The 'Asian Century' may not be that good

The Sydney Morning Herald September 20, 2012 - 8:05AM by Tim Colebatch

We've heard so much about the potential for Australia to benefit from "the Asian century" that it seemed right that two eminent Asian economists opened Wednesday's official conference on the Asian white paper with a warning: it might not be that good.
Malaysian-born, Melbourne-trained economist Jayant Menon, now with the Asian Development Bank, said that if all went well, Asia (also Phil? ) by 2050 could have living standards similar to those of Europe today. But it is also possible that countries such as China, India and Indonesia could reach middle-income levels, then lose momentum, as Malaysia and Thailand have.
Asia, too, has challenges to overcome, Dr Menon reminded us. It has been very successful in its "catch up" phase of growth, but to reach Western levels, Asian countries will need to spread the benefits to all their people, become innovators at the frontiers of technology and science, develop lower emission technologies, attractive cities, and deep financial markets — and in China, among others, cope with a fast-shrinking labour force.
Professor He Fan, of the Chinese Academy of Social Sciences, was similarly frank about China's future challenges, which include a fast-shrinking labour force, due to its one-child policy. China's workforce will peak next year, he said, then start shrinking — putting a serious brake on growth.
And while Australia could expand its exports to China to high-value agricultural produce, manufactured goods and services, he noted, they will have to compete there with manufactures and services from all over the world — and proximity will not be the big advantage it has been for exports of bulk minerals.
Professor Anne Krueger, former deputy chief of the International Monetary Fund, was also wary of assuming that Asia is set to continue its stellar growth path. She backed Dr Menon's warnings, saying Asian countries will face slower growth as they approach convergence with the West and in China and Korea, workforce growth reverses, and fewer workers have to support many more retirees.
The Gillard government appointed former Treasury secretary Ken Henry to head a taskforce to prepare a white paper (policy statement) on how Australia could best position itself to benefit from what it calls "the Asian century". Julia Gillard and Treasurer Wayne Swan constantly beguile us with images of Australian schools, health care professionals, farmers and niche manufacturers finding new markets among Asia's rapidly-growing middle class consumers.
At the seminar, hosted jointly by Treasury, the Reserve Bank and the International Monetary Fund, no one disputed the central thesis that Australia's future lies in developing closer ties with Asia. But there was a clear gulf between the optimism of officials' confidence that Asia will sustain high commodity prices for a decade or more, and the estimate of Victoria University professors Peter Sheehan and Bob Gregory that within a year or two, mining investment will start falling, and detracting from our growth rather than sustaining it.
Both the officials and the outsiders agreed that what we call the resources boom really has three distinct phases. To summarise Professor Gregory's version:
? Phase 1: rising commodity prices. Between 2003 and 2011, the world decided to roughly double what it paid for our minerals. That added about 10 per cent to Australian incomes, and drove up the Australian dollar, making our imports cheaper. But that phase ended a year ago. Our minerals prices have fallen since, and could fall a lot more ahead.
? Phase 2: rising mining investment. That began in 2003, and is still building to its climax, now expected to be in 2013 or 2014. Mining investment is now running at 10 times the levels of a decade ago. In the last year, in constant prices, it grew by $33 billion while the whole of GDP itself grew just $45 billion. It dominates the economy, but soon it will be shrinking, and we will need to find new drivers of growth.
? Phase 3: rising mining exports. You might think that has happened already, but not that much. In the past decade, the volume of mining exports has grown just 3.9 per cent a year, not much faster than GDP. The next five years will see much more spectacular growth: Sheehan and Gregory estimate that it could add $100 billion a year to our GDP.
But on their scenario, that would be offset by a similar fall in the value of mining investment, as Phase 2 goes into reverse. And Sheehan and Gregory point out that there's virtually no jobs in mining — the vast Pluto LNG project will employ just 600 people, once it is up and running — and many of them are 100 per cent owned.
"An extreme example of these trends is the Shell Prelude project, which is a $15 billion wholly foreign-owned LNG project situated in waters offshore in Western Australia", their paper notes.
"Shell is constructing in Korea a massive platform which will be towed to the offshore site, and from which all drilling, liquefaction and shipping activities will take place. None of the gas will be piped to the Australian mainland. The domestic impact is likely to be minimal, other than through the tax paid."
They want the Federal government and the states to combine to create a new growth driver for Australia by setting a joint, semi-independent infrastructure authority, which could borrow under Federal government guarantee, and invest heavily in tackling Australia's infrastructure backlog, which has been estimated at $700 billion.
Treasury secretary Martin Parkinson was not impressed. He suggested that the private sector will provide the growth engine, and if the states need more money for infrastructure, they should stop exempting small business from payroll tax, and cut back their other tax concessions.
Presumably Parkinson is giving similar advice to Swan about the Federal government's own tax concessions, which Treasury last totted up at a cool $112 billion a year. There's enough money there to finance any number of initiatives to keep the economy ticking on.

