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Saturday, 28 May 2016

South America – our next frontier

There is huge potential in the region and considerable goodwill towards Malaysia.

PERU is about 20,000 km away from Malaysia. Like much of South Ame­rica, it’s not a country that is often on travel itineraries for Malaysians – simply because it’s so far away.

Peru, however, is part of Apec and so it is very much on the International Trade and Industry Ministry’s (MITI) radar. This is especially since it will host the Leaders’ Summit in November, which our Prime Minister is scheduled to attend.

I was in the country recently for my trade and investment mission, and I must say that there is much potential here for Malaysian businesses. However, since most Malay­sians are not familiar with the changes and progress happening in South America, our presence in the region has so far been minimal. Nevertheless, there are some notable exceptions to this.

I met John Tey from Batu Pahat, Johor, who has been in Peru since 1994. He studied in Taiwan, married a Taiwanese girl and has deci­ded to settle in Peru.

He owns 250ha of oil palm plantations and his business is thriving. He has attempted to plant durians and rambutans to remind him of home.

Then there is Evelyn Ng, a lady from Malacca who has been in Peru for six years. She represents DXN, which is a direct-selling company whose roots are in Kedah.

DXN is selling ready-to-drink-beverages, health drinks and supplements. It has 300,000 dealers in Peru and sales last year amounted to about US$20mil, making it the biggest market for the company. Indeed, their sales have continued to grow at a phenomenal rate.

We need more of our local companies and Malaysians in general to walk along a path similar to the paths of John Tey and Evelyn Ng. This is something that my ministry is aware of, and we will continue to promote trade and investment op­­por­­tunities available in this region.

A day before the meeting of Apec Trade Ministers in Arequipa, Matrade organised a seminar in Lima on business opportunities in Malaysia.

This seminar – the first of its kind – was attended by 120 Peruvian companies interested in doing business with us.

Mario Mongilardi, the president of the Chilean Chamber of Com­merce, spoke about how he imported US$3mil (RM12.3bil) worth of Malaysian surgical gloves and condoms last year. Incidentally, these products – which currently attract an import duty of 9% – will enter the Peruvian market duty-free when the Trans-Pacific Partnership (TPP) kicks in.

In recent years, Peru has been doing well, growing about 4% on average from 2010-2016.

According to my counterpart Magali Silva, this has been mainly due to domestic reforms and Peru’s participation in 18 Free Trade Agreements covering 60 countries. It is interesting to see how aggressive Peru has been in pursuing an open trade agenda.

It was hence heartening that Mario spoke highly about Malaysia’s favourable business environment. We definitely want to do more with them, indeed the whole of South America.

Malaysian companies and entrepreneurs are, after all, searching for new markets. As a trading nation, we need to further diversify our markets and be more aggressive in our investment.

There is huge potential in the region and considerable goodwill towards Malaysia. This partly comes from South Americans who have participated in the Malaysian Technical Cooperation Programme.

There are about 70 in Chile and 50 in Peru. They spoke highly of their studies of the Malaysian growth experience.

Malaysia has seven embassies in South America: Brazil, Argentina, Chile, Peru, Venezuela, Mexico and Cuba. Matrade has two offices, one in Mexico City and another in Santiago, Chile, to cover more than 25 countries in the region.

A number of South American countries including Mexico, Peru and Chile are rising economic po­­wers. Mexico has introduced a number of market-oriented reforms in the last couple of years, which has seen the opening up of the energy, telecoms and service sectors.

Our total trade with South America amounted to about US$7.8bil (RM32bil) in 2015 and we expect this to increase substantially given the prospect for continued growth and transformation in the next 10 years.

Moreover, the TPP will give us the opportunity for further economic ties with these countries. The TPP, better connectivity and libera­lisation in South America mean that the region ought to be the next “hunting ground” for Malaysian entrepreneurs.

It would be a good thing – indeed, a necessity, I would argue – for more Malaysians and their companies to join our pioneers in Peru and South America.

As I said earlier, Malaysia needs to expand its global outreach. We need to sell more products by exploring new markets. We need to attract more foreign investments to create quality jobs and promote growth.

At the same time, we need to diversify our import sources and we should ramp up our efforts to increase Malaysian investments overseas. In this respect, South America promises boundless opportunity. MITI and its related agencies are ready and willing to help Malaysians who want to make the leap.

In this day and age, closer integration and collaboration is the name of the game.

If we can learn from each other and more importantly, create win-win outcomes from a more open trading and investment regime, then there is no limit to what Malaysia can achieve.

Datuk Seri Mustapa Mohamed is Minister of International Trade and Industry. The views expressed here are entirely the writer’s own.

Tags / Keywords: Mustapa Mohamed , columnist

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