ASEAN Summit SME Conference

  • Speech, check against delivery

This morning the Prime Minister reiterated the value the Australian Government places on SMEs as the engine rooms of the Australian economy.

ASEAN is a diverse and exciting region – and this is a natural fit for the risk taking and entrepreneurial zeal encompassed within small and medium enterprises.

SMEs drive innovation, with businesses investing their own capital and their own blood, sweat and tears to succeed in their export journey.

I want to underscore three things. You have much to gain from seizing the opportunities ASEAN has to offer; As a Government, we stand ready to support you in your efforts to pursue new opportunities – in particular through strengthening trade rules and market access through our trade agreements; With enhanced business connections we can together support a more open, inclusive and prosperous region.

SMEs are critical to innovation, inclusive economic growth and empowering communities across the region – in particular women.

Our SMEs share much in common with those in ASEAN – they are the largest employers of the most diverse workforce, and generate well over half of all economic activity in the region.

SMEs have an important role to play in growing Australia's investment relationship with ASEAN and developing successful business relationships.

ASEAN region is already the source of the largest goods export revenue for Australia's small to medium exporters. Further opportunities are there for adaptive, entrepreneurial businesses like those here today.

ASEAN is one of the most economically dynamic regions in the world with strong foundations for sustained growth.

Combined GDP is US$2.7 trillion, already equivalent to the fifth largest economy in the world, predicted to grow at 5.2 per cent per year for the next five years, above global average 3.7 per cent.

Over the next five years, six of ASEAN's economies will grow faster than China and all ten will grow faster than the US or Europe.

ASEAN's growth is driven by its growing consumer class (to reach 334 million by 2030), increasing urbanisation (90 million more people in cities by 2030, adding $500 billion to ASEAN GDP) and its economic integration and digital transformation.

The Australian Government's ambitious trade agenda is supporting regional economic integration and creating pathways for business success in the ASEAN region.

The ASEAN-Australia-NZ FTA (AANZFTA) is the foundation of our regional trade relationship.

Now eight years old, it remains ASEAN's highest quality trade agreement with an external partner.

We estimate that by 2020, over 96 per cent of imports from Australia will enter ASEAN tariff-free – up from 67 per cent prior to AANZFTA's entry into force.

Australian businesses are making increasing use of AANZFTA.

The number of export shipments from Australia issued with AANZTA certificates of origin increasing each year; total of 36,717 in 2017.

AANZFTA brings real benefits in this way to the 12,000+ businesses that export to ASEAN.

Lindsay Bourke, Chair of the Australian Honey-bee Industry Council credits AANZFTA with giving his industry the confidence to expand and professionalise Tasmanian honey production.

Tasmania's four biggest producers export honey worth $8-10 million a year to Southeast Asia.

Bourke's own company, which started 30 years ago, exported $140,000 worth of premium honey to Malaysia and Singapore in 2016 a review of AANZFTA is underway to ensure it continues to be relevant and useful for business.

In the Regional Comprehensive Economic Partnership (RCEP) negotiations – we intend to build on AANZFTA and bring in the major economies of China, South Korea, Japan and India. ASEAN is at the centre of any future deal.

RCEP's potential significance to Australia is clear - 10 of our 15 largest trading partners are involved.

A high quality RCEP that significantly improves on existing agreements would do much to help our businesses; by streamlining rules of origin to promote access to regional production and supply chains; and encouraging investment flows and the development of digital trade.

The Trans-Pacific Partnership (TPP-11) signed last week in Chile is a landmark trade and economic integration deal for our region the TPP is a high watermark for regional economic integration.

It will generate trade and investment, and to support growth and job creation; it provides for countries to join in future if they are able to meet the agreement's high standards and Australia is focused on bringing the TPP-11 into force as rapidly as possible.

Australia's existing FTAs with Singapore, Malaysia and Thailand have reduced tariff barriers and opened new markets for our businesses across the region.

I am pleased to be discussing the proposed bilateral FTA with Indonesia with my counterpart Minister Lukita this weekend.

