São Paulo – Participants of the World Economic Forum (WEF) for Latin America, promoted on Wednesday and yesterday (16th), in Rio de Janeiro, agree that the trade and investment flow between the region, the Middle East and Asia should continue growing despite the global financial crisis, according to a press statement by the event organisers. The Forum brought together businessmen, analysts, government representatives and international organisations and had the crisis as its central theme.
"The boom in South-South relations is a major historical shift which the crisis will not stop," said the chief economist of the development area at the Organisation for Economic Cooperation and Development, Javier Santiso. "OECD countries are no longer the centre of the world," he added, according to a press statement issued by the WEF. The OECD currently includes 30 members, mostly developed nations.
In the same lines, the president of the Brazilian Export and Investment Promotion Agency (Apex-Brasil), Alessandro Teixeira, who is also the president of the World Association of Investment Promotion Agencies (Waipa), said that the flow of investment from the Middle East and Asia to Latin America should continue strong, despite the Waipa itself forecasting a reduction of between 20% and 30% in the global movement of foreign direct investment (FDI) in 2009. "Right now, there is a historical window of opportunity for Latin America in terms of foreign direct investment from Asia and the Middle East," he pointed out.
Brazil is the country that receives the greatest volume of FDI among the Latin American and Caribbean nations. Last year, the volume of funds flowing into the country reached a record US$ 45.1 billion. In the first two months of 2009, the FDI inflow totalled US$ 3.9 billion. The Central Bank believes that the total volume of FDI entering the country this year should total US$ 25 billion. If the figure is confirmed, despite the reduction in comparison with 2008, this should be the third best figure since 2000.
Still according to a press statement by the Forum, Daniel Brennan, a member of the executive board of the of British law office Matrix Chambers, pointed out that, for Latin American countries to be able to make use of investment opportunities in Asia and the Middle East, they must improve their infrastructure and legal and educational systems. "Young people in the region must learn that South-South [cooperation] is the future," said Brennan, who is on the board of World Bank consultants for Latin America and the southern and eastern regions of Asia.
Complementary
According to analyses published on the Forum site, the focus of Latin American nations in the attraction of Asian and Middle Eastern investment jams on problems that both of these regions are also facing due to the crisis.
On mentioning an address by the former Development, Industry and Foreign Trade minister of Brazil, Luiz Fernando Furlan, the site, however, points out that the demand for raw material in Asia and the Middle East and the need to guarantee access to stable food sources, of which Latin America is a great supplier, makes the three regions complementary economic blocs.
A practical example is the recent purchase by Dubai Aluminium (Dubal), from the United Arab Emirates, of 19% of the Pará Alumina Company (CAP), announced this week by Vale do Rio Doce, the controller of the enterprise. Dubal said yesterday, through its website, that it entered the business to "secure the raw materials required to fuel the company’s future growth strategy".
The opportunities, however, go beyond the areas of inputs and food, as, in the case of Brazil, for example, national companies invest more and more heavily on the foreign market and, according to the WEF site, companies in the Middle East and Asia have been investing in the areas of services and technology in Latin America.
Furlan added that successful experiences in Latin American countries in the fields of clean energies may represent opportunities for greater business, especially with Asia. "We have plenty of opportunities in the region, but most countries do not know of them," said former minister Furlan, who is currently chairman of the board at food sector company Sadia.
*Translated by Mark Ament
