2. Economic overview - Victoria and South East Asia
South East Asia’s strong economic performance is likely to continue, driven by population growth, growing trade and investment activity and the increasing complexity and international engagement of the major economies of the region– Indonesia, Malaysia, the Philippines, Singapore, Thailand and
Vietnam. Together these countries are known as the ASEAN 6.
As a single market, South East Asia is a significant component of the global economy. However, each South East Asian country has a unique demographic, cultural, political and economic development profile. Graph 1 shows this diversity in terms of GDP per capita in the region, forecast to 2018. Singapore is by far the wealthiest nation with a GDP per capita almost double that of all other South East Asian nations combined. Indonesia has the highest GDP, but also has the largest population and therefore a much lower GDP per capita. GDP per capita has increased in all South East Asian countries over the last 20 years; however GDP growth rates vary considerably.
Victoria’s trade relationship with South East Asia is strong and growing. The region is currently our largest merchandise export market, with Victoria exporting $3.8 billion worth of goods to South East Asia in FY2012.6
At present, the markets of Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam account for 95 per cent of the South East Asian economy.7 With the exception of Vietnam and the Philippines, these countries are in our top ten export markets for goods, with all maintaining or growing in importance as an export market over the last five years.
There is much scope for expansion of the trade and investment relationship between Victoria and South East Asia. In the shorter term, the economies of Indonesia, Malaysia and Singapore are each predicted to grow strongly over the next five years, with the International Monetary Fund forecasting growth of 6.4 per cent in Indonesia, 5.2 per cent in Malaysia and 3.5 per cent in Singapore to 2017.8
Victorian goods exports to the South East Asian region have increased on average, by seven per cent per annum since FY2008 to reach $3.8 billion, as highlighted in Table 1.
Graph 1: ASEAN 6 - GDP per capita (purchasing power parity)
Source: World Bank, International Comparison Program database.
TABLE Victorian goods exported to South East Asia 2011-12
| Country | Victorian export destination ranking FY2012 | Goods exports to FY2012 ($m) | Average yearly growth FY2008-12 | Key exports (Goods) |
| Singapore | Top 5 | 1033 | 14.1% | Refined petroleum, dairy and aluminium |
| Malaysia | Top 10 | 692 | 6.7% | Refined petroleum, wheat and dairy |
| Indonesia | Top 10 | 683 | 6.8% | Wheat, beef and dairy |
| Thailand | Top 10 | 651 | -0.1% | Aluminium, wheat and dairy |
| Vietnam | Top 20 | 372 | 10.7% | Wheat, ferrous waste & scrap and plastic |
| The Philippines | Top 25 | 273 | 9.2% | Wheat, beef, dairy |
| Other markets | - | 58 | - | Wheat, dairy, meat and aluminium |
| TOTAL | - | 3,762 | 7.0% | Wheat, refined petroleum, dairy and aluminium |
Source: Australian Bureau of Statistics, cat 5368.0 – International Trade in Goods and Services
Almost 50 per cent of Victorian goods exported to the region in FY2012 were primary goods (wheat and dairy) and simply transformed manufactures (aluminium and petroleum). South East Asia is growing in importance as a destination market for Victorian services including international education and tourism. As at December 2012, South East Asian students were the second largest number of international students in Victoria after China. Of the nearly 150,000 international student enrolments from 160 countries, close to 32,500 student enrolments were from South East Asia. Thirty per cent of these student enrolments were from Vietnam and 25 per cent were from Malaysia.9
Victoria is also performing strongly in attracting visitors from South East Asia. Since 2008, visitors from the region have grown at a rate of 11 per cent per annum to reach 323,200 visitors in 2012. Victoria imports a large amount of refined ($2.0 billion) and crude ($2.4 billion) petroleum from South East Asia, with the majority of refined petroleum coming Singapore, whilst crude petroleum is imported from Malaysia, Indonesia, Vietnam and Brunei.10
Other significant imports from the region include automotive vehicles and parts, electrical goods and computers and food products such as seafood, cocoa and fruit.
3. South East Asia’s emerging importance in the global economy
South East Asia has a long history of global strategic importance and as the trade access point between the Indian and Pacific Oceans. As the centre of global economic power shifts to the East, the region is now also emerging as an important contributor to the international economy.
Regional integration has been an important feature of South East Asia’s economic rise. With the Association of South East Asian Nations (ASEAN) at its core, the region has embarked on a process of market liberalisation and deeper engagement, with ASEAN member states opening up markets to each other through the ASEAN Free Trade Area and also internationally through free trade arrangements with significant trade and investment partners, either as an ASEAN bloc or on an individual basis. Internally, ASEAN continues to work towards the ambitious goal of an ASEAN Economic Community by 2015, including a single market and production base, which will further enhance regional integration.
4. South East Asia is experiencing demographic shifts
South East Asia’s defining economic advantage is its increasingly urbanised population of more than 600 million that is estimated to be growing at around 1.45 per cent per year. In comparison, the world rate is estimated to be 1.16 per cent, China 0.48 per cent and India 1.37 per cent.11
Much of the region’s population is young, with 66 per cent in, or about to enter, the working-age demographic (15-64) and a further 28 per cent are under 15 years of age. This young workforce is contributing to South East Asia’s current and forecast competitive advantage in the world economy.
As the populations of South East Asian countries grow and national and individual wealth increases, the demographic structure of populations also change. Across the region, this large, young workforce is driving investment in education and skills training in addition to increasing the demand for goods.
Furthermore, improved living standards mean people are living longer, healthier and increasingly urbanised lives.
Over time, as the current group of young workers transitions into older age, economic demand shifts from young peoples’ needs (entertainment, food, education and mobility) to the needs of older people, namely, housing, health and aged care.
Also as wealth increases, family sizes decrease and, ultimately, populations decline.
South East Asia’s current and forecast population growth is driving strong demand for basic goods and even greater demand for services such as, infrastructure, food services, transport, education, entertainment and leisure and ICT. Victoria is well placed to build on opportunities emerging as a result of these regional trends.
Graph 2: South East Asia and Australia – median age
Source: CIA World Factbook
5. South East Asia's growth is intensifying demand for goods and services
South East Asia’s rapid modernisation is no more evident than in the massive growth of industries involved in the provision of goods and services. For example, efficient transport systems reduce the delivery costs of other products and increase competitiveness along the supply chain.
Victoria has a number of service industries that are, or are emerging as, internationally competitive. These include: food services, education and training, tourism, urbanisation and infrastructure, information communications and technology, financial services and healthcare.
Victoria’s industry requires connectivity and one of Victoria’s key strengths is Melbourne’s position as Australia’s transport hub. Melbourne Airport hosts 25 international carriers with more than five million international passengers each year. The Port of Melbourne is the southern hemisphere’s largest container port, handling almost 40 per cent of Australia’s container trade. Other major ports in Victoria are Geelong, south-west of Melbourne and Portland, in the State’s west.
Food
The opportunity
Domestic consumer demand and tourism are driving a proliferation of supermarket chains, food service outlets, and restaurants, premium food and beverage supply to hotels across the region, especially in Indonesia, Malaysia, the Philippines and Singapore. In particular, demand has recently increased in foods that Victoria produces including, wheat based foods (noodles, breads, cakes) and some dairy products (milk, milk powder, higher value milk derivatives and cheese).
