Bahia is without a doubt one of the most important tourism destinations in South America with its numerous attractions and pleasant climate throughout most of the year. Beaches, islands, rivers, caves and mountains are just a few examples of the many landscapes of this land, which is known for its great cultural diversity. Extensive conservation areas, delicious local cuisine and a wealth of folk traditions are other elements that make the state even more attractive to visitors.

A public administration committed to prioritizing tourism development, divided into teams responsible for planning, structuring and marketing the state’s main tourism zones, as well as for training and quality control of tourism services, make Bahia the ideal place to implement accommodations, service and leisure undertakings.

As a state with a great vocation for tourism, Bahia opens its doors to investors through SUINVEST, the Superintendency of Investments in Tourism Development Zones, a department of the Secretariat of Culture and Tourism, which is responsible for overseeing development projects and receiving new investments.

Bahia is already established as a tourism destination, as can be seen by the increasing number of visitors from all over the world.

The right place to visit, the right place to invest!

■ Location

■ Regular international flights to Salvador

Bahia currently receives 20 regular international flights per week originating in five different countries.

During the high season, especially during the Bahian summer from November to March, the number of flights increases substantially with the arrival of numerous charter flights.

Source: Bahiatursa, June 2004

■ Passenger movement at main airports

Strategically located and equipped to handle aircraft of a variety of sizes, the airports in Bahia’s Tourism Development Zones are important gateways for both national and international visitors. The chart below shows the annual passenger statistics at the state’s main airports, from 1997 to 2004.

Bahia – Passenger movement at main airports

Source: INFRAERO, 2004

(*) The Lençóis Airport began operations in July 1998

(1) International Airpt

or(2) Domestic Airport

■ Infrastructure

Joint efforts between the government and the private sector are contributing to the development of Bahia’s service and tourism infrastructure, whose quality standards are comparable to those of large urban centers worldwide.

Through the Tourism Development Program -- Prodetur –– and other complementary initiatives the government has been working to promote the consolidation of tourism in Bahia with the aim of satisfying the needs related to infrastructure, environmental preservation and tourism promotion. To this end, actions have been carried out to improve the state’s transport, sanitation and water distribution systems as well as urban development, environmental preservation and historic heritage, without overlooking safety, health, signage, tourism information, garbage collection and landscaping.

These investments, besides providing the state’s Priority Tourism Zones with the infrastructure necessary for the development of tourism, have helped raise the standard of living of the local population by generating jobs, improving roads and services, among others.

The graph below shows the total projected public investments until 2020:

Public Investments in Tourism Development Zones, 1991-2020

Source: SCT/Suinvest – August, 2005

In response to these governmental initiatives, the private sector has been investing in tourism. Today, Bahia is home to a wide range of companies and a hotel sector offering accommodations for all tastes and budgets, restaurants serving world famous Bahian and international cuisine, travel agencies, eco-tourism specialists and convention centers, among many others.

According to data from Bahiatursa, the Bahia Tourism Authority, the state had more than 168,000 beds in the year 2005.

The chart below shows the total projected private sector investments until 2020 according to information in the data bank of the Secretariat of Culture and Tourism – SUINVEST:

Private Sector Investments in Tourism Development Zones, 1991-2020

Source: SCT/Suinvest – August, 2005

■ Job Generation

Tourism is one of the economic sectors with the greatest potential to generate jobs since it involves a wide range of activities related to services for tourists – transportation, accommodations, restaurants and entertainment, among others. It is estimated that by the end of 2005 tourism will have generated over 90,000 direct jobs and 408,000 indirect jobs. By 2010 it is estimated that the number of direct jobs will increase to 121,000 while indirect jobs should reach a total of 546,000, assuming all projected investments are carried out.

