(James) Well good afternoon everyone and thank you for those who can make it today and to all of us who are joining online welcome.
00:18 - Just quickly to the people that are here today, if you can make sure your phones are turned off so we don’t have any random calls or texts throughout the sessions, or session that would be wonderful.
00:29 - I’ll now quickly hand over to Doug Ferguson, who’s the Chairman of KPMG New South Wales, and the Head of International Markets, and an NCP business champion for a few words.
00:41 - (Doug Ferguson) Thanks James and welcome everybody.
00:45 - It’s wonderful to be here and have you here as our guests.
00:49 - James, wonderful to have you as our moderator, given you’re an NCP alumnus of some repute, and have now landed a very senior role in the New South Wales Government doing what we hoped you would.
01:01 - So congratulations and it’s great to have you involved.
01:04 - My name is Doug Ferguson. I’m the Chairman as mentioned for KPMG here in New South Wales which means that we look after about six offices and 4,500 staff.
01:15 - I also have worked with this amazing team to run our Asia International Markets business for the last nine years and we, we’re going to be drawing on their talent today to talk about what’s happening specifically in the Chinese, Japanese and Indian corridors with Australia.
01:33 - More importantly though, I’m a business champion of the New Colombo Plan.
01:37 - I was involved on the reference group for a number of years working with Secretary Adamson and ministers.
01:43 - And more pertinently, I was, once a foreign student myself, studying in Taiwan in the mid ‘90s.
01:52 - So, the NCP is very close to my heart and my mind.
01:56 - It’s helped me enormously with my career and I hope it helps all of you with yours.
02:01 - As it’s our custom here at KPMG, I’d like to start by acknowledging the traditional custodians, the Gadigal people of the Eora Nation, and pay our respects to their Elders, past, present, and emerging.
02:14 - This is the Asia Symposium, one of the last events in the NCP Momentum Series for 2021 and I’d like to thank you, the New Colombo Plan secretariat, Michael, Lisa, and particularly Brian Borgohna, for helping us to arrange this.
02:31 - I would like to acknowledge and welcome Gary Quinlan AO, who’s one of the nation’s most senior foreign affairs and public service diplomats, who’s just retiring as the Ambassador to Indonesia, and has done an incredibly good job over many decades and it’s great to have Gary here with us today from Canberra.
02:53 - We’ve also got our team, as I mentioned, Helen, Kenji, and Jai, who I’ll introduce briefly.
02:59 - But this is a really, really great opportunity for us to take stock.
03:02 - Obviously, there’s a huge amount going on in the Indo-Pacific region that is directly impacting Australia, and it’s going to be great to hear from not only the team that are here, but also online we have Dr Merriden Varrall, who’s, who’s smiling and waving.
03:19 - Merriden runs our geopolitics hub, and she’s also a non-resident fellow of the Lowey Institute.
03:28 - The, the New Colombo Plan has been a national project of great significance.
03:33 - Over 40,000 Australians at university age have now completed an international experience, and I think it’s going to leave a very long term legacy for our country, and we really need each of you to go on with the job.
03:46 - You know, we are, Australia is a trading nation that depends on foreign investment.
03:53 - We are very well positioned within the Indo-Pacific region to leverage the capabilities that each of you bring but it is complex, so we need people that have taken an interest in this from a very young age and have continued to invest in yourselves.
04:08 - So, you know, as it gets, you know, more and more into the Asia century, we will hope to see each of your stars rise and one day you’ll be, you’ll be sitting out here and in front as well.
04:20 - I don’t want to say too much more than that.
04:22 - I’m really looking forward to hearing from our guest speakers but once again, on behalf of KPMG, thanks to the New Colombo Plan, thank you very much to each of our guests that are in, in the audience today, and online.
04:36 - And I hope it’s a great session. James.
04:39 - (James) Thank you Doug. And a big warm welcome to our panellists, and Merriden as well.
04:44 - Thank you for joining us online. I might start the questions today with you Merriden while we have you on our screen to the right.
04:54 - What do you see as the opportunity for business in Asia and how has it changed from say pre-Covid to now, and will it change further in the future? (Dr Merriden Varrall) Thanks.
05:04 - Thanks very much for having me and apologies that I can’t be there in person.
05:08 - I have a slight sniffle, which is not actually close to death in any way, but I can’t really go out in public until that’s cleared up.
05:18 - So, it’s great to see you all here. I’ve got a bit of an echo, so I’ll just also try and negotiate that.
05:26 - I wanted to answer that question if I can by looking at some of the major geo-political themes that are driving change in the region, and think about how that’s shifting the environment that we’re all operating in, and Australia is one of the many countries affected by this, where we’re seeing national interest objectives, and business interests intersecting perhaps more than they have in the last 20 or 30 years.
05:53 - So, indeed I think in Australia our national interests, or the definition of national interests are expanding such that business interests can’t be separated from them anymore, like, the definition, the expanded definition of critical infrastructure that we now have in Australia.
06:09 - It’s like our old friend Hugh White often likes to talk about, we’ve got two horses.
06:16 - One is our economic wellbeing, and one is our security, and strategic interests.
06:20 - And it’s fine for us, and other countries in the region this is true for as well, if those two horses are running in parallel, to have one foot on each separate course.
06:31 - But if those horses are not running in parallel, we find ourselves in an extremely difficult situation, and that’s the situation that we’re in.
06:39 - Our economic security horse, and our national interest horse, are no longer just running neatly side by side.
06:46 - Now, why is this? Because of the rapidly changing global and regional geopolitical context that we’re in.
06:53 - And I’d like to, as I said, talk about sort of four major themes in order to, to answer this question that’s been posed.
07:00 - The first theme or megatrend is structural shift in the international system.
07:05 - So, what we’re looking at here is the rising economic power of actors who weren’t part of the formation of the post-World War 2 international order, and their desire for more voice and agency in the system, and at the same time the response of the status quo powers to these emerging voices.
07:25 - Now, in particular of course we’re talking about the strategic competition between China – as it grows more powerful and assertive – and the US.
07:34 - There are implications in that strategic competition for Australia and our relationship with China.
07:40 - And the bottom line for that, for our bi-lateral relationship with China is that the challenges we’re facing are much deeper and broader than Australia just spear heading the investigation into Covid origins, as that’s, as the [07. 56] narrative holds.
07:57 - Our relationship with China and the challenges that we’re facing are so much deeper and so much broader that they’re not set to improve anytime soon, not in the short term, and not in the medium term.
08:08 - And long term, I’d say it’s unknowable at best.
08:13 - The second theme is rising anger at real and perceived inequality.
08:19 - There’s a growing belief around the world among average people – those not in the elite, privileged classes – that the benefits from globalisation, and free trade, are being scooped off by the elite, and that average working people aren’t seeing any improvements in their own wellbeing and their own livelihoods.
08:37 - And what that’s leading to is a mistrust that the status quo way of doing things, that the current regime of elite will ever make things better.
08:48 - So, we’re seeing a move away from the political centre.
08:51 - We’re seeing shifts to the extreme left, the extreme right.
08:54 - We’re seeing a growth in identity politics around religious identification, ethnic identification, and that’s happening all around the world.
09:03 - For example, in the United States, real wages have been stagnating for about 20 years, and that is very much part of the polarisation that led to Trump coming into power, and continuing to underpin Trumpism, despite Biden now being President.
09:21 - Now, this dissatisfaction is very fertile ground for the rise of populism in authoritarian leaders.
09:27 - We see then the erosion of stability domestically because populous leaders, and authoritarian leaders alike, don’t appreciate the institutions and norms of a democratic order so, because they provide checks and balances of power.
09:44 - So rule of law, freedom of speech, freedom of information, these kinds of things start to be pulled apart, and globally we see an erosion of institutionalism, and multi-lateral [09:57], and the kinds of ideas and structures that allow free trade.
10:03 - So, we can look at the WTO over the past few years and how that’s been challenged.
10:08 - And co-operation for global governments on cross-border threats also starts to erode.
10:14 - Now, we have to ask is this just a Trump phenomenon.
10:17 - We just had a G7, and the first in many years, where the leaders have been able to come together and develop a communique and an agreement about what the challenges are and how to address them.
10:28 - But it still remains to be seen whether actions will meet rhetoric, and whether or not this is even enough to turn the tide that we’re seeing around the world.
10:38 - Is the G7 where the answer for global governments really lies? The third theme is Industrial Revolution 4. 0.
