Manaus Free Trade Zone Revenue in 2022 was R$ 174 billion, generating 700 thousand direct and indirect jobs

The Manaus Free Trade Zone (MFTZ) in Brazil is a special economic zone that was established in 1967 to promote economic development in the Amazon region. The FTZM offers tax incentives and other benefits to businesses that operate within its boundaries.

On Tuesday, February 7, 2023, the Brazilian Chamber of Deputies celebrated the 56th anniversary of the establishment of the Manaus Free Trade Zone (MFTZ). It was established by Decree-Law 288/67. The event was presided over by Deputy Sidney Leite (PSD-AM).

In a message read by Sidney Leite, the mayor, deputy Arthur Lira (PP-AL) attested that the Manaus Free Trade Zone is successful. “In 2022, total revenue reached BRL 174 billion. This figure represents a record and growth of almost 7% over 2021; exports amounted to BRL 3 billion, up 29%,” he said.

“No social program is better for the Brazilian family than employment, and investment in the MFTZ was responsible for maintaining an average of 110,000 jobs last year, which could represent around 700,000 direct jobs and indirect”, continued the message from the president of the Chamber.

Sidney Leite, in turn, said he supports tax reform in the country, citing that the MFTZ represents the highest revenue collection in the country’s North Region. He also points out that the maintenance of tax incentives contributes to reducing regional inequalities and environmental sustainability.

“The Manaus Free Trade Zone led to the creation of some of the cleanest industry on the planet and has taken measures to preserve the largest rainforest in the world,” said Sidney Leite. The Industrial Pole of Manaus, according to the Superintendency of the Free Trade Zone of Manaus (Suframa), is home to more than 500 companies that can be considered to be “cutting edge.”

Industries represented in the MFTZ include:

What industries are in the Manaus Free Trade Zone?

• Electronics and Technology: The MFTZ is known for its electronics and technology industry, which includes the production of consumer electronics, such as smartphones, tablets, and televisions. Major companies like Samsung, LG, and Panasonic have factories in the FTZM.
  
  
• Automotive: The automotive industry is also present in the MFTZ, with major manufacturers like Honda, Yamaha, and Harley-Davidson operating factories there.
  

• Pharmaceuticals: The Manaus Free Trade Zone has a growing pharmaceutical industry, with companies like Pfizer, GlaxoSmithKline, and Novartis establishing operations there.
  
  
• Chemicals: The MFTZ has a significant chemical industry, which includes the production of petrochemicals, plastics, and other chemical products.
  
  
• Food Processing: The MFTZ has a growing food processing industry, with companies like Coca-Cola, Nestle, and PepsiCo establishing factories in the zone to produce a variety of food and beverage products

Tax reform

For Deputy Reginaldo Lopes (PT-MG), chairman of the Chamber’s working group that is working on tax reform, it will be necessary to seek consensus to approve the proposal. “We need more modern mechanisms to support regional development,” said Lopes, suggesting a new dialogue on the FTZM.

Other deputies and entities working on this issue include Captain Alberto Neto (PL-AM), Fausto Santos Jr. (União-AM), Saullo Vianna (União-AM), Silas Câmara (Republicanos-AM), Coronel Chrisóstomo (PL-RO) and Damião Feliciano (União-PB); senator Plínio Valério (PSDB-AM); business leaders; and Amazon authorities.

History

The Manaus Free Trade Zone emerged with the objective of stimulating the economic and social development of the Amazon region, in addition to seeking environmental preservation and border protection. The area covered by the FTZM comprises the states of Acre, Amazonas, Rondônia, and Roraima and the cities of Macapá and Santana in Amapá.

With an original term of up to 1997, the Free Zone, which covers the agricultural, commercial, and industrial sectors, was extended on several occasions by the National Congress. In 2014, Constitutional Amendment 83 extended its validity until 2073, maintaining incentives for companies until the end of 2050.

Products that are manufactured in the MFTZ have tax benefits. Among them are the reduction of up to 88% in Import Tax on industrial inputs and 75% in Income Tax. Companies also enjoy an exemption from the Tax on Industrialized Products (IPI).

According to a report on subsidies released in July 2020 by the extinct Ministry of Economy, between 2003 and 2019, the Manaus Free Trade Zone had, per year, tax benefits equivalent to about 0.37% of the Brazilian Gross Domestic Product (GDP ) or BRL 23.3 billion, on average, in 2019 values.