Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 21 - Evidence - Meeting of January 29, 2015
OTTAWA, Thursday, January 29, 2015
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 10:32 a.m. to study security conditions and economic developments in the Asia-Pacific region, the implications for Canadian policy and interests in the region, and other related matters.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: Honourable senators, today the Standing Senate Committee on Foreign Affairs and International Trade is continuing its study on security conditions and economic developments in the Asia-Pacific region, the implications for Canadian policy and interests in the region and other related matters.
We have been at this study for quite some time now, so we thought it would be wise, as we are preparing for our next phase, to be brought up to date on any issues that may be of importance or any questions that you may wish to put to the panel.
I'm very pleased that Foreign Affairs, Trade and Development Canada has responded to our request and is here to give us an update on any issues they think may be important to our study. Appearing on behalf of the department we have Ms. Susan Gregson, Assistant Deputy Minister, Asia-Pacific; Mr. Peter MacArthur, Director General, South and Southeast Asia and Oceania; and Mr. Jeff Nankivell, Director General, Asia Programming.
Welcome to the committee. This is not your first time, so you know that we like questions. The floor is yours for an opening statement.
Susan Gregson, Assistant Deputy Minister, Asia-Pacific, Foreign Affairs, Trade and Development Canada: Madam Chair and honourable senators, thank you for the invitation to speak to you again today to provide an update on Canada's relations with Burma, Indonesia, Singapore and the Philippines, as well as regional developments in advance of your visit to Southeast Asia.
[Translation]
In the months since I last appeared before this committee, Canada's relations with the countries of Southeast Asia and the Association of Southeast Asian Nations, ASEAN, have continued to grow, commensurate with the increasing importance of this region. It is worth underlining that the ASEAN region represents a compelling and dynamic market with a plentiful labour force, significant natural resources, expanding infrastructure and a large and growing consumer population. Canada's engagement with ASEAN facilitates the advancement of our foreign policy and commercial interests.
[English]
In August 2014, at the ASEAN-Canada post-ministerial conference, Minister Baird announced plans to significantly increase Canada's visibility in the region by establishing a dedicated ambassador to ASEAN and expanding resident diplomatic representation to all 10 ASEAN member states by opening Canadian offices in Cambodia and Laos. Our visibility was further bolstered by Mr. Baird's announcement of substantial new security projects to mitigate biological and nuclear threats, combat human smuggling and other forms of transnational criminal activity, improve regional cybersecurity tools and address radicalization to violence and the foreign-fighter phenomenon.
Our work in the security realm with ASEAN countries has significant benefits to member countries and to Canada. Canada's regional development assistance programming in Southeast Asia is focused on ASEAN priorities in the areas of human rights and disaster risk reduction, as well as ASEAN's regional connectivity agenda.
Since my last appearance Canada has also successfully hosted the ASEAN Economic Ministers roadshow. We have a little booklet on that to show you as well.
Minister Fast welcomed a delegation of ASEAN trade ministers and senior economic officials to Vancouver and Toronto in June 2014. The roadshow highlighted energy, infrastructure, science and technology and financial services sectors and helped brand Canada as a key economic partner for the ASEAN member countries.
Addressing the countries in question, allow me to begin with Indonesia, as it remains one of our most important diplomatic partners and is Canada's largest merchandise export market and largest destination for Canadian foreign direct investment in the region.
Internationally Indonesia is growing in prestige and influence. It is the only Southeast Asian country that is a member of the G20 and hosts the ASEAN secretariat.
[Translation]
The most significant development in Indonesia since I last testified has been the presidential election in July 2014. President Joko Widodo, or Jokowi, is the first Indonesian president who is not a member of the traditional economic, political and military elite who have dominated Indonesian politics since independence. Expectations are high that he will be a true reformer and make strides in tackling endemic corruption and improving Indonesia's economy. Jokowi's top priorities include attracting foreign investment and further integrating Indonesia into global trade, presenting opportunities for Canada. As a tangible measure to support Canadian private sector involvement and to help Indonesia meet its infrastructure needs, Canada is supporting the establishment of a public-private partnership centre in Indonesia with a view to promoting private sector investment in infrastructure development in the country.
[English]
In 2015 the focus for the bilateral relationship is the implementation of the Canada-Indonesia Plan of Action signed by Minister Baird and his Indonesian counterpart in August 2014. The plan outlines objectives to enhance bilateral relations through strengthened political defence and security cooperation, increased trade investment, economic and development cooperation and through enhanced collaboration on social, cultural and people-to-people contacts from 2014 to 2019. Indonesia continues to be a country of focus for Canadian development assistance, and the yearly allocation is growing.
