Improving the competitiveness of the Australian economy will be fundamental to making the most of opportunities for engagement with the world’s growth hub of Asia, Business Council of Australia President Tony Shepherd says.
Mr Shepherd launched the report Assessing Australia’s Trade and Investment with Asia, which is an initial contribution by the council to the federal government’s Australia in the Asian Century White Paper.
He said the council strongly endorses the government’s decision to initiate the white paper. The council’s report, prepared with assistance by ITS Global, highlighted the importance of government, business and the community working effectively to strengthen Asian engagement, with Australian competitiveness a key challenge.
“Our research shows that Australia is well engaged with Asia, with Asian nations last year purchasing almost two thirds of our exports, worth $175 billion. From this strong foundation, there are opportunities for us to continue to grow our commercial links”.
“The BCA is concerned, however, that Australia is not moving fast enough to lift our productivity and enable improvements in the competitiveness of industries already deeply engaged with Asia,” Mr Shepherd said.
The report puts a spotlight on trade transaction costs for Australia and other APEC economies as one of the key measures of competitiveness and finds Australia is lagging in the race to reduce transaction costs for exports and imports.
It estimates that between 2006 and 2010 trade transaction costs in other APEC economies fell by an average of five per cent, but there was very little overall change in transaction costs in Australia for the same period.
“We need to recognise we are not alone in pursuing opportunities in Asia, with highly competitive emerging economies trying to gain an advantage”, Mr Shepherd said.
“We must invest in the efficiency and productiveness of our key infrastructure, and we will need continuing reforms to improve tax and investment settings and to reduce the growing burden of regulation so we can build on our existing strengths.
“In addition to the resources and energy, agriculture and services sectors, many Australian manufacturers are succeeding in Asia, although this is not widely recognised. It will be important that policies enable all sectors, including manufacturing, to attract new investment and make the most of their opportunities.”
Mr Shepherd said that a new strategy for future engagement with Asia was needed, and it should identify policy changes and supporting actions that include:
- Domestic economic reforms focused on improving our competitiveness, our ability to attract investment and to enable businesses in Australia to compete effectively in international markets.
- Working effectively with Asian governments to remove or reduce regulatory restrictions and other barriers to trade and investment that prevent or restrict Australian and other foreign business.
- Lifting both the extent of engagement and the capabilities of both government and business to successfully build economic relationships within Asia.
“If Australia is to maximise current and emerging opportunities in Asia, our critical task is for business, governments and the wider community to work together to make sure Australia is a highly competitive, high-performing economy,” Mr Shepherd said.
“The major economies of Asia are actively seeking new suppliers, and businesses in North and South America, Europe and Africa are trying to win new markets. Added to this, our large-scale exports comprise only a narrow base of resources and energy products, agricultural products and services.
“We must not underestimate the importance of opportunities in education and other non-resource and energy sectors, including manufacturing.
“We must also be willing to change our mindset, recognising that our future economic prospects are linked to our relationships with Asia.
“We also need to ensure our perspective on engagement with Asia is a wide one, recognising that key relationships and emerging opportunities extend across many diverse nations.
“The council looks forward to contributing to the development of a bipartisan foundation for Australia’s continuing engagement in the Asian Century,” Mr Shepherd said.