Indonesia explores exported products to MERCOSUR countries

Jakarta (Indonesia Window) – Indonesia and the MERCOSUR countries consisting of Argentina, Brazil, Paraguay, Uruguay and Venezuela are currently conducting a feasibility study and establishing a scoping paper to determine products that can be included in the trade regime of both sides.

“The formation of an agreement with MERCOSUR is essential to reduce costs and make Indonesian products more competitive,” Indonesian Ambassador to Argentina Ninik Kun Naryati said at an online seminar entitled Indonesia’s Business Potentials with Argentina, Paraguay and Uruguay was held by the Indonesian Ministry of Foreign Affairs on Friday (Sep 4).

MERCOSUR (a Spanish initial) is a Southern Common Market founded by Argentina, Brazil, Paraguay and Uruguay, and subsequently joined by Venezuela, and Bolivia (the latter still complying with the accession procedure).

Trade between Indonesia and Argentina should be explored considering the challenges in the Latin American country’s economic system which tends to be closed with fairly tight capital controls, making transactions in foreign currencies extremely difficult and costly.

In fact, Argentina is the second largest market in South America after Brazil, with a population of 45 million people, with Gross Domestic Product (GDP) of 450 billion U.S. dollars and per capita income of 10,006 U.S. dollars.

Other challenges that have to be faced by Indonesian entrepreneurs in doing trading in Argentina is that the archipelagic country is not yet widely known in the America Latin country, and the import tariff is quite high.

However, there is an interesting solution in penetrating the Argentine market, namely, by implementing a barter system that allows Indonesia to exchange exported commodities with imported ones.

According to the chairman of the Indonesian Exporters Association (GPEI), Benny Soetrisno, the formation of the barter system requires G to G cooperation to smoothen the process and strengthen the application.

Meanwhile, Paraguay and Uruguay have the potentials to become testing markets for Indonesian products before being distributed to other Latin American countries.

Unlike Argentina, the two countries are quite open in doing business with foreign parties.

The online seminar which was participated by 347 people with speakers, the Indonesian Ambassador to Argentina, Niniek Kun Naryati; the Chairman of the Indonesian Exporters Association, Benny Soetrisno; the Indonesian Honorary Consul in Paraguay, Ricardo Sanchez; as well the Indonesian Honorary Consul in Uruguay, Nicolas Potrie Bo.

Reporting by Indonesia Window