Returning foreign fighters, coupled with the impending release of a number of prisoners that have been involved in some of the main terror incidents in Indonesia, has generated concern about the terrorist threat in that country. Canada continues to provide significant counterterrorism and anti-crime capacity-building support, including anti- migrant smuggling assistance to Indonesia.
A strong demonstration of the long-term approach Canada has taken can be seen in the RCMP deployment of an officer to the Jakarta Centre for Law Enforcement Cooperation. This position continues to enable the direct delivery of Canadian training to Indonesian and regional security forces.
Perhaps the most significant development in the Philippines since my last appearance is the signing of the landmark peace agreement in March 2014 between the government and the Moro Islamic Liberation Front. In the coming months the Philippines congress is expected to approve the necessary legislation for the agreement to enter into force. It is then anticipated that a plebiscite will be held in the affected areas, paving the way for a new, autonomous Bangsamoro government. This would end decades of civil war in the Southern Philippines and is a priority for the Aquino government. Canada continues to provide support to the peace process.
Progress has also been achieved in assisting people in areas affected by Typhoon Haiyan, known locally as Yolanda, which struck in November 2013.
Canada has been at the forefront of the response to Haiyan and is the third largest donor. Our response included deploying the Disaster Assistance Response Team, or DART, and creating the Typhoon Haiyan Relief Fund, which generated $85.59 million in donations made by individual Canadians to registered charities. In total, the Government of Canada has committed over $90 million to the Typhon Haiyan response, of which $70 million has been programmed to date. In November 2014, Canada announced a $20.6 million Typhoon Haiyan reconstruction assistance call for proposals.
In December, the Philippines faced Typhoon Hagupit, known locally as Ruby, and prepared and responded successfully. In response to the storm, Canada deployed its Interdepartmental Strategic Support Team prior to Hagupit's landfall, to provide immediate on-the-ground assessments and contributed $5.13 million in humanitarian assistance.
[Translation]
The Philippines has also been designated as one of Canada's 25 development countries of focus. Canada's development assistance program supports sustainable economic growth in the Philippines, focusing on increasing opportunities for women, youth and marginalized groups, as well as improving the environment for inclusive growth throughout the country. In addition, since my last appearance, I am pleased to inform you that the Philippines has been added to the Global Markets Action Plan. Both of these designations will allow Canada to support development needs in the Philippines, while at the same time benefiting from the economic and commercial opportunities that exist in the country.
[English]
On the multilateral front, the Philippines have taken over from China as the chair of APEC. They will host the twenty-third APEC leaders' summit in Manila in November. This year will provide an opportunity to revisit optimal levels of Canadian engagement in APEC to ensure that regional interests are advanced within the APEC fora.
The Philippines recently publicly endorsed Canada's bid to join the East Asia Summit, or EAS, and will make a strong partner as it takes over in 2015 as Canada's coordinating country within ASEAN.
[Translation]
Since my presentation in December 2013 on Burma, there have been several important developments, including the official opening of the first resident Canadian embassy in Rangoon in August 2014. That presence on the ground allows us to closely monitor changes and to contribute positively to the ongoing reforms. We are well positioned to pursue commercial and development priorities. Burma was identified as a priority market under the Global Markets Action Plan and is also a country of focus for development cooperation. Canada will concentrate on implementing programs that stimulate sustainable economic growth and advance democracy.
[English]
In May 2014, Manulife became the first Canadian company to establish a physical presence in Burma. Since the easing of sanctions in 2012, Burma's trade with Canada has been growing rapidly. Figures for 2014 continue to show steady growth, with total bilateral trade already reaching over $26 million, up from $4.8 million in 2012. Two-way investment activity has so far been limited as a result of economic sanctions.
2014 was a breakout year for Burma. It successfully chaired ASEAN and hosted the East Asia Summit in November. Both Minister Baird and Minister Fast visited Burma in August 2014, meeting key Burmese interlocutors in government, the private sector and civil society.
While there were many positive developments, the human rights situation of ethnic and religious minorities continues to be of concern, particularly that of Muslim communities, including the Rohingya. The Burmese government has made a concerted effort to reach a national ceasefire with armed ethnic groups, and rapid progress was made over the first half of 2014. However, talks have stalled and there is worry that if there is no signing by April, the window of opportunity will close.
The eyes of the world will remain on Burma heading into general elections in the fall of 2015. The elections will be a critical indicator of Burma's continued move towards democracy. It appears that there will be no constitutional changes made prior to the elections, so opposition leader Aung San Suu Kyi will be unable to stand for president.
