Brics nations — the fast-growing grouping of Brazil, Russia, India, China and recently added South Africa — are an economic force to be reckoned with. Goldman Sachs expects the Brics to account for nearly 40 per cent of global GDP by 2050 and to have become four of the world's top five economies. They are poised to become the most important source of future global growth, one group of analysts believes. They represent more than a quarter of the Earth's landmass, more than 41 per cent of its population, almost 25 per cent of world GDP, and nearly half of all foreign-exchange and gold reserves. The UAE already has historically strong trade ties with India and China but is seeking to strengthen economic relations with the remaining blocs in the Brics for the mutual benefit of both, experts say. "The potential for mutual economic benefit between the Brics and the UAE has not been lost on the Emirati government. It has been building trade bridges with the Brics for the past few years, marked by official visits to China in 2008, Russia and Brazil in 2009 and India in 2010," said Rashid Al Jumairi, researcher with the Abu Dhabi Council for Economic Development.
Trade between the UAE and the Brics grew by 18 per cent between 2005-09, according to the UAE Ministry of Foreign Trade. In 2009, trade between the UAE and the Brics reached around $44 billion (Dh161.5 billion), accounting for around 25 per cent of the UAE's trade with the world.
BRAZIL
A high-profile Brazilian trade mission, including the minister of trade and representatives of 47 companies, arrived recently in the UAE to explore trade and investment opportunities. Priority sectors which require investment are construction, food and beverage, agribusiness, machinery, infrastructure and real estate.
The visit concluded with companies signing deals worth $65.3 million (Dh239.79 million). "Market expansion is crucial for Brazil to keep its good foreign trade performance and it increasingly demands continuous contact with non-traditional markets," said Fernando Pimentel, Brazil's Minister of Development, Industry and Foreign Trade.
The UAE was the 30th most important destination for Brazilian goods, taking 0.8 per cent of its exports last year, he said.
First quarter trade between Brazil and UAE was tipped in Brazil's favour. Brazilian exports to the UAE reached $611 million, placing the UAE as the second top Brazilian export destination in the Arab world after Saudi Arabia which purchased $701 million worth of Brazilian goods. The top exports from Brazil included sugar, beef and poultry, mineral ores, cereal and vegetable oils.
Brazilian exports to the UAE totalled $2.17 billion and imports reached $478.7 million last year. Main exports included $483.49 million in cane sugar and sucrose, $353.66 million in raw sugar cane, $300.47 million in iron ore, according to data released by the Brazilian government. The main imports included $265.78 million in jet fuel kerosene, $59.71 million in sulphur and $54.34 million in liquefied propane.
Record foreign investment
Brazil, one of the Bric sisters and Latin America's largest economy, makes a compelling trade pitch: It overtook Britain to become the world's sixth largest economy last year following a long journey of economic reforms.
Its estimated GDP last year was $2.5 trillion, according to the CIA World Factbook. It set a national record when it raked in $60 billion in foreign direct investment (FDI) in the first 11 months of last year.
With a population of approximately 205 million and a growing middle class with improving purchasing power, Brazil is a substantial consumer market.
Among recent deals between the UAE and Brazil, ports operator DP World has partnered with Brazilian company Odebrecht to acquire a stake in Embraport, the largest Brazilian private multi-modal port terminal in the city of Santos.
The Santos port is the largest Brazilian container port and the largest in South America, with 90 per cent of its cargo destined for the local Sao Paulo market.
Brazil's trade ties with the UAE go back to 2004 when the two nations signed a historic bilateral aviation agreement.
RUSSIA
There are excellent possibilities to expand trade between the UAE and Russia, which in 2011 stood at $1.5 billion (Dh5.5 billion), according to the Chamber of Commerce and Industry of Russia.
In efforts to strengthen economic ties, investment organisations and sovereign wealth funds from the UAE were exempt from taxation in Russia under an agreement signed in December. Previously, UAE official investors in Russia had to pay a 20 per cent tax on stock profits, 15 per cent on profits from interest, and 20 per cent on capital gains, according to the UAE Ministry of Finance.
Russia is keen to attract investors because of heavy capital outflows fuelled by instability in the global economy and domestic political problems. The Russian Finance Ministry said capital flight could exceed $80 billion in 2011 and even hit $85 billion, up from $38.3 billion in 2010.
Investment opportunities are possible between the two countries, given that the Abu Dhabi Investment Authority (ADIA) has assets estimated by analysts at between $400 billion and $600 billion, ranking it among the largest sovereign wealth funds globally.
Russia has the world's ninth largest economy, and has an abundance of natural gas, oil, coal and precious metals. In late 2008 and early 2009, Russia experienced its first recession after ten years of economic expansion. Steady growth resumed in late 2009 and 2010.
"The most compelling economic growth stories in a world starved for growth are the incremental transformations experienced by countries like China, India, Poland, Russia, Argentina, Botswana, Brazil, Turkey, South Africa and the UAE to name a few," said the organisers of the Annual Investment Meeting, or AIM 2012, that will take place in Dubai from May 1 to 3.
The UAE's second largest ports operator, Gulftainer has set up a $500 million fund with Russian partners as it eyes more acquisitions in Russia, the Gulf and Asia, Reuters has reported. The company signed a $275 million deal last year to co-develop and operate Russia's Baltic port of Ust-Luga. "We see huge potential in Russia and we are looking at both — greenfields and existing ports — for acquisitions," said Gulftainer vice chairman Badr Jafar, adding the company hopes to conclude at least one deal in Russia this year.
"A GCC partnership with the Brics would be an important move, for strategic, economic and political dimensions on the one hand and the redrawing of international relations on the other. This is important in light of the changing balance of power in the world; at a time when the West shies away from buying Gulf oil, the Brics are drawing closer to the Arabian Gulf and its oil products and exports," said Dr Mohammad Al Asoomi, a UAE economic expert.
