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Key takeaways from the Australia-Latin America Business Networking Event 2020

“Latin America: Diversify your Growth”

Co-hosted by ALABC and COALAR.

Wednesday 14th October 2020

Richard Andrews: Chairman ALABC

Initial comments about Latin America:

Latin America has been growing in economic importance for Australia in recent years. Chile, for example, in 2009 became just the fifth country in the world with which Australia entered a free trade agreement, and this basis for exchange has only been bolstered through both countries’ membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – an accord that also includes Mexico and Peru. More recently, Australia signed an FTA with Peru.

ln addition to such agreements, the increased trade between Australia and Latin America has been stimulated by a gradual move by both sides away from their traditional reliance on exporting primary products and towards services and manufactured goods. As global commerce and trade become more and more digitised, particularly amid the potential long-term transformations brought about by Covid-19, exchange between these increasingly service-based economies could no doubt be accelerated. 

Mr. Alberto Calderon: MD and CEO of Orica, takes over as the new Chairperson of the Council on Latin America Relations (COALAR):

Mr. Alberto Calderon made his first official speech as COALAR’s Chair at the Australia-Latin America Business Networking Day, on the 14^th October 2020.

The new Chair of COALAR mentioned the close relationship and dependency, that exists between Australia and Latin American countries, especially in the resources industry, where collaboration in areas such as the environment, productivity and many other fronts have been mutually advantageous and worth continual exploration.

 In that sense, he expressed his willingness to continue partnering with ALABC in bringing together, government and businesses to discuss the important issues of diversifying markets during these extraordinary times.

Mr. Calderon also announced a special grant round targeting COVID-19, with a specific focus in digital technologies to assist in the recovery of business between Australia and Latin America. The official call will be published on the DFAT website.

Eduardo Suarez: Vice – President Latin American Economics at Scotiabank:

Latin America is the region where Scotiabank has chosen to expand very aggressively prior to operations in Toronto, Canada and Australia. Currently, the Bank has more than 60,000 employees based in the Latam region.

What do we like so much about Latin America?

In spite of going through challenging times, Eduardo believes that there are some very attractive long-term dynamics in the region that make it very attractive as a long-term investment opportunity. It's a region that can be characterised as being part of the global middle class, a very large market that is attractive for multinationals.

Income:

For many consumer brands, when you break the US $5,000 in terms of income, a market becomes an attractive opportunity for non-durables. In the Latin American region, most of these countries have an income between $5,000 to $20,000. Most of the region is over the $10,000 mark, thus becoming very attractive for durables as well.

Demographics:

Just looking at five of the largest markets in the region, the growth in population will add 65 million new consumers over the next 30 years. With today's income level, that would be equivalent to creating a new economy the size of Colombia, Singapore or South Africa.

The increase in the size of the Latin American market will be largely noticeable.

Women in the labour Force:

Women have an extremely strong influence in Latin America and the increased participation of females in the formal labour market has been overwhelming, especially for countries such as Peru and Chile. Due to this, this means that the capacity of households to consume has drastically increased. The same situation applies to countries such as the Dominican Republic, Costa Rica, Panama and numerous other countries that manage to convert from a country of $3,000 of income per capita to over $10,000, in just a couple of decades. 

Well-funded social security systems:

The pension reforms developed in Chile in the 1980’s and exported to majority of the region where each individual makes mandatory contributions to his/her own saving account, has created a diverse pool of domestic savings, which in turn has allowed interest rates in the region to fall, affecting consumption dynamics in the region. Now these countries have the capacity to take out debt in their own currency at fixed interest rates for much longer, which increases the demand and supply of durables such as housing and cars.

Chile, Colombia and Peru entered the crisis with very strong growth dynamics and prospects; therefore, the expectation is that growth will start strong for the recovery next year.

As the region entered the COVID crisis, countries such as Colombia, Peru, Chile, Costa Rica and the Dominican Republic have had very prominent growth dynamics and growth prospects, while other countries have experienced growth challenges, burdened by the government’s debt to GDP ratio.

