When Canadians think of economic opportunities in Asia, most think of emerging economies with impressive projected growth rates and large GDPs, such as China and India, or of more established economies, like Japan or Korea.
What most of us don’t think of is a group of economies in Southeast Asia known as the Association of South East Asian Nations. While the growth rate of China is expected to cool off, it may surprise many Canadians to learn that ASEAN economies such as Indonesia, Vietnam and the Philippines are expected to become some of the hottest in the region, with GDP growth rates projected by the International Monetary Fund to reach six per cent in each country by 2019.
Which is why Canada’s International Trade Minister Ed Fast is on his 13th trade visit to Southeast Asia in just four years. Fast will join business leaders and other senior government officials in Bangkok next week for the Canada-ASEAN Business Forum, where trade and investment between Canada and Southeast Asia will dominate the agenda.
For many Canadians, ASEAN may seem convoluted and confusing, a mishmash of different nations with varying forms of government, disparate levels of development, diverse cultures and religions and, quite often, troubled pasts. These perceptions may explain why ASEAN has not featured prominently on Canada’s trade and investment radar.
A national opinion poll by the Asia Pacific Foundation of Canada found that only 11 per cent of Canadians believe Southeast Asia is highly important for Canada’s economic prosperity, compared to more than a third of Canadians who see China and Japan as highly important.
ASEAN is a region with challenges. A 2013 Asia Pacific Foundation of Canada survey of Canadian businesses in ASEAN found that issues of corruption, inconsistent application of laws and regulations and intellectual property infringement are some of the major concerns for Canadian businesses.
ASEAN leaders are aware of the international business community’s concerns and are taking steps to address them. The ASEAN Economic Community, for instance, hopes to streamline intra-ASEAN economic relations and increase the region’s competitiveness to attract global trade and investment.
The ambitious goal of the AEC is to deliver a single market and production base, with the free flow of goods, services, capital, investment and labour across the region by the end of 2015. Although inspired by the European Union’s predecessor, the European Economic Community, it is drastically different from the EU in that no member country will surrender any of its sovereignty, monetary policy governance or border regulation to a managing organization.
Despite internal differences and market-entry challenges, ASEAN is a place of burgeoning opportunities for Canadian trade and investment. It features a population base of more than 600 million for Canadian goods and services; a set of regional free-trade agreements than can provide Canadian companies operating in ASEAN with preferential market access to China, India and Japan; and possible collaborations in private-public partnerships to develop the region’s infrastructure.
APF Canada’s survey of Canadian businesses in ASEAN found that 86 per cent of these businesses see profitability within their first three years of operations and more than 62 per cent have increased their investment in the region within two years. It is a place we cannot afford to overlook when we consider engaging emerging markets in Asia.
Critics of ASEAN’s Economic Community argue that the scope of trade and investment liberalization proposed is limited and the agreements that make up the community will fail to be implemented by the 2015 deadline, given the limited capacity of some of the less-developed countries. To some extent this is true, but it does not mean we should dismiss ASEAN’s genuine commitment to pursue greater integration into the global economy.
In the past year, the Canadian government has slowly realized the growing importance of the region. Canada announced a new dedicated ambassador to ASEAN and resident representatives in Cambodia and Laos, opened its first chancery in Myanmar and expanded its countries of focus, which receive a majority of Canada’s development assistance, to include four ASEAN countries: Indonesia, Myanmar, the Philippines and Vietnam.
Yet the message of ASEAN’s growing importance hasn’t really transferred to Canadians at home.
In order to bridge this information gap, we need to leverage our diaspora populations to build the profile of ASEAN across Canada, much as our South Asian and Chinese diasporas have done for India and China. Recent census data show that Southeast Asian visible minorities constitute 2.8 per cent of the Canadian population, and in the past decade, the Philippines remains one of the highest sources of immigrants to Canada.
While we need to educate and support our Canadian companies operating in the region, we must be simultaneously building greater awareness of ASEAN at home. Missing out on ASEAN now will be missing out on Canada’s future.
Stewart Beck is the president and CEO of the Asia Pacific Foundation of Canada.
