It is no secret that bureaucracy in Brazil has gotten out of hand. Simple administrative processes can often take on Kafkaesque proportions, with illogical requirements and mind-numbing delays. For instance, many documents in Brazil require “recognized signatures,” a process which entails queueing up at a notary office and paying a fee simply to attest to the veracity of one’s own signature. Such bizarre rules have slowed Brazil’s economic recovery, stifling the creation of new businesses and investment.

It is in this bureaucratic swamp that the Jair Bolsonaro has issued its latest provisional decree, the fancifully titled “Economic Freedom Decree,” promising to make things easier for new businesses and reduce red tape.  

The core provision of the measure is the removal of operating license requirements for “low-risk” economic endeavors. These businesses will now be able to be set up in record time and will have no limits on their operating hours.

</span></p> <p><span style="font-weight: 400;">Mr. Bolsonaro claims that the move is intended to &#8220;take the state off the backs&#8221; of producers, while Paulo Uebel, the special secretary of the Economy Ministry responsible for drafting the decree, claimed it will help the government &#8220;focus on what is essential,&#8221; referencing the </span><a href="https://brazilian.report/society/2019/02/11/brazil-preventable-tragedy-impunity/"><span style="font-weight: 400;">Kiss nightclub fire</span></a><span style="font-weight: 400;"> which killed 242 people in 2013, which caused controversy about operating licenses in the country.</span></p> <p><span style="font-weight: 400;">Crucially, however, the measure does not define exactly what &#8220;low-risk&#8221; activities are, suggesting that the government will regulate this in future. However, it is also likely that the federal administration defers to each individual state and municipality to establish their own </span><a href="https://economia.uol.com.br/noticias/redacao/2019/04/30/alvaras-licencas-empresas-mp.htm"><span style="font-weight: 400;">definitions</span></a><span style="font-weight: 400;"> of &#8220;low-risk,&#8221; which could cause a great deal of confusion. In general terms, however, government figures have given the examples of clothes shops, tailors, and shoe repair shops as &#8220;low-risk&#8221; endeavors. Startups are also set to be put under this umbrella.</span></p> <hr /> <style type="text/css"> #banner_news { padding: 10px; display: flex; flex-direction: row; align-items: center; margin: 20px 0; position: relative; cursor: pointer; } #banner_news .logo img{ float: left; width: 141px; margin-right: 40px; } #banner_news .titulo { font-size: 41px; font-weight: 900; line-height: 47px; margin-bottom: 7px; font-family: 'league_spartanbold' } #banner_news .subtitulo { float: left; font-size: 25px; font-weight: 900; line-height: 25px; margin-bottom: 9px; } #banner_news .texto { float: left; font-size: 16px; font-weight: 100; } #banner_news .botao img{ max-width:130px; } #banner_news .botao a { position: absolute; bottom: 10px; right: 30px; } #banner_news .logo { width: 22%; float: left; } #banner_news .botao { width: 20%; float: left; text-align: center; transition: .5s all; } #banner_news .conteudo { width: 58%; float: left; } #banner_news.branco .titulo {color: #72A7F8;} #banner_news.preto {background: #FDDC3D;} #banner_news.preto .titulo, #banner_news.preto .subtitulo {color: #2E2D2C;} @media(max-width: 760px) { #banner_news .titulo { font-size: 25px; line-height: 18px; margin-top: 15px; } #banner_news {display: block} #banner_news .logo {width: 25%; } #banner_news .conteudo {width: 75%; } #banner_news .botao {width: 100%;margin-top: 20px; } #banner_news .botao a {position: relative; bottom: auto; right: auto} } @media(max-width: 500px) { #banner_news .titulo { font-size: 18px; line-height: 18px; margin-top: 15px; } #banner_news {display: block} #banner_news .logo {width: 25%; } #banner_news .conteudo {width: 100%; float: none; } #banner_news .botao {width: 100%; } #banner_news.branco .titulo { font-size: 30px; line-height: 37px; } #banner_news .subtitulo { font-size: 17px; } #banner_news .texto { font-weight: 100; } } </style> <div id="banner_news" class="preto" onclick="location.href='https://brazilian.report/newsletters#botr'"> <div class="logo"><img src="https://brazilian.report/wp-content/uploads/2019/04/logo_mini_preta.jpg"></div> <div class="conteudo"> <div class="titulo">BRAZIL ON THE RECORD</div> <div class="subtitulo">EVERY SUNDAY</div> <div class="texto">The most important laws, decrees, administrative acts, and executive orders approved by the Brazilian government and published on the Federal Register (the Diário Oficial da União)</div> </div> <div class="botao"><a href="https://botr.brazilian.report"><img src="https://brazilian.report/wp-content/uploads/2019/04/more.png"></a></div> <div class="clear"></div> </div> <hr /> <h2>Authorization by default</h2> <p><span style="font-weight: 400;">Another key point of the decree is the introduction of so-called &#8220;tacit authorization&#8221; for other companies. This means that when a request to open an economic activity is submitted, the corresponding authority is given a deadline to grant or deny the application, if it does not respond within the allotted time, the license is automatically approved. This new feature is available for all companies, bar those of &#8220;justifiable risk,&#8221; another concept left undefined by the decree.