ASEAN Market Outlook - Western Australia

GOVERNMENT OFWESTERN AUSTRALIA

Department of Jobs, Tourism, Science and Innovation

ASEAN Market Outlook2020-21

Trade and investment opportunities for Western Australian businesses

2 | ASEAN Market Outlook 2020-21

ASEAN market overview

Combined gross domestic product

US$3.2 trillion(IMF 2019)

Combined population

656 million(2019)

If ASEAN were a single country it would be in the

top 5economies in the world

The Association of Southeast Asian Nations (ASEAN) is a cooperative intergovernmental group of 10 neighbouring countries – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

ASEAN has some of the world’s fastest-growing economies that offer a broad range of opportunities for Western

Australian businesses looking for a new and growing export market. Many ASEAN countries are industrialising and urbanising, and have growing demand for minerals and energy. With a rapidly growing middle class and young populations that are digitally savvy, there is also demand for higher standards of consumer goods, education and training services, and new technologies.

Western Australia’s trade relationship with ASEAN

2012Established the WA Investment and Trade Office in Singapore

$25.3 billion3rd largest trading partner in 2019

$17.3 billion3rd largest export market, with 43% of Australia’s merchandise exports to ASEAN in 2019

WA merchandise exports to ASEAN in 2019

57%Petroleum

10%Iron ore

8%Gold

6 ASEAN countries were ranked in the state’s top 20 export markets in 2019Singapore (5th)Malaysia (8th)Indonesia (10th)Thailand (12th)The Philippines (13th) Vietnam (16th)

279,000 visitorsfrom ASEAN countries in 2019 with Singapore the 2nd largest market for visitors to Western Australia and Malaysia the 3rd largest market

9,000+international students in 2019

3ASEAN Market Outlook 2020-21 |

The Western Australian Government supports local businesses pursuing opportunities with ASEAN countries through the Department of Jobs, Tourism, Science and Innovation’s Invest and Trade WA team and Western Australia’s Investment and Trade Office in Singapore, in collaboration with Western Australia’s Investment and Trade Office in Jakarta. This support includes providing advice and assistance to Western Australian companies looking to export to ASEAN countries or attract investment to grow their business.

The relationship between Western Australia and ASEAN member country Vietnam is supported by a memorandum of understanding (MoU) between Western Australia and Ba Ria-Vung Tau, Vietnam’s most active industrial province and one of the region’s most prosperous. Signed in September 2020, the MoU will strengthen economic and cultural ties between Ba Ria-Vung Tau and Western Australia. The MoU has a focus on economic development, education, and

culture and the arts. It provides Western Australian businesses with a competitive edge in accessing opportunities in Ba Ria-Vung Tau and Vietnam as a whole.

ASEAN countries are key markets under Western Australia’s Asian Engagement Strategy 2019-2030 which supports: » maximising trade and investment opportunities

» Asia literacy and capability

» people-to-people links

» business networks and communities.

The strategy provides direct support to Western Australian businesses through 2 programs:

» Access Asia Business Grants fund initiatives to increase trade and investment with Asia.

» Asia Business Capability workshops support people in gaining the Asia literacy skills required to develop sophisticated relationships and capture more trade opportunities.


ASEAN-Australia-New Zealand Free Trade Area (AANZFTA)AANZFTA entered into force in January 2010, delivering extensive tariff reductions and greater certainty for service providers and investors across ASEAN countries, Australia and New Zealand. The leading opportunities for Australian businesses from AANZFTA include the reduction and eventual elimination for at least 90% of all tariff lines, as well as more liberalised movement of goods through modern and flexible rules of origin, simplified customs procedures and more transparent mechanisms.

Singapore-Australia Free Trade Agreement (SAFTA)SAFTA entered into force in July 2003 and acts as a central pillar of Australia’s economic relationship with Singapore, Western Australia’s largest trade and investment partner in Southeast Asia. In addition to full tariff elimination, the agreement provides increased market access for Australian exporters of services, particularly education, environmental, telecommunications and professional services.

Thailand-Australia Free Trade Agreement (TAFTA)Since TAFTA entered into force in January 2005, total two-way trade between Thailand and Australia has more than doubled. TAFTA outlines a commitment for the complete elimination of Thailand’s significant tariffs across all sectors by 2025. Under TAFTA, Thailand has also agreed to relax a number of its restrictive conditions relating to visas and work permits and to guarantee non-discriminatory treatment of Australian investments in Thailand.

