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.
Does Hydrogen Have the Support to Lead the Future of Fuel?
The 2015 Paris Agreement was a groundbreaking diplomatic effort: 196 countries committed to prevent average temperatures from rising by more than 2 degrees Celsius, with an aim of less than 1.5 degrees Celsius. To meet that goal, scientists argue that fossil fuel use will have to reach net zero emissions by midcentury. The genius of […]
Does Hydrogen Have the Support to Lead the Future of Fuel?
The 2015 Paris Agreement was a groundbreaking diplomatic effort: 196 countries committed to prevent average temperatures from rising by more than 2 degrees Celsius, with an aim of less than 1.5 degrees Celsius. To meet that goal, scientists argue that fossil fuel use will have to reach net zero emissions by midcentury.
The genius of the Paris climate accord was getting all the major parties to agree — particularly major greenhouse gas emitters including Russia, China, India, Brazil and members of the Organization of the Petroleum Exporting Countries (OPEC).
Photo: Dirk Waem/Belga Mag/AFP via Getty Images
The launch of the first dual-fuel hydrogen engine in Gent on September 17, 2020. Many electric utilities and energy companies are actively exploring a transition to a hydrogen-mixed economy, with a focus on blue hydrogen as an interim step.
Now, the challenge is implementing the multiplicity of solutions needed to bend the global warming curve. The Paris Agreement is not a treaty: Countries set their own targets and determine their own strategies for meeting them. Each signatory has its own politics, economic structure, energy resources and climate exposure.
The commitments from countries are still falling short as U.S. President Joseph Biden hosts a virtual climate summit with international leaders this Earth Day and carries out the hard diplomatic work with Russia, China and other countries to develop implementable solutions. One technology attracting attention from groups on all sides is hydrogen.
Different Visions of Energy’s Future
As the world’s population and economies grow, energy demand is expected to increase by as much as 50% over the next 30 years, so making the right long-term investments is crucial.
Energy companies and policymakers have widely different visions of that future. Their long-term scenarios show that most expect fossil fuel demand to remain steady for decades and possibly decline. However, many are also increasing their investments in cleaner technologies.
The International Energy Agency — which countries often look to for future scenarios, but has a history of underestimating demand and clean energy — forecasts that renewable energy will meet about one-third of the global energy demand by 2040 in its most optimistic scenario. That would be in a world with higher carbon taxes and more wind power, solar power, electric vehicles, carbon capture and storage. Greener technologies may come close to keeping warming under 2 degrees Celsius, but not quite.
Exxon, on the other hand, forecasts a path dependent on a fossil fuel-based economy, with slower transitions to electric vehicles, steady demand for oil and gas and a warmer world. Exxon is also investing in carbon capture, storage and hydrogen. However, Exxon believes oil and gas will provide half the global energy supply in 2040, and renewable energy will be less than one-fifth.
OPEC, whose members are among the most exposed to climate change and dependent upon oil and gas, also sees oil and gas dominating in the future. Nonetheless, several Gulf nations are investing heavily in alternative technologies — including nuclear, solar, wind and hydrogen — and trying to transition away from oil.
BP proposes a more focused shift toward cleaner energy. Its “rapid scenario” forecasts flat energy demand and a more dramatic swing to renewables combined with a growing hydrogen economy. The company expects its own renewable energy to go from 2.5 gigawatts in 2019 to 50 gigawatts by 2030, and its oil production to fall by 40%.
Others are also exploring hydrogen’s potential. Much as with utilities’ shift from coal to natural gas, hydrogen may ease the transition to cleaner energy with enough investment.
Since this fuel is getting so much industry attention, let’s look more closely at its potential.
How Realistic Is Hydrogen As a Climate Solution?
Hydrogen has the potential to fuel cars, buses and airplanes, heat buildings and serve as a base energy source to balance wind and solar power in our grids. Germany sees it as a potential substitute for hard-coal coke in making steel. It also offers energy companies a future market using processes they know. It can be liquefied, stored and transported through existing pipelines and LNG ships, with some modifications.
So far, however, hydrogen is not widely used as a clean-energy solution. First, it requires an upfront investment — including carbon capture capacity, pipeline modifications, industrial boilers for heat rather than gas and fuel cells for transportation — plus policies that support the transition.
Second, for hydrogen to be “green,” the electricity grid has to have zero emissions.
Most of today’s hydrogen is made from natural gas and is known as “grey hydrogen.” It is produced using high-temperature steam to split hydrogen from carbon atoms into methane. Unless the separated carbon dioxide is stored or used, grey hydrogen results in the same amount of climate-warming CO2 as natural gas.
“Blue hydrogen” uses the same process but captures the carbon dioxide and stores it so only around 10% of the CO2 is released into the atmosphere. “Green hydrogen” is produced using renewable electricity and electrolysis, but it is twice as expensive as blue and dependent on the cost of electricity and available water.
Many electric utilities and energy companies — including Shell, BP and Saudi Aramco — are actively exploring a transition to a hydrogen-mixed economy, with a focus on blue hydrogen as an interim step. Europe, with its dependence on imported natural gas and higher electricity costs, is setting ambitious net-zero energy targets that will incorporate a mix of blue and green hydrogen coupled with wind, solar, nuclear and an integrated energy grid.
China, the world’s largest energy user and greenhouse gas emitter, is instead investing heavily in natural gas — which has about half the carbon dioxide emissions of coal — along with carbon capture and storage and a growing mix of solar and wind power. Russia, the second-largest natural gas producer after the U.S., is expanding its gas production and exports to Asia. Some of that gas may end up as blue hydrogen.
Ramping up blue and green hydrogen as clean-energy solutions will require substantial investments and long-term modifications to energy infrastructure. It is not the magic bullet, but it may be an important step.
Finding Solutions Amid Messy Politics
Of course, technology investments cannot assume away the messy politics of the world. Individuals and leaders around the globe still have differing views on the urgency of the climate crisis and need for greener energy investments.
Perhaps the leaders gathered will find some common ground as seas rise and temperatures break records. What is critical for meeting the Paris goals is that countries invest now in a cleaner future.
A version of this piece was originally published on The Conversation.
Related themes: CLIMATE CHANGE INVESTMENT RENEWABLE ENERGY
John Ballantine
Professor of International Business at Brandeis University
John W. Ballantine, Jr. is a professor of international business at Brandeis University. He is a specialist in energy/climate change, corporate finance, and political economy. He has taught finance, economics, and banking courses at Babson College and been a research associate at the John F. Kennedy School of Government, Harvard University.
The original articles were be read in the Brink’s website HERE
ADB’s Innovation through Collaboration: Planning for an Inclusive Post-COVID-19 Recovery
Just over a week to go before the Asian Development Bank’s (ADB) Southeast Asia Development Symposium 2021, Innovation through Collaboration: Planning for an Inclusive Post-COVID-19 Recovery, on 17–18 March. Join our power-packed two-day lineup of global thought-leaders and decision-makers to explore how Southeast Asian nations can most effectively revitalize businesses, create sustainable job opportunities, and […]
ADB’s Innovation through Collaboration: Planning for an Inclusive Post-COVID-19 Recovery
Just over a week to go before the Asian Development Bank’s (ADB) Southeast Asia Development Symposium 2021, Innovation through Collaboration: Planning for an Inclusive Post-COVID-19 Recovery, on 17–18 March.
Join our power-packed two-day lineup of global thought-leaders and decision-makers to explore how Southeast Asian nations can most effectively revitalize businesses, create sustainable job opportunities, and position themselves for robust recovery in the wake of COVID-19. We’ll also examine how countries can harness “Big Data” and new technology to support growth, and discuss concrete measures countries can adopt to better ensure widespread vaccine access.
Register HERE.
Register HERE.
Introduction
COVID-19 has had a devastating impact on families, businesses, and lives throughout Southeast Asia. But hope is on the horizon. With widespread vaccine distribution planned in 2021, countries can now intensify their focus on post-COVID-19 recovery.
How can Southeast Asian nations most effectively revitalize businesses, create sustainable job opportunities, and position themselves for inclusive and robust recovery? How can they harness “Big Data” and new technology to support growth? How can they ensure that recovery is environmentally and fiscally sustainable? How can countries better ensure widespread vaccine access, which will be essential for sustainable pandemic recovery?
At SEADS 2021 leading global thought leaders will discuss ways to join forces and harness innovation to address the COVID-19 crisis. The two-day virtual event will feature keynote addresses by government and industry leaders; high-level panel discussions; the launch of an in-depth ADB study on COVID-19 recovery; final “Shark Tank” pitches and announcement of the ADB COVID-19 hackathon winner; and special partner deep diver workshops.
March 17 – Opening Keynote Addresses
17 March, 10:00 a.m. to 11:00 a.m. (Manila time, GMT +8)
How can innovation and collaboration accelerate Southeast Asia’s post-COVID-19 recovery? Hear from Masatsugu Asakawa, President, ADB; Carlos Dominguez, Governor for the Republic of the Philippines in the Asian Development Bank and Secretary, Department of Finance, Philippines; Armida Salsiah Alisjahbana, Under-Secretary-General, United Nations and Executive Secretary, UNESCAP; Jacquelline Fuller, Vice-President, Google and President, Google.org; Dr. Jerome Kim, Director General, International Vaccine Institute; and Melati Wijsen, Founder, Bye Bye Plastic Bags and YOUTHTOPIA Voices.
Plenary Panel Discussion
New Solutions for New Challenges
17 March, 11:05 a.m. to 12:05 p.m. (Manila time, GMT +8)
COVID-19 has presented countries with a new set of unprecedented challenges. What new solutions can be harnessed to foster recovery? Join our distinguished panelists: Ahmed M. Saeed, Vice-President (Operations 2), ADB; Indranee Rajah, Minister in the Prime Minister’s Office, Second Minister for Finance, and Second Minister for National Development, Singapore; Ming Maa, Group President, Grab; and Audrey Choi, Chief Marketing Officer and Chief Sustainability Officer, Morgan Stanley.
Launch of ADB Policy Briefs on COVID-19 Response
17 March, 12:10 p.m. to 12:30 p.m. (Manila time, GMT +8)
Ramesh Subramaniam, Director General, Southeast Asia Regional Department, ADB, will officially launch four hot-off-the-press policy briefs that set forth a blueprint for Southeast Asia’s medium-term recovery.
March 18 – Featured Sessions
Opening Keynote Addresses
18 March, 10:00 a.m. to 10:30 a.m. (Manila time, GMT +8)
How can countries in Southeast Asia enhance their health response to the COVID-19 crisis and lay the groundwork for recovery? Hear from Bambang Susantono, Vice-President, Knowledge Management and Sustainable Development, ADB; Budi Gunadi Sadikin, Minister of Health, Indonesia; Dr. Richard J. Hatchett, CEO, Coalition for Epidemic Preparedness Innovations; and Dr. Ayesha Khanna, Co-Founder and CEO, ADDO AI.
Plenary Panel Discussion
Immunization for All
18 March, 10:30 a.m. to 11:30 a.m.(Manila time, GMT +8)
What measures are required to provide COVID-19 vaccines across Southeast Asia? Join this group of experts for insights: Patrick L. Osewe, Chief, Health Sector Group, ADB; Myrna Cabotaje, Undersecretary, Department of Health, Philippines; Dr. Ruth Karron, Professor, Department of International Health, Johns Hopkins Bloomberg School of Public Health and Director of the Center for Immunization Research; and Dr. Suresh Jadhav, Executive Director, Serum Institute of India Pvt. Ltd.
Plenary Panel Discussion
Recovery for All
18 March, , 11:30 a.m. to 12:30 p.m. (Manila time, GMT +8)
How can countries ensure that the post-COVID-19 recovery is human-centered and does not leave the most vulnerable behind? Hear from this distinguished group of experts: Robert Guild, Chief Section Officer, Sustainable Development and Climate Change Department, ADB; Ketsuda Supradit, International Economic Advisor, Fiscal Policy Office, Ministry of Finance, Thailand; Janti Soeripto, President and Chief Executive Officer, Save the Children US; Sherry Madera, Chief Industry and Government Affairs Officer, London Stock Exchange Group; and Magnus Ekbom, Chief Strategy Officer and Co-Founder, Lazada.
Other Key Events
ADB/Partner Special Sessions
17 March, afternoon (Manila time, GMT +8)
Post-COVID-19 Policy Responses to Support Recovery (ADB); Enhancing Revenue Flows to Support Recovery (ADB/OECD); Reinventing Smart Cities after COVID-19 (ADB); Leave No One Behind: Harnessing Data and Technology to Revitalize Service Delivery (ADB/UNESCAP); Supporting Post-Pandemic Green Growth and Green Recovery (ADB, OECD, and European Commission-SWITCH-Asia); An Ecosystem Approach for Economic Recovery in Southeast Asia (Google); and Supporting Revenue Flows for All (Grab).
SEADS Hackathon
18 March, 14:00 to 17:00 (Manila time, GMT +8)
Re-Establishing Tourism Confidence through Innovative Digital Solutions Hackathon: “Shark Tank” pitches and announcement of winner.
Partner Deep Dive Workshops
18 March, 14:00 to 17:00 (Manila time, GMT +8)
Applying Futures Thinking and Foresight to Transport (ADB); Clean Energy Transition as an Engine for Green Recovery (ADB); Invitation Only: Reimagining the future: COVID-19’s Impact on Youth Jobs and Livelihood Aspirations (ADB’s Youth for Asia); Scaling up SMEs Sustainable Consumption and Production Actions (SWITCH-Asia Programme); Open Source and Government Digital Transformation—Perfect Storm of Opportunity (Amazon Web Services Institute).
Invitation-only Deep Dive Workshops
18 March, 14:00 to 15:30 (Manila time, GMT +8)
For more information, please contact: seads@adb.org or visit the SEADS website.
Register HERE.
Webinar on Beyond Digital Currency: An Asian Perspective
CACCI would like to invite its members to register to join the webinar on “Beyond Digital Currency: An Asian Perspective organized by the Asian Institute of Digital Finance in collaboration with Bridge. The physical venue of the webinar will be Bridge+, 79 Robinson Road, Singapore 068897 on Friday 19 March 2021 at 3:00pm to 6:00pm (SGT, […]
Webinar on Beyond Digital Currency: An Asian Perspective
CACCI would like to invite its members to register to join the webinar on “Beyond Digital Currency: An Asian Perspective organized by the Asian Institute of Digital Finance in collaboration with Bridge.
The physical venue of the webinar will be Bridge+, 79 Robinson Road, Singapore 068897 on Friday 19 March 2021 at 3:00pm to 6:00pm (SGT, GMT +8). The Registration fee for in-person attendance and online attendance is FREE.
Participants are strongly advised to register HERE.
Please register early as limited spaces are available for both in-person and online attendance. Confirmation emails will be sent from both Eventbrite and AIDF.
Overview
Aimed at industry practitioners, entrepreneurs, government officials, regulators, and other enthusiasts, the Public Forum Series includes the discussion of the latest trends, ideas, and applications of digital finance.
“Beyond Digital Currency: An Asian Perspective” will harness the knowledge of the latest trends in digital assets with a focus on improving business decisions. The discussions among top-tier panellists will enable you to gain insights into the most recent ideas, applications, and technologies in digital assets.
Core Focus
- Challenges and trends of digital assets from an Asian perspective
- Real–world applications of blockchain
Panelists
Are We Entering a Commodity Supercycle?
Since the beginning of the year, prices of commodities of all kinds have been rising significantly, prompting speculation that we are entering a commodity supercycle — the first since 2008. Copper prices are at an eight-year high, while commodities as varied as oil and soybeans are also rising in price, driven by the possibility of […]
Are We Entering a Commodity Supercycle?
Since the beginning of the year, prices of commodities of all kinds have been rising significantly, prompting speculation that we are entering a commodity supercycle — the first since 2008. Copper prices are at an eight-year high, while commodities as varied as oil and soybeans are also rising in price, driven by the possibility of large infrastructure spending and growing demand for rare metals in the sustainable economy.
Paul Ekins is Professor of Resources and Environment Policy at University College London and a member of the UN Environment Programme’s International Resource Panel. BRINK spoke to him about the possibility of a supercycle.
EKINS: There’s very little doubt that over the long term, we can expect upward pressure on commodity prices, driven by demand growth and supply challenges. It will be very different for different commodities, and there’s no particular reason why different kinds of commodities should exhibit the same pressures and, therefore, the same price fluctuations.
The distinction I would make would be between food, which is clearly an important commodity, and the pressures there are going to come from growth in population and challenges to food production arising from climate change. And then there are the basic metals and minerals that are fundamental to economic development.
We’ve also got other kinds of pressures such as those arising from financialization, with stocks in commodities being bought by people buying who aren’t interested in the commodities as such, but simply in how the price is going to move.
Another pressure is on supply, which is an area that I’ve been involved in with the UN’s International Resource Panel. Lots of countries aren’t keen to have new mines because of the damage that they cause and the uncertain economic benefits they yield to the host countries and communities. Those problems can only be sorted out through improved governance.
Photo: Pexels
There is a wide range of battery technologies under development, but lithium is still key to the current generation. If countries continue planning to build and buy more electric vehicles, the global supply of lithium is going to have to increase by a very large margin.
Heavy Demand From Developing Countries
The last supercycle that went from 2000 to 2014 was when China experienced its extraordinary economic growth, and so all the infrastructure metals and minerals were essentially hoovered up by China. Today, there are a number of emerging economies that are going through the China experience, if you like.
The most obvious example is India, which has potentially as much demand for those sorts of commodities as China had back in the early 2000s. With very large numbers of people and a reasonably well-educated population, all the foundations are there for that sort of economic growth. Not to mention most of Africa is still relatively undeveloped and it’s got enormous resources, but challenges in accessing those resources in a timely manner.
The Race to Net Zero Is a Big Driver
On top of that, we’ve got the drive to decarbonize, which affects a quite different set of metals and commodities. More and more countries are going for net zero, requiring very large quantities of electric vehicles, batteries, and tech and I.T. of all kinds. These technologies require specialist metals in far larger quantities than we’ve seen in the past: lithium, neodymium, cobalt, and many others that have not been widely exploited in the past but are going to be.
BRINK: So could this supercycle potentially slow down the decarbonizing of the economy?
EKINS: Potentially. It’s certainly a cause of price volatility and may be a cause of high prices. There is an example in the last supercycle when the high price of steel definitely slowed down the growth of wind power because wind turbines use a lot of steel, and the high price of steel actually resulted in wind turbines becoming more expensive over a number of years, rather than cheaper. At that point, people were wondering whether that was going to choke off the explosion in renewables.
We could see exactly the same with batteries and electric vehicles. There’s a wide range of battery technologies being developed, but obviously lithium is key to the current generation of batteries. And if all the countries go for building electric vehicles and buying electric vehicles that say they’re going to, lithium is going to have to increase in supply by a very large margin.
If we want to recycle more products, it will be more economical if modules within products are usable — that is an absolutely core agenda item as part of addressing these materials issues in the future.
In my view, there’s enough lithium in the earth’s crust, but it takes a lot of investment to get it out. It’s sometimes in quite inhospitable places, with governments that are a bit suspicious of miners, so there could be challenges along those lines.
Increasing the Need for a Circular Economy
BRINK: What is the solution to that — would a greater emphasis on recycling and the circular economy help to lessen the impact of this supercycle?
EKINS: Yes, very much. In fact, I would say that it’s precisely these kinds of pressures that have contributed to the new policy interest in circular-economy thinking, in recycling, remanufacturing, refurbishing, trying to ensure that we get more than one lifecycle out of the metals and commodities that we dig out of the ground and that they stay in circulation for longer than they currently do.
People are talking about the importance of “urban mining,” which means identifying where these metals are in use and ensuring they don’t end up in landfill tips — that they are actually mined locally, through reusing and repurposing the various materials that we’re talking about.
Product Design Will Need to Incorporate Recycling
There are also people who talk about going into landfill tips and mining the materials in there, because very often the materials in landfill tips are at a higher concentration than they are in the ores from which they were originally produced. So I think we’re going to see a lot of that; whether that gets to a scale that it can really mitigate the sorts of pressures from increased demand and problems in accessing new supply will remain to be seen.
One important area at the moment is the design of products; most products are designed without any thought of their end-of-life fate. If we want to recycle more products, it will be more economical if modules within products are usable. You could take out the modules that you’re interested in if the products have been put together in a way with recycling or later reuse in mind.
That is an absolutely core agenda item as part of addressing these materials issues in the future.
Short-Term Inflation Likely
BRINK: What about the impact on inflation. Some investors are buying up commodities as a hedge against inflation. But could a rise in commodity prices actually trigger inflation?
EKINS: In the short term, very possibly, because when demand goes up faster than the investment can go in to meet it with new supply, prices go up. And that’s a pretty well-established pattern. History has shown us that investment and new supply then tends to catch up with that.
However, technological development tends to moderate prices in the medium- and long-term, and I see no reason why that won’t continue. So I’m a little skeptical when people say that we’re going to experience a kind of supercycle where the price goes up and up and up and becomes a real inflationary problem.
We have seen this in oil and gas, where every now and again, there is a price spike that feeds inflation figures. But what that has also done in the case of oil and gas is stimulate new technologies. So the whole U.S. shale oil and gas revolution of the last 20 years was, in a sense, a result of the supercycle in those prices from about 2000.
I see no reason for thinking that that wouldn’t happen with regard to other commodities. But in the short term, certainly you can see price spikes that influence the inflation rate, and I think we can expect to see that in the future, too.
Related themes: INFRASTRUCTURE INVESTMENT RENEWABLE ENERGY
Paul Ekins
Professor of Resources and Environment Policy at University College London
Paul Ekins is professor of resources and environmental policy and director of the UCL Institute for Sustainable Resources, University College London. Paul Ekins’ academic work focuses on the conditions and policies for achieving an environmentally sustainable economy. In 2013, he was appointed to UNEP’s International Resource Panel, for whom he was lead author of a major report on resource efficiency at the request of the German Government at the G7 Summit in 2015.
The original articles were be read in the Brink’s website HERE.
How Asia Can Unleash Private Investment for Its Infrastructure
Asian governments are scrambling to reboot their battered economies, following the COVID-19 pandemic. The key to generating a return to high levels of economic growth is a substantial increase in infrastructure investment. The Asian Development Bank (ADB) has estimated that developing Asian economies need $1.7 trillion a year in climate-adjusted infrastructure investment in transportation, power, water and […]
How Asia Can Unleash Private Investment for Its Infrastructure
Asian governments are scrambling to reboot their battered economies, following the COVID-19 pandemic. The key to generating a return to high levels of economic growth is a substantial increase in infrastructure investment.
The Asian Development Bank (ADB) has estimated that developing Asian economies need $1.7 trillion a year in climate-adjusted infrastructure investment in transportation, power, water and sanitation and telecommunications. Prior to the pandemic, only about two-thirds of that huge financing requirement was being met, overwhelmingly with government spending.
However, the public purse, stretched thin by the costly response to COVID-19, is unable to fill the massive gap. Only through private sector investment can developing Asia ensure connectivity and the physical foundations essential for a modern economy to create jobs and prosperity.
So what can Asian governments and their partners do to unleash pent-up funds waiting on the sidelines? Here are four key areas for action.
Photo: Ishara S. Kodikara/AFP via Getty Images
Laborers work at a construction site on reclaimed land as part of the Chinese-funded project for Port City in Colombo in February 2020. It is increasingly important to leverage technology for better infrastructure project delivery.
Prepare More Projects
A key bottleneck to increasing infrastructure investment is the simple lack of bankable projects. There are several initiatives underway, but more action is required — particularly in more challenging environments, like fragile and conflict-affected states.
One promising initiative is the Asia Pacific Project Preparation Facility. The facility, supported by several donors, helps governments in developing countries prepare and structure their infrastructure projects with private sector participation — including privatization and public–private partnership (PPPs) modalities — and bring them to the global market.
Harness Technology
It is increasingly important to leverage technology for better infrastructure project delivery. Utilities are incorporating technology solutions to strengthen resilience and improve efficiency.
For example, operation and maintenance of projects can be enhanced greatly by using Internet of Things devices for speedy response, employing data analytics to monitor and supervise projects and utilizing blockchain for online authentication and disintermediation.
COVID-19 dealt a harsh blow to Asia’s developing countries and derailed their efforts to meet the Sustainable Development Goals, but they can prepare the groundwork for long-term growth.
Consultations with leading actors in different infrastructure sectors reveal the great importance of incorporating technology across the project lifecycle, using tools like drone monitoring of construction and robotic process automation to improve performance. To attract financing, greenfield projects will have to incorporate new technologies.
Standardize Procedures
A new report by Swiss Re Institute notes that infrastructure transactions often include custom-tailored financing structures, adding complexity, time and higher upfront costs to the due diligence process. The use of a common template for loan contracts could reduce costs of performing due diligence, while advancing the time to capital deployment.
In addition, standardizing contracts for PPPs would improve the efficiency of project preparation and enable loans to be packaged together more easily. Such an approach would increase the overall size of an investment opportunity and promote diversification within a single transaction, which would help to attract investment.
Tap the Development Banks
The multilateral development banks (MDBs), including the World Bank Group, provide about 10% of the infrastructure financing needs for developing Asia, excluding China and India. Although this may appear small next to the region’s needs, the catalytic role and demonstration effects of such financing makes it very important. MDB project financing often stimulates further investment, including by commercial actors.
Last year, the ADB and Asian Infrastructure Investment Bank broke their single year records for financing due to demands related to COVID-19. Close to two-thirds of ADB’s $20 billion COVID-19 response package is planned for budget support providing countercyclical fiscal stimulus. The share of the two institutions’ loans committed to infrastructure will rise as COVID-19 is contained.
In addition to providing finance, the MDBs also provide valuable policy advice, knowledge, technical assistance and capacity development. These additional services help countries make better policies that improve the investment climate for business. The MDBs often take on complex or challenging projects, thereby assuming risk that the private sector is unwilling to assume.
The MDBs have also been working to entice institutional investors—- like pension funds, mutual funds and insurance companies — into emerging markets. The International Finance Corporation runs the Managed Co-Lending Portfolio Program, which provides institutional investors a platform for participation in a diversified global portfolio of emerging market projects across multiple sectors. The ADB plans to raise $30 billion–$35 billion from the capital markets in 2021.
Because the MDBs adhere to high environmental, social and governance standards — and consider a country’s debt burden before approving loans — the MDBs promote quality, sustainable infrastructure within an overarching mission of reducing poverty.
The pandemic dealt a harsh blow to Asia’s developing countries and derailed their efforts to meet the Sustainable Development Goals. Yet they can prepare the groundwork for long-term growth by taking decisive action in the four areas above, while improving the transparency and integrity of governance systems, and predictability of their legal, fiscal and regulatory regimes.
Relalted themes: INFRASTRUCTURE INVESTMENT
Bart Édes
Distinguished Fellow at Asia Pacific Foundation of Canada@Bartapest
Bart Édes is a Distinguished Fellow at the Asia Pacific Foundation of Canada. He was a senior staff member at the Asian Development Bank, 2009-2020, based mainly in Southeast Asia.
A Bullish Outlook for Asia in 2021
The original articles were be read in the Brink’s website HERE.
A Hot Opportunity: Four Trillion Reasons to Accelerate the Energy Transition
If European companies do no more to reduce carbon dioxide emissions than they have currently promised, Earth’s temperature will be on track to rise 2.7 degrees Celsius by 2100. That’s well above the Paris Agreement’s target increase of no more than 1.5 C and higher than the 2-degree C tipping point at which life-threatening climate […]
A Hot Opportunity: Four Trillion Reasons to Accelerate the Energy Transition
If European companies do no more to reduce carbon dioxide emissions than they have currently promised, Earth’s temperature will be on track to rise 2.7 degrees Celsius by 2100. That’s well above the Paris Agreement’s target increase of no more than 1.5 C and higher than the 2-degree C tipping point at which life-threatening climate changes will be triggered. This was the conclusion of the latest report from CDP Europe, a climate monitoring group, and Oliver Wyman on the progress of Europe’s efforts to combat global warming.
It’s concerning, to say the least. But according to the report, it doesn’t have to turn out this way. On the hopeful side is the fact that the financial system seems willing to mobilize at a scale that could produce real change. An impressive 95% of the bank lending to corporates in Europe is from institutions that have committed to align their portfolios with the Paris climate accord targets. But at the moment, there is the potential for a 4 trillion euro ($4.8 trillion) gap to develop between Paris-aligned lending and Paris-aligned borrowing, with far more supply than demand. For European banks to adjust portfolios to reflect Paris targets, they will have to find many more industrial companies — and large industrials — that have not only committed to the targets but have developed a viable road to get there. The alternative would be to stop lending to them, which isn’t good for banks, companies or economies.
Photo: Christof Stache/AFP via Getty Images
Sun sets behind wind turbines near eastern Germany at the end of a hot summer day in August 2020. Investors are looking for a more urgent response to the climate crisis.
The Perks of Being a First-Mover
Europe’s corporates, especially in carbon-intensive industries, should derive two clear messages from this critical report. First, many of them need to significantly increase the pace of business transition if they are to be real players in the fight against climate change.
Showing what’s possible, the top quartile of companies analyzed in the paper managed to cut emissions by 15% in just one year, based on data collected before the coronavirus pandemic disrupted economic activity. But progress is uneven. Within key sectors, such as metals production and energy, the intensity of individual company emissions varies by as much as three to four times, demonstrating the chasm that exists even within the same industry. Future winners and losers are already starting to emerge, and those that don’t move with some urgency may well find themselves defaulting into the latter group.
Secondly, those that seize the opportunity can ride what appears to be a massive wave of pent-up financing that is ready to help them succeed. Buoyed by this financial stimulus, European capital markets have already demonstrated that so-called first-movers will often be rewarded with three to five times price-to-earnings ratios versus laggards that languish at or below a price-to-earning ratio of one. Orsted, a Danish oil and gas company that transitioned to become the world’s largest developer of offshore wind power, is one example. Others are European renewable energy companies Enel and Iberdrola, which, along with Orsted, have been dubbed by Bloomberg as “the new energy giants” and “are now worth more than comparable oil majors.”
Successfully managing the energy transition is by no means straightforward and, therefore, calls for bold leadership and greater collaboration between companies and industries than ever before.
Our report presents an important reminder to public company executives that their investors — the ultimate owners of these firms — are now expecting and increasingly demanding much more than quarterly performance growth and returns. They are looking for a more urgent response to the climate crisis, and when they don’t see it, they are signaling their intent to direct financial capital toward those firms that are moving decisively to deliver an accelerated energy transition.
Requirements of the Transition
No doubt, this transition will not be a painless one. Boards of directors and executive teams of Europe’s largest corporates find themselves walking an uncomfortably narrow tightrope between the need to keep delivering performance today, while concurrently transforming their businesses to stay relevant tomorrow. But we cannot forget the cautionary tales of companies that failed to adapt to changing realities — retailers who ignored the internet revolution come immediately to mind.
Successfully managing the energy transition is by no means straightforward and, therefore, calls for bold leadership and greater collaboration between companies and industries than ever before. New, unproven technologies, such as green hydrogen, utility-scale battery storage, and carbon capture, need to be developed, brought rapidly down their respective cost curves, and deployed at world scale — just as we did with solar and wind energy over the last decade.
Entire mobility systems need to be rewired away from traditional privately owned hydrocarbon-centric solutions toward electrified, autonomous shared-economy alternatives. Innovative financing and insurance solutions, capable of supporting such assets, technology and commodity-intensive infrastructures and services need to be created and delivered. Industrial innovation and collaboration are also demanded in hard-to-abate sectors, such as steel production, to deliver the low-carbon foundations required for the world’s future economic development.
Raising the Red Flag
As corporate leaders and governments prepare for COP26 later this year, the report raises a clear red flag. A 2.7 degree temperature increase is far from the track laid out in the Paris accord and underscores both the need for more ambitious commitments and delivery against these. Rarely has there been such a common threat of the magnitude of climate change, and rarely has there been so much financing waiting for worthy takers. This presents a tremendous opportunity for those companies ready to take the kind of bold steps required to transform their industries. And given that the goal is to halve emissions over the next 10 years, nothing less than substantial transformation across the economic spectrum will suffice.
Related themes: BOARDROOM INVESTMENT RENEWABLE ENERGY
David Knipe
Partner at Oliver Wyman
David Knipe started his career in management consulting and worked for 12 years as Consultant, Manager and Partner of Oliver Wyman. In this capacity David worked for major companies in the Financial Services, Energy and Commodities industries. He advised clients on various aspects of their strategy, organisational design and risk management practices.
James Davis
Partner of Financial Services at Oliver Wyman
Based in our London office, James Davis is a partner in our global CIB practice, advising wholesale banking clients on issues around their business strategy, capital and liquidity, approach to technology, or how they operate. In addition to this, Davis leads on CIT coverage for a large multinational bank and financial services company as well as being the lead on climate change and sustainable finance in EMEA. Davis studied Economics and Management at Oxford and spent a year in China before joining Oliver Wyman.
The original articles were be read in the Brink’s website HERE
10 Questions That Will Determine the Future of Work
In the span of a few months, the COVID-19 pandemic has prompted a rethink not only of how workers work, but of long-term policies that respond to disruptions being unleashed by technology and automation. Policymakers are quickly drawing up plans to address the future of work from the perspectives of inequality, skilling, social protection, gender and the role of human […]
10 Questions That Will Determine the Future of Work
In the span of a few months, the COVID-19 pandemic has prompted a rethink not only of how workers work, but of long-term policies that respond to disruptions being unleashed by technology and automation.
Policymakers are quickly drawing up plans to address the future of work from the perspectives of inequality, skilling, social protection, gender and the role of human labor in the 21st century.
The Pre-Pandemic Future of Work
Prior to the pandemic, many governments and policymakers treated future-of-work policy making with little urgency, believing that technology and automation would be implemented gradually. But the pandemic has shown that the job and labor market disruption can come from nearly any direction — not just through technology and automation.
Still, governments around the world broadly face a set of common themes when it comes to preparing their countries for the future of work. Since up to 14% of workers globally may have to change occupations by 2030, policymakers are rightly concerned with exactly how training models can avert skills obsolescence.
Photo: Kevin Frayer/Getty Images
Employees work in a warehouse in Beijing, China. If we want to design “good” future-of-work policies, we must have an inclusive and wide-ranging discussion of what we are trying to solve before we attempt to develop and deploy solutions.
The pandemic has also heightened concern over inequality and job disruption among specific groups, which in turn has led to granular discussions of how governments can build social safety nets that protect workers while welcoming new technologies that boost workers’ productivity and living standards.
But in many cases, policymakers face a blizzard of contradictory information and forecasts that can lead to confusion and inaction. Unable to make sense of the torrent of data being thrown their way, policymakers often end up being preoccupied by the answers presented — rather than reflecting on the questions that matter.
Right Time, Wrong Questions
If we want to design “good” future-of-work policies, we must have an inclusive and wide-ranging discussion of what we are trying to solve before we attempt to develop and deploy solutions.
Deficiencies in our policymaking processes leave us ill-equipped to respond to complex policy challenges, ranging from pandemics to climate change and the future of work. Future challenges (and many current ones) require a rethink of how we develop policy and search for answers to our most vexing public problems.
While the pandemic has catapulted questions surrounding the future of work into the mainstream, we still lack a basic stable of solutions for policymakers to test-drive. Among the approaches that have been floated are universal basic income (UBI), increasing digital literacy and reskilling programs.
Some of these, notably UBI, have gained traction around the world, from the United States to Germany and Kenya. Don’t get us wrong: UBI may indeed be among the policy solutions that work. But, in future-of-work policy deliberations, “solutions” such as UBI often precede a reasoned and methodical discussion of exactly what problems we are trying to solve.
