32nd ASEAN Post-Ministerial Conference - Plenary (10 + 10) Session

Opening Statement by the Hon Alexander Downer MP, Minister for Foreign Affairs, to the 32nd ASEAN Post-Ministerial Conference Plenary Session

Singapore, 27 July 1999

(Check Against Delivery)

It is a pleasure to be here in Singapore to participate in the 32nd ASEAN Post-Ministerial Conference. It is an annual event that I look forward to. The outlook for the region definitely appears brighter than it was last year, indeed even six months ago.

Australia has long believed that its future is tied up with Asia and has committed itself to a long-term, mutually beneficial relationship with the region. The past two years have been a testing time for East Asia and indeed the world, as the Asian economic crisis spread first to Latin America and then other parts of the globe. Every country has been affected to some extent. Still, Australia never lost its optimism about the region's future, or about its ability to bounce back.

In these past two years, Australia has proved it is no fair-weather friend to the region. We were there to help our neighbours when it counted, when they needed us most. Australia was one of only two countries to participate in the IMF second tier support arrangements for Indonesia, Thailand and Korea. We were concerned enough to persuade the IMF to amend the conditions of its rescue package for Indonesia to more sensitively address the real needs of that country. Australia has provided other programs to help regional countries meet the challenges caused by the crisis.

Australia has been happy to offer assistance and information to our neighbours on the means to combat problems associated with the economic crisis, and on implementing economic reforms. Our advice has carried weight for two reasons: because it comes from a country that has been doing well when others have been doing it tough, and because we have shown that we are prepared to take our own advice. For all these reasons, it is all the more heartening to see the emergence of signs that the worst of the East Asian economic crisis may be over.

It has not been an easy task for our neighbours, and there were times when it appeared too hard - especially as the social costs of the crisis mounted. There is still a long way to travel before we can confidently say that we've seen a resumption of sustained economic growth in East Asia, and there are still many potential risks. But the fact is that the reforms are starting to take root. There are growing signs of confidence: confidence in regional economies, and confidence in the systems of Asia, in their ability to overcome the crisis and emerge stronger. For Australia's part, I would like to reassure our neighbours that we remain firmly committed to working with you as you pull out of the depths of the crisis, we are committed to continuing to provide assistance in dealing with the other effects of the economic crisis.

Regional Political and Economic Issues

The worst of the contraction, caused by the economic and financial crisis, appears to have passed. Most economies in the region are forecast to experience positive growth in 1999. Rising stock markets and exchange rates, improved external positions and lower inflation and interest rates are evidence of a recovery. Growth forecasts for most of the economies of East Asia are being revised upwards.

Still, the economic future is uncertain. The continuing strength of the economic recovery will depend on the growth of import demand in East Asia's foreign markets. Growth in the United States is expected to slow this year and recovery in Japan is not guaranteed. Low growth in the European Union is affecting world growth. We must also be alert to, and vigorously resist, the rising protectionist tendencies in all markets. If we resile from open and outward looking trade and foreign investment regimes, we may stifle the turnaround in East Asia. We therefore cannot afford to become complacent - there is still much to do to ensure the nascent recoveries take root firmly and develop into a new period of sustainable growth.

The Australian economy has shown remarkable resilience to the financial crisis. Our economy is among the fastest growing in the world. Interest, unemployment and inflation rates are at their lowest for years. This has been achieved in the middle of the worst East Asian economic crisis for half a century, through the pursuit of a thorough program of economic and labour market reform.

We can never underestimate the challenges facing the region. East Asian governments must push ahead with reforms to the banking system and financial sector, including eliminating non-performing loans, recapitalisation of cash-strapped institutions and an easing of the credit crunch. Corporate restructuring should be pursued with vigour. Public and corporate governance and the transparency of economic transactions need to improve. Only by continuing with the economic reforms begun over the past two years can sustained economic growth be locked in for the region. Any backsliding could possibly see a return to recession and increased social tensions.

The Hanoi Plan of Action, ASEAN's response to the issues affecting the region, is an ambitious range of initiatives to hasten economic recovery and address the social impact of the economic crisis. The Statement on Bold Measures is especially welcome in that it seeks to accelerate the ASEAN Free Trade Agreement (AFTA) by one year, and to increase the number of tariffs at zero. In the face of the crisis, it reaffirms ASEAN's commitment to regional economic integration. Australia encourages ASEAN members to fully implement commitments made under AFTA on a most favoured nation basis. Australia also welcomes the decision by ASEAN to enhance the investment climate for foreign investors. The Hanoi Plan of Action shows ASEAN is open for business and sends a strong signal to the international financial community about the region's commitment to liberalisation.

