Our economic future lies to the north
Following a recent trip to Hong Kong and Singapore, NAB Group Executive, Angela Mentis, writes in The Australian that our economic future is increasingly centred on Asia.
By Angela Mentis, Group Executive, Business Banking
It’s time all of Australia realised our playing field is much bigger than we believe. The reality is it is global, but increasingly centred on Asia and its growing middle class.
Every day Australian businesses are finding more ways to move up the value chain and export our products, professional services and expertise.
Our proximity to Asia provides the Australian economy and Australian business with huge opportunities. Today there are an estimated 500 million middle class people in Asia. That figure is expected to rise to 1.7 billion by 2020 and to more than 3.2 billion by 2030 when they will account for 66% of the global middle class.
By 2050 it is estimated that Asian food imports alone will grow by US$470 billion, offering opportunities for huge growth in our agricultural exports – dairy, beef and crops.
Asia’s share of global output has increased from around 15% in 1952 to almost 30% in 2010, and it is forecast to exceed 50% by 2050.
Volatility in share markets globally this week illustrates just how important China’s economy is. Investors are right to be watchful, but it is important we take a long term view. That’s because the potential is enormous.
The question we need to be asking is are we doing our best as a nation to realise that potential? Are we giving Brand Australia every chance to succeed for decades to come?
Free trade agreements are opening doors throughout the region, the falling Australian dollar is making Australian business more competitive, and technology can enable a small business to compete with a big business.
As Australia’s biggest business bank, NAB knows well the opportunity for our Australian and New Zealand customers who are facing north. About half of our Institutional Banking clients, a third of our Corporate clients and one in ten of our SME clients currently trade with Asia because of the opportunities to grow. NAB is right alongside them – as they grow, so will we.
Australia is uniquely positioned as more of Asia shifts from “build” to “grow and consume”. While resources remain critical to our future, the burgeoning Asian middle-class wants our services – Australian expertise in health, education, governance and business financial and professional services. The demand for agriculture – dairy, beef, seafood and crops – grows daily because in Asia, where food security is paramount, Brand Australia means clean, green and fresh.
Australian businesses growing north include Shepparton-based dairy manufacturer Pactum Dairy Group – part of the Freedom Foods Group – which NAB helped introduce and then develop a relationship with China’s Bright Foods and New Hope Group, resulting in a strategic supply agreement for high-quality dairy milk.
And then there’s Skybury Tropical Plantation from Far North Queensland. Skybury is experiencing growing demand for its premier single origin Arabica coffee among coffee lovers in Asia, particularly Singapore, who are attracted by the great taste and company’s green credentials.
These are just two of many Australian companies whose futures are being propelled by the Asian demand for Australian produce and expertise.
The opportunity in Asia is not limited to exports. We also view our role for Australian business and the economy as the bridge that extends both ways. Just as the trade flows shift north, increasingly the investment flows are coming south from Asia.
I was recently in Hong Kong and Singapore with major clients and institutions who are hungry for opportunities in Australia because of the long-term value. They have the capital to invest and are attracted by our natural resources, stability as a nation and economy; and in particular the huge potential pipeline of infrastructure ripe for investment – infrastructure critical to meet the needs of Melbourne and Sydney as they rapidly expand, but also to realise the potential of northern Australia.
This long-term approach our Asian clients take is something Australia’s political and business leaders must heed, and the National Reform Summit co-hosted by The Australian and Australian Financial Review on Wednesday is a show of intent. But the hard work is ahead of us. We must think and act long-term if we are to not just talk and plan for the next phase of nation building but deliver it.
In these pages last weekend, Greg Sheridan warned of the risk to Australia’s reputation as a place to do business posed by the mixed signals sent to investors through decisions such as the cancellation of contracts for the East West link in Melbourne and campaigns against the China free trade agreement. My meetings in Asia tell me these investor concerns are real.
As a nation we must recognise and remember that foreign investment brings new wealth, new opportunity and jobs. That’s why NAB submission to Infrastructure Australia’s first national infrastructure audit advocates for certainty over which projects will be developed. NAB argues that government policy needs to be formed on the back of an agreed plan of infrastructure priorities, based on transparent cost-benefit analysis. This will help realise priority projects by assuring investor confidence – confidence that is vital at a time when Australia is competing with a multitude of other developing and developed markets for capital investment.
Corporate Australia has a significant role to play in advocating for reforms to ensure Australia’s long-term infrastructure requirements are met, but this leadership must extend to our elected representatives. A bipartisan and de-politicised long-term approach has the capacity to deliver greater confidence in the infrastructure pipeline, thereby elevating Australia as a preferred destination for offshore capital.
Our future is in facing north. The potential and possibility is there for enduring growth for the prosperity of generations to come. Build Brand Australia and build our nation.