Countries including Brazil, Mexico and Argentina have been negatively impacted by COVID-19, but they have strong fundamentals and large markets, making these countries desirable for Australian companies to consider doing business with.

Many countries in the region have agreements with other countries such as Australia, Canada, Europe, United States, Japan and China which protect investors and also display an attractive investment destination at a time when, when global politics is making us question assumptions that have not been questioned in the past.

READ FULL ARTICLE HERE

The Export Council of Australia (ECA) has created this Webinar with the support of Austrade to assist food & beverage (F&B) exporters using FTAs and accessing LATAM markets.

Hear from key industry experts, successful Australian exporters, and relevant trade commissioners who will address questions and guide you through the process of making FTAs relevant for you.

The discussion will provide you with specific market entry tips and tricks to your chosen destination.

Watch full video here: https://www.youtube.com/watch?v=eoKTtMC3Nkw&feature=youtu.be&ab_channel=ExportCouncilofAustralia

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• Cross-border collaboration for the achievement of the United Nations 2030 Agenda: Australia and Latin America lessons on sustainability

  Policy Brief

  Project Lead: Isabel B. Franco and John Mangan

  Research Assistant Team: Tahlia Smith, Daniel Nieto and Dayana Jimenez

  Advisory Team: Jessica Gallagher, Marcelo Salas and Rachael Kelly 

  The University of Queensland

  Australia-Latin America Business Council (ALABC)

  Industry Partners: Orica, Embassy of Peru, BHP Foundation, South Pole, MMG, Geovia Dassault Systemes, CSIRO and Santos

  Highlights

  With the year 2020 drawing to a close, the achievement of the United Nations (UN) 2030 agenda is now more critical than ever. However, the only way to achieve this goal is by promoting greater international cooperation and collaboration related explicitly to the 17 Sustainable Development Goals (SDGs) outlined in the agenda (Babier, 2018; Franco et al; 2018 UN, 2018;). While Australia and Latin America (LATAM) are on distinct sides of the globe, continents away from each other, the partnership and knowledge sharing between these two regions in areas of sustainability create cross-border learnings that have a positive impact on both regions as well as the world as a whole. While the achievement of all SGDs is essential in order to achieve a sustainable future for all, this policy brief will focus on the following three SDGs which have a particularly strong link between industry and sustainability:

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• SDG 9-"Build resilient infrastructure, promote inclusive and sustainable industrialisation, and foster innovation."
• SDG 12- "Ensure sustainable consumption and production patterns."
• SDG 17- "Strengthen the means of implementation and revitalise the global partnership for sustainable development".

Read full article here: Policy Brief October 2020 UQ -ALABC (1).pdf

ALABC’s purpose is to help our members succeed in doing business in Latin America, therefore an important component of our work is to promote the best policies to advance trade, investment and business engagement with the region.

​In keeping with that promise, we recently organised a virtual meeting with Senator Keneally, Shadow Minister for Home Affairs, Madeleine King MP, Shadow Minister for Trade, Anne Stanley MP, Caucus Multicultural Engagement Taskforce Secretary and Peter Khalil MP, Caucus Multicultural Engagement Taskforce Chair, to put forward the views of our members on how our migration settings should be set when the boarders do reopen.

This interactive session included six ALABC members including: Valeria Alvano, Latam Airlines Group, Paola Lasso, Newcrest Mining, Rongyu Li, University of Queensland, Professor Adrian Little, Pro-Vice Chancellor International, The University of Melbourne, Lorraine Meldrum, Swann Global and Melanie McFarlane, Veta Education.

The opening of the boarders is a key element for the long term expansion of the mining, oil and gas industries in Australia, as it relies on advances and investments in science and research and attracting specialised skills that are not currently available on-shore.

It is essential for our economic growth, to keep attracting international skilled migration and talent. International students represent a great opportunity to grow our wealth of knowledge and diversify our trade partnerships around the world. Currently 81,000 students from Latin America are enrolled in Australia’s education system.

