Speech Notes of Ambassador Bill Tweddell
at Asialink events and other addresses
Australia, May 2014
It is my pleasure to talk to you today about Australia’s relationship with the Philippines, and the current political and economic environment in that country.
This is an important time for the Philippines and for Australia’s relations with that country.
President Aquino has put the Philippines on a positive trajectory. The economy is thriving, the budget is in good shape, corruption is being tackled, programs are being rolled out to help the poor, and the Bangsamoro Peace Agreement to bring peace to conflict-affected Mindanao has been a significant achievement.
The President’s popularity is unprecedented and he has the opportunity to entrench lasting reforms before his term expires in 2016. It is in Australia’s interests to help his Administration to do this, to the extent that we can.
The bilateral relationship
And we are doing so – the Philippines-Australia relationship is in very good shape.
It is both broad, and in some areas, deep.
Defence and security links, for example, are excellent and produce good results for both sides:
the Status of Visiting Forces Agreement came into force in 2012 – and proved its use during our response to Super Typhoon Haiyan;
we are training Philippines Defence Force personnel in Australia; and
there is strong police and security cooperation, including on counter-terrorism in Mindanao.
There is a strong development cooperation relationship between our countries – Australia has committed $170 million in the 2013/2014 financial year to support the Philippines’ development.
The focus of our aid program in the Philippines is on five key areas:
- education reforms;
- enhancing the foundations for economic growth;
- promoting better disaster preparedness;
- improving conditions for peace and security; and
- building stronger institutions for accountable and inclusive development.
People–to–people links are a significant strength. Approximately 250,000 Filipinos live in Australia. And increasing numbers of Australians are choosing to holiday and live in the Philippines.
Trade and investment relations, while modest, are growing. Two-way trade was $3.5 billion in 2013, and Australian FDI in the Philippines reached $1 billion in 2012.
The strength of the relationship is both exemplified and reinforced by the number of recent two-way high level visits:
the then Governor General visited Manila in April 2012;
President Aquino visited Australia in October 2012;
the Foreign Minister visited the Philippines in December 2013; and
again in February, with Trade and Investment Minister Robb for the Philippines-Australia Ministerial Meeting (PAMM) accompanied by a 22-member strong business delegation and the New South Wales Premier;
a multi-party Parliamentary delegation visited in March
- demonstrating multi-party and federal-state support for strong relations with the Philippines
These high-level visits point to the increasing ties between our two countries, which are also reflected in the work we are doing together in the region, for example, through the East Asia Summit, and globally through the United Nations.
They also highlight the importance with which we regard the Philippines. Indeed Manila is our 7th largest diplomatic mission globally. We have 7 agencies represented at post, all of which have some education/training/capacity building emphases:
Department of Foreign Affairs and Trade,
Australian Federal Police,
Department of Immigration and Border Protection,
The Defence Department,
Department of Infrastructure and Regional Development,
Austrade, and the
Australian Centre for International Agriculture Research
And we are the third largest diplomatic mission in Manila, behind the US and Japan.
Australia’s response to the devastation wrought by Typhoon Haiyan was very warmly received in Manila and across the archipelago.
Australians were also among the first international personnel to arrive in the worst-affected areas. Our immediate assistance affirmed the position of Australia as a responsive and generous regional neighbour of the Philippines, especially in times of critical need.
And for the political relationship, what our response to Haiyan did – including at the highest levels of government in Manila - was to reinforce the view that Australia is a country to be relied upon, a friend for all seasons.
Indeed, Foreign Minister Bishop told her Philippine counterpart - when she visited just weeks after Haiyan had struck, specifically to visit the affected areas and see Australia’s response for herself - that there was a real expectation by Australians that their government would respond immediately and generously.
Australia committed a total of $70 million to support immediate and life-saving requirements for around 220,000 people severely affected by the typhoon. And assistance by the Australian Defence Force amounted to more than $30 million.
The 37-member Australian Medical Assistance Team (AusMAT) and field hospital in Tacloban treated 3,281 patients and performed 238 surgeries. The Australian hospital tent served as a regional and referral hub for serious cases from other health facilities.
Over 500 Australian Defence Force (ADF) personnel helped clear debris in and around Ormoc, and rehabilitated 16 schools allowing 15,000 schoolchildren to go back to school.
The Royal Australian Air Force undertook 230 missions to transport over 1,800 metric tonnes of relief goods into affected areas; evacuated 3,300 people; and transported 200 officials and humanitarian workers into the disaster zones.
$40 million was delivered through partners in the United Nations, the Red Cross society, and international and local NGOs, to meet emergency relief needs such as food, water, sanitation, health care and shelter of people severely affected by the typhoon.
An additional $30 million has been committed to support implementation of the Recovery Assistance Plan for areas affected by Typhoon Haiyan. This additional funding will support livelihood recovery, classroom and day care construction and rehabilitation, better disaster preparedness, and provision of technical experts.
I noted earlier that education reform in the Philippines is the flagship or key focus of our aid program, and I would now like to spell out a little more the work we are doing in this area.
