Public-Private Dialogue Centered on Construction Industry Takes Center Stage at Construmetal 2023

Atop Allianz Parque's rooftop, Construmetal 2023 took place last Thursday (21), bringing together key players from the construction industry. With five panels throughout the day, the event attracted a gathering of over 500 individuals, including entrepreneurs, politicians, and influential figures in the sector, to delve into trends and emerging technologies.

In the fifth and final panel of the event, opened by Felício Ramuth, Vice-Governor of the State of São Paulo, the main topics discussed were the trends and prospects within the sector. During his address, he pointed out challenges hindering the development of the construction industry, such as legal frameworks, while also highlighting technological solutions as accelerators.

"What are the challenges? First, legal frameworks. Unfortunately, the court of accounts and laws do not evolve at the same pace as innovations. So, the public administrator needs to have a strong political will to implement projects", he remarked.

Another point highlighted in his initial speech was the assurance that the state government would ease this transitional period for the population and entrepreneurs when the tax reform comes into effect. Additionally, he warned about the risks of having the highest VAT rate globally due to tax exemptions in certain sectors.

"The São Paulo State Government is committed to aiding in the simplification and modernization of the national and state tax systems [...] Tax reform is real, but we are running a significant risk. I alert entrepreneurs, entities, and associations that we risk having the 'reform of exceptions' rather than rules; every day new sectors seek new exemptions", said the Vice-Governor.

The statement referred to the criticism made by the government's opposition regarding requests for tax exemptions by sectors through complementary laws. So far, the tax reform has been approved, and in its initial text, basic food items received tax exemptions.

Uallace Moreira Lima, Secretary of Industrial Development, Innovation, Trade, and Services at the Ministry of Development, Industry, Trade, and Services (MDIC), made a presence and delivered a speech on the strategic importance of the construction industry in neo-industrialization.

"The construction industry is one of the most strategic for us to engage with what the Vice President and Minister, Geraldo Alckmin, calls neo-industrialization. Why do I think this? When the Vice President redefines President Lula's government project, he incorporates the main objectives, which are innovation and sustainability", he stated.

Lima emphasized that the construction industry plays a significant role in job creation, promoting innovation, and striving for sustainability. Within industrial activity, according to the secretary, the sector is one of the major contributors to job generation. However, data from the National Confederation of Industry (CNI) shows that employment levels decreased from 49.7 points to 48.3 between July and August, considered stable when compared to the same period in previous years.

Data from the SiiLA Market Analytics platform reveals that among industrial projects, the construction sector expanded in occupied area and had a net absorption of 56,808 m² in the second quarter of 2023 among the areas monitored.

Another highlighted point was the investment in the Growth Acceleration Program (PAC) in construction, in which the secretary mentioned an investment of R$ 1.7 trillion (US$ 343 billion) in the coming years.

The Deputy Secretary of the Economic Development and Labor Department of the city of São Paulo, Armando Junior, highlighted the Requalifica Centro program, which aims to repopulate the city center, as well as the incorporation of the environmental agenda in the 2029 Master Plan.

Junior stated that the construction industry is São Paulo's second-largest sector, with 300,474 formal jobs, 55,000 MEIs, and 17,000 establishments dedicated to these activities (hardware stores, offices, etc.).

Regarding Requalifica Centro, the Deputy Secretary informed that this is an incentive to boost the construction industry in downtown São Paulo. With adherence to the program, enterprises will enjoy certain tax benefits, such as credit remission and exemption from property tax, progressive rates over the next five years, a 2% reduction in the ISS on construction-related services, and exemption from municipal fees for installation and operation for the next five years.

Ulysses Nunes, Executive Director of the Brazilian Association of Steel Construction (ABCEM), the event organizer, stressed the importance of establishing a dialogue between the private sector and the government to promote industrialized construction.

"One of the intentions of Construmetal was to show that the steel construction segment can be an option for the government. We also want to demonstrate to the Executive Branch that industrialized construction as a whole — including steel construction — aligns with the global trend toward a more sustainable economy. It meets ESG requirements and the United Nations' Sustainable Development Goals (SDGs) since it is a much cleaner form of construction", he said.

*Real to dollar exchange rate as of September 26, 2023, at 3 p.m.