Singapore remains at the economic heart of Southeast Asia and continues to punch above its weight internationally, including through its hosting of the APEC secretariat. 2015 is an important year for Singapore, as it marks 50 years of independence and as Canada celebrates 50 years of diplomatic ties with Singapore. 2015 may also prove to be an active year on the political front in Singapore, as there are expectations that Singaporeans will head to the polls late this year or early in 2016 for parliamentary elections.
[Translation]
Canada is also working in collaboration with the Government of Singapore by providing $4.5 million to the ASEAN Infrastructure Centre of Excellence to support public-private partnership projects to meet Southeast Asia's pressing infrastructure needs by helping ASEAN countries identify and prepare viable, bankable and high-impact regional PPP infrastructure projects. Given the country's importance in the region, it is no surprise that Minister Baird chose to deliver a key speech in Singapore in August 2014, outlining Canada's vision for its relationship with the entire Asia-Pacific region.
[English]
The past several months have seen a range of developments in this fast-moving, dynamic region. Despite all of the changes, the constant has remained that Southeast Asia and ASEAN are central to Canadian interests in the Asia- Pacific and, indeed, globally. As such, Canada continues to look for ways to increase and improve our visibility and engagement.
My colleagues at the Canadian embassy in Jakarta and at the Canadian High Commission in Singapore are very much looking forward to welcoming you next month, and I wish you a productive and enjoyable visit.
The Chair: Thank you. I think, Mr. MacArthur and Mr. Nankivell, you are here to answer any specific questions.
I have two areas for information to put before I turn to other senators for questions.
First, you're saying that the human rights situation of ethnic and religious minorities continues to be of concern. I know that government to government there are some comments and maybe conversations, but increasingly, it seems to be that the majority, how they acted and reacted within the previous regime with a little freedom, are showing the excesses of the minorities and majorities. It is worrisome.
Are we working at the community or parliamentary level on these human rights issues or differences?
Ms. Gregson: You're referring to Burma, senator?
The Chair: Yes. I'm sorry; I should have said that.
Ms. Gregson: That's right. Canada has been welcoming of the democratic reforms in Burma. We've been working with the authorities there and with civil society in respecting human rights, democracy, rule of law and so forth. But we do continue to have serious concerns with regard to violations of religious freedoms involving the Rohingya and also other ethnic minorities.
Recently, violence broke out in Rakhine State in western Burma. This was in June and October of 2012, which was really the result of long-term simmering tensions between the Buddhist majority, who are ethnic Arakan citizens, and the mostly stateless Rohingya, who are viewed by the Burmese as Bangladeshi, but they are actually stateless persons. So this tension continues to simmer. Canada is very active in promoting a peaceful resolution to these issues. We have been constant in condemning the sectarian strife.
The Chair: You pointed out that 2015 will be the fiftieth anniversary of independence of Singapore and that Canada will celebrate 50 years of diplomatic ties with them. Are there any programs? I'm concerned that if we go there, we should know what is being planned because we are often asked to participate in ceremonies and we should know what the official positions are and what our government may be planning for this fiftieth anniversary.
Ms. Gregson: I know that our High Commission is working on various activities to highlight the fiftieth anniversary. I'm not specifically aware of any activities during your visit.
The Chair: Yes. We need to know what the two governments are planning so that we are not caught off guard.
Ms. Gregson: That's in the planning stage but I will turn to Peter.
Peter MacArthur, Director General, South and Southeast Asia and Oceania, Foreign Affairs, Trade and Development Canada: Certainly. To date, Singapore has not announced any plans to celebrate this anniversary, but I'm happy to report that the High Commission is involving youth in Singapore to mark this occasion by setting up a contest for students to develop a logo to be used throughout the year. This week, they have also launched a web page design competition targeting young Singaporeans, ages 14 to 25, on the significance and importance of the Canada-Singapore relationship. We are involving young people locally to help celebrate. Work is also under way to identify other appropriate opportunities to demonstrate the value of the long-standing relationship we have with Singapore.
The Chair: That will be one more reason why Singapore was a good choice on our part.
I also want to put on the record that I have contacted both the ambassador in Jakarta and the high commissioner in Singapore and I want to put on the record that they have been extremely cooperative and helpful in our program. That should be noted by the department.
Ms. Gregson: They are very much looking forward to your visit.
[Translation]
Senator Fortin-Duplessis: Welcome to our committee. I would like to know more about the most promising development sectors when it comes to bilateral trade and investment between Canada and Indonesia.