Education quality, access and retention are a significant challenge in the Philippines. As many as 9% of children never enrol in school, and only half of those who begin Grade 1 complete secondary education. The lowest education outcomes are in the conflict affected areas in Mindanao. Without significant investment the education system will continue to constrain economic growth and hamper efforts to reduce poverty.
President Aquino is implementing an ambitious reform agenda to improve the quality of education and add three years, kindergarten and grades 11 and 12 to the curriculum. And Australia is assisting this reform.
On 21 February, Foreign Minister Bishop announced new funding assistance totalling $150 million over the next six years for the Basic Education Sector Transformation (BEST) program, which will benefit more than eight million boys and girls in 19,000 public schools.
The Australian Embassy supports four other programs to improve access to quality education in the Philippines:
Basic Education Assistance for the Autonomous Region in Muslim Mindanao (BEAM-ARMM) –education assistance to reduce the gap in participation in the disadvantaged communities in the Autonomous Region in Muslim Mindanao;
Philippines Response to Indigenous Peoples and Muslim Education (PRIME) – to improve access to education for disadvantaged learners from Muslim and Indigenous People’s communities;
Classroom Construction Initiative – to construct 660 classrooms and improve procurement system; and
Early Learning for Life - to improve foundations for early learning in day care centres and public schools
In addition, Australian and Philippine Universities are working together on research partnerships to strengthen evidence-based policy development in a range of issues affecting education.
Australia has supported the Philippine education sector for over 20 years and achievements have been highly visible and well regarded. The current support to the transformative reforms in Philippines basic education will also play a role in influencing changes in tertiary curriculum. This will allow Philippine universities to be internationally competitive in attracting students from Australia under the New Colombo Plan, a signature initiative of the new Australian Government.
The New Colombo Plan aims to lift knowledge of the Indo Pacific in Australia and strengthen people-to-people and institutional relationships, through study and internships undertaken by Australian undergraduate students in the region. Internships will be integral to the New Colombo Plan, with the aim of ensuring students are work ready, have professional connections in the region and can link their study experience directly to career opportunities.
The New Colombo Plan is intended to be transformational and to deepen relationships with the region, both at the individual level and through expanding university, business and other stakeholder links. Over time, the Australian Government wants to see study in the Indo Pacific region become a “rite of passage” for Australian undergraduate students, and as an endeavour that is highly valued across the Australian community.
The New Colombo Plan will encourage a genuine two way flow of students with the region, with an increasing number of Australian undergraduates heading to the region to complement the thousands of students from the region coming to Australia to study each year.
The Australian Government has announced funding of $100 million over five years for the plan. A close partnership between governments, universities and business will support the realisation of this important initiative. The New Colombo Plan will commence in 2015, after a pilot phase in 2014 in which Indonesia, Japan, Singapore and Hong Kong are participating. The Philippines will be part of the program from 2015 and the Embassy has begun discussions with leading Philippine universities.
Education is also a significant driver of the bilateral trade relationship. With a value of $277 million in 2012-13, Australian education services exports to the Philippines have more than doubled in the last five years. 35% growth last year – albeit off a low base – Australia has now overtaken the United States as the No. 1 education provider for Filipinos choosing to study overseas. Anthony will talk further about Future Unlimited and the opportunities that exist in the education area.
So, what are the opportunities for Australian business?
The Philippines is the fastest growing economy in South East Asia [7.2% in 2013], and the second fastest growing economy in East Asia behind China.
It reached investment grade status in 2013 and expects a population dividend from an emerging skilled labour force – the Philippines has the largest proportion of its population aged under 14 in ASEAN.
But the economy is narrowly based: consumption accounts for 70% of GDP, driven by remittances [10 million Filipinos are working abroad at any point in time] and the disposable incomes of those working in the booming Business Process Outsourcing Sector.
Australian businesses are, however, taking advantage of burgeoning GDP growth – there are more than 200 Australian companies operating in the Philippines in a diverse range of sectors – from mining, oil and gas, banking, finance to ship building.
And we are fortunate to have with us today Ian Porter, President of ANZCHAM – Australia’s premier business chamber in the Philippines and our key partner in advocating for a stronger bilateral economic relationship – to give his insights into doing business in the Philippines. ANZCHAM’s membership is now more than 330 and growing.
The Australian Embassy in Manila is strongly committed to supporting Australian business in the Philippines. Economic diplomacy is now at the heart of DFAT’s work around the world — in foreign policy, trade and our aid and development work. It is our priority to maximise Australia’s economic benefit in the Philippines, by deepening and building business links, by supporting economic reform and free-er trade and encouraging foreign investment to deliver greater prosperity for Australia, our region and the world.
Our economic diplomacy agenda is guided by four key objectives:
Trade — by pursuing trade liberalisation through bilateral, regional and global trade agreements that open up new markets for Australian exporters and sustain a strong, rules-based architecture for global trade.
Growth — by supporting global growth, including by using Australia's aid program and other measures to promote economic reform and infrastructure, and through regional and global economic cooperation fora.
Investment — by promoting investment into Australia and Australian investment internationally.
Business — by advancing the interests of Australian business overseas, the development of a stronger private sector in our region, and by promoting Australian tourism.
