Brazil seeks Arab investors who want to fund infrastructure projects

Brazil seeks Arab investors who want to fund infrastructure projects
The South American country is the largest exporter of halal protein in the world, so partnerships with Gulf nations to improve Brazil’s logistical systems would be only natural. (Supplied)
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Updated 28 February 2023

Brazil seeks Arab investors who want to fund infrastructure projects

Brazil seeks Arab investors who want to fund infrastructure projects
  • Talks were held between Brazilian officials and Gulf ministers and business leaders in January in Davos

SAO PAULO: With new state governors and a new president, Brazil is expected to become fertile ground for international investors who want to fund infrastructure projects. Gulf nations are well-positioned to take part in that process.

Various reasons make Brazil a good destination for investments at this time. Not only does it need to urgently develop its logistical systems and energy production infrastructures, but its authorities also learned over time that they need to work with public-private partnerships if they want to have access to the necessary funds and stimulate change.

During the World Economic Forum in January in Davos, Brazil’s Finance Minister Fernando Haddad met with Saudi Investment Minister Khalid Al-Falih and discussed potential partnerships.

“They have investment funds and are paying attention to the calls for partnerships that the Brazilian government, the states and the municipalities will open from now on. That is good because it will make available a significant volume of funds,” Haddad said after the meeting.

Sao Paulo’s Gov. Tarcisio de Freitas also met with Al-Falih and presented to him and to Bandar Alkhorayef, Saudi minister of industry and mineral resources, the state’s asset portfolio.

During the forum, the governor also held talks with Mansoor bin Ebrahim Al-Mahmoud, CEO of the Qatar Investment Authority, and Sultan Ahmed bin Sulayem, chairman and CEO of Emirati multinational logistics company DP World. 

Sao Paulo’s Governor, Tarcisio de Freitas discusses potential partnerships with Saudi Investment Minister Khalid  at the World Economic Forum in January. (Supplied)

Guilherme Schmidt, a partner in law firm Schmidt Valois Advogados and an expert in infrastructure projects, told Arab News: “This is an interesting moment for potential investments given that the first years of government usually bring new possibilities.

“And fortunately, Brazil learned from its past errors and will avoid repeating them and driving away investors.”

The country opened the door for private investment in the public sector over the past 30 years, and now there are no political risks for foreign agents in the country, said Armando Castelar, an economist and expert in infrastructure.

“The federal government won’t create any disturbances in that matter. Brazilian society already understands the significance of private investment,” he told Arab News.

President Luiz Inacio Lula da Silva’s Workers’ Party was critical of the privatization policies advanced by former President Fernando Henrique Cardoso (1995-2003).

But during Lula’s first two tenures (2003-2010) and President Dilma Rousseff’s administrations (2011-2016), Brazil’s government largely worked side by side with the private sector.

“We shouldn’t wait for the privatization of state-run companies during Lula’s tenure, but we’ll have several concession agreements. Rousseff, for instance, opened concessions for airports,” Castelar said.

Many partnership opportunities will emerge in renewable energy, and Brazil already has a solid concession model.

Projects are being developed to produce biofuels, bidding rounds for wind power plants will keep being opened, and solar energy will see larger growth. 

Brazil already has a solid concession model in renewable energy. (Supplied)

But expectations are higher when it comes to logistical infrastructure. In January, Transport Minister Renan Filho announced that he wanted to raise the participation of railways in Brazil’s logistical system from 20 to 40 percent by 2035.

In April, he said, the government will launch the auction of a new part of the West-East Integration Railway concession in Bahia state.

He also intends to resume the Ferrograo project, a railway that will connect Mato Grosso state, Brazil’s agribusiness epicenter, to Para state, from where shipments can reach the Atlantic via the Tapajos River.

Plans for the project were suspended due to environmental concerns, but Filho hopes that such obstacles can be solved now, and will discuss the issue with Environment Minister Marina Silva.

“The area of transport brings additional challenges given that conceding projects to the private sector is something rather new and, at times, there are no established models to do it in Brazil,” Castelar said.

Ports are another promising field. De Freitas has been pushing the federal government to allow him to privatize the Port of Santos, the most important in the country.

