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UAE Investments in Argentina Research Paper

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Updated: Sep 30th, 2020

Discuss how present an opportunity for the UAE to invest in Argentina

Argentina and the United Arabs Emirates (UAE) have a potential business partnership. With a lot of opportunities available in both countries for investments, it is more likely that UAE’s investments in Argentina are more likely to be successful (Merz 13). For example, there are three sectors of the economy that can be very successful in Argentina given the strengths of UAE in comparison to the opportunities demand and gap available in Argentina. These areas include the food, energy, real estate and infrastructure sectors.

First, the food industry in Argentina, particular agriculture and beef presents a business opportunity for UAE in Argentina. Oil production in the United Arabs Emirates has contributed largely to the country’s increase in revenue. This positions UAE in the top lists of countries that have enough capital for investment internally and externally. With the lack of development in Argentina in areas of food and food security, UAE can use such opportunity to invest in the food industry of Argentina.

UAE is known to have a strong food industry with agriculture playing a significant role in the country’s struggle towards maintaining food security. On the other hand, UAE has a strong history of success in the beef industry. This presents a strategic opportunity for UAE given that poultry and meat form a significant part of the total exports in Argentina.

While UAE is not a major consumer of meat and poultry, the country has strategic ties with numerous international countries and often exports most food products. As such, UAE has a potential to invest in the food industry of Argentina. In addition, Argentina has a more friendly business environment nowadays than in the past (Chudnovsky and López 25). This is attributable to the presence of a strong infrastructure and the necessary skilled labor from locals.

On the other hand, most administrative restrictions to international trade have been removed in Argentina making it possible for international investors to carry out various investments in Argentina easily. Similarly, tax on repatriation and imports in Argentina have been reduced significantly (Rudnick 49). As such, the United Arabs Emirates’ investment in the food industry of Argentina specifically in the agriculture and meat sectors will involve low operations cost due to the friendly business policies available in Argentina following the election of Macri.

Economically, UAE is placed strategically due to the rising prices of oil and revenue from other sectors. This has given UAE the opportunity to invest in other areas to diversify as well as increase its revenue base. With high income from oil, agriculture, and other exports, UAE has increased its disposable income. As such, the country has enough capital to invest in the food industry of Argentina.

Its strategic geographic location gives the country easy access to various markets such as China, Asia, Philippines, Indonesia, Malaysia, South Asia, and other European markets (McGoldrick 2). For this reason, its investment in the food industry of Argentina has a high potential of success due to the country’s strategic location and access to a variety of markets. The implication is that UAE will source for consumers of agricultural products and beef products from its markets in the Middle East, Europe, and Asia.

UAE has numerous commercial strengths that make its investments in Argentina’s food industry successful such as non-corporate and personal taxation. In addition, the business environment in UAE is highly friendly and characterized by government support in terms of incentives and lack of levies on imports and exports. This reduces the country’s operational cost, a factor that projects high revenue from its investments abroad. The lack of tax on exports and imports implies that food products from Argentina can be imported to UAE for the country’s market or even for re-export.

Secondly, Argentina’s energy sector has remained undeveloped for a long time. This can be attributed to the division between policy makers in local and federal governments which has caused inconsistent implementation of policies. Effects of such lack of effective policies have been felt in the main parts of the country’s economy; the energy sector included, and has led to increased government expenditure, and lack of development in technology in the Argentina (Chudnovsky and López 24).

Resultantly, a lot of natural resources of the country have remained untapped due to the unavailability of the required technology to develop the country’s energy sector. However, following the election of Macri, a lot of positive changes have been seen in the country’s energy sector which presents a suitable business environment for UAE. For example, Argentina has removed all forms of tariffs in energy making the industry more attractive to investors such as UAE given that now the prices are determined by the market instead of Argentina’s set tariffs. In addition, the removal of tax on repatriation is a significant move as far as the exploitation of the untapped energy reserves of Argentina is concerned (Rudnick 49).

The country has abundant natural resources such as uranium, petroleum, shale and natural gas. As such, the availability of untapped energy resources in Argentina presents a suitable business opportunity for UAE given that UAE’s has the necessary knowledge and expertise in energy-related investments following its long-term production of oil.