Mr. MacArthur: Indonesia is the most important export market of the region for Canada. We are especially focused on financial services and infrastructure projects — all public-private partnership projects, an area in which Canada, including Ontario, is a global leader. Our legal and accounting firms, as well as infrastructure-oriented companies, are mostly interested in Indonesian and Philippine markets. Mr. Nankivell could tell you about what we are doing through PPPs in development.
Jeff Nankivell, Director General, Asia Programming, Foreign Affairs, Trade and Development Canada: We see a very promising market for Canadian companies that provide services in the infrastructure sector in Indonesia, which has huge international needs, but has so far been unsuccessful in developing its infrastructure effectively. Prime Minister Harper announced, in 2013, Canada's support, in collaboration with other donor countries — including Australia — and the Asian Development Bank for establishing a new centre of expertise on PPP projects in Indonesia.
The new Indonesian government's finance minister will facilitate the emergence of that agreement, as there are numerous constraints in terms of regulations, legislation, administration, and so on.
Senator Fortin-Duplessis: My second question is about security. Ms. Gregson mentioned that Canada provided security assistance. Have you looked at all the significant challenges Indonesia is facing in terms of security?
Ms. Gregson: We are participating in a counter-terrorism working group with Indonesia, which has shown a lot of leadership in that area. We have a counter-terrorism program within the department. We have contributed to a number of initiatives, especially in partnership with Indonesia, as well as with other partners through regional programs.
We are working on developing legislation on regional plans with agencies from Southeast Asia, including Indonesia.
[English]
Senator Ataullahjan: Thank you for being here this morning. To go back to a similar question to what Senator Andreychuk asked, in late December the UN General Assembly adopted a resolution calling on Burma to amend its citizenship laws so it no longer discriminates against the Rohingya. Has this put additional pressure on the Burmese government and how have they have reacted? I can't even repeat what the Burmese monk had to say about the UN representative and the language that was used. How has the government reacted?
Ms. Gregson: As I mentioned earlier, we have been urging the authorities and the ethnic groups to work toward a peaceful solution to this tension. Minister Baird has raised the situation of ethnic minorities with the Minister of Foreign Affairs of Burma. He has also raised issues with regard to religious freedom in Burma and raised issues with regard to Muslim minority populations with the President during his trip to Burma in August last year. We consistently use every opportunity we can to call upon all the parties in Burma, including the government, communities, leaders and opposition groups to allow all the humanitarian actors safe and unhindered access to the crisis-affected people, including in Rakhine State, where a lot of these problems are taking place.
I should add that our ambassador on the ground works on an ongoing basis, as does his team, with the various authorities, ethnic groupings and so forth to try to promote dialogue and peaceful resolution of these issues.
Senator Demers: Thank you very much for your presentation. Which regional organizational groupings are the most important in Southeast Asia and what is Canada's policy toward the various groupings in the region?
Ms. Gregson: Thank you for your question, senator. I mentioned ASEAN during my opening remarks and that remains a very important grouping in the region. So the 10 countries that are in ASEAN are working toward having greater economic integration between the 10 countries. Of course you will understand there is quite an array in the state of development of these countries. We have lesser developed countries like Laos and then we have Singapore. So it's quite a range. But the countries are working together to support one another mutually, particularly in areas of economic integration.
As I mentioned earlier, Canada's been a dialogue partner with ASEAN for, I think, 37 years. What we've been trying to do over the past several years is demonstrate our solid commitment to that region and we've been doing that by ensuring that we have ministerial representation at the various meetings that take place several times a year. So both Minister Baird and Minister Fast have regularly attended these meetings. For the past couple of years, we have consistently expressed our desire to become a member of the East Asia Summit, which is a leaders' summit, and also the ADDM-plus, the ASEAN Defence Ministers' Meeting, which is a defence meeting. We were very pleased that during the East Asian Summit last year in November, President Aquino of the Philippines publicly welcomed Canada and offered its support to Canada for joining the EAS. This is really the most positive signal we've had to date.
I should also mention APEC, Asia-Pacific Economic Cooperation, as an important regional organization. Of course it also includes Mexico and the U.S. It is not just Asia, but it is largely made up of Asian countries, many of which are also members of ASEAN. So the priority for APEC is largely regional economic integration.
This year, with the Philippines as chair, we are also looking at the priorities of the Philippines, which include attention to small and medium enterprises. That is a huge priority for Canada in our Global Markets Action Plan, so there's good alignment there.
Also, they are looking at resilience to natural disasters. Canada, of course, responded actively to the terrible Typhoon Haiyan last year.
