I returned this past weekend from one of my most exciting overseas business trips so far, visiting the burgeoning international markets of the Philippines, Burma and Thailand. Although these countries in South East Asia are all at different stages when we talk about the size, growth and focus of their economies, the common factor is their huge potential.
One of the topics that I was keen to discuss during my time in Burma was corporate governance. At a reception in Rangoon, hosted by the Association of Chartered Certified Accountants and KPMG, I spoke about how good corporate governance can accelerate the development of a healthy market economy, persuading governments and business that investment is a good idea. It can be the decisive factor in whether a company opens a new office or factory, or whether a sovereign wealth fund invests in an ambitious infrastructure opportunity. A McKinsey study showed that institutional investors are willing to pay a premium of 22 per cent for investments in well-governed companies and markets.
Because corporate governance standards vary so much from country to country, those nations that take it seriously are far more attractive to investors. The UK is a great example: our stable business environment is one of the reasons that we remain so attractive for foreign direct investment. So much so that we’re ranked number one in Europe for investment from overseas, and second in the world behind the US.
Part of my job is to reiterate this to global investors, promoting our financial and professional services sector and speaking for UK interests. But the dialogue goes both ways, and it is also my responsibility to speak to – not just for – the City.
We cannot ignore the topic of tax and accountability after the revelations of the last fortnight. The issues with HSBC were raised and confronted eight years ago but, in a febrile pre-election atmosphere, they are in danger of being taken out of context. My message on this is simple: mistakes were clearly made, but it’s what we do to resolve those issues that counts.
In order to go around the world and sell the UK as a great place to do business, we need to show that we can maintain transparent open markets. Whether the scandals that have hit the City in the past few years have damaged the UK’s businesses is something I am frequently asked, and I always reply that our number one priority is that we need to rebuild, and be seen to be rebuilding, the trust that has been damaged since the financial crash.
In London and across the entire UK, our financial and professional services sector is the best in the world. We have a great product to sell and I enjoy selling it. But to attract even more investment, people need to have confidence that their capital will be safe and secure. My speech in Rangoon echoes what I say to the City – let’s rebuild trust, restore people’s confidence and help turn our country towards the sustainable, reliable economy we all want to see.