Investments of R$ 12 billion transform small Três Lagoas in the state of Mato Grosso do Sul

Três Lagoas, in the state of Mato Grosso do Sul, consists of long, flat roads, where motorcycles and bicycles still predominate. It’s just over 100 000 inhabitants, that still have as one of the main landmarks of the city a statue of Christ, which seems to control traffic at the junction of two major avenues. And the most significant sign of modernity are LCD TVs in the Lagoon Emporium, a trendy bar where outsiders and wealthy locals gather to drink and watch soccer.
But it is also in this urban enclave on the banks of the Parana River, that giants like Petrobras, Votorantim, Fibria and Eldorado are investing more than R$ 12 billion in projects of cellulose, fertilizers and steel – equivalent to half the budget of the Cup World in Brazil – and dragging together hundreds of suppliers.
Last year alone, according to the local government, more than a thousand micro enterprises were open on the single tax regime. Restaurants that used to have a few dozen tables, turned into industrial kitchens that today serve up to 3,000 meals a day on construction sites and large industries.
And besides the pulp mills(cellulose), steel and fertilizers, an additional 57 medium and large companies, who settled in Três Lagoas in recent years, and manufacture from fabrics and children’s shoes to power cables and fiber-optics, to fridges for use at points of sale, to packaging.

What makes Três Lagoas different from other cities of similar size is a rare combination of factors. The main one among them may be plenty of areas available for planting eucalyptus, associated with geoclimatic features favorable to their growth.
Eucalyptus is one of the main varieties used in production of pulp and paper, and the speed at which grows weighs on the competitiveness of the pulp(cellulose) industry. In the region of Três Lagoas, it is the world’s fastest, with trees reaching mature age in six to seven years.That’s what attracted large industries of the sector to the region and causes it to be a strong candidate to become the main center for the forestry industry in the country.

Not only that, the city is also served by rail and by road on the verge of one of the major waterways of the country, the Tietê Paraná. It is next to the state of Sao Paulo, the largest consumer market in the country, but benefits from generous tax incentives to industry, granted by the government of the Mato Grosso do Sul state, receives gas from the Bolivia-Brazil pipeline and houses a hydroelectric plant and a thermopower.

So much money concentrated in space and time, however, has also caused distortions that the government of the city and its inhabitants gradually will discover hard to fix. On the one hand feed the revenue from the growing number of restaurants and leisure options of Três Lagoas, engineers, executives and workers arriving by the thousands inflate prices and overwhelm public services.


The town of Tres Lagoas, MS, and the 3 lagoons that name it.

A businessman is an example of those who live the best and worst that breakneck economic transformation. Last year, he returned with a wife and three children from 15 years in Japan, bought his brother’s restaurant Yaki Niku, on the brink of the largest lagoons of Três Lagoas. Since October, he has had a full house. But the lack of skilled labor, because of high local demand, has made him double the salary of employees to retain them. “The city has a lot of work and fewer workers,” said the businessman.
But not everyone has the same sort of his employees. “The rent of houses in the center, tripled,” says saleswoman Fabiana Gomes. “Owners of property who demanded R$ 300, now charge R$ 900. In a city where the industry pays little more than minimum wage, it is hard. ”
One last look in the classifieds of any of the four local newspapers will confirm what she says. Moreover, it suggests that the estimated prices for it are even outdated. The few available apartments in the city do not go under R$ 1200. There are studios from R$ 700. And houses higher standard will reach R$ 7000.

Real estate speculation
The prices put pressure on real estate speculation in the backside of the local council. According to Mayor Marcia Moura, 2 000 houses are being built for families with incomes up to three minimum wages. The first 1200 will be delivered later this year. A draft revision of the master plan is also in final discussions. Among the expected changes is the expansion of the area considered the center and therefore the number of properties potentially for trade and commercial activities. The progressive growth of property tax for unused lots and parking on public roads and incentives to build garages in new buildings are also on the agenda. The government’s intention is to present it to council by April.
The cost of rent is, in fact, one of the problems plaguing the local trade, and on which the city has limited control. Dedicated to retail for 14 years, the last four as the owner of the Fashion Gleice, Gleice Simone Nunes says that the arrival of industries and workers to the city did not generate increased sales. Still, the owner of the property it occupies readjusted the rent from R$ 1800 to R$ 2500.
The low impact of the economic expansion of Três Lagoas on commercial activities, such as retail clothing and footwear, is explained by another retailer. Luciano Carvalho, Slipper Mania, dealer of Alpargatas shoes(think Havaianas), says that as the GST for trade in Mato Grosso do Sul is higher than in Sao Paulo, who has a little more money will cross the state border and go shopping in Sao Paulo towns, like Andradina or Araçatuba, distant about 150 miles.
In health, the main problem is not lack of money or infrastructure. It’s doctors. Special clinics have been established for the care of elderly, women and children. The city says it invests 25% of the budget in health, well above the 15% minimum. But there are health posts that do not work yet for lack of professionals. According to Marco Garcia de Souza, secretary of city development, Três Lagoas doubled the base pay to attract professionals.
Três Lagoas still has 40% of unpaved streets.


The town of Tres Lagoas, MS.

More difficult, however, is to get rid of unpaved streets. New subdivisions(plots) shall only be approved with all the infrastructure installed. But even with that, and with the increase in municipal tax revenues of about R$ 80 million in the middle of the last decade, to R$ 280 million expected this year, Getulio da Costa Neves Dias, Secretary of Public Works, estimates that Tres Lagoas will still take ten years to pave all the streets.
Today, 40% of them are still dirt. The problem is the cost of the pavement itself. But the cost of drainage. As the city is flat, the galleries have to be wider to accommodate the water that enters the storm drains. The cost per mile, thus, becomes four times larger.
The changes are slow, as implemented by John Gill who runs a small hotel with his wife. With little money, they took twelve years to complete it. But now, they take advantage of the bonanza. “This town, boy, will still turn into a city,” laughs the Bahia state native.

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