Branding Australia in the Gulf

A free trade agreement with the Gulf, more exports to the Middle East and potential investment Down Under are all on the table as Australia undertakes its biggest ever promotional trade campaign in the region
By Beatrice Thomas
Sat 31 May 2014 10:56 AM

Grains, cars and meat. The Australian “brand” in the Middle East has long been defined by these three sectors.

Making up the bulk of Australia’s exports to the six GCC countries, they have been the Australian staple in a two-way trade relationship worth $12bn after rising 20 percent in 2012-13, with crude petroleum and fertilisers accounting for the majority of exports from the GCC end.

However, last year’s landmark alliance between national carrier Qantas and Emirates — boosting the number of flights to 98 a week between Dubai and Australia alone, and overall Gulf weekly air links, including through Abu Dhabi’s Etihad Airways and Qatar Airways, now numbering 140 flights — is being viewed as a step-change in trade relations, with the Australian government now singling out the Gulf as its fourth most important trade partner after the “big three” of China, Japan and South Korea.

“For a long time Australia benefited from a very low profile to quite a rapid growth in the relationship with the GCC countries, particularly the UAE, which was driven largely by increased flights,” Australia’s ambassador to the UAE, Pablo Kang, tells Arabian Business.

“We’re sort of in a situation where that’s been good. [But] then we’ve seen a lot of competition now, particularly coming from Europe where with the global financial crisis a lot of countries in Europe have gone into recession, unemployment is on the rise, a lot of the big European companies are looking for work outside their own country, so competition is much greater than it was, say, maybe ten years ago for Australian companies.”

Responding to this trend and in a bid to boost its own country’s profile and not just rely on a “feel-good factor” about Australia, as Kang puts it, Australia has upped the ante in its trade marketing drive in a bid to promote itself as a reliable trade partner and key investment choice.

Under the banner of the wider Australia Unlimited brand, its MENA trade road show has grown from just one city, Dubai, in the pilot year in 2013 to six cities, including Abu Dhabi, Riyadh, Muscat, Kuwait City and Rabat in Morocco in the second event last month, alongside a concurrent Food, Water, Energy Nexus policy forum exploring interconnections and parallels and potential areas of co-operation in these fields.

It’s Australia’s largest-ever promotional campaign in the region, with 150 local companies involved, and represents what Australian Trade and Investment Minister Andrew Robb says is a genuine effort to take Australia’s relationship with the Gulf to a new level as it drives home the message that it’s “open for business”.

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“We have a strong brand and reputation with agricultural activities, resources and energy, and education,” Robb says at the Australia Unlimited launch in Dubai.

“But the big secret is the quite wide range of services that Australia as a knowledge-based economy is well-placed to contribute whether it’s aged care, anything to do with health, of course education, with construction, with environmental protection, water management, engineering, legal — you name it we have got it and are ready to get involved in a partnership way all of those sorts of services with the Gulf states.”

Already about 269,000 Australians visited Dubai last year, an increase of 39 percent on 2012, while an estimated 30,000 UAE citizens visit Australia annually. Around 1,000-1,300 UAE students are studying in Australia at any one time, increasing to about 10,000 Saudi students.

Robb says there are also many opportunities for investment in an estimated A$700bn infrastructure backlog in Australia as well as in the development of greenfield areas, saying Australia could double its agricultural output with the right investment in enhanced irrigation and farming systems. Robb says “a host” of projects, including urban rail, major roads, airports and tunnels  — typical of the challenges faced from major cities facing congestion issues — needed funding, with the Gulf states’ sovereign wealth funds “ideal investment partners”.

“There are many, many big projects that are emerging in the years ahead. The demand for high-value, good quality, clean, green produce is just growing and growing and we have got a lot of even greenfield opportunities for major developments in that area,” he says.

“We’re also looking to develop, of course, too, the education and tourism relationship in a significant way, and the air linkages are providing enormous opportunities for that.

