Address by The Hon Alexander Downer, MP, Minister for Foreign Affairs, to the 10th Joint Business Conference of the Australia Thailand Business Council (ATBC), Perth, 15 September 1997.
Introduction
Your Excellency Dr Narongchai, Thailand's Minister for Commerce,
the Honourable Richard Court, MLA, Premier of Western Australia, Her
Excellency Mrs Laxanachantorn Laohapan, Thailand's Ambassador to
Australia, His Excellency Mr Cavan Hogue, Australia's Ambassador to
Thailand, Mr Narong Luesakul, Thai President of the Australia
Thailand Business Council, Mr John Connor, Australian President,
Australia Thailand Business Council, ladies and gentlemen.
It is a great pleasure for me to be able to address today the 10th
Joint Business Conference of the Australia Thailand Business Council.
I know that some of you have travelled here from Thailand and we are
very pleased to see you here. I particularly welcome Dr Narongchai
who - as a graduate of the University of Western Australia - knows
first hand the benefits that an Australian education can offer. Dr
Narongchai must be convinced because he's also sending his children
here for their education!
Today's meeting provides a valuable forum for business people from
Australia and Thailand to come together, to canvass the opportunities
for increased trade and investment and, most importantly, assemble
mutually profitable deals.
I want to speak first today about the White Paper, secondly, the
Australian government's confidence in South East Asia's prospects
and, thirdly, the bilateral relationship.
PART ONE: The White Paper and Australia's Commitment to the
Asia Pacific
Australia's first ever White Paper on Foreign and Trade Policy
brings together everything that the Government has been doing in
foreign and trade policy since March last year, and charts the way
ahead for Australia's place in our regional neighbourhood and the
world in the 21st century.
The fundamental message of the White Paper is that Australia is
committed to the Asia Pacific for the long haul, and that Australia's
highest foreign policy priority is to make a lasting contribution to
the region. It reflects the weight of Australian interests which are
engaged with the Asia Pacific: with ASEAN, the countries of North
East Asia and the Pacific, including the United States.
As a member of the Asia Pacific, and with one of the most East
Asian-oriented economies in the world, it makes perfect sense for
Australia to build on the foundations which complementary economies
and geographic proximity provide.
The White Paper underlines Australia's accelerating involvement in
the life of the Asia Pacific, and the enormous potential to expand
our ties across the region. It recognises that the sustaining force
behind the Asia Pacific's dynamism is economic liberalisation.
The White Paper identifies globalisation and the rise of East Asia
as the two most profound trends in the international environment to
which Australia's foreign and trade policies must adapt and respond
over the next fifteen years.
Globalisation offers huge opportunities for internationally
competitive economies, but also brings in its wake challenges for
political and economic management. The White Paper's judgement is
that economic growth in industrialising Asia will continue at
relatively high levels over the next fifteen years. The World Bank
forecasts growth for East Asia - excluding Japan - over the next
decade at 6.8 per cent, compared with 2.4 per cent for Western Europe
and North America.
All of this means that the countries of East Asia will become even
more important to Australia as trade and investment partners, and in
security terms. It also has implications for Australia's relative
standing in the region, and significant consequences for the broader
relativities of power and influence in the Asia Pacific and
beyond.
The White Paper defines a `jobs foreign and trade policy' for
Australia. Its whole-of-government approach recognises that - in a
global economy - the competitiveness of the Australian economy will
be the single most important determinant of Australia's future.
Our industries have already made considerable progress in this
area as protection has been reduced and they have had to meet world
standards. This graph from the White Paper (Graph A) clearly
demonstrates that exports have grown as protection has been reduced
over the last decade or so. We will, of course, continue to press for
other countries to lower their trade barriers as well. In large part,
this process is already well under way. Again we can see clearly -
with the help of some more illustrations from the White Paper - the
extent to which our major trading partners in the Asia Pacific have
also been reducing their tariff barriers. It is clearly the case in
South East Asia (Graph B), in North East Asia (Graph C) and in the
Americas (Graph D).
