Red-hot Brazilian economy running afoul of paperwork

SAO PAULO, Brazil — Every evening after the federal police headquarters in Sao Paulo closes, immigrants and foreign professionals begin to line up along the street where they will remain, huddled under blankets, until the building reopens in the morning.

Since there is only one official to receive documents and only 100 people are attended to on a first-come-first-served basis each day, applicants have to wait in the cold all night to try to register as temporary residents, a process required by the Brazilian authorities. 

Getting registered is so difficult that businesses often pay R$120 (or more than $70 U.S. dollars) an hour to have companies handle the process for their foreign employees. They pay even more — up to R$5,000 (almost $3,000) — to get professional assistance applying for a business or work visa, which can be complicated and time-consuming.

“Every type of process has strict requirements based on what the worker will do, how long the worker will be here, who they will get paid by,” said Daniela Lima, a lawyer at EMDOC, a company with more than 200 employees and six offices in Brazil to help businesses navigate the country’s bureaucracy.

“The whole thing is very difficult for someone who is not specialized in the area,” said Lima. It is not simply a question of speaking Portuguese, it’s a question of understanding the laws and carrying out all the necessary steps.”

Brazilian bureaucracy affects nearly all aspects of life, requiring investments in time and money that are costly for workers and inhibit businesses eager to invest in the country’s growing economy, according to studies by international and local financial institutions.

Starting a business in Brazil takes an average of 16 processes and 120 days, according to a study by the World Bank on doing business in Brazil in 2010. 

That’s nearly twice as long as the average for the rest of Latin America and 20 times the average time it takes in the United States, the study reported.

“The problem is that you need permits for everything and sometimes you have to go to four different places just to get one process,” said Eva Rodrigues Dos Santos. Dos Santos lived in Nigeria and Mexico for years before opening an import and export business in Brazil. 

“While people from China and Japan, Europe and America are making money, Brazilians are busy trying to get stamps on pieces of paper, Santos said.

Dos Santos said the paperwork to incorporate her company took 11 months, and she couldn’t import or export until she got another permit that took another half a year to get approved.

While she was waiting, she was approached by the Nigerian government to negotiate the purchase of 450 buses for a municipal transit system, but problems with their visas and other paperwork led to the deal falling through, she said. 

“The idea was to include the turnstiles and everything to equip the bus stations, too. It was a multimillion dollar contract, but I had to wait to get my export license,” she explained. “They ended up going to India instead. I missed out on a huge opportunity.”

Brazil’s bureaucratic excess costs the country $46 billion a year when compared with a selection of countries where the bureaucracy is less cumbersome, according to a recent study by the State Federation of Sao Paulo Industries.

But bureaucratic regulations don’t affect businesses alone; they are also costly for individuals. 

Back at the federal police station in Sao Paulo, most people have to pay about R$200 (roughly $120) to register as a temporary resident. But it’s the time it takes to navigate the system that makes their cost of living difficult to sustain, said several applicants standing in line recently.

“I got here at 11:30 last night to wait in line for my Bolivian girlfriend, who is applying for her residency, then I went to work.” said Gilvan Andrade, a slim 23-year-old from Sao Paulo who earns a living printing T-shirts in a factory. 

“I only earn R$510 a month ($303), which is the minimum wage,” he said, hurrying out of the station late in the evening to catch the bus with his wife and his baby daughter. “If I miss a day, we won’t have enough money to pay for milk, our rent and all our bills. It’s not fair but that's just life, thanks to all the bureaucracy in this country.”