ACTING CHAIR —Welcome. The subcommittee prefers that all evidence be given in public, but should you at any stage wish to give evidence in private you may ask to do so and the subcommittee will give consideration to your request. Would you like to make any opening statement?

Mr Weemaes —Yes, thank you very much. As you know, I have not made a written submission to the committee, but I am extremely happy that you have asked me to appear because I think there are opportunities for Australian business in Latin America. I am a consultant. I guess you would call me an SME. My job is to identify and develop business opportunities in Latin America, with a particular focus on Argentina. I also come with a perspective of having been a public servant, serving as ambassador in the region to Brazil and Argentina, with accreditations to Peru, Uruguay and Paraguay.

Apart from the major commodity type exports, which have been traditional, Australia has opportunities in the areas of services, systems and innovative manufactures. If you look at Argentina, for example, you can see that there is a theme running through what the Australian companies there now, which are the new entrants in the field, do. P&O is there basically with a system with logistics; two Australian cinema companies are there, once again with systems with know-how; HIH is there with workers compensation insurance, which is once again a system; Prime Television is there, once again with a system. You could probably say that our mining investment there is, once again, a demonstration that Australian developed systems are applicable. And an area I have had something specific to do with - the health area - is one more illustration of that. All of that shows that there are things and systems developed in Australia which are applicable to Latin America and successfully exportable. So I would think that, if there are any Australian exporters already in the field, they should have a look at South America. They may or may not find a market, but at least they should look at it.

On the question of the role of government, I believe very strongly that government, along with business and other actors, has a very important role to play. If I could summarise that, I would say that the first element is the overall bilateral relations framework. People often tend to be sceptical about that, but I believe it does count. In countries such as Argentina, Brazil, Chile and Uruguay, for example, our Cairns Group relationship is an important backdrop for a general attitude about and image of Australia. The fact that the government deals with those and other governments over a wide range of fields makes it easier for business. That is in the general sense.

There is another obvious role, which is raising awareness in those markets of what Australia has to offer as an exporter and also raising awareness within Australia that there are prospects in Latin America. Business is done by business but my impression is that, for example, a lot of the publicity and the lead which was given by government in relation to Asia did encourage business to look at the Asian market. Although Latin America is far from being Asia, I think that sort of profile from government does assist.

Then there is the question of information which the government can provide to the public and private sectors. I remember when I was ambassador in The Netherlands I visited the Dutch archives and was interested to see that, up until the Napoleonic invasion, all Dutch diplomatic reports were unclassified and were distributed automatically to the chambers of commerce around the country. The government's attitude apparently was that diplomacy was very much to do with commerce and information was valuable to commercial sources. I think, from my observation, the Australian government system is doing that and doing a good job.

Finally - and this should not be underrated in any way - the government can help specific business efforts. In two areas that I have had personal knowledge of and involvement in - for example, the interest in exporting Australian plastic note technology and the successful bid for a health consultancy in Argentina's principal university hospital - the fact that the Australian government was seen to be behind the projects was, I think, quite a helpful factor. I should mention that on both of those occasions the Minister for Trade gave specific assistance both in talking to ministers and, in the hospitals project, making a speech in Argentina about Australia's capacity in the health field. Thank you, Mr Chairman. If there are questions, I would be very happy to answer them.

ACTING CHAIR —Thank you, Mr Weemaes.

Mr BAIRD —Yes. Thanks very much for your input. These guys seem to know you personally, which I have not had the opportunity to do. Where else have you been as ambassador?

Mr Weemaes —My last post was as ambassador in Argentina. Before that I was ambassador in Saudi Arabia accredited to all the Arabian peninsula countries. Before that I was ambassador in the Netherlands. Prior to that I was ambassador in Brazil accredited to Peru.

Mr BAIRD —I suppose the time in The Netherlands is a good reference point. One of the things catalysed by the comments that were provided by EFIC is the degree of risk, et cetera. It keeps occurring to me in terms of this inquiry that we have a small amount of trade which, considering the volatility of the markets, is good work that we have. But in terms of getting benefits from the market, are we really better to concentrate on our existing markets?

One of the reasons this influences me is that I had a few years involvement in the tourism industry. There were examples of different states doing different things. Some wanted to be all things to all people and spread their resources thinly around the world. They seemed to have lagged behind. Others have said, `We are going to concentrate on these markets and put our resource into them,' and it seems to have paid off. Given your experience both in Europe and South America, should we be decreasing our resources in South America and putting them where there are better opportunities elsewhere, staying where they are at the moment, or increasing them because of the opportunities that are not being taken advantage of as you would see them?

Mr Weemaes —It is the sixty-four dollar question. I do not believe I can give you the sixty-four dollar answer. I agree that logically you should place your efforts where you are most likely to get returns. But I suppose it is also true that you can get incremental returns in other areas which surprise you and which are welcome. For example, looking at the export of Australian plastic note technology, I believe they will be looking at a number of non-mainstream markets because they see opportunities there. Looking at the health consultancy area, I believe the group that got together to go for and execute that contract found an opportunity which was valuable.

