“South East Asia & Australia: New opportunities and challenges”

Speech to the Australian Institute of International Affairs (AIIA) - Sydney by Ian Kemish, First Assistant Secretary, South and South-East Asia Division, DFAT

30 November 2004

INTRODUCTION

Very pleased to be with you this evening, and delighted to have this opportunity to speak to you on an important day for Australia’s relationship with the countries of South-East Asia.

The ASEAN-ANZ Leaders’ Summit in Vientiane today, attended by the Prime Minister, marks thirty years since Australia became an ASEAN dialogue partner. 

My clear sense from colleagues in Vientiane accompanying Mr Howard is that the Summit is providing an excellent opportunity to commemorate this important anniversary - of ASEAN’s longest-standing bilateral dialogue relationship - and to explore strategically ways to deepen our engagement across economic, political, strategic and people-to-people links.

The key outcome of the Summit is expected to be the launch of negotiations towards an ASEAN-Australia New Zealand Free Trade Agreement, as recommended by ASEAN, Australian and New Zealand economic ministers at their meeting in Jakarta in September.  The GDP of the countries covered by this agreement will be fractionally short of China’s (USD1.4008 billion).

The Summit is also an important symbol of the range and depth of our ties with the countries of South-East Asia.  It highlights the strength and maturity of our relationship with the region - I have been very pleased to have been witness to the growth of this relationship in the course of my career to date.  I fully expect this new term of government in Australia to be marked by further substantial work with countries of the region - on issues of national interest to Australia.

This evening I’d like to provide an updated snapshot of the region as we see it, and in doing so explore the very significant contemporary challenges and opportunities for Australia in South Asia.  I’ll do so by reference to the political - security environment in South-East Asia and recent economic developments in the region.

I will not mention every country in S E Asia, but will single out some key relationships.

By any measure the region is far more prosperous than it was thirty years ago, and the possibility of conflict between states has receded.  This is in great part due to the efforts of the ASEAN countries themselves to build patterns of dialogue with each other and with key external partners.  In the view of successive Australian governments, the United States has played an important stabilising influence in the region. 

But security remains a major concern for the region.  The threat of terrorism remains the most serious threat to S E Asia and to Australia and will remain so for some time to come.

The reality of terrorism in the region was bought home to Australia by the Bali atrocity on 12 October 2002.  Some Australians - particularly those who lost their loved ones - felt the shock far more deeply than others.  In the two years since, as these families have sought to come to terms with their loss and suffering, Australian public debate has canvassed a range of important questions including, for example, what the Government’s advice should be to Australians contemplating travel to the region.  There are difficult and complex issues at stake. 

Our analysis confirms that Australians are responding to the new security paradigm in a way that should make us all proud - they are factoring in the risk of terrorism, getting on with their lives rather than running away from the threat, but importantly are preparing themselves well by consulting travel advice - at the rate of 150,000 page views a week.  Dare I say it, they have become smart travellers.

But terrorist groups continue to evolve.  Networks such as JI morph into more localised groups which broadly share Al Qaida’s agenda.  They continue to actively organise, recruit and train with serious long-term intent to pursue their goals.

As demonstrated by the Jakarta Embassy bombing - the first direct attack on our official interests in South-East Asia - JI retains a potent capacity to inflict harm on innocent people.

Other security problems, including trans-national crime, separatism and communal violence are expected to remain challenges to the region and its friends.

For example, the situation in the southern Philippines remains a serious concern to regional policy makers, and foreign extremists may seek to exploit the situation in southern Thailand.

Australia’s priority is to help countries in South-East Asia build greater cooperation and capacity to fight terrorism, with a focus on targeted practical measures.

Counter-terrorism cooperation has expanded significantly since September 11 and the Bali bombings.

Our colleagues in the Australian Federal Police, as part of a determined and unified whole of Government effort, have done inspirational work with regional counterparts in tracking the perpetrators of Bali and the Jakarta bombing

Counter-terrorism MOUs have been signed with Indonesia, Malaysia, the Philippines, Thailand, Cambodia and East Timor; and in July 2004, Mr Downer signed a Joint Australia-ASEAN Declaration for Cooperation to combat International Terrorism.  This reflects unprecedented levels of cooperation between Australia and ASEAN countries.

These arrangements have allowed us to create a comprehensive regional CT strategy to expand cooperation at a practical level in areas such as intelligence and information exchange, law enforcement cooperation, transport security, border management, defence, legal frameworks, and anti-terrorist financing.

Specifically we have createdCT assistance packages with Indonesia and the Philippines to strengthen capacity in these areas.

The Government recently announced it would double the existing CT assistance packages to Indonesia (now $20 million) and the Philippines (now $10 million).