10:47 - So, this is about tech disruption, cyber. But I think the terminology of Industrial Revolution 4. 0 gives a sense of the gravity, and the importance of this change.
10:58 - It’s not driverless cars, it’s not just fridges that can order your groceries for you when you run out.
11:03 - We’re talking about emerging innovation, cutting edge science and technology, that has the very real potential to revolutionise government structures, economies, businesses, and life as we know it.
11:16 - It’s arguably the kind of change that was comparable, that’s comparable to that that was brought about by the steam engine, steam power, or electricity, or computing.
11:26 - There are many different aspects to this. For example automation and AI, and how they’re going to affect jobs and employment, and what that means for political stability.
11:36 - The growing role of social media in shaping politics and society when it’s being used by sophisticated political actors for political ends.
11:45 - What the future of warfare, of conflicts could look like.
11:48 - We’re not going to see this kind of physical tanks, boats, boots on the ground, but much more of this grey zone, plausibly deniable conflict and tension.
11:58 - So, military power no longer guarantees national security.
12:02 - And tech is not only going to shape how conflict is conducted, but also what states are in conflict about.
12:10 - If data is the new oil, that is who has data has wealth of power, and certain minerals are critical to the data – sorry are critical to the hardware that makes data run – who has access to these minerals and elements could reshape the geo-political landscape.
12:29 - Hydrogen also is another resource that could fundamentally redraw the geo-political map.
12:35 - So, these kinds of tech data resource issues really pushing geo-political dynamism.
12:41 - And developments are moving far faster than governments can keep up with.
12:44 - And the last theme is the climate crisis. At the global level, as David Attenborough said to the G7, the climate crisis is an issue of global security.
12:55 - And at business level as Levi Strauss’ head, Paul Dillinger said, anyone with a supply chain is going to be affected by climate change, just as important for us as it is to the Pentagon.
13:08 - We’re all familiar now with the first order effects like droughts, bushfires, cyclones, floods.
13:13 - We’re seeing these happen, extreme and intense, and more of them.
13:18 - So, the cold snap in France just now after a hyper warm spring devastated grapes and other crops, and that’s been attributed to climate change.
13:27 - But there are also flow-on effects and we have to look at these as well in terms of migration, refugees, new diseases, increased frequency of pandemics, political instability.
13:39 - In our own region, the millions of people in Vietnam, who rely on the Mekong River for their wellbeing and their livelihoods, are struggling to maintain their livelihoods as the Mekong records lower, and lower, and lower levels of water each year.
13:54 - And that’s because of extended and severe droughts, as well as damming up streams, which is another geo-political issue coming into play.
14:02 - So, what does this mean for the movement of refugees and people within Vietnam, across board, for Asian stability and security? We have to think of these flow on effects as well.
14:13 - And of course Covid has accelerated and exacerbated all of these trends.
14:17 - The way we recover from Covid at national levels and global levels will affect all these trends into the future.
14:25 - So, very quickly the outlook for business in the region, we need to understand that geo-political logic is increasingly shaping the business environment, and the geo-political logic is shifting profoundly from the trends that we saw in the ‘90s and the early 2000s, like openness, globalisation, internationalisation, and democratisation.
14:48 - Rather we’re moving to an environment which is characterised by suspicions, scepticism, nationalism, protectionism, populism, and authoritarianism.
15:00 - So, it’s certainly the case that the time of business as usual, based on an assumption that there is a broadly shared, and increasingly convergent economic logic, is really diminishing.
15:10 - So, three things in our region to look out for, to finish up.
15:14 - Firstly, commitments to de-carbonisation, and the political will to follow through.
15:20 - So, who in our region has committed to what? We know that our three major export markets for coal, Japan, South Korea, and China, have all committed to net zero by 2050 or 2060.
15:33 - To what extent are they going to be able to realise that commitment? We’re seeing huge political demonstrations within China, by which I mean indications, that from the very top and from the very centre they intend to meet these targets.
15:49 - What does that mean for Australia’s trade and investment? It’s not only coal but there are other opportunities as I said in, for example, hydrogens, rare earths, and critical minerals.
15:59 - But we also have to keep in mind with those as well the ESGs, the economic, sorry, the environmental, and social, and governance consequences and considerations.
16:09 - The second thing to keep in mind and look out for is domestic political developments in our region.
16:15 - What are the tendencies of leaders in our region when it comes to democratic norms and institutions domestically and multilateralism and openness internationally? And the third is of course post-Covid recovery and development.
16:31 - Australia has been banking on an increasingly wealthy and stable Asia for our increased and ongoing prosperity.
16:38 - Is this still the trajectory as we look down the barrel of a long-Covid, with many countries in our region being extremely hard hit? This has implications for regional stability, and we also need to think about what it means for development and poverty reduction as that slows and regresses.
16:55 - So, what do we need to reconsider when we’re thinking about Asia and Australia in the short and medium term? I want to just finish off by saying that while this sounds like a fairly dramatic picture, we can think about it as an opportunity and not just as a series of risks.
17:12 - People talk about unpredictable times – it was one of Julie Bishop’s favourites – but I would argue that it’s not so much unpredictable but what we’re looking at is a shock to our once comfortable assumptions about how the world works and will continue to work.
17:27 - But it’s not just chaos, it’s a shift. And so understanding why that shift is happening and where it’s going can really bring great opportunities for those who are prepared for it.
17:38 - OK, I’ll leave it there. Thank you very much.
17:41 - (James) That was wonderful. Thank you for that Merriden.
17:44 - And it’s, perhaps we’ll stick with the themes we’re talking about here in terms of, you know, nationalism, and protectionism and the many challenges that we have to, to a long established, you know, way of life for many of us in the global markets.
18:01 - And I might move to you Gary and perhaps we’ll pivot to a government perspective on this.
18:07 - Given your recent posting to Indonesia, and agreements like IACEP Free Trade Agreements and closing of ties with Indonesia, how do you see Australia navigating the Asian century from say a government to government level, and a policy level, and also a government to business level? (Gary) OK.
18:28 - Thanks Merriden, you must have, you must have aligned with my email that I sent you last night with what I was proposing to say.
18:37 - No, no, no, so I agree with everything you’ve said because it’s self-evident.
18:40 - It is the world we’re facing, the ecosystem.
18:44 - To pick up on your last point about what we’re experiencing is a shift, that’s absolutely right.
18:50 - So, what do we do about a shift? We try and shape it to secure our own interests and make sure the ecosystem which is developing is as, I don’t want to use the word benign, but is as favourable as it can be to the interests of a country like ourselves.
19:10 - That may seem fairly self-evident so what does that then mean? It means as a country we have to be enormously pro-active.
19:17 - We need to know how we think we would like to see the eco-system, and what are the points that we’re worried about, and what are the points that we can work on.
19:31 - The point, Merriden, you make about globalisation, reaction to globalisation, competition, and all the rest of it means one thing.
19:41 - It means that the rules we agree to abide by are even more important than they were in the past.
19:49 - But the key is, that we agree to abide by, because we’re not alone in this and so we have to work with everybody to refresh those rules, reform those rules.
19:59 - And there’s quite a lot of activity now, of course, internationally about what do we do about the World Trade Organisation which President Trump, God bless him, did some damage to, but it was already having problems.
20:11 - It needs to be more fit for purpose. World Health Organisation is an obvious case because public health is clearly going to be, indefinitely as we await the next pandemic, we’re not quite sure when it’ll happen, maybe sooner than we think, so we have to have public health globally in a much better position.
20:28 - The International Monetary Fund, that’s in need of reform and recognition of the very legitimate interests of countries like China to have a greater influence on something in terms of quota system and everything else that operates in the IMF.
20:43 - And Australia has been pushing for that since the G20 was established in 2008 at leaders’ level, so those kind of things to refresh and reform the rules we all agree to abide by, but as part of a collective effort.
21:00 - And it’s not easy, but that’s very much what has to be a particular priority for a country like this.
21:07 - And that means you’ve got to have coalitions you can work with to do that and be careful to try and make sure those coalitions don’t create a minor imposition on a situation which actually pushes certain people away.
21:21 - So all of this is, you know, what diplomacy is all about and what have you, to achieve that, and this is why I think meetings like the G7, which has just taken place, are very important.
21:32 - The G7 is not a solution to all the problems we’ve got, but you do need to shake the tree loose, particularly now that Trump’s gone, to sort of see, well, who are the countries who make the same kind of assessments about what’s going on in the world and then are prepared to say, “Now let’s work out a bit of a strategy on how we can deal with some of these things”, and that’s what we’re seeing.
