Gulf states plan farm projects in Philippines

The projects are part of a major economic co-operation programme signed between the two sides. (AFP)

Emirates Business 24/7 | Monday, June 22, 2009

By Nadim Kawach

Gulf oil producers are considering plans to invest in farming projects in the Philippines to face a steady increase in domestic food demand and reduce a painful import bill, said the region's private sector leader.

Abdul Rahim Hassan Naqi, Secretary-General of the Saudi-based Federation of the GCC Chambers of Commerce and Industry, discussed the plan with Philippine President Gloria Macapagal Arroyo during a visit to Manila last week.

The projects in farming and other sectors are part of a major economic co-operation programme signed between the two sides during the visit.

"President Arroyo expressed a strong desire to expand relations between her country and the Gulf Co-operation Council (GCC) in trade, economy, investment and other sectors," Naqi said in a statement sent to Emirates Business.

"During my visit, we signed a memorandum of understanding with the Philippine Chamber of Commerce and Industry to boost co-operation and agreed to discuss investment opportunities in agricultural projects in that country through the creation of joint ventures and partnerships for the production of foodstuffs, mainly rice, corn, banana and pineapple, we also agreed to invest in cattle."

Naqi said trade between the six-nation GCC and the Philippines jumped by around 20 per cent in 2008 but added the increase still not to "our expectations given the massive trade and economic potential of the two parties". He said talks with the Philippine businessmen also covered the setting up of joint projects to produce halal meat products, mainly in Mindanao.

A surge in global food prices in 2007 and most of 2008 has prompted plans by the UAE, Saudi Arabia and other GCC countries to invest in farm projects in Sudan and other fertile nations in the Middle East and outside the region.

In a recent study, the Federation of the GCC Chambers urged member countries to expand their farm investment plans to cover other countries to achieve self-sufficiency and bridge a massive farm deficit that exceeded $14 billion (Dh51.3bn) in 2008.

Despite efforts to expand their agricultural sector over the past two decades, the GCC countries are still reeling under a painful gap between food imports and exports given the limited farm potential in the desert region and lack of interest in setting up joint farm ventures, according to the study.

From around $8.9bn in 2001, the GCC's combined farm and food trade gap surged to $12.2bn in 2006 and was expected to have exceeded $14bn in 2008 because of slow growth in their agricultural sector, a sharp increase in imported food prices, and a rapid growth in their population.

"The issue of food security has become a priority for the GCC countries in the current circumstances," the Federation said.

"The steady increase in the farm gap has been due to lack of coordination and cooperation among member states in the agricultural sector and in the establishment of joint farm projects. It is time for the GCC countries to take measures to cover that gap by setting up farm projects in such fertile Arab countries as Sudan and Yemen and other areas."

GCC states of the UAE, Bahrain, Kuwait, Oman, Qatar and Saudi Arabia, which control nearly 45 per cent of the world's proven oil wealth, are the largest farm importers in the Middle East given their poor agricultural sector and high per capita income. Their food imports accounted for more than 70 per cent of the total Arab farm imports of around $18bn in 2008.

"The memorandum of understanding we signed in the Philippines is part of a major economic co-operation programme launched by the two sides this week. This progamme covers numerous sectors, including banking, agriculture, trade, employment and tourism, it constitutes a real pillar for building a strong economic relationship between the two sides in the long term," said Naqi.

He said the GCC nations are considering opening Islamic banking units in the Philippines, which heavily relies on the Gulf for exporting labour and securing its hard currency needs.

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