Branch
Asia and Middle East
Parliamentary Committee
Introductory Presentation to Deputy
on International Relations and
Ministers
Cooperation
BRANCH:ASIAJune
AND2014
MIDDLE EAST
Ambassador Anil Sooklal
DDG:July
Asia and
Middle East
30
2014
1
Presentation Outline
1.
2.
Organisational Structure
Maps
–
–
–
–
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Central and East Asia
South Asia and South East Asia
Oceania
Middle East
South Africa in Asia and the Middle East – A Twenty Year Overview
Selected Trade Figures
Strategy for Engagement
The Region we Operate In
Rising Asia: Opportunities for South Africa and Africa
BRICS
IORA
Risks and Challenges
Proposed Way Forward
Structured Bilateral Mechanisms at Deputy Minister Level – 2014 to 2015
2
ORGANISATIONAL STRUCTURE
ASIA AND MIDDLE EAST
Office of the DDG
DECENTRALISED:
CORPORATE SERVICES
MANAGEMENT
BRICS
CD
CENTRAL AND EAST
ASIA AND ECONOMIC
AFFAIRS & REGIONAL
ORGANISATIONS
DIR:
CHINA &
MONGOLIA
DIR:JAPAN,
KOREAS &
CENTRAL ASIA
DIR:
ECON AFFAIRS &
REG.
ORGANISATIONS
CD
SOUTH ASIA,
SOUTH EAST ASIA
AUSTRALASIA &
OCEANIA
DIR:
SOUTH ASIA
DIR:
SOUTH EAST ASIA
DIR:
OCEANIA
CD
MIDDLE EAST
DIR:
LEVANT
DIR:
GULF STATES
CHIEF DIRECTORATE: CENTRAL AND EAST ASIA
MAP OF REGION OF RESPONSIBILITY
SA Embassy
SA Embassy
SA Embassy
SA ConsulateGeneral
SA Liaison
Office
4
Index
Bangkok
Hanoi
Manila
Kuala Lumpur
Singapore
Jakarta
Oceania
Canberra
Suva
Wellington
6
7
South Africa in Asia and the Middle East
A Twenty Year Overview
1994 – 2014
A Good Story
1994
Only 6 Missions in Asia and the Middle
East:
Manama
Hong Kong
Tokyo
Tel Aviv
Taipei
Canberra
2014
32 Missions today
Beijing; Shanghai; Hong Kong, Taipei,
Tokyo; Seoul, Astana, Canberra,
Wellington, Suva, K. Lumpur, Jakarta,
Singapore, Hanoi, Bangkok, Manila, New
Delhi, Mumbai, Colombo, Islamabad,
Tehran, Tel Aviv, Amman, Kuwait City,
Muscat, Ramallah, Doha, Riyadh, Jeddah,
Damascus, Abu Dhabi, Dubai
Diplomatic Relations will all 57 countries
in the region
Total Trade:
Asia: Approx. R 40 bn (Source: DTI)
Middle East: Approx. R 5bn
8
Total Trade :
Asia: Approx. R 760 bn (Source: SARS)
Middle East: Approx. R 116 bn
South Africa in Asia and the Middle East
A Twenty Year Overview
1994 – 2014
A Good Story
1994
2014
Tourism Arrivals
Tourism Arrivals
Asia:
24, 348
Oceania:
5, 602
Middle East:
3, 436
Asia:
358, 203
Oceania:
120, 694
Middle East: 47, 581
Structured Bilateral Mechanisms
Structured Bilateral Mechanisms:
Nil
•
•
9
Middle East : 6 structured bilateral mechanisms
with an additional three, those with the UAE,
Jordan and Iraq set to convene for the first time
in this year.
Asia: 18 structured bilateral mechanisms
The region we operate in
Selected Trade Figures 2013
(SARS)
Country/
Region
China
Imports
Exports
Total Trade
Balance of Trade
R 154 494 731 684
R 115 651 096 176
R 270 145827 860
R-38 843 635 508
India
R 51 867 367 587
R 28 971 518 949 R 80 838 886 536
R-22 895 848 638
Japan
R 39 323 855 164
R 53 750 888 815 R 93 074 743 979
R 14 472 033 651
South Korea
R 18 103 910 256
R 12 145 196 833 R 30 249 107 089
R -5 958 713 423
ASEAN
R 74 790 453 927
R 28 036 197 401
10
R 102 826 651 328
R -46 754 256 526
Strategy for Engagement
1. Deepen contacts and engagement with the leadership of Asia and the Middle East at all
levels and walks of life
2. Develop a more assertive economic strategy towards the region based on South Africa’s
national priorities
3. Intensify the promotion of the Brand and Image of SA
4. Promote and project South Africa’s “soft power” diplomacy
5. Adopt the “whole-of-government-and-state” approach in engaging the region at all levels
and in all sectors
6. Expand development cooperation with specific emphasis on education and skills
acquisition
7. Increase South Africa’s diplomatic representation/presence in the region
11
The region we operate in
•
South Africa maintains strong political relationship with the countries of Asia and the
Middle East, however, we need to scale up high-level interaction to further solidify
relations and leverage economic, trade, investment and tourism opportunities.
