Inform and advise the Government on the advancement of Australia’s political, economic and security interests in South-East Asia and South Asia;
enhance trade and investment opportunities in countries in these regions through commercial diplomacy, bilateral government-industry forums, and the provision of information and in-country assistance to Australian companies;
maintain and expand high-level consultations, exchanges and mechanisms for dialogue to promote Australia’s interests in the security and economic development of these regions;
encourage wider adherence by countries in these regions to international human rights standards and democratic principles; and
project an accurate, contemporary image of Australia in these regions and inform debate within Australia in support of Australia’s interests there, particularly closer economic integration.
The last decade has seen economic transformation in South Asia and South-East Asia and all available projections indicate that significant economic growth will continue throughout the 1990s. As the decade advances, the growing interdependence flowing from the global-isation of trade, information and ideas and a developing convergence of interests, perceptions and processes will accelerate this trend, presenting both opportunities and challenges for Australia.
Significant developments in South Asia and South-East Asia over 1993-94 placed new policy demands on the Department. The rapidly expanding Indonesia-Australia relationship was underpinned by the rapid growth of bilateral economic relations under the framework of the Australia-Indonesia Ministerial Forum, and also strong Indonesian interest in the Australia Today Indonesia ‘94 promotion (see sub-program 1.9). Cambodia re-emerged as an issue of regional security concern despite the success of the United Nations Transitional Authority in Cambodia (UNTAC) mission, while the centrally-planned economies of Vietnam and Laos continued to open up, providing valuable new commercial opportunities for Australian companies. Difficulties in the relationship with Malaysia affected the bilateral agenda and generated a substantial policy workload. There was an acceleration in the development of the ASEAN Free Trade Area (AFTA), accompanied by a growing willingness by some members of ASEAN to contemplate an AFTA- CER link. The ASEAN Regional Forum established itself as a useful mechanism to develop a dialogue on regional security.
In South Asia, rapid progress on market reforms in India saw its attraction increase as an economic partner for Australia, and for other countries. In view of the radical economic reforms in India and the emergence of South Africa as a potential partner both politically and economically, the increasing economic liberalisation generally in the South Asian economies and the changed security concerns in the Indian Ocean following the end of the Cold War, the Department will focus anew on the prospects for security and economic frameworks for cooperation among the countries of the Indian Ocean rim.
Australian domestic interest accelerated in South Asia and South-East Asia, at Federal and State government and private sector levels. The South and South-East Asia Division of the Department participated in the National Trade Strategy Consultative Process through the preparation of papers discussing Australia’s bilateral trade and investment strategies for priority markets in Asia. The division is continuing to work on Commonwealth-State-business follow-up to policy problems with Australia’s investment in South-East Asia, drawing on the East Asia Analytical Unit’s report Changing Tack: Australian Investment in South East Asia.
The resources dedicated to sub-program 1.2 were the South and South East Asia Division (South East Asia Branch and South Asia and Indo-China Branch) and a significant proportion of the work of Australia’s overseas missions in these regions. Following the New Policy Proposal decision in June 1994, a three-branch structure was approved for the division. The new structure has a new branch, Regional Policies and Projects Branch, and renames the South-East Asia Branch the ASEAN Bilateral Branch.
The new structure will strengthen the division’s overall capacity to advance Australia’s political, economic and security interests in South and South-East Asia. In particular, the restructuring will allow greater resources to be focused on business support and market development by bilateral country desks, while boosting the capability to take on forward-looking policy development and projects aimed at maximising the benefits of the Government’s policy of closer economic integration with the Asian region. The division’s work is closely coordinated with that of the North Asia Division. On behalf of the two Asia Divisions South and South East Asia Division produces Asialine, a monthly newsletter for business with a distribution of about 3000 small and medium enterprises interested in trade and investment in Asia.
Ministerial and client (including the business sector) satisfaction with timeliness and relevance of information and advice on economic, political and security developments in South and South-East Asia; and
Indications through high-level, official, institutional and business contacts, and media coverage of program activity resulting in enhanced understanding and acceptance of Australian policies.
Cambodia
The formation of the Government of the Kingdom of Cambodia on 24 September 1993 and the conclusion of the mandate of the United Nations Transitional Authority in Cambodia (UNTAC) marked the formal end of the peace process with which Australia was so closely identified, and began a new period for Cambodia and for Cambodia’s relations with other countries.
Succeeding the Provisional National Government of Cambodia, which had bridged the gap between the UN-sponsored elections in May 1993 and the promulgation of the constitution in September, the new government was a coalition between the royalist party, (FUNCINPEC), and the former communist party, the Cambodian Peoples’ Party (CPP). The Government was led, perhaps uniquely, by two Prime Ministers-the Secretary General of FUNCINPEC, Prince Norodom Rannariddh, as First Prime Minister, and the leader of the CPP, Mr Hun Sen, as Second Prime Minister. Under the new constitution, the form of government was decreed to be a constitutional monarchy, with the King reigning but not ruling.
The formation of the new government and the end of the UNTAC period called for the redirection of Australian policy objectives away from close involvement in the peace process to the establishment of a normal bilateral relationship, building on Australia’s commitment to support Cambodia and its democratically-elected government. In the post-UNTAC period, the Department struck a careful balance between showing proper respect for the independence and sovereignty of the Kingdom of Cambodia and encouraging Cambodia to take full responsibility for its own future, while providing the material and moral support required after several decades of destructive conflict. The objectives of this policy were to consolidate gains made in the peace process in the interests of regional security, to ensure the survival of democratic processes as well as the advancement of the rule of law and respect for human rights, and to create conditions for economic growth and development for the people of Cambodia.
These broad objectives were not realised as fully as might have been hoped. The security situation in Cambodia deteriorated during the first half of 1994 and it became obvious that the new government was having difficulty tackling effectively the serious security, economic and social challenges before it. This was particularly worrying in the countryside where the lack of development continued to be exploited by the Khmer Rouge. It became apparent after several military reverses that the Government’s armed forces were unable, by virtue of their lack of equipment, training and discipline, to contain the Khmer Rouge or to prevent terrorist activities, including hit and run attacks and the kidnapping of foreigners, which had the potential to arrest desperately needed economic development. In the face of evidence that assistance was urgently needed to improve the capabilities of the armed forces, especially in the areas of training and institution-building, the Australian Government indicated readiness to respond sympathetically to a request from the Cambodian Government for further military assistance.