ACTING CHAIR —Probably the final comment made by the EFIC people - and I noticed you sitting in the gallery listening - was about whether you will you get paid. Regarding the sorts of businesses you have been developing, which have been in the services field, how have you felt about recommending to your clients: `This is worth a run and I am confident we will get paid'? How have you made that judgment?

Mr Weemaes —Essentially we went into it on the understanding that we were reasonably sure we would get paid. But I have to say that we nevertheless needed to put in a lot of effort to make sure that we were paid.

Senator FERGUSON —How enthusiastic are South American businesses to do trade with Australia or to allow Australian investment to become involved in South American business? I ask that because I wonder what have we got to offer as Australians that they cannot get from other countries that are closer, that have had traditional closer links with them, that offer the same price or are cheaper or that offer more opportunities for investment. What is it that is attractive about Australia that would make them want to do business with Australia, or Australians to do business with South America, unless there is a good investment opportunity? It is all right for the ambassadors to say how keen they are for us to go and do business with South America, but that is part of their job in Australia. What we really need to know is how keen the actual business people are to do business with Australia.

Mr Weemaes —Just as here people would not normally think of Latin America, over there people would not normally think of Australia; their principal focus would be North America, Europe or Asia. That having been said, we do have a certain image there and in the areas that I am familiar with we have won business because we have had high quality and better product and we have been price competitive. In a way, we are seen as non-threatening. We come from a country which they believe is of similar economic size to them and perhaps with a similar economic history and therefore that is a positive thing. But in the end you have to interest the client in what you have to offer and the client will only buy what you have to offer if it is good and competitive. From what I know of Australian business in Latin America and the companies that have put in submissions, all of them have had product which is competitive.

Senator FERGUSON —If that is the case, the answer to Mr Baird's first question really might be that perhaps we need more resources to make people aware of what we do have to offer. Mr Baird's question was whether we have enough resources, too much or not enough. If in your opinion there is a product that we have to offer which is price competitive, of better quality and attractive for a lot of other reasons, then maybe we are not making them aware enough in a strong enough manner of the products that we have to offer.

Mr Weemaes —I guess this is an issue of government resources, business resources and the question Mr Baird put, which really is the sixty-four dollar question, as to where both should put their resources. I do not think there is a clear answer.

Senator FERGUSON —But we had a situation where EFIC said that they were going to have their exposure in South America by attending trade fairs. They went to one two years ago and it was a mining fair when in most cases mining companies are big enough to be able to do their own promotion. It would appear as though it might be better if somebody were to attend a trade fair where we were looking at more of the microbusinesses that Mr O'Keefe was talking about. I do not know whether our emphasis is in the right place. That is what worries me.

Mr HOLLIS —I also wish to go back to what Mr Baird asked. You have been an ambassador in several of the countries there and also in other countries, and in your experience people must come to you as an ambassador for assistance or when they are doing business. As we had EFIC before us, what sort of role do you think that they play in assisting Australian business to gain credit in insurance? Did you have any experience of this?

Mr Weemaes —I do not have direct experience in assisting Australian business to get credit in insurance but I do believe that the ambassador, the staff and DFAT can provide valuable assistance to business. They can provide general information on the economic and political environment, which is always essential. They can facilitate access to senior levels of business and government decision makers and, in a more general way, they can in effect act as salespeople for Australia in general and for the sector from Australia in particular.

Mr HOLLIS —But that is all very general, isn't it? We all know that. I was trying to get a little bit more out of you. We had EFIC here talking to us about their role in cover and about short-term and long-term business things. Obviously, they have to be careful although they seemed to say that they were prepared to take risks. I wondered if you could enlighten us, given your time in South America, particularly as ambassador there, and in the Argentine and Brazil and accredited to other countries; if there was a business project, for instance, that you must have had knowledge of. Given the role of EFIC, I was wondering whether they carried out a role or not in insurance, or didn't anyone ever see you about these things?

Mr Weemaes —When I was with DFAT as an ambassador, I kept in contact with EFIC and on briefing and consultation visits I always visited EFIC. But I have to say that I had never been involved in a direct case with EFIC, so unfortunately I cannot help you on that.

ACTING CHAIR —I will ask the question in a different way. EFIC tend to need to come into the game as a last resort provider of finance when no-one will touch the deal and where an Australian business opportunity looks like it is going nowhere unless EFIC does it. Along with EFIC, comes a bit of a sense that government is behind it in one way or another. In the business opportunities that you have facilitated, have you found resistance among the financial institutions to getting involved with Latin and South American business, like the banana republic kind of imagery, or are they quite sophisticated and open about assessing the deals on a merit by merit basis?

Mr Weemaes —I have not had to face an issue of financing a project, but my general experience, both when I was with DFAT and even more particularly now that I am looking for business and trying to encourage business to look at Latin America, is that there has to be quite an education process to combat the banana republic image. You have to overcome that.

ACTING CHAIR —So in your case, if you have identified an opportunity, and you are looking for a provider for it, is the difficulty in getting the provider interested, or once the provider is interested, in getting the financing interested?

