Indonesia and Russia to build $22b refinery in East Java among other projects
Indonesia and Russia are set to work together on several projects, even as the West is isolating Russia in response to its invasion of Ukraine. Indonesian state-owned oil company Pertamina and Russia’s Rosneft Oil Company are going ahead with their project to build a refinery in the Indonesian province of East Java to produce fuel […]
Indonesia and Russia to build $22b refinery in East Java among other projects
Indonesia and Russia are set to work together on several projects, even as the West is isolating Russia in response to its invasion of Ukraine.
Indonesian state-owned oil company Pertamina and Russia’s Rosneft Oil Company are going ahead with their project to build a refinery in the Indonesian province of East Java to produce fuel and raw materials for the petrochemical industry, a senior Indonesian government official told The Straits Times on July 1.
“The Russian party has been negotiating to get tax holidays. The project is still on track,” said the official, who supervises the project and spoke on condition of anonymity.
The two state-owned companies earlier formed a Jakarta-based joint venture, PT Pertamina Rosneft Pengolahan dan Petrokimia, which will manage the East Java’s New Grass Refinery Root (NGRR) in Tuban and have an output of 229,000 barrel per day of gasoline, diesel and jet fuel.
A pre-project planning phase has been completed for the US$16 billion (S$22 billion), which will be 45 per cent owned by Rosneft and 55 per cent by Pertamina.
Pertamina chief executive Nicke Widyawati did not respond to The Straits Times’ request for a comment.
When completed, the project will greatly help Indonesia reduce its reliance on imported fuel, which has been rising in price.
To make fuel prices affordable, the administration has increased energy subsidies this year to a staggering 502.4 trillion rupiah (S$46.8 billion), from the originally budgeted 152.2 trillion rupiah.
The Russian embassy in Jakarta also said President Vladimir Putin offered to have Russian Railways invest in Indonesia’s new capital in Kalimantan. The new capital, named Nusantara, will see construction start in August after delays due to the pandemic.
The government has earlier invited investors including Abu Dhabi and Taiwan’s Foxconn Technology Group to help build the renewable energy-powered new capital city.
Russian energy companies are also keen to come and invest in Indonesia, especially in developing nuclear power to provide electricity, Mr. Putin said during Mr. Widodo’s visit to Moscow, according to the Russian embassy statement. Indonesia has a power shortage, especially in regions in Kalimantan and Sulawesi.
How Persistent Inflation Is Causing Procurement to Adapt
It has been almost two years since the first signs of inflation, ignited by the COVID-19 pandemic, began appearing across the global industrial landscape. From the summer of 2020 through late 2021, prices rose steadily across the board — on everything from raw materials to labor. Since then, conditions have begun to moderate. Most nations […]
How Persistent Inflation Is Causing Procurement to Adapt
It has been almost two years since the first signs of inflation, ignited by the COVID-19 pandemic, began appearing across the global industrial landscape. From the summer of 2020 through late 2021, prices rose steadily across the board — on everything from raw materials to labor.
Since then, conditions have begun to moderate. Most nations are lifting pandemic-related mandates, and the massive labor shortages that plagued companies in 2020 and 2021 are starting to subside. The one major exception, of course, is China where full-lockdown conditions akin to 2020 have returned, following recent COVID variant outbreaks.
In the United States, for example, rising wages and the phaseouts of foreclosure moratoria and extended unemployment insurance have coaxed more people back to work. Unemployment in March was just a tenth of a percentage point above its level in February 2020. The labor force participation rate, which measures the percentage of the population either working or actively looking for work, was 62.4% in March, up from a multidecade low of 60.2% in April 2020. While that isn’t quite back to the pre-pandemic level of 63.4% recorded in February 2020, the trend is clear.
Photo: Unsplash
Aggravated by Geopolitical Conflict
What hasn’t reversed is inflation, particularly in raw materials prices. For many commodities, the world is dealing with successive and excessive increases that have, in some cases, doubled or even tripled the prices. While the increases were initially fueled by COVID-related supply chain disruptions and the rapid rebound in economic activity in 2021, they were driven even higher by the Russian invasion of Ukraine on February 24. For example, as Russian tanks rumbled across the border, the cost of plastic spiked — 71% above its pre-pandemic level in the United States and 112% higher in Europe. Today, U.S. steel prices are 76% higher than in March 2020 and 184% higher in Europe. On the London Metal Exchange, spot prices for aluminum were 98% above March 2020 levels.
Although the global economy remains very much in flux, companies with unwavering focus can identify and capture the opportunities bred by the current supply chain scramble.
Perhaps no single commodity tells the global economy’s inflationary tale of woe more than overseas shipping container rates. As measured by the Freightos Baltic Index of China/East Asia to Northern Europe, these rates jumped an astounding 822% higher than they were on the eve of the pandemic. Simply put, while labor shortages are showing signs of easing in some sectors, raw materials prices aren’t anywhere close to normalizing. Obviously, the implications of such unrelenting inflation are enormous for businesses trying to get on an even keel.
Yet, uncertainty breeds opportunity, and today’s mixed-bag economy is opening opportunities that companies should be more willing to exploit rather than take a wait-and-watch approach. Some of the biggest openings for an innovative business approach will come on the value-add side of manufacturing, where companies can tap their growing workforces to optimize cost structures.
Exploiting the Value-Add
In today’s seemingly chaotic but value-rich sourcing environment, the biggest key to success will be in drawing the distinction between purchased items with meaningful value-add steps and components that are 80% or more raw material-dependent. Examples of components with meaningful value-add steps include plastic and aluminum extrusions, stamped or machined metal parts, molded plastic products, motors, fans, and other semi-finished goods. Raw material-dependent components include steel wire rod, plastic resin, metal ingots, and other items.
In the current environment, cost structures of components with higher value-add steps have been somewhat insulated from wild raw material price fluctuations, given that raw materials generally comprise no more than 15% of the total cost of the component. In contrast, heavy raw material-dependent components have been susceptible not only to continued rising prices but also to extreme swings, which have made planning difficult.
In addition, many previously “underrepresented” markets have gained meaningful share from the more established raw material markets. For example, several types of lumber and wood products like furniture, previously thought of as a stronghold for Chinese and East Asian products, are now being sourced from Eastern Europe at a growing rate. The massive hike in ocean shipping rates from Asia has made European and U.S. suppliers significantly more cost competitive. Of course, the conflict in Ukraine might change the dynamics when it comes to Europe.
Capitalizing on Variables
The COVID-19 outlook in China remains the biggest variable on the supply chain front, while the conflict in Ukraine holds the potential to cause continued price increases of many raw materials and energy, particularly in Europe.
Private capital investors and operators need to act now to seize value-creation opportunities centered on optimizing the costs of procured materials while simultaneously identifying potential acquisition targets with true latent value.
Although the global economy remains very much in flux, companies with unwavering focus can identify and capture the opportunities bred by the current supply chain scramble.
This article was made possible with the support and insights from Tushar Narsana and Karina Swette.
Apurva Nair
Partner at Oliver Wyman
Apurva Nair is a partner with the Private Equity practice and a leader in the post-deal value-creation team. He drives enterprise value by delivering tangible financial benefit to clients in accelerated time frames. He has a dual focus on driving the bottom line via strategic sourcing and transactional pricing, and organic top-line revenue growth via sales analytics.
The original report can be read at the Brink’s website HERE.
ACCI welcomes closer economic ties with India
The Australian Chamber of Commerce and Industry (ACCI) welcomes the Morrison Government’s continuing focus on strengthening economic ties with India, the world’s largest democracy. As a member of the International Chamber of Commerce (ICC) and Business at the OECD, ACCI plays an active role in advocating on behalf of Australian business for open markets and […]
ACCI welcomes closer economic ties with India
The Australian Chamber of Commerce and Industry (ACCI) welcomes the Morrison Government’s continuing focus on strengthening economic ties with India, the world’s largest democracy.
As a member of the International Chamber of Commerce (ICC) and Business at the OECD, ACCI plays an active role in advocating on behalf of Australian business for open markets and private sector-led growth.
“Given local businesses have been hard hit by COVID, now is the perfect time to continue to bolster economic relations with India and work towards finalising a comprehensive Free Trade Agreement (FTA) as soon as possible” ACCI CEO Andrew McKellar said.
“What we know is that our high-quality Australian made products are in demand overseas and a free trade agreement with India would make it easier and more accessible for local enterprises to sell their products to one of the world’s largest and fastest growing economies.”
“We welcome the Government’s efforts in launching the three Maitri initiatives allowing high achieving Indian talent to study in Australia, supporting professionals to collaborate on research and boosting the role of creative industries. These initiatives continue to build the groundwork for an FTA.”
“The renewal of the Australia-India Memorandum of Understanding on Tourism Cooperation is also a step in the right direction.”
“Even though our international border is opening on 21 February, what was previously our biggest source of tourists, China, remains largely closed due to outbound travel restrictions so it is important that we look to diversity our tourism sector so that it can open and continue to operate.”
“Over 300,000 Australian tourism businesses and their 700,000-strong workforce are set to benefit in growing our tourism relationship with India.”
“The immediate removal of the import tariff on Australian lentils is also a welcome and important move. Many farmers will reap significant benefits from this new trade condition given they saw a record grain harvest this year.”
“Two-way trade with India was worth over $24 billion in 2020 and in the five years before the pandemic this two-way trade and investment doubled. A free trade partnership between our two countries would work to further cement our strong and growing trade relationship.”
“As we have seen with other free trade deals, this would not only benefit Australian businesses but individuals as well through increased job opportunities.”
ACCI Newsroom
Cyber Disaster Risks Are Mounting
As the U.S. kicks off the 2022 hurricane season, another potential disaster looms large. With the Russian invasion of Ukraine and other ever-present the criminal and terrorist threat actors, the risk of a cyber disaster is mounting. Meanwhile, those responsible for responding to such a disaster remain largely focused on “traditional” disasters. As the head […]
Cyber Disaster Risks Are Mounting
As the U.S. kicks off the 2022 hurricane season, another potential disaster looms large. With the Russian invasion of Ukraine and other ever-present the criminal and terrorist threat actors, the risk of a cyber disaster is mounting. Meanwhile, those responsible for responding to such a disaster remain largely focused on “traditional” disasters.
As the head of the U.S. Department of Homeland Security agency responsible for managing these risks, Cybersecurity & Infrastructure Security Agency (CISA) Director Jen Easterly described the threat landscape and identified potential targets in a recent 60 Minutes interview. “We are seeing evolving intelligence about Russian planning for potential attacks. And we have to assume that there’s going to be a breach. There’s going to be an incident. There’s going to be an attack.” Director Easterly identified the energy and finance sectors as particularly likely targets.
Most assume cybersecurity to be the domain of technology professionals. As Carolyn Harshman, president of the International Association of Emergency Managers told me: “Too often, cybersecurity is thought of as a business continuity or IT issue.” The reality is that those on the front lines of managing the physical consequences of a cyber disaster would be the same who respond to hurricanes, tornadoes and floods. “These are the emergency managers at all levels of government and the first responders in each of our communities,” said Harshman.
Recall the ice storm that crippled the electric grid in Texas last year. The cold weather exacerbated the power loss, as those impacted struggled to stay warm and care for themselves and their families. Imagine instead it was a cyberattack that caused the disruption. The consequences would be the same, or worse. Such an attack could be timed to coincide with high energy demand, such as the summer months when health risk from heat is highest. Thousands could die if timed for greatest impact.
Just as emergency managers and first responders prepare for “traditional” disasters, so too must they prepare for cyber disasters.
Photo: Getty Images
Pandemic Lessons
Not only is the cyber threat real, but a seemingly unrelated disaster demonstrates why preparing for a cyber disaster should be a priority. The pandemic has yielded lessons that a cyber preparedness plan should include.
First, the pandemic exposed vulnerabilities in many sectors. From inadequate security safeguards for largely remote workforces to supply chain shortages of critical technologies, COVID demonstrated the potential shortfalls in the nation’s ability to protect itself from future cyberattacks. These vulnerabilities could amplify any impacts from an attack, thereby complicating a response to the physical consequences of a cyber disaster.
Second, the pandemic forced the cancellation of a major cyber exercise that we had spent years planning at the Federal Emergency Management Agency (FEMA). National Level Exercise 2020 (NLE 2020) would have been the nation’s largest cyber exercise. Without it, the realistic scenario it envisioned was not tested, and the gaps it would have likely exposed have not been closed.
Americans are ill equipped to defend against the increasing sophistication and volume of cyberattacks.
Third, the pandemic also laid bare the challenges facing emergency managers as “all hazards” practitioners. Just as many mistakenly believed early in the pandemic that COVID was a health emergency and only belatedly realized the role of emergency managers, so too are catastrophic cyber incidents also almost certain to fall to emergency managers.
What Can Be Done?
What can be done to prepare those charged with protecting us from the consequences of cyber disasters? Much like a “traditional” disaster, preparing for future contingencies is critical. This should include core elements of preparedness such as planning, training, equipment and exercises.
Having overseen FEMA preparedness programs from 2017-2020, I directed an internal review of agency cyber preparedness program. In 2019, I publicly released our findings: “We offer over 20 online and in-person courses, focused on everything from network assurance and digital forensics, to information security and cyber incident response. Since 2004, FEMA has trained more than 87,000 federal, state, local, tribal and territorial officials on cybersecurity.”
Today, FEMA offers over 40 such courses. The challenge, says IAEM President Harshman, “is to ensure that emergency managers are aware of and have access to these courses.” Further, “Cybersecurity must be integrated into existing ‘traditional’ emergency management courses to ensure cyber response becomes a core competency of our profession.”
I also found during our earlier FEMA review that the agency had provided $165 million over 10 years to strengthen state and local government cyber preparedness. While it seemed substantial at the time, it pales in comparison to the overall need. Thus the $1 billion cyber grant program included in the recently enacted infrastructure law represents an unprecedented opportunity to bolster state and local preparedness for cyber disasters. FEMA and CISA are currently finalizing the grant guidance for the new program, which is anticipated to be released this summer.
To ensure a robust response should a catastrophic cyber disaster occur, a strong working relationship between the government agencies responsible for cybersecurity and disaster preparedness is necessary. At the federal level in the U.S., this is principally FEMA and CISA. When I was at FEMA, we made it a priority to collaborate with CISA. Whether it was grant guidance, exercises such as NLE 2020, or response planning, we worked with our sister DHS agency as partners. Going forward, such a partnership will be critical.
In a January 2022 position paper, the National Emergency Management Association (NEMA) stated that “questions abound relating to the federal government’s processes for responding to major cybersecurity attacks.” To address these concerns, the association representing state emergency management directors proposed an Integrated Program Office between FEMA and CISA to “coordinate all policy and response doctrine as it would apply to cybersecurity, critical infrastructure protection, and any other subject of shared interest.”
The same collaboration should be a priority at the state and local levels and with the private sector. State and local governments should pair their technical experts (Chief Information Security Officers), with their operational responders (emergency managers). And given that the vast majority of the nation’s critical infrastructure is owned by the private sector, this is not a challenge the government alone can solve. Strong partnerships between industry and all levels of government will be necessary to confront this threat.
Finally, at the individual level, we must all take our cyber responsibilities seriously. Brian Hastings, director of the Alabama Emergency Management Agency, told me “Americans are ill equipped to defend against the increasing sophistication and volume of cyberattacks.” Hastings, who also chairs the NEMA Homeland Security Committee added: “Humans are simultaneously the vulnerability, the target, the enemy, and the solution on the front lines making cybersecurity awareness, training, and education a shared responsibility and crucial to reducing our collective risk to attacks.”
Cyber Preparedness Must Be a Priority
A new RAND study finds that responding to a cyber disaster will likely be far more challenging than responding to a traditional disaster. Largely this is because of the nation’s inexperience with responding to catastrophic cyber incidents and thus officials must develop plans and test these capabilities before an incident occurs. The study provides yet more evidence that bolstering the nation’s cyber preparedness now should be a national priority.
Just as emergency managers and first responders prepare for “traditional” disasters, so too must they prepare for cyber disasters. Just because there isn’t a cyber disaster season, doesn’t mean it isn’t time to prepare now.
Related themes: CYBERSECURITY
Daniel Kaniewski
Managing Director, Public Sector at Marsh McLennan Advantage@dankandc
Daniel Kaniewski is the managing director of Public Sector at Marsh McLennan Advantage. Prior to joining the firm in February 2020, Dr. Kaniewski was the deputy administrator for resilience at the Federal Emergency Management Agency (FEMA). In this role he was FEMA’s second-ranking official and led the agency’s pre-disaster programs. He was unanimously confirmed by the U.S. Senate on September 14, 2017.
FEMA Could Be America’s Climate Adaptation Agency — What Is the Biden Administration Waiting For?
When a 100-Year Disaster Strikes
The Value of Disaster Planning Outweighs Its Cost — Sixfold
The original report can be read at the Brink’s website HERE.
9 Takeaways From Davos
The annual World Economic Forum took place in Davos last week for the first time in three years. The high-profile gathering of corporate executives and politicians was smaller than usual and was held in May instead of January. Here are some of the highlights. The managing director of the International Monetary Fund sought to dispel […]
9 Takeaways From Davos
The annual World Economic Forum took place in Davos last week for the first time in three years. The high-profile gathering of corporate executives and politicians was smaller than usual and was held in May instead of January. Here are some of the highlights.
The managing director of the International Monetary Fund sought to dispel the gloom at the World Economic Forum, saying a global recession isn’t in the cards, but “it doesn’t mean it’s out of the question.” Kristalina Georgieva noted that the IMF expects economic growth of 3.6% for 2022, but acknowledged that it’s going to be a “tough year.”
A global buyers’ club of more than 50 companies, including Microsoft and Ford Motor, say they will buy “green” steel, aluminum and other commodities by 2030. The idea behind the buyers’ club, known as the First Movers Coalition, is to stoke demand for green versions of materials that have proved difficult to manufacture without significant carbon dioxide emissions.
The aviation industry, decimated during the pandemic, is rebounding strongly, said Hassan El Houry, CEO of National Aviation Services. He predicted the airline industry would return to pre-pandemic levels at the end of this year or the middle of next, earlier than airline industry group IATA’s forecast of 2025. “Almost every airline I speak with is reporting a huge rebound, especially for this summer and particularly in leisure travel.”
Klaus Schwab, founder of the World Economic Forum, introduces Ukrainian President Volodymyr Zelenskyy during the 2022 World Economic Forum Annual Meeting.
Photo: World Economic Forum/Sikarin Fon Thanachaiary via CC
Ukrainian President Volodymyr Zelenskyy says that his country will not give up land to end Russia’s war. Speaking by video link Wednesday, Zelenskyy said through a translator that “Ukraine is not going to concede our territory. We are fighting in our country, on our land.” Meanwhile, Henry Kissinger, the 98-year-old former secretary of state urged Ukraine to cede territory to make peace with Russia.
Cryptocurrencies … ‘are not currencies at all …they are speculative assets, the value of which changes enormously over the course of time … coin issuers should have to back up their coins with as many dollars as they have coins.’
The Chairman of Volkswagen, Herbert Diess, says Volkswagen is seeing a “clear improvement through summer” on the supply of microchips it needs for its vehicles. Audi board member Hildegard Wortmann said the VW-owned brand has its “highest level of orders at the moment,” but customers are facing wait times of about a year or more.
An international deal to force the world’s biggest multinational companies to pay a fair share of tax has been delayed until 2024, amid fresh wrangling over the painstakingly negotiated agreement. Mathias Cormann, the secretary-general of the Organisation for Economic Co-operation and Development (OECD) said he remained confident an agreement would eventually be implemented to let countries levy more tax on the world’s largest firms based on the sales generated within their borders.
Israeli President Isaac Herzog called on other nations to consider a “renewable Middle East” as a resource for sustainable food, water and energy solutions. He appealed for a new partnership with nations in Europe, Asia and Africa modeled in part on the economic agreements Israel has struck with four Arab nations. He said such new links would expand a “zone of understanding, despite wide gaps and conflicting narratives” about a surge in violence between Israel and the Palestinians.
The World Economic Forum has unveiled an initiative to develop the metaverse. The forum said that it will work with businesses, regulators, civil society and academic experts to help define and build the metaverse. The focus will be on governing the metaverse as well as how to create economic and societal value.
European Central Bank President Christine Lagarde criticized cryptocurrencies, saying that they “are not currencies at all …they are speculative assets, the value of which changes enormously over the course of time … coin issuers should have to back up their coins with as many dollars as they have coins. That needs to be checked, supervised, and regulated.” Lagarde’s latest comments come after she told a Dutch talk show: “My very humble assessment is that [crypto] is worth nothing, it is based on nothing — there is no underlying asset to act as an anchor of safety.”
Related themes: CLIMATE ADAPTATION INFLATION METAVERSE UKRAINE
Editorial Staff BRINK
Despite Progress, Food Insecurity Remains Key Global Challenge
U.S. Within 15 Years of Energy Independence
The original report can be read at the Brink’s website HERE
Global Insurance Pricing Increases in First Quarter 2022
Global commercial insurance prices rose 11% in the first quarter of 2022, marking the fifth consecutive reduction in rate increase since global pricing increases peaked at 22% in the fourth quarter of 2020. It was, however, the eighteenth consecutive quarter that composite prices rose, continuing the longest run of increases since the inception of the Marsh […]
Global Insurance Pricing Increases in First Quarter 2022
Global commercial insurance prices rose 11% in the first quarter of 2022, marking the fifth consecutive reduction in rate increase since global pricing increases peaked at 22% in the fourth quarter of 2020.
It was, however, the eighteenth consecutive quarter that composite prices rose, continuing the longest run of increases since the inception of the Marsh Global Insurance Market Index in 2012.
Cyber insurance pricing continues to show significant rate increases — 110% in the U.S. and 102% in the U.K. for the quarter — and has driven up average pricing in financial and professional lines, globally.
Q1 2022 marks the fifth consecutive reduction in insurance rate increases since global pricing increases peaked at 22% in the fourth quarter of 2020. from their high in 2020.
Photo: Unsplash
The U.K. had the highest average increase, with composite pricing increases at 20%, down from 22% in the fourth quarter of 2021. Both the U.S. and Pacific also saw composite pricing increases in the double digits — 12% and 10%, respectively.
Latin America and the Caribbean was the only region to see its composite pricing increases rise, from 4% in the fourth quarter of 2021 to 6% in the first quarter of 2022.
All three major product lines showed increases in average pricing globally, though less than the prior quarter: financial and professional lines (26%), property (7%), and casualty (4%).
Cyber Claims and Systemic Exposure Concerns Escalate Financial and Professional Lines in US
The average rate of composite price increase in the first quarter of 2022 in the U.S. was 12% — a slight reduction on the prior quarter (13%). This again was driven by cyber insurance pricing.
Average property insurance pricing for the quarter increased 7%, as it did in the fourth quarter of 2021. Clients with significant losses, poor risk quality, or significant exposure to secondary catastrophe (CAT) perils — including wildfire, convective storm, and pluvial flood — continued to experience above average rate increases.
Casualty insurance pricing increased 4% on average in the first quarter of 2022, which was the same increase as the prior quarter.
Financial and professional lines pricing increased 28% on average this quarter. Though increases are still being driven significantly by cyber insurance price increases, this quarter’s average increase was lower than that of the fourth quarter of 2021 (34%).
Directors and officers (D&O) liability insurance pricing for publicly traded companies increased 3% on average — this was lower than the 6% increase of the prior quarter.
Pricing for cyber insurance increased 110% on average, in large part due to the re-pricing and re-underwriting of cyber risks. Prolific claims activity contributed significantly to pricing increases. The conflict in Ukraine also exacerbated concerns relating to systemic exposures and accumulation risk.
UK Pricing Moderates Despite Rising Cyber Pricing Increases
Composite insurance pricing in the first quarter of 2022 in the U.K. increased 20%, compared to 22% in the fourth quarter of 2021.
Cyber insurance pricing increased by 102% on average, again driven by ransomware claims.
Financial and professional lines pricing increased 39%, on average, down from 43% in the prior quarter. D&O pricing increases demonstrated a degree of moderation, with average pricing increases of 16% in the first quarter of 2022, compared to 24% in the fourth quarter of 2021.
Cyber insurance pricing increased by 102% on average, again driven by ransomware claims; this was up on the prior quarter, which had an average increase of 92%.
Property insurance pricing increased by 9%, compared to 10% in the prior quarter; and casualty insurance pricing increased 3% on average, down from a 4% increase in the prior quarter.
Pace of Pricing Increase in Asia Continues Decline
Composite insurance pricing in the first quarter of 2022 in Asia increased 3%, down from 4% in the prior quarter, as price increases continue to moderate.
Both property insurance and casualty insurance saw average pricing increases of 2% in the quarter; while property insurance was down on the prior quarter’s pricing increases of 3%, casualty insurance increases were 2% for both quarters.
Financial and professional lines pricing increased 13% on average, down from 17% in the prior quarter. The cyber market remained challenging, with ransomware placing considerable pressure on premiums.
Insurance Pricing by Region
Other regional highlights in the first quarter included the following:
In the Pacific, composite insurance pricing increased 10%, on average, down from 13% in the prior quarter. Property insurance pricing increased 8%, on average, mirroring the increases seen in the prior quarter. Losses from the New South Wales and Queensland floods reduced any potential pricing relief. Casualty insurance pricing rose 15%, while financial and professional lines pricing rose 10% — a decrease from 18% in the prior quarter.
Composite insurance pricing in the first quarter of 2022 in Continental Europe increased 6%, compared to 9% in the prior quarter. Property insurance pricing rose 6%, a decrease from 10% in the prior quarter, with CAT-exposed risks experiencing the largest increases. Financial and professional lines pricing increased 9% on average, down from 13% in the prior quarter. The D&O market had an influx of new capacity, which led to rate reductions on select programs with adequate pricing. Average casualty insurance pricing rose 6%.
Average composite insurance pricing in the first quarter in the Latin America and Caribbean region increased 6%, up from 4% in the prior quarter. Casualty pricing in the region was flat, marking a potential shift from decreasing rates in the space. Property insurance pricing increased 8%, up from 7% in the previous quarter. Financial and professional lines pricing rose 11%, down slightly from the 12% increase in the prior quarter.
Related theme: INSURANCE
Lucy Clarke
President of Marsh Specialty and Global Placement
Lucy is president of Marsh Specialty, president of Marsh Global Placement, and is a member of the Marsh executive committee. Lucy joined Marsh in April 2019 as part of the acquisition of JLT Group, where she worked for 17 years in key leadership roles, including CEO of JLT Specialty, the insurance and risk arm of the JLT Group. Lucy graduated from Vanderbilt University and has worked in London since 1990.
Global Insurance Pricing Increases in Fourth Quarter 2021
Global Insurance Pricing Increases in Third Quarter 2021
Ransomware Attacks Are Becoming More Frequent, Severe and Expensive
The original report can be read at the Brink’s website HERE.
We Need a More Resilient Food System
The World Food Program has warned that 275 million people are facing starvation as a result of global food shortages caused by the Ukraine conflict, bottlenecks in the supply chain, and crop failures in India and China. Sheryl Hendriks, a food security expert at the University of Pretoria in South Africa, says that one of […]
We Need a More Resilient Food System
The World Food Program has warned that 275 million people are facing starvation as a result of global food shortages caused by the Ukraine conflict, bottlenecks in the supply chain, and crop failures in India and China.
Sheryl Hendriks, a food security expert at the University of Pretoria in South Africa, says that one of the big problems is the lack of private sector involvement in the food sector in many countries.
A man harvests tea on a mechanized tea estate in Kericho, Kenya. To learn from the current global food shortages, countries will need to invest in mechanization and encourage private sector development.
Photo: Patrick Sheperd/CIFOR via CC
HENDRIKS: David Beasley, the head of The World Food Program, says that the situation is already so bad that they are having to choose between the hungry and the starving. What’s unfolding is both a short- and a longer-term crisis. A third of the world’s grain supplies and a large proportion now of oil seeds are tied up in Russia and Ukraine.
There’s food sitting from the previous harvest that can’t be moved out to the places that need the food. Much of the rail infrastructure and some ports in Ukraine have been damaged or destroyed, so while the silos are full, food can’t get out to those who need it. And countries in Africa are particularly reliant on imported grain from those two countries.
Banning Food Exports Is Short Sighted
There’s a secondary aspect to this crisis because Ukraine and Russia also provide significant amounts of fertilizer for agriculture. Higher processing costs and lower availability will be major constraints to future harvests. Fertilizer prices were already going up last year, because fertilizer prices are linked to crude oil prices, so we were seeing farmers in Africa using less fertilizer, and that affects their harvests.
BRINK: Some countries are banning food exports as a way to husband their own resources. Will that make things worse or not?
HENDRIKS: Absolutely. There is some logic to holding back a proportion of food in order to meet your domestic requirements, but for example, Indonesia’s outright ban on the export of palm oil is going to have major repercussions. What happens if they run short of another commodity? Their neighbors are not going to be very friendly about sharing what they have.
So in terms of neighborliness, bans are fairly shortsighted. It also means that countries could lose their market share because somebody else will step into the market and fulfill their requirements. The palm oil restriction is going to affect a huge proportion of processed foods in particular, such as snack foods and many cheaper brands of ready-to-eat foods that are the go-to foods for busy urban communities.
BRINK: Let’s turn to possible solutions. How do you make sure that this crisis isn’t wasted as an opportunity?
HENDRIKS: Good question. We wasted the learning opportunities from the previous two high food price crises in 2007/8 and 2013. Countries should have responded to these crises by looking at their domestic production and seeing how they could diversify to ensure higher domestic supplies.
The response to the 2007/2008 food crisis in many African countries was to provide free or highly subsidized fertilizer and seeds to boost the production of grains. And for example, in West Africa, there was a significant response by farmers. But then the upstream distribution, storage, and transport components were lacking, and so a lot of that excess harvest just rotted the next year. We haven’t really learned much in terms of creating the right balance between import, export, and domestic production.
The Complicated Role of Governments
One of the dynamics in many developing countries is that, unlike in the West, governments have a huge role to play in the food market. Land is typically owned by the government, the seed supply system is either owned or managed by the government, the fertilizer distribution is highly subsidized, and so are the seeds.
In developing countries, the government is very often the price setter, and the government is the major procurer of grain. It’s not an entirely free market economy. There’s huge government control, and governments see themselves as custodians of the food supply, especially for the staple grains. There are big risks in that.
There’s considerable fear and hesitancy around private sector development in developing countries, but it’s really important for us to support private sector development in order to drive innovation, job creation and economic growth.
BRINK: There’s no shortage of scientific research around food systems and reducing starvation. Why hasn’t that translated into a more secure global food system?
HENDRIKS: Because food is an instrument of politics, I guess. Particularly in the developing world, where the government plays such a big hand in food systems, any major shortfall is going to lead to food riots, and policy change in terms of food is viewed as extremely risky by governments.
In my engagement with government officials, particularly across Africa and with the Malabo Montpellier Panel that I work with, the nervousness of government officials to adopt policy change is very tangible. And scientists are not good at engaging with governments to support decision-making.
The Need to Understand Consumers’ Trade-Offs
BRINK: Do you have any concrete recommendations for how there could be some improvement to food systems?
HENDRIKS: The digital domain provides many opportunities. A colleague, Athula Ginige, has developed a digital app to help farmers make their crop choices, so as an individual farmer, you can keep real-time knowledge of who’s planting what. The app then gives an estimation of the predicted price when it comes to harvesting.
But one thing we don’t understand very well are the trade-offs that consumers are making for convenience products, such as bread. Bread is not a staple food in many African countries, but it’s the go-to because if you have nothing else, you can eat just like that. You don’t need power, you don’t need energy to cook it, you don’t need energy to store or warm it, and because it’s so full of preservatives, it lasts a week.
But there’s a trade-off between convenience and the energy required to prepare alternative meals that require cooking. The complexity lies in the connectedness of food and energy prices. If we were able to invest in producing more ready-to-eat, minimally processed natural foods, rather than additive-laden ultra processed foods, we could perhaps sway consumer choices to healthier meals.
Mechanization Is Critical
Countries also need to invest a lot more in mechanization. There’s considerable fear and hesitancy around private sector development in developing countries, but it’s really important for us to support private sector development in order to drive innovation, job creation and economic growth.
There are some shining examples of mechanization success. In Rwanda for example, the government classified the entire country by agro-ecological zones and then identified the best varieties, for example banana, that would grow in each particular agricultural zone. They then re-orientated their entire extension system to deal with the specific diseases and pests per agricultural zone. There are very clever strategies to encourage people to grow what is relevant for their particular agro-ecological conditions.
Rwanda also invented an Uber-inspired tractor service, where, when a farmer needs a tractor service, they can call the Uber service. And there’s an incentive to keep the tractor maintained, have it full of fuel, and have it ready to run at any time. Rwanda has taken a very holistic approach to development with win-wins for the whole economy. We need more such initiatives where government and private entrepreneurs cooperate.
Related Themes: FOOD SECURITY UKRAINE
Sheryl Hendriks
Professor at University of Pretoria
Professor Sheryl L. Hendriks is a professor and head of the Department for Agricultural Economics, Extension, and Rural Development in the Faculty of Natural and Agricultural Sciences at the University of Pretoria. She is a member of the Academy of Science of South Africa.
The original report can be read at the Brink’s website HERE.
The Changing of the Guard in South Korea — What Does It Mean for Business?
The new president elected in South Korea. Yoon Suk Yeol is a populist conservative politician, who narrowly beat President Moon Jae-in from the progressive Democratic party. President-elect Yoon is likely to move South Korea to the right and perhaps take a more confrontational approach to the North. Andrew Yeo, the SK-Korea Foundation Chair in Korea […]
The Changing of the Guard in South Korea — What Does It Mean for Business?
The new president elected in South Korea. Yoon Suk Yeol is a populist conservative politician, who narrowly beat President Moon Jae-in from the progressive Democratic party. President-elect Yoon is likely to move South Korea to the right and perhaps take a more confrontational approach to the North.
Andrew Yeo, the SK-Korea Foundation Chair in Korea Studies at Brookings Institution, spoke to BRINK about what this means for the region and for business.
YEO: There’s definitely going to be a change in direction in how the country is governed under this new conservative leadership, even if structural constraints prevent leaders from veering too far off course from the current trajectory.
On domestic policy, we will see less government intervention and deregulation of various industries and sectors to promote economic growth. The government will offer more market-oriented solutions to address domestic problems, particularly the shortage in affordable housing.
President Yoon Suk Yeol stands before a microphone on a podium to address an audience.
BRINK: Can you give us a sense of who Yoon Suk Yeol is?
YEO: Yoon Suk Yeol is considered an elite in South Korea, in contrast to the more humble, social activist background of current president Moon Jae-in. He is a lawyer by training and attended Seoul National University. Yoon’s biggest claim to fame is his role as the prosecutor- general under the Moon government, where he played a leading role convicting former conservative president Park Geun-hye on corruption charges.
Yoon seems to demand loyalty from his followers, and thus far, he has surrounded himself with trusted advisers, including many who served under former President Lee Myung-bak in the late 2000s and early 2010s. This is in contrast to former President Moon Jae-in, who sought greater diversity and inclusiveness among his staff.
The clearest shift in South Korean foreign policy will be the new government’s engagement policy toward North Korea. All Korean governments, whether progressive or conservative, want inter-Korea relations to improve. How you get there, however, differs between progressives and conservatives.
Championing Small Business Over Big Conglomerates
BRINK: How would you characterize his relationship with South Korea’s business community?
YEO: Conservative governments in South Korea tend to have a better relationship with big business in part because they’re more keen in promoting market-oriented policies. But in this case, there might also be some tensions, as the president-elect has emphasized promoting small and medium enterprises (SMEs), which may lead to some competition with the big conglomerates. Yoon seems keen in cultivating the digital economy and may promote policies which support innovation among SMEs in the emerging technology space. Overall, the relationship between government and business should be generally positive, however.
The Trade Relationship With China
BRINK: What about the commercial relationship with China — do you see that changing much?
YEO: Given Yoon’s pro-U.S. stance, some might assume that the new government will adopt a more hardline position toward China.
President-elect Yoon has indicated more willingness to speak out against China on issues such as human rights and freedom of expression. The new government will be less tepid in how it engages China and more willing to assert its own geopolitical interests.
However, we have to be careful regarding this expectation that Seoul will suddenly hop onto the anti-China bandwagon. There are still strong Korean corporate interests and stakeholders in China, even as we see more South Korean companies shifting operations outside of China to Southeast Asia, South Asia and elsewhere, including the United States. For large companies such as Samsung, SK or Hyundai, China is a very large market. There will be pressure from companies to not completely decouple from China. Thus the Yoon government will have to navigate between national and corporate interests.
In sum, there may be reduced trade with China relative to the past as Korean companies seek to diversify risk, but it would be unrealistic to expect a mass exodus or complete decoupling from Chinese trade.
South Korea’s Approach to the North Will Shift
BRINK: And what about North Korea — is there going to be a noticeable shift?
YEO: The clearest shift in South Korean foreign policy will be the new government’s engagement policy toward North Korea. All Korean governments, whether progressive or conservative, want inter-Korea relations to improve. How you get there, however, differs between progressives and conservatives.
The new conservative government will be much more skeptical in its approach to North Korea.