There were some encouraging developments. The Cambodian Government demonstrated awareness of the constitutional requirement for human rights to be observed in deed as well as in the letter. The Government acted early to improve the revenue base of the economy and passed a commendable budget. In February, the Council of Ministers approved the National Program for the Rehabilitation and Development of Cambodia, praised by the World Bank and the Asian Development Bank, among others. A meeting of the International Committee for the Reconstruction of Cambodia (ICORC), in which Australia participated, pledged some US$400 million in international assistance to help rebuild Cambodia.
Australia helped to maintain the momentum of international dialogue on Cambodian issues, encouraging other countries to keep Cambodia on their agendas; helping to coordinate responses to Cambodia’s needs, such its request for military assistance; playing an active role in forums such as ICORC; and by encouraging Cambodia’s re-establishment of regional and international links, including future membership of ASEAN and the ASEAN Regional Forum. Bilaterally, Australia implemented a carefully targeted development cooperation program and announced an aid commitment worth $92 million over four years, a defence cooperation program and a cultural relations program. Special emphasis was given in support of efforts to rid the country of millions of land mines, a lethal legacy of the years of conflict.
The Department managed a busy program of bilateral consultations at all levels. There was an exchange of visits by the two Foreign Ministers and by ministers responsible for various portfolios, and an exchange of parliamentary delegations which laid the foundation for future relations between the Australian Parliament and the new National Assembly. The continuity of the dialogue was maintained through ministerial correspondence which frankly outlined Australia’s views on Cambodian issues with an impact on regional security and on matters related to human rights and good governance. Australia’s record of assistance to Cambodia, and particularly the role played by the Minister for Foreign Affairs, Senator Evans, in the peace process, were well enough established in Cambodian eyes to allow a forthright dialogue to be undertaken with the Cambodian leaders without negative repercussions.
The deterioration in the security climate and the slow pace at which the Cambodian economy began to pick up after the devastation of the previous 20 years meant very limited scope for activity in commerce and investment. Nevertheless the Department pursued openings when they appeared. Australia’s continuing support for Cambodia laid the groundwork for a strong level of Australian involvement when economic conditions become more favourable. Australia supported the economic reforms devised by the Cambodian Government, and urged the Government to implement draft investment legislation to speed up recovery.
Preparations for a round of bilateral and multilateral consultations, and the continuing high level of media and community interest in Cambodian issues, involved the Department in almost daily production of submissions, briefings and correspondence, in addition to intense liaison with the post, AIDAB and non- government agencies. The evolving political and security situation in Cambodia provided the Department with the challenge of devising and implementing imaginative solutions to a diverse and demanding range of problems.
Vietnam
Australia’s relations with Vietnam were cemented at the highest level when Mr Keating became the first Australian Prime Minister to visit a unified Vietnam in April 1994. Together with Senator Evans’s official visit to Vietnam in November 1993, Mr Keating’s historic visit reinforced Australia’s reputation as a technologically advanced and competitive economy able and willing to participate in Vietnam’s development. As an indication of the expanding relationship, the Government announced its intention to open a consulate in Ho Chi Minh City in 1994-95.
The continued opening of Vietnam’s economy provided valuable new opportunities for Australian companies. The Department, through its Embassy in Hanoi, and close work with Austrade, devoted considerable resources to supporting Australian commercial interests in Vietnam. It provided advice, serviced business visitors, and made representations to the Vietnamese Government. The third meeting of the Australia-Vietnam Joint Trade and Economic Cooperation Committee, in Canberra in October 1993, co-chaired by the then Minister for Trade, Senator Cook, and his counterpart, Vietnam’s Minister for Trade, Le Van Triet, reviewed prospects and problems in the bilateral commercial relationship. The Vietnamese delegation visited Victoria, Queensland and Western Australia to broaden business contacts. The Vietnam trade displays in Sydney and Melbourne in March 1994, sponsored by the Department’s Trade and Investment Promotion Service (see AIDAB’s program 6), facilitated further commercial contact between the two countries.
As an indication of the strength of the commercial relationship, Australia became the third largest foreign investor in Vietnam during 1993-94 with some 41 projects involving a total capital of about one billion dollars, while two-way trade doubled to $366 million. BHP, the major equity holder and operator of the Dai Hung offshore oil project, due to commence production in October 1994, remained the biggest Australian investor in Vietnam. Telstra continued to expand its successful investment in the overseas telecommunications market in Vietnam. ANZ is one of a few foreign banks licensed to operate in Vietnam. Australian companies were also active in the services, energy, tourism, mining and construction sectors.
Australia encouraged both the US and Vietnamese Governments to achieve early normalisation of their relations in the best interests of both countries, and regional prosperity and stability. Lifting of the US trade embargo against Vietnam in February 1994, preceded by the resumption of international aid and lending to Vietnam, was welcomed by the Australian Government and business. Well established on the ground floor in Vietnam, and respected for capability and expertise, Australian business was confident that the end of the embargo, while intensifying competition, would create new opportunities.
Australia continued to raise human rights concerns with Vietnam at the highest level, through the embassy in Hanoi and in meetings with the Vietnamese Government . The Department put considerable effort into the negotiations and preparation for a parliamentary delegation visit to Vietnam to develop understanding and dialogue on human rights issues. Regrettably, the visit had to be cancelled when Vietnam withdrew the visa of a delegation member and cut back the proposed program. Despite this setback, Australia will continue to raise human rights issues with Vietnam, and will seek to revive the proposal for such a delegation in the future. On the positive side, one of the political prisoners whose cases Australia had been regularly raising with Vietnam, Mr Quach Vinh Nien, was released and later migrated to Australia to rejoin his family.
Taking every opportunity to encourage greater cooperation in the region, Australia initiated and maintained high-level consultation with Vietnam on issues relating to regional security and development, disarmament, and engagement with ASEAN. Vietnam participated in the inaugural ASEAN Regional Forum and secured ASEAN’s agreement to become a member soon. Vietnam also became a member of the Pacific Economic Cooperation Council (PECC).
