Room for more in Aus-ASEAN trade

The Association of Southeast Asian Nations (ASEAN) and Australia have shared a strong and enduring trade relationship. However, ASEAN’s share in Australia’s trade has remained stagnant in the past decade.

At ANZ research we see potential for increased two-way trade between ASEAN and Australia, especially in services where mutual trade benefits are larger.

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Forums such as the upcoming ASEAN-Australia Leaders’ Summit in Canberra, expected to be held in March 2018, will be crucial for reinvigorating ties.

" We see potential for increased two-way trade between ASEAN and Australia, especially in services where mutual trade benefits are larger." Khoon Goh


ASEAN-Australia trade links have been evolving over the years. ASEAN, as a bloc, is Australia’s third-largest trading partner, after China and Europe. In 2016, it accounted for roughly 14 per cent of Australia’s trade and was worth $US67.2 billion. Of that, merchandise trade contributed $US49.3 billion and services $US17.9 billion.

While this relationship is significant and enduring, we think there is further room for expansion. ASEAN enjoys favourable demographics, has a growing service sector and is seeing increasing infrastructure development. 

Source: DFAT Australia, ANZ Research


An analysis of Australia’s trade with ASEAN and the rest of the world reveal the following trends.

  • Australia’s trade with China increased manyfold in the past decade. Starting in 2009, Chinese demand for Australian iron ore, coal and natural gas fuelled China’s investment-led growth.
  • ASEAN’s share of trade has, by contrast, remained stagnant. While the same is true of all other trading partners, the expected positive effects of ASEAN's emergence as a manufacturing and trade hub and its increasing engagement with Australia do not seem to have materialised.
  • Although narrowing, Australia runs a trade deficit with ASEAN. Except for the Philippines and Myanmar, Australia has a deficit with all ASEAN countries, the biggest being with Thailand ($US8.6 billion).
  • While China has dominated Australia’s goods exports for over a decade, ASEAN has traditionally been a large importer of Australia’s services.
  • This ranges from tourism to personal and business travel. However, recent years have seen Chinese demand for services rise sharply.
  • Over the last two decades China’s share in Australian imports has been steadily rising at the expense of all other regions, racing past even those of Europe and ASEAN since 2014.

While stark for goods imports, this is also true for services, with China’s share inching up steadily.


ASEAN’s recent infrastructure push and increasing Chinese investments into ASEAN could lead to higher demand for hard commodities and intermediate goods imports from Australia. Soft commodities already form the bulk of Australia’s total exports to ASEAN.

At ANZ Research, we think the emergence of an increasingly affluent consumer class in ASEAN will help sustain the demand for these goods.  However we see greater scope in services trade given the sector’s benefits for both Australia and ASEAN.

Travel (especially for tourism) and transport form the bulk of Australia’s services imports. While tourism is also a key service export revenue generator for Australia, it is travel related to education which has become dominant in recent years.

We believe there is scope for enhancement of trade ties between Australia and ASEAN, particularly in hard and soft commodity exports from Australia and two-way services trade.

To fully capture the benefits would require deft handling of the complex trading arrangements, a key objective of which should be to activate regional product supply chains.

Policy intervention will also be vital for unlocking service sector opportunities. The aforementioned ASEAN-Australia Leaders’ Summit in Canberra in 2018 will be a crucial step, especially when concentration risks to China are growing.

Khoon Goh is Head of Asia Research at ANZ

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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