Southeast Asia - New Zealand Dialogue: Towards a Closer Partnership 9789812307255

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SOUTHEAST ASIA– NEW ZEALAND DIALOGUE

The Institute of Southeast Asian Studies (ISEAS) was established as an autonomous organization in 1968. It is a regional centre dedicated to the study of socio-political, security and economic trends and developments in Southeast Asia and its wider geostrategic and economic environment. The Institute’s research programmes are the Regional Economic Studies (RES, including ASEAN and APEC), Regional Strategic and Political Studies (RSPS), and Regional Social and Cultural Studies (RSCS). ISEAS Publishing, an established academic press, has issued almost 2,000 books and journals. It is the largest scholarly publisher of research about Southeast Asia from within the region. ISEAS Publishing works with many other academic and trade publishers and distributors to disseminate important research and analyses from and about Southeast Asia to the rest of the world.

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SOUTHEAST ASIA– NEW ZEALAND DIALOGUE Towards a Closer Partnership

Institute of Southeast Asian Studies

First published in Singapore in 2007 by ISEAS Publishing Institute of Southeast Asian Studies 30 Heng Mui Keng Terrace Pasir Panjang Singapore 119614 E-mail: [email protected] Website: bookshop.iseas.edu.sg All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the Institute of Southeast Asian Studies. © 2007 Institute of Southeast Asian Studies, Singapore ISEAS Library Cataloguing-in-Publication Data Southeast Asia-New Zealand dialogue : towards a closer partnership. Papers originally presented at a Southeast Asia-New Zealand Dialogue : Towards a Closer Partnership, 26–27 April 2006, Singapore, organized by ISEAS in association with New Zealand High Commission, Singapore, New Zealand Thinking Festival, and Asia New Zealand Foundation. 1. ASEAN—Congresses. 2. Asian cooperation—Congresses. 3. Southeast Asia—Foreign relations—New Zealand—Congresses. 4. New Zealand—Foreign relations—Southeast Asia—Congresses. 5. Southeast Asia—Foreign economic relations—New Zealand—Congresses. 6. New Zealand—Foreign economic relations—Southeast Asia—Congresses. 7. Singapore—Foreign relations—New Zealand—Congresses. 8. New Zealand—Foreign relations—Singapore—Congresses. I. Institute of Southeast Asian Studies. II. New Zealand. High Commission (Singapore) III. New Zealand Thinking Festival. IV. Asia New Zealand Foundation. V. Southeast Asia-New Zealand Dialogue : Towards a Closer Partnership (2006 : Singapore). DS525.9 N45S721 2007 ISBN 978-981-230-451-3 (soft cover) ISBN 978-981-230-725-5 (PDF) Typeset by Superskill Graphics Pte Ltd Printed in Singapore by Seng Lee Press Pte Ltd

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CONTENTS

Towards a Closer Partnership K. Kesavapany

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Keynote Speech Jim Sutton

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I

New Zealand-ASEAN Political and Security Relations: An Overview

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New Zealand-ASEAN Political and Security Relations: A New Zealand Viewpoint Anthony L. Smith

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ASEAN-New Zealand-Australia Relations: A Long-Term Perspective Michael Richardson

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Towards a Closer Partnership: New Zealand and Southeast Asia Defence Links Gerald Christopher Philip Hensley

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New Zealand-ASEAN Defence Perspectives: An ASEAN Viewpoint Zakaria Haji Ahmad

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New Zealand-ASEAN Economic Relations: Cooperation and Challenges

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Trade and Investment Overview: A New Zealand Perspective Dryden Spring

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Trade and Investment Overview: An ASEAN Perspective Jose L. Tongzon

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Relationship Trends in New Zealand-ASEAN Tourism Tim Hunter

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ASEAN-New Zealand Dialogue: Nature, Status, Characteristics and Future Possibilities Rodolfo C. Severino

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III ASEAN Integration and Towards an East Asian Community 9.

ASEAN Integration Rodolfo C. Severino

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10. ASEAN’s Centrality in the EAS Chin Kin Wah

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11. An East Asian Community: A New Zealand Perspective 46 Brian Lynch

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New Zealand and Southeast Asia: Long-Term Prospects and Challenges

12. The East Asia Summit: New Zealand’s Role in the Balancing Act Cornelius P.F. Luhulima

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13. Towards a Closer Partnership: Long-Term Prospects and Challenges –– New Zealand’s Perspectives Gary R. Hawke

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14. Summary of New Zealand-ASEAN Relations John Austin

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New Zealand-Singapore Relations: Developing Stronger Economic Ties: Trade, Investment and Services

15. New Zealand-Singapore Relations: Opening Address John Austin

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16. Learning and Growing Together: Business Opportunities for a Stronger Singapore-New Zealand Relationship 67 Tony Nowell 17. Developing Stronger Economic Ties: Trade, Investment and Services Winston Ho and Aravind Vasu

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18. A Hotelier’s Perspective Tsang Jat Meng

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19. Intellectual Property Exploitation Antony Paul Bishop

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Creativity and Connectivity: Maximizing Opportunities

20. Beca: A Case Study in Creativity and Connectivity for Sustainable Business Growth Paul White

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21. Closer Partnership and Collaborative Approaches Donald Christie

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22. Exploring New Frontiers Wong Peng Wai

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Conference Programme

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TOWARDS A CLOSER PARTNERSHIP K. Kesavapany Director Institute of Southeast Asian Studies

I have great pleasure to warmly welcome all of our friends to this Inaugural Seminar between ASEAN and New Zealand. We in ASEAN are particularly appreciative of the friendship and support, which New Zealand has shown to us for decades. For instance, New Zealand was the first dialogue partner to negotiate an FTA with ASEAN. We in Singapore also remember with gratitude the tremendous efforts in the area of defence cooperation that New Zealand has helped us with since World War II through the Malayan Emergency to Confrontation and the FPDA, until today, when our Singapore Armed Forces trains in New Zealand. Several ASEAN countries are small states, except for Indonesia, Thailand, Vietnam, Philippines, and Myanmar. We all admire and appreciate what a small state like New Zealand has achieved on the world stage. In world sports like sailing, rugby, cricket and others, New Zealand has shown that a small population is no hindrance. In economics, she has been a pioneer in economic reforms. In opera, a New Zealander, Dame Kiri Te Kanawa is a world-class singer. In terms of beautiful scenery, famous movies like the “Lord of the Rings” series have show-cased New Zealand, now also known as Middle Earth. The wines of New Zealand are excellent and win awards. In innovation, Kiwis are famous for their No. 8 wire hands-on approach to problem solving. So ASEAN

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members have a lot to learn in terms of best practice from New Zealand. This seminar provides a platform for an exchange of ideas between the two sides. As a research institute, ISEAS is particularly interested in the exchange of ideas and information. Analyses and policy-oriented research are our focus and raison-d’être, particularly when the wider region is changing rapidly, with the rise of China and India, and the establishment of new moves like the Trilateral Security dialogue between the United States, Japan and Australia, and closer ties between India and the United States. New Zealand shares certain common interests with us as fellow members of ARF, APEC, ASEM, EAS and as an ASEAN dialogue partner. So it is to our mutual benefit that we sit together and discuss the new regional security architecture, the impact upon regional economics and politics. ASEAN is also evolving, with new moves like the ASEAN Charter, the driver’s seat of the EAS, and the proposed establishment of the three ASEAN Communities. There is much to brief each other and to exchange views on extra-regional issues such as geo-energy trends. ISEAS would like this seminar to be the first of a series, alternating the venue between both sides, like we do with the Russia seminar. Second, we should publish the papers arising from this seminar, so that there will be both a permanent record as well as a wider dissemination of the ideas and discussions made at this seminar. It remains for me to wish all of the participants a fruitful discussion as well as happy networking!

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KEYNOTE SPEECH Jim Sutton Minister of State and Associate Minister of Trade Negotiations New Zealand

I am delighted to be here. This is absolutely the right time to be discussing New Zealand’s relations with ASEAN. Tomorrow we will be looking specifically at our relationship with Singapore — a longstanding, close relationship that we must make sure we don’t take for granted. This seminar is but one event of an exciting three-week festival comprising a wide range of activities which aims to expose Singaporeans to twenty-first century New Zealand — a country of innovation, initiative and diversity with a growing sense of its connectedness to this region. My thanks to the Institute of Southeast Asian Studies for cohosting the seminar with the New Zealand High Commission. You have put together a very interesting programme and I hope that participants get a lot out of it. This symposium is one of the initiatives that my Prime Minister, Helen Clark, announced at the ASEAN Summit last year as part of New Zealand’s enhanced engagement with Southeast Asia. I would like to set the scene for today’s discussion by describing in broad terms New Zealand’s relationship with ASEAN and how we see it developing. The ASEAN region is on the move; it is fundamentally in New Zealand’s interests to be part of this process; and that whilst much has been achieved in our relationships, we need to and will do more.

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Let me stress that we don’t take our place or our role in the region for granted. We recently celebrated thirty years of relations with ASEAN, and over that time have established many good relationships throughout the region. I think its fair to say that many of us feel an affinity with ASEAN countries. Often this is based on warm personal relationships, but it also reflects the fact that you are our closest neighbours beyond the Pacific Forum community. There is a history to this. For example, our diplomatic mission in Singapore has been here for over fifty years — and there are few other countries that claim that sort of record, in the region. But we recognize that times are changing –– and changing fast. As ASEAN Secretary-General Ong correctly suggested when he addressed a recent ASEAN business conference in Auckland, New Zealand needs to look to the future, rather than rely on the successes of the past. There is no doubt that there is a sense of dynamism in Southeast Asia today. The slump following the financial crisis of 1997 has well and truly gone. Even the foreign exchange reserves of the region are healthy again. ASEAN countries are palpably growing in economic and political confidence and, flowing from this, are increasingly outward-looking in advancing their interests. ASEAN economies are posting large and sustained growth rates. Last year, GDP growth ranged from 3 to 8 per cent. Greater participation in the wave of globalization has helped tremendously. Trade is up. FTA negotiations are proliferating. China’s membership of the WTO has played a significant role in its explosive emergence as a major trading power. For ASEAN, China is not just another competitor, it a major potential and

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actual customer. And, on the security front, the Southeast Asian region continues, particularly through the solidarity of ASEAN, to be free of major problems. ASEAN has to its east and west two rapidly growing economic giants –– China and India respectively. The essential geo-political and geo-economic characteristics of our region are significantly changing. Perhaps most telling of ASEAN’s role in this changed environment was its initiative to launch the East Asia Summit. This is the most exciting development in the region’s architecture for many years and New Zealand is delighted to be part of it. These changes respond to the challenges facing the region. Economic development is uneven — between countries and within countries. Poverty levels are reducing but not fast enough. There are major environmental issues to be addressed. Energy security is a growing concern. The possibility of an avian flu pandemic is well recognized. ASEAN countries regularly stress to us the importance of cooperation in our relationships. We understand why this is a priority to you. Where does New Zealand fit into this picture? Let me say straight away that New Zealand is a natural partner for Southeast Asia. We are a small, democratic, economically advanced society. Over time, we have come to recognize that our engagement with other countries can contribute to a more stable region; a more peaceful, harmonious, and prosperous neighbourhood in which to live. These are goals, as I understand it, of ASEAN member states as well. We have shown in the past that New Zealand is prepared to play a part in building a secure region. We have been a partner of ASEAN since 1975. We have run technical assistance programmes in the region since the 1960s. We have educated and trained a

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generation of people in New Zealand academic institutions. And we have opened our markets to trade with ASEAN in advance of many bigger economies. It is fundamentally in our economic, political, and security interests to engage closely with the ASEAN region. We have recognized this for a long time but it is now more important and urgent than ever. The threat of terrorism hangs over us all. There is a vital need to promote greater understanding among the many religions of the region. On the economic front, the sense of deeper involvement with the region is evident. We are currently negotiating a free trade agreement with ASEAN. The fifth round of talks was held in New Zealand earlier this month and we are making steady progress. ASEAN is a key market for us (the fifth largest as a region) and whilst our trade with you is growing, it is not growing fast enough. Our economies are complimentary, not competing, and we need to work harder to gain the benefits for both sides. That should mean an ambitious agreement that seeks to broaden and deepen the range of areas where we trade. We are also negotiating a bilateral FTA with Malaysia, which will fit alongside the FTAs already signed with Singapore in November 2000 and last year with Thailand. The Trans Pacific Partnership, which includes New Zealand, Singapore, Brunei, and Chile will come into effect on 1 May. But the FTAs are about much more than trade. In our experience, such agreements and process of negotiating them have led to significant spin-off effects for the wider bilateral relationships, including for education, scientific, and cultural collaboration. In all these negotiations New Zealand has set out to develop comprehensive, high quality FTAs. Let me stress that we look to

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these FTAs to complement and enhance, but not replace, what can be achieved through the WTO’s Doha Development Round of negotiations. On the political and security side, last year we acceded to the Treaty of Amity and Cooperation with ASEAN. New Zealand remains fully engaged in ARF and bilaterally is expanding the number of political and defence talks with countries of the region. The Five Power Defence Arrangement, which we share with Australia, Malaysia, Singapore, and the United Kingdom, is enjoying a new lease of life. It remains the symbol of long-standing New Zealand commitment to preserving stability in Southeast Asia. But it also, today, a real and serious part of the security architecture in this region. In another initiative to contribute to developing a more secure platform for inter-communal understanding, Prime Minister Helen Clark attended the recent regional Interfaith Dialogue meeting in the Philippines. New Zealand has offered to host the next meeting. New Zealand’s development assistance to the ASEAN region is second only in importance to the Pacific. The NZAID programme focuses on poverty alleviation in the ASEAN’s poorer member countries, and NZAID has agreed to align its ASEAN programme with the ASEAN Vientiane Plan of Action. New Zealand’s ability to enhance our economic relations with ASEAN depends much on developments back home. Our economic strategy is to achieve growth through innovation. This means prioritizing education and skills (including through skilled migration), science, research and development; encouraging design and branding in creating higher value; lifting productivity and investment; and increasing the strength or our export sector. The transformation of some Asian economies — South Korea and Singapore, for instance — by their embrace of new

