CHALLENGES OF THE BASIC PRODUCTION PROCESS (PPB) IN THE MANAUS FREE TRADE ZONE (ZFM): THE TENSION BETWEEN TAX INCENTIVES, FREE ENTERPRISE, AND FREE COMPETITION

Abstract

This article aims to analyze the compatibility of the Basic Productive Process (PPB), applied within the Manaus Free Trade Zone (ZFM), with the constitutional principles of free enterprise and free competition. The central issue is whether the PPB, established by interministerial ordinances, constitutes an undue limitation on economic freedom or a legitimate instrument of industrial policy and regional development promotion. To this end, a qualitative methodology is adopted, based on bibliographic and documentary research, with an examination of the relevant legislation, doctrine on the economic order, and the legal framework governing the tax incentives of the ZFM, since Decree-Law No. 288/1967. The practical effects of regulatory requirements on business activity are also analyzed, especially in medium-sized industries, considering compliance costs, regulatory complexity, and impacts on competitiveness. The results indicate that the PPB has a legal basis and is compatible with the constitutional economic order as a mechanism for fostering regional development. However, its implementation may create tensions with free enterprise and free competition when applied in an excessively rigid, disproportionate, or sectorally insensitive manner. It is concluded that the preservation of the regime’s developmental purpose depends on the periodic review of its criteria, so as to harmonize tax incentives, economic freedom, and legal certainty, preventing the PPB from becoming an obstacle to the entry, permanence, and expansion of companies in the ZFM. In this context, state action must observe proportionality, reasonableness, and transparency, ensuring regulatory predictability and balance between intervention and business freedom.