Most Expensive Expat Destination in the World

Mercer brings out a reputed cost of living survey for expats once a year and this year, Brazil showed up prominently in the top positions:

10. São Paulo
12. Rio de Janeiro
34. Brasília

If you compare this to New York (33.), then this is quite an achievement. Expats in Brazil will surely agree with these rankings, especially when considering the positions the cities were in last year (21., 29. 70. respectively). Luanda in Angola remains the leader in 1st (1st in 2010 too).

Now what surprised me is the ranking of xpatulator: São Paulo in second, Rio in sixth and Brasília in seventh... talking about of expensive places to live in...

The World Cup and a Lack of Sense of Urgency

Yes, pretty it is, but will it be ready by 2014?
Source: Copa2014.org.br

The never-ending story: The World Cup. There is a current blog entry on veja.com.br, coinciding with this weeks cover story. Veja did a fairly simple, if simplistic calculation: How much has been spent so far, how much time until the World Cup, so when will the stadiums get done?

The answer: All but one will be finished AFTER the World Cup.

Stadium	Budget	Spent to date	Conclusion Run-Rate
Corinthians (SP)	R$ 1bn	Zero	Never
A. das Dunas (RN)	R$ 400m	Zero	Never
A. da Baixada (PR)	R$ 220m	Zero	Never
Maracanã (RJ)	R$ 957m	R$ 26m	2038
Arena Pernambuco	R$ 532m	R$ 60m	2025
Arena Amazônia	R$ 499,5m	R$ 30m	2024
Mineirão (MG)	R$ 666m	R$ 86,6m	2020
Nacional (DF)	R$ 670m	R$ 45m	2021
Arena (MT)	R$ 355m	R$ 48m	2017
Beira Rio (RS)	R$ 290m	R$ 30m	2017
Fonte Nova (GO)	R$ 591m	R$ 99,9m	2015
Castelão (CE)	R$ 519 milhões	R$ 80m	2013 (October)

Source: Veja Magazine

Is this likely? Probably not. Is this possible? At least for a few of the stadiums, it is starting to seem that way. Why so? Well, apart from a Brazilian lack of sense of urgency (which can drive the German author of this blog mad at times), aparently, there have been some problems with planning. The Brasilia stadium, for example, was planned without grass, seats and illumination (so it will cost more). In the Maracana stadium, the construction company found that the concrete structure was rotten only after tearing out the seats (what a surprise, considering the stadium was completed for the 1950 World Cup on the run and probably not much has been invested since - also here, more will be spent... and it will take a wee longer).

The blog is worth a read, and the issue is worth buying, as it also contains a bunch or pretty pictures of what stadiums should not look like three years before the cup... The first part of the solution will probably be to throw so much money at the construction, to get them finished on time. This has worked in the past: The 2007 Pan American Games were suffering from the same problem, until the government decided to "invest" a bit more in the last six months prior to the games. The result: An overspend of R$3.6bn - instead of R$400m, the cost went up to R$4bn. The second part of the solution will be to reduce the amount of venues from twelve to... 8 or less. Bookmark this page. I am betting on the exit of Manaus, Natal and Curitiba - and Sampa will not host the opening game.

Now, the only question (apart from the many above) is: Where will the 2013 Confederations Cup be held? Oh, and let us not talk about airports this time...

P.S. There even is an official (?) site or the Itaquerão (São Paulo Stadium depicted above): http://www.itaquerao.com/  - But the bandwidth has been exceeded... so Error 509 for you...

1000km of traffic jam... every day

Lies, nothing but lies...

(Picture by: Mariordo Mario Roberto Duran Ortiz/Leticia Ferreira)

I just read that in 2010, Germany had a total of 400.000km of registered traffic jams. I am not really sure how those were computed, but I assume they took the maximum length per occurence. This would then amount to a total of 1095km per day. The automobile club ADAC, the voice of all German drivers, advocates building more and better streets, claiming the situation to be unbearable.

Clearly, nobody from the ADAC has ever been to São Paulo. On any single day at any single time, please feel free to visit the website of Apontador/Maplink, which, in a partnership with the Radio Station Sulamerica (specialized in traffic reports and affiliated to the insurance broker ING), will show you a picture that would make the Germans gasp.

On a normal day, before and after rush hours the website will register between 150 and 200km of traffic jams. In the mornings and evenings, the length can easily double. So, if we take morning, noon and evening as separate incidents, we also get 1000km of traffic jams a day... just in the metro area of São Paulo.


Personally, although I don't feel that way, I can be considered lucky: I have a 33km commute and it takes me 45-60min in the morning and 60-70min in the evening, putting my average speed at about 35-40km/h. The average in São Paulo is below 20km/h. The reason for my "luck" is that of my 33km, I have 29km on 2-4 lane expressways and drive against the flow (I live in town and work outside). Nevertheless, awful situations occur: A few weeks ago, like every morning, I left home at 6:25 - and I arrived at work at 10:40...

