Discussing Brazil: Across the great divide

Peter Mace- General Manager.  Export Council of Australia shares his insights on the state of play for Australian exporters, opportunities for export to Latin America, the Carbon Tax, Sustainability and more with the Australia Brazilian Chamber of Commerce for Brazil Talk.

Brazil Talk: When did you join the Export Council of Australia, and what was your background prior to this?

Peter Mace: I joined the Australian Institute of Export (now the Export Council of Australia) in 2004.  The connection the Institute had, and the support it provided to grass roots exporters,  was a real interest for me and I wanted to contribute to that goal.

Most of my previous career had been in International Banking, working with  Westpac, Citibank and Bank of America.  I also had a 2 year term with EFIC, and so with that background  international trade was a major  interest for me.

Brazil Talk: What does your current role General Manager & State Manager, New South Wales entail?

Peter Mace: My current role focus is on the Education and Training activities of the Export Council.  We have decided to continue to badge the education arm under the Australian Institute of Export, given the 50 years of history the Institute carries in export education, and the high recognition of the brand for quality trade training. We also manage 4 TradeStart offices in regional Victoria.

The Export Council has a wider role in events, advocacy, awards programs and general trade activities. Being a small organization staff wise we all pitch in to cover what currently needs doing, so the job role is very fluid and always dynamic, challenging and interesting.

Brazil Talk: What are the key issues for ECA members at present?

Peter Mace: There is a feeling among many small to medium exporters, that their very real concerns are not being heard.  This in part was a catalyst for the formation of the Export Council.  There are a number of headwinds facing our exporters, apart from a high AUD.  For example the high cost of the Australian leg of the global supply chain.  It is in areas like this that the Council intends to play a role in bringing the problem to the attention of Government and other agencies, and seeing how the process can be  streamlined to make exporting from Australia a more competitive endeavour. For example, the  recent global competitive index for 2012 shows that Australia has dropped from 16th to 20th place, a situation that is not in our national interest. 

Brazil Talk: What is the greatest challenge for exporters now?

Peter Mace: It depends a lot on the industry segment you are in, and so there is no quick one-off fix for all problems. Certainly adjusting to a higher currency environment is one, and so is the downturn in some of the more traditional European and North American markets.  However there is great potential opening up in Asia, in Africa and in Latin America.  These are the areas where Austrade now has greater focus and this is where future export profits will be made. Australian companies need to be ready and actively looking for these upcoming opportunities.

Brazil Talk: And the greatest opportunity?

Peter Mace: I believe one of our biggest growth opportunities in the next decade will be in helping feed the world.  Australia is a very competitive agricultural producer, and the quality and “clean & green” nature of our agri-products are already globally known.  As more of the world’s population move into a ‘middle class’ and out of subsistence, diets change and the desire for meat, vegetables and fruit increase. Australia is subject to large variations in output caused by flood and drought, so a challenge is in developing back up production areas and an increased focus on irrigation to deliver more consistency.

Brazil Talk: What is the general consensus among your members in regard to the carbon tax?

Peter Mace: There is general support I think to working for a more sustainable use of our resources, but whether the carbon tax is the best response?  It is certainly a detriment to our exporters who have to include it in their export inputs, when many competitors don’t.  The most recent DHL Export Barometer (which many of our members participated in) found that 71% of respondents thought the carbon tax was too high.

Brazil Talk: How important is the environment and sustainability to Australian exporters? (or, is there a growing green consciousness among Australian exporters as the world gathers to mitigate the effects of climate change?)

Peter Mace: As above I think that exporters appreciate the value of caring for the environment and developing sustainable export activities. The value of these environmentally friendly production practices  will become more important and more valued in the future, especially in relation to agriculture and food production.

Brazil Talk: What is the ECA environmental policy / stance on sustainability?

Peter Mace: The Export Council of Australia is conscious of all issues relating to the environment and encourages Australian business to implement affordable change to limit carbon dioxide emissions. The ECA is also aware of the need for Australian exporters to remain internationally competitive and therefore supports a multi-lateral approach to the implementation of controls on emissions.
 
Brazil Talk: What are the key products being exported from Australia to Brazil?

Peter Mace: Looking at the ABS Statistics, our major exports to Brazil  include coal, crude petroleum, flat-rolled iron and steel, and electrical circuits. Of more interest though are the services areas including education, sport, energy technology and agricultural science.  Off a small base, these are the areas of future interest to SME exporters.

Brazil Talk: What similarities do you see in terms of consumer demand in both Brazil and Australia?

Peter Mace: While Brazil and Australia have many competing industry sectors, there is also great opportunity for collaboration.  Both are large mineral providers and agri producers. Brazil obviously has a larger population, and certainly there is a shared interest in areas like fashion, coffee, food and sport.

Brazil Talk: What relationships exist between the Export Council of Australia and relevant organisations in Brazil?

Peter Mace: The Export Council and ALABC have shared membership, and we are looking to develop that relationship to better support our members who have an interest in Latin America and in key markets like Brazil.  Obviously the upcoming World Cup and 2016 Olympics will focus the world’s attention on Brazil and a lot of Australian exporters are taking notice.

Brazil Talk: How do you see the export relationship between Australia and Brazil strengthening in the future?

Peter Mace: The Australian Government has a renewed interest in Latin America, and Austrade are being better positioned to assist. As the largest market in Latin America, Brazil will be a key entry point, and the numbers of Australian tourists heading that way will build the links and understanding of what Brazil has to offer.

Brazil Talk: What advice would you give to Australia businesses considering exporting their products to Brazil?

Peter Mace: The Brazilian Chamber and ALABC are obvious places to start, as are the Government agencies of Austrade, EFIC and DFAT.  We always encourage companies to visit the target market personally to properly assess the potential.