Already the Abu Dhabi Investment Authority (ADIA) owns 20 percent of the Port of Brisbane, as well a part-share in Sydney’s Port Botany and Illawarra’s Port Kembla in New South Wales (NSW)  through the NSW Ports Consortium, in which it has a 20 percent stake through wholly-owned subsidiary Tawreed Investments Limited.

ADIA is also one third of a consortium bidding for the right to own Queensland state-owned toll road owner Queensland Motorways Ltd, with the Kuwait Investment Authority making up one-fourth of a rival consortium bid.

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“What a lot of sovereign wealth funds in this region look for is obviously commercially good returns but there also has to be some kind of balance between the risk,” Kang says. “We’re seeing sovereign wealth funds look more and more at countries like Australia where it’s very low risk, the returns are good, solid returns, and the AAA credit rating that we have is quite important, the 23 years of consecutive growth is very important, and most important is the fact that there is such high demand for investment in infrastructure in Australia.”

Of the A$12bn ($11.08bn) in two-way trade last year about A$6bn ($5.54bn) was from UAE-Australia bilateral trade relations, according to Australian Department of Foreign Affairs and Trade figures, making Australia the UAE’s tenth-largest export market at 1.8 percent of all goods. It is followed by Saudi Arabia (A$2.36bn), Qatar (A$1,227m), Kuwait (A$940m), Bahrain (A$430m) and Oman (A$412m).

Kang says while Australia manufactures Toyota Camry vehicles used by the Dubai and Abu Dhabi taxi fleets as well as Chevrolet Caprice model cars popular in Saudi, it will be finite with the recent announcements that Toyota, Ford and Holden will all close their Australian manufacturing plants by 2017 — putting a AUD$1.28bn dent in exports to the GCC.

“We want to diversify trade — alumina and crude petroleum and cars, they can fluctuate, they’re quite seasonal: alumina depends on the capacity to export out of Australia, crude petroleum, we’re getting in Australia more and more LNG ourselves,” he says.

He says Australia also has a bilateral agreement with the UAE on peaceful use of nuclear energy, which is a framework that will ultimately allow commercial companies to tap into Australia’s uranium reserves, which are estimated at 40 percent of the worldwide total, and ultimately contribute to building the UAE’s $20bn nuclear plants development plan.

Robb says the Australian government has formally asked the six Gulf states to resume negotiations on a free trade agreement (FTA) between the two regions after the GCC initiated a freeze on FTAs in 2009.

“When a hold was put on all agreements, all negotiations, not just with ourselves but everyone else in 2009 by the GCC at that stage the negotiations with Australia were very well advanced,” he says.

“I have raised this already with His Excellency [UAE Minister of Economy Sultan Bin Saeed Al Mansoori], I will raise it again all the way around my trip. It’s very important, I’ve written to all the relevant ministers a few weeks ago in all the Gulf states requesting that we restart negotiations.”

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It’s perhaps something Al Mansoori appears open to, saying at the opening of the Australia Unlimited event that the UAE is keen to increase the level of trade between the two sides.

“We have quite a diversified portfolio of trade in different goods, starting with of course food stuff, which is very important for us, agriculture products in general and also infrastructure,” he says.

“With this in mind of course there are other opportunities of areas of co-operation between the two sides”, he says, adding that this included further exploring the education links as the UAE aims to invest heavily in the sector in the next few years.

Australia operates campuses for Wollongong and Murdoch universities, primary and secondary schools in Sharjah, with plans for more, as well as supplies curriculum and teachers to the Fatima College of Health Sciences in Abu Dhabi and has an agreement with the The International Centre for Biosaline Agriculture through the University of Sydney.

“Through the co-operation that we have on the educational level, we do hope that the focus on education from the Australian side with the UAE will also be on education,” Al Mansoori says.

“The whole situation, in terms of the relations that we have between our two sides, will continue to grow and continue to flourish.”