Malaysia-Australia Free Trade Agreement (MAFTA)MAFTA entered into force in January 2013 and opens avenues for Australian goods and services into the dynamic Malaysian market. The key outcomes of MAFTA include the elimination of 99% of all tariffs by 2017 and increased foreign equity limits in Malaysia for specified sectors, including education and financial services.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)CPTPP is a free trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam. The agreement entered into force in March 2018 and delivers many benefits for Australian businesses, including the elimination of all tariffs on key agricultural products.

Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA)IA-CEPA entered into force on 5 July 2020 and creates the framework for a new era of closer economic engagement between Australia and Indonesia. Opportunities for Western Australian businesses include improved access for key agricultural products, allowance for higher levels of Australian ownership in joint ventures set up for the provision of mining services in Indonesia, and future liberalisation for Australian universities opening a campus in Indonesia.

For further information on Australia’s free trade agreements with ASEAN countries visit: ftaportal.dfat.gov.au/



Trade and investment opportunities with ASEAN

An outline of trade and investment opportunities with ASEAN countries is provided below, categorised under Western Australia’s key industry sectors.

Each section also describes the Western Australian Government’s actions to support businesses pursuing these opportunities in 2020-21. The actions are a combination of initiatives to assist Western Australian businesses to develop their export capability (sector-based) and activities that specifically support trade and investment opportunities with ASEAN countries (market-based).

The COVID-19 pandemic has affected both the opportunities that can be pursued and the way the Western Australian Government can practically support Western Australian businesses. The Western Australian Government has adapted its approach to best support ongoing engagement with ASEAN countries and will continue to adapt as the COVID-19 situation changes.

EnergyThere is growing energy demand across ASEAN countries driven by rising incomes, industrialisation and urbanisation.

Many ASEAN countries have an energy mix with a high share of coal, oil and gas. LNG demand is growing in ASEAN countries, particularly in Thailand and Singapore and while Indonesia, Malaysia and Brunei are long-standing LNG exporters, total LNG production across these countries is declining. There is potential for Western Australia to become more involved in intra-regional LNG trade.

In the longer term, ASEAN countries are likely to follow the global trend and move towards cleaner energy sources, including renewables. Initially, the deployment of renewable energy in ASEAN countries may be better suited to populations outside major cities. This will create opportunities for renewable energy companies to enter ASEAN markets and for the delivery of training in maintenance and repair.

Western Australian Government actions » Establish a conducive environment for investment into Western Australia’s future battery industry by:

› exploring incentives to attract and facilitate investment into cathode active materials (CAM) manufacturing

› developing a process to certify production of Western Australia’s battery minerals.

» Facilitate projects to stimulate the renewables industry in Western Australia, including developing local capability in the manufacture of wind turbines.


Tourism, events and creative industriesWhile COVID-19 has disrupted international tourism, ASEAN countries still offer strong long-term potential as a tourism market for Western Australia, particularly given their proximity to the state.

In 2019, there were around 279,000 visitors from ASEAN countries to Western Australia. This was greater than the combined number of visitors from the United Kingdom, United States and China. As individual markets, Singapore, Malaysia and Indonesia ranked second, third and eighth respectively in the number of visitors to Western Australia in 2019.

Ensuring the sustainability of the tourism industry in Western Australia will be a key component of preparing for the resumption of international tourism post COVID-19. Growing the number of international students from ASEAN countries studying in Western Australia will also support future tourism opportunities.

Western Australian Government actions » Finalise the tourism recovery plan and develop the long-term tourism strategy to ensure industry sustainability and drive international tourism post COVID-19.

» Investigate opportunities for additional direct flights to Western Australia.

» Explore opportunities to promote creative industries through artist exchanges as part of Western Australia’s MoU with Ba Ria-Vung Tau.

International educationASEAN countries accounted for 18% of international student enrolments in Western Australia in 2019. Malaysia and Singapore are the third and fourth largest markets for higher education, while a number of other ASEAN countries (Vietnam, Indonesia and Thailand) rank highly for school enrolments in Western Australia.

Western Australia’s universities have also established a presence in ASEAN countries, including Curtin University’s


campuses in Singapore and Malaysia, and Murdoch University’s campuses in Singapore and Myanmar.