President-elect Yoon has been very clear that North Korea needs to take steps toward denuclearization before offering any sanctions relief or aid package. There are rumors that a North Korean long range missile test may occur to coincide with the anniversary of former President Kim Il-Sung’s birth on April 15. If something like that were to happen, we will see much stronger language from the Yoon government directed at North Korea and most likely a prolonged period of non-engagement.
In the meantime, nothing is happening on the engagement front while North Korea remains locked in its shell under its self-imposed pandemic border lockdown.
Where we might see some shift is if the North Koreans decide that the food or humanitarian crisis becomes unbearable. North Korea may want to begin talking again to the U.S. or South Korea. I think then we may see some opportunities for inter-Korea engagement and more flexibility from the Yoon government in how it approaches North Korea.
Related themes: CHINA INTERNATIONAL RELATIONS
Andrew Yeo
Senior Fellow and SK-Korea Foundation Chair in Korea Studies at Brookings Institution’s Center for East Asia Policy Studies
Andrew Yeo is a senior fellow and the SK-Korea Foundation Chair in Korea Studies at Brookings Institution’s Center for East Asia Policy Studies. He is also a professor of politics at The Catholic University of America in Washington, D.C. His latest book, State, Society and Markets in North Korea is out now with Cambridge University Press.
The original article can be read at Brink’s website HERE.
How the Ukraine Conflict Is Impacting India’s Economy
India’s trade with Russia is approximately $10 billion, which is 1.3% of India’s total trade. India imports a significant amount of precious and semi-precious stones, mineral oil, boilers, nuclear reactors and fertilizers from Russia, and all of this trade is being affected, with a cascading impact on the Indian economy. After the U.S. and China, […]
How the Ukraine Conflict Is Impacting India’s Economy
India’s trade with Russia is approximately $10 billion, which is 1.3% of India’s total trade. India imports a significant amount of precious and semi-precious stones, mineral oil, boilers, nuclear reactors and fertilizers from Russia, and all of this trade is being affected, with a cascading impact on the Indian economy.
After the U.S. and China, India is the world’s third-largest consumer of oil, over 80% of which is imported, and oil and food prices have always haunted the Indian economy.
Two months into the conflict, faced with a steep upward movement of oil prices, with a projection to touch upon $140 per barrel, India’s business leaders and policymakers are seriously evaluating the impact of this crisis just as business has started to come out of the pandemic.
As the price of these commodities are reaching new highs, it opens up new markets for Indian farmers and trades.
Impact of Oil Price Hike
India imports about 2% of its oil needs and $1 billion worth of coal from Russia per year. Indian oil companies have multibillion-dollar investments in Russian oil fields, which is still relatively small compared to India’s oil requirements. On the converse side, Russian oil giant Rosneft has a controlling stake in the 20 million metric tons per annum of India’s Nayara Energy.
The most obvious impact of high oil prices is inflation. There has been a steep hike in diesel and petrol prices in the last four weeks; and LPG prices were steadily moving up even before the conflict. Fuel and power have a 13% weighting in the wholesale price index, and fuel and light have a 6.5% weighting in the consumer price index. Moreover, fuel and food prices have a cascading effect on the economy as they push up costs at every stage of agriculture and industrial production.
In its latest update, the IMF has projected a slowdown of India’s economic growth to 6.6% from 7.2% in 2022, mainly due to changes in oil price assumptions. The key assumption behind the GDP growth in the Economic Survey of India last year was that oil prices would be $70-$75 per barrel, instead of $100.
The crisis has also pushed up the price of imported fertilizers to India, particularly Urea and Potash from Russia. This threatens to increase the agriculture fertilizer subsidy bill of the government by about $1.3 billion, and the state and central governments will have to rework their budgets to accommodate these cost escalations.
If other trading partners of Russia shift to their own currency-based trade like the Indian rupee-Russian ruble arrangement, and if an alternative to bank transactions can be found, the move away from dollar-based trade and finance can accelerate.
The Silver Lining for India’s Food Exports
However, the Russia-Ukraine conflict is also creating an unlikely opportunity for select Indian agriculture exporters, especially in wheat, maize, millet and processed food.
As the Russia-Ukraine conflict unfolds, the world has been looking for Indian wheat to fill the huge shocks in the supply chains originating from Russia and Ukraine. Ukraine is one of the world’s top wheat exporters — when combined together Russia and Ukraine have a 25% share in the global market. A ban on freight from Russia also means more opportunities for Indian exporters of nuts, confectionery, fruits and pulses.
As the price of these commodities are reaching new highs, it opens up new markets for Indian farmers and trades. Until June, no fresh wheat is expected from other major markets such as Australia, Pakistan and Brazil.
Several reports say India will be able to export 10-12 million metric tons of wheat this year to markets vacated by Russia and Ukraine. Expectations of a normal monsoon season this year will further boost a growth cycle in the rural economies of India, but harnessing the opportunities also depends on how quickly the buyer-seller market is established and enhancing the freight infrastructure.
Significant Outflow in Foreign Investment
The impact of all this could have severe implications for India’s balance of payments. Due to the inelastic nature of energy demand and current difficulties in coal imports, any further increase in crude oil prices invariably leads to higher import bills for the country. If the conflict continues, this will worsen the current account deficit.
This problem is more acute in India because business is witnessing one of the most significant outflows of foreign institutional investors over the first quarter of 2022. The looming threat of a U.S. Fed rate hike makes it an extremely challenging task for the Reserve Bank of India. This will also have implications for the exchange rate. Thanks to the prudent policies and forex management strategy, the rupee did not experience any abnormal pressure.
On the other hand, if other trading partners of Russia shift to their own currency-based trade like the Indian rupee-Russian ruble arrangement, and if an alternative to bank transactions such as SWIFT can be found, the move away from dollar-based trade and finance can accelerate. These kinds of developments post the Russia-Ukraine conflict can have a far-reaching impact beyond India.
Volatility is the most likely prospect in the near future. As the country starts to recover from the pandemic-induced economic slowdown, India’s public and private sectors will need to work on resolving legacy issues of energy security, inflation and resiliency. Supply-side shocks, demand variations, the course of the conflict, and the extent of global sanctions will all impact the future of the Indian economy, while also opening some new doors for opportunity.
Related themes: INFLATION SUPPLY CHAINS TRADE
Venkatachalam Anbumozhi
Director, Research Strategy and Innovations at Economic Research Institute for ASEAN and East Asia
Venkatachalam Anbumozhi is Director, Research Strategy and Innovations at the Economic Research Institute for ASEAN and East Asia (ERIA). Previously he worked at the Asian Development Bank Institute in Tokyo. He has written books, research articles, and project reports on natural resource management, climate-friendly infrastructure design, and private-sector participation in green growth. He was a member of the APEC Expert Panel on Green Climate Finance and the ASEAN panel for promoting climate-resilient growth.
What Will India’s Post-COVID Recovery Look Like?
Can India Pull Off a Sustainable Economic Recovery?
Can a Self-Reliance Strategy Pull India Out of Recession?
The original report can be read at the Brink’s website HERE.
How Long Can China’s Economy Handle Zero COVID?
An interview with David Dollar Senior Fellow of the John L. Thornton China Center at Brookings Institution President Xi Jinping’s policy of zero tolerance toward COVID kept cases down during the first two years of the pandemic. But the infectiousness of the omicron variant is making it much harder to pull off. It’s estimated that […]
How Long Can China’s Economy Handle Zero COVID?
An interview with David Dollar
Senior Fellow of the John L. Thornton China Center at Brookings Institution
President Xi Jinping’s policy of zero tolerance toward COVID kept cases down during the first two years of the pandemic. But the infectiousness of the omicron variant is making it much harder to pull off.
It’s estimated that 87 of the 100 largest cities in China are now under some kind of restricted movement. Shanghai is under an intense lockdown, severely impacting living conditions for its 25 million inhabitants.
This is starting to impact global financial markets and supply chains. BRINK spoke to David Dollar, an expert on the Chinese economy at Brookings, to assess the economic impact.
DOLLAR: It seems like the zero-tolerance policy is starting to have a negative effect on the Chinese economy. According to official data released last week, China’s economy expanded 4.8% in the first three months of this year compared to the same period last year. However, much of that growth was recorded in January and February only. There’s no question the Chinese economy has slowed down, and there are anecdotal reports about certain ports suffering big backlogs and cities that have shut down.
China’s a big country, so shutting down a couple of cities doesn’t necessarily have an overwhelming effect, but it is definitely going to be negative for China’s growth.
BRINK: Its impact will depend on how long this goes on — do you have any sense of whether the government is determined to stick to the policy?
A truck driver wearing a protective mask walks past containers at Yangshan port in Shanghai, China. Shanghai is under an intense COVID lockdown, as are an estimated 87 of the 100 largest cities in China
Photo: Yves Dean/Getty Images
DOLLAR: China has an important Communist Party congress in November, so I would be surprised if they changed policy before November. But President Xi has sent out a message to local officials to pay attention to growth, and there are examples of cities modifying their quarantine policies, for example, by moving from a three-week quarantine to one week. Or in Shenzhen, the factory that produces a lot of Apple products was allowed to keep operating. So I would say, you see some local flexibility, but they are basically sticking to their zero-tolerance policy.
BRINK: Are you seeing any sign of this rippling through global supply chains yet?
DOLLAR: The Ukraine [conflict] is having a big effect on the global economy, and the spread of COVID in China is an additional negative factor, but on a smaller scale, so far. However, the longer it goes on, the more it’s going to take away from China’s annual growth rate.
The financial markets hate the uncertainty around the Ukraine [conflict], the effect on the global economy, and what’s happening with China.
One thing about China, which we saw with the first wave of COVID, is if things shut down for a month or two, then they seem to work extra hard to recover. And that’s kind of a natural tendency, but China’s particularly good at it. Oftentimes, they get close to annual targets, they have a couple of bad months, and then they work super hard for a few months. But if the spread of cases continues throughout the year, then of course, you’re not going to be able to make up for this during 2022.
BRINK: I’ve seen some projection suggesting it could knock a point off the GDP growth. Do you think that is overly pessimistic?
DOLLAR: They set a target for the year of around 5.5% growth in GDP, and they made that decision before the Ukraine [conflict]. Frankly, even leaving aside COVID, that already seemed like a very ambitious target, given the challenges that they were already facing domestically with their real estate and the tech crackdown.
When you add in the Ukraine [conflict], the notion that COVID could take a point or more off of that 5.5 target seems realistic. The financial markets hate the uncertainty around the Ukraine [conflict], the effect on the global economy, and what’s happening with China. So it’s not surprising to see stock markets bouncing around a lot.
When it comes to Ukraine, China happens to be the poster child for a country that imports a lot of petroleum, natural gas and wheat. And the [conflict] has affected prices globally, so it doesn’t even matter where China is importing its oil and gas from — those prices have gone up very dramatically. That’s a big shock for the Chinese economy.
BRINK: How does this play with inflation if the Ukraine crisis drags on and there’s this continued zero COVID policy?
DOLLAR: Well, China has much lower consumer inflation than we do in the U.S., or even in Europe. And so, that actually puts them in a position where they can ease up their monetary policy, while we’re going to be tightening our monetary policy. So that gives them some room to stimulate the economy with both fiscal and monetary policies.
It’s a little bit of a mystery how their consumer pricing inflation has stayed so low. This latest spread of COVID has been going on long enough now that prices for a lot of services have gone down because people are not traveling or going to restaurants as much. So you’ve got price declines in services. And compared to Americans, people don’t drive nearly as much, so high gas prices don’t have as much effect on household budgets. So their inflation is quite modest and they’ve got room to stimulate.
David Dollar
Senior Fellow of the John L. Thornton
China Center at Brookings Institution
David Dollar is a Senior Fellow in the John L. Thornton China Center at the Brookings Institution and the host of the Brookings trade podcast, Dollar & Sense. He was the World Bank Country Director in China (2004-2009) and the U.S. Treasury representative in Beijing (2009-2013).
Will China Ever Become a Fully Developed Economy?
The original article can be viewed at the Brink’s website HERE.
Global Trade Is Battling Demand and Price Shocks
The invasion of Ukraine and renewed COVID-19 outbreaks in China will hit global trade with a double whammy in 2022: lower volumes and higher prices. We now expect trade to grow by 4.0% in volume terms in 2022 (2 percentage points lower than expected before the crisis), while trade in value terms surges by 10.9% […]
Global Trade Is Battling Demand and Price Shocks
The invasion of Ukraine and renewed COVID-19 outbreaks in China will hit global trade with a double whammy in 2022: lower volumes and higher prices. We now expect trade to grow by 4.0% in volume terms in 2022 (2 percentage points lower than expected before the crisis), while trade in value terms surges by 10.9% (vs. 7.2% previously expected).
After the contraction in Q3 2021, the risk of a double-dip in global trade volume in H1 2022 has increased further – not only due to supply-chain bottlenecks, but also because of lower demand. The economic consequences of Russia’s invasion of Ukraine will slow GDP growth around the world, especially for economies in Europe. The resulting confidence and demand shock explains more than half of the downward revision in our forecast for trade growth in volume in 2022 (see Exhibit 1). Conversely, trade prices growth has been revised upwards by 5.7 percentage points, with commodity prices and additional supply chain disruptions contributing roughly equally.
Global trade will take a hit, particularly in Europe, as the conflict in Ukraine continues.
Photo: Unsplash
After the contraction in Q3 2021, the risk of a double-dip in global trade volume in H1 2022 has increased further – not only due to supply-chain bottlenecks, but also because of lower demand. The economic consequences of Russia’s invasion of Ukraine will slow GDP growth around the world, especially for economies in Europe. The resulting confidence and demand shock explains more than half of the downward revision in our forecast for trade growth in volume in 2022 (see Exhibit 1). Conversely, trade prices growth has been revised upwards by 5.7 percentage points, with commodity prices and additional supply chain disruptions contributing roughly equally.
Exhibit 1: Breakdown of 2022 trade growth forecast revisions (percentage points)
The Demand Shock
The confidence and demand shock will result in a loss of $480 billion in exports to Russia and Eurozone countries in 2022 (roughly evenly split between the two destinations), with companies in Eastern Europe the most exposed. While Russia as an end-demand market is not systemic at the global level (representing just 1.2% of global imports on average in 2015-2019), the multi-year recession it is likely to face could lead to losses in the region.
The most exposed countries are Moldova, Slovakia, Serbia, Slovenia and Czech Republic, where exports exceed 1.5% of GDP. Among the biggest Eurozone exporters, Germany and Italy are among the top 20 most exposed, with potential losses of up to 0.6% ($21 billion) and 0.5% of GDP ($90 billion) respectively, in the worst-case scenario where relationships with Russia are completely frozen.
Looking at Russia as a supplier in global and regional value-chains, Eastern Europe remains the most at risk, while a complete cut-off of relations would mean the Eurozone’s largest four economies losing up to 0.4% of their GDPs and 1.1% of their exports.
Focus on Commodities
Looking at the world’s exposure to goods produced in Russia, the sectors of focus are energy (e.g., oil, gas), metals (e.g., aluminum, palladium, nickel) and agrifood (e.g., wheat, corn) as Russia respectively represents around 9%, 3% and 2% of each sector’s global exports. By looking precisely at the amount of energy, metals and agrifood inputs produced in Russia that end up in other countries’ outputs (through direct and indirect trade linkages), we find that Bulgaria (close to 9% of GDP), Lithuania (more than 5% of GDP) and Hungary (more than 2% of GDP) are the most exposed (see Exhibit 2).
Some Western and Northern European countries are also among the top 20 most exposed, including the Netherlands (0.8% of GDP), Sweden (0.6%), Italy (0.6%) and Germany (0.5%). This compares with 0.3% of Chinese GDP depending on Russian inputs, and 0.1% for the US. Looking at how much Russian value-added is used in other countries’ exports yields similar results, with Eastern European economies the most exposed, while up to 1.1% of exports from the largest four economies of the Eurozone could be at risk (compared with 0.7% for China and 0.2% for the US).
Exhibit 2: Russian energy, metals and agrifood inputs used in respective countries’ output (% of GDP), top 20 exposed in relative terms
Supply Chain Bottlenecks
Europe is thus by far the most at risk of supply-chain disruptions caused by the Russian invasion of Ukraine and ensuing sanctions. Beyond food and energy commodities, which can be easily substituted with other suppliers, metals are actually more sensitive products. Indeed, they are often part of an industrial process that has been designed to take into account the particularities of a certain supplier. As such, changing suppliers, even when possible, is not an easy task as it might require industrial adjustments. Based on the critical materials analysis from the European Commission, we observe that Russia represents over 10% of imports for about 20 metals, with key applications in transport equipment, high-end electronics (batteries, semiconductors, smartphones), construction and automotive.
To account for second-round supply-chain effects of ongoing events, value-added that needs to transit via Russia before reaching its final destination also needs to be taken into consideration, on top of that directly produced in Russia. We find that the latter has a much larger impact than the former, which is even negligible outside Europe. This confirms Russia’s limited role in global and regional supply chain logistics. Indeed, even if high-frequency data show that the number of tankers moving in the Black Sea and Baltic Sea, and the number of container vessels anchored in Russian ports, have declined since the start of the conflict, it is important to keep in mind that Russia represents just around 2-3% of the global tanker fleet and containerized trade.
New COVID-19 outbreaks in China are the larger issue for global supply chains as the sustained zero-COVID policy is likely to keep delivery times elevated throughout 2022. Local lockdowns and more restrictions in response to rising infections in cities such as Shenzhen and Shanghai are likely to impact production and logistics in China. Data show that congestion waiting times and anchorage outside the Yantian port and the outer Pearl River Delta have risen over the past few weeks. For now, they remain below the levels seen during summer 2021, when outbreaks led to temporary port closures.
However, this new bottleneck comes at a time when the global maritime shipping industry is still fragile. A repeat of the temporary port closures in China could have ripple effects on global logistics: The historical relationship between our proprietary China port congestion index and the global manufacturing PMI suppliers’ delivery times index (see Exhibit 3) suggests that delivery times are likely to remain above the pre-pandemic average for most of 2022, and even lengthen slightly at the start of 2023 – though remaining below 2021 peaks.
Exhibit 3: China port congestion index and global manufacturing sector delivery times
Ana Boata
Global Head of Economic Research at Allianz Trade
Ana Boata is the global head of Economic Research at Allianz Trade. Ana started her career in the banking sector before joining Euler Hermes in November 2012 as Eurozone economist. In 2018 she received the Best Forecaster Award for the Eurozone by Consensus Forecast. In 2019, she became head of Macroeconomic Research of Euler Hermes Group and led its thematic research on SMEs. Ana also teaches macroeconomics at the University of Paris Dauphine and Sciences Po Paris.
Françoise Huang
Senior Economist for Asia-Pacific at Allianz Trade
Françoise joined Allianz Trade in 2019 as a senior economist for Asia-Pacific. Prior to this, Françoise worked as an Economist for over five years at the equity broker Exane BNP Paribas in London. There, she was in charge of the macroeconomic analysis of the Chinese economy and Emerging Markets. She also worked on global and European topical themes. Her other work experiences include the ACPR, the French supervisor for the banking and insurance sectors.
Ano Kuhanathan
Sector Advisor and Data Scientist at Allianz Trade
Ano Kuhanathan has held various positions in the financial industry in trading, research and consulting. He was the Eurozone economist at Axa Investment Managers from 2016 to 2018. Before joining Allianz Trade in 2020, he was the head of economic advisory and advanced analytics at EY Advisory. Ano regularly teaches economics, sustainable finance and applied data science at Neoma Business School.
A version of this article originally appeared in Unravel.
The original report can be read at the Brink’s website HERE.
Revolutionary Changes in Transportation Could Slow Global Warming — If They’re Done Right
Around the world, revolutionary changes are under way in transportation. More electric vehicles are on the road, people are taking advantage of sharing mobility services such as Uber and Lyft, and the rise in telework during the COVID-19 pandemic has shifted the way people think about commuting. Transportation is a growing source of the global […]
Revolutionary Changes in Transportation Could Slow Global Warming — If They’re Done Right
Around the world, revolutionary changes are under way in transportation. More electric vehicles are on the road, people are taking advantage of sharing mobility services such as Uber and Lyft, and the rise in telework during the COVID-19 pandemic has shifted the way people think about commuting.
Transportation is a growing source of the global greenhouse gas emissions that are driving climate change, accounting for 23% of energy-related carbon dioxide emissions worldwide in 2019 and 29% of all greenhouse gas emissions in the U.S.
The systemic changes under way in the transportation sector could begin lowering that emissions footprint. But will they reduce emissions enough?
Electric cars are shown charging in a garage. Electric vehicles and other changes in transportation can help significantly lower the greenhouse gas emissions that cause climate change.
Photo: Unsplash
In a new report from the Intergovernmental Panel on Climate Change released April 4, 2022, scientists examined the latest research on efforts to mitigate climate change. The report concludes that falling costs for renewable energy and electric vehicle batteries, in addition to policy changes, have slowed the growth of climate change in the past decade, but that deep, immediate cuts are necessary. Emissions will have to peak by 2025 to keep global warming under 1.5 degrees Celsius (2.7 F), a Paris Agreement goal, the report says.
Source: IPCC Sixth Assessment Report
The transportation chapter, which I contributed to, homed in on transportation transformations – some just starting and others expanding – that in the most aggressive scenarios could reduce global greenhouse gas emissions from transportation by 80% to 90% of current levels by 2050. That sort of drastic reduction would require a major, rapid rethinking of how people get around globally.
The Future of EVs
All-electric vehicles have grown dramatically since the Tesla Roadster and Nissan Leaf arrived on the market a little over a decade ago, following the popularity of hybrids.
In 2021 alone, the sales of electric passenger vehicles, including plug-in hybrids, doubled worldwide to 6.6 million, about 9% of all car sales that year.
Strong regulatory policies have encouraged the production of electric vehicles, including California’s Zero Emission Vehicle regulation, which requires automakers to produce a certain number of zero-emission vehicles based on their total vehicles sold in California; the European Union’s CO2 emissions standards for new vehicles; and China’s New Energy Vehicle policy, all of which have helped push EV adoption to where we are today.
Beyond passenger vehicles, many micro-mobility options – such as autorickshaws, scooters and bikes – as well as buses, have been electrified. As the cost of lithium-ion batteries decreases, these transportation options will become increasingly affordable and further boost sales of battery-powered vehicles that traditionally have run on fossil fuels.
An important aspect to remember about electrifying the transportation system is that its ability to cut greenhouse gas emissions ultimately depends on how clean the electricity grid is. China, for example, is aiming for 20% of its vehicles to be electric by 2025, but its electric grid is still heavily reliant on coal.
With the global trends toward more renewable generation, these vehicles will be connected with fewer carbon emissions over time. There are also many developing and potentially promising co-benefits of electromobility when coupled with the power system. The batteries within electric vehicles have the potential to act as storage devices for the grid, which can assist in stabilizing the intermittency of renewable resources in the power sector, among many other benefits.
Other areas of transportation are more challenging to electrify. Larger and heavier vehicles generally aren’t as conducive to electrification because the size and weight of the batteries needed rapidly becomes untenable.
For some heavy-duty trucks, ships and airplanes, alternative fuels such as hydrogen, advanced biofuels and synthetic fuels are being explored as replacements for fossil fuels. Most aren’t economically feasible yet, and substantial advances in the technology are still needed to ensure they are either low- or zero-carbon.
Other Ways to Cut Emissions From Transportation
While new fuel and vehicle technologies are often highlighted as decarbonization solutions, behavioral and other systemic changes will also be needed to meet to cut greenhouse gas emissions dramatically from this sector. We are already in the midst of these changes.
Telecommuting: During the COVID-19 pandemic, the explosion of teleworking and video conferencing reduced travel, and, with it, emissions associated with commuting. While some of that will rebound, telework is likely to continue for many sectors of the economy.
Shared mobility: Some shared mobility options, like bike and scooter sharing programs, can get more people out of vehicles entirely.
Car-sharing and on-demand services such as Uber and Lyft also have the potential to reduce emissions if they use high-efficiency or zero-emission vehicles, or if their services lean more toward car pooling, with each driver picking up multiple passengers. Unfortunately, there is substantial uncertainty about the impact of these services. They might also increase vehicle use and, with it, greenhouse gas emissions.
New policies such as the California Clean Miles Standard are helping to push companies like Uber and Lyft to use cleaner vehicles and increase their passenger loads, though it remains to be seen whether other regions will adopt similar policies.
Public transit-friendly cities: Another systemic change involves urban planning and design. Transportation in urban areas is responsible for approximately 8% of global carbon dioxide emissions.
Efficient city planning and land use can reduce travel demand and shift transportation modes, from cars to public transit, through strategies that avoid urban sprawl and disincentivize personal cars. These improvements not only decrease greenhouse gas emissions, but can decrease congestion, air pollution and noise, while improving the safety of transportation systems.
How Do These Advances Translate to Lower Emissions?
Much of the uncertainty in how much technological change and other systemic shifts in transportation affects global warming is related to the speed of transition.
The new IPCC report includes several potential scenarios for how much improvements in transportation will be able to cut emissions. On average, the scenarios indicate that the carbon intensity of the transportation sector would need to decrease by about 50% by 2050 and as much as 91% by 2100 when combined with a cleaner electricity grid to stay within the 1.5-degree Celsius (2.7 Fahrenheit) target for global warming.
These decreases would require a complete reversal of current trends of increasing emissions in the transportation sector, but the recent advances in transportation provide many opportunities to meet this challenge.
A version of this article originally appeared in The Conversation.
Related themes: CITIES CLIMATE ADAPTATION RENEWABLE ENERGY
Alan Jenn
Assistant Professional Researcher at The Institute of Transportation Studies at the University of California, Davis
Alan Jenn is an assistant professional researcher at the Plug-in Hybrid and Electric Vehicle (PH&EV) group of the Institute of Transportation Studies (ITS) at the University of California, Davis, and an affiliate at Lawrence Berkeley National Laboratory. Alan’s research is focused on plug-in electric vehicles (PEVs): integration with the electric grid, adoption of the technology, use in ride-hailing companies (such as Uber and Lyft), and its impact on transportation finance.
The original report can be read at the Brink’s website HERE.
How the Ukraine Crisis Is Disrupting Global Supply Chains, Part 2
Experts are assessing the ripple effects that the Ukraine crisis is having across a wide variety of global supply chains that have already been frayed by the upheaval from the pandemic. In the second article in our series (you can read the first piece here), we spoke to Sarah Schiffling, senior lecturer in Supply Chain […]
How the Ukraine Crisis Is Disrupting Global Supply Chains, Part 2
Experts are assessing the ripple effects that the Ukraine crisis is having across a wide variety of global supply chains that have already been frayed by the upheaval from the pandemic.
In the second article in our series (you can read the first piece here), we spoke to Sarah Schiffling, senior lecturer in Supply Chain Management at Liverpool John Moores University.
SCHIFFLING: We see a variety of impacts from the crisis in Ukraine on global supply chains. The most obvious is energy, but we’ve also got agricultural supply chains. Ukraine is a massive agricultural producer for wheat, corn, sunflower oil, and also metals and rare materials that are feeding into some already strained supply chains. For example, neon, which is needed in the production of semiconductors.
The rise in oil prices is going to affect transport around the globe, an area where there’s already been a lot of disruption with very high container prices over the past year or so. The closure of Russian airspace to most airlines means much longer routes, particularly from Europe to Northeast Asia.
We’re looking at additional flight times of several hours being added to these routes, and because of that extra flight time, the planes need more fuel on these flights, which reduces the capacity space on these aircraft.
Having a broader supplier base helps prevent businesses from being too impacted by a geographically constrained issue like the Ukraine crisis.
Photo: Unsplash
The Closing of Odessa
BRINK: How about the sea supply chains — are they being equally impacted?
SCHIFFLING: Black Sea shipping is pretty much suspended. Commercial shipping in and out of Ukraine is non-existent right now. The closure of the port at Odessa is a big concern for wheat exports. There are quite a few countries that are heavily dependent on Ukrainian wheat, such as Egypt, Turkey, but also areas of global crisis such as Yemen and Lebanon, where the main grain silos were destroyed in the 2020 explosion.
But it could also impact you if you are a supermarket chain that gets wine from Moldova. That was probably scheduled to go through Odessa and then shipped onward. Where I live, near the port of Liverpool, we had a Russian tanker coming here and dockers refused to unload it so it had to be turned back.
Worrying Rise of Food Insecurity for Many Countries
BRINK: Is this likely to increase food insecurity in some countries?
SCHIFFLING: Absolutely, this crisis comes on top of existing issues in many countries. We’re seeing, for example, stunning numbers from the World Food Programme, which supports so many people around the world. In a normal year, the WFP gets 50% of its wheat from Ukraine, and it’s now estimating that their costs will rise by around $700 million, due to the crisis in Ukraine.
Countries that have limited ability to shift to other supplies or to pay an extra premium are likely to be the most heavily affected, which is particularly tragic if you’re looking at a country like Yemen, where we already have many people on the brink of starvation, and now they’re facing rising food prices.
BRINK: How much impact is this going to have on the whole idea of just-in-time supply chains that’s really expanded in the last 15 or so years?
SCHIFFLING: This ties into the wider conversation that has been triggered by the pandemic and the resulting supply chain effects. It is showing us once more that it’s really important to understand your supply chains and to be prepared. It’s another argument for more of a “just in case” approach rather than just in time.
You need to have higher inventory to be able to weather these storms. But there’s also huge responsibility on the customer side. If customers are demanding highly customized deliveries at low prices, then it’s very difficult to build up your buffer to make sure that you’ve got the resilience in that supply chain.
You might have a very good spread in your first-tier suppliers, but in the end, it’s not much help if you discover that it all comes back to the same second- or third-tier supplier.
It helps to build up your partnerships in your supply chain and make sure that you are working with partners who are valuing you and will be supporting you in any changes that you might experience so you can rely on them. Of course, that’s all very nice, but even if you have the best relationship in the world with a Ukrainian supplier right now, they’re not able to help you.
A China-Plus Approach
Another approach is to diversify geographically in terms of suppliers, having a broader supplier base so you’re not too impacted by a geographically constrained issue within supply chains. We’ve seen that in previous crises. We are increasingly seeing a China-plus policy, where companies continue to import from China but also invest in a supplier closer from home to broaden out their base. So if you do have these transport disruptions that we have been seeing, you have more local options and shorter supply chains that might be more flexible to respond if there are disruptions.
BRINK: Do most companies know where their supplies come from, at least in the kind of first and second degree? Is it possible to map that now with technology?
SCHIFFLING: Most companies will know their first-tier suppliers. But a lot of companies were surprised to see how much they’ve been affected by events in the Black Sea region right now and are trying to figure out what exactly comes from there or through there.
It’s not necessarily just your raw material suppliers. You will also be looking at, is there maybe transport providers that need to be on board as well? If I’m talking about getting my wine out of Moldova, then I don’t just need my wine supplier, I also need to know which tanker is transporting that wine because if that tanker is currently in the port of Odessa, then I’m probably not going to get my delivery, even if I’m not supposed to be shipping out of Odessa.
Then, once we get into second-tier, third-tier suppliers, it gets a lot more difficult. We’re seeing how crucial it is from a business perspective to actually understand what we are dependent on. You might have a very good spread in your first-tier suppliers, but in the end, it’s not much help if you discover that it all comes back to the same second- or third-tier supplier.
Related themes: GEOPOLITICAL CONFLICT SUPPLY CHAINS TRADE
Sarah Schiffling
Senior Lecturer in Supply Chain Management of Liverpool John Moores University
Sarah Schiffling is a senior lecturer in supply chain management at Liverpool John Moores University, UK, and an international research fellow with the HUMLOG Institute in Helsinki, Finland. She previously worked as lecturer in logistics and operations management at the University of Lincoln, UK.
Supply Chains in 2022: Shortages Will Continue
The original article can be viewed at the Brink’s website HERE.
How the Ukraine Crisis Is Disrupting Global Supply Chains, Part 1
Global supply chains were starting to recover from two years of upheaval caused by the pandemic when the Ukraine crisis hit. The further disruption caused by Russia’s invasion of Ukraine could cause many companies to rethink their suppliers. BRINK spoke to Mark Millar, the author of Global Supply Chain Ecosystems and a supply chain expert […]
How the Ukraine Crisis Is Disrupting Global Supply Chains, Part 1
Global supply chains were starting to recover from two years of upheaval caused by the pandemic when the Ukraine crisis hit. The further disruption caused by Russia’s invasion of Ukraine could cause many companies to rethink their suppliers.
BRINK spoke to Mark Millar, the author of Global Supply Chain Ecosystems and a supply chain expert based in Hong Kong, and asked which supply chains are being most impacted by the crisis.
MILLAR: Even though this is a very fluid and fast-moving scenario, and notwithstanding the terrible humanitarian calamity, it is already clear that the Russia-Ukraine conflict will have far-reaching ramifications for many supply chains.
In particular, there are immediate consequences for ground-based freight networks transporting goods between Asia and Europe by road and rail.
Last year, shippers suffering from the chaotic uncertainty in container shipping caused by COVID turned to rail transport as an alternative freight option for the Asia-Europe trade routes. This year, the war in Ukraine will impact supply chains again.
Photo: Unsplash
The Asia-Europe Land Route
Last year, shippers suffering from the chaotic uncertainty in container shipping caused by COVID turned to rail transport as an alternative freight option for the Asia-Europe trade routes. In 2021, rail operators ran more than 1,200 freight trains per month between China and Europe, transporting almost 1.5 million containers. Many of these trade routes from China transit through Russia, Ukraine and Belarus on their way to Western European destinations.
The risks for such containerized rail-freight are now prohibitively high, so traders are frantically searching for alternative routes, at a time when the containerized shipping sector is still besieged by port congestion, shipping delays and container shortages resulting in extensive delays and record-high freight rates.
However, just about every supply chain will suffer a negative impact from this crisis, for example, with fuel prices surging and shipping routes being cancelled or diverted.
A Nail in the Coffin of Over-Globalized Trade Routes
Unfortunately, this is another massive disruption for today’s globalized supply chains, on top of two years of COVID-induced supply chain chaos, from which many businesses (or economies) have still not recovered.
There is enormous uncertainty as to whether this crisis could be over by the end of the month, whether it could drag on for years, or worst-case scenario, could trigger a direct military conflict between NATO and Russia.
Whichever the outcome, I think it is another nail in the coffin of our modern-day over-globalized supply chains.
The cumulative disruptions over the last five years from ever-increasing costs in Asia, geopolitical tensions and trade tariffs, the pandemic’s turbulence in global shipping and now the military conflict in Europe have exposed the profound interdependencies and inherent vulnerabilities in globalized supply chains.
BRINK: Are there any critical products that come from Russia and Ukraine (besides oil and gas) that will be disrupted?
MILLAR: In addition to gas and oil, Russia’s top exports include coal, iron, platinum, raw aluminum, sawn wood and copper. So many global commodities markets will be squeezed, and we can foresee some shortages of raw materials.
Food Supplies Will Be Impacted
As both countries are major exporters of agricultural products, we can also expect global food supply chains to be impacted.
Russia exports over $6 billion of wheat annually and is a major producer of vast amounts of the essential raw ingredients for the fertilizer products that are used in produce grown around the world.
Many of the finely tuned just-in-time and lean systems will be replaced or supplemented with business models incorporating buffer inventories and safety stocks. In many scenarios, just-in-time will become replaced by just-in-case.
Meanwhile in Ukraine, two-thirds of its GDP relate to international trade, the foundation of which is a strong agricultural sector. Fifteen percent of global grain exports come from Ukraine, as well as cereals, animal and vegetable oils, and seed oils, together representing 35% of Ukraine’s exports.
A further quarter of Ukraine’s exports are iron ore and steel, including refined electrical machinery, equipment and other mechanical appliances.
BRINK: Do you think this crisis is likely to cause companies to rethink their supply chains and develop suppliers nearer to home?
MILLAR: Absolutely. As a result of COVID, many companies were already re-evaluating their supply chains, exploring options for near-shoring and/or reshoring of their sourcing and production closer to home.
However, reconfiguring and relocating your global supply chain is much easier said than done.
Today’s Supply Chains Cannot Easily Be Moved
Today’s global supply chain ecosystems have been built and fine-tuned over many years. They cannot easily be untangled, unpacked and moved elsewhere. Whether near-shoring or re-shoring, this is a major undertaking. And, of course, you can’t stop your business whilst you’re reconfiguring your supply chain.
The entire ecosystem needs to be reviewed from end to end, considering potential future sources — both the suppliers and their locations — for essential inputs, such as materials and components. Ideally, the new supplier network will be within the same vicinity as the newly relocated manufacturing operations.
For finished goods distribution, new channels and business partners may need to be established — and alternative logistics service providers evaluated and appointed.
Companies must undertake any supply chain reconfiguration initiative as a parallel project, alongside the business-as-usual activities of day-to-day supply chain execution. In terms of resources, the project will consume plenty of management bandwidth and demands on your A-team. It will incur considerable costs, some inevitable disruption, as well as sizable risk. The timeline to complete the relocation would be measured in years, not months.
So, reconfiguring your supply chain is not for the fainthearted.
But this Ukraine crisis on top of two years of COVID disruptions has surely brought many companies to a tipping point that will result in real action during the coming years on near-shoring and reshoring initiatives. Supply chain 2025 will undoubtedly look significantly different for many companies.