Senator Eaton: Will this increased footprint that you have been working on for many years help us with the TPP negotiations? Is this part of a larger picture for TPP?
Ms. Gregson: We'd like to think so. I would defer that question to my colleague Kirsten Hillman, who is our lead TPP negotiator. The TPP is a very complex set of negotiations. When we look at our economic engagement in the region, we look at various options such as having different trade agreements with some of the member countries of ASEAN or some of the APEC member economies. But we decided to focus on the TPP as our priority for engagement in the region. We have very ambitious goals for the TPP. So we want to make sure that this is a beneficial agreement for Canada, as well as other countries in the region.
Senator Eaton: We got some pushback, didn't we? The U.S. didn't really want us to be part of the TPP is my understanding. Are there countries in ASEAN that you know of that are not pro us, or do you think that, for instance, Singapore, Indonesia or Burma are quite happy that we are at the table?
Ms. Gregson: It has certainly been my understanding that quite a large number of countries are engaged in the TPP and that everyone is working together to try to achieve some goals. I will turn to my colleague who has more background than I do.
Mr. MacArthur: Madam Chair, in answer to the senator's question, the only four ASEAN countries in the TPP are Singapore, Brunei, Vietnam and Malaysia. We are in the TPP negotiation. It is currently largely between the United States and Japan. I think that there are talks happening right now in New York City, trying to reach some conclusion to TPP. Only four of the 10 ASEAN member countries are in the TPP currently. We would like to see others join eventually, but it's a beginning. Within the TPP, we are all bargaining, and we are all hoping to benefit collectively from a positive outcome.
Senator Eaton: China is a huge, looming presence near those countries. How does it feel about Canada? For instance, when I was embedded with the navy the first year I was a senator, Australia conducted war exercises with us off the coast of Newfoundland because China was building their navy. Do you have any sense of how China feels about us taking and assuming a greater role in Southeast Asia?
Ms. Gregson: The short answer is that we would assume that China would welcome our participation in the region. China is, of course, engaged in some territorial disputes — and I think this is what you're referring to, senator — particularly maritime disputes, in the region, with a number of the ASEAN countries. Canada doesn't pronounce on these disputes. Our policy is to urge the countries involved to resolve their differences peacefully, but it is certainly an area that we are watching carefully.
Senator Oh: Thank you for the presentation. My question is on aviation safety. The world has placed much attention on Southeast Asia recently, due in large part to aviation safety, or the lack of it, in the region. There is an argument that, due to the growing demand for commercial air travel, the knowledge and the infrastructure of aviation simply can't keep pace. Can you share with the committee if this is the general concern you have from the region? Is Canada helping out with aviation maintenance or services?
Ms. Gregson: It is certainly an area that is a concern to everyone. Canada has expressed its condolences to the countries whose citizens have been lost in these tragic accidents. Aviation safety is an issue that is of concern to everyone. The ICAO, housed in Montreal, is certainly taking a lead in looking at aviation safety.
In terms of our response to the various disasters, where appropriate, we would look to seeing whether Canada has any expertise to deploy, but, generally speaking, the assistance has been provided by countries that are located a little bit closer to the disasters. I will turn also to Mr. MacArthur.
Mr. MacArthur: I would add, Madam Chair, that the Montreal-based company CAE, a world leader in flight simulators, has an extensive and growing presence in, for example, establishing a major regional training centre for pilots, civilian and military, in Brunei last year. They also have facilities in other countries, and they play a very important part in better training of pilots. I should also mention that, in the regular consultations that we have with many of these governments, we involve Transport Canada, and, in some cases, we do offer collaboration in things such as crash investigations, which we're very good at, and dealing with cold weather, for example, and hazardous remote conditions. These are the sorts of things that do come up. In the case of the most recent loss of an aircraft underwater, we did consult with the Indonesian government to see whether we could help with submersible technology, which Canada is very good at. We have a number of corporate entities that produce this technology, and we also have government entities that manage some of these units. They were not required at that time, but it is an ongoing offer to governments for search and rescue of downed aircraft.
The Chair: Just a couple of follow-up areas: it wasn't so long ago, maybe two decades ago, that we started the Track II confidence-building, partly as a look at how we could become more significant in the Asia-Pacific area. Part of it was the lack of confidence or, shall I say, some suspicions between countries in the Asia-Pacific, most notably China but also others, and that was somewhat successful.
We are now moving into formal structures. We hear about them from time to time in the press, et cetera, but have the tensions between the various actors in South Asia, in particular Southeast Asia, diminished? Have they found ways to work together on their dispute areas, but also trade and security issues? How do you see this evolving?