Laos
An exchange of prime ministerial visits in 1993-94 consolidated the Australia-Laos relationship. Reciprocating the visit to Australia in December 1993 by the Prime Minister of Laos, General Khamtay Siphandone, the Prime Minister, Mr Keating, made an official visit to Laos in April 1994, attending the opening of the Mekong River Friendship Bridge linking Laos and Thailand. The bridge, funded and built by Australia, is a symbol of Australia’s commitment to friendship, development and cooperation in the region and demonstrates Australia’s technological capabilities.
The longstanding relationship between the two countries underpins the current growth in commercial relations. The Lao economy is small, but the country’s strategic location in the middle of one of the world’s fastest growing regions and its continuing transformation from a centrally planned to a free market economy have provided the basis for rapid expansion of Australia’s commercial relations, with excellent prospects for further development.
The Department, through the embassy in Vientiane, played a major role in assisting Australian business. This included representations at the highest level in the Lao Government to support major Australian investment proposals, and servicing a large number of business clients and visiting trade delegations. An investment protection and promotion agreement was signed during Mr Keating’s visit, giving an important legal framework to Australia’s increasing level of trade and investment with Laos. A visit to Australia in June 1994 by the Lao Minister for Transport, Telecommunications and Construction, provided an opportunity to show Australian capabilities in priority sectors for Laos and to facilitate contact between the Lao Government and Australian business. To provide up-to-date information to business interested in entering the Lao market, the Department participated in organising the ‘Indo-China and Beyond’ investment forum in Sydney in December 1993, and produced the Laos Country Economic Brief.
As an indication of the strength of the commercial relationship, in 1993-94 Australia ranked third among foreign investors in Laos, after Thailand and Taiwan. Transfield won the development rights, against intense international competition, to build and operate a hydroelectric power station on the Nam Thuen River. It will cost more than $1 billion, the largest such project in Laos. The Hydro-Electric Commission (HEC) of Tasmania signed a memorandum of understanding for the development of two other power stations. Australian companies were also active in the mining, telecommunications, and mineral processing sectors.
Australia supported Laos’s efforts to increase its involvement in regional affairs, including high-level consultations and briefings on regional issues. Laos is expected to become an ASEAN member in the near future.
Australia continued to encourage Laos to comply with the Universal Declaration of Human Rights. The recent release of a number of long-term political detainees was an encouraging indication of a more positive attitude to human rights by the Lao Government.
Countries in the region continued their programs of economic reform and restructuring. In this increasingly liberalised economic environment, the Department’s major objectives in the region focused on expanding opportunities for Australian exporters and investors. The Department undertook a major study on India, which assessed the outlook for the Indian economy and identified strategies for Australian trade and investment, and supported trade, investment promotion and cultural exchange activities throughout the region. The continuing conflicts in Afghanistan, the north and north-east of Sri Lanka, and in Kashmir, remained sources of concern for Australia and the Department sought to play a constructive role in encouraging peaceful negotiated settlements. Australia’s commitment to internationally accepted standards of human rights remained a major focus of the Department’s activities, and human rights issues were regularly raised in discussions with countries of the region.
India’s growing strategic and economic interests and assertiveness in the region underlined the importance for Australia of strengthening ties with India. With the re-entry of South Africa into the world political and economic community, this heightened the need to consider the establishment of frameworks for security and economic cooperation among Indian Ocean littoral countries. These twin developments were a key focus for the South and South East Asia Division’s activities during the year.
The Department has initiated a project to develop a comprehensive regional approach in the Indian Ocean on issues of interest to Australia. While the Indian Ocean is at present a difficult area in which to find a community of interests, there exist a number of potential building blocks for practical cooperation, particularly in the economic field. Security aspects will be more difficult to follow up and the Department will need to address how regional cooperative security strategies might be further explored in the new post-Cold War security environment.
The project will identify key issues to be addressed in working papers that will examine the scope for building a community of economic and security interests among the countries of the region, focusing on how best to advance Australia’s interests. It will take an incremental and evolutionary approach, leading to a broadly based international seminar to examine frameworks for cooperation in mid-1995.
India
India, which has the world’s second-largest population and a vast resource base, is only now beginning to realise its immense economic potential. The Indian economy is projected to grow at about 6% a year to the year 2000. In June, Prime Minister Narasimha Rao declared the Indian Government’s program of economic reform, which had commenced three years earlier, to be ‘irreversible’. In response to continued rapid progress on market reforms, the Department sharpened the commercial focus of Australia’s approach to India while actively promoting the full range of the relationship.
To encourage Australian business to make the most of opportunities arising from the internationalisation of the Indian economy, the Department in April released a comprehensive study, India’s Economy at the Midnight Hour: Australia’s India Strategy. The study was optimistic about India’s short-to-medium term economic outlook and assessed the Indian market as providing enormous potential for Australian companies. Working closely with its regional offices and the Australian High Commission in New Delhi, the Department publicised the study widely through a series of seminars conducted in State capitals in Australia and India. Feedback from the Australian private sector and India has been strongly positive.
The release of the Department’s India study followed a successful third meeting of the Australia-India Joint Ministerial Commission in Sydney in February 1994. This was organised by the Department and chaired by the Minister for Trade, Senator McMullan, and the Indian Minister of State for Commerce, Mr Kamaluddin Ahmed. The Department used the joint ministerial commission meeting, which was well attended by Australian private sector representatives, to lobby the Indian Government on key market access and tariff issues, particularly on wool and coal, and to support specific Australian project bids. The meeting was followed by Indian legislative action addressing a number of those issues. In accordance with an agreement achieved at the meeting, the Department will negotiate a bilateral investment promotion and protection agreement. The meeting also agreed to synchronise the next Joint Ministerial Commission (JMC) meeting with the annual meeting of the Australia-India Business Council, and to conduct an intersessional review of the commercial partnership before the next full meeting of the JMC.