The Knock On Effect for China
BRINK: Is there likely to be a knock-on effect on China?
MILLAR: Inevitably. China is the largest trading partner for both Russia and Ukraine, so those respective bilateral trade flows are going to be curtailed by the conflict.
More importantly, China’s trade with the world will be adversely affected as established trade flows and supply chains become increasingly disrupted.
In particular, the various Silk Road rail-freight corridors — via Belarus and Poland, or Ukraine, or St. Petersburg and Finland — will become dislocated. There are over seventy rail freight routes from China connecting into 174 cities across 23 countries in Europe, offering transit times of just 12-17 days, shaving several weeks off sea freight transit times.
Many of these routes are now completely impractical and unfeasible, resulting in goods becoming stranded en-route and inventory shortages in destination markets.
This will have the greatest impact on goods exported from factories that have relocated inland to China’s midwest, for whom rail freight is a particularly relevant alternative to sea freight. Chengdu in Sichuan province, for example, is almost two thousand kilometers inland from the main export container port in Shanghai.
China will also experience knock-on effects from the broader supply chain implications, such as near-shoring initiatives and regionalization trends, which over the medium term will result in some manufacturing being relocated out of China.
The End of Just in Time?
BRINK: How should companies build greater resilience into their overseas supply chains to avoid being impacted by this kind of crisis?
MILLAR: Supply chain resilience has become the key strategic priority for this decade. Multiple initiatives need to be undertaken, including revisiting the supply base to identify sources closer-to-home and adopting wider deployment of dual- or multi-sourcing strategies, featuring multiple suppliers in multiple locations.
Many of the finely tuned just-in-time and lean systems will be replaced or supplemented with business models incorporating buffer inventories and safety stocks. In many scenarios, just-in-time will become replaced by just-in-case.
Over the medium term, I foresee some large-scale near-shoring activity with many companies adopting a more regional approach — e.g., producing in Latin America for the USA, and serving developed EU markets with products made in lower-cost European nations such as Poland, Hungary or Turkey, potentially also in some north African countries.
The technological advancements and reducing costs in robotics and automation will also enable some businesses to re-shore their production activities back into high labor cost markets, further empowered by increasing availability of Robotics as a Service (RaaS) solutions, which eliminate the need for upfront capital costs, which hitherto proved prohibitively expensive, especially for small- and medium-enterprise businesses.
Related themes: GEOPOLITICAL CONFLICT SUPPLY CHAINS
Mark Millar
Author of Global Supply Chain Ecosystems
Mark Millar is author of the widely acclaimed book Global Supply Chain Ecosystems that help business leaders make better informed decisions about strategies for competitive advantage in today’s complex, connected world.
Mark serves on the Advisory Board of the Foundation for Future Supply Chain, is a Visiting Lecturer at Hong Kong Polytechnic University and has won multiple awards including “Thought Leadership Champion” and “Most Inspiring Supply Chain Professional”.
Supply Chain Disruption Impacts Cost, Quality and Risk
The original article can be viewed at the Brink’s website HERE.
Click HERE to read Part 2 of “How the Ukraine Crisis Is Disrupting Global Supply Chains”
FBCCI wants corporate tax rate cut to 10-15%
The country’s apex trade body has demanded that the government lower corporate tax rate to 10-15%, in order to help the backward linkage industry flourish. Since most of the backward-linkage industries in the country are small and medium-sized enterprises, corporate tax rate in this sector should be less, it further said. The Standing Committee of […]
FBCCI wants corporate tax rate cut to 10-15%
The country’s apex trade body has demanded that the government lower corporate tax rate to 10-15%, in order to help the backward linkage industry flourish.
Since most of the backward-linkage industries in the country are small and medium-sized enterprises, corporate tax rate in this sector should be less, it further said.
The Standing Committee of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) on Backward Linkage Industries came up with the proposal at its first meeting at FBCCI Icon in the capital on February 10.
Chairman of the committee Abul Kalam Bhuiyan said lowering the corporate tax rate to 10-15% would help develop the backward linkage industry. He also suggested that the entrepreneurs should get plots at affordable prices for expansion of the industry.
Speaking as the chief guest at the meeting, FBCCI Vice President M A Momen said that most of the giant companies today started their journey as backward linkage industries. “Therefore, the role of this sector in the overall development of the country is undeniable,” he said.
Mr. Momen said industrialisation was not possible without development of the backward linkage industry. If there is no such industry, the supply chain will break down, said the FBCCI leader, putting emphasis on the development of this industry for greater good.
At the same time, he called upon the government to give due importance to this sector while adopting policies.
Director-in-charge of the FBCCI standing committee Joshoda Jibon Debnath called upon the entrepreneurs of the backward linkage industry to take concerted initiatives to establish a separate industrial zone for the sector. He assured them of cooperation in accessing necessary bank loans in this regard.
Mr. Debnath said the expansion of the backward linkage industry was essential to meet the challenges of post-LDC industrialisation.
The Financial Express
Chey Tae-won conducts sweeping reshuffle at KCCI
The Korea Chamber of Commerce and Industry (KCCI) Chairman Chey Tae-won, who is also SK Group chairman, has conducted sweeping organizational restructuring to strengthen communication between Korea’s largest lobby group and its member firms, KCCI said. The restructuring marks the first of its kind since Chey was inaugurated as KCCI Chairman in February 2021. “Instead […]
Chey Tae-won conducts sweeping reshuffle at KCCI
The Korea Chamber of Commerce and Industry (KCCI) Chairman Chey Tae-won, who is also SK Group chairman, has conducted sweeping organizational restructuring to strengthen communication between Korea’s largest lobby group and its member firms, KCCI said.
The restructuring marks the first of its kind since Chey was inaugurated as KCCI Chairman in February 2021.
“Instead of downsizing the existing management planning headquarters, we established a planning and coordination headquarters to enhance the communication platform and also revived the Sustainability Management Institute that will lead communication efforts with society,” KCCI said.
First, the key role of a communication platform will be to incorporate diverse voices at home and abroad to find solutions to economic and social problems through the establishment of the Planning and Coordination Headquarters.
The Planning and Coordination Headquarters is in charge of operating the communication platform, discovering agendas, and new entrepreneurship.
The Sustainability Management Institute was also revived, which had previously led environmental management. The institute will lead efforts to commercialize national development projects, ESG management, and aid in the implementation of carbon neutrality measures.
The public relations room was also expanded and reorganized. The purpose is to integrate and unify external communication functions by newly establishing the Corporate Relations Team (CR) and New Media Team within the existing public relations (PR) team.
The KCCI also conducted a largescale personnel reshuffle transferring 30 team leader level staff to head other departments within the firm.
“This reorganization is aimed at strengthening the ‘communication’ capability, which has been continuously emphasized since the inauguration of Chairman Chey Tae-won. We will seek ways to gather opinions from all levels of society to pave the way for the country to achieve sustainable growth, where all members are satisfied,” KCCI Executive Vice Chairman Woo Tae-hee said.
Korea Times
New program to ensure Turkish SMEs e-trade with US
The Union of Chambers and Commodity Exchanges of Turkey (TOBB) and the American business association (AmCham Turkey) will provide local companies with mentorship services to enable those firms to have the chance to conduct e-trade businesses with the United States. The “e-Commerce Mentoring Program” will benefit small and medium scale enterprises (SMEs), TOBB said in […]
New program to ensure Turkish SMEs e-trade with US
Ankara is Capital of Turkiye
The Union of Chambers and Commodity Exchanges of Turkey (TOBB) and the American business association (AmCham Turkey) will provide local companies with mentorship services to enable those firms to have the chance to conduct e-trade businesses with the United States.
The “e-Commerce Mentoring Program” will benefit small and medium scale enterprises (SMEs), TOBB said in a statement.
The firms that will be selected among the applicants will be matched with mentors. Market analysis will be carried out with the companies, enabling them to conduct e-exports to the United States market.
According to the project, potential companies in priority sectors will be determined. Strategic planning, consultancy and business development support will be given to these companies so that they can mature their e-export processes.
Companies that aim to e-export to the U.S. in sectors such as furniture, textile, ready-made clothing and machinery sub-industries will have the opportunity to review their current cross-border e-commerce processes, increase their business volumes and accelerate their processes once mentoring applications have been approved.
The Turkish Trade Center established by TOBB in Chicago will also play an active role in expanding the presence of local firms in the U.S. market.
TOBB President Rifat Hisarcıklıoğlu said that they continue to provide active support to entrepreneurs for new trade opportunities.
Emphasizing that they want to increase Turkey’s share in global foreign trade, Hisarcıklıoğlu said: “As TOBB, we are working to increase the participation of our SMEs, which are an indispensable element of economic development, in the global value chain and to improve our companies’ access to markets.”
Representing more than 110 U.S. companies with investments of more than $50 billion in Turkey, AmCham Turkey Chairperson Tankut Turnaoğlu stated that they hope to bring together SMEs aiming to enter the U.S. market with their members.
“As an association, one of our priorities is to enable Turkish companies to participate more in the global value chain. Thus, we are carrying out the ‘e-Commerce Mentoring Program’ in cooperation with TOBB and with the support of our member UPS,” Turnaoğlu said.
Daily Sabah
Having up-to-date machinery a must: ICCIMA head
Head of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) has said having advanced and up-to-date production lines and machinery is the prerequisite for developing export-oriented industries, the ICCIMA portal reported. Mentioning a meeting of the country’s industrial manufacturers with Leader of the Islamic Revolution Seyed Ali Khamenei on February 1, Gholam-Hossein Shafeie said: […]
Having up-to-date machinery a must: ICCIMA head
Head of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) has said having advanced and up-to-date production lines and machinery is the prerequisite for developing export-oriented industries, the ICCIMA portal reported.
Mentioning a meeting of the country’s industrial manufacturers with Leader of the Islamic Revolution Seyed Ali Khamenei on February 1, Gholam-Hossein Shafeie said: “Having employment-generating and export-oriented production requires bridging the gap between the technology level of domestic and global production lines.”
In the meeting with the country’s producers the leader had stressed the need to pay attention to “employment-creating and export-oriented production” in order for the country to overcome its economic problems.
According to Shafeie, the decline of the value of the national currency against the U.S. dollar along with the sanctions have prevented domestic producers from upgrading their production lines, and this has created a gap between Iran and the world in terms of technology.
Tehran Times
Irfan Iqbal Sheikh is new chairman of FPCCI
Irfan Iqbal Sheikh has been unanimously announced as the Chairman of the Management Committee of FPCCI by its Executive Committee. It has extended its full support and expressed their full confidence in the leadership and the statesmanship of Mr. Irfan Iqbal Sheikh. A large number of the executive committee members participated physically; from the Head […]
Irfan Iqbal Sheikh is new chairman of FPCCI
Irfan Iqbal Sheikh has been unanimously announced as the Chairman of the Management Committee of FPCCI by its Executive Committee. It has extended its full support and expressed their full confidence in the leadership and the statesmanship of Mr. Irfan Iqbal Sheikh.
A large number of the executive committee members participated physically; from the Head Office (Karachi), capital office (Islamabad) and the regional offices of Lahore, Peshawar and Quetta. The whole process was conducted amicably and harmoniously under the directions of the Director General of Trade Organizations (DGTO). Representatives of the DGTO office were also present on the occasion to ensure its transparency and integrity.
Irfan Iqbal Sheikh expressed his profound gratitude to the executive committee members for the honor bestowed upon him and articulated his resolve to fulfil the myriad responsibilities as the head of country’s apex trade body.
The Management Committee will also include Mr. Muhammad Suleman Chawla as its Vice Chairman; and, Shabbir Hassan Mansha, Mr. Muhammad Nadeem Qureshi and Qazi Muhammad Akbar as its members.
The committee has been empowered to induct new members into the management committee, if needed; appoint members of FPCCI’s Standing Committees to represent various sectors; constitute FPCCI’s Business Councils for various countries; nominate FPCCI’s representatives to International Forums; manage all the operations and affairs of the federation; prepare FPCCI’s budget proposals and represent the business, industrial and trade community of entire Pakistan on all forums.
Daily Times
FNCCI objects to banks raising interest rates on deposits
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has objected to the agreement reached among commercial banks to increase the interest rate on deposits. The Nepal Bankers Association, an association of chief executive officers of commercial banks, had on February 11 agreed to raise the interest rate on deposits to 11.03%. The FNCCI […]
FNCCI objects to banks raising interest rates on deposits
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has objected to the agreement reached among commercial banks to increase the interest rate on deposits.
The Nepal Bankers Association, an association of chief executive officers of commercial banks, had on February 11 agreed to raise the interest rate on deposits to 11.03%.
The FNCCI has issued a statement objecting to the news of the agreement among banks. It urged to reconsider the agreement.
The statement said that the private sector is worried that the industries and businesses are going through a crisis, and in such situation if the interest rates on loans taken by the industrialists increase again, the sector will strain further and industrialists will end up on the streets.
The FNCCI concluded that the decision to increase interest rates in the country will further weaken the industries and businesses as the industry and business sectors will be subject to all-round pressure due to hiked interest rates.
Khabarhub
Russia-Ukraine Crisis Amplifies Growth and Inflation Risks in Asia
The crisis in Ukraine will raise food, energy, and other prices, while sanctions will disrupt financial markets in Asia. Photo: Unsplash The sharp escalation of the Russia-Ukraine crisis has led us to change our global baseline. This assumes a prolonged period of instability following the installation of a “friendly” government in Ukraine by Russia. Our […]
Russia-Ukraine Crisis Amplifies Growth and Inflation Risks in Asia
The crisis in Ukraine will raise food, energy, and other prices, while sanctions will disrupt financial markets in Asia.
Photo: Unsplash
The sharp escalation of the Russia-Ukraine crisis has led us to change our global baseline. This assumes a prolonged period of instability following the installation of a “friendly” government in Ukraine by Russia.
Our new baseline incorporates higher energy, food and other commodity prices over the medium term, as well as more financial market disruption and tougher EU and U.S. sanctions on Russia.
The impact of these changes on our global forecasts is expected to be significant, with Russia bearing the heaviest impact.
We estimate that global growth will be 0.2ppts lower in 2022 from our no-crisis baseline, while inflation could be 0.7ppts higher. For Asia-Pacific (APAC), GDP growth will likely be lower, by 0.1ppts-0.15ppts in 2022, and inflation higher, by 0.3ppts-0.4ppts (Exhibit 1).
Exhibit 1: The Crisis Will Impact Both Growth and Inflation Adversely
Limited Links With Russia and Ukraine, but Asia Not Completely Insulated
Asia’s geographical distance from the center of the crisis, and its weak trade and investment linkages with both countries, should shield it from a significant impact from either a collapse in Russian imports or any trade or investment barriers imposed by Russia’s administration.
Russia and Ukraine together account for less than 1% of total exports for most Asian economies (Exhibit 2). The notable exception is China. But even there, the share is not big enough to be of great concern. The picture is similar for imports. While import dependency is slightly higher compared to exports, Russia is not the main source of energy or other commodity imports for Asian economies. They largely depend on the Middle East for energy supplies and on intra-regional trade for other raw materials.
Exhibit 2: The Trade Channel Represents a Minor Source of Risk
Russia is also not an important source of FDI, with a minuscule share of total FDI inflows into Asia. Despite its political proximity to India and China, it does not feature in the top 10 sources of FDI for either.
Oil and Commodity Prices
But this doesn’t mean that global developments will have no consequence for Asia. We see two main channels of impact. The first, and the most important channel, is via higher oil and commodity prices. We now expect oil prices to remain above $100/barrel until the early stages of the second half and also see the plausibility of the crisis pushing up base metal and food prices. This will result in a negative terms-of-trade shock for Asia, as it is a net commodity importer.
Simulations on our Global Economic Model show that an average oil price of $100/barrel in 2022 will lower Asia’s GDP growth by 0.2ppts, while raising inflation by 0.5ppts. Higher inflation will squeeze household spending across the board. But the eventual GDP growth impact will vary substantially across the region, with large oil importers such as South Korea, Singapore and India being most affected. Meanwhile, Malaysia will suffer less as it’s an oil exporter, and the cost for Indonesia will likely be offset to a large degree by it being a net commodity exporter (Exhibit 3).
Exhibit 3: Higher Oil Prices Will Boost Inflation and Weigh on Growth
External Demand Under Pressure
The second channel is lower foreign demand. With all major economies globally now expected to grow at a slower pace in 2022 and 2023, external demand will come under pressure. This has implications for the growth outlook of the more export-oriented Asian economies.
Other than these, risks to cross-border financial flows need to be monitored closely. At first sight, risks to Asia’s financial sector from the sanctions imposed on Russian banks appear low. Australia and Japan are the only APAC economies so far that have joined the West in announcing sanctions against Russia. Taiwan has announced its intention to do so.
We expect China to continue its economic engagement with Russia. But the latest energy deals and potentially new agriculture deals will likely be denominated in renminbi. Also, China’s commercial banks may scale back their financial transactions with Russia given their exposure to the U.S. dollar system.
Still, as past crises have highlighted, in an increasingly integrated global financial system that is dominated by the U.S. dollar, unexpected disruptions may materialize quickly. It’s likely that Asian markets will remain volatile for the foreseeable future in a risk-off environment (Exhibit 4).
Exhibit 4: Markets Will Likely Remain on an Uncertain Footing for Now
But eventually we are likely to see more differentiation based on economic fundamentals. Some Asian markets could benefit as relative havens of stability and increase their share of global capital flows. These risks, however, are likely to increase for the twin deficit countries — India, Indonesia, and the Philippines, and also Malaysia to some degree, given its dependence on foreign borrowings.
From a policy perspective, higher inflation and deteriorating deficits will increase the pressure on the Reserve Bank of India and the Bangko Sentral ng Pilipinas to act more aggressively, even as growth is slowing. How they navigate this policy dilemma will be crucial for investor sentiment and the future growth outlook. For now, we maintain our view of a more widespread, but relatively muted, tightening in Asia ex-China this year.
A version of this piece originally appeared on Unravel.
Related themes: EUROPE INTERNATIONAL RELATIONS TRADE
Priyanka Kishore
Head of India and Southeast Asia Economics at Oxford Economics
Priyanka Kishore is the head of India and Southeast Asia economics at Oxford Economics. She has more than a decade of experience in macroeconomic research and forecasting across emerging markets, with a special focus on India and ASEAN. She currently leads Oxford Economics’ Singapore Global Macro Services team and is responsible for overseeing the firm’s South and South East Asia research.
Asia: A Growth Puzzle, Once Again
How will the U.S. Presidential Election Impact Asian Economies?
The original article can be viewed at the Brink’s website HERE.
Sheikh Fazle Fahim elected IORBF chairman
Sheikh Fazle Fahim, CACCI Vice President and former president of FBCCI, has been elected as the chairman of Indian Ocean Rim Business Forum, better known as IORBF. IORBF is the primary body for business representatives to formulate policies and project recommendations to IORA (Indian Ocean Rim Association) member states. Since the establishment of IORA in […]
Sheikh Fazle Fahim elected IORBF chairman
Sheikh Fazle Fahim, CACCI Vice President and former president of FBCCI, has been elected as the chairman of Indian Ocean Rim Business Forum, better known as IORBF.
IORBF is the primary body for business representatives to formulate policies and project recommendations to IORA (Indian Ocean Rim Association) member states.
Since the establishment of IORA in 1997, Bangladesh has been elected for the first time as its Chair for 2021-2023. The 23rd Committee of Senior Officials meeting of IORA took place on November 15-16 November, 2021 while the 21st Council of Ministers was on November 17, 2021, said a press release.
In a speech given in the CSO meeting, Fahim talked about his plans with the IORBF to take it forward. While discussing the geo-economic importance of the Indian Ocean as a vital trading hub for the entire world, Fahim pointed out the challenges imposed on IORBF’s operations in the aftermath of Covid-19.
Fahim stressed on supply chain disruptions, the rising cost of trade logistics, decline of investments in the private sector, economic stagflation and inflation. He then proceeded to suggest possible solutions which can be implemented to combat these challenges.
IORA works to improve regional cooperation through the creation of sustainable development within the Indian Ocean region. IORA has 23 Member States and 9 dialogue partners. The primary focus of IORA lies in disaster risk management, tourism & cultural exchanges, maritime safety & security, fisheries management, trade & investment facilitation, and academic, science and technological cooperation. Their two other focus areas are blue economy and women’s economic empowerment.
New Age
“2022 Global Economic Outlook” Forum
CACCI is pleased to invite members, partners and friends to join the CNAIC 70th Anniversary Forward-thinking Forum – 2022 Global Economic Outlook and Regional Economic Integration to be held on March 15, 2022 at 14:00-16:20 hrs., Taipei Time. According to the “World Economic Outlook” released by the International Monetary Fund (IMF) in October 2021, the […]
“2022 Global Economic Outlook” Forum
CACCI is pleased to invite members, partners and friends to join the CNAIC 70th Anniversary Forward-thinking Forum – 2022 Global Economic Outlook and Regional Economic Integration to be held on March 15, 2022 at 14:00-16:20 hrs., Taipei Time.
According to the “World Economic Outlook” released by the International Monetary Fund (IMF) in October 2021, the global economy is projected to grow by 4.9 percent in 2022. While the global economy is seen to be on the path to recovery, many challenges remain, including the continued worldwide spread of the Omicron variant of the Covid-19 virus; the slowdown in employment growth; the rapid rise of inflation in the US and in some emerging markets and developing economies; and food security and climate change, among others. As the global supply chain is likely to remain impacted, the outlook of the economic development seems gloomy.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which entered into force on December 30, 2018, is considered a regional trade agreement which upholds the rules-based scope and high-quality standards of the world trading system. It opens to economies which comply with its high standards, and has started accepting the second batch of membership applications in 2021. The Regional Comprehensive Economic Partnership (RCEP), which took effect on January 1, 2022, is currently the largest global free trade agreement with 15 member countries comprising 30 % of the global population and almost 30% of the global GDP. The development of CPTPP and RCEP as well as the regional economic integration in the future will certainly play an important role in deciding the global deployment of businesses.
To be held in a hybrid format, this Forum – which is co-organized by CNAIC and CACCI to commemorate CNAIC’s 70th Anniversary – will feature speakers and panelists who will share their insights on the latest global economic trends and the outlook of economic integration in the region.
Participation is free of charge.
For the complete Program and to register, please click HERE.
Confirmation Message, along with the Forum link and other relevant information, will be sent to registered participants on March 11.
“The Role of ASEAN in the Global Supply Chain” webinar
CACCI is pleased to convey an invitation from the ASEAN Business Advisory Council (ASEAN-BAC), of which CACCI is an Associate Member of its Joint Business Councils, to attend the virtual event “The role of ASEAN in the Global Supply Chain” on Tuesday, 18 January 2022 at 9:00-11:00 AM (SGT GMT+8). Synopsis of the webinar […]
“The Role of ASEAN in the Global Supply Chain” webinar
CACCI is pleased to convey an invitation from the ASEAN Business Advisory Council (ASEAN-BAC), of which CACCI is an Associate Member of its Joint Business Councils, to attend the virtual event “The role of ASEAN in the Global Supply Chain” on Tuesday, 18 January 2022 at 9:00-11:00 AM (SGT GMT+8).
Synopsis of the webinar
The recent supply chain crisis, caused by events such as climate disasters and new COVID-19 variants, has had a severe impact on businesses, consumers, and the global economy. Companies both small and large have been prompted to restructure their global supply chains, and find new ways to mitigate risk. Supply chain diversification and digitalisation have become of increasing importance, as these strategies provide the potential for companies to operate more sustainably and resiliently across borders. Southeast Asia is home to some of the fastest-growing economies in the world, and presents many opportunities for Canadian companies looking to expand and diversify their businesses internationally. Singapore is often considered a regional hub and a gateway to the rest of Southeast Asia, while other ASEAN countries such as Vietnam are well-positioned to become alternate production hubs in the global supply chain.
Join the Canada-ASEAN Business Council and our partners to find out more about the strategies that are being taken by companies and policy makers to future-proof supply chains, and why the ASEAN region is playing an increasingly important role for companies’ global operations. This event is part of the Canada-ASEAN Business Leaders Series, organized by the CABC, in partnership with the Government of Canada.
Objectives
- Outline the drivers of the current supply chain crisis, and what strategies have proved successful.
- Understanding the current and future impact of COVID-19 variants on global supply chains.
- Understanding the impact of major weather conditions in Canada and ASEAN, and how this affects supply chain management.
- Hear from successful companies/organisations who will share their strategies for diversifying supply chains, and how this can improve the ease of business, investment, and mobility.
- Understand how supply chains are being reimagined in Asia amidst the digital revolution.
- Networking opportunities for the Canada-ASEAN business community.
Click HERE for more information and to register.
Webinar on Asian Economic Integration – Register now
CACCI would like to invite its members and friends to join the 40th Asian Impact webinar on 9 February 2022, Wednesday, 10:00 AM, Manila time, Asian Impact Webinar: Asian Economic Integration Report 2022 Launch. Rapid digitalization and the COVID-19 pandemic are spurring growth of digital services trade in Asia and the Pacific. ADB’s flagship report explores how the region can capitalize on these […]
Webinar on Asian Economic Integration – Register now
CACCI would like to invite its members and friends to join the 40th Asian Impact webinar on 9 February 2022, Wednesday, 10:00 AM, Manila time, Asian Impact Webinar: Asian Economic Integration Report 2022 Launch. Rapid digitalization and the COVID-19 pandemic are spurring growth of digital services trade in Asia and the Pacific. ADB’s flagship report explores how the region can capitalize on these opportunities through structural reforms and cooperation.
As a webinar under the Zoom platform, registration is required to attend. Please register in advance of the webinar date at https://asianimpact.adb.org. A confirmation email containing the webinar link and password will be sent once you have successfully registered.
To view the past Asian Impact webinars, please visit: https://www.adb.org/news/events/webinar/asian-impact
What Surprised You the Most About 2021?
2021 A survey of BRINK contributors To round out 2021, we asked a cross section of our BRINK experts to name — in a couple of sentences — what they had learned that surprised them the most in their areas of expertise over the last year or so since the pandemic began. Jo […]
What Surprised You the Most About 2021?
2021 A survey of BRINK contributors
To round out 2021, we asked a cross section of our BRINK experts to name — in a couple of sentences — what they had learned that surprised them the most in their areas of expertise over the last year or so since the pandemic began.
Jo Owen, Author of Smart Work: The Ultimate Handbook for Remote and Hybrid Teams
The speed with which firms and people can change. In March 2020, remote working was transformed from unthinkable to essential in one weekend.
Mona Sloane, Sociologist and Senior Research Scientist, New York University
Literacy around AI systems and their risks and benefits has increased over a very short period of time.
David Dollar, Senior Fellow, Brookings Institution
The difficulty of establishing scientific certainty in real time; policies keep changing.
Businesses and populations have quickly adjusted to the “new normal” that the pandemic caused, despite poor performances across the globe by governments.
Source: Pexels
Ellen Ernst Kossek, Basil S. Turner Distinguished Professor of Management, Purdue University, Krannert School of Management
How much COVID-19 negatively impacted the work-life equality, labor force participation and careers of women; perhaps setting them back at least a generation.
Larissa van der Lugt, Director, Erasmus Center for Urban, Port and Transport Economics
The difficulty of achieving cooperation, while the pandemic urged that even more.
Scenario planning in good times is excellent planning for the challenging times.
Deborah Gordon, Senior Principal at Rocky Mountain Institute
How easily the work world adapted to virtual interactions and maintained productivity. I’m eager to see how hybrid working (both in-person and virtual) shapes up in the year ahead.
John Asafu-Adjaye, Senior Fellow, the African Center for Economic Transformation
The extent to which the use of ICT has been scaled up over the past two years in most African countries, especially in the areas of banking, finances and education and health. Going forward, there is an opportunity to accelerate the use of ICT for nation-building by addressing the infrastructure challenges.
RM Charan, President of Charan Associates
How little U.S. business leaders were aware of the implications of the evolving U.S. China relations.
Sarah Tong, Senior Research Fellow at the East Asian Institute at the National University of Singapore
That there are social groups who would oppose efforts to contain the spread of the pandemic.
Alicia Garcia Herrero, Senior Research Fellow, Bruegel
Supply chain disruptions.
Richard Wilding, Professor of Supply Chain Strategy, Cranfield University U.K.
That scenario planning in good times is excellent planning for the challenging times.
Ben Hoster, Director, Transformative Technologies, Marsh McLennan Advantage
The pace of technology adoption and related perils. The second and third order effects of increased remote work and related cyber/digital risks. Technology is at once a key enabler and also a threat vector at increasingly large scale.
Bart W. Edes, Distinguished Fellow at the Asia Pacific Foundation of Canada
How quickly our work environment could dramatically change, with long-term impacts now embedded for the post-pandemic era.
John West, Executive Director, Asian Century Institute
I have been surprised at the incompetent management of COVID in most advanced countries and the lack of a serious effort to uncover the origin of COVID. Against that, I have been equally surprised at how rapidly effective vaccines were developed.
Alexander Privitera, Head of European affairs at Commerzbank AG
The resilience of banks.
Blair Chalmers, Director, Marsh McLennan Advantage
The ability of firms to conduct due diligence on acquisitions virtually (in the face of travel restrictions).
Marcus Courage, CEO at Africa Practice
The constraints of labor laws in managing remote and distributed workforces.
Anbumozhi Venkatachalam, Director, Research Strategy and Innovations at the Economic Research Institute for ASEAN and East Asia
The resilience of value chains and digitalization.
Haig Nalbantian, Senior Partner, Mercer
The ease of adaptation to flexible work arrangements in response to COVID and the ability to sustain productivity and engagement under these circumstances is beyond anything I predicted.
Jason Clay, SVP Markets, ED Markets Institute, WWF
The pandemic is getting all the headlines, but climate change will disrupt and kill more lives and economies. It is already here and is having much more profound impacts than expected.
VADM (Ret) John Miller, CEO, The Fozzie Miller Group
I’ve been impressed by how quickly businesses and populations have adjusted to the “new normal” that the pandemic caused, despite poor performances across the globe by governments, which was slow, oppressive in the establishment of restrictions and regulations, and largely ineffective in easing the burdens caused by the virus.
Kavitha Hariharan, Director, Healthy Societies, Marsh McLennan Advantage
The continued failure to appreciate that in a pandemic, no one is safe until everyone is safe. Lack of vaccine access in poor countries and vaccine hesitancy anywhere result in persistent transmission of SARS-Cov-2, which rolls the dice in favor of the emergence of new variants.
The original article can be read at Brink’s HERE.
What Will Be the Greatest Challenge of 2022?
2021 A survey of BRINK contributors On December 26th, we asked a cross section of our experts to name — in a couple of sentences — What had surprised them the most in their business since the pandemic began. In the second half of our survey, we asked them to name the challenge or opportunity […]
What Will Be the Greatest Challenge of 2022?
2021 A survey of BRINK contributors
On December 26th, we asked a cross section of our experts to name — in a couple of sentences — What had surprised them the most in their business since the pandemic began.
In the second half of our survey, we asked them to name the challenge or opportunity that they think will rise up the agenda the most in their area of expertise.
Jo Owen, Author of Smart Work: The Ultimate Handbook for Remote and Hybrid Teams
Hybrid working will become the new normal.
Mona Sloane, Sociologist and Senior Research Scientist, New York University
We will see more AI regulation kick in in 2022, and businesses will have to adapt rapidly to new transparency, accountability and audit requirements.
The transition to a low carbon economy, US-China tensions, inflation, and hybrid working all feature in our experts’ predictions of 2022.
Source: Tyler Lastovih/Pexels
David Dollar, Senior Fellow, Brookings Institution
Rising trade disputes and protectionist policies.
Ellen Ernst Kossek, Basil S. Turner Distinguished Professor Of Management, Purdue University, Krannert School of Management
Implementing flexible working in a way that truly balances employee and employer needs and transforms the workplace from a place to a virtual relationship.
Larissa van der Lugt, Director, Erasmus Center for Urban, Port and Transport Economics
Making progress in the energy transition.
Developing effective, data-driven DEI strategies which will continue to accelerate and come to dominate the HR agenda.
Deborah Gordon, Senior Principal at Rocky Mountain Institute
In 2022, we will need to develop a better understanding of the dynamics of market transitions, especially in an effort to rebuild a net-zero emissions economy. It will be essential to maintain market integration as we shift to low-carbon inputs and outputs — this risk is especially concerning in the refining sector.
John Asafu-Adjaye, Senior Fellow, the African Center for Economic Transformation
The main challenge will be how African economies can recover from the effects of the pandemic and speed up economic growth and create good jobs for the large population of young people. Many countries have had to borrow to supplement the COVID-19 response measures — how can they scale back their debt levels without cutting back on social expenditures?
RM Charan, President of Charan Associates
Inflation, U.S.-China relations, and the U.S. economy.
Sarah Tong, Senior Research Fellow at the East Asian Institute at the National University of Singapore
Uncertainty around the global pandemic and U.S.-China tensions are two of the most serious challenges to the world economy.
Alicia Garcia Herrero, Senior Research Fellow, Bruegel
Taiwan becoming the central focus of U.S.-China strategic competition.
Richard Wilding, Professor Of Supply Chain Strategy, Cranfield University U.K.
Increasing agility and planning for on-shoring, nearshoring and multi-shoring to increase supply chain resilience.
Ben Hoster, Director, Transformative Technologies, Marsh McLennan Advantage
Technology convergence, “smart” devices and applications, with related cyber threats and digital risks, and some day, the Metaverse.
Bart W. Edes, Distinguished Fellow at the Asia Pacific Foundation of Canada
Containing COVID-19 to enable the launch of a sustainable, inclusive global recovery.
John West, Executive Director, Asian Century Institute
Growing global political instability in light of [President] Biden’s weakness and unpopularity at home, [President] Xi’s anxiousness to have his term as China’s leader extended, [President] Xi’s impatience for Taiwan to be unified with mainland China, and strategic drift in Europe with the departure of [former Chancellor] Merkel and the French elections.
Alexander Privitera, Head of European Affairs at Commerzbank AG
Calibrating fiscal and monetary policies.
Blair Chalmers, Director, Marsh McLennan Advantage
The adaptation and resilience of infrastructure assets.
Marcus Courage, CEO at Africa Practice
Regulation/regulatory compliance. A wave of new regulations to address tax compliance, health, digital/data and environment.
Anbumozhi Venkatachalam, Director, Research Strategy and Innovations at the Economic Research Institute for ASEAN and East Asia
Destructive innovation and financing sustainability.
Haig Nalbantian, Senior Partner, Mercer
Developing effective, data-driven DEI strategies which will continue to accelerate and come to dominate the HR agenda.
Jason Clay, SVP Markets, ED Markets Institute, WWF
The need for common metrics, methodologies and boundaries to make meaningful change. Absolute reductions of all climate impacts.
VADM (Ret.) John Miller, CEO, The Fozzie Miller Group
2022 will be a year of continued challenges — especially regarding Chinese and Russian aggression. The most pressing issue will be responding in Ukraine, should Russia decide to invade. We can expect China to further pressurize Taiwan as they continue to move toward an unwanted re-unification.
Kavitha Hariharan, Director, Healthy Societies, Marsh McLennan Advantage
Workforce burnout will exacerbate delivery challenges in health care, in a context of swelling demand caused by new SARS-Cov-2 variants and Long COVID, care that has been deferred during the pandemic, and other health crises such as those caused by increasingly severe extreme weather events.
The original article can be viewed at the Brink’s website HERE.
CCC sets up liaison office in Japan
To further augment and give a major thrust to the commercial sector between Cambodia and Japan, the Cambodian government has established a broad liaison of the Cambodia Chamber of Commerce (CCC) in Japan. In a sub-decree on December 17 and signed by Prime Minister Hun Sen, the CCC’s liaison was established in Sendei city, Japan’s […]
CCC sets up liaison office in Japan
To further augment and give a major thrust to the commercial sector between Cambodia and Japan, the Cambodian government has established a broad liaison of the Cambodia Chamber of Commerce (CCC) in Japan.
In a sub-decree on December 17 and signed by Prime Minister Hun Sen, the CCC’s liaison was established in Sendei city, Japan’s Tohoku Region.
The CCC’s liaison will be chaired by Susuma Tai, honorary consulate of Cambodia in Japan. The process of setting members of the liaison will be made soon, said Lim Heng, CCC’s Vice-President.
“Now, we have already established a liaison in Sendei city of Japan. The next procedures will be in the process of electing members and president. It will not take long to see the liaison put into commence,” Heng said yesterday, adding, “The establishment of a representative office of the Cambodian Chamber of Commerce in Japan is another good sign for the friendly relations, trade and investment cooperation between the two countries.”
The Cambodian government just endorsed new investment law which will be incentives offered to new investors from abroad to Cambodia, Heng said.
The official launch of the CCC liaison will be run under the presence of senior officials of relevant ministries, he added. This is the first liaison abroad and the CCC plans to set up its liaisons in other countries of China, EU, the US and Canada.
Nguon Mengtech, director-general of the CCC said in June this year that the liaison in Japan will work functionally attracting new investment from Japan to Cambodia.
“In Japan, we don’t have any representative office so, once operational, the CCC’s representative office will play an important role in facilitating investment and businesses from Japan to Cambodia,” Meng Tech said.
