(MENAFN- Arab Times) The following is an exclusive interview with the British Ambassador to Kuwait Matthew Lodge regarding trade relations with Kuwait, tourism, defense ties and economy. € Editor
By Heather Hammad
Al-Seyassah Staff
Question: How do you describe the relationship between Kuwait and UK?
Answer: I have been told by previous officials that the profile of the British Ambassador and the United Kingdom here in Kuwait is very high and that the relations go back a long way. Indeed, everything I personally saw in Kuwait confirms this fact.
There is a lot of history in terms of this relationship both before and after independence. Kuwait shares a close partnership with the UK that has been strong for the last 116 years from the start of the 20th century.
There are many factors that have served in strengthening our relationship. When I go around and meet the senior Kuwaiti businessmen, they talk to me about the contribution of the British oil industry in Kuwait's oil exploration sector as well as the involvement of the British banks in establishing the first steps of Kuwait's financial services sector.
The British importers were present in the Kuwaiti market when Kuwait was leading the GCC countries economically and politically in the 60's and 70's.
That part of history is very clear. However, considering the history of past 30-40 years, I think we've got a job to do. Since the UK continues to have global business ambitions, we still share a strong economic relationship because of the large scale Kuwaiti investments in the UK of both public PIA and KIO as well as the Kuwaiti companies. In addition, many Kuwaitis own houses in London and other areas of UK.
We have been working on increasing the number of British businesses and investments in the Kuwaiti market. However, the competition is much more these days compared to what it used to be. I do not think the UK is taking most of the opportunities in this country especially since we are faced with competitors from France, Italy, America, and even from the Far East such as Japan, South Korea and China. We have a lot to do to catch up to the game and make more of the relationship for economic and international purposes.
Q: Could you tell us more about the terms of trade? What are the main sectors of trade for both countries?
A: The obvious strength at the moment in terms of UK exports and imports to Kuwait is mainly the Automobile Sector, particularly the high-end global British brands such as Land Rover, Jaguar and Range Rover as well as luxury brands such as Aston Martin, Rolls Royce and Bentley.
There are a number of brands that are closely associated with Britain, but are not British-owned companies now such as Mini BMW, which is still manufactured in the United Kingdom; this means British expenditures, engineers, and manufacturing.
The Automobile Sector is definitely considered to be one of the main sectors of trade in Kuwait.
Another main sector we care about is the Retail Sector, with common household brands such as Debenhams, Mothercare and many others, as well as high-end brands such as Burberry, etc. Our involvement in the Retail sector is big in many ways and is growing.
There are a large number of grocery chains such as Saveco and Lulu in Kuwait that are importing significant quantities of UK-produced goods.
The third main sector of trade is the Healthcare Sector, both in terms of providing healthcare services in the UK to Kuwaiti patients as well as providing medical services and expertise here.
In addition, there are many British specialists in the Oil and Gas Sector, providing engineering and consultancy services from companies such as AMAK and PETRA.
Q: What about the Agriculture Sector?
A: We are continually working on increasing the agricultural exports to Kuwait.
Just last week I attended one of the biannual ministerial meetings of the Joint Ministerial Group where I met the secretary Khaled Al-Jarallah from Ministry of Foreign Affairs who represented the Kuwaiti side, while UK was represented by our Minister for Middle East Affairs Mr Al Wood.
In fact, this was not a foreign ministry issue but what it did was bring together officials from all areas of business and government. There was a group there that focused specifically on trade and investments, while another focused on healthcare and another on education and culture. In all these areas, work is ongoing to find ways to increase and strengthen the commercial and economic relations between the two countries.
We have a British counselor here in Kuwait who provides language services as well as English language examinations and other educational and training services.
In terms of the trade and investment discussions, we are keen about increasing the import of agricultural produce from the UK to Kuwait. Currently we are working on renewing the import of British beef and lamb into Kuwait, which have not been happening for a while and we discovered that we need to fix this matter from the UK. We are not going to compete with the Dutch over flour products but there are other goods that we could import particularly the meat products.
Q: What are the plans for the near future for the relations between both countries?
A: The British and Kuwaiti governments have agreed to increase the bilateral trade with a target of 4 billion British pounds by the end of 2016. It is now 2.9 billion pounds but those figures are increasing as the trade figures have grown by 16 percent in the first quarter of this year compared to last year.
We have had a significant increase in the number of Kuwaiti students in the UK. I think there are around 3,500 Kuwaiti students studying in the British universities these days.
Regarding tourism, the visa section here in Kuwait issued around 100,000 visas to mostly Kuwaitis last year, which is a significant increase compared to the previous years' figures.