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technologies, mirrors exactly what we want to achieve in New Zealand. New Zealand is known globally for its innovative and challenging information technology, especially for the intellectual property that its inventors and designers put into software. At one end of the scale is the work done by Peter Jackson and his colleagues in “The Lord of the Ring” series of films. At the other, less high-profile end, is a string of successes in software and applications which a growing number of New Zealanders are contributing to the global economy. We know the New Zealand economy is small, in comparison to many in the region. Through the Closer Economic Relations (CER) partnership with Australia, we are an attractive partner to ASEAN countries — and others, like China, where New Zealand is the first developed country to be negotiating an FTA. We have to compensate for this smallness, and in the FTA negotiations I mentioned, we have been putting considerable weight on the economic advantages that both sides can achieve from these initiatives — as opposed to the pure flow of goods. The achievement of our economic goals will change the way New Zealand looks to the world outside. One area where this is more and more apparent is the ethnic composition of the New Zealand population. New Zealand is increasingly a multicultural society. By 2015 Asians are expected to make up 12 per cent of our total population. We cherish the positive contribution that our ethnic diversity makes to New Zealand society. Our next Governor-General — Anand Satyanand — is of Indian extraction. He takes up this position in August of this year. All this has helped promote a greater awareness among New Zealanders of the importance of Asia to us. In 1994, the New Zealand Asia Foundation was set up, with government support to

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promote both a greater understanding of Asia among Kiwis, and a greater understanding of New Zealand in Asia. More recently, a “Seriously Asia” programme has been established to promote specific media, business, cultural and academic links between New Zealand and Asia. In 2003 the Deputy Prime Minister Lee Hsien Loong was the keynote speaker at the conference that launched “Seriously Asia”. Another area of change is in the study of Asian languages and cultures in New Zealand secondary and tertiary institutions. And in getting Asian students, following in the tracks left by the old Colombo Plan, to study in New Zealand. Encouraging New Zealanders to study in Asia. Here, at the National University of Singapore, there is a small group of New Zealanders studying for their undergraduate degrees — which is a real change of approach from what we used to know. Tourism and people-to-people contacts are another key factor for New Zealand. We are always happy to have Southeast Asian tourists visit New Zealand, but we also contribute a lot of tourists to the region as well. Just to give one example, Vietnam has taken off amongst young, and not so young, New Zealanders as a mustvisit destination. What about the future? New Zealand is fully committed to expanding our relationships with ASEAN. We will do this through developing stronger bilateral partnerships with individual ASEAN countries and greater engagement with ASEAN as a region. A key vehicle for the latter is the establishment of the East Asia Summit. We welcome the EAS as a highly significant ASEAN driven initiative, and were delighted to take part in the first summit, in Kuala Lumpur last December.

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The EAS has the potential to develop into a broader East Asia Community. It will take time for it to define itself. But — standing back a moment — it may well be that we have now started on the road towards achieving a degree of regional integration that would have been unthinkable a decade ago. The way ahead is not clearly signposted, and you may well raise factors that could make reading the map even more difficult. These might include political/security factors; they might involve the unforeseeable consequences of a pandemic. I have not discussed the fight against terrorism, which has a regional face in this part of the world. Energy supplies, and the cost of energy, are critical to every country. You could name others. Even so, I want to tell you that I am convinced that the way forward for us all is greater integration and greater cooperation, so that we can promote prosperity that will endure and deal effectively with the challenges that we face. As Malaysian Prime Minister Abdullah Badawi said in opening the first EAS Summit, a new age has arrived and it is time for a new concept of regionalism. The world has changed, and engagement is replacing ideological confrontation and containment. New Zealand’s relations with ASEAN countries are more pivotal than ever to our future. I wish you all a fruitful two days. I shall follow with great interest the outcome of your debates.

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Anthony L. Smith

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I NEW ZEALAND-ASEAN POLITICAL AND SECURITY RELATIONS An Overview

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1 NEW ZEALAND-ASEAN POLITICAL AND SECURITY RELATIONS A New Zealand Viewpoint Anthony L. Smith Former Associate Research Professor Asia-Pacific Centre for Security Studies, Hawaii

As the first speaker, Dr Anthony Smith reviewed the varied perceptions that have formed New Zealand’s policies towards Southeast Asia since the end of World War II. He also outlined the breadth and substance of the relationship between ASEAN and New Zealand in the contemporary context. Dr Smith opened his analysis by noting the shifts in New Zealand’s perception of Southeast Asia over the decades. From an initial “disinterest” in the aftermath of WWII, New Zealand began by the 1950s to view the region as a source of instability and concern, warranting its involvement in the Malayan Emergency, Confrontation, Southeast Asia Treaty Organisation (SEATO) and the Vietnam War. This position again altered by the mid-1970s and 80s as New Zealand began to appreciate the role of ASEAN in forging a “diplomatic community” providing greater stability and resilience to its constitutive members in the region. Dr Smith pointed out that by the 1990s — by which time Southeast Asia had convincingly demonstrated its commercial and strategic potential — New Zealand had come to perceive the region as an economic “opportunity”.

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Anthony Smith next described the dimensions of the current relationship between ASEAN and New Zealand in terms of security, commercial and people-to-people ties. He pointed out that the New Zealand Foreign Ministry placed importance on ASEAN not only as a regional organization but also in terms of its individual member states. ASEAN’s role in improving the security of Southeast Asia in fact reduced New Zealand’s need to pay attention to the region. Thus, supporting ASEAN and its principles has been in the clear interests of New Zealand. Stronger ties between ASEAN and New Zealand are evident from the latter’s interest in working as a “team player” with ASEAN and increased likelihood of New Zealand signing ASEAN’s Treaty of Amity and Cooperation (TAC). Dr Smith argued that New Zealand and ASEAN shared concerns over a range of global issues and have collectively promoted rules based international behaviour. Efforts to strengthen international norms governing Weapons of Mass Destruction (WMD) and common concerns over hostilities in South Asia, the Korean peninsula and Northeast Asia exemplify this aspect of their relations. Further, New Zealand and some ASEAN member countries maintain “military to military contacts” through their membership of the Five Power Defence Arrangement (FPDA) that continues to play an important role in the face of modern day security threats. Dr Smith argued that while New Zealand cannot be a central actor in Southeast Asia defence, it could nevertheless make significant military contributions in times of crisis. This was demonstrated by New Zealand’s support for the United Nations Transitional Authority in Cambodia (UNTAC) in 1993, and in the international missions in East Timor in 1999.

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Apart from security ties, New Zealand and ASEAN also share a potential for good commercial relations, which, currently, remain neglected and underdeveloped. Dr Smith emphasised this when he stated that much of New Zealand’s trade with Asia is concentrated in North Asia — mainly Japan, South Korea and China. In fact, Southeast Asia accounts only for 8 per cent of New Zealand’s imports and exports. While New Zealand’s exports to the region continue to be dominated by pastoral sector products, the exports from ASEAN countries have shifted from bulk commodities to a range of industrial goods. He argued that it is no longer viable for New Zealand to neglect the potential of Southeast Asian markets. Anthony Smith added that New Zealand has looked to Southeast Asia to help lower barriers to trade in both Southeast Asia and the wider region. He put forth the example of the Cairns Group through which New Zealand and ASEAN states formed an important bloc to counter the weight of EU, US and Japan in trade negotiations. New Zealand has also been involved in bilateral and multilateral deals with ASEAN countries. Dr Smith stressed that New Zealand views bilateral deals as “supplementary” and “not contradictory” to broad regional trade initiatives. He pointed out that at ASEAN’s 10th summit at Laos in November 2004 member countries agreed to initiate two-year negotiations — starting from early 2005 — for an agreement between ASEAN and the AustraliaNew Zealand Common Economic Region (CER). This would result in a substantial non-tariff barrier removal in the commerce between the two regions. Dr Smith added that the New Zealand Ministry of Foreign Affairs and Trade has been enthusiastic about this possibility of having a “Single Economic Market”. Besides this,

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New Zealand is a member to the Closer Economic Partnership (CEP) deals that it signed with Singapore and Thailand in 2001. It is also a member to the “Pacific-3” between New Zealand, Chile and Singapore, an arrangement which is currently under negotiation. Dr Smith asserted that ASEAN will remain commercially important for New Zealand’s future interaction in APEC and in the emerging East Asian Community (EAC). New Zealand’s aid to Southeast Asia was another area Dr Smith described as an important aspect of relations between the two actors over a long period. New Zealand was the founding member of the Colombo Plan of 1950 and allocated nearly 20 per cent of its aid to Southeast Asian states. Dr Smith also discussed the importance for more people-level contacts. He lamented that there is a paucity of scholars specializing in Southeast Asia studies at a tertiary level in New Zealand. Further, there are very few students oriented towards Southeast Asian affairs who could be absorbed by the private and public firms in New Zealand. Dr Anthony Smith concluded by emphasizing the importance of ASEAN to New Zealand in diplomatic, commercial and strategic terms. Even though New Zealand has greater “breadth” in its relations with Southeast Asia than before, its reach and ability to influence the region is, however, quite limited.

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Michael Richardson

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2 ASEAN-NEW ZEALAND-AUSTRALIA RELATIONS A Long-Term Perspective Michael Richardson Visiting Senior Research Fellow ISEAS

Mr Richardson started his presentation by suggesting that New Zealand’s geographical distance from Southeast Asia and its political-military distance from the policies of the various U.S. administrations — unlike its neighbour Australia — have made it less controversial (although less substantial) and indeed more acceptable to the states of Southeast Asia. Richardson predicated his analysis of ASEAN-NZ-Australia relations on a close examination of the character of relations between New Zealand and Australia. While the two sides have diverged in the past, there have also been important instances of cooperation between the two neighbours. Troops from both countries, for instance, have served together in wars and conflicts overseas: for instance, the Malayan Emergency in the 1950s and 60s, the Indonesian Konfrontasi in the mid-1960s, in Vietnam, Papua New Guinea, and most recently, in the Solomon Islands. Apart from military and peacekeeping cooperation, the Australian and New Zealand governments also consult on a wide range of domestic and foreign policy concerns. The signing of the Closer Economic Relations (CER) agreement in 1983 has been

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crucial to the high degree of economic integration of Australia with New Zealand. The CER, which has provided for free trade in most agricultural products and almost all services between the two countries, has significantly integrated employment, banking and financial services in both countries. Mr Richardson pointed out that while Australia and New Zealand have engaged separately with Southeast Asian states, they have also converged to pursue common approaches and strategies on certain trade, diplomatic and security issues relating to the region. The joint-negotiations by Australia and New Zealand over a liberalized trading and investment pact with ASEAN, their membership of the Five Power Defence Arrangements (FPDA) and their participation in the inaugural East Asia Summit in 2005 are notable instances of such cooperation. Richardson emphasized that while Australia and New Zealand maintain separate and individual bilateral ties with Southeast Asian states, there is now a growing importance of, and movement towards, joint AustraliaNew Zealand links with Southeast Asia. Richardson elaborated on these broad regional links between Australia-New Zealand and Southeast Asia. He noted the increase in trade, investment, air travel, tourism and educational ties that have brought the regions closer. He described the new relations between the two regions being marked by the use of “soft power”. He further noted the perceptible similarities and affinities between the regions that have emerged over the last thirty years: the rise of multicultural societies in Australia and New Zealand which appear similar to the “multi-religious” and “multi-ethnic” societies of Southeast Asian states, the adoption of open economic and trading systems by Australia, New Zealand and several Southeast Asian states, and indeed the rise of

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representative government (in both parliamentary and presidential forms) and the operation of rule of law in Southeast Asian states. Thus, even though important political, cultural and economic differences exist between Australia-New Zealand and other Southeast Asian states, Richardson pointed out that the two regions are more alike now than they were thirty years ago. This “gradual convergence”, Richardson argued, provides for a firm platform on which the actors can now construct closer ties. However, there are challenges in doing so. Richardson went on to pose two questions: first, how can states build on current convergence and diminish divergences, and, second, how can the two sides reduce gaps in opportunity and income that sustains both poverty and extremism in parts of the region? He emphasized the seriousness of the latter by pointing out that such income and opportunity gaps create conflicting interests among Southeast Asian states, heighten protectionism and the fear of open markets, and thus have the cumulative effect of encumbering ASEAN economic integration. Richardson argued that there are several areas where Australia and New Zealand can “synchronize” their approaches to accrue significant advantage. These include: • •

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The ongoing negotiations to create a free trade area that links ASEAN and New Zealand-Australia. The improvement of aid, technical assistance and disaster relief coordination between countries of the two regions to prevent duplication and reduce wastage. Partnership in enhancing bio-security to safeguard against outbreaks and the transmission of diseases such as Bird Flu and HIV-AIDs among others.

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Closer cooperation in varied security concerns: counter terrorism efforts, arms/drugs/money/people smuggling, policing and law enforcement, among others. Constructive involvement of Australia and New Zealand in the ASEAN sponsored East Asia Summit (EAS).

