The Malta Independent 24 October 2020, Saturday

Developing political relations with Brazil - Diversifying into new markets

Saturday, 10 October 2020, 07:37 Last update: about 13 days ago

Bernard Vella

Brazil might be complex to understandas the late Brazilian composer, Tom Jobim used to say, “Brazil is not for beginners”. Nevertheless, Brazil is the 9th largest economy in the world by GDP.

Brazil rose as a major player on the world stage, joining the group of the largest emerging markets; the BRICS (Brazil, Russia, India, China and South Africa). Have you ever eaten a Burger King meal, put on Havaianas beachwear or flown on an Embraer jet?...They are all fruit of Brazilian investment. Politically, Malta should pay more attention to Brazil’s rise.

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While Brazil is relatively Malta’s largest trade market in South America, Malta can achieve far better volumes of trade and investment to and from Brazil, especially when considering Malta’s geostrategic location, its recent economic growth and ventures into sophisticated services. As per UNCOMTRADE data, in 2019, imports from Brazil totalled $11.5million (the top being sugar) and exports to Brazil totalled $2million (the top being machinery). In 2016, Malta and Brazil signed a Memorandum of Understanding (MoU) envisaging to strengthen bilateral ties.

In a post-Covid scenario, diversification to new markets can significantly strengthen Malta’s economic resiliency. In this regard, Brazil would indeed present a steady market. Therefore, how can Malta further develop political and commercial ties with Brazil?

Malta has a double taxation agreement (taxation relief) with all BRICS except Brazil. Negotiating a similar deal with Brazil would encourage Brazilian companies to extend business operations to Malta and local companies to Brazil.

Given Brazil’s continental dimension, targeting city clusters vis-à-vis Malta’s most pertinent sectors is key to bolstering business activity between countries. São Paulo is Brazil’s financial and commercial hub. Its state economy solely is larger than Argentina’s. São Paulo’s leading sectors which would tie in to Malta’s industry include; manufacturing of pharmaceuticals and aircraft, banking, insurance, IT services and block chain. Furthermore, the University of São Paulo is developing Brazil’s largest Artificial Intelligence research centre. An active political dialogue with São Paulo’s State Government Secretariats would enable Malta to tap into such sectors.

These sectors can also serve as the basis for cooperation in higher education. Stimulating such flow of knowledge would promote investment niches between Malta and Brazil, for example, creating exchange programmes where Brazilian students can carry out traineeships in Malta and Maltese students in Brazil, especially in the fields of engineering and pharmaceuticals.

In addition, Brazil is dotted with several colonial towns, some UNESCO heritage sites. Malta can provide its expertise in restauration.

The Port of Santos, Latin America’s largest cargo port and the most important foreign trade route in Brazil lies at the coast of São Paulo. Malta Free Port (MFP) already serves Santos and other Brazilian ports. Undoubtedly, MFP’s location holds the capacity for further collaboration with the Port of Santos in distributing cargo from Brazil to Europe, North Africa and the Middle East.

The Brazilian Airline TAM (now merged with LATAM) used to send its aircraft to Lufthansa Technik Malta for maintenance checks. In 2019, an Air Services MoU was signed between Transport Malta and Brazilian Authorities. Malta can aim at attracting stopover flights from Brazilian airlines operating to European cities, as well as promoting its aircraft registration services with Brazil.

As per NSO data, Brazilians form the largest group of Non-Europeans studying English in Malta, doubling to 5,000 students by 2019 from 2,621 in 2016. Furthermore, in 2018, Malta Tourism Authority recorded 10,749 Brazilian tourists, with 40.6% being students for English language learning. After the pandemic, Malta should ensure that such numbers persist and increase.

Avenues for cooperation between Malta and Brazil are bountiful. A post-pandemic era might open a window of opportunity for Malta in a region where so far political and commercial relations have been limited.

 

Bernard Vella is a member of the PL's Policy Fora

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