Imprimir Republish

regional conference

São Paulo proposes new research incentives

Researchers, scientists, businessmen and parliamentarians ask for the implementation of a fiscal policy to stimulate company investments in innovation

Brazil must take urgent measures to overcome its technological backwardness that compromises its development and its competitiveness. It needs to stimulate investments in Research, Development and Innovation (R,D&I). Today’s research activities, concentrated in the universities, have also to be inserted in companies. This challenge demands the implementation of policies of fiscal incentives and government support. This evaluation, endorsed by businessmen, parliamentarians, researchers, journalists and representatives of the universities and research institutions, was the focus of the debates at the Regional Conference of Science, Technology and Innovation of the State of São Paulo, which took place at the Legislative Assembly on the 16th and 17th of August.

The conference had as its objective the discussion of São Paulo priorities in this area and to prepare the state’s contributions for the National Conference that the Ministry of Science and Technology (MCT) and the Brazilian Academy of Sciences will be holding in Brasilia, between the 17th and the 21st of September with the ambitious program of defining a scientific and technological policy for the next ten years. In São Paulo, as well as in the other regions of the country, the debates have centered around five proposed major themes: Advancement of Knowledge, Quality of Life, Economic Development, Strategic Challenges and Institutional Challenges. “This is a strategic debate on the future of the country”, stated the secretary of Science, Technology and Economic Development of the State of São Paulo, Ruy Altenfelder Silva.

“The challenge to transform knowledge into wealth will only be possible with official support and by facilitating the involvement of companies in the activities of R&D”, said Dr. Carlos Henrique de Brito Cruz, the president of FAPESP and one of the debaters on the theme of S,TeI and Development, coordinated by the journalist Roberto Müller Filho, of the economic newspaper Gazeta Mercantil. Brito reminded those present that it was a very successful fiscal incentives policy which allowed South Korea to expand its economy and to widen its participation in the world market. While today Brazil has only 11% of its scientists and engineers working in companies and 89% in universities and research institutions, North Korea has 54% of these professionals in the private sector. “What is needed is to create a less hostile atmosphere for companies to invest in R&D”, he completed.

In the developed countries, companies play a fundamental role in the implementation of applied research, always supported through official subsidies. Brito referred to the Buy American Act, a North American law that gives preference to national companies in government purchases. “The United States dedicates US$ 25million per year towards this”, he emphasized. In Brazil, the situation is different. Gilberto Câmara Neto, a researcher at the National Institute of Spatial Research (Inpe), reminded those present that the government contracts only 10% of its satellite projects through Brazilian companies. “The space program should be an instrument of industrial policy, giving preference to national industry in this strategic sector, as occurs in the developed countries”, said Câmara, guaranteeing that more than half of what is contracted abroad could be purchased here.

The lack of an incentives policy has its price. Here the private sector is responsible for, at the maximum, 36% of the total of the amount spent in R&D, while in the countries of the Organization for Cooperation and Economic Development (OCDE) the average percentage is 70%. In the United States, the government pays for close to 40% of the total spent on applied research and development, though it carries out only 10% of the activities relates to the costs: 90% are done by companies. Tax breaks for investment in research are as high as 30% in some countries while in Brazil it is only 5%.”We need to reverse this situation”, points out Brito.

Fiscal incentives
In the rules of international commerce, there are no impediments for the implementation of policies to give incentives towards investments in R&D in companies. José Augusto Correia, of the Technology Department of the Federation of Industries of the State of São Paulo (Fiesp), emphasized that subsidies for innovation is one of the few that cannot be punished by the agreement of the World Organization of Commerce (OMC), signed by 142 countries, that allows this assistance to reach as much as 75% of the research costs.

