São Paulo – The Arab countries are concerned with improving the environment of their economies to attract foreign investment. Figures regarding the measures adopted are part of a study by the Market Development Department at the Arab Brazilian Chamber of Commerce. The study is called "Investment in the Arab Countries – 2009". "There was significant progress. In some countries, it is possible to observe great opening," said the manager of the area responsible for the study, Rodrigo Solano, with regard to the stimulation granted by the local economies to foreign participation.
The director of the Bank of Brazil office in Dubai, Renato Gerundio de Azevedo, said that the Emirates are among the countries in the Middle East with the most developed foreign investment legislation. "There are others that are opening up. Saudi Arabia plans to open up," said Azevedo, adding Qatar and Bahrain as nations that are opening up to foreign investment. According to the director, they are mainly interested in finding investors for the areas of infrastructure, city development, energy projects and oil and logistics.
According to the study by the Arab Brazilian Chamber, among the characteristics in the Arab countries that attract foreign investors are the broad consumer market, the possibility of making use of agreements for export to other countries, like those in Europe and Asia, low customs fees, between 4% and 5% for many products, public investment in infrastructure, guaranteeing a good environment for company development, the possible repatriation of 100% of profits and the improvement being lived by the local financial markets.
According to figures in the research, the Middle East hopes for demographic growth of 60% up to late 2020. This growth in population should make the region need to open new job opportunities for youths, who should reach a total of 400 million people by 2020. To incorporate the new workers, according to information collected for the study, it will be necessary to invest 30% of the Gross Domestic Product (GDP) of the countries and to generate growth of income of between 5% and 6% a year.
Solano recalls that throughout the Arab world there are industrial free zones that grant incentives to foreigners. They may be found from Saudi Arabia and the Emirates to Lebanon, Syria and Sudan. According to Solano, the incentives vary according to the economic needs of each country. Azevedo recalls that in the Arab world the free zone concept is different from that of Brazil, as in the region there are practically no taxes. "In the free zones there is no need for an Arab partner," he explained. Normally, in other Arab nations, to open an office a company needs a local partner.
The Brazilian investment flow to the Arab world is still not very significant, but the initiatives grow by the day. There are several Brazilian brands with shops in the region, like Boticário, of perfume, Carmem Steffens, Via Uno and Arezzo, of shoes, and Colcci and Hering, of garments. There are also Randon, with an assembly line of road implements, construction company Andrade Gutierrez, Minerva and Friboi slaughterhouses, Tubos Tigre, of pipes, and food sector companies Sadia and Perdigão, which have offices. According to Solano, other figures are being collected for the study, showing further investment opportunities for Brazilian companies.
From there to here
Investment of Arab companies in Brazil is also not very large, according to official figures. Information disclosed by the Central Bank of Brazil, compiled by the Arab Brazilian Chamber, show that last year the Arabs invested US$ 72.9 million in Brazil. Despite the low value when compared to the total foreign investment the country receives, there was growth. In 2007, Arab direct investment in Brazil was US$ 4.23 million. According to the economist at Tendências Consultancy, André Luiz Sacconato, foreign direct investment is not what the Arabs usually do. They prefer investment in capital markets.
Last year, Brazil received US$ 45 billion in foreign direct investment and this year, according to Tendências Consultoria, should receive US$ 25 billion. Next year, this total should rise to US$ 35 billion. According to Sacconato, up to now the sector that received most investment in Brazil this year was industry, with 55%. The auto sector was among those responsible for the greatest volume of funds.
*Translated by Mark Ament
