CEO & Partner John W.H. Denton was a panel member this week at a Policy Forum - Toward a Closer Australia-Taiwan Economic Partnership held at RMIT in Melbourne.
John joined Rowan Callick, Asia Pacific Editor, The Australian and Dale Jieh, Deputy Chief Negotiator, Office of Trade Negotiations, Ministry of Economic Affairs, Taiwan, in an open discussion on "Influencing the Asian Century and Strengthening Relations with Taiwan – Role and influences of the Asian Century and economic integration". The forum was facilitated by Ken Waller, Director, the Australian APEC Study Centre, RMIT University, Melbourne.
AUSTRALIAN RELATIONS WITH TAIWAN REMAIN GOOD
- While high-level contact is not that of the heady heights of the 1990s, Minister Ferguson's visit last year was a reminder of our cultural affinity, shared political systems and mutual interests
- This is bolstered by a strong trading relationship - Taiwan is Australia's 6th largest export market, and our trade relations look set to improve, particularly if the recent investments in liquid natural gas come online as scheduled
- Finally, we continue to have a lot of people-to-people contact, particularly in education and cultural sectors.
WE SHARE SIMILAR INTERESTS IN OPEN TRADING REGIMES AND REGIONAL ECONOMIC FRAMEWORKS
- We are both strong and committed members of APEC, and both our economies have taken leadership roles in lowering tariffs across the region
- In fact we've both been beneficiaries of a more open regional trading regime and made the most of APEC's strong trade relationships and APEC's successful lowering of tariffs to levels below the commitments made in the Bogor Round
- And in this the TPP is of interest to both of our economies at a political level - including offering a possible way forward for Taiwan to obviate some of the delays around the bilateral Trade and Investment Framework Agreement (TIFA) with the US.
YOU HAVE CREATIVELY AND SUCCESSFULLY USED FOREIGN DIRECT INVESTMENT AND REGIONAL SUPPLY CHAIN INTEGRATION TO ADVANCE YOUR INVESTMENTS
- Taiwan has have been most successful at using regional supply chain integration to move up the value chain and make the most of your highly-skilled labour force
- Interestingly, you have also been highly successful at using outward investment with China to boost the performance of your multinational companies, and to integrate your economy more closely with China's
- This integration has made you not only a trusted and successful business partner for Chinese entities, it has also made you a very attractive investment destination for other foreign companies and countries looking to make the most of your supply chain networks and links.
AUSTRALIA CAN LEARN A LOT FROM YOUR SUCCESSES IN THIS AREA
- Given regional supply chains are central to current and future regional development, the fact is: -
- Australia is under represented in these supply chains, and a part of the Asian Century White Paper was looking at how we can do this better
- And your high-tech industry and highly skilled and innovative workforce is also a model for us, and should be a source of ideas and inspiration for Australia.
OUR NATURAL RESOURCE ENDOWMENT MAKES OUR ECONOMIES HIGHLY COMPLEMENTARY, AND THERE ARE GREAT PROSPECTS FOR THE FUTURE
- We are a secure and reliable source of minerals and resources such as coal, iron ore, aluminium, copper and LNG; as well as a major exporter of agricultural products
- And, as Taiwan remains the most resource dependent country in the world, these resources and our relations will only become more important as your economy continues to grow
- But it isn't all about resources – surveys put Australia as the second most preferred overseas destination for Taiwanese students, behind the United States
- And last year we welcomed nearly 85,000 Taiwanese visitors, including nearly 17,000 on our working holiday maker program.
BUT WE HAVEN'T INTEGRATED ANYWHERE NEAR AS MUCH AS WE COULD, AN ISSUE ADDRESSED DIRECTLY IN THE ASIAN CENTURY WHITE PAPER
- So while our economies are highly complementary, we have far less exchange on services
- An important point to note here is that our mutual investment is much lower than it could be as well, in spite of some success stories such as Macquarie Bank or CNPC
- In this regard the Asian Century White Paper made clear that we greatly welcome your economic investment, but it also noted many other things we need to address - the paper was express: we need to have much greater flow of goods, services, capital, ideas and people between our two economies.
- The paper also makes manifest that Australia needs more working partners in Asia, countries whose legal institutions, political leaders, commercial practices, cultures and governance standards we know better across the board – and this, of course, includes Taiwan.
AS A GENERAL PROPOSITION, MORE INVESTMENT, INCLUDING JOINT INVESTMENT WILL AID US IN INTEGRATING OUR ECONOMIES AS WELL AS THOSE OF THE REGION
- In Asia, investment in general is much lower than it should be given the relative size of the economies in the region – our trade links remain much better than our investment links
- Australia is no exception to the rule: recent estimates show it that while 50% of our total trade is with Asia, but only 5% of our investment goes there
- Looking for ways of boosting this investment was a focus of the White Paper, and your expertise remains most useful to us
- Similarly, joint investments that make the most of our respective strengths and links into different markets offer great promise.
WE BOTH HAVE STRONG INTERESTS IN IMPROVING THE SYSTEM OF CAPITAL FLOWS IN THE REGION
- Financial services is our biggest industry, and one of your biggest industries
- Asia remains our biggest potential market, with around 60% of the world's population, and an increasingly wealthy but aging population -- but only around 13% of the world's funds under management
- But we lack confidence in the frameworks that underpin our regional financial markets, preferring instead to look to the US or Europe
- So we need to work together on better regulation and standards, and ensuring that there are sound financial systems to develop the market and make it function securely.
INITIATIVES ARE CURRENTLY IN PLACE, BUT WILL NEED POLITICAL AND BUSINESS COMMUNITY SUPPORT
- The APEC Business Advisory Council, which I am a member of, has recommended a collaborative framework to help build a more effective financial service sector in the region through the creation of, the Asia-Pacific Financial Forum (APFF)
- The Forum would be open to relevant bodies such as finance ministries, central banks, financial regulators private sector players from APEC economies
- Similarly, APEC is currently considering a multilaterally agreed framework that would allow funds managers to distribute and market their products across the region – an Asia Region Funds Passport
- Both of these initiatives would be of great benefit to both our countries, as well as the region, and both need our support.
I ALSO BELIEVE THERE'S MORE WE CAN DO TO BUILD STRONGER PEOPLE-TO-PEOPLE LINKS
- The Asian Century White Paper made clear that 'our people' are vital in making the most of the Asian Century
- And we both have highly-skilled, hard-working creative populations; have excellent research institutions; and can add enormous value to cross-border value chains and regional production networks
- We all also work in largely similar time zones, and have a lot of shared relationships through not only business but also through education
- So we now need to think of ways to nurture more collaborative projects and ties
- The arts sector is leading the way in this, particularly Opera Australia.
AND IN THE LONGER TERM, THE ASIAN CENTURY WHITE PAPER SHOWS HOW OUR NATIONAL STRATEGIES ARE BROADLY ALIGNED
- Our cultural affinity, shared political systems and mutual interests give us a good base to build more familiarity, and trust
- We now need to build on this to establish more social, business and cultural networks between us
- These networks are vital – they can bring with them many, often-unanticipated benefits, as today's students, tourists and friends become tomorrow's investors and business partners
- And businesses similarly need to develop more sophisticated relationships at a firm to firm level so we can share knowledge and specialise in what we do best
- These 'enmeshments' were a central message of the Asian Century White Paper, and I think they remain excellent ways for us to go forward together.
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