São Paulo – The Arab Brazilian Chamber of Commerce established, some three weeks ago, a committee turned to investment. The work group, which includes board members and managers at the organisation, should operate in the area of Arab investment in Brazil and Brazilian investment in the Arab world. According to the Foreign Trade vice president at the Arab Brazilian Chamber, Wladimir Freua, who heads the committee, the promotion of two seminars has already been scheduled, one in Kuwait and another in the Emirates, in April, to present figures regarding the Brazilian economy and the investment environment.
At the meetings, to include the Ministry of Tourism and the Brazilian Association of Infrastructure and Basic Industries (Abdib), the infrastructure sector for tourism and industry in general should be shown to potential investors. Apart from those already scheduled, another two seminars are being organised, in Libya and Saudi Arabia, in the second half.
The Foreign Trade vice president at the Arab Brazilian Chamber believes in a greater flow of Arab investment into Brazil in coming years. According to him, Brazil has now shown itself to be a great harvester of investment, outside the Europe-United States axis, in recent years. The fact that Brazil left the 2008 crisis practically unharmed is one of the great boosters for future investment, according to Freua.
Apart from the investment committee, the Arab Brazilian Chamber has also established other committees, like foreign trade and tourism. The initiative is aimed at expanding and improving the organisation’s activities and, mainly, guaranteeing operation in all 22 countries of the Arab League. Read below an interview with Freua regarding the investment committee and the flow of Arab capital into Brazil.
ANBA – When did the Arab Brazilian Chamber of Commerce establish the investment committee?
Wladimir Freua – The investment committee was established, as an initiative of our president (Salim Taufic Schahin), some three weeks ago. It includes me, the Foreign Trade vice president, our Foreign Relations advisor, Alberto Paiva, our secretary general, Michel Alaby, the head of the Market Development Department, Rodrigo Solano, the head of the Foreign Trade Department, Francisca Barros, and the Marketing manager, Andrea Monteiro, each in his specialty. In its statutes, the Chamber includes activities of cultural nature, operation in foreign trade, which is the main focus and has been an area of renown for the Chamber, the tourism area, in which a committee has been operating for over a year, with excellent results, and the sector of investment. In this field it is important to point out that the committee will operate in two senses, fostering both Arab investment in Brazil and Brazilian investment in the Arab world.
Why did the Arab Brazilian Chamber decide to establish the committees?
The Arab Brazilian Chamber has been growing in all areas and has formal correspondence with the 22 Arab countries. This brings an additional demand to the relations as it is necessary to assist them all. The establishment of these committees, then, took place to expand the operation of the Arab Brazilian Chamber, so that all countries may be supplied equally, both in institutional terms and in business, in the area of culture, tourism and, now, in investment.
And for what reason was the investment committee set up?
The Arab Brazilian Chamber has already had some experiences in the past, of talking about investment in Brazil in Arab countries. I, myself, had the privilege of making presentations about Brazil to qualified investors in Dubai, in the United Arab Emirates, and Kuwait City. The meeting also included investors from Abu Dhabi. It was seminal. A seminar was organised for presentation in Brazil. The macro economical environment in Brazil was discussed, as was the investment climate, legal, exchange and financial system safety in Brazil, among other aspects. We then visited some investors in these countries and noticed the interest. But that was in 2002. Brazil was already the focus of attention for investment, but not as it is today. Especially after the 2008 crisis, Brazil has stood out as one of the viable countries, one of the most viable. For all these reasons, as we have had some demand from Arab investors, wanting to learn about Brazil, how to invest in Brazil, what the investment mechanisms are, how to bring money in and how to take it out, we created the committee.
When will the seminars in Kuwait and Abu Dhabi take place?
In the last week of April.
What themes will be covered in the seminars?
The seminars are divided into three great modules. The first module is about Brazil. What is Brazil, how big is it: area, GDP, per capita income. We are going to discuss the financial system in Brazil, the National Monterary Council, the Central Bank, CVM (the country’s Security and Exchange Commission). We are going to show how it works, what kinds of financial institutions are authorised to operate in Brazil and how each one of them may be useful to interact with potential investors in the Arab world. Still in this first phase, we should speak about the Brazilian exchange policy, fluctuation of the currency and mechanisms, as well as requirements for the inflow of capital, aid, etc… We are going to show the operation of the Brazilian exchange universe. In the second phase of the seminar we are going to cover investment in tourism infrastructure and in the third part, we are going to discuss investment in infrastructure as a whole, mainly in the electricity system, generation, transmission and distribution of energy, public concession of highways, railways, ports, etc… These seminars should take place in the morning. We are targeting specific audiences, qualified, no more than 20 or 22 investors in each country to be visited. We want to see whether those responsible for sovereign funds or large funds in the countries will participate in the seminars and we will have a day and a half in each city in which to visit investors.
