MELBOURNE – Australian businesses risk missing out on South-east Asia’s looming economic boom, Foreign Minister Penny Wong said, expressing frustration at the struggle to spur more private investment in near neighbours.

Foreign direct investment in South-east Asia was lower in 2022, when Ms Wong’s Labor Party came to power, than in 2014, she told an Australian Financial Review conference on Sept 3.

Not a single South-east Asian nation is in Australia’s top 20 destinations for foreign investment, government data show.

Ms Wong said she’s seen scant progress in corporate ties between Australia and its northern neighbours, even though South-east Asia is expected to be the world’s fourth-largest economy by 2040 with an expanding population.

The foreign minister worries that Australian firms will fail to capitalise on the opportunity.

“The US is there, China is there, Canada’s there, others are there, and they’re growing, and we will have a diminishing share of a growing market,” she said. “That is not a recipe for either geopolitical weight or economic prosperity.” 

The scale and growth of foreign direct investment into Asean nations by Canada and China has “far outstripped” Australia, according the Department of Foreign Affairs and Trade.

Chinese investment stocks in South-east Asia almost doubled between 2016 and 2020 and Canadian stocks grew almost fourfold, it said.

Ms Wong’s call to spur ties with the surrounding region comes as a slowdown in key trading partner China sends the price of iron ore, Australia’s largest export, tumbling below US$100 (S$130.89) a ton.

At the same time, a global shift toward clean energy is going to keep eroding the nation’s coal industry.

Australia has moved to boost diplomatic ties with its near neighbors since 2022, particularly in South-east Asia and the Pacific.

To spur economic links between businesses and the region, Prime Minister Anthony Albanese announced a A$95 million (S$83.82 million) package to facilitate investment in 2023.

Former Macquarie Group Ltd chief executive officer Nicholas Moore, who was commissioned to create a South-east Asian economic plan for Australia, told Bloomberg in 2023 that fears of volatility in the region were overrated.

South-east Asia is “critical for Australia’s prosperity and security,” Mr Moore said in his final report. BLOOMBERG