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

“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.

Indeed, increased economic cooperation took centre stage at the summit, as Canberra rolled out deals with Southeast Asian nations that focused on green energy and the digital economy.

These efforts align with the Albanese government’s Southeast Asia Economic Strategy to 2040, which was launched last year.

The strategy’s recommendations included Canberra setting aside money for the financing facility, establishing deal teams in Southeast Asia and reducing investment red tape to increase Australia’s two-way trade and investments with the region.

Walker commended the government for the A$2 billion in “leadership capital”, but warned if private investments did not come to the table alongside that co-funding, it would be wasted.

Much more private capital on top of the A$2 billion would be needed for Canberra to realise its expansion plans in Southeast Asia, Walker said.

Among the factors affecting investors’ risk assessments of Southeast Asia are the different ways of doing business, regulatory uncertainty, political instability, and a potential lack of transparency, said Matthew Barsing, an Australian investor and vice-chairman of the Malaysia Australia Business Council.

In general, investors need to be compensated for additional risk in the form of