In order to attain service quality standards comparable to other international tourism destinations, the government and other sectors involved in the Bahian travel industry have invested in staff training. To this end, the government has included professional and business training for municipalities in the state's Tourism Development Program (PRODETUR NE/II): Discovery Tourism Development Zone (including the Discovery and Whale Coasts), Salvador and Surroundings Tourism Development Zone (including All Saints' Bay and the Coconut Coast), South Coast Tourism Development zone (including the Dendê and Cocoa Coasts) and the Chapada Diamantina Tourism Development Zone.

Another important initiative is Qualitur – the Quality Certification Program for the Tourism Sector of the State of Bahia, whose main objective is to promote continuous improvements of Bahian tourism sector service providers. The program focuses on companies working in accommodations, transportation, bars and restaurants, travel agencies and operators which will receive, free of charge, consulting and training services in a variety of areas including quality control, nutritional safety and hospitality. The participating companies are audited by BVQI—Bureau Veritas Quality International, and those that achieve quality standards demanded by Qualitur earn the Program’s quality seal.

■ Tourism Statistics

Starting in the 1990s, a new phase in Bahian tourism was begun, with the structuring of the state's main destinations, the strengthening of the network of services available, preservation of the state's natural and cultural heritage, among other activities carried out by both the pulbic and private sectors. Thanks to these efforts, the State of Bahia gained greater visibility and became an important international tourism destination. The growth of the travel industry is borne out by the number of visitors who come to the state, attracted by its spetacular range of landscapes and cultural manifestations.

According to data from Bahiatursa – the Bahia Tourism Authority – the total number of visitors to the state increased from 3.6 million in 1997 to nearly 4.9 million in 2004, a 34% increase over a period of 8 years. In Salvador, the state’s main gateway, the statistics are also significant. During the same period (1997-2004), there was an increase of approximately 31%. In the year 2004 alone, more than 2.0 million travelers visited the Bahian capital. The following chart shows the overall total of visitors to the state and its capital from 1997 to 2004.

Bahia – Total number of visitors 1997-2004

Source: Bahiatursa, 2005

Over the next few years, it is expected that the number of visitors will continue to grow, surpassing the total of 8.7 million in 2015. The projections relating to the total number of visitors to the State of Bahia and Salvador are given below:

Bahia – Tourism Goals, total number of visitors (2005-2015)

Source: Bahiatursa, 2005

If only foreign visitors are included, the numbers are also significant. In 2004, for example, Bahia received more than half a million overseas visitors, with Salvador as the preferred destination (approximately 443,000 tourists).

According to data from Embratur’s Study on International Tourism Demand, Salvador ranks third among Brazilian cities most visited by foreigners in 2003, with a 15.8% share. The chart below shows the total number of overseas visitors to the State of Bahia between 1997 and 2004.

Bahia – Total Number of International Visitors 1997-2004

Source: Bahiatursa, 2005

It is estimated that in the next few years the number of international visitors will continue to grow as well. According to Bahiatursa projections, the total number of overseas visitors should increase by 77% by the year 2015, as can be seen in the following chart:

Bahia – Tourism goals, total number of international visitors (2005-2015)

Source: Bahiatursa, 2005

It is important to note, as well, the diverse origins of the domestic and international visitors who come to Bahia. This is proof positive of the growth of Destination Bahia on different markets, a fact which has led to the arrival of tourists throughout the year, consequently reducing the effects of seasonality.

rce: Bahiatursa, 2005

Source: Bahiatursa, 2005

Regarding international source countries, it is important to point out that the results for 2002 were atypical, with an accentuated drop in the number of visitors from Argentina, due to the economic crisis in that country. The following chart shows the total number of international visitors over the last 7 years and allows for a better understanding of this data.

Source: Bahiatursa, 2005.

Regarding domestic sources, it is important to mention as well the flow of visitors within the state, Bahians who travel in the State of Bahia. This is a significant segment of visitors whose main motivations for traveling are regional festivals and commemorative events, and the diversity of the state’s natural landscapes and cultural traditions.

