Speech by the Minister for Trade, Senator Bob McMullan at the Australian Business Group Lunch

Hanoi, 7 September 1995

It is extremely encouraging for me to get a sense of the strength and diversity of the Australian business presence in this important regional market.

Australia-Vietnam economic partnership

This is also a timely opportunity for us to review the progress which Australian business has made in Vietnam

Yesterday I co-hosted the fourth annual meeting of the Australia/Vietnam Joint Trade and Economic Committee

- a productive meeting at which representatives of our respective business communities and Governments were able to take stock of the commercial relationship and to consider some of the issues which will govern the direction we take in the future.

As you will know much better than I, the established and well respected Australian commercial presence in Vietnam today is testament to the considerable mettle and determination of those Australian companies which have managed to overcome the obstacles and difficulties of investing in an embryonic, but fast growing, market economy

- no high returns without risks.

The JTECC process is now well established and it has continuing relevance to the commercial relationship.

JTECC provides an opportunity for the Australian Government to supplement and support the expansion of private sector operations in Vietnam

- and it is a forum in which Australia can flag its considerable potential to contribute to the development and reform of the Vietnamese economy.

Our relationship with Vietnam is at a high point and we are currently the eighth largest foreign investor in Vietnam and holding our own against the strong competition of some of the Asian super economies

- reflected in the tenfold increase in bilateral trade over the past five years to its current level of A$ 450 million

We are recognised as a long-term economic partner with a good track record of investment and contribution to Vietnam's development and reform processes

- our business standards and operations are respected, again a testament to those among you who have taken the time and opportunity to set up solid business relationships and credible operations here

- our presence and role in Vietnam clearly has a maturity and depth not enjoyed by some of the newcomers.

Although we are well established, a number of significant changes to Vietnam's economic and political status in the South East Asia region mean we must recognise that the competition will get even hotter

- Vietnam is now a member of ASEAN, a fact that will accelerate the already rapid pace of investment by regional economic powers in key Vietnamese economic sectors.

As Vietnam strengthens its ties with its ASEAN neighbours the focus of its market will naturally shift towards them

- perhaps accelerated by the preferential aspects of AFTA

- and the strength of our own geographic proximity and regional commitment will be put to the test.

Another significant change to Vietnam's breadth of opportunity has been brought about by the normalisation of diplomatic relations with the United States

- our track record in Vietnam means that this is unlikely to seriously infringe on our current status and opportunities

- indeed a freer investment climate and the presence of another Western economy may well accelerate the processes of market and legal reform (which are at the heart of many of the persisting difficulties of operating in Vietnam)

: and, through developments and competition, open up new opportunities for countries like Australia.

Reform in Australia

Nevertheless it's timely for us to review our position in light of these external factors and to take account of the environment Australian business contributions will encounter in the future

- our success in the past has of course been driven primarily by you, the investors, but it has also been underpinned by the significant and successful economic reforms we have put in place in the Australian economy over the past decade.

I don't want to dwell on that reform program, which I'm sure you'll be sufficiently familiar with

- beyond saying that the results of the reforms are now plain to see

: we have been the fastest growing economy in the Western world, with a GDP growth over the past three years of 13 per cent and the signs suggest our 4 year record of sustained growth is about to be broken

: we are continuing to hold the underlying rate of inflation at gratifyingly low levels

: business investment is growing strongly, recording an increase of 21 per cent last year

: business profits have recorded substantial growth, with profit share now running at just under 25 per cent

: we have seen employment grow by 4.2 per cent over the last year, with unemployment falling by 2 per cent and some 500,000 new jobs created in the past two years

: and industrial unrest is at its lowest level in fifty years.

The domestic gains have been matched by strong export performance

- exports of goods and services have grown from around 16†per cent of GDP in 1989-90 to over 19 per cent in 199394

- there has been rapid diversification, with manufactured exports growing at around 13 per cent per annum to reach around 30 per cent of merchandise exports

- and an increasingly important services sector, with services exports growing in real terms at more than 9 per cent per annum in the last decade.

We are doing better than we have done in the past - but we need to do even better to secure our future

- "... reform never stops - you never entirely get out of the woods, there is always one thing more- or two, or three or even four things. The modern economic contest is a long distance race - a very long distance race. It is like the modern marathon, it gets faster and faster. But unlike the marathon, it has no finish line†..." {Paul Keating at Press Club}

Conclusion

While these developments and reforms are the basis of the strong performance by the Australian private sector in regional markets, it goes without saying that the majority of companies now engaged in these markets have largely blazed their own trails

- in Vietnam, as in other regional markets, it is the Australian private sector which drives the bilateral commercial relationship

- the Government stands ready to supplement and assist this process where it can.

Events such as yesterday's JTECC, the official opening of the Australian Consulate General in Ho Chi Minh City tomorrow and the expansion of Austrade's presence in both the north and south of Vietnam illustrate the variety of roles Government can play

- particularly in Vietnam where government links to the private sector are still linked.

May I again congratulate you on your persistence, determination and many successes as you have tackled the challenges of trade and investment in Vietnam.

What you are doing here is what Australia needs if it is to succeed in the increasingly competitive global market place.

We need more Australian men and women who see a significant part of their future tied up in Asia and are prepared to work hard to make it happen.

Thank you for being part of that future.