With growing middle classes, favourable demographics and integral positions in regional value chains, the 10 nations that make up the Association of Southeast Asian Nations (ASEAN) are collectively one of the fastest-growing regions of the world.
Despite sitting on Australia’s doorstep, and though we are strong trading partners, there is plenty of scope to expand our trading relationship with our neighbours to the north.
Nearly 70% of Australian exports are destined for just six markets: the three East Asian giants of China, Japan and South Korea, as well as India, the USA and New Zealand. Of the ten ASEAN economies, only Singapore and Malaysia are among Australia’s top ten export destinations.
Leveraging a growing and integrating ASEAN offers an excellent and highly accessible opportunity to both grow and diversify Australia’s export profile.
The region is home to over 600 million people and a fast-growing middle class that is creating new customers every day for the goods and services that Australia excels at providing – whether that be financial services or quality agricultural produce.
This growing middle class will more than double in under a decade to encompass 400 million consumers by 2020, thanks to average annual income gains of around 5%. GDP per capita has grown faster in ASEAN than in any other region of the world over the past four decades.
Meanwhile, long-running regional integration efforts have transformed ASEAN into Asia’s third-largest combined market and the world’s third largest trading bloc, after the European Union and North America.
For Australian companies, market access to this bloc is greatly simplified by an extensive array of free trade agreements (FTAs). This FTA network leaves Australia better positioned than our Western counterparts from Europe or North America – who for the most part lack their own ASEAN FTAs – to leverage Southeast Asia’s growth story to fuel our own prosperity.
Bilateral FTAs are in place between Australia and Malaysia (MAFTA), Singapore SAFTA) and Thailand (TAFTA). These agreements have lifted most or all tariffs on Australian trade with these three countries, while liberalising market access for Australian service providers, increasing foreign equity limits for Australian investment in certain sectors, and easing visa and residency procedures for Australian professionals, among other benefits.
In addition to this trio, Australian companies can also leverage AANZFTA, an ASEAN-wide FTA that also includes New Zealand, to access regional opportunity. AANZFTA is a unique agreement.
It is the most comprehensive FTA ASEAN has ever negotiated and covers not only goods and services, but investment and intellectual property as well. By 2020, the agreement will have eliminated tariffs on 96% of all product lines.
AANZFTA also offers unique benefits such as regional rules of origin, which allows Australian companies to better integrate into the extensive regional value chains that criss-cross the ASEAN region, as well as increasing protection for Australian investment in ASEAN.
On the intra-regional front, initiatives such as the ASEAN Economic Community are further integrating the diverse economies of Southeast Asia, with the ultimate goal
of creating a single ASEAN market for goods, services and investment. Understanding these various connectivity initiatives and agreements is crucial to maximising their benefit to your businesses.
Recognising this, the ECA, in collaboration with HSBC Bank Australia, has developed a range of tools and guides to assist Australian businesses navigate the ASEAN
Launched in late 2016, our ASEAN Connected report focuses on the six largest ASEAN economies – who also happen to be Australia’s six largest ASEAN trading partners – to highlight specific opportunities Australian companies can leverage in each.
Going forward, we have developed a series of toolkits to assist businesses in navigating the four Australia- ASEAN FTAs noted above, highlighting their benefits and how to practically take advantage of them.
Australia’s trade with ASEAN is strong but we cannot be complacent. Despite the breezes of protectionism beginning to blow in many Western economies, Asia remains focused on an open trading future and is sure to attract increasing attention from companies around the world seeking growth opportunities.
Australian companies are better positioned than many potential competitors to take advantage of the opportunities that await, but it is up to companies themselves to seize the initiative.