ASIA
26 March 2014
Leveraging the Asianization of Australia
Australia is in need of new sources of economic growth. More effectively leveraging the burgeoning Asianization of the country would provide an important boost to Australia's growth potential.
As Australia's export markets in Asia slow down, the country is in need of new sources of economic growth. This is especially the case for regions like Western Sydney, which face many economic and social challenges.
More effectively leveraging the burgeoning Asianization of Australia would provide an important boost to the country's growth potential, as I argued at an excellent workshop, organized by the OECD's Local Employment and Enterprise Development Programme, and the University of Western Sydney's Urban Research Centre.
What do we mean by the Asianization of Australia?
Modern Australia has been built through international immigration and investment. From the first Western settlement in 1788, Australia experienced two centuries of Westernization.
To be sure, Australia also saw some immigration and investment from Asia, especially China, during this period. But, more recently, over the past couple of decades, Asia has accounted for a growing share of Australia's immigration and inward foreign investment.
In other words, following two centuries of Westernization, Australia is now being Asianized. This is especially the case for Sydney and Melbourne, Australia's two largest cities, which are the principal destinations for Asian immigrants to Australia.
Australia is now blessed with a wave of skilled migrants from Asia, as are the US, UK and Canada. Other countries from the advanced OECD club, mainly continental Europe, Japan and Korea, are missing out on this dynamic. And Asian Australians now make up 12% of the nation's population, more than equivalent figures for Canada (11%) and the US (6%).
These migrants are on average more skilled than the native population, and their children have better education achievements. Moreover, migrants are more active as entrepreneurs than the native population.
The great economic potential Asian migrants is evident from detailed US data on Asian Americans from the Pew Center. For example, the median household annual income of Asian Americans is $66,000, well above the American national average of $49,800. The Indian American group earns $88,000, and the annual incomes for the other groups are as follows: Filipino -- $75,000, Japanese -- $65,390, Chinese -- $65,050, Vietnamese -- $53,400, and Korea -- $50,000.
But is Australia making the most of its skilled migrants?
According to the evidence, the answer is a clear no. Too many skilled migrants are unable to find jobs corresponding to their skills, and are vastly overqualified for the jobs they do secure. Doctors become nurses, accountants become taxi drivers, and so on.
Why? There are a number of reasons. Qualifications may be recognized in Australia. Of they may not be recognized by the potential employer. Sometimes a lack of local experience or insufficient English language capacity may be perceived problems.
Greater efforts are required to recognize foreign qualifications, and to facilitate the acquisition of the necessary local qualifications and equivalences. Financial assistance is sometimes necessary because immigrants often arrive with few financial reserves and a family to support, and Australia has a high cost of living. Immigrants may also need to send financial remittances to family and friends back home who helped finance the whole migration adventure.
But what is worse is that all too often international students (an important migrant group in Australia), with new Australian qualifications, have difficulty finding jobs that effectively use their skills. There seem to be many "informal barriers" in the labor market which prevent them from obtaining a good job.
Such discrimination is usually subtle, diplomatic and polite -- but all too real, nevertheless. It can take the form of ethnic profiling, for example, when human resource officers are culling piles of CVs. Since they may have to cut CV piles by half or more, and do that quickly, eliminating all ethnic names, can provide a quick solution. Some immigrants are responding by changing their names -- such as from Lo to Lowe -- and use photos that may be "photoshopped". But such tactics only get them through the first hoop.
Regarding red tape and the ease of doing business, Australian business people will always make lots of complaints and noise -- even though Australia scores well by international standards. But what is true is that the government bureaucracy for business establishment and operations is not sufficiently migrant-friendly. Much greater efforts are necessary to translate all documents into relevant migrant languages, and to conduct migrant seminars and training to create a migrant-friendly business environment.
Many migrants, who have achieved freedom in their new country of settlement, are bursting with energy and enthusiasm to establish their own business and to become their own boss. Banks should also have more enlightened lending policies, and provide greater credit and other financial services to migrants. Migrant entrepreneurs must often resort to falling back on families and friends for financial assistance, or hold down a second job.
Australia is proud of its seemingly successful skilled migration policies. But all too often these skills are wasted. This is not just a question of giving migrants a 'fair go'. It's about making the best use of the nation's most critical resource, its human capital.
Another aspect of the growing Asianization of Australia is the rapidly rising Asian investment. Japan is currently Australia's third-largest source of foreign investment after the US and the UK. Indeed, Japanese investment has been key to Australia’s past economic development, and has continued to grow apace in recent years – almost doubling since 2007 to reach $126.4 billion in 2012.
