1.2 Interests in South and South East Asia

Table 8: Resources Summary for Sub-program 1.2

Figure 11: Interests in South and South East Asia Program and Organisational Structure as at 30 June 1998

Sub-program Objectives

In 1997-98, the objectives of sub-program 1.2 were to:

• maximise Australia’s influence and advance its political and security interests in South and South East Asia through developing relations with key regional countries
• advance Australia’s economic interests in South and South East Asia by contributing to the expansion of trade and investment opportunities in the region, assisting Australian companies and promoting investment in Australia
• consolidate Australia’s place in the South East Asian and Indian Ocean regions through participating in established regional bodies and fostering new networks that advance Australia’s interests.

Description

The South and South East Asia Division administers the sub-program. SED comprises three branches: Maritime South East Asia Branch, Mainland South East Asia Branch and South Asia and Indian Ocean Branch. The Images of Australia Unit, funded under sub-program 1.9, Information and Cultural Relations, is also located within the division. SED’s area of responsibility includes 18 Australian overseas posts; it coordinates and supports these missions, ensuring their work is targeted effectively. In July, SED assumed responsibility for the Australia-Indonesia Institute and the Australia-India Council, both formerly funded under sub-program 1.9, Information and Cultural Relations.

The sub-program pursues strategies designed to help achieve three of the Department’s corporate goals: to enhance Australia’s security; to promote Australia’s economic growth, jobs and standard of living; and to strengthen global cooperation in ways which advance Australia’s interests. The Images of Australia Unit, under sub-program 1.9, helps to achieve a fourth goal: to promote public understanding of Australia’s foreign and trade policy. These strategies include advising the Government on political, economic and strategic developments in South and South East Asia and their impact on Australia’s national interests, promoting engagement with the region, and supporting activities by ministers and senior officials in regional countries and forums.

Performance Information

In 1997-98, the Department indicated that it would evaluate its performance using:

• acceptance and approval of advice by key clients and their satisfaction with the implementation of sub-program activities
• success of bilateral visits to and from Australia, and quality of government-to-government dialogue
• acceptance of Australia as a constructive interlocutor on key regional issues
• maintenance of Australian interests at the forefront with Indonesian ministers and senior
• decision makers
• full development of the sectoral working groups in the Australia Indonesia Development
• Area initiative to promote Australian trade and investment in eastern Indonesia
• continued improvement in relations with Malaysia
• development of broader relations with the Philippines, including through a successful first Philippine-Australia Dialogue
• constructive outcomes from ministerial commissions and/or consultations with Thailand, Vietnam and India
• continued strong growth in trade and investment with major ASEAN states, India and South Asia
• progress toward participation in the Asia Europe Meeting (ASEM) and involvement in Mekong Basin development cooperation activities
• development of Indian Ocean Rim Association for Regional Cooperation (IOR-ARC) as an outward-looking, WTO-consistent, non-preferential trading body.

The following performance measure was included under sub-program 1.9, Information and Cultural Relations:

• contribution of programs of bilateral councils, foundations and institutes to expanding and deepening Australia’s bilateral relations with priority countries covered by these bodies, as reflected by the impact on target countries and level of satisfaction of Australian stakeholders.

Performance Outcomes

The regional economic crisis transformed the economic, political and strategic environment in South East Asia, providing a major policy challenge for the Department in the review period. The crisis significantly affected Australia’s economic interests in South East Asia. Exports to the region as a whole fell by 6 per cent to comprise just over 13 per cent of total exports. The sharpest declines in exports were to Thailand (18 per cent), Indonesia (17 per cent), Malaysia (10 per cent) and the Philippines (5 per cent). On the other hand, exports that increased most were to Vietnam (54 per cent) and South Asia (over 20 per cent), although the latter still represent just over 3 per cent of total Australian exports. Export growth to Pakistan was particularly strong (54 per cent) and also to India (24 per cent).

The Department contributed to positive export outcomes through activities to reduce tariffs, quotas and non-tariff barriers; organising business missions and seminars; and providing commercially relevant information in Asialine, a pan-Asian magazine, produced by SED.

SED coordinated a cross-program initiative within the Department to project positive images of Australia and counter negative perceptions, particularly in Asia. It implemented a range of activities, including high-level media visits, to improve understanding of Australia. Monitoring of regional media indicated the accuracy, tone and comprehensiveness of reporting about Australia had improved and this should have a long-term positive impact on Australia’s image in the region.

Table 9: Australia's Merchandise Trade with South and South East Asia

Figure 12: Commodity Composition of Merchandise Exports to South and South East Asia

1.2.1 Interests in Maritime South East Asia

Indonesia

In the review period, Indonesia entered an intense and continuing economic crisis which led to the resignation of President Soeharto, the installation of President Habibie and continuing political ferment. The Department played a key role in developing government policy towards Indonesia, including participation in IMF packages and bilateral trade and humanitarian programs. The Department facilitated visits by the Prime Minister (in October to Jakarta), and the Foreign Minister (in January to Jakarta, and in March to Washington DC) which promoted Australian policy objectives, particularly the continued engagement between the IMF and Indonesia. The Government’s policy has helped to ensure the new Indonesian President and administration favourably view Australian interests and greatly enhanced Australia’s standing with key individuals and groups in Indonesia.