Lula’s Chief of Staff Rui Costa seems willing to debate that possibility, while Minister of Ports and Airports Marcio Franca rejects the idea.

But Franca believes that a number of services in the ports, such as dredging, can be privatized.

“Brazil has dozens of ports that could potentially be modernized with the help of the private sector,” Tamer Mansour, secretary-general of the Arab Brazilian Chamber of Commerce, told Arab News.

“We’ve been facing great difficulties given that the ports of Santos and Paranagua can’t tend anymore to the needs of trade between Brazil and the Middle East.”

The South American country is the largest exporter of halal protein in the world, so partnerships with Gulf nations to improve Brazil’s logistical systems would be only natural, Mansour said, adding that now is a good time for such investments.

Over the past four years, during President Jair Bolsonaro’s administration, Brazil strengthened its ties with the Gulf.

Bolsonaro met with Gulf authorities on different occasions and signed important agreements. Saudi Arabia’s Public Investment Fund, for example, announced $10 billion in investments in different areas in Brazil after Bolsonaro visited the Kingdom in 2019.

“I’m even more optimistic with the current administration,” said Mansour, adding that Lula “was a great partner of Arab nations during his previous administrations. He’ll certainly work to intensify partnerships and investments.”

Brazil’s government is now more prepared to raise its projects’ transparency, presenting them with all the details needed in due time, he said.

“I think Arab nations are ready to invest more in countries like Brazil. There’s more stability now and the right mindset to work on partnerships,” Mansour added.

One of the successful cases of cooperation between Gulf nations and Brazil in infrastructure was the participation of the UAE’s Mubadala Capital in Rio de Janeiro’s subway system.

The fund acquired part of the company in charge of the subway in 2017, and assumed full control in 2021.

“The Arab investor was very professional and did a superb job. Since then, it has been consulted regarding many other endeavors,” Guilherme Schmidt, who worked on that project, told Arab News.

Among the Brazilian states, not only Sao Paulo but also Parana, Rio Grande do Sul and Goias will probably take the lead and launch infrastructure projects to be funded by the private sector, Castelar said. “Those are states that had more progress in structuring public-private partnership models,” he added.

Mansour said some state governors attended Expo 2020 in Dubai and opened conversations with Arab authorities.

“Now they were re-elected, so their administrations’ structure is unaltered — something that may give investors more confidence,” he added.

Mansour said Brazil currently has many local agents that can bring additional reliability for international investors.

“When we talk about megaprojects, local partners are always needed to take part in the investment, directly or indirectly. Brazil has strong financial institutions that have been playing that role,” he added.

Saudi PMI reveals strong non-oil sector performance, despite price pressures 

Saudi PMI reveals strong non-oil sector performance, despite price pressures 
Updated 19 sec ago

Saudi PMI reveals strong non-oil sector performance, despite price pressures 

Saudi PMI reveals strong non-oil sector performance, despite price pressures 

RIYADH: Saudi Arabia’s economy showed robust expansion in the non-oil private sector in November, driven by strong demand and the sharpest increase in new business inflows, despite cost pressures, an economic tracker showed. 

However, the Kingdom’s Purchasing Managers’ Index dropped to 57.5 in November from October’s 58.4.

This dip is attributed to slower staff and inventory growth rates, coupled with a notable reduction in delivery times, according to the Riyad Bank Saudi Arabia PMI report, compiled by S&P Global. 

Despite this decline, Saudi PMI remained well above the neutral threshold of 50.0, signifying a significant improvement in business conditions within the Kingdom’s non-oil private sector economy, the report added. 

The new orders index, one of the two largest contributors to Saudi Arabia’s PMI, recorded the highest reading in five months, indicating improvements in market conditions, customer numbers, and investment spending. 

Naif Al-Ghaith, chief economist at Riyad Bank, commented in the report: “Despite the expansion in new orders and output, the new export figures have remained relatively low to be in line with the non-oil exports figures posted by GASTAT (General Authority for Statistics).”  

He added: “This weak performance in exports can be primarily attributed to the petrochemical sectors as this sector represents more than 29 percent of non-oil exports.”   