This agreement has the potential to invigorate the trade and investment between Australia and one of South East Asia's pillar economies. Australia's FTA portal, operated by the Department of Foreign Affairs and Trade, provides a wealth of information to help understand the benefits and requirements of FTAs.

This can help emerging SME exporters to identify which agreement will provide the greatest benefit for helping access ASEAN's emerging market. The portal is on display in the Marketplace exhibit.

Despite these positive settings, our two-way trade and investment lags behind its potential.

Australia-ASEAN investment at the end of 2016 was worth $224 billion – around half of our direct investment in the UK, even though ASEAN has an economy roughly the same size.

ASEAN accounts for less than 7 per cent of Australia's foreign direct investment overseas in total.

Astute investors and entrepreneurs will identify the opportunities in ASEAN and overcome some market difficulties as ASEAN continues its journey to enhanced economic integration.

AustCham ASEAN's survey, which I launched yesterday, shows that 87 per cent of Australian firms surveyed state they plan to increase their trade or investment in ASEAN over the next five years.

Australian businesses should be confident in their ability to operate in Asia. We have both geographic and cultural dividends to leverage.

We are geographically proximate to growth hubs in Jakarta, Singapore, Bangkok and Manila and we have a business-ready workforce that understands Australia and ASEAN.

Nearly 100,000 students from ASEAN enrolled to study in Australia in 2016. Over 700,000 Australians speak an ASEAN language at home.

An important lesson I hear time and again from successful Australians in ASEAN is that you need to invest and stay the course for the long term.

Take the case of Tony Charters and Associates – a successful eco-tourism company providing consulting services in the Philippines. Tony credits building relationships over 10 years of visiting as key to his success. 'Businesses need to get to the know the country, the culture and the people'.

I hope that everyone has walked through and connected with all the government services and experts available in the SME Marketplace today.

Including having a read of ASEAN Now and Country Starter Packs for all ASEAN markets, which provide advice and tips on how to establish and grow in ASEAN.

And meeting representatives from our key agencies Efic, DFAT and Austrade to discuss the help they can provide.

For instance, Austrade and Efichelped Intersective, an edtech company is working with RMIT University Vietnam, to build collaborative online learning experiences and is expanding into ASEAN markets.

I also want to acknowledge the women business owners in the audience today. Women's economic empowerment is a significant driver of growth – Australia worked with ASEAN last year on this important issue.

Pleasing to see ASEAN Leaders endorse the Action Agenda on Mainstreaming Women's Economic Empowerment in ASEAN in November 2017. McKinsey research has identified that achieving gender equality in Southeast Asia could add 30 per cent to GDP by 2025.

There are particular opportunities for SMEs from digital trade. Southeast Asia is the world's fourth largest internet market globally.

Google estimates 3.8 million new internet users come online every month in ASEAN. E-commerce in ASEAN is expected to grow at 14 per cent compound annually over the next five years, equalled only by India.

Yet inconsistent national policies and regulatory approaches create unintended barriers to trade.

The ASEAN Australia Digital Standards initiative announced by the Prime Minister this morning will help reduce barriers to trade and investment opportunities in the digital economy.

Commencing with a survey of standards user needs across ASEAN and Australia, Australia will work with ASEAN to develop a framework for cooperation to develop and implement international digital standards, tailored to the needs of the region.

In the long-run the development and adoption of international digital standards will help businesses compete internationally on a more level playing field, regardless of size or location.

This means more Australian firms participating in global value-chains and cross-border e-commerce.

I commend you all for your attendance at today's SME Conference. It is you – the small and medium-sized enterprises from across the region – who are custodians of a stronger and deeper trade and investment relationship across our region.

With ASEAN to be an engine room of growth over the years to come, there are boundless opportunities for ASEAN and Australian businesses to collaborate and develop the goods and services of the future.

Competing regional and global pressures mean we cannot take an open approach to trade and investment for granted.

The integrity of global trading system is fundamental to regional economic growth and our shared prosperity.

Business leaders need to speak up in its defence. Remaining open and supportive of rules based global trade will keep doorways to business opportunity open.

And with SMEs like you engaging and staying the course, we can reach the full potential of our trade and investment relationship with ASEAN.

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