Clarke urges Far East drive: The Chancellor tells Terry McCarthy that business must invest in Asia

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The Independent Online
BRITISH businessmen and politicians have ignored Asia for too long, and the UK's economic recovery will be stunted unless it engages more closely with the booming economies of the Orient, according to the Chancellor, Kenneth Clarke.

He was speaking in an interview in Manila after a 10-day tour of Hong Kong, Indonesia and the Philippines, where he had been promoting British business. Mr Clarke's strongest sales pitch was for British bankers. He took along representatives from Barings, BZW, Kleinwort Benson, Morgan Grenfell and SG Warburg, hoping to sell their advice on privatisation and investment.

Mr Clarke said British and other European investment was strongly desired by these countries, which did not want to be too reliant on Japanese big business.

'It's time for the British to put Asia higher up on the agenda . . . Here we are at home recovering, but our recovery has slowed up to some extent because dominant markets are in recession.

'While France and Germany are in recession, there's not very much you can do there. So you look around the world, and I think that South-east Asia - and I would add Latin America - are places where great things are happening. They are the most dynamic parts of the global economy, and if Britain wants to be a leading industrial country, you have to make sure a good proportion of your trade and investment is in those places where there is growth.'

Although the economy of the Philippines has been stagnant since 1989, both Indonesia and Hong Kong have enjoyed stronger growth. They have grown by an average of 8.4 per cent and 3.8 per cent a year since 1989. Other countries in the region, such as South Korea and Taiwan, have grown even faster.

Last year John Major made the first visit to Japan in four years by a British prime minister, while Douglas Hurd, the Foreign Secretary, made his first visit in three years. Asked whether that showed a high enough level of interest in the world's second-largest economy, Mr Clarke said: 'No, but we are all busy. And I am glad that I raised the score.'

He also expressed frustration with insular thinking in British politics: 'My theme is that Britain should be more visible in Asia, should participate more heavily in Asia - because that is the dynamic part of the world now. But the trouble is that it is far removed from the knock-about level of British political debate.'

Both Indonesia and the Philippines were actively seeking more investment from Britain. 'They were pushing the boat out for us,' said Mr Clarke. 'People are polite on these visits, and they didn't say that was because they sensed their overseas investment to be dominated by the Japanese. But if I were them, I would want to see European and US investment building up as well.'

The topic of privatisation came up in Mr Clarke's talks with Indonesia's President Suharto and President Ramos of the Philippines. 'I made something of the fact that Britain invented this way of getting private capital into state industries.'

Mr Clarke said both countries had realised they would not be able to upgrade their infrastructure unless they opened up to private capital from abroad. He added that the experience of British merchant banks would be useful. 'It's no good them going to American banks; I mean who in America has ever privatised a state monopoly? The combined experience of the Treasury and the City of London is more use to them.' And if the privatisations went ahead as hoped, this would open the way for investment by British utilities.

On Hong Kong, Mr Clarke characterised the Sino-British conflict as an 'exchange of rhetoric'. He said London could not wait for Peking any longer and that the Government was entitled to put the constitution of Hong Kong 'into acceptable condition'. But he said this was having little effect on business confidence.

'The population of Hong Kong has taken the view that this place matters too much to China. It's going to produce 20 per cent of Chinese GNP after 1997, and the Chinese don't want to change it, can't afford to change it. Twelve months ago Hong Kong might have got a bit wobbly when this battle of words started; that seems to be totally over and it's roaring ahead as ever.'

(Photograph omitted)