MINISTRY OF DEVELOPMENT INDUSTRY AND FOREIGN TRADE SECRETARIAT

MINISTRY OF DEVELOPMENT, INDUSTRY AND FOREIGN TRADE SECRETARIAT OF COMMERCE AND SERVICES - SCS The Role of Micro and Small Enterprises in the Brazilian Services Exports 3 rd Meeting of the Working Party on International Trade in Goods and Trade in Services, 4 – 6 October, 2010, OECD Headquarters, Paris 1

Initial Remarks • Micro and Small Enterprises (MSEs) comprised, in 2008, 98% of the total number of the services companies in Brazil and 77% of the country’s formal labor force. • Main goal for MSEs in the Productive Development Policy (PDP), in May 2008: increase the number of exporting companies in 10% by 2010. • The knowledge on MSEs’ foreign trade data is essential to the goal of increasing Brazilian international competitiveness. • Due to MSEs’ importance to the Brazilian economy, central government launched a concerted effort towards the production of more (and superior) information on micro and small enterprises. Secretariat of Commerce and Services 2 Ministry of Development, Industry and Foreign Trade

Institutional Mission • SCS/MDIC is the lead coordinator for all federal policies directed towards the development of MSEs, including the improvement of their export capacity and internationalization. • SCS/MDIC is the Government’s agency responsible for: a) proposals and public programs relating to foreign trade in services. b) formulating policies and providing information in respect to statistics on commerce and services, at the national level, as well as on foreign trade in services, including the collection, treatment and disclosure of this information. Secretariat of Commerce and Services 3 Ministry of Development, Industry and Foreign Trade

Targeting users • The gathering of data mainly intends to properly inform various stakeholders involved with the international trade in services, such as: – – Permanent Forum of Micro and Small Enterprises Brazilian External Chamber of Trade Committee of Exports Financing and Guarantees Services Complex of the PDP (Development Productive Policy) – International Negotiatiors – Agencies in charge of services public policies (ex: Ministry of Tourism, Ministry of Culture, etc. ) – Private sector Secretariat of Commerce and Services 4 Ministry of Development, Industry and Foreign Trade

Main features of the methodology • Primary souces: exchange settlements – codes 45 and 48 of the International Capital and Foreign Exchange Market Regulation (RMCCI) – which represent the majority of exchange settlements related to services imports/exports and Annual Datasheet on Social Information. • RMCCI codes related to Governmental Services, Transports, Insurance and International Travel were not used, as well as financial operations. • In Brazil, legally constituted companies receive a numerical identity called the CNPJ (National Registry of Juridical Person), which is often used as a key number to contrast different databases. • By crossing different data it is possible to associate the number of employees with the total imported/exported value of a company in a established period of time, and also by a specific area of economic activity. Secretariat of Commerce and Services 5 Ministry of Development, Industry and Foreign Trade

Methodology to classify the company size The methodology used for the identification of companies by their size adopted the criterion which associates the company’s number of employees to the value of their services exports during the period of analysis, distributed among branch of activity (industry or commerce/services) and in accordance with the parameters adopted in Mercosur. According to this methodology, the larger amount (in terms of export value or number of employees) prevails for classification purposes. Secretariat of Commerce and Services 6 Ministry of Development, Industry and Foreign Trade

Treatment of the data - 2 layouts for services exports and imports: Codified CNPJ CNAE 2. 0 Division Company Size State/Federate Unit Country Code Country Value (US$) Thousand 30 64 Large DF 2496 UNITED STATES 30, 0 30 64 Large DF 6289 UNITED KINGDOM 9, 6 31 72 Medium SP 1490 CANADA 24, 9 31 72 Medium SP 2496 UNITED STATES 3, 4 31 72 Medium SP 6289 UNITED KINGDOM 0, 7 32 45 Medium DF 2496 UNITED STATES 32, 1 33 46 Micro SP 2496 UNITED STATES 0, 4 34 58 Large DF 2496 UNITED STATES 196, 0 34 58 Large DF 6289 UNITED KINGDOM 4, 0 35 82 Small DF 639 ARGENTINA 591, 3 35 82 Small DF 1589 CHILE 2, 5 35 82 Small DF 2453 SPAIN 1, 1 35 82 Small DF 2496 UNITED STATES 6, 3 Secretariat of Commerce and Services 7 Ministry of Development, Industry and Foreign Trade

