Britain looks east towards Asean: The Star columnist

Storm clouds are seen above the Canary Wharf financial district in London, Britain, on Aug 3, 2010. PHOTO: REUTERS

(THE STAR/ASIA NEWS NETWORK) - From Britain, where they are only and still debating four months afterwards the pros and cons of leaving the European Union (EU) in the Brexit decision, Asean looks like an oasis of opportunity and hope.

With an economy threatened by the prospect of being denied preferential access to the European market because of likely British insistence on control over migrants from the continent, the projected 4 per cent -5 per cent growth for the Asean economy - with about the same GDP as Britain - is attractive to business people in Britain.

Britain is looking to work its way more freely again in the world. The Asean Economic Community (AEC), as is Asia generally, is a good prospect in a world economy of anaemic growth.

When business people in Britain hear that the growth rate on mainland Asean is even higher at about 8 per cent, from a low base with greater need for infrastructure development, their interest is doubly enhanced as this is a rate hard to find post the 2008 Western financial crisis.

The British, however, are in a bit of a muddle. They are engrossed with, and still cannot believe, how the Brexit decision was made.

This is not surprising because it was an ill-advised decision, based on emotional reasons, not tutored by pragmatic considerations which had hitherto driven the British nation.

The Brexit vote is the first real demonstration of how divided the country has become. A decision may have been made in the close vote, but this does not take away the fact that Britain remains divided almost 50-50.

British Prime Minister Theresa May says: Brexit means Brexit. But what is it? Hard, soft, gentle? When and how?

This is all in the air. Thus there is a court case asserting that before triggering Article 50 of the European Union Treaty for the exit from EU, the British government needs parliamentary approval.

Unsurprisingly, the opposition Labour Party has come up with 170 questions for the British government to answer from the time Theresa May announced she would trigger Article 50 next March. Less comfortably, the British cabinet is divided on what kind of relationship Britain should have with the EU after Brexit.

The City of London is getting increasingly nervous about its future after Brexit. Many foreign banks are fretting.

There is talk of relocation as fears rise of loss of "passporting rights" - the lucrative business of selling services into the EU, including clearing of euro-denominated bonds.

The Irish government, which is positioning Dublin as a preferred centre for relocation (because it is the only English-speaking alternative in Europe), estimates there are 100,000 to 150,000 jobs at risk in the City of London out of the 400,000 banking jobs in Britain.

All this, understandably, absorbs the full attention of the British government. A divided nation overwhelmingly demands answers to domestic issues in policy-making. There is scant time to plot the post-Brexit ex-Europe strategy.

British businessmen wish Theresa May would find time to visit Asean, to follow up on the marker left by former prime minister David Cameron earlier, and to give them a boost as they look east towards Asean.

Some wish their government would initiate negotiations on the UK-Asean Free Trade Agreement. The UK-Asean Business Council, which has existed as a standalone despite there being the EU-Asean Business Council, hopes for stronger support from the government.

So looking east towards Asean needs a strategy, a framework and governmental support not quite available given Brexit preoccupations.

Of course the British-Asean relationship existed before Brexit. The question, however, is how much stronger it is desired that it should become after it. Or is it going to be half-cocked should there be a half-Brexit, and not a hard Brexit?

On the other hand, should there be a hard Brexit, when Britain might be inclined to look harder at Asean, Asean member countries might be more attracted to the larger European market - if the EU can get its act together on its own relationship with Asean.

It has never been all or nothing, of course. And great British companies are already in Asean, as there are great European companies. The point is we are here talking of a strategic and focused economic relationship between Asean and Britain which affords greater opportunity to a greater number of companies, as well as taking that relationship to a higher level.

Great British companies, with high-level technology, can offer Asean economies better choice, especially in manufacturing and infrastructure development. This is not happening enough.

If there were a framework of agreement at governmental level, especially with regard to intellectual property protection, and settlement and enforcement of disputes, more investment and joint ventures could take place, to take advantage of the Asean and wider regional market.

In infrastructure development, where the stock in Asean is 20 points below the 70 per cent of GDP level in most countries, Britain has much to offer in at least three facilitating ways: hard-wiring public-private partnerships which have been an abject failure in Asean; introducing "delivery partners" to scrutinise tenders and to ensure objectivity in award of contracts; and in the development of long-term bond markets.

Indeed, more widely, the threat from Brexit to the City of London could also be turned into opportunities of partnership, for instance, in the development of the Islamic fund management industry.

For Britain to be clear about looking east to Asean, there cannot continue to be an opacity about Brexit for too long, and for that self-absorption with Brexit to persist. There needs to be British Government lead for British business to find its way.

Asean, that association of states masquerading as a community of nations, is in no perfect form either. But its economies are growing.

Individual countries can offer themselves as the hub for the single production base which is to penetrate the common market. Both the offer of hub and the free and open market have to be real, however.

The non-tariff measures, that are extensive, are a put-off. Individual state policies too are not always attractive.

It was quite surprising for me to hear that British companies manufacturing high-level technology construction equipment find some of the states in India more attractive than most Asean member countries.

Therefore, it is not as if British companies have no alternatives. But it is clear that many of them wish to be in Asean for expansion and diversification.

What is needed is official facilitation, primarily by the British Government, but also by the Asean states to attract technology and investments.

* The writer, a visitng senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.

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