FPCCI-SCC to collaborate

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Atif Ikram Sheikh announced an intensified collaboration with the Scottish Chambers of Commerce (SCC) to actively promote trade, investments, joint ventures, and broader economic relations. Sheikh highlighted the robust Pakistani diaspora in Scotland, emphasising the substantial opportunity for expanding commercial and business interests.

Dr. Jeanette Forbes, the Ambassador of Scottish Chambers for Pakistan,highlighted the MoU formalised on Sept 26, 2022 which aims to fortify trade cooperation but acknowledges the need for
additional efforts in export promotion, foreign direct investment,JVs, and B2B linkages.

Highlighting the significance of tourism, hospitality, and cultural avenues in Scotland, Forbes stressed their pivotal role in establishing robust people-to-people and B2B connections.

YEGAP Iran member wins at 3rd International Invention and Innovation Competition for IFIA Members

Sina Taghizadeh and Shadi Azimi Gohar, inventors from Iran, achieved success by winning the gold medal in a joint project titled “Device for Determining Temperament Based on Facial Recognition and Skin Color” at the 2023 International Federation of Inventors Associations (IFIA) competition held in Switzerland. Taghizadeh is a member of CACCI’s Young Entrepreneurs Group of Asia-Pacific (YEGAP).

The World Invention Competition 2023 took place over three days (August 20th to 22nd) in Geneva, Switzerland, organized by the International Federation of Inventors Associations (IFIA). In this edition, inventors from various countries including the United States, Canada, England, Australia, Russia, China, Hong Kong, the United Arab Emirates, and Iran participated. Among all the participating countries, representatives from our country succeeded in winning the gold medal in this edition of the World Invention Competition.

Sina Taghizadeh, whose joint project with Shadi Azimi Gohar earned them the gold medal in this edition of the World Invention Competition, is also one of the young entrepreneurial managers in Iran. Taghizadeh stated that the International Federation of Inventors Associations (IFIA) holds invention registration events worldwide every year. These invention registrations are held in
various fields, and this year the third edition of the Federation’s competition was held in Geneva, Switzerland.

Taghizadeh continued: The Federation announces publicly in all countries and has offices in many countries, directly receiving projects and transferring them to Geneva, Switzerland. There,
the projects are judged, and this year, which was more vibrant than in previous years, participants from 36 countries including Canada, the United States, Australia, England, China, Russia, Hong Kong, and the United Arab Emirates, with 830 acceptable projects, were present.

The entrepreneur stated: Selected inventors submitted a short film of their innovation to participate in the festival, and the jury, considering criteria such as public demand, cost-effectiveness, environmental friendliness, etc., reviewed the submitted designs in 13 different categories.

Taghizadeh added that after the evaluation, the top performers in various categories are introduced to the world. He further added: “In the medical category, M.s Shadi Azimi Gohari and I were able to achieve the gold standard of this competition through our collaboration.”

Sina Taghizadeh continued: Our invention is in the field of Iranian traditional medicine and is titled “Temperament Diagnosis.” In traditional medicine, we diagnose diseases based on temperaments. We have four types of temperaments: warm and dry, warm and moist, cold and dry, cold and moist, which ancient Iranian traditional medicine says all diseases arise from these temperaments, and not adhering to the type of diet and lifestyle can affect these temperaments.

Our country’s inventor continued: Considering that doctors may make mistakes in diagnosing temperaments, we invented a device that, by examining and diagnosing the face and skin warmth and responding to a few short questions and some other signs with a high confidence level, diagnoses people’s temperaments, and based on that, provides a dietary plan to improve life, which
reduces the incidence of diseases in individuals. He said: We introduced this device as Iranian traditional medicine and it was accepted by the competition judges, and we were able to achieve
the gold medal in this competition for Iran.

IFIA is a non-governmental organization in the field of inventions and innovations, established in 1968 with the aim of creating an international platform to support inventors. IFIA’s mission is to foster the creation of knowledge, promote a culture of innovation, and facilitate the process of transforming ideas into wealth.