Putting the Cart Before the Horse
Solutions cannot come before a clear understanding of the problem. What is required are more foundational — and inclusive — discussions and society-wide debates that would help identify the most important questions and more generally establish priorities to guide how scarce resources should be allocated.
We have found that policymakers often fail to ask questions and are often uncertain about the variables that underpin a problem.
In addition, few of the interventions that have been deployed make the best use of data, an emerging but underused asset that is increasingly available as a result of the ongoing digital transformation. If civil society, think tanks and others fail to create the space for a sustainable future-of-work policy to germinate, “solutions” without clearly articulated problems will continue to dictate policy.
How can we determine the value of skills relevant to the future-of work-marketplace, and how can we increase the value of human labor in the 21st century?
The 100 Questions Initiative
Over the past six months, TheGovLab and the Bertelsmann Foundation engaged with more than 100 “bilinguals” — practitioners across fields who have both domain knowledge and data science expertise. We used a participatory and iterative process to harness the power of collective intelligence and to compile a set of questions that could be transformative if answered.
Our 100 Questions Initiative seeks to interrupt this cycle of preoccupation with answers by ensuring that policymakers are, first of all, armed with a methodology they can use to ask the right questions and from there, craft the right solutions.
We are now releasing the top 10 questions and are seeking the public’s assistance through voting and providing feedback on whether or not these are really the right questions we should be asking:
Preparing for the Future of Work
(1) How can we determine the value of skills relevant to the future-of work-marketplace, and how can we increase the value of human labor in the 21st century?
(2) What are the economic and social costs and benefits of modernizing worker-support systems and providing social protection for workers of all employment backgrounds, but particularly for women and those in part-time or informal work?
(3) How does the current use of AI affect diversity and equity in the labor force? How can AI be used to increase the participation of underrepresented groups (including women, Black people, Latinx people, and low-income communities)? What aspects/strategies have proved most effective in reducing AI biases?
(4) How do automation and digitization impact income inequality? How can workers from all backgrounds benefit from technological innovations in the world of work?
(5) What factors hinder women’s participation in the labor force? How do these barriers impact women’s work in the future and their career trajectories? What policies or programs can facilitate women’s work and remove barriers to their work and careers?
(6) What new systems of education and training could help workers reap gains from technology and automation?
(7) How can we demonstrate the relationship between skills gained and economic mobility? What characteristics of retraining programs produce equitable outcomes for workers — across a range of demographic and professional characteristics — and what is the impact of these educational/training programs and vocational schooling?
(8) Who determines the legal and governance frameworks, as well as the ethical conditions under which technologies are developed and used, and how can we make these decisions more democratic? What legal gaps need to be identified and filled in order to protect the labor market and society from any negative effects of technology? What aspects of and practices from international law can help mitigate the impact of technology and automation on workers and the labor market?
(9) What does a labor force that is resilient to technological, financial, health or other shocks look like?
(10) In what ways will technology and automation widen or narrow gaps between developed and developing nations? What steps can developing countries take to harness and apply new technologies?
The 100 Questions Initiative is not just about becoming more methodical and less driven by buzzwords. Rather, we want to prioritize questions that can steer the creation of purpose-driven data collaboratives for policymakers to incorporate into their own decision-making.
While this project has channeled the expertise of 100 “bilinguals,” future systems and practices could be developed to ask the right questions — and solve for the right variables — at scale. Indeed, as policy challenges grow increasingly complex, this approach will seem not optional, but necessary.
Related themes: DISRUPTION FUTURE OF WORK TALENT
Jeffrey Brown
Head of Tech Policy at Bertelsmann Foundation@jeffreybrown438
Jeffrey Brown leads the technology policy portfolio at the Washington, D.C.,-based Bertelsmann Foundation. He works with stakeholders in Europe and the U.S. to build policy around new technologies and the future of work.
Coronavirus Will Trigger a Superspread of Automation
Stefaan Verhulst
Co-Founder and Chief Research and Development Officer of The Governance Laboratory@sverhulst
Stefaan G. Verhulst is the co-founder and chief research and development officer of the Governance Laboratory (The GovLab) at New York University (NYU) – an action research center focused on improving governance using advances in science and technology – including data and collective intelligence.
The original articles were be read in the Brink’s website HERE.
Webinar on Leveraging Technology and Innovation
CACCI invites members and associates to join the ADB-OECD Webinar on Leveraging Technology and Innovation for Disaster Risk Management and Financing happening on 11 March 2021, Thursday, at 7:00 p.m. – 8:30 p.m. (GMT+8). This will be held via Zoom and registration would be required. This webinar will feature a presentation of the findings of […]
Webinar on Leveraging Technology and Innovation
CACCI invites members and associates to join the ADB-OECD Webinar on Leveraging Technology and Innovation for Disaster Risk Management and Financing happening on 11 March 2021, Thursday, at 7:00 p.m. – 8:30 p.m. (GMT+8). This will be held via Zoom and registration would be required.
This webinar will feature a presentation of the findings of the ADB-OECD report on Leveraging Technology and Innovation for Disaster Risk Management and Financing, which proposes strategic approaches and policy options to harnessing and integrating technologies and innovations into effective disaster risk management and financing. Policy considerations will be further discussed in a subsequent panel discussion.
For more information on the webinar, visit this page. To register for the webinar, click here.
New Chief Executive of Wellington Chamber of Commerce
CACCI is pleased to inform you that Wellington Chamber of Commerce has appointed Mr. Simon Arcus as its Chief Executive who took over the role from Mr. John Milford with effect from March 2021. Mr. Arcus is currently at Mercer Australia in Melbourne working with the Goldman Sachs, Alcoa and GM Holden superannuation funds. The […]
New Chief Executive of Wellington Chamber of Commerce
CACCI is pleased to inform you that Wellington Chamber of Commerce has appointed Mr. Simon Arcus as its Chief Executive who took over the role from Mr. John Milford with effect from March 2021.
Mr. Arcus is currently at Mercer Australia in Melbourne working with the Goldman Sachs, Alcoa and GM Holden superannuation funds. The Board of Wellington Chamber of Commerce is delighted that Mr. Arcus agreed to join the team as his knowledge and experience across business, in the financial and insurance sectors, and his time heading membership and advocacy organisations will be of huge benefit to the Chamber’s members and the wider business community in New Zealand.
CACCI wishes Mr. Arcus the best in his new position and looks forward to working closely with the team of Wellington Chamber of Commerce under his leadership.
Ernest Lin
Director-General, CACCI
FICCI and CACCI hold Joint Training Workshop on “Digital Marketing for Indian SMEs”
CACCI and the Federation of Indian Chamber of Commerce and Industry (FICCI) jointly organized an exclusive workshop on “Digital marketing for Indian SMEs” on February 12, 2021. The four-hour workshop, which was held virtually, aimed to provide a holistic and overall understanding on the nuances of digital marketing and how it can be leveraged to create new business opportunities and or […]
FICCI and CACCI hold Joint Training Workshop on “Digital Marketing for Indian SMEs”
CACCI and the Federation of Indian Chamber of Commerce and Industry (FICCI) jointly organized an exclusive workshop on “Digital marketing for Indian SMEs” on February 12, 2021.
The four-hour workshop, which was held virtually, aimed to provide a holistic and overall understanding on the nuances of digital marketing and how it can be leveraged to create new business opportunities and or expand existing business using
different tools.
The training was conducted by Ms. Nidhi Bhasin, an expert on digital marketing with substantial experience in helping Indian SMEs expand their businesses using digital technology.
FICCI Fintech Expo 2021
CACCI forwards to its members hereunder the invitation from the Federation of Indian Chambers of Commerce and Industry (FICCI) to participate in its Fintech EXPO 2021 scheduled on March 10-11, 2021. Mr. Ernest Lin Secretary-Treasurer Asian Bankers Association Dear Mr. Lin, Greetings from FICCI. I am writing to kindly share with you […]
FICCI Fintech Expo 2021
CACCI forwards to its members hereunder the invitation from the Federation of Indian Chambers of Commerce and Industry (FICCI) to participate in its Fintech EXPO 2021 scheduled on March 10-11, 2021.
Mr. Ernest Lin
Secretary-Treasurer
Asian Bankers Association
Dear Mr. Lin,
Greetings from FICCI.
I am writing to kindly share with you that Federation of Indian Chambers of Commerce and Industry (FICCI) is organising a virtual ‘Fintech Expo’ on 10th and 11th March 2021. This Expo is being supported by the Department of Economic Affairs, Ministry of Finance, Government of India. A conference alongside the Expo is also planned. The Boston Consulting Group is the Knowledge Partner to the event.
Fintechs have been rapidly transforming the financial services industry and we are seeing numerous innovations in areas including digital payments, digital lending, artificial intelligence, wealth management, insurtech and underlying enabling tech. Their significance has gained immensely especially during the recent Covid times as they have been offering interactive and user-friendly tech solutions.
As part of the FICCI Fintech Expo 2021, we will have leading Indian fintech companies join us and showcase their products and tech offerings to financial institutions. The Expo will be open 24X7 wherein banks, insurance companies, NBFCs, financial institutions, investors and other participants can visit the Expo & check exhibitors’ products & services and plan B2B meetings.
The accompanying conference will help in bringing together leading fintech players, bankers, NBFCs, insurance companies, technology experts and policy makers on a common platform to discuss and analyse several innovations that are redefining the financial services industry and also look at developing potential fruitful collaborations. It will offer several components which includes stimulating discussions and demo presentations.
Enclosed is the copy of E-Flyer(click) and draft conference agenda(click) for your reference.
May we request you to kindly participate at the Expo and Conference. You may also consider nominating a few officials from your organisation to attend the same. Participation in the Expo & Conference is complimentary. The nominations can be sent by email to Ms Geetanjali Bisht / Mr Yogesh Kumar, FICCI (8368978647 / 9210827676) at fintech@ficci.com .
For online registration, please use the following link https://registrations.ficci.com/finexp/visitor-registrationvv.asp
For further details, you may visit our website http://ficcifintechexpo.com/
With kind regards,
Jyoti Vij
Deputy Secretary General
Federation of Indian Chambers of Commerce and Industry ( FICCI )
Industry’s Voice for Policy Change
Federation House, 1, Tansen Marg, New Delhi 110001, INDIA
T: +91-11-2348 7290 F: +91-11-2332 0714
Email: jyotivij@ficci.com Web: www.ficci.in
ISO 9001:2015 certified
FB: www.facebook.com/ficciindia | Twitter: www.twitter.com/ficci_india | Blog: blog.ficci.com
Click here to access: FICCI’s Knowledge Paper Series & FICCI’s Voice from SG’s Desk
FICCI Corporate Identity Number (CIN) : U99999DL1956NPL002635
Avoiding Response Paralysis as Ransomware Attacks Mature
Your files are encrypted. You have five days to submit payment, or your data will be lost. Last year, ominous messages like this one appeared on the computer screens of millions of businesses and organizations targeted by ransomware. Such attacks are not new, but have recently grown more frequent and severe — in 2020, […]
Avoiding Response Paralysis as Ransomware Attacks Mature
Your files are encrypted. You have five days to submit payment, or your data will be lost.
Last year, ominous messages like this one appeared on the computer screens of millions of businesses and organizations targeted by ransomware. Such attacks are not new, but have recently grown more frequent and severe — in 2020, they reached new heights, fueled partially by the pandemic.
Once a relatively minor concern, ransomware can now cripple organizations as they routinely disrupt operations for days or weeks. They can cost billions of dollars in downtime, remedial expenses and skyrocketing payments now demanded to release or restore data.
Photo: Nicolas Asfouri/AFP via Getty Images
A hacker uses a website that monitors global cyberattacks. The nature of cyberattacks is changing: Many attackers now use data stolen in cyber breaches to extort businesses.
Despite ransomware’s prevalence, however, too many victimized companies suffer from response paralysis. Lacking the necessary plans and procedures, businesses under attack often find themselves in a state of shock that can deepen a crisis.
With attackers growing bolder and more aggressive, businesses cannot afford to respond on the fly.
This month, the Cybersecurity and Infrastructure Security Agency (CISA) of the U.S. Department of Homeland Security announced a cybersecurity campaign, Reduce the Risk of Ransomware, in an effort to raise awareness and decrease susceptibility to attacks.
Finding Weaknesses
Ransomware attacks constantly evolve as perpetrators experiment and learn. Increasingly, cyberattackers scan corporate technology environments to identify companies with poor cyber hygiene — for example, lax controls or unpatched software.
Once identified, the next step is to penetrate vulnerable networks. Attackers may send phishing emails, use watering hole attacks — in which they seek to infect targeted companies by attacking websites that their employees frequently visit — or offer bogus software on thumb drives. Sophisticated attackers may also install backdoors or plant “process bombs” that lay hidden for later exploitation.
The nature of attacks is also changing. Many attackers now use data stolen in cyber breaches to extort businesses: Pay us or we’ll disclose your proprietary or personally sensitive data.
Amid the pandemic, malicious actors have stepped up their efforts. With more people working from home, hackers have discovered a rich environment of unsecured Wi-Fi, vulnerable equipment and outdated intrusion prevention software. As remote working environments seem likely to remain prevalent after the pandemic ends, these dangers will not disappear.
Cryptocurrency and Ransomware
Although for many, cryptocurrencies like Bitcoin are an alien concept, their use has proliferated across the dark web — and Bitcoin is the currency of choice for ransomware attackers. Coveware, a cybersecurity consulting firm, estimates that 98% of ransomware demands are denominated in Bitcoin. Companies facing ransomware demands should know that making a cryptocurrency payment is not as simple as going to the bank or using a credit card.
Bitcoin is easy to get and difficult to trace. Although Bitcoin operates on an identifiable public blockchain, it allows for anonymity, with no direct way to identify specific account owners. In a cryptocurrency transaction — which can take time to execute — both parties are identified only by an address or account number, and users often can only purchase and send Bitcoin after setting up digital wallets through cryptocurrency exchanges.
The anonymity of cryptocurrency could bring regulatory scrutiny. In October 2020, the U.S. Treasury Department’s Office of Foreign Assets Control warned that it may sanction companies for making payments to any person on OFAC’s Specially Designated Nationals and Blocked Persons (SDN) list — even if they do so unknowingly. The Foreign Corrupt Practices Act (FCPA) also prohibits U.S. citizens from bribing foreign government officials to benefit their business interests.
OFAC recommends against paying ransoms and encourages companies and their advisors to instead report cyber extortion attacks to law enforcement. Still, with critical data, business functions and reputations at stake, it’s important for businesses to be ready for all possibilities. Companies should engage outside counsel or cyber forensics providers for guidance and to manage potential cryptocurrency transactions. If a company decides to make a ransomware payment, this will help enable a smooth, quick transaction that is in line with regulatory requirements.
Consider ransomware risks as part of your broader risk management efforts — and consider every situation on a case-by-case basis.
Planning Is Everything
Businesses can take several steps to reduce their ransomware risk. Foremost among these is improving cyber hygiene, which can help limit potential exposure to attacks.
At a minimum, companies should focus on the following hygiene essentials:
- Regular backups and periodic data restoration testing. Storing backup data offline in a secure manner, with limited access for privileged users, can substantially expedite recovery from an attack. A full backup should be completed at least once a week, while the most valuable data may need to be backed up more often and incrementally. Businesses should also conduct tests to confirm that backed up and restored data will work in a live environment.
- Network segmentation. Splitting large networks into smaller segments through firewalls and other means can limit opportunities for attackers. Without gaining privileges, unauthorized users will hopefully not extend beyond the originally compromised segment.
- Limiting access. Companies should require multifactor authentication for users accessing critical or sensitive data. Businesses can also keep prying eyes from sensitive data by requiring remote access to corporate IT systems through encrypted VPNs only.
- Vulnerability and patch management. Users should update software with patches released to respond to identified malware threats in a timely manner to maintain the security of applications and operating systems.
Specific but Flexible Response Plans
Even with these measures in place, it’s imperative to develop detailed cyber incident response plans. These plans should include specific procedures and processes for managing ransomware attacks. They should also identify the resources and vendors to call upon in the event of an attack, which can enhance preparation and resilience.
Plans should also consider potential outcomes and how responses — including the possibility of paying a ransom — will be viewed by boards, shareholders and others. A decision to pay a ransom should be made only after careful reflection and consultation with key advisors. These should include legal counsel — with specific experience responding to cyberattacks — cyber forensic specialists, extortion services providers and insurers.
As every situation is different, it’s important to not have an ironclad policy that dictates always paying or never paying ransoms. Consider every situation on a case-by-case basis, taking into account the cost of the ransom, the criticality of affected data and estimated cost of restoration, the likelihood of successful restoration if the ransom is not paid, and other factors.
Crisis Rehearsal
In addition to careful planning, testing is key. Tabletop exercises that walk through worst-case scenarios can enable organizations to rehearse and refine their responses to ransomware attacks to build resilience. Group exercises that involve all cyber incident response and crisis management stakeholders, including legal counsel and key vendors, can identify important questions and challenges to be addressed before an attack. Exercising plans will require that all stakeholders are on the same page about who will be responsible for specific actions and decisions.
Conducting periodic indicators of compromise assessments, meanwhile, can help validate the integrity of an organization’s IT enterprise and keep unauthorized users, malware, or backdoors off networks. These assessments can help to establish new baselines for IT enterprises and confirm networks are clear of unauthorized activity.
Finally, consider ransomware risks as part of your broader risk management efforts. Take into account your cyber insurance coverage, broader enterprise risk management programs, and value chain as you review and develop your ransomware plans and prepare for the possibility of an attack.
Related themes: Blockchain Cybersecurity Risk Mitigation
James Holtzclaw
Senior Vice President of Cyber Risk Consulting at Marsh Advisory
James Holtzclaw is a senior vice president of cyber risk consulting at Marsh Advisory, where he works with a team of experts to identify, develop, implement and execute cybersecurity consulting strategy, capabilities, and services in North America.
The original article can be read at the Brinks’ website HERE
The Productivity Puzzle of Working Remotely
New research by Harvard University suggests that there are productivity gains for companies that offer remote working — both before and during the COVID-19 pandemic. However, whether those gains will persist after the pandemic depends on the type of workers attracted to remote jobs. BRINK spoke to Emma Harrington of Harvard University, who contributed to this research on […]
The Productivity Puzzle of Working Remotely
New research by Harvard University suggests that there are productivity gains for companies that offer remote working — both before and during the COVID-19 pandemic.
However, whether those gains will persist after the pandemic depends on the type of workers attracted to remote jobs. BRINK spoke to Emma Harrington of Harvard University, who contributed to this research on remote working with her colleague Natalia Emmanuel.
HARRINGTON: We studied the effect of going remote for workers in two different settings. In both, we found that working remotely improved worker productivity.
First, we looked at workers who started working in a call center and then transitioned to working remotely before the pandemic. For those workers, we found a pretty sharp increase in their productivity following that transition — the calls they took per hour rose by about 8% when they went from the office to working at home.
Photo: Pexels
A Harvard University report found that in this remote work setting, people with childcare responsibilities are more productive than those without those responsibilities — both before and after the pandemic.
Productivity Rises When Remote
Second, we looked at what happened when the pandemic forced all the onsite workers at the same retailer to work remotely. Then, we compared the productivity of newly remote workers, who were no longer able to go into the office due to the pandemic, to the productivity change of their already remote working peers.
The productivity of newly remote workers rose relative to their already remote peers. So even if they didn’t volunteer to be remote, they still became more productive when working from home. In both cases for a given worker, transitioning from onsite work to remote work led to about an 8% increase in productivity.
Our explanation for this increase in productivity is that it likely stems from a reduction in distractions. So you might be spending less time interacting with your coworkers. Particularly in the context of a call center, you might have a reduction in ambient noise of people chatting around you on the phone.
Some Workers Are More Productive Than Others
BRINK: But you found a difference between those who were hired to do remote work and those who were hired to work on site, but were then forced to go remote.
HARRINGTON: Yes, so there are two dimensions of productivity. One is: Are people reaching their full potential of their personal productivity? And the other is: How productive are the people who are taking a particular job? When we think about the extent to which people are reaching their personal potential, it looks like remote work is helping people.
However, the people who were hired for remote jobs turned out to be relatively less productive than the people hired initially into onsite jobs and then transferred to remote working.
So, from the firm’s perspective, when they think about which work arrangement is going to be more productive, they also need to also think about what types of workers are going to take these two types of jobs.
Some workers who would prefer to work remotely, and would be more productive at home, still might decide to go into the office because they don’t want to be seen as less productive.
When we get out of the pandemic, a company might prefer to hire new workers into an office role — even though that worker might be more productive being remote — just because the type of worker who is willing to go into the office may on average be more productive.
In other words, the willingness to go into the office may reveal some sort of dedication to the job that can be divorced from the effect of being in an office on someone’s productivity.
Workers with Childcare
BRINK: One of the findings showed a positive correlation with childcare responsibility. Is that correct?
HARRINGTON: Yes, we found that in this setting, people with childcare responsibilities were more productive than those without those responsibilities — both before and after the pandemic. The gap became marginally larger after the pandemic.
I think one possible explanation for that finding is that this is a relatively low wage job. Therefore, I think choosing this role because of constraints at home might be a better signal about a worker than choosing this job without those constraints.
BRINK: This research was conducted with call center workers, which are relatively low wage jobs. Do you think these findings have equal application in other higher paid or executive level jobs?
HARRINGTON: I think the benefits of being remote in reducing distractions are likely to be pretty generalizable. In lots of jobs, you’re going to be benefited by having fewer distractions.
But in those other jobs, these benefits need to be weighed against the potential costs of remote work, making coordination more difficult. You might also lose some of those productive water cooler chats that you would likely have in the office.
Further, in other occupations, the question of who takes a remote versus onsite job might be an even bigger concern. When productivity is harder to assess, workers who are less productive may have a more direct incentive to be remote to hide their lower productivity from their manager.
Going Back to the Office Post-Pandemic
When firms think about what to do after the pandemic, there may be incentives for them to return to the office because they prefer to hire workers who want to go to the office rather than work remotely.
That doesn’t mean going back to the office is the socially optimal outcome. Using remote versus onsite work to sort workers into different types can lead to a market failure. Some workers who would prefer to work remotely, and would be more productive at home, still might decide to go into the office because they don’t want to be seen as less productive.
The market doesn’t necessarily get to the best solution because the incentives of individual firms don’t necessarily align with maximizing total output. Privately, each firm might be worried about the types of workers it will hire into remote jobs. But, in the aggregate, productivity might rise if more jobs were remote.
Thus, one implication of our findings is that moves by governments and other entities to try to support remote work may improve efficiency. Further, since workers with childcare responsibilities have an added interest in working at home, such policies may also improve economic equity.
Related themes: Future Of Work Talent
Emma Harrington
PhD Candidate in Harvard University’s Department of Economics
Emma Harrington is a labor economist studying the changing nature of work. She is a PhD Candidate in Harvard University’s Department of Economics and a Stone Scholar in the Harvard Inequality and Social Policy Program
The original article can be read at the Brinks’ website HERE
Tender for Ankara CC Convention Center
We are pleased to convey the invitation from the Union of Chambers and Commodity Exchanges of Turkey (TOBB) for possible new operator to deliver tenders for the Ankara Chamber of Commerce Convention and Event Center (ATO Congresium). Located in the center of Ankara, the ATO Congresium is close to business, shopping and entertainment areas and […]
Tender for Ankara CC Convention Center
We are pleased to convey the invitation from the Union of Chambers and Commodity Exchanges of Turkey (TOBB) for possible new operator to deliver tenders for the Ankara Chamber of Commerce Convention and Event Center (ATO Congresium).
Located in the center of Ankara, the ATO Congresium is close to business, shopping and entertainment areas and 4-5 starred hotels with world standards. As a versatile commercial complex, its facility has the ability to serve a wide range of events from conferences to outdoor events, from exhibitions to concerts.
The scope of the tender is to lease of the ATO Congresium, which is owned by Ankara Chamber of Commerce for the duration of 1+10 (one+ten) years. We herewith attach the tender specification for your perusal and interested parties are requested to deliver the tenders by March 8, 2021, 2:00 pm (GMT +3).
For more information on the ATO Congresium and the tender process can be found from the following link: Ankara Ticaret Odası Web Portali (atonet.org.tr) .
The Global Case for Optimism
Good news has been in short supply. From the devastation of the COVID-19 pandemic to racial violence and political polarization, it seems like the world is taking a global gut-punch. But is humanity overall still on the up-and-up, despite the massive challenges? Charles Kenny, director of technology and development and senior fellow at the Center for […]
The Global Case for Optimism
Good news has been in short supply. From the devastation of the COVID-19 pandemic to racial violence and political polarization, it seems like the world is taking a global gut-punch. But is humanity overall still on the up-and-up, despite the massive challenges?
Charles Kenny, director of technology and development and senior fellow at the Center for Global Development, joins the Altamar podcast team of Peter Schechter and Muni Jensen to explain why the doom-mongers are wrong. His current work focuses on gender and the role of technology in development, governance and anticorruption. He is the author of numerous books on improving the world, and his latest, The Plague Cycle, explores humankind’s struggles with infectious disease.
Photo: STR/AFP via Getty Images
Trucks transferring containers at an automated cargo wharf in Qingdao, China. “Trade is a really important tool to deliver technologies that have a massive impact on the quality of life.”
Getting Back on Track
Kenny is “broadly optimistic” for 2021, for which the OECD forecasts 4.2% global growth. “I think the vaccine will spread … global trade looks like it’s bouncing back,” says Kenny. Optimism should be tempered by patience for the vaccine roll-out, and mounting debt issues in developing nations, he says, but “there are reasons to think that we can get back on track reasonably fast.”
Zooming out, things look even better.
The last 50 years have seen a historic fivefold increase in GDP per capita in the world, while global social indicators have moved in the right direction. As countries recover from the pandemic shock, according to Kenny “a lot of the forces that are undergirding longer-term progress, like other health technologies, expanded education and policy progress, are getting back on track.”
In some ways, he says, COVID-19 demonstrates how quickly the world was improving: “This huge global pandemic temporarily reversed just three or four years of worldwide progress against extreme poverty reduction, for example.”
Health Offers a Way to Cooperate
The coronavirus crisis would also have been even more painful at another point in world history. Indeed, highly effective vaccines and testing for COVID-19 have been developed at record speed. “We’re incredibly lucky to be facing COVID with the technology and knowledge we have today,” says Kenny. As he points out, “We wouldn’t have recognized COVID as a new disease for the vast majority of human history, just because so many people were dying of infection and respiratory diseases every year.”
While global cooperation is at a low point compared to previous decades, Kenny is also optimistic that the world can band together. “If you look at some of the earliest global international agreements, they were around global public health issues,” he argues.
According to Kenny, “COVID has rammed home how much we live in a global disease pool and how much we have to work together. … Maybe a silver lining out of this will be a renaissance in international cooperation more widely.”
Climate Is Fixable
One clear area where nations must work together is in combating the climate crisis. According to Kenny, “We haven’t come together in the way we should to deal with it. In some ways, we’ve gone backward.”
Nevertheless, he believes that climate change is an “eminently fixable problem.” Kenny points to a recent IMF paper suggesting that it would cost just 1% of global GDP to stay below two degrees warming: “Now that’s a low estimate compared to others that range up to 6%, but even at 6%, it’s a massively good deal.”
Kenny is also hopeful that globalization and worldwide trade will keep serving as catalysts for progress. “I’m hugely in favor of the spread of … norms of behavior through international agreements,” he says. “Trade is a really important tool to deliver technologies that have a massive impact on the quality of life.”
For this reason, Kenny argues that the world needs “standards that protect rights in developing countries, but that don’t stifle the opportunity created by trade agreements.”
But isn’t technology a double-edged sword? Kenny argues that it comes down to guardrails. “We need to be updating the laws and institutions to make sure they keep up with our technology. … We need rules for data. … We need global rules for privacy that work,” he says.
But according to Kenny, “While I do accept there are downsides to technological advances, they are downsides that we know how to deal with, and we just need to get on and deal with them because their upside potential is so huge.”
Altamar is a global politics podcast hosted by former Atlantic Council senior vice president Peter Schechter and award-winning journalist Muni Jensen. Subscribe to the Altamar podcast on: Apple, Spotify, or Google.
Related themes: Climate Change Risk Mitigation Trade
Charles Kenny
Director of Technology and Development at Center for Global Development@charlesjkenny
Charles Kenny is the director of technology and development and senior fellow at the Center for Global Development. His current work focuses on gender and development, the role of technology in development, governance and anticorruption and the post-2015 development agenda.
The original article can be read at the Brinks’ website HERE.
CACCI Women Entrepreneurs Newsletter available
CACCI is pleased to share with its members, associates and friends the 22nd Volume of Grow, the publication of CACCI Women Entrepreneurs Council. Click HERE to read or download. 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 […]
CACCI Women Entrepreneurs Newsletter available
CACCI is pleased to share with its members, associates and friends the 22nd Volume of Grow, the publication of CACCI Women Entrepreneurs Council. Click HERE to read or download.
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 .
Thank you, and with best regards.
Ernest Lin
Director-General
CACCI
Cambodia CC President Kith Meng helps in fight against Covid-19
The Cambodia Chamber of Commerce (CCC) President Kith Meng and his wife Mao Chamnan, have contributed $3 million to the government to purchase COVID-19 vaccines for the Cambodian people. Mr. Meng, who serves as Chairman and CEO of the Royal Group of Companies, and his wife, are no strangers to humanitarian assistance. They have previously contributed $200,000 […]
Cambodia CC President Kith Meng helps in fight against Covid-19
The Cambodia Chamber of Commerce (CCC) President Kith Meng and his wife Mao Chamnan, have contributed $3 million to the government to purchase COVID-19 vaccines for the Cambodian people.Mr. Meng, who serves as Chairman and CEO of the Royal Group of Companies, and his wife, are no strangers to humanitarian assistance. They have previously contributed $200,000 to the Cambodian government to assist rescue efforts when the country was hit by floods; provided $500,000 to fight the COVID-19 pandemic back in May; and donated $500,000 to the Cambodian Red Cross.
CCC is a Primary Member of the Confederation of Asia-Pacific Chambers of Commerce and Industry (CACCI).
BRINK Explores the Technology Sector in 2020
Photo: Wang Zhao/AFP via Getty Images A man wearing a face mask looks at a robot in Beijing. The use of industrial robots became increasingly widespread in 2020. A year is a long time in the technology space. In 2019, much of our focus was on blockchain and 5G, but in 2020, it was all […]
BRINK Explores the Technology Sector in 2020
Photo: Wang Zhao/AFP via Getty Images
A man wearing a face mask looks at a robot in Beijing. The use of industrial robots became increasingly widespread in 2020.
A year is a long time in the technology space. In 2019, much of our focus was on blockchain and 5G, but in 2020, it was all about artificial intelligence and its rapid adoption into business practices — something that was hastened by the onset of COVID-19. But among the 50 pieces that BRINK published on technology in 2020, we also covered cyberattacks, fintech, digital healthcare and other areas of technological expertise.
The Rise of AI
In the past, one of the challenges of adopting AI has been the cost. But that is changing from an increase in open source AI comes into the market. Justin Starr, the vice president of digital transformation at PreScouter, says that companies can experience huge efficiencies from quite straightforward AI uses:
“Companies that are able to leverage AI on existing data sets can immediately begin identifying causal relationships and generating a return on investment. Effectively, this means that AI projects can generate a 3-5 times ROI and cost less than any capital improvement program.”
This has not gone unnoticed by companies: In February, even before the full onset of COVID-19, we published a graphic from Salesforce showing companies’ rapid expansion plans for AI.
In “Here Are 3 Ways AI Could Help You Commute Safely After COVID-19,” CEO and Co-Founder Amos Haggiag of Optibus pointed out the various ways AI can help ensure safe public transport post-COVID:
“Artificial intelligence can help us all travel at ease by crunching huge amounts of data, devising optimal schedules and journeys and adapting them to the rapidly evolving situation.”
CEO Steve Potter of Odgers Berndtson, U.S. wrote about the way in which AI is transforming talent search and the ability to fit people to the right jobs:
“Though it would have seemed impossible just a few years ago, AI algorithms can now aggregate personal and organizational profiles from billions of social, public and enterprise sources and use them to build a continuously updated portrait of the labor market.”
Meanwhile, we showed how industrial robots became increasingly widespread in 2020:
Can AI Design a Fair Tax System?
Stephan Zheng, the lead research scientist at Salesforce Research, posed a fascinating possibility in his piece: “Can AI Build a Tax System That Supports Equality?”
“In our simulations, the AI Economist achieved a 16% gain in the trade-off between equality and productivity compared to the next best framework, the Saez model. Compared to the free market, the AI Economist also improves equality by 47 percent, with only an 11% decrease in productivity.”
AI’s treatment in the law was another challenge that we covered. In his piece, “Should AI be Treated the Same as Humans Legally,” Ryan Abbott, the author of The Reasonable Robot, argued that the law is biased in favor of AI because companies do not have to pay payroll tax on an AI ‘employee’, thereby incentivizing the adoption of robots over humans:
“The even bigger problem may be that automation can dramatically reduce tax revenue. That’s because 90% of the U.S. federal government’s revenue comes from payroll and income taxes. A relatively small amount, less than 10%, comes from company taxes.”
Bias in the Machine
Bias within algorithms has become a major focus of academic study. CEO Rumman Chowdhury of Parity and Mona Sloane of New York University explored the concept further in “The Risks of Using AI for Government Work”:
“The public use of an algorithmic decision-making system has different requirements than a private-use product. It is acceptable for a private company to create a product that addresses the needs of, for example, 80% of their target market. However, if this product is translated to public use, addressing the needs of 80% of your constituency is unacceptable.”
Mona Sloane also wrote about the problems of relying on ethics codes to curb the danger of bias in AI, while Kartik Hosanagar, a professor of technology at the Wharton School, addressed a major concern in his piece called “How Can We Stop Algorithm Bias?” He concluded that it is possible to give consumers a digital bill of rights that at least provides them with some transparency in how AI makes a decision:
“it’s much easier in the long run to fix and correct biases in algorithmic decisions than in human decisions. Correcting gender or race bias in humans is incredibly hard.”
AI in Health
AI offers much promise for healthcare, but there are considerable risks too. COVID-19 has accelerated the acceptance of digital healthcare tools, such as telemedicine, online symptom checkers, use of robots in hospitals and algorithms in surgery. This is particularly seen in Asia, according to Kitty Lee and Matt Zafra of Oliver Wyman’s Health & Life Sciences practice. Kavitha Hariharan, the director of healthy societies at Marsh & McLennan Advantage, argues that male bias pervades every step of the process that shapes health care — from discovery and testing to clinical practice and outcomes — but that this could be changed with AI:
“To ensure health equity for women, we need a sex and gender lens incorporated into data, algorithms and health care.”
BRINK’s most widely read pieces on technology in 2020 were as follows:
Technology
Could CRISPR Create a COVID-19 Vaccine?
Online Education in China Spikes Due to COVID-19
Is Coronavirus a Tipping Point for Digital Health on Demand?
As Remote Work Takes Root, Do Tech Workers Face Pay Cuts?
Cyber Risk Grows As Criminals Exploit the Coronavirus Crisis
If you would like to read more of our technology articles in 2020 — anything from the risks in digital time to the rise of esports and use of drones in the city — you can find them all here.
Artificial Intelligence Cybersecurity Future Of Work
Thomas Carver
Executive Editor of BRINK News
Thomas Carver is the executive editor of BRINK News. Carver was vice president for communications and strategy at the Carnegie Endowment for International Peace, and a journalist for the BBC from 1984 to 2004.
The Global Economy on BRINK in 2020
A Year of BRINK: What We Learned in 2019
What Did BRINK Readers Learn about the Workplace in 2018?
