Singh is King ....in Argentina

I wrote a blog in 2009 describing Simmarpal Singh as the Peanut Prince of Argentina.

http://businesswithlatinamerica.blogspot.com/2009/05/simmarpal-singh-peanut-prince-in.html#links)

The prince has now become a king. He has a kingdom of 20,000 hectares of peanut farms. He is growing soya and corn in 10,000 hectares. He is now into rice. This year he has leased 1700 hectares of land in Concordia in the Entre Rios province for rice cultivation. His target for farming in Argentina is atleast 100,000 hectares....

I visited his rice farms on Thursday 3 November with him. I saw the process of planting of rice. As in the case of other crops, the Argentines use the No-Till method, also called as Direct Seeding. The seeds are directly planted in the land with the direct seeding machines. The fertiliser containing nitrogen, potassium and phosphorous is also added into the same hole where rice is put. They do not follow the Indian practice of ploughing the land nor the method of developing a nursery first and then transplanting the rice plant. They spray glyphosate herbicide to kill the weeds before planting rice. The spraying is done from an aircraft. They prepare a kind of embankment after every three metres to hold the water evenly in the parcel of the land which comes in very large pieces. They use a special equipment for making the embankment of mudwalls. Then they start watering the rice field with ground water pumped by a motor. The water pump works almost non-stop for 90 days till the rice seeds ripen. They have water pumps for every 70 hectares and there is a person to take care of the watering for every 140 hectares.

But the watering of the fields is expensive, costing almost 500 dollars per hectare due to the high cost of diesel. There is a proposal to electrify the motors with a World Bank loan. When this is done the cost will come down. At present the total cost of rice cultivation is 1800 dollars per hectare.

After the harvest, the paddy is dried and stored in the huge silos of a rice mill. The paddy is milled into rice and packed in 100 kilo bags for exports.

Coming from a small farming family, the Argentine cutivation appeared to me more like a civil engineering project with heavy machines, huge land parcel and high cost.

Here is a field with 25-days old rice plants

This is a direct seeding machine which plants 12 rows at a time

The Argentine yield per hectare is 7 tons, which is double that of India. Argentina produces about 1.5 million tons of rice of which one million is exported. Simmarpal's objective is to export the rice. His company Olam ( based out of Singapore and run by persons of Indian origin ) is one of the major rice traders of the world.

Simmarpal has now gained sufficient expertise and confidence in farming in Argentina. His company Olam has recognised this and is encouraging him to go for more acreage and scale up the operations.

Simmar's and Olam's ambition coincides with those of the Entre Rios government which wants to increase the rice acreage and production. The government sees value addition to the province by Olam which contributes to production,exports, employment and human resource development. The Entre Rios province has large uncultivated tracts of fertile land with plenty of water since the province is located between the large Parana river on one side and the Uruguay river on the other side. Besides rice, there is cultivation of blueberries, soya, wheat, citric fruits and even eucalyptus plantations in the province.

I discovered one of the secrets of success of Simmarpal but at a high cost to my comfort. He made me leave Buenos Aires by car at 6 am in order to reach Concordia by 1030 am and join a conference call with his colleagues at 11 am. He inflicted the same pain on return too. We left Concordia at 6 am to enable him to attend a meeting at 11 am in Buenos Aires. I wanted a short break after the long four hour journey but he did not need and plunged straight into work.

Simmar had himself driven 36,000 kms during his first six months of his arrival in 2005 in Argentina to look for farms, recruit people and supervise the operations. Now with the luxury of a chauffeur-driven vehicle, he works in his blackberry, iPad and laptop non-stop.

I was impressed by this Indian-style hard work and also the pleasant Latino way in which he manages his Argentine employees. He has cultivated commendable rapport with the Argentines in the same efficient way with which he cultivates the land. The Argentines admire this young Indian's dynamism and adore his turban, thinking that he is a Maharaja.

Gammon India invests in Ecuador

I had known Gammon India as an engineering and construction company when I was posted in Libya in 1983-85. I was pleasantly surprised to see that they have diversified into petroleum and other sectors and have even entered Latin America.

Gammon has established a subsidiary company Campo Puma Oriente SA ( based in Panama ) which operates the Puma oil fields in Ecuador which consists of eleven wells with proven reserves of 8 million barrels. So far, they have drilled seven wells which produce 1,500 bpd. The contract for the 20-year lease of Puma fields was signed in March 2008.

The Puma field investment is a joint venture with Joshi Technology International of USA. Gammon has 66.4% and Joshi 33.6%. The joint venture company in Ecuador is called as Consorcio Pegaso They have invested 50 million dollars till December 2010 and plan to invest 51 million dollars more in the next five years.

Joshi company, founded by Dr Joshi produces 5000 bpd of oil in Colombia. They also have oil fields in India and USA.

The Puma block is in the orient basin located 400 km from the capital Quito. The block has an area of 166 sq kms.

According to a June 2011 Reserve Bank of India report, Gammon has invested 1.8 billion dollars in their Panama subsidiary which will diversify into agriculture, fishing, hunting and forestry. Hmm.... Interesting ...

Argentine company Arcor entering India

Last April, when I was in Trichy, the nearest town to my village, I went to a small supermarket to buy chocolates for the kids in my place. The kids liked the chocolates and thanked me for bringing them all the way from Argentina. I was taken aback and sheepishly confessed that I had bought them in Trichy. But they showed me the label ¨Made in Argentina¨. Yes. These were in fact made in Argentina and exported to India by an Argentine company Arcor. Last year their exports to India were 10 million dollars.

The CEO of Arcor Mr Luis Pagani is right now in India on a two-week tour. He had an interactive meeting organised by CII in Delhi. He is also visiting Mumbai and Bangalore. The purpose of his visit is to open an office in Delhi in the next few months. Later, Arcor is planning to establish a plant in India to manufacture for the Indian market and for exports to rest of Asia. They are looking for a site in India to put up the plant. This will be the first ever Argentine investment in India.

Arcor is an Argentine multinational company exporting to 120 countries. They are a leader in Latin America and have 41 plants in five countries of the region.It is a family-owned company with a turnover of 2.5 billion dollars.

Wipro of India had done some IT work for Arcor.

