21 February 2017

An Era of Asian Opportunity

phil-green By Philip Green, OAM, First Assistant Secretary South-East Asia & Regional Division, DFAT   

If my four years in Singapore, on top of more than three decades in the wider Australian foreign service, has convinced me of one thing, it is this: that the rise of the economies of Asia is the dynamic of our time.  To our immediate north, the greatest economic transformation of the last two hundred years is taking place.  Nothing comparable has happened in the economic sphere of our world since the Industrial Revolution in Europe.

Nations that were until recently poor are now prosperous.  Hundreds of millions of people are being lifted out of poverty.   Wealth is being created on an unprecedented scale.  There are many ways to exemplify what is happening.  But the way that resonates most to me is the new significance of the middle class in Asia.  As growth rolls out, and incomes in the region rise, more and more people graduate into the middle class.  So much so that the size of the middle class in Asia is predicted to double between now and 2030.  By then, more than three billion people in Asia will be middle class.

Three billion middle class people means there will be countless more consumers in our region who will have aspirations for the same sort of consumption patterns that many Australians have.  For the first time in their families’ histories, they will be able afford things like high quality health care, first class education, premium foods, even an overseas holiday.  So, for all of our exporters there will be growing opportunity.

But this era of opportunity will not last forever. This rise in the middle class in Asia is happening now, and will roll out over the coming decades.  Either we can take full advantage of this unique opportunity, or we can miss it.

philip-green-blog

Questacon Science exhibition held in Vietnam

Sometimes, it is difficult for us to appreciate the advantages that we enjoy from simply being who we are, and where we are.  We take for granted what we have grown up with.  This phenomenon is at play in the imperfect recognition of the substantial good fortune that Australia enjoys from its proximity to Asia.  It is difficult to imagine a location better than ours to take advantage of the new growth engine of the global economy.   What used to trouble us as ‘the tyranny of distance’ now represents the logistics of opportunity.

But, there is one other thing.  Australia is fortunate not just in where it lies, but in the sort of economy that we are.  In many ways, our economy is the ideal complement to those in Asia.  Asian economies are rich in labour and mostly short of land.  Australia is the opposite.  That difference drives great opportunity.

The land with which our nation abounds means that we are rich in energy and resources to meet the demands for infrastructure in Asia.  It means we are rich in agricultural products to meet the needs of growing populations with more spending power.  And it means that we are blessed with a pure, natural environment that appeals to Asian tourists, some of whom live in crowded, polluted, and congested cities.

Beyond that, Australia is also strong in many of the services that a rapidly developing Asia needs – architecture and design, project management, financial technology, engineering, health and aged care, advanced construction and more.

Australia stands to secure great benefit from these dynamics – if we play it right.  If we better prepare our industries and services for the rich pickings of export.  If we engage with our neighbours, and are seen as part of Asia’s new greatness, and not remote from it.  And if we can work with our region to ensure that the new challenges it faces – strategic, environmental, developmental – do not outweigh its economic potential.

Philip Green has just returned from four years as High Commissioner to Singapore.  This blog is based on the address he gave at the Murdoch University graduation ceremony for the award of an Honorary Doctorate of the University earlier this month.

Join the conversation! 2 Comments

  1. The problem, though, is that the Earth passed its sustainability point for the +current+ world population last August. All these people cannot have a refrigerator, a vehicle, or even a proper house for that matter since the actual physical resources are just not there. Yes,we can mine on the Moon and Mars eventually and have aggressive recycling initiatives and a transition to viable alternative energies–but the tipping point is already here. What happens when that reality of poverty becomes fully realized? I dread to think. Mad Max here we come.

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  2. Whilst I agree with the above, currently we have seen some major Australian enterprises selling and withdrawing or pull back their Asian operations substantially. One of the biggest problem Australia faces in its connection with Asia is that Australian business here simple do not have what the Asian have in spades: “patient capital”: both intellectual and financial. This is a systemic problem. It has to be solved. There are of course great Australian enterprises engaging daily with Asia, but we also have a challenge here when CEOs jobs basically reply on them staying in Australia and making higher returns, for now.

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