Australia-ASEAN Business relations August 2016 Mark Thirlwell, - - PowerPoint PPT Presentation

Australia-ASEAN Business relations

August 2016 Mark Thirlwell, Chief Economist

SIX DRIVERS AND SIX OPPORTUNITIES

WHY ASEAN AND WHY NOW?

A KEY RESOURCE PRODUCED BY AUSTRADE AND DFAT

WHY ASEAN AND WHY NOW?

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SIX REASONS FOR OPTIMISM

WHY ASEAN AND WHY NOW?

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1. An expanding and deepening regional economic architecture, including the establishment of the ASEAN Economic Community (AEC). 2. The growth of the services sector and its potential as a major regional growth driver. 3. The development of regional and global value chains. 4. ASEAN’s growing status as an FDI magnet. 5. Infrastructure development and enhanced connectivity. 6. Productivity gains via education and training.

OPPORTUNITIES FOR AUSTRALIAN BUSINESS

WHY ASEAN AND WHY NOW?

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1. Services into infrastructure development, including sustainable urbanisation and transport. 2. Education and skills training into human capital development. 3. Sustainable food partnerships, reliable supply and support for self sufficiency challenges. 4. Plug into regional value chains: aviation, automotive, gas, logistics. 5. Wealth management into ASEAN’s growing pool of savings. 6. Two-way tourism development and promotion.

EXPORTS, EXPORTERS AND INVESTMENT

A LOOK AT THE CURRENT STATE OF PLAY

A MAJOR EXPORT MARKET AND A KEY SOURCE OF IMPORTS

ASEAN IS ALREADY A KEY TRADING PARTNER

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Top ten import sources for goods and services 2015 A$ bn Share (%) 1 China 64.2 18.2 2 United States 48.1 13.6 3 Japan 22.7 6.4 4 Republic of Korea 15.8 4.5 5 Thailand 15.4 4.4 6 Germany 15.4 4.4 7 Singapore 14.7 4.2 8 United Kingdom 14.4 4.1 9 New Zealand 11.4 3.2 10 Malaysia 11.2 3.2 Subtotal 233.5 66.2 Total all countries 352.7 100.0 ASEAN 10 57.4 16.3 EU 65.9 18.7 Top ten export markets for goods and services 2015 A$ bn Share (%) 1 China 91.3 28.8 2 Japan 42.4 13.4 3 United States 22.1 7.0 4 Republic of Korea 20.0 6.3 5 India 13.6 4.3 6 New Zealand 12.6 4.0 7 Singapore 11.0 3.5 8 United Kingdom 8.8 2.8 9 Malaysia 8.0 2.5 10 Taiwan 7.5 2.4 Subtotal 239.1 75.0 Total all countries 316.6 100.0 ASEAN 10 38.6 12.2 EU 23.5 7.4

EXPORTS OVER TIME TOP TEN EXPORTS

TRENDS IN GOODS AND SERVICES EXPORTS

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6 7 8 9 10 11 12 13 14 5 10 15 20 25 30 35 40 45 2001 2003 2005 2007 2009 2011 2013 2015

Value (LHS) Share of total exports (RHS)

Exports to ASEAN

A$ billions

Source: ABS.

per cent

Top ten exports to ASEAN, 2015 A$ bn Share (%) Change (%) Education-related travel 3.9 10.0 5.4 Gold 2.8 7.2

• 26.7

Wheat 2.7 6.9 5.5 Other business services 2.4 6.2 19.4 Crude petroleum 2.0 5.3

• 44.9

Personal travel ex ed. 1.7 4.4 2.2 Coal 1.3 3.4 27.3 Live animals 1.0 2.7 21.9 Copper 1.0 2.5

• 22.3

Aluminium 0.9 2.4

• 6.6

Total exports 38.6 100.0

• 3.9

IMPORTS OVER TIME TOP TEN IMPORTS

TRENDS IN GOODS AND SERVICES IMPORTS

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14 15 16 17 18 19 20 5 15 25 35 45 55 65 2001 2003 2005 2007 2009 2011 2013 2015

Value (LHS) Share of total imports (RHS)

