WA urged to grasp opportunity in Asia
The head of a company linking Wheatbelt farmers to a flour and malt production network in South-East Asia has urged WA business leaders to step up investment in the region.
Interflour chief executive Greg Harvey said Australia’s investment and engagement with South-East Asia was “anaemic at best”.
Mr Harvey said the “vexed and horny issues” of sovereign risk and corruption were real but could be managed through partnerships with family-owned enterprises in the region and appropriate due diligence.
“I would encourage companies looking to invest to focus on family-owned enterprises,” he said. “They really are the fabric of the business community throughout South East-Asia.
“In my experience the best renowned and most professional ones are using the big four accountancy firms for annual audits, often using international law firms as their legal advisers, they often have strong regional banks or global banks, and marquee corporate advisers.
“As a result, issues around risk and corruption often get managed out of the decision-making process.”
Mr Harvey was speaking at an Asia Insight breakfast in Perth yesterday where other panellists included Indonesian consul-general Ade Padmo Sarwono, Malaysian consul-general Nazarudin Jaafar and Andrea Gleason, State director of the Department of Foreign Affairs and Trade.
The panellists highlighted the opportunities created by the ASEAN Economic Community, which came into effect on January 1 this year. AEC is expected to reduce non-tariff barriers to trade and foreign investment across the region.
Those issues will be on the table next month when Perth hosts about 700 officials for the next round of negotiations in the Regional Comprehensive Economic Partnership involving ASEAN and its free-trade agreement partners Australia, China, India, Japan, Korea and New Zealand.
The breakfast was told South-East Asia attracted only a fraction of Australia’s foreign investment. Australian Bureau of Statistics figures showed Australian companies had $81 billion invested in New Zealand compared to $32 billion across Indonesia, Thailand, Vietnam and the Philippines.
Mr Harvey said that through its investment in Interflour, CBH had shown other WA-based businesses the value in investing in downstream processing in the region. Interflour, a partnership between CBH and Indonesian billionaire Anthony Salim, owns and operates a network of flour mills in the region. Its assets include a major port terminal in Vietnam where it is preparing to open South-East Asia’s first malt plant in the next year.
Interflour will import barley from WA farms, mainly in the Esperance and Albany port zones, to supply the malt plant and the world’s fastest growing beer market. It has signed customer agreements with major brewers Heineken, Carlsberg and Sapporo.
Mr Harvey said ASEAN had the potential to outstrip China as a manufacturing hub. Australia was not cost competitive in areas like meat and grain processing.
“The reason we decided to build a malt factory in Vietnam is that our costs are 75 per cent lower than the supply chains costs out of Australia,” he said.
“We have a situation where if, as industries, we wish to participate in growing demand in South-East Asia, we need to start to see some more investment and transfer of capital into those regions to enable us to catch that growth.”
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