In the discussion about Australia’s economic future in the region, two topics tend to dominate – the unprecedented demand from China’s growing middle class and the enormous potential of a strengthening Indian economy. However, a third piece of the Asian economic story is very much underway and is often underappreciated – the rapid growth of the members of the Association of Southeast Asian Nations (ASEAN). The rise of ASEAN creates a number of exciting opportunities for Australia.

Regional integration – both among ASEAN states and more broadly – continues to progress. In early April, ASEAN central bankers and finance ministers met in Laos to consider deepening their financial links in order to improve economic stability. In late April, negotiations over the Regional Comprehensive Economic Partnership – a proposal for a regional free-trade area between ASEAN and its free trade agreement partners, including Australia – continued in Perth. In combination with the creation of the ASEAN Economic Community in November last year, these meetings and negotiations signal that the region’s economic architecture is likely to develop further.

ASEAN’s economic clout is also growing. The countries of ASEAN have a collective GDP of 2.6 trillion dollars and a population of 620 million. Further, a number of factors look set to drive sustained economic growth among ASEAN states in the medium term. Across ASEAN, 65% of the population is under 35 and in Indonesia, Vietnam, Malaysia, and the Philippines – four of ASEAN’s more populous members – labour force growth is expected to be in double digits for the next decade. Another driver is urbanisation. McKinsey estimates that the 22% of ASEAN’s population that lives in cities account for more than 54% of the region’s GDP. The additional 54 million people that are anticipated to move to cities by 2025 will only increase economic productivity.

Regional economic growth will also create a substantial class of new consumers – a fertile market for Australian exports. One Accenture study estimated that by 2020, ASEAN states will add an additional 770 billion dollars of new consumer spending. Australia is well-positioned to take advantage of consumer demand in a range of fields including food and agriculture, healthcare, financial services, and communications.

To realise these opportunities, Australian businesses must negotiate the economic, legal, and cultural diversity across ASEAN’s member states. There is no ‘one-size-fits-all’ approach. Yet entry points into the region do exist. Singapore is an important hub for investment into ASEAN states and is a repository of significant country-specific know-how. Chinese and Australian firms are also continuing to build experience and relationships in the region.

Further, to realise their growth trajectories, many of the states in ASEAN will need to make substantial investments in education and training; improve transport, communications, health and other infrastructure; and secure wider access to finance, particularly for small to medium enterprises. Australia’s significant capacity and expertise in these fields – both public and private – should be deployed to assist ASEAN states to secure strong economic growth.

Australian professional services firms, businesses and governments can provide training in a variety of industries to try to reduce the coming skills shortage in states like Indonesia and Myanmar. Infrastructure expertise and investment in infrastructure projects (either through the Asian Development Bank and World Bank or through direct investment) can fill gaps in less developed ASEAN states, such as Laos or Cambodia or Vietnam. These opportunities are even more pronounced because these markets are not yet saturated with investment. Australia’s legal and financial services industry can also help less well-established ASEAN counterparts to innovate and build capacity. This investment offers a means of building and deepening economic relationships and more closely integrating the Australian economy with the region.

A focus on areas where Australia has a competitive advantage, such as food and agriculture, resources, health, education, and financial services is common sense. We must continue to improve the quality and sophistication of our offerings to increase our share of the burgeoning ASEAN consumer market. Existing export strengths in medical instruments, telecommunications equipment, and primary produce all offer significant value-add opportunities for the Australian economy and we should continually seek to broaden our export markets.

In higher education, Australian universities are making efforts to climb international rankings and improve offerings to overseas students. In addition, the New Colombo Plan Mobility and Scholarship Programs will assist thousands of Australian undergraduates to study in Asia and the Pacific region. Yet constraints in higher education funding often limit our reach. We also need to address the varying quality and authenticity of education and training providers to avoid damage to Australia’s reputation in the field.

As the OECD has noted, middle-income ASEAN countries will need to transition existing manufacturing industries toward more sophisticated and demanding economic production. Through collaboration on scientific research and technological innovation, Australian universities, research institutions and private firms can help facilitate this transition and build deeper connections at a non-government and societal level.

There are challenges, of course. Negotiating parochialism and cultural difference is not easy. High-profile regional failures or specific negative experiences can also feed inertia. In addition, businesses and governments operating in the region need to ensure that they comply with Australian and international anti-bribery and corruption and anti-money laundering regulations. Dealing with these challenges will take time and requires persistence and specific know-how.

The Australian government and many Australian businesses are already investing in ASEAN nations. The Department of Foreign Affairs and Trade’s 2015 report ‘Why ASEAN and Why Now?’ speaks directly to both the advantages of such investment and identifies some of the steps already underway. Yet Australian initiatives to build economic relationships with the states in ASEAN have often been inconsistent, reactive and short-lived. A medium to long term, holistic outlook and better coordination is required when making investments in economic relationships in Asia. The strength of the factors underpinning future growth in ASEAN and the opportunities for Australia justify the investment and the patience required to see it through.