Underground economy grows beyond the formal


Source: Valor Econômico, 03/11/2008

The rhythm of piracy continues to be intense in Brazil and is spreading in several sectors despite the apprehension of an increasing volume of fake goods. In addition to software, CDs, DVDs, sporting goods, clothing, toys, cosmetics and cleaning utensils, among other consumer products, counterfeiting also affects other items of restricted use, such as medicines, surgical materials and even vehicle inserts and wheel bearings. airplane turbines. The list is immense and the negative effects are being felt in the economy.

André Franco Montoro Filho: “With more income, people tend to buy more pirated and non-pirated products”

The government has closed its grip on piracy, increasing repression, while businessmen and civil society organizations are embarking on a real crusade to raise awareness of the harmful effects of this practice. Last year, the IRS seized the equivalent of R $ 1,051 billion in counterfeit items, approximately 20% more than in 2006. However, nothing seems to contain the action of gangs, which have efficient logistics to supply the market with pirated products or with original goods imported irregularly - most of them from Asia. A scenario that contributes to further denigrate the image of Brazil, which appears on the list of the ten countries with the highest incidence of piracy.

In the market there is a consensus that the high tax burden is one of the factors that favor the advance of piracy. Taxes and charges on the production chain are passed on to the final consumer, who tends to give preference to the lowest prices practiced in the informal economy even at the risk of purchasing products that can harm health, which have no guarantee or technical assistance. .

The growth of the economy also stimulates piracy, says André Franco Montoro Filho, executive president of the Brazilian Institute of Ethics in Competition (Etco). "With more income, people tend to buy more pirated and non-pirated products," he explains. According to him, piracy is part of the so-called underground economy - defined as the set of informal activities - that has been growing more than the real economy.

Mormaii, a traditional manufacturer of sunglasses, has adopted an aggressive strategy to combat piracy through market monitoring work, which has resulted in an average of 50 to 60 lawsuits per month against offenders. In addition, it closed in on ports against counterfeit goods brought from China. As a result, it managed to reduce the piracy rate of its products by 80% and maintain the value of its brand. “There were times when at each formal sunglasses sales point, there were another ten selling counterfeit products,” says Fábio Meirelles, a lawyer for the company.

In addition to combating the supply of pirated products, there is an effort to curb demand, through educational actions to change consumer behavior. The Forum Against Piracy, which brings together 32 companies and associations from different sectors, bets on running an educational campaign on TV to show that illegal trade is bad for people and very bad for the country's economy, reveals Alexandre Cruz, president of the entity . "For every worker recruited by informal commerce, six vacancies are no longer open in the formal market." The play will begin airing nationally on TV Globo in November and will be on the air for a year.

Last year, Microsoft and the American Chamber of Commerce (Amcham) launched the Legal School project, which made teachers aware of the importance of discussing piracy with public school students. This work was carried out in 62 choices in Porto Alegre, Campinas, São Paulo and Goiânia and next year it will include three other municipalities, in addition to Brasília, informs Nayana Rizzo, from Amcham. A novelty was the creation of a blog, to allow the exchange of information and experiences between schools in an online environment.

Another aspect of the fight is of an economic nature and aims at the exemption of products whose price difference in relation to the similar pirate is very large. In the software sector, for example, the tax burden is around 50% and many suppliers are being encouraged to make the price more flexible to the final consumer, says Antonio Eduardo Mendes da Silva, coordinator of the anti-piracy working group of the Brazilian Software Association ( Abes).

Software piracy is 59% and, according to Santos, it has dropped 5% in the last two years. But as the information technology (IT) market has grown by around 25% in the past two years, industry losses due to the sale of illegal software have increased from $ 1,1 billion in 2006 to $ 1,6 billion billion last year. “If the piracy rate fell to 50% in the IT market, 11.500 new direct jobs would be created and additional revenue of US $ 2,9 billion would be generated. The government would raise US $ 309 million in additional taxes, ”he says.

Support for repression activities, through training of federal, highway, military and civil police, in addition to professionals from the Federal Revenue and the Judiciary, is considered essential to curb piracy. Abes, for example, trained 3.500 agents from 42 cities between 2006 and July this year. Until December, it will carry out training in another ten municipalities for 1.500 agents. “In addition, we are going to hold seminars and debates at universities and local companies,” says Santos.