ASIA IS ONE OF THE MOST ATTRACTIVE AND PROMISING MARKETS. BY 2026, THE FAST-GROWING ECONOMIES OF ASIA ARE EXPECTED TO ACCOUNT FOR 44% OF THE WORLD'S GDP. IT IS NOT SURPRISING THAT IN RECENT YEARS, VARIOUS COMPANIES HAVE TRIED TO EXPLORE THIS NEW WORLD. HOWEVER, THERE HAVE BEEN FEW SUCCESSFUL CASES SO FAR.
Entrepreneurs, speaking about their failures, cite completely incomprehensible «rules of the game» for them, a different mentality, high expenditures on business development, high custom duties and legislative bans on a number of areas. In this situation, more and more companies are looking at Australia as a gateway to Asian markets.
Although Australia is in itself an attractive business environment due to stable political situation, resilient economy, developed infrastructure, high level of national tolerance, it has a major advantage of easy access to Asian markets.
Australia’s geographic location compels it to rely on trade and cooperation with its immediate neighbors, which is why Australia has already concluded many free trade agreements and double taxation treaties. Uniquely, Australia managed to enable its companies to operate in those sectors of economy of other countries that are usually closed to foreigners.
Australian trade has long focused on Asian economies, particularly in the sphere of mineral resources, energy, services and agriculture.
A recent major trade agreement allowed trading Australian goods duty-free with 15 of Asia's largest economies from January 1, 2022. It is the world's largest free trade zone with about 2.2 billion consumers and a GDP of $28 trillion, more than 32% of the world's total GDP.
Beside this major agreement, Australia signed various bilateral agreements on free trade and other trade preferences with Singapore, Thailand, Malaysia, South Korea, China, Japan, India and the UK.
Thus, Australia has become an attractive destination for the relocation of any business. Many companies from the CIS countries, Europe and the USA are moving their production facilities, opening branches and offices here. Especially since opening a company and starting a business in Australia often simplifies visa issues and makes it possible to move key employees to the country.
An additional and significant bonus is government support in the form of grants under various programs, such as Austrade's Export Market or Development Grants (EMDG) program, which helps Australian exporters to enter foreign markets.
In most countries of the world «Made in Australia» is a sign of high quality and the best service.
Let us consider, in relation to specific industries, the preferences of only one interstate cooperation: Australia – Indonesia.
Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) came into force on July 5, 2020. IA-CEPA provides a framework for Australia and Indonesia to unlock the potential of bilateral economic partnerships and encourages economic cooperation between businesses, communities and individuals.
Indonesia with the population of 264 million offers significant opportunities for Australian businesses.
According to IA-CEPA 99% of Australian goods will be imported into Indonesia duty-free or under greatly improved preferential terms. Besides, IA-CEPA will support stronger value chains between Australian and Indonesian businesses, ensuring that Australia is well positioned to deepen economic cooperation with Indonesia and participate in its growth. This will also ensure a significant boost to a number of service sectors, including education and training, tourism, finance, mining and energy, and provide new mechanisms for removing non-tariff barriers.
Indonesia guarantees automatic issuance of import permits for live cattle, frozen beef, lamb, feed grains, citrus fruits, carrots and potatoes, and rolled steel.
Another trade agreement is aimed at stimulating import of Australian grain products. Under its terms, Australian grain producers have the right to supply up to 500 thousand tons of wheat, sorghum and barley to Indonesia at zero customs duty. At the same time, it is specified that the volume of grain exports at zero customs duty will be increased by 5% annually.
According to USDA, Australia's 2021- 2022 wheat production is up 50% from the previous season's level, amounting to 23 million tons, while grain exports are up 77%, amounting to 14.5 million tons.
Indonesia places strict bans and limitations on foreign companies, which operate in certain areas, such as health care, education and cybersecurity. Through a series of agreements, Australia has secured exceptions to this rule.
Unimpeded access to services, digital trade and investment markets ensures stable position of Australian enterprises and service providers on Indonesian market including guarantees to protect Australian ownership. Indonesia removes restrictions on the level of ownership of stakes in Indonesian companies by Australian residents (with some exceptions).
