Brazil curtails land sales to foreigners

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Soybeans on a farm in Bahia, April 2010 (Reuters)

Reuters | Tue Aug 24, 2010

• New rules on foreign land purchases apply immediately

• Foreign companies no longer can purchase unlimited land

By Raymond Colitt and Reese Ewing

BRASILIA, Aug 24 (Reuters) - The Brazilian government has tightened restrictions on unfettered land purchases by foreigners, authorities said on Tuesday, renewing concerns among investors.

Brazil is one of the world's leading food producers.

The government has decided to close a legal loophole that had permitted foreign interests to circumvent existing restrictions by creating a Brazil-based company, the attorney-general's office said.

The ruling means foreign companies, even if acting through a subsidiary in Brazil, cannot buy more than 50 modules, which totals from 250 hectares (620 acres) to over 5,000 hectares (12,350 acres), depending on the region.

The move does not apply retroactively to existing properties.

Under the new interpretation of a 1971 law, foreign land purchases must also be logged at registrars and communicated to the ministry of land development, the AGU said.

"The legal finding is immediately binding," Attorney-General Luis Inacio Lucena Adams told a news conference on Tuesday.

"I don't think there will be a fall in foreign investment. The companies will have to adapt," he said, adding that foreign investors would have to cooperate more with domestic companies.

Foreigners had been buying large chunks of land in Brazil, one of the emerging bread baskets of the world.

But foreign land acquisition has slowed since outgoing President Luiz Inacio Lula da Silva said in June he was concerned about local land falling into foreign hands. Several investors said they were concerned over what they considered rising xenophobia.

Lula's chosen candidate, former chief of staff Dilma Rousseff, is leading opinion polls to become his successor in Oct. 3 elections.

Even with the latest legal restriction, other loopholes for foreign investors continue, Adams said. These include phantom businesses used as a front for investors.

Separately, Congress is considering legislation that would adopt even tougher restrictions on foreign land ownership in the Amazon.

(Editing by Sofina Mirza-Reid)
Original source: Reuters
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