Annual Report 2004-2005

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1. Overviews2. Performance3. Corporate4. Appendixes5. Financials6. Glossaries and Compliance Index

Your location: Performance > Outcome 1 > Output 1.1 > 1.1.2 South and South-East Asia

OUTPUT 1.1: Protection and advocacy of Australia's international interests through the provision of policy advice to ministers and overseas diplomatic activity

1.1.2 South and South-East Asia

On this page: Overview :: South-East Asia :: ASEAN and regional issues :: South Asia


The department advanced Australia's political, strategic and economic objectives in South and South-East Asia. Our efforts were underpinned by increasingly broad and deep linkages and high-level political contact. The department's significant contribution to the Government's swift and compassionate response to the Indian Ocean tsunami laid the groundwork for a legacy of practical cooperation in the region, in particular with Indonesia and Thailand.

We continued to engage countries in the region on security and counter-terrorism issues. We consolidated our framework for bilateral counter-terrorism cooperation, including through enhanced cooperation with the Philippines and a memorandum of understanding (MOU) with Pakistan.

We also continued to pursue Australian objectives for combating transnational crime, drug trafficking, people smuggling and money laundering, and promoted regional cooperation through the South-West Pacific Dialogue and the Interfaith Dialogue processes.

An unprecedented number of high-level visitors to Australia over the year demonstrated how our relations are gaining strength. The department supported visits by the heads of state of Brunei, Indonesia, Pakistan and Singapore, and visits by heads of government of Malaysia, Thailand and Vietnam. An extensive program of visits to Australia by ministers across a range of portfolios and visits to the region by Australian ministers supplemented these high-level contacts. Our support for Mr Downer's advocacy helped secure the agreement of the Association of Southeast Asian Nations (ASEAN) to Australia's participation in the first East Asia Summit, to be held in December 2005.

We promoted Australian commercial interests, including by pushing for increased market access and helping companies strengthen their presence in the region. Merchandise exports to the region held up despite some adverse conditions, including the continuing effects of the drought and the strength of the Australian dollar. The growth in merchandise exports to South Asia, particularly India, was underpinned by the strong performance of commodity exports, and reflected increased interest in these markets by Australian exporters.

We finalised a free trade agreement with Thailand (TAFTA) and a review and refinement of the provisions of the Singapore–Australia Free Trade Agreement (SAFTA).

The department led bilateral negotiations with East Timor on maritime boundaries and resource issues. Agreement was all but achieved.

South-East Asia


The mature and diverse bilateral relationship was significantly strengthened by the historic April 2005 Declaration on a Comprehensive Partnership (DCP). The DCP, developed in close cooperation with the department, signalled a new commitment to expanding bilateral cooperation on security and trade and in people-to-people links. Agreement to proceed with the DCP was reached during the visit by Indonesian President Dr Susilo Bambang Yudhoyono in April 2005, which the department supported.

The security relationship was boosted when Mr Downer and Indonesian Foreign Minister Dr Hassan Wirajuda agreed to discuss a framework for security cooperation.

The department coordinated the seventh Australia–Indonesia Ministerial Forum (AIMF), which brought together five Indonesian and eight Australian ministers and Mr Billson. The AIMF further advanced key bilateral interests in counter-terrorism, people smuggling, illegal fishing, and trade and investment.

With Indonesian counterparts, the department organised the Regional Interfaith Dialogue in Indonesia in December 2004, which brought together religious leaders from various faiths across the region. The meeting achieved its key objective with religious leaders issuing a joint statement condemning violence and terrorism and underlining their desire to foster understanding and harmony between faith communities in the region.

Through the Bali Process on People Smuggling, Trafficking and Related Transnational Crime, the department entrenched cooperation with Indonesia that built confidence and habits of dialogue among regional countries (see sub-output 1.1.7 for more information).

