UAE-Colombia trade and investment to accelerate as Latin American markets beckon

The UAE and Colombia are set to accelerate trade and investment in priority sectors – from food to IT and fertilisers to precious metals – after they signed a Comprehensive Economic Partnership Agreement (Cepa) and Emirates this month launched a new flight to Bogota as the Gulf country seeks to capitalise on Latin American markets. The UAE is seeking to diversify its economy from oil, while Colombia is a lush agricultural powerhouse rich in minerals and though the two countries are thousands of miles apart, the potential for strong trade and investment opportunities are drawing them closer together. While the UAE-Colombia Cepa deal is designed to deepen trade and investment ties, the private sector must take the initiative to realise the agreement's potential, Juma Al Kait, assistant undersecretary for international trade affairs at the UAE Ministry of Economy told The National. “Bogota recently hosted a roundtable with senior business leaders from both nations to explore the investment areas of most promise and we believe there is a strong appetite for greater economic collaboration – and the renewable energy and technology sectors are prominent among them,” he said. “The UAE and Colombia have complementary economies and we are confident that the deal will also enable greater investments in a number of priority sectors.” Sectors of strategic interest include renewable energy, agriculture, tourism, artificial intelligence, environment and free zones. The value of non-oil trade between the UAE and Colombia rose to $553 million in 2023, an increase of 43 per cent on 2022 and more than double the levels recorded in 2021, according to UAE Ministry of Economy data. The UAE-Colombia Cepa deal signed in April is projected to push bilateral non-oil trade above $1 billion within five years of implementation, which the ministry expects to commence before the end of 2024. The Cepa is designed to remove or reduce tariffs on more than 95 per cent of product lines, eliminate unnecessary barriers to trade, improve customs co-operation, increase market access for services exports and create a framework for digital trade. The UAE has identified key areas, from green hydrogen to technology, that it seeks to collaborate on with Colombia. Colombia is the third-largest provider of IT services in Latin America with more than 5,400 companies and sales of nearly $2.5 billion, while its agriculture sector opens up opportunities for the sale of UAE fertilisers, according to Mr Al Kait. The South American country is also a major gold producer and will benefit from the UAE's position as one the largest precious metal trading hubs in the world, he said. Colombia, which dubs itself the food basket of the world, is also a major exporter of fruit, coffee and cut flowers. The South American country has identified opportunities to increase the export of its products to the UAE, ranging from agriculture products to metals and pharmaceuticals. Top of that list are agri-products such as cacao, food and confections, according to ProColombia, the government agency responsible for promoting international tourism, trade and investment. This is followed by metals, electrical appliances, handicrafts, auto parts, cement, tools, pneumatic tires, iron and steel products, industrial machinery, construction materials, metallurgy, home and office furniture and vehicles. Also on the planned Colombian exports list are chemicals, clothing and leather goods. In 2023, Colombia's total exports to the UAE reached $289.4 million, 13.8 per cent more than in 2022, ProColombia said. As of March, total Colombian exports to the UAE amounted to $57.3 million, 53.3 per cent less than the same period in 2023. Non-mining energy exports to the UAE in 2023 reached $34.3 million, 2.5 per cent less than in 2022. As of March 2024, the non-mining energy segment totalled $11.4 million, 49.6 per cent more than the same period in 2023. During 2023, 166 Colombian companies exported non-mining energy products to the UAE with a value of more than $10,000. The main export products are coffee, flowers, fruits, beef and agro-industrial products, ProColombia said. Overall, the South American country in 2023 received $17.4 billion in foreign direct investment, the highest on record, with 66 per cent of that amount flowing to the non-mining and energy sectors, ProColombia said. The top five countries that were the main sources of FDI to Colombia were the US, Spain, Switzerland, UK and the Netherlands, the data showed. Colombia touted its growing economy, strategic geographical location and investor-friendly reforms as some of the main reasons to do business in the country, particularly in the technology, energy and agriculture sectors. Colombia is the third-largest coffee producing country in world and is keen to make further inroads in UAE and Middle East markets, according to ProColombia. “There is a potential market not only in terms of consumers, but when you go to the Middle East, and especially, in the UAE, you find a special interest in products like coffee and you have very trendy coffee shops,” Gilberto Salcedo Ribero, vice president of tourism at ProColombia, told The National . “There is a huge opportunity for many companies that produce coffee here in Colombia to re-export [via Dubai] or to sell locally to consumers.” The Cepa deal will open commercial opportunities for both countries, especially for investments from the UAE to Colombia, while Emirates' flight to Bogota will help to facilitate business, Mr Ribero said. The agreement is yet to be approved by Colombia's congress as the procedures are still under way but “it's one of the priorities of the trade ministry to push this”, he said. Further enabling the transport of people and goods, Emirates launched a daily flight to Bogota via Miami on June 3, deepening its network in South America. The Dubai-based airline already operates routes to Sao Paulo, Rio de Janeiro and Buenos Aires in the region. The airline's Bogota route will promote more business and leisure travel opportunities for its customers through its passenger and cargo services, Emirates said. “Our entry into the market is strongly linked to the agreements signed between the UAE and the Colombian government to strengthen their ties. We all look forward to adding value to the new communities served and building new partnerships to promote tourism and trade,” Nabil Sultan, Emirates’ executive vice president, passenger sales and country management, told The National. “With Colombia being the third largest economy in South America, a key coffee producer and a potential gateway for UAE-based companies to leverage