I would like to thank the Malaysia-Australia Business Council and the Australia-Malaysia Business Council for hosting today's lunch.
The Councils do a great job in promoting the economic ties between our two countries and I want to acknowledge their contribution and commitment.
It is a great pleasure to back in Kuala Lumpur.
I have enjoyed visiting this city in the past.
Each time I come back the changes are remarkable.
Malaysia is a country with a remarkable record of national achievement and contribution to the region.
There is real strength to the ties between our two nations.
A strength that comes from the history we share.
But also a strength from the future we can shape together.
What ties us together are the bonds that have grown between our people over more than half a century.
During the Second World War Australians came to defend the Peninsula.
They fought, were captured, suffered and died here and in Singapore
In the Post-War years they came to provide security and stability as the modern nation of Malaysia came into being.
And all of these veterans formed a strong bond with this country and her people.
They still come back.
Each year, the veterans and the families of veterans of the Malaya Emergency and the Second World War come back and visit Malaysia.
Over 35,000 of them have served here from the Second World War on.
But the traffic has not all been one way.
Australia has been happy to welcome hundreds of thousands of Malaysians to study in Australia over the years.
In their teens and twenties, young Malaysians come to Australia to study.
They get to know about us.
They make friends.
They might even learn about rugby or Aussie rules football and other high cultural pursuits.
And they come back to Malaysia and they maintain those connections with Australia.
They maintain their memories of their time in Australia.
It is those personal experiences that tie our two countries together.
We also have the contemporary ties of migration.
The Malaysian-Australian community has made a great contribution to Australia's development - including through our Climate Change Minister Penny Wong, who has Malaysian heritage.
Going back, we have many ties between us.
But our relationship is also very contemporary.
And it is also a relationship about how we shape the future together.
We face many of the same challenges domestically, regionally and globally.
And we have great scope to cooperate even more closely in meeting those challenges.
Before I talk about how the new Australian Government hopes to build on our ties, I want to explain a little about the Government itself.
We were sworn in as the new Government just over seven months ago.
And we were elected on a platform of responsible economic management, investing in the nation's future in education and infrastructure, and tackling the big long-term challenges like climate change, water and our future in this Asia-Pacific region at the dawn of this century of the Asia Pacific.
In an uncertain global economy, the Government has brought down a responsible budget based on a 22 billion dollar surplus - one of the largest in the nation's history.
The Government has established an 11 billion dollar education fund to invest in the future needs of our universities and our vocational education institutions.
The Government has also established for the first time a 20 billion dollar Building Australia Fund to invest in our future infrastructure needs in roads, rail, ports and high-speed broadband.
And through the Council of Australian Governments, we have begun a process of national regulatory reform with the long-term goal of creating a seamless national market.
We have a big agenda.
But it is one we have to implement if we want to secure Australia's future.
When I was reading about the Malaysian Budget before coming here, I was struck by how similar our approaches are in some ways.
We both realise the importance of investing in our human and physical capital.
Both Governments are focusing on the same areas with the same aims - making sure our nations are as competitive as they can be in the highly competitive global economy of the 21st century.
This is not surprising.
Our populations are about the same size.
And both our populations are an example of bringing together people from diverse backgrounds.
Our two economies have a strong emphasis on resources.
But we are also both diverse economies - strong in the manufacturing, agricultural and services sectors.
To ensure prosperity for our nations, it is critical that we have the right domestic policy settings.
But we also need to engage the global economy beyond.
Malaysia has a rich history as an international trading centre.
It has been a meeting point of trade routes, cultures, peoples and religions for many centuries.
Most famous is the city of Melaka - home of Malaysian hero Hang Tuah - which dominated the region's trade routes in the 15th century and was a meeting point and melting pot for many of the diverse influences that gave rise to the modern nation of Malaysia.
As the 21st Century goes on, we are all going to have to follow the example of Melaka and ensure our prosperity and development through openness and engagement.
We will all need to be more connected, more globalised than ever.
If we want to thrive, we will need to be fully engaged with the global economy.
The development in the economic relationship between our two countries is an example of this.
We have both benefited from our economic engagement.
Malaysia is Australia's 11th-largest trading partner.
And Australia is Malaysia's 11th-largest trading partner.
The headline figures in the growth in trade have been impressive - trade has grown at over 10 per cent annually in recent years.
But what is more impressive is the range of connections being formed and the remarkable growth in Australian investment in Malaysia in recent years.
ANZ Bank has invested a billion dollars in Malaysia's Ambank.
