Speech made by the British High Commissioner John Rankin at the session on “Bilateral Trade Between Sri Lanka and U.K” on October 29 at the National Chamber of Commerce.
“As British High Commissioner I have many tasks in representing the United Kingdom’s interests here in Sri Lanka. But one of the most rewarding tasks is the promotion of the commercial relations between our two countries”.
“Promoting commercial relations and helping to increase bilateral trade between the UK and Sri Lankan is one of my key objectives. The rapidly growing markets of Asia, which include Sri Lanka, present strong opportunities for British businesses. And British businesses, with their experience, expertise and strong track record in innovation, can in turn match the needs of the market here. A strong commercial relationship is a win-win for both of our countries in building growth, employment opportunities and prosperity”.
UK trade and investment (UKTI) and what do they do?
“I carry out commercial work together with my UKTI team. UKTI works both in the UK and overseas with UK based businesses to ensure their success in international markets. UKTI help businesses to export their products and establish offices, operations and manufacturing bases in overseas markets – tapping in to the global economy in which we all now live. UKTI do this through a team of professional advisers in their London HQ and offices in over 100 countries around the world, including Sri Lanka. Additionally, we work to encourage and support overseas companies to look at the UK as the best place to set up or expand their international businesses. The UK welcomes Foreign Direct Investment, including from Sri Lankan companies”.
UK/Sri Lanka commercial relationship
“The trading relationship between the UK and Sri Lanka is already well developed. Sri Lanka is home to some of the big UK companies – Marks and Spencer, HSBC, De La Rue Currency, GlaxoSmithKline, London Stock Exchange Group, Standard Chartered Bank, Rolls Royce etc. with a growing presence from companies like Next, Tesco and George for Asda. There are indeed over 100 companies in Sri Lanka with a UK affiliation across a wide range of sectors”.
“In the other direction, the UK is a hugely important market for Sri Lankan goods and is by some distance your largest market in the European Union. Sri Lanka has been traditionally known for its agricultural exports such as tea, coir and spices. But it is now apparel and industrial goods that contribute most to your exports to the UK. Your lingerie and sportswear products are in high demand from UK buyers and consumers. And the majority of children’s school uniforms across the UK are manufactured here in Sri Lanka and sold in the UK by, for example, Tesco and George for Asda”.
“The strong presence of UK companies together with Sri Lanka’s exports makes the UK your 3rd largest trading partner by value and 2nd largest in volume, after India. In 2013 UK exports to Sri Lanka amounted £167 million, a 14% increase on the previous year, whilst UK imports from Sri Lanka amounted to £849million. That represents a very healthy trade balance in favour of Sri Lanka”.
“In addition to the UK companies mentioned above, there are other areas of UK-Sri Lankan business which are perhaps less widely recognised, but which are also important”.
“We are your leading the leading business partner in the fields of higher education and professional training. 28 UK Universities offer access to their qualifications through local education providers in Sri Lanka. This country also hosts the largest number of Chartered Institute of Management Accountant members of any country worldwide outside of the UK”.
“Technology partnerships including Millennium IT, which was bought over by the London Stock Exchange Group in 2009, and which powers exchanges around the world. Similarly, but in the other direction, your cutting edge apparel companies increasingly partner and collaborate with UK Universities in their Research and Development work”.
Sectors requiring expertise and specialist equipment including infrastructure, with British companies continuing to win significant bridge building contracts, and aviation.
The Sri Lankan business climate is viewed favourably and there is a well founded perception it’s easier to do business here than in other countries in the region. The latest figures show that the UK remains among the top 10 investors in Sri Lanka.
2013 – A record year for UK business in Sri Lanka
Last year was the most successful ever for UK businesses in Sri Lanka. Fuelled primarily by Sri Lankan Airways decision to modernise its fleet with Airbus planes with engines from Rolls Royce and wings manufactured in the UK, UK businesses secured US$3BN worth of contracts. I am delighted to note that the first new A330-300 will be delivered to Sri Lankan Airlines at Bandaranaike International Airport this Friday.
UK open for business
I also want to encourage more Sri Lankan businesses to come in to the UK market. We are an excellent place in which to invest and grow your business:
We are now the fastest growing major advanced economy in the world, and the IMF has noted that our economy ‘has rebounded strongly’. Our current account deficit has narrowed and the unemployment rate continues to fall. UK manufacturing, services and construction surveys all point towards good growth, supporting the pound sterling to a 6 year high.
There is no western country that is more open to inward investment in the world. That’s why we have got China investing in civil nuclear power in the UK. And why London is now the Western hub of offshore Renminbi trading. And why in the World Bank’s Ease of Doing Business Index, the UK is by far the highest ranking major EU economy.
