INDONESIA & ARGENTINA: Business Opportunities and the importance of Indonesia from Argentina's view - Binus University
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INDONESIA & ARGENTINA:
Business Opportunities and the importance of
Indonesia from Argentina's view
BINUS UNIVERSITY, SEPTEMBER 13TH, 2019
INTERNATIONAL TRADE
“INTERNATIONAL EXPERIENCE BINUS ONLINE LEARNING”
BY SEBASTIAN STERZER
HEAD OF INTERNATIONAL RELATIONS AREA
INTERNATIONAL TRADE OBSERVATORY
NATIONAL UNIVERSITY OF LUJAN
BUENOS AIRES - ARGENTINA
Index • Key facts about Argentina • Economy • Doing business • Doing Business with Indonesia • Importance of Indonesia from Argentina’s view • Conclusions
• OFFICIAL NAME: República Argentina (Argentine
Key Facts about Republic)
Argentina • HEAD OF STATE AND GOVERNMENT: President:
Mauricio Macri (next Elections: October 27th,
2019)
FORM OF GOVERNMENT: federal republic with two legislative houses (Senate [72]; Chamber of
Deputies [257])
• CAPITAL: Buenos Aires
• OFFICIAL LANGUAGE:
Spanish
• OFFICIAL RELIGION: none.
Roman Catholicism has special
status and receives financial
support from the state, but it
is not an official religion.
• POPULATION (2019 est.):
44,495,000
• TOTAL AREA
th
(SQ KM):
2,780,400 (8 largest country)
• DENSITY: PERSONS PER SQ
KM (2019): 16
• URBAN-RURAL
POPULATION: Urban: (2019)
Key Facts 91.9%, Rural: (2019) 8.1%
• MOST IMPORTANT CITIES: La
Plata, Mar del Plata, Rosario,
Córdoba, Tucumán, Mendoza,
Bariloche, Ushuaia
Link: https://www.youtube.com/watch?v=wVhZVoAvhX4
• Our natural resources are varied: it encompasses immense plains, deserts, tundra, and forests, as well as tall mountains, rivers, and thousands of miles of ocean shoreline. • Link: https://www.youtube.com/watch? v=xCaGeP1-fFI
History – Important facts • 1810 => The May Revolution • 1816 (July 9th) => Independence Day • Peronism => Important political movement (Juan Domingo Perón 1895-1974; President: 1946-1955, 1973- 1974)
Key Facts - Cultural Life • Gaucho • Mate • Carlos Gardel (1890-1935) • Jorge Luis Borges (1899-1986) • Colon Theatre • University
Key Facts – Sports - Juan Martin del Potro (tennis) - Emanuel Ginobili (basketball) - Football: * Boca Juniors vs. River Plate * Diego Armando Maradona * Lionel Messi
Index • Key facts about Argentina • Economy • Doing business • Doing Business with Indonesia • Importance of Indonesia from Argentina’s view • Conclusions
• MONETARY UNIT: peso (ARS)
• CURRENCY EXCHANGE RATE: 1 USD
equals 57.93 Argentine peso
• GNI PER CAPITA (U.S.$) (2017):
13,040
• Argentina’s economy is one of the
more powerful in the region.
• Argentina still produces more grain
than any other country in Latin
America and is second in cattle
raising only to Brazil, and its receipts
from tourism are second in the
region only to those of Mexico.
• Its gross national product (GNP),
GNP per capita, and value added
from manufacturing are also among
the highest in the region.
• However, the country has withstood
several economic downturns,
including periods of high inflation
Economy and unemployment during the late
20th century and a major financial
crisis in the early 21st century.Agriculture, forestry, and fishing
Economy - Resources and power The importance of: - Vaca Muerta (one of the largest deposits of shale oil and gas in the world) - Renewable Energy
Manufacturing
• GDP Growth Rate in Argentina
is expected to be -0.20
percent by the end of this
quarter, according to Trading
Economics global macro
models and analysts'
expectations.
• Looking forward, they
estimate GDP Growth Rate in
Argentina to stand at 0.60 in
12 months time. In the long-
term, the Argentina GDP
Growth Rate is projected to
trend around 0.80 percent in
2020, according to their
econometric models.
Economic GrowthBalance of Trade
MERCOSUR • The importance of the South American trade bloc • Regarding Southeast Asia and Indonesia, what is next?