Khmer Times
ICCIMA Energy Committee holds meeting to discuss consumption issues
The members of Energy Committee of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) gathered on December 25 in a meeting attended by the Head of Iran’s Energy Exchange (IRENEX) Ali Naghavi to discuss energy-related issues. As reported by the ICCIMA portal, offering Energy Saving Certificates (ESCerts) at IRENEX was one of the major […]
ICCIMA Energy Committee holds meeting to discuss consumption issues
The members of Energy Committee of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) gathered on December 25 in a meeting attended by the Head of Iran’s Energy Exchange (IRENEX) Ali Naghavi to discuss energy-related issues.
As reported by the ICCIMA portal, offering Energy Saving Certificates (ESCerts) at IRENEX was one of the major subjects discussed in the mentioned meeting.
Speaking in the gathering, Head of ICCIMA Energy Committee Arash Najafi mentioned some of the existing issues regarding the government policies in energy consumption management and asked the IRENEX head to explain some of the exchange’s plans and policies to improve the situation.
Naghavi for his part noted that so far, the government’s major policy with regard to energy consumption management has been tariff-based, which means that the government has only increased or decreased energy tariffs to manage consumption in various sectors.
TEHRAN – The members of Energy Committee of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) gathered on Saturday in a meeting attended by the Head of Iran’s Energy Exchange (IRENEX) Ali Naghavi to discuss energy-related issues.
The government and the ministries of oil and energy, as the major entities in charge of energy in the country, have been looking to manage consumption by reforming the tariff system. But what is common in the world, and is also designed in the Iranian energy exchange, is a system based on punishment and reward, Naghavi explained.
One of the main policies of the Iran Energy Exchange, however, is to communicate with market stakeholders; we have had collaborations with ICCIMA and positive cooperation has been also started with the electricity market, the refining industry, and so on, he said.
Mentioning the offering of ESCerts at the market, the official said: “This tool has two types: the certificate of energy-saving; based on which the industries who have saved energy are given bonds equivalent to their saving and they can offer this as ESCerts in the market.”
“The second type of certificate is a financing certificate; If a company or industry wants to implement a new technology to save energy, it will publish this certificate in the market for financing the project for implementing this technology,” he added.
Tehran Times
Kadin calls for local protection under 2022 fishing policy
The Indonesian Chamber of Commerce and Industry (Kadin) has called on the government to protect local fishing companies ahead of a ministerial plan to auction commercial fishing rights covering a total quota of several million tons to both local and foreign investors starting 2022. Joseph Pangalila, Kadin’s deputy chair for marine affairs and fisheries, told […]
Kadin calls for local protection under 2022 fishing policy
The Indonesian Chamber of Commerce and Industry (Kadin) has called on the government to protect local fishing companies ahead of a ministerial plan to auction commercial fishing rights covering a total quota of several million tons to both local and foreign investors starting 2022.
Joseph Pangalila, Kadin’s deputy chair for marine affairs and fisheries, told Kontan.co.id on Wednesday that businesses expected the fishing quota licensing system to attract more investment, especially foreign investment, as the policy made it easier for investors to calculate returns while it also ensured sustainable production.
The government should therefore require foreign companies to work with their Indonesian counterparts “so the policy does not kill off local businesses”, he said.
In November, the Maritime Affairs and Fisheries Ministry announced plans to start offering in 2022 an annual fishing quota of 4.89 million tons, worth an estimated Rp 110.2 trillion (US$7.71 billion) per year.
The policy is the government’s solution to the long-standing problem of illegal, unreported and unregulated (IUU) fishing in Indonesian waters, which it aims to reduce by requiring both foreign and local companies to obtain a license to fish certain areas.
By opening the fishing industry to investments, the ministry aims to boost the share of gross domestic product (GDP) contributions from the “blue economy”, which refers to the sustainable use of a country’s marine resources and environment.
Fisheries minister Sakti Wahyu Trenggono has also pledged to reserve part of the quota allocations for traditional fishermen as well as recreational fishing. “That’s what we will do. We will build thousands of fishing villages over the next three years,” Trenggono said.
The Jakarta Post
Differentiating Oil and Gas Emissions Will Be a Big Deal in 2022
An interview with Deborah Gordon, Senior Principal at Rocky Mountain Institute One of the most important successes of COP26 was the Global Methane Pledge, in which 100 countries agreed to cut 30% of methane gas emissions by 2030 from 2020 levels. Methane is 84 times more potent than carbon and is relatively easy to […]
Differentiating Oil and Gas Emissions Will Be a Big Deal in 2022
An interview with Deborah Gordon, Senior Principal at Rocky Mountain Institute
One of the most important successes of COP26 was the Global Methane Pledge, in which 100 countries agreed to cut 30% of methane gas emissions by 2030 from 2020 levels. Methane is 84 times more potent than carbon and is relatively easy to remove from oil and gas production.
However there is a huge range of carbon emissions from different oil and gas producers, depending on their extraction, handling and transportation. Back in November, Deborah Gordon of the Rocky Mountain Institute told BRINK that methane’s moment had arrived.
Next year, she predicts, will become the year of differentiations when markets start to choose their oil and gas supplies based on the degree of carbon emissions, thereby putting further pressure on the O&G sector to decarbonize rapidly.
In this BRINKPod with BRINK’s executive editor Tom Carver, Deborah Gordon explains how the market is hungry for this kind of information, how the sector is likely to be shaken up over the next 12 months, and what is likely to happen at next year’s COP summit in November in Egypt.
Oil and gas companies are starting to take seriously the need to differentiate their assets and understand where the emissions are coming from.
Photo: Anrune Smenes-reite/Pexels
A Lightbulb Going Off
GORDON: The oil and gas companies are really taking to heart differentiating their assets and [understanding] where the emissions are coming from. So we’re seeing things that are starting to make me realize the companies are finally starting to see this as a way forward. For example, Shell is an interesting example. They probably have been thinking about this for quite some time, but they’re selling off a lot of their worst and dirtiest assets.
From a company’s point of view, that realization that your assets are pretty variable and some of them have much more risk associated with them than others, to me, it’s a light bulb going on.
Exxon is signed on to differentiate assets in New Mexico; BP just signed on to differentiate assets that are in Louisiana. … They’re starting to pilot differentiating their assets and grade their gas: How low-emitting, how low in methane is their gas? So to me, those are all real positives because it has the industry actually taking note and doing something about it.
https://youtu.be/mU0cZAGTB6g
Markets don’t work if you don’t differentiate assets. I mean, if everything’s the same, there’s no choice. I was just talking to a colleague who’s working on just the liquified natural gas portion of the supply chain. And it was a factor of 20 times between worst case and best case just in the handling of the gas from a liquefaction and gasification and transshipping point of view. And that’s not even considering upstream.
Consumer Behavior
We’re working on a project at RMI to digitize all these attributes. So you can actually track them through the supply chain. Someday, you could be a consumer at a gas pump and add up the average, almost like the grades over a semester in college. Your average emission of your gas, at that pump, at that time, is a B plus.
Right now, when there are three gas stations on a corner, you may choose a gas station just because the company’s actually selling your favorite candy. Which is not differentiated on climate at all.
Related themes: CLIMATE CHANGE INFRASTRUCTURE
Deborah Gordon
Senior Principal at Rocky Mountain Institute@dxgordon
Deborah Gordon is a senior principal in the Climate Intelligence Program at Rocky Mountain Institute where she is leading RMI’s Oil and Gas Solutions Initiative. Gordon also serves as a senior fellow at the Watson Institute of International and Public Affairs at Brown University. Her new book, “No Standard Oil: Managing Abundant Petroleum in a Warming World,” will be published by Oxford University Press this fall.
This Is Methane’s Moment: Battling Methane to Win the Climate War
Managing Methane Needs to Become a Top Priority
Not All Oil Is Equal. As Economies Recover, Which Oils Should Stay in the Ground?
The article can be read at Brink HERE.
Jewelry can be a major export-oriented sector: FBCCI president
The jewelry sector in Bangladesh holds the potential to be one of the major export-oriented sectors after readymade garments, said the President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Jashim Uddin. He also called upon the government to provide policy support to the sector and focus on building the capacity of […]
Jewelry can be a major export-oriented sector: FBCCI president
The jewelry sector in Bangladesh holds the potential to be one of the major export-oriented sectors after readymade garments, said the President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Jashim Uddin.
He also called upon the government to provide policy support to the sector and focus on building the capacity of those involved so that the sector can truly flourish.
The FBCCI president was speaking at the assumption of responsibility ceremony of the 2021 – 23 committee of the Bangladesh Jewelers Association (Bajus) at a city hotel on December 15.
“To make the jewelry sector more export-oriented, the focus must be given to technological development as well,” Jashim Uddin added.
He also requested the government to eliminate the existing inequality in corporate tax. He said a fixed rate of corporate tax should be established.
“In India, VAT on jewellery is 3% but in Bangladesh, it is 5% and it is causing Bangladesh to fall behind in the competition,” he added.
At the event, Managing Director of Bashundhara Gold Refinery Sayem Sobhan Anvir, chairman of the new committee of Bajus, took over the responsibility from Enamul Haque Khan, chairman of the old committee.
The new committee of Bajus consists of 35 members, including seven vice presidents. Earlier on 29 November, the result of the election of Bajus’s new committee was announced.
The Business Standard
Business set to benefit from Australia-UK free trade agreement
Businesses in Australia and the United Kingdom have been brought closer with the signing of a bilateral free trade agreement between the two countries. “Business has played an important role in the development of the Australia-United Kingdom trade deal and welcomes the opportunities this partnership provides,” ACCI chief executive Andrew McKellar said. “The longstanding relationship […]
Business set to benefit from Australia-UK free trade agreement
Businesses in Australia and the United Kingdom have been brought closer with the signing of a bilateral free trade agreement between the two countries.
“Business has played an important role in the development of the Australia-United Kingdom trade deal and welcomes the opportunities this partnership provides,” ACCI chief executive Andrew McKellar said.
“The longstanding relationship between Australia and the United Kingdom is taken to new heights by this agreement that will greatly strengthen the ties with a key economic ally. Australian businesses are set to reap the advantages of increased access to the UK market, and it’s 65 million consumers.”
“When the agreement comes into effect, exporters are set to benefit from the abolition of 99 per cent of tariffs on Australian goods exported to the United Kingdom. These products are valued at approximately $9.2 billion.”
“The deal also opens access for our service exports, including professional services is also of high value to our service-based economy.”
“After a long period of closed borders, it will be of great benefit for our tourism industry to welcome more British working holiday makers.”
“As Australia and the world begins to reopen, establishing open and free trade partnerships will play a pivotal role in driving our economic recovery. It is vital that this agreement is ratified as soon as possible so that Australian businesses can begin to enjoy increased market access.”
ACCI Media Release
New Director of New Zealand Trade Office in Taiwan
The Wellington Employers’ Chamber of Commerce has announced Mark Pearson as the new director of the New Zealand Commerce and Industry Office (NZCIO) in Taipei. NZCIO is a subsidiary of the Wellington Chamber and promotes New Zealand’s trade, economic and cultural interests in Taiwan. Mr. Pearson is currently lead adviser for business partnerships at APEC […]
New Director of New Zealand Trade Office in Taiwan
The Wellington Employers’ Chamber of Commerce has announced Mark Pearson as the new director of the New Zealand Commerce and Industry Office (NZCIO) in Taipei. NZCIO is a subsidiary of the Wellington Chamber and promotes New Zealand’s trade, economic and cultural interests in Taiwan.
Mr. Pearson is currently lead adviser for business partnerships at APEC New Zealand and has a long career in trade, international security and diplomacy at the Ministry of Foreign Affairs and Trade. He has previously held roles at the New Zealand embassies in Tokyo and Seoul as well as head office positions involving North Asia, ASEAN and disarmament.
Chamber chief executive Simon Arcus says New Zealand and Taiwan are both island economies driven by exports. “We share similar philosophies on international trade and trade liberalisation. ANZTEC (Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu) is the backbone of our trading relationship and will eventually lead to the removal of tariffs on all of New Zealand’s exports to Taiwan,” Mr. Arcus says.
Wellington Chamber of Commerce
Good Business Foundation Announces Partnership with ygap
The Good Business Foundation (GBF) has recently announced its partnership with ygap aimed at supporting inclusive business and entrepreneurship that results in reducing global inequality. Under the partnership, the GBF and ygap will work together over the next three years to build inclusive entrepreneurship into traditionally mainstream business systems and networks, thereby allowing people previously […]
Good Business Foundation Announces Partnership with ygap
The Good Business Foundation (GBF) has recently announced its partnership with ygap aimed at supporting inclusive business and entrepreneurship that results in reducing global inequality.
Under the partnership, the GBF and ygap will work together over the next three years to build inclusive entrepreneurship into traditionally mainstream business systems and networks, thereby allowing people previously marginalised and left out of the process to sit behind the driver’s seat of their own future.
“Most practically this partnership will work in fostering entrepreneurship within new migrant and refugee communities here in Australia and work in places like Fiji and Kenya to back local entrepreneurs. It will support women led entrepreneurs and leverage ygap’s expertise in gender lens investing,” GBF Founder Mr. Peter McMullin and GBF Executive Director Mr. Stuart Thomson said in a joint statement announcing the partnership.
Established in 2019, GBF is a for-purpose organisation leveraging expertise, relationships and resources to further social and environmental good. The team behind GBF believe that investing in an equitable future is essential for both business and communities to thrive.
GBF Founder Mr. McMullin, who is also CACCI Vice President, believes that the private sector has an important role to play in the resolution of many of today’s pressing social issues. He has made a significant contribution throughout his career forging positive, constructive partnerships between the private sector and governments, the not-for-profit sector and educational institutions. In furthering these objectives, he has established GBF to look at engaging business in social good.
ygap is an international organisation that aims to create positive change by making entrepreneurship more inclusive.by increasing their capacity to run successful businesses and by reducing the barriers that inhibit access and inclusion within the entrepreneurial ecosystem Since 2008, it has run 57 programs that have supported 589 ventures working to make a social or environmental change in their communities. It has offices led by local teams in Africa, South Asia, the Pacific Islands and Australia.
CACCI Women Entrepreneurs Newsletter available now
Taipei – CACCI is pleased to inform members and friends that the 24th Volume of Grow, the publication of CACCI Women Entrepreneurs Council is available HERE. We hope that this publication will serve as an effective platform for an exchange of information among women entrepreneurs in the CACCI region. Members are, therefore, encouraged to contribute articles for our […]
CACCI Women Entrepreneurs Newsletter available now
Taipei – CACCI is pleased to inform members and friends that the 24th Volume of Grow, the publication of CACCI Women Entrepreneurs Council is available HERE.
We hope that this publication will serve as an effective platform for an exchange of information among women entrepreneurs in the CACCI region. Members are, therefore, encouraged to contribute articles for our future issues. Kindly forward your materials (preferably with accompanying photos) to wendy.yang@cacci.biz
ACCI Elects New President
The Australian Chamber of Commerce and Industry (ACCI) elected Ms. Nola Watson as its new President during its Annual General Meeting held in Canberra on December 1, 2021, making her the first female to assume the position. She replaces Mr. Ray Sputore, who was ACCI President for the past two years. Ms. Watson has served […]
ACCI Elects New President
The Australian Chamber of Commerce and Industry (ACCI) elected Ms. Nola Watson as its new President during its Annual General Meeting held in Canberra on December 1, 2021, making her the first female to assume the position. She replaces Mr. Ray Sputore, who was ACCI President for the past two years.
Ms. Watson has served as the Deputy President of ACCI, President of Business NSW, and Chairman of International Chamber of Commerce Australia. Aside from her involvement in the chamber movement, Ms. Watson was executive General Manager of Insurance Australia Group, and spent many years in senior executive positions within New South Wales and Commonwealth governments.
“Over the past two years as Deputy President of ACCI, I have seen Australian business rise to meet the unprecedented challenges posed by the Coronavirus pandemic, I am honoured to continue to represent them as President,” Ms. Watson said.
“Alongside Chief Executive Andrew McKellar and the Board, I look forward to building ACCI’s advocacy efforts, maximizing our economic potential to ensure our future prosperity.
“With great uncertainty and major challenges in the national agenda, it is critical that business has the strongest leader and advocate to represent its interest. ACCI is that voice, representing businesses large and small, across the economy, from all corners of Australia. ACCI and its affiliates share one ambition, to make Australia the best place in the world to do business.”
Whittaker’s win top prize at Wellington Export Awards
A household name has shown its quality to the world, as Whittaker’s were crowned Exporter of the year at the 2021 ExportNZ ASB Wellington Export Awards, in front of a socially distanced and fully vaccinated audience at Te Papa. “Whittaker’s success, despite a turbulent global environment, and domestic restrictions, shows the best of Wellington’s export […]
Whittaker’s win top prize at Wellington Export Awards
A household name has shown its quality to the world, as Whittaker’s were crowned Exporter of the year at the 2021 ExportNZ ASB Wellington Export Awards, in front of a socially distanced and fully vaccinated audience at Te Papa.
“Whittaker’s success, despite a turbulent global environment, and domestic restrictions, shows the best of Wellington’s export community,” said Simon Arcus, Chief Executive of the Wellington Chamber of Commerce, which delivers ExportNZ in Wellington.
“After the past year, it’s more important than ever to acknowledge the contribution exporters make to keeping Wellington’s economy running. They have persevered through lockdowns, closed borders and supply chain shocks,” Mr. Arcus added.
“Every one of this year’s finalists deserves recognition for their hard work, and Whittaker’s success in international markets shows just how successful Wellington can be.”
ASB’s Executive General Manager for Corporate Banking Nigel Annett said he was impressed by the calibre of this year’s regional finalists. “At ASB, we’re extremely impressed by all of the 2021 ExportNZ ASB Export Awards winners and finalists. Every business involved this year demonstrated their relentless pursuit of an identified market niche, supported by highly developed product innovation. We’re proud to support the range of diverse companies involved in this year’s awards, all doing a remarkable job representing New Zealand on the global stage.”
The judges found that Whittaker’s were set apart by their ability to reorient their product and use data to adapt to new markets, all while remaining true to their values.
The judges were Chair of Business Central Vaughan Renner, NZTE Customer Director Ann Clifford, and ASB International Trade Consultant Paul Gestro.
Whittaker’s also claimed the CentrePort Wellington Best Established Business Award. Peanut Butter maker Fix & Fogg won the Southeast-Asia CAPE Best Emerging Business Award, as the judges were impressed by their rapid expansion into new markets.
Tube perforator manufacturer Sanpro Industries won the WellingtonNZ Excellence in Innovation Award, as the judges recognised the committed customer support and continuous innovation that has allowed the Petone based company to lead its industry worldwide.
Method Recycling claimed the Toitū Envirocare Excellence in Sustainability Award, recognising both their own commitment to sustainability, and the potential of their product to help others on their journey.
Hutt Valley staple Woolyarns claimed the Wellington School of Business and Government Judge’s Choice Award – recognising their exceptional resilience to in navigating a challenging pandemic.
Wellington Chamber of Commerce
PCCI: Senate OK of PSA amendments a Christmas gift
Senate approval of amendments to the Public Service Act (PSA) to allow 100-percent foreign ownership of a wide range of local business enterprises was described as “sort of a Christmas gift” by the Philippine Chamber of Commerce and Industry (PCCI). The Philippine Senate had approved on the third and final reading Senate Bill 2094, which […]
PCCI: Senate OK of PSA amendments a Christmas gift
Senate approval of amendments to the Public Service Act (PSA) to allow 100-percent foreign ownership of a wide range of local business enterprises was described as “sort of a Christmas gift” by the Philippine Chamber of Commerce and Industry (PCCI).
The Philippine Senate had approved on the third and final reading Senate Bill 2094, which amends the PSA to allow full foreign ownership of ventures in telecommunications, air carriers, domestic shipping, railways and subways, canals and irrigations.
The Senate bill will still have to be consolidated with the version approved by the House of Representatives before a final proposed measure is brought before the President for signing.
Under SB 2094, the 40-percent limit on foreign ownership will remain for those considered as public utilities such as distribution or transmission of electricity, petroleum and petroleum products pipeline transmission or distribution systems, water pipeline distribution systems and wastewater pipeline systems, airports, seaports, public utility vehicles, expressways and tollways.
Overall, PCCI President Emeritus George Barcelon said that PCCI believes this measure – along with other reforms such as the Corporate Recovery and Tax Incentives for Enterprises Act, proposed amendments to the Retail Trade Liberalization Act, and amendments to Foreign Investments Act – would help open the country to more investments which are needed, given the impact of the pandemic on the economy.
The Philippine Star
The RCEP will boost Central Bank Digital Currencies (CBDCs) in Asia
By Dr. Oriol Caudevilla, FinTech Advisor, Co-Leader of the CBDC and Blockchain Working Groups at the Global Impact FinTech Forum (GIFT) Central bank digital currencies (CBDCs) have been referred to as “the future of payments”, or even “the future of money”, and not without reason. A CBDC is a new form of central bank money […]
The RCEP will boost Central Bank Digital Currencies (CBDCs) in Asia
By Dr. Oriol Caudevilla, FinTech Advisor, Co-Leader of the CBDC and Blockchain Working Groups at the Global Impact FinTech Forum (GIFT)
Central bank digital currencies (CBDCs) have been referred to as “the future of payments”, or even “the future of money”, and not without reason.
A CBDC is a new form of central bank money accessible to the public, accepted as a means of payment, legal tender, safe store of value by all citizens, businesses, and government agencies. Undoubtedly, the pandemic has turbocharged a global financial technology revolution.
CBDCs can serve many different purposes and can be designed accordingly: they can replace physical notes; they can be used to improve financial stability as a monetary policy tool, to promote financial inclusion, to fight against financial crime, improve payment efficiency and reduce intermediary risks, etc.
However, CBDCs are not cryptocurrencies, even though there is of course some relation between both categories.
The rationale behind CBDCs and cryptos is actually the opposite: whilst CBDCs are Central Bank Money adopting a digital form (therefore, legal tender issued by a central bank, representing a claim against that central bank) and thus centralized, cryptocurrencies are a key pillar of the movement known as DeFi (Decentralized Finance).
FNCCI preparing business code of conduct to end unfair practices
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) is preparing a comprehensive business code of conduct as growing unfair and irresponsible practices have been hurting the corporate and business environment, the country’s apex private sector body said. The FNCCI has started collecting views from stakeholders as an input for the protocol for its […]
FNCCI preparing business code of conduct to end unfair practices
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) is preparing a comprehensive business code of conduct as growing unfair and irresponsible practices have been hurting the corporate and business environment, the country’s apex private sector body said.
The FNCCI has started collecting views from stakeholders as an input for the protocol for its members.
The move comes ahead of two crucial elections slated for next year when donation drives and extortion by political parties are expected to accelerate as they raise money to fund their campaigns.
Industry insiders say the code of conduct is indirectly meant to control donation drives by the political parties.
Consumers are already bearing the brunt of rising prices which shows election preparations have started, consumer rights activists say.
The general convention season is on with major political parties holding mass gatherings of their members which has led to price increases in the market.
These jamborees are held with funding by industrial entrepreneurs and traders, and they have passed on their expenses to the Nepali consumer, Madhav Timalsina, president of the Consumer Rights Investigation Forum, told the Post.
A study carried out by the Election Observation Committee, Nepal showed that the government, political parties and candidates spent an estimated Rs131.63 billion in total during the 2017 elections. “And the costs of campaigning are taken out of the consumer’s pocket by hiking the prices of goods and services,” Timalsina said.
At the same time, traders are having a free hand in setting market prices because the Ministry of Industry, Commerce and Supply has been headless for more than five months now,” Timalsina added.
In 2013, the FNCCI for the first time released codes of conduct dealing with six areas—consumer rights, competitive market, taxation, labour management, environment protection and corruption control.
FNCCI President Shekhar Golchha said the time had come to revise the code of conduct as the private sector aspires to achieve economic prosperity.
The private sector has introduced a vision paper for economic prosperity that also includes a key feature for a reputable private sector.
The FNCCI is revising the code of conduct under the leadership of Padma Jyoti, a past president of the organisation. Work on drafting the code of conduct has already started, and a Business Code of Conduct Forum has been formed, the federation said.
The Kathmandu Post
Fiber Broadband: Here’s How Governments Could Support Balanced Coverage
Worldwide, there has been an exponential growth in government and end-user appetites for high-speed fiber broadband; the number of OECD countries reaching 70% fiber has doubled from 2018 to 2020 alone. Key reasons for this shift include the fact that fiber networks send data about 20 times faster than legacy copper counterparts and require far […]
Fiber Broadband: Here’s How Governments Could Support Balanced Coverage
Worldwide, there has been an exponential growth in government and end-user appetites for high-speed fiber broadband; the number of OECD countries reaching 70% fiber has doubled from 2018 to 2020 alone. Key reasons for this shift include the fact that fiber networks send data about 20 times faster than legacy copper counterparts and require far less maintenance and energy input.
A worker drives a specialized vehicle that is laying tubing used for running fiber optic cable underground during the installation of broadband infrastructure near Haldensleben, Germany. Historical choices about communications infrastructure can impact future fiber coverage growth.
Photo: Photo by Sean Gallup/Getty Images
Fiber connections have also been linked to numerous desirable government outcomes — increased corporate innovation, increased labor productivity, increased data security, higher property values, reduced unemployment and increased access to education and health care. A study of fiber rollout in France found that fiber provisions boosted the creation of new businesses in the transport, services and commerce sectors by about 10% and reduced unemployment by about 5-8%.
Challenges
While plans for future investment in fiber rollouts globally are significant, the current reality is that coverage varies significantly across countries. A country’s natural environment, particularly its size and topography, will impact the speed and overall cost of extending fiber coverage to all towns and businesses.
Where a government leaves the progress of a rollout to market forces alone, this can lead to an imbalance of coverage where urban areas are prioritized based on operator profits.
Historical choices about communications infrastructure can also impact future fiber coverage growth. Where legacy infrastructure is a mix of copper wiring, cables and other technologies, prior investment in these technologies can slow the willingness of operators to migrate to an expensive fiber-only business model. Re-skilling telco workers for fiber rollout has also been a significant challenge for operators. In 2021, a group of bipartisan leaders both within and outside of the telecommunications industry in the U.S. penned a letter to President Joe Biden, urging that the government spend more money on apprenticeship programs to support the federal rollout of broadband projects. Other providers have opted for private training options instead; for example, Etisalat in the United Arab Emirates (UAE), has trained over 2,000 technical laborers via their Etisalat Academy, which has become the largest telco training center in the MENA region.
Potential Ways Forward
There are a number of ways that governments can help guide or stimulate fiber rollouts, potentially generating significant interest from industry participants and private capital if the right environment is created.
Many nations that have progressed at speed with a fiber rollout have done so in parallel with supportive government policies that strike the right balance between supporting incumbent operators and new entrants to ensure competition, innovation and coverage of more rural areas. South Korea, for example, vaunts one of the highest fiber penetration rates in the world, at 83.9% as of 2020. Much of its success has been attributed to the 2012 Giga Korea Project, which received a total of 550 billion won ($470 million) investment at a 3:1 ratio of government to private sector contribution. Additionally, a fair regulatory environment has encouraged the entry of new players, keeping fiber infrastructure costs low and consumer choice wide, enabling the rapid rollout of 5G across the country.
The U.K.’s Project Gigabit, a 5 billion pound ($6.6 billion) government infrastructure plan to enable and deliver fast and reliable digital connectivity across underserved areas in the U.K., has also been highly impactful. Run by Building Digital U.K., the project has boasted one of the fastest fiber rollouts across Europe: 60% of U.K. households are to have access to gigabit speeds by the end of 2021, contrasted against the 10% coverage in 2019. In addition, households and businesses still awaiting coverage from the project are eligible for the U.K.’s 210 million pound ($278 million) Gigabit Broadband Voucher Scheme, which subsidizes the costs of fiber installation.
Along with financial support, ensuring that national targets are clear and aligned with private sector goals is key to a successful rollout. The U.S. Congress recently passed a $1.2 trillion bipartisan infrastructure bill, of which $80 billion has been designated for the deployment of symmetrical 100Mbps broadband in underserved areas. Some price cap operators have criticized the 100Mbps policy requirement citing its impracticability: Operators would face massive costs in overhauling legacy copper systems and believe that symmetrical 100Mbps speeds are both unnecessary for most homes and small businesses while also resulting in higher costs for consumers.
In addition to understanding and being aligned with ambitions that are set by a national government for fiber roll-outs, potential investors will also be keen to understand the current regulatory environment and intended future direction of travel. Where a regulatory body is known to be willing to engage with the private sector and outline longer-term ambitions, this can help provide the confidence that is needed to attract new investors into this sector.
Conclusion
The positive externalities incurred by broad-based fiber rollouts are numerous, extending beyond market competitiveness to alleviating socioeconomic disparities. However, where rollout progress is left to market forces alone it is clear that network coverage can be uneven and diverge from national targets. The public sector therefore plays a pivotal role in partnering with private operators to capitalize on these externalities, while distributing fiber services in an efficient and equitable manner for end users.
Related themes: CYBERSECURITY INFRASTRUCTURE
Blair Chalmers
Director of Marsh McLennan Advantage
Blair Chalmers is a director in Marsh McLennan Advantage and leads the unit’s agenda for the infrastructure and construction sectors. Prior to this role, he worked for Oliver Wyman, the management consultancy, with a focus on clients in asset intensive industries.
Here’s How Emerging Technologies Will Impact the Future of Infrastructure
Building Climate-Resilient Infrastructure in the Post-Pandemic World
Latin America Has Taken Steps to Curb Corruption and Boost Sustainability. Will Investors Bite?
Rachel Juay
Research Analyst at Marsh McLennan Advantage
Rachel is a Singapore-based research analyst at Marsh McLennan Advantage. She holds a Masters in Public Policy and is interested in the intersection between government policies, business, and social change.
The original article can be read at Brink HERE.
7 Risks to Asia’s Economic Resilience in 2022
Across Asia, vaccination rates are rising, e-commerce is soaring, trade has rebounded and supply chain problems are starting to ease, delivering hope for the new year. Moody’s Analytics predicts that, by the end of 2022, all major Asian economies will have achieved a full recovery as measured by real GDP that exceeds its level of the fourth quarter […]
7 Risks to Asia’s Economic Resilience in 2022
Across Asia, vaccination rates are rising, e-commerce is soaring, trade has rebounded and supply chain problems are starting to ease, delivering hope for the new year. Moody’s Analytics predicts that, by the end of 2022, all major Asian economies will have achieved a full recovery as measured by real GDP that exceeds its level of the fourth quarter of 2019.
Yet optimism is tempered by several risks to sustained economic recovery and regional stability. Here are seven to watch for in the months ahead.
COVID-19 Halts the Global Recovery
The slow roll out of vaccines in several countries, waning vaccine effectiveness and the emergence of the Omicron variant (and potentially others), constitute the biggest threat to the region’s sustained recovery in 2022. The situation could worsen if new variants prove resistant to existing vaccines and spread quickly across borders, straining health care systems.
Because of its reliance on manufacturing, Asia is particularly exposed if there is continuing disruption to global supply chains. Expect more localized lockdowns and targeted travel bans that could spook investors, unsettle stock markets, inflict more pain on the battered travel and tourism industry and generally raise concerns about a deferred exit from the pandemic.
The IMF warns that higher commodity prices and shipping costs, coupled with continued disruption of global value chains, are amplifying concerns about inflation persistence and export resilience.
People walk by construction workers as they work on a traditional style building in a shopping district in Beijing, China. The Evergrande crisis and volatility at other Chinese real estate companies have stoked concerns about how the government is managing the unsettled property sector, which accounts for the bulk of household wealth.
Photo: Kevin Frayer/Getty Images
China Misjudges Its Response to Domestic Challenges
The Evergrande crisis and volatility at other Chinese real estate companies have stoked concerns about how the government is managing the unsettled property sector, which accounts for the bulk of household wealth. Regulatory crackdowns on different sectors (internet services, education tutoring) have caused investors to wonder what industry will be targeted next and what measures Beijing intends to apply in its drive to reduce wealth disparities and achieve “common prosperity.”
China’s zero-tolerance approach to COVID-19 translates into a ban on most foreign travel and regular shutdowns at ports for mass testing. The knock-on effects on supply chains are contributing to persistent product shortages and delays globally and, in turn, contributing to inflation globally.
Local economies within China have been disrupted by lockdowns and curbs on inter-provincial travel. Consumer confidence remains below pre-pandemic levels, construction has slowed and power cuts have forced businesses to reduce their operations.
The IMF reports that the rapid withdrawal of policy support and the lagging recovery of consumption are also slowing economic recovery. In short, China is juggling multiple domestic challenges, and if it does not perfectly calibrate its responses, growth could be further constrained, negatively impacting other Asian economies.
Asia Is Particularly Exposed to Cybercrime
Asia is particularly exposed to cybercrime because of its large populations, relatively low awareness of cyber threats, absence of disclosure regulation and outdated and unlicensed technology.
While the region accounts for 60% of the countries that are very highly exposed to cyberattacks, it is also the top originator of cyberattacks, including state-backed actions supported by China, Iran and North Korea.
Phishing, pharming, extortion, non-payment/non-delivery, personal data breaches, identity threats and spying will continue to challenge the defenses of individuals and organizations in the public and private sectors. Bots will be responsible for the vast majority of incidents. Continuous cyberattacks threaten to impose great costs and generate disruption.
Inflation Is On the Rise in Asia
Inflation has been on the rise across Asia, driven by shifting global demand, rising food and fuel prices, and supply chain disruptions. The Asian Development Bank forecasts higher inflation in developing Asia in 2022.
The IMF warns that higher commodity prices and shipping costs, coupled with continued disruption of global value chains, are amplifying concerns about inflation persistence and export resilience. Lasting delays in mining operations, shipment backlogs, semiconductor shortages, surging freight costs and snap quarantine restrictions in key manufacturing and shipping areas are magnifying inflation risk. They may also cause structural changes to production and delivery and storage capacity across sectors.
Higher rates in the U.S. could increase debt burdens, stimulate capital outflows and cause a tightening of financial conditions in Asian developing economies. It could also cause downward adjustments in stock markets globally. If Omicron and other variants boost infections globally and continue to spur new government restrictions this risk will decline as economies slow.
Divisions Deepen Between the United States and China
Strategic competition between the U.S. and China has increased and threatens to drive global fragmentation. The U.S. and its allies continue to promote defense, security and infrastructure development initiatives in the “Indo-Pacific” region with the aim of countering China’s ambitions. Building on the groundwork laid by his predecessor, President Joe Biden is urging allies to apply restrictions on China in the areas of finance, investment, technology and trade.
This effort is putting pressure on third countries to choose sides. Decoupling is underway in areas of advanced technologies. President Xi Jinping’s consolidation of power — and pride in accomplishments like containing COVID-19 and hosting the Winter Olympics — will bolster China’s confidence in the face of the prevailing anti-China sentiment in the American capital and growing concerns about Beijing’s actions among its neighbors and many democratic states globally. The geopolitical rivalry could depress investment and productivity growth.
Social Tensions from COVID and Climate
COVID-19 has generated immense human suffering in developing Asia, particularly among groups that were already challenged with poverty, vulnerability and marginalization. During the pandemic, many governments tightened control over their populations and used the crisis as cover for restricting civil liberties and suppressing dissent.
Having boosted public spending to ameliorate the immediate impacts of the crisis, state budgets will come under pressure, which may lead curtailing social programs. Environmental threats and climate change are adding to instability.
Asia remains the world region most at risk to the negative impacts of climate change. In some countries, populations already chafing against unrepresentative government, political repression, corruption and inequality may be agitated enough — by lost opportunities during the pandemic and further delays in recovery — to turn to protest. Countries where unrest may turn violent include Bangladesh, Myanmar, Pakistan and Thailand.
Potential Security Flash Points
The U.S. withdrawal from Afghanistan renews the threat of a safe haven for terrorist groups. Violent extremist media branches of al-Qaida and its affiliates, as well as the Islamic State of Iraq and as-Sham (ISIS), have celebrated the Taliban’s perceived victory over the U.S and encouraged the use of violence by their followers and supporters.
China and Central Asian states are casting a wary eye over developments. COVID-19 and natural disasters have hit North Korea particularly hard and could spur more provocations like missile tests as it seeks attention and aid.
China has ramped up the pressure on Taiwan from several angles, including military flights into Taiwan’s air defense identification zone. Meanwhile, the U.S. has scaled up its support to the self-governing island. Although an attempt by Beijing to take Taiwan by force in 2022 is highly unlikely, a miscalculation by involved parties could cause an incident that would have major global ramifications for international relations and the global economy.
Conclusion
Renewed pandemic waves, possibly driven by the emergence of more infectious and vaccine-resistant variants, the waning effectiveness of vaccines already administered and slower-than-expected vaccine rollouts could derail Asia’s recovery.
However, if China and the U.S. ratchet down their bilateral tensions and find ways to work together on major global challenges, investor sentiment will improve, along with business and consumer confidence.
Bart Édes
Distinguished Fellow at Asia Pacific Foundation of Canada
The original article can be read at Brink HERE.