Food and beverage is Victoria’s largest export category to South East Asia and smaller producers are able to compete in markets of considerable size. Indonesia, Malaysia, Singapore and Vietnam are all top ten food export markets for Victoria. The combined South East Asian market accounted for more than $1. billion of Victoria’s food exports in FY2012, which is more than double the value of our food exports to Japan ($776 million), Victoria’s largest single export market.12
As regional markets have developed, the regulation of food imports and the adoption of national standards (including quarantine) have also increased. Deeper government to government engagement will encourage less trade restrictive approaches and address countries’ food security needs as they face shortages of arable land, particularly in the markets of Indonesia, Thailand, Vietnam and the Philippines.
Victoria’s strengths
Victoria is very competitive in food and associated food technology exports to South East Asia for a number of reasons, including: reliably clean, safe and green production; proximity, efficient and timely freight and logistics supply chains to market; reliable supply of products where South East Asian countries have low self-sufficiency, such as processed dairy, meat, beverages, grains and counter seasonal horticultural products; and specialisation in premium niche markets, such as nutriceuticals for the young and aged.
What we will do
- Provide in-market support through the Victorian Government Business Offices in Kuala Lumpur, Jakarta and in Melbourne to help Victorian food production and food service businesses gain a foothold in South East Asian markets with market-specific information (such as, local food preferences).
- Facilitate business networks and relationships with food buyers in South East Asian countries.
- Facilitate participation in trade shows.
- Support inbound trade missions and visiting buyers from South East Asia to attend events such as, for example, the International Food Trade Week March 2013 in Melbourne.
Education and training
The opportunity
South East Asian governments have identified a key objective in achieving their economic goals is a productive workforce and higher skilled people. Knowledge-based economies require high quality education systems and currently, some countries are experiencing an imbalance between the skills produced by their education systems and growing industry demand.
In particular, growing economies are challenged with providing better education outcomes such as:
- Improving teaching skills.
- Better integration of education to meet industry needs.
- Improving basic and technical skills of graduates.
- Improving education-related infrastructure.
The increasing need for enhanced research collaboration and skills training to support growing industries is evident across most South East Asian economies. This need is clearly demonstrated, for example, in the extensive modernisation in South East Asia’s maritime and aerospace markets. The region is one of the few global defence markets currently experiencing growth. The Indonesian Government, for example, has identified its need for pilot training and air transport technicians, estimating its growing fleet and airline needs will require at least 500 pilots per year and 1,000 technicians per year to cope with the increasing demand in its air transport industries.
Demand is also growing for capacity building support to: develop educational frameworks, policy and curriculum; to train staff; and help establish new teaching facilities. Other industries that draw on Victoria’s education expertise include agriculture, manufacturing, hospitality, energy, mechanical trades, and mining.
Victoria’s strengths
- Victoria is home to Australia’s number one university which is among the world’s top 30 in 2012 and has four of Australia’s top 20 universities.
- Melbourne consistently rates as the world’s most liveable city and is ranked fourth top student city in the world (after Paris, London and Boston).
- Melbourne is famous for its research as a Knowledge City with multiple research precincts and the Australian Synchrotron, and as a designated UNESCO City of Literature.
- Victoria recorded around 150,000 international student enrolments from 165 countries in 2012.
- Victoria is Australia’s leader in transnational (offshore) education, providing education to more than 80,000 students outside Australia in approximately 33 countries in 2011.
What we will do
- Victoria’s International Education Cluster for South East Asia is developing opportunities through partnerships with regional governments, aid agencies and the private sector to connect in-market education and training demand with Victorian service providers. Cluster members include Victorian universities, TAFE institutes and private education and training providers. The cluster model provides economies of scale that allow service providers to compete in high volume markets.
- Support Victorian education and training organisations to expand partnerships in the region through continuation of the Education Services Managers network.
- Support deepening institutional linkages in vocational and higher education.
- Work with partners in Victoria’s domestic airline industry and airlines and regulators in South East Asia to capture opportunities across the training lifecycle.
International education is Victoria’s most valuable export sector
Victoria is well placed to be a regional leader in international education with 32 per cent of Australia’s enrolments from South East Asian countries. The top five source countries from the region are Vietnam, Malaysia, Indonesia, Thailand and Singapore. Vietnam is now Victoria’s third largest source of international students after China and India. Victoria is currently the preferred destination in Australia for student enrolments from Vietnam (44 per cent), Malaysia (38 per cent) and Singapore (32 per cent). Victoria also receives a sizeable proportion of student enrolments from Indonesia (31 per cent).13
Victoria’s industry-centric Vocational Education and Training (VET) sector and world class university system offers students and their industries a competitive edge in the labour markets. The Victorian Government’s Education Services Manager network assists international education providers to access opportunities in-market.
Victoria has a long history of higher education engagement in the region, including many decades of Victorian-educated graduates and many institutions providing services through in-market campuses or partnerships. While the breadth of Victorian educational institutions currently operating in South East Asia is extensive, Victorian universities and VET providers that have established in-market education services include the following:
- Monash University’s Sunway Campus was the first foreign university in Malaysia when it opened in 1998.
- In 2000, Swinburne University opened a branch campus in Malaysia in partnership with the provincial government. Swinburne Sarawak has grown rapidly, with over 3,000 students from more than 40 countries.
- In 2001, RMIT University became the first foreign university campus in Vietnam. RMIT Vietnam saw more than 1,700 students graduate in 2012, bringing the total number of RMIT graduates in Vietnam to more than 5,000. In 2012, RMIT’s partnership with the Singapore Institute of Management celebrated its 25th anniversary. Today, the partnership involves more than 6,500 current students and 24,000 graduates.
- William Angliss Institute has partner campuses in Kuala Lumpur, Malaysia with the Berjaya University College of Hospitality and in Bangkok, Thailand with the Dusit Thani College. The Singapore Workforce Development Agency appointed William Angliss Institute to set up an integrated Continuing Education and Training Centre to deliver training for the tourism and hospitality industry as well as to conduct national skills assessment for existing tourism workers.
- Box Hill Institute provides Australian qualifications through 20 educational partners in South East Asia. Box Hill Institute’s Singapore campus has established world class training for the community and social services sector to provide Singapore Workforce Development Agency qualifications.
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Tourism services
The opportunity
Developing new tourism-related infrastructure, including integrated resorts, airports, rail networks and hotels, is a priority for most South East Asian countries with tourism within the region experiencing unprecedented growth. More than 73 million international arrivals (including 47 per cent sourced intra-region) in 2010 provided an 11 per cent increase over 2009.
Victoria has performed strongly in attracting visitors from South East Asia in recent years and more than 460,000 visitors are expected from South East Asia by 2021-22. This represents average annual growth of four per cent per annum during the next decade. In comparison, visitors from China are expected to grow to approximately 500,000 in the same period, a rate of six per cent per annum. India is the fastest growing visitor market with average annual growth of seven per cent per annum that is anticipated to reach 128,000 by 2021-22.14
The mature visitor markets of Singapore and Malaysia, in particular, disperse into regional Victoria, often along self-drive touring routes. Out of Victoria’s top eight source markets for international visitors, the highest expenditure per night is from Singapore, followed by Indonesia and Malaysia. In terms of expenditure per trip, the highest yielding market for Victoria is Indonesia, followed by China, Malaysia and Singapore.15
Business tourism from South East Asia is also growing strongly, with increases in business tourism from Malaysia (+26.4 per cent) and Singapore (+9.5 per cent) in the year ending December 2012.
