WHILE acknowledging the uncertainty over the UK’s decision to leave the European Union, Vicki Treadell, the British High Commissioner to Malaysia, says Britain is still very much open to business.
“People are worried about Brexit and they ask, ‘Should we be investing in Britain?’ My answer is, ‘Yes, of course!’ If you look at our history, our economic trajectory, what we stand for, what we do in the world, we have the right economic policy to deliver the right growth,” she tells The Edge in an exclusive interview.
Today, a handful of Malaysian companies have exposure in the UK. Foreign direct investment (FDI) from Malaysia to the UK grew 161% to £3.7 billion in 2014, up from £1.7 billion in 2010.
Genting Malaysia Bhd is one of the largest casino operators in the UK with more than 40 casinos while YTL Power International Bhd owns Wessex Water Services Ltd, the Bath-based water supply and sewerage utility company.
DRB-Hicom Bhd, through Proton Holdings Bhd, owns legendary British sports car maker Lotus Cars, and tycoon Tan Sri Khoo Kay Peng, through Malayan United Industries Bhd, owns Laura Ashley Holdings PLC, a home furnishing and womenswear company.
But the one sector that makes the biggest impression on Malaysian investors in the UK is property, mainly due to the massive Battersea Power Station redevelopment project that is co-owned by Sime Darby Bhd, S P Setia Bhd and the Employees Provident Fund. Eco World International Bhd and Eastern & Oriental Bhd also have meaningful exposure in the UK.
In 2013, Malaysian companies and institutions emerged as the second largest group of investors globally for commercial and residential properties in London.
But Treadell thinks Malaysian companies are not investing enough in the UK and suggests now is a good time to do so, considering the weakening of the British pound as a consequence of the Brexit vote.
“There are still many more opportunities in other areas, such as infrastructure redevelopment. We are keen to get Malaysian companies to these areas and also getting them to move to other cities in the UK,” she says.
Using the history of the British automobile industry as an example, Treadell says the UK has always been open to business because it acknowledges that foreign investments always create new jobs in the host country’s economy.
“In the 1970s, it reached a point where we could not compete with the emerging car nations such as Japan and South Korea. The big Japanese car manufacturers were looking at expanding their global market and made a decision to manufacture their vehicles overseas. Of all the European countries, they chose Britain. So we landed Nissan and Toyota, making their cars in the UK,” she says, adding that the Nissan plant in northwest England soon began designing and making cars for markets outside Japan.
She also highlights the mega deal whereby Indian automotive firm Tata Motors Ltd acquired Coventry-based Jaguar Land Rover Ltd from Ford Motor Co in 2008 as another classic example of foreign investments creating jobs.
“When Ford decided to sell its interest in Jaguar Land Rover, we were open to whoever might want to acquire the British brand. Yes, we may have lost the old car industry but we gained a new one, which is highly competitive and is driven by design and innovation. We are exporting more cars out of Britain now than ever before,” Treadell points out.
“The protectionists can’t allow foreigners to own their brands, hence they don’t have the injection of investments, and if you are not open to business, then you are not open to the global markets. By being open, we have seen our car industry grow and become renewed,” she says.
Treadell says the bilateral relationship between the UK and Malaysia is not an unbalanced one as the increasingly close relationship is reflected in growing levels of investment in both directions.
A survey conducted in the first quarter of 2015 by the High Commission showed that the top 25 UK companies in Malaysia — including Standard Chartered, HSBC, Aberdeen Asset Management, Dyson, The Dairy Farm Group, Rolls-Royce, Shell and Tesco — have invested over £17.2 billion in total in the country.
These British firms, which accounted for almost £1.5 billion of Malaysian exports a year, have created over 70,000 Malaysian jobs so far and invested £33.2 million in capacity building for the local workforce a year.
Investments in Malaysia from the UK had risen from 9% in 2010 to over £3.4 billion by the end of 2014 with Malaysian investment in the UK valued at £3.7 billion in 2014.
Moving forward, Treadell expects more British firms to invest in Malaysia as companies from the engineering, manufacturing, new technology, digital and artificial intelligence sectors may see the country as their Southeast Asian or Asia-Pacific hub.
“British companies will want a position in this part of the world. English is well spoken here in Malaysia, the law has its roots in English common law due to the legacy of Britain’s times here. And there is a familiarity with this country, so it’s an attractive destination,” she says.
Treadell says Malaysia’s economic growth is reflected in the healthy increase in UK exports to Malaysia since 2010, which have been growing rapidly in recent years and overtook Thailand to regain its position as the second largest export market in Asean.
In 2014, exports of UK goods and services to Malaysia totalled £2.5 billion. Treadell stresses that the UK and Malaysia will remain important partners and that this will not change after Brexit.
“The relationship between the UK and Malaysia is historic and it existed even before we joined the European community. Initially, there was a global reaction and market volatility.
We have seen the pound go up and down [and] the less strong economies and currencies equally suffered because people want to buy the strong currencies. But in terms of our relationship with Malaysia, nothing has changed,” she says.
One thing that could happen in the future is that the UK may negotiate its own free trade agreement (FTA) with Malaysia as the former will no longer be a part of the EU.
“Britain believes in free trade, we are free traders. We believe the more you open up your market to competition and the more you liberalise your market, the better the economy and businesses will be,” says Treadell.
“Industries that have no competition are bad on many levels. You will have monopoly, heavily subsidised industries that are not sustainable. But when you open up the market, allowing free market and competition, they will drive innovation, improve choices and create stronger businesses so that they are able to compete and stand on their own feet.”
Treadell was born in Malaysia and lived here until she was eight. She did a stint here early in her diplomatic career. Having followed developments in Malaysia through the years, she is worried about rising polarisation among the races and says Malaysians need to recreate a genuine sense of unity in diversity.
“Tunku Abdul Rahman went to London with the leaders of MIC and MCA, representing the three races of Malaysia, to negotiate together for independence for all Malaysians. That is the kind of history the Malaysians today should remember and celebrate, that the three races did it together for the nationhood. I worry that Malaysia might have lost sight of that.
“People talked about Malaysia as an incredible multiracial, moderate, majority-Muslim country. And in relative terms, that is still Malaysia today but it is a little less moderate, a little less tolerant and has a little less mutual respect for each other than it used to.”
On concerns that the Brexit referendum has unearthed deep chasms among the UK populace, particularly the intolerance towards foreigners, Treadell acknowledges that some Brexiters were motivated by fears that there were no controls on migration.
“I suspect, in parts of our community, that people were uncomfortable ... For any country, if you don’t absorb and integrate at a reasonable pace, the local people, regardless of their ethnicity, will find it difficult to accept,” Treadell says, underlining the complexity of the issue.
Nevertheless, the British government has made it clear that there is no place for hatred or race-based violence, she adds.
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