ASIA
12 February 2023
The Future
Our partner, Glen Robinson, shares his thoughts on the future.
Australia has handled the disasters which befell the world over the last almost 3 years reasonably well, but some shortcomings were exposed. Importantly, it is suggested that we should not sit and complain about the shortcomings but take remedial action to improve our lot.
This essay is an attempt to explore and highlight examples of the Australian performance compared to the global performance. It is not an exhaustive analysis, and the conclusions are not those of any other person or entity, but it is one which provides a comparative look at Australia’s position in the global hierarchy,
There are many more sectors which could benefit from a review, but that is outside the scope of this essay, as this analysis attempts to demonstrate that with determination and adequate planning the Australian organisations have the opportunity to become world leaders in many sectors. Consequently, it is hoped that an action plan will be developed, and real action taken on many of the sectors which could benefit from review.
Australian businesses have demonstrated an ability to undertake significant improvement programs, and it is hoped that as the business community emerges from the recent disasters, the country is able to look forward with enthusiasm and determination and undertake the improvements which are available.
As a consequence of the disastrous pandemics, we were faced with in the last 3 years, beginning with the drought, then flooding rains, disastrous floods, then medical issues, it has been a trying and disappointing period. During the medical pandemic when equipment and medications were in short supply and those which were theoretically available, in reality were largely unattainable due to our inability to respond quickly, which prompted many people to cry that we should be self-sufficient and manufacture and produce our own goodies.
A logical lament until you take a closer look. Take a stroll through the local Coles supermarket and the local Bunnings hardware store and take a note of the source location of the goodies on display. There is absolutely no way Australian business could ramp up its processing capability to even put a dent in the supply of imported goods. Those goodies encompass the total range of goodies we enjoy, so it is only logical to assume that imports of goodies shall continue, however, there will be some items and components of items which will be locally produced by enterprising young organisations, and the opportunity exists to produce components and undertake processing in the supply chain. We must remember that the smart I-Phone is comprised of components manufactured in over 40 separate specialist factories.
So, what does Australia do?? We have considerable catching up to achieve if we are to take a reasonable stand in the processing industry, as we have been out of it for so long and we have allowed ourselves to be convinced that we cannot become involved in those activities. Some of the reasons which are regularly expounded include:
We are too expensive; Salaries and wages are too high; We do not have the funds to get involved in true manufacturing or processing; We are too distant from the markets; We are only a small market.
Sound familiar?? There are many other comments speculating as to why we cannot join the manufacturing fraternity and take a processing stand, is that a correct proposition? but those above are sufficient at least as examples. Are these comments relevant? If the Australian situation is compared with the international performance of say Sweden, the answer is obviously NO.
Sweden is a relatively small country, less than half the population of Australia, it has equivalent operating costs and very few natural resources, but it has operations in at least 20 countries and 3 continents, and it exports products, and the markets which it services are quite impressive.
So, Australia must do things differently, but what is it that we must do differently? We used to be a significant supplier into the global market, for example in the 1980’s the large well established Australian global players were very prominent, say Boral, Pioneer, Monier, Hardie, Lion Nathan, Fosters, AIG, each of the banks, Viscount, just to name a few, and they were part of a much larger cohort of Australian companies, mainly public companies, doing it well on the international stage. But not anymore as any analysis will demonstrate, as most have withdrawn from the global stage and others have been swallowed up by other international companies.
This essay is not designed, nor is it qualified to answer the question directly, but analyses have been undertaken of Australia’s connection with the global entities in a number of areas, including manufacturing, education, medical, sports and internet, which may act as an example point to the sectors which this comparative analysis shows they could benefit from action to become internationally competitive or more importantly, internationally attractive to tourists, commercial investors and potential students. We need a clear and well-defined strategic plan to identify the sectors to be targeted and the action plan required to ensure that those sectors can become among the best in the global space. The following paragraphs are examples of some of the sectors which may benefit from a thorough structural overhaul, and it is timely to add that this list is not exhaustive, it is just an example.
INWARDS when investment foreign capital is invested in your country into projects, usually operating companies, where the foreigner has some influence on the direction of the company. The minimum level of investment is at least 10 % of the target company.
