Australia urged to expand flights to Malaysia, the Philippines, Thailand and Vietnam in blueprint to boost trade

Australia should expand flights to key south-east Asian markets such as Malaysia, the Philippines, Thailand and Vietnam, according to a sweeping economic blueprint to boost trade.

The strategy, to be released by the prime minister, Anthony Albanese, on Wednesday, also calls on the government to cut foreign investment barriers, fast track visas and urgently improve Australia’s “south-east Asia literacy”.

Australia’s two-way trade with south-east Asian countries was worth $178bn in 2022, but has been rising more slowly than average economic growth across the “powerhouse” region, the document warns.

The government commissioned the former Macquarie Group boss Nicholas Moore to examine how to tap into that growth.

His report makes 75 recommendations, including expanding “air links to help promote the movement of people, goods and services with the region”.

The government is releasing the report amid intense domestic political debate over the decision to block Qatar Airways’ request for further flights to Australia, and upheaval at the top of Qantas.

Moore’s report says: “Given the reliance of travellers between Australia and south-east Asia on air travel, ensuring airlines are well positioned to cater for future demand will be crucial.

“The Australian government should seek to enhance capacity opportunities available to airlines under air service agreements so that they remain ahead of demand, enabling future growth and competition to support increases in travel and freight.”

That echoes a submission from the Australian Airports Association, which argued bilateral air services agreements were constraining access from Malaysia, the Philippines, Thailand and Vietnam.

The association said better negotiation of those agreements and reform of the visa-issuing system would help “overcome some of the obstacles faced by airports in serving south-east Asian markets for tourism, education, skills and training”.

However, government figures show there is still some room for growth in existing agreements.

For example, Malaysia is using only 27,576 out of the 36,500 seats allowed each week into key gateway airports of Sydney, Melbourne, Brisbane and Perth.

Thailand is using only about half of the 20,000 seats allowed into these major airports each week.

“Particular focus should be directed towards those agreements projected to reach capacity entitlements in the next five years,” the review says.

“Additionally, the Australian government could explore open skies agreements with interested south-east Asian partners where in the national interest and on a reciprocal basis.”

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The report, Invested: Australia’s south-east Asia economic strategy to 2040, predicts the region’s expanding middle class will lead to increased consumer demand.

It says south-east Asia, as a bloc, is “projected to become the world’s fourth-largest economy by 2040, after the United States, China and India, with an expected compound annual growth rate of 4% between 2022 and 2040”.

But it warns that Australia’s role is not “assured”.

“While Australia’s trade with the region has grown in nominal terms over the past 20 years, the proportion of total trade has remained constant at around 14%,” the report says.

“Australian investment in the region is underweight, and growth in foreign direct investment has stagnated in the past decade.”

A government source said Australia’s lagging performance in south-east Asia was both a “lost opportunity and a strategic liability”.

The source said Australia wanted to boost its trade and investment links to give countries in the region “options and alternatives” – an apparent reference to intensifying competition with China for influence.

Addressing the geostrategic environment, the report says: “Expanding economic linkages between Australia and south-east Asia provides choices and creates shared wealth, contributing to a strategic equilibrium.”

The report urges the government to set up a “concierge service” to help south-east Asian investors navigate the process of obtaining Australian approvals.

It also flags the need to “streamline” foreign investment processes. That follows complaints from some companies that had already invested in Australia that “the need to seek new approvals for further investments may disincentivise investment”.

Albanese, who will release the report in Jakarta on Wednesday, said: “Our economic future lies with south-east Asia. This strategy outlines how we can harness this growth, and seize the vast trade and investment opportunities our region presents.”

The report urges the government to establish Austrade “landing pads” in Indonesia and Vietnam to support Australian tech companies, similar to an existing initiative in Singapore.

The report lists 10 priority sectors as offering the most potential for growth, including agriculture, resources, the green energy transition and infrastructure.

The other key sectors are education and skills; healthcare; the visitor economy; the digital economy; creative industries; and professional and financial services.

The Business Council of Australia welcomed the strategy as “a significant step”.

Its chief executive, Jennifer Westacott, said businesses should “double down on our efforts to tap into these expanding economies – which offer huge growth and investment opportunities for Australia”.


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