Mr Major’s Speech to Federation of Bangladesh Chambers of Commerce – 11 January 1997
Below is the text of Mr Major’s speech to the Federation of Bangladesh Chambers of Commerce and Industry, held in Dhaka on Saturday 11th January 1997.
PRIME MINISTER:
Mr President and Cabinet Ministers, Ministers, Ladies and Gentlemen. I think at the outset I should congratulate the President on the skill with which he shortened his prepared remarks. It is a skill I think could usefully be translated to the British Parliament from time to time.
Let me say at the outset how delighted I am to be here today. I think in many ways this is a visit that is long overdue, overdue but certainly one that I have been much looking forward to, and looking forward to I think for some very practical hard-headed business reasons of importance to my country, and I think of importance to Bangladesh as well.
In both of our countries trade runs deep in the instincts. I recognise that. And so in addition to being pleased to be here in your country simply because I have been anxious to see it for some time, I was delighted to have the opportunity of addressing the Federation this morning to talk about matters related to business, trade and commerce. And the central message that I would like to deliver this morning is that we in Britain are keen to develop our business and commercial links with Bangladesh. We would like to increase our trade with you and we would like to increase our investment in Bangladesh, to play our part in building the Bangladesh of the future.
Your Prime Minister, with whom I have just been meeting, where we had a very successful discussion, has in turn stressed to me your determination to move from a heavy reliance on outside aid to the inter-dependence which unites all of us in the international trading community.
Trade, of course, is very important but it is only one of the many links between us, though I would suspect for this audience it is the one that is most appropriate and till one upon which I now wish to concentrate. We have a common business language; in important ways we have a shared history; Bangladesh’s legal system is based on that of England and Wales; and the Bangladeshi community in the United Kingdom, which has a distinctive and important contribution to modern Britain, forms a particularly important and unbreakable bond between our two countries.
Another area, equally important but perhaps less frequently remarked upon, is the shared membership of the Commonwealth that provides a further link between our countries.
The Commonwealth is a very remarkable institution. It draws together a unique cross-section of countries with a shared commitment to democracy and increasingly it is a modern Commonwealth, a Commonwealth prepared to tackle the critical issues of the day. Bangladesh, like Britain, has a key role to play in that Commonwealth and I very much look forward to welcoming your Prime Minister to Edinburgh at the Commonwealth Heads of Government Meeting later this year.
The theme that we have chosen for that Heads of Government Meeting is very appropriate, it is a theme of very key importance for the developing world as well as for the developed world. And the theme is the promotion of international trade, and I believe that is a theme that the Commonwealth is very well suited to tackle.
The issue of trade, investment and development, that is the road to prosperity right across the Commonwealth. The Commonwealth hasn’t fully developed those opportunities yet, hasn’t fully acknowledged right across the Commonwealth the role that trade, investment and development actually have to play in the prosperity not just of countries as a whole, not just of businesses, but of many, many millions of individuals. Now those are matters that we propose to examine very carefully both up to, during and beyond the Commonwealth Conference.
I also think those matters have a key role to play in the relationship between the United Kingdom and Bangladesh, and so on this occasion I wish to say just a little more about each of them.
Let me start with trade. Britain already has, I am delighted to say, the largest foreign commercial presence in Bangladesh. Over 47 of our companies are now operating here in a very wide range of sectors: British-American Tobacco, now the Bangladesh Tobacco Company, is the largest single foreign investor in the country. Many others are household names like Lever Brothers, GEC, Glaxo Wellcome, British Oxygen, Hong Kong and Shanghai and the Standard Chartered Banks, known not just in Bangladesh but known as organisations in every part of the world. Many of those 47 companies – settled here already – are seeking to expand their presence. And it is both my hope and my expectation that many more British companies will follow their example in the future.
Meanwhile trade between our two countries has risen by more than one half over the last three years alone. So investment is substantial and about to grow, indeed it has been growing today, and trade has been growing steadily and is set to grow further in the future.
That is very attractive but I have to say, despite that, that the levels of trade between us as are still far too low. There is ample capacity for growth and improvement and I am convinced that both can and should do more. For our British part, we will be taking active steps to do so and I am delighted to be accompanied here by a number of leading British businessmen who have precisely that aim in mind.
