“The Green Alliance Initiative” webinar on May 23, 2024 – Register now!

CACCI is inviting all CACCI Officers, members and friends to join the upcoming webinar on “The Green Alliance Initiative” scheduled to take place on May 23, 2024 at 5:00 PM, Taipei Time.

Jointly organized by CACCI and the Singapore Manufacturing Federation (SMF), the one -hour webinar will introduce the Green Alliance Initiative, which aims “to help small and medium enterprises in the Asia-Pacific region to embark on their sustainability transformation, sharing of best practices, standards development, advisory support, recognition, and collectively striving towards a net-zero goal and be future-ready for Industry 5.0.” Underscoring its importance, CACCI President Mr. Peter McMullin AM said that the Green Alliance Initiative is designed to empower SMEs on their sustainability journey. Attached herewith is a background on the Green Alliance Initiative.

Tentative Agenda

5:00pm – 5:05pm: Welcome Remarks by Mr. Peter McMullin AM, President, CACCI

5:05pm – 5:40pm: Presentation on the Green Alliance Initiative by Mr. Clement Teo, Chief Sustainability Officer, Assistant Chief Executive, Singapore Manufacturing Federation

5:40pm – 5:55pm: Q&A Session

5:55pm – 5:00pm: Closing Remarks

Register in advance for this webinar:
https://us06web.zoom.us/webinar/register/WN_tV0HQdlERV2CXcbq0dz-Mg

For more details about The Green Alliance Initiative, please click HERE.

Invitation to join Timor-Leste Australia Economic & Business Conference in Dili

CACCI is pleased to convey to its members the invitation from the Australian Embassy in Timor-Leste to attend the Timor-Leste – Australia Economic and Business Forum to be held on 11-13 June 2024 in Dili, Timor Leste. The three-day event is being organized by the Australian Embassy in partnership with the Government of Timor-Leste. The complete program can be downloaded HERE.

The Green Alliance Initiative – An explanation

The Green Alliance Initiative

Founding members of the Asia Pacific Green Alliance (APAC-GA)

The Asia Pacific Green Alliance, which was launched in Singapore on 19th January 2024, is a collaboration between the SMF, the CACCI, the Singapore Business Federation (SBF), the Institute of Singapore Chartered Accountants (ISCA), and the China Council for Promotion of International Trade (CCPIT). The APAC-GA is co-chaired by the founding members, the SMF and CACCI.

What is the Green Alliance?

Well, it’s a response to the fragmented sustainability landscape we currently navigate. Across nations, we encounter diverse standards, regulations, and approaches to sustainability. This diversity, while reflective of local priorities and contexts, creates a significant challenge, especially for small and medium enterprises (SMEs).

#1: The focus on SMEs.

SMEs account for the majority of businesses worldwide and are important contributors to job creation and global economic development. They represent about 90% of businesses and more than 50% of employment worldwide. But despite their positive contribution to the economy they also play a key role in climate change. SMEs can contribute to up to 50% of Greenhouse Gas Emissions. But unlike their larger counterparts like multinational or listed companies, SMEs often lack the resources or expertise to adapt and thrive amid these varying sustainability demands and legislation around the world.

The APAC-GA aims to equip SMEs with the skills, knowledge, and support to take on the climate change challenge. Otherwise, we won’t move the needle. By leveraging the collective voice of SMEs, we will advocate for regulations that not only benefit the environment but also create a conducive ecosystem for SMEs to thrive sustainably.

#2: The focus on building capability & capacity

Most people, including business owners, know that they want to take action on climate change but often just don’t know where to start. This initiative is a significant step towards democratising sustainability. By providing SMEs with the tools and resources they need to measure and reduce their carbon emissions, we are ensuring that sustainability is not just reserved for large corporations with significant resources.

It levels the playing field and empowers smaller businesses to contribute to a greener future. It will also help large businesses by providing suppliers along their supply chain with green credentials. In recognition of the ever-evolving nature of global sustainability standards, the APAC Green Alliance will remain dynamic and adaptable. It will continuously update the various standards to stay in step with international developments and foster cross-border recognition.

Enhancing the capability and capacity of SMEs for sustainable development is not just a feel-good initiative; it’s a necessity for the future of our planet and our economies. By focusing on capability and capacity, we ensure that SMEs are not left behind in the global shift towards sustainability.

#3: The focus on relationships and collaboration

One country cannot solve this challenge alone. Focusing on relationships and collaboration is vital for launching the Asia-Pacific Green Alliance as it leverages the diverse strengths and resources of the region’s nations. The Asia-Pacific region, characterised by varying economies, cultures, and environmental challenges, demands a unified approach to effectively combat climate change and promote sustainable practices. The Green Alliance is an invitation that extends to all Chambers of Commerce and Business Associations to join this growing movement. Our collective effort will be focused on nurturing sustainable growth among SMEs across the APAC region.

#4: The focus on investing in the long-term

The Green Alliance is the work we do today, to create a better tomorrow. Focusing on long-term investments is crucial for the successful launch of the Asia-Pacific Green Alliance, as it underscores a commitment to sustainable development and environmental resilience. By prioritising long-term over short-term gains, the Asia-Pacific Green Alliance can ensure that its initiatives are not only effective in the immediate future but also contribute to a lasting positive impact on the environment and the economies of its member nations.

This Alliance is integral to building a resilient, sustainable future for the Asia-Pacific region and beyond. This can’t exist without building the next generation of leaders to build upon the work we create today.

Chocolate & Juice from Timor Leste for sale

Meet Patricia from Pattys Serie – Chocolates of Timor

Patricia (or Patty) is driven by her dual passion for chocolate but also to help the local cocoa farmers of Timor-Leste. She believes (and her numbers show) that cocoa in the country is underutilised, with a large majority of the crops left to rot on the ground. By upping production, Patty believes she can support farmers to send their kids to school while providing a premium product to the Australian and Asian markets. Her product has both the President of Timor-Leste and Ambassadors of the country raving about her chocolates.

If you want to support her work, visit https://www.facebook.com/profile.php?id=100078921977274

Meet Claudia from Vera Juice

Claudia (middle in black polka dots) sees a local and international market for her juice. She got the idea when she saw a lot of waste in the markets when older fruit was not sold. She started experimenting with producing fresh juice, often from fruit that couldn’t be sold at the market. She has found a niche and also a desire from the local population to drink fresh juice in comparison to the long-lived imported varieties. Her juice is a hit. She can’t keep up with the demand. Claudia is another great example of the entrepreneurial spirit starting to be unleashed in the young Timorese community. If you want to support her work, visit: https://www.facebook.com/p/Vera-Juice-100083299823604/

Webinar on “Mongolia’s Business Environment

CACCI is inviting members and friends to participate in the webinar on “Mongolia’s Business Environment” to be held on 2 May 2024 at 2PM Singapore time.

Jointly organized by the Mongolian National Chamber of Commerce and Industry (MNCCI) and CACCI, the 60-minute webinar features two distinguished speakers – Mr. Enkhtuvshin D., MNCCI President, Mr. Duuren T., MNCCI CEO and Mrs. Erdenebayar O., Investment & Trade Agency Senior Officer, who will provide valuable information on current business trends and developments in Mongolia.

We encourage business people, investors and bankers to join the webinar to gain insights into the business opportunities available and investment prospects in the Mongolian market.

(1) AGENDA

2:00 Introduction about MNCCI and Mongolia’s Business Environment by Mr. Enkhtuvshin D, MNCCI President
2:15 MNCCI’s Business Recovery Program by Mr. Duuren T., MNCCI CEO
2:30 Investment and Business Opportunities in Mongolia
2:45 Q&A (10 minutes)
3:00 End of Webinar

(2) SPEAKERS

To join the webinar, please register HERE

Productivity and competitive policy key to future prosperity: ACCI

Australia needs a sovereign manufacturing capability, so focused government attention on meeting that objective is welcome. However, Australia’s largest and most representative business network says careful consideration of the details is needed.

“Recent experience has starkly demonstrated how the narrowing of our industrial base has exposed the Australian economy to high levels of risk,” ACCI chief executive officer Andrew McKellar said. “We support the objective. Promoting the idea of Australia having a sovereign manufacturing and industry capability is important.

“Most importantly, the Prime Minister’s speech reflects the fundamental importance of boosting productivity and improving competition for our future prosperity. “We can’t achieve that without a competitive tax system or by handing more power to trade unions to tie businesses in ever-tighter knots.”

The proposed Future Made in Australia Act announced today will combine several previously announced initiatives, including the National Reconstruction Fund and energy transition initiatives, under one umbrella. “We see benefit in drawing together those existing threads and building on that to better co-ordinate and manage the rollout of this government investment,” Mr. McKellar said.

“There are significant opportunities in decarbonisation and the energy transition. We should seek to maximise those advantages. “If the government is to invest in driving emerging Australian industry capabilities, that investment needs appropriate consideration and scrutiny.”

ACCI Newsroom

Uzbek Ambassador Oybek Arif Usmanov calls on FPCCI President Atif Ikram Sheikh

Ambassador of The Republic of Uzbekistan Oybek Arif Usmanov called on FPCCI President Atif Ikram Sheikh at the capital office in Islamabad and discussed various issues including bilateral trade, mutual cooperation, investment, Pakistan Uzbekistan Business Council, and exchange of trade delegations. The Uzbek ambassador was accompanied by Bakurum Yusov, Economic and Trade Consul of Uzbekistan.

FPCCI President Atif Ikram Sheikh said that Pakistan is a brotherly country of Uzbekistan. Pakistan’s exports with Uzbekistan have increased gradually in the last years, and bilateral trade can be promoted in textile, pharmaceutical, rice, machinery, agriculture machinery, electro-technical and other sectors. There is a need to explore different avenues to further promote this bilateral trade.

Atif Ikram added that “we will participate in the single country exhibition to be held in Uzbekistan on June 28. Pakistanis have the problem of business visa, tourist visa, flights to Uzbekistan which should be solved. The first Gems and Jewellery Exhibition is being held in Pakistan in collaboration with TDAP and Federation of Pakistan Chamber of Commerce and Industry, in which Uzbek businessmen who belong to this sector should participate and you provide us their names too.”

Uzbek Ambassador Oybek Arif Usmanov said that Uzbekistan is organizing an International Business Forum on May 3 and 4, in which FPCCI and the business community are invited to participate; while the Minister of Uzbek Foreign Affairs will visit Pakistan on May 9-10. There will be G2B and B2B meetings. Trade between Pakistan and Uzbekistan is suffering due to Afghanistan, so there is a need to start the Afghanistan-Pakistan Corridor. Direct flights will be started from Islamabad and Lahore, resolving visa issues soon.

Pakistan should open up deep sea fishing to foreign investors: CACCI VP

A delegation led by Mr. Khurram Tariq Sayeed, CACCI Vice President and Former Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), called on Pakistan’s Federal Minister for Maritime Affairs Mr. Qaiser Ahmed Sheikh.

Mr. Sayeed briefed the Minister that CACCI is a powerful and influential non-governmental organisation composed of the National Chambers of 27 countries of Asia and Western Pacific region, granted consultative status under the United Nations. CACCI’s objective is to cut across national boundaries to link Asia-Pacific businesspersons and promote economic growth of member countries, which account for 40% of the World population and 20% of the world’s GDP with a trade volume of US$ 11 Trillion.

While congratulating Mr. Sheikh on assuming charge as Federal Minister, Mr. Sayeed emphasized that Pakistan must create a conducive environment for foreign investment, stating that no country can flourish without FDI.

The delegation discussed in detail the potential of foreign investment in the deep-sea fishing sector enabling Pakistan to earn much-needed foreign exchange and increase its export base by tapping the vast potential that exists in this sector. He stated that in order to achieve this, Pakistan must open up deep-sea fishing to foreign investors and re-visit its policy by issuing deep sea fishing licenses to foreign companies.

Mr. Sheikh assured the delegation that the Government will look into these suggestions seriously and in order to create a consensus, a moot of all stakeholders will be called shortly.

In the end, Mr. Sayeed thanked the Minister for Maritime Affairs for meeting with CACCI delegation and presented him with a CACCI memento.

FBCCI calls for using technology in agricultural sector to increase productivity

Speakers at a meeting on March 20 underscored the need for using technology, facilitating quality seeds and implementing modern storage systems to increase agricultural productivity in the country.

They also urged the government to provide improved varieties of seeds to farmers, strengthen the food innovation process for high-yielding and climate-tolerant varieties and conduct research to achieve the desired productivity goal in the sector.

The stakeholders made the remarks while addressing a meeting organized by the Bangladesh Chambers of Commerce and Industry (FBCCI) Standing Committee on Agriculture, agro-processing and agro-based industries held at its Motijheel office in Dhaka.

They have emphasised agricultural mechanisation, the establishment of specialised cold storage facilities, and improved the supply chain and process of agricultural products to reduce production costs.

In his chief guest speech, FBCCI President Mahbubul Alam said, “We must put importance on research aimed at enhancing seed quality. Increased productivity can be achieved through the effective adoption of technology in the agricultural sector.”

He also put special importance on building a cool-chain network across the country to prevent wastage of agricultural products at various stages from production to marketing.

The farmers should get fair prices for the agricultural products and policies should be implemented to protect their interests, he said.

Chairman of PRAN-RFL Group, Ahsan Khan Chowdhury, emphasised the significance of maximising the utilisation of agricultural land and enhancing productivity, with a focus on future food security and rising demand.

He also underscored the need for increasing production in many sectors like horticulture, fisheries, livestock, poultry and pulses and oilseeds in addition to traditional crops.

Daily Sun

The original article can be read HERE.

Kowloon Chamber of Commerce Officers Meet with CACCI Executives in Taipei

A delegation from Kowloon Chamber of Commerce (KCC) led by Chairman Mr. Ernest Yuen was hosted dinner by officers of the CACCI Secretariat headed by Director-General Mr. David Hsu on March 17, 2024.

The visiting Hong Kong delegation – which was composed of members of the KCC Council — were in Taipei to attend the Taipei Chinese Medical Association International Medical Conference and to visit various organizations with which KCC has good relations such as CACCI.

During the dinner with the KCC visitors, CACCI Director-General Mr. Hsu expressed CACCI’s continued appreciation to KCC and its officers for their continued strong support of CACCI and its activities since it joined the Confederation as Primary Member in 1981. He also briefed the attendees on the ongoing and upcoming activities of CACCI, including the 38th CACCI Conference to be held on November 18-19 in Singapore, and invited them to attend these important events.

For his part, KCC Chairman Mr. Yuen, who is concurrently Vice President of CACCI, stressed the importance of CACCI as a regional association of businesspersons and its role in providing a platform for networking among members of the business community of the region – including members of KCC and other business enterprises in Hong Kong – and for promoting regional cooperation.

Kadin Indonesia, MUSIAD Indonesia to expand female entrepreneur market potential

As part of the celebrations surrounding In­ternational Women’s Day, the Indonesian Cham­ber of Commerce and Industry (Kadin Indonesia) collaborated with Müstakil Sanayici ve Isadamlari Dernegi (MUSIAD) Indonesia for a discussion titled “Cup of Change: Women Empowering Progress” on March 8, 2024.

Initiated by Kadin’s women’s empowerment division, the hybrid event was attended by more than 100 people, and was held as an effort to em­power female entrepreneurs, create a more inclu­sive national economy and bridge a deeper connec­tion between Indonesia and Turkey.

The discussions touched on topics related to aspects of women’s empowerment, especial­ly women’s entrepreneurial skills, leadership and self-development.

Carmelita Hartoto, deputy general chair coordinator for human quality improvement, re­search and technology and innovation at Kadin In­donesia, said female entrepreneurs played an im­portant role in the national economic development.

She highlighted the fact that around 64 per­cent of the total micro, small and medium enter­prises (MSMEs) in Indonesia are owned by women. In 2023, the MSME sector contributed 60.5 percent of the national gross domestic product (GDP).

“This talk show aims to increase wom­en’s leadership in entrepreneurship and also as a means of networking, especially with female entre­preneurs from Turkey,” said Carmelita, adding that the discussions could also be a means of sharing women’s personal experiences in their process of climbing the ladder to success.

“We hope that this will inspire and motivate other women so that they can explore their own potential and support the progress of women in so­ciety.”

Nihal Yazici Aygun, chair of MUSIAD Women Indonesia, expressed her appreciation for the close cooperation between Indonesia and Turkey, start­ing from knowledge sharing to opening markets between Indonesian and Turkish women entrepre­neurs.

“We hope that events like this can continue to be held to build relationships between entrepre­neurs and motivate fellow female entrepreneurs,” she said.

During the event, Tri Hanurita, deputy gen­eral chair for women’s empowerment at Kadin In­donesia, emphasized that solidarity between wom­en entrepreneurs in Indonesia must continue to be maintained in order to expand their market poten­tial.

“With the potential of women entrepre­neurs especially in the MSME sector, solidarity be­tween women entrepreneurs in Indonesia must continue to be well maintained. In addition, Indo­nesian women entrepreneurs need to be confident in continuing to network, for example with entre­preneurs from Turkey, to expand their market,” she concluded.

Jakarta Post

The original article can be read HERE.

CACCI Attends 43rd Japan YEG National Convention in Komatsu

The Young Entrepreneurs Group of the Japan Chamber of Commerce and Industry (Japan YEG) recently held their 43rd National Convention in Komatsu, Ishikawa from March 13 to 17, 2024. The multi-day event is an annual gathering of young entrepreneurs from across the eight regions of Japan, packed with meetings, networking dinners, ceremonies, product exhibitions, and excursions. This year’s theme highlighted the ‘Power of

Community’ exemplified by the membership, particularly in light of the Noto earthquake that tragically struck Ishikawa on January 1, 2024. The 2024 convention attracted over 10,000 attendees from 417 local chambers, along with foreign delegates from Cambodia, Philippines, Taiwan, Thailand, and Vietnam who were invited to attend festivities on March 15 and 16. In attendance from the CACCI Secretariat were Senior Officers Teresa Liu and Abby Moreno.

On March 15, Japan YEG’s International Business Committee (IBC) signed MOUs with the Vietnam Young Entrepreneurs Association (VYEA), the Young Entrepreneurs Chamber of Commerce Thailand (YEC Thailand), and the Philippine Young Entrepreneurs Association (PYEA) at the Komatsu Chamber of Commerce and Industry. Attending as observers were representatives of the Young Entrepreneurs Association of Cambodia (YEAC), Taiwan’s Third Wednesday Club Young Entrepreneurs Group (TWC-YEG), and the Confederation of Asia-Pacific Chambers of Commerce and Industry (CACCI). YEAC and TWC-YEG have previously signed MOUs with Japan YEG, while the Japanese Chamber of Commerce and Industry (JCCI) is a founding member of CACCI.

During the MOU ceremony, Japan YEG Chairperson Ms. Asako Kimura signed three separate MOUs with VYEA President Mr. Dang Hong Anh, YEC Thailand Vice President Mr. Kraisorn Chatlekavanich, and PYEA President Ms. Charmaine Co Leong. According to the memorandum, parties will collaborate to organize projects promoting cooperation, establish networks to facilitate business exchanges, connect businesses through trade promotion activities, support businesses in accessing capital sources, and organize workshops and forums to share experiences, knowledge, and trends, among other goals.

The MOU signing was announced to the Japan YEG membership at the Convention Ceremony held at the Komatsu Dome on March 16, 2024. IBC Chairman Mr. Hiromi Aoki invited representatives of the overseas delegations onstage to deliver their brief greetings and congratulations to the 43rd National Convention. CACCI Senior Officer Ms. Teresa Liu spoke on behalf of CACCI President Mr. Peter McMullin AM.

VCCI proposes zero tax rate to be maintained for exported services

The Vietnam Chamber of Commerce and In­dustry (VCCI) has proposed a zero-value added tax (VAT) rate to be maintained for exported services, over worries that tax hikes would undermine the competitiveness of Vietnamese providers against foreign rivals.

The Ministry of Finance is drafting amend­ments to the Law on Value Added Tax which will be proposed to the National Assembly for consider­ation in the 7th meeting in May this year.

In the draft, the ministry wants to impose VAT on most exported services, instead of the zero rate as currently.

Specifically, only international transporta­tion and vehicle rental outside Vietnam and some related services are proposed to be maintained at zero tax rates, while others will be subject to VAT rate, commonly at 10%.

The reason for the amendment is that tax authorities found it difficult to distinguish between revenues from exported services and from domes­tically consumed.

VCCI said that the imposition of 10% VAT rate when exporting will make it difficult for Viet­namese services providers to compete with foreign rivals.

International trade of services increased strongly in the global market during the past two decades and is forecast to remain robust in coming years, along with the vibrant development of In­ternet and remote work solutions, VCCI said, citing statistics of the World Bank that global export of services jumped from 400 billion USD in 1980s to more than 7.2 trillion USD in 2022, with an average annual growth rate of 6.5% from 2003 to date.

The international transportation service ac­counts for a significant proportion but it is drop­ping, from 30% in 1982 to 17% in 2020, while tele­communications and IT services are rising.

Statistics showed that global telecommu­nications and IT services export is expanding at 12.3% annually on average from 2004. The rate has been rising more rapidly since the COVID-19 pan­demic.

According to the VCCI services export has huge potential for development. Vietnam’s export of services reached 20 billion USD in 2023 with an average annual growth rate of 11%, higher than the country’s gross domestic growth rate. Vietnam is running a trade deficit of services worth more than 10 billion USD each year.

Providing exported services does not re­quire huge capital like investing in manufacturing and processing industry, which is appropriate in a capital-shortage economy like Vietnam.

In addition, Internet-based services export helps promote the country’s image and increase “soft power”, VCCI said.

Vietnam is an export-oriented economy with export being an important growth driver with an average annual growth rate of nearly 15%, VCCI said, emphasising that zero VAT on exported ser­vices plays a significant role.

According to VCCI, most countries around the world are imposing zero VAT on exported ser­vices and allow tax refunds on inputs. Thus, VAT on exported services should be kept at zero, VCCI said.

Major exporting services of Vietnam include manufacturing outsource, maintenance and repair­ing, tourism and transportation, insurance, finan­cial services, IT and information services.

Vietnam Plus

The orignal article can be read HERE.

Cambodia CC and Victorian CCI reach a MoU on business collaboration

Cambodia Chamber of Commerce (CCC) and Victorian Chamber of Commerce and Industry (VCCI) have reached a Memorandum of Understanding (MoU) on Business Collaboration to promote trade, investment and economic cooperation between the two countries.

The MoU was signed in Melbourne, Australia under the witness of Cambodian Prime Minister Hun Manet, following the Australia-Cambodia Business Forum held on the side-lines of ASEAN-Australia Special Summit to commemorate the 50th Anniversary of ASEAN-Australia Dialogue Relations.

Under the MoU, CCC and VCCI agreed to develop ongoing exchange of trade and investment information (subject to confidentiality requirements), and implement referral mechanisms and servicing members of each organisation to support business between the respective countries.

CCC and VCCI will also offer assistance and support to trade and investment missions arranged by each respective organisation, and promote Trade Fairs and other special events conducted by the two sides.

Moreover, CCC and VCCI will exchange of ideas and information on a periodical basis to further improve mutual collaboration, subject to confidentiality requirements.

Khmer Times

The original article can be read HERE.

ICCIMA calls on government to remove business barriers to realize 8% economic growth

The deputy head of the Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) has said realizing the eight percent growth set in the Seventh National Development Plan requires the government to remove the barriers in the way of private sector businesses.

“The government support and the removal of obstacles hindering business along with the responsibility of the private sector are both emphasized by the leader of the Islamic Revolution in order to achieve the macroeconomic goals of the country,” Hossein Pirmoazen said.

“The requirement to achieve the eight percent economic growth in the Seventh five-year National Development plan is the government’s effort in removing business obstacles along with the responsibility of the private sector,” he stressed.

Tehran Times

The original article can be read HERE.

TEPAV studies Value Chain Transformation among CACCI Members

CACCI would like to share with its members the full text of the study prepared by the Union of Chambers and Commodity Exchanges of Turkey (TOBB) – through its think-tank cacci@cacci.bizion model for value chain formation among CACCI member countries”

This detailed study aims to introduce a model to enhance value chain formation among CACCI member countries, aiming to extend their export presence to major markets, especially the EU, the access to which is contingent upon alignment with its new Green Deal.

We would appreciate if leaders of Chambers analyze the study and communicate his/her observations about the study. In particular, we would like to hear your thoughts on the key takeaways pointed out in the study that stress the importance of intra-regional and cross-regional collaboration among CACCI member countries in implementing the sector-specific approach outlined in the study to enhance value chain formation. Your insights will help us determine how best to pursue the study’s  recommendations going forward and could provide guidance to many Chambers under the current shift in the supply chain structure worldwide.

The study can be downloaded HERE.

For comments please write to cacci@cacci.biz

TOBB head invites US companies to invest more in Türkiye

Rifat Hisarcıklıoğlu, the president of the Union of Chambers and Commodity Exchanges of Türkiye (TOBB) has called on U.S. investors to in­vest more in Türkiye.

Speaking at the Türkiye-US Greentech Tech Delegation Working Dinner held in the Turkish capital Ankara, Hisarcıklıoğlu stressed that they prioritize Türkiye-U.S. relations and that the economic pillar of the relations between the two countries is getting stronger.

Deputy Trade Minister Mustafa Tuzcu, se­nior advisor to the U.S. Presidential Special Envoy for Climate, Ambassador David Thorne and Senior Vice President of the U.S. Chamber of Commerce Marty Durbin attended the event.

“We are focused on improving our commercial relations and providing a better investment and business environment. Investments have become an important dimension of our economic relations,” Hisarcıklıoğlu said.

The U.S. is the number one destination for Turkish investments abroad and that Turkish companies have invested $9.7 billion in the U.S., he noted.

“We invite U.S. investors to invest more in Türkiye. We opened a trade center in Chicago to help bilateral investment and trade. Bilateral trade volume reached a record high of $33 billion in 2023 and the upward trend continues,” he said, but stressed that trade between the two countries should be more liberal.

A free trade agreement or a preferential trade agreement would give a boost to the bilateral trade, according to Hisarcıklıoğlu. For his part, Durbin said that the U.S. Cham­ber of Commerce, has set ambitious goals between Türkiye and the U.S. on green transformation, emission reduction and climate change. The private sector is an important partner in such efforts, he added.

“As the private sector, we can accelerate the green transformation and the energy transition while at the same time strengthening energy security. If we work together, it is possible to achieve both,” Durbin said.

Hurriyet Daily News

The original article can be read HERE.

Go Negosyo, PCCI partner for MSME development

Non-profit group Go Negosyo recently met with officials of the Philippine Chamber of Commerce and Industry (PCCI) as part of efforts to intensify its partnerships with the country’s largest business groups to align with the government’s push to drive development through micro, small and medium enterprises (MSMEs).

In a statement, Go Negosyo said its founder Joey Concepcion met with key officials of the PCCI chapters in the National Capital Region. “The MSME sector is one of the platforms being pushed aggressively as a driver for the country’s growth, and as we roll out more mentoring of the MSMEs, we will need mentors coming from the respected business groups,” Concepcion said during the meeting.

Leading the PCCI were its national chairman George Barcelon, national president Nina Mangio, PCCI NCR area vice president Hernando Delizo and PCCI NCR immediate past vice president Tess Ngan Tian. Department of Trade and Industry (DTI) Undersecretary Cristina Roque, who is heading the newly formed Micro, Small and Medium Enterprises Group, was also present at the meeting.

Members of top business organizations such as the PCCI, the Philippine Franchise Association, the Philippine Retailers Association, the Federation of Filipino-Chinese Chambers of Commerce and Industry, and many more form the pool of volunteers who mentor small and aspiring entrepreneurs during the various free public entrepreneurship mentoring events held regularly by Go Negosyo.

Earlier this year, Go Negosyo said it plans to help at least 200,000 MSMEs by 2028 by giving them access to the three Ms of entrepreneurship – money (capital), markets and mentoring – through its own programs, as well as in partnership with government and other members of the private sector.

Among these programs are the public entrepreneurship mentoring events, structured learning courses, online seminars, national summits and programs focused on youth, women, OFWs, tourism and digital technology.

The non-profit organization also has programs held in cooperation with outreach programs of the government, such as its youthpreneur and agri education projects with the Department of Education, among others.

“The meeting with PCCI became an opportunity to align with the DTI, the private sector’s efforts to scale up MSMEs,” Go Negosyo said.

During the meeting, PCCI officials were also able to discuss with Roque the opportunities presented by the tourism sector, the halal industry and the need for industry data monitoring and evaluation to aid mapping and impact analysis, especially for the MSME sector.

Philstar

The original article can be read HERE.

SMF President Lennon Tan Appointed CACCI Vice President

Mr. Lennon Tan, President of the Singapore Manufacturing Federation (SMF) – which is the newest Primary Member of the Confederation  of Asia-Pacific Chambers of Commerce and Industry (CACCI) – has been appointed Vice President of the Confederation  of Asia-Pacific Chambers of Commerce and Industry (CACCI), representing the Southeast Asia region.

Mr. Tan was named to the position by the CACCI Council during the 97^th CACCI Council Meeting held on November 6, 2023 in conjunction with the 37^th CACCI Conference in Kathmandu, Nepal.

Mr. Tan is Chairman of ADERA Global Group, which is considered Singapore’s globally trusted leader in data security and automation, working in partnership with international banks, businesses and governments to advance the future of a secure world. In 2017, Lennon was named by Ernst & Young as the EY Entrepreneur of the Year for Financial Technology Enablement.

The SMF is the largest national organisation representing the interests of manufacturing and manufacturing-related industries in Singapore since 1932, with about 5,000 corporate members, comprising SMEs, MNCs and Affiliate Members.

Mr. Tan joins eight other key leaders of  CACCI Primary Members from other Asia-Pacific regions who currently serve as CACCI Vice Presidents, namely: (a) Sheikh Fazle Fahim, Immediate Past President, FBCCI; (b) Dr. Alireza Yavari, Deputy President for International Affairs, ICCIMA; (c) Mr. Khurram Tariq Sayeed, Representing FPCCI; (d) Mr. Ernest Yuen, Chairman Kowloon Chamber of Commerce; (e) Mr. Hiroshi Oshima, Special Advisor, Japan CCI;  (f)  Mr. Pradeep Kumkar Shrestha, Former President, FNCCI; (g) Mr. Henry C. S. Kao, Chairman, CIECA, Taiwan; and (h) Mr. Rifat Hisarciklioglu, President, TOBB.

CACCI VP Dr. Alireza Yavari’s Business Dinner with Sri Lanka’s Foreign Minister Mr. Ali Sabri

On the evening of 5th August 2023, Dr. Alireza Yavari, the Vice-President of CACCI, attended a business dinner banquet planned by the Business Magnates Association (BMA) in Tehran. It was at this event that Dr. Yavari had the honor of engaging in a comprehensive discussion with the Foreign Minister of Sri Lanka, Mr. Ali Sabri.

The crux of their conversation delved into the commercial activities prevalent in the APAC region.

The three primary topics discussed were:

1. APAC Region Trade: The importance of commercial activities in the APAC region was highlighted, with an emphasis on enhancing trade relations among CACCI’s member states.
2. Tourism in Sri Lanka: Focus was on Sri Lanka’s growing tourism sector, covering:

• The rise in foreign investments in hotels, especially luxury brands like Shangri-La.
• The involvement of Emirati investors in the hotel sector.
• The popularity of boutique hotels.

3. Economic Strategy of Sri Lanka: Minister Sabri discussed:

• The nation’s success in reducing inflation from 70% to 6.7% swiftly.
• Steps taken included raising interest rates, removing subsidies, and introducing social security for the poorest 20%.
• These efforts led to Sri Lanka’s inclusion in the IMF program, reflecting economic stability and a confirmed $8 billion funding over four years from institutions such as the IMF and ADB, promising steady economic growth and recovery.

16th Singapore International Energy Week is Open – Register now!

Registration is now OPEN for the 16th Singapore International Energy Week (SIEW). Organised by the Energy Market Authority of Singapore (EMA), SIEW will take place from 23 to 27 October 2023 with the theme “Energy Transition Towards a Net Zero World”.

SIEW 2023 will bring together energy ministers, leaders of global energy organisations and renowned industry experts, while providing a platform for panel discussions and networking opportunities where energy professionals can gain insights and forge new partnerships to address key energy issues. With a diverse line-up of renowned speakers and engaging sessions, SIEW offers an unparalleled platform for professionals to gain insights and exchange perspectives.

Global Energy Thought Leaders

Prominent industry leaders convening at SIEW 2023 include:

I. Governments and International Organisations

• H.E. Raphael Perpetuo Lotilla, Secretary of Energy, Republic of the Philippines
• Dr Akihiko Yokoyama, Chairman, Electricity and Gas Market Surveillance Commission (Japan)
• Eric Pang, Director, Electrical and Mechanical Services Department, Hong Kong SAR
• Dr Fatih Birol, Executive Director, International Energy Agency (IEA)
• Dr Marit Brommer, Executive Director, International Geothermal Association (IGA)
• Francesco La Camera, Director-General, International Renewable Energy Agency (IRENA)
• Mikhail Chudakov, Deputy Director General, International Atomic Energy Agency (IAEA)
• Dr Angela Wilkinson, Secretary General and Chief Executive Officer, World Energy Council

II. Industry

• Audra Low, Chief Executive Officer and Executive Director, Clifford Capital Pte Ltd
• James Stacey, Partner, Global Leader of Clients & Industries, ERM
• Eric Arnold, Executive Chairman, Global Energy Storage
• Toshiro Kudama, Chief Executive Officer, JERA Asia Pte. Ltd.
• Laura Ashton, Co-Founder and Chief Executive Officer, Low Carbon Advisors
• Takao Tsukui, Executive Vice President, International Sales and Marketing, Mitsubishi Power
• Shivkumar Kalyanaraman, Chief Technology Officer Energy Industry, Asia, Microsoft Asia Pacific
• Roberto Lorato, Director and Chief Executive Officer, PT Medco Energi Internasional Tbk
• Dannif Danusaputro, Chief Executive Officer, PT Pertamina Power Indonesia
• Paula Conboy, Board Member of PJM Interconnection and Senior Counsel, Sussex Strategy Group
• Martin Houston, Vice Chairman, Tellurian Inc
• Dilhan Pillay Sandrasegara, Executive Director and Chief Executive Officer, Temasek Holdings
• David Gray CBE, Non-Executive Director, Tokamak Energy

III. Anchor Events

SIEW 2023 will feature a range of anchor events organised by EMA. These include:

(1) SIEW Summit: This high-level event will bring together energy ministers, leaders of international organisations and industry experts to discuss topics such as: • Net Zero Asia

• Intensifying Net Zero Innovation
• Hydrogen as the Future of Net Zero Energy
• Securing Green Financing for a Net Zero Future

(2) Singapore-International Energy Agency (IEA) Forum: Co-hosted by Singapore and IEA, the forum will focus on the decarbonisation efforts in Southeast Asia towards Net Zero, and the policy levers required for a sustainable future.

(3) 3rd Singapore-International Renewable Energy Agency (IRENA) High-Level Forum: Co-hosted by Singapore and IRENA, the event will address the topics of “Pathways for Regional Interconnectivity” and “Scaling up Investment to accelerate Energy Transition”.

(4) SIEW Energy Insights, SIEW TechTable and SIEW Thinktank Roundtables: These industry events will facilitate knowledge exchange and discussions on emerging trends and innovations driving the region’s energy transition. China Renewable Energy Engineering Institute and Singapore Green Building Council will host the SIEW Thinktank Roundtables for the first time.

(5) The SIEW Energy Showcase: Returning for its second year, the Showcase will exhibit the latest industry trends, clean energy solutions, and sustainable practices driving Singapore’s and Asia’s net zero transition.

IV. Industry Events

SIEW 2023 will also play host to returning industry events across the energy domains:
Asia Clean Energy Summit (ACES): Commemorating its 10th edition, ACES will focus their discussions on the theme “Clean Energy for a Clean World”, featuring panels on solar and energy storage, electric mobility and energy efficiency for the low-carbon transition.

Asian Downstream Summit (ADS) & Asian Refining Technology Conference (ARTC): These events will address challenges across the downstream value chain, from green financing to cybersecurity. ADS also marks its 15th anniversary with a new discussion track focused on carbon capture, utilisation & storage.

Asia Hydrogen and LNG Markets Conference: The conference will explore pressing issues shaping the industry, such as shifting liquefied natural gas (LNG) trade flows and the viability of a hydrogen-powered economy.

Future of the Grid: The conference will deep dive into contemporary grid-related matters, with topics ranging from interconnectivity to renewables integration and grid modernisation. New this year, the event will host the inaugural ASEAN Energy Regulatory Forum, which will facilitate conversations between regulators, policy-makers and key industry stakeholders to enhance regional interconnectivity and facilitate the development of greener future grids.

Singapore skyline at night

Registration and More Information

With the opening of registration for SIEW 2023, early bird discounts are available. For more information on the conference programme, speakers, and bundled discounts available for partner events, please visit https://www.siew.gov.sg

About the Energy Market Authority

The Energy Market Authority (EMA) is a statutory board under the Singapore Ministry of Trade and Industry. Through our work, we seek to forge a progressive energy landscape for sustained growth. We aim to ensure a reliable and secure energy supply, promote effective competition in the energy market and develop a dynamic energy sector in Singapore. Visit www.ema.gov.sg for more information.

About Singapore International Energy Week
The Singapore International Energy Week (SIEW) is an official trademarked event by the Energy Market Authority (EMA). It is an annual platform for energy professionals,
policymakers and commentators to discuss and share best practices and solutions within the global energy space. The 16th edition of SIEW will be held from the 23-27 October.

For media enquiries, please contact:
Mr Dion Lim
FINN Partners for Singapore International Energy Week
Tel: +65 6779 5514
Email: SIEWMedia@finnpartners.com

Tehran, Tashkent Look to Boost Central Asian Cooperation

Wedged by Russia, China, Iran and Afghanistan, the Central Asian republics are pursuing multi-vector foreign policies to ensure economic growth and navigate among the local powers, as well as the US and Europe, even though the latter have antagonistic relations with the four countries.

The republics know, “When the elephants fight, the grass suffers,” reads an article published in OilPrice.come.

Uzbekistan is an example of the political entrepreneurship demanded of the republics, as they press ahead in an environment shaped by the twin shocks of the Taliban victory in Afghanistan and the NATO-Russia war in Ukraine.

In June 2023, Uzbek President Shavkat Mirziyoyev met Iran’s President Ebrahim Raisi and Iran’s Leader Ayatollah Ali Khamenei. The meeting netted cooperation pacts in areas as diverse as agriculture, energy, customs affairs, sports, science, technology and innovation, cultural exchanges, healthcare, Chabahar Port, the environment, industry and tourism. It was the first visit to Iran by an Uzbek leader in over 20 years.

The countries plan to increase annual trade to $3 billion, according to Raisi (trade was $431 million in 2021), and intend to develop a transport corridor through Turkmenistan, which Mirziyoyev first discussed with Turkmenistan’s President Serdar Berdimuhamedow in October 2022. (Transportation cooperation between Tashkent and Ashgabat started in 2017 with the opening of the Turkmenabat-Farab railroad and car bridges that will link the countries and open opportunities for long-distance trade.) Raisi pledged to connect Uzbekistan to high seas via Turkmenistan and Afghanistan.

The June meetings were a follow-up to the March 2023 visit by Uzbekistan’s foreign minister who met Iran’s ministers of foreign affairs and industries. Afterwards, the parties announced efforts to increase trade turnover, and foster business links and people-to-people ties. The ministerial meetings built on the September 2022 visit by Raisi to Uzbekistan that produced 17 agreements in areas such as energy, transport and agriculture, and discussed how to double trade from the current $500 million annually, though in less than a year the trade target has ambitiously increased to $3 billion.

Iran is increasingly attractive to the landlocked Central Asian republics that are seeking new trade routes. In June 2021, Tashkent hosted a conference to highlight Central Asia-South Asia connectivity via Afghanistan and Pakistan.

Two months later, the US and NATO retreated from Afghanistan and the country plunged in chaos, so the republics had to consider alternatives. In February 2022, the Russia-Ukraine war forced Kazakhstan to develop a trans-Caspian route to avoid the effects of the Russian-Ukraine war, and the other republics followed suit.

Central Asia can now consider trading through Iran’s ports of Chabahar and Bandar Abbas.

Iran can offer a space free of the violence by the Islamic State and the Pakistani Taliban that plagues Afghanistan and Pakistan; organized and functioning government agencies; and ports adjacent to the markets of India (Chabahar) and the Persian Gulf (Bandar Abbas). Iran is also a large market of close to 90 million people.

The US has promoted the Middle Corridor to the republics as an alternative to Iran, but avoiding the “Southern Corridor” via Iran or Afghanistan-Pakistan, deprives the republics of ready access to Asia and the Persian Gulf. The republics are not burdened by Washington’s sense of grievance against Iran that has festered since 1979, especially as there would be an economic cost of joining Washington’s campaign against the Islamic Republic, with no offsetting benefits other than a thank you for “doing the right thing.”

The republics want a reliable partner who can also help them deal with instability in Afghanistan. Iran shares that interest and has no territorial aspirations in Central Asia, though it will seek political support from the republics in fora such as the United Nations, as it implements its “Look East” policy and seeks a larger regional role through groups like the Shanghai Cooperation Organization.

The people of Tajikistan are Persian-speaking and many historic cities in the region, such as Samarkand and Bukhara in Uzbekistan, and Eastern Uzbekistan, are home to Tajik people who are indigenous to the region, so Iran will use cultural links, old and new, as tools of influence.

Financial Tribune

China, New Zealand willing to advance trade growth, agreements

China is willing to advance balanced trade growth with New Zealand and effectively implement the upgraded protocol of their free trade agreement, said the country’s top commerce official.

During his meeting with Damien O’Connor, New Zealand’s Minister for Trade and Export Growth in Beijing, Chinese Commerce Minister Wang Wentao said China is keen to further strengthen exchanges and cooperation with New Zealand under frameworks such as the World Trade Organization, the Asia-Pacific Economic Cooperation, the Regional Comprehensive Economic Partnership, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and the Digital Economy Partnership Agreement.

O’Connor said that New Zealand has maintained a long-standing and positive economic and trade cooperation with China

The two sides engaged in frank discussions, focusing on promoting bilateral economic and trade relations, as well as strengthening cooperation in regional and multilateral areas, said a statement released by China’s Ministry of Commerce after the meeting.

O’Connor said that New Zealand has maintained a long-standing and positive economic and trade cooperation with China. The trade structures of the two countries are highly complementary, and the bilateral free trade agreement has facilitated rapid growth in both export and import activities.

New Zealand will continue leveraging complementary advantages and strengthen cooperation with China, particularly in agriculture and food security sectors, said O’Connor, adding that the Oceania country seeks to enhance communication and coordination with China in multilateral and regional mechanisms.

Asia News Network

Inflation retreat will bring some comfort to small business: ACCI

Fresh inflation numbers will offer some consolation to Australia’s 2.4 million small business owners, many of whom are nearing breaking point as price pressures and elevated interest rates increase the risk of further economic pain.

“After experiencing 12 interest rate increases, declining consumer spending, and a surge in input costs, it’s good news for small businesses that inflation is returning to its downward trend,” ACCI chief of policy and advocacy David Alexander said.

“As supply chain bottlenecks ease, small businesses have experienced a decline in petrol prices while material costs have also steadily decreased from previously high levels.

“Despite this welcome progress, the expected inflation-chasing wages hike from July 1 will heap even more pressure on small businesses when they can least afford it.

“Many small businesses are seeing their costs rise to the point where they have no choice but to increase their prices to maintain operations.

“With further disruption on the horizon as the federal government pursues retrograde changes to the industrial relations system, small businesses across the country are questioning why laws that will make it harder to create new jobs and grow the economy are needed.

“At its meeting next week, the Reserve Bank should take stock of whether rates are sufficiently restrictive to bring inflation back to target.

ACCI Newsroom

CNAIC elects Thomas Wu as new Chairman

The Chinese National Association of Industry and Commerce (CNAIC) held a general meeting on June 21, 2022, during which they elected Thomas T.L. Wu as their 26th-term Chairman. Wu’s term was effective immediately following the election. He takes over the role from former Chairman Por-Fong Lin.

According to Wu, he plans on leading CNAIC to become a more influential platform that speaks for the industry, to assist the industry and commerce communities in communicating with the government and connect them to the world, and to ultimately promote Taiwan’s economic growth and development. To achieve this, he will use four core principles: optimizing the investment and operation environment; deepening global economic cooperation; promoting the innovative use of energy in industry and commerce; and planning for a sustainable future.

Apart from his new role as Chairman of CNAIC, Wu is also concurrently Chairman of Taishin Financial Holdings, Taishin Bank, and Taishin Charity Foundation.

His experience in both the industrial and financial sectors is vast. He was the Chairman and President of Shinkong Synthetic Fibers Corporation; the Vice Chairman of TECO Electric and Machinery; and the Director, Managing Director and Supervisor of First Bank, Taipei Business Bank, and Hua Nan Bank respectively. In 1992, he co-founded Taishin Bank with societal leaders and established Taishin Financial Holdings in 2002. Since then, the business scope of Taishin Financial Holdings has expanded to include banking, life insurance, securities, investment trust, investment advisory, leasing, and asset management.

Wu is also deeply aware of his social responsibilities. He has served as the Chairman of Friends of the Police Association and is the current convener for their Board of Supervisors. At the same time, he is Managing Director of both the Taiwan After-Care Association and the Association for Victims Support.

First board of directors meeting of FBCCI Innovation, Research Centre held

The FBCCI Innovation and Research Center, a pioneering venture initiated by FBCCI, held its inaugural board of directors meeting on June 21, 2023 at a hotel in the capital. The Initiative aimed to address the challenges of the fourth industrial revolution and foster growth in the private sector through research and policy support.

Salman F Rahman, Prime Minister’s Private Industry and Investment Adviser, attended the meeting as the chief guest. He emphasized the timely significance of the Innovation and Research Center in the current business landscape and highlighted its pivotal role in advancing the country’s development by empowering the private sector through research-driven policies, said a press release today.

The Chairman of the Board of Directors of the FBCCI Innovation and Research Centre and FBCCI President Md Jashim Uddin presided over the meeting. Md Jashim Uddin expressed his confidence that the FBCCI Innovation and Research Center would accelerate the ongoing progress of the nation, led by Prime Minister Sheikh Hasina.

He further emphasized the institution’s vital contribution to propelling the private sector forward and thus providing essential policy support through robust research initiatives. During the meeting, the board of directors finalized the draft of the proposed Memorandum of Association and Rules & Regulations.

Business Post

FNCCI proposes BIMSTEC Business Forum to boost intra-regional trade

The Federation of Nepalese Chambers of Commerce and Industries (FNCCI) President Chandra Prasad Dhakal floated the idea for the formation of the BIMSTEC Business Forum to boost intra-region trade and investments in the member countries among their private sector.

Speaking at the Special Plenary Session of the International Trade Forum during the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) Business Conclave in Calcutta, India, President Dhakal said as the private sector is involved in trade and investment, the formation of a business forum would achieve commercial success.

He further said that to foster regional trade and investments, there is a need for an efficient and effective infrastructure such as land, waterway, rail, air and digital connectivity.

“We need to jointly invest to improve the existing connectivity infrastructure and also build new ones for better connectivity.”

Similarly, enhancing physical infrastructure, such as roads, ports, and logistics facilities was essential for the efficient movement of goods within the region, he said, adding, joint efforts could be made to develop and upgrade infrastructure to support the development of regional value chains.

“Promoting cross-border energy cooperation, including the development of energy infrastructure and efficient energy trade can support the growth of energy-intensive industries within the regional value chains.

For example, Nepal- Bangladesh and India have been working on hydropower transmission lines, to export electricity produced in Nepal, to Bangladesh, via India. “The success of such a project can be expanded to other BIMSTEC nations and beyond as well,” Dhakal said.

In addition to connectivity infrastructure, BIMSTEC countries need to remove and reduce the various non-tariff barriers for trade, making the regional trade and investments smooth.

BIMSTEC nations can work towards aligning their trade and investment policies to create a conducive environment for regional value chains. “This can involve streamlining customs procedures, simplifying regulations and promoting investment facilitation measures,” said Dhakal.

He added: “The free trading arrangement in the region can facilitate increased bilateral and multilateral trade among the member countries. Nepal can benefit from the removal or reduction of tariffs for its exports, leading to a boost in trade volumes and diversification of its export base.”

Dhakal said the regional connectivity and free trade agreements would also help attract foreign direct investments (FDI).

“Smooth and strong regional connectivity and free trade arrangement will help attract FDI. Improved market access and reduced trade barriers will encourage foreign companies to invest in various sectors of the economy, leading to economic growth and job creation in the BIMSTEC countries,” he added.

The share of all BIMSTEC countries — that include two ASEAN member-states – Thailand and Myanmar — is less than 4 percent in world trade.

The BIMSTEC intra-regional trade was at $70 billion in 2021, significantly lower than ASEAN’s $600 billion.

The BIMSTEC members have agreed to establish the BIMSTEC Free Trade Area Framework Agreement in order to stimulate trade and investments. BIMSTEC countries’ existing trade and investment profiles are overwhelmingly influenced by their levels of economic development, geographical proximity, cross-border logistic facilities and different regional cooperation agreements.

Kathmandu Post

PCCI backs land reform debt write off

The Philippine Chamber of Commerce and Industry (PCCI) said it is backing the enactment of a proposed law that will condone some P57 billion in debt incurred by land reform beneficiaries, signaling strong support from the private sector for a measure that is currently awaiting approval by President Marcos.

“The New Agrarian Emancipation Act is expected to provide much-needed financial relief to the agricultural reform beneficiaries to allow farmers freed from debt to devote more resources to their land,” PCCI president George Barcelon, whose business association touts itself as the largest in the country, said in an online forum.

“Hopefully, the enactment of this measure will help in the development of farms, increase productivity and advance an agriculture-driven economy,” he added.

Barcelon also noted that the weakest link in Philippine socioeconomic development is agriculture, adding that it has continued to decline in terms of contribution to the country’s overall economic output which is now pegged at around 9 percent.

The PCCI official cited that the services sector has expanded significantly, contributing 61 percent, while the industry sector has a share of 30 percent.

According to the Philippine Statistics Authority, the agriculture, forestry and fishing sector accounted for only 8.9 percent of the Philippines’ gross domestic product (GDP) in 2022, the lowest in five years.

“Putting this into perspective, agriculture accounted for one-quarter of the country’s GDP during the 1980s and almost one-third in the 1970s. We were a net exporter of agricultural products in the 1980s but as of the 1990s, we have become net importers as exports fell behind, outpaced by imports,” Barcelon said, but noted that the sector still provides employment for 25 percent of the country’s labor force.

Barcelon pointed out that restrictions under the Comprehensive Agrarian Reform Law have put farmers in grave states of indebtedness through the erosion of the value of their lands, limited access to credit and constrained the transfer of land to more productive uses, among others.

The Partido Federal ng Pilipinas, which is led by President Marcos as national chair, had recently cited the benefits of letting the chief executive continue to lead the Department of Agriculture.

“This is because the President knows what to do and apparently has the solutions needed to address problems in the agriculture sector,” South Cotabato Gov. Reynaldo Sucayan Tamayo Jr., who stands as the party president, said last week.

Philippine Daily Inquirer

Singapore Manufacturing Federation appoints CEO and CSO

The Singapore Manufacturing Federation (SMF) said on May 25 that it has appointed Dennis Mark as it chief executive officer effective Jun 15.

The federation said in a statement that it has re-designated the position of secretary-general to CEO. SMF’s website shows that the role of secretary-general is vacant. The position was previously occupied by Lawrence Pek.

SMF said Mark has more than 20 years of experience in the manufacturing sector in multinational corporations under the HP group.

The federation also announced that it has appointed Clement Teo as its first chief sustainability officer (CSO) and assistant chief executive effective Jun 5. SMF said Teo has led sales and operational teams across the Asean region in TUV-SUD, an organisation in the testing, inspection and certification industry.

SMF president Lennon Tan said the new appointments will “bring a new focus on new ideas to bring new benefits to SMF members”.

“The appointment of SMF’s first CSO will also add expertise to the SMF in an area which manufacturers large and small will require to remain competitive in the global arena,” he said.

The Business Times

Kazakhstan and Singapore Create Joint Venture to Promote Trans-Caspian International Transport Route

Kazakhstan Temir Zholy (KTZ) national railway company and PSA International, a leading port group with a global network, signed an agreement to establish a joint venture to develop Kazakhstan’s transport and transit potential by promoting the Trans-Caspian International Transport Route (TITR) and enhancing connectivity and trade flows from Southeast Asia and China to Europe through Kazakhstan.

The agreement was signed during a May 22 Kazakhstan-Singapore Business Forum as part of President of Singapore Halimah Yacob’s first visit to Central Asia, reported KTZ on May 23.

“This joint venture is a milestone moment for PSA, as it expands our global footprint into Central Asia and reflects our continued commitment to enhance global connectivity and enable sustainable trade,” said Tan Chong Meng, Group CEO of PSA International.

KTZ said the experience and technologies of PSA will open up additional opportunities to expand transportation geography and integrate Kazakh transport corridors with the world’s largest hubs.

According to the PSA leadership, relevant experience and pooled resources will help create an efficient logistics network connecting countries and continents. This will allow KTZ to enter new markets and establish itself as a key player in the global logistics arena.

Business leaders from Kazakhstan and Singapore signed commercial documents worth $275 million at the Kazakhstan-Singapore forum.

Astana Times

Kadin holds expo to engage Chinese firms in smart city development

The Indonesian Chamber of Commerce and Industry (Kadin) – China Committee (KIKT) has organized the Indonesia-China Smart City Technology & Investment Expo 2023 to encourage Chinese
companies to participate in smart city development in Indonesia.

“This event is expected to provide information about the development of smart cities and (the new capital) IKN Nusantara for stakeholders to invest in the country and open opportunities for local
industry players in the international market,” Head of the Expo’s Committee Ben Yura Rimba said.

He said that the expo, which is being held in collaboration with the Chinese Indonesian Association (INTI), aims to accelerate government programs in 100 smart cities and IKN Nusantara’s
development.
Around 50 high-tech manufacturing companies, mostly from Guangdong province, China, are participating in the expo, which is taking place from May 24–26, 2023. These companies could help implement advanced concepts and technologies in the construction of smart cities, Rimba said.

“Some of the companies have carried out their businesses in Indonesia for many years, with the confidence that Indonesia is a promising market. This expo is a bridge for the companies to step onto the world stage,” he added.
Meanwhile, KIKT chairperson Garibaldi Thohir said he expects the event to serve as a forum for exchanging information and carrying out education and promotion as well as exploring opportunities to find the best partners for smart city development in Indonesia

“We invite companies engaged in smart city development, especially companies from China that have experience in the development of Internet- based digital technology and innovation, which is the backbone of smart city development,” he added. INTI chairperson Teddy Sugianto stated that smart city development will be a future trend in Indonesian cities.

“As a national organization, INTI remains loyal and committed to helping the recovery and revival of the national economy post-pandemic. We hope that this event can be a driving factor for investment in Indonesia,” he added.

Amtara News

Taiwan eases hiring rules to bring in 28,000 more migrant workers

Taiwan will ease employment regulations to allow for the entry of 28,000 additional migrant workers as soon as mid-June to address its worker shortage.

On May 23, the Ministry of Labor (MOL) announced it will relax regulations employing migrant workers in the following industries: manufacturing, construction, agriculture, and caregiving. The sectors will be allotted 600, 8,000, 12,000, and 14,000 extra workers, respectively.

The “notice period” for adjusting the qualifications for hiring migrant workers will last until May 30.

In the manufacturing industry, there will be 210 companies eligible for the relaxed rules, including 142 aquatic product processing companies, 37 tofu manufacturing firms, and 31 shipbuilders. The MOL plans to increase the allocation ratio of foreign migrant workers from 15% to 20%.

For the construction industry, the new rules will be applied to construction businesses, professional construction companies, and civil engineering contractors that have handled a minimum number of cases and Taiwanese workers over the past three years. These companies can hire migrant workers at a ratio of 30%, and the employment stability fee could increase that number to 40%.