21:57 - And I must say I think President Biden’s doing the right thing by shaking that tree and trying to get people to focus more strategically on what those issues are that need, need to be, to be worked on.
22:10 - A country like Australia, the Asian Century, well, as Merriden, you said, we’re not quite sure how that’s going to play out.
22:18 - We’ll have to see what impact Covid 19 has medium term, and then longer term on the economies in the Asia Pacific, we simply don’t know.
22:28 - But I think it’s probably fair enough at the moment to guess, guess… not guess, estimate, assess that the fundamental shift we’ve seen strategically, geopolitically, but geoeconomically, and economically to this part of the world, the Indo-Pacific will continue.
22:46 - The reality is, when you look at a world of strategic competition, which is what we’ve got now, the fulcrum of that strategic competition is this region, the Indo-Pacific and that means an enormous amount to us, because we are a significant player in our own terms and regionally within the Indo-Pacific.
23:03 - So what should our response be? In the broader sense, we want a resilient region.
23:09 - That means, we have to be resilient, as a nation, and know what we want and what the points are that we think we can have an impact, a good impact on, but also we want other countries in the region to be resilient and that means frankly, we’ve got, we, Australia, have to do a lot more, in terms of operationalising the rhetoric we have about the region.
23:32 - I think we’ve got the rhetoric right, you know, ASEAN, the importance of ASEAN, the centrality of ASEAN, South-East Asia, more broadly, but we don’t operationalise it enough and what does that mean? It means we’ve got to spend more money.
23:46 - You know, I mean, the Prime Minister made a commitment of half a billion, new money, half a billion at the ASEAN Australia Summit, held last November, and that’s great.
23:59 - Some money for the Mekong, a bit of money on infrastructure, $70 million, $70 million, fine, but and it’s good and we’ll provide expert advice and everything like that but we need to do more than that.
24:13 - Public health, obviously we’re giving a lot of money in terms of vaccinations, but again, that should only be seen as the first instalment in working to ensure that the ecosystem for public health in our region is so much stronger than it is.
24:29 - So more money has to be spent; it’s a simple fact and if you’ve got a deficit of $1. 6 trillion and you’re prepared to work with that, well fine.
24:37 - You know, maybe we could spend just a little bit more, very targeted in the areas where we have a distinct advantage and obviously you know, anything to do with institution building, governance, public policy, because there is an appetite, there is an interest in countries in our region, including Indonesia, about what we, as a country that has remade itself since the 1980s, fundamentally, in those terms, has got to teach others, including because we’ve made mistakes.
25:07 - I mean, as a young kid, I worked on some of this for eight years in the Hawke and Keating Government, you know, as Chief of Staff on domestic not diplomatic issues, nothing to do with me, but I was there and able to see the kind of fundamental changes we made and what we subsequently learned from them.
25:23 - And there’s an appetite in our region and we need to meet that, to reinforce their own national resilience and the deficits in resilience in these countries.
25:33 - You know, these people know what’s going on in their own country, the elites who run it and everything else, and they’re identifying problems and they want help and we should be the go-to country for all of that, because they want us to be.
25:46 - They’re aware, if you think just of China, they’re aware of the potential difficulties with China, for heaven’s sake.
25:51 - They want a new equilibrium, but they want it to be a fair equilibrium and therefore, they want the assistance of resilient people like ourselves and that’s how they see us, to be able to work with them on all those kinds of things.
26:04 - Sorry I’ve gone on a bit but my key point is we’ve got a lot of the rhetoric right but we’ve got to operationalise it.
26:12 - What does it mean? What is the next step? And we’ve got a whole history of doing a lot of good in the region, but now, is the point of a fundamental shift, where we need to do so much more, rather than just a bit here and a bit there and play catch-up.
26:28 - We’re not just doing that, but we’ve got to do more and, and the region wants us to, so there’s an open door.
26:35 - Anyway, sorry, I went on a bit, but… I haven’t touched on business, I don’t think.
26:39 - And Merriden’s points about the intersection now between, you know, activity with business and governments and everything else is a telling one.
26:49 - Obviously, the private sector, have a massive role and should have and everything else.
26:54 - But it is, it is a difficult intersection in so many ways.
26:59 - If you just look at the, at the threat from new technology to business, the digital economy, critical infrastructure, these are all under threat through grey war and all the rest of it, you know, grey conflict, and so the kind of symbiosis in a country like this with business, in those kind of areas to help protect business protect itself, including offshore, but also domestically, if it means anything, the distinction is going to be so much greater in the future as well.
27:30 - (Doug Ferguson) And I think that most business leaders are increasingly aware of that now and are at least privately, if not publicly, supportive and understanding but nonetheless need to continue to trade and seek investment from Asia.
27:47 - (James) Well, that’s exactly what I was about to ask you here.
27:50 - Doug, I think, you know, both Merriden and Gary have touched on these themes of, you know, finding where Australia has strategic advantage and where it’s excelling, and I guess from a business perspective, I’d like to know more about what you’re seeing, you know, where Australian capabilities are really matching with opportunities across the Indo-Pacific.
28:11 - Are there any particular sectors? I mean, we see, you know, right through the Federal Government, State Government levels a big focus on things like, themes like agribusiness, medtech.
28:20 - The Federal Government just announced tax incentives for medtech.
28:23 - Where are you seeing the, the opportunities matching with our, our capabilities and will that change? (Doug Ferguson) Well, I’m very pleased to have my colleagues that are going to be talking specifically about China, Japan and India.
28:35 - But, but in general, I think that there’s a number of areas that are not only important but could be increasingly important for Australian companies to focus in on, despite the geopolitical issues that will always continue at the government level.
28:52 - The, the desire for protein, and safe, reliable food, and also the food safety systems and the cold-chain logistics to ensure that food reaches consumers safely and, and efficiently throughout the Indo-Pacific region.
29:10 - I do think that, that health care, you know, the treatment of cancers, the, the treatment of dietary based diseases, aged care, that that’s another really big area where Australia has very genuine and deep experience.
29:26 - Other, other areas are around the financing of major infrastructure.
29:32 - And we’re one of the best people at, at looking at ways of, of recirculating capital from old infrastructure that might be sold and privatised to enable funding and the right mix of debt and equity for, for new projects.
29:45 - And I know that that’s something in Indonesia that’s incredibly attractive to the Jokowi Administration.
29:53 - So yeah, so these are just three examples, but we’ve got to play the strengths.
29:57 - We, obviously, we can export minerals, we can export gas, but as I think Merriden’s pointed out, you know, there is a change in, in the, in the settings of governments as they look towards their 2050 and 2060 goals, so we have to adapt to that, as well.
30:15 - That’s not going to evaporate overnight, but I also am a huge believer in the importance of people-to-people exchanges.
30:22 - So making sure that we receive foreign students into our universities, who come here, learn and experience what the best of Australia has to offer, and for us to send people like you out, our brightest university students across to Asia, because there is so much that needs to be done in terms of just taking some of the, the heat out of what we read in the newspapers and distilling it down to people-to-people interactions again.
30:51 - A lot can be achieved and we need to move intergenerationally through from, from Gary’s, and my generation, to yours by building strength and warmness in the relationship.
31:03 - (James) Absolutely and maybe, as you said, let’s take a deep dive into the different markets so I’d like to hear from you Kenji about the, the emerging opportunities, you know, between Japan and Australia.
31:15 - Are there, are there trends in trade investment? What are you seeing through, through this Covid period and beyond? (Kenji) Thanks. I guess this is a good segue from Merriden, Doug and you, Gary.
31:25 - So Merriden touched on decarbonisation and hydrogen so this is because the agenda that Japan and Australia have at the moment.
31:34 - So as Merriden said, Japan announced a net carbon zero target at 2050.
31:40 - But if you think about what happened in the past probably 30, 40 years, so, Australia has been key supplier of energy to Japan.
31:49 - So, Japan basically have got nothing underneath the ground, so they basically import, so basically 90, more than 95% of energy is actually exported from elsewhere.
31:59 - So after the disa… a bit of issue with the nuclear power station in 2011, so they’ve basically gone back to the coal-fired power stations, so coal is the main source of electricity in Japan, so it’s about 65-70%, like Australia.
32:16 - So what are you going to do with this situation? So basically, Japan is now focussing really hard on a hydrogen-based solution.
32:25 - So at the same time, so Australia has announced a national hydrogen strategy – I think it was 18 months ago – it was a pretty timely strategy announcement, but basically what it’s saying is Australia wants to get to top three hydrogen exporter in the next five to ten years.