We continued to advance Australia's trade and investment interests. We facilitated more than 20 Australian companies' participation in the Indonesia Infrastructure Summit held in Jakarta in January 2005. In advocating the liberalisation of Indonesia's import regime and improvements to the business environment, we pushed for improved market access through tariff reductions for Australian exports, including frozen meat, wheat flour and horticulture products, with relevant Indonesian authorities. Mr Vaile and the Indonesian Minister of Trade, Dr Mari Pangestu, announced the development of a trade and investment framework, which will provide a focus for enhanced commercial ties.

The department facilitated high-level visits by Australian ministers and officials to Indonesia, including two visits by the Prime Minister, four by Mr Downer, two by Mr Vaile, and visits by the Attorney-General, Minister for Immigration and Multicultural and Indigenous Affairs, and Minister for Justice and Customs.

After the tsunami: the Australia–Indonesia Partnership for Reconstruction and Development

On 5 January 2005—ten days after the Boxing Day tsunami—the Prime Minister,Mr Howard, and Indonesia's President Susilo Bambang Yudhoyono agreed to a historic bilateral program—the five-year, $1 billion Australia–Indonesia Partnership for Reconstruction and Development (AIPRD). Its goal is to provide assistance for reconstruction and development in Aceh and throughout Indonesia.

The AIPRD Joint Commission, led by the Prime Minister and Indonesian President, oversees how the AIPRD is put into practice, with advice and assistance from foreign and economic ministers of both countries. The first meeting of the Joint Commission in Canberra on 17 March 2005 was cochaired by Mr Downer and his Indonesian counterpart Dr Hassan Wirajuda. The Treasurer, Mr Costello, and Indonesia's Development Planning Minister, Dr Sri Mulyani Indrawati, attended the meeting.

The Joint Commission agreed that the AIPRD's primary objective was to support Indonesia's reconstruction and development efforts, both in and beyond tsunami-affected areas, through sustained cooperation focused on the Indonesian Government's programs of reform. The emphasis is to promote economic and social development.

Ministers agreed at the first Joint Commission meeting to fund a number of early activities. AusAID is to do the work on the ground with $1 billion provided under the Appropriation (Tsunami Financial Assistance and Australia–Indonesia Partnership) Act 2004–05. (For more information on AIPRD-funded activities, see the AusAID annual report, which is volume 2 of this report.)

A Secretaries' Committee advises Australian ministers on major activities to be funded and ensures strategic management of the AIPRD from a whole of government perspective. The Secretary of the Department of Foreign Affairs and Trade chairs the committee. Other members include the Secretary of the Department of the Prime Minister and Cabinet, the Secretary of the Treasury, the Secretary of the Department of Finance and Administration and the Director General of AusAID.

A small whole of government secretariat based in the Department of Foreign Affairs and Trade supports the work of the Secretaries' Committee and Australian participation in the Joint Commission.


The department strengthened Australia's cooperation with Thailand in a range of areas, including trade and investment, law enforcement, counter-terrorism, education, defence, migration and tourism.

The department led negotiations on the Thailand–Australia Free Trade Agreement (TAFTA) and the Agreement on Bilateral Cooperation. With the Department of the Prime Minister and Cabinet, we coordinated a successful visit to Australia by Prime Minister Thaksin Shinawatra in July 2004, when both agreements were signed.

We negotiated TAFTA over a 14-month period before its entry into force on 1 January 2005. TAFTA is a major market-opening agreement that will achieve the elimination by 1 January 2010 of Thai tariffs on virtually all goods imported from Australia. It will substantially improve the environment for bilateral services trade and investment. We conducted an advocacy program to promote the agreement's benefits to Australian business to ensure they make full use of its opportunities.

The department negotiated the Agreement on Bilateral Cooperation, which provides a framework for closer cooperation across a wide range of bilateral activity, including security and law enforcement, environment and heritage, education, culture, public administration, and science and technology. Prime Minister Thaksin Shinawatra's visit also resulted in the signature of important government-to-government agreements on work and holiday visas and environmental cooperation and education, which provide a framework for enriched people-to-people ties.

