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New Economy In Brazil Simmers Down But Still Hot

The boom in "new economy" ventures is likely to continue to boost the economic prospects of Brazil for at least the next two years, according to a new report by industry observer Latin Venture Partners, Inc.

The company, which released the report Monday at its "Vamos Wireless! 2001" conference in Coral Gables, says that private equity investment in Brazil last year more than tripled to $3.5 billion and is expected to rise, albeit at a slower pace, this year as well.

But while technology, and specifically internet-related ventures, helped fuel past growth in the Brazilian market, Latin Venture says it expects investments in non-technology sectors this year will outpace new economy initiatives as the dot.com slowdown dampens investor enthusiasm in that sector.

To be sure, new economy initiatives will continue to crop up in Brazil -- Latin America's largest economy -- but, as has been the case in the past, most investment earmarked for those initiatives will come from outside the country, the report says.

Entitled "Brazilian Venture: Unleashing the Potential of the Fastest Growing Online Market," the report was produced by the Latin Venture Intelligence unit, the research arm of the Miami-based company.

In it, the company predicts that Brazil's notoriously labyrinthine regulatory system will ease up somewhat as pending legislation is approved by the Brazilian government that would loosen rules on minority shareholder status and the repatriation of foreign investment capital. The rules in place right now often tax ventures heavily, costing both foreign and Brazilian investors.

Brazil's successful breakup of the fomerly government-run telecommunications industry has also opened a flood of competition into the growing wireless communications sector. The Latin Venture report predicts that further competition will benefit service vendors and providers of wireless content.

Mobile e-commerce, for example, is expected to boom in the next few years, the company says, though current wireless devices are still far from replacing personal computers for internet access in Brazil.

And despite the slow down in investment, Brazil remains the region's bellwether for technology initiatives. Latin Venture says the country will continue to be the primary focus for internet and other new economy investment because of its lead in e-commerce. The report cites that more than half of Latin America's online e-commerce transactions last year were done in Brazil.

A copy of the report can be obtained from Latin Venture's Web site.

William Plasencia is a writer with Miami.internet.com