We are seeking to take a broad approach to the problem of terrorism.  For example, we and Indonesia are determined to foster understanding and build harmonious relationships between faith communities in our region as we seek to work together to address common challenges.  Neither country wants to allow extremists - those intent on fomenting inter-communal discord - to set the agenda in our region.

Mr Downer and Indonesian Foreign Minister Hassan Wirajuda have therefore initiated an Interfaith Dialogue to emphasise and strengthen the role of religious groups in building community harmony in the region.  The dialogue, which will involve faith and community leaders and Interfaith experts from ASEAN countries, Australia, East Timor, PNG and New Zealand, will be held at Yogyakarta next week.

The Interfaith Dialogue is an act of defiance to terrorists and extremists.  It will demonstrate that the moderate majority want to live in harmony and work together to renounce those who imperil our security, affirm the key role of the major faith and community leaders in further strengthening pluralism and multiculturalism; and provide a platform for them to convey these important messages.

Our cooperation with S E Asia on terrorism is a heartening story in itself.

There have been other very positive developments in the politico-security environment which augur well for the region and present useful opportunities for Australia

In particular, the outcomes of recent elections in Indonesia and Malaysia indicate a welcome preference for moderate Islam and secular government.  Indonesian President Susilo Bambang Yudhoyono, who came to the attention of so many Australians with his speech on the first anniversary of the Bali tragedy, and Malaysia’s Prime Minister Abdullah may provide new leadership and direction into ASEAN as it works to tackle regional problems.

Indonesia’s year of elections in 2004 has demonstrated the maturity and stability of its young democracy.

New parties, like the Democrat Party and the Justice & Prosperity Party, made strong starts.  The elections also reinforced our view that a majority of Indonesians endorse moderate politics, and reject the politics of extremism.

President Yudhoyono should be a good thing for Indonesia.  He has outlined an ambitious program to combat terrorism, find a resolution to separatist and sectarian conflict, tackle corruption and attract foreign investment in his administration’s first 100 days. 

We also believe the new administration will be good for Australia.  Among the experienced and committed policy makers in President Yudhoyono’s new cabinet are the Foreign Affairs and Trade Ministers.

Foreign Minister Hassan Wirajuda is well-known to us and will continue the drive to strengthen relations with Australia, and the appointment of ANU-educated Mari Pangestu as Trade Minister is also welcome.  Dr Pangestu is a leading Indonesian trade academic and vocal advocate of Indonesia’s engagement on international trade issues

Some commentators have raised expectations about the chances of early results from Yudhoyono’s reform agenda.  But we need to recognise that progress will be a collaborative effort between the President and the parliament and other stakeholders - and may take some time.

Mr Downer has proposed that we deepen our bilateral security dialogue and cooperation with Indonesia, with a new security agreement as one possible initiative that has received attention in the Australian media.

It should be noted that Australia and Indonesia already cooperate effectively against our common security threats of terrorism and transnational crime, and that any agreement would focus on strengthening our existing cooperation

As the Prime Minister made clear, the strength of our relationship should not be benchmarked on whether or not we conclude a new security agreement.  Rather it should be assessed on the results of our joint cooperation.

We have been heartened by President’s Yudhoyono’s comments in favour of further dialogue on security issues.  We will be advancing our dialogue on security and other issues over the next year, including through the next meeting of the Australia Indonesia Ministerial Forum in early 2005.

In Malaysia, following on from the smooth leadership transition in October 2003, Prime Minister Abdullah Badawi led the Barisan Nasional (BN) coalition to a landslide victory in elections 21 March 2004

Meanwhile, Abdullah Badawi’s domestic agenda is focussed commendably on improving further the lives of Malaysians by reducing the budget deficit, promoting rural development, education and health, efficiency, accountability and transparency.

He is working off a solid economic platform: the Malaysian economy is strong, and is likely to grow by at least 6.5% GDP in 2004.

Since the leadership transition in Malaysia, Australia has been looking for ways to build, particularly at the political level, on the already strong bilateral links.

We have been encouraged by the high levels of cooperation between Australia and Malaysia across a broad range of sectors - including trade, education, defence and security.  And the prospects to further strengthen these links are good.

We welcomed Malaysia’s Trade Minister, Rafidah Aziz, to Australia for the Australia-Malaysia Joint Trade Committee Meeting in Melbourne in July.  In recognition of the importance of the economic relationship she and Mr Vaile agreed that Australia and Malaysia should undertake parallel scoping studies on a possible free Trade Agreement.

And Foreign Minister Downer visited Malaysia in June and agreed with senior Malaysian ministers to a number of important initiatives to develop the bilateral relationship further, including annual visits by Foreign Ministers and the establishment of a senior officials' security dialogue.

