Call for taxpayers to underwrite Australia’s Southeast Asia push

Australia’s Southeast Asia envoy has called for taxpayers to underwrite Australian investments in the region.

The government’s Southeast Asia envoy and former Macquarie Bank chief executive Nicholas Moore. Picture: AAP

The Albanese government’s Southeast Asia envoy has called for taxpayers to help underwrite risky Australian investments in the region in his blueprint to harness the nation’s economic future to the powerhouse countries to Australia’s north.

Former Macquarie Bank boss Nicholas Moore says Australia could triple two-way trade with the region to $534bn a year by providing the raw materials for its growth, targeting its burgeoning middle class, and using Australians’ superannuation savings to build its infrastructure.

Anthony Albanese will release Australia’s Southeast Asia Economic Strategy to 2040 at an ASEAN business reception in Jakarta on Wednesday, where he will declare: “Our economic future lies with Southeast Asia.”

The document urges the government to consider “derisking mechanisms” such as political risk insurance to allow investors to “partly or fully” hedge against unforeseen events and sovereign risk by sharing exposure with government agencies that have “experience and diplomatic leverage”.

“One of the most significant risks faced by foreign investors in Southeast Asian countries is disruption of the operations of companies by governance and regulatory uncertainty,” it says.

“If done right and with the right Australian government agencies involved, this could help reduce risks for Australian investors into Southeast Asia and encourage further investment.”

The strategy identifies 10 priority sectors offering the most potential for growth: agriculture and food; resources; green energy; infrastructure; education and skills; tourism; healthcare; the digital economy; professional and financial services, and; creative industries. It calls for a whole-of-nation effort to boost Australians’ “regional literacy”, remove barriers to trade, and promote our national “brand”. It urges visa changes to streamline movement of people, greater investment in skills to support priority sectors, and a better focus on business start-ups.

Mr Moore says investors will have a significant role to play, calling on the $3.5 trillion superannuation industry to improve its understanding of the region so it can tap emerging opportunities. At the current long-term growth rate of 5.5 per cent, total trade with the 10 ASEAN nations plus East Timor will rise from $178bn to about $465bn by 2040.

But lifting two-way trade growth to 6.3 per cent – 0.8 above the long-term average – would triple total trade with the region to $534bn over the same period, the strategy says.

The Prime Minister, who departed on Tuesday afternoon for the Indonesian capital to attend the ASEAN and East Asia Summits, said Southeast Asia presented a huge opportunity for Australian businesses, “but we haven’t kept pace with their exponential growth”. “This strategy outlines how we can harness this growth, and seize the vast trade and investment opportunities our region presents,” he said.

By 2040, Southeast Asia will be an “economic powerhouse fuelled by favourable demographics, industrialisation, urbanisation and technological advances”, the strategy says. As a bloc, the region is projected to be the world’s fourth-largest economy after the US, China and India.