32:45 - So it’s perfect, the timing for Japan-Australian relationships, as well.
32:50 - So basically what the strategy is saying is to invest quite heavily in technology and then also increase the export capability, so they can export hydrogen to key markets such as Japan, Singapore and Korea.
33:04 - So we’ve been seeing quite a lot of jointly-operating projects between Australia and Japan so you might have seen large ground for hydrogen prospecting in Victoria called HESC Project.
33:16 - So basically, what they’ve done is the Japanese Consortium, Victorian Government and then Asia have teamed up together to basically come up with a new technology called using carbon capture storage technique to basically extract CO2 out of the ground coal to create hydrogen.
33:33 - So they basically did a [33. 35] between Australia and Japan.
33:36 - So, they’ve established a port, shipment, terminal, everything to basically have a new technology in place.
33:43 - So we are going to see a lot more similar projects like this in the next five years.
33:47 - So that’s what I’ve been really working hard on.
33:49 - In terms of an advantage that you’ve asked, so Australia’s got pretty strong advantages about hydrogen especially in this region.
33:58 - So basically for the hydrogen there’s two types, I can talk about hydrogen probably for the next two hours but two types of hydrogen.
34:05 - So in terms of the green hydrogen which is completely clean energy, so you source energy from the renewables so basically we have 23GB new electricity generation capability coming on, on the market, in the next seven years.
34:21 - So we’ve got very a powerful source of hydrogen, green hydrogen, and then also the blue hydrogen which is still used for the gas and the coal.
34:30 - Obviously we’ve got existing infrastructure like the gas pipelines and, you know, electricity, you know, connectors, and everything that can be used for the hydrogen as well.
34:40 - So I think we are very well-placed in the hydrogen space for Asia, especially for Japan.
34:45 - So we basically have got 52 years of trading energy in the past, yeah, basically in the past 50 years.
34:52 - Seventy percent of Japan, the coal Japan uses is actually from Australia, and the 35% of energy Japan uses is from Australia as well.
35:01 - So really strong relationship, so that is a big, big advantage as well for the two countries.
35:06 - (James) Exciting times indeed and I might, I might stick with coal, if I can.
35:12 - Helen, most exciting opportunities between Australia and China at this time? It’s a challenging relationship.
35:18 - (Helen Zhi Dent) It’s hard to say at this stage.
35:21 - Hi, good afternoon everyone, Helen Zhi Dent.
35:24 - So my role at KPMG is to look after the Chinese investors’ community.
35:30 - So my job is to look after Chinese clients here in Australia.
35:34 - Therefore, we’ve been tracking Chinese investment into Australia consecutively for the last 11 years.
35:42 - Actually, Doug and myself, together with our friends at Sydney University, we produce a signature authorship.
35:49 - It’s called Demystifying Chinese Investment in Australia.
35:51 - So, in Google I download it. It gives you a full view of the Chinese investors’ landscape into Australia.
35:58 - But very quickly, to summarise it; at the moment, not much happening.
36:02 - Actually in three weeks’ time we will launch our newest Demystifying Report.
36:06 - You will see that the investment number from China in 2020 to Australia in that report, but if you look compared with 2018, the overall trend is going down, the investment from China.
36:19 - It’s not just since Covid happened when the two governments started to be not on a proper constructive talk terms.
36:26 - Even before that, two years before that, we saw the investment from China going down.
36:31 - There’s lots of reasons behind it. Chinese investors are trying to rationalise their own investments.
36:37 - There was too much, kind of, non-commercially driven, you know, fevers of investment from China and they now realise, you know, we need to ration out our investment and more due diligence, more planning, more accountabilities need to be in place, and then many other reasons.
36:55 - But we kind of know from 2018 Chinese investment going down.
36:58 - But if you look at a wider horizon, China and Australia are two countries, they absolutely need each other.
37:09 - Australia needs China for its products and services.
37:12 - China needs Australia for lots of its products and services.
37:16 - So that’s why the Chinese are not just buying products services from Australia, they are also investing into the businesses, projects, the assets here, in Australia to secure the supply.
37:29 - It all started from natural resources as we know.
37:32 - The oil, gas, the iron ore project, the coal project.
37:37 - So it all started there and then some infrastructure projects followed in a no-brainer, you know when you’ve got a large amount of things that you need to ship over to China.
37:45 - So infrastructure’s the next step, and from there around 2011-2012, Chinese investment into Australia started to diversify so that’s when agriculture started.
37:56 - At one stage, back in 2012, every week, I got a call from some who are agricultural business or property business in China, “Hey I want to invest into dairy business in Australia.
38:07 - Hey, I want to invest into beef farm projects in Australia”.
38:11 - So agriculture became an interested area. Although for some years, we say we see one or two major agri-investment project, but most investment into this sector remained fairly small and from agricultural we started to, when we came to 2014, it’s property, 2014, ‘15, ‘16, ‘17 for four consecutive years property, from nowhere, jumped to the second highest sector in terms of receiving Chinese investment.
38:39 - And after property it was healthcare. Healthcare is the vitamins that’s where we said, you know, Swisse, you know, lots of the landmark Nature’s Care, lots of, and also Medicare, even some cancer treatment clinics were invested by or acquired by Chinese investors and that’s what the Chinese want and after healthcare increasingly we saw even more diversified, like renewables, like now lots of it in technology, education services.
39:10 - So the trend here, overall is speaking, we are, they started from natural resources but they gradually move to, you know, agricultural, healthcare, renewables, properties and now even more diversified sector.
39:24 - What does this say? It says what China needs from the rest of the world are changing.
39:29 - So I believe, and you know, I’ve grown up in China, my early career was in Chinese organisations as well.
39:37 - It’s all about Made In China. In the ‘90s or started in the ‘80s actually, the Chinese Government and Chinese people wanted investment from overseas.
39:46 - So they set up manufacturer, JVs in China so that they can produce, produce, produce and export to the rest of the world.
39:53 - That’s why China is called the manufacturing centre of the world.
39:56 - But from 2014, it really has changed. Why 2014? In China’s history, that’s the first year China exported more capital than the capital it received.
40:08 - That means China invested more capital outside of China than the capital flowed into China.
40:13 - What is… China wanted to own global operations to supply to the increasing middle classes in China.
40:20 - So I believe the trend is changing from Made in China to Made for China.
40:25 - And in this process lots of assets and projects became owned by China, but the goal if you like, ask, majority of my clients, the reason they invest in Australia, they believe they can create more value to the Australia or any overseas business by bringing their products and services and sell back to the Chinese market.
40:42 - So that’s the overall trend that we see. (James) Great answer and I might stick with you for a second, because I’d like to explore more about, you know, you mention some themes about where from here.
40:53 - And I might open up to the broader panel and Merriden as well.
40:57 - I’d like to ask you first, Helen, about, you know, what do you see the role of, of relationship building, in building, whether that be trade or investment or even for some of the scholars here today their relationships overseas? (Helen Zhi Dent) Great question, great question.
41:15 - I think, you know, the bilateral relationship between the two countries is very complex, but everyone has a role to play.
41:23 - We actually do a survey to Chinese investors every two, three years and you will see this consistent theme showing up by the Chinese investors.
41:34 - So they feel Australian media is possibly, most, relatively speaking, most hostile towards the Chinese investors, Chinese business, and they felt followed by the Federal Government.
41:45 - But by, at the state level, at the business level, at a community level, they actually feel they are very welcome and supported by people from their level.
41:55 - And that, that, at a local level also include the universities, so the other institutions here in Australia.
42:01 - So they don’t see Australia, just as one voice, although, you know, sometimes the media report can be heavily focused on one kind of voice, but the Chinese investors here, they know, that they look at Australia at different levels.
42:13 - So therefore, you know, people and institutions at every level has a role to play.
42:19 - So that hasn’t changed in every survey, their feeling towards different areas of Australia and institutions, their supportiveness toward China hasn’t changed, very consistent for the last ten years.
42:34 - What’s interesting is also, although the Australian-China relationship at currently in a very challenging environment, but the investors we talk to they don’t think it will last for ever.
42:47 - They definitely don’t think it will finish in six months’ time, but it will finish and everyone has a pipeline.
42:53 - They continue to study Australian market. They continue to invest into their network and building their local resources and building their local team, because the moment, the relationship starts to turn around, they will be ready to make their investment.
43:07 - So to me that shows people’s view of Australia’s attitude towards China is multi-layered.