Ms. Gregson: Since you mentioned Track II, I can't resist. In reference to China, you will be aware that Prime Minister Harper had a very successful visit to China in November 2014, and there was an extensive joint list of outcomes that the two leaders signed. One of those outcomes was the establishment of a Track II dialogue with regard to trade relationships between the two countries. There is also an economic dialogue.
We are very pleased with the results of that visit and the Track II processes that have been launched.
In terms of the Asia-Pacific region and disputes there, this is really why we're so pleased to see entities such as ASEAN taking on a number of these areas.
The ASEAN Regional Forum is a forum in which regional security issues are discussed, and of course Minister Baird attends that forum every year.
Peter, did you want to add anything?
Mr. MacArthur: Simply to say that Canada would like China to follow the development path of a responsible, integrated stakeholder role in the region. We see, as you've heard, the ASEAN fora as the most appropriate venues for engagement on regional security issues. I wanted to reinforce that.
The most recent ASEAN meeting was emblematic of that.
The Chair: On security, from a Canadian perspective, when we started this study there were certainly a few senators and others who looked to security structures in the Pacific in the same way we have them in the Atlantic. Certainly as our evidence progressed it was quite obvious to everyone that there aren't security structures as we know them in other parts of the world, in particular our own with NATO, et cetera.
Are most of the security architectures that are being built either bilateral or responsive mechanisms to crises? Is there some thinking about long-term structures? Is it reinforcing the fact that China is taking the lead in many of these issues but it may be somewhat worrisome for the rest if they're not included? Where is the architecture on security trending at this point?
Ms. Gregson: Essentially, when we look at the security situation in the region, we are looking mostly at the disputed territories. That seems to be the cause of much of the security questions that arise.
In particular, there are islands in the South China Sea, the Spratly and Paracel Islands, and ownership of these islands is contested. It's related to economic activity as well, because these are zones where there's a lot of commercial fishing, but they are also areas where there are suspected to be oil deposits. Clearly it's in the interests of all the countries claiming these territories to continue.
Some of the countries — I believe Vietnam and the Philippines, if I'm not mistaken — have taken their case with regard to the so-called "nine-dash line" that China has imposed to the U.N. Law of the Sea, UNCLOS. China has rejected the jurisdiction of UNCLOS over these disputes and wants to resolve them on a bilateral basis. From our point of view, again, we don't make comments on territorial disputes but we urge all parties to resolve their differences peacefully.
Again, the ASEAN Regional Forum is one of the main architectural structures that helps discussion and works toward peaceful solutions in these areas.
As I mentioned in my opening statement, Canada contributes through various capacity-building mechanisms to provide security support in the region.
The Chair: Following up on security, you've talked about regional disputes, and that's the destabilizing elements, the religious minorities and others. There are international threats and international terrorism. How do we work on those with Indonesia at the moment? Is it only through UN dialogues or are we trying to develop stronger input into ASEAN, et cetera?
Ms. Gregson: This, of course, is where our interest in joining the East Asia Summit comes into play. As a leaders' summit it provides an opportunity for leaders to discuss all of the issues at play in the region, including security issues. We are continuing our efforts there.
There is also the Shangri-La dialogue that takes place. We also have bilateral security discussions with many of the countries in the region.
I don't know, Peter, whether you wanted to add anything to that.
Mr. MacArthur: I would only add that there are an estimated 500 Indonesians who have travelled to Syria to join the anti-Assad forces. We're watching the situation carefully.
I'm pleased to indicate that Indonesia benefited from approximately $5.5 million in capacity-building assistance from the department's anti-crime capacity-building, human smuggling envelope. This includes training and equipment to enhance Indonesian law enforcement's ability to prevent human smuggling. This is being delivered in part by Canadian agencies such as the RCMP and CBSA.
This is an example of the kind of cooperation, and when our ministers meet this is always one of the agenda items discussed.
The Chair: Our focus had been on piracy issues in the Indian Ocean. Increasingly I hear that it is moving into Southeast Asia in certain areas. Can you comment on those security issues?
Ms. Gregson: On the piracy situation? I'm afraid, Madam Chair, I don't have information on that with me. With your permission, we'll get back to you in writing on that question.
The Chair: Thank you.
Senator D. Smith: I've been to this part of the world several times before, but not Indonesia. Of the group, obviously, they have the most muscle. Sometimes, when I think of Indonesia, I still think of that old movie The Year of Living Dangerously, which I've watched several times. Quite fascinating.
