Dubai’s DP World has invested Peru’s Callao port

Latin America and the Caribbean need an estimated $150 billion annually in investment to bridge its infrastructure gap, and a new source for that financing could come from an unexpected place – the Middle East.   

“Middle Eastern investors have money and we have projects that need financing. I think it is a simple equation,” former Peruvian Foreign Affairs Minister Oscar Maúrtua told LatinFinance. 

Governments in the Middle East have been increasingly interested in the region and there are some standout investors, such as DP World, the Dubai-based logistic firm that runs port facilities in various countries, from the Dominican Republic to Brazil to Ecuador and Peru. 

New strategies are emerging to ramp up ties between the countries in the region and investors in the Middle East.   

The Peruvian government announced in February that it planned to start free-trade talks with the United Arab Emirates (UAE). Negotiations should begin in the second half of the year. 

The deal would be a first on several fronts. It would be Peru’s first free-trade agreement with a Middle Eastern country as well as the first agreement negotiated by the UAE with a country in this hemisphere. The UAE, as part of the larger Gulf Cooperation Council (GCC), has made overtures to the Southern Cone Common Market, or Mercosur, but they have not moved beyond good intentions. 

SUPPLY & DEMAND

Mercosur includes Argentina, Brazil, Paraguay and Uruguay, while the GCC includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. 

Peru’s government stresses the fact that per capita income in the UAE is above $51,000 and the country imports more than 90% of its food to meet demands of its population of 10 million people. And Peru has become as a major exporter of fruits such as avocado, blueberries and grapes in recent years.

Meanwhile, Qatar-based Power International Holding broke ground on a $300-milion resort and convention center in Guyana in February. It is the largest investment in the country’s nascent tourism sector. 

Guyana has also been the recipient of cash from the Saudi Fund for Development, borrowing $100 million for a housing project in June 2023 and another $50 million for a new bridge to facilitate transport in the capital, Georgetown. 

Guyana’s finance minister Ashni Singh told LatinFinance the Saudi loans were part of the country’s strategy to finance its connectivity plans. 

FOOD SECURITY

In neighboring Brazil, the Saudi Agriculture and Livestock Investment Company acquired a 10% stake in the Brazilian food company BRF. The Saudi Araban firm also owns 35.5% of Brazilian meatpacker Minerva. 

In April 2023, the Saudi Fund announced an investment of $500 million in Argentina for infrastructure, including agriculture and power projects. 

The investments are expected to continue, but a number of countries faces problems of scope. 

Luis Pellerano, managing partner at Pellerano Nadal Law & Consulting in the Dominican Republic, said that while the Caribbean country has infrastructure needs and Middle Eastern investors have deep pockets, the size of projects could be an obstacle. 

“We are talking about investors looking for big projects. If we are going to take advantage of this opportunity we need to reconsider how we present our investment needs,” he said. 

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