Figure 13: Australia's Merchandise Trade with Indonesia

Business participants welcomed the Department’s work on the Australia Indonesia Development Area agenda, particularly the Melbourne sectoral working group conference in August, and worked with the Department in the jointconvening of the Australia-Indonesia Ministerial Forum meeting, the AIDA Ministerial Meeting and the Joint Conference of the Business Councils. The economic crisis has caused momentum in AIDA to slow considerably in 1998; however, in the medium term, it will remain important in building commercial relations with eastern Indonesia.

SED took responsibility for the Australia-Indonesia Institute in July. The institute’s activities enhanced relations with Indonesia by fostering people-to-people contact at a range of levels, including a meeting of senior editors in Sydney, visits by members of federal and state governments and a youth exchange program. Past participants in AII-sponsored exchanges hold positions in government and the private sector, and continue to promote contact between Indonesia and Australia.

Malaysia

The Department contributed to an improvement in bilateral relations with Malaysia by supporting an intense program of ministerial visits. On the commercial front, it helped Australian firms identify and pursue opportunities in the Multimedia Super Corridor and finalised negotiation of a new bilateral trade agreement which took effect on 1 January. It supported Monash University’s successful bid to become the first foreign university to be granted permission to establish a branch campus in Malaysia. The Department also supported a bid to build offshore patrol vessels for Malaysia. Although unsuccessful, it nonetheless promoted Australia as a source of sophisticated defence technology and created sub-contracting opportunities for Australian companies.

Photo: Deputy Prime Minister and Minister for Trade, Tim Fischer, presents Indonesian Communications Minister, Haryanto Dhandutirto, with a copy of the Foreign Affairs and Trade White Paper, In the National Interest in August in Melbourne. (photo: Russell Mant Photography)

Figure 14: Australia's Merchandise Trade with Malaysia

The Philippines

The Department supported the first Philippine-Australia Dialogue held in October in Manila, which broadened bilateral links by bringing together leaders from politics, business, academia and the media. The Department also supported a visit by Philippine Foreign Secretary Siazon in August to Australia and a visit by Mr Downer in October to the Philippines. Together with negotiations conducted throughout the review period, these visits improved market access for agricultural products including eliminating a tariff quota regime on beef, reducing a tariff on certain live cattle, and creating access for kangaroo meat. Departmental activities facilitated the signing of a Memorandum of Understanding for Joint Action to Combat Child Sexual Abuse and Other Serious Crimes between the Philippines and Australia.

Figure 15: Australia's Merchandise Trade with the Philippines

Singapore

The Department’s activities enhanced trade and investment opportunities for Australian business in Singapore through support for a Singapore Australia Business Alliance Forum conference in June, an Australian investment seminar in November in Singapore, a visit by the Singaporean Minister for Trade to Australia in June and an intersessional meeting of the Singapore Australia Joint Ministerial Commission in February.

Figure 16: Australia's Merchandise Trade with Singapore

Brunei

The Department supported a visit by Mr Downer to Brunei in July to increase market access for Australian meat and vegetable exports, and support Australian involvement in a joint venture to upgrade the naval port at Muara.

1.2.2 Interests in Mainland South East Asia

Thailand

The Department strengthened bilateral relations with Thailand during a period of acute economic crisis. It supported early Australian participation in the IMF package to Thailand. This quick response and the success of the Prime Minister’s visit in April to Thailand, also supported by the Department, provided a strong basis for the development of a good relationship with the new Thai Government. Positive bilateral outcomes included Thai agreement to almost double air services between Australia and Thailand and the signing of memorandums of understanding on agricultural cooperation and academic qualifications.

The Department supported Mr Fischer’s visit with a small business mission to Thailand in October. Outcomes included positive feedback from new entrants to the Thai market and the lifting of a ban on the export of live horses to Thailand. The Department facilitated an exchange of letters on intellectual property to improve the investment climate in Thailand for Australian companies, secured an agreement from the Thai Government to test lupin seeds with a view to reducing tariffs, and negotiated streamlined quota allocations of a major dairy industry export.

