Speech to the Malaysia-Australia Business Council Business Dinner
Malaysia, 25 August 2005
Australia and Malaysia – Embracing Opportunity, Pursuing Prosperity
Introduction
Dato Zain, MABC Chairman
Dato Sidek, MITI Secretary-General
Mr Ted Sharp, AMBC President
Tunku Shahabuddin, former MABC Chairman
Other distinguished guests, ladies and gentlemen
Thank you Ted Sharp for that warm welcome.
I am delighted to be here in Malaysia again for the Australia-Malaysia Joint Trade Committee meeting – the twelfth JTC meeting, and my sixth as Minister.
The Joint Trade Committee meetings provide an invaluable forum for our governments to discuss and explore trade policy questions and advance our commercial links.
It was, after all, at the JTC last year that Minister Rafidah and I agreed that Australia and Malaysia would undertake parallel scoping studies on a possible bilateral FTA.
I recall, only one month after my appointment as Australian Trade Minister in 1999, having the pleasure of attending my first Joint Trade Committee meeting in Sydney with Rafidah.
With that meeting came my first opportunity to engage in ministerial discussions with Minister Rafidah – already then a trade minister for twelve years and now the longest serving in ASEAN.
Across a variety of forums and in pursuit of ever closer ties between our two countries, Minister Rafidah has been an excellent partner for Australia and colleague for me.
On the golf course, we may be very competitive rivals – but in all other aspects of our work, bilateral, regional and multilateral we have become trusted colleagues and good friends.
It is a great pleasure to be here among so many colleagues and friends who have been so committed over the years to developing the bilateral trade and economic relationship and, in turn, lending support to our wider bilateral relationship.
Friends such as those within the Malaysia-Australia and Australia-Malaysia Business Councils that have helped foster the Australia-Malaysia bilateral relationship to the point where it is now
We are entering a new phase of cooperation, with new and excellent opportunities for both nations in sight.
Pursuing Prosperity Together
Now more than ever, Australia and Malaysia are successfully pursuing prosperity together.
In terms of economic performance, we both have much to be proud of.
Without doubt, Malaysia has an economy on the move.
An economy delivering prosperity and driving up income levels.
Average income of Malaysians today is some two and a half times what it was fifteen years ago.
Having transformed itself over recent decades, Malaysia now has a high middle-income, export-oriented economy – the fourth most open economy in the world, measured by trade as a share of GDP and able, as we have seen, to successfully weather the impact of external shocks.
The Malaysian and Australian economies clearly make a good team – and bring much to the region in terms of growth, stability and resilience.
For the fourth year in succession, the World Competitiveness Yearbook 2005 ranked Australia as the most resilient economy in the world.
The Australian Government has helped lay the foundation for a robust business environment with low inflation, low interest rates and the lowest unemployment levels in three decades.
Now in our fifteenth straight year of economic expansion, we have recorded growth rates exceeding the OECD average in nine out of the past ten years and, in 2004-05, the highest level of exports ever - $162.3 billion!
With world’s best practice when it comes to removing controls on state enterprises, limiting regulation on business and removing barriers to entrepreneurship…
Doing business with, and in Australia is clearly a smart move.
And Malaysia is set to do more and more business with Australia in the future.
The visit by Prime Minister Abdullah to Australia in April this year saw the launching of the bilateral free trade agreement negotiations, but also opened up further opportunities to build on our existing wide-ranging links and strengthen political ties.
And in doing so, the visit ushered in a new chapter in the bilateral relationship.
We already cooperate closely on a range of security and transnational crime issues and have a longstanding and substantial defence relationship founded on the Malaysia Australia Joint Defence Program and the Five Power Defence Arrangements.
Malaysia is also already a very important economic partner for Australia ranking as our second-largest trading partner in ASEAN and our ninth-largest trading partner overall.
Two-way trade between our two countries currently standing at around $10 billion.
A free trade agreement between our two buoyant and complementary economies can only serve to expand and deepen our economic engagement and provide enormous opportunity for the future growth of each.
Economic modelling conservatively estimates that an FTA would increase Australia’s GDP by $1.9 billion, in net present value terms, over twenty years with Australia’s exports to Malaysia to rise by nearly $200 million per year.
On the Malaysia side, there would be even more impressive gains with Malaysia’s GDP expected to increase by $6.5 billion – or 18.3 billion Malaysian Ringgit – as a direct result of an FTA with Australia.
Malaysia’s annual exports to Australia are set to increase by around a quarter of a billion dollars – or some 760 million ringgit.
Case studies which form part of the Study indicated a number of potential synergies between the Australian and Malaysian market sectors, including in the automotive sector.
In the services sector, there are considerable opportunities to further promote bilateral trade and investment which will benefit both countries.
One area, in particular, where I see an FTA delivering much for our economies is in promoting higher levels of Australian investment in Malaysia.
While Australian investment in Malaysia is gathering momentum – rising by 54 per cent in 2004 to $736 million – over the longer term it has failed to keep pace with the level of Malaysian investment in Australia such that, as of December 2004, Malaysia had invested about seven times more in Australia than Australia has invested in Malaysia.
To deliver on its true potential and deliver real benefits to both Australian and Malaysian business, we must work towards achieving a comprehensive and high quality agreement.
