Shoeb K Zainuddin
In the past, most British companies looked outward when it came to working with Asian investors. But as Asian companies become larger and more important, the UK government is working hard to woo them to invest in Britain.
How do you transform a city in tough economic times? London has for some time now been regarded as the world’s financial capital, competing with New York City for the number one spot.
Beyond the financial district, London has been transformed over the past two decades through innovative redevelopment projects. Canary Wharf has emerged as a new business district while East London has become Europe’s Silicon Valley. More young entrepreneurs, especially in the creative industries, are opting to establish themselves in the British capital.
But with Europe facing the prospects of a deep economic winter, London and the United Kingdom are feeling the chill. The UK economy grew by less than 1% in 2011 and prospects for 2012 are not very bright. With global financial markets in a state of uncertainty, the City of London, the historical financial district, is also looking at a bleak year.
The longer-term view, however, is more positive given the UK government’s new emphasis on building closer economic and trade ties with fast-emerging economies in Asia, including Indonesia. London wants to attract more Asian investors to the UK, not just to buy properties but to establish new businesses.
“The UK attracts more investments than any other country in the eurozone and Asia is a priority for us,” said Nick Baird, chief executive of UK Trade and Investment, speaking to GlobeAsia on a recent media visit to London.
“There are 27 countries which have been determined as emerging powers and Asia has nine of these,” he added. These include China, India, South Korea, Thailand, Malaysia, Indonesia, Singapore, the Philippines and Vietnam.
Last year, the UK attracted more than 250 billion pounds sterling in new investments and, while the bulk of this money came from European companies, investments from Asia are the fastest growing.
To attract more investments, the UK government has launched a coordinated program to look at developing infrastructure projects where foreign companies, especially those from Asia, can participate. “We are shifting to a more renewable energy infrastructure network and we are looking to develop partnerships with Asian countries,” noted Baird.
The British government has earmarked more than 200 million pounds sterling ($260 million) worth of infrastructure projects over the next few years. These include high-speed rail; waste water management; high-speed broadband and property developments.
Asian companies are responding: the single largest investment in Britain over the past two years came from a Thai company, which built a steel plant.
In order to strengthen economic ties with Asia, the UK Foreign & Commonwealth Office is also playing its role by engaging more deeply with the region. Boosting diplomatic ties with emerging Asia is thus a top priority for the Foreign Office.
A senior diplomat at the Foreign & Commonwealth Office told Asian journalists during the visit that Britain wants to make sure it has strong relations with Asia as half the world’s economic growth will come from the region. “Diplomatically, it is very important for us to engage with Asia and Indonesia is a top priority.”
“Most of the big decisions concerning the world over the past 20 years were made by the US and Europe,” he added. “That is changing.”
Beyond fostering better diplomatic ties, the sheer economic pull of Southeast Asia is compelling. Britain exports more to Southeast Asia, for example, than to India and China combined. This is because these economies are now at a level of economic development that is compatible with what Britain has to offer than they were 20 years ago.
British luxury cars are selling well in Asia. More British professionals, such as accountants and lawyers, are also heading east and doing well. Than there is football, one of Britain’s biggest exports, as well as a top draw for investors.
Malaysian tycoon Tony Fernandez, the founder of AirAsia, owns premier league football team Queens Park Rangers while former Thai Prime Minister Thaksin Shinawatra was the former owner of Manchester City, before selling the club to Abu Dhabi investors.
Football is no longer a British game but a global game based in Britain, given the nature of the players, owners and sponsors that are involved.
This year is especially important for Britain on two other fronts – London will host the Olympics and the Queen has just celebrated her silver jubilee. Both these events are expected to attract millions of tourists to the UK, giving it a boost not only in terms of tourism dollars but further enhancing its image as a major economy.
“For us the Olympics is a massive opportunity, not just as a sporting extravaganza but to leave behind a legacy,” said the senior diplomat. “It is a great opportunity for us to showcase our business excellence.” GA