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Gerald Christopher Philip Hensley

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3 TOWARDS A CLOSER PARTNERSHIP New Zealand and Southeast Asia Defence Links Gerald Christopher Philip Hensley Former Secretary of Defence, Wellington, and Former High Commissioner to Singapore

Mr Hensley began his presentation by stating that New Zealand’s security will remain very closely, indeed “inextricably” linked to the security of Southeast Asia. He pointed out that New Zealand’s first links with Southeast Asia were its defence ties and that it is from this that other ties binding the two actors have followed. While these defence ties are “half buried” now and have been overlaid by important ties of trade, investment and tourism, Hensley emphasized that all these ties are undergirded by a common interest in the security of the region. Hensley went on to explain how New Zealand came to realize the importance of Southeast Asia as a factor impacting its own security. He argued that a number of developments since the 1930s — the problematic dependence on the forces of the British Empire, the fall of Malaya and Singapore in 1942 and the rise of communist insurgencies thereafter — had brought about this realization. Further, the role that New Zealand played in dealing with such developments, particularly through its defence roles and investments have played a “modest part” in shaping the current security structure of the region.

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Hensley suggested that an important legacy of security initiatives in the past decades, and of New Zealand’s role in them, is the “Five Power Arrangements”, in particular the FPDA which continues to have a role in the contemporary context. He argued that the arrangement flourishes as a way of “building familiarity and interoperability” among the armies of the five member countries. This, he argued, has had its benefits in terms of maintaining professional skills and in supporting peacekeeping, such as in the case of East Timor where Singapore and New Zealand troops were grouped under the same command. Hensley pointed out that despite the absence of “external threats” the region could still be vulnerable to future risks, the most serious of them being terrorism. Hensley suggested that the rise and potency of terrorism in the region had much to do with its alliance with “two partners”: religion and globalization. Hensley also referred to long-term security risks to the region, in particular the emerging relationships between China, Japan and the United States. He stated that the “delicate relationship” between China and the United States, and how it will be managed in the future would be of critical importance to the security of the region. While emphasizing that history lends little substance to the proposition that China will be expansionist, Hensley argued that the Communist Party’s dependence on nationalism for political legitimacy makes the country vulnerable to the “powerful and unpredictable force” of nationalist politics. Apart from concerns over the way a rising great power will be managed, Hensley also expressed concern over the “American” and “Western” tendency for “missionary urges”, which, in the present context, is apparent through the advocacy of democracy and human rights. He argued that while these are “admirable aims”, they cannot be advanced by force or threat.

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The possibility of a Sino-American confrontation over the Taiwan Straits was described by Hensley as a plausible risk in the medium term. He pointed out that the “nightmare” for Southeast Asia and New Zealand would be to choose between the US and China. Even though the countries of the region are small, there is no reason for them to be “passive and anxious” onlookers as long as they are willing to work together. While it is not possible to individually deal with “great power collision”, Hensley said that the small states do possess the asset of sharing numerous crosscultural links with both powers. The understanding this imparts can be practically used by having appropriate institutions. He referred to the ASEAN Regional Forum (ARF), which — though a “toddler” — still needs to build its authority. He concluded by saying that by making good use of existing opportunities, the region will be best placed to manage emergent risks over which it has little or no direct control.

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4 NEW ZEALAND-ASEAN DEFENCE PERSPECTIVES An ASEAN Viewpoint Zakaria Haji Ahmad Executive Director Help University College, Malaysia

An ASEAN perspective on defence and security relations between New Zealand and ASEAN was presented by Dr Zakaria who elaborated on the character of strategic relations between the two actors and the form this relationship could take in the future. Dr Zakaria opened his analysis by pointing at the changed context of the post-Cold war period. While New Zealand has moved away from its dependence on U.S.-led alliances to espousing independent initiatives on its security, Southeast Asia has changed in substantial measure from being a theatre of inter-state tension and conflict to a region of growth seeking peaceful evolution in international politics. Dr Zakaria expressed this change by quoting Thomas Freidman’s theory, the “world is flat”. Dr Zakaria went on to describe the Southeast Asian perception of New Zealand in defence and strategic terms. Identifying it as a “small power with limited capacity and modest objectives” Dr Zakaria pointed out that New Zealand’s defence reach is limited with regard to Southeast Asia. However, New Zealand derives its strength from being perceived as a country that is “benign and

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non-threatening”, that possesses significant human resource capacity and which has a government that is committed to Southeast Asia. Despite its limitations in being a major defence actor, New Zealand has played a significant role through the Five Power Defence Arrangement (FPDA). Dr Zakaria stated here that ASEAN itself is a complex and diverse organization which can be understood in terms of three tiers: the original five members and Brunei, “Indochina” (Vietnam, Laos and Cambodia) and Myanmar. Among these states, New Zealand is particularly important for Singapore and Malaysia as all three are members of the FPDA. He went on to comment that the FPDA is still “intact and functional”, and that it has gone beyond its original objectives. Dr Zakaria noted that within the FPDA, New Zealand has been efficacious as a small power and its military ties with Malaysia and Singapore have been complemented by inter-state cooperation, training of military personnel and exercises. His opinion on the role of New Zealand in FPDA: it is important for military and political reasons. Having outlined the character of strategic relations between New Zealand and ASEAN, Dr Zakaria suggested that the highly successful partnership between Malaysia and Australia — in the form of the Malaysian Australian Joint Defense Program (MAJDP) — could be replicated by New Zealand with Malaysia, Singapore or Brunei. There are also other ways by which New Zealand could enhance its defence partnership with other ASEAN nations. In this regard, Dr Zakaria stressed the need for more cooperation between the armies of New Zealand and other ASEAN states; he went on to suggest that there could be officer exchanges, cooperation over training facilities and the

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exchange of information. He also referred to the vast expertise of the New Zealand army in peacekeeping operations that could be drawn under the umbrella of military cooperation. He emphasized that such initiatives for greater cooperation would have to come from both actors. Dr Zakaria also brought out the challenges faced by New Zealand and ASEAN by an increasing range of non-traditional security threats. In fact, the nature and rise of such non-traditional security issues only warranted greater cooperation between the two sides. Dr Zakaria concluded by stressing that New Zealand’s longterm engagement in Southeast Asia must be supported by efforts to propel the social and economic development of the region, as greater prosperity in Southeast Asia will only go towards ensuring a more secure environment for New Zealand. He added that there is scope for cooperation over a whole range of areas such as human resource training, commerce, and education, among others.

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Dryden Spring

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II NEW ZEALAND-ASEAN ECONOMIC RELATIONS Cooperation and Challenges

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5 TRADE AND INVESTMENT OVERVIEW A New Zealand Perspective Dryden Spring Chairman Asia New Zealand Foundation

Sir Dryden stated that his analysis was based largely on a review commissioned by the Asia New Zealand Foundation, written by Professor Anthony Smith, who was also present at the symposium. Professor Anthony Smith had stated, and correctly, according to Sir Dryden, that New Zealand’s “lack of capacity, small size and distance from Southeast Asia puts limitations on the types of relationships that it can realistically expect”. This helped to explain why New Zealand was perceived internationally as a team player respected for its neutrality, and for working multilaterally through international forums, Sir Dryden continued. He announced that about one-third of New Zealand’s trade was with Asia, and this included an intensifying courtship between Beijing and Wellington, as highlighted by the recent visit to New Zealand by Chinese Premier Wen Jiabao. China was now New Zealand’s fourth largest trading partner behind Japan. This relationship was worth US$3.4 billion per year. He noted that the two countries were presently working towards a preferential trade deal that was expected to increase New Zealand’s exports to China by between US$34 million and US$248 million annually.

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Imports from China should also increase by US$43 million to US$62 million annually. Furthermore, Sir Dryden said, there were almost 30,000 Chinese students enrolled in New Zealand at various levels. He added that Air New Zealand was in the process of starting direct flights to Shanghai, which was understandable given that 85,000 Chinese tourists visited New Zealand every year. This state of affairs, he stated, contrasted greatly with New Zealand’s relations with ASEAN as a whole. Despite having 500 million people with a combined GDP of US$737 billion, the region accounted for only 8 per cent of New Zealand’s exports. Imports from the region were just as low, and New Zealand’s FDI in the ASEAN region was minimal. Southeast Asia was a region that New Zealand could not afford to pass up, said Sir Dryden. While exports to China were expected to grow from 10 per cent of New Zealand’s total to 20 per cent within ten years, exports to Malaysia, Thailand, Singapore and Vietnam were projected to remain the same, or even decline. According to Sir Dryden, only the Philippines was expected to increase its imports from New Zealand substantially in the new future. Although New Zealand’s economy had been growing at an average of 3.4 per cent, Sir Dryden said that New Zealand was not faring well enough as a trading nation. The country’s current account balance had gone from a US$2.2 billion surplus in 2001 to a US$2.4 billion deficit by the end of 2005. He felt that New Zealand, being a small country, was vulnerable to the ups-anddowns of global financial markets. He thought that it was because of this, that New Zealand’s government was pursuing a range of preferential trade agreements with ASEAN countries.

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New Zealand had believed that the APEC grouping was an important forum for trade liberalization, he said, and had invested a lot of resources to help develop open regionalism and improve market access. However, he felt that the country was beginning to realize the limits of APEC, and was now striving to reach regional and bilateral trade deals instead. Sir Dryden said that New Zealand already had preferential trade deals with Singapore and Thailand, and was negotiating with Malaysia, and with ASEAN as a whole. He perceived ASEAN as a region situated between the two emerging superpowers, China and India, and New Zealand had to realize that it was a convenient and strategic area for investment and trade. Should the region move towards a single economic market, or a common currency, Sir Dryden was convinced that New Zealand would wish to be a stakeholder. Given historical ties with Commonwealth nations in the ASEAN region, it was important that New Zealand tried to avoid investing too heavily in the North Asian markets. He concluded that it made no sense to ignore or undervalue ASEAN trading partners, and therefore New Zealand needed to become a bigger contributor to the changing economic relatives in the region.

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6 TRADE AND INVESTMENT OVERVIEW An ASEAN Perspective Jose L. Tongzon Department of Economics National University of Singapore

Dr Jose L. Tongzon highlighted that his main objective was to look at the relationship between ASEAN and New Zealand from the economic perspective. He commenced his presentation by stating the trade relationship between New Zealand and ASEAN — there had been inconsistent growth in the trade relationship in the past ten years. The second part of his presentation dealt with this issue, the slow growth and obstacles to trade and investment between these two economies. ASEAN-New Zealand trade relations have seen an inconsistent growth pattern from 1993 to 2004. Trade relations were significant since 1993 but stalled in 1997, when the Asian financial crisis took place. It has been inconsistent in the post Asian crisis period. For instance, exports to New Zealand fell during the Asian financial crisis, and also in 2001 and 2004. In contrast, ASEAN imports from New Zealand have grown significantly in 2003 and 2004. Another notable point is that exports from New Zealand were significantly higher than ASEAN exports to New Zealand. The bilateral trade remains insignificant, accounting for only 1 per cent of total ASEAN imports and exports.

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Dr Tongzon explained that trade relations between the two countries were greatly affected by the following factors: firstly, the increase or change in commodity prices, especially from New Zealand; secondly, world demand had a impact on trade relations; and lastly, the appreciation of the New Zealand dollar. As the latter appreciates, there is an increase in trade between the two regions. Different products in ASEAN and New Zealand dominate the composition of trade between the two regions. The composition of New Zealand exports to ASEAN is dominated by dairy products, fruits, vegetables, meat and food products. There is potential for export between New Zealand and ASEAN as a population boom is expected in the ASEAN countries. Additionally, as more people are becoming health conscious and there is insufficient domestic supply to keep up with the increase in demand, there is certainly scope for New Zealand exports in ASEAN. On the other hand, ASEAN exports to New Zealand comprise of electronics, electrical goods, motor vehicles and natural resource processed products such as gold jewellery. The trade and investment links between New Zealand and ASEAN are quite insignificant as there is a high degree of complimentarity in the products traded. In the case of New Zealand, its agricultural products include meat, dairy, fish, fruits and vegetables, while primary products comprise of fuels/mining products, machinery and transport equipment. In the case of ASEAN, it exports electronics, palm oil, crude oil and natural gas. Within agriculture, there are similarities between the two economies. New Zealand specializes in temperate climate agricultural products while ASEAN specializes in tropical foods. The other area where there is a high degree of complimentarity is in the services sector, such as the financial, transport and travel

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services. Dr Jose Tongzon quantified this complementarity by using the export similarity indices. He used four services in the service sector; computer, communications and other services, insurance and financial services, transport services and travel services. Dr Tongzon concluded that the export similarity index is less than 50. The index ranges from zero to a hundred. The higher the indices (that is closer to one hundred), explains the more similar they are. Though both regions are exporters, both are highly dissimilar. At the same time, one has to bear in mind that New Zealand has become a more liberal economy for ASEAN exporters in the past two decades. Since 1999, it has unilaterally lowered tariffs and abolished restrictions. It is understandable for New Zealand to undertake these reforms as lower tariffs for New Zealand would equate to lower growth of agricultural exports. There has been a tremendous deregulation and reduction of trade barriers in New Zealand. Additionally, there has been a shift in emphasis from unilateral trade liberalization to reciprocal trade liberalization in 2000. However, there are still barriers that exist in certain sectors, namely, textiles, clothing, footwear, transport equipment and machinery, and automotive parts, which remain to this day, a highly protected sector in New Zealand. In the case of ASEAN, there are still some obstacles to trade. High tariffs, import licensing, tariff borders and technical barriers exist across most ASEAN countries. New Zealand on the other hand, has high tariffs for textiles, clothing and footwear, sanitary and phytosanitary (SPS) measures and compulsory levies for industrial research purposes. Dr Jose Tongzon provided a detailed account of investment barriers that exist both in ASEAN and New Zealand. There are four barriers to investment that exist in ASEAN. Firstly, the concern