Tim Colebatch is economics editor.
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The Canberra Times October 28, 2012 - 12:22PM  Phillip Coorey Chief Political Correspondent

The wealth of individual Australians and the nation as a whole will be boosted dramatically over the next decade through increased engagement with a rapidly rising Asia, a new white paper released today says.
The white paper on Australia in the Asian Century, commissioned by the Prime Minster, Julia Gillard, outlines 25 objectives for the nation to achieve by 2025 to exploit the opportunities in a region where the pace and scale of change ''have been staggering''.

''Our goal is to ensure that Australians have higher incomes in a more diverse economy that is resilient in the face of ongoing change,'' the 312-page report says.
But it warns ''all of us will have to work smarter to maximise prosperity and manage challenges''.
It says that by 2025, Australia's average national income could be $73,000 per person, compared with $62,000 now. By the same time, Australia's school system should rate in the world's top five, and 10 Australian universities should be in the global top 100.
The paper was put together by a team led by the former Treasury secretary, Dr Ken Henry and seeks to look beyond Australia's current reliance on Asia for mineral exports  - although the paper says the mining boom has a way to go and will be part of the bigger picture.
''Continued economic development in the region will drive demand for energy and resources,'' it says.
But the paper says the opportunities elsewhere are vast.
''The Asian Century offers a wealth of opportunities and career choices in a variety of businesses, including small and medium-sized enterprises, especially for Australia's young people,'' it says.
It identifies sport, tourism, education, the arts, professional, business, banking and financial services, science and technology ''thanks to a growing affluence in Asia''.
It cites that in agriculture alone, rising food demand and a growing middle class create opportunities for Australia ''to be an important supplier of high-value food''. This would require research and investment by producers to boost output.
It places great emphasis on learning Asian languages and says Asian studies ''will be a core part of a national school curriculum''.
All students would be able to learn Chinese, Hindi, Indonesia or Japanese.
''Children in kindergarten now will graduate from high school with a sound working knowledge of Asia,'' Ms Gillard said.
Many of these objectives reflect current government policies such as building the national broadband network, reforming the tax system and adopting measures to maximise the working potential of every adult.
The paper warns against lower wages and conditions just so Australian manufacturing and industry can compete with its neighbours.
The paper stresses that the focus on the region would not be to the detriment of existing relations.
Australia would continue to ''work with the United States to ensure that it continues to have a strong and consistent presence in the region, without alliance contributing to regional stability, security and peace,'' it says.
At the same time, security and economic prosperity in the region would be well served by Australia promoting cooperative arrangements among major powers including China, Japan, Indonesia and the United States.
Australia's business and public sector leaders would also have to increase their Asia literacy.
The paper says one third of the board members of the nation's top 20 publicly listed companies and Commonwealth authorities ''will have a deep experience in and knowledge of Asia'', as will one third of senior public servants.
It talks of the enormous potential in the Chinese tourism market and the need for greater transparency in screening foreign investment.

•   by: Adam Gartrell, AAP Diplomatic Correspondent
•   From: AAP
•   October 28, 2012 12:03PM

ASIAN studies will become a core part of Australia's school curriculum under the federal government's ambitious plan to capitalise on the region's growing wealth and influence.