And in the last budget our Chancellor doubled the amount of lending available to British exporters, and cut the interest rates we charge on those loans by a third. We now have the most competitive export finance package in Europe.
Indeed in my term of office in Sri Lanka a number of UK companies have successfully won business in Sri Lanka with Export Finance backing. The most recent has been Cleveland Bridge, being awarded a contract to supply 537 rural bridges with UK Export Finance support.
Whenever I and my UKTI team work to support our companies, we are keenly aware that those who know most about the challenges, realities and opportunities of business are business people themselves. So, I would at this point pay tribute to the help and support that we at the High Commission enjoy from our British Chamber of Commerce – the Council for Business with Britain (CBB). They are fundamental in helping us continue to deliver success for UK businesses looking for opportunities in Sri Lanka. With over 140 companies as members and membership growing, they are in my opinion, the best chamber in Sri Lanka devoted to trade promotion and commercial growth between two specific Nations.
Working with the Sri Lankan Government
As well as working directly with businesses, we also work with the Sri Lankan Government in many Line Ministries to enhance our commercial relationship. We enjoy the support and cooperation of the BOI, the Ministry of Finance and other key departments here in Colombo. Another avenue open to Sri Lankan businesses looking to export to the UK or to find a company there to partner with is also of course your High Commission in London. At the British High Commission we assist UK companies seeking partners here. When that request is made the other way around, i.e. when a Sri Lankan company is looking for a partner in the UK, we recommend that the company contact the Commercial Section of the Sri Lankan High Commission in London in the first instance as they will be able to help signpost you in the right direction.
“Putting British Business on the Front Foot”
Repeating the UK business successes in Sri Lanka of 2013 will be difficult. But to try and maintain the commercial success UK companies enjoyed last year we have arranged a Trade Mission to come to Sri Lanka at the end of November.
Some 20 UK companies have already registered to participate across all of the “5+1 Regional Hub” sectors identified by your Government as being crucial for the economic development of Sri Lanka – namely Aviation, Maritime, Knowledge, Commercial, Energy and Tourism. This ambitious Regional Hub concept presents enormous opportunities for UK Businesses in Sri Lanka.
UK companies and organisations are already well placed to win new business in these fields: for example the first overseas University campus in Sri Lanka is likely to come from the UK; and we are your second largest source of overseas tourism, showing a 5.4% increase to August of this year and with British tourists staying longer here and spending more money than those from other countries.
Sri Lanka’s high literacy rates and skilled population places the economy on the right footing to avoid falling into the middle-income trap. This can be combined with investment into higher levels of human capital, advanced infrastructure, innovation, R&D and building institutions that promote dynamism, helping unleash the private sector potential that will in turn drive further growth.
For both Sri Lanka and the UK, investment into higher levels of human capital must include policies that promote women in business. The evidence is that empowering women to take leadership positions helps to build business success, and there is a clear business case for greater gender diversity in corporate boards both from a microeconomic perspective and macroeconomic perspective.
I am pleased that the Women’s Chamber of Commerce and Industry is taking the initiative to identify how women in Sri Lanka could break the proverbial glass ceiling and increase female participation at high levels in more corporate entities. I am looking forward to seeing more women serving on blue chip conglomerates soon.
Cutting barriers to business
In any country, there is also a need to cut barriers to business, which in turn can help to attract further Foreign Direct Investment (FDI) and consequent growth. Sri Lanka is an easier place to do business than most of its neighbouring countries. In 2014, Sri Lanka ranked 85th place out of 189 countries in the World Bank’s Ease of Doing Business Index, and was the highest rank country in South Asia. I believe that the business community in Sri Lanka can help improve the business climate by helping to tackle the barriers to growth and to advance good governance.
Innovation is a key for economic growth, creating jobs and solving the energy crisis. Appropriate investment into innovation and R&D can be the corner stone of any economic policy in driving economic growth.
Sri Lanka has made some considerable headway in this. The country has a strong ICT background. The work of Millennium IT, and its use of innovation, has made it a well sought after global company.
I have been fascinated by the garment industry in Sri Lanka. I have visited a number of factories during my time here and have been impressed with the cutting edge technology being used to produce high quality clothing in good working conditions. When Michael Phelps won his gold medals at the Athens Olympics in 2004, he was wearing the fast skin swim suit designed by Speedo and manufactured by MAS Holdings.
I strongly believe that Sri Lanka offers unique opportunities for UK companies. Strong economic growth, a highly educated labour force and access to markets in the region makes Sri Lanka an attractive market for investors.