Asia Society Annual Dinner 2006

Mr Richard Woolcott, Founding Director of the AustralAsia Centre,
Distinguished guests, Ladies and Gentlemen

Introduction

1. May I thank Mr Woolcott for his generous introduction and warm remarks. Mr Woolcott is an old friend of Singapore and of Asia, having long served in many countries in the region. He has witnessed Australia’s engagement with East Asia over the past half century, and played a role in many of the pivotal events, including the creation of APEC in 1989. I am also glad to see many other friends in our midst. It is good to be back in Australia again, and to join you tonight for dinner.

Update of Regional Developments

2. These are exciting times of change in Asia. China’s rapid growth has energised the whole region, and opened up many opportunities for its neighbours. India is also changing. Despite a late headstart, it has made significant progress in recent years, and is “Looking East” to strengthen its ties with the region.

3. Besides these two emerging giants, Japan’s economy has revived after more than a decade of stagnation, and Korea has successfully restructured its economy after the Asian financial crisis. In Southeast Asia, ASEAN countries are making progress, growing their economies and participating in the growth of China and India, although some of them face political difficulties.

4. Established strategic relationships in Asia are evolving. The triangular relationship between the US, Japan and China remains critical to the region, but the balance is shifting. US-China ties have become the most important side in the strategic triangle. Both countries have strong incentives to build a constructive relationship. America’s interests lie in engaging China and not creating a long-term opponent in Asia. A prosperous and stable China will be a major market of the US and a joint stakeholder in the international system. It will have an interest in avoiding disruptions and upheavals, and in cooperating with other powers to tackle global problems. For its part, China needs a stable external environment to grow and solve its domestic problems, and wants access to US markets and technology. It understands that a stable relationship with the US is critical to achieving both. One potential flashpoint in US-China relations is Taiwan, but for now that situation has stabilised.

5. Sino-Japanese relations are currently going through a difficult patch. Japan has not come to terms with its history during the Second World War. Japan also needs to adapt to having a neighbour that in twenty years will have grown to four times its present size, and that will soon overtake Japan as the biggest economy in Asia. But I believe that neither country wants a collision. China has become Japan’s biggest trading partner, surpassing the US, and Japan is a major source of investments and technology to China.

6. The ties between US and Japan are strong. The US-Japan Security Alliance anchors the US presence throughout East Asia and the Pacific, and assures Japan of the security it needs, without requiring it to build up its own military forces and alarm its neighbours. Japan will need to maintain its ties with the US, while developing its relations with China, South Korea and other neighbours, especially through economic cooperation. One is not a substitute for the other.

7. Beyond this triangular core lies India. India’s strategic partnership with the US, and its growing engagement with East Asia, have created a new dynamic. The once frosty China-India ties have transformed into a “strategic and cooperative partnership for peace and prosperity”, and the two countries are engaging in dialogue to address bilateral and regional issues.

8. Overall, I am optimistic that the strategic and security situation in Asia will remain stable. This is a prerequisite for prosperity and growth in the region, and indeed in the world.

Australia’s Response to a New Asia

9. While these major changes are underway in Asia, Australia has been engaging itself more actively with the region. For their part, Asian countries also want Australia to be a partner in their development. In all the major Asian cities, Australians are travelling, visiting and making a living. Seven out of Australia’s top ten overseas travel destinations are in Asia. In addition, growing numbers of Asians are in Australia, as new immigrants, working expatriates or students. This has helped to give Australians a greater “Asian” exposure.

10. Australia’s economic relations with Asia have grown, especially its ties with China and India. Australian companies are exporting more to China, especially raw materials and agricultural products. Australian consumers are benefiting from imports of consumer goods from China. Australia and China are now negotiating an FTA. At the same time, Australia-India ties are warming up, following Prime Minister John Howard’s recent successful visit to New Delhi. Australia is well placed to benefit from India’s growing demand for energy and raw materials to fuel its economic growth.