Brazil also has an Incentives Law for R&D, No 8,661/93. However, it accounts for only 2% of the total value for tax breaks as an incentive to research, development and technological training in companies, which, last year, summed up R$ 1.55 billion. Two thirds of this total resulted from the Information Technology Law (8,248/91), one quarter is the fruit of the law specifying the Manaus Free Trade Zone (8,387/91) and 5% is for the laws which give incentive to the importation of research equipment (8,010/90 and 8,032/90).

Law 8,661/93 was inspired in legislation similar to that adopted by countries such as Canada, the United States, France, Japan and South Korea. Between 1995 and 1998, the total of the subsidies conceded by law 8,661 had grown almost 250%, to the point of increasing the participation of technology investments from 0.8% to 1% of the Gross National Product (PIB), according to José Miguel Chaddad, the executive director of the National Association of Research, Development and Engineering of Innovative Companies (Anpei). In 1997, however, the incentives were reduced to 4% of corporate income tax (IR), and the law also started to incorporate subsidies of the Worker Support Fund (FAT). The results, during this period, were just R$ 33.7 million.

Both Anpei, the institution responsible for the implementation of law 8,661/93, and Fiesp consider it a priority to recover and even increase the percentages doled out by this law. Anpei is proposing that a deduction of 15% on income tax is established for all expenses with R&D, the amount leaping up to 25% in the Center-West, North and Northeast regions, and also the exemption of the Tax on Industrialized Products (IPI) on material destined for technological research in companies, the absence of taxation on importation and a reduction ofother taxes applied to imported goods and servicesdestined towards technological research.

Anpei also suggests the creation of incentive mechanisms that stimulate innovation in companies that don’t pay income tax, such as the case of the majority part of small size organizations, and the deduction, in double, of expenses with masters and doctorate courses for employees, among other measures. Chaddad even proposes the simplification of the process of incentive concessions; the certifying of the companies; the opening of lines of credit for the financing of the acquisition of machinery, equipment and apparatus for R&D activities; non-pay-back loans for cooperative projects; and the creation of a national technology agency.

Innovation Law
Rui Quadros, a professor at the State University of Campinas (Unicamp) and the assistant coordinator of the National Conference for Science, Technology and Innovation, highlighted the point that one of the MCT’s priorities is the approval of an Innovation Law to protect intellectual property and for the transfer of technology, to stimulate the mobility of researchers from the public sector to the private sector and for the formation of venture capital. Changes in the Law of Auctions And Bidding is also being studied, as a way of making more flexible the participation of technology companies in public bids and to allow government hiring of research jointly with companies.

Nevertheless, from the perspective of the Federal Tax Revenues Office, fiscal incentive is a form of tax evasion, as reminded Gerson Ferreira Filho, of the Secretary of the Government of the State of São Paulo. “However, if we are thinking of coming out of the level of 1.2% of the GNP destined to R&D, and to hit possibly 2.5% over the next five years, we need to allow a share of incentives for application in R&D to be accessible to any company, and not just to industries or agro-industries that have an approved Technology Development Plan”, he suggests.

For example, these measures should include the authorization for corporation that have shares on the Stock Market to issue a class of shares or bonds directly linked to investments in R&D. The companies with payable income tax could set aside a slice of this money to the purchase of these new shares, for a determined period. Quadros further recalled that the participation of the municipalities in the effort of development, not contemplated in the Constitution of 1988, would be another possibility for the support of innovation technology, and commented that the Law of Fiscal Responsibility should be used to oblige the States to pass on to the Research Support Foundations the percentages required in law. “There would be more than R$ 300 million every year for Science and technology.”

Among those participating in the debates, there was a consensus of opinion on the necessity of creating instruments for the systematic evaluation of the level of corporate investments in R&D. For example, at Unicamp a virtual institution to study the impacts of Science and technology on society is already being created, according to the announcement by the ex-rector Carlos Vogt, currently the vice-president of the Brazilian Society for the Progress of Science (SBPC).