One other form is OUTWARDS, where the Australian company invests in the target country in order to sell its product/service into that market.
Other forms of foreign investment are PORTFOLIO, in its simplest form, is an investment onto the stock market, and there are other instruments which form an offshore investment. However, it is the FDI which is the subject of these comments.
There are advantages to an Australian company which adopts an offshore policy, or a multi domestic policy, and invests or trades internationally. Those advantages can include: -
Insulation from the cyclical nature of some markets, as the cyclicality is not synchronized between countries or markets.
The market has the perception that it is a local company and hence is afforded the privileges of such.
Being closer to the market and customers, ensures a better understanding of the customer requirements and product suitability.
Often closer to the raw materials or subcomponents can be an advantage.
Builds a stronger company and provides wider executive experience.
Generally, provides a larger market.
Regardless of the motivation for an offshore investment, the advantages still flow to the both the investor and the recipient.
Logic may indicate that the Inwards investment should roughly equate to the Outwards to avoid an imbalance in any particular country. From the analysis, the results of aggregation are as follows.
It is clear that Australia’s INWARDS FDI is significantly more than the OUTWARDS FDI by a factor of almost 3 times, and consequently the OUTWARDS FDI may benefit from a significant increase in investment.
Australia has a large export market for mined raw materials, and this has been of significant benefit to the economy over a considerable time.
The comparative statistics indicate that developing Asia has a significantly higher exports and imports (per capita) than the remainder of the world, and Australia’s statistics are in keeping with the remainder of the world.
The last test was taken in Australia in 2018, as the 2021 test series was deferred due to the pandemic, and in that testing series Australia came in at number 17 of the 24 reported countries which were surveyed and reported, and we received better results than those of USA, France, Norway & Portugal. Even so, there was considerable discussion on why our results were lower than expected.
The test does come in for some controversy but is a standardized test and it is one measure of educational activities, and as such certainly has some merit.
In the “The Container Port Performance Index 2020” published by the World Bank Group and IHS Markit, the rankings of the operating performance for the 351 ports are as follows: -
Port Brisbane Rank 246 In the bottom 30%
Port Melbourne Rank 302 in the bottom 15%
Port Fremantle Rank 326 in the bottom 5%
Port Sydney Rank 337 in the bottom 5%
Additionally, the information published by UNCTAD for 2019 shows the median In-Port time for container ships visiting Australia was three times longer than Japan, twice as long as China, and 50 % longer than Singapore or New Zealand. For 2020 the global median in-port time was an average of 0.78 days, but for Australia it was 1.46 days.
There is no disputing the fact that the performance of Australian container ports is well below normal expectations, and the immediate future does not look bright. The current maximum size of a container ship is 10,000 containers, but the future trend is to at least 20,000 containers, and Australian ports are struggling to handle the current ships, and there are no ports in Australia which can handle the new sized containers.
Interestingly, many of the reports identify the factors which contribute to the poor performance, and several have suggested rectifications, but there appears to be little action.
For a detailed analysis of the 351 international ports see “The Container Port Performance Index 2020” The CPPI 2020: Global Ranking of Container Ports
There has been some critical comment in relation to the negative effects of the pandemic, given that many countries may not have the facilities to adequately count, or they may choose to under-report the actual situation.
Australia has done reasonably well in relation to deaths, with 0.62 deaths per 1000 people and the comparable number for the USA is 3.32 and for the UK it is 2.92. The average for the G20 countries is 1.63 deaths per 1000 people.
Another aspect of the medical issue relates to treatment centres, predominantly hospitals, and while this aspect is not an international comparison, it is an area which probably requires further consideration and evaluation to ensure that Australian hospitals are fit for purpose.
7.1 Electric Vehicles. We are not sure which power source will become the “normal” as there are at least two main sources currently under research and development, and certainly additional ones may be developed over time, however, the introduction of electric vehicles has been well developed, with Norway the world leader with over 86% of new vehicles sold in 2021 being plug in electric vehicles. A summary of some selected countries is as follows: -
Norway 86.2%
Sweden 43.3%
United Kingdom 18.6%
New Zealand 5.5%
United States 4.0%
Australia 2.4%
The global average of the introduction of plugin EV for the 2021 year was 8.6%, and the annual increments has been quite impressive, as the global average penetration in 2013 was 0.3%, and it has grown steadily up to the present 8.6%. It is expected that the sales and purchase of the vehicles will accelerate as purchase prices are reduced and refuelling facilities are more widely available.