In Australia, 65% of engineers are from overseas. These individuals are comprised of highly skilled Latin American engineers who cannot always achieve the advanced English levels required to obtain an invitation for permanent or even temporary residence. It does not make sense to not offer those international students who remain onshore in Australia, a clear pathway for permanent residence.

There are significant benefits for this two way traffic, for example, The University of Queensland Sustainable Minerals Institute is working in Chile with academic institutions and the mining sector, in collaboration with knowledge transfer and sharing best practices to make sure that mining is developing in a sustainable, environmentally, socially and morally friendly manner.

Global mobility is the way of the future despite, or perhaps because of, the pandemic, and those coming to Australia may not always seek to remain here, rather utilise it as a means to further their opportunities elsewhere, creating global economic diversity.

1.     2020 is a fateful year. All countries are facing grave circumstances that are affecting the international economy as a consequence of the Covid-19 Pandemic. I will not be the only one to point out that the projections of the fall in global GDP would be -4.5% by 2020.

2.    On the other hand, the effects of the pandemic on the Latin American economy are visible. This year GDP points to a fall of 9.1%.

Latin American economies reached the pandemic, with the exception of a few cases, after half a decade of minimal growth. In the first quarter of 2020, GDP was already negative in nine out of twenty Latin American countries as a result of low external demand, with China in the midst of the crisis at the time.

During the first half of the year and part of the second, the pandemic restrictions, with the consequent partial or total paralysis of the production of goods and services, only aggravated that negative figure. In addition, household spending deteriorated as a result of the mandatory confinement imposed by the authorities in many countries, and household inflows fell resulting from the loss of sources of work.

In parallel, Latin America has suffered a significant deterioration in its prospects abroad, both due to falling commodity prices – which remains its main source of foreign exchange – and because of the crisis in its main commercial partners.

According to the United Nations, food and metal exporting economies will be less affected, and the good news is that unlike other major recessions in the past, the economic slump is not yet producing a domino effect on banks. The financial crisis seems, for now, to be ruled out. Inflation is also under control except in a couple of countries that have been dragging their own inflationary dynamics long before Covid-19 began to sound in the media.

3.     This second half of 2020, the international economy experienced a slight uptick as a result of the relaxation of strict containment measures and confinement in the peak months of Covid-19 in many countries and the consequent economic revival.

We hope that if there is a resurgence of the pandemic in the coming months, this slight recovery will not be affected in the eventuality of the implementation of new restrictive measures.

At global level the economic growth is expected to reach 5% by 2021. However, all this is still uncertain and depends on the evolution of the pandemic and the availability of a vaccine.

According to a last analysis of the Focus Economics Consensus Forecast LatinFocus, the projected growth of GDP in Latin America will increase, on average, 4.1% in 2021, 2.9% in 2022 and 2.8% in 2023.

4.     We must now work on building confidence for recovery.

To do this, countries are adjusting strategies for economic reactivation, flexibility in fiscal and financial support policies, employment, and strengthening the health sectors, among others.

The objectives and priorities set out are to continue efforts to contain the pandemic and mitigate its impacts, to support individuals and businesses to overcome the consequences of the pandemic, restore the economy and return to normal in the region.

5.     I thank ALABC for the digital meetings it holds, which prove that it is possible to realise economic connectivity, create a productive and business environment, and take advantage of new opportunities.

I also thank those who have preceded me in the floor for giving impulse to the Australia-Latin American relationship, and for agreeing that it is important to respond to the immediate impact of the pandemic by keeping goods and services markets and investment open, and supporting the central role of trade in the economic recovery.

Thanks, ALABC for working on new initiatives in the context of the economic recovery.

Thanks, Australia, for remind us that is a global and moral responsibility, that the vaccine must be share far and wide, safe, available to all, and affordable to all.

Thank you all of you again, and now I have the honour to give the floor to our esteem Minister of Trade, Tourism, and Investment, Senator the Honourable Simon Birmingham.

Latin America is ready to answer your calls, dear Minister.

On Oct. 25, Chileans will vote to reject or approve the start of creating a new constitution. The citizens of more countries should do the same. The country’s current Constitution, written under the authoritarian rule of the dictator Augusto Pinochet, has protected conservative interests and the military and has suppressed political dissent for 40 years.