The increasing focus on commerce in Australia’s relations with India was reflected in the 1993-94 trade figures. Two-way trade, which stood at less than $100 million in 1982, increased by 3% during 1993-94 to $1.3 billion. Exports decreased by almost 3% to $862 million, reflecting an overall contraction in Indian imports worldwide. Imports increased by 18% to $427 million. There was a 60% increase in the numbers of full fee-paying students travelling from India to Australia. Australian investment in India, while still small, increased in the period, particularly in the energy sector. The Australian High Commission in New Delhi assisted an increasing number of Australian business visitors in the period. Australian subscribers to the Department’s country economic brief for India increased.
The Australian High Commission in New Delhi maintained a high-level dialogue with key Indian ministers and senior officials on aspects of India’s economic reform program bearing on Australian commercial interests, and on the GATT Uruguay Round Accord. The Indian Government decided to endorse the accord despite intense domestic opposition.
The High Commission also initiated a dialogue with the recently formed Indian Human Rights Commission, modelled on the Australian Human Rights Commission, and together with the Department, via senior officials’ talks, made representations to the Indian Government on a range of human rights issues, including specific cases of concern.
Activities instituted by the Australia-India Council, particularly the month-long India Today ’94 festival in Australia in April-May, and the Department’s India study, enhanced Australia’s image in India and served to focus interest in Australia on India as a major bilateral and regional partner. Media coverage of Australia increased in 1993-94 and was more informed and helped bring up-to-date perceptions of Australia to India. Public affairs activities supported the higher trade and economic profile of the mission and targeted specific bilateral issues, science, technology and cultural activities and exchanges.
In April, the Indian Vice-President, Mr K.R. Narayanan, became the highest level Indian ever to visit Australia. The Vice-President’s visit provided an excellent opportunity to advance Australia’s dialogue with India on a range of issues. A number of Indian ministers visited Australia in the period.
Defence dialogue and cooperation continued through a range of activities. In April, the Australian High Commission in New Delhi facilitated a visit to India by the Chief of the Australian Defence Force, Admiral Beaumont. In July, the Australian High Commission provided support for the visit to Cochin by HMAS Sydney. The High Commission also facilitated Indian participation in the Chief of General Staff exercise in Australia in October, and in courses such as those conducted by the Joint Services Staff College.
In February, the annual senior officials’ talks in Sydney enabled Australia and India to review the full range of bilateral, regional and international political, strategic, security and economic issues of interest or concern.
Pakistan
The support of the military ensured the political stability required for the new Prime Minister of Pakistan, Mrs Benazir Bhutto, to continue economic liberalisation and public sector reforms. The 1994- 95 Pakistan budget continued the process of liberalisation of the economy, including further tariff cuts, simplification of the taxation structure and full convertibility of the rupee on the current account.
The Department provided assistance to companies seeking new business in telecommunications, port and road construction, education, defence equipment and education, and introduced 15 new Australian companies to the Pakistani market. In January 1994, the High Commission held the first Australian education exhibition in Pakistan, reflecting the marked increase in interest by Australian educational institutions. In order to facilitate increasing Australian commercial activities in Pakistan, Austrade restored the post of an Australian Trade Commissioner to Islamabad.
Australia’s exports fell between 1992-93 and 1993-94 by 6% to $221 million, due mainly to a $50 million fall in confidential items of trade. Imports from Pakistan rose by 8% to $141 million, reflecting rises across broad categories of items. The Department continued to facilitate increased sales of Australian commodities such as coal, iron ore, pulses and cotton. Trade development was also assisted by Depart- ment-sponsored visits to Australia of Mr Naveed Qamar, the Chairman of the Privatisation Commission, Mr Shafqat Mahmood, Political Adviser to the Prime Minister of Pakistan, and a Pakistani parliamentary delegation.
The Department maintained high-level contacts with Pakistan on disarmament, nonproliferation, terrorism, human rights, narcotics and environmental issues. Notwithstanding the sensitivity of the disarmament and nonproliferation issues, Pakistan welcomed serious dialogue with Australia, reaffirming the value of working towards a full round of disarmament talks in 1995. Australia’s efforts to bring direct attention to narcotics issues resulted in a proposal for negotiations for an extradition treaty between Australia and Pakistan.
Australia’s bilateral aid to Pakistan covered activities in education, health, water supply and population, and the scope of training awards has broadened to include health and education. Australia’s profile was raised in Pakistan as a result of satellite television, specific publicity initiatives, and public speaking engagements by the Australian High Commissioner.
Bangladesh
The government led by Prime Minister Mrs Khaleda Zia has achieved moderate economic success despite an increasingly difficult domestic political environment. The 1993-94 budget in Bangladesh continues the economic and social reform process that began with the election of the Bangladesh National Party government in 1991.
The Department and the Australian High Commission in Dhaka provided support to Australian firms in identifying and taking advantage of emerging trade and investment opportunities. The largest of these ventures is expected to lead to a US$400 million investment in the mining sector. Total merchandise trade in 1993-94 rose from $97 million in the previous financial year-the bulk being Australian exports of vegetable and dairy products, cereals and metals. Imports from Bangladesh, mainly textiles and garments, rose marginally to $20 million.
The High Commission was active in Australia’s program of development assistance to Bangladesh, focusing on food aid, public health activities and human resource development.
Nepal
Australia’s relations with Nepal have strengthened following increased investment by Australian companies in sectors such as power generation and civil aviation. The Department, through the Australian Embassy in Kathmandu, assisted Australian companies in increasing their commercial presence. The Snowy Mountains Engineering Corporation successfully bid for a US$600 million joint venture investment to build and operate a hydro-power generating plant in western Nepal. The commissioning of the Fred Hollows intraocular lens manufacturing facility, built with substantial Australia aid, added to Australia’s profile.
An Australian parliamentary delegation, led by Mr Harry Jenkins MP, visited Nepal in 1993 and was impressed by Nepal’s development efforts and by signs of emerging commercial opportunities following initial economic liberalisation measures. However, recurrent political instability continues to deter potential Australian investors, and may delay further crucial economic reforms.
The Department’s consular role remained significant in Kathmandu, with assistance provided to about 200 Australian travellers.
