ASEAN: here comes the neighbourhood

12 May 2017


  • Divya Skene
  • International Trade

Trade data for 2015-16 shows the ASEAN region continues to be an important trading partner for Australia - greater in significance than some might expect.

ASEAN is currently a ‘top three’ trade, export and import market. In terms of total trade values, the region’s trade with Australia accounts for $93 billion in transactions which ranks it third behind Australia’s other major two-way trade partners China ($150 billion) and the European Union ($96 billion).

Our trade profile with South-East Asia is quite different to North-East Asia. Among our six top trading partners in 2015-16, Australia sustained a trade surplus with China, Japan and South Korea but a trade deficit with United States, European Union and ASEAN.

However within this overall context of a trade deficit, Australia’s exports to the ASEAN region remain significant.

  • In 2015‑16, ASEAN accounted for twelve per cent of Australia’s exports placing the region alongside Japan, our second‑largest export market, for the value of its purchases of Australian goods and services.
  • With $36 billion of exports sold in 2015-16, ASEAN is Australia’s third largest export destination after China ($86 billion) and Japan ($38 billion). The market exhibited a five year average annual growth rate of 3.2 per cent, just below the export growth rate for China (3.9 per cent). This compares to Japan, where exports have declined on average each year by 4.6 per cent over the past five years.
  • Lastly, Australia’s exports to the ASEAN region are greater than the value of exports to the European Union ($27 billion) and United States ($22 billion) respectively.

On this site, Mark Thirlwell recently noted that China’s growing share of Australian export purchases over the last decade has been balanced by a fall in share to many other export markets. Yet overall, in the face of a China market surge from ten per cent to over 25 per cent of Australian exports - and as Japan, United Kingdom, the European Union and India lost share - ASEAN has ‘stood its ground’ and maintained its share of Australian exports over the past decade.


To record such strong export sales to the region yet maintain a trade deficit, means Australia purchases a relatively significant amount of goods and services from ASEAN markets. In 2015-16 we purchased more from ASEAN ($57 billion) than we did from the United States ($47 billion). It is a leading source of imports headed to Australia, ranking third behind the European Union and China.

A strong record of two-way investment is generally considered an important sign of the maturity of economic relations, and on this measure ASEAN performs relatively well. With $44 billion worth of direct investment stock in 2016, the region ranks second, after Japan ($91 billion), as the most important Asian direct investor in Australia. ASEAN holds claim to larger investment stock in Australia, than our leading trade partner, China[i].

ASEAN is the largest destination for Australian outward investment in Asia. However CEDA recently highlighted Australia’s outward direct investment into Asia trails outward direct investment into markets such as the United States, United Kingdom and New Zealand and suggested there is potential for stronger growth in this area. The United States example has shown the benefits of outward investment, including sales in-market by Australian affiliates that are a multiple of the value of export sales.

At a firm-level, ASEAN is an attractive target region for businesses. Responses to Australia’s International Business Survey 2016 showed ASEAN was equal to China as an immediate expansion target for Australian companies. Just over 15 per cent of expanding respondent companies expected the ASEAN region to be their most important new revenue source over the next 2 years – compared with 14.8 per cent for China.

When we consider trade data it is clear that ASEAN has managed to carve out a position as a dominant trading partner for Australia with strong growth prospects. Although individually most ASEAN markets appear outside the top ten rankings for Australia’s export destinations, key ASEAN markets dominate the rankings from nine to fifteen, and when combined the region exhibits scale.


With a basket of drivers ranging from economic prosperity through to demography, the promise of greater economic policy co‑ordination and infrastructure linkages within the region, ASEAN neighbours offer Australian businesses diverse growth prospects close to home.


[i] Around 70 per cent of ASEAN investment in Australia is accounted for by Singapore. The five year CAGR for direct investment from China is 23 per cent compared to 9 per cent for direct investment from ASEAN.