Opinion

Play time for tigers, pumas
and lions

Most people would agree that seeing a pack of wild cats rip-roaring and play-fighting in the middle of a vast green safari park is both amusing and pleasurable. For some, such vivid imagery is worth a thousand words.

Let us turn now to another pack of big cats that have kept people pondering outside the animal kingdom. These are groups of emerging nations that economists refer to as the Asian Tigers, Latin American Pumas and African Lions. Although superfluous to call them wild creatures of the globalized world, they are certainly catching our attention.

Given that the world economy continues to slump — due to the prolonged crisis in the eurozone and slow growth in the United States —global trade and investment patterns are changing. We have seen global trade growth weaken, prompting the World Trade Organization to slash the global trade growth projection last year from 3.7 percent to 2.5 percent. Developed countries can hardly afford to import goods and services like they used to — but still find ways to remain atop the competitive ladder.

The fragility of “North-South” trade is now put to the test. Should emerging economies now look
elsewhere?

This is already evident for Indonesia where exports to other emerging markets have continued to grow at a much greater rate than exports to traditional markets. For instance, Indonesia’s non-oil and gas exports to Libya, Guinea, Mauritius, Laos, Macedonia Republic, Haiti, Nicaragua, Liberia and Côte d’Ivoire have more than tripled, up to US$318 million by first half of this year.

Regional trade had also been on the rise. The Association of Southeast Asian Nations (ASEAN) member countries are moving swiftly to boost intra-trade and looking to improve connectivity as they are aggressively realizing a grandeur regional economic community. While the Asian Tigers are known for their fast growth, they do remain volatile. Exposure to outside risks is still significant and to no one’s surprise, some of the ASEAN member countries find themselves holding back.

Remember when the Indonesian public mulled over floods of Chinese goods after the reenactment of the ASEAN-China Free Trade Agreement? Old wounds are yet to heal and many remain vexed over possible new scars.

To make the most out of trade during such global uncertainty, nations should have clear trade strategies capable of triggering stronger trade links that lead to mid- and long-term goals without simply going “all out”.

What the Chinese have done in Africa shows that trade is more than just exchanges of goods and services. Trade is a gateway to culture, knowledge and other resources deemed beneficial for the long haul.

One way to identify a regional catalyst is to take the Latin Pumas as an example. Trade data shows that Mexico had been our entry point. As our main export destination in Central America, Mexico is central to expanding our products to the rest of the region.

Trade with Mexico stimulates economic activities reaching as far as Costa Rica, Nicaragua and Guatemala. There is a positive correlation between Indonesia’s trade with Mexico and Indonesia’s trade with Mexico’s neighboring countries.

Brazil also has the potential to spur that same effect. Needless to say, there are similarities in our economic structures. Both countries have large agricultural sectors and have been the main destination for the footwear market. With about a 25 percent increase in trade this year alone, a value close to $2 billion, one can just imagine the possibilities. In addition, Mexico and Brazil are also members of the G20.

The African continent is another hotspot. It has one of the fastest growing economies in the world and with the recent democratic wave; it is only a matter of time until this region becomes a center for trade and investments.

Some Asian economies have started to open up channels to the region and there is potential, especially in commodities. Indonesia had initiated some cooperation but could be more focused. Should the country engage closer ties with regional champions such as South Africa and Egypt, whom are also among the largest African economies in terms of gross domestic products (GDP) and share deep historical connections with Indonesia, trade could exponentially grow. With a staggering number of Indonesian diaspora living there, trade linkages can easily be traced.

Countries of these regions are cognizant that there is room to fill. However, simply opening up borders to trade does not guarantee the utmost benefit. Trade must be pursued with a long-term vision. While it is uncommon that trade barriers are stringent in the developing world, this initiative could be the beginning toward a more inclusive “South-South” cooperation.

With the ever changing nature of the globalized economy, a stronger trade regime with the rest of the emerging economies could be the solution to diversifying risk, balancing growth and at the same time strengthening regional connectivity with emphasis on national industries.

A new playing field for the Asian, Latin and African markets is very much inevitable.

The writer is a diplomat living in Jakarta. The opinions expressed are his own.

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