On counter-terrorism, we worked closely with the Department of Defence and relevant Thai authorities to initiate a combined counter-terrorism military exercise, Wyvern Sun, in Thailand in July 2004. With the cooperation of the Australian Federation of Islamic Councils, we hosted a visit to Australia by a delegation of moderate young southern Thai Muslims to expose them to the role of Islamic faith and the Australian Islamic community in Australian society. The exchange was followed by visits to Thailand by four prominent Australian experts on Islam, building mutual understanding of our cultures and societies.


The department played a key role in maintaining and strengthening our dialogue with Singapore across common interests, including regional security and transnational crime.

Through the first Singapore–Australia Free Trade Agreement (SAFTA) review process, we advanced Australia's trade and investment interests by ensuring that SAFTA remained relevant to Australian business. The review, held in Sydney on 14 July 2004, was co-chaired by Mr Vaile and his then Singapore counterpart, Minister for Trade and Industry George Yeo. It resulted in a balanced package of gains for both Australia and Singapore. For Australia, these included recognition of further law degrees, certificates of origin and technical standards for food and horticultural goods.

The frequency of high-level visits in both directions underlined the close and productive bilateral relationship. Prime Minister Howard visited Singapore in February 2005. Singapore's President Nathan made an official visit to Australia in March 2005, the first visit to Australia by a Singapore Head of State. The department contributed to the strengthening of political, defence, educational, trade, tourism and Commonwealth links through its policy and organisational involvement in these and other visits.


The visit to Australia by Malaysian Prime Minister Abdullah Badawi and his ministerial delegation in April 2005—the first official bilateral visit by a Malaysian Prime Minister in 21 years—provided an important opportunity to strengthen political ties and build on Australia's longstanding and cooperative links with Malaysia. The visit was a culmination of the department's efforts to strengthen relations with Malaysia, particularly at the political level, following the change of leadership and elections in Malaysia in March 2004.

We made a substantial contribution to the visit outcomes, which included the launch of bilateral FTA negotiations and the establishment of the Australia–Malaysia Institute to enhance institutional and people-to-people ties.

The decision to proceed to FTA negotiations followed the conclusion of parallel scoping studies agreed by Mr Vaile and his Malaysian counterpart at the 11th Australia– Malaysia Joint Trade Committee meeting held in July 2004 in Melbourne. The meeting, organised by the department, helped advance commercial opportunities for Australian business in the construction, franchising, agriculture, medical devices regulation and coal sectors through identifying new areas for cooperation and facilitating private sector links.

The department continued to advocate Australian commercial interests in Malaysia. We lobbied in favour of an Australian firm's successful bid for one of five foreign stockbroking licences in Malaysia. We continued to work closely with the Department of Agriculture, Fisheries and Forestry in trying to resolve ongoing problems in the halal meat trade with Malaysia.


In October 2004, the Government announced a doubling to $10 million of the existing Counter-Terrorism Assistance Package to the Philippines. The department worked closely with a range of government agencies, including AusAID, the Australian Federal Police, the Department of Immigration and Multicultural and Indigenous Affairs, and the Department of Transport and Regional Services, to give effect to this expanded package of assistance.

We continued to work to improve the bilateral trade relationship. Although a number of bilateral trading irritants remained unresolved, we promoted new opportunities in the Philippines, including in the mining sector following a Philippines Supreme Court decision to uphold legislation to facilitate foreign investment in this sector.

These efforts contributed to decisions by a number of Australian companies to consider investment in the mining sector. Lafayette Mining began gold production at Rapu Rapu, the first new foreign-funded mine in the Philippines to be commissioned since 1968.


The department continued to promote close cooperation with Vietnam on counterterrorism, defence, police, immigration, education and investment issues.

In cooperation with the Department of the Prime Minister and Cabinet, we coordinated a successful visit by Vietnam's Prime Minister Phan Van Khai in May 2005. In a joint statement Vietnam expressed support for Australian participation in the East Asia Summit, undertook to hold initial discussions on an International Transfer of Prisoners Agreement, expressed support for the University of Sydney's proposal to establish a medical school in Hanoi, welcomed Australian assistance during Vietnam's year as APEC host in 2006, and foreshadowed early signature of an MOU on police cooperation on transnational crime.