Victoria’s strengths
- Victoria’s tourism offering to the South East Asian markets include:
- A cooler climate, high quality shopping, entertainment and nightlife, and outstanding food and wine experiences.
- Easy access to the natural beauty and wildlife of Victoria’s regions, including Victoria’s snowfields.
- Excellent infrastructure for major events, including business events.
- A strong student population which generates significant ‘Visiting Friends and Relatives’ traffic.
- The range of low-cost travel options made available by low cost carriers, greater air connectivity and the increasing number of individuals travelling overseas will remain the main catalysts behind the anticipated strong growth in inbound visitor numbers from South East Asia.
What we will do
- Maintain Tourism Victoria’s South East Asia regional office in Singapore and work with our public relations partners in Malaysia and Indonesia to stimulate growth in inbound visitor numbers from the region.
- Continue to work with Tourism Australia and key airline and travel distribution partners including travel agencies to enhance awareness of Victorian destinations.
- Establish Victoria as an integral element of an Australian itinerary.
- Maximise high yield visitation.
Urbanisation and infrastructure
The opportunity
Underpinned by regional Governments’ master plans for economic growth, the urbanisation of South East Asia is driving infrastructure development. However, substantial investment is required to meet basic civil infrastructure needs (power, transport, water, land remediation and telecoms) in addition to building modern services such as hospitals, airports and advanced communications.
Governments across South East Asia have acknowledged that private sector participation in infrastructure development is essential to their future growth and are increasingly implementing policies to facilitate improved delivery of infrastructure through public private partnerships (PPP).
There are opportunities for Victoria in South East Asia as a destination for ‘green capital’. Indonesia is attracting overseas technology and capital in water treatment, waste to energy and carbon sequestration projects. The Philippines is the world’s second largest geothermal market.
Victoria’s strengths
Victoria’s infrastructure and urbanisation service providers are recognised as world class in:
- Sustainable cities and urban masterplanning.
- Project management, civil engineering, quantity surveying and cost controlling.
- Architecture (in 2010, Melbourne firm Fender Katsalidis won the tender to design the tallest building in the southern hemisphere, the Warisan Merdeka tower in Kuala Lumpur).
- Health infrastructure: hospital design and systems.
- PPP expertise: governance and legal frameworks, risk management and procurement systems, and financial modelling and controlling.
- Water engineering and technologies.
- Freight and logistics infrastructure, ports and airports.
- Intelligent transport systems.
- Leading-edge green building technologies and systems.
Case study: Vedaleon
Vedaleon Technologies is a privately owned company employing 21 staff headquartered in Melbourne, Victoria. Commencing ten years ago, Vedaleon has created and grown a niche market in the aviation services industry.
Vedaleon develops eCommerce and IT solutions for air transport service providers across the globe and in particular in the fast growing South East Asian and Pacific air services markets.
Vedaleon provides full eCommerce solutions to the Lion Air Group, Air Tahiti Nui and India’s Jet Airways as well as a range of airlines operating in the Asia-Pacific market.
Vedaleon is currently working with global aviation systems provider SITA to develop automated bag drop and real-time passenger management software solutions that have been launched with Jetstar. These solutions provide major opportunities for airports and airlines to improve passenger experience, asset utilisation, ancillary
revenue streams and rates of return.
Vedaleon sees that its export program is enhanced by the Victorian Government’s focus on developing new relationships and growth strategies for Victorian companies in South East Asian markets. Many of these markets are experiencing significant growth and Vedaleon believes it is ideally placed with leading edge products and extensive industry expertise to aid customers with a range of proven tools and solutions designed to minimise cost and maximise efficiency and effectiveness.
Vedaleon looks forward to being part of the Victorian government export program and to benefiting from the range of services and senior level meetings that small businesses struggle to deliver and secure on their own.
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What we will do
- Assist knowledge transfer, training and education to promote Victoria’s infrastructure development experience.
- Facilitate business to government relationships and business to business networks in South East Asian infrastructure markets.
- Work with the Commonwealth Government and aid agencies to develop infrastructure skills training in relevant South East Asian countries.
Environmental services
The opportunity
The emerging economies of South East Asia are well positioned to take advantage of a wealth of environmental sustainability and climate change knowledge and experience in neighbouring countries such as Australia to ensure their long-term economic progress is aligned with environmentally sustainable growth.
Victoria has particular expertise in the areas of:
- Supporting clean technology, recycling and green building systems in urban environments.
- Assisting industry with compliance and regulatory frameworks.
- Remediation of contaminated environments, clean air and water systems.
- Establishing robust environmental sustainability controls and reforms.
- Developing appropriate tourism opportunities in environmentally sensitive areas such as national parks.
Victoria’s strengths
Victoria is a national leader in delivering environment reforms and regulatory improvements as a foundation for a cleaner environment, particularly in the areas of regulatory frameworks and environmental standards. Victoria has a long history of leadership in environmental governance, establishing the world’s second oldest Environment Protection Authority, the Victorian EPA, which provides best practice pollution regulation to support a liveable and prosperous community. This goal is endorsed each time Melbourne is voted the world’s most liveable city. Victoria boasts clean air, clean water and world class natural tourism attractions.
What we will do
- Partner with local governments, businesses and aid agencies throughout South East Asia on projects to clean up waterways
and improve air quality.
- Share knowledge and experience of innovative financing mechanisms for critical environmental works and urban systems.
- Establish partnerships with South East Asian governments to continuously improve environmental protection frameworks.
- Support local businesses to establish relationships and business opportunities in South East Asian markets for high end specialist services and clean technology capabilities.
- Partner with governments and businesses on environmental plans and technologies.
- Work with regional industries and agencies on new resource recovery measures to help reduce waste and to improve recycling, to cut the volume of waste going to landfill sites.
Information communications and technology (ICT)
The opportunity
Across South East Asia, governments are leveraging the fast and pervasive integration of ICT through business and personal use to transform the economic and cultural quality of life for vast numbers of people. The region is striving to be a global ICT hub and is doing so at a greater rate than the rest of the world by increasing access to affordable technologies, encouraging training in ICT jobs and cross-country initiatives to bridge the digital divide both between countries and within countries.
Drivers of rapid modernisation of ICT in South East Asia include:
- Increased consumer spending on connectivity, internet use and devices.
- Vast industry expansion which is underpinned by ICT.
- Emergence of hi-tech corridors within individual countries.
- Industry specialisation (for example, software development in Vietnam, cloud and business process services in Singapore).
- Government initiatives, such as investment in broadband networks and extending ICT services to rural areas (for example, Indonesia’s target of all rural areas receiving ICT coverage by 2015).
Victoria’s strengths
Victoria has recognised capability across many ICT disciplines. Some of the greatest potential and scale of opportunity across the key South East Asian markets include: mobile technology, spatial technology, e-Learning and e-Health, banking and finance IT and wireless and broadband.
What we will do:
- Work with partners in Kuala Lumpur and Singapore to create export opportunities for Victorian ICT companies, attract investment opportunities and promote Victoria’s ICT capabilities.
- Promote Victoria’s regional ICT capabilities through participation in CommunicAsia2013 in Singapore.
Case study: William Angliss Institute using ICT to deliver education and training in South East Asia
Victoria’s William Angliss Institute uses ICT connectivity to deliver teaching and learning resources to improve the mobility of tourism professionals throughout South East Asian countries.