11. Besides these two emerging giants, Australia is also engaging the ASEAN countries. Australia concluded a free trade agreement with Singapore in 2003, its first with any country apart from its Closer Economic Relations Trade Agreement with New Zealand. This has significantly expanded bilateral trade, and encouraged other Southeast Asian countries to negotiate similar agreements with Australia, as was indeed the intention. Now Australia and New Zealand are negotiating a Closer Economic Partnership with the ASEAN group as a whole. This will further strengthen Australia’s links with the region.

12. On the security front, Australia has long historical ties with Asia stretching back to the Second World War, when many Australian soldiers sacrificed their lives defending Singapore and Malaysia. Today, Australia still contributes to the security of Singapore and Malaysia, as a member of the Five Power Defence Arrangements (FPDA).

13. More broadly, Australia has a security interest in a stable and predictable regional order that will allow it and its neighbours to grow and prosper. Australia is a strong ally of the US, but it also seeks good relations with its major Asian partners including China. Prime Minister John Howard has said that Australia’s close relations with the US will “in no way…. affect the capacity of Australia to interact with and form a close and lasting partnership and friendship with China”. Indeed the only scenario which will confront Australia, and many other Asian countries, with a difficult choice between the US and China is a conflict over Taiwan.

14. Australia also has an interest in maintaining good relations with ASEAN, in particular Indonesia, which is not only the biggest ASEAN member but also the one closest to Australia, stretching across its northern approaches and astride its main air and sea lanes. After Boxing Day Tsunami in 2004 and the recent earthquake in Jogjakarta, Australia responded swiftly and generously with humanitarian assistance.

15. A new aspect of security since 9/11, and especially after the Bali bombing of 2002, is countering the threat of terrorism. The discovery of a home-grown terrorist group in Australia last year is a chilling reminder that the threat remains real and serious. The security agencies of Australia, Singapore, Malaysia and Indonesia are working closely together in counter-terrorism. Just as the terrorists recognise no borders, so too countries must cooperate closely with one another to neutralise them effectively.

16. Indonesia is a critical country in the war against terrorism. It has made significant progress capturing terrorists, disrupting the Jemaah Islamiyah network, and tracking the many other groups of militants in the country. But cleaning up the terrorist infrastructure and neutralising its deviant ideology of hatred and violence is much harder. Abu Bakar Bashir, the former spiritual leader of the JI Group has just been released from prison, and has promptly said that the 2002 Bali nightclub attacks were God’s will and called the bombers ‘holy warriors’.

17. Outside Southeast Asia, Australia’s interests encompass the South Pacific where it has shouldered responsibilities for fostering and periodically restoring peace and stability in East Timor and other South Pacific countries.

18. These Australia strategic interests fit in with ASEAN’s own interests for a more stable region.

19. The complex web of economic and security linkages in Asia are creating a new architecture for strategic cooperation. Many forums exist for countries to discuss issues. This includes the Shangri-la Dialogue and the ASEAN Regional Forum (ARF), which have established themselves as platforms for the Asia-Pacific countries to exchange views and manage sensitive problems. The ARF is unique in bringing together all the major external and regional powers to the same forum. The countries have shared interests in maritime security, counter-terrorism, disaster relief and other issues. We can advance cooperation in these areas through the ARF.

20. At the same time, APEC continues to play an important role in fostering cooperation among the Asia-Pacific countries. It was Australia’s skilful diplomacy which brought the idea of APEC into fruition in 1989. Since then, APEC has fostered practical cooperation, including trade and investment liberalisation as well as other trans-Pacific issues. Through APEC, for example, Australia has been at the forefront of efforts to strengthen the region’s response to possible pandemics. These links across the Pacific ensure that the growing cooperation among the Asian countries does not split the Pacific down the middle, or exclude the US from Asia.

21. However, given that APEC has now grown to encompass 21 countries, we need a smaller grouping which brings together the main regional participants in the new Asia. This is the purpose of the East Asia Summit (EAS), a new forum which was set up last year. The EAS comprises the ten ASEAN countries, ASEAN’s three dialogue partners in Northeast Asia – China, Japan and South Korea; plus three more dialogue partners – India, Australia and New Zealand.