Sri Lanka
The Sri Lankan economy has shown remarkable resilience despite the costs of the continuing war between the Sri Lankan Government and the Liberation Tigers of Tamil Eelam in the north-east of the island.
The ethnic conflict remains of concern to Australia. Australia has consistently urged both sides to seek a peaceful negotiated settlement and recently renewed the 1990 offer to assist in the facilitation of a Commonwealth mediation role. Australia continued to monitor the situation and to make representations on specific human rights aspects as required.
In June 1994, the Australian High Commission organised a successful and innovative one-week promotion of Australian business and culture. The High Commission also continued to provide active support to Australian companies interested in trade and investment in Sri Lanka, which contributed to the increase in bilateral trade. Recent trade statistics indicate that annual two-way trade with Sri Lanka has reached $153 million, with a substantial increase in Australian exports of 34% in 1993-94 compared to the previous financial year. Australian investment in Sri Lanka is estimated at $400 million and several promising proposals involving Australian companies were awaiting finalisation at the end of the reporting period.
The ASEAN grouping provides the primary institutional focus for Australia’s relations with South-East Asia. In 1993-94, Australia’s focus on South-East Asia as a key area for foreign policy strengthened further. Highlights were ASEAN’s decision to take a wider role in Asia-Pacific security through creation of the ASEAN Regional Forum, Thailand’s proposal for a link between the ASEAN Free Trade Area (AFTA) and Closer Economic Relations (CER) trade areas, and the extension of functional relations through various working groups under the ASEAN-Australia Forum. The year saw Australia make substantial further progress towards the goal articulated by Senator Evans in 1989 of ‘comprehensive engagement’ with South-East Asia.
In July 1993, Senator Evans attended the annual ASEAN Post Ministerial Conference in Singapore. The conference, at which the six ASEAN foreign ministers meet their counterparts from ASEAN’s seven dialogue partners (Australia, the United States, Japan, Canada, South Korea, New Zealand, and the European Union), is one of the most important events on Australia’s multilateral calendar. The central theme of the 1993 conference was regional security, with the meeting welcoming ASEAN’s establishment of the ASEAN Regional Forum as the first Asia-Pacific wide forum for regional security discussions. The inaugural forum meeting, including ASEAN members and their dialogue partners, as well as China, Russia, Vietnam, Laos and Papua New Guinea, was to be held in July 1994.
Among the wide range of international political and economic issues discussed at the Post Ministerial Conference, ASEAN’s agreement to open its Treaty of Amity and Cooperation to non-South-East Asian states, and progress towards the creation of a South-East Asia nuclear weapons-free zone were of particular interest to Australia, with potential to contribute to a growing regional security partnership between Australia and ASEAN countries.
Two-way trade between ASEAN and Australia continued to increase strongly, growing to $13.9 billion in 1993-94. Australia’s exports to ASEAN were valued at $8.9 billion, or 13.8% of total exports, making ASEAN our second largest regional market after North-East Asia.
Australia continued to closely follow implementation of the ASEAN Free Trade Area (AFTA) during 1993-94. The Department’s East Asia Analytical Unit produced a major study in April 1994 of AFTA’s implications for Australia. One of the study’s recommendations was that Australia explore the prospects for a link between AFTA and our CER relationship with New Zealand, as suggested by Thai Deputy Prime Minister Supachai at the NTIOC conference in Melbourne in November 1993. The ASEAN- Australia Forum in May 1994 agreed that the concept of an AFTA-CER link merited further discussion.
A highlight of the officials-level ASEAN-Australia Forum was progress in functional cooperation. Working groups on trade and investment, telecommunications, education and training, and environment set down programs which will augment relations between ASEAN and Australia. In a significant new development, the forum agreed to establish a working group on industry and technology, an area with great potential in the relationship with ASEAN. Australia was pleased with the forum’s agreement to create a working group on culture and information to promote discussion of shared principles and values. The forum also supported joint technical cooperation programs in third countries and Australian involvement in sub-regional growth areas.
The ASEAN-Australia Economic Cooperation Program Phase II was completed in June 1994. Phase III, commencing in July 1994, will be divided into a projects stream and a linkages stream, both of which will encourage the participation of ASEAN and Australian business sectors. The new phase is expected to stimulate increasing trade and investment between ASEAN and Australia.
Indonesia
There was continued substantial expansion and diversification of practical cooperation between Australia and Indonesia, reflecting the increasingly multidimensional relationship which is developing between the two countries. The Government welcomed the conclusion of the November 1993 report on Australia’s relations with Indonesia by the Joint Parliamentary Standing Committee on Foreign Affairs, Defence and Trade that there is a very promising future for harmonious cooperation between the two countries.
Sustained high-level consultations and exchanges, including at prime ministerial level, continued to expand. This ensured a constructive dialogue with Indonesia on key regional economic and security issues, and bilateral cooperation. The future of Asia Pacific Economic Cooperation (APEC) was a particular focus in view of Indonesia’s chairmanship of APEC in 1994. The Prime Minister visited Indonesia in October 1993, and in June 1994 as part of the Australia Today Indonesia ‘94 promotion (see sub- program 1.9). Senators Evans and McMullan and six other ministers (the Deputy Prime Minister, Mr Howe; the Minister for Industry, Technology and Regional Development, Senator Cook; the Minister for Human Services and Health, Dr Lawrence; the Minister for Employment, Education and Training, Mr Crean; the Minister for Defence, Science and Personnel, Mr Punch; and the Minister for Family Services, Mrs Crowley) also visited Indonesia to participate in Australia Today Indonesia ’94. Each State was represented at the promotion. State ministers who attended were Mr John Olsen from South Australia, Mr David Hamill from Queensland, Mr Hendy Cowan from Western Australia, Mr Phillip Gude from Victoria, Mr Ron Phillips from New South Wales and Mr Shane Stone from the Northern Territory. The promotion was the largest staged by Australia in Indonesia. A total of 19 Australian Federal ministers visited Indonesia during the year, while 12 Indonesian ministers visited Australia.
Australia continued to encourage the Indonesian Government to adhere to international human rights standards and to improve the human rights situation in East Timor. Australia also expressed disappointment over the revocation of publishing licences of three prominent weekly news magazines and urged the Indonesian Government to reinstate the licences.