Mr Pagani has two guides to show him around in India. His sister and daughter. Both have travelled to India many times and like Indian culture and spiritualism.

Argentine hair colour for Indian men

Last year Godrej bought two Argentine hair colour companies ( Issue Group and Argencos ) for about 50 million dollars. These two companies are doing well in the local market and are also exporting their products to other Latin American markets. The entry of Godrej into Latin America is not surprising, given the global ambitions of this large and established firm.

What took me by surprise was when I came to know that a small Argentine company Plumari has entered the Indian market with men's hair colour products. The Plumari products are sold in the Mens & Boys retail stores in India. At the moment, the Indian company has six retail outlets but is planning to open 100 stores by 2016. Plumari is keen to market their products for women also in India. They are excited by their entry into the large, growing and promising market of India.

Plumari is a family-run company with a turnover of 30 million dollars. They specialise in hair colour and export their products to over 30 countries. . More information in http://www.plumari.com

The success of Plumari should be an inspiration for other small Argentine and Latin American companies. This should also be seen in the context of the comments by some Latin American and other economists that Latin America is dependent upon exports of primary commodities. The Latin American companies which have consumer products should explore the large Indian market seriously and systematically.

A Brazilian company Surya Brasil is already exporting their Henna products to India. My blog on this http://businesswithlatinamerica.blogspot.com/2010/11/surya-shines-in-brasil-exports-henna-to.html#links

Brazil and India - Synergy between Bikini and Bindi

A Brazilian firm with an Indian name ¨Surya¨ is marketing its henna products in India. Renuka, an Indian company is a major producer of sugar in Brazil.

Clélia Cecilia Angelon, the president of Surya Brasil and Narendra Murkumbi, vice chairman of Renuka Sugars are the trendsetters in the new paradigm of synergy between the New Brazil and the New India. Economists of the old school used to consider Brazil and pre-reform India as more competitive than complementary to each other.

Cecilia started off with a shop in Sao Paulo selling henna powder made with raw materials imported from India. To make it look authentic she named her company Surya Henna. She had once invited me to her stall in a Cosmetics Fair which drew large crowds attracted by the scantily clad Brazilian beauties tattooed all over their bodies with henna. I realised then that India not only stirred the Brazilian soul with spiritualism but also gave a touch to their bodies as well. This combination convinced me that it was going to be a winner in business and win-win for India and Brazil. The turnover of the company, which changed its name to Surya Henna, has now reached twenty million dollars. They export to twenty countries including USA, Australia, UK and France. In an audacious move, Cecilia decided to export her henna products to India. The marketing team of the company thought this was like a Brazilian trying to teach an Indian Guru. How would the Indian consumers living with a long tradition of henna accept a Brazilian henna product? How could a Brazilian company find a place in the space crowded by so many Indian companies in their home market? Cecilia would not take no for an answer. She opened an office in India in 2005 and sent a marketing executive Fernanda Drumond who spent four years to study and understand the Indian market. She has achieved sales of 1.5 million dollars in 2010 and plans to double it in 2011. She has placed the products in beauty parlours and stores in shopping malls in the major cities. Now she is reaching out to the smaller towns. Surya Brasil plans to open a production plant in India from which it will export to Japan, Korea, Taiwan, Australia and other Asian countries. They also plan to open an organic SPA in India like the one they have in Brazil. Besides henna Surya uses in their cosmetic products other Indian ingredients such as Amla.

Surya goes beyond henna in its India connection. The company´s website says ¨Surya is guided by Ayurvedic principles: know and respect individuality; pursue well being with emotional and physical balance¨. The website of Surya has a section, ¨moment of meditation ¨.

How does one explain the success of Surya in India and in the world? The answer lies in the fact that the Brazilians, with their sensual expertise, understand and practice body care better than the Indians whose focus is more on the spirit and the soul.

Cecilia’s interest in henna started with her love for an Indian Raj Malhotra who had employed her as a salesperson in his shop in London. Raj could not resist the Brazilian charm and married her. She became Cecilia Malhotra. They had a daughter Vandana. Raj lived for some time in Sao Paulo. After a few years, Raj and Cecilia separated. Later, she had relationship with another Indian Kanwaljit Singh.

When Murkumbi wanted to enter the Brazilian sugar sector, it was like Cecilia trying to penetrate the Indian henna market. Sugar industry was the holy cow of Brazil. It was controlled by the sugar barons and traditional families of Brazil. They were formidable as the global leaders in sugarcane farming, sugar and ethanol production and the pioneers in the use of fuel ethanol and flexifuel vehicles. But Murkumbi who believes in ¨Rewriting rules and Reinventing paradigms ¨ and ¨contrarian philosophy in a conventional business¨ ventured boldly . He has acquired two Brazilian sugar groups with an investment of 350 million dollars. Renuka is now the seventh largest producer of sugar in Brazil with a cane-crushing capacity of 14 million tons a year in its four sugar mills. It is also a leading producer of ethanol (one million litres) and co-generated power (221 MW). Renuka is investing 70 million dollars in 2011-12 more to expand the capacity. The goal of Murkumbi is to take the company from seventh to third rank in Brazil.

Murkumbi sees strategic synergy between India, the largest sugar consumer and Brazil, the largest sugar producer in the world. He believes in the complementarity between India whose sugar production faces increasing challenges of agricultural land and water scarcity and the advantage of Brazil with ample land and water resources, conducive climate and efficient farming and manufacturing, low operating cost and high scalability. Murkumbi has also become successful in marketing the Brazilian sugar in many countries besides India.

From time to time Indian domestic production goes down due to weather and other cyclical circumstances which make India import sugar. In 2009-10 India imported 2 billion dollars of sugar from Brazil.

The success of Cecilia and Murkumbi have become inspiration for other Indian and Brazilian entrepreneurs to seek such win-win opportunities.

India imported from Brazil soya oil worth 71 million dollars and pulses worth a few million dollars in 2010. These two imports are likely to increase in the coming years since India's production of these two items are inadequate to cope with the growing demand.

There is an evolving agricultural complementarity between Brazil which is poised to become a global agricultural powerhouse and India which is likely to face more challenges arising from increasing food demand and decreasing agricultural land and depleting water resources. According to a statement in March 2011 by the Brazilian Agriculture minister Wagner Rossi, Brazil has 120 million hectares of degraded land that could be converted to agriculture, which would triple the total area under cultivation.

