By Peter G. Hall, Vice-President and Chief Economist, EDC
We Canadians are not the same as we used to be. More and more, Canadian business is seeing the world as its stage. The transformation stepped up in 2003, and since then, diversification of trade to emerging markets has flourished. With the world economy on the verge of a new growth cycle, there is increased curiosity – and not just in Canada – about the planet’s next big market.
This same curiosity has turned Canada’s eyes toward the ASEAN (Indonesia , Malaysia, the Philippines , Singapore, Thailand, Brunei , Myanmar, Cambodia, Laos and Vietnam) economies. The 10-nation association has a collective GDP of $2.2 trillion – about 20 per cent greater than Canada’s – and an impressive population base of just over 600 million. Add to that the collective growth dynamic, which in the next cycle will have very few rivals. Prospects like this are hard to ignore.
With this in mind, the Canada-ASEAN Business Council was formed last year at the 44th ASEAN Economic Ministers’ meeting, producing the first annual Canada-ASEAN Business Forum meeting two weeks ago in Singapore. The gathering attracted 220 regional and Canadian business leaders, government officials and prominent local media personalities. Canada’s Minister of International Trade officiated, and was joined by his contemporary Mr. Lim Hng Kiang from Singapore and Saskatchewan Premier Brad Wall. Expert speakers covered issues from trade structure to prospects for future bi-directional trade and investment, delving into various key needs in the region and industry-specific opportunities. The depth of the sessions was matched by the overall enthusiasm.
During the proceedings, the Asia Pacific Foundation of Canada presented the illuminating findings of their 2013 Survey of Canadian Businesses in ASEAN. It showed that there is a significant Canadian presence in the region that in general, has facilities spread broadly across Association members with a reasonably long history of commercial involvement. There is also a diverse industrial representation, led (but not dominated) by professional services, manufacturing and oil & gas operations. Most of the Canadian operations are small and medium-sized enterprises, who are on balance highly satisfied, quickly profitable, upbeat about their prospects in spite of regional business risks, and proving it by diverting a good share of their regional investment to ASEAN economies.
Results like this suggest strongly that there is much greater Canadian potential in the region. In one session at the Forum, former Secretary-General of ASEAN, Dr. Surin Pitsuwan, challenged the audience to double Canada-ASEAN trade in the coming five years. Is it possible? In the 2000-2008 period, Canadian exports to ASEAN grew by 9 per cent annually – just under the average pace to emerging markets as a whole. Post-crisis, the rate of growth is exactly the same. Doubling trade in five years would require notching that pace up to 15 per cent annually. Given the potential of the region and its average import growth, not an unachievable target by any stretch of the imagination.
Really? Consider a few facts: China is running out of labour, but instead of giving in to lower growth, is investing heavily in manufacturing facilities in ASEAN. These factories will likely serve the global market, but will be focussed on the needs of the swelling Chinese middle class – currently growing by over 40 million annually. The ASEAN middle class will also benefit – in Indonesia alone, it is growing by some 7 million annually. Stack these numbers against Canadian population, and they’re stunning.
The bottom line? The ASEAN region will undoubtedly be a force to be reckoned with in the coming economic cycle. It has fast-growing customers, has a rapidly-growing domestic base, has a rich population base that could prove to be a great release valve for Canada’s population-constrained future and an attitude of greater openness that suggests great promise for outward-bound Canadians.
This commentary is reprinted with permission from EDC. It is presented for informational purposes only. It is not intended to be a comprehensive or detailed statement on any subject and no representations or warranties, express or implied, are made as to its accuracy.