The development of bilateral economic and commercial relations remained a central objective. Trade and investment links received a substantial boost with a major business forum and mission to Indonesia, as part of Australia Today Indonesia ’94, held in Jakarta between 14 June and 3 July. The promotion, including a 300-member business mission and forum and an associated trade and industry exhibition, achieved its aim of projecting Australia as a technologically advanced economy and a diverse and culturally sophisticated society. Fully supported by the Indonesian Government, it attracted strong participation by the Australian and Indonesian business communities, whose level of awareness of the opportunities for commercial collaboration was significantly enhanced with consequent major business results.
Australian States and Territories participated in Australia Today Indonesia ’94 and continued to expand their links with Indonesian provinces, adding to the developing bilateral economic relationship. The opening of a representative office in Jakarta by the Victorian Government followed the establishment of a sister state-province link between New South Wales and the Special Territory of Jakarta during the year.
Total two-way trade between Indonesia and Australia decreased by 0.9% to just under $3 billion in 1993- 94. The rate of growth of Australian exports, after slowing in 1992-93, rose 10%. This increase, coupled with a 15% fall in imports, almost doubled Australia’s merchandise trade surplus with Indonesia, which stands at $783 million.
The working groups on trade and industry and investment and on agriculture and food cooperation, established by the initial meeting of the Australia Indonesia Ministerial Forum in November 1992, made substantial progress in meetings in Darwin and Jakarta, which will further advance Australia’s trade and investment links with Indonesia. This was facilitated by strong business involvement in the forum process. Collaborative activities in the health, housing and education fields were also initiated or expanded under the umbrella of the ministerial forum. The second forum meeting was due to be held in August 1994, in Canberra. Defence links between Australia and Indonesia continued to strengthen during the year.
Thailand
The bilateral relationship with Thailand developed greater intimacy and substance during the year. Prime ministerial and ministerial contact across a range of portfolios strengthened as Thailand positioned itself as the sub-regional economic hub of the South-East Asian mainland.
The Prime Minister’s visit to Thailand in April, and the opening of the Australian-funded and built Friendship Bridge linking Thailand and Laos, generated significant momentum in the relationship. Agreement was reached to establish a ministerial commission comprising the foreign and trade ministers of both countries. The commission will provide a high-level bilateral forum for consultation on political, security and economic issues of shared interest and concern, and give impetus to bilateral economic and commercial relations.
High-level exchanges including Mr Howe, Senator Evans, Senator Cook, Senator McMullan, Mr Kerr and Mr Bilney, the Thai Foreign Minister, Mr Prasong and Commerce Minister, Mr Uthai, helped to generate support from Thailand for major Australian foreign policy objectives in the Asia-Pacific. In particular this related to economic integration and trade liberalisation through APEC, and the Thai proposal for a linkage between AFTA and CER. Strong Thai support for the Cairns Group was secured in the final stages of the Uruguay Round, aiding the achievement of a successful outcome. Thailand and Australia worked closely in the lead-up to the inaugural meeting of the ASEAN Regional Forum, helping to facilitate a highly successful meeting.
Thailand became Australia’s 17th largest trading partner ($2.1 billion in 1993-94) and 12th largest export market ($1.27 billion in 1993-94). Thailand’s rapidly expanding industrial base and average GDP growth of over 10% over the past five years make it one of our fastest growing export markets. High-level Thai participation in the inaugural National Trade and Investment Outlook Conference (NTIOC) in Melbourne in late 1993, heightened awareness of the opportunities for trade and investment in Thailand.
The Australian Parliamentary Joint Committee on Foreign Affairs, Defence and Trade is conducting an inquiry into Australia’s relations with Thailand. DFAT provided a major submission to this inquiry in April 1994, as a contribution to informed public discussion and awareness of Thailand and the economic opportunities it offers.
Bilateral economic issues, pursued through the Joint Trade Committee officials talks, ministerial-level dialogue, and on a regular basis through Australia’s mission in Bangkok, resulted in some movement on market access issues, including the question of a zero value-added tax rating on Qantas operations, and significant progress in efforts to encourage liberalisation of the Alien Business Law. The best Uruguay Round trade liberalisation outcomes among the ASEAN countries were obtained from Thailand.
Australia continued with its program of close defence cooperation with Thailand. Defence cooperation activities included training courses for Thai armed forces personnel in Australia, study visits, ship visits and combined military exercises. Australia also assisted in research and development and strategic planning. Defence cooperation supported activity in 1993-94 is expected to cost $4.2 million. Senior defence officials talks are held annually.
Australia’s bilateral aid program in Thailand is its fifth largest, with total expenditure in 1993-94 expected to be $37.1 million. This was a fall of around $4 million on the previous year due to completion of the Mekong Bridge project. The successful completion of this project greatly enhanced Australia’s commercial image in Thailand and the sub-region.
The Philippines
There was a closer focus on the Philippines during the year, following the success of the Ramos Administration in achieving political stability through its national reconciliation process, and emerging signs of recovery in the Philippine economy. Visits by the Minister for Trade in March, and the Minister for Foreign Affairs in June, registered Australia’s intention to strengthen and expand political, and trade and investment relations with the Philippines. Consultations and exchanges with the Philippines at ministerial and senior officials level and by our mission in Manila on regional economic and security issues ensured that the Philippines remained a supportive partner. In particular this applied to regional security issues and to involvement by the Northern Territory in the Brunei Indonesia Malaysia Philippines East ASEAN Growth Area, which encompasses Mindanao in the southern Philippines.
Discussions at the 12th Joint Commission Meeting in April focused on the Philippine customs valuation system, quarantine issues, coal tariffs and barriers to agricultural trade and mining investment. The meeting produced a number of practical outcomes to enhance trade and investment including agreement to negotiate an investment promotion and protection agreement and to review Australia’s assistance on trade and investment promotion. Progress on market access issues facilitated by the joint commission and the efforts of the embassy in Manila assisted new and existing Australian companies in the Philippines. This included the first financial and technical assistance agreement concluded between an Australian mining company and the Philippines Government. The agreement allows for a substantial increase in the maximum foreign equity permitted in mining projects undertaken in the Philippines. The Philippines continued to work towards removing import licence restrictions on meat imports and bringing its customs valuation system into line with international best practice.