7.2 Pollution. Pollution is rarely discussed in relation to Australia; however, it could be a useful parameter for comparison. The organisation called Numbeo produce a range of comparative statistics and the pollution is among them.
Australian cities do not have the pollution issues which many global cities are faced with, and the comparative analysis undertaken by Numbeo shows the worst cities have indices of over 90, and Sydney, Australia’s most polluted city has an index of less than 30
7.3 Carbon Footprint is an important factor in the future of the global wellbeing for the 210 countries reported by World Population Review. The comparative statistics show the total emissions for a selected year and importantly also show the emissions per capita for each country. It is interesting that in 2020 China emitted 11,680 million tonnes and Australia emitted 386 million tonnes, but on a per capita basis, China emitted 8.2 tonnes per capita whereas Australia emitted 15.2 tonnes per capita, almost twice as much.
7.4. Emissions per Capita In the total emissions for 2020 Australia is number 16 with 386 million tonnes whereas China is number 1 at 11,680 million tonnes for the year and the lowest is Anguilla at 2million tonnes. Anguilla hardly warrants inclusion as it is just a very small dot in the West Indies. However, Australia is prominent in the top 20 emitters.
Emissions per Capita is probably a more useful statistic, as the reduction of emissions is easily obtained if the population is reduced, a very useless consideration, given that populations are rising in most countries. So, the Emissions per Capita is a controllable factor.
The average for the 210 countries included in the analysis is 4.78 million tonnes per person which would be equivalent to number 65 in the total list. Australia is quite high at number 13 which is 15.22 million tonnes, China is at 8.6million tons per person, and Burundi is the very least at .02 million tonnes per person.
The statistics for the 142 countries evaluated are shown in Appendix 10
These show that Australia has a Broadband speed of 82.73mbps, which is no. 45 in the international lists and a mobile speed of 135.3mbps which is no.8 in the international lists.
It is clear we have an unusual opportunity to refocus and take improvement action in many sectors. But it will require a determined and planned approach by all sectors of the community lead and directed by a government agency.
It is hoped that this essay will join with others in suggesting that we urgently need to develop a plan to once again be a leader in the global community.
About the Author
Glen Robinson
Glen Robinson is a co-founder and director of Asean Focus Group with Peter Church which was formed in 1990 to provide advice and assistance to those organisations which wished to take a commercial presence in ASEAN and other Asian countries. He initially gained his Asian experience as chief executive officer for the Asian subsidiaries and joint ventures of a major international manufacturing and marketing organisation, and he has worked with a wide range of industries from agriculture, government through to manufacturing, distribution and service industries. A number of years ago Asean Focus Group entered into a joint venture with Venture Group and both now trade as AFG Venture Group
Glen is a director of the Australia Thailand Business Council and a Councillor of the Australia Institute of International Affairs NSW and is vitally interested in Australia’s position in the international commercial space.
The views expressed in this article are solely those of the author and not of any of the companies or organisations mentioned.
This essay is an attempt to explore and highlight examples of the Australian performance compared to the global performance. It is not an exhaustive analysis, and the conclusions are not those of any other person or entity, but it is one which provides a comparative look at Australia’s position in the global hierarchy,
There are many more sectors which could benefit from a review, but that is outside the scope of this essay, as this analysis attempts to demonstrate that with determination and adequate planning the Australian organisations have the opportunity to become world leaders in many sectors. Consequently, it is hoped that an action plan will be developed, and real action taken on many of the sectors which could benefit from review.
Australian businesses have demonstrated an ability to undertake significant improvement programs, and it is hoped that as the business community emerges from the recent disasters, the country is able to look forward with enthusiasm and determination and undertake the improvements which are available.
