Speech: AustCham Business Awards, Singapore, 20 July 2009
'Partners in Recovery: Australia and Singapore working together'
The Hon. Simon Crean MP, Australia's Minister for Trade
Thank you for the opportunity to speak to you today.
Particular thanks to AustCham President Nick Cocks and AustCham for hosting this event.
I would also like to express my sorrow and condolences to the families and friends of those who lost their lives in the bombings of the Marriott and Ritz Carton hotels in Jakarta last Friday.
This was a terrible attack on our way of life. A barbaric attack to kill men and women, who are doing so much to strengthen business and commercial links across our region – creating jobs, a better way of life and great prosperity.
Yesterday I spoke with Mrs Senger who is a remarkable woman and is clearly suffering great loss at this time. Craig Senger was an Austrade official who some of you may have met and I know his colleagues are deeply feeling his loss.
Yesterday, I also met Trent McEvoy, the brother of Garth McEvoy another Australian who died tragically in the bombings and passed on my condolences and those of the government.
Yesterday, as well, I also visited Scott Merriless from ANZ Bank in Jakarta here in a Singapore hospital. Scott is recovering well from his injuries sustained in the attack and is in remarkably good spirits given his experience.
This was a barbaric attack and one which the government’s of Indonesia and Australia are cooperating to bring to justice those responsible, as we continue our collective efforts in the fight against terrorism.
I would also like to acknowledge the co-patrons of AustCham, Australia’s High Commissioner to Singapore, Mr Doug Chester, and Dr Chua Yong Hai. I would also like to welcome New Zealand’s High Commissioner to Singapore, Mr Martin Harvey, members of Singapore’s APEC Business Advisory Council and the many senior business representatives of Australian and Singaporean business communities.
And, let me add my congratulations to the winner of this year’s AustCham President’s medal - The Australia New Zealand Association.
I know that ANZA works in so many ways to further the relationship between Singapore and Australia.
The links its 7000 members make in the Singaporean community help underpin our close relationship, both in the world of business and beyond.
I also congratulate SingTel for winning the Commonwealth Bank Award for its long-term investment in Australia.
SingTel’s achievement with Optus is a fine example of what can be accomplished under our dynamic trade and investment relationship.
Singapore was Australia’s fourth largest two-way merchandise trading partner in 2008, with total trade goods valued at $31 billion. Singapore is Australia’s largest two-way goods and services trading partner in ASEAN. Australian merchandise exports to Singapore totalled $6.1billion, while merchandise imports amounted to $16.1 billion.
Australian service exports to Singapore for 2008 totalled $3.9 billion, with service imports valued at $4.7billion.
Our investment relationship is also strong. Australian Investment in Singapore is close to A$22 billion and Singapore’s investment in Australia is A$43 billion.
I am very pleased to be back here in Singapore.
This bustling, vital hub with its first-class ports, roads and airport always reinforces to me in a very physical sense that trade brings prosperity.
I like it here so much I’m coming back ... next week, in fact. And, I’m bringing friends.
Next week I’ll be back in Singapore with Foreign Minister Stephen Smith and Defence Minister John Faulkner for the Singapore-Australia Joint Ministerial Committee.
The Ministerial committee is the primary forum for ministerial engagement between Australia and Singapore. Comprising six ministers (three from each country), it offers a unique opportunity for strategic discussion, as well as traversing our broad and diverse bilateral agenda.
At our meeting next Monday, Trade and Industry Minister Lim and I will discuss the review of our gold-standard FTA – the Singapore Australia Free Trade Agreement.
SAFTA continues to deliver benefits to business and to set a benchmark for Australia’s free trade agreements.
This week, of course, I’m here to attend the APEC Meeting of Ministers Responsible for Trade. Tomorrow’s meeting will be significant: it is the largest formal meeting of Trade Ministers globally so far this year.
And, can I just say, what a great job Singapore is doing hosting APEC in 2009 – the year in which APEC celebrates its 20th anniversary.
We want to use the meeting to generate further momentum for the conclusion of the World Trade Organization’s Doha round of global trade negotiations, and continue our work to resist protectionism and facilitate trade in the APEC region.
I also welcome the major theme Singapore is focusing on in APEC this year: and that is logistics. Australia and Singapore are both pushing hard for APEC to develop an ambitious work program on trade logistics. This fundamental behind the border issue means moving goods efficiently, safely and effectively.
Addressing chokepoints, or impediments, across the entire supply chain will ensure the APEC region is in the best possible position to capitalise on recovery.