The White Paper's reaffirmation that the Asia Pacific and, in
particular, East Asia, is our highest foreign and trade policy
priority helps Australian exporters make the most of regional
developments. Again, I'd like to show you three graphs which tell a
very clear story about why we are focusing on the region. Firstly,
(Graph E) East Asian economies are forecast to increase significantly
their proportion of world GDP by the year 2010. Secondly (Graph F),
looked at individually, the wealth of Indonesia and Thailand has
increased dramatically since 1980 and will increase even more over
the next decade or so - with Indonesia - on current predictions -
overhauling Australia. On a per capita basis (Graph G) Singapore is
the star performer, already having a higher per capita GDP than
Australia, but Malaysia and Thailand will also improve significantly
by 2010.
The White Paper also plays another important role in setting out,
again for the first time, the economic, strategic and cultural assets
which Australia brings to its pursuit of foreign and trade policy.
Perhaps chief amongst these is our capacity to adapt successfully to
changing geopolitical realities.
Australia has built strong economic and cultural links with Europe
but has also engaged successfully with the Asia Pacific and the rest
of the world. Australia's economic links, and increasingly its
people-to-people links, are now predominantly with the Asia
Pacific.
Australia has thrown open its doors to the world and has welcomed
peoples of more than 130 different nationalities. The tolerance
evident in Australia's day-to-day life is testimony to the fact that
the vast majority of Australians believe in a fair and
non-discriminatory approach. No amount of inflammatory rhetoric by a
maverick rejected by 95 per cent of the population will change
that.
The White Paper reaffirms the principle which informs the
collective actions of over ninety-five per cent of Australians: that
is, an unqualified commitment to racial equality and eliminating all
forms of racial discrimination. Let me make it perfectly clear - the
Member for Oxley, with support of only 5 per cent of the population
has not, does not and will not be making Australian foreign and trade
policy - the Government, on behalf of the vast majority of the
Australian people, will be.
PART TWO: South-East Asia's Prospects and Australia's role
The White Paper demonstrates that - along with the major economies
of the Asia Pacific, the United States, Japan and China - the
countries of ASEAN will be at the forefront of Australia's endeavours
to build closer bilateral relationships. As you in this room know
better than most, Australia's partnership with our ASEAN neighbours
is expanding more and more, as we look for ways to deepen our
relationship to our mutual benefit.
There is no doubt, however, that - despite solid medium-to-long
term prospects - recent developments in the region's financial and
currency markets have posed a challenge for ASEAN countries and
Thailand in particular.
We consider that the lesson provided by the region's progress in
the last few decades is a very clear one. Sound macroeconomic
policies and deregulated markets, open to global trade and investment
- these are the fundamentals which have laid the most long term and
sustainable basis for growth and for developing prosperous
competitive industries.
The positive path of increasing openness has been one which - in
general terms - ASEAN countries have followed for some time. We have
confidence that they will continue to follow that path. Australia has
known the difficulties which a sudden currency adjustment can create.
We know it can be painful. We believe, however, that it is possible
to emerge all the stronger, particularly if the right economic
framework is kept in place.
This is an economic lesson which the White Paper has underlined
for Australia and its relations with the region.
Some commentators have, however, been critical of the White
Paper's judgement that East Asia will continue to grow significantly
over the next fifteen years and that its growth will be crucial for
Australia's future. They point to the recent currency and market
adjustments in South-East Asia as evidence that the East Asian
miracle has come to an end.
As Foreign Minister I do not wish to comment on the direction that
financial and currency markets may take in the short term. But the
knee-jerk reactions we are seeing from some commentators underline
the importance of the White Paper's longer term approach.
By looking at the fundamentals of the economies of the region -
and where they are likely to head over a decade or more - we can
identify what is really in this country's long term interests.
Importantly, several of these key fundamentals are unchanged - for
example, the commitment to open economies and continued
de-regulation; and receptivity to inward foreign investment.
The World Bank's principal regional economist only recently
pointed out that the countries of South East Asia are all maintaining
sound fiscal positions with Malaysia, the Philippines, Singapore and
Thailand all running budget surpluses last year.
Moreover, regional economies continue to maintain high rates of
domestic savings - Malaysia, Indonesia, Singapore and Thailand all
save more than a third of annual national income. Underlying
inflation is relatively low in Malaysia, Singapore and Thailand. And
the nations of South-East Asia remain competitive producers of
various goods and services that have strong international growth
prospects. Indeed they are all the more competitive now that local
currencies have dropped, particularly against the yen.
