By Daniel Archibald | CFA
In Australia, when it comes to our most important trade partners, we often think of China, or the US, or perhaps India, Japan or New Zealand. One vital trade partner that we will have to start paying closer attention to is not one country, but ten - the countries of the Association of South East Asian Nations (ASEAN). This bloc of Asian peninsula and island states is Australia's closest economic partner and may one day become our largest.
So, who are ASEAN?
ASEAN was formed in 1967 as a group of five nations and has since grown its membership to ten. These are:
- Brunei - One of the smaller countries in the world, but also one of the richest per capita. Joined ASEAN in 1984.
- Cambodia - The poorest country in the bloc is also one of the fastest growing, with textiles and tourism providing much of the nation's income. Last to join ASEAN in 1999.
- Indonesia - ASEAN's largest member by population and GDP, with over 250 million people and $US 870 billion in nominal GDP. Member of ASEAN since its beginnings in 1967.
- Laos - The only country in ASEAN without ocean borders, and also one of its poorest. Joined ASEAN in 1997.
- Malaysia - A relatively wealthy country, particularly the western half which sits on the southern tip of continental Asia. Member of ASEAN since its beginnings in 1967.
- Myanmar (Burma) - With the dissolution of the military junta in 2011, the country is looking for growth and further opening of the economy. Joined ASEAN in 1997.
- Philippines - The second biggest ASEAN nation in population with over 100 million people. Member of ASEAN since its beginnings in 1967.
- Singapore - This small, but wealthy, country, is the financial centre of the trade bloc. Member of ASEAN since its beginnings in 1967.
- Thailand - Despite the government falling to a military coup in 2014, the country has the longest serving head of state in King Bhumibul Adulyadej. Member of ASEAN since its beginnings in 1967.
- Vietnam - A large country of 90 million strong, which shares a disputed maritime border with China. Joined ASEAN in 1995.
The total population of ASEAN is over 600 million people, which would make it the third largest and about half as much as India and China. Its total land area is almost 4.5 million km2, which would make it the 7th largest. And the total GDP of ASEAN is about $2.4 trillion (nominal) which would make it the 7th largest, ahead of the likes of Brazil, Italy, Russia, India and Australia. Importantly, GDP growth in ASEAN is strong and is expected to continue to outpace global averages. In fact, the poorer ASEAN countries (Cambodia, Laos, Myanmar, Vietnam) have recently seen annual GDP growth of around 10%.
Though being in existence for almost 50 years, it has only had an in force charter since 2008. The main aims and purposes of ASEAN are to accelerate economic growth and to promote regional peace and stability. As part of this aim, the group is looking to build stronger trade relations between its members via free trade agreements and less restrictive labour laws. It may also look at some stage to adopt the one currency.
Currently, 3 of Australia's top ten trading partners are from ASEAN, and together they sit behind only China in economic importance to Australia. And as the group grows together and becomes a more attractive business hub, it will likely become an essential part of the Australian economic and business dialogue.