Imports from ASEAN

A$ billions

Source: ABS.

per cent

Top ten imports from ASEAN, 2015 A$ bn Share (%) Change (%) Refined petroleum 6.1 10.6

• 35.4

Personal travel ex ed. 5.3 9.2

• 0.2

Crude petroleum 5.1 8.8

• 46.7

Goods vehicles 3.9 6.7 32.8 Transport services 3.4 5.9

• 5.6

Passenger motor vehicles 2.0 3.5 24.7 Telecom equipment 1.9 3.3 30.6 Other business services 1.7 2.9 23.6 Computers 1.5 2.6 38.3 Heating & cooling equip. 1.3 2.2

• 15.9

Total imports 57.4 100.0

• 5.6

DEVELOPMENTS IN 2015 BY MAJOR GOODS CATEGORY. . .

AUSTRALIAN MERCHANDISE EXPORTS TO ASEAN

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• 100
• 80
• 60
• 40
• 20

20 40 60 80 100 5 10 15 20

Australia's merchandise exports to ASEAN, 2015

Growth in value of exports, per cent

Source: DFAT and Austrade

Share of sector in total exports, per cent

Confidential items Food & live animals Processed minerals Mineral manufactures and metals Processed food Unprocessed fuels Non-monetary gold Engineering products Chemicals Other elaborately transformed manufactures Processed fuels Mineral manufactures and metals

EXPORTS TO ASEAN BY SELECT ASEAN MEMBER

AUSTRALIAN MERCHANDISE EXPORTS TO ASEAN

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5 10 15 20 25 30 Rolling annual total, A$ billions

Merchandise exports to ASEAN to June 2016

Source: ABS.

2 4 6 8 10

Viet Nam Singapore Indonesia Malaysia Thailand

Rolling annual total, A$ billions

Merchandise exports to selected ASEAN members

Source: ABS.

A MIXED PICTURE ON EXPORTER NUMBERS. . .

AUSTRALIAN MERCHANDISE EXPORTERS

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Top 15 export markets for goods in 2014-15: By number of exporters Market Number of exporters Share of total exporters (per cent) Change in number of exporters 1 New Zealand 18,054 37.1 904 2 United States 10,232 21.0 841 3 Singapore 6,418 13.2 228 4 Hong Kong SAR 6,345 13.0 1008 5 China 6,231 12.8 338 6 United Kingdom 5,722 11.8 518 7 PNG 4,824 9.9 26 8 Malaysia 3,831 7.9

• 8

9 Japan 3,105 6.4 74 10 Fiji 2,961 6.1 97 11 Thailand 2,953 6.1 111 12 Germany 2,852 5.9 97 13 UAE 2,756 5.7 320 14 Canada 2,469 5.1 142 15 Indonesia 2,428 5.0

• 33

Source: ABS 5368.0.55.006, Table 9. Note, exporters can sell to more than one market. Memo: Vietnam 1,938 exporters, up 196 Philippines 1,860 exporters, up 73

BY COUNTRY BY SERVICE

AUSTRALIAN SERVICES EXPORTS TO ASEAN

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12.0 13.0 14.0 15.0 16.0 17.0 18.0 2 4 6 8 10 12 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Singapore Malaysia Indonesia Viet Nam Thailand Other ASEAN Share of total (RHS)

Service exports to ASEAN

A$ billions

Source: ABS.

Per cent 2 4 6 8 10 12 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Travel services Other business services Transport services Other services

Service exports to ASEAN

A$ billions

Source: ABS.