Moreover, the latest survey data showed a notable surge in cost inflation in the non-oil economy, led by the fastest rise in overall input costs since June 2022, especially in construction. Although wage inflation moderated, it remained above average due to efforts to retain staff amid rising living costs. 

Despite a slightly slower growth rate than the previous month’s record, the non-oil sector still experienced significant employment growth. 

“Another factor affecting the PMI is the response of prices to input costs. Over the past few months, input prices have been increasing, and this trend has started to impact the price of final goods and services,” Al-Ghaith said.  

He added that, due to competitive pressures, the impact on overall prices had been somewhat subdued. “This month, output prices recorded an increase, yet one that was slower than the increase in input prices.” 

In conclusion, the report highlighted a substantial improvement in business expectations for the next 12 months in November, reaching the highest level since June. The heightened optimism is attributed to the widespread belief that strong new business inflows will spur increased activity, the report added. 

Turkish inflation rises to its highest level this year

Turkish inflation rises to its highest level this year
Updated 04 December 2023

Turkish inflation rises to its highest level this year

Turkish inflation rises to its highest level this year
  • Aggressive rate-hiking cycle may be beginning to cool demand

ISTANBUL: Turkiye’s annual inflation rate edged up to 61.98 percent in November, data showed on Monday, its highest level this year but just shy of expectations, signaling that an aggressive rate-hiking cycle may be beginning to cool demand.

Month-on-month, consumer price inflation was 3.28 percent, according to the Turkish Statistical Institute, less than a forecast of 3.9 percent in a Reuters poll.

Annual inflation was expected to have risen to 63 percent in November before ending the year at 67 percent, the poll showed. Price rises are seen peaking in May between 70-75 percent before dipping due to the monetary tightening cycle that is winding down.

The data “adds to evidence that inflation pressures in the economy continue to cool,” said Liam Peach, senior emerging markets economist at Capital Economics.

The “monetary tightening cycle is likely to come to an end with one final interest rate hike later this month,” he wrote.

In October, annual inflation dipped for the first time in three months to 61.36 percent.

Inflation soared after a currency crisis at the end of 2021 and touched a 24-year peak of 85.51 percent in October last year. This year, the lira has so far lost some 35 percent of its value, compounding the cost-of-living crisis for Turks.

The monthly CPI was driven by an 11 percent jump in housing-related costs in November, while clothing and transportation costs were nearly flat, the data showed.

Concern autos will become less affordable due to rising prices and the ongoing lira depreciation has driven sales to an annual record, up 60.8 percent in the January-November period, trade association data showed on Monday.

The domestic producer price index was up 2.81 percent month-on-month in November for an annual rise of 42.25 percent.

The latest run-up in inflation began in July on the back of tax hikes and a sharp decline in the lira following May elections.

Since June, the central bank has reversed a yearslong policy of low rates that had long been favored by President Recep Tayyip Erdogan. It has hiked rates by 3,150 basis points to stem inflation and also adjusted a raft of credit rules.

As part of Erdogan’s pre-election pledges, household monthly natural gas consumption up to 25 cubic meters was provided free until May next year.

The lira weakened 44 percent against the dollar in 2021 and another 30 percent in 2022. Inflation fell to as low as 38.2 percent earlier this year, partly due to base effects and a relatively stable lira.

The central bank raised its benchmark rate to 40 percent last month and said tightening will be completed in a short period of time.

The bank said domestic demand appears to be moderating however its existing high level, along with stickiness in services prices, and geopolitical risks keep inflation pressures alive.

Women complain of unfulfilled promises to tackle gender disparity

Women complain of unfulfilled promises to tackle gender disparity
Updated 04 December 2023

Women complain of unfulfilled promises to tackle gender disparity

Women complain of unfulfilled promises to tackle gender disparity

DUBAI: As Gender Day was observed on Dec. 4 at the 2023 UN Climate Change Conference in Dubai, female participants advocated for increased awareness regarding climate change’s acute impact on women, especially in the developing world.