22. The membership is significant and carefully considered. The original idea was to constitute a narrower grouping comprising ASEAN plus China, Japan, and South Korea. But ASEAN eventually decided that it would be wise to broaden the grouping, and to invite India, Australia and New Zealand as well. This better reflected the emerging patterns of trade, investment, and people linkages in the region. It would also help to make the grouping an open and balanced structure, one not likely to develop into a closed block. We are therefore very happy that both Australia and New Zealand have signed the Treaty of Amity and Cooperation which ASEAN gives weight to, joined the EAS, and are playing a part in the unfolding developments in East Asia.

23. APEC, EAS, ASEAN and the ASEAN-based forums are important components of an open and inclusive regional architecture, which gives all the major players a stake in Asia. This structure has the best chance of producing a stable regional order where countries, big and small, can grow and prosper.

Australia-Singapore Partnership

24. Australia’s relationship with Singapore fits into this overall framework of regional cooperation. Our two countries enjoy a close and longstanding partnership, rooted in similar national outlooks and shared interests. Our societies are open and egalitarian. Our peoples are direct and pragmatic in their approach. We conduct relations based on mutual interests and rational considerations, and can rely on each other to take predictable and consistent stands even when difficult issues crop up.

25. Our views on many international issues converge. We uphold an open, globalised system that promotes economic interdependence between countries. We want peace and stability in the region, and believe the best way to achieve this is through an open regional architecture. We see the US as a constructive force in Asia, contributing to the stability and prosperity of the whole region. We are convinced that the peaceful emergence of China and India is positive for the region, and the world. We cooperate in a wide range of areas, from counter-terrorism to scientific research. Hence, our relationship has developed and become institutionalised. People-to-people ties are warm and friendly. Thousands of Singaporeans work and study in Australia while an even larger number spend their holidays here. The same is true of Australians in Singapore.

26. Our economic relations have been growing steadily. The Singapore Australia FTA helps Singapore companies to tap opportunities opening up in the vibrant Australian economy, and Australian businesses to use Singapore as a base to expand within and beyond Asia. However we need to update and improve this FTA, so as to bring it abreast of changes since it was concluded three years ago, and to strengthen the overall relationship between Singapore and Australia. We hope to do this in the SAFTA review next month.

27. Our defence relationship is a mature and multi-faceted one, grounded on substantive interactions. Singapore is grateful for the many training facilities that Australia provides the Singapore Armed Forces (SAF) and the Republic of Singapore Air Force (RSAF). Our two armed forces have worked side by side in peacekeeping operations in Cambodia (as part of UNTAC) and in East Timor before it became independent. When I met Prime Minister Howard on Wednesday we discussed the current problems in East Timor. I explained that East Timor is part of the South Pacific and not an ASEAN member. Nevertheless, if East Timor requests for international help, and the UN plans to send more forces to East Timor, Singapore will consider how we can do our part together with other countries.

28. While relations between Singapore and Australia are good, we must never take this for granted. We must continue to cultivate our ties based on mutual respect and reciprocity, and build on what we have achieved thus far. As in any relationship, problems will surface from time to time. There will be issues where we will take different positions, as in the case of Nguyen Tuong Van last year. The key is to discuss such issues openly and in good faith, and work through them together bearing in mind our shared longer term interests.

Connecting to the Global Economy

29. Beyond these specific policies, Australia’s relations with Asia will prosper most if countries open up and integrate with the global economy to the greatest extent possible. This is not just to derive economic benefits, but also to increase our stakes in one another’s success, and strengthen the interest which countries have in a stable and predictable world order.

30. For Singapore’s part, this is what we have always tried to do. Our economy is totally open to the world, both in trade and in investments. Our society is geared towards the free exchange of talent, knowledge and ideas. We are acutely conscious of the risks of globalisation, but we believe that the way to increase our security is by plugging in fully to the international grid, and to diversify our exposure by linking up with many partners. We are convinced that if we try to erect barriers and keep out competition, we will fail.