In 2010, Reliance, the top Indian company accounted for about 38% of the Indo- Brazil trade. They exported 1.7 billion dollars of diesel and imported 1.25 billon dollars of petroleum crude. While India imports about 70 percent of its crude oil requirements, Brazil has become a net exporter. With the recently discovered pre-salt reserves, Brazil is expected to produce 6 million barrels per day by 2020. Given the need to fuel the projected high growth rate, India would import more Brazilian crude in the future. Besides imports, Indian companies have invested in oil exploration and production in Brazil.

Hopefully India will learn from Brazil's successful experience of fuel ethanol and flexifuel vehicles to meet the rising need for fuels. Brazil is also a source of minerals and timber and manufactured products as well as regional jets made by Embraer which are needed by the fast growing Indian market.

Renuka and Reliance have positioned themselves in the middle of the complementary partnership between India and Brazil in food and fuel. Brazil is becoming important for India's food and energy security.

What does India contribute to Brazil? There are several Indian IT and BPO companies which operate in Brazil employing 3000 Brazilians. This is more than employment. The Indian companies train and prepare these young Brazilians for the new Age of Information and Knowledge society. The Brazilians working in the Indian IT and BPO companies acquire multicultural skills through their interaction with US and European clients besides Indians. Fabio from Curitiba has become the regional manager of WIPRO for the whole of Latin America. Guess who is the new country manager of WIPRO in Argentina. Another Brazilian, Valdo.

The Indian pharmaceutical companies have helped the government and people of Brazil to reduce their cost of health care. In the nineties, Jose Serra, the Brazilian health minister invited the Indian companies to enter the Brazilian market and facilitated registration of their products. Thanks to this wise initiative, there are twenty Indian pharma companies which sell their products in Brazil through local production and distribuition besides exports. The low cost generic medicines from India have put pressure on the multinationals and local companies of Brazil to lower their prices and to increase the volume of less expensive generic products. The success of the Indian companies have inspired the Brazilian pharma companies which are aggressively expanding their domestic production and also extending their presence in the rest of Latin America and Africa.

India supplies embryos to the Brazilian cattle industry. Brazil has a large stock of cattle developed as a cross between Indian and European breeds. They had to do this cross breeding since the original cattle brought from Europe could not survive the hot and tropical climate of Brazil. The Brazilians had earlier imported cattle from Ongole, Gir and Nellore in India and named the cross breed as Nelore and Indubrasil. About 90% of Brazilian cattle meat production comes from Nelore. The Brazilians have also exported this Nelore breed to Paraguay, Argentina, Venezuela, Mexico, Central America and to USA.

The Indian manufacturers who make low cost products for the price sensitive Indian masses using ¨frugal engineering¨ (a term coined by Carlos Ghosn, the Brazilian who is the CEO of Renault and Nissan) and ¨reverse innovation¨ can supply such products to the Brazilians with low income. Micromax, a low cost Indian cellphone maker has just started marketing its products in north eastern Brazil. Tata has announced plans to assemble their Nano cars in Brazil.

The trade between India and Brazil have more than tripled in the last five years from 2.3 billion dollars in 2005 to 7.7 billion in 2010. This is set to increase significantly given the complementarity in food and energy security and the change in the mindset of Indian and Brazilian businessmen who have started taking each other’s markets more seriously.

Around 40 Indian companies have invested in Brazil in IT, BPO, pharmaceuticals, agribusiness, agrochemicals, oil, mining and manufacturing. On the other hand, eight Brazilian companies have invested in India in sectors such as assembly of buses, steel, electrical motors and shoes.

The 2014 World Cup, the 2016 Olympics, the 224 billion dollar investment plan of Petrobras in this decade and the 270 bn $ investment planned in the mining sector in the next 20 years in Brazil offer unprecedented opportunities for exports and contracts for Indian companies. The Brazilian companies too can take advantage of the huge investment opportunities and the growing size of the large consumer market of India.

The Indians admire and cheer the Brazilian football team during world cups. With more exchanges with Brazilian clubs, training and getting more Brazilians to play in Indian teams, there is hope and scope for Indian football which is becoming more popular.

The air-connectivity problem between the two countries has been partly solved with the flights of Qatar Airways and Emirates Airlines who link Sao Paulo with Indian cities through Doha and Dubai. Besides providing better service, these airlines have spared the Indians the need for transit visas at European airports.

The academic world too is catching up and has started focussing on the evolving partnership between the two countries. India has established a chair in Getulio Vargas Foundation, Sao Paulo and there is a Brazilian professor in Jawaharlal Nehru University. The centre for Latin American Studies at the University of Goa is organising a major conference on Brazil on 28-30 October 2011.

The governments of India and Brazil have a number of programmes of bilateral cooperation. Faced with similiar developmental challenges such as poverty alleviation and improvement in education and health care, the two governments could learn from the best practices of each other. A number of Indian delegations have visited Curitiba city which is a role model for urban bus transportation service. On the other hand Brazilian delegations visit Bangalore to get inspiration from the Indian IT companies.

India and Brazil are part of the trilateral alliance of IBSA alongwith South Africa. They are members of BRICS, G-20 and take common stand in a number of multilateral fora. The two countries work together to realize their aspiration to become permanent members of the UN security council.

Some might say that India's trade with Brazil was just 13% of China's trade with Brazil which reached 56.6 billion dollars in 2010. Chinese companies have invested much more than Indian firms in Brazil. But India is different. It is more than a commercial partner. India and Brazil share common values of democracy, freedom and culture.

At the level of people, there is cultural complementarity between the two countries. The Brazilians admire the culture and spirituality of India. There are thousands of Brazilian followers of Sai Baba and other such Indian Gurus. Yoga and meditation are no longer passing fads. They have become part of everyday life for several million Brazilians. While Sri Sri Ravi Shankar's Art of Living is popular in Brazil, the Indians admire the way the Brazilians have made enjoyment of life as an art. The new generation of Indians are attracted to the Brazilian spirit of samba and carnival.

