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Instability in East Asian markets: implications for Australia': address to the Luncheon hosted by Australian business in Europe and the Australian and New Zealand Chamber of Commerce



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Speech by the Minister for Foreign Affairs an... Page 1 o f 6

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FOREIGN AFFAIRS AND TRADE

SPEECH BY THE MINISTER FOR FOREIGN AFFAIRS, MR DOWNER, TO THE LUNCHEON HOSTED BY AUSTRALIAN BUSINESS IN EUROPE AND THE AUSTRALIAN AND NEW ZEALAND CHAMBER OF COMMERCE ON 'INSTABILITY IN EAST ASIAN MARKETS: IMPLICATIONS FOR AUSTRALIA' - 28 JANUARY 199?g

THANKS VERY MUCH, GREG, AS THE PRESIDENT OF ABIE, AGENTS-GENERAL FOR AUSTRALIA - AND CAN I CONGRATULATE MAURICE DE ROHAN ALSO ON HIS APPOINTMENT AS THE NEW AGENT GENERAL FOR MY OWN STATE OF SOUTH AUSTRALIA - THE AGENT-GENERAL FOR VICTORIA AND THE AGENT-GENERAL FOR WESTERN AUSTRALIA, THE ACTING HIGH COMMISSIONER, ROS MCGOVERN, AND DISTINGUISHED GUESTS, LADIES AND GENTLEMEN.

CAN I JUST BEGIN BY CONGRATULATING ABIE AND ALSO THE AUSTRALIAN AND NEW ZEALAND CHAMBER OF COMMERCE ON THE GREAT JOB THEY DO HERE IN LONDON AND MORE BROADLY IN THE UNITED KINGDOM IN PROMOTING THE ECONOMIC LINKS BETWEEN AUSTRALIA AND THE UNITED KINGDOM. I KNOW WHAT A VALUABLE JOB BOTH ORGANISATIONS DO. I'VE SEEN THEM AT WORK OVER MANY YEARS. THE ECONOMIC RELATIONSHIP BETWEEN AUSTRALIA AND BRITAIN, OF COURSE, AS WE ALL KNOW IN THIS ROOM WITHOUT ME HAVING TO ARTICULATE THE DETAILS, IS A VERY BIG ECONOMIC RELATIONSHIP AND ONE THAT I THINK, AS THE YEARS GO BY, WILL CONTINUE TO GROW AND BECOME MORE IMPORTANT TO EACH OTHER: AUSTRALIA AS A GREAT LINK FOR BRITAIN INTO THE ASIA PACIFIC REGION, AND BRITAIN AS A GREAT LINK FOR AUSTRALIA INTO THE EUROPEAN REGION.

I'VE BEEN ASKED TODAY TO SAY A FEW WORDS ABOUT THE EAST ASIAN ECONOMIC SITUATION, BUT PUT THAT INTO A BROADER CONTEXT OF AUSTRALIAN FOREIGN POLICY. WHEN WE CAME TO GOVERNMENT, WE SAID THAT, FIRST AND FOREMOST, IT WAS A VERY OBVIOUS THING THAT OUR FOREIGN AND INTERNATIONAL ECONOMIC POLICY WOULD FOCUS ON OUR OWN REGION. IT'S QUITE APPROPRIATE IT SHOULD. HERE IN BRITAIN, NATURALLY ENOUGH, BRITISH FOREIGN POLICY AND BRITISH INTERNATIONAL ECONOMIC POLICY FIRST AND FOREMOST FOCUSES ON EUROPE AND INDEED MANY OF THE GREAT DEBATES ABOUT FOREIGN POLICY HERE IN BRITAIN ARE DEBATES ABOUT BRITAIN AND EUROPE. EQUALLY IN AUSTRALIA, OUR FOCUS IN OUR FOREIGN AND INTERNATIONAL ECONOMIC POLICY IS ON THE ASIA PACIFIC REGION. IN PARTICULAR, EAST ASIA, BUT ALSO SOUTH ASIA AND THE SOUTH PACIFIC REGION AS WELL.