What activities should the committee cover?
We have already defined the promotion of seminars in Saudi Arabia and Libya, in the second half of 2010, with an identical programme to that of the first two. We are also talking to possible partners in Brazil to bring committees of investors to the country. This would be a consequence of the seminars and technical visits. Our participation is purely institutional.
These activities will help Brazil attract Arab investors, won’t they?
The seminars, in truth, will be for generation of awareness. The first part of the seminar will generate awareness, to show what Brazil is, why to invest, how to invest. The second and third parts will be to present the great sectors in Brazil. That is, we are going to show which the great sectors are. And we are not yet going to cover enormous sectors, like agribusiness. In this area the investment committee should work to define the model for generation of awareness among the Arabs. It should be done during the second half.
What are the most promising sectors for attraction of Arab investment into Brazil?
I would say that there are investors and investors. There are Arabs who are going to invest thinking on the long term. And in this area the investment forecasted is for 20 to 30 years. For this investor profile, infrastructure through public concessions is an area that seems adequate. They are concessions for 30 years, with high level of certainty, resulting in income over the years. Then there are short-term investors. They may invest in the stock markets, in Brazilian bonds. And there are also medium-term investors, for projects, for example, in agriculture. Nowadays, in the world, food safety is the word of order. And in Brazil, we have land, we have technology, we have labour and a large part of the inputs. Brazil, through foreign investment, may, more than ever, be the food cellar of the world. And we cannot forget the sectors of tourism. Tourism has been the spring of several countries and Brazil is especially privileged. We have mountains, beaches, forests, the Brazilian appeal, a friendly people, football and carnival.
An area in which we have been hearing people discussing investment is the real estate area. Is it interesting for Brazil to attract Arab capital to this sector?
All capital is welcome. Mainly medium- and long-term capital. It is stable, generates little stress in short-term currency exchange rates. The real estate sector is characterised by medium- and long-term investment. Return in less than five or ten years is not expected in real estate. And it is relatively stable. The model of taxation on property in Brazil provides comfort to investors, different from what takes place in other nations. The real estate sector should certainly, as the investment Arab Brazilian Chamber’s committee’s work progresses, be one of the focuses of our activities.
There has been much news of Arab investment in Brazil in recent years. Is it really coming?
The truth is that Brazil has proved itself a great captor of investment outside the Europe-United States axis. Look at Spain, for example. Spain has been investing in Brazil for 20 years. The country came in at the time of privatisation of telecommunications. Before that there was very little Spanish investment. What was present was basically North American, German, English and some Italian investment. There is currently investment from the most varied of origins, including Arab.
Did this investment come due to improvement of the economy?
It came due to the perception of little risk. Of course, there are companies that invest to gain market share, despite the greater risk. There are companies that invest spare capital, so they accept greater risk, investing expecting a greater rate of return. Some years ago people spoke about the BRIC, Brazil, Russia, India and China. “They are the four,” they said. Now, the countries are no longer on the same level. China is a great receptor of investment, even due to its position, and there is clear perception that Brazil is in the second place in this ranking of investor interest.
Can a government change modify that?
Long-term investors are concerned about some things. The first, and maybe the most important, is knowing the political stability of the country. They will ask about political risk. But those who invest for 20 or 30 years are not eyeing this or the next government, they are eyeing the long-term political and legal stability. Is the justice system solid? Is the Brazilian financial system solid? The Brazilian financial system lived the crisis without a hiccough. Some smaller banks had some difficulty, but they soon solved them, and the large banks remained solid. The Brazilian financial system, with specific difficulties, sailed through the crisis. In little time we were already offering credit. Brazil lived some instability when president Lula (Luiz Inácio Lula da Silva) was elected for his first term in office (in 2002), when it was not known what he would do, what he wouldn’t do, so exchange rates oscillated significantly, and interest rose. But little by little, it was seen that institutions were larger than any head. After that, it all changed and is fine for Brazil.
*Translated by Mark Ament