¨Camino das Indias¨, the Globo TV soap opera based on an Indian theme topped the viewer ratings in 2009 and has stimulated the interest of the Brazilian masses in India. This Indian story with Brazilian actors had a profound impact. Indians are greeted with Namaste and are asked if they are Brahmins or Dalits. Ganesh idols for good luck adorn the offices and homes of many Brazilians. Exports of Indian ethnic dress and handicrafts have skyrocketed. The number of Brazilian tourists to India have gone up.

There are a number of Brazilians who perform Indian classical music and dances. One of them, called as Juliana has even come to teach in Buenos Aires. Her interest in Indian dance was inspired by Father Joachim Andrade, a catholic priest in Curitiba. Father Andrade himself had learnt classical dances in India. In Brazil, he did his masters in Anthropology on the topic “Dance as a ritual: a case study of Indian Dance”. For his doctorate, he chose the topic of “Bharatnatyam as the medium of diffusion of Hinduism in Brazil ¨.

Brazilians are embracing the principles of Non-Violence of Mahatama Gandhi as a preventive remedy for the young minds which are being infected by the serious crime and violence in their cities. Palas Atena, a NGO from Sao Paulo is celebrating the birth anniversary of Gandhi every year for the last 30 years and spreading Gandhi’s teachings on non-violence among children and youth in particular.

Romance is in the air between Bollywood and Brazil. The Indian film Dhoom II was shot in Rio de Janeiro. Some Indian Reality TV shows were also filmed there. There is a Brazilian model Giselle Monteiro who has taken new avatar as a Bollywood actress. She acted in two films ¨Love Aaj Kal¨ and ¨Always Kabhi kabhie¨. She has featured on the covers of Indian women's and fashion magazines and is the Brand Ambassador for some Indian products including jewellery. Her success has inspired a number of Brazilian girls and boys who are queuing up at the Indian consulate in Sao Paulo for visa to go to Mumbai for modelling and to have a shot at Bollywood. One of the reasons for the acceptability and success of the Brazilians in Bollywood is their café con leite (coffee with milk) complexion in which they look like Indians with the same blend of coffee and milk colour in their skin. Many Indians who saw Giselle in the Bollywood films mistook her as a Punjabi. Does'nt she look like one?

Giselle is romancing a Punjabi in the Bollywood film in the picture below

Brazilians have taken to Indian fashion too. Indian ethnic dress, jewellery and accessories are popular in Brazil. Girls from Ipanema are putting bindis in their foreheads matching with their bikinis. This Bikini-Bindi combination is the symbol of the synergy between the sensual Brazil and the spiritual India. This is more than synergy. Bindi is an auspicious sign of marriage.

Resurgent Latin America swims against the current of Recurring Global crisis

¨This is the second time crisis affects the world, and for the second time Brazil is not trembling¨, declared Brazilian President Dilma Roussef last week.

“This is our time and we must help them (EU and US) solve their problems. Because when Brazil, Paraguay and Bolivia were in trouble a group of ‘gringos’ landed every time to tell us what to do.. now it’s their turn to listen to us.. North-American and European leaders should know that a politician should have character, I think they are lacking political initiative¨ said former President Lula.

"When did the American dream become a nightmare? When will USA learn to control financial speculation, which has brought ruin on the world?¨, asked Argentine President Cristina Fernandez in a speech at the Buenos Aires Stock Exchange last month. She said, ¨The Americans thought that money just reproduces by itself, and only in the financial sector, without having to produce any goods or services". In 2002, the US Treasury Secretary Paul O'Neill had mocked Argentina saying , "They like it that way. Nobody forced them to be what they are." The Argentines ask who forced USA now?

The Latin American Schadenfreude is understandable. They used to be on the receiving end of lectures and taunts by the Europeans and Americans in the past. They are now in a position to return the favour.

Crisis, Debt, Default, Deficit – the bad news from US and Europe since September 2008 does not seem to stop…. The prospects for them in the near future are not bright either. Contrast this with the Latin American bullishness.

¨Will 2011 be the dawn of the Latin American decade?¨ is the title of the webcast by Standard and Poors in January 2011.

¨Laying the foundation for a Latin American Decade¨, was the theme of the World Economic Forum on Latin America held in Rio de Janeiro in April 2011.

“The decade of Latin America and the Caribbean- a real opportunity¨ is the title of the new book of Luis Alberto Moreno, President of the Inter American Development Bank launched in July.

"This can and should be the decade for Latin America," declared Colombian President Juan Manuel Santos during his speech on 17 August at the Economic Commission for Latin America and the Caribbean (ECLAC) headquarters in Santiago, Chile.

¨Nuestra Hora (our time) ¨is the title of a new book by Raul Rivera who talks about the new Latin American mindset of the Twenty First century.

¨The New Latin America and the New India- synergies and complementarities, is the title of the seminar to be held by the embassy of India in Buenos Aires on 5 December.

In the olden days, if US and Europe caught cold, Latin America would sneeze. Not any longer. During the global financial meltdown of 2008-9 not a single bank or financial institution collapsed in Latin America. The region weathered the storm without any serious damage and bounced back quickly with an impressive GDP growth of 6% in 2010. BBVA, the Spanish Bank in its ¨Latin America Report¨ of August, says that in spite of the global turbulences, the Latin American economy will expand by 4.8% (same estimate as those of ECLAC and World Bank ) in 2011 and is optimistic about the region’s growth possibilities in the coming years.

Earlier this month, the World Bank's chief economist for Latin America and the Caribbean, De la Torre, remarked, “ Latin American economies have developed strong immune systems against global contagion. Over the last 20 years the region has experienced a silent economic revolution that has provided a shield against external shocks, as we have witnessed in the previous crisis and those reforms are still in place. Latin America could absorb the financial shocks from the global turmoil through greater exchange rate flexibility, maintaining reasonable growth rates.” The Latin American economies have become more resilient and less vulnerable to external shocks. The policy makers are better prepared now, after having having gone through hell in the olden days. According to the 13 August issue of Economist, ¨they have more policy weapons available than most rich-world economies¨.

