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Why aren't more Australian companies peering behind the bamboo curtain?

Why aren't more Australian companies peering behind the bamboo curtain into Asia? At a recent ANZ town hall, chief executives of ANZ's Asian businesses offered some thoughts.

Joe Abraham, CEO Indonesia: We are probably the largest Australian investor in Indonesia. What we found is that Australia is number 12 in terms of trade and that position has to change.

"The challenge is the perception of these countries in the region, these governments, these regulatory movements, not the reality."
Joe Abraham, CEO ANZ Indonesia

Basically I think the challenge is the perception of these countries in the region, these governments, these regulatory movements, not the reality.

The riskiness in the Australian corporate mindset is far higher than the reality. There's a PwC survey that says only about 20 per cent of Australian companies are even thinking of going outside Australia because of these perceptions of risk.

So I think that's the challenge first of all: convincing business that entry into Asia is essential for their business. Second is the long-term commitment and staying calm when there's movement, when there's currency and economic and regulatory issues. That's the challenge many Australian companies are facing.

On the other hand, in Asia, Australian companies and Australia per se has a very good reputation for governance, for standards, for quality and for the Australian brand. That's something we at ANZ leverage a lot.

There's an enormous opportunity there. I think that's the challenge, getting over the perceived riskiness.

Ivy Au Yeung, CEO Hong Kong: Information is critical and I just want to add that in Hong Kong Australian companies do have very good infrastructure. We have Austrade, for example.

There are a lot of companies that want to ask for information about working in the region and we share with them and help them link up with China as well as provide support.

Farhan Faruqui, CEO International Banking: I would say the best thing that ANZ can do when Australian companies come and ask us about Asia or we have the opportunity to talk to them about this is to make sure we connect them with our people on the ground.

Sometimes the best connection is locals, people who understand how business is done, to make sure that they have every competitive advantage. It is so important to actively connect people, business, in these Asian countries.

Vishnu Mohan, CEO Pacific: In the Pacific there's a lot of privatisation happening, especially in infrastructure.

Sometimes businesses can be put off by things like country dynamics, political landscapes and security but at the end of the day, when the fiscal proposition is in front of them I think common sense will prevail.

We mustn't forget that some things, even though they may be obvious to us, because we are in Asia, are not necessarily obvious to businesses – even some who have been in Asia for a while.

Abraham: Logistics is the new growth space in Asia given the increasing intra-Asian trade and the rebalancing of China to a more consumption oriented growth model which means moving manufacturing to new countries.

The new Jokowi government is focusing on streamlining Indonesian logistics costs which at 23 per cent of GDP are the highest in Asia (for example Singapore is 9 per cent and Vietnam 16 per cent).

We have also recently seen Hong Kong-based Kerry Logistics enter into a joint venture with Puninar Logistics, the second largest logistics entity in Indonesia, to capitalise on the growing opportunity. That shows the increasing cross border moves in logistics.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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