The original article can be read at the Brinks’ website HERE
ASEAN BAC, VCCI hold virtual ASEAN Business and Investment Summit
The ASEAN Business & Investment Summit (ASEANBIS) 2020 was held virtually by the ASEAN Business Advisory Council (ASEAN BAC) and the Vietnam Chamber of Commerce and Industry (VCCI) from November 12 to 13, 2020. The two-day event brought together the leaders of ASEAN member states, partners and a large number of businesses in the region, […]
ASEAN BAC, VCCI hold virtual ASEAN Business and Investment Summit
The ASEAN Business & Investment Summit (ASEANBIS) 2020 was held virtually by the ASEAN Business Advisory Council (ASEAN BAC) and the Vietnam Chamber of Commerce and Industry (VCCI) from November 12 to 13, 2020.
The two-day event brought together the leaders of ASEAN member states, partners and a large number of businesses in the region, demonstrating the spirit of cooperation of countries’ governments and the private sector in joining hands to develop a prosperous ASEAN region.
With the theme “Digital ASEAN: Sustainable and Inclusive”, the Summit’s program covered four sub-themes: ASEAN’s Economic Outlook; the Future of ESG investing in Asia; Technology and the Future of Work in ASEAN; and Sustainable Agri Development and Inclusive Growth. This year’s ASEAN ABIS 2020, which was attended by 3,477 online participants, 385 enterprises, and 150 members of the press, discussed future investment and business in the region, comments on development trends, the introduction of government action programs and the commitment to accompany the business community in COVID prevention and economic recovery efforts.
Vietnam Prime Minister Nguyen Xuan Phuc, in his opening remarks, emphasized the current COVID-19 pandemic has caused economic downturn, impeded world trade, disrupted supply chains, hindered people’s travel, and forced many businesses to cease operations.
However, he affirmed that in such difficult circumstances, ASEAN demonstrated self-reliance and cooperation, combating the disease and promoting economic recovery and development with an inclusive goal of ensuring people’s health and life and creating favorable conditions for businesses to promote their proactivity and creativity in economic recovery and development.
He further voiced his belief that ASEAN BIS 2020 would act as a bridge connecting leaders and policy makers with international organizations and leading enterprises in the region, with the event offering a platform to discuss and share experiences and best practices to open up opportunities for cooperation and development towards sustainability and inclusiveness.
Virtual gold? Bitcoin’s rise sparks new debate
Bitcoin’s rally above US$15,000 has reignited debate over whether the cryptocurrency is so-called digital gold or a perilously risky bet as investors grapple with the coronavirus pandemic. The world’s most popular virtual unit has gained over 30% in value in almost three weeks up to last November 6, taking it close to its December 2017 […]
Virtual gold? Bitcoin’s rise sparks new debate
Bitcoin’s rally above US$15,000 has reignited debate over whether the cryptocurrency is so-called digital gold or a perilously risky bet as investors grapple with the coronavirus pandemic.
The world’s most popular virtual unit has gained over 30% in value in almost three weeks up to last November 6, taking it close to its December 2017 peak when it reached nearly US$20,000.
After a rollercoaster ride on markets since then, it began its latest meteoric rise on Oct 21, after US online payments provider PayPal announced that it would enable account holders to use cryptocurrency.
“It is the validation of a market which was still relatively uncertain a few years ago,” said Simon Polrot, president of Paris-based crypto-assets association ADAN.
Bitcoin was created in 2008 by the pseudonymous Satoshi Nakamoto, and marketed as an alternative to traditional currencies. Unregulated by any central bank, it was sold as an attractive option for investors with an appetite for the exotic – although criminals have also seen its under-the-radar appeal.
However, after bitcoin surpassed US$1,000 for the first time in 2013, it has increasingly attracted the attention of financial institutions. The more recent arrival of big players in the virtual market, such as PayPal and Mastercard, are “very important signals” solidifying that trend, according to Mr Polrot.
PayPal said it would allow users to buy and sell using bitcoin as well as other cryptocurrencies such as Ethereum and Litecoin. “The migration toward digital payments and digital representations of value continues to accelerate, driven by the Covid-19 pandemic and the increased interest in digital currencies from central banks and consumers,” the company said.
The US Federal Reserve and European Central Bank are holding consultations on the possible launch of their own virtual currencies, while China’s central bank started experimenting with digital payments in four cities in April.
Investment banking giant JPMorgan Chase has joined industry players in the increasing optimism around bitcoin. After PayPal’s announcement, analysts at the bank compared the cryptocurrency to gold. “Bitcoin could compete more intensely with gold as an ‘alternative’ currency over the coming years given that millennials will become over time a more important component of investors’ universe,” they said.
They noted that the total capitalisation of the cryptocurrency market is 10 times lower than gold, with some speculating it could steadily close that gulf. The viewpoint represents a significant shift given JPMorgan chief Jamie Dimon described bitcoin as a “fraud” two years ago.
As with gold, bitcoin could benefit as central banks gush out trillions in stimulus support to counter the devastating effects of the Covid-19 pandemic, potentially diluting the value of their currencies. Both gold and bitcoin are “mined” – virtually, by computer users, in the cryptocurrency’s case – and have a finite supply, in contrast to hard cash printed in unlimited amounts by central banks.
Charles Morris, whose company ByteTree specialises in cryptocurrencies, argues bitcoin is “very much a growth asset, behaving like a tech stock”.
However, others point to the highly volatile and speculative nature of cryptocurrencies. “There is no room for bitcoin in a serious forex portfolio,” said a London trader who asked to remain anonymous, noting the unit had lost a quarter of its value in March alone before resuming its rally more recently. “That would be a catastrophe for a forex trader – we use gold to balance our portfolio.”
AFP
“New Pension Funding Regime” webinar on 24 February 2021
Fast Track or Bespoke? A new choice faces companies sponsoring defined benefit pension schemes, one which has stayed hidden during Covid-19 but could have a multi-billion pound consequence for UK plc as a whole. The introduction of a “twin-track” approach to the funding of pension schemes was proposed by The Pensions Regulator in March 2020. […]
“New Pension Funding Regime” webinar on 24 February 2021
Fast Track or Bespoke? A new choice faces companies sponsoring defined benefit pension schemes, one which has stayed hidden during Covid-19 but could have a multi-billion pound consequence for UK plc as a whole.
The introduction of a “twin-track” approach to the funding of pension schemes was proposed by The Pensions Regulator in March 2020. With the onset of the Covid-19 pandemic weeks later which kept companies busy in 2020, the policy document went unnoticed by many companies, but pensions consultancies have warned that while the new regime introduces a simple solution for SMEs, its rigidity could stifle innovation and demand unnecessary cash injections from the UK’s blue chip companies. The consultation has now closed but as a further consultation will be launched in Spring 2021. Companies are being urged to start planning for the new regime now as it is likely to become a requirement for companies in 2022.
The twin-track regime gives sponsors of DB schemes two options. Fast Track would see schemes having to use a number of fixed assumptions in exchange for a lighter regulatory burden. If schemes choose to take the Fast Track approach it may well result in Trustees adopting an excessively prudent approach to setting assumptions as part of a valuation and increase cash contributions from the company. Those opting for a more flexible bespoke approach would have to justify why they have used this approach.
As the regulator attempts to get tougher with companies, will its insistence on more cash, sooner, put unnecessary stress on companies struggling to rebuild after the Covid-19 pandemic? Join the FT, consultancy Mercer, and the regulator itself for an interactive webinar unpicking the implications of the new policy proposal. Featuring interviews, panel debates and live Q&As, the session will allow corporate DB sponsors to stay ahead of the regulator’s thinking, and prepare a strategy to navigate the watchdog’s final policy.+
REGISTER HERE
The Global Economy on BRINK in 2020
Photo: Romeo Gacad/AFP via Getty Images A couple wearing protective face masks walk past an electronic quotation board displaying share prices in Bangkok. One of the most important themes of 2020 was the response of governments and global financial systems to the COVID-19 crisis. 2020 was obviously an epoch-making year for economies everywhere and these […]
The Global Economy on BRINK in 2020
Photo: Romeo Gacad/AFP via Getty Images
A couple wearing protective face masks walk past an electronic quotation board displaying share prices in Bangkok. One of the most important themes of 2020 was the response of governments and global financial systems to the COVID-19 crisis.
2020 was obviously an epoch-making year for economies everywhere and these historic shifts are fully reflected in the web pages of BRINK.
In all, BRINK published 130 articles on the status of the economy in 2020 — some on global tectonic shifts, but many pieces looking at what was going on in individual countries, as varied as Chile, Vietnam, India, Saudi Africa, Japan and Germany.
Optimism at the Beginning
The year began with a sense of confidence about the general direction of things. On January 28, we ran a piece by CEO Jim Kaitz of Association for Financial Professionals, called “Finance Executives Are Optimistic About 2020”, which was followed by a Quick Take entitled, “People Skills a Priority Even As Tech Drives Jobs Growth in Major Economies.” However, on that same day as the Quick Take (January 30), we also ran our first piece on COVID-19 entitled “Coronavirus: One Step Back for the Global Economy.”
At that time, it seemed like coronavirus might turn out to be similar to SARS in terms of its economic impact. But that quickly changed, as the signs became more ominous. The following week brought the first indications of its huge impact on individual industry sectors, with the publication of “The Novel Coronavirus May Damage Aviation More Than SARS.” Over the coming weeks, this was followed by examinations of COVID’s impact on supply chains, the EU financial system, the automotive sector, African economies and others.
By May 1, we were publishing stunning illustrations of COVID-19’s impact on certain sectors, such as this one on the collapse in the demand for oil after only 3 months.
In mid-September we revealed the extraordinary drop off in oil and gas exploration that followed the fall in demand:
The Insights of Economic Advisors
Throughout the year, BRINK benefited from the insights of a number of influential economic commentators and thinkers. In mid-May, Moises Naim, the best-selling author of The End of Power, floated this possibility: “Is This Year One of an Economic ‘Lost Decade’?” Naim reflected on how Netflix has a larger valuation than Exxon as a sign of the times:
“This crisis generates situations in which what we thought was permanent — institutions, ideologies, political and economic arrangements, business models, habits — ended up being transitional. And what we thought was temporary became permanent.
A good example, an iconic example, of this in this current crisis, is with teleworking. Of course, people working from home had already become a trend before COVID-19 but not in significant ways. Now, most companies and governments will have work from home programs even if the pandemic recedes.”
This was followed by Mohamed El-Erian, the well-known chief economic advisor at Allianz, and his predictions for the global economy.
“There’s going to be a pendulum swing in corporate America and, also, around the world, from efficiency to resilience. So, the romance of just-in-time inventory management is going to give way to increasing resilience, and when you rewire the corporate sector, it takes time for productivity to go back up.
Secondly, we’re going to end up with much more involvement from government. And we’re not doing it in a principled manner; it’s being done in response to this crisis, So, you’re going to end up with a spaghetti bowl of the public and the private sector. Historically, those are very hard to untangle.
Thirdly, you’re going to have a significant era of de-globalization, because this is the third shock to globalization in 10 years, and this one has all sectors of society looking to de-globalize. So, that de-globalization process is going to also accelerate the decline in productivity.”
Given its ubiquitous impact, it’s no surprise that COVID-19 features heavily in our top five most popular economy pieces of 2020:
What Is Going On in the US Housing Market?
Will COVID-19 Devastate the Indian Economy?
The New Normal: Mohamed El-Erian’s Predictions for the Global Economy
Coronavirus Is Changing Global Supply Chains in Unexpected Ways
This Is the Impact of the Coronavirus on Business
The Impact of Central Banks
One of the most important features of the year was the response of governments and global financial systems to the crisis. In August, we asked Pulitzer Prize-winning Author and Economist Liaquat Ahamed about central banks: “How Well Have Central Banks Performed in This Crisis?”
“One of the things that has made this crisis very different is there’s much less finger-pointing. In the 2008 crisis, it was hard to persuade the rich countries to bail out the poor countries because they were seen as having created the mess they were in.
This time, everyone agreed that the pandemic was no one’s fault. As a consequence, there was much less political debate about what to do. For example, the U.S. government managed to do a $2 trillion stimulus within 10 days of the crisis. Whereas last time, it was pulling teeth to get even less than a trillion. And the U.S. government has done another trillion since then. And the same is true in Europe.
The problem is that central banks are reaching the limits of what they’re capable of doing. We may be creating more problems for the future if central banks become the primary instrument for dealing with the downturn. Because they can only lend money, and it’s probably not a good idea for corporations that already have too much debt to borrow even more money.”
One of the more intriguing pieces we published was by Stephan Zheng, the lead research scientist at Salesforce Research, on whether AI could design a better tax system — one that is more equitable and efficient. The answer appears to be a qualified yes. Shortly before the U.S. election, we invited Eric Toder, the co-director at Urban-Brookings Tax Policy Center, to pick over Joe Biden’s tax policies, and particularly his focus on increasing corporate taxes.
“All countries are worried about the race to the bottom in corporate taxation that’s been going on, so there’ll have to be discussions around what the international tax architecture looks like if Biden wins.”
All in all, it was a remarkable year for the global economy. If you would like to read more of BRINK’s economic coverage in 2020, including topics like whether or not direct cash transfers work and what is happening to debt in Africa, you can find them all here.
Happy Holidays from the BRINK News staff!
Related themes: Disruption Investment Regulation
Thomas Carver
Executive Editor of BRINK News
Thomas Carver is the executive editor of BRINK News. Carver was vice president for communications and strategy at the Carnegie Endowment for International Peace, and a journalist for the BBC from 1984 to 2004.
A Year of BRINK: What We Learned in 2019
What Did BRINK Readers Learn about the Workplace in 2018?
BRINK’s Coverage of Cities in 2018 Suggests a Vibrant Urban Future
The original article can be read at the Brinks’ website HERE
UNCTAD report on COVID-19’s global impact
In its latest assessment of the impact of COVID-19 on global investment, UNCTAD found that global FDI flows fell by 49% in the first half of 2020, with the biggest decline in Europe and the US. Lockdowns across the world slowed existing investment, and fears of a recession resulted in a 37% drop in new […]
UNCTAD report on COVID-19’s global impact
In its latest assessment of the impact of COVID-19 on global investment, UNCTAD found that global FDI flows fell by 49% in the first half of 2020, with the biggest decline in Europe and the US. Lockdowns across the world slowed existing investment, and fears of a recession resulted in a 37% drop in new project announcements.
Read the full assessment in the October issue of Investment Trends Monitor: https://unctad.org/…/official…/diaeiainf2020d4_en.pdf
Study says Taiwan Disproves Idea that Either Health or the Economy Must Suffer
Taiwan is one of several countries that clearly disproves the argument that governments must choose between protecting people’s health and protecting the economy in their response to the COVID-19 pandemic, an Oxford University researcher said. In a study posted on Our World in Data, an online journal run by the Oxford Martin School, researcher Joe […]
Study says Taiwan Disproves Idea that Either Health or the Economy Must Suffer
Taiwan is one of several countries that clearly disproves the argument that governments must choose between protecting people’s health and protecting the economy in their response to the COVID-19 pandemic, an Oxford University researcher said. In a study posted on Our World in Data, an online journal run by the Oxford Martin School, researcher Joe Hasell compared COVID-19 death rates in 38 countries with their GDP data.
Hasell examined the scale of the pandemic’s economic impact by comparing second-quarter GDP figures with the same quarter last year. Taiwan was the least affected nation, with a decline of 0.6% in economic growth, followed by South Korea’s fall of 3% and Lithuania’s 3.7%, the study showed. Spain, the UK and Tunisia experienced declines of more than 20%, which Hasell said was “four to five times larger than any other quarterly fall on record for these countries.” The worst economic outcome was in Peru, which reported a year-on-year fall of 30.2%, the study said. Hasell compared the GDP data with the countries’ number of confirmed COVID-19 deaths per 1 million people as of August 30.
There was no correlation between lower death rates and higher declines in GDP, the study said. “Contrary to the idea of a tradeoff” between health and the economy, countries that had the most severe economic downturns “are generally among the countries with the highest COVID-19 death rate,” according to Hasell. For instance, research showed that in Peru, Spain and the UK, the COVID-19 death rates were relatively high at 867.62, 620.49 and 611.29 per 1 million people. Taiwan, South Korea and Lithuania had significantly lower death rates of 0.29, 6.3 and 31.59 respectively. However, the study did not look into contributing factors such as exposure to previous coronaviruses, which might have boosted a population’s alertness or immunity, and the speed of their response. It did not compare healthcare standards, or address cultural or political factors that might have contributed to or hindered pandemic responses. In some cases, countries with similar GDP declines had death rates that varied widely, the study said.
Comparing the US and Sweden with Denmark and Poland, all of which had economic contractions of 8 to 9%, Hasell said that the US and Sweden had five to 10 times more deaths per 1 million people than Denmark and Poland, suggesting the influence of additional factors. One thing the study seems to indicate is that countries that took effective action not only saved lives, but also their economy, he said. “As well as saving lives, countries controlling the outbreak effectively may have adopted the best economic strategy too,” Hasell said. China was excluded from the final data because the outbreak and economic downturn there began earlier, the study said. GDP growth in China fell by 6.8% in the first quarter, but has bounced back, growing 3.2% in the second quarter. China contained the virus’ spread relatively quickly, and the huge size of its domestic economy meant that it was not heavily dependent on trade and tourism to boost economic growth, the study said.
CNA
CACCI members invited to Financial Times (FT) Global Boardroom
CACCI herewith forward an invitation to attend the Financial Times (FT) Global Boardroom 2nd Edition, of which CACCI is a Supporting Partner, to be held on November 11-13. With over 50,000 people from 150 countries registering for the inaugural Global Boardroom in May 2020, the second Global Boardroom to be held in November will […]
CACCI members invited to Financial Times (FT) Global Boardroom
CACCI herewith forward an invitation to attend the Financial Times (FT) Global Boardroom 2nd Edition, of which CACCI is a Supporting Partner, to be held on November 11-13.
With over 50,000 people from 150 countries registering for the inaugural Global Boardroom in May 2020, the second Global Boardroom to be held in November will expand further into different regions of the world, with in-depth interviews and panel discussions structured around a number of key themes: (1) Economics and geopolitics; (2) Rethinking business; (3) Disrupted industries; (4) Health; (5) Tech; (6) Banking, finance and investment; (7) Environmental, Social, and Corporate Governance; (8) Emerging markets; and (9) Deal-making. The event is a series of live online conversations between top FT journalists and the policy-makers, CEOs, investors and other thought leaders who are stepping up to these unprecedented challenges and driving change around the world due to the coronavirus.
The event introduction can be downloaded HERE for your perusal.
For more information on the event and registration, please visit the following website: https://globalboardroom.ft.com/?spoor-id=ckfbwkiz400003r60jlr4ymgb .
John Milford thanked for service to Wellington CC
John Milford is stepping down from his position as Chief Executive of the Wellington Chamber of Commerce, Business Central and ExportNZ Central, and will finish at the end of November. John has been Chief Executive since the beginning of 2015, and prior to this was an active supporter of the Chamber, previously serving as board […]
John Milford thanked for service to Wellington CC
John Milford is stepping down from his position as Chief Executive of the Wellington Chamber of Commerce, Business Central and ExportNZ Central, and will finish at the end of November. John has been Chief Executive since the beginning of 2015, and prior to this was an active supporter of the Chamber, previously serving as board member and then President of the Wellington Chamber. “Although I am sad to be leaving the organisation, it is the right time for me to finish up.
I have thoroughly enjoyed my time, both in voluntary and paid roles,” says John Milford. “I couldn’t have done the job without the team, the staff, volunteers, and the members who have been the biggest part of the successes we’ve had. He said, “I have worked with some great people who believe in and love this city and region – and who truly want to see it succeed. There’s still much, much work to do and I know they will continue it.” “While I have no set plans presently, I will continue to contribute to the greater Wellington region, I’m a passionate and proud Wellingtonian first and foremost,” Milford added.
Combined Council Chair Vaughan Renner thanked John for his service to the organisation. “On John’s appointment, he clearly signalled to me and the Board that he felt a five-year tenure was appropriate for this role and for a position as CEO of an organisation and he has now been with us for five and a half years,” says Vaughan Renner. “He has built strong relationships and has done a great job of promoting business and the Central New Zealand region.”
“In addition to being a dedicated champion for business, John’s achievements over the last five years included: an increase and retention of membership at 3,600 represented members; stabilising the financial results of the organisation and achieving budget for the last four years; working with the Board to build a governance structure that truly reflects the business environment in which we operate today; and successfully recruiting and training a great cohort of team members who reflect the demographic make-up of business today. “On behalf of the Board, I wish John every success in any future ventures in which he may be involved. We are now looking for an excellent person to continue the organisation’s work and intend going to the market for a replacement.”
Wellington Chamber of Commerce
The Race to Save the World Trade Organization
The World Trade Organization is at a critical moment in its history. Trade nationalism is becoming more widespread, the U.S./China dispute shows no sign of abating and the WTO is searching for a new leader to take it forward and ensure its relevance. Of the five candidates still in contention, two are women from Africa. […]
The Race to Save the World Trade Organization
The World Trade Organization is at a critical moment in its history. Trade nationalism is becoming more widespread, the U.S./China dispute shows no sign of abating and the WTO is searching for a new leader to take it forward and ensure its relevance. Of the five candidates still in contention, two are women from Africa.
BRINK spoke to Robert Wolfe, professor emeritus at Queen’s University School of Public Studies and an expert on the WTO. We began by asking him where the leadership competition for WTO director general currently stands.
WOLFE: The decision is made by consensus, rather than a vote. The three WTO ambassadors running the process asked each ambassador from the 164 member countries at the WTO for a confidential list of four preferred candidates. Based on that, on September 18th, they told three of the candidates that it doesn’t look like they are going to meet with consensus. And then they’ll do that process again and hope to end up with just two candidates. And then they will try to see if one of those candidates would meet a consensus of the membership.
Delegates attend the opening session of a World Trade Organization Aid for Trade review summit on November 20, 2007, at WTO headquarters in Geneva.
Photo: Fabrice Coffrini/AFP via Getty Images
BRINK: Do you think there may be an outcome before the American election?
WOLFE: I think that’s at least a possibility. The only reason it wouldn’t be possible would be if major players end up supporting different candidates, with no possibility of compromise. So if the Americans and the Chinese have a diametrically opposed position on who the next director general should be, then countries would probably want to wait until next year and see if that changes.
BRINK: Two of the front runners are African women. What’s the significance of that, if any, in your view?
WOLFE: First of all, they are very highly experienced. Ngozi Okonjo-Iweala had a distinguished career at the World Bank, so she knows a lot about the world of international organizations. Amina Mohamed had been both the chair of the general council as her country’s ambassador in Geneva and the chair of a WTO ministerial meeting when the WTO met in her country.
Many people think that it’s high time the WTO appointed a woman as its director general. There has never been a director general from Africa, whereas there have been from the Western hemisphere, from Asia and from Europe, of course.
Personality Matters
BRINK: How much significance does the actual personality of the director general matter in terms of global markets?
WOLFE: It matters hugely for the work of the organization, and that matters for markets. The Uruguay Round was concluded in the early 1990s in part because the then director general, Arthur Dunkel, took all the texts that chairs had been working with in the various different negotiating groups, crunched it all together, put it on the table and said, “why don’t you guys talk about this as a possible outcome for the round?” He took a risk, but it helped bring a major negotiation to a conclusion. And that sort of thing in different ways happens frequently if less dramatically.
BRINK: With regard to trade nationalism, do you think we’re heading into even worse territory, or are you starting to feel that maybe things are going to improve?
WOLFE: Well, I’m an eternal optimist, so I’m always expecting that things will start to improve. We have one rogue government at the moment, which is the United States.The U.S. has been consistently operating on a unilateral basis, instead of trying to assemble coalitions inside the WTO to take collective multilateral action.
But there is a growing willingness among the members of the WTO to negotiate differently. The mantra, the default setting for the traditional, multilateral trade negotiator, is that any negotiation has to involve the whole membership all the time. And that, of course, allows countries that don’t want to do anything to stall the whole organization.
The new WTO director general can make a difference, and if you want to know where the problems in the WTO are, look in Beijing and Washington.
Plurilateral Negotiations
What we see countries doing now is forming what are called plurilateral negotiations, where only the countries who want to participate in an issue participate in that negotiation. And they’re doing it within a WTO framework, which means that anybody who would actually like to seriously negotiate is free to join the negotiation. And anybody who would want to join later should be free to join it. Then the results are applied in a way that should not be discriminatory.
Of course, there is always the problem that if you don’t get the largest participants in world trade joining in such negotiations, then you don’t get to what’s called critical mass, and often you don’t get to critical mass if you don’t have the U.S., China and the European Union.
If they decided, “We don’t agree with each other on a lot of things, but we’re going to take our disagreements to the WTO,” then a lot of other countries would say, “Fine, let’s do it. Let’s start talking.”
BRINK: So overall, it sounds like forecasts of the WTO’s demise are premature.
WOLFE: Oh, absolutely. But, that is different from saying forecasts of the demise of multilateralism are premature. The WTO is simply a creature of the existing state of multilateral cooperation. If the leading countries have decided that they do not want to cooperate at all or do not want to cooperate multilaterally, then one of the places they won’t be cooperating is the WTO.
But it’s been clear for some years now that if the United States and China do not want to have a negotiation of the WTO, nobody can make them have that negotiation. And most negotiations that others would want to have won’t come to any useful results.
Hard to Predict Which Way China and US Will Go
China makes fine statements about how they’re committed to multilateral cooperation and how they want to cooperate in the WTO, but at the moment, they don’t have a partner in Washington. If we find ourselves with a government in Washington that says, “Right, China, you want to cooperate in the WTO? Let’s get to work.” That will create an interesting situation.
People also say the WTO’s dispute settlement system is gone — which is simply wrong. The appellate body has been put into cold storage by the U.S. The U.S. has many critiques of how the appellate body works. We did a survey last year of the trade community and found a good deal of sympathy for many of the concerns of the U.S. So if the U.S. was prepared to engage seriously with the rest of the membership, then appellate body reform should be possible.
The Dispute Settlement System Is Working
As for the rest of the dispute settlement system, it’s working just fine. There is the interim appellate process put in place by the EU, with 20 countries. They said, “Look, if we can’t appeal to the appellate body, but we need to appeal, here’s a different system we can use.” That will keep the panel process working, and a lot of countries have confidence in it.
As for negotiations, there are ongoing discussions on domestic support in agriculture, on e-commerce and on domestic regulatory measures in services. The crucial negotiation is fisheries subsidies. It’s been going on for many years. They could get a deal done. Some people even think they could get the deal done this year.
So in short, the message that business leaders should keep in mind is that the sky has not fallen. The new director general can make a difference, and if you want to know where the problems in the WTO are, look in Beijing and Washington.
Related themes: Geopolitical Conflict Trade
Robert Wolfe
Professor Emeritus at Queen’s University
Robert Wolfe is professor emeritus at the School of Policy Studies, Queen’s University in Canada and a member of the Global Affairs Canada Trade Advisory Council. He has written extensively on WTO transparency and WTO reform issues, most recently as part of a team that surveyed 800 members of the trade policy community on their priorities for the next WTO Director-General.
The original article can be read at Brink website HERE.
5th ASEAN Young Entrepreneurs Carnival ONLINE – 30 November 2020
The 5th ASEAN Young Entrepreneurs Carnival is happening next week – *Monday 30th November 2020* CACCI would like to invite members to the virtual edition for the 5th edition. Due to the current pandemic we unfortunately cannot all meet in person. This is our next best thing! The program Agenda is below for your perusal. We cannot […]
5th ASEAN Young Entrepreneurs Carnival ONLINE – 30 November 2020
The 5th ASEAN Young Entrepreneurs Carnival is happening next week – *Monday 30th November 2020*
CACCI would like to invite members to the virtual edition for the 5th edition. Due to the current pandemic we unfortunately cannot all meet in person. This is our next best thing!
The program Agenda is below for your perusal.
We cannot wait to meet you all on screen. Please register HERE and share this with your network and friends.
Need for convergence between self-reliance, globalisation: FICCI president
There is a need for convergence between self-reliance and globalisation, according to FICCI President Dr. Sangita Reddy. The Indian industry would achieve faster growth and development under the present leadership, she said at the inaugural session of LEADS 2020, a four-day event host by the industry chamber. Dr. Reddy added that there is a need for convergence […]
Need for convergence between self-reliance, globalisation: FICCI president
There is a need for convergence between self-reliance and globalisation, according to FICCI President Dr. Sangita Reddy. The Indian industry would achieve faster growth and development under the present leadership, she said at the inaugural session of LEADS 2020, a four-day event host by the industry chamber. Dr. Reddy added that there is a need for convergence between self-reliance and globalisation, while sustainability and diversity would remain as cornerstones of future growth. Speaking on re-imagining the world post-COVID-19, she said, “I would like to assure our global partners that we are fully committed to ensuring a robust and resurgent future for our ‘Bharat’.”
FICCI Senior Vice President Uday Shankar said increasing reliance on artificial intelligence and machine learning is the need of the hour, saying: “these will be a gateway for enhanced customer loyalty, as well as business sustainability.” Governments and industries around the world have realised that business excellence, adaptability to change, gender diversity and sustainability would be key drivers for decision making towards building a resilient and smart economic framework, Shankar noted. Ahmad Abdulrahman Albanna, Ambassador of the United Arab Emirates to India, said, “The pandemic is a watershed moment for the global socio-economic order.”
He added that “going forward, the two defining factors that will shape how this crisis affects us are collective Khabarhubleadership and coordinated actions.” The COVID-19 pandemic, he emphasized, would require significant innovation, out-of-the-box thinking and a massive cooperative effort to achieve stable and sustainable equilibrium between economic growth and social well-being. Andre Aranha Correa do Lago, Ambassador of Brazil to India, said it has never been more important for like-minded nations to strengthen their international relationships and ensure mutual trust and mutual benefits. Barry O’Farrell AO, High Commissioner of Australia to India, emphasised that both countries need to work together to keep the markets open and enhance the resilience of diversifying supply chains.
FICCI Media Division
Financial Times Global Boardroom set for November 11-13
CACCI Members and Officers are invited to attend the Financial Times (FT) Global Boardroom 2nd Edition — of which CACCI is a Supporting Partner — from November 11 to 13. The event will take place in a digital format. With over 50,000 people from 150 countries registering for the inaugural Global Boardroom in May 2020, […]
Financial Times Global Boardroom set for November 11-13
CACCI Members and Officers are invited to attend the Financial Times (FT) Global Boardroom 2nd Edition — of which CACCI is a Supporting Partner — from November 11 to 13. The event will take place in a digital format.
With over 50,000 people from 150 countries registering for the inaugural Global Boardroom in May 2020, the second Global Boardroom to be held in November will expand further into different regions of the world, with in depth interviews and panel discussions structured around a number of key themes:
(1) Economics and geopolitics;
(2) Rethinking business;
(3) Disrupted industries;
(4) Health;
(5) Tech;
(6) Banking, finance and investment;
(7) Environmental, Social, and Corporate Governance;
(8) Emerging markets; and
(9) Deal-making.
The event is a series of live online conversations between top FT journalists and the policy-makers, CEOs, investors and other thought leaders who are stepping up to these unprecedented challenges and driving change around the world due to the coronavirus. Key speakers include: • Suyi Kim, Head of Asia Pacific, CPP Investments • Laura Cha, Chairman, Hong Kong Exchanges and clearing (HKEK) • Ameera Shah, CEO, Metropolis Healthcare • Naveen Jindal, Chairman, Jindal Steel & Power • Heenam Choi, CEO, Korea Investment Corporation • Ajay Bhalla, President, Cyber and Intelligence Solutions, Mastercard.
To register for the event or to get more information, please click HERE.
CACCI, TaiwanICDF paper highlighted in CoNGO contribution to HLPF 2020
For the past four years, the Conference of NGOs in Consultative Relationship with the United Nations (CoNGO) has been working through its Regional Committee in Asia-Pacific (RCAP) to augment the potential for NGOs/CSOs in the region to work with the United Nations, with a particular emphasis on the Sustainable Development Goals (SDGs) and Agenda 2030. […]
CACCI, TaiwanICDF paper highlighted in CoNGO contribution to HLPF 2020
For the past four years, the Conference of NGOs in Consultative Relationship with the United Nations (CoNGO) has been working through its Regional Committee in Asia-Pacific (RCAP) to augment the potential for NGOs/CSOs in the region to work with the United Nations, with a particular emphasis on the Sustainable Development Goals (SDGs) and Agenda 2030.
For the United Nations Highlevel Political Forum (HLPF) on July 7 to 16, 2020, the overall theme has been set as “Accelerated Action and Transformative P a t h w a y s : Realizing the Decade of Action and Delivery for Sustainable Development.” CoNGO and its RCAP focused on the last six words: ACTION AND DELIVERY FOR SUSTAINABLE DEVELOPMENT.
In a statement to HLPF 2020 participants days prior to the forum, CoNGO highlighted a paper submitted by the Confederation of Asia Pacific Chambers of Commerce and Industry (CACCI) as one of two illustrative examples of Action and Delivery that show identifiable results replicable by others.
The paper, titled “A Paradigm toward an Equitable and Sustainable Future through the Public-Private Partnership in the AsiaPacific”, highlights the best practices of Taiwan’s International Cooperation and Development Fund (TaiwanICDF) in Sustainable Agriculture, Economic Growth, Human Capital Development, and Partnerships for Sustainable Future. TaiwanICDF is one of the strategic partners of CACCI in its efforts to promote the interests of the business sector in the Asian region.
The second example is one submitted by the Pan Pacific South East Asia Women’s Association (PPSEAWA) and focuses on grass roots action in the areas of Water for Sustainable Living, and Adaptive Yoga for Vulnerabilities (notably for persons with disabilities and special needs).
Does the world need its own risk management system?
BRINK interview with David Wood, Principal of Delta Wisdom A recently published book called Aftershocks and Opportunities – Scenarios for a Post Pandemic Future explores the impact of COVID-19 on the world’s economy, geopolitics, environment, society and working life, from now to 2035. In one of the chapters, futurist David Wood explores the idea […]
Does the world need its own risk management system?
BRINK interview with David Wood, Principal of Delta Wisdom
A recently published book called Aftershocks and Opportunities – Scenarios for a Post Pandemic Future explores the impact of COVID-19 on the world’s economy, geopolitics, environment, society and working life, from now to 2035. In one of the chapters, futurist David Wood explores the idea of a global risk management system.
David Wood is the chair of London Futurists and the principal of Delta Wisdom, an independent futurist consultancy. BRINK began by asking him what the purpose of a more comprehensive risk management system might be.
Photo: Jens Schlueter/Getty Images
A shipment of 10 million protective face masks and other protective medical gear to fight against COVID-19 in Germany. The likelihood and variety of risk overall is higher than in the past.
WOOD: One reason for a more comprehensive risk system is that you often need to amalgamate insights from multiple perspectives to really appreciate the nature of the challenges and opportunities ahead. If you look at the lead-up to the 9/11 bombings, it turned out there was ample evidence and intelligence that had been seen by individual groups, but because there was insufficient sharing of information between the different agencies and insufficient imagination as to what the al-Qaida terrorists might be doing, nobody managed to join the dots in a satisfactory way beforehand.
Greater Pooling of Insights
WOOD: We must be more transparent and open in pooling our insights, because often the biggest possibilities emerge not just when one trend moves forward, but when several trends collide or converge in ways that individual observers may not have anticipated.
BRINK: To do this well would obviously involve governments cooperating with each other and sharing knowledge and information. How do you foresee that happening in an age when governments seem increasingly nationalist and there is less and less global cooperation?
WOOD: There are worrying trends toward populism, but at the same time, there are also trends that encourage countries to cooperate, even in the countries where the leaders might be hostile to each other — especially if they can be persuaded of the true scale of the risks that are confronting them.
