What’s behind Australian investors’ reluctance to venture into Southeast Asia?

A lack of risk appetite for developing markets and different ways of doing business are among the factors holding back Australian investors, experts say

Investors urge Australia to move ‘quickly’ and ‘with focus’ in cementing ties with Southeast Asia, and boost awareness of the 2040 economic strategy

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Australian Prime Minister Anthony Albanese with the leaders of (from left) Cambodia, Malaysia, Laos and Indonesia at the 2024 Asean-Australia Special Summit on March 5. Photo: dpa

Published: 9:30am, 16 Mar 2024

John Walker, a former executive at leading Australian investment firm Macquarie Bank, recalled Canadian investors telling him decades ago they “just had to be in India” so they could be among the first to tap into the burgeoning returns from investing in an emerging economy.

Today, investors look at growing Southeast Asia economies through the same lens, according to Walker, as the region becomes a global economic engine amid slowdowns in the United States, Europe and China.

But he told This Week in Asia he struggled to have the same conversation with many Australian investors who “just did not understand” Asia and other emerging markets.

John Walker, a former executive at leading Australian investment firm Macquarie Bank. Photo: Handout

To attribute Australian investor apathy about Asia to a “fear of the unknown” or that it was already saturated with local investors did not make sense when many in the US or Europe had charged into Asia with creative investment ideas, said Walker – one of the few Australians with a business foothold in Asia after establishing Macquarie’s South Korean arm in 2000.

“I think the basic impediment to Australian investors not coming into Southeast Asian markets in a meaningful way, or at all, is a historical preoccupation with developed Western markets and a lack of risk appetite for so-called developing markets,” he said.

Australian investors, particularly institutional investors such as large managed funds, tended to prefer “neatly packaged opportunities in jurisdictions with familiar regulatory and financial and political systems”, Walker said.

Last week, the Australian government sought to reverse this inertia, setting aside a first-ever A$2 billion (US$1.3 billion) funding facility that would provide loans, guarantees and other financial help to investors expanding into Asia.