Mr Weemaes —The first difficulty is to get the provider interested and that can be quite difficult. For example, in this hospital project, in the end those that were involved were very satisfied with the project and the outcome although initially sceptical.

ACTING CHAIR —And they would now want to continue to tender for further business of that kind in South America.

Mr Weemaes —Certainly.

Senator FERGUSON —You have been asked the question about EFIC and the role that they might play. I guess one of the real questions is that, during your time as ambassador, how many projects, companies or businesses either ran into defaults or actually were involved in businesses that failed? Because if there was a risk there, generally it is because somebody has failed or credit has been withdrawn or they have not been paid, or some of those issues. As ambassador, if things like that happened in either Brazil or Argentina, you surely would have known if they had Australian connections. What was the rate of lack of success?

Mr Weemaes —Forgive me; I am trying to recall.

Senator FERGUSON —No, that is all right. It is hardly a fair question off the cuff.

Mr Weemaes —Nothing initially jumps out at me as such a case. I am certainly aware of companies that had experienced difficulties with late reimbursement of taxation - difficulties with getting payment. But they were seen as the normal operational factors in Brazil and Argentina. I cannot remember a business that failed during my time.

Senator FERGUSON —You cannot remember any business failures?

Mr Weemaes —I would not want to make an affirmation that there were not, but I cannot recall any.

Senator FERGUSON —In your current role as a consultant, do you detect any reluctance of Australian companies to want to do business in South America?

Mr Weemaes —Certainly, there is an image problem. There is the problem that Mr Baird mentioned of companies concentrating on markets they know, and easier markets, and the question is: why should we try an unknown or something which seems to us to be difficult or tricky?

Senator FERGUSON —It seems to us that, apart from mining, where you actually have to go to where the resources are, you have not got much choice unless there are options in various places in the world. Apart from mining, there seems to be some difficulty. We might hear from other witnesses that it is not.

Mr Weemaes —The difficulty is a difficulty in perception and attitude towards Latin America on the part of Australian business. I would argue that Australian business has gone into a number of difficult, tricky and unfamiliar markets around the world and has done so as, first-up, an adventure. Asia, at one stage, was considered extremely exotic and difficult. The Middle East was always thought to be a difficult market. Yet these are now considered as normal markets.

ACTING CHAIR —So why is there reluctance? Is it a mixture of political instability and economic instability? Is it the mixture of both that makes them reluctant, or just an unknown of the market?

Mr Weemaes —I would say that, firstly, it is a misguided perception that these are unstable, banana republic type places. Secondly, it is a lack of awareness of what those markets are really like - their sophistication, the opportunities that are there, the size of the markets and the fact that it is possible for an Australian company to do successful business there. During my time as ambassador in both Argentina and Brazil, I continued to hear, from Australian business representatives who were there and doing business, this very point: that people in Australia were timid. These businesses had proved that it was a rewarding market and that the government should be doing more to get this message across.

ACTING CHAIR —Is there a distinction to be drawn between Australian businesses that are simply exporters of goods or services - in other words, that are just marketing goods and services - and those that, because of the nature of the business, have to invest in the South American country? Senator Ferguson mentioned the mining industry as an example where, because the resource is there, it is an investment activity rather than simply a marketing activity. I know there is some involvement in primary industry in Argentina on the part of some Australian investors. I am talking about those sorts of things. Is there a distinction to be drawn there as to which is harder and in which area there is more interest on the part of Australian business, from your experience?

Mr Weemaes —My impression is that big projects are investment projects, and there is quite a range of those. For the newcomer, I think it is possible to get into those markets without making significant investment, by marketing services or manufactures which are innovative.

ACTING CHAIR —Thank you. The observations you have made are very consistent with quite a stream of submissions that have been made to us - that there is a strong role for government to play because, culturally in South America and Latin America, the role of government is significant in encouraging these trade relationships, and we need to be aware of that. Secondly, a constant theme is that there is little awareness of Australia over there, and there is little awareness of opportunities here. There has to be a breakthrough in that to create these opportunities. What you are saying - as I pick it up - is that the opportunities are particularly in skills, services and products, every bit as much as major commodity investments of one kind or another.

We have also been told quite consistently that there is a much better established business culture, albeit perhaps coming off a Spanish or Portuguese language base. But the European business culture is identical to the one that has evolved here, and we ought to understand those opportunities. They are not any more difficult than Asia was to get into, if you get the focus. I think that is a fair summary of what we have been hearing, and it is your experience too, both professionally as a diplomat and as a consultant. We are trying to pick our way through the ways in which we might report to give emphasis to those things, but what you have said has reinforced that, and I thank you for that. Is there anything you would like to say in conclusion?

Mr Weemaes —No. As I said at the beginning, I am very grateful you have asked me to come. I think that what you are doing is part of the important effort to publicise the opportunities that there can be in Latin America. But, basically, it is up to business to take them.

ACTING CHAIR —I thank you once again. You will be sent a copy of the transcript.