An agreement that demonstrates a high level of ambition in areas such as tariff elimination and services.
We are hoping to be able to do all of this by mid-2006.
If we are to achieve the deadline we have set ourselves and produce a comprehensive, high-quality agreement, which provides significant benefits to both countries there is much work to be done, in a limited amount of time.
Our next round of negotiations is scheduled for November in Canberra with negotiations on some issues continuing inter-sessionally between now and then
We hope to be in a position to consider a number of draft chapters of the FTA in November.
The successful conclusion of an FTA would be a great achievement for what is already a strong and broad-ranging bilateral relationship and will build on the already strong people to people relationship.
There can be no better base upon which to build the future of a bilateral relationship than close people-to-people links.
And these are exceptionally strong between Australia and Malaysia and have developed over many years with approximately 250,000 Malaysian alumni of Australian educational institutions.
Australia is still the first choice for Malaysians considering study at international education institutions.
The number of Australians travelling to Malaysia has increased from around 142,500 tourist arrivals in 2002-03 to around 169,000 in 2004-05.
At the same time, Malaysian tourist flows into Australia have steadily increased with around 156,000 short-term visitor arrivals from Malaysia in 2004-05.
To further strengthen people-to-people and institutional links, the Australian Government announced during Prime Minister Abdullah’s visit in April this year the establishment of the Australia-Malaysia Institute.
The Institute will focus on political and media exchanges, young leaders programs, the promotion of muslim exchanges as well as cultural cooperation.
Regional and Global Trade and Economic Priorities
Our efforts at the bilateral level are set against the backdrop of a complex regional and global trade and economic agenda that presents enormous opportunities and considerable challenges.
The stronger bilateral ties and closer regional community that we are forging are providing us with the wherewithall to take on the challenges of our region.
A region that has come far in recent years and promises much for the future and where Australia’s most immediate interests and responsibilities will always lie.
Australia and Malaysia are pursuing prosperity together but also engaging substantially at the regional and global level.
We share with Malaysia similar trade policy objectives.
We are both strong advocates for a robust rules-based international trading system.
The Australian Government – and I know it is similarly the case for Minister Rafidah and the Malaysian Government – is committed to securing a successful and ambitious outcome in the Doha Round WTO negotiations...
… and to conclude the Round in 2006.
Malaysia and Australia have been working together towards this end particularly through the Cairns Group where we both recognise that an ambitious conclusion to the Round – particularly one that delivers comprehensive agricultural liberalisation and removes the worst distortions on global agricultural trade – is essential if we are to deliver fairer world trade and real gains and opportunities for developing countries.
To highlight this point, I would note that liberalisation of agriculture – according to World Bank estimates – provides two-thirds of the potential welfare gains for developing countries from the Round.
So I fully expect that both Malaysia and Australia will continue to champion the cause of agricultural liberalisation.
Added to these efforts at the global level, Malaysia – like Australia – is pursuing bilateral FTAs which will see the Malaysian economy further integrated with the region.
The trading and investment relationship between ASEAN and Australia is strong and growing but it can deliver much more – for Australia and for ASEAN.
With a vibrant economy and GDP more than US$600 billion, Australia offers exciting prospects for ASEAN.
Together with New Zealand, Australia is now engaged in FTA negotiations with ASEAN which will help all of us to further tap this potential.
This FTA adds to the agreements we have already reached with Singapore, Thailand, the United States and our longstanding FTA with New Zealand.
Leaders have set us a high level of ambition with firm instructions to deliver a comprehensive agreement – covering all sectors of trade – in two years, with full implementation within ten years.
So we have been getting on with the job with our trade officials just last week concluding their fourth round of negotiations in Chiang Mai, Thailand.
The Australian Government has long supported the development of effective, open and inclusive regional institutional architecture that is of practical benefit to the Asia-Pacific region.
And the Australian Government is pleased to be hosting APEC in 2007 – the first time Australia has hosted APEC since the inaugural ministerial meeting in Canberra in 1989.
In recent years, APEC – the pre-eminent forum for regional economic cooperation – has broadened its traditional focus to also include security issues that affect trade and investment.
And so, by evolving and staying relevant to the concerns of the day, we see that APEC is continuing to flourish.
Another – complementary – step in the direction of stronger regional cooperation is the East Asia Summit to be held in Malaysia in December.
We anticipate the Summit process will prove valuable for regional cooperation with great potential to enhance our economic interaction and the cohesiveness of regional responses to other key issues confronting the region.
The Australian Government was delighted to receive the invitation from ASEAN Foreign Ministers to participate in the inaugural Summit and the opportunity it brings to be part of the evolution of such a community.
It is yet another demonstration of our growing engagement with the countries of the Asia-Pacific region – and the growing bonds with Malaysia – in this important phase of our relationship.
Conclusion
In times past, Australia and Malaysia were not always able to deliver upon the full potential that existed for our relationship.
No doubt there will continue to be issues where we might have a difference of view but the enduring strength of the relationship allows us to address any such things in a mature way and focus on the overwhelming level of commonality that characterises the contemporary relationship.
It is from that base we are now moving confidently in the new phase of the relationship where there is far more bringing us together than should ever keep us apart.
By embracing the enormous opportunities which come from working together, we can bring greater prosperity to both nations, and deliver outcomes for our region and the global trading environment.