The Joint Working Group on Energy, involving government and private sector representatives, met for the first time in May 1994 to stimulate interest in Australia’s ability to supply equipment and expertise. Although the major contracts for provision of new power stations have been concluded, opportunities were identified for profitable Australian involvement in areas such as power transmission, and distribution systems, load management and environmental aspects of power production.
In 1993-94, two-way trade increased by 14% to $883 million. While Australian investment in the Philippines was only $146 million in 1991-92, there have been a series of substantial new flagship Australian investments in the past year in transportation, mining, telecommunications and harbour services. Australian exports to the Philippines in 1993-94 totalled $695 million, an increase of 16% on 1992-93 and consisted mainly of dairy products, including live cattle, metals and machinery and transport equipment.
Australia was the largest provider of training to the Philippines Armed Forces in 1993-94. Philippines trainees attended staff colleges and major courses in Australia, contributing to professionalism in the armed forces. The Australian Government continued to fund human rights courses for Philippines military and police trainers to help stem the continuing, but declining, incidence of human rights violations. To complement its training program, the Government funded the International Committee of the Red Cross to supply human rights texts to Philippines military and police schools, individual units and military and police trainers.
Australia’s aid program in the Philippines is its fourth largest and ranks fourth in the Philippines as a bilateral aid donor, providing about 1.5% of its total aid receipts. Total Australian aid in 1993-94 was $48.1 million, with $38 million provided as programmed bilateral assistance. The major project elements were education and training, natural resources management, water provision, health and community livelihood.
Myanmar
Australia maintained correct but limited diplomatic relations with Rangoon, and continued to play a prominent role in international and regional efforts to pressure the ruling State Law and Order Restoration Council (SLORC) to implement political reforms and adhere to universally accepted standards of human rights.
The fundamentals of Australia’s approach to Myanmar remained unchanged. Australia co-sponsored United Nations consensus resolutions calling for political and human rights reform, and continued to use its best endeavours to restrict the assistance programs of UN organisations in Myanmar to grassroots activities. Bilateral development assistance remained suspended in the absence of substantial progress in the political and human rights situation in Myanmar, and a ban on defence exports to Myanmar and the suspension of defence visits from Australia remained in place. There were signs that this approach was having some limited effect, with indications that the SLORC was making some concessions and seeking to explain its position to the international community.
It became abundantly clear, however, that there was no point in continuing to call for economic or other types of sanctions against the SLORC, given the difficulty of mobilising significant international support for them and clear questions about how effective such measures, if set in place, would actually be in bringing about positive change in isolationist Myanmar. The Government therefore sought to improve the situation in Myanmar by encouraging the government of that country to accommodate democratic and other concerns on a step-by-step basis, and by combining a judicious use of encouragement and pressure. Australia continued to work hard, through ministerial and officials-level contact, to encourage the ASEAN countries to apply greater direct influence to encourage positive movement in Myanmar. Other developments in Australia’s approach included the restoration of indirect humanitarian assistance in 1993, limited cooperation on narcotics, and resumption of defence attache visits from Bangkok in early 1994. By the end of the period, there were indications that this approach was also having some effect, with the SLORC showing distinct signs of wanting to be part of the mainstream in South-East Asia and ASEAN, in response, indicating that this process would be facilitated by a resolution of the country’s internal problems.
Australia maintained dialogue with the Myanmar authorities, and sought to welcome positive developments when they occurred. Senator Evans agreed to meet with a visiting SLORC delegation in August 1993, on the basis that this provided an opportunity to express directly to the SLORC Australia’s continuing concern over the situation in Myanmar. The Government also issued statements welcoming the SLORC’s November 1993 agreement to allow a UNHCR presence to monitor the repatriation of the Rohingya refugees and the decision to allow US Congressman Richardson to see Aung San Suu Kyi in February 1994.
A government-facilitated experts workshop on Myanmar in February 1994, in conjunction with the Brisbane-based Griffith University Centre for the Study of Australia-Asia Relations, identified some fresh and creative approaches to the situation in Myanmar. The workshop devised a set of ‘aspirations for Myanmar’ aimed at fostering a sense of consensus and purpose on the part of the international community; targets for measuring progress in Myanmar; and a range of confidence-building measures to promote dialogue between the parties to the conflict. The results of this workshop, which were circulated to key nations, were generally recognised as a significant contribution to the search for new and imaginative approaches to the situation in Myanmar.
Singapore
During the year, relations between Australia and Singapore became more productive and diverse, based on strong trade and investment links, similar regional outlooks and strengthening defence ties. High-level consultations and exchanges secured Singapore’s acceptance of Australia’s views on a wide range of regional economic and security issues, and maintained constructive cooperation with Singapore, especially in advancing APEC as the region’s preeminent economic forum and in consolidating the ASEAN Regional Forum as a forum for regional security dialogue. The opening in March of the permanent Singapore Air Force training school at Pearce in Western Australia by the then Singapore Defence Minister, Dr Yeo Ning Hong, further strengthened bilateral defence ties.
The Government’s Strategic Business Linkages initiative was advanced by a targeted business mission from Singapore in May 1994. The program included a seminar in Canberra launched by the Prime Minister, Mr Keating, and a series of targeted individual meetings in Sydney and Melbourne. The mission informed Australian companies of the opportunities presented by Singapore’s regionalisation policy and put them in direct contact with Singa-porean firms so that they might combine their respective comparative advantages and complementary strengths to form cooperative ventures in Singapore and third country markets such as China, India and Indo-China. High-level ministerial involvement, with Singapore Minister of State for Trade and Industry and Labour, Mr Goh Chee Wee, leading the business mission and Mr Keating and Senator McMullan addressing the seminar in Canberra, highlighted Australia’s shared interests in pursuing trade and investment opportunities in ASEAN markets and beyond.
