Growth through international trade and investment

Saturday, 4 June 2011 00:00 -     - {{hitsCtrl.values.hits}}

Following is the address delivered by British High Commissioner to Sri Lanka John Rankin to the Council for Business with Britain:

The theme for my remarks this morning is ‘Growth through International Trade and Investment,’ an important subject for the United Kingdom, for Sri Lanka and for the members of the Council for Business with Britain.

My job in Sri Lanka is in some respects a simple one: It is to represent here the consular, commercial and the political interests of the UK. That indeed is the basic job description of all of our Ambassadors and High Commissioners around the world. The same is true in reverse for Sri Lanka’s Ambassadors and High Commissioners: their job is to represent Sri Lanka’s consular, commercial and political interests overseas.

That might sound straight forward. The difficulty we face is that we need to meet this objective in a very fast changing world. As a young diplomat I lived through the fall of the Berlin Wall, followed by the collapse of the Soviet Empire and the end of the Cold War. These were welcome developments. But the speed at which it all happened had not been foreseen and indeed some of the consequences are still being worked through in parts of Europe, more than 20 years after those momentous events.

Today, something similar is happening in North Africa and parts of the Middle East, with the outbreak of the Arab Spring. The precise outcome is not yet known. But my hope, and that of my Ministers, is that democratic Governments will emerge which will act in accordance with the will of their people and which will be responsible players on the international stage.

One lesson to be drawn from both the collapse of the Soviet Union and the current Arab Spring is that the most stable countries are pluralistic democracies that respect the rule of law. That is one reason why I welcome the institutions that our two countries have in common as a consequence of our shared history: our traditions of Parliamentary democracy; of free elections and of an independent judiciary.

Another value that we share is our recognition that private enterprise plays a key role in the development of our countries – in the creation of jobs and wealth, the driving forward of innovation, and in contributing positively to social welfare. I therefore welcome the Council for Business with Britain’s work in sponsoring the English Language Training Project, which is helping to upgrade the English language skills of pupils in schools throughout Sri Lanka, particularly in rural areas.

Sri Lanka already enjoys the highest literacy rates in South Asia, and spreading English language skills to rural areas can help those communities to share more fully in the country’s economic growth. On behalf of both the Foreign and Commonwealth Office and the British Council, who are your partners in the project, I thank all those in the CBB who are funding this programme for their generosity. It is money well spent.

The British Government that came to power last year inherited the challenges that the global financial crisis had placed on the UK’s economy. The Government immediately set out its resolve to move away from unsustainable borrowing and unsustainable public spending. And it has now taken decisive steps to reduce the UK’s budget deficit and bring our economy back into the balance.

At the same time the Government made it clear that it would not resort to protectionist measures. Rather, it has taken determined steps to maintain and enhance the UK’s reputation as the world’s most open, entrepreneurial and free market economy – precisely because it is international investment and international trade which can be the main driver of the economic growth we need.

We are moving in the right direction:

According to the World Bank, the UK is the easiest place in Europe to operate a business. It takes just 13 days to set up a business in the UK, compared to the European average of 32 days. The OECD assesses that the UK has the fewest barriers to entrepreneurship in the world.

This in turn is helping us to develop highly innovative industries. Our ICT sector is now worth £ 120 billion annually. We are renowned for high tech engineering and aero space technology as well as being a world leader in low carbon technology.

And we are a global trading centre. According to the World Trade Organization, in 2009 the UK was the second largest exporter of commercial services in the world and the third largest importer.

The World Bank says we have one of the most flexible labour markets in the world. 673 jobs are created in the UK every week and one in four jobs in the UK is linked to business overseas.

And finally, we have a competitive tax system. We are moving toward a corporate taxation rate of 23%, the lowest of any economy in the G8.

What does this mean for

Sri Lanka?

First and foremost, it means that the UK is very much open to investment from Sri Lanka and to partnership between UK and Sri Lankan companies. The British High Commission remains committed to providing assistance to Sri Lankan companies wanting to do business in the UK, and we will always be keen to put you in touch with UK companies interested in setting up a partnership.

But our commitment to international investment is not merely a one way process. We also want to grow our companies by helping them to enter overseas markets and to increase their exports.

