Transcript
4 August, 2009
Joint Media Conference with Malaysian Minister of International Trade and Industry, Dato' Mustapa Mohamed
Subjects: Australia Malaysia Free Trade Agreement (MAFTA), the automotive and finance industries, Islamic finance.
MR CREAN: Well, thank you for coming today. I welcome Dato' Mustapa, my counterpart from Malaysia, with whom I've had a very close association and a regular one in the short space of time that he's been the Trade Minister for Malaysia.
We welcome him here today, with a significant delegation of business from Malaysia, and we'll talk about that relationship in a minute.
What we've just signed is a joint statement reflecting the way forward, in terms of the development and advancement of the bilateral relationship between our two countries. The relationship is already a strong one but we are firmly convinced that it can be much stronger still.
Two-way trade is in the order of $15 billion to $16 billion and stock of investment between the two economies is of a similar magnitude, with important new investment already in the pipeline, not the least of which is the Santos Petronas announcement, the first major shipment of coal seam gas from Australia, from a joint venture relationship between those two companies. And, of course, there is also the Rio investment in the - in a smelter in Malaysia.
So these are big ticket items. They will increase the stock of investment between the two countries. What we're also very keen to do, of course, is to encourage activity in the small to medium enterprise category and to significantly lift the expansion of services between both economies.
So the relationship is broad. It is a comprehensive one, it is well established, and we want to build upon it.
And today we've laid the basis for clearer directions to our officials who will be meeting in the next couple of weeks, in another round of negotiations to advance MAFTA.
We had very significant discussions last year with Dato' Mustapa's predecessor, now Deputy Prime Minister Muhyiddin. The fourteenth JTC, which took place in KL last year, occurred after two significant events. We were seemingly heading in to the global financial crisis, but we had just concluded the ASEAN free trade agreement with - between Australia and New Zealand and the ASEAN groups of nations.
We undertook then - despite the difficulties in autos, which still remain to be resolved and can't be resolved until the report into the automotive sector conducted by the Malaysian Government - but we nevertheless undertook some important commitments to roundtable engagement.
One of those roundtables was on the finance sector up there last year, and we headed into the realm of Islamic financing. I'm pleased to say that as a result of that engagement last year, we are going to have a major engagement in this country, headed by a delegation, headed by their Central Bank coming to Australia in November to see how we can continue to advance the issues associated with Sharia compliant product, how we can get cooperation.
This has developed into a very significant agenda. And, given the significance that the Australian Government is now placing on this, particularly as a consequence of that visit last year, I'm very pleased - both of us will be very pleased… not only pleased at the discussions taking place, but we will be delighted to see the progress emanating from it.
Now, the other roundtable that is taking place is legal services and we continue to look for opportunities in that field.
But so successful has the roundtable concept been that we've committed to engagement at the roundtable level in a number of key areas: clean energy and technology, a commitment that the Prime Minister's made to develop; as well as clean, green building and construction activity. So a roundtable on green related issues, but not just renewables, not just the technologies, but of construction and urban design.
Now, the other roundtable that we have committed to is on logistics, given the importance of greater efficiencies in the logistics chain. That too is an important area.
We've also undertaken to have greater engagement in the automotive sector between the industries in both countries. The automotive industry faces huge challenges going forward but, in my view, will rise to those challenges because people aren't going to stop driving cars. What we've got to do is to produce the cars of the future and be part of the supply chain that produces those cars of the future, more fuel efficient, lighter weight vehicles, less carbon footprint.
So they're the areas of activity that we've identified for business to business exchange.
We also had a presentation from the Australia-Malaysia Business Council, who had its dialogue with the Malaysia-Australia business dialogue.
One of the great strengths of this bilateral relationship is the active engagement by the business participants in both economies. We welcome it, we appreciate it, we value it. And the key for us, as ministers, is to obviously strengthen the framework for facilitation and business activity through government-to-government exchange but that has to be also driven and priorities identified by the business-to-business exchange.
These meetings provide just one of many opportunities for us to connect the dots, business-to-business, government-to-government and developing a comprehensive relationship going forward.
