BUSINESSES face losing Asian market opportunities unless they make the most of their geographic and corporate advantages, according to the nation’s peak commercial body.
The Business Council of Australia’s (BCA) submission on the Federal Government’s Asian Century white paper blames weak productivity growth for eroding competitiveness and leading Asian economies to find alternative goods and services providers.
“Our assessment of Australia’s competitiveness compared to a sample of other countries comprising (of) Canada, the United States, Singapore and Japan indicates that Australia’s rankings on measures of competitiveness tend to be toward the middle rather than leading our peers,” says CEO Jennifer Westacott (pictured).
“In a number of important areas, including the ease of doing business, our rankings have been trending lower. Businesses from competitor countries are also increasingly focused on winning new and larger markets in Asia.”
BCA does not perceive attitude to be a barrier, saying most businesses are very positive towards Asia. However, it suggests the Foreign Investment Review Board (FIRB) should loosen its regulatory reins.
“There are, however, some aspects to our mindset that have the potential to impede our economic relationships with Asia as these evolve. In recent years we have, for example, appeared to be inconsistent in our approach to new flows of foreign direct investment from Asia,” says Westacott.
“Australia should be demonstrating to the nations of Asia that we are serious about being an economy open to increased levels of investment and trade. Furthermore, we should aim to be an economic partner interested in generating mutual benefits over the medium to long term.”
Newly appointed FIRB chairman Brian Wilson welcomes foreign investment, but believes proposed inflows from foreign government-controlled entities should face deep scrutiny.
“Investment by state-owned enterprises are scrutinised quite deeply to ensure it is done for rational commercial reasons and not as an arm of sovereign policy,” says Wilson who founded Lazard Australia in 2004.
“FIRB’s rejection of deals should make Australians comfortable that foreign investment is being managed and scrutinised – and that it is in Australia’s interest.”
This view is echoed by Prime Minister Julia Gillard, who recently defended the Federal Government’s ban on National Broadband Network tenders from the Chinese military-linked telecommunications company Huawei.
“Let’s be very clear about the decision we have made here. I have stood up for Australia's national interests,” she says.
“Any suggestion that this is somehow in breach of our trade obligations is simply untrue … we’ve taken a decision in the national interest and of course we stand by it.”