William Angliss Institute has campuses in Singapore, Thailand, Malaysia and Sri Lanka, providing education, training and consultancy services to international tourism,
hospitality and food industries. William Angliss Institute has been working with the ASEAN Secretariat since 2005.
The Common ASEAN Tourism Curriculum project is improving human resource capabilities to offer better standards of service and ensure consistent quality of products and services across the region over time, narrowing the gap between developed and developing countries within the region.
William Angliss Institute has utilised its curriculum expertise to develop a Common ASEAN Tourism Curriculum (CATC). The CATC along with a Regional Qualifications Framework and Skill Recognition System (RQFSRS) developed 242 competency standards for 52 qualifications across six labour divisions of the tourism industry (front office, housekeeping, food and beverage, food production, tour operations and travel agencies).
The CATC has been endorsed by all ASEAN member countries. The endorsed competency standards and curriculum framework provide the blueprint of the standards required for training tourism professionals across South East Asia, promoting uniformity and consistency of tourism training programs and promoting labour mobility in the region.
William Angliss Institute used ICT to disseminate and engage with industry stakeholders, including online surveys and a web based repository of the 242 competency standards for easy access by participating tourism professionals.South East Asia Market Engagement Plan 2013 23
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Financial services
The opportunity
Along with demand for traditional consumer products, the demand for financial services is also increasing. There are growing opportunities in South East Asia for wealth management, funds management, project and infrastructure finance and Islamic finance. Accessing the region’s financial services market will require Victorian businesses to identify their niche in terms of skills and products.
Victoria’s strengths
Recognising the importance of Islamic finance, Victoria is developing expertise in this growing market and was the first state in Australia to ensure financial institutions are
able to operate in accordance with Islamic finance principles.
Melbourne is home to the National Centre for Islamic Studies and a number of the city’s tertiary institutions offer programs on Islamic finance.
What we will do
- Facilitate a focused and strategic approach to assist Victorian firms to build local investment and finance relationships in South East Asian markets.
Case study: Amanie Advisors Australia
Amanie is an independent Shariah global advisory firm founded on the core values of integrity, transparency, commitment and accountability. The group has a deep understanding and vast experience in designing Shariahcompliant financial products including sukuk, investment funds, structured products, and liquidity instruments.
When Amanie decided to expand its global reach into the Asia Pacific and complement its Seoul and Kuala Lumpur offices, Amanie chose Melbourne to establish its Australian presence. Key to Amanie’s decision were factors such as the broad and deep cluster of sophisticated financial service firms, the significant size of capital under management and more specifically the Victorian Government’s Gulf States Engagement Strategy which Amanie saw as an alignment of the State’s intentions with its own.
On April 16, 2013 Amanie held its first Australian Islamic finance forum in Melbourne. The day attracted the Australian financial community and focused on Islamic finance’s growing role internationally. The forum fostered an environment for high quality discussion and networking amongst attendees.
South East Asia represents a significant opportunity for Australian business and Amanie can attest to the benefits of undertaking business in the region.
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Healthcare
The opportunity
South East Asia’s emerging economies are increasingly reliant on private investment to assist governments in healthcare delivery. In the face of continued population growth and rising expectations of care, some countries are looking to increase the GDP proportion of their health expenditure.
Opportunities for Victoria in South East Asia’s healthcare markets include: health products; management and consulting services for new health systems development; attracting new foreign investment into Victoria’s health sector; and medical research exports.
Victoria also has opportunities to grow exports in the areas of medical and health education and training, biotechnology, medical devices, pharmaceuticals, and mental health programs.
Victoria’s strengths
Victoria has a strong international reputation for health services expertise and particular strengths in the health and aged care sector including:
- Planning and design of health and aged care facilities.
- Development and delivery of management systems.
- Formal training in acute, allied, mental health and aged care.
- Formal training in managing health and aged care organisations, including workforce planning.
- Health systems management, including government compliance/legislative/policy/quality assurance and business and government partnerships.
- Medical research.
- Biotechnology.
- Medical devices.
- Health related IT systems.
What we will do:
Implement a strategic approach to professional health engagement with the countries of South East Asia to facilitate mutually beneficial outcomes while promoting Victoria’s healthcare expertise.
Case study: Hella Australia
Hella Australia, proudly headquartered in Melbourne since 1961 and part of the global Hella organisation headquartered in Germany, is one of Australia’s premier automotive component suppliers and has been engaged in Asia for some time.
More recently Hella Australia has experienced great success in Malaysia and is well positioned to grow in other South East Asian markets. Hella Australia’s success has, among other things, built on the company’s willingness to continuously develop world-class technologies in a range of different industries and provide training and development to employees at all levels.
As South East Asian markets continue to grow, so do consumer preferences. This is driving a focus on higher quality and value products for domestic consumption, along with the demand for higher quality products for export markets. This again provides opportunities for businesses such as Hella to bring an appropriate balance
of quality and value to these growing markets.
The Hella approach has been to identify key markets where it can deliver superior products and understand the pitfalls that can be avoided with careful planning and research.
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Automotive production
The opportunity
Total automotive vehicle production in South East Asia is estimated to increase from three million units in 2012-13 to more than five million units by 2017. This growth is largely increased sales of vehicles especially in Indonesia and increased export of vehicles from Thailand.
Opportunities exist in the significant automotive markets of Indonesia, Thailand, Malaysia, Singapore and Vietnam for Victoria’s technical collaborations in automotive components, research and development, engineering and design, high value components, process improvement and engineering, greencar technology, automotive aftermarket and performance enhancement.
Victorian automotive companies currently engaged with the region include:
- MTM has concluded a Memorandum of Understanding with Proreka (Malaysia).
- Hella has secured two contracts with Proton (Malaysia) for the supply of rear lamps.
- AutoCRC’s collaboration with Proton through the Malaysian Automotive Institute.
Victoria’s strengths
- A track record of on time and in full delivery.
- R&D, design, engineering, product and process development, and advanced manufacturing.
- Design, develop and manufacture components from concept through to production.
- Product testing to global safety standards.
- Significant tooling design and build capability.
- Small scale capability and broad experience base.
What we will do
Support Victorian automotive businesses to capitalise on opportunities resulting from the recently signed Malaysia-Australia Free Trade Agreement and to further develop relationships with ASEAN business partners.
6. South East Asia is a region of economic diversity
The vast demographic, cultural, political and economic differences in the countries of South East Asia have often been the basis for a lively engagement with the world. Regional diversity means that each South East Asian country has its own particular internal characteristics that are driving enormous changes.
Victoria aspires to developing deeper engagement with each of the 11 countries in South East Asia and this Market Engagement Plan identifies ways that closer ties can be progressed over the coming years. In the shorter term, however, there are important trade and investment opportunities in Indonesia, Malaysia and Singapore that can be developed for mutual benefit through Victoria’s existing business, institutional, cultural and government relationships.
Indonesia, Malaysia and Singapore account for 56.5 per cent of South East Asia’s combined GDP (purchasing power parity)16 and Victoria is well placed to tap into the strong growth forecast in these economies over the next five years of, Indonesia (6.4 per cent), Malaysia (5.2 per cent) and Singapore (3.5 per cent) respectively.17This selection does not detract from the importance that Victoria ascribes to each of the 11 countries in South East Asia and we remain committed to deeper engagement with each country through ongoing and shared attentiveness, understanding, discussion and exchange.