Talal Yassine, chairman of the Council for Australian-Arab Relations (CAAR), which organised the Food, Water, Energy Nexus, says he believes Gulf states are impressed with Australia’s “know-how and technological ability and also the similarities which we face together in terms of the challenges that we have as nations”.

However, he says trade figures still remain “modest” in a situation he likens to the “good-looking cousin which comes to the family barbecue once a year”. “A lot of positive affection, it’s a relation, a very good relationship but we don’t actually know enough about each other and we don’t actually deal with each other in between,” he says.

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CAAR, which was formed in 2003 to improve, expand and reinforce social, political, economic and cultural relationships between the world’s Arab nations and Australia, has resolved  to “move the dial” in that relationship through bigger projects which impact daily lives and discussion on a higher level, including through events such as the Nexus.

 “The relationship is good but we seek to build on it and redefine it in ways, especially as Australia looks beyond the Asian region its next, natural territory would be the Arab world. It’s what I call from an Australian perspective a go north, turn left strategy in Australia’s national interest,” he says.

Yassine, who is CEO of Crescent Wealth, Australia’s first Sharia-compliant superannuation fund, says Australia has “always needed capital… external investment to grow our nation”. However, from an Arab perspective it also has a clean food source, vast tracts of land and “an ability to grow exponentially in that area”.

“It’s just being discovered by the Arab world — northern Europe and northern America have been the aim but now they’re looking for a third option and we should put ourselves right in the picture to be a very good third option for them,” he says.

Yassine says issues around live animal exports trade, including a recent damning report from the Australian Department of Agriculture over the death of 4,000 sheep en route from Australia to Qatar and the UAE in August last year, were “unhelpful” but “a distraction more than anything else in terms of the broader relationship”.

“In Australia we have very strong views about animal welfare and I think sometimes we self-righteously exaggerate those and other times we honestly believe in them. The Arab world has a different view of that and so does the Asian world, by the way, so we’ve got to find that common ground there,” he says. “But, as both sides, so to speak, of this debate get more educated and knowledgeable about each other that will be just one of the issues that we deal with in a sensible orderly manner.”

Victorian Commissioner for the Middle East, Africa and Turkey, John Butler, who heads the first of the four trade offices to have now been established by different Australian states (Western Australia), NSW and Queensland run the others) in the region, says in 2013 companies reported an expected boon of more than $212m in business within 24 months in February as a result of a trade mission last year.

While it was still collating results from the 2014 mission, he says early indications are it will surpass that figure easily.

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Victoria, which set up shop in the UAE in 1997, a year after Emirates landed its first flight in Australia, estimates two-way trade with the MENA region at A$3.75bn in 2012-13. As a “food bowl” state, a key focus in its trade markets is food and beverages, meat and dairy products, grain, processed goods, fresh fruit and vegetables, he says.

 “With the air links being so strong into this part of the world with daily flights with Qantas and Emirates and Etihad it’s very easy to move products in here very quickly overnight,” he says.

“Melbourne was the first point that Emirates starting flying to in Australia in 1996 and the government of the day, [under] the Premier Jeff Kennett, was very pro-active in securing Emirates for Melbourne.

“There were difficulties with Emirates getting the rights, but he strongly lobbied the Federal Government at the time and said he would like to offer them the opportunity and Emirates were given the rights to fly three times a week into Melbourne and now they fly three times a day into Melbourne.

“The rest is history and we’ve just really gone very strongly since then over very many years.”

Kang says he expects similar growth to continue in the near future, though adds it is a crystal-ball question.

“We need to be keep focusing on those areas where we think have been under-utilised and trying to diversify the trade,” he says.

However, he also cautions that it is all intangible — while trade is driven at the private sector level, governments from this region will also make strategic decisions about their trade partners.

“That’s where we can play a role in terms of highlighting Australia as a very solid trading nation and a very desirable investment destination.”

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