South East Asia’s growth is intensifying demand for goods and services
South East Asia’s rapid modernisation is no more evident than in the massive growth of industries involved in the provision of goods and services. For example, efficient transport systems reduce the delivery costs of other products and increase competitiveness along the supply chain.
Victoria has a number of service industries that are, or are emerging as, internationally competitive. These include:
- Food services
- Education and training
- Urbanisation and infrastructure
- Environmental Service
- Information Communication Technology (ICT)
- Financial services
- Automotive production
Victoria’s industry requires connectivity and one of Victoria’s key strengths is Melbourne’s position as Australia’s transport hub. Melbourne Airport hosts 25 international carriers with more than five million international passengers each year. The Port of Melbourne is the southern hemisphere’s largest container port, handling almost 40 per cent of Australia’s container trade. Other major ports in Victoria are Geelong, south-west of Melbourne and Portland, in the State’s west.
Domestic consumer demand and tourism are driving a proliferation of supermarket chains, food service outlets, and restaurants, premium food and beverage supply to hotels across the region, especially in Indonesia, Malaysia, the Philippines and Singapore. In particular, demand has recently increased in foods that Victoria produces including, wheat based foods (noodles, breads, cakes) and some dairy products (milk, milk powder, higher value milk derivatives and cheese).
Food and beverage is Victoria’s largest export category to South East Asia and smaller producers are able to compete in markets of considerable size. Indonesia, Malaysia, Singapore and Vietnam are all top ten food export markets for Victoria. The combined South East Asian market accounted for more than $1. billion of Victoria’s food exports in FY2012, which is more than double the value of our food exports to Japan ($776 million), Victoria’s largest single export market.12
As regional markets have developed, the regulation of food imports and the adoption of national standards (including quarantine) have also increased. Deeper government to government engagement will encourage less trade restrictive approaches and address countries’ food security needs as they face shortages of arable land, particularly in the markets of Indonesia, Thailand, Vietnam and the Philippines.
Victoria is very competitive in food and associated food technology exports to South East Asia for a number of reasons, including: reliably clean, safe and green production; proximity, efficient and timely freight and logistics supply chains to market; reliable supply of products where South East Asian countries have low self-sufficiency, such as processed dairy, meat, beverages, grains and counter seasonal horticultural products; and specialisation in premium niche markets, such as nutriceuticals for the young and aged.
What we will do
- Provide in-market support through the Victorian Government Business Offices in Kuala Lumpur, Jakarta and in Melbourne to help Victorian food production and food service businesses gain a foothold in South East Asian markets with market-specific information (such as, local food preferences).
- Facilitate business networks and relationships with food buyers in South East Asian countries.
- Facilitate participation in trade shows.
- Support inbound trade missions and visiting buyers from South East Asia to attend events such as, for example, the International Food Trade Week March 2013 in Melbourne.
South East Asian governments have identified a key objective in achieving their economic goals is a productive workforce and higher skilled people. Knowledge-based economies require high quality education systems and currently, some countries are experiencing an imbalance between the skills produced by their education systems and growing industry demand.
In particular, growing economies are challenged with providing better education outcomes such as:
- Improving teaching skills.
- Better integration of education to meet industry needs.
- Improving basic and technical skills of graduates.
- Improving education-related infrastructure.
The increasing need for enhanced research collaboration and skills training to support growing industries is evident across most South East Asian economies. This need is clearly demonstrated, for example, in the extensive modernisation in South East Asia’s maritime and aerospace markets. The region is one of the few global defence markets currently experiencing growth. The Indonesian Government, for example, has identified its need for pilot training and air transport technicians, estimating its growing fleet and airline needs will require at least 500 pilots per year and 1,000 technicians per year to cope with the increasing demand in its air transport industries.
Demand is also growing for capacity building support to: develop educational frameworks, policy and curriculum; to train staff; and help establish new teaching facilities. Other industries that draw on Victoria’s education expertise include agriculture, manufacturing, hospitality, energy, mechanical trades, and mining.
- Victoria is home to Australia’s number one university which is among the world’s top 30 in 2012 and has four of Australia’s top 20 universities.
- Melbourne consistently rates as the world’s most liveable city and is ranked fourth top student city in the world (after Paris, London and Boston).
- Melbourne is famous for its research as a Knowledge City with multiple research precincts and the Australian Synchrotron, and as a designated UNESCO City of Literature.
- Victoria recorded around 150,000 international student enrolments from 165 countries in 2012.
