Little noticed in Australia, the Association of Southeast Asian Nations Economic Community came into operation December 31, 2015 — a bold plan to bring together the economies of 10 nations immediately to Australia’s north, including our closest and largest neighbour, Indonesia, the region’s financial powerhouse, Singapore, as well as Thailand and Malaysia, also in the top 10 trading partners for Australia.
In fact, the combined economies of the ASEAN EC are Australia’s No. 3 trading partner, yet Indonesia and Singapore aside they get relatively little attention from Canberra. ASEAN is home to 650 million people, the world’s third biggest workforce after China and India, and an unbelievable opportunity for Australian business.
Australia (together with New Zealand) has a free trade “area” agreement with ASEAN described on the DFAT website in 2014 as:
“… Australia’s most ambitious trade deal to date. The countries of ASEAN — Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam — constitute one of the most dynamic economic regions in the world. And what’s more, it’s right on Australia’s doorstep.’”
Yet despite all this terrific-looking paperwork, Australia is in danger of having opportunities in its own backyard snatched away by more strategic and sophisticated nations. These are led (as always) by the United States, but also many of Europe’s largest economies and — particularly in the case of the region’s Muslim nations, Indonesia and Malaysia — the rich oil states of the Middle East.
This week’s annual World Economic Forum in the Swiss alpine resort of Davos is a case in point, and it’s worth comparing the contrasting travel schedules of Australia’s (free) Trade Minister Andrew Robb and US Secretary of State John Kerry, the most senior members of their respective governments attending the international gabfest.
The meeting’s theme is the “Fourth Industrial Revolution”, which certainly sounds right up our innovative PM’s alley, but there was little allusion to this in Robb’s media release to this week.
Robb is “leveraging” his trip by opening a new Austrade office in Zurich. WTF. Yes, Switzerland is a nominally biggish investor — it’s tax haven, so hard to tell if its really them, of course — but it beggars belief to think that employing a former UBS banker (yep), no doubt at exorbitant expense to the taxpayer, will make much difference to tax-minimising companies wanting to invest in Australia. It’s worth noting the, eh-hem, small amounts of tax Swiss miner Glencore pays in Australia and think about whether those are the sorts of investors we want.
Meanwhile, back in the real world, Kerry is taking off from Davos and heading back into Australia’s neighbourhood with visits to two of what the economists call “frontier” economies of south-east Asia: Laos and Cambodia. Sleepy Laos, a stunning, sparsely populated backwater — it has about 6 million people compared with 70 million or so in neighbouring Thailand and 90 million in Vietnam — is poised to received phenomenal attention this year when it hosts the annual ASEAN meeting,
US President Barack Obama is set to make an incredibly rare visit, and it will be interesting, by the by, to see if he makes an apology or offers some reparations for the hideous amount of unexploded ordinance littering the Lao countryside, a reminder of the secret wars unleashed during the US/Vietnam conflict. Those bombs still kill and maim hundreds of innocent people each year.
There’s plenty of economic opportunity in resource-rich Laos, and Australia — well, at least its miners — has been at the front of the queue, starting the country’s two major copper/gold mines before selling out in the past few years to the Chinese.
Laos is also emerging as a low-cost manufacturing centre, particularly for Japanese companies who like the more stable Communist political environment compared with neigbouring Thailand, where the ruling military junta grows weirder by the day. As is Cambodia, although with the rider of the usual developing world labour issues.
The Americans, at least, seem alive to the opportunities — doubtless also informed by their desire to try to drive a wedge between the rapacious Chinese, who worry most smaller south-east Asian nations with their blandishments, and the region’s minnows.
Hell, even distant, icy Canada has got with the program, appointing its first ambassador to ASEAN this week and pouring more than US$300 million in aid into the region.
And as Kerry visits Laos neighbour Cambodia as well following his Swiss trip to promote bilateral ties — while Robb swans around the bier halls of Zurich — it’s worth remembering that Australia tends to see such countries as convenient dumping grounds for refugees, rather than places to develop more productive economic relationships. In a better world, the Turnbull government would be working to change this narrative.