For the agricultural sector, the number of incoming migrant workers will increase from 6,000 to 12,000. This will increase the ratio of migrant workers to local workers employed by individual farmers or small-sized farming operators with less than 10 people from 35% to 50%. The 35% ratio would remain the same for public institutions and large-scale farmers.

As for caregiving, an additional 14,000 workers will be hired. The ratios of one caregiver per three residents in social welfare institutions, one caregiver per five residents at long-term care facilities, and one caregiver per care recipient for live-in caregiving will not change.

Taiwan News

New ICCIMA President Elected

Hossein Selahvarzi has been elected the new head of Iran Chamber of Commerce, Industries, Mines and Agriculture. He will be at the helm of the chamber for the next four years, replacing Gholamhossein Shafei. The election of the new president came after a March vote for new members. “The government had no intervention in the process of election,” Selahvarzi was quoted as saying by IRNA.

At a press conference following his election, he noted that transparency will be top the agenda of ICCIMA under his leadership and the chamber’s organizational structure should be reformed. Selahvarzi underlined the importance of re-inviting European businesses after their pullback from the Iranian market as a result of the US sanctions. ICCIMA, known as “private sector parliament” is a 140-year-old institution and represents Iran’s private businesses.

Describing chambers of commerce as “the only honest observers” of policymaking developments and economic trends in Iran, Mohsen Jalalpour, former president of ICCIMA, said despite all the criticisms leveled at them, they can play a key role in making correct economic decisions and sending important signals from the private sector to the policymaking system.

“The estimates and analyses of the chambers of commerce are vital, if decision-makers are willing to design a win-win game for all economic players. The point is that the representatives of this large organization are members of different manufacturing, commercial, industrial and mining sectors. Contrary to what is believed, the members of the chamber are not from a specific trade and do not have common interests. Therefore, if competent people make up the chamber’s board, they can be vigilant watchers for the country’s business environment and work to consolidate important economic concepts such as competition and ownership,” he wrote for the Persian economic daily Donya-e-Eqtesad.

Jalalpour believes the main mission of the chamber is monitoring the business environment and not bargaining to gain more privileges and benefits.

“The leading members of the chambers should be the voice of the real private sector that does not seek to acquire wealth through privileges and rent-seeking practices. Therefore, the representative of the chamber should have the ability to distinguish between decent demands from rent-seeking demands,” he said.

Financial Tribune

VietNam Business Update – Special Edition

In April 2023, the VietNam Chamber of Commerce and Industry (VCCI) produced the Vietnam Business Update – Special Edition publication in celebration of its 60^th anniversary.

The publication showcase VietNam’s remarkable progress over the past and wish to present to you the vast and diversified business opportunities that VietNam offers to its foreign friends.

VCCI has been a leading advocate for business development trade promotion, and economic cooperation in VietNam for six decades. Since our establishment in 1963, we have worked tirelessly to create a conducive business environment, promote entrepreneurship, and support the growth of VietNam’s private sector.

Today, VCCI proudly owns the membership network of over 200,000 companies and over 200 business associations across all sectors of the economy, and we continue to expand our reach beyond boundaries.

As VietNam continues integrating more deeply into the global economy, VCCI recognizes the importance of engaging with foreign partners to foster cooperation, share knowledge, and promote mutual understanding.

In fact, foreign partnerships have been instrumental in promoting trade and investment, building networks of contacts, and opening up new opportunities for businesses in VietNam and abroad.

Please take a look at the publication HERE.

Asia-Pacific business leaders call for forging a new path on inclusion, resilience, and sustainability

APEC Business Advisory Council (ABAC) members this week urged APEC Trade Ministers to leverage the challenges facing the region, including environmental risks, financial stress and the cost-of-living crisis, as opportunities to firmly place the region on a new path of economic inclusion, resilience, and sustainability. Separate letters to APEC trade ministers and transportation ministers and statements on the WTO and the Free Trade Area of the Asia-Pacific capture ABAC’s views.

2023 ABAC Chair Dominic Ng noted, “The private sector wants to see governments in the region build on the lessons learned from dealing with the pandemic to make trade more resilient, inclusive, and sustainable for all. ABAC is supporting this effort by bringing forward clear, concrete recommendations for governments that, if implemented, will result in tangible outcomes. Many of these recommendations are captured in the letters and statements that we finalized at our meeting in Brunei.”

Regarding ABAC’s Statement on the World Trade Organization, Ng said, “Our businesses, communities and our planet deserve a future-ready, effective, and enforceable global trading system – that demands ambitious outcomes at the WTO, including on core reforms in agriculture, fisheries subsides and dispute settlement, and in the open plurilateral negotiations on digital trade and the environment.”

ABAC’s separate Statement on the FTAAP calls for well-designed and modern trade rules in the eventual FTAAP, building on CPTPP and RCEP, and building out concrete outcomes in the short term that support equity, sustainability and expand economic opportunities for communities around the Asia-Pacific.

Under the theme of Equity. Sustainability. Opportunity. ABAC’s agenda includes a focus on ensuring that micro, small, and medium-sized enterprises (MSMEs) can expand their engagement in the global economy. ABAC is developing a supply chain resilience toolkit, a self-assessment tool for MSMEs seeking to enhance their ability to withstand dramatic economic shifts. ABAC is also calling for a mechanism to support MSMEs as they adapt to the environment, social and governance (EGS) investing.

ABAC is advancing a work plan on digitalization that seeks to embed trust in the heart of the digital economy, address cybersecurity challenges, promote digital upskilling of the region’s workforce, strengthen digital health, and facilitate interoperability for digital trade across borders.

ABAC is also tackling issues at the intersection of trade and sustainability, including launching a study to better understand the impact of carbon border adjustment mechanisms (CBAMs) on the region and how to leverage trade policy to enhance access to goods and services that can contribute to solving environmental challenges. CBAMs, alongside various large scale subsidy programs of environmental goods, have the potential to impact on regional trade and the attainment of an equitable transition.

The ABAC II meeting began with the half day Brunei Business Conference that brought representatives from ABAC and the ASEAN Business Advisory Council (ASEAN-BAC) together with business and government representatives from Brunei. In his opening remarks for the Conference, H.E. Dato Seri Setia Dr Awang Haji Mohd Amin Liew Abdullah, Minister at The Prime Minister’s Office and Minister of Finance and Economy II, noted that collaboration is key to navigating the multiple crises facing the world today. In view of this, Yang Berhormat Dato emphasized the importance of APEC economies remaining optimistic and persistent in their work towards promoting integration and in advocating for sustainable, resilient and inclusive growth.

Pak Arsjad Rasjid, ASEAN-BAC Chairman, also addressed the meeting where he briefed ABAC of his Council’s current work agenda and outlined potential areas of synergy between the two organizations in addressing their shared goals of achieving sustainability, inclusion and digital transformation. As this was the first time that ABAC and ASEAN-BAC have met formally, ABAC Members expressed their desire for further interaction moving forward.

ABAC members also had the chance to visit businesses and organizations that are driving economic growth and innovation Brunei, including CAE Brunei Multi-Purpose Training Centre, Brunei Innovation Lab and Royal Brunei Culinary.

Manila Bulletin

Vietnam to require social media users to verify identity

Vietnam is preparing to make it mandatory for social media users of both local and foreign platforms to verify their identity in a bid to rein in online scams, state media reported.

The measure, part of the Telecommunications Law Amendment to be issued by the end of this year, will enable law enforcement agencies to track down offenders using social media to break the law, state-run Voice of Vietnam (VOV) newspaper reported.

“There are times the authorities can identify social media account holders that violate the laws but cannot track them down because those criminals use cross-border applications,” VOV cited information deputy minister Nguyen Thanh Lam as saying.

“Unverified accounts, no matter on local or foreign platforms such as Facebook, TikTok, YouTube, will be dealt with.”

According to the report, both individual and organisational users would be subject to the measure. However not all providers currently offer identity verification in Vietnam.

The regulation will need the approval of the country’s lawmakers. Details have not been revealed yet.

Vietnam in recent years has issued several regulations together with a cybersecurity law that target foreign social media platforms in a bid to battle disinformation in news and force foreign tech firms to establish representative offices in Vietnam and store data in the country.

Reuters

President lauds VCCI for contributions to national development

President Vo Van Thuong commended the continued, meaningful contributions of the Vietnam Chamber of Commerce and Industry (VCCI) to national construction and development while addressing a ceremony in Hanoi on April 26 marking its 60th anniversary.

The Chamber has worked hard to support Vietnamese businesses and offered consultations to the Party and the State on policy making and international integration, the President said.

He asked the Chamber to raise its capacity and overcome limitations and shortcomings to better perform its role and tasks, thus contributing more to national economic development.

The VCCI and the business circle should make greater efforts to promote the Vietnamese brand in the international market, and expand cooperation with international partners for mutual successes, Thuong suggested.

Each businessperson should be well aware of their role in the great national unity bloc, and strengthen solidarity and collaboration with workers, farmers, and intellectuals, he said, noting that the present difficulties should be opportunities for enterprises and businesspeople to grow stronger.

VCCI President Pham Tan Cong recalled the formation and development of the Chamber whose network now covers more than 200,000 enterprises and over 200 associations nationwide.

The VCCI will continue with policy activities and play a more active role in perfecting the institutional environment to nurture and develop Vietnamese businesspeople and enterprises, he said.

It will further support businesspeople and enterprises, and build a code of ethics for them and business culture, helping them position themselves in the international business community, Cong said.

On this occasion, the VCCI made public a council of Vietnam’s leading businesses with 21 members, which will work to boost the development of big Vietnamese firms, expand cooperation, both domestically and internationally, and uphold the role of leading enterprises in the development of sectors and agencies, and in guiding small-and medium-sized enterprises.

VNA

The sources of East Asia’s industrial prowess

The Samsung Electronics Co. smartphone manufacturing factory stands in this aerial photograph taken above Gumi, South Korea, on Sunday, April 5, 2020. Samsung unveils preliminary earnings Tuesday, becoming one of the first major technology corporations to paint a picture of how the pandemic impacted the global tech industry in 2020’s first three months. Photographer: SeongJoon Cho/Bloomberg

As the United States works to limit China’s access to advanced technologies like semiconductors, it cannot ignore its own dependence on small Asian economies like South Korea and Taiwan for many of those same technologies. The question the U.S. and its allies must ask, then, is how reliable these economies are as producers.

Examining South Korea’s industrial successes can go a long way toward providing an answer. It is by now old news that the Korean giant Samsung Electronics has surpassed Japan’s Toshiba and America’s Intel to become the world’s top chip producer (by revenue). But South Korean industry’s prowess extends well beyond semiconductors.

For example, Hyundai Motors recently became the world’s third-largest carmaker, after Toyota and Volkswagen — with quality to match. Hyundai and its sister company Kia took the top spots in this year’s J.D. Power Vehicle Dependability Study, beating Toyota and General Motors. And in both 2022 and 2023, the World Car Awards named Hyundai’s electric vehicle (EV), the Ioniq, “world car of the year.”

South Korea’s arms industry also is growing fast. Taking advantage of the opportunity created by the Ukraine war, firms have increased arms exports to the West — for example, selling K9 self-propelled howitzers and infantry fighting vehicles to Poland. Moreover, in February, Korea Aerospace Industries confirmed a deal to sell 18 fighter jets to Malaysia’s government. Hanwha Group, which has grown rapidly since acquiring Samsung’s chemicals business in 2014, is now expected to acquire Daewoo Shipbuilding & Marine Engineering — one of the country’s top ship makers, which also produces military vessels and submarines.

South Korean firms are even making headway in biotechnology. The barriers to entry for such long-cycle sectors are high and some South Korean firms tried and failed in the 1990s to break in. But the COVID-19 pandemic created a window of opportunity and South Korean firms did not miss it. Since 2020, three biotech companies — Samsung Biologics, Celltrion and LG Chemical — have been among the top 10 companies trading on Seoul’s stock market.

It is worth noting that this list also includes NAVER, a South Korean counterpart to Google, and Kakao, Korea’s Facebook. This makes South Korea one of just a few countries — such as China — where homegrown digital platforms outperform those of America’s tech giants.

South Korean firms have thrived by seizing external opportunities as they have arisen. Their agility — and their success more broadly — is rooted partly in their structure: the economy is dominated by diversified family-owned conglomerates known as chaebols.

The chaebols’ track record is hardly spotless. They were widely criticized for helping to fuel the Asian Financial Crisis of the 1990s by investing excessively with borrowed money. But while roughly one-third of the top 30 chaebols went bankrupt during the crisis, the rest were reborn as profitable global players.

Family ownership enables quicker decision-making and longer strategic time horizons than are typical of Western-style hired management, which might be less willing to pursue innovation that could disrupt existing business for the sake of a firm’s long-term success. Stable ownership supports long time horizons for risk-taking.

LG’s rise as a leading electric-battery producer would never have happened were it not for the vision of its founder’s grandson and chairman, Koo Bon-moo. Even as losses piled up, Koo remained committed to developing world-leading battery technology over the course of nearly 20 years. Thanks to his tenacity, LG Energy Solution is now the top battery-maker in the global market, excluding China.

To be sure, family ownership is also prone to opaque corporate governance and entrenched management. But increased public scrutiny in recent years has led to important progress on these fronts. Many chaebols now employ a two-pronged leadership structure, with the family owners leading alongside hired professional CEOs with strong incentive packages.

This has proved to be a winning combination. It was Samsung founder Lee Byung-chul who, over the objections of his management team, decided that the company would begin producing semiconductors. And it was two CEOs, Yun Jong-yong and Kwon Oh-hyun, who, after seven years of losses, made the chip business profitable. Yun and Kwon were both given substantial autonomy and financial incentives, while the Lee family and its staff provided constant monitoring and updates on the business.

Chaebols have often succeeded by leapfrogging over incumbents. As the digital revolution took hold, for example, South Korean firms were able to pioneer cutting-edge products, while the Japanese incumbents were weighed down by analogue technologies. When Samsung and LG launched the world’s first digital television in the American and European markets in the 2000s — the result of a decade-long joint public-private research-and-development effort — Japanese firms were still attempting to market high-definition analogue TVs. Sony had long been the leading TV maker, but it could not compete in global markets that had already turned to digital.

In a sense, Hyundai, under the leadership of its founding family’s third generation, has replicated this dynamic in its EV business. Toyota was a first-mover in the hybrid-vehicle market. Rather than playing catch-up, Hyundai focused on developing purely electric passenger vehicles, as well as hydrogen-powered trucks and buses. As soon as consumer demand for EVs was sufficiently well-established, Hyundai ramped up its EV production.

A corporate structure that plays to the strengths of both family ownership and professional management, together with the vision to seize opportunities as they arise, has enabled firms from a small East Asian country to become major global players. Their agility and capacity for innovation, together with their reliability, is good news for the West.

Project Syndicate

Successful Trade Finance Training held in Hanoi and HCMC

The Institute of Information Technology for Business under Vietnam Chamber of Commerce and Industry (ITB-VCCI) organized two training sessions on various international trade and finance topics taught by Pavel Andrle, long term expert of ICC (International Chamber of Commerce) commissions on banking and commercial law and practice. The training sessions were sponsored by CACCI.

Each session consisted of one full day and one half day course held in two different Vietnamese cities. The first session was held on April 17 and 18, 2023 in Hanoi, and the second session was held on April 19 and 20, 2023 in Ho Chi Minh City. The ITB-VCCI hosted training gathered mostly exporters, importers, traders, also bankers and specialists working in other related fields such as logistics, tax, customs and law.

As observed by Mr. Nguyen Ngoc Khiem – Vice Director of ITB/VCCI: “We are pleased that our long term cooperation with CACCI and ICC trainer Pavel Andrle continues. We had again great success, more than 60 participants in Hanoi and 110 participants in Ho Chi Minh City attended the course! It is wonderful that we could make it again as in-person event which makes it interactive. Participants particularly liked the focus on practical issues and real business scenarios. Recently, some vietnamese exporters suffered significant difficulties which might have been arguably prevented if the proper analysis of risks in the transaction was done and right decisions/measures were taken. The continuing learning and updating is a must and we are glad to be able to pass some of the knowledge to our members.“

First Day

The very comprehensive course was focused on main payment methods used in international trade, i.e. payment in advance, on open account terms and by a documentary credit or documentary collection. Pavel Andrle, the trainer, informed participants about risks from perspectives of users: exporters and importers. Many mistakes, errors and mishandling issues were discussed which was particularly well received by the audience. Participants very appreciated the opportunity to learn how to avoid problems in their daily business transactions. The first part of the course also included topics such as financing methods based on documentary credits (discounting, post-financing, UPAS credits, negotiation).

Afternoon session of the first full day course then covered receivable finance and its various techniques such as factoring, invoice discounting, supply chain financing.

The last part was devoted to security instruments, i.e. demand guarantees and standby letters of credit. Trainer highlighted importance of understanding technical terms of the instruments, above all differences between demand (independent) guarantees and standbys and accessory ones (suretyships). The proper wording of a suitable instruments is the key to success. Detailed technical knowledge is a must for any user of such instruments to be well protected. ICC rules bring a lot of certainly and clearity to where otherwise quite murky practices might prevail.

Second Day

The second half day course addressed the practical impact of the most recent revision of Incoterms, i.e. Incoterms 2020. Despite the fact that there are only a few substantial changes in these ICC rules on trade terms, the new publication brings more clarity to some previously debated issues (e.g. proper use of DAT term) and makes the rules easier to read and understand.

New Incoterms 2020 change the scope of the insurance coverage which the seller is to arrange for the buyer under CIP (ie. more extensive coverage Institute Cargo Clauses A or its equivalent is needed now) and also rename and extend the intended scope of usage for the previously used term DAT, now DPU. Incoterms 2020 also brought in a new option for FCA when the seller needs a shipped on board bill of lading (e.g. in case a documentary credit is used as the means of payment for the delivery of the goods). Evidently, a request for a shipped on board bill of lading does not match the seller´s delivery obligations under FCA, however, at least, the new opinion in Incoterms 2020 gives the seller a clear right to claim the bill of lading from the buyer (who is in turn obligated to instruct the carrier to issue the bill of lading to the seller).

Mr. Pavel Andrle, who is ICC certified expert on Incoterms 2020, explained all eleven trade terms with main focus on choosing and describing the relevant documentation. Documents requested (e.g. by the documentary credit) often do not match the seller´s delivery obligation under the chosen Incoterm which creates significant risks for the seller or the buyer. One needs to know and take measures to minimise relevant risks.

The training course was a success given the large number of participants and the active participation of the audience that raised many relevant questions. Above all, various case studies and stories of what went wrong resonated with the audience. To know how to conduct international transactions properly is a must to minimize risks and thus avoid significant losses.

Prevention is better than cure!

President Lennon Tan Represents SMF in the CACCI Council

With its recent admission as the newest Primary Member of CACCI, the Singapore Manufacturing Federation (SMF) has gained a seat in the CACCI Council, the governing body of the Confederation, where it is represented by SMF President Mr. Lennon Tan. The Council is composed of heads and/or duly designated representatives of Primary Members and the incumbent president of CACCI.

Mr. Tan is the Group Chairman of ADERA Global. He started his career as an engineer in the Petrochemical industry before spending 10 years with the American multinational 3M. In 2001, he decided to pursue his dream of being an entrepreneur.

After taking a small smart card manufacturing business in China, he tapped on technology and innovation to transform the manufacturing outfit into the top 10 global smart card producers in the world, and thereafter transforming the company’s capabilities to lead in the fields of artificial intelligence, biometric authentication, automation, fintech and data analytics, supporting major sectors ranging from banks, insurance, government, healthcare, telecommunications and transport worldwide.

The group was awarded ASEAN Business Award Overall Winner for Priority Integration Sector (ICT) in 2018. In 2016, Mr. Tan was awarded ASEAN Teochew Entrepreneur Award  and in 2017, he was named EY Entrepreneur of the Year (Financial Technology Enablement) from global professional services firm Ernst & Young. He is also President of the Teochew Entrepreneurs Club, sits on the judging panel of Women Entrepreneur Awards, and serves as advisor to the Women Entrepreneur Club.

With about 5,000 corporate members, comprising SMEs, MNCs and Affiliate Members, the SMF is the largest national organisation representing the interests of manufacturing and manufacturing-related industries in Singapore since 1932. It is considered a forefront trade federation serving the manufacturing community by driving digitalisation, innovation-led productivity, business transformation and internationalisation towards enhancing the competitiveness of its member companies.

Business chambers of Korea, Japan agree to cooperate on expo bid

Business chambers of Korea and Japan agreed to work together to realize Busan’s bid to host the 2030 World Expo and a successful opening of the same event in Osaka in 2025.

The agreement was reached between the Korea Chamber of Commerce and Industry (KCCI) and the Japan Chamber of Commerce and Industry (JCCI) in a joint statement adopted during their chairs’ meeting in Busan, the KCCI said.

The meeting marked the first such gathering between the two business chambers in six years. It had been suspended since 2018 amid deteriorating bilateral relations over a dispute stemming from Japan’s 1910-1945 colonial rule of the Korean Peninsula.

Bilateral ties have warmed after Korea proposed compensating the Korean victims of Japan’s wartime forced labor without contributions from accused Japanese companies in March.

“[The KCCI] will actively participate in the Osaka-Kansai Expo in 2025, and the [JCCI] will actively cooperate to attract the Busan World Expo in 2030,” the statement read.

Korea is competing against Italy, Ukraine and Saudi Arabia to host the World Expo in 2030, with the winner to be announced in November.

In the joint statement, the organizations agreed to promote cooperation in economic security, including rebuilding the supply chains, achieving carbon neutrality and cooperating on artificial intelligence, cybersecurity and others.

They agreed to bolster exchanges in tourism, culture and education in line with the post-pandemic recovery and border reopening

KCCI Chair Chey Tae-won and JCCI Chair Ken Kobayashi attended Friday’s meeting, accompanied by the heads of the regional business chambers of the two countries.

The KCCI and JCCI agreed to host the next chairs’ meeting in Osaka in 2024.

Korea Joong Ang Daily

Rifat Hisarciklioglu re-elected President of TOBB

The General Assembly of the Union of Turkic Chambers of Commerce and Industry (TOBB) was held in Istanbul with the participation of representatives of the business world of Türkiye, Azerbaijan, Kazakhstan, Kyrgyzstan, Uzbekistan, Hungary, Turkmenistan and the TRNC and hosted by the Union of Chambers and Commodity Exchanges of Türkiye (TOBB).

As a result of the election held at the General Assembly, TOBB President M. Rifat Hisarcıklıoğlu was unanimously re-elected as the President of the Union of Turkic Chambers of Commerce and Industry.

Hisarcıklıoğlu, stating that they will continue to work to develop and strengthen the economic relations between the member countries, said, “I would like to thank you for the trust and kindness shown to me.”

Hisarcıklıoğlu, emphasizing that they should first increase trade by removing trade barriers between member states, said, “We should also write an EU-like integration success story. I see the Organization of Turkic States and our Union as strategically important steps that will enable us to achieve this goal. Thus, the solidarity between us will increase even more and new possibilities of cooperation will develop. I believe that if we join hands, if our governments and the business world work together, the Turkic world will also write new success stories.”

TOBB

Chandra Dhakal is new FNCCI President, Anjan Shrestha elected as Senior Vice President

New FNCCI President Chandra Prasad Dhakal and Senior Vice President Anjan Shrestha

Chandra Prasad Dhakal has become the president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).

Dhakal, who was the senior vice-president, has risen to the topmost position of the umbrella organization of the private sector, as per the FNCCI’s statute. The outgoing FNCCI President Shekhar Golchha administered the oath of office and secrecy to Dhakal on April 13.

Dhakal is the founder chairman of the IME Group. He leads more than two dozen businesses related to remittance, banking, information technology, energy, tourism, automobile, insurance and entertainment, among others.

Likewise, Anjan Shrestha has been elected as the new senior vice-president of FNCCI. Shrestha and two other candidates – Ram Chandra Shanghai and Umesh Lal Shrestha — were in the fray for the position. Following the defeat of Sanghai in the first-round election held on Wednesday, Shrestha secured his win after Umesh Lal Shrestha agreed to withdraw from the race.

The election entered the second-round as no single candidate got 50 percent votes in the first round. As per FNCCI’s statute, one should receive at least 50 percent votes to be elected as the senior vice-president.

The newly-elected Senior Vice-president Shrestha is the executive director of Laxmi Group, a conglomerate of Sujal Food and Dairy Products, packaging industry, automobile trading, infrastructure, steel manufacturing and agriculture, among others. Shrestha will be automatically promoted to the position of FNCCI president after three years.

According to the election committee of the FNCCI, there were three contenders for the post of senior vice-president, eight candidates for the three vice-presidential posts and 108 candidates for the 60 posts of members.

MyRepublica

CACCI Special Member Md. Gias Uddin Bhuiyan visits CACCI Secretariat

Md. Gias Uddin Bhuiyan Managing Director and CEO of Shan Sabil (BD) Ltd from Bangladesh., on March 21, 2023 visited the CACCI Secretariat headquarters during his recent business trip to Taiwan.

He called on CACCI officers led by Director- General Mr. David Hsu to say hello and update them on recent developments in his business, which is mainly in textiles and garments, one of the major industries of Bangladesh. He shared with them the challenges his business faced during the Covid19 pandemic, and what he did to overcome them.

He was happy to report, however, that the market environment has gradually improved, and that is why he has been travelling again to Taiwan and other countries to meet with his business partners and suppliers to discuss new business opportunities and areas for possible partnerships.

For his part, Mr. Hsu asked them if he was interested to assume the chairmanship of CACCI’s Asian Textiles and Garments Council and invited him to attend the 37th CACCI Conference to be held in Phnom Penh, Cambodia on October 30-31, 2023. Md. Gias is a member of FBCCI and Shan Sabil (BD) has been a long-time Lifetime Special Member of CACCI.

How Asia Can Ease Scarring from Lower Investment, Employment and Productivity

Asia should prioritize reforms that address the investment scarring from high corporate debt, mitigate education losses, and boost digitalization

Siddharth Kothari, Nour Tawk

The pandemic, coupled with trade disruptions and Russia’s war on Ukraine, caused lasting harm to Asia-Pacific economies, damaging growth, productivity, and investment.

Specifically, it left deep and long-lasting scars which, without swift and bold policy action, could restrain growth well into the future. Our recent research shows Asia is likely to experience the biggest output loss from the pandemic of all five major world regions.

Scarring to Asian economies

We measure the magnitude of these medium-term output losses by comparing 2022 forecasts of growth to projections for the same period made in January 2020. For Asia, we expect an average gross domestic product loss of 9.1 percent through next year, with greater losses for the region’s emerging and developing economies.

To explain Asia’s deeper and more persistent scarring, we examine three critical factors: investment, employment, and productivity growth.

Investment losses are an important contributor to scarring in Asia: a quarter of the region’s expected output losses result from reduced spending on investment projects. The effects are especially large in emerging economies, where we expect investment as a share of GDP to be 3 percentage points lower next year versus pre-pandemic projections.

One likely cause for this steep drop is Asia’s high corporate debt. Businesses that borrow more are less likely to be able to expand or further invest, as this would add servicing costs to existing obligations. That would reduce overall capital spending, in turn reducing growth. This dynamic is important in the context of historically high corporate debt in Asia, which increased further during the pandemic, and is especially elevated in emerging economies compared to other regions.

Using a new, detailed database of corporate balance sheets to estimate the effects of debt on investment, our research suggests that while recessions leave a large and persistent negative effect on firm-level investment, the effect is greater for those with high debt. Highly indebted firms, on average, see investment fall by 6 percent more than low-debt firms three years after a recession.

Greater borrowing alone accounts for at least 28 percent of the average drop in investment after recessions. Of these, smaller and less profitable firms with high debt tend to see the biggest investment declines. This reflects their difficulty securing external funding without collateral, as well as the limited internal funds these firms need to finance investment.

For employment, our calculations suggest that lower job growth would contribute about 2 percentage points to output losses in Asia. Employment could remain depressed for many years because of both the long-term loss of labor force quality and the reduced quantity of workers.

Regarding labor force quality, protracted school closures have caused severe learning losses among students, with classrooms closed longest in Asia’s low-income economies. We expect these education losses to significantly hamper the acquisition of valuable skills, leading to lower human capital than would have been without school closures and hence lower long-term productivity.

Regarding labor force quantity, we expect the COVID crisis to reduce the number of people entering the workforce, as evidence shows that pandemics can reduce fertility rates: epidemics over the past two decades, though smaller in scale, led to persistent declines in fertility rates of about 2.5 percent.

Mitigation policies

To mitigate scarring, economic reforms are essential to reduce corporate debt, boost labor outcomes, and raise productivity:

First, an orderly reduction of corporate sector debt should be prioritized, to improve resilience to future shocks. Reforms to the insolvency framework can also allow a reallocation of resources to more productive firms.

In addition, losses from school closures must be recouped: governments should assess learning setbacks and invest in teaching marketable skills to students. This may require more in-person training or longer school years, but retraining and other programs that can return people to the workforce would deliver economic benefits.

Another priority is to boost slowing productivity growth, which accounts for about half of Asia’s scarring. Here, digitalization can be essential, especially after the pandemic, as companies and industries harnessing digital technology can better connect with customers and employees, and as remote work and online sales protect workers, students, and businesses.

Empirical evidence from before and during the pandemic confirms how digitalization is building resilience and limiting scarring. Pre-pandemic data show that firms in more digital-oriented industries see a smaller decline in revenues following a recession than other firms.

During the pandemic, labor markets also favored digital sectors: high-frequency data from job sites like Indeed and LinkedIn shows that digital jobs remained robust and recovered more quickly, even in emerging economies.

Promoting digitalization is especially important in emerging economies, which have generally lagged advanced economies when it comes to online commerce, patents, and other digital innovation.

Conclusions

Asia could suffer significant long-term output losses from COVID-19, given diminished investment, productivity growth, and labor force participation. Economic reforms are essential to mitigate this scarring.

Asia should prioritize addressing the investment scarring from high corporate debt by promoting deleveraging, and mitigating education losses.

Finally, digitalization can help mitigate scarring and boost productivity growth. Though Asia has invested rapidly in this, more can be done. Enhancing digital connectivity should be a priority, especially in low-income developing countries, and for disadvantaged groups and regions.

With a bold, concerted push, economies in the region can return to growth and better protect themselves against future shocks.

IMF Blog

ICC promotes Digital Export Enablement for ASEAN

The International Chamber of Commerce (ICC) Centres of Entrepreneurship (CoEs) intent is to make cross-border commerce more accessible to small businesses and startups. The ICC have partnered with Google and the International Trade Centre (ITC) to launch DEEP – Digital Export Enablement Programme for ASEAN Small Businesses. The programme will help 1000 SMEs from 10 countries. As President of CACCI and member of the ICC World Chambers Federation Council I fully support this project.

Currently, they are inviting applications from trainers as well as SMEs to apply for the programme. The deadline for receiving applications is March 20, 2023.

The Digital Export Enablement Programme (DEEP), designed in partnership with Google and International Trade Centre provides:

• Tailored digital #marketing skills and strategies for #MSMEs in 10 ASEAN markets
• Market analysis clinic
• Online self-learning courses

Interested in participating please click here https://lnkd.in/eTF33vSg

Southeast Asia the ‘new China’ for supply chains: business group

Southeast Asia is the “new China” and should be the centre of the global supply chain, the head of an influential regional business body has said.

In an interview, Arsjad Rasjid, chairperson of the ASEAN Business Advisory Council (ASEAN-BAC), said the 10-member Association of Southeast Asian Nations (ASEAN) should be the “supply chain of the world.”

“ASEAN should be the supply chain of the world, the new China is ASEAN,” Arsjad said in an interview with Al Jazeera last week.

Arsjad, who also leads the Indonesian Chamber of Commerce and Industry, said the bloc is on track to take China’s spot “good as tomorrow” due to the region’s rich resources of nickel and other key minerals.

“ASEAN countries also have food and agriculture,” said Arsjad, who was in Kuala Lumpur to meet with government officials and business leaders.

Arsjad Rasjid, chairperson of the ASEAN Business Advisory Council, says Southeast Asia’s rich mineral resources make it an ideal base for global supply chains [Amy Chew]

The comments come as China and Chinese companies, especially critical sectors such as advanced chips, face growing Western-imposed restrictions amid the heated geopolitical rivalry between Washington and Beijing. The tensions have pushed industry giants such as Apple, Google, and Samsung to seek out new bases for manufacturing outside of China, particularly in Vietnam.

ASEAN-BAC, the private sector arm of ASEAN, is mandated to facilitate economic cooperation and integration in the region. Indonesia is the chair of ASEAN this year.

Indonesia has the world’s largest nickel reserves at 21 million tonnes, which accounts for nearly one-quarter of the global total, according to data from the US Geological Survey. The Philippines has the fourth-largest reserves, with 4.8 million metric tonnes. Nickel is a crucial element in the manufacture of stainless steel, electronic devices and electric-powered vehicles.

“Indonesia contributes 40 percent of the nickel [output] to the world. If you add the Philippines, it becomes 50-60 percent,” Arsjad said.

Indonesia, along with Thailand and Vietnam, is aiming to become a key player in the electric vehicle supply chain by leveraging its large nickel reserves to attract investment.

Arsjad said that although Southeast Asia is rivalling China’s position at the heart of global supply chains, firms in the region are keen to complement and work together with China.

“We are always open to China. We are saying to China to invest here [in ASEAN] … not just buy the raw materials. Create the value added [production] here,” he said

“It is time for us to create our own down-streaming … our own ecosystem, to add more small and medium-sized enterprises … and create jobs.”

Yose Rizal Damuri, executive director of the Jakarta-based Center for Strategic and International Studies, said ASEAN has the resources to be at the heart of the global supply chain.

“But each of them needs to realise that individually, they cannot do much. There must be a regional supply chain that they first need to build,” said Damuri.

“They have to cooperate and allow for certain production stages to be developed in [fellow] ASEAN countries,” Damuri added.

Fithra Faisal, an economist at the University of Indonesia, said China’s transition to high-end production has created an opportunity for Southeast Asian countries with lower labour costs.

“China is now leaving behind the middle and low stage of production. Most ASEAN countries will fill the gap. We see the Chinese stage of production as being more complementary with its ASEAN counterparts,” Fithra told Al Jazeera.

China leads the world in 37 out of 44 critical technologies, with Western democracies falling behind in the race for scientific and research breakthroughs, according to a report released by the Australian Strategic Policy Institute think tank earlier this month.

Fithra said the spillover from Chinese advanced production could help ASEAN countries to establish their own production networks.

“It will be a much more significant production line and network in the globe in the next 20 or 30 years,” Fithra said.

ASEAN-BAC’s Arsjad said the region also needs policies that encourage financial institutions to treat farmers as entrepreneurs, which remain a backbone of ASEAN’s economy and have helped ensure food security amid the Russia-Ukraine war.

“This helps to reduce what bankers see as risks and helps farmers gain access to capital,” said Arsjad.

Aljazeera

CACCI conveys deepest sympathy to TOBB and Turkish people

New ICC CoE in Georgia established to support small businesses in the Caucasus region

The International Chamber of Commerce (ICC) has launched a new Centre of Entrepreneurship in Tbilisi, Georgia, to support the business environment for entrepreneurs and small and medium-sized businesses (SMEs) in the country and across the Central Asia and Caucasus region.

The new Centre of Entrepreneurship will work with various stakeholders in Georgia and the wider Caucasus region, including local business organisations and academic institutions, to support entrepreneurs and accelerate the transition of small businesses and startups into cross border commerce by providing by high-impact trainings, digital platforms and market opportunities.

ICC Georgia Chairman Fady Asly said: “The ICC Tbilisi Centre for Entrepreneurship will turn Georgia into a regional and professional business hub, to become an efficient tool to develop the skills of young people who face uncertain employment prospects, to train them and help them understand how business works, so they are given all the chances to succeed and contribute to the wealth of their country.”

The Centre will play a very important role in strengthening and improving the startup and business ecosystem in Georgia, where SMEs represent more than 90% of businesses, thereby stimulating economic growth and the creation of job opportunities. Through the centre, youth and aspiring entrepreneurs will also be able to gain knowledge and acquire new skills as ICC aims to shape and inspire the future generation of business leaders. Programmes will include:

• Trainings, seminars and webinars in various areas for SMEs
• Mentorship programmes for startups to accelerate the personal and professional development of entrepreneurs and business owners
• Networking sessions and meetings with business sector representatives
• The creation of affordable coworking spaces for startups and SMEs

ICC Secretary General John W.H. Denton AO said: “Located at the crossroads of Eastern Europe and Western Asia, Georgia is well-positioned – both economically and geographically – to harness the full potential of the ICC Centre of Entrepreneurship’s capacity to promote and support market-based economies in the Caucasus region. We look forward to bringing ICC’s expertise, knowledge and experience to Georgia to help local businesses grow and connect to global markets.”

Over 50 Georgian business leaders and international representatives joined ICC Secretary General John W.H. Denton AO and ICC Georgia Chairman Fady Asly in officially launching the Tbilisi hub of the ICC Centre of Entrepreneurship at an event held in the country’s capital.

Following the launch of centres in Accra, Beirut, Buenos Aires, Casablanca, Istanbul, Jakarta, Lagos, Nairobi, Bogota, Ukraine and Sevilla, the latest addition to the ICC Centre of Entrepreneurship brings the number of hubs helping entrepreneurs and small businesses worldwide to twelve.

The ICC Centre of Entrepreneurship’s central mission is to globalise and democratise entrepreneurship, by creating the largest interconnected business-led entrepreneurial ecosystem with the objective of fighting poverty, inequalities and promoting SME growth.

ICC

IEAT welcomes CACCI Secretariat officers

CACCI Director-General Mr. David Hsu, Deputy Director General Mr. Mig Moreno, Senior Officer Ms. Abby Moreno, and Officer Ms. Teresa Liu paid a visit to the offices of the Importers and Exporters Association of Taipei (IEAT) on the afternoon of February 17 2023. IEAT is an affiliate member of CACCI. The CACCI officers were welcomed by IEAT Secretary General Mr. Peter W.J. Huang, Trade Services Director Ms. Dana Hsu, Trade Promotion Department Chief of American and European Affairs Section Ms. Anita Fang, Trade Promotion Department Chief of Asian Affairs Section Ms. Viola Yu, and Project Officer of Asian Affairs Section Ms. Avianna Kuo.

During the visit, Mr. Huang introduced IEAT’s membership, their activities throughout the year, and the services they provide for their members and the business community. He expressed that IEAT is happy to be a member of CACCI and is eager to take part in CACCI activities, including the upcoming Presidential Visit to be led by CACCI President Peter McMullin AM to Taipei and Hanoi in May. Mr. Huang and Mr. Hsu further discussed possible areas of cooperation between the two organizations. The CACCI Officers were also given a tour of the IEAT building, which houses a coffee shop in the lobby, several classrooms, lecture halls, and conference facilities.

Forum promotes ties between Vietnam and Japan

The 2023 Vietnam-Japan Economic Forum marks the 50th anniversary of diplomatic relations between Japan and Vietnam and represents an opportunity for business leaders from the two countries to meet, exchange, and seek cooperation on future development plans.

In his opening remarks at the forum, held on February 16 at the Hotel du Parc, Hanoi, Pham Tan Cong, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), noted that the occasion was the first of a series of planned events between the two countries, to be organised by the VCCI and its Japanese partners throughout 2023.

“I believe that following the great achievements during the last five decades of Vietnamese – Japanese relations, and through the aspirations of the business community and the determination of both governments, bilateral trade and investment relations between the two countries will be strengthened further,” said Cong.

As for investment cooperation, Japan’s FDI flow has left footprints in 57 out of 63 localities across Vietnam. Deputy Prime Minister Tran Luu Quang, also in attendance at the event, stressed the importance of Japan as, “One of Vietnam’s leading economic partners”. The DPM proposed Vietnam and Japan continue promoting economic cooperation, especially in key industries, with the expectation that Japan will accelerate its technology transfer to Vietnam, thereby aiding sustainable development in the country.

The forum also marked the occasion of a visit by Yoshihisa Suzuki, chairman of Japan-Mekong Business Cooperation Committee of the Japan Chamber of Commerce and Industry (JCCI), together with an entourage of Japanese business delegates from such diverse fields as high-tech agriculture, renewable energy, IT, and manufacturing. The JCCI chairman noted that as a country with a population of almost 100 million, mostly young people, Vietnam had become an attractive market for Japanese businesses.

With Vietnamese people’s growing interest in Japan and its culture, the Vietnamese community in Japan has reached half a million people, accounting for 16 per cent of the total number of foreigners in Japan, second only to China.

To commemorate the 50th anniversary of the establishment of diplomatic ties between Vietnam and Japan, the VCCI and its Japanese partners will coordinate a string of activities this year, the two most prominent being the Vietnam-Japan trade and investment promotion forum in Japan, and the Vietnam-Japan Trade and Cultural Exchange Week in the Mekong Delta, which hopes to attract some 300 Vietnamese and 200 Japanese enterprises to join the event. The two events are expected to take place towards the end of the summer.

Vietnam Net

Invitation to Participate in the 13th World Chambers Competition

CACCI wishes to once again convey to CACCI members the invitation form the ICC World Chambers Federation (ICC WCG) their invitation for your Chamber to submit your entries for the 13th World Chambers Competition.

The process is simple. The platform requires chambers to submit a maximum 10-page summary of the project of their choice that has proven results over the past 2 years.

In order to facilitate your submission, the ICC WCF has come up with the downloadable Toolkit where chambers will find all relevant information.

Please note that the deadline for 13th World Chambers Competition has been extended to February 27, 2023.

Donations to help Turkey’s recovery

Please click on the following link to give generously today:

https://tobb.org.tr/Sayfalar/Eng/DepremKampanyasi.php

IEAT Secretary-General Visits CACCI Secretariat

Mr. Peter W. J. Huang, Secretary-General of the Importers and Exporters Association of Taipei (IEAT) (center), on February 8 2023  visited the CACCI Secretariat office in Taipei and met with CACCI officers led by Director General David Hsu (left) and Deputy Director-General Mr. Amador Honrado (right).

Mr. Huang briefed the CACCI officers on the progams and activities of IEAT, particularly its recent efforts to strengthen its relationships with other similar business organizations in many other countries around the world. He expressed his hopes to make use of CACCI as an additional platform for this purpose.

For his part, Mr. Hsu invited the IEAT to participate in the upcoming activites lined up by CACCI in 2023, including the proposed Presidential visits to several CACCI member countries, as well as the online Investment Forum series aimed at providing CACCI members the opportunuty to make presentations on the economic situation and the trade, investment and business opportunities in their respective countries, as well as on their organizations’ activities and services that benefit their members and the customer base they serve.

Wake Up, CEOs

By many measures, Tim Cook is having a great year. Apple, which he runs as CEO, is the most-profitable company in the Fortune 500 and also was ranked by the magazine as the most admired company in the world for the 15th consecutive year. In September, however, plaudits turned to brickbats as an investor criticized Apple for agreeing to conduct a civil rights audit of its policies in response to a shareholder vote.

Welcome to the new corporate culture wars. Recent years have seen a trend in favor of stakeholder capitalism, which calls on companies to have a “sense of purpose,” in the words of BlackRock CEO Larry Fink, and work for the benefit of customers, employees, suppliers, and communities, not just shareholders. But a backlash against perceived “woke” capitalism is growing from people and organizations that want firms to shut up and focus on the bottom line.

This tension isn’t going away anytime soon. Companies face growing pressure from activists, employees, and some investors to take a public stance on issues ranging from economic and racial inequality to gay and trans rights to climate change and abortion rights. But in today’s polarized political environment, speaking out increasingly brings retribution from the other side.

In Atlanta, people gather to march and memorialize the life of George Floyd on the anniversary of his death in 2021. Massive social movements, such as the one spurred by Floyd’s death, force organizations to reexamine their values and how they are being communicated internally and externally.

Photo: Megan Varner/Getty Images

Just ask Bob Chapek. Under pressure from employees, the Disney CEO spoke out earlier this year against a Florida law restricting instruction about sexual orientation or gender identity in public schools, prompting Governor Ron DeSantis and the state’s Republican legislature to strip the company of its unique self-governing authority at its Orlando-area theme parks.

What’s a CEO to do? There’s no single right or wrong answer as every company and every issue is different. But bosses need to be clear about what the company stands for and engage with the board, employees, and wider stakeholder groups to ensure everyone is aligned. They also should be as prepared for social or political issues to erupt as they are for potential economic shocks, given the possible impact. And they need to combine a proactive strategy with discipline. A CEO doesn’t have to address every issue that comes up, but when he or she does, they need to remain consistent in their approach.

The Stakeholder Dilemma

The pressure on companies to take a stand is real, particularly among younger people that businesses are eager to have as consumers and, crucially, employees. Many companies spoke out on issues like the Black Lives Matter protests and the #MeToo movement against sexism to foster a more inclusive workplace.

Not all issues are the same, though. People generally favor companies taking a stance on women’s rights, racial inequality, climate change, and economic inequality but not on abortion or foreign policy, while opinion on gay rights is mixed, according to the Oliver Wyman Forum’s research of opinion in Brazil, the United Kingdom and the United States.

Companies need to be prepared for controversy. They can develop an early-warning system to monitor issues, particularly ones its stakeholders feel strongly about, and assess the likelihood they could erupt and affect the business.

There’s another factor to consider. One recent study suggested that corporate positioning on hot-button issues may have mainly a negative impact on consumers who oppose the position, although that impact is short lived. It found that visits to stores run by CEOs who voiced support for gun control measures after two US mass shootings declined for several weeks in conservative areas, where such policies are unpopular, but didn’t increase in liberal areas, where gun control finds more favor.

And some issues are inherently complicated. We don’t yet have broad agreement on how companies and investors should address environmental, social, and governance (ESG) issues in their operations. That lack of clarity enabled Texas to single out BlackRock, a big proponent of climate action, for potential divestment by the state’s pension funds even though the firm’s funds had over $90 billion invested in Texas oil and gas companies earlier this year.

Be Prepared

It’s challenging to navigate these conflicting pressures, but CEOs can start by being clear about corporate values and rooting that in data wherever possible. Companies should reach out to employees, suppliers, customers, and the communities in which they operate to get a clear sense of what issues matter to them. Advisory worker councils can give executives a good sense of where opinion lies in-house.

Companies also should examine social and political issues through two other lenses: Can it damage the business’s license to operate if mishandled, and can the company have a positive impact if it speaks out? For some companies, matching purpose with the underlying business can seem clear cut. Nike, for instance, has emphasized racial justice and opportunities for women in sports. It made former football quarterback Colin Kaepernick the face of its “Just Do It” campaign four years ago despite the controversy over his decision to kneel during the national US anthem to protest racial injustice.

Next, companies need to be prepared for controversy. They can develop an early-warning system to monitor issues, particularly ones its stakeholders feel strongly about, and assess the likelihood they could erupt and affect the business. Then they can develop scenario plans to minimize the risk of being caught off guard. If an issue relates directly to the company’s mission and values, affects key constituencies, and employees expect action, executives should be ready to take a public stance or at least engage with employees internally and reach out directly to affected stakeholders.

Be Proactive and Consistent

Finally, companies should be proactive whenever possible by getting out early on issues where they feel a need to engage, framing their response in their own terms, and remaining consistent in matching words and actions. They also don’t need to grab the spotlight – or even use the CEO – to craft an effective response.

Over three months before the US Supreme Court’s June decision overturning the right for women to have an abortion, Citi announced that the bank would provide travel benefits to employees who needed to go to another state to obtain reproductive health care. CEO Jane Fraser didn’t speak publicly on the issue until the company’s shareholder meeting a few weeks later, where she said the bank was simply guaranteeing US employees the same reproductive healthcare benefits wherever they live, and not making “a statement about a very sensitive issue.”

On the other hand, some companies and CEOs may want to take a stand even if it’s likely to stir opposition or damage a relationship with a key stakeholder. In 2018, Delta Air Lines ended a discount policy for members of the National Rifle Association after a gunman killed 17 students and staff at a high school in Parkland, Florida. When Georgia responded by canceling a planned tax credit worth tens of millions of dollars to the airline, CEO Ed Bastian didn’t flinch. “Our decision was not made for economic gain and our values are not for sale,” he said in a memo to staff.

Leaders can‘t be weather vanes in a crisis. For CEOs, that applies to social and cultural issues as much as economic ones.

Related themes: ESG LEADERSHIP

Oliver Wyman Forum
This piece has been reprinted from the Oliver Wyman Forum.

• 2023 Will Be a Time for Business to Experiment
• How Can Businesses Successfully Navigate Economic Uncertainty?

The original version of this article can be read at Brink’s website HERE.

FCCISL and CTISL sign MoU for promoting Lankan products and services in UAE

The Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL) and Chamber of Tourism and Industry of Sri Lanka (CTISL) recently signed a memorandum of understanding (MOU) at a high-level meeting held on January 9, 2023, at the FCCISL Board Room, Colombo.

Under this MoU, it is expected to organise Sri Lanka-RAK Business Forum and Trade Fair 2023, scheduled to be held from July 28 to August 6, 2023, at the RAK Expo Building, United Arab Emirates (UAE). The event will be co-organised by the FCCISL and CTISL in partnership with RAK (Ras Al Khaimah) Chamber of Commerce and Industry, UAE.

The 10-day event will include ministerial level economic conference, stakeholder forums, business-to-business meetings together with a trade fair of over 237 stalls for Sri Lankan products and services in various sectors. The objective of the event is to promote products and services of Sri Lanka in the markets of the UAE and surrounding countries, thereby enhancing the economic cooperation between Sri Lanka, the UAE and Middle East.

The FCCISL and CTISL believe that this initiative will indeed be instrumental in strengthening the forex reserve of Sri Lanka becoming a somewhat solution for the ongoing economic crisis in the country. FCCISL President Keerthi Gunawardane and CTISL President A.M. Jaufer signed the MoU representing the two organisations.

The event was also attended by CTISL Senior Advisor and FCCISL Past President Dr. Tissa Jayaweera, former Consul General of Sri Lanka to Saudi Arabia and Special Representative of CTISL for Middle East Dr. M. Inamullah, Rajabdeen & Son Chairman M. Shafeek Rajabdeen, former Tourism Ministry Secretary and Public Security Ministry S. Hettiarachchi, CTISL Secretary General U.P.S. Pathirana, FCCISL Deputy Secretary General (Actg.) Tilan M. Wijesooriya and CTISL National Organiser Donald Rajapaksha.

Daily Mirror

Cambodia-Australia business council mooted

The Cambodia Chamber of Commerce (CCC) has agreed in principle to the establishment of a Cambodia-Australia Business Advisory Council to promote economic and commercial corporation between the two countries.

The endorsement came after a request by Australian businessmen and an official letter from the Ministry of Commerce regarding the establishment of the council.

“The council will meet regularly to set up strategic planning and execution for the promotion of bilateral business and investments, and will host events such as business seminars, trade missions, and other promotional activities,” said a January 5 CCC press statement.

According to the statement, the council has two main tasks: to provide advice on attracting foreign direct investment and trade to strengthen and provide access and to link Australian and international companies in order to promote investment, trade and tourism to Cambodia.

Reach Ra, secretary of state at the commerce ministry, said the ministry has requested input from the CCC on the possibility of forming the Cambodia-Australia Business Advisory Council.

He said his ministry had received notice from the foreign affairs ministry regarding the establishment of the Cambodia-Australia Business Advisory Group (CABAG).

He said CABAG, which will now be known as the Cambodia-Australia Business Advisory Council, will be a volunteer group which will spread information and bring Australia companies and entrepreneurs to Cambodia. The council will mobilise companies and entrepreneurs in New South Wales, Victoria, South Australia and Queensland.

“The council will hold workshops on business, their mission, trading and other promotional activities,” Ra said.

Phnom Penh Post

China’s Economy in 2023 — a Post-COVID Rebound?

In November and December, China’s State Council announcements reducing COVID restrictions and enhancing targeted pandemic prevention and control marked the beginning of the end of China’s three-year-long fight against COVID-19. In his new year’s address President Xi acknowledged that the country still faced difficulties ending the pandemic: “We have now entered a new phase of COVID response where tough challenges remain,” he said.

An important question is what this means for China’s economy in the coming years. The swift and decisive move away from zero-COVID indicates that supporting growth is back at the top of the government’s policy agenda once again.

COVID and related measures have caused considerable damage to China’s business environment. Therefore, economic normalization will be gradual and incomplete in the short run. Growth is likely to mirror its pre-COVID gradual deceleration, underlined both by long-term factors, including population aging and economic restructuring, as well as emerging new challenges, including rising geopolitical tensions.

China’s growth in 2023 is dependent on a few factors, including new COVID policies that have abruptly loosened restrictions and also external challenges within the global economy.

Photo: Getty Images

Zero-COVID Policy Dragged Down the Economy

China’s economy has been on a rough ride since early 2020, when COVID-19 first hit China. Following a sharp downturn in 2020, China’s economy achieved a healthy recovery in 2021.

In 2022, however, the economy under-performed, especially in the second quarter. One key factor was the surge of COVID cases since mid-March and the resulting lockdowns and other severe restrictive measures, which lasted at least until late November. Between mid-March and the end of April, the number of new COVID cases rose to around 2,100 a day, on average, up from 540 in the first half of March.

This triggered a series of city-, district-, or community-wide lockdowns, including in coastal commercial hubs, such as Shanghai, Guangzhou and Shenzhen. Although the number of average daily new cases has since declined, to below 400 in May, various pandemic control measures remained in place, under China’s zero-COVID policy.

Prolonged mobility restrictions have had a serious and direct impact on the economy, causing disruptions to supply-chain related logistics and in-person services. In April 2022, the worst affected month, highway freight traffic and turnover contracted by 14.3% and 6.6% year-on-year. Despite gradual improvement since, the figures remained negative in October, at -7.8% and -3.0%, respectively.

Consumption was also hurt badly. For the first 10 months of 2022, total retail sales of consumer goods grew by a mere 0.6% year-on-year, in which catering actually contracted by 5%, compared to 2019, when total retail sales and catering grew by 8.1% and 9.4% during January to October.

Economic growth had been decelerating in the pre-COVID decade, and will likely continue.

Such disruptions damaged China’s investment environment. Yearly growth of fixed-asset investment decelerated from 9.3% in the first quarter to 5.9% for the first nine months. Weakness in investment was particularly acute for the non-state sector, including domestic private enterprises and firms with foreign investment.

What Comes Next Is Unclear

The measures announced by the Joint Task Force on Pandemic Prevention and Control of China’s State Council reversed the previous mass testing- and mobility restriction-centered approach to one that emphasizes vaccine protection. Mandatory PCR testing and centralized quarantine have been gradually abolished, while vaccination for the elderly and other vulnerable groups are to be actively promoted. Such a move is badly needed and a clear plus to the economy.

While we expect a healthy recovery in 2023, the extent of the economic rebound remains uncertain. First, it takes time and effort to implement the new policies and to normalize the economy. Second, COVID-related disruptions to the economy may be long-lasting, lowering China’s growth trajectory. Third, economic growth had been decelerating in the pre-COVID decade, and will likely continue. Lastly, China’s economic performance will be dependent on the world economy and the various emerging challenges it faces.

The Economic Deceleration Is Likely to Continue

The government’s policy shift on COVID management occurred quite swiftly and seemed ill-prepared. Anecdotes suggest that supply shortages in antigen test kits and fever medications are common.

There are also questions regarding whether the new economic policy-makers are ready for the challenging tasks ahead. Although the recently concluded Party Congress has identified Li Qiang as likely the new premier, his team will only take office in March, at the national congress. It is unclear when a comprehensive and coherent economic blueprint will be announced, which will affect 2023’s economic outcome.

Business confidence has been negatively affected by long and strict COVID restrictions, in addition to other challenges. In 2022, Purchasing Managers Index (PMI) dropped from 51 in the first two months to 48.8 in March and 42.7 in April. After a brief bouncing back to above 50, it has since declined consecutively, to 47.1 in November.

What Will China’s Growth Be in 2023?

Some multinational corporations have reportedly started or accelerated their efforts to diversify suppliers to reduce supply-chain disruption, lowering China’s growth potential in the coming years. Moreover, China’s future economy will be constrained by various structural factors, such as population aging and industrial upgrading. The global economic slowdown and China’s uncertain external environment also add uncertainties to its future economic growth.