Some economists have suggested that US and Europe could learn from the experience of Latin America which has successfully resolved their debt crisis. The title of a blog of the Washington DC- based Council on Hemispheric Affairs on 18 August is ¨Mounting Debt: the U.S. could Learn from Latin America¨. The US public debt to GDP ratio has increased from 60% in 2003 to 96%in 2010 while in the case of Latin America the ratio of external debt to GDP has decreased from 39.9% in 2003 to 19.2% in 2010.

The main driver for the ongoing growth in Latin America is the domestic demand. The Inclusive Development policies have lifted 40 million people out of the poverty line in the period 2003-8 alone and the middle class has been expanding significantly. In the case of South America, the high Asian demand and the soaring prices of commodities have offset the negative impact of EU and USA.

According to the UN Economic Commission for Latin America and Caribbean (ECLAC), the GDP growth rates of some of the Latin American countries in 2010 were: Argentina (9.2%), Brazil (7.5%), Paraguay (15.0%) and Uruguay (8.5%), Panama (7.5%), Dominican Republic (7.8%) and Peru (8.8%). The growth figures of Latin America are not just one-time wonders. In the period 2003-8 the region had a consistent growth which was an annual average of over 5%. The growth is only one part of the new story of Latin America. The region has been strengthened by sound macroeconomic fundamentals of the economies and the prudent policy disciplines of the governments.

Here are some indicators of the fundamentals, from the July 2011 report of ECLAC :

- Sustained economic growth is enhancing the economies’ employment-generating capacities and the unemployment rate is expected to come down again in 2011, to between 6.7% and 7%. What is more, indicators for the first part of 2011 show formal wage employment rising as a proportion of total employment in several countries, suggesting that the new jobs being created are of better quality. Continued economic growth and jobs rising in both numbers and quality should usher in fresh gains in poverty reduction.

-GDP growth was driven by strong domestic demand in the form of both consumption and investment and by buoyant external demand.

-Inflation of the region in 2010 was 6.6% and is expected to increase to 7.5% in 2011 due to the higher global prices of food and fuel. The average inflation of the region is in single digit since 2003 and it had gone down to 4.7% in 2009.

-Current account deficit of the region in 2010 was just 1.2% and is expected to increase slightly to 1.5% in 2011, although it was much lower at 0.4% in 2009. From 2003 to 2007, Latin America experienced an unprecedented current account surplus that averaged 1% of GDP.

-Eleven countries of the region recorded nominal appreciation of their currencies in 2010 and early 2011, in particular Brazil, Colombia and Uruguay but also, to a lesser extent, Chile, Costa Rica, Mexico and Peru.

-Foreign Exchange reserves of the region reached a record level of 715 billion dollars in June 2011 from 160 billion in 2002.

-Total gross external debt of the region as a percentage of GDP declined to 19.2% in 2010 from 39.9% in 2003.

-Net Foreign Direct Investment increased to 70 billion dollars in 2010 from 38 billion in 2003.

Even with all these strong points, obviously Latin America cannot escape the adverse impact of the ongoing global crisis. Mexico and Central America, which are more exposed to the US market will suffer more than South America which can count on continued exports of commodities to China and India. The region has also its own longterm challenges such as poverty, education, infrastructure, corruption, urban crime, drug trafficking. The Latin American economies need to go further down the road of structural reforms.

The Argentines say that they ended up in a mess after implementing the IMF prescriptions in the eighties. After 2002, they refused to listen to IMF advice and did exactly the opposite of what they were told. The result speaks for itself. Argentina came out of its historic crisis of 2001-2 remarkably and has shown consistent growth since 2003 and is flourishing. The Latin Americans who transitioned from dictatorship to democracies in the eighties were advised to follow neoliberal policies by the Washington Consensus at that time. As a consequence, the Latin American situation became worse and the eighties came to be known as the Lost Decade for Latin America. This triggered an anti-neo liberal reaction and turn to the Left.

Having seen and suffered the consequences of the flaws and follies of US and Europe, the Latin Americans no longer look up to them as role models. They are now diversifying their economic relations and reaching out to new markets. They are inspired by the success stories of India and China. They want to learn from the value system of these new Gurus. In his latest book ¨Basta de historias (enough of the past)¨, launched in Buenos Aires on 16 August in Buenos Aires, Andres Oppenheimer, the popular columnist of Miami Herald has advised the Latin Americans to focus on education which has unlocked the potential of countries such as India

The Latin Americans have now found their own home-made solution and their own path to development based on their experience. They are moving towards the centre with polices of Inclusive Development along with market-friendly approach. It is a pragmatic balance of pro-Favela and pro-Wall Street policies as practised by the former Brazilian president Lula. Lulaism, as some describe, has become not only the new dominant trend but also a vote winner. Ollanta Humala, the radical leftist won the Presidential elections in Peru in June this year because of the promise that he would follow Lulaism. In 2009, the Mujica, the ex-guerilla fighter of Uruguay won the elections by assuring the voters that he would govern like Lula. Lulaism is also called as ¨Brasilia Consensus ¨ as against the externally imposed ¨Washington Consensus¨. This is the new mindset of the resurgent Latin America. It is based on this solid foundation of new confidence, vision and optimism that a New Latin America is emerging.

The risk of doing business with Colombia is …falling in love….

The risk of visiting Colombia is that you might stay on… Says the Colombian tourism advertisement. But there is also another greater risk … The risk of ...falling in love...

This is what happened to three Indian IT guys Mohan, Atul and Kaushik who went to Colombia for an IT project. All three were captured, kidnapped ...and taken to the altar... The Indians were, of course, not innocent. They were willing victims.. and now lead happy married life with their Colombian wives.

The three went to Colombia as employees of an IT company. Soon, they quit their jobs and founded their own company Sophos Banking Solutions. They will not tell me which came first - love or entrepreneurship. It does not matter. They conquered the market but let themselves be conquered by the Colombian women.

Colombian women are among the most beautiful in Latin America. Those from Medellin and Calli are the prettiest in the region. When I was in Medellin in July this year, my eyes almost popped out while sitting in the outdoor cafes and bars. The streets of Medellin are like catwalks. The women walk ...parade ..as though they are models. It was like watching Fashion TV - a non-stop out door fashion show. It reminded me of the Brazilian composer Antonio Jobim and poet Vinicius de Moraes who used to sit in a bar in Rio de Janeiro and saw a girl passing by often. This inspired them to compose the famous song, ¨Garota de Ipanema- the girl from Ipanema¨. The bar is located near the Ipanema beach and known as the Garota de Ipanema bar.