Time Magazine ran this nice article a few years ago, and every single word is true. Recently, I had a meeting scheduled for 9:00 on Avendida Paulista (downtown) and I live in the southern zone, ca. 18km away from there. I decided to play it safe and left home at 7:30. At 9:00 I was sitting inside a McDonald's, reading a newspaper and sipping a cappuccino after calling to the meeting and telling them I could not make it (nobody was upset, everybody understood the reason). I had simply given up

Why all of this? Road infrastructure is a mess, public transportation is not even close to adequate (I have seen small towns in Germany with a subway network of similar extension to the one in Sampa) and the amount of cars is amazing. The city of 11m people of has a total of 7m registered vehicles, of which 5.1m are passenger cars... and 1000 additional ones are added every day...

Now official: Airports will not be ready for the World Cup

Reality today... and in 2014... and in 2016...

The renown (governmental) institute IPEA has now confirmed what most realists have known for a while: The airports will not be ready for the World Cup in 2014. Notable exemptions are Curitiba and Tom Jobim in Rio.

While the Minister for Civil Aviation (a brand new ministry) Wagner Bittencourt still claims that the timeplan is "adequate", he seems to be in denial, ignoring the IPEA data.

Experts have long advocated the privatisation of the airports to ensure that infrastructure grows ahead of (or at least with) deman - but the government remains stubborn that airports remain a national interest and thus must be state operated. Now it is too late...

Of the 13 airports under construction and modernisation, 9 will not be ready by 2014... among these the unimportant Sampa Guarulhos, Salvador and Brasília. And what is worse, these will not be ready for the 2016 olympics (Only Porto Alegre and Belo Horizonte will be) - so do not plan any extensive travel outside of sporting events in 2014 or 2016.

This blog, as one of many sources, has repeatedly highlighted that there is a huge risk of the aiports, most specifically Guarulhos not being ready for the World Cup 2014, nor the Olympics in 2016. And this is not only based on other news sources or what I hear and read. I fly in and out of Guarulhos at least once a month and just recently signs have gone up announcing the modernisation and expansion of the security area and passport controls... Unfortunately, as in many cases, it will take a long time until something starts happening - but the renderings on the posters look nice.

Oh, and to add to the troubles, the Itaquera Stadium in Sampa, which apparently should host matches during the World Cup (if they ever get construction started), will not be ready for the Confederations Cup in 2013.

And I will not even get started on any bullet train discussion - this is just sad.

World Cup Troubles

Let Us Hope there are no second thoughts about this

To make it quick: The 2014 World Cup is in trouble. A report to be released these days (today?) will put a green light on the stadium construction of Belo Horizonte. Full Stop. All other stadiums will receive a yellow light for progress - except for Natal and São Paulo, where construction hasn't even begun. To be honest, I still do not know where and how the São Paulo stadium should be built.

The second part of the bad news is that almost all infrastructure to support the world cup (airports, roads, subway, etc.) will receive at least a yellow light. The "grand plan" for São Paulo is expected to be to block all access roads to and from stadiums and major hotel districts to allow soccer fans to get to and from the games - killing off the rest of the city.

The third part of the bad news is that, contrary to initial official news, almost no private money will be used for infrastructure and stadium construction. The required money is estimated to be a total of ca. 10 billion Euros, of which 7.2 billion Euros alone are for airport infrastructure projects. The available 147m EUR from the private sector are from soccer clubs used to build or refurbish their own stadiums. In other words, the tax payer will pay for 98.5% of the cost. Good job.

The fourth part of the bad news is that the world cup will be in roughly 1200 days.

The fifth and final part is that at least six stadiums with infrastructure need to be ready in 835 days - for the confederations cup...

EDIT AND UPDATE: Since last year, costs for stadium construction have already gone up, on average, by 57% according to AFP. Top cost increases were registered in Salvador, at 170%.

Top executive salaries are paid in... São Paulo

The Economist, January 27, 2011

This week's The Economist is running an article on a market study on executive pay. In Brazil, specifically, São Paulo, pay is highest, with generous bonuses to boot - coupled with extremely high taxes, this makes hiring executive professionals daunting. Even without the real valorization, São Paulo is an expensive place to hire top-execs, when you get them.

In addition, a befriended Blog (Expat American in Brazil) confirms what I have also noticed: Scarce local labor (especially on a high level) is starting to make an export of labor from other countries an option - in addition to trying to get Brazilian Expats abroad to return to Brazil.

Recycling Paradise

According to one number, the citizens of the city of Sao Paulo produce 17.000 tons of trash every day. Other estimates put the garbage at up to 3.5kg per capita per day, a whopping 40.000 tons.

Regardless of the exact amount, a mere 1% of this gets recycled, compared with 23% in Curitiba. Cities in Germany have a minimum of 35%, most much more.

One would think that there are not enough incentives for this, right? I do not think so. Thousands of people make a living, collecting recyclable waste and bringing this to cooperatives that re-process the material. Usually, these are very poor people that pull their carts, paper and plastic piled high - more fortunate drive around with ramshackle cars and trucks, collecting what they can. And the returns are not so bad. Carton sells for R$0,50, Clear plastic for R$1,00 and Aluminum for up to R$3,00.

