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Speech to the UK-Malaysia Partnership Dialogue, 19 May 2010

Your Royal Highness, Ladies and Gentleman,

I am delighted to be here this afternoon to speak to you about the warm relationship between the UK and Malaysia. As I think you know, I am the UK’s Special Representative for International Trade and Investment. I am a regular visitor to your shores and have seen the relationship between our countries develop and deepen in the past 10 years in my tenure as the Special Representative. So I can say with absolute confidence that our bilateral relationship is vibrant and it is thriving. It has not only standing the test of time but shows every sign of becoming stronger and deeper.

My last visit here, when I met with some of you, was for the fiftieth anniversary Independence Celebrations in August 2007, a hugely important event in Malaysia’s history, and an important milestone in the UK and Malaysia relationship.

I believe that the anniversary symbolised the coming to maturity of a relationship; between peers and old friends. I was struck at the time by the warmth of feeling towards the UK, the number of Malaysians that have strong ties with the UK and the very positive attitude towards those ties. I have had many meetings with Malaysians since then and these have reinforced the very positive feelings that visit left me with.

But, of course, it’s not a relationship that either partner can take for granted. Like any friendship it needs constant nurturing. As is the way in Asia, it needs regular face-to-face contact to establish and build mutual trust.

I am grateful therefore that organisations like ASLI and the British Malaysian Society are prepared to put in the time and effort needed to do that nurturing. I know that the High Commissioner and his team continue to play their important part.

I hope too that I am able to play my part through regular visits and maintaining an open door policy to visitors in London. (If I’m there, of course, because I do travel quite a lot!)

If you look at some of the major investments in Malaysia, there is an indelibly British stamp. Shell is a major investor in Malaysia and has helped the development of the oil and gas sector; Petrofac is another major investor in the oil and gas sector with ambitious plans to expand further. The largest planned investment into Malaysia in the next few years will be that of Rio Tinto’s aluminium smelter in Sarawak.

Malaysia offers enormous potential in the rapidly growing Islamic Finance banking sector. British banks recognise this potential better than most. Look at the way HSBC and Standard Chartered have opened up Islamic Finance operations in the last few years.

In insurance, Prudential is well established as the leading insurance operator here and both Aviva and Friends Provident have joint ventures with leading Malaysian partners.

In retail, Tesco and Giant have continued to grow their businesses and between them employ over 25,000 Malaysians, and are therefore not just major investors but also significant employers and contributors to local economies around the country, with both of them increasingly sourcing products from Malaysia, taking them into their networks elsewhere.

And a walk around Kuala Lumpur’s leading shopping centres, as I did yesterday, is akin to a walk down a UK High Street – which I don’t get the opportunity to do that often – with many of the well known stores and clothing brands from the UK represented here.

During my last visit I went to Johor to visit Dyson. At that time the Iskandar development region was very much in its infancy and I gather it is coming on leaps and bounds. I also gather that UK companies and institutions are amongst the vanguard of investors in Iskandar, including Newcastle University, Legoland, Marlborough College (where my youngest daughter was educated) and Pinewood Studios.

I could go on. But I hope that quick overview of UK business in Malaysia gives you a clear sense of the importance British companies attach to business in Malaysia, across the ASEAN region and beyond that into the rapidly developing markets across other parts of Asia.

There is a steady stream of UK investment and the well established companies continue to grow here.

And we hope that as the New Economic Model is unveiled in more detail that more British companies, particularly in the services sector, can be persuaded that Malaysia has a lot to offer and is a market which they should consider seriously.

I believe that even more British companies would invest here once further liberalisation in the economy takes place. I know that Prime Minister Najib’s government has already made some solid progress on this. I would say this wouldn’t I, but we would certainly like to see more in areas like legal and financial services, share ownership, distribution and logistics, and recognition of professional qualifications. And we would certainly hope to see good and rapid progress on the proposed EU-Malaysia Free Trade Agreement, conclusion of which would certainly boost the growth of trade and investment between our respective countries.