Index • Key facts about Argentina • Economy • Doing business • Doing Business with Indonesia • Importance of Indonesia from Argentina’s view • Conclusions
Source: World Bank Group
Source: World Bank Group
2019 INDEX OF ECONOMIC FREEDOM
Source: The Heritage
FoundationRule of Law • Secured interests in real property are recognized and enforced. • The government has taken significant steps to improve the protection of intellectual property rights, but deficiencies persist within the patent and regulatory data protection regimes. • President Macri has issued executive orders to improve judicial transparency, but the opposition-controlled Congress has blocked his comprehensive reforms to strengthen bureaucracy and reduce corruption. Government size • The top individual income tax rate is 35 percent, and the top corporate tax rate is 30 percent. • Other taxes include value-added, wealth, and financial transactions taxes. • The overall tax burden equals 30.8 percent of total domestic income. • Over the past three years, government spending has amounted to 41.0 percent of the country’s output (GDP), and budget deficits have averaged 6.2 percent of GDP. • Public debt is equivalent to 52.6 percent of GDP.
Regulatory efficiency • The Macri government has pursued a range of measures to improve the efficiency of business regulation. • The government is removing price controls on fuel, oil, and natural gas and plans to cut energy and transportation subsidies in an effort to lower the fiscal deficit. Open Markets • The combined value of exports and imports is equal to 25.0 percent of GDP. • The average applied tariff rate is 7.5 percent. • Openness to foreign investment is below average. • The financial sector remains subject to government interference, but the presence of foreign banks has increased, and their assets have risen to approximately 30 percent of the total.
• Argentina’s investment profile declined during the presidencies of Cristina Fernández de Kirchner and her late husband Néstor. • Their legacy of statist protectionism and other Peronist policies isolated the country and led to economic stagnation. • Center-right President Mauricio Macri began his four-year term in 2015 and has implemented a reformist agenda. Faced with an opposition-controlled Congress, weaker commodity prices, and a downturn in foreign investment, Macri was forced to seek a highly unpopular $50 billion IMF bailout in 2018. • Government’s politically risky austerity plan of budget cuts and tax increases to close the fiscal gap. • These unpopular measures include the continued unwinding of costly energy subsidies, which caused prices of regulated goods and services to rise and spiked inflation. • If Macri can succeed in restoring fiscal health, he will be well positioned to improve government integrity and make the many other institutional and structural reforms that are needed to restore Argentina to its former levels of economic freedom.
Next Fairs & Exhibitions in Argentina
Index • Key facts about Argentina • Economy • Doing business • Doing Business with Indonesia • Importance of Indonesia from Argentina’s view • Conclusions
Source: World Bank Group
Source: World Bank Group
Doing business with Indonesia
Trade balance with Argentina (mill. USD)
From Indonesia's view
Data in Millions of USD 2016 2017 2018 2019 (Jan to June)
Export 219,55 266,44 238,28 97,5
Import (-1.373,63) (-1.157,67) (-1.441,57) (-1.013,03)
Balance of Trade (-1.154,08) (-891,23) (-1.202,29) (-915,53)
Source: BPS, Processed by Trade Data and Information Center,
Ministry of Trade of IndonesiaDoing business with Indonesia
Main products exported by Argentina to
Indonesia in 2018
N° Products
1 Cakes and other solid waste from the extraction of soybean oil
2 Cereals (wheat and corn)
3 Cotton
4 Whey
5 Shrimp, prawns and others
6 Edible fruits and fruits (pears, lemons and tangerines)
7 Bovine hides and skins
8 Pharmaceutical products
9 Coffee, tea, yerba mate and spices
Source:
INDEC 10 Vegetables, plants, roots and food tubersDoing business with Indonesia
Main products imported by Argentina from
Indonesia in 2018
N° Products
1 Footwear and parts
2 Natural rubber
3 Gearboxes for motor vehicles
4 Synthetic staple fiber yarn
5 Passenger cars / Motorcycles and their spare parts
6 Machines, appliances and mechanical devices
7 Pineapples prepared in sweetened water
8 Polyester fiber yarn
Source: 9 Knitted sweaters - sweaters
INDEC 10 Coconut oilDoing business with Indonesia Indonesia needs • Agricultural products (wheat, soy, sugarcane, corn) due to the demand of the growing consumer class. • Meat (especially during Ramadan). • Infrastructure (roads, rail network, air, ports). • Transportation services (passengers and freight). Argentina needs • Infrastructure (roads, rail network, air, ports). • Transportation services (passengers and freight). • Food products such as te, coffee, fish, fruits & vegetables, spices • Rubber, footwear & other manufacturies (textiles, petroleum products)
Doing business with Indonesia GOOD NEWS FOR ARGENTINE FRUITS • The recognition of the Argentine Safety System, as well as access through the port of Jakarta, had a very positive impact on our country's exports to this destination. • Those who have country recognition (Argentina, United States, Australia, New Zealand, Canada, South Africa, Japan) have a competitive advantage over the rest.