Through sustained trade advocacy, the department secured Vietnamese agreement to apply most favoured nation tariffs to most Australian goods from December 2004. The decision will improve Australia's prospects for an increased share of Vietnam's growing market for imported agricultural and manufactured goods. It represented a further step in the full integration of Vietnam's economy with the international trading system. The department continued to negotiate with Vietnam on its accession to the WTO, resulting in Vietnam improving its offers on Australian services.

East Timor

The department played an important role in shaping a new mandate for United Nations involvement in East Timor and in coordinating an Australian contribution to the new United Nations mission. To be known as the United Nations Office in Timor-Leste (UNOTIL), the mission represents a shift in the focus of international activities in East Timor from peace-keeping to peace-building. This reflects the significant improvement in East Timor's security situation.

The department facilitated the Governor-General's visit to East Timor in December 2004. As the first bilateral visit to East Timor by a foreign head of state, it represented a significant development in the bilateral relationship. The department led the Government's negotiations with East Timor on maritime boundary and resource issues, which reached the threshold of an agreement (see sub-output 1.1.7 for more information).

The department was closely involved in arrangements for the Sultan of Brunei's first State Visit to Australia, in February 2005, as well as the August 2004 visit by the Brunei Foreign Minister, Prince Mohamed Bolkiah. A key outcome of the Sultan's visit was signature of an Australia–Brunei MOU on cooperation to combat international terrorism, which the department was closely involved in drafting.

Australia's relations with Laos continued to expand on the back of our ongoing development assistance program, cooperation to combat terrorism and transnational crime, and Australia's significant foreign investment in Laos. The department contributed to a successful visit by the Prime Minister to Vientiane for the ASEAN– Australia–New Zealand Summit in November 2004, and to preparations for the visit to Australia by Laos's Foreign Minister and Deputy Prime Minister in February 2005 (see ASEAN and regional issues below).

With strong support from Australia and considerable lead-up negotiations involving the department, Cambodia joined the WTO in September 2004. Australia continued to have constructive relations with Cambodia on a range of issues, including counterterrorism, where departmental officials helped draft necessary legislation.

On Burma we continued to make clear statements in the UN General Assembly, the UN Commission on Human Rights and the International Labor Organisation calling for the release of all political prisoners, including Aung San Suu Kyi, respect for human rights, and genuine progress on political reform. We emphasised the need for democratic political reform and national reconciliation at senior levels with the Burmese authorities. We pursued our other interests in Burma, such as combating narcotics trafficking, terrorism and money laundering, and secured the participation of Burmese officials in regional technical training focused on transnational crime and public health.

  Export Export   Import Import  
Goods(a) and Services 2003
$ millions
$ millions
Trend Growth
$ millions
$ millions
Trend Growth
Indonesia 3 737 4 209 5.1% 4 547 4 239 6.9%
Malaysia 2 986 3 390 2.7% 4 982 6 290 6.4%
Philippines 1 089 1 116 -6.9% 983 957 11.2%
Singapore 5 617 5 595 -2.8% 6 825 8 814 7.3%
Thailand 2 711 3 551 11.3% 4 352 4 675 10.2%
Vietnam 628 874 11.9% 2 628 2 876 10.8%
Other ASEAN 115 161 2.7% 641 767 25.8%
Total Asean 16 883 18 897 2.0% 24 957 28 618 8.3%
India 3 902 6 053 25.2% 1 206 1 398 10.6%
Other South Asia 929 1 176 -3.0% 433 405 -3.2%
Total South Asia 4 831 7 229 16.8% 1 639 1 803 6.3%
Total 21 715 26 126 4.9% 26 596 30 421 8.1%

(a) Goods data is on a recorded trade basis.

Source: DFAT Stars database and ABS International trade in services by partner country 2004.

ASEAN and regional issues

Three key events strengthened the relationship between ASEAN and Australia.

The Prime Minister attended an ASEAN–Australia–New Zealand Summit in Vientiane in November 2004 to celebrate Australia's 30 years as a Dialogue Partner of ASEAN. Following the summit, Leaders announced the start of negotiations towards an ASEAN–Australia–New Zealand Free Trade Agreement.

