Wednesday, November 14, 2012

Australia in the Asia Century White Paper

Asia’s ascent is changing the world. The 21st century can rightly be called the Asian century.
- Selwin Leito, Marketing Assistant - Export Council of Australia

The White Paper released by the Gillard Government on October 28th 2012 and undertaken by the Department of the Prime Minister and Cabinet was led by Dr Ken Henry AC. As Australia is facing increasing competition for the opportunities arising in Asia, we need to keep ahead of our competitors. This White Paper provides a roadmap for every aspect of the Australian economy to maintain our position as a strong nation in the region.


Other than economic benefits, other valuable opportunities for Australia to build stronger relationships across the region include closer educational, cultural and people-to-people links.


It is expected that in just a few years Asia will be the world’s largest producer of goods and services and also the largest consumer of them. Despite its distance to other countries in the region, the rapid growth of consumerism in Asia provides a prime trading opportunity for Australia going forward. New opportunities arise from the increasingly wealthy and mobile middle class emerging in the Asian region demanding a diverse range of goods and services.


Even though Australia and the Asian countries histories are closely interlined and go back a long way, the opportunities for Australia in the Asian century are vast and Australia’s engagement with Asia has to be deeper and broader. Australia must sustain the policy settings and pathways that have served the country well in the past.


The Asian region has a lot to offer Australia but, we also have a lot to offer to Asia. We have strong, world-leading institutions and a multicultural and highly skilled workforce, to name just a few. And over the past 50 years, Australia’s trade with Asia as a share of our total trade has risen dramatically and our trading relationships can only grow from here.


There are five key areas Australians need to act on to achieve success in the Asian century:


First, we need to build on our strengths. There needs to be a continuous reformation and investment in the five pillars of productivity- skills and education, innovation, infrastructure, tax reform and regulatory reform in order to extend our comparative advantage.


Secondly, as a nation we must do even more to develop the capabilities that will help our country succeed. Our understanding of Asian cultures and languages needs to be broadened and deepened in order to build stronger partnerships and connections across the region.


Third, to achieve commercial success in the region, highly innovative, competitive Australian firms and institutions need to develop collaborative relationships with others in the region.


Fourth, Australia has much to offer through cooperation with other nations to support sustainable security in the region.  


Fifth, we need to strengthen Australia’s relationships across the region at every level. Stronger relationships lead to more knowledge and understanding of what is happening in Asia. Furthermore, we could access the benefits of growth in our region. Our neighbors will know us better in turn.


Some points that are relevant to stimulate export to Asia:

• Australians need to build ‘Asia-relevant’ capabilities—both broad-based and specialised.
• Australian businesses need to continue developing products, services and expertise that are valued in Asia—by innovating and by understanding the diversity in demand, conditions and customs.

To conclude, the challenges ahead require effort, and lots of it. In the long run, we will benefit from this- our economy will be stronger and we will obtain more knowledge and understanding of our neighbors to pass on to the next generations. To increase exporting opportunities to Asia, the Australian Government has to work beyond Australia’s borders to strengthen regional economic and financial architecture, increase openness to trade and improve outward investment opportunities for Australian businesses across the region. We also need to conclude high-quality agreements with China, India, Indonesia, Japan and South Korea and a regional trade agreement in the long term.


Interview with Ian Murray, Executive Director of the Export Council of Australia

In what way do you think Australia will benefit from Asia’s ascent?
The middleclass growth in Asia will increase the level of demand for Western cuisine, and more nutritious foods, Australia is well placed to meet that need, the demand for new tourism destinations, professional services like architecture, construction and of course education.

The paper mentions the potential big opportunity for Australia; how big do you think that opportunity is for our country?

The opportunity is substantial, but there is significant competition from all over the world. We have some advantages like proximity and time zone, many Asian students have been educated here and we have a good track record in Asia and a highly educated workforce. But we are expensive, our infrastructure is dated and inefficient and our ability to raise local finance is limited. So it’s going to be a two way street, Asian finance for our agriculture and infrastructure and we can focus on high value products and services targeted at the middle classes in Asia.


As the Executive Director of the ECA, an organisation that deals with export companies on a day to day basis, how have you seen this opportunity yourself?

I have seen a massive growth in food, particularly high quality meat, education and training over the last ten to fifteen year, massive growth in resources exports and professional services, including banking, architecture and construction.


Many of the targets mentioned in the White Paper have been set for 2025. Is this realistic? Should Australia move more quickly or slower?  

Our country has been engaged with Asia since the 1950’s. It is an automatic progression, accelerated by a substantial growth among the middle classes. The spending capabilities too of the middle class are increasing, so yes, the targets are quite realistic.


Other than China, what other countries that have the potential to become significant trading partners for Australia?

I’m always irritated when China is held up as the only card in the pack. Indonesia, Malaysia, Vietnam and India are all developing rapidly and offer substantial opportunities right across the board.


As is mentioned in the White Paper, the two continents want to be deeper and broader connected. What, in your opinion, is the best way to achieve this
?
First there isn’t an Asian culture. There is a mixture of cultures across the region. Australians doing business in any one of these countries need to understand the business culture of places they plan to do business in. Likewise Asians need to get a better feel for the way we operate. This will occur with more business, more travel and more people being educated either here or just as importantly Australians being educated in Asian countries.


How do we ensure that both nations benefit from the Asian Century?

We need to be open to free trade. If we can freely exchange goods and services across our region, the gap between us will become smaller.


What is your overall opinion about this year’s White Paper?

Australia has had a long engagement with Asia. Teaching of Asian language in schools in Australia is a good strategy but more important to business is to know how to operate successfully in different business cultures.

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