TOTAL FOREIGN INVESTMENT FDI

AUSTRALIA AS AN INVESTOR IN ASEAN

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Top ten destinations for foreign investment, 2015 A$ bn Share (%) 1 United States 594.4 28.6 2 United Kingdom 353.2 17.0 3 New Zealand 98.7 4.7 4 Japan 93.2 4.5 5 China 70.2 3.4 6 Singapore 67.1 3.2 7 Germany 66.9 3.2 8 Hong Kong (SAR) 50.7 2.4 9 Cayman Islands 49.5 2.4 10 France 45.6 2.2 Subtotal 1489.5 71.6 Total all countries 2080.7 100.0 ASEAN 10 100.7 4.8 EU 589.5 28.3 Top ten destinations for FDI, 2015 A$ bn Share (%) 1 United States 105.2 19.4 2 United Kingdom 81.3 15.0 3 New Zealand 60.5 11.2 4 Singapore 21.2 3.9 5= Papua New Guinea np np 5= Germany np np 5= China 14.1 2.6 8 Canada 8.5 1.6 9 Bermuda 7.9 1.5 10 Netherlands 7.8 1.4 Subtotal

• Total all countries

542.6 100.0 ASEAN 10 37.6 6.9 EU 111.8 20.6

A GROWING SHARE, WITH SINGAPORE STILL FAVOURITE. . .

AUSTRALIAN FDI INTO ASEAN

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1 2 3 4 5 6 7 8 5 10 15 20 25 30 35 40 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Singapore (LHS) Other ASEAN (LHS) ASEAN share of total (RHS)

Stock of Australian FDI in ASEAN

A$ billions Source: ABS. Per cent

TOTAL FOREIGN INVESTMENT FDI

ASEAN AS AN INVESTOR IN AUSTRALIA

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Top ten sources of foreign investment, 2015 A$ bn Share (%) 1 United States 860.3 28.4 2 United Kingdom 499.9 16.5 3 Belgium 238.5 7.9 4 Japan 199.6 6.6 5 Singapore 98.6 3.3 6 Hong Kong (SAR) 85.4 2.8 7 China 74.9 2.5 8 Netherlands 63.0 2.1 9 Luxembourg 58.3 1.9 10 Switzerland 50.2 1.7 Subtotal 2228.7 73.7 Total all countries 3024.0 100.0 ASEAN 10 126.7 4.2 EU 990.9 32.8 Top ten sources of FDI, 2015 A$ bn Share (%) 1 United States 173.5 23.6 2 Japan 85.9 11.7 3 United Kingdom 76.0 10.3 4 Netherlands 44.4 6.0 5 China 35.2 4.8 6 Singapore 28.8 3.9 7 Canada 25.9 3.5 8 Bermuda 24.1 3.3 9 British Virgin Islands 21.5 2.9 10 Germany 17.2 2.3 Subtotal 532.6 72.4 Total all countries 735.5 100.0 ASEAN 10 41.5 5.6 EU 157.6 21.4

SINGAPORE STILL OUR MAIN ASEAN INVESTOR. . .

ASEAN FDI INTO AUSTRALIA

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2 3 4 5 6 7 10 20 30 40 50 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Singapore (LHS) Other ASEAN (LHS) ASEAN share of total (RHS)

Stock of ASEAN FDI in Australia

A$ billions Source: ABS. Per cent

FINDINGS FROM AIBS 2016

WHAT DO AUSTRALIAN BUSINESSES TELL US?

AUSTRALIA’S INTERNATIONAL BUSINESS SURVEY 2016

NEW SURVEY RESULTS FROM AIBS 2016

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TWO ASEAN MARKETS IN THE TOP TEN. . .

AIBS 2016 TOP TARGET MARKETS FOR NEXT TWO YEARS

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ONE MODEST EXAMPLE OF ASEAN’S DIVERSITY. . .

AIBS 2016 MARKET OUTLOOKS COMPARED

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40 20 20 40 60 80 100

Indonesia Singapore

Worse Same Better Much better

What is the outlook for your international operations in 2016 compared to 2015?

Per cent of respondents

Source: AIBS 2016

AND ANOTHER MORE POWERFUL ONE. . .

AIBS 2016 EASE OF DOING BUSINESS

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FOR THE BUSINESS ENVIRONMENT. . .

AIBS 2016 WHY CHOOSE TO GO TO SINGAPORE?

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100 80 60 40 20 20 40 60 80 100

Advice from advisors / other firms Trade mission or similar Presence of FTA or similar Presence of family or personal contacts Followed similar firms / competitors Familiar culture / language Strong growth / profit opportunities Low barriers to trade / investment Proximity Easy / safe business environment

Very important Moderately important Not important

For Singapore: Why was this market your first target market?