31. Australia too has done well by embracing globalisation. Since the 1980’s successive governments on both sides of the political spectrum from Mr Bob Hawke, to Mr Paul Keating and now Prime Minister John Howard have lowered tariffs, opened up the economy, freed up the labour market, and made Australia more competitive. As a result when the 1997 Asian Financial Crisis afflicted many countries in East Asia, Australia sailed through unscathed. It developed new markets, and continued to grow. Australia has been a strong advocate for further trade liberalisation, particularly in agriculture as part of the Cairns Group of agricultural exporters. Therefore in the WTO, Singapore is working with Australia to secure a successful Doha Round.

32. However, globalisation is not always an easy policy to sustain. Admitting foreign workers can lead to the perception that local jobs are being displaced. Opening up markets can put pressure on local companies, even when it benefits consumers and the wider economy. And when governments attempt to privatise state-owned companies, this can create public unhappiness about the sale of the nation’s crown jewels.

33. These pressures exist in most countries, and are evident in Australia too, as seen from the cancellation of the sale of Snowy Hydro and the debate over the privatisation of Telstra. One specific instance in which Singapore has a direct interest is the opening up of the Trans-Pacific air route to competition. The Australian government has made a decision not to have an open skies agreement with Singapore, or to open up the Trans-Pacific air route to SIA. Singapore respects that decision, though we remain convinced that opening up would benefit both countries. I therefore hope that the Australia government will reconsider its position in the not too distant future.

Changing Attitudes and Mindsets

34. As a consequence of globalisation, countries with different cultures, values and systems of government will come into closer and more intensive contact. We must recognise and accept these differences between countries. We are not all the same, nor can we easily make other societies like our own. But we can strive to understand one another, respect one another’s systems, and cooperate effectively despite our differences. This is the way to coexist harmoniously in a highly interdependent world.

35. This is a factor between Australia and many Asian countries. Australia is an Anglo-Saxon society, whereas Asian countries have their own tradition and outlooks. Our cultural and political values differ, as do our languages and social norms. Our different attitudes towards capital punishment are a case in point. But these differences should not prevent us from building bridges between our societies.

36. The Australian government understands this, and so do many Asian governments. This is why we have been able to cooperate productively. However, it is also necessary for the broader societies to understand this reality about the world, so that governments will enjoy political support when they cooperate with other countries, and do business based on mutual give and take.

37. The media has an important role to play. They ought to inform and educate the public, and promote better understanding of the world we live in. The best of Australian journalism does this, but there are also media reports that trivialise Asia, and reinforce negative perceptions and old stereotypes which linger in the popular consciousness. Mr Gareth Evans, the former Australian Foreign Minister, once said that the popular media in Australia only had two stories about its relations with Asia – “row or kow tow”, so Australia was either fighting or appeasing the Asian countries!

38. These lapses can occur on both sides. For example, when an Indonesian newspaper recently published a rude cartoon of Prime Minister Howard, the Weekend Australian retaliated a few days later with an obscene caricature of the Indonesian President. This sparked protests in Jakarta and calls for an Indonesian boycott of Australian goods, prompting Foreign Minister Alexander Downer to condemn the caricature as tasteless and offensive, and to emphasise that the Australian government did not condone its publication. This is one small example to show how much influence the media has over our perceptions and understanding of each other.

Conclusion – Securing a Brighter Future

39. Looking ahead, both Singapore and Australia are well positioned to ride the rising tide in Asia. But we cannot stay put. In a world of rapid change and uncertainty, we will have to move on and move up, to keep abreast with the rapid changes going on all around us. Our responses must be creative and far-sighted to keep our economies going forward for the next 50 or 100 years.

40. As a small country, with an acute sense of our own vulnerability, Singapore knows that we have to change with the world, or risk becoming irrelevant and marginalised. Australia is a luckier country, with a huge continent, rich natural resources and a more secure position. But in 50 or 100 years time, will Australia be on top of its destiny or will Asia have moved forward and left Australia out of the game? Much will depend on what Australia does to engage Asia, and stay relevant to the changing world. You have proven your ability to adapt to these changes. I hope that Australia will continue to develop ties with the most dynamic region in the world, and work closely with Asian countries to secure a brighter future for all of us.