</span></p> <p><span style="font-weight: 400;">This loosening of licenses will also apply to environmental permits, but not to the same extent. Instead of the &#8220;tacit authorization&#8221; implemented for other licenses, once the deadline expires for analysis of an environmental permit, jurisdiction is passed on to a higher authority. For instance, once a municipal body is unable to respond to a case in time, it is sent to state officials, and so on.</span></p> <p><span style="font-weight: 400;">The decree also establishes the idea of binding decisions for licensing, the lack of which has long been a frustration for producers. Under the previous system, two nearly identical businesses could place similar license applications and receive different outcomes. In theory, this will now be done away with, as favorable decisions will be applicable to all similar cases.</span></p> <h2>At long last, Brazil goes digital<span style="font-weight: 400;">  </span></h2> <p><span style="font-weight: 400;">One of the most universally welcomed changes in the decree is the determination that digital copies of documents now hold the same legal validity as the original paperwork. What&#8217;s more, public and private documents which are digitized may have their original copies destroyed, providing the electronic version is intact.</span></p> <p><span style="font-weight: 400;">As this is a provisional presidential decree, it has taken immediate effect and licensing changes are already being implemented. However, it differs from a standard decree in that it will need to be approved by both chambers of Brazil&#8217;s Congress within 60 days, otherwise, it is no longer enforceable.</span></p> <p><span style="font-weight: 400;">Members of Congress may also suggest amendments to the measure, meaning it will be another test of the government&#8217;s political capital in the legislative branch. One provision which may be removed is the scrapping of the Sovereign Wealth Fund of Brazil, a state-owned fund set up in 2008 to invest in non-commodities. The measure is what is known in Brazilian politics as a &#8220;</span><i><span style="font-weight: 400;">jabuti,</span></i><span style="font-weight: 400;">&#8220;</span><span style="font-weight: 400;">[1]</span><span style="font-weight: 400;"> which is a provision completely unrelated to the main legislation that is sandwiched in at the last minute, as a deceptive maneuver. Last year, former President Michel Temer tried to get rid of the Sovereign Fund as part of a decree of his own, but it was voted down in Congress.</span></p> <p><span style="font-weight: 400;">You can read more about this provisional decree in our weekly newsletter, Brazil on the Record, where we take an in-depth look in all of the official government acts published on Brazil&#8217;s Federal Register.</span></p> <hr /> <h5><b><i>Footnote</i></b></h5> <p><span style="font-weight: 400;">[1]</span> <i><span style="font-weight: 400;">Jabuti </span></i><span style="font-weight: 400;">is the Portuguese word for tortoise. The political meaning of the term was made popular in the 1960s by Ulysses Guimarães, one of the most important Brazilian politicians of the 20th century. As the expression goes: “</span><i><span style="font-weight: 400;">jabutis</span></i><span style="font-weight: 400;"> don’t climb trees. If there is a </span><i><span style="font-weight: 400;">jabuti</span></i><span style="font-weight: 400;"> up a tree, it means somebody put it there.” What did Mr. Guimarães mean? Whenever a law is approved containing one or many amendments that deviate from its original scope, the same logic is applied: if this unusual provision is present, it means someone put it there—and is probably going to gain from it. In Brazil, members of Congress have made a habit of including </span><i><span style="font-weight: 400;">jabutis</span></i><span style="font-weight: 400;"> in bills labeled as “urgent matters.” They are voted as soon as they are presented to the House floor and are under far less scrutiny from their peers.

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