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with political and social instability that exists in some of its member countries. Secondly, ASEAN is not an integrated market like the European Union as it has inconsistent rules and regulations. Thirdly, laws and regulations in ASEAN are also highly discriminatory against foreign firms. Tongzon cited two examples — in the area of services, cabotage laws still exist in Indonesia and Malaysia and one needs to possess a Filipino passport for professional practice. Fourthly, ASEAN lacks a coordinated set of investment policies, especially fiscal incentives, restrictions on entry of foreign personnel, regulations on exploitation of domestic natural resources and other sensitive sectors. He identified three investment barriers that exist in New Zealand. Firstly, a barrier that is beyond the control of New Zealand and ASEAN, is its physical distance. The geographical distance between Southeast Asia and New Zealand is quite considerable, thus it affects transport costs. The second barrier is the presence of a lengthy list of approval procedures for most sectors that are open to foreign direct investment. Thirdly and lastly, there are restrictions to total foreign equity ownership that apply to certain sectors — air, telecommunications and maritime services. For instance, in air services, foreign nationals are allowed to own up to 40 per cent of national airlines with up to 35 per cent ownership by foreign airlines and 25 per cent by individual airlines. In the area of telecommunications, foreign investment is limited to 49.9 per cent in the largest service provided, Telecom, and at least half of the company’s Board must be New Zealand nationals. Maritime services has its own restrictions as well — a foreign-owned vessel may be registered in New Zealand if it is leased under a bare charter (that is, the operator and crew are Kiwis) provided that consent is given by the owner and foreign registry.

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In his conclusion, Dr Jose Tongzon noted positively that there was scope and potential for trade and strengthening investment links between New Zealand and ASEAN, although the two economies are highly complimentary and trade barriers exist. In order to realize this potential, both economies need to address the remaining obstacles and challenges — in particular trade and investment barriers. There is enormous scope for investment cooperation –– in terms of joint ventures between the two regions in the areas of biomedical technology development, education and tourism. There is also investment scope in joint promotion and marketing. But he emphasized that investment barrier obstacles needed to be addressed in order to strengthen the links in trade and investment between New Zealand and ASEAN.

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7 RELATIONSHIP TRENDS IN NEW ZEALAND-ASEAN TOURISM Tim Hunter General Manager International Operations, Tourism New Zealand

Mr Tim Hunter spoke on the tourism relationships between New Zealand and the ASEAN countries. He noted that tourism was an outstanding vehicle to build cultural and economic understanding between both regions. Twenty years ago, many New Zealanders thoughts of travel to Southeast Asia as essentially a city experience in either Singapore or Bangkok, and that too was as a short stopover. Today, however, the perception is very different. Thirty-seven per cent of long haul travellers from New Zealand visit ASEAN countries. Annual growth in visits from New Zealand to ASEAN countries over the last ten years has increased 70 per cent. Furthermore, the speaker added that the tourism experience of New Zealanders in Asian countries, combined with healthy immigration from the region, had infused increasing Asian influences into the everyday life of New Zealanders. In addition, Mr Hunter noted that while no U.S. or European carriers flew to New Zealand, the country continues to be served by eight Asian carriers that contribute a massive 60 per cent share of the total long-haul capacity into New Zealand. Asian carriers have grown air capacity to New Zealand for three reasons:

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1.

New Zealand has seasonally balanced inbound and outbound tourism flows with multi-sector long-haul traffic feed in two directions. Demand for long-haul travel by New Zealanders has grown rapidly over the past four years as the NZ dollar has strengthened. New Zealand in-bound tourism consistently exceeded world average growth rates between 2000 and 2004. The growing demand for New Zealand as a tourism destination can be attributed to New Zealand’s reputation as a “peaceful” destination, the success of the “Lord of the Rings” trilogy, and Tourism New Zealand’s own very successful brand campaign “100 per cent Pure New Zealand”.

2.

3.

Separately, Southeast Asia has been the investment source for more than 30 per cent of New Zealand’s three and four-star hotel stock in the major cities and tourist destinations. Many of the major hotel brands operate from Southeast Asian owned hotels including Millennium Copthorne, Kingsgate, Bayview, Heritage & City Life, Carlton as well as individual properties such as Novotel Royal Lakeside Hotel in Rotorua. The future challenge in the hotel sector is to build more five-star hotel properties within key tourism destinations. Hunter informed the audience that tourism was a very important industry to New Zealand — providing one in ten jobs and earning the country about US$4b per year — making it the largest foreign exchange earner, slightly ahead of the dairy industry. New Zealand attracts 2.4 million visitors per year — an increase of 50 per cent since the commencement of the 100 per cent Pure New Zealand global campaign in 1999. Sixty per cent of

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the visitors are long-haul travellers who originate from further points than Australia and the Pacific Island area. The tourism strategy for ASEAN countries has essentially focused on attracting groups from a larger inbound market, which are Singapore, Malaysia and Thailand. Growth performance from these main markets in Southeast Asia has slowed down in the past 12 months attributable in part to the increase in short-haul holidays spurred by, Low Cost Airline competition and also to the increase in long-haul fares due to rising fuel prices. Nonetheless, longer-term predictions are that Asian markets will deliver the strongest growth over the next 10–20 years. To help support this trend, the marketing effort in Southeast Asia was focused in five areas: 1. 2. 3. 4. 5.

Providing strong information and training support to the travel industry in the region. A world-class website to motivate and inform potential travellers. Television advertising — currently mainly on Discovery and BBC. Hosting travel and lifestyle media in New Zealand. Running local promotions and events.

Mr Hunter opined that New Zealand’s landscape was by far the biggest drawcard to New Zealand, but noted that many visitors equated the beautiful landscape with a country that is relaxing, but not very exciting. The biggest challenge is to ensure that the marketing work does not underpin the scenic splendour of New Zealand but tells a more compelling story as to what visitors can do in New Zealand.

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A second challenge is to all those involved in tourism to deal with growth in a responsible way, one that does not damage communities or the environment. New Zealand is also learning to deal more formally with “flow control” in tourism by putting in place more rigorous tourism management plans in the few scenic areas that are coming under pressure. Increasingly, the focus in tourism management is not simply going to be on numbers and value growth but on visitor satisfaction. Generally, New Zealand is doing well but there are some areas for improvement. Visitors from Asian markets tend to do less forward planning than other markets, they do not participate as much, and do not come to New Zealand for a particularly long time. New Zealand was looking at how these perceptions can change, including studying the types of holidays that are purchased to increase visitor satisfaction in New Zealand. In conclusion, Mr Hunter argued that visitor satisfaction would be the true index of sustainability in tourism and it is going to be the measure that not only tests New Zealand’s international competitiveness, but also keeps the country true to the claim of offering a “100 per cent Pure New Zealand” experience.

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Rodolfo C. Severino

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8 ASEAN-NEW ZEALAND DIALOGUE Nature, Status, Characteristics and Future Possibilities Rodolfo C. Severino Visiting Senior Research Fellow ISEAS

Mr Rodolfo Severino’s presentation on New Zealand-ASEAN economic relations focused on a narrow dimension, specifically the relationship as an institution and process. New Zealand’s relationship with ASEAN started as early as 1975. She was ASEAN’s third dialogue partner, after the European Union and Australia. In 1977, New Zealand had a solo summit with ASEAN in Kuala Lumpur, Malaysia. Mr Severino commented that New Zealand today participates annually in the East Asia Summit (EAS). Describing New Zealand as a small country with a population smaller than Singapore, with a purchasing power parity (PPP) smaller than each of the original five ASEAN member countries. As such, New Zealand is a relatively small market for ASEAN products. Conversely, New Zealand’s exports to ASEAN are more than 7 per cent of New Zealand’s overall exports to the world. The five original members of ASEAN are among New Zealand’s top twenty countries receiving New Zealand’s exports. New Zealand is a major supplier of ASEAN’s dairy products, meat and wood products. On the reverse, New Zealand imports electronics,

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electrical appliances, other manufactured products including motor vehicles, fruits, vegetables, petroleum products and other resource-based products from ASEAN. Mr Severino stated that despite the small size of New Zealand’s market and economy, there were still 90,000 Kiwi visitors to ASEAN in 2001. The visitors from ASEAN to New Zealand amount to another telling figure — 252,000. Additionally, more than half of foreign students in New Zealand hail from ASEAN countries though this trend is changing with students from mainland China fast overtaking the ASEAN student population. Moving to New Zealand’s official development assistance (ODA) to ASEAN, Mr Severino applauded New Zealand’s efforts in the region. As a developed country, she has shared her experiences and advances and this has been the basis from which ASEAN initiated the dialogue relationship with New Zealand. At the third ASEAN-New Zealand Dialogue in 1977, both sides agreed on several projects relating to New Zealand’s strengths; animal husbandry, reforestation, pine forest development and a survey of the end uses of timber. Two dialogues later in 1981, the ODA relationship expanded to include energy matters such as geothermal power and several other useful aspects of energy. At the eighth dialogue in 1987, it was announced that New Zealand would devote NZ$12 million to ASEAN ODA over the five years. The following year in 1988, New Zealand decided to fund trade and investment promotion programme and linkages between professional, academic, commercial and scientific institutions. At the fifteenth dialogue in 2002, New Zealand instituted the costsharing system. This meant that certain ASEAN countries had to contribute towards the cooperation programmes as several ASEAN countries had already attained per capita incomes that were larger

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than New Zealand’s. New Zealand’s noteworthy contributions are many — it is the only country outside the ASEAN that has contributed to the ASEAN Science Fund and New Zealand initiated studies on non-tariff barriers to trade in seafood, forestry products, electronics and automobiles. New Zealand’s emphasis on the ODA to ASEAN, much like ASEAN’s other dialogue partners, has been to move away from assistance as a whole and has focused on assistance to the four newer members of ASEAN. The ODA has been channelled to the Mekong River Commission, Mekong Institute and bilateral programmes particularly with Cambodia, Laos and Vietnam. It also has supported several projects in the Initiative for ASEAN Integration (IAI) — ASEAN’s programme for helping newer members of ASEAN such as in the area of customs valuation and product standards. New Zealand’s economic relationship with ASEAN is underpinned with strong political and security ties that have developed over the years. Even before ASEAN’s founding, New Zealand had a security relationship with several Southeast Asian countries. It was part of SEATO, the Vietnam conflict and has taken part in the five power defense arrangement. As an ASEAN dialogue partner, New Zealand was a founding participant in the ASEAN Regional Forum (ARF) and has played a constructive role in the ARF, often serving as a bridge to narrow gaps in positions among ARF participants. ASEAN and New Zealand also take a similar stand on nuclear non-proliferation — both adopt the Southeast Asia nuclear weapons free zone treaty based on New Zealand’s well-known anti-nuclear policy. Although one has to note that ASEAN’s position on nuclear weapons is less vehement than New Zealand’s considering the treaty allows port calls of

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warships in ASEAN member countries on a “don’t ask, don’t tell” basis. Additionally, New Zealand has signed the Treaty of Amity and Cooperation (TAC) in Southeast Asia. Mr Severino felt that that the East Asia Summit has added another dimension to ASEAN-New Zealand relations. After 1977, it took several decades till November 2004 for Australia and New Zealand to have another summit which was called the “commemorative summit” with ASEAN and Australia. This summit resulted in a joint declaration, outlining the institutions, allowing both sides to forge closer cooperation and most importantly, negotiating free trade agreements between ASEAN, and resuming the Australia-New Zealand Closer Economic Relations Trade Agreement (CER). In his conclusion, Mr Severino summed up ASEAN-New Zealand relations as being free of problems, relaxed and practical. Though the overseas development assistance from New Zealand has not been as large as that of Japan, Australia or the European Union, it cannot be denied that it has been well targeted and derives from New Zealand’s strengths as well as ASEAN’s needs. New Zealand and ASEAN certainly can cooperate in the future — especially in the environment, energy sector, terrorism and transnational crime, and communicable diseases. Mr Severino highlighted that New Zealand is probably the only country in the world that exports wood products, with the acreage of planted trees that has simultaneously increased. Secondly, it is not very well known that New Zealand is the second largest producer of geothermal energy in the world after the United States. New Zealand has shared its geothermal technology with some ASEAN countries. There is heavy on-going cooperation in reducing terrorism and transnational crime as well as in the area of communicable diseases.

