OBG talks to Lord Powell, Chairman, Asia Task Force (ATF)

Interview: Lord Powell

Which sectors of the British economy can benefit most from increased trade with South-east Asia?

LORD POWELL: Education features heavily in our efforts in Asia. We have 100,000 Chinese students at our universities, and about 40,000 Malaysians. But we do not just do education – services are also very important, especially given Britain’s strength in the financial sector. Our other main goal is attracting inward investment. In Margaret Thatcher’s time, we aimed for the lion’s share of investment from Japan and South Korea, and we succeeded; the UK got 40% of all their investment to Europe. Now we want to repeat that performance with inward investment from China and ASEAN.

In terms of industry, our trade in chemical and electrical products is pretty strong. Germany is our biggest rival among European countries across the board. Germany’s strengths match the needs of many emerging countries, such as China, which are developing indigenous manufacturing; it can supply the machine tools and the technology that those industries require. This advantage is being seen, for example, in automobile manufacturing, which is becoming increasingly important for a number of Asian countries. Our market share has lapsed since 30 or 40 years ago. Of course, that was a much less competitive time, but given our history and our long-standing role in the area, we should have done better. The aim now is at least to get back to where we were. It will take time, but it is doable. As Asian economies become more sophisticated, Germany’s built-in advantage will diminish and ours will increase. We are better at the sort of technology of the future that more sophisticated countries, such as Singapore, Malaysia and China, are going to need.

How important is the higher education sector to promoting the UK overseas? Is there a future for Oxford or Cambridge to set up overseas branches?

POWELL: Oxford and Cambridge do not want to dilute their brands by expanding overseas. They are old institutions attached to distinguished cities, and their goal is to attract students to the UK, not the other way around. This has been a successful strategy, especially in subject areas like business – only around 7% of students studying for an MBA at Oxford are British, the rest are international students. We are seeing overseas expansion from other universities such as Nottingham.

It is a clever strategy, allowing people to get a British education without having to come to Britain itself, where the costs would be much higher. This also benefits trade, ultimately, by building links between our countries. If, for example, a Malaysian businessman receives training from a British institution, he will naturally be encouraged to look to our country later in life.

What policies can ASEAN adopt to raise its profile on the international stage?

POWELL: I do not think ASEAN especially wants to raise its global presence; it is confident as the region it is, and it does not aspire to change or lead the world. It still welcomes the US military presence in the Pacific as a guarantee of security against China, even though it does not say so loudly. As the situation with the South China Sea gets more tense, more countries are welcoming the US’s being there, and the “pivot to Asia” has gone down well with ASEAN. Essentially, ASEAN wants to have maximum free trade, keep the trade routes free, benefit from China’s growth and prevent China from becoming too dominant as a political force in the area.

In terms of integration, ASEAN is sensibly not showing much inclination to be like the EU, to sacrifice their national sovereignty in exchange for greater coordination. ASEAN countries are attached to their sovereignty, and they are at such different levels of economic development, even by European standards, that it would be hard to mould everyone into a single institution. They want to be a successful economic bloc, increasing their living standards, trading as widely as possible, and being free from too much outside interference. As a customer, ASEAN is a great institution, with not enough attention paid to it by the UK’s companies.