Select Committee on Foreign Affairs Appendices to the Minutes of Evidence - Sixth Report


APPENDIX 27

Memorandum submitted by the Confederation of British Industry

1.  BACKGROUND

  The Confederation of British Industry (CBI) has a large number of members with interests in Central Asia and the Transcaucasus. These interests range from multi-million pound investments to longstanding and substantial trading relationships. We believe that there are clear opportunities to grow these business links still further. The views outlined in this submission represent the opinions of the major investors in the region and the experience of companies doing business in these markets. It does not seek to provide trade or investment data that is available from other sources.

2.  THE CONTEXT OF FCO WORK

  It is important to note that the political dynamics of the region have a key impact on the way that business is conducted. In particular due consideration should be given to the following points:

    —  the significant commercial impact of the political and economic insights given by FCO officials. This is recognised and appreciated by business. In addition, diplomatic assistance provided by the FCO has been central to investment decisions in the region.

    —  government contact is very important in these countries. It is vital to maintain and strengthen the network of contacts to assist in growing existing commercial positions, to facilitate the search for solutions to business-related problems and to best take advantage of emerging opportunities.

3.  THE RATIONALE FOR GREATER REPRESENTATION IN THE REGION

  Business feels that there are strong arguments for an enhanced level of resources in the region. It believes that:

    —  in spite of the recognition given to the overall limitations on FCO resources, increased FCO representation in the region is required. The Caspian Enhancement Programme will go some way towards redressing the imbalance when compared to the levels of representation of our major competitors. The CBI would urge that this situation is kept under review. There is also scope for other innovative ways of resourcing including co-location and some hub-and-spoke networking.

    —  high levels of experience and expertise in FCO staff are particularly important in the region. All of these markets often operate in a complex manner and exhibit less than transparent characteristics. Business recognises the role that Ambassadors play in trade matters. This is valued. There is, however, a need for more sector specialisation in commercial staff, particularly in the energy sector. This has already been recognised by our competitors. For example, the US Embassy has now appointed a full time Energy Officer.

    —  the potential offered by the FCO short-term secondment scheme could be utilised. The CBI played a major role in getting this private sector attachment scheme launched and it believes its demonstrable success could be extended. Six-month project-based secondments to Posts in the region would provide real mutual benefits in key commercial sectors.

    —  the current arrangements for consular and visa services are in need of review. This is important because many of the major investors in the region are employers of considerable numbers of local staff, some of whom travel frequently to the UK. Any visa system must not only look to protect British interests, but must also be flexible enough not to impact negatively on legitimate commercial and political interchange.

4.  THE MECHANICS OF DOING BUSINESS

  There are a number of general recommendations that the CBI would make that relate to the way in which British business interests could be assisted still further. These include:

    —  the need for Cabinet-level support and an increased programme of ministerial visits in both directions. This would not only serve broad foreign policy aims, but would also raise and support British business interests in the region. This is particularly the case where strategic industries are concerned.

    —  developing greater synergies with British investors who remain concerned at the general investment environment. These concerns include elements such as the treatment of foreign investors; tax issues involving regimes, treatment and administration; customs regulations; the legal system; and the guaranteed protection of patents. The FCO, working with business, has a part to play in ensuring that unnecessary impediments and burdensome bureaucracy are not acting as deterrents or inhibitors to commercial operations.

    —  examining whether greater efforts can be made in institution-building in the region. British expertise is recognised as world-class and there are both generic and specific advantages of assisting the proper growth of a sound institutional framework.

    —  providing advice on finance. Although not the lead responsibility of government, all the markets are classified by ECGD as "under constant review". It is imperative, therefore, that there is timely, relevant and accurate information that enables business opportunities to be pursued. In addition, there is a clear need to provide details of funding that is available from other sources such as the EU and the multilateral institutions. This is particularly the case for major project funding.

    —  increasing the use of Information Technology which would benefit more firms seeking access to information, especially where FCO research facilities on the ground are limited. Equally, organisations such as the CBI could share data-bases of commercial interest with the Posts in a more meaningful manner.

    —  full and faithful implementation of all the recommendations contained in Sir Richard Wilson's Review of Export Promotion will create a truly effective public-private sector partnership in export and investment promotion. The CBI strongly supports Sir Richard's Review and urges the Committee to take its recommendations into account as the inquiry proceeds.

April 1999


 
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