Australian Embassy
The Philippines


Remarks by Ambassador Rod Smith
Australia-New Zealand Chamber of Commerce
15 July 2008

Richard Barclay, other members of ANZCHAM Board, members, good evening and thank you for inviting me to speak tonight.

It is almost exactly four months since my arrival in Manila, so this is a timely and welcome opportunity. I’ve had the pleasure of meeting a number of you at various functions; I look forward to meeting others tonight and working with all of you in one way or another over the course of my term in Manila.

I want to acknowledge at the outset that ANZCHAM is a very significant partner of the Embassy. Business chambers are often referred to as stakeholders in the work of embassies, and they are – but I also think the term stakeholder doesn’t capture the sense of reciprocal interest we have in each other’s activities. So I prefer to think of it as partnership.

The first message I want to leave you with is about the priority I attach to working closely with ANZCHAM as a partner. Having an embassy representative on the ANZCHAM Board, in the form of Ross Bray, our Senior Trade Commissioner, is a very good arrangement. Ross is an obvious and important point of contact for ANZCHAM in the embassy, but he shouldn’t be seen as the only one. There is good contact and interaction at all levels across the embassy and this is something I want to encourage. And I want to underline my personal commitment to working with ANZCHAM.

One of my priorities as Ambassador, and one of the embassy’s priorities, is to work with the business sector to build trade and investment between Australia and the Philippines. This is one area of the bilateral relationship that is not as substantial as it should be. We’re doing a number of things to address this, and I’ll talk about these in a few minutes. But first let me make some general comments about the state of bilateral relations and the work the embassy is doing here.

The bilateral relationship is in good shape. Australia’s standing in the Philippines is high. We’re a substantial player here: Australia has the third largest embassy in the Philippines, we’re the second largest grant aid donor, the second largest defence cooperation partner, and a major contributor to the counter-terrorist effort in the south and to building the counter-terrorist capability of the Philippine security forces. We’re an increasingly important market for skilled Filipino workers as Australian businesses look to meet labour shortages, and of course the Filipino community in Australia stands at somewhere around 200,000, or perhaps more.

I don’t want to ignore the smaller – but not small – number of Australians in the Philippines. I’ve been surprised since my arrival at just how extensively we are spread – across business, in teaching, aid workers and volunteers working for NGOs and community groups. All of them contributing in different ways to this country, and to building ties and cooperation and understanding between our two countries. ANZCHAM itself, as befits one of the bigger chambers here, has a significant profile and influence, as many of you do in your individual and corporate capacities.

At a government to government level, we enjoy very good cooperation. President Arroyo visited Australia twice last year, and later this year, in October, we will have the biennial Philippines-Australia Ministerial Meeting, to be held here in Manila, attended by both the Foreign Minister, Stephen Smith, and the Trade Minister, Simon Crean.

So all of this provides a very good foundation for continuing to build the bilateral relationship. With the election of the new Government in Canberra, don’t expect any radical changes in direction. The main elements of the bilateral relationship will remain the same, although there will certainly be differences of emphasis. We are seeing that for example in the foreign policy arena, with the strengthened priority the government is giving to engagement with Asia and to multilateral diplomacy which, along with the US alliance, make up the main pillars of our foreign policy.

Development cooperation – our aid program – will continue to be an important part of our efforts here, reflecting our fundamental interests in promoting economic growth and development in the Philippines, improving the quality of life of its people and promoting regional stability and security. The aid budget has increased substantially in the last two years and in the current financial year will be at least A$109m – around PHP4.4b. That figure will continue to grow, and we expect there will also be some evolution in the shape and composition of the aid program.

Defence and security cooperation will also continue as priorities for the embassy and for Australian interests in the Philippines. As I said earlier, we are its second largest defence cooperation partner – many are surprised to learn that more members of the Armed Forces of the Philippines are trained in Australia than in the US. The Status of Visiting Forces Agreement, signed last year, is awaiting ratification by the Philippine Senate. We have a substantial program of police cooperation in areas of counter-terrorism, joint investigations and capacity building.

We’re also doing a lot of valuable work in partnership with Philippine transport and security agencies to improve the security and efficiency of its transport systems, particularly maritime. The potential benefits of this kind of cooperation for business are obvious.

Let me say on security that we still have real concerns about the situation in Mindanao, and particularly Zamboanga and the Sulu archipelago – and indeed some signs of resurgent NPA activity elsewhere. The Philippines has made substantial headway against terrorist groups, but it’s a war that has yet to be won. We’re working with them on this at a number of levels – through traditional defence and security cooperation, but also through activities like development assistance, peace building and conflict prevention, support for human rights, counter-radicalisation activities and inter-faith dialogue. It all adds up to a very substantial investment – but many of you will appreciate that it is a bottom-line issue for us in terms of both our security and economic interests.

Let me come back to the topic of our economic relations.

I do think there is considerable potential to grow the trade and investment relationship. Merchandise trade, at less than $2b both ways, is the lowest amongst the major ASEANS – in fact trade with ASEAN stands at $55b, so our bilateral trade with the Philippines accounts for less than 5% of our trade with ASEAN. Services trade is also quite low, at a little over half a billion dollars both ways. There are many reasons for this relatively low level of trade, which you as business people can probably explain to me much better than I can explain to you. Some of those factors aren’t going to change quickly, so we need to be realistic about the prospects for rapid growth. But the potential is there.

A major focus of activity for us at the moment is the conclusion of a free trade agreement with ASEAN and NZ, now in the final stages of negotiation. We are aiming for it to be as comprehensive as we can achieve. Once ratified and in force, we hope it will act as a stimulus to expanded trade. And while it is hard to make direct comparisons – this of course depends on commercial decisions which are influenced not only by tariff levels and other border measures but by a range of other business factors – it is instructive to look at the case of Thailand. The Thailand-Australia Free Trade Agreement, concluded in 2005, boosted merchandise trade from $6.8 billion in 2004 to over $12.3 billion in 2007. Interestingly, most of this growth was in exports from Thailand to Australia. So in theory at least the AANZFTA should give a significant boost to our trading relationship.

Mining of course is a sector with very significant potential. It is not always easy in this country, as anyone who follows the media will know, but it is worth persevering with. It’s one in which the embassy continues to be closely engaged with Australian companies and we’re looking for ways we can assist. There is also interest on the part of Australian companies in setting up BPOs, and we think there is good potential in sectors like agribusiness, education, infrastructure and consulting. And there will always be demand for skilled Filipinos to work in Australia.

Let me mention briefly two other points relevant to our trade and economic interests here. The Australian government continues to be strongly committed to pushing for an outcome from the Doha round of multilateral trade negotiations. Here Australia, New Zealand and the Philippines are partners in the Cairns Group, pushing for a fair deal on agriculture. The government also remains very committed to APEC as a key regional economic forum.

And it is also looking hard at measures to boost domestic productivity and our trade performance through a wide-ranging Review of Export Policies and Programs, chaired by David Mortimer. Its scope covers domestic constraints on our exports and investment, and impediments in foreign markets. It is also looking at the suitability of the Government’s programs and services to meet contemporary economic challenges.

Back on bilateral issues, I mentioned earlier the PAMM, to be held in October. This will be an important occasion to take forward our interests with the Philippines across the board, including in the trade and economic area. We are working with the Philippine government now on the program for the meeting, and will ensure there will be opportunities for interaction between our ministers and ANZCHAM. We’ll keep working with the Board on this.

This has necessarily been a fairly cursory overview of my priorities and those of the Government and embassy, but let me leave it at that. Thank you again for the opportunity to speak to you, and I’d be happy to answer questions or take up any issues with you afterwards.