It is the Government’s ambition to partner with business to identify opportunities and challenges for a stronger Australian commercial presence in the Philippines and to drive growth in the bilateral trade and investment relationship.
Supporting Free Trade Agreement (FTA) negotiations has an important role to play in this endeavour. The Australian Government will not enter into any trade agreement that falls short of the benchmarks set by the WTO or the benchmarks we set ourselves of high-quality, truly liberalising trade deals that support global trade liberalisation.
The ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), which came into force in 2010, was Australia’s most ambitious trade deal to date. The countries of ASEAN constitute one of the most dynamic economic regions in the world. And it’s right on Australia’s doorstep.
AANZFTA is Australia’s first multi-country FTA. It is the first time Australia and New Zealand have been involved jointly in negotiating an FTA with third countries. It is the first time ASEAN has embarked on FTA negotiations covering all sectors including goods, services, investment and intellectual property simultaneously. This makes it the most comprehensive trade agreement that ASEAN has ever negotiated.
For Australian exporters to the Philippines, AANZFTA saw tariffs go to zero on key commodities like wheat and beef, giving exporters a significant commercial advantage. Since 2012, Australian wheat exports to the Philippines have increased tenfold, while beef exports have almost doubled.
The Philippines has the highest uptake of AANZFTA in ASEAN, which reflects the advocacy work undertaken by the Embassy and the Philippine Department of Trade and Industry.
We are currently negotiating the Regional Comprehensive Economic Partnership (RCEP), which brings together ASEAN FTAs into one agreement. RCEP has the potential to deliver significant opportunities for Australian businesses. The 16 RCEP participating countries account for almost half of the world’s population, almost 30% of global GDP and over a quarter of world exports.
The objective of launching RCEP negotiations is to achieve a modern, comprehensive, high-quality and mutually beneficial economic partnership agreement that will cover trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement and other issues.
In addition to these two FTAs, we are encouraging the Philippines to undertake the necessary reforms so that in the future it can join 21st century FTAs like the Trans Pacific Partnership, which is currently being negotiated.
On the investment side, we have had a number of successes – Australia has a strong presence in the BPO and the shipbuilding sector. But in other key areas of interest like mining and oil and gas, Australian investors face many challenges.
Foreign Direct Investment (FDI) levels in the Philippines are very low. With stocks accounting for just 3.5% of GDP, the Philippines lags all other ASEAN 5 economies in attracting investment. [The ASEAN 5 are Singapore, Indonesia, Malaysia, Thailand and the Philippines.]
FDI is constrained by the economic provisions of the Philippines constitution and the negative investment list, which limits the sectors in which foreign companies can invest and the professional occupations in which foreign nationals can be employed.
But it is also stymied by weak property rights and concerns about sovereign risk, relating to regulatory and legal uncertainty and corruption.
The Australian Government is actively encouraging the Philippines to embrace a broad economic reform agenda to address these and other issues that impact on Australians’ ability to do business in the Philippines. As part of our economic diplomacy strategy, we are encouraging the development of a strong national competition policy, the development of stronger property rights and investment liberalisation.
We are also supporting the development of infrastructure, a major constraint on growth, including by funding the Public Private Partnership Centre to the tune of $30 million over six years. We are pleased with the gains being made under this program. Six major infrastructure and health projects have been successfully awarded and Australia’s investment of $1 million in transaction advisory support contributed to the awarding of the $360 million Ninoy Aquino International Airport Expressway PPP.
My colleague, Anthony [Weymouth, Senior Trade and Investment Commissioner], will discuss infrastructure and opportunities for Australia.
It would be remiss of me before I conclude not to mention the challenges facing Australian miners in the Philippines. The Philippines is blessed with enormous mineral wealth – it is rated as the third most endowed country for gold, fourth in copper, fifth in nickel and sixth in chromite. But, with opposition from the Church and environmentalists, combined with regulatory and legal uncertainty, world class projects like the $6 billion Tampakan Copper-Gold Project continue to be stymied.
Given the potential that mining provides for economic development in the Philippines, and Australia’s experience in the extractive sector, Trade and Investment Minister Andrew Robb committed at the 2014 Philippines-Australia Ministerial Meeting (PAMM) to provide Australian expert assistance to develop the capacity of the Philippines mining regulatory environment. And this commitment was welcomed.
We have already begun to deliver. In coming weeks the Embassy is sending officials from the Philippines Department of Environment and Natural Resources to the University of Western Australia to undertake short courses run through the International Mining for Development Centre.
The aim, in short, is for Australia to become the partner of choice when it comes to expertise around mining.
While there are challenges, this is a good time for Australian business to be looking for opportunities in the Philippines.
Long the laggard of South East Asia, the Philippines now leads GDP growth across the region. It is being led by a President who is determined to leave a legacy of reform – by improving governance, tackling corruption and reducing poverty.
The Australian Government, as the largest bilateral grant aid donor to the Philippines, is a strong partner in this rejuvenation, and we at the Embassy are committed to supporting reform that promotes inclusive growth, job creation and opportunities for Australian business.