Australia and a region in the making

By Greg Earl

Greg Earl Disruptive Asia

Australia can’t turn away from the challenges and shouldn’t miss the opportunities that such a diverse region as South-East Asia will keep presenting.

For a sudden change in the zeitgeist in South-East Asia it is hard to go past the remarkable scene on May 10 this year. Then ninety-two-year Mahathir Mohamed was declaring his own return to power by explaining Malaysia’s electoral procedure in his deceptively soft-spoken but steely old doctor’s manner. “You are all clapping. The King is not required to clap, he is required to sign,” the once and future prime minister explained to a country which had not felt the need to prepare for a change of government but was now worried about whether it would actually happen. “That is what the provision of the Constitution says. It doesn’t say, ‘I like you, I don’t like you, I love you’,” the world’s oldest elected leader explained to nervous applause.

With its diverse cultures, economic development levels and political practices, South-East Asia has an infinite capacity for surprise, not least for neighbours like Australia prone to missing the wood for the trees in such a polyglot region. Malaysia’s election has been a classic case in point by challenging the emerging new political science thesis that South-East Asia may be a region which goes through the motions of democracy without ceding much change in power. Thailand’s long delayed return from military rule, Cambodia’s no opposition party poll and a Filipino vice-president isolated from government decision making have all lent weight to this thesis.

When Australia capped more than four decades of diplomacy with the Association of South-East Asian Nations (ASEAN) in March with a rare summit of regional leaders outside the region in Sydney, it was then Malaysian Prime Minister Najib Razak who unexpectedly stole the show with a most-unASEAN public attack on Myanmar State Counsellor Aung San Suu Kyi. His complaint about the flood of almost one million Muslim Rohingya people from Myanmar into Bangladesh raised two big questions about South-East Asia’s capacity to act like the coherent region which is increasingly promoted as the third leg of global growth after China and India. How could it be seen to be living up to that global scale economic and diplomatic potential when it was failing to collectively deal with its worst human rights crisis in a generation? And how could it live up to the same potential when one of the longest serving leaders was suddenly happy to attack a fellow leader because it suited his increasingly desperate attempts to fuel Malay Muslim nationalist sentiment at home amid a tough election fight?

But in September a very different vision of South-East Asia was unfolding in the traffic congested streets of Hanoi and Ho Chi Minh City. A company built on the pillion seats of Indonesia’s ubiquitous motorcycle taxis was firing the opening shots of a battle royale for the hearts and wallets of more than 600 million mostly youthful consumers suddenly empowered by digital technology. Indonesia’s first unicorn tech start-up and ride-hailing business Go-Jek – now valued at $5 billion – took its biggest step out of its home market in a competition to become the region’s dominant consumer services and cash payments platform.

This is a battle which has attracted investment from technology giants in Japan, China and the US. Go-Jek’s US$10 billion Singapore-based rival Grab is already more active across the region but faces a challenge dislodging Go-Jek in Indonesia, the country with the biggest potential demographic dividend of youthful consumers and workers. The regional internet economy is forecast to be worth more than US$200 billion by 2025 changing the way business is done and possibly achieving a sense of regional integration that has often eluded trade negotiators and diplomats despite half a century of planning. According to a Google-Temasek study South-East Asian people spend more time on their mobile phones each day than people from other regions in the world and twice as much time in ecommerce marketplaces than Americans.

These vignettes from a brief few months of tumult – political, human and technological – emphasise how this region is entering a challenging new phase of modernity after the dramas of decolonisation and the hubristic high economic growth of the Asian Tiger era. Beyond the glittering shops of Bangkok’s Siam Paragon Mall and the endless blue horizon of the infinity pools in Nusa Dua, an old culture of patrician and authoritarian politics and business is under pressure from a new generation of digitally empowered consumers. Grab, messaging app Line and discount airline Air Asia are the real new arteries of a region that is torn between the promise of greater ASEAN integration and domestic social challenges that are forcing most leaders to look more inward.

All this is happening at Australia’s front door on a scale that is increasingly impossible to ignore in an exemplar of why Asia Society Australia has chosen South-East Asia for the second volume of this aptly named Disruptive Asia series of essays. These essays were commissioned to reflect on some of the challenges and opportunities that were debated on the official agenda or the many sideline events of the ASEAN Australia Summit in March. One statistic neatly captures how South-East Asia will inevitably loom larger in Australia’s sense of place and engagement with the broader region for better or worse. When Australia opened diplomatic relations with its South-East Asian neighbours four decades ago, its economy was about one third bigger than the combined production of all five then members of the newish Association of South-East Asian Nations (ASEAN). Now looking forward about the same distance into the future, four of those original countries (Indonesia, Thailand, Malaysia and the Philippines) plus Vietnam are each forecast to be economically larger than Australia.

The essays by a diverse cross section of commentators and participants in the ten (or perhaps 11 with Timor Leste) country region touch on a wide range of subjects. But they tend to be unified by the idea that Australia can’t turn away from the challenges and shouldn’t miss the opportunities that such a diverse region will keep presenting. Indeed, while diversity makes turning South-East Asia into an ASEAN region quite challenging, it also means opportunities keep arising for Australia to cooperate with individual countries. The capacity for shifting bilateral relationships within the overall engagement with ASEAN over time was demonstrated by Australia’s commitment in March to a Strategic Partnership with Vietnam, once an enemy but now a growing trade and diplomatic interlocutor. Cat Thao Nguyen writes in her essay about a generational shift in the Vietnamese refugee population towards more engagement with their country of origin which is underpinning the new bilateral diplomatic relationship.