“Hella Australia has over many years collected experiences in our neighbouring countries. This has led to direct business in South East Asia as well as investment into the region such as in the Philippines. It takes a long-term approach as well as understanding the different and diverse cultures in the South East Asian region.”
Lothar F. Schmidt, Director OE Sales, Hella Australia Pty Ltd
Indonesia
The opportunity
Indonesia is rapidly emerging as a regional and global economic powerhouse. Indonesia has the largest economy and population in South East Asia and is the fourth largest economy in East Asia (after China, Japan and the Republic of Korea). Demographic projections indicate an additional 90 million Indonesians will have joined the world’s consuming class by 2030 and Indonesia will have grown to become the world’s seventh-largest economy.
Indonesia’s ambitious economic development plans present challenges and opportunities for Victoria to strengthen relationships at the provincial as well as national level of the Indonesian Government. At the provincial level, there is a role for the Victorian Government to advocate Victoria’s interests and facilitate opportunities arising from Indonesia’s growth. For example, many provincial Indonesian governments have a high demand for new infrastructure, such as airports and shipping ports to improve logistics and efficiencies across thousands of Indonesian islands. This is an area in which Victorian businesses have acknowledged experience in developing projects to successful completion.
Other opportunities for Victorian businesses to deepen their Indonesian relationships include: education and training for the vast numbers of middle income earners employed in Indonesia’s emerging service industries; food services and agribusiness (Indonesia is the largest food market in South East Asia); information and communications technology; tourism; healthcare and pharmaceuticals; automotive (particularly fuel-efficiency); mining services; and clean technology.18
Master Plan: Acceleration and Expansion of Indonesia Economic Development 2011-2528 South East Asia Market Engagement Plan 2013
The Indonesian Government’s economic plan is aimed at accelerating economic growth whilst ensuring development includes the country’s poorer regions; much of Indonesia’s recent growth has centred on Jakarta, while the rest of the country has been slower to develop.
The total investment required under the plan is an estimated IDR 4,000 trillion (A$400 billion) with the Indonesian Government contributing approximately 10 per cent and the remainder to be funded through private sector and public private partnership.
The plan focuses capital spending on a number of key areas including: skills and education; infrastructure; resource efficiency; inequality and regional disparity; governance, regulation and security. There are a number of areas in which Victoria is well positioned to assist, including:
- International education.
- Research and development partnerships.
- Professional services (particularly project management, legal, financial).
- Infrastructure and urban planning.
- PPP.
- Government capability building.
Current Links
Victoria’s current engagement with Indonesia has strong informal networks and relationships fostered through migration and educational ties over many years. Indonesia is currently the fifth largest source of international student enrolments in Victoria.19
Trade between Victoria and Indonesia has grown significantly over recent years, especially in Victorian food exports, such as wheat and dairy. Indonesia is Victoria’s tenth largest merchandise trading partner with two-way merchandise trade between Victoria and Indonesia during FY2012 valued at A$2.13 billion.20 Indonesia is a modest source of foreign direct investment (FDI) into Victoria, but there has been notable investment such as the Halim Group’s purchase of Melbourne’s iconic Windsor Hotel.
Victoria’s strengths
Victoria has highly regarded experience in urban planning, civil infrastructure, architecture, public-private partnerships, water engineering technologies, health and education system design and ICT, that can assist Indonesia’s ambitious development plans. In addition, Victoria’s food services and agribusiness industries have a reputation for clean, green produce.
Victorian-educated alumni are prominent in Indonesian government and business and are strong ambassadors for the State. Victorian education institutions have a good reputation in Indonesia. An increasing number of Victorian tertiary and TAFE institutions are offering education and training programs catering for the skills needed, in-country as well as in Victoria.
Market challenges
- Highly decentralised government administration. Much of Indonesia’s decision-making authority and responsibility for action is largely located at the provincial level.
- Dealing with complex and unfamiliar regulatory environments along with commercial contract administration can be time consuming. Therefore, great importance is placed on informal business agreements and professional networks.
- Infrastructure limitations can constrain productivity and impede foreign investment.
- Internal security issues, terrorism and civil unrest in some regions have the potential to deter business.
What we will do
Priority one: Facilitate trade and export growth with Indonesia
- Lead a Super Trade Mission to South East Asia, including Indonesia, in June 2013.
- Support Victorian exports through the re-establishment of the Victorian Government Business Office in Jakarta.
- Support Indonesia’s infrastructure development needs including sharing Victoria’s experience in delivering PPPs through:
- partnering with the University of Melbourne to deliver an intensive tailored PPP study tour for senior Indonesian Government officials in May 2013; and
- hosting an Infrastructure/PPP roundtable in Jakarta in June 2013.
- Work with Victoria’s domestic airline industry partners and airlines and regulators in Indonesia to capture opportunities across the air transport training lifecycle.
Priority two: Attract Indonesian investment and assist businesses to internationalise
- Promote Victoria’s proximity, stability, liveability and multiculturalism to encourage Indonesian businesses, individuals and families to invest and live in Victoria.
- Support firms to internationalise through the new Victorian Government Business Office in Jakarta.
Priority three: Foster deeper relationships with Indonesia
- Increase the Victorian Government’s presence in South East Asia with the re-establishment of the Victorian Government Business Office in Jakarta.
- Extend the Victorian Connection program to Indonesia with leading events held each year.
- Strengthen engagement with Indonesia’s provincial governments.
Priority four: Improve Victorians’ understanding of Indonesia
- Advocate the benefits to Victorians of learning Bahasa Indonesia.
- Support deepening institutional linkages in vocational and higher education.
Malaysia
The opportunity
Malaysia is Victoria’s ninth largest trading partner, with twoway trade worth $2.9 billion in FY2012. Malaysia’s major exports to Victoria include crude petroleum, computers and telecommunications equipment. Victoria’s major exports to Malaysia include refined petroleum, wheat, dairy and prepared food products.21
Malaysia’s population of 29 million makes it the third largest economy in South East Asia, with GDP (purchasing power parity) of $492 billion.22 Domestic demand is driving high growth in Malaysia’s services sector (6.3 per cent in January-March 2013) and the construction sector continues to grow vigorously at 18.1 per cent in January-March 2013.23
Victorian companies are expected to increase their engagement following the successful conclusion of the MalaysiaAustralia Free Trade Agreement and the release of significant infrastructure and construction projects arising from Malaysian Government’s 10th economic plan.
These projects comprise 52 PPP projects worth RM63 billion (A$20.3 billion). Among the 52 PPP projects are:
- Seven tolled highways at an estimated value of RM19 billion (A$6.1 billion).
- Two coal-fired electricity generation plants (RM7 billion/A$2.3 billion).
- Malaysian Rubber Board’s land development (RM10 billion/A$3.2 billion).
- Petronas LNG Melaka plant (RM3 billion/A$968 million).
- Two aluminium smelters in Sarawak (RM18 billion/A$5.8 billion).
In addition to basic infrastructure development of almost 12,000 kilometres of new roads and clean water to more than 95 per cent of rural households, Malaysia’s infrastructure initiatives to support growth and productivity targets include broadband penetration of 75 per cent by 2015. RM2.7 billion (A$71 million) is allocated to build roads and rail access to key ports and airports to improve trade efficiency and logistics systems.