- Victoria is Australia’s leader in transnational (offshore) education, providing education to more than 80,000 students outside Australia in approximately 33 countries in 2011.
What we will do
- Victoria’s International Education Cluster for South East Asia is developing opportunities through partnerships with regional governments, aid agencies and the private sector to connect in-market education and training demand with Victorian service providers. Cluster members include Victorian universities, TAFE institutes and private education and training providers. The cluster model provides economies of scale that allow service providers to compete in high volume markets.
- Support Victorian education and training organisations to expand partnerships in the region through continuation of the Education Services Managers network.
- Support deepening institutional linkages in vocational and higher education.
- Work with partners in Victoria’s domestic airline industry ;and airlines and regulators in South East Asia to capture opportunities across the training lifecycle.
International education is Victoria’s most valuable export sector
Victoria is well placed to be a regional leader in international education with 32 per cent of Australia’s enrolments from South East Asian countries. The top five source countries from the region are Vietnam, Malaysia, Indonesia, Thailand and Singapore. Vietnam is now Victoria’s third largest source of international students after China and India. Victoria is currently the preferred destination in Australia for student enrolments from Vietnam (44 per cent), Malaysia (38 per cent) and Singapore (32 per cent). Victoria also receives a sizeable proportion of student enrolments from Indonesia (31 per cent).13
Victoria’s industry-centric Vocational Education and Training (VET) sector and world class university system offers students and their industries a competitive edge in the labour markets. The Victorian Government’s Education Services Manager network assists international education providers to access opportunities in-market.
Victoria has a long history of higher education engagement in the region, including many decades of Victorian-educated graduates and many institutions providing services through in-market campuses or partnerships. While the breadth of Victorian educational institutions currently operating in South East Asia is extensive, Victorian universities and VET providers that have established in-market education services include the following:
- Monash University’s Sunway Campus was the first foreign university in Malaysia when it opened in 1998.
- In 2000, Swinburne University opened a branch campus in Malaysia in partnership with the provincial government. Swinburne Sarawak has grown rapidly, with over 3,000 students from more than 40 countries.
- In 2001, RMIT University became the first foreign university campus in Vietnam. RMIT Vietnam saw more than 1,700 students graduate in 2012, bringing the total number of RMIT graduates in Vietnam to more than 5,000. In 2012, RMIT’s partnership with the Singapore Institute of Management celebrated its 25th anniversary. Today, the partnership involves more than 6,500 current students and 24,000 graduates.
- William Angliss Institute has partner campuses in Kuala Lumpur, Malaysia with the Berjaya University College of Hospitality and in Bangkok, Thailand with the Dusit Thani College. The Singapore Workforce Development Agency appointed William Angliss Institute to set up an integrated Continuing Education and Training Centre to deliver training for the tourism and hospitality industry as well as to conduct national skills assessment for existing tourism workers.
- Box Hill Institute provides Australian qualifications through 20 educational partners in South East Asia. Box Hill Institute’s Singapore campus has established world class training for the community and social services sector to provide Singapore Workforce Development Agency qualifications.
Developing new tourism-related infrastructure, including integrated resorts, airports, rail networks and hotels, is a priority for most South East Asian countries with tourism within the region experiencing unprecedented growth. More than 73 million international arrivals (including 47 per cent sourced intra-region) in 2010 provided an 11 per cent increase over 2009.
Victoria has performed strongly in attracting visitors from South East Asia in recent years and more than 460,000 visitors are expected from South East Asia by 2021-22. This represents average annual growth of four per cent per annum during the next decade. In comparison, visitors from China are expected to grow to approximately 500,000 in the same period, a rate of six per cent per annum. India is the fastest growing visitor market with average annual growth of seven per cent per annum that is anticipated to reach 128,000 by 2021-22.14
The mature visitor markets of Singapore and Malaysia, in particular, disperse into regional Victoria, often along self-drive touring routes. Out of Victoria’s top eight source markets for international visitors, the highest expenditure per night is from Singapore, followed by Indonesia and Malaysia. In terms of expenditure per trip, the highest yielding market for Victoria is Indonesia, followed by China, Malaysia and Singapore.15
Business tourism from South East Asia is also growing strongly, with increases in business tourism from Malaysia (+26.4 per cent) and Singapore (+9.5 per cent) in the year ending December 2012.
Victoria’s tourism offering to the South East Asian markets include:
- A cooler climate, high quality shopping, entertainment and nightlife, and outstanding food and wine experiences.
