Indonesian businesses urged to invest in Mexico
MEXICO CITY (JP): Indonesian businesses are being encouraged to invest in Mexico as a means of penetrating markets in North and South America.
"I think investment here has good prospects because the goods produced here can enter the North American Free Trade Agreement (NAFTA) countries freely," Indonesian Minister of Industry and Trade Tunky Ariwibowo said here Thursday.
He said that Indonesia will benefit from investing in Mexico because it is a member of NAFTA and has several free trade agreements with other Latin American nations.
Tunky was speaking at a meeting with the local trade and business communities here Thursday. He called the bilateral relations between Southeast Asian nations and Mexico the next logical step in market globalization.
"We think of Mexico as not only a place for profitable, safe relations, but also as a springboard into the United States and other Latin American countries," Tunky said.
Meanwhile, Indonesian ambassador to Mexico Usman Hasan said that Mexico is still recovering from the economic disaster caused by the devaluation of its peso against the U.S. dollar at the end of 1994.
"This recovery is a good moment for our businesspeople to enter Mexico because it has an urgent need to diversify its export markets and sources of imports and foreign direct investment," Usman said.
Mexico is heavily dependent on its neighbor to the north: some 48 percent of Mexico's foreign direct investment comes from the United States, as does 73 percent of its imports. Some 83 percent of its exports goes to the U.S.
Meanwhile, Mexican Vice Secretary of International Trade Negotiations Jaime Zabludovsky said that his country has had a liberal investment regime since the enactment of new investment law in 1993.
"I do think that Mexico offers Indonesian businessmen and businesswomen very good opportunities not only to participate in the Mexican market but also to enter the North American market through NAFTA and also the Latin American market," Zabludovsky said.
He noted that Indonesia and Mexico have built up relatively strong trade relations, but not in the investment sector.
"You export to Mexico electronic parts, plywood and textiles, and I do think that there are very good opportunities for your textile and apparel industries to come into Mexico and take up with the NAFTA," Zabludovsky said.
The Indonesian and Mexican governments are also encouraging Mexican businesses to enter East Asia through Indonesia.
Mexico's entry into the Asia-Pacific market could be facilitated by stabilizing trade relations with Indonesia, Tunky said at a business forum during his two-day trade mission to Mexico.
In addition to being a gateway to one of the world's most lucrative trade areas, Indonesia is home to nearly 200 million people, a wealth of natural resources and a history of prudent macroeconomic management, he said.
According to the Indonesian government, Indonesia suffered a US$4 million trade deficit with Mexico last year. According to the Mexican government, Indonesia enjoyed a trade surplus of $151.4 million last year.
Tunky said the discrepancy is normal because Mexico's records of imported Indonesian products include those coming from Indonesia through third countries.
Indonesian counts its exports to Mexico as those shipped directly from Indonesia to Mexico. Indonesia records its imports from Mexico in the same way, as does Mexico when it exports goods to Indonesia.
"Such a difference in statistics does not matter to me. What is more important to me is how to export more of our products to Mexico, either directly or via third countries," Tunky said.
According to Mexico's figures, Mexican products bound for Indonesia represented less than 0.02 percent of its total exports of $78.8 billion last year. Its imports from Indonesia were less than 0.23 percent of its total imports of $72.4 billion.
Trade flow between the two emerging economies dropped to $151.1 million last year from $211.7 million the year before.
"Hopefully in the next few months we will see significant changes in our bilateral statistics," Zabludovsky said. "Our two countries offer too many economic and strategic advantages." (rid)