Visits by the Australian Ministers for Trade (Senators Cook and McMullan) to Singapore in July 1993 and March and June 1994, helped to strengthen Australia’s commercial links with Singapore and promote Australia as an attractive destination for Singapore investment. In 1993-94, Singapore was Australia’s largest trading partner in ASEAN and fifth largest export market worldwide, with exports valued at $3.26 billion and imports at $1.8 billion. However, it was disappointing that, despite representations, the Singapore Government withdrew recognition of foreign legal and medical qualifications from a number of overseas institutions, including some Australian universities.
A large number of other ministerial and senior official visitors to Singapore at Federal and State levels received appropriate levels of access and helped reinforce the image of Australia as a changing, sophisticated, technologically advanced and multicultural society. They included the Deputy Prime Minister, Mr Howe (November 1993); Special Minister of State, Mr Walker (November 1993); Minister for Communications, Mr Beddall (September 1993); Minister for Tourism and Resources, Mr Lee (September 1993); and Minister for Justice, Mr Kerr (July 1993). Their visits also contributed positively to Singapore’s better understanding of Australia’s domestic agenda. In a similar vein, visits from Singapore included the then Defence Minister, Dr Yeo Ning Hong, (March 1994), Senior Minister, Mr Lee Kuan Yew (April 1994), and Minister of State for Trade and Industry, Mr Goh Chee Wee (May 1994), helped to convey a contemporary image of Australia’s economy and society.
Malaysia
There was continuing strong growth in economic and trade relations between Australia and Malaysia as Malaysia’s economic boom continued to draw Australian exports and investment. The continued diversification of bilateral relations was reflected in the appointment of counsellors for education, and science and technology, to the Australian High Commission in Kuala Lumpur. Defence cooperation activities under the Malaysia-Australia Joint Defence Program, the largest of its kind with an ASEAN country, were maintained at a high level, reflecting shared interests and mutual benefit.
The bilateral controversy of November-December 1993, after the APEC leaders meeting in Seattle, placed a high premium on the Department’s ability to manage the relationship and Australian interests in Malaysia. The difficulties were resolved quickly, and in a manner consistent with Australia’s interests.
High-level consultations and exchanges included, at ministerial level, the participation of Senator Cook in a Malaysian-organised Pacific Rim Business Collaboration Symposium in November 1993 and Senator McMullan at the Pacific Economic Cooperation Council (PECC) Ministerial conference in Kuala Lumpur in March 1994. This promoted Australia’s interests in the economic dialogue and development of the Asia-Pacific region. Participation in regional security seminars and consultations at officials level, as well as regular high-level exchanges, remained important. This ensured that Malaysia had a clear understanding of Australia’s views on regional security and economic issues, including in particular on the ASEAN Regional Forum and APEC. An innovation in the field of human rights dialogue with Malaysia was a visit to Malaysia for consultations in late 1993 by members of the Australian delegation to the UN Commission on Human Rights. These informal talks were valuable to both sides and are likely to be repeated.
Malaysia continued to be an important trading partner in 1993-94, providing an export market of $1.75 billion and imports of $1.1 billion. Trade and investment opportunities with Malaysia were pursued vigorously. Visits by Senator Cook and his successor Senator McMullan contributed to restoring the environment for doing business. A visit by Mr Crean enhanced opportunities for Australian education and training providers in Malaysia. The Department played a major role in supporting Transfield’s bid to build patrol vessels for the Royal Malaysian Navy, and in assisting numerous other companies in developing commercial relationships in Malaysia. The Department organised a visit by a high-level delegation of Malaysian business people for the inaugural National Trade and Investment Outlook Conference in Melbourne in November 1993. The Department also pursued a number of specific market access issues with Malaysia on behalf of Australian companies.
Public affairs activities in Malaysia focused on changing often outdated and prejudicial stereotypes of Australia. Growing Malaysian understanding of economic opportunities in Australia was reflected by very high levels of investment in Australia, particularly in commercial property. The post made significant progress towards the establishment of an Australian alumni network, to enable more regular communication with the estimated 100 000 graduates of Australian educational institutions in Malaysia.
Brunei Darussalam
Australia’s bilateral relationship with Brunei remained strong. Several developments contributed to the promotion of Australia’s interests, particularly in political, strategic, defence, trade and education links.
The Department re-established regular officials talks at a senior level. In expressing a commitment to maintaining high-level consultations, both sides acknowledged the talks as a useful forum for exchanging information on a wide range of bilateral, regional and international issues. More specifically, discussion on APEC and the ASEAN Regional Forum revealed similarities in approach by both governments which should facilitate efforts to promote Australia’s objectives in these forums. The talks underscored Brunei’s importance to Australia as a member of both APEC and ASEAN and Australia’s forthcoming ASEAN dialogue partner coordinator.
The year covered considerable growth in defence relations. An increased level of military exercises and exchanges occurred between the defence forces of Australia and Brunei. HMAS Swan visited Brunei in October 1993. These activities added to Australia’s stock of goodwill within Brunei’s armed forces and increased Brunei’s awareness of Australia’s defence expertise. This was particularly relevant to Brunei’s plans to acquire offshore patrol vessels and upgrade a naval base. Through regular representations by the post, the Brunei Government was encouraged to positively consider the inclusion of Australian companies as tenderers in both projects. The Brunei Government’s final decision had not been made at the end of 1993-94.
Endeavours to enhance trade and investment opportunities had a positive impact. To complement assistance to a wide range of Australian business people in Brunei, the Department supported a private sector initiative to establish the Australia-Brunei Darussalam Business Council in March 1994. The council was established against the backdrop of two trade and investment seminars which attracted a wide range of business people with an interest in developing commercial links between Australia and Brunei. Some Australian participants are following up commercial ventures identified at the seminars.
Australian educational services were bolstered by a successful Fifth Annual Education Exhibition conducted by the post in Brunei in November 1993 which highlighted the advantages of cost, proximity and the quality of Australian educational institutions. The exhibition gave Australian participants useful insights into the Bruneian student market. Local feedback indicated a very positive attitude towards and growing awareness of Australia as a study and tourism destination.
Additionally, the Department supported the granting of extended services between Darwin and Brisbane to Royal Brunei Airlines, inaugurated in June 1994. The impact of this service on tourist and trade levels from Brunei will be assessed after the service has been in operation for 12 months.