If there are two or three things, or even one or two things that you think we might particularly focus on that might help, what would they be?
Ms. Gregson: That's an excellent question. As I mentioned in my opening statement, there's a lot of attention being paid to the new President Joko Widodo, known as Jokowi, and the fact that he's not a member of the established elite. He also has a very populist kind of style and approach that has generated a lot of interest — a very different kind of style.
When he was Governor of Jakarta he would go to various government service-providing agencies, so for licensing or whatever, and show up on foot and with tennis shoes on, basically, and ask for a service. If he wasn't given the kind of service that was expected to be given to citizens, this is something he would raise.
This is the kind of approach that this new president has been taking to government. That's of interest to us because we look at corruption as an endemic and pervasive issue in Indonesia. It's endemic, it's through all layers of government and it's in the legal system. According to Transparency International, Indonesia ranked one hundred seventh out of 175 countries. So clearly this is something of real concern.
The police force is commonly viewed as the most corrupt institution within Indonesia, and that's in a tie with the legislature. That gives you an indication of how pervasive this problem is.
That impacts on Canadian interests in terms of our commercial engagement. Nonetheless, we feel that Indonesia offers tremendous potential.
Just turning to our commercial activity, which I think is another area you might want to pursue, a lot of Canadian companies are operating there. Bombardier is there. BlackBerry; Manulife and Sun Life are experiencing tremendous growth. We also have Talisman Energy, Husky Energy, McElhanney Engineering, Ballard with fuel cells. SNC- Lavalin is there. There are some incredible opportunities.
I spoke about infrastructure earlier on, and as an island state or as a state that is composed of, I think, thousands of islands.
Mr. MacArthur: Seventeen thousand.
Ms. Gregson: Seventeen thousand islands, thank you. You can understand that providing infrastructure to get people and goods moving from place to place is a serious challenge. It also presents an incredible opportunity for Canadian companies in PPP areas, for example.
Those might be areas you want to pursue further during your visit. Peter has a suggestion.
Mr. MacArthur: Madam Chair, I will mention that Indonesia, a G20 country, many people term as the most important country not enough of us know about. One example is the social media scene there, the rising middle class where you have, in terms of Facebook and Twitter, amongst the leading clusters of this activity in the world. That's one reason that BlackBerry terms the Indonesian market as its biggest market in the world.
The young Indonesians connecting offer all kinds of opportunities to Canadian companies and ICT, including apps for the Internet. That makes it an interesting market beyond aerospace, agri-food, infrastructure, which we've talked about already.
Senator D. Smith: I've done a fair bit of work, and continue to, with the World Bank and IMF on this whole issue of transparency and corruption. I have served on a couple of big international bank boards and things like that, and they kind of like having the input.
But with this new president, it really sounds encouraging. Sometimes you will get a situation like a Nelson Mandela, who was as clean as they come and who was totally contrary to the sort of existing culture on these issues of where they're from. Do you feel optimistic this new president may be in that category? It would be refreshing and, quite frankly, exciting if this really happens because the stories I hear of the World Bank — they keep sending me to these conferences where they have Third World countries wanting to get things and trying to deliver the message on transparency and anti-corruption. This sounds hopeful. Do you think that's true?
Ms. Gregson: We certainly hope so. We think that is a great question. It is an area that our embassy is tracking very closely and reporting on significantly.
Of course, with corruption and other such issues that are so endemic, it is definitely an uphill battle. It is early days, so we're very optimistic about the future. I believe that our embassy will be very well placed to provide you with in- depth briefings on what they see happening with the Jokowi government during your upcoming visit.
The Chair: I think it has been stated elsewhere: Will he change the system or will the system change him? These are early days and we should be tracking that.
Senator Dawson: Very briefly, Mr. MacArthur, you mentioned about Indonesia being sort of the world's best-kept secret as far as economic growth. You also mentioned BlackBerry. Now that the secret is out, is BlackBerry getting more competition in the Indonesian market? Are they still the dominating player in social media, emails and in communications in general?
Mr. MacArthur: The last time I looked, BlackBerry was the leader, partly because the BBM system is cost-effective for young people and still very much a target of that market as a priority.
My comment was that there should be other companies moving into the market. BlackBerry is in the lead, but there are many other Canadian companies in this sector that should be exploring the Indonesian market more seriously because it is so large.
Senator Ataullahjan: Thank you. Just a follow-up to the question Senator Andreychuk asked, under the chairmanship of Malaysia in 2015, ASEAN has decided to intensify its effort to resolve the conflict in the South China Sea, which includes a code of conduct. How do you see these negotiations progressing? How have other countries in our study reacted to this?