Media Monitors are here with more than 50 staff here in Kuala Lumpur extending their very successful Australian business model to Malaysia.
Australian and Malaysian companies are working together here, in Australia and around the world in the resources sector.
And I understand that the Convention Centre we are in today is managed by an Australia-Malaysia joint venture.
The list goes on and on.
The members of the two Business Councils are at the forefront of this and I want to thank all of you here today for your efforts.
You are the people who are building these ties.
Whether you are large or small, your contribution to strengthening the economic ties between our two countries is important and appreciated.
Our job in government is to provide not only the domestic environment to help businesses thrive, but to help remove barriers to trade and investment around the world - to create more opportunities for you to do business; to make it easier for you to do business.
And there is a lot of work being done on this front.
We are negotiating an FTA between Australia and New Zealand and all of the ASEAN countries.
Australia and New Zealand have had a free trade agreement - what we call the Closer Economic Relations agreement (CER) - for 25 years.
The idea is to link our bilateral FTA with the ASEAN group.
It is a complex negotiation with 10 in the ASEAN group and two in the ANZ group.
But we are getting close to finalising the negotiations.
I am hopeful that we can overcome the last obstacles in the months ahead.
For many products, that would mean that the ASEAN and the ANZ markets become one - a market with a combined GDP of 2.3 trillion US dollars.
Bigger than India at 1.1 trillion US dollars and nearly three-quarters the size of China's 3.3 trillion dollar economy.
Already, four out of ten Australian exporters sell their products to ASEAN countries.
That would be a great outcome for businesses operating between Australia and Malaysia.
An outcome that we hope will spur even more growth in our trade and investment links.
At the same time we are negotiating a bilateral free trade agreement.
Prime Minister Abdullah and I agreed today that as soon as the ASEAN-ANZ negotiations are concluded, Australia and Malaysia will invigorate our bilateral negotiations with the aim of reaching a quick and mutually beneficial conclusion.
In doing so we will continue to consult widely with stakeholders in both our countries - including many of you here today - to ensure that we know what barriers to trade and investment need to be addressed.
For Australia, getting a good outcome for the services sector is particularly important.
Our funds management sector is now the fourth-largest in the world with around one trillion dollars under management.
It is a sector of the Australian economy that has developed rapidly in recent years and it has world-class skills to offer the world.
I hope that we can find further opportunities for our financial services sector to work closely together in the years ahead.
A good outcome on a trade agreement between our two countries would be another boost to our trade.
Of course, sitting above all of this is the World Trade Organisation negotiations that have been underway since 2001.
I have just come from Japan where I attended the G8 Outreach Summit and we agreed that pushing for an outcome on these negotiations is a global priority.
I met Brazil's President Lula and the trade negotiations were a feature of our discussions - Brazil is a critical nation in the negotiations.
It was also a feature of discussions I had with other leaders.
In the negotiations we are getting closer to a deal.
But, for a whole range of reasons, time is also running out.
We have to get agreement this year - and as soon as possible this year - if we want to see the benefits of the deal flow through to the global economy over the next couple of years.
On 21 July, trade ministers will meet in Geneva to thrash out a deal.
This meeting is likely to be the make or break point of the negotiations.
Australia and Malaysia have long been close allies in the WTO negotiations.
And I want to see us continuing to work closely together in the next critical months.
We are both in the Cairns Group of agricultural exporting nations.
We both want to see freer trade in agricultural products.
But we also want to see freer trade in manufactured goods and, importantly, in services.
For Australia, the services sector is a critical part of the Doha negotiations.
Our economy is nearly three-quarters services, but it makes up less than one-quarter of our exports.
One reason for this discrepancy is barriers to trade in services around the world.
I am pleased that Trade Ministers will meet in Geneva later this month to finalise the package on these core areas of the Round.
If they do, we will have a good framework for a deal before the end of the year.
And at a time of economic uncertainty with rising global energy and food prices, a good Doha outcome will be an important psychological boost for the business world.
Whatever happens with the Doha Round, one thing is clear in terms of the global economy - in the 21st Century, the Asia-Pacific region will become even more important to the global economy.
Look at some of the remarkable figures.
Japan, as a 5 trillion US dollar economy, is the second-largest economy in the world.
China has foreign exchange reserves of USD$1.6 trillion and its economy is growing at around 10 per cent a year.
The value of India's exports has grown at an average of nearly 20 per cent a year over the past decade.
The ASEAN countries - having sprung back from the 1997 Asian Financial Crisis - have had average economic growth of six per cent annually over the past five years.
Also in the Asia-Pacific region is the United States.
