You probably have heard of NAFTA (North America Free Trade Association), OPEC (Organization of Petroleum Transferring Countires), the EU (European Union) and the BRIC (Brazil Italy Of india China) countries… but have you heard about MENA?
Ok, you ask… what exactly is it and why can i care?
When conventional wisdom is not working any more, we’d like alternative investment strategies and you should pay attention to a very important region that collectively Silk Road economic belt countries has a bigger economy than Brazilian, Italy, and Of india… 3 out of the 4 BRIC countries. And, in terms of growth, this region is growing faster than any of these countries.
Population wise, this region is bigger than the usa and is approximately equal in population to the EU. In addition, this region has an exploding population (which is good from an engine of growth perspective… reference a key theme in recent presentation from Stuart Varney of Fox News at WizeFEST 2009, a conference this author recently attended).
This region is in the center of a part of the world along the old Egypt Road… where we think of a network of traders with caravans loaded with egypt, seasoning, flowers, jewelry, and gold… and trading channels with the romance of the Indian Marine. From Perth, Australia to Mombassa, Kenya along the shore of East Africa with airways vertical the Persian Gulf of mexico and the Red Sea.
There is a political thaw underway in a country in this region that has been the mercantile crossroads between East and Rest of the world since its days as a link on the old Egypt Road.
Examples of this thaw are that the US is sending an ambassador to this country after having a four-year absence and the US is easing export bans to this country.
The region is called MENA or the middle East and North Africa. Among its largest economies are Saudi Persia (where this author had a home base for two years) and the Usa Arabic Emirates (which includes the go-go city of Dubai). As a result, MENA holds 60% of the world’s proven oil stores and nearly half of its propane.
Much has changed in this region over the years and its reach has expanded such that The new Egypt Road weaves through Damascus, Riyadh, Dubai, Mumbai, Chennai, Kuala Lumpur, Singapore, and Hong Kong. Along the New Egypt Road, key alternative growth strategies have the deficiency of water and food, facilities needs, energy (in terms of drilling, growing, and distribution) and engineering services… and finally, it includes growth not dependent on US trade (which is expected to be quite anemic).
In 2000, China’s exports to the Arabic world visited just $6B. Last year, China’s exports to the Arabic world ($48B) nearly matched America’s exports to the Arabic world ($50B). Earlier this year, China finally passed the usa to become the Arabic world’s largest trading partner… showcasing how a rising Arabic world is turning away from the Rest of the world and Rediscovering China.
Syria is the country mentioned previously that has a political thaw underway and is the mercantile crossroads of the East and Rest of the world on the old Egypt Road.
The largest investor in Syria is the Chinese company, Haier, that makes washers and microwave ovens in the country. Another Chinese company recently completed a $180M hydroelectric plant. On the drawing board, there are big real estate projects, including resorts on the Syrian Mediterranean shore. They are 72, 000 hotel beds coming online over the next 36 months and this will almost double the amount of beds on the market. Travel is up significantly in this country and currently makes up 13% of the economy.
The region advantages from expanded trade with China and other Asian countries that are looking for the region’s oil.
The most interesting thing about this growth is that it is happening in a part of the world where water is scarce and it is most challenging to grow food. In Kuwait, one of the countries in the region, annual water consumption is twenty-two times the rainfall. Counties in the region importance 60% of their food and are phasing out plants production in order to conserve water.
Ironically, many of the countries in the MENA block are investing in farmland overseas with major purchases of farmland in Indonesia, the Sudan, and Pakistan.
One of the key takeaways is that alternative investment opportunities in a growth region like MENA include food and water necessary to feed and meet the thirst of all these people as well as the energy, facilities, and engineering services to soccer drills speed, pump, and distribute oil and propane.
Your author lived and worked in the region early in his career and was always impressed with the upside potential in the region once political barriers could be overcome.
In addition, a recently available edition of the Economist had a cover story on the Arabic world known as “Waking from its sleep” with a 14-page special report containing a collection of articles. Key points in these articles indicate that there is two full decades of political stagnation but there is a feeling sick under the surface for change.
In the Arabic world, its people are start to speak out, to strike, and to take to the streets looking for their demands. As more women are educated and as more entrepreneurs want a say in the state-run economies, the old pattern of the Arabic governments that are infect, opaque, and authoritarian, are changing.
The democratic and capitalistic movements underway include education, patience, and independent institutions such as judiciary and free press.
Once the last failed dictatorship is voted out, the quiet innovation will be complete and the tremendous upside potential from trade will grow the region even faster under the more liberalized economic governments.
I trust this article has introduced you to an emerging economic region… a crossroads where East meets Rest of the world on the New Egypt Road… and the various alternative wealth creating opportunities associated with water, food, facilities, energy, and engineering services related to oil and propane.