INTRODUCTION
As we approach normality in the world, we could ask ourselves “what is normal”? We begin to look into the future and wonder what lies before us, and there are numerous speculative comments available, and from those it is possible to select paths which are diametrically opposed, such is the spread and diversity of views.As a consequence of the disastrous pandemics, we were faced with in the last 3 years, beginning with the drought, then flooding rains, disastrous floods, then medical issues, it has been a trying and disappointing period. During the medical pandemic when equipment and medications were in short supply and those which were theoretically available, in reality were largely unattainable due to our inability to respond quickly, which prompted many people to cry that we should be self-sufficient and manufacture and produce our own goodies.
A logical lament until you take a closer look. Take a stroll through the local Coles supermarket and the local Bunnings hardware store and take a note of the source location of the goodies on display. There is absolutely no way Australian business could ramp up its processing capability to even put a dent in the supply of imported goods. Those goodies encompass the total range of goodies we enjoy, so it is only logical to assume that imports of goodies shall continue, however, there will be some items and components of items which will be locally produced by enterprising young organisations, and the opportunity exists to produce components and undertake processing in the supply chain. We must remember that the smart I-Phone is comprised of components manufactured in over 40 separate specialist factories.
So, what does Australia do?? We have considerable catching up to achieve if we are to take a reasonable stand in the processing industry, as we have been out of it for so long and we have allowed ourselves to be convinced that we cannot become involved in those activities. Some of the reasons which are regularly expounded include:
We are too expensive; Salaries and wages are too high; We do not have the funds to get involved in true manufacturing or processing; We are too distant from the markets; We are only a small market.
Sound familiar?? There are many other comments speculating as to why we cannot join the manufacturing fraternity and take a processing stand, is that a correct proposition? but those above are sufficient at least as examples. Are these comments relevant? If the Australian situation is compared with the international performance of say Sweden, the answer is obviously NO.
Sweden is a relatively small country, less than half the population of Australia, it has equivalent operating costs and very few natural resources, but it has operations in at least 20 countries and 3 continents, and it exports products, and the markets which it services are quite impressive.
So, Australia must do things differently, but what is it that we must do differently? We used to be a significant supplier into the global market, for example in the 1980’s the large well established Australian global players were very prominent, say Boral, Pioneer, Monier, Hardie, Lion Nathan, Fosters, AIG, each of the banks, Viscount, just to name a few, and they were part of a much larger cohort of Australian companies, mainly public companies, doing it well on the international stage. But not anymore as any analysis will demonstrate, as most have withdrawn from the global stage and others have been swallowed up by other international companies.
This essay is not designed, nor is it qualified to answer the question directly, but analyses have been undertaken of Australia’s connection with the global entities in a number of areas, including manufacturing, education, medical, sports and internet, which may act as an example point to the sectors which this comparative analysis shows they could benefit from action to become internationally competitive or more importantly, internationally attractive to tourists, commercial investors and potential students. We need a clear and well-defined strategic plan to identify the sectors to be targeted and the action plan required to ensure that those sectors can become among the best in the global space. The following paragraphs are examples of some of the sectors which may benefit from a thorough structural overhaul, and it is timely to add that this list is not exhaustive, it is just an example.
FOREIGN DIRECT INVESTMENT (FDI)
There are several forms of FDI.INWARDS when investment foreign capital is invested in your country into projects, usually operating companies, where the foreigner has some influence on the direction of the company. The minimum level of investment is at least 10 % of the target company.
One other form is OUTWARDS, where the Australian company invests in the target country in order to sell its product/service into that market.
Other forms of foreign investment are PORTFOLIO, in its simplest form, is an investment onto the stock market, and there are other instruments which form an offshore investment. However, it is the FDI which is the subject of these comments.
There are advantages to an Australian company which adopts an offshore policy, or a multi domestic policy, and invests or trades internationally. Those advantages can include: -
Insulation from the cyclical nature of some markets, as the cyclicality is not synchronized between countries or markets.
The market has the perception that it is a local company and hence is afforded the privileges of such.
Being closer to the market and customers, ensures a better understanding of the customer requirements and product suitability.
Often closer to the raw materials or subcomponents can be an advantage.
Builds a stronger company and provides wider executive experience.
Generally, provides a larger market.
Regardless of the motivation for an offshore investment, the advantages still flow to the both the investor and the recipient.
Logic may indicate that the Inwards investment should roughly equate to the Outwards to avoid an imbalance in any particular country. From the analysis, the results of aggregation are as follows.