promising economic opportunities in the region, the UAE-Colombia Cepa is intended to give a major boost to businesses in both countries.” Air cargo accounts for more than 35 per cent of global trade by value, according to the International Air Transport Association, and Emirates' Bogota route operated with a Boeing 777-300ER aircraft has the capacity to carry 20 tonnes of cargo on each flight. This will grant Colombia access to more global markets for its exports such as fresh flowers, fruits, vegetables and other perishable goods. “We expect that our cargo services will serve Colombian and Middle Eastern producers and allow them to strengthen commercial and trade relations and opportunities for economic growth. Cargo services also create vital trade links between Colombia, the Middle East and beyond and expands the entry of their products to global markets,” Mr Sultan said. The new route will play an important role in building UAE-Colombia supply chains. This is “the first link between the Middle East and the northern part of South America. This is a vital first step in unlocking the Cepa's benefits”, Mr Al Kait said. Emirates also benefits the local economies it serves by creating direct or indirect aviation jobs and spending on advertising, fuel uplift, aircraft landing costs, aircraft handling costs, staff salaries and in-flight catering, among others, said Mr Sultan. The terms of the UAE-Colombia Cepa deal focus on priority sectors including hospitality, tourism, infrastructure, agriculture and food production. That pact and Emirates' Bogota flight will “help the UAE forge closer ties with the third largest economy in Latin America and create a regional hub for investments that can foster bilateral trade”, Marco Forgione, director general of the Institute of Export and International Trade, told The National. A stroll through Bogota's sprawling Paloquemao market makes it easy to see why Colombia promotes itself as a food basket of the world. Bursts of colour from the fruit and flower stalls brighten up a cloudy, chilly day in Bogota and is a spot where many locals come to have breakfast. Here food is not just about sustenance but a way to incorporate mindful eating during busy work days, a solution to the world's hunger problem and a reminder about environmental sustainability. That is according to Maria Jose Caro Gomez, the founder and chief executive of 3.2.1 Colombia, a travel agency that offers fruit-tasting tours, food workshops and social dining experiences in Bogota. During a fruit-tasting experience at Paloquemao market, Ms Gomez expands on this “fruitosophy”, inviting visitors to feel more connected to their food and to the earth. “Colombia is the planet's food reserve,” she said, highlighting its diversity of fruit offerings. During the fruit tasting, visitors are urged to discard the seeds in a separate container where they are saved to be stored or replanted, she said, highlighting the importance of maintaining Colombia's biodiversity. Besides attracting investments and boosting trade, the UAE and Colombia are keen on increasing the number of tourists from each other's markets. The Emirates route to Bogota “presents new opportunities for further visitation growth from a market in which we are seeing increasing interest”, Hoor Al Khaja, senior vice president of international operations at Dubai Corporation of Tourism and Commerce Marketing, told The National. In the first quarter of 2024, Dubai recorded a rise in visitors from Colombia from a year ago and “with this new route we are optimistic that the momentum will continue throughout the rest of the year and beyond”, she said without providing numbers. Dubai is conducting brand campaigns to key Latin American markets such as Colombia, Brazil, Mexico and Argentina, and is offering their citizens visas on arrival. “Dubai offers everything that visitors from Latin America look for and enjoy, from beaches, shopping and gastronomy, to culture, lifestyle and entertainment,” Ms Al Khaja said. When Latin American travellers come to the Gulf region, they tend to stay longer and often combine Dubai with other destinations, so the upcoming unified Gulf tourist visa will make the option for a stopover more appealing. On the other hand, Colombia is also working to attract more visitors from the Middle East by increasing its international flight connections, reviewing entry visa requirements and promoting itself as a sustainable tourism destination. Emirates' Bogota flight will “promote Colombia's tourism diversity, opening doors to new business and cultural opportunities ... and strengthening its position as a key tourist destination in South America”, an official with Colombia's civil aviation authority told The National. Passenger and cargo demand is expected to be high as the Miami connection has “significant occupancy”, the official said. The UAE-Colombia flight and Cepa deal come as the Gulf country is deepening its trade ties with Latin America. The UAE's non-oil trade with Latin America increased 12.1 per cent to $13.1 billion in 2023, an all-time high, and accounts for 2 per cent of the UAE’s non-oil trade globally, according to its Ministry of Economy. “The burgeoning markets in Latin America are increasingly important as they align with the UAE’s interests in diversifying commercial partnerships and increasing investments in technology, maritime transport, as well as clean and renewable energy,” Mr Forgione said. Last week, global ports operator DP World completed a $400 million expansion project at the Port of Callao in Peru as part of the Dubai company's efforts to increase capacity across Latin America. In Ecuador, the company plans to extend its berth at the Port of Posorja to 700 metres, with an investment of $140 million. DP World also manages a special economic zone adjacent to the port. In April, DP World teamed up with Brazilian railway operator Rumo to build a terminal at Brazil’s Santos port – one of the largest ports in Latin America – to manage 12.5 million tonnes of cargo annually. The UAE has signed a Cepa deal with Costa Rica and concluded the terms of a Cepa pact with Chile – a major partner in food security and energy co-operation – and agreed to launch negotiations with Ecuador. The UAE's move to join the expanded Brics bloc will further strengthen its ties with Brazil. "South and Central America are regions of considerable promise," Mr Al Kait said. "We continue to build our relationships with the region and pursue opportunities of mutual benefit."

UAE-Colombia trade and investment to accelerate as Latin American markets beckon

Non-oil trade between the UAE and Colombia rose to $553 million in 2023, up 43% on 2022 and double the levels of 2021