Singapore - Latin America Emerging Opportunity
Singapore signed a Memorandum of Understanding (MOU) on 24 September 2007, with the Mercosur (Mercado Comun Del Sur or Southern Cone Common Market), comprising Argentina, Brazil, Paraguay and Uruguay, and associate members Bolivia, Chile, Colombia, Ecuador and Peru, on trade and investment cooperation. The MOU aims to provide a platform for expertise and information exchange and for investment cooperation and promotion.
The Latin American economies gained momentum since 2004, reinforced by the strong rise in global demand and commodity prices. This growth has eventually triggered a growth in household consumption and investments. Though moderate the growth is expected to be steady and unfailing, in 2007 Latin America is expected to post a 5% growth, up from 4.6% in 2006. The growing optimism about the region has resulted in an increased FDI inflow which amounts to US$ 72.4 billion in 2006. In turn the Latin American companies have also recognized that Asia is the prime market to invest to achieve strategic growth, and their FDI outflow in 2006 totals to US$40 billion. Total trade between Singapore and Latin America grew at an average of 30% per annum over the last three years, far exceeding the 16.3% average growth rate of Singapore’s total trade with the world over the same period. Total trade with Latin America reached US$7.8 billion in 2006 which constitutes only 1.46% of Singapore’s total trade, leaving much opportunity for growth.
Distance, limited direct air routes, and the difference in culture and language and lack of personal contacts were the main inhibitors for the Asian entrepreneurs to explore this emerging growth market. To address such issues and to help Singapore based companies to exploit the potential of these economies Singapore Government has launched a series of well orchestrated efforts such as Overseas Centers and Business Representatives in cities like Mexico City and Sao Paolo.
Latin American firms are intensifying the pace of their overseas investments. Leading Brazilian jet manufacturer Embraer, has chosen Singapore as its hub for customer support, simulator training and distribution activities for the Asia-Pacific market. Starting as a representative office back in 2000, Embraer has since incorporated a fully-owned subsidiary now responsible for serving the Asia-Pacific region in terms of spare parts distribution, logistics and full training of pilots and crew, and will invest up to US$40 million in Singapore this year to meet the growing needs of its clients. Brazilian mining giant CVRD, which already has operations in Australia, China, Japan, South Korea and Indonesia, has just established a representative office in Singapore to coordinate marketing activities in the region and develop strategies for its business in the Asia-Pacific region. Such progress contributes to the diversity of the industrial sectors in Singapore and eventually paves way not only for the Trans- Latin corporations but also a myriad of smaller enterprises from the region who render support services to ride on this wave.
Ms. Ragini Dhanvantray CEO of Rikvin Consultancy which is offering a seamless immigration and company incorporation services says “The signing of the MOU is a concerted effort to strengthen the trade and investment relationship between the Singapore companies and the Latin American region. To capitalize on the developments the Asian enterprises are routing their trade and investments through Singapore. We are also witnessing similar significant strides by the Latin American counterparts who use Singapore as a springboard to seize a slice of the Asian markets. The business friendly policies, accommodating immigration formalities and absence of redtapism are complemented by efficient infrastructure and support services”.