This virtual institute intends to carry out a mapping of the Brazilian business structure, evaluating the growing segments, those that have stagnatedand withered, and also to analyze the tendencies of fragmentation, concentration and the mortality of companies, as well as the productivity processes, the labor profile in each sector and the modifications in the Brazilian job structure. This data will be crossed with an analysis of the investments in technology, the registration of patents, and imports and exports in every sector.

Small companies
The debates also emphasized the importance of research foster in the private sector be directed with priority towards the small and medium companies. “In Brazil, the participation of small companies doesn’t reach 25% of the GNP and 2% of exports. We have to expand this relationship adding value to the products of these companies through a stimulation in innovation”, said the superintendent director of the Support Service to Small and Medium Companies of the State of São Paulo (Sebrae-SP), Fernando Leça, who participated in the round table on The Support towards Innovative Technology, coordinated by the journalist Luís Nassif. He highlighted the importance of high technology companies incubators, as well as the innovation stimulation.

In the State of São Paulo, Sebrae is participating in 35 of these incubators that are housing some 400 start-up companies and 1,650 work centers.Sebrae-SP which is a partner with FAPESP in the Company Research Program, further suggests the elaboration of a large program of innovative technology for the next five to ten years, bringing together FAPESP, Fiesp, universities and other organizations, as well as the creation of technology centers for the priority areas of government policy.

The potential for innovation by small companies can be demonstrated by the results of the Small Business Innovation Research (PIPE) and of Partnership for Innovative Technology (PITE), implemented through FAPESP. According to José Fernando Perez, the scientific director of the Foundation, with support, small companies develop technologies as diverse as a vaccine that prevents the poor formation of eggs, to a piece of software for the recognition of characters, national biotechnology for the production of human insulin, as well as two projects for the development of fuel cells. One of the companies supported through PIPE – the AsGa Microeletrônica – will reach this year R$ 100 million in income, almost 19 times its result achieved in 1997.

Two other FAPESP programs were presented with examples of projects in strategic areas, with wide applicability, which have generated expertise and are already expanding throughout all of the country: the Genome and Biota programs. The Inovar Project, brought up at the conference by Mauro Marcondes Rodrigues, the president of the Financier of Studies and Projects (Finep), is also an example of initiative directed towards the broadening of private investments in Science and technology. The project stimulates venture capital in the country through the selection of the more promising projects and by the organization of an incubator with venture capital funds.

The challenge of education
Data such as the average schooling of Brazilians, at 6.1 years of study as against 9.5 years for Mexicans and 10.4 years for Chileans, make clear that education is one of the main challenges for technological development. In the opinion of Hermano Tavares, the rector at Unicamp, Brazil needs to overcome its backwardness, above all in the area of college education, and to invest in what he calls anticipation capacity. “Studies pointout that the demand for places at university will double over the next seven to ten years”, he says, reminding that it is necessary to create the structure to absorb this population.

He was one of the debaters on the theme The Path to the Future, coordinated by the State parliamentarian Célia Leão, who presides over the S&T and Education Commission of the Legislative Assembly of São Paulo. In Brazil, he revealed, of the 900,000 openings at colleges, 750,000 are in the private sector. He then concluded with the words, “If we want to think about the educational future of the country, we have to take into consideration the private network.”

The structure and legislation of universities was also under discussion at the symposium Institutional Challenges, coordinated by Ivan Chambouleyron of Unicamp. “The private university has much more space for innovation than the public”, said Nina Ranieri, of the University of São Paulo (USP). The law of Directives and Bases (LDB), it was said, made the public university more flexible, but created a paradox , by recognizing its special judicial statute, still not regulated, and yet not securing clear commitments to its financing. “It is difficult to define new paths within the present judicial framework”, she added. “The private university has the same autonomy, administered, however, by the desire and liberty of hiring”, she compared. The creation of new structures to attend to new challenges depends on the definition of a special legal framework, concluded the specialist.

