6
7 July 1982]
MINUTES OF EVIDENCE TAKEN BEFORE
[Continued
UK/Indonesia Joint Working Party of businessmen and officials from Indonesia and the UK. The first meeting of the JWP in Jakarta in December 1980 was followed by a visit by Mr Nott, who had then just ceased to be Secretary of State for Trade, in January 1982 and this enabled the European Commission in Brussels to resolve the problem. The JWP has continued to meet twice yearly and has constructively discussed a wide range of trade issues. The fourth meeting of the JWP has just taken place in Edinburgh.
4. During 1980 and 81 three Ministers visited Indonesia including the Minister for Trade, Mr Rees, as part of his tour of ASEAN in October 1981. The then Foreign Secretary, Lord Carrington, as part of his tour of ASEAN and Mr Baker (DOI Minister for Industry and Information Technology) visited the country in January 1982. Trade relations with Indonesia are excellent.
MALAYSIA: MARKET AND ECONOMY
ANNEX B-II
1. Malaysia has been a traditional market for UK exports, second only to Singapore in ASEAN. However, the UK has dropped from third to fourth place as trading partner and its share of Malaysian imports has fallen to 9 per cent over the past decade. Agriculture continues to dominate the Malaysian economy accounting for 23 per cent of GNP in 1981; Malaysia is the world's largest exporter of rubber, palm oil, pepper and also of tin and it is a leading exporter of timber. However, a set-back was suffered in 1981 when agricultural commodity export revenues fell reflecting the recession and reduced demand in the industrialised consumer markets. Although the exploitation of large natural gas and petroleum resources has compensated to some extent, in 1981 Malaysia recorded her first balance of payments deficit in some years. She therefore appreciates the essential need to diversify the economy and reduce. her vulnerability to commodity price fluctuations. But the Malaysian development plan includes a large industrialisation programme in which the development of higher technologies and more value added resource based industries are primary objectives. The manufacturing sector is planned to overtake agriculture as the largest contributor to GNP by 1985. In 1981 real GNP growth dropped to 6-8 per cent from 8 per cent in 1980. Inflation is static however at around 11 per cent.
2 In 1982 the UK/Malaysia Credit Agreement was signed which provided for £20 million in ATP funds and £57 million in matching export credits to be available over 3 years in support of UK bids for major capital projects. A number of offers have been made under the Credit Agreement but none has yet been taken up.
3. A serious difficulty for British firms doing business in Malaysia springs from the Directive issued in October 1981 by the Prime Minister, Dr Mahathir. This requires that all UK bids for government contracts be submitted, with an alternative non-UK bid, to his office for approval. The Directive was intended to correct what Dr Mahathir believed was a tendency in Malaysia to discriminate in favour of buying British goods and to show Malaysia's disapproval of some British actions and attitudes which were perceived there as damaging to Malaysia. In frequent contacts between Ministers and officials on both sides the British view of these matters has been fully explained but, so far, the trading difficulties continue for British firms.
4. Seven UK Ministers visited Malaysia in 1980 and 1981 including the Minister for Trade, Mr Rees, in September 1981. The then Foreign Secretary, Lord Čarrington visited Malaysia in February 1982 as part of his ASEAN tour.
THE PHILIPPINES: MARKET AND ECONOMY
ANNEX B-III
1. The Philippines has not been a traditional market for UK exporters and we currently supply only 4 per cent of its visible imports. During recent years our falling exports and rising imports from the Philippines have led to the balance of trade currently being in deficit. Japan (39 per cent) and American (37 per cent) are the dominant suppliers to the market and they also receive more than 50 per cent of Filipino exports. They also provide