So the joint statement that we've signed is reflective of the areas that we want to proceed with, going forward. We are committed to advancing MAFTA. We know that there are issues that have to be resolved. Our commitment is to do that.
And, finally, if I can just say, Mustapa it's been a pleasure working with you here on our soil and I've got no doubt we'll be seeing each other regularly, going forward. There's the EAS meeting, there's the India summit. There's lots of activities within the region in which we will engage. But I'm delighted with the way in which the discussions went today; frank exchanges. I think we have built an important personal relationship.
I'm looking forward to working with you in the future and looking forward to that relationship strengthening what is already a strong relationship between our two economies but we hope will strengthen even further.
I invite Mustapa to address the gathering.
MR MOHAMED: Thank you Honourable Mr Crean, Trade Minister. It is a pleasure for me to lead the Malaysian delegation for the first time.
This is the fifteenth JTC meeting between our two countries. I've been informed this is the longest - the first JTC established between any… between Malaysia and the Australian partner and I am pleased to note that there's been a lot of progress in the last many, many years and once again thank you for your hospitality.
Each country has got its own unique way of dealing with issues and challenges. And, in the case of Malaysia, Australia has been - one is foreign diplomacy, yeah. My PM has been on the phone with your Prime Minister on a number of occasions besides meeting, you know, having meetings, and that's one characteristic of this informal and formal relationship. I think that demonstrates the strength of this bonding between the two countries, and I'm here to further expand on the discussion that the two PMs had in July of this year. And going forward, I think we can expect more collaborative efforts.
I would like to characterise the relationship has been informal and friendly and there's been a number of phone engagements between the two prime ministers.
Another is the roundtable approach. I think that has been very useful. We'll further expand on this approach. This morning we decided to identify one or two other areas where we can engage in this manner, yeah, and that's one way of promoting better understanding, understanding your strengths and assets and, in your case, understanding our system, and by bridging whatever gaps there are we can move forward.
So I just want to highlight those two approaches. One is the roundtable approach, which I find to be very creative and innovative. And, secondly, the number of phone calls between the two PMs and between me, that I think is very important in underlining the strength of the relationship between the two countries.
I just want to add a few points. Of course, it's all in the statement. First is the role of trade in stimulating growth. When faced - the financial crisis '97-'98, we… what we call, we exported our way out of the crisis. It is a fact that exports rebounded after a couple of years, and that really stimulated growth in the Malaysian economy. We experienced an active growth also in 1998. We went through a fairly long period of rapid growth in the decade preceding the crisis, and exports played a very important role in getting out - us out of this recession.
So I'm looking back into history, the role of trade in economic development, and trade of course is very important to Malaysia. We are a small country but we're very open and, for that reason, we have not been spared by the recent global financial crisis.
So we're here to discuss trade, how we can further promote trade between Malaysia and Australia. Last year, as I observed yesterday, our trade numbers went up by a big percentage, and the first five months of this year, the performance has not been as good.
So the challenge for us is to see how, by increasing trade between our two countries and indeed global trade, we can partly resolve the present difficulty we're going through.
Second point I would like to highlight, come next year, hopefully the Australia-New Zealand ASEAN FTA will be enforced, and our private sector in both countries - in Malaysia and Australia - have been looking forward to this ASEAN-Australia-New Zealand FTA. There will be more opportunities, yeah, created by this FTA so the prospects of greater collaboration and higher volume of trade between the two countries are good.
That's my second point. The third point, of course, one main issue we discussed this morning was our bilateral FTA, MAFTA, and we share some issues and challenges. We have issues in auto and services and also government procurement, which the Aussie side fully understands. And the seventeenth of this month our officials, Australia and Malaysia will be meeting and will be taking stock of the current situation. And, of course, what's important in any negotiation is to move forward and we hope there will be some progress.
We'll be setting the broad parameters; in my case, to get some directions to my people as to which way we should be moving. But I hope that there can be progress in this discussion.