PCCI organized “47th Philippine Business Conference and Exposition” on November 17-18
The Philippine Chamber of Commerce and Industry (PCCI) held the “47th Philippine Business Conference and Exposition (PBC&E)” on 17-18 November 2021 via Zoom. As a dialogue, a showcase, and a learning platform, the 47th PBC&E, which carried the theme of “Innovation.ph: Economic Recovery for All,” was the biggest annual gatherings of local business and government […]
PCCI organized “47th Philippine Business Conference and Exposition” on November 17-18
The Philippine Chamber of Commerce and Industry (PCCI) held the “47th Philippine Business Conference and Exposition (PBC&E)” on 17-18 November 2021 via Zoom.
As a dialogue, a showcase, and a learning platform, the 47th PBC&E, which carried the theme of “Innovation.ph: Economic Recovery for All,” was the biggest annual gatherings of local business and government leaders organized by PCCI. The two-day event was expected to bring policy reforms, fresh actions, and a new mindset on how the Philippines rise from the ravages wrought by the Covid-19 pandemic.
In addition, PCCI hosted in their virtual conference site International Meeting Rooms for business-to-business matching with featured countries, Networking Rooms for government partners such as the Department of Trade and Industry (DTI) and Department of Science and Technology (DOST), and for lending institutions specializing in MSME financing.
“The 29th Joint Economic Cooperation Meeting between CIECA and FTI” was Convened at Taipei
The Chinese International Economic Cooperation Association (CIECA), Taiwan and the Federation of Thai Industries (FTI) jointly convened the “29th Joint Economic Cooperation Meeting between CIECA and FTI” on Nov. 29, 2021 at the Hua Nan Bank International Convention Center, Taipei. Dr. Pan, Wen-Whe, Chairman, Thailand Committee, CIECA, Taiwan and Mr. Supant Mongkolsuthree, Chairman, FTI, jointly […]
“The 29th Joint Economic Cooperation Meeting between CIECA and FTI” was Convened at Taipei
The Chinese International Economic Cooperation Association (CIECA), Taiwan and the Federation of Thai Industries (FTI) jointly convened the “29th Joint Economic Cooperation Meeting between CIECA and FTI” on Nov. 29, 2021 at the Hua Nan Bank International Convention Center, Taipei. Dr. Pan, Wen-Whe, Chairman, Thailand Committee, CIECA, Taiwan and Mr. Supant Mongkolsuthree, Chairman, FTI, jointly presided over the video conference. A total of 115 Taiwanese and Thai participants attended the meeting.
The theme of this year’s meeting correlated to the New Southbound Policy being promoted by the government and continued to explore new opportunities for business cooperation. The topics included: “Circular Economy”, “Biotechnology” and “Green Energy”.
The expert speakers were:
“Circular Economy”: Dr. Lin, Chun-Hsu, Deputy Director, Center for Green Economy, Chung-Hua Institution for Economic Research and Mr. Phromphron Isarankura Na Ayutthaya, Quality Management Division Manager, PTT Global Chemical PCL
“Biotechnology”: Mr. Peter Chen, Manager, Business Development, Orient EuroPharma Co., Ltd. and Dr. Panit Kitsubun, COO, KinGen Biotech Co., Ltd.
“Green Energy”: Mr. Ben Pan, Vice President, United Renewable Energy Co., Ltd. and Dr. Phatiphat Thounthong, Professor, Department of Electrical Engineering, King Mongkut’s University of Technology North Bangkok
The meeting participants included Mr. Chokechai Puapattanakajorn, President, Bangkok Bank Public Co., Ltd.; Ms. Sophia Chiu, Chairman, TECO Electric and Machinery Co., Ltd.; Dr. Chen, Jen-Pin, President, Agricultural Technology Research Institute and other industry professionals and academics attended the meeting. Mr. Narit Therdsteerasukdi, Deputy Secretary General, Thailand Board of Investment (BOI) and Mr. Y. C. Tsai, Director General, Dept. of International Cooperation and Economic Affairs, Ministry of Foreign Affairs, R.O.C. (Taiwan) addressed the meeting during the opening ceremony. Mr. Kriengkrai Thiennukul, Vice Chairman, FTI delivered closing remarks in which he thanked all participants and the conference speakers to their efforts in introducing business opportunities.
Thailand’s petrochemical sector is the largest in Southeast Asia, and its plastics industry contributed 6.71% of GDP. To solve the problem of plastic waste, the Thai government has introduced its Roadmap on Plastic Waste Management and set the goal of recycling targeted plastic wastes by 100% by the year 2027 to serve the circular economy concept.
Since the outbreak of the COVID-19 pandemic, besides vaccine development, countries have been seeking a way to resolve the pandemic. The Thai government has also joined the relevant research market. It develops the biotechnology and biomedicine industry through its Bio-Circular-Green (BCG) economic model. In Thailand, biotech and biomedicine have expanded by around 10 percent annually in recent years, showing particularly robust growth in medical devices, natural extracts for cosmeceuticals, food supplements that is expected to continue in the future.
One-third of Thailand’s energy capacity comes from renewable sources. To lower greenhouse gas emissions to 20.8% in 2030, the Thai government encouraged green energy producers with tax breaks and easier access to financing options. Experts forecast Thailand will raise its renewable energy capacity from 15 GW to 60 GW by 2037.
CIECA has regularly held the Joint Economic Cooperation Meeting with FTI which has been an important platform for communications and exchanges between the business communities of the two nations.
Are Apps Becoming Gateways for Cybercrime?
How we travel and where we can go now depends on a smartphone. Freedom of movement is app-based. This is a major change in the mechanics of doing business and our everyday lives that was drastically accelerated by COVID-19 and the need for touch-free access. Apps can make access quicker and easier to manage for […]
Are Apps Becoming Gateways for Cybercrime?
How we travel and where we can go now depends on a smartphone. Freedom of movement is app-based.
This is a major change in the mechanics of doing business and our everyday lives that was drastically accelerated by COVID-19 and the need for touch-free access. Apps can make access quicker and easier to manage for events, venues, buildings and transport of any kind. And they can make business operations cheaper.
But relying on apps also opens up a much wider front across society in the battle with cybercriminals. The fundamental issue is that the more widely used an app is, the bigger and more attractive the target.
Photo: Getty Images
Companies should be making full use of the advantages of apps for security
Reportedly, hackers “defeated” Microsoft’s recent attempts to make a new hardware component compulsory to Windows 11 within the space of 30 minutes. The U.K.’s National Health Service Test and Trace app was immediately ripped apart to explore the data waiting there. It can be done for the fun of it, to purposely cause damage to organizations, or as the basis of extorting money or for committing fraud. An app-based life encourages a mix of criminal activity with a kind of gaming, offering an ongoing series of challenges to test skills.
The Risk of Loss of Trust
The danger in this is the potential for customer-facing systems to become plagued by chaos and suspicion. A snowballing of minor issues with entry and disrupted plans could create a lack of public trust in digital proof of COVID-19 evidence, for example, leading to an ongoing sense of insecurity when traveling or in other public places.
In practice, the use of app-based access is so fundamental to commercial activities that cybersecurity is being ramped up and will stay top of priority lists. When there are problems, there will be “patches.”
But that doesn’t mean there are solutions on the horizon. For the foreseeable future, the reputation of digital access is going to be involved in a constant battle, with another crisis for major brands always just around the corner.
The World Needs IT Talent — Lots of It
In the U.S. alone, figures suggest a shortage of more than 464,000 cybersecurity specialists. We might have skilled staff, but do we have skilled, creative, highly motivated people willing to keep up the relentless fight?
The flaw at the heart of app-design is human. App security is only as strong as the human team involved, and experience shows that, over time, people become predictable. They have their favorite ways of putting code together, meaning patterns of code, data structures and file locations that can be more easily anticipated and taken apart. Walls that look solid to organizations can be riddled with entry points.
We need freewheeling creativity to stay ahead. Rather than working in silos, software engineers should be embedded alongside the security experts. Start with the security element.
Layering on Security
There are approaches that businesses can take to make their “access” offerings less vulnerable. Fraud is made harder by as much layering of elements as possible — where each element has to be simulated. So, for an e-ticket, that might involve including both a QR code and an animated logo, for example.
There are other tactics, like removing the ability to take screenshots while an app is open or making sure digital tickets require registration linked to an email account or a personal digital device.
In principle, apps on specific devices can be made safer than web-based purchases, which are just based around an online user account and stored information is “controlled” by the browser. Sometimes the website might note location, or there might be two-factor authentication, but there is still a more limited number of potential factors for securing information. A fixed device can keep information and tie itself to that device.
Apps Offer a Greater Range of Security Than Browsers
Companies should be making full use of the advantages of apps for security. There are additional avenues that can be used to track down how fraud has occurred, for example, by checking app logs and contacting customers to check whether devices have been lost or stolen or by looking at data on whether cybercriminals have managed to generate the ticket in the app, built a separate app, or used a combination.
There is the opportunity to make use of biometrics and additional passwords, again used as layers on top of basic user accounts for the product.
App security can be built up by prompting permission requests from the device (location, phone number, unique serial information and other user data) to validate activity, identify fraudulent activity and catch criminals.
We’re going to be using our smartphones as a kind of passport for free movement, locally and internationally. That means this is an issue for whole societies to think about. We’re all going to have to start thinking about the part we play in the battle, add to the pipeline of cybersecurity talent and what’s needed to keep us all moving.
Related themes: CYBERSECURITY
Sarah Morris
Head of the Digital Investigation Unit at Cranfield University
Sarah Morris is head of the Digital Investigation Unit in the Centre for Electronic Warfare, Information and Cyber at Cranfield University.
The original article can be read in the Brink’s website HERE.
Chamber Leaders Join 12th World Chamber Congress
Over 3,800 chamber leaders, representatives and industry experts representing 110 countries – including those from CACCI member chambers – attended the 12th World Chambers Congress (12WCC) which took place from November 23 to 25 in Dubai. Co-organised by Dubai Chamber, the International Chamber of Commerce and its World Chambers Federation, under the theme Next Generation: […]
Chamber Leaders Join 12th World Chamber Congress
Over 3,800 chamber leaders, representatives and industry experts representing 110 countries – including those from CACCI member chambers – attended the 12th World Chambers Congress (12WCC) which took place from November 23 to 25 in Dubai.
Co-organised by Dubai Chamber, the International Chamber of Commerce and its World Chambers Federation, under the theme Next Generation: Chambers 4.0, the Congress was the first hybrid event of its kind, offering delegates a glimpse into what chambers of the future will look like.
More than 80 speakers took part in 44 interactive sessions over the three days of the Congress. The 12WCC in Dubai highlighted the need for chambers of commerce around the world to realign their services to drive business in a new era that is being defined by digitalisation, governance, and increasing concern for social and environmental issues.
In the closing session, H.E. Hamad Buamim, President and CEO of Dubai Chamber and Chair of the ICC-World Chambers Federation, said Dubai delivered a World Chambers Congress like no other that raised the bar, while challenging chamber leaders to rethink their strategies, innovate and adopt action plans for the future.
“This a proud moment for me to see to this major international event hosted in my home country and the successful outcome of this Congress in Dubai exceeded our expectations. Dubai proved to be an ideal host city to host the first Congress to be held in the Covid-era, and I believe that it did not disappoint and certainly brought in fresh perspectives and new elements that took the event to the next level,” he said.
“12WCC in Dubai offered a glimpse into the future and global opportunities and insights through the Expo 2020 Dubai platform, which complemented the delegate experience. We hope that we have been able to start important conversations about the need for chambers of commerce to change their services to adapt to the needs of our members in a world that has gone through unprecedented changes – changes that are here to stay,” he added.
Addressing delegates virtually, Fabienne Fischer, Minister, Geneva Department of Economy and Labour, Switzerland, praised Dubai Chamber for creating a unique experience for the global chambers community at 12WCC. She spoke about what Geneva will offer when it hosts the next World Chambers Congress in 2023, also highlighting the need for chambers of commerce to focus on sustainable actions moving forward.
“We surely hope that the 13th World Chambers Congress will take place in more, if I dare say, ‘normal’ circumstances. As a member of the green party, I personally believe that the discussions about reshaping free trade and global commerce across all sectors and within all organisations will be strongly influenced by climate action,” she said.
She shared her view that governments cannot be expected to foster innovation on their own and said chamber of commerce have a very important role to play in promoting best practices and sharing lessons learned.
“I am proud to say that the Geneva Chamber of commerce is among the local leading drivers in this effort and strongly promotes business transformation towards more sustainable behaviours and products,” she added.
12WCC opened on November 23, with His Highness Sheikh Ahmed bin Mohammed bin Rashid Al Maktoum, Chairman of Dubai Media Council inaugurating the event that was the first to be held in the region since 2013. His Excellency Omar Sultan Al Olama, Minister of State for Artificial Intelligence, Digital Economy, and Remote Work Applications, and Chairman of the Dubai Chamber of Digital Economy, delivered the opening address on day one, discussing how the global pandemic had presented new opportunities for international chambers of commerce.
Other highlights of 12WCC were the launch of Chamber Model Innovation framework for revamping chamber services and embracing innovation, the latest edition of the Dubai Innovation Index analysing innovation input across 39 cities, and the Digital Fitness Test designed for chambers of commerce to evaluate their digital capabilities.
Dubai Chamber released a whitepaper during the congress, with the report providing valuable insights into the concept of Chambers 4.0 and how technology is reshaping global trade.
Geneva, Switzerland’s second-most populous city and a capital for global diplomacy, will host Congress delegates in June 2023. The proposed theme is Achieving shared prosperity through multilateralism, as the Geneva Chamber of Commerce, Industry and Services firmly demonstrated the power of international trade as a means to achieve peaceful cooperation among nations.
Dubai Chamber
ASEAN’s Business Community Makes Recommendations for Greening ASEAN
In response to the call made during the 26th session of Conference of Parties (COP26) held in Glasgow to involve non-state actors to help deliver climate finance, the CARI ASEAN Research and Advocacy, in consultation with trade associations, chambers of commerce and foreign business associations in the ASEAN region, has prepared a report entitled “Pathway […]
ASEAN’s Business Community Makes Recommendations for Greening ASEAN
In response to the call made during the 26th session of Conference of Parties (COP26) held in Glasgow to involve non-state actors to help deliver climate finance, the CARI ASEAN Research and Advocacy, in consultation with trade associations, chambers of commerce and foreign business associations in the ASEAN region, has prepared a report entitled “Pathway Towards Green Recovery for ASEAN” to better understand and socialise the climate agenda with the private sector operating in ASEAN.
The 29-page report consists of recommendations in green recovery for ASEAN proposed by over 26 chambers of commerce, business councils, industry groups and partners from all ten ASEAN member states, dialogue partner countries and regions including EU, UK, US, Japan, India, Canada and Russia. It is the third instalment of a series of Pathway Reports following the release of A Pathway Towards Recovery and Hope for ASEAN (Pathway 225) in 2020 and Pathway for Malaysia 2021 that captures recommendations, perspectives and priorities from the private sector’s perspective.
This report captures 88 critical feedback and recommendations from two virtual Consultation Dialogues on business perspectives with regards to green initiatives following the COVID-19 pandemic, policy gaps affecting a green recovery, challenges and the required support for a green recovery in ASEAN. Key questions presented during the consultative sessions are as follows:
- Key green areas critical to sustainable recovery for businesses
- Green initiatives or green opportunity areas most relevant to businesses
- Key areas of concern in adopting green initiatives
- Government support that can encourage or further drive green initiatives
- Key consideration in investment decisions for businesses
To read the full report, click here.
Urgent clarity needed for cruises to set sail: ACCI
As Australia’s summer season approaches, indications from the Federal Health Minister that the cruise industry will be permitted to set sail before Christmas are a promising sign. However, without a clear timeline to end the ban on cruise lines and a commitment to welcome cruising from State and Territory Governments there is little hope of […]
Urgent clarity needed for cruises to set sail: ACCI
As Australia’s summer season approaches, indications from the Federal Health Minister that the cruise industry will be permitted to set sail before Christmas are a promising sign. However, without a clear timeline to end the ban on cruise lines and a commitment to welcome cruising from State and Territory Governments there is little hope of cruises returning before the years end.
“With cruises resuming responsibly in other parts of the world, our own industry remains anchored,” Andrew McKellar, Chief Executive of the Australian Chamber of Commerce and Industry said.
“For our cruise industry to recommence operations they need a firm commitment and timetable to resume, indications are not enough. We cannot expect the cruise industry to set sail again with so much uncertainty.”
“Restarting the industry is not as simple as the Federal Government just lifting the ban. A restart to the cruise industry takes months of planning with staffing, catering and ship storage all needing to be considered.”
“The Federal Government must provide a clear timetable for ending the Biosecurity Determinations so that cruises can resume. The COVID safe measures required for cruise ships to operate must also be outlined. Further, we need state and territory governments to commit to accepting cruise ship arrivals.”
Prior to the pandemic, the Cruise sector contributed $5.2 billion to the Australian economy, supporting more than 18,000 jobs.
“The economic impact of cruising is significant, with the industry bringing key tourism dollars to regional and remote communities, while also benefiting the accommodation, hospitality and retail sectors,” John Hart, Executive Chair at Australian Chamber – Tourism added.
“Just as the cruise ships that have recommenced operations internationally, the Australian cruise industry is ready and willing to operate within any required COVID safe measures, they just need to know what they are so they can start to prepare.”
ACCI Media Release
FBCCI signs MoU with MEDEF International to boost bilateral trade
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has signed a memorandum of understanding with MEDEF International (Mouvement des Entreprises de France International) to boost bilateral trade and investment. The MoU was signed at France-Bangladesh Business Council Meeting organized by MEDEF International and Embassy of Bangladesh on November 11 at Paris in France. […]
FBCCI signs MoU with MEDEF International to boost bilateral trade
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has signed a memorandum of understanding with MEDEF International (Mouvement des Entreprises de France International) to boost bilateral trade and investment.
The MoU was signed at France-Bangladesh Business Council Meeting organized by MEDEF International and Embassy of Bangladesh on November 11 at Paris in France.
Md Jashim Uddin, President of FBCCI and Pierre – Jean Malgouyres, Chairman of the France – Bangladesh Business Council, MEDEF International, inked the deal on behalf of their respective organizations, said a press release.
Addressing the meeting, FBCCI President Md Jashim Uddin stated that Bangladesh attaches great importance to its existing cordial relations with France. The two countries have a long-lasting bilateral relationship.
He also mentioned that France is the fifth largest export destination of Bangladesh with rising trend with major export products like woven garments, knitwear, home textile and footwear.
Jashim said Bangladesh offers best competitive fiscal and non-fiscal incentives for investment. Manufacturers of Bangladesh are adopting greener technologies and modern productions methods aligned with 4IR and challenges of climate change. Among the world’s top 10 green RMG factories, the top 7 are located in Bangladesh.
He hoped that the signing of MoU, would help further promoting cooperation between FBCCI and MEDEF for diversifying trade and expanding investment in an effective manner.
RTV News
KCCI warns S. Korea’s potential growth rate to drop amid low birth rates
The Korea Chamber of Commerce and Industry warned that South Korea’s potential growth rate could drop to the mid-one percent range as a result of low birth rates and a drop in labor productivity. In a report released on November 10, the chamber’s sustainable growth initiative division said South Korea’s total fertility rate hit a […]
KCCI warns S. Korea’s potential growth rate to drop amid low birth rates
The Korea Chamber of Commerce and Industry warned that South Korea’s potential growth rate could drop to the mid-one percent range as a result of low birth rates and a drop in labor productivity.
In a report released on November 10, the chamber’s sustainable growth initiative division said South Korea’s total fertility rate hit a record low of 0.84 last year as it has been also hit with the fastest aging population among OECD members.
Combined with a drop in labor productivity in the wake of the financial crisis, these factors are slowing down the country’s potential growth rate, the chamber said.
South Korea’s potential growth rate remained at around 4.7% on average between 2000 and 2009 before dropping to around 2 percent this year, according to the KCCI’s latest estimate.
If the demographic change and labor productivity slump continue at their current pace for another 10 years, the potential growth rate will drop further to 1.5% in 2030, the report warned.
To slow down the dwindling of the country’s potential growth, the KCCI said the government should introduce new measures to help raise birth rates and encourage women’s economic participation. “Raising child benefits or increasing the amount of child allowance depending on the number of children should be considered,” the report said.
The current child benefit scheme provides a monthly allowance of 100,000 won ($84.61) for a child below 7 years old. In Germany, the monthly child allowance for the first and second child is 219 euros per month.
Flexible work systems including remote work should be introduced more widely so women can continue to work after childbirth, the report also said.
When the women’s labor force participation rate rises from 52.8% in 2020 to the OCED European average of 55.3%, it will lead to a 0.25 percentage point increase in potential growth rates.
But fighting low birth rates will be a long-term solution rather than a short-term solution for a shrinking labor population as it will take around 15 years for a bump in birth rates to start positively affecting potential growth rates, the report said.
The Korea Herald
Philippine chamber releases ‘wish list’ for Duterte administration’s last months
The Philippines’ largest business group released its “wish list” of policies for the remaining months of the administration of President Rodrigo Duterte. The Philippine Chamber of Commerce and Industry said it hopes the Duterte administration will implement the following measures for the remainder of its term: Institutionalize innovation for economic development Open the economy […]
Philippine chamber releases ‘wish list’ for Duterte administration’s last months
The Philippines’ largest business group released its “wish list” of policies for the remaining months of the administration of President Rodrigo Duterte.
The Philippine Chamber of Commerce and Industry said it hopes the Duterte administration will implement the following measures for the remainder of its term:
- Institutionalize innovation for economic development
- Open the economy now and assist businesses to create new jobs
- Fully implement ease of doing business
- Fast-track internet connectivity at competitive rates
- Modernize agriculture for food security
- Innovate and digitize the education system,
- Balance industry growth and environmental protection
- Assure adequate power supply at a competitive cost
- Make infrastructure a cornerstone of economic development
- Fast track the completion of infrastructure and ensure transparency in bids and awards.
The PCCI released this during its 47th Business Conference and Expo, which was also attended by some of the country’s economic managers.
Socioeconomic Planning Secretary Karl Chua and Trade Secretary Ramon Lopez said they will continue to push for legislative reforms that will open up the Philippines to more foreign competition, especially in telecommunications, so that the public can get access to a wider range of services and products for their connectivity.
Lopez said they will also push Congress to ratify the Regional Comprehensive Economic Partnership or RCEP, which will open up opportunities for more trade across the region.
Information and Communications Technology Undersecretary meanwhile said the agency will pilot test satellite technology for internet communications in underserved areas.
PCCI president Benedicto Yujuico meanwhile lauded the Philippines’ jump in the Global Innovation Index from the 73rd spot in 2018 to 51st this year.
“Among the factors cited for the improvement in our GII are innovations particularly in the online sales via e-commerce and improved logistics in the delivery of goods and services. Our better GII performance proves that we are an efficient innovator and that we have the capacity to make things faster, better and more efficient,“ Yujuico said.
Vice President Leni Robredo, who delivered the keynote address to open the event, said that she will also push for some of the items on the ‘wish list’ of the PCCI.
ABS-CBN News
Supply Chain Issues Are Not the Biggest Threat to the Maritime Industry
The marine industry faces significant challenges in its effort to prepare for decarbonization and new environmental regulation. While keeping a wary eye on COVID-19-related issues, the global marine industry sees environmental issues as potentially having the most impact in the coming decade, according to the Global Maritime Issues Monitor 2021 survey. For the marine sector, key […]
Supply Chain Issues Are Not the Biggest Threat to the Maritime Industry
The marine industry faces significant challenges in its effort to prepare for decarbonization and new environmental regulation.
While keeping a wary eye on COVID-19-related issues, the global marine industry sees environmental issues as potentially having the most impact in the coming decade, according to the Global Maritime Issues Monitor 2021 survey.
For the marine sector, key environmental risks involve the decarbonization of shipping, new environmental regulations, and the failure of climate change mitigation and adaptation. Each of these scored high among survey participants for their perceived impact and likelihood — and worryingly low on preparedness.
Alongside environmental issues, industry leaders see cyberattacks, sustainability and digitization among their key concerns, according to the annual report, a joint project of the Global Maritime Forum, the International Union of Marine Insurance and Marsh Specialty.
Photo: Getty Images
Interestingly, the industry gained confidence in its ability to manage pandemic risk — despite the disruptions COVID-19 has caused in supply chains, shipping and global economies. While the 2020 survey placed “pandemic” as the issue for which the industry was least-prepared, in 2021, it was placed among those issues for which the industry was most prepared, likely a reflection of many months of intense focus.
Impact of Environmental Issues Increases
For the first time across the survey’s four years, respondents ranked shipping decarbonization as the most impactful issue, followed by new environmental regulation. This concern, in large part, comes from increased pressure from investors, financial institutions and customers seeking to address climate change and related sustainability issues.
The marine industry faces significant challenges in its effort to prepare for decarbonization and new environmental regulation.
For example, the implications of decarbonization extend to fuel price increases, which the survey found to be an increasing concern as it moved five spots higher to 10th place in 2021 regarding its impact.
Environmental issues are also affected by the broad societal demand for sustainability, which can be seen in the increased interest and expectations from consumers in everything from energy use to how goods are manufactured, and ultimately, transported.
As part of its role in global efforts to rein in climate change, the maritime sector will need to reduce its carbon footprint — shipping emits about 3% of global greenhouse gas (GHG) emissions. Success will depend largely on implementing policy frameworks that enable the industry to reach global climate targets at scale and with urgency.
The entire ecosystem of the movement of goods is changing.
The International Maritime Organization (IMO) adopted an Initial GHG Strategy in 2018, aiming to reduce emissions from shipping by at least 50% by 2050 compared to 2008 levels; the strategy is scheduled to be revised in 2023.
Some experts say that a potential IMO 100% by 2050 target could have nearly as much impact as a global price on GHG emissions; however, only 23% of survey respondents believe such a measure will be adopted.
Simply reducing emissions in current vessels will not be enough to reach the goals; zero-emission ships must start entering the global fleet by 2030 and increasing their numbers significantly in the following years.
Survey respondents also said global policies and regulations would have more impact than regional ones, but that regional and domestic ones are more likely to be implemented. Regulatory uncertainty — including the pricing of GHG emissions and fuel mandates — generally are seen as more likely to be used than are incentives such as fuel and vessel subsidies.
Regarding pricing, some experts believe a key step in climate policy will be to place a price on GHG emissions; it’s also viewed as the most likely step to be implemented. Among survey participants, a global price was seen as the most impactful and ranked second for likelihood.
Still, agreeing to a global price on GHG emissions is fraught with political challenges, causing some regions to consider regulating shipping while global measures are worked out. In July, for example, the European Commission proposed to include shipping in the EU Emissions Trading System, while the U.S. and China have raised the possibility of similar steps.
Digital and Cyber Risks Increasing for Shippers
As in most other sectors, the marine industry sees cyberattacks and data theft as more impactful and more likely in 2021. Survey respondents raised a red flag, saying the industry is not fully prepared to tackle these issues.
In these days of never-ending cyberattacks, no organization in the marine industry can afford to feel “insulated” from targeted attacks. Upgrades involving technology and digitization are the norm across the industry, including changes to vessels, terminals, ports and other areas. While leading to vast improvements in shipping, these changes also open the door to increased attacks from bad actors — and increase the stakes.
As the industry continues to digitize and upgrade technology, organizations must at the same time reinforce and upgrade their ability to withstand the inevitable attacks. Training employees, being vigilant regarding IT protocols, and other steps are necessary to improve cyber resilience.
The entire ecosystem of the movement of goods is changing, and industry experts see the risks around big data and artificial intelligence as additional areas for which the marine industry needs to improve its preparedness.
For example, AI’s role in logistics operations is increasing, while autonomous driving systems are set to be ubiquitous in all means of transportation, including shipping. For the marine sector, impacts will include the interoperability of cargo booking and forwarding systems, electronic bills of lading, and more.
Not only are such developments rife with cyber risks, they are shifting liability and leading to the need to purchase new and/or expanded insurance programs that align with new laws.
The marine industry continues to adjust to a number of issues brought on or exacerbated by COVID-19, including shipping delays and a crew-change crisis. Looking beyond these immediate concerns, the industry is working to deliver changes needed to help meet the challenges of climate change and the increased cyber risks of a technologically driven global economy.
Marcus Baker
Chairman of Marsh Marine Practice
The original articles were be read in the Brink’s website HERE.
FNCCI and Investment Board to work together to increase foreign investment
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the Investment Board Nepal (IBN) will cooperate with each other to promote foreign investment in Nepal. In the third meeting held at the IBN for the International Investment Promotion Committee under the FNCCI, the Chief Executive Officer of the IBN Sushil Bhatta and the […]
FNCCI and Investment Board to work together to increase foreign investment
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the Investment Board Nepal (IBN) will cooperate with each other to promote foreign investment in Nepal.
In the third meeting held at the IBN for the International Investment Promotion Committee under the FNCCI, the Chief Executive Officer of the IBN Sushil Bhatta and the FNCCI President Shekhar Golchha expressed their commitment to work together to promote investment in the country.
Bhatta also said that the IBN is actively working with the private sector to bring necessary policy reforms to attract foreign investment in Nepal. Stating that the investment sector should also be diversified, he added, “We have many potential areas for investment and investors should also be encouraged to invest in our diverse sectors. Similarly, no project can move forward without an in-depth study of the technical, environmental and financial condition.”
On the occasion, FNCCI President Golchha said that the federation is a responsible and capable body to hold discussions and ensure coordination with domestic and foreign private investors. He stressed the need for the IBN and the FNCCI to work together to reach out to foreign investors to attract investment in Nepal. “We have an active network, both at home and abroad. Using that network, we can easily reach out to investors and attract investment to Nepal,” said Golchha.
Republica Nepal
ICCIMA holds online meeting to explore trade opportunities in Croatia
Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) held an online meeting on October 30 to explore investment and trade opportunities in Croatia, the ICCIMA portal reported. The meeting was attended by the Iranian Ambassador to Zagreb Parviz Esmaili, the ICCIMA Deputy Head for International Affairs Mohammad-Reza Karbasi, and representatives of provincial chambers of […]
ICCIMA holds online meeting to explore trade opportunities in Croatia
Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) held an online meeting on October 30 to explore investment and trade opportunities in Croatia, the ICCIMA portal reported.
The meeting was attended by the Iranian Ambassador to Zagreb Parviz Esmaili, the ICCIMA Deputy Head for International Affairs Mohammad-Reza Karbasi, and representatives of provincial chambers of commerce as well as a number of businessmen interested in doing business in Croatia.
During the meeting, the capabilities and needs of each province were discussed, and accordingly, the existing capacities in Croatia, about which there is a possibility of joint investment and economic cooperation were also explored.
In this regard, Karbasi underlined establishing direct flights between the two countries, expansion of joint cooperation in the field of health tourism, and signing of sisterhood agreements between different provinces of the two countries as measures that could be taken for boosting mutual trade relations.
He also expressed ICCIMA’s readiness and willingness to implement a barter trade management in collaboration with Iranian specialized parent companies and called on the Iranian Embassy in Zagreb to list Croatian companies wishing to barter goods and services with Iran.
Referring to the high capacities in Iran and the Balkan region, as well as the importance of increasing Iran-Croatia trade interactions, the official underlined the need for using the potentials of the provincial chambers and the Iranian embassy in Croatia to strengthen cooperation in various fields.
He further suggested specialized meetings be held in various fields in cooperation with the Iranian Embassy in Croatia.
Karbasi stressed the need for establishing a joint Iran-Croatia Trade Committee under the supervision of the two countries’ chambers of commerce based on a memorandum of understanding signed between the two sides.
Tehran Times
Arun Chawla appointed as Director General of FICCI
The Federation of Indian Chambers of Commerce & Industry (FICCI) on October 30 said Arun Chawla has been appointed as its new Director General. Chawla will assume charge with immediate effect. He joined FICCI in 2011 served as the Deputy Secretary General of the chamber prior to his appointment. “We are delighted to welcome Arun […]
Arun Chawla appointed as Director General of FICCI
The Federation of Indian Chambers of Commerce & Industry (FICCI) on October 30 said Arun Chawla has been appointed as its new Director General.
Chawla will assume charge with immediate effect. He joined FICCI in 2011 served as the Deputy Secretary General of the chamber prior to his appointment.
“We are delighted to welcome Arun Chawla in his new role. FICCI would surely benefit from his long experience in the organisation and his earlier stint in the corporate world,” FICCI President Uday Shankar said.
Data Localization Is Now a Big Part of Doing Business Globally
More than 100 countries now require their citizen data stored in servers physically located inside their borders. These laws are creating significant new technical challenges for chief information security officers (CISOs). In this new data sovereignty era, the threat landscape is more sophisticated, and risks are typically no longer a binary yes/no but a scale […]
Data Localization Is Now a Big Part of Doing Business Globally
More than 100 countries now require their citizen data stored in servers physically located inside their borders. These laws are creating significant new technical challenges for chief information security officers (CISOs).
In this new data sovereignty era, the threat landscape is more sophisticated, and risks are typically no longer a binary yes/no but a scale of limitations based on the sensitivity of the data involved. The fact that a lot of data remains scattered in the cloud makes the CISO’s job an even more challenging affair.
Photo: Robin Bartholick / Getty Images
Many countries like Germany, France and Russia have laws that require citizens’ data to be stored on physical servers within the country’s physical borders.
Data localization or data sovereignty refers to restrictions placed on the ability of companies to move, store, process or otherwise handle their users’ personal data.
Many countries like Germany, France and Russia have laws that require citizens’ data to be stored on physical servers within the country’s physical borders. There are also countries where regulations only apply to certain industries that advocate the same local data flow, such as government agencies and military contractors.
These proposals can take different forms; some aim to make it harder for companies to move customer data outside the country, while others call for companies to maintain local copies of all user data.
GDPR Was a Game-Changer
When the European Union enacted the revolutionary General Data Protection Regulation (GDPR) in 2018, it was a challenge for CISOs in many companies to align with the demands of the law. Over 500 lawsuits have been filed against non-compliant companies, resulting in 260 million euros ($300 million) in fines so far. Meanwhile, the cost of GDPR compliance is expected to be around $8 billion per year for Fortune 500 organizations.
As the world transitions to a data-driven society, privacy seems set to play an even more important role than it already does.
Following suit, over a hundred jurisdictions — countries, states and cities — have now passed their own data privacy legislation. These “local GDPRs” add up to create a global tangle of regulatory responsibilities that will wreak havoc on the operations of nearly every global firm that interacts with consumers.
It’s like a second set of tax codes for CISOs, with high expenses, high risk, complex implementation and absolutely no room for noncompliance.
Barriers to Cloud Adoption
The 2019 Cloud Security Report highlighted some major concerns regarding a CISO’s migration to the cloud. Sixty-four percent of the surveyed population mentioned data loss as their primary challenge during the transition, while 62% highlighted data privacy.
Although the focus of a breach response is to remediate the damage and restore business, the cost of a data breach should not be taken lightly. The most contributing factors are third-party involvement, system complexities, operational technology, compliance failure and extensive cloud migration.
Another consideration is the legislation of the data itself. This can place restrictions on CISOs and their ability to access and work with user data. User privacy and security become a lot more than simply putting the right protective measures in place — there are rules, and they can sometimes be difficult to navigate as different countries have different laws.
Privacy Is No Longer an Accessory But an Essential
The privacy landscape has changed drastically in the last few years, so much so that privacy has become essential to business and is no longer an accessory. As the world transitions to a data-driven society, privacy seems set to play an even more important role than it already does.
Any CISO should be aware of the fact that customers will demand transparency from organizations, especially about their data. They need to tell their users where their data resides and who can access it.
CISOs can contribute significantly to the effectiveness of their organizations by taking an active interest in establishing robust data sovereignty practices. For example,
CISOs should consider the “entire stack” when developing and maintaining a solution that meets relevant compliance standards.
CISOs need to research and know how to comply with the local requirements. Knowing the local laws is now the standard operating procedure for navigating international business deals. You can’t do business in another country without understanding their data laws.
The Hybrid Cloud
A hybrid cloud made up of on-premises infrastructure, private cloud services and a public cloud gives CISOs more options and the chance to streamline operations and save money. If the business is using a public cloud model today, most of the applications will be in play with a hybrid cloud approach. These applications can be moved back to the on-premises environment when needed while also capitalizing on the advantages of the public cloud when applicable.
Protecting the most sensitive information, whether it is trade secrets, personally identifiable information, or intellectual property, is the core function of a CISO.
With more enterprises leveraging data analytics and business intelligence to gain business advantage, CISOs are challenged to balance strategies for achieving data sovereignty with the new realities of cloud computing and big data.
Related themes: CYBERSECURITY GLOBALIZATION INFRASTRUCTURE INTERNET OF THINGS REGULATION
Deepak Gupta
CTO and Co-Founder of LoginRadius@dip_ak
Deepak is the CTO and co-founder of LoginRadius, a rapidly-expanding Customer Identity Management provider. He’s dedicated to innovating LoginRadius’ platform, and loves fooseball and winning poker games.
Voice Technology Is in Demand — and Social Distancing Could Accelerate Its Adoption
The original article can be read in the Brink’s website HERE.