A good example was what happened in the 1980s, between former presidents Ronald Reagan and Mikhail Gorbachev. When Ronald Reagan became president, he spoke of the Soviet Union as the evil empire. When Mikhail Gorbachev took power in the Soviet Union, the Soviet Union regarded the West with great hostility. But something changed that enabled them to work toward a significant reduction in nuclear weapons. And that was the new understanding that a nuclear attack would not just destroy some cities, but that the dust created by these explosions would go high into the stratosphere and could block out the sun’s light, creating a nuclear winter that would impact both sides, killing many more people than previously expected.
Understanding a Common Purpose
WOOD: There were other factors, of course, like the personal chemistry between President Gorbachev and President Reagan, but this is a model of what is needed: clear, credible discussions of huge risks that will cause even nationalist populist leaders to start reconsidering their positions.
We need global leaders and budget holders to wake up to the responsibility that there are greater numbers of large risks out there than ever before.
BRINK: What role would you imagine the United Nations would have in this? After all, the U.N. is a risk management body that was created after the Second World War.
WOOD: The U.N. was set up with the right vision and purpose for its time, but like many other organizations, it has become fossilized and is the victim of inertia. It needs to be regenerated or rejuvenated by one means or another.
We need global leaders and budget holders to wake up to the responsibility that there are greater numbers of large risks out there than ever before. Large risks are changing from matters of occasional concern to matters of constant concern. Leaders need to understand that, as technology becomes more advanced — not just artificial intelligence, but also biotech, cogno-tech, robotics and nanotech — it opens huge new risks as well as huge, new opportunities.
And so the likelihood and variety of risk overall is higher than in the past, which means it’s even more important that enough public mindshare is given to this task of understanding them.
Becoming More Risk-Literate
BRINK: You talk about the psychology of denial, which is a common human trait in risk management. You can’t imagine something like COVID-19 until it’s happened. Are there ways that you can mitigate against that in thinking about future risk?
WOOD: We need to be immersed in discussions of credible scenarios for what might and might not happen, rather than just Hollywood films. We need to become much more literate at understanding the risks of outbreaks of infectious diseases, as well as the other risks of contagion, whether it’s financial contagion or malware contagion, or fake news contagion and so on.
And we need to understand things more probabilistically. Probability is a difficult concept, but we need to help people understand it, so when things like bird flu or SARS or MERS happen, the public appreciates that things could well have turned out very differently. In each case, it was either because the diseases weren’t sufficiently infectious enough to spread easily from human to human, or because of aggressive action that various governments took that prevented these earlier cases of infection from causing wider damage.
Science isn’t a fixed, black-and-white understanding. Science reevaluates itself as it gains better insights. We need to be prepared to plug that probabilistic understanding into our actions. I wish that children at school learned more about risk planning and scenarios. We should all become more competent talking about this. We should all learn more about exponentials and know how they can accelerate and how they can slow down. And when we tell the story of recent history, we should give more credit to those instances when scenario planning had a positive role to play in the outcome.
Related themes: Regulation Risk Mitigation
David Wood
Principal of Delta Wisdom
David Wood is the chair of London Futurists and the principal of Delta Wisdom, an independent futurist consultancy. He spent 25 years as a pioneer of the smartphone and mobile computing industry, being a co-founder of operating system company Symbian. He is the author or lead editor of nine books, including Transcending Politics, The Abolition of Aging and Sustainable Superabundance.
The original article can be read at Brink website HERE.
How to fight off cyberattacks in an age of remote working
With tens of millions of people working remotely in the wake of the COVID-19 pandemic, the cybersecurity weaknesses of the remote work ecosystem have become apparent. Criminals and nation-state actors have been presented with an exponential growth in access points to pressure and penetrate corporate systems, and the scramble to secure systems from a menagerie […]
How to fight off cyberattacks in an age of remote working
With tens of millions of people working remotely in the wake of the COVID-19 pandemic, the cybersecurity weaknesses of the remote work ecosystem have become apparent. Criminals and nation-state actors have been presented with an exponential growth in access points to pressure and penetrate corporate systems, and the scramble to secure systems from a menagerie of devices, networks and enterprise networks leaves many companies vulnerable to attack, theft or exploitation.
Persistent Threat
The FBI has stated that cyberattacks have drastically increased this spring; ransomware, malware, general email scams and malicious phishing expeditions abound. Some cybercriminals have even taken to providing fraudulent COVID-19 resources via apps or other downloads to target both individual and corporate systems. While these assaults have happened in an astonishing variety of industries and against a diverse array of targets, areas hit hardest by COVID-19 are the most vulnerable. These crimes can be extremely profitable, often lack sophistication to execute certain techniques, require a remarkably low financial commitment and are difficult to attribute to any particular parties.
Considering this combination, it becomes clear that this threat will be a persistent one. As corporations build out the interoperability of their corporate systems with personal technology — via either increased compatibility with personal mobile devices or other methods of accessing company databases through home computing networks — the probability of inadvertently introducing vulnerabilities into corporate systems increases. The ability to rapidly identify vulnerabilities and detect breaches will become paramount to the successful operation of any company.
Remote Working Drives Up Cyber Risk
The longer this remote work period persists, the more sophisticated and targeted the actions of criminals and bad actors will become. Considering these technical vulnerabilities in conjunction with the increased ease of exploiting human vulnerabilities (i.e., it is more difficult to exert direct control over how employees use their computer systems in a remote work environment), it is critically important to increase vigilance in adopting and maintaining proper cybersecurity hygiene.
Photo: Unsplash
The nature of the newly established remote work ecosystem means that cybercriminals have more access points and security vulnerabilities to exploit than ever before.
Despite the increased risks and the uncertainty of security protocols constructed on an ad hoc basis, working remotely is a mandatory aspect of life for tens of millions of Americans. Corporations must find a way to protect the safety and security of both their employees and the public writ large by ensuring that remote work systems are secure enough to operate for as long as needed until a significant portion of the American workforce can return to work safely. This effort requires vigilance, flexibility and a keen awareness of the threat landscape, and corporations that can create and foster a secure working environment now will be far better situated to protect themselves from cybersecurity threats in a post-COVID working environment.
The nature of the newly established remote work ecosystem means that cybercriminals have more access points and security vulnerabilities to exploit than ever before.
Review Your Data Logs
A starting point for any organization must be a thorough review of data storage: storage hardware, storage methods and access control. As myriad new devices are granted access to corporate systems, the need for careful curation of access lists and data logs recording the time and manner of access grows. Monitoring and controlling access will allow organizations to reintegrate the vulnerable and potentially compromised assets that have been out of their direct control for extended periods of time.
Institutions also need to assess their cybersecurity insurance policies to ensure adequate coverage, as well as seek to mitigate their third-party and supply-chain vendor risks. Increased use of remote work technologies and outside support systems will also require corporations to revisit and revise their risk management programs for supply chains. As the web of contact with outside systems and vendors grows, existing cybersecurity procedures may also need to be overhauled. These may include incident response plans, remote work and employee privacy policies, data privacy and security training materials, bring-your-own-device (BYOD) rules, data/record retention schedules, information security and acceptable use policies and email and messaging standards.
Importance of Internal Messaging
Given the radical nature of the changes that are likely to take place, communication and education efforts are a necessary pillar of a successful transition. A combination of intensive contingency planning and aggressive outreach to employees, vendors, suppliers and stakeholders is recommended. Employees who have been working from home need to make their shared platforms, devices and databases less vulnerable to attack. It’s not just the organization’s cybersecurity that’s at risk, but the privacy interests of the individual at stake in maintaining their personal and financial security from criminals and other bad actors.
Internal messaging related to cybersecurity must be clear, compelling and consistent — whether in writing, in person, online, in a virtual training session or in a video. After employees receive training, each should be required to pass a test to ensure they understand their new cybersecurity responsibilities. An ongoing return-to-work task force should be established, with input from a variety of institutional stakeholders, from communication and human resources to the general counsel’s office and information technology. The communications elements of all cyber-crisis response plans must be thoroughly overhauled to reflect current exigencies, then incorporated into drills and tabletop exercises that engage everyone in the organization.
An Unpredictable Future
Supply-chain constituencies also need to be built out and tested in conjunction with the latest cybersecurity procedures. Once an organization’s internal priorities have been addressed, it can begin reaching out to assure local and industry media, elected officials and community leaders that it is thoroughly committed to identifying and mitigating cybersecurity assaults in this unpredictable and evolving environment.
The nature of the newly established remote work ecosystem means that cybercriminals have more access points and security vulnerabilities to exploit than ever before. To adequately address these emerging threats, corporations and institutional stakeholders must bring to bear a suite of innovative methods and tools to prevent compromise when possible and mitigate damage when necessary. While cybercriminal activity is inevitable — and emerging national security paradigms result in more sophisticated attacks than in the past — organizations that use this opportunity to implement strong, secure and flexible cybersecurity practices will find themselves on solid footing to face the known threats of today and the unknown threats of the post-COVID world.
Related themes: Cybersecurity Future Of Work Risk Mitigation
Phyllis Sumner
Chief Privacy Officer at King & Spalding
Phyllis Sumner chairs King & Spalding’s Data, Privacy and Security Practice and is the firm’s partner and chief privacy officer.
Richard Levick
Chairman and CEO of LEVICK@richardlevick
Richard Levick is chairman and CEO of LEVICK, a global advisory firm providing a full range of strategic communications consulting services to companies and nations involved in critical high-stakes issues. He can be reached at: rlevick@levick.com
What Does Issue Engagement Mean for a Company?
9 Corporate Communications Changes to Anticipate for 2020
Have You Adapted Your Communications to Our New Forms of Democracy?
The original article can be read at Brink website HERE
Three key considerations for post-pandemic site relocation
Cost is no longer the most important aspect of supply chain site selection The COVID-19 outbreak has been an ugly shock to the system for global manufacturers. Though experts have been warning about the risk of globally dispersed supply chains for years, few companies were truly prepared for the pandemic. Ultimately, companies with […]
Three key considerations for post-pandemic site relocation
Cost is no longer the most important aspect of supply chain site selection
The COVID-19 outbreak has been an ugly shock to the system for global manufacturers. Though experts have been warning about the risk of globally dispersed supply chains for years, few companies were truly prepared for the pandemic. Ultimately, companies with local or diversified supply chains have been most able to mitigate the impact. Others have been caught flat-footed. The majority (75%) of companies surveyed by the Institute for Supply Management said they have experienced disruption, and four out of 10 (44%) said they had no plan in place to address supply disruptions from China.
Across industries, there are new and urgent conversations happening in boardrooms around how to improve mid-term resilience, and among manufacturers about whether to relocate plants — away from China in many cases — and how to put into place contingency labor and production plans that can survive future disruptions. Leaders, trying to wring some clarity from the chaos, are considering ideas for the reinvention phase of the pandemic response that can mitigate the impact of future black swan events.
Manufacturers will ultimately have to choose between two extremes: not doing anything — and hoping this will never happen again — or making investments in mapping and relocating supply networks to be better prepared if or when future disruptions occur.
Photo: Unsplash
An image of a warehouse. In the post-COVID-19 world, there are three primary considerations a company should consider in supply chain site selection
Shifting Supply Chains
Of course, betting only on option one is a risky gamble. According to a Thomas survey, 31% of respondents are turning down or delaying orders. Twenty-eight percent said they were looking for alternative suppliers internationally, and another 28% said they were looking for new suppliers domestically. Any company that fails to protect its production will be at risk of losing future contracts and existing customers.
For example, if a pharmaceutical company locates all of its plants for a key medication in the Philippines and that country is subsequently hit by a catastrophic typhoon, it could knock out all manufacturing of the drug, leading to liability, loss of business and even loss of customers’ lives. However, if that company had already diversified and located even a portion of its facilities closer to home, it would have the ability to shift production and potentially avoid a shortfall.
This same scenario can repeat itself in disruptions of supplies for original manufacturer components or consumer goods. While the threat may not be life or death, it could be existential for manufacturers who are unable to resolve off-shoring risks. More than 80% of fashion brands have said they already planned to reduce sourcing from China, and many companies are reacting similarly to Wistron Corporation, an iPhone assembler that recently told analysts it plans to locate 50% of its capacity outside of China by 2021.
Prioritizing Site Resilience
Vital industries, such as pharmaceuticals or medical supplies, may have no choice but to diversify production. There is mounting public pressure in the United States to move essential production of pharmaceuticals and medical equipment closer to home, with several bipartisan bills already in play. Japan has also made moves in this direction, putting $2.2 billion of its COVID-19 economic stimulus package into supporting manufacturers who shift production outside of China.
In the post-COVID-19 world, a company should consider three topics when choosing a location: labor market, cost and ecosystem.
For many companies, this will mean a combination of possible solutions such as opening new, additional plants closer to consumers; expanding current plants in more favorable locations; closing existing plants and re-opening in a new location; and deprioritizing cost as the main factor in site selection — in favor of resilience.
Once a decision is made to move near-shore, one of the first questions will be, “Where should we locate?” Prior to COVID-19, Mercer’s site selection was typically based on these three criteria: cost of the labor force, cost of real estate and regulatory burden, and proximity to the existing supply chain.
Cost Is Not Overriding Concern
The convergence of cheap and plentiful labor with a low overall cost of doing business is how so many plants ended up in East Asia over the past decades. However, site cost can no longer be the only driver with the risk of disruption being as high as it is today.
In the post-COVID-19 world, what are the primary considerations a company should consider in choosing a location? There are three main considerations companies will likely prioritize: labor market, cost and ecosystem.
The labor market, or quality and composition of the workforce, should always come first. Companies should enhance their focus on workforce and labor planning, taking the time to thoroughly explore talent availability and labor quality in the areas under consideration.
Secondly, cost is not going to disappear as a critical component of this decision. Companies will be considering the comparative impact of labor costs — and other considerations like incentives and taxes — for each potential site.
And the last factor that will significantly grow in importance in the post-COVID-19 manufacturing world will be the ecosystem that provides structure and resilience to each potential plant, including infrastructure, community attractiveness, business climate and potential risks incumbent upon the available choices. How this ecosystem provides resilience in the face of shocks like COVID-19 will be of utmost importance.
Related themes: Boardroom Risk Mitigation Supply Chains
Matthew Stevenson
Partner and Leader of Mercer’s Workforce Strategy and Analytics Practice
Matthew Stevenson is a partner and leader of Mercer’s Workforce Strategy and Analytics practice, specializing in workforce productivity and strategic workforce planning.
Uniko Chen
Principal of Mercer’s Workforce Strategy and Analytics practice
Uniko Chen is a principal in Mercer’s Workforce Strategy and Analytics practice, specializing in workforce management practices and labor market conditions.
The original article can be read at Brink website HERE.
New CACCI Vice President from MNCCI
The Mongolian National Chamber of Commerce and Industry (MNCCI) has nominated its CEO, Mr. Duuren Tumenjargal to serve as CACCI Vice President. Mr. Tumenjargal takes over the position from Mrs. Saruul Bulgan, who is no longer with MNCCI. Before joining MNCCI, Mr. Tumenjargal was Head of MCS Group’s Marketing Department in 2000-2005, Vice Director of […]
New CACCI Vice President from MNCCI
The Mongolian National Chamber of Commerce and Industry (MNCCI) has nominated its CEO, Mr. Duuren Tumenjargal to serve as CACCI Vice President. Mr. Tumenjargal takes over the position from Mrs. Saruul Bulgan, who is no longer with MNCCI.
Before joining MNCCI, Mr. Tumenjargal was Head of MCS Group’s Marketing Department in 2000-2005, Vice Director of the UFC Group in 2005-2010 and Vice Director of Capitron Bank in 2015-2016. He has been Member of the Board of Auto Trade Complex since 2016 and has been appointed CEO of MNCCI since 2019.
Mr. Tumenjargal studied in the University of Delhi, India and received his Bachelor degree on Economics and Marketing in 1999. In 2008, the “Altangadas” Government Medal was conferred on him in recognition of his outstanding performance.
Mr. Tumenjargal is married with two sons and is fluent in Russian and English.
ICC webinar: Ethical marketing during COVID-19
The International Chamber of Commerce’s Academy is inviting interested parties to join its free ICC livecast on “Ethical Marketing During COVID-19” to be held on Wednesday 3 June 2020 at 9:00 am EDT – 3:00 pm CET – 6:30 pm IST – 9:00 pm SGT. Misleading or false advertising in the context of […]
ICC webinar: Ethical marketing during COVID-19
The International Chamber of Commerce’s Academy is inviting interested parties to join its free ICC livecast on “Ethical Marketing During COVID-19” to be held on Wednesday 3 June 2020 at 9:00 am EDT – 3:00 pm CET – 6:30 pm IST – 9:00 pm SGT.
Misleading or false advertising in the context of the COVID-19 pandemic can seriously undermine consumer trust and – more concerningly – public health advice.
This ICC webinar will explore the different health and financial claims made in the context of the current pandemic and demonstrate how businesses can and should advertise responsibly drawing from guidance in the ICC Marketing Code.
- Want to know?
- When health claims are considered misleading?
- How businesses can advertise responsibly?
- What mechanisms are in place to ensure that businesses do advertise responsibly? and
- What you can do as a consumer when presented with questionable health claims or “get rich quick” ads?
Then join our experts
In a discussion moderated by Raelene Martin, Knowledge Manager, ICC Commission on Marketing and Advertising to find out and learn much much more!
They will share prime examples of some of the many misleading health claims and “get rich ads” that have been circulating over past few months as the world grapples with one of the biggest health and economic crises of the last 100 years.
The ICC livecast is open to everyone and will last 1 hour with 15 minutes of Q&A.
Have a burning question? Don’t forget to submit your questions for our speakers when you sign-up for the event.
Register HERE.
Predictions for the Global Economy, Mohamed el-Erian
This is a global crisis, and yet we have seen a much lower level of global policy coordination than we did after the global financial crisis. As the global economy emerges from lockdown, leaderships are grappling with a large number of momentous decisions about how to move forward, such as how to recover […]
Predictions for the Global Economy, Mohamed el-Erian
This is a global crisis, and yet we have seen a much lower level of global policy coordination than we did after the global financial crisis.
As the global economy emerges from lockdown, leaderships are grappling with a large number of momentous decisions about how to move forward, such as how to recover growth, how much structural adjustment to make and how long to maintain the financial support.
One of the world’s most well-known economic commentators is Mohamed el-Erian, chief economic advisor at Allianz. A Financial Times contributing editor, Bloomberg Opinion columnist and the former CEO of PIMCO, el-Erian has authored two New York Times best sellers.
Tom Carver, executive editor of BRINK, began by asking el-Erian about the stock market.
CARVER: As we speak, and obviously this can change, the stock market seems to be far ahead of the economy in its levels of optimism. Do you think that the markets have factored in enough risk?
EL-ERIAN: The markets have convinced themselves that they are in a win-win situation. They win on fundamentals, if they bet on a recovery, and that looking through the current dismal economic data is the right thing to do. So, that is the constructive, forward-looking side of the market. But, they also win if they get things wrong, because they truly believe that the Federal Reserve, and other central banks, have the markets’ back covered.
That is something that has been building for the last few years, but took a massive leap forward when the Federal Reserve decided not just to buy their investment-grade bonds, but also to venture into some areas of high-yield, including buying the high index, because in the market’s mind, high-yield is just one notch above equities. So, if the threat has come all the way down to high-yield, surely it will come into equities.
So, that win-win bet has been driving up markets to a level of decoupling from the real economy, but has a lot of unintended consequences. I understand it, but it’s not something that I feel comfortable about.
Photo: Shutterstock
CARVER: You talk about the extraordinary interventions by governments and by the Fed. Do you think we’re going to get waves three and four of these kinds of interventions?
EL-ERIAN: So, definitely we’re going to get at least one, probably two, more waves on the government side. I think we’re going to get another wave of relief, and then after that, there will be stimulus rather than relief. And that’s a really important distinction, because even though it’s been called stimulus, it’s not stimulus. This is all about trying to keep the system from imploding, trying to keep people who’ve lost jobs from real desperation, trying to stop companies’ liquidity problems from becoming sovereignty problems.
CARVER: You have written and talked in the past, with some sympathy, about modern monetary theory, which argues that governments can run much larger economically sustainable debts than conventional thinking suggests.
EL-ERIAN: I think the modern monetary theorists are pinching themselves. Because they’re seeing many elements of what they advocated now starting to be implemented. We are seeing budget deficits that were unimaginable, while interest rates have come down even more, meaning that these deficits can be financed. And then, central banks have been incredibly accommodating in terms of buying more and more government debt.
So, from a modern monetary theorist’s perspective, it’s playing out in front of your eyes: We can run the economy at a higher level of debt because interest rates are lower and will remain low for a long time. But there’s other elements that make me nervous. And that is co-opting the central bank. That is the part that makes me worry.
CARVER: Do you think we are heading into a phase where we are going to see universal basic income coming in, not just to get through this crisis, but as a permanent feature of developed market economies?
We’re realizing that we have a problem with global policy coordination: We have seen a much lower level of global policy coordination than we did after the global financial crisis.
EL-ERIAN: So, it all depends on what the crisis looks like. If we shut down again, then the answer is, it will become more common because there will be long-term unemployment if we shut down again for a long time.
But once you’ve sent people a check in the mail that’s completely unrelated to anything we normally think of, and simply they get it because they are who they are, it’s very difficult not to do that again. So, the political system has taken a step forward, and it’s going to be difficult to put this genie back into the bottle.
CARVER: Referring to the 2009 crash, you have said that we “won the war, but lost the peace of the chance to build a really inclusive economy.” Do you think we have a better chance of doing this now?
EL-ERIAN: I don’t know. We now have what I’m calling “The New Normal 1.0,” which is frustratingly low economic growth, increasing inequality — not just in income and wealth, but in income, wealth and opportunity — and central banks becoming more and more held hostage by the marketplace.
But if we’re not careful, we’re going to go to a “New Normal 2.0,” because it’s already clear that there’s going to be a pendulum swing in corporate America and, also, around the world, from efficiency to resilience. So, the romance of just-in-time inventory management is going to give way to increasing resilience, and when you rewire the corporate sector, it takes time for productivity to go back up.
Secondly, we’re going to end up with much more involvement from government. And we’re not doing it in a principled manner; it’s being done in response to this crisis, So, you’re going to end up with a spaghetti bowl of the public and the private sector. Historically, those are very hard to untangle.
Thirdly, you’re going to have a significant era of deglobalization, because this is the third shock to globalization in 10 years, and this one has all sectors of society looking to deglobalize. So, that deglobalization process is going to also accelerate the decline in productivity.
And, then, on the demand side, I’m worried that we’re going to end up with much higher levels of unemployment than most people expect, and I worry that people may become more risk-averse. I don’t know whether we will get to the frugality of the Great Depression generation, but certainly people will be less willing to consume. So, you’ve got more sluggish demand, more sluggish supply and more debt.
But there’s nothing predestined about this. Policy can, and should, counter this, but you need the political will to do so.
CARVER: I was going to ask you whether you saw any silver lining in any of this?
EL-ERIAN: Look, I have a whole list on my desk of silver linings. We are seeing leap-frogging in scientific conventions and innovations, so that’s great. We’re seeing much more effective public-private partnerships. That’s also great. Hopefully, we’re becoming much more sensitive to tail events — highly consequential events — climate change being one.
And finally, we’re realizing that we have a problem with global policy coordination. This is a global crisis and we have seen a much lower level of global policy coordination than we did after the global financial crisis. So you have two wakeup calls, hopefully, and then you add the other things, which I think can be maintained. So, there are silver linings to this.
Related Themes: Globalization Regulation Risk Mitigation
Mohamed el-Erian
Chief Economic Advisor at Allianz@elerianm
Mohamed el-Erian is the chief economic advisor at Allianz, the corporate parent of PIMCO, where he formerly served as chief executive and co-chief investment officer. He chairs President Obama’s Global Development Council, is a columnist for Bloomberg View and a contributing editor at the Financial Times.
The original article can be read at Brink website HERE.
ASEAN Policy Brief on COVID-19
The ASEAN Secretariat has released a policy brief on the economic impact of the COVID-19 outbreak on ASEAN. Key points include: The COVID-19 pandemic has disrupted economic activities and upended lives, tapering growth prospects around the world. ASEAN member states have rolled out various measures to counter the impact of the pandemic. Stimulus […]
ASEAN Policy Brief on COVID-19
The ASEAN Secretariat has released a policy brief on the economic impact of the COVID-19 outbreak on ASEAN. Key points include:
- The COVID-19 pandemic has disrupted economic activities and upended lives, tapering growth prospects around the world.
- ASEAN member states have rolled out various measures to counter the impact of the pandemic. Stimulus measures included tax breaks, subsidies, targeted support and cash assistance, and moratoriums on loan payments and pension contributions. Central banks also lowered interest rates, reduced reserve requirements, and purchased government bonds.
- The pandemic may lead to long-term and considerable economic implications. To restore confidence and revive the economy, ASEAN should consider mobilizing all available macro, financial, and structural policy tools; preserving the economy’s productive capacity; keeping the supply chains going; leveraging on technologies and digital trade; strengthening social safety nets; scaling up regional pandemic response; and redoubling the resolve to advance regional integration.
Read more: https://asean.org/storage/2020/04/ASEAN-Policy-Brief-April-2020_FINAL.pdf
Reducing Supply Chain on China Won’t Be Easy
The global spread of COVID-19 has sparked a clarion call to diversify supply chains away from China. But its singularity as a manufacturing location will make it hard to find alternatives. The outbreak of the coronavirus in Wuhan in January highlighted the pitfalls of China as the dominant global manufacturer of record. A delay in […]
Reducing Supply Chain on China Won’t Be Easy
The global spread of COVID-19 has sparked a clarion call to diversify supply chains away from China. But its singularity as a manufacturing location will make it hard to find alternatives.
The outbreak of the coronavirus in Wuhan in January highlighted the pitfalls of China as the dominant global manufacturer of record. A delay in orders from Chinese factories was inevitable, given the scale of dependency on Wuhan alone. According to Dun & Bradstreet, a business intelligence company, 51,000 companies have one or more direct suppliers in Wuhan, while 5 million companies have one or more tier-two suppliers in the region. The data suggests that it’s not just Southeast Asia that is dependent on Chinese suppliers — the problem appears to be much more widespread.
Another survey by the Institute for Supply Management captures the magnitude of the outbreak for global manufacturers: More than half (57%) of companies are experiencing longer lead times for tier-1 China-sourced components, while 44% are simply unprepared to address continued supply disruptions from China. A case in point — the technology giant Apple was one of the first major global companies to inform investors that it would miss Q1 revenue projections, in part due to delays in production by its China-based assembly plants. Of late, Apple had begun to move some production activities to Vietnam and India, but the company remains reliant on Chinese assembly plants to power its inventory.
The spread of the coronavirus has made one thing clear — across the technology, automotive, electronics, pharmaceutical, medical equipment and consumer goods sectors, nearly all supply chains lead back to China as the preeminent global provider of intermediate materials and components. Recognizing the risk that a dependency on China poses to national industries, some governments are offering manufacturers incentives to exit China and ease the pain of diversification. Japan is putting $2.2 billion of its COVID-19 economic stimulus package into supporting its manufacturers shift production outside of China. There’s also mounting public pressure in some countries, such as the United States, to move essential production of pharmaceuticals and medical equipment out of China and closer to home.
Photo: Loic Venance / AFP via Getty Images
A man walking around in a factory. The outbreak of the coronavirus in Wuhan in January highlighted the pitfalls of China as the dominant global manufacturer of record.
Indeed, the pandemic might accelerate pre-existing plans to reduce supply chain dependency on China. Alongside rising labor costs, the ratcheting of trade tensions between China and the U.S. had already pushed brands to re-evaluate their “single-source” strategies. More than 80% of fashion brands said they already planned to reduce sourcing from China, according to a July 2019 U.S. Fashion Industry Association report. Ensuring more resilience in supply chains is also likely to be a future expectation of investors, who will now be looking at the ability of companies to hedge risk in the event of continued outbreaks or other “Black Swan” events. The chairman of Wistron Corp, an iPhone assembler, told analysts that the company would locate 50% of its capacity outside of China by 2021. Simply put, the coronavirus has accelerated trends that have been evident for some time pertaining to China’s manufacturing stature.
As manufacturers examine their supply chains for a post-COVID 19 world, they will need to navigate the imperative for greater supply chain resilience versus the attractiveness of China as a manufacturing location.
But the reality is that a major manufacturing shift away from China is easier said than done. Even those companies that have diversified production are finding it hard to break free of China’s pervasive influence. Anticipating a rise in tariffs from the U.S.-China trade war, video game producer Nintendo had shifted the manufacturing of its blockbuster gaming console to Vietnam in 2019. Still, there is a shortage of Switch consoles in stores today due to a lack of essential components flowing to the company’s Vietnamese factories, as COVID-19 paused production by Chinese suppliers of component parts.
The global technology and consumer electronics sectors are especially reliant on China’s infrastructure and specialized labor pool, neither of which will be easy to replicate. The Chinese government is already mobilizing resources to convince producers of China’s unique merits as a manufacturing location. Zhengzhou, within Henan Province, has appointed officials to support Apple’s partner Foxconn in mitigating the disruptions caused by the coronavirus, while the Ministry of Finance is increasing credit support to the manufacturing sector. Further, the Chinese government is likely to channel stimulus efforts to develop the country’s high-tech manufacturing infrastructure, moving away from its low-value manufacturing base and accelerating its vision for a technology-driven services economy.
To this end, manufacturers are cognizant of the potential of China as a major consumer market for iPhones today and for advanced technologies such as robotics, autonomous vehicles and smart devices tomorrow. A flash poll by the Beijing-based U.S. Chamber of Commerce conducted in March shows that U.S. businesses are still bullish on Chinese consumers, despite the impact of the virus. The consumer sector had the most businesses reporting that they intend to maintain planned investments (46%), followed by the technology industry (43%).
As manufacturers examine their supply chains for a post-COVID 19 world, the imperative for greater supply chain resilience versus the attractiveness of China as a manufacturing location and tech-forward consumer market is the defining tension that they will need to navigate. The outcome is unlikely to be a clean break from China for most. Lower-value sectors, such as apparel, are most likely to expedite diversification. Indeed, many garment manufacturers have already diversified from China to the likes of Vietnam, Cambodia and Ethiopia on the basis of rising labor costs. It will be the higher-value technology and consumer electronics sectors — where the country’s manufacturing prowess and consumer potential is the most pronounced — that will find it hardest to turn away from China’s distinctive allure.
Related themes: China Supply Chains
Manisha Mirchandani
Director of Strategy at Atlantic 57
Manisha is a director of strategy at Atlantic 57 and an Asia specialist. She previously served as Asia analyst at the Economist Intelligence Unit and conducted field research in Myanmar for the United Nations Development Program. She has also authored publications for the Centre for Asian Philanthropy and Society.
Coronavirus Exposes Dependency of Southeast Asia’s Manufacturers on China
Why China Could Lead on Global Data Privacy Norms
The original article can be read at Brink website HERE.
Special Issue of UNCTAD’s Investment Policy Monitor during COVID-19
We are pleased to share with our members the latest “Special Issue of UNCTAD’s Investment Policy Monitor” issued by United Nations Conference on Trade and Development (UNCTAD). This report documents and analyses investment policies response to the crisis. Below are the highlights. Numerous countries around the globe have taken a variety of measures in support of […]
Special Issue of UNCTAD’s Investment Policy Monitor during COVID-19
We are pleased to share with our members the latest “Special Issue of UNCTAD’s Investment Policy Monitor” issued by United Nations Conference on Trade and Development (UNCTAD).
This report documents and analyses investment policies response to the crisis. Below are the highlights.
- Numerous countries around the globe have taken a variety of measures in support of investment or for protecting critical domestic industries in the crisis.
- Support measures include the speeding up of investment approval procedures, the accelerated use of online tools and e-platforms, COVID-19-related services of investment promotion agencies, incentive schemes for health-related R&D and medical supplies, acquisition by states of equity in struggling domestic key companies as well as state loans and guarantees for domestic suppliers in value chains.
- To protect their health sector and industries in other sectors considered as particularly important in the crisis, several countries have tightened foreign investment screening mechanisms. Other investment-related State interventions in the health industry include mandatory production, export bans for medical equipment and a reduction of import duties for medical devices.
- The pandemic will slow the pace of investment treaty-making. At the same time, policy responses taken by governments to address the pandemic and its economic fallout could create friction with existing investment treaty obligations, hence the risk of investor-State disputes.
- The pandemic is likely to have lasting effects on investment policy making. It may solidify the ongoing trend towards more restrictive admission policies for foreign investment in key industries. At the same time, the pandemic may trigger increased competition for attracting investment in other industries as economies seek to recover from the crisis. It may also boost the use of online administrative approval procedures for investment matters. And it may provide further impetus to the reform of investment treaty regime.
For in-depth analysis on the impact of pandemic on global investment prospects and policy developments, please see World Investment Report 2020: International Production beyond Covid-19 Crisis (forthcoming in June).
Is This Year One of an Economic ‘Lost Decade’?
Governmental measures to address coronavirus stopped economies in their tracks in unprecedented ways. For example, no one could anticipate the drop in demand for oil being as significant as it was. The latest economic data from the IMF suggests that coronavirus and the subsequent lockdowns will cause the global GDP to shrink by at least 3% this […]
Is This Year One of an Economic ‘Lost Decade’?
Governmental measures to address coronavirus stopped economies in their tracks in unprecedented ways. For example, no one could anticipate the drop in demand for oil being as significant as it was.
The latest economic data from the IMF suggests that coronavirus and the subsequent lockdowns will cause the global GDP to shrink by at least 3% this year. To get some insight into whether we might expect a quick or long recovery from that, BRINK turned to Moisés Naím, distinguished fellow at the Carnegie Endowment for International Peace, and chief international columnist for El País, Spain’s largest newspaper.
In the early 1990s, Naím was Venezuela’s minister of trade and industry, director of Venezuela’s Central Bank and executive director at the World Bank. BRINK’s executive editor, Tom Carver, began by asking Naím if he thought this crisis was different to anything that the global economy had had to face before.
NAÍM: Of course, this is new, but it’s also early days. We don’t know how it will evolve. If we have a vaccine in six months or so, that’s one outcome. But if it takes a couple of years, or if it becomes a chronic thing in which it becomes seasonal, it’s a completely different ball game.
But I do detect several similarities to previous crises, like 2008 and 9/11. The first is that the reaction to the crisis touched more lives and had more consequences than the event that triggered the crisis. Think about 9/11, which had a bit over 3,000 fatalities. But the reaction to it was far more costly in human lives, economic consequences and geopolitical turmoil. After two decades, the effects of the reactions to the attacks are still with us today.
The second common factor in the big crises of the last half century is an overestimation of their consequences. If you look at the media coverage, opinion columns, TV political discourse and even scholarly seminars and papers during these crises, you find that the common wisdom was that the event was a world-altering game-changer, and that nothing would remain the same. In reality, what happened is that while some important changes did indeed occur and affected parts of the world, none changed the entire world.
The Transitional Becomes Permanent
And the third commonality is that this crisis generates situations in which what we thought was permanent — institutions, ideologies, political and economic arrangements, business models, habits — ended up being transitional. And what we thought was temporary became permanent.
A good example, an iconic example, of this in this current crisis, is with teleworking. Of course, people working from home had already become a trend before COVID-19 but not in significant ways. Now, most companies and governments will have work from home programs even if the pandemic recedes.
CARVER: One characteristic of this crisis has been a sharp drop in the price of oil. You obviously have enormous experience running a resource economy, from your time in Venezuela. Do you put this price drop in the category of long-term or short-term change?