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III ASEAN INTEGRATION & TOWARDS AN EAST ASIAN COMMUNITY

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9 ASEAN INTEGRATION Rodolfo C. Severino Visiting Senior Research Fellow ISEAS

When the topic of ASEAN integration is being discussed, it is often assumed that ASEAN economic integration is being broached. According to Mr Severino, ASEAN economic integration has political and cultural elements. All elements are essential for regional integration to take place and to make ASEAN economic integration possible. There are two levels to ASEAN economic integration. The first level is integration within ASEAN itself. The second level is integration with its external partners. Each level has two stages; in the case of ASEAN, it progressed from economic cooperation to economic integration to form an ASEAN economic community. In the second level, the relationship between ASEAN and its external partners has evolved from a donor-recipient relationship to one where the economies are now more closely cooperating. In the Bangkok Declaration when ASEAN was founded in 1967, all references to economic cooperation were used to mask political objectives. Economic cooperation was only institutionalized and acquired its form before the ministerial meetings of the ASEAN Summit in February 1976. During that time, the main pillars of ASEAN economic integration consisted

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of preferential trading arrangements (PTA) and the intended establishment of large ASEAN industrial projects. The PTAs that were adopted were based on negotiated lists of products to which preferences (note that these were margins of preferences) were given. The industrial projects that were initiated and directed by the governments were also protected. These projects were not market driven. This protectionist direction that certain ASEAN member countries adopted resulted in the very slow pace that ASEAN economic integration took. Nevertheless, the positive outcome was that the processes established during the early periods of economic cooperation between the ASEAN states later paved the way for future successful communication. The twin trends of globalization and worldwide regionalization pressurized ASEAN to propose the ASEAN Free Trade Area (AFTA). This resulted in attracting investments from multinational corporations, economies of scale in the regional markets and lowering transaction costs. Additionally, ASEAN had more clout to negotiate in international economic forums. The ASEAN Free Trade Area propagated and established the Common Effective Preferential Treatment (CEPT) with tariffs ranging from 0–5 per cent, with sensitive and temporary exclusion lists. The annual legal enactments to lower tariffs in stages have been on schedule. AFTA’s primary aim is to reduce and eliminate tariffs on inter-ASEAN trade. The reduction of tariffs is insufficient to integrate a regional economy. Total or real integration can only occur once all tariff and non-tariff barriers have been eliminated; transportation and communication systems also need to be integrated within the region and customs administration needs to be effective. The products traded within ASEAN need to be harmonized in terms of their standards if there is to be real regional integration. Part of

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this process involves the conclusion of mutual recognition arrangements so that ASEAN products do not have to undergo multiple tests when they are being traded within ASEAN. Trade liberalization also has to include trade in services (which is now acquiring a greater proportion of intra ASEAN trade), and flow of capital and labour. On the one hand, it can be concluded that ASEAN economic integration is successful, as tariffs have been reduced. Additionally, the ASEAN industrial cooperation scheme has been set up where companies operating in two or more countries are allowed “conditional” duty-free trade. This means that the final product which has had its components assembled and manufactured in an ASEAN country will not be subject to import duties in the ASEAN country where the components originated from. This has benefited the automobile and electronics industries. ASEAN has implemented some changes to increase integration in the region: it has adopted criteria for defining non-tariff measures; products have been standardized; implementation guidelines for the application of WTO evaluation agreement have been issued; and certain customs administration procedures to facilitate passage of goods have been standardized. However, there are elements of ASEAN economic integration that have yet to take place. For example, it has yet to begin to dismantle non tariff barriers in a concerted manner; the lengthy process still exists of harmonizing product standards; mutual recognition arrangements have only been concluded in very few sectors; the liberalization of trade and services has been slow, transport agreements still suffer delays and the sensitive issue of movement of labour has not been officially addressed. In addition, there has been a lot of restriction on movement of capital due to the lack of coordination in economic policies. New challenges to

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ASEAN economic integration exists, such as the emergence of China and India, the entry of emerging economies in the European Union and problems caused by the Asian financial crisis. The abovementioned challenges have accelerated ASEAN regional integration to move to the next stage of economic integration — ASEAN Economic Community (AEC). The ASEAN Economic Community called for the accelerated implementation of integration measures pertaining to customs, rules of origin, non-tariff measures, product standards, trade in services, investments, intellectual property and mobility of capital. The two-plus-X principle was implemented where two or more ASEAN countries were allowed to proceed to implement the ASEAN agreements. This allowed other countries to join the agreement at a later date. Simultaneously, ASEAN economic integration moved to a different level — economic relations with its dialogue partners, such as Australia, New Zealand and Europe. The orientation of dialogue with these partners has changed from one of seeking development assistance to concern for market access for their manufactured exports, developmental assistance for poorer member countries of ASEAN and bilateral Free Trade Agreements. ASEAN has been working on economic integration — that is de facto market driven integration. The FTAs may be technically effective and commit countries to facilitate trade, technology transfer and investment. Politically, FTAs have the effect of strengthening relationships and economic ties. However, between ASEAN and its partners, there is one major obstacle to effective economic integration — namely, lack of mutual trust. Additionally, economic ties and political bonds need to be pursued in parallel of each other — they mutually reinforce each other.

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10 ASEAN’s CENTRALITY IN THE EAS Chin Kin Wah Deputy Director ISEAS

Dr Chin’s commenced his lecture by questioning ASEAN’s position in East Asia as there has been much mentioned about the centrality of ASEAN. He doubted that ASEAN has yet to self reflect and consequently make amendments to stay competitive with the rise of East Asia. Dr Chin started by recalling the background to the East Asia Summit (EAS). A combination of factors has shaped the EAS and it has been indeed a very long process. The 1970s and 1980s saw the Koreans and Japanese trying to underpin the economic connectivity of the wider Asia region. However, the Cold War brought its own set of problems and it was only after the 1990s that someone like Malaysia’s ex-premier, Dr Mahatir Mohammad, was able to openly and expansively discuss the East Asia grouping which was subsequently reincarnated into the East Asia Economic Caucus (EAEC). By 1992, despite some of the open reservations expressed by this type of community building, Singapore Senior Minister Goh Chok Tong, stated that the concept of the EAEC needed to be embraced. It was also suggested that among other things, there needed to be an East Asian response to other megaregional enterprises that were being conceived around the same

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time such as North Atlantic Free Trade Agreement (NAFTA) and the European Union (EU). In 1994, the Asia Europe Meeting (ASEM) enforced a concerted process where the Asian side (of ASEM) was driven to think more cooperatively and engage in the ASEM Dialogue. By 1997, the ASEAN plus three (APT) had begun to meet on annually. The other major watershed was the 1997/98 East Asian economic crisis that triggered earnest East Asian responses to address the negative spillover effects of the existing economic connectivity. From 1998 to 2001, a series of measures were discussed which eventually culminated in the idea of the East Asia Summit (EAS) meeting. The exit of Dr Mahatir Mohammad as Malaysia’s Prime Minister opened the doors for New Zealand and Australia (and India) to participate in the EAS. Dr Chin then proceeded to state the significances of the East Asia Summit held in 2005. The first significance of the Summit was a symbolic one where the concept of EAEC was fulfilled and had materialized into something concrete, that is, the EAS. More interestingly, a new dimension was introduced to multilateralism where Northeast Asia was bound to Southeast Asia. The second significance of the EAS was the reaffirmation of ASEAN’s centrality — the venue of EAS would be in Southeast Asia. Previously, there was speculation that the EAS venue would alternate between a non-Southeast Asian country and Southeast Asian country. Thirdly, a clearer distinction was beginning to emerge between the EAS and the ASEAN+3, which has not been supplanted and subsumed within the EAS. Fourthly, the inclusion of India, Australia and New Zealand membership clearly indicated that EAS supports and practices open regionalism. The fifth implication of the EAS reflected ASEAN’s positive attempt to engage a rising China and India within a multilateral cooperative setting — both opportunities

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and challenges these two countries pose. The sixth point that was addressed was the changing economic orientation of Australia and New Zealand towards East Asia. Finally, the participation of Australia and New Zealand certainly presented a different hue to the East Asia concept — their involvement presented the EAS as being open and broad minded — a positive image in the eyes of the United States. Elaborating on ASEAN’s centrality in the East Asian Summit, Dr Chin emphasized ASEAN’s presence in the EAS as “centrality” by default and its “centrality” by design. Delving deeper into ASEAN’s “centrality” by default, Dr Chin explained that the external powers (the “plus 3” members being China, Japan and Korea) find it convenient and expedient to ride on an ASEAN-centred engagement process. Elaborating further, these external member countries find it difficult to effectively engage each other given the structural difficulties in their relationship (for example, SinoJapanese and Korean-Japanese). The Malaysian Prime Minister, Abdullah Badawi, has stated that “ASEAN, is big enough collectively to exert important influence and yet small enough not to be seen as threatening by the others.” Dr Chin went on to add another implication of ASEAN’s “centrality” by design. It has allowed market-driven integration to take place in East Asia and this can be substantiated with the evidence of the numerous free trade agreements (FTA) involving East Asian countries that are being discussed. At the time the lecture was being delivered, Dr Chin stated that ninety-five FTAs were in the process of being discussed. An interesting point to note was the presence and involvement of ASEAN as an important building block for economic regionalization to take place. Citing ASEAN’s involvement in FTAs (for example, ASEAN-China, ASEAN-Japan and AFTA-CER), it can be deduced that ASEAN’s role is crucial.

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Discussing the second point on ASEAN’s “centrality”, that is, ASEAN’s “centrality” by design, Dr Chin felt that it is important to bear in mind that the EAS and the ASEAN Summit are usually held around the same time. This provides ASEAN an opportunity to shape the agenda of the EAS, noting that it is not in a position to dictate the EAS’ agenda. Dr Chin gave the example of the membership criteria of the EAS — which was set by the Foreign Ministers who had gathered for the 38th ASEAN Ministerial Meeting held on 11 April 2005 in Cebu, Philippines. He stated the three components of the membership criteria: full dialogue partner status, signing of the ASEAN Treaty of Amity and Cooperation (TAC) and substantial relations with ASEAN. The TAC embodies the guiding principles for good neighbourly conduct — reinforcement of sovereignty, equality and mutual respect. Dr Chin posed eight challenges that ASEAN needs to address and whether ASEAN will be able to sustain itself in the drivers seat: (1) does it have the leadership and capacity to take the leading role, (2) can ASEAN facilitate confidence building among the Northeast Asian members of the East Asia Summit and would Sino-Japanese relations prove to be a stumbling block, (3) how can ASEAN really “balance” China’s very purposeful expansion into Southeast Asia, (4) will ASEAN be able to effectively engage China and India to successfully address its own vexing problem of Myanmar — the current Secretary of General of ASEAN had suggested asking China and India to nudge Myanmar to open its economy and speed up its political reforms, (5) are there limits to regional openness; where are the boundaries of the new East Asia. It has been suggested that regionalism now be defined on a functional basis to clearly define the boundaries, (6) can the EAS underpin an East Asian identity especially since ASEAN has trouble grappling with identity creation within Southeast Asia,

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(7) how does one keep the United States engaged since it is most important to regional stability, and lastly (8) what is the new mechanism for the EAS since there is no mechanism to this date; whether it should be ASEAN plus “three”, ASEAN plus “one”, ASEAN plus “six” or a combination of all these. Dr Chin also stated positive changes the ASEAN could undertake to ensure that it stays “centred”: (1) ASEAN needs to engage itself in a comprehensive effort in community building — strengthening its economic, security and social-cultural framework, (2) ASEAN needs to hasten the regional integration process where it should progress from the ASEAN Free Trade Area (AFTA) to an ASEAN Economic Community (AEC), (3) it will have to narrow the intra-regional development gaps, (4) strengthen institutional capacity to coordinate, monitor and enforce, (5) have a rule based ASEAN which is the reason why the ASEAN Charter is being drawn up, and finally (6) ASEAN needs to change its structure; it has to shed its “top down” image if it intends to engage the non-governmental and business sector in community building.

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11 AN EAST ASIAN COMMUNITY A New Zealand Perspective Brian Lynch Chairman New Zealand Institute of International Affairs (NZIIA)

Mr Brian Lynch commenced his lecture by stating that he was not presenting an official and definitive New Zealand perspective on the East Asian Community. New Zealand’s relationship with Asia is undergoing change today like it did previously in the 1940s and 1970s. Mr Lynch posed the following questions; which direction is the relationship between the two countries headed and what would be the eventual consequence of the relationship. This is especially so when new regional lexicons are being carved out — “East Asia Summit”, “regional community” and “closer integration”. Mr Lynch stressed that New Zealand would be swept up in the event of a major reordering of Asia’s regional architecture. In the period following the end of World War II, New Zealand had to face the harsh reality of its physical location from Asia despite the fact that both regions shared the common history of being colonized. The contacts between the two regions were poor and the progressive development of the relationship has been a long and arduous one, which sometimes were stalled due to security considerations. New Zealand’s main objective with Asia is to have

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a stable relationship with all its Asian countries and also be looked upon as a good and reliable regional partner. Continuing to give his account of New Zealand’s relationship with Asia in the 1970s, he recounted that New Zealand had security alliances and was involved in sub-groupings such as ANZUS, SEATO and the Five Power Defence Arrangements. New Zealand’s relationship with Singapore has been a particularly strong one — especially since it maintained a defence presence here. It also helped ASEAN in its practices of consultation and cooperation in the aftermath of the “konfrontasi” with Indonesia and the situation in Vietnam. In 1975, although New Zealand was given the status of a “dialogue partner”, a domestic political shift stagnated its relationship with ASEAN. The 1997 financial crisis that hit the Asian economies showed that the Asian countries had integrated — primarily by their response and ability to pull themselves out of the financial quagmire despite countries individual differences. He mentioned three factors that drive the “Emerging New Zealand” process. Firstly, New Zealand has a modest accomplishment in global trade considering its small population. Second, New Zealand cannot and has not been complacent in the global arena especially due to its geographical location. The third factor that is contributing to an “Emerging New Zealand” is the changing composition of its society. New Zealand has become a multicultural society today. Brian Lynch went on to describe the new power centres that existed at present: China, India, Japan, the Republic of Korea and ASEAN. Each individual power centre possesses its individual economic and political strength. All the power centres share the common understanding that that there is a new game and nobody is very sure how the rules operate. He touched on the East Asia Summit as a form of the East Asian Community where the leaders

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of sixteen countries including New Zealand assembled for discussions and an exchange of ideas and views. He stressed that the EAS underscored the central role that ASEAN would continue to play in forming the new regional architecture. Mr Lynch felt that the “Asian Community” could be achieved through three steps: first, ASEAN members should maintain their commitment to the “Community” concept, otherwise it may just wither away. The second step through which the “Asian Community” could be built would be through the identification of certain key issues that could be worked upon — energy, human security, and transnational crime. The third and last step would be to sort out the existing regional structures: APEC, ARF, ASEAN+3 if the East Asian Community is not to suffer the same fate and become a simple regional lexicon. New Zealand, Mr Brian Lynch added, could not ignore the East Asia Summit. It is still able to contribute constructively as it did at the Kuala Lumpur Summit in order to ensure its survival.

