Transparency, predictability key to encouraging more Australian investment - High Commissioner

Sri Lanka police, AFP continue cooperation over investigation into cyber theft

Trade agreements like the Regional Comprehensive Economic Partnership really help with these issues

Australian High Commissioner to Sri Lanka Matthew Duckworth, in an interview with Daily Mirror, discuss the aspects of bilateral cooperation, dynamics of the Indo-Pacific region. The interview:

Q Everybody is talking about the cyber theft that took place in Sri Lanka. In what ways can Australia cooperate with Sri Lanka in curbing such crimes?

Cybercrime of this nature is a global risk. It’s a global phenomenon. We’re seeing more of this as more business moves online, as more transactions are made electronically. There are groups around the world that target banks and individuals.

It is a concern in Australia, as our community has been targeted by these sorts of scams in the past. Our government has taken measures domestically to raise the costs for people who try to conduct these scams and to empower our agencies to stop it.

Now there’s been a high-profile incident that’s affected Sri Lanka, where payments from the Sri Lankan Ministry of Finance to Australia have been compromised. This appears to have followed a similar pattern to the global phenomenon I mentioned. And it’s now a matter that the Sri Lankan authorities are investigating.

We respect that it’s a Sri Lankan investigation. We have offered to assist where we can. The Sri Lankan police and the Australian Federal Police are cooperating on the matter, although I can’t go into operational details on that. However the Sri Lankan authorities have provided some updates through the media.

Australia remains committed to supporting Sri Lanka, in particular to supporting Sri Lanka’s return to debt sustainability over the longer run. We’ll continue to see what we can do to assist in this space.

Q Australia is a middle power. How important is it for Sri Lanka to have Australia involved in this region as a middle to reduce pressure from major powers and strike a balance among all?

When we look at the world, what our Foreign Minister Penny Wong says is that we must take the world as it is and seek to shape it for the better. We understand there’s rising contestation in our region, so Australia and other countries need to think about how we can respond to and manage this. 

For regional partners like Australia, and Sri Lanka, this means we need to think about our agency. How are we able to influence developments in our region and in the part of the world that we call home? There are very few countries in the world that have the ability to exert their will over other countries, and Australia recognises we’re not a superpower. But we do still have influence and ability to shape things. We want to be active in the Indo-Pacific region, to support better outcomes and help our regional partners to stand and act in our own sovereign interests. 

The Indo-Pacific - which includes our neighbours in the Pacific Ocean, Southeast Asia and here in the Indian Ocean - is where we’re mainly focusing our attention. What we want is for this region to be stable, peaceful, and prosperous. Whenever we think about how we act in this part of the world, that’s the frame through which we approach it.

We want no one country to dominate this region. We want all countries to have the freedom to act and to decide their own futures. We want countries to follow the rules and norms that have enabled us to have peace and stability here over a very long time.

Q What does it mean for a middle power like Australia, and in many cases as well, like Sri Lanka, to act in this way?

It means we need to understand where we have agency and levers that we can pull. But more importantly, it means being ready and able to work with other countries toward an outcome that we both want. As a middle power we have to persuade, we have to cooperate and negotiate, and we have to be prepared to work in partnership. That doesn’t mean making alliances; it means recognising that countries like Australia and Sri Lanka have some shared interests, and we have a greater ability to achieve those interests if we work together.

Q As the world is dealing with the fallout of the Middle East conflict, an Iranian ship sank off in Sri Lanka’s Exclusive Economic Zone. In Australia’s point of view, what should be done to improve the freedom of navigation in the Indo-pacific region?

You mentioned the Iranian warship that sank in early March just outside Sri Lankan waters. Then a few days later there was a second Iranian warship that came in and anchored itself within Sri Lanka’s territorial waters. This situation became a diplomatic crisis that Sri Lanka had to handle within its own waters. And it also became an example of how Sri Lanka effectively used middle power diplomacy to find a solution.

Sri Lanka did so by invoking its clearly stated humanitarian values, its neutral position in the conflict, and its obligations as a party to the United Nations Convention on Law of the Sea (UNCLOS). The Sri Lankan government communicated clearly with all parties that it was going to conduct a humanitarian rescue to ensure there was no further loss of life. It used its agency to intervene and neutralise a tense situation in this region, and work with the countries involved to resolve it.

This is what we mean when we talk about ‘middle power diplomacy’: this is how a country like Australia or Sri Lanka is able to influence outcomes in our shared part of the world despite not being a superpower. On freedom of navigation, Sri Lanka and Australia are both parties to UNCLOS.

So we want to work with Sri Lanka and our other partners in this part of the world to make clear our expectations that countries will respect UNCLOS and the rules and norms that have guided how we manage the open seas.

One thing we can do to promote rules like UNCLOS is to share knowledge and experience. Recently an Australian expert on maritime law, professor Stuart Kaye from the University of Wollongong, visited Colombo to deliver some workshops on the law of the sea. Professor Kaye’s goal was to improve regional governments’ understanding of the law of the sea and our various obligations and rights under that convention. This is really important for maintaining a rules-based order and freedom of navigation in this part of the world.