The federation is a supervisory and advisory member of the United Nations Conference on Trade and Development (UNCTAD) and a member and observer of the European Patent Office (EPO).
It is the most important supporting organization for inventors worldwide, under the auspices of the World Intellectual Property Organization (WIPO), a member of the United Nations Industrial
Development Organization (UNIDO) and a special member of the European Union’s Innovation Union (EAI).

Sina Taghizadeh holds a PhD in Business Administration-Marketing from the University of Tehran. He is a professor at the University of Tehran, Vice President of the International Affairs and Trade Development Commission of the Iran house of Industry, Mine and Trade, a member of the International Federation of Inventors Associations, CEO of Afra Gol Caspian Company, and Chairman of the Board of Javid Toos Group of Companies. He is also the international deputy of the JCI Iran, Secretary and Founder of the International Youth Business Club (YBC), and
Ten Outstanding Young Persons of Iran in 2022 according to JCI Toyp.

Shadi Azimi Gohari holds a Master’s degree in Energy Architecture from the University of Tehran, Kish International Campus. She is also a Master of Entrepreneurship with a focus on New Business from the University of Tehran, Kish International Campus. She is a member of the Alborz Province Engineering Organization and holds a professional certificate in construction.

Iran News Agency

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

Experts discussed CPTPP Agreement during CACCI webinar

The Confederation of Asia-Pacific Chambers of Commerce and Industry (CACCI) organized a webinar on Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on 28 June 2023.

The 90-minute webinar discussion was moderated by Mr. Lennon Tan, President of the Singapore Manufacturing Federation, with Dr. Roy Chun Lee, Deputy Minister of Foreign Affairs, Republic of China (Taiwan) setting the introductory stage of the experts’ presentation of this difficult international trade agreement. The webinar featured three trade experts: (1) Mr. Noriyuki Mita, Director of Strategy & Planning Division at Basic Materials Business Group, Mitsubishi Chemical Corporation, (2) Dr. Huai-Shing Yen, Associate Research Fellow and Senior Deputy, Executive Director at the Taiwan WTO and RTA Center, Chung Hwa Institution for Economic Research (CIER), and (3) Hon. Professor Andrew Stoeckel, Centre for Applied Macroeconomic Analysis at the Australian National University.

Following their extensive presentation, the presenters engaged in a panel discussion to further elaborate on the issues affecting CPTPP, and concluded with a Q&A session. The summary of the webinar is presented as follows.

SUMMARY

(1) Mr. Lennon Tan, President of the Singapore Manufacturing Federation (Opening Remarks)

Mr. Lennon Tan commenced the webinar by welcoming all participants and setting the stage for the discussions. He emphasized the significance of collaboration among Asian economies to foster sustainable growth and innovation. Mr. Tan highlighted the pivotal role of manufacturing in driving economic development and the need for industries to adapt to evolving global trends.

(2) Dr. Roy Chun Lee, Deputy Minister of Foreign Affairs, Republic of China (Taiwan) (Special Remarks)

Dr. Roy Chun Lee addressed the audience with insights into Taiwan’s foreign policy and economic strategies. He underscored Taiwan’s commitment to strengthening ties with neighboring countries and participating actively in regional trade agreements. Dr. Lee also discussed Taiwan’s initiatives in technology and innovation, aiming to position the nation as a leader in the global digital economy.

(3) Mr. Noriyuki Mita, Director of Strategy & Planning Division at Basic Materials Business Group, Mitsubishi Chemical Corporation (1st Presenter)

Mr. Noriyuki Mita presented on the advancements in sustainable materials and their applications in various industries. Key points from his presentation include:

• Sustainable Innovations: Introduction of eco-friendly materials developed by Mitsubishi Chemical Corporation to reduce environmental impact.
• Industry Applications: Examples of how these sustainable materials are being integrated into automotive and packaging sectors to promote circular economies.
• Future Outlook: Emphasis on continuous research and development to meet the growing demand for sustainable solutions globally.

