JEDDAH: The Middle East and North Africa (MENA) region steps up cooperation with India and China to fully benefit from the dynamics of the two high-growth regions, Al Masah Capital said in its report titled “China and India's growing influence in the MENA region - Their legacy and future footprint”. In the last five years, two-way trade between China and the Middle East tripled and reached $107 billion in 2009. On Chinese exports, the major destinations in the MENA region were the UAE, Saudi Arabia, Iran and Egypt. Until August 2010, China's exports to the UAE stood at $13.7 billion, the largest in the MENA region. The region's free trade agreements with China and India, which are underway, could catapult these trade relations to new heights, bolstering the region's diversification of economies and shaping broader investment ties, the report said. “We are on the threshold of a new era of growth and inter dependence,” said Shailesh Dash, chairman of Al Masah Capital. “While oil is the key trading commodity between the regions, non-oil trade has been largely unexplored. MENA's competitive advantage in other sectors such as petrochemicals, basic materials and fertilizers is yet to be fully explored,” said Dash. India's total trade with MENA stood at $116.9 billion in 2009-2010 marked by strong trade links with the UAE and Saudi Arabia (India-GCC trade volume was put at $83.9 billion during the period). China's GDP rose 9.5 percent per year on an average during the past thirty years and is expected to grow 10 percent and 8.7 percent in 2010 and 2011 respectively. The country's gross domestic product (GDP) for the second quarter of 2010 totaled $1.33 trillion. Similarly, the Indian economy grew at an impressive annual average growth rate of 7.1 percent during 2000-2009 period with its GDP growing 8.8 percent during the first quarter of the fiscal year 2010-11. “China is the second largest consumer of oil in the world after United States with oil consumption growth accounting for about a third of the world's oil consumption growth in 2009. On the other hand, India is the world's fifth largest oil consumer and the country is expected to account for 12.59 percent of Asia-Pacific's oil demand by 2014.” “With China and India continuing their economic uptrend, their dependence on MENA for energy supplies is expected to increase. Hydrocarbons will continue to boost their rising interest in the MENA region and at the same time both regions will look to expand their trade links beyond oil,” Dash added. Dash said MENA's drive to achieve greater economic diversification and emerge as a knowledge enterprise was complemented by China and India's expertise in technology and services sector. “This component is driving new relationships with China and India both in the form of trade as well as broader investments and political ties.” MENA could benefit from India's expertise in the services sector, particularly IT-enabled services, science and technology and education, while massive growth in China is offering up new market opportunities in a variety of industries for a lot of companies in this region. “Besides energy, higher opportunities for fertilizers, petrochemicals, agricultural products, and a number of manufactured goods where MENA maintains a strong comparative advantage are being explored in China,” he added. Dash exuded confidence that the proposed Free Trade Agreements (FTA) between the regions were bound to deliver greater synergies. “In short, MENA and India and China offer tremendous potential for cooperation in trade, investment, energy and manpower and we've only seen the tip of what is possible.”
