Introduction

The Philippines occupies an important geostrategic location, between the Americas, Oceania and Asia, while serving as a bridge between Southeast and Northeast Asia. Because of the involvement of Spain and then the United States, the Philippines has evolved into Asia's only predominantly Christian country and the region's oldest independent democracy.

The Philippines is made up of some 7,100 islands, while Australia has over 8,200 within its maritime borders. In land mass terms, Australia is over twenty-five times larger than the Philippines, though the latter's population of 95 million is almost four times that of Australia's. English is widely and fluently spoken in the Philippines as the language of education, business and government. The country has a competitive, globalised workforce: more than 10 million Filipinos work overseas, and their remittances constituted 8 per cent of the Philippines' economy in 2011.

The Philippines is rich in natural resources. Agriculture employs over a third of the workforce, and the Philippines is one of the world's leading exporters of coconut products, bananas and pineapples. It is considered to be the world's fifth most mineralised country, and the resources sector has great potential for further expansion. The Philippines' prospective oil and gas sector also offers good opportunities.

Government, business and people-to-people links

Australia's long-standing relations with the Philippines stretch back beyond World War II, when Australian sailors and airmen fought together with Americans and Filipinos in campaigns in Leyte and the Lingayen Gulf. Links between church and non-government groups also stretch back to the 1940s. Diplomatic ties between the two countries began soon afterwards in 1946, paving the way for strengthened development assistance, defence cooperation and people-to-people ties.

Today, Australia and the Philippines share common interests and values, which are the bedrock of our relationship: a commitment to democracy; a determination to work for peace, security and economic growth; respect for human rights; and care for the environment. Australia has an enduring interest in the stability and prosperity of the Philippines. This is reflected in the broad sweep of our engagement in the country, including commercial links, people-to-people ties, and development and security cooperation.

Total two-way trade is growing, particularly as a result of increased services trade. In 2011, total two-way trade increased by 13 per cent to almost $3 billion. Major Australian exports were agriculture products, manufactured products, minerals and fuels. Two-way goods trade between Australia and the Philippines is 8 per cent higher than it was 10 years ago. While Australian goods exports have risen modestly in that time, our imports from the Philippines rose by 14 per cent. Trade in services has been more robust, albeit from a much lower base, rising from $387 million to $969 million over the past decade on the back of strong growth in education services and tourism.

The past five years have seen a fivefold increase in Australian investment in the Philippines, and there is potential for further Australian investment, especially in the minerals, infrastructure and services sectors. Greater regulatory certainty and improved infrastructure would boost commercial relations.

Australia and the Philippines have growing people-to-people links through migration, trade, investment, education and tourism. More than4,800 Filipino students applied to study in Australia in 2010. Around 225,000 people identified as having Filipino ancestry in the 2011 census, which also showed that Filipinos ranked seventh-largest in terms of Australian migrants born overseas. The community continues to make positive contributions and act as a catalyst in building links between our countries at every level. In early 2012, the Philippines was Australia's fourth-largest source of temporary skilled workers, with approximately 10,500 Filipino 457 visa holders in Australia. These workers make important contributions to the Australian health, professional services and manufacturing industries.

Australia is now the largest bilateral grant aid donor to the Philippines, allocating almost $129 million of official development assistance for 2012–13. Our development assistance is focused on supporting basic education, improving local government capacity to deliver basic services, strengthening climate change adaptation and disaster risk management, and improving the prospects for peace and security in conflict-prone Mindanao.

Education is our flagship development program in the Philippines. Australia supports the decision by the Government of the Philippines to expand the country's education system by a further three years. This is the largest education reform yet undertaken by the Philippines and will require ongoing and long-term support from partners such as Australia.

The Philippines continues to respond to a multifaceted Islamist separatist movement, as well as Asia's longest-running communist insurgency. Australia supports and cooperates closely with the Philippines' security agencies in their ongoing efforts to counter terrorism. The two countries' law enforcement, defence, border control and port and aviation security agencies continue to collaborate closely.

Australia and the Philippines share many common interests in the region, including promoting maritime security in accordance with international law, building a regional disaster preparedness and response capacity, and strengthening economic integration. As neighbours in the Asia–Pacific, we cooperate closely in regional for a, including the ASEAN Regional Forum, the East Asia Summit, the ASEAN Defence Ministers' Meeting Plus and the Asia–Pacific Economic Cooperation (APEC) forum.

Globally, there is a common interest in transnational challenges such as climate change, food security, human trafficking and disarmament. Australia continues to work closely with the Philippines in international fora, including in the United Nations and on interfaith dialogue.

Towards 2025

There is great potential for the already broad bilateral relationship to develop greater depth in the coming decades.

The Philippines is a regional neighbour with a large and growing population. By 2025, the Philippines will be the world's 12th most populous country, presenting great potential to expand trade and investment ties. If governance and transparency reforms to the Philippines' economy bear fruit over the coming years, more Australian companies will be doing business in the Philippines in fields such as business process outsourcing, engineering, construction, tourism, mining and processed foods. The ASEAN – Australia – New Zealand Free Trade Agreement will continue to draw our business communities closer together, strengthen bilateral commercial links and foster more regional trade and investment exchange.

Oil and gas exploration in the Philippines is likely to lead to the development of productive fields by 2025. If the Philippines can increase market certainty in this sector, Australia's role will expand. Australian oil and gas companies, including BHP Billiton, Nido Petroleum and Otto Energy, are already exploring in the Philippines' waters. Mining also has the potential to generate significant economic and development benefits for the Philippines, and Australian companies are well-positioned to assist in these efforts.

Bilateral education links will continue their steady growth, resulting in a greater share of Filipinos who study overseas choosing to do so in Australia. The number of Filipinos emigrating to Australia will continue to grow and their increased numbers will lead to all the benefits that increased people-to-people links bring. Cooperation between the two counties on international environmental issues will also continue to develop, including related to the marine environment.

The Philippines' burgeoning population will necessitate continuous investment in infrastructure and social services over the years ahead. Australia's ongoing work with the Philippines in disaster risk reduction and management should see more resilient communities and better disaster preparedness across the country.

While there are continuing governance and low public revenue challenges, the role of development assistance can be expected to decrease as economic conditions in the Philippines improve. Based on the strong partnerships Australia has developed through the development cooperation program, there is likely to be a role for assistance—including expertise and policy advice, and ongoing targeted support to poorer parts of the country, such as the south – for some years after 2025.

Out to 2025, Australia will continue to be a reliable security partner for the Philippines. An improved security outlook in the southern Philippines will result in an environment less conducive to transnational terrorism in the region and in more opportunities for economic development. Australian defence cooperation and police training will have played a key role in this.

Given current trends, the relationship between Australia and the Philippines in 2025 is likely to be stronger and more comprehensive in all fields, including politically and in international institutions.