E&OE...........
Thank you very much for that very warm introduction. To the State Minister
for Research and Technology, and the State Minister for State Enterprises,
other very distinguished guests, ladies and gentlemen. I am particularly
delighted that it was possible to include in this my fifth visit to Indonesia
as Prime Minister and my eighth visit in different capacities, this luncheon
of the Australian Indonesian Business Council because it gives me an opportunity
to say a few things in two areas. It gives me an opportunity to say something
having just come from a meeting of the World Economic Forum in New York,
or colloquially called Davos in New York, an opportunity to reflect upon
attitudes towards economic growth and recovery in the United States; but
also and most importantly to stress the critical importance of growing
business relations and economic links between Australia and Indonesia
to the bilateral relationship between our two countries.
We are all aware that for a combination of circumstances the relationship
between our two countries has gone through at a political level some strains
and some difficulties in recent years. But we also know that sustained
by very strong person to person links in so many areas, and this large
gathering of people here today at this luncheon is a testament to the
strength of those personal links in the area of business activity and
business investment. We know that the basic infrastructure of the relationship
has remained very strong because it is the person to person links in the
end that drive a relationship more than anything else and it';s a
happy fact that as I speak to you today there are some 18,000 Indonesian
students studying in Australia, more than from any other country in the
world and it';s that kind of linkage which over the years has been
the constant in the relationship between our two countries.
May I say that on this visit of mine I have been very graciously received
by the President and all of the senior ministers of her Government. We';ve
had an opportunity of talking about the areas of similarity, the areas
of debate, and the areas of difference that those discussions have been
conducted in a spirit of wanting to achieve better outcomes and of recognising
that geography and circumstance and the fact that we are regional neighbours
means that our two societies are with each other forever and there is
a responsibility in charge on all of us to do what we can to contribute
to the maintenance and the development of very strong relations between
our two countries.
Indonesia suffered grievously and in my view unfairly in many respects
from the impact of the Asian economic downturn in 1997. And I was very
pleased as Prime Minister of Australia that we were able to provide material
and valuable assistance in relation to the IMF package in 1997, and we
were also able to advocate to the international monetary fund at that
time a more realistic approach to the reform process that was to be undertaken
in Indonesia. And once again economic circumstances have combined to put
pressure on Indonesia';s economy at a time when it is going through
a process, along with the political structure of this country, a process
of great change and great reform.
All economies of the world now are inevitably influenced by what occurs
in the United State more than at any time that I can recall in the almost
thirty years that I';ve been in public life. The influence of the
United States politically and economically is strong and dominant. I believe
that the American economy is already in the early stages of recovery.
It may not be as strong a recovery as many would want but a recovery nonetheless.
And I certainly found in New York both in the discussions I had with the
Secretary of the United States Treasury – Mr Paul O';Neill,
and other senior people in the business and financial community, not universal
but nonetheless majority, optimism about the future of the American economy
and a belief that the strength of consumer spending underpinned by the
very low interest rates, historically almost low interest rates, than
America has enjoyed in recent times, and the capacity because of the increase
in wealth of so many middle class Americans to leverage off that increase
to support their consumer spending there is a belief that an economic
recovery is on the way.
Naturally of course the American economy and the world economy took an
enormous confidence hit on the 11th of September and I have no doubt that
the objectives of those who perpetrated that foul deed included a desire
to harm and damage the exuberant economic confidence of the United States
and of the American people. The good thing that I can report to those
who care about investment not only here in Indonesia but all around the
world, the good thing that I can report from the time that I spent in
the United States in New York is that the exuberance and the confidence
of the American people, although very seriously assaulted on the 11th
of September, is nonetheless still there and their determination in their
commitment to economic growth and enterprise, their determination to continue
and to resume the patterns of growth that existed until last year should
not be doubted. So I came away from that meeting with a great sense of
hope and optimism about the United States economy.
And I can also say to you today as Prime Minister of Australia that I
believe the economy of Australia in this calendar year will grow very
strongly. Some such as the Economist magazine predict that our growth
could be greater than that of any other industrialised country. Whether
it reaches that level or falls a little short of it it will nonetheless
be the case that we will experience very significant economic growth.
I';m very happy to report that the last year has seen a steady growth
in the trade flows between Australia and Indonesia. There';s been
a very healthy growth in both exports and imports. I recognise that as
I am reminded by my Indonesian ministerial friends that there is an imbalance
in the pattern of trade and one of the things that we committed ourselves
to in our discussions yesterday was to ensure that there were no unnecessary
impediments between trade and investment flows between our two nations.
The Australian economy has benefited greatly over the last few years
from a series of economic reforms some of which were undertaken by the
government of Australia before I became Prime Minister and many of which
have been undertaken by my Government over the last almost six years.