So, what can we expect for China’s growth in 2023? Hypothetically, we assume that, had there not been a three-year-long pandemic, China’s economy would have continued its gradual deceleration seen between 2012 and 2019. This would result in a 2023 GDP 22.8% larger than that of 2019.

Given that the economy grew by 2.2% in 2020 and 8.1% in 2021 and is expected to expand by 3% to 3.3% in 2022, how big a bounce back is needed for 2023 to achieve the above 22.8%? The answer is more than 7.5% — that’s a difficult task by any means.

Given the numerous challenges and uncertainties, we believe a more realistic projection would be between 5% and 6%. This is lower than China’s pre-COVID growth of 6% to 7%, but in the range of the government’s growth target for 2022.

Related themes: CHINA COVID

Sarah Y. Tong
Senior Research Fellow at the National University of Singapore
Sarah Y. Tong is a senior research fellow at the East Asian Institute at the National University of Singapore. She holds a Ph.D. in economics from the University of California at San Diego.

China Is Set To Become a More Interventionist Economy

China’s Government Is Struggling to Stimulate Economic Growth

Is President Xi’s Dual Circulation Strategy for China Under Threat?

The original version of this article can be read at Brink’s website HERE.

Introduce e-visas, one-stop service to attract more foreign tourists: FBCCI

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) suggested that the government introduce on-arrival visas and e-visas as well as one-stop services (OSS) for foreign tourists with a view to giving a boost to the country’s tourism sector.

The apex trade-body made the call at the fourth meeting of its Standing Committee on Tourism Development (Inbound, Outbound, Domestic, and Civil Aviation) on January 3, 2023.

Attending the meeting as the chief guest, FBCCI President Md. Jashim Uddin said the tourism industry of Bangladesh is very important and has potentials.

“A few days ago, HSBC projected that Bangladesh will become the ninth largest consumer market in the world by 2030. Our economy is growing, and the quality of life is improving. As a result, the tourism industry has now become more important.”

He said the Prime Minister has given special importance to the tourism sector. Various infrastructural developments are going on in Cox’s Bazar.

The Padma Bridge has opened new windows for the tourism industry. After its inauguration, the number of tourists in the south and south-western parts of the country has increased significantly.

The FBCCI president also mentioned that the chamber will focus on the potential sectors of the country in the upcoming Bangladesh Business Summit, going to be held in March on the occasion of the FBCCI’s 50th anniversary. The tourism sector will be one of these sectors.

He added that the FBCCI will always support all positive initiatives in development of the tourism sector.

FBCCI Vice President Md. Amin Helaly said apart from attracting foreigners to Bangladesh, it is also a big market for the country’s large population.

He said to ensure discipline and coordination in this potential sector, active participation of the government agencies and the private sector, including the associations concerned, is essential.

M G R Nasir Majumder, Director-in-Charge of the FBCCI Standing Committee, said tourism is always one of the priority sectors to the Prime Minister.

FBCCI Director Syed Moazzam Hossain, co-chairmen and all members of the standing committee along with Deputy Secretary of Ministry of Civil Aviation and Tourism Sanjida Sharmeen were also present in the meeting.

The Financial Express

What Most Worries You About 2023?

A survey of BRINK experts

We asked a cross-section of our experts to name — in a couple of sentences — what had been the most significant development in their areas of expertise over the last year. Today, in the second half of our survey, we asked them to name what risk most worries them in 2023. Here’s what they had to say.

• An expansion of the Ukraine war either beyond its borders or with nuclear weapons.

Peter Schechter, Host of Altamar Global Issues Podcast and BRINK columnist

• The annual value of global gas trade is poised to hit one trillion US dollars in 2023. Gas globalization could trigger climate tipping points — conditions beyond which climate change becomes self-perpetuating and leads to abrupt, irreversible, and dangerous impacts.

Deborah Gordon, Senior Principal at Rocky Mountain Institute

• Rising geopolitical tensions and worsening China-U.S. relations.

Sarah Y. Tong, Senior Research Fellow at the National University of Singapore

Protesters shout slogans during a protest against China’s strict zero COVID measures on November 28, 2022 in Beijing, China.

Photo; Kevin Frayer/Getty Images

• Efforts by the federal government to slow inflation by punishing workers.

Robert Bruno, Professor of Labor and Employment Relations at University of Illinois

• A more severe economic downturn than currently expected.

Alexander Privitera Fellow at UniMarconi, Rome

• Climate change increasingly affects the global transport system. Droughts are becoming a main threat to river traffic (Rhine, Mississippi, Yangtze etc.) rather than floods that were historically the focus.

Sarah Schiffling, Senior Lecturer in Supply Chain Management of Liverpool John Moores University

• The risk that advanced countries may renege on their financial commitments to help developing countries. This risk is likely to increase if there is no early resolution to the ongoing Russia-Ukraine war.

John Asafu-Adjaye, Senior Fellow at the African Center for Economic Transformation

• I am most concerned about China’s ability to tackle multiple challenges (e.g., surge in COVID-19 cases, weakness in the property sector, shrinking labor force, constraints on the private sector, tech decoupling from the West) to relaunch growth.

Bart Édes, Distinguished Fellow at Asia Pacific Foundation of Canada

• The idea of deconstructing jobs into tasks and farming them out for delivery to various forms of contract or gig work. We’ve eliminated traditional pensions that provided adequate earnings in retirement, and now, we’re turning on jobs in the name of “skills” and organizational “agility.”

Haig R. Nalbantian, Senior Partner, Co-Leader of Mercer’s Workforce Sciences Institute

• Top insurance industry risks include cybersecurity, geopolitical risk, and natural catastrophes.

Mark Friedlander, Director of Corporate Communications at Insurance Information

• The harmful use of AI in the workplace.

Mario Mariniello, Author of “Digital Economic Policy”

• A lack of coordinated actions in the political economy.

venkatachalam Anbumozhi, Director, Research Strategy and Innovations at Economic Research Institute for ASEAN and East Asia

The original version of this article can be read at Brink’s website HERE.

2023 Will Be a Time for Business to Experiment

What a year to run a business! An unprovoked war triggers a global energy crisis, the worst inflation in decades threatens to derail the global economy and geopolitical forces push even harder for a rolling back of globalization.

Corporate leaders can’t expect a respite in 2023. Inflation may be showing signs of easing, but high interest rates, energy shortages and residual pandemic supply-chain issues are likely to slow global growth to 2.7% in 2023 from 3.2% in 2022, according to the International Monetary Fund.

Businesses already bruised by the pandemic need to prepare for the next round of challenges and opportunities by trying new things and seeing what works.

Among other trends in 2023, businesses will continue to face a war for talent as baby boomers retire. Companies will need to adjust — and quickly — to Gen Z.

Photo: Getty Images

Research, Plan, Experiment

Businesses need to be nimble, prepared and willing to experiment in 2023. Now is the time to review what worked this year and what risks could arise next year from macro and micro trends. Some are universal — a changing workforce, access to capital, climate change, supply chain bottlenecks — but others are industry-specific.

Companies should ramp up their data collection and analysis to better understand their customers and colleagues. What products are customers likely to abandon if they have to choose between higher energy costs and groceries? Data can help provide answers.

Business leaders also need to understand their people. Do your employees have the skills they need, or are you about to have a brain drain as experienced managers retire? What benefits do they value, and what are they willing to give up? Use the data to build best- and worst-case scenarios. That way, business is ready, whether it’s to relocate a factory or acquire a competitor, shrink a product line, or provide new benefits

Interest Rates

Businesses and consumers had grown accustomed to low interest rates and easy access to credit. But that disappeared in 2022 as central banks raised rates to tame inflation. Capital in 2023 will be harder to get and cost more than in the recent past, when lenders would provide cash for a good idea without a product or overwhelming proof that it could become a money-making business.

Companies will now need a solid track record and business plan to get cash. But tight credit also could lead to more acquisitions as businesses collapse or seek mergers.

Transition plans that articulate the long-term value of a low-carbon business — and explain the cost of inaction — may help executives walk the line of differing stakeholder expectations.

Add Links to the Supply Chain

While many of the pandemic-era bottlenecks have cleared, lots haven’t, and protectionism is creating shortages and pushing up prices. Companies need to identify these and other potential supply-chain risks, whether they could come from geopolitical tensions or severe weather shuttering a plant.

A growing number of companies are trying to avoid these challenges by diversifying suppliers, factory locations and shipping strategies. Companies are now prioritizing security, access and stability but are taking cost and friction into account by building more time into projects to ensure that plans are realistic.

Embrace Your New Team

Despite economic weakness, business will continue to face a war for talent, especially as experienced baby boomers, the youngest of whom are 60, continue to retire. Business needs to adjust — and quickly — to Gen Z. These digital natives will account for 30% of the workforce by 2030. Born between 1997 and 2012, they have very different expectations about work from older generations.

The pandemic trauma left them more focused on personal health and less on traditional careers. They expect far more than remote work and appropriate pay. They want benefits that align with their focus on holistic health and opportunities to grow at their own pace. Companies should experiment with different hybrid options to see what works best for their culture. Many are successfully using job sharing, flexible hours and four-day work weeks to attract and retain talent.

Digital Assets Are Here to Stay

2022 gave us the most brutal of crypto winters, but CEOs should not write off digital assets. The sector shows real promise of useful innovations, and the underlying distributed ledger technology continues to gain ground in real world applications, such as the European Investment Bank’s recent 100 million-euro bond issued on a permissioned blockchain. In financial markets, this will translate to the “tokenization” of stocks, bonds and other assets, bringing major efficiencies and reducing liquidity needs and operational risks.

Meanwhile, digital currencies will assist in the increasing digitization of the economy, including in the metaverse, with central bank digital currencies, private sector stablecoins and bank-issued tokenized deposits all playing a role. There is also strong potential for decentralized finance (DeFi) to eliminate expensive and time-consuming human-centric processes, although it will be challenging to ensure DeFi solutions are truly safe.

The spectacular disasters of 2022 — principally the collapses of crypto exchange FTX and the Terra/Luna stablecoin platform — and their ripple effects underline the need for guardrails to protect consumers, investors, the financial system and the wider economy. Fortunately, policymakers are in the process of designing laws, regulations and supervisory approaches appropriate for the digital assets sector.

More Climate Pressure

Company leaders will need to make tradeoffs as, on top of current economic challenges, they face climate-related pressure from multiple angles. This includes employees, consumers and regulators, who are often pushing for faster progress and increased transparency, and a spectrum of shareholder views, from the climate-committed to those who think corporates should stick to purely focusing on the bottom line.

Developing detailed transition plans could help provide stakeholders comfort that executives are getting it right. The clock is ticking. About three-quarters of consumers say they want businesses to act on climate change, according to a recent Oliver Wyman Forum survey of those in the United States, United Kingdom and Brazil.

Government pressure also is growing, with several committed to mandatory external disclosures. Earlier this year, the U.S. Securities and Exchange Commission proposed a mandate for public businesses to disclose their greenhouse gas emissions, while more than 1,300 of the largest U.K. companies have to disclose climate-related financial information, including transition plans, as of April 2022.

Transition plans that articulate the long-term value of a low-carbon business — and explain the cost of inaction — may help executives walk the line of differing stakeholder expectations.

Companies will need to make tradeoffs as they face these and other challenges, with careful consideration of climate change and China’s shifting COVID policies. But they can also think of this as a time to experiment, to try new strategies and to question long-held assumptions.

Mistakes will occur, but failure also is an opportunity to learn and to innovate.

Related themes: BLOCKCHAIN CLIMATE ADAPTATION NEW WAYS OF WORKING SUPPLY CHAINS

Oliver Wyman Forum
This piece has been reprinted from the Oliver Wyman Forum.
How Can Businesses Successfully Navigate Economic Uncertainty?

The original version of this article can be read at Brink’s website HERE.

We Have Reached Peak Fossil Fuels

Investment in clean energy technology is now outpacing fossil fuels. According to the IEA, clean energy will be 60% of total investment in energy in 2022. New research from the Rocky Mountain Institute shows that the world reached peak fossil fuel demand in 2019 and is bouncing along a plateau of demand.

RMI predicts that fossil fuel demand will enter a steep decline by the end of the decade, as greater efficiencies and rapid deployment boost clean energies. BRINK spoke to Kingsmill Bond, lead author of the RMI report.

BOND: Global demand for energy grows at about 1% a year or around 6 ExaJoules (EJ). But global supply growth for solar and wind is growing by around 20% a year, also about 6 EJ this year using the BP methodology, and 17 EJ by the end of the decade. And as this new technology is deployed, there is no longer any room for fossil fuel demand to grow.

An aerial view shows a shepherd walking past photovoltaic cell solar panels in the Pavagada Solar Park on October 11, 2021 in Karnataka, India. For the first time, investment in clean energy, like solar power, is outstripping fossil fuels.

Photo: Abhishek Chinnappa/Getty Images

Coal demand peaked in 2013, and since then, we’ve been bouncing along a plateau for a decade. As solar and wind move up their growth curves, they will push coal off the edge and into decline. A similar thing is now happening in oil. You’ve got a peak in 2019; it fell in 2020, bounced back in 2021, but not to the 2019 levels. It bounded back again in 2022 but again, not to the 2019 levels; so it’s bouncing around on a plateau. As the electric vehicle market grows, oil demand will start declining.

The S Curve of Exponential Growth

BRINK: Your analysis shows a very steep drop in fossil fuel demand, almost a cliff, from about 2027 onwards. What precipitates that?

BOND: What lies at the heart of this energy transition is exponential growth in the new technologies, known as an S curve. To give you a flavor, think about electric vehicles. Three or four years ago, electric vehicles had a market share of around 1% and were still niche. Now, they have passed their tipping point, and the market share is 15% globally and 30% in China, the world’s largest market. There’s a very clear path on an S-curve where you go essentially from about 5% to 80% within a decade, so we think that electric vehicle sales are shifting towards a market share of 80% in leading markets by the end of this decade.

Essentially, what’s going on here is replacement. Capital is reallocating from an industry that is about to enter decline to an industry that has got spectacular amounts of growth.

It’s a similar story with solar panels. A decade ago, we were struggling to deploy 30 gigawatts a year of solar panels. In 2022, Bloomberg NEF raised its central forecast for solar panel deployment globally to 270 GW of new capacity. To put that number in context, it is three times as much as the total deployed capacity in the U.S. at the end of 2021 and will provide over half of the expected increase in electricity demand globally this year. It’s clear that in a decade’s time we’ll be deploying between 500 and 1,000 gigawatts of solar, which will be easily enough to supply all the growth in electricity demand.

Fossil Fuels Won’t Disappear Overnight

BRINK: If we look ahead to 2030, what will be the clean energy mix, according to your calculations?

BOND: By 2030, fossil fuel demand will clearly be in decline across the system, after 200 years of growth. The implication of current growth rates is that solar and wind would increase from 12% of electricity generation to 35%, fossil fuels would decline from 60% to 40%, and nuclear, hydro, and biomass would stay basically flat at about a quarter of the system.

No one is suggesting that fossil fuel demand will vanish overnight. It’s always the same in technology transitions: You don’t go from having tens of millions of horses and thousands of miles of canals to no canals or no horses overnight. You simply find a better solution, stop growing the old system, and then it enters into decline.

Capital allocation is shifting from fossil fuels to renewables. If you take the IEA data from their World Energy Investment publication, fossil fuel capital expenditure has dropped from $1,200 billion in 2015 to about $950 billion this year, at the same time as renewable capital expenditure has grown from $1,000 billion dollars to $1,400 billion. Essentially, what’s going on here is replacement. Capital is reallocating from an industry that is about to enter decline to an industry that has got spectacular amounts of growth. This is quite normal.

Squeezed Between Rising Efficiency and Growing Renewables

BRINK: There’s been a lot of talk about how the recent crises have propped up demand in fossil fuels. Could that upset this trajectory?

BOND: [President Vladimir] Putin removed a piece of Russian energy supply from the global system, so we had a supply shock and prices went up. But if somebody doubles the price of something, you’re going to use less of it. That’s precisely what’s been happening. Of course, Europe is using more coal, but it is using less gas; on a global basis, people are using less fossil fuels because the price is so much higher and they’re using as much renewables as they possibly can. Our solar deployment is 50% higher than last year. Asia has decided not to embrace gas. And battery and hydrogen deployment has gone through the roof.

Because fossil fuels are so inefficient compared to renewables, the very fact that these renewable technologies are being deployed at scale will increase the efficiency gains of the system. So fossil fuel demand will be squeezed between rising efficiency and growing renewables. That’s what creates the real risk for the system right now.

We have calculated that the deployment of new technologies like electric vehicles, heat pumps and solar and wind would increase efficiency by 1%, which doesn’t sound very much, but if the efficiency gains in previous decades have been 2% a year with 3% global growth, and now efficiency gains are going to increase to 3% at the same time as global growth is actually decelerating towards 2%, you get a very clear picture of a system that is much more vulnerable to the growth of renewables.

Related themes: CLIMATE ADAPTATION DECARBONIZATION ENERGY

Kingsmill Bond
Energy Strategist for Rocky Mountain Institute

Kingsmill has worked as a financial market analyst and strategist for over 25 years, including for Deutsche Bank, Sberbank and Citibank in London, Hong Kong and Moscow. He joined RMI in 2022 to write analysis on the impact of the energy transition on financial markets, and has written many pieces on that theme.

The original version of this article can be read at Brink’s website HERE.

Aviation’s Recovery Isn’t As Robust as Expected

In the aviation world, 2022 was projected to be a year of recovery. But that was before a series of exogenous shocks that exacerbated already malfunctioning global supply chains and prompted the industry to pull back.

After the COVID-19 pandemic temporarily disabled global commerce, the world’s economy was battered again in 2022 by the Russian invasion of Ukraine, which caused energy prices to spike and created shortages in an array of raw materials, including titanium. This was compounded by unexpected COVID lockdowns in China that led to a slowdown in the world’s second-largest economy and more supply chain disruption. Meanwhile, aviation’s rebound was stifled by widespread labor shortages in North America and Europe that prompted flight delays and cancellations.

As a result, Oliver Wyman has reassessed elements of its Global Fleet and MRO Forecast 2022-2032. Not surprisingly, a small percentage of the growth initially anticipated isn’t materializing. By January 2023, we now expect the fleet to be 1% smaller than the original forecast of around 27,600 aircraft. MRO spend in 2022 will be 6% less, at just under $74 billion. Over the decade, the growth in fleet size and MRO demand are now both expected to trend 1% to 3% less than originally forecast.

A food court inside the international terminal at San Francisco International Airport sits empty as union food service workers are on strike on September 26, 2022 in San Francisco, California.

Photo by Justin Sullivan/Getty Images

Driving this contraction is lower narrowbody production than expected, weaker than anticipated growth and fleet utilization in China, and slower regional jet and turboprop recovery. Of the drop in MRO spend in 2022, 40% can be attributed to cutbacks in China and Eastern Europe.

Fewer Aircraft Produced

Already, aircraft production year to date is less than projected, particularly on the A320neo and 737 MAX. Through July, monthly production rates on these platforms have been 10% to 15% below initial expectations. The lower production rates can be attributed to the difficulty aerospace manufacturers have faced ramping up again after two years of COVID, given supply chain delays and shortages and trouble finding enough workers.

Production numbers also will be down over the decade because of the impact of Ukraine-related sanctions on Russian-built Superjet and MC-21 aircraft. Original forecasts projecting over 300 MC-21 and 200 Superjet deliveries by 2032 have been revised, based on expectations for little to no production over the next few years because of the sanctions.

For instance, one problem Russian aerospace manufacturers face is no longer being able to buy engine and avionics packages for these models from the United States or Europe as planned. Instead, they now must develop them on their own.

China’s Slowdown

China’s COVID lockdowns and weaker economy are also factors in a less vibrant aerospace forecast. The Chinese government reinstituted strict lockdowns in March that have suppressed travel demand. The domestic revenue passenger kilometers (RPKs) flown in July, for instance, was 29% lower than the same month in 2021 and 31% below pre-pandemic July 2019, according to date from the International Air Transport Association. Year to date, China’s domestic RPKs are down 45% versus the same period in 2021.

China accounts for 15% of the global fleet and 12% of the global MRO market. While the size of the fleet remains 6% above pre-COVID levels, thanks to an impressive rebound from COVID in 2021, it has barely grown in 2022 — only 1.1% between January and July.

In addition, Chinese operators have cut utilization of in-service aircraft. Available seat miles are down 15% from 2021, close to 2020 levels. Aircraft utilization is a significant driver of maintenance demand and lower utilization has driven a 9% reduction in 2022 China MRO spend in our revised forecast.

Another possible sign of slowdown in China’s aviation market: Chinese airlines have 430 MAX on order, including 100 that are already built. The completed aircraft remain undelivered because Chinese regulators haven’t recertified the MAX after its 2019 grounding. The United States, Europe, and other major markets recertified the MAX in 2021, leaving China as the only big market not to bring the aircraft back into service.

Slower Recovery for Regional Jets

The recovery in the regional jet and turboprop fleets has been significantly slower than anticipated as well. The revised forecast projects the size of the regional jet fleet to be 6% down to 3,240 and the turboprop fleet 8% lower at 2,270 in 2023.

Meanwhile, narrowbody aircraft have surpassed their pre-COVID levels in markets with significant regional jet and turboprop fleets, while regional jet and turboprop fleets are still only 80% to 90% recovered. Globally, available seat miles (ASMs) for jets with fewer than 100 seats are 74% of their 2019 levels; ASMs for aircraft with more than 100 seats are at 83%.

The recovery of the regional jet market will likely be curbed by the decade-long shortage of pilots, especially in the near to medium term.  That’s because the major carriers are likely to recruit pilots away from regional markets.

Regional Differences

Over the 10 years covered by the fleet forecast, all regions are within 0.5% or less of the original MRO spend projection. The only exceptions are Eastern Europe, which is projected to be down 6.4%, and Latin America and the Caribbean, now expected to be 2.4% lower. Between 2022 and 2032, North America MRO spend is now projected to be 0.2% higher and Europe 0.1% higher.

Related themes: COVID SUPPLY CHAINS

Sam Sargent
Principal, Transportation and Services Practice at Oliver Wyman
Sam Sargent is a principal in Oliver Wyman’s transportation and services practice.

Carlo Franzoni
Technical Specialist at Oliver Wyman
Carlo Franzoni is a Technical Specialist for Oliver Wyman CAVOK based in the firm’s Atlanta, Georgia office. Carlo is a member of the Oliver Wyman CAVOK Market Intelligence team, with experience in data analysis, market sizing, and forecasting.

Livia Hayes
Director at Oliver Wyman
Livia Hayes is a director with Oliver Wyman’s CAVOK division, the firm’s Atlanta-based airline technical consulting business.

The original version of this article can be read at Brink’s website HERE.

ICC and Google Release Survey Results on MSME Digital Exports in Southeast Asia

The International Chamber of Commerce (ICC) and Google have recently released the results of the survey that was primarily aimed at studying the digital exports of micro, small and medium-sized enterprises (MSMEs) in Southeast Asia. The two organizations plan to use the  survey results to inform policy discussions and develop tailored training programmes to upskill and empower MSMEs in the region.

According to ICC and Google, MSMEs form the backbone of economies of the Association of Southeast Asian Nations (ASEAN). Yet, despite their contribution to ASEAN economies and society, participation in exports and global markets remain relatively low. MSMEs account for a small proportion of exports relative to their share of activity and employment in the region. Against this backdrop, the MSME Digital Exports in Southeast Asia report assesses and paints an accurate picture of ASEAN MSME exports, identifies key barriers that prevent MSMEs from exporting, and analyses how MSMEs leverage digital technologies to help drive exports in the region.

“Smaller businesses and entrepreneurs are the backbone of the real economy. Through this partnership with Google, ICC is committed to delivering trusted, quality training to help SMEs harness the opportunities of digital trade. The goal is to ensure our global know-how and solutions benefit business communities and the communities they serve, in Asia and beyond,” John W.H. Denton AO, Secretary General of the International Chamber of Commerce, said.

On her part, Karan Bhatia, Vice President, Government Affairs and Public Policy at Google, said.  “Digital technologies are creating opportunities for small businesses to trade and reach international markets in ways impossible a generation ago, but those opportunities are not always easy to seize. Google is excited to collaborate with ICC and the International Trade Centre to develop a training curriculum to help address this gap in ASEAN – and better enable MSMEs to fully benefit from the growing digital economy.”

The MSME Digital Exports in Southeast Asia report is underpinned by a survey of 1,560 MSMEs in the 10 ASEAN markets. Key insights from the report include:

• MSMEs in the ASEAN markets express a strong interest in exporting in the region and internationally – over 60% of surveyed enterprises are looking to expand their export footprint;
• MSMEs in the ASEAN markets have drastically increased their use of digital tools and technologies – 80% of surveyed enterprises have expanded their use of digital tools in the past two years;
• 70% of surveyed MSMEs in the ASEAN markets see digital tools and technologies as a way to identify access new markets;
• MSMEs in the ASEAN markets continue to be hampered by significant Internet coverage and affordability gaps – 65% of surveyed MSMEs reported issues with Internet accessibility (patchy service or slow connection) and affordability;
• E-commerce growth is severely constrained by: (i) high cost of delivery of return, (ii) issues associated with complaints or disputes, (iii) issues with payments online;
• MSMEs in the ASEAN markets are seeking tailored support to increase their skills and capabilities in digital marketing and in leveraging digital tools and technologies to access market information – 75% of surveyed MSMEs expressed an interest in developing these capabilities.

Building on the report, ICC, Google and the International Trade Centre are co-designing a curriculum and creating a network of trainers to train 1,000 ASEAN MSMEs in digital export-relevant skills. The ICC Centre of Entrepreneurship in Indonesia will play a leading role in deploying and coordinating the implementation of the training programme.

Supply Chain Strategies Are Likely to Lead to More Deglobalization

Businesses have been facing shocks on multiple fronts these days, from COVID-19 and inflation to the conflict in Ukraine and other escalating geopolitical tensions. COVID and the Russian invasion of Ukraine particularly turned global supply chains upside down and intensified disenchantment with the trend toward globalization that has dominated world commerce for decades.

In the face of these challenges, business leaders are urgently seeking ways to bolster supply chain resilience. Often, the first port of call has been to increase the level of stock in company warehouses. This has led to a dramatic rise in inventory levels across the globe and higher operating costs, especially given current global inflation. But while it is often a useful, short-term tactic, other solutions can be more sustainable for the long term.

Multiple container ships are docked at Container Terminal Altenwerder at Hamburg Port on October 3, 2022 in Hamburg, Germany.

Photo: Gregor Fischer/Getty Images

In our work with industrial clients around the world, we have examined many different approaches that companies are taking and studied how they can be combined into resilient, longer-term supply chain strategies. Based on this corporate input, we’ve put together an overview of essential strategies available to companies, how they interact, and the implications of choosing one over another.

The key to success is ensuring that new supply chains are more robust than the ones they replace. And the more companies approach supply chain decision-making intentionally and holistically, the more likely they will develop long-term sustainability.

Trade Troubles and Consumer Interests

First, some context on pressures facing the supply chain: After decades of globalization and economic liberalization, continued trade growth can no longer be taken for granted. The global financial crisis of 2007 through 2009 left many suppliers with payment issues. While the financial system ultimately recovered, global trade remains down by eight percentage points from its peak in 2008. On top of slowing global trade came the introduction of trade sanctions between the United States and China, followed by COVID-19 and the challenges of maintaining supply when much of the world economy was shuttered.

This series of shocks has led many to question globalization itself. Consumer attitudes in the electronics industry reveal that in countries such as France, Germany, and India, most consumers now believe “the world is too globalized.” While those in China and the U.S. remain more positive about globalization, it is by a margin of just 4% and 6%, respectively.

The experiences of the past two years have also led consumers to take much stronger interest than before in questions about the origin of products. Interest in these matters is up 29% in the United States, for example. When buying electronics, 65% of consumers focus on domestic brands and 74% on locally produced devices. This is especially the case when issues of quality and trust are involved.

Additional Geopolitical Pressures

Recent events are also raising questions about companies’ continued dependence on China and its lengthy supply routes. The share of trade in China’s economy is on the decline, falling from a high of 35% before the financial crisis to less than 20% today.

Russia’s invasion of Ukraine could prove the biggest test of all. The conflict has already pushed up prices of oil and gas significantly. Low fuel prices have correlated historically with periods of high economic growth. The recent surge in commodity prices is adding to a dangerous inflationary spiral.

Even if peace comes soon, sourcing commodities or components from Russia and Ukraine will remain out of the question for the foreseeable future.

Ways Forward

In response to these challenges, companies are looking for ways to bolster supply chains so they might ride out future storms. Ultimately, the last few years have shown us that companies can be more flexible and adaptive than expected.

Build up inventory. The quickest and simplest way to increase resilience is to increase inventory. This acts as a buffer against disruption — but it comes at a cost. Economists have suggested the recent rise in inventory costs is equivalent to 1% of global gross domestic product (GDP). Currently, this is a price many companies view as worth paying, but there is a long-term question of whether the strategy is sustainable.

Regionalizing the supply chain. Regionalization allows companies to view the supply map as a series of interconnected but largely independent ecosystems. It has led companies to source commodities, such as textiles, wood products, and metals, closer to their customer base, from locations such as India, Mexico, Poland and Vietnam. The impact of regionalization by numerous firms has had such a big impact that it has increased the GDPs of these countries.

Regionalization helps limit the risk of disruptions affecting all regions simultaneously. It also provides companies with the opportunity to potentially cut emissions and up their game in applying the sustainability criteria of environmental, social, and governance (ESG) programs.

Nearshoring supply and production. Relocating production and supply closer to home gives companies greater control. Like regionalization, it also potentially decreases the carbon footprints of supply chains.

There are numerous recent examples of nearshoring. For example, one U.S. toymaker recently announced it would invest $50 million in a manufacturing plant in North America, after years of manufacturing most of its goods in Asia. Likewise, in December 2020, a major U.S. computer chipmaker announced it would invest hundreds of millions of dollars in domestic production facilities.

Making the Best Decisions

Chief operations officers recognize that future supply strategies need to be more flexible and resilient — but reshaping supply chains can be a complex and time-consuming task. To help speed the process, leaders can use a decision-making matrix to assist in thinking through these challenging decisions.

The matrix helps identify the most optimal combination of sourcing and warehouse management approaches for a company’s circumstances. It focuses on two key dimensions: the complexity of the product and the customers’ demand for the timeliness of supply. This produces four quadrants with distinctive characteristics. For each, the framework identifies which approaches can be combined to greatest effect.

Not every circumstance warrants such investment. For example, products of low complexity, where timely supply is less important, are unlikely to justify such interventions.

While speed is of the essence in developing short-term tactical responses to supply-chain challenges, strategy is necessarily longer-term in nature. Companies need to incorporate tactical measures to ensure increased resilience during the implementation phase. But implementation itself is likely to consist of multiple stages, especially when the new approach entails both nearshoring production and localizing supply.

Assessing these short- and long-term possibilities isn’t easy. But companies that can find the right mix of responses can build a supply chain that proves resilient over the long haul.

Related themes: SUPPLY CHAINS TRADE

Tushar Narsana
Partner at Oliver Wyman

Tushar Narsana is a Detroit-based partner in Oliver Wyman’s Manufacturing, Automotive and Aerospace practices. Prior to joining Oliver Wyman, he was the global lead of supply chain services at Accenture where he led and transformed client supply chains within Industrial Products, Automotive, Aerospace, Retail, and Hi-Tech industries.

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Apurva Nair
Partner at Oliver Wyman

Apurva Nair is a partner with the Private Equity practice and a leader in the post-deal value-creation team. He drives enterprise value by delivering tangible financial benefit to clients in accelerated time frames. He has a dual focus on driving the bottom line via strategic sourcing and transactional pricing, and organic top-line revenue growth via sales analytics.

How Persistent Inflation Is Causing Procurement to Adapt

Anne Valtink
Engagement Manager at Oliver Wyman

Anne is an Engagement Manager in Oliver Wyman’s Operations Practice in Chicago. She specializes in rapid profitability transformation initiatives for private equity clients and large corporations.

The original version of this article can be read at Brink’s website HERE.

Georgian, Azerbaijani commerce, natural resources bodies sign cooperation agreements

Georgia and Azerbaijan on December 15, 2022 signed memorandums of agreement for cooperation between their state agencies of commerce and natural resources, the Georgian Government revealed.

Signed following the ninth meeting of the Joint Intergovernmental Commission of the two countries in Tbilisi, the agreements include documents signed between the Georgian Chamber of Commerce and Industry and the Small and Medium Business Development Agency of Azerbaijan.

Another memorandum was reached between the Georgian Ministry of Environmental Protection and Agriculture and the Ministry of Ecology and Natural Resources of Azerbaijan, with the latter also signing a letter of intent with the Georgian Ministry of Economy.

Azerbaijani Prime Minister Ali Asadov, who is visiting Georgia for the Commission meeting, said relations between Georgia and his country had reached the level of “strategic partnership” in recent times, while there was “more potential” to further develop the connections.

AzerNews

Former FPCCI VP meets with Australian High Commissioner to Pakistan

Khurram Tariq Sayeed, Former Vice President & Focal Person of Federation of Pakistan Chamber of Commerce & Industry (FPCCI) to CACCI met with the Australian High Commissioner to Pakistan H.E. Neil Hawkins during his visit to Federation House. Mr. Sayeed briefed the High Commissioner on the upcoming visit of FPCCI high profile delegation to be led by President FPCCI Mr. Irfan Iqbal Sheikh to Melbourne, Australia to attend the 36th Confederation of Asia Pacific Chambers of Commerce and Industry (CACCI) conference from 28th – 30th November 2022.

The High Commissioner assured FPCCI of his full support and co-operation in making the FPCCI trip a success and appreciated the efforts being undertaken by CACCI in promoting regional trade and investment among the CACCI member countries.

Various other proposals to increase trade and investment among CACCI member countries as well as bilateral trade between Pakistan and Australia came under discussion. The meeting was also attended by Senior Vice President FPCCI Suleman Chawla, Former President FPCCI Mian Anjum Nisar, Vice Presidents FPCCI Shabbir Hassan Mansha, Eng. M.A.Jabbar & Haji Yaqoob, Former Vice President & CACCI Budget Commission Member Sheikh Sultan Rehman & Saquib Fayyaz Maggo.

Skilled migration rules must deliver more in-demand workers: ACCI

Abolishing prescriptive occupation lists would open up skilled migration and deliver more in-demand workers the Productivity Commission has found as the Australian economy continues to battle with chronic labour shortages.

“Businesses are unable to get the workers they need because of the shortcomings of existing priority lists for in-demand occupations,” ACCI chief executive Andrew McKellar said.

“The Productivity Commission has rightly identified the fact that skilled occupation lists can result in undue restrictions on fulfilling the needs of employers. Instead, businesses in any industry should be afforded the flexibility to sponsor across a broad range of occupations.

Mr. McKellar also cautioned that an increase to the temporary skilled migration income threshold must be carefully considered.

“An excessive increase to the salary threshold would prevent many businesses from accessing migrant workers to fill critical vacancies, for example in the aged care sector.

“Ideally, there should be more flexibility in setting thresholds that are tailored by sector, skill level, and job location.

“As the global race to attract skilled migrants heats up, we cannot risk getting left behind.  With efficient and cost-effective visa settings we can attract and retain talent which will be crucial to strengthening our economic recovery.

“With Australia’s unemployment rate at historic lows, and businesses simply unable to fill vacancies, it’s crucial that migration levers be adjusted, along with initiatives to enhance the skills of Australians and increase participation in the labour market.

ACCI Media Release

Register for SIEW 2022 Today!

CACCI is pleased to forward hereunder the message from the Energy Market Authority (EMA) of Singapore reiterating its invitation for CACCI members to join the 15th Singapore International Energy Week (SIEW) 2022 of which CACCI is a Supporting Organization.

SIEW, a four-day hybrid event with both onsite and online streaming elements to be held on 25th to the 28th of October at the Marina Bay Sands Singapore, is an annual platform for energy professionals and policymakers to discuss and share best practices and solutions within the global energy space.  It aims to foster a robust exchange of views and perspectives among thought leaders and industry professionals in the energy industry.

To find out more about the event, interested parties may visit the official event website at: SIEW 2022.

Online registration can be made via the following link: SIEW 2022: Welcome .

The Dollar Is At Its Strongest Value in 20 Years

The U.S. dollar is at its strongest value relative to the Japanese yen and British pound since the 1980s and trading on par with the euro for the first time in nearly two decades. The driving force behind the rising strength of the dollar is U.S. monetary policy — as the Federal Reserve raises interest rates to curtail inflation, it also pushes up the price of the dollar. The Bank of Japan, the Bank of England, and the European Central Bank have also raised interest rates, albeit less aggressively than the Fed.

Source: Tufts University

Russia’s invasion of Ukraine also spurred an inflow of capital into the U.S., raising demand for dollars as global investors consider the U.S. a safer haven than Europe, the U.K. or Japan. The U.S. economy has recovered from the pandemic more quickly compared to other countries; its GDP is now 15.6% higher than the third quarter of 2019. In comparison, the eurozone’s GDP grew by 8.3% and Japan’s declined by 3.6%, over the same period.

The strength of the dollar will help U.S. inflation as it lowers the cost of imports. But it also has drawbacks, as American products become more expensive in international markets and emerging economies like China and India pay a higher dollar price for commodity imports.

The original report can be read at the Brink’s website HERE.

China’s Government Is Struggling to Stimulate Economic Growth

China’s economy has shown signs of weakening since April after a respectful first quarter outcome, when GDP grew by 4.8% year on year. The country’s GDP expanded by just 0.4% in the second quarter, due to factors including COVID-related lockdowns in major cities and deterioration in the real estate sector.

Last month, the central bank, People’s Bank of China (PBoC), surprised the market with a significant interest cut: both the one-year medium-term loan facility (MLF) and the seven-day Reverse Repo were lowered by 10 basis points. Another rate cut took place a week later, when the five-year and the one-year loan prime rate (LPR) were each slashed by 15 and 5 basis points.

Pedestrians walk at a shopping district on August 06, 2022 in Hong Kong, China. Hong Kong’s economy contracted consecutively for the last two quarters in a row due to weak exports and investment as it struggles with pandemic-induced restrictions.

Photo by Anthony Kwan/Getty Images

Restoring Business Confidence Is the Key Objective

China’s recent rate cut was unexpected by most analysts since major central banks around the world have been in a cycle of interest rate hikes in recent months, and China’s consumer price index rose by 2.7% year on year in July, indicating stronger inflation pressure. The market expected the central bank to favor structural monetary tools, such as additional liquidity or rate cuts for selected sectors, rather than a more general interest rate reduction.

We believe the rate cut is reasonable, as it helps to restore business confidence after the release of discouraging macro data for July. Total societal financing (i.e., total excluding financial institutions) experienced a 30% drop year on year, from 1.08 trillion to 756 billion yuan ($108 billion), a new monthly record low in six years.

This implies that willingness and actual borrowing remain weak despite the money authority’s previous policy efforts.

Growing Mortgage Boycotts

Another sign of economic trouble is a fast spread of mortgage boycotts in July, involving projects in 26 provinces and municipalities, raising fear of possible broad risk in the financial sector.

In July, China’s home prices fell for the 11th month and since the breakout of the mortgage strike, the decline has further widened. The rate cut served as a strong policy support for the troubled real estate sector.

Meanwhile, the central bank maintained its prudent stand in liquidity expansion, while taking measures to reduce financing costs for households and companies. On August 15, when 600 billion yuan worth ($86 million) of MLF loans matured, PBoC’s operation had resulted in a net fund withdrawal of 200 billion yuan from the banking system.

A Decline in Borrowing Activity

Underlying the weakness in social financing are inadequate demand for investment and consumption, resulting from uncertainties in enterprises’ profits and the population’s income prospects.

In July 2022, M2, a broad measure of money supply, declined by 337 billion renminbi ($48 billion) month-on-month, compared to an average increase of 3.3 trillion renminbi for the first half of the year. The reductions in new loans, by households and firms, is the most important reason for the decline in M2 balance.

Meanwhile, the risk is increasing that the funds and liquidity are idling within the financial system, due to deterioration of credit demand from the real estate sector. The short-term bill financing of the four state-owned banks and national large banks rose by 148.0% and 102.7% year on year in July 2022, while the growth rate of short-term and long-term loans from these banks declined. In the same month, the growth of loans has also significantly softened (negative) for the small and medium banks, indicating further weakening of credit demand by small- and medium-sized enterprises.

The fiscal injection from the central bank’s profit submission will be depleted soon, and the quota for local government bond issuance will be used up shortly.

Lowering Borrowing Cost and More Targeted Support to Continue

We expect the central bank to accelerate the implementation of existing structural policies, such as extra liquidity to specific sectors, increased targeted credit expansion for SMEs, especially low-carbon and agriculture-related and technological innovation-oriented ones.

For example, the executive meeting of the State Council in June decided for the first time to set 300 billion yuan ($43 billion) aside for policy-based development financial instruments (PDFI) to accelerate funding for local government projects. In August, the government announced a credit increase of 800 billion yuan to policy banks to support infrastructure construction. Another increase of more than 300 billion yuan was added later in the month.

China’s monetary policy will likely continue to aim at stimulating borrowing demand and helping financial institutions to expand credit supply to targeted borrowers.

Funding Support for Local Governments

In March 2022, the PboC announced the PBoC will turn over profits of over 1.1 trillion renminbi to the central government. The amount will be used to accelerate policy implementation including the VAT rebate and other expansionary fiscal policies. In the first half of 2022, it had turned over 900 billion renminbi ($129 billion), equivalent to a liquidity injection from a 0.45 percentage point reduction in reserve requirement ratio, according to PBoC’s estimation.

The profits handed over by the central bank can reach the intended parties directly without going through the traditional money-creation cycle. More importantly, the injection helps to replenish local government finance without raising their debt level, enabling local governments to carry out tax-cutting and employment protection policies and adding the much-needed cash flow into the real sector.

One recent innovation is the use of PDFI (policy-based and developmental financing instruments), a new monetary policy tool first announced in June, which aims to provide quick financing for government-supported infrastructure projects. In particular, PDFI provides start-up or bridging funds through infrastructure funds, which can be considerably faster than the issuance of local government bonds.

At present, PDFI focuses mainly on network-based infrastructure construction for transportation, energy, and irrigation while other local projects such as those on scientific and technological innovation were expected to be funded by local government special bonds.

In the coming months, the government has to come up with more funding to help reverse the economic downturn in recent months. The fiscal injection from the central bank’s profit submission will be depleted soon, and the quota for local government bond issuance will be used up shortly.

The impact of the rate cut has not yet materialized, and the financial risks associated with a depressed real estate sector are far from being resolved. We expect that more monetary easing measures will be announced, especially those targeted to strengthen fiscal expansion for the remainder of the year.

Related themes: CHINA INFLATION

Sarah Y. Tong
Senior Research Fellow at the National University of Singapore

Sarah Y. Tong is a senior research fellow at the East Asian Institute at the National University of Singapore. She holds a Ph.D. in economics from the University of California at San Diego.

Is President Xi’s Dual Circulation Strategy for China Under Threat?

How Much Will the Chinese Economy Be Damaged by COVID-19?

Li Yao
Research Fellow at the National University of Singapore

Li Yao is a research fellow at the East Asian Institute at the National University of Singapore. She holds a Ph.D. in economics from the University of Hawaii at Manoa.

How Much Will the Chinese Economy Be Damaged by COVID-19?

The original report can be read at the Brink’s website HERE.

Southeast Asia tops worldwide e-commerce growth

Southeast Asia consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. Five of them are among the fastest growing ecommerce markets worldwide, comprising half of the top 10.

This article will focus on those five: Indonesia, Malaysia, the Philippines, Thailand, and Vietnam.

Until recently Southeast Asia was an ecommerce laggard and overshadowed digitally by China and Japan. Impediments included poor infrastructure, limited internet availability, and consumer skepticism. Most residents have no computer. But nearly all of them now have mobile devices and thus internet access. Mobile penetration rates for the five countries hover around 100%.

Covid-19 caused a shift in consumer behavior as stores closed in 2020 and 2021. According to a report from Google and Bain & Company, as many as 40 million people in Singapore, Malaysia, Indonesia, Philippines, Vietnam, and Thailand became new internet users in 2020. eMarketer projected the region’s 2022 ecommerce sales growth at 20.6%, the highest in the world, totaling $89.67 billion.

Country Statistics

Unless noted otherwise, the info below is from Statista’s ecommerceDB.

Indonesia, with a population of 278 million, is the region’s largest market for online purchasing with sales of $43.4 billion in 2021 and year-over-year growth of 32%. The top Indonesian marketplaces in the country are Tokopedia (a local firm), Shopee, China-based JD, and Lazada. Indonesia has a 73.7% internet penetration rate. Electronics and furniture are the main product categories.

Malaysia’s population is 32.8 million. 2021 ecommerce sales were $6.3 billion, 15% higher than 2020. Shopee is the most visited marketplace, followed by local platform PGMall, which partners with JD. Electronics and fashion are the top two purchase categories. The country has an 89.6% internet penetration rate.

Thailand, with a population of 70 million, had ecommerce revenue of $10.5. billion in 2021 and year-over-year growth of 28%. JD, Shopee, and Lazada are the most popular marketplaces. Electronics and personal care are the main product categories. Thailand’s internet penetration is 77.8%.

Vietnam has a population of 98.2 million and 2021 ecommerce revenue of $8 billion, 24% higher than in 2020. The top marketplaces are Shopee and two local providers: The Gioi Di Dong and Dien May Xanh. The country has 73.2% internet penetration.

The Philippines, with a population of 112.7 million — second to Indonesia — has relatively low ecommerce engagement. 2021 revenue estimates vary from $5.5 billion (Global Data) to $12 billion (Statista). Shopee and Lazada are the two leading marketplaces. The Philippines has the lowest internet penetration at 68%.

Marketplaces

Lazada, owned by the Alibaba Group, has a presence in Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Once the largest marketplace in the region in terms of customers, Lazada has been overtaken by Shopee.

Nonetheless, LazMall connects shoppers to over 32,000 leading international and local brands. It sells goods in electronics, automotive, fashion, health and beauty, and groceries. It reportedly has the strongest logistics network and fastest shipping in the region. LazMall generates roughly $1.5 billion in annual sales, making it the biggest ecommerce website in Southeast Asia by revenue. Lazada gets over 50 million visitors monthly and offers a custom fulfillment service.

Shopee, founded in Singapore, operates throughout Southeast Asia as well as Taiwan, Brazil, and a few other countries. It began as a consumer-to-consumer marketplace but has evolved into a business-to-consumer model while still offering C2C services. Facing high inflation, in June Shopee laid off staff in Indonesia, Thailand, and Vietnam. It shut down Mexico operations this month.

Shopee has logistics partnerships with local companies where it operates. Its payment system, ShopeePay, is an integrated mobile wallet. In March, Shopee partnered with 2C2P, a global payments platform. The partnership allows ShopeePay as a payment option for 2C2P’s extensive merchant network across the five markets in Southeast Asia.

Tokopedia was founded in 2009 in Indonesia as a C2C marketplace. Tokopedia has evolved to help small Indonesian street vendors sell their products across the country, which consists of 17,000 islands. The site now has 12 million merchants. Last month it introduced GoPayLater Cicil, a buy-now-pay-later service.

Tokopedia works with 13 logistics and fulfillment providers for same-day delivery. Merchants can store their products in Tokopedia warehouses located throughout Indonesia. The company’s advertising platform helps merchants promote their businesses and products.

Practical Ecommerce

Why Inflation Represents an Opportunity for Grocers

During the recession in 2001 and the financial meltdown seven years later, the U.S. Department of Agriculture reported how “Food at Home” consumption grew at the expense of “Food Away from Home.” It’s logical: Stressful financial times make people shift from expensive restaurant dining toward more affordable at-home options.

We’re seeing a similar shift as the cost of living is being pushed up by global supply chain pressures, labor shortages, and climate-impacted food production. This new focus on spending follows two years of disruptions from the COVID-19 pandemic, which also forced people back to their own dining tables — this time for health and safety reasons.

All this eating at home, especially when coupled with how little time people have to prepare meals, provides grocers with substantial opportunities to expand and refine their efforts to provide fresh prepared foods and capitalize on new consumer priorities.

Market indicators are telling the same story today. According to recent numbers from data firm IRI, prepared deli foods are seeing double-digit growth again this year. We expect prepared foods and meal solutions for grocers to continue to represent a strong growth area. Those that invest heavily in them can be expected to see bottom-line benefit, with a broad halo effect anticipated for the rest of the store.

Colleagues at the new Tarleton Aldi store restock the shelves on July 22, 2022 in Tarleton, United Kingdom.

Photo by Christopher Furlong/Getty Images

Fast and Healthy

The key to grocer success in prepared foods is to remember what’s important to consumers: Keep it healthy and easy. The Food Industry Association’s U.S. Grocery Shopper Trends 2022 report shows that three-quarters of consumers take less than an hour to prepare meals, and about half of the decisions about what to eat are based on wellness and finding calm.

How to provide a fresh convenience experience for customers that generates loyalty? Here are four key merchandising plays that make the most of grocers’ unique capabilities:

Step Up Sophistication

Cracking the shoppable “assembly” of the meal combines the simplicity of quick service restaurants with the abundance of grocery shopping — a killer combination. To do that, grocers have to get into the heads of shoppers, understanding price point priorities and tastes. By building a complete assortment in a layout that suggests different ways customers might assemble meals takes pressure off consumers with options to cook or heat and ways to embellish a menu to make it a little special. Ultimately, grocers suddenly become shortcut meal planners.

Even though grocers have a leg up on a lot of the competition, there are still some threats — especially from the meal delivery platforms that consumers relied on during the pandemic.

Innovate Like a Restaurant

We often turn to restaurants not only for convenience, but also for inspiration. We consume a variety of foods through the wide range of restaurants available to us, and the best restaurants keep us inspired by rotating and curating their menus to ensure we’re always delighted and interested. Today, most grocers change their offerings seasonally at best. Yet fresh convenience campaigns offer a natural venue to create an innovation pipeline through recipe variation and new sourcing.

Supercharge Omnichannel

Many retailers avoid making some of their prepared foods available online for fear of disappointing customers if they run out or because of the short shelf life of fresh foods. That means many are potentially ceding share. Instead, grocers need to invest in more visibility online, with leading retailers providing real-time transparency into what’s available in store. The most capable players take this a step further and allow customers to customize their orders as if they are at a restaurant.

Become a Destination

Many consumers don’t associate all grocery stores as places to go for high-quality prepared foods because of unappealing displays. To compete with restaurants you have to look more like them using the backdrop of bountiful produce, exposed kitchens, authentic rotisseries, and busy staffs to make offerings more compelling.

Changing Landscape

Even though grocers have a leg up on a lot of the competition, there are still some threats — especially from the meal delivery platforms that consumers relied on during the pandemic. They were the biggest winners, with U.S. sales of food and beverages from restaurants ordered via digital services increasing 187% between 2019 and 2021 and their prices gradually getting closer to grocery.

Related themes: INFLATION STRATEGIC INNOVATION

Marc Rousset
Partner at Oliver Wyman, Retail and Consumer Goods Practice

Marc Rousset is a partner in Oliver Wyman’s retail and consumer goods practice, based in Boston. He has supported many clients undergoing organizational improvements, digital and artificial-intelligence transformations, targeted margin improvement programs, and end-to-end turnarounds. Retail is continually undergoing seismic shifts, and Rousset helps organizations adapt to these changes and remain competitive within their respective markets.

Why SEC Emissions Rule May Benefit Retail and Consumer Goods

Corey Rochkin
Principal at Oliver Wyman, Retail and Consumer Goods Practice

Corey Rochkin is a principal with Oliver Wyman’s retail and consumer goods practice, based in Chicago. There, Rochkin works with diverse clients, helping them define and implement their corporate strategies and improve their commercial effectiveness, operations and financial governance.

Tanja Ebner
Principal at Oliver Wyman

Tanja Ebner is a principal with Oliver Wyman, based in Los Angeles. She has more than 10 years of experience in the retail and consumer goods industry in Europe and the Americas, with particular expertise in the areas of business transformation, operational effectiveness and customer satisfaction.

The original report can be read at the Brink’s website HERE.

Taiwan-Lithuania Business Club launched in Taipei

Taiwan’s Chinese International Economic Cooperation Association (CIECA) launched the Taiwan-Lithuania Business Club on September 15, with Lithuanian and Taiwanese dignitaries and business delegations in attendance.

The establishment of the club was sponsored by the Ministry of Economic Affairs’ Bureau of Foreign Trade.

Among attendees at the launch were bureau Deputy Director-General William Liu and Lithuanian Vice Economy and Innovation Minister Karolis Žemaitis.

A delegation made up of representatives from the Baltic state’s bioscience and laser technology industries also attended as part of the group’s seven-day visit to Taiwan, as were individuals from the Lithuanian Confederation of Industrialists, the Export-Import Bank of the Republic of China, and Fortress Group, a Taiwanese company based in Lithuania.

Addressing attendees, Žemaitis said in his short stay in Taiwan, he has already witnessed the great strides companies from both nations have made to bring the countries together and ensure mutually prosperous cooperation and partnerships.

Meanwhile, Liu praised the Baltic state’s innovative companies, referencing a visit to Lithuania where he witnessed the recycling of plastic bottles into materials used in EV bus production.

The club was founded to explore the potential of Lithuanian innovation and to cement partnerships in investment, trade and industry, Liu added.

Speaking with CNA, Fortress Group founder Waylon Yeh said entering the Lithuanian market also provides a new entry point into Eastern European nations and perhaps even the European Union.

Yeh, who is one of Taiwan’s first entrepreneurs to invest in the Baltic state, explained that Lithuania has an abundance of resources that provide opportunities to expand into other European markets, even though it might take some time to achieve.

In related news, the Ministry of Foreign Affairs MOFA announced that a Lithuania Lifestyle Festival will be held from Sept. 16-29 at the Breeze Super Nanshan Store.

MOFA Department of International Cooperation and Economic Affairs (ICEA) Deputy Director-General Isaac Chiu said thanks to governmental and private sector efforts in both countries, bilateral relations between Taiwan and the Baltic state will expand from business-to-business to business-to-consumer.

The festival is an example of this achievement, as it is organized by ICEA and Lithuania’s Public Institution Rural Business and Markets Development Agency (LitFOOD), Chiu said.

The festival will promote products from 12 of Lithuania’s lifestyle companies, as well as featuring the signing of a Memorandum of Understanding between the ICEA and LitFOOD on Sept. 16.

CNA

Vietnam and India look to deepen economic cooperation

Bilateral trade volumes between both countries have registered impressive growth in recent years. (Bloomberg)

Vietnam came calling for investments to India as representatives of the country’s Khanh Hoa Province visited New Delhi. Speaking at an event organised by the Indian Chambers of Commerce and the Foreign Ministries of India and Vietnam, representatives from both countries set their sights squarely on achieving USD 15 billion in bilateral trade this year.

Vietnam’s Deputy Chief of Mission in India, Do Thanh Hai, pointed out that the visit marked one of the first visits by a provincial delegation from Vietnam seeking increased investment and trade ties.

Bilateral trade volumes between both countries have registered impressive growth in recent years. According to the Indian Embassy in Hanoi, trade rose by 27% and crossed USD 14 billion during the last financial year. India’s trade volumes with Vietnam are beginning to rival those of established partners like Indonesia and Malaysia.

Vishwas Vidhu Sapkal, Joint Secretary (South) in the Ministry of External Affairs, was optimistic about the future of trade ties. The future of economic ties, he felt, lay in building reliable, resilient supply chains, facilitating long term investments and greater market access while also working to upgrade the regional trade structure. Mr. Sapkal pointed to the upcoming talks on the revision of the India-ASEAN trade in goods agreement as a particular opportunity to expand bilateral trade. In the decade since that agreement was signed, Indo-Vietnamese bilateral trade grew at a staggering Compounded Annual Growth Rate (CAGR) of 19.11%. Only India’s rather miniscule trade with Laos grew faster during the same period.

Mr. Sapkal pointed to agriculture, energy, pharmaceuticals among industries as India’s particular strengths in the trade relationship while. Vietnam’s strengths, by contrast, lay in chemicals and construction.

