SAO PAULO -- Brazil's economic adjustment will result in an open door to multinational investors, modeled on the approach of successful Asian nations, officials say.

The transition from a protectionist approach comes as Brazil moves closer to formally ending its two-year estrangement from the International Monetary Fund to break the deadlock with foreign creditors caused by the suspension of interest payments. In Brasilia an IMF team has begun to examine Finance Minister Luis Carlos Bresser's domestic adjustment plan and the general economic plan that will be presented to foreign creditors after it is approved by President Jose Sarney this week.

Sarney's promise to open up the economy, bankers say, could make possible the conversion of up to 20 percent of the nation's $68 billion worth of commercial debt into foreign equity investment.

"Brazil is getting out of step, getting outdated," Sarney said at a news conference recently. "We must deregulate our economy, which is too full of rules that inhibit investment." Brazil needs to import technology, he said, criticizing protectionist ideas as relics from the 1950s.

Sarney said he had ordered the commerce and industry minister, Jose Hugo Castelo Branco, to produce within a month a new industrial policy that would guarantee "freedom to set up factories of whatsoever nature in the country, without a license, provided they do not demand subsidies or incentives."

Sarney said Brazil's model would be Asian nations such as South Korea and Taiwan. The industry ministry has been asked to produce plans for six "export promotion zones" that would help the country restore its trade balance, providing jobs, taxes and a cheap base for foreign capital.

Such an about-face has met with criticism from economists who warn that the amount of dividends and profits flowing out of the country could exceed Brazil's present interest bill.

But presidential spokesman Frota Neto said, "Multinationals are now being seen as our associates in the process of development. The wheel of modernization for Brazilian industry has begun to turn."

Some investment bankers are delighted about the prospects for legislation on swaps of debt into equity, though others warn of resistance from politicians because weakening the public sector would reduce their power to distribute state jobs.

"Brazil's debt must now be seen as an immense advantage. It's a huge block of capital caught up here for a long time that will be used to attract investments that might otherwise go elsewhere," said Igor Cornelsen, representative of Libra Bank, a consortium of major U.S., European and Japanese lenders. "This is a turning point. We are at the brink of major changes."

"Turning Brazil into a giant Taiwan is much better than seeing it become another Nicaragua," Cornelsen said.

Bankers said that on the debtor's side, debt-equity swaps will transfer funds from the state to private sector, unlocking capital frozen in unproductive government investments for use in mining, hotel-building or export industry. From the lenders' side, regional banks not interested in Brazil could trade their assets to institutional investors or multinationals eager to invest at a discount.

With $4.6 billion lent to Brazil, Citicorp is considering converting up to $500 million of its assets into investments over five years, an official said. "It's really a matter of trusting, believing that this is the only viable alternative for the country," said Antonio Boralli, chief executive of Citicorp's local investment banking unit. "There will be much greater opening up and internationalizing than there has been in the past."