The Federal Government’s decision to be a part of the Asian Infrastructure Investment Bank is a bold move which encourages long term investment in a growing region which will benefit Australia, PwC Asia desk leader Andrew Parker said today.
“The recent PwC report, the World in 2050, projected that by 2030 four of the World’s top five economies will be in Asia, with only the United States interrupting Asia’s dominance,” he said.
“Asia is already home to 6 of our top 10 trading partners so our economic prosperity is very much tied to Asia’s success. “But according to a separate PwC Report on infrastructure in the Asia Pacific, the infrastructure deficit across the emerging growth markets in Asia is very substantial.
“The Asian Development Bank estimated that, between 2010 and 2020, Asia will need to spend approximately US$8 trillion in order to maintain current levels of economic growth.
“This estimate excludes social infrastructure requirements and takes no account of disaster recovery infrastructure spending which is becoming very material. The challenge is enormous.
“In our landmark report on the Asian opportunity, Passing us By we highlighted that Asian economies are increasingly sophisticated and connected – both globally and within Asia itself.
“Intra-Asian trade was $3 trillion in 2013 and is predicted to exceed intra-European flows, to become the world’s largest trading block in 2016. The formation of the ASEAN Economic Community at the end of 2015 will create a $2.4 trillion economy – the seventh largest in the world.
“This structural shift in economic power is also re-defining global supply chains. The recent spate of free trade agreements with Korea, Japan and China, ongoing negotiations with India and the proposed Trans Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP) are all manifestations of the relentless advance of globalisation, fuelled by technology, that is affecting Australian industries.
“Infrastructure is vital to Asia being able to sustain the economic growth that it has enjoyed to date and to fulfil the potential highlighted in our World in 2050 report. Asia needs the AIIB, and China is to be commended for stepping up to the plate with a bold initiative.
“The conclusion of negotiations of our FTA with China provides a unique opportunity for Australia to re-define our relationship with China. We should not forget that China offered concessions they have not provided to any other nation before in the FTA. The FTA is an open invitation to a new partnership with China, not just in Australia but also the region, and it is one we should embrace.
“The governance concerns that Australia and other countries have expressed are understandable, but we are far better served resolving those inside the tent with China as our partner. The UK and NZ have taken up the opportunity, Australia cannot let this one pass us by.”
