BANGKOK — Home to over half the world’s population, Asia’s array of growing, dynamic economies will become an increasingly important place for Irish business going forward.
That was the key message delivered at the Asia Pacific Ireland Business Forum held in Bangkok recently.
Hosted by the Irish Thai Chamber of Commerce, the forum brought together over 400 Irish business leaders with operations across Asia and follows up on the recent Global Ireland event held at Farmleigh.
However, despite Asia’s potential and resistance to the current downturn, Liam O’Keefe – a Farmleigh attendee and leading Irish businessman in Asia – told the Bangkok gathering that that Asia was not originally on the Farmleigh agenda.
Jerome Kelly is President of the Chamber. He told the Irish Examiner that “we aim see how we can create opportunities for the Irish businesses looking to expand and invest in Asia.”
Thai Finance Minister Korn Chatikavanij told the forum how his country has, like most of Asia, passed through the worst of the global downturn and is looking forward to renewed economic growth in 2010. However analysts worry that political instability in Thailand – which has seen 18 coups since 1932 – could derail this.
The Minister outlined how Thailand endured a wrenching economic downturn in 1997, with similar dynamics to contemporary Ireland. A domestic property bubble burst amid an international financial crisis hitting South Korea, Indonesia and Malaysia. All countries faced International Monetary Fund economic surgery – something that Irish economists see as looming over the Celtic Tiger should NAMA not work as planned.
This time around, smaller Asian Tiger economies such as Thailand and Singapore have coped better than in 1997. Singapore has a population of just over 4 million, and its open, export-oriented economy has many similarities with Ireland’s. However, while Ireland faces a budget deficit of 12% of GDP, with unemployment possibly reaching 14% by the year’s end, the city-state economy will shrink just 2 percent this year, the trade ministry said in a statement two weeks ago. Singapore’s GDP growth has resumed, expanding at an annualised 14.9 percent last quarter from the previous three months.
South Korea recently initialed a free trade agreement with the EU. The deal has to be vetted by national governments and the European Parliament, but the Commission believes that it could create up to €19 billion in new trade opportunities for EU exporters. The EU has a similar deal lined up with the Association of Southeast Asian Nations (ASEAN), the ten-state bloc which includes Thailand and Singapore.
The region has its pitfalls however. It includes one potential global giant in Indonesia, whose 240 million population makes it the world’s fourth largest country. However Indonesia is the only full democracy in ASEAN, which includes Burma, whose lush natural resource economy is largely off-limits to western investors due to American and European sanctions put in place after decades of human rights abuses.
Delegates pointed out that Asia’s vast markets and growing affluence cannot be assessed without factoring in political risk. Australia and China have gotten into a nasty bilateral dispute over Beijing’s attempt to buy a dominant stake in Anglo-Australian mining giant Rio Tinto. The Australian foreign investment review board turned down the Chinese bid, citing a lack of credible distance between an ostensibly private Chinese company, which made the bid, and the Chinese state. China retaliated by jailing four Rio Tinto executives based in Shanghai, for alleged espionage.
However, Liam Casey, CEO of PCH international, which was founded in Cork and now headquartered in Shenzhen in China, told the conference that business red tape in China had been streamlined in recent years, making it easier for foreign investors eager to access the vast Chinese market.
And there may be other reasons for Irish exporters to look to Asia. Enterprise Ireland’s Michael Garvey said that his organisation is constantly helping Irish businesses to get a foothold in Asia, and all delegates agreed that exports could be a key factor in kickstarting Ireland’s crisis economy.
October 23-25 saw Thailand hosting another summit, with ASEAN heads of government meeting counterparts from China, Japan, India, Australia, South Korea and New Zealand. Free trade agreements and a number of other economic cooperation initiatives were set in train across Asia, new ways for countries to further liberalise the vast continent and spur domestic consumption in Asia.
