Address by The Hon Tim Fischer MP, Deputy Prime Minister, Leader of the National Party, Minister for Trade, to the Australia-Vietnam Business Council: Vietnam '97, Canberra, 23 September 1997

Introduction

Mr. Taylor, Your Excellency Ambassador Tung, distinguished guests.

I am very pleased to have the opportunity to address the Australia-Vietnam Business Council this evening because I know I am among fellow enthusiasts who are committed to strengthening Australia's trade and investment links with Vietnam and the Asian region.

This evening I would like to talk to you about Australia's and Vietnam's relations generally as well as our growing commercial ties with Vietnam. Before doing so, however, I would like to say a few words about the Foreign and Trade Policy White Paper - which my colleague Alexander Downer and I released last month - which reaffirms our commitment to the Asia Pacific region.

The White Paper and Australia's Commitment to the Region

Australia's first ever Foreign and Trade Policy White Paper represents a significant rearticulation and rebalancing of Australian foreign and trade policy. It outlines priorities and broad strategies for Australia to pursue as we move into the twenty-first century.

The White Paper underlines the pragmatic hard-headed approach Australia now takes to its foreign and trade policy. Our key aim is to improve the security, jobs and standard of living of all Australians. And, importantly, we will do this through a whole-of-government approach geared towards making Australia even more competitive in an increasingly globalised economy.

The White Paper also stresses once more that Australia gives the Asia Pacific region and, in particular, East Asia, its highest foreign and trade policy priority. It identifies the ongoing economic rise of East Asia and the momentum of globalisation, as the key influences on our policy over the next fifteen years.

The White Paper makes clear that - along with 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.

The recent turbulence in South East Asian financial markets has, however, generated considerable concern about the region's direction.

But we disagree with some commentators' assessment that the "East Asian miracle" has come to an abrupt end. Australia is in the region for the long haul. We will not up stumps at the first sign of trouble.

We have demonstrated in the White Paper that we take a longer term perspective of where our interests lie. Our judgement is that East Asia will grow substantially over the next fifteen years and that our involvement with East Asian countries will be vital to our future.

Let me therefore stress that Australia has confidence in the fundamentals of the region.

Most of South East Asian countries maintain sound fiscal positions, with a number running budget surpluses last year. Regional economies continue to maintain high domestic savings rates.

Moreover, the silver lining of the recent currency adjustments is that the region's exports are now all the more competitive.

These sound fundamentals prompted Jim Wolfensohn, World Bank President, to say earlier this month that he remained "bullish on East Asia". Moreover, World Bank and IMF forecasts still have the economies of East Asia outperforming OECD economies for the foreseeable future, with the IMF commenting last week that the selling of Asian currencies had gone too far.

Australia's links with Vietnam and with other ASEAN countries are vital to our long term future. We want to build on our existing strong relationships and the growing commercial ties which flow from them.

Australia and Vietnam: The Bilateral Relationship

It was just over a year ago that I made my first official visit to Vietnam as Deputy Prime Minister and Minister for Trade.

And next year, 26 February to be precise, marks the 25th anniversary of the establishment of diplomatic relations between Australia and Vietnam. This is a significant milestone in a bilateral relationship that is rapidly developing into a mature partnership.

This partnership is now supported by good cooperation at the political level and on trade and investment issues, by valued defence and security dialogues and by strengthening social and cultural links.

Moreover, there will be a number of high profile events to mark the 25th anniversary next year and I encourage companies represented here to consider corporate sponsorship of these celebrations.

At the heart of the partnership is a growing commercial relationship. Two-way merchandise trade between Australia and Vietnam has expanded rapidly in the 1990s, totalling around $600 million in 1996, an increase of $125 million on the previous year. Trade in services between Australia and Vietnam has also been growing strongly.

An important facet of our relationship is Australia's long standing commitment to assisting Vietnam's economic and social development. Last financial year, Australian aid totalled around $65 million.

I would like to mention particularly the My Thuan bridge, a drawing of which graces the cover of your excellent yearbook. Mr. Downer attended in July the ground-breaking ceremony for the bridge which is to be constructed by the Australian firm, Baulderstone Hornibrook. Scheduled for completion in the year 2000, the bridge, as well as making a major contribution to the Mekong Delta economy, will be a showcase for Australian engineering expertise.

Beyond the sphere of trade and aid, we have made important strides in broadening the relationship through the recent establishment of practical and constructive dialogues on regional security and human rights issues. Civil aviation, environmental management, parliamentary exchanges and legal cooperation have also been on the bilateral agenda over the past year.

Speaking of legal cooperation, I want to commend to you a publication launched by the Attorney-General, Daryl Williams, last Friday titled 'Commercial Legal Development in Vietnam'. The book includes papers presented at a Hanoi legal symposium last year which I understand was sponsored by several AVBC members.