It is clear that Australia’s INWARDS FDI is significantly more than the OUTWARDS FDI by a factor of almost 3 times, and consequently the OUTWARDS FDI may benefit from a significant increase in investment.
EXPORT and IMPORTS
Exports and imports are an important way of balancing the in-country manufacturing and consumption of products and services. Importantly, the imports provide the goods and services which Australia cannot or chooses not to produce from its local resources, and conversely, exports provide additional goods and services for the other country and allows the Australian producers and providers to maximise their output for a much larger customer base.Australia has a large export market for mined raw materials, and this has been of significant benefit to the economy over a considerable time.
The comparative statistics indicate that developing Asia has a significantly higher exports and imports (per capita) than the remainder of the world, and Australia’s statistics are in keeping with the remainder of the world.
EDUCATION
As education is such an important component of a country's development and continued improvement, it is certainly worth evaluating the comparison of the quality of education. The OECD conducts a Programme for International Student Assessment [PISA], which is a test mainly in science, reading and mathematics for 15-year-olds and is aimed to establish their quality of thinking. The tests are conducted in at least 65 countries which make up 90 % of the world’s economies.The last test was taken in Australia in 2018, as the 2021 test series was deferred due to the pandemic, and in that testing series Australia came in at number 17 of the 24 reported countries which were surveyed and reported, and we received better results than those of USA, France, Norway & Portugal. Even so, there was considerable discussion on why our results were lower than expected.
The test does come in for some controversy but is a standardized test and it is one measure of educational activities, and as such certainly has some merit.
CONTAINER PORTS
The international container ports are a vital part of the international maritime transport system, and unfortunately the performance of the Australian container ports is well below that of other international ports. This is a sector which is well analysed internationally, and there are frequent and detailed reports which outline the situation and to some extent predict the future.In the “The Container Port Performance Index 2020” published by the World Bank Group and IHS Markit, the rankings of the operating performance for the 351 ports are as follows: -
Port Brisbane Rank 246 In the bottom 30%
Port Melbourne Rank 302 in the bottom 15%
Port Fremantle Rank 326 in the bottom 5%
Port Sydney Rank 337 in the bottom 5%
Additionally, the information published by UNCTAD for 2019 shows the median In-Port time for container ships visiting Australia was three times longer than Japan, twice as long as China, and 50 % longer than Singapore or New Zealand. For 2020 the global median in-port time was an average of 0.78 days, but for Australia it was 1.46 days.
There is no disputing the fact that the performance of Australian container ports is well below normal expectations, and the immediate future does not look bright. The current maximum size of a container ship is 10,000 containers, but the future trend is to at least 20,000 containers, and Australian ports are struggling to handle the current ships, and there are no ports in Australia which can handle the new sized containers.
Interestingly, many of the reports identify the factors which contribute to the poor performance, and several have suggested rectifications, but there appears to be little action.
For a detailed analysis of the 351 international ports see “The Container Port Performance Index 2020” The CPPI 2020: Global Ranking of Container Ports
MEDICAL
It is difficult to compare medical proficiency across the globe. In order to gain an indicative response, the number of deaths associated with the Covid-19 virus from the beginning [Feb 2020] through to today has been taken. The total number reported for the world is close to 6.67 million, a staggeringly high number given the relatively casual approach to by our politicians.There has been some critical comment in relation to the negative effects of the pandemic, given that many countries may not have the facilities to adequately count, or they may choose to under-report the actual situation.
Australia has done reasonably well in relation to deaths, with 0.62 deaths per 1000 people and the comparable number for the USA is 3.32 and for the UK it is 2.92. The average for the G20 countries is 1.63 deaths per 1000 people.
Another aspect of the medical issue relates to treatment centres, predominantly hospitals, and while this aspect is not an international comparison, it is an area which probably requires further consideration and evaluation to ensure that Australian hospitals are fit for purpose.
