Message from the Chairman of Odebrecht S.A.
Now more than ever, relations between business, the state and society are the subject of reflection in most emerging countries, with the overarching aims of improving them and increasing their focus on the common good.
We at the Odebrecht Group take a very clear stance on this interaction. We view it as part of an organic social whole whose proper functioning depends not only on the performance of entrepreneurs – who are responsible for coordinating people and capably managing the material and financial resources required to produce wealth – but on the development of the individuals who manufacture and consume products directly, and the adaptation of the policies and laws that regulate relations among all of these agents.
In the course of this synergetic interaction, the reinvestment of business results is key to social development, because these results drive government initiatives, particularly in the field of infrastructure, and enable the state to concentrate its resources on improving essential services, such as public education, health and safety.
There is no shortage of historic examples of social development financed by business with the guidance of the state for the benefit of society as a whole. During the Imperial period in Brazil (1822-1889), the city of Salvador – the Group’s birthplace and home base – experienced a surge of development in the second half of the 19th century that made it one of Brazil’s foremost urban centers. This was down to investments in urban transportation, water supply, sanitation and lighting that resulted from a successful partnership between the public sector and local entrepreneurs, and went far beyond what the government could have accomplished on its own.
Today, the Brazilian Government is experiencing a similar situation. Limited resources are available for investment in priority projects that would eliminate the bottlenecks to economic growth, particularly in the energy, transportation and basic sanitation sectors. Brazil spent just 1% of its GDP on infrastructure works in the last decade, and needs to invest at least 3.2% to maintain current growth levels, and about 9% to increase them by four percentage points and keep pace with rapidly growing economies around the globe.
The challenge is great. To surmount it, we must break the vicious cycle of weak growth leading to low investment, which weakens growth even further. If the State does not have the wherewithal to break this cycle without falling back into the one Brazil escaped over a decade ago – the inflationary cycle – the time has come to guide private-sector resources into infrastructure investments. In this context, “guide” means “attract,” and considering businesses’ inherent commitment to preserving their assets and creating value for shareholders, this can be achieved by offering prospects of profits that are not only worthwhile but compatible with the risks incurred.
In principle, the presence of repressed demand means good business opportunities are in the offing. Nevertheless, long-term investments in infrastructure are also associated with higher risk, and the absolute need for clear regulatory frameworks. Therefore, stable legislation and scrupulous respect for contractual commitments are crucial for attracting investors to this sector.
In Brazil and several other emerging nations in Latin America, Africa and even Europe, Odebrecht has partnered with the State to develop infrastructure and industrial development projects (like the investments planned for Venezuela in the petrochemical industry). These partnerships are always based on the pursuit of growth and improved living conditions for the communities in which we work.
We want to produce wealth for the common good in an atmosphere that allows us fully to exercise our commitment to service – growing steadily, creating new work opportunities, setting greater challenges for our subsidiaries’ members and consequently enabling them to share in the results achieved.
Emílio Odebrecht
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