Trade hopes rise with oil prices

By Nevil Gibson

Friday 2nd June 2000

BRIEFINGS: Bruce Shepherd

Rising oil revenues in the Gulf Arab states have fuelled exporters' hopes trade levels will lift further this year.

Dubai-based Trade New Zealand official Bruce Shepherd was back in the country this week briefing companies on the region's investment plans.

Many of these have been dusted off since oil prices doubled in the first quarter of this year.

"It's really starting to come through," Mr Shepherd said.

"There's a lot more business in the tendering process right throughout the Gulf."

Key projects targeted by Trade New Zealand are the $US160 million upgrade of the airport at Abu Dhabi, capital of the United Arab Emirates.

That country's commercial capital, Dubai, also shows no sign of slowing its hotel expansion.

"There are expected to be about 30% more rooms - or 19 new luxury four and five-star hotels - in Dubai by 2002," he said.

While 70% of New Zealand's $370 million exports to the Gulf states are primary products, the fastest-growing segment is manufactured building materials and fittings.

Other exporters, such as Carter Holt Harvey and Fletcher Challenge Forests, are also benefiting from increased demand for logs and timber.

"The tender process allows us a fair go to show our wares," Mr Shepherd said.

Trade officials are also pushing food products with a permanent promotion of Taste New Zealand through Dubai's large hotel and restaurant sector and a strong participation in next February's Gulf Food 2001, a fair which attracts 10,000 trade visitors from the hospitality industry. Food equipment suppliers would also be present.

Mr Shepherd said economic confidence was recovering sharply elsewhere in the region.

"Saudi Arabia has announced a new foreign investment regime, which will mean western oil companies spending anywhere between $US30-100 billion on new projects, mainly in the eastern province [bordering the Gulf]."

The new law will allow foreigners for the first time to own projects and related property.

A further driving force for macroeconomic reform is Saudi Arabia's bid to join the World Trade Organisation.

Oman and Saudi Arabia are the only Gulf Co-operation Council states outside the WTO and with Iran opening up (see story above) competition for investment funds is hotting up.

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