Our close historic ties, the similarities in our legal and regulatory systems and the close family ties between Sri Lanka and the UK mean that our business links are very strong. But I am not sure how many people realise just how strong those links are in practical terms.

Let me give you some facts and figures:

UK companies provided $ 300 million of Foreign Direct Investment in Sri Lanka in 2009. That was over 10% of total FDI in Sri Lanka, more than any other country apart from China.

 There are over 100 companies in Sri Lanka with a UK affiliation across a wide range of sectors, including financial services (HSBC, Standard Chartered, Aviva), the garment industry (Marks and Spencer, Tesco, Triumph, Next) pharmaceuticals (GSK) and construction (Mabey Bridge, Scott Wilson).

Sri Lankan exports to the UK totalled $ 1 billion in 2010, and imports from the UK were $ 186 million. That made the UK Sri Lanka’s second largest trading partner by volume.

Sri Lanka’s strong economic growth is now creating new opportunities. Existing British companies are expanding their investments, and not just in traditional fields. The London Stock Exchange investment in Millennium IT demonstrates how Sri Lankan expertise can play an important role in attracting new forms of investment. Cairn Energy will begin drilling for oil off the coast of Mannar later this year with an initial investment of $ 100 million.

And of course there continue to be very strong opportunities in the tourism sector, in education and in construction. Cleveland Bridge recently concluded a contract to build 210 steel bridges in this country with support from the UK’s Export Credit Guarantee Department.

In the education sector, some 8,000 Sri Lankan students are currently studying in the UK in our Universities and Colleges. They are bright and motivated individuals who perform consistently well. But of course not all students can or want to move to the UK for their studies. That is why I am delighted that more than 25 UK Universities and Colleges are now offering their degrees and qualifications here in Sri Lanka through local partners.

The enrolment figures are hugely encouraging. Thus, to take one example, the University of Staffordshire now has more than 1,000 Sri Lankan students enrolled in its local programmes. The University of Wales in Cardiff has over 100 students enrolled in its local MBA programme. The British Council here in Sri Lanka last year had 34,000 Sri Lankan candidates sitting examinations for UK qualifications.

The British High Commission’s Trade and Investment team continue to offer services to British companies interested in the Sri Lankan market, providing market investment reports on a sector by sector basis. We also support business events and inward trade delegations. The recent trade delegation from Northern Ireland has already resulted in a contract for $ 63,000 sales in Sri Lanka for one Belfast Company.

In the UK, the Sri Lankan High Commission is also seeking to expand business between our companies. And on 3 June in London 10 major Sri Lankan companies will be engaging in presentations at the Sri Lanka Capital Markets day organised by the London Stock Exchange.

My hope is that Sri Lanka will continue to maintain a transparent and well regulated market which can continue to attract overseas investment from the UK and other countries. This is not a zero sum game. It is a win-win for all involved.

Next year, London will be hosting the Olympics Games. In 2014, Glasgow will host the Commonwealth Games. And of course Sri Lanka is bidding to host the Commonwealth Games in 2018.

Sri Lanka is in competition with Australia and I make no comment on the relative merits of those two bids. But what I do know is that the London Olympics will not merely be a marvellous sporting occasion. This will also be an Olympics with a longer term legacy:

  • The redevelopment of six of the poorest boroughs in East London
  • A green legacy, reclaiming previously heavily polluted land for long term use
  • Nine million extra visitors to the UK next summer, many of whom will visit again in future years as returning tourists
  • And an estimated 50,000 extra long term jobs created in the UK.

Should Sri Lanka be successful in its bid to host the Commonwealth Games, we look forward to sharing our expertise in games organisation with you. And in particular our companies with experience of building sports stadia and providing top class sporting facilities look forward to doing business with you.

So this is an exciting time for both of our countries. More UK companies are looking to do business here. More UK tourists visited Sri Lanka in 2009 than from any other western nation. Over 100,000 are expected to visit this year. There are huge demands for UK Higher Education providers, with our universities working in partnership with your education sector to provide top class courses and qualifications.

If both of our countries can continue to provide an open, fair and competitive environment for two-way trade and investment, while also reducing budget deficits, then I believe our respective economic futures will be bright. And I believe that a strong two way trade and investment relationship between our two countries can play a key role in strengthening the wider bonds between the United Kingdom and Sri Lanka.