The government on Sunday released its long-awaited Asian Century white paper, a policy blueprint that sets out how Australia can increase integration with Asia over the coming decade and beyond.
The document reveals a number of targets for the nation over the 13 years to 2025, aimed at ensuring Australia fulfils its ambitions and competes effectively within Asia.
By 2025 Australia's gross domestic product (GDP) per person will be in the world's top 10, up from 13th last year.
That would lift Australia's average real national income to about $73,000 per person in 2025, compared with about $62,000 now.
The school system will be in the top five in the world, and 10 of its universities in the world's top 100.
The paper places a heavy emphasis on education, saying Asian studies will become a core part of the Australian school curriculum.
All students will be able to study an Asian language and the priorities will be Chinese Mandarin, Hindi, Indonesian and Japanese.
Australia's leaders will also be more Asia literate, with one-third of board members of the top 200 publicly listed companies and commonwealth bodies to have "deep experience" in and knowledge of Asia.
The Australian economy will be more deeply integrated with Asia, with Asian trade links to be at least one third of GDP, up from one quarter today.
Prime Minister Julia Gillard says the document lays out an ambitious plan to make sure Australia grows stronger by capitalising on the opportunities offered by the Asian Century.
"The scale and pace of Asia's rise is staggering, and there are significant opportunities and challenges for all Australians," she said in a statement on Sunday.
"It is not enough to rely on luck.
"Our future will be determined by the choices we make and how we engage with the region we live in. We must build on our strengths and take active steps to shape our future."
Australia should be in the top five countries for ease of doing business by 2025, the white paper says.
Its diplomatic network should have a larger footprint across the region.
While the white paper sets out what actions governments can take, it also calls on businesses and communities to play their part.
New work and holiday agreements between Australia and its Asian neighbours will mean more opportunities for work and study in the region and to take up professional opportunities.
Financial markets will be better integrated, allowing capital to flow more easily across borders.
The government will enter into a National Productivity Compact with the states and territories, focused on regulatory and competition reform.
"We want to ensure that Australia is as competitive as it can be," Finance Minister Penny Wong said in a statement.
The compact is expected to be agreed at the next meeting of the Business Advisory Forum between business leaders, prime minister and senior ministers.
The white paper also reinforces the need to attract skilled migrants and students from Asia.
The government is expanding its network to support online visa lodgment, multiple entry visas and longer visa validity periods and is streaming the student visa process.
Seven of the top 10 source countries in Australia's migration program are in the Asian region, including India, China, the Philippines, Sri Lanka, Malaysia, South Korea and Vietnam.
Students from Asia already account for about 77 per cent of the more than 550,000 international enrolments each year.
In agriculture, the government says Australia's primary producers can benefit from rising demand by Asia's middle classes for high quality food and farm product.
It proposes setting up a series of grass roots programs, plans and policies and increasing exporter access to Asian markets.
It will support two-way investment in food and food processing, agriculture-related transport infrastructure, natural resource management and water conservation.
This will help drive the development of regional and remote areas, especially in Northern Australia and Tasmania.

18/03/2013

Australia is going to have an increasing role and influence in the Asian Century, and NSW and Sydney must play an important role in that, according to Peter Grauer, Chairman of Bloomberg.

"Australia's economy, both during and since the global financial crisis, has become recognised as one of the world's most resilient," Mr Grauer told a NSW Business Chamber event in Sydney earlier this month.

"Your currency is now the world's fifth most traded and regionally, if not globally, has assumed the kind of safe haven status that was once almost exclusively assigned to the US dollar.

"Your 1.4 trillion dollar pension fund system is among the best managed in the world, and overseas markets, including those in Asia, must be intrigued by the possibility of those funds being diversified.

"You have in excess of $100 billion of two-way trade annually with China. If this is the Asian Century, then Australian commodities are stoking the fire in the belly of the biggest dragon of all."

In spite of those strengths, Mr Grauer said, Australia has a challenge to seize all the opportunities presented by the Asian Century.

"When most global investors think of Asia's financial centres, they think of Hong Kong, Singapore, and to a lesser extent Tokyo; and maybe even some others before they think of Sydney. That has to change. But if Australia is prepared to visibly and enthusiastically embrace its place in Asia, then I think it will.

"Clearly Sydney and NSW are extremely serious about your future as a financial centre. The impressive plans for Barangaroo represent your physical commitment to this and I applaud you for the vision that has gone into this project, concentrating the financial, technical and talent base into an attractive hub for major banks, finance houses, hedge funds, insurance groups and international firms operating here.