SO WE HAVE ARGUED, AS SUCCESSIVE AUSTRALIAN GOVERNMENTS HAVE ARGUED FOR MANY YEARS, THAT OUR FIRST PRIORITY MUST BE OUR OWN REGION. BUT WE'VE ALSO SAID THAT AUSTRALIA HAS GLOBAL INTERESTS, NOT JUST REGIONAL INTERESTS, AND I SUPPOSE THAT'S TRUE OF BRITAIN. BRITAIN IS A COUNTRY THAT HAS GLOBAL INTERESTS, NOT JUST REGIONAL INTERESTS. SO WE'VE ALWAYS WANTED TO MAKE SURE AS A GOVERNMENT THAT THERE IS AN APPROPRIATE BALANCE IN OUR INTERNATIONAL ECONOMIC AND OUR FOREIGN

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POLICIES. WE TOOK THE VIEW WHEN WE CAME TO GOVERNMENT THAT NOT ENOUGH HAD BEEN DONE IN RECENT YEARS TO DEVELOP AND MAINTAIN OUR RELATIONS WITH THE EUROPEAN UNION AND WITH THE INDIVIDUAL MEMBER STATES OF THE EUROPEAN UNION AND OVER THE LAST TWO YEARS WE'VE DONE A GOOD DEAL TO STRENGTHEN THOSE RELATIONS. I MYSELF HAVE MADE A NUMBER OF TRIPS TO EUROPE. THE PRIME MINISTER HAS BEEN HERE. THE DEPUTY PRIME MINISTER AND TRADE MINISTER, TIM FISCHER, HAS TRAVELLED EXTENSIVELY IN EUROPE AND A NUMBER OF EUROPEAN LEADERS HAVE ALSO BEEN IN AUSTRALIA, INCLUDING CHANCELLOR KOHL OF GERMANY, DURING THE COURSE OF LAST YEAR.

ALSO IN JUNE LAST YEAR WE SIGNED AN HISTORIC JOINT DECLARATION BETWEEN AUSTRALIA AND THE EUROPEAN UNION WHICH PROVIDES ESSENTIALLY A FRAMEWORK FOR TAKING THE RELATIONSHIP BETWEEN AUSTRALIA AND EUROPE FORWARD. SO WE HAVEN'T IGNORED THE RELATIONSHIP WITH EUROPE AND JUST FOCUSED ON OUR OWN REGION. ON THE CONTRARY, WE HAVE NATURALLY ENOUGH FOCUSED FIRST AND FOREMOST ON OUR OWN REGION BUT WE HAVE MADE SURE THAT WE'VE STARTED TO DEVELOP MUCH FURTHER THE TIES THAT WE NEED TO HAVE WITH OTHER PARTS OF THE WORLD.

BUT OUR OWN REGION, OF COURSE, IS THE FIRST PRIORITY OF OUR FOREIGN AND TRADE POLICY AND IT'S A REGION WHICH INDISPUTABLY HAS RUN INTO SOME ECONOMIC DIFFICULTIES, PARTICULARLY OVER THE LAST SIX OR SEVEN MONTHS. OUR PERSPECTIVE OF THIS IS THAT THE REGION, IN PARTICULAR EAST ASIA, HAS RUN INTO ECONOMIC DIFFICULTIES WHICH ARE SERIOUS DIFFICULTIES BUT WHICH ARE OF A SHORT RUN NATURE. WE BELIEVE IN THE MEDIUM TO LONG TERM THAT THE EAST ASIAN REGION IS GOING TO BE

STRENGTHENED BY THE REFORMS THAT THEY WILL HAVE TO UNDERTAKE IN ORDER TO WORK THEIR WAY THROUGH THEIR SHORT TERM ECONOMIC DIFFICULTIES.

