Southeast Asia, Latin America to expand ties

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.