Building the Nordesfe

Brazil's government is willing to offer most anything to help in the economic development of the country's impoverished Nordeste--or Northeast--area, a territory more than twice the size of Texas where some 26,500,000 people have a per capita average income of $140 a year.

The government itself has spent millions on Nordeste roads, irrigation and other projects. Under Brazilian law, individuals are offered exemptions of up to 50% of their taxable incomes for investments in Nordeste communications, farming and industrial projects. So anxious is the government that corporations are allowed to take half of their tax debts, invest the money in the Nordeste. What with other government sweeteners, including long term, very low interest loans, it is quite possible to set up a $1,000,000 Nordeste enterprise with only $50,000 cash.

So far, Brazilian investors have not taken full advantage of the situation, but foreigners are showing a lively interest. Willys-Overland, 38%-owned by Kaiser Industries, two months ago began assembling Jeeps near the Nordeste city of Recife, where Kelvinator is already building refrigerators. Firestone plans an $11 million tire plant and Italy's Pirelli is building a wire and conductor factory. Other European groups are setting up ventures in canning, batteries and cement forms. Last week the U.S.-backed Inter-American Development Bank chipped in $29.5 million to help finance a $79 million expansion of the Paulo Afonso hydroelectric plant on the San Francisco River in the Nordeste.

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