SO IN A SENSE I THINK IT'S IMPORTANT THAT EUROPEAN AUDIENCES, AS WELL AS AUSTRALIAN AUDIENCES, UNDERSTAND THAT THE DIFFICULTIES OF EAST ASIA AT THE MOMENT ARE A WATERSHED FOR EAST ASIA. IF THE RESPONSE IN EAST ASIA IS QUICK AND EFFECTIVE, THEN THOSE PROBLEMS WILL BE SOLVED QUICKLY AND EFFECTIVELY AND EAST ASIA WILL BE THE STRONGER FOR IT. I'M CONFIDENT THAT THOSE PROBLEMS ARE BEING ADDRESSED AND THAT IT WON'T BE TOO LONG BEFORE EAST ASIA IS BACK ON THE PATH OF GROWTH THAT WE'VE BECOME SO FAMILIAR WITH. THERE'S NO DOUBT THAT THE ECONOMIC PROBLEMS OF EAST ASIA ARE BORN OUT OF STRUCTURAL WEAKNESSES IN THEIR ECONOMIES AND THEY MAY HAVE BEEN STRUCTURAL WEAKNESSES - OR CLEARLY WERE STRUCTURAL WEAKNESSES - WHICH WERE OVERLOOKED TOO MUCH IN RECENT YEARS BY THE GOVERNMENTS OF EAST ASIA AND INDEED GOVERNMENTS AND FINANCIAL INSTITUTIONS AND BUSINESSES OUTSIDE OF EAST ASIA AS WELL. I THINK IT'S FAIR TO SAY THAT THE FINANCIAL INSTITUTIONS OF EAST ASIA HAVE BEEN FOUND TO BE, IN SOME OF THE COUNTRIES IN EAST ASIA - NOT IN ALL OF THEM - INSUFFICIENTLY TRANSPARENT AND THEY HAVE HAD TO MAKE SOME ADJUSTMENTS IN ORDER TO COPE WITH THAT.

IT'S ALSO TRUE THAT THERE ARE HIGH LEVELS OF CORPORATE DEBT IN PARTS OF EAST ASIA AND AGAIN THAT PROBLEM IS PARTICULARLY EXPOSED NOW AS

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THE ECONOMIES SUCH AS THOSE OF INDONESIA, THAILAND AND KOREA HAVE TO COPE WITH VERY SIGNIFICANT DEVALUATIONS.

THERE HAS ALSO BEEN IN THOSE THREE COUNTRIES SOME DEGREE OF POLITICAL UNCERTAINTY. IN THE CASE OF THAILAND, THERE HAS BEEN SOME INSTABILITY WITHIN THE STRUCTURE OF GOVERNMENT, ALTHOUGH THE PRESENT GOVERNMENT IN THAILAND, I THINK, IS AS GOOD A GOVERNMENT AS THAILAND COULD PUT TOGETHER. IT IS MADE UP OF MANY VERY CAPABLE, VERY ABLE MINISTERS AND I THINK THAT'S SOMETHING THAT IS INCREASINGLY BEING RECOGNISED BY THE MARKETS.

IN THE CASE OF KOREA, IT'S GONE THROUGH A PERIOD OF UNCERTAINTY. IT'S HAD A PRESIDENTIAL ELECTION AND THE OPPOSITION CANDIDATE FOR THE PRESIDENCY WAS SUCCESSFUL SO THERE WAS SOME QUESTIONING IN TERMS OF ECONOMIC POLICY, ABOUT WHAT THAT WOULD MEAN IN PRACTICE. ALTHOUGH THE INCOMING PRESIDENT HAS YET TO TAKE UP OFFICE, ALL THE INDICATIONS ARE THAT HE WILL MAINTAIN AN APPROPRIATE RESPONSE TO THE IMF PACKAGE WHICH THE KOREAN ECONOMY HAS BEEN SUBJECTED TO. SO I THINK THERE IS ALSO GROWING CONFIDENCE THAT CHANGE OF ADMINISTRATION IN KOREA WON’T LEAD TO ANY DETERIORATION IN THE QUALITY OF ECONOMIC MANAGEMENT. IN FACT, QUITE THE CONTRARY. THERE IS CONFIDENCE THAT WE'LL SEE SIGNIFICANT IMPROVEMENTS IN THE FUTURE IN THE QUALITY OF ECONOMIC MANAGEMENT.

FINALLY, IN THE CASE OF INDONESIA, THERE IS ALSO SOME POLITICAL UNCERTAINTY BORN OUT OF THE QUESTION OF WHO THE NEXT VICE-PRESIDENT OF INDONESIA IS GOING TO BE, AND I THINK THAT QUESTION TOO WILL BE RESOLVED WITHIN THE NEXT FEW WEEKS. AND, AS A RESULT OF THAT, THERE WILL AGAIN BE A GREATER DEGREE OF POLITICAL CERTAINTY THAN IS CURRENTLY THE CASE.

