Brazil Wants a Piece of the Gulf’s US$ 1 Trillion Construction Boom

In Dubai cranes are all over Gulf's civil construction industry seem to have conquered Brazilian businessmen for good. Beginning November 18, the Arab Brazilian Chamber of Commerce and the Brazilian Export and Investment Promotion Agency (Apex) are going to take a group of companies in the sector on a trade mission to three countries in the region: Kuwait, Qatar and United Arab Emirates.

It will be the fourth trip of the kind in less than two years with the participation of the Arab Brazilian Chamber.

"We are going to take the companies to get to know countries that are experiencing a process of heavy investment in the infrastructure and civil construction fields," said the president at the organization, Antonio Sarkis Jr. "Those are countries that justify a strong presence due to their market potential," he stated.

Besides the mission, the Chamber and Apex will promote, from November 25 to 29, the participation of Brazilian companies in the Big 5 Show, the leading fair for the construction material in the Middle East.

Just to have an idea, last week, Proleads, a market survey company based in Dubai, in the United Arab Emirates, published data according to which real estate developments underway in the Gulf Cooperation Council (GCC) countries, a bloc comprised of Kuwait, Qatar, Emirates, Saudi Arabia, Bahrain, and Oman, total US$ 1 trillion.

The figure includes all types of commercial and residential buildings, educational, medical and sports premises, theatres, hotels, theme parks, mixed-use buildings, and stores. The Projects are in different phases, from planning to construction.

The United Arab Emirates is the country with the largest volume of developments, estimated in US$ 430 billion, according to the survey company. If infrastructure works, such as roads, bridges, ports and airports are also taken into account, the value of real estate projects underway in the GCC totals more than US$ 1.25 trillion, according to Proleads.

"We are partners with the Arab Brazilian Chamber of Commerce, and of course the Middle Eastern market is becoming increasingly important. Just have a look at the expansion of our exports to the region," said the president at Apex, Alessandro Teixeira.

From January until September of this year, exports of Brazilian construction material to the three countries to be visited have totaled almost US$ 10 million, a 33.7% increase over the same period of 2006.

Considering all of the Arab countries, sales have reached US$ 32.9 million up until September, an increase of 76.5%, which places the region in the 19th position in the ranking of main importers from Brazil.

The data were supplied by the Foreign Trade Secretariat (Secex) of the Brazilian federal government, compiled according to the list of products of the Brazilian Association of the Construction Material Industry (Abramat).

Until last Friday, October 26, 21 companies and organizations had enrolled to participate in the mission. They belong in the segments of ceramic tiles, ornamental stones, metallic structures, aluminum, synthetic grass, tools, hydrometers, metallic doors, electric cables, sanitary metals, wood and wooden products, furniture, gypsum, as well as trading companies that sell products in those fields.

The number of participants may increase, because the Federation of Industries of the State of Paraná (Fiep) is also inviting businessmen in the southern Brazilian state to participate.

"Our idea is to keep up the promotion actions in the field of construction," said the secretary general at the Arab Brazilian Chamber, Michel Alaby. "And we are taking new companies," he claimed.

Economies on the Rise

The three countries to be visited are currently enjoying great liquidity, due to revenues from the oil and gas industry, and the price of oil continues to rise in the international market, having surpassed US$ 90 per barrel last week, which allows for a forecast of even greater availability of capital in the future. "There is no risk of contingency, of developments not being executed," said Alaby.

The first stop will be Kuwait, a country that, according to data collected by the Arab Brazilian Chamber, posted a Gross Domestic Product (GDP) of US$ 102.2 billion in 2006, at a real growth rate of 12.7% in comparison with 2005. With a population of 3.2 million, the nation has a per capita GDP of more than US$ 32,000.

Kuwait owns approximately 10% of all global oil reserves, and activities related to the commodity answer to 50% of the GDP, 95% of exports, and 80% of government revenues. Exports from Brazil to the Arab country totaled US$ 158.7 million from January to September, according to the Secex, a 74% increase over the same period of last year. The main items shipped were chicken meat, bovine meat, sugar, caterpillar tractors and other machinery in the genre, and frozen juice.

In turn, imports of Kuwaiti products totaled US$ 77.3 million, compared to only US$ 550,500 in the first nine months of 2006. The main products imported were diesel and naphthas for the petrochemical industry.

Qatar, the second stop in the trip, recorded a GDP of US$ 52.7 billion last year, 7.1% more than in 2005. With a population of just 900,000, the country has one of the world's highest per capita incomes, at US$ 52,700. The natural gas industry is expanding rapidly in the country, which is already the world's leading producer of Liquefied Natural Gas (LNG).

Oil and gas account for more than 60% of the GDP, 85% of exports, and 70% of government revenues. Brazilian exports to Qatar totaled US$ 100.3 million from January to September, a 110.7% rise in comparison with the same period of 2006.

The main items shipped were iron ore, chicken meat, trucks, shotgun clips, and bovine meat. Imports, on the other hand, have totaled US$ 12.7 million, against just US$ 102,000 in the first nine months of last year. Urea was virtually the only exported item.

The United Arab Emirates will be the last stop. The country, according to data compiled by the Arab Brazilian Chamber, posted a GDP of US$ 163.1 billion in 2006, an increase of 8.9% in comparison with 2005. With 4.9 million inhabitants, the per capita GDP is US$ 35,700. The emirate of Abu Dhabi concentrates the bulk of oil production, but Dubai is the leading commercial hub, and the epicenter of the Middle East real estate boom.

Brazilian exports to the Emirates totaled US$ 937.3 million between January and September, 40% more than in the same period of last year. The main items shipped were sugar, chicken meat, caterpillar tractors, soy, gasoline, and aircraft. In turn, imports stood at US$ 268 million, a 36% rise over the first nine months of 2006. The main items in the export basket were diesel, aviation kerosene, liquefied propane and butane, and aluminum residue.

In the three countries, the businessmen will attend seminars and business roundtables at local chambers of commerce, and will pay visits to real estate projects and construction material retail stores. In Dubai, they will join the members of another mission, organized by the Federation of Industries of the State of Santa Catarina (Fiesc), which will be coming from India.

Also in Dubai, the delegation will visit the Big 5 Show. The fair will have a Brazilian pavilion featuring 29 exhibitors in the fields of ceramic tiles, ornamental stones, sanitary metals, glass, bathroom accessories, electric material, pipes, tools, domestic utensils, and others.

"Part of the mission, in Kuwait and Qatar, will focus on the discovery of opportunities in civil construction, and on how to position ourselves in the sector. Upon attending the Big 5, on the other hand, our aims are to improve the Brazilian market positioning, and increase our insertion in the region," said the coordinator at the Apex international events unit, Juarez Leal.

The stand will occupy an area of 480 square meters, 60% more than last year, when 27 companies participated. The Apex estimates that business deals worth US$ 8 million will be closed during the fair, and another US$ 25 million in the 12 following months. Last year, the Big 5 attracted 41,400 visitors from several countries.

Before the mission and the fair, a preparatory mission will be held on October 31st, at the head office of the Arab Brazilian Chamber, for the participating companies.

Anba –


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