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Brazil Strives to Tempt Settlers to a 'Silicon Valley'

The South American nation launches a program to boost its global software market share to 1 percent by 2000

RESIDENTS of seaside Florianopolis like to call software developer Paulo Guimaraes ''our Bill Gates.''

The 35-year-old former motorcycle racer and founder of a software company here, has won prizes for his ground-breaking inventions, including an infrared wireless communications system he hopes to sell to Chicago's commodities market.

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Mr. Guimaraes, who studied computer science in the United States, is one of several up-and-coming entrepreneurs who local officials say are turning this picturesque island resort into a South American Silicon Valley.

''We know it sounds like a dream,'' says Rodolfo Pinto da Luz, director for computer development of Santa Catarina state. ''But we have the talent and the will to become a Brazilian Silicon Valley.''

Several up-and-coming software firms are located throughout the state. But it's new software haven, dubbed ''Tecnopolis,'' is here in Florianopolis.

Today, Tecnopolis is home to only 50 employees, with one completed building -- a fiber optic telecommunications company -- and another under construction. But 12 Brazilian companies and a German software firm called Baden-Baden have bought lots and are expected to begin construction soon.

''The combination of Florianopolis's beauty and state incentives will lure many companies here,'' predicts Neri dos Santos, Santa Catarina's secretary of state for science and technology.

Those incentives include $3 million in infrastructure, selling land at 10 percent below the market value, easy credit for research projects, and property- and excise-tax exemptions.

Moreover, small firms without sufficient capital can qualify to use the ''incubator,'' a mini-industrial park that provides hefty discounts on laboratories, equipment, business services, phones, and even the omnipresent ''cafezinho,'' or little coffee, delivered by uniformed waiters. Industry experts say this will help reduce the industry's two biggest problems here: poor management and lack of capital.

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Softex 2000

Currently, a national incentives program called Softex 2000 aims to boost the nation's global software market share to 1 percent by the end of the decade. Brazil's current $1 billion industry makes up only 0.5 percent of the world market. United States companies have captured an estimated 50 percent.

Softex 2000 hopes to create 200 software companies and 50,000 jobs in 14 urban areas, or ''poles,'' including three in the state of Santa Catarina.

Despite the generous incentives, state officials have had problems wooing international firms. Foreigners are wary of a return of Brazil's chronic inflation, even though the new President Fernando Henrique Cardoso's current economic plan has tamed it. Other causes for concern are a lack of enforcement of copyright laws, existing tariffs, and the federal government's infamous red tape.

Attracting US companies

To date, officials here say representatives of IBM Corporation, Apple Computer Inc., Microsoft Corporation (chaired by Bill Gates), and Olivetti, based in Ivrea, Italy, have visited Tecnopolis and expressed interest. John Andara, owner of the Miami-based Zyx Corporation, says he will relocate if state officials fulfill their commitments. But he says he doubts other US firms will follow without a fundamental change in Brazil.

''It's painful to do business in Brazil. It's so bureaucratic,'' he says. ''The Brazilian market is one-twentieth the size of the one in the United States, with 500 times the nonsense.''

Mr. dos Santos argues that those days are ending. A Mercosur agreement (a regional free-trade zone between Brazil, Argentina, Uruguay, and Paraguay) will lower tariffs on imported computer items to 16 percent by 2006. And he says President Cardoso will continue to open the economy to the world market to lure foreigners and make Brazilian companies more competitive.

The idea of creating a Silicon Valley South began in the early 1980s, after a local university professor named Fernando Macondes de Mattos convinced local officials that high-tech developers in San Jose, Calif., and Florianopolis, had much in common: a large pool of qualified workers, and valuable support from local universities. As a result, state officials made several trips to the Silicon Valley and returned determined to attract software developers.

Next, the government bought land for an industrial park on the outskirts of town and dubbed it ''Tecnopolis.'' Then it began a fierce marketing campaign to lure top international and national companies, highlighting Florianopolis's small population (270,000 inhabitants) 42 beaches, three scenic bridges, low crime rate, and its strategic location as a hub for Mercosur.

Included among Santa Catarina software firms are:

r Cianet, refining a hardware and software system that guarantees high performance at low speed for computer networks. IBM is reportedly interested in buying or marketing the product.

r Step, finding a market for its software for TV teleprompters, which allows journalists to make last minute changes more easily.

r Gyron, developing a robot-driven mini helicopter that can fly to otherwise inaccessible areas, such as the Amazon jungle.

r Datasul, exporting business management software to the US, Mexico, and South Africa.

Yet without a doubt, the state's star is Guimaraes.

In 1986 he founded Compusoft and was on the verge of bankruptcy before launching his first successful invention: a device that compresses four data lines into one, reducing communication costs by 75 percent. Today, most of Brazil's major banks, airlines, and car companies use his product.

Last year, Guimaraes introduced his infrared communications system called Papyrus, which receives and transmits data via a hand-held computer and can be used by 2,000 people at a time. It is currently being tested by the Sao Paulo stock market and studied by the Chicago commodities market. Both markets are attracted by the device's ability to eliminate the use of paper on stock exchange floors. If Papyrus proves successful, Compusoft sales are expected to double from $8 million in 1994 to $16 million this year.

Guimaraes's most recent invention is a virtual reality helmet, which allows the user to simulate flying a 747 airplane or skiing down an Alps slope by simply changing the software. ''Bill Gates will want to make software for this,'' he says, grinning.

With such innovative products, Brazilian companies are slowly making inroads into the domestic market now dominated by foreign firms.

''We can't compete in hardware, but software is a great opportunity for a developing nation,'' Dos Santos says. ''All you need is a brain and a computer. It's our big chance.''

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