Chile’s struggle with its authoritarian past is not unique. Countries with recent democracies like Myanmar, South Korea and Turkey have operated under authoritarian constitutions for years or even decades. My research indicates that more than two-thirds of political transitions to democracy since World War II — in more than 50 countries — occurred under constitutions written by the outgoing authoritarian regime. In some countries like Argentina that have flip-flopped between democracy and dictatorship multiple times, several democratic transitions have been guided by authoritarian-penned constitutions.

Persistent authoritarian influence under democracy is a recipe for inequality and democratic discontent. Democracies with authoritarian-era constitutions have weak political accountability and not enough citizen involvement in forming policies. And their political systems favor elites tied to the former regime rather than common citizens.

Inequality in Chile is at similar levels to the Pinochet era, while influence peddling by the wealthy — some of whom gained their fortunes through connections with Mr. Pinochet and insider privatizations — is pervasive.

Read full article here: https://www.nytimes.com/2020/10/19/opinion/chile-constitution-referendum-protests.html

A water molecule is composed of two hydrogen atoms and one oxygen atom. Through a chemical process known as electrolysis, the hydrogen atom can be separated from the water molecule and used as fuel. When this process is fed by renewable energy, it produces what is known as green hydrogen — a clean, zero-emission fuel that is environmentally friendly.

Chile has great potential for developing green hydrogen thanks to our country’s increasingly renewable energy matrix. This matrix is the result of Chile’s tremendous natural resources for generating solar and wind power, such as the Atacama Desert in the north and the winds blowing along our thousands of kilometers of coastline.

Green hydrogen, also known as the “fuel of the future”, will play a fundamental role in achieving Chile’s goal of carbon neutrality by 2050. Estimates suggest this power source could mitigate carbon dioxide emissions by between 17% and 27% by that date and will help us reduce our dependence on fossil fuels like oil and gas.

According to the Energy Ministry, the domestic green hydrogen industry could become a new hub of progress for Chile, similar to today’s copper industry. Currently, the government is working on a National Green Hydrogen Strategy, to be presented in November. Once unveiled, Chile will join the small group of countries with a road map on this topic, which is key for sustainable economic development and environmental protection.

Read the full article here: https://marcachile.cl/en/chiles-enormous-potential-for-developing-green-hydrogen/

Under the Global Talent Program, highly skilled Latin Americans have made Australia their home, and are advancing their careers and supporting critical Australian business sectors. While the closure of our international borders has been critical to our success in slowing the spread of COVID-19, the Department of Home Affairs is prioritising the processing of visas under the Global Talent Program.   

Launched in November 2019, the Global Talent Program offers a streamlined, priority visa pathway for highly skilled and talented individuals to work and live permanently in Australia. Target sectors include: AgTech; Space and Advanced Manufacturing; FinTech; Energy and Mining Technology; MedTech; Cyber Security; and Quantum Information, Advanced Digital, Data Science and ICT.   

Juan Reyes Lega and Margarita Torres are internationally recognised entrepreneurs, and were recently granted visas to live and work in Australia.   

“We feel very honoured for being part of the Global Talent program. It has been a great achievement for our company and for our personal careers as well. Our aim is to continue producing creative and unique digital content while supporting the development Australian digital games ecosystem. This will be possible thanks to the Global Talent program which was incredibly fast and whose officers were extremely supportive during our application process.” - Juan Reyes Lega and Margarita Torres, Colombia.   

To support interested businesses and candidates, the Department also has a dedicated Global Talent Officer for the Americas region.   

The Global Talent Program is available to those who are offshore and seeking migration to Australia, as well as many of those who are already onshore and are enthusiastic about continuing their stay in Australia to further grow their industry experience here. Successful candidates can bring their immediate family with them. There are also no State or Territory planning levels, and no age limit.   

Candidates should have the ability to attract a salary at or above the Fair Work Commission’s high income threshold, which is currently AUD153,600. This includes current work, employment offers and Australian labour market research. Candidates’ talent credentials will need to be proven via a simple nomination process. Standard health, character and security checks also apply.   

