Tap into Asean opportunities
Like the European Union, the Association of Southeast Asian Nations (Asean) is a grouping of diverse countries. But Asean has been around for longer than the European Union.
A recent estimate by the International Monetary Fund (IMF) puts Asean’s nominal GDP at US$2.7 trillion. The region’s population stands at 644 million – slightly less than half that of China and of India.
The IMF also estimates that Asean’s nominal GDP will reach US$4.1 trillion in 2022. By that time, NZ’s GDP is expected to be around US$260 billion.
The NZ Inc Asean Strategy has the following broad goals: to become better connected and more influential in Asean countries; to become better integrated with the Asean community; and to boost trade and investment and economic returns from the region.
Business engagements are facilitated by the Asean Australia New Zealand Free Trade Agreement, the first comprehensive FTA signed by Asean, as well as other bilateral arrangements such as with Brunei and Singapore in P4, the NZSingapore Closer Economic Partnership (CEP), the NZThailand CEP and the NZMalaysia FTA.
Bilateral goods trade with Asean runs at a healthy US$8.1b despite having fallen from its 2014 high of US$10.9b.
The main goods imports from Asean are vehicles, mineral fuels, mineral oils and products of their distillation. Not surprisingly, the main goods exports are dairy produce, natural honey and edible products of animal origin.
Although the goods trade mix remains stable, there are signs of diversification in the goods that NZ trades with Asean.
While goods exports to Asean constitute 10 per cent of NZ’s total goods exports, they constitute only
0.3 per cent of Asean’s goods imports.
Asean, like China, is also increasing its consumption of services.
Service exports from New Zealand to Asean stood at US$812m in 2015, rising from US$730m in
2013 – 11 per cent in two years. The service exports figures to Asean are 42.7 per cent of New Zealand’s service exports to China.
They constitute 5.7 per cent of New Zealand’s service exports, but only 0.26 per cent of Asean’s service imports.
In 2016, Asean’s share of the global goods trade was 62 per cent of that of China’s share, and slightly smaller than the sum of Japan, South Korea and India’s share. The region’s service trade is about the same as China’s, and again slightly smaller than the sum of the other three large Asia economies’ share.
Asean’s rising importance to the global economy and the relative weightings of New Zealand’s goods and service trade with the region suggest that more can be done in the New ZealandAsean economic relationship.
The diversity of the markets in Asean does mean that for most New Zealand businesses, it will be ideal to select one target market at a time.
But in recent years, especially with the inception of the Asean Economic Community on December 31, 2015, signs indicate that the Asean markets are more accessible as a unit.
Trade within the region has risen exponentially in the past couple of years.
Competition is putting stress on local players in some of these economies, but overall the markets are strengthened and, as always with rising competition, consumers are the key beneficiaries.
There are also signs that the region is keen to engage with the rest of the world as a group.
With these shifts, our thinking about any Asean country as a market needs to adjust.
For example, targeting the Philippines as a market could be a primary focus for expansion into Asia/Asean, but engaging in or with the Philippines does provide other access that needs to be accounted for.
In that way, it does simplify the onerous process of target market selection that usually consists of complex business, economic, trade, cultural and political interactions.
Rising intra-regional trade tells us that this is a viable route for New Zealand’s engagements with and in Asean.
Trade within the Asean region has risen exponentially in the past couple of years.