•
2014 may see the re-integration of Iran into the global community with the subsequent
replacement of Saudi Arabia as the dominant regional power.
•
South Africa-Asia Middle East bilateral relations are built on the long-standing
relationships and solidarity that South Africa had developed with the countries and
peoples of the region during the pre-1994 period.
12
Rising Asia: Opportunities for South Africa and Africa
•
The region constitutes one of the leading dynamic economic growth points in the
global economy.
– Despite 2008 financial crisis, many countries still enjoy relatively high levels of growth.
China is projected to overtake the USA as the largest economy in 2017 in PPP terms and
by 2027 in market exchange rate terms; India is projected to become the 3rd largest
economy by 2050 (With reference to BRICS, Brazil is projected to be the 4th largest economy
(ahead of Japan) by 2027, Russia as 6th and SA as 23rd (PWC, 2013). BRICS expected to account by
2020 for 50% of global GDP growth)
– China and India will become the world’s dominant suppliers of manufactured goods and
services. (In BRICS context, Brazil, Russia and South Africa will become dominant suppliers of raw
materials (BRICS hold 10% of world oil reserves; 25% of gas reserves and 40% of coal reserves)
– The World Bank predicts that the USD will lose its global dominance by 2025 as RMB and
Euro become co-equals with USD in a multi-currency monetary system
– Massive growth in disposable income leading to an exponential growth in
travel from the region.
– Increased development and technical cooperation, including skills
development
13
Rising Asia: Opportunities for South Africa and Africa
•
According to the Asian Development Bank (Asia 2050 – Realizing the Asia Century), Asia’s
rapid growth implies that by 2050 it could converge with average global living standards.
•
Asia’s march to prosperity will be led by seven economies, two of them already
developed and five fast growing middle income converging economies: PRC, India,
Indonesia, Japan, Republic of Korea, Thailand and Malaysia (Vietnam and Philippines also
important).
•
In 2010 these seven economies had a combined population of 3.1 billion (78%) and GDP
of US$ 14.2 trillion (87%) . By 2050 their share in population will fall to 73% and their
share of GDP will rise to 90% of Asia. These seven economies will account for 45% of
global GDP.
14
BRICS
•
The context and rational for South Africa’s BRICS membership resorts in a Local (leveraging domestic economic
priorities), Regional (promoting objectives of the African agenda) as well as on a Global level (restructuring of the
global political, economic and financial architecture)
•
Minister Maite Nkoana-Mashabane received a telephone call on 23 December 2010 from the former Chinese Minister
of Foreign Affairs of the People’s Republic of China, Mr Yang Jiechi informing her that China, in its capacity as the
rotating Chairperson of the grouping, based on agreement reached between the Member States, invites South Africa
to join as a full member.
•
Cabinet approved a BRICS Strategy in September 2012. This document is classified, however, various stakeholders
were consulted in drafting it and all key approaches were outlined in policy addresses that focused on BRICS and its
first review will be conducted as from August 2014
•
The main BRICS activities take place on various levels, inter alia, i) The BRICS Leaders meet at the BRICS Summits on an
annual basis as well as on the margins of the G20 Summits, ii) The Ministers of Foreign Affairs/International Relations
meet annually on the margins of the United General Assembly Sessions (UNGA) and as required, as well as the other
ministerial tracks as outlined in the Summit Action Plans (supported by preparatory Senior Officials’ meetings), iii)
other BRICS structures among members of civil society collaborate as outlined in the Summit Action Plans, e.g. BRICS
Business Council, BRICS Think Tanks Council, etc.
•
New areas proposed for cooperation in BRICS is usually initiated with a Senior Officials Meeting, who prepare
documentation, Concept Documents and Terms of Reference, for Ministerial consideration.