43:13 - It’s not just one single voice, Australians love China or hate China.
43:16 - They know at different level, you hear different voices.
43:20 - (James) Interesting. And I guess maybe I’ll move, I’ll move now to you, Jai who I’ve left kind of on the end for the important questions and I do want to perhaps if you can start with a little bit about the trends that you’re seeing, just as Kenji and Helen have both mentioned the changing dynamics of Japanese and Chinese trade investment.
43:42 - Are you seeing change in the way that, that, you know, we are trading with, with India and we, Indian investors are coming here? And how much of that is built on, as we, we just touched on, relationships? (Jai Patel) Thanks, James.
43:56 - Great to be lucky last. No, thanks for the questions, and I think, you know, you know, absolutely we’ve seen a lot of change, particularly over the last five or six years.
44:08 - But, good afternoon everybody and it’s great to be here.
44:13 - As mentioned, my name’s Jai Patel. I’ve been with the firm here in Australia for 20 years.
44:19 - Started out as a tax grad. Moved around the Tax Division through Indirect Taxes, Corporate Tax, Research and Development Tax, including a secondment to KPMG in India.
44:30 - In Mumbai, specifically, in 2006 and that was a wonderful experience working with clients and our colleagues there.
44:39 - And I guess that was probably the genesis of my, my interactions from a work or career perspective with India.
44:45 - And ever since then my KPMG world if you like has consisted of KPMG Australia, KPMG India, and the broader KPMG international network because a lot of the Indian clients I work with are truly multinational organisations.
45:03 - In 2015, Doug asked me to take on my current role, which is to head up the KPMG’s Australia’s India Business Practice.
45:10 - So like Helen, my, my focus is very much on the Indian inbound but also Australian outbound trade and investment flows between our two countries and the organisations behind those.
45:25 - And I have to say since 2015 I’ve been quite fortunate because what we’ve seen is a steady rise in the bilateral relationship between Australia and India.
45:37 - Initially spearheaded by, you know, numerous senior ministerial visits, but that led then to the two, to governments on both sides developing quite detailed economic strategies and roadmaps to assist businesses in their consideration of the commercial opportunities in Australia and India.
46:01 - Over the same period, so since 2015 if in, if we look at the economic relationship in pure economic terms, the two-way trade and investment relationship has grown from $40 billion to $67 billion.
46:15 - So we have, James, seen a steady rise in the, in the bilateral relationship as well as the economic relationship as part of that.
46:25 - Now Covid 19 of course has had a devastating impact on India and, and you know, for that reason there has been an impact on that rate of growth in the bilateral relationship over the last 12, 15 months.
46:39 - But two really positive developments that, that have emerged during this period which I’d like to share, and one is the really close friendship between Australia and India and I think that’s, that’s from Prime Minister level down to the, to the cricket pitch and you know into our communities and societies and probably no more evident in Australia’s really quick response to India’s, urgent, you know, requirements for medical supplies, during the most recent, the second wave of Covid 19 in India.
47:15 - But I think that that act of solidarity and humanitarian support, really, it really does signal a very strong foundation for, for greater collaboration across the board.
47:29 - And of course, Australia and India, as many of the panellists have, have highlighted today, you know, there’s a lot more that they can do in the space of Covid 19 research, research and development best practice, but also beyond in the health and life science, sciences sectors.
47:50 - The second key development is, really, the rise in the voice of the Indian diaspora which is here in Australia, which is 700,000 plus strong and they really play a critical role in helping to sort of accelerate the economic relationship between our two countries given the very strong social, cultural and business connections and ties that they have back, back in India.
48:23 - So it’s, it’s great that they’ve come to the fore during this period.
48:27 - In my view, it’s, it’s really important now that some, you know, specific programmes are developed to, you know, really untap the potential and the power within the diaspora, to help organisations realise those commercial opportunities between the two countries.
48:50 - I will just turn to the economic relationship, then, and, and talk both about the Australian outbound into India and the reverse in turn.
49:01 - If we look at the Australian outbound, just a couple of overarching comments, I think, you know, just to set the scene.
49:08 - Merriden’s touched on the geopolitics at play and what that means in terms of open and free market access and, and the impact and shift we’re seeing in supply chains and, you know what, what India means in that, in that context.
49:26 - Secondly the, the core fundamentals around India still hold true and so, once this current Covid situation settles the expectation is that India will sort of bounce back and, you know, will experience a V-shaped recovery if you like.
49:47 - So India is forecast to grow at something like 8. 3% in this current financial year, by ‘22, followed by 7. 5% in ‘23.
49:59 - And the third point is that, in the two to three years preceding Covid, what, what we did see was a, was a steady but, you know, a very definite uptick in interest amongst Indian business, Australian businesses as far as India was concerned.
50:21 - Many were in advanced stages of their, their India studies and plans, had been visiting in India for that purpose and so, I, I really do believe when Covid hit we were, we were at that inflexion point or very close to an inflexion point.
50:38 - And so I’m, I’m, with these two or three points in mind, I’m quite confident that Australian business will, or is very keen to resume its, its India study and, you know, business plans as, as soon as that is possible and the ten sectors that are identified in the India Economic Strategy will still be relevant in a post-pandemic India, perhaps, with some tweaking in terms of the priority of sectors.
51:10 - So to perhaps bring sectors like health and infrastructure to the top, given that, you know, India has some, you know, desperate and urgent needs in that regard.
51:26 - Important to note, that despite the disruption that Covid has caused in India the government there has continued its economic reform agenda, particularly around attracting foreign direct investment and making it an easier place to do business and so that’s, that’s a dynamic space that Australian businesses need to sort of be mindful of and keep watch, watch of.
51:53 - If I think about some of the more recent developments in that space, India’s introduced production-linked cash incentives to attract manufacturing across a range of sectors and that’s, and that’s you know, in combination to, for India to become more self-reliant, but also to position India as a global manufacturing hub.
52:21 - Secondly, the introduction of, or the establishment rather, of India’s first International Financial Services Precinct which is in Gujarat and, and that’s now opened up, opened up to foreign participation, you know, in terms of core, core financial services organisations and expertise but also ancillary service providers like professional services firms.
52:52 - I’ll now move to the Indian inbound into Australia.
52:57 - It’s, it comes broadly across five sectors, energy and natural resources, pharmaceuticals, information technology, a little bit of advanced manufacturing and financial services.
53:10 - Having said that, in, over the last 12 to 24 months India’s Sterling-Wilson Solar has just become the largest EPC provider for solar renewable projects in Australia.
53:24 - But, conscious of time, so I might just focus on the Indian IT companies here in Australia because of their, their presence here, the size of their presence and the size of their workforces.
53:38 - They’re well established in this market, they’re profitable, growing organically, inorganically.
53:43 - In fact, I can probably think of four acquisitions that have happened just in the last 12 months, you know, ranging from $50 to $250 million in this market and they’re increasingly moving up the value chain into niche and, you know, high-tech areas.
53:57 - But what, what excites me most about the Indian IT companies is, is the potential they have in this market because the proposition I’d put to them is the opportunity to, to establish innovation hubs or centres of excellence and, or the like and, you know, perhaps in collaboration with broader industry, government, academia, not just for Australia but also for the region, addressing, you know, some key national priorities and areas of strategic importance such as cyber and AI and, and 5G and that would be a wonderful thing.
54:37 - We’d see them contribute even further to job creation capabilities, skill development and, and in the higher education space.
54:47 - I’ll leave it there, thank you. (James) Well, we’re nearly out of time, but I’ll, I’ll perhaps, we’ll ask one more question and then afterwards we’ll do a Q &A, so if you have any questions, get ready.
54:57 - I’d like to, to open up to all of, all of the panel, a question about, you know, we’ve mentioned a lot of themes today, Merriden, you spoke about a lot of the challenges that we’re, you know and changes that we’re having and, and we looked at that from, I guess, a government policy level, as well, Gary and then we sort of moved through the markets and business opportunities.
55:18 - I guess for, for us, younger, younger people in the audience, a really cool and key takeaway from today would be, would be to, to understand where we can take advantage of these opportunities, where we can engage in the Indo-Pacific, whether it’s in China or Japan or India or even more broadly.
55:37 - So perhaps, Merriden, I’ll, I’ll ask you first as we haven’t, we haven’t come back to you in a while but, you know, from your, your, I guess, policy and, and geostrategic position, where do you see, you know, exciting opportunities for young people and where can we think out of the box in terms of engagement? (Dr Merriden Varrall) I hate going first on these sorts of questions because I really like nicking other people’s answers and then saying them differently and pretending they’re mine.
