The Australian Financial Review
By Graham Bradley
President, Business Council of Australia
The importance of collaboration between business and government in the development of a white paper on Australia in the Asian century was recognised last week in the Prime Minister’s announcement of a high-level advisory panel.
The ability of Australian businesses to be a valued partner in Asian growth will be fundamental to our ability to create greater wealth for all Australians.
The white paper process, led by former Treasury secretary Ken Henry, will involve consideration of our strategic, diplomatic, economic and cultural relationships with the nations of Asia.
Telstra chairman Catherine Livingstone and Corrs Chambers Westgarth CEO and the chairman of the Business Council of Australia’s global engagement taskforce, John Denton, are the two business representatives to work with Henry.
The BCA welcomes that the terms of reference for the white paper specifically refer to Australia’s economic and business-to-business relationships. We would expect that the white paper process would be an opportunity to consider the following key issues:
- Whether Australia is well placed to take up emerging economic opportunities for Australian industries and what is needed to harness these opportunities for the mutual benefit of Australia and partners in Asia.
- The steps business and governments can take to build effective, sustained relationships.
- Making sure we become more competitive at home so that we can continue to compete with the rest of the world when it comes to growing markets in Asia.
- Working constructively, and respectfully with our Asian neighbours to encourage them to remove barriers to investment and doing business in their markets. Two-way investment is the key to unlocking opportunities.
- Making sure that business has the capabilities required to work effectively in the 21st century international business environment.
To address these issues, the BCA recognises that we need to work more closely with the federal government on our key relationships in Asia. Recently, the BCA decided to increase its focus on building our economic relationship with China.
Earlier this year we were involved in organising the second Australia–China CEO Round Table, which I co-chaired with the chairman of China Development Bank, Chen Yuan. The round table met during Prime Minister Julia Gillard’s visit to Beijing.
Recently, we have had discussions with the government about further collaboration on the China relationship.
China and the other nations of Asia are already incredibly important to Australia’s economy. There is no doubt that our strong economic ties with our major trading partners in Asia were the basis of our mutual resilience during the global financial crisis.
Australia’s exports to Asia were worth more than $175 billion last year, with our total exports worldwide being $280 billion. The proportion of Australia’s total exports going to Asia has gone from 50 per cent just five years ago to 60 per cent last year.
Asia is a rapidly growing source of foreign direct investment in Australia. The proportion of the stock of our foreign direct investment from Asia has almost doubled in four years. Last year, Asia was the source of 19 per cent of the stock of direct investment in Australia, when in 2006 Asia accounted for 10 per cent.
Importantly, foreign investment enables growth in our export markets because it is directed towards our key export industries. We have established vital trading relationships in resources and energy, agriculture, education and in a number of other services industries.
While our trading relationships with Asia are strong, it is also the case that the vast majority of our exports are made up of a small number of products.
Added to this, the overall level of investment from Australian businesses in Asia is relatively low.
There is a strong view within Australian business that as a nation we are not moving fast enough to take up new opportunities that are available in Asia.
Furthermore, we are not planning to elevate fast enough our current level of engagement by meeting near-term challenges, especially from competitors.
The economic opportunities available from engagement with Asia won’t wait for those who are unprepared to grasp them. We need a sense of urgency directed towards doing all that is necessary to deepen our relationships and take up the new opportunities available to Australian businesses.
The Asian century white paper provides a timely mechanism for business and government to work together on what is a vital project for the nation’s future.