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Brazil: Government looking for a way to develop foreign investment in civil aviation

Brazil’s government have decided to scratch its proposal to turn the Brazilian Tourist Board “Embratur” into a tourism agency, to better facilitate the involvement of foreign investment in civil aviation.

The government is looking into ways to expedite the overturning of the restriction on foreign capital share in airlines, pegged at the moment at 20%. The rationale behind this pending move is to incite the arrival of budget airlines in Brazil.

“The priority is to overturn the limitation on foreign capital. The Embratur proposal is not satisfactory as it is because it takes money from System S (social services) in addition to other controversial themes,” explained a spokesman for the Planalto, which is the official workplace of the President of Brazil.

Forwarded by the Executive to the National Congress a year ago, the proposal has not prospered and is still looking for approval in spite of the request for it being given priority status.

Additionally, two other projects were annexed to this proposal: one that deals with the national tourism policy ratifying the operation of casinos in resorts, and another that makes way for a progressive rise of foreign capital in civil aviation, going from 20% to 49% to 100%, depending on the authorization of the antitrust authorities.

In the initial proposal, the share of foreign capital in the air sector could reach 100%. A modified proposal could be an application forwarded by Alberto Fraga (DEM-DF), which removes from the need for approval from consumer protection groups to increased foreign participation.

However, that would mean disposing of the plan to transform the Embratur into a tourism agency.

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