We worked with Sydney University, with support from ALABC and HSBC early in the year when a group of students undertook a project to assess market potential for 5 member companies looking to enter the Brazil market.  The pre-briefing  we provided for the students was comprehensive and covered all the practical areas that exporters would need to consider.

The students spent time in Sao Paulo and surrounds undertaking the review, and their report findings were comprehensive and very valued by the companies participating. This project was a wonderful success and we hope to repeat it in 2013.

Brazil Talk: What is the best thing about working for the Export Council of Australia?

Peter Mace: The ability to actively help Australian businesses to succeed, whether through our Education and Training programs, our Trade Publications, providing advice and running educational seminars. 

Additionally being able to see export success and effort rewarded through the two programs that we run; the Premier’s NSW Export Awards and the Australian Export Heroes awards, provides the inspiration and reward  to all of us at the ECA to keep going.

Brazil Talk: What’s on the horizon at the Export Council of Australia?

Peter Mace: The Export Council of Australia is in the very early and very exciting launch stages. We have the framework in place, and for the remainder of the year we are concentrating on building our partnership alliances with Australian industry association domestically and also our relationship with similar bodies overseas. As part of our role in supporting Australian exporters and representing the export community, we recently commenced two major research projects, the first project will examine the issue of high cost of trade facilitation for exporters within Australia and the second project is to analyse trade support programs in the top markets Australia competes with.

We are also about to launch industry working groups, who will provide input to the Export Council of Australia on export-related issues specific to their industry sector, such as: Industry capability, Barriers to export, Government policy, Free Trade Agreements, Marketing of Australian products/services, Market opportunities and research focus areas.

As we only launched the Export Council of Australia in April, we are still evolving and I see the Export Council growing rapidly over time. We are very keen to hear from the community as we go through this evolutionary period.

To find out more about the Export Council of Australia please go to www.export.org.au

Plusses and minuses for the future of Australia's exports

Both the 2012 Annual Economic Roadshow run by the Export Council of Australia and the Export Finance and Insurance Corporation (EFIC) and the 2012 DHL Export Barometer flag plusses and minuses for the future of Australia’s exports.

Ian Murray, Executive Director of the Export Council of Australia who participated in both these programs said “that while Asia continues to provide strong opportunities for export growth, some sectors will continue to find it difficult due largely to the high dollar and the struggling European and US markets.”

“The fact that the DHL study reported that an increasing number of exporters expect their export orders to increase in 2012 was encouraging,” Mr Murray said “but what really matters most is whether these companies represented major exporters or the smaller end of the market.” 

Additionally, Mr Murray remarked that “it was also nice to read that 50% of those surveyed said their company profitability was forecast to increase, but that also means that 50% obviously thought profit would either stay flat or decline which is a concern.”

While the study showed that New Zealand replaced the UK as one of the five biggest destinations, more relevant was the fact that respondents recognised Indonesia and the Middle East as the biggest markets for growth.

“Indonesia,” Mr Murray said “should probably be viewed in the same light as both India and China when it comes to opportunity, as one cannot escape the fact that it has a rapidly growing 25 million middle class population, an economy growing at over 6% and has economically become much more stable in recent years. Food and protein will undoubtedly increase in demand as diets change and Western behaviours become more commonplace.”   
 
“The 2012 Economic Roadshow,” Mr Murray said “showed some similarities to the DHL study, particularly in relationship to Indonesia and the Middle East, but overall the optimism was clearly divided on geographic and sector dimensions. Europe and the US showed little immediate opportunity for solid export activity apart from niche business, while Asia continued to be strong. Food was undoubtedly seen as our strongest opportunity after resources while consensus was clearly shown for Australia to position itself as a provider of high value products and services.”

“Nobody,” he said “expected the dollar to fall far below parity, hence the continued spending on R& D and innovation was critical to building our future export businesses.”

Mr Murray said that “Drawing a line through both programs the export environment was certainly more encouraging than twelve months ago. Companies are either living with the higher dollar and the GFC, by implementing change to strengthen their margins or taking some production offshore. Growth in Asia and the Middle East is still uppermost in peoples’ minds and while it is tough right now, the future still remains positive."    

Ian Murray, Executive Director- Export Council of Australia

Happy Independence Day Indonesia

At 10am on the 17th of August 1945 Indonesia proclaimed its independence.  Since then, every year on the 17th of August, Indonesians have celebrated this significant moment.

For weeks now Indonesians have been getting ready for this year’s Independence Day. They have been decorating buildings and shops with their national colours, and stocking up on celebratory food to share with family and friends. Some residents even paint their gates red and white to celebrate.

As close neighbours of Indonesia, Australia has a highly productive connection that covers political, commercial, environmental, cultural and social aspects with Indonesia. The relationship between Australia and Indonesia is a very important one for both countries.

The Department of Foreign Affairs and Trade estimates that Australia’s two-way trade with Indonesia rose 15 per cent to reach $14.8 billion in 2011. This makes Indonesia our 11th largest trade market*.

In January 2012 the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) entered into force for Indonesia. This is Australia’s most ambitious trade deal to date. It gives exporters many commercial benefits, including reduced tariffs and new opportunities to tap into global supply chains. For more information on AANZFTA visit the DFAT website.

Indonesia has a huge potential for trade. But there are differences in the IP protection schemes between the two countries.  Make sure your intellectual property (IP) is secure before you enter the Indonesian market. Visit IP Australia’s IP protection in Indonesia page to help you understand the IP issues you may face when exporting to Indonesia.


 *Source: Department of Foreign Affairs and Trade, 2012.