The economic crisis has placed enormous pressure on the social safety nets in the region as increased demand overwhelmed the systems. While the East Asian economies may be on the road to recovery, the social impact of the crisis will be felt for some time. ASEAN has demonstrated its commitment to address the social impact of the economic crisis, when it implemented its action plan on social safety nets as part of the Hanoi Plan of Action. Australia applauds such efforts to reinforce and protect social investment and welfare mechanisms. Nevertheless, the international community must continue to provide support for social investment and human capital. Australia is pleased to be able to fund two proposals under the ASEAN Plan of Action on Social Safety Nets. These projects will focus on developing the capacity for social impact assessments to assist program design and increase the effectiveness of social safety nets through the application of best practices in design and operation.

The region has weathered the worst of the crisis and has seen its institutions grow. Cambodia's inclusion in ASEAN on 30 April completed the reintegration of Cambodia into the regional community and realised the vision of an ASEAN 10. This is a welcome development, which also poses challenges to ASEAN. I am sure however, that, as it has done in the past, ASEAN will be able to meet these new challenges and turn them to advantages.

International Political and Economic Issues

The haze from forest fires continues to have serious environmental and economic effects on the region. The haze is estimated to have cost over US$1 billion in reduced economic activities such as tourism, air flights and in direct health costs over the past two years. Australia welcomes the recent ASEAN Environment Minister's agreement on an Immediate Action Plan to combat haze in Indonesia and the development of a legal framework to assist in the implementation of the Regional Haze Action Plan. The Indonesian government's new laws against open burning show how determined ASEAN is to combat this issue. Australia is assisting countries in the region through cooperative training in land clearance and forest and fire management.

The economic crisis has impacted on those least able to look after themselves - such as women and children - and makes them easy targets for unscrupulous people. Australia has a strong commitment to combat trafficking in women and children for forced labour or sexual slavery and is involved in a number of international initiatives in this area. The Australian government has taken the lead on combating this abhorrent practice by developing specific legislation to address trafficking in persons for the purposes of sexual slavery. We strongly encourage other governments to enact similar laws. Australia is also working cooperatively in the region to strengthen communication and cooperation between law enforcement authorities in order to combat people trafficking, and narcotic drug trafficking. Money laundering continues to be a serious problem, with the proceeds from narcotics production being integrated into the financial systems of the region. Playing its part in endeavours to combat this activity, Australia has provided $1 million to the Asia/Pacific Group on Money Laundering, as part of the "Tough on Drugs" strategy. In addition, Australia recently provided $1 million to the United Nations Drug Control Program to reduce drug demand and develop alternative activities in the Mekong sub-region states.

Conclusion

In conclusion, let me say the Year 2000 (Y2K) problem presents an unprecedented challenge to our region. It has the potential to impair the delivery of key services such as transportation, communications, power, water and sewerage, health facilities, emergency services and banking and finance. The dimensions of the Y2K problem and its cross-border impacts have reinforced the importance of regional cooperation in meeting this challenge.

Australia welcomes the increasing attention that governments and major business enterprises in our region are directing to sharing information and expertise on tackling Y2K. Australia has been pleased to cooperate with regional governments in international forums including the United Nations, APEC, the International Atomic Energy Agency, and the Second Global Summit on Y2K in Manila in March 1999. Australia is working with Papua New Guinea and the Pacific Island Countries on Y2K programs in critical areas such as telecommunications, utilities, aviation, health, accounting and revenue collection. We are also assisting with other regional partners in the aviation, telecommunications and power sectors.

The challenge for us all for the remainder of 1999 is to intensify our cooperative efforts on contingency planning; to promote greater transparency including by encouraging international sectoral groups such as the International Civil Aviation Organization, the International Telecommunications Union, and the International Maritime Organization to provide information on the Y2K preparedness of key sectors internationally and to disseminate information on contingency planning by those sectoral groups; and to continue to cooperate on appropriate mechanisms for early advice to our communities on the actual impact of international Y2K issues as they occur during the Y2K critical period.

ENDS

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