Q: What are the reasons behind this increase in the number of Kuwaiti tourists to the UK?
A: I think there is a growing appetite among the Kuwaitis to travel to the UK because they know UK quite well as they used to visit it often. In addition, perhaps the relative weakness of the British pound at various points has made it more affordable for them.
Kuwaiti tourists consider UK as a shopping destination. We have not received the figures of last year yet but certainly Kuwaitis were the single biggest contributors in 2013 in terms of spending when in the UK.
Q: Among GCC countries, where do you list Kuwait in terms of the number of travelers and investments?
A: More visas are issued in the UAE than in Kuwait even though most of the travelers from the Emirates are the non-Emiratis.
I believe Kuwait is at the top of the list. Kuwait is the single largest source of travelers from the GCC to the UK with the total number of Kuwaiti travelers roughly equivalent to the Omanis, Qataris, and Emiratis combined. So it is quite important for us to ensure our visa policy is right especially since we had introduced an electronic-visa system last year for the citizens of three countries € United Arab Emirates, Qatar, and Oman. However, we have not introduced it yet in Kuwait because it has not been working properly, due to which we have been hastily working on a new updated system so that we can introduce it here.
We also found out that the visa section in Kuwait is the most productive in the world as per our visa organization statistics.
Q: Can you tell us more about the Kuwaiti investments in the British Real Estate Sector?
A: Kuwait's Investment Office in London was formed in 1953. It is one of the oldest fund offices in the world that plays a huge role in running big investments in the UK. They are quite discreet about the total value of funds and the operations they manage but my understanding is that there are big investments that are managed from London. They are one of the largest foreign investors in the UK.
I do find the investments of the Kuwaiti government and Kuwait's Public Investment Authority (PIA) in the UK very sophisticated and mature. Large areas in London on the South Bank of the Thames between the Tower Bridge and London Bridge are owned and managed by the PIA.
They are not seeking publicity in order to keep the work more secure and manageable, unlike some other GCC countries that prefer a high-profile approach.
Honestly, I respect the 'low-profile' strategy adopted by the PIA, not forgetting that part of the office's responsibilities is taking care of the Kuwaiti private investors, Kuwaiti institutions and also Kuwaiti banks that have been continually maintaining their interest in investing in the UK, whether in students' housing accommodation, medical services and facilities and many other aspects.
There are some Kuwaitis who buy houses in different areas across the country. In fact, there is a small community of Kuwaitis who own houses in Milton Keynes.
Q: Why do you think Kuwaitis consider the UK as the main destination for their investments out of all the European countries?
A: There are a number of factors. It all started with the older Kuwaiti generation, as many of them went to the UK for educational purposes and discovered the British culture and lifestyle which they liked. I believe they like the environment that the UK provides to them from many perspectives. Then there is the history factor.
These days, the travel of Kuwaitis to the UK is quite facilitated such as easy access, ease in obtaining visas, presence of direct flights, etc. This is not the same with the other countries such as Australia, Canada, or the United States.
In addition, London will always be familiar to most Kuwaitis, as it has a welcoming environment for them.
From a business perspective, it has an attractive environment for foreign investments and has good opportunities. We share good relations with our trusted Kuwaiti partners and allies, and we will work on enhancing those relations.
Q: How do you describe the relations in terms of defense and military aspects?
A: We do share very strong defense and military relations. Each year, Kuwait sends a number of students to the British military institutions for training.
In addition to our defense section in the Embassy, we have British military missions within the Kuwaiti Ministry of Defense for providing direct support to the ministry. We are working on strengthening the relations between both countries in terms of defense and military aspects.
Q: Regarding the food chain franchises, are there any plans to expand the British presence in the Kuwaiti market?
A: It is obvious that the presence of a number of American brands in the country has raised the profile in that respect.
There are some British franchises that are well-known on the UK high street such as Costa Coffee, Pizza Express, etc.
In fact, this is another area that we are always keen to look out for opportunities to develop the relations. I think Kuwait is a competitive market and we need to work harder to enhance the business in this area.
Q: The oil prices dropped sharply last year while the political issues are getting complicated day after day. How did this reflect on the trade and economies of both countries?
A: When I was in London last year preparing to come here, there was still a lot of debates regarding the cost of living in the UK where we do not enjoy subsidies and low fuel prices. Most people there depend on cars for transportation due to which one of the most controversial subjects is the cost of fuel.
From the Kuwaiti perspective as well as that of other oil producing countries in the Gulf area, the main concern is the budget. Collapse in the oil prices means lesser government revenues.