But just as important as increased trade is increased investment. The United Kingdom is now the world’s second largest outward investor and also the second largest investor in Bangladesh with over 300 million US dollars of direct investment registered here at present.
That figure is about to increase further. I have just come from witnessing with Sheikh Hasina a new 150 million dollar gas production sharing contract between Britain’s Cairns Energy and Petrobangla. And from early 1998 this promises to bring gas supplies to Chittagong and to supply the Midlands Tiger Power Project proposed in Haripur. So it is a very big project which I think will have a significant boost for living standards in Bangladesh and also I hope for Bangladesh’s foreign exchange earnings as soon as the full stream of gas production comes on schedule. I hope that the final agreement on the Haripur Project can also be reached soon to give a much needed boost to power supplies in the country, and also something else as well, the clearest possible signal of encouragement to foreign investors that Bangladesh welcomes foreign investment in up-grading your infrastructure. That seems to me to be an important message.
In Britain we too have been working hard to make ourselves an attractive location for foreign investors and we have done so for the very straightforward reason that we recognise the benefits that such investment brings – it brings jobs, it brings prosperity, it brings benefits for consumers through better quality, lower prices and a wider range of goods and services. Foreign investment forces companies to be more competitive, so prices go down and the consumer benefits.
And in Britain the results have been striking. Since 1979 inward investment into Britain has directly created or safeguarded some 700,000 jobs and now accounts for 40 percent of our manufactured exports. This also constitutes, by any measure, a substantial contribution to the Balance of Payments. And we now have some 40 percent of all new direct investment into the European Union from the United States, Japan and Korea. And I emphasise that point for this reason. We have been seeking to create an economic structure that encourages people to invest in Britain, and they have done so. I know it is Bangladesh’s policy to create a structure that will encourage people to invest in Bangladesh and I hope and believe that you will be equally successful as your economic reforms move ahead. I know that that is the intention of your government, to make yourself an attractive location in the fierce global competition fort foreign investment.
And I think the current approach being taken is one that seems to me to provide a good base for future development. Your provisions for 100 percent foreign ownership, repatriation of capital gains, tax holidays and low duties on the import of capital machinery have all been evidently weighed by foreign investors and I think they view those changes with very considerable delight because it opens up the market for investment in a way that was not previously the case and I am sure that is the right approach for Bangladesh to take.
Of course there are still difficulties. Problems can’t be wiped off the slate entirely and speedily. I am sure it will not surprise you to hear me saying that although procedures for gaining approvals for new investment have been streamlined, they can still sometimes be just a touch cumbersome. The multiple permissions required can lead to bureaucratic delay and consequent discouragement. So I hope you will continue to apply your scissors ruthlessly to the red tape as you encourage further investment into Bangladesh. But what potential investors need above all is a stable and a transparent regime in which to operate, for trade and investment can be most beneficial only if they are allowed to flow with the minimum of government interference. So in the United Kingdom, for example, I have been determined to unshackle the British economy from the bonds of bureaucracy to leave the market free to operate without excessive interference by government. I commend that as a way to encourage investment.
We of course still have more to do, but by insisting on deregulation and by remorselessly bearing down on inflation and unnecessary government expenditure the impact upon Britain has been very remarkable. We are now enjoying the best economic conditions for a generation and the strongest recovery of any of the leading European economies – inflation about 3 percent, output growing at 7.5 percent, base rates at 6 percent and unemployment now under 7 percent of the workforce and falling quite sharply.
And with deregulation goes liberalisation and particularly pulling down trading barriers to the outside world. All the evidence indicates that it is those countries that are most integrated into the world economy – most integrated into the world economy – that achieve the fastest growth in output. And that is why I am such a passionate believer in free trade and in open markets. It is why I have called for the developed world to abolish tariffs on imports from developing countries.
Provided that we all work on a level playing field, the opportunities for all of us, large countries, small countries, rich countries, less rich countries, are absolutely enormous. And there is of course something inherently ludicrous to my mind in the developed Western world offering aid to countries in difficulties and then not opening their markets to those same countries, thus ensuring that they stay in difficulties. And that in essence is the case for free trade and open markets. It isn’t a desirable proposition not to open those markets and leave some parts of the world all within a position where their goods are locked out of developing markets and they are not able, by their own efforts and their own skills, to improve the quality of life of their own people. So free trade, I believe, is thoroughly desirable. The British aim is to achieve total free trade by 2020 around the world and we will continue to advocate that whenever and wherever we can.