Close people-to-people links have underpinned our relationship with Malaysia - with particularly strong education and defence ties - throughout the ups and downs of the broader political relationship.

These recent developments in Indonesia and Malaysia reflect what is an overall very positive story for S E Asia, particularly when one considers just how far they’ve come.

Of course one country has clearly stood aside from the process of political development enjoyed by Indonesia, Malaysia and many other countries of the region. Notwithstanding the welcome release of political prisoners announced in the lead-up to the ASEAN Meetings in Vientiane, Australia remains seriously concerned about the situation in Burma.

Australia strongly supports multilateral and regional efforts to resolve the political problem in Burma.  For example, we participated in high-level consultations in New York on 29 September, chaired by Secretary-General Kofi Annan, and we recently issued a joint statement with New Zealand on forced labour in Burma for the ILO Governing Body meeting. 

The Government has expressed directly to the Burmese government its disappointment at the lack of commitment and concrete progress through its so-called seven-point “roadmap” to democracy. 

The expansion of ASEAN to include Vietnam, Laos, Cambodia and Burma has given rise to some major economic challenges.

The East Asian financial crisis served to highlight these problems - a widening developmental gap among original and new members, poor governance and a shortage of skilled technocrats.

Notwithstanding ongoing economic challenges, 2004 has proven to be a good year economically for most South-East Asian countries.  The region has experienced its strongest growth in years.

This has been underpinned by the strong recovery in key developed markets, robust demand from China and a cyclical rebound in the global electronics sector.

Public debt levels are also being brought under control, in most countries, including Indonesia and Thailand the two crisis economies of the late 80s

Australia has worked with ASEAN to build economic cooperation and prosperity in the region including through direct support provided during the East Asian financial crisis.

It is often said that South-East Asia is an important market for Australia.  This is true.  The ASEAN countries collectively account for some 11 per cent of Australia's total exports.  It is a growing market and one in which Australian exporters have an ever more important interest.

It is also true, however, that Australia’s extremely strong economic performance, combined with its strategic standing in the region mean that we have a lot to offer the region.  This thought has not yet been fully internalised by many Australian public commentators.  Make no mistake - we are an important market for SE Asia

ASEAN-Australia development cooperation has made a valuable contribution to economic development in the region

Australia's total aid commitment to ASEAN countries in 2003-04 was A$395 million and in addition, A$20 million was expended on regional programs involving ASEAN members.

Australia is pursuing closer economic integration with the region through bilateral and regional arrangements.  As I have mentioned, ASEAN leaders are expected today to launch negotiations on an ASEAN ANZ FTA.

The Singapore Australia Free Trade Agreement (SAFTA), which entered into force in July 2003, was the first FTA for Australia since the 1983 Closer Economic Relations Agreement with New Zealand.  This reflects Singapore’s importance among Australia’s closest strategic and economic partners in the region.

The Thailand-Australia Free Trade Agreement (TAFTA), which was signed in Canberra on 5 July 2004 and subject to the approval of the Australian Parliament, is expected to enter into force on 1 January 2005.

Thailand is an important regional partner of Australia, with whom we have built close and mutually beneficial cooperation in a broad range of areas, including law enforcement, counter-terrorism, education, defence, migration, and tourism.

TAFTA will provide Australia an ambitious free trade agreement with a major regional partner, strengthen Australia’s important economic linkages with South-East Asia, and set a benchmark for regional trade liberalization.

In the long term, the gains from TAFTA promise to yield significant benefits to the Australian economy.  The Centre for International Economics estimates TAFTA will boost the Australian economy by over US$2.4 billion over the first twenty years of its operation.

The regional operating context, then, contains a real mix of opportunities and challenges.  There are real opportunities to advance the prosperity and security of Australians, and to promote the values that Australia holds dear - freedom, a commitment to democratic principles, and a desire to assist others.  The key challenge is to defeat the new threat of terrorism through strong and broad-based joint approaches with our regional countries.  We are meeting that challenge and will need to keep meeting it every day.

Importantly, Australia’s approach to the region is based on self-respect.  It does not reflect a plaintive desire to join regional association at any cost.  We are avoiding casting ourselves as a plaintive demandeur in the region.

Australia’s approach to South East Asia, like all aspects of international affairs, remains a pragmatic one, seeking to reflect that Australia has an identity of its own which does not need to be defined by reference to the region. 

Above all, our approach focuses on Australia’s national interests.  On balance, the dynamics and complex picture that is contemporary South East Asia holds great promise for those interests.  It is an exciting time to be working in the field.

Thank you and good evening.