There is potential to grow international student enrolments from ASEAN countries. Indonesia and the Philippines in particular have large and relatively young populations and growing economies, creating a demand for education and training that cannot be met entirely by domestic institutions.

Markets that have industries in common with Western Australia present specific opportunities. An example of this is education and training services for the mining and oil and gas industries in Indonesia, Vietnam, the Philippines and Myanmar.

Western Australia can also capitalise on its safe handling of the COVID-19 pandemic to market itself as an attractive destination for students from ASEAN countries.

Western Australian Government actions » Develop and implement an international education recovery and renewal plan.

» Undertake in-market activities to promote Western Australia as a high-quality and safe international education destination.

» Gather intelligence on in-market activities and trends to inform Western Australia’s international education policy and ensure it is conducive to recovery.

» Investigate opportunities for vocational education and training in East Java as part of the consortium endorsed by the Western Australian Government.

» Explore opportunities for Western Australian education and vocational training providers as part of Western Australia’s MoU with Ba Ria-Vung Tau.

» Promote Western Australia as a favoured education destination within the ASEAN countries, including by:

› collaborating with education agents on relevant events and programs that promote the School Curriculum and Standards Authority, universities, TAFE institutions and public and private schools

› exploring the possibility of the School Curriculum and Standards Authority offering the WA pre-primary to Year 10 curriculum to select education institutions in ASEAN countries

› exploring how Western Australia’s TAFE institutions can develop a footprint in Thailand’s education sector and the broader ASEAN region.

Mining and mining equipment, technology and services (METS)Western Australia’s mining exports to ASEAN countries are relatively small compared to the large markets in northeast Asia. As the pace of industrialisation and urbanisation increases in ASEAN countries, there will be opportunities for Western Australian businesses to grow mining exports, particularly iron ore, nickel and copper.

Many ASEAN countries have significant mining production. Indonesia and the Philippines are the world’s leading producers of nickel, while coal, copper, gold and tin are produced in large volumes in the region. As demand for these commodities increases and creates a need for mining operations to become more productive, opportunities for Western Australian METS businesses are likely to emerge. Specific opportunities are in areas such as work safety, environmental sustainability and corporate social responsibility.


Western Australia has a well-established reputation in Indonesia as a global leader in the mining and METS sector. In partnership with Austrade, Western Australia’s Investment and Trade Office in Jakarta has developed a report on The Opportunity for Western Australian METS companies in Indonesia. The report provides a roadmap for METS companies seeking access to the Indonesian market.

Western Australian Government actions » Work with the Chamber of Minerals and Energy (WA) to market regional opportunities to Western Australia’s METS businesses.

» Promote Western Australia as an option to fulfil mining industry skills shortages and provide expertise, including in offshore exploration and extraction, and decommissioning.

Primary industriesThe population of ASEAN countries is large and diverse, with demand for food and beverages correspondingly large and diverse. ASEAN is already a leading

market for Western Australia’s agricultural exports, with demand for a range of commodities. For example, Indonesia ranks highly as a market for wheat and beef, and Singapore ranks highly for dairy products and fruit and vegetables. The Philippines, Malaysia and Vietnam are also important markets for Western Australia’s primary industry exports.

Western Australia’s reputation as a reliable supplier of clean, safe and high-quality food, and its existing agricultural trade relationship, provides a platform to increase supply to meet ASEAN’s growing demand for premium agrifood products. This will require Western Australian businesses to develop well-organised supply chains between producers, distributors and retailers.

At the same time, agriculture remains a significant industry in many ASEAN countries, for both economic and cultural reasons. As food demand grows, there are opportunities for Western Australian businesses to provide agricultural technology and services to help ASEAN countries increase the efficiency and output of their agricultural sectors.


Western Australian Government actions » Facilitate virtual trade missions in support of market diversification for Western Australia’s agrifood industry.

» Promote agricultural exports across ASEAN markets by identifying and engaging with ASEAN buyers, importers and distributors to ascertain their premium agrifood requirements, and facilitating links with export-ready agrifood producers in Western Australia.

» Engage with food processors in ASEAN countries to explore opportunities to supply quality commodity exports such as dairy, wheat and barley from Western Australia.

Health and medical technologyWith rising incomes, the demand for quality health services is increasing across ASEAN. There are opportunities for Western Australian organisations that provide health-related vocational training services to deliver hospital administration, patient management, diagnostics and aftercare courses and best practice instruction. Other avenues for market entry include technology-enabled medical consultations and health technology.

