Southeast Asia, Latin America to expand ties

By Vincent Lingga

BUENOS AIRES (JP): Business representatives from ASEAN and Latin American Mercosur common market issued a joint declaration Friday expressing strong commitment to expanding economic ties between the two regions.

The declaration was issued at the end of high-level discussions on Asia-Latin America economic relations here after the 12th General Meeting of the Pacific Economic Cooperation Council (PECC) in Santiago, Chile, on Thursday.

Hundreds of businesspeople and academicians from ASEAN joined their counterparts from Latin America in two parallel seminars which were opened jointly by Malaysian Prime Minister Mahathir Mohamad and Argentina's President Carlos Saul Menem.

"The discussions have opened our eyes to the wide range of possibilities of business partnerships, notably trade, between our two regions," noted Sofjan Wanandi, chief of the Indonesian business delegation to the meeting.

The Indonesian team included The Ning King, Chairman of the Argo Manunggal textile group, Robby Wibawa, a director of the Salim Group, Abdul Rachman Ramly, vice chairman of the Astra group, Steve Sondakh, a director of the Hero retail chain, Philip Juchahana, director of the Great River textile group, Prijadi Praptosuhardjo, managing director of state Bank Rakyat Indonesia.

"What is more important, though, is how we, together with our government, respond to the great enthusiasm on the part of this region to expand economic ties with ASEAN," added Sofjan, who is chairman of the Gemala Group.

"Our meetings with businesspeople and ministers in Brazil, Chile and Argentina showed how serious is Latin America about finding new partners outside the continent and deepening its trade and investment integration across the Pacific," he said.

The Ning King said he was surprised to find that a portion of his garments had entered Brazil, Chile and Argentina through Japan.

Brazil and Argentina are the largest countries in Latin America accounting for more than 50 percent of the gross domestic product of the region.

Panelists at the seminars acknowledged the great distance as one of the obstacles to economic linkages.

"However, both regions -- their confidence bolstered by their economic reforms and trade liberalization -- have increasingly realized the essential need for market diversification away from their traditional trading partners (U.S. and Europe)," Jusuf Wanandi, Chairman of the Indonesian Centre for Strategic and International Studies, observed.

Jusuf, a speaker at the seminars, said ASEAN and Latin American countries had benefited greatly from economic reforms and trade liberalization, further encouraging them to diversify their markets.

He pointed to the potentials of ASEAN countries with a total population of 475 million and a per capita income ranging from US$110 to $30,860.

Mercosur members have 225 million people with per capita income ranging from of $1,750 in Paraguay, $4,500 in Brazil, $4,850 in Chile, $5,400 in Uruguay to $8,500 in Argentina.

"A reforming Latin America has changed the way it looks at the outside world. Today, the view is based on free trade and global capital flows," said Felipe Larrain of the Latin American Studies of Harvard University.

"Good politics and good economics now go hand in hand in Latin America," Jusuf said, referring to the situation in the region until the mid-1980s which was marked by closed economies and military dictatorships.

Mercosur, like ASEAN which will become a free trade area in the year 2003, groups Argentina, Brazil, Paraguay and Uruguay in a common market scheduled for 2001. Chile and Bolivia, currently associate members, will join in 1999.

Even though Latin America-ASEAN trade has been growing steadily since the late 1980s, it is still small in proportion to their respective total trade.

Latin American exports to ASEAN countries, which amounted to $2.6 billion in 1996, accounted for a mere 3.2 percent of its total exports and its $1.6 billion imports from ASEAN were only 1.8 percent of its total imports.

Latin American exports consisted mainly of copper, iron ore, dairy products, soybeans, sunflower, wood pulp, chemicals and some light industrial goods.

Latin American imports from ASEAN countries comprised vegetable oils, fuels, rubber, footwear, synthetic fibers, electric appliances and machinery.

Indonesia's exports to Mercosur countries totaled $652 million and imports from that region $310 million last year, compared to more than $1.2 billion in Malaysia's two-way trade with that region.

"I think we have a great prospect here for labor-intensive industrial products such as footwear and garments and various other consumer products of light industries," The Ning King said.

Malaysia seems to be the most aggressive and well-positioned among ASEAN members to penetrate the Latin American countries. Its government and private sector have worked closely since the early 1990s to tap the region's market.

The Malaysian Airline System runs direct flight services to Buenos Aires via South Africa, and Mahathir himself has visited the region five times over the last decade.

Malaysia and Argentina signed an agreement on Friday providing tax exemption to airlines and sea freighters serving each other country.

"We need to set our networking in this region before other players from Asia dominate this greatly promising regional market," Indonesian Ambassador to Argentina Aswin Darwis said.