The Colombian women are like the emeralds of the country- exquisite and sparkling. They are charming, sweet, elegant, graceful and intensely feminine. Besides their natural endowments, some get cosmetic surgeries done to enhance their attractiveness. Cosmetic surgery is a thriving business in Colombia.

Colombian women make good wives and parners with their committment, loyalty and sincerity. They are family oriented, affectionate and caring. I have a number of Indian and foreign friends who are married to Colombian women happily for many years with more mature love, as described in the song in the film ¨Love at the time of cholera¨ based on the novel of Gabriel Garcia Marquez.

Hay amores que se vuelven resistentes a los años,

como el vino que mejora con los años,

There are loves that come to be resistant to years

Like the wine becoming better with years.

Here is the song http://www.youtube.com/watch?v=uZ53MAEaoyQ

It was this book ¨Love at the time of cholera¨ which put a spell on me and got me passionate about Latin America for the last fifteen years. I was fascinated by the incurable romantic Florentino who is hopelssly in love with Fermina even when she rejects him and gets married to another. He waits for over fifty years with the same pure love and comes to propose to her at the age of seventy after the death of her husband.

Oops.. I got carried away…. I forgot to mention the fourth member of the Sophos team, Amitt. He is the exception. His parents seemed to have had knowledge of Colombia. They were not taken in by the title of the book ¨One hundred years of solitude¨ by Marquez. They knew it was just magical realism. They would not believe that there could be any solitude for bachelors in Colombia. So they made Amitt marry an Indian girl Vidushree before he could also fall a victim to the Colombian magic. She speaks fluent spanish and has become almost a Colombian.

Sophos provides IT solutions for banks and financial instituitions besides BPO and other services. They work with partners such as Infosys and Oracle. They have 90 Colombian and 12 Indian employees and are adding more.

I visited the Sophos office in Bogota. In the picture below you can see Amitt in the left and Mohan in the right with their Colombian staff, whom they describe proudly as their extended family.

The office of Sophos is strategically located in the heart of the financial district of Bogota. They own the office and recently bought an adjacent space also as part of their expansion. The company is growing as the Colombian clients have gained more confidence in Sophos. Atul told me the secret…If he and a Colombian were to compete for a IT contract from a Colombian client, he as an Indian, had a better chance. Yes.. Indian name gives a competitive edge in the IT business in Colombia as in US.

Atul Malhotra is from Chandigarh, Mohanraj is from Coimbatore, Amitt is from Agra and Kaushal is from Mumbai. All the four guys work like Indians and have fun like the Colombians. They work typically an average of 13 hours a day. Every Sunday they have a video conference to review the past week and plan the next one. Guess what time.. At 0630 hrs. I am sure the video line will be absolutely clear and uncongested at this ungodly time when the whole of Colombia will be enjoying their Sunday morning sleep.

Atul who lives and works in Medellin is a connoisseur of the night life in Parque Lleras , where he took me out for an incredible evening. Mohan, who has the typical conservative and quiet Coimbatore smile was transformed completely into a Colombian Fiestero (party man) after a couple of aguardientes (local spirit) at the famous Andres DC Bar in the Zona Rosa of Bogota.

The Colombian wives have adapted well to their hard working husbands, confused in-laws and curious Indian relatives. They have learnt Indian cooking and know how to make their Indian husbands cry …with their hot Indian food.

I asked the Sophos guys about the experience of their Colombian employees. They are happy with the quality of Colombian human resources and their commitment. The Colombians are willing to work late in the evening or on a weekend whenever there is need. This has reconfirmed my own opinion that the Colombians have the best work culture in the Andean Community region and among the best in Latin America.

These days, Colombia is the hottest destination in Latin America for foreign investment with lots of opportunities and investor-friendly government policies. President Santos surprised the Indian Ambassador Warjri when he himself came forward to meet all the Indian participants in an Indian engineering exhibition last year. The Colombian embassy is the only Latin American mission in India to have an Investment Promotion Officer. The Colombian Ambassador in India Juan Alfredo Pinto is known for his proactive Economic Diplomacy with his background as an economist and entrepreneur. With the third largest population (48 million) in Latin America, Colombia is the third largest destination of Indian exports to the region. Reliance, ONGC, United Phosphorous Ltd, and Havells Sylvania are the major Indian investors in Colombia.

So here is a strategy for Indian companies to conquer the Colombian market. Send the bachelors in your export departments. They will have an extra motivation to establish long term exports and business of your company with Colombia.They will be inspired by Shakira's song ¨Sale el sol¨

uno y uno no siempre son dos

Cuando menos piensas sale el sol

One plus one is not always two

The sun starts shining , when one least expects

Here is the full song

http://www.youtube.com/watch?v=mqqLoUcLX5I

Role Reversal between Latin America and USA

Debt, Default, Deficit and Rescue – are the headline news these days in USA and Europe…. not in Latin America which has come out of these nightmares since 2003. The Latin Americans who were lectured by the Europeans and Americans in the past are now returning the favours. "When did the American dream become a nightmare?" ¨When will USA learn to control financial speculation, which has brought ruin on the world?¨, asked Argentine President Cristina Fernandez in a speech at the Buenos Aires Stock Exchange on 18 July. She said, ¨ The Americans thought that money just reproduces by itself, and only in the financial sector, without having to produce any goods or services". She had every right to say so. In 2002, the US Treasury Secretary Paul O'Neill had mocked Argentina saying , "They like it that way. Nobody forced them to be what they are." The Argentines ask who forced USA now?

