MAFTA Matter on JTC Agenda Following is a question-and-answer interview with The Hon Mark Vaile, Australia’s Minister for Trade and newly-appointed Deputy Prime Minister following his election this year as Leader of The Nationals, junior partner in Australia’s coalition government. The questions were e-mailed to Mr Vaile by MABC Byline editor, Eric Pringle, in the week prior to the DPM’s current visit to Kuala Lumpur to attend the Joint Trade Committee Meeting with his Malaysian counterpart, Datuk Seri Rafidah Aziz. Q: What are the main items on your agenda for the JTC to be held in KL later this month? The Joint Trade Committee is a forum to discuss forward-looking and cooperative trade and investment issues of interest to the business communities of both our countries. It has a full and broad-ranging agenda, reflecting the breadth of our commercial linkages and the significant opportunities that exist to build on these ties. As always, I am pleased to have the Business Councils participate in the discussions. The meeting will provide a timely opportunity to review progress in the bilateral FTA negotiations. It will also review the very good progress on initiatives arising from the previous meeting, in sectors as diverse as agriculture, coal, construction and medical devices regulation. Significantly, since last year, we have included a sectoral initiative with private sector participants drawn from an industry of commercial interest to both sides. This year, I am pleased that we will focus on franchising and look forward to the participation of Australian and Malaysian industry from this sector to discuss ways to increase collaboration. Q: Are you looking forward to working with your Malaysian counterpart, Minister Rafidah, to iron out any minor problems and to enhance bilateral trade and investment during your August visit? This will be the sixth Joint Trade Committee that Minister Rafidah and I have co-chaired and I am very much looking forward to discussing the range of bilateral, regional and multilateral issues of interest to both our countries. The trade agenda is a dynamic one, and one where we have many shared goals. Our commercial relationship is strong and cooperative – Malaysia is our ninth largest trading partner with merchandise trade increasing by 23 per cent in 2004-05 to A$8.5 billion. That said, there are areas where we can improve our linkages, for example, in addressing investment flows. The FTA negotiations will play an important role in this process. Q: Will you be making any announcement about the signing of the MAFTA during your pending official visit? There will be no announcement about signing MAFTA during my visit to Kuala Lumpur. My visit is a good opportunity to review progress in the negotiations. Both sides are working towards concluding a comprehensive agreement by mid-2006. Q: If no official announcement about the signing of a MAFTA agreement is made on this visit, can you indicate the status of the MAFTA process and when an official announcement may be forthcoming from Canberra and/or KL? Good progress has been made following two rounds of negotiations – in Kuala Lumpur on May 19-20 and again on August 3-5, 2005. But it is early days yet. Useful progress has been made in some areas and could lead to the development of text in a range of technical areas by the next meeting, which is scheduled for mid-November in Australia. There are still some issues that present particular challenges in the negotiations. Minister Rafidah and I will work together to narrow differences on these issues. Our priority is to achieve an ambitious, high-quality agreement that will provide significant economic benefits to both countries. We have the opportunity to raise income levels for people in Malaysia and Australia. Economic modelling conducted as part of Australia’s FTA Scoping Study suggested that a comprehensive agreement could increase Australia’s GDP by A$1.9 billion and Malaysia’s GDP by A$6.5 billion in net present value terms over the period to 2027. Q: Will you be accompanied on this visit to KL by a business delegation and, if so, what will be its main areas of interest? Over a number of years now, Minister Rafidah and I have sought to involve other private sector representatives in our bilateral trade talks, and this year will continue that involvement of business. Last year, the agreed industry focus was construction. This year it is franchising, and representatives of both the Australian and Malaysian franchise industries and their peak industry councils will take part in our bilateral talks. In addition, there will be an Australian Environment Industry Mission visiting Malaysia during the time that I am in Kuala Lumpur. During my visit I will be involved with this mission. The nine Australian companies comprising this mission represent a range of Australia’s leading-edge water and waste technologies and expertise, and we are very optimistic that there will opportunities for commercial outcomes during the visit of this mission. Q: Although Malaysian investment in Australia continues to rise, why is it that the investment flow from Australia has shown no appreciable gain? We have been working to encourage greater investment flows between our two countries, because we recognise the significant imbalance that exists. This will be one issue that Minister Rafidah and I will discuss during our talks. I am pleased to report that in 2004, Australian investment in Malaysia did increase – albeit from a low base – to A$736 million (compared with A$485 million in 2003). This is a good start and we hope, with the FTA negotiations, to make even further gains in improving investment levels. I welcomed the news earlier this year that the Malaysian Government had awarded Australia’s