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A new report from the Arab Irish Chamber of Commerce (AICC) has highlighted the extensive economic opportunities for Ireland presented by the Arab states, with the value of Irish exports to the region expected to more than double within the next 15 years to reach almost €12 billion by 2033(1).
According to the EY-DKM compiled report, current Irish merchandise exports to the region are valued at €1.91 billion(2), while services account for €3.27(3) billion of the total €5.18 billion export value(4). The report, The Arab World – Long Term Economic Prospects & Opportunities for Ireland, was commissioned by the AICC.
Four categories of Irish goods account for over 70% of Irish merchandise exports to the region namely soft drink concentrates, baby formula, pharmaceuticals and computers. Dairy, which accounts for 8.2% of Irish goods exported to the region, is valued at more than €140 million. This represents an increase of circa 37% since the first AICC economic report, compiled by DKM in 2013, which reflects the growing opportunities in the dairy sector.
Since the 2013 report, Irish medical and pharma exports to the region have grown by almost 73% and are now valued at €334 million. This is driven by a rapidly growing population and investment in healthcare in the region and may also be reflective of high incidences of lifestyle-related diseases.
The region of 21 states between the Middle East and North Africa (MENA) has a growing population of more than 420 million people, representing 5.5% of the world’s population and accounting for 3.1% of the world’s economy. The population of the region is growing rapidly and is forecast to exceed 500 million, 6% of the global population, by 2028.
The AICC report by EY-DKM focuses in particular on 13 AICC member countries that are considered to represent the greatest potential for Irish business: Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan and the United Arab Emirates (UAE). These countries represent approximately 4.4% of the world’s population and 2.8% of the world economy.
The region is highly reliant on imports. With a population of 33.6 million, Saudi Arabia is the largest importer of Irish goods among the AICC member countries. 0.88% of Saudi Arabia’s merchandise imports are from Ireland and are valued at €553 million. As the largest economy for Irish exports in the Arab region, Saudi Arabia will continue to attract Irish attention both in the short and longer term. High income levels, public investment and a strong focus on making the economy more open to the private sector all bode well. Food imports are important; Ornua (formerly Bord Bainne) recognises Saudi Arabia as the fifth largest dairy importer in the world and operates a cheese factory in Riyadh.
The UAE, which is home to an estimated 10,000 Irish expats and with a population of 9.6 million, imported €361 million3 worth of Irish goods (0.2% of its global merchandise imports) last year. It is one of the most dynamic and diversified economies in the Arab region with significant growth potential for Irish businesses. Bord Bia has been actively promoting Irish food products in the UAE in recent years and the food sector, together with construction, tourism and aviation present some of the strongest opportunities for Irish companies looking to grow their business there.
With 98 million inhabitants and a more diversified economy than some other AICC countries, Ireland’s merchandise exports to Egypt amounted to €167 million in 2018. In 2016, the Egyptian market reopened to live Irish cattle and in 2017, the beef market re-opened and five Irish meat plants were approved for export to Egypt.
Ireland holds a 0.83% share of global merchandise trade, but currently holds just 0.27% share of the Arab region’s merchandise imports, pointing to the significant opportunities for growth.
To achieve this, in simple terms, requires more Irish businesses doing more trade with the Arab world, and the report points to a number of specific opportunities in the Arab markets including:
Food sector: Rapidly growing populations along with constrained and relatively underdeveloped agriculture creates an ongoing opportunity in the food sector and, in particular, dairy and meat. A number of markets in the region have recently reopened to Irish meat, which is pertinent given the possible disruptions or increase in competition as a result of Brexit.
Pharma and medical: Driven by demographic factors, the incidence of lifestyle-related conditions and the move towards improving the healthcare sector.
Healthcare: There is a significant shortage of local healthcare professionals creating opportunities to directly provide healthcare or provide healthcare training.
Agricultural advice and training: Expected to be growth areas as countries look to improve their food security and production capacity.
Construction: With ambitious plans across the region for large volumes of investment across economic and social infrastructure, the report highlights a wide range of opportunities in construction and development services (urban planners, QS, architects, engineers and construction companies).
Education: Policies aimed at improving education together with a shortage of local teachers generates opportunities to directly provide education or teacher training services, particularly in the Gulf States.
