Ruqayyah Snyder
The Indian Ocean is a critical trade route for Australia, connecting it to Asia, Africa, Europe, and the Middle East. It is bordered by six continents: Africa, Asia, Australia, Antarctica, Europe, and North America. Australia has the longest Indian Ocean coastline in the world and the largest search and rescue zone in the region. The Indian Ocean is strategically significant for Australia, facilitating trade with countries such as India, Bangladesh, Indonesia, Thailand, Singapore, Malaysia, and the United Arab Emirates. It is a vital route for the shipping of minerals, fuels, energy resources, and other commodities. Australia's engagement with the Indian Ocean region has evolved in recent years, influenced by China's growing presence and the diverse nature of the region, which encompasses both major economies and small island states.
| Characteristics | Values |
|---|---|
| Number of countries Australia trades with in the Indian Ocean | 7 (India, Bangladesh, Indonesia, Thailand, Singapore, Malaysia, and the United Arab Emirates) |
| Percentage of Australia's outbound trade in goods and services with Indian Ocean countries in 2022 | 17% |
| Australia's biggest export sector to Southeast Asia | Minerals and fuels |
| Number of Australian companies that have invested directly in Southeast Asia | Several, including Orica and ANZ (in Indonesia and the Philippines), ResMed, Lendlease and QBE (in Singapore), Cochlear and Arnott's (in Malaysia), Telstra, Toll Group and GHD (in the Philippines), and Callington (in Thailand) |
| Value of Australian foreign investment stocks in Southeast Asian countries in 2022 | A$123.1 billion |
| Australia's rank as ASEAN's two-way goods trading partner in 2022 | 8th |
| Australia's proportion of total Southeast Asian trade in 2022 | 3.4% |
| Australia's trading partners in the Indian Ocean that are also island territories | India, France |
| Australia's trading partners in the Indian Ocean that are also major global economies | India, Indonesia |
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What You'll Learn
Australia's biggest Indian Ocean trade partners: India, Bangladesh, Indonesia, Thailand, Singapore, Malaysia, and the United Arab Emirates
Australia is an Indian Ocean country, with Perth being its Indian Ocean capital. The Indian Ocean is fundamental to Australia's trade and energy security, spanning Africa, the Middle East, South Asia, and Southeast Asia.
India
India is one of Australia's largest trading partners. In the 2022-2023 financial year, India exported about $450 billion worth of merchandise and about $323 billion worth of services. India exports approximately 7500 commodities to about 192 countries.
Indonesia
Indonesia is a growing market for Australian goods and services exporters. In 2021-22, total two-way trade in goods and services with Indonesia was worth A$18.35 billion, making Indonesia Australia's 14th largest trading partner. Indonesia is one of the fastest-growing economies in the Indo-Pacific, and the two countries have a Comprehensive Economic Partnership Agreement (CEPA) in place to foster economic cooperation.
Malaysia
Malaysia is a vital trading partner for Australia, with two-way trade valued at AUD $33.5 billion in 2022, making it Australia's second-largest trading partner in ASEAN. Malaysia's favourable business environment, skilled workforce, and government support for foreign investment make it an attractive market for Australian businesses. The Australian Trade and Investment Commission (Austrade) has a local office in Kuala Lumpur, providing market intelligence and introductions to key industry and government contacts.
Thailand, Singapore, Bangladesh, and the United Arab Emirates
Although specific details on Australia's trade with Thailand, Singapore, Bangladesh, and the United Arab Emirates were not readily available, these countries are part of the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), which fosters trade and investment between the member countries.
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The Indian Ocean's role in Australia's trade with China
Australia is an Indian Ocean country, with Perth as its Indian Ocean capital. The Indian Ocean is a significant trade route for Australia, connecting it to Asia, Africa, Europe, and the Middle East. It is also a vital energy security route, with approximately 80% of the world's maritime oil trade traversing the Indian Ocean.
The Indian Ocean is the third-largest ocean in the world, covering an area of approximately 70 million square kilometers. It is bordered by Africa to its west, Asia to the north, Australia to the east, and the Southern Ocean to the south. The Indian Ocean Region (IOR) is generally understood to encompass the land and ocean territory stretching from the Strait of Malacca in the east to the Mozambique Channel in the west. This region includes 33 littoral countries with a combined population of about 2.9 billion.
The Indian Ocean is a vital trade route for China, which relies on shipping lanes through the Indian Ocean and the Malacca Straits chokepoint for a majority of its imports. China's presence in the Indian Ocean has been steadily growing over the last decade and a half. This has included the deployment of naval vessels, the establishment of a military base in Djibouti, infrastructure investments through the Belt and Road Initiative, and a security agreement with the Maldives. China now has an embassy in every Indian Ocean country and is estimated to have three to eight warships on rotation in the region at any given time.
In response to China's increasing influence in the Indian Ocean, Australia has focused on three key areas: maritime security, partnership with India, and emphasis on a rules-based order. Australia co-hosted the 7th Indian Ocean Conference in Perth in February 2024, where Foreign Minister Penny Wong outlined Australia's vision for the region, addressing Chinese opaque lending, naval buildup, and bids for influence.
Australia's approach to the Indian Ocean Region has also evolved in recent years, with a growing recognition of the region's economic significance. Indian Ocean countries accounted for 17% of Australia's outbound trade in goods and services in 2022. Australia has also been working with countries in the region to develop new processing pipelines and off-take agreements, particularly in the critical minerals and clean energy sectors.
