* IP has been investing in Brazil for 60 yrs
* Company proceeding with investments without problems
By Reese Ewing
SAO PAULO, Brazil, Nov 24 (Reuters) - Brazil’s attempt to limit foreign ownership of land is not likely hurt International Paper’s (IP.N) investment plans in the country’s forestry, pulp and paper industry, the local chief executive said.
IP’s Brazilian chief executive Jean Michel Ribieras told Reuters on the sidelines of a lunch in Sao Paulo on Wednesday that he was confident the government would eventually draw a distinction between what he referred to as investments in productive capacity and speculative investments in land.
International investors have been suspending billions of dollars in Brazilian farming and forestry projects after the government set limits on the size of land owned by foreign capital.
International Paper will release its 2010-2011 investments in January. It invested $87 million in Brazil in 2009.
“International Paper has been in Brazil for over 60 years and we are still investing in the country without any problems,” said Ribieras. “We think this will be worked out. The government will see the difference between productive investments and speculative ones.”
In Brazil, IP has 102,000 hectares (252,000 acres) of forested area, according to the company’s website.
Commercial forestry, a sector that requires considerable capital investments, has been one of the areas most effected by the government’s efforts to limit foreign investments in land.
Private equity and hedge funds in the United States and Europe, as well as investors from Asia and Latin America, were caught off guard in June when outgoing President Luiz Inacio Lula da Silva said he was concerned about growing foreign ownership of Brazilian land. [ID:nN24252886]
Not only does Brazil have abundant, arable and cheap land by global standards, ample sun and rain induces trees to grow faster than in most other countries. This makes Brazil one of the leading growth areas for the world’s commercial forestry and pulp and paper industry.
“The Brazilian Constitution does not distinguish between local and foreign capital. Up until now, companies that come from abroad and have registered in Brazil enjoy the same rights as local companies,” Ribieras said.
International Paper’s Brazilian director of legal and corporate affairs, Ricardo Zangirolami, added that the company recognizes the government’s concerns over the flood of potential investments from Asia and other regions in Brazilian land.
“But to issue a legal interpretation (of a 1971 law), contrary to several previous interpretations, to try to limit land investments is not likely to hold up under scrutiny,” Zangirolami said.
“I think discussions between the government and the productive industries involved will resolve this issue. The government would need to pass a Constitutional amendment in order to limit investments in this way.”
Editing by Lisa Shumaker