Aviation developments in 2012-13 in terms of direct flight access to key cities in Australia include potential increases to Melbourne. These developments are an indication of the growth potential of the Malaysian market to Victoria.
Malaysia has an open and accessible private education system as illustrated by the establishment of international campuses of respected institutions including Victoria’s Monash University and Swinburne University. Specific Malaysian education initiatives to increase workforce capabilities include:
- RM150 million (A$48.4 million) to train 20,000 early school leavers.
- RM7.5 million (A$2.5 million) to train coaches, instructors and facilitators and strengthen the performance culture in Malaysian universities.
Upgrading the skills of Malaysia’s existing workforce offers opportunities for Victoria’s Vocational Education and Training service providers including:
- RM500 million (A$161 million) for training and skills upgrading.
- RM50 million (A$16 million) for training and skills upgrading of small and medium enterprise employees.
- RM50 million (A$16 million) to co-sponsor employees to obtain industrial PhDs.
The 10th Malaysia Plan
The key message of the 10th Malaysia Plan (10MP) is that change is critical if Malaysia is to benefit from the shift of economic power to Asia. The Government’s target is to achieve a high income and developed nation in just ten years.
Malaysia’s challenges include: a lack of private sector investment, declining productivity, inefficient use of resources and skills shortages.
The 10MP provides the platform to transform the Malaysian economy towards a high-income nation and full employment It is a plan for a private sector-led economy with innovation-led growth and the restructuring of subsidies. The 10MP includes a Facilitation Fund that is assisting the implementation of 52 PPP projects worth RM63 billion (A$20.3 billion).
Malaysia is encouraging more foreign direct investment, especially into small and medium sized businesses (SMEs). Currently SMEs make up 99.2 per cent of all businesses in Malaysia, contributing 56.4 per cent of total employment and 31 per cent to GDP.
Malaysia is implementing business friendly measures through a special taskforce, Pemudah (The Victorian Government’s equivalent measures include the Red Tape Commissioner and red tape reduction targets). The impact of the Pemudah is evident in Malaysia’s rise to 12th place from a ranking in 2009 of 20th place in the World Bank’s ‘Ease of Doing Business’ rankings.
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Current links
Victoria has long-standing cultural ties with Malaysia and Victoria is home to more than 35,000 Malaysia-born people.24
The Victorian Government Business Office in Kuala Lumpur provides in-market services and support to develop and maintain relationships with potential and current South East Asian investors and facilitates Victorian exports into South East Asia.
Victoria’s strengths
Victoria’s automotive industry has developed close relations with the Malaysian automotive industry through a series of missions aiming to improve design and engineering skills in Malaysia.
This has culminated in collaborative agreements between respective national automotive research institutions, training bodies and automotive industry associations. Importantly, this engagement has provided the platform for numerous business agreements and deals for Victorian research institutes, design services and component suppliers with Malaysian suppliers and the Malaysian national car manufacturers. These agreements set the platform for a broader engagement and scope of business in the future.
Malaysia is a strong market for Victorian-branded food and beverage products. This means that smaller producers are able to compete in a market of considerable size and opportunity.
Victoria has a reputation as a producer of clean, green produce.Victoria has significant capability in clean technology, especially in the research and development of water, waste, energy efficiency, advanced manufacturing and materials, environmental engineering and remediation, pollution reduction and monitoring and intelligent transport solutions.
Victoria’s globally recognised strengths in the planning, design and construction of sustainable and efficient buildings and cities can tap into Malaysia’s large scale urbanisation programs. These plans include the restoration of rivers and waterfronts and the challenges brought by air pollution from industrial and vehicular emissions and water pollution. Malaysia is a key tourism market for Victoria. In the year ending December 2012, there were 95,900 Malaysian overnight visitors to Victoria, an 8.6 per cent increase on the previous year. Victoria also attracted the largest share of expenditure by Malaysian visitors to Australia (35.2 per cent).25
Aviation developments have had a dramatic effect on this market over recent years. The growth in low cost carriers, as exemplified by the spectacular growth of AirAsia and AirAsia X, has transformed outbound tourism from Malaysia.
Market challenges
- Continuing strength of the Australian dollar.
- Australian airport taxes are high in relation to competing destinations.
- Variable quality control of imported automotive components can create bottlenecks in Victoria’s production supply chains.
- Victorian automotive businesses are aiming to improve their profit margins by moving away from low volume, low value added products to niche and high value component products.
What we will do
Priority one: Facilitate trade and export growth with Malaysia
- Lead a Super Trade Mission to South East Asia, including Malaysia, in June 2013.
- Through the Victorian Government Business Office Kuala Lumpur, continue developing trade links, supporting inbound and outbound trade missions and in-market business support.
- Support Victorian automotive businesses to capitalise on opportunities resulting from the recently signed MalaysiaAustralia Free Trade Agreement and to further develop relationships with ASEAN business partners.
- Work with partners in Kuala Lumpur to create export opportunities for Victorian ICT companies, attract investment and promote Victoria’s ICT capabilities.
Priority two: Attract Malaysian investment and assist businesses to internationalise
- Promote Victoria’s proximity, stability, liveability and multiculturalism to encourage Malaysian businesses, individuals and families to invest and live in Victoria.
- Facilitate investment opportunities with Malaysian companies seeking to utilise Victoria’s high quality research and development resources.
Priority three: Foster deeper relationships with Malaysia
- Through the Victorian Government Business Office Kuala Lumpur, deepen high level government to government and business interaction.
- Extend the Victorian Connection program with leading events held each year.
- Take advantage of Victoria’s world class tourism and major events calendar to further engage key Malaysian stakeholders.
- Pursue opportunities to establish sister state relationships with key provincial governments across the region.
Priority four: Improve Victorians’ understanding of Malaysia
- Strengthen the Malaysian program of the Victorian Connection to better target Victorian expatriates and people who have studied or lived in Victoria to stay connected with each other.
- Advocate the benefits to Victorians of learning Bahasa Malaysia.
- Support deepening institutional linkages in vocational and higher education.
Singapore
The opportunity
Singapore is one of Victoria’s largest trading partners in South East Asia. In the year ending 30 June 2012, two-way merchandise trade between Victoria and Singapore was valued at $4.15 billion.
Singapore is a significant competitor for Victoria, particularly regarding investment in services industries, biotechnology, chemical and petrochemical industries.
Singaporean industries of particular interest to Victoria include: aviation, vocational education and training, ICT and food and beverage.
Victoria has received the greatest proportion of Singaporean investment in Australia with investors including Singapore Airlines, Tiger Airways, Olam International, SPAusnet and Optus.
Victoria’s highly skilled workforce and research and development capabilities provide opportunities for companies in the health, environmental technology and alternative energy industries.
Singapore Airlines operates triple daily services between Melbourne and Singapore and in August 2012, introduced a second daily A380 service. The Victorian Government also collaborates with Singapore Airlines on marketing activities to attract visitors to Victoria.
Singapore’s sovereign wealth fund, the Government of Singapore Investment Corporation (GIC), is the third largest sovereign wealth fund in the world with assets of an estimated $330 billion. The Singapore Government, through another sovereign wealth fund Temasek Holdings, holds a total of $160 billion in assets worldwide. Temasek Holdings is also a majority investor in Singaporean companies such as Singapore Airlines and Singtel. Both funds hold significant assets in Australia, including GIC’s significant stake in the $1.2 billion Myer Emporium retail development project in Melbourne.
