In preparing for this meeting, I thought it might be useful to pose some basic questions. Members will already be familiar with many of the answers but I will give perhaps slightly different perspectives on them. The key questions are why Asia matters in a broader sense, why Asia matters to Ireland and the key trade opportunity sectors in Asian markets for Ireland. I will outline a little of Asia Matters' activities and how they blend in with Ireland Inc. activities in regard to Asia. Hopefully, we are saving the best until last but I will make suggestions to further Ireland's trade with Asia.
Why does Asia matter? Everyone is aware that Asia is essentially changing the world as we know it. This is the century of Asian economic growth, which has profound implications for Asia, Europe and the rest of the world. The Asian Development Bank, of which Ireland is a member, estimates that Asia will double its share of global GDP to 52% by 2050. China, the fastest growing economy in the world, with 9.2% economic growth in 2011, presents huge opportunities. Even if growth slows, as anticipated, it will very soon become the world's largest economy. Japan, which remains an industrial giant, with 8.4% of world GDP, is Asia's largest overseas FDI investor, and 10% of the top 100 global companies are Japanese. Many countries in Asia now have annual GDP growth of 6% or more.
Of the top ten largest global cities by population, seven are in Asia and, as we know, many cities in Asia now have populations greater than entire population of Ireland. I will give some examples based on the metro area of the cities. The largest city in the world is Tokyo in Japan, with more than 32 million people. Seoul has more than 20 million people, Mumbai, has 19 million, Jakarta has almost 19 million, Delhi has 18 million, Osaka has 17 million and Shanghai has more than 16 million. If one moves into the second tier, Manila in the Philippines has just over 16 million. This will have huge implications globally in the future in terms of growth, economic opportunity, where consumers are and Irish trade policy.
Why does Asia matter to Ireland? Ireland needs to embrace the change happening globally because of Asia. We obviously need to go where growth is and we need more business from Asia to grow our economy and create jobs. Currently, the Irish Exporters Association has advised us that only 4% of Irish trade goes to Asia compared with 20% going to the EU. We obviously have a lot of catching up to do.
Our history with Asia is relatively recent. We do not have long historical relations, which is a good thing and a bad thing. It is a good thing in that we have no colonial legacy or no historical baggage but it is a bad thing in that we do not have long-standing relationships. Perhaps the best relationships we have at senior level in Asia were started through our missionaries, many of whom educated some of the leaders of today's private and public society in Asia.
The year 2012 saw increased bilateral engagement between Asia and Ireland, including high level reciprocal visits by the Taoiseach and Asian leaders. As the Chairman correctly stated, the visit of Vice President Xi Jinping was a game changer. The Taoiseach, along with the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, led a return visit in March following Vice President's Xi Jinping's visit in February. I happened to be on that delegation and it certainly resonated very well with Chinese partners, companies and buyers and on the Irish side. That was an example of Ireland doing something very well within a relatively short period of time.
Part of our problem is that 90% of our trade to Asia comes from Ireland-based multinationals, so only 10% of our trade with Asia comes from indigenous Irish companies. Obviously, we need to grow that. However, in 2011, according to Enterprise Ireland figures released last year, Irish company exports to China grew by 29% and 17% to Asia overall, so we are heading in the right direction.
Equally, the purchasing power of the Japanese consumer for quality goods and services remains very strong. One gets different figures but it is estimated that the average household savings in Japan are somewhere in the region of €250,000 to €350,000.
There are substantial funds available from wealthy consumers who are looking to buy quality goods and services. Clearly this has implications for tourism as well. Clear potential also exists in India, Korea and key ASEAN countries, including Indonesia, Vietnam, Malaysia, Singapore, the Philippines, Thailand, Myanmar and Brunei Darussalam.
I compliment the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, on his address to the International Trade Committee of the European Parliament last week in which he encouraged the restoration of the EU generalised system of preferences for Myanmar, or Burma as some people call it, given recent democratic reforms. My understanding is that Ireland does not have diplomatic relations with Myanmar at present. Given the re-engagement of the US, the EU and the reopening of embassies by some EU countries in Myanmar, I think this is worth reviewing. I am sure the Department of Foreign Affairs and Trade, as always, is on top of this, but I think it is important to consider this country. It has been reported in the media recently that certain Irish companies are looking to invest in Myanmar.