Main Findings • The measuring of foreign trade in services by company size is of great importance. • The 2010 Outlook on International Trade in Services revealed important aspects: – 63% of the services companies exported between US$ 1, 000 and US$ 100, 000, regardless of company size (facilitates targeting of potential exporting groups). – Concentration of exports to the US in all size categories (38, 3% MSEs, 43, 7% medium-sized and 46, 7% large companies) – Main concentration in large companies. – Rio and Sao Paolo concentrated 60% of MSEs’ services exports. – Identification of main sector of MSEs’ exports by CNAE: Wholesale, consultancy and business management, office and administrative support services, computer and related services, architecture, engineering testing and technical analysis and legal, accounting and auditing services. Secretariat of Commerce and Services 8 Ministry of Development, Industry and Foreign Trade

Methodological aspects • The measuring of data seeks to complement the available information about Brazilian foreign trade in services (e. g. BOP/Central Bank and Annual Research on Services/IBGE), as well as to address Federal Government commercial intelligence needs and public policy assessment. • Possible reports by service company’s size: value of services exports/imports, number of services exporters/importers and their economical activities (CNAE). It also allows the crossing of data on: “Company’s Size x State/Federation Unit”; Company’s Size x Country”; “CNAE x State/Federation Unit”; “CNAE x Country”; and “State/Federation Unit x Country”. Five level crossing of data is also possible, such as, “Company Size x number of Exporters x economic activity x exported value x country of acquisition of the Brazilian services exported”. • The 2010 Outlook is available at: http: //www. desenvolvimento. gov. br/arquivos/dwnl_1285603849. pdf Secretariat of Commerce and Services 9 Ministry of Development, Industry and Foreign Trade

% RATIO SERVICES EXPORTS/IMPORTS BY COMPANY SIZE* - 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS Secretariat of Commerce and Services 10 Ministry of Development, Industry and Foreign Trade

BRAZILIAN SERVICES EXPORTS BY COMPANY SIZE* (%) - 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS Secretariat of Commerce and Services 11 Ministry of Development, Industry and Foreign Trade

MAIN BRAZILIAN EXPORTING SECTORS (CNAE) * Microenterprises – 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

MAIN BRAZILIAN EXPORTING SECTORS (CNAE) * Small Enterprises – 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

MAIN BRAZILIAN EXPORTING SECTORS (CNAE) * Medium Enterprises – 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

MAIN BRAZILIAN EXPORTING SECTORS (CNAE) * Large Enterprises – 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

MAIN COUNTRIES OF ACQUISITION OF BRAZILIAN SERVICES EXPORTS * BY COMPANY SIZE– 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

MAIN SERVICES EXPORTING STATES BY COMPANY SIZE * – 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

SERVICES EXPORTS – NUMBER OF NATURAL AND JURIDICAL PERSONS Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

NUMBER OF SERVICES EXPORTING COMPANIES BY COMPANY SIZE * – 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

NUMBER OF COMPANIES BY EXPORTED SERVICES VALUE * 2009 – US$ Mil / US$ Thousand Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

NUMBER OF MICROENTERPRISES BY EXPORTED SERVICES VALUE * 2009 - US$ mil / US$ thousand Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

NUMBER OF SMALL ENTERPRISES BY EXPORTED SERVICES VALUE * 2009 - US$ mil / US$ thousand Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

NUMBER OF MEDIUM ENTERPRISES BY EXPORTED SERVICES VALUE * 2009 - US$ mil / US$ thousand * Ver notas explicativas (2) e (9) / See explanatory notes (2) and (9) Fonte: Banco Central do Brasil / Elaboração : DECOS/ SCS Source: Central Bank of Brazil / Elaboration : DECOS/ SCS