By far the world's biggest economy.
And still the leader and innovator in so many economic and technological fields.
The point of these figures is to show that global economic and strategic weight is shifting to the Asia-Pacific region in what will be the Asia Pacific century.
To make the most of that, we need an open and a stable region.
We need a region at peace, and engaged with the rest of the world.
The question, then, is how do we ensure that we get what we need?
The Association of South-East Asian Nations (ASEAN) is an example of the benefits of long-term vision.
Forty-one years ago, leaders in South-East Asia took the farsighted decision to establish ASEAN.
And, since then, in a diverse region, ASEAN has brought together a varied group and forged a common outlook on many questions.
ASEAN has built habits of cooperation and dialogue.
And ASEAN has played a critical role in building and maintaining peace in the region through its work.
ASEAN will remain central to the region's future architecture.
A month ago in Sydney, I announced that Australia would begin a series of regional consultations about the future of the region, culminating if warranted in an international conference next year.
The aspiration of an Asia-Pacific Community was part of the dynamic which led to the establishment of APEC.
Twenty years after APEC was established, I think we need to start the discussion about where we want to be in 2020 and beyond in terms of our regional architecture.
There will be different views on where we need to go; how we should get there; and about how fast we should move.
My own view is that we need a regional organisation that includes all of the major players - from the United States to India, Japan and China and of course Australia, Malaysia and the ASEAN countries among others.
And we need an organisation that can discuss all of the challenges we will face in the century ahead - economic, political and security challenges.
Australia and Malaysia have long been at the forefront of the discussion about our region.
Malaysia has been a driving force in ASEAN.
Australia played a key role in establishing APEC nearly 20 years ago.
For Australia, Malaysia is a key partner in this process of thinking about how we want the region to look in 2020.
I was pleased that Prime Minister Abdullah and I could discuss this today.
And I will be asking my envoy for an Asia Pacific Community, Dick Woolcott, to make sure that he comes to Malaysia early in his consultations to hear the view from Kuala Lumpur about the way forward.
I want to emphasise that the Australian proposal is about doing the necessary thinking about where we want to be in 2020.
So we have begun a process of dialogue about an Asia-Pacific Community.
Because we believe that, in a rapidly changing region, we should seek to shape the future of our region, rather than let it be shaped by events.
But ASEAN, as I indicated in my speech in Sydney, will remain at the core of the region.
And the region has much to learn from ASEAN's experience.
One reason we need robust regional institutions is to help us tackle the wider challenges we share - economic challenges, security challenges and political challenges.
And, among those shared challenges, none is more difficult than climate change.
Yesterday I was in Japan for a meeting with the leaders of 15 other countries.
It is a group called the Major Economies Meeting on Climate Change and Energy Security.
This group brings together 16 developed and developing countries to discuss climate change.
And yesterday we all agreed - it is time to act.
Both developed and developing countries need to act together - because the impact of climate change will be felt by all of us.
As we forge a new grand bargain on how to tackle climate change it is important that a wider range of countries are involved in efforts to slow the growth of and reduce greenhouse gas emissions.
Fast-growing emerging economies like Malaysia can play an important role in this process.
And Australia looks forward to partnering with Malaysia in the lead up to the Copenhagen climate change meeting.
Cooperation on the future of our region is something that Australia and Malaysia should be able to do well, just as we cooperate globally in areas like trade.
We should be able to work closely together because we have such a strong bilateral relationship.
And the Australian Government is committed to building on that relationship.
I am pleased to announce today that the Australian Government has decided put the Australia-Malaysia Institute on a permanent footing.
The Institute was established in 2005 for three years and it has made a strong contribution to building new links between our nations.
So we have decided that it should keep filling that important role.
It will help us take the relationship forward.
In fact, Prime Minister Abdullah and I talked a lot today about how to take our relationship forward.
And I was pleased that we were able to discuss some new initiatives.
For instance, the schools twinning program.
If we want to make sure that our two countries not only maintain our existing ties but develop them even further, we have to make sure that younger generations in both countries know each other.
I was delighted to be able to visit a school in Kuala Lumpur before this lunch.
The school is participating in a new twinning program with Australian schools.
Under this scheme, schools in Malaysia and schools in Australia will become partners.
To get us started, six schools from the state of Victoria will partner with six Malaysian schools.
The students in the partner schools will get to know each other.
And in the process, children in both countries will come to understand their counterparts.
I hope they will also come to understand how important this relationship is.
Education links between us are not new.
But they continue to grow.
We have around 20,000 Malaysian students studying in Australia.
