Expanding relationships

John H C Colvin looks towards 2015 and the exciting opportunities emerging in the Asia-Pacific region.

The year 2015 will be a milestone for our region as members of the Association of Southeast Asian Nations (ASEAN) move towards their goal of establishing a single economic community or common market.

We hear daily about the opportunity created by China’s rapid industrialisation and economic transformation. But the so-called Asian Century will also provide new avenues for Australia to engage more with the 10 members of ASEAN – Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.

The goal of a single ASEAN economic community (AEC) is part of the region’s reorientation away from traditional trading partners – such as Japan, the United States and the European Union – towards the region itself and also to neighbouring emerging markets such as China and India. A recent joint report by the Asian Development Bank (ADB) and International Labour Organization (ILO) highlights the remarkable economic growth in the ASEAN region. According to the report, ASEAN’s gross domestic product (GDP) was US$2.4 trillion in 2013, accounting for 3.3 per cent of the world’s economy. Between 2007 and 2013, ASEAN economies, with the exception of Brunei Darussalam, grew faster than the global average. In 2013, GDP growth for the world as a whole was 3 per cent, but for ASEAN it was 4.9 per cent, according to the ADB/ILO report.

The aim of the AEC is to facilitate the flow of goods, services, investment capital and skilled labour in the region. Tariffs and other barriers to intra-regional trade will be reduced to create new opportunities for growth and improved prosperity for the 600 million people who live in ASEAN’s member countries.

This vision will, inevitably, throw up as many challenges for the region as it does opportunities. The road to a single market and economic equality is never straightforward. It will also require Australian companies that wish to do business in Asia to understand the mechanics of the new common market as it evolves, as well as its relationship with other countries such as ours.

There is much happening in this regard. The Australian government is one of six nations negotiating a Regional Comprehensive Economic Partnership (RCEP) with ASEAN for a free trade area. Those six nations also include China, India, Japan, Korea, and New Zealand.

The aim of the RCEP negotiations is to produce “a modern, comprehensive, high-quality and mutually beneficial economic partnership agreement establishing an open trade and investment environment in the region to facilitate the expansion of regional trade and investment and contribute to global economic growth and development.” The RCEP partnership was announced in November 2012 and the sixth round of talks will be held from 1-5 December this year in New Delhi.

The government’s stated intention is that RCEP will build on and expand Australia’s existing free trade agreement with ASEAN and New Zealand. It is also intended to complement other bilateral trade talks and the ongoing negotiations for a Trans-Pacific Partnership Agreement between 12 countries, including Japan, Singapore, the US, Australia and Malaysia. Company Directors already has strong links with the Southeast Asian region, not just through our own activities but also through our membership of the Global Network of Director Institutes. We will be strengthening that relationship even further in 2015 by holding Company Directors’ National Conference in the city of Kuala Lumpur from 20-23 May. Malaysia is at the heart of the dynamic ASEAN region and also the inaugural chair of the AEC, so it is an ideal conference location.

The conference program will explore opportunities for businesses looking to work with ASEAN or to trade in emerging growth markets. Simon Merrifield, Australia’s Ambassador to ASEAN, will be a speaker at the event, as will our High Commissioner to Malaysia, Rod Smith. Other high-profile speakers confirmed so far include Anne-Marie Slaughter, president of the New America Foundation, a public policy think tank, and author of the controversial article Why women still can’t have it all, published in The Atlantic magazine in 2012.Robert Kay, co-founder of Incept Labs and an adjunct professor in the Department of Accounting and Corporate Governance at Macquarie University, will again be one of our speakers after proving the most popular presenter at this year’s conference on Hamilton Island. Clearly, there is much for boards to understand if they are to grasp the opportunities offered by Southeast Asia’s economic transformation. We hope our 2015 national conference will help to unravel the complexities of Australia’s trade relationship with the region and provide an insight into its culture and business world.