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.
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-
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-
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-
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-
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-
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 -
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 -
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 -
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-
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 -
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-
So the message essentially that I wish to leave you with today is that in all of those three areas -
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-
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
MR. 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-
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?
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.
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?
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 -