Macquarie Bank one of five foreign stock-broking licences. We would encourage more Australian companies to consider investment opportunities in Malaysia, as well as welcoming greater Malaysian investment into Australia. Q: Have the warmer political ties that have become evident since Prime Minister Abdullah Badawi assumed office not had any impact on corporate Australia? The example of investment levels in 2004 demonstrates a certain “head-turning effect” among Australian boardrooms. I am aware of numerous Australian companies – big and small – looking at opportunities in the Malaysian market. The fact that our trade levels continue to rise demonstrates the strengthening commercial links in the merchandise and services sectors. Q: What about Australian tourist flows to Malaysia? Australian visitors to Malaysia have increased significantly over recent years and in 2004-05, there were 155,600 Australian short-term tourist arrivals into Malaysia. Malaysian tourist levels to Australia have also shown a steady increase with Malaysian visitors the second largest source of tourists from South-East Asia. Q: How do you see the lifting of the Ringgit peg? Do you see it generating more interest in Australian board rooms in investment in Malaysia in the near future? Malaysia’s exchange rate policy is a matter for the Malaysian Government, but we welcome Malaysia’s decision to move towards a more flexible exchange rate regime. The movement to date in the Malaysian Ringgit against the Australian dollar has been relatively small. As a result, the short-term impact of the currency revaluations on Australian exports is likely to be minimal. In the longer term, more flexible exchange rates will open the way for further revaluations and could increase demand for Australian exports of goods and services. Q: Can you predict the amount by which investment in Malaysia might rise and in what particular areas? It’s not possible to predict amounts, but I would hope that investment levels in Malaysia will rise as a result of this and other factors which I have noted already. I look forward to discussing potential areas of collaboration with Minister Rafidah at the JTC. Q: There are some 30,000 Malaysians receiving tertiary educations Down Under. But there is little evidence of an Australian exchange student presence here. Can you comment on this and indicate how we can promote a greater flow of Australian students to Malaysia? The Australia Government recognises the significant benefits for Australian students in undertaking all or part of their studies overseas. In recognition of the experiences and relationships developed through international education, we actively encourage and support Australian students to study offshore through scholarships and a loan scheme. The Endeavour Programme, an Australian Government initiative, brings together under the one umbrella all of the Department of Education, Science and Training’s international scholarships. The Programme was established to bring high achieving students and scholars to Australia and for Australians to undertake study or research abroad. Under the Endeavour Programme, there are four awards that enable Australians to study in Malaysia: Endeavour Malaysia Awards Endeavour Malaysia Research Fellowships Australian Cheung Kong Student Exchange Programme Australian University Mobility in Asia and the Pacific (UMAP) Programme The Government has also introduced the Overseas Study Higher Education Loan Program (OS-HELP) to assist Australian undergraduate students to study abroad for one or two semesters, as part of their Australian degree programme. This scheme provides eligible students loans of up to A$5,000. These issues were discussed during the recent visit to Malaysia by my colleague, Brendan Nelson, Minister for Education, Science and Training. Q: With so many Malaysian students travelling to Australia and consequential visits to Australia by their thousands of parents, relatives and friends, does it not make commercial sense for Qantas to resume direct flights between KL and Australian capitals? It is a commercial decision for Qantas. Q: Will Australia’s signing of the off-again, on-again ASEAN Treaty of Amity and Cooperation have any impact on Australian-Malaysian bilateral trade and investment? Our commercial links with Malaysia are already strong, and I hope that the bilateral trade and investment relationship with Malaysia will continue to show robust growth. Australia welcomed the invitation by ASEAN to participate in the East Asia Summit to be held in Malaysia in December this year, following Australia’s decision to accede to the ASEAN Treaty of Amity and Cooperation. Q: Has any date been set for an official visit by Prime Minister Howard to reciprocate the visit made by Prime Minister Abdullah to Australia earlier this year? The Prime Minister has been invited to attend the inaugural East Asia Summit in Kuala Lumpur, 12-14 December 2005. His travel programme for 2006 is still to be determined. Q: Congratulations on your election as Leader of The Nationals and elevation to the Australian Deputy Prime Ministership. Will this mean any diminution of the time and energy you have always been noted for in your stewardship of your trade portfolio? Trade is a critically important issue for Australia. I have been in the trade portfolio now for six years and have developed strong personal relationships with my counterparts throughout the world. There are still a number of critical trade issues on my desk, including the completion of the Doha Round, and I believe I would be abrogating my responsibilities if I did not stay in the job. As the Deputy Prime Minister, I now have a Parliamentary Secretary who will be assisting me with my trade promotion and advocacy responsibilities.