Address by Senator The Hon David Brownhill, Parliamentary Secretary for Trade, on behalf of The Hon Tim Fischer MP, Deputy Prime Minister, Leader of the National Party, Minister for Trade, to the "Doing Business with the World Bank and the United Nations" Conference, Sydney, 10 November 1997.

Introduction

Mr President, Mr Speaker, Mr Chairman, members of the Public Accounts Committee, distinguished speakers and guests, ladies and gentlemen.

Before I begin, on behalf of the Minister for Trade, Deputy Prime Minister, Mr Tim Fischer, I would like to pass on his best wishes to you all as he was unable to be here today.

In the three years from 1993 on, Australian companies have done just over three-quarters of a billion dollars of business with the UN and the World Bank. Now that's a very handy export market but I know we can sell much more to organisations which span the planet and are on the lookout for new suppliers.

I am therefore very pleased to be able to address this conference today. If the number of companies here is any indication, the potential for Australian business to increase activity in these markets is very real .

And that will be good news for Australia. Exports now represent a fifth of our GDP and our growth in exports in recent years has contributed substantially to economic growth more broadly. If Australian companies can sell more in this market, they will be helping themselves and they will be creating more jobs for Australians.

I therefore congratulate the NSW Public Accounts Committee for putting in the effort to bring together an impressive group of speakers from both the World Bank and a range of UN organisations. I note that you were ably assisted by the United Nations Association of the United States of America, whose Vice-President, Mr Ralph Cwerman, is with us today.

As a result, you have already heard this morning from a number of key people in the UN system and this afternoon it will be the World Bank's turn.

I'd like to talk first today about the scope of the opportunities which these two markets hold for Australian business. Second I want to tell you about the Government's strategy to raise awareness of those opportunities. Finally, I want to look at what business can do to maximise their sales to these giant purchasers.

A 36 Billion Dollar Market

Let me start by repeating a figure which I'm sure has already been mentioned today. But it is one worth saying again.

The UN and World Bank markets are worth in the order of $US25 billion annually. That's around $A36 billion.

Let's look first at the World Bank group - made up of four closely associated institutions - the International Bank for Reconstruction and Development, the International Development Agency, the International Finance Corporation and the Multilateral Investment Guarantee Agency.

For over fifty years the World Bank has been the largest source of financial and technical assistance to developing countries helping to stimulate their economic growth and development.

The Bank group has around 2000 projects under implementation at any one time and prepares over 300 new projects a year. And Bank borrowers award around 40,000 contracts a year.

But where does this massive funding go? The answer is, in large part, to our own region. In 1995-96 nearly forty per cent of the $A30 billion lent by the Bank was to South Asia, East Asia and the Pacific. A further twenty per cent went to Latin American and Caribbean countries.

What's more the top sectors in which the bank was active were energy, transportation, agriculture and population, health and nutrition - all fields in which we are strongly competitive internationally.

In 1995-96 Australian companies' share of total World Bank disbursements was $US112 million.

But given our proximity to the markets in which so much of the World Bank's expenditure is made and our strengths in their priority sectors it is my hope that Australian firms should be doing better.

Let me now turn to the United Nations group of organisations.

The UN's activities represent significant opportunities for internationally competitive Australian firms.

UN agencies contract out activities in the order of $A5 billion each year. The sorts of goods and services purchased by UN agencies include food, drugs, vaccines and medical equipment, vehicles, industrial and communications equipment, computers and software, as well as sea and air freight - areas in which Australian companies can compete, and compete well.

In 1996, Australian companies wrote business with the UN totalling $A37 million.

When you consider that Australia puts nearly five times as much into UN budgets as Australian companies won in UN business in 1996 - a return of 21 cents in the dollar - there's clearly plenty of scope to raise Australia's profile amongst UN agencies as a supplier of quality goods and services.

To put it in perspective, Denmark and Switzerland each did more than twice as much business with the UN in the same period.

The Government's Trade and Multilateral Procurement Strategy

The Government has a trade and multilateral procurement strategy to help raise Australian firms' awareness of the opportunities emerging in the multilateral procurement market. We are pursuing this strategy both domestically and overseas.

Austrade and the Department of Foreign Affairs and Trade actively encourage Australian companies to take up multilateral procurement opportunities. Austrade's Export Hotline is a valuable source of information.