"Joining the Brics bloc is also of great significance in the post-oil era as the Gulf seeks new markets. There is no better market than the Brics, which are thirsty for all sorts of goods due to their fast growth."
INDIA
This Asian economic powerhouse is the UAE's biggest trading partner. Both countries traditionally have had close economic, social and cultural ties spanning centuries. India-UAE trade was valued at $180 million (Dh660 million) per annum in the 1970s.
In fiscal year 2010-2011, trade between India and the UAE crossed $67 billion, according to Indian government figures. This included $34 billion of Indian exports to the UAE and $32 billion worth of UAE exports to India.
Trade last year propelled the UAE to the top slot among India's trade partners, displacing both China and the US.
India emerged as Dubai's top trading partner in 2011. Trade with India accounted for nearly a fifth—19 percent—of Dubai's foreign trade at Dhs. 206 billion in 2011, according to Dubai customs. This was followed by China at Dhs. 100 billion.
Major Indian exports included gems and jewellery, petroleum products, machinery and instruments. Major imports included gold, precious stones and gems, machinery and electronics. Dubai has been a popular gold shopping destination for Indians.
Indian businessmen and traders have been a crucial part of Dubai's business community and have in turn found opportunities here. The Dubai Chamber of Commerce and Industry has 20,038 Indian companies registered.
The Sharjah Chamber has 9,532, Ajman Chamber has 2,596 and Ras Al Khaimah over 1,610 Indian companies registered. The Jebel Ali Free Zone has around 600 Indian companies.
CHINA
Total trade between the UAE and China reached Dh47.3 billion in the first 11 months of 2011, according to the latest data available from the UAE Ministry of Foreign Trade. The total trade volume was expected to reach Dh50 billion in 2011. China is Dubai's second largest trading partner.
"The UAE, especially Dubai, enjoys an excellent economic relationship with Bric countries as India and China occupy the top two slots in the list of Dubai's list of leading trading partners. Dubai's non-oil trade with India and China in the first ten months of 2011 reached Dh180.7 billion and Dh82.8 billion respectively. Also, during the same period Dubai's non-oil trade with Brazil was Dh5.6 billion, with Russia Dh4.5 billion and with South Africa Dh4.2 billion," Hamad Bu Amim, director-general of the Dubai Chamber of Commerce and Industry, told Gulf News.
China's energy dependency has been the focus when it comes to the economic ties between China and the GCC.
"With the current instabilities surrounding the Iranian question, China needs to secure an energy source which is less reliant towards Iran while at the same time ensuring its future growth potential," said Nael Shehadeh, associate researcher at the Gulf Research Centre Foundation.
"Emerging Asia is very exposed to Iranian risks, due to marked oil dependency and trade links. Certainly, China is highly concerned about the stability of the Gulf as 43 per cent of [its] total oil import come from both Iran and the GCC. For China, Saudi Arabia represents a quarter of their oil import, but this proportion is expected to rise in the near future," said Shehadeh.
The recent six-day visit of Chinese Premier Wen Jiabao to Saudi Arabia, Qatar and the UAE was to secure oil contracts and other infrastructure projects.
Trade agreement
He also called for the conclusion to a GCC-China Free Trade Agreement therefore highlighting the fact that the relationship outside of energy also spans commerce, investments, infrastructure, finance, security and technology.
Total trade between China and UAE increased threefold from Dh14 billion in 2003 to Dh42 billion in 2007, according to a paper on their trade relations by the Dubai Economic Council (DEC). Despite the global financial crisis in 2008, trade volumes hit Dh43 billion in 2009. The UAE government is keen to develop and further enhance the unique relations between UAE and China, said Hani Al Hameli, DEC secretary-general during a recent visit to China.
China is the second-largest economy in the world with an approximate GDP of $9.10 trillion. It is also considered to be the largest exporter in the world.
The massive growth rate in China was a result of the export growth which adds up to about $3.64 trillion. Nevertheless, the value of China's total imports adds up to about $1.39 trillion, and it is the second-largest importer of oil worldwide.
A 35 billion yuan (Dh20.28 billion) swap deal was made between the Chinese and UAE central banks on January 18, 2012. "This would undoubtedly increase the trade relations between the two countries, and would make the UAE the regional hub for yuan clearance" Al Hameli said.
SOUTH AFRICA
Trade between South Africa and the UAE was valued at nearly $2 billion (Dh7.34 billion) in 2011, according to Yacoob Abba Omar, South Africa's Ambassador to the UAE.
Trade has surpassed the level of 2008. The UAE has become South Africa's sixth biggest oil supplier. South Africa's main exports to the UAE include metals, auto parts, raw diamonds and gold.
In November 2011, South African President Jacob Zuma came on a state visit to the UAE, further boosting ties between the two countries.
"Our industrial policy seeks to expand production in value-added sectors with high employment and growth multipliers. In addition to manufacturing, we will focus on sectors such as energy and energy saving industries as well as those that have the potential to develop long-term advanced capabilities: nuclear, advance materials and aerospace," South Africa's Minister of Trade and Industry Dr Rob Davies said during a visit to Dubai in November.
"We believe that such sectors can specifically contribute towards an increase in bilateral trade, investment, tourism, science and technology, financial services, as well as industrial cooperation between South Africa and the UAE. In addition, given the geographic position of both countries as hubs, it would also enable both countries to achieve a lot together."
It estimated that the market size of the developing world will be larger than that of developed world by 2020.
"It is therefore important that the developing nations trade among each other. Moreover, rather than the exchange of commodities, the structure and composition of trade between developing nations should be advanced and manufactured goods," he added.