Structural and institutional difficulties also compromise the performance of research institutes. Guilherme Ari Plonski, the director superintendent of the Technology Research Institute (IPT), in São Paulo, pointed to the difficulties that the researchers confront as a result of the instability of resources, the legal impediments in their application and of the low salaries offered to scientists. Plonski called attention to the necessity of a re-definition of the role of the research institutes, which must assume clearer and more relevant functions in the innovation process, such as operating portals into technology, bringing together cooperative networks, forming human capital and they should function as observatories capable of producing consistent information about S,T&I in the country.

The universities and the research institutes cannot move away from their mission to produce knowledge and to carry out Science. The president of the Brazilian Academy of Sciences, Walter Colli, made a passionate defense of the importance of basic Science. It is an error to think that basic Science is a luxury for a developing country, which by investing only in technology will take its people out of misery more quickly, because without good scientists a country will not manage to follow the understanding of the inventions done by others and to transform them into technology”, he stated.

He also highlighted that the two pillars of all of the ongoing biotechnological revolution are founded on two discoveries of basic research that did not appear at the time to have any practical application: the double helix of DNA discovered by Watson and Crick, and the transmission enzymes. “We need to graduate more engineers and scientists capable of developing products, but never to the detriment of basic Science”, Colli emphasized. He concluded by saying that the financing of basic research is an obligation of the State and applied research of companies.

Social development
The debates on Science, Technology and Innovation and the Quality of Life brought together specialists in health, violence, farming and the environment. The tables were coordinated by Marcos Macari, of the São Pauo State University (Unesp), and by Hernan Chaimovich, of the University of São Paulo (USP). In the area of Health, José Carvalheiro, of the Secretary of Health of the State of São Paulo, emphasized the need for dialogue between the scientific community and the representatives of the health care system at the various levels of government. In his evaluation, health is part of the system of S&T.

He defended a proposal for the creation of a specific fund for the sector,. However he has some misgivings about the idea of the structuring of an agency specialized in S&T in health. He observed that São Paulo, with the largest capacity installed for research into this area in the country, should be attentive to the division of resources if this agency were in fact to be implemented. “Brazil doesn’t have experience with specific agencies, and the collective health segment is studying the question with caution”, he emphasized.

Carvalheiro said that one cannot ignore, that of the US$ 60 billion that the public and private sectors destine worldwide to health, 90% are consumed by illnesses that affect only 10% of humanity. He pointed to the necessity of adopting methodologies that indicate what the priority in investigations is, not only from the point of view of frequency and of relevance of the illness, but of also the capacity built up in containing it. Marco Antônio Zago, of the University of São Paulo, emphasized that the mission of any plan for S&T in health is that of identifying action models and points of intervention with a multiplying effect. “The first step is to recognize the problems of better health education, of the formation of researchers in the area and of the planning of the administration of public health”, he stated.

Zago highlighted as well the importance of suiting the resources available with strategies of S&T that produce a high impact on health conditions of the population and on the economy. He mentioned, as an outstanding example, the importation of 225 million units of coagulation factor VIII for the treatment of hemophiliacs, obtained through the fractionation of plasma, a surpassed technology that consumes US$ 90 million annually, or 75% of the value available for the purchase of hemoderivatives in the external market. To mount fractionation factories in Brazil – which has an surplus of plasma sufficient to produce 165 million units a year and the appropriate technology, – there would need to be an investment of a little more than double the annual value destined to imports.The better alternative would be, therefore, national production based on technology today used by developed countries and based on recombinant DNA.

“A collaborative project with this objective, that involves four research centers, is receiving an investment of only R$ 3 million from Finep”, lamented Zago. Approaching the relationship between S&T and the quality of life, Sérgio Adorno, also from USP, dealt with the question of violence. In his understanding, S&T could contribute to the control of violence on three flanks: the construction of a system of criminal statistics at the national level, the formation of specialized human resources to confront the challenge of reforming the judicial system and the formation of a program dealing with research looking into the implementation of medium and long term policies.

