Before the election was called, preparations were well underway for the first Ministerial Joint Economic and Trade Committee (JETCO) between the UK and Malaysia in London. If the acronym sounds technocratic, that’s because it is – but no less important for that fact. Future UK economic growth depends on access to new and growing markets – for a high-skilled, service-oriented economy such as ours, opening up our export markets is the only path to sustained increases in economic growth. Ensuring the JETCO occurs as soon as possible after the election must be a priority for the next Business Secretary.
Nowhere in the world is the UK’s export opportunity more obvious than in Southeast Asia. Analysis by the IMF shows that over the coming years the five leading ASEAN nations, including Malaysia, will have the fastest-growing demand for imports of anywhere in the world. Together, those markets represent over 450 million people, with a growing middle class and growing demand for Western goods and services.
How to turn this opportunity into reality? The Malaysian JETCO is a good place to start. The meetings will be focused on reducing and removing trade barriers – and on building cooperation in related areas, such as regulation, standards and so forth. The Department of Business & Trade (DBT) and incoming ministers should have their demands ready – leading UK export businesses will no doubt provide a wish list of how market access can be improved, and it is DBT’s job to secure results.
Trade is a two-way street, though, so a key question is how can the next government generate support and goodwill from our trading partners in ASEAN? Two opportunities immediately come to mind: investment and mutual recognition.
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First, investment. Malaysian forms are significant investors in major infrastructure projects across the UK. The enormous redevelopment of Battersea Power Station has been led by a Malaysian firm, as has the expansion of a refinery in Liverpool, and the funding of an offshore wind farm in Northumberland. ‘Levelling up’ and ‘Net Zero’ are domestic political priorities for both Labour and the Conservatives: it is foreign investment, in these cases from Malaysia, is making these priorities a reality. Encouraging further investment has to be a core priority for deepening UK-Malaysia trade and commercial links – and avoiding any tax or regulatory changes that would disincentivise future foreign investment.
Second, mutual recognition. This is crucial to translating the warm words of trade summits into real-world impact. The goal here is smoother trade, and generating goodwill for the UK by formally recognising the standards developed by our partner countries. A key priority for Malaysia is recognition of its agricultural sustainability standards, notably its mandatory palm oil certification known as MSPO (Malaysian Sustainable Palm Oil). MSPO is already compliant with UK due diligence rules under the Environment Act, because it guarantees zero deforestation, and acts as a legality certification for over 400,000 Malaysian farmers of palm oil. The UK is not a huge market for palm oil, but here is an opportunity to build cooperation on sustainable agriculture, and generate real goodwill in the process. Japan and India, among others, have already taken steps to recognise MSPO as a sustainable.
While the EU’s process is mired in predictable Brussels bureaucracy, there is an opportunity for us to steal a march and position the UK, not the EU, as the trade partner that can make real substantive progress on a closer relationship.
This is the kind of work that is necessary to stay competitive in the global marketplace. Free trade deals are important – the CPTPP agreement that includes both the UK and Malaysia is a shining example – but the less glamorous JETCO work on issues such as recognising standards is just as fundamental.
The ASEAN region in general and Malaysia in particular are primed to go through a period of huge growth in imports. This will be satisfied by nations with already established close trading and diplomatic cooperation. A position that must be continually nurtured. By building closer links now, pursuing recognition of standards, and driving forward foreign investment we can ensure Britain is among the nations benefiting from ASEAN’s ongoing rise. It will require technical expertise, certainly, but also political leadership from British Ministers and Ambassadors. Starting work must be high on the priority list after the election.
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