NAÍM: What no one could anticipate was that the drop in demand for oil was going to be as significant as it was. It was a result of the measures taken by governments to deal with the coronavirus that essentially stopped the economies in their tracks in unprecedented ways.
The conversation and the debates about oil used to be centered on production levels and prices. Now the conversation has shifted to competition for markets, clients and storage facilities. We are far from the days when producers called the shots.
Oil for Low, for Long
This is going to be part of what is going to stay with us, oil for low for long. I’m not suggesting that we’re going to have oil permanently at $25 a barrel; it may go up, may go down, but it’s not going to be near $80 or $90 levels that we have seen. There were even brief moments in which oil prices reached three digits. I don’t see that ever coming back.
I see a lot of stranded assets, meaning oil fields that are not economically viable and, therefore, left underground. I also see a redefinition of the industry, the very telling factoid about what’s going on is that the valuation of Netflix today is higher than that of ExxonMobil.
CARVER: How long do you think it’s going to be possible for governments to continue to support and pay the wages of workers who have lost their jobs and may not have jobs to come back to?
In the short term, we are going to have a combination of political turmoil, economic mediocrity and stagnation caused by COVID-19.
NAÍM: Well, it depends on the country, of course. If the world uses your money, you have a long way to go because you can just print your money. I’m thinking, of course, about the United States.
There are two protagonists of almost all economic crashes that so far have been missing in the current crisis. One is inflation and the other is devaluation. The United States just gave a stimulus equivalent to 14% of GDP. It’s quite amazing and it’s very surprising first how large it was and second how limited its stimulative effect was.
Inflation Is Missing in Action
And yet very few people believe that such a massive monetary expansion in public spending will spur inflation. In the past, that would have been the case. It hasn’t happened. And the second is devaluation of the dollar. Again, we have not seen that.
More broadly, it’s looking increasingly likely that, as Larry Summers has been alerting, we have entered a long period of secular stagnation. Low interest rates are no longer the powerful boosters of investment and consumption that they once were.
CARVER: Do you think this crisis increases the chances of some sort of permanent universal base income having to be introduced?
NAÍM: We have a very large number of countries that, in one way or another, are doling out cash to their populations in different forms. But there’s a lot we still don’t know about this crisis.
We don’t know how fiscally sustainable this is, and there’s plenty that we don’t know about the long-term effect of these instruments. But it’s already happening. It’s happening in many European countries and in emerging markets.
CARVER: What’s your view of the future of the developing world economies? They obviously have additional challenges such as weak infrastructure, weak social safety nets and so forth.
NAÍM: Unfortunately, it is a dire perspective. These emerging markets largely depend on the export of raw materials and minerals, hydrocarbons, agricultural products, commodities in general. The prices of all of these commodities have been down and will stay down until the world’s economy vigorously recovers steam. \
The Coming of a Lost Decade?
Many of these countries also depend quite significantly on remittances of their citizens living abroad and sending money back to the families. Remittances will be down by about 20%, according to the World Bank this year. Credit and foreign investment flows along with tourism are all sharply down. Capital is fleeing, inflation is up and devaluations are common, large and, of course, very damaging.
So there are some economists predicting that this could be year one of a lost decade for the emerging markets. In the eighties, you may recall, as a result of the debt crisis, there was a lost decade, at least for Latin America, in which economies were stagnating and social policies had to be curtailed. It created a lot of human suffering and political repercussions.
Let’s hope we can avoid it this time, but surely the signals are not good.
CARVER: That’s a depressing thought. With all the years of experience you have, do you feel optimistic or fundamentally pessimistic about what is going to happen over the next few years, both economically and politically?
NAÍM: If you take the long view, you’re always optimistic. Eventually humanity solves significant problems and, in the end, things end up well for some, though not for everyone. But in the short term, we are going to have a combination of political turmoil, economic mediocrity and stagnation. That is going to nurture a highly turbulent environment.
Related themes: Investment Risk Mitigation
Moisés Naím
Fellow at the Carnegie Endowment for International Peace@moisesnaim
Moisés Naím is a distinguished fellow at the Carnegie Endowment for International Peace and an internationally syndicated columnist. He was the editor in chief of Foreign Policy magazine from 1996 to 2010 and the author of bestsellers like Illicit and The End of Power. He is on Twitter at @moisesnaim.
The original article can be read at Brink website HERE.
ICC survey for Asian Chambers of Commerce
CACCI forwards herewith the request from the International Chamber of Commerce (ICC) for chambers of commerce in Asia to participate in a survey on the global response to COVID-19. This first global survey conducted by the International Chamber of Commerce (ICC), in collaboration with the World Health Organization (WHO) ‒ a major step in the […]
ICC survey for Asian Chambers of Commerce
CACCI forwards herewith the request from the International Chamber of Commerce (ICC) for chambers of commerce in Asia to participate in a survey on the global response to COVID-19.
This first global survey conducted by the International Chamber of Commerce (ICC), in collaboration with the World Health Organization (WHO) ‒ a major step in the private sector’s global response to COVID-19.
Complete the ICC-WHO survey now.
This survey will take only 3 minutes to help the WHO in the global fight against COVID-19.
COVID-19 has killed public transport. How will it recover?
A man wearing a facemask for protective measures waits for the subway train on the platform as the spread of the COVID-19 continues. Transit agencies are struggling to maintain service levels, and many of them are making cuts or are planning to make cuts in the next month or two. Photo: Adem Altan […]
COVID-19 has killed public transport. How will it recover?
A man wearing a facemask for protective measures waits for the subway train on the platform as the spread of the COVID-19 continues. Transit agencies are struggling to maintain service levels, and many of them are making cuts or are planning to make cuts in the next month or two.
Photo: Adem Altan / AFP via Getty Images
Around the world, public transit ridership has been devastated by the lockdowns and social distancing related to coronavirus. According to most estimates, ridership levels are at least 70% below pre-crisis levels, with some areas losing even more, especially on longer-distance and commute-oriented services. San Francisco’s BART system, for example, has lost 93% of its riders.
BRINK executive editor Tom Carver spoke to Jarrett Walker, an international consultant in public transit planning and policy, and asked him how he assesses the present situation.
WALKER: The numbers we’re seeing are anywhere from 70% to 90%. It looks like it stabilized at -70% to 80%, somewhere in there. But of course many things are still changing.
Transit agencies are struggling to maintain service levels. Many of them are making cuts or are planning to make cuts in the next month or two. So of course, that will have a further impact on ridership.
CARVER: What are the main factors behind the ridership collapse, apart from the stay-at-home orders? Are there other factors at play as well?
WALKER: Well, the stay-at-home orders have done it — combined with the accurate perception that public transport is about being close to other people. So it’s understandable that people who have the option to drive are going to do that. Because they’re going to feel like they have control of who’s been touching the surfaces inside of their car, to the extent that they need to travel.
Why Hasn’t It Collapsed 100%?
WALKER: When you hear that, you’d expect ridership to have collapsed 100%. But we still have roughly 25% of our original ridership in the U.S. These are people traveling to reach or provide essential services and who have no choice but to use public transit. Many of these people are working in hospitals, grocery stores, and so on, things that just have to function for civilization to continue. It shows the degree to which we all depend on those people getting to work, which is one of the reasons transit can’t just shut down.
Right now, the knowledge worker, the white collar worker, is working from home. That means, for example, that rush hour has disappeared. Transit ridership is very flat across the day now, because those essential service workers are, of course, coming and going at various times of day.
CARVER: How can public transport come back from here? Will it come back in a very different form?
WALKER: It has to come back, because there are no other alternatives for doing what it does. We are seeing that there is a core of essential functions that absolutely require transit. Anybody who can find an alternative to using public transit to get to a job is doing it now.
Public transportation is going to come back gradually because the economy is going to come back gradually.
And yet we still have 25% of our ridership. That’s with schools closed, restaurants closed, a whole bunch of the economy closed. So there is a basic floor of our demand, which is also an argument for why transit must exist and why it must succeed.
Of course, once we emerge from stay-at-home, many more trips will be made, and we will quickly end up with too much congestion if we don’t bring back a transit alternative.
The End to Denser Living?
CARVER: In the last 15 years, a lot of cities have been made more walkable, with a greater focus on public transport. Do you think that trend will end?
WALKER: Well, the interesting thing is that relatively dense development has helped to make cities livable at small scale during the crisis. People can walk, people can ride bikes. We’ve seen cycling go up as people find that to be a reasonably viable way of getting around. And of course, much safer than it used to be because there are fewer cars. But that’s only possible because of density.
I don’t think there’s an alternative to the dense development form. It may very well be that we end up with more knowledge workers telecommuting permanently because they figured out how to make it work. That could move some of those people toward lower-density living.
But the city isn’t going away. Given that people want to live in those kinds of communities and that those kinds of communities are viable for so many other reasons, public transit also has to be there.
How Will Public Transit Reopen?
CARVER: How do you see public transit systems reopening? It’s obviously not going to all rush back immediately. Will they have to have social distancing on the buses, for instance?
WALKER: We have to assume that as the economy comes back, we are going to see many more people for whom transit is the best option continuing to use transit.
It will take a while to get a highly discretionary rider, the suburban person who has a car and likes driving their car, to use transit. Ultimately though, all of the reasons people have had to use transit will come back, including, of course, congestion.
It’s going to come back gradually because the economy is going to come back gradually. I think you have to look at the economic prospects. We’re clearly going to have lowered expectations for ridership for a long time.
This is why it’s critical that we all understand that public transit needs to exist for other reasons, for the way that it is supporting essential services, the way it is providing for social justice and equity outcomes, and access to opportunity. Then also, very importantly, the ability of cities to protect their economies from congestion. Which is an issue that will arise more gradually as economies come back.
Related themes: Future Of Work Risk Mitigation
Jarrett Walker
International Consultant of Public Transit Planning and Policy@humantransit
Jarrett Walker is an international consultant in public transit planning and policy. He writes the blog Human Transit, and is author of the book Human Transit: How Clearer Thinking about Public Transit Can Enrich Our Communities and Our Lives.
The original article can be read at Brink website HERE.
COVID-19 exposed weakness in Risk Management
Given the ruinous business costs of COVID-19 and the failure of public health authorities to effectively respond to COVID-19, we should explore whether there was more the business community could have done to manage its own risks. The COVID-19 pandemic demonstrates how vulnerable companies are to systemic risk events — and how limited our […]
COVID-19 exposed weakness in Risk Management
Given the ruinous business costs of COVID-19 and the failure of public health authorities to effectively respond to COVID-19, we should explore whether there was more the business community could have done to manage its own risks.
The COVID-19 pandemic demonstrates how vulnerable companies are to systemic risk events — and how limited our normal business risk management approaches are in these situations. In January 2019, the World Economic Forum (WEF) and the Harvard Global Health Institute published a white paper about how businesses should prepare for a pandemic. It recommended a number of steps companies can take to prepare for infectious disease risks.
As shown in the chart below, “advanced” recommendations included strong board-level leadership, active threat surveillance and active supply chain management.
These are all pretty conventional business-centric risk management strategies.
COVID Is a Systemic Risk
Unfortunately, even the advanced strategies have turned out to be totally inadequate in mitigating the business impacts of COVID-19. That is because a pandemic like COVID-19 represents a systemic risk, requiring systemic preparedness and a systemic response. Traditional business risk management doesn’t deliver either.
In all fairness to business decision-makers, the responsibility of preparing for and responding to a pandemic has always rested with public health authorities. Given the ruinous business costs of COVID-19, however, and the failure of public health authorities to effectively respond to COVID-19, we should explore whether there was more the business community could have done to manage its own risks.
The problem with COVID-19 has not been a lack of dedication and expertise among health professionals; rather, it’s the chronic shortfall in the political and budgetary prioritization of pandemic preparedness. Such preparedness need not have been overly costly; by one estimate, the global cost of being prepared for a pandemic like COVID-19 works out to $1-$2 per person. That’s a trivial amount, in hindsight.
Business Needs to Advocate for Better Policies
Are there tools other than the typical risk management measures suggested in the WEF white paper that the business community could have used to ensure that pandemic preparedness was prioritized, funded and implemented? Sure.
The business community could have been a powerful advocate for pandemic preparedness in policy and budgetary decision-making. With the exception of the pharmaceutical industry trying to sell its products, it’s fair to say that business involvement in advocating for pandemic preparedness has historically been very limited.
While systemic risk management has not historically been seen as a business priority, COVID-19 has exposed a material business risk that has been ignored. COVID-19 is a wake-up call for businesses to recognize that they have a legitimate risk management interest in promoting readiness for systemic risks like COVID-19.
Apply the Principles to Climate Change
A more proactive role for the private sector should not be limited to the systemic risk posed by a pandemic. Climate change, for example, comes immediately to mind. Climate change is a veritable petri dish for future systemic risk events including, coincidentally, pandemics. Even as we live through the COVID-19 crisis, scientists are publishing reports of ancient viruses discovered in melting glaciers. They may turn out to be the tip of a viral iceberg to which we have no natural resistance.
Pandemics are just one of many systemic risk events that could be triggered by climate change. Others include:
A drought that triggers an expanding geographical conflict over water supplies. Conflicts over water in the Middle East, for example, have been suggested for years as a potential flash point for the next world war.
Simultaneous droughts in three of the world’s breadbaskets, disrupting food production, food prices and, ultimately, the global economy and political stability. That is the exact scenario used by Lloyd’s of London for its seminal systemic climate change risk report in 2015.
An extreme event that triggers large-scale environmental migration, exacerbating regional tensions and conflicts.
Systemic risk events like these, caused or worsened by climate change, could manifest at virtually any time. The likelihood of such events is also increasing as climate change progresses.
Strong Business Case for Tackling Systemic Climate Risks
The literature looking at systemic business risks associated with climate change is growing rapidly. The Bank for International Settlements’ recent report on so-called green swans, for example, argues for a proactive role for banking in anticipating and mitigating climate change-induced systemic risks.
The business risk management rationale for engaging at all levels in working to tackle climate-related systemic risks is even more solid than is the case for COVID-19. First, business activities in the power, transportation and building sectors account for a large fraction of the greenhouse gas emissions over time that are causing the climate to change. Unlike COVID-19, business is actively contributing to likelihood and severity of systemic risk events.
Second, imagine if investigative reporting were to reveal that business interests had actively interfered with pandemic preparedness by lobbying against the necessary funding and could therefore be causally linked to the COVID-19 pandemic. There would be public outrage — and rightly so. Yet when it comes to climate change, business interests have a long history of obfuscating the nature and severity of the problem. Some business interests continue to oppose the adoption of policies and measures needed to mitigate climate change, as is well documented through the work of InfluenceMap in the United Kingdom.
Voluntary Initiatives Cannot Scale
But wait, you may say. Haven’t thousands of companies around the world committed to help tackle climate change through initiatives ranging from reducing their carbon footprints to adopting science-based targets, internal carbon pricing and going carbon-neutral? Certainly.
These and other measures, however, represent corporate social responsibility initiatives. Voluntary initiatives like these cannot scale to the systemic change required to mitigate climate change. As a climate change mitigation strategy, they represent “greenwishing,” at best, and “greenwashing” at worst.
Mitigating climate change and, thus, the business risks of future systemic climate risk events requires a rapid transition to a low-carbon economy.
That, in turn, requires a broad suite of policies and measures to guide business behavior in that direction. When it comes to policy advocacy for a rapid low-carbon transition, however, the business community is missing in action. Notwithstanding numerous CEO expressions of support for climate policies, for example, U.S. Senator Sheldon Whitehouse recently noted, “I am involved in a number of secret climate conversations with some of my Republican colleagues, but they can’t find a single corporation that will come out and say ‘I’ve got your back.’”
Get Engaged in Climate Policy
The failure of decision-makers to be prepared for the COVID-19 pandemic, after years of warnings from public health experts, will go down in history as an epic policy failure. In hindsight, and given the catastrophic business costs of the pandemic, it also reflects a failure of business risk management foresight and initiative.
There are lessons to be learned. Looking forward, business decision-makers need to recognize the growing business risks of climate change-induced systemic risk events. Given the role of business interests in contributing to climate change and the efforts to impede climate policy responses, whole sectors could lose their social license to operate.
Although it requires stepping outside their business comfort zones, companies should focus much more intensively on growing their climate policy footprints than on shrinking their carbon footprints. That’s what business risk management calls for in an era of climate change calls.
Related themes: Boardroom Risk Mitigation
Dr. Mark Trexler
CEO of The Climatographers@ClimateRoulette
Dr. Mark Trexler has advised companies around the world on climate change since 1991. He currently focuses on climate change decision-making support through the Climatographers and the Future Strategies Group, and is a visiting scholar at The George Washington University.
The original article can be read at Brink website HERE.
Oliver Wyman’s New Covid-19 Website
CACCI is pleased to convey to its members and friends the invitation from Oliver Wyman, one of the Knowledge Partners of CACCI, to visit its new Covid website – referred to as the Coronavirus Hub – at https://www.oliverwyman.com/our-expertise/hubs/coronavirus.html. As you are well aware, COVID-19 continues to spread around the world with new information […]
Oliver Wyman’s New Covid-19 Website
CACCI is pleased to convey to its members and friends the invitation from Oliver Wyman, one of the Knowledge Partners of CACCI, to visit its new Covid website – referred to as the Coronavirus Hub – at https://www.oliverwyman.com/our-expertise/hubs/coronavirus.html.
As you are well aware, COVID-19 continues to spread around the world with new information emerging daily. Designated a global emergency by the World Health Organization, the outbreak has had far-reaching effects, including on the public at large as well as travel, supply chains, and economies globally.
For organizations, especially multinational businesses, the outbreak can have extensive implications, some of which have already been felt. Hotels have been forced to close, airlines have cancelled thousands of flights, and supply chains have been hit hard, while financial markets have been volatile. Oliver Wyman and its parent company Marsh & McLennan (MMC) have been monitoring the latest events and are putting forth their perspectives – through the Coronavirus Hub – to support their clients and the industries they serve around the world.
The Coronavirus Hub will be updated regularly as the situation evolves.
CACCI members invited to EFMA’s webinars on Covid-19
CACCI is pleased to convey to its members an invitation of Efma, to participate in its upcoming webinars on the COVID-19 crisis. As the effects of the COVID-19 pandemic continue to amplify, financial institution leaders are looking for strategies on how to organize, protect employees, and maintain financial services for their customers. To support you during these […]
CACCI members invited to EFMA’s webinars on Covid-19
CACCI is pleased to convey to its members an invitation of Efma, to participate in its upcoming webinars on the COVID-19 crisis.
As the effects of the COVID-19 pandemic continue to amplify, financial institution leaders are looking for strategies on how to organize, protect employees, and maintain financial services for their customers. To support you during these difficult times, Efma has created new online experiences to connect you with colleagues from other financial institutions, share best practices, and get guidance on strategy implementation based on different scenarios.
Online Meetings in April
The online meetings can be mixed & matched, each dedicated to a specific taskforce group and now open to the entire Efma community (members and non-members):
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ABOUT EFMA
EFMA is a non-profit organization created in 1971 by leading European banks. It has extended its borders in 2012 and is now the preferred network of over 3,300 bank and insurance brands in 130 countries all around the world. Efma aims to unite financial services industry professionals within a global and reliable network and facilitate connection and exchange among the sector’s decision-makers.
Mr. Anjum Nisar elected new President of FPCCI
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in December 2019 elected Mr. Anjum Nisar its new President whose term will be for the year 2020 till December 31, 2020. Mr. Anjum Nisar, who is former President of The Lahore Chamber of Commerce and Industry (LCCI), is a seasoned businessman and has a […]
Mr. Anjum Nisar elected new President of FPCCI
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in December 2019 elected Mr. Anjum Nisar its new President whose term will be for the year 2020 till December 31, 2020.
Mr. Anjum Nisar, who is former President of The Lahore Chamber of Commerce and Industry (LCCI), is a seasoned businessman and has a vast knowledge about the issues being faced by the trade, industry and economy. Under his leadership, the FPCCI is expected to continue playing a vital role in the development of the local business community as well as a bridge between the private and public sectors in Pakistan.
The FPCCI also voted in the election of eleven Vice Presidents in charge of different areas of developments and functions.
Trust: the most valuable asset of the Digital Revolution
The vast majority of technologies, processes and assumptions underlying the innovations that will lead to a more prosperous future rely on the use and flow of data. More and more information must be exchanged between the various actors in ever-growing ecosystems for the economy to continue to function. At the same time, however, the threats […]
Trust: the most valuable asset of the Digital Revolution
The vast majority of technologies, processes and assumptions underlying the innovations that will lead to a more prosperous future rely on the use and flow of data. More and more information must be exchanged between the various actors in ever-growing ecosystems for the economy to continue to function. At the same time, however, the threats caused by cyberattacks or the misuse of data are increasing — and pose a threat to entire ecosystems. Even more important than the huge economic damage is the erosion of trust: the most valuable asset of modern societies and economies for their digital transformation.
Trust facilitates the processes that keep the ecosystem and its various relationships running. For these data streams to keep on flowing and be put to best use, many actors need to take responsibility for (re)building trust. To do so, they need to focus on one of the most important pillars of trust: cybersecurity. By developing a clear strategy for cybersecurity and data use, it will be possible to continuously build and renew the trustworthiness of ecosystems as a whole.
Photo: For the data streams to keep on flowing and be put to best use, many actors need to take responsibility for (re)building trust. (Photo: Unsplash)
The erosion of trust versus the potential of data
Building trust has always been a fundamental imperative for any organization. This need, as well as the associated responsibility for fostering the mechanisms that promote trust, will grow more challenging as the scope of digital transformation extends. Edelman’s 2019 Trust Barometer — a survey of more than 33,000 respondents from around the world — showed that trust, especially as it relates to new technology, continues to erode significantly.
This widespread erosion of trust is as alarming as the potential of data to improve business and benefit society is enormous. Procter and Gamble, for example, is using real-time production and logistics data to make for more efficient production lines and a lower carbon footprint. Siemens gas turbines generate, on average, 30 gigabytes of operating data daily; smart evaluation of this data can determine when turbines require servicing, resulting in less downtime for customers. In public transport, massive data sets from sensors are used to support predictive analytics that will, in the future, ensure close to 100% reliable rail transport. These promising applications can improve many aspects of our lives and yield the benefits expected if we can trust the system enough (and the people responsible for building and running it) to share the data that systems thrive on.
Defenders of trust must then go beyond collaboration and beyond technical expertise in distrust to understand the relationship between security, transparency, responsibility and trust.
Effective trust-building
This is why every organization and its stakeholders (innovators, business leaders and users) must understand how to achieve and maintain a high level of trustworthiness. Effective trust-building requires clear ownership from those at the highest level, who must define a trust strategy and set overall priorities. A team of IT and cybersecurity professionals should define a comprehensive set of measures to continuously work on the organization’s trustworthiness. From external ratings to standards and shared practices, such measures will define what trust means in practice and what it is to be trusted. To this end, such teams will need to probe the depths of distrust to pre-empt harmful activity and become defenders of trust by understanding the risks to trustworthiness, such as lack of privacy or irresponsible data-sharing.
Such expertise, while important, must be balanced with the potential opportunities that arise through data exchange. An important risk to innovation, for example, could be data hoarding — because hidden data cannot be used for data-based business models or applications of any kind. One solution to this risk could be to clearly understand how to classify different levels of information, facilitated by regular training. Technical solutions would then include secured communication channels and a central logging and reporting service to gather and deliver operational and security data across the organization.
Collaborating across industries
This applies not only within individual organizations but across entire industries, where distrust threatens much-needed data-sharing between companies. Again, effective and transparent cybersecurity measures as well as collaboration play an important role. To assure others of their organizational security, thereby demonstrating trustworthiness, businesses need to assume greater responsibility for their own cybersecurity. Collaborative new ways of meeting this challenge across industries and geographies would mitigate this risk.
Collaboration can be achieved on various levels and by various means. One credible way is by actively participating in — not merely passively using — information-sharing and analysis centers (ISACs). ISACs and the closely related information-sharing and analysis organizations (ISAO) gather and share information on cyber threats, but they need commitment from companies to function optimally. Business leaders must recognize the importance of building trust and create a culture in which information-sharing is accepted and encouraged. Other options for collaboration include the World Economic Forum’s Platform for Shaping the Future of Cybersecurity and Digital Trust or initiatives like the Global Cybersecurity Alliance or Charter of Trust.
Defenders of trust must then go beyond collaboration and beyond technical expertise in distrust to understand the relationship between security, transparency, responsibility and trust. Good security is the foundational element of trust, but to build a viable system of trustful relationships, other aspects of trust need to be incorporated, including transparency and accountability. These values have to underpin any system aiming to foster the long-term, sustainable trust that supports the life-improving and transformative aspects of data-based business models.
Related themes: Cybersecurity Internet Of Things
Bill Fryberger
Director of Information Security, Procter & Gamble at World Economic Forum
Bill Fryberger is a global information security leader with over 22 years in information security operations leadership, consulting and solutions design. Experience includes building cost-effective teams to deliver global information security operations, compliance, technology programs and systems aligned with critical business requirements and external industry regulations in large, multi-national organizations.
Kai Hermsen
Global Coordinator for the Charter of Trust for Siemens at World Economic Forum
Kai Hermsen is the global coordinator for the Charter of Trust for Siemens. Previously, he headed the Siemens cybersecurity strategy and worked as project manager in Siemens Management Consulting in Germany and India. He has a background in business administration.
Daniel Dobrygowski
Head of Governance and Policy at World Economic Forum
Daniel Dobrygowski is the head of governance and policy for the World Economic Forum Centre for Cybersecurity, where he advises on strategy, law, and policy around cybersecurity issues. His research areas include privacy, election security, intellectual property, competition law, digital trust, and governance of new and emerging technologies.
The original article can be read at Brink website HERE.
Coronavirus: One step back for the global economy
For a second there, the global economy was off to a slightly better start for 2020. The U.S. and China finally inked an initial “phase one” trade deal that at least promised to pause hostilities for a while. That provided some much-needed respite for a world economy, which last year reached its weakest point since […]
Coronavirus: One step back for the global economy
For a second there, the global economy was off to a slightly better start for 2020. The U.S. and China finally inked an initial “phase one” trade deal that at least promised to pause hostilities for a while. That provided some much-needed respite for a world economy, which last year reached its weakest point since the global financial crisis. Shortly after, the International Monetary Fund was quick to provide a more upbeat global growth outlook, suggesting that slowing economic activity might be bottoming out.
Enter the Wuhan coronavirus. We can only speculate what ultimate impact — both human and economic — the virus will have, depending on how far it ends up spreading.
The most important channel of economic impact will likely be the hit to Chinese consumer spending. That’s less a function of the inherent danger of the virus — which is still unknown — and more about the precautionary response of the government and Chinese consumers leading people to stay home instead of heading to the shops, eating out, traveling or doing leisure activities. Other government containment efforts will also add to this — including lost output as businesses stay shut for longer following the Lunar New Year.
Photo: Getty Images
Photo: People wear face masks as they wait at Hankou Railway Station in Wuhan, China. A new infectious coronavirus known as “2019-nCoV” was discovered in Wuhan in mid-January
How big of an impact for the Chinese economy might this prove? Comparing it to the 2002–03 SARS outbreak suggests the shock could be substantial. While China’s economy continued to grow briskly through that episode, the underlying story suggests today’s experience could be quite different.
In 2003, Chinese consumption growth suffered a sharp slowdown. The economy was only able to escape a drop in headline growth because investment and exports were booming at the time, with China having entered its hyper export-led growth phase following its 2001 accession to the World Trade Organization. The government was also able to help with stimulus measures.
This time around things are very different. Consumption is now an even more important driver of the economy while investment and exports have been weakening — reflecting China’s efforts to reduce its reliance on debt-fueled investment and pressure on the external front from the trade war with America.
There is also much less scope for sizable stimulus today, with Chinese policymakers aiming to stabilize macro leverage in the economy in order to contain systemic financial risks. China might also be reluctant to let a weaker yuan serve as a natural exhaust valve — for fear of encouraging capital outflows but also potentially reigniting economic tensions with the Trump administration over the exchange rate. Having said that, if things worsen, China’s top leadership may eventually judge that more support is needed to buttress things.
It is not clear how far the virus itself might spread in other countries, but the indirect effect of a sharply slowing Chinese economy would be felt by others.
All up, if the Wuhan coronavirus crisis proves around the same scale as the SARS episode, then China’s economy could conceivably be looking at economic growth dipping from the current 6.1% rate to something in the 4%-5% range this year, even on the government’s rosy numbers. This is of course simply a guess. A lot of variables could influence that. A wider epidemic would spell bigger problems. Conversely, even successful government and public precautions might still impose a significant cost on the economy, if that is what it takes to halt the spread of the virus.
What might the impact be on the global economy? China accounts for about a fifth of world output on a purchasing power parity basis — the IMF’s preferred measure — meaning a Chinese slowdown to say 4.5% would directly knock off 0.3 percentage points from the fund’s latest global forecast of 3.3% for 2020 (made only last week). That alone would effectively wipe out the 2020 uptick in global growth that the IMF was hoping for and instead keep the world economy growing at a similar pace to last year — already the slowest pace of global growth since the 2008–09 crisis.
Knock on effects for other economies could however make things worse. It is not clear how far the virus itself might spread in other countries. But the indirect effect of a sharply slowing Chinese economy would be felt by others and could be a major difference compared to the SARS experience. Not only are the risks of a sharp Chinese slowdown greater this time around, but China is also now a far more important source of demand for the rest of the world, particularly in Asia.
And what about Australia? Australia’s tourism and education exports to China would appear most in the firing line. China has announced a halt to overseas tour groups. However, Australia’s tourism exports to China only amount to about 0.2% of GDP. Education exports amount to a more sizable 0.6%. But the experience during the SARS epidemic was that education exports remained resilient, suggesting less cause for concern.
Meanwhile, the fact that the overall slowdown in China’s economy will be consumption-led should help insulate Australia’s more important commodity exports from major damage (if China were to resort to renewed stimulus, it could even provide some boost). Australia’s much less significant agricultural exports could however take a hit from weaker Chinese consumption.
A weaker Australian dollar in response to increased global risk aversion and slower Chinese growth should however provide at least a partial offset — giving a boost to Australia’s international competitiveness, including tourism, education, and agricultural exports to other countries.
The economic risks for Australia therefore look less severe than some might fear.
All of this, however, depends on how far the virus ultimately spreads.
Related themes: China Risk Mitigation
Roland Rajah
Director of the International Economy Program at the Lowy Institute@RolandMRajah
Roland Rajah is the director of the International Economy Program at the Lowy Institute. Before joining the Lowy Institute, he was a senior economist and country manager at the Asian Development Bank, where he worked on macro-fiscal policy, economic growth, and development issues in the Pacific region.
The original article can be read at Brink website HERE.
Global FDIs remain flat in 2019: UNCTAD Report
According to the latest issue of UNCTAD’s Global Investment Trends Monitor, global foreign direct investment (FDI) remained flat in 2019, at $1.39 trillion, a 1% decline from a revised $1.41 trillion in 2018. This is against the backdrop of weaker macroeconomic performance and policy uncertainty for investors, including trade tensions. FDI flows to developed countries […]
Global FDIs remain flat in 2019: UNCTAD Report
According to the latest issue of UNCTAD’s Global Investment Trends Monitor, global foreign direct investment (FDI) remained flat in 2019, at $1.39 trillion, a 1% decline from a revised $1.41 trillion in 2018. This is against the backdrop of weaker macroeconomic performance and policy uncertainty for investors, including trade tensions.
FDI flows to developed countries remained at a historically low level, decreasing by a further 6% to an estimated $643 billion. Flows to developing economies were unchanged at $695 billion. Flows to transition economies rose by two thirds to $57 billion.
The report can be downloaded HERE.
Trends in selected economies:
(1) FDI in the United Kingdom down 6% as Brexit unfolds.
(2) Hong Kong, China divestments cause a 48% FDI decline in turbulent times.
(3) Singapore up 42% in a buoyant ASEAN region.
(4) Zero-growth of flows to both the United States and China.
(5) Brazil up 26% at the start of a privatization programme.
(6) German inflows triple as MNEs extend loans to foreign affiliates in a year of slow growth.
Looking ahead, UNCTAD expects FDI flows to rise marginally in 2020 on the back of further modest growth of the world economy.
The China-Japan Economic Relationship Is Getting Stronger
China’s Premier Li Keqiang (R) meets with Japan’s Prime Minister Shinzo Abe (2nd L) at a bilateral meeting during the 8th trilateral leaders’ meeting between China, South Korea and Japan in China’s Sichuan province. The reorientation of Japan’s economy toward China represents a paradigm shift. Photo: Wang Zhao-Pool/Getty Images “If the relationship between China […]
The China-Japan Economic Relationship Is Getting Stronger
China’s Premier Li Keqiang (R) meets with Japan’s Prime Minister Shinzo Abe (2nd L) at a bilateral meeting during the 8th trilateral leaders’ meeting between China, South Korea and Japan in China’s Sichuan province. The reorientation of Japan’s economy toward China represents a paradigm shift.
Photo: Wang Zhao-Pool/Getty Images
“If the relationship between China and the United States, the world’s two largest economies, is the most important relationship in the world, then arguably the second most important relationship is that between China … and its neighbor, Japan, the third largest economy,” wrote distinguished East Asia expert, Ezra Vogel.
Indeed, Japan and China have been closely intertwined for more than 1,500 years through economic, cultural and political connections, perhaps longer than any other two countries.
Hot Economics, Cold Politics
In recent times, political relations between Japan and China have suffered from conflict, different interpretations of history, territorial disputes and Japan’s close political relationship with the U.S. But since the opening of China to the world economy in 1978, business and economic connections between these two countries have blossomed, thanks to their geographical proximity and natural complementaries.
China’s rising middle class provides a welcome market for a Japan mired in demographic stagnation, while Japan’s advanced technology offers many benefits to China, including essential components for companies like Huawei and products that China assembles on behalf of companies like Apple. The Japan-China relationship is often described as “hot economics, cold politics.”
A major rebooting of the Japan-China economic partnership occurred in 1978, when Chinese Vice Premier Deng Xiaoping visited Japan, the first-ever visit of a Chinese state leader.
Massive Technology Transfer
Vice Premier Deng Xiaoping visited a Panasonic TV factory in Osaka and said to company founder Kōnosuke Matsushita, “Mr. Matsushita, you are called the god of management in Japan. Would you be willing to help us advance the modernization of China?” The founder immediately responded, “We will do whatever we can to contribute to the modernization of China.”
Throughout the 1980s, Mr. Matsushita transferred technology, trained Chinese workers and otherwise helped China modernize its industry through 150 separate projects. China learned how Mr. Matsushita made everything from electric irons to transformers and semiconductors.
Panasonic’s investment in China was just the beginning of the wave of Japanese investment in China. The total stock of Japanese foreign direct investment in China stood at some $124 billion at the end of 2018, with about 23,000 Japanese companies now having operations in China.
Japan’s Biggest Trading Partner
In the early days, Japanese manufacturing companies in the motor vehicle, electronics and heavy industries were taking advantage of China’s low cost structure. But today, the buying power of China’s emerging middle class is a growing attraction for Japanese companies.
With such a strong investment relationship, it is not surprising that China has also become Japan’s most important trading partner.
Trade has increased from $1 billion to some $317 billion over the past 45 years and now represents more than 20% of Japan’s total trade — even though it has suffered recently from the U.S. administration’s trade war and China’s slowdown. Japan is also China’s third-largest trading partner. The recent agreement by 15 regional economies, including both Japan and China, for the Regional Comprehensive Economic Partnership will only improve the foundations for trade relations.
Chinese Tourists
Today, Japan’s services trade is being driven by a veritable boom in inbound tourists, with the number of visitors leaping from around 8 million in 2008 to more than 31 million in 2018. And not surprisingly, Chinese tourists, now the biggest group visiting Japan, have been behind this boom.