- Easy access to the natural beauty and wildlife of Victoria’s regions, including Victoria’s snowfields.
- Excellent infrastructure for major events, including business events.
- A strong student population which generates significant ‘Visiting Friends and Relatives’ traffic.
- The range of low-cost travel options made available by low cost carriers, greater air connectivity and the increasing number of individuals travelling overseas will remain the main catalysts behind the anticipated strong growth in inbound visitor numbers from South East Asia.
What we will do
- Maintain Tourism Victoria’s South East Asia regional office in Singapore and work with our public relations partners in Malaysia and Indonesia to stimulate growth in inbound visitor numbers from the region.
- Continue to work with Tourism Australia and key airline and travel distribution partners including travel agencies to enhance awareness of Victorian destinations.
- Establish Victoria as an integral element of an Australian itinerary.
- Maximise high yield visitation.
Underpinned by regional Governments’ master plans for economic growth, the urbanisation of South East Asia is driving infrastructure development. However, substantial investment is required to meet basic civil infrastructure needs (power, transport, water, land remediation and telecoms) in addition to building modern services such as hospitals, airports and advanced communications.
Governments across South East Asia have acknowledged that private sector participation in infrastructure development is essential to their future growth and are increasingly implementing policies to facilitate improved delivery of infrastructure through public private partnerships (PPP).
There are opportunities for Victoria in South East Asia as a destination for ‘green capital’. Indonesia is attracting overseas technology and capital in water treatment, waste to energy and carbon sequestration projects. The Philippines is the world’s second largest geothermal market.
Victoria’s infrastructure and urbanisation service providers are recognised as world class in:
- Sustainable cities and urban master planning.
- Project management, civil engineering, quantity surveying and cost controlling.
- Architecture (in 2010, Melbourne firm Fender Katsalidis won the tender to design the tallest building in the southern hemisphere, the Warisan Merdeka tower in Kuala Lumpur).
- Health infrastructure: hospital design and systems.
- PPP expertise: governance and legal frameworks, risk management and procurement systems, and financial modelling and controlling.
- Water engineering and technologies.
- Freight and logistics infrastructure, ports and airports.
- Intelligent transport systems.
- Leading-edge green building technologies and systems.
What we will do
- Assist knowledge transfer, training and education to promote Victoria’s infrastructure development experience.
- Facilitate business to government relationships and business to business networks in South East Asian infrastructure markets.
- Work with the Commonwealth Government and aid agencies to develop infrastructure skills training in relevant South East Asian countries.
The emerging economies of South East Asia are well positioned to take advantage of a wealth of environmental sustainability and climate change knowledge and experience in neighbouring countries such as Australia to ensure their long-term economic progress is aligned with environmentally sustainable growth.
Victoria has particular expertise in the areas of:
- Supporting clean technology, recycling and green building systems in urban environments.
- Assisting industry with compliance and regulatory frameworks.
- Remediation of contaminated environments, clean air and water systems.
- Establishing robust environmental sustainability controls and reforms.
- Developing appropriate tourism opportunities in environmentally sensitive areas such as national parks.
Victoria is a national leader in delivering environment reforms and regulatory improvements as a foundation for a cleaner environment, particularly in the areas of regulatory frameworks and environmental standards. Victoria has a long history of leadership in environmental governance, establishing the world’s second oldest Environment Protection Authority, the Victorian EPA, which provides best practice pollution regulation to support a liveable and prosperous community. This goal is endorsed each time Melbourne is voted the world’s most liveable city. Victoria boasts clean air, clean water and world class natural tourism attractions.
What we will do
- Partner with local governments, businesses and aid agencies throughout South East Asia on projects to clean up waterways
and improve air quality.
- Share knowledge and experience of innovative financing mechanisms for critical environmental works and urban systems.
- Establish partnerships with South East Asian governments to continuously improve environmental protection frameworks.
- Support local businesses to establish relationships and business opportunities in South East Asian markets for high end specialist services and clean technology capabilities.
- Partner with governments and businesses on environmental plans and technologies.
- Work with regional industries and agencies on new resource recovery measures to help reduce waste and to improve recycling, to cut the volume of waste going to landfill sites.
Across South East Asia, governments are leveraging the fast and pervasive integration of ICT through business and personal use to transform the economic and cultural quality of life for vast numbers of people. The region is striving to be a global ICT hub and is doing so at a greater rate than the rest of the world by increasing access to affordable technologies, encouraging training in ICT jobs and cross-country initiatives to bridge the digital divide both between countries and within countries.