Despite the extensive ongoing discussions surrounding the topic, numerous female participants expressed dissatisfaction, asserting that akin to various other facets of climate change, the gender gap has largely remained mere discourse. They highlighted that changes are unlikely to occur, even as the repercussions of climate change, particularly affecting women, continue to heighten.

Vinita Apte, founder of TERRE Policy Centre, a Pune-based NGO working with women living in rural areas, outlined the challenges climate change presents for women, particularly in India.

Apte spoke with Arab News on the sidelines of the forum, saying: “In terms of climate change, women are facing a lot of problems, especially with water scarcity, which is a major issue in their life because they have to walk for long (distances) just to get even a pot of clean water. Besides water, they have a lot of problems typical of climate change in terms of heavy rains or hot summers.”

She added that in the absence of training or outside aid, women, many of whom are illiterate, remain unaware of how to adapt to the current climate crisis.

“They don’t know what needs to be done, like changing farming patterns or how to conserve rainwater and also how to prepare for heat waves,” Apte said.

Naliba Mamman, from Nigeria, added that women, especially in rural areas, face several problems due to a lack of resources.

“For cooking, they need to arrange for fuel, which is mainly by cutting down trees in their villages. They need energy to run homes. They are also impacted in terms of farming, getting their produce to the local markets or getting their kids to school,” Mamman said.

The pain of women in developing countries is also being felt in other parts of the world where there is less gender disparity in terms of climate change.

“While in the UK, we may not feel any difference gender-wise, but it is recognized just around the world. And there are a lot of places, especially developing countries, where there is a massive difference between how climate change affects men and women. And so I think there are issues with the different kind of traditional roles that some women have in the community, like collection of kind of resources, water, food, that kind of thing, which can be more difficult in droughts and floods, that kind of situation. Also, the child care and family caring responsibilities fall mainly on the women, which again is, you know, in times of drought, climate crisis, food shortages, water shortages, illness, climate catastrophes, you know, that that’s an added pressure on kind of women as well,” said Rachel Mulholland, a British woman currently working in Saudi Arabia.

In certain nations, government entities, more so than multilateral bodies, have taken note of the issues surrounding women and have initiated action.

Habon Aden Awaleh of Djibouti highlighted that its government has already created a plan to help women adapt to the issues raised by climate change.

However, Awaleh revealed that for women from urban and rural backgrounds, there are implements in place to help lessen the impact of climate change. For the nomadic population, however, which is widespread throughout Djibouti, like many other African nations, the challenge is much greater as these populations are in transit, and therefore, delivering assistance becomes more difficult.

Celina Ewbuomwan of Nigeria highlighted that, like in various facets of the climate change debate, including the gender gap, the era of mere discussions has ended. She asserts it is now imperative to transition from talk to tangible action.

“This year, the whole thing is beyond ambition. We’re talking about action. So we hope that at the end of this, every country will take something back home and be able to implement that next year when everybody’s coming back again. There’s something we have probably a milestone that we say this is what we have done and this is where we are today,” said Ewbuomwan.

“Yes, the issue is there are so many beautiful plans, the issue is implementation, which is the challenge. We must have a timeline to achieve our goals. This year, the theme is ‘Unite. Act. Deliver.’ So, I would like to see some delivery on this issue,” said Mamman.

COP28: Saudi Arabia’s Red Sea economy shifts to regeneration

COP28: Saudi Arabia’s Red Sea economy shifts to regeneration
Updated 04 December 2023

COP28: Saudi Arabia’s Red Sea economy shifts to regeneration

COP28: Saudi Arabia’s Red Sea economy shifts to regeneration

DUBAI: Saudi Arabia’s push toward sustainability has evolved as large corporations aim for regeneration in the Red Sea, according to the person in charge of one of the Kingdom’s giga-projects.

During a panel discussion at the 2023 UN Climate Change Conference in Dubai, John Pagano, CEO of Red Sea Global, highlighted how the company has shifted from sustaining its natural landscape to healing and recovering what has been damaged.  

“When we started our journey six years ago, we talked about setting new standards in sustainability and we came to realize fairly quickly that sustainability is no longer enough, and we coined the term regeneration,” Pagano said.  

He further underscored that maintaining the status quo is no longer adequate, stating: “We are on a terrible trajectory.”  

