Brazil’s independent cinema owners, as with all independent cinema owners around the world, are struggling to convert to digital cinema before a cut-off of film prints takes place. But unlike a lot of countries, Brazil’s government offers a 0-3% interest digital cinema equipment loan for those exhibitors who follow certain rules. Those who don’t want to get involved with government rules, and who have other means to finance their equipment purchases, have other options. The government has temporarily relaxed federal import duties for cinema equipment to help facilitate the conversion. It all sounds very nice. But no digital projectors are being installed, much to the dismay of distributors.
The problem is not the VPF entities in the country. The government’s low interest rate loans are available through a VPF entity called Quanta DGT. Another VPF entity, GDC Technologies, offers a subsidy program for those with other sources of financing.
Quanta DGT was formed by putting together several competing entities: Telem (Quanta), a very large architectural firm in Brazil, and DGT, a Brazilian-owned independent VPF entity. Together, they contract with Arts Alliance Media (AAM) in the UK, who also has its own VPF deals. Quanta DGT was strategically created hold title to VPF-financed equipment, in light that the government’s bank doesn’t want to hold title to the equipment, and putting the equipment to work through a tax-favored lease program to exhibitors. A joint venture of competitors also brings needed efficiency to a small market. With so many benefits to the venture, it was a surprise this month to learn that the Brazilian national development bank, BNDES, mired with government bureaucracy, had not yet signed agreements with Quanta DGT. Without signed agreements with the bank, exhibitors can’t execute their agreements with Quanta DGT. Without exhibitors on board, projectors don’t get installed. Hopefully in the near term, this situation will turn around. In the meantime, it explains why no progress has yet been made by VPF entity Quanta DGT.
GDC Technologies, the other VPF entity in Brazil, has also been slow to bring projectors into Brazil. GDC doesn’t get its funds through the government bank, but government bureaucracy has managed to find other ways to slow it down. To bring equipment into the country openly and cheaply requires a release from import taxes under a relatively new government program for the importation of cinema equipment called RECINE. Eventually, this roadblock will also open up.
In the meantime, independent exhibitors have their hands tied. Which would not be so bad if top exhibitors Cinepolis and Cinemark weren’t close to completing their conversion to digital in the country. Distributors, no doubt, are exasperated, having to pay for expensive prints to keep independents open. The irony in all this is that the government programs for low interest rate loans and import tax relief were designed to help independent exhibitors survive the transition to digital projection. But government bureaucracy trumps the politicians, and independent exhibitors in Brazil continue to hang in the breeze.
