Building a sustainable trade and investment presence for South Australia in ASEAN

Brand_Adelaide_1_and_2_ALLThe South Australian Government announced in late June a new directions paper seeking to develop a trade and engagement strategy between South Australia and South East Asia. This is certainly a positive step for South Australian business, and will help build upon the competitive advantages that currently support our economy. The Association of South East Asian Nations, or ASEAN, is a major economic and political grouping of 10 nations in south East Asia; Indonesia, Singapore, Malaysia, Brunei, Thailand, Myanmar, Cambodia, Laos, Vietnam, Philippines, and Timor Leste (as an observer). Many of these countries have historical business, government and development links with South Australia through State Government trade offices (formerly located in Indonesia; Jakarta and Bandung, Malaysia; Kuala Lumpur, Singapore, and Vietnam; Ho Chi Minh City (HCMC)), Sister City Relationships between Adelaide and Georgetown (Malaysia), and Sister State Agreements between South Australia and West Java (Indonesia). Beyond the formal government links, South Australian business has developed substantial commercial trade links, with the 600 million strong population of ASEAN representing South Australia’s 2nd largest export destination in 2012/13. ASEAN provides the perfect opportunity for South Australia to leverage trade with India and China, through the logistics hub of South East Asia linking SA with South Asia, East Asia. In addition, the majority of SA’s seaborne freight transits through South East Asia to Europe, the Middle East and North America. The ASEAN region is therefore the logical location for a trade engagement strategy.

South Australia has been undergoing substantial economic transformation, epitomised by the announced closure of Holden and through extension the automotive industry. Our economic transformation will lead us towards advanced manufacturing and service delivery, and South East Asia is a prime location in which our competitive industries can foster this transformation. South Australia’s strategic plan identifies our collective industry strengths as including; education, agribusiness, advanced manufacturing, and mining. South East Asia has demands for all of these strengths, and provides more alignments for South Australia to develop sustainable value chains into Asia for re-export beyond into South Asia, East Asia, Europe and North America.

Indonesia is the largest economy in ASEAN with upwards of 250 million people, and is regularly SA’s largest agricultural export partner primarily for wheat. Indonesia has some of the largest food processors in Asia, who re-export food products such as noodles (made with SA wheat) to other Asian markets. This is a win-win for South Australian farmers, as our exports have risen inline with Indonesian exports of value added, but crucially low cost food items throughout Asia. There is a similar experience in Thailand, and Vietnam with other SA agricultural commodities, and we need to work with our partners in ASEAN to ensure we can grow market share, and develop sustainable business models seeking to utilise our competitive advantage in producing high quality bulk agricultural commodities not readily available in Asia.

South Australia’s mining, oil and gas explorers, and mining service providers are already partnering with companies from South East Asia to develop projects. Petronas (Malaysian based Fortune 500 oil company), has a joint venture with SANTOS in Queensland for the export of LNG, while a number of SA based Oil and Gas and Mining explorers have active tenements throughout Indonesia, and further into the ASEAN region. The growth in the mining sector across ASEAN provides a great opportunity for SA to leverage our mining services capabilities in a way that helps ASEAN markets increase efficiency and productivity. In this way SA can partner with Asia and grow our mutual prosperity through trade and investment.

South East Asia have a demand for capacity development in a range of industry sectors, and with our advanced manufacturing and mature further education capabilities in South Australia we can help these economies realise these objectives. SA needs to think about more effective methods of partnering with Asia, not solely to sell to Asia. Petronas in Malaysia, have recently completed a full size working model of a oil and gas processing plant for education purposes, worth more than A$100 million. There is a great opportunity for the South Australian government, in combination with SANTOS, Beach Energy and th education sector to develop partnerships with Petonas and build upon the newly announced unconventional oil and gas centre at Tonsley Park. World class facilities and world leading organisations in South Australia should be actively seeking to partner with similar organisations in South East Asia, as the opportunities rapidly emerge.

ASEAN is already SA’s second largest trading partner, however there are substantial opportunities for our corporate and community sectors to grow our involvement with this region. The South Australian business community should seek to leverage the shared British and European regulatory culture that exists across much of ASEAN, in addition to the historical trade relationships to grow our effective trade with this region. South East Asia is an opportunity that shouldn’t be missed by SA.