Investment is not just one way traffic. An important part of my role is to encourage overseas companies to invest in the UK and I’m pleased to say that Malaysian companies have strong stakes in the UK, including ownership or large shareholdings in Wessex Water, Stanley Leisure, Laura Ashley, Crabtree and Evelyn, Corus Hotels, Star Storage and Lotus Cars, amongst others. Some of those are what we might consider to be quintessentially British brands, but without Malaysian involvement they might have failed to achieve their full potential. I intend to continue to work hard to attract more Malaysian companies to set up in the UK and I hope that you will do the same.

The potential for relationships between our countries is illustrated by one person (and I am hesitant to name just one), Tony Fernandes, who I met on my last visit in 2007. Since then, I have watched Air Asia grow and expand its fleet with Rolls Royce engines. In March last year, Air Asia X launched its inaugural services to London, where I was present at its arrival at Stanstead. Last summer he further expanded into Formula 1 by securing the return of one of the great British marques, Lotus, now bearing the Malaysian flag.

I have been following Lotus’ performance on the track with some interest – they have made a very solid start and I hope they can now build on the position they have established as the best of the new teams. However I do acknowledge that Monaco wasn’t a complete success. But I am sure the learning curve for Lotus in expanding their knowledge will ultimately be successful. I opened the new redeveloped track at Silverstone this month and Lotus were on hand to support that momentous event. I have visited their F1 factory just outside Norwich and I do look forward to seeing them at Silverstone in July.

Turning to travel and tourism, the number of British tourists coming to Malaysia rose last year from 370,000 to 435,000. And in the opposite direction there have been some 120,000 Malaysians visiting Britain. In many instances, these tourists have been flying on a Malaysian airline using Airbus aircraft built substantially in Britain, powered by Rolls Royce engines.

Of course, any discussion of our wider relationship has to touch on education which is one of the glues which binds our two countries together.

Earlier this morning I visited Nottingham University’s campus just outside Kuala Lumpur to mark the tenth anniversary of this major success in our education links. Nottingham is just one of the many UK university offering Malaysian students the choice of studying for a British qualification here in Malaysia – two with their own campuses here and a further 78 offering courses through Malaysian institutions. At the same time I’m delighted that the numbers of Malaysian students choosing to study in the UK continues to increase. That goes against other trends I have seen but this might be in part due to the savvy Malaysian who recognises a bargain when he sees it and the relative value to Malaysians in terms of Pound to Ringit! We know that experience can engender warmth towards the UK which can last a lifetime and that’s a great foundation on which to build on for the future.

But, again, we can’t take that for granted. Your Prime Minister has said in recent comments that more Malaysian students are choosing the United States over the UK: that is a clear sign, if any was needed, that we must continue to work hard to convince young Malaysians that studying for a UK qualification can be a real asset for their future. I refer to that potential bargain again as the Dollar strengthens…

Of course preparing young people for the workplace – in the case of Malaysia, a quickly-changing workplace – is of paramount importance. The qualification shouldn’t be the end of the journey it should lead on to brighter prospects in the future.

Many countries around the world are turning to vocational education to help them reduce unemployment and reduce dependence on foreign workers – an issue which is high on the political agenda in both the UK and Malaysia. A skilled workforce can be a key driver for a country’s economic development. A focus on vocational skills can help to reduce inequality and benefit the economy as a whole – driving social mobility and complementing investment in higher education.

The UK has recognised for many years the crucial role that skills can play in economic growth and has established a world class vocational education and training sector that works closely with employers flexibly responding to training needs.

As Malaysia continues to make a shift to a mixed service/industrial/agrarian economy, skills set requirements will change. I hope that we can help you meet this need.

I hope these comments help to convince you that UK and Malaysian relations are booming. We all need to work hard to take the relationship to greater breadth and heights. I am grateful therefore to ASLI for putting this Partnership Dialogue together and for you, the participants, for giving up part of your business day to attend and contribute. Between us we can ensure that the relationship remains vibrant and, particularly importantly, relevant going forward.

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