The Argentines say that they ended up in a mess after listening to IMF in the eighties and nineties. After 2002, they refused to listen to IMF advice and did exactly the opposite of what they were told. The result speaks for itself. Argentina has shown consistent growth since then and is flourishing. The Latin Americans who transitioned from dictatorship to democracies in the eighties were advised to follow neoliberal policies by the Washington Consensus at that time. As a consequence of following these policies the Latin American situation became worse and the eighties came to be known as the Lost Decade for Latin America. This triggered a anti-neo liberal reaction and election of Leftists to govern the region. It is now the turn of Europe and USA to face the prospects of a Lost Decade in contrast to the Latin Americans who are prospering and celebrating this period as their Growth Decade. While Europe and USA are expected to grow by 1.85% and 2.6% in 2011, South America is projected to grow by 5.1% in 2011, according to the July 2011 report of ECLAC ( Economic Commission for Latin America and Caribbean of the United nations). Even Mexico which is tied to USA as a NAFTA partner is projected to grow by 4% while Central America's growth is predicted as 4.3%. President Christina was able to talk so boldly since Argentina's own growth in 2011 is projected to be an impressive 8.3% coming after a sizzling 9.2% in 2010.

The Latin Americans have found their own ¨Brasilia Consensus ¨ and given up on the externally imposed ¨Washington Consensus¨. Another name of the Brasilia Consensus is Lulaism, which means pragmatic balance of pro-Favela and pro-Wall Street policies as practised by the former Brazilian president Lula. Lulaism has become not only the new dominant trend but also a vote winner. Ollanta Humala, the radical leftist won the Presidential elections in Peru in June this year because of the promise that he would follow Lulaism. In 2009, the Mujica, the ex-guerilla fighter of Uruguay won the elections by assuring the voters that he would govern like Lula.

The growth figures of Latin America are not just one-time wonders. Look at the GDP growth rates of some of the Latin American countries in 2010: Argentina (9.2%), Brazil (7.5%), Paraguay (15.0%) and Uruguay (8.5%), Panama (7.5%), Dominican Republic (7.8%) and Peru (8.8%). In the period 2003-7 the region had a consistent growth which was an annual average of over 5%. The growth is only one part of the new story of Latin America. The region is marked by sound macroeconomic fundamentals of the markets and the prudent policy disciplines of the governments.

Here is more news on the fundamentals, from the July 2011 report of ECLAC:

- Sustained economic growth is enhancing the economies’ employment-generating capacities and the unemployment rate is expected to come down again in 2011, to between 6.7% and 7%. What is more, indicators for the first part of 2011 show formal wage employment rising as a proportion of total employment in several countries, suggesting that the new jobs being created are of better quality. Continued economic growth and jobs rising in both numbers and quality should usher in fresh gains in poverty reduction.

-GDP growth was driven by strong domestic demand in the form of both consumption and investment and by buoyant external demand.

-Inflation of the region in 2010 was 6.6% and is expected to increase to 7.5% due to the higher global prices of food and fuel. The average inflation of the region is in single digit since 2003 and it went down to 4.7% in 2009.

-Current account deficit of the region in 2010 was just 1.2% and is expected to increase slightly to 1.5%, although it was much lower at 0.4% in 2009. From 2003 to 2007, Latin America experienced an unprecedented current account surplus that averaged 1% of GDP.

-The region’s continued financial inflows, access to financial markets and historically high levels of international reserves show that its external financial position remains solid.

-Eleven countries of the region recorded nominal appreciation of their currencies in 2010 and early 2011, in particular Brazil, Colombia and Uruguay but also, to a lesser extent, Chile, Costa Rica, Mexico and Peru.

-Foreign Exchange reserves of the region reached a record level of 719 billion dollars in May 2011 from 164 billion in 2002.

-Total gross external debt of the region as a percentage of GDP declined to 19.2% in 2010 from 39.9% in 2003.

-Net Foreign Direct Investment increased to 70 billion dollars in 2010 from 38 billion in 2003.

Latin American market

For those Indian businessmen who still think Latin America is not that important, here are some facts to correct their perceptions:

-The GDP of Latin America has reached 5 trillion dollars in 2011. There are two Latin American members in the Trillion Dollar club. Brazilian GDP has crossed 2 trillion dollars while Mexican GDP is over one trillion.

-The population of the region is 550 million of which 350 million are middle class.

-In 2010 the Latin American imports were 844 billion dollars and exports 889 billion.

-Latin Americans have over 500 billion dollars of investment projects in the coming years in energy, mining, infrastructure and industry. The Brazilians account for the bulk of it with their own projects relating to World Cup 2014, Olympics 2016 and the projects of Petrobras.

Of course, the region faces a number of challenges and is marked by a few aberrations and deviations from the main trends, just as in India and other countries.

India - Bolivia Encounter of civilisations in El Mutun

¨Hermano… Yo tambien soy Indio ¨– Brother ...I am also an Indian. This is how President Evo Morales greeted Naveen Jindal, Managing Director of Jindal Group when they met first time in 2006. Naveen responded ¨Your Excellency , We from India believe in Karma. It is the Karma which has brought together the brothers from India and Bolivia ¨. Evo asked, ¨ how long are you here?¨. Naveen replied, ¨for the next seven reincarnations¨. Evo burst out laughing and gave a 40 year lease of the El Mutun iron ore mine which has one of the largest reserves in the world with an estimated 40 billion tons.

The Jindal investment of 2.1 billion dollars is significant for Bolivia whose GDP is just 18 billion dollars and population 10 million. It is the biggest investment Bolivia has ever received. The steel plant to be set up by Jindal is the first- ever in the country. The Jindal Project will contribute to the industry, economy and export earnings of Bolivia besides to the exchequer by way of taxes and royalty. They will provide jobs and training to thousands of Bolivians. It is, therefore, no surprise that Jindal steel is the talk of the town all over Bolivia from El Mutun where the mine is located to Santa Cruz the provincial capital and to La Paz the capital of Bolivia. At the Santa Cruz airport, you can just tell the taxi driver to take you to Jindal office and need not worry about the address. They all know it. The only thing is you have to say Hindal since J is pronounced as H in Spanish.

The Jindal investment is not just another project. It is a civilisational encounter between the millenial India and the ancient native Indians of Bolivia. Evo Morales is the first native Indian to be elected as president of Bolivia which has sixty percent Indians in the total population. In fact, he is the first native Indian President to be elected in Latin America. This historic empowerment is a celebration for the 40 million indigenous Indians of Latin America spread from Chile to Mexico.

