Dubai Chamber highlights Lat Am's investment potential

On the occasion of the high profile UAE official delegation visit to Latin America, headed by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, the Dubai Chamber of Commerce and Industry issued four studies compiled by the Economist Intelligence Unit (EIU) on Mexico, Brazil, Chile and Argentina.

Coming as part of Dubai Chamber 's initiative of highlighting and exploring upcoming economies of the world for its members, the studies focus on important areas of investment potential for U.A.E. businesses while providing a clear guideline for the country's investors to make the best of these opportunities.

Hamad Buamim, President and CEO, Dubai Chamber , stated that these studies which are in line with the Chamber 's new strategy of enhancing the competitiveness of Dubai businesses in the overseas markets while stimulating the economic growth of the emirate, has launched iDubai market intelligence unit as one of the pillars of the strategy which provides stakeholders with statistical studies and reports on local, regional and global markets and their investment potential.

Buamim further stressed that these studies with their facts and figures help investors to make sound investment decisions in these promising markets while they also contribute to enhancing the competitiveness of Dubai and the U.A.E. businesses to plan a successful strategy to explore and enter new markets.

The President and CEO of Dubai Chamber also informed about the Chamber 's plans to open a representative office in the Brazilian capital Sao Paulo to provide a gateway to U.A.E. investors to enter the Latin American market which he said promises ample investment opportunities for the country's investors.

Mexico

According to the report, U.A.E. imports from Mexico were over three times bigger than exports in 2013 as the planned reforms will increase competition in major and improve infrastructure and education as a result of which Mexico's structural-growth rate could rise from under 3.5  to 4.5 per cent per annum.

The study states that the services sector accounted for 62 per cent of the GDP of Mexico in 2013, followed by the manufacturing sector (18 per cent) and oil and gas (8 per cent), and construction (8 per cent) and agriculture and fisheries (3 per cent), indicating that the presence of an extensive network of free trade agreements with over 50 countries make it easier for the country to trade with most parts of the world with access to over 70 per cent of global GDP.

The study adds that the leading exports of Mexico during the year 2012 were manufactured goods (82 per cent) as automotive formed a major component of manufactured exports, followed by oil (14 per cent) and agricultural products (3 per cent), while the export markets were US taking on 78 per cent of Mexican exports, followed by Canada (3 per cent), Spain (2 per cent) and China (2 per cent). The vehicles 21.6 per cent of the manufacturing sector, and 18.9 per cent of Mexico s exports in the year 2012.

Also the expected growth of the Mexican economy in 2014 comes from its developing consumer market, diversity of its economy, optimistic outlook for FDIs, and an improving business environment ensured by the commitment of the Mexican government to increase investments are factors enhancing the strength of the Mexican economy and luring investments to the country, the report adds.

It further states that UAE  imports from Mexico overshadowed exports in 2013 and valued at $479 million as almost half of these imports ($230m) were trucks, for the transport of goods, machinery parts ($52m), organic chemicals ($50m) and electrical equipment ($49m) are also significant.

The UAE  exports to Mexico totalled $143 million. About two-thirds ($94m) of these exports consisted of aluminium. The remainder is spread thinly over a number of product categories, the largest being machinery ($12m), iron and steel ($8m) and plastics ($6m).

The study reveals that Mexico attracted two-thirds of the FDIs in the manufacturing sector during the period 2003-13, to the value of $35.2 billion in 2013 while Mexico City alone attracted over 400 investment projects during the period 2003-2013.

In its assessment of Mexico's business environment, the report ranks the country 32nd out of 85 countries in comparison to the U.A.E. 's 23rd rank for its attractiveness of doing business as Mexico finds its macroeconomic environment, foreign trade and exchange control and FDI policy as very good, while its financing, labour market, market opportunities, infrastructure as good. Its tax regime and private-enterprise policy, are rated as moderate.

In its outlook for 2014-18, the report states that key sectors like retail will witness a volume growth of 4 per cent per annum. It also states that private sector investment in the energy sector is expected by $40 billion to $50 billion annually while a $300 billion infrastructure plan to 2018 encompasses highways, railways, telecoms infrastructure and port upgrades.

In the area of telecommunications, the government expects recent reforms to expand the market from $35 billion to $55 billion by 2018 as foreign investors will no longer be limited to a 49 per cent stake in broadcast services while a solid regulatory environment and sizeable credit growth potential is forecasted for the financial services and the automotive manufacturing sectors.

Brazil

Another study on Brazil commissioned by Dubai Chamber and compiled by the Economist Intelligence Unit (EIU), states that trade and consumer goods companies which stand to benefit from an increasing middle class are the leading drivers of the country's economic growth.

Figures quoted in the report on U.A.E. 's trade with Brazil state that the emirates imports from Brazil were over $2.5 billion in 2013 and consisted of raw sugarcane ($452 million), refined sugar ($409 million) and meat ($605 million), mainly poultry. Iron ore ($257 million) is also significant while gold also accounted for $108 million of imports in 2013, up sharply from $50 million in 2012.

Also, U.A.E.  exports to Brazil totalled $611 million in 2013 out of which $430 million worth of exports consisted of petroleum oils (not crude), fertilisers ($49 million) and ships and boats ($49 million) were also prominent. Trade was around 20 per cent of GDP in 2012.

The study highlights that Brazil has attracted about half of the foreign direct investment in South America during the years 2012 to 2013. The rate of FDIs averaged at $53 billion over the past five years and was concentrated in the sectors of manufacturing and services which absorbed 86 per cent of total inflows to Brazil. The total inward FDI is expected to reach $70 billion by 2018.

Sao Paulo attracted the greatest share of foreign direct investment during the period 2003-2013 with over 800 investment projects, followed by the city of Rio de Janeiro which had more than 200 investment projects.

The report ranks Brazil 45th out of 85 countries assessed for their attractiveness of doing business in comparison to the 23rd rank received by the U.A.E.  as it finds its macroeconomic environment, financing foreign trade and exchange control and FDI policy as good, while its tax regime, private-enterprise policy, market opportunities, infrastructure and labour market moderate.

In its key sector review, the study focuses on infrastructure, energy, retail and agriculture and banking. The National Integrated Logistics Plan (PNLI) concessions programme for logistics infrastructure (roads, ports, airports and railways) aims to lift overall spending on infrastructure (including electricity, telecommunications and sanitation) from a total of $184 billion in 2008-11 to $257 billion in 2013-16.

Brazil is the world's 10th largest consumer of energy and will be a top-10 oil exporter by 2025. Investment in energy is expected to be around $485 billion up to 2021. Over 65 per cent will go into upstream and downstream oil and gas, while 25 per cent will go on electricity generation and transmission. Higher employment and incomes, plus greater credit access, led to a consumption boom up to 2012 as annual retail-sales growth will average 4-5.5 per cent in 2014-18 in real terms.

Focusing on agriculture and banking, the report states that the government thinks the large agribusiness industry could grow by around 4 per cent in 2014, to $416 billion. They will invest $60 billion in 2014 through capital investment and credit which doubled 56.5 per cent of GDP in the decade to end-2013, but will now slow owing to tighter monetary conditions and an unwinding of household debt (currently 44 per cent of annual income).



 

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