29 December, 2011
The development of the Government’s recently announced White Paper on Australia in the Asian Century reinforces the importance of having business and government work together to promote Australia’s influence in the region, especially though the promotion of solid institutions and sound regulatory frameworks.
Australia’s sustained leadership efforts through the G20, APEC and other bodies is already paying dividends. Australia is emerging as a nation of some influence and has a seat at the table at all major dialogues.
Domestically, the major structural reforms made over the last few decades, including the floating of the Australian dollar, combined with a strong a well regulated financial sector, an independent central bank, a flexible labour market and an on-going structural reform agenda have allowed us to take advantage of explosive growth in Asia, bringing with it unprecedented opportunity for Australia, and Australians.
At one level, Australian business is ideally placed to make a big contribution to the next phase of Asia’s economic development, with the know-how, the ideas and the energy to build new businesses and develop new partnerships and business links.
There is, however, another level on which Australian business can play a more active role. And that is in collaboration with government as an active player in promoting Australia’s influence in the region – or as some describe it, our 'soft power'.
To start, there is scope for business to more actively advocate, and push for changes to, the regulatory and investment environment in the region.
The financial sector has been at the forefront in proactively promoting the structural soundness of the sector. Led by Treasury and ASIC, but with the active support of the funds management sector, the pilot program for an Asian Funds Passport is an excellent example of good policy and business support for an initiative which will increase investor choice, provide access to capital, improve efficiency, lead to cost reductions and the retention of asset management jobs regionally.
By 2050, Asia’s share of global domestic product, led by China, is expected to be double that all the combined major Western powers – combined. The next decade will witness major structural changes to China's growth model, unleashing a new generation of Chinese companies which are better able to compete, positioned higher up the value chain and determined to operate on a global basis. We will see the emergence of globally relevant state-owned entities and experience the dynamism of China's private sector.
In this context, the challenge is to recognise the new reality, the vast implications it holds for Australia, and to imagine how we can use it to strengthen Australia and increase our prosperity.
For business this means being a more active participant in shaping the rules of play. Whether it is through business focussed organisations, industry bodies or think-tank organisations, we have a unique ability to influence the policy agenda – and the outcomes.
But more importantly, just as business is calling on governments to recognise the changing nature of the global economy and to structure its policy settings accordingly, so too must business be prepared to make changes to its own operations and mindsets to accommodate change.
The skill set of future business leaders needs to include a more nuanced and deeper understanding of the political, economic, social and structural changes that are underway in China, Indonesia, India and the rest of the region.
With awareness comes the ability to identify the emerging opportunities and an appreciation of the capabilities needed to push ahead with implementation of business strategies.
Embedded Asian capabilities will be the hallmark of successful organisations. Language skills are already important, but just as crucial will be an understanding of local business culture, the regulatory and legal environment and the role of government.
People to people links and the relationships that are built are vital to business and global relations. Too often the opportunity to build these links at a deeper level is overlooked. There can be no substitute for regular personal contacts and shared experiences as the bedrock for trusted relationships, especially in the context of China's transformation and rise.
The changes that the new world order will require will be a challenge for many. The 'Asian Century' involves more than a shift in strategic and economic power. It is time for Australian business to stand alongside our political leaders and show the world that we are willing and active participants in creation of the structures and institutions to underpin our future prosperity, and that of the region.
For further information, please contact:
David Olsson, Mallesons Stephen Jaques