Pacific Money

Australia’s Realist Malaysian Policy

FM Carr says Australia’s policy towards Malaysia will be guided by economic interests regardless of allegations of voter fraud.

Australia’s Foreign Minister Bob Carr has defended putting economics first in ties with Malaysia, saying it was “improper” to intervene over alleged election irregularities.

Speaking Tuesday to the Australia Malaysia Business Council (AMBC) Qld in Brisbane, the Labor senator said the Australian government would not respond to claims by independent Senator Nick Xenophon of “massive cheating.”

“We’re not in a position to do as Senator Xenophon has asked us to do, and be a court of disputed returns. We have no way of telling whether the ink on a voter’s fingers washed off easily, or whether the regulations around political parties are sound – it’s up to the Malaysian people,” Carr said.

“We’ve got to have robust relations with Malaysia so there’s no impediment to doing business, so Malaysians feel happy about coming here and investing in Australia…I think the foreign policy position of Malaysia, recognizing ASEAN’s centrality, dealing with China and being friendly with Australia, will stay.”

On Sunday, Malaysia’s ruling coalition won the nation’s 13th general election to extend its 56-year reign, despite securing only 49 percent of the vote. Malaysian opposition leader Anwar Ibrahim described the result as the “worst electoral fraud in our history”.

Carr invoked Australia’s 1975 political crisis in defending his approach toward Malaysia, despite criticism that the stance contrasted with Australia’s pro-democracy policy in Fiji, Myanmar and elsewhere in the region.

“We went through a constitutional crisis in 1975, and there wasn’t a country in the world, not even a Cuba or Vietnam, countries on the left of the spectrum, who dared to express a view on what happened. It was our internal affairs and for us to settle, and all those other countries in the world were prepared to work with whatever government emerged in Australia,” he said.

“Malaysian society will evolve and change over time and it would be improper for us to base our foreign policy on a running commentary on their internal political affairs.”

MAFTA boost

Carr pointed to the Malaysia-Australia free trade agreement (MAFTA) that commenced January 1 as an important step in further integrating Australia’s economy with Asia, in line with his government’s “Australia in the Asian Century” white paper.

Two-way trade between the countries reached A$17 billion in the 2012 fiscal year, with Malaysia representing Australia’s 10th largest trading partner and its third-largest in the ASEAN region. Malaysian investment in Australia reached A$14 billion in 2011, up 66 percent on the previous year, with the relationship broadening across trade and investment, education and other exchanges.

“As the MAFTA comes into force, there’s going to be improved access across a broad range of industries – liberalizing the services sector, allowing Australian suppliers to hold majority ownership in education, finance, telecommunications, professional and mining service industries,” he said.

Under MAFTA, virtually all current Australian exports to Malaysia will be tariff-free by 2020, while Australia has eliminated tariffs on Malaysian imports, benefitting agricultural, automotive and resource exports along with service suppliers.

Writing in the New Straits Times, Australian High Commissioner to Malaysia, Milles Kuppa, extolled the deal as a “win-win” for both countries, cementing personal relationships developed through the 116,000-strong Malaysian community in Australia.

“[MAFTA] will bring our economies closer, opening up new opportunities for Malaysian businesses to work with Australian investors and suppliers of goods and services, and enable Malaysian consumers to access many imported Australian goods and services at lower cost,” he wrote.

More FTAs planned?

Amid Australia’s current FTA negotiations with top trading partners China and Japan, Carr said trade minister Craig Emerson had conceded ground to achieve the Malaysia pact.

“Craig Emerson drove that [FTA deal] very hard, but when it got to a sticking point, he told his [Malaysian] counterpart, we’ll forgo that. The Malaysians were struck that an Australian trade minister was prepared to give up something big, something Australia was fighting on, to get this into place,” he said.

Carr said talks with China were focused on gaining access for Australian exporters in agriculture and financial services, hailing the new “strategic partnership” between the two countries.

Meanwhile, FTA negotiations continue with second-largest trading partner Japan, amid speculation of a deal being reached this year.

Carr however warned of potential threats to the region’s outlook from territorial rows and the “middle income trap,” citing problems with governance and corruption in countries such as Laos and Vietnam.

But he said Australia’s “worst nightmare” and the region’s would be a breakdown of the U.S.-China relationship, saying statesmanship was needed on both sides.