Even Paul Krugman - a well known sceptic about Asia's long-term
growth prospects - has pointed out that these currency movements do
not tell us much about the long term. In fact, Krugman expects Asia's
growth to resume, albeit at slower rates but driven by education,
savings, and growing labour force participation.
We should also take note of the views of the President of the
World Bank, Jim Wolfensohn, who was quoted earlier this month as
remaining "bullish on East Asia". He said:
"When there is a storm going on, it looks very black. But history
seems to show that in the end fundamental economics prevail ... after
a period of quiet and reflection, you'll see the return of confidence
in Asian markets."
All of this should give us considerable confidence in the medium
to long term growth prospects for East Asia - as the White Paper
concluded. It identified tremendous opportunities for Australia to
benefit from the growth and development both in North East and South
East Asia over the next fifteen years.
Let me say clearly that Australia's confidence in the fundamentals
of the region, and its extraordinary prospects for the next fifteen
years are unchanged by recent events. The fundamentals remain and I
am confident that prudent policy settings will prevail.
I am pleased, therefore, to see the measures that the Indonesian
and Malaysian governments have now taken to address the situation.
Indonesia's 3 September package of measures lifted limits on foreign
shareholdings, imposed greater budget discipline, lowered tariffs on
imported inputs to export products and strongly encouraged mergers of
smaller financial institutions. This was well received by the
markets. Malaysia too has now freed up share trading and has moved to
improve its current account deficit with a positive market
response.
I want to add, though, that you can count on the Australian
Government doing what it can as a regional player to assist Thailand
and the region to surmount these sort of short term currency
movements. That is why we have made a contribution of up to USD 1
billion to last month's IMF rescue package for Thailand.
Australia applauds Thailand's decision to accept the reform
measures proposed by the IMF as part of the USD 16 billion package
agreed last month. The package will require ongoing structural reform
of the Thai economy - and hopefully will open up new opportunities
for trade and investment.
The IMF package represents a win-win situation for Thailand and
for regional contributors including Australia. It is an investment in
Thailand's future and in the region's economic stability and
continuing growth. Economic stability in Thailand and the region is
in the best interests of Australia's sizable export and investment
presence in the region and it is also a responsibility which as a
friend and neighbour we are happy to share.
Indeed, our action in assisting Thailand through the IMF package
was a natural outgrowth of our place in the region. As one
commentator said in The Australian, "In joining Hong Kong, Singapore
and Malaysia ... in the (baht) stabilisation program, Australia has
done more for its regional credentials in one day's action in Tokyo
than a year of blather from Canberra".
I may not have put it quite that way myself but the basic point is
clear: Australia is not just a fair weather friend - it is committed
to the neighbourhood for the long haul. I should also say that I
often use the term neighbourhood because it captures the sense of
proximity, friendship and mutual assistance which characterises
Australia's relations with its regional partners.
PART THREE: Australia and Thailand - A Strengthening
Relationship
I'd like now to turn to Australia and Thailand's relationship.
After a decade of extraordinarily high growth, Thailand is going
through a period of transition and adjustment. This is a challenging
process for policy makers.
During the current period of economic transition, we welcome
Thailand's commitment to intensifying economic reform and trade
liberalisation. I am confident that Thailand will continue in its
march towards liberalisation, and as a consequence, I have faith that
Thailand's future remains strong.
Given this promising future there is still further scope to
strengthen our relationship, especially through expanded trade and
investment.
I was accordingly very pleased to see that the Conference
organisers have taken as the theme for today's conference the
challenge of doubling trade and investment by 2000. My colleague Mr
Fischer and myself, and our counterparts Dr Narongchai and Mr
Prachuab, the Thai Foreign Minister, set this challenge at the
conclusion of the Ministerial Economic Commission in Canberra in
February. In setting this objective, I believe both Governments were
expressing their confidence in the private sectors in both Australia
and Thailand and drawing attention to the many opportunities which
exist for increased bilateral commercial contact.
