Growth in Gulf lures exporters

By DANIEL RIORDAN

Who said rising oil prices are all bad news?

While motorists dig deeper at the petrol pumps and industry tightens its tool-belt, greater revenues to Arab Gulf oil producers are benefiting New Zealand exporters to the Middle East.

Bruce Shepherd, New Zealand's Dubai-based Trade Commissioner, says when he arrived there in January last year, the price of oil was $US10 ($21.90) a barrel and dropping.

Today, it is $US30 and rising, and the economies of the Gulf, which had been suffering one of their rare growth hiccups, are surging again. Businesses and consumers are spending more and millions are being poured into new infrastructure.

"The opportunities for New Zealand exporters are growing rapidly," Mr Shepherd told Auckland members of the Export Institute this week.

Last year, countries of the Gulf Cooperation Council - Saudi Arabia, Bahrain, Oman, Qatar, Kuwait and the United Arab Emirates (including Dubai, the region's trade and tourism hub) - imported $361 million of New Zealand products.

That was 8 per cent higher than the previous year's $333 million, despite most countries struggling to cope with lower oil prices.

Saudi Arabia was New Zealand's biggest market with $191 million, followed by the UAE with $95 million.

The biggest export earners were milk, lamb, butter, cheese, beef and timber.

But an increasing number of non-commodity exporters and consultants are making good money in the Gulf.

They range from corporate giants such as the Dairy Board and Fletcher Construction to niche manufacturers such as Porirua-based hatmaker Hills International.

Fletcher Construction recently completed in Dubai what is claimed to be the world's tallest hotel.

The sail-shaped 56-storey Burj Al Arab is only slightly shorter than Auckland's Sky Tower.

Hills' berets are worn by most of the Gulf's police and military.

Mr Shepherd says patience and persistence are the keys to doing business in the Gulf.

First-time exporters have to be prepared to make successive visits to break through. Seasoned visitors looking for answers to even urgent requests for action will be familiar with the phrase "In sha' Allah" - loosely translated as "God willing" and a kind of Arabic equivalent to the Western shrug of the shoulders.

The exporter's paperwork has to be perfect, and there can be vast differences in business and cultural practices from country to country.

Be prepared to have business meetings interrupted up to five times a day by calls to prayer.

And though you can export pork to Dubai and Bahrain, do not try selling it to Muslims.

Mr Shepherd says the problems are no greater than in other emerging export markets and he believes Kiwis should be keen to cash in on the region's upturn.

Awareness of New Zealand is high. English is widely spoken - in 18 months Mr Shepherd has needed a translator just three times. Most of the Gulf's currencies have been pegged to the US dollar for 20 years and have remained largely stable.

Opportunities in the Gulf's biggest state, Saudi Arabia, are likely to increase as the kingdom's determination to join the World Trade Organisation prompts plans for physical restructuring and legal consolidation programmes, including liberalisation of investment laws.

Mr Shepherd says foreign businesses will still require a local partner, once the liberalisation measures are gazetted.

Higher oil prices have also spurred the Saudis to negotiate with big oil companies for a staggering $60 billion to $200 billion in new oil industry investment. That will bring significant downstream benefits for exporters across all sectors.

Other Gulf states are also spending more on infrastructure, much of it directed personally by the ruling royal families.

Dubai is building 19 five-star hotels over the next three years, and the NZ Trade Development Board is keen to see Kiwi exporters grab the biggest share they can of the increased demand for food and beverage exports that will follow.

One of the reasons for Mr Shepherd's visit to New Zealand was to encourage exporters to participate in Dubai's world-renowned Gulfood Show, held every two years. The next is in February.

What represents opportunities for New Zealand exporters also means opportunities for others, including Australia, which has poured far greater resources into the region than New Zealand.

But at least any lift in export growth will offset the pain to the New Zealand economy of the rising cost of oil imports, which last year were worth $272 million from Saudi Arabia alone.