In a referendum held at 23 June 2016, Britain voted to leave the European Union (EU) after more than 40 years of membership. The British people voted for change and the establishment of a new type of relationship with the EU. The vote results could have impacts on the world’s economy as it enters a period of uncertainty, with financial markets experiencing sole falls while the biggest impact was the very abrupt depreciation in the value of the British Pound and the Euro, The Guardian reported. The fears of uncertainty, afterwards, were compounded by signs of slowing Chinese economy which had been a key driver of economic growth since 2007 – 2009, as well as the increasing visibility of far-right nationalism within several prominent European countries.
From the Asian perspective, Brexit presents the region with many unique opportunities and challenges. Despite the fact that the level of exports from most Asian countries has decreased in recent times, many leading Asian economies have seen Britain and the EU as being key destinations of direct investment. Given today’s uncertain climate, there is a growing concern that these investments might be at risk.
Jacob et al. revealed that the decision of Britain leaving the EU would mean harder deal in trade across Asia. Brexit might affect the trade of some countries in the region disproportionately more than others. For example, China, Cambodia, India, Hong Kong, or Turkey are found to have a higher chance of being exposed to direct trade disruption risk, owing to their relatively high proportion of exports to the UK. Meanwhile, Japan also faces several issues, with some of its leading manufacturers and financial institutions having a regional operational base in Britain.
Not only the economic burden, but the human resource department might also face some challenges in the Brexit decision. According to Open Access Government article, There are four serious impacts HR face, including recruitment, employment law, employee rights, and workforce management.
Given the fact that many Asia companies have operations in the EU regions, they should relook at their plans. The “new” policies might not allow them to have access to the EU and will be restricted to Britain only. This will definitely allow an organisation to rethink their workforce strategy.
Despite the issues above, Brexit decision also offers a number of interesting opportunities for the Asian region. Countries like Singapore, Myanmar, and Malaysia can build on a relationship with the UK and establish stronger economic and diplomatic ties.
As reported by The Jakarta Post, trading relationship between the aforementioned countries is currently very low but there is an enormous potential for growth. In order to help realize these opportunities, nevertheless, the UK and its Asian counterparts can negotiate free trade agreements (FTA). In this instance, many of the Asian economies are well placed to take advantage of not only the UK’s lack of negotiation experience but also its weaker negotiating position, as any prospective agreement would be entered without the size and inﬂuence of the EU’s domestic marketplace behind it.
Moreover, as a region with rapidly growing populations and more afﬂuent middle class, Asia provides many opportunities for British businesses in which Asia is well-placed to take advantage of.
Rienzo and Vargas-Silva study on migration to the UK, India is the most common country of birth among the foreign-born British population at 9 percent, while Pakistan is third at 6 percent and Bangladesh the eighth at 2 percent. These individuals within the population could be used to help build a cultural and economic bridge after Britain left the EU, and a base from which stronger economic and political ties might be forged. As countries that specialise in outsourcing and IT, as well as textiles and agricultural industries, their economies are complementary. As a consequence, these Asian economies are well placed to establish highly effective trading partnerships with the UK.