56:03 - But I think that, you know going back to the point that I made about the opportunities here in understanding what’s happening.
56:14 - This is where, from my point of view, the rubber hits the road.
56:19 - To understand that to do business now from Australia, you need to build this stuff, this geopolitics, into your strategy.
56:29 - You can’t pretend that it’s not there. And so then, when you’re looking for whatever opportunity it is, thinking about what, what my colleagues have just said, whatever opportunity it is that you’re thinking about, to build the geopolitical challenges and opportunities into that is really critical, but I also want to add that in terms of sort of exciting potential, what Helen mentioned a minute ago in response to your question about connections and relationships is so true.
57:00 - And this is where, you know, you guys and your experience on the New Colombo Plan can really start to, to leverage your experiences.
57:08 - When I was working in China I was working for the United Nations over there and the contact that we had in the Ministry of Commerce had done a Masters degree at New South Wales Uni.
57:19 - And the ability for us to connect in a way that no one else on our team from the UK, from Germany, from America could connect because of his experience in Sydney.
57:31 - You know we talked about going for walks under fig trees and various beaches that he’d been to and all these sorts of things and the ability that that gave us to work together in a way that that it seems, you know, it seems overkill to suggest that that really was the foundation for our success, but it really was and because we had that connection our project went better than I’m sure it would have otherwise.
57:54 - So I just think that that combination of understanding the large, but also utilising those individual human connections as a combination is really powerful.
58:04 - I’ll stop there. (James) Great answer and Gary, do you, from your, you know, diverse experience across a range of different countries, environments and institutions, what do, do you have anything else to add on that point? (Gary) Look, I, look, it’s fairly self-evident that if you’ve got that as an advantage then good.
58:26 - But you need to leverage it, of course and use it.
58:28 - But, and that’s what the New Colombo Plan and everything else is about.
58:33 - The trick with the New Colombo Plan of course is, if we could just get people to spend, once the borders are open again we can get people to spend more than just a few weeks, you know, I mean it’s at least a semester and then we should be looking to a longer period of engagement and, and so many people here today of course have been fellows and scholars and that’s, that’s fantastic and all the rest.
58:56 - My only comment would be digital, because we, look we’re all moving to a digital economy and Covid, one of the interesting, as you know, effects of Covid 19, has been to accelerate very significantly digital growth across most economies and certainly in our own region, even in Indonesia, very significant increase in digital interactions for business and commerce and, of course, that cuts into every other business sector so anything that, where we can leverage off digital change in other areas whether its agribusiness, medicine whatever, is going to be a new and very prospective area and my own experience of young people in Indonesia, and I wouldn’t overstate that but, you know, quite a lot because our real focus as an embassy and so on was very much on younger generations in every sense, the future leaders, and the people leading change in Indonesia at an accelerated pace, so savvy, so smart, so switched on and just huge appetite to engage with others in those areas.
60:11 - Mind you, we compete, they have an absence of, you know, data experts the same as we do and so we’re competing with each other in some of those areas but increasingly the focus is, well what could we do together? Address the same gaps together because it magnifies the impact, obviously, in the opportunities.
60:31 - So anyway that’s the only comment I would make, you know.
60:34 - (James) Great answer. And perhaps in the interests of time, I will allow the other panellists maybe, we can touch on that in our networking afterwards.
60:41 - So we’ll now move to a quick Q & A with the audience.
60:44 - Are there any questions here anyone has about what we’ve spoken about today or anything else for that matter? (Liam Holt) I have a question that I’d like to open to the panel.
60:53 - Obviously, the key theme of this is [1. 00. 56] the climate crisis, so there’s going to be, you know, two parts to this question that will kind of intersect with half the panel so geopolitics and business side of things.
61:04 - Obviously, we’ve seen huge opposition from businesses, particularly in fossil fuels and extraction, manufacturing that have seen large oppositions and acquisitions of hydrogen-based projects as early as the early 2000s.
61:15 - People just questioned the advantage of fossil fuels.
61:18 - What role do states have in kind of providing the incentives with these kind of big fossil fuel attractors with committing to green energy areas like the value of green tech, as well as hydrogen attraction? (James) Just before I, I answer, can we get, just before people ask questions, can you just say your name and where you’re going to? (Liam Holt) Oh sure, I’m Liam Holt.
61:37 - I’m the New Colombo Plan Report Fellow for 2021.
61:41 - (James) Thanks, Liam. Big question, to the panel.
61:45 - (Doug Ferguson) Yeah, I’m looking to the screen to be honest.
61:49 - (Dr Merriden Varrall) Oh are you? Well I’m just going to have a cup of tea? Can I turn the question around a little bit and say that, while that you are right in some, in saying, you know, that business has in many ways, in many aspects, dug its heels in and tried to maximise its advantage in things that maybe are not so tremendous for the climate crisis into the future, what we’re seeing now is businesses increasingly becoming very responsive and in some ways leading governments in areas where governments are resistant and unwilling to make changes, we’re seeing businesses take the lead.
62:32 - And I was very heartened to see for example, just recently, what happened with Chevron and Exxon over in the US where their shareholders and their stakeholders basically said we’re not going in this direction, in the climate-denialism direction anymore.
62:47 - We’ll be going in an entirely new direction and we’re seeing a big shift there.
62:51 - So, it’s interesting to me to see that many businesses are finding that consumer sentiment is pushing them and driving them into taking an entirely new direction from something.
63:05 - It’s almost 180 degrees, 180 degrees in some cases from where they were a couple of years ago.
63:10 - So that is not answering your question about what role states have in making businesses do things differently.
63:17 - I think in many cases, businesses are leading states, for example, this country.
63:23 - But we’re also seeing that this, you know, the consumer sentiment is starting to grow, it’s becoming really loud and is becoming really powerful, and that’s driving businesses so just a slight shift on the answer.
63:34 - Hope that will do for now. (James) Beautiful.
63:39 - Gary, I hate to throw you over here. (Gary) Look, I’ll be very brief.
63:42 - The only comment Merriden’s comment triggers with me, is we’re all familiar with the sustainable development goals, right, OK, that they replace the millennial goals, you know, from a decade and a half ago, and a tremendously complicated negotiation, tremendously complicated piece of work but a very good piece of work.
64:02 - And what I want to point out is, it not only for governments and what policy should be for governments on sustainability, but the interesting thing is businesses who are actually taking the SDGs, the goals and writing them into their forward strategic planning, accepting those, as the boundaries, for the planet within, and the ecosystem within which they’re going to work, and a good number of the major companies and multinationals in the world, also domestic, but, have taken the SDGs on that basis.
64:38 - Now this is a really creative shift, frankly yeah.
64:43 - (James) Thank you for that Gary. Any other questions from the floor? (Female) So this is a small question to the right of the panel and maybe Merriden as well because it touches on something you previously talked about, which is what are the themes on tech destruction and I really like how you talked about the effect of AI because it’s one of my interests as well and I actually wanted to know, well what kind of, digital policy is in the [1:05:12] in effective implementation and closer interaction with the public especially with the business in government, because countries like Taiwan have kind of merged that type of gap, or that information gap on eco policy and listening to the people and getting a closer look into the social movement.
65:34 - Do you see that as a foreseeable event in the future when the digital policy would be accessible to the public in that way, even for businesses or small businesses actually? (James) I think this question was aimed more at you Merriden.
65:53 - Did you, did you get that? (Dr Merriden Varrall) These are too hard.
65:58 - These questions, these people are too clever.
66:00 - I didn’t entirely catch it so I was just trying to write that down, so whether or not digital policy might be accessible to the public, oh yeah, can I just get a quick summary of the question sorry? (Female) Oh sorry, yeah, I’ll rephrase.
66:15 - Do you think Australia’s government or Australian government would be able to implement digital policy and make that accessible to like interaction with small business owners and general public to get an idea of today’s social movement? (Dr Merriden Varrall) So are you talking about, kind of, accessing consumer sentiment? (Female) Yep.
66:42 - Along that lines. (Dr Merriden Varrall) Sure, this might be a good question from that government angle, for Gary, but I’m sure that the Australian Government could do that.
66:54 - There’s a lot of tools and capabilities available.
66:57 - KPMG has some for accessing consumer sentiment and understanding where people want to take things, if that’s what you mean, and the ability is there and I, I would imagine that government is, is using it; businesses certainly are to find out what consumers are thinking and to tailor their strategies accordingly.
