Speech
Australian Minister for Trade, Mark Vaile
2 August 1999
Speech by Minister for Trade The Hon Mark Vaile MP to the Malaysian Trade and
Investment Seminar, ANA Hotel, Sydney.
Australia-Malaysia Ties - Maximising Our Potential
(Check Against Delivery)
Introduction
Dato' Seri Rafidah Aziz (Malaysian Minister of International Trade and Industry); Mr Alexander Gosling, (President Australia Malaysia Business Council); ladies and gentlemen.
First of all, may I take this opportunity to welcome Minister Rafidah to Australia. I am particularly pleased that your visit provides the first opportunity to welcome one of my ministerial counterparts to Australia in my new capacity as Minister for Trade.
I approach this new job with great enthusiasm and think it highly appropriate that Malaysia, where Australia has such strong trade and investment links, and Minister Rafidah, one of the longest serving trade ministers of the 1990's, should provide the first opportunity for major ministerial bilateral talks.
Also, my congratulations to Alexander Gosling on his appointment as President of the Australia-Malaysia Business Council.
Strong and enduring trade relations
The Australian Government has a strong commitment to the bilateral trade and investment relationship with Malaysia. As many of you will be aware, Malaysia is Australia's third largest trading partner in ASEAN and our 13th largest partner overall.
This seminar comes at a particularly opportune time. It is almost two years since the region was first rocked by what has become its worst economic crisis in half a century. There is little denying that the economic crisis has had an adverse affect on Australia's trade and investment relationship with Malaysia - just as it has with many other countries in the region. And while there has been a drop in the level of trade in some sectors as a result of the crisis, I am pleased that the total level of trade in goods and services continues to rise. That is good news for both our countries.
This positive bilateral and trade investment relationship has a solid foundation and has produced sustained growth over the past decade, quadrupling during that period. For the first time in five years, last year Malaysia enjoyed a trade surplus with Australia to the tune of $896 million. Australia's imports of Malaysian machinery, electrical equipment and palm oil have shown a steady upward trend for the last three years. Australia's exports of foodstuffs, including sugar and dairy products, and other items such as fertilisers have been important. Malaysia is still Australia's third largest trading partner in ASEAN, and our 13th largest partner overall. And while short- to medium-term prospects are somewhat uncertain, the long-term outlook remains good.
Despite the recent challenges, our trade and investment relationship with Malaysia is well founded and complements the wide range of significant bilateral linkages in other areas. This includes the strong education links with over fifteen thousand students currently studying in Australia, as well as the strong defence links through the Malaysia-Australia Joint Defence Program and the Five Powers Defence Arrangements.
Regional economic trends
In recent months there have been an increasing number of encouraging signs that point to economic recovery in some of the economies in the region affected by the crisis. Economic activity is up in Singapore, Thailand, the Philippines and, I am pleased to say, Malaysia.
Even if these trends continue, it could take up to five years for the region to return to pre-crisis levels of economic output. And many potential risks to a full-scale recovery remain.
Among these are the possibility of a faster than expected slowdown in the US economy, continuing uncertainty in Japan despite some encouraging signs of recovery, or failure by governments in the region to continue to press ahead with needed reforms, particularly in the financial sector.
But when all is said and done, the outlook for the global economy today is much more positive than it was twelve, or even six, months ago.
Later this year APEC leaders will gather in Auckland against an economic background that is much rosier than that which confronted them the last time they met. I know that some APEC member economies are concerned about undertaking further trade liberalisation while they have to deal with the challenges of the economic crisis, but I am encouraged that most regional countries are resisting protectionist pressures. The clock is not being turned back on the greater openness that has been won over the past decade - which is very good news for business in our neighbourhood, and a positive factor for a revival in our region.
Australia and the region
The Australian Government has repeatedly made it clear that Australia's future is intimately tied to Asia. We have put into practice the views spelt out in our 1997 White Paper on Foreign and Trade Policy, which committed Australia to a long-term, mutually beneficial relationship with the region. We've done that by revitalising bilateral relations with all the countries of Asia, and by taking decisive and practical action to help our neighbours tackle the consequences of the economic crisis.
Trade has been an integral part of this strategy. In fact, the East Asian economic crisis has been something of a defining moment for Australia's relationship with Asia. It has allowed us to show that our ties with Asia are strong, substantial and lasting.
Our response to the crisis put Australia at the forefront of international efforts to overcome the economic and social impacts of the crisis. We were one of only two countries to participate in the IMF second tier arrangements for Indonesia, Thailand and Korea. We provided substantial assistance for crisis-hit countries through our bilateral aid programs. And on the trade front, we provided additional trade financing facilities for our exporters to some of the affected economies through the export finance insurance corporation. It is also a matter of record that many of the countries worst hit by the crisis have increased their exports to Australia significantly over the past two years, including those from Malaysia.
The Malaysian economy has unfortunately not been able to quarantine itself from the regional financial contagion. For the first time in 13 years the Malaysian economy went into recession. During the last year, economic conditions and a degree of political uncertainty have encouraged businesses to reassess and refocus their strategies. Malaysia's economic difficulties have unsurprisingly had an impact on the Australia-Malaysia business relationship.
Business links strong and growing
I am pleased that Australian companies in Malaysia and their Malaysian partners have been striving to respond quickly to the changing. This will help them in finding ways of expanding trade and investment links in the new climate as economic recovery becomes more firm.
The reason for this confidence is the underlying strength of the ties between our two countries - and our business communities - which continues to see us enjoy a productive and profitable bilateral relationship despite the economic and political challenges of the past year.
Most Australian companies are committed to remaining active in Malaysia despite the effects of the regional economic crisis, reflecting confidence in Malaysia's medium- to long-term prospects. My message for Australian business is that those who do not cut and run at the first sign of difficulty, but rather choose to stay for the long haul, will be rewarded for their foresight.
The East Asian economies will inevitably recover, and that recovery will bring with it a more open, flexible and transparent economic and political situation. Such change can only strengthen the business environment. It is much easier to participate in the upswing if you have remained in the market. Those companies who have pulled back will find it much more difficult to regain their foothold in the region as the good times return.
Conclusion
Forums such as this one provide an excellent opportunity to hear first hand, from a senior and respected economic minister in the Malaysian cabinet, about the prospects and outlook for Malaysia's economy. I understand that Australia is one of a few countries where Minister Rafidah is visiting to promote investment and trade opportunities in Malaysia. I urge you all to take advantage of this good fortune of ours, and explore with her the prospects for greater collaboration and mutual benefit in the Australia-Malaysia relationship. I am confident our further discussions of these themes this afternoon at The Joint Trade Committee will be equally productive.