I'VE JUST BEEN TO JAKARTA AND I'VE HAD THE OPPORTUNITY WHILST THERE TO MEET NOT JUST WITH THE PRESIDENT BUT WITH A RANGE OF MINISTERS AS WELL AND TO MAKE MY OWN ASSESSMENT OF HOW I SEE THE ECONOMIC SITUATION IN THAT COUNTRY. AND IN MANY RESPECTS, IT'S VERY SIMILAR TO THAT OF THAILAND AND KOREA. THERE'S NO DOUBT THAT IT'S GOING THROUGH A VERY DIFFICULT TIME AND THE PROBLEM OF RESTRUCTURING - IN

PARTICULAR PRIVATE SECTOR DEBT - IS A VERY SEVERE PROBLEM WHICH THE INDONESIAN GOVERNMENT AND THE PRIVATE SECTOR IN INDONESIA NOT ONLY HAVE TO ADDRESS BUT ARE IN THE PROCESS, AS A STATEMENT MADE YESTERDAY ILLUSTRATED, OF ADDRESSING.

AS I SAID EARLIER, ONE OF THE PROBLEMS IN COUNTRIES LIKE INDONESIA, THAILAND AND KOREA - PARTICULARLY IN THOSE THREE ECONOMIES - HAS BEEN THE WEAKNESS OF THEIR FINANCIAL INSTITUTIONS AND IN PARTICULAR THE LACK OF TRANSPARENCY IN THOSE FINANCIAL INSTITUTIONS. AGAIN, IN THE CASE OF INDONESIA, HAVING JUST BEEN THERE, I CAN SAY THAT THEY ARE IN THE PROCESS NOW OF ADDRESSING THAT ISSUE AS WELL.

THESE THREE ECONOMIES HAVE BEEN SUBJECTED TO THE IMF PACKAGES, AS YOU WOULD ALSO BE AWARE. I JUST WANT TO MAKE A POINT ABOUT THESE IMF PACKAGES BECAUSE THERE'S BEEN SOME CONTROVERSY, NOT ONLY IN EAST ASIA BUT IN THE UNITED STATES AND ELSEWHERE, ABOUT THOSE PACKAGES.

POSSIBLY THERE HAS BEEN IN EUROPE AS WELL. SOME PEOPLE HAVE ARGUED

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THAT THESE PACKAGES ARE VERY TOUGH AND THAT THE CURE TO THE PROBLEMS OF THESE EAST ASIAN ECONOMIES IS GOING TO BE AS PAINFUL AS THE PROBLEMS THEMSELVES. I WOULD SAY THAT THE TRUTH OF THE PACKAGES IS THAT THEY ARE CERTAINLY VERY TOUGH. BUT THE TRUTH ALSO IS THAT THEY ARE GOING TO LAY THE FOUNDATION FOR THE STRENGTHENING OF THOSE THREE ECONOMIES AND - WHAT I THINK IS THE FUNDAMENTALLY IMPORTANT POINT - THE REVITALISATION OF THE EAST ASIAN ECONOMIES MORE GENERALLY. THEY ARE ENSURING THAT THOSE THREE ECONOMIES HAVE APPROPRIATE AND TIGHT FISCAL POLICIES. THEY ARE ENSURING THAT THE FINANCIAL SECTORS IN THOSE ECONOMIES ARE RESTRUCTURED; THAT THE BANKING SYSTEMS DO BECOME MUCH MORE TRANSPARENT; AND THAT THEY WILL BE SUBJECT TO MUCH TIGHTER SUPERVISION THAN HAS BEEN THE CASE IN THE PAST. AND VERY IMPORTANT FROM THE POINT OF VIEW OF AUSTRALIA AND ALSO THE EUROPEAN UNION, THESE IMF PACKAGES ARE ACHIEVING A DEGREE OF MARKET LIBERALISATION WHICH WOULDN'T HAVE OCCURRED HAD IT NOT BEEN FOR THE DIFFICULTIES THAT THE THREE ECONOMIES HAVE ENCOUNTERED.

