Cheppy Triprakoso Wartono
Ambassador
Embassy of the Republic of Indonesia
/
Expert Contributor

Mexico’s Real Potential Partner During Crisis: Indonesia

By Cheppy Triprakoso | Mon, 08/01/2022 - 17:00

We have concluded the first half of 2022, where we are enduring multiple disruptions all at once. The prolonged effect of the COVID-19 pandemic, conflict between Russia and Ukraine, Shanghai’s port lockdown, among others, are all affecting the global economy. The war between Russia and Ukraine is limiting the short-term availability of natural resources and raw materials that are critical to businesses worldwide. We are experiencing an increase in prices of global commodities, including natural gas, fertilizer, wheat, and steel. There are also still some knock-on effects on global shipments after two months of lockdown at the Shanghai port.

Last year, Mexico’s GDP grew by 4.8 percent after contracting by 8.2 percent in 2020[1]. The first quarter of 2022 saw Mexico’s GDP grow 3.6 percent quarter on quarter, below analysts’ expectations, as the outlook for 2022 continues to deteriorate[2]. Indonesia has it better to some extent. The country’s GDP expanded 3.69 percent last year after a 2.07 contraction in 2020.

At a glance, it seems like this is not a good year to do business. But as Albert Einstein said, “In the midst of every crisis, lies great opportunity.” The global economic crisis challenges businesses to maneuver and to find new partners. For Mexico, Indonesia could be that partner.

If we look at the trade relations between Mexico and Indonesia, a significant increase occurred during the crisis. After the economic recession of 2009, trade values between Mexico and Indonesia almost doubled from 2010 to 2012. It happened again last year, when total trade between the two countries increased by more than US$400 million compared to the previous year, and higher than pre-pandemic. It was an increase of 33.5 percent, from US$1.205 billion in 2020 to US$1.609 billion in 2021. This year, the trend continues. Indonesia and Mexico’s trade volume in January-April 2022 showed an increase of 40.13 percent, compared to the same period in 2021[3].

The crisis has led many countries around the world to proactively find new market opportunities to boost economic growth. Business communities in Indonesia and Mexico are forcing themselves to find new partners, other than their established allies. If we broaden the horizon and dig deeper, the potential for trade cooperation between Indonesia and Mexico is wide open.

One of the best ways to connect with new Indonesian business partners is through business forums and expos. Every year, the Indonesian government organizes two important events to connect international business communities with their Indonesian partners: Indonesia – Latin America & the Caribbean (INA-LAC) Business Forum and Trade Expo Indonesia (TEI).

The INA-LAC Business Forum is conducted specifically to connect Indonesian business communities with their counterparts from Latin America and the Caribbean, including Mexico. This is one of the concrete actions taken by the government of the Republic of Indonesia to target Latin America and the Caribbean as its new potential trading partner.

This year, the INA-LAC Business Forum will be held on Oct. 17-18 in Tangerang, Greater Jakarta. Organized by the Indonesian Ministry of Foreign Affairs, the annual forum was established in 2019. The third INA-LAC Business Forum in 2021 generated business transactions and commitments worth US$87.96 million[4].

Several Mexican companies have participated in this event and found their Indonesian partners. In 2020, there were three agreements signed by Mexican institutions: Omega Group with Dufry AG and Indonesian state-owned enterprise PT Sarinah; CAMCO Rattan Muebles with Naza Art Furnitures from Indonesia; and Instituto Nacional de Investigaciones Nucleares with Indonesian nuclear enterprise PT INUKI. Last year, COMCE signed a letter of intent on the establishment of an INA-LAC Business Network along with business associations from other LAC countries.

Adapting in the pandemic era, in line with INA-LAC Business Forum’s objective to connect Indonesia and Latin America and the Caribbean, the Indonesian Ministry of Foreign Affairs has built a digital platform, ina-access.com, where everyone can access information on trade, tourism and investment in Indonesia. Mexican businesses can also register as exhibitors and have their products showcased on the digital platform, 24/7, for free. Registered users can also request one-on-one business meetings during the INA-LAC Business Forum. As of today,  ina-access.com has 17 Mexican companies registered as exhibitors and hundreds more as visitors.

The other important event is TEI, which is the biggest B2B tradeshow in Indonesia. This year, Indonesia will restart the expo in person on Oct. 19-23, also in Tangerang, Greater Jakarta, back-to-back with the INA-LAC Business Forum. While the online expo will be held from Oct. 19 to Dec. 19. The exhibition is hosted by the Ministry of Trade of Indonesia and will have trade forums, business matching and counseling. Last year, the event had 8,220 buyers from 136 countries, with a total transaction value of US$6.06 billion. Fifty Mexican companies participated in TEI last year[5].

Indonesia, with a population of more than 270 million people and the 16th-largest economy in the world, is a prospective hub for Mexican products in the ever-growing economy of ASEAN. Reciprocally, Indonesia is trying to establish Mexico as the trade hub for Indonesian products to Central America. This would, in return, help to achieve the post-pandemic economic growth that both countries seek.

As the Ambassador of Indonesia to Mexico, it is my great pleasure and honor to invite all Mexican businesses to participate in both the INA-LAC Business Forum and Trade Expo Indonesia this year. This year is a perfect time, since Indonesia holds the G20 presidency, to find new trade and investment partners from Indonesia. Doing business with Indonesia could be the great opportunity in the midst of the crisis.

 

[1] World Bank, Mexico Overview, https://www.worldbank.org/en/country/mexico/overview

[2] Banco de Mexico, Communique on economic expectations, April 2022

[3] Kementerian Perdagangan (Ministry of Trade) Indonesia, https://satudata.kemendag.go.id/balance-of-trade-with-trade-partner-country, accessed on 26 June 2022

[4] Kementerian Luar Negeri (Ministry of Foreign Affairs) Indonesia, “Forum Bisnis Indonesia-Amerika Latin dan Karibia (INA-LAC) 2021 Wujudkan Transaksi Bisnis US$87,96 juta” https://kemlu.go.id/portal/id/read/3047/berita/forum-bisnis-indonesia-amerika-latin-dan-karibia-ina-lac-2021-wujudkan-transaksi-bisnis-us8796-juta

[5] Kementerian Perdagangan Indonesia, Press Release “Bukukan Transaksi USD 6,06 Miliar, Mendag: Capaian TEI 2021 Sangat Menggembirakan”, https://www.kemendag.go.id/en/newsroom/press-release/bukukan-transaksi-usd-6-06-miliar-mendag-capaian-tei-2021-sangat-menggembirakan