Finally, I think what's important is the follow-up. Yesterday we had a good meeting with the business community, a good seminar, and good follow-up discussion, and last night a function organised by AMBC. We acknowledge your active involvement, and we look forward to working with you closely in amongst that. I think I would like to underline the importance of the role of the business communities in both countries in taking up - in taking follow-up action. We would be setting broad directions and parameters, but the nitty-gritty and the detailed work of course will have to be done by the business communities in the two countries.
We would like to congratulate the two councils in Malaysia and Australia for the good work they have done, and I think going forward, looking at the body language and the sentiment and the mood, I think there's no way but moving up in terms of announcing bilateral relations between Malaysia and Australia. And I look forward of course to more investments from this country. I look forward to a greater volume of trade. At the same time, of course, Malaysians are coming here in a fairly big way. We're pleased to note that Santos and Petronas, our national oil company, have teamed up to produce gas not only for Malaysia's requirement but also for ASEAN and indeed the world.
So this is an example. We had the pleasure of being briefed by senior officials of these two companies yesterday, and listening to them, we know that this is going to be very exciting; yet another example of close collaboration between the two business communities.
We also this morning discussed SME cooperation in the area of SMEs. That's equally important as we talk about the bigger - the big players, the big boys, we are also mindful of the very important role of the small and medium enterprises in getting us out of this crisis. They are very important, and that's another area that we wish to expand in terms of bilateral cooperation, to see what we can learn from you in terms of building up our capacity in small and medium enterprises.
So, Simon, thank you for this hospitality. It has been a very fruitful meeting, a very memorable first encounter for me, yeah, although we met a few times before this. But I think it is important for us under present challenging circumstances to move forward on all fronts, and I believe this morning we have achieved that. And our officials will be following up on all those issues we agreed this morning. Thank you once again.
MR CREAN: Thank you. Okay, any questions?
QUESTION: Can I ask, just on the car issue, what's the sense that you're getting from your [indistinct] of the industry here about how important the Malaysian market would be to the industry here?
MR CREAN: I think the sense is that Australia has a lot to offer, but it's got a very small market.
It's also the sense that we have a lot to offer in the direction in which the automotive sector has to head and so therefore we've got to be much more creative this time round in identifying strategic engagement, not just in terms of completed vehicles but of the component supply industry.
Now this is something that we've not stood still on. I mean, Kim Carr and myself went to China two weeks ago. We think that there is important potential and you would be aware that the Government has made very strong commitments in terms of underpinning the future direction of the automotive sector in the direction of green cars, more fuel efficient vehicles.
It's also true that Malaysia has some very efficient operations in the automotive sector. In fact it exports here, Mustapa was telling us, one of their companies 70 per cent of the mufflers that are in Australian vehicles. So there is already the existence of a synergy.
But the message that I think we've got to continue to develop is this: that whilst we understand the sensitivities within particular countries, it's also true that Malaysia, like Australia, is not going to have its automotive industry survive simply by producing for Malaysia, we're too small a market. But if there is expertise, the key thing, the smart thing to do is to try and find the basis in which you can use that competitive and comparative advantage and sell into a bigger global supply chain.
We therefore think there's merit. Instead of just trying to hammer this point about tariff reduction, even though that's our obviously end objective in terms of this, but to understand why that's important, not just for us but for other countries with whom we're trying to get the barriers down. And the reason for that is if you can't produce the lot, you're part of a global supply chain, what's the point in penalising yourself with tariff barriers that put the cost up of those bits that you import?
Now, how do we get that message through? We get it through by continuing to talk about the strategic direction forward, we watch with interest the way in which the report will come down in Malaysia. But in the meantime we think that there is some serious advantage and opportunity in trying to get key representatives of each sector together to talk about where the opportunities might be.
So whilst we're not unmindful of the difficulties in terms of the bilateral relationship when it comes to autos, which is not unusual in bilaterals that they are around autos, I think what we've done today is to have a very frank discussion about the issues confronting both of us and establishing a framework by which the industry itself is encouraged to become much more active in also a frank exchange.
