Asia, Africa need to address unfamiliarity to get closer

Asia, Africa need to address unfamiliarity to get closer

Unfamiliarity with each other still plagues the relationship between Asia and Africa and this issue must be addressed to enable tighter economic ties, officials and businesspeople say.

Nigerian Ambassador to Indonesia Muhammad Lawal Sulaiman said Tuesday that most Asian countries, excluding China, remained reluctant to do business in Africa, despite the promising prospects of the world's second largest continent inhabited by 1.1 billion people.

"The main obstacle is a lack of information about business opportunities in Africa. Most Indonesian companies, for example, are not aware of them. Some of them think of Africa as it was in the past, but in fact it has changed quite a lot," said Sulaiman on the sidelines of a seminar hosted by The Jakarta Post to commemorate the 60th Anniversary of the Asian-African Conference.

Gross domestic product in the 54 nations as a whole amounted to US$2.39 trillion (S$3.25 trillion) in 2013 and this figure is projected to rise to $2.6 trillion by 2020.

At present the rate of return on investment in Africa is the highest in the developing world.

Since the past few years, bilateral trade between both continents has intensified with shares of African exports to Asia catching up with those to its major trading partner, the EU.

The EU's share of African exports totaled 43.8 per cent and those of Asia reached 21.1 per cent in 2004. However, Asia's proportion climbed significantly to 31.5 per cent, while the contribution of Europe declined to 38.6 per cent in 2013.

Speaking during the seminar, Asia-Africa Business Summit organising committee chairman Noke Kiroyan said that a lack of interest by Indonesian businesspeople to do business in Africa stemmed from their unfamiliarity with the continent.

"We don't know much about Africa. News on Africa in our country is dominated by mainly negative issues like ebola, Boko Haram and piracy off the coast of Somalia. No good news is partly the reason for the lack of interest," he said.

One way to increase the economic partnership would be to boost Indonesia's trade with African countries, which is now lower compared to other countries in Asia.

Africa's trade with Indonesia reached $10.7 billion in 2012, slightly lower than the $11.6 billion with Thailand, but much lower than the $200 billion with India and the $70 billion with China, a situation that needs to be changed, according to Noke.

In terms of investment, there are 15 Indonesian companies that have spent cash to build manufacturing facilities in Africa, including food producers Indofood and Wings, pharmaceutical firm Kalbe Farma and polyester producer Indorama.

The Trade Ministry's director for Asia-Pacific Economic Cooperation (APEC), Deny Kurnia, said that existing tariff and non-tariff barriers were among the biggest challenges for Indonesia to increase exports to Africa, the continent that hosts a large number of non-traditional export destinations. Most African countries apply high import duties and complicated trade rules.

"It's not easy to develop preferential or free trade agreements with African countries on a single country basis because a number of them unite in customs unions," he said.

Deny, however, said that co-operation could move beyond these issues, such as by collaborating to enhance trade facilitation, trade financing and trade promotion.

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