In the sphere of healthcare Indonesia offers remarkable opportunities for Australian business. Digital health care has been regarded by the Indonesian government as one of the key growth areas for start-ups since 2018. Services include online consultations, delivery of pharmaceuticals and electronic scheduling of appointments. These firms often have strong partnerships with well-known players in health care or technology, such as hospital chains, pharmaceutical companies and e-commerce platforms.
Indonesia’s digital innovations sector is growing at a fast pace as well, contributing to the deepening partnership with Australia. Internet penetration in Indonesia is 64.8%, and by 2025, the digital economy is expected to grow to $133 billion a year. Smartphones are a key platform with 96% of internet users accessing the global web via their handheld devices. Experts estimate the «internet economy» of Indonesia in $40 billion, with an average growth rate of 49% per year since 2015 and it is projected that by 2025, it will reach 130 billion U.S. dollars.
An increasingly important way for Australian businesses to access and participate in the Indonesian market is the Indonesian startup ecosystem. Indonesia is one of the largest and most diverse startup ecosystems in ASEAN, driven by 215 million Internet users and ASEAN's largest economy.
Startup innovations are critical to growing sectors of the digital economy, such as e-commerce, digital health, fintech and educational technology. It is also a force for modernization in traditional sectors, including banking, telecommunications, agriculture, logistics, retail, resources, and public services. As of May 2020, Indonesia had more than 2,000 digital startups and five unicorn technology companies. This is supported by a wide range of accelerator/incubator programs, co-working spaces and venture investors.
As for education, Australian vocational education and training providers can open Australian-owned educational institutions anywhere in Indonesia and offer all Australian and Indonesian qualification programs. Opening education branches and departments in Indonesia will allow their graduates to obtain jobs in tourism, medical and mining companies operating in the country.
In 2018-2019, bilateral services trade between Australia and Indonesia was estimated at $6.2 billion, with education-related travel dominating Australian services exports to Indonesia.
A relatively new phenomenon in Indonesia is SaaS (software-as-a-service), the development of which was facilitated by the growth of Internet penetration, the need for cost-effective cloud solutions and the importance of the transition to digital technology.
According to a Boston Consulting Group study, the SaaS market in Indonesia is expected to grow at an annual growth rate of 31.9% to reach $400 million in 2023, up from $100 million in 2018. SaaS in Indonesia are implemented in business application areas such as payroll and HR management, CRM, and file sharing. Key cloud computing support companies include Microsoft, AWS, and Telkom Cloud.
The area of cybersecurity deserves special attention. Indonesia has been particularly susceptible to cyberattacks, and this vulnerability has increased as many traditional industries modernize their operations and new digital industries such as e-commerce and digital health and education experience rapid growth. In recent years, the prevailing approach in government and business has shifted from avoiding public recognition of cybersecurity risks to viewing cyber resilience as part of critical national infrastructure. As a result, national cybersecurity agency BSSN was established in January 2018. It develops standards for industry to support the resilience of Indonesian business and government.
The area of cybersecurity deserves special attention. Indonesia has been particularly susceptible to cyberattacks, and this vulnerability has increased as many traditional industries modernize their operations and new digital industries such as e-commerce and digital health and education experience rapid growth. In recent years, the prevailing approach in government and business has shifted from avoiding public recognition of cybersecurity risks to viewing cyber resilience as part of critical national infrastructure. As a result, national cybersecurity agency BSSN was established in January 2018. It develops standards for industry to support the resilience of Indonesian business and government.
Indonesia is one of the few countries with which Australia has an intergovernmental agreement on cybersecurity cooperation. This memorandum of understanding was signed between the countries in September 2018 with the participation of Indonesian President D. Widodo and Australian Prime Minister S. Morrison. The agreement laid the foundation for a strong cooperation in the formal, academic, business and skills development aspects of cybersecurity resilience.
The growth and success of many Indonesian startups has also highlighted the value of data analytics and artificial intelligence (AI) for decision-making.
