May 9, 2017
This report deals with the regulation of logistics infrastructures in Brazil, focusing in particular on the federal level. Brazil, one of the key emerging economies in the world, has a particular need for developing logistics infrastructures. Past initiatives, however, have suffered from a lack of strategic perspective and from poor regulatory capacity. This report argues for a renewed focus on regulatory governance and regulatory capacity.
Logistics infrastructures are critical for social and economic development. Enhancing infrastructures has therefore become a central theme for governments internationally. Given the state of public finances in Brazil, the key challenge is how to attract sufficient private investment into infrastructures so as to achieve social and economic development. This report deals with the regulation of logistics infrastructures in Brazil, focusing in particular on the federal level. Brazil, one of the key emerging economies in the world, has a particular need for developing logistics infrastructures. Past initiatives however have suffered from a lack of strategic perspective and from poor regulatory capacity. They have encouraged poor strategic investments and a 'gaming culture' among concession holders. The latest reforms have sought to strengthen the credibility and predictability of regulatory frameworks to attract 'better' and 'new' private investment into expanding Brazil's logistics infrastructure. This report argues that such an approach towards regulation is unlikely to be sufficient. Instead, it argues for a renewed focus on regulatory governance and regulatory capacity. This study therefore is interested in developing insights and recommendations that both serve the development of regulatory capacity in Brazil — a country that has witnessed considerable investment into its regulatory frameworks over the past two decades — and address sector-specific challenges.
Regulatory governance is at the heart of attracting investment for logistics infrastructures. Earlier approaches have been criticized for the micro-management exercised by central government and for the perverse incentives set by domestic lending institutions. Whatever the current preferences in terms of facilitating investment and competition, there are long-term issues that require addressing. These are:
This report diagnoses a number of regulatory capacity deficits, ranging from the need to enhance analytical strategic considerations, the need to consider coordination and oversight more directly, as well as to develop more challenge capacities. At present, regulatory debate in Brazil is shaped by an emphasis on reducing 'discretion'. This emphasis is understandable in view of the contemporary political climate, but is unlikely to enhance overall regulatory capacity.
This report puts forward the notion of 'disciplined discretion' as a model for the development of regulatory capacity. To enhance regulatory governance, there should be a dialogue between PPI, ministries and regulators about:
To enhance regulatory capacity, the emphasis should be on developing 'disciplined discretion'.
Regulating logistics infrastructures
Development of the regulatory framework and recent reform
Regulatory issues and challenges around logistics infrastructure per sector
Recommendations: towards a roadmap for enhancing regulation in logistics infrastructure in Brazil
Appendix A — Development of the logistics sector and related infrastructure between 1820s and 1990s
Appendix B — Regulatory issues and challenges in the railway sector
Appendix C — Regulatory issues and challenges in the road sector
Appendix D — Regulatory issues and challenges in the ports sector
Appendix E — Regulatory issues and challenges in the airport sector