Transcript of press conference

Transcript, E&OE, proof only

Ho Chi Minh City, Vietnam

13 April 2011

Kevin Rudd: Well first of all can I say publicly how much I appreciate the opportunity to visit Vietnam, to visit Ho Chi Minh City, and to have the opportunity to participate in the opening of these expansive facilities at RMIT Vietnam.

This is a great institution in Australia, but it is also becoming a great institution in Vietnam. I know from my discussion with members of the Vietnamese leadership, the President, the Prime Minister and the General Secretary in the past several years, they have all themselves mentioned the role which this institution plays in their country.

And what I have seen this morning is a dynamic and vibrant campus, a large number of students, a strong curriculum, a dedicated teaching staff and with great facilities. So with this expansion, the RMIT Vietnam project goes from strength to strength and we wish it well in the future.

We wish all the graduates of this university well in the future and also for the careers they will pursue in building the Vietnam of the future.

More broadly my bilateral visit to Vietnam is something I have been looking forward to for a long, long time as I have said already, it's my first visit to Vietnam.

I'm looking forward very much to travelling to Hanoi this afternoon and for meetings with the Foreign Minister, the Prime Minister and with the President. In those meetings I will be reaffirming the Comprehensive Partnership Agreement which we in Australia framed with Vietnam in 2009.

That Comprehensive Partnership Agreement is based on three pillars; our dialogue and cooperation on security issues both bilaterally and through regional institutions such as the EAS; secondly our continued economic cooperation bilaterally as well as our collaborations in multilateral bodies like the WTO; and thirdly, our people to people links the most important of which is what is done here and what is done by Vietnamese students in Australia and what is done by our scholarships program.

As I said in my formal remarks before I am deeply proud of the fact that Australia is the largest single foreign provider of scholarships in Vietnam. Over the years more than four thousand Vietnamese scholarship students have earned university qualifications in Australia and we are offering four hundred scholarships in the expanded program this year — this is one bridge — and what this University does as a fee paying institution is another, what Vietnamese full fee paying students do in Australia is yet another. And taken together there are tens of thousands of students emerging from Australian institutions from Vietnam, who will make a huge contribution to this country's future and also a huge contribution to our work together.

Finally, I mentioned in my remarks before, the incredible importance of the work which we in Australia now do with Vietnam in shaping the future agenda of the East Asia Summit. That is extremely important to the future of our region's long term security. It is critical that we evolve through the East Asian Summit a regional institution which maintains an open dialogue on the security challenges we face and builds confidence and security-building measures between all the participating states including dealing with outstanding challenges concerning conflicting territorial disputes in the South China Sea.

So Australia, Vietnam, Indonesia — where I was only a week or two ago — all of these major countries engage in the East Asia Summit and we have a combined responsibility to make our contribution to the evolution of an institution which enables us to maximise our cooperation in security and minimise the possibility of conflict and misunderstanding in the future and create the foundations for a peaceful and prosperous future for us all — all countries, rich and poor, developed and developing, large and small.

I think I will conclude my remarks here and throw over to any questions you might have.

Journalist from Cong Thuong News: The relationship between Vietnam and Australia has been very good in the past. However, the two-way trade between our two countries is still lower than between Vietnam and other countries. How do you evaluate this issue? And how do you see this progressing in the future?

Kevin Rudd: I think the opportunity for further expansion of the investment will be improved because of the recent coming into force of the Australian-New Zealand ASEAN Free Trade Agreement otherwise called AANZFTA.

This for the first time creates a free trade area involving economies making up 3.2 trillion US Dollars therefore this makes it easier for our economies to trade with one another.

We believe there is great potential for Vietnamese exports to Australia in a whole series of areas, and also in terms of Australian trade with Vietnam. If I look for example at parts of the mining industry and the mining services industry and if I look at the other services industries, the sale of education services and I look at also the provision of traditional agricultural commodities, the prospects are vast.

You have asked what we can do more about it — and I challenge also the students of this university — we need to harness our diasporas better.

We have hundreds of thousands of Vietnamese Australians, we have tens of thousands of Vietnamese graduating from Australian institutions, this forms a natural human bridge through which the arteries of commerce can now flow and therefore I think we should rely on the diasporas more to grow areas of business which has not been evident so far.

We now have a Free Trade Agreement across the entire ASEAN plus Australia area 3.2 trillion dollars worth of economic activity that's pretty good; secondly we have a very active diaspora working between us and Vietnamese Australians; and thirdly the natural strengths that we have in education services but also other services industries like financial services, the presence of the ANZ bank in this city together with other services industries such as mining services and agribusinesses, I believe form a basis for a rapid expansion between us in the future.

Journalist: I am from Financial Business Television

Kevin Rudd: Ok, good

Journalist: I have a question for you about exploring for minerals in Vietnam. Do you have a plan to develop and exploit minerals in Vietnam?

Kevin Rudd: The Australian mining industry is one of the biggest in the world.

Secondly look at Africa right now we are one of the largest investors in prospecting and mineral development and in resource development in Africa. We currently run more than 20 billion US dollars worth of investment across 600 projects involving 200 or 300 companies in Africa.

Currently in Indonesia we have a very large corporate presence in the mining sector as well.

Here in Vietnam it is just the beginning but we believe it has rich potential.

My only advice to our friends in the Vietnamese Government is to ensure that they are as open as possible to the prospects of investment because it has been part of the basis of Australia's long term prosperity, the fact that for 150 years we have been an open market for foreign investors in the mining sector and those countries which prosper around the world are usually open markets and that should apply here in Vietnam as well.

