The case is clear: the “Asian Century” is upon us. That is the unequivocal message of the white paper by former Treasury head Ken Henry, Australia in the Asian Century, released yesterday.
“The report is a compelling argument for how Australia is part of the Asian region,” Tamerlaine Beasley, managing director of consultancy, Beasley Intercultural, tells LeadingCompany. “Doubt is farcical in terms of the scale of economic opportunity, the increase in Chinese tourism and the ‘Asianisation’ of the Australian population. Mandarin is the second most spoken language in Australia.”
Asia’s real gross domestic product (GDP) is expected to more than double to US$67 trillion by 2030, exceeding that projected for the Americas and Europe combined, a 2011 report found.
“Over the same timeframe, Asia will likely account for nearly 70% of the world’s capital stock and will lead capital exports,” the report, Developing An Asia-Capable Workforce, says. “Even sooner, by 2020, Asia is expected to have more middle-class consumers than the rest of the world combined, driving rapid growth in real private consumption across the continent.”
Expectation and reality
For leading companies, there is now much expectation to realise the opportunities from the sudden rise in economic prosperity of our near neighbours – but no financial help.
Beasley says: “The white paper makes the case, however, the government is not committing significant funds to enabling that because they don’t have it. What the white paper is doing is leaving it at the door of business and saying ‘it is up to you’.”
Businesses have been singled out to improve their performance. Among the 25 objectives outlined for the nation to reach by 2025 is the following: One-third of board members of Australia’s top 200 publicly-listed companies and Commonwealth bodies (including companies, authorities, agencies and commissions) will have deep experience in and knowledge of Asia.
The report also singled out the Australian Institute of Company Directors to integrate Asian cultural competency training into its company directors course.
John Colvin, CEO of the AICD, says this is a suggestion the institute will take on board, in addition to the work the institute is already doing in international training for directors.
Colvin is concerned about mandating diversity for the ASX200 boards based on anything other than opportunity and need. “I get nervous when people say we need so many red, blues, pinks or purples on our top boards in Australia. These are some of the best boards in the world, and they will work out their need for diversity.”
Reduce regulation to encourage risk
Colvin says the government needs to lift the regulatory burden off directors if it wants them to grasps the opportunities of the Asian century, which also come with risks. “If we are supportive of going to Asia, that means the risks increase. Risks grow outside own countries, culture, rules of law, politics, and we have to have a culture that comes out of Canberra that is entrepreneurial.
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“Now, we have a culture of punishing people, of compliance-driven regulation that is out of control. That makes so much of our boards and managements’ efforts focused on conformance rather than performance.”