Cameron aims to seal £750m trade, investment deals with S-E Asia

London

UK Prime Minister David Cameron aims to sign some £750 million (S$1.6 billion) trade and investment deals with South-east Asian nations this week. Mr Cameron has also asked the European Union (EU) to jump start a trade agreement with Asean worth £3 billion to the UK economy.

Accompanied by 31 business people from all UK regions, he began his whistle stop four-day trade and investment tour in Indonesia on Monday and will then go to Singapore, Malaysia and Vietnam.

"Over the next 20 years, 90 per cent of global growth is expected to come from outside Europe, and Britain must be poised to take advantage," Mr Cameron said. "We can also open up more markets for British businesses by leveraging the power of the EU's single market with 500 million consumers."

The UK government intends to provide £1 billion finance for Indonesia's infrastructure via its export guarantee scheme and aims to generate £200 million export contracts through the deal.

It will be the first time a British prime minister has visited Vietnam and the headquarters of Asean.

The EU is by far Britain's biggest trading partner, but as he renegotiates Britain's membership with the Community, Mr Cameron wants to raise long-term trade and investment with India, China and South-east Asia. In an article in the Daily Mail, he said that Britain is still selling more to Hungary than to Indonesia, even though Indonesia is 25 times bigger, and the UK does more trade with Belgium than it does with Indonesia, Malaysia, Vietnam and Singapore combined.

According to Singapore's official statistics, the UK's stock of direct investment in the island amounts to S$58.5 billion or 20 per cent of total European foreign direct investment and 7 per cent of the global total. In turn, Singaporean companies have invested S$49.8 billion in the UK, 56 per cent of Singapore's total investment in Europe.

UK-Singapore trade, however, has fallen sharply. UK merchandise exports to Singapore declined to S$7.84 billion in 2014 from S$9.96 billion in 2013 and S$8.74 billion in 2012. Singapore's exports to the UK were S$4.5 billion in 2014, up slightly from 2013's S$4.3 billion, but nearly half the annual levels of 2008 to 2012.

Britain also attracts the bulk of inward Asian investment and Mr Cameron intends stressing to Asian leaders that although there will be a referendum on whether the UK remains in the EU, he wants Britain to stay in the significant political and economic bloc. Prior to the referendum, however, Mr Cameron will be negotiating reforms and business people including chief executives of Asda - the UK division of Walmart - and EasyJet, the airline, are advising him.

The UK's current account deficit has widened to a record of 5.9 per cent of gross domestic product (GDP) mainly due to the poor performance of the eurozone economies and the stronger pound sterling. The government thus aims at doubling UK exports to £1 trillion by 2020 and the relatively fast growing Asian market has become a natural target for exports and direct investment into the UK, especially the north of England.

"We must tap into markets outside Europe; to look to the Commonwealth and beyond. There's plenty of potential," Mr Cameron wrote in an article in the Daily Mail.

In bilateral talks with President Joko Widodo in Indonesia and later in the week with Prime Minister Najib Razak in Malaysia, the prime minister is expected to raise the threat from Islamist extremism and discuss ways in which the UK can help South-east Asia defeat terrorism.

He is keen to explore whether the UK can offer more practical counter-terrorism cooperation to both countries, for example on disrupting foreign fighters and aviation security. He also wants to hear from politicians, religious leaders and young people how they are tackling the extremist propaganda and how the UK can learn from their approach.