In particular in the area of labour market reform we have made changes
which have boosted the productivity of the Australian economy, made it
more competitive, and that productivity boost has enabled us to maintain
a faster rate of economic growth than has been possible over earlier years.
For many years the great challenge of the Australian economy was to try
and find a way of taking the speed limits off economic growth. We experienced
the unhappy phenomenon of having a period of economic growth which led
to a period of inflation or a blow out in our current account deficit
which necessitated the imposition of a more restrictive monetary or fiscal
policy which in turn suppressed economic growth. But by undertaking structural
reform, by first of all floating our exchange rate which proved to be
quite important in relation to Australia';s adjustment to the Asian
economic downturn in 1997 and more recently under my Government bringing
about a fiscal surplus position with our budget in recent years, major
labour market reforms, significant reforms to Australia';s taxation
system which represent one of the biggest systemic changes to our economy
in recent years. These things have all combined to create a situation
where some of the speed limits that used to be there on Australia';s
economic growth are no longer there.
I also believe that we have benefited very greatly from a very stable
legal and political climate in Australia. Certainly our political environment
is robust and combative as the Australians and many others in the audience
will know, but it is nonetheless a stable political climate. The certainty
of corporate governance and the clarity of our legal system, all of those
things are very important.
And I agree that increasingly in this borderless world, the use the frequent
clich, and a world of globalisation, countries with predictable and stable
codes of corporate governance, prudential supervision and legal systems
will be the beneficiaries of increasing levels of foreign investment.
When I was in New York there was much debate of course about the impact
of globalisation, there was much debate about the impact of the tragic
events of last September on how nations relate to each other, and how
the process of globalisation might be affected. I think a very strong
view emerged from those to whom I spoke that we must do more if we believe
in globalisation to explain the benefits, to offer the critics of a more
open economic system around the world, are allowed to propagate falsehoods
all to infrequently those who understand its benefits are silent or inarticulate
in expressing the benefits and explaining the advantages. The reality
is that developing countries do, despite some of the anti-globalisation
rhetoric, the reality is that developing countries do have much to gain,
if globalisation involves as I believe it should, the opening up of markets
for greater access to the products and the services of developing countries.
It';s frequently been said that if the protective trade barriers
of the industrialised world were to be removed, then the value of that
one single act to the wealth and the export income from developing countries
would multiply by many times the existing level of foreign aid from those
industrialised countries to the developing world. And if in fact you look
at the experience and the history of nations over the last forty to fifty
years, comparing the experience of those that have started off being under-developed
with others of a similar situation, the first group adopting more open
economic policies and the second group adopting more closed economic policies,
the first group has turned out to be infinitely more successful.
I recognise that the process of economic change and economic adjustment
is very difficult in a nation such as Indonesia. I know the importance
to the many citizens of this country of a lot of the arrangements that
have been in place for many years. But as a politician of now some twenty-seven
years in the Australian Parliament, and almost six years as Prime Minister,
I know in my own country how resistant many people are to change, and
how difficult it is to explain the longer term virtues of change and reform,
particularly if that involves some short term cost. And I do empathise
very strongly with the Indonesian people, the Indonesian Government, and
those in the business community who are seeking to lead this country';s
transformation in so many areas.
And I want to leave you with my most important remark today, and that
is, that in that process of change and reform which is so very important
to the people of Indonesia, and to the people of this region, the people
of Indonesia do have a firm and constant and understanding friend in Australia.
We are a country that values the relationship we have with Indonesia.
We have had our differences, and will have our differences in the future.
But I believe that those who carry influence in both societies understand
that being neighbours and because of shared history and shared experiences,
we do have a future together, and a future that I know people in both
countries want to build on and make more fruitful, and I hope that in
a small way my visit on this occasion has contributed to building ever
closer links between our two communities.
But it is very important that what this room represents, and that is
the economic dynamism of the relationship, that has a very prominent part
because without investment, without economic growth, without the beneficial
effects of entrepreneurial risk taking, without achieving a proper balance
between the role of the state and the role of the private sector, growing
living standards and reaping the benefits globalisation will not be available
to Indonesia. I know there are many in the Australian business community
who are keen to support Indonesia';s future economic growth. Like
all people in business, they like a good return, and that is understandable.
They like certainty and predictability. They respect the efforts being
made to bring about change and reform, and at a political level, I look
forward to better and growing relationships between our two nations. And
I say that sure in the knowledge that our association which has now been
very long standing, Australia having been one of the very first supporters
of the independence movement in Indonesia in the 1940';s, that it
is an association that is built on very sound foundations. And I am delighted
to be back here in Jakarta, and I wish all the members of the Council
the very best of good fortune.
Thank you.
[ends]