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Cornelius P. F. Luhulima

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IV NEW ZEALAND AND SOUTHEAST ASIA Long-Term Prospects and Challenges

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12 THE EAST ASIA SUMMIT New Zealand’s Role in the Balancing Act Cornelius P.F. Luhulima Centre for Strategic and International Studies Indonesia

On 11 April 2005, the ASEAN foreign ministers gathered in Cebu, the Philippines, to discuss Indonesia’s proposal for an “inclusive” East Asia Summit. They agreed that the East Asia Summit be held in Malaysia in December 2005, and that other countries be invited in order not to replicate the ASEAN+3 summit. Three conditions for inviting other countries were formally agreed upon in the 28th ASEAN Ministers Meeting in Vientiane, Laos, in July 2005. The first was that any invited country should be a full ASEAN dialogue partner. Second, it should have substantive relations with ASEAN, including trade and economic relations. Third, it should be willing to accede to the ASEAN Treaty of Amity and Cooperation (TAC) in Southeast Asia. Indonesia indicated from the beginning that the proposed East Asia Summit be attended by three of ASEAN’s dialogue partners: India, Australia and New Zealand. New Zealand has had bilateral relations with Indonesia since 1974 and has since provided development assistance. At an ASEAN-New Zealand dialogue in Wellington in September 2004, Indonesia urged New Zealand to

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accede to TAC. New Zealand was asked to contribute to the security in the region, both in the context of ASEAN, as well as Asia as a whole. Furthermore, Indonesia argued, the spirit of TAC shared similarities with New Zealand’s foreign policy, that is, the peaceful resolution of inter-state conflicts in the region. Conversely, New Zealand’s foreign policy did indeed take a comprehensive view of security. It recognized the importance of economic, social and environmental factors, as well as the need for non-military intervention in finding lasting solutions to international and regional conflicts. As such, its policy emphasis on strengthening cooperation and seeking consensus overlapped with ASEAN’s thinking and practice in diplomacy. New Zealand’s participation would also allow it to be part of the evolving regional views on security, political and economic developments. Although New Zealand was a small country, its role in balancing peace and security in the Asia Pacific region was crucial, especially at a time when major powers were strategically positioning themselves in the region. Given these considerations, on 29 June 2005, the Foreign Minister of New Zealand conveyed New Zealand’s willingness to accede to TAC, and on 28 July 2005, ASEAN consented to its accession. New Zealand’s invitation to the East Asia Summit signifies increased participation in the region’s strategic development, allowing New Zealand to maintain its visibility in the shifting power dynamics in Northeast Asia and the political rivalry among China, Japan and India, irrespective of its size and location. Furthermore, New Zealand’s signing of TAC signals its affirmation of the principle of non-military intervention in regional conflicts. Australia’s later signing of TAC reduced the threat of a pre-emptive war, a significant move given the country’s alignment with the Bush Administration’s foreign policy.

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Gary R. Hawke

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13 TOWARDS A CLOSER PARTNERSHIP Long-Term Prospects and Challenges — New Zealand’s Perspectives Gary R. Hawke Head, School of Government Victoria University of Wellington

Professor Gary Hawke’s presentation on the long-term prospects and challenges between New Zealand and Southeast Asia encompassed a number of perspectives. As an economic historian, he commenced by providing an outline of economic relations between New Zealand and Southeast Asia. It essentially started as a small thin stream of exports and imports for ASEAN members and subsequently thickened into a tidal flow in the 1990s. In addition to the economic relationship, there was an aid and defence relationship. The economic relationship has evolved substantially and now involves trade, investment and policy dialogue. In the early 80s, New Zealand officials were always engaged in debate about the relative importance of the New Zealand-Southeast Asian relationship. Professor Hawke feels that this focus will shift towards (a) a bilateral relationship between New Zealand and individual ASEAN countries, (b) the relationship between New Zealand and ASEAN, and (c) the relationship between New Zealand and ASEAN and the wider East Asia region and the Asia Pacific region.

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The present-day New Zealand and Southeast Asia relationship features certain issues, including tariffs, rules of origin, government procurement services, investment and movement of natural persons. However, Professor Hawke pointed out that diplomats and businessmen involved in the New ZealandSoutheast Asia relationship must be wary of the application of the agreements to specific products and specific markets. He predicts that the current New Zealand-Southeast Asia relationship is going to change in the future due to two reasons: (i) the increasing role of services and (ii) the increasing importance placed on regional trade agreements (RTAs). To the latter point, Professor Hawke underlined Sir Dryden Spring’s statement “the importance of ensuring a compatibility of a RTA multilateral system. It is not going to be easy and is going to take a particular mechanism to ensure that we do get a progressive form of relationship in the future.” Professor Hawke wanted to draw attention to one aspect of the inter-relationship between the New Zealand/Singapore Closer Economic Partnership (CEP) and the agreement that has yet to come into being, the trans-Pacific Strategic Economic Partnership (SEP) between New Zealand, Chile, Singapore and Brunei. This illustrates the need to pay attention to ensuring the progressivity between successive agreements. The CEP and SEP will, in the case of New Zealand and Singapore, have an explicit agreement that any individual business will be able to choose between the provisions of either agreement. This ensures two things: firstly, that the more generous, favourable terms of integration will generally be chosen and secondly, the favourable terms of integration will not necessarily depend upon official intervention and more likely lie in the hands of individual businesses. It is through such events that there will be a progression towards liberalization.

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Professor Hawke predicted four areas in which the New Zealand-Southeast Asia relationship will develop in the future: (i)

The rise of China is going to be an extremely important component in the way the New Zealand-Southeast Asia relationship is going to develop. It is important to recognize that this is a medium-term prospect. With China growing at 8–9 per cent per capita, it is going to take sixty years to reach the point where the average per capita income in China will be about the same level as the per capita income of the wealthiest countries in the world at the time. When China’s average per capita income matches that of the wealthiest nations, one could say that the resources of China are genuinely integrated into the international economy. (ii) There are two factors under the “rise of China” phenomenon that one has to bear in mind when discussing the future of the relationship between New Zealand and Southeast Asia. Firstly, there will be plenty of tensions and anxieties within China. The integration of different levels of markets within China is proceeding in a very positive fashion. The anxieties, which are being expressed about regional tensions within China, are genuine and academic evidence states that integration is positively taking place and this points towards a greater degree of conviction in thinking of what is going to shape the context of the New Zealand Southeast Asia relationship. Secondly, the integration of China into the world system will force China to address its acceptances of international rules. It is important to draw a distinction between China’s acceptance of the rules as they exist at the beginning of the process and the notion that China has hereby accepted that it will also acquiesce in Western interpretations of those rules as they are applied to new

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circumstances in the future and as they apply to things which were not foreseen at the time of the accession. It is not a matter of China simply joining in an existing rule system, it is a matter of China accepting a starting point and participating in the evolution of the rules of the future. The most important kind of cooperation that can exist between New Zealand and Southeast Asia is to participate in the process in which China is able to participate in the formulation of rules for the international economy in the future. (iii) The rules of international engagement will need to relate to economic integration. The General Agreement on Tariffs and Trade (GATT) was concerned about tariffs but in the 1960s, had to re-focus to discuss non-tariff measures such as antidumping measures, develop ways to deal with services, intellectual property, dispute settlement, and agriculture. The agenda of economic integration has widened from tariffs. The issues which are taking most time in negotiation of regional trade agreements are not tariffs but are issues such as dispute settlements, the proximation of laws from one jurisdiction to another, the conditions under which countervailing duties can be exercised, the creation and maintenance of standards of various sorts for technical barriers to trade and all the issues around government procurement. (iv) The fourth and last point with regard to the future of the New Zealand and Southeast Asia relationship is the “East Asia” or “Asia Pacific” factor. There is going to be a greater degree of movement in East Asia and Asia Pacific for the next few years. The President of the Asian Development

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Bank, Mr Haruhiko Karuda is championing economic integration. His personal vision for economic integration is as follows: (a) Intensify the process of building cross-border infrastructure and the coordination of laws, rules, and regulations, not only within subregions but across Asia as a whole. (b) Coordinate regional efforts to combat the spread of communicable diseases (such as HIV/AIDS, SARS, and avian flu); promote environmental sustainability; manage natural disasters, such as tsunamis and earthquakes. (c) Enhance trade integration within Asia by ensuring that the growing number of regional trade agreements become building blocks rather than stumbling blocks to regional and global trade integration. (d) Strengthen the Chiang Mai Initiatives (CMI) by expanding it into a more solid regional financing facility and by making the ASEAN+3 economic surveillance mechanism effective, through the establishment of a professional secretariat charged with both the CMI and regional economic surveillance. (e) Make the Asian financial system more resilient through the sustained reform of the banking system and the development of local currency bond markets, thereby achieving a better balance between banks and capital markets. (f) Promote a regional exchange rate arrangement that is flexible towards the rest of the world but relatively stable within the region, perhaps leading to a monetary union over time.

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In his conclusion, Professor Hawke felt that the current circumstances needed to be dealt with but at the same time, one could not dismiss the future especially since there is good analysis available to understand what is happening at the moment. He ended describing the economic integration of the New Zealand and Southeast Asia relationship with a remark that John Maynard Keynes made in the 1920s, “more alarmed I become seeing you and others in authority attacking the problems of the changed post-war world with pre-war views and ideas”.

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14 SUMMARY OF NEW ZEALAND-ASEAN RELATIONS John Austin Executive Director Asia New Zealand Foundation

John Austin summed up a few important themes in his concluding session of the Southeast Asia-New Zealand Dialogue. He started off emphasizing East Asia’s economic growth as being unprecedented. It is changing the world and New Zealand needed to be on board in order not to face irrelevance. The second theme that Dr Austin put across was the changing nature of relationships that globalization has brought about. New Zealand and Southeast Asia share a history of common enemies and being part of the British Empire. However, this relationship is slowly being replaced by market dominance, economies of scale and strategic trade alliances with defence relationships still being close and in operation. New Zealand is perceived from the Asian perspective as being isolated and having a small economy based on agriculture, tourism and education. New Zealanders view themselves as being niche players, innovative, creative, working and leading hi-tech industries in such areas as film, designer foods, biomedical and information technology. They are reputed to be reliable partners, who come detached without any political baggage.

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Summarizing the day’s key points, Dr Austin said New Zealand was in transition towards becoming a more Asianoriented society. Although New Zealand and ASEAN offer highly complimentary products and services, New Zealand’s trade with ASEAN countries had nevertheless stalled and was relatively small compared to its overall trade flows with other regions of the world. This was surprising as ASEAN trade flows with New Zealand’s neighbour, Australia, occupy top positions. To rectify this problem, Sir Dryden Smith highlighted the importance of trade reform, free trade and the regional trade agreements. Dr Chin Kin Wah and Professor Gary Hawke held similar views. Professor Tongzon suggested that new forms of strategic corporate alliances that could be formed. The third session on ASEAN integration and towards an East Asian Community stressed the importance of the East Asia Summit in building a new regional architecture to help in trade. All this was designed to improve economic performance both in terms of physical and soft infrastructure, that is, trying to reduce the cost of business and improve the bargaining position of all the ASEAN countries and the partners in East Asia Summit. Dr Austin reiterated a point made by Professor Gary Hawke: that is, common agreements are required in financial markets in order to sustain positive growth. In response to a provocative question made by a member of the panel: “Does New Zealand need ASEAN or vice-versa?” Dr Austin responded that he believed that the two regions need each other. The first stage of Asia’s economic miracle was its exports to the rest of the world: growth, dynamism within the region, specialization of products and penetration into sophisticated international markets. That same dynamism now is driving internal integration of markets throughout Asia. There are

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impacts on New Zealand with the emergence of China and India. For instance, New Zealand is experiencing firsthand the hollowing out of its manufacturing sector as it faces the challenges of competition from Asia. New Zealand needs to find new ways to engage the world. Sir Dryden Smith pointed out that the trade deficit is close to US$7 billion and the balance of payments is 9 per cent of GDP. ASEAN economies remain niche players just like New Zealand. ASEAN economies in combination represent just 10 per cent of East Asia’s GDP. Dr Chin Kin Wah mentioned that there were important unanswered questions about the capacity of ASEAN to move forward on the ambitious agenda of regional integration. Continuing economic progress depends heavily on moving forward with the agenda. New Zealand can contribute positively to the progress based on its past experience and the CER. Dr John Austin’s concluding theme going forward towards a closer partnership between New Zealand and ASEAN was that there are enormous opportunities to strengthen New Zealand’s trade relationship with ASEAN. However, the burden is mainly on New Zealand to propel the relationship forward. New Zealand is fully engaged at the government level, through its close military alliances, Treaty of Amity and Cooperation and free trade agreements are being worked on. However, more scope existed for the business communities to be fully engaged. Both New Zealand and ASEAN economies have to produce “smart” products with the emphasis given to design, creativeness, innovation and the value captured in its intellectual property.