NUMBER OF LARGE ENTERPRISES BY EXPORTED SERVICES VALUE * 2009 - US$ mil / US$ thousand Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

BRAZILIAN SERVICES IMPORTS BY COMPANY SIZE* (%) - 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

MAIN BRAZILIAN IMPORTING SECTORS (CNAE) * Microenterprises – 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

MAIN BRAZILIAN IMPORTING SECTORS (CNAE) * Small enterprises – 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

MAIN BRAZILIAN IMPORTING SECTORS (CNAE) * Medium enterprises – 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

MAIN BRAZILIAN IMPORTING SECTORS (CNAE) * Large enterprises – 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

MAIN DESTINATION OF PAYMENTS OF BRAZILIAN SERVICES IMPORTS BY COMPANY SIZE * – 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

MAIN SERVICES IMPORTING STATES BY COMPANY SIZE * – 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

SERVICES IMPORTS – NUMBER OF NATURAL AND JURIDICAL PERSONS Source: Central Bank of Brazil /Elaboration : DECOS/ SCS

NUMBER OF SERVICES IMPORTING COMPANIES BY COMPANY SIZE * – 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

NUMBER OF COMPANIES BY IMPORTED SERVICES VALUE * 2009 – US$ mil / US$ thousand Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

NUMBER OF MICROENTERPRISES BY IMPORTED SERVICES VALUE * 2009 - US$ mil / US$ thousand Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

NUMBER OF SMALL ENTERPRISES BY IMPORTED SERVICES VALUE * 2009 - US$ mil / US$ thousand Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

NUMBER OF MEDIUM ENTERPRISES BY IMPORTED SERVICES VALUE * 2009 - US$ mil / US$ thousand * Ver notas explicativas (2) e (9) / See explanatory notes (2) and (9) Fonte: Banco Central do Brasil / Elaboração : DECOS/ SCS Source: Central Bank of Brazil / Elaboration : DECOS/ SCS

NUMBER OF LARGE ENTERPRISES BY IMPORTED SERVICES VALUE * 2009 - US$ mil / US$ thousand Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

Possible reports by Company Size - 2009 - US$ thousand Exports and Imports by Company Size to the U. S. and share in relation to the rest of the world. Source: Central Bank of Brazil and Ministry of Labor

Possible reports by Company Size - 2009 - US$ thousand Main CNAE sectors to the European Union by Company Size Source: Central Bank of Brazil and RAIS/Ministry of Labor

10 Main Exports CNAE Sectors to the U. S. - 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

10 Main Imports CNAE Sectors from the U. S. - 2009 Source: Central Bank of Brazil – CNAE 2. 0 /Elaboration : DECOS/ SCS

Final Remarks (1) • Despite the importance of this information in terms of commercial intelligence, improvements have to be made, such as: – Promote research on which services are being exported/imported by CNAE or CPC sector – this improvement will be achieved with the full implementation of the SISCOSERV. • Notwithstanding the difficulties, the effort of measuring foreign trade by company size is of utmost importance to the formulation of public policies aiming to help micro and small companies. It is also key to assist them in improving their performance. Secretariat of Commerce and Services 43 Ministry of Development, Industry and Foreign Trade

Final Remarks (2) MDIC/SCS, Central Bank and IBGE – among others – formed a working group that attempts: • to upgrade the relationship between all agencies with foreign trade in services statistics. • to share the available information about international trade in services with other governmental agencies. • to allow that constant evolution occur not only in the obtainable data, but also in the interpretation of researches and data treatment. Secretariat of Commerce and Services 44 Ministry of Development, Industry and Foreign Trade

THANK YOU! Ministry of Development, Industry and Foreign Trade Secretariat of Commerce and Services Department of Commerce and Services Policies Jane Pinho General Coordinator of Foreign Market E-mail: decos. scs@mdic. gov. br Jane. Pinho@mdic. gov. br 45