Chuck Chiang: Trade with ASEAN nations can and does work

May 25, 2015

By: Vancouver Sun

Given Ottawa’s recent focus on trade opportunities in Southeast Asia, it’s natural that people start asking whether such trade is realistic.

The countries of ASEAN, the Association of Southeast Asian Nations, combined are the seventh-largest economy in the world with a population of more than 600 million.

But logistical challenges abound when it comes to trading with any of the 10 countries comprising the region.

Canadian officials have spent the past few years aggressively promoting trade with ASEAN, topped by the announcement in August of a diplomatic mission dedicated to the regional association. This is in addition to existing diplomatic and trade mission offices in eight of the 10 ASEAN countries (consular services in Laos and Cambodia are handled by the Canadian embassy in Bangkok, Thailand), and countries such as Indonesia, Vietnam and The Philippines have all been identified as priority markets in Ottawa’s trade strategy.

But there remains just one direct flight from Vancouver to Southeast Asia, the Philippine Airlines’ service to Manila. The geographical distance and the lack of ASEAN diaspora in Canada (again, the exception is the Philippines) inevitably makes one ask whether Canada-ASEAN could ever reach a large-enough scale to benefit both parties?

The answer is yes. And the proof is a giant roll of toilet paper.

The location is Asia Pulp & Paper’s Lontar Papyrus mill, deep in the tree plantations of Jambi province in south-central Sumatra Island, 1,000 kilometres from the Indonesian capital of Jakarta. Here, the mill’s 2,000-plus employees and its gigantic machines churn out 450 tonnes of toilet paper every day, in jumbo weighing six tonnes and more than two metres in height.

From here, this paper will be processed into more manageable (and shippable) sizes and be transported to the port in Singapore, then to markets around the world. Asia Pulp & Paper officials say their top markets include places familiar to Canadian businesses, such as the United States, China, Japan and South Korea, plus Israel and other countries in the Middle East.

But Canada, specifically B.C., has a part in this story. Pulp from mills in Howe Sound and Mackenzie make up as much as 15 per cent of the each of these giant rolls of toilet paper. By my math, that’s more than 67 tonnes a day of the total amount produced, which is then hitting markets in Tel Aviv, Dubai, Seoul, Shanghai.

In that sense, the Canada-ASEAN trade relationship is already happening, despite the logistical challenges, and B.C. products are already accessing the global market via Indonesia and Singapore.

It demonstrates that a trade deal is do-able and could open markets previously unrealized to B.C. businesses.

In this case, the story has a family element: The Mackenzie and Howe Sound mills are owned by Richmond-based Paper Excellence. Owner Jackson Widjaja is the son of Teguh Widjaja, chairman of Asia Pulp & Paper’s parent company. (The companies are independent of each other in corporate structure and governance, officials say, but maintain a partnership relationship.)

Paper Excellence’s four mills in B.C. employ 1,230 Canadians, and the company has been heavily investing here, purchasing a mill in Chetwynd in May while investing more than $160 million in modernization.

It provides a model for Canadian businesses, urged by Ottawa to take to high-potential markets like Indonesia, for building something similar or on a smaller scale by seeking the right partners across the Pacific to access places like the Middle East and Africa that would normally be well out of reach for Vancouver business interests.

And it demonstrates that, even without the presence of a large diaspora in Canada — the 2006 census puts that number at 14,320 Indonesians, a fraction of the population of Canadians from China, South Asia or the Philippines — all it takes is an adequate partner to facilitate a trade relationship. The key is finding a partner whom you trust, and with whom you share the same value sets, business goals and principles.

By: Vancouver Sun

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