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Dubai's next frontier: Latin America


Dubai has become a pivotal connector for world trade, yet one corner of the globe barely registers: Latin America. But that is about to change - drastically. The continent’s share of Dubai’s total trade is destined to double from 3 percent to 6 percent within just three years and reach double-digits by 2022, according to an ambitious plan set out by Dubai Chamber of Commerce and Industry. In April, the organisation, which boasts 201,000 members and business councils from 49 countries, opened its first representative office in the region (São Paulo, Brazil) and announced its second (Buenos Aires, Argentina). The offices are expected to help grow trade exponentially. “This is the beginning of many activities with this part of the world,” Dubai Chamber president and CEO Hamad Buamim said during a high level delegation to Brazil, Argentina and Paraguay to inaugurate the offices and sow the seeds of growth. A key instigator of the growing trade with Latin America is food security. The region boasts 28 percent of the world’s arable land and one-third of its freshwater supplies, according to the World Economic Forum, which last year described Latin America as having the potential to become the “breadbasket of the world”. Despite its vast agricultural resources, Latin America has barely tapped its potential. And with the UAE and the rest of the Gulf importing as much as 90 percent of their food and a growing population that will increase demand, the region is in line to play a key role in fulfilling the Gulf's food security. “Although agriculture is the main driver of economic activity in Paraguay, the country has barely tapped its agricultural potential and stands to benefit significantly from boosting its exports of soybeans, cotton, oilseeds, and sugar which are seeing high global demand,” Buamim says. “High-potential imports from Argentina, include fruits, dairy products, cereals, meat and seafood, which are all categories that can help meet the needs of a fast-growing population in Dubai, which currently imports 85 percent of its food requirements.” Brazil is the biggest exporter of halal food in the world but currently only supplies half of the global demand, according to the Federation of Muslims Associations in Brazil (FAMBRAS). The federation’s president, Mohamed Hussein El Zoghbi, says Dubai’s interest in more Brazilian halal food products has opened up opportunities for Brazilian producers. “Because Dubai is creating a halal hub, the [Dubai Chamber] office in Brazil will open up opportunities. It’s creating more credibility for Brazil’s halal production, which will expand the market,” El Zoghbi, who was instrumental in helping Dubai Chamber establish its office in São Paulo, said during the recent delegation trip. Buamim says the success of Brazilian food giant Sadia in Dubai illustrates the potential. “Especially Mexico and Brazil have a lot to offer; they have the power to move quickly to Dubai and do big business. If we can attract these big anchors we can, in no time, grow trade to double or triple,” he says. Essa Al Ghurair Investments, one of the largest industrial companies in the UAE, imports more than 2 million tonnes of grain from Latin America, which is distributed via Dubai to countries as far as Morocco and Vietnam. Chairman Essa Al Ghurair says he expects to import 7 million tonnes – worth $2.1bn – in the near future. He also wants 1 million tonnes of soybeans from Paraguay. He says the increased dialogue between businesses from Dubai and Latin America is already bearing fruit, with his firm in discussions with Brazil’s largest orange juice exporter to potentially use their warehousing space during its off-season to store corn, an additional food that Al Ghurair hopes to export to the Gulf from Paraguay. “[The warehouses are] empty so we’re creating a win-win with some local knowledge. Maybe next they can trade orange juice and citrus; one business leads to another business,” he says, adding that his company is also assessing whether Brazil’s famous coffee is appropriate for its new roasting facility in Algeria. The increase in food trade requires a significant investment in logistics and transport, both within Latin America and between the region and Dubai. Dubai-based container port operator DP World is the largest Gulf player in Latin America, with $4bn invested in five countries, according to the Economist Intelligence Unit. However, it lacks direct services between Latin America and the Gulf. Domestic logistics is also lacking throughout the continent. But Buamim says Brazil in particular is working to increase its connections to sea ports. “They want to improve their logistics and we could be a part of that,” he says. Infrastructure in general is a significant area of investment potential for the UAE. The majority of Latin American countries (including Brazil and Argentina) fall into the bottom third of the World Economic Forum’s Global Competitiveness Index 2015-16 ranking of overall infrastructure.


Source : http://www.arabianbusiness.com
Posted on :7/6/2017