Source: The State of S. Paulo - SP - 08/11/2009

Excessive bureaucracy has punished investors who decide to do business in São Paulo, Brazil's main economy. Today, it is easier to take a project out of paper in Bahia, Maranhão, Santa Catarina and Mato Grosso do Sul than in São Paulo, according to a survey by the Federation of Industries of São Paulo (Fiesp), based on data from the Bank Worldwide.

In the general ranking, the State ranks only 11th in terms of the best business environment, which considers the time and cost of starting a company and registering property and guarantees, in addition to procedures for the collection of taxes, tax burden and compliance with contracts. The first three positions are in the Federal District, Amazonas and Minas Gerais (where it is quicker to open a company in Brazil).

"Despite the various measures that are beginning to be taken, São Paulo is still a very bureaucratic state", evaluates the director of the Fiesp's Competitiveness and Technology Department, José Ricardo Roriz Coelho. In his opinion, because of the better infrastructure in relation to the rest of the country, São Paulo makes little effort to attract investments. "In other locations, the need for new capital has encouraged the simplification of processes to gain competitiveness."

One of the main weaknesses of the State is the delay in opening companies, three times greater than the national average. Lawyer José Samurai Saiani, from Machado, Meyer, Sendacz and Opice, says he recently spent six months setting up an automotive industry in the state for a European investor. "They are incredulous at the bureaucracy and the lack of connection between public agencies."

In his assessment, more complicated than obtaining the CNPJ and State Registration is obtaining installation and operation licenses from the companies. This is because there is an overlap of assessments between the municipal, state and federal levels. “And there is not always a consensus between the agencies. For this reason, some processes drag on for a year. ”

Lawyer Eleonora Altruda de Faria, from Celso Botelho de Moraes Law Firm, had to go to court to register a corporate change at the São Paulo Board of Trade. “They asked for documents that had nothing to do with the process. It took us three months to register. This after getting an injunction. ”

The São Paulo government is aware of the problem. An example of this is that it launched the State Debureaucratization Program (PED) to reduce the time for opening companies and granting licenses. By the end of the year, the expectation is to launch the Integrated Licensing System (SIL), which will unify the processes.

“In the case of low-risk activity, the entrepreneur will receive a provisional license while the inspections are not carried out within a maximum of six months”, says the secretary of Employment and Labor Relations of São Paulo, Guilherme Afif Domingos. He says the government is working on creating a Poupatempo for legal entities. The intention is to allow requests to be made via the internet, enabling the opening of a company in 15 days.

Responsible for more than a third of the country's Gross Domestic Product (GDP), São Paulo helps to pull down the Brazilian position in the ranking of the most bureaucratic in the world. In the latest Doing Business report by the World Bank, Brazil appears in 129th place - two more than in the previous survey.

“Bureaucracy is a national epidemic. It is in the DNA of the country ”, criticizes the president of the Brazilian Institute of Ethics in Competition (Etco), André Franco Montoro Filho.

For him, one of the main problems is in the tax bureaucracy, which increases the informality of the economy and increases tax evasion. Not to mention the complexity in collecting taxes. According to the Fiesp survey, among 13 states, Minas Gerais and São Paulo impose greater difficulty in paying taxes. Bahia has the best system for collecting taxes, alongside Rondônia and Mato Grosso do Sul.

In a recent event, Jorge Gerdau, chairman of the board of directors of the Gerdau Group, said that his company has 200 people in Brazil to control the tax area, while in Canada it needs only “half a person” for the same function.

All of this causes an additional expense equivalent to 5% of GDP, according to calculations by the federal government itself. "Foreigners are very interested in investing in Brazil, but they complain a lot about bureaucracy and the tax burden," says lawyer Eleonora.