A more recent trend has been rising investment from China. Just a few years ago, China's investment in Australia was virtually zero. And now, China has the tenth highest stock of foreign investment in Australia, at $17 billion for foreign direct investment, and $23 billion for total investment. It has been the fastest growing investor in Australia these past years. Interestingly, Australia has also been the most important national destination for Chinese international investment, ahead of the US.
Australia's investment relationship with China has provided many benefits in terms of developing and facilitating the export of Australia's natural resources. And both sides of Australian politics stress that they welcome Chinese investment in Australia and appreciate the benefits such investment brings.
But while the Australia/China investment relationship may seem to be working, there are a number of question marks, and Australia is set to be overtaken by the US and perhaps other countries, as a destination for Chinese investment.
This is partly due to Chinese investors wish to diversify as they now seek manufacturing technologies and brands, as well as natural resources. Other factors include Australia's taxes, labor costs and the quality of its infrastructure.
But most importantly, according to analysis by John Larum and Jingmin Qian, "Chinese investors do not feel as welcome in Australia compared to other countries competing for Chinese investment. There are perceptions of a lack of trust and even discrimination, often linked to the additional Australian government scrutiny accorded Chinese government-related investments."
In short, there seems that there is much that could be done to better leverage the Australia/China investment relationship. There is much to be gained, including in the manufacturing sector.
For example, while America's Detroit may now seem a basket case, Chinese investors are moving in, because they are interested in technology and skilled labor for their own emerging automobile industry. Could China save Australia's chronically sick automobile industry?
There are many other aspects of the Asianization of Australia. Large numbers of Asian tourists are having an impact. People-to-people contacts are blossoming. And Australia's culture is changing dramatically through Asian cuisine, cinema, art, design and so on.
But two of the main drivers of the Asianization of Australia are immigration and investment. Government policy can play a very important role to reap the full benefits. But fundamentally, Australian attitudes may also need to change in order to leverage the full benefits of the Asianization of Australia.
In the context of its White Paper for the Asian Century, the Australian government is endeavoring to promote Australia's "Asian literacy" -- with a view promoting trade and other links. Improving Asian literacy of native Australians on the ground would also be very important for leveraging the rapid Asianization of Australia.
Executive Director
Asian Century Institute
www.asiancenturyinstitute.com
More effectively leveraging the burgeoning Asianization of Australia would provide an important boost to the country's growth potential, as I argued at an excellent workshop, organized by the OECD's Local Employment and Enterprise Development Programme, and the University of Western Sydney's Urban Research Centre.
What do we mean by the Asianization of Australia?
Modern Australia has been built through international immigration and investment. From the first Western settlement in 1788, Australia experienced two centuries of Westernization.
To be sure, Australia also saw some immigration and investment from Asia, especially China, during this period. But, more recently, over the past couple of decades, Asia has accounted for a growing share of Australia's immigration and inward foreign investment.
In other words, following two centuries of Westernization, Australia is now being Asianized. This is especially the case for Sydney and Melbourne, Australia's two largest cities, which are the principal destinations for Asian immigrants to Australia.
Australia is now blessed with a wave of skilled migrants from Asia, as are the US, UK and Canada. Other countries from the advanced OECD club, mainly continental Europe, Japan and Korea, are missing out on this dynamic. And Asian Australians now make up 12% of the nation's population, more than equivalent figures for Canada (11%) and the US (6%).
These migrants are on average more skilled than the native population, and their children have better education achievements. Moreover, migrants are more active as entrepreneurs than the native population.
The great economic potential Asian migrants is evident from detailed US data on Asian Americans from the Pew Center. For example, the median household annual income of Asian Americans is $66,000, well above the American national average of $49,800. The Indian American group earns $88,000, and the annual incomes for the other groups are as follows: Filipino -- $75,000, Japanese -- $65,390, Chinese -- $65,050, Vietnamese -- $53,400, and Korea -- $50,000.
But is Australia making the most of its skilled migrants?
According to the evidence, the answer is a clear no. Too many skilled migrants are unable to find jobs corresponding to their skills, and are vastly overqualified for the jobs they do secure. Doctors become nurses, accountants become taxi drivers, and so on.
Why? There are a number of reasons. Qualifications may be recognized in Australia. Of they may not be recognized by the potential employer. Sometimes a lack of local experience or insufficient English language capacity may be perceived problems.
Greater efforts are required to recognize foreign qualifications, and to facilitate the acquisition of the necessary local qualifications and equivalences. Financial assistance is sometimes necessary because immigrants often arrive with few financial reserves and a family to support, and Australia has a high cost of living. Immigrants may also need to send financial remittances to family and friends back home who helped finance the whole migration adventure.