Speakers at the event pointed to prospects for the future. India’s reputation as a destination for medical tourism and ability in human resource development in fields like information technology would be particularly helpful to Vietnam. The Indian Technical and Economic Cooperation (ITEC), an initiative by the Indian government, has played a key role in this regard in Southeast Asia.

Tourism was cited as another possible avenue for growth in economic activity. In 2019, approximately 170,000 Indians visited Vietnam.

According to the ministry of External Affairs, “India’s investments in Vietnam are estimated at around US$ 1.9 billion including investments routed through third countries.” These investments are to be found in “energy, mineral exploration, agro-processing, sugar, tea, coffee manufacturing, agro-chemicals, IT and auto components.” By contrast, an MEA briefing note added, “Vietnam has six investment projects in India with a total estimated investment of US$ 28.55 million, primarily in the areas of pharmaceuticals, information technology, chemicals and building material.”

Mint

Indonesia set to pass new Data Privacy Law after spate of leaks

Data operators could face up to five years in jail and a maximum fine of 5 billion rupiah ($337,000) for leaking or misusing private information, according to Indonesia’s new data privacy bill set to be passed by parliament.

Institutions may collect personal information for a specific purpose but must erase the record once that purpose has been met, according to a copy of the draft law obtained by Bloomberg. Relevant parties have two years to comply with the rules once it becomes law.

Indonesia is under pressure to pass the law to improve its cyber security as breaches at companies and government institutions intensified in the past year.

The Personal Data Protection bill states that consent must be obtained from each individual for records such as name, gender, and medical history, with a clear agreement in place on how the data will be used, along with accountability measures. Each person has the right to withdraw their consent and receive compensation for any breaches. Anyone that fabricates personal data may face up to six years in jail and as much as 6 billion rupiah in fines.

Enacting the data privacy law is even more important as Indonesia’s digital economy is set to grow to $146 billion by 2025, according to the latest report by Alphabet Inc.’s Google, Singapore’s Temasek Holdings Pte. and global business consultants Bain & Co. Cloud data provider PT DCI Indonesia said in March a new project to set up a data center in Bintan will only proceed once the government issue a regulation on data safety and protection.

The passing of the bill would make Indonesia the fifth Southeast Asian country to have a specific law on personal data protection after Singapore, Malaysia, Thailand and the Philippines.

Bloomberg

FBCCI signs MoU with AUW to award annual scholarships

The Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) will award scholarships to 30 female students per year for higher education giving them an opportunity to study at the Asian University for Women (AUW).

The apex trade body of the country on Saturday signed a memorandum of understanding (MoU) with the AUW, reports UNB.

FBCCI President Md Jashim Uddin and AUW Vice-Chancellor Dr. Rubana Huq signed the MoU on behalf of their respective organizations. The MoU will remain effective for five years initially, said the FBCCI.

Asian University for Women seeks to graduate women who will be skilled and innovative professionals, service-oriented leaders in the businesses and communities in which they will work and live, and promoters of intercultural understanding and sustainable human and economic development in Asia and throughout the world.

The FBCCI came forward to enable underprivileged women to access higher study as part of their responsibility to society, the FBCCI chief said while speaking at the signing ceremony.

This initiative will improve women empowerment and participation in the country’s development process, the President noted.

Jashim said other countries maintain an intimate relationship between academia and industry and Bangladesh also needs to enhance the collaboration. “Therefore, FBCCI has established linkages with BUET and North South University.”

AUW Vice-Chancellor Rubana Huq said underprivileged women have to struggle with many hurdles in accessing higher studies. “Her university aims at inclusiveness to ensure that no women are left behind. Currently, 1300 female students from 19 countries are studying in Asian University for Women,” she informed.

FBCCI Senior Vice President Mostofa Azad Chowdhury Babu remembered the significant contributions of the former president late Annisul Huq to the development of trade and commerce and the construction of different chambers’ infrastructure.

The founder and CEO of Asian University for Women Kamal Ahmed said that no country can move forward leaving half of the population behind. He also called for ensuring quality education and the universal right to higher education.

Among others, FBCCI Vice President Md. Amin Helaly, Salahuddin Alamgir, Md. Habib Ullah Dawn, MA Razzak Khan Raj, Directors and Secretary General Mohammad Mahfuzul Hoque were also present at the signing ceremony.

The Financial Express

Thailand, Vietnam, Myanmar deepen Russia ties to blunt economic woes

Oil tanks at a petroleum depot in the port of Vladivostok, Russia. Myanmar starts importing Russian fuel oil as early as September. © Reuters

From wooing more Russian tourists to boosting trade, Southeast Asian nations are bolstering economic ties with Russia in hopes of curbing inflation and spurring their recovery from the COVID-19 pandemic.

The U.S. and European countries have imposed sweeping sanctions on Russia in response to its invasion of Ukraine. But these efforts could be hindered by emerging nations as they prioritize addressing their own economic headwinds.

Thailand has said Russian flag carrier Aeroflot will resume regular service between Moscow and Phuket at the end of October. Phuket is a popular destination among Russian tourists, but the route was suspended after the war in Ukraine began.

The resumption will benefit Thai tourism, said Yuthasak Supasorn, governor of the Tourism Authority of Thailand.

With China continuing tight travel restrictions under its “zero COVID” strategy, Russia accounted for the most foreign tourists to Thailand in January and February, before the invasion. Thailand aims to attract 1 million Russian tourists this year, even as the European Union raises hurdles for such visitors.

Thailand and Russia also agreed to expand bilateral trade in a May meeting, looking to hit $10 billion in 2023 — nearly four times as much as in 2021. Thailand, which chairs the Asia-Pacific Economic Cooperation summit this year, exports cars and food to Russia while importing crude oil and fertilizer.

Meanwhile, Vietnam and Russia held talks Aug. 18 on expanding wheat exports, Russian authorities said. Russian shipments to Vietnam plunged below 190,000 metric tons in 2021 from 2.6 million metric tons in 2018 after potentially invasive thistle seeds were found in the wheat.

Russia intends to ship a trial batch of thistle-free wheat to Vietnam as early as September. Wheat prices are surging as the war disrupts shipments from Ukraine, a leading producer alongside Russia. The grain is used widely in Vietnam to make bread and noodles, and Hanoi likely hopes to curb prices in the country by increasing imports from Russia.

Russian Foreign Minister Sergey Lavrov visited Vietnam in July and agreed to bolster bilateral ties on a wide range of fields during a meeting with Vietnamese counterpart Bui Thanh Son.

Thailand and Vietnam are part of the Association of Southeast Asian Nations, which holds neutrality as a core tenet. The communique from the ASEAN foreign ministers meeting in August refrained from criticizing Russia by name for its invasion of Ukraine, and Singapore is the only member of the 10-nation group to impose sanctions on Moscow.

Myanmar, whose military took control of the government in February 2021, has grown especially close to Russia in recent months. The country starts importing Russian fuel oil as early as September under a deal discussed when Myanmar military leader Min Aung Hlaing visited Russia in July, a military spokesperson said.

Min Aung Hlaing arrived in Vladivostok on Sept 4 to attend the Eastern Economic Forum, his third trip to Russia since taking power. He will meet with Russian officials to further bolster bilateral cooperation on the economy and other areas, Myanmar state media report.

Gasoline prices have more than tripled in Myanmar since the military takeover, due to the depreciation of the local kyat combined with surging crude prices. The military wants to curb inflation, which is only expected to exacerbate public resistance to its control.

Nikkei Asia

What’s the Latest With Supply Chains?

The turbulence in global supply chains may have diminished since its peak last year, but considerable kinks still remain, and it’s estimated that as much as 50% of the current inflation is being caused by supply chain blockages.

Nonetheless, Donnie Williams, executive director of the Supply Chain Management Research Center at the University of Arkansas, says global supply chains have proved more resilient than many expected and are weathering all the changes in workplace practices.

WILLIAMS: The new normal is a constant state of uncertainty. Certainly, things have stabilized some, certainly there’s certain sectors where you’ve seen demand slow down basically in response to some of the inflationary pressures that we have. That’s allowed some of the easing of some of the pressures that we’ve seen on ports and infrastructures.

One of the problems now is that there’s quite a bit of inventory build-up, particularly in our retail supply chains, on our warehousing distribution networks. And sometimes there’s a mismatch between what customers are demanding versus what retailers are holding. And there are rational behaviors from companies that may seem irrational because they don’t want to miss the opportunity to serve a customer, and the effect is to increase inventory to account for supply chain disruptions. We call this the “bullwhip effect.”

A crane operator works at the Garden City Port Terminal on November 12, 2021 in Garden City, Georgia. The terminal recently completed construction of the Mason Mega Rail Station, doubling the Port of Savannah’s rail lift capacity to one million containers per year.

Photo by Sean Rayford/Getty Images

Throwing Darts in the Dark

However, I think there’s been a misunderstanding about supply chains in general, particularly from the U.S. perspective. If you look at the trade volumes that came through our ports over the past couple of years, it was more than we’d ever seen before, with an increase of 28% more imports in April of 2022 from April 2019. This increase hasn’t let up in two years. And if you think about all the pressures of people working from home, of people being sick and having to stay away from work and the stresses that created on labor, yet these supply chains still moved more and brought in more than we ever had before.

There was this big fear that we’d run out of food at some point, but that never happened. And I think that demonstrates that the supply chains were pretty resilient and held up better than what most people actually give them credit for.

Companies exposed themselves to too much risk by single sourcing their raw materials or manufacturing capabilities, or not considering the total cost to deliver a product to the customer, which includes transportation, holding and other various costs outside of just the production cost.

Now, it’s a matter of trying to navigate what’s coming up in the next year to two years. I heard one executive say that trying to anticipate demand moving forward is like throwing darts in the dark, because you can’t really look back at historical data — we don’t have historical data that demonstrates the environment that we’re in now.

BRINK: Where are the top three choke points at the moment?

WILLIAMS: We are still dealing with the uncertainty around lockdowns in China, and the systemic global effect that has on ports around the world. And there are some port backups in Savannah, those are elevated again, while the west coast ports seem to be getting caught up.

The second choke point I am concerned about right now is the supply chain labor market.  There has been increasing demand for blue and white collar talent in the supply chain for the last 10 to 15 years. This is causing challenges in capacity, whether you are talking about trucking, distribution or manufacturing.

Then, I think in terms of raw material shortages. The war in Ukraine created bottlenecks in the commodity market, particularly food commodities as Ukraine is a major global supplier of fertilizer and grains. And the semiconductor and precious metals sector is a big concern as companies are still working out plans to handle the shortages for these raw materials in many industries.

Agility Is the Key Word

I don’t think it’s wise for companies to abandon strategies that have over 30 years of research and practice, however, this once-in-a-generation event has caused companies to reflect on some basic theoretical principles in supply chain management, particularly the idea of agility. Companies are taking a stronger look at that, as the reality is that the closer my manufacturing product is to my customer, the more agile I can be because I don’t have to produce as much inventory in order to meet the needs of those customers.

In many cases, companies exposed themselves to too much risk by single sourcing their raw materials or manufacturing capabilities, or not considering the total cost to deliver a product to the customer, which includes transportation, holding and other various costs outside of just the production cost. This is where I believe companies are reevaluating their supply chain network strategies.

BRINK: Does that mean nearshoring is happening in your view?

WILLIAMS: That depends on the products. It depends on where my raw materials supplies are. This is something that we’re going to find out with these semiconductors: Where are the precious metals located that make up the raw materials for these things? In many cases, the U.S. doesn’t have those raw materials, and they’re not that close. And so in those cases, it may make sense for that particular supply chain to have a global footprint. This is relevant in many industries, whether you are talking about pharmaceuticals, perishable food or precious metals.

People tend to misunderstand and misuse the terms just-in-time, lean manufacturing and lean supply chains. It’s important to understand the changing dynamics of customer demand, so that I can respond to it quickly. If I have too much inventory, like we’re seeing now, that slows down my operations, and then I can’t respond.

Lean is really about getting rid of waste, so that I can understand where my processes are being hindered, where bottlenecks are, and I can implement process improvements that can reduce friction in the flow of goods. This allows a company to respond quicker to the consumer with the actual products that they need. So retailers with excess inventory are going to be discounting all of these products that are clogging up their supply chains, because they are creating bottlenecks and reducing the flow of goods to the consumer.

I don’t think just in time is going away. And I don’t think companies or shareholders or the general public want companies to hold more inventory, because that’s going to drive the cost of goods up, which is going to drive prices up.

Related themes: SUPPLY CHAINS TRADE

Donnie Williams
Executive Director of the Supply Chain Management Research Center at the University of Arkansas

Donnie Williams is an associate professor of Supply Chain Management and the executive director of the Supply Chain Management Research Center in the Sam M. Walton College of Business at the University of Arkansas. His work has been published in various academic and practitioner journals, including the International Journal of Physical Distribution & Logistics Management, Transportation Journal, Marketing Theory and Practice, Transportation Management Journal, Supply Chain Management Review and Supply Chain Quarterly.

The original report can be read at the Brink’s website HERE.

Which Way Is Inflation Heading?

Jerome Powell, Chairman, Board of Governors of the Federal Reserve System, arrives to testify before the Senate Banking, Housing, and Urban Affairs Committee on June 22, 2022 in Washington, DC. Powell testified on the Semiannual Monetary Policy Report to Congress during the hearing.

Photo by Win McNamee/Getty Images

The latest economic data shows inflation in the U.S. running at 8.5% in July. This is a drop from 9.1% in June. July’s retail sales figures were flat, which some analysts interpreted as a hopeful sign. After stripping out food and fuel costs, prices climbed by 5.9% through July, matching the previous reading, according to The New York times.

Another sign that inflation may be decelerating in the U.S.: Gas prices have fallen by $1 a gallon, back to the same levels as March, after peaking in June.

However, Federal Reserve Chairman Jerome Powell has signaled a willingness to inflict “some pain” on households and businesses in order to maintain the pressure on inflation. His speech led to the Dow dropping by 1,000 points, and market analysts believe that the Fed could raise interest rates by as much as 0.75% when it next meets later this month.

In the U.K., inflation hit 10.1% in July, and the Bank of England is predicting that it could reach in excess of 13% in the final three months of this year and remain “very elevated” for much of 2023. Goldman Sachs says it could rise as high as 20% in the winter if energy prices continue to climb. However, the Bank of England expects inflation “to slow down next year and be close to 2% in around two years.”

The Primary Drivers of Inflation

According to the Bank of England, there are three primary reasons for inflation in the U.K. The biggest is higher energy prices caused by Russia’s invasion of Ukraine, which has led to a doubling of the price of natural gas since May.

A second reason is COVID, which is still causing disruptions in the supply chain and an increase in demand for consumer goods at the same time, causing prices to rise. The third is that, in the U.K., there are more job vacancies than there are people to fill them, as fewer people are seeking work following the pandemic. “That means that employers are having to offer higher wages to attract job applicants. And prices for many services have gone up.”

Higher wages in the U.K. also appear to be creating an inflationary spiral, with a shortage of workers causing a rise of wages, which is driving up prices, which in turn fuels more wage rise demands. In the rest of Europe, there has been more wage restraint so far with most sectors in Germany, for example, agreeing to limit wage increases to a range between 3 and 4.5%.

China Is Cutting Its Interest Rates

In most parts of the world, inflation appears to still be climbing. In the eurozone, inflation hit a new high in August at 9.1%. Germany’s central bank chief is predicting prices could hit 10% by the end of the year, primarily because of the cutoff in Russian gas. Prices in Australia rose by 6.1% last month, in South Africa by 7%, 14% in Russia, and in Brazil by 10%, although this is the lowest it’s been since December.

Turkey’s inflation rate is one of the highest, at around 80%. Even so, the Turkish president is calling for a cut in interest rates, claiming that it is interest rate hikes that cause inflation, the opposite of conventional economic thinking.

In China, the Central Bank has been cutting its interest rates, suggesting that it is more concerned about slowing economic growth than inflation. The Chinese economy is being hit by extended COVID lockdowns and significant problems in the country’s real estate market. Some analysts are even predicting an annual growth rate of less than 3% in the country, which would be the lowest level in two decades.

Risk of Stagflation

One hopeful piece in the puzzle has been a recent drop in food prices. Wheat, corn and palm oil are all back to their price levels of six months ago, before the Ukraine conflict. The main driver of this, ironically, appears to be a bumper wheat crop in Russia which has increased the amount of Russian grain exports. However, many developing countries will still suffer high food prices because of the decline of their currencies against the strong dollar.

Source: The Economist;  Data sources: FT, Refinitiv Datastream; S&P Global Commodity Insights

There is concern that the global economy could become stuck in a stagflationary loop of long-term elevated inflation and low economic growth.

The IMF has lowered its economic growth predictions in the U.S. to 2.3% this year and 1% next year. In China, the IMF estimate is down to 3.3% this year — the slowest in more than four decades, excluding the pandemic — and in the euro area, the growth rate is revised down to 2.6% this year and 1.2% in 2023, reflecting spillovers from the war in Ukraine and tighter monetary policy. The European Central Bank is due to announce its next rate rise this week.

BRINK Editorial Staff

The original report can be read at the Brink’s website HERE.

Permanent migration increase a win for Australia: ACCI

A boost to Australia’s permanent migration intake by 35,000 up to 195,000 a year, and a $36.1 million increase to departmental funding to clear visa backlogs will be instrumental in resolving Australia’s chronic skill shortages.

Welcoming the announcement, ACCI chief executive Andrew McKellar said the policies represented a significant advocacy win for the chamber movement which had been campaigning for an increase to the migration cap since August last year.

“Changes announced by the government are a win, not just for businesses, but for all Australians,” Mr. McKellar said.

“Businesses of every size in every sector are reporting significant barriers to getting the skilled workforce they need, forcing them to operate below capacity or close their doors entirely.

“With labour and skill shortages at their most severe levels in 48 years, raising the migration intake and addressing protracted visa processing times will be essential in addressing unmet labour demand.

“Australia has grown and thrived because we have attracted the most talented people to our shores.  However, in recent years, the system has fallen short on delivering the demands for society, our businesses, and our workers.

“As the global race to attract skilled migrants heats up, we cannot risk getting left behind.

“Government must make it easier to access the best in global talent and expertise. For business, this means access to a simple, affordable, and responsive migration system.

ACCI News Release

Is This the West’s Answer to China’s Belt and Road Initiative?

German Chancellor Olaf Scholz speaks to the media at the last day of the three-day G7 summit at Schloss Elmau on June 28, 2022 near Garmisch-Partenkirchen, Germany. Leaders of the G7 group of nations came together under the motto: “progress towards an equitable world” and discussed global issues including war, climate change, hunger, poverty and health.

Photo by Christian Ender/Getty Images

This summer, the G-7 launched the Partnership for Global Infrastructure Investment (PGII) to mobilize $600 billion for middle- and low-income countries in infrastructure investments.

It is designed to be a counterweight to China’s long-standing Belt and Road Initiative (BRI), but previous initiatives of the U.S. and EU like this have not met with much success. Elizabeth Losos is a senior fellow at the Nicholas Institute for Energy, Environment & Sustainability at Duke University.

LOSOS: After China announced the Belt and Road Initiative in 2013, it has dominated this space — infrastructure investment in emerging and developing economies — ever since. Chinese financing has vastly eclipsed that coming from the U.S. and EU and even outpaced funding from multilateral development banks like the World Bank.

Over these last nine years, China has gained a lot of economic advantage. At the same time, it has used the Belt and Road Initiative to build soft power and strengthen political alliances with other countries in Asia, Africa and Latin America.

A Counterweight to BRI

Earlier this summer, the G-7 rolled out the Partnership for Global Infrastructure Investments in part to provide a counterweight to China’s Belt and Road. PGII hopes to mobilize investments into low- and middle-income countries for four main areas: clean energy, digital connectivity, health, and gender equality. Except for gender equality, these sectors happen to be the areas where BRI has also been expanding in recent years.

This new initiative differs from China’s BRI in two key ways: First, PGII aims to promote high-quality infrastructure investments that reflect the Western values. By “high-quality,” the G-7 has something very specific in mind: infrastructure with low environmental risk, social risk, governance risk. The implication is that these attributes would distinguish PGII investments from BRI investments, which have been criticized because some of its loans have led to crippling debt burdens, and others resulted in significant environmental destruction.

One of the recent developments that has not been widely recognized is that the Belt and Road has changed enormously since its inception almost a decade ago.

Transparency is one of the key features promoted by PGII. The initiative’s promoters argue that such requirements will build confidence among investors and build confidence within borrowing nations that they are not taking on debt levels that they can’t sustain.

PGII builds on similar past efforts by G-7 nations — such as the U.S.’s Build Back Better World, the EU’s Global Gateway Initiative, and the U.K.’s Clean Green Initiative — whose impact to date has been modest at best. To improve on these, PGII is expected to coordinate investments by G-7 countries to enhance efficiencies. For example, the EU might cover certain areas of Africa, while the U.S. would focus more on Southeast Asia or Latin America.

Private Sector to the Fore

Secondly, the G-7 initiative is distinctive in that most of its capital will be raised through the private sector in the form of public-private partnerships. By comparison, Belt and Road investments come largely from the Chinese government and flow through state-owned enterprises. PGII aims to mobilize $600 billion, but public financing is going to be just a fraction of that.

The theory behind this is that ample private-sector funding is already available, particularly in pension funds and insurance funds with ESG mandates (that is, a requirement that investments have low environment, social, governance risks). But these institutional investors are not comfortable with the perceived high level of risk in emerging and developing economies.

Without the capability of identifying what are truly high-quality projects with low ESG risks, they are hesitant to invest their funds. As a consequence, high-quality infrastructure is not being built in the countries that are in most need of it.

The question is, if private-sector funds have been sitting on the sideline, what is it about PGII that will unlock these funds so that they will reach the level of $600 billion over five years?

ESG Standards Are Emerging in Infrastructure

In the last year, two different global infrastructure standard initiatives have been launched to help private investors and governments more easily and reliably identify sustainable, high-quality infrastructure. One of them, called FAST-Infra, is being led by financial-sector institutions like the World Bank and firms such as HSBC.

The Blue Dot Network, the second initiative, is being developed by the governments of the U.S., Australia, and Japan, and is endorsed by the G-7. Blue Dot Network’s standard is broader than FAST-Infra’s, covering not just ESG but also other aspects of quality infrastructure.

The label or certification offered by these initiatives would be similar to a Good Housekeeping Seal of Approval. Investors could rely on them to easily identify projects that have ESG and other quality characteristics and feel confident that they were not being misled through greenwashing.

BRINK: Do you think PGII will be a game-changer in bringing scaled private investment to Africa?

LOSOS: I think PGII is a serious and significant undertaking, but I am not confident it’s going to reach the level that they’ve put forward. A huge demand already exists and will continue to increase. This is not just demand in Africa for infrastructure investments, but also by private-sector investors seeking projects that can produce solid returns with acceptable levels of risk in Africa.

The BRI Has Changed Significantly

One of the recent developments that has not been widely recognized is that the Belt and Road has changed enormously since its inception almost a decade ago. Chinese overseas infrastructure investments peaked about five years ago. Since then, China has reduced its lending for large infrastructure projects by more than 90%.

Part of this shift seems to have resulted from the large number of unprofitable loans in the early rounds that were invested in high-risk projects, as well as the bad international press surrounding some Belt and Road projects that had devastating environmental and debt outcomes.

If both PGII and BRI follow through in trying to reach their ambitious objectives of quality and green lending, this could set off a “race to the top.” If both were to compete to provide high-quality, green infrastructure in emerging and developing markets, that would be a win-win-win.

Related themes: CHINA INFRASTRUCTURE INTERNATIONAL RELATIONS INVESTMENT TRADE

Elizabeth Losos
Senior Fellow at the Nicholas Institute for Energy, Environment & Sustainability at Duke University

Elizabeth Losos is a senior fellow at the Nicholas Institute for Energy, Environment & Sustainability at Duke University. She leads a team exploring policies to mitigate the environmental and social risks from large-scale infrastructure projects in the transportation and energy sectors. She holds a Ph.D. in biology and a master’s degree in public administration and international affairs from Princeton University and a bachelor’s degree from Harvard University.

The original report can be read at the Brink’s website HERE.

How the Russia-Ukraine Conflict Is Impacting Insurance Across Industries

Nearly six months into Russia’s invasion of Ukraine, the conflict’s long-term impact is coming into focus. The conflict prompted many multinational corporations to voluntarily exit or sever business ties with Russia and triggered a broad set of international sanctions. Now, much of the focus has shifted from specific developments in Ukraine and Russia to economic inflation globally and a fracturing geopolitical order.

Businesses and governments should not lose sight of the indirect consequences of the Russia-Ukraine conflict, which may persist for a long time. This includes the continuing risk arising from the large volume of new economic, financial and trade sanctions; the global impact arising from the reduced availability of key commodities such as oil, fertilizer and grain; and potential insurance claims made as a result of the conflict.

A representative working with the joint inspection team prepare to board the Osprey S vessel anchored in the Marmara sea to conduct an inspection on August 18, 2022 in Istanbul, Turkey. The Osprey S left the Ukrainian port of Chornomorsk on the 16th of August carrying 11,500 tons of grain destined for Turkey.

Photo: Chris McGrath/Getty Images

Claims under political risk and trade credit insurance policies typically take time to develop; the volume of claims associated with the conflict is nearly certain to increase, although that remains to be seen. Below is an industry-level look at how the conflict is introducing new risks to business operations and impacting insurance as a result.

Aviation and Space

Sanctions by the U.K., EU and others prohibiting the supply of aircraft or parts to Russia as well as related financing or insurance, followed by a Russian expropriation of foreign-leased aircraft, have led to multiple aircraft stranded in Russia. This has resulted in significant aviation hull losses, which have already led to aviation hull war insurance rates spiking by approximately 200%, on average, and underwriters re-examining coverage.

The broader aviation insurance market may harden, further straining the aviation industry, which is struggling to recover from the impact of the pandemic.

The aviation and space sanctions have also led to international insurance coverage for satellite launches and deployment being unavailable for Russian-built satellites and launch sites within Russia. Between 2017 and 2021, Russia accounted for about 16% of global launches.

In addition, specialist Russian aircraft carried a significant proportion of satellites made and delivered outside Russia, which is no longer possible.

This reduction in satellite carrying capability may delay launches for years, resulting in a reduction in space insurance premiums that may impact rates for launches outside Russia.

Marine

Damage to marine hulls, ports, and cargo will generate losses in Ukrainian ports. Notably, insurance coverage for land transit of cargo in Ukraine is no longer available.

Global supply chains and the flow of commodities may face further disruption as a direct result of the hostilities in Ukraine and indirectly through sanctions and insurance market tightening.

The significant increase in sanctions and trade controls on Russia impact a wide variety of goods being supplied to or from Russia. The EU, U.K., and some other countries have also prohibited the financing and insurance of impacted exports and imports.

The differences between various countries’ sanctions regimes have added an additional measure of complexity and risk of doing business internationally.

Companies that operate internationally need to consider not only sanctions that apply to them but also how local sanctions may apply to other parties in their supply chain may impact their business, as well as their banks, lenders and insurers.

It should also be noted that the marine insurance industry had in recent years been put on notice by U.S. and U.K. regulators to increase their monitoring of the vessels and goods they insure in order to identify vessels that may have sanctions ownership or be involved in sanctions evasion.

For the time being, all marine insurance lines remain relatively stable, from both an overall capacity and a pricing perspective, with the exception of increased hull and cargo war rates.

Energy and Power

The energy insurance market is seeing an immediate impact on its premium volume due to sanctions on Russian oil and EU attempts to reduce reliance on Russian energy. As of December 2021, Russia accounted for nearly 10% of world petroleum production. Germany and other EU members that previously bought Russian natural gas and oil are trying to line up alternative energy supplies, including possibly delaying original coal phase-out plans or revamping already shutdown coal power plants (when feasible). Meeting power demand may increase the need for new upstream energy investments and energy infrastructure outside of Russia.

EU sanctions prohibiting EU companies from insuring any Russian oil shipment are due to fully come into effect by the December 5, 2022, raising concerns of even higher energy prices. The U.K. has so far held back on a similar ban, only restricting imports into the U.K. from the end of the year. Changes to U.K. and EU positions depend on the outcome of a U.S. attempt to gain international agreement on an oil price cap, which would allow insurance for oil shipments under a certain price.

One of the long-term consequences of the Russia-Ukraine conflict is the acceleration of the transition to renewable energy sources. Energy market observers forecast that mature economies are entering a “capex supercycle” in which capital expenditures to support the transition to a lower-carbon economy are expected to be enormous. That shift is likely to increase demand for insurance coverage for these new industries.

Credit and Political Risk

Claims are beginning to emerge for Russian and Ukrainian trade credit, political risk, and structured credit policies issued before sanctions were imposed. More trade credit and structured credit claims for Russia are anticipated in the second half of 2022 and the first quarter of 2023. Political risk claims are expected from Russia in the fourth quarter of 2022 and through 2023.

Significant political risk claims for war and confiscation in Ukraine have emerged. Since late February, few — if any — new political risk or credit insurance policies have been available for Russia, Ukraine or Belarus.

The Russia-Ukraine conflict underlines the increased volatility in geopolitics in recent years, which creates complexity for managing risk in supply chains and in evaluating the cost of that risk. This is increasing demand for trade credit, political risk, and structured credit insurance to respond to the heightened risk environment and to secure liquidity and reduce capital costs.

Sanctions and Supply Chain Shifts

Sanctions and trade controls have significantly increased. While media reporting has focused on the aviation and marine industry, sanctions have impacted a large variety of goods and services being supplied to Russia.

Companies need to keep up with regular changes to sanctions, the differences in sanctions regimes between the EU, U.K., and U.S., as well as other countries joining the effort such as Singapore, Australia and Canada. This increases the complexity for international companies looking at which sanctions may apply in all the different countries in which they operate.

Many companies are also seeking new suppliers, points of manufacture, and routes of shipment. A major shift in thinking is taking place, from “just in time” supply chain deliveries to “just in case” supply chain risk management. The combination of these issues with geopolitics and inflation means that values at risk have increased in less well-known locations, often with new suppliers and changing customers.

D&O Liability

The conflict has signaled a shift in corporate reactions to events that trigger moral/ethical decisions. Over a thousand companies have announced they are leaving or voluntarily curtailing operations in Russia.

The exodus of Western companies from Russia illustrates how public pressure can amplify risks for company decisions intended to demonstrate their commitment to environmental, social, and governance (ESG) programs. For example, choosing to either continue doing business in a country perceived as acting contrary to ESG values, or to exit and trigger a financial loss, may complicate directors and officers (D&O) liability risks. Russia has also threated insolvency proceedings and criminal liability for companies seeking to close their Russian operations.

The Russia-Ukraine conflict has exacerbated post-COVID-19 economic risk, accelerated inflation, and drawn a line under recent Western economic orthodoxy. While many Western companies have announced plans to divest assets in Russia, often at significant expense, how organizations handle future decisions to exit countries — and whether those decisions trigger derivative actions that may be covered under D&O liability insurance — remain unknown.

This article first appeared on marsh.com

Related themes: GEOPOLITICAL CONFLICT SUPPLY CHAINS UKRAINE

Nick Robson
Global Specialty Head, Credit Specialties at Marsh

Nick is the global leader of Credit Specialties for Marsh, leader of the Marsh Parametric business and member of the Marsh global specialty executive committee. He has worked in the areas of credit, political risk, surety, security, contingency and alternative risk for 31 years and has worked extensively to deliver risk advice and mitigation solutions for financial institutions, trading companies, industrial and infrastructure groups and public agencies in every region of the world. He has spoken at many risk, insurance and finance forums and conferences about strategic geopolitical, macroeconomic and developmental risk issues. He is also engaged as a member of the WEF working group focused on financing the transition to a lower carbon economy.

The original report can be read at the Brink’s website HERE.

ICCIMA stresses need for establishing railway regulatory body

During a meeting of the Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA)’s Transport and Logistics Committee, the members of the committee stressed the need for establishing a regulatory body in the country’s railway industry, the ICCIMA portal reported. The attendees of the mentioned meeting

emphasized that necessary provisions should be made in the Seventh Five-Year National Development Plan for the operation of a regulatory body in the railway industry and the private sector should also be able to have a stronger role in the industry.

Speaking at the meeting, Ali Hosseini, the head of the ICCIMA Transport and Logistics Committee enumerated some of the challenges and problems of the country’s transportation industry and said: “The transportation industry is one of the industries that operate in direct connection with all economic sectors and the conditions governing it have significant effects on the market. Therefore, paying attention to the needs of this industry should be the priority in defining the country’s economic and legislative programs.”

He further pointed to some of the issues of the railway industry, saying: “There is not enough productivity in this industry. We have problems in railway management and our approach in this field is uneconomical. Due to the low speed of rail transportation and the lack of efficiency, a regulatory body should be established. If we want to reach the transit goals of 30 to 50 million tons per year, the rail industry must be developed.”

Tehran Times

KCCI Chief Targets Industrialization of Korean Food

SK Group Chairman Chey Tae-won, who serves as chairman of the Korea Chamber of Commerce and Industry (KCCI), is stepping up to spearhead the industrialization of Korean food in the private sector. The business body announced that it has chosen Korean food’s industrialization as the primary theme for this year’s National Development Project Season 2.

The National Development Project, hosted by the KCCI, aims to discover a variety of solutions from the private sector to address structural problems faced by Korean society in the post-pandemic era. Last year, the program was held in the form of a public contest gathering ideas for startups. The selected ideas have turned into actual products under the auspices of Chey and other mentoring entrepreneurs.

This year, the program will commence under the overarching theme of industrializing Korean food. The Korean food industry carries a high potential for growth and synergy in the private sector, which can easily be linked to other industries like content production, the KCCI explained.

The Korea Bizwire

Reshore or Diversify? How to Reorganize the World’s Fragile Supply Chains

Trade conflicts, the pandemic and geopolitical tensions have all had an impact on global supply chains. It’s time to rethink how these crucial production links are set up and how they can be made more resilient.

One key lesson of the pandemic and subsequent supply and demand mismatches is that global supply chains are fragile. They have been struggling amidst uneven economic recovery and trade conflict between global heavyweights, and are suffering geopolitical risks that are critically weighing on food and energy supplies.

Businesses, particularly in manufacturing, are finding it difficult to source inputs and engage seamless, multistep logistics and delivery management systems across borders. At national levels, this has resulted in shortages in key medical products and equipment during the health crisis, shipping and transportation costs going through the roof, and security concerns about the heavy reliance of critical goods and commodities from countries that could turn less supportive or even antagonistic in a volatile geopolitical environment.

An air crew member loads pallets of boxes of Bubs baby formula into a cargo plane at Melbourne Airport on June 12, 2022, in Melbourne, Australia. Bubs Australia planned to export approximately 4.6 millions bottle of instant baby formula to the United States due to a shortage.

Photo: Asanka Ratnayake/Getty Images

The Time Is Right to Rejigger Global Supply Chains

One school of thought is to diversify those further away from places prone to disruptions due to economic, health, climate change and geopolitical issues. The other is bringing the production capacity back to the home country (onshoring) or to countries nearby (nearshoring). The benefits of diversification transcend sheer cost minimization. They also involve gains from risk mitigation and securing back-up sourcing plans in case of a threat to existing supply chain security.

Nearshoring utilizes geographical or even cultural and political proximity of neighboring countries for upstream or downstream segments of supply chains. Onshoring builds production capacity of goods at home, often intending to cover the end-to-end business streams of designing, sourcing, manufacturing, marketing, distribution, sales and post-sales services.

Regional trade blocs or agreements such as the European Union, the Regional Comprehensive Economic Partnership (RCEP) and the United States–Mexico–Canada Agreement (USMCA) support nearshoring. The Indo-Pacific Economic Framework (IPEF) is another example, although it can fall under the category of “friendshoring” as touted by some people, where the scope of “friend” goes beyond the geographical boundary.

Pursuing Multiple Strategies at Once

Although concerns are growing about potential fragmentation of global supply chains based on a few trading blocs among allies, the future of global supply chains may not follow one common path, and will unfold differently depending upon countries’ priorities and sectoral characteristics.

No matter how ambitious a country might be, reshoring across broad industries is neither possible nor desirable given additional cost implications and inefficiencies involved in bringing back home part of supply chains.

It is also worth noting that a government’s industrial policy can do only so much, and the ultimate reconfiguration of supply chains is hugely dependent upon how businesses take supply chain risks on board and how they respond to incentives provided by governments.

While supply chain risk management seems to have become part of operational decisions in many C-suites, cost efficiency and gains from specialization and trade are something that business cannot entirely forgo. In this sense, reshoring or onshoring versus further diversification of supply chains may not be viewed as an either/or choice, but as strategies to be pursued in parallel.

Some sectors will rely more on reshoring while others will focus on further diversification, subject to supply chain vulnerabilities and the expected gains from repositioning of management strategies.

Reshoring Comes With a Cost

In rejiggering supply chains, governments should consider:

First, reshoring needs to be pursued in a selective and efficient way. No matter how ambitious a country might be, reshoring across broad industries is neither possible nor desirable given additional cost implications and inefficiencies involved in bringing back home part of supply chains.

Although we hear a lot about the need to rebuild production capacity of semiconductors in the U.S. and EU, with their heavy reliance upon East Asia for manufacturing (foundry), this doesn’t mean they have forgone the sector entirely over time. They have rather become specialized in high value-added, upstream segment of the chips supply chain such as Electric Design Automation (EDA) and Discrete, Analogue, and Optoelectronics and sensors (DAO), relegating simpler manufacturing processes largely to Asian economies.

By encompassing the manufacturing segment, reshoring will certainly enhance supply chain security for this critical “new oil” of the economy, yet with additional cost implications at least for the short term. This is where technological advances can play a role and the level of technological sophistication vis-à-vis traditional foreign peers will characterize the efficiency of such reshoring strategies.

Second, reshoring strategy may not solely target outsourced production capacities of domestic companies. Attracting foreign investment could also be a part of strategy to cope with short-term domestic constraints in human and physical capital mobilization. Domestically incorporated foreign invested enterprises will make no less contribution to expanding production capacity and job creation than local companies, let alone the expected technology spillovers.

Risk Implications

Third, diversification motives may not be based solely on cost efficiency, but should consider risk management perspectives. For this, the offshoring of production to multiple sites with lower correlation of various supply chain disruption risks will help. This also corroborates the rationale that free trade agreements should be explored not only with geographical neighbors but with trade partners further afield to expand the scope for such opportunities.

Lastly, while government incentives to rejigger supply chains could be effective in jumpstarting businesses’ motivation to reshore or diversify, this may not ensure the long-term sustainability of such approaches, given that subsides tend to ameliorate fixed costs for investment or tax payment, not operational costs.

Incentives for export competitiveness could also have some implications on WTO compliance and stoke retaliatory reactions from trading partners. So, the success of such strategies will hinge on how a good eco-system could be nurtured to facilitate a virtuous cycle of outputs from newly expanded production or sourcing capacity being linked to robust demand base domestically and abroad.

Legitimate economic rationale and political motives for rejiggering supply chains may not always ensure its success unless pursued with strategic thinking and practical implementation plans, which also need to be well aligned with business incentives. Rhetoric is one thing, but implementation is another. Only those which can wisely strategize its implementation will be able to reap the benefits.

A version of this article originally appeared on the Asian Development Blog.

Related themes: SUPPLY CHAINS TRADE

Jong Woo Kang
Principal Economist, Economic Research and Regional Cooperation Department at Asian Development Bank

Jong Woo Kang is a seasoned economist with extensive knowledge and experience on policy and strategic issues. He leads the publication of Asian Economic Integration Report. His areas of research interest include regional integration, inclusive growth, macroeconomic and trade policies, and aid effectiveness.

Can Changing Trade Reshape Global Imbalances?

How Asian Economies Can Prepare for a Financial Market Downturn

The original report can be read at the Brink’s website HERE.

Industry Ministry and FNCCI agree to join hands for economic transformation

The Ministry of Industry, Commerce and Supply and the Federation of Nepalese Chamber of Commerce and Industry (FNCCI) has signed a memorandum of understanding at Radisson Hotel. The MoU was signed between two parties with the aim of implementing a public-private partnership campaign for economic transformation.

The partnership campaign will be implemented by jointly implementing the policies and programs of the Government of Nepal and the programs related to the industry and commerce sector mentioned in the budget, including the main provisions of National Economic Transformation, 2030 announced by FNCCI last year.

Earlier, in its 55th annual general meeting, FNCCI had released the vision paper 2030 with the objectives of increasing the country’s economy to 100 billion US dollars within the next decade, creating employment for 2.2 million people in the formal private sector, and reducing the ratio of trade deficit to economy by half.

According to this partnership, FNCCI will prepare suggestions for timely reforms in the existing policy, legal and procedural arrangements related to industry, trade and business to increase private sector investment, production, infrastructure construction and employment, and submit the suggestions to the Ministry as required. The Ministry will assist in incorporating the suggestions submitted by FNCCI into policies and laws as required.

In the program, FNCCI President Shekhar Golchha said that a steering and implementation committee will be formed for the effective implementation of the partnership campaign. The committee will consist of representatives of concerned government agencies, FNCCI and other representative associations of the private sector.

Similarly, addressing the program, Chief Guest Industry Minister Dilendra Prasad Badu said that collaboration between the government and the private sector is an important effort in the economic transformation of the country and the ministry is committed to its full implementation. He also urged the committees to work as mentioned in the memorandum of understanding.

The MoU was signed by FNCCI President Shekhar Golchha and Joint Secretary Narayan Duwadi and Govinda Karki.

MyRepublica

Taiwan and China’s Economies Are Inextricably Linked

Tensions between the U.S. and China remain high following last week’s visit by U.S. Speaker of the House Nancy Pelosi to Taiwan, the first in 25 years by a top U.S. official. Despite Taiwan’s fraught diplomatic relationship with China, the two countries’ economies are  inextricably linked, reports Investment Monitor.

China is Taiwan’s biggest export partner, with a value of more than $515 billion of goods between 2017-2022, more than double that of the United States. Taiwan’s main export to China is semiconductors — in 2020, China spent more on chips than on oil.

Taiwan’s electronic exports dwarf any other industry and were valued at more than $844 billion between 2017-2022. Electronics also attract the most foreign direct investment, bringing in more than 16% of all greenfield FDI projects between 2019-2020. While strained trade relations between the U.S. and China have prompted some U.S. companies to relocate from mainland China to Taiwan, the recent rise in tensions may make Taiwan a riskier prospect for foreign investors.

The original report can be read at the Brink’s website HERE.

Iran YEGAP Member enlisted as Judge Panelist at Global Benchmarking Award Final 2022

The 8th Global Benchmarking Award was held virtually on August 4 with the purpose of encouraging organizations to demonstrate how benchmarking is a drive for their success and an integral part of their advancement.

The award is designed by the Global Benchmarking Network (GBN), a network of organizations with interest in the practice of benchmarking. The award is organized by Partnerships (Australia), BestPrax Club (India) and COER (New Zealand). This year, Dubai Police was selected as the winner by the judges. The members of the board of GBN attended the award in their capacity as judges. Mr Khashayar Ataie from Iran was one of the judges. Mr. Ataie is also a member of CACCI’s Young Entrepreneurs Group of Asia-Pacific. Other judges were from the Netherlands, the US, the Philippines, India, and New Zealand.

Introduction to Tehran Youth Association of Entrepreneurs

Tehran Youth Association of Entrepreneurs, which was established with the official permission of the Iran Chamber of Commerce and the full supervision of the Tehran Chamber of Commerce
in 2017 is the only official association of Iran Chamber of Commerce for the youth of the country whose members are from Tehran Chamber of Commerce.

They are active in providing cooperation, mutual thinking and organized activities among young entrepreneurs in order to create a favorable environment for young entrepreneurship, business
networking and doing joint work, training and skill building in the field of management and entrepreneurship.

Also, this association, with its official presence in some government organizations and departments of Iran, follows up on potential issues and problems of the country’s young producers and businessmen. They also provide numerous welfare, sports, and consulting services that support the country’s youth in the path of progress.

Like youth chambers in other parts of the world, this organization operates on the four pillars of education, social responsibility, networking in entrepreneurship and deputy preparation and has expanded its relationship with the corresponding associations at the national and international levels, which led to the signing of memorandums of understanding like the arbitration center of the Tehran Chamber of Commerce, insurance, etc., all of which directed toward serving of the youth.

To get familiar with the association, more info is available on https://www.instagram.com/tccimjunior/

ACCI renews Memorandum of Understanding with Indonesian Chamber of Commerce and Industry

The Australian Chamber of Commerce and Industry on August 1, 2023 hosted Mr. Arshad Rasjid, chair of the Indonesian Chamber of Commerce and Industry (KADIN), Indonesian Ambassador to Australia, Dr. Siswo Pramono, and a delegation of Indonesian business leaders.

During the delegation’s visit, the Chamber oversaw the signing of a Memorandum of Understanding (MOU) with KADIN dedicated to further enhancing trade and investment linkages through the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA). The signing renews an MOU first signed in 2016.

The MOU was signed by KADIN chairman Arshad Rasjid and ACCI chief executive Andrew McKellar and reaffirms their commitment to further promote growth and prosperity between Australia and Indonesia, one of the world’s fastest growing economies.

The agreement is expected to help elevate the two organisations’ already strong levels of cooperation and comes amid the Chambers’ work in facilitating further commercial opportunities in both Australian and Indonesian markets.

ACCI’s leadership in further advancing a forward-leaning Indonesia policy will be further on display when the Chamber represents Australian business at the forthcoming B20 Summit in Indonesia. Australia and Indonesia are the only members of the B20 in South East Asia.

ACCI chief executive Andrew McKellar said: “The world needs less protectionism and more collaboration. We need meaningful cooperation and real teamwork to address the new global challenges of today.

“The renewed Memorandum of Understanding between the Australian Chamber of Commerce and Industry and Indonesian Chamber of Commerce and Industry reaffirms our commitment to enhance the collaborative partnership between our countries.

“ACCI and KADIN are pleased to take this step forward today alongside partners and friends to advance our common purpose of promoting Australia-Indonesia commercial relations,” Mr. McKellar added.

ACCI News

Global Economic Growth Slows Amid Gloomy and More Uncertain Outlook

The global economy, still reeling from the pandemic and Russia’s invasion of Ukraine, is facing an increasingly gloomy and uncertain outlook. Many of the downside risks flagged in our April World Economic Outlook have begun to materialize.

Higher-than-expected inflation, especially in the United States and major European economies, is triggering a tightening of global financial conditions. China’s slowdown has been worse than anticipated amid COVID-19 outbreaks and lockdowns, and there have been further negative spillovers from the [conflict] in Ukraine. As a result, global output contracted in the second quarter of this year.

A man selling slippers waits for customers in a market street in Eminonu on May 05, 2022 in Istanbul, Turkey. Inflation soared to nearly 70% (69.97%) over one year in April in Turkey, the highest since February 2002.

Photo: Burak Kara/Getty Images

Under our baseline forecast, growth slows from last year’s 6.1 percent to 3.2 percent this year and 2.9 percent next year, downgrades of 0.4 and 0.7 percentage points from April. This reflects stalling growth in the world’s three largest economies—the United States, China and the euro area—with important consequences for the global outlook.

In the United States, reduced household purchasing power and tighter monetary policy will drive growth down to 2.3 percent this year and 1 percent next year. In China, further lockdowns, and the deepening real estate crisis pushed growth down to 3.3 percent this year—the slowest in more than four decades, excluding the pandemic. And in the euro area, growth is revised down to 2.6 percent this year and 1.2 percent in 2023, reflecting spillovers from the [conflict] in Ukraine and tighter monetary policy.

Despite slowing activity, global inflation has been revised up, in part due to rising food and energy prices. Inflation this year is anticipated to reach 6.6 percent in advanced economies and 9.5 percent in emerging market and developing economies—upward revisions of 0.9 and 0.8 percentage points respectively—and is projected to remain elevated longer. Inflation has also broadened in many economies, reflecting the impact of cost pressures from disrupted supply chains and historically tight labor markets.

Overall Economic Outlook

The risks to the outlook are overwhelmingly tilted to the downside:

• The [conflict] in Ukraine could lead to a sudden stop of European gas flows from Russia
• Inflation could remain stubbornly high if labor markets remain overly tight or inflation expectations de-anchor, or disinflation proves more costly than expected
• Tighter global financial conditions could induce a surge in debt distress in emerging market and developing economies
• Renewed COVID-19 outbreaks and lockdowns might further suppress China’s growth
• Rising food and energy prices could cause widespread food insecurity and social unrest
• Geopolitical fragmentation might impede global trade and cooperation.

In a plausible alternative scenario where some of these risks materialize, including a full shutdown of Russian gas flows to Europe, inflation will rise and global growth decelerate further to about 2.6 percent this year and 2 percent next year—a pace that growth has fallen below just five times since 1970. Under this scenario, both the United States and the euro area experience near-zero growth next year, with negative knock-on effects for the rest of the world.

Policy Priorities

Inflation at current levels represents a clear risk for current and future macroeconomic stability and bringing it back to central bank targets should be the top priority for policymakers. In response to incoming data, central banks of major advanced economies are withdrawing monetary support faster than we expected in April, while many in emerging market and developing economies had already started raising interest rates last year.

The resulting synchronized monetary tightening across countries is historically unprecedented, and its effects are expected to bite, with global growth slowing next year and inflation decelerating. Tighter monetary policy will inevitably have real economic costs, but delaying it will only exacerbate the hardship. Central banks that have started tightening should stay the course until inflation is tamed.

Targeted fiscal support can help cushion the impact on the most vulnerable. But with government budgets stretched by the pandemic and the need for an overall disinflationary macroeconomic policy stance, offsetting targeted support with higher taxes or lower government spending will ensure that fiscal policy does not make the job of monetary policy even harder.

As advanced economies raise interest rates to fight inflation, financial conditions are tightening, especially for their emerging-market counterparts. Countries must appropriately use macroprudential tools to safeguard financial stability. Where flexible exchange rates are insufficient to absorb external shocks, policymakers will need to be ready to implement foreign exchange interventions or capital flow management measures in a crisis scenario.

Such challenges come at a time when many countries lack fiscal space, with the share of low-income countries in or at high risk of debt distress at 60 percent, up from about 20 percent a decade ago. Higher borrowing costs, diminished credit flows, a stronger dollar and weaker growth will push even more into distress.

Debt-resolution mechanisms remain slow and unpredictable, hampered by difficulties in obtaining coordinated agreements from diverse creditors over their competing claims. Recent progress in implementing the Group of Twenty’s Common Framework is encouraging, but further improvements are still urgently needed.

Domestic policies to address the impacts of high energy and food prices should focus on those most affected without distorting prices. Governments should refrain from hoarding food and energy and instead look to unwind barriers to trade such as food export bans, which drive world prices higher. As the pandemic continues, governments must step up vaccination campaigns, resolve vaccine distribution bottlenecks and ensure equitable access to treatment.

Finally, mitigating climate change continues to require prompt multilateral action to limit emissions and raise investment to hasten the green transition. The [conflict] in Ukraine and soaring energy prices have put pressure on governments to turn to fossil fuels such as coal as a stopgap measure. Policymakers and regulators should ensure such measures are temporary and only cover energy shortfalls, not increase emissions overall. Credible and comprehensive climate policies to increase green energy supply should be accelerated urgently. The energy crisis also illustrates how a policy of clean, green energy independence can be compatible with national security objectives.

The outlook has darkened significantly since April. The world may soon be teetering on the edge of a global recession, only two years after the last one. Multilateral cooperation will be key in many areas, from climate transition and pandemic preparedness to food security and debt distress. Amid great challenge and strife, strengthening cooperation remains the best way to improve economic prospects and mitigate the risk of geoeconomic fragmentation.

A version of this piece originally appeared on the IMF Blog.

Related themes: INFLATION

Pierre-Olivier Gourinchas
Economic Counsellor and the Director of Research of International Monetary Fund

Pierre-Olivier Gourinchas is the Economic Counsellor and the Director of Research of the IMF. He is on leave from the University of California at Berkeley where he is the S.K. and Angela Chan Professor of Global Management in the Department of Economics and at the Haas School of Business. Professor Gourinchas was the editor-in-chief of the IMF Economic Review from its creation in 2009 to 2016, the managing editor of the Journal of International Economics between 2017 and 2019, and a co-editor of the American Economic Review between 2019 and 2022.

The original report can be read at the Brink’s website HERE.

Reshore or Diversify? How to reorganize the world’s fragile supply chains

By Jong Woo Kang, Asian Development Bank

Trade conflicts, the pandemic and geopolit­ical tensions have all had an impact on global sup­ply chains. It’s time to rethink how these crucial production links are set up and how they can be made more resilient.

One key lesson of the pandemic and sub­sequent supply and demand mismatches is that global supply chains are fragile. They have been struggling amidst uneven economic recovery and trade conflict between global heavyweights, and are suffering geopolitical risks that are critically weighing on food and energy supplies.

Businesses, particularly in manufactur­ing, are finding it difficult to source inputs and engage seamless, multistep logistics and delivery management systems across borders. At national levels, this has resulted in shortages in key medical products and equipment during the health crisis, shipping and transportation costs going through the roof, and security concerns about the heavy reliance of critical goods and commodities from countries that could turn less supportive or even antagonistic in a volatile geopolitical environment.

The Time Is Right to Rejigger Global Supply Chains

One school of thought is to diversify those further away from places prone to disruptions due to economic, health, climate change and geopolit­ical issues. The other is bringing the production capacity back to the home country (onshoring) or to countries nearby (nearshoring). The benefits of diversification transcend sheer cost minimization. They also involve gains from risk mitigation and securing back-up sourcing plans in case of a threat to existing supply chain security.

Nearshoring utilizes geographical or even cultural and political proximity of neighboring countries for upstream or downstream segments of supply chains. Onshoring builds production capacity of goods at home, often intending to cover the end-to-end business streams of designing, sourcing, manufacturing, marketing, distribution, sales and post-sales services.

Regional trade blocs or agreements such as the European Union, the Regional Comprehen­sive Economic Partnership (RCEP) and the Unit­ed States–Mexico–Canada Agreement (USMCA) support nearshoring. The Indo-Pacific Economic Framework (IPEF) is another example, although it can fall under the category of “friendshoring” as touted by some people, where the scope of “friend” goes beyond the geographical boundary.

Pursuing Multiple Strategies at Once

Although concerns are growing about po­tential fragmentation of global supply chains based on a few trading blocs among allies, the future of global supply chains may not follow one common path, and will unfold differently depending upon countries’ priorities and sectoral characteristics.

It is also worth noting that a gov­ernment’s industrial policy can do only so much, and the ultimate reconfiguration of supply chains is hugely dependent upon how businesses take supply chain risks on board and how they respond to incentives provided by governments.

While supply chain risk management seems

to have become part of operational decisions in many C-suites, cost efficiency and gains from spe­cialization and trade are something that business cannot entirely forgo. In this sense, reshoring or onshoring versus further diversification of supply chains may not be viewed as an either/or choice, but as strategies to be pursued in parallel.

Some sectors will rely more on reshoring while others will focus on further diversification, subject to supply chain vulnerabilities and the expected gains from repositioning of management strategies.

Reshoring Comes With a Cost

In rejiggering supply chains, governments should consider:

First, reshoring needs to be pursued in a se­lective and efficient way. No matter how ambitious a country might be, reshoring across broad indus­tries is neither possible nor desirable given addi­tional cost implications and inefficiencies involved in bringing back home part of supply chains.

Although we hear a lot about the need to rebuild production capacity of semiconductors in the U.S. and EU, with their heavy reliance upon East Asia for manufacturing (foundry), this doesn’t mean they have forgone the sector entirely over time. They have rather become specialized in high value-added, upstream segment of the chips supply chain such as Electric Design Automation (EDA) and Discrete, Analogue, and Optoelectronics and sensors (DAO), relegating simpler manufac­turing processes largely to Asian economies.

By encompassing the manufacturing seg­ment, reshoring will certainly enhance supply chain security for this critical “new oil” of the economy, yet with additional cost implications at least for the short term. This is where techno­logical advances can play a role and the level of technological sophistication vis-à-vis traditional foreign peers will characterize the efficiency of such reshoring strategies.