In 2018, some 8.4 million Chinese tourists visited Japan and spent a whopping $13 billion, accounting for nearly 34% of all spending by foreign visitors.
Japan has also experienced a boom in international students, with 300,000 students in Japan in 2018, up from 124,000 a decade earlier. Once again, China is leading the way, accounting for 115,000 of these students, way ahead of Vietnam, in second place with 72,000.
Chinese Immigrants
A similar story applies to immigration. In 2018, there were some 2.7 million foreign residents in Japan, an increase of 270% since 1990, representing 2.2% of the national population. China has now jumped ahead of Korea as Japan’s biggest source of foreign residents, with close to 800 thousand. Many of these Chinese residents are skilled workers.
The reorientation of Japan’s economy toward China represents a paradigm shift.
From 1945 until the 1970s, when the People’s Republic of China was finally recognized by the U.S. and Japan, the U.S. held Japan back from doing business with China, much to the chagrin of Japanese business. The U.S.-Japan Security Alliance gave the U.S. great sway over Japanese foreign policy, and Japanese exports were thus more focussed on the U.S. market.
America Accelerating the Realignment
But with the progressive rise of a more open and dynamic China over the past few decades, it was only natural that the historical pattern of close Sino-Japanese economic relations would re-emerge.
And the recent disdain of the U.S. in regional free trade agreements like the Trans-Pacific Partnership will only further marginalize the U.S. as a trading partner for Japan and other Asian countries.
More generally, as economic relations are drawing Japan and China closer together, so too is the erratic behavior of the U.S., especially in the trade wars. With the U.S. perceived as an unreliable political and economic partner, it is only natural that Japan and China seek cooperation together.
While Japan followed America’s lead in not signing up to China’s Belt and Road Initiative, it is now seeking to cooperate with the project. And both Japanese and Chinese leaders now speak positively of the new era of Sino-Japan relations.
Moving Past Historic Rifts
We cannot say that Japan is moving away from the U.S. and toward China — the U.S. has long been Japan’s security guarantor, and Japan still feels more comfortable being aligned with another democracy. The Japan-China relationship still has many deep historical scars, too, and Japan is concerned at China’s military buildup and assertive behavior in the East and South China Seas.
But we do seem to be witnessing a slow drift of Japan to a more independent role in the Indo-Pacific and in its global relations, and as part of this, its relationship with China has become more important and will likely continue to increase in importance in the decades to come.
It’s even possible that closer people-to-people contacts between Japan and China will eventually soothe some of the wounds of history in tandem with generational change and thereby improve each country’s low public opinion of the other. Indeed, evidence is now appearing of Chinese public attitudes to Japan starting to warm.
Related themes: China Geopolitical Conflict Trade
John West
Executive Director of the Asian Century Institute
John West is author of the recent book, “Asian Century … on a Knife-edge,” and executive director of the Asian Century Institute. He is also adjunct professor at Tokyo’s Sophia University and contributing editor at FDI-Intelligence, a Financial Times magazine. These positions follow a long career in international economics and relations, with major stints at the Australian Treasury where he was director of balance of payments, OECD (head of public affairs and director OECD Forum) and Asian Development Bank Institute (senior consultant for capacity building and training).
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The original article can be read at Brink website HERE.
Confrontations and Threats: The Prospects for 2020 and Beyond
Residents in the Sydney area were warned of catastrophic fire danger as Australia prepared for a fresh wave of deadly bushfires that have ravaged the drought-stricken east of the country. The 2020 Global Risks Report outlines the intensifying confrontations and deepening long-term threats that 2020 will encounter. Photo: Peter Parks/AFP via Getty Images […]
Confrontations and Threats: The Prospects for 2020 and Beyond
Residents in the Sydney area were warned of catastrophic fire danger as Australia prepared for a fresh wave of deadly bushfires that have ravaged the drought-stricken east of the country. The 2020 Global Risks Report outlines the intensifying confrontations and deepening long-term threats that 2020 will encounter.
Photo: Peter Parks/AFP via Getty Images
The new decade holds immense promise for societal, economic and technological advances. At the same time, as highlighted in the 2020 Global Risks Report prepared by the World Economic Forum with the support of Marsh & McLennan and other partners, the world faces intensifying confrontations between and within countries, as well as escalating long-term threats from climate change and biodiversity loss. Emerging technologies are also amplifying some short-term risks and creating new risks, for example, with the increasingly pervasive deployments of artificial intelligence.
An Unsettled Geopolitical Landscape
Conflict continues to persist in the Middle East, tensions are growing in North Asia and there are ongoing issues in the South China Sea. The role of multilateral institutions in coordinating around critical issues has been challenged by national political agendas, with many countries choosing to forge their own path.
Economic confrontations between major powers have also been intensifying, reflected in the escalation of tariffs and trade disputes as well as increasing investment restrictions worldwide.
While trade tensions between the U.S. and China have eased to some degree recently, most risk experts see the overall level of economic confrontations between major countries growing in 2020. High debt levels in the public and private sector have also been heightening economic vulnerability.
Source: Global Risks Report, 2020
Nations also face deepening fractures in their domestic politics, with societies increasingly polarized and a growing level of protests in many regions. We have seen this in the U.K. with the frictions underpinning Brexit, in the partisan politics in the U.S., which will further intensify in the run up to the presidential election in 2020, and in the social unrest driven by systemic economic inequality in Latin America, Africa and Europe. Disapproval of how governments are addressing fundamental social and economic issues is sparking protests in the streets, for example, in Chile and Hong Kong. Domestic political polarization ranks as one of the risks most likely to continue increasing in this year’s Global Risks Report.
Technology is amplifying both domestic and international confrontations. Domestically, new digital technologies have spawned fake news and extremist content online, which has served to fracture discourse, erode trust and fuel unrest within countries. Technology is also facilitating interstate conflicts, evident in state-affiliated cyberattacks on critical infrastructure and the increasing strategic competition and conflict among countries with respect to the acquisition of sensitive technologies.
Growing Urgency on Environmental Risks
The most striking aspect of this year’s Global Risks Report is that the top five long-term risks are all in the environmental sphere.
Concerns about climate change have been rising over the past 10 years, and all key indicators point to a bad situation getting worse. The recent spike in the frequency and intensity of extreme weather events has served to further elevate concerns.
Polar ice is melting more quickly than anticipated, with significant implications for sea-level rise. A growing proportion of the world’s population is exposed to catastrophic flood risk due to the combination of climate shifts and rapid urbanization in coastal and low-lying areas.
Australia is experiencing a continent-scale wildfire emergency with more than 5 million hectares burned, and California’s catastrophic 2018 wildfire season caused more than $22 billion in direct property damages. Shifts in seasonal temperature and rainfall are damaging crop yields, increasing the stress on countries dependent on agricultural output and intensifying disputes over water resources.
Biodiversity loss also rose significantly in this year’s risk ranking.
Recent reports have brought greater attention to the irreversible consequences to society from the loss of biodiversity within and between species, which threatens food security and — in a vicious circle — amplifies climate change impacts. For example, damage to coral reefs increases flood risk, and deforestation in the Amazon increases the potential for drought and fire.
Climate change activism is growing, and governments are facing mounting pressure to strengthen their efforts to address climate change mitigation and adaptation. This pressure and demand for action is also being channeled to the private sector. Companies should actively monitor legislative and regulatory developments so they don’t get caught out by unexpected policy changes or regulation and prepare for increasing pressure on climate issues from all of their stakeholders: investors, customers, employees and communities.
And as more governments are headed toward mandatory corporate disclosures of climate risks, companies will benefit from engaging in more rigorous risk quantification and scenario planning in this area.
Health Care Systems Are on Life Support
The Global Risks Report also underlines a heightened sense of urgency globally regarding health care. Surging social care and health demands and the rise of noncommunicable diseases (NCDs) and mental health disorders are increasing strains on an already stretched global health system. NCDs account for 41 million deaths each year, and the WHO expects this number to reach 52 million by 2030. Depression and anxiety disorders are also rising — currently 700 million people worldwide are estimated to have a mental health disorder.
Source: Global Risks Report, 2020
As an example of interconnected risks, climate change is further exacerbating the strain on health systems globally. Weather-related disruptions to health include air pollution, food and water insecurity and an increase in infectious diseases due to rising temperatures.
Technology Risk Continues As a Critical Concern for Business
Cyberattacks remain the No. 1 risk concern among business leaders in advanced economies, and the rapid expansion in internet-of-things deployment is substantially amplifying the cyberattack surface for many companies. Data fraud and theft is also a high-ranking risk for the business community.
There are also growing concerns with respect to the potential threats stemming from artificial intelligence — including safety, privacy and bias risks — and business leaders face increasing societal mistrust of emerging technologies generally.
There has been limited progress in the development of any global governance standards with respect to emerging technology risks in the public sector. Some businesses are enhancing their internal approaches to technology governance — for example, by launching AI ethics frameworks or dedicated committees to oversee AI — as leaders grapple with the wide-ranging implications stemming from deploying these technologies.
Improving Resilience and Capturing Opportunity
The Global Risks Report is a useful reference point for companies to consider external threats and their organization’s resilience to them as well the potential growth opportunities that may stem from them. Focus should center on three areas.
First, business leaders should rigorously identify and assess the potential sources of disruption specific to their company stemming from the current global risk landscape. Risk quantification and scenario planning around the potential impact of individual or interconnected global risks can help identify potential tensions between commercial innovation, operational resilience and risk appetite.
Second, they should review their risk prevention and response plans more fully, with a particular focus on whether their business is ready to respond effectively to fast-moving events that can impact operations and reputation. This process may facilitate the discovery and implementation of early-warning indicators, so that quick decision-making and response engagement can happen when a crisis arises.
Finally, businesses should consider how to turn global risks into opportunities by pursuing growth and investment strategies that align their organization with the direction of change.
In relation to climate risk, for example, many businesses are evaluating their physical and transition risk profile to consider their supply chain vulnerabilities and fulfill legal, regulatory and investor requirements.
The same analysis can be leveraged to consider the new and expanded product and market opportunities that will be created from the evolution of climate change — for example, in renewable energy, sustainability-linked finance or more general innovations that will attract customers, investors and employees with a heightened sensitivity to the issue.
The complex, multivector nature of these risks won’t make it easy for companies to navigate the coming decade. It will require a constant weather eye on the geopolitical landscape, innovation and agility in technology, and a willingness to adapt supply chains and business models to accommodate the rapidly changing climate. But for those who do succeed, the rewards will be well worth it.
Related themes: Climate Change Risk Mitigation Trade
John Drzik
Chairman of Marsh & McLennan Insights
John P. Drzik is chairman of Marsh & McLennan Insights, a research group focused on identifying breakthrough perspectives and solutions to society’s most complex challenges. He frequently writes and speaks on timely strategy, risk management and insurance issues. John previously served as president of Marsh’s Global Risk and Digital division, where his responsibilities included consulting, analytics and digital insurance solutions. Prior to this, he was CEO of Oliver Wyman. John serves on the advisory board of the International Risk Governance Council and the Wharton Financial Institutions Center.
Business As Usual Is No Longer an Option
Real-Time Risk Management and Next-Generation Insurance
Reconciling Opportunity and Resilience in Changing Times
The original article can be read at Brink website HERE.
Global challenges to prepare for in 2020
Photo: Joe Raedle/Getty Images Photo: A cargo ship prepares to dock at PortMiami as the United States and China continue their trade war. The new face of trade will be something to keep a close eye on in the new year. 2019 has been a whirlwind of upheaval and change around the world. The Altamar […]
Global challenges to prepare for in 2020
Photo: Joe Raedle/Getty Images
Photo: A cargo ship prepares to dock at PortMiami as the United States and China continue their trade war. The new face of trade will be something to keep a close eye on in the new year.
2019 has been a whirlwind of upheaval and change around the world. The Altamar podcast team of Peter Schechter and Muni Jensen has had no shortage of global issues to jump into, from the colossal but rocky U.S.-China trade relationship to tiny Guyana’s oil bonanza. Throw in protests in Hong Kong, the return of Peronism to Argentina, growing cyber warfare and worldwide attacks on press freedom for good measure. It’s been a turbulent year. And, it begs the question — what will 2020 have in store?
David Rothkopf, former editor-at-large of Foreign Policy magazine and U.S. undersecretary of commerce for the International Trade Administration, joined Altamar to peer into the crystal ball and predict the primary global issues to track in the coming year. Mr. Rothkopf is a prolific author and journalist who writes extensively on international affairs.
Five Trends to Watch
Altamar identified five trends it believes will shape the international political stage in 2020:
First and foremost, citizen unrest will continue to be a major global force as citizens worldwide take to the streets to express discontent with governments across the political spectrum.
We’re also witnessing the decline of the West, including the dominance of its institutions and cultural influence that spread in the wake of WWII.
2020’s third trend will undoubtedly be the ongoing climate emergency, as humanity pushes ever closer to the point of no return in addressing climate change.
Fourth, the end of privacy could be upon us with the rise of big data, coordinated election interference and worldwide disinformation campaigns.
Finally, we agree that the new face of trade will be something to keep a close eye on in the new year. Rising globalization fears have sparked a backlash, prompting countries to eschew favorable trade policies and regulate it instead — tariffs, for instance, became a weapon of choice among global players, a trend that’s unlikely to abate any time soon.
The Climate Emergency
Among these myriad challenges, Mr. Rothkopf agreed that the current climate emergency looms larger than anything else: “The damage that is being done — in some cases, irreversibly to the planet — is going to have consequences that extend as far as we can see and result in tens of thousands of lost lives, hundreds of millions of people dislocated, tens of billions — hundreds of billions of dollars in cost, and some of the world’s leading countries are doing very little about it. … We need to set real standards, to hold people to them, to penalize people for not achieving those standards, and to hold accountable those who are doing damage that the Earth cannot recover from.”
Threats to Privacy and Democracy
The rapidly evolving role of tech also makes Mr. Rothkopf believe that this issue will rise fast in 2020. He thinks that simultaneous advances in artificial intelligence, big data and the loss of privacy will soon produce a global backlash: “We’re starting to see it now, but we’re only in the very early days.
Because we haven’t really seen governments go Big Brother on this stuff, although the Chinese are getting closer and closer to it with facial recognition and giving people social points that they get charged and sort of moving us into real Black Mirror territory, and I think that’s going to happen increasingly.”
Mr. Rothkopf flags the decline of liberalism worldwide as another major, foundational change: “I think that democracy is in trouble. It’s in trouble in the United States. It never really got a foothold in China, and it’s being further suppressed there. It’s in trouble in the world’s largest democracy in India. It’s in trouble in Europe, where the Russians and the far-right and ethno-nationalists are actively working against shared institutions and democratic processes and undermining those processes.”
To protect Western institutions, Mr. Rothkopf warns that we need to update the international system: “We need to go back to these institutions and fix the ones that are old and broken. … And then we need to recognize some institutional gaps that we have that need to be addressed, whether that’s an alliance for security in the Pacific, which doesn’t exist, or whether that’s global institutions to deal with climate change or transmigration or issues like common network standards.”
Reimagining Global Institutions
Mr. Rothkopf is worried that global economic inequality has created further distress worldwide. “The top 0.01% of the U.S. population has wealth equivalent to the bottom 90% of the U.S. population. So, democracy is being quashed, but free markets have gotten out of hand, and inequality is growing at a record pace,” explained Mr. Rothkopf.
Addressing this issue head on will require enormous political will and institutional change: “I think we need to make some fundamental structural changes in our society that take the power away from those who would despoil the environment in order to profit in the short term and give it back to the people who are going to have to live in that environment, notably both those who are disenfranchised economically and those who are disenfranchised because they haven’t been born yet.”
According to Mr. Rothkopf, world leaders need to work together to combat these global, existential threats — and fast: “The next generation of leaders have the job before them sort of present at the creation 2.0. They need to reimagine global institutions.” But perhaps there is room for hope, he argued: “The best part about 2020 is that it won’t be 2019.”
Altamar is a global politics podcast hosted by former Atlantic Council SVP Peter Schechter and award-winning journalist Muni Jensen. Click here to listen to the full episode with David Rothkopf.
For the complete report, including the audio conversation, consult to Brink Asia site HERE.
Related themes: Artificial Intelligence Climate Change Geopolitical Conflict
David Rothkopf
CEO at The Rothkopf Group
David Rothkopf is CEO of The Rothkopf Group. He was the former editor-at-large of Foreign Policy magazine and served as U.S. undersecretary of commerce for the International Trade Administration.
Renewable Energy tops citizens’ demands for new infrastructure
The need to address climate change emerges as the most pressing demand in a survey of public attitudes on infrastructure across 28 countries. Three-quarters of citizens see investment in infrastructure as vital to their countries’ future economic growth, though 60% think their country is not doing enough to meet its infrastructure needs. The Global Infrastructure Index survey […]
Renewable Energy tops citizens’ demands for new infrastructure
The need to address climate change emerges as the most pressing demand in a survey of public attitudes on infrastructure across 28 countries. Three-quarters of citizens see investment in infrastructure as vital to their countries’ future economic growth, though 60% think their country is not doing enough to meet its infrastructure needs.
The Global Infrastructure Index survey was conducted by Ipsos, in partnership with the Global Infrastructure Investor Association (GIIA), and is the largest survey of its kind into public attitudes on infrastructure.
Encouragingly for international investors, around two-thirds of respondents are comfortable with private sector investment in infrastructure if it means the country gets what it needs, outnumbering those who are against foreign investors by more than three to one.
Photo: An image of a car driving past windmills. A recent survey shows how the public feels about the future of infrastructure: The issue of public or private ownership comes bottom, while addressing environmental impact is the most important.
Out of the 14 infrastructure sectors surveyed, airports received the highest approval rating (67% rate them as very/fairly good), followed by digital (55%), water supply and sewerage (also 55%), and motorways (54%). Citizens were least positive about current infrastructure related to electric vehicle charging (24%), flood defenses (31%), solar energy (33%) and wind energy (34%).
Support for Private Investment
At a time when there is much public debate over the merits of privately owned and operated infrastructure, the index shows that satisfaction with current infrastructure tends to be higher where the private sector plays a prominent role, notably in airports and water.
Furthermore, when asked to rank in importance seven factors to consider in the future, the issue of public or private ownership comes bottom, with addressing environmental impact followed by making the quality as good as possible the most important. This reinforces GIIA’s view that the debate over public or private investment is a distraction from what people really care about in terms of improving existing and delivering new infrastructure.
Overall, Europe scored the worst rating of any region (29%) in terms of overall satisfaction, with Asia Pacific highest with 47%, closely followed by BRIC countries with 44% and the Middle East and Africa with 44%. North America scored 38%, Latin America 31% and the G-8 35%.
Source: Global Infrastructure Index, 2019, Ipsos and GAIIA
Climate Tops Citizens’ Concerns
When asked to identify priorities for future investment, respondents across the globe said that more needs to be done in the areas of renewable energy, indicating a strong and increasing level of public support for government policies to address climate change.
Investment in solar energy (42%) topped the list of global priorities ahead of wind energy at 34%. Other sectors identified by respondents as being priorities for future investment included both water supply (39%) and flood defenses (38%).
Source: Global Infrastructure Index, 2019, Ipsos and GAIIA
However, only a fifth globally (22%) believe there should be increased spending on infrastructure if it means funding through higher taxes or government borrowing. This compares to 53% who think public spending is already high and that taxes and government borrowing should not be increased any further to improve infrastructure.
These results reinforce the critical importance of the need for an honest conversation between government and citizens on how infrastructure is paid for. Respondents also expressed a firm belief that technical experts, not politicians, are best placed to make decisions on new infrastructure (59% to 21%).
The Nimby Factor Matters
For the first time, the index also looked at factors that influence support for new infrastructure. Globally, levels of support for new infrastructure are highest when projects improve the local economy (75%) and create jobs (74%). However, support wanes significantly when it involves building on greenfield sites (47%) or increasing traffic congestion (34%).
“The index runs from 1 to 100 based on participants’ positivity towards building new infrastructure, with the maximum value of 100 set at Serbia, which scored the highest (and Japan, at 1, the lowest). The index thus shows the relative ‘nimbyism’ between countries,” according to the index report.
Source: Global Infrastructure Index, 2019, Ipsos and GAIIA
G-8 countries were the least receptive to new infrastructure being built in their local area (defined as a 10-minute walk from where they live) with the U.S., Great Britain, Canada, Germany, France and Japan all toward the bottom of the rankings. This strongly points to a greater need for government and investors to ensure they are effectively communicating the benefits that new infrastructure can deliver in the face of greater skepticism from local communities.
Serbia, Poland and Peru come top of the Nimby Index as being the most consistently positive about building new infrastructure locally.
Ben Marshall, research director at Ipsos MORI, commented: “Our annual survey shows a relative improvement in global public’s ratings of infrastructure, but also continues to underline people’s strongly held conviction that governments need to do more.
“We’re seeing growing salience of environmental considerations and also interest in investment in renewable energy. People are pragmatic — saying they are comfortable with foreign and private investment — but are also wary of tax rises and borrowing and, on balance, favor maintaining and repairing existing infrastructure over investing in new projects.”
Related themes: Climate Change Infrastructure Investment Renewable Energy
Jon Phillips
Director of Corporate Affairs for the Global Infrastructure Investor Association
Jon is the director of corporate affairs for the Global Infrastructure Investor Association (GIIA). GIIA represents 70 of the leading institutional investors around the world along with many of the professional services firms that advise the infrastructure sector. Jon has spent over 25 years in infrastructure-related sectors spanning both the private and public sectors.
The original article can be read at Brink website HERE.
Why did India suddenly pull out of the world’s largest trade deal?
After seven long years of talks, leaders of 15 Asia-Pacific nations finally reached an agreement on the world’s largest trade deal, the Regional Comprehensive Economic Partnership (RCEP), in Bangkok in November (the RCEP will likely be formally signed next year). India’s Sudden About Face China pushed to finalize the RCEP deal as it faces […]
Why did India suddenly pull out of the world’s largest trade deal?
After seven long years of talks, leaders of 15 Asia-Pacific nations finally reached an agreement on the world’s largest trade deal, the Regional Comprehensive Economic Partnership (RCEP), in Bangkok in November (the RCEP will likely be formally signed next year).
India’s Sudden About Face
China pushed to finalize the RCEP deal as it faces slowing growth in part due to its trade war with the U.S. But at the very last minute, even after the leaders’ photo was taken, India’s Prime Minister Narendra Modi pulled his country out of the deal.
India has since been subject to much criticism. It is alleged to be missing out on a new growth opportunity, caving into domestic protectionist pressures and allowing China to dominate trade in the Asia-Pacific. It has also been accused of taking other countries for a ride, by jumping ship following seven years of tough negotiation. What is the truth behind this talk?
Photo: AFP via Getty Images
Photo: A farmer winnows paddy crops at a field on the outskirts of Agartala. Today, about half of India’s workforce is still employed in agriculture and has relatively low levels of education, which means that alternative work opportunities are very limited.
The RCEP’s objective was to create one single free trade agreement (FTA) between the 10 ASEAN member states (Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam), which already have their own FTA, and those six countries which already have FTAs with ASEAN — Australia, China, India, Japan, Korea and New Zealand — the “Plus-6 countries.”
The World’s Largest Trading Bloc
The negotiations had several elements — consolidating the “noodle bowl” of many disparate FTAs; aiming for “significant improvements” over the existing agreements; and achieving agreements between those Plus-6 countries that don’t already have agreements among themselves.
On paper, the RCEP looks like a huge deal, even without India. The participating countries account for 30% of global GDP and about a quarter of world exports and foreign investment. It could thus become the world’s biggest trading bloc.
But the RCEP is not very ambitious and could not be compared with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP or TPP 11), which covers a broad range of issues of relevance to international business, like intellectual property, competition policy, state-owned enterprises, government procurement, labor, the environment and transparency and anti-corruption. RCEP is more narrowly focussed, with an emphasis on merchandise trade barriers.
What Are India’s Reasons?
India already has FTAs with ASEAN, Japan and Korea, and talks are also underway for an FTA with Australia and New Zealand. So India is not excluded from the Asia-Pacific trade world. Its main gap is the lack of FTAs with China (and Australia and New Zealand), which the RCEP would have covered.
India has a number of concerns about the RCEP. First, the country already has trade deficits with 11 of the 15 other RCEP members (amounting to more than $100 billion in total), with half of the deficit being with China.
It was thus concerned that the RCEP would lead to even more cheap Chinese products flooding into India, a risk that is heightened by excess capacity across a range of Chinese industries, at a time of economic slowdown. During the RCEP negotiations, India’s request for slower phasing of market opening and safeguards against surges in imports were resisted by other countries.
India’s Fear of a Widening Trade Deficit
Indeed, India’s experience has been that following each FTA it has negotiated, its trade deficit has expanded. It also fears that the RCEP would undermine its ambitions to develop its historically weak manufacturing sector.
Moreover, some of the more competitive sectors of the Indian economy, notably IT and pharma industries (India is the world’s largest supplier of generic medicines), face great restrictions in attempting to enter the Chinese market, as Beijing protects its own companies. These restrictions have not been solved by RCEP.
Another area of concern for India is agriculture, especially the dairy industry. It was worried about a surge of imports from Australia and New Zealand that could disturb its agricultural sector, which remains very backward. Today, about half of India’s workforce is still employed in agriculture and has relatively low levels of education, which means that alternative work opportunities are very limited.
Chronically Weak Competitiveness
Lastly, despite the recent hype surrounding the RCEP deal, most expert analyses point to the RCEP generating only very minimal benefits for participating countries. This is hardly a source of enthusiasm for a country like India whose economy has been slowing sharply for the past few quarters.
India’s withdrawal from the RCEP agreement was a great disappointment to both Japan and Australia, which are both seeking to foster India as a regional counterweight to China.
Australia’s Prime Minister Scott Morrison has insisted that the RCEP door is still open for India, while there are reports that Japan may not ultimately sign up to the RCEP unless India is also a member. In other words, it seems very possible that further talks will take place, and it may be possible to resolve India’s concerns.
Be that as it may, India’s reluctance to sign FTAs reflects, in part, an incapacity to benefit sufficiently from past FTAs. And this is due to India’s chronically weak competitiveness for which the government is substantially responsible.
India ranks only 58th out of 140 countries in the World Economic Forum’s Global Competitiveness Report, whereas China has already climbed the ladder to the 28th position. India’s competitiveness is hampered by many factors in the hands of government, like its poor human capital, inadequate infrastructure, low adoption of information and communications technology, antiquated labor and land laws, inefficient logistics systems and gender discrimination. And the recent trend of discrimination against certain religious minorities is only destabilizing and fracturing this already difficult-to-govern country.
Need for More Open Trading
If India is to realize Prime Minister Modi’s dream of India becoming a manufacturing superpower, it will not only have to revolutionize its competitiveness, but it will need to become significantly more open to international trade and investment.
Global value chains, the grand vehicle for modern manufacturing, are based on a rich web of trade in inputs, parts, components and final goods, as well as foreign investment. Any hint of protectionism provides a great deterrent.
RCEP may not have been a very attractive deal for India, but open trade and investment, bolstered by strong domestic competitiveness is a sure recipe for the kind of economic success that India is seeking.
Related themes: Geopolitical Conflict Trade
John West
Executive Director of the Asian Century Institute
John West is author of the recent book, “Asian Century … on a Knife-edge,” and executive director of the Asian Century Institute. He is also adjunct professor at Tokyo’s Sophia University and contributing editor at FDI-Intelligence, a Financial Times magazine. These positions follow a long career in international economics and relations, with major stints at the Australian Treasury where he was director of balance of payments, OECD (head of public affairs and director OECD Forum) and Asian Development Bank Institute (senior consultant for capacity building and training).
Better Corporate Governance Is Critical for Japan’s Future Prosperity
Japan Is a Poor Performer on Gender Equality. Can the ‘Womenomics’ Initiative Help?
The G-20 Summit Showed a World in Disarray, but Events on the Margins Suggest Progress
The original article can be read at Brink website HERE.
CIPE Sessions at the 33rd CACCI Conference on November 26-27, 2019 in Dhaka
Delegates to the 33rd CACCI Conference to be held on November 26-27, 2019 in Dhaka, Bangladesh can look forward to another interesting and highly informative gathering, as this year’s program will feature special sessions to be organized by the Center for International Private Enterprise (CIPE). The two sessions to be organized by CIPE are […]
CIPE Sessions at the 33rd CACCI Conference on November 26-27, 2019 in Dhaka
Delegates to the 33rd CACCI Conference to be held on November 26-27, 2019 in Dhaka, Bangladesh can look forward to another interesting and highly informative gathering, as this year’s program will feature special sessions to be organized by the Center for International Private Enterprise (CIPE).
The two sessions to be organized by CIPE are the following:
Plenary Session 4 – This session will focus on the topic “Building an Enabling Environment for Inclusive Digital Transformation in the Asia-Pacific”. According to CIPE, the digital economy, including cross-border services, digital trade, and electronic commerce (e-commerce), contributes to democratic and economic development by expanding market access for local businesses, promoting inclusive trade, creating jobs, and expanding tax revenue for governments to provide essential services. As the scope of digital innovation expands around the globe, so must national and regional policies that facilitate business growth and competitiveness.
Invited speakers will share their perspectives on how to as business people they engage entrepreneurs/businesses and other stakeholders regarding digitalization and how to encourage chambers/associations to play an active role in achieving this objective. Potential question areas of discussion include: (a) Regional eCommerce and eTrade regulations; (b) E-payment solutions; (c) Data flows and data privacy; and (d) Policies for workforce readiness in ICTs/ 4th Industrial Revolution
Breakout Session on Overcoming the Digital Gender Divide – Speakers will share best practices and successful country examples and initiatives in bringing women into the digital economy. Research by the International Trade Centre shows that the share of women-owned firms doubles when moving from traditional offline trade to cross-border e-commerce. Including women entrepreneurs and business owners in developing the rules and regulations that govern online trade is crucial to promote participation and growth in e-commerce.
Potential areas of discussion include: (a) Opportunities for digitally-driven growth that empowers women and the barriers they still face (e.g., access to infrastructure, capital, technology, and to regional and global markets); (b) Best practices and successful country examples in bringing women into the digital economy (BWCCI could discuss their work on women’s digital empowerment; inclusive public private dialogue and policy reforms; discussion from Entrepreneurs); and (c) Potential synergies with existing regional initiatives (e.g., APEC Policy Partnership on Women in the Economy includes legal and business indicators such as the percentage of women using the internet and digital payments for online transactions; other relevant ASEAN initiatives, etc.)
CIPE is one of the four core institutes of the National Endowment for Democracy and an affiliate of the US Chamber of Commerce. Since 1983 CIPE has been working from the ground up with partners to find locally driven solutions to problems that affect the lives of millions of people. Working with our local partners that include business associations, chambers of commerce, think tanks, universities and advocacy organizations, CIPE is helping create the enabling environment for business to thrive.
The latest Conference program is available HERE
We encourage you to register now at the official Conference website at http://fbcci.org/2019cacci/
Thank you, and we look forward to seeing you in Dhaka.
Sincerely yours,
Ernest Lin
Director-General
CACCI
“Regional Conference on Preventing and Combating Corruption in Infrastructure in Asia-Pacific,” on December 3, 2019 in Hanoi
CACCI would like to convey to its members an invitation from Business at OECD (BIAC) to participate in the “Regional Conference on Preventing and Combating Corruption in Infrastructure in Asia-Pacific” to be held on December 3, 2019 in Hanoi, Vietnam. As part of the OECD Southeast Asia Anti-Corruption and Business Integrity Project, the OECD is […]
“Regional Conference on Preventing and Combating Corruption in Infrastructure in Asia-Pacific,” on December 3, 2019 in Hanoi
CACCI would like to convey to its members an invitation from Business at OECD (BIAC) to participate in the “Regional Conference on Preventing and Combating Corruption in Infrastructure in Asia-Pacific” to be held on December 3, 2019 in Hanoi, Vietnam.
As part of the OECD Southeast Asia Anti-Corruption and Business Integrity Project, the OECD is organizing a series of regional workshops on the role of business in combating corruption and promoting integrity in the first week of December 2019.
During the week-long Conference, the first day, (December 3rd), is open to business participation, and the BIAC has been invited to suggest participants as well as a Business at OECD speaker.
Should member organization, company or individual member be interested in participating and/or suggesting an expert from your company or association who is active in the region, please contact directly BIAC via e-mail: rosenbaum@biac.org.
The concept note and agenda can be downloaded HERE.
For more information on the Conference, interested parties may wish to visit the following website: https://www.oecd.org/site/adboecdanti-corruptioninitiative/meetingsandconferences/combatting-corruption-in-infrastructure-projects.htm
“2020 Smart City Summit & Expo” on March 24-27, 2020 in Taipei
CACCI forwards herewith an invitation to attend the “2020 Smart City Summit & Expo (SCSE)” to be held on March 24-27, 2020 in Taipei, Taiwan. Organized by the Taipei Computer Association, the four-day event aims to accelerate the application of AI technologies in different areas such as transportation, healthcare, education, energy efficiency and sustainability, […]
“2020 Smart City Summit & Expo” on March 24-27, 2020 in Taipei
CACCI forwards herewith an invitation to attend the “2020 Smart City Summit & Expo (SCSE)” to be held on March 24-27, 2020 in Taipei, Taiwan.
Organized by the Taipei Computer Association, the four-day event aims to accelerate the application of AI technologies in different areas such as transportation, healthcare, education, energy efficiency and sustainability, and architecture design through exhibitions, forums, and networking events. By creating strong global networks for groups and individuals in the industry, the SCSE is expected to bring together more than 30,000 professional visitors and more than 250 exhibitors from around the world to share their insights and facilitate in-depth discussion at more than 60 parallel conference sessions.
Information kit of 2020 SCSE can be download it HERE.
Interested parties may wish to visit the event website at https://en.smartcity.org.tw/index.php/en-us/ for more information.
As ASEAN enters an infrastructure boom, geopolitical and economic risks abound
Photo: STR/AFP/Getty Images Photo: A newly launched bullet train undergoes a test run between Yancheng in Jiangsu province and Lianyungang in China. Southeast Asia is witnessing an infrastructure boom, through loans provided by Japan and China. Southeast Asia is witnessing an infrastructure boom, with major projects approved in Vietnam, Thailand, the Philippines, Malaysia and […]
As ASEAN enters an infrastructure boom, geopolitical and economic risks abound
Photo: STR/AFP/Getty Images
Photo: A newly launched bullet train undergoes a test run between Yancheng in Jiangsu province and Lianyungang in China. Southeast Asia is witnessing an infrastructure boom, through loans provided by Japan and China.
Southeast Asia is witnessing an infrastructure boom, with major projects approved in Vietnam, Thailand, the Philippines, Malaysia and Indonesia. In several cases, these have been facilitated through loans and other assistance provided by Japan and China.
However, despite this boom, there’s also a clear gap in spending. The 10 members of the Association of Southeast Asian Nations (ASEAN) require a collective $2.76 trillion in infrastructure spending between 2016 and 2030, according to the Asian Development Bank. That is about 5.7% of gross domestic product. Given that ASEAN states spend only about 2.3% of GDP on infrastructure, they are plainly falling far short of their needs.
Slowly, leaders in the region are waking up to the urgent need to spend.
Recently, Indonesian President Joko Widodo, Philippine President Rodrigo Duterte and Thai Prime Minister Prayuth Chan-ocha have linked infrastructure development to their political destinies. Numerous infrastructure projects have been approved across the region in Vietnam, Thailand, the Philippines, Malaysia and Indonesia.
