Current and projected high prices of oil and gas may herald a further increase in Poland’s trade with the Gulf States. Other factors conducive to this include positive results in the fight against the coronavirus epidemic in the region, macroeconomic stabilisation, good economic growth prospects and a growing number of Polish enterprises who are not afraid of expanding into these markets
Janusz Władyczak, President and CEO of KUKE – Polish export credit agency
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The “30 years of Polish export” report, recently prepared by SpotData analytical centre for KUKE’s 30th anniversary, shows that in the years 2001-2020 the export of goods to the Middle East increased more than tenfold, from approx. USD 0.5 billion to USD 5.1 billion, and their share in Polish exports grew from 1.2 to 2.2%. This is obviously still not much when compared, e.g. to Hungary, which has a 2.5% share all by itself. Potentially, however, this is a very promising market, considering for example the number of inhabitants; the populations of Turkey and Iran exceed 80 million and Saudi Arabia 34 million.
The International Monetary Fund forecasts that economic growth in the Middle East and North Africa will exceed 4 per cent this year and next, driven by the modernising Persian Gulf countries which benefit from high prices of oil and gas. And, as historical data show, such a situation is conducive to increased imports, a fact which companies from Poland have also been able to make excellent use of in the past. Increased interest in the region is also supported by the restoration of macroeconomic stability and growing number of large infrastructure projects, especially in Saudi Arabia. Construction of the largest offshore city Oxagon, part of the Neom smart city plan which is expected to cost USD 500 billion, may serve as an example.
It is worth mentioning at this point that Polish exporters who enjoy success in the region are not just producers of excellent confectionery or halal meat and cosmetics, but also suppliers of state-of-the-art equipment who win tenders subject to the most exacting requirements. These include the Dubai Metro contract for the delivery of 50 trains, which were manufactured at the Polish plant of Alstom. KUKE insured this transaction and now trains from Chorzów carry visitors from all over the world to the Expo exhibition.
The World Expo in Dubai, which was postponed for a year due to the pandemic, could and should increase interest within the Polish business community not only in the Persian Gulf region, but also in North Africa. It is not widely known that the way to many African markets runs through the Middle East. Let us take the example of a project comprising the construction and modernisation of over 60 maternity hospitals in the Ivory Coast, where Polish companies will perform work worth approximately PLN 200 million and where KUKE is insuring the loan for its financing. The main contractor is an entity from Dubai, responsible for coordinating the participation of several dozen companies from different countries. Polish entrepreneurs coming to the Expo should therefore keep their eyes peeled for opportunities on African markets. In February next year, the Expo will host a Polish-African forum, which may finally become a catalyst for the successful and wide expansion of Polish exporters on the continent. KUKE, as an official export credit agency, has a wide range of options to support Polish exporters thanks to, among others, close cooperation with its counterparts from the region.
As for the United Arab Emirates, in the Middle East they rank second, after Turkey, in terms of the value of exports insured with KUKE. Our companies were able to find buyers there for a very wide range of products – sweets, beverages, meat, lighting equipment, “heavy” chemicals, carpets, plumbing fixtures and cosmetics. Importantly, we note an upward trend in trade. Compared to 2018, this is an increase of more than 30 per cent. Trade with our verified local partners can be considered quite safe. In practice, we rarely experience non-payment or major delays.
Of course, when deciding on a business presence in this region, one should be aware of certain tensions and rivalries. However, you can remove both commercial and political risks by transferring them to an insurer, for example. Another problem is the way in which trade negotiations are conducted, which differs considerably from the approach taken in Europe. Polish entrepreneurs who have been there for years also point out that it is easier to win clients for Western concerns with a recognised brand name on the one hand and very cheap producers from Asia on the other. Nevertheless, we have achieved notable success, and the region is very receptive. In 2020 alone, we sold wheat with a value of USD 360 million, car engines worth USD 200 million, cars with a total value of USD 180 million and razors – a seemingly trivial product – worth as much as USD 160 million.