One of the major challenges of the energy sector in Argentina is the lack of the necessary technology to extract and transport energy in Argentina. The availability of such technology in UAE makes the country a strategic business partner and potential investor in Argentina’s energy sector. For example, the United Arabs Emirates has numerous established companies dealing with the exploration, extraction, and transportation of energy and energy-related products. Examples of such companies include the Dolphin Energy, which operates within the oil and gas industry and was established in 1999, DP World, which is in the logistics and transport sector, and Mubadala Petroleum.

The Dolphin Energy Limited was founded following the need to ensure that there was a strategic energy initiative between Oman and the United Arabs Emirates. The company has engaged in numerous investments in export pipeline, processing plant, sea lines, as well as in wells. In addition, Dolphin Energy has invested in the distribution of energy in many parts of Middle East. With such experience in the energy sector, Dolphin Energy can adequately help in the exploitation of Argentina’s energy, as well as the subsequent distribution of the energy products to various parts of the world.

The second company that is strategic in UAE’s energy investment in Argentina is the DP World. This company has port terminals in various parts of the world. DP World has established links in six continents, and it is developing underway in Middle East, Europe, Africa, and India. DP World connects various parts of the world through its effective supply chain extending to more than 70 inland and marine terminals. As such, DP World will be very effective in UAE’s activities in the energy sector of Argentina as far as distribution and market of the energy products are concerned.

Lastly, Mubadala Petroleum can be very instrumental in the extraction of energy in Argentina. Mubadala Petroleum is a company in the oil and gas industry, which was started in 2012. It is very significant in the oil and gas industry of UAE following its contribution to the management of assets and operations in any given upstream value chain. The company has had numerous cases of success in the extraction of energy such as the production of more than 390,000 barrels of oil in 2014.

In addition, Mubadala Petroleum has had significant and lasting partnerships with communities, international and national oil and gas companies as well as with the government. As such, Mubadala Petroleum presents itself as a strategic partner in UAE’s entry into the energy exploration of Argentina. The three companies, Mubadala Petroleum, DP World, and Dolphin Energy Limited, present UAE with a suitable background for the bargain on the exploration of Argentina’s untapped energy reserves.

All of the three companies have the necessary expertise and experience in exploration and distribution of energy-related products. For this reason, UAE can adequately improve the technology used in the extraction and transportation of energy in Argentina through the help of Mubadala Petroleum, DP World and Dolphin Energy Limited.

Additionally, Argentina’s abundant uranium is very significant for the production of nuclear energy (McGoldrick 2). UAE has a corporation, the Emirates Nuclear Energy Corporation that specializes in the production of efficient, clean and safe nuclear energy for use in UAE. As such, the availability of abundant uranium in Argentina gives UAE a raw material for its nuclear energy production (Boumedjout 12). Evidently, Argentina has a suitable business environment in its energy sector. On the other hand, UAE has the necessary resources (technology and market) for Argentina’s energy products.

Thirdly, the real estate and infrastructure of Argentina present a strategic business opportunity for UAE. Following the election of Macri, the business environment in Argentina has significantly changed (Rudnick 50). This has evident in the development of new friendly business policies in major sectors of the country. For example, the reduction in the repatriation taxes and administrative restrictions to international trade has attracted foreign investors into the country (Sauvant 4).

As a result of such changes, the real estate sector of Argentina has shown potential growth and development. For example, the housing market of Argentina is recovering. Such a positive change can be attributed to the rise in demand and increased access to the dollar. Initially, the market was adversely affected by the currency control. However, the election of Macri has led to the removal of the currency control. Various companies in UAE such as the Mubadala Real Estate & Infrastructure (MREI) can be very instrumental in ensuring UAE’s success in the real estate and infrastructure sector of Argentina.

MREI carries its operations in asset management with a lot of concern in real estate investment both internally and externally. The Mubadala Real Estate & Infrastructure has a lot of experience in the development of leisure districts, residential and commercial houses. As such, Mubadala Real Estate & Infrastructure will be very important as far as the real estate sector of Argentina is concerned. In addition, the government can make use of Emaar Group, which is a leading company in real estate and property development in UAE.