Moreover, Pagano urged global leaders to take action and “change course,” emphasizing the current bleak outlook of the future.

Accompanying Pagano, Carlos Duarte, professor and marine scientist at King Abdullah University of Science and Technology, supported the call for action.  

“We have a commitment to our youth not to hand over a planet that is crippled, but a planet with oceans and a Red Sea that can support generations to come,” Duarte said.  

“The bold decision that we are taking globally is that we are no longer content with conservation; we need to go into regeneration,” he added.

Both speakers highlighted the concept of “natural capital” and how this will be used as a global metric for investors to measure a country’s economic performance. Natural capital refers to the stock of renewable and non-renewable natural resources that aid citizens. The term highlights the importance of maintaining and managing ecosystems and their services for the long-term benefit of society.

“The private sector is key to the future of biodiversity and the future of climate and without the involvement from the private sector, we will not meet our goals. That is where concepts like natural capital are very important. Now, natural capital is the new real estate,” Duarte said.

Pagano further added that aside from a country’s gross domestic product, investors will use natural capital as a measure for investment analysis.

RSG has become one of Saudi Arabia’s leading sustainable tourism developments with projects that bring together luxury and clean energy.

“We’ve delivered on the promises that we made dating back to six years ago but we’re doing it sustainably. Six Senses Southern Dunes is totally renewable energy-powered, 24 hours a day, completely off-grid,” Pagano said during the panel discussion.

“We are able to literally push the boundaries of what is possible today,” he added.

Not enough renewable energy to meet global demand: Aramco chief

Not enough renewable energy to meet global demand: Aramco chief
Updated 05 December 2023

Not enough renewable energy to meet global demand: Aramco chief

Not enough renewable energy to meet global demand: Aramco chief

RIYADH: The amount of renewable energy coming to the international market falls short of fulfilling the rising demand, according to Saudi Arabian Oil Co.’s CEO. 

Speaking on a panel at the Saudi Green Initiative Forum on the sidelines of the 2023 UN Climate Change Conference, Amin Nasser highlighted that more investments are needed in the oil and gas sector to ensure a smooth energy transition.

“Even with all the renewable coming to the market, it is still not enough to handle the additional demand we are seeing,” said Nasser. 

He added: “If you compare the investments in the energy sector, it was around $740 billion. Right now, we are doing 40 percent below that at around $500 billion. Considering the higher demand we are anticipating in the future, I think we need more investments.”

Patrick Pouyanné, CEO of TotalEnergies, who was also present on the panel, said that investments in the energy sector are rising, but the industry should learn how to split investments between renewables and hydrocarbons. 

“Investments in the energy sector are growing. The question is, how do we split these investments? Because we want to triple renewables, and at the same time, we need to maintain the production of oil and gas, which is the energy of today. Let us do more investments in the energy sector, but in an orderly manner,” said Pouyanné. 

During the talk, Nasser highlighted that the demand for clean energies like green hydrogen remains low due to its high associated costs.

Regarding the world’s energy divide based on socio-economic characteristics, Nasser said: “Today, 60 percent of what we produce goes to the global south, and 40 percent goes to the global north. By 2050, almost 70 percent will go to the Global South, and in hydrocarbons, 80 percent will be going to the Global South.” 

Nasser added: “We need to take care of all stakeholders in terms of making sure that we provide affordable, sustainable, and secure energy for the whole world.” 

The Aramco chief further noted that Saudi Aramco is one of the energy companies in the world that has made significant strides in ensuring sustainability in its operations. 

According to Nasser, today, Saudi Aramco has the lowest average methane intensity and CO2 intensity per barrel of oil globally. He went on to add that Saudi Aramco will continue to drive it down, reiterating that they have made the commitment to zero methane by 2030. Furthermore, Nasser informed that they are building the carbon capture and storage and they are also getting into e-fuels.

Last year, Saudi Aramco partnered with the Kingdom’s Ministry of Energy to establish a carbon capture and storage hub in the region. 

Following the launch, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said the hub will have a storage capacity of up to 9 million tons of carbon dioxide annually by 2027.