Australia (Commonwealth)_
Australia is set to host the Australia-ASEAN Special Summit from March 4 to 6, marking only the second time the nation has organized such an event. The summit is a critical initiative as Prime Minister Anthony Albanese aims to strengthen economic ties with Southeast Asian nations, as outlined in the “Invested: Australia’s South-east Asia Economic Strategy To 2040” report, also known as the “Moore Report.” Launched in Jakarta during the ASEAN Summit in September, this strategy signals Australia’s commitment to enhancing trade and investment partnerships with its regional neighbors.
The special summit, scheduled to take place in Melbourne, signifies an opportunity for Australia to reestablish itself as a key economic partner in the Southeast Asian region. Notably, this gathering commemorates fifty years since Canberra became ASEAN’s first dialogue partner. The Moore Report, led by investment banker Nicholas Moore, emphasizes that ASEAN member states have outpaced the growth of Australia’s traditional economic allies, positioning the region as a crucial player in Australia’s economic future.
Despite the potential benefits, Australia faces challenges in boosting its economic standing in Southeast Asia. While the ASEAN region has shown robust economic growth, Australia’s share of trade with the region has remained stagnant for two decades, accounting for less than 3% of its foreign investment as of 2022. Tensions with China, exacerbated by the COVID-19 pandemic, have prompted Australia to explore alternative markets, emphasizing the need to reduce dependence on its top trade partner.
The Australia-ASEAN Special Summit comes at a time when Australia’s reputation as a regional economic powerhouse seems to have diminished, even though it remains a significant defense partner and a key ally to the United States in the Indo-Pacific. Most ASEAN leaders attending the summit have China as their largest trading partner, creating a complex dynamic amid geopolitical tensions between Washington and Beijing.
Simon Birmingham, the Australian Senate opposition leader and shadow foreign minister, acknowledges the challenge of overcoming perceptions of political instability and cultural differences in engaging with ASEAN. Despite these obstacles, Birmingham emphasizes the need to strengthen relationships with the region, drawing parallels with Australia’s successful engagement with China.
In preparing for the economic beauty contest in Southeast Asia, Australian businesses are urged to go beyond selling commodities to China and focus on establishing a physical presence in the region. Melbourne-based consultancy Asialink Business’s CEO, Leigh Howard, emphasizes the importance of building “Asia Capability” to support expansion into new markets. He notes that fostering relationships and developing a deeper understanding of local markets will be critical for Australian businesses venturing into Southeast Asia.
While ASEAN’s share of global foreign direct investment has more than doubled in a decade, Australia’s contribution to this growth has dwindled. Despite historical ties dating back to World War II, a substantial South-east Asian diaspora, and proximity to Indonesia, one of the world’s largest economies, Australia has not fully capitalized on its potential in the ASEAN market.
Analysts attribute this conservatism within Corporate Australia to a sense of risk aversion, shaped by 25 years of prosperity since the late 1990s recession. Canberra’s previous report in 2017, titled “ASEAN Now,” failed to gain traction, but the region’s economic landscape has evolved since then, growing from a $2.5 trillion market to a $3.6 trillion market.
The ASEAN Economic Community (AEC), launched in 2015 to create a highly integrated regional economy by 2025, has faced challenges in realization. Despite these hurdles, there is an opportunity for ASEAN to be more vertically integrated. Malaysia’s Deputy Investment, Trade, and Industry Minister, Liew Chin Tong, suggests exploring a supply chain that leverages the strengths of various ASEAN economies.
As the special summit approaches, the spotlight is on Australia to navigate these challenges, foster stronger ties, and seize the economic opportunities that the Southeast Asian region presents. With the global economic landscape evolving, Australia’s strategic pivot to ASEAN is not only a logical move but a crucial one for its future economic resilience.