Per cent of respondents

Source: AIBS 2016

FOR THE GROWTH OPPORTUNITIES . . .

AIBS 2016 WHY CHOOSE TO GO TO INDONESIA?

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100 80 60 40 20 20 40 60 80 100

Presence of family or personal contacts Followed similar firms / competitors Presence of FTA or similar Advice from advisors / other firms Trade mission or similar Familiar culture / language Easy / safe business environment Low barriers to trade / investment Proximity Strong growth / profit opportunities

Very important Moderately important Not important

For Indonesia: Why was this market your first target market?

Per cent of respondents

Source: AIBS 2016

FACTORS FOR SINGAPORE

AIBS 2016 KEY FACTORS IN TARGETING THE MARKET

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100 80 60 40 20 20 40 60 80 100

Education around non-tariff barriers Access to official Australian support in-market Participation in trade missions Purchase of specific, tailored advice on market conditions and requirements Access to EMDG Access to finance Information on local agents and other relevant contacts Education around international pricing for the market Help and advice with local language and business culture Education around IP and trade mark protection General information on local business taxes and regulations General information on local economic and political conditions General information on local customs and border procedures Understanding market compliance and risk

Very important Moderately important Not important Not applicable

For Singapore: When you targeted your most important market, how important was . . . ?

Per cent of respondents

Source: AIBS 2016

FACTORS FOR INDONESIA

AIBS 2016 KEY FACTORS IN TARGETING THE MARKET

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100 80 60 40 20 20 40 60 80 100

Education around IP and trade mark protection Education around non-tariff barriers Participation in trade missions Purchase of specific, tailored advice on market conditions and requirements Access to EMDG Access to finance Information on local agents and other relevant contacts Education around international pricing for the market Help and advice with local language and business culture Access to official Australian support in-market General information on local economic and political conditions General information on local business taxes and regulations General information on local customs and border procedures Understanding market compliance and risk

Very important Moderately important Not important Not applicable

For Indonesia: When you targeted your most important market, how important was . . . ?

Per cent of respondents

Source: AIBS 2016

Australia-ASEAN Business relations

August 2016 Mark Thirlwell, Chief Economist

REGIONAL ARCHITECTURE, AEC, GROWTH, DEVELOPMENT

ANNEX

FASTEST GROWING ECONOMIES BASED ON IMF PROJECTIONS

ASEAN MEDIUM-TERM GROWTH OUTLOOK

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Real GDP growth (2015-20F) Rank Country Growth (per cent) 1 Bhutan 8.3 2 Côte d'Ivoire 7.9 3 Myanmar 7.7 4 India 7.5 5 Ethiopia 7.4 6 Lao P.D.R. 7.3 7 Mozambique 7.0 8 Cambodia 6.9 9 Rwanda 6.9 10 Senegal 6.9 11 Bangladesh 6.8 12 Tanzania 6.8 13 Djibouti 6.7 14 Vietnam 6.3 15 Niger 6.3 16 China 6.3 17 Panama 6.2 18 Philippines 6.2 19 Kenya 6.2 20 Uzbekistan 6.1 27 Indonesia 5.4 34 Brunei 5.1 42 Malaysia 4.8 105 Thailand 3.1 117 Australia 2.8 137 Singapore 2.3

2010-15 COMPARED TO 2015-20F

ASEAN GROWTH PERFORMANCE AND RELATIVE SIZE

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2 4 6 8 10 2 4 6 8 10

ASEAN growth performance and outlook

Real GDP growth 2015-20, per cent Real GDP growth 2010-15, per cent

Lao Thailand Cambodia Myanmar Brunei Philippines Malaysia Indonesia Singapore Vietnam

Size of bubbles scaled by PPP GDP in 2015 Source: IMF WEO database

AUSTRALIA IN THE REGIONAL ECONOMIC ARCHITECTURE

REGIONAL ECONOMIC ARCHITECTURE

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IMPACT OF AEC-LED INTEGRATION BY SECTOR

ASEAN ECONOMIC COMMUNITY (AEC)

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