The efforts of ASEAN nations to build and maintain basic infrastructure have often been supported by major overseas funders. Traditionally, loans and other assistance have come from Japan, but in recent years, China has stepped up its financing of large-scale projects in the Asia-Pacific region.
Japan is the biggest financier
Currently, Japan remains far ahead of China in terms of infrastructure investment in Southeast Asia. In 2018, Japan’s investments totaled $367 billion, compared to $255 billion from China. Japan is also ahead in terms of the number of infrastructure projects, with engagement in 240 projects, versus 210 by China. Vietnam is, by far, the largest recipient of Japan’s infrastructure investment in the region, with pending projects worth $209 billion, including a $58.7 billion high-speed rail line connecting Hanoi and Ho Chi Minh City.
China, meanwhile, has poured $93 billion of its infrastructure investments in Southeast Asia, or 36% of the total, into Indonesia. The biggest Chinese project in the country is the $17.8 billion Kayan River hydropower plant on the island of Borneo.
But China’s involvement is growing fast
The comparison of Japan and China’s investments in Southeast Asia in a single year only reflects part of the story. In fact, China’s infrastructure investments in ASEAN have grown rapidly over the past few years. From 2012 to 2017, the value of China’s ASEAN construction contracts doubled to $19 billion. China not only wants to win the infrastructure race with other competitors, especially Japan, but it also wants to dominate this game and alter the overall economic order in the region. In the recent preliminary bidding for the North-South Expressway in Vietnam, the majority of the 60 potential investors came from China.
ASEAN should take a comprehensive and coordinated approach to receiving China’s infrastructure investment.
For ASEAN countries, accepting Chinese financing is considered a relatively wise choice to boost economic development, as these investments are affordable, unconditional and include the necessary funding and resources to process such megaprojects. In accordance with China’s ambitious Belt and Road Initiative, Beijing has come to the aid of Laos by funding 70% of a $7 billion high-speed rail project, while its investments in Cambodia have helped sustain the country’s economic growth.
Concerns about a debt trap
Of course, there is no free lunch — such generous investments do not come without strings. Indeed, many of these investments are facing a lot of issues, including slow progress and low-quality management, and some critics argue the investments are a debt trap with unsustainable borrowing and unstable balance of payments.
Consequently, some countries such as Indonesia and Malaysia have grown cautious about BRI opportunities, and other concerns have put a damper on the excitement among ASEAN members. Indeed, China’s assertiveness in the South China Sea is a major challenge that prevents them from trusting China with large-scale projects that could affect their economies and political stability.
For Vietnam, one of the six countries with maritime jurisdiction claims in the area, its deep-rooted rivalry with China has made the idea of cooperating with China on large-scale projects a political taboo that has triggered public outcry.
Connective infrastructure can act as a tool for asserting power. Dominant powers may seek to reshape regional infrastructure to benefit their own interests. The Suez and Panama Canals are prominent examples of how major trade and transportation infrastructure served to project and bolster hegemonic power by Great Britain and the United States, respectively.
ASEAN’s hopes of fostering transportation connectivity with China in a way that would profit all sides with a “win-win” solution fail to consider China’s wider strategic view and self-interest. While China’s statements about BRI may align with ASEAN’s development and commercial aspirations, Beijing accords these infrastructure systems far greater strategic importance than do ASEAN nations. If Southeast Asian countries do not take this into account, the new infrastructure connections, which would tie each nation individually to China rather than link China with ASEAN as a whole, could ultimately pose a threat to regional connectivity, a key principle in the maintenance of the organization’s integrity, unity and security.
Despite the risks from China’s investments and its political calculations, China possesses the key resources for infrastructure development. It has amply demonstrated the depth of its pockets and its capacity to finance and execute deals around the world from Africa to the South Pacific to Latin America.
To cooperate with China and use these resources, ASEAN should take a comprehensive and coordinated approach to receiving China’s infrastructure investment. ASEAN members must have a joint vision of connectivity and a common standard for project approval, management, implementation and monitoring. Without these shared values and guidelines, the competition for limited infrastructure investments not only reduce the bargaining positions of Southeast Asian nations, but would likely trigger a “race to the bottom” in terms of project quality, undermining the fragile solidarity among ASEAN members and preventing collective efforts to restrain an assertive China and its ambitions in the region.
This piece first appeared in AsiaGlobal online.
Related themes: China Infrastructure Investment
The original article can be read at Brink website HERE.
Truong-Minh Vu
Lecturer at Vietnam National University, Ho Chi Minh City
Truong-Minh Vu is a lecturer at the University of Social Sciences and Humanities, Vietnam National University, Ho Chi Minh City. He has also been a senior fellow of Indiana University’s O’Neill School of Public and Environmental Affairs since 2018. He is co-editor of Power Politics in Asia’s Contested Waters: Territorial Disputes in the South China Sea.
The digital economy is boosting productivity — but official measures aren’t capturing the benefits
The new digital economy has become a key driver of United States economic growth and productivity. For instance, the real value added has grown at an average annual rate of 7.2% over the past 10 years — four times faster than GDP. The recent raft of technological advances has also led to the emergence of […]
The digital economy is boosting productivity — but official measures aren’t capturing the benefits
The new digital economy has become a key driver of United States economic growth and productivity. For instance, the real value added has grown at an average annual rate of 7.2% over the past 10 years — four times faster than GDP. The recent raft of technological advances has also led to the emergence of deflationary price dynamics among digital goods and services. This has allowed more and more businesses to embrace new technologies that enhance corporate efficiency such as the internet of things or cloud computing. In other words, businesses in the digital era can operate faster and at a lower cost.
Despite the undeniable boost from digital innovations, U.S. productivity growth has slowed sharply since the early 2000s, which is a paradox. From 2014 to 2018, the government’s official labor productivity measure has grown 1% per year on average — a rate typically associated with economic recessions rather than expansions.
Can improvements in statistical methodologies reveal just how important the digital economy is to overall economic prosperity? Partly, but there is more to the story.
Photo: Shutterstock
Photo: An employee on a digital device at their desk. Businesses in the digital era can operate faster and at a lower cost.
The Underrated Boost From the Digital Economy
New data from the Department of Commerce offers some valuable insights into the economic benefits of the digital economy. In 2017, the digital sector accounted for 7% of nominal GDP, a larger share than many traditional sectors such as retail trade (5.6%) or construction (4.0%). Since it is growing much faster than the overall economy, its contribution to GDP growth has been outsized: The real digital economy accounted for close to 30% of the overall U.S. expansion in 2017 (Chart 1).
The boost from the digital sector has not only been limited to output but has also filtered into productivity. Over the past decade, productivity in the digital economy has, on average, grown twice as fast as aggregate productivity (1.1% versus 0.5%, respectively). In 2016, the digital economy’s positive contribution to productivity growth helped mitigate the aggregate productivity decline.
Digital price deflation is another manifestation of how the digital economy is providing an underestimated boost to productivity and economic growth. Whereas prices in traditional sectors of the economy have tended to increase in recent decades, prices in the digital sector have unrelentingly declined. In 2017, the price deflator for the overall economy increased by 1.9% year over year, while that of the digital economy declined by 2.2%.
Are We Measuring Correctly?
One explanation that economists use to explain sluggish aggregate productivity growth in the post-recession era is mismeasurement: the idea that official statistics are incapable of capturing productivity gains in IT-related goods and services. In this regard, the most critical issues relate to the measurement of price and quality change. If official price measures do not accurately capture quality improvements, price deflators are likely overestimated and therefore real economic output is also likely underestimated. Encouragingly, statistical agencies are increasingly adopting hedonic measures to capture the utility of products and services and the use of matching-products techniques to ensure similar products with similar quality are used across time.
Another measurement issue relates to the changing composition of a rapidly evolving economy. Whether it is businesses introducing new products and services, consumption substitution, or quality enhancements, these developments can bias estimates of GDP and labor productivity growth downward. Anecdotal evidence illustrates how more and more services, such as Airbnb and Uber, are transforming the economy in a way that may be increasingly tough to capture through official statistics. While it is extremely difficult to estimate the productivity growth bias from these economic transformations, it appears quite clear that these innovations have both boosted productivity growth and gained in importance over the past decade.
However, it’s likely that these measurement issues only explain a small portion of the productivity shortfall. As David Byrne, John G. Fernald and Marshall Reinsdorf pointed out in a 2017 report, the mismeasurement challenge was already present before the slowdown and there is no evidence that it has worsened over time. Rather, major structural impediments — technologies’ slow adoption and diffusion through the economy in particular — are preventing the digital economy from contributing as much of a boost to productivity as past innovations.
The Missing Link
In 1987, Robert Solow, the Nobel Prize winning economist, famously joked that “you can see the computer age everywhere but in the productivity statistics.” At the time, annual labor productivity growth had slowed sharply to around 0.5% despite major advances in IT. The solution to the Solow paradox came in the following decade when labor productivity surged back above 2% as more and more firms leveraged IT advances to fundamentally change the way they operate. In that light, it’s likely that the productivity slump over the last decade is not so much due to a lack of transformative innovations, but more about a lack of innovation diffusion between firms and industries.
Examining firm-level productivity growth globally, it appears that the general slowdown in annual productivity growth has predominantly affected productivity-laggards, which are firms that have a lower rate of technological adoption. Meanwhile, global frontier firms (top 50 firms in a sector) have continued to experience relatively strong growth. For instance, data from Dan Andrews, Chiara Criscuolo and Peter N. Gal in a 2016 report show that productivity growth in the services sector has been about eight times faster in the global productivity-frontier firms than in laggard firms since 2000 (see Chart 2).
The Next Productivity Boom
To be sure, the lack of diffusion is not irreversible; there is room for optimism about the potential for the digital economy to support stronger productivity growth. Policy changes could spur a more widespread adoption of innovations: specifically, policies that promote increased competition in product markets and lower barriers to entry, encourage higher non-tangible investments and support adequate training to enable new technologies.
Moreover, a look back at previous eras of innovation reveals that there has been a significant delay between the inception of new technologies and their diffusion through the economy. That’s especially true for far-reaching technological innovations, also called general-purpose technologies (GPTs), such as the steam engine, electricity and the computer. It is difficult to predict when the next productivity boom will occur, but it could take a while yet — it took as long as 30 years with previous GPTs — before it’s in sight.
Related themes: Disruption Internet Of Things
The original article can be read at Brink website HERE.
Lydia Boussour
Senior Economist at Oxford Economics
Lydia Boussour is a senior U.S. economist at Oxford Economics.
“Asia-Pacific Agribusiness Development and Matching Forum,” October 24, 2019, New Taipei City, Taiwan
CACCI would like to forward an invitation to its members from the International Cooperation and Development Fund (TaiwanICDF) to attend the “Asia-Pacific Agribusiness Development and Matching Forum” to be held on October 24, 2019 in New Taipei City, Taiwan. As a platform for international exchange, the Forum is expected to be attended by government officials […]
“Asia-Pacific Agribusiness Development and Matching Forum,” October 24, 2019, New Taipei City, Taiwan
CACCI would like to forward an invitation to its members from the International Cooperation and Development Fund (TaiwanICDF) to attend the “Asia-Pacific Agribusiness Development and Matching Forum” to be held on October 24, 2019 in New Taipei City, Taiwan.
As a platform for international exchange, the Forum is expected to be attended by government officials and business representatives from India, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, Cambodia, and Sri Lanka for discussions on international aid effectiveness and the benefits that could be brought to enterprises. Representatives from the government, agribusiness chamber, banks and international aid agencies of Taiwan are also invited to share their experience and insights.
In addition, the event will also witness the launching of the TaiwanICDF Business Matching Platform (TBMP) which aims to enhance the linkage between the overseas market and Taiwan companies as well as explore business opportunities.
The introduction of the forum can be downloaded HERE and its flyer HERE for your perusal.
For inquiries, interested parties may wish to contact Mr. Tim Tseng, Junior Specialist, Partnerships and Development Division, Research, Development and Evaluation Department, TaiwanICDF via e-mail: cy.tseng@icdf.org.tw.
The International Cooperation and Development Fund (TaiwanICDF) is dedicated to boosting socio-economic development, enhancing human resources and promoting economic relations in a range of developing partner countries. It also offers humanitarian assistance and provides aid in the event of natural disasters or international refugee crises. For more information on TaiwanICDF, please visit its official website at: https://www.icdf.org.tw/mp.asp?mp=2
No sign of a trade war resolution. How is China adjusting its supply chains?
In November 2018, BRINK spoke to Gary Gereffi, director of the Global Value Chains Center at Duke University, about what impact the U.S.-China trade dispute was having on global supply chains. We caught up with him recently to see how his view had changed over the last 10 months. An interview with Gary […]
No sign of a trade war resolution. How is China adjusting its supply chains?
In November 2018, BRINK spoke to Gary Gereffi, director of the Global Value Chains Center at Duke University, about what impact the U.S.-China trade dispute was having on global supply chains. We caught up with him recently to see how his view had changed over the last 10 months.
An interview with Gary Gereffi, Director of the Global Value Chains Center at Duke University
Gary Gereffi: Ten months ago, when we spoke, I expected that the trade wars were a tactical gamble by President Donald Trump to get at some of the deeper issues in the U.S.-China relationship.
But a larger discussion or agreement hasn’t been forthcoming, and the trade wars now seem to be locked into the multiple rounds that we’ve seen over recent months and will be affecting all of U.S.-China trade by the end of this year.
Photo: A container ship sits docked in California. The trade war between the U.S. and China seems locked in, with no type of agreement on the horizon.
BRINK: How has the Chinese economy adapted to this?
Professor Gereffi: China has been identifying various ways to deal with a prolonged trade war with the U.S. I recently came back from China, where I talked to a range of companies, and several things are happening simultaneously.
One, exporting companies from China are accelerating their moves to other countries as sourcing bases in order to avoid the trade war restrictions. A favored country is Vietnam. But some other Southeast Asian and South Asian countries like Indonesia and Bangladesh are also sites where export firms are moving their operations.
Another response has been for export companies from China to set up facilities in or near the U.S. Mexico has been a preferred location. Many of these investments were already in place even before the trade wars started, but the amount of exports from those locations has accelerated and diversified.
A third big change is for Chinese companies to focus more on sales to the large domestic market. China had been wanting to move out of low-cost, export-oriented industrialization as a primary development strategy ever since the 2008-2009 global recession, and it views the domestic market as a way to move into higher-value branded production in some cases. So that’s also been happening.
BRINK: Some CEOs, such as Amar Hanspal, have suggested that, with rising protectionism and climate change, you’re going to see things sourced nearer to the market that they’re serving, rather than having extended global value chains. Do you agree?
Professor Gereffi: We may be moving into a world of parallel systems in the digital economy value chains. So, if you look at a key field like e-commerce, China and the U.S. have top firms that are supplying both the domestic and global markets. In China’s case, Alibaba is basically focusing on the domestic market, but with some inroads into Southeast Asian countries, while Amazon has been a global leader from the start.
If Africa begins to adopt more of China’s advanced technologies, then maybe China would gain momentum in terms of expanding its technologies.
U.S. companies are far more global in terms of their impact on value chains around the world, while China has been launching a very strong national value chain strategy around these key technologies, but is hoping to expand outward from that. With Huawei, China was hoping to have a global pacesetter in the global telecom industry.
BRINK: What do you mean by parallel worlds?
Professor Gereffi: Well, parallel in the sense that we might have two different sets of global standards emerging. For example, China has had its own great China firewall since the early 2000s, where e-commerce inside China operates according to a Chinese set of standards and regulations that restrict access to many foreign websites. In contrast, U.S. and European companies have adopted relatively open international standards, although global internet governance is becoming increasingly contested over issues like data privacy and international tax laws.
So, if pushed, China would continue to try to develop its own standards that would apply to the China market and maybe to its allies in East Asia and elsewhere. We’ve had those technology battles before between the U.S. and Japan, involving Sony’s Betamax videocassette recorders and the rival VHS format in the U.S. in the 1980s and 1990s.
I don’t think the parallel systems approach is sustainable long term. One standard is usually going to win out, and everybody wants to be connected to that platform. But even in contemporary IT, we have seen Apple standards coexist with Android standards in the mobile phone market. So, in some ways, we’ve got parallel value chains in that area. So it’s not inconceivable that we might have that kind of outcome, at least in the short term.
BRINK: What about Africa and the Middle East — how do they fit into this dynamic?
Professor Gereffi: Africa is actually an area where China can score some significant wins. One of the big advantages of China in terms of these digital technologies has been mobile money and its pervasiveness in China. If you look at Kenya’s M-Pesa system for mobile phone money transfers, they have become a leader in sub-Saharan Africa in mobile money.
China is emerging as a major investor in Africa through its Belt and Road Initiative. So Africa, for sure, and potentially the Middle East, are areas where China-based technologies could be supported by heavy China investments. They’ve already got massive infrastructure investments linked to the BRI, which opens up to a broader participation by Chinese companies in those regions, including sub-Saharan Africa.
If sub-Saharan African countries begin to adopt more of China’s advanced technologies, then maybe China would actually gain considerable momentum in terms of expanding its technologies and standards to other countries or regions around the world.
Related themes: China Supply Chains Trade
The original article can be read at Brink website HERE.
What’s the right balance of energy, security and sustainability?
Photo: Wind turbines spin next to an electric cable pylon as the sun sets near Schönwalde in eastern Germany. Renewable installations in the power sector now account for almost two-thirds of new generation capacity. An energy transition is unfolding around the world. In efforts to reduce carbon dioxide emissions and air pollution, governments are installing […]
What’s the right balance of energy, security and sustainability?
Photo: Sean Gallup/Getty Images
Photo: Wind turbines spin next to an electric cable pylon as the sun sets near Schönwalde in eastern Germany. Renewable installations in the power sector now account for almost two-thirds of new generation capacity.
An energy transition is unfolding around the world. In efforts to reduce carbon dioxide emissions and air pollution, governments are installing increasing amounts of wind and solar. Since 2000, renewable installations in the power sector have risen from 20 GW per year to around 160 GW per year and now account for almost two-thirds of new generation capacity.
But the challenge for policymakers is not only to decarbonize energy systems, it is to do so while simultaneously ensuring the security and affordability of energy. Should either goal be seriously compromised, the economic, social and political ramifications may be severe.
The World Energy Trilemma 2019 examines the progress governments have made in the continual struggle to balance the critical policy objectives of security, equity and sustainability. By objectively measuring individual countries’ performance on each since the year 2000, it provides a unique insight into policymakers’ achievements and failures.
Uneven Progress
The overall picture is one of progress. Out of 128 countries assessed, fewer than 10 have seen their aggregate score across the three dimensions decline since 2000. Progress is also accelerating. Between 2000 and 2004, only 11 countries managed to improve their aggregate score; from 2015 to 2019, this number rose to 31.
Although progress has been widespread, it has not always been even or consistent. No country has managed to achieve continuous improvement in each of the dimensions. All countries have experienced setbacks in one or more dimensions at some point, illustrating the challenge of balancing three distinct policy objectives that do not always align. Trade-offs are sometimes unavoidable.
Security
The top three performers on security are Sweden, Denmark and Finland. The high energy security of the Nordic countries comes from their diverse energy systems, achieved by early and sustained investments in renewables and reduced reliance on fossil fuels (see chart below). In doing so, the Nordic countries have simultaneously improved the security and sustainability of their energy systems. In addition to being the top performers on security, Sweden, Denmark and Finland all receive the highest grading on sustainability.
Source: World Energy Trilemma Index 2019, World Energy Council
The rest of the security top 10 is overwhelmingly European, reflecting the security benefits realized by integrated governance arrangements, including stable regulatory and market frameworks and stockholding obligations.
Remarkable Improvements in Asian and African Countries
Hydrocarbon-rich Gulf countries dominate the top performers on affordability and accessibility of energy. Their populations enjoy access to some of the cheapest energy in the world due to generous subsidies that keep domestic energy prices low. This has come at a price to overall trilemma performance, however.
Cheap energy does not encourage efficiency, and inefficient burning of fossil fuels means the Gulf countries are among the worst performers on sustainability. A number have also seen deterioration in their security scores, as their reliance on fossil fuels has increased. The future trilemma performance of the Gulf countries will, therefore, depend heavily on current efforts to reduce energy subsidies and promote renewable energy. Success will allow them to diversify their energy systems, increase efficiency and reduce emissions intensity.
Outside the Gulf, small wealthy countries with geographically concentrated populations such as Luxembourg, Singapore and the Netherlands perform well. But the real story is in parts of Asia and Africa, which have witnessed remarkable improvements in energy access and affordability as incomes have risen and investments in electrification have taken effect.
The fastest improvers since 2000 include Cambodia, Nepal, Bangladesh, Myanmar, Ethiopia and Kenya. While equity scores — measuring a population’s access to affordable energy — for the top performing countries have remained relatively flat, scores among this group of countries have soared, driving a number of them into the top 10 improvers across all three dimensions. This progress is a testament to the success of efforts to deliver Sustainable Development Goal 7: to ensure access to affordable, reliable, sustainable and modern energy for all.
China Scoring Well on Sustainability
The most sustainable energy systems are in Europe, where some of the world’s most ambitious climate change policies can be found. Eight of the top 10 performers on sustainability are European. Costa Rica, which has similarly adopted highly ambitious climate change goals and has a high penetration of renewable energy, also makes the top 10.
However, the energy transition is not confined to Europe, and some of the most rapid progress on sustainability has occurred elsewhere. Notable within the top 10 improvers are the world’s two largest greenhouse gas emitters: China (fifth) and the U.S. (ninth). Both have invested significantly in renewable energy technologies, and the U.S. has also benefited as shale gas has displaced coal on its grid. Although coal remains a significant source of energy in China, clean energy has expanded significantly, and the country has persistently topped renewable investment tables in recent years.
Of the three dimensions of the trilemma, the sustainability dimension has shown the most marked improvement at the global level, reflecting the increasing focus on energy sector decarbonization.
Looking to the Future
The 2019 World Energy Trilemma reveals much to celebrate. Access to affordable energy is increasing rapidly, and energy sectors are decarbonizing. More countries are managing to balance the trilemma and achieve progress across the three dimensions. But despite this progress, the world remains way off track to meet its climate goals.
Achieving the Paris Agreement’s objective of limiting temperature increases to well below 2 degrees Celsius requires that net global greenhouse gas emissions peak in the next few years and decline to zero early in the second half of the century.
This means the global energy transition must be complete within the next 30 to 40 years. However, global emissions are still rising, and although renewables are ramping up, it is from a small base, and we are burning more fossil fuels than ever before (see chart below).
Source: BP
In short, progress on energy sustainability needs to increase dramatically.
Policymakers can take heart from the previous 20 years, which show that decarbonization has not undermined progress on security and affordability of energy. But they face new challenges as the energy transition accelerates. How will power sectors cope with saturating levels of intermittent renewables and increasing demand from electric vehicles? Will the countries that have displayed remarkable progress on improving access to energy be able to maintain that progress without increasing their dependency on fossil fuels? How will energy security evolve in a future of increasing electrification, more extreme weather and heightened cyber threats?
The next 20 years of the energy trilemma will not look like the last.
Related themes: Climate Change Renewable Energy
The original articles can be read at Brink website HERE.
Rob Bailey
Director of Climate Resilience at Marsh & McLennan Insights
Rob Bailey is the director of Climate Resilience at Marsh & McLennan Insights. Before this, he was the research director for Energy, Environment and Resources at Chatham House.
Global Climate Regulation Looms on the Horizon. Are Banks and Insurers Ready?
As Wildfires Get Costlier and Deadlier, Insurers and Utilities Pay the Price
Climate Change Has Claimed Its Biggest Corporate Victim. Now Banks Are on Alert.
François Austin
Partner and Head of Energy Practice for Oliver Wyman
François Austin, Partner and Head of Oliver Wyman’s Energy Practice, has 20 years of consulting experience focused on translating business strategies and ideas into demonstrable results. François specializes in business strategy, post-merger integration, performance improvement, risk management, and leadership development, and has led a number of change improvement programs working at board level within the Oil and Gas, Utilities and Financial Services sectors.
Progress Toward Balanced, Sustainable Energy World Remains Slow
Is 5G technology bad for your health?
Photo: Jung Yeon-Je/AFP/Getty Images Photo: A technician checks an antenna for the 5G mobile network service on the rooftop of a building in Seoul. 5G is designed to permit much faster transmission of data than present day 3G and 4G technologies. Pushback to technological revolutions sometimes arises in unexpected places. Case in point is the […]
Is 5G technology bad for your health?
Photo: Jung Yeon-Je/AFP/Getty Images
Photo: A technician checks an antenna for the 5G mobile network service on the rooftop of a building in Seoul. 5G is designed to permit much faster transmission of data than present day 3G and 4G technologies.
Pushback to technological revolutions sometimes arises in unexpected places. Case in point is the tiny island of Stronsay, off the north coast of Great Britain. Last year, the BBC installed one of the first 5G cellular systems in the U.K., bringing live BBC radio programming for the first time to an area that heretofore had little or no digital radio coverage and slow broadband coverage.
It mounted the antennas above the Stronsay Junior High School, which, in retrospect, may not have been the best choice of location. In the uproar that ensued, one family withdrew its children from the school. A petition, circulated on the internet, so far has garnered over 900 signatories urging the local government to stop “rolling out 5G.”
5G refers to the latest iteration of cellular telephone technology, which is designed to permit much faster transmission of data than present day 3G and 4G technologies. In many respects, 5G builds on present cellular technologies, with many initial installations — as in Stronsay — transmitting on similar frequencies and power levels as those used by present cellular systems.
What’s the Controversy?
While there has always been some level of public opposition to cellular telephone systems, 5G has become intensely controversial in many locations, with citizens’ groups and a few scientists expressing concerns about the possible health effects of radiofrequency (RF) energy transmitted by 5G base stations.
Two features of the technology appear to have ignited their concerns.
One is the use of “small cells,” with a multitude of small (half meter or smaller) antennas mounted on utility poles or other low structures, as opposed to meter-long antennas mounted atop buildings, as is the usual practice for existing cellular networks in urban areas. Existing cellular networks are also moving toward installation of many small cells to accommodate ever-increasing data traffic, and this feature is not particular to 5G. However, 5G networks will rely on thousands of small cells scattered around a city. The prospect of large numbers of transmitting antennas on familiar structures such as utility poles is undoubtedly disquieting to many citizens, as is the limited ability of cities to control the installation of such facilities.
A second feature is the planned — or, in some 5G networks, actual — use of RF signals close to or within the millimeter wave band (which extends from 30-300 gigahertz or GHz), compared to present cellular bands that are chiefly between 0.7 and 2.6 GHz. Millimeter waves have been used for many applications, including microwave links between present day cellular base stations, airport security scanners, and anti-collision radar for automobiles, but not heretofore for cellular communications.
More generally, as 5G becomes established, its advocates expect it to be used to connect many wireless-enabled devices on the body, in the home, and elsewhere and, ultimately, to enable cellphone control of automobiles and even surgery without direct human intervention. Apart from RF safety issues, potential implications of such applications need to be carefully examined.
Are Radiofrequency Signals Bad for Your Health?
For many years, there has been some level of public concern about possible harms from exposures to radiofrequency signals at ordinary environmental levels. In a 2017 survey of 2,450 residents of six European countries, Peter Wiedemann, then at the University of Wollongong in Australia, found that 40% of the respondents had some concerns, with 12% describing themselves as “enduringly concerned” — that is, frequently thinking and talking about — electromagnetic field exposure. Their concerns chiefly focused on involuntary exposures to RF signals from environmental sources, including cellular base stations.
However, numerous expert reviews under the auspices of health agencies around the world have consistently concluded that there is no clear evidence — despite thousands of studies — that RF exposures below accepted limits carry any health risks. Data on the Stronsay Junior High School website show that RF exposures at the school are far below U.K. limits, which are generally similar to those in the U.S. and in many other countries. The reported levels, in fact, are typical of those present in many ordinary settings and are at the same frequency range as used by present day cellular communications.
Using Millimeter Waves
There has recently been an upsurge of research using millimeter waves, although none at the precise — and, for the most part, still undetermined — frequencies to be used by 5G systems. Millimeter waves are absorbed within about 0.5 mm of the skin surface.
Their obvious potential hazards — thermal damage to skin or cornea of the eye — were studied by the U.S. Air Force beginning in the mid-1990s (the present author participated in several of these studies). More recently, a group at Kanazawa Medical University in Japan has studied ocular damage by millimeter waves, among other groups. The U.S. Air Force also sponsored one long-term cancer study involving repeated exposures of mice to pulsed millimeter waves at 94 GHz.
Health Authorities Are Not Too Concerned, but Want More Research
For their part, health agencies have not concluded that exposure to RF signals, including millimeter waves, below recommended limits carries health risks, even as they recommend that more research be done. For example, in 2019, the Swedish Radiation Safety Authority concluded that “despite the lack of established mechanism[s] for affecting health with weak radio wave exposure, there is however need for more research covering the novel frequency domains used for 5G.”
Nor has there been a rush to revise exposure limits in the face of 5G.
In August 2019, FCC Chairman Ajit Pai announced that the FCC proposes to maintain its current RF exposure safety standards, adopted in 1996, quoting a statement from the director of the U.S. Food and Drug Administration Center for Devices and Radiological Health that “the available scientific evidence to date does not support adverse health effects in humans due to exposures at or under the current limits.”
But Allegations Continue
In contrast to the assessments of health agencies, a few scientists have warned about possible hazards of 5G. An appeal, signed by 245 scientists as of August 2019, recommended “a moratorium on the roll-out of the fifth generation, 5G, for telecommunication until potential hazards for human health and the environment have been fully investigated.” The appeal mentions many harms that the signatories consider to be caused by exposure to RF fields at typical environmental levels. This controversy has continued for many years and is not specific to 5G.
In a response to the appeal, in late 2017, Vytenis Andriukaitis, head of the Cabinet of Commissioners of the European Union, reiterated reassuring advice of expert reports and indicated that the request to “stop the distribution of 5G products appears too drastic a measure. We first need to see how this new technology will be applied and how the scientific evidence will evolve.”
The EU should support more studies on possible health effects of millimeter waves. Given the many poor-quality studies in the literature, any new research needs to be focused on endpoints with plausible connection to human health and be of very high quality.
For their part, teenagers in Stronsay have become big fans of the music played over their newly accessible programs on BBC.
Related themes: Healthcare Infrastructure
The original Brink’s article can be read HERE.
Kenneth R. Foster
Professor of Bioengineering at the University of Pennsylvania
Kenneth R. Foster is an emeritus professor of bioengineering at the University of Pennsylvania, who has been involved in studies of health and safety aspects of RF energy for many years. He belongs to the department of the Institution of Electrical and Electronics Engineers (IEEE), that sets exposure limits for RF energy.
ASEAN Young Entrepreneurs conclude energetic Summit in Bangkok
Thirty-six visionary young leaders of ASEAN gathered at the Royal Orchid Sheraton Bangkok on September 2nd and 3rd 2019 to share with other young businessmen their successes, failures, challenges, concerns, and future plans. Guided by a vision for a smart, sustainable and empowered ASEAN, the ASEAN Young Entrepreneurs Carnival was attended by global change makers, […]
ASEAN Young Entrepreneurs conclude energetic Summit in Bangkok
Thirty-six visionary young leaders of ASEAN gathered at the Royal Orchid Sheraton Bangkok on September 2nd and 3rd 2019 to share with other young businessmen their successes, failures, challenges, concerns, and future plans.
Guided by a vision for a smart, sustainable and empowered ASEAN, the ASEAN Young Entrepreneurs Carnival was attended by global change makers, high level entrepreneurs, impact investors and high ranking governmental officials forming the ASEAN (+6) community; as well as by delegates from China, Japan, India, South Korea, Taiwan and Australia all of whom were interested in meeting and establishing ties with the new generation of young and dynamic ASEAN entrepreneurs.
The ASEAN Young Entrepreneurs Carnival was a great opportunity to open new lines of communication with the upcoming generation of new businessman and build genuine friendships.
The successful Young Entrepreneur Carnival was organized by Young Entrepreneurs Chamber of Commerce (YECBK) led by Rutt Pongsurapipat, the Young Entrepreneur Chamber of Commerce (YEC) of the Thai Chamber of Commerce led by Gavin Vongkusolkit, and The Board of Trade of Thailand led by Prim Jitcharoongphorn.
First Day
The first day events received the greatest support from all the members of ASEAN states. It started with a stunning Muay Thai grand opening performance followed by remarks from Kobsak Pootrakooi, Deputy Secretary General of the Prime Minister Office for Political Affairs. Then, Kalin Sarasin, the Chairman of Thai Chamber of Commerce, proceeded to welcome the hundreds of young entrepreneurs conforming the audience.
Kobsak Pootrakool
Soon after, an exciting line-up of great speakers ignited the morning session, which was concentrated on themes such as Hi-tech, sustainable society 5.0, changes in retail business, Blockchain, entrepreneurs’ capacity to solve global problems, and 5G and its impact on the new society.
Kalin Sarasin
The afternoon continued at a fast pace, with presentation on mindfulness against technology’s distractions, women empowerment, gaming, re-skilling the workforce, the cultural power of ASEAN, and AI and VR.
The diverse and interesting day of presentations of September 2nd concluded with a banquet party at LLhong 1919, a chic restaurant-bar on the other bank of the Chaopraya river where everybody had the opportunity to further commingle while enjoying a beautiful sunset. The evening reception had indeed the Carnival atmosphere that delivered a very unique and unforgettable experience among new friends.
Second Day
The second day continued with a dynamic presentation format where changemakers from Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam spoke candidly about their businesses, projects, problems, challenges, failures and futures plans.
The speakers
Here we present most of the successful ASEAN Young Entrepreneurs speakers featured during the Carnival, who enlightened the Summit with their experiences, humor, and young wisdom.
The first speaker was Philaiphone Vongpraseuth, the first female CEO leading a construction company to be listed successfully in the Lao Stock Exchange in 2017. Philly is the CEO of Solver Laos-Business & Investment Consultancy and partner in many other enterprises.
The next speaker was PaiPon Saiyadeth, CEO of Capital Residence managing residences and properties. She has a creative fabric factory that manufactures luxury hand-woven textiles for the global interior market. She is also involved in other businesses.
The following speaker was Douglas Corley, a China-based healthcare entrepreneur with eight year experience in transnational research and market entry strategy for growth-stage startups. He is passionate about problem solving and is bringing the next generation of solutions to the China healthcare market.
Dato Daniel Lee Kee Foong is Chief Executive Officer of Gofay Group, an airline that provides chartering flight, travel agency and other travel related businesses. He explained to the audience the challenges operating a new airline growing rapidly, specially has Gofay schedules 300 departures per day.
The next speaker brought change into the food business routine. Matt Reid, the co-founder at Maximal Concepts, changed the conversation into new restaurant management and branding. He participated in the creation of Mott 32, the Group’s flagship restaurant.
Phonesavanh Vilivong is a mother of three who uplifts and supports the Lao Coffee sector through Direct Trade. She tailored coffee training program for local baristas in the HORECA and consciously implements PPP model (profit, planet and people).
Wai Phyo is the Managing Director of Yathar Cho Industry Ltd., one of the largest food manufacturing companies in the country. He explained his business expansion into distribution, IT space and ecommerce ebusinesses.
Satoshi Takahashi, co-founder and CDO of Cost Science Inc., researches global economic trends and Japan’s future, focusing on disruptive technologies that could be implemented into large companies.
James Goh, a very young member of the Young Entrepreneur Association of Brunei, works in the renewable energy industry. In 2016, he founded G-Bio Energy Sdn Bhd, a company managing the whole supply chain from agriculture to logistic and to generating electricity.
Douglas Ga is a Singaporean technology entrepreneur founder of GBCI, a leading smart city solutions provider. Douglas deals with AI, robotics, virtual reality, big data and IoT to build smart cities all around Asia with the objective of connecting them into borderless urban services.