"But with your role in the regional economy and your trade partnerships with its largest economies, you have an opportunity to position yourself more visibly and compellingly as a key day-to-day influence on what's happening in Asia both now and in the future.

"Seizing that opportunity involves a focus on both the substance and the positioning of the role Sydney has to play in the wider regional and global financial system. New York has Wall Street, London has the ‘city' and the compact nature of the Hong Kong skyline is dotted with a swathe of the who's who of finance companies and global brands.

"Each of these global financial centres has become iconic in their positioning, but equally has defined themselves by the complementary nature of their role in global financial markets.

"Finding, embracing and defining Sydney's unique positioning in the context of Asia and global markets will be part of the challenge, and perhaps it's already there but could be more recognised."

Mr Grauer said Australia's trading and business relationships within Asia, and with China in particular, were such that Asian markets, if well-informed about what was happening in Australia, should take cues from Australia and not just from the US and Europe.

"There are major news flow and economic data from Australia that drive the agenda for the region. Australia is an integral conduit to a new day and the start of the week, and ultimately the curtain raiser for Asian financial markets.

"Because yours is an economy which, when many others were faltering or falling backwards during the GFC, has proven that you can respond independently."

Asia’s rise is changing the world. This is a defining feature of the 21st century—the Asian century. These developments have profound implications for people everywhere.

Asia’s extraordinary ascent has already changed the Australian economy, society and strategic environment. The scale and pace of the change still to come mean Australia is entering a truly transformative period in our history.

Within only a few years, Asia will not only be the world’s largest producer of goods and services, it will also be the world’s largest consumer of them. It is already the most populous region in the world. In the future, it will also be home to the majority of the world’s middle class.

The Asian century is an Australian opportunity. As the global centre of gravity shifts to our region, the tyranny of distance is being replaced by the prospects of proximity. Australia is located in the right place at the right time—in the Asian region in the Asian century.

For several decades, Australian businesses, exporters and the community have grown their footprint across the region. Today, for Australia, the minerals and energy boom is the most visible, but not the only, aspect of Asia’s rise. As the century unfolds, the growth in our region will impact on almost all of our economy and society.

An increasingly wealthy and mobile middle class is emerging in the region, creating new opportunities. They are demanding a diverse range of goods and services, from health and aged care to education to household goods, and tourism, banking and financial services, as well as high quality food products.

Beyond economic gains, there are many valuable opportunities for building stronger relationships across the region, including through closer educational, cultural and people to people links.

Our nation also has the strength that comes from a long history of engagement with countries in Asia. Australia’s relationships in our region are strong and robust, including with Asian nations like China, Japan, India, Indonesia and the Republic of Korea (South Korea). But in this Asian century we must enter a new phase of deeper and broader engagement.

This White Paper provides a roadmap for the whole of Australia—governments, business, unions, and the broader community—in this next phase. Our goal is to secure Australia as a more prosperous and resilient nation that is fully part of our region and open to the world.

Australia starts from a position of strength. Just as our region has a lot to offer us, we have a lot to offer our region. We have strong, world-leading institutions, a multicultural and highly skilled workforce, and a productive, open and resilient economy, which is one of the strongest in the world. These assets have been reinforced by a series of economic reforms and good decisions made over past decades, including Australia’s world-beating actions to avoid the worst impacts of the Global Financial Crisis.

Our strengths have long been reflected in Australia’s interaction with countries in Asia. Over the past 50 years, Australia’s trade with Asia as a share of our total trade has risen dramatically. Our financial, political and cultural links have deepened. We have strong relationships and close friendships with countries across the region.

But Australia’s success will be based on choice, not chance. In order to succeed, we must sustain the policy settings and pathways that have served us well. We need to reinforce our strong social foundations, including our national institutions, our cultural diversity and our outward-looking society.

We will need to do more than this—we all need to respond to the rapid changes occurring in our region.

Australians need to act in five key areas in order to succeed in the Asian century.