Doing business with Argentina GOOD NEWS FOR INDONESIAN FRUITS July 2019 • Indonesia has received the green light from the Argentinian government to export its tropical fruits such as mango, banana and mangosteen to the country as part of the two countries’ commitment to double their two-way trade value within the next three years. • During the meeting, Argentine President Macri also promised to increase the quota of Argentina’s palm oil imports from Indonesia. • Both governments agreed to cooperate in developing agricultural technology, namely dryers, silos and the processing of agricultural products. • In addition to fruits and CPO, Indonesia also has an excellent opportunity to export garments, shoes and automotive parts to Argentina.
Index • Key facts about Argentina • Economy • Doing business • Doing Business with Indonesia • Importance of Indonesia from Argentina’s view • Conclusions
• 1956: establishment of
diplomatic relations between
Argentina and Indonesia
• 1959: Argentine President
Sukarno visits Argentina in May
• 1959: opening of the
Indonesian embassy in Buenos
Aires.
• 1960: opening of the Argentine
embassy in Jakarta
• 2000: Indonesian President
Abdurrahman Wahid visits
Argentina in September
• 2013: Indonesian President
Cristina Fernández visits
Indonesia in January
• 2019: Indonesian President
Brief history of Mauricio Macri visits Indonesia
diplomatic relations between Argentina and in June
IndonesiaSigned Treaties 1993 • Economic and commercial cooperation agreement signed in October 1990, in force in October 1993 • Memorandum of Understanding on Tourism Cooperation, signed and in force in October 1993
Official visit of the Argentine Government to Indonesia (2019)
GOALS • Indonesia and Argentina have agreed to double the value of bilateral trade between then to $3.4 billion within the next two years as both countries seek alternative destinations for their commodities amid a global trade war. • "The two countries have great potential that has not been explored so far. Indonesia and Argentina are also regional market hubs in Asean and Mercosur," Trade Minister Enggartiasto Lukita said. • Enggartiasto and Argentine Production and Manpower Minister Dante Enrique Sica reached the agreement during a second ministerial meeting in Buenos Aires. • "The railroad and airplane industry, as well as infrastructure, are strategic industries that can be enhanced by cooperation with Argentina," the Indonesian Minister said.
Importance of Indonesia from Argentina’s view • Southeast Asia's biggest economy is seen as having a strong influence in Asean, which is a potential strategic partner for Argentina and Mercosur. • Indonesia is a growing powerhouse in Southeast Asia. A member of the G20, Indonesia’s GDP stands at US$1 trillion, the largest in the region. It is touted by analysts to be among the new economies to watch out. Indonesia is part of the newly-coined emerging markets acronym MIST (Mexico, Indonesia, South Korea, and Turkey) owing to its potentials, huge GDP, and large share in the Goldman’s N-11 equity fund. SOURCE: BINUS GLOBAL
BOCA JUNIORS’ FOOTBALL SCHOOL IN INDONESIA
Index • Key facts about Argentina • Economy • Doing business • Doing Business with Indonesia • Importance of Indonesia from Argentina’s view • Conclusions
• According with Minister of Trade Enggartiasto Lukita, who said "Strengthening trade and investment cooperation with Argentina and Mercosur is important in the midst of uncertainty over global economic conditions this year, which is expected to continue until next year,“. • Cooperation between public and private sector between both countries is a MUST. • There are many opportunities for doing business. • When uncertainty because of current trade war is, then we need to work strongly to open new non-traditional markets.
Muchas gracias Terima Kasih
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