UPDATE 1-Rousseff says Brazil must shape up and compete

Wed Feb 27, 2013 1:40pm EST

* High business costs hurt competitiveness, Rousseff says

* President touts big infrastructure investment projects

* Oil industry to "jump" forward with offshore oil auctions

BRASILIA, Feb 27 (Reuters) - President Dilma Rousseff said on Wednesday that Brazil must cut its high business costs to become more competitive and vowed to keep inflation in check as the world's sixth-largest economy shifts into higher gear this year.

Rousseff, who has struggled to put the once-booming Brazilian economy back on to a path of solid growth, said 2013 will be a year of major infrastructure investments in roads, railways, ports and airports to try to stop bottlenecks from holding the economy back.

She said Brazil has no choice but to become more competitive and to reduce the costs of doing business and will proceed with such actions as opening up the country's crowded ports to private initiative despite opposition from labor unions.

"Brazil has an unnecessary cost with its ports. We have to open up to competition because the ports are part of the so-called Brazil Cost," she said at a meeting of government officials and some of the country's top business leaders in Brasilia.

"Our country has to change, and change in the direction of greater competitiveness," she said.

Brazil's oil industry will take a big step towards tapping the large potential of its sub-salt-level offshore oil reserves with auctions scheduled for November, she said.

Brazil's sub-salt offshore fields are believed to contain as much as 100 billion barrels of oil, enough to supply all U.S. needs for 14 years. Output from the fields is expected to continue to expand to more than 6 million barrels a day by 2020, making Brazil one of the world's major oil producers.

The world economy should improve this year and help Brazil grow, Rousseff said, pointing to China's "soft landing" as a reason for diminished fears of crisis in many countries.

Brazil's economy only grew by about 1 percent last year, despite a barrage of tax breaks and other government stimulus measures. Most economists expect a rebound in the second half of this year as the effects of those incentives start to kick in.

Rousseff vowed continued commitment to the main pillars of the economic strategy that has given Brazil financial stability for over a decade: inflation targeting, fiscal discipline and a flexible exchange rate.

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