Second, reshoring strategy may not solely target outsourced production capacities of do­mestic companies. Attracting foreign investment could also be a part of strategy to cope with short-term domestic constraints in human and physical capital mobilization. Domestically incorporated foreign invested enterprises will make no less contribution to expanding production capacity and job creation than local companies, let alone the

expected technology spillovers.

Risk Implications

Third, diversification motives may not be based solely on cost efficiency, but should consider risk management perspectives. For this, the off­shoring of production to multiple sites with lower correlation of various supply chain disruption risks will help. This also corroborates the rationale that free trade agreements should be explored not only with geographical neighbors but with trade partners further afield to expand the scope for such opportunities.

Lastly, while government incentives to rejig­ger supply chains could be effective in jumpstart­ing businesses’ motivation to reshore or diversify, this may not ensure the long-term sustainability of such approaches, given that subsides tend to ame­liorate fixed costs for investment or tax payment, not operational costs.

Incentives for export competitiveness could also have some implications on WTO compliance and stoke retaliatory reactions from trading part­ners. So, the success of such strategies will hinge on how a good eco-system could be nurtured to facilitate a virtuous cycle of outputs from newly expanded production or sourcing capacity being linked to robust demand base domestically and abroad.

Legitimate economic rationale and politi­cal motives for rejiggering supply chains may not always ensure its success unless pursued with strategic thinking and practical implementation plans, which also need to be well aligned with business incentives. Rhetoric is one thing, but implementation is another. Only those which can wisely strategize its implementation will be able to reap the benefits.

Asian Development Bank Blog

Vietnam announces 90-day visa ‘open door policy’ to attract foreign tourists

Foreign tourists at HCM City’s book street in May. — VNA/VNS Photo Hồng Đạt

The Government emphasised that the extension of e-visa validity to 90 days, three times longer than the current 30 days, will be an open-door policy in attracting more foreigners to visit Việt Nam as well as seek investment and business opportunities, creating a driving force to promote the country’s socio-economic development.

The Government has recently reported to the National Assembly regarding the clarification of the National Assembly Standing Committee’s opinions on the amended Law on Foreigners’ Entry into, Exit from, Transit Through, and Residence in Việt Nam.

Previously, the National Assembly asked the Government to provide more specific arguments for the proposal to extend the validity of e-visas from 30 days to 90 days and the proposal to extend the duration of temporary residence permits at the border gates for visa-exempt unilateral entry visitors from 15 days to 45 days.

The Government stated that since the implementation of the e-visa pilot phase in 2017, the number of foreigners requesting e-visas has been increasing. However, due to the current short duration of 30 days for e-visas, it has not attracted more foreigners as expected.

In particular, foreigners who wish to have a longer stay for vacation, market research or investment opportunities in Việt Nam need relatively longer durations.

Therefore, the Government has proposed to extend the validity of e-visas to three months, valid for single or multiple entries, to meet the long-term vacation needs of international tourists.

The new policy will provide favourable conditions for foreigners who want to conduct research, market surveys, and promote investment opportunities in Việt Nam, especially for those who need to visit multiple countries in the region and return to Việt Nam to evaluate and compare investment and business opportunities.

Extending the e-visa validity to three months is suitable for foreigners responsible for establishing commercial presence, service providers, and contract suppliers as committed to by Việt Nam in free trade agreements.

According to the Government, the issuance of e-visas for these cases is carried out through pre-approval of personnel. Therefore, compared to unilateral visa exemptions, this policy helps immigration authorities screen individuals who do not meet entry requirements or the requirements of management work.

Regarding the extension of the duration of temporary residence permits at the border gates for visa-exempt unilateral entry visitors from 15 days to 45 days, the Government states that through studies on travel trends, tourists from distant markets such as Europe often have vacations lasting more than 15 days or choose resort and cross-country tour programmes.

Asia News Network

Battery Producers Need to Be Experts in Recycling

Because of the growth in demand for electric vehicles, lithium-ion batteries (LIBs) are experiencing a steep demand that is expected to rise to three to four million metric tons by 2030. LIBs have emerged as the most widely accepted energy storage technology due to their high efficiencies, long cycle life and high energy density.

But according to a new report from Prescouter, their growth is being impacted by two major problems that will rise in the short term: how to meet this demand in light of depleting precious metals such as lithium, nickel and cobalt that are needed to manufacture LIBs, and how to deal with the massive amount of battery waste produced when LIBs reach their end of life.

The high demand for LIBs is attracting the attention of regulators who seek to ensure fair competition, support a circular economy, and reduce environmental and social effects through all stages of the battery life cycle.

Cars arrive to Tesla Powerpack Launch Event at Hornsdale Wind Farm on September 29, 2017 in Adelaide, Australia, where Tesla built the world’s largest lithium ion battery.

Photo: Mark Brake/Getty Images

European Union

The EU is developing ambitious sustainability goals mandating strict requirements for end-of-life management of LIBs for EVs and obligations for operators throughout the value chain regarding sourcing and use of recycled materials for LIBs.

In 2006, the EU enacted the Battery Directive 2006/66/EC making producers of batteries and other products that incorporate a battery responsible for the waste management of batteries that they placed on the market, in particular the financing of collection and recycling schemes.

The EU is now seeking to repeal this directive and amend the regulation (EU) No 2019/1020 with a new regulatory framework for batteries setting sustainability requirements. This will mandate strict requirements for end-of-life management of LIBs for EVs and includes obligations for operators that source raw materials. The new draft expects that by 2027, producers are to use recycled metal contents from LIBs for the production of new cells and must present a declaration of their content of recycled cobalt, lead, lithium and nickel.

Tough Recycling Requirements

The EU has set an ambitious target of 70% LIB recycling by 2030, with the aim of recovering 70% of lithium and 95% of nickel, copper and cobalt in end-of-life batteries. Provisions for recycled materials that must be used in new cells are set at 4% for lithium and nickel and 12% for cobalt by 2030.

EU Battery Recycling Targets

Source: PreScouter

Member states such as Germany, France and Italy have also developed their own LIB recycling legal instruments:

Germany BattG-2 requires that the collection, treatment and recycling of all batteries used to power EVs are the responsibility of their producers.

France, with a similar policy framework, requires that producers assume the expenses of collection, treatment and recycling of LIB waste.

Italy requires producers to organize and finance the collection of waste batteries, treatment and recycling and register the type and number of batteries and accumulators placed on the national market annually, along with the methods used for their removal and disposal.

United Kingdom

The U.K. Waste Batteries and Accumulators regulations detail the handling and taking-back process of industrial batteries, with producers/manufacturers being financially responsible for collection and recycling.

The U.K.’s National Standards Body has published PAS 7061, which states the best practice for handling battery packs for EVs without introducing environmental risks from sourcing material, manufacturing, use and disposal.

It is expected that by 2040, 70% of all vehicles sold in Europe will be electric, reaching a total of 1,200 gigawatt-hours annually. But recycling LIBs is not yet a common practice.

China

China has begun making significant efforts to implement LIB policy management. The Interim Measures for the Management of Power Battery Recovery and Utilization of New Energy Vehicles (2018) makes automobile manufacturers responsible for EV battery recovery and full life cycle management of LIBs.

The Traceability Management of Power Battery Recovery and Utilization of New Energy Vehicles (2018) requires traceability management along the Chinese value chain, from battery production to sales, use, scrap and recovery.

In the EU, the demand for lithium will be 59,577 metric tons by 2030, from which approximately 2,799 metric tons will have to come from recycled sources, according to the EU Battery Directive. To meet the 4% target, taking the Tesla Model 3 as an example, an equivalent of 572,078 Tesla Model 3 battery packs will need to be recycled by 2030.

This gives rise to two fundamental questions: Will there be enough end-of-life LIBs to recycle come 2030 to meet the 4% requirement, and is there a sufficient battery recycling infrastructure to support these targets?

LIB Recycling Methods

There are three current processes for the recycling of spent LIBs, and their applications depend on the suite of components that need to be recycled.

The pyrometallurgical process requires the use of furnaces at high temperatures to melt LIBs. This process, however, generates metal alloys, slags and volatile gases.

The hydrometallurgical process requires mechanical pre-treatment of LIBs. The components are then separated into streams by density, magnetism and/or chemically. Cathode materials can be recovered with solvent extraction and precipitation; metals in the form of sulfates, oxalates, carbonates and hydroxides can be recovered with the use of reagents. This process is highly effective at recovering cobalt and nickel.

The direct recycling process maintains the chemical structure of the cathode and avoids complex purification steps. The repetitive recycling process promotes the low flexibility of LIB components, which can affect their chemical nature in the long term. In theory, this process can help to recover all LIB components.

New, less expensive and greener processes are at early stages of development. The ultrasonic delamination technique claims to recover about 80% of the original material in a purer state and is 100 times faster, according to the University of Leicester and Birmingham in the U.K. Another method proposes that batteries can be degradable, non-toxic and recyclable, according to Texas A&M University in the U.S. A new ultrasound method can enable faster, more sustainable battery recycling, reducing the extraction time by 50% and achieving 97% metal ion recovery on average, according to KTH Royal Institute of Technology in Sweden. Finally, biological leaching, or biomining — widely used in the mining industry — offers the potential for a selective separation of metals from battery leachates at a purity that allows for its reuse, according to the Nanyang Technological University in Singapore.

The Future of the Recycling Market

It is expected that by 2040, 70% of all vehicles sold in Europe will be electric, reaching a total of 1,200 gigawatt-hours annually. But recycling LIBs is not yet a common practice. Technical limitations, economic impediments, logistical problems and, undoubtedly, regulatory inadequacies are still challenges that must be dealt with.

In addition, LIB recycling has to contend with variability in material prices. For instance, a drop in the price of mined cobalt can make it cheaper than buying recycled cobalt. Finally, a potential investment in LIB recycling requires consideration of these batteries’ abilities to compete with propulsion systems that work with greener technologies such as hydrogen-powered fuel cells.

In sum, there are several factors — recycling methods, regulatory gaps, newer green power technology — that come into play in offering a clear perspective on whether, in the short and long term, LIB recycling targets can be met.

Related themes: CLIMATE ADAPTATION ENERGY

Dr. Sofiane Boukhalfa
Technical Director of PreScouter

Dr. Sofiane Boukhalfa is a PreScouter Technical Director helping companies stay on top of key emerging technologies. His expertise is coupled with a strong understanding of the associated business ecosystem and drivers pushing these sectors forward.

Who Will Win the Battery Wars?

Jorge Hurtado
Researcher at PreScouter

Jorge Hurtado is a researcher at PreScouter, helping provide clients high-quality information and analysis about the latest insights into disruptive technologies. Jorge performs research in developmental and environmental sustainability. He holds a Ph.D. in Biology and a M.A. in Conservation Biology.

Automated Freight Transport Is Transforming Global Logistics

The original report can be read at the Brink’s website HERE.

Indonesia and Russia to build $22b refinery in East Java among other projects

Indonesia and Russia are set to work together on several projects, even as the West is isolating Russia in response to its invasion of Ukraine.

Indonesian state-owned oil company Pertamina and Russia’s Rosneft Oil Company are going ahead with their project to build a refinery in the Indonesian province of East Java to produce fuel and raw materials for the petrochemical industry, a senior Indonesian government official told The Straits Times on July 1.

“The Russian party has been negotiating to get tax holidays. The project is still on track,” said the official, who supervises the project and spoke on condition of anonymity.

The two state-owned companies earlier formed a Jakarta-based joint venture, PT Pertamina Rosneft Pengolahan dan Petrokimia, which will manage the East Java’s New Grass Refinery Root (NGRR) in Tuban and have an output of 229,000 barrel per day of gasoline, diesel and jet fuel.

A pre-project planning phase has been completed for the US$16 billion (S$22 billion), which will be 45 per cent owned by Rosneft and 55 per cent by Pertamina.

Pertamina chief executive Nicke Widyawati did not respond to The Straits Times’ request for a comment.

When completed, the project will greatly help Indonesia reduce its reliance on imported fuel, which has been rising in price.

To make fuel prices affordable, the administration has increased energy subsidies this year to a staggering 502.4 trillion rupiah (S$46.8 billion), from the originally budgeted 152.2 trillion rupiah.

The Russian embassy in Jakarta also said President Vladimir Putin offered to have Russian Railways invest in Indonesia’s new capital in Kalimantan. The new capital, named Nusantara, will see construction start in August after delays due to the pandemic.

The government has earlier invited investors including Abu Dhabi and Taiwan’s Foxconn Technology Group to help build the renewable energy-powered new capital city.

Russian energy companies are also keen to come and invest in Indonesia, especially in developing nuclear power to provide electricity, Mr. Putin said during Mr. Widodo’s visit to Moscow, according to the Russian embassy statement. Indonesia has a power shortage, especially in regions in Kalimantan and Sulawesi.

Straits Times

How Persistent Inflation Is Causing Procurement to Adapt

It has been almost two years since the first signs of inflation, ignited by the COVID-19 pandemic, began appearing across the global industrial landscape. From the summer of 2020 through late 2021, prices rose steadily across the board — on everything from raw materials to labor.

Since then, conditions have begun to moderate. Most nations are lifting pandemic-related mandates, and the massive labor shortages that plagued companies in 2020 and 2021 are starting to subside. The one major exception, of course, is China where full-lockdown conditions akin to 2020 have returned, following recent COVID variant outbreaks.

In the United States, for example, rising wages and the phaseouts of foreclosure moratoria and extended unemployment insurance have coaxed more people back to work. Unemployment in March was just a tenth of a percentage point above its level in February 2020. The labor force participation rate, which measures the percentage of the population either working or actively looking for work, was 62.4% in March, up from a multidecade low of 60.2% in April 2020. While that isn’t quite back to the pre-pandemic level of 63.4% recorded in February 2020, the trend is clear.

Photo: Unsplash

Aggravated by Geopolitical Conflict

What hasn’t reversed is inflation, particularly in raw materials prices. For many commodities, the world is dealing with successive and excessive increases that have, in some cases, doubled or even tripled the prices. While the increases were initially fueled by COVID-related supply chain disruptions and the rapid rebound in economic activity in 2021, they were driven even higher by the Russian invasion of Ukraine on February 24. For example, as Russian tanks rumbled across the border, the cost of plastic spiked — 71% above its pre-pandemic level in the United States and 112% higher in Europe. Today, U.S. steel prices are 76% higher than in March 2020 and 184% higher in Europe. On the London Metal Exchange, spot prices for aluminum were 98% above March 2020 levels.

Although the global economy remains very much in flux, companies with unwavering focus can identify and capture the opportunities bred by the current supply chain scramble.

Perhaps no single commodity tells the global economy’s inflationary tale of woe more than overseas shipping container rates. As measured by the Freightos Baltic Index of China/East Asia to Northern Europe, these rates jumped an astounding 822% higher than they were on the eve of the pandemic. Simply put, while labor shortages are showing signs of easing in some sectors, raw materials prices aren’t anywhere close to normalizing. Obviously, the implications of such unrelenting inflation are enormous for businesses trying to get on an even keel.

Yet, uncertainty breeds opportunity, and today’s mixed-bag economy is opening opportunities that companies should be more willing to exploit rather than take a wait-and-watch approach. Some of the biggest openings for an innovative business approach will come on the value-add side of manufacturing, where companies can tap their growing workforces to optimize cost structures.

Exploiting the Value-Add

In today’s seemingly chaotic but value-rich sourcing environment, the biggest key to success will be in drawing the distinction between purchased items with meaningful value-add steps and components that are 80% or more raw material-dependent. Examples of components with meaningful value-add steps include plastic and aluminum extrusions, stamped or machined metal parts, molded plastic products, motors, fans, and other semi-finished goods. Raw material-dependent components include steel wire rod, plastic resin, metal ingots, and other items.

In the current environment, cost structures of components with higher value-add steps have been somewhat insulated from wild raw material price fluctuations, given that raw materials generally comprise no more than 15% of the total cost of the component. In contrast, heavy raw material-dependent components have been susceptible not only to continued rising prices but also to extreme swings, which have made planning difficult.

In addition, many previously “underrepresented” markets have gained meaningful share from the more established raw material markets. For example, several types of lumber and wood products like furniture, previously thought of as a stronghold for Chinese and East Asian products, are now being sourced from Eastern Europe at a growing rate. The massive hike in ocean shipping rates from Asia has made European and U.S. suppliers significantly more cost competitive. Of course, the conflict in Ukraine might change the dynamics when it comes to Europe.

Capitalizing on Variables

The COVID-19 outlook in China remains the biggest variable on the supply chain front, while the conflict in Ukraine holds the potential to cause continued price increases of many raw materials and energy, particularly in Europe.

Private capital investors and operators need to act now to seize value-creation opportunities centered on optimizing the costs of procured materials while simultaneously identifying potential acquisition targets with true latent value.

Although the global economy remains very much in flux, companies with unwavering focus can identify and capture the opportunities bred by the current supply chain scramble.

This article was made possible with the support and insights from Tushar Narsana and Karina Swette.

Apurva Nair
Partner at Oliver Wyman

Apurva Nair is a partner with the Private Equity practice and a leader in the post-deal value-creation team. He drives enterprise value by delivering tangible financial benefit to clients in accelerated time frames. He has a dual focus on driving the bottom line via strategic sourcing and transactional pricing, and organic top-line revenue growth via sales analytics.

The original report can be read at the Brink’s website HERE.

ACCI welcomes closer economic ties with India

The Australian Chamber of Commerce and Industry (ACCI) welcomes the Morrison Government’s continuing focus on strengthening economic ties with India, the world’s largest democracy.

As a member of the International Chamber of Commerce (ICC) and Business at the OECD, ACCI plays an active role in advocating on behalf of Australian business for open markets and private sector-led growth.

“Given local businesses have been hard hit by COVID, now is the perfect time to continue to bolster economic relations with India and work towards finalising a comprehensive Free Trade Agreement (FTA) as soon as possible” ACCI CEO Andrew McKellar said.

“What we know is that our high-quality Australian made products are in demand overseas and a free trade agreement with India would make it easier and more accessible for local enterprises to sell their products to one of the world’s largest and fastest growing economies.”

“We welcome the Government’s efforts in launching the three Maitri initiatives allowing high achieving Indian talent to study in Australia, supporting professionals to collaborate on research and boosting the role of creative industries. These initiatives continue to build the groundwork for an FTA.”

“The renewal of the Australia-India Memorandum of Understanding on Tourism Cooperation is also a step in the right direction.”

“Even though our international border is opening on 21 February, what was previously our biggest source of tourists, China, remains largely closed due to outbound travel restrictions so it is important that we look to diversity our tourism sector so that it can open and continue to operate.”

“Over 300,000 Australian tourism businesses and their 700,000-strong workforce are set to benefit in growing our tourism relationship with India.”

“The immediate removal of the import tariff on Australian lentils is also a welcome and important move. Many farmers will reap significant benefits from this new trade condition given they saw a record grain harvest this year.”

“Two-way trade with India was worth over $24 billion in 2020 and in the five years before the pandemic this two-way trade and investment doubled. A free trade partnership between our two countries would work to further cement our strong and growing trade relationship.”

“As we have seen with other free trade deals, this would not only benefit Australian businesses but individuals as well through increased job opportunities.”

ACCI Newsroom

Cyber Disaster Risks Are Mounting

As the U.S. kicks off the 2022 hurricane season, another potential disaster looms large. With the Russian invasion of Ukraine and other ever-present the criminal and terrorist threat actors, the risk of a cyber disaster is mounting. Meanwhile, those responsible for responding to such a disaster remain largely focused on “traditional” disasters.

As the head of the U.S. Department of Homeland Security agency responsible for managing these risks, Cybersecurity & Infrastructure Security Agency (CISA) Director Jen Easterly described the threat landscape and identified potential targets in a recent 60 Minutes interview. “We are seeing evolving intelligence about Russian planning for potential attacks. And we have to assume that there’s going to be a breach. There’s going to be an incident. There’s going to be an attack.” Director Easterly identified the energy and finance sectors as particularly likely targets.

Most assume cybersecurity to be the domain of technology professionals. As Carolyn Harshman, president of the International Association of Emergency Managers told me: “Too often, cybersecurity is thought of as a business continuity or IT issue.” The reality is that those on the front lines of managing the physical consequences of a cyber disaster would be the same who respond to hurricanes, tornadoes and floods. “These are the emergency managers at all levels of government and the first responders in each of our communities,” said Harshman.

Recall the ice storm that crippled the electric grid in Texas last year. The cold weather exacerbated the power loss, as those impacted struggled to stay warm and care for themselves and their families. Imagine instead it was a cyberattack that caused the disruption. The consequences would be the same, or worse. Such an attack could be timed to coincide with high energy demand, such as the summer months when health risk from heat is highest. Thousands could die if timed for greatest impact.

Just as emergency managers and first responders prepare for “traditional” disasters, so too must they prepare for cyber disasters.

Photo: Getty Images

Pandemic Lessons

Not only is the cyber threat real, but a seemingly unrelated disaster demonstrates why preparing for a cyber disaster should be a priority. The pandemic has yielded lessons that a cyber preparedness plan should include.

First, the pandemic exposed vulnerabilities in many sectors. From inadequate security safeguards for largely remote workforces to supply chain shortages of critical technologies, COVID demonstrated the potential shortfalls in the nation’s ability to protect itself from future cyberattacks. These vulnerabilities could amplify any impacts from an attack, thereby complicating a response to the physical consequences of a cyber disaster.

Second, the pandemic forced the cancellation of a major cyber exercise that we had spent years planning at the Federal Emergency Management Agency (FEMA). National Level Exercise 2020 (NLE 2020) would have been the nation’s largest cyber exercise. Without it, the realistic scenario it envisioned was not tested, and the gaps it would have likely exposed have not been closed.

Americans are ill equipped to defend against the increasing sophistication and volume of cyberattacks.

Third, the pandemic also laid bare the challenges facing emergency managers as “all hazards” practitioners. Just as many mistakenly believed early in the pandemic that COVID was a health emergency and only belatedly realized the role of emergency managers, so too are catastrophic cyber incidents also almost certain to fall to emergency managers.

What Can Be Done?

What can be done to prepare those charged with protecting us from the consequences of cyber disasters? Much like a “traditional” disaster, preparing for future contingencies is critical. This should include core elements of preparedness such as planning, training, equipment and exercises.

Having overseen FEMA preparedness programs from 2017-2020, I directed an internal review of agency cyber preparedness program. In 2019, I publicly released our findings: “We offer over 20 online and in-person courses, focused on everything from network assurance and digital forensics, to information security and cyber incident response. Since 2004, FEMA has trained more than 87,000 federal, state, local, tribal and territorial officials on cybersecurity.”

Today, FEMA offers over 40 such courses. The challenge, says IAEM President Harshman, “is to ensure that emergency managers are aware of and have access to these courses.” Further, “Cybersecurity must be integrated into existing ‘traditional’ emergency management courses to ensure cyber response becomes a core competency of our profession.”

I also found during our earlier FEMA review that the agency had provided $165 million over 10 years to strengthen state and local government cyber preparedness. While it seemed substantial at the time, it pales in comparison to the overall need. Thus the $1 billion cyber grant program included in the recently enacted infrastructure law represents an unprecedented opportunity to bolster state and local preparedness for cyber disasters. FEMA and CISA are currently finalizing the grant guidance for the new program, which is anticipated to be released this summer.

To ensure a robust response should a catastrophic cyber disaster occur, a strong working relationship between the government agencies responsible for cybersecurity and disaster preparedness is necessary. At the federal level in the U.S., this is principally FEMA and CISA. When I was at FEMA, we made it a priority to collaborate with CISA. Whether it was grant guidance, exercises such as NLE 2020, or response planning, we worked with our sister DHS agency as partners. Going forward, such a partnership will be critical.

In a January 2022 position paper, the National Emergency Management Association (NEMA) stated that “questions abound relating to the federal government’s processes for responding to major cybersecurity attacks.” To address these concerns, the association representing state emergency management directors proposed an Integrated Program Office between FEMA and CISA to “coordinate all policy and response doctrine as it would apply to cybersecurity, critical infrastructure protection, and any other subject of shared interest.”

The same collaboration should be a priority at the state and local levels and with the private sector. State and local governments should pair their technical experts (Chief Information Security Officers), with their operational responders (emergency managers). And given that the vast majority of the nation’s critical infrastructure is owned by the private sector, this is not a challenge the government alone can solve. Strong partnerships between industry and all levels of government will be necessary to confront this threat.

Finally, at the individual level, we must all take our cyber responsibilities seriously. Brian Hastings, director of the Alabama Emergency Management Agency, told me “Americans are ill equipped to defend against the increasing sophistication and volume of cyberattacks.” Hastings, who also chairs the NEMA Homeland Security Committee added: “Humans are simultaneously the vulnerability, the target, the enemy, and the solution on the front lines making cybersecurity awareness, training, and education a shared responsibility and crucial to reducing our collective risk to attacks.”

Cyber Preparedness Must Be a Priority

A new RAND study finds that responding to a cyber disaster will likely be far more challenging than responding to a traditional disaster. Largely this is because of the nation’s inexperience with responding to catastrophic cyber incidents and thus officials must develop plans and test these capabilities before an incident occurs. The study provides yet more evidence that bolstering the nation’s cyber preparedness now should be a national priority.

Just as emergency managers and first responders prepare for “traditional” disasters, so too must they prepare for cyber disasters. Just because there isn’t a cyber disaster season, doesn’t mean it isn’t time to prepare now.

Related themes: CYBERSECURITY

Daniel Kaniewski
Managing Director, Public Sector at Marsh McLennan Advantage@dankandc

Daniel Kaniewski is the managing director of Public Sector at Marsh McLennan Advantage. Prior to joining the firm in February 2020, Dr. Kaniewski was the deputy administrator for resilience at the Federal Emergency Management Agency (FEMA). In this role he was FEMA’s second-ranking official and led the agency’s pre-disaster programs. He was unanimously confirmed by the U.S. Senate on September 14, 2017.

FEMA Could Be America’s Climate Adaptation Agency — What Is the Biden Administration Waiting For?

When a 100-Year Disaster Strikes

The Value of Disaster Planning Outweighs Its Cost — Sixfold

The original report can be read at the Brink’s website HERE.

9 Takeaways From Davos

The annual World Economic Forum took place in Davos last week for the first time in three years. The high-profile gathering of corporate executives and politicians was smaller than usual and was held in May instead of January. Here are some of the highlights.

The managing director of the International Monetary Fund sought to dispel the gloom at the World Economic Forum, saying a global recession isn’t in the cards, but “it doesn’t mean it’s out of the question.” Kristalina Georgieva noted that the IMF expects economic growth of 3.6% for 2022, but acknowledged that it’s going to be a “tough year.”

A global buyers’ club of more than 50 companies, including Microsoft and Ford Motor, say they will buy “green” steel, aluminum and other commodities by 2030. The idea behind the buyers’ club, known as the First Movers Coalition, is to stoke demand for green versions of materials that have proved difficult to manufacture without significant carbon dioxide emissions.

The aviation industry, decimated during the pandemic, is rebounding strongly, said Hassan El Houry, CEO of National Aviation Services. He predicted the airline industry would return to pre-pandemic levels at the end of this year or the middle of next, earlier than airline industry group IATA’s forecast of 2025. “Almost every airline I speak with is reporting a huge rebound, especially for this summer and particularly in leisure travel.”

Klaus Schwab, founder of the World Economic Forum, introduces Ukrainian President Volodymyr Zelenskyy during the 2022 World Economic Forum Annual Meeting.

Photo: World Economic Forum/Sikarin Fon Thanachaiary via CC

Ukrainian President Volodymyr Zelenskyy says that his country will not give up land to end Russia’s war. Speaking by video link Wednesday, Zelenskyy said through a translator that “Ukraine is not going to concede our territory. We are fighting in our country, on our land.” Meanwhile, Henry Kissinger, the 98-year-old former secretary of state urged Ukraine to cede territory to make peace with Russia.

Cryptocurrencies … ‘are not currencies at all …they are speculative assets, the value of which changes enormously over the course of time … coin issuers should have to back up their coins with as many dollars as they have coins.’

The Chairman of Volkswagen, Herbert Diess, says Volkswagen is seeing a “clear improvement through summer” on the supply of microchips it needs for its vehicles. Audi board member Hildegard Wortmann said the VW-owned brand has its “highest level of orders at the moment,” but customers are facing wait times of about a year or more.

An international deal to force the world’s biggest multinational companies to pay a fair share of tax has been delayed until 2024, amid fresh wrangling over the painstakingly negotiated agreement. Mathias Cormann, the secretary-general of the Organisation for Economic Co-operation and Development (OECD) said he remained confident an agreement would eventually be implemented to let countries levy more tax on the world’s largest firms based on the sales generated within their borders.

Israeli President Isaac Herzog called on other nations to consider a “renewable Middle East” as a resource for sustainable food, water and energy solutions. He appealed for a new partnership with nations in Europe, Asia and Africa modeled in part on the economic agreements Israel has struck with four Arab nations. He said such new links would expand a “zone of understanding, despite wide gaps and conflicting narratives” about a surge in violence between Israel and the Palestinians.

The World Economic Forum has unveiled an initiative to develop the metaverse. The forum said that it will work with businesses, regulators, civil society and academic experts to help define and build the metaverse. The focus will be on governing the metaverse as well as how to create economic and societal value.

European Central Bank President Christine Lagarde criticized cryptocurrencies, saying that they “are not currencies at all …they are speculative assets, the value of which changes enormously over the course of time … coin issuers should have to back up their coins with as many dollars as they have coins. That needs to be checked, supervised, and regulated.” Lagarde’s latest comments come after she told a Dutch talk show: “My very humble assessment is that [crypto] is worth nothing, it is based on nothing — there is no underlying asset to act as an anchor of safety.”

Related themes: CLIMATE ADAPTATION INFLATION METAVERSE UKRAINE

Editorial Staff BRINK
Despite Progress, Food Insecurity Remains Key Global Challenge
U.S. Within 15 Years of Energy Independence

The original report can be read at the Brink’s website HERE

Global Insurance Pricing Increases in First Quarter 2022

Global commercial insurance prices rose 11% in the first quarter of 2022, marking the fifth consecutive reduction in rate increase since global pricing increases peaked at 22% in the fourth quarter of 2020.

It was, however, the eighteenth consecutive quarter that composite prices rose, continuing the longest run of increases since the inception of the Marsh Global Insurance Market Index in 2012.

Cyber insurance pricing continues to show significant rate increases — 110% in the U.S. and 102% in the U.K. for the quarter — and has driven up average pricing in financial and professional lines, globally.

Q1 2022 marks the fifth consecutive reduction in insurance rate increases since global pricing increases peaked at 22% in the fourth quarter of 2020. from their high in 2020.

Photo: Unsplash

The U.K. had the highest average increase, with composite pricing increases at 20%, down from 22% in the fourth quarter of 2021. Both the U.S. and Pacific also saw composite pricing increases in the double digits — 12% and 10%, respectively.

Latin America and the Caribbean was the only region to see its composite pricing increases rise, from 4% in the fourth quarter of 2021 to 6% in the first quarter of 2022.

All three major product lines showed increases in average pricing globally, though less than the prior quarter: financial and professional lines (26%), property (7%), and casualty (4%).

Cyber Claims and Systemic Exposure Concerns Escalate Financial and Professional Lines in US

The average rate of composite price increase in the first quarter of 2022 in the U.S. was 12% — a slight reduction on the prior quarter (13%). This again was driven by cyber insurance pricing.

Average property insurance pricing for the quarter increased 7%, as it did in the fourth quarter of 2021. Clients with significant losses, poor risk quality, or significant exposure to secondary catastrophe (CAT) perils — including wildfire, convective storm, and pluvial flood — continued to experience above average rate increases.

Casualty insurance pricing increased 4% on average in the first quarter of 2022, which was the same increase as the prior quarter.

Financial and professional lines pricing increased 28% on average this quarter. Though increases are still being driven significantly by cyber insurance price increases, this quarter’s average increase was lower than that of the fourth quarter of 2021 (34%).

Directors and officers (D&O) liability insurance pricing for publicly traded companies increased 3% on average — this was lower than the 6% increase of the prior quarter.

Pricing for cyber insurance increased 110% on average, in large part due to the re-pricing and re-underwriting of cyber risks. Prolific claims activity contributed significantly to pricing increases. The conflict in Ukraine also exacerbated concerns relating to systemic exposures and accumulation risk.

UK Pricing Moderates Despite Rising Cyber Pricing Increases

Composite insurance pricing in the first quarter of 2022 in the U.K. increased 20%, compared to 22% in the fourth quarter of 2021.

Cyber insurance pricing increased by 102% on average, again driven by ransomware claims.

Financial and professional lines pricing increased 39%, on average, down from 43% in the prior quarter. D&O pricing increases demonstrated a degree of moderation, with average pricing increases of 16% in the first quarter of 2022, compared to 24% in the fourth quarter of 2021.

Cyber insurance pricing increased by 102% on average, again driven by ransomware claims; this was up on the prior quarter, which had an average increase of 92%.

Property insurance pricing increased by 9%, compared to 10% in the prior quarter; and casualty insurance pricing increased 3% on average, down from a 4% increase in the prior quarter.

Pace of Pricing Increase in Asia Continues Decline

Composite insurance pricing in the first quarter of 2022 in Asia increased 3%, down from 4% in the prior quarter, as price increases continue to moderate.

Both property insurance and casualty insurance saw average pricing increases of 2% in the quarter; while property insurance was down on the prior quarter’s pricing increases of 3%, casualty insurance increases were 2% for both quarters.

Financial and professional lines pricing increased 13% on average, down from 17% in the prior quarter. The cyber market remained challenging, with ransomware placing considerable pressure on premiums.

Insurance Pricing by Region

Other regional highlights in the first quarter included the following:

In the Pacific, composite insurance pricing increased 10%, on average, down from 13% in the prior quarter. Property insurance pricing increased 8%, on average, mirroring the increases seen in the prior quarter. Losses from the New South Wales and Queensland floods reduced any potential pricing relief. Casualty insurance pricing rose 15%, while financial and professional lines pricing rose 10% — a decrease from 18% in the prior quarter.

Composite insurance pricing in the first quarter of 2022 in Continental Europe increased 6%, compared to 9% in the prior quarter. Property insurance pricing rose 6%, a decrease from 10% in the prior quarter, with CAT-exposed risks experiencing the largest increases. Financial and professional lines pricing increased 9% on average, down from 13% in the prior quarter. The D&O market had an influx of new capacity, which led to rate reductions on select programs with adequate pricing. Average casualty insurance pricing rose 6%.

Average composite insurance pricing in the first quarter in the Latin America and Caribbean region increased 6%, up from 4% in the prior quarter. Casualty pricing in the region was flat, marking a potential shift from decreasing rates in the space. Property insurance pricing increased 8%, up from 7% in the previous quarter. Financial and professional lines pricing rose 11%, down slightly from the 12% increase in the prior quarter.

Related theme: INSURANCE

Lucy Clarke
President of Marsh Specialty and Global Placement
Lucy is president of Marsh Specialty, president of Marsh Global Placement, and is a member of the Marsh executive committee. Lucy joined Marsh in April 2019 as part of the acquisition of JLT Group, where she worked for 17 years in key leadership roles, including CEO of JLT Specialty, the insurance and risk arm of the JLT Group. Lucy graduated from Vanderbilt University and has worked in London since 1990.

Global Insurance Pricing Increases in Fourth Quarter 2021

Global Insurance Pricing Increases in Third Quarter 2021

Ransomware Attacks Are Becoming More Frequent, Severe and Expensive

The original report can be read at the Brink’s website HERE.

We Need a More Resilient Food System

The World Food Program has warned that 275 million people are facing starvation as a result of global food shortages caused by the Ukraine conflict, bottlenecks in the supply chain, and crop failures in India and China.

Sheryl Hendriks, a food security expert at the University of Pretoria in South Africa, says that one of the big problems is the lack of private sector involvement in the food sector in many countries.

A man harvests tea on a mechanized tea estate in Kericho, Kenya. To learn from the current global food shortages, countries will need to invest in mechanization and encourage private sector development.

Photo: Patrick Sheperd/CIFOR via CC

HENDRIKS: David Beasley, the head of The World Food Program, says that the situation is already so bad that they are having to choose between the hungry and the starving. What’s unfolding is both a short- and a longer-term crisis. A third of the world’s grain supplies and a large proportion now of oil seeds are tied up in Russia and Ukraine.

There’s food sitting from the previous harvest that can’t be moved out to the places that need the food. Much of the rail infrastructure and some ports in Ukraine have been damaged or destroyed, so while the silos are full, food can’t get out to those who need it. And countries in Africa are particularly reliant on imported grain from those two countries.

Banning Food Exports Is Short Sighted

There’s a secondary aspect to this crisis because Ukraine and Russia also provide significant amounts of fertilizer for agriculture. Higher processing costs and lower availability will be major constraints to future harvests. Fertilizer prices were already going up last year, because fertilizer prices are linked to crude oil prices, so we were seeing farmers in Africa using less fertilizer, and that affects their harvests.

BRINK: Some countries are banning food exports as a way to husband their own resources. Will that make things worse or not?

HENDRIKS: Absolutely. There is some logic to holding back a proportion of food in order to meet your domestic requirements, but for example, Indonesia’s outright ban on the export of palm oil is going to have major repercussions. What happens if they run short of another commodity? Their neighbors are not going to be very friendly about sharing what they have.

So in terms of neighborliness, bans are fairly shortsighted. It also means that countries could lose their market share because somebody else will step into the market and fulfill their requirements. The palm oil restriction is going to affect a huge proportion of processed foods in particular, such as snack foods and many cheaper brands of ready-to-eat foods that are the go-to foods for busy urban communities.

BRINK: Let’s turn to possible solutions. How do you make sure that this crisis isn’t wasted as an opportunity?

HENDRIKS: Good question. We wasted the learning opportunities from the previous two high food price crises in 2007/8 and 2013. Countries should have responded to these crises by looking at their domestic production and seeing how they could diversify to ensure higher domestic supplies.

The response to the 2007/2008 food crisis in many African countries was to provide free or highly subsidized fertilizer and seeds to boost the production of grains. And for example, in West Africa, there was a significant response by farmers. But then the upstream distribution, storage, and transport components were lacking, and so a lot of that excess harvest just rotted the next year. We haven’t really learned much in terms of creating the right balance between import, export, and domestic production.

The Complicated Role of Governments

One of the dynamics in many developing countries is that, unlike in the West, governments have a huge role to play in the food market. Land is typically owned by the government, the seed supply system is either owned or managed by the government, the fertilizer distribution is highly subsidized, and so are the seeds.

In developing countries, the government is very often the price setter, and the government is the major procurer of grain. It’s not an entirely free market economy. There’s huge government control, and governments see themselves as custodians of the food supply, especially for the staple grains. There are big risks in that.

There’s considerable fear and hesitancy around private sector development in developing countries, but it’s really important for us to support private sector development in order to drive innovation, job creation and economic growth.

BRINK: There’s no shortage of scientific research around food systems and reducing starvation. Why hasn’t that translated into a more secure global food system?

HENDRIKS: Because food is an instrument of politics, I guess. Particularly in the developing world, where the government plays such a big hand in food systems, any major shortfall is going to lead to food riots, and policy change in terms of food is viewed as extremely risky by governments.

In my engagement with government officials, particularly across Africa and with the Malabo Montpellier Panel that I work with, the nervousness of government officials to adopt policy change is very tangible. And scientists are not good at engaging with governments to support decision-making.

The Need to Understand Consumers’ Trade-Offs

BRINK: Do you have any concrete recommendations for how there could be some improvement to food systems?

HENDRIKS: The digital domain provides many opportunities. A colleague, Athula Ginige, has developed a digital app to help farmers make their crop choices, so as an individual farmer, you can keep real-time knowledge of who’s planting what. The app then gives an estimation of the predicted price when it comes to harvesting.

But one thing we don’t understand very well are the trade-offs that consumers are making for convenience products, such as bread. Bread is not a staple food in many African countries, but it’s the go-to because if you have nothing else, you can eat just like that. You don’t need power, you don’t need energy to cook it, you don’t need energy to store or warm it, and because it’s so full of preservatives, it lasts a week.

But there’s a trade-off between convenience and the energy required to prepare alternative  meals that require cooking. The complexity lies in the connectedness of food and energy prices. If we were able to invest in producing more ready-to-eat, minimally processed natural foods, rather than additive-laden ultra processed foods, we could perhaps sway consumer choices to healthier meals.

Mechanization Is Critical

Countries also need to invest a lot more in mechanization. There’s considerable fear and hesitancy around private sector development in developing countries, but it’s really important for us to support private sector development in order to drive innovation, job creation and economic growth.

There are some shining examples of mechanization success. In Rwanda for example, the government classified the entire country by agro-ecological zones and then identified the best varieties, for example banana, that would grow in each particular agricultural zone. They then re-orientated their entire extension system to deal with the specific diseases and pests per agricultural zone. There are very clever strategies to encourage people to grow what is relevant for their particular agro-ecological conditions.

Rwanda also invented an Uber-inspired tractor service, where, when a farmer needs a tractor service, they can call the Uber service. And there’s an incentive to keep the tractor maintained, have it full of fuel, and have it ready to run at any time. Rwanda has taken a very holistic approach to development with win-wins for the whole economy. We need more such initiatives where government and private entrepreneurs cooperate.

Related Themes: FOOD SECURITY UKRAINE

Sheryl Hendriks
Professor at University of Pretoria

Professor Sheryl L. Hendriks is a professor and head of the Department for Agricultural Economics, Extension, and Rural Development in the Faculty of Natural and Agricultural Sciences at the University of Pretoria. She is a member of the Academy of Science of South Africa.

The original report can be read at the Brink’s website HERE.

The Changing of the Guard in South Korea — What Does It Mean for Business?

The new president elected in South Korea. Yoon Suk Yeol is a populist conservative politician, who narrowly beat President Moon Jae-in from the progressive Democratic party. President-elect Yoon is likely to move South Korea to the right and perhaps take a more confrontational approach to the North.

Andrew Yeo, the SK-Korea Foundation Chair in Korea Studies at Brookings Institution, spoke to BRINK about what this means for the region and for business.

YEO: There’s definitely going to be a change in direction in how the country is governed under this new conservative leadership, even if structural constraints prevent leaders from veering too far off course from the current trajectory.

On domestic policy, we will see less government intervention and deregulation of various industries and sectors to promote economic growth. The government will offer more market-oriented solutions to address domestic problems, particularly the shortage in affordable housing.

President Yoon Suk Yeol stands before a microphone on a podium to address an audience.

Flickr via CC

BRINK: Can you give us a sense of who Yoon Suk Yeol is?

YEO: Yoon Suk Yeol is considered an elite in South Korea, in contrast to the more humble, social activist background of current president Moon Jae-in. He is a lawyer by training and attended Seoul National University. Yoon’s biggest claim to fame is his role as the prosecutor- general under the Moon government, where he played a leading role convicting former conservative president Park Geun-hye on corruption charges.

Yoon seems to demand loyalty from his followers, and thus far, he has surrounded himself with trusted advisers, including many who served under former President Lee Myung-bak in the late 2000s and early 2010s. This is in contrast to former President Moon Jae-in, who sought greater diversity and inclusiveness among his staff.

The clearest shift in South Korean foreign policy will be the new government’s engagement policy toward North Korea. All Korean governments, whether progressive or conservative, want inter-Korea relations to improve. How you get there, however, differs between progressives and conservatives.

Championing Small Business Over Big Conglomerates

BRINK: How would you characterize his relationship with South Korea’s business community?

YEO: Conservative governments in South Korea tend to have a better relationship with big business in part because they’re more keen in promoting market-oriented policies. But in this case, there might also be some tensions, as the president-elect has emphasized promoting small and medium enterprises (SMEs), which may lead to some competition with the big conglomerates. Yoon seems keen in cultivating the digital economy and may promote policies which support innovation among SMEs in the emerging technology space. Overall, the relationship between government and business should be generally positive, however.

The Trade Relationship With China

BRINK: What about the commercial relationship with China — do you see that changing much?

YEO: Given Yoon’s pro-U.S. stance, some might assume that the new government will adopt a more hardline position toward China.

President-elect Yoon has indicated more willingness to speak out against China on issues such as human rights and freedom of expression. The new government will be less tepid in how it engages China and more willing to assert its own geopolitical interests.

However, we have to be careful regarding this expectation that Seoul will suddenly hop onto the anti-China bandwagon. There are still strong Korean corporate interests and stakeholders in China, even as we see more South Korean companies shifting operations outside of China to Southeast Asia, South Asia and elsewhere, including the United States. For large companies such as Samsung, SK or Hyundai, China is a very large market. There will be pressure from companies to not completely decouple from China. Thus the Yoon government will have to navigate between national and corporate interests.

In sum, there may be reduced trade with China relative to the past as Korean companies seek to diversify risk, but it would be unrealistic to expect a mass exodus or complete decoupling from Chinese trade.

South Korea’s Approach to the North Will Shift

BRINK: And what about North Korea — is there going to be a noticeable shift?

YEO: The clearest shift in South Korean foreign policy will be the new government’s engagement policy toward North Korea. All Korean governments, whether progressive or conservative, want inter-Korea relations to improve. How you get there, however, differs between progressives and conservatives.

The new conservative government will be much more skeptical in its approach to North Korea.

President-elect Yoon has been very clear that North Korea needs to take steps toward denuclearization before offering any sanctions relief or aid package. There are rumors that a North Korean long range missile test may occur to coincide with the anniversary of former President Kim Il-Sung’s birth on April 15. If something like that were to happen, we will see much stronger language from the Yoon government directed at North Korea and most likely a prolonged period of non-engagement.

In the meantime, nothing is happening on the engagement front while North Korea remains locked in its shell under its self-imposed pandemic border lockdown.

Where we might see some shift is if the North Koreans decide that the food or humanitarian crisis becomes unbearable. North Korea may want to begin talking again to the U.S. or South Korea. I think then we may see some opportunities for inter-Korea engagement and more flexibility from the Yoon government in how it approaches North Korea.

Related themes: CHINA INTERNATIONAL RELATIONS

Andrew Yeo
Senior Fellow and SK-Korea Foundation Chair in Korea Studies at Brookings Institution’s Center for East Asia Policy Studies

Andrew Yeo is a senior fellow and the SK-Korea Foundation Chair in Korea Studies at Brookings Institution’s Center for East Asia Policy Studies. He is also a professor of politics at The Catholic University of America in Washington, D.C. His latest book, State, Society and Markets in North Korea is out now with Cambridge University Press.

The original article can be read at Brink’s website HERE.

How the Ukraine Conflict Is Impacting India’s Economy

India’s trade with Russia is approximately $10 billion, which is 1.3% of India’s total trade. India imports a significant amount of precious and semi-precious stones, mineral oil, boilers, nuclear reactors and fertilizers from Russia, and all of this trade is being affected, with a cascading impact on the Indian economy.

After the U.S. and China, India is the world’s third-largest consumer of oil, over 80% of which is imported, and oil and food prices have always haunted the Indian economy.

Two months into the conflict, faced with a steep upward movement of oil prices, with a projection to touch upon $140 per barrel, India’s business leaders and policymakers are seriously evaluating the impact of this crisis just as business has started to come out of the pandemic.

As the price of these commodities are reaching new highs, it opens up new markets for Indian farmers and trades.

Impact of  Oil Price Hike

India imports about 2% of its oil needs and $1 billion worth of coal from Russia per year. Indian oil companies have multibillion-dollar investments in Russian oil fields, which is still relatively small compared to India’s oil requirements. On the converse side, Russian oil giant Rosneft has a controlling stake in the 20 million metric tons per annum of India’s Nayara Energy.

The most obvious impact of high oil prices is inflation. There has been a steep hike in diesel and petrol prices in the last four weeks; and LPG prices were steadily moving up even before the conflict. Fuel and power have a 13% weighting in the wholesale price index, and fuel and light have a 6.5% weighting in the consumer price index. Moreover, fuel and food prices have a cascading effect on the economy as they push up costs at every stage of agriculture and industrial production.

In its latest update, the IMF has projected a slowdown of India’s economic growth to 6.6% from 7.2% in 2022, mainly due to changes in oil price assumptions. The key assumption behind the GDP growth in the Economic Survey of India last year was that oil prices would be $70-$75 per barrel, instead of $100.

The crisis has also pushed up the price of imported fertilizers to India, particularly Urea and Potash from Russia. This threatens to increase the agriculture fertilizer subsidy bill of the government by about $1.3 billion, and the state and central governments will have to rework their budgets to accommodate these cost escalations.

If other trading partners of Russia shift to their own currency-based trade like the Indian rupee-Russian ruble arrangement, and if an alternative to bank transactions can be found, the move away from dollar-based trade and finance can accelerate.

The Silver Lining for India’s Food Exports

However, the Russia-Ukraine conflict is also creating an unlikely opportunity for select Indian agriculture exporters, especially in wheat, maize, millet and processed food.

As the Russia-Ukraine conflict unfolds, the world has been looking for Indian wheat to fill the huge shocks in the supply chains originating from Russia and Ukraine. Ukraine is one of the world’s top wheat exporters — when combined together Russia and Ukraine have a 25% share in the global market. A ban on freight from Russia also means more opportunities for Indian exporters of nuts, confectionery, fruits and pulses.

As the price of these commodities are reaching new highs, it opens up new markets for Indian farmers and trades. Until June, no fresh wheat is expected from other major markets such as Australia, Pakistan and Brazil.

Several reports say India will be able to export 10-12 million metric tons of wheat this year to markets vacated by Russia and Ukraine. Expectations of a normal monsoon season this year will further boost a growth cycle in the rural economies of India, but harnessing the opportunities also depends on how quickly the buyer-seller market is established and enhancing the freight infrastructure.

Significant Outflow in Foreign Investment

The impact of all this could have severe implications for India’s balance of payments. Due to the inelastic nature of energy demand and current difficulties in coal imports, any further increase in crude oil prices invariably leads to higher import bills for the country. If the conflict continues, this will worsen the current account deficit.

This problem is more acute in India because business is witnessing one of the most significant outflows of foreign institutional investors over the first quarter of 2022. The looming threat of a U.S. Fed rate hike makes it an extremely challenging task for the Reserve Bank of India. This will also have implications for the exchange rate. Thanks to the prudent policies and forex management strategy, the rupee did not experience any abnormal pressure.

On the other hand, if other trading partners of Russia shift to their own currency-based trade like the Indian rupee-Russian ruble arrangement, and if an alternative to bank transactions such as SWIFT can be found, the move away from dollar-based trade and finance can accelerate. These kinds of developments post the Russia-Ukraine conflict can have a far-reaching impact beyond India.

Volatility is the most likely prospect in the near future. As the country starts to recover from the pandemic-induced economic slowdown, India’s public and private sectors will need to work on resolving legacy issues of energy security, inflation and resiliency. Supply-side shocks, demand variations, the course of the conflict, and the extent of global sanctions will all impact the future of the Indian economy, while also opening some new doors for opportunity.

Related themes: INFLATION SUPPLY CHAINS TRADE

Venkatachalam Anbumozhi
Director, Research Strategy and Innovations at Economic Research Institute for ASEAN and East Asia

Venkatachalam Anbumozhi is Director, Research Strategy and Innovations at the Economic Research Institute for ASEAN and East Asia (ERIA). Previously he worked at the Asian Development Bank Institute in Tokyo. He has written books, research articles, and project reports on natural resource management, climate-friendly infrastructure design, and private-sector participation in green growth. He was a member of the APEC Expert Panel on Green Climate Finance and the ASEAN panel for promoting climate-resilient growth.

What Will India’s Post-COVID Recovery Look Like?

Can India Pull Off a Sustainable Economic Recovery?

Can a Self-Reliance Strategy Pull India Out of Recession?

The original report can be read at the Brink’s website HERE.

How Long Can China’s Economy Handle Zero COVID?

An interview with David Dollar
Senior Fellow of the John L. Thornton China Center at Brookings Institution

President Xi Jinping’s policy of zero tolerance toward COVID kept cases down during the first two years of the pandemic. But the infectiousness of the omicron variant is making it much harder to pull off.

It’s estimated that 87 of the 100 largest cities in China are now under some kind of restricted movement. Shanghai is under an intense lockdown, severely impacting living conditions for its 25 million inhabitants.

This is starting to impact global financial markets and supply chains. BRINK spoke to David Dollar, an expert on the Chinese economy at Brookings, to assess the economic impact.

DOLLAR: It seems like the zero-tolerance policy is starting to have a negative effect on the Chinese economy. According to official data released last week, China’s economy expanded 4.8% in the first three months of this year compared to the same period last year. However, much of that growth was recorded in January and February only. There’s no question the Chinese economy has slowed down, and there are anecdotal reports about certain ports suffering big backlogs and cities that have shut down.

China’s a big country, so shutting down a couple of cities doesn’t necessarily have an overwhelming effect, but it is definitely going to be negative for China’s growth.

BRINK: Its impact will depend on how long this goes on — do you have any sense of whether the government is determined to stick to the policy?

A truck driver wearing a protective mask walks past containers at Yangshan port in Shanghai, China. Shanghai is under an intense COVID lockdown, as are an estimated 87 of the 100 largest cities in China

Photo: Yves Dean/Getty Images

DOLLAR: China has an important Communist Party congress in November, so I would be surprised if they changed policy before November. But President Xi has sent out a message to local officials to pay attention to growth, and there are examples of cities modifying their quarantine policies, for example, by moving from a three-week quarantine to one week. Or in Shenzhen, the factory that produces a lot of Apple products was allowed to keep operating. So I would say, you see some local flexibility, but they are basically sticking to their zero-tolerance policy.

BRINK: Are you seeing any sign of this rippling through global supply chains yet?

DOLLAR: The Ukraine [conflict] is having a big effect on the global economy, and the spread of COVID in China is an additional negative factor, but on a smaller scale, so far. However, the longer it goes on, the more it’s going to take away from China’s annual growth rate.

The financial markets hate the uncertainty around the Ukraine [conflict], the effect on the global economy, and what’s happening with China.

One thing about China, which we saw with the first wave of COVID, is if things shut down for a month or two, then they seem to work extra hard to recover. And that’s kind of a natural tendency, but China’s particularly good at it. Oftentimes, they get close to annual targets, they have a couple of bad months, and then they work super hard for a few months. But if the spread of cases continues throughout the year, then of course, you’re not going to be able to make up for this during 2022.

BRINK: I’ve seen some projection suggesting it could knock a point off the GDP growth. Do you think that is overly pessimistic?

DOLLAR: They set a target for the year of around 5.5% growth in GDP, and they made that decision before the Ukraine [conflict]. Frankly, even leaving aside COVID, that already seemed like a very ambitious target, given the challenges that they were already facing domestically with their real estate and the tech crackdown.

When you add in the Ukraine [conflict], the notion that COVID could take a point or more off of that 5.5 target seems realistic. The financial markets hate the uncertainty around the Ukraine [conflict], the effect on the global economy, and what’s happening with China. So it’s not surprising to see stock markets bouncing around a lot.

When it comes to Ukraine, China happens to be the poster child for a country that imports a lot of petroleum, natural gas and wheat. And the [conflict] has affected prices globally, so it doesn’t even matter where China is importing its oil and gas from — those prices have gone up very dramatically. That’s a big shock for the Chinese economy.

BRINK: How does this play with inflation if the Ukraine crisis drags on and there’s this continued zero COVID policy?

DOLLAR: Well, China has much lower consumer inflation than we do in the U.S., or even in Europe. And so, that actually puts them in a position where they can ease up their monetary policy, while we’re going to be tightening our monetary policy. So that gives them some room to stimulate the economy with both fiscal and monetary policies.

It’s a little bit of a mystery how their consumer pricing inflation has stayed so low. This latest spread of COVID has been going on long enough now that prices for a lot of services have gone down because people are not traveling or going to restaurants as much. So you’ve got price declines in services. And compared to Americans, people don’t drive nearly as much, so high gas prices don’t have as much effect on household budgets. So their inflation is quite modest and they’ve got room to stimulate.

Related themes: CHINA UKRAINE

David Dollar
Senior Fellow of the John L. Thornton
China Center at Brookings Institution

David Dollar is a Senior Fellow in the John L. Thornton China Center at the Brookings Institution and the host of the Brookings trade podcast, Dollar & Sense. He was the World Bank Country Director in China (2004-2009) and the U.S. Treasury representative in Beijing (2009-2013).