The ecommerce conundrum is a deliberately strong theme in these essays with Helen Brown recounting how Indonesian tech leaders are shopping for engineers and ideas in fields such as agtech in Australia but wonder whether the DNA to compete in their dynamic market will be found. However, Bede Moore, back from running an Indonesian online delivery platform, says the digital disruption process underway in the region provides a new entry point for Australian business. While not ignoring the consumer market opportunities, David Burns notes that the world beating social media usage annual growth rates in the region mean that Australians should also remain focussed on the infrastructure development opportunities as well as the consumer app developments. But in a nice rejoinder to this digital optimism, Aim Sinpeng asks how Australia will square its professed commitment to internet freedom with rising cyber illiberalism in the region.

Australia has done well in integrating with South-East Asia’s trade architecture with a web of regional and bilateral links, Indonesia the most recent edition only this year. Louise McGrath widens the lens by focussing on Australia’s cooperation with ASEAN members to finalise the 18-member Regional Comprehensive Economic Partnership agreement. This would cement supply chains across the world’s fastest growing region, but she wonders whether RCEP will be up to the task of facilitating the digital economy. Anna Green takes an equally challenging big picture view by asking whether an integrated ASEAN market will become Australia’s next China – and she provides a checklist drawn from on the ground business experience in China. Peter Osborne also brings extensive on the ground practical experience to this business debate combined with insights into how rapid development is transforming South-East Asian attitudes to health and wellness products. He sees the opportunity for a genuine two-way conversation about modern and traditional medicine ranging from managing ageing populations to harmonisation of regulatory standards. Shamim Razavi rounds out this business discussion with a different take on the often cited Australian business reluctance to invest in Asia due to legal uncertainty. He calls for more development aid spending on legal system staff training but also argues that a body of authoritative commercial legal practice is emerging in South-East Asia which investors need to understand.

Sandra Seno-Alday’s essay provides a bridge between this business discussion and the region’s broader demographic challenge to provide opportunities for its women to flourish in the workforce and elsewhere. She points out the little appreciated fact that women already have better workforce participation rates in this region than other regions of the world and the highest proportion of female entrepreneurs. She suggests these women bring different approaches to business due to their gender, family and financial circumstances but could do well out of digital disruption providing a “glimpse into the socioeconomic future of South-East Asia.” Kelly Gerard is less confident of this having looked at many existing women’s empowerment programs that don’t address the specific needs of women. It is hard to conduct a broad discussion of Australian engagement with Asia without reopening the vexed issue of lacklustre language education and skills or, in the case of successful language students, poor employment prospects. Michelle Kohler and Kathleen Turner focus on Indonesian as the most widely spoken language in the region and the one that has had the greatest roller roaster ride of deflated expectations across the Australian education system. Turner says the country should have a language strategy and investment equal to its focus on trade deal negotiation. She says a new multi-polar security environment will leave Asian language deficient Australia exposed. Kohler says Australia’s pride in its multiculturalism should be viewed through the prism of its poor embrace of multilingualism.

One of the little appreciated consequences of the arrival of a restless, digitally literate regional population has been the facilitation of irregular people movement in pursuit of employment or safety from human rights abuses. But social media has also brought this movement more readily to the attention of the broader region and world making it a challenge for ASEAN integration and the credibility of regional leaders. Melissa Crouch argues that the Rohingya refugee crisis can only be resolved by deeper regional engagement rather than isolation or detachment, and this applies to Australia’s responsibility as well. Meanwhile Savitri Taylor identifies how the Rohingya mass evacuation is but the largest of several irregular people movement challenges and Australia should recognise this by shifting its focus from hard border protection to a broader regional plan to deal with the problem.

Whether the South-East Asian countries high growth trajectory (which attracts business) remains or not, they are destined to play a bigger role in a more multi-polar regional security arrangement to deal with the rise of China and the relatively less prominent role of the US. ASEAN is at the center of much regional security architecture and at the cross roads of the new Indo-Pacific construct. Doug Ferguson says the New Colombo Plan needs long term nurturing as an Australian bridge to the region. Geoff Raby sets out a detailed plan for Australia to develop a hedging strategy with ASEAN neighbours to manage the rise of China. Huong Le Thu questions whether most of the region has given up on trying to shape a more equal relationship with a rising China. And Natalie Sambhi drills down further into the Indo-Pacific policy-making debate by exploring the opportunities for maritime cooperation amongst Australia, Indonesia and the Philippines.

It says something about the diversity of the countries and breadth of issues facing contemporary South-East Asia that the two smallest countries Brunei Darussalam and Laos have so far not been mentioned in this introduction.

The March ASEAN Summit set up a new agenda for Australia’s relationship with the countries of South-East Asia and the collective ASEAN group from the new partnership with Vietnam to a series of cooperation programs from city renewal to coordinated terrorism laws. But it was at the very end of the gathering that Laotian Prime Minister Thongloun Sisoulith most evocatively captured the potential for Australia to engage with the region. He said the Australian aid funded Mekong River bridge crossing between his country and Thailand in the early 1990s – which he helped negotiate – had simply transformed his nation by turning it from a land-locked to a land-linked county. In retrospect this was a matter of the right idea at the right place at the right time. It is in the spirit of that sentiment from an overlooked corner of South-East Asia that these essays offer a road map for re-engagement with the whole region.


Greg Earl is editor of Asia Society Australia’s Asia Briefing.

To read the full list of essays Download Disruptive Asia (Volume Two) - ASEAN Special Edition

Disruptive Asia is a thought-leadership project by Asia Society Australia launched in 2017. It presents – through long-form essays – new perspectives and policy recommendations on how Asia’s rise is impacting Australia’s foreign policy, economy and society and how Australia should respond. Disruptive Asia deliberately looks at both external aspects of Australia’s relationship with Asia (foreign policy, business connectivity, international education) and their domestic implications and manifestations (community relations, leadership diversity, education settings and capabilities).

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