QUESTION: Minister, you're pinning a lot - you'd have to be pinning a lot of your hopes on a positive outcome for the Malaysian review. I mean, if it's not favourable then do the FTA talks founder again?
MR CREAN: I can't pre-empt the review. I mean the review has to take account of the market and global reality. The review may well have come to a different decision if it had have come out last year, compared to this year. I'm sure that would have been the case in the United States as well.
But think about it, the United States has put something like $17 billion; the Government owns half of the automotive sector because of the restructuring arrangements. Does it really believe that it can survive simply by producing for itself? I don't think they can. Yet they're the biggest - were the biggest automotive market, China's the biggest now, but they were the biggest automotive market. But if they're restructuring an industry, again for green cars, they have to find avenues to export. If there are barriers up against them that is an issue for them.
So I think in the shake-up, not just of the global financial crisis, but in the micro sense globally the auto sector, I think that there is a really strong case for reinforcing why the barriers need to come down if you accept the logic of the global supply chain.
QUESTION: Minister Mohamed can I ask you about that review - I mean, are you hopeful that the timetable for reduction of the tariff will be improved by that review?
MR MOHAMED: A couple of comments before that. Firstly, we've agreed in the last few minutes that there should be a delegation, yeah, from here and also from Malaysia of people in the industry, so that we understand better the profile of the auto business in Australia. And we hope on 17 August, this month, when officials will be meeting to discuss specific issues, there can be also two or three representing the auto sector to interact with the Malaysian auto people so that we can have a better understanding of the profile of the business in this country, and in the same time Malaysians will have a glimpse of the challenges ahead. So that's something that I would like to share with you.
The other is, I would like to highlight here that we - I mean there are two.. in Malaysia there are two parts to this business. One is the cars which are built in Malaysia under our national brand, another is the component business, and from Australia's point of view of course its market access for components from Australia. But we were telling our Aussie counterparts that there's a segment of this component business which is world class. Some are already exporting to Australia and many other countries. These are what we call the tier one vendors.
So there can be possibilities of collaboration to exploring third country markets; Malaysian and Aussie companies coming together, producing in Malaysia and exporting to third countries as well as supplying our local car manufacturers.
So I would like to give you that background and hopefully this delegation of two or three from the auto sector representing your industry will be able to make this trip and in the process bridge whatever gap in understanding the risks on the profile of the auto industry in Malaysia and also in Australia.
On what is going to happen end of next month, which is the review of my auto sector I shared with Simon this morning, it's very challenging. We have some legacy issues; the industry has got large investments by Government linked countries. We spent billions in our auto companies, those which have got links with the Government. So going forward of course there's no choice but to open up; it's a question of when and how.
I think the issue is speed. I mean, in principle the way forward, I agree you cannot survive unless you open up your comparative, yeah, but I think the issue is when and how, and we'll be addressing these issues when the review comes out in September.
I don't want to - I do not want to pre-empt the outcome of this discussion, but I think going forward we all agree that there's no choice but to be competitive otherwise you will be out of business, as is happening in America. So we recognise that, and the review of course will take that into account, global developments as well as our big investments. I'm talking about Government-linked companies in our two national car companies.
QUESTION: Just another one. Islamic finance, that's obviously a new exciting area for Australian banks and there's been a bit of investigation of that already. Is there much appetite and opportunity there for the Australian finance industry making [indistinct] into Malaysia?
MR CREAN: I believe there is and so too does the Malaysian sector, and that's why the conference that will take place in November, or the engagement in November, is a very comprehensive agenda that was outlined to us today.
It's not just the banking sector either. We think that there is opportunity in the funds management area for the offering of Sharia compliant product. We believe there could be opportunities to be able to access Sharia product in terms of investment. What we want to be able to do is to draw on the recognised expertise of Malaysia in this field and see where the opportunities for cooperation exist.
Now, you would be aware that the Treasury, which has commissioned this review as to how to strengthen Australia's position as a regional financial hub, has as one of its aspects the Islamic financing. This was because we are geared strongly for it following the discussions in Malaysia at the fourteenth JTC.