The influence of the State in many Asian countries is much stronger than it is in many western countries. The difference between having strong bilateral relations and having an Irish embassy on the ground can be critical to those discussions, and ultimately to the trade results. It is not just within the world of business in Asia that Asian governments are so respected, it is that all governments are respected. In the past we have seen evidence that the presence of an Irish Minister visiting Asia has had significant implications for the relationship. I think Asia matters to Ireland because it is an opportunity to brand Ireland as an integral part of Europe, not simply a country on the periphery, and a trusted business partner for Asia. ASEAN is planning to commence an economic community in 2015, somewhat similar to the European Community but somewhat different in other ways. It would be very important to engage on the ground with that process. Equally, members may be aware that due to the global economic forum, certain initiatives have developed very well here. Sean O'Driscoll is leading a very good initiative on re-engagement with Japan to prioritise that relationship to further trade. Asia Matters is happy to support him in that work. The key opportunity sectors which we have identified in Asian markets are financial, legal and professional services, innovative technologies, life sciences and consumer products, food, drink and agritech, education, tourism and culture.
Indonesia is currently spending 20% of its annual budget on education. I am sure many governments would envy such a budget for education. Indonesia is the fourth largest country in the word, with a population of 242 million. It is putting a major focus on upskilling the nation and there are significant opportunities for Ireland in the education sector. Unfortunately, we do not have many Indonesian students in Ireland. There are still opportunities for us to engage with Indonesia. Equally, we do not have an embassy in Indonesia, which perhaps is an area to be reviewed in the future.
I recently met a senior official from Brunei Darussalam. Since January Brunei Darussalam assumed the chairmanship of ASEAN. We happened by chance to have a discussion on what he knew about Ireland. I found it interesting to hear his personal observation, but I have not verified it, that a few years back it was his understanding that hundreds of students from Brunei Darussalam were studying in Irish universities, but currently he was aware of only one student. Again, this is an area of opportunity which we could develop.
We in the organisation Asia Matters hold a very strong view on how to increase our understanding of Asia and develop trade opportunities. We know that one cannot separate trade from cultural understanding and respect. I have lived in Japan for a number of years. My wife is Japanese, both my children were born in Japan. We speak both Japanese and English at home. When one talks to members of the Asian community in Ireland, they will quickly tell you the people they deem respectful of their culture. To do business with them, it is important that government, business and institutional leaders learn the essence of being capable and respectful in Asia.
I understand that Riverdance is currently in China and the GAA is planning to send the All Stars to China this year. Culture is a good basis to build people-to-people relations. However, sometimes we Ireland, in spite of doing well in many areas, suffer from a lack of joined-up thinking. I went to see Riverdance when I lived in Tokyo and I remember the buzz among the Japanese people who were so excited by it. That excitement lasts for about a week which is the time that one should target advertisements for visiting Ireland such as book now for special trips to Ireland advertisements. Sometimes I think the right hand and the left hand, in other words the cultural side and the business side, are not always in sync. That is an area we need to look at.
Irish universities have very high service quality and high qualifications. Last year, however, when we brought a group of Irish ambassadors to Asia with a group of senior managers from Irish universities, one ambassador made a very interesting observation. He expressed the frustration in his city - I am respecting the Chatham House Rule - that in a three month period, four representatives from different Irish universities came to the same city essentially selling the same product. The chancellor of the most famous Asian university in that city politely called him to arrange a meeting at which the chancellor said that, with respect, they did not want more Irish universities visiting because they had made their top people available and there was no point in making these busy people available to hear the same story from different named universities. I lived in Japan for four years and I never recommended any Irish university per se because there was no unique course, of which I was aware, to recommend. I recommended the Royal College of Surgeons because it had a unique brand and I recommended the then National Microelectronics Research Centre, NMRC, in Cork, now the Tyndall National Institute, because one is sure of the quality and it is unique. There is some work to do in respect of the universities so that they agree to focus on selling different specialised courses in different markets rather than each selling everything.
In regard to the activities of Asia Matters, we have an advisory group that meets regularly. It is chaired by Mr. Alan Dukes, the former Irish Minister for Finance, and we are committed to working closely with key stakeholders in Irish, EU and Asian government and business sectors. We have a philosophy that we want to work in partnership with people. We are quite careful when we run Asia events in that we try to have as many Asian speakers as Irish and EU speakers. Last year we held an inaugural EU-Asia top economist round table in Dublin. The event went well and we had more than 250 top business people in Ireland in one place at one time listening to some very senior experts from Europe and Asia on Asian business.
That was so successful that we are running a second event during the Presidency. We are delighted that both An Taoiseach and the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, will give keynote addresses at the event. A Chinese newspaper has agreed to partner with us for the event, which will ensure coverage in China. We are happy with that.
Things are developing very well. Last July we facilitated the second Asia Pacific-Ireland business forum in Croke Park. We worked in partnership with the GAA and the Irish chambers of commerce in Asia and all key business organisations in this country. Again, it is about building awareness and getting people on the ground in Asia to share their experiences, including their mistakes. We learn more from mistakes than from success with Irish companies wishing to do or expand business in Asia.