And it is within that theme that the importance of the World Trade Organisation is most evident. It provides a framework for international commerce that fosters economic growth instead of hinders it. The World Trade Organisation held its first Ministerial Conference in Singapore last month and achieved some useful progress. I was glad to hear that the British and the Bangladeshi delegations cooperated particularly closely together during the course of that particular discussion.
In Europe we have found that there is a wider reason as well for pursuing open markets and free trade that they help to bind countries together, encouraging wide forms of cooperation and so promoting security and stability. Because there is a plain truth in all this, a plain truth that deserves to be universally recognised. In the end, trade and investment will only flourish against a stable political background. Without a stable political background external investors won’t invest; without a stable political background internal investors will not have the security to re-invest; without a stable political background, the security of investment, and growth and the prosperity that follows it cannot be achieved. And so that is an absolute basic fundamental to prosperity for the future.
Within the European Union we have had, of course, the good fortune to have a stable political system for a long time and the European Union not only provides a single market of some 400 million people, it has also made armed conflict between its members unthinkable though I have to confess to you it doesn’t make verbal conflict between its members at all unthinkable.
I have been particularly encouraged by some of the recent progress which Bangladesh and other members of SARC have made, progress in promoting greater regional cooperation. With a potential market of 1.2 billion – three times the size of the European market I just referred to – the potential commercial benefits in the long term are surely self-evident but greater cooperation also offers, I believe, an opportunity to build in south Asia a region of shared prosperity between countries whose previous history has been rather more difficult and I was particularly pleased to see the conclusion of your recent water-sharing agreement with India; that is a tremendous achievement enormously to the credit of both the Bangladesh and the Indian governments and I think that has been received with pleasure i many parts of the world. Neither have the two sides stopped there. I have just come from India where I met prime minister Deve Gowda and he told me only yesterday of his productive visit here earlier this week and I hope that cooperation can be extended and developed not only with India but with other neighbours.
Mr. President, you raised the question of the European Union, how can the European Union best help, and I think in what I have to say I answer directly the point that you had to make about it.
Whether for central and eastern Europe or for countries further afield like Bangladesh, I am convinced that the most effective way for the European Union to encourage democracy and prosperity is for its markets to remain open to the products and investment of developing countries so let me offer you this promise today which I do so entirely willingly: we in Britain will continue to lead the way within the European Union in arguing for it to be generous and open to the products of developing countries [applause] and we will do so for the reasons I set out just a few moments ago.
But our belief in the benefits of free trade doesn’t mean that we underestimate the difficulties of getting there and therein lies the best role of development assistance so in Britain we concentrate on using our aid budget both to help those most in need and to support countries in introducing or strengthening market disciplines and the other elements of good government. We are delighted to be working with Bangladesh. Bangladesh in fact receives more British aid than any other country bar one but in addition to that, Bangladesh has become very active in helping itself. The development of micro-credit, for example, has been a particular area in which your pioneering work can justifiably claim and receive very great credit; together with your programmes for non-formal education to help human rights, rural development, micro-credit has helped millions of your people to dignity, knowledge and greater economic independence. Later today, I look forward to seeing something of this myself at the Brac [phon] project I shall be visiting at Manikganj and I will be announcing there a further substantial grant for a programme to improve the health of mothers and their children in the area and I hope that that will prove helpful. [Applause].
So the message essentially that I wish to leave you with today is that in all of those three areas – trade, investment and development – Britain is keen to be your partner and keen to increase our work together. As fellow members of the Commonwealth and I believe as firm historical friends as well, Bangladesh and the United Kingdom have a solid foundation upon which to build. As governments and as business partners, we can look forward to an exciting future and to a long and mutually beneficial cooperation.
