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APINDO | Latin-ASEAN Business Forum: Opportunities and Constraints for
Further Economic Cooperation

The Latin – ASEAN Business forum was held in July 2012 at the Shangri-La Hotel in Jakarta and was officially opened by President Susilo Bambang Yudhoyono. The theme of the two day conference was ‘Towards a Sustainable Future’ with the aim of trying to map the opportunities and barriers to further trade and investment cooperation between the two regions. Also in attendance at the opening ceremony was Economic Coordinating Minister Hatta Rajasa, Minister of Trade Gita Wirjawan, Minister of Agriculture Suswono, Cabinet Secretary Dipo Alam, Head of BKPM Chatib Basri, Chairman of APINDO Sofjan Wanandi, Executive Director of the ASEAN Foundation Makarim Wibisono and Chairman of KADIN Suryo B. Sulisto.

According to the UN Economic Commission for Latin America and the Caribbean (UNECLAC), the collective GDP of Latin America has reached U.S. $ 6.87 trillion and is expected to grow by 4.1% this year. ASEAN GDP is currently U.S. $ 3.36 trillion and is projected to grow by 7.2%.

In his opening speech, President Yudhoyono remarked "both of these dynamic regions hold a lot of potential for collaboration which has not yet been seriously explored”. The President also added that despite the size of the economy and the population, trade between the two regions is only 2.3% of the total value of all global trade. With a population of 580 million and the projected growth in the region of about 4 to 5 percent, Latin American imports from the ASEAN have grown from 0.4% in 1970 to 3.2% in the last five years. During the same period, Latin American exports to the ASEAN increased from 0.2% in 1970 to 1.4%.

Foreign investment between the two regions is still low when compared with the total net investment into each region. "This makes the business forum all the more relevant and the need for cooperation all the more necessary given the current global economic climate" added President Yudhoyono. The President further noted that the issue of connectivity is one that must be addressed in order to realise the market potential of the two regions. This subject was covered at the event by the President Director of Pelindo II, R.J. Lino who was a co-speaker at the Technology and Infrastructure session of the forum. Mr Lino presented how Indonesia’s planned infrastructure developments will improve sea transportation links between the two regions by Indonesia serving as a hub point for trans global shipping routes.

At the event, Chairman of APINDO Sofjan Wanandi gave a speech regarding the lack of knowledge that each region has on the other and that the forum faced a major task in trying to overcome this obstacle to develop conducive business channels. Mr Wanandi added that cooperation is needed between businesses, government and academic institutions to identify the priorities in developing economic cooperation. In addition, incentives should also be created for investment, trade as well as the sharing of technology and the development of transport links.

Further to the forum, Sofjan Wanandi laid out some of the key points to be considered for the next steps in achieving further cooperation between the two regions. When examining the business opportunities, issues such as the geographical distance must be addressed by the private sector in order to establish which products are commercially viable for increased trade such as raw materials, partially processed materials and finished goods which are less reliant on a coordinated supply chain. Further to this, Latin America has many experienced businessmen and investors in the fields of energy, minerals and agriculture for the downstream processing sector which Indonesia can benefit from. Indonesia also has the potential to learn from Latin America’s success in operating dynamic and profitable state owned enterprises. South America can also be a highly lucrative market for Indonesia’s manufactured goods once the country has a better grasp of the local distribution networks in the Latin American region.

However, cultural gaps are an area that requires efforts on both sides given the language barriers as well as the need to appreciate the individual characteristics of each member country of both regions. Mr Wanandi concludes that at this very early stage in mapping the business opportunities, a lot of work needs to be done on both sides to learn the unique selling points both regions have to offer and to continue the upward trend of ASEAN – Latin American trade through effective alignment of both parties’ areas of trade focus.

APINDO - 2012

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Indonesia Snapshot

Capital: Jakarta
Population: 259 million (2016)
Currency: Indonesian Rupiah
Nominal GDP: $936 billion USD (IMF, 2016)
GDP Per Capita: $3,620 USD at Current Prices (IMF, 2016)
GDP Growth: 5.0% (2016)
External Debt: 36.80% of GDP (BI, Q2 2016)
Ease of Doing Business: 91/190 (WB, 2017)
Corruption Index: 90/176 (TI, 2016)