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Australia's trade with Southeast Asian countries
Australia has the world's longest Indian Ocean coastline, and the Indian Ocean is fundamental to maintaining open trade and energy security for the country. The Indian Ocean region, which includes Southeast Asia, is essential to Australia's security and prosperity.
Southeast Asia is Australia's second-largest trading partner, with two-way trade valued at around A$178 billion in 2022, larger than Australia's trade with the United States. The Association of Southeast Asian Nations (ASEAN) is a significant trading bloc, accounting for 12% of Australia's total exports. In 2021, trade between Australia and ASEAN countries was $80.8 billion, greater than its two-way trade with Japan and the US.
Australia has had economic ties with ASEAN for 50 years, since becoming its first dialogue partner in 1974. However, Australia's trade and investment with the region have not kept pace with the growth of Southeast Asian economies. Australia's direct investment in Southeast Asia has stagnated in recent years, while overall investment in the region from other countries has increased.
Australia is keen to diversify its trade away from a heavy reliance on China, and Southeast Asia presents a potential AUD$3 trillion opportunity. Australia's Economic Strategy to 2024 identifies the low levels of direct investment in Southeast Asia, and the country is taking steps to boost trade ties with the region. At the Melbourne Summit, Australia announced measures to support its businesses in growing their Southeast Asia footprints.
There are major economic opportunities for Australian businesses in Southeast Asia in the coming decades. Australia can help meet the needs of Southeast Asians by facilitating more trade in medical technology, supporting increased standards of care and investment in health infrastructure, and harmonizing standards and regulations.
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Australia's trade with India
Australia is an Indian Ocean country, with Perth as its Indian Ocean capital. The Indian Ocean is a significant economic highway for Australia, connecting it to Africa, the Middle East, South Asia, Southeast Asia, and other parts of the world. The ocean is a vital trade route, with a third of the world's bulk cargo and two-thirds of global oil passing through its sea lanes.
India is Australia's seventh-largest trading partner and its fifth-largest export market. Major exports to India include coal, copper, and gold, while major imports from India include refined petroleum, pearls and gems, and medicaments. The Australia-India Economic Cooperation and Trade Agreement (ECTA), which came into force on 29 December 2022, has helped strengthen this relationship. Over 85% of Australian goods exports by value to India are now tariff-free, and this number is set to increase to 90% by 1 January 2026. Similarly, 96% of imports from India are currently tariff-free, rising to 100% by 1 January 2026.
The two countries also engage in strategic and defence dialogue and cooperation. Australia and India have established platforms such as the annual Defence Policy Talks and the 1.5 Track Defence Strategic Dialogue for regular discussions. Additionally, service chiefs from both countries exchange security perspectives and gain an understanding of each other's military structures and capabilities through visits. For instance, the Indian Chief of Naval Staff visited Australia in October 2015. Australia and India also participate in joint patrols, with Indian and Australian maritime surveillance aircraft conducting joint exercises.
Australia and India's partnership is also evident in their co-hosting of the 7th Indian Ocean Conference in Perth in February 2024. This event highlighted Australia's vision for the region, addressing challenges such as Chinese influence and naval buildup in the Indian Ocean.
In summary, Australia's trade with India is facilitated by their shared access to the Indian Ocean and is strengthened by economic agreements, strategic dialogues, defence cooperation, and joint participation in regional events.
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Australia's trade with France
Australia and France have a history of diplomatic relations and bilateral treaties, including agreements on cultural, scientific, and defence cooperation. The two countries are geographically close, with less than 700 km separating them between New Caledonia and Norfolk Island.
France is a member of the Indian Ocean Rim Association (IORA), a regional forum that Australia is also actively engaged in. In 2022, IORA members (excluding France) accounted for 17% of Australia's outbound trade in goods and services, highlighting the economic significance of the Indian Ocean region for Australia.
France is a significant trading partner for Australia, with treaties concerning trade and investment processes. French companies wishing to sell products and services to Australia or obtain import regulations are advised to contact the appropriate government trade promotion bodies. The Australian Trade and Investment Commission (Austrade) is Australia's leading trade and investment agency, assisting Australian businesses in navigating complex overseas markets.
The two countries have also collaborated on defence agreements, with Australia purchasing submarines from France in 2016. This deal was, however, cancelled in 2021 with the signing of the AUKUS security pact. During a 2018 visit to Australia, French President Emmanuel Macron expressed his desire to create a strategic alliance between France, Australia, and India in the Indo-Pacific region.
Cultural exchanges are facilitated through the Australia-France Foundation, which is administered by the Australian Embassy in Paris. This foundation promotes cultural interactions and publishes a quarterly newsletter, 'L'Australie en France', showcasing Australian activities in France.
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Frequently asked questions
Australia trades with many countries using the Indian Ocean, including India, Bangladesh, Indonesia, Thailand, Singapore, Malaysia, and the United Arab Emirates.
The Indian Ocean is a vital trade route for Australia, connecting it to Asia, Africa, Europe, and the Middle East. It is home to some of the busiest shipping lanes globally, with a third of the world's bulk cargo and two-thirds of global oil passing through its sea lanes.
Australia's biggest export sector to the Indian Ocean region is minerals and fuels. Other important commodities include coal and seafood.