First, irrespective of how the Asian century evolves, Australia’s prosperity will come from building on our strengths. We need to reinforce the foundations of our fair society and our prosperous, open and resilient economy at home. We need to build on areas where we already perform well, in order to extend our comparative advantage. Critical to this will be ongoing reform and investment across the five pillars of productivity—skills and education, innovation, infrastructure, tax reform and regulatory reform.

Second, as a nation we must do even more to develop the capabilities that will help Australia succeed. Our greatest responsibility is to invest in our people through skills and education to drive Australia’s productivity performance and ensure that all Australians can participate and contribute. Capabilities that are particularly important for the Asian century include job specific skills, scientific and technical excellence, adaptability and resilience. Using creativity and design-based thinking to solve complex problems is a distinctive Australian strength that can help to meet the emerging challenges of this century. As a nation we also need to broaden and deepen our understanding of Asian cultures and languages, to become more Asia literate. These capabilities are needed to build stronger connections and partnerships across the region.

Third, Australia’s commercial success in the region requires that highly innovative, competitive Australian firms and institutions develop collaborative relationships with others in the region. Australian firms need new business models and new mindsets to operate and connect with Asian markets. We will work to make the region more open and integrated, encouraging trade, investment and partnerships. Firms will adapt their business models to seize the opportunities created in our region.

Fourth, Australia’s future is irrevocably tied to the stability and sustainable security of our diverse region. Australia has much to offer through cooperation with other nations to support sustainable security in the region. We will work to build trust and cooperation, bilaterally and through existing regional mechanisms. We will continue to support a greater role for Asian countries in a rules based regional and global order. Australia’s alliance with the United States and a strong US presence in Asia will support regional stability, as will China’s full participation in regional developments.

Fifth, we need to strengthen Australia’s deep and broad relationships across the region at every level. These links are social and cultural as much as they are political and economic. Improving people-to-people links can unlock large economic and social gains. While the Australian Government plays a leading role in strengthening and building relationships with partners in the region—with more intensive diplomacy across Asia—others across a broad spectrum spanning business, unions, community groups and educational and cultural institutions also play an important role. Stronger relationships will lead to more Australians having a deeper understanding of what is happening in Asia and being able to access the benefits of growth in our region. In turn, more of our neighbours in the region will know us better than they do today.

Success in the Asian century requires a whole-of-Australia effort, with businesses, unions, communities and governments being partners in a transformation as profound as any that have defined Australia throughout our history.

It is in the interests of all Australians—and therefore in the national interest—to develop the capabilities and connections that Australia will need, so that we can contribute to, and learn from, the region, and take full advantage of these opportunities.

The challenges ahead require sustained effort; Australians cannot build stronger relationships or learn new skills overnight, or even over five years, especially given the diversity of the countries in our region. Some actions can be taken immediately, but others require further conversation among communities across the nation, detailed planning and careful implementation over a generation.

Posted: 21/08/2013 5:00:00 AM by Mining Oil and Gas Jobs
Filed under: Oil-and-gas, Mining
________________________________________

The Asian market is growing and Australia’s resources place the country in a good position to boost trading relations, says the Sydney Morning Herald.

Figures released last week by the International Monetary Fund showing a slowdown in global growth to 3.1% may have raised concern for some industries. However, this is unlikely to affect the Australian mining industry in the short term. This is despite predictions that the growth of Australia’s largest trading partner, China, will drop to 7.8%.

Although the building boom may have slowed down in China, Australia is dealing with other current Asian heavyweights, such as Japan and Korea. So important are these relationships to Australia’s economy, the government will put more than $35 million behind a National Centre for Asia Capability. The aim is deepen the country’s understanding of the Asian market.

Now is a particularly exciting time to work in the resources industry. In the next five years, Australia is poised to become the world’s largest oil and gas exporter, with the bulk of the gas destined for Korean and Japan, as well as China.

Because of the minerals and energy boom, Australia is now at the cutting edge of the management of mega projects, not just in mines but also across the entire infrastructure from power and transportation to technology and logistics needed to get the minerals to the markets. Indonesia and India, both with burgeoning economies, are in desperate need of this knowledge, and Australia is perfectly poised to provide it.


To read more, click http://www.miningoilgasjobs.com.au/our-blog/august-2013/australia-well-positioned-to-boost-trade-with-asia.aspx