“Singapore International Energy Week 2021,” October 25-29
CACCI herewith forward an invitation to all CACCI officers and members to attend the Singapore International Energy Week (SIEW) 2021, of which CACCI is a Supporting Organization, to be held on October 25-29 at the Marina Bay Sands Expo and Convention Centre, Singapore. Organized by The Energy Market Authority of Singapore (EMA), SIEW 2021 is […]
“Singapore International Energy Week 2021,” October 25-29
CACCI herewith forward an invitation to all CACCI officers and members to attend the Singapore International Energy Week (SIEW) 2021, of which CACCI is a Supporting Organization, to be held on October 25-29 at the Marina Bay Sands Expo and Convention Centre, Singapore.
Organized by The Energy Market Authority of Singapore (EMA), SIEW 2021 is a hybrid event with both onsite and online streaming elements. Featuring the theme of “Advancing the Energy Transition,” the five-day event is an annual platform for energy professionals and policymakers to discuss and share best practices and solutions within the global energy space. It aims to foster a robust exchange of views and perspectives among thought leaders and industry professionals in the energy industry, even as we adhere to safe management practices.
Anchor events at SIEW include the SIEW Opening Keynote (SOK) and Singapore Energy Summit (SES) which feature high-level keynotes and panel discussions around this year’s theme. Other key events include the SIEW Energy Insights, SIEW Thinktank Roundtables and In Dialogue with Youth. SIEW partner events, the Asia Clean Energy Summit, Asian Downstream Summit, and LNG & Hydrogen Gas Markets Asia provide an opportunity to focus in on industry-specific topics.
For more information on the event visit their website HERE or register online HERE.
Opportunities in Aircraft Leasing & Financing at GIFT IFSC
FICCI under the aegis of International Financial Services Centres Authority (IFSCA) is organising a digital roadshow on Opportunities in Aircraft Leasing and Financing at GIFT IFSC. IFSCA is keen to set up a facilitative regulatory framework with the objective of making GIFT City a highly attractive destination for aircraft leasing. A brochure and pdf flyer […]
Opportunities in Aircraft Leasing & Financing at GIFT IFSC
FICCI under the aegis of International Financial Services Centres Authority (IFSCA) is organising a digital roadshow on Opportunities in Aircraft Leasing and Financing at GIFT IFSC. IFSCA is keen to set up a facilitative regulatory framework with the objective of making GIFT City a highly attractive destination for aircraft leasing. A brochure and pdf flyer detailing the opportunities can de downloaded for further reference.
We invite interested CACCI members to join this roadshow scheduled on 29th October 2021 from 1600-1730 hrs (IST).
For any further query, you can write to finance@ficci.com.
What Does Globalization Look Like in a Post-Pandemic World?
The global economy is emerging from the pandemic with global supply chains in disarray and companies struggling to source products from around the world. In his new book with Anthea Roberts, Six Faces of Globalization, professor Nicolas Lamp argues that there is no longer a single narrative to describe globalization, but multiple. BRINK began by asking […]
What Does Globalization Look Like in a Post-Pandemic World?
The global economy is emerging from the pandemic with global supply chains in disarray and companies struggling to source products from around the world. In his new book with Anthea Roberts, Six Faces of Globalization, professor Nicolas Lamp argues that there is no longer a single narrative to describe globalization, but multiple. BRINK began by asking him how the pandemic has changed the nature of globalization.
LAMP: I don’t think the pandemic has changed the fact that we live in a globalized world. We will continue to have global supply chains. But there’s no question that we now think about those supply chains differently. The key narrative that has emerged in response to the pandemic focuses on the importance of resilience.
Resilience Is the New Ingredient
I believe that what we are going to see is a more balanced form of globalization, which balances the benefits of efficiency, of just-in-time supply chains and specialization, with the value of resilience.
There will be an awareness that it can’t always be the cheapest option, it can’t always be the quickest option, that sometimes we have to accept redundancies and make long-term investments, even if they are expensive.
We have to keep in mind that there are many different ways of achieving resilience. As defenders of globalization have pointed out, if you concentrate production at home, that could also be a danger to resilience. What’s happening in the United Kingdom right now is a striking illustration of how a lack of openness to the outside world can undermine your resilience.
Photo: Getty Images
Businesses now think about supply chains differently. The key narrative that has emerged in response to the pandemic focuses on the importance of resilience.
Workers in different countries are in the same boat, and it’s the corporations who are taking advantage of workers everywhere.
With a hard Brexit, the United Kingdom has made a big bet on domestic workers and has foreclosed the option of relying on workers from the European Union. Now it’s experiencing the consequences. Concentration is a problem for resilience, no matter whether you’re dependent on foreign or domestic suppliers.
We need to get away from the idea that resilience can only be achieved through reshoring. Often, it will simply not be practical to reshore the production of most of the goods that we purchase. Maybe the United States and European Union can build their own semiconductor industries. But you see the sums that are involved: $50 billion in the case of the United States, $20 billion in the case of the European Union, which is probably not going to be enough. For most countries, that is simply not in the cards.
Don’t Rely On a Single Narrative
BRINK: The book is about six different perceptions of globalization. So which is on the ascendant and which isn’t?
LAMP: It depends very much on the context. We don’t have a clearly dominant narrative, but rather different narratives in contestation, and our message to policymakers is that when you’re dealing with complex issues such as globalization, trade, climate change, the response to the pandemic, it’s dangerous to rely on a single narrative and to design policies on the basis of that narrative.
You need to look at your policy from the angle of all the different narratives and try to attend to the concerns of all the narratives if you want to have a policy that is going to stand the test of time and is not going to go down in flames.
Take President Emmanuel Macron’s diesel tax as an example in France. It made perfect sense from a sustainability perspective, and also from the perspective of what we call the establishment narrative, which favors market-based solutions.
But President Macron did not consider how the tax would be perceived by those who subscribe to the populist narratives, who saw the tax as an attack on people living in the countryside that did not impose any burdens on city-dwelling elites. And soon enough, President Macron had the “yellow vest” protests on his hands.
BRINK: Would you say that there is a corporate narrative of globalization?
LAMP: That’s a great question. Corporations are using these different narratives when it suits their interests. Perhaps the best example is when Facebook and the tech companies were being subjected to scrutiny because of antitrust and other regulatory concerns. One reaction was to say, “Well, look, the Chinese government is working together with its tech companies and supporting its tech companies. We also need to be team USA in order to be able to confront team China.” That argument, of course, doesn’t work as well anymore, since China cracked down on its own tech companies. But there was definitely an attempt to deflect attention from the role of corporations by reframing the issue as one of geo-economic competition.
BRINK: You talk about a corporate power narrative. Can you explain what you mean by that?
LAMP: The corporate power narrative is a narrative that identifies corporations as key actors in globalization and juxtaposes them with a transnational working class.
The argument here is that workers in different countries are in the same boat, and it’s the corporations who are taking advantage of workers everywhere. This narrative tries to rebut the perspective of former President Trump and other right-wing populists, who argue, for example, that Mexican and U.S. workers are in competition.
The corporate power narrative that was put forward by American and Canadian trade unions was very different: It said that the real fault is not with Mexican workers, the real fault is with corporations. When the corporations take the jobs to Mexico, they pay the Mexican workers poverty wages, which don’t reflect the productivity of those workers. So they’re screwing both the workers in Canada and the U.S. who are losing their jobs, as well as the Mexican workers who are not being fairly rewarded for their work.
BRINK: Will this debate ever be resolved, one way or the other?
LAMP: I don’t think the contestation between the narratives will ever be resolved. What may change is the focus of the debate. In recent years, the globalized world has been the meta-narrative of our time.
But there is a possibility that other issues become the center of our attention — the pandemic provided an example. When the pandemic started to dominate public life, all the narratives that we were studying suddenly became narratives about the pandemic and what should be done about it.
There are two other topics that might become the center of these debates. One is climate change. We consider the possibility that globalization becomes a sideshow, and the real debates on which these narratives focus is what to do and how to deal with climate change.
And the other potentially all-encompassing meta-narrative could be U.S.-China geopolitical competition, where suddenly everything becomes about the U.S.-China relationship, just as the Cold War dominated public debate in the second half of the 20th century. If that becomes the dominant frame, then the narratives will tell different stories about that issue.
So we don’t think the debate is going to be resolved, but our aim is to make the debate based on a better understanding of different types of views and pave the way to develop policies that integrate concerns from the different narratives and obtain a broader base of consensus.
Related themes: GLOBALIZATION SUPPLY CHAINS TRADE
Nicolas Lamp
Assistant Professor of Law at Queen’s University@nicolas_lamp
Nicolas Lamp joined the Faculty of Law at Queen’s University as an Assistant Professor in 2014. In 2020, he was cross-appointed to the Queen’s School of Policy Studies. He also serves as the Academic Director of the International Law Programs, an eight-week summer course that Queen’s Law offers at the Bader International Study Centre at Herstmonceux castle in England during the summer term. Since 2019, he has also been the Director of the Annual Queen’s Institute on Trade Policy, a professional training course for Canadian trade officials that is hosted by the Queen’s School of Policy Studies.
What Does 2021 Hold for Global Trade?
What Just Happened at the WTO? Everything You Need to Know
How Do We Think About the Winners and Losers from Globalization?
The original article can be read in the Brink’s website HERE.
Are Electric Vehicles Really Green?
When it comes to transport’s carbon footprint, increasing attention is being paid to the carbon impact not only of the fuel type but of the parts used in the assembly of a vehicle, whether electric or petrol-powered. A new report on the materials used in the vehicle manufacture by the Brussels-based Transport & Environment think […]
Are Electric Vehicles Really Green?
When it comes to transport’s carbon footprint, increasing attention is being paid to the carbon impact not only of the fuel type but of the parts used in the assembly of a vehicle, whether electric or petrol-powered.
A new report on the materials used in the vehicle manufacture by the Brussels-based Transport & Environment think tank (T&E) shows that EVs should have far fewer carbon emissions in their manufacturing process, though much depends on how the battery is made.
Lucien Mathieu is road vehicles and mobility analysis manager at T&E. BRINK spoke to him about how the process of manufacturing a vehicle determines that vehicle’s carbon footprint.
Photo: Sean Gallup/Getty Images
A worker assembles the interior of an electric car on the assembly line at a production facility on June 08, 2021, in Germany. The process of manufacturing a vehicle, excluding the battery, generates around six tons of carbon emissions on average.
MATHIEU: The process of manufacturing a vehicle, excluding the battery, generates around six tons of carbon emissions, on average. Of course, it depends on the size of the vehicle, but that includes acquiring the primary materials and all the manufacturing processes.
The main difference in the carbon footprint of the materials used in an electric car versus a petrol car comes down to the battery. An electric engine is much smaller and much lighter than a petrol or a diesel engine, which is much more complex and, therefore, requires significantly more materials and manufacturing.
Sourcing the Energy
Even more important in terms of reducing the carbon impact of the production of a vehicle — whether electric or not — is the source of the energy used by the car producer on its site. It matters whether the car producers use renewable electricity and whether their manufacturing processes are energy efficient. This is essential when seeking to reduce manufacturing emissions and is especially true in the production of the EV battery.
We have a tool online that allows you to look at the entire lifecycle of a vehicle and compare the carbon emissions of any car, petrol or electric, to see where the battery is made, what type of electricity is used to recharge the electric car, etc.
For an EV, the second most critical element after the source of electricity is how the battery is actually made. Manufacturing an average battery will add between four to five tons of carbon dioxide emissions. We divide these impacts into two phases. The first phase, the upstream parts, is the extraction of the raw material for the battery and the refining of those materials.
The second stage is manufacturing in huge battery factories that are setting up shop around the globe. If you produce a battery with electricity generated by coal, then the battery cell production stage will have a relatively high impact, whereas, on the other hand, if you use renewal electricity, the impact of battery production is only between a third and a quarter of the impact of the upstream matter extraction. This offers a huge potential to reduce emissions from battery cell production.
Recycling Will Be Critical
BRINK: Right. How much is the carbon footprint dependent on recycling materials?
MATHIEU: We don’t have a lot of data on battery recycling because only a very small number of EV batteries have already reached their end of life. Batteries will stay on the road for 10, 15 years, so we have very few batteries that are coming to the recycling stage.
And the few that are coming to the recycling station are closely kept by the battery producers because, for them, it’s a very valuable opportunity to learn and develop their in-house recycling processes.
BRINK: How much impact will the EU’s new battery law have?
MATHIEU: The law is now being discussed at the EU level between the parliament and in the member states. And it’s a major breakthrough in terms of how we address batteries. This will oblige all batteries placed in the market to be collected and recycled. And it will have specific material recovery targets, such as 95%, when it comes to cobalt, nickel, manganese or copper. Ninety-five percent of those materials will have to be recycled and recovered to be used in new applications, like for a new EV battery.
There is still a bit of a gap in terms of the knowledge that we have, but we expect recycling to play a significant part in reducing the emissions from the battery footprint, in particular for reducing the amount of primary raw materials that we have to extract from the ground.
Responsible Mining
However, we’re still going to need so much more raw material in the future to meet expanding demand for decarbonizing the road transport sector, so extraction will still have to increase as well. There is a whole section in this new EU law about responsible mining, which obliges the battery-makers to do a full due diligence and risk assessment and mitigation of their supply chain in the identification of the risks linked to extracting the materials.
This can be an environmental impact, for example, on the water toxicity, but also the ethical and social impacts, for example, child labor in Congo. These are things that will be addressed as well in this new battery law.
The last pillar of the law is on the type of carbon footprint calculation.
The European Commission will be developing a methodology to calculate the precise carbon footprint of the batteries, taking into account all the different variations that you can have, for example, if the nickel is from Indonesia or it’s from South America, if the battery is produced with clean electricity or not. So all these questions will be taken into account.
The European Commission will then put in place strict requirements on the maximum carbon footprint of batteries placed in the market in Europe.
Related themes: CLIMATE CHANGE REGULATION
Lucien Mathieu
Road Vehicles and Emobility Analysis Manager at T&E@mat_lucien
Lucien Mathieu is a road vehicles and emobility analysis manager at T&E, the leading think tank and campaign group on sustainable mobility in Europe. His work is focused on accelerating the transition to electric mobility for cars and trucks, on the basis of evidence-based advocacy work. Mathieu has been the main author of several reports on CO2 emissions from cars and carmakers compliance with the EU car CO2 emission standards, as well as reports on electric mobility, notably on the EV market in Europe, EV batteries and charging infrastructure.
The original article can be read in the Brink’s website HERE.
Invitation to “FICCI-CACCI Business Delegation to Expo 2020,” Dubai, UAE, November 23-25, 2021
CACCI herewith forward an invitation from the Federation of Indian Chambers of Commerce and Industry (FICCI) to join the FICCI-CACCI Business Delegation to Expo 2020, Dubai, United Arab Emirates (UAE), to be organized on November 23-25, 2021. To be hosted by Dubai, UAE, Expo 2020 is scheduled to be held from October 1, 2021 to […]
Invitation to “FICCI-CACCI Business Delegation to Expo 2020,” Dubai, UAE, November 23-25, 2021
CACCI herewith forward an invitation from the Federation of Indian Chambers of Commerce and Industry (FICCI) to join the FICCI-CACCI Business Delegation to Expo 2020, Dubai, United Arab Emirates (UAE), to be organized on November 23-25, 2021.
To be hosted by Dubai, UAE, Expo 2020 is scheduled to be held from October 1, 2021 to March 31, 2022. As the world’s greatest show of human brilliance and achievement, the Expo will see millions of people from around the world meet and celebrate their collective humanity and is an opportunity to work towards a shared and sustainable future under the promise of “connecting minds, creating the future”. It will also showcase innovation, inspiration, and the most brilliant talents from 192 countries in one spectacular futuristic destination.
By joining the Delegation, participants will have the opportunity to be engaged and entertained through immersive pavilions, cultural experiences, more than 60 live events per day and 200-plus food and beverage options, uniting visitors in a world-class extravaganza.
The tentative itinerary and estimated participation fee can be viewed HERE.
Evergrande Is the Consequence of An Unsustainable Economic Model
The Chinese real estate sector has long been too big and too risky, and it is not coincidental. It was central in the Chinese leadership’s plan to reflate the economy from the global financial crisis in 2008. Since then, the way forward for the sector has been to leverage debt so as to increase the […]
Evergrande Is the Consequence of An Unsustainable Economic Model
The Chinese real estate sector has long been too big and too risky, and it is not coincidental. It was central in the Chinese leadership’s plan to reflate the economy from the global financial crisis in 2008. Since then, the way forward for the sector has been to leverage debt so as to increase the supply of housing units, given Chinese households’ infinite demand for them.
In fact, housing has long been the most important asset to those in China as an investment of their savings, in light of the still draconian controls to capital outflows. Investment in housing has been El Dorado for Chinese households, as prices have been on the rise nearly continuously until recently.
Reasons for the Price Decline
Prices suddenly decelerated in 2021 for several reasons. First and foremost, there was a sudden regulatory push to control the overstretched balance sheets of real estate developers, which has resulted in restructuring some large real estate companies, such as China Fortune Land, even before Evergrande got into trouble.
In other words, Chinese households — even if flooded by a still rosy picture of the real estate sector and the Chinese economy in the local media — are increasingly wary about investing in real estate.
If Evergrande were not to deliver on its promises, pre-sales of housing units would dry up in China pushing most real estate developers to the brink.
The second reason is that the tighter controls do not only affect developers but also buyers of real estate who deal with huge down payments as well as the fear of a nationwide property tax, which has been rumored for quite some time.
Finally, Chinese households are feeling the brunt of an economy that has been decelerating rapidly for the last few years, pushed by its own overcapacity but also the U.S.-led trade and tech war and, more recently, the pandemic.
A man walks through the Evergrande changqing community in Wuhan, Hubei Province, China. China’s real estate sector is not bound to collapse out of Evergrande’s demise.
Housing Is a Major Source of China’s Inequality
The Chinese government’s crackdown on the real estate sector comes in the context of China’s rapidly changing long-term economic goal from growth “über Alles” to common prosperity. The crackdown involved the introduction of the so-called “three red lines” to limit their debt leverage, dependence on pre-sales, and short-term funding that was too short.
Common prosperity is President Xi-Jinping’s new economic mantra, following that of dual circulation, to highlight the importance of better income distribution and more equal opportunities. Excessively high — and growing — housing prices are probably the most important source of income inequality in China. Access to housing — or the lack thereof — is a key factor in explaining income disparity.
Evergrande could not but be the target of the government crackdown for a number of reasons. First, it is the largest real estate developer. Second, it is the most leveraged and does not fulfill any of the aforementioned three red lines.
Thirdly, Evergrande is heavily exposed to foreign investors, whether through the Hong Kong stock exchange or bonds issued in Hong Kong’s offshore market. The latter, which accounts for close to $20 billion, mostly denominated in USD, have mainly been bought by foreign private banks and asset managers for their high net worth clients.
It seems clear, after the lack of payment of a USD bond coupon last Thursday, that Evergrande’s offshore debt will go through a restructuring. Based on the example of China Fortune Land, which is finishing its own restructuring, this might not necessarily entail a nominal haircut but an extension of the maturity and the reduction of the interest due.
Foreign investors will probably be relieved if such restructuring is announced as they now lack clarity as to the future of their investment in Evergrande. Still, most of Evergrande’s debt is domestic and will need to be serviced, especially the amount received by Evergrande in pre-sales from Chinese households.
1.5 Million Are Waiting for Their Apartments
Close to 1.5 million Chinese households are waiting for Evergrande to finish their units, and this will surely happen. The main reason is the massive reliance of other real estate developers on pre-sales so that if Evergrande were not to deliver on its promises, pre-sales of housing units would dry up in China pushing most real estate developers to the brink.
In addition, President Xi-Jinping’s common prosperity is really not about dumping the losses on the households. As such, the Chinese government has already given clear signs that local governments will take care of the unfinished projects.
Two important takeaways follow. First, China’s real estate sector is not bound to collapse out of Evergrande’s demise, as public money is going to be put to work to solve its systemic consequences within China. This does not mean, however, that everybody, especially not foreign investors, will be fully bailed out. Evergrande needs to serve as a warning signal of the cost of excessive leverage.
The second takeaway is that China’s growth will suffer from all of this. Not only is the real estate sector — which is a key contributor to China’s investment, employment and growth — going to slow down after Evergrande’s demise, but investors, in general, will be increasingly wary of China’s drastic change in priorities.
Economic success is no longer the goal, and financial excess will be penalized. Contributing to common prosperity is now the key objective, even at the cost of disgruntled private investors and, thereby, a potential stagnation of the economy.
Related themes: CHINA DISRUPTION INVESTMENT
Alicia García-Herrero
Senior Fellow for Bruegel and Chief Economist for Asia Pacific at Natixis
Alicia García Herrero is chief economist for Asia-Pacific at Natixis and a senior fellow for Bruegel. Previously she was chief economist for Emerging Markets at Banco Bilbao Vizcaya Argentaria. She is a non-resident fellow at Cornell’s emerging market research centre and Senior Research Fellow at El Cano Royal Institute for International Relations. She is currently adjunct professor at City University of Hong Kong, visiting faculty at University of Science and Technology as well as at China-Europe International Business School.
Could the RMB Dislodge the Dollar As a Reserve Currency?
Asia-Pacific Must Phase Out Fossil-Fuel Subsidies
Is China About to Cap Its Coal Output?
The original articles can be read in the Brink’s website HERE.
Invitation to the ASEAN Leadership and Partnership Forum 2
CACCI is pleased to forward hereunder an invitation to CACCI officers and members from the ASEAN Business Advisory Council (ASEAN-BAC), of which CACCI is an Associate Member, to join the “ASEAN Leadership and Partnership Forum 2021” to be held on October 7, 2021.
Invitation to the ASEAN Leadership and Partnership Forum 2
CACCI is pleased to forward hereunder an invitation to CACCI officers and members from the ASEAN Business Advisory Council (ASEAN-BAC), of which CACCI is an Associate Member, to join the “ASEAN Leadership and Partnership Forum 2021” to be held on October 7, 2021.
Ransomware Attacks on Critical Infrastructure Are Surging
According to Temple University’s Cybersecurity in Application, Research & Education Laboratory, ransomware attacks on critical infrastructure are on the rise, with about 75% of recorded incidents since 2013 having taken place in the last 18 months. The increasing frequency and severity of ransomware attacks are reflected by the steady increase in cyber insurance prices. Threat actors can […]
Ransomware Attacks on Critical Infrastructure Are Surging
According to Temple University’s Cybersecurity in Application, Research & Education Laboratory, ransomware attacks on critical infrastructure are on the rise, with about 75% of recorded incidents since 2013 having taken place in the last 18 months. The increasing frequency and severity of ransomware attacks are reflected by the steady increase in cyber insurance prices.
Threat actors can target critical infrastructure with geopolitical or financial motivations. They are well aware of the potential knock-on impacts on businesses and economies, as these attacks can cripple unprepared organizations by halting operations for extended periods.
A failure to prevent or respond to ransomware incidents can lead to reputational and liability risks, with lasting impacts on trust dynamics between infrastructure operators and key stakeholders such as governments, investors and consumers. These trust implications are further discussed in Built to Last: Infrastructure and Trust In A Changing World, a new report from Marsh McLennan.
Source: Rege, A. (2021). “Critical Infrastructure Ransomware Incident Dataset”. Version 11.3. Temple University. https://sites.temple.edu/care/ci-rw-attacks/ • Critical infrastructure sectors are labelled according to definitions of the US Cybersecurity and Infrastructure Security Agency (CISA). * As of July 2021.
What Do Post-COVID Supply Chains Look Like?
Across the world, companies have been celebrating the return of more normal activity, more reliable supply chains and a boost from renewed consumer confidence. And that’s where they are going wrong. A year ago, I described how the pandemic was changing supply chains in unexpected ways, and if a business’s supply chains have remained the same […]
What Do Post-COVID Supply Chains Look Like?
Across the world, companies have been celebrating the return of more normal activity, more reliable supply chains and a boost from renewed consumer confidence. And that’s where they are going wrong.
A year ago, I described how the pandemic was changing supply chains in unexpected ways, and if a business’s supply chains have remained the same as they were before the pandemic, then it is going to have problems. Retail is just one immediate example. Post-lockdown sales might be sharply up, but profits remain down because the cost to serve is so much higher for online sales and delivery models. Businesses in all sectors need to move forward to a new normal for supply chains. Perhaps it can be a “new better.”
Photo: plus49/Construction Photography/Avalon/Getty Images
Container ships from China passing at Blankenese on the Elbe, Germany. In the short to medium term, the impact of COVID-19 is not going away, meaning sharp rises in shipping and air freight costs.
Cost to Serve Is Higher
A year on from the first waves of shocks, global supply chains are working in a fast and furious fashion. Working, but volatile — subject to local uncertainties and the potential for a difficult accumulation of disruption.
In the short to medium term, the impact of the COVID-19 pandemic is not going away, which means a changing picture of lockdowns and restrictions in different parts of the globe. Overall, that has meant sharp rises in shipping and air freight costs. And, in general, lead times for supply chains have needed to be extended.
The knock-on effect of this has been a need for more containers, more containers not moving and capacity being fully taken up — so, containers end up in the wrong places around the global supply chains system. It’s like supermarket trolleys. If processes to take trolleys back to the front of the store aren’t working, then they’re going to end up scattered all around the extremities of the car park.
Bottled Up Consumer Spending
Supply chain disruptions and shortages are continuing to happen because of the dramatic upturn in economies, a release of bottled-up consumer spending.
The microchip shortages in some sectors are also being exacerbated by parallel interactions, where there is increased competition from across different sectors competing for supplies, especially with the accelerated shift to computerization and autonomous systems in everything from the workplace to transport systems.
A question mark also remains over whether the surge in demand for products is real or just a bubble of stockpiling as businesses fill their stock rooms to pre-empt recovery. The danger is that customer demand doesn’t or won’t exist on the same scale and we enter a boom-and-bust cycle.
The pandemic crisis of 2020-21 has brought permanent, structural changes to supply chains. There is no return to 2019, and businesses need to take on board the lessons of the past 18 months and find the best blend of old and new.
Cost and value will always be fundamental, but resilience has to be the priority for protecting company survival for the longer-term.
Shorter, More Localized Supply Chains
We have seen how those supply chain managers with the strongest network of relationships have coped better. Businesses tend to focus effectively on the basic management of inventories, KPIs, information systems and people — but appear to think relationships happen by accident. Collaboration and proactively managed relationships are the key to future resilience.
Businesses have seen the need for shorter, more localized supply chains. Supplies of some high-demand raw materials, like cobalt and lithium, can only come from specific regions — nothing can change that situation — but there can be more near-shoring and on-shoring. There is also the need for multi-shoring, not basic multi-sourcing, which caught out some operations during lockdown that had arranged multiple different supply sources in the same region, all affected by COVID-19 transport restrictions.
The crisis has demonstrated the need for transparency: continuous monitoring and intelligence, real-time information across networks in order to anticipate and understand the impact of volatility and better deal with the complexity involved. Events like the blockage of the Suez Canal earlier this year had a heightened impact because it was a case of disruption on disruption.
The Need for a Strong Culture
A strong culture has been critical for ensuring there’s the necessary agility and flexibility in a supply chain operation. By ‘culture’ I mean what happens when people are left without instruction and under pressure? What do they do? Can they work together to find solutions?
People have been shown to be the most vulnerable element in an organization, adding to the momentum toward Robot Process Automation. This could both increase resilience within operations (not having to rely on the presence and movements of human employees) but also take the repetition out of human work roles.
There needs to be a working trade-off between property assets, information systems and HR. Organizations may no longer need physical offices to the same extent as a result of automation and remote working, but they need to invest into more than just new information systems. There has to be renewed attention and investment into HR and the management and leadership of dispersed workforces, all the processes that need to be re-engineered for a virtual world of work. The growing reliance on digitization and connectivity also means a new intensity of focus on cybersecurity.
A ‘New Better’?
What companies and consumers value has changed. Lockdowns have moved a much larger proportion of the consumer population — including older demographics — over to the ease of online shopping. In other words, people have got used to shopping differently, and that means that whole supply chain processes, networks, information systems and organizations have to change.
Ultimately the lesson has been the need to procure for resilience and not solely cost. Cost and value will always be fundamental, but resilience has to be the priority for protecting company survival for the longer-term.
A new better for supply chains will bring some major changes for wider societies.
There will be benefits from more automation, digital systems and on-shoring, including higher quality jobs, the potential for more diversity in the workforce, a reduced transport footprint for the environment and less plastic waste. But at the same time, there will be challenges, including the need for new business models to ensure viability and maintaining the engagement and motivation of supply chain workers. The biggest barrier, though, will be complacency around the “return to normal.”
Related themes: CYBERSECURITY SUPPLY CHAINS TRADE
Richard Wilding
Professor of Supply Chain Strategy at Cranfield School of Management@SupplyChainProf
Richard Wilding OBE is the professor of supply chain strategy at Cranfield School of Management. He is also the chair of the Chartered Institute of Logistics & Transport (UK), and recognised as one of the world’s leading experts in logistics and supply chain management.
Coronavirus Is Changing Global Supply Chains in Unexpected Ways
The original articles were be read in the Brink’s website HERE.
99 of the World’s 100 Most Environmentally At Risk Cities Are in Asia
It’s clear that cities everywhere are uniquely threatened by the environment. Not just climate change, but other issues, such as air quality, water pollution and resource restrictions are becoming increasingly significant in mega-cities. A recent report by global risk analytics firm Verisk Maplecroft concludes that 99 of the most environmentally threatened cities are in Asia. […]
99 of the World’s 100 Most Environmentally At Risk Cities Are in Asia
It’s clear that cities everywhere are uniquely threatened by the environment. Not just climate change, but other issues, such as air quality, water pollution and resource restrictions are becoming increasingly significant in mega-cities.
A recent report by global risk analytics firm Verisk Maplecroft concludes that 99 of the most environmentally threatened cities are in Asia. BRINK spoke to the author of the report, Will Nichols, head of Environment and Climate Risk Research at Verisk Maplecroft.
NICHOLS: One of the key things that is driving the Asian risk score so high is air quality. While we do have air quality issues in Europe, for example, in London and some of the Eastern European cities, Asia really is far and away ahead of that.
Photo: Sajjad Hussain/AFP via Getty Images
People walk along Rajpath near India Gate under heavy smog conditions in New Delhi on November 9, 2020. One of the key things that is driving the Asian risk score so high is air quality — aggravated by a growing population.
Air pollution and water pollution, alongside water stress — the availability of water and water demand — are all aggravated by a growing population, and we see quite high population growth rates in many of these Asian countries, which is compounding these risks.
There are also issues around natural hazards such as flooding or earthquakes or droughts in many Asian cities. So for example, Jakarta, which is the number one city on our index, not only has issues around air quality and water pollution and wood stress. It’s also got real threats from flooding and earthquakes. And all these impacts are all going to be exacerbated as climate change kicks in, as well.
The Threat to Urban ‘Wealth Generators’
BRINK: Did you rank all these risks equally?
NICHOLS: There are nine risk indices, such as air quality, water quality and so forth, as well as the exposure of the economy and transport infrastructure to natural hazards. In terms of natural hazards, there’s some consideration given to casualties, but we’re mainly looking at economic losses, so it’s geared toward businesses and economic impact.
If these risks are increasing, as we think they are, then they threaten the status of these cities as wealth generators. This has knock-on effects on investment, credit risk and how countries might organize their economies.
Climate change is often viewed with deadlines — “we’ve got 2030 targets.” etc. But it’s not like these environmental challenges occur with a switch. We’re trying to make people aware that these risks are rolling so they are better prepared to mitigate them.
Source: Verisk Maplecroft Global Risk Analytics Dataset © Verisk Maplecroft 2021
Why Asia’s Climate Risks Differ from Africa’s
BRINK: A lot of people would imagine that African cities would be somewhere near the top, places like Lagos, for example. Why don’t they feature as much as Asian cities?
NICHOLS: Natural hazard risks are comparatively lower in sub-Saharan Africa. So, there aren’t the threats of storms or earthquakes or volcanoes to the same extent that there are in Asia or South America.
Where African cities really do spike, is in terms of climate change vulnerability. That’s partly a result of the climate extremes these countries are facing, but it also is a factor around how well these countries are able to mitigate the impacts of climate change and adapt.
So, even though the climate extremes and the physical risks they’re facing might not be quite as severe as some parts of Asia, because African countries are poorer, they are less able to cope in terms of the strength of their institutions, and the funding needed to finance mitigation measures.
Population growth is also going to exacerbate these risks for cities, as you see migration from more risky cities to less risky cities taking place, which will put greater pressure on those cities that were previously seen as less risky.
What Does This Mean for Business?
BRINK: If you’re a company that has a presence in some of these cities, how do you process these findings?
NICHOLS: We recognize that it’s not always possible to pick up your operations, or your supply chain from one at-risk city, and move it to a less risky city. You need to be near the market. You need to be near a labor force. Whatever it is, there’s certainly other factors that will go into decision-making, here.
Nowadays, it’s difficult to find a company that hasn’t got some kind of climate change policy. However, all these environmental factors need to be a part of any long-term decision-making. especially if you’re investing in infrastructure, like an airport or railway line that’s going to be around in 20, 30 years. Otherwise, you risk the asset being potentially stranded or not useful.
In poorer countries, governments may lack the capacity to deal with these risks, whether that’s levies or building sea walls, etc., so the burden on mitigating climate change impacts and adapting may fall on businesses.
There are also going to be increasing limits around carbon — we’ve seen the enormous Chinese emissions trading market going ahead — and these have tended to happen first at a city level before they roll up to a national level. So, it really falls on companies to factor these potential threats into their investments at a city level before they move ahead.
Related themes: CITIES CLIMATE CHANGE RISK MITIGATION
Will Nichols
Head of Climate and Environment Research at Verisk Maplecroft@WillNicholsRisk
Will Nichols heads up Verisk Maplecroft’s global environmental and climate change research team. He generates data-driven insights to help financial and corporate clients identify and address ESG and climate risks impacting their operations, investments and supply chains.
The original articles were be read in the Brink’s website HERE.
Decentralized Finance: The Next Big Threat for the Finance Sector
Decentralized finance, or DeFi, is a fast-growing segment of the financial markets. Based on a blockchain platform, DeFi provides software services that can cut out intermediaries in financial transactions, thereby allowing for financial services, such as mortgages and investment, to be delivered at lower costs. The question is: Will it take off, or will the […]
Decentralized Finance: The Next Big Threat for the Finance Sector
Decentralized finance, or DeFi, is a fast-growing segment of the financial markets. Based on a blockchain platform, DeFi provides software services that can cut out intermediaries in financial transactions, thereby allowing for financial services, such as mortgages and investment, to be delivered at lower costs. The question is: Will it take off, or will the financial sector push back?
Kevin Werbach is the chair of the Department of Legal Studies and Business Ethics at the Wharton Business School, University of Pennsylvania.
WERBACH: At a broad level, DeFi is about reconstructing the entire financial system on decentralized blockchain-based foundations.
At the moment, we have a significant and growing market around cryptocurrency trading, as well as payments in things like Bitcoin. However, most of that activity still goes through centralized actors. If you buy Bitcoin on an exchange like Coinbase, for example, Coinbase is taking custody of your assets, and it’s providing a similar kind of intermediation function to a traditional financial services provider.
No One Takes Custody of Your Assets
DeFi is about taking the actual financial service provision and transforming it into software that is operating as what are called “smart contracts” on a blockchain.
Most of this kind of activity today is on the Ethereum blockchain, but there’s a number of other blockchains that are growing in their level of DeFi activity.
Photo: Chris McGrath/Getty Images
People use bank ATMs next to a Bitcoin ATM at a shopping mall in Istanbul, Turkey on April 16, 2021. There are now more crossovers where decentralized finance architectures are being built within the traditional financial services world.
There are three key attributes of DeFi.
The first is that settlement is done on a trust-minimized blockchain platform. The base layer is that these are digital assets — cryptocurrencies where the ultimate ledger of transactions is a blockchain — as opposed to some centralized database in a financial entity.
The second piece is that the services are non-custodial — no one takes ownership or full control custody over investors’ assets. The investor still has control of their assets — even though they are transacted — whether it’s a trade or a lending relationship through the financial services platform.
The third piece of DeFi is that services are open, programmable and composable. What that means is that all of these are just software components that are running on a blockchain network. So it’s easy to add in additional functionality or to combine functions from different services because everything is running on a standardized software environment.
Which of the Intermediaries Will Be Most Threatened?
BRINK: Which intermediaries are likely to be most disrupted by this?
WERBACH: We first need to question whether DeFi actually disrupts traditional finance, operates alongside traditional finance or integrates with traditional finance.
It probably will be some of all three, but the growing success of DeFi does not necessarily require undermining traditional financial institutions. The question that DeFi poses to traditional finance is whether intermediation is valuable.
If the things that a bank or an asset manager does turn out to be things that can be provided more cheaply and efficiently in an automated way through software, then that will ultimately lead to capital flowing away from those traditional intermediaries.
In terms of the infrastructure, staffing, processes and relationships that are wrapped around that basic intermediation function in traditional finance, what will happen to all of those if we move to a world where at the core is software and decentralized blockchains as opposed to existing finance structures?
BRINK: Can you describe any new services or new areas of financial activity that might open up as a result of this innovation?