Renewables: Policies aimed at increasing the share of renewables in the local energy markets point to opportunities for Irish businesses with knowledge, experience and capabilities in the development and operation of renewables infrastructure.
Infrastructure: There is a move to privatise significant elements of state-owned enterprises in many of the Gulf Countries, which could lead to opportunities for Irish infrastructure firms in areas such as transport, logistics, energy and water. As a direct consequence, there may also be opportunities to provide financial services to these privatisation processes.
Aviation: Aviation-related services will provide significant opportunities for Irish businesses operating in this sector, particularly in the UAE.
Tourism: Many of the AICC ‘s member countries view tourism as a means of diversifying their economies and generating employment, which opens doors for those who can offer technical and marketing advice in addition to operating facilities.
Seven countries, Algeria, Egypt, Jordan, Lebanon, Morocco, Palestine and Tunisia have free Trade Agreements (FTAs) with the EU and Ahmad Younis, CEO and Secretary General of the Arab Irish Chamber of Commerce said that negotiation of an FTA between the EU and the Gulf Cooperation Council (GCC) could significantly facilitate growing trade.
Ahmad Younis said:
"With the likelihood of some form of economic disruption from Brexit, reactivating FTA negotiations should be a priority for Ireland and the recent appointment of Phil Hogan as the EU’s Trade Commissioner could prove significant in this regard.
"New and expanded FTAs with the other AICC countries to cover services and agriculture would also be worth pursuing and the lack of trade agreements points to significant untapped potential trade opportunities.
"With strong population growth and continued reliance on imports, there is huge potential for Irish businesses across a wide range of sectors. The value of goods and services to Ireland’s economy makes the Arab region one of its most important trading blocs, outside of the EU and North America, and hundreds of Irish businesses have been successfully trading with or in the region for many years.
"Ease of access to the region has improved greatly in recent times. And, the World Bank reports that over the past year, a number of AICC countries have introduced reforms focused on making it easier to set up a business there such as removing the requirement to obtain a bank certificate (Egypt), abolition of deed registration fees and stamp duties for start-ups (Morocco), and improvements in technology to make registration easier for new businesses.
"The Arab World is a major, growing export market for Ireland offering high import demand, good proximity, rapid population growth and large-scale investment and infrastructure plans. Direct links between Ireland and the region have improved dramatically, easing market access and creating stronger links between the two markets. Irish businesses with a high-quality product or service that are willing to put in the time to explore and nurture new opportunities are on a pathway to success in the Arab world. We are a small nation, but we have a very positive image in the region and Arabs like doing business with their Irish counterparts."
Launching the report, Minister for Trade, Business and Employment, Pat Breen TD said:
"I very much welcome the launch of this report, which identifies existing and future opportunities in the Arab World, and which highlights the key actions that can be taken to develop business relationships. While Ireland has always valued its relationship with the Arab world, it is a region that has been a particular focus for my department in recent years. Only last December, I led Enterprise Ireland’s first trade mission to Egypt in over a decade while this November, in addition to visiting the UAE, I will be leading a Trade Mission to Kuwait and Bahrain. This department’s strategy with regard to this region is already bearing fruit. I am delighted to note for example that exports to the region by Enterprise Ireland client companies increased by 2.5% in 2018. I am confident that today’s report will make it easier for Irish companies to pursue business opportunities in the Arab world and, in doing so, help to further develop Ireland’s already-strong relationship with the region."
ENDS
For information or an interview: Rachel.sherry@grayling.com / 087 6622111
For more than 30 years, the AICC has been facilitating the shipment of exports from Ireland to the Arab world by arranging and processing all requisite documents, making it easier for Irish companies to do business with Arab countries.
The AICC promotes Ireland and Irish exporters to Arab countries. AICC strengthens trade links between Ireland and the region through its link with the embassies, business groups and government bodies.
For more information go to www.aicc.ie.
