Matrade; the Malaysia External Trade Development Corporation, is encouraging Malaysian companies with robust business linkages with China to explore partnership options with their Chinese partners to venture into Latin American countries and the Caribbean.

In a statement issued on Monday, Matrade said the Inter-American Development Bank (IDB) announced a China Co-financing Fund for Latin America and the Caribbean, one of the multitude of initiatives by China to increase bilateral trade with these two regions.

According to Matrade, the fund is aimed at supporting public and private sector projects that promote sustainable economic growth in the region and is the first of its kind established by China and a multilateral development bank.

“The proposed US$2 billion contribution by China will be used to co-finance a total of up to $500 million of IDB public sector loans and up to US$1.5 billion for loans made by the Bank to private sector entities,” according to the statement. It also said that prior to this fund, the IDB had approved US$153 million in loans for the establishment of a new equity investment platform for Latin America and the Caribbean in partnership with the Export-Import Bank of China (EXIM).

The platform is expected to mobilise as much as US$1.8 billion from a diversified pool of investors, including Chinese investors, to fund equity investments that will support economic and financial integration between Latin America, the Caribbean and China.

China became a member of the IDB, the largest regional development bank and the main source of multilateral finance for the Latin America and Carribean region in January 2009.

Malaysia’s Trade Commissioner in Mexico, Remee Yaakub, said, “China is among the 22 non-borrowing members of IDB together with the US, Canada, Japan, Israel, the Republic of Korea, the People’s Republic of China and 16 European countries that include France, Germany, Italy, Spain and the UK.” He also added that non-borrowing members benefit from the procurement standpoint, in that only suppliers from member states can provide goods and services for IDB-financed projects.

Trade between China and Latin America has increased at an annual average rate of 25 per cent since the year 2000, reaching an estimated US$236 billion in 2011.

The southern Latin America countries, together with Peru and Venezuela have enjoyed robust exports to China, with Brazil, Chile and Peru having bilateral trade surpluses.

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