ASEAN businesses should not underestimate opportunities 'Down Under'

Access to capital, commodities and infrastructure expertise can unlock new opportunities for the fast-growing region.

In late August, government and business leaders from across Australia and Southeast Asia met in Canberra to discuss how to further catalyse two-way commercial and investment opportunities between Australia and ASEAN.

That the Australia-ASEAN Business Forum so closely followed the historic ASEAN-Australia Special Summit in March is a clear indication that the Australian Federal Government’s ambitions for a role in ASEAN are matched by the business community’s willingness to engage.

It’s no wonder that companies in Australia are alive to the opportunities that exist for them in Southeast Asia. The ASEAN region is on track to become the world’s fourth-largest economy and a $4t consumer market by the end of this decade, thanks to a booming, youthful population that is enthusiastically embracing digital technologies and other new economy sectors.

But what of opportunities Down Under for Southeast Asian businesses? 

It’s true that many ASEAN firms have been focused on opportunities with the rest of Asia – as have their Australian counterparts. Australia accounts for only around 5% of total outbound investments from ASEAN.

It’s also true that Australia’s strengths as a developed market and primary resources producer hold huge potential for Southeast Asia. Australia’s population may be only a 20th that of ASEAN, but its food, minerals and financial resources are important ingredients in ASEAN’s continued economic success. 

Business leaders in ASEAN should be looking to capitalise on the growing interest in Australia by seeking out and educating their Australian counterparts about the scope of the opportunity in their region. They can also do more to understand how best to package investments to meet the needs of Australian investors. 

We’re convinced that deeper engagement along the ASEAN-Australia corridor will present rich opportunities in both directions.

Complementary strengths
The complementary nature of ASEAN and Australia is often underestimated. Take Australia’s pensions industry, for instance – a A$3.9t superannuation savings pool that is running out of domestic investment options. Southeast Asia, meanwhile, has a parallel need for infrastructure development: an average annual spend of $210b will be required between now and 2040 in order to bridge the $3t gap in the region’s infrastructure investment funding.

Big Australian investors also have a long track record in providing finance for the infrastructure sector. Transport, renewable energy and data centres are currently amongst the most popular segments – and all align well with the opportunities in Southeast Asia.

Australia’s technology sector can also complement the growth of the digital economy in Southeast Asia. The region has already become a world-leading innovation powerhouse brimming with digital economy companies. Its digital economy is set to reach $600b in value within six years.

Australia and ASEAN also share a strong commitment to free trade, which will allow them to benefit from long-term geopolitical trends which are reshaping global supply chains.

In recent years, the business community in Australia has come to realise that the growing markets of Southeast Asia will be critical to their growth ambitions. ASEAN businesses can do well by stepping up their engagement, too.

A willingness to engage
Initiatives such as the A$2b Southeast Asia Investment Financing Facility, announced by the Australian government in March, are a direct example of how businesses will benefit from increased interaction.

Government support of this kind is critical. It means that Australian companies in a range of industries, including professional services, engineering, and logistics will gain the confidence to enter ASEAN markets and build supply chains around targeted multi-billion dollar and multi-generational investments.

For our Southeast Asian partners, there will be many benefits from the increasing focus by Australian companies on country-specific opportunities. The recently-signed Memorandum of Understanding between Malaysia and Singapore, to develop the Johor
Singapore Special Economic Zone, is a perfect example of where Australian businesses will find demand for their expertise and products. We have already seen Australian companies like AirTrunk choose Johor for their investments in data centres, one of the priority areas for the economic zone. 

ASEAN companies will stand to benefit from that dynamic because major inbound investments have a multiplier effect, creating jobs and opportunities throughout the value chain.

Australia, meanwhile, is open to investment from ASEAN businesses that are looking to leverage their skills in a mature market. Philippines renewable energy firm ACEN, for example, counts Australia as one of its largest overseas markets.

In fact, it’s easy to overlook just how much ASEAN is already investing in Australia. Investment flows from ASEAN into Australia totalled A$180.7b in 2023, nearly 80% higher than the A$101.4b invested by Australia in the opposite direction.

All this builds on the existing strong trading relationship between ASEAN and Australia. Goods and services imports from ASEAN accounted for nearly 18% of global imports into Australia in 2023, rising from A$62.1b in 2022 to A$97.2b and second only to those from China.

Supported by government initiatives both in ASEAN and in Australia, this relationship is set to strengthen further. Spaces like the Australia-ASEAN Business Forum provide critically important opportunities for both sides to broaden their engagement. For businesses in ASEAN, there are many opportunities to capture.