14 May 2020
As Australians, there's one simple question we should be asking ourselves every day: "What's the one thing I can do to build our relationships with Indonesia and India?"These two remarkable nations are on our doorstep, forever linked with Australia, and particularly WA, by the vast Indian Ocean.
One is our nearest neighbour, the other an old Commonwealth friend.Both are predicted to be among the world's top four economies within 30 years, along with the US and China.Both have huge emerging populations of middle-class consumers.And both are vibrant democracies.Even before trade tensions with China emerged in recent days, and before the COVID-19 shock, the need to spread the risk and diversify our export markets was obvious.China is our biggest trading partner, and we should never forget that this relationship has brought huge economic benefits to the people of both countries.China is likely to remain our biggest export market for some time, particularly as a buyer of WA's bounty of iron ore and liquefied natural gas (although Chinese demands for these products is forecast to plateau over the coming decades).In order to safeguard Australian jobs, we must do our best to ensure that our productive trading relationship with China continues.Disengagement is not an option.But at the same time, we need to get serious about the need for diversification of our export markets.Just as we might seek to diversify where we keep our personal savings with the aim of guarding against shocks, it makes sense for Australia to grow the volumes of goods and services we produce and to send them to more countries around the world.Calls for Australia to diversify its trade are common, but are usually made without a plan or call to action.Simply wishing for extra markets won't make it happen.We should start by acknowledging that diversification is hard and that it will take decades to realise.But nothing will happen unless the Commonwealth makes it a priority.Following World War II, no export market compared to Britain, but Australia's leaders of the day, including Sir Charles Court, worked tirelessly to build a resources industry to export into Japan and Korea and later to China.Today, it is that industry that will form the backbone of our COVID-19 recovery.Now we must resolve ourselves to a great national effort to undertake diversification.We should be asking ourselves: what can I do today to better understand the people of what will be two of the world's largest economies?It may be as simple as learning some new phrases in Indonesian. After all, it's something of a national embarrassment that more students in Australia were learning the Indonesian language in the 1990s than they are today.Our overall knowledge of Indonesia remains limited, and our economic links with this emerging giant are going backwards.Australia invests more in Luxembourg, Ireland and Papua New Guinea than we do in Indonesia.Indonesia accounts for only around two per cent of Australia's exports.Governments, business people and plenty of ordinary Australians have long held an unfairly negative view of Indonesia that has consigned it to the "too hard" basket.Fortunately, there is some hope that the Indonesia-Australia Comprehensive Partnership Agreement (IA-CEPA) will boost trade volumes when it comes into effect on July 5.In theory, this will allow Australian businesses to capitalise on Indonesia's rising demand for consumer goods and services, particularly premium food and beverages, education, healthcare and financial services.But these companies will need to make a long-term effort; the Indonesian market rarely offers overnight success.Those looking to make a difference in the national interest might also consider getting to know some of Australia's 700,000-strong Indian diaspora.Or they could consider reading the work of Peter Varghese on our relationship with India.Varghese, a distinguished former diplomat, produced a ground-breaking report on India late last year that was met with strangely little fanfare.He found no single market over the coming decades offered more opportunities for Australian business than India - in areas as diverse as education, agriculture, energy, resources, tourism, healthcare, financial services, infrastructure, science and sport."The opportunities . . . will not fall into our lap," he wrote."What's now needed is a step change in the economic partnership, led at the highest levels of government and business."Many of the recommendations in Varghese's report - submitted in December last year - are still awaiting a government response.Meanwhile, we are left with grim statistics that show over the past decade, even as India's economy has more than doubled in size, the value of WA's trade with India has more than halved.Diversification of our export markets will take years and years.But a step must be taken each day and a national effort must go on to solidify our engagement with our neighbours in Indonesia and India.Our future prosperity depends on it. This piece was first published in The West Australian on Thursday, 14 May, 2020
Authorised by Madeleine King MP, U 4-5 Chalgrove Ave, Rockingham WA 6168