I compliment the GAA. It is a unique Irish organisation. There is no other organisation anywhere in the world that replicates it. It presents huge opportunities in terms of our cultural engagement with Asia. I do not see any reason in future for Etihad Airways not to show GAA games on flights to Asia.
At the end of February we are launching the first ever Ireland-Asia business yearbook in association with business and leadership. This is an attempt to try to put together a lot of the key statistics on what is happening in the relationship and having a lot of leading experts tell us where we are and where we could be going. In September of this year we are doing a third EU-Asia round table of top economists in Tokyo, Japan. I am delighted to say that we have reached agreement with key Japanese partners and media, as well as EU organisations, to partner on that. It is important that we go into Asia, engage with people and build relationships and partnerships.
In terms of suggestions to further Ireland’s trade with Asia, again, I reflect a need for joined-up thinking. It is important that, as a country, the Government and the business, education and tourism sectors start to create one simple message and that we stick to it. There seems to be a variance in messages at the moment. The brand of Ireland we sell is important. We should see Asia as the third opening for Ireland. In the past when we opened up to the US and got investment from there into this country, it not only created jobs and boosted the economy but also trained young Irish people to become professionals, and at a later stage many of them created their own companies. That level of engagement with the US or the EU should be replicated with Asia.
In order to do that we must update Ireland’s Asia strategy, perhaps for the next five to 15 years and to give an outline of what we want to achieve 15 years from now and then work backwards. The committee is aware that this country had its first Asia strategy in 1999 when the then Taoiseach went to China. There was some updating of the strategy in 2005 and subsequently but we still have some way to go. By comparison, last year Australia created a detailed Asia strategy. It is over 300 pages. Australia is a unique country in its own right. One could say geographically it is in Asia, although culturally it is perhaps in many ways western. It has unique expertise and partnership within Asia. That would be a good framework for what this country could do within our own right, going forward.
We should appoint a senior political administration figure for Asian relations, for example, a Minister of State, who could work for this country within the EU-Asia context and co-ordinate, engaging with all Departments and agencies so that one would have co-ordinated trade, education, tourism and cultural activities. We should all work to support the development of direct air links between Dublin and Asian capitals, commencing with Beijing. Evidently, those are purely commercial decisions. The Dublin Airport Authority is doing very good work on that, but when we look at other small countries in Europe that have direct connections to Asia, we must ask ourselves why we do not. Starting with Beijing, if we could create a direct air link with Beijing that is commercially viable, that would be a game changer in the relationship.
The committee has previously discussed the need to ensure a positive visa process for Chinese business visitors and tourists. I question the statistics in a United Kingdom article recently that indicated that France gets approximately ten times more Chinese visitors than the United Kingdom because the visa regime in the United Kingdom is deemed to be more harsh. When one talks to French Government people, there are no major negative repercussions regarding people overstaying their welcome or crimes being committed. We must examine the situation.
Sean O’Sullivan of Open Ireland has suggested that Ireland could be the first country in the world to issue a 90 day visa for all Chinese visitors. Clearly, there are practical considerations such as our joint passport zone with the United Kingdom, but the officials in the Department of Justice and Equality are aware of the need for a more positive visa process. Like all things, I believe those issues can be negotiated and worked through. We must create a three year forward plan for ministerial visits to key Asian cities and, reciprocally, seek to invite Asian peer leaders to visit Ireland. Very often we have visits from both sides which seem to be announced approximately two or three months in advance which, respectfully, do not give adequate time to prepare properly and maximise not only the partnership relations but the trade benefits and media coverage of such visits.
I say key Asian cities because I used to work in financial services in the regulatory compliance area. I am still friendly with that world and I have noticed that organisations such as HSBC and Citigroup no longer look at their global business as countries, they are looking at cities. They will plan their futures based on what are the 50 biggest cities in the world. We must incorporate that kind of thinking into our engagement with Asia and perhaps elsewhere.
Equally, in reverse, I am a Corkonian, so when Corkonians refer to the capital, it normally has a different meaning perhaps from my friends from Dublin. However, even as a Corkonian I admit that most visitors to any country tend to go through the capital city on the first visit. It is important that there is a strong sense of promoting Dublin. I am on the Dublin-Beijing twinning committee executive steering group. We are working on the initiative. The Dublin City Business Association and others such as the city council are involved. In bilateral relations it is important that the capital cities have a dual recognition and special promotion. Business tourism will filter from such a connection. When I lived in Japan I did some work with Japan National Tourism. It was interesting to note that up to 95% of first-time visitors went to Tokyo. Many of them went to Kyoto, Osaka, Hiroshima or other destinations on the second visit. If one can get people to come at all, the capital city has an important focus.