WERBACH: Right now, there is a tremendous amount of experimentation in DeFi because these base functions in finance can be combined in different ways. So one area of experimentation we see are aggregators — where if, for example, you have multiple opportunities to earn yields for providing capital as liquidity, then that can be automated and optimized in very efficient ways.
So there’s a new layer of DeFi providers that have already sprung up on top of the first level of DeFi applications to do that automated management. We have things somewhat like that in traditional finance, but generally speaking, they’re only accessible to the largest investors, the hedge funds and the very sophisticated players. They also have a lot of manual activity and costs associated with them. So that’s one area of experimentation.
There are a host of technical risks and concerns about attacks and hacks that have been very significant in DeFi that costed hundreds of millions of dollars because these systems are not sufficiently mature, robust and resilient.
Getting Your Mortgage via DeFi
Another area of experimentation is potentially opening up financial products that have not been accessible to retail level investors, or to the billion or so people in the world who don’t have bank accounts and access to the traditional financial system.
Now that has to be said with some caution because there’s risk involved, and DeFi today is very immature. Making complex financial services accessible to someone who doesn’t have the background or the knowledge or the legal protections that traditional banking customers enjoy is not a desirable outcome.
Right now with DeFi, we’re seeing people trying all sorts of creative things because they can — but that doesn’t necessarily mean that all those things are going to succeed or that they should.
BRINK: For example, one could potentially see mortgage services provided this way?
WERBACH: Sure, any kind of lending relationship can be done in DeFi. The idea is that the collateral pool can be drawn from multiple holders of these digital assets in very flexible ways. Lending can be done in an automated way that is fully-collateralized or even over-collateralized. This addresses some of the risk concerns with these assets.
That being said, markets, like mortgage markets, are extremely large, sophisticated and regulated based on experience of where things can go wrong. I think we will see DeFi integrating in and providing alternatives to some of those markets. But again, there’s a long way to go to the point where people would feel comfortable doing that at scale.
BRINK: What are the major risks that regulators should have an early lead on?
WERBACH: First of all, there are a host of technical risks and concerns about attacks and hacks that have been very significant in DeFi. There have been hundreds of millions of dollars lost because these systems are not sufficiently mature, robust and resilient.
Manipulating the Oracle
For example, DeFi systems depend on what are called oracles. A blockchain doesn’t know the price of an asset — it only knows what’s on the blockchain. There needs to be some decentralized mechanism to allow the price signal to be recorded in the blockchain. It turns out that those can be manipulated. If you can manipulate the price oracle, you can use that in some cases to drain funds from the DeFi application that depend on that price oracle.
Now there’s a lot of sophisticated technical work going on to harden these systems, but we still have a long way to go.
All of these applications are based on smart contracts, and they generally have fail-safes involved and mechanisms to address significant price volatility. But as we’ve seen time and time again in finance writ large, it’s impossible to fully predict how systems will respond to every possible scenario. We don’t entirely know what will happen if there are rapid price swings in these assets.
Legal Risks
There are legal risks as well, where regulators appropriately have concerns about things like money laundering and fraud that are going on in the larger blockchain and cryptocurrency world and as well as in DeFi specifically.
The value of these DeFi services is that they are decentralized, so there’s not one actor that is responsible for all of the transactional activity. However, that can’t simply open the door to eliminating any protections against various kinds of financial crime and fraud. That’s certainly an area that the regulators are looking at because there have been plenty of examples in the cryptocurrency world where this has happened.
BRINK: Ten years out, what percentage of the financial landscape do you think will be running through DeFi systems?
WERBACH: It’s a hard question to answer: probably still a relatively small amount because finance is so gargantuan around the world and is tied into so many different kinds of systems. The value of transactional volumes in trade finance, for example, is astronomical.
Finance is a Software Application
I think the basic concept that finance is increasingly becoming a software application is unstoppable, and that’s happening independently of DeFi. FinTech broadly is moving in this direction as well.
I think we will see more and more crossovers where DeFi-type architectures are being built within the traditional financial services world once we can get greater confidence about addressing risks and the regulatory questions.
And there’ll be more and more gateways where the activity may not flow predominantly through these new DeFi providers, but the line between DeFi and traditional finances is going to blur. So 10 years out, I think, some version of what we’re now calling DeFi is going to be fairly well-established as an element of the financial landscape.
Related themes: BLOCKCHAIN DISRUPTION INVESTMENT
Kevin Werbach
Chair of the Department of Legal Studies and Business Ethics at The Wharton Business School, University of Pennsylvania@kwerb
Kevin Werbach is the chair of the Department of Legal Studies and Business Ethics at the Wharton School, University of Pennsylvania. He examines business and policy implications of emerging technologies, such as artificial intelligence, next-generation wireless, gamification and blockchain. His books include For the Win: How Game Thinking Can Revolutionize Your Business and The Blockchain and the New Architecture of Trust.
The original articles were be read in the Brink’s website HERE.
The Clean Energy Transition Starts With Company Culture
Climate change is the biggest risk we are facing, according to the World Economic Forum’s 2021 Global Risk Report. In recent high-profile shareholder proposals and landmark court rulings on climate cases, it is clear the energy sector is an important stakeholder in climate change. Fossil-fuel combustion is responsible for around two-thirds of global greenhouse-gas emissions. Brands […]
The Clean Energy Transition Starts With Company Culture
Climate change is the biggest risk we are facing, according to the World Economic Forum’s 2021 Global Risk Report. In recent high-profile shareholder proposals and landmark court rulings on climate cases, it is clear the energy sector is an important stakeholder in climate change. Fossil-fuel combustion is responsible for around two-thirds of global greenhouse-gas emissions. Brands are under pressure and climate and investor activists are pushing energy companies to change.
The transition to clean energy is imposing immense risks to company valuations — but it is also creating tremendous opportunities for firms willing to act quickly.
Transformation Will Determine Survival
And how organizations respond will be critical to their future. According to Mercer’s 2021 Global Talent Trends survey, despite the pandemic, 56% of companies in the energy sector are continuing their work on ESG at equal pace. A further 22% have accelerated their shift toward ESG and a multi-stakeholder business approach.
Photo: Pexels
Although companies have begun to realize and feel the magnitude of the energy transition, many are still underestimating the pace required to deliver the change demanded.
Although companies have begun to realize and feel the magnitude of the energy transition, many are still underestimating the pace required to deliver the change demanded. We believe a key determinant of success will be how quickly these organizations transform from a traditional product-oriented mindset toward a customer- and solution-focused culture.
To become more sustainable and customer-focused, companies will need to transform their entire operating system — that is culture, structures, procedures and workforce — at the same time. This is a complex undertaking, with little margin for error. And we believe that changes to the business model and company culture also have to be done holistically to be successful.
However, the industry does have experience to fall back on.
Companies will have to start now when developing new capabilities and will need to be nimble and decisive to stay ahead of the pack.
We’ve Done This Before
We see this as the third major cultural transformation since the new millennium. The first was the safety cultural transformation and the second the digital cultural transformation.
Culture is an amorphous concept, but its importance is becoming increasingly evident. According to the latest Global Culture Survey from Virginpulse, 65% of executives state that culture is a more important driver of company performance than strategy or their choice of operating model. And 80% of employees are asking to see significant change in their corporate culture.
In addition to the pain that it has caused, the pandemic has had positive impacts on the way that many of us are working. Three-quarters of energy companies indicated the lockdown allowed them to relinquish central control of employees toward more autonomous work arrangements. Among the biggest questions during the cultural transition is whether or not to make these changes permanent.
Weave Sustainability Into Your Values
Other post-pandemic strategies could include designing a corporate purpose or values that incorporate sustainability at its core. A dedicated exercise to involve all employees would enable a greater sense of ownership over this new culture. Redesigning incentive schemes can be a powerful supplement to these interventions.
Fostering the necessary competencies will require new ways of managing both company performance and individual development. We are seeing a trend to combine these two to replace traditional annual performance reviews, supplemented by a new emphasis on paying for skills rather than pure performance. Modern learning practices, like nudging, will embed new competencies within daily routines. To complement in-house capabilities — especially for transforming the organization, flexible talent ecosystems are being developed that include temporary resources. All of this will require new ways of collaborating and networking, approaches that have already been developed and accelerated by the pandemic.
The cultural transformation will reach a tipping point. The same goes for developing new capabilities. Companies will have to start now and will need to be nimble and decisive to stay ahead of the pack.
Related themes: BOARDROOM CLIMATE CHANGE RISK MITIGATION
Kai Anderson
Head of International Transformation Services at Mercer
Based in Munich, Kai Anderson leads Mercer’s international Transformation services. He joined Mercer through the acquisition of his own company. Kai is a recognized keynote-speaker and author of books and publications on transformation and people management.
Milan Taylor
Global Energy Leader at Mercer
Milan Taylor is Mercer’s Global Energy Leader. Based in London, he works with energy and natural resources organizations to proactively manage their people risk agendas and ensure their people strategies are future-fit.
The original articles were be read in the Brink’s website HERE.
Here’s How Emerging Technologies Will Impact the Future of Infrastructure
The transformative and disruptive technologies of the Fourth Industrial Revolution are reimagining the possibilities for the built environment. Advances in data proliferation, connectivity, automation and sustainability technology are disrupting existing markets and creating new ones altogether in many infrastructure sub-sectors. The COVID-19 crisis is also causing profound shifts in societal needs and consumer demands, hastening […]
Here’s How Emerging Technologies Will Impact the Future of Infrastructure
The transformative and disruptive technologies of the Fourth Industrial Revolution are reimagining the possibilities for the built environment. Advances in data proliferation, connectivity, automation and sustainability technology are disrupting existing markets and creating new ones altogether in many infrastructure sub-sectors.
The COVID-19 crisis is also causing profound shifts in societal needs and consumer demands, hastening the adoption of certain technologies that threaten to erode the market share of assets that were conventionally highly used. Taken together, these dynamics are now shaking long-held assumptions about the essential and monopolistic nature of some infrastructure services.
As noted in the recent report from Marsh McLennan Advantage and the Global Infrastructure Investor Association (GIIA), Global Risks for Infrastructure: The Technology Challenge, these two forces have resulted in increased competition for owners and operators of certain assets while reducing or changing demand for others.
Photo: Loic Venance/AFP via Getty Images
Solar panels of a photovoltaic power plant are shown in Guignen, western France. New solar and wind projects are already cheaper than new coal plants in all major markets as well as existing coal-fired power plants in many regions.
Yet the infrastructure sector has historically been slow to understand and adopt new technology. In 2019, the World Economic Forum remarked that it remains “one of the least digitally transformed sectors of the economy.” This disconnect creates the potential for stranded assets — it is estimated that the disruptive power of renewables will strand almost $20 trillion worth of traditional fossil fuel-based energy assets worldwide within the next 30 years. As such, the time is now for the infrastructure sector to sit up and take notice of the risks that technological disruption entails.
An Evolving Competitive Landscape
Rapid technological developments have often lowered the traditionally high barriers to entry for infrastructure services that had previously been regarded as monopolistic in nature. As new technologies become cheaper or more efficient, opportunistic disruptors increasingly stake a claim for market share in many sub-sectors by offering attractive alternatives to existing products and services. This creates new risks for incumbent investors and raises hard questions about asset valuations and long-term contracting structures.
Technological disruption is particularly relevant to the energy sector, with renewable energy and energy storage technologies making large strides toward cost and efficiency parity with fossil fuel-based electricity generation. According to the International Renewable Energy Agency, the cost of utility-scale solar photovoltaic energy fell 82% between 2010 and 2019, while new solar and wind projects are already cheaper than existing coal-fired power plants in many regions and new coal plants in all major markets. Consequently, global coal power capacity has fallen for the first time on record, with more generators being shut down than commissioned in the first half of 2020.
Global coal capacity by year; Source: Marsh McLennan Advantage/Carbon Brief and Global Coal Plant Tracker
Renewable energy has already broken the monopoly of fossil fuel-based electricity generation by providing consumers with a genuine alternative that is moreover backed by the ongoing crusade against climate change. With green technology poised to become more commercially viable at large scales in the coming years — in part driven by the continuation of government-backed subsidies — fossil fuel power may eventually lose the centrality it has long enjoyed in the world’s energy system. Indeed, global energy infrastructure financing is already moving away from fossil fuel-based assets and toward renewables, with investment in the latter expected to overtake downstream oil and gas investment in the near future.
The rise of renewables is even threatening to strand assets in other infrastructure sub-sectors, such as freight rail tracks that exclusively transport coal to power plants. As the Fourth Industrial Revolution rolls on, the competitive pressure from emerging technologies will only continue to transform the outlook for incumbent infrastructure investors and operators.
Reduced Utilization Rates For Transportation Assets
The societal fallout from the COVID-19 crisis expedited a shift in customer needs and preferences, which could further undermine the fundamental and essential nature of assets and services.
For instance, the downturn in traffic for commuter rail and international air travel was matched by the rapid adoption of remote working technologies and shifting work practices. Data from the U.S. Bureau of Transportation Statistics suggests that, since the COVID-19 lockdowns began, more people stayed home in any given week of 2020 than in the corresponding week in 2019. The dramatic transformation in mobility patterns induced seismic shockwaves across various transportation sub-sectors. In early 2021, U.S. monthly urban rail use was down to almost a quarter of 2019 levels; total monthly air travel was down 65% year-on-year.
Average daily number of people staying home week beginning December 20, 2020. Source: Bureau of Transportation Statistics
It has become clear that technology-enabled, remote work models are seen as legitimate work spaces. This means business travel in particular, from intercity bus and rail to domestic or international flights, may no longer be as essential as before for some citizens in the “new normal.” Depending on the extent to which companies continue to embrace digital solutions such as video conferencing, the post-pandemic world could be marked by reduced demand for some commuter transportation services, which may, in turn, impact the nature and scale of future investment for many transportation assets.
Looking Ahead
While the sector’s technological revolution and the pandemic have no doubt resulted in increased demand and supply uncertainty, the need for new infrastructure across the globe continues to rise to levels beyond the capacity of governments alone. Private investment, at higher levels than has been allocated to date, will be needed in order to close the multi-trillion-dollar global infrastructure gap.
Looking at the core markets for Global Infrastructure Investor Association (GIIA) members, the challenges of decarbonization, climate resilience and digital connectivity will drive unprecedented levels of new investment opportunities.
As governments around the world look to bounce back from the economic damage inflicted by COVID-19, they will have to quickly determine the role they see for private investment in delivering our future infrastructure needs. Infrastructure asset owners stand ready to bring not only much-needed private capital, but also global expertise, innovation and project discipline to bear. The GIIA will continue to work with governments and regulators to create the right framework to encourage that investment in a way that works for all stakeholders.
A version of this piece originally appeared on the World Economic Forum Agenda blog.
Related themes: DISRUPTION INFRASTRUCTURE RENEWABLE ENERGY
Blair Chalmers
Director of Marsh McLennan Advantage
Blair Chalmers is a director in Marsh McLennan Advantage and leads the unit’s agenda for the infrastructure and construction sectors. Prior to this role, he worked for Oliver Wyman, the management consultancy, with a focus on clients in asset intensive industries.
Building Climate-Resilient Infrastructure in the Post-Pandemic World
Latin America Has Taken Steps to Curb Corruption and Boost Sustainability. Will Investors Bite?
Does Asset Recycling Actually Work?
Lawrence Slade
CEO of the Global Infrastructure Investor Association
Lawrence Slade joined the Global Infrastructure Investor Association as CEO in January 2020, having most recently been Chief Executive of Energy UK since 2015. He has been involved in the energy industry since the late 1990’s working in countries all over the world. Lawrence is a member of the UK Government’s Committee on Fuel Poverty, an Advisory Board member of Connected Kerb, a Board Trustee and Audit Committee member of the Money Advice Trust (who run the National Debtline and Business Debtline), and is also a fellow of the Energy Institute.
Building Climate-Resilient Infrastructure in the Post-Pandemic World
The original articles were be read in the Brink’s website HERE.
Construction Produces 25% of a Building’s Lifetime Emissions — But New Materials Are Changing This
The construction industry has demonstrated remarkable resilience in the face of the challenges and disruption posed by the COVID-19 pandemic — whether through practical worker safety steps at the coalface, or by navigating multiple pressures in the boardroom. Now, attention is turning back to an equally pervasive challenge that is very much coming to the […]
Construction Produces 25% of a Building’s Lifetime Emissions — But New Materials Are Changing This
The construction industry has demonstrated remarkable resilience in the face of the challenges and disruption posed by the COVID-19 pandemic — whether through practical worker safety steps at the coalface, or by navigating multiple pressures in the boardroom.
Now, attention is turning back to an equally pervasive challenge that is very much coming to the fore and is set to dominate the coming years: the need to accelerate the transition to a low-carbon economy.
Photo: Greg Baker/AFP via Getty Images
A worker prepares to weld a steel structure at a construction site in Beijing. Producing zero-emission cement and steel depends heavily on the continued development of carbon capture and hydrogen technologies.
Toward Zero Emission Building Materials
Net-zero construction is the responsibility of all stakeholders of a project — from owners, developers and financiers, to designers and those who turn the conceptual design into a tangible asset — the contractors. With construction material production accounting for an estimated 25% of the total lifetime emissions of buildings, decarbonizing this aspect of construction is a key building block of the industry’s support for global emissions targets. This area is undergoing rapid change, with the sustainable use of natural materials and adoption of net-zero techniques typically replacing the production of tried, tested and established traditional alternatives, like concrete and steel.
Producing zero-emission cement and steel depends heavily on the continued development of carbon capture and hydrogen technologies. But as the wait for these breakthrough technologies continues, considerable innovation is happening in the space of low-carbon materials, such as novel cements, material recycling — of concrete, rubber and metallurgical slag, for example — and a move back to natural materials like timber, straw and hemp. Wood-based materials, such as cross-laminated timber (CLT) may even offer the potential for negative emissions, by “locking up” carbon in buildings that was removed from the atmosphere by trees.
With global infrastructure investment of $6.3 trillion a year needed to meet development goals, the impact of these new materials alone on achieving climate change objectives could be truly profound. With new materials, of course, comes the introduction of new risks, and it is how these unknown risks are identified, managed, allocated and transferred that will be key to the part played by the construction industry — and the insurance market with which it works closely.
Managing Material Risk
Innovation inevitably brings with it unknown outcomes — the possibilities of failure during construction; injury to workers, third parties and the wider environment; long-term durability; and failure to perform as anticipated. Typically, new materials and ways of working are introduced gradually with innovation juxtaposed with the concept of prototypical design, and the construction industry and insurers working closely to apportion who takes what risk. To load any one party with all the risk inevitably stifles progress and the likelihood of a step-change toward achieving desired objectives is held back.
Isabelle Kowalski, global head of construction at SCOR, cites the example of the move away from asbestos in France: “The ban of asbestos from building materials for safety reasons led to huge decennial losses: liquefaction of window joints and collapse of roofs of corrugated sheets; we had to replace asbestos — that had known characteristics — with new materials that had unknown characteristics.”
With decarbonization, we are seeing innovation in the construction industry on a broad scale at seemingly breakneck speed — but can the insurance market keep up with it?
The challenge for the insurance market is pricing often-unknown risks while designing affordable products that cater to the needs of the construction industry.
Partnership Is Key
With decarbonization, we are seeing innovation in the construction industry on a broad scale at seemingly breakneck speed. The question is, can the insurance market keep up with this and be the partner that it has historically been? Timber frame building, and specifically the use of CLT, is a good example: The widespread and rapid increases in adoption in many regions has been accompanied by an increased frequency in fire losses and a resulting contraction in insurance capacity within the market.
This demonstrates the need for the construction industry and insurance sector to work together toward a common goal. Insurers recognize that they have an important part to play in facilitating the transition — from deployment of their risk management expertise, global overview and supporting data, to their provision of a financial backstop, tailored investment strategies and role in incentivizing early adopters.
The insurance market is uniquely placed to catalyze a dialogue among construction industry stakeholders about innovation on the horizon and how the new risks can be identified, allocated and managed appropriately — particularly with regard to new building materials. In areas like tunneling and fire risk, we have often seen practical loss experience drive regulation and a constructive dynamic between the two industries to develop risk management solutions. With climate change, things are likely to be different.
The regulatory agenda will be broader, with an objective to support the uptake of new materials while balancing safety concerns. The French government’s mandate that public buildings be built from at least 50% timber or natural materials is one example. While experience will, as it has always done, play a part in product design, terms, conditions and risk pricing, new materials and ways of working driven by decarbonization objectives will be employed, because they have to be.
Kowalski summarizes the conundrum very well: “Our challenge is global and spans across the entire construction industry. Construction companies and developers need to find insurance solutions, brokers need to find capacity, and insurers need to understand the risks. The end-goal is to reduce carbon dioxide emissions around the world. Every country is trying to find a solution, innovation is coming from everywhere, and good ideas, as well as increased exposure, need to be spread rapidly around the world. We are not in a situation of “innovate to be the first,” we are in a situation of “innovate together to save all.” We cannot fail. This will require collaboration between key professionals, sharing new and best practices and helping each other.”
As we have seen through the COVID-19 pandemic, when the world works together, amazing strides can be taken and outcomes achieved. There will perhaps not be a better example of history needing to repeat itself.
As we have seen through the COVID-19 pandemic, when the world works together, amazing strides can be taken and outcomes achieved. There will perhaps not be a better example of history needing to repeat itself.
Related themes: CLIMATE CHANGE INFRASTRUCTURE RISK MITIGATION
Richard Gurney
Global Head of Construction at Marsh Specialty
Richard Gurney is the global head of construction at Marsh.
The original articles were be read in the Brink’s website HERE.
When Will International Air Travel Reopen With a Health Passport?
Domestic air travel in the U.S. is getting back to 2019 levels with an average of 2 million passengers a day. However, many international routes remain closed as they await the arrival of a system for checking vaccinations. IATA has been working on a digital travel credential for several years, and its Travel Pass is […]
When Will International Air Travel Reopen With a Health Passport?
Domestic air travel in the U.S. is getting back to 2019 levels with an average of 2 million passengers a day. However, many international routes remain closed as they await the arrival of a system for checking vaccinations.
IATA has been working on a digital travel credential for several years, and its Travel Pass is currently being trialed with several airlines. BRINK spoke to Nick Careen, who leads Operations, Safety and Security division at IATA.
CAREEN: Right now, international traffic is all but shut down. In order for governments to be confident in removing border restrictions, passengers will need to show some kind of health status. That could mean showing what your current status is with respect to your vaccinations; it could also mean illustrating that you’ve received a negative test, be it an antigen and/or PCR test, and those vary by country.
Currently, all those things are done manually. So in simplest terms, this is about taking a manual process and making it digital so that we can all travel seamlessly as international traffic resumes. If we don’t, we’re going to run into a major challenge in terms of manual processing in lines and queues.
Photo: Karim Sahib/AFP via Getty Images
A Flydubai aircraft is parked on the tarmac of Dubai International Airport, on April 6, 2020. Dubai has gone through a lot of pain over the last 18 months of flying and not flying, flying and not flying.
BRINK: What does the IATA Travel Pass contain, and how does it work?
CAREEN: It has a digital identity created by you against your passport information, which would be on your Travel Pass app. It will enable you to receive digital versions of your vaccination or immunity information to allow for traveling. And ultimately, it will also check the validation of what you have against where you’re going, to give you that “okay to travel.”
That “okay to travel” feature is important because it will subsequently allow for the use of self-service tools, like online check-in or airport kiosks that we’ve become accustomed to taking advantage of when we travel. So it has all those elements available to it now.
At the moment, we’re trialing it and piloting it to learn from it. We are working with close to 60 airlines, and we foresee that in the next week or two, we’ll sign actual commercial agreements with some airlines that will take this one step further.
Source: IATA
Passport Adoption From Two Perspectives
There are two ways of looking at adoption. There’s broad acceptance from an airline perspective, which allows the airlines to fulfill their requirements by ensuring that travelers have what they need to meet entry requirements, as governments typically make airlines responsible for delivering passengers who are legal to enter the country.
The other element is government acceptance of digital documentation, and we’re working with governments to get that. We’re in various stages of discussions with them. That’s the more difficult one; it’s a work in progress.
BRINK: Does the IATA Travel Pass hasten the opening of an air corridor with either the U.K. or Europe?
CAREEN: It could, but I think there are considerations that are more important than the Travel Pass. There are politics involved in terms of a corridor being opened up.
But we are seeing an increase in Atlantic capacity, as certain European states begin to open up sooner than others. And so it’s just a matter of time. Will this particular app help give governments confidence in terms of the facilitation of that? Absolutely. Whether it’s ours or someone else’s, this kind of thing will be a requirement as we move forward in order to allow for better transit through the airport.
What About Privacy?
BRINK: There are a lot of concerns around privacy and the risk of someone’s personal data either getting into the wrong hands or being misused. How do you address that?
CAREEN: Well, with respect to the Travel Pass, the key is that we don’t house any data. Every piece of information that you have is on your phone, and you choose whom to share it with.
The airline typically needs to know that you have met the criteria that’s been established by a government — that “okay to travel” message is all they need, and in terms of the government, you were already sharing that information with them anyway. But it is coming from you and no one else, and no data is actually stored by the airlines. It is just verified and deleted.
BRINK: Couldn’t you do that just using a PDF?
CAREEN: Yes you could, but then that data wouldn’t be ingested into the airline’s systems, so it’s a bit more complicated than that — a PDF is just the same as a piece of paper in that sense.
International Travel Recovery
BRINK: Which of the international routes are closest to getting back to normal?
CAREEN: The Middle East, maybe. But keep in mind that Dubai has gone through a lot of pain over the last 18 months of flying and not flying, flying and not flying.
Inside the U.S., we’re getting close to 2019 levels of domestic traffic. Last week, there were 2 million passengers a day, on average. China’s domestic market has actually returned to positive growth compared to 2019, and other domestic markets are recovering as well.
Internationally, Europe is probably the best example of being a little bit ahead of everybody else. Canada just announced that as of July 5th, vaccinated Canadians and those eligible to enter the country can do so without the requirement for mandatory hotel quarantine. And we’re seeing more and more moves in that direction, but it is definitely happening at a different pace around the world. We estimate that it will be 2022 before we begin to see flying levels close to what we’re used to.
Related themes: DISRUPTION RISK MITIGATION
Nick Careen
SVP of Operations, Safety and Security for IATA
Nick Careen is the senior vice president of Operations, Safety and Security Division at International Air Transport Association (IATA). Nick is responsible for IATA’s relations with airports, safety, flight operations, fuel supply, passenger experience, cargo, security and ground handling for IATA member airlines and industry partners around the world. He also has corporate responsibility for IATA’s training, publications and consulting portfolios.
The original articles were be read in the Brink’s website HERE.
Asia-Pacific Must Phase Out Fossil-Fuel Subsidies
The extent to which Asia-Pacific is planning on decarbonizing will make or break the global fight against climate change. Asia-Pacific is home to 60% of the world’s population and the main engine of global economic growth. However, since the early 2000s, Asia-Pacific has been the main carbon dioxide emitting region, producing about half of the […]
Asia-Pacific Must Phase Out Fossil-Fuel Subsidies
The extent to which Asia-Pacific is planning on decarbonizing will make or break the global fight against climate change. Asia-Pacific is home to 60% of the world’s population and the main engine of global economic growth. However, since the early 2000s, Asia-Pacific has been the main carbon dioxide emitting region, producing about half of the world’s total emissions.
Source: Bruegel based on BP Statistical Review of World Energy (2021).
Note: data refers to carbon dioxide emissions resulting from fossil-fuel combustion, as listed in the IPCC Guidelines for National Greenhouse Gas Inventories. Other sources of CO2 emissions, or other greenhouse gases, are not included.
Photo: Kevin Frayer/Getty Images
A laborer unloads waste coal and stone as smoke and steam rise next to an unauthorized steel factory in China.
Compared to other world regions, Asia-Pacific faces a specific decarbonization challenge: a need to rapidly decrease its reliance on coal that makes up about 50% of Asia-Pacific’s energy mix. In other regions, coal makes up from 10% to 20%.
Source: Bruegel based on BP Statistical Review of World Energy (2021).
The coal challenge is particularly pronounced in China and India, which respectively account for 60% and 14% of Asia-Pacific emissions. About 70% of electricity generation comes from coal in both countries, compared to about 20% in other major emitters including the United States, the European Union and Russia (Figure 3).
Source: Bruegel based on BP Statistical Review of World Energy (2021).
The Use of Coal Is Still Increasing
All in all, coal in China and India is currently the single biggest contributor to global greenhouse-gas emissions. Phasing down the use of coal in these two countries is absolutely critical if the world is to meet the Paris Agreement objectives and fight climate change.
As a second objective — but still important — the coal dependency of low-income countries in Asia-Pacific needs to be reduced. The share of coal in electricity generation in these countries is increasing rapidly with the expansion of electricity demand and infrastructure, with which natural gas and hydropower cannot keep up.
Asia-Pacific countries have increasingly adopted policy measures designed to fulfill their climate pledges under the Paris Agreement — ranging from air-quality regulations to renewable-energy subsidies, from vehicle emission standards to carbon-pricing mechanisms.
While welcoming, these measures will certainly not be enough without tackling the most pressing and significant problem of excessive reliance on coal in the energy basket. In fact, notwithstanding the adoption of climate policy measures, countries in the region continue to subsidize significantly the consumption of fossil fuels, including coal. China continues to subsidize coal for at least four reasons: 1) to provide cheap electricity and heating to citizens, as coal plants remain a low-cost electricity supply option compared to natural gas and offshore wind (and might remain so until 2026); 2) to foster industrial competitiveness by using cheaper electricity for production; 3) to enhance energy security by reducing the need for energy imports; and 4) to support the coal industry, which employs about six million workers, mainly in north-eastern provinces that suffered most growth-wise since 2015.
Diverting Fossil-Fuel Subsidies
The International Energy Agency (IEA) estimates that, in 2019, Chinese fossil-fuel subsidies amounted to $30 billion, while in India, they were $21.8 billion and in Indonesia, they were $19 billion (Table 1).
There is no justification for subsidizing fossil fuels in a context in which their share in the energy mix must be reduced drastically. In fact, for Asia to meet its carbon neutrality goals, no new coal mines should be constructed because there will be a sharp decline in fossil-fuel demand. According to the IEA’s May 2021 net-zero by 2050 roadmap, global coal demand should decline by 90%, to just 1% of total energy use, by 2050.
Not only are fossil-fuel subsidies counterproductive, they also divert resources from other potentially necessary subsidies for renewable energy. While data is not fully comparable, let alone transparent, estimates of China’s subsidies for renewables in 2019 hovered between $1.1 billion (27 times less than fossil fuels) and $13 billion (a little bit less than three times less). India only devoted $1.5 billion to renewables (more than 15 times less than fossil fuels), and Indonesia only devoted $1.1 billion (17 times less).
These subsidies represent a major stumbling block for decarbonization in Asia-Pacific. Consequently, the first climate policy must be to ensure that fossil fuels do not get direct or indirect government support.
Only by phasing-out these subsidies can market distortions be avoided and the potential deployment of renewable energy and energy efficiency solutions fully unleashed. Furthermore, the phase-out of these subsidies is important to free-up public finance resources that can be reallocated towards green investments and towards compensatory measures for the poor — to ensure climate justice.
In this context, the very rapid increase in the number of coal power plants in developing Asia in the last few years is very concerning. This shows that international coordination is needed to stop the financing of coal. The May 2021 announcement by the Asian Development Bank that it will stop financing coal is welcome, but others must follow. In particular, given the huge role of Chinese public banks in the financing of coal plants in the region, an international coordinated effort to stop such financing is needed to expedite the shift away from coal in these countries’ energy baskets.
Finally, it should be mentioned that while discussions on carbon pricing are important in Asia — as they are for the rest of the world — the sheer amount of fossil-fuel subsidies makes this issue rather secondary compared to the need to reduce the immediate distortions generated by fossil-fuel subsidies.
How China Is Approaching the Problem
Take China: After years of pilot schemes at regional and sub-regional levels, China announced in 2017 the creation of a national emissions trading system (ETS). The scheme’s first compliance period, initially due for 2020, will now start in mid-2021, covering coal- and gas-fired power plants (approximately 40% percent of national carbon emissions). While it is still too early to say how the ETS will develop, TransitionZero has estimated — using satellite images and machine learning to estimate operations at China’s biggest coal plants in 2019 and 2020 — that China is likely to have oversupplied the scheme by as much as 1.6 billion allowances for 2019 and 2020, potentially causing prices to quickly crash to zero when trading begins later this year. Should this happen, it might take several years before China’s ETS becomes an effective decarbonization tool. Considering the $12 billion in fossil-fuel subsidies provided to the electricity sector every year, China’s carbon price would be negative. This represents a major concern for global decarbonization efforts. In its Net-zero by 2050 roadmap, the IEA notes that China’s carbon price should reach $45 per ton by 2025 to be consistent with a net-zero scenario by mid-century.
All in all, the phase-out of fossil-fuel subsidies must be the first step in decarbonization of the Asia-Pacific region. It really is a key prerequisite for the development of properly functioning carbon-pricing systems and the unleashing of their vast potential for driving decarbonization in this region. Coal subsidies are not only an issue in Asia, of course. There is probably no more important issue on the climate change front, though much more attention is given to carbon pricing or carbon tariffs. For industrialized countries, helping create the incentives to dismantle coal subsidies in China and India, and stopping the building of more coal plants, especially in the rest of Asia, should be a priority in their international climate strategies.
This piece was originally published in Bruegel.
Related themes: CHINA CLIMATE CHANGE RENEWABLE ENERGY
Alicia García-Herrero
Senior Fellow for Bruegel and Chief Economist for Asia Pacific at Natixis
Alicia García Herrero is chief economist for Asia-Pacific at Natixis and a senior fellow for Bruegel. Previously she was chief economist for Emerging Markets at Banco Bilbao Vizcaya Argentaria. She is a non-resident fellow at Cornell’s emerging market research centre and Senior Research Fellow at El Cano Royal Institute for International Relations. She is currently adjunct professor at City University of Hong Kong, visiting faculty at University of Science and Technology as well as at China-Europe International Business School.
Could the RMB Dislodge the Dollar As a Reserve Currency?
Is China About to Cap Its Coal Output?
Will Europe and China’s Investment Agreement Amount to Anything?
Simone Tagliapietra
Senior Fellow at Bruegel
Simone Tagliapietra is a senior fellow at Bruegel. He is also an adjunct professor of Energy, Climate and Environmental Policy at the Università Cattolica del Sacro Cuore and at The Johns Hopkins University, School of Advanced International Studies (SAIS) Europe.
Is China About to Cap Its Coal Output?
The EU 2030 Climate and Energy Framework: More Governance Needed
The original articles were be read in the Brink’s website HERE.
“Sri Lanka Investment Forum 2021” – Virtual on June 7-9, 2021
In their continuous efforts towards attracting Foreign Direct Investments (FDIs) and Equity Capital Investments to the country, The Ceylon Chamber of Commerce, the Board of Investment of Sri Lanka and the Colombo Stock Exchange are jointly organising the “Sri Lanka Investment Forum 2021 – Virtual”, from 7th to 9th June, 2021. The Virtual Forum will be […]
“Sri Lanka Investment Forum 2021” – Virtual on June 7-9, 2021
In their continuous efforts towards attracting Foreign Direct Investments (FDIs) and Equity Capital Investments to the country, The Ceylon Chamber of Commerce, the Board of Investment of Sri Lanka and the Colombo Stock Exchange are jointly organising the “Sri Lanka Investment Forum 2021 – Virtual”, from 7th to 9th June, 2021.
The Virtual Forum will be centered on an overall theme of “Asia’s next Growth haven” and feature a three days’ event with Panel Discussions coupled with Virtual B2B Meetings. An introductory brochure can be downloaded HERE. Participation is free of cost.
The forum organizers are also glad to inform that His Excellency Gotabaya Rajapaksa, President of Sri Lanka will be the Chief Guest at the Forum on 7th June, 2021.
CACCI wishes to encourage its members to register for the Forum HERE.
For further details visit the website at https://invest-srilanka.lk or contact the forum’s organizers at +9411 5588818, +9411 2421745-7 or +94-773215566 or by e-mail lilakshi@chamber.lk
What Will India’s Post-COVID Recovery Look Like?
Since the beginning of 2020, India has reported more than 25 million COVID cases, bringing the country’s total number of lost lives to 274,000 — a record, second only to the United States for infections. A massive tsunami of COVID-19 is sweeping through India, with around 83% of the new infections reported in 10 states, […]
What Will India’s Post-COVID Recovery Look Like?
Since the beginning of 2020, India has reported more than 25 million COVID cases, bringing the country’s total number of lost lives to 274,000 — a record, second only to the United States for infections.
A massive tsunami of COVID-19 is sweeping through India, with around 83% of the new infections reported in 10 states, including the western state of Maharashtra, which hosts India’s financial capital, Mumbai. The laxity in preventive measures during election rallies and religious gatherings coupled with the presence of new COVID variants are believed to have resulted in this nationwide crisis.
Photo: Abhishek Chinnappa/Getty Images
Patients who have contracted COVID-19 rest at a hospital on May 06, 2021, in Bengaluru, India. India launched its vaccine drive, the world’s largest inoculation program, in early January 2021.