Trade logistics is the oil that keeps the engine of world trade running.
Whilst they are not attending this meeting, in the regular discussions I have had with Australia’s APEC Business Advisory Council (ABAC) members, they also strongly welcome the enhanced focus on streamlining logistics within the APEC region, given is direct relevance to business costs and efficiencies.
A recent study by the Centre for International Economics, commissioned by DFAT as part of a recent Australia-Singapore organised APEC symposium on logistics, concluded that a modest ten percent increase in efficiency in supply chain connectivity could contribute to an increase in combined APEC GDP of USD 21 billion per year.
For Australia, this increase could be as large as USD 4.7 billion per year. And so the message is clear: structural reform reaps real rewards.
The historic ASEAN Australia New Zealand Free Trade Agreement (AANZFTA) provides an excellent opportunity to maximise these benefits.
Today I want to talk on the role of Singapore and Australia in the global economic recovery.
Let me start by discussing the economy-wide structural reform undertaken by Australia and Singapore 20 years ago.
Structural reform is fundamental in creating well-performing, resilient and robust economies by tackling behind the border barriers to trade and investment. It fosters an economic environment that supports the efficient functioning of markets. It also contributes to macroeconomic stability, productivity and economic growth.
Our structural reform included making tough decisions on floating the dollar, bringing down tariffs, deregulating the financial sector, putting in place a formal Accord between government and unions to lock in low inflation, retirement income reform – including compulsory superannuation that has produced for us one of the most sophisticated financial sectors in the world, national competition policy, significant cuts to personal and company tax rates and greater autonomy for the Reserve Bank.
Among other things, our reform focussed attention on our trading relationships, particularly in our trading partners in Asia. We now have a twin pillar approach to trade policy – addressing issues at the border and behind the border.
Singapore has also shown this commitment.
Liberalisation of trade and investment requires commitment at two levels: Government to Government as well as business to business.
The Australian and Singaporean governments will continue to work together to develop a trade and investment framework that will benefit and support business and ultimately consumers. Both governments have put tremendous energy into the WTO, APEC, AANZFTA, SAFTA and other multilateral and bilateral fora.
We have both shown the political will to continue to drive reform.
Commitment at the business to business level is also required. We need business to step up.
Business is in a unique position to advocate the benefits of free and open trade. The employment and economic growth business creates is a powerful argument for the tangible long-term benefits of trade.
Australia shares Singapore’s commitment to fight protectionism and to push hard for the multilateral trade reform that will help underwrite the global economic recovery.
I strongly believe a conclusion to the Doha Round is the best means for keeping the forces of protectionism in check and for contributing to the emerging economic recovery we are now seeing in our region.
Neither Singapore nor Australia has been spared from the economic crisis that has wreaked havoc around our region and, indeed, around the world. But we are both absolutely united in our common belief that boosting global trade offers a clear path to escaping global recession.
We have seen the sharpest contraction in the global economy in 60 years, and forecasts are for an 11 per cent fall in global trade volumes .
In Asia, the falls have been much greater as the demand for electronic goods, cars and other high-end manufacturing goods has been hit by recession in the US and Europe.
Singapore, as a champion of free trade, and where trade makes up a larger proportion of the economy than anywhere else in the world, has been hit hard by this external shock.
As you know, the Singapore Government made an investment of about 8 per cent of GDP to stave off the worst effects of the recession. And as a nation that has wholeheartedly embraced trade liberalisation, Singapore can also expect to be one of the first nations to benefit when recovery gathers pace.
There are, already, some bright spots emerging on the horizon.
I note that DBS Research last month forecast a sharp rebound in Singapore’s performance in the June quarter, with GDP growth of 16.7 per cent, quarter on quarter, led by a strong recovery in manufacturing.
It is also heartening to see that, in May, exports from Singapore rose 6 per cent and that visitor numbers to Singapore increased 6.1 per cent year on year in April 2009.
Australia too has been affected by the crisis. Our growth has slowed dramatically, although we have been better cushioned than most countries.
Thanks to the performance of our exporters, and the impact of the Government’s policies to stimulate the economy we have, so far, avoided falling into a technical recession.
Importantly, our exporters are operating in a better framework than many after embracing structural reform two decades ago.
In fact, the Australian economy grew by 0.4 per cent in the March quarter, the fastest growth in the OECD.
The volume of Australia’s exports have held up comparatively well, thanks in part to our close trading links with China. But parts of our economy are facing enormous challenges.
