Asia still the engine of world growth

Eurozone financial turbulence and a slowdown in the US economy have sent worries rippling around the world, including Asia. The International Monetary Fund (IMF) warns that near-term risk to Asian economies is rising due to the situation on those two continents. The Jakarta Post’s Yohanna Ririhena talked to Alex Thursby, ANZ CEO for Asia Pacific, Europe and America, about the factors that protect Asia from the worst of the crisis.

Alex ThursbyQuestion: The IMF says that Asia is at risk from European and US spillover. What do you think?

Answer: The situation in Europe is very volatile, complex and has people feeling conservative. The position that the European market with its sovereign debt crisis is in is not good.

However, one part of the world is still growing, which is Asia. It may be slower and harder, but it will still grow. Yes, there will be some volatility but it will still grow.

What are the factors that make Asia more resilient?

The fundamental structures of the Asian economies are very good: high savings, high liquidity, a well-capitalized banking system, low national debt and strong foreign exchange reserves.

A number of countries, including Indonesia, are very strong. But the reality is that people will spend less and be more conservative. I expect the growth rate to be at around 4–8 percent depending on the countries in Asia. The countries that will be most affected are the ones with open economies such as Singapore, Hong Kong and possibly South Korea and Japan.

If we look at the long and medium-term pictures, industrialization, an emerging middle class, technology growth, the low cost of labor, improving governance — particularly surrounding the financial system — you have to be positive. The problem is not Asia but Europe and to some extent North America.

What happened there will have negative impacts, but it will not be big [in Asia]. Growth and demand will be slow, but it will still be there. The big positives that Asian economies and Indonesia have will still be there. This is the place to go. We’re not going to buy American banks. Australia and New Zealand will benefit as part of this region.

Let’s be very clear. The panic is in Europe, not here.

What is Indonesia’s significance?

I think Indonesia, politically and economically, is increasingly important. I see Indonesia as being the third super power of Asia. So, China, India and Indonesia will not only create engines for themselves but also create growth for Thailand, Singapore, Australia and New Zealand. This will be the catalyst of sustainable growth for the next several years. It’s really important that Indonesia keeps its key strengths.

How has ANZ performed in this region?

We have had massive success in the last four years, since we undertook the strategy of being a super regional bank. Our business in the countries where we operate has been going very quickly. We have established a viable institution of businessmen. We successfully integrated RBS (Royal Bank of Scotland). We repositioned the business where we wanted to direct affluent and emerging affluent segments.

We see Australia and New Zealand as critical parts of Asia. The future of the two countries is so dependent upon Asia. We’re from the region. Our brand recognition is remarkable, quite extraordinary.
ANZ a few years ago was an unknown, and now is very close to becoming the fourth or third bank in the region.

What is the strategy behind your success in the Asia Pacific region?

First is our commitment. We have been extraordinarily committed as a bank to investing. Right at the beginning of our investment was the global financial crisis in 2008, but we didn’t back off. That gave a very good signal to the market. Our approach during the coming years is exactly the same. We see crisis and volatility as opportunities.

Second, now we are 12,100 people in the Asia Pacific region. We brought in a lot of Asians — people who understand Asia, people who understand this part of the world. In summary, we brought in a lot of Asian insiders who understand how to successfully do business in this region. We didn’t lift the Australian banking model and said that’s what we’re going to do in Asia. That’s incorrect.

Third, we’ve been very disciplined about what we would grow and how we would to grow. We didn’t try to hit all things, but prioritized countries and segments. We built things in a logical manner. We’re making money, and we’re investing that money into the business.

The last thing, our banking model is built around customers not product. We didn’t push a product that customers did not want. Dedication to our clients, supplying what the clients want and acting like proper bankers rather than salesman has been the key to our success.