67:17 - So, it’s certainly possible and I think from a business point of view it’s highly desirable but I’ll hand over to Gary from a government point of view.
67:28 - (Gary) Huh, thank you. Look obviously businesses, it’s a big preoccupation for business because it’s the way of the future.
67:35 - So they’ve got to be totally in control of what’s happening on the digital side because they need to be able to leverage existing digital platforms but also digital change.
67:45 - So that, that happens. I think, if I understand you, I’m not quite sure, because I don’t quite know what the Taiwanese have done, but you’re saying that there is a government policy, or are you saying a government policy, which tries to make the average citizen and so on so much more literate in terms of what digital possibilities, what’s happening digitally, what the possibilities are but potentially also the risks is that, is that…? Yeah, I mean government, I think, is well, individual business policies that both Federal Governments and State Governments have got a huge focus on digital opportunity.
68:22 - The way of the future, we all know that. You’ve got to instrumentalise all of that to, you know, achieve better change, blah, blah, blah, all of that kind of stuff we understand.
68:31 - It’s the risk element, I think, where government is increasingly taking a role to engage with business to explain the, sort of, the risks of cyber activity, interference and all the rest of it and that’s, that is a growth industry with government and business, I have to say now, because there is, we all know, a huge amount of cyber intrusion and all the rest and people think that’s all just a geopolitical thing and it is but it’s also aimed at getting whatever information can be pulled out of different, you know, technology platforms and business platforms in order to get a technological and economic advantage.
69:11 - I mean, you know, the Russians are very good at this, the Chinese are very good at it.
69:15 - You know, all this business about the theft of industrial property and everything else is true and it goes beyond just business of course.
69:25 - In fact the Department of Foreign Affairs and Trade gets more cyber intrusions every single day than any other institution in the country is interesting.
69:33 - It runs into tens of thousands of intrusions of various kinds every few months.
69:41 - So all of that risk, the government is very much focused on that risk.
69:45 - If you want to talk about artificial intelligence, I’m a great believer in Terminator 3, Rise of the Machines, and I think that’s the greatest risk to the human race in the future but that’s another set of issues.
69:58 - That’s a bit of an overstatement, but not entirely, because there’s too much unregulation in that area.
70:04 - And that’s where rules are needed. When we talked about rules earlier on and where there is increasingly a focus, I mean the G7 touched on this the other day, but we’re playing catch up on all of that, yeah.
70:19 - (James) Well, I have a question for you actually, Doug.
70:22 - We’ve heard a lot about, you know, the importance of people-to-people links, you know, the rapid pace of, of technology, terminator, infinity, you know, among all of this, you know Jai, for example, touched on the importance of the diaspora in Australia and making those links.
70:43 - What do you see the role of, you know, young Australian entrepreneurs in, in building relationships and engaging with the Indo-Pacific? (Doug Ferguson) Great question.
70:53 - And I was hoping to be included in the last round of questions as well on this, basically the same question.
71:00 - So, where I think you have a unique opportunity is, you are studying with foreign students.
71:07 - You know, you have been studying with foreign students.
71:09 - You have relationships with young, probably representatives of very wealthy families, private capital, who have got an enormous, their parents have sent them out here and they have enormous plans for them.
71:23 - So, you can’t achieve anything within the Indo-Pacific region on your own.
71:27 - You have to have a partner and you have to have a cohort of colleagues.
71:31 - So, I think if you could focus in on, on this, this issue of digital technology, whether it’s AI or Fintech or Medtech or Edutech, Healthtech, AI, cyber security plus matching it with private capital through the relationships that you develop at a young age and grow with.
71:51 - And then finally Gary, I can’t help but say, I think we need to put a disproportionate amount of effort into Indonesia, our nearest neighbour, and I think that, you know, in terms of picking, picking winners that would be incredibly well-received.
72:09 - You know, their president has been out here twice in his, in his, in recent history at least as he’s been the president.
72:17 - There’s a, there’s a deep attraction for Australian capital, know-how, and cross-border people-to-people links with Indonesia, and I think, if I was your age that’s, that’s where I’d be aiming.
72:30 - There, Vietnam and of course the diaspora. We’re a multicultural country and I hope that we all see each other as first and foremost Australians and what worries me a little bit about, is about when that there’s division within our society.
72:48 - We can’t allow that to happen. We are the, we are the gatekeepers of, of unity in Australia and I think that, by doing that in a very genuine way we will build deeper relationships with people that are living here, and perhaps not having the easiest of times, and that will stand you in very good stead to grow your careers with the, with this amazing cohort who will, as I said, go on to do great things.
73:15 - (James) Good answer. (Doug Ferguson) Thanks.
73:17 - (Stanford) I’ve got a small question. So my name’s Stanford.
73:19 - I’m also a [1:13:20] scholar at [1. 13. 23]. I was abroad in like Singapore, Japan and South Korea for around two years.
73:25 - So when I was over there, I was really interested in, sort of, the technology scene and Doug you mentioned something about I guess, venture capital and, sort of, the private financing of technology ventures and I’m really passionate about both start-ups and also R & D, how that’s, you know, how the labour, I guess how you get high technology labour in the first place which is a tremendous sort of geographical, sort of, issue of how do you get higher level, sort of, so high tech talent with the different start ups across the world and the other thing is financing, right.
73:51 - So there’s sort of government financing into R & D and promoting it.
73:53 - I know that China is, for example, one of the largest, sort of, financiers of R & D domestically and also internationally.
73:59 - I just wanted to ask the entire panel, sort of, what is your opinion or, you know, have a look into the state of affairs with how, sort of, high technology start-ups and R & D is done throughout the region and the relationship with Australia because obviously we have a lot of, I guess, protectionism, domestically with these countries, where they keep the talent, locally, the capital is local but actually everyone could benefit if it was more regionalised in general, or internationalised.
74:24 - It’s not flowing, you know, just to the United States, but also in an APAC sort of way.
74:28 - So I just wanted to extend that thought and see what your opinions are? (Helen Zhi Dent) Ah, maybe I’ll start.
74:34 - Yeah, from the China perspective, I definitely see that as the area where we increasingly see more and more interest of investors from China looking for good technologies in Australia, the R & Ds, you know, early stage technologies, you know, Fintechs, and they want to invest into this technology.
74:53 - Again, their goal is to, you know, further develop this technology, make it tailored, and bring that back to China.
75:00 - I think what they know that there’s lots of good ideas, creative new technologies outside of China, but the best way, the best market to apply this technology is actually in China.
75:12 - So, we definitely see lots of interest, making enquiries in the Fintech space as well, you know, lots of the digital banking, lots of Fintech and other creative technologies and I’ve got, we’ve got investors even trying to find a technology.
75:27 - It’s like a, you just need to give them, like a little dip into your mouth and then they can tell in the next five years what kind of disease you may have.
75:35 - You know, China’s crazy about this kind of, if you have anything like this, would be very keen to invest.
75:39 - So there’s definitely interest but because they are early stage not large-scale commercialised technology, so the investment is fairly small, so usually not being noticed, and also the investors are mostly private business from China or could be a fund or could be a consortium from China, you know, making a 15%, 30%.
75:58 - So this kind of activity usually, below the radar you would not see much reported in the media.
76:03 - It’s usually the headline stories, you know, someone acquired a port in Australia, or a big industrial project may get reported but there’s lots happening in the technology space and lots of our clients even the, for instance, there’s one major investor from China, they actually 90% of their business in China is around agricultural, but what they’re looking for now is new technologies, AI related technologies and the digital banking, you know, Fintech technologies.
76:33 - They say, you know, anything, we’re very interested to have a look in that space.
76:36 - So we definitely see interest there, it’s just, we’re yet to say, here to see some large-scale kind of a headline type of project.
76:46 - (Doug Ferguson) I know the last Federal Budget had a specific callout to the financing and the exploration and the growth of certain technologies and the Federal Government’s also very keen and publicly trying to attract the leading technologists not just from Silicon Valley but also from Asia where frankly, China, you know, Singapore, Japan, they lead the way and if we can attract those people to bring their capital, their ideas and their families, you know.
77:18 - Australia’s a very attractive place at the moment, once the borders open.
77:23 - So we do have the ability, if we, if we execute, if we execute and that’s I think your point as well, to, to attract and reposition Australia’s whole economy gradually.