A Year Ago, India’s Economy Was At a Crossroads
After growing at very high rates for several years, India’s economy had begun to slow down to 4% growth before the pandemic. Between 2016 and 2019, growth decelerated from 8.3% to 4%. In March 2020, the government imposed one of the world’s most stringent lockdowns to contain the spread of the virus, which brought the economy to a halt, as public movement was restricted, factories were shut and trains were stopped.
The three-month lockdown sent the economy into its worst ever contraction of -24% in the June 2020 quarter, followed by a -7.3% shrinkage from July to September, pushing the economy into a rare recession.
Since then, the economy has shown a gradual economic recovery. GDP grew 0.4% from September to December 2020, compared with the same period a year earlier.
The composite Purchasing Managing Index, an integrated measure of activity in the manufacturing and services sector continues to see improvement, rising to its highest levels in the post-pandemic phase at 57.30. A reading above 50 in the index indicates month-on-month expansion in business activity.
Rapid Growth Could Be Stunted
The IMF and ADB have upgraded India’s GDP forecast for FY 2021-22 to 12.5% and 11% respectively, while highlighting the downside risk to growth. But the ability of industry to bounce back depends on several uncertainties, such as the impact of a disrupted supply chain, business defaults, job losses and the stress on the financial sector.
If, like last year, the partial lockdowns announced by the state governments get extended due to uncontrolled infections, the economic damage could be extensive.
The impact on services such as travel, tourism and hospitality will have multiplier effects, as these sectors have strong backward links with other sectors of the economy. However, agricultural growth and rural demand have been quite robust until now and are expected to give further boost to the economy due to the timely onset of the monsoon season.
To build a modern, post-COVID economy, India will need to strategically evolve a global brand position and adopt a global market and innovation mindset.
Due to uncertainty regarding the path of the second wave, the private capital expenditure cycle will take some time to recover. Rising non-performing assets are a challenge for the banks. State-owned banks owned approximately 6.8 trillion rupees ($90 billion) in non-performing assets in 2020.
Though the government now has limited fiscal space to bring out a massive bailout program, production-linked incentive programs could bring some relief to manufacturers planning to make investments in fast-recovering sectors. But a 2020 study by NCAER suggests that it could take a couple of years to reach pre-pandemic output levels.
The Country’s Young Population Helps to Blunt Pandemic’s Impact
Experts speculate that two factors account for the drastic decline in India’s COVID-19 case numbers in the first wave: the country’s younger population and the possibility of rising herd immunity. Half of India’s population is 25-years-old or younger, and 65% are under the age of 35.
A younger population means largely mild disease. It is also an important fact that more than 60% of Indians live in rural areas, where ventilations are better, herd immunity is high and network contact circles are smaller compared to cities.
India launched its vaccine drive, the world’s largest inoculation program, in early January 2021, and has already vaccinated nearly 35 million people, with a target to cover 300 million priority people by the end of July. The country’s drug regulator has given emergency approval for two manufacturers: Bharat Biotech and Serum Institute. Bharat Biotech produces Covaxin, the homegrown government-backed vaccine, while the Serum Institute produces Covishield, the Indian version of Oxford AstraZeneca vaccine.
India’s Vaccine Diplomacy Faltering
Besides inoculating its own people, India is also supplying vaccines to neighboring South Asian countries and a host of other developing countries in Latin America and Africa. The pharmaceutical industry in India provides about 20% of generic drug exports globally, and so far, it has shipped 60 million COVID-19 vaccine doses to over 70 countries.
However, the second wave of COVID-19 and the accelerated domestic inoculation program for all people over 18 has meant the export of some vaccines has been postponed or called off, leaving many countries vulnerable to a fresh wave of the virus and probably delaying their efforts to return to normal. The Chinese authorities are also moving aggressively to promote their vaccines to other countries, in place of India’s.
The current transformation in creating new global platforms, cloud computing and digital data flows have been reflected in the emergence of nearly 12,000 digital tech startups in the last two years in India. New opportunities span such areas as data-driven lending and insurance payments.
Many of these digital innovations hold great promise for a new type of globalization, in which division of labor and resultant services can move freely from firms in developed countries to Indian firms. India’s path-breaking efforts in space technologies at a very low cost is also an opportunity for other countries to launch educational satellites, global navigation channels, broadband spectrum and so forth.
But to build a global role, the Indian corporate sector needs to acquire niche technologies through open innovation models, such as licensing, and forge multilateral partnerships with the governments and a new generation of social entrepreneurs. To build a modern, post-COVID economy, the government and corporate leaders must strategically evolve a global brand position and adopt a global market and innovation mindset. It will require Indian corporates to invest enough in R&D and overhaul organizational structures that inhibit new solutions, business models and approaches.
Related themes: GLOBALIZATION HEALTHCARE INVESTMENT
Venkatachalam Anbumozhi
Senior Economist at Economic Research Institute for ASEAN and East Asia
Venkatachalam Anbumozhi is a senior economist at the Economic Research Institute for ASEAN and East Asia (ERIA). Previously he worked at the Asian Development Bank Institute in Tokyo. He has written books, research articles, and project reports on natural resource management, climate-friendly infrastructure design, and private-sector participation in green growth. He was a member of the APEC Expert Panel on Green Climate Finance and the ASEAN panel for promoting climate-resilient growth.
Can India Pull Off a Sustainable Economic Recovery?
Can a Self-Reliance Strategy Pull India Out of Recession?
Will COVID-19 Devastate the Indian Economy?
The original article can be read at the Brink Asia HERE.
The Global Economy is about to become the Climate Economy
In the next 20 years, climate will move from being a sector of the economy to becoming the dominant force in macroeconomics. New forms of sustainability will disrupt virtually all industries: from manufacturing, the production and use of energy, food, fiber and material resources, to the expansion of transport options and consumer choices. Many leaders […]
The Global Economy is about to become the Climate Economy
In the next 20 years, climate will move from being a sector of the economy to becoming the dominant force in macroeconomics. New forms of sustainability will disrupt virtually all industries: from manufacturing, the production and use of energy, food, fiber and material resources, to the expansion of transport options and consumer choices.
Many leaders suggest artificial intelligence will be the determining factor in the fate of the world in the coming years. While there is an argument to be made in support of this idea of an AI-controlled destiny, we believe that it will be climate that will ultimately define the global economic winners and losers of the next geopolitical era. The application of AI will then be viewed as either an important enabler or a limiting factor with respect to how nations adapt to climate variability in the decades ahead.
No aspect of the emerging 21st century global economy is likely to escape the influence of climate and sustainability factors; what we call the new climate economy will be the defining factor for companies, governments and societies alike.
Photo: Loic Venance/AFP via Getty Images
An electric windmill farm in Plomodiern, western France. Climate tech appears to have a sustainable presence in the minds of long-term investors.
The Shift From Clean Tech to Climate Tech
What was once a narrow purview around clean tech has recently morphed into the all-encompassing term of climate tech, and unlike the boom and bust cycle that accompanied the clean energy frenzy of the late 2000s, climate tech appears to have a sustainable presence in the minds of long-term investors.
During the boom and bust clean tech cycle, the narrow focus on energy production led to massive capital outflows when the market lost its legs. Venture-backed startups and their investors lost billions in this space, and the period following the crash kept capital out of the sector for years.
Today, the cost of capital outlay in climate-related innovation is becoming cheaper than the cost of climate-related impact on developed economies. More than 215 corporations are reporting climate-related costs to their businesses, at a cumulative cost of trillions of dollars. Unlike clean tech, climate tech opportunities are spread across all industrial and commercial sectors, rather than focusing solely on the supply side of the energy and/or transportation matrix.
Climate VC Activity Is Accelerating
Over the last seven years, climate tech investment has grown at five times the venture capital market rate, with venture capital and corporate investment in this sector growing faster than venture capital as a whole in the early 2010s.
Beyond investing in deep technology such as renewable energy, per the earlier clean tech movement, today’s climate tech VCs are looking more broadly at agriculture and other food production, such as meatless burgers Beyond Meat; eco-friendly transportation, such as scooter startup Bird; and a wide variety of startups that can impact society’s greenhouse gas emissions.
A number of recent early-stage investments into consumer and social tracking and sharing and optimizing personal climate-related contributions has also marked a technological shift into the consumer mainstream.
The Rise of the Chief Sustainability Officer
Environmental, social and governance (ESG) factors are now becoming standard parlance in the financial services sphere. What was once viewed as a fringe boutique industry has worked its way onto the agenda of nearly every global financial institution and risk manager as both a source of strategic competitive advantage and as an investment screening factor for discretionary and quantitative investors.
Viewing the global economy through the new climate economy lens is a unique yet appropriate viewpoint to inform our view of the world.
We have seen a significant rise to prominence of the chief sustainability officer; as corporate sustainability is no longer the domain of generalists, the CSO is an increasingly important member of the C-suite that can guide a transition to this new economic reality.
In the same way that the winners of the digital race were those organizations and economies that became digital-first, so this is likely to be replicated across the climate space, and the role of the chief sustainability officer is soon likely to permeate all other business units.
The Physical Environment Is a Primary Driver
Corporations and analysts continue to underestimate the impact that climate-driven volatility exerts on earnings, overall financial performance and broader downstream economic activity.
Whereas some corporations are beginning to include climate-related volatility in their projections, such as defense contractor Raytheon, which reports that 11%-20% of its future global revenue could be affected by water risk, there is upward of a trillion-dollar difference in unexpected global economic impact of climate change and reported corporate financial risk.
The growth of the global economy is currently focused in geographical regions that experience the most adverse of the climate impacts through both short-term disasters and long-term climate change. China and India, the world’s two fastest-growing economies, are ranked second and third, respectively, for the highest number of natural disasters after the United States.
However, unlike the U.S., China and India’s rapid economic development is outpacing their already limited capacity to withstand the impact of major disasters, leaving them highly vulnerable to the highest health and economic threats from natural disasters.
Embedding Climate Risk Into Corporate Planning
Capturing opportunities within this climate-macro confluence needs to start with science and the data supporting the science. By using a combination of alternative and traditional data sources grounded in systems analysis and thinking, we can better understand the connections and risks associated with climate factors and material production, processing, physical flows and pricing as key drivers in order to predict directional macro performance.
For example, geographically indexing raw material exposures by sector and subsectors allows for early detection and signaling of climate-related cost changes.
Exploiting climate tech opportunities at the micro-level will require new sources of historical data, from meteorological data to reanalysis proxies. In turn, these can be used to back-test strategy formulation and to better characterize climate-induced financial and operational risk by quantifying its duration, magnitude and severity.
Supply chain mapping and network analysis will require the creation of a climate-first approach, with the forward-looking identification of physical supply derived from climate models.
Viewing the global economy through the new climate economy lens is a unique yet appropriate viewpoint to inform our view of the world, as we look to better anticipate and understand individual firm, market and economic behavior in the decades to come. Just as digital technology cemented long-standing winners and losers and ultimately created a new and more complex geopolitical order, we should expect climate to deliver similar opportunities.
Related themes: CLIMATE CHANGE DISRUPTION INVESTMENT
Michael Ferrari
Managing Partner at Atlas Research Innovations@MichaelRFerrari
Dr. Michael Ferrari is the managing partner at Atlas Research Innovations, providing clients with basic and applied bespoke research services towards a variety of scientific, technical and economic domains. He is also a senior fellow at The Wharton School’s Customer Analytics initiative.
A Systems Approach to Global Agriculture Could Solve Food Insecurity
Sinead O’Sullivan
Senior Fellow at MIT Sloan and MIT School of Computation@SineadOS1
Sinead O’Sullivan is a senior fellow at MIT Sloan and MIT School of Computation, as well as a fellow at the U.S. Center of Climate and Security and a network partner at Atlas Research Innovations.
The original article can be read at Brink Asia HERE.
Battery Technology Is About to Disrupt the US Power Sector
Until recently, the adoption of battery power storage solutions in the U.S. had fallen short of expectations. Yet, declining costs and advancing technology suggests that battery storage is ready to play a larger role in the U.S. power sector. This potential is now attracting significant investor interest, and from 2024 onward, S&P Global Ratings expects […]
Battery Technology Is About to Disrupt the US Power Sector
Until recently, the adoption of battery power storage solutions in the U.S. had fallen short of expectations. Yet, declining costs and advancing technology suggests that battery storage is ready to play a larger role in the U.S. power sector. This potential is now attracting significant investor interest, and from 2024 onward, S&P Global Ratings expects total capital investment in North American battery storage to exceed $3 billion annually.
The Inflection Point Has Arrived
With global installed capacity increasing at a 25% compound annual rate, growth in battery storage has been robust over the past five years. In the U.S., however, development has been slow. At the end of 2020, the U.S. had around 25 gigawatts of power in energy storage — 23 GW of which is pumped hydroelectric storage. This is minimal relative to the renewables already on the grid.
Photo by Philippe Desmazes PHILIPPE DESMAZES/AFP via Getty Images
A worker controls batteries in an electricity storage container in France. An increase in the uptake of battery storage will inevitably have implications for the wider power sector.
In the past five years, the U.S. has installed just over 1 GW of battery storage, with the majority of growth occurring in the Pennsylvania-Jersey-Maryland Interconnection and the California Independent System Operator region.
Pre-pandemic project delays and uncertainty surrounding trade tensions with China were to blame for declining forecasts, and in the near term, we anticipate some uncertainty around the impact of the pandemic on economic measures. Despite this, S&P now expects annual deployments to accelerate from 2022, as battery storage in the U.S. approaches an inflection point.
A Ninefold Increase in Battery Storage On the Way
S&P Global Platts Analytics, an affiliate of S&P Global Ratings, expects advanced battery energy storage to drive an almost ninefold increase in the U.S. storage market in the period 2020-2023, with cumulative deployment approaching 10 GW by 2024, suggesting large-scale deployment is now imminent.
Growth will be spurred on in part by state targets and surging mandates. Indeed, seven states — led by California and New York — are now targeting a total of 11 GW of battery deployment by 2036. Additionally, the rapid increase of battery projects in the interconnection queue provides anecdotal evidence of a potential growth surge on the horizon, while the continually declining cost curve and the potential for revenue stacking, a way of getting multiple revenue streams for one battery, will remain key to achieving a positive return on investments.
Economically Viable Alternative to Gas-Fired Plants
In addition to financial impetus, the development of technology — notably the growth of storage solutions to economical peak-shifting four-hour applications — is playing an important role in increased deployment. Indeed, when used for providing peak capacity, batteries are well on their way to becoming an economically viable alternative.
In certain markets, including California and Hawaii, battery costs have declined sufficiently to compete with gas-fired peaking generation. In addition, a four-hour grid-level battery storage unit requires less maintenance: With no moving parts and no fuel, long-term operation costs are more stable and predictable.
While battery storage creates opportunities for many businesses, it also poses a threat to those that focus on conventional generation.
What’s more, battery banks are scalable, with the capacity for more units to be added without pronounced cost increases. Our estimates show that a utility-scale battery solution would currently cost between $1,250 and $1,300 per kW, comparable with the cost of building a gas-fired peaker plant in California. Utilities are increasingly recognizing the value of storage in integrated resource planning, particularly in the vertically integrated markets, suggesting that the provision of peaking capacity will be a major use for batteries.
A Game-Changer for Solar Power
Given battery storage’s ability to solve issues pertaining to intermittency in solar power generation, we believe large-scale, co-located solar plus storage deployments are now imminent.
Solar power generation’s primary issue is that it is interruptible, and as the grid adds more solar plants producing electricity at the same time, daytime reliability issues are mitigated so effectively that the remaining reliability challenges move into the evening hours. This naturally diminishes the marginal effectiveness of adding more solar plants — unless battery storage systems are able to store energy and deliver it to the grid when most needed.
In the Electric Reliability Council of Texas (ERCOT), for instance, most battery projects are located in counties where major photovoltaic (PV) solar generation projects are expected. Indeed, co-located storage projects are increasing as capital costs continue to decline. Most projects co-located with solar PV installations have a battery capacity ranging from 50%-150% of the PV capacity, an indication that developers are seeking to contract with utilities for the provision of peaking capacity.
Not only does adding storage provide the potential for offering a firm power product, it has meaningful up-front benefits from qualifying for investment tax credits (ITCs). Storage effectively doubles the capital costs of a solar project, 26% of which can then immediately attract ITC benefits and avail of modified accelerated cost recovery system depreciation.
Together with declining PV solar installed capital costs, as well as lower operating and maintenance requirements, the falling cost of storage should result in a significant uptake in solar-plus storage in the coming years.
The Disruption Has Arrived
An increase in the uptake of battery storage will inevitably have implications for the wider power sector. Companies such as NextEra Energy and AES Corp. could benefit from significant growth if they add storage capabilities to existing renewables development sites, thanks to existing infrastructure.
Of course, while storage creates opportunities for many businesses, it also poses a threat to those that focus on conventional generation. As renewable costs continue to decline, they weigh heavily on both peak and off-peak power prices. While gas-fired assets should be able to coexist with renewables for the foreseeable future in some regions, companies that rely on coal-fired generation will face the threat of significant asset retirements.
Market participants have long acknowledged the declining cost curve of battery storage. In our view, however, the more compelling reason for the uptake of the technology is its complementary role improving the economics of solar power generation. With annual investment set to surpass $3 billion in the coming years, this technology is now well set to disrupt conventional generation in the North American power sector.
Related themes: DISRUPTION INVESTMENT RENEWABLE ENERGY
Aneesh Prabhu
Senior Director of Infrastructure at S&P Global Ratings
Aneesh Prabhu is a senior director and sector lead of the North American infrastructure at S&P Global Ratings.
How Can Offshore Wind Energy Be Profitable in the US?
The original article can be read at the Brink Asis website HERE.
Have the Wheels Come Off the Driverless Car Revolution?
Five years ago, Uber predicted it would have 200,000 driverless cars on the road by 2020. But to date, the widespread use of driverless cars has not arrived. So what has happened? The last five years have seen the hype surrounding the phenomenon slowly dissipate, as the industry wrestles with a number of hard technical […]
Have the Wheels Come Off the Driverless Car Revolution?
Five years ago, Uber predicted it would have 200,000 driverless cars on the road by 2020. But to date, the widespread use of driverless cars has not arrived. So what has happened? The last five years have seen the hype surrounding the phenomenon slowly dissipate, as the industry wrestles with a number of hard technical challenges.
Nick Reed, who led the original U.K. self-driving trials, described to BRINK the current state of development.
Photo: Ed Jones/AFP via Getty Images
A safety driver sitting behind the wheel of a ‘self-driving’ car in South Korea. Once we can demonstrate that automated vehicles are safe, there will be a blossoming ecosystem of operating systems
REED: Five years ago, there was a lot of hype, a sense that this was something that was coming very soon and would be a part of the lives of many people — in the Western world, at least, within a few years. But people underestimated the scale of the challenge of operating a fully automated, safety-critical system in an unpredictable and infinitely variable environment.
Being able to build a vehicle that can work in some environments, in some weather conditions, when the winds are favorable as it were, is very achievable. But getting it to work every time, when there is infinite variability, is a much greater challenge.
Harder Than Going to the Moon?
BRINK: The CEO of Waymo said recently that it’s a bigger challenge than sending a rocket into space — is it really harder to put a driverless car on a road than a rocket into space?
REED: Well, you had thousands of people putting billions of dollars into sending those guys to the moon and doing that six times. Automated vehicles are a consumer proposition, and something that will be engaged perhaps everyday by millions of people.
That level of reliability, predictability and safety is a big challenge for tech companies. Waymo’s CEO John Krafcik described it as an extraordinary grind, getting these systems to work. That reflects the scale of the challenge in dealing with the complexity of driving, which was underappreciated five years ago.
BRINK: Waymo is running an operational taxi service with driverless cars in Phoenix. If it is doable in one city, could it not be replicated elsewhere?
REED: The environment in which you expect the automated vehicle to operate is what’s called the operational design domain. This includes the routes, the environmental conditions and the traffic conditions that the automated vehicle is expected to encounter.
Once you don’t have to think about accommodating a driver, you’ve got many different types of vehicles and business models that can emerge.
So if you want to say, “we don’t just want to operate in city A, but now expand to cities B, C and D,” you need to understand everything about where the traffic lights are, where vehicles park, where the turning lanes are and all these different aspects of those new environments. That’s why it’s so difficult to just have one operating system that works everywhere.
BRINK: What’s likely to be the first application of this technology in the U.K.?
REED: There is an evolutionary path and a revolutionary path. The evolutionary path builds on existing driver assistance systems — for example, adaptive cruise control, lane guidance — to the point where the vehicle manufacturer is taking responsibility for the safe control of the vehicle for extended periods of time. I can see that happening in the next two to three years on highways. If there were a collision, it would be the manufacturer that was responsible, subject to the exact conditions of the collision.
The revolutionary path is when you have vehicles that don’t have any driver within them, where you have robotaxis and automated shuttles. The sorts of things that Waymo and Amazon/Zoox are doing. I envisage a step-wise process gradually expanding the operational design domain of their vehicles, as they build more evidence around the capabilities of their vehicles.
Transforming Car Insurance
BRINK: Do you see insurers willing to insure those kinds of vehicles?
REED: When this field was opening up, I think there was a lot of nervousness from the insurers; that there would be many fewer collisions and they would all be fighting for larger segments of a smaller pie.
That’s gone away, to an extent. They realize that insurance will remain a necessary enabler to the deployment of automation. My intuition is that in the early stages of automation deployment, premiums will remain broadly similar to those we see today. But once the evidence builds up about the relative safety of automated driving, they can start to adjust their models and price in the improvements in safety that we believe automation can bring.
Depending on the business models of automated vehicle operation, there may be more fundamental changes. If I no longer own a car, but summon an automated vehicle as needed, the insurance will be through the operator rather than having an individual motor vehicle policy. So, while there may be interesting changes in the model of insurance, the importance of having that cover in place remains.
Solving 99% of Journeys for 99% of the People
BRINK: Do you think that the puzzle you outlined, of being able to replicate driverless cars in any weather, any traffic or terrain, will ever be solved?
REED: Whether it will ever be solved completely, I’m not sure. I mean, maybe in 50 years, 100 years’ time. But if you can solve 99% of journeys for 99% of people, that’s a much more achievable task. Then you’ve got an incredibly powerful business case and safety case, frankly, for doing it.
Once we can demonstrate that automated vehicles are safe, there will be a blossoming ecosystem of operating systems. Once you don’t have to think about accommodating a driver, you’ve got many different types of vehicles and business models that can emerge, such as pavement-dwelling robots delivering groceries, or road-going vehicles delivering packages or automated trucks doing hub-to-hub transport of containers.
For the most part, much like cars today, a lot of the underpinning technologies are likely to come from a small number of providers. There will be a convergence much of which may be driven by the regulations that demand a required level of safety performance.
Related themes: DISRUPTION INVESTMENT
Nick Reed
Founder of Reed Mobility@reedmobility
Nick Reed is the founder of Reed Mobility, an independent consultancy working at the forefront of future transport. Nick led mobility research at TRL (the U.K.’s Transport Research Laboratory) and Bosch, and has extensively researched driver behavior and the contribution that automated vehicles might play in improving road transport.
The original articles were be read in the Brink’s website HERE.
Is China About to Cap Its Coal Output?
Of the 40 world leaders attending today’s virtual White House Summit on Climate Change, the key figure is President Xi Jinping of China. As the world’s largest greenhouse-gas emitter, China will make or break the global quest to achieve climate neutrality by the middle of the century — which will be the only way to […]
Is China About to Cap Its Coal Output?
Of the 40 world leaders attending today’s virtual White House Summit on Climate Change, the key figure is President Xi Jinping of China. As the world’s largest greenhouse-gas emitter, China will make or break the global quest to achieve climate neutrality by the middle of the century — which will be the only way to limit the global average temperature increase to 1.5 degrees Celsius.
Consequently, President Xi Jinping’s announcement in September 2020 at the United Nations General Assembly of China’s new objective to peak carbon dioxide emissions before 2030, and then achieve carbon neutrality by 2060 has been broadly welcomed. But President Xi offered no detail on how China will turn this vision into reality, and an examination of China’s current plans shows clearly the goal will not be achieved without major changes.
Photo: Kevin Frayer/Getty Images
Street vendors wait for customers at a local market outside a state owned coal fired power plant in Huainan, China. Instead of cutting its reliance on coal, China put 38 gigawatts of new coal-fired power capacity into operation in 2020.
Some details of how China might approach its targets were provided at the December 2020 Climate Ambition Summit. Here, President Xi outlined preliminary elements of the new Nationally Determined Contribution that China is due to submit — like all other Paris Agreement signatories — ahead of COP 26 in late 2021.
President Xi stated that China would aim by 2030 to cut carbon intensity per unit of GDP by more than 65% from 2005 levels — compared to the existing target of 60%-65% by 2030 — and would increase the share of non-fossil fuels in energy consumption to 25% by 2030 — compared to the existing target of 20%.
Coal-Fired Power Plants Are Still Being Built
However, this was seen as more of a continuation of the progress already being made by China, rather than an acceleration, and these preliminary targets raised doubts about the feasibility of China peaking its emissions before 2030 and securing carbon neutrality by 2060.
China’s continued investments in coal, the primary component of the county’s energy mix, have reinforced those doubts.
Instead of cutting its reliance on coal, China put 38 gigawatts of new coal-fired power capacity into operation in 2020, equal to the entire coal-fired power generation capacity currently installed in Germany. While one could argue that the pandemic made 2020 a difficult year for China to focus on climate, it remains to be seen when and how China will reveal how it intends to peak emissions by 2030 and achieve carbon neutrality by 2060.
What’s Missing From the 14th Five Year Plan?
The most obvious place to look for such information is China’s 14th Five Year Plan (FYP), which was announced at the National People’s Congress in March 2021. Five Year Plans are the main guiding force behind policy in China at all levels of government. Unfortunately, on climate measures, the 14th FYP falls short. It essentially outlines a continuation of existing trends, rather than an acceleration of climate action. Strongly focused on the development of the manufacturing sector — notably through strict targets on state-led innovation — the plan mentions neither a coal cap, nor an emissions cap.
If China’s emissions do not peak quickly, achieving carbon neutrality by 2060 will be challenging.
The 14th FYP simply commits to reducing the carbon and energy intensity of China’s GDP growth. Current estimates are that China’s emissions will continue to rise every year, at a rate of 1% to 1.7% until 2025. It should also be noted that the 14th FYP makes several references to the development of coal, emphasizing its “clean and efficient utilization.”
This is consistent with the broader structure of the plan, which is strongly oriented toward ensuring China’s self-sufficiency in the context of an increasingly hostile external environment and, in particular, U.S.-China strategic competition. In other words, the 14th FYP does not include a coal-consumption reduction target, nor a clear target for emissions to peak by 2025. Interestingly, the plan also makes no reference to the target of 1,200 GW of solar and wind installed power capacity by 2030, mentioned by President Xi in December 2020.
The lack of specific targets for the 2020-2025 period in the 14th FYP is worrisome, but does not mean President’s Xi’s commitment made at the U.N. is unachievable.
It could still be achieved with much more stringent measures to cut emissions between 2025 and 2030, or with more stringent measures within the 14th FYP at central and local level, even if not imposed in the FYP. However, China’s recent economic history shows local governments pushing for higher rather than lower growth, hampering progress in cutting carbon emissions.
Will We See a Coal Cap?
More detailed measures on energy, renewable energy, coal and electricity from the Ministry of Ecology and Environment are expected in late 2021/early 2022. It might be within these measures that we finally see a “coal cap” for 2021-2025.
As if this were not enough, both Chinese and international climate modeling studies state that China’s emissions should peak by 2025 at the latest for China to reach carbon neutrality by 2050 (see, for example, a December 2020 study coordinated by the Energy Foundation China and the University of Maryland, which highlights the dangers of locking-in high-emission assets and the need for rapid action). If China’s emissions do not peak quickly, achieving carbon neutrality by 2060 will be challenging.
Against such backdrop, the Biden administration is making climate change the most important – and possibly the only — area of cooperation with China, as reflected by US climate chief negotiator, John Kerry’s recent visit to Beijing in advance of today’s White House Summit.
Coercion Could be On the Table
The need to cooperate with China has become blatantly clear for the European leaders as well, which explains the recent trilateral meeting among President Macron, Chancellor Merkel and President Xi. The question, thus, is whether the Western voices asking China’s leader for cooperation on climate change will lead to much more specific and immediate deadlines to reduce carbon emissions.
In the absence of such a plan, it might well be that voluntary cooperation slides into coercion from the West and, in particular from the Biden administration. In fact, potential retaliation cannot be fully excluded if China’s plan against climate change remains elusive. A very real form of coercion could be the implementation of a carbon border tax in the U.S. and the European Union. All in all, it seems China may want to review its loose climate plans for the next few years sooner rather than later.
Related themes: CHINA CLIMATE CHANGE INVESTMENT
Alicia García-Herrero
Senior Fellow for Bruegel and Chief Economist for Asia Pacific at Natixis
Alicia García Herrero is chief economist for Asia-Pacific at Natixis and a senior fellow for Bruegel. Previously she was chief economist for Emerging Markets at Banco Bilbao Vizcaya Argentaria. She is a non-resident fellow at Cornell’s emerging market research centre and Senior Research Fellow at El Cano Royal Institute for International Relations. She is currently adjunct professor at City University of Hong Kong, visiting faculty at University of Science and Technology as well as at China-Europe International Business School.
Will Europe and China’s Investment Agreement Amount to Anything?
The Pandemic Will Structurally Change the Global Economy More Than We Think
Asia’s Workforce Is Rapidly Aging — And Many Countries Are Not Ready
Simone Tagliapietra
Senior Fellow at Bruegel
Simone Tagliapietra is a senior fellow at Bruegel. He is also an adjunct professor of Energy, Climate and Environmental Policy at the Università Cattolica del Sacro Cuore and at The Johns Hopkins University, School of Advanced International Studies (SAIS) Europe.
The EU 2030 Climate and Energy Framework: More Governance Needed
The original articles were be read in the Brink’s website HERE.
Why Business Interruption Risk Affects Us All
Catastrophic risk is the hardest risk of all for business to protect itself against. In the third of our occasional series on how to bridge the protection gap for business interruption resulting from major crises like the pandemic, BRINK spoke to Dirk Wegener, president of the Federation of European Risk Management Associations (FERMA). FERMA is the umbrella […]
Why Business Interruption Risk Affects Us All
Catastrophic risk is the hardest risk of all for business to protect itself against. In the third of our occasional series on how to bridge the protection gap for business interruption resulting from major crises like the pandemic, BRINK spoke to Dirk Wegener, president of the Federation of European Risk Management Associations (FERMA). FERMA is the umbrella body for 21 European risk management associations, representing nearly 5,000 senior professional risk managers.
The first two articles in the series can be found here and here.
Photo: Alexandre Schneider/Getty Images
A general view of a vacant airport during COVID-19 on May 15, 2020, in Sao Paulo, Brazil. The pandemic has clearly shown that systemic risks exceed the capacity of private insurance on its own.
BRINK: What lessons have your members learned from the pandemic crisis about managing business interruption risk?
WEGENER: During the pandemic, it became clear that there is a real gap in protection for non-damage business interruption (NDBI), mainly because of a lack of supply in the insurance market.
Insurance Doesn’t Cover the Gap
In the COVID-19 survey that FERMA conducted among its members at the end of 2020, only 5% of the respondents said that insurance provided their organization with coverage for the business interruption losses resulting from the pandemic. Some legal cases have favored the insureds, but if anything, this is likely to result in stronger exclusions in NDBI coverage.
However, most risk and insurance managers who responded to the FERMA survey felt their organizations had been largely or fairly well prepared to manage the pandemic. A majority, although not all, said their organizations had suffered negative operational and financial impacts from the pandemic.
We have certainly seen the value of flexible risk management tools, such as business continuity planning, as contributing to business resilience and to recovery post-pandemic.
BRINK: Do you think companies are now in a better position to handle catastrophic risks of this nature?
WEGENER: Yes, for at least three reasons. The first is that they now have a greater awareness of systemic risks. Secondly, they have an enhanced appreciation of the value of enterprise risk management and risk management tools in creating resilience. And the third is technology — the fact that organizations have been able to shift, remarkably smoothly, to remote working has made an enormous difference.
However, I would add that we are now taking into account a number of newly heightened risks that come with these new working methods — in particular, exposure to cyber risks.
The Need for Public-Private Partnering
BRINK: What sort of public/private partnerships do you think are needed to handle future systemic risks, such as climate change?
WEGENER: The pandemic has clearly shown that systemic risks exceed the capacity of private insurance on its own to provide meaningful capacity for organizations to manage their business interruption.
A number of European countries, such France, Spain and the Netherlands, already have public-private mechanisms, like pools for extensive or peak losses. But they are limited by national boundaries and by perils, most frequently flood and terrorism.
We believe that there should be a layered approach to a public-private partnership to create substantial capacity for non-damage business interruption losses across Europe. It would start with good risk management in corporations at its foundation, followed by participation from the insurance/reinsurance industry.
FERMA members regard the insurance industry as an essential element of such a public-private scheme.
Re/insurers, brokers and loss adjusters have extensive risk knowledge, and the insurance mechanism can motivate risk mitigation, as well as provide risk transfer. Thus, they can incentivize sound risk management practices on corporate level. This then contributes to the overall resilience of our societies from catastrophic events.
The Role of Capital Markets
Above this re/insurance layer, there may be interest from capital markets in providing extra capacity through alternative instruments, such as catastrophe bonds. And we envisage some form of public funding as the “reinsurer of last resort.”
Respondents across all business sectors put cyber threats, including data theft, among their top five risks now and in the medium term.
We understand that the private insurance sector can’t make up for the financially devastating impacts of this pandemic. Only a public-private partnership, built on corporate risk management acknowledged by the insurance sector, can build an effective resilience framework for the benefit of societies and a fairer allocation of tax payers’ money to affected companies.
BRINK: Should any such solutions be at a pan-EU level or individual country government level?
WEGENER: Individual country schemes can be useful, but they are too limited to fully support international or global businesses. Moreover, not all EU member states have such national schemes nor plan to have one. As we have seen with the pandemic, systemic events spread across continents, even the globe. International businesses have extensive cross-border exposures.
In addition to pandemics, cyberattacks on elements of common operating systems have the potential to affect multiple countries. The SolarWinds attack in late 2020 illustrates this risk. Its repercussions are still emerging.
Captives Have a Role
BRINK: What is your view of captives, i.e., corporations self-insuring?
WEGENER: FERMA has always regarded captives as a valuable element of corporate risk management, especially for large organizations. Captives allow organizations to buffer insurance market conditions, thanks to risk financing techniques based on the technical premium for low- to medium-impact risks. They can also allow a large corporation direct access to the reinsurance market especially for exceptional risks.
In the 2020 FERMA Risk Manager Survey, 27% of respondents said they would use an existing captive for hard-to-place risks (this marks a significant increase from 1% in 2018), and 16% planned to create a new (re)insurance captive by 2022 (14% in 2018). These figures could be even higher if we repeated the survey now.
That said, a company will not automatically say: The market has hardened; we will set up a captive tomorrow. Captives do have costs in terms of capital, and resources and take some time to establish.
In terms of regulatory approaches, FERMA has advocated strongly that the principle of proportionality should apply to captives under the European Solvency II prudential regime. By this we mean that insurance supervisory authorities in the EU member states should take account of the nature of captive insurance companies and the very low risks they pose to consumers.
We have proposed a method that national regulators can use so that captives are treated proportionally evenly across EU member states according to this proportionality principle. We expect that the review of Solvency II, currently underway, will enhance the attractiveness of European existing and prospective captive domiciles.
The Rise of Cyber Risks During the Pandemic
BRINK: You mention cyber risks — why have these risen since the pandemic?
WEGENER: The risks of hacking and data theft are pervasive. Criminals are now “digital natives,” as the European Union Serious and Organized Crime Threat Assessment said earlier this year.
The pandemic has increased the exposure as employees have moved to remote working, and organizations have accelerated their use of digital technology, including artificial intelligence. Even before this, the FERMA 2020 Risk Manager Survey made the issue of digital risks clear. Respondents across all business sectors put cyber threats, including data theft, among their top five risks now and in the medium term.
Many types of cyberattack are foreseeable, and organizations have incorporated them into their enterprise risk management processes. Insurance is — or should be — available to mitigate the risk.
At the other extreme, state-sponsored cyber terrorism is a concern, especially in critical industries. This goes beyond the capabilities of individual corporates to address on their own. It needs coordination across industry and governmental cyber defense agencies, including the European Union authorities.
The Gap in Cyber Insurance
Organizations are looking for more and better cover, but we believe there is a real gap between the insurance offering and the increased exposure. We are currently hearing from risk managers from our member associations that cyber insurance renewals this year have been difficult, leading to less coverage and higher premiums.
FERMA is supporting its members to help this market develop in line with their needs. We have a project with one of our members to quantify the cyber insurance market. We are currently working with the (re)insurance industry including brokers and policyholders on coverage definitions for cyber insurance.
Related themes: CYBERSECURITY RISK MITIGATION
Dirk Wegener
President of The Federation of European Risk Management Associations
Dirk Wegener is the president of the Federation of European Risk Management Associations (FERMA).
The original articles were be read in the Brink’s website HERE.