RI wants to balance trade with Latin America by 2000

By Riyadi

SAO PAULO, Brazil (JP): Indonesia is aiming to balance its trade with Latin American countries by the turn of the century, Minister of Industry and Trade Tunky Ariwibowo said.

He said here on Monday that Indonesia has suffered from a cumulative deficit of some US$500 million per annum in its trade with Latin American countries.

"Therefore, we must pursue joint efforts to improve our exports to Latin America, so that we will be able to balance our trade with the region by the year 2000," Tunky told some 35 Indonesian businessmen who accompanied him in a two-week trade mission to Argentina, Brazil and Mexico.

On Monday, Tunky and his Brazilian counterpart Fransisco Dornelles signed a trade agreement in Brasilia to provide a formal basis for bilateral trade relations.

"So far, we have no formal trade agreement with Brazil, but now we have this one, which governs the responsibilities of each government to foster bilateral trade," Tunky said.

He added that setting the target at 2000 is necessary to drive the Indonesian government and business sector to boost exports to Latin America.

Although bilateral trade between Indonesia and 12 Latin American countries have grown by an average of more than 20 percent per annum during the last five years, Indonesia continues to run deficits in trade with all of its major trading partners in Latin America.

Last year, even though Indonesia enjoyed a combined surplus of $51 million in its bilateral trade with seven Latin American countries, namely Bolivia, Columbia, Ecuador, Paraguay, Suriname, Uruguay and Venezuela, it suffered a total deficit of $596 million in its trade with the five other Latin American countries it trades with, namely Argentina, Brazil, Chile, Mexico and Peru.

Indonesia's exports to Latin America stood at US$525.88 million last year but its imports from the region reached $1.07 billion, and thus, it suffered a total deficit of $544 million. The largest deficit came from Brazil with $212 million, followed by Chile with $185.9 million, Argentina $177 million, Peru with $18 million and Mexico with $4 million.

Indonesia's imports from Latin American countries mostly consist of bulk agricultural and mineral commodities including wheat, corn, soybean and iron ore, while its exports to those countries mostly comprise manufacturing products including textiles and textile-related products, footwear and electronics, in addition to natural rubber and palm oil.

Alternative

Mani Maren, an executive at the Texmaco Group, said that while Indonesia's traditional textile markets have been saturated, Latin America serves as a potential marketing alternative for Indonesia's textiles and garments, considering the affluent lifestyle of most people in Latin America.

Texmaco currently exports some $25 million in textiles and textile products to Latin America per annum.

Chairman of the Indonesian Chamber of Commerce and Industry Aburizal Bakrie said that considering the huge market in Latin America, Indonesia should be able to export more of its products to the region.

"Our products, especially garments and electronic products, are actually very competitive here," Aburizal said, adding that the chamber has helped open ways for Indonesian companies to export more of their products to Latin America.

During the mission to Latin America, Aburizal, in his capacity as the chamber's chairman, has signed memorandums of understanding to foster investment and trade with his counterparts from Argentina and Brazil and plans to sign another one with his counterpart in Mexico.

To help penetrate the market, Aburizal suggested that Indonesia's businesspeople cooperate closely with overseas Indonesians in Latin America. In Brazil, for instance, overseas Indonesians have successfully laid business roots here.

He added that Indonesia can also reduce its deficits with Latin America by conducting direct trade with the region, considering that many Indonesian products enter the region through third countries like the United States and Panama.

To help facilitate direct trade with Latin America, Aburizal said, the chamber plans to establish a Latin America-Indonesia trading firm, which will have offices in Jakarta and most capitals of Latin American countries.

Rudy J. Pesik, head of the chamber's Latin America department, explained that Indonesian leading companies which have interests in Latin America, and Latin American firms which have interests in Indonesia are expected to become shareholders of the Latin America-Indonesia firm.