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V NEW ZEALAND-SINGAPORE RELATIONS: DEVELOPING STRONGER ECONOMIC TIES Trade, Investment and Services

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15 NEW ZEALAND-SINGAPORE RELATIONS Opening Address John Austin Executive Director Asia New Zealand Foundation

In his opening address on the New Zealand-Singapore relations session, Mr Austin shared his perceptions gathered from the prior two days of meetings in Singapore where they met with businessmen, officials, academics and New Zealand companies based in the country. He observed that Singaporeans were concerned with attaining world class standards in the areas of business, academia and even politics. This preoccupation was compounded by a fear of losing out to India and China. Hence, although Singaporeans valued historical relationships, they were more focussed on dealing with the present competition in the globalizing world. Singaporeans viewed New Zealand as a nice, green and clean agricultural country. However, due to its distance from Singapore, it was off the radar screen for most Singaporeans. Mr Austin lamented the lack of awareness of the deep military ties which existed between the two countries and was disappointed that New Zealand was seen as an extension of Australia. Despite the modest levels of bilateral trade and the

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increasing business links, only a few New Zealand companies were truly internationalizing their businesses in Singapore. He urged New Zealand companies to show Asians that it was not simply a scenic paradise, empty of people but a powerhouse of creativity, innovation and leading technology which is accessible to world.

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Tony Nowell

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16 LEARNING AND GROWING TOGETHER Business Opportunities for a Stronger Singapore-New Zealand Relationship Tony Nowell Managing Director Griffin’s Food Ltd

Mr Nowell examined the business and trading ties between Singapore and New Zealand and how the untapped potential could best be realized. Singapore was an important trading partner for New Zealand and ranked high on its list of ASEAN trading partners. However, total bilateral trade still only amounted to NZ$1.3 billion dollars, which was low by international standards. Considering Singapore’s immense strength as a regional launching pad, Mr Nowell believed that there was scope for improvement. Singapore is New Zealand’s largest source of imports from the ASEAN region but only the fifth largest destination for New Zealand exports with diary products forming the bulk of the trade. However, as an economy with a high per capita income, there should be greater interest in the wealth of innovative highquality products that New Zealand was capable of producing. Singapore exports had experienced healthy growth in the last few years. In particular petroleum, oil and fuel transmission apparatus saw a 100 per cent increase from 2003. Meanwhile, New Zealand exports to Singapore had languished.

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It was an indication that Singapore had utilized their strategic strengths in the trading relationship but New Zealand’s strategic strengths had not gone far. On the tourism front, New Zealand continued to be an attractive holiday destination for Singaporeans. But tourist numbers were disproportionately small in comparison to its population size. Mr Nowell argued that New Zealand had many unique features and was a much cheaper and nearer destination than the United States or Europe. He was also alarmed that few young Singaporeans were choosing to study in New Zealand and vice versa.

Potential Areas for Improvement New Zealand companies must leverage off their strengths as a primarily pastoral, agricultural nation especially when clean, safe food is presently of utmost concern. Isolation had also bred inventiveness particularly in its agricultural, biotechnology and food processing industries. In the areas of creative IT solutions and a number of expert service capabilities especially in engineering, New Zealand companies have proven to be winners. These were the areas where Singapore companies can leverage off New Zealand’s strengths and work together to maximize opportunities for a larger target market. Mr Nowell viewed Singapore as a friendly business ‘beachhead’ for New Zealand companies. He proposed the formation of third market development ventures between the two countries so as to collaborate and not compete in acquiring innovative quality products and solutions to compete with the rest of developing world. Singapore could become a gateway to Asia for New Zealand and in turn Asia’s gateway to New Zealand.

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17 DEVELOPING STRONGER ECONOMIC TIES Trade, Investment and Services Winston Ho International Enterprise Singapore (IE Singapore)

Aravind Vasu CEO MatrixView

Winston Ho, International Enterprise Singapore (IE Singapore) Mr Ho began by stressing two points. Firstly, New Zealand was an interesting market which Singaporean companies should explore instead of focusing on the traditional markets. Secondly, New Zealand companies should also view Singapore as an Asian base for development. The years from 1993 to 2003 were a decade of regionalization for Singapore as the government encouraged local companies to move beyond the domestic market. Singapore invested heavily in flagship projects such as the Wuxi and Suzhou industrial parks in China, the Bangalore IT Park in India and other regional industrial parks.

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Projections for Singapore’s trade with the world indicate a twofold increase up to 2015. Foreign direct investment likewise is set to increase twofold in that period. Asia is currently the fastest growing region in the world with East Asia heading the pack followed by Southeast Asia. Thus Singapore and New Zealand companies should look to collaborate in order to invest in Asia. Mr Ho identified a few key sectors where Singapore-New Zealand collaboration would be beneficial: 1) ICT The ICT sector was an area where firms from New Zealand and Singapore could embark on joint collaborations or partnerships. The Singapore government agency A*STAR has launched initiatives to allow Singapore-based Infocom local enterprises to enhance their position by working with global players like Motorola to form R&D centres in Singapore. 2) Media The media industry was another promising sector where collaborations could take place. New Zealand and Singapore recently signed a co-production agreement for screen productions. This enables companies from both countries to share resources and expand the distribution network for quality exportable content. 3) Biotechnology Both Singapore and New Zealand have invested heavily in local companies to help them start new projects and to commercialize new technologies for the international market. IE Singapore has an I-Partner scheme which brings together locally-based companies to hunt for projects overseas. The

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advantages of banding together include combined customer bases, co-selling of true channels, more complete product offerings, operating synergies, branding, risk sharing and generally greater resources to pursue projects together. Aravind Vasu, CEO, MatrixView One company which benefited from IE Singapore’s matchmaking programmes with New Zealand industries was MatrixView, a core technology company. They participated in an IE Singapore trade mission for ICTs to New Zealand in February 2006, which resulted in them signing a Memorandum of Understanding (MOU) with a local partner. MatrixView is a Singapore business using Indian technology, listed in Australia creating solutions for the North American market. It developed a new technology which enhances the movement and compression of data, hence reducing the hardware and bandwidth required for data transmission. This technology is used in healthcare, in the field of telemedicine and document management. Mr Vasu discovered a vibrant information and communication technology industry in New Zealand. It comprised a large number of boutique companies developing applications for mobile telephony, healthcare, film, document management and Internet games. MatrixView benefited from New Zealand companies’ expertise in creating sophisticated graphic and user interface targeted for Western audiences. This was particularly important for MatrixView as it faced difficulties in translating its technology, which is developed in India, into viable commercial applications for a Western market. On the downside, Mr Vasu observed that New Zealand companies had limited access to capital and lacked an

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understanding of and interest in global markets. This was where, he believed, Singapore companies could come in. The Singapore Government has demarcated the information and communication technology sectors as a top priority. Large amounts of funding have been made available for such R&D in these areas. Singapore’s cultural and linguistic linkages to India, China and even Vietnam make it a suitable bridge for New Zealand to Asian markets.

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18 A HOTELIER’S PERSPECTIVE Tsang Jat Meng Former Chairman (2001–05) CEO of Millennium & Copthorne New Zealand

Mr Tsang provided a Singapore hotelier’s perspective on running a chain of hotels in New Zealand. He was appointed managing director of Millennium & Copthorne New Zealand, CDL Investments New Zealand and Kingsgate International in July 2001. He was also instrumental in Singapore property giant CDL or City Development’s foray into New Zealand in the early 1990s. Under his tenure Millennium & Copthorne profits rose from $1.5 million in 2000 to $23 million in 2005. CDL acquired its first chain of Quality Hotels in 1992 followed by the Kingsgate hotel chain in 1994. Subsequently CDL Hotels adopted the name of the parent company Millennium & Copthorne Hotels which is listed in London. Millennium and Copthorne New Zealand Limited is also listed on the New Zealand Stock Exchange. Presently, they are the largest owner-operator of hotels in New Zealand with a portfolio of thirty hotels, which are owned, leased, franchised and/or managed, with around 4,000 rooms in fifteen locations across Australasia. The company also has extensive land and property development interests in both New Zealand and Australia under its subsidiaries CDL Investments New Zealand Ltd and Kingsgate International Corporation Ltd.

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Mr Tsang pointed out that when CDL had plans for expansion in Australasia, the New Zealand market was favourably viewed as a great tourist destination with a hospitality sector which was less saturated than Australia’s. They were also attracted by its transparent laws and ease of communication being a fellow commonwealth country. On the downside, New Zealand’s population of four million made it have a small domestic market. Nevertheless, the group got around the problem by focusing on foreign tourists and promoting holidays within New Zealand to great success. There was also a lack of a skilled and motivated workforce. The unions had initially prevented hotel staff from taking on more than one role. However in a small hotel, staff often had to multitask. Fortunately following negotiations, the unions relented and rules were relaxed. CDL also faced geographical obstacles in New Zealand such as long distances which created problems for communication. The lack of infrastructure in towns also increased difficulties in housing and recruiting staff. Legislation was sometimes not favourably inclined towards hoteliers. In conclusion, Mr Tsang felt that New Zealand would remain a safe haven for investments. Particularly after the September 11 attacks, investments have poured in from the United States into the local property market. He also noted New Zealand’s inventiveness and strengths in the areas of bioscience and ICT. But in order to succeed, the country needed to boost competitiveness and commit to greater integration with world standards and networks.

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19 INTELLECTUAL PROPERTY EXPLOITATION Antony Paul Bishop Managing Partner iGlobe Treasury

iGlobe Treasury was another example of a successful joint venture between Singapore and New Zealand companies. Mr Bishop introduced iGlobe Treasury as an early stage venture capital fund that helps young New Zealand companies grow. It was a partnership between Singapore based iGlobe Partners and New Zealand Treasury Merchant Finance. The Fund was also backed by the governments of Singapore and New Zealand. It served to exploit international property by using Singapore-New Zealand partnerships established by cross border venture capital funds. Small-scale companies in New Zealand required considerable nurturing in the expansion stage. They also needed to be outwardly focussed, as desired growth could not be achieved within the domestic market alone. iGlobe Treasury assists companies by creating unique intellectual property (IP) for them in order to optimize their growth potential. This unique IP involves developing a suitable structure for international business, building an international management team, charting business plans and finding partnerships.

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iGlobe Treasury Fund’s objectives hence were to serve New Zealand early stage technology companies to partner with Singapore commercialization skills and networks in order to internationalize their technology. Since its launch in June 2003, the Fund has 6 investee companies.

Benefits of Partnership Partnerships can reduce downside risks and increase the potential upside to the investor. Mr Bishop highlighted the benefits of Venture Capital (VC) partnership: 1) 2)

3)

4)

5)

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Cross border co-investment increases international trade; Leveraging IP technology through partnerships can lower risk and increase investor returns. As more returns are experienced by investors, it will attract more capital; Early stage co-investment linkages provide a stronger basis for partnership than general cooperation arrangements because fund mangers and investors have more financial incentives to maximize returns. Hence they actively assist in partnership cooperation; Cross-border VC funds provides a valuable conduit for formal cross-border linkages as the VC manager is a dedicated, focused third party, mandated and rewarded for maximizing returns; and IP is a key asset which can be exploited for all parties and leads to longer and stronger long-term partnership. It also generates greater cross-border economic gain.

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VI CREATIVITY AND CONNECTIVITY Maximizing Opportunities

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20 BECA A Case Study in Creativity and Connectivity for Sustainable Business Growth Paul White Managing Director Beca Asia Holdings, Singapore

Mr Paul White drew from the experience of Beca Asia to demonstrate the creative ways by which companies in Southeast Asia and New Zealand can successfully synergize their operations in both regions. Mr White started his presentation by outlining the work of Beca in Asia. Beca is one of New Zealand’s largest privately owned engineering service providers. Catering mainly to the hubs of Singapore, Australia and New Zealand, Beca offers services in engineering, planning, project management and valuations to clients on a global scale. Mr White elaborated on Beca’s early growth in Southeast Asia, which started from the late 1970s. The company established a local presence in areas with the promise of suitable engineering work and recruited local staff to support its senior New Zealand personnel. He said that the “Kiwi desire” to give their business partners a “fair go” complemented the Singaporean partners desire for a long-term “family relationship” and this helped both sides

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forge a relationship with common values. Local leaders — who rose to be directors in local entities — were encouraged to take up shareholding in the company and this, Mr White pointed out, was “critical” to the growth of Beca in Singapore, Indonesia, Brunei, Malaysia and Papua New Guinea. Mr White went on to describe the three main “synergies” that mark the company’s Singapore-New Zealand business initiatives: 1)

2)

3)

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The eschewal of patch protection: White emphasized that Beca “cannot afford to be territorial” and thus patch protection had to be avoided fully. Expertise from different offices would be continually required to make what is essentially a “one Beca” product. He said that this was fundamental to Beca’s success especially in times when resources are stretched. Further, this provides a basis for technology and management skill transfer. Promoting inter-operability: White pointed out that the open sharing of systems and best practices was critical to both standardization and the avoidance of reinventing the wheel. The ISO 9001 quality system in Singapore for instance was an adaptation of the New Zealand system. Similar such interoperability has been employed in risk mitigation procedures, among others. Resource sharing: This has been possible because of Beca’s decentralized administration. From the late 1990s increased connectivity became routine and different Beca offices began to share their IT systems. Beca also began the global delivery of its services by sharing its workload across the Beca region. For more competitive pricing of services Beca has taken advantage of outsourcing. However, White clarified that Beca

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prefers “remote resourcing” whereby the company uses its own resources in countries remote to the projects. White also emphasized the role of the Beca shareholding scheme in attracting talent and in maintaining high standards. Making employees stakeholders in the profit share of the parent company has been critical to the “one-Beca” concept. Further, White stressed the importance of the right business environment that Singapore has provided to companies like Beca. He added that the Economic Development Board (EDB), the Building and Construction Authority and Spring Singapore offer grants for businesses in strategic business planning, people developer standards, utilization of the Singapore Quality Class framework for a comprehensive approach to business planning and management. He went on to say that Beca is “privileged” to interact and network with the above-mentioned Singaporean entities and that the collective efforts of the “Singapore Inc” has been great for the company. White concluded that strong long-term relationships, mutual respect, teamwork and innovation are the common values that are integral and constant to Beca operations in Singapore and New Zealand.