So I think that's where the importance of these engagements can be seen. It's not just an exercise where we turn up because we have to; we turn up because we believe in the relationship, we want to make it a constructive relationship, we want to develop a dynamic agenda. And there's no point just agreeing to do it and then not following up.
I think, in the case of Islamic financing, there has been a lot of movement between the two countries and within Australia in focusing attention on this. And so I look forward to their deliberations in November. I am delighted at the way in which this has advanced since last year. And if that's any guide, we'll be back next year with a good progress on logistics, hopefully on automotive, on green technologies and green construction. This is the agenda going forward. These are key sectors that we have identified for cooperation.
QUESTION: Can I just quickly, Minister, ask you the same question. Is there an advantage for your Islamic finance industry, which is already a regional hub, to connect with the Australian industry?
MR MOHAMED: Yes, certainly, we are recognised as a world leader, global heir in Islamic finance. And world leader means we need to connect ourselves with the rest of the world, and Australia has got a growing Muslim population.
And in the case of Malaysia, it's not just the Muslims which - that use these facilities. In fact, the majority are non-Muslims. The bonds have been purchased by the non-Muslims. So it is a product which is gaining wide acceptance, not simply within the Muslim communities all over the world but also among non-Muslim communities throughout the world.
So Australia - for example, the Government of Victoria, we were told yesterday by the State Government rep, has decided to focus on this area as one of its priority areas. And Melbourne, as you know, is the financial capital of Australia and where these regulatory systems, I've been informed, are very supportive of Islamic finance. So it makes a lot of sense for us to connect with our friends in Australia.
This is something our two camps discussed in the last few months since they met, and it is something I am sure that - this is an area where there has been concrete progress and I am confident that there will be more progress. And we are sending a high powered team, led by our deputy governor of the Central Bank, here in November. And hopefully that will be the starting point of the development of a more Sharia compliant products in this country.
So it makes a lot of sense for us to venture out. And it's got to be of course - this is going to be a strategic partnership and there's a lot of expertise. And we were telling the meeting this morning we have, as you know, the ANZ Bank, a very sizeable presence in [indistinct] banks, and they've got Islamic banking licence. That probably can be a springboard for the development of Islamic compliant products in Australia, with the Aussie bank that's already in Malaysia which, I understand, is very familiar with our system.
QUESTION: [Inaudible question]
MR MOHAMED: I'll address this. This has been on our agenda for quite some time and there are - our vision is very clear but the challenge is how to achieve that vision. One problem we have of course is supply, domestic supplies of products, and Australia has got abundant supplies. And [indistinct] to develop Halal food, one is demand which is growing with all in Middle East and Europe, throughout the world, they are [indistinct] supplies.
So Malaysia hasn't got the kind of supply that would enable us to skill up this activity, so Australia has got abundant supplies. So this is an area where we should collaborate and I hope to be able - this is another front that I think we should get into action. We've been talking quite a bit on this but unfortunately I think there's not been too much progress. So that's an area for - there's more work to be done on this.
MR CREAN: And we've identified a two-step process for that. One is the training and the requirement dimension to be more effectively communicated here as to what the particular needs are to be able to supply to this market. So there's the training side of it but we've also agreed that there would be a closer interaction between Austrade and MATRADE for the purposes of identifying opportunities, the suppliers that Dato' was - talked about, but convincing them that if they can meet the requirements then there's a very big market that Malaysia provides, not just for Malaysians but as a regional hub too.
QUESTION: Minister, just a quick one on the subject of bilateral FTAs in the region. How far away
are we from starting the process with Indonesia, going past the preliminary stuff, to actually getting to this kind of…
MR CREAN: Well, that's - obviously they've just had an election. I think we are close to it. It's still a matter
that has to be formally considered and announced. But one would expect that that's not too far away.
QUESTION: This year, do you think?
MR CREAN: Hopefully. It's up to the leaders to determine that. As we know, its best not to pre-empt them, isn't it.
MR MOHAMED: That's dangerous.
MR CREAN: We prepare the ground but we don't pre-empt them. Okay, thanks very much.
[ENDS]
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