The export credit can be accessed either in British sterling or in ringgit
By ALIFAH ZAINUDDIN / Pic By ISMAIL CHE RUS
THE UK export credit agency, UK Export Finance (UKEF), has doubled its support to a maximum facility of £5 billion (RM28.4 billion) for both local and UK companies to do business in Malaysia.
The British Prime Minister’s Trade Envoy to Malaysia Richard Graham said the figure is the largest amount the country has allocated for any nation.
“It is £5 billion in total that can be accessed either in British sterling or in ringgit, and it can also be done through Shariah-compliant finance like the sukuk.
“That is relatively unusual in terms of what is available to Malaysian organisations from other export credit agencies,” he told The Malaysian Reserve yesterday.
Graham said unlike export credit facilities offered by other countries like Japan and South Korea, financing by UKEF can be used for 100% of the contract value with a minimum of 20% UK content.
“It is the highest amount we offer anywhere in the world to a single country, and it is at the most attractive rate that the Organisation for Economic Cooperation and Development allows for in lending terms to Malaysia,” he added.
The move to increase the amount of export finance available echoes similar advances made in other developing nations such as Bangladesh, Pakistan and Peru.
The UK has been upping its game in high-growth countries to ensure the country’s exports across the world continue to rise, while its trade arrangements with the European Union (EU) — which represents 42% of British exports — is being sorted.
“That is why Prime Minister Theresa May has doubled her team of trade envoy from 15 to about 30 within this past year.
“This is why there are more ministers coming out to the Asean region than ever before. We’ve got a dedicated team of international trade ministers and with each own department looking at opportunities outside the EU, particularly after the UK leaves the EU,” he said.
Last Friday, May had proposed in the Tuscany capital of Florence that the UK’s withdrawal from the European bloc would involve a two-year transition period, after it formally leaves the EU in March 2019.
This is to further facilitate the arrangement of a trade deal with the EU.
Graham said while being part of the EU posed some legal constraints for the UK to engage in formal trade negotiations, it did not prevent the UK from carrying out informal talks with other countries.
May recently held talks in Australia, Canada and New Zealand, in addition to her highly publicised visits to the US and India earlier in the year. Meanwhile, Prime Minister Datuk Seri Mohd Najib Razak had on Sept 15 visited his British counterpart in a meeting that reaffirmed strong ties between Malaysia and the UK.
“There are two things we have at hand. At the government-to-government level, it is about trying to identify what are the blocks to more trade and investment for both ways.
“On the other hand, there is the business-to-business relation where big multinationals like, GlaxoSmithKline plc for example, would be looking at doing more business in Asia and they have to decide which country they would want to go to,” he said.
Graham said apart from conducting informal talks on trade, the UK has high hopes that Malaysia and other countries in Asia would accelerate free trade negotiations with the EU, to be replicated by the UK.
“If Malaysia restarts negotiations with the EU and finishes a free trade agreement (FTA) before we leave the EU, then that would be the starting point of our bilateral FTA.
“The EU is already negotiating with Indonesia. It has started negotiations with the Philippines. So, there is quite a lot of movement within Asean and is an encouraging starting point. If it is not finished by the time we leave the EU, then we can start our own separate negotiation,” he added.
With the arrangements at hand, Graham expects overall trade and investment in Asean to expand by about 20% over the next five years.
“It is quite hard to put a specific figure on future investment, but I would be surprised if we didn’t continue to see UK investment into Malaysia and Asean as the largest single investment from any country in Europe, and the third-largest investor in the world. That would be my strong expectation.”