Current links
The Singapore-born community in Victoria numbers in excess of 13,500. In 2011, there were 2,940 Singaporean students enrolled across all sectors in Victoria. Of this number, 2,564 were enrolled in higher education.26
A Sustainable Population for a Dynamic Singapore Population White Paper, January 2013
The Singaporean Government’s Population White Paper includes an economic vision to build a dynamic and vibrant economy, creating good jobs and employment opportunities to meet Singaporeans’ hopes and aspirations. The plan aims to direct Singapore’s growth by:
- Remaining open and globally competitive to tap into Asia’s growth.
- Helping businesses restructure and move up the value chain.
- Building a strong and skilled local workforce.
- Supplementing the local workforce with lower skilled foreign workers.
Singapore plans to stay ahead of its regional competitors and continue supplying high value goods and services into regional and global markets.
Singapore is forecasting productivity growth of 2 to 3 per cent per year up to 2020 with an average annual GDP growth rate of 3 to 5 per cent.
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Market challenges
- Singapore is emerging as a competitor for Victoria’s international education market.
- Growth in visitors from Singapore to Australia is anticipated to plateau as new travel destinations emerge and competition increases.
- Exchange rate fluctuations challenge Australia’s position as a good value travel destination.
What we will do
Priority one: Facilitate trade and export growth with Singapore
- Lead a Super Trade Mission to South East Asia, including Singapore, in June 2013.
- Support firms to internationalise through the Victorian Government Business Office in Kuala Lumpur providing inmarket expertise, business intelligence and events.
- Engage Singapore’s Agency for Science, Technology and Research (A*STAR) to promote opportunities to progress Singapore’s science agenda in collaboration with Victorian companies and research institutions.
- Work with partners in Singapore to create export opportunities for Victorian ICT companies, attract investment and promote Victoria’s ICT capabilities.
- Promote Victoria’s ICT capabilities to a regional audience through participation in CommunicAsia2013 in Singapore.
Priority two: Attract Singaporean investment and assist businesses to internationalise
- Promote Victoria’s proximity, stability, liveability and multiculturalism to encourage Singaporean businesses, individuals and families to invest and live in Victoria.
- Actively engage institutional investors to promote significant investments into major Victorian infrastructure, urban development and tourism investment opportunities.
Priority three: Foster deeper relationships with Singapore
- Strengthen the Singapore program of the Victorian Connection to better target Victorian expatriates and people who have studied or lived in Victoria to stay connected with each other.
- Take advantage of Victoria’s world class tourism and major events calendar to further engage key Singaporean stakeholders.
Priority four: Improve Victorians’ understanding of Singapore
- Investigate opportunities for new cultural agreements and sister state relations.
South East Asia presents many opportunities for deeper engagement
Victoria has long-standing and deep relationships with the remaining eight countries of South East Asia, including significant engagement in trade, investment, education and migration. Several of these countries are already important trading partners for Victoria and, over the longer term through ongoing dialogue and exchange, we will build robust engagement plans with each of these richly diverse markets.
The countries of Brunei Darussalam, Cambodia, Laos, Myanmar, the Philippines, Thailand, Timor-Leste and Vietnam comprise a considerable market with a combined population of approximately 340 million and total GDP of $1.56 trillion. Furthermore, these countries account for 43.5 per cent of South East Asia’s combined GDP (purchasing power parity).27
This South East Asia Market Engagement Plan identifies a number of opportunities to build on our existing links within the region, particularly through the Victorian Government Business Offices in Kuala Lumpur and Jakarta and Victorian-educated alumni located throughout the region. Moreover, each country listed in the following pages offers unique opportunities to deepen these connections for long-term and mutual benefit.
Brunei Darussalam
With a population of 430,000, Brunei has the smallest population in South East Asia. Brunei is a wealthy country with a GDP (purchasing power parity) per capita of $51,000 arising from a strong oil and gas industry.28 Victoria imports a significant amount of crude petroleum from Brunei, worth $295 million in FY2012.
In recent years, Brunei has worked to establish itself as a hub for travel between Europe and Australia. There may be opportunities for Victorian businesses as Brunei seeks to diversify its economy by strengthening the banking and tourism sectors.
Cambodia
Cambodia’s economy of GDP (purchasing power parity) $36.6 billion is forecast to grow at more than seven per cent per year to 2018.29
Compared to the very large populations in South East Asia, Cambodia’s population is relatively small at just over 15 million.
Cambodia’s recent record of strong economic growth has been underpinned by growth in tourism and textile manufacturing, as well as foreign investment in infrastructure. The Cambodian Government has taken steps to make it easier for foreign investment to occur by increasing the transparency and stability of the banking sector.
Victoria has a significant Cambodian community as well as being the preferred location for almost 44 per cent of all Cambodian students in Australia.30
Laos
Laos has a population of 6.3 million and an economy of GDP (purchasing power parity) of $20 billion. Strong growth is expected over the next five years at more than seven per cent per year,31 following steps taken by the Government in the 1990s to encourage greater private enterprise. In a sign of the modernisation of the Laos economy, the Lao Securities Exchange was established with assistance from South Korea in 2011.
Laos’ economy is dominated by the country’s natural resources which present opportunities for Victorian mining and extraction businesses. Tourism is Laos’s fastest growing industry and the growing education sector is also an opportunity for Victorian providers.32
Myanmar
Following a long period of isolation, Myanmar’s economy expected to grow strongly at more than six per cent per year.
With a population of more than 60 million and extensive natural resources, opportunities in Myanmar are anticipated to arise over the longer term.33 Myanmar’s imports include textile materials, petroleum products, fertilisers, machinery, construction materials and food. Myanmar is a growing market for Victorian food exports, especially wheat.
The Philippines
The Philippines has the second largest population in South East Asia at 97 million and the Philippines’ economy is expected to grow strongly at more than five per cent per year over the next five years.34
The Philippines is an important food export destination for Victoria, especially wheat, dairy and beef. Two-way trade between Victoria and the Philippines was valued at $444 million in FY2012.35
The Asian Development Bank is headquartered in Manila, providing significant funding for infrastructure development.
The Philippines has a long history with PPP projects and seeks to increase private participation in infrastructure development.
Philippines Development Plan 2011-2016
The Philippine Government’s economic objectives include the following areas:
- Globally competitive and innovative industry and services
- Improved food security
- Increased incomes in the agriculture and fisheries sectors
- Sector resilience to climate change
- Growth in the agriculture and fisheries sectors
- Improved performance of the tourism and agriculture sectors
- Improved access to social goods and services
- Improved environmental quality
- Increased resilience to climate change and natural disasters
- A resilient and inclusive financial system
- Effective and transparent governance.
Thailand
Thailand is a major economy in South East Asia with GDP (purchasing power parity) currently more than $600 billion. The Thailand economy is forecast to experience moderately strong growth, averaging four per cent per year, over the next five years to an estimated $900 billion by 2018.
With a population of 64 million and an expanding middle class, Thailand is an important trading partner for Victoria with annual two-way trade worth $3.1 billion. Aluminium and food products such as wheat and dairy are Victoria’s major exports to Thailand.
The Thai Government’s economic development plans will require a more highly skilled workforce. It is anticipated Thailand will provide further growth opportunities for Victorian education and training service providers.
