Brazil hopes to forge closer links with Indonesia

Linda Yulisman, The Jakarta Post, Jakarta | Wed, 10/05/2011

Brazil, the largest economy in South America, expects to expand its cooperation with Indonesia, Southeast Asia’s largest economy, as there is still enormous room for growth in many areas, including agriculture and high-technology industry, a high-level official says.

Undersecretary-general for Asia of the Brazilian External Relations Ministry, Maria Edileuza Fontenelle Reis, said that Brazil wanted to boost bilateral trade and investment in Indonesia, its key partner in the Southeast Asia region, in the near future as economic cooperation between the two countries was very much complementary.

“In terms of investment and trade, prospects are numerous. Our bilateral trade figure is now more than US$3 billion and should reach beyond $4 billion by year’s end. But the dynamism and dimensions of our economies are way beyond that,” she told The Jakarta Post in an exclusive interview in Jakarta on Tuesday.

Reis is on an official four-day visit to Indonesia, set to conclude on Wednesday, and leading a business delegation comprising 17 representatives from the Brazilian Ministry of Agriculture, trade promotion department and businessmen from the energy, mining, civil construction and aviation sectors, such as mining firm Vale and aircraft producer Embraer.

At 58.73 percent, Vale is the largest shareholder in PT International Nickel Indonesia that has just been renamed PT Vale Indonesia.

Reis explained that as one of the world’s largest beef producers, Brazil wanted to export beef to Indonesia. Indonesia is reportedly seeking alternative sources of cattle and beef imports to reduce dependency on Australia following a recent suspension of its live cattle exports due to alleged mistreatment of cattle in local slaughterhouses.

“We’ve received an Indonesian team to discuss with our sanitary and phytosanitary authorities about the possibility of opening the local market to Brazilian beef,” she said, adding that exporting genetic materials for husbandry, re-utilization of degraded soil and investment in the local biofuel industry were also possibilities.

In the high-technology sector, Brazil is also looking to raise its exports of airplanes to Indonesia as well as to investing in the production sector.

“We have already sold 16 aircraft to Indonesia and we could increase this number. Indonesia is also very much interested in having some kind of technology-based trade-off, for example the production of aircraft parts here, and we are considering this possibility,” she said.

Embraer, the world’s third-largest airplane producer after Boeing and Airbus, Reis said, had studied the possibility of teaming up with Indonesian firms. Apart from that, investment would also continue in the energy sector with Brazilian firms engaging in building hydropower plants in Indonesia, she said.

Reis said Brazil was interested not only in increasing exports and investing in Indonesia, but also to increase imports, such as fertilizers, textiles and palm oil and further Indonesian investment, including in infrastructure projects.

She said that Brazil expected to sign a number of agreements soon, including on trade, in a bid to forge closer cooperation.

The agreements are set to be signed during the ASEAN Summit in Bali next month, during which a large Brazilian business mission will be present to explore business opportunities in Indonesia.

Bilateral trade between Brazil, which has a gross domestic product (GDP) of approximately $2 trillion and is the world’s seventh-largest economy and fifth in terms of purchasing power, and Indonesia has grown significantly in recent years.

According to Trade Ministry data, bilateral trade rose by 185.09 percent to $3.25 billion in 2010 from $1.14 billion in 2006.

Indonesia exports natural rubber, crude palm oil, paper and electronics and imports soybean oil, sugar cane, cotton and iron from Brazil.