Update: Lula's in South East Asia pt. 2 -- Indonesia and Brazil to cooperate in biofuels

Brazilian Present Luiz Inacio Lula da Silva began his tour of South East Asia in Vietnam. He met with his counterpart Nguyen Minh Triet and the two discussed promoting stronger trade ties between their respective counries (click here to view original Vietnam piece from July 10).

Lula has moved onto his second destination, Indonesia, where he also made a good impression with with his Indonesian counter-part, President Susilo Bambang Yudhoyono.

Brazilian and Indonesian leaders agreed on Saturday the two nations could mutually benefit if they developed a framework in which to cooperate on biofuels. Brazil and Indonesia are home to much of the world's remaining tropical rain forest, which at the moment is shrinking due to expropriation, illegal timber operations and government/ private sector expansion--- many times into biofuels.

The two nations signed an agreement for Indonesia to send experts to Brazil to study its biofuel developments, said Indonesian President Susilo Bambang Yudhoyono.

"Brazil has been successful developing bioethanol and of course Indonesia can learn from the research and development," Yudhoyono stated at a news conference.

Both countries are big biofuel producers-- Brazil produces large amount of pure ethanol for both domestic use and export. Brazil does so through tapping into its huge sugar cane sector, mixing a sugar cane based fuel with gasoline to make a clean ethanol it fuels its automobiles with.

Indonesia, a former member of the OPEC cartel, is also the world biggest palm oil producer. Indonesia once mainted a surplus of oil, allowing it to export its surplus abroad in exchange for hard currency which it used to subsidize much of its state spending, and maintain price controls on goods ranging from food to gasoline.

Indonesia is now a net importer of crude oil. The country has naturally began exploring alternative energy options, one of which is to encourperate biofuel made from palm oil. The government hopes this will at least partially help to compensate for both increasing energy demand in Indonesia as population rises and society modernizes and also for its own decreasing domestic production.

Indonesia's government has set a goal of making as many petroleum based products as possible into a new blend petroleum biodiesal blend. The blend will use 2.5% biodiesal produced form domestic palm oil.

With the food crisis in full swing (read previous post on food crisis), many critisize the biofuel sector for being responsible for rising prices, since those crops otherwise would go to markets instead of factories to be made into fuel... Maybe, but that's over simplyfying the situation and leaving out the United States which has probably hurt poor people's diet much more substantially due to its use of corn to produce its ethanol.

It also probably angers a country like Brazil. Brazil is home to the most fertile land of any country on the planet, yet its agriculture industry is inhibited because of agricultural subsidies from the developed world-- a point Lula continuously tries to make well known.

Another factor Indonesia has been keep to point out itself is the fact richer nations should also be responsible for their own forests (Canada and the US in particular), which also account for large stores of carbon and act like sponges to soak up greenhouse gases just as tropical forests do.

"No one wants to preserve our forests more than we ourselves but the most polluting countries they must start to discuss more seriously how to cut greenhouse gas emissions," said Lula on Saturday to Indonesian Press.

Click here to access a article on this topic from the Economictimes.indiatimes.com

Although originally questioned for being a bit too far to left for the likings of the United States, Lula and his administration have prooven to be quite good at managing the macro economy. Add to that the incredible strides Lula has made in the international areana.

He has successfully promoted Brazil as the leader of the fight between developing contries and developed counries over farm subsidies.

His presidency has successfully brought inflation under control and made the Brazilian Real one of the best preforming currencies against the US $ in the world as of recent.

He has forged strategic ties with a wealth of countries which Brazil previously had little or no exchange with-- Vietnam and Indonesia being two recent examples.

Brazil has joined the ranks of China, India and Russia in what is now referred to as the BRIC contries-- the largest and potentially most influential developing countries in the world.

The list goes on... note however, there also exist many scandels, political mishaps and growing problems; such as the growing income disparity and extremly high crime rates in its major cities. No less Brazil has not done so bad.