Thailand is a very valued partner for Australia in the region. It
is strategically placed in mainland South East Asia. It is the second
largest economy in ASEAN. Thailand is also a close partner for
Australia in forums such as the CER/AFTA link, APEC and the Cairns
Group. Also reflecting Australia's close relationship with Thailand,
I recently agreed with Foreign Minister Prachuab to establish an
important bilateral security dialogue.
The Government also hopes to enhance the linkages between CER and
AFTA - for which we can thank Thailand which first proposed such
links in 1993. We were therefore interested to note that - only a
fortnight ago - Singapore's Trade and Industry Minister, Lee Yock
Suan, spoke of the potential stimulus to regional economic growth
were CER and AFTA to be linked in the long term. This is a concept in
which I have a particular interest and indeed there are many areas of
cooperation which could be expanded fruitfully in the mean time.
The Government has also focused on developing our bilateral trade
with Thailand.
Last year, we established the high-level bilateral Market
Development Task Force, which coordinates market access and
development through bilateral mechanisms with key markets, including
Thailand. Following strong support for several priorities in the Thai
market under the Market Development Task Force, we have been very
pleased with a number of significant outcomes over the past twelve
months.
For example, the government gave strong support to Australian
companies bidding for banking and insurance licences in the Thai
market during the past year. The National Australia Bank was awarded
a Bangkok International Banking Facility licence at the beginning of
this year, and my colleague Mr Fischer is looking forward to opening
their new Branch in Bangkok next month. We were similarly delighted
that National Mutual was awarded an insurance licence this year.
Similarly the Government worked hard to support Australian
interests in consortia which submitted successful bids in Thailand's
Independent Power Producers Program. The Government has followed up
with a public relations program to promote Australian black coal for
use by the successful consortia.
In recognition of the continuing opportunities that we believe
exist in Thailand, I intend to visit Thailand again in November, and
Mr Fischer will pay an official visit to Thailand next month. These
visits are clear tokens of our continuing belief in Thailand's
enduring strength and importance. We are very keen to continue to
work with the Thai Government in support of increased trade and
investment. This will, no doubt, be a two-way process: a lower baht
will mean more competitive exports and, in all likelihood, a tourism
boom.
For our part, ongoing priorities include market access for a
number of agricultural items and automotive products. And I look
forward to discussing some of these issues with Dr Narongchai later
today.
I should also note that Dr Narongchai has been very supportive of
ongoing liberalisation in Thailand, and I thank him for his support
of a number of Australia's priority market access issues.
One important opportunity for Australian business to participate in
training in Thailand is through the Australia Thailand Youth
Ambassadors Program which I established last year. The Australian
Government has approved funding of $500,000 to place young
Australians in Thailand between 1997 and 2001, and I call on business
to match our contribution.
I encourage all of you to consider funding the placement of a
young Australian in Thailand to participate in the Program. The
subsequent contacts which are developed are likely to contribute
directly to future economic links.
Conclusion
I would like to conclude by noting that the Government believes
that our words must be matched by our deeds.
The White Paper has made clear that Australia's highest foreign
and trade policy priority will be the Asia Pacific, and particularly
East Asia, because we believe that the economic growth of East Asia
over the medium to long term will be crucial to Australia's
future.
We have demonstrated our commitment to the region through our
continued involvement in forums contributing to the region's economic
and political stability, through our early action in contributing USD
1 billion to last month's IMF package and through our commitment to
education and other people-to-people links.
This is the reality of the Australian Government's policies
towards Asia, and of Australian popular sentiment. It is a policy
about commitment to the region, participation in the region and
building links with our region.
In the 20th century, the Australian experience of nation building
has been one of growth, adaptation and social progress - Australia
can therefore look confidently to meeting the challenges of the new
millennium.
An important partnership as we move into the future will, of
course, be that between Australia and Thailand. I salute the efforts
of those here today who are directly contributing to strengthening
our trade and investment relationship.
The challenge for all of us, both Thai and Australian, is to look to
new opportunities that are being created in an evolving
Asia-Pacific.
Ultimately, our futures are tied together. We share a common
region. We share common challenges. And I am proud to say, we are
well placed to make the most of our common opportunities.