If there are companies that want to move from Asia to Latin America, the IDB finances the trip: Claver-Carone

The American Mauricio Claver-Carone became president of the Inter-American Development Bank (IDB) on October 1, 2020 with one goal: to prevent Latin America from going through another “lost decade”. His strategy for this has been to promote the collaboration of the IDB, which is the largest development agency in the region, with the private sector, the official revealed in an interview with the newspaper El Mundo.

This means attracting investment, which includes nearshoring, that is, the relocation of companies and supply lines currently located in Asia closer to their destination markets.

It is an idea that, given the current rise in inflation in the world, takes on more topicality. As Claver-Carone, who was in Spain after COP26, affirms, “the blockage in the supply chains that we are seeing today is precisely the consequence of the world’s overinvestment in China,” he said.

To date, the IDB is, together with the Government of Japan, the only organization in the world that finances this type of nearshoring.

The official added that nearshoring is not anti-China, but pro-Latin America.

“It is something that I have presented to Spanish companies. But I’m not talking about nearshoring thinking only of the United States but also of Spain. If there are Spanish companies that have invested their value chain in China or in other Asian countries and want to transfer that chain to Latin America, the IDB will finance it. I think the Europeans are beginning to see it as an opportunity ”.

On whether the bank would finance the entire move or just part of it, the official explained that the IDB would structure a comprehensive financing package based on the company’s needs. It can be the transfer, the operations or another modality.

The IDB is already designing the first Policy-Based Loans, in support of nearshoring governments with Colombia. Because there are countries that have seen the benefits and are developing and launching strategies, such as Guatemala, the Dominican Republic, Colombia, Panama, and, to a certain extent, Costa Rica and Uruguay. Although, obviously the country that could benefit the most would be Mexico, he pointed out.

Japan launched its initiative with a $ 1 billion endowment and made two packages. One, for Japanese companies with manufacturing abroad and who wanted to transfer them to Japan, to which it gave a very attractive package.

Another, for those who relocated to ASEAN countries (the economic pact formed by eight Asian countries, including neither China nor Japan) who receive a lower amount.

According to the official, there is a danger that this is a decade of missed opportunities.

“Most of the improvement in growth that we are seeing is from the increase in the prices of raw materials. But that has already happened in the past. And what was done then with that money? To a large extent, it was wasted on electoral and populist programs, “he said in an interview with the Spanish newspaper.

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