The indigenous population of Bolivia and the region were also called (mistakenly) as Indians by the Spanish colonisers. Besides being called as Indians, the people of India and Bolivia have many similiarities. Many gods and goddesses bless the indigenous people of Bolivia as in India. Evo went to thank the native God in the mountains and had a special religious ceremony before assuming office like the Indian politicians go to Tirupati temple. The indigenous communities of Bolivia offer Coca leaves as part of the worship to their gods and also chew coca leaves as people do in south India with betel leaves. The Bolivians garland their VIPs just as the Tamils do. Bolivia has many indigenous groups speaking different languages. Evo belongs to the Aymara group which he calls as Aymara nation. He has even changed the official name of the country as Estado Plurinacional de Bolivia – Plurinational State of Bolivia. It is in the context of these common rich traditions that the Mutun project assumes importance as a historic link between the civilisations of India and Bolivia.

Here are the brothers Evo Morales and Naveen Jindal in the picture below:

The Jindal project has the following components:

-production of 25 million tons of iron ore a year

-a pellet plant with capacity of 10 m tons

-Sponge Iron Plant: 6 m tons

-Steel Plant: 1.7 m tons

-Power Plant: 450 MW

Part of the production of iron ore and steel will be exported. To start with, iron ore will be exported in the next few months. The ore will be transported by trucks to Puerto Busch 100 km away from El Mutun. From there, barges will be used on the Paraguay-Parana rivers for about 1800 kms to an Argentine river port near Rosario. Each barge will carry 2500 tons and 16 barges will go together in a convoy. From the Argentine port there will be transshipment on ships with capacity of around 45,000 tons. These ships will go through the river for another 400 kms through Buenos Aires to reach the Atlantic ocean and then on to China and other countries. The steel to be produced will be supplied mostly to the domestic market as well as to the neighbouring countries.

Vikrant Gujral, President of Jindal Bolivia is the one who manages the project. He is a veteran with 48 years in the steel industry. He rose from a management trainee of the Indian Iron and Steel Company (IISCO) in 1963 to become the Chairman of IISCO as well as Managing Director of Bhilai steel plant and a senior director in SAIL. He is passionate about steel and motivates and entertains his team with stories and anecdotes over Argentine and Chilean wines at the dinner table. He has a team of about 20 hard working and innovative Indian engineers and experts who interact with the Bolivians enthusiastically in their broken Spanish. They have spanish classes in the evenings. The Bolivians working in the project greet the Indians with Namaste and keep saying Achha hai. They enjoy the chappatis, basmati rice, dals and even the pickles at the Jindal guest house.

Gujral has found out another cultural similiarity of Bolivia with India but an uncomfortable one. Bolivians queue up in front of his offices in Puerto Suarez and Santa Cruz for jobs and contracts. He receives numerous calls from political leaders seeking favours. He has delegated this job of dealing with political leaders to his Director Arvind Sharma who flies the Indian flag as the Honorary Consul of India in Santa Cruz. He is a permanent resident of Santa Cruz since 1990 and is more Bolivian than many natives.Both are conscious of the high expectations of the Bolivians and corporate social responsibility. They work with the local communities contributing to the socioeconomic development of the region. They have donated medical equipments worth 300,000 dollars to local hospitals and ambulances to villages. They are building roads and renovating public plazas and schools. Jindal has started a vocational training centre in Puerto Suarez to train the Bolivians. This week they are leading a campaign to plant trees in collaboration with local schools and NGOs as part of their commitment to preservation of environment. Naveen Jindal is literally raising the Bolivian flag, as he has done with Indian flags in India. He has put up a huge Bolivian flag on a 100 feet tall steel pole in Puerto Suarez which can be seen even from across the border in Brazil. He is going to put up another one in La Paz too. Jindal banners are all over the roadsides proclaiming their commitment to partner with Bolivia to make steel.

Vikrant Gujral, the President of Jindal Bolivia in front of his office in Puerto Suarez, the nearest town 40 km from Mutun:

The mine is working 24 hours and seven days a week. Picture of the work in the mine below:

Jindal has already produced 400,000 tons of iron ore which are waiting for exports. The stocks can be seen in the picture below:

Puerto Suarez where Jindal has their operational headquarters is a quiet town with a population of 25,000 people, who are all excited about the transformation in their lives to be brought about by the steel project. The owner of a local restaurant has got a large and lucrative contract to feed the people at work in the mine and had to abandon his restaurant in the town. Traffic in the small and charming airport of Puerto Suarez has increased. This should be the most civilised airport in the world. The passengers can walk from the check in counter to the plane without the botheration of X Rays, metal detectors, baggage check and groping. The airline operating from Puerto Suarez is called as TAM... Not the Brazilian one. It is Transport Aereo Militar. Their punctuality and services are better than the Brazilian TAM.

While the Jindal is proceeding with the project seriously, they face some challenges. These are technological, logistic, infrastructural, administrative and political challenges too. But the Indian team, with its innovative skills is overcoming them. The most formidable challenge is, of course, political. There are some vested interests who do not want to see the success of this project and progress of Bolivia. These were the same forces who had ruthlessly kept the indigenous people of Bolivia backward and excluded them from political power and economic opportunities for the last several centuries. They spread misinformation about the Jindal project and poison the minds of policy makers and put obstacles at every possible opportunity. But these vested interests underestimate Naveen Jindal who himself is a politician and a champion shooter. And then there is Vikrant Gujral, the Iron Man who has dealt with mafias and politicians in the interior of India and succeeded in making the public sector steel plants profitable. He is optimistic that the dark forces cannot stop the project which is so important for the Bolivian economy and society. Gujral faced his first challenge while bidding for the project. He had difficulty in breathing when he went for the first time to meet the Bolivian authorities at La Paz which is at an altitude of 3100 metres. He was aware that Bolivian football teams had beaten Brazil and Argentina using their altitude advantage. In the world cup qualifying match on 1 April 2009 Bolivia beat Argentina 6-1, the worst defeat Argentina had suffered. The Bolivians trounced the Brazilians 2-1 on 11 October 2009.

Vikrant Gujral was given the following advice to survive the altitude problem in La Paz:

Come poquito

Bebe poquito

Durme solito

Eat less

Drink less

Sleep alone....

Gujral followed this advice, survived the altitude and succeeded in winning the contract ...and now he has decided to continue to sleep alone till he completes the project......