The appetite for AI adoption among both small and medium-sized businesses is high. A survey of retail, IT/ telecom, financial services and insurance companies in eight Asia-Pacific markets found that Indonesian companies top the list for AI adoption, with 65% implementing or expanding their use of AI to improve operational efficiency and develop innovative products and solutions that better meet customer needs.
These are not the only areas where there are business opportunities in Australia. And with strong government support, well-developed and clear legal framework and a familiar business culture, companies registered in Australia have the opportunity to promote their services and products to the attractive and lucrative Asian markets.
Although Australia is in itself an attractive business environment due to stable political situation, resilient economy, developed infrastructure, high level of national tolerance, it has a major advantage of easy access to Asian markets.
Australia’s geographic location compels it to rely on trade and cooperation with its immediate neighbors, which is why Australia has already concluded many free trade agreements and double taxation treaties. Uniquely, Australia managed to enable its companies to operate in those sectors of economy of other countries that are usually closed to foreigners.
Australian trade has long focused on Asian economies, particularly in the sphere of mineral resources, energy, services and agriculture.
A recent major trade agreement allowed trading Australian goods duty-free with 15 of Asia's largest economies from January 1, 2022. It is the world's largest free trade zone with about 2.2 billion consumers and a GDP of $28 trillion, more than 32% of the world's total GDP.
Beside this major agreement, Australia signed various bilateral agreements on free trade and other trade preferences with Singapore, Thailand, Malaysia, South Korea, China, Japan, India and the UK.
Thus, Australia has become an attractive destination for the relocation of any business. Many companies from the CIS countries, Europe and the USA are moving their production facilities, opening branches and offices here. Especially since opening a company and starting a business in Australia often simplifies visa issues and makes it possible to move key employees to the country.
An additional and significant bonus is government support in the form of grants under various programs, such as Austrade's Export Market or Development Grants (EMDG) program, which helps Australian exporters to enter foreign markets.
In most countries of the world «Made in Australia» is a sign of high quality and the best service.
Let us consider, in relation to specific industries, the preferences of only one interstate cooperation: Australia – Indonesia.
Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) came into force on July 5, 2020. IA-CEPA provides a framework for Australia and Indonesia to unlock the potential of bilateral economic partnerships and encourages economic cooperation between businesses, communities and individuals.
Indonesia with the population of 264 million offers significant opportunities for Australian businesses.
According to IA-CEPA 99% of Australian goods will be imported into Indonesia duty-free or under greatly improved preferential terms. Besides, IA-CEPA will support stronger value chains between Australian and Indonesian businesses, ensuring that Australia is well positioned to deepen economic cooperation with Indonesia and participate in its growth. This will also ensure a significant boost to a number of service sectors, including education and training, tourism, finance, mining and energy, and provide new mechanisms for removing non-tariff barriers.
Indonesia guarantees automatic issuance of import permits for live cattle, frozen beef, lamb, feed grains, citrus fruits, carrots and potatoes, and rolled steel.
Another trade agreement is aimed at stimulating import of Australian grain products. Under its terms, Australian grain producers have the right to supply up to 500 thousand tons of wheat, sorghum and barley to Indonesia at zero customs duty. At the same time, it is specified that the volume of grain exports at zero customs duty will be increased by 5% annually.
According to USDA, Australia's 2021- 2022 wheat production is up 50% from the previous season's level, amounting to 23 million tons, while grain exports are up 77%, amounting to 14.5 million tons.
Indonesia places strict bans and limitations on foreign companies, which operate in certain areas, such as health care, education and cybersecurity. Through a series of agreements, Australia has secured exceptions to this rule.
Unimpeded access to services, digital trade and investment markets ensures stable position of Australian enterprises and service providers on Indonesian market including guarantees to protect Australian ownership. Indonesia removes restrictions on the level of ownership of stakes in Indonesian companies by Australian residents (with some exceptions).
In the sphere of healthcare Indonesia offers remarkable opportunities for Australian business. Digital health care has been regarded by the Indonesian government as one of the key growth areas for start-ups since 2018. Services include online consultations, delivery of pharmaceuticals and electronic scheduling of appointments. These firms often have strong partnerships with well-known players in health care or technology, such as hospital chains, pharmaceutical companies and e-commerce platforms.
