Why Britain's exit from EU poses problems for Asia

The United Kingdom will hold a referendum on June 23 on its membership of the European Union. Britons will decide on whether their country remains inside or outside of the EU.

Like turkeys praying for a Christmas they would probably never enjoy, large sections of Britons are being lured by a Europhobic popular press and jingoistic politicians into thinking it would be a good thing if their country left the European Union.

British Prime Minister David Cameron said that would be a mistake. So did United States President Barack Obama and Japanese Prime Minister Shinzo Abe, their sentiments echoed by the leadership in China and India.

Across Asia, which does not relish the prospect of a "Brexit", the common sentiment is to ask why so many Britons are daft enough to want it, even as the negative consequences stare them in the face. After all, Britain clamoured to be let into the European project, gaining entry into the European Community only in 1973, after French president Charles de Gaulle had left the scene.

Asians who live in Britain have a better sense of why so many Britons want out, likely making this a close vote. The European refugee crisis - even if it does not affect Britain as much as, say, Germany or Greece - is one reason. There is fear of too many Europeans arriving to grab jobs and slack off on their healthcare and other welfare measures.

Beyond are fundamental differences with Europe on how society itself should be ordered and how to treat the underprivileged. Also, memories of empire have not faded in some British breasts. There is of course island insularity, captured by the famous British newspaper headline of half a century ago: "Fog in the Channel, Continent cut off".

For the rest of us, though, Brexit can be a problematic thing. London is still the best hub for the European market, and for most of Asia, which is comfortable with the English language, Britain is the major destination for outbound investment.

For instance, Britain takes fully three-quarters of Singapore's investments in the EU. These include big-ticket investments such as the Frasers serviced apartments chain, Millennium & Copthorne Hotels and ComfortDelGro. Among the most significant is Keppel's Greater Manchester Energy-from-Waste Plant, which produces steam and electricity from waste.

Besides, it was always easier to deal with the rest of Europe through Britain. British soft skills helped the country punch way beyond its true weight. Without question, Brexit would cause the financial hub for Europe to shift to Berlin. Asian companies in non-finance industries face the prospect of having to consider relocating to Paris, Luxembourg or Brussels. That means needing to acquire new language skills, besides adjusting to a new culture. It will not be easy.

To a lesser extent, a reduced EU could have some knock-on effects in Asia, especially South-east Asia. The EU, as a bloc, is the biggest investor in Asean. At US$29 billion (S$40 billion), this amounted to 26 per cent of investments in South- east Asia in 2014, according to the latest figures available. It was 12 per cent each from the US and Japan.

"To the extent that the EU is a significant investor in these parts, anything that unsettles the region cannot be good news for us," said a senior Asean diplomat.

Also, not often recognised is that Britain did bring a unique perspective on Asia into the EU. Though the Germans export more, Britain is more globally connected and the Britons were always ahead in their knowledge of Asia. The EU will be deprived of this unique Anglo-Saxon perspective if Britain were to exit.

Perhaps the least impact would be in the strategic sphere. Britain's declining weight in strategic affairs began with then Prime Minister Harold Wilson's shock decision in 1967 to reduce the country's presence east of the Suez Canal, leading nations such as newly independent Singapore to scramble to build ties with other nations. There has been other evidence of Britain's dwindling weight in world affairs and its efforts to live with the new realities.

In March last year, it signed up to the China-led Asian Infrastructure Investment Bank, annoying the US, its traditional partner. Ahead of Chinese President Xi Jinping's state visit in October, his diplomats extracted from London treatment for him normally accorded to visiting sovereigns.

Britain has but a bit role these days on the Asian strategic stage. From trade deals to cultural agreements, it will have to take its place at the back of the queue as Asia is likely to prioritise the EU over it.

Asia will get used to an EU without Britain. But it would wish that Brexit did not happen.

A version of this article appeared in the print edition of The Straits Times on May 23, 2016, with the headline 'Why Britain's exit from EU poses problems for Asia'. Print Edition | Subscribe