ENVIRONMENT
This is a particularly large area with a lot of facts to demonstrate significant differences between Australia and other countries, however, there are several areas which could be highlighted.7.1 Electric Vehicles. We are not sure which power source will become the “normal” as there are at least two main sources currently under research and development, and certainly additional ones may be developed over time, however, the introduction of electric vehicles has been well developed, with Norway the world leader with over 86% of new vehicles sold in 2021 being plug in electric vehicles. A summary of some selected countries is as follows: -
Norway 86.2%
Sweden 43.3%
United Kingdom 18.6%
New Zealand 5.5%
United States 4.0%
Australia 2.4%
The global average of the introduction of plugin EV for the 2021 year was 8.6%, and the annual increments has been quite impressive, as the global average penetration in 2013 was 0.3%, and it has grown steadily up to the present 8.6%. It is expected that the sales and purchase of the vehicles will accelerate as purchase prices are reduced and refuelling facilities are more widely available.
7.2 Pollution. Pollution is rarely discussed in relation to Australia; however, it could be a useful parameter for comparison. The organisation called Numbeo produce a range of comparative statistics and the pollution is among them.
Australian cities do not have the pollution issues which many global cities are faced with, and the comparative analysis undertaken by Numbeo shows the worst cities have indices of over 90, and Sydney, Australia’s most polluted city has an index of less than 30
7.3 Carbon Footprint is an important factor in the future of the global wellbeing for the 210 countries reported by World Population Review. The comparative statistics show the total emissions for a selected year and importantly also show the emissions per capita for each country. It is interesting that in 2020 China emitted 11,680 million tonnes and Australia emitted 386 million tonnes, but on a per capita basis, China emitted 8.2 tonnes per capita whereas Australia emitted 15.2 tonnes per capita, almost twice as much.
7.4. Emissions per Capita In the total emissions for 2020 Australia is number 16 with 386 million tonnes whereas China is number 1 at 11,680 million tonnes for the year and the lowest is Anguilla at 2million tonnes. Anguilla hardly warrants inclusion as it is just a very small dot in the West Indies. However, Australia is prominent in the top 20 emitters.
Emissions per Capita is probably a more useful statistic, as the reduction of emissions is easily obtained if the population is reduced, a very useless consideration, given that populations are rising in most countries. So, the Emissions per Capita is a controllable factor.
The average for the 210 countries included in the analysis is 4.78 million tonnes per person which would be equivalent to number 65 in the total list. Australia is quite high at number 13 which is 15.22 million tonnes, China is at 8.6million tons per person, and Burundi is the very least at .02 million tonnes per person.
The statistics for the 142 countries evaluated are shown in Appendix 10
DIGITAL APPLICATION
The digital age has overtaken us and almost every country is subject to the internet, social media, and almost all communication is via some digital mechanism. Many countries are proud of their internet and mobile speeds and the costs involved, so comparisons can be made of the speeds. The internet and mobile speeds are included in Appendix 12.These show that Australia has a Broadband speed of 82.73mbps, which is no. 45 in the international lists and a mobile speed of 135.3mbps which is no.8 in the international lists.
SUMMARY
Australia does well in the international arena but not as well as we claim or aspire to be, but that is no reason to avoid making improvements. This essay attempts to set out to demonstrate that there are sectors which could be identified as being suitable for review, and there is no attempt to belittle the current standing, but the objective is to show that even in sectors which rarely come in for comment, the international competitors have superior standing.It is clear we have an unusual opportunity to refocus and take improvement action in many sectors. But it will require a determined and planned approach by all sectors of the community lead and directed by a government agency.
It is hoped that this essay will join with others in suggesting that we urgently need to develop a plan to once again be a leader in the global community.
About the Author
Glen Robinson
Glen Robinson is a co-founder and director of Asean Focus Group with Peter Church which was formed in 1990 to provide advice and assistance to those organisations which wished to take a commercial presence in ASEAN and other Asian countries. He initially gained his Asian experience as chief executive officer for the Asian subsidiaries and joint ventures of a major international manufacturing and marketing organisation, and he has worked with a wide range of industries from agriculture, government through to manufacturing, distribution and service industries. A number of years ago Asean Focus Group entered into a joint venture with Venture Group and both now trade as AFG Venture Group
Glen is a director of the Australia Thailand Business Council and a Councillor of the Australia Institute of International Affairs NSW and is vitally interested in Australia’s position in the international commercial space.
The views expressed in this article are solely those of the author and not of any of the companies or organisations mentioned.