15
BRICS (Cont)
Fifth BRICS Summit
•
President JG Zuma hosted the Fifth BRICS Summit from 26-27 March 2013 in Durban,
eThekwini, KwaZulu-Natal under the theme: “BRICS and Africa: Partnership for Development,
Integration and Industrialisation”
•
The key outcomes that South Africa projected for the Summit were successfully achieved, i.e.
the launch of the New Development Bank and Contingent Reserve Arrangement; the first
BRICS dialogue with another region, i.e. the BRICS Leaders-Africa Dialogue Forum; the launch
of the BRICS Business Council and the launch of the BRICS Think Tanks Council.
•
South Africa achieved 100% implementation of the meetings listed in the eThekwini Action
Plan
16
BRICS
Sixth BRICS Summit
•
The key outcomes of the VI BRICS Summit pertain to strengthening intra-BRICS economic and financial
cooperation as was manifested in the first formal BRICS inter-governmental agreements that were
concluded (and signed by Minister Nene), namely
i) Agreement on the New Development Bank (NDB)
ii) Treaty for the Establishment of a BRICS Contingent Reserve Arrangement (CRA)
•
The negotiations to establish these new BRICS institutions were facilitated during South Africa’s tenure
as BRICS Chairperson
•
Other agreements concluded that will strengthen economic cooperation include:
iii) Memorandum of Understanding on Cooperation among BRICS Export Credit Insurance
Agencies (signed by Mr Kutoane Kutoane, Chief Executive Officer of the Export Credit Corporation
SOC Ltd)
iv) Cooperation Agreement on Innovation under auspices of the BRICS Inter- bank Cooperation
Mechanism (signed by Mr J Moleketi, DBSA)
17
BRICS (Cont)
Agreement on the New Development Bank (NDB):
• The Leaders endorsed the following decisions in respect of the future functioning of the Bank:
i) The headquarters of the Bank will be located in Shanghai, China;
ii) The establishment of the NDB Africa Regional Centre in Johannesburg will be
launched concurrently with the headquarters;
iii) The order of rotation of Presidents of the Bank will be India as the first President to
be followed by Brazil, Russia, South Africa and China;
iv) A Special Fund will be created within the Bank, with the participation of all
founding members, for the purpose of helping project preparation and
implementation (China will be the largest contributor);
v) The first chair of the Board of Governors shall be from Russia; and
vi) The first chair of the Board of Directors shall be from Brazil
•
The NDB agreement must now be ratified by each country’s legislature
•
A proposed interim board will take forward the setting up of the Bank
18
BRICS (Cont)
What does it mean for South Africa and Africa?
“Cooperation amongst BRICS countries is anchored in its institutions, so the New Development
Bank is an important step forward”
President D Rousseff
•
•
•
•
The Bank shall have an initial authorized capital of US$ 100 billion and the initial subscribed
capital shall be of US$ 50 billion, equally shared among founding members- SA has to
contribute USD 2 bn within a 7 year period
Africa will receive the first infrastructure project, i.e. the Regional Centre of the NDB for
Africa will be established in SA concurrently with the NDB HQ in Shanghai
The aim is to strengthen cooperation among emerging economies and developing countries
by jointly pooling BRICS savings (notably foreign reserves estimated around USD 4 trillion as
well as other private financing within the jurisdiction of BRICS countries) to meet the
development needs of countries with whom we share common objectives
Important regional leverage for SA: President Zuma has successfully represented the
mandate received from the African leadership in respect of the importance of the Bank for
the continent’s own developmental aspirations
19
BRICS (Cont)
What does it mean for South Africa and Africa?
• The aggregate price tag of the PIDA projects: USD 360-billion over the next 30 years, with at
least USD 68-billion required by 2020 (51 regional projects and programmes – and over 400
subprojects )
• The achievement of South Africa’s infrastructure development ambitions will depend on
finding the so-called “sweet spot” of mutual interest between government, players in the
private construction and engineering sectors and financiers- Moe Shaik, Group Executive
Manager for Int Finance, DBSA
• Infrastructure and sustainable development projects will be the core focus of funding
• An important additional gain is that the regional office will pay particular attention to project
preparation and implementation
• South Africa we also have our own Infrastructure Plan which requires funding beyond the
means of our own fiscus and this Bank will certainly bring complementary funding to
facilitate the implementation of such projects, in line with our National Development Plan
• It could be explained that the Bank’s leverage to achieve impact will be multiplied by the
direct Rand, Real, Rouble, Rupee and Renminbi investments made by the members
20
BRICS (Cont)
What does it mean for South Africa and Africa?
