São Paulo – Brazilian agribusiness exports to the Middle East may increase by 50% in the next 10 years. The projection was made by the Institutional Relations vice president of the Marfrig group and former secretary of Agriculture of the state of São Paulo, João Sampaio, during the seminar “Perspectives in economic relations between Brazil and Arab countries – 60 years of the Arab Brazilian Chamber of Commerce,” promoted this Wednesday (17th) in São Paulo by the Arab Brazilian Chamber of Commerce and newspaper Valor Econômico.
“By the year 2000 we exported under US$ 1 billion worth of products to the Arab countries; in 2011 we sold [the equivalent of] US$ 9 billion, a near tenfold hike,” said Sampaio in the panel “Brazil as the world’s food and energy breadbasket.” “Brazil has a huge capacity to meet the world food demand. We have opportunities to boost relations with the Arab world, be it as exporters or partners in production,” he added.
In the assessment of Sampaio and all participants in the event, there are lots of business yet to be tapped between Brazil and the countries in the Middle East and North Africa, despite the significant growth in bilateral trade and investment seen in the past few years. It is worth noting that bilateral trade stood at US$ 25 billion last year.
“We are very pleased to realize the interest Brazil has in the Arab world, and by now said interest has become institutionalized, which is key for business,” said the Arab Brazilian Chamber president Salim Taufic Schahin. “Without this policy things would be much more difficult,” he said, referring to the efforts to establish closer ties which the administration of the former Brazilian president Luiz Inácio Lula da Silva initiated, and on which his successor Dilma Rousseff built upon.
The Foreign Trade secretary at the Brazilian Ministry of Development, Industry and Foreign Trade, Tatiana Lacerda Prazeres, said the celebration of the Arab Brazilian Chamber’s 60th anniversary is “a great opportunity to assess” relations with the Middle East and North Africa. “The Arab world is positioned strategically with regard to Brazilian foreign trade,” he said.
This is so because, according to the secretary, the international economic crisis makes it increasingly important for Brazil to diversify its trade partners, because business with traditional markets is declining. She said there is much room for Brazilian exporters to gain market share in the Arab world, because sales to the region are highly focused on products such as sugar, meats and ore.
“There is a wide range of products in which Brazil is competitive, but still do not account for much in the way of exports to the Arab countries,” she said. To the government, there is a margin available for increasing sales of food and beverages, building material, services, defence equipment, medical and hospital products and others. “We have a significant agenda of commercial promotion in the region,” she said, alluding to the participation of Brazilian companies in fairs and trade missions in the Middle East and North Africa.
Many of these actions are held in partnership with the Arab Brazilian Chamber. Schahin said the Chamber’s support creates options which would otherwise be unavailable to most companies, especially from the business culture standpoint. Arabs have a peculiar way to go about doing business, with a strong emphasis on personal relationships.
In that regard, the speakers stressed the need for companies to maintain a constant presence in the region so as not to lose market. “One of the keys [for doing business in the Arab world] is continuity,” said the director of the Trade and Investment Promotion Department at the Brazilian Foreign Ministry (Itamaraty), Rubens Gama, during the panel “How to foster the increase of trade and investment flows between Brazil and Arab countries.”
Along the same lines, the former minister of Agriculture, Marcus Vinicius Pratini de Moraes, said Brazilian companies must invest in strengthening their brands in the region. “We are bad at marketing. For 350 years our country has topped coffee exports, and yet which Brazilian coffee brands are sold there?,” he said as an example.
The Arab Brazilian Chamber CEO, Michel Alaby, added that trade is a two-way street. “We want to export, but we also must import, we must invest in those companies as much as we would like to attract their investment,” he said. The Middle East and North Africa sell mostly oil, derivatives, and fertilizers to Brazil, but there are opportunities for business in other areas, such as local foods, including olive oil and dates, textiles, and plastics.
Investment
Alaby cited several figures of trade and investment in the region, of which two were particularly striking: with regard to trade, the Arab countries are generally quite liberal, and when it comes to investment, most have foreign investment protection policies. “It has been at least 20 years since we have last seen one single case of nationalization of foreign capital in the Arab world,” he said.
Concerning investment, the chairman of the managing board at Copersucar, Luiz Roberto Pogetti, said that in the case of sugar, becoming established in the region means having a base near the highest growing markets in the world, i.e. the Middle East itself and Asia, and saving logistics costs. “That is why the main refineries in the world have operations in Arab countries,” he said. He mentioned, for instance, that Copersucar sells raw sugar for refining in Dubai, United Arab Emirates, and has storage capacity for 350,000 tonnes in the emirate.
The head of the Internationalization Department of the Brazilian Development Bank, Leonardo Botelho, said the bank is at the disposal of governments, financial institutions and companies to discuss financing in Brazil and in the Arab world, be it new projects, acquisitions, joint ventures, or exports.
He added that the BNDES intends to encourage an increase in participation of private institutions in the Brazilian long-term credit market. “This is a huge challenge and we will need partnerships with international investors,” he said.
*Translated by Gabriel Pomerancblum