For more information, interested businesses and candidates can contact the Global Talent Officer for the Americas region. Once candidates are ready to formally test their eligibility, they should submit an Expression of Interest via the Department’s website.

According to PwC’s Mine 2020 report (covering the top 40 global miners by market capitalisation) released in June, in some respects, the mining sector is well-situated to recover from the impact of COVID-19. For example, despite uncertainty regarding Brazil’s ability to continue mining in some areas, iron ore prices have risen, potentially limiting the total impact on the sector. Disruption in mining operations has also occurred in Chile and Peru. However, mining companies in general have strong finances and are mostly still operational, albeit with increased levels of precautionary controls.

The pandemic has exposed the vulnerabilities of the approach of driving down the cost of mining, (as has a focus on hyper-efficiency, lean principles and just-in-time techniques). At least for their most critical supply chains, companies may need to consider an alternative approach: improved inventory management combined with globally diversified or locally sourced and financially viable resources. This would not only de-risk mining companies against a similarly disruptive event but also help develop and build resilience in local communities. Many are already doing it; Anglo American, and BHP, among others, have announced initiatives to increase support for their domestic suppliers as a result of the pandemic.

Read PwC’s Mine 2020 report at:

https://www.pwc.com.au/industry/mining/pwc-mine-2020.pdf

Since the first releases of Wolbachia-carrying mosquitoes in Queensland, Australia in 2011, the World Mosquito Program (WMP) has been working to implement its method to eliminate mosquito-borne diseases in places at risk all over the world. 

A major arm of the operation is situated in the Americas – with active projects running in Mexico, Colombia and Brazil. While the global pandemic has temporarily delayed the opening of WMP’s third hub-office in Panama, projects in these three countries remain key pillars for the organisation’s ambitions to protect 100 million people globally within the next five years. “We remain committed to sustainable growth – plain and simple,” says WMP Regional Director Janina Khayali. “If we succeed with national roll out in Brazil, Colombia and Mexico alone, we will have achieved the Americas portion of this goal, but our eyes are always on the horizon to achieve far beyond that.” WMP began working in Brazil in 2012. In Rio de Janeiro and Niterói, Wolbachia-carrying mosquitoes have been released in an area covering a population of around 1.3 million people. While data from the releases continues to be analyzed, plans are ramping up to roll out projects in Belo Horizonte and Campo Grande. In Colombia, releases have taken place in Bello and Medellin, protecting over 2.5 million people. The cities of Cali and other municipalities within the Valle de Cauca are next in line. While in Mexico, the project will re-establish  city-wide releases across La Paz later this year with national roll-out in motion.  

The program paused releases of mosquitoes in communities due to the pandemic in order to help keep staff and communities safe. With a growing body of evidence to support the success of the method, the focus for the program has shifted to the question of how to scale – how it can protect as many people as possible quickly, efficiently and cost effectively. The recent spread of the novel CoronaVirus together with alarming numbers of dengue cases have provided a grim reminder of the impossible task of controlling multiple outbreaks simultaneously.  

Progress is positive in the three countries mentioned above, but there are plenty of other countries, cities and communities in which diseases spread by Aedes aegypti is a common and debilitating threat. Khayali names Peru, Paraguay, El Salvador and the Virgin Islands as places where discussions have begun. But as long as diseases like dengue, Mayaro Zika and chikungunya continue to surface, there will be keen interest in getting things rolling across the entire continent. “Our model is designed to build the capacity in communities so they can protect themselves from mosquito-borne disease. This requires building trust and developing strong relationships across the region. If we can achieve this, we’ll be one step closer to a world free from the devastating health and economic burdens these diseases continue to inflict.” The World Mosquito program is very interested in building strong partnership and building support for its work so more people can be protected. 

If you are interested in learning more or supporting the World  Mosquito Program’s work please contact Enrica Longo, Director External Relations.  

Enrica works with the global team from Vietnam.   

enrica.longo@worldmosquito.org 

+84 901859466