Bearing Northward

Bearing Northward

Australian ICT companies are increasingly attracted to the South East Asian market light.

Australia can be a land of business opposites. On the one suntanned hand, it is vast, economically magnanimous and endowed with a surplus of nature’s bounty that supplies a wealthy, developed market. On the other, it is ridden with natural barriers, geographically remote from the world’s trading centres and burdened with a small population. Its few sizeable businesses have traditionally looked to the distant and cut-throat markets of the US and Europe, instead of its populous neighbours to the immediate north, to achieve growth.

Increasingly, however, Australian companies, including many from the IT sector, are breaking out of the mould and seeking out new opportunities in South East Asia – a region that has for far too long been discredited as without potential and full of peril.

Admittedly, the region suffered badly during the financial crisis in 1997 and the various socio-political upheavals haven’t helped ease fears of doing business there. But with Singapore ranked as the number one place to do business worldwide by an International Finance Group and World Bank Survey for the third year in a row (Malaysia was ranked 20th in 2007), and immensely populous countries like Indonesia now back to the same pre-crisis development growth levels (ASEAN GDP was 6.54 per cent in 2007), the South East Asian market light is shining brightly, even with the world downturn.

Growing markets

“There is a trend for most global organisations to target South East Asia as a growth market,” IDC associate research director, green IT and services, Philip Carter, said. “Key countries in ASEAN, for example, are a critical part of IBM’s ‘growth market’ strategy in this part of the world. In addition, the Indian-based players are targeting this region too; the ‘big five’ posted growth of above 30 per cent for the second half of 2007.”

Of Australia’s $450 billion two-way trade in goods and services during 2007, ASEAN was the second most important region for exports at 11.4 per cent. This was behind North Asia, which hit 47.3 per cent. The World Bank has also noted Indonesia, one of the least developed in the region, has “an additional $US15 billion to spend on development this year as a result of reducing fuel price subsidies and prudent fiscal management”. Clearly, the region is growing in importance and offering companies like publicly-listed IBA Health a chance to forge an international presence.

“When the company was looking at its growth, and we are a publicly listed company, we sat back and said we are not going to get double-digit growth in Australia,” IBA Health group marketing director consumer and media, Greg King, said.

“We already occupied in the order of 50 per cent of the private hospital market place in Australia and had a reasonable presence in the public sector. They weren’t growing anymore hospitals; they were aggregating. If we were going to remain a public company, we were not going to get double-digit growth out of the Australian market.”

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