Let's do the math. Assuming Sao Paulo could elevate the recyclingquote to 20%, at least 3400 tons per day would be recycled - 1.2m tons per year, at a value of at least 620m BRL.

And while I do this math, Sao Paulo is forced to export trash, as all city landfills are full and the only incinerration plant IN THE COUNTRY is still in construction.

I smell a pretty solid business plan. (no pun intended)

OHMYGODITSRAINING

The title is probably offensive to some, but I just was treated to a piece on the news channel Globo News about how the rain caused all these horrible mudslides in Rio with all those deaths.

I am in Brazil for in the third year and I do recall hearing the same in the past. Thanks to google news, I can check if I am halucinating. A search for "chuva deslizamento", classified by date brings up, in no particular order, a few news articles:

• January 2007
• January 2008
• January 2009
• January 2010, lots of em, no search required

And, what should be done about it? Right: an alert system for natural disasters is supposed to be set up within four years. I wonder what that is supposed to be good for? According to CBN radio, about 150.000 people live in endangered areas in the city of Sao Paulo alone. A bit of proper planning and zoning would surely help - but that probably requires too much... well, planning - and does not make up for some nice emergency government meetings.

And don't think that it is only the poor getting affected. I currently have a view on a pending disaster in my back yard. The first picture is from December 18 of last year - observe the last site which carved out a piece of the hill.

And now look at the picture below, taken last week.

It probably would be a good idea for somebody from the city to take a look at the site - in the interest of those living in the 24 floor building on top of the hill.

Whatband?

Now this is an interesting fact, retrieved from speedtest.net - I am pretty sure that it is not representative, because it only tallies speedgeeks - but if we compare speedgeeks to speedgeeks around the globe, Brazil, which is the 9th largest economy by GDP by PPP (right behind France, Russia and the UK), is still far behind in terms of technology.

Especially if I consider, that today it is possible to get 50mbit broadband in São Paulo (albeit for a fortune), this shows the level of technological inequality in the country. In Latin America, Brazil remains in second, behind Chile (which fits to the GDP/head picture) but on a global scale, 65th place is pretty nasty...

Logistics Backlog

For those of you who can read Portuguese, here is the article on the backlog in Santos.

As mentioned several times already, infrastructure is a massive problem in Brazil. Especially with the economy hot as it is (growing at 7-8% in 2010), infrastructure is starting to crack at the edges.

The delay of 15 days or more for ships to get into Santos, the main Brazilian port, has been commonplace since the beginning of the year. Once ships do arrive, it takes another 10 days to get the container out of the port and to your warehouse (if this is in the São Paulo metro area). The view is pretty spectacular (not to say frightening for logistics managers) looking out from an airplane flying over Santos to São Paulo - you can see ships lined up for dozens of kilometers, waiting to be let in.

I see it at my company and several of my suppliers, as we import a fair amount of raw materials from Europe, NAFTA and China. We have already also tried alternative ports, but the major ones in the south, such as Paranaguá and Itajaí are not much better and similarly clogged.

The situation is very similar at airports. It has become fairly common for cargo to get lost at Guarulhos (São Paulo) airport. Recently returning from Argentina, our plane had to park at an outside position (Guarulhos passenger load is at 120% of capacity, another problem...) and we took the bus, driving by the cargo terminal - containers, boxes, crates and drums all over the place - I am surprised that we are getting anything by air at all... Leadtimes for airfreight have also gone up - it takes, on average, 10 days to get a slot for an airshipment to Brazil, and as most of the freight goes through São Paulo (some goes through Campinas-Viracopos), there are few alternatives.

No World Cup in Sao Paulo?

In the middle of the world cup of South Africa, the Fifa has announced (rather quietly) that the Morumbi stadium in Sao Paulo and surrounding infrastructure is not suited for a world cup game...

This does not really come as a surprise - during a game I recently saw in the stadium, I was afraid parts of the ceiling would come down and I walked for 10 minutes to find food that went beyond dry popcorn.

But I am sure there will be some "jeitinho" to find an alternative - maybe they can build a new stadium?

The picture above shows a (poor) design that was planned to "pimp" the stadium for the world cup...

New Consumer Capital of the World

Ok, I am exagerating a bit, but I dug up this great  NY Times article which highlights the ascent of millions of poor in Brazil into the middle class. It is from 2008, but things have just gone uphill since then...

You can call the Brazilian president Lula a populist, but his assistance programs have changed the lives for millions, indeed. By some estimates, over 30m have moved from the poor classes into the so-called "C-Class", which is the Brazilian middle class, where people have access to FMG, holiday trips, cars and their first own home.

And if I look at the last part, depending on how well policy is maintained, we may be looking at a serious real estate bubble in some parts of Brazil (São Paulo is probably a good bet) in the near future...