S&T also has a predominant role to play in farming development. Raul Machado Neto, of the College of Agriculture Luiz de Queiroz, of USP, called attention to, for example, the fundamental importance of the systems of geographical location by satellite, of the accumulation of knowledge of national genetic resources such as the mapping of the animal andvegetable biodiversity, of the protection of species and of the rational managing of wild animals. Other topics touched upon by Machado were the necessity of offering to farmers alternative production systems which take into consideration ecological, social and economic values, as well as the potential of irrigation techniques.

Maria Inês Pagani, of Unesp, who dealt with the relationships between S&T and the environment, suggested that the MCT should group together some of the proposals of Agenda 21, such as, for example, the projects of environmental zoning; the recovery, revitalization and conservation of water basins and of their living resources; and studies on the spreading of technologies for the treatment and re-use of water. João Furtado, also from Unesp, underlined that the S&T policies must be economically self-sustaining and establish clear priorities to face competition between companies, institutions and countries in a scenario in which being rich depends more and more on information.

Sebrae and FAPESP prepare for a partnership in PEMP
In partnership with Sebrae-SP, FAPESP has created a new program to stimulate innovative technology. The Researcher in the Company (PEMP) is going to support, through scholarships, the carrying out of research projects developed in business environment, we might think about establishing similar agreements as well with the Confederation of Industries of the State of São Paulo (Fiesp) and with the National Confederation of Industry (CNI)” says José Fernando Perez, the scientific director of FAPESP. The new rules are still to be announced.

The structure of PEMP resembles that of the Small Business Innovation Research (PIPE). The difference is that Sebrae will finance the first six months of the program, the period in which the researcher must detail the research project to be developed in the company. Once the proposal is approved, it will be able to count upon a FAPESP scholarship for further eighteen months. The objectives of the PEMP are to stimulate the practice of research and to encourage innovation in São Paulo companies, to reconcile the efforts of applied research with company interests and to promote the hiring of people of high level for positions related to research and development in companies, among others.

According to Perez, the expectation is that the PEMP will as well generate a greater demand for the PIPE, whose main problem is the lack of researchers who understand the company environment. The PEMP will give out two types of scholarships – Researcher in the Company (PDI) or Scientific and Technological Initiation (IC) -, depending on the qualification of the researcher. The PDI will deal with recently graduated researchers with documented competence.Those with scholarships in category IC will also receive transportation assistance. The companies may also complement the researchers pay in such as way as to make them compatible with their market value.

Five regions debate Sicence, Technology and innovation
As well as São Paulo, simultaneously five other regions carried out Regional Conferences dealing with Science, Technology and Innovation. Scientists, researchers and businessmen of Rio de Janeiro and Minas Gerais, met in Rio, and showed their support for the proposed bill by senator Roberto Freire (PPS-PE) which authorizes researchers at public universities to carry out temporary work in private companies. It also points to the necessity of perfecting professional formation and of the expansion of the system of education at a distance.

In Florianópolis, representatives of universities, research institutes and businessmen from the southern states of the country proposed, among other measures, the regionalization of stimulating actions by the MCT and the creation of Centers of Excellence in Innovation and the Administration of Technology in various regions of the three states. Representatives from the states of the northern region meeting in Belém, suggested the drafting of a regional plan of action in S, T&I for the next ten years, the creation of an Amazon Fund for S, T&I and a mechanism for the fixed formation of human resources, as well as a Sector Fund for products from biodiversity.

Meeting in Maceió, scientists, researchers and businessmen from the northeastern states and from the State of Espirito Santo held up the qualifying of human resources as the main obstacle to the development of the region and suggested new strategies for qualifying the present human potential, which would favor the fixation of young talent and the formation of researchers.

In Goiania, researchers and businessmen from the Central-Western region demanded of the federal government the definition of a policy for the unequal regions and investments in the installation of research centers and they hope that the Sector Funds will create a regular inflow of resources for research and development in various areas of C&T.