(1) Oxford Economics forecasts that merchandise imports to the region will grow by 30% over the coming five years (to 2023), by 70% over the coming ten years (to 2028) and 125% over the coming 15 years (to 2033). On the basis that Ireland should at a minimum maintain its share of this trade, by 2033 Irish exports will grow by €6.52 billion, reaching an aggregate value of €11.70 billion
(2) Source: CSO
(3) Source: World Trade Organisation 2017
(4) Export figures for 2018 (goods) and 2017 (services), which are the latest figures available
The Arab Irish Chamber of Commerce has been supporting Irish companies like Astron Engineering, Tipperary Crystal, Pestle & Mortar and Firstaff Recruitment to do business in the Arab world and each spoke about their own company’s successes there:
Jennifer Hayes, Business Development Manager, Astron Engineering:
"Astron Engineering Ltd began exporting to the UAE in 2008 through an agent and, since 2010, we have been exporting directly to our Arab clients. We design and manufacture custom built food display equipment for the retail sector and have cabinets in UAE, Oman, Bahrain and Saudi Arabia. We have found the best piece of advice over the years is to have patience and have as many face-to-face meetings as possible. Our clients in the region wanted to spend a lot of time getting to know us and how we conducted ourselves before they ever purchased anything. A personal touch is very important to them. Then just ensure you have all agreements in writing, and you are comfortable with your terms and conditions. We find it a pleasure to work in the Middle East region."
Declan Fearon, Managing Director, Tipperary Crystal:
"Tipperary Crystal is over 30 years in business and has made its name internationally from manufacturing specially customised and bespoke commissions. The business began focusing on the Middle East in 2012, coinciding with the time we chose to pass on our brand in Ireland, excluding our thriving lamp and chandelier business. This allowed us to focus on the international expansion of our brand.
"Tipperary Crystal first exhibited in Dubai with the help of Enterprise Ireland and found immediate success with both our chandeliers and bespoke pieces. We quickly grew a reputation in the Middle East by creating one-off commission pieces that were subsequently presented to the Royal families.
"We additionally have a continuous flow of chandelier orders for VIP clients in the Middle East. These orders come with large price tags, sometimes exceeding six figures, so are very important to our business growth.
"Building long-standing relationships is part of the ethos in developing trust and longevity when doing business in the Middle East. The Arab Irish Chamber has been a huge part of our success and has been very active in introducing clients interested in our services over the years."
Sonia Deasy, brand co-founder, Pestle & Mortar:
"We’re incredibly excited to launch Pestle & Mortar in the Arab countries. The Arab client values beauty and understands design. Once you understand that personal relationships are key to doing business in the Arab countries, it’s easy to break through cultural and language barriers. Face-to-face contact is valued. We’re looking forward to building on the relationships that we have worked hard to create.
"Initially our focus is to partner with the number one online beauty retailer across the region. This will aid us in seeding the brand with the most influential people. Saudi Arabia has a huge population and we plan to target this market both on- and offline by tailoring our model to meet the needs of the local consumer. We’re planning to launch in the GCC in December this year. By partnering with one of the best and most active distributors in the region, we have ensured that the brand will be supported locally.
"When it comes to doing business in the Arab world, adjust your business model to meet local needs – one size does not fit all. Take advantage of the many exhibitions that take place in the UAE with some of the largest regional events held in Abu Dhabi and Dubai. This is a good opportunity for companies to meet potential partners, distributors and clients.
"We expect to have sales in excess of €250,000 in year one and awareness with all major influencers. Strategically positioned between Europe and Asia, we view the Gulf as the gateway into Asia."
Paul Dooley, Managing Director of recruitment firm Firstaff:
"Firstaff entered the Arab market over 16 years ago. Our first client was the Saudi Arabian Monetary Agency (SAMA). Today, we also count the Saudi Industrial Development Fund, Saudi Aviation Holdings and National Centre for Privatisation as our close business associates and clients. By expanding into the GCC, Firstaff has been able to expand its client base exponentially, it’s also helped the business survive two very deep recessions.
"Our Growth in the GCC has been driven by a hunger for knowledge as well as knowledge transfer. The Irish are liked by the Arab community, which has made it easy to do business here. If you are thinking of expanding your business into this marketplace, you need to have patience. Saudi Arabia is a dynamic market but takes time to build up friendships and contacts here, it doesn’t happen overnight and you need to work hard to gain a client’s trust.
"Firstaff is happy to be a trusted recruitment partner and to be able to bring our skills and expertise into the GCC marketplace and we are confident our presence in the Arab market will continue for a long time into the future."