What are UAE investment interests in Argentina?

Argentina presents numerous opportunities for investment for United Arabs Emirates, following the development of new and friendly business policies in the country (McDonald and McMillen 23). Nevertheless, UAE has a number of investment interests in Argentina. Some of UAE’s areas of investment interests include the uranium resources, petroleum, agriculture, and beef sectors.

Uranium is a significant raw material in the production of nuclear energy. In UAE, nuclear energy plays a significant part in the country’s social and economic growth. In spite of this, UAE lacks enough sources of uranium to ensure a continuous supply of nuclear energy to its citizens. As such, United Arabs Emirates wishes to engage in bilateral trade with Argentina for the purpose of tapping on its available uranium deposits.

The significance of nuclear energy in UAE has been seen in the country’s numerous nuclear ties with different countries such as Australia, Russia, Canada, France, South Korea, the UK and US (Boumedjout 4). For this reason, entering into nuclear ties with Argentina will increase UAE’s sources of nuclear energy, and specifically the raw material (uranium) for the production of nuclear energy (Rudnick 49). The availability of a suitable base for nuclear research in Argentina is strategic for UAE’s uranium and nuclear energy needs.

Secondly, United Arabs Emirates has numerous companies in the oil and gas industry. With the reduction in the oil deposits of UAE, there is a need for the companies to establish overseas deals. As such, UAE targets the untapped energy sector of Argentina. In addition, UAE targets the energy sector of Argentina as a way to diversify its economy base following the need for energy security in the country. For this reason, Argentina’s availability of untapped resources such as shale, petroleum, and uranium offers UAE a suitable opportunity to increase its revenue from energy.

Thirdly, UAE has a wide market for agricultural products and meat. In spite of this, the country’s domestic production of such products has not been able to meet the demand and supply of agricultural and beef products. For this reasons, UAE seeks new markets for its agricultural products, as well as plans to get more products for its increased market for food related products both domestically and internationally. For example, in Argentina, poultry and meat are produced in high quantity.

Nonetheless, Argentina’s market for such products is limited which forces the country to seek international markets. With UAE’s numerous market links, the country has seen the need to exploit such an opportunity by targeting to have strategic business partnership with Argentina. Argentina has experienced an increase in agricultural production due to access to improved technology, with the lift of import restrictions and reduction in export tax. As such, UAE targets the Argentina’s food sector in order to benefit from the low cost of operation following the removal of various restrictions and export tax.

Fourth, UAE’s real estate sector has experienced significant growth in the recent years, targeting both domestic and international clients. As such, following the recovery of the housing market in Argentina due to rising demand and increased access to the dollar after removal of currency control, UAE hopes to make a significant impact on the country’s real estate and infrastructure sectors.

Works Cited

Boumedjout, Hichem. “UAE to Build Nuclear Reactor”. Nature Middle East 1.1 (2012): 4-12. Print.

Chudnovsky, Daniel and Andrés López. The Elusive Quest for Growth In Argentina, Basingstoke: Palgrave Macmillan, 2007. Print.

McDonald, John and Daniel McMillen. Urban economics and real estate: Theory and Policy, John Wiley & Sons, 2010. Print.

McGoldrick, Fred. “The US-UAE Peaceful Nuclear Cooperation Agreement: A Gold Standard or Fool’s Gold?.” CSIS Policy Perspectives, Center for Strategic and International Studies 1.2 (2010): 2. Print.

Merz, Ryan. “From Subsistence to Existence: Worker strategies in the recovery of Talleres Union.” ISP Collection 2.1 (2008): 13.Print.

Rudnick, Hugh. “South American reform lessons-twenty years of restructuring and reform in Argentina, Brazil, and Chile.’’ IEEE 3.4 (2005): 49-59.Print.

Sauvant, Karl. “The Rise of International Investment, Investment Agreements and Investment Disputes.” New York: Oxford University Press, 2008. Print.

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