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21 CLOSER PARTNERSHIP AND COLLABORATIVE APPROACHES Donald Christie Director Catalyst IT, New Zealand

This presentation sought to provide a comprehensive review of the economic, demographic and technological developments in New Zealand with the object of exploring the benefits that Singaporean businesses can accrue from collaboration with New Zealand. Mr Donald Christie attempted to demonstrate how a dynamic population and, small but liberal economy with a favourable geo-political situation can help create a collaborative and innovative culture such as the one in New Zealand. Mr Christie started the presentation by narrating a remark by the ASEAN Secretary-General Ong Keng Yong in New Zealand. Mr Ong had cautioned New Zealanders that it would be a mistake on their part to think that they could realize major economic growth in the future by relying on dairy and milk products. Christie regarded this as “blunt feedback” that should be taken seriously to avoid complacency. It was with this concern that Christie launched into his primary concern: What can New Zealand offer to its prospective partners in Asia? To flesh this out Christie elaborated on the emergent trends in New Zealand, starting with demography, which he claimed reveals new dynamic trends. These trends include the fast growth

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rate among Asian, Pacific and Maori groups which has had the effect of making the country more multicultural and dynamic. He alluded to the dynamism of immigrant groups and how this is a factor in the case of New Zealand with nearly 20 per cent of its population being first generation New Zealanders. Christie also mentioned the role of nearly one million New Zealand passport holders who live overseas who tend to return home with their vast supply of ideas, experience and contacts that contributes to businesses in the country. Christie described the economic environment in New Zealand, which he argued provided for a suitable business environment. He pointed out that the country has a strong economy and a developed education, health and legal system. All this, together with a sound governance structure, gives the country a good standing on the list of OECD countries. Further, the New Zealand economy has a free market with low external tariffs and little government intervention. There have also been important changes in the society and economy of the country in the last twenty-five years. In pure GDP terms (New Zealand has a GDP of $24,100) the changes may not match up to the success of the Asian Tigers yet the increase in world wealth and equalling out of per capita GDP represent the potentialities of a bigger market which New Zealand businesses can exploit. Christie emphasized the technological environment of New Zealand and pointed out that the penetration of technology has been “high and fast”. This is seen in the widespread adoption of electronic points of sales, fast penetration rates for Internet and the early use of mobile phones. Christie further highlighted the fact that New Zealanders expect services that are comparable to OECD standards in their quality and access, and this expectation has propelled many software designers in the country to deliver high quality services. He also pointed out that New Zealand has

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aimed to develop “appropriate technology”. While the country has access to the latest technological advances it is challenged by its small population base and hence the smaller economies of scale. The solution to this, Christie revealed, has been to “blend international providers” solutions with those of local developers, an approach by which New Zealand corporates use IT in an appropriate manner bearing in mind the size of the target audience. Also, New Zealand service providers posses a broad range of capabilities. Christie went on to discuss the challenges that geography and size throw up for a country like New Zealand. The first and perhaps obvious such challenge is in terms of scale. With a population of just over four million, businesses in the country are much smaller and face the challenge of “scaling up” to meet requirements of overseas markets. Such an effort requires high cost inputs and investments and these carry their attendant risks. Second, the cost of developing overseas markets has been a particular challenge for the country since the island country is far away from the large markets of Asia, Europe and America. Thus, it is hard to start up and sustain an overseas satellite using the cash reserves of the country given the low profit margins of the New Zealand market. Third, New Zealand is for the most part viewed as a primary goods producer. While not inaccurate, this perception fails to recognize the dynamic state of IT in the country. Christie also admitted the inexperience of New Zealand IT firms in dealing with overseas business environments. While the government in New Zealand has helped firms in dealing with these problems, Christie argued that ultimately “constant innovation and collaboration” is the way to meet these challenges.

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Christie elaborated on this last point in greater detail. He first spelled out the distinction between innovation and invention, pointing out that the invention refers to the “clever application and combination of ideas in ways that were not originally conceived by those from whom the ideas originated”. He went on to stress that New Zealand firms place much importance to being innovative by adding value at a local level to be more competitive and relevant in local and overseas markets. In fact, he argued that for New Zealanders innovation is not a choice but a necessity. Speaking on the second component of this approach — collaboration — Christie pointed out that New Zealand is not a large country that can seek to achieve its national goals without the need for partners and international consensus. Thus a small country like New Zealand has little choice but to seek partners that value its dynamics and innovation. Christie argued that collaboration is a “national imperative” and will bring to the country more capability, information, tools and relationships. He fleshed out two examples where such collaboration has worked for his IT firm “Catalyst”. These include the ENUM-convergent technology case where ENUM refers to a proposed extension of Internet protocols that allows convergence of “old style” telephony and the Internet to take place in a “seamless manner”. Other cases include a number of collaborative e-Learning projects such as an education portal called “eduforge” and a learning management system called “Moodle”. Christie concluded by saying that the search for new partners and new innovations is not only a matter of survival but is also a matter of building prosperity and ensuring relevance in the global context.

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22 EXPLORING NEW FRONTIERS Wong Peng Wai Director Asia-Pacific Operations Singapore Economic Development Board (EDB)

Representing the Singapore Economic Development Board (EDB), Mr Wong spoke of the possibilities that Singapore could offer to New Zealand companies and which could maximize opportunities between the two economies. Mr Wong started the presentation by introducing the EDB. He pointed out that it is the “lead government agency” involved in planning and in implementing strategies that will sustain Singapore’s environment as a “compelling business and investment hub”. He pointed out that the EDB fosters sustainable growth by promoting industry clusters and entrepreneurship, attracting foreign investments and by enhancing the general business environment. In particular, Wong stressed Singapore’s role as a vibrant business hub. He argued that Singapore is a “springboard” to Asia with nearly 7,000 multinational companies (MNC’s) choosing to operate from here. There are a number of features that make Singapore attractive, especially its predominantly English-speaking workforce, high literacy (98 per cent), open immigration policy (a quarter of the total population is comprised of non-Singaporeans),

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its reliability as the most protective intellectual property regime in Asia, excellent physical connectivity to other parts of the world (in terms of sea, air and Internet connectivity) and its highly probusiness environment. Focusing on the current state of New Zealand companies in Singapore, Wong said that their participation has rapidly increased. In fact the number of such companies has doubled since 2002 and currently stands at 202, including major firms like Fonterra, Beca, Baycorp, Fisher & Paykel, among others. He pointed at the Singapore-New Zealand Joint Fund that has come to serve as a launch pad for New Zealand companies, and of the New Zealand Technology Centre (NZTC) that will serve as a “beachhead for New Zealand companies to commercialize their technologies and launch their businesses globally”. With regard to prospects for cooperation between New Zealand and Singapore firms, Wong said that Singapore is emerging as a digital media capital “where Singapore creations are made for global consumption”. He highlighted the many digital media companies that have set up bases here. These include Lucasfilms, Koei, Electronic Arts, Southern Star and Digipen. He further added that Singapore is emerging as a “global node in alternative energy” and pointed at alternative energy companies like Vestas, Asia Carbon Group, Cremer Gruppe, among others. Wong also emphasized the forums that exist to enable companies to network with each other in Singapore. In particular, he referred to the Global Entrepolis (where deals worth nearly $900m were inked in 2005) and various other business-networking evenings. He concluded that Singapore has much to offer to New Zealand companies in terms of providing a strong regional headquarter, value manufacturing, investment management, and Research and Development (R&D).

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CONFERENCE PROGRAMME

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SOUTHEAST ASIA-NEW ZEALAND DIALOGUE Towards a Closer Partnership 26–27 April 2006 Grand Copthorne Waterfront Hotel

WEDNESDAY, 26 APRIL 2006 8.30 am – 9.00 am

Registration

9.00 am – 9.15 am

Performance by Kahurangi Maori Performance Group

9.15 am – 9.45 am

Welcoming remarks Mr K. Kesavapany, Director, ISEAS Keynote Speech Hon Jim Sutton, Minister of State & Associate Minister for Trade Negotiations, New Zealand

9.45 am – 10.00 am

Coffee Break

10.00 am – 11.15 am

Session 1 Chair: Mr Brian Lynch, Chairman, New Zealand Institute of International Affairs (NZIIA) New Zealand-ASEAN Political and Security Relations: An Overview

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i)

Political Perspectives: New Zealand’s Viewpoints Dr Anthony L. Smith, former Associate Research Professor, AsiaPacific Centre for Security Studies

ii)

Political Perspectives — ASEAN Mr Michael Richardson, Visiting Senior Research Fellow, ISEAS

iii) Defence Perspectives — New Zealand Mr Gerald Christopher Philip Hensley, former Secretary of Defence, Wellington, and former High Commissioner to Singapore iv) Defence Perspectives — ASEAN Professor Dato’ Dr Zakaria Haji Ahmad, Executive Director, Help University College, Malaysia Q&A 11.15 am – 12.30 pm

Session 2 Chair: Professor Saw Swee Hock, Professorial Fellow, ISEAS New Zealand-ASEAN Economic Relations: Cooperation and Challenges i)

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Trade and Investment Overview — New Zealand

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Sir Dryden Spring, Chairman, Asia New Zealand Foundation ii)

Trade and Investment Overview — ASEAN Associate Professor Jose Tongzon, Department of Economics, National University of Singapore

iii) Mr Tim Hunter, General Manager — International Operations, Tourism New Zealand iv) ASEAN-New Zealand Dialogue — Nature, Status, Characteristics and Future Possibilities Mr Rodolfo C. Severino, Visiting Senior Research Fellow, ISEAS Q&A 12.30 pm – 1.45 pm

Lunch

1.45 pm – 3.00 pm

Session 3 Chair: Mr Gerald Christopher Philip Hensley, former Secretary of Defence, Wellington, and former High Commissioner to Singapore ASEAN Integration and towards an East Asian Community i)

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ASEAN Integration Mr Rodolfo C. Severino, Visiting Senior Research Fellow, ISEAS

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iii) Towards an East Asian Community Dr Chin Kin Wah, Deputy Director, ISEAS iii) An East Asian Community: New Zealand’s Perspective Mr Brian Lynch, Chairman, New Zealand Institute of International Affairs (NZIIA) Q&A 3.00 pm – 3.30 pm

Coffee Break

3.30 pm – 4.30 pm

Session 4 Chair: Mr Jørgen Ørstrøm Møller, Visiting Senior Research Fellow, ISEAS New Zealand and Southeast Asia: Long-Term Prospects and Challenges i)

An ASEAN Perspective Professor Cornelius P.F. Luhulima, CSIS, Indonesia

ii)

New Zealand’s Perspective Professor Gary R. Hawke, Head, School of Government, Victoria University of Wellington

Q&A 4.30 pm – 5.00 pm

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Concluding Session Mr John Austin, Executive Director, Asia New Zealand Foundation

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THURSDAY, 27 APRIL 2006 New Zealand-Singapore Relations 9.00 am – 9.15 am

Registration

9.15 am–– 9.30 am

Welcome remarks Mr John Austin, Executive Director, Asia New Zealand Foundation

9.30 am – 10.45 am

Developing Stronger Economic Ties: Trade, Investment & Services Chair: Mr Tan Keng Jin, Head, Public Affairs, ISEAS i)

Mr Tony Nowell, Managing Director, Griffin’s Foods Ltd

ii) Mr Winston Ho, International Enterprise Singapore and Mr Aravind Vasu, Senior Vice President, MatrixView Ltd iii) Mr Tsang Jat Meng, former Managing Director, Millennium & Copthorne Hotels New Zealand iv) Mr Antony Paul Bishop, Managing Partner, iGlobe Treasury Management Q&A 10.45 am – 11.15 am

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Coffee Break

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11.15 am – 12.30 pm

Creativity and Connectivity: Maximizing Opportunities Chair: Sir Dryden Spring, Chairman, Asia New Zealand Foundation i)

ii)

12.30 pm – 12.45 pm

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Case Studies of Successful New Zealand-Singapore Cooperation a)

Mr Paul White, Managing Director, Beca Asia Holdings, Singapore

b)

Mr Donald Christie, Director, Catalyst IT Limited, New Zealand

Exploring New Frontiers Mr Wong Peng Wai, Director, Asia Pacific Operations, Singapore Economic Development Board

Concluding remarks Mr K. Kesavapany, Director, ISEAS

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