But what is worse is that all too often international students (an important migrant group in Australia), with new Australian qualifications, have difficulty finding jobs that effectively use their skills. There seem to be many "informal barriers" in the labor market which prevent them from obtaining a good job.
Such discrimination is usually subtle, diplomatic and polite -- but all too real, nevertheless. It can take the form of ethnic profiling, for example, when human resource officers are culling piles of CVs. Since they may have to cut CV piles by half or more, and do that quickly, eliminating all ethnic names, can provide a quick solution. Some immigrants are responding by changing their names -- such as from Lo to Lowe -- and use photos that may be "photoshopped". But such tactics only get them through the first hoop.
Regarding red tape and the ease of doing business, Australian business people will always make lots of complaints and noise -- even though Australia scores well by international standards. But what is true is that the government bureaucracy for business establishment and operations is not sufficiently migrant-friendly. Much greater efforts are necessary to translate all documents into relevant migrant languages, and to conduct migrant seminars and training to create a migrant-friendly business environment.
Many migrants, who have achieved freedom in their new country of settlement, are bursting with energy and enthusiasm to establish their own business and to become their own boss. Banks should also have more enlightened lending policies, and provide greater credit and other financial services to migrants. Migrant entrepreneurs must often resort to falling back on families and friends for financial assistance, or hold down a second job.
Australia is proud of its seemingly successful skilled migration policies. But all too often these skills are wasted. This is not just a question of giving migrants a 'fair go'. It's about making the best use of the nation's most critical resource, its human capital.
Another aspect of the growing Asianization of Australia is the rapidly rising Asian investment. Japan is currently Australia's third-largest source of foreign investment after the US and the UK. Indeed, Japanese investment has been key to Australia’s past economic development, and has continued to grow apace in recent years – almost doubling since 2007 to reach $126.4 billion in 2012.
A more recent trend has been rising investment from China. Just a few years ago, China's investment in Australia was virtually zero. And now, China has the tenth highest stock of foreign investment in Australia, at $17 billion for foreign direct investment, and $23 billion for total investment. It has been the fastest growing investor in Australia these past years. Interestingly, Australia has also been the most important national destination for Chinese international investment, ahead of the US.
Australia's investment relationship with China has provided many benefits in terms of developing and facilitating the export of Australia's natural resources. And both sides of Australian politics stress that they welcome Chinese investment in Australia and appreciate the benefits such investment brings.
But while the Australia/China investment relationship may seem to be working, there are a number of question marks, and Australia is set to be overtaken by the US and perhaps other countries, as a destination for Chinese investment.
This is partly due to Chinese investors wish to diversify as they now seek manufacturing technologies and brands, as well as natural resources. Other factors include Australia's taxes, labor costs and the quality of its infrastructure.
But most importantly, according to analysis by John Larum and Jingmin Qian, "Chinese investors do not feel as welcome in Australia compared to other countries competing for Chinese investment. There are perceptions of a lack of trust and even discrimination, often linked to the additional Australian government scrutiny accorded Chinese government-related investments."
In short, there seems that there is much that could be done to better leverage the Australia/China investment relationship. There is much to be gained, including in the manufacturing sector.
For example, while America's Detroit may now seem a basket case, Chinese investors are moving in, because they are interested in technology and skilled labor for their own emerging automobile industry. Could China save Australia's chronically sick automobile industry?
There are many other aspects of the Asianization of Australia. Large numbers of Asian tourists are having an impact. People-to-people contacts are blossoming. And Australia's culture is changing dramatically through Asian cuisine, cinema, art, design and so on.
But two of the main drivers of the Asianization of Australia are immigration and investment. Government policy can play a very important role to reap the full benefits. But fundamentally, Australian attitudes may also need to change in order to leverage the full benefits of the Asianization of Australia.
In the context of its White Paper for the Asian Century, the Australian government is endeavoring to promote Australia's "Asian literacy" -- with a view promoting trade and other links. Improving Asian literacy of native Australians on the ground would also be very important for leveraging the rapid Asianization of Australia.
Author
John WestExecutive Director
Asian Century Institute
www.asiancenturyinstitute.com
REFERENCES:
- OECD LEED Programme (Local Economic and Employment Development)- Workshop: New sources of growth for dynamic local labour markets - Policies and strategies in Western Sydney and beyond (Sydney, Australia)
- Urban Research Centre, University of Western Sydney
- The rise of Asian Americans. Pew Research. Social and Demographic Trends.
- A Long March: The Australia-China Investment Relationship by John Larum and Jingmin Qian. October 2012. Australia China Business Council.