During the Middle East Economy Conference last week, His Excellency Anas Al-Saleh spent a lot of time talking about the challenges of economic diversifications that Kuwait is facing these days, and how at the same time it is trying to reform some of the established patterns in order to continue the fuel subsidies and open new revenue sources.
Of course, the reduced oil prices and the fact that it is not expected to increase anytime soon have a big impact on countries like Kuwait; but because of the strength of Kuwait's funds and investments as a scale of the Kuwaiti oil reserves and the efficient way the Kuwaiti budget has been managed, I think the Kuwaiti government has got everything under control, even though the minister said the country's budget might still suffer a small deficit for the first time this year and that they do need to reform.
From the UK perspective, the reduction in the oil prices is another challenge for the economy, especially with the current difficult political relationships with some countries such as Iran, Venezuela, and Russia.
At the same time, we have seen that Britain's economy has continued to grow. In the last quarter, the UK economy has been the fastest growing economy among the 'G7' group of countries.
Austerity policies and reduction of public expenditures have managed to secure a revival of economic growth for the UK, especially since people did not think it was going to be possible three or four years ago. The main challenge now is reducing the public deficit and debt.
Q: What are your predictions regarding the UK economy in the near future?
A: The economy is growing. We have a very low inflation rate. The growth rate has been around 2.7 percent and we expect it to either keep growing or at least stay. Even though this is not clear yet, what we are certain of is the fact that our economy was in recession and the government has transformed that into growth. One of the solutions that helped enhance the rescue plan is the UK government choosing to "free" our currency.
The British economy is almost unique in Europe. Even though the German economy is fundamentally strong, I think our decision reinforces to those who believe that we were right about retaining national control over our currency. However, we are still in a position where about 40 to 50 percent of the UK trade is with partners in the European Union. It is a huge proportion of our trade and we are therefore very sensitive to any crises that affect the European economy. This is a risky fact we will always live with, which is why the UK government is keen to hold the referendum that has been promised for UK to continue its membership in the European Union.
Q: Do you think retaining UK as part of the European Union has more disadvantages especially from the economical aspect?
A: There are arguments about whether it is in Britain's best interest from economic and political perspectives for it to remain in the European Union.
The government's position is clear. Prime Minister David Cameron said the European Union needs to reform to become more organized, more competitive and open. If the European Union does reform, then Britain will stay part of it.
It is fair to say from a British point of view that our membership in the European Union has always been more about trade, common sense and geographical partnership than about ideology. There are some countries within Europe that were most affected by the scares of World War II and the 20th century and who are determined to make sure there are no conflicts in European Union. In fact, they always talk about getting even closer.
We are not 'anti-Europe'. We are just saying there has to be a balance and that it is about doing what we can do together most effectively, whether that is trading, negotiating or influencing the world stage. On the other hand, retaining a degree of difference and an element of internal completion is necessary and healthy, from our perspective.
Q: What is UK's share in Kuwait's development plan and infrastructure projects?
A: When Mr. Hammond was here last October to attend a UK-GCC foreign ministers meeting, he met with His Excellency Sheikh Sabah Al-Khaled, Her Excellency Hind Al-Sabeeh and many others. He was very interested to hear about the new national developmental plan that Kuwait was working on at that time. We kept him updated about its progress when he was in London. Now, it is officially launched.
We have a number of British partners, agencies and companies that are involved in providing consultancy services, investing in Kuwait's efforts to increase its human resources, and training individuals on management skills besides many other things.
We have a number of British companies already present here in Kuwait; most of them are engaged in the oil and gas sector.
All this was discussed as a significant element during the meetings of the Joint Ministerial Group that I talked about earlier. They deliberated on how the UK can increase its support for Kuwait's development ambitions and plan through different perspectives and sectors.
Q: We've noticed that the British Embassy has been active in organizing exhibitions and social activities. Do you usually achieve the targets of those exhibitions?
A: One of the things I learned last week from Sheikh Meshal Al-Sabah is that the Kuwaiti government is planning for the International Trade Exhibition which will be launched during the last week of February 2016.
We were very interested to hear about this and are keen to ensure there is a significant British contribution in this exhibition.
Earlier this year, we had the British-Kuwait Exhibition which was organized by HH Sheikh Nasser Al-Mohammad. That was a huge push for our relations.
We also had an event for the British brands last April.
I have been discussing with a number of Kuwaiti colleagues, some people in London and even here in the embassy about whether we can do something similar next spring, taking advantage of that International Trade Exhibition as well as the 25th Liberation Day of Kuwait. I am hopeful that we will be able to do something by then.
As I mentioned earlier, Kuwait has a very attractive but also a very competitive market. We will always keep working on developing the relations between both countries. These are our main targets.
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