Will China Ever Become a Fully Developed Economy?

The original article can be viewed at the Brink’s website HERE.

Global Trade Is Battling Demand and Price Shocks

The invasion of Ukraine and renewed COVID-19 outbreaks in China will hit global trade with a double whammy in 2022: lower volumes and higher prices. We now expect trade to grow by 4.0% in volume terms in 2022 (2 percentage points lower than expected before the crisis), while trade in value terms surges by 10.9% (vs. 7.2% previously expected).

After the contraction in Q3 2021, the risk of a double-dip in global trade volume in H1 2022 has increased further – not only due to supply-chain bottlenecks, but also because of lower demand. The economic consequences of Russia’s invasion of Ukraine will slow GDP growth around the world, especially for economies in Europe. The resulting confidence and demand shock explains more than half of the downward revision in our forecast for trade growth in volume in 2022 (see Exhibit 1). Conversely, trade prices growth has been revised upwards by 5.7 percentage points, with commodity prices and additional supply chain disruptions contributing roughly equally.

Global trade will take a hit, particularly in Europe, as the conflict in Ukraine continues.

Photo: Unsplash

After the contraction in Q3 2021, the risk of a double-dip in global trade volume in H1 2022 has increased further – not only due to supply-chain bottlenecks, but also because of lower demand. The economic consequences of Russia’s invasion of Ukraine will slow GDP growth around the world, especially for economies in Europe. The resulting confidence and demand shock explains more than half of the downward revision in our forecast for trade growth in volume in 2022 (see Exhibit 1). Conversely, trade prices growth has been revised upwards by 5.7 percentage points, with commodity prices and additional supply chain disruptions contributing roughly equally.

Exhibit 1: Breakdown of 2022 trade growth forecast revisions (percentage points)

The Demand Shock

The confidence and demand shock will result in a loss of $480 billion in exports to Russia and Eurozone countries in 2022 (roughly evenly split between the two destinations), with companies in Eastern Europe the most exposed. While Russia as an end-demand market is not systemic at the global level (representing just 1.2% of global imports on average in 2015-2019), the multi-year recession it is likely to face could lead to losses in the region.

The most exposed countries are Moldova, Slovakia, Serbia, Slovenia and Czech Republic, where exports exceed 1.5% of GDP. Among the biggest Eurozone exporters, Germany and Italy are among the top 20 most exposed, with potential losses of up to 0.6% ($21 billion) and 0.5% of GDP ($90 billion) respectively, in the worst-case scenario where relationships with Russia are completely frozen.

Looking at Russia as a supplier in global and regional value-chains, Eastern Europe remains the most at risk, while a complete cut-off of relations would mean the Eurozone’s largest four economies losing up to 0.4% of their GDPs and 1.1% of their exports.

Focus on Commodities

Looking at the world’s exposure to goods produced in Russia, the sectors of focus are energy (e.g., oil, gas), metals (e.g., aluminum, palladium, nickel) and agrifood (e.g., wheat, corn) as Russia respectively represents around 9%, 3% and 2% of each sector’s global exports. By looking precisely at the amount of energy, metals and agrifood inputs produced in Russia that end up in other countries’ outputs (through direct and indirect trade linkages), we find that Bulgaria (close to 9% of GDP), Lithuania (more than 5% of GDP) and Hungary (more than 2% of GDP) are the most exposed (see Exhibit 2).

Some Western and Northern European countries are also among the top 20 most exposed, including the Netherlands (0.8% of GDP), Sweden (0.6%), Italy (0.6%) and Germany (0.5%). This compares with 0.3% of Chinese GDP depending on Russian inputs, and 0.1% for the US. Looking at how much Russian value-added is used in other countries’ exports yields similar results, with Eastern European economies the most exposed, while up to 1.1% of exports from the largest four economies of the Eurozone could be at risk (compared with 0.7% for China and 0.2% for the US).

Exhibit 2: Russian energy, metals and agrifood inputs used in respective countries’ output (% of GDP), top 20 exposed in relative terms

Supply Chain Bottlenecks

Europe is thus by far the most at risk of supply-chain disruptions caused by the Russian invasion of Ukraine and ensuing sanctions. Beyond food and energy commodities, which can be easily substituted with other suppliers, metals are actually more sensitive products. Indeed, they are often part of an industrial process that has been designed to take into account the particularities of a certain supplier. As such, changing suppliers, even when possible, is not an easy task as it might require industrial adjustments. Based on the critical materials analysis from the European Commission, we observe that Russia represents over 10% of imports for about 20 metals, with key applications in transport equipment, high-end electronics (batteries, semiconductors, smartphones), construction and automotive.

To account for second-round supply-chain effects of ongoing events, value-added that needs to transit via Russia before reaching its final destination also needs to be taken into consideration, on top of that directly produced in Russia. We find that the latter has a much larger impact than the former, which is even negligible outside Europe. This confirms Russia’s limited role in global and regional supply chain logistics. Indeed, even if high-frequency data show that the number of tankers moving in the Black Sea and Baltic Sea, and the number of container vessels anchored in Russian ports, have declined since the start of the conflict, it is important to keep in mind that Russia represents just around 2-3% of the global tanker fleet and containerized trade.

New COVID-19 outbreaks in China are the larger issue for global supply chains as the sustained zero-COVID policy is likely to keep delivery times elevated throughout 2022. Local lockdowns and more restrictions in response to rising infections in cities such as Shenzhen and Shanghai are likely to impact production and logistics in China. Data show that congestion waiting times and anchorage outside the Yantian port and the outer Pearl River Delta have risen over the past few weeks. For now, they remain below the levels seen during summer 2021, when outbreaks led to temporary port closures.

However, this new bottleneck comes at a time when the global maritime shipping industry is still fragile. A repeat of the temporary port closures in China could have ripple effects on global logistics: The historical relationship between our proprietary China port congestion index and the global manufacturing PMI suppliers’ delivery times index (see Exhibit 3) suggests that delivery times are likely to remain above the pre-pandemic average for most of 2022, and even lengthen slightly at the start of 2023 – though remaining below 2021 peaks.

Exhibit 3: China port congestion index and global manufacturing sector delivery times

Ana Boata
Global Head of Economic Research at Allianz Trade

Ana Boata is the global head of Economic Research at Allianz Trade. Ana started her career in the banking sector before joining Euler Hermes in November 2012 as Eurozone economist. In 2018 she received the Best Forecaster Award for the Eurozone by Consensus Forecast. In 2019, she became head of Macroeconomic Research of Euler Hermes Group and led its thematic research on SMEs. Ana also teaches macroeconomics at the University of Paris Dauphine and Sciences Po Paris.

Françoise Huang
Senior Economist for Asia-Pacific at Allianz Trade

Françoise joined Allianz Trade in 2019 as a senior economist for Asia-Pacific. Prior to this, Françoise worked as an Economist for over five years at the equity broker Exane BNP Paribas in London. There, she was in charge of the macroeconomic analysis of the Chinese economy and Emerging Markets. She also worked on global and European topical themes. Her other work experiences include the ACPR, the French supervisor for the banking and insurance sectors.

Ano Kuhanathan
Sector Advisor and Data Scientist at Allianz Trade

Ano Kuhanathan has held various positions in the financial industry in trading, research and consulting. He was the Eurozone economist at Axa Investment Managers from 2016 to 2018. Before joining Allianz Trade in 2020, he was the head of economic advisory and advanced analytics at EY Advisory. Ano regularly teaches economics, sustainable finance and applied data science at Neoma Business School.

A version of this article originally appeared in Unravel.

The original report can be read at the Brink’s website HERE.

Revolutionary Changes in Transportation Could Slow Global Warming — If They’re Done Right

Around the world, revolutionary changes are under way in transportation. More electric vehicles are on the road, people are taking advantage of sharing mobility services such as Uber and Lyft, and the rise in telework during the COVID-19 pandemic has shifted the way people think about commuting.

Transportation is a growing source of the global greenhouse gas emissions that are driving climate change, accounting for 23% of energy-related carbon dioxide emissions worldwide in 2019 and 29% of all greenhouse gas emissions in the U.S.

The systemic changes under way in the transportation sector could begin lowering that emissions footprint. But will they reduce emissions enough?

Electric cars are shown charging in a garage. Electric vehicles and other changes in transportation can help significantly lower the greenhouse gas emissions that cause climate change.

Photo: Unsplash

In a new report from the Intergovernmental Panel on Climate Change released April 4, 2022, scientists examined the latest research on efforts to mitigate climate change. The report concludes that falling costs for renewable energy and electric vehicle batteries, in addition to policy changes, have slowed the growth of climate change in the past decade, but that deep, immediate cuts are necessary. Emissions will have to peak by 2025 to keep global warming under 1.5 degrees Celsius (2.7 F), a Paris Agreement goal, the report says.

Source: IPCC Sixth Assessment Report

The transportation chapter, which I contributed to, homed in on transportation transformations – some just starting and others expanding – that in the most aggressive scenarios could reduce global greenhouse gas emissions from transportation by 80% to 90% of current levels by 2050. That sort of drastic reduction would require a major, rapid rethinking of how people get around globally.

The Future of EVs

All-electric vehicles have grown dramatically since the Tesla Roadster and Nissan Leaf arrived on the market a little over a decade ago, following the popularity of hybrids.

In 2021 alone, the sales of electric passenger vehicles, including plug-in hybrids, doubled worldwide to 6.6 million, about 9% of all car sales that year.

Strong regulatory policies have encouraged the production of electric vehicles, including California’s Zero Emission Vehicle regulation, which requires automakers to produce a certain number of zero-emission vehicles based on their total vehicles sold in California; the European Union’s CO2 emissions standards for new vehicles; and China’s New Energy Vehicle policy, all of which have helped push EV adoption to where we are today.

Beyond passenger vehicles, many micro-mobility options – such as autorickshaws, scooters and bikes – as well as buses, have been electrified. As the cost of lithium-ion batteries decreases, these transportation options will become increasingly affordable and further boost sales of battery-powered vehicles that traditionally have run on fossil fuels.

An important aspect to remember about electrifying the transportation system is that its ability to cut greenhouse gas emissions ultimately depends on how clean the electricity grid is. China, for example, is aiming for 20% of its vehicles to be electric by 2025, but its electric grid is still heavily reliant on coal.

With the global trends toward more renewable generation, these vehicles will be connected with fewer carbon emissions over time. There are also many developing and potentially promising co-benefits of electromobility when coupled with the power system. The batteries within electric vehicles have the potential to act as storage devices for the grid, which can assist in stabilizing the intermittency of renewable resources in the power sector, among many other benefits.

Other areas of transportation are more challenging to electrify. Larger and heavier vehicles generally aren’t as conducive to electrification because the size and weight of the batteries needed rapidly becomes untenable.

For some heavy-duty trucks, ships and airplanes, alternative fuels such as hydrogen, advanced biofuels and synthetic fuels are being explored as replacements for fossil fuels. Most aren’t economically feasible yet, and substantial advances in the technology are still needed to ensure they are either low- or zero-carbon.

Other Ways to Cut Emissions From Transportation

While new fuel and vehicle technologies are often highlighted as decarbonization solutions, behavioral and other systemic changes will also be needed to meet to cut greenhouse gas emissions dramatically from this sector. We are already in the midst of these changes.

Telecommuting: During the COVID-19 pandemic, the explosion of teleworking and video conferencing reduced travel, and, with it, emissions associated with commuting. While some of that will rebound, telework is likely to continue for many sectors of the economy.

Shared mobility: Some shared mobility options, like bike and scooter sharing programs, can get more people out of vehicles entirely.

Car-sharing and on-demand services such as Uber and Lyft also have the potential to reduce emissions if they use high-efficiency or zero-emission vehicles, or if their services lean more toward car pooling, with each driver picking up multiple passengers. Unfortunately, there is substantial uncertainty about the impact of these services. They might also increase vehicle use and, with it, greenhouse gas emissions.

New policies such as the California Clean Miles Standard are helping to push companies like Uber and Lyft to use cleaner vehicles and increase their passenger loads, though it remains to be seen whether other regions will adopt similar policies.

Public transit-friendly cities: Another systemic change involves urban planning and design. Transportation in urban areas is responsible for approximately 8% of global carbon dioxide emissions.

Efficient city planning and land use can reduce travel demand and shift transportation modes, from cars to public transit, through strategies that avoid urban sprawl and disincentivize personal cars. These improvements not only decrease greenhouse gas emissions, but can decrease congestion, air pollution and noise, while improving the safety of transportation systems.

How Do These Advances Translate to Lower Emissions?

Much of the uncertainty in how much technological change and other systemic shifts in transportation affects global warming is related to the speed of transition.

The new IPCC report includes several potential scenarios for how much improvements in transportation will be able to cut emissions. On average, the scenarios indicate that the carbon intensity of the transportation sector would need to decrease by about 50% by 2050 and as much as 91% by 2100 when combined with a cleaner electricity grid to stay within the 1.5-degree Celsius (2.7 Fahrenheit) target for global warming.

These decreases would require a complete reversal of current trends of increasing emissions in the transportation sector, but the recent advances in transportation provide many opportunities to meet this challenge.

A version of this article originally appeared in The Conversation.

Related themes: CITIES CLIMATE ADAPTATION RENEWABLE ENERGY

Alan Jenn
Assistant Professional Researcher at The Institute of Transportation Studies at the University of California, Davis

Alan Jenn is an assistant professional researcher at the Plug-in Hybrid and Electric Vehicle (PH&EV) group of the Institute of Transportation Studies (ITS) at the University of California, Davis, and an affiliate at Lawrence Berkeley National Laboratory. Alan’s research is focused on plug-in electric vehicles (PEVs): integration with the electric grid, adoption of the technology, use in ride-hailing companies (such as Uber and Lyft), and its impact on transportation finance.

The original report can be read at the Brink’s website HERE.

How the Ukraine Crisis Is Disrupting Global Supply Chains, Part 2

Experts are assessing the ripple effects that the Ukraine crisis is having across a wide variety of global supply chains that have already been frayed by the upheaval from the pandemic.

In the second article in our series (you can read the first piece here), we spoke to Sarah Schiffling, senior lecturer in Supply Chain Management at Liverpool John Moores University.

SCHIFFLING: We see a variety of impacts from the crisis in Ukraine on global supply chains. The most obvious is energy, but we’ve also got agricultural supply chains. Ukraine is a massive agricultural producer for wheat, corn, sunflower oil, and also metals and rare materials that are feeding into some already strained supply chains. For example, neon, which is needed in the production of semiconductors.

The rise in oil prices is going to affect transport around the globe, an area where there’s already been a lot of disruption with very high container prices over the past year or so. The closure of Russian airspace to most airlines means much longer routes, particularly from Europe to Northeast Asia.

We’re looking at additional flight times of several hours being added to these routes, and because of that extra flight time, the planes need more fuel on these flights, which reduces the capacity space on these aircraft.

Having a broader supplier base helps prevent businesses from being too impacted by a geographically constrained issue like the Ukraine crisis.

Photo: Unsplash

The Closing of Odessa

BRINK: How about the sea supply chains — are they being equally impacted?

SCHIFFLING: Black Sea shipping is pretty much suspended. Commercial shipping in and out of Ukraine is non-existent right now. The closure of the port at Odessa is a big concern for wheat exports. There are quite a few countries that are heavily dependent on Ukrainian wheat, such as Egypt, Turkey, but also areas of global crisis such as Yemen and Lebanon, where the main grain silos were destroyed in the 2020 explosion.

But it could also impact you if you are a supermarket chain that gets wine from Moldova. That was probably scheduled to go through Odessa and then shipped onward. Where I live, near the port of Liverpool, we had a Russian tanker coming here and dockers refused to unload it so it had to be turned back.

Worrying Rise of Food Insecurity for Many Countries

BRINK: Is this likely to increase food insecurity in some countries?

SCHIFFLING: Absolutely, this crisis comes on top of existing issues in many countries. We’re seeing, for example, stunning numbers from the World Food Programme, which supports so many people around the world. In a normal year, the WFP gets 50% of its wheat from Ukraine, and it’s now estimating that their costs will rise by around $700 million, due to the crisis in Ukraine.

Countries that have limited ability to shift to other supplies or to pay an extra premium are likely to be the most heavily affected, which is particularly tragic if you’re looking at a country like Yemen, where we already have many people on the brink of starvation, and now they’re facing rising food prices.

BRINK: How much impact is this going to have on the whole idea of just-in-time supply chains that’s really expanded in the last 15 or so years?

SCHIFFLING: This ties into the wider conversation that has been triggered by the pandemic and the resulting supply chain effects. It is showing us once more that it’s really important to understand your supply chains and to be prepared. It’s another argument for more of a “just in case” approach rather than just in time.

You need to have higher inventory to be able to weather these storms. But there’s also huge responsibility on the customer side. If customers are demanding highly customized deliveries at low prices, then it’s very difficult to build up your buffer to make sure that you’ve got the resilience in that supply chain.

You might have a very good spread in your first-tier suppliers, but in the end, it’s not much help if you discover that it all comes back to the same second- or third-tier supplier.

It helps to build up your partnerships in your supply chain and make sure that you are working with partners who are valuing you and will be supporting you in any changes that you might experience so you can rely on them. Of course, that’s all very nice, but even if you have the best relationship in the world with a Ukrainian supplier right now, they’re not able to help you.

A China-Plus Approach

Another approach is to diversify geographically in terms of suppliers, having a broader supplier base so you’re not too impacted by a geographically constrained issue within supply chains. We’ve seen that in previous crises. We are increasingly seeing a China-plus policy, where companies continue to import from China but also invest in a supplier closer from home to broaden out their base. So if you do have these transport disruptions that we have been seeing, you have more local options and shorter supply chains that might be more flexible to respond if there are disruptions.

BRINK: Do most companies know where their supplies come from, at least in the kind of first and second degree? Is it possible to map that now with technology?

SCHIFFLING: Most companies will know their first-tier suppliers. But a lot of companies were surprised to see how much they’ve been affected by events in the Black Sea region right now and are trying to figure out what exactly comes from there or through there.

It’s not necessarily just your raw material suppliers. You will also be looking at, is there maybe transport providers that need to be on board as well? If I’m talking about getting my wine out of Moldova, then I don’t just need my wine supplier, I also need to know which tanker is transporting that wine because if that tanker is currently in the port of Odessa, then I’m probably not going to get my delivery, even if I’m not supposed to be shipping out of Odessa.

Then, once we get into second-tier, third-tier suppliers, it gets a lot more difficult. We’re seeing how crucial it is from a business perspective to actually understand what we are dependent on. You might have a very good spread in your first-tier suppliers, but in the end, it’s not much help if you discover that it all comes back to the same second- or third-tier supplier.

Related themes: GEOPOLITICAL CONFLICT SUPPLY CHAINS TRADE

Sarah Schiffling
Senior Lecturer in Supply Chain Management of Liverpool John Moores University
Sarah Schiffling is a senior lecturer in supply chain management at Liverpool John Moores University, UK, and an international research fellow with the HUMLOG Institute in Helsinki, Finland. She previously worked as lecturer in logistics and operations management at the University of Lincoln, UK.

Supply Chains in 2022: Shortages Will Continue

The original article can be viewed at the Brink’s website HERE.

How the Ukraine Crisis Is Disrupting Global Supply Chains, Part 1

Global supply chains were starting to recover from two years of upheaval caused by the pandemic when the Ukraine crisis hit. The further disruption caused by Russia’s invasion of Ukraine could cause many companies to rethink their suppliers.

BRINK spoke to Mark Millar, the author of Global Supply Chain Ecosystems and a supply chain expert based in Hong Kong, and asked which supply chains are being most impacted by the crisis.

MILLAR: Even though this is a very fluid and fast-moving scenario, and notwithstanding the terrible humanitarian calamity, it is already clear that the Russia-Ukraine conflict will have far-reaching ramifications for many supply chains.

In particular, there are immediate consequences for ground-based freight networks transporting goods between Asia and Europe by road and rail.

Last year, shippers suffering from the chaotic uncertainty in container shipping caused by COVID turned to rail transport as an alternative freight option for the Asia-Europe trade routes. This year, the war in Ukraine will impact supply chains again.

Photo: Unsplash

The Asia-Europe Land Route

Last year, shippers suffering from the chaotic uncertainty in container shipping caused by COVID turned to rail transport as an alternative freight option for the Asia-Europe trade routes. In 2021, rail operators ran more than 1,200 freight trains per month between China and Europe, transporting almost 1.5 million containers. Many of these trade routes from China transit through Russia, Ukraine and Belarus on their way to Western European destinations.

The risks for such containerized rail-freight are now prohibitively high, so traders are frantically searching for alternative routes, at a time when the containerized shipping sector is still besieged by port congestion, shipping delays and container shortages resulting in extensive delays and record-high freight rates.

However, just about every supply chain will suffer a negative impact from this crisis, for example, with fuel prices surging and shipping routes being cancelled or diverted.

A Nail in the Coffin of Over-Globalized Trade Routes

Unfortunately, this is another massive disruption for today’s globalized supply chains, on top of two years of COVID-induced supply chain chaos, from which many businesses (or economies) have still not recovered.

There is enormous uncertainty as to whether this crisis could be over by the end of the month, whether it could drag on for years, or worst-case scenario, could trigger a direct military conflict between NATO and Russia.

Whichever the outcome, I think it is another nail in the coffin of our modern-day over-globalized supply chains.

The cumulative disruptions over the last five years from ever-increasing costs in Asia, geopolitical tensions and trade tariffs, the pandemic’s turbulence in global shipping and now the military conflict in Europe have exposed the profound interdependencies and inherent vulnerabilities in globalized supply chains.

BRINK: Are there any critical products that come from Russia and Ukraine (besides oil and gas) that will be disrupted?

MILLAR: In addition to gas and oil, Russia’s top exports include coal, iron, platinum, raw aluminum, sawn wood and copper. So many global commodities markets will be squeezed, and we can foresee some shortages of raw materials.

Food Supplies Will Be Impacted

As both countries are major exporters of agricultural products, we can also expect global food supply chains to be impacted.

Russia exports over $6 billion of wheat annually and is a major producer of vast amounts of the essential raw ingredients for the fertilizer products that are used in produce grown around the world.

Many of the finely tuned just-in-time and lean systems will be replaced or supplemented with business models incorporating buffer inventories and safety stocks. In many scenarios, just-in-time will become replaced by just-in-case.

Meanwhile in Ukraine, two-thirds of its GDP relate to international trade, the foundation of which is a strong agricultural sector. Fifteen percent of global grain exports come from Ukraine, as well as cereals, animal and vegetable oils, and seed oils, together representing 35% of Ukraine’s exports.

A further quarter of Ukraine’s exports are iron ore and steel, including refined electrical machinery, equipment and other mechanical appliances.

BRINK: Do you think this crisis is likely to cause companies to rethink their supply chains and develop suppliers nearer to home?

MILLAR: Absolutely. As a result of COVID, many companies were already re-evaluating their supply chains, exploring options for near-shoring and/or reshoring of their sourcing and production closer to home.

However, reconfiguring and relocating your global supply chain is much easier said than done.

Today’s Supply Chains Cannot Easily Be Moved

Today’s global supply chain ecosystems have been built and fine-tuned over many years. They cannot easily be untangled, unpacked and moved elsewhere. Whether near-shoring or re-shoring, this is a major undertaking. And, of course, you can’t stop your business whilst you’re reconfiguring your supply chain.

The entire ecosystem needs to be reviewed from end to end, considering potential future sources — both the suppliers and their locations — for essential inputs, such as materials and components. Ideally, the new supplier network will be within the same vicinity as the newly relocated manufacturing operations.

For finished goods distribution, new channels and business partners may need to be established — and alternative logistics service providers evaluated and appointed.

Companies must undertake any supply chain reconfiguration initiative as a parallel project, alongside the business-as-usual activities of day-to-day supply chain execution. In terms of resources, the project will consume plenty of management bandwidth and demands on your A-team. It will incur considerable costs, some inevitable disruption, as well as sizable risk. The timeline to complete the relocation would be measured in years, not months.

So, reconfiguring your supply chain is not for the fainthearted.

But this Ukraine crisis on top of two years of COVID disruptions has surely brought many companies to a tipping point that will result in real action during the coming years on near-shoring and reshoring initiatives. Supply chain 2025 will undoubtedly look significantly different for many companies.

The Knock On Effect for China

BRINK: Is there likely to be a knock-on effect on China?

MILLAR: Inevitably. China is the largest trading partner for both Russia and Ukraine, so those respective bilateral trade flows are going to be curtailed by the conflict.

More importantly, China’s trade with the world will be adversely affected as established trade flows and supply chains become increasingly disrupted.

In particular, the various Silk Road rail-freight corridors — via Belarus and Poland, or Ukraine, or St. Petersburg and Finland — will become dislocated. There are over seventy rail freight routes from China connecting into 174 cities across 23 countries in Europe, offering transit times of just 12-17 days, shaving several weeks off sea freight transit times.

Many of these routes are now completely impractical and unfeasible, resulting in goods becoming stranded en-route and inventory shortages in destination markets.

This will have the greatest impact on goods exported from factories that have relocated inland to China’s midwest, for whom rail freight is a particularly relevant alternative to sea freight. Chengdu in Sichuan province, for example, is almost two thousand kilometers inland from the main export container port in Shanghai.

China will also experience knock-on effects from the broader supply chain implications, such as near-shoring initiatives and regionalization trends, which over the medium term will result in some manufacturing being relocated out of China.

The End of Just in Time?

BRINK: How should companies build greater resilience into their overseas supply chains to avoid being impacted by this kind of crisis?

MILLAR: Supply chain resilience has become the key strategic priority for this decade. Multiple initiatives need to be undertaken, including revisiting the supply base to identify sources closer-to-home and adopting wider deployment of dual- or multi-sourcing strategies, featuring multiple suppliers in multiple locations.

Many of the finely tuned just-in-time and lean systems will be replaced or supplemented with business models incorporating buffer inventories and safety stocks. In many scenarios, just-in-time will become replaced by just-in-case.

Over the medium term, I foresee some large-scale near-shoring activity with many companies adopting a more regional approach — e.g., producing in Latin America for the USA, and serving developed EU markets with products made in lower-cost European nations such as Poland, Hungary or Turkey, potentially also in some north African countries.

The technological advancements and reducing costs in robotics and automation will also enable some businesses to re-shore their production activities back into high labor cost markets, further empowered by increasing availability of Robotics as a Service (RaaS) solutions, which eliminate the need for upfront capital costs, which hitherto proved prohibitively expensive, especially for small- and medium-enterprise businesses.

Related themes: GEOPOLITICAL CONFLICT SUPPLY CHAINS

Mark Millar
Author of Global Supply Chain Ecosystems
Mark Millar is author of the widely acclaimed book Global Supply Chain Ecosystems that help business leaders make better informed decisions about strategies for competitive advantage in today’s complex, connected world.

Mark serves on the Advisory Board of the Foundation for Future Supply Chain, is a Visiting Lecturer at Hong Kong Polytechnic University and has won multiple awards including “Thought Leadership Champion” and “Most Inspiring Supply Chain Professional”.

Supply Chain Disruption Impacts Cost, Quality and Risk

The original article can be viewed at the Brink’s website HERE.

Click HERE to read Part 2 of “How the Ukraine Crisis Is Disrupting Global Supply Chains”

FBCCI wants corporate tax rate cut to 10-15%

The country’s apex trade body has demanded that the government lower corporate tax rate to 10-15%, in order to help the backward linkage industry flourish.

Since most of the backward-linkage industries in the country are small and medium-sized enterprises, corporate tax rate in this sector should be less, it further said.

The Standing Committee of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) on Backward Linkage Industries came up with the proposal at its first meeting at FBCCI Icon in the capital on February 10.

Chairman of the committee Abul Kalam Bhuiyan said lowering the corporate tax rate to 10-15% would help develop the backward linkage industry. He also suggested that the entrepreneurs should get plots at affordable prices for expansion of the industry.

Speaking as the chief guest at the meeting, FBCCI Vice President M A Momen said that most of the giant companies today started their journey as backward linkage industries. “Therefore, the role of this sector in the overall development of the country is undeniable,” he said.

Mr. Momen said industrialisation was not possible without development of the backward linkage industry. If there is no such industry, the supply chain will break down, said the FBCCI leader, putting emphasis on the development of this industry for greater good.

At the same time, he called upon the government to give due importance to this sector while adopting policies.

Director-in-charge of the FBCCI standing committee Joshoda Jibon Debnath called upon the entrepreneurs of the backward linkage industry to take concerted initiatives to establish a separate industrial zone for the sector. He assured them of cooperation in accessing necessary bank loans in this regard.

Mr. Debnath said the expansion of the backward linkage industry was essential to meet the challenges of post-LDC industrialisation.

The Financial Express

Chey Tae-won conducts sweeping reshuffle at KCCI

The Korea Chamber of Commerce and Industry (KCCI) Chairman Chey Tae-won, who is also SK Group chairman, has conducted sweeping organizational restructuring to strengthen communication between Korea’s largest lobby group and its member firms, KCCI said.

The restructuring marks the first of its kind since Chey was inaugurated as KCCI Chairman in February 2021.

“Instead of downsizing the existing management planning headquarters, we established a planning and coordination headquarters to enhance the communication platform and also revived the Sustainability Management Institute that will lead communication efforts with society,” KCCI said.

First, the key role of a communication platform will be to incorporate diverse voices at home and abroad to find solutions to economic and social problems through the establishment of the Planning and Coordination Headquarters.

The Planning and Coordination Headquarters is in charge of operating the communication platform, discovering agendas, and new entrepreneurship.

The Sustainability Management Institute was also revived, which had previously led environmental management. The institute will lead efforts to commercialize national development projects, ESG management, and aid in the implementation of carbon neutrality measures.

The public relations room was also expanded and reorganized. The purpose is to integrate and unify external communication functions by newly establishing the Corporate Relations Team (CR) and New Media Team within the existing public relations (PR) team.

The KCCI also conducted a largescale personnel reshuffle transferring 30 team leader level staff to head other departments within the firm.

“This reorganization is aimed at strengthening the ‘communication’ capability, which has been continuously emphasized since the inauguration of Chairman Chey Tae-won. We will seek ways to gather opinions from all levels of society to pave the way for the country to achieve sustainable growth, where all members are satisfied,” KCCI Executive Vice Chairman Woo Tae-hee said.

Korea Times

New program to ensure Turkish SMEs e-trade with US

Ankara is Capital of Turkiye

The Union of Chambers and Commodity Exchanges of Turkey (TOBB) and the American business association (AmCham Turkey) will provide local companies with mentorship services to enable those firms to have the chance to conduct e-trade businesses with the United States.

The “e-Commerce Mentoring Program” will benefit small and medium scale enterprises (SMEs), TOBB said in a statement.

The firms that will be selected among the applicants will be matched with mentors. Market analysis will be carried out with the companies, enabling them to conduct e-exports to the United States market.

According to the project, potential companies in priority sectors will be determined. Strategic planning, consultancy and business development support will be given to these companies so that they can mature their e-export processes.

Companies that aim to e-export to the U.S. in sectors such as furniture, textile, ready-made clothing and machinery sub-industries will have the opportunity to review their current cross-border e-commerce processes, increase their business volumes and accelerate their processes once mentoring applications have been approved.

The Turkish Trade Center established by TOBB in Chicago will also play an active role in expanding the presence of local firms in the U.S. market.

TOBB President Rifat Hisarcıklıoğlu said that they continue to provide active support to entrepreneurs for new trade opportunities.

Emphasizing that they want to increase Turkey’s share in global foreign trade, Hisarcıklıoğlu said: “As TOBB, we are working to increase the participation of our SMEs, which are an indispensable element of economic development, in the global value chain and to improve our companies’ access to markets.”

Representing more than 110 U.S. companies with investments of more than $50 billion in Turkey, AmCham Turkey Chairperson Tankut Turnaoğlu stated that they hope to bring together SMEs aiming to enter the U.S. market with their members.

“As an association, one of our priorities is to enable Turkish companies to participate more in the global value chain. Thus, we are carrying out the ‘e-Commerce Mentoring Program’ in cooperation with TOBB and with the support of our member UPS,” Turnaoğlu said.

Daily Sabah

Having up-to-date machinery a must: ICCIMA head

Head of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) has said having advanced and up-to-date production lines and machinery is the prerequisite for developing export-oriented industries, the ICCIMA portal reported.

Mentioning a meeting of the country’s industrial manufacturers with Leader of the Islamic Revolution Seyed Ali Khamenei on February 1, Gholam-Hossein Shafeie said: “Having employment-generating and export-oriented production requires bridging the gap between the technology level of domestic and global production lines.”

In the meeting with the country’s producers the leader had stressed the need to pay attention to “employment-creating and export-oriented production” in order for the country to overcome its economic problems.

According to Shafeie, the decline of the value of the national currency against the U.S. dollar along with the sanctions have prevented domestic producers from upgrading their production lines, and this has created a gap between Iran and the world in terms of technology.

Tehran Times

Irfan Iqbal Sheikh is new chairman of FPCCI

Irfan Iqbal Sheikh has been unanimously announced as the Chairman of the Management Committee of FPCCI by its Executive Committee. It has extended its full support and expressed their full confidence in the leadership and the statesmanship of Mr. Irfan Iqbal Sheikh.

A large number of the executive committee members participated physically; from the Head Office (Karachi), capital office (Islamabad) and the regional offices of Lahore, Peshawar and Quetta. The whole process was conducted amicably and harmoniously under the directions of the Director General of Trade Organizations (DGTO). Representatives of the DGTO office were also present on the occasion to ensure its transparency and integrity.

Irfan Iqbal Sheikh expressed his profound gratitude to the executive committee members for the honor bestowed upon him and articulated his resolve to fulfil the myriad responsibilities as the head of country’s apex trade body.

The Management Committee will also include Mr. Muhammad Suleman Chawla as its Vice Chairman; and, Shabbir Hassan Mansha, Mr. Muhammad Nadeem Qureshi and Qazi Muhammad Akbar as its members.

The committee has been empowered to induct new members into the management committee, if needed; appoint members of FPCCI’s Standing Committees to represent various sectors; constitute FPCCI’s Business Councils for various countries; nominate FPCCI’s representatives to International Forums; manage all the operations and affairs of the federation; prepare FPCCI’s budget proposals and represent the business, industrial and trade community of entire Pakistan on all forums.

Daily Times

FNCCI objects to banks raising interest rates on deposits

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has objected to the agreement reached among commercial banks to increase the interest rate on deposits.

The Nepal Bankers Association, an association of chief executive officers of commercial banks, had on February 11 agreed to raise the interest rate on deposits to 11.03%.

The FNCCI has issued a statement objecting to the news of the agreement among banks. It urged to reconsider the agreement.

The statement said that the private sector is worried that the industries and businesses are going through a crisis, and in such situation if the interest rates on loans taken by the industrialists increase again, the sector will strain further and industrialists will end up on the streets.

The FNCCI concluded that the decision to increase interest rates in the country will further weaken the industries and businesses as the industry and business sectors will be subject to all-round pressure due to hiked interest rates.

Khabarhub

Russia-Ukraine Crisis Amplifies Growth and Inflation Risks in Asia

The crisis in Ukraine will raise food, energy, and other prices, while sanctions will disrupt financial markets in Asia.

Photo: Unsplash

The sharp escalation of the Russia-Ukraine crisis has led us to change our global baseline. This assumes a prolonged period of instability following the installation of a “friendly” government in Ukraine by Russia.

Our new baseline incorporates higher energy, food and other commodity prices over the medium term, as well as more financial market disruption and tougher EU and U.S. sanctions on Russia.

The impact of these changes on our global forecasts is expected to be significant, with Russia bearing the heaviest impact.

We estimate that global growth will be 0.2ppts lower in 2022 from our no-crisis baseline, while inflation could be 0.7ppts higher. For Asia-Pacific (APAC), GDP growth will likely be lower, by 0.1ppts-0.15ppts in 2022, and inflation higher, by 0.3ppts-0.4ppts (Exhibit 1).

Exhibit 1: The Crisis Will Impact Both Growth and Inflation Adversely

Limited Links With Russia and Ukraine, but Asia Not Completely Insulated

Asia’s geographical distance from the center of the crisis, and its weak trade and investment linkages with both countries, should shield it from a significant impact from either a collapse in Russian imports or any trade or investment barriers imposed by Russia’s administration.

Russia and Ukraine together account for less than 1% of total exports for most Asian economies (Exhibit 2). The notable exception is China. But even there, the share is not big enough to be of great concern. The picture is similar for imports. While import dependency is slightly higher compared to exports, Russia is not the main source of energy or other commodity imports for Asian economies. They largely depend on the Middle East for energy supplies and on intra-regional trade for other raw materials.

Exhibit 2: The Trade Channel Represents a Minor Source of Risk

Russia is also not an important source of FDI, with a minuscule share of total FDI inflows into Asia. Despite its political proximity to India and China, it does not feature in the top 10 sources of FDI for either.

Oil and Commodity Prices

But this doesn’t mean that global developments will have no consequence for Asia. We see two main channels of impact. The first, and the most important channel, is via higher oil and commodity prices. We now expect oil prices to remain above $100/barrel until the early stages of the second half and also see the plausibility of the crisis pushing up base metal and food prices. This will result in a negative terms-of-trade shock for Asia, as it is a net commodity importer.

Simulations on our Global Economic Model show that an average oil price of $100/barrel in 2022 will lower Asia’s GDP growth by 0.2ppts, while raising inflation by 0.5ppts. Higher inflation will squeeze household spending across the board. But the eventual GDP growth impact will vary substantially across the region, with large oil importers such as South Korea, Singapore and India being most affected. Meanwhile, Malaysia will suffer less as it’s an oil exporter, and the cost for Indonesia will likely be offset to a large degree by it being a net commodity exporter (Exhibit 3).

Exhibit 3: Higher Oil Prices Will Boost Inflation and Weigh on Growth

External Demand Under Pressure

The second channel is lower foreign demand. With all major economies globally now expected to grow at a slower pace in 2022 and 2023, external demand will come under pressure. This has implications for the growth outlook of the more export-oriented Asian economies.

Other than these, risks to cross-border financial flows need to be monitored closely. At first sight, risks to Asia’s financial sector from the sanctions imposed on Russian banks appear low. Australia and Japan are the only APAC economies so far that have joined the West in announcing sanctions against Russia. Taiwan has announced its intention to do so.

We expect China to continue its economic engagement with Russia. But the latest energy deals and potentially new agriculture deals will likely be denominated in renminbi. Also, China’s commercial banks may scale back their financial transactions with Russia given their exposure to the U.S. dollar system.

Still, as past crises have highlighted, in an increasingly integrated global financial system that is dominated by the U.S. dollar, unexpected disruptions may materialize quickly. It’s likely that Asian markets will remain volatile for the foreseeable future in a risk-off environment (Exhibit 4).

Exhibit 4: Markets Will Likely Remain on an Uncertain Footing for Now

But eventually we are likely to see more differentiation based on economic fundamentals. Some Asian markets could benefit as relative havens of stability and increase their share of global capital flows. These risks, however, are likely to increase for the twin deficit countries — India, Indonesia, and the Philippines, and also Malaysia to some degree, given its dependence on foreign borrowings.

From a policy perspective, higher inflation and deteriorating deficits will increase the pressure on the Reserve Bank of India and the Bangko Sentral ng Pilipinas to act more aggressively, even as growth is slowing. How they navigate this policy dilemma will be crucial for investor sentiment and the future growth outlook. For now, we maintain our view of a more widespread, but relatively muted, tightening in Asia ex-China this year.

A version of this piece originally appeared on Unravel.

Related themes: EUROPE INTERNATIONAL RELATIONS TRADE

Priyanka Kishore
Head of India and Southeast Asia Economics at Oxford Economics
Priyanka Kishore is the head of India and Southeast Asia economics at Oxford Economics. She has more than a decade of experience in macroeconomic research and forecasting across emerging markets, with a special focus on India and ASEAN. She currently leads Oxford Economics’ Singapore Global Macro Services team and is responsible for overseeing the firm’s South and South East Asia research.

Asia: A Growth Puzzle, Once Again

How will the U.S. Presidential Election Impact Asian Economies?

The original article can be viewed at the Brink’s website HERE.

Sheikh Fazle Fahim elected IORBF chairman

Sheikh Fazle Fahim, CACCI Vice President and former president of FBCCI, has been elected as the chairman of Indian Ocean Rim Business Forum, better known as IORBF.

IORBF is the primary body for business representatives to formulate policies and project recommendations to IORA (Indian Ocean Rim Association) member states.

Since the establishment of IORA in 1997, Bangladesh has been elected for the first time as its Chair for 2021-2023. The 23rd Committee of Senior Officials meeting of IORA took place on November 15-16 November, 2021 while the 21st Council of Ministers was on November 17, 2021, said a press release.

In a speech given in the CSO meeting, Fahim talked about his plans with the IORBF to take it forward. While discussing the geo-economic importance of the Indian Ocean as a vital trading hub for the entire world, Fahim pointed out the challenges imposed on IORBF’s operations in the aftermath of Covid-19.

Fahim stressed on supply chain disruptions, the rising cost of trade logistics, decline of investments in the private sector, economic stagflation and inflation. He then proceeded to suggest possible solutions which can be implemented to combat these challenges.

IORA works to improve regional cooperation through the creation of sustainable development within the Indian Ocean region. IORA has 23 Member States and 9 dialogue partners. The primary focus of IORA lies in disaster risk management, tourism & cultural exchanges, maritime safety & security, fisheries management, trade & investment facilitation, and academic, science and technological cooperation. Their two other focus areas are blue economy and women’s economic empowerment.

New Age

“2022 Global Economic Outlook” Forum

CACCI is pleased to invite members, partners and friends to join the CNAIC 70^th Anniversary Forward-thinking Forum – 2022 Global Economic Outlook and Regional Economic Integration to be held on March 15, 2022 at 14:00-16:20 hrs., Taipei Time.

According to the “World Economic Outlook” released by the International Monetary Fund (IMF) in October 2021, the global economy is projected to grow by 4.9 percent in 2022. While the global economy is seen to be on the path to recovery, many challenges remain, including the continued worldwide spread of the Omicron variant of the Covid-19 virus; the slowdown in employment growth; the rapid rise of inflation in the US and in some emerging markets and developing economies; and food security and climate change, among others. As the global supply chain is likely to remain impacted, the outlook of the economic development seems gloomy.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which entered into force on December 30, 2018, is considered a regional trade agreement which upholds the rules-based scope and high-quality standards of the world trading system. It opens to economies which comply with its high standards, and has started accepting the second batch of membership applications in 2021. The Regional Comprehensive Economic Partnership (RCEP), which took effect on January 1, 2022, is currently the largest global free trade agreement with 15 member countries comprising 30 % of the global population and almost 30% of the global GDP. The development of CPTPP and RCEP as well as the regional economic integration in the future will certainly play an important role in deciding the global deployment of businesses.

To be held in a hybrid format, this Forum – which is co-organized by CNAIC and CACCI to commemorate CNAIC’s  70^th Anniversary – will feature speakers and panelists who will share their insights on the latest global economic trends and the outlook of economic integration in the region.

Participation is free of charge.

For the complete Program and to register, please click HERE.

Confirmation Message, along with the Forum link and other relevant information, will be sent to registered participants on March 11.

“The Role of ASEAN in the Global Supply Chain” webinar

CACCI is pleased to convey an invitation from the ASEAN Business Advisory Council (ASEAN-BAC), of which CACCI is an Associate Member of its Joint Business Councils, to attend the virtual event “The role of ASEAN in the Global Supply Chain” on Tuesday, 18 January 2022 at 9:00-11:00 AM (SGT GMT+8).

Synopsis of the webinar

The recent supply chain crisis, caused by events such as climate disasters and new COVID-19 variants, has had a severe impact on businesses, consumers, and the global economy. Companies both small and large have been prompted to restructure their global supply chains, and find new ways to mitigate risk. Supply chain diversification and digitalisation have become of increasing importance, as these strategies provide the potential for companies to operate more sustainably and resiliently across borders. Southeast Asia is home to some of the fastest-growing economies in the world, and presents many opportunities for Canadian companies looking to expand and diversify their businesses internationally. Singapore is often considered a regional hub and a gateway to the rest of Southeast Asia, while other ASEAN countries such as Vietnam are well-positioned to become alternate production hubs in the global supply chain.

Join the Canada-ASEAN Business Council and our partners to find out more about the strategies that are being taken by companies and policy makers to future-proof supply chains, and why the ASEAN region is playing an increasingly important role for companies’ global operations. This event is part of the Canada-ASEAN Business Leaders Series, organized by the CABC, in partnership with the Government of Canada.

Objectives

• Outline the drivers of the current supply chain crisis, and what strategies have proved successful.
• Understanding the current and future impact of COVID-19 variants on global supply chains.
• Understanding the impact of major weather conditions in Canada and ASEAN, and how this affects supply chain management.
• Hear from successful companies/organisations who will share their strategies for diversifying supply chains, and how this can improve the ease of business, investment, and mobility.
• Understand how supply chains are being reimagined in Asia amidst the digital revolution.
• Networking opportunities for the Canada-ASEAN business community.

Click HERE for more information and to register.

Webinar on Asian Economic Integration – Register now

CACCI would like to invite its members and friends to join the 40th Asian Impact webinar on 9 February 2022, Wednesday, 10:00 AM, Manila time, Asian Impact Webinar: Asian Economic Integration Report 2022 Launch.  Rapid digitalization and the COVID-19 pandemic are spurring growth of digital services trade in Asia and the Pacific. ADB’s flagship report explores how the region can capitalize on these opportunities through structural reforms and cooperation.

As a webinar under the Zoom platform, registration is required to attend. Please register in advance of the webinar date at https://asianimpact.adb.org. A confirmation email containing the webinar link and password will be sent once you have successfully registered.

To view the past Asian Impact webinars, please visit: https://www.adb.org/news/events/webinar/asian-impact

What Surprised You the Most About 2021?

2021 A survey of BRINK contributors

To round out 2021, we asked a cross section of our BRINK experts to name — in a couple of sentences — what they had learned that surprised them the most in their areas of expertise over the last year or so since the pandemic began.

Jo Owen, Author of Smart Work: The Ultimate Handbook for Remote and Hybrid Teams

The speed with which firms and people can change. In March 2020, remote working was transformed from unthinkable to essential in one weekend.

Mona Sloane, Sociologist and Senior Research Scientist, New York University

Literacy around AI systems and their risks and benefits has increased over a very short period of time.

David Dollar, Senior Fellow, Brookings Institution

The difficulty of establishing scientific certainty in real time; policies keep changing.

Businesses and populations have quickly adjusted to the “new normal” that the pandemic caused, despite poor performances across the globe by governments.

Source: Pexels

Ellen Ernst Kossek, Basil S. Turner Distinguished Professor of Management, Purdue University, Krannert School of Management

How much COVID-19 negatively impacted the work-life equality, labor force participation and careers of women; perhaps setting them back at least a generation.

Larissa van der Lugt, Director, Erasmus Center for Urban, Port and Transport Economics

The difficulty of achieving cooperation, while the pandemic urged that even more.

Scenario planning in good times is excellent planning for the challenging times.

Deborah Gordon, Senior Principal at Rocky Mountain Institute

How easily the work world adapted to virtual interactions and maintained productivity. I’m eager to see how hybrid working (both in-person and virtual) shapes up in the year ahead.

John Asafu-Adjaye, Senior Fellow, the African Center for Economic Transformation

The extent to which the use of ICT has been scaled up over the past two years in most African countries, especially in the areas of banking, finances and education and health. Going forward, there is an opportunity to accelerate the use of ICT for nation-building by addressing the infrastructure challenges.

RM Charan, President of Charan Associates

How little U.S. business leaders were aware of the implications of the evolving U.S. China relations.

Sarah Tong, Senior Research Fellow at the East Asian Institute at the National University of Singapore

That there are social groups who would oppose efforts to contain the spread of the pandemic.

Alicia Garcia Herrero, Senior Research Fellow, Bruegel

Supply chain disruptions.

Richard Wilding, Professor of Supply Chain Strategy, Cranfield University U.K.

That scenario planning in good times is excellent planning for the challenging times.

Ben Hoster, Director, Transformative Technologies, Marsh McLennan Advantage

The pace of technology adoption and related perils. The second and third order effects of increased remote work and related cyber/digital risks. Technology is at once a key enabler and also a threat vector at increasingly large scale.

Bart W. Edes, Distinguished Fellow at the Asia Pacific Foundation of Canada

How quickly our work environment could dramatically change, with long-term impacts now embedded for the post-pandemic era.

John West, Executive Director, Asian Century Institute

I have been surprised at the incompetent management of COVID in most advanced countries and the lack of a serious effort to uncover the origin of COVID. Against that, I have been equally surprised at how rapidly effective vaccines were developed.

Alexander Privitera, Head of European affairs at Commerzbank AG

The resilience of banks.

Blair Chalmers, Director, Marsh McLennan Advantage

The ability of firms to conduct due diligence on acquisitions virtually (in the face of travel restrictions).

Marcus Courage, CEO at Africa Practice

The constraints of labor laws in managing remote and distributed workforces.

Anbumozhi Venkatachalam, Director, Research Strategy and Innovations at the Economic Research Institute for ASEAN and East Asia

The resilience of value chains and digitalization.

Haig Nalbantian, Senior Partner, Mercer

The ease of adaptation to flexible work arrangements in response to COVID and the ability to sustain productivity and engagement under these circumstances is beyond anything I predicted.

Jason Clay, SVP Markets, ED Markets Institute, WWF

The pandemic is getting all the headlines, but climate change will disrupt and kill more lives and economies. It is already here and is having much more profound impacts than expected.

VADM (Ret) John Miller, CEO, The Fozzie Miller Group

I’ve been impressed by how quickly businesses and populations have adjusted to the “new normal” that the pandemic caused, despite poor performances across the globe by governments, which was slow, oppressive in the establishment of restrictions and regulations, and largely ineffective in easing the burdens caused by the virus.

Kavitha Hariharan, Director, Healthy Societies, Marsh McLennan Advantage

The continued failure to appreciate that in a pandemic, no one is safe until everyone is safe. Lack of vaccine access in poor countries and vaccine hesitancy anywhere result in persistent transmission of SARS-Cov-2, which rolls the dice in favor of the emergence of new variants.

The original article can be read at Brink’s HERE.

What Will Be the Greatest Challenge of 2022?

2021 A survey of BRINK contributors

On December 26th, we asked a cross section of our experts to name — in a couple of sentences — What had surprised them the most in their business since the pandemic began.

In the second half of our survey, we asked them to name the challenge or opportunity that they think will rise up the agenda the most in their area of expertise.

Jo Owen, Author of Smart Work: The Ultimate Handbook for Remote and Hybrid Teams

Hybrid working will become the new normal.

Mona Sloane, Sociologist and Senior Research Scientist, New York University

We will see more AI regulation kick in in 2022, and businesses will have to adapt rapidly to new transparency, accountability and audit requirements.

The transition to a low carbon economy, US-China tensions, inflation, and hybrid working all feature in our experts’ predictions of 2022.

Source: Tyler Lastovih/Pexels

David Dollar, Senior Fellow, Brookings Institution

Rising trade disputes and protectionist policies.

Ellen Ernst Kossek, Basil S. Turner Distinguished Professor Of Management, Purdue University, Krannert School of Management

Implementing flexible working in a way that truly balances employee and employer needs and transforms the workplace from a place to a virtual relationship.

Larissa van der Lugt, Director, Erasmus Center for Urban, Port and Transport Economics

Making progress in the energy transition.

Developing effective, data-driven DEI strategies which will continue to accelerate and come to dominate the HR agenda.

Deborah Gordon, Senior Principal at Rocky Mountain Institute

In 2022, we will need to develop a better understanding of the dynamics of market transitions, especially in an effort to rebuild a net-zero emissions economy. It will be essential to maintain market integration as we shift to low-carbon inputs and outputs — this risk is especially concerning in the refining sector.

John Asafu-Adjaye, Senior Fellow, the African Center for Economic Transformation

The main challenge will be how African economies can recover from the effects of the pandemic and speed up economic growth and create good jobs for the large population of young people. Many countries have had to borrow to supplement the COVID-19 response measures — how can they scale back their debt levels without cutting back on social expenditures?

RM Charan, President of Charan Associates

Inflation, U.S.-China relations, and the U.S. economy.

Sarah Tong, Senior Research Fellow at the East Asian Institute at the National University of Singapore

Uncertainty around the global pandemic and U.S.-China tensions are two of the most serious challenges to the world economy.

Alicia Garcia Herrero, Senior Research Fellow, Bruegel

Taiwan becoming the central focus of U.S.-China strategic competition.

Richard Wilding, Professor Of Supply Chain Strategy, Cranfield University U.K.

Increasing agility and planning for on-shoring, nearshoring and multi-shoring to increase supply chain resilience.

Ben Hoster, Director, Transformative Technologies, Marsh McLennan Advantage

Technology convergence, “smart” devices and applications, with related cyber threats and digital risks, and some day, the Metaverse.

Bart W. Edes, Distinguished Fellow at the Asia Pacific Foundation of Canada

Containing COVID-19 to enable the launch of a sustainable, inclusive global recovery.

John West, Executive Director, Asian Century Institute

Growing global political instability in light of [President] Biden’s weakness and unpopularity at home, [President] Xi’s anxiousness to have his term as China’s leader extended, [President] Xi’s impatience for Taiwan to be unified with mainland China, and strategic drift in Europe with the departure of [former Chancellor] Merkel and the French elections.

Alexander Privitera, Head of European Affairs at Commerzbank AG

Calibrating fiscal and monetary policies.

Blair Chalmers, Director, Marsh McLennan Advantage

The adaptation and resilience of infrastructure assets.

Marcus Courage, CEO at Africa Practice

Regulation/regulatory compliance. A wave of new regulations to address tax compliance, health, digital/data and environment.

Anbumozhi Venkatachalam, Director, Research Strategy and Innovations at the Economic Research Institute for ASEAN and East Asia

Destructive innovation and financing sustainability.

Haig Nalbantian, Senior Partner, Mercer

Developing effective, data-driven DEI strategies which will continue to accelerate and come to dominate the HR agenda.

Jason Clay, SVP Markets, ED Markets Institute, WWF

The need for common metrics, methodologies and boundaries to make meaningful change. Absolute reductions of all climate impacts.

VADM (Ret.) John Miller, CEO, The Fozzie Miller Group

2022 will be a year of continued challenges — especially regarding Chinese and Russian aggression. The most pressing issue will be responding in Ukraine, should Russia decide to invade. We can expect China to further pressurize Taiwan as they continue to move toward an unwanted re-unification.

Kavitha Hariharan, Director, Healthy Societies, Marsh McLennan Advantage

Workforce burnout will exacerbate delivery challenges in health care, in a context of swelling demand caused by new SARS-Cov-2 variants and Long COVID, care that has been deferred during the pandemic, and other health crises such as those caused by increasingly severe extreme weather events.

The original article can be viewed at the Brink’s website HERE.

CCC sets up liaison office in Japan

To further augment and give a major thrust to the commercial sector between Cambodia and Japan, the Cambodian government has established a broad liaison of the Cambodia Chamber of Commerce (CCC) in Japan.

In a sub-decree on December 17 and signed by Prime Minister Hun Sen, the CCC’s liaison was established in Sendei city, Japan’s Tohoku Region.

The CCC’s liaison will be chaired by Susuma Tai, honorary consulate of Cambodia in Japan. The process of setting members of the liaison will be made soon, said Lim Heng, CCC’s Vice-President.

“Now, we have already established a liaison in Sendei city of Japan. The next procedures will be in the process of electing members and president. It will not take long to see the liaison put into commence,” Heng said yesterday, adding, “The establishment of a representative office of the Cambodian Chamber of Commerce in Japan is another good sign for the friendly relations, trade and investment cooperation between the two countries.”

The Cambodian government just endorsed new investment law which will be incentives offered to new investors from abroad to Cambodia, Heng said.

The official launch of the CCC liaison will be run under the presence of senior officials of relevant ministries, he added. This is the first liaison abroad and the CCC plans to set up its liaisons in other countries of China, EU, the US and Canada.

Nguon Mengtech, director-general of the CCC said in June this year that the liaison in Japan will work functionally attracting new investment from Japan to Cambodia.

