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PILLAR: ASIA It was a personal mission. Australian Prime Minister Malcolm Turnbull vigorously pursued and then persuaded the Association of Southeast Asian Nations (ASEAN) to hold their business summit in Australia.
It was the second time in its 50-year history that the heads-of-government conference had been hosted by a non-member nation and the first time Australia has hosted the summit.
The South China Sea remains a potential flashpoint for the region with China, Taiwan, Brunei, Malaysia, the Philippines and Vietnam all having territorial claims. There is also a strong presence of Islamic terrorism with the Philippines, Indonesia, Malaysia and Singapore facing security challenges from Islamic militants.
Against a backdrop of uncertainty, risk and even danger, the heads-of-government of the 10 nations that comprise ASEAN met in Sydney last month. Turnbull says the summit was a historic meeting and an important part of Australia’s future. He says the business summit “has put the accelerator on Australia’s economic engagement with ASEAN. This is the fastest growing region in the world, it is critically important to our future.”
Turnbull says he has a vision that is “born of ambition, for a neighbourhood that is defined by open markets and the free flow of goods, services, capital and ideas”.
Turnbull says over the past 50 years, ASEAN has used its influence to defuse tension, build peace, encourage economic cooperation and support to maintain the rule of law. “Australia has supported ASEAN since its inception and became its first dialogue partner in 1974. And we are fully committed to backing ASEAN as the strategic convenor of our region.”
Turnbull says the summit “has given us an opportunity to confirm Australia’s commitment to ASEAN – the centrality of ASEAN and Australia as an “all-weather friend”.
He says there were no protectionists around the ASEAN-Australia Special Summit table.
“Our own free trade agreement with ASEAN and between Australia, ASEAN and New Zealand, (AANZFTA) is regularly referred to as ASEAN’s most comprehensive and progressive free trade agreement, and we are all committed to ensuring we maintain the momentum that it has generated.” Turnbull says there was very strong support for a swift conclusion of the Regional Comprehensive Economic Partnership or RCEP. It covers half the world’s population and a third of the world’s trade. “If we secure a good agreement, this would be, as one of our colleagues said, “an antithesis to protectionism” - it would ensure, on the back of the TPP-11, that the Indo-Pacific continues to be the fulcrum of open and free trade.”
PwC Asia Practice leader Andrew Parker says the ebb and flow of major power competition has never been far from the heart of the political and security focus in Southeast Asia. “ASEAN has made a major contribution to regional security and stability which is of critical importance to Australia,” Parker says. “ASEAN has sought to manage the diverse needs of its members by a process known as ‘the ASEAN way’. It seeks to establish a consensus on issues and follows a principle of non-interference in the internal affairs of members from outside or within the region. While change takes a long time, Australia has benefited considerably from an unprecedented period of stability and economic growth in Southeast Asia, much of which has been due to ASEAN.”
The ASEAN way seeks to establish a consensus on issues and follows a principle of non-interference in the internal affairs of members from outside or within the region.
Parker says the region is witnessing the fastest, largest and most sustained rise in incomes in human history. “The doubling of per capita income, a feat that took Britain 58 years and America half a century, was achieved in under 10 years by Japan, Korea, Singapore, China and India,” he says.
PwC’s economic modelling predicts that four of the world’s five largest economies in purchasing power parity will be in Asia by 2030. The 10 nations that comprise ASEAN have a population exceeding 630 million people, half of which are under the age of 30, and a combined GDP of $US2.5 trillion, compared to Australia’s GDP, at $US1.3 trillion. ASEAN also has 260 million internet users and the fourth largest and fastest growing online commerce market in the world.
Two-way trade with ASEAN has reached $A93 billion, second only to our trade with China and putting ASEAN as a group ahead of Japan, the US and the UK in our list of top five trading partners. Parker says ASEAN is not a homogeneous region. “It’s culturally and geographically diverse, encompassing a multitude of terrains, languages, governments, cultures, religions, histories and traditions.” He says the economies have significant structural transformations to undergo not to mention the infrastructure build required in the coming 15 years, estimated at $US3 trillion by the Asian Development Bank.
“These needs play to our strengths, and as one of the few developed countries in the region, Australian businesses are uniquely placed to help ASEAN economies address these challenges,” he says. “Australian businesses have a once in a lifetime opportunity to participate in the growth of this region. But they will have to be where the consumers are. And that will increasingly be in ASEAN countries.”
Parker says Australia’s prosperity is substantially dependent on our ability to trade and access foreign savings to fund our investment needs. “As a result, we are particularly exposed to any loss of popular support, whether at home or abroad, for the liberal international order and the rules-based norms that have underpinned our economic success. The idea that economic power can be leveraged to pursue national interests is not new. But for the first time in our history, we do not share a security alliance with our major trading partner.”
He says a more confident and assertive China is challenging Australia in new ways. “We can no longer separate economic issues from security issues – they go hand in hand in this new world,” Parker says. “The business community - traditionally at arm’s length from our strategic and security decision making - urgently needs to be heard in explaining our strategic economic interests to the Australian public and government leaders.”
Reflecting on the discussion at the summit, Parker says given the diverse nature of the different nations that comprise ASEAN, plans developed are generally not realised quickly.
“While valuable progress has been made in developing ideas like the ASEAN Economic Community (AEC), its goals are likely to take decades to fully implement. Tariff barriers have been reduced substantially but obstacles to economic cooperation continue, including the prevalence of non-tariff barriers and resistance to the liberalisation of services and investment,” he says. “ASEAN in this sense remains a long way from being an integrated market.”
The Press is a publication by PwC Australia, aimed at sharing expertise, capturing insights and working together to solve important problems.
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This article first appeared in Edition 5 of The Press
By Lucille Keen, Senior Reporter, The Press
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