London has been the world's largest financial centre for decades and it will remain so despite chaos in the euro zone, says Lord Mayor of London David Wootton.
Wootton, a lawyer by training with expertise in mergers and acquisitions, did not hide the pride that London feels for demonstrating over the centuries great ability to adapt itself to stay ahead of others, aside from openness and transparency that draws law and financial firms as well as numerous transactions to the city.
“It’s open. Services are welcome to operate in the UK and a level-playing field is provided, with a single standard across the market,” he said in a group interview.
The UK has been hit by the euro-zone crisis as Europe is its biggest export market. However, through the past few years, London has demonstrated its flexibility to maintain its status as a global financial centre amid two big threats – exposure of UK banks to other European banks following the euro crisis; and amendments to Europe’s regulatory structure.
Despite the bleak backdrop, growth opportunities in London remain. Ahead of Olympics 2012, real estate investment is booming. In the past few years, London was also firm in basing bank executives’ pay on real performance and tightening regulations to ensure the city’s resilience. It is also the world’s first centre outside China for yuan trading, besides being the biggest centre of Islamic finance in the Western Hemisphere.
London is ready to share its experiences with Thailand, which has long dreamed of becoming a regional financial centre.
“Britain is looking East as never before. In time, we’ll be united by the forces,” he said.
Wootton was in Bangkok last week, leading a delegation of British business leaders to meet Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong and Bank of Thailand Governor Prasarn Trairatvorakul as well as Thai business leaders. The mission is to present companies in London and across the United Kingdom as partners of choice to Thailand, boost bilateral trade and set the course for British companies’ role in Thailand, particularly in services and construction, and Britain’s part in the Public Private Partnership.
By the same token, he welcomed Thai banks, securities firms and funds to the UK as well as those in the manufacturing sector.
In the context of British investment in Thailand, he expressed concern over Thailand’s foreign ownership limit, which should be lowered to allow foreign companies to become majority shareholders.
“If they are to be minorities, who’s gonna put money? Over time, Thailand will see how this will be good for the country,” he noted.
When the Asean Economic Community begins in 2015, he considers that the integration would make it easier to advance openness with a single set of rules, no matter where investment is poured. In this regard, Thailand has a competitive edge as it is one of the more active centres for finance. What the region first needs is central regulators. Then, they must acknowledge that rules require business openness and transparency in terms of information, security and disclosure, he said.
Despite chaos in the euro zone following its monetary integration, he did not see that as a cause of fear for Asean countries. He does not write off Europe, which “will remain the best part of the world”. Moreover, he foresees more similar groupings in other parts of the world. There would be more groups of countries than indi-|viduals in the next 50 years, like what happened in the past 20 years.
“I suspect more permanent influence to groupings like those in the EU, Asean, Africa and Latin America. They are not necessarily unified, but they could be cooperating in specific partnership,” he concluded.
“The EU is a lesson to be learnt. The crisis is not a structural fault. It hasn’t happened because of the grouping. You have to learn from Europe’s mistakes and identify what went wrong,” he said, adding that much of the crisis is born out of the Hamburger crisis in 2008, which forced European countries to pump in liquidity and incur huge fiscal costs.