■ Tourism Revenues

In terms of the revenues generated by tourism, the total for 2004 was US$ 1.09 billion, nearly 8% of Bahia’s Gross State Product. The following revenue projections for the state were based on growth rates of 5.0% and 7.0% a year until 2015:

Estimate of Overall Growth of Tourism Revenues, 2004-2015

Source: SCT/Bahiatursa, 2005

■ Motivational segmentation

Each of the state’s Tourism Region has its own characteristics and peculiarities. For this reason Bahia has a wide range of differentiated products to meet the needs of diverse groups of consumers. The main motivations offered by Bahia’s tourism destinations are sun and sea, history and culture, eco-tourism, adventure, leisure and entertainment, water sports and rural tourism.

The following chart shows, in a succinct graphic design, the main and complementary motivations of each destination.

Bahia – Destinations and Motivations

Main motivation Complementary motivation

FINANCIAL SUPPORT PROGRAM FOR TOURISM IN BAHIA

DOMESTIC LINES OF CREDIT

INTERNATIONAL LINES OF CREDIT

STATE FISCAL INCENTIVES

MAIN FINANCING ADMINISTRATORS

FOREIGN CAPITAL

INSTRUCTIONS FOR FOREIGN INVESTORS TO REGISTER A COMPANY IN BRAZIL

The establishment, installation and operation of commercial, industrial and service entities with the participation of persons residing or domiciled abroad are regulated by NORMATIVE GUIDELINES Nos. 76/98 and 81/99 of the Brazilian National Business Registration Department (DNRC), which is part of the Ministry of Industry and Commerce.

• Site: www.dnrc.gov.br

PROCEDURES FOR CAPITAL TRANSFERS TO BRAZIL

Investments in legal currency do not require previous authorization from governmental authorities.

• Officially register a company in Brazil;

• Obtain CPF personal tax ID number as a foreign investor;

• Register the company at the Receita Federal, the Brazilian equivalent of the US Internal Revenue Service, to obtain a CNPJ business tax ID number;

• Register the company at the Junta Comercial, a state-level commercial regulatory agency, and the Secretaria da Fazenda, the state treasury;

• Register the company at the Brazilian Central Bank to officially record the investment.

Procedures to register at the Central Bank:

• Fill out the form available at: www.bcb.gov.br – Sisbacen;

• Attach requested documents;

• Personally receive the password and instructions on how to operate the system.

ADVANTAGES OF REGISTERING INVESTMENTS

• Guaranteed profit and dividend repatriation to country of origin;

• Guaranteed repatriation of amount invested, including capital gains;

• Ability to cede investments to partners (foreign or Brazilian).

OTHERS FORMS OF INVESTMENT

Foreign investors can become partners in Brazilian companies in the following ways:

• Investments by conversion of remittable credits¹;

• Investments in fixed assets, machinery and equipment.

REPATRIATION OF PROFITS

• There are no restrictions on the repatriation of profits and/or dividends. Since 1996, profits generated in Brazil are exempt from income tax withholding;

• Profits can also be reinvested in the company, thereby increasing the capital. It is possible to send capital abroad without any previous authorization. However, if the amount of capital remitted is higher than that which was registered upon entry, the difference will be considered capital gains and taxed at a rate of 15%.

OTHER INFORMATION

• It is not necessary to have a Brazilian partner or live in Brazil. The company, however, must be managed or represented by an administrator residing in Brazil and the guidelines issued by the Ministry of Industry and Commerce must be followed;

• Upon arrival in Brazil, it is necessary to make a customs declaration if carrying more than US$ 10,000 in currency or other monetary instrument;

• It is recommended that currency be exchanged only in establishments officially authorized by the Central Bank. These exchange offices can be easily identified, as they will have an official certificate in a plainly visible location. Exchanging currency in other establishments is not safe.

FURTHER INFORMATION

• Suinvest – Superintendency of Investments in Tourism Development Zones

prodetur@sct.ba.gov.br or (55 71) 3116-4068.

• Brazilian Central Bank – www.bcb.gov.br or (55 71) 3245-2174.