Foreign investors and businesses can still find opportunities in Latin America, even as the region is mired in economic and political volatility.
Deputy Prime Minister Tharman Shanmugaratnam made the observation while speaking at the Latin Asia Business Forum, where he called for greater linkages between Asia and Latin America.
"In periods of overall macroeconomic weakness, we should look for opportunities at the micro level. Sometimes, there are opportunities to go in and find partners," he said yesterday at the forum at Shangri-La Hotel.
POCKETS OF STRENGTH
Latin America is going through some macro-weakness, but it still has significant micro strengths at the company level. We will find partners and companies that are themselves leaders, people we can learn from.
DEPUTY PRIME MINISTER THARMAN SHANMUGARATNAM, on opportunities to work with Latin Americans
"Latin America is going through some macro-weakness, but it still has significant micro strengths at the company level. We will find partners and companies that are themselves leaders, people we can learn from."
This came just a day after Fitch Ratings downgraded Brazil's credit rating to just a notch above junk status at BBB-, as Latin America's biggest economy languishes in recession. This was not helped by the scandals engulfing President Dilma Rousseff.
All of Latin America is stuck in a recession, with the International Monetary Fund forecasting a 0.3 per cent contraction for this year. It paints a dimmed global outlook, along with the weakness in Asia where China's slowdown has triggered widespread market jitters.
But "there's still a great story in international trade and cross regional linkages" if governments can push on with the necessary economic and social reforms, Mr Tharman stressed.
"This is not a crisis in the world economy. It's a well-needed correction not just in over-inflated (asset) prices, but also a correction politically," he said.
Development Bank of Latin America chief executive Enrique Garcia, who also spoke at the forum, said the public perception of Brazil has been overly negative, and the country will be able to weather the current storms.
International Enterprise Singapore signed a memorandum of understanding with the Development Bank of Latin America at the forum aimed at boosting collaboration in urban infrastructure planning and development.
Companies such as Surbana Jurong already have a presence in Latin America. Chief executive Wong Heang Fine told reporters the urban planning and infrastructure consultant has township and industrial park projects in nations such as Brazil and Ecuador.
"We hope to also bring our experience in public housing development to the region," he added.
Another Singapore firm succeeding in Latin America is Banyan Tree, with two hotels in Mexico posting 21 per cent growth in room revenue last year.
With tourism booming, Banyan Tree is confident of Mexico's prospects and will launch a US$300 million (S$415 million) Mexico hospitality fund in the next few months, a spokesman told The Straits Times.
More bilateral investments are on the cards, following the breakthrough agreement on the Trans-Pacific Partnership (TPP).
The 12-country bloc is only the start, Mr Tharman said, adding that the TPP can become a foundation for a free trade area covering the whole Asia-Pacific region.
So far, in Latin America, only Chile, Mexico and Peru are involved in the trade deal.