The opportunities are there for us to seize and I am sure that we can take those opportunities and I am sure that we must take those opportunities for trade touches all of us, it touches the upper strata, it touches the business classes self-evidently, of course it touches the business classes, but it also touches others as well: the revenue from successful trade accrues not only to the businessman who first concludes the deal but to the five merchants with whom he then spends the proceeds and then to the twenty-five shopkeepers when each of the first rive merchants goes into five shops with his profits from the businessman; and to the five times twenty-five wholesalers who each supply the shopkeepers and to the five times twenty-five farmers who each supply the shopkeepers and on and on. The same argument applies to the effects of investment. It is like dropping a pebble into the centre of a still pool and watching the ripples spread right out across the water and the fewer the obstacles, the truer and more complete the ripples will be and the faster and harder the pebbles are dropped, the more dramatic the results and that is why I am such a fervent believer in the benefits of free trade, of liberalisation and deregulation and I detect from the actions of your government and your reactions that many of you have the same wish.
There is so much that needs to be done and there is so much that can be done and providing we are able to accelerate the huge flow of trade that potentially exists out there, the wall of goodwill and investment that potentially can be encouraged, to countries in need of it, providing that is encouraged then I think we can see very dramatic improvements in the volume of trade and in the volume of investment so I wish you every success in your endeavours and I give you a firm assurance that so far as it is in our power to do so, Britain will be there to help you and be there to trade with you and if I may say one thing about my country over the years, we are firm friends and we are good friends of those who historically have been our friends and our trading partners. Bangladesh is among those countries. We have a flourishing, thriving Bangladeshi community the United Kingdom that plays an important role in our society.
I think there comes a time when the opportunities come together in a way perhaps that people have not always foreseen and I think with the developments that are now beginning to take place in Bangladesh, with the new optimism and capacity and willingness to invest overseas that exists in the United Kingdom, that this may be a particularly ripe time to ensure that the old relationship can not only be refreshed but be built on in a way that few people perhaps have yet realised. I think the opportunities are there. I hope by being here today I can indicate to you that Britain is keen to take them and thank you for your hospitality this morning. [Applause].
QUESTIONS AND ANSWERS
- KHABIR (PHON):
Mr. Prime Minister, you have in your speech answered most of what I wanted to ask but I will be looking for something a little more specific.
As you know, in recent months there has been a series of announcements and actions relating to Bangladesh, India and the north-east part of the sub-continent. This includes the agreement on water-sharing of the Ganges, continuing discussion on other rivers and reduction of tariffs by India on goods manufactured in Bangladesh and exported to India. Besides, a sub-region consisting of Bangladesh, Bhuttan, India and Nepal is in the process of being formed. These activities should open up opportunities for large-scale investment in the building of infrastructures in the region.
How can Your Majesty’s Government be of assistance so that the business community in the United Kingdom gets to know of this vastly increased opportunity that has taken place in the last six months and how can we be of assistance in that?
PRIME MINISTER:
Let me answer that very speedily because I think it is a very pertinent point. How can UK business potential investors realise the changes taking place in Bangladesh? Let me offer you three ways:
I think many of them are going to spot it because I am here, because of the reporting of what has been said.
Secondly, Sir Martin Lang will be bringing a very substantial trade mission of businessmen here just within a few weeks time; that will also generate a great deal of interest.
Thirdly, we will disseminate the information to the larger business community via the Confederation of British Industry and the Institute of Directors and the smaller business community through the small business organisations.
Those are three direct ways in which we can let people know of the extra opportunities that exist and we shall certainly do so.
QUESTION:
My question relates to grants given by the British Government to the government of Bangladesh to develop the tea industry. At present, the projects proposed by the ODA are technical projects with the component of poverty alleviation in the field of labour welfare. Our most pressing need is to upgrade the existing labour welfare facilities in education, sanitation, housing and health care. Is there any scope of ODA funding in these areas given our ability to invest only very little due to continuous low prices of tea in the international market?
PRIME MINISTER:
Again, let me answer that very speedily and directly.
As far as education is concerned, there is a scheme that will shortly be announced and I think you will find it will meet the sort of proposition you have in mind.
As far as the other points are concerned, the Foreign Office – the ODA – will be sending across their most senior official who deals with overseas aid in Bangladesh; he will be here with the High Commissioner in just a couple of weeks time for substantive discussions with the government in Bangladesh and with the business community to determine where and how most appropriately we can utilise the overseas aid resources that are available so I am grateful to you for making that point, the High Commissioner will have taken note of it and it can be a subject of discussion at the end of the month.