Sent: 14-03-2012 09:57:03
In this issue:
Return to full article list
HomeFree weekly newsletterSelf Managed Super Fund ArticlesContact usLogin
Little Enthusiasm for Asian Century
The Australian government is being presumptuous and possibly wrong in proclaiming an Asian century. Its call for submissions to help it create a White Paper seems to have fallen on deaf ears.
Last year, the Gillard government decided that Asia will be "the greatest influence on the future prosperity of Australia" and commissioned a White Paper in September 2011 on how Australia can deepen its engagement with its near neighbours. An advisory panel headed by recently retired top bureaucrat Ken Henry is helping the government sort out its views.
A White Paper is supposed to be far more than a discussion opener. It should provide specific guidance about policies the government intends to follow. It should present a framework within which business, political and social affairs can be conducted without disruption from policy changes.
Among the matters to be considered in the White Paper will be "the current and likely future course of economic, political and strategic change in Asia, encompassing China, India, the key ASEAN countries as well as Japan and the Republic of Korea".
A frank assessment of these matters could risk antagonising the very countries with which the government wishes to engage.
In looking forward 100 years, China is going to face the possibility of a revolution that topples the dictatorship of the communist party, at some time. Any government commenting on this today will surely invite a rebuke. So, too, would an honest assessment of how Australian business can connect with corruption ridden Indonesia.
To offer a meaningful strategic analysis, the government will also need to be bold enough to take a view about some of the big global variables like the direction of the US dollar and the future level of oil prices.
Governments are usually coy about making comments on these matters but there is no way that any government can give business a meaningful strategic outline without putting its view on these and a wide range of other topics playing on the minds of investment decision makers.
If these aspects of the document are limited to bland descriptions of current conditions, the government will not be adding anything to the strategic store of knowledge necessary to help guide Australian companies or individuals in their dealings in the region.
To help the panel formulate its views, an initial period of consultation sought submissions addressing the terms of reference. When the deadline for submissions to the panel came last week, there were 228. This was surprisingly few for a topic that is supposed to dominate the century.
The reticence to respond could mean many things: people are too busy; the topic is too vast; or business strategists do not rely on government as much as the government thinks.
Perhaps everyone already has their Asian strategy and only the government is still floundering to work out what it thinks.
There were no more than five or six submissions from operating businesses, depending on how sporting bodies like Tennis Australia and the national soccer body are categorised. Among major companies, only Rio Tinto and ANZ Banking Group featured. Those entities already depending most on government funding seemed to be most likely to make a submission to the panel. Perhaps they are used to the process.
Any company with a sound grasp of what is happening in the region or a clear view of its own strategic positioning might be reluctant to put its intellectual capital on display to be picked over by competitors.
Umbrella bodies like the Australian Chamber of Commerce and Industry did make submissions. They put their well known views about workplace relations, taxation and business regulation. One suspects much the same set of thoughts would have emanated from their Canberra headquarters if they had been asked to discuss how Australia could engage with Uruguay or Botswana.
For anyone like this writer who grew up in Western Australia and worked in Queensland over the past 30 years, there is nothing new in the looming importance of Asia. The renewed focus on Asia this time comes with a China and, to a lesser extent, an India bias. Current views are very much a product of the outstanding growth profiles of these countries over recent years.
The share of global output accounted for by the so-called advanced economies has been shrinking in the face of their growth. But China has not been the only reason the share of global output from the advanced economies has been slipping. The International Monetary Fund, for example, is forecasting that Latin American and Caribbean countries are in the midst of a 10 year average 4.3% growth path. Sub Saharan Africa is running ahead at a 5.7% rate. The advanced economies over this time are growing at just 1.7%.
The distinguishing feature of the global economy today is the breadth of the growth. Countries freeing up markets in every corner of the world have stimulated economic growth in ways not seen for hundreds of years.
If anything, we are near the beginning of a global century. The paradigm in which one region of the world - whether Europe, north America or Asia - dominates conspicuously for a lengthy period of time may not apply any longer.
This means economies like Australia's will need to develop multilateral linkages not only within the Asian region but across the globe to maximise its promise.
Trying to put in place a vision about the political and economic conditions in each Asian country in 2030, for example, could simply be inviting companies to wear a commercial straightjacket that prevents them from reacting opportunistically to events as they unfold around the world.
Governments have an exceptionally poor track record as business strategists. Admittedly he was no friend of government, but Lang Hancock often observed that Australia would not have an iron ore industry if it had been left to its governments to foresee the potential.
Governments are too frequently hostage to the present time or their thoughts are so anchored in the most recent past that they end up simply extrapolating already known conditions rather than genuinely anticipating changes.
Perhaps that is one reason Australian companies have not readily embraced the opportunity to engage with the Gillard government on this topic.
This email is general in nature only and does not constitute or convey specific or professional advice. Legislation changes may occur quickly. Formal advice should be sought before acting in any of the areas discussed. Be aware that the information in these articles may become innaccurate with time. Responsibility is disclaimed for any inaccuracies, errors or omissions. Particular investments are neither invited nor recommended and hence this publication is not "financial product advice" as defined in Section 766B of the above legislation. All expressions of opinion by contributors are published on the basis that they are not to be regarded as expressing the official opinion of any other person or entity unless expressly stated. No responsibility for the accuracy of the opinions or information contained in the contributor's articles is accepted by any other person or entity. Copyright: This publication is copyright. If you wish to reproduce this article you require a license, which can be purchased here, to do so.