Figure 17: Australia's Merchandise Trade with Thailand

Photo: Australian Ambassador to Thailand, William Fisher, and Thai Minister for Agriculture and Cooperatives, Pongpol Adireksarn, at the signing ceremony for the Memorandum of Understanding on Agricultural Cooperation in April in Thailand, with Prime Minister, John Howard, and Thai Prime Minister, Chuan Leekpai, looking on. (photo: AUSPIC)

Vietnam

The Department supported an active program of ministerial and official-level visits to Vietnam, and conducted a wide range of activities in Vietnam to commemorate the twenty-fifth anniversary of diplomatic relations. Positive outcomes included increasing exports of construction and building materials, lifting a ban on the export of poultry meat to Vietnam, facilitating the entry into force of a double taxation agreement and signing a memorandum of understanding on air services. The Department supported a business mission which concluded investment deals in breweries and packaging, and established a structured dialogue between Australian business people and government representatives in Ho Chi Minh City to facilitate speedier resolution of obstacles to trade and investment. The Department worked to broaden relations with Vietnam by supporting the commencement of a government-to-government defence relationship, as well as police cooperation and a regional security dialogue.

Photo: Minister for Foreign Affairs, Alexander Downer, and Australian Ambassador to Vietnam, Sue Boyd, at a press conference in April in Hanoi, Vietnam.

Figure 18: Australia's Merchandise Trade with Vietnam

Cambodia

The violent events of July in Cambodia required that bilateral relations be reassessed. The Department played a key role in formulating the Government’s response, maintaining the civil aid program but suspending defence assistance. It also supported active participation in the ‘Friends of Cambodia’ group to contribute to preparations for free, fair and credible national elections, including organising 22 Australians to observe the elections in Cambodia as part of an international team coordinated by the United Nations. The Department also contributed significantly to the drafting of UN resolutions calling for the protection of human rights in Cambodia; these obtained consensus support.

Burma (Myanmar)

A departmental official travelled to Burma as a special envoy of the Minister for Foreign Affairs to make clear to the Burmese Government the political and human rights reforms needed before relations with the international community could improve. While positive results will take time, and the regime has made several minor concessions since the visit, there has been little discernible movement on political reform. Australia’s new approach has been appreciated within the region and more widely as a practical attempt to encourage positive change in Burma.

Regional Forums

The Department supported portfolio ministers participating in key regional forums: the annual ASEAN Post Ministerial Conference, the ASEAN Regional Forum and the ASEAN Free Trade Agreement-Closer Economic Relations (Australia and New Zealand).

The Department made considerable efforts to secure Australia’s membership of the Asia Europe Meeting. Participants at the second ASEM Summit in April in London however, deferred consideration of all new membership bids until the next summit in 2000 in Seoul.

Figure 19: Australia's Merchandise Trade with ASEAN

1.2.3 Interests in South Asia and the Indian Ocean

After strong growth in bilateral relations with all South Asian countries, Australia’s political and defence relations with India and Pakistan were seriously set back when these countries conducted nuclear tests in May. The Department played a lead role in advising ministers on Australia’s response, with Australia taking a key role in condemning the tests and in promoting efforts to strengthen nuclear non-proliferation and disarmament regimes and norms. (See also sub-program 1.7, Global Issues.) Australia’s trade policy objectives were not affected by these difficulties.

India

The Department supported a range of visits to strengthen bilateral relations with India in the first nine months of the review period, including a visit by the Minister for Foreign Affairs to India in July, a visit by the Indian Commerce Minister to Australia in September, and visits to Australia by Indian ministers and parliamentary delegations. These, together with other departmental activities, including support for a Joint Ministerial Commission, resulted in improved market access for Australian exports to India. Most notably, Australia (under the auspices of the WTO) secured India’s agreement to phase out quantitative import restrictions. The Department also negotiated the signing by officials of an Investment Promotion and Protection Agreement; this will improve the investment climate for Australian companies in India.

During the review period, the Department commissioned an independent evaluation of the ‘New Horizons’ campaign which in 1996 promoted expanded trade and other relations between India and Australia. The evaluation concluded that the promotion would generate $44 million worth of new business during the review period. Meetings of a contact group involving Australian government agencies and other bodies active in India also confirmed that a wide range of ongoing bilateral activities had flowed from ‘New Horizons’.

SED took responsibility for the Australia-India Council in July. Through the AIC, the Department supported a range of projects in both countries with business and professional groups strongly involved. The projects expanded Australia’s long-term links with India in legal mediation, environmental training, health services and agribusiness.

Figure 20: Australia's Merchandise Trade with India

Sri Lanka, Pakistan and Bangladesh

In support of the ‘Year of South Asia’ initiative, the Department conducted an extensive cultural events program and supported the publication of several monographs focusing on the trade and investment outlook in regional countries. The Department also supported visits by Mr Downer to Sri Lanka in July, and to Pakistan and Bangladesh in February. These visits helped to increase market access for Australian exports and promote trade and investment.

Regional Cooperation

At the senior officials meeting of the Indian Ocean Rim Association for Regional Cooperation in March in Mauritius, the Department’s officials worked closely with the Australian business representative to gain support for Australia to host an informal meeting of trade officials from member countries later this year. This process will be used to encourage IOR-ARC to develop a trade policy agenda that promotes outward-looking, WTO-consistent, non-preferential trade among members.

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