•
Our contributions to the bank are in fact investments and not mere expenditure and it is
expected that the Bank will function according to sound commercial terms, also with a view
to obtain desired credit ratings, and its assets will definitely grow and multiply over time as
is the case with other similar Multilateral Development Banks- South African is also party to
various other such financial initiatives, whether it be the World Bank or African
Development Bank and where we also participate in calls for capital
21
BRICS (Cont)
Treaty for the Establishment of a BRICS Contingent Reserve Arrangement (CRA):
• The CRA Treaty must now be ratified by each country’s legislature
• Central Banks must conclude an inter-central bank agreement (ICBA) which will
operationalize the CRA
• The ICBA is expected to be completed within the next 12-18 months; in addition, procedural
guidelines for the operation of the CRA must be approved
What does it mean for South Africa?
• Virtual foreign exchange reserves pool modelled along the lines of the Chiang Mai initiative
Multilateralisation Agreement
• $100 billion reserve
• The CRA will forestall short-term balance of payments pressures, provide mutual support
and also provide additional and supplementary support and insurance for global financial
stability
• The Parties shall be able to access resources subject to maximum access limits equal to a
multiple of each Party’s individual commitment (China 0,5; Brazil, Russia and India 1 and
South Africa 2)
22
BRICS (Cont)
Treaty for the Establishment of a BRICS Contingent Reserve Arrangement (cont.):
•
It bears no immediate or direct financial implication and will only be activated once a
member makes a call for capital and according to the agreed share, but with the important
condition of repayment (countries invest their reserves in various global financial
instruments of this nature)
•
Assist the IMF to ease global economic system, by working concurrently with it
•
SA will contribute USD 5bn – held in reserve
•
Will stabilise rand should future currency fluctuations occur
23
Trade with BRICS 2009 to 2013
(Source:SARS and thedti)
R 400 000 000 000
R 350 000 000 000
R 300 000 000 000
R 250 000 000 000
R 200 000 000 000
TOTAL TRADE
R 150 000 000 000
TRADE BALANCE
R 100 000 000 000
R 50 000 000 000
R0
2009
2010
2011
2012
2013
- R 50 000 000 000
- R 100 000 000 000
YEAR
TOTAL TRADE
TRADE BALANCE
2009
R 169 653 645 799
- R 30 964 539 751
2010
R 194 842 159 418
- R 17 019 483 973
2011
R 269 016 452 887
- R 22 353 705 913
2012
R 298 291 730 743
- R 47 687 647 047
2013
R 380 412 613 738
- R 70 642 491 502
24
IBSA
• Following its 10 year anniversary in 2013, going forward, IBSA will focus on
its niche and identified areas of comparative advantage, i.e. global
governance reform and the IBSA Fund for Poverty Alleviation.
• Area of Strategic Focus:
– UN Security Council Reform
– Continued IBSA co-operation in various global governance platforms such as
ECOSOC and the Human Rights Council
– Deepening and widening the reach of the IBSA Fund for Poverty Alleviation
25
Indian Ocean Rim Association (IORA)
IORA
•
Renewed strategic interest in the Indian Ocean Rim
•
SA to preside over Vice Chair (2015-2017) and Chair (2017-2019) following leadership by
three G20 members of the Rim: (India, Australia and Indonesia)
•
Area of Strategic Focus:
– Ocean Economy (“Blue Economy”) as the next frontier of global economy growth
– Maritime Security and Transport
26
Risks and Challenges
•
Increasing tension between rising regional powers and traditional global powers.
–
–
–
–
•
The pursuit of our domestic priorities in the Middle East will continue to face
challenges in the light of:
–
–
–
–
27
Shifting of alliances due to rising economic and military power of China, Japan, India
US strategic interests
Territorial disputes due to energy and natural resources
Contested trade routes
Political tension and sectarian violence;
The continuing civil strife and humanitarian crises and its impact on the region
Israeli occupation of Palestine and lack of progress in the MEPP
Vested interests of major powers
Risks and Challenges
•
Trade Deficits
–
–
–
•
Other Risks
–
–
–
28
SA still experiences challenges with market access for products and services of exports interest to
South Africa with several countries of the region (Trade Protectionism)
To contain the growing deficit with our major trading partners of the region.
Mercantilist approach to South Africa and Africa
Trans-Pacific Partnership: A most significant geo-strategic trade negotiation led by the USA,
promising major economic benefits to its 12 member countries and clearly excludes China (i.e.
United States, Australia, Brunei Darussalam, Chile, Canada, Japan, Malaysia, Mexico, New Zealand,
Peru, Singapore and Vietnam). Its market size is approx. 793 million consumers and it had a
combined GDP of U$28.1 trillion in 2012, which is 39.0% of World GDP.