BOTH CAPITAL MARKETS AND THE TRADING ENVIRONMENT IN ALL THREE ECONOMIES, IN THAILAND, KOREA AND INDONESIA, HAVE BECOME A GREAT DEAL MORE LIBERAL ALREADY AS A RESULT OF THE INTERVENTION OF THE INTERNATIONAL MONETARY FUND. NOW IN THE SHORT TERM, THAT'S CERTAINLY GOING TO CREATE SOME DIFFICULTIES AND SOME MARKET

STRUCTURING WITHIN THOSE ECONOMIES. BUT, IN THE MEDIUM TO LONG TERM, IT MEANS THERE ARE GOING TO BE MANY MORE OPPORTUNITIES FOR AUSTRALIAN BUSINESSES AND ALSO FOR EUROPEAN BUSINESSES IN TERMS OF THEIR INVOLVEMENT IN THOSE MARKETS.

SO I DON'T THINK ANY OF US SHOULD HIDE THE FACT THAT THE ECONOMIC SITUATION, IN PARTICULAR FOR KOREA, INDONESIA AND THAILAND AND, TO A LESSER EXTENT, SOME OF THE OTHER ECONOMIES OF EAST ASIA IS A DIFFICULT SITUATION AT THE MOMENT. BUT I THINK THE POINT THAT WE ALL NEED TO REMEMBER, WHICH IS A POINT OF FUNDAMENTAL IMPORTANCE AND NEEDS TO BE UNDERSTOOD AS WELL IN EUROPE AS IT SHOULD BE IN AUSTRALIA, IS THAT THE RESTRUCTURING THAT IS GOING ON IS ESSENTIAL RESTRUCTURING WHICH HAD TO TAKE PLACE IN ANY CASE. I SUPPOSE IT WOULD HAVE TAKEN PLACE IN ANY CASE, BUT OVER A MUCH LONGER PERIOD OF TIME THAN IS GOING TO BE BECAUSE OF THE FINANCIAL PROBLEMS THAT THESE ECONOMIES HAVE RUN INTO.

CAN I ALSO EMPHASISE THE VERY GREAT MARKET OPPORTUNITIES THAT WILL EXIST FOR FIRMS FROM AUSTRALIA AND THE EUROPEAN UNION AND ELSEWHERE, INCLUDING THE VERY GOOD INVESTMENT OPPORTUNITIES THAT EXIST IN EAST ASIA NOW, PARTICULARLY BEARING IN MIND THE DEPRECIATION

OF ASSET PRICES ON THE STOCK MARKETS AND ALSO, OF COURSE, THE VERY SUBSTANTIAL DECLINES IN THEIR EXCHANGE RATES.

NOW MANY PEOPLE IN AUSTRALIA DEBATE WHAT THE IMPACT ON AUSTRALIA IS GOING TO BE, GIVEN THAT WE HAVE SUCH A SIGNIFICANT PROPORTION OF OUR TRADE WITH EAST ASIA. SOMETHING LIKE 61 PERCENT OF AUSTRALIA'S EXPORTS ARE TO THE EAST ASIAN REGION AS A WHOLE, AND OVER THE LAST 20 OR 30 YEARS THE AUSTRALIAN ECONOMY HAS BECOME INCREASINGLY INTEGRATED WITH THE EAST ASIAN ECONOMIES.

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WELL WE GO INTO THIS PERIOD OF HISTORY IN EAST ASIA IN WHAT IS FRANKLY A VERY STRONG POSITION. WE DO HAVE A VERY HIGH RATE OF GROWTH BY THE STANDARDS OF OECD COUNTRIES. THE AUSTRALIAN ECONOMY THIS FINANCIAL YEAR IS EXPECTED TO GROW BY 3.75 PERCENT. NEXT YEAR IT MAY GROW BY A LITTLE LESS THAN THAT, BY ABOUT 3.25 PERCENT, AND THAT IS SLIGHTLY LESS THAN WE HAD ORIGINALLY EXPECTED BECAUSE OF THE IMPACT OF THE PROBLEMS IN EAST ASIA. WE HAVE A VERY LOW INFLATION RATE. THE INFLATION FIGURES THAT WERE RELEASED TODAY, ACTUALLY, WERE EXCEPTIONALLY GOOD FIGURES. THE UNDERLYING INFLATION RATE IN AUSTRALIA OVER THE LAST YEAR WAS ONLY ABOUT 1.4 PERCENT. OUR CURRENT ACCOUNT DEFICIT, WHICH HAS BEEN AN HISTORIC PROBLEM FOR AUSTRALIA FOR A VERY LONG TIME, IS NOW RUNNING AT AROUND 4 PERCENT OF GDP WHICH IS CONSIDERABLY LOWER THAN IT HAS DONE ON VARIOUS OCCASIONS IN THE PAST.

