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Asia's emerging frontier with Latin America

In a world where Europe and the US are struggling, both East Asia and Latin America are outperforming, even if they too face challenges. More than 12 years since it started, the Forum for East Asia and Latin American Cooperation (FEALAC) has not garnered enough attention - not when compared to, say, the BRICS countries. Yet even without headlines, a real relationship has grown.

Notwithstanding the considerable distances, inter-regional trade has grown at an average of 20.5 per cent over the past decade, and is projected to reach US$500 billion this year. The full range of goods crossing the ocean includes manufactured and agricultural products, with natural resources especially important.

Global conditions are pushing the two regions even closer. With the developed markets of the West still soft, the search is on for new markets within South-South cooperation. As the meeting's host, Indonesian Foreign Minister Marty Natalegawa said FEALAC can assist in "the next major shift in the world's geo-politics and geo-economy".

But this cannot happen overnight and, if left to market forces, relations will be dominated by the larger and more developed countries. China, for instance, accounts for nearly 50 per cent of East Asia's trade with Latin America. Japan too has substantial ties - especially with Peru and Brazil - and together with South Korea are especially active exporters of their manufactured goods.

Among the Latin Americans, Brazil attracts the most interest, despite a recent slowdown. Mexico too is considerable in its own right and also provides access to the US market through the North American Free Trade Area (Nafta). Smaller economies on each side tend to be less noticed. Yet Peru and Colombia rack up impressive growth rates, after making political changes and policy reforms. The recently formed Pacific Alliance brings them together with Chile, Mexico and Costa Rica, accounting for a sizeable $445 billion in exports.

On the Asian side, Asean - whose collective population of 650 million is more than all of Latin America - deserves more attention. As the members integrate into the Asean Economic Community, their competitiveness will further improve and the regional group will do more to link with sub-groups like the Pacific Alliance.

Individual countries too, can further their ties. An estimated 100 Singaporean companies are present in Latin America, including Keppel, Sembcorp, Olam and Wilmar. There are also Latin American companies venturing in the opposite direction into Singapore, like the petrochemical company Braskem and mining giant Vale.

Thailand too, has engaged, with a free trade agreement with Peru, and has seen its exports to Latin America more than double in recent years. Following the recent Bali meeting, the Kingdom will be co-chair for the group and can be a key player in progress.

The efforts of different countries and sub-groups can be building blocks for FEALAC to become the premier forum for the inter-regional relationship, and broaden the connections for all 36 countries participating. This is where governments can make a difference.

There remain gaps in business connectivity - information, infrastructure, logistics and trade facilitation. Progressively, the aim must be to fill these gaps so that even the smaller and medium-sized enterprises - and not only the larger corporations - can access the inter-regional opportunities.

A broader foundation for engagement is also needed. This is difficult given the lack of historical interaction between the two regions. Nevertheless, networks between universities and cultural institutions, and using the media and tourism can foster better understanding and increase people-to-people contact. Building for the future, efforts are needed to interest the youth of both regions and help them develop intercultural skills.

These were among the recommendations put forward in Bali by a Vision Group appointed by the FEALAC ministers. Some ideas aim to jumpstart a new stage in relations with projects like a regular business forum and a network among universities. The longer-term goal is to deepen and broaden the inter-regional relationship so that it can be an essential component of the global system - taking its place alongside ties with the US and Europe.

Cliches about revolutions and drug smuggling may persist when Asians think about Latin America, and vice-versa. The realities of trade and changes in global politics are, however, pushing both sides to rethink old assumptions. The opportunities are real and substantial - more than when FEALAC first began. But for these to be realised, Asians and Latin Americans must increasingly give attention to each other in a new frontier for engagement.

Simon Tay is chairman of the Singapore Institute of International Affairs. He served as his country's representative on a Vision Group for FEALAC and was the overall editor of the final report submitted to the ministers at their meeting held in Indonesia.


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