Drivers of rapid modernisation of ICT in South East Asia include:
- Increased consumer spending on connectivity, internet use and devices.
- Vast industry expansion which is underpinned by ICT.
- Emergence of hi-tech corridors within individual countries.
- Industry specialisation (for example, software development in Vietnam, cloud and business process services in Singapore).
- Government initiatives, such as investment in broadband networks and extending ICT services to rural areas (for example, Indonesia’s target of all rural areas receiving ICT coverage by 2015).
Victoria has recognised capability across many ICT disciplines. Some of the greatest potential and scale of opportunity across the key South East Asian markets include: mobile technology, spatial technology, e-Learning and e-Health, banking and finance IT and wireless and broadband.
What we will do:
- Work with partners in Kuala Lumpur and Singapore to create export opportunities for Victorian ICT companies, attract investment opportunities and promote Victoria’s ICT capabilities.
- Promote Victoria’s regional ICT capabilities through participation in CommunicAsia2013 in Singapore.
Along with demand for traditional consumer products, the demand for financial services is also increasing. There are growing opportunities in South East Asia for wealth management, funds management, project and infrastructure finance and Islamic finance. Accessing the region’s financial services market will require Victorian businesses to identify their niche in terms of skills and products.
Recognising the importance of Islamic finance, Victoria is developing expertise in this growing market and was the first state in Australia to ensure financial institutions are able to operate in accordance with Islamic finance principles.
Melbourne is home to the National Centre for Islamic Studies and a number of the city’s tertiary institutions offer programs on Islamic finance.
What we will do
- Facilitate a focused and strategic approach to assist Victorian firms to build local investment and finance relationships in South East Asian markets.
South East Asia’s emerging economies are increasingly reliant on private investment to assist governments in healthcare delivery. In the face of continued population growth and rising expectations of care, some countries are looking to increase the GDP proportion of their health expenditure.
Opportunities for Victoria in South East Asia’s healthcare markets include: health products; management and consulting services for new health systems development; attracting new foreign investment into Victoria’s health sector; and medical research exports.
Victoria also has opportunities to grow exports in the areas of medical and health education and training, biotechnology, medical devices, pharmaceuticals, and mental health programs.
Victoria has a strong international reputation for health services expertise and particular strengths in the health and aged care sector including:
- Planning and design of health and aged care facilities.
- Development and delivery of management systems.
- Formal training in acute, allied, mental health and aged care.
- Formal training in managing health and aged care organisations, including workforce planning.
- Health systems management, including government compliance/legislative/policy/quality assurance and business and government partnerships.
- Medical research.
- Medical devices.
- Health related IT systems.
What we will do:
Implement a strategic approach to professional health engagement with the countries of South East Asia to facilitate mutually beneficial outcomes while promoting Victoria’s healthcare expertise.
Total automotive vehicle production in South East Asia is estimated to increase from three million units in 2012-13 to more than five million units by 2017. This growth is largely increased sales of vehicles especially in Indonesia and increased export of vehicles from Thailand.
Opportunities exist in the significant automotive markets of Indonesia, Thailand, Malaysia, Singapore and Vietnam for Victoria’s technical collaborations in automotive components, research and development, engineering and design, high value components, process improvement and engineering, greencar technology, automotive aftermarket and performance enhancement.
Victorian automotive companies currently engaged with the region include:
- MTM has concluded a Memorandum of Understanding with Proreka (Malaysia).
- Hella has secured two contracts with Proton (Malaysia) for the supply of rear lamps.
- AutoCRC’s collaboration with Proton through the Malaysian Automotive Institute.
- A track record of on time and in full delivery.
- R&D, design, engineering, product and process development, and advanced manufacturing.
- Design, develop and manufacture components from concept through to production.
- Product testing to global safety standards.
- Significant tooling design and build capability.
- Small scale capability and broad experience base.
What we will do
Support Victorian automotive businesses to capitalise on opportunities resulting from the recently signed Malaysia-Australia Free Trade Agreement and to further develop relationships with ASEAN business partners.
12. Department of Environment and Primary Industry: Victorian Food and Fibre Export Performance 2011-12. ▲
13. Australian Education International ▲
14. Tourism Forecasting Committee Forecast 2012 Issue 2; International Visitor Survey, Tourism Research Australia, year ending June 2012. ▲
15. International Visitor Survey, year ending September 2012. ▲