In March last year the Government established the Multilateral Procurement Unit within the Department of Foreign Affairs and Trade. The Unit campaigns with Austrade to raise business awareness of multilateral procurement opportunities. It has done this both through relevant state business bodies and by producing a number of publications outlining how to take advantage of these opportunities.

Happily these initiatives appear to be delivering some positive outcomes with many more Australian companies now registering with UN agencies.

Moreover, the profile which multilateral procurement opportunities has now attained is evident from the attendance at this conference and also the successful "How to do Business with the United Nations Conference" conducted in Melbourne in February this year by the Committee for Melbourne.

The second element of the Government's strategy involves overseas staff from both agencies collecting timely information about project opportunities. These staff also work to establish close links with procurement officials in World Bank and UN agencies in borrower countries for bank-financed projects.

In addition, Austrade and DFAT staff of key missions - in particular Geneva, New York, Rome, Vienna and Washington - actively promote the interests of Australian business in this context.

For example, Austrade played a key role together with staff at the Washington and Beijing posts in assisting the Australian Wheat Board win a $10 million dollar tender as part of the World Bank and Chinese Government funded China Grain Handling and Distribution Project.

AusAID also plays an important role in the Government's strategy by maintaining contacts with key figures in the multilateral development banks and in UN agencies. AusAID's co-financing of projects with these agencies also provides opportunities for Australian companies.

How Australian Business can Gain a Better Share of the Market

Let me now say a few words about how Australian business can maximise future opportunities in this market. All the Government's efforts aim to raise business's level of awareness but it is, of course, only the private sector itself which can go out and win more of this lucrative market.

In this context, representatives of the UN and World Bank have - in our regular discussions about Australia's desire to be more involved - made a number of points very clearly to us.

The message we are getting is that they are keen to diversify their sources of supply. The quality of Australian products and services is clearly recognised and, therefore, they would like to see more Australian companies on their databases.

But Australian companies need to be well-informed and proactive if they are to win contracts.

They need to possess much higher levels of awareness of the procurement procedures followed by World Bank and UN agencies. Also, many companies still do not respond regularly to invitations to bid, and are running the risk of not being asked to bid again.

Companies need to ensure that they complete their tender documents thoroughly and meet tender deadlines - so they are not disqualified at an early stage.

Paying attention to detail is vital. So too is personal contact, as is providing full information, if not samples, of the product or service being offered.

One possible way for business to improve its performance in this area - at least as far as the World Bank is concerned - would be the establishment of a World Bank Business Partnership Centre. These centres can play a crucial role in acting as a central contact point for enquiries on Bank products and services. They can also help establish strategic partnerships with local businesses. I know that the idea of setting up such a centre in Australia has attracted considerable interest and hope that it can proceed in the near future.

Looking to the future, the momentum for greater Australian participation in these markets is gathering. A crucial next step, will be, in 1999, the holding in Melbourne of the annual meeting of the heads of the procurement departments of all UN agencies. This meeting will provide Australian companies with an excellent opportunity to demonstrate to key UN purchasers that their goods and services are the match of any in the world. Indeed, I was pleased to be able to assist the Committee for Melbourne in its efforts to secure this meeting for Australia.

Business Opportunities with MDBs

I have spoken this morning primarily about the UN and the World Bank.

Everything I have said, however, applies equally to the other main multilateral development institutions - the Asian Development Bank and the European Bank for Reconstruction and Development.

Australian companies have recently been lifting their profile in their business involvement with these institutions. But, again, there is plenty of room for even greater involvement as these are also very substantial markets.

Conclusion

I would like to conclude by applauding the vision of those companies who are here today.

The World Bank and the UN are two of the world's largest customers.

Although involvement in multilateral procurement can mean long lead times and substantial financial commitments for Australian businesses, the rewards are potentially very great.

Australian companies are providers of world-class goods and services. Through these markets they can showcase their products around the world. And what's more they can do so knowing that they will be of great benefit to the world community.

The Government congratulates those Australian companies which have, over the last couple of years, taken greater advantage of the available opportunities. We are confident Australian involvement will become even more significant in future.

Finally, may I thank the Parliament of New South Wales for hosting this important event which I believe will make a significant contribution to boosting exports not only from this state but from Australia as a whole.