Vietnam is also a valued partner for Australia in regional affairs, particularly as a member, since 1995, of ASEAN. We view Vietnam's participation in the ASEAN Free Trade Area - or AFTA - as an important stepping stone on the way to a more liberalised approach to trade.

The Government has also given its in-principle support for Vietnam's membership of APEC and encourages its aspirations to join the WTO. We are currently looking at options to help Vietnam develop trade policies which will assist its integration into regional and global trade regimes.

In addition, Australia is eager to see even greater cooperation between AFTA and the Australia New Zealand Closer Economic Relations Trade Agreement - known as CER. I look forward to meeting with ASEAN economic ministers in Kuala Lumpur on 17 October to explore ways in which we might strengthen the linkage.

Underpinning Australia and Vietnam's relations are, of course, the all important people-to-people links. There are thousands of Vietnamese living in Australia, many now developing business links with their homeland. There are also hundreds of Australians living in Vietnam - managers, engineers, bankers, lawyers, educators - forging bonds which link us more firmly.

The Commercial Relationship

I referred earlier to the growing commercial links between Australia and Vietnam. I would like to take this opportunity to reiterate the Government's commitment to promoting Australia's trade and investment interests in Vietnam.

I know the Vietnamese Government welcomes Australian investment not least because Australian companies have the skills, technology and experience to make a valuable contribution to Vietnam's development. The goodwill which exists towards Australia is therefore a testament to the integrity of the Australian business people engaged in business with Vietnam.

As I see it, there are two major challenges facing Australia in developing its commercial relationship with Vietnam: increasing international competition and dealing with Vietnam's complex business environment.

The competition in the Vietnamese market is tough and getting tougher. The lifting of the US trade embargo, growing interest from the West Europeans and Canada, and the active role of other Asian countries, have all meant Australian exports now face stiffer competition.

Government and business therefore need to work hand-in-hand to win greater market share for Australia. I know that the Australian Embassy in Hanoi and the Consulate in Ho Chi Minh City are adopting just such an approach.

They are doing what they can to assist the more than 100 Australian companies represented in Vietnam in sectors as diverse as banking, legal services, agriculture, building and construction, education, mining and telecommunications.

Moreover, Australian investment in Vietnam involves capital commitments in excess of $800 million, a figure which could increase substantially if several major projects being considered are implemented.

In this context I want also to give a plug to the publication from the Department of Foreign Affairs and Trade's East Asia Analytical Unit - The New ASEANs - Vietnam, Burma, Cambodia and Laos. The Unit's publications are part of the Government's efforts to help business by disseminating valuable information on regional markets. I can certainly recommend the Vietnam section because I know members of the Australia Vietnam Business Council contributed to it!

I know many of you will be familiar with the second challenge for Australian business in Vietnam - the difficulties and complexities associated with Vietnam's administrative red tape, foreign currency limitations, weak legislative framework and problems between the central and provincial authorities.

These have taken some of the gloss off Vietnam's reputation as an emerging Asian tiger economy and the result has been declining interest in Vietnam from foreign investors - a fact that the Vietnamese Government is keen to reverse.

The initial surge of foreign investors into Vietnam's newly opened market in the late 1980s reflected a degree of over-optimism. And perhaps it is not such a bad thing if the new crop of investors are more realistic in their expectations and better prepared to deal with the difficulties of operating in a developing economy.

The new Vietnamese Government will, however, be faced with hard decisions on market reforms and deregulation of the economy. But reform is essential if foreign investor confidence in Vietnam is to be restored and long-term goals achieved.

As part of our efforts to help Australian business we will be encouraging the new leadership to implement such reforms.

We will continue to push for a lowering of tariff and non-tariff barriers to Australian exports to Vietnam and promote trade in services, particularly in the education, finance, telecommunications and information technology sectors. We will also continue to seek investment opportunities for Australian firms.

As has been the case in the past, those companies which take a long-term view, have a good project or product, spend time building the necessary relationships, and which develop strategies to deal with Vietnam's complex business environment- those are the companies which can be successful.

Amid the news of high profile investments which have gone bad, it is easy to forget that many more ventures have succeeded than have failed, and some have been very profitable indeed.

Conclusion

In concluding, I am reminded of a remark made by our Ambassador in Vietnam, Sue Boyd, on the state of Australia's commercial relationship with Vietnam - that the honeymoon is over but the marriage is sound. That is an apt summary of where we are at today.

If I have one message to leave with you this evening it is that Australia remains committed to Vietnam. Since establishing diplomatic relations nearly 25 years ago, but particularly over the past few years, Australia and Vietnam have forged strong links which form a solid foundation for mutually profitable relations.

We recognise that Vietnam, together with our other South-East Asian neighbours, is destined to be an engine of growth in the long term, and we have set our foreign and trade policy priorities accordingly.

I look forward to joining with you in contributing to the strengthening of relations between Australia and Vietnam in the years ahead and wish you well in your individual endeavours.