Our government, like that of Singapore, has embarked on a substantial fiscal stimulus strategy to respond to these challenges. Our three-stage strategy comprises a short-term package of 2 per cent of GDP, just over 3 per cent over the medium term and a further 1.2 per cent of GDP in long-term nation building infrastructure.
Nonetheless, our Budget forecasts a contraction in GDP of ½ a per cent in this financial year.
What is important to note is that through these difficult times, Singapore and Australia’s commitment to free trade and free markets has remained steadfast. Both of our governments understand that the best way to engineer a quick exit from this recession is to keep trade flows open.
There can be no doubt that keeping trade flows open is essential to ending this global economic crisis.
Trade generates profits for business, it creates new jobs and it spreads new technologies around the world.
Put simply, trade stimulates growth, and what the world needs now, more than anything, is growth. Now is the very time we need to search out opportunities and seize new markets.
The investments we make today in strengthening our economies and our businesses will position us to capitalise on the recovery that is coming and will – I am sure – be well-rewarded.
We also urgently need to forge ahead with ongoing trade reform.
The historic, ASEAN Australia New Zealand Free Trade Agreement is the largest free trade agreement Australia has ever signed.
When it comes into force, it will reduce and eliminate tariffs across a region that is home to 600 million people – a region with a combined GDP of A$3.2 trillion.
Signed in February of this year, amid the very worst of the global downturn, AANZFTA sends a powerful message to the rest of the world. It shows that progress in trade can be made if the political will is there.
The WTO Doha process is also gaining important momentum. With my Ministerial colleagues, we will take the opportunity here in Singapore this week to continue to work closely with other WTO member states to push for a successful conclusion to the Doha negotiations.
This will build on the momentum of recent meetings I chaired in Bali and Paris to focus Ministers’ efforts on to areas we need to move forward.
As I said earlier, concluding the round would be our best insurance against protectionism. It will set the rules for global trade in agricultural access, product markets, manufactured goods, services, and in other areas.
WTO Director General Pascal Lamy has said the successful completion of Doha would bring benefits of $150 billion in reduced tariffs alone.
This would substantially boost global economic activity – which is why we are keen to take this opportunity to progress the discussion on Doha here at APEC.
Of course, APEC is already driving free trade in the region and setting an example for the world.
APEC’s 21 economies account for 56 per cent of global GDP, 43.7 per cent of world trade and 40.5 per cent of the world’s population.
2009 is the 20th anniversary of APEC and it is a crucial year for the leading economic forum in our region. 2010 will also be a watershed year with the end of the moratorium on new members.
But as the global economy continues to be dominated by recession, progress in APEC on trade issues will be critical in maximising future opportunities.
My message today is that even amid a global economic crisis there are opportunities.
Just last week I was in China – my sixth visit since I have been in the portfolio. It is no understatement to say that China’s rapid recovery from its economic slowdown is proving key to the economic recovery in our region – particularly for our two economies.
The latest data from Beijing indicates that China’s economy is on track towards a target of 8% growth for the year. China’s stimulus package has proven to be a critical ingredient in leading a global recovery.
It goes without saying that China’s ongoing demand for Australia’s raw materials has also helped to cushion our economy from the worst fallout from the global financial crisis. And the so-called bamboo shoots from China give cause for confidence that a global recovery is finally on the way.
Early signs of recovery hint at the promise of new and exciting economic opportunities – and it is up to business to seize these opportunities. Our award winners today here in Singapore provide a great example of what can be achieved.
I come back to SingTel, the winner of the Commonwealth Bank award. In less than two decades, through its investment in Optus, SingTel has built a company that:
• serves one in three Australians
• does more than $8 billion a year in sales, and
• since 2000 - has invested an average of $1.1 billion a year in new network infrastructure and technology.
And, SingTel represents just one example of the dynamism in our trading relationships.
There are more than 2100 Australian companies doing business in Singapore. Singapore is Australia’s fourth largest two-way trading partner, with total trade in goods valued at $31 billion. It’s a good news story but there’s more to do.
And I’d like to throw the challenge open to you, as business leaders invested in the Singapore-Australia relationship.
We need your support to take forward APEC initiatives on “across-the-border” trade facilitation and the “behind-the-border” initiatives that will simplify business regulations and make it easier, faster and cheaper for business to get trade and investment flowing.
And to the Singapore Government, as APEC hosts and as a champion of free trade, your approach is an example to the rest of the world.
We hope we can count on our business leadership to help further promote economic liberalisation and free trade as a means of growth in these difficult times.