In July 2004 Mr Downer signed an ASEAN–Australia Joint Declaration for Cooperation to Combat International Terrorism, which will underpin constructive regional cooperation on counter-terrorism and regional security issues.

Through our sustained, targeted advice the department supported Mr Downer's advocacy with ASEAN leading to agreement for Australia's participation in the first East Asia Summit, to be held in Kuala Lumpur in December 2005. This represents a very significant step forward in our engagement with ASEAN, and with the nations of East Asia generally.


(a) Goods data is on a recorded trade basis.

Source: DFAT Stars database.

South Asia


Photo - See caption below for description
Minister for Foreign Affairs Mr Alexander Downer meets the Indian Prime Minister, the Hon. Dr Manmohan Singh, during his visit to India in June 2005.
Enlarge image :: Photo gallery

The department's endeavours added significant impetus to Australia's expanding relationship with India. In view of its strong economic growth and emergence as a major power in Asia, India is an increasingly important economic, political and strategic partner for Australia.

After a hiatus in high-level visits and official meetings during the second half of 2004—a result of national elections held in both countries—the bilateral relationship regained momentum in 2005 with a series of high-level meetings.

The department led logistical and policy support for the Senior Officials' Talks and Strategic Dialogue in March 2005, the Joint Ministerial Commission (JMC) (on trade) in May 2005 involving Mr Vaile and his Indian counterpart Kamal Nath, and the Foreign Ministers' Framework Dialogue in New Delhi in June 2005 involving Mr Downer and the Indian External Affairs Minister Natwar Singh.

At the JMC, the two trade ministers agreed to negotiate a Trade and Economic Framework to lift the profile of the bilateral trade and economic relationship and set the direction for its future development. They agreed to work towards lifting the level of bilateral merchandise trade from $6.5 billion in 2004 to $8 billion in 2007.


Photo - See caption below for description
Minister for Foreign Affairs Mr Alexander Downer and Pakistan Minister for Industries, Production and Special Initiatives, Mr Jahangir Khan Tareen, sign a memorandum of understanding on counter-terrorism in Canberra in June 2005. Photo: AUSPIC
Enlarge image :: Photo gallery

Australia's bilateral relationship with Pakistan was strengthened by the visits to Australia by Foreign Minister Kasuri in May 2005 and by President General Pervez Musharraf in June 2005. The latter was the first visit ever to Australia by a head of state of Pakistan. The department helped coordinate the visit, which resulted in the signing of MOUs on counter-terrorism, agricultural sector linkages and cooperation between the Exchange Commissions of Australia and Pakistan.

We supported Australian commercial interests in Pakistan, particularly in the energy and mineral resources sectors. We provided strong advocacy on behalf of Australian wheat exports following allegations of contamination of Australian wheat shipments to Pakistan. We assisted AWB Limited in rebutting the allegations and in helping to promote systemic improvements in Pakistan to avoid a repeat of the episode.

Working closely with a number of other government agencies, including the Australian Federal Police and the Department of Immigration and Multicultural and Indigenous Affairs, we made a substantial contribution to Australia's security interests through cooperation with the Government of Pakistan on counter-terrorism, transnational crime, people-smuggling and irregular migration.


The department continued to encourage Afghanistan's progress towards a more secure, stable and prosperous future, particularly during the landmark presidential elections in October 2004. We supported AusAID's contribution to the international community's reconstruction efforts. Australia's aid commitment to Afghanistan since September 2001 amounts to $110 million.

We worked closely with other Australian Government agencies, including the Australian Federal Police and the Department of Immigration and Multicultural and Indigenous Affairs, to assist the Government of Afghanistan on border control, counter narcotics, refugee resettlement, primary education and national parliamentary elections.

The department supported Australia's trade and investment interests in Sri Lanka, particularly through support for Australian companies' efforts to enter the Sri Lankan market and for Australian education services to maintain their leading position. In Bangladesh, the department continued to promote Australian commercial interests and counter-terrorism cooperation.

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