While the population of ASEAN as a whole is relatively young, some countries, such as Thailand and Singapore, have ageing populations. There will be long-term opportunities for businesses to provide innovative aged care products and services to these markets.

The Western Australian Government has recently established the Future Health Research and Innovation Fund. The fund aims to drive health and medical research, innovation and commercialisation to better position Western Australia as a leader in research and innovation, providing opportunities for collaboration with international partners, particularly countries such as Singapore that have well-established research and innovation sectors.

Western Australian Government actions » Promote Western Australia’s health and aged care skills, services and products, by:

› working with Western Australian aged care service providers and education institutions to expand links into ASEAN countries

› identifying potential investors and/or partners in ASEAN for the Western Australian aged care services sector, focusing on design for aged care living, enabling technologies and clinical care

› exploring opportunities for Western Australian organisations to provide their expertise in designing, establishing and managing aged care facilities.


Western Australian business success with ASEAN

Fruit West Co-operative LtdBravo™ apples have been successfully introduced into premium fresh food markets in Hong Kong, Malaysia, Singapore and Thailand, adding to the taste of Australia experience available to consumers.

The apple, bred at Western Australia’s Manjimup Horticulture Research Institute, is grown in some of the most pristine regions of the state, giving the apple its striking characteristics and wide consumer appeal.

Managing fruit quality from the orchard to a consumer’s shopping basket is a feature of the successful 2020 entry of Bravo™ apples into the ASEAN market in particular. The availability of Bravo™

apples for export will increase as trees mature and more trees are planted over coming years.

The Western Australian Government owns Bravo’s IP and trademarks, and appointed the Western Australian grower-owned and controlled Fruit West Co-operative Ltd to commercialise the apple.

A Perth-based fresh food supplier, WA Farm Direct Pty Ltd, is licensed by Fruit West to exclusively supply all export fruit, which helps to ensure quality control and service delivery of the highest order are maintained.

Consumer acceptance of Bravo™ apples represents an opportunity for the Western Australian apple industry to increase exports and expand production.

The Australian Contact Lens CompanyGelflex has been manufacturing contact lenses for more than 45 years and is Australia’s only manufacturer of disposable contact lenses. The Asian region has been a vital part of the company’s success from both a sales and logistical viewpoint.

In 2007, Gelflex established a manufacturing facility in Batam, Indonesia, as a hub for global manufacturing and export. Gelflex Vision Indonesia was established in 2017 as a sales office in Jakarta.

Over 50% of the company’s disposable lens sales come from their distributor partners in a number of ASEAN countries, including Indonesia, the Philippines, Vietnam, Thailand and Malaysia. Gelflex has invested in a number of raw material suppliers in the region and has developed successful and long-term partnerships with these local companies.

The proximity of Asia to the company’s head office in Perth and a shared commitment to long-term business partnerships has been integral in the company’s success. Gelflex employs over 150 staff in Indonesia and provides support to many more in various ASEAN countries through its distributor network.


Western Australian Government supportThe Western Australian Government has been operating in the ASEAN region since 1994. Western Australia’s Investment and Trade Office in Singapore has supported Western Australian businesses seeking to access trade and investment opportunities with ASEAN countries since 2012.

The Singapore office has established a strong network of contacts to support Western Australian businesses in ASEAN. This includes close working relationships with Australian embassies and consulates in the ASEAN region.

In 2020-21, Western Australia’s International Investment and Trade Office Network will move to a regional hub model. The office in Singapore will continue to operate as part of the ASEAN regional hub, providing the following services: » advice on ASEAN markets and specific trade and investment opportunities

» advice on market entry strategies » supporting in-market promotion and visits

» facilitating introductions to potential customers and partners.

Invest and Trade WAThe Department of Jobs, Tourism, Science and Innovation’s Invest and Trade WA team promotes Western Australia as a destination for investment, provides a ‘one-stop-shop’ for incoming trade and investment enquiries, and assists WA businesses to develop and expand their exports.

Contact:[email protected]

Web:www.investandtrade.wa.gov.au

View Western Australia’s Asian Engagement Strategy 2019-2030:

www.wa.gov.au/asian-engagement-strategy

GOVERNMENT OFWESTERN AUSTRALIA

Department of Jobs, Tourism, Science and Innovation

ASEAN Market Outlook - Western Australia

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