77:35 - OK, we’ve got to play the strengths. We produce the highest quality iron ore and the highest quality coke and coal, the cleanest burning, so that will be something that gradually phases out over time but if we can balance that with the growth of, of attracting technology and growing it in Australia, perfect.
77:54 - We’re in the same time-zone. It’s, it’s an easy win for Australia.
77:58 - (Jai Patel) Just to Doug’s point, I think immigration policy and programmes like the, the Global Talent Programme which is a new programme focused on highly skilled professions and technology and sub-sectors within that are part of the, you know, the target to, to attract that sort of, you know, capital and know-how into Australia.
78:22 - The other thing I mentioned is that the Indian, and I touched on this, you know, when I spoke earlier but the Indian tech companies, traditionally have, sort of, you know, delivered here in Australia, as well as around the world, based on an onshore-offshore model.
78:38 - So you know, basically housing, you know, the core capability in India and then sort of delivering through small teams in, in, on the ground.
78:49 - But they’ve made a conscious move to actually, you know, have a greater footprint in country.
78:55 - And so what comes with that is greater capability, skill development within the local market and, you know, we have seen that in Australia.
79:02 - So I think they’re doing their little bit as well.
79:06 - (Gary) One of the problems is shifting the perception of Australia, of course, by people, you know, the business people and everybody else and even governments in the region, our region for example, about what we are capable of and that does require a very dedicated programme and extensive programme to showcase what we’ve done in the technology area.
79:31 - There was a report published, was it earlier this year? I think it was, by the Institute of South-East Asian studies in Singapore.
79:39 - It does a regular report of elite views about different countries and what, what benefit they are to you and this is South-East Asia and this is an elite business group and a bit of government and all the rest of it.
79:53 - And who are the people that, who were polled, you know, the responses were, the countries, the areas in which we are most interested, you know, this is the elite in South-East Asia, because what they can deliver and they were thinking economically, technology and so on, not the politics, forget the politics, EU and Japan.
80:13 - Right up there with the percentages saying yep, it’s the EU, it’s the Europeans and the Japanese, right up there, you know, 40%, 43% of people said they’re for the EU and Japan was, kind of, you know, almost 38% or something.
80:29 - Australia was way down the bottom and I think it was about 3% or 4% or something.
80:36 - I mean it was, you know, just as a graphic of elite assessments of people who were doing stuff and thinking about what are the technology connections, the economic connections that can deliver stuff to us to them, and we’re just not on the radar.
80:53 - I mean they’re individual cases but… (Doug Ferguson) I think the Australian diaspora overseas probably play, play a bit of a role.
81:00 - Yeah, no they do very well but there’s a shift in perception.
81:05 - (Gary) Yeah. Very hard, but you’ve got to do it.
81:08 - (James) Well, on that note we’re nearly out of time but perhaps, since we’ve taken a look through time today at what now, I might ask all the panellists just for a few words on what’s next.
81:17 - So can I start with you Jai? What’s next for Australia’s position in the Indo-Pacific? (Jai Patel) I think from my perspective, the borders open, James, and if I think about India and the Australia-India bilateral relationship, for Australia at least, India is a place, you know, you need to touch and feel and smell.
81:38 - And it’s you know, heavy on relationships, so actually being able to be on the ground there, spend the time, develop those relationships, navigate what you need to navigate to meet your objective.
81:54 - (James) Right. Kenji? (Kenji) In terms of the Japanese investment to Australia, I guess that could continue.
82:03 - So if you look at what happened in the past ten years it’s been quite a lot of high power activity, you can see [1. 22. 10], you know, 90% here, 20% of Australia is actually Japanese owned, but yeah that’s going to continue down, because unlike Australia, Japan’s domestic economy is shrinking.
82:20 - So basically in a net basis the population is decreased by 500,000 each year.
82:25 - That’s really because, you know, ageing population, or the migration policy, so the domestic economy is shrinking.
82:31 - So they really need to go overseas to grow their business in order to survive because, you know, if they stay domestically they’re not going to survive.
82:39 - So Australia is definitely a [1. 22. 41] place to be, keeping these years of, you know, very, very strong trade and investment prospect relationships, so this is definitely going to continue to flourish.
82:53 - (James) And Helen. (Helen Zhi Dent) From China’s perspective, I think we’re definitely moving away from the mega-investment project by the state-owned enterprises, to private investors from China as well as the local Chinese-Australia entrepreneurs.
83:08 - I didn’t have a chance to mention yet, so Doug and myself, we, we just did another area of studying Chinese business community in Australia.
83:16 - These are surprisingly, these are Chinese students who came to study in Australia in the ‘90s, in the early 2000s and they stayed in Australia and set up their own business and became very successful entrepreneurs in this country.
83:29 - And what did they do? They help to sell Australian products and services to the Chinese market.
83:34 - So to me from, you know, state-owned, moving to private investors and private entrepreneurs in Australia is definitely the trend.
83:44 - (James) And Merriden I might jump over to you.
83:50 - (Dr Merriden Varrall) Sure. So I think, what’s next for Australia’s position in the Indo-Pacific? I liked the way that Gary described, when we’re looking at this region as a fulcrum in the geostrategic competition between China and the US, or the way that the world’s dividing and Australia’s position in the Indo-Pacific.
84:12 - Our ongoing well-being and our ongoing economic success depends on managing this, our position in relationship to this bifurcation very, very carefully and we can’t do that by ourselves.
84:24 - We cannot just be alone in trying to navigate these complexities.
84:29 - We need our neighbours and we need our region and to do that I think we could do a better job of listen… when we talk about engagement, genuine engagement, listening, with real respect and real humility to our neighbours’ experiences and our neighbours’ knowledge of how to navigate difficult geopolitical challenges.
84:51 - And so we don’t just rely on neighbourly rhetoric, talking a big game, but not putting both our money and our actions into that as well.
85:00 - And I’ve really heard a lot from South-East Asian counterparts in the past talking about how Australia likes to tell them how they should manage this, how they should manage the geostrategic competition, how they should manage their challenges with China, and I think we could do a lot to, to listen and learn as well because we’re going to need to work together to manage these challenges.
85:21 - (James) And Gary, on a South-East Asian note.
85:23 - (Gary) Gosh, now, I don’t want to give the impression the government is not doing anything and there’s not a lot of dedicated policy to the region.
85:30 - There is, but the point is to do more because we’re at a profound point for the region, where we need to do more to be able to influence the way the division, the fault-line is going to evolve and so on.
85:47 - So it’s to make ourselves in many ways a sort of a really stronger organic part of the region, at the operational level, the daily level all of that.
85:59 - Leave aside the political alignments and all the rest of it because countries are intelligent.
86:06 - They know what they’re doing on the political side.
86:08 - They make their own judgements. It’s just that they won’t talk about them, necessarily.
86:12 - A lot of countries in the region, why would you? But they want options, they need options, but they want options and I’m talking about the daily stuff to build themselves up as resilient countries, strengthen their ability to be able to cope with this incredible change and the pace and rate of change and that’s where we come into play and we can do more, yeah.
86:33 - We can, we’re doing a lot, but we need to do more.
86:38 - (James) And finally, Doug. (Doug Ferguson) Well, I just had my second Covid vaccination today.
86:43 - So I think the first thing to do next is try to vaccinate as many people in Australia as we possibly can and then start exporting, you know, we’re a generous, we’re a wealthy nation, we need to start exporting our, our vaccinations to the region and then as, as individuals, as business people, we just have to be increasingly aware of the geopolitics and the geoeconomics, read it, you know, get multiple perspectives.
87:10 - I would encourage you to think about joining, you know, Asia Society or Asia Link or other groups that enable you to, to get access to information that you wouldn’t necessarily just read in the, in the mainstream newspapers to continue to understand what, what you can, can do to build relationships.
87:30 - And you know, James, I think today’s been a great, a great start there in terms of what’s next.
87:37 - But who knows? You know, it’s such a dynamic region, so many opportunities.
87:44 - So many things that you didn’t think were possible are emerging and I think that thank goodness we have such, such great talent coming through our universities to be able to capitalise, because you guys in many ways know more about the details around the technology and the digital transformation than, than many others.
88:00 - So, you know, it’s a shared responsibility from here on in.
88:04 - (James) Well, on that note, I’d like to finish today and thanks to all our wonderful panellists for spending so much time.
88:12 - We know you’re very busy and we appreciate each and every minute and all of your comments and views so if you could all put your hands together for them. Thanks.
88:20 - Applause can be heard And I think on that note, we will leave all of our on-line compatriots and talk to you later. .