Mr. MacArthur: The most recent ASEAN meeting that was hosted by Burma went much better than the one hosted by Cambodia. I think it is well recognized in the press and common knowledge that in the case of the Burmese, they stood up to the plate and did a wonderful job hosting and to ensure a more balanced discussion with respect to these issues between China and certain ASEAN members.
What you see is not only the Philippines and Vietnam but now Indonesia and Brunei voicing increasing concern about the more bilateral approach that China is adopting. I think the value of ASEAN is that collectively smaller countries get together and are able to work more closely with the Chinese but also with other players in the region, such as Japan and the United States.
There is a certain value of a well-chaired ASEAN meeting, especially when it goes to dealing with dialogue partners such as China, where these things can be talked out. The more venues and fora that exist like this, including the Shangri-La Dialogue, where the Chinese have their deputy minister available, help keep the dialogue going.
But there is an entrenched position, as Ms. Gregson mentioned, where the Chinese reject the internationalization and they would prefer a bilateral deal, and that is something that we have a problem with. We are assuming a UN Law of the Sea guided outcome is the way to go. It is peaceful and legal by international law.
[Translation]
Senator Fortin-Duplessis: Ms. Gregson, you mentioned earlier that Indonesian police forces are corrupt and that it will be difficult for the president to resolve that problem.
Should a conflict arise between a Canadian and an Indonesian, or between a Canadian company and an Indonesian one, can the Canadian side expect a fair settlement?
Ms. Gregson: Madam Chair, that's a very good question. This is really something we are monitoring closely, especially when it comes to situations where Canadians face legal difficulties in Indonesia.
This is really something we have to consider on a case-by-case basis. However, with their knowledge of the system's corrupt nature, our officials in Indonesia, our consular officials and our ambassador use every opportunity to raise the issues of transparency and the rule of law with the authorities in order to share our concerns with them and encourage them to do whatever they can to achieve a more transparent system.
Senator Fortin-Duplessis: When our committee travelled to China, we learned about an egregious case of a Canadian rotting in prison because he was deemed to have been bribed by a Chinese company accused of poorly carrying out the work it was supposed to do. All efforts are now being made to have that man released — that is, unless you have news of his release. This really caused us concern. We found that there were problems in China, as judges can be bribed there.
I hope the situation will not be the same in Indonesia.
Ms. Gregson: This is a concern we share with a number of countries.
Senator Fortin-Duplessis: Thank you very much.
[English]
Senator Oh: Thank you. I see Indonesia is coming up fast under new President Widodo. Recently I was in Ecuador for the APPF conference, and Indonesia suddenly had the largest delegation, close to 40 members.
What are the most promising areas for increasing Canada's bilateral trade and investment with Indonesia?
Ms. Gregson: Thank you very much for that question.
Canada actually has a trade surplus with Indonesia. It is one of the few countries in the world with which we have a trade surplus. It has emerged as Canada's largest export market, at $1.9 billion in 2013. It is the largest export market in the ASEAN region, and it is an important destination for Canadian direct investment abroad. The stock was $3.2 billion in 2012. Our exports rose by 96 per cent from 2009 to 2013.
The sectors of interest — and my colleague mentioned some of these earlier — are, in particular, information and communications technology; financial services, so this is why we see Manulife and Sun Life so active there; and aerospace. It is also one of our top 15 export markets for agriculture and agri-food products.
Mr. MacArthur: Just to add, it is a very interesting market as well in terms of the fact that the massive Canadian investment is mainly in mining extraction, where the Canadian and corporate social responsibility brand is important in Indonesia.
I also wanted to point out that energy is very important. We talk about maritime disputes. Two major Canadian energy firms, Husky and Talisman, are active offshore in that part of the world, and we're very strong as well in fuel cells, engineering, mapping and any services related to aerospace, including the flight training I mentioned earlier. It is an interesting market, not just for exports, but as you've heard, for Canadian investment in the market, which allows them to be more competitive.
The Chair: Thank you for appearing before us again and updating us. It has been helpful. We hope our report will be helpful to you and the work you do on an ongoing basis. We will certainly afford you an opportunity for any debriefing or follow-up on our report. Thank you again for appearing before us.
Senators, we are going to adjourn now, but before we do, we will have a meeting on Wednesday, and that will be the meeting to prepare for our visit. So we anticipate having that on Wednesday at 4:15. There will be one witness. We will determine which order we put those in, and then we will have our usual witnesses and meeting on Thursday.
(The committee adjourned.)