We all rely on open sea lanes. We know that some two-thirds of the world’s maritime trade uses the sea lanes that pass directly by Sri Lanka’s southern coast. Keeping these sea lanes free and open is critical for our economies and for the movement of goods and people around the world. So it’s vital for countries like Australia and Sri Lanka, which have a shared interest in this region, to cooperate to keep those sea lanes open in keeping with the rules and norms that serve us all so well. 

Another thing we can do is to engage more seriously in the regional organisations that bring the countries of the Indo-Pacific region together, such as the Indian Ocean Rim Association (IORA). Looking further east, there are also important bodies like ASEAN and the Pacific Islands Forum. These regional groupings enable countries like Australia and Sri Lanka to amplify our voice.

This is where it comes back to amplified middle power diplomacy. By working with other countries through these groupings and institutions, we can increase our influence and make a clear statement about how we want to manage our shared region.

Q How does Australia actually see the importance of Sri Lanka maintaining this strategic autonomy?

We want Sri Lanka and the Indian Ocean region to be peaceful and resilient. This includes being able to make decisions and act in our own interests without influence from others.

Australia supports Sri Lanka’s strategic autonomy by partnering with Sri Lankan civilian and military agencies to help increase their capability. This includes sharing knowledge on things like maritime environmental sustainability, hydrography, search and rescue skills, and maritime domain awareness.

We also want to work with Sri Lanka to expand and diversify trade and encourage more foreign investment. All of this supports a region that is more stable and more resilient, and partner countries that are better able to make decisions in their own interest.

Q How do you see Sri Lanka’s potential for developing the mining sector in Sri Lanka?

There is a real potential for Sri Lanka to benefit from a well-managed mining and minerals sector.

Take Australia’s economy as an example. We have benefited enormously from our mining sector. We have been able to generate a lot of wealth from our resources. This has been possible because we’ve had the right conditions in place to enable the large scale investment that is needed to extract our resources and process or export them.

If Sri Lanka wants to be able to similarly benefit from its own minerals endowment, an important first step is to look at the investment and business settings that will enable that to happen. Equally important is to have mechanisms to consider environmental and community concerns. You can’t have a successful mining sector if it fails to take into account community impacts or to respect its social license. Australia has learned that lesson over the years with our own mining industry.

So I’d suggest the goal for Sri Lanka’s mining sector should be to create an industry that can generate income for the country while being responsive to community and environmental concerns.

Having resources in the ground is one thing, but getting value out of that resource is an entirely different matter. You need investment to extract the mineral from the ground. But then there is the question of what happens to that mineral: for example, is it possible to have some processing stages onshore?

To maximise the potential of your minerals sector, thinking in advance about how to enable some processing steps to happen here will help Sri Lanka capture more value from your resources. That means looking at the business regulatory environment and investment conditions.

Another key consideration is energy: how can an investor in a remote part of Sri Lanka power a large scale mine or a processing facility? Achieving this will require not only an appropriate regulatory framework but also investments in energy infrastructure, particularly in electricity generation and transmission. Such initiatives demand careful planning and cannot be accomplished within a year. Often these initiatives have five or ten year windows. If you don’t get this planning right at the outset, it makes it far more difficult to maximise the value later on.

Q Sri Lanka has a lot of potential for renewable energy-wind and solar. Australia has an arrangement with Singapore for energy trade. Is there any potential for tri-lateral cooperation involving Sri Lanka?

Many countries are asking how do we ensure that our energy supply is sustainable and reliable? Australia, Europe and Asia all grapple with this question. It’s a common problem for any domestic energy market.

Part of the answer to this question can involve connecting electricity services across national borders. Improved technology has made this more viable, enabling us to draw on each other’s strengths and build more sustainable energy grids.

You mentioned Australia’s cross-border energy arrangement with Singapore. This has been under development because Australia has large-scale wind and solar potential, whereas Singapore has concentrated energy demand and very good battery capability but not a lot of space for generation. So there’s a possible connection that we could make there. 

Now of course Sri Lanka is a bit further away from Australia, but it is very close to India. To me, Sri Lanka’s natural partner for cross-border energy sharing would be with India.

If Sri Lanka could get the conditions right for a connection across the Palk Strait, that could open up a lot of potential. Sri Lanka is exploring investment in wind and solar power; and India is likely to have a limitless energy demand in the coming years. There’s a natural opportunity here.

Q What do you hear from Australian companies about investment opportunities in Sri Lanka, especially in the Colombo Port City?

What I consistently hear from our corporations looking at entering any international market, is that their top concerns are the transparency and predictability of the market.

Transparency means can they understand what the rules are?

And predictability means can they rely on those rules to run their business as they had expected?

So when I talk to the Sri Lankan government about how we can encourage more Australian investment, I always say that transparency and predictability are key. How do you make your market more understandable for new entrants, and make it as reliable as possible for investors once they are established? Trade agreements like the Regional Comprehensive Economic Partnership really help with these issues, but ultimately it all boils down to your domestic regulations. 

I think we’ve got a pretty good record with Australian investment into Sri Lanka, but of course I always want to see more!