“In Japan, we don’t have any representative office so, once operational, the CCC’s representative office will play an important role in facilitating investment and businesses from Japan to Cambodia,” Meng Tech said.

Khmer Times

ICCIMA Energy Committee holds meeting to discuss consumption issues

The members of Energy Committee of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) gathered on December 25 in a meeting attended by the Head of Iran’s Energy Exchange (IRENEX) Ali Naghavi to discuss energy-related issues.

As reported by the ICCIMA portal, offering Energy Saving Certificates (ESCerts) at IRENEX was one of the major subjects discussed in the mentioned meeting.

Speaking in the gathering, Head of ICCIMA Energy Committee Arash Najafi mentioned some of the existing issues regarding the government policies in energy consumption management and asked the IRENEX head to explain some of the exchange’s plans and policies to improve the situation.

Naghavi for his part noted that so far, the government’s major policy with regard to energy consumption management has been tariff-based, which means that the government has only increased or decreased energy tariffs to manage consumption in various sectors.

TEHRAN – The members of Energy Committee of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) gathered on Saturday in a meeting attended by the Head of Iran’s Energy Exchange (IRENEX) Ali Naghavi to discuss energy-related issues.

The government and the ministries of oil and energy, as the major entities in charge of energy in the country, have been looking to manage consumption by reforming the tariff system. But what is common in the world, and is also designed in the Iranian energy exchange, is a system based on punishment and reward, Naghavi explained.

One of the main policies of the Iran Energy Exchange, however, is to communicate with market stakeholders; we have had collaborations with ICCIMA and positive cooperation has been also started with the electricity market, the refining industry, and so on, he said.

Mentioning the offering of ESCerts at the market, the official said: “This tool has two types: the certificate of energy-saving; based on which the industries who have saved energy are given bonds equivalent to their saving and they can offer this as ESCerts in the market.”

“The second type of certificate is a financing certificate; If a company or industry wants to implement a new technology to save energy, it will publish this certificate in the market for financing the project for implementing this technology,” he added.

Tehran Times

Kadin calls for local protection under 2022 fishing policy

The Indonesian Chamber of Commerce and Industry (Kadin) has called on the government to protect local fishing companies ahead of a ministerial plan to auction commercial fishing rights covering a total quota of several million tons to both local and foreign investors starting 2022.

Joseph Pangalila, Kadin’s deputy chair for marine affairs and fisheries, told Kontan.co.id on Wednesday that businesses expected the fishing quota licensing system to attract more investment, especially foreign investment, as the policy made it easier for investors to calculate returns while it also ensured sustainable production.

The government should therefore require foreign companies to work with their Indonesian counterparts “so the policy does not kill off local businesses”, he said.

In November, the Maritime Affairs and Fisheries Ministry announced plans to start offering in 2022 an annual fishing quota of 4.89 million tons, worth an estimated Rp 110.2 trillion (US$7.71 billion) per year.

The policy is the government’s solution to the long-standing problem of illegal, unreported and unregulated (IUU) fishing in Indonesian waters, which it aims to reduce by requiring both foreign and local companies to obtain a license to fish certain areas.

By opening the fishing industry to investments, the ministry aims to boost the share of gross domestic product (GDP) contributions from the “blue economy”, which refers to the sustainable use of a country’s marine resources and environment.

Fisheries minister Sakti Wahyu Trenggono has also pledged to reserve part of the quota allocations for traditional fishermen as well as recreational fishing. “That’s what we will do. We will build thousands of fishing villages over the next three years,” Trenggono said.

The Jakarta Post

Differentiating Oil and Gas Emissions Will Be a Big Deal in 2022

An interview with Deborah Gordon, Senior Principal at Rocky Mountain Institute

One of the most important successes of COP26 was the Global Methane Pledge, in which 100 countries agreed to cut 30% of methane gas emissions by 2030 from 2020 levels. Methane is 84 times more potent than carbon and is relatively easy to remove from oil and gas production.

However there is a huge range of carbon emissions from different oil and gas producers, depending on their extraction, handling and transportation. Back in November, Deborah Gordon of the Rocky Mountain Institute told BRINK that methane’s moment had arrived.

Next year, she predicts, will become the year of differentiations when markets start to choose their oil and gas supplies based on the degree of carbon emissions, thereby putting further pressure on the O&G sector to decarbonize rapidly.

In this BRINKPod with BRINK’s executive editor Tom Carver, Deborah Gordon explains how the market is hungry for this kind of information, how the sector is likely to be shaken up over the next 12 months, and what is likely to happen at next year’s COP summit in November in Egypt.

Oil and gas companies are starting to take seriously the need to differentiate their assets and understand where the emissions are coming from.

Photo: Anrune Smenes-reite/Pexels

A Lightbulb Going Off

GORDON: The oil and gas companies are really taking to heart differentiating their assets and [understanding] where the emissions are coming from. So we’re seeing things that are starting to make me realize the companies are finally starting to see this as a way forward. For example, Shell is an interesting example. They probably have been thinking about this for quite some time, but they’re selling off a lot of their worst and dirtiest assets.

From a company’s point of view, that realization that your assets are pretty variable and some of them have much more risk associated with them than others, to me, it’s a light bulb going on.

Exxon is signed on to differentiate assets in New Mexico; BP just signed on to differentiate assets that are in Louisiana. … They’re starting to pilot differentiating their assets and grade their gas: How low-emitting, how low in methane is their gas? So to me, those are all real positives because it has the industry actually taking note and doing something about it.

https://youtu.be/mU0cZAGTB6g

Markets don’t work if you don’t differentiate assets. I mean, if everything’s the same, there’s no choice. I was just talking to a colleague who’s working on just the liquified natural gas portion of the supply chain. And it was a factor of 20 times between worst case and best case just in the handling of the gas from a liquefaction and gasification and transshipping point of view. And that’s not even considering upstream.

Consumer Behavior

We’re working on a project at RMI to digitize all these attributes. So you can actually track them through the supply chain. Someday, you could be a consumer at a gas pump and add up the average, almost like the grades over a semester in college. Your average emission of your gas, at that pump, at that time, is a B plus.

Right now, when there are three gas stations on a corner, you may choose a gas station just because the company’s actually selling your favorite candy. Which is not differentiated on climate at all.

Related themes: CLIMATE CHANGE INFRASTRUCTURE

Deborah Gordon
Senior Principal at Rocky Mountain Institute@dxgordon
Deborah Gordon is a senior principal in the Climate Intelligence Program at Rocky Mountain Institute where she is leading RMI’s Oil and Gas Solutions Initiative. Gordon also serves as a senior fellow at the Watson Institute of International and Public Affairs at Brown University. Her new book, “No Standard Oil: Managing Abundant Petroleum in a Warming World,” will be published by Oxford University Press this fall.

This Is Methane’s Moment: Battling Methane to Win the Climate War

Managing Methane Needs to Become a Top Priority

Not All Oil Is Equal. As Economies Recover, Which Oils Should Stay in the Ground?

The article can be read at Brink HERE.

Jewelry can be a major export-oriented sector: FBCCI president

The jewelry sector in Bangladesh holds the potential to be one of the major export-oriented sectors after readymade garments, said the President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Jashim Uddin.

He also called upon the government to provide policy support to the sector and focus on building the capacity of those involved so that the sector can truly flourish.

The FBCCI president was speaking at the assumption of responsibility ceremony of the 2021 – 23 committee of the Bangladesh Jewelers Association (Bajus) at a city hotel on December 15.

“To make the jewelry sector more export-oriented, the focus must be given to technological development as well,” Jashim Uddin added.

He also requested the government to eliminate the existing inequality in corporate tax. He said a fixed rate of corporate tax should be established.

“In India, VAT on jewellery is 3% but in Bangladesh, it is 5% and it is causing Bangladesh to fall behind in the competition,” he added.

At the event, Managing Director of Bashundhara Gold Refinery Sayem Sobhan Anvir, chairman of the new committee of Bajus, took over the responsibility from Enamul Haque Khan, chairman of the old committee.

The new committee of Bajus consists of 35 members, including seven vice presidents. Earlier on 29 November, the result of the election of Bajus’s new committee was announced.

The Business Standard

Business set to benefit from Australia-UK free trade agreement

Businesses in Australia and the United Kingdom have been brought closer with the signing of a bilateral free trade agreement between the two countries.

“Business has played an important role in the development of the Australia-United Kingdom trade deal and welcomes the opportunities this partnership provides,” ACCI chief executive Andrew McKellar said.

“The longstanding relationship between Australia and the United Kingdom is taken to new heights by this agreement that will greatly strengthen the ties with a key economic ally.   Australian businesses are set to reap the advantages of increased access to the UK market, and it’s 65 million consumers.”

“When the agreement comes into effect, exporters are set to benefit from the abolition of 99 per cent of tariffs on Australian goods exported to the United Kingdom.  These products are valued at approximately $9.2 billion.”

“The deal also opens access for our service exports, including professional services is also of high value to our service-based economy.”

“After a long period of closed borders, it will be of great benefit for our tourism industry to welcome more British working holiday makers.”

“As Australia and the world begins to reopen, establishing open and free trade partnerships will play a pivotal role in driving our economic recovery.  It is vital that this agreement is ratified as soon as possible so that Australian businesses can begin to enjoy increased market access.”

ACCI Media Release

New Director of New Zealand Trade Office in Taiwan

The Wellington Employers’ Chamber of Commerce has announced Mark Pearson as the new director of the New Zealand Commerce and Industry Office (NZCIO) in Taipei. NZCIO is a subsidiary of the Wellington Chamber and promotes New Zealand’s trade, economic and cultural interests in Taiwan.

Mr. Pearson is currently lead adviser for business partnerships at APEC New Zealand and has a long career in trade, international security and diplomacy at the Ministry of Foreign Affairs and Trade. He has previously held roles at the New Zealand embassies in Tokyo and Seoul as well as head office positions involving North Asia, ASEAN and disarmament.

Chamber chief executive Simon Arcus says New Zealand and Taiwan are both island economies driven by exports. “We share similar philosophies on international trade and trade liberalisation. ANZTEC (Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu) is the backbone of our trading relationship and will eventually lead to the removal of tariffs on all of New Zealand’s exports to Taiwan,” Mr. Arcus says.

Wellington Chamber of Commerce

Good Business Foundation Announces Partnership with ygap

The Good Business Foundation (GBF) has recently announced its partnership with ygap aimed at supporting inclusive business and entrepreneurship that results in reducing global inequality.

Under the partnership, the GBF and ygap will work together over the next three years to build inclusive entrepreneurship into traditionally mainstream business systems and networks, thereby allowing people previously marginalised and left out of the process to sit behind the driver’s seat of their own future.

“Most practically this partnership will work in fostering entrepreneurship within new migrant and refugee communities here in Australia and work in places like Fiji and Kenya to back local entrepreneurs. It will support women led entrepreneurs and leverage ygap’s expertise in gender lens investing,” GBF Founder Mr. Peter McMullin and GBF Executive Director Mr. Stuart Thomson said in a joint statement announcing the partnership.

Established in 2019, GBF is a for-purpose organisation leveraging expertise, relationships and resources to further social and environmental good. The team behind GBF believe that investing in an equitable future is essential for both business and communities to thrive.

GBF Founder Mr. McMullin, who is also CACCI Vice President, believes that the private sector has an important role to play in the resolution of many of today’s pressing social issues. He has made a significant contribution throughout his career forging positive, constructive partnerships between the private sector and governments, the not-for-profit sector and educational institutions. In furthering these objectives, he has established GBF to look at engaging business in social good.

ygap is an international organisation that aims to create positive change by making entrepreneurship more inclusive.by increasing their capacity to run successful businesses and by reducing the barriers that inhibit access and inclusion within the entrepreneurial ecosystem Since 2008, it has run 57 programs that have supported 589 ventures working to make a social or environmental change in their communities. It has offices led by local teams in Africa, South Asia, the Pacific Islands and Australia.

CACCI Women Entrepreneurs Newsletter available now

Taipei – CACCI is pleased to inform members and friends that the 24th Volume of Grow, the publication of CACCI Women Entrepreneurs Council is available HERE.

We hope that this publication will serve as an effective platform for an exchange of information among women entrepreneurs in the CACCI region.  Members are, therefore, encouraged to contribute articles for our future issues.  Kindly forward your materials (preferably with accompanying photos) to wendy.yang@cacci.biz

ACCI Elects New President

The Australian Chamber of Commerce and Industry (ACCI) elected Ms. Nola Watson as its new President during its Annual General Meeting held in Canberra on December 1, 2021, making her the first female to assume the position. She replaces Mr. Ray Sputore, who was ACCI President for the past two years.

Ms. Watson has served as the Deputy President of ACCI, President of Business NSW, and Chairman of International Chamber of Commerce Australia. Aside from her involvement in the chamber movement, Ms. Watson was executive General Manager of Insurance Australia Group, and spent many years in senior executive positions within New South Wales and Commonwealth governments.

“Over the past two years as Deputy President of ACCI, I have seen Australian business rise to meet the unprecedented challenges posed by the Coronavirus pandemic, I am honoured to continue to represent them as President,” Ms. Watson said.

“Alongside Chief Executive Andrew McKellar and the Board, I look forward to building ACCI’s advocacy efforts, maximizing our economic potential to ensure our future prosperity.

“With great uncertainty and major challenges in the national agenda, it is critical that business has the strongest leader and advocate to represent its interest. ACCI is that voice, representing businesses large and small, across the economy, from all corners of Australia. ACCI and its affiliates share one ambition, to make Australia the best place in the world to do business.”

Whittaker’s win top prize at Wellington Export Awards

A household name has shown its quality to the world, as Whittaker’s were crowned Exporter of the year at the 2021 ExportNZ ASB Wellington Export Awards, in front of a socially distanced and fully vaccinated audience at Te Papa.

“Whittaker’s success, despite a turbulent global environment, and domestic restrictions, shows the best of Wellington’s export community,” said Simon Arcus, Chief Executive of the Wellington Chamber of Commerce, which delivers ExportNZ in Wellington.

“After the past year, it’s more important than ever to acknowledge the contribution exporters make to keeping Wellington’s economy running. They have persevered through lockdowns, closed borders and supply chain shocks,” Mr. Arcus added.

“Every one of this year’s finalists deserves recognition for their hard work, and Whittaker’s success in international markets shows just how successful Wellington can be.”

ASB’s Executive General Manager for Corporate Banking Nigel Annett said he was impressed by the calibre of this year’s regional finalists. “At ASB, we’re extremely impressed by all of the 2021 ExportNZ ASB Export Awards winners and finalists. Every business involved this year demonstrated their relentless pursuit of an identified market niche, supported by highly developed product innovation. We’re proud to support the range of diverse companies involved in this year’s awards, all doing a remarkable job representing New Zealand on the global stage.”

The judges found that Whittaker’s were set apart by their ability to reorient their product and use data to adapt to new markets, all while remaining true to their values.

The judges were Chair of Business Central Vaughan Renner, NZTE Customer Director Ann Clifford, and ASB International Trade Consultant Paul Gestro.

Whittaker’s also claimed the CentrePort Wellington Best Established Business Award. Peanut Butter maker Fix & Fogg won the Southeast-Asia CAPE Best Emerging Business Award, as the judges were impressed by their rapid expansion into new markets.

Tube perforator manufacturer Sanpro Industries won the WellingtonNZ Excellence in Innovation Award, as the judges recognised the committed customer support and continuous innovation that has allowed the Petone based company to lead its industry worldwide.

Method Recycling claimed the Toitū Envirocare Excellence in Sustainability Award, recognising both their own commitment to sustainability, and the potential of their product to help others on their journey.

Hutt Valley staple Woolyarns claimed the Wellington School of Business and Government Judge’s Choice Award – recognising their exceptional resilience to in navigating a challenging pandemic.

Wellington Chamber of Commerce

PCCI: Senate OK of PSA amendments a Christmas gift

Senate approval of amendments to the Public Service Act (PSA) to allow 100-percent foreign ownership of a wide range of local business enterprises was described as “sort of a Christmas gift” by the Philippine Chamber of Commerce and Industry (PCCI).

The Philippine Senate had approved on the third and final reading Senate Bill 2094, which amends the PSA to allow full foreign ownership of ventures in telecommunications, air carriers, domestic shipping, railways and subways, canals and irrigations.

The Senate bill will still have to be consolidated with the version approved by the House of Representatives before a final proposed measure is brought before the President for signing.

Under SB 2094, the 40-percent limit on foreign ownership will remain for those considered as public utilities such as distribution or transmission of electricity, petroleum and petroleum products pipeline transmission or distribution systems, water pipeline distribution systems and wastewater pipeline systems, airports, seaports, public utility vehicles, expressways and tollways.

Overall, PCCI President Emeritus George Barcelon said that PCCI believes this measure – along with other reforms such as the Corporate Recovery and Tax Incentives for Enterprises Act, proposed amendments to the Retail Trade Liberalization Act, and amendments to Foreign Investments Act – would help open the country to more investments which are needed, given the impact of the pandemic on the economy.

The Philippine Star

The RCEP will boost Central Bank Digital Currencies (CBDCs) in Asia

By Dr. Oriol Caudevilla, FinTech Advisor, Co-Leader of the CBDC and Blockchain Working Groups at the Global Impact FinTech Forum (GIFT)

Central bank digital currencies (CBDCs) have been referred to as “the future of payments”, or even “the future of money”, and not without reason.

A CBDC is a new form of central bank money accessible to the public, accepted as a means of payment, legal tender, safe store of value by all citizens, businesses, and government agencies. Undoubtedly, the pandemic has turbocharged a global financial technology revolution.

CBDCs can serve many different purposes and can be designed accordingly: they can replace physical notes; they can be used to improve financial stability as a monetary policy tool, to promote financial inclusion, to fight against financial crime, improve payment efficiency and reduce intermediary risks, etc.

However, CBDCs are not cryptocurrencies, even though there is of course some relation between both categories.

The rationale behind CBDCs and cryptos is actually the opposite: whilst CBDCs are Central Bank Money adopting a digital form (therefore, legal tender issued by a central bank, representing a claim against that central bank) and thus centralized, cryptocurrencies are a key pillar of the movement known as DeFi (Decentralized Finance).

FNCCI preparing business code of conduct to end unfair practices

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) is preparing a comprehensive business code of conduct as growing unfair and irresponsible practices have been hurting the corporate and business environment, the country’s apex private sector body said.

The FNCCI has started collecting views from stakeholders as an input for the protocol for its members.

The move comes ahead of two crucial elections slated for next year when donation drives and extortion by political parties are expected to accelerate as they raise money to fund their campaigns.

Industry insiders say the code of conduct is indirectly meant to control donation drives by the political parties.

Consumers are already bearing the brunt of rising prices which shows election preparations have started, consumer rights activists say.

The general convention season is on with major political parties holding mass gatherings of their members which has led to price increases in the market.

These jamborees are held with funding by industrial entrepreneurs and traders, and they have passed on their expenses to the Nepali consumer, Madhav Timalsina, president of the Consumer Rights Investigation Forum, told the Post.

A study carried out by the Election Observation Committee, Nepal showed that the government, political parties and candidates spent an estimated Rs131.63 billion in total during the 2017 elections. “And the costs of campaigning are taken out of the consumer’s pocket by hiking the prices of goods and services,” Timalsina said.

At the same time, traders are having a free hand in setting market prices because the Ministry of Industry, Commerce and Supply has been headless for more than five months now,” Timalsina added.

In 2013, the FNCCI for the first time released codes of conduct dealing with six areas—consumer rights, competitive market, taxation, labour management, environment protection and corruption control.

FNCCI President Shekhar Golchha said the time had come to revise the code of conduct as the private sector aspires to achieve economic prosperity.

The private sector has introduced a vision paper for economic prosperity that also includes a key feature for a reputable private sector.

The FNCCI is revising the code of conduct under the leadership of Padma Jyoti, a past president of the organisation. Work on drafting the code of conduct has already started, and a Business Code of Conduct Forum has been formed, the federation said.

The Kathmandu Post

Fiber Broadband: Here’s How Governments Could Support Balanced Coverage

Worldwide, there has been an exponential growth in government and end-user appetites for high-speed fiber broadband; the number of OECD countries reaching 70% fiber has doubled from 2018 to 2020 alone. Key reasons for this shift include the fact that fiber networks send data about 20 times faster than legacy copper counterparts and require far less maintenance and energy input.

A worker drives a specialized vehicle that is laying tubing used for running fiber optic cable underground during the installation of broadband infrastructure near Haldensleben, Germany. Historical choices about communications infrastructure can impact future fiber coverage growth.

Photo: Photo by Sean Gallup/Getty Images

Fiber connections have also been linked to numerous desirable government outcomes — increased corporate innovation, increased labor productivity, increased data security, higher property values, reduced unemployment and increased access to education and health care. A study of fiber rollout in France found that fiber provisions boosted the creation of new businesses in the transport, services and commerce sectors by about 10% and reduced unemployment by about 5-8%.

Challenges

While plans for future investment in fiber rollouts globally are significant, the current reality is that coverage varies significantly across countries. A country’s natural environment, particularly its size and topography, will impact the speed and overall cost of extending fiber coverage to all towns and businesses.

Where a government leaves the progress of a rollout to market forces alone, this can lead to an imbalance of coverage where urban areas are prioritized based on operator profits.

Historical choices about communications infrastructure can also impact future fiber coverage growth.  Where legacy infrastructure is a mix of copper wiring, cables and other technologies, prior investment in these technologies can slow the willingness of operators to migrate to an expensive fiber-only business model. Re-skilling telco workers for fiber rollout has also been a significant challenge for operators. In 2021, a group of bipartisan leaders both within and outside of the telecommunications industry in the U.S. penned a letter to President Joe Biden, urging that the government spend more money on apprenticeship programs to support the federal rollout of broadband projects. Other providers have opted for private training options instead; for example, Etisalat in the United Arab Emirates (UAE), has trained over 2,000 technical laborers via their Etisalat Academy, which has become the largest telco training center in the MENA region.

Potential Ways Forward

There are a number of ways that governments can help guide or stimulate fiber rollouts, potentially generating significant interest from industry participants and private capital if the right environment is created.

Many nations that have progressed at speed with a fiber rollout have done so in parallel with supportive government policies that strike the right balance between supporting incumbent operators and new entrants to ensure competition, innovation and coverage of more rural areas. South Korea, for example, vaunts one of the highest fiber penetration rates in the world, at 83.9% as of 2020. Much of its success has been attributed to the 2012 Giga Korea Project, which received a total of  550 billion won ($470 million) investment at a 3:1 ratio of government to private sector contribution. Additionally, a fair regulatory environment has encouraged the entry of new players, keeping fiber infrastructure costs low and consumer choice wide, enabling the rapid rollout of 5G across the country.

The U.K.’s Project Gigabit, a 5 billion pound ($6.6 billion) government infrastructure plan to enable and deliver fast and reliable digital connectivity across underserved areas in the U.K., has also been highly impactful. Run by Building Digital U.K., the project has boasted one of the fastest fiber rollouts across Europe: 60% of U.K. households are to have access to gigabit speeds by the end of 2021, contrasted against the 10% coverage in 2019. In addition, households and businesses still awaiting coverage from the project are eligible for the U.K.’s 210 million pound ($278 million) Gigabit Broadband Voucher Scheme, which subsidizes the costs of fiber installation.

Along with financial support, ensuring that national targets are clear and aligned with private sector goals is key to a successful rollout. The U.S. Congress recently passed a $1.2 trillion bipartisan infrastructure bill, of which $80 billion has been designated for the deployment of symmetrical 100Mbps broadband in underserved areas. Some price cap operators have criticized the 100Mbps policy requirement citing its impracticability: Operators would face massive costs in overhauling legacy copper systems and believe that symmetrical 100Mbps speeds are both unnecessary for most homes and small businesses while also resulting in higher costs for consumers.

In addition to understanding and being aligned with ambitions that are set by a national government for fiber roll-outs, potential investors will also be keen to understand the current regulatory environment and intended future direction of travel.  Where a regulatory body is known to be willing to engage with the private sector and outline longer-term ambitions, this can help provide the confidence that is needed to attract new investors into this sector.

Conclusion

The positive externalities incurred by broad-based fiber rollouts are numerous, extending beyond market competitiveness to alleviating socioeconomic disparities. However, where rollout progress is left to market forces alone it is clear that network coverage can be uneven and diverge from national targets. The public sector therefore plays a pivotal role in partnering with private operators to capitalize on these externalities, while distributing fiber services in an efficient and equitable manner for end users.

Related themes: CYBERSECURITY INFRASTRUCTURE

Blair Chalmers
Director of Marsh McLennan Advantage
Blair Chalmers is a director in Marsh McLennan Advantage and leads the unit’s agenda for the infrastructure and construction sectors. Prior to this role, he worked for Oliver Wyman, the management consultancy, with a focus on clients in asset intensive industries.

Here’s How Emerging Technologies Will Impact the Future of Infrastructure

Building Climate-Resilient Infrastructure in the Post-Pandemic World

Latin America Has Taken Steps to Curb Corruption and Boost Sustainability. Will Investors Bite?

Rachel Juay
Research Analyst at Marsh McLennan Advantage
Rachel is a Singapore-based research analyst at Marsh McLennan Advantage. She holds a Masters in Public Policy and is interested in the intersection between government policies, business, and social change.

The original article can be read at Brink HERE.

7 Risks to Asia’s Economic Resilience in 2022

Across Asia, vaccination rates are rising, e-commerce is soaring, trade has rebounded and supply chain problems are starting to ease, delivering hope for the new year. Moody’s Analytics predicts that, by the end of 2022, all major Asian economies will have achieved a full recovery as measured by real GDP that exceeds its level of the fourth quarter of 2019.

Yet optimism is tempered by several risks to sustained economic recovery and regional stability. Here are seven to watch for in the months ahead.

COVID-19 Halts the Global Recovery

The slow roll out of vaccines in several countries, waning vaccine effectiveness and the emergence of the Omicron variant (and potentially others), constitute the biggest threat to the region’s sustained recovery in 2022. The situation could worsen if new variants prove resistant to existing vaccines and spread quickly across borders, straining health care systems.

Because of its reliance on manufacturing, Asia is particularly exposed if there is continuing disruption to global supply chains. Expect more localized lockdowns and targeted travel bans that could spook investors, unsettle stock markets, inflict more pain on the battered travel and tourism industry and generally raise concerns about a deferred exit from the pandemic.

The IMF warns that higher commodity prices and shipping costs, coupled with continued disruption of global value chains, are amplifying concerns about inflation persistence and export resilience.

People walk by construction workers as they work on a traditional style building in a shopping district in Beijing, China. The Evergrande crisis and volatility at other Chinese real estate companies have stoked concerns about how the government is managing the unsettled property sector, which accounts for the bulk of household wealth.

Photo: Kevin Frayer/Getty Images

China Misjudges Its Response to Domestic Challenges

The Evergrande crisis and volatility at other Chinese real estate companies have stoked concerns about how the government is managing the unsettled property sector, which accounts for the bulk of household wealth. Regulatory crackdowns on different sectors (internet services, education tutoring) have caused investors to wonder what industry will be targeted next and what measures Beijing intends to apply in its drive to reduce wealth disparities and achieve “common prosperity.”

China’s zero-tolerance approach to COVID-19 translates into a ban on most foreign travel and regular shutdowns at ports for mass testing. The knock-on effects on supply chains are contributing to persistent product shortages and delays globally and, in turn, contributing to inflation globally.

Local economies within China have been disrupted by lockdowns and curbs on inter-provincial travel. Consumer confidence remains below pre-pandemic levels, construction has slowed and power cuts have forced businesses to reduce their operations.

The IMF reports that the rapid withdrawal of policy support and the lagging recovery of consumption are also slowing economic recovery. In short, China is juggling multiple domestic challenges, and if it does not perfectly calibrate its responses, growth could be further constrained, negatively impacting other Asian economies.

Asia Is Particularly Exposed to Cybercrime

Asia is particularly exposed to cybercrime because of its large populations, relatively low awareness of cyber threats, absence of disclosure regulation and outdated and unlicensed technology.

While the region accounts for 60% of the countries that are very highly exposed to cyberattacks, it is also the top originator of cyberattacks, including state-backed actions supported by China, Iran and North Korea.

Phishing, pharming, extortion, non-payment/non-delivery, personal data breaches, identity threats and spying will continue to challenge the defenses of individuals and organizations in the public and private sectors. Bots will be responsible for the vast majority of incidents. Continuous cyberattacks threaten to impose great costs and generate disruption.

Inflation Is On the Rise in Asia

Inflation has been on the rise across Asia, driven by shifting global demand, rising food and fuel prices, and supply chain disruptions. The Asian Development Bank forecasts higher inflation in developing Asia in 2022.

The IMF warns that higher commodity prices and shipping costs, coupled with continued disruption of global value chains, are amplifying concerns about inflation persistence and export resilience. Lasting delays in mining operations, shipment backlogs, semiconductor shortages, surging freight costs and snap quarantine restrictions in key manufacturing and shipping areas are magnifying inflation risk. They may also cause structural changes to production and delivery and storage capacity across sectors.

Higher rates in the U.S. could increase debt burdens, stimulate capital outflows and cause a tightening of financial conditions in Asian developing economies. It could also cause downward adjustments in stock markets globally. If Omicron and other variants boost infections globally and continue to spur new government restrictions this risk will decline as economies slow.

Divisions Deepen Between the United States and China

Strategic competition between the U.S. and China has increased and threatens to drive global fragmentation. The U.S. and its allies continue to promote defense, security and infrastructure development initiatives in the “Indo-Pacific” region with the aim of countering China’s ambitions. Building on the groundwork laid by his predecessor, President Joe Biden is urging allies to apply restrictions on China in the areas of finance, investment, technology and trade.

This effort is putting pressure on third countries to choose sides. Decoupling is underway in areas of advanced technologies. President Xi Jinping’s consolidation of power — and pride in accomplishments like containing COVID-19 and hosting the Winter Olympics — will bolster China’s confidence in the face of the prevailing anti-China sentiment in the American capital and growing concerns about Beijing’s actions among its neighbors and many democratic states globally. The geopolitical rivalry could depress investment and productivity growth.

Social Tensions from COVID and Climate

COVID-19 has generated immense human suffering in developing Asia, particularly among groups that were already challenged with poverty, vulnerability and marginalization. During the pandemic, many governments tightened control over their populations and used the crisis as cover for restricting civil liberties and suppressing dissent.

Having boosted public spending to ameliorate the immediate impacts of the crisis, state budgets will come under pressure, which may lead curtailing social programs. Environmental threats and climate change are adding to instability.

Asia remains the world region most at risk to the negative impacts of climate change. In some countries, populations already chafing against unrepresentative government, political repression, corruption and inequality may be agitated enough — by lost opportunities during the pandemic and further delays in recovery — to turn to protest. Countries where unrest may turn violent include Bangladesh, Myanmar, Pakistan and Thailand.

Potential Security Flash Points

The U.S. withdrawal from Afghanistan renews the threat of a safe haven for terrorist groups. Violent extremist media branches of al-Qaida and its affiliates, as well as the Islamic State of Iraq and as-Sham (ISIS), have celebrated the Taliban’s perceived victory over the U.S and encouraged the use of violence by their followers and supporters.

China and Central Asian states are casting a wary eye over developments. COVID-19 and natural disasters have hit North Korea particularly hard and could spur more provocations like missile tests as it seeks attention and aid.

China has ramped up the pressure on Taiwan from several angles, including military flights into Taiwan’s air defense identification zone. Meanwhile, the U.S. has scaled up its support to the self-governing island. Although an attempt by Beijing to take Taiwan by force in 2022 is highly unlikely, a miscalculation by involved parties could cause an incident that would have major global ramifications for international relations and the global economy.

Conclusion

Renewed pandemic waves, possibly driven by the emergence of more infectious and vaccine-resistant variants, the waning effectiveness of vaccines already administered and slower-than-expected vaccine rollouts could derail Asia’s recovery.

However, if China and the U.S. ratchet down their bilateral tensions and find ways to work together on major global challenges, investor sentiment will improve, along with business and consumer confidence.

Bart Édes
Distinguished Fellow at Asia Pacific Foundation of Canada

The original article can be read at Brink HERE.

PCCI organized “47th Philippine Business Conference and Exposition” on November 17-18

The Philippine Chamber of Commerce and Industry (PCCI) held the “47th Philippine Business Conference and Exposition (PBC&E)” on 17-18 November 2021 via Zoom.

As a dialogue, a showcase, and a learning platform, the 47th PBC&E, which carried the theme of “Innovation.ph: Economic Recovery for All,” was the biggest annual gatherings of local business and government leaders organized by PCCI.  The two-day event was expected to bring policy reforms, fresh actions, and a new mindset on how the Philippines rise from the ravages wrought by the Covid-19 pandemic.

In addition, PCCI hosted in their virtual conference site International Meeting Rooms for business-to-business matching with featured countries, Networking Rooms for government partners such as the Department of Trade and Industry (DTI) and Department of Science and Technology (DOST), and for lending institutions specializing in MSME financing.

“The 29th Joint Economic Cooperation Meeting between CIECA and FTI” was Convened at Taipei

The Chinese International Economic Cooperation Association (CIECA), Taiwan and the Federation of Thai Industries (FTI) jointly convened the “29th Joint Economic Cooperation Meeting between CIECA and FTI” on Nov. 29, 2021 at the Hua Nan Bank International Convention Center, Taipei. Dr. Pan, Wen-Whe, Chairman, Thailand Committee, CIECA, Taiwan and Mr. Supant Mongkolsuthree, Chairman, FTI, jointly presided over the video conference. A total of 115 Taiwanese and Thai participants attended the meeting.

The theme of this year’s meeting correlated to the New Southbound Policy being promoted by the government and continued to explore new opportunities for business cooperation. The topics included: “Circular Economy”, “Biotechnology” and “Green Energy”.

The expert speakers were:

“Circular Economy”: Dr. Lin, Chun-Hsu, Deputy Director, Center for Green Economy, Chung-Hua Institution for Economic Research and Mr. Phromphron Isarankura Na Ayutthaya, Quality Management Division Manager, PTT Global Chemical PCL

“Biotechnology”: Mr. Peter Chen, Manager, Business Development, Orient EuroPharma Co., Ltd. and Dr. Panit Kitsubun, COO, KinGen Biotech Co., Ltd.

“Green Energy”: Mr. Ben Pan, Vice President, United Renewable Energy Co., Ltd. and Dr. Phatiphat Thounthong, Professor, Department of Electrical Engineering, King Mongkut’s University of Technology North Bangkok

The meeting participants included Mr. Chokechai Puapattanakajorn, President, Bangkok Bank Public Co., Ltd.; Ms. Sophia Chiu, Chairman, TECO Electric and Machinery Co., Ltd.; Dr. Chen, Jen-Pin, President, Agricultural Technology Research Institute and other industry professionals and academics attended the meeting. Mr. Narit Therdsteerasukdi, Deputy Secretary General, Thailand Board of Investment (BOI) and Mr. Y. C. Tsai, Director General, Dept. of International Cooperation and Economic Affairs, Ministry of Foreign Affairs, R.O.C. (Taiwan) addressed the meeting during the opening ceremony. Mr. Kriengkrai Thiennukul, Vice Chairman, FTI delivered closing remarks in which he thanked all participants and the conference speakers to their efforts in introducing business opportunities.

Thailand’s petrochemical sector is the largest in Southeast Asia, and its plastics industry contributed 6.71% of GDP. To solve the problem of plastic waste, the Thai government has introduced its Roadmap on Plastic Waste Management and set the goal of recycling targeted plastic wastes by 100% by the year 2027 to serve the circular economy concept.

Since the outbreak of the COVID-19 pandemic, besides vaccine development, countries have been seeking a way to resolve the pandemic. The Thai government has also joined the relevant research market. It develops the biotechnology and biomedicine industry through its Bio-Circular-Green (BCG) economic model. In Thailand, biotech and biomedicine have expanded by around 10 percent annually in recent years, showing particularly robust growth in medical devices, natural extracts for cosmeceuticals, food supplements that is expected to continue in the future.

One-third of Thailand’s energy capacity comes from renewable sources. To lower greenhouse gas emissions to 20.8% in 2030, the Thai government encouraged green energy producers with tax breaks and easier access to financing options. Experts forecast Thailand will raise its renewable energy capacity from 15 GW to 60 GW by 2037.

CIECA has regularly held the Joint Economic Cooperation Meeting with FTI which has been an important platform for communications and exchanges between the business communities of the two nations.

Are Apps Becoming Gateways for Cybercrime?

How we travel and where we can go now depends on a smartphone. Freedom of movement is app-based.

This is a major change in the mechanics of doing business and our everyday lives that was drastically accelerated by COVID-19 and the need for touch-free access. Apps can make access quicker and easier to manage for events, venues, buildings and transport of any kind. And they can make business operations cheaper.

But relying on apps also opens up a much wider front across society in the battle with cybercriminals. The fundamental issue is that the more widely used an app is, the bigger and more attractive the target.

Photo: Getty Images

Companies should be making full use of the advantages of apps for security

Reportedly, hackers “defeated” Microsoft’s recent attempts to make a new hardware component compulsory to Windows 11 within the space of 30 minutes. The U.K.’s National Health Service Test and Trace app was immediately ripped apart to explore the data waiting there. It can be done for the fun of it, to purposely cause damage to organizations, or as the basis of extorting money or for committing fraud. An app-based life encourages a mix of criminal activity with a kind of gaming, offering an ongoing series of challenges to test skills.

The Risk of Loss of Trust

The danger in this is the potential for customer-facing systems to become plagued by chaos and suspicion. A snowballing of minor issues with entry and disrupted plans could create a lack of public trust in digital proof of COVID-19 evidence, for example, leading to an ongoing sense of insecurity when traveling or in other public places.

In practice, the use of app-based access is so fundamental to commercial activities that cybersecurity is being ramped up and will stay top of priority lists. When there are problems, there will be “patches.”

But that doesn’t mean there are solutions on the horizon. For the foreseeable future, the reputation of digital access is going to be involved in a constant battle, with another crisis for major brands always just around the corner.

The World Needs IT Talent — Lots of It

In the U.S. alone, figures suggest a shortage of more than 464,000 cybersecurity specialists. We might have skilled staff, but do we have skilled, creative, highly motivated people willing to keep up the relentless fight?

The flaw at the heart of app-design is human. App security is only as strong as the human team involved, and experience shows that, over time, people become predictable. They have their favorite ways of putting code together, meaning patterns of code, data structures and file locations that can be more easily anticipated and taken apart. Walls that look solid to organizations can be riddled with entry points.

We need freewheeling creativity to stay ahead. Rather than working in silos, software engineers should be embedded alongside the security experts. Start with the security element.

Layering on Security

There are approaches that businesses can take to make their “access” offerings less vulnerable. Fraud is made harder by as much layering of elements as possible — where each element has to be simulated. So, for an e-ticket, that might involve including both a QR code and an animated logo, for example.

There are other tactics, like removing the ability to take screenshots while an app is open or making sure digital tickets require registration linked to an email account or a personal digital device.

In principle, apps on specific devices can be made safer than web-based purchases, which are just based around an online user account and stored information is “controlled” by the browser. Sometimes the website might note location, or there might be two-factor authentication, but there is still a more limited number of potential factors for securing information. A fixed device can keep information and tie itself to that device.

Apps Offer a Greater Range of Security Than Browsers

Companies should be making full use of the advantages of apps for security. There are additional avenues that can be used to track down how fraud has occurred, for example, by checking app logs and contacting customers to check whether devices have been lost or stolen or by looking at data on whether cybercriminals have managed to generate the ticket in the app, built a separate app, or used a combination.

There is the opportunity to make use of biometrics and additional passwords, again used as layers on top of basic user accounts for the product.

App security can be built up by prompting permission requests from the device (location, phone number, unique serial information and other user data) to validate activity, identify fraudulent activity and catch criminals.

We’re going to be using our smartphones as a kind of passport for free movement, locally and internationally. That means this is an issue for whole societies to think about. We’re all going to have to start thinking about the part we play in the battle, add to the pipeline of cybersecurity talent and what’s needed to keep us all moving.

Related themes: CYBERSECURITY

Sarah Morris
Head of the Digital Investigation Unit at Cranfield University
Sarah Morris is head of the Digital Investigation Unit in the Centre for Electronic Warfare, Information and Cyber at Cranfield University.

The original article can be read in the Brink’s website HERE.

Chamber Leaders Join 12th World Chamber Congress

Over 3,800 chamber leaders, representatives and industry experts representing 110 countries – including those from CACCI member chambers – attended the 12th World Chambers Congress (12WCC) which took place from November 23 to 25 in Dubai.

Co-organised by Dubai Chamber, the International Chamber of Commerce and its World Chambers Federation, under the theme Next Generation: Chambers 4.0, the Congress was the first hybrid event of its kind, offering delegates a glimpse into what chambers of the future will look like.

More than 80 speakers took part in 44 interactive sessions over the three days of the Congress. The 12WCC in Dubai highlighted the need for chambers of commerce around the world to realign their services to drive business in a new era that is being defined by digitalisation, governance, and increasing concern for social and environmental issues.

In the closing session, H.E. Hamad Buamim, President and CEO of Dubai Chamber and Chair of the ICC-World Chambers Federation, said Dubai delivered a World Chambers Congress like no other that raised the bar, while challenging chamber leaders to rethink their strategies, innovate and adopt action plans for the future.

“This a proud moment for me to see to this major international event hosted in my home country and the successful outcome of this Congress in Dubai exceeded our expectations. Dubai proved to be an ideal host city to host the first Congress to be held in the Covid-era, and I believe that it did not disappoint and certainly brought in fresh perspectives and new elements that took the event to the next level,” he said.

“12WCC in Dubai offered a glimpse into the future and global opportunities and insights through the Expo 2020 Dubai platform, which complemented the delegate experience. We hope that we have been able to start important conversations about the need for chambers of commerce to change their services to adapt to the needs of our members in a world that has gone through unprecedented changes – changes that are here to stay,” he added.

Addressing delegates virtually, Fabienne Fischer, Minister, Geneva Department of Economy and Labour, Switzerland, praised Dubai Chamber for creating a unique experience for the global chambers community at 12WCC. She spoke about what Geneva will offer when it hosts the next World Chambers Congress in 2023, also highlighting the need for chambers of commerce to focus on sustainable actions moving forward.

“We surely hope that the 13th World Chambers Congress will take place in more, if I dare say, ‘normal’ circumstances. As a member of the green party, I personally believe that the discussions about reshaping free trade and global commerce across all sectors and within all organisations will be strongly influenced by climate action,” she said.

She shared her view that governments cannot be expected to foster innovation on their own and said chamber of commerce have a very important role to play in promoting best practices and sharing lessons learned.

“I am proud to say that the Geneva Chamber of commerce is among the local leading drivers in this effort and strongly promotes business transformation towards more sustainable behaviours and products,” she added.

12WCC opened on November 23, with His Highness Sheikh Ahmed bin Mohammed bin Rashid Al Maktoum, Chairman of Dubai Media Council inaugurating the event that was the first to be held in the region since 2013. His Excellency Omar Sultan Al Olama, Minister of State for Artificial Intelligence, Digital Economy, and Remote Work Applications, and Chairman of the Dubai Chamber of Digital Economy, delivered the opening address on day one, discussing how the global pandemic had presented new opportunities for international chambers of commerce.

Other highlights of 12WCC were the launch of Chamber Model Innovation framework for revamping chamber services and embracing innovation, the latest edition of the Dubai Innovation Index analysing innovation input across 39 cities, and the Digital Fitness Test designed for chambers of commerce to evaluate their digital capabilities.

Dubai Chamber released a whitepaper during the congress, with the report providing valuable insights into the concept of Chambers 4.0 and how technology is reshaping global trade.

Geneva, Switzerland’s second-most populous city and a capital for global diplomacy, will host Congress delegates in June 2023. The proposed theme is Achieving shared prosperity through multilateralism, as the Geneva Chamber of Commerce, Industry and Services firmly demonstrated the power of international trade as a means to achieve peaceful cooperation among nations.

                                                                                                                                                                Dubai Chamber

ASEAN’s Business Community Makes Recommendations for Greening ASEAN

In response to the call made during the 26th session of Conference of Parties (COP26) held in Glasgow to involve non-state actors to help deliver climate finance, the CARI ASEAN Research and Advocacy, in consultation with trade associations, chambers of commerce and foreign business associations in the ASEAN region, has prepared a report entitled “Pathway Towards Green Recovery for ASEAN” to better understand and socialise the climate agenda with the private sector operating in ASEAN.

The 29-page report consists of recommendations in green recovery for ASEAN proposed by over 26 chambers of commerce, business councils, industry groups and partners from all ten ASEAN member states, dialogue partner countries and regions including EU, UK, US, Japan, India, Canada and Russia.  It is the third instalment of a series of Pathway Reports following the release of A Pathway Towards Recovery and Hope for ASEAN (Pathway 225) in 2020 and Pathway for Malaysia 2021 that captures recommendations, perspectives and priorities from the private sector’s perspective.

This report captures 88 critical feedback and recommendations from two virtual Consultation Dialogues on business perspectives with regards to green initiatives following the COVID-19 pandemic, policy gaps affecting a green recovery, challenges and the required support for a green recovery in ASEAN. Key questions presented during the consultative sessions are as follows:

1. Key green areas critical to sustainable recovery for businesses
2. Green initiatives or green opportunity areas most relevant to businesses
3. Key areas of concern in adopting green initiatives
4. Government support that can encourage or further drive green initiatives
5. Key consideration in investment decisions for businesses

To read the full report, click here.

Urgent clarity needed for cruises to set sail: ACCI

As Australia’s summer season approaches, indications from the Federal Health Minister that the cruise industry will be permitted to set sail before Christmas are a promising sign. However, without a clear timeline to end the ban on cruise lines and a commitment to welcome cruising from State and Territory Governments there is little hope of cruises returning before the years end.

“With cruises resuming responsibly in other parts of the world, our own industry remains anchored,” Andrew McKellar, Chief Executive of the Australian Chamber of Commerce and Industry said.

“For our cruise industry to recommence operations they need a firm commitment and timetable to resume, indications are not enough.  We cannot expect the cruise industry to set sail again with so much uncertainty.”

“Restarting the industry is not as simple as the Federal Government just lifting the ban.  A restart to the cruise industry takes months of planning with staffing, catering and ship storage all needing to be considered.”

“The Federal Government must provide a clear timetable for ending the Biosecurity Determinations so that cruises can resume.  The COVID safe measures required for cruise ships to operate must also be outlined. Further, we need state and territory governments to commit to accepting cruise ship arrivals.”

Prior to the pandemic, the Cruise sector contributed $5.2 billion to the Australian economy, supporting more than 18,000 jobs.

“The economic impact of cruising is significant, with the industry bringing key tourism dollars to regional and remote communities, while also benefiting the accommodation, hospitality and retail sectors,” John Hart, Executive Chair at Australian Chamber – Tourism added.

“Just as the cruise ships that have recommenced operations internationally, the Australian cruise industry is ready and willing to operate within any required COVID safe measures, they just need to know what they are so they can start to prepare.”

ACCI Media Release

FBCCI signs MoU with MEDEF International to boost bilateral trade

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has signed a memorandum of understanding with MEDEF International (Mouvement des Entreprises de France International) to boost bilateral trade and investment.

The MoU was signed at France-Bangladesh Business Council Meeting organized by MEDEF International and Embassy of Bangladesh on November 11 at Paris in France.

Md Jashim Uddin, President of FBCCI and Pierre – Jean Malgouyres, Chairman of the France – Bangladesh Business Council, MEDEF International, inked the deal on behalf of their respective organizations, said a press release.

Addressing the meeting, FBCCI President Md Jashim Uddin stated that Bangladesh attaches great importance to its existing cordial relations with France. The two countries have a long-lasting bilateral relationship.

He also mentioned that France is the fifth largest export destination of Bangladesh with rising trend with major export products like woven garments, knitwear, home textile and footwear.

Jashim said Bangladesh offers best competitive fiscal and non-fiscal incentives for investment. Manufacturers of Bangladesh are adopting greener technologies and modern productions methods aligned with 4IR and challenges of climate change. Among the world’s top 10 green RMG factories, the top 7 are located in Bangladesh.

He hoped that the signing of MoU, would help further promoting cooperation between FBCCI and MEDEF for diversifying trade and expanding investment in an effective manner.

RTV News

KCCI warns S. Korea’s potential growth rate to drop amid low birth rates

The Korea Chamber of Commerce and Industry warned that South Korea’s potential growth rate could drop to the mid-one percent range as a result of low birth rates and a drop in labor productivity.

In a report released on November 10, the chamber’s sustainable growth initiative division said South Korea’s total fertility rate hit a record low of 0.84 last year as it has been also hit with the fastest aging population among OECD members.

Combined with a drop in labor productivity in the wake of the financial crisis, these factors are slowing down the country’s potential growth rate, the chamber said.

South Korea’s potential growth rate remained at around 4.7% on average between 2000 and 2009 before dropping to around 2 percent this year, according to the KCCI’s latest estimate.

If the demographic change and labor productivity slump continue at their current pace for another 10 years, the potential growth rate will drop further to 1.5% in 2030, the report warned.

To slow down the dwindling of the country’s potential growth, the KCCI said the government should introduce new measures to help raise birth rates and encourage women’s economic participation. “Raising child benefits or increasing the amount of child allowance depending on the number of children should be considered,” the report said.

The current child benefit scheme provides a monthly allowance of 100,000 won ($84.61) for a child below 7 years old. In Germany, the monthly child allowance for the first and second child is 219 euros per month.

Flexible work systems including remote work should be introduced more widely so women can continue to work after childbirth, the report also said.

When the women’s labor force participation rate rises from 52.8% in 2020 to the OCED European average of 55.3%, it will lead to a 0.25 percentage point increase in potential growth rates.

But fighting low birth rates will be a long-term solution rather than a short-term solution for a shrinking labor population as it will take around 15 years for a bump in birth rates to start positively affecting potential growth rates, the report said.

The Korea Herald

Philippine chamber releases ‘wish list’ for Duterte administration’s last months

The Philippines’ largest business group released its “wish list” of policies for the remaining months of the administration of President Rodrigo Duterte.

The Philippine Chamber of Commerce and Industry said it hopes the Duterte administration will implement the following measures for the remainder of its term:

• Institutionalize innovation for economic development
• Open the economy now and assist businesses to create new jobs
• Fully implement ease of doing business
• Fast-track internet connectivity at competitive rates
• Modernize agriculture for food security
• Innovate and digitize the education system,
• Balance industry growth and environmental protection
• Assure adequate power supply at a competitive cost
• Make infrastructure a cornerstone of economic development
• Fast track the completion of infrastructure and ensure transparency in bids and awards.

The PCCI released this during its 47th Business Conference and Expo, which was also attended by some of the country’s economic managers.

Socioeconomic Planning Secretary Karl Chua and Trade Secretary Ramon Lopez said they will continue to push for legislative reforms that will open up the Philippines to more foreign competition, especially in telecommunications, so that the public can get access to a wider range of services and products for their connectivity.

Lopez said they will also push Congress to ratify the Regional Comprehensive Economic Partnership or RCEP, which will open up opportunities for more trade across the region.

Information and Communications Technology Undersecretary meanwhile said the agency will pilot test satellite technology for internet communications in underserved areas.

PCCI president Benedicto Yujuico meanwhile lauded the Philippines’ jump in the Global Innovation Index from the 73rd spot in 2018 to 51st this year.

“Among the factors cited for the improvement in our GII are innovations particularly in the online sales via e-commerce and improved logistics in the delivery of goods and services. Our better GII performance proves that we are an efficient innovator and that we have the capacity to make things faster, better and more efficient,“ Yujuico said.

Vice President Leni Robredo, who delivered the keynote address to open the event, said that she will also push for some of the items on the ‘wish list’ of the PCCI.

ABS-CBN News

Supply Chain Issues Are Not the Biggest Threat to the Maritime Industry

The marine industry faces significant challenges in its effort to prepare for decarbonization and new environmental regulation.

While keeping a wary eye on COVID-19-related issues, the global marine industry sees environmental issues as potentially having the most impact in the coming decade, according to the Global Maritime Issues Monitor 2021 survey.

For the marine sector, key environmental risks involve the decarbonization of shipping, new environmental regulations, and the failure of climate change mitigation and adaptation. Each of these scored high among survey participants for their perceived impact and likelihood — and worryingly low on preparedness.

Alongside environmental issues, industry leaders see cyberattacks, sustainability and digitization among their key concerns, according to the annual report, a joint project of the Global Maritime Forum, the International Union of Marine Insurance and Marsh Specialty.

Photo: Getty Images

Interestingly, the industry gained confidence in its ability to manage pandemic risk — despite the disruptions COVID-19 has caused in supply chains, shipping and global economies. While the 2020 survey placed “pandemic” as the issue for which the industry was least-prepared, in 2021, it was placed among those issues for which the industry was most prepared, likely a reflection of many months of intense focus.

Impact of Environmental Issues Increases

For the first time across the survey’s four years, respondents ranked shipping decarbonization as the most impactful issue, followed by new environmental regulation. This concern, in large part, comes from increased pressure from investors, financial institutions and customers seeking to address climate change and related sustainability issues.

The marine industry faces significant challenges in its effort to prepare for decarbonization and new environmental regulation.

For example, the implications of decarbonization extend to fuel price increases, which the survey found to be an increasing concern as it moved five spots higher to 10th place in 2021 regarding its impact.

Environmental issues are also affected by the broad societal demand for sustainability, which can be seen in the increased interest and expectations from consumers in everything from energy use to how goods are manufactured, and ultimately, transported.

As part of its role in global efforts to rein in climate change, the maritime sector will need to reduce its carbon footprint — shipping emits about 3% of global greenhouse gas (GHG) emissions. Success will depend largely on implementing policy frameworks that enable the industry to reach global climate targets at scale and with urgency.

The entire ecosystem of the movement of goods is changing.

The International Maritime Organization (IMO) adopted an Initial GHG Strategy in 2018, aiming to reduce emissions from shipping by at least 50% by 2050 compared to 2008 levels; the strategy is scheduled to be revised in 2023.

Some experts say that a potential IMO 100% by 2050 target could have nearly as much impact as a global price on GHG emissions; however, only 23% of survey respondents believe such a measure will be adopted.

Simply reducing emissions in current vessels will not be enough to reach the goals; zero-emission ships must start entering the global fleet by 2030 and increasing their numbers significantly in the following years.

Survey respondents also said global policies and regulations would have more impact than regional ones, but that regional and domestic ones are more likely to be implemented. Regulatory uncertainty — including the pricing of GHG emissions and fuel mandates — generally are seen as more likely to be used than are incentives such as fuel and vessel subsidies.

Regarding pricing, some experts believe a key step in climate policy will be to place a price on GHG emissions; it’s also viewed as the most likely step to be implemented. Among survey participants, a global price was seen as the most impactful and ranked second for likelihood.

Still, agreeing to a global price on GHG emissions is fraught with political challenges, causing some regions to consider regulating shipping while global measures are worked out. In July, for example, the European Commission proposed to include shipping in the EU Emissions Trading System, while the U.S. and China have raised the possibility of similar steps.

Digital and Cyber Risks Increasing for Shippers

As in most other sectors, the marine industry sees cyberattacks and data theft as more impactful and more likely in 2021. Survey respondents raised a red flag, saying the industry is not fully prepared to tackle these issues.

In these days of never-ending cyberattacks, no organization in the marine industry can afford to feel “insulated” from targeted attacks. Upgrades involving technology and digitization are the norm across the industry, including changes to vessels, terminals, ports and other areas. While leading to vast improvements in shipping, these changes also open the door to increased attacks from bad actors — and increase the stakes.

As the industry continues to digitize and upgrade technology, organizations must at the same time reinforce and upgrade their ability to withstand the inevitable attacks. Training employees, being vigilant regarding IT protocols, and other steps are necessary to improve cyber resilience.

The entire ecosystem of the movement of goods is changing, and industry experts see the risks around big data and artificial intelligence as additional areas for which the marine industry needs to improve its preparedness.

For example, AI’s role in logistics operations is increasing, while autonomous driving systems are set to be ubiquitous in all means of transportation, including shipping. For the marine sector, impacts will include the interoperability of cargo booking and forwarding systems, electronic bills of lading, and more.