Regional Comprehensive Economic Partnership (RCEP): A Free Trade Agreement (FTA) scheme of the
10 ASEAN Member States and its FTA Partners (Australia, China, India, Japan, Korea and New
Zealand) to be concluded by the end of 2015, taking over movements and efforts in the East Asia
Free Trade Agreement (EAFTA). RCEP will include more than 3 billion people, has a combined GDP of
about $17 trillion, and accounts for about 40 percent of world trade.
Establishment of ASEAN Common Market in 2015
Proposed Way Forward
1. In order to take advantage of the enormous opportunities in Asia and the Middle East (be it
trade, tourism, defence spending, FDI, development cooperation, technology transfer, etc.), a
comprehensive Asia strategy, following the “whole of government” approach, should be
developed, taking into account our domestic priorities, the National Development Plan and
advancing the African Agenda. This should form the basis for a proposed roadmap on how to
effectively engage the “first” and “second” tier countries in the region. – Convene an Asia
Heads of Mission Conference in 2014 to review relations and develop a long-term strategy for
Asia.
2. Strengthening South Africa’s representation in the region,
• strategic placement of appropriately trained diplomats (trade and economic diplomacy,
language skills, etc).
• Capacity at Head Office and Missions;
• Further expand presence in the region
• Re-orientation of Missions APP with major focus on Economic Diplomacy
29
Proposed Way Forward
3. Diversify the trade basket, focusing on value addition;
•
Market Analysis and Intelligence
4. Utilising the strength of our diplomatic relations to address the growing trade
deficit;
5. Closer cooperation between government and the private sector in the promotion
of trade, including enabling the Minister of International Relations and
Cooperation to assemble private sector delegation to accompany the Principal on
high-level visits and the establishment of a follow–up mechanism;
6. Closer cooperation between DIRCO and DTI, e g DIRCO access to DTI database, etc.
30
Proposed Way Forward
7. South Africa should actively pursue opportunities in the field of energy in the Middle East
and central Asia.
8. Expand development cooperation with specific emphasis on education and skills
acquisition;
9. Intensify the promotion of Brand SA
10. To continue to advance South Africa’s soft power diplomacy, especially our good
story experience (already shared with Palestine, Israel, Iraq, Sri Lanka, Nepal,
Afghanistan, Syria, Iran)
11. Revisit the BRICS Strategy to focus more specifically on South Africa’s priorities.
31
Proposed Way Forward
12. In IBSA, continue to build on the six identified priority areas (Agriculture, Science
and Technology, Environment, Trade and Investment, Health and Transport and
Infrastructure), and expand activities of the IBSA Trust Fund;
13. To develop an Indian Ocean Rim Association (IORA) strategy in preparation for our
chairship and to work in closer partnership with Indonesia.
32
Structured Bilateral Mechanisms Meetings
2014/15
Country
Incoming or
Outgoing
Proposed Time Frame
Joint Ministerial
Commission Meeting
with Malaysia
Incoming
Provisionally Scheduled
for Q3
9th Joint Ministerial
Commission Meeting
with India
Incoming
Provisionally Scheduled
for Q3
Second Partnership
Forum Meeting with
Oman
Incoming
Provisionally Scheduled
for Q3
Joint Commission
Meeting with
Indonesia
Incoming
Provisionally Scheduled
for Q3
RSA-PRC InterMinisterial Joint
Working Group
Meeting
Outgoing
September 2014 (TBC)
Status
originally scheduled for 2013
33
Structured Bilateral Mechanisms Meetings
2014/15
Country
Incoming or
Outgoing
Proposed Time Frame
Status
Iran 5th Deputy
Ministerial Working
Group
Incoming
Provisionally scheduled in
APP for Quarter 3
(2014/15)
Iraq
Incoming
1st Session pending Signing
of MoU
Jordan
Outgoing
1st Session pending Signing of
MoU
Kuwait 1st Joint
Commission
Incoming
Provisionally scheduled in
APP for Quarter 4
(2014/15)
Qatar 5th Bilateral
Consultations
Incoming
Provisionally scheduled in
APP for Quarter 3
(2014/15)
34
Structured Bilateral Mechanisms Meetings
2014/15
Country
Incoming or
Outgoing
Proposed Time Frame
Pakistan
Incoming
Q2 tbc
Third SA – Vietnam
Partnership Forum
Meeting
Outgoing
Q2/Q3 tbc
8th SA - Rep of Korea
Policy Consultative
Forum
Outgoing
Q2/Q3 tbc
4th SA Kazakhstan
Bilateral
Consultations
Outgoing
Q3/Q4 tbc
Status
35