The tax on industrialised products (IPI) was raised as of 1 July and this has affected furniture, wood panel and veneer manufacturers. The new IPI rates for these three products will go from 2.5% to 3% and will be effective until a review in September. The Ministry of Finance pointed out that they have no room for exemptions and asked the timber sector representatives not to pass along the tax increase to consumers to avoid adding to inflationary pressures.

According to the Institute for Retail Development of (IDV), there is a dilemma between the government's commitment to fiscal adjustment and the desire to maintain the competitiveness of the items listed in the programme. Representatives of Walmart Brazil say that this change in tax rate will have a major impact on sales.

Partnership benefits small furniture companies

A furniture cluster in Belo Horizonte, Minas Gerais state will benefit from the recently launched Technology Services Network (Rede de Serviços Tecnológicos - RST). The RST will benefit almost 200 micro and small companies in the city of Belo Horizonte and the municipalities of Pará de Minas and Carmo do Cajuru in the Midwest region of the state.

The RST has a budget of R$ 2.6 million for activities until 2016. The RST is a project within the Supporting Service for Micro and Small Businesses (SEBRAE) implemented in partnership with the Inter-American Development Bank (IDB) and the Center for Technology and Quality of Furniture Industry (Cosmob), with support from the United Nations Development Program (UNDP) and the Multilateral Investment Fund (MIF).

The objectives of the RST include improving the quality of furniture parts manufactured by small companies, improving manufacturing processes and introducing the application of advanced design methods. Incentives will be provided for the development of prototypes and investigation of new technologies appropriate to the sector. In 2008, in the states of Amazonas and Pará, a similar programme was implemented called the SEBRAE-IDBCosmob partnership.

The idea was to create competitiveness and disseminate technical solutions suitable for small companies. After the successful experience in the Amazon, the state of Minas Gerais will now implement a similar project after which the project activities will be extended to the furniture sector of Arapongas, in the state of Paraná. In total, the RST project, with a budget of R$ 16 million, will involve 1,214 companies.