Wednesday 06 Oct 2021 | 16:51 | SYDNEY
Wednesday 06 Oct 2021 | 16:51 | SYDNEY

Australia 'Asian Century': A view from Bangkok

19 April 2012 11:13

Bandid Nijathaworn is a former Deputy Governor of the Bank of Thailand and is now chair of the Thai Bond Market Association.

This year, Australia and Thailand are due to celebrate 60 years of diplomatic ties, a relationship that economically has moved from strength to strength. Since the landmark free trade agreement between the two countries in 2005, Thailand is now Australia's ninth-largest trading partner.

For any Thai familiar with Australia, the Sydney Opera House, good wine, affordable quality education, beautiful cities and trustful business practices are things that easily come to mind when Australia is mentioned. All this indicates a higher recognition of Australia now for its strength as a country that offers quality and systematic processes, an impression that is probably shared throughout Asia. 

For Asia, Australia's economic role has become increasingly intertwined with the region. Asia is now Australia's largest trading region, and Australia supplies a large proportion of the commodities and mineral resources that drive Asia's industrial growth. Such mutual roles will only increase as the process of development and urbanisation in Asia continues. So, going forward, Asia will need Australia as much as Australia will need Asia.

A key question for Australia in the Asian Century, then, is how Australia can best use its relative economic strength to engage closely and constructively with Asia beyond its current role as the region's major exporter of commodities.

Analysing Australia in the Asian century from this perspective, one sees a large scope for a constructive engagement between Australia and Asia to develop further, an engagement that will offer mutual long-term benefits to both.

First, while Australia will benefit from having Asia as its markets for commodity exports, Australia will need Asia more as a market for its services, an industry which accounts for over 70% of Australia's GDP. Growth of the services sector is vital for Australia's long-term competitiveness and economic survival, given its uncompetitive manufacturing sector and the need to reduce the dependency on the resource sector so as to avoid a repeat of the damaging booming sector effects, as was the case in the past.

Asia offers an ideal market for the Australia's services industry to grow. More importantly, for Australia's services industry to develop into a global competitive force, it also needs a market that can be a learning ground for its product development and for sharpening its competitive edge.

In this respect, Asia's growing middle class, with generally less sophisticated demand, is an ideal market. This is similar to what Singapore is doing currently with its service industry, which is increasingly playing a regional role. In this respect, Asia is of immense importance for Australia's long-term economic viability, both as market for commodities and as a source of future competitiveness.

Second, while Asia benefits from Australia as a supplier of commodities and services to fuel growth, countries in Asia can benefit much more from Australia's recent successful experience in development and restructuring, especially in the public policy process and governance, which have transformed Australia into one of the world's most competitive, least unequal, and well-managed economies. For Asia, maintaining growth while upholding financial stability and ensuring a fair distribution of growth benefits will be a key challenge. Australia has done well and has a lot to offer to Asia.

Finally, as global economic power shifts to Asia, Asia will also need support of countries outside the region to help with its new responsibilities and leadership role. This is also an area in which Australia can be helpful, given the country's status and track record in the world economy.

Therefore, Australia will be of immense value to Asia if the country's strength and experience can be deployed in a manner that will help Asia sustain its growth, stability, and development. To this end, there are at least three roles that Australia can meaningfully contribute.

The first is the role of gate-keeper for the international commodities market. As Asia will need efficient and secure access to the supply of raw materials to fuel its growth in the Asian century, Australia — as a major exporter of commodities – can contribute by helping to improve the integrity, regulation, functioning, and transparency of international commodities markets. This is an area where Australia's involvement will be of potentially great value to Asia and to the world alike, given the country's strong commitment to promoting an efficient market and good public policy.

The second is its role as Asia's dependable voice on global issues. Important in this context is the issue of global governance in international economic policy and a fair setting of global standards and regulation.

The third is its role as Asia's partner in development. Australia's vast expertise and experience can contribute importantly and usefully to Asia's capacity and institution-building at all levels. Particularly important in this context is the public policy process and governance, issues that have become a challenge for most countries in Asia.

So, Australia will be important for Asia as much as Asia will be important for Australia in the Asian Century. The key is to focus on the synergy that will bring benefits to both.

Photo by Flickr user Mike Behnken.