The UAE and India recently signed a comprehensive trade deal across a wide range of sectors, showcasing the importance of broadening economic partnerships in the aftermath of the pandemic.
A potential deepening of trade ties with the Latin America region – one of the world’s biggest exporters of food and raw materials – will be highly beneficial to UAE’s economy as well.
In an interview with Gulf News, Hamad Buamim, President and CEO of Dubai Chamber of Commerce & Industry, says the roadmap to make things happen is ready.
Where do you see opportunities for UAE companies in Latin America?
There is definitely a lot of scope for investment in other areas such as agriculture, manufacturing, food and beverage, tourism and technology to name a few.
We had conducted a survey a few months ago, which gave us some very interesting insights into what investors on both sides are looking for, and what their concerns are. That has helped us steer the conversation as the UAE is a very important trading partner in the GCC for Latin American countries.
Between 2016 and 2021, the GCC invested $4 billion into Latin American countries, 77 per cent of which was sourced from the UAE, 22 per cent from Saudi Arabia and 1 per cent from Qatar. More than half of that investment was directed towards logistics, distribution and transportation companies.
There is also an untapped opportunity for knowledge exchange between the two regions. The UAE has successfully executed road, electricity and telecommunications infrastructure projects, while LATAM is home to a rapidly expanding fintech sector and are experts in agriculture. Therefore, there is an opportunity for sharing the best practices in sectors that are strategic for the other.
For instance, the halal sector offers many areas of collaboration. Dubai is also at the forefront of the global halal food industry, which is one of the fastest growing segments of the Islamic economy, with the value of this market expected to grow to $1.93 trillion by 2022. Brazil, on the other hand, is the largest producer and exporter of halal meat to the world, especially to the Gulf nations.
Could Latin America emerge as a major trade hub, much like India or China?
LATAM countries definitely have the potential to become a major trade hub and we would like to be optimistic about it. I believe the region has been focusing on bilateral trade agreements, which will strengthen their trade and allow exchange of best practices.
Their growth will come from sectors that require engagement with international markets. As far as Dubai is concerned, Dubai-Latin America trade hit $3.67 billion in the first half of 2021, with Brazil, Peru, Mexico, Guyana and Suriname being the top five trading partners.
The pandemic has boosted demand for products coming out of Latin America due to the rising reliance on e-commerce. Is this something UAE can take advantage of?
There is no doubt that there has been a phenomenal growth in e-commerce in LATAM, which could also be due to the pandemic as it brought about shifts in consumer behavior that may stick even after the pandemic ends.
According to research by Statista, in 2020, retail e-commerce sales in Latin America were estimated to amount to approximately $85 billion, nearly 35 per cent more than reported in the previous year before the COVID-19 pandemic. According to forecasts, this figure is expected to rise to about $160 billion by 2025.
This coupled with the fact that there are not that many local brands to choose from and myriad international shipping options available, opportunities abound for brands which offer superb quality, competitive prices and strong customer service. E-commerce and digitalisation of services is the way of the future and UAE companies are geared to take advantage of that for their growth and expansion. Both brand owners and trading companies can explore the LATAM e-commerce space and look for synergies.
Mexico: $590 million
Peru: $574 million
Guyana: $348 million
Suriname: $299 million
The current shipping congestion has choked the supply of goods by sea and raised prices. Is this affecting UAE’s trade lines with Latin America?
I think this is not unique to Latin America, as globally all countries faced supply issues due to the pandemic. The UAE imports more than 90 per cent of its food products and 12 per cent of our food imports in 2020 came from Latin American markets. Thus maintaining open channels for trade and dialogue is very important to us.
As the representative of the private sector in Dubai, we are very committed to playing our part in ensuring that the interests of the business community are honoured and new solutions to any bottlenecks are found.
What is your outlook for UAE-Latin America trade in 2022 and the next five years?
There is a lot of potential for growth in bilateral trade between the UAE and Latin America. Both sides have been working diligently to push trade to the next level. Given Dubai’s new five-year plan to boost foreign trade to Dh2 trillion, I am confident that Latin America will gradually account for a much larger share of the emirate’s trade in the years to come.
There are ways to further boost trade, such as strategic cooperation agreements, expansion of direct flights linking Dubai to Latin American business hubs and the creation of new incentives with the aim of facilitating investment flows between the two regions. This is what investors from the UAE are looking for.
While there will be challenges such as the geographical distance and the ambiguity on regulations which can impact the cost of doing business, we believe that the LATAM countries are growing and will find a way to deal with these teething issues that every country faces when it starts dealing with the rest of the world.
Global Business Forum
Buamim’s comments come ahead of the Global Business Forum – LATAM on March 24 and 25, 2022, which is likely to see more than 800 participants representing more than 50 countries.
The forum is a major pillar of Dubai Chamber’s international expansion strategy, which aims to explore economic potential in promising markets around the world. Currently, Dubai Chamber operates four offices in Latin America, located in Panama City, Panama; São Paulo, Brazil; and Buenos Aires, Argentina. It’s planning to open the next office in Mexico City, Mexico, later this year.