ASEAN investment fund adds ‘heft’ to Australia’s regional commitment

ASEAN countries want to diversify regional investment partners to prevent dependency on either China or the US.

Australian PM Anthony Albanese. Picture: Getty Images

Australia’s new $2bn infrastructure and energy investment mechanism for Southeast Asia is an “overdue” but welcome commitment to growth at a time when ASEAN is looking to ­diversify investment partners, a regional business group has said.

AustCham ASEAN, a group of nine regional chambers of commerce, welcomed Anthony Albanese’s Tuesday announcement of the facility to underwrite Australian trade and investment in Southeast Asia.

The Prime Minister described it as the “most significant upgrade of Australia’s economic engagement with ASEAN for a generation”.

The group’s Thailand-based treasurer Brenton Mauriello said Australian investment in the ­region had long lagged behind goods and services trade in ASEAN, with most investment going to or through Singapore.

Mr Mauriello said the fund would help Australian businesses concerned about long-term risk returns involved in investing in Southeast Asia, and provide comfort to regional authorities dealing with new market ­entrants.

“We have talked a lot about building relationships in Southeast Asia but that commitment has waxed and waned with the political cycle, whereas this is about long-term relationship building,” he said.

“This puts some heft behind the Nicholas Moore report and provides opportunities for Australian businesses to enter the market on the back of this. Sometimes access to capital can be a limitation to entering the ­region. This provides that and an opportunity to engage in the growth of the ASEAN region directly.”

The government’s blueprint for long-term investment in Southeast Asia to 2040, unveiled last September at the Jakarta-hosted ASEAN leaders’ summit, seeks to triple two-way trade with the region to $534bn a year by providing the raw materials for its growth, training its workforce, targeting its burgeoning middle class and using Australians’ superannuation savings to build its infrastructure.

The report by Mr Moore, a former Macquarie Group chairman-turned Southeast Asia government envoy, telegraphed Australia’s intention to pour money into the region and reprosecute the case for why Australian businesses should be looking at Southeast Asia.

A population of 687 million on Australia’s doorstep – 190 million of them middle class and 55 per cent under 35 – with a combined gross domestic product of $5.6 trillion is just the start of it. ASEAN’s collective economy is projected to sustain compound annual growth of 4 per cent for the next 20 years.

But to ensure sustainable growth the region requires an average annual investment of $US210bn over the next 17 years to address a shortfall in sustainable water, energy, transport and waste infrastructure.

Indonesian Chamber of Commerce and Industry spokeswoman Shinta Kamdani said the finance facility, along with Mr Albanese’s announcement of an extra $140m to extend the Partnerships for Infrastructure Program, signalled a “commitment to deepen trade and investment”.

But she cautioned it must encourage two-way trade and investment, not just the penetration of Australian goods and services into the region.