Brazilian Trade Relations with Arabs Keep on Growing

Cargo ship
Trade relations between Brazilians and Arabs are entering a new and
important phase: investment. This after consolidation of bilateral
trade between Brazil and the Arab countries in a way that the region
has become the fourth largest destination of Brazilian exports.

A recent survey conducted by the Market Development Department of the Arab Brazilian Chamber of Commerce shows that the flow of investment between Arabs and Brazilians is growing, a fact that attests to the mutual potential for larger-scale investment by Brazilian companies in the Arab world, as well as by Arab investors in various sectors of the Brazilian economy production chain.

The survey calls the attention of Brazilian investors to Arab governments' efforts to attract international investment by means of strong incentive policies. Among other advantages, said policies enable foreign investors to benefit from the advantages at free trade zones in various countries in the region, and thus profit from agreements sustained with the European and Asian markets.

The consumer market of the 22 Arab countries (335 million people), with an average per capita income of US$ 5,400 and the strength of its economy is, in itself, a strong factor of attraction for international investors.

Just to give an idea, even with the global crisis, the GDP of Arab nations, which totaled US$ 1.085 trillion in 2008, should grow 2.8% this year, a rate higher than the world average. The forecasted growth rate for 2010 is 5%.

There are also incentives for the establishment of partnership with local enterprises such as, for instance, Algerian, Moroccan and Syrian companies. The survey lists other factors and incentives granted to international companies interested in investing in the region, such as the possibility of having 100% foreign investment; guarantee of abidance to private property contracts; adoption of transparency and corporate governance procedures by private and public organizations; development and perfecting of the local financial market; guarantee of non-appropriation and non-nationalization of foreign investment; possibility of nationalizing 100% of profits; public investment in infrastructure, seeking to increase the efficiency of productive and commercial activity in the region (cost reduction); customs tariffs of between 4% and 5% to a large share of products.

The commitment to offering foreign investors a better business environment (by guaranteeing the meeting of contracts and respect to private property, for instance) must be underscored as one of the most important Arab government actions turned to attracting foreign capital to stimulate their respective economies, in addition to being an excellent opportunity for Brazilian businessmen to participate more actively in those rapidly expanding markets.

The survey, on the other hand, also shows that various sectors of the Brazilian economy also offers excellent business opportunities which may attract the interest of Arab investors, and bring into Brazil a large share of the several billion dollars that Arabs have at their disposal to invest.

To that extent, Brazil needs to carry out government and private initiative actions that will display the strength and potential of its economy. The Arabs have already shown interest, for example, in investing in agribusiness, infrastructure projects, agricultural research and energy. Conditions and guarantees must be created for said investment to enter the country.

The investment capacity of the Arab countries, particularly those of the Gulf Cooperation Council (GCC)  -  an economic bloc comprised of the United Arab Emirates, Kuwait, Saudi Arabia, Oman, Qatar and Bahrain  – may reach US$ 7 trillion by 2012, according to estimates by the McKinsey consultancy firm.

The vast availability of funds for investment, however, is not restricted to the Arab countries in the GCC. According to a report by the International Monetary Fund (IMF), Libya, Algeria and Yemen are also creditor countries (credit suppliers).

Brazil may also benefit from the entire process of economic integration of the GCC countries, by means of re-export alternatives resulting from the free trade agreement between the nations in the bloc.

Public and private investment in the region tends to stimulate the aggregate demand of economic agents, thus enabling an increase in the search for goods and services, as well as for investment in portfolios and government bonds. The international environment abounds with financial resources from Arab investment funds seeking investment opportunities.

Programs such as the Brazilian federal government's Growth Acceleration Program (which entails public and private investment in education, health, energy, infrastructure, urbanization and sanitation), coupled with a more attractive business environment, more stable and predictable macroeconomic indicators, credibility in the implementation of the economy policy, and cultural identification and empathy make Brazil a true potential target for Arab investment.

The Arab countries have the economic conditions to expand and develop their domestic markets and consumer base, due to revenues from foreign trade of oil and derivatives. Other positive factors are the willingness of Arab governments to diversify their economies, and thus reduce their dependence on the oil sector, and the presence of multinational companies in the region, which has a consumer market with high purchasing power.

Factors that may foster economic growth in the region include: adoption of transparency and increased use of corporate governance in public administration (investment attraction), as well as in private management, and collective action and positioning of those nations to pursue their interests, as well as the possibility of using them as a launch pad for exports and a shop window for Brazilian products to markets in Europe, Asia and, particularly, the other Arab and Middle Eastern countries.

The Brazilian agency Wish Marketing e Eventos, which has opened a branch in France recently and intends to conquer Arab clients, has established a partnership with American executive Lee Cockerell, the former vice president of operations of Walt Disney World, who came to Brazil to launch his book Creating Magic.

The company is now the official representative of Lee Cockerell in Brazil and in France, and will be in charge of the executive's schedule and future prospecting actions, besides giving support to all of the future customer actions.

Lee Cockerell, responsible for the 10 leadership strategies that were developed by Disney, administers lectures and training programs on leadership and professional development. He combines business knowledge and experiences during the four decades in which he also worked for other large organizations.

Armed with the executive's experience, the Caiado sisters (Vanessa and Natasha), managing partners at Wish, intend to bring even further knowledge to their clients.



  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.


You May Also Like

Brazilian Shoemakers Wooing Russia

The annual earnings of Brazil’s footwear industry amount to US$ 10 billion. Each year ...

Brazil Wants to Raise Interest Rates to Curb Demand and Prevent Inflation

Central bank policy-makers in Brazil said Thursday they are ready to raise rates next ...

While Uruguay Praises Lula Bringing Him to Tears, Colombia Scolds Brazil’s President

The president of Brazil, Luiz Inácio Lula da Silva and Uruguay’s José Mujica on ...

Brazilian Judiciary Runs Amok in Election Campaign

Reporters Without Borders today condemned measures taken by courts in Brazilian capital BrasÀ­lia and ...

Brazil Unveils Plan to Fight ‘Global Predatory Competition’

Brazil has just launched the Greater Brazil Plan. Under the slogan “Innovation for Competition. ...

Who’s Afraid of Lula?

The International Monetary Fund moved to lock the future government of Brazil into an ...

British Petroleum Finally Gets a Piece of Brazil Buying US Devon

The company British Petroleum has agreed to buy Brazilian, Azeri and Gulf of Mexico ...

An old poster touting Brazilian ethanol

Brazil Signs Pact to Send Japan 800 Million Gallons of Ethanol a Year

Brazil's state-controlled oil company Petrobras and the Japan Bank for International Cooperation signed Monday, ...

It’s the law

After 22 years of discussion, the Brazilian senate has approved a new civil code. ...