Indonesia And Paraguay: New Prospects For A Greater Partnership – Analysis

On November 29th, 2014, Paraguay will celebrate the 33rd anniversary of the establishment of its diplomatic relations with the Republic of Indonesia, the world’s fourth largest nation with over 252 million people and one of the N – 11 Economies and together with Paraguay is also a memberof the Group of Eleven (G11), whose efforts are focused towards reducing poverty. Both nations became members of the World Trade Organization in 1995.

Although there is a great potential to further strengthen the commercial, political and economic partnership between the two countries, unfortunately, the Foreign Ministry of Paraguay is looking the other way, even though Jakarta is one of the fifteen most important commercial partners of Paraguay. The South East Asian giant in 2012 has imported over US$19.5 million, meanwhile there is a significant increase of imports in 2013, reaching over US$121.8 million worth of goods a services.

Despite of the unmatched strategic importance that exists in exploring the tremendous business opportunities that can be accomplished throughout a Free Trade Agreement framework between Indonesia and Paraguay as well as Paraguay and the ASEAN nations (currently the world’s largest trading group together with Japan, China and Russia).

Unfortunately Paraguay continues to drag its feet and continues to postpone these commercial opportunities of once in a lifetime. However, these commercial agreements are considered highly beneficial and the efforts undertaken by Minister Gustavo Leite and his Ministry of Industry and Commerce (MIC) as well as Paraguay’s Network of Investments and Exports (REDIEX) are truly admirable and certainly demonstrated a great performance, Asuncion for the first time has a visionary and a pragmatic leader as the head of its Ministry of Industry and Commerce.

At the same time, in order to fully implement Paraguay’s national agenda abroad and promote its agricultural products in the most influential international markets there are other components in its government that are not functioning as a well-oiled machine, practically are not coordinating their efforts accordingly with other pertinent ministries, at the moment there are no regular contacts between the Foreign Ministry and the Ministry of Agriculture and Livestock nor between the Foreign Ministry and the National Agency for Animal Health and Quality (ServicioNacional de Calidad y Salud Animal) and its regular meetings with MIC officials are completely absent, and as a result the overall performance of some ministries like MIC and other sectors focused towards foreign commercial relations and exports have a significantly reduced potential.

On March 22nd, 2013, was the last meeting between representatives of the two nations, which was led by Ambassador Manuel Maria Caceres the Paraguayan Deputy Foreign Minister and Ambassador Nurmala Kartini Pandjaitan Sjahrir of Indonesia, on this meeting was also present the Director for Asia Affairs Mrs. Nilda Acosta.

For more than a year and four months, especially after the beginning of President HoracioCartes government in August, 2013, the two Foreign Ministries have not engaged in a serious dialogue in order to discuss mutually beneficial items in bilateral trade, commerce, economic growth and cooperation in the industrial and logistical sector. Despite the deep interest of President HoracioCartes and the Indonesian authorities to strengthen the bilateral partnership, which dates back in 1981, the Paraguayan Foreign Ministry officials have turned a blind eye towards reaching out to their colleagues in Jakarta and initiate a bilateral dialogue on pending issues.

On June 13-14, 2013, a Paraguayan delegation led by Ambassador Rigoberto GautoVielman, the current Deputy Foreign Minister, participated in the VI Meeting of the Forum of Cooperation between Latin America and East Asian countries (FOCALAE) where 34 delegations lead by Ministers of Foreign Affairs participated,and Paraguay had lost a great opportunity to revitalize the dialogue with its strategic commercial partners in Asia, the representatives of the Republic of Indonesia. The only request made by the Paraguayan representatives was to improve the cooperation of landlocked countries, however they did not have a single meeting with their Indonesian counterparts let alone meetings with Costa Rican and Thailand’s diplomats, whose nations will be leading the coordination of the regional Cooperation Forum of Latin America and East Asia (FOCALAE) during the period 2013-2015.

While the mission of this Forum is to promote the connectivity between the two regions, in areas such as: science, technology, commerce, tourism, education and culture, theParaguayan delegation had barely two meetings with the representatives of the governments of Laos and Mongolia. Based on the current trend of operations and their daily routine, the Paraguayan Foreign ministry has not placed the bilateral relations with Indonesia and other countries in the South East Asia, on its list of priorities, this is also evident when looking at the current number of staff members in the Embassy of Paraguay in Indonesia (According to the Foreign Ministry’s official website, it consists only with the Ambassador and no one else), and the lack of embassies in Vietnam, Philippines, Thailand, Malaysia and Australia. Paraguay, to no ones’ surprise, is not an observing country of the Association of South East Asian Nations, headquartered in Jakarta, and in the ASEAN Regional Forum. Paraguay, just like Canada, is more than eligible to attend the ASEAN Regional Forum and should express its interest to the leaders of this regional forum.

Paraguay: Indonesia’s Leading Food Supplier

Located in the heart of South America, sandwiched between Brazil and Argentina, Paraguay, with the size of California, has demonstrated a tremendous economic growth and emerged as the world’s eighthlargest producer of beef and aspires to be the fifth largest producer by 2018 and it is currently the world’s seventh largest producer.

Recently in Paraguay there have been identified areas with petroleum and mineral ores and steel are also founded in the Chaco region.Currently there is a great potential for Indonesia to import a highly quality beef, soybean oil, organic sugar and organic rice from Paraguay. In 2011, Asuncion was the largest provider of organic sugar to the United States and its products are largely imported by European Union Countries.

Paraguay has the best and most affordable arable land in the region; it is the fourth largest producer of soybean and is the largest producer of renewable energy per capita in the world.Despite the Cow disease, in the course of 2014, Paraguay exported more than US$ 542 million worth of beef products, representing only 14.7 percent in relation to the same period last year, therefore this disease has not affected the cattle ranchers’ prospects and performance. During the present season there have been exported more than 250,000 tons of beef products abroad. And more than 400,000 are expected to be exported by 2015. In the last few years livestock companies in Paraguay, have significantly invested on improving the genetics of their cows, this is the reason why they are distinguished in the MERCOSUR by their peers.

One of the traditional food products in Indonesiais Tempeh a soybean based food made from the condensing or curdling of soymilk and then fermenting it, for which there is a need for large quantities of soybean. In this regard, Paraguay as the world’s 4th largest Soybean producer, could easily become a ‘TEMPEH PARTNER’ of INDONESIA through a bilateral cooperation agreement and a potential joint venture between the Indonesian TEMPEH Industry leaders and Paraguayan Soybean entrepreneurs and the Paraguayan Food Industry leaders in order to implement the processing of this Typical Indonesian food in the Paraguayan soil and export it directly to Indonesia at highly competitive prices and consequentlyearning essential mutual benefits.

Paraguay Needs Indonesia’s Technological Assistance

The discovery of Natural Gas and oil fields in the Chaco Paraguay is also another strategic sector that will require the expertise and assistance of Indonesia’s major oil companies and their technology, in order to make the use of its oil resources according to the principles of sustainability and environmental friendly.

Indonesia’s natural gas and oil drilling industry plays a vital part in its national economy, such a wealth of experience in this sector would be a great asset to the Paraguayan Government, which is on its initial stages of exploring petroleum and natural gas. After the next 20 years, Asunción will need to diversify its national energy production as the current production levels at its two hydroelectric dams (Itaipu and Yacyreta) will not be sufficient to supply energy nationwide, therefore the construction of new hydroelectric dams in rivers stretching throughout Paraguay and reaching distances of over 6,500Km, as well as the effective use of oil and gas resources with the help of Indonesian experts would be of great value for Paraguay’s future.