H.E. Buamim: We are looking to bolster trade ties between GCC countries and Latin America, and to find new ways to develop business and find solutions for the challenges inhibiting the economies of both our regions
Kuwait: The Dubai Chamber of Commerce and Industry (DCCI) conducted a study to explore investment opportunities for GCC countries in Latin America and create a roadmap for bilateral relations between the two regions.
The study comes in the lead-up to the Global Business Forum (GBF) on Latin America, which the Chamber is preparing to host on November 9 and 10 at Atlantis, The Palm, Dubai. The research identified the most promising sectors for cooperation between the two regions. These included agricultural and food products, aviation services, logistics, manufacturing, banking and finance, trade, and investment.
His Excellency Hamad Buamim, President and CEO of Dubai Chamber, said: “This study identifies opportunities within key strategic sectors, as well as the prominent economic traits for the countries of the Gulf Cooperation Council and their Latin American counterparts.”
H.E. added: “This year’s Forum welcomes high-profile decision makers, entrepreneurs, and creatives, which presents an ideal setting for exchanging ideas and insights and creating new avenues for cooperation between the two regions. We are also looking to bolster trade ties between GCC countries and Latin America, and to find new ways to develop business and find solutions for the challenges inhibiting the economies of both our regions.”
The study underlines the importance of developing the aviation sector to include direct flights to and from Latin America, seeing as the Gulf occupies a central geographical position, which enables it to be a hub connecting Latin America to major destinations such as China and Japan, all while shortening the duration and the journey, the number of stops, and the cost.
As far as the agricultural and food product sector is concerned, the study reveals that GCC countries depend heavily on the import of such materials, whereby imported food products make up 80 per cent of local food consumption. GCC countries, in fact, all ranked within the 22 to 30 most vulnerable countries in the International Monetary Fund’s (IMF) Global Food Security Index 2016.
GCC countries depend heavily on the countries of Latin America to import key food products, such as dairy products; grains; natural honey; products made from fruits, vegetables, and nuts; coffee and tea, among other products. This encourages both regions to strengthen their bonds through investments in arable land and food-manufacturing facilities.
Elsewhere, GCC investments in the industrial sector in Latin America are growing, as the International Petroleum Investment Company (IPIC) – part of the Abu Dhabi Investment Authority (ADIA) – collaborates with a number of petrochemical plants in Latin America. Meanwhile, opportunities abound for Latin American countries to establish production facilities in the GCC; this makes it easier to process products closer to their destinations in Europe and Asia.
At present, there are as many as 200 commercial treaties – including an agreement to prevent double taxation – between the GCC and Latin America; these treaties seek to facilitate the flow of capital and investments between the two regions.
The report reveals that commercial activity between the two regions has seen notable growth in recent years, buoyed by Latin America’s demand for energy, on the one hand, and the GCC’s demand for food products, on the other. Nonetheless, the GCC-Latin America trade ties are not confined to these commodities, they also include metal, vehicles, and machinery.
Brazil stands out as the GCC’s top trade partner in Latin America; the South American country accounted for as much as 77 per cent of the GCC’s imports from Latin America in 2015, the study reveals, which amounted to $11 billion. Meanwhile, Brazil received 65 per cent of the region exports to Latin America, which amounted to $5.6 billion. What is more, GCC countries rely almost exclusively on Brazil to import metals, while products ranging from machinery to wood products come from elsewhere in the Latin American region.
Argentina and Mexico are the GCC’s top trade partners after Brazil; Argentina provides Gulf countries with grains, iron, and steel, while Mexico provides vehicles and electrical devices. On the flip side, oil, liquefied natural gas, and fertilisers make up the bulk of GCC exports to Latin America.
As oil prices continue on their downward trajectory when compared with previous years, GCC investors look to diversify and balance their portfolios by exploring new markets in Latin America, and attracting more foreign investments into the GCC region.