And there's a reason for it — the capital intensity of mining investments is huge. You require a huge amount of money to go from prospecting through to sale and through extraction. It is a very big business and to therefore share the risk you need multiple investors and financial institutions from around the world.

That's the way we've done it in the past and we have never felt our sovereignty compromised so I would hope that Vietnam will follow in the same direction and that's what we see also in countries of Africa and other countries in Asia.

Question: What is the purpose of your visit to Vietnam at this time? Will there be any Memorandum of Understanding signed during this trip? What will your advice to the Government of Vietnam be in terms of the mining industry, and your advice to Australian investor's in this industry? In what industries do you think Australian businesses have the strongest advantage and greatest potential to invest into Vietnam? And, one more small question, which industry of Vietnam's industries do you think is best placed to collaborate with Australian business or to export to Australia?

Kevin Rudd: On the first question, which is my reason for being in Vietnam, this is a bilateral visit to cover the whole range of security, economic and education and environmental interests that we have in this relationship.

We signed a Comprehensive Partnership Agreement with Vietnam in 2009. It provides the written framework. We don't need more documents. What we need is more action. We need more action at the political level; more action at a bureaucratic level; more action at a commercial level; more action at the institutional level and more action also in terms of practical environmental projects.

So I think in terms of documents to sign we've probably signed enough. I am always open to sign another one, but the key thing here is to turn documents into reality; to turn words into action, that is what we should be committed to, that's the first point.

Secondly you raised a legitimate question about what should be the economic priorities for Australian investors into Vietnam. This ultimately is a matter for individual investors. I have just made some remarks about the mining industry, Australia as I said is a vast mining country. We invest everywhere in the world. We have two of the largest mining companies in the world — BHP and Rio Tinto — we also have large second tier companies as well.

Now it's for the Vietnamese Government to decide what their regulatory structure is for that and that is a matter of sovereign decision making for Vietnam. But I believe that if this is a completely open market for investment in the mining sector you will see a lot of Australian investment flowing into this country because the prospectivity of Vietnam I think is good.

In terms of other areas of investment, the financial services sectors I refer to before ANZ I think is already a very heavy investor here and in fact when I was having a burger last night at the Consul-General's residence I saw a big ANZ sign in downtown Ho Chi Minh City so if they have a sign on the top of a big tall building I assume they are doing ok. Therefore investment in the financial services sector here would be important to Australia.

People in Vietnam may not be conscious of this but Australia runs the fourth largest funds management industry anywhere in the world. And you say well how can that be? Well the reason is we have for 20 years now had a system of compulsive saving for retirement therefore we have a funds management industry of at least USD1.3trillion in size. We have therefore a very strong regulatory system, we have strong financial institutions and we have strong auditors, strong legal systems, a strong accounting system. I believe in the terms of the financial services industry in general and the funds management industry in particular, these are strong potential partners for Vietnam, where again direct foreign investment from Australia into Vietnamese financial institutions and in the finance sector in general would be useful.

Further, because I've noted carefully what the Vietnamese Government has determined in its economic plan confirmed in the deliberations of the party in January of this year, that education constitutes a key priority for the future. For example, the plan to produce 20 000 PHD's by 2020 — that's a big plan — and that's a good plan. I fully support it but to do that you are going to need a lot of investment in the education sector.

We welcome foreign investment in the Australian education sector and we currently have American universities investing in Australia, like Carnegie Mellon in Adelaide and one or two others as well and our universities, the most active among them RMIT are also investing abroad.

So I would strongly encourage Australian academic institutions to invest here and I think that's to Vietnam's advantage as it has been for us to receive investment in Australia in academic institutions... for the future as well.

Is there anyone else bursting for a question? Question, do you want one, last question mate.

Journalist: You said only earlier that the ASEAN Australia New Zealand Free Trade Agreement has contributed to the [inaudible] So now Australia and Vietnam and other countries are negotiating the Trans Pacific Partnership, So my question is, what is the difference in Australia's trade policy after ASEAN Australia New Zealand Free Trade Agreement and now negotiations on TPP?

Kevin Rudd: Well the big difference with the TPP is that it includes an economy called the United States of America and that's a fairly big addition. The United States represents a 13 trillion dollar economy, the rest of us in the AANZFTA represent 3.2 trillion dollars so there is a very big difference, that's the first point.

Secondly in terms of Australian trade policy which is the responsibility of my colleague the Trade Minister Craig Emerson, we are active supporters of the multilateral free trade round, the DOHA round. We believe the DOHA round is in significant difficulty at present but as leaders of the CAIRNS Group of free trading agricultural nations we are strong proponents of concluding that round. It would be good for Vietnam as an agricultural exporter and good for Australia and good for all countries.

Thirdly in terms of our trade policy can I say this, we also actively support various bilateral FTA's as long as these are genuine FTA's. We have negotiations on foot with China, Korea with Japan and also we have concluded one already with the United States United States.

These are important negotiations but I think I'll say this more generally about trade, there is a grave danger that we as an international community take our eye off the importance of free trade. If we begin to embrace a more protectionist global environment it will shrink all of our global economies, it will lower all of our living standards and it will make it much, much worse for countries like Vietnam, where goods and services exports represent 80% of GDP.

We are strong free traders and our call to the international community is to join us.

Thank you very much.

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