UK and Sri Lanka: Bilateral Trade

Lord Naseby Excerpts

Thursday 11th December 2014 Lords Chamber

[Lord Naseby (Con)]

My Lords, it is a particular pleasure to join this debate and I thank my noble friend for instigating it. I go back 50 years with Sri Lanka, having worked there in 1963 for the Reckitt and Colman Group as a marketing manager, visiting every conceivable market in the year I was there. When I came back, I wrote a pamphlet in 1967 called Helping the Exporter. It even had to have a reprint, although there are not too many copies left nowadays. Before I came to the House I was a director of one of the major advertising agencies specialising in overseas trade, so I think I have a reasonable heritage to comment on trade between two countries.

The first thing I want to say is that Sri Lanka is very relevant to our country. The population is roughly 30% of the size of our own. I will not cover the same areas as my noble friend, but it is right to re-emphasise that growth since peace in 2009 has been roughly between 6.5% and the 8% at which it is currently running. I congratulate Her Majesty’s Government on the trade mission that was put together at the end of November. I think our high commissioner, who I know is on his last few months there, put together a really good programme, and the feedback from the chamber of commerce in Colombo was very positive. Indeed, I shall quote one sentence from the welcome. Thankfully the high commissioner has put “Ayubowan” which is the traditional welcome in Sri Lanka. He says:

“With a Free Trade Agreement with China to be signed shortly adding to the existing FTAs with Pakistan, India, South Asia and Asia Pacific, Sri Lanka could act as a regional hub to over 3 billion potential customers”.

That is what it is all about.

I also inevitably did some research into, for me, a relatively new area, looking in some depth, not at the political scene, which I think I know backwards, but at the trade and commerce side. An excellent article appeared by a man called Jon Springer of Forbes Asia. He picks out a number of key determinants why Sri Lanka has such good opportunities for the UK to export there.

First, he picks out government stability. It is true that in 2009, once peace was there, there was stability on the ground. Added to that, there is now a railway system all the way to Jaffna. There are new roads, both up to Jaffna and down to the south-west. There is electricity, without permanent cuts, which was the situation for many years and certainly when I worked there. There is good electricity on tap. I would call that a rising peace dividend.

My noble friends mentioned the stock market. No wonder Sri Lanka is proud if our stock market is using software from Sri Lanka. I would be jolly proud if that happened. A friend of mine, a Tamil, is a director of one of the major companies, MAS, a major clothing manufacturer exporting all over the world. It exports here to Marks & Spencer and other retailers. I went round not only his factories, but the housing developments for some of their people. They are extremely well done. Yesterday, I went to Human Rights Day in the Foreign Office, where there was talk about the need for the corporate sector to show a proper response to its workers and others for whom it is responsible. In passing, I say to my noble friend that I thought yesterday’s initiative, Human Rights Day, was very good indeed.

John Springer also picked out a comment that I had also seen from Ceylon Asset Management, which, I admit, is at the far end:

“We expect 25% growth in the equity market on average per year for the next five years. If you think about it, that isn’t that much space on 7 to 8% growth in the economy annually. What people don’t realise is that on a per capita basis, Sri Lanka is twice as rich as India”.

I think that is probably blowing a trumpet a bit, but nevertheless, there is positive note there.

Then, of course, next door there is a big brother, but a very much changed big brother. Modi’s India is there with a link for Sri Lanka to be the hub for goods and services on their travels eastward to drop in to the brand new port at Colombo city. There is the additional new port down at Hambantota and the revitalisation of Galle harbour, by kind permission of the Dutch. All that means that this is a real opportunity for growth.

I have been a tourist in Sri Lanka on a number of occasions. I was a tourist in the very early days when if you were on the shore you ate fish curry and if you were up country you ate chicken curry. Today, there are wonderful hotels. I looked at the figures, which are astonishing. This year, it is estimated that there will be 1.6 million tourists and there has been a steady increase in the amount of money that tourists spend.

Sri Lanka is really becoming a middle-income country, although there are obviously poor parts of it; I think I know where they are as well. The real estate market is moving in Colombo and surrounding areas and that is a positive move. Are there risks? Of course, in every commercial world—and I was in it for quite a long time—there are risks. There is one simple thing that Her Majesty’s Government can take on board, which is supported 100%, I am pleased to say, by our high commission. If we want to do more trade with Sri Lanka, we have to speed up the process of issuing visas to those coming on a short-term visit to do business. Although the Foreign Office claims that it is to save money that visas have to be processed in Chennai, that is a nonsense. We even built a building in Colombo to do the processing. It is sitting there idle. What would be the net extra expenditure for a couple of officers to process the proper visas, maybe just for business visitors? That really needs to be looked at. That is my plea to my noble friend on the Front Bench.

There are some other handicaps. I will highlight three. One is the Small Business, Enterprise and Employment Bill going through your Lordships’ House. Parts 7 and 8 and Schedule 3 require that shareholders holding 25% or more, or having some control over a company ownership, have to be kept in a register and that register must be made public. Admittedly, this applies only to UK companies, but I have to tell my noble friend on the Front Bench, as one who has worked and lived in that part of the world, as far as the Middle East and south-east Asia are concerned, nobody wants to have their public or any other public look at a register. That leaves them open to creative journalism and, I am sorry to say, one or two creative NGOs. There is ample provision to check on fraud, money-laundering and other provisions. However, I think my noble friend will have to pass on a message to his noble friends that that will cause a huge problem for trade.

I am sure there are those in the Chamber who wonder why I have not even mentioned politics. I have to mention it on a couple of issues, though. Here in the UK there is a challenge from the part of the Tamil diaspora that just pours out propaganda. I must get one or two things a week, telling me that dreadful things are happening every day, and, more importantly, that Eelam is still on the agenda—that is, the independence of the north and possibly the east. Frankly, that does not help anybody. What I find so disappointing about the Tamil diaspora is that the amount of money and investment that is going into the Jaffna region is so tiny that it is almost embarrassing to record how low it is.

Add to that the news we had yesterday or the day before about torture in Guantanamo Bay. There are allegations of torture in Sri Lanka. On my last visit, I did my level best to check with all the independent authorities whether there was any evidence of torture, particularly the ICRC, which said that there was none. However, we keep getting the odd report, without substantiated evidence, that there is torture. We need to take all those with a pinch of salt.

There are also claims that there is religious intimidation. I say to my noble friend that there is not. There is diversity of faith there. Certainly the Sri Lankan Government are not stirring it up one way or the other. Should we not reflect that mosques were burned down in Luton, Bletchley and Birmingham? We do not know who perpetrated that situation but we know that it is wrong. I believe that the Government in Sri Lanka will be equally keen to find out who is responsible there.

Overhanging it all is the OHCHR situation in Geneva, which, frankly, is not recognised by the Sri Lankan Government. Perhaps more importantly, it is not recognised by a number of Commonwealth countries, including India and Australia. We will have to see how objective it is, but sadly the UN does not have a great history of objectivity in what has happened in Sri Lanka.

I conclude by saying that we have a new high commissioner going from here to Sri Lanka. I hope that he will have really good knowledge of commercial matters and will deal with that with energy. Sri Lanka has a presidential election on 8 January. I do not know who will win; I wish whoever does all possible success. I know those elections, as does the Opposition Whip; I am sure it will be a fair and full election. I thank those who have enabled me to take part in this excellent debate.