Brasília – Trade between Brazil and the Arab world has increased significantly over the last ten years, mutual investment between both regions is taking place, and tourist flows are growing. However, Brazilian and Arab businessmen want more, and so do leaders and diplomats. Issues in product registration, excessive paperwork for certificates and visa issuance, and the lack of agreements to protect investment are some of the obstacles that must be overcome if Brazil-Arab relations are to grow, and these issues were discussed this Wednesday (4th) at the Brazil-Arab Countries Economic Forum, in Brasília.
The meeting took place at the headquarters of the National Confederation of Industry (CNI) and the hurdles impeding progress in relations between the two regions will be drafted into a document to be submitted to the Brazilian government and the governments of Arab countries, via their embassies in Brazil. The forum was attended by Brazilian and Arab business executives, delegates from organizations such as the CNI and the Arab Brazilian Chamber of Commerce, Brazilian government officials, and diplomats from Arab embassies in Brazil.
The speakers all agreed that commercial and business ties between Brazil and the Arab world have grown stronger over the last few years. The Arab Brazilian Chamber president, Marcelo Nabih Sallum, noted that in 2001 the then-secretary general to the Arab League, Amr Moussa, said in a forum for Brazil-Arab Countries, in Rio de Janeiro, that bilateral trade did not meet the needs of both parties involved. Since then, however, it has grown by 380%, from US$ 5 billion to US$ 25.9 billion last year, said Sallum
CNI chairman Robson Braga de Andrade said bilateral trade between Brazil and Arab countries remains largely commodity-based, on the Brazilian side, and oil-based on the Arab side. “We need to add value to these commercial exchanges,” said Andrade. The dean of the Council of Arab Ambassadors in Brazil and Palestinian ambassador, Ibrahim Alzeben, said something along similar lines. “We have much more than just oil and food; we have services, human intelligence, tourism, investment,” said the diplomat.
The Egyptian ambassador in Brazil and chairman of the Council of Arab Ambassadors’ Economic Committee, Hossameldin Mohamed Ibrahim Zaki, noted that Brazil boasts a huge market, an opportunity that Arab countries must seize, and vice versa. “The Arab countries also constitute a vast market, comprising 300 million consumers, and their purchasing power attracts attention worldwide,” said Zaki.
Trade
Delegates from Brazilian companies which sustain trade relations with Arab countries discussed their businesses and what prevents them from growing. The world’s leading manufacturer of animal protein, Brazil’s JBS-Friboi group, is watching its exports rise, and Arab countries account for a significant share of this growth. According to the company’s export manager Rada Saleh, a few changes would help sales increase even further. “There are countries which allow for certain products to enter and prohibit other [poultry] cuts,” he said, referring to the fact that some countries only buy whole chickens. “They lose the opportunity to import an excellent product at competitive prices,” he said. His opinion was corroborated by the chairman of the Brazilian Poultry Union (Ubabef), Francisco Turra, who also spoke at the Brazil-Arab Countries Economic Forum.
Saleh, of JBS-Friboi, mentioned the time it takes for sanitary barriers between the regions to be resolved. He cited the fact that several Arab countries banned Brazilian beef imports after the gene that causes mad cow disease was detected in an animal which died in Brazil’s Paraná state. It was proven, however, that the animal neither developed the condition nor died from it. According to him, although it was proven that no risks were posed to consumers, some Arab countries haven’t cleared imports of Brazilian beef yet.
Turra also called for less complicated export processes to Arab countries, as these still require various certifications, and this drives up prices. “It could be simpler,” he said. The Arab Brazilian Chamber issues documents and certificates for Brazilian product exports to Arab countries, and according to CEO Michel Alaby, the organization is working to offer the process online, which will make the proceedings swifter.
The superintendent director for Vicunha Têxtil, Marcel Yoshimi Imaizumi, discussed the company’s myriad unsuccessful attempts at entering into trade partnerships with Arab countries. He listed obstacles to be overcome in relations with the region, such as lack of knowledge, the language and customs barrier, the existing complexity in the Arab world stemming from different laws in each country, and changing counterparts due to changes in government.
The pharma company EMS also outlined its experience doing business with Arabs. The company posts annual revenues of R$ 3 billion (US$ 1.26 billion) and ships to 30 countries, but exports account for less than 2% of revenues. “Our exports to the Middle East are still rather timid, “said SEM Business Development manager Flávio Pereira de Magalhães. According to him, regulatory requirements make it difficult for products to enter, and this is mostly due to lack of communication between regulatory agencies in Brazil and in Arab countries.
Alaby said Arabs are faced with a similar problem when it comes to selling their products in Brazil, seeing as the country does not accept several records from Arab countries. As a case in point he cited olive oil, whose imports to Brazil require onsite supervision of manufacturers.
Investment
What about investment? Do they flow adequately? There are issues as well, though not enough to prevent Brazilian companies like Marcopolo to set up operations in the Arab world, in Egypt, or to prevent Dubai’s DP World to have an arm in Santos, by investing in the Embraport Terminal. Embraport’s commercial director Michael M. da Silva discussed the pickup in investment at Brazilian ports that followed the new legislation for the industry, dating from 1993; a new law, passed this year, is likely to increase the flow even further.
Nonetheless, Silva reported issues when it comes to obtaining different licenses, first for construction work and later for starting operations. According to him, the latter phase requires 16 different licenses, which started being applied for nine months before the deadline so they would be available at the right time. Some aspects of the work, like installing electrical power at the terminal, had to be undertaken by the company itself in order to speed up the process. And Embraport is still facing problems with port workers who are not willing to give up working at the site. According to Silva, it is of the utmost importance that foreigners have a strong, influential partner when it comes to investing in Brazil. DP World shares the project with Odebrecht Transport. “One must also be aware that the process is expensive,” he said with regard to investment.
Marcopolo’s Commercial Operations manager for Foreign Markets, Ricardo Portolan, said the company decided to invest in other countries once it realized it would no longer be as competitive by shipping its product out of Brazil. Marcopolo owns a manufacturing plant in Egypt alongside a local partner. According to Portolan, the language and knowledge barriers have been overcome as time passed. And the political change in Egypt was regarded as a passing affair, whereas the company’s strategy for that country is designed for the long haul.
Cement company Votorantim Cimentos, which has manufacturing operations in Morocco, also recounted its history with the Arab world. According to the company’s Aggregates director, Fernando Lohmann, it is crucial for investors to be keenly aware of the rules, so they can know exactly what to do in order to obtain the licenses required. Lohmann said that as soon as it arrived in the country, Votorantim was offered assistance by the government for its expansion plan.
The moderator of the panel on investment, attorney and professor at the Law School of São Paulo’s Fundação Getúlio Vargas, Rabih Nasser, said foreign investment in Brazil have gone from US$ 18.7 billion in 2002 to US$ 65 billion in 2012, and that Brazilian investment abroad soared from US$ 2.3 billion to US$ 13.7 billion in the same period. “However, the presence of Arabs is small on both sides,” he said, supporting the consensus that this must change in coming years.
The Forum was held by CNI in partnership with the Arab Brazilian Chamber and the Council of Arab Ambassadors in Brazil as a part of the Arab Week, during which the National Arab Day and the International Day of Solidarity with the Palestinian People were celebrated.
*Translated by Gabriel Pomerancblum