(4) Dr. Huai-Shing Yen, Associate Research Fellow and Senior Deputy, Executive Director at the Taiwan WTO and RTA Center, Chung Hwa Institution for Economic Research (CIER) (2nd Presenter)

Dr. Huai-Shing Yen provided an analysis of regional trade agreements (RTAs) and their implications for Asian economies. Highlights from her presentation include:

• RTA Trends: Overview of the increasing number of RTAs in Asia and their role in facilitating trade and investment.
• Economic Impacts: Assessment of how RTAs contribute to economic growth, with a focus on tariff reductions and market access.
• Policy Recommendations: Suggestions for policymakers to maximize the benefits of RTAs, including aligning domestic regulations with international standards.

(5) Hon. Professor Andrew Stoeckel, Centre for Applied Macroeconomic Analysis at the Australian National University (3rd Presenter)

Professor Andrew Stoeckel discussed the macroeconomic challenges and opportunities facing the Asia-Pacific region. Key insights from his presentation include:

• Economic Outlook: Analysis of current economic indicators and growth projections for Asia-Pacific countries.
• Policy Challenges: Identification of issues such as income inequality and environmental sustainability that require coordinated policy responses.
• Strategic Opportunities: Exploration of areas where the region can capitalize on global trends, such as digitalization and green energy.

(6) Panel Discussion Summary

The webinar concluded with a panel discussion featuring all six participants. The key themes addressed during the discussion were:

• Regional Cooperation: The necessity for enhanced collaboration among Asian countries to tackle common challenges and leverage collective strengths.
• Innovation and Sustainability: The role of technological innovation in driving sustainable economic growth and addressing environmental concerns.
• Trade and Investment: Strategies to boost intra-regional trade and attract investment, including the harmonization of regulations and improvement of infrastructure.

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

Developing Asia’s 2023 Growth Outlook Upgraded to 4.9%

The Asian Development Bank (ADB) has raised its economic forecast for developing economies in Asia and the Pacific, after robust domestic demand drove higher-than-expected growth in the People’s Republic of China (PRC) and India.

The regional economy is expected to grow 4.9% this year, compared with a previous forecast of 4.7% in September, according to the Asian Development Outlook (ADO) December 2023. The
outlook for next year is maintained at 4.8%. The PRC’s economy is projected to expand by 5.2% this year, compared with a previous forecast of 4.9%, after household consumption and public
investment boosted growth in the third quarter.

The growth outlook for India has been raised to 6.7% from 6.3% following faster-than-expected expansion in July-September, driven by double-digit growth in industry. The upgrades for the PRC and India more than offset a lowering of the forecast for Southeast Asia, caused by lackluster performance in the manufacturing sector.

“Developing Asia continues to grow at a robust pace, despite a challenging global environment,” said ADB Chief Economist Albert Park. “Inflation in the region is also gradually coming under control. Still, risks remain, from elevated global interest rates to climate events such as El Niño. Governments in Asia and the Pacific need to remain vigilant to ensure that their economies are resilient, and that growth is sustainable.”

The region’s inflation outlook for this year has been lowered to 3.5% from an earlier projection of 3.6%, according to ADO December 2023. For next year, inflation is expected to edge up to 3.6%,
compared with a previous forecast of 3.5%. The growth outlook for Southeast Asia this year has been lowered to 4.3% from 4.6%, amid weak demand for manufacturing exports. The outlook for economies in the Caucasus and Central Asia has been raised slightly, while projections for Pacific economies are unchanged.

Risks to the outlook include persistently elevated interest rates in the United States and other advanced economies, which could contribute to financial instability in vulnerable economies
in the region, especially those with high debt. Potential supply disruptions caused by the El Niño weather pattern or the Russian invasion of Ukraine could also rekindle inflation, particularly regarding food and energy.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned
by 68 members—49 from the region.

Asian Development Bank

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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How a COVID-19 Vaccine Can Reach Billions of People

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.

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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.

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