Asia, Central Europe forge closer ties

Asia, Central Europe forge closer ties

BERLIN (DPA): Two of the world's fastest growing regions -- Asia and Central Europe -- are rapidly forging new economic ties, as evidenced by Indonesian Trade and Industry Minister Tunky Ariwibowo's embarking on a 10-day trip to the former Soviet bloc Friday.

Ariwibowo's visit to Hungary, Rumania and Poland comes in the wake of the stepped-up exchange of top-level business and political missions and trade agreements between the two regions.

Spurred on by Central Europe's low cost but highly skilled labor force, several big-name Asian companies have been carving out new empires in the emerging markets of the former Soviet Union.

Investment in Central Europe by Asian businesses at present represents only a small part of their global investment strategies.

But for corporations such as the giant diversified Korean group, Daewoo, which has extensive investments in nations such as Rumania and Poland, labor costs in Central Europe can be up to 25 per cent of costs in Korea.

Despite the somewhat underdeveloped cultural and historical ties between Asia and the countries making up the former Soviet bloc, Asian investors are projected to more than double their investments in the region over the next five years to about 3 billion German marks (US$1.75 billion) with a string of new plans also under consideration.

While European and U.S. corporations still comprise the lion's share of the US$24 billion of foreign funds that have so far flowed into Central Europe, leading Asian nations such as Indonesia are keen to cash in on the fast-changing economies of the former Soviet bloc.

Ariwibowo's trip to Central Europe follows a similar swing through the region by the Vietnamese Prime Minister Vo Van Kiet. Likewise, Central European states are moving to cement ties with the Asian-Pacific region.

A high-level Rumanian investment and political mission has just returned to Bucharest from a mission to the region. Meanwhile in Bucharest Monday, Rumanian President Emil Constantinescu told a visiting Chinese minister Bao Xuding of the great importance Rumania attached to its ties with China.

Earlier this year, Hungarian Prime Minister Gyula Horn completed a series of trade, investment and tax deals in Asia following a trip to the region, including visits to Malaysia and Singapore.

Trade between Hungary and Singapore jumped 50 percent last year to $180 million.

At the same time, Polish Foreign Minister Dariusz Rosati was in Thailand to sign several new agreements aimed at promoting bilateral ties between the two nations.