Not only are such developments rife with cyber risks, they are shifting liability and leading to the need to purchase new and/or expanded insurance programs that align with new laws.

The marine industry continues to adjust to a number of issues brought on or exacerbated by COVID-19, including shipping delays and a crew-change crisis. Looking beyond these immediate concerns, the industry is working to deliver changes needed to help meet the challenges of climate change and the increased cyber risks of a technologically driven global economy.

Marcus Baker
Chairman of Marsh Marine Practice

The original articles were be read in the Brink’s website HERE.

FNCCI and Investment Board to work together to increase foreign investment

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the Investment Board Nepal (IBN) will cooperate with each other to promote foreign investment in Nepal.

In the third meeting held at the IBN for the International Investment Promotion Committee under the FNCCI, the Chief Executive Officer of the IBN Sushil Bhatta and the FNCCI President Shekhar Golchha expressed their commitment to work together to promote investment in the country.

Bhatta also said that the IBN is actively working with the private sector to bring necessary policy reforms to attract foreign investment in Nepal. Stating that the investment sector should also be diversified, he added, “We have many potential areas for investment and investors should also be encouraged to invest in our diverse sectors. Similarly, no project can move forward without an in-depth study of the technical, environmental and financial condition.”

On the occasion, FNCCI President Golchha said that the federation is a responsible and capable body to hold discussions and ensure coordination with domestic and foreign private investors. He stressed the need for the IBN and the FNCCI to work together to reach out to foreign investors to attract investment in Nepal. “We have an active network, both at home and abroad. Using that network, we can easily reach out to investors and attract investment to Nepal,” said Golchha.

Republica Nepal

ICCIMA holds online meeting to explore trade opportunities in Croatia

Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) held an online meeting on October 30 to explore investment and trade opportunities in Croatia, the ICCIMA portal reported.

The meeting was attended by the Iranian Ambassador to Zagreb Parviz Esmaili, the ICCIMA Deputy Head for International Affairs Mohammad-Reza Karbasi, and representatives of provincial chambers of commerce as well as a number of businessmen interested in doing business in Croatia.

During the meeting, the capabilities and needs of each province were discussed, and accordingly, the existing capacities in Croatia, about which there is a possibility of joint investment and economic cooperation were also explored.

In this regard, Karbasi underlined establishing direct flights between the two countries, expansion of joint cooperation in the field of health tourism, and signing of sisterhood agreements between different provinces of the two countries as measures that could be taken for boosting mutual trade relations.

He also expressed ICCIMA’s readiness and willingness to implement a barter trade management in collaboration with Iranian specialized parent companies and called on the Iranian Embassy in Zagreb to list Croatian companies wishing to barter goods and services with Iran.

Referring to the high capacities in Iran and the Balkan region, as well as the importance of increasing Iran-Croatia trade interactions, the official underlined the need for using the potentials of the provincial chambers and the Iranian embassy in Croatia to strengthen cooperation in various fields.

He further suggested specialized meetings be held in various fields in cooperation with the Iranian Embassy in Croatia.

Karbasi stressed the need for establishing a joint Iran-Croatia Trade Committee under the supervision of the two countries’ chambers of commerce based on a memorandum of understanding signed between the two sides.

Tehran Times

Arun Chawla appointed as Director General of FICCI

The Federation of Indian Chambers of Commerce & Industry (FICCI) on October 30 said Arun Chawla has been appointed as its new Director General.

Chawla will assume charge with immediate effect. He joined FICCI in 2011 served as the Deputy Secretary General of the chamber prior to his appointment.

“We are delighted to welcome Arun Chawla in his new role. FICCI would surely benefit from his long experience in the organisation and his earlier stint in the corporate world,” FICCI President Uday Shankar said.

Data Localization Is Now a Big Part of Doing Business Globally

More than 100 countries now require their citizen data stored in servers physically located inside their borders. These laws are creating significant new technical challenges for chief information security officers (CISOs).

In this new data sovereignty era, the threat landscape is more sophisticated, and risks are typically no longer a binary yes/no but a scale of limitations based on the sensitivity of the data involved. The fact that a lot of data remains scattered in the cloud makes the CISO’s job an even more challenging affair.

Photo: Robin Bartholick / Getty Images

Many countries like Germany, France and Russia have laws that require citizens’ data to be stored on physical servers within the country’s physical borders.

Data localization or data sovereignty refers to restrictions placed on the ability of companies to move, store, process or otherwise handle their users’ personal data.

Many countries like Germany, France and Russia have laws that require citizens’ data to be stored on physical servers within the country’s physical borders. There are also countries where regulations only apply to certain industries that advocate the same local data flow, such as government agencies and military contractors.

These proposals can take different forms; some aim to make it harder for companies to move customer data outside the country, while others call for companies to maintain local copies of all user data.

GDPR Was a Game-Changer

When the European Union enacted the revolutionary General Data Protection Regulation (GDPR) in 2018, it was a challenge for CISOs in many companies to align with the demands of the law. Over 500 lawsuits have been filed against non-compliant companies, resulting in 260 million euros ($300 million) in fines so far. Meanwhile, the cost of GDPR compliance is expected to be around $8 billion per year for Fortune 500 organizations.

As the world transitions to a data-driven society, privacy seems set to play an even more important role than it already does.

Following suit, over a hundred jurisdictions — countries, states and cities — have now passed their own data privacy legislation. These “local GDPRs” add up to create a global tangle of regulatory responsibilities that will wreak havoc on the operations of nearly every global firm that interacts with consumers.

It’s like a second set of tax codes for CISOs, with high expenses, high risk, complex implementation and absolutely no room for noncompliance.

Barriers to Cloud Adoption

The 2019 Cloud Security Report highlighted some major concerns regarding a CISO’s migration to the cloud. Sixty-four percent of the surveyed population mentioned data loss as their primary challenge during the transition, while 62% highlighted data privacy.

Although the focus of a breach response is to remediate the damage and restore business, the cost of a data breach should not be taken lightly. The most contributing factors are third-party involvement, system complexities, operational technology, compliance failure and extensive cloud migration.

Another consideration is the legislation of the data itself. This can place restrictions on CISOs and their ability to access and work with user data. User privacy and security become a lot more than simply putting the right protective measures in place — there are rules, and they can sometimes be difficult to navigate as different countries have different laws.

Privacy Is No Longer an Accessory But an Essential

The privacy landscape has changed drastically in the last few years, so much so that privacy has become essential to business and is no longer an accessory. As the world transitions to a data-driven society, privacy seems set to play an even more important role than it already does.

Any CISO should be aware of the fact that customers will demand transparency from organizations, especially about their data. They need to tell their users where their data resides and who can access it.

CISOs can contribute significantly to the effectiveness of their organizations by taking an active interest in establishing robust data sovereignty practices. For example,

CISOs should consider the “entire stack” when developing and maintaining a solution that meets relevant compliance standards.

CISOs need to research and know how to comply with the local requirements. Knowing the local laws is now the standard operating procedure for navigating international business deals. You can’t do business in another country without understanding their data laws.

The Hybrid Cloud

A hybrid cloud made up of on-premises infrastructure, private cloud services and a public cloud gives CISOs more options and the chance to streamline operations and save money. If the business is using a public cloud model today, most of the applications will be in play with a hybrid cloud approach. These applications can be moved back to the on-premises environment when needed while also capitalizing on the advantages of the public cloud when applicable.

Protecting the most sensitive information, whether it is trade secrets, personally identifiable information, or intellectual property, is the core function of a CISO.

With more enterprises leveraging data analytics and business intelligence to gain business advantage, CISOs are challenged to balance strategies for achieving data sovereignty with the new realities of cloud computing and big data.

Related themes: CYBERSECURITY GLOBALIZATION INFRASTRUCTURE INTERNET OF THINGS REGULATION

Deepak Gupta
CTO and Co-Founder of LoginRadius@dip_ak

Deepak is the CTO and co-founder of LoginRadius, a rapidly-expanding Customer Identity Management provider. He’s dedicated to innovating LoginRadius’ platform, and loves fooseball and winning poker games.

Voice Technology Is in Demand — and Social Distancing Could Accelerate Its Adoption

The original article can be read in the Brink’s website HERE.

“Singapore International Energy Week 2021,” October 25-29

CACCI herewith forward an invitation to all CACCI officers and members to attend the Singapore International Energy Week (SIEW) 2021, of which CACCI is a Supporting Organization, to be held on October 25-29 at the Marina Bay Sands Expo and Convention Centre, Singapore.

Organized by The Energy Market Authority of Singapore (EMA), SIEW 2021 is a hybrid event with both onsite and online streaming elements.  Featuring the theme of “Advancing the Energy Transition,” the five-day event is an annual platform for energy professionals and policymakers to discuss and share best practices and solutions within the global energy space.  It aims to foster a robust exchange of views and perspectives among thought leaders and industry professionals in the energy industry, even as we adhere to safe management practices.

Anchor events at SIEW include the SIEW Opening Keynote (SOK) and Singapore Energy Summit (SES) which feature high-level keynotes and panel discussions around this year’s theme. Other key events include the SIEW Energy Insights, SIEW Thinktank Roundtables and In Dialogue with Youth. SIEW partner events, the Asia Clean Energy Summit, Asian Downstream Summit, and LNG & Hydrogen Gas Markets Asia provide an opportunity to focus in on industry-specific topics.

For more information on the event visit their website HERE or register online HERE.

Opportunities in Aircraft Leasing & Financing at GIFT IFSC

FICCI under the aegis of International Financial Services Centres Authority (IFSCA) is organising a digital roadshow on Opportunities in Aircraft Leasing and Financing at GIFT IFSC. IFSCA is keen to set up a facilitative regulatory framework with the objective of making GIFT City a highly attractive destination for aircraft leasing. A brochure and pdf flyer detailing the opportunities can de downloaded for further reference.

We invite interested CACCI members to join this roadshow scheduled on 29th October 2021 from 1600-1730 hrs (IST).

For any further query, you can write to finance@ficci.com.

What Does Globalization Look Like in a Post-Pandemic World?

The global economy is emerging from the pandemic with global supply chains in disarray and companies struggling to source products from around the world. In his new book with Anthea Roberts, Six Faces of Globalization, professor Nicolas Lamp argues that there is no longer a single narrative to describe globalization, but multiple. BRINK began by asking him how the pandemic has changed the nature of globalization.

LAMP: I don’t think the pandemic has changed the fact that we live in a globalized world. We will continue to have global supply chains. But there’s no question that we now think about those supply chains differently. The key narrative that has emerged in response to the pandemic focuses on the importance of resilience.

Resilience Is the New Ingredient

I believe that what we are going to see is a more balanced form of globalization, which balances the benefits of efficiency, of just-in-time supply chains and specialization, with the value of resilience.

There will be an awareness that it can’t always be the cheapest option, it can’t always be the quickest option, that sometimes we have to accept redundancies and make long-term investments, even if they are expensive.

We have to keep in mind that there are many different ways of achieving resilience. As defenders of globalization have pointed out, if you concentrate production at home, that could also be a danger to resilience. What’s happening in the United Kingdom right now is a striking illustration of how a lack of openness to the outside world can undermine your resilience.

Photo: Getty Images

Businesses now think about supply chains differently. The key narrative that has emerged in response to the pandemic focuses on the importance of resilience.

Workers in different countries are in the same boat, and it’s the corporations who are taking advantage of workers everywhere.

With a hard Brexit, the United Kingdom has made a big bet on domestic workers and has foreclosed the option of relying on workers from the European Union. Now it’s experiencing the consequences. Concentration is a problem for resilience, no matter whether you’re dependent on foreign or domestic suppliers.

We need to get away from the idea that resilience can only be achieved through reshoring. Often, it will simply not be practical to reshore the production of most of the goods that we purchase. Maybe the United States and European Union can build their own semiconductor industries. But you see the sums that are involved: $50 billion in the case of the United States, $20 billion in the case of the European Union, which is probably not going to be enough. For most countries, that is simply not in the cards.

Don’t Rely On a Single Narrative

BRINK: The book is about six different perceptions of globalization. So which is on the ascendant and which isn’t?

LAMP: It depends very much on the context. We don’t have a clearly dominant narrative, but rather different narratives in contestation, and our message to policymakers is that when you’re dealing with complex issues such as globalization, trade, climate change, the response to the pandemic, it’s dangerous to rely on a single narrative and to design policies on the basis of that narrative.

You need to look at your policy from the angle of all the different narratives and try to attend to the concerns of all the narratives if you want to have a policy that is going to stand the test of time and is not going to go down in flames.

Take President Emmanuel Macron’s diesel tax as an example in France. It made perfect sense from a sustainability perspective, and also from the perspective of what we call the establishment narrative, which favors market-based solutions.

But President Macron did not consider how the tax would be perceived by those who subscribe to the populist narratives, who saw the tax as an attack on people living in the countryside that did not impose any burdens on city-dwelling elites. And soon enough, President Macron had the “yellow vest” protests on his hands.

BRINK: Would you say that there is a corporate narrative of globalization?

LAMP: That’s a great question. Corporations are using these different narratives when it suits their interests. Perhaps the best example is when Facebook and the tech companies were being subjected to scrutiny because of antitrust and other regulatory concerns. One reaction was to say, “Well, look, the Chinese government is working together with its tech companies and supporting its tech companies. We also need to be team USA in order to be able to confront team China.” That argument, of course, doesn’t work as well anymore, since China cracked down on its own tech companies. But there was definitely an attempt to deflect attention from the role of corporations by reframing the issue as one of geo-economic competition.

BRINK: You talk about a corporate power narrative. Can you explain what you mean by that?

LAMP: The corporate power narrative is a narrative that identifies corporations as key actors in globalization and juxtaposes them with a transnational working class.

The argument here is that workers in different countries are in the same boat, and it’s the corporations who are taking advantage of workers everywhere. This narrative tries to rebut the perspective of former President Trump and other right-wing populists, who argue, for example, that Mexican and U.S. workers are in competition.

The corporate power narrative that was put forward by American and Canadian trade unions was very different: It said that the real fault is not with Mexican workers, the real fault is with corporations. When the corporations take the jobs to Mexico, they pay the Mexican workers poverty wages, which don’t reflect the productivity of those workers. So they’re screwing both the workers in Canada and the U.S. who are losing their jobs, as well as the Mexican workers who are not being fairly rewarded for their work.

BRINK: Will this debate ever be resolved, one way or the other?

LAMP: I don’t think the contestation between the narratives will ever be resolved. What may change is the focus of the debate. In recent years, the globalized world has been the meta-narrative of our time.

But there is a possibility that other issues become the center of our attention — the pandemic provided an example. When the pandemic started to dominate public life, all the narratives that we were studying suddenly became narratives about the pandemic and what should be done about it.

There are two other topics that might become the center of these debates. One is climate change. We consider the possibility that globalization becomes a sideshow, and the real debates on which these narratives focus is what to do and how to deal with climate change.

And the other potentially all-encompassing meta-narrative could be U.S.-China geopolitical competition, where suddenly everything becomes about the U.S.-China relationship, just as the Cold War dominated public debate in the second half of the 20th century. If that becomes the dominant frame, then the narratives will tell different stories about that issue.

So we don’t think the debate is going to be resolved, but our aim is to make the debate based on a better understanding of different types of views and pave the way to develop policies that integrate concerns from the different narratives and obtain a broader base of consensus.

Related themes: GLOBALIZATION SUPPLY CHAINS TRADE

Nicolas Lamp
Assistant Professor of Law at Queen’s University@nicolas_lamp
Nicolas Lamp joined the Faculty of Law at Queen’s University as an Assistant Professor in 2014. In 2020, he was cross-appointed to the Queen’s School of Policy Studies. He also serves as the Academic Director of the International Law Programs, an eight-week summer course that Queen’s Law offers at the Bader International Study Centre at Herstmonceux castle in England during the summer term. Since 2019, he has also been the Director of the Annual Queen’s Institute on Trade Policy, a professional training course for Canadian trade officials that is hosted by the Queen’s School of Policy Studies.

What Does 2021 Hold for Global Trade?

What Just Happened at the WTO? Everything You Need to Know

How Do We Think About the Winners and Losers from Globalization?

The original article can be read in the Brink’s website HERE.

Are Electric Vehicles Really Green?

When it comes to transport’s carbon footprint, increasing attention is being paid to the carbon impact not only of the fuel type but of the parts used in the assembly of a vehicle, whether electric or petrol-powered.

A new report on the materials used in the vehicle manufacture by the Brussels-based Transport & Environment think tank (T&E) shows that EVs should have far fewer carbon emissions in their manufacturing process, though much depends on how the battery is made.

Lucien Mathieu is road vehicles and mobility analysis manager at T&E. BRINK spoke to him about how the process of manufacturing a vehicle determines that vehicle’s carbon footprint.

Photo: Sean Gallup/Getty Images

A worker assembles the interior of an electric car on the assembly line at a production facility on June 08, 2021, in Germany. The process of manufacturing a vehicle, excluding the battery, generates around six tons of carbon emissions on average.

MATHIEU: The process of manufacturing a vehicle, excluding the battery, generates around six tons of carbon emissions, on average. Of course, it depends on the size of the vehicle, but that includes acquiring the primary materials and all the manufacturing processes.

The main difference in the carbon footprint of the materials used in an electric car versus a petrol car comes down to the battery. An electric engine is much smaller and much lighter than a petrol or a diesel engine, which is much more complex and, therefore, requires significantly more materials and manufacturing.

Sourcing the Energy

Even more important in terms of reducing the carbon impact of the production of a vehicle — whether electric or not — is the source of the energy used by the car producer on its site. It matters whether the car producers use renewable electricity and whether their manufacturing processes are energy efficient. This is essential when seeking to reduce manufacturing emissions and is especially true in the production of the EV battery.

We have a tool online that allows you to look at the entire lifecycle of a vehicle and compare the carbon emissions of any car, petrol or electric, to see where the battery is made, what type of electricity is used to recharge the electric car, etc.

For an EV, the second most critical element after the source of electricity is how the battery is actually made. Manufacturing an average battery will add between four to five tons of carbon dioxide emissions. We divide these impacts into two phases. The first phase, the upstream parts, is the extraction of the raw material for the battery and the refining of those materials.

The second stage is manufacturing in huge battery factories that are setting up shop around the globe. If you produce a battery with electricity generated by coal, then the battery cell production stage will have a relatively high impact, whereas, on the other hand, if you use renewal electricity, the impact of battery production is only between a third and a quarter of the impact of the upstream matter extraction. This offers a huge potential to reduce emissions from battery cell production.

Recycling Will Be Critical

BRINK: Right. How much is the carbon footprint dependent on recycling materials?

MATHIEU: We don’t have a lot of data on battery recycling because only a very small number of EV batteries have already reached their end of life. Batteries will stay on the road for 10, 15 years, so we have very few batteries that are coming to the recycling stage.

And the few that are coming to the recycling station are closely kept by the battery producers because, for them, it’s a very valuable opportunity to learn and develop their in-house recycling processes.

BRINK: How much impact will the EU’s new battery law have?

MATHIEU: The law is now being discussed at the EU level between the parliament and in the member states. And it’s a major breakthrough in terms of how we address batteries. This will oblige all batteries placed in the market to be collected and recycled. And it will have specific material recovery targets, such as 95%, when it comes to cobalt, nickel, manganese or copper. Ninety-five percent of those materials will have to be recycled and recovered to be used in new applications, like for a new EV battery.

There is still a bit of a gap in terms of the knowledge that we have, but we expect recycling to play a significant part in reducing the emissions from the battery footprint, in particular for reducing the amount of primary raw materials that we have to extract from the ground.

Responsible Mining

However, we’re still going to need so much more raw material in the future to meet expanding demand for decarbonizing the road transport sector, so extraction will still have to increase as well. There is a whole section in this new EU law about responsible mining, which obliges the battery-makers to do a full due diligence and risk assessment and mitigation of their supply chain in the identification of the risks linked to extracting the materials.

This can be an environmental impact, for example, on the water toxicity, but also the ethical and social impacts, for example, child labor in Congo. These are things that will be addressed as well in this new battery law.

The last pillar of the law is on the type of carbon footprint calculation.

The European Commission will be developing a methodology to calculate the precise carbon footprint of the batteries, taking into account all the different variations that you can have, for example, if the nickel is from Indonesia or it’s from South America, if the battery is produced with clean electricity or not. So all these questions will be taken into account.

The European Commission will then put in place strict requirements on the maximum carbon footprint of batteries placed in the market in Europe.

Related themes: CLIMATE CHANGE REGULATION

Lucien Mathieu
Road Vehicles and Emobility Analysis Manager at T&E@mat_lucien

Lucien Mathieu is a road vehicles and emobility analysis manager at T&E, the leading think tank and campaign group on sustainable mobility in Europe. His work is focused on accelerating the transition to electric mobility for cars and trucks, on the basis of evidence-based advocacy work. Mathieu has been the main author of several reports on CO2 emissions from cars and carmakers compliance with the EU car CO2 emission standards, as well as reports on electric mobility, notably on the EV market in Europe, EV batteries and charging infrastructure.

The original article can be read in the Brink’s website HERE.

Invitation to “FICCI-CACCI Business Delegation to Expo 2020,” Dubai, UAE, November 23-25, 2021

CACCI herewith forward an invitation from the Federation of Indian Chambers of Commerce and Industry (FICCI) to join the FICCI-CACCI Business Delegation to Expo 2020, Dubai, United Arab Emirates (UAE), to be organized on November 23-25, 2021.

To be hosted by Dubai, UAE, Expo 2020 is scheduled to be held from October 1, 2021 to March 31, 2022. As the world’s greatest show of human brilliance and achievement, the Expo will see millions of people from around the world meet and celebrate their collective humanity and is an opportunity to work towards a shared and sustainable future under the promise of “connecting minds, creating the future”.  It will also showcase innovation, inspiration, and the most brilliant talents from 192 countries in one spectacular futuristic destination.

By joining the Delegation, participants will have the opportunity to be engaged and entertained through immersive pavilions, cultural experiences, more than 60 live events per day and 200-plus food and beverage options, uniting visitors in a world-class extravaganza.

The tentative itinerary and estimated participation fee can be viewed HERE.

Evergrande Is the Consequence of An Unsustainable Economic Model

The Chinese real estate sector has long been too big and too risky, and it is not coincidental. It was central in the Chinese leadership’s plan to reflate the economy from the global financial crisis in 2008. Since then, the way forward for the sector has been to leverage debt so as to increase the supply of housing units, given Chinese households’ infinite demand for them.

In fact, housing has long been the most important asset to those in China as an investment of their savings, in light of the still draconian controls to capital outflows. Investment in housing has been El Dorado for Chinese households, as prices have been on the rise nearly continuously until recently.

Reasons for the Price Decline

Prices suddenly decelerated in 2021 for several reasons. First and foremost, there was a sudden regulatory push to control the overstretched balance sheets of real estate developers, which has resulted in restructuring some large real estate companies, such as China Fortune Land, even before Evergrande got into trouble.

In other words, Chinese households — even if flooded by a still rosy picture of the real estate sector and the Chinese economy in the local media — are increasingly wary about investing in real estate.

If Evergrande were not to deliver on its promises, pre-sales of housing units would dry up in China pushing most real estate developers to the brink.

The second reason is that the tighter controls do not only affect developers but also buyers of real estate who deal with huge down payments as well as the fear of a nationwide property tax, which has been rumored for quite some time.

Finally, Chinese households are feeling the brunt of an economy that has been decelerating rapidly for the last few years, pushed by its own overcapacity but also the U.S.-led trade and tech war and, more recently, the pandemic.

A man walks through the Evergrande changqing community in Wuhan, Hubei Province, China. China’s real estate sector is not bound to collapse out of Evergrande’s demise.

Housing Is a Major Source of China’s Inequality

The Chinese government’s crackdown on the real estate sector comes in the context of China’s rapidly changing long-term economic goal from growth “über Alles” to common prosperity. The crackdown involved the introduction of the so-called “three red lines” to limit their debt leverage, dependence on pre-sales, and short-term funding that was too short.

Common prosperity is President Xi-Jinping’s new economic mantra, following that of dual circulation, to highlight the importance of better income distribution and more equal opportunities. Excessively high — and growing — housing prices are probably the most important source of income inequality in China. Access to housing — or the lack thereof — is a key factor in explaining income disparity.

Evergrande could not but be the target of the government crackdown for a number of reasons. First, it is the largest real estate developer. Second, it is the most leveraged and does not fulfill any of the aforementioned three red lines.

Thirdly, Evergrande is heavily exposed to foreign investors, whether through the Hong Kong stock exchange or bonds issued in Hong Kong’s offshore market. The latter, which accounts for close to $20 billion, mostly denominated in USD, have mainly been bought by foreign private banks and asset managers for their high net worth clients.

It seems clear, after the lack of payment of a USD bond coupon last Thursday, that Evergrande’s offshore debt will go through a restructuring. Based on the example of China Fortune Land, which is finishing its own restructuring, this might not necessarily entail a nominal haircut but an extension of the maturity and the reduction of the interest due.

Foreign investors will probably be relieved if such restructuring is announced as they now lack clarity as to the future of their investment in Evergrande. Still, most of Evergrande’s debt is domestic and will need to be serviced, especially the amount received by Evergrande in pre-sales from Chinese households.

1.5 Million Are Waiting for Their Apartments

Close to 1.5 million Chinese households are waiting for Evergrande to finish their units, and this will surely happen. The main reason is the massive reliance of other real estate developers on pre-sales so that if Evergrande were not to deliver on its promises, pre-sales of housing units would dry up in China pushing most real estate developers to the brink.

In addition, President Xi-Jinping’s common prosperity is really not about dumping the losses on the households. As such, the Chinese government has already given clear signs that local governments will take care of the unfinished projects.

Two important takeaways follow. First, China’s real estate sector is not bound to collapse out of Evergrande’s demise, as public money is going to be put to work to solve its systemic consequences within China. This does not mean, however, that everybody, especially not foreign investors, will be fully bailed out. Evergrande needs to serve as a warning signal of the cost of excessive leverage.

The second takeaway is that China’s growth will suffer from all of this. Not only is the real estate sector — which is a key contributor to China’s investment, employment and growth — going to slow down after Evergrande’s demise, but investors, in general, will be increasingly wary of China’s drastic change in priorities.

Economic success is no longer the goal, and financial excess will be penalized. Contributing to common prosperity is now the key objective, even at the cost of disgruntled private investors and, thereby, a potential stagnation of the economy.

Related themes: CHINA DISRUPTION INVESTMENT

Alicia García-Herrero
Senior Fellow for Bruegel and Chief Economist for Asia Pacific at Natixis

Alicia García Herrero is chief economist for Asia-Pacific at Natixis and a senior fellow for Bruegel. Previously she was chief economist for Emerging Markets at Banco Bilbao Vizcaya Argentaria. She is a non-resident fellow at Cornell’s emerging market research centre and Senior Research Fellow at El Cano Royal Institute for International Relations. She is currently adjunct professor at City University of Hong Kong, visiting faculty at University of Science and Technology as well as at China-Europe International Business School.

Could the RMB Dislodge the Dollar As a Reserve Currency?

Asia-Pacific Must Phase Out Fossil-Fuel Subsidies

Is China About to Cap Its Coal Output?

The original articles can be read in the Brink’s website HERE.

Invitation to the ASEAN Leadership and Partnership Forum 2

CACCI is pleased to forward hereunder an invitation to CACCI officers and members from the ASEAN Business Advisory Council (ASEAN-BAC), of which CACCI is an Associate Member, to join the “ASEAN Leadership and Partnership Forum 2021” to be held on October 7, 2021.

Ransomware Attacks on Critical Infrastructure Are Surging

According to Temple University’s Cybersecurity in Application, Research & Education Laboratory, ransomware attacks on critical infrastructure are on the rise, with about 75% of recorded incidents since 2013 having taken place in the last 18 months. The increasing frequency and severity of ransomware attacks are reflected by the steady increase in cyber insurance prices.

Threat actors can target critical infrastructure with geopolitical or financial motivations. They are well aware of the potential knock-on impacts on businesses and economies, as these attacks can cripple unprepared organizations by halting operations for extended periods.

A failure to prevent or respond to ransomware incidents can lead to reputational and liability risks, with lasting impacts on trust dynamics between infrastructure operators and key stakeholders such as governments, investors and consumers. These trust implications are further discussed in Built to Last: Infrastructure and Trust In A Changing World, a new report from Marsh McLennan.

Source: Rege, A. (2021). “Critical Infrastructure Ransomware Incident Dataset”. Version 11.3. Temple University. https://sites.temple.edu/care/ci-rw-attacks/ • Critical infrastructure sectors are labelled according to definitions of the US Cybersecurity and Infrastructure Security Agency (CISA). * As of July 2021.

What Do Post-COVID Supply Chains Look Like?

Across the world, companies have been celebrating the return of more normal activity, more reliable supply chains and a boost from renewed consumer confidence. And that’s where they are going wrong.

A year ago, I described how the pandemic was changing supply chains in unexpected ways, and if a business’s supply chains have remained the same as they were before the pandemic, then it is going to have problems. Retail is just one immediate example. Post-lockdown sales might be sharply up, but profits remain down because the cost to serve is so much higher for online sales and delivery models. Businesses in all sectors need to move forward to a new normal for supply chains. Perhaps it can be a “new better.”

Photo: plus49/Construction Photography/Avalon/Getty Images

Container ships from China passing at Blankenese on the Elbe, Germany. In the short to medium term, the impact of COVID-19 is not going away, meaning sharp rises in shipping and air freight costs.

Cost to Serve Is Higher

A year on from the first waves of shocks, global supply chains are working in a fast and furious fashion. Working, but volatile — subject to local uncertainties and the potential for a difficult accumulation of disruption.

In the short to medium term, the impact of the COVID-19 pandemic is not going away, which means a changing picture of lockdowns and restrictions in different parts of the globe. Overall, that has meant sharp rises in shipping and air freight costs. And, in general, lead times for supply chains have needed to be extended.

The knock-on effect of this has been a need for more containers, more containers not moving and capacity being fully taken up — so, containers end up in the wrong places around the global supply chains system. It’s like supermarket trolleys. If processes to take trolleys back to the front of the store aren’t working, then they’re going to end up scattered all around the extremities of the car park.

Bottled Up Consumer Spending

Supply chain disruptions and shortages are continuing to happen because of the dramatic upturn in economies, a release of bottled-up consumer spending.

The microchip shortages in some sectors are also being exacerbated by parallel interactions, where there is increased competition from across different sectors competing for supplies, especially with the accelerated shift to computerization and autonomous systems in everything from the workplace to transport systems.

A question mark also remains over whether the surge in demand for products is real or just a bubble of stockpiling as businesses fill their stock rooms to pre-empt recovery. The danger is that customer demand doesn’t or won’t exist on the same scale and we enter a boom-and-bust cycle.

The pandemic crisis of 2020-21 has brought permanent, structural changes to supply chains. There is no return to 2019, and businesses need to take on board the lessons of the past 18 months and find the best blend of old and new.

Cost and value will always be fundamental, but resilience has to be the priority for protecting company survival for the longer-term.

Shorter, More Localized Supply Chains

We have seen how those supply chain managers with the strongest network of relationships have coped better. Businesses tend to focus effectively on the basic management of inventories, KPIs, information systems and people — but appear to think relationships happen by accident. Collaboration and proactively managed relationships are the key to future resilience.

Businesses have seen the need for shorter, more localized supply chains. Supplies of some high-demand raw materials, like cobalt and lithium, can only come from specific regions — nothing can change that situation — but there can be more near-shoring and on-shoring. There is also the need for multi-shoring, not basic multi-sourcing, which caught out some operations during lockdown that had arranged multiple different supply sources in the same region, all affected by COVID-19 transport restrictions.

The crisis has demonstrated the need for transparency: continuous monitoring and intelligence, real-time information across networks in order to anticipate and understand the impact of volatility and better deal with the complexity involved. Events like the blockage of the Suez Canal earlier this year had a heightened impact because it was a case of disruption on disruption.

The Need for a Strong Culture

A strong culture has been critical for ensuring there’s the necessary agility and flexibility in a supply chain operation. By ‘culture’ I mean what happens when people are left without instruction and under pressure? What do they do? Can they work together to find solutions?

People have been shown to be the most vulnerable element in an organization, adding to the momentum toward Robot Process Automation. This could both increase resilience within operations (not having to rely on the presence and movements of human employees) but also take the repetition out of human work roles.

There needs to be a working trade-off between property assets, information systems and HR. Organizations may no longer need physical offices to the same extent as a result of automation and remote working, but they need to invest into more than just new information systems. There has to be renewed attention and investment into HR and the management and leadership of dispersed workforces, all the processes that need to be re-engineered for a virtual world of work. The growing reliance on digitization and connectivity also means a new intensity of focus on cybersecurity.

A ‘New Better’?

What companies and consumers value has changed. Lockdowns have moved a much larger proportion of the consumer population — including older demographics — over to the ease of online shopping. In other words, people have got used to shopping differently, and that means that whole supply chain processes, networks, information systems and organizations have to change.

Ultimately the lesson has been the need to procure for resilience and not solely cost. Cost and value will always be fundamental, but resilience has to be the priority for protecting company survival for the longer-term.

A new better for supply chains will bring some major changes for wider societies.

There will be benefits from more automation, digital systems and on-shoring, including higher quality jobs, the potential for more diversity in the workforce, a reduced transport footprint for the environment and less plastic waste. But at the same time, there will be challenges, including the need for new business models to ensure viability and maintaining the engagement and motivation of supply chain workers. The biggest barrier, though, will be complacency around the “return to normal.”

Related themes: CYBERSECURITY SUPPLY CHAINS TRADE

Richard Wilding
Professor of Supply Chain Strategy at Cranfield School of Management@SupplyChainProf
Richard Wilding OBE is the professor of supply chain strategy at Cranfield School of Management. He is also the chair of the Chartered Institute of Logistics & Transport (UK), and recognised as one of the world’s leading experts in logistics and supply chain management.

Coronavirus Is Changing Global Supply Chains in Unexpected Ways

The original articles were be read in the Brink’s website HERE.

99 of the World’s 100 Most Environmentally At Risk Cities Are in Asia

It’s clear that cities everywhere are uniquely threatened by the environment. Not just climate change, but other issues, such as air quality, water pollution and resource restrictions are becoming increasingly significant in mega-cities.

A recent report by global risk analytics firm Verisk Maplecroft concludes that 99 of the most environmentally threatened cities are in Asia. BRINK spoke to the author of the report, Will Nichols, head of Environment and Climate Risk Research at Verisk Maplecroft.

NICHOLS: One of the key things that is driving the Asian risk score so high is air quality. While we do have air quality issues in Europe, for example, in London and some of the Eastern European cities, Asia really is far and away ahead of that.

Photo: Sajjad Hussain/AFP via Getty Images

People walk along Rajpath near India Gate under heavy smog conditions in New Delhi on November 9, 2020. One of the key things that is driving the Asian risk score so high is air quality — aggravated by a growing population.

Air pollution and water pollution, alongside water stress — the availability of water and water demand — are all aggravated by a growing population, and we see quite high population growth rates in many of these Asian countries, which is compounding these risks.

There are also issues around natural hazards such as flooding or earthquakes or droughts in many Asian cities. So for example, Jakarta, which is the number one city on our index, not only has issues around air quality and water pollution and wood stress. It’s also got real threats from flooding and earthquakes. And all these impacts are all going to be exacerbated as climate change kicks in, as well.

The Threat to Urban ‘Wealth Generators’

BRINK: Did you rank all these risks equally?

NICHOLS: There are nine risk indices, such as air quality, water quality and so forth, as well as the exposure of the economy and transport infrastructure to natural hazards. In terms of natural hazards, there’s some consideration given to casualties, but we’re mainly looking at economic losses, so it’s geared toward businesses and economic impact.

If these risks are increasing, as we think they are, then they threaten the status of these cities as wealth generators. This has knock-on effects on investment, credit risk and how countries might organize their economies.

Climate change is often viewed with deadlines — “we’ve got 2030 targets.” etc. But it’s not like these environmental challenges occur with a switch. We’re trying to make people aware that these risks are rolling so they are better prepared to mitigate them.

Source: Verisk Maplecroft Global Risk Analytics Dataset © Verisk Maplecroft 2021

Why Asia’s Climate Risks Differ from Africa’s

BRINK: A lot of people would imagine that African cities would be somewhere near the top, places like Lagos, for example. Why don’t they feature as much as Asian cities?

NICHOLS: Natural hazard risks are comparatively lower in sub-Saharan Africa. So, there aren’t the threats of storms or earthquakes or volcanoes to the same extent that there are in Asia or South America.

Where African cities really do spike, is in terms of climate change vulnerability. That’s partly a result of the climate extremes these countries are facing, but it also is a factor around how well these countries are able to mitigate the impacts of climate change and adapt.

So, even though the climate extremes and the physical risks they’re facing might not be quite as severe as some parts of Asia, because African countries are poorer, they are less able to cope in terms of the strength of their institutions, and the funding needed to finance mitigation measures.

Population growth is also going to exacerbate these risks for cities, as you see migration from more risky cities to less risky cities taking place, which will put greater pressure on those cities that were previously seen as less risky.

What Does This Mean for Business?

BRINK: If you’re a company that has a presence in some of these cities, how do you process these findings?

NICHOLS: We recognize that it’s not always possible to pick up your operations, or your supply chain from one at-risk city, and move it to a less risky city. You need to be near the market. You need to be near a labor force. Whatever it is, there’s certainly other factors that will go into decision-making, here.

Nowadays, it’s difficult to find a company that hasn’t got some kind of climate change policy. However, all these environmental factors need to be a part of any long-term decision-making. especially if you’re investing in infrastructure, like an airport or railway line that’s going to be around in 20, 30 years. Otherwise, you risk the asset being potentially stranded or not useful.

In poorer countries, governments may lack the capacity to deal with these risks, whether that’s levies or building sea walls, etc., so the burden on mitigating climate change impacts and adapting may fall on businesses.

There are also going to be increasing limits around carbon — we’ve seen the enormous Chinese emissions trading market going ahead — and these have tended to happen first at a city level before they roll up to a national level. So, it really falls on companies to factor these potential threats into their investments at a city level before they move ahead.

Related themes: CITIES CLIMATE CHANGE RISK MITIGATION

Will Nichols
Head of Climate and Environment Research at Verisk Maplecroft@WillNicholsRisk
Will Nichols heads up Verisk Maplecroft’s global environmental and climate change research team. He generates data-driven insights to help financial and corporate clients identify and address ESG and climate risks impacting their operations, investments and supply chains.

The original articles were be read in the Brink’s website HERE.

Decentralized Finance: The Next Big Threat for the Finance Sector

Decentralized finance, or DeFi, is a fast-growing segment of the financial markets. Based on a blockchain platform, DeFi provides software services that can cut out intermediaries in financial transactions, thereby allowing for financial services, such as mortgages and investment, to be delivered at lower costs. The question is: Will it take off, or will the financial sector push back?

Kevin Werbach is the chair of the Department of Legal Studies and Business Ethics at the Wharton Business School, University of Pennsylvania.

WERBACH: At a broad level, DeFi is about reconstructing the entire financial system on decentralized blockchain-based foundations.

At the moment, we have a significant and growing market around cryptocurrency trading, as well as payments in things like Bitcoin. However, most of that activity still goes through centralized actors. If you buy Bitcoin on an exchange like Coinbase, for example, Coinbase is taking custody of your assets, and it’s providing a similar kind of intermediation function to a traditional financial services provider.

No One Takes Custody of Your Assets

DeFi is about taking the actual financial service provision and transforming it into software that is operating as what are called “smart contracts” on a blockchain.

Most of this kind of activity today is on the Ethereum blockchain, but there’s a number of other blockchains that are growing in their level of DeFi activity.

Photo: Chris McGrath/Getty Images

People use bank ATMs next to a Bitcoin ATM at a shopping mall in Istanbul, Turkey on April 16, 2021. There are now more crossovers where decentralized finance architectures are being built within the traditional financial services world.

There are three key attributes of DeFi.

The first is that settlement is done on a trust-minimized blockchain platform. The base layer is that these are digital assets — cryptocurrencies where the ultimate ledger of transactions is a blockchain — as opposed to some centralized database in a financial entity.

The second piece is that the services are non-custodial — no one takes ownership or full control custody over investors’ assets. The investor still has control of their assets — even though they are transacted — whether it’s a trade or a lending relationship through the financial services platform.

The third piece of DeFi is that services are open, programmable and composable. What that means is that all of these are just software components that are running on a blockchain network. So it’s easy to add in additional functionality or to combine functions from different services because everything is running on a standardized software environment.

Which of the Intermediaries Will Be Most Threatened?

BRINK: Which intermediaries are likely to be most disrupted by this?

WERBACH: We first need to question whether DeFi actually disrupts traditional finance, operates alongside traditional finance or integrates with traditional finance.

It probably will be some of all three, but the growing success of DeFi does not necessarily require undermining traditional financial institutions. The question that DeFi poses to traditional finance is whether intermediation is valuable.

If the things that a bank or an asset manager does turn out to be things that can be provided more cheaply and efficiently in an automated way through software, then that will ultimately lead to capital flowing away from those traditional intermediaries.

In terms of the infrastructure, staffing, processes and relationships that are wrapped around that basic intermediation function in traditional finance, what will happen to all of those if we move to a world where at the core is software and decentralized blockchains as opposed to existing finance structures?

BRINK: Can you describe any new services or new areas of financial activity that might open up as a result of this innovation?

WERBACH: Right now, there is a tremendous amount of experimentation in DeFi because these base functions in finance can be combined in different ways. So one area of experimentation we see are aggregators — where if, for example, you have multiple opportunities to earn yields for providing capital as liquidity, then that can be automated and optimized in very efficient ways.

So there’s a new layer of DeFi providers that have already sprung up on top of the first level of DeFi applications to do that automated management. We have things somewhat like that in traditional finance, but generally speaking, they’re only accessible to the largest investors, the hedge funds and the very sophisticated players. They also have a lot of manual activity and costs associated with them. So that’s one area of experimentation.

There are a host of technical risks and concerns about attacks and hacks that have been very significant in DeFi that costed hundreds of millions of dollars because these systems are not sufficiently mature, robust and resilient. 

Getting Your Mortgage via DeFi

Another area of experimentation is potentially opening up financial products that have not been accessible to retail level investors, or to the billion or so people in the world who don’t have bank accounts and access to the traditional financial system.

Now that has to be said with some caution because there’s risk involved, and DeFi today is very immature. Making complex financial services accessible to someone who doesn’t have the background or the knowledge or the legal protections that traditional banking customers enjoy is not a desirable outcome.

Right now with DeFi, we’re seeing people trying all sorts of creative things because they can — but that doesn’t necessarily mean that all those things are going to succeed or that they should.

BRINK: For example, one could potentially see mortgage services provided this way?

WERBACH: Sure, any kind of lending relationship can be done in DeFi. The idea is that the collateral pool can be drawn from multiple holders of these digital assets in very flexible ways. Lending can be done in an automated way that is fully-collateralized or even over-collateralized. This addresses some of the risk concerns with these assets.

That being said, markets, like mortgage markets, are extremely large, sophisticated and regulated based on experience of where things can go wrong. I think we will see DeFi integrating in and providing alternatives to some of those markets. But again, there’s a long way to go to the point where people would feel comfortable doing that at scale.

BRINK: What are the major risks that regulators should have an early lead on?

WERBACH: First of all, there are a host of technical risks and concerns about attacks and hacks that have been very significant in DeFi. There have been hundreds of millions of dollars lost because these systems are not sufficiently mature, robust and resilient.

Manipulating the Oracle

For example, DeFi systems depend on what are called oracles. A blockchain doesn’t know the price of an asset — it only knows what’s on the blockchain. There needs to be some decentralized mechanism to allow the price signal to be recorded in the blockchain. It turns out that those can be manipulated. If you can manipulate the price oracle, you can use that in some cases to drain funds from the DeFi application that depend on that price oracle.

Now there’s a lot of sophisticated technical work going on to harden these systems, but we still have a long way to go.

All of these applications are based on smart contracts, and they generally have fail-safes involved and mechanisms to address significant price volatility. But as we’ve seen time and time again in finance writ large, it’s impossible to fully predict how systems will respond to every possible scenario. We don’t entirely know what will happen if there are rapid price swings in these assets.

Legal Risks

There are legal risks as well, where regulators appropriately have concerns about things like money laundering and fraud that are going on in the larger blockchain and cryptocurrency world and as well as in DeFi specifically.

The value of these DeFi services is that they are decentralized, so there’s not one actor that is responsible for all of the transactional activity. However, that can’t simply open the door to eliminating any protections against various kinds of financial crime and fraud. That’s certainly an area that the regulators are looking at because there have been plenty of examples in the cryptocurrency world where this has happened.

BRINK: Ten years out, what percentage of the financial landscape do you think will be running through DeFi systems?

WERBACH: It’s a hard question to answer: probably still a relatively small amount because finance is so gargantuan around the world and is tied into so many different kinds of systems. The value of transactional volumes in trade finance, for example, is astronomical.

Finance is a Software Application

I think the basic concept that finance is increasingly becoming a software application is unstoppable, and that’s happening independently of DeFi. FinTech broadly is moving in this direction as well.

I think we will see more and more crossovers where DeFi-type architectures are being built within the traditional financial services world once we can get greater confidence about addressing risks and the regulatory questions.

And there’ll be more and more gateways where the activity may not flow predominantly through these new DeFi providers, but the line between DeFi and traditional finances is going to blur. So 10 years out, I think, some version of what we’re now calling DeFi is going to be fairly well-established as an element of the financial landscape.

Related themes: BLOCKCHAIN DISRUPTION INVESTMENT

Kevin Werbach
Chair of the Department of Legal Studies and Business Ethics at The Wharton Business School, University of Pennsylvania@kwerb
Kevin Werbach is the chair of the Department of Legal Studies and Business Ethics at the Wharton School, University of Pennsylvania. He examines business and policy implications of emerging technologies, such as artificial intelligence, next-generation wireless, gamification and blockchain. His books include For the Win: How Game Thinking Can Revolutionize Your Business and The Blockchain and the New Architecture of Trust.

The original articles were be read in the Brink’s website HERE.

The Clean Energy Transition Starts With Company Culture

Climate change is the biggest risk we are facing, according to the World Economic Forum’s 2021 Global Risk Report. In recent high-profile shareholder proposals and landmark court rulings on climate cases, it is clear the energy sector is an important stakeholder in climate change. Fossil-fuel combustion is responsible for around two-thirds of global greenhouse-gas emissions. Brands are under pressure and climate and investor activists are pushing energy companies to change.

The transition to clean energy is imposing immense risks to company valuations — but it is also creating tremendous opportunities for firms willing to act quickly.

Transformation Will Determine Survival

And how organizations respond will be critical to their future. According to Mercer’s 2021 Global Talent Trends survey, despite the pandemic, 56% of companies in the energy sector are continuing their work on ESG at equal pace. A further 22% have accelerated their shift toward ESG and a multi-stakeholder business approach.

Photo: Pexels

Although companies have begun to realize and feel the magnitude of the energy transition, many are still underestimating the pace required to deliver the change demanded.

Although companies have begun to realize and feel the magnitude of the energy transition, many are still underestimating the pace required to deliver the change demanded. We believe a key determinant of success will be how quickly these organizations transform from a traditional product-oriented mindset toward a customer- and solution-focused culture.

To become more sustainable and customer-focused, companies will need to transform their entire operating system — that is culture, structures, procedures and workforce — at the same time. This is a complex undertaking, with little margin for error. And we believe that changes to the business model and company culture also have to be done holistically to be successful.

However, the industry does have experience to fall back on.

Companies will have to start now when developing new capabilities and will need to be nimble and decisive to stay ahead of the pack.

We’ve Done This Before

We see this as the third major cultural transformation since the new millennium. The first was the safety cultural transformation and the second the digital cultural transformation.

Culture is an amorphous concept, but its importance is becoming increasingly evident. According to the latest Global Culture Survey from Virginpulse, 65% of executives state that culture is a more important driver of company performance than strategy or their choice of operating model. And 80% of employees are asking to see significant change in their corporate culture.

In addition to the pain that it has caused, the pandemic has had positive impacts on the way that many of us are working. Three-quarters of energy companies indicated the lockdown allowed them to relinquish central control of employees toward more autonomous work arrangements. Among the biggest questions during the cultural transition is whether or not to make these changes permanent.

Weave Sustainability Into Your Values

Other post-pandemic strategies could include designing a corporate purpose or values that incorporate sustainability at its core. A dedicated exercise to involve all employees would enable a greater sense of ownership over this new culture. Redesigning incentive schemes can be a powerful supplement to these interventions.

Fostering the necessary competencies will require new ways of managing both company performance and individual development. We are seeing a trend to combine these two to replace traditional annual performance reviews, supplemented by a new emphasis on paying for skills rather than pure performance. Modern learning practices, like nudging, will embed new competencies within daily routines. To complement in-house capabilities — especially for transforming the organization, flexible talent ecosystems are being developed that include temporary resources. All of this will require new ways of collaborating and networking, approaches that have already been developed and accelerated by the pandemic.

The cultural transformation will reach a tipping point. The same goes for developing new capabilities. Companies will have to start now and will need to be nimble and decisive to stay ahead of the pack.

Related themes: BOARDROOM CLIMATE CHANGE RISK MITIGATION

Kai Anderson
Head of International Transformation Services at Mercer
Based in Munich, Kai Anderson leads Mercer’s international Transformation services. He joined Mercer through the acquisition of his own company. Kai is a recognized keynote-speaker and author of books and publications on transformation and people management.

Milan Taylor
Global Energy Leader at Mercer
Milan Taylor is Mercer’s Global Energy Leader. Based in London, he works with energy and natural resources organizations to proactively manage their people risk agendas and ensure their people strategies are future-fit.

The original articles were be read in the Brink’s website HERE.

Here’s How Emerging Technologies Will Impact the Future of Infrastructure

The transformative and disruptive technologies of the Fourth Industrial Revolution are reimagining the possibilities for the built environment. Advances in data proliferation, connectivity, automation and sustainability technology are disrupting existing markets and creating new ones altogether in many infrastructure sub-sectors.

The COVID-19 crisis is also causing profound shifts in societal needs and consumer demands, hastening the adoption of certain technologies that threaten to erode the market share of assets that were conventionally highly used. Taken together, these dynamics are now shaking long-held assumptions about the essential and monopolistic nature of some infrastructure services.

As noted in the recent report from Marsh McLennan Advantage and the Global Infrastructure Investor Association (GIIA), Global Risks for Infrastructure: The Technology Challenge, these two forces have resulted in increased competition for owners and operators of certain assets while reducing or changing demand for others.

Photo: Loic Venance/AFP via Getty Images

Solar panels of a photovoltaic power plant are shown in Guignen, western France. New solar and wind projects are already cheaper than new coal plants in all major markets as well as existing coal-fired power plants in many regions.

Yet the infrastructure sector has historically been slow to understand and adopt new technology. In 2019, the World Economic Forum remarked that it remains “one of the least digitally transformed sectors of the economy.” This disconnect creates the potential for stranded assets — it is estimated that the disruptive power of renewables will strand almost $20 trillion worth of traditional fossil fuel-based energy assets worldwide within the next 30 years. As such, the time is now for the infrastructure sector to sit up and take notice of the risks that technological disruption entails.

An Evolving Competitive Landscape

Rapid technological developments have often lowered the traditionally high barriers to entry for infrastructure services that had previously been regarded as monopolistic in nature. As new technologies become cheaper or more efficient, opportunistic disruptors increasingly stake a claim for market share in many sub-sectors by offering attractive alternatives to existing products and services. This creates new risks for incumbent investors and raises hard questions about asset valuations and long-term contracting structures.

Technological disruption is particularly relevant to the energy sector, with renewable energy and energy storage technologies making large strides toward cost and efficiency parity with fossil fuel-based electricity generation. According to the International Renewable Energy Agency, the cost of utility-scale solar photovoltaic energy fell 82% between 2010 and 2019, while new solar and wind projects are already cheaper than existing coal-fired power plants in many regions and new coal plants in all major markets. Consequently, global coal power capacity has fallen for the first time on record, with more generators being shut down than commissioned in the first half of 2020.

Global coal capacity by year; Source: Marsh McLennan Advantage/Carbon Brief and Global Coal Plant Tracker

Renewable energy has already broken the monopoly of fossil fuel-based electricity generation by providing consumers with a genuine alternative that is moreover backed by the ongoing crusade against climate change. With green technology poised to become more commercially viable at large scales in the coming years — in part driven by the continuation of government-backed subsidies — fossil fuel power may eventually lose the centrality it has long enjoyed in the world’s energy system. Indeed, global energy infrastructure financing is already moving away from fossil fuel-based assets and toward renewables, with investment in the latter expected to overtake downstream oil and gas investment in the near future.

The rise of renewables is even threatening to strand assets in other infrastructure sub-sectors, such as freight rail tracks that exclusively transport coal to power plants. As the Fourth Industrial Revolution rolls on, the competitive pressure from emerging technologies will only continue to transform the outlook for incumbent infrastructure investors and operators.

Reduced Utilization Rates For Transportation Assets

The societal fallout from the COVID-19 crisis expedited a shift in customer needs and preferences, which could further undermine the fundamental and essential nature of assets and services.

For instance, the downturn in traffic for commuter rail and international air travel was matched by the rapid adoption of remote working technologies and shifting work practices. Data from the U.S. Bureau of Transportation Statistics suggests that, since the COVID-19 lockdowns began, more people stayed home in any given week of 2020 than in the corresponding week in 2019. The dramatic transformation in mobility patterns induced seismic shockwaves across various transportation sub-sectors. In early 2021, U.S. monthly urban rail use was down to almost a quarter of 2019 levels; total monthly air travel was down 65% year-on-year.

Average daily number of people staying home week beginning December 20, 2020. Source: Bureau of Transportation Statistics

It has become clear that technology-enabled, remote work models are seen as legitimate work spaces. This means business travel in particular, from intercity bus and rail to domestic or international flights, may no longer be as essential as before for some citizens in the “new normal.” Depending on the extent to which companies continue to embrace digital solutions such as video conferencing, the post-pandemic world could be marked by reduced demand for some commuter transportation services, which may, in turn, impact the nature and scale of future investment for many transportation assets.

Looking Ahead

While the sector’s technological revolution and the pandemic have no doubt resulted in increased demand and supply uncertainty, the need for new infrastructure across the globe continues to rise to levels beyond the capacity of governments alone. Private investment, at higher levels than has been allocated to date, will be needed in order to close the multi-trillion-dollar global infrastructure gap.

Looking at the core markets for Global Infrastructure Investor Association (GIIA) members, the challenges of decarbonization, climate resilience and digital connectivity will drive unprecedented levels of new investment opportunities.

As governments around the world look to bounce back from the economic damage inflicted by COVID-19, they will have to quickly determine the role they see for private investment in delivering our future infrastructure needs. Infrastructure asset owners stand ready to bring not only much-needed private capital, but also global expertise, innovation and project discipline to bear. The GIIA will continue to work with governments and regulators to create the right framework to encourage that investment in a way that works for all stakeholders.

A version of this piece originally appeared on the World Economic Forum Agenda blog.

Related themes: DISRUPTION INFRASTRUCTURE RENEWABLE ENERGY

Blair Chalmers
Director of Marsh McLennan Advantage
Blair Chalmers is a director in Marsh McLennan Advantage and leads the unit’s agenda for the infrastructure and construction sectors. Prior to this role, he worked for Oliver Wyman, the management consultancy, with a focus on clients in asset intensive industries.

Building Climate-Resilient Infrastructure in the Post-Pandemic World

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Lawrence Slade
CEO of the Global Infrastructure Investor Association
Lawrence Slade joined the Global Infrastructure Investor Association as CEO in January 2020, having most recently been Chief Executive of Energy UK since 2015. He has been involved in the energy industry since the late 1990’s working in countries all over the world. Lawrence is a member of the UK Government’s Committee on Fuel Poverty, an Advisory Board member of Connected Kerb, a Board Trustee and Audit Committee member of the Money Advice Trust (who run the National Debtline and Business Debtline), and is also a fellow of the Energy Institute.

Building Climate-Resilient Infrastructure in the Post-Pandemic World

The original articles were be read in the Brink’s website HERE.