AND LET ME ALSO SAY THAT WE HAVE BENEFITED VERY MUCH AS AN ECONOMY OVER THE LAST TWO YEARS BECAUSE WE HAVE ADDRESSED WHAT WAS A SIGNIFICANT PROBLEM FOR AUSTRALIA - THE SIZE OF THE GOVERNMENT'S BUDGET DEFICIT. TWO YEARS AGO WE WERE RUNNING A

BUDGET DEFICIT OF AROUND 10 BILLION DOLLARS. NEXT YEAR WE WILL BE IN BUDGET SURPLUS AND, GIVEN WHAT HAS HAPPENED IN EAST ASIA, IT'S A VERY GOOD THING. NOT ONLY IS THAT GOOD PUBLIC POLICY, BUT IT IS REINFORCED

BY THE PROBLEMS OF EAST ASIA AS GOOD PUBLIC POLICY. AND IT WAS MEANT THAT AUSTRALIA HAS VERY MUCH BEEN ABLE TO PROTECT ITSELF FROM THE PROBLEMS THAT HAVE OCCURRED IN EAST ASIA.

OF COURSE, THE PROBLEMS OF EAST ASIA WILL HAVE SOME EFFECT ON AUSTRALIA. IT WILL HAVE SOME EFFECT ON OUR EXPORTS AND WE ARE ALREADY SEEING A DECLINE IN OUR HORTICULTURAL AND LIVE ANIMAL EXPORTS INTO THAT REGION. IT'S HAVING SOME EFFECT ON STUDENTS COMING TO AUSTRALIA AND SOME STUDENTS WHO ARE IN AUSTRALIA ARE HAVING

SOME DIFFICULTY CONTINUING TO PAY FOR THE COURSES THAT THEY ARE UNDERTAKING. THERE IS GOING TO BE A DOWNTURN IN TOURISM FROM SOME MARKETS IN EAST ASIA AND THAT'S PARTICULARLY CLEAR IN THE CASE OF KOREA. BUT THESE PROBLEMS HAVE BEEN TO SOME EXTENT OFFSET BY HIGHER THAN EXPECTED GROWTH IN THE UNITED STATES AND, INDEED, HIGHER THAN EXPECTED GROWTH IN THE EUROPEAN UNION AND THE FACT THAT FEATURES OF THE DOMESTIC ECONOMY HAVE GROWN FASTER THAN WE WOULD HAVE EXPECTED.

SO I THINK, DESPITE THE PROBLEMS OF EAST ASIA, THAT THE AUSTRALIAN ECONOMY IS IN VERY STRONG SHAPE AND ONE OF THE THINGS THAT HAS BEEN BROUGHT HOME TO PEOPLE IN THE ASIA PACIFIC REGION BY THE ECONOMIC PROBLEMS OF A NUMBER OF ECONOMIES IN EAST ASIA IS HOW FUNDAMENTALLY STRONG AUSTRALIA IS: WHAT A VERY RELIABLE, WHAT A VERY SECURE, WHAT A VERY POLITICALLY STABLE COUNTRY AUSTRALIA REALLY IS.

I SUPPOSE THAT BRINGS ME TO THE LAST POINT I WANT TO MAKE AND THAT IS THAT AUSTRALIA IS IN A POSITION NOW TO REMIND BRITISH COMPANIES AND OTHER COMPANIES AROUND EUROPE THAT IT IS THE PERFECT PLACE FOR THEM TO LOCATE THEIR REGIONAL HEADQUARTERS. WE DO HAVE A RANGE OF DIFFERENT INCENTIVES IN PLACE AT THE FEDERAL LEVEL - 1 THINK THE STATE

