Conclusions and recommendations
Support to businesses from UK Trade and Investment
1. We
fear that the reorganisation of UKTI, may lead to business opportunities
in certain (temporarily less fashionable) countries being overlooked,
and the loss by dispersal of country expertise. Some of our witnesses
shared these concerns. It is still too early to judge whether
our fears will be borne out by events, nor do we wish to recommend
another reorganisation: UKTI has had too many 'makeovers' in recent
years. We recommend our successors to examine the structure and
effectiveness of UKTI in the course of the next Parliament. In
the meantime, at the very least, to avoid further confusion among
businesses, there should be no further changes to the name of
UKTI. (Paragraph 33)
2. We have already
expressed concerns that devolution of responsibilities for trade
promotion to the regions might lead to a duplication of effort
and the ridiculous situation of different regions competing with
each other. We note that the Department of Trade and Industry
is aware of this danger, and the Permanent Secretary is of the
view that UKTI's co-ordination of efforts will reduce these risks.
We would recommend our successors to keep this area under review.
(Paragraph 34)
3. We were surprised
at the low level of awareness of UKTI services among their target
customers. It is possible that UKTI's regional offices will spread
knowledge of the services available, particularly if they work
closely with local Chambers of Commerce and trade associations.
However, businesses also have a responsibility of their own. There
is nothing that can be done to help businesspeople who, as we
heard, do not even try to find out from the internet whether
the UK Government provides any assistance to exporters.
(Paragraph 41)
Support in-country
4. The
service given by the posts in Malaysia, Singapore and Thailand—especially
the commercial sections, but also more generally—are highly
prized by the British business community, and, in our view, rightly
so. We congratulate them on what they are achieving with fairly
modest resources. (Paragraph 42)
Problems in trading with Malaysia, Singapore and
Thailand
5. Although
counterfeiting in the three countries we studied is clearly not
so great a problem as it is in China, in some sectors (for example,
the music and film industries) there is considerable piracy, especially
in Thailand. British companies need to make protection of IPR
an important element of their business, both in terms of preventative
action, like constant development of products and close relationships
with suppliers, and in ensuring that they have access to good
legal advice if IPR
is infringed.
(Paragraph 24)
6. Although companies
have to be aware of logistical considerations in these three countries,
it seems to us that these are minor compared with those faced
by companies trading with mainland China. (Paragraph 26)
7. Neither of the
Business Councils in Malaysia and Singapore plays as active a
role as the China-Britain Business Council does in mainland China;
but in neither country is it as difficult for foreign companies
to operate as it is in China. We asked British businesses in Malaysia
whether they wished that they had a more active Council and in
Thailand whether they regretted the lack of one. In both countries,
businesses were satisfied with the status quo. We consider that
UKTI's approach of varying the degree of effort according to the
wishes of British business and the general economic and political
environment to be the right one, provided that, if British activity
in Malaysia and Thailand intensifies, UKTI reviews the situation.
(Paragraph 44)
8. We are disappointed
with the negligible take-up of the British Chambers of Commerce
Thailand's initiative in establishing a free mentoring scheme
to match UK exporters new to Thailand to Thai member companies
of the Chamber. We have no criticism to make of UKTI's advertising
of the scheme, which it did via UK Business Links and its regional
offices. We are baffled as to why businesses fail to take the
assistance that is offered. (Paragraph 45)
Promising sectors: oil industry
9. This
is a sector where British expertise is recognised worldwide. Our
perception is that Malaysia offers considerable opportunities
for SMEs in the oil industry. The companies already established
there are proof that it is possible to penetrate through the bureaucracy
and, once operations have been set up, they appear to be profitable
and run without too many problems. UKTI has chosen this—rightly—as
a priority sector for the promotion of British trade with Malaysia.
It is now for the industry to take up the challenge. (Paragraph
49)
Promising sectors: education
10. It
is clear that there are considerable opportunities for all types
of UK educational institution in South East Asia, whether for
provision in-country or for recruiting more students to UK-based
courses. Greater co-ordination appears desirable, and it would
be a shame if the benefits of the Prime Minister's Initiative
were now wasted because of a lack of funding for an integrated
marketing and strategic campaign to promote UK education. (Paragraph
62)
Trade agreements
11. Currently
a Free Trade Agreement between the EU and ASEAN would be impractical,
a severe distraction from other trade negotiations, and would
provide little help to UK exporters.
12. At present, the
economic gains from FTAs with the individual members of ASEAN
appear likely to be small. Even the most enthusiastic advocate
of FTAs, Singapore, acknowledges that their importance is largely
political rather than economic. Moreover, the WTO negotiations
are now, rather creakily, making progress again, and there is
a consensus that efforts should be focussed on these. However,
it is not yet clear whether the bilateral agreements already made
between South East Asian countries and the USA, Australia and
Japan may have some deleterious effect on the access of UK companies
to the South East Asian markets; so we recommend that the Government
keep a watch on the situation and, if it appears that the UK is
losing business as a result of FTAs, that it urge the EU to lift
its moratorium on further trade negotiations. The UK has historically
been a significant trading partner in the region, and we detected
a considerable amount of goodwill towards the UK and willingness
to continue that relationship. We should not lose this advantage
by default. (Paragraph 67)
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