Viewpoint : Steven Ciobo
One of the most striking things about the economic transformation of the ASEAN region over recent decades is the scale of opportunities yet to be realised. The IMF forecasts that over the next five years, six of ASEAN’s economies will grow faster than China, and every single one of ASEAN’s economies will grow faster than both the US and the EU. In market terms, this means that the number of middle-class households in the ASEAN region will quadruple, exceeding 160m by 2030.
The demographics of the region are also positive. The bloc’s 637m people are young, entrepreneurial and urban. By 2030, 500m people will be of working age; by 2050 the urban population will increase by around 200m; and within the next decade its consumer class is forecast to grow to over 130m households.
Despite this positive outlook, a number of challenges lie ahead. Domestic economic reforms, improvements to governance and further trade liberalisation are all necessary to underpin the region’s ongoing success, while continued investment in infrastructure, connectivity and skill development are needed to improve the business environment. For these reasons, the implementation of the ASEAN Economic Community in 2015 – with its goal of a region characterised by the free flow of goods, services, investment capital and skilled labour – was a welcome development. Realising this vision will require sustained effort by ASEAN’s member states and support from its partners.
Australia is one such committed partner. Since becoming ASEAN’s first dialogue partner in 1974, we have been a supporter of the region’s journey towards a more open, competitive, integrated and connected economy. Establishing the ASEAN-Australia-New Zealand Free Trade Agreement – ASEAN’s most comprehensive trade agreement – was a milestone achievement. Australia also signed bilateral free trade agreements with Malaysia, Singapore and Thailand to ensure our business communities could benefit from the expanding opportunities in these respective markets. Likewise, a future bilateral trade agreement with Indonesia offers further opportunities for our businesses.
The ASEAN-Australia Special Summit in March 2018 marked a major step forward in our partnership. Enhancing our business links with ASEAN was a major focus of the summit, which signals Australia’s elevated commitment to South-east Asia and ASEAN as its premier institution. Australia’s development programmes can develop economic growth and resilience through our assistance programmes, which provide support for economic reform, the empowerment of women, infrastructure development and trade liberalisation.
At a regional level, the conclusion of the Comprehensive Progressive Agreement for Trans-Pacific Partnership opens the door to a trade zone with a combined GDP of $13.7trn, and the Regional Comprehensive Economic Partnership can also help unlock future economic opportunities across East Asia.
The outlook for an even deeper economic relationship between Australia and ASEAN is strong. There is a natural fit between ASEAN’s growth drivers and the goods and services Australia offers. The economies of ASEAN provide a young, rapidly urbanising and increasingly digital-savvy consumer base, and as a group, ASEAN is an important export market for Australia, consistently ranked as one of our top-three trading partners. In 2016 ASEAN accounted for 14% of Australia’s total trade at A$93bn ($72bn), with two-way investment valued at A$224bn ($173.3bn) at the end of 2016. Our ability to serve as a competitive, reliable supplier of resources and energy will help the region meet the demands of ongoing growth.
The ASEAN-Australia economic partnership is supported by substantial and enduring people-to-people links, with nearly 1m Australians having South-east Asian ancestry and over 700,000 speaking an ASEAN language other than English. These cultural and linguistic ties provide a foundation for expanding trade and strengthening investment ties between our nations.