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GOVERNMENTS DO AS WELL - TO ENCOURAGE COMPANIES FROM OUTSIDE THE REGION TO ESTABLISH THEIR ASIA PACIFIC HEADQUARTERS IN AUSTRALIA. THE AUSTRALIAN EXCHANGE RATE HAS COME DOWN A LITTLE OVER THE LAST SIX MONTHS AGAINST THE EUROPEAN EXCHANGE RATE WHICH MAKES US OF COURSE CHEAPER TO INVEST IN. ALSO, AS YOU WOULD APPRECIATE - THOSE OF YOU WHO ARE AUSTRALIANS DON'T NEED TO BE PERSUADED - AUSTRALIA IS A WONDERFUL PLACE TO LIVE AS WELL. SO WE WOULD HOPE THAT IN THIS ENVIRONMENT MORE COMPANIES WILL TAKE THE OPPORTUNITY OF CHOOSING AUSTRALIA AS A BASE FOR THEIR REGIONAL HEADQUARTERS THAN MIGHT OTHERWISE BE THE CASE.

THE REALLY IMPORTANT MESSAGE, WHICH PEOPLE IN EUROPE NEED TO UNDERSTAND ABOUT EAST ASIA AND ABOUT THE ASIA PACIFIC REGION AS A WHOLE IS THAT, IN THE MEDIUM TO LONG TERM, IT IS A REGION WHICH IS GOING TO CONTINUE TO GROW ECONOMICALLY AT A FAIRLY HIGH RATE AND IS GOING TO BE VERY SIGNIFICANT IN TERMS OF THE GLOBAL ECONOMY.

NOW IS A DIFFICULT TIME. BUT NOW IS NOT THE TIME TO BE A FAIR WEATHER FRIEND TO THE ASIA PACIFIC REGION. NOW IS NOT THE TIME TO SAY, WELL, WE CAN'T MAKE SO MUCH MONEY THERE THIS YEAR, SO LET'S FORGET IT, AND

THINK ABOUT IT IN A FEW YEARS' TIME. BECAUSE I THINK IN EAST ASIA THEY WILL REMEMBER THE GOVERNMENTS, THEY WILL REMEMBER THE BUSINESSES, WHO STUCK BY THEM WHEN TIMES WERE A BIT DIFFICULT. AND AS FAR AS AUSTRALIA IS CONCERNED, IT HAS CERTAINLY BEEN A CONSIDERED PART OF OUR STRATEGY IN COPING WITH THE EAST ASIAN CRISIS TO TELEGRAPH THE MESSAGE THAT WE ARE NOT A FAIR WEATHER FRIEND; THAT WE ARE THERE TO STAY; THAT WE ARE PART OF THAT REGION FOR THE DURATION. AND WHEN COUNTRIES IN OUR REGION RUN INTO DIFFICULTIES, THEN WE WILL DO WHAT WE CAN WITHIN OUR LIMITED POWERS TO HELP THEM. AND THAT IS PRECISELY WHAT WE HAVE BEEN DOING THROUGH OUR SUPPORT FOR THE IMF PACKAGES AND THROUGH PROVIDING TECHNICAL ASSISTANCE IN A NUMBER OF OTHER WAYS.

I CAN CONCLUDE, I THINK, BY QUOTING ANWAR IBRAHIM, THE FINANCE MINISTER AND DEPUTY PRIME MINISTER OF MALAYSIA, WHO DID AN INTERVIEW WITH AN AUSTRALIAN NEWSPAPER ONLY A COUPLE OF DAYS AGO. IN THAT NEWSPAPER HE MADE THE POINT THAT OUT OF THIS ECONOMIC CRISIS WILL EMERGE NEW ASIA WHICH IS MORE CONFIDENT, MORE MATURE, MORE LIBERAL AND MORE DEMOCRATIC. THERE’LL BE GREATER TRANSPARENCY AND THERE'LL BE GREATER ACCOUNTABILITY. ASIA IS GOING THROUGH A WATERSHED. IT IS GOING THROUGH A VERY SIGNIFICANT TRANSFORMATION AND SOME PAIN WILL BE CAUSED BY THAT TRANSFORMATION. BUT LET ME SAY AT THE END, ASIA WILL BE STRONGER FOR THE CHANGES THAT ARE NOW TAKING PLACE. THE ECONOMIES WILL BE STRONGER. THE POLITICAL SYSTEMS WILL BE STRONGER AND THE FUTURE OF THE REGION WILL BE MORE SECURE. THANK YOU VERY MUCH.

TEXT ENDS

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