And we have around 15,000 Malaysian students studying in more than 500 Australian programs in Malaysia.
These courses are delivered through partnerships between Australian institutions and more than 50 Malaysian institutions.
The ties go beyond teaching too.
Our researchers work together through the thirty active agreements between Australian and Malaysian universities.
The education connections between us are one of the underpinnings of the relationship.
I would like to acknowledge the presence here today of Tan Sri Dato' Seri Dr Jeffrey Cheah and Tan Sri Dato' Azman Hashim.
Two men who studied in Australia.
And two men who are the leaders in their fields.
Your personal links and your understanding of Australia are an important strand in our relationship.
It is a strand that I hope will grow.
Later today I will be involved in the launch of a full-time Australia Network channel on the ASTRO television network.
I am proud of the Government's support for Australia Network: an independent but credible voice, it will bring Australia into the homes of many Malaysians, enhancing knowledge and understanding of how we live and view the world.
The Prime Minister and I also announced today that Australia and Malaysia have agreed on a work and holiday visa scheme to be signed by our ministers.
This scheme will let young people in both countries visit the other and spend some time travelling around and doing some work.
It is another avenue for us to build the ties.
I am particularly keen to see more Australians come to Malaysia - either to study or to work.
The Australian Government is committed to making Australia more Asia-literate - and that means giving our young people more chance to learn the languages of our region.
It also means giving them more chances to spend time in the region.
Because I believe that such experiences - along with academic study - are critical to really understanding a country.
This morning Prime Minister Abdullah and I agreed on a new element to our education cooperation - an element that extends our cooperation to benefit third countries.
Australia and Malaysia are going to combine to provide teacher education for Afghanistan.
I think this is a great symbol of us taking our relationship to the world.
It is not just about Australia and Malaysia cooperating with each other, it is about using the depth of our relationship to make a contribution to the global community.
One area where we already have very strong exchanges is defence cooperation - through both the long-standing Five Power Defence Arrangement (now 37 years old) and our bilateral contacts.
In the past year, more than 2200 Australian service personnel visited Malaysia to work side-by-side with their counterparts.
And in the same period nearly 700 Malaysian defence force personnel visited Australia for the same reason.
3000 defence force personnel visiting each other's country in 12 months is a strong indication of the depth of the defence ties we have - and we want to expand these even further.
We conduct joint exercises.
And we conduct joint exercises with other partners in the region from time to time as well.
Our militaries work well together because they have a long history of ties and exchanges.
And the programs maintain their momentum because both sides are committed to them.
In the case of the Five Powers Defence Arrangement, the exercises are among the largest in the region.
That means that when we have to work together - like we have in East Timor for example - our soldiers can work together seamlessly.
It means we can work together on disaster relief operations when it is needed.
Our defence links are an important - if sometimes underappreciated - part of our relationship.
But like education, it has the potential for us to take our partnership to the world.
Prime Minister Abdullah and I agreed today to work together on peacekeeping training around the region.
This is another great example of our bilateral cooperation now being extended to a regional or global level.
We have many strands to our relationship.
We have to strengthen those strands and encourage new ones to develop.
Today, the Prime Minister and I agreed to a joint ministerial commission, which will involve regular meetings between our foreign ministers.
This reflects one simple fact.
Both governments want to make sure that in the years ahead, we are working together more on a wider range of challenges - including climate change and energy security.
The relationship between our two countries has a very strong base.
It has a base of history, of personal ties and experience, and it has a base of mutual interest in regional and global affairs.
We will face some big questions in the decades ahead:
* How do we ensure prosperity and stability for our people in an age of rising food and oil prices and financial instability?
* How do we deal with climate change?
* How do we deal with the shift of global economic and strategic weight to our region?
These questions will take a lot of effort to answer.
But we will be better off if we work on the answers together.
And I believe that Australia and Malaysia should be close partners in this process.
I would like to thank you for the opportunity to speak today.
I wanted to send a clear message that Australia is committed to developing a broader, deeper relationship with Malaysia.
We want to take our bilateral relations to a new level - by building our strong cultural, political, economic, education and security ties.
We also want to work together in the region - in particular on the question of how we shape our region for the future.
And we want to work together globally on international trade, on climate change and on other challenges we face.
We are both committed members of the United Nations.
And we both have a strong history of participating in peacekeeping operations.
We can build on this shared commitment and strengthen our global cooperation too.
We are committed to building the ties between our nations, our people and government and private institutions.
We are committed to working together on regional issues.
And, in the century ahead, we are committed to working together on the big global challenges we face.