Eleventh National Economic and Social Development Plan 2012-2016
The Thai Government has identified a broad range of social, economic and environmental objectives for improving the lives of Thai people. While agriculture is the main source of income and food security, Thailand will base its future development on knowledge, technology and innovation.
The Thai Government’s economic objectives focus on developing an efficient and sustainable economy by upgrading production, services and creating effective regional links, improving food and energy security and upgrading eco-friendly technology toward a low-carbon society. The plan’s environmental goals centre on preserving Thailand’s natural resources and environment to ensure an ecological balance and secure foundation for development.
Thailand’s economic targets include:
- Increasing productivity to reach an average growth rate of at least three per cent per year.
- Increasing the GDP contribution of agriculture and agribusiness and the service sectors, and upgrading the manufacturing industry to be more community and environmentally responsible while maintaining high value.
- Raising Thailand’s competitiveness ranking to be among the world’s top ten countries for ease of doing business.
- Increasing funding of research and development with the ratio of private to public sector investments at 70:30.
- Reducing logistics costs to less than 15 per cent of GDP.
- Increasing the ratio of renewable and alternative energy consumption to total energy consumption to at least 19 per cent, reducing energy imports by at least three per cent and reduce the rate of energy consumption by two per cent.
Timor-Leste
With a population of 1.1 million, Timor-Leste is one of the smaller countries in South East Asia. Opportunities for Victoria in Timor-Leste exist in many areas including: basic infrastructure, building and construction, education and training. Timor-Leste has very strong economic growth forecast for the next five years at more than nine per cent per annum.36
Whilst Timor-Leste remains one of the poorest countries in the region, the Government of Timor-Leste has benefited from double digit economic growth based on the development of its offshore oil and natural gas reserves. The World Bank notes in its country overview that Timor-Leste has gone from ‘aid
dependence to resource abundance’.
There is a very strong and enduring bond between Victoria and the people of Timor-Leste. Victoria is home to the largest Timorese population outside Timor-Leste. Many of the current Timorese ministers and senior government officials have studied, lived and worked in Victoria and many retain strong connections with Melbourne.
In February 2012, Acting Premier, the Hon Peter Ryan MLA, confirmed the Victorian Government’s commitment to Timor-Leste with the Prime Minister of Timor-Leste, Xanana Gusmao. This commitment included an endorsement of the Memorandum of Understanding that was signed between the Victorian and Timor-Leste Governments on 20 February 2008 and a commitment to support Timor-Leste undertake the process of nation building and to respond to mutually beneficial opportunities presented by the strong relationship between Victoria and Timor-Leste.
Vietnam
Vietnam has a large population of 90 million and an economy forecast to continue strong growth of more than five per cent per annum over the next five years.37 Vietnam is Victoria’s largest source of South East Asian student enrolments and, importantly, Victoria is the preferred location for 40 per cent of all Vietnamese students in Australia.38 As at the 2011 Census, there were 68,293 Vietnam-born persons in Victoria (36.9 per cent of Australia’s total).39
The Vietnamese Government’s economic development plans will require a highly skilled workforce and therefore increase demand on education and training services. Expansion of urban areas will require new infrastructure in ports, roads and rail, hospitals, schools, industrial parks, commercial areas, residential housing and retail. New tourist resorts will require airports, roads and other tourism infrastructure.
Master plan on economic restructuring in association with conversion of the growth model towards improving quality, efficiency and competitiveness during the 2013-2020 period
The plan focuses on restructuring public investment, credit organisations and public institutions. The Vietnamese Government aims to achieve the restructuring by:
- Using monetary and fiscal policies to curb inflation, secure macro stability and an appropriate growth rate.
- Boost export and development of complementary industries and domestic consumer goods industries.
- Further control prices and markets to maintain the balance of primary goods.
About 20–25 per cent of total budget will be spent on development investment.
7. Conclusion
Victoria’s ongoing and deepening engagement with each country in South East Asia will continue to enrich our lives, culturally as well as economically. Many of these relationships have taken decades to cultivate and we must continue to foster our links if we are to fully enjoy the mutual benefit such long-term associations bring. We will also continue to encourage new links through business, culture, institutions, government and individuals.
This South East Asia Market Engagement Plan signals a new phase in Victoria’s trade and investment relationships with our regional neighbours. The plan builds on existing South East Asian connections across industry, institutions, people and government through commitments including, trade missions,
the Victorian Government Business Offices in Kuala Lumpur and Jakarta, new markets for the Victorian Connection program and in-market Education Services Managers through which Victoria will become the most Asia-capable state in Australia.
This document sets out the Victorian Government’s plan to help deepen the State’s engagement with the 11 countries of South East Asia. While every effort has been made to ensure accuracy and currency at the time of publication, you should verify information for yourself and obtain independent professional advice regarding any investment or other business decision.
References
1 World Bank, World Development Indicators
2 International Monetary Fund, World Economic Outlook. One of two main methods of conversion uses market exchange rates – the rate prevailing in the foreign exchange market. The other approach uses the purchasing power parity exchange rate – the rate at which the currency of one country would have to be converted into that of another country to buy the same amount of goods and services in each country
3 International Monetary Fund 2012
4 International Monetary Fund: Nominal GDP average per annum growth 2013-18
5 Department of Foreign Affairs and Trade, ASEAN economic fact sheet, 13/11/2012
6 Australian Bureau of Statistics, cat 5368.0 - International Trade in Goods and Services
7 International Monetary Fund, World Economic Outlook
8 International Monetary Fund, GDP (purchasing power parity) average year on year growth over the next five years 2012-17
9 Australian Education International
10 Australian Bureau of Statistics, cat 5368.0 - International Trade in Goods and Services
11 World Bank, World Development Indicators
12 Department of Environment and Primary Industry: Victorian Food and Fibre Export Performance 2011-12
13 Australian Education International
14 Tourism Forecasting Committee Forecast 2012 Issue 2; International Visitor Survey, Tourism Research Australia, year ending June 2012
15 International Visitor Survey, year ending September 2012
16 International Monetary Fund 2012
17 International Monetary Fund: Nominal GDP average per annum growth 2013-18
18 Master Plan for Acceleration and Expansion of Indonesia’s Economic Development, 2011-2025
19 Australian Education International
20 Australian Bureau of Statistics, cat 5368.0 - International Trade in Goods and Services
21 Australian Bureau of Statistics, cat 5368.0 - International Trade in Goods and Services
22 International Monetary Fund
23 Department of Statistics, Malaysia: Gross Domestic Product Fourth Quarter 2012
24 Australian Bureau of Statistics, 2011 Census
25 International Visitor Survey, year ending December 2012
26 Australian Bureau of Statistics, 2011 Census Data
27 International Monetary Fund
28 International Monetary Fund
29 International Monetary Fund
30 Department of Foreign Affairs and Trade, Australian Education International
31 International Monetary Fund
32 Austrade: Laos Economic Update
33 International Monetary Fund, Department of Foreign Affairs and Trade
34 International Monetary Fund
35 Australian Bureau of Statistics, cat 5368.0 - International Trade in Goods and Services
36 International Monetary Fund
37 International Monetary Fund
38 Australian Education International
39 Australian Bureau of Statistics, Census of Population and Housing, 2011
In Taiwan, the home country of the two Pom Pom victims, the feelings of outrage are understandably much higher.