If we are serious about engaging with Asia as business partners, we must show respect based on equality. It is important that we begin to employ Asian people in Departments, in particular the key Departments that engage with Asia. Even if it is in summary format we need regular Asian language content on Government websites and those of trade agencies. To be fair, one does not see that on sites in the United Kingdom or in the US but if we do that we will stand out in a positive way and Asian people will respect it.
We must multiply the twinning links, such as the developing Dublin-Beijing link, and the Cork-Shanghai link, which is established and successful, and create a national plan to twin Irish educational institutions and cultural bodies with Asian counterparts to enhance people-to-people relations. Within that context, for example, in December 2011, University College Cork received the best Confucius Institute in the world award in Beijing.
It was in competition with 388 Confucius Institutes so, being from Cork, I am delighted to say "Fair play". The point is we have the expertise which can be used to enhance Asian languages within the developing Irish system. I was somewhat shocked recently when I saw a Forfás report on future skills that stated that only 2% to 3% of Irish university courses have foreign language components, which is abysmal, to put it bluntly. There is an old adage that one buys in one's own language but sells in that of the customer. If we want to sell to the Chinese we must have people who can do so in Chinese. It is the same with Japanese, and with Bahasa in Indonesia. We must sell in their language. The Korean ambassador made a comment recently when I chaired an Asia conference in UCC. I asked him what single thing he would like that would improve our countries' relationship and his answer was very telling. He said he would like to meet Irish business people who can speak even basic Korean. I thanked him in appallingly bad Korean but at least I hope I failed with dignity. It is important that we get serious about language ability. In Ireland we have very good educational institutions.
If we are talking about game changers, I would refer to Ireland's Asia strategy for the coming five to 15 years. Why not be bold and ambitious? As John F. Kennedy said, why look at what is and ask why instead of looking at what is not and asking why not? Why not propose to have ten Irish universities in Asia in 15 years? At present, UCD is doing great work establishing a university in Beijing and DIT is creating a tourism college in Hainan. Why not have DCU create a university in Jakarta or UCC create one in Seoul, and so on? We have the expertise, and if Irish universities did this deliberately, placing one university in each country, they would not be competing with each other. This would help both the universities and Ireland Inc. Beyond that, in the legal and financial sectors, we have very good third level training institutions. The Institute of Bankers in Ireland is world class. I do not know whether I had good fortune or tragedy in doing some of its exams but it is world class in standard and resources. It needs to go beyond Ireland and there are opportunities.
I will add two points, if I may. Ireland is a small country with very limited resources. We know this and we also know that in many places in Asia where we might have four or five staff in an embassy, including the trade agency representatives, we are competing with countries that have 40 or 50 staff. We do well because of the quality of our people. Sometimes, however, we make mistakes. One such was when we dropped - unfortunately, in my opinion - the FÁS graduate programme in Japan that we had spent more than 20 years in building. This programme was envied by other countries because it gave us access to the global Japanese companies where young Irish graduates could work for two years. They learned Japanese and developed good person-to-person relations. The direct benefits to Ireland, a direct result of that programme, were that some Japanese companies opened in Ireland although prior to this they had never heard of us. As a result of their trust in these young people, their professionalism and personality, they came to look at Ireland and opened up here. When they did so, some of them sent their Irish graduates to open up the facility. Some of these graduates, who speak Japanese and understand the cultural decision making, started working with Irish trade agencies, offering unique expertise. The cost is very modest. The companies here who want to employ them can support the cost and will cover the accommodation, food, etc.
As members are aware, on 29 November the EU agreed to commence FTA negotiations with Japan which is very eager to engage with Europe. This is a good opportunity for us. I suggest Enterprise Ireland would have the capacity to do this programme very well.
People often ask me where in Asia Ireland should have embassies. We are all aware of the financial restraints on the State now but in due time I suggest Indonesia should be a priority. It is the fourth largest country in the world and is the home of the ASEAN secretariat which represents ten countries. It may interest members that 19 of the 27 EU countries have embassies in Jakarta. Members will be interested in some of the countries I call out: Austria, Belgium, Bulgaria, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Italy, Netherlands, Poland, Portugal, Romania, Slovak Republic, Spain, Sweden and the United Kingdom. Not only are there 19, but some are relatively small with economies far more modest than ours. The second country I would recommend is the Philippines which is host to the Asian Development Bank. It is my understanding that Ireland has contributed more than €30 million as a member of the Asian Development Bank but to date the number of contracts from this bank to Irish companies remains quite modest. There are good companies such as Project Management opening the doors but perhaps a presence on the ground would produce a different relationship. Finally, I would offer Thailand, as a global supply chain centre.