Indonesia’s digital innovations sector is growing at a fast pace as well, contributing to the deepening partnership with Australia. Internet penetration in Indonesia is 64.8%, and by 2025, the digital economy is expected to grow to $133 billion a year. Smartphones are a key platform with 96% of internet users accessing the global web via their handheld devices. Experts estimate the «internet economy» of Indonesia in $40 billion, with an average growth rate of 49% per year since 2015 and it is projected that by 2025, it will reach 130 billion U.S. dollars.
An increasingly important way for Australian businesses to access and participate in the Indonesian market is the Indonesian startup ecosystem. Indonesia is one of the largest and most diverse startup ecosystems in ASEAN, driven by 215 million Internet users and ASEAN's largest economy.
Startup innovations are critical to growing sectors of the digital economy, such as e-commerce, digital health, fintech and educational technology. It is also a force for modernization in traditional sectors, including banking, telecommunications, agriculture, logistics, retail, resources, and public services. As of May 2020, Indonesia had more than 2,000 digital startups and five unicorn technology companies. This is supported by a wide range of accelerator/incubator programs, co-working spaces and venture investors.
As for education, Australian vocational education and training providers can open Australian-owned educational institutions anywhere in Indonesia and offer all Australian and Indonesian qualification programs. Opening education branches and departments in Indonesia will allow their graduates to obtain jobs in tourism, medical and mining companies operating in the country.
In 2018-2019, bilateral services trade between Australia and Indonesia was estimated at $6.2 billion, with education-related travel dominating Australian services exports to Indonesia.
A relatively new phenomenon in Indonesia is SaaS (software-as-a-service), the development of which was facilitated by the growth of Internet penetration, the need for cost-effective cloud solutions and the importance of the transition to digital technology.
According to a Boston Consulting Group study, the SaaS market in Indonesia is expected to grow at an annual growth rate of 31.9% to reach $400 million in 2023, up from $100 million in 2018. SaaS in Indonesia are implemented in business application areas such as payroll and HR management, CRM, and file sharing. Key cloud computing support companies include Microsoft, AWS, and Telkom Cloud.
The area of cybersecurity deserves special attention. Indonesia has been particularly susceptible to cyberattacks, and this vulnerability has increased as many traditional industries modernize their operations and new digital industries such as e-commerce and digital health and education experience rapid growth. In recent years, the prevailing approach in government and business has shifted from avoiding public recognition of cybersecurity risks to viewing cyber resilience as part of critical national infrastructure. As a result, national cybersecurity agency BSSN was established in January 2018. It develops standards for industry to support the resilience of Indonesian business and government.
The area of cybersecurity deserves special attention. Indonesia has been particularly susceptible to cyberattacks, and this vulnerability has increased as many traditional industries modernize their operations and new digital industries such as e-commerce and digital health and education experience rapid growth. In recent years, the prevailing approach in government and business has shifted from avoiding public recognition of cybersecurity risks to viewing cyber resilience as part of critical national infrastructure. As a result, national cybersecurity agency BSSN was established in January 2018. It develops standards for industry to support the resilience of Indonesian business and government.
Indonesia is one of the few countries with which Australia has an intergovernmental agreement on cybersecurity cooperation. This memorandum of understanding was signed between the countries in September 2018 with the participation of Indonesian President D. Widodo and Australian Prime Minister S. Morrison. The agreement laid the foundation for a strong cooperation in the formal, academic, business and skills development aspects of cybersecurity resilience.
The growth and success of many Indonesian startups has also highlighted the value of data analytics and artificial intelligence (AI) for decision-making.
The appetite for AI adoption among both small and medium-sized businesses is high. A survey of retail, IT/ telecom, financial services and insurance companies in eight Asia-Pacific markets found that Indonesian companies top the list for AI adoption, with 65% implementing or expanding their use of AI to improve operational efficiency and develop innovative products and solutions that better meet customer needs.
These are not the only areas where there are business opportunities in Australia. And with strong government support, well-developed and clear legal framework and a familiar business culture, companies registered in Australia have the opportunity to promote their services and products to the attractive and lucrative Asian markets.