Pech Bolen, Chairman and CEO of Westline Education Group Co., manages six education brands in Cambodia and is successfully expanding into new areas. He delivered a powerful presentation about business and growth.
The next speaker, Doga Makiura from Japan, turned the audience attention into government impact on businesses. As CEO of Degas, Doga somehow ended up in Africa where his company buys and sells commodities on behalf of farmers in Ghana. He is also expanding online education service “Quipper” in Indonesia and the Philippines among many other endeavors in his portfolio.
Izzat Hazim, as Director of Sword GRC Malaysia and ASEAN Region, provides Risk Management Software to clients such as NASA, Nestle, Airbus and has over 1000 clients worldwide. In 2011, he returned to Malaysia to start an Aquaculture farm. Izzat is currently the Managing Director of Agro Gold Industries; which uses advanced farming technology to grow rockmelons. His products supply supermarkets across Malaysia and internationally.
Dr. Vanessa Teo is the founder and CEO of agri-tech startup company Agrome IQ International Sdn Bhd. Her services empower farmers to maximize plantation procedures. She uses modeling systems and algorithms to support in rice farming system optimization in Brunei.
She collaborated with University of Brunei Darussalam, IBM Research Lab New Delhi, Bangalore, Brazil and the USA and the Ministry of Industry and Primary Resources, Brunei.
Jirawat Panpiemras, Vice President at Bangkok Bank Public Company Limited, researches complex issues such as intellectual property, and policy issues in Thailand’s health insurance system among many other problems.
Thaweelap Rittapirom, member of the Board and an executive director of Bangkok Bank Public Company Limited, explained the changing role of bankers and the evolution of banking into the new economy.
Audrey Pe might have been the youngest entrepreneur among all presenters. She founded Women in Technology (WiTech) to bring up the number of women into the IT industry. WiTech also provides used laptops and curated tech education modules to under privileged school. Audrey will enter Stanford University in the fall of 2020.
Jack Thomas, the founder and CEO of BASE gym won “Asia’s Gym of the Year” at the region’s biggest fitness industry awards. Now, he is expanding from 1 to 3 branches in central Bangkok. Jack spoke about the fitness industry in Asia and the challenges ahead.
Dr. Thant Myint-U, an award-winning writer, historian, conservationist, and a former advisor to the President of Myanmar, brought academic perspective to the changes affecting ASEAN and the path forward.
Mrs. Christy Le (Lê Diệp Kiều Trang) is the CEO of GO-VIET, an on-demand multi-service platform providing a range of services including transportation, logistics, food delivery and payments. She is passionate about uplifting socioeconomically challenged members of the Vietnamese society.
She was Misfit’s CFO and COO from its founding until its acquisition by the Fossil Group for US$260 million.
For the past twenty one years, Dr. Mai Huu Tin has been Chairman and CEO of U&I Investment Corporation (Unigroup), the company he founded. His company currently owns over 50 subsidiaries and affiliates, and employs more than 20,000 people.
Theodore Khng is a 29 year-old accountant who has invented many organic skincare and healthcare products and has opened up his manufacturing unit in Singapore. Temasek Holding backed his research laboratory to co-develop more natural and organic products to fight common diseases rampant in the region.
Woo Sze Min is the founder of Gamurai, software-as-a-service technology enabler company marketing its flagship product – VEON@Experience. It is a suite of SaaS tools to empower the salon and stylists in their daily business operations. The invention has increased clients’ sales revenue by 10% and achieved cost savings of at least $4,000 per year by empowering staff with digital tools.
Nicole Zycinski-Singh was an advocate & solicitor of the Supreme Court of Singapore. An unexpected visit to Myanmar ignited her entrepreneurial spirit. Now she is managing the operations of the Killem Pest Pte Ltd and its sister companies in Singapore. The Killem Group of companies specialises in urban pest management and uses only the most effective technology and methods, and environmentally friendly chemicals.
Okhna Sok Piseth launched his first company “Toys and Me” in 2007 in Cambodia, and then expanded it into a diversified business that included G Gear, a mechanical and electrical engineering company. His company is the official distributor of LG Electronics products, and Hyundai Elevator.
Jirayut Srupsrisopa, co-founder and group CEO at Bitkub Capital Group Holding, has dedicated the majority of his career to the cryptocurrency and blockchain technology industry. His presentations focused on the emerging conditions and opportunities of this new currency market.
The current Thailand’s Minister of Higher Education, Science, Research and Innovation Dr. Suvit Maesincee also used the opportunity to speak about the ASEAN markets and opportunities for economic development.
Tom Chirathivat, a data driven new retail x digital expert, implements customer data initiatives to grow business opportunities. He has been dwelling into artificial intelligence and data analytics.
Vikrom Kromadit, chairman of AMATA Corporation and founder of industrial states, encouraged the audience to invest and develop new business in ASEAN. Moreover, he explained that new opportunities are arising out of the China and USA trade dispute that will benefit ASEAN.
Sam Lee is the founder and CEO of Blockchain Global Limited. Under his vision and leadership, the company has invested more than $300 million in 80 blockchain-enabled companies and projects.
Kosta Miachin, founder and visionary behind Vikasa, presented an up and coming lifestyle/experience brand of wellness, nutrition and hospitality. For him, all started with a passion for yoga, nutrition and well being. Now, his business has grown to a 54 key resort and 100 employee operation in just 6 years.
Ken Lai is the owner of Brandoville Studios and Brandoville Academy (Indonesia) and co-owner of Lemon Sky Studios (Malaysia). Ken Lai is responsible for running all facets of the two businesses in Jakarta and Malaysia. Lemon Sky now has more than 300 artists.
Mr. Alan Archapiraj, the founder and CEO of MAD virtual reality studio, concentrates his efforts in the innovative, dynamic and highly competitive gaming and interactive exhibition sectors. In establishing MAD, Alan was guided by his long-term commitment to social enterprises and innovation.
Lina Khalifeh, the Founder and owner of SheFighter (The First Self-Defense studio for women only in Jordan and the Middle East), empowers women physically, mentally and emotionally through self-defense training. The studio was founded in 2012 and has trained more than 15 thousand women all over the globe.
Richard Webb is an entrepreneur who has taken seven of his start-ups global and successfully exited those start-ups with trade sales and an IPO. Five years ago he founded Cataliize to help scale up businesses to the world and in doing so he created a new business model to more effectively catalyse ventures and social enterprises. Cataliize team has grown to over 180 people in 36 cities and serves over 40 ventures.
Pranitan Phornprapha, Kelly Go, Chakrapol Chandavimol, Suradech Taweesaengsakulthai and Wareeerat Toni Kitchaixankul completed the energetic lineup of young speakers featured during the two-day Young Entrepreneur Carnival in Bangkok on September 2nd and 3rd of 2019.
2019 Taiwan Business Alliance Conference on October 7, 2019 in Taipei
CACCI would like to convey to all its members an invitation to attend the 2019 Taiwan Business Alliance Conference to be held on October 7, 2019 in Taipei, Taiwan. Carrying the theme of “Secure and Trustworthy,” the one-day event serves as a platform for showcasing the achievements of international corporations operating in Taiwan as well […]
2019 Taiwan Business Alliance Conference on October 7, 2019 in Taipei
CACCI would like to convey to all its members an invitation to attend the 2019 Taiwan Business Alliance Conference to be held on October 7, 2019 in Taipei, Taiwan.
Carrying the theme of “Secure and Trustworthy,” the one-day event serves as a platform for showcasing the achievements of international corporations operating in Taiwan as well as Taiwan’s investment potential. The Conference will focus on emerging business areas such as 5G mobile telecommunications, the Internet of Things (IoT), artificial intelligence (AI), Big Data, electric vehicles, and self-driving cars. Senior managers of transnational corporations operating in Taiwan have been invited to participate in the Conference, and will provide in-depth analysis of industry trends and the opportunities associated with investing in Taiwan.
By attending the Conference, participants will have the opportunity to learn about new cutting-edge technology applications and changing patterns in global business. E-DM of the Conference is presented here for your perusal.
For more details on the event and on-line registration, interested parties are encouraged to visit the official website at: http://2019tba.cier.edu.tw/index.aspx?lang=en
Blockchain promised a revolution. It’ll have to clear three governance hurdles first
(Photo: Giant letters, spelling out the word “blockchain,” are displayed at the Blockchain Centre in Lithuania’s capital, Vilnius. Blockchain is a relatively new technology with no predetermined governance structure.) Today, traditional digital platform companies are governed like most firms and institutions — one entity is in charge. It’s responsible for maintaining its platform, attracting users and fixing […]
Blockchain promised a revolution. It’ll have to clear three governance hurdles first
(Photo: Giant letters, spelling out the word “blockchain,” are displayed at the Blockchain Centre in Lithuania’s capital, Vilnius. Blockchain is a relatively new technology with no predetermined governance structure.)
Today, traditional digital platform companies are governed like most firms and institutions — one entity is in charge. It’s responsible for maintaining its platform, attracting users and fixing problems when things go wrong. This is a standard setup found anywhere from the biggest tech companies to a small-town grocer.
Blockchain is different, working through a mechanism known as shared consensus. In simple terms, this means that rather than having one entity in charge — like a company or board — all platform participants can propose and effect change. Information is broadcast network-wide, and anyone can access and verify it in real-time without any need for third-party confirmation. It dramatically decreases transaction times, lowers transaction costs and has been described as a revolutionizing force for industry.
But as amazing as all of that sounds, the reality of blockchain — particularly for business — isn’t so simple. One problem, for example, is governance.
Blockchain is a relatively new technology with no predetermined governance structure. As a result, startups and industry-wide initiatives alike have all emerged with their own governance solutions, each with resulting problem-points. The most common tend to come from three essential questions: how networks engage with competitors, how regulators are involved and how they should size their voting base.
Competition, Consortia and Antitrust
Many industry-wide blockchain initiatives have emerged with the simple principle of: If I’m going to take a chance on this technology, I’m not doing it alone. Consortia such as MOBI, BiTA and the Global Shipping Business Network are all comprised of industry competitors working together to uncover how this potentially revolutionary technology can streamline their businesses. R3, too, was originally founded as a consortium of banks. This trend is only continuing; before 2016, only an average of four blockchain consortiums were added per year — there were 65 added in 2018.
Unfortunately, consortia can also raise antitrust concerns. Especially in the maritime space — which includes cargo shipping and transport logistics — consortia have faced grilling by lawmakers to ensure that they don’t take up too much market share. This is due to the concentrated nature of the industry, where, as an example, 65% of the containerized shipping market is covered by just five players.
The worries are valid — too much concentrated power can yield results like the manipulation of technical standards and use of blockchain as a vehicle for collusion. On the other hand, if success in an industry hinges on a single platform controlled by a limited number of players, then gatekeeping could become an issue. As the OECD points out, consortia could exclude or raise costs for outside rivals and allow firms to soften price competition.
This then poses a paradox for consortium members — how can they ensure total inclusion of other competitors without becoming a monopoly? There is no easy answer to this question, but companies should be aware that it could become a problem.
What’s the right level of regulator engagement?
Another area of focus lies in regulator engagement. Right now, one of the most high-profile blockchain stories surrounds issues with the cryptocurrency, Libra, at the regulatory level. The U.S. government has already called for its development to be halted until after regulators have examined it more closely. Outside of the U.S., representatives from the European Central Bank, the Bank of England, India and even China have already voiced their concerns.
These regulators — understandably — want to gauge Libra’s likely impact and its developer’s intentions. Furthermore, if Libra succeeds, that just means it’ll be subject to even more rules, like the Principles for Financial Market Infrastructures set by the Bank for International Settlements and the International Organization of Securities Commissions.
And therein lies the problem: Blockchains and cryptocurrencies must abide by the laws of where they’re located. The challenge, though, is that regulators themselves are still learning about blockchain. Such a nascent industry has a great deal of conflicting, confusing and even misleading information. As a result, officials could unintentionally impose laws that stifle growth, or — as in the case of Libra — threaten to halt initiatives as a whole. To ensure the success of their projects, firms and consortia must take an active role in helping to engage and educate regulators about blockchain and the industry impacts of their policies.
Too many players
For blockchain applications, the issue of internal governance has also proven a very tricky problem to solve, specifically regarding how decentralized a decentralized platform should be.
Let’s see what happens where there are too many players. Here, Bitcoin is a useful case study.
Bitcoin update proposals are submitted by core developers and subject to a community vote. This sounds pretty centralized, but it’s important to note that there are over 300 Bitcoin core contributors, and upgrades require a 95% consensus from miners.
So, when it comes time to vote on important platform decisions, consensus can be near-impossible to achieve. The clearest example of this comes from 2015, when it looked like bitcoin transaction sizes would exceed the hard cap of 1MB per block. Those aforementioned developers proposed many solutions, ranging from Bitcoin XT to a 17.7% annual block size increase to a 2MB “emergency” increase. Some developers thought it would just be best to leave the block size the way it was, and others suggested a lightning network or the creation of sidechains.
But despite all these proposals, the limit never changed. Bitcoin’s average block size today has actually exceeded the 1MB cap, and though miners have been able to skirt around shutdowns for now, it’s only a temporary Band-Aid, and Bitcoin’s core has not changed.
Not enough players
Now let’s contrast this with too few decision-makers.
Two years after all that, a cryptocurrency called Tezos emerged that promised a solution to all of Bitcoin’s governance problems. It would implement something called “on-chain voting,” and give the users of the currency, not just miners and developers, a say in what happens to the coin’s protocol. Tezos’ two founders were able to raise a whopping $232 million to launch their coin, but before it could even be deployed, its development team was torn apart by infighting. The two founders of the currency were pitted against the holder of all the fundraising proceeds. These three leaders couldn’t agree on how much power and responsibility they would share, and as a result, the launch of the coin was delayed for more than a year after its ICO.
From here, it becomes clear that blockchain is not immune to issues that plague traditional businesses; namely, that the size of the governing body can either become too cluttered to function efficiently, or is not large enough to accommodate internal strife.
Some takeaways
For all the disruptive potential of decentralization, blockchain can suffer from old problems. Governance models for distributed platforms vary dramatically, and each one has its own shortcomings. Consortia, though they provide excellent ways to usher in industry-wide development, face a hard antitrust problem. Government oversight is a difficult subject, as a lack of understanding means projects are in danger of being shut down by regulators. And both the Bitcoin and Tezos examples show that all the efficiencies of blockchain can be undercut by the very decentralization that makes it appealing.
What is clear is that while distributed digital architecture that has the potential to revolutionize business today as we know it, because of the newness of this technology and the rapid pace at which it’s growing, there are still plenty of hurdles it has to overcome. Blockchain could, one day, disrupt the business environment as we know it, but that’s only if it can get over its biggest stumbling block — governance.
Related themes: Blockchain Regulation
The original Brink’s article can be read HERE.
Alisa DiCaprio
Head of Research and Global Trade Strategy at R3
Alisa DiCaprio is the head of research and global trade strategy at R3. Previously she was with the Asian Development Bank working on trade and digitization.
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Jacqueline Yang
Researcher at R3
Jacqueline Yang is a researcher at R3, where she focuses on blockchain applications in supply chain management and logistics.
VCCI conducts “Short Term Trade Finance and International Trade” in partnership with CACCI, ICC CR
Vietnam Chamber of Commerce and Industry (VCCI) in partnership with CACCI and International Chamber of Commerce Czech Republic (ICC CR), conducted a workshop on “Short Term Trade Finance and International Trade” on April 17-18, 2019 in Hanoi and Ho Chi Minh City, Vietnam. Pavel Andrle from ICC CR led the workshop attended by over 350 […]
VCCI conducts “Short Term Trade Finance and International Trade” in partnership with CACCI, ICC CR
Vietnam Chamber of Commerce and Industry (VCCI) in partnership with CACCI and International Chamber of Commerce Czech Republic (ICC CR), conducted a workshop on “Short Term Trade Finance and International Trade” on April 17-18, 2019 in Hanoi and Ho Chi Minh City, Vietnam.
Pavel Andrle from ICC CR led the workshop attended by over 350 participants from 150 businesses (import-export companies, banks, and lawyers among others). He covered practical aspects of using documentary credits from the importer´s and exporter side, as well as various forms of receivable finance such as factoring and supply chain finance.
The role of credit insurance was also explained, including new trends and developments in the area of continuing attempts of digitalization of trade finance. The afternoon session was focused on the ICC model sales contract and introduction to the new revision of Incoterms.
Experts from Vietnam International Arbitration Centre (VIAC) were also invited to share their experience on international contracts.
EU GDPR: A Look Back and Ahead
When the European Union’s General Data Protection Regulation (GDPR) took effect one year ago this week, on May 25th 2018, proponents of the new law promised a profound change in data privacy protection. The sweeping regulation has not disappointed. Here’s a quick look at where we are one year later. Open for Business […]
EU GDPR: A Look Back and Ahead
When the European Union’s General Data Protection Regulation (GDPR) took effect one year ago this week, on May 25th 2018, proponents of the new law promised a profound change in data privacy protection. The sweeping regulation has not disappointed. Here’s a quick look at where we are one year later.
Open for Business
The European Data Protection Board, which coordinates the EU’s data protection authorities, recently reported that regulators brought more than 200,000 cases in 31 countries and issued nearly 56 million euros ($62 million) in fines in the first nine months the GDPR was in effect. That tally includes a 50 million euro fine levied against one company that regulators claim inadequately advised customers about how it collected personal data from new customer accounts and subsequently used that data. (Given the company’s size, the fine did not approach the maximum possible 4 percent of its annual revenue.)
Perhaps more striking than the monetary value of fines imposed is the diversity of enforcement actions. Some cases involve traditional privacy concerns, such as the failure to encrypt or control access to personal data. Others demonstrate the GDPR’s broad scope.
In Poland, for example, regulators penalized a company that scraped data—mostly mailing and email addresses—from public sources because the company only provided notice passively in a statement on its website. In Austria, regulators fined a local business for performing excessive surveillance when its security cameras recorded people walking on the sidewalk outside the business. More recently, the European data protection supervisor announced that it would audit contracts between EU agencies and a major cloud vendor to make sure data transferred abroad by the vendor would be protected by GDPR standards.
These initial actions confirm that the GDPR carries many obligations well beyond data breach notification and that regulators are holding companies accountable. No penalties have come close to the much-discussed maximum fine of 20 million euros or 4 percent of annual revenue, whichever is greater. But companies can expect data protection authorities to be aggressive with their sanction powers, which are entirely new for some EU members, and expansive in their interpretation of data privacy rights.
Photo: Sean Gallup/Getty Images
Photo: A worker handling wires behind server and data storage devices. The European Union’s General Data Protection Regulation took effect one year ago this week.
Global Regulatory Momentum
Regulators intended for the reach of the GDPR to extend far beyond the EU’s borders, with the rights granted under it following wherever an individual’s data may sprawl. However, the GDPR has also prompted many nations to introduce comprehensive data privacy rules of their own. Brazil, India, Japan, Thailand, the U.S. and others have adopted laws with protections similar to those in the GDPR.
In the U.S., the California Consumer Privacy Act (CCPA) mimics the GDPR in many ways. It includes a broad definition of personal data; creates new rights for individuals to challenge how companies collect, protect or store that data; and applies to a broad range of companies. The CCPA also features the GDPR concept of the individual’s right to have personal data expunged (the “right to be forgotten”), an emphasis on providing clear consent notices, and the right to opt out of commercial sales of personal data. While changes to the CCPA are still being considered before it takes effect in 2020, other U.S. states have followed with similar proposals.
A consequence of this regulatory wave is the drive toward greater data localization—the practice of keeping personal data stored on devices or servers that are physically present in the territory where the data is generated. As many large technology companies have already discovered, transferring large amounts of data outside of the EU can quickly run afoul of GDPR requirements and prompt EU regulators to scrutinize the receiving jurisdiction’s data protection standards. Outside of the EU, some nations’ laws overtly require data localization.
These laws assert greater control over privacy, but they also present challenges for cloud solutions and data sharing practices intended to create greater flexibility and efficiencies. We can expect these challenges to provoke discussion about efforts to harmonize data protection standards globally. Ultimately, however, companies may incur substantial costs in order to bring their data use practices into compliance.
Implications for Technology
While the GDPR made a bold statement about the need to protect the individual’s right to privacy, businesses are quickly discovering that no policy exists in a vacuum.
Since its implementation, the GDPR has butted up against some law enforcement practices. German regulators, for example, have raised objections to the German Federal Police’s choice of body camerasbecause they store data in a cloud environment outside of the EU.
A more far-reaching situation has provoked debate about access to data of website registrants. That information, which is made available by the Internet Corporation for Assigned Names and Numbers (ICANN), is commonly known as WHOIS data. ICANN’s mission is to ensure that when a domain name is typed in, the associated webpage loads. As part of its mission, ICANN collects basic information on domain name registrants, such as names, mailing addresses, email addresses and phone numbers for administrative and technical contacts.
For decades, law enforcement, cybersecurity researchers and intellectual property owners used the WHOIS database to shut down illicit websites, stop spam and enforce copyrights. Since the GDPR took effect, however, public access to the WHOIS data has been blocked. Many in the cybersecurity field and in law enforcement have criticized the loss of this capability, and recently the U.S. Department of Commerce urged ICANN to find a solution that would allow third-party access for legitimate purposes.
The GDPR and similar privacy laws will also face challenges related to evolving technology. The growth and development of 5G networks, the Internet of Things and artificial intelligence all depend on greater connectivity and increased data sharing. The European Parliament recently issued ethics guidelines that identify AI as “a growing threat to the right of human beings to form their own opinions and take autonomous decisions.” The guidelines call for greater scrutiny of AI’s ability to “use personal and non-personal data to sort and micro-target people, to identify individual vulnerabilities and exploit accurate predictive knowledge.”
As AI evolves, however, it should help companies comply with privacy regulation by tracking the use and transfer of personal data. But there will be growing pains as the technology develops. Businesses should expect the EU to take an active approach to AI’s consumption and processing of personal data, especially when that processing distinguishes individuals based on race, gender, political beliefs or any other sensitive category, even where the consequences are unintentional.
More Work Lies Ahead
The enactment of the GDPR marked a titanic shift for data privacy, signaling the start of more aggressive privacy oversight and enforcement in an era of rapidly advancing technology.
Thousands of GDPR actions are currently pending, and organizations should expect EU regulators to continue to aggressively pursue instances of noncompliance.
The GDPR has brought regulatory momentum to other regions, including the U.S. The standards being enacted are not uniform, and companies may struggle to comply where privacy regimes conflict. In addition, the evolution of technology will have privacy impacts that will challenge many organizations.
The combination of these factors creates the potential for a hydra-like cyber risk for businesses. Risk professionals should prepare for the potential pitfalls that lie ahead by consulting with their advisers and insurance brokers about evolving regulatory standards and changing technology and adopting insurance policy terms and conditions to address their organizations’ widening exposures.
Related theme: Cybersecurity Regulation
Matthew McCabe
Senior Vice President and Assistant General Counsel on Cyber Policy at Marsh
Prior to joining Marsh, Matthew McCabe served as senior counsel to the US House of Representatives Committee on Homeland Security. He previously served in the administration of President George W. Bush as a policy director on the Homeland Security Council.
How the C-Suite Can Fight Back Against Cyber Threats
The original version can be read at the Brink website here.
Promises & pitfalls of 5G Technology
In December, the Federal Communications Commission will undertake the largest spectrum auction in U.S. history—putting 3.4 GHz of airwaves on the market to free up space for 5G communications. As the next generation in wireless technology, 5G promises to boost data speeds by up to 100 times, making it competitive with the fastest wired broadband […]
Promises & pitfalls of 5G Technology
In December, the Federal Communications Commission will undertake the largest spectrum auction in U.S. history—putting 3.4 GHz of airwaves on the market to free up space for 5G communications.
As the next generation in wireless technology, 5G promises to boost data speeds by up to 100 times, making it competitive with the fastest wired broadband networks. In April, the White House planted an official stake in the 5G race, with President Donald Trump calling it a “big deal,” as it will change the way Americans work, learn, communicate and travel.
A lot of expectations are riding on 5G—and for good reason. The Knowledge@Wharton radio spoke to business and economics professors for their perspective on 5G technologies, and the risks and opportunities involved.
Photo: Sean Gallup/Getty Images
A traffic light shows red under a cellular phone tower that stands on top of an office building in Berlin, Germany. What are the implications of the introduction of 5G technology?
Will Augmented Reality Finally Have Its Day?
A potential killer app for 5G is augmented reality (AR), according to Jeffrey Reed, Virginia Tech professor of electrical and computer engineering and founding director of Wireless@Virginia Tech. That means “being able to superimpose on your field of view augmentation that may explain the things around you,” he said. “That could have a very dramatic effect, impacting everything from tourism to education.”
5G can supercharge AR and virtual reality by placing “virtual items, virtual characters and augmented contextual information” in TV shows and movies or even projecting 3D holographic displays, according to the 5G Economics of Entertainment report by Intel and Ovum.
But the cold reality is that a fully functioning 5G future is still a long ways away.
“5G is called 5G because it is the fifth generation of wireless technology, and so, obviously, there were four prior generations,” said Kevin Werbach, a Wharton professor of legal studies and business ethics who used to work for the FCC.
Mr. Werbach added, “These are things that evolve and develop and get implemented over a long period of time. They involve extensive standards work in the industry; they involve extensive deployment work.” Even the FCC’s plans took time. “All of these spectrum auctions for the high frequency spectrum to be used for 5G have been in the works for a long time,” he said.
Only Viable over Short Distances
5G can use any band of spectrum, but it thrives in the extremely high frequency range of 30 to 300 GHz, compared to today’s cellphones that are in much lower bands. But a key drawback is that these signals travel only short distances. The wavelengths in this band range from 1 mm to 10 mm—the FCC’s December auction is called the millimeter wavelength auction—so these can’t reach very far and are easily degraded.
Because millimeter wavelengths are short, they need more antennas to connect. “One of the things that 5G requires is a much denser network,” Mr. Werbach said. “You need many more nodes. That is partly how the capacity increases, which means either more towers or more cells in more places. You need equipment that is running on those cell sites, and then you need chips that go into people’s handsets and devices.”
At least, the 5G antennas are small and can be installed easily on top of telephone poles and other locations, according to Gerald Faulhaber, professor emeritus of business economics and public policy at The Wharton School.
5G is feasible mainly for more populated areas, where many antennas can be placed close together. This brings another challenge: the widening of the digital divide.
Will It Increase the Digital Divide?
Because it requires density, 5G is feasible mainly for more populated areas, where many antennas can be placed close together.
“The nature of the infrastructure is that it works in dense areas; it doesn’t work as well in other areas,” Mr. Faulhaber said. “Will there be 5G in [rural areas]? The answer is yes, but it won’t be over these high-frequency antennas. It will be basically where 4G is today, so you won’t get the high-capacity [service].”
This brings another challenge: the widening of the digital divide by geography.
“It is a real problem,” Mr. Werbach said. “There are still too many Americans who don’t have broadband service and many more who have inferior quality broadband service.” The reality is it’s “harder and more expensive to provide wireless service and wireline service in rural and hard-to-reach areas.” While the FCC has set aside $20 billion to expand broadband access in rural areas, he said, the commission was short on details and where the funds would actually come from.
Major Telecom Investment
Telecom companies and other providers will have to invest billions to make 5G a reality—not only to buy more spectrum, but also to build out the infrastructure. Because it’s yet uncertain how much revenue 5G will bring, for now, the most prudent path for telecom firms is to upgrade the capacity of their 4G networks by reclaiming airwaves allocated for 2G and 3G. But there will come a time when these tactics won’t be enough.
Historically, data traffic rises by 20 percent to 50 percent a year, and 5G could put the traffic increases at the higher end of that range. That means most telecom companies will have to embark on a major expansion between 2020 and 2025. And to handle higher traffic, carriers have to install fiber in their wired networks, where wireless connects to the Internet. “It’s rather ironic that the projected performance goals of 5G wireless will depend on the availability of wireline fiber,” an executive at telecom equipment maker Ciena said.
At least, 5G standards have been finalized by the 3GPP, an international group whose members work together to develop cellular standards. These are standards that networks must meet to be considered 5G.
5G Hype and China’s Huawei
Politics also influence the U.S. carrier adoption of 5G. The government has security concerns about using 5G telecom equipment from China’s Huawei because of fears over spying. Huawei is the world’s largest maker of telecom equipment, including the equipment needed for 5G.
Huawei became a colossus, and “a key reason for that is they produce very inexpensive equipment. It is much cheaper than [that of] their European competition,” Mr. Reed said. Huawei doesn’t have any U.S. competition, because U.S. infrastructure providers left the business about 20 years ago, he added.
Today, Europe and other parts of the world are customers of Huawei. Britain and Germany specifically are resisting pressure from the U.S. to stop using Huawei. Their carriers have used Huawei in their networks for years, so “for them, it is very difficult to say … ‘rip it all out and go find someone else,’” Mr. Werbach said. “They’re just not going to do it.”
Mr. Reed added: “Even though a security threat exists with Huawei, companies tend to look the other way to maximize profits, lower costs.” As for security, “that’s way down on their list,” Mr. Reed said.
Mr. Werbach explained that the U.S. can’t address these security concerns by merely saying it will not use this equipment. It has to be more proactive. “We need to invest in companies in the U.S. and bring trust around the world that, for example, the U.S. is not putting similar kinds of back doors into equipment made by U.S.-based service providers.”
This piece first appeared in Knowledge@Wharton.
Related themes: Cities Cybersecurity Infrastructure
Knowledge@Wharton at the Wharton School of the University of Pennsylvania
Making Way for Generation Z in the Workplace
The original article can be read at Brink website here.
Electricity Grid Cybersecurity Will Be Expensive. Who Will Pay, and How Much?
Photo: David McNew/Getty Images (Photo: A figure looks at the dynamic map board showing power distribution through California’s electrical grids in Los Angeles, California. People rarely consider whether they’re paying the right amount to ensure that the lights come on when they’re needed.) Recently, a neighbor asked one of us whether Russia, China, North Korea […]
Electricity Grid Cybersecurity Will Be Expensive. Who Will Pay, and How Much?
Photo: David McNew/Getty Images
(Photo: A figure looks at the dynamic map board showing power distribution through California’s electrical grids in Los Angeles, California. People rarely consider whether they’re paying the right amount to ensure that the lights come on when they’re needed.)
Recently, a neighbor asked one of us whether Russia, China, North Korea and Iran really are capable of hacking into the computers that control the U.S. electricity grid. The answer, based on available evidence, is “Yes.” The follow-up question was, “How expensive will it be to prevent, and who will end up paying for it?”
The answers are: Likely tens of billions of dollars, and probably us, the electricity customers. This is a major—and, in our view, vital—investment in community and national security. But as scholars of grid cybersecurity, we understand it’s not very clear what consumers will be getting for their money, nor whether utility companies themselves should bear some share of the cost.
In the U.S., the electricity grid is a ubiquitous system that’s highly reliable. Most consumers expect the lights to turn on when they flip the switch and don’t think much more about it—except when paying the monthly bill.
Electric power companies’ high levels of performance depend on interconnected computer systems, which are vulnerable to cyberattacks. Hackers took down portions of Ukraine’s electricity grid in 2015 and 2016, cutting power to hundreds of thousands of people. U.S. officials regularly report that foreign agents are working to infiltrate critical infrastructure systems, like computers that control the power grid. An as-yet-unspecified cyber event affected the power grid in California and Wyoming in March 2019, according to the U.S. Department of Energy.
While media coverage and neighborly conversations have increased public awareness of the risks to the grid, most people’s thinking hasn’t changed much. People regularly evaluate how much they pay for car insurance, whether they need to buy life insurance, what the risks are of a recommended medical procedure or whether they feel safe flying. But they rarely consider whether they’re paying the right amount to ensure that the lights come on when they’re needed.
It can be difficult even for experts to keep track of all the potential risks to the grid, an interconnected set of industrial control systems. There are big threats from very rare events, like massive solar flares. And there are relatively minor threats from nearly certain incidents, like trees falling on wires. In between are cybersecurity concerns—which themselves can range from one individual hacker playing around to a national government orchestrating intrusion attemptsinto the national grid.
Now consider how much we, as consumers of a utility service, might be willing to pay to protect against those dangers. Making a system more secure and reliable costs money, but often the economic benefits are hard to quantify. How much was saved by preventing a citywide blackout? Was it worth millions—or billions—of dollars invested in protection? Even if that could be calculated, it’s not easy to communicate effectively to the public, who regularly face many difficult choices about where to spend their limited money.
Recouping the Costs
Collectively, utility companies in the U.S. are already planning to spend billions of dollars a year on grid cyber defenses. Those investments will include securing locations and equipment, improving the security of the utility supply chain, and continuous training and workforce development. This spending in turn brings up another complication: Most electricity utilities are highly regulated by the government, so they have to provide a certain level of service and spend money on required compliance activities. In return, those utilities are permitted to recover a certain return on their investment.
When utility companies’ costs rise, they typically ask for permission from regulators to raise the prices they charge customers. What those customers can ask for, and in our view, what regulators should insist on, is clear information about what those charges will be paying for.
Right now, there is ongoing research exploring what the best practices are for cyber defense of public utilities, but there is only limited useful information about what those measures should cost. Ultimately, consumers can reasonably expect to shoulder some of the cost—but should get as much information as possible about the benefits that will result from the rates they’re paying.
This article, which was previously published by The Conversation, was written in collaboration with Wei Chen Lin of the Illinois Commerce Commission.
Related themes: Cybersecurity Disruption Infrastructure
Manimaran Govindarasu
Professor of Electrical and Computer Engineering at Iowa State University
Manimaran Govindarasu is currently the Mehl Professor of Computer Engineering in the Department of Electrical and Computer Engineering at Iowa State University. He received his Ph.D degree in Computer Science and Engineering from the Indian Institute of Technology (IIT), Chennai, India, and has been on the faculty of Iowa State University since 1999.
Dominic Saebeler
Adjunct Instructor of Business Administration at University of Illinois at Springfield
Dominic Saebeler is the Director of Cybersecurity and Risk Management at the Illinois Commerce Commission. He is also an Adjunct Instructor in the Department of Business Administration at the University of Illinois at Springfield.
The original Brink’s article can be read HERE.
Kowloon CC invites CACCI members to 125th Canton Fair
Hong Kong – The Kowloon Chamber of Commerce (KCC) is inviting CACCI members to participate in the 125th Canton Fair to be held from April 15 to May 5, 2019 in Guangzhou, China. The Canton Fair (also known as the China Import and Export Fair) is an international exhibition organized jointly by the Ministry of […]
Kowloon CC invites CACCI members to 125th Canton Fair
Hong Kong – The Kowloon Chamber of Commerce (KCC) is inviting CACCI members to participate in the 125th Canton Fair to be held from April 15 to May 5, 2019 in Guangzhou, China.
The Canton Fair (also known as the China Import and Export Fair) is an international exhibition organized jointly by the Ministry of Commerce of the People’s Republic of China and the People’s Government of Guangdong Province.
During the 125th Canton Fair, the KCC and the Canton Fair Hong Kong Representative Office will jointly organize a four-day tour to visit the fair, Guangzhou and nearby cities to learn about the Canton Fair and Lingnan culture from different angles. Participants are expected to increase their understanding of China’s reform and opening-up, economic development, and will be able to explore business opportunities to promote economic and trade cooperation between the Belt and Road countries/regions and China.
Interested CACCI members can download further information and the registration form about the 125th Canton Fair HERE.
For additional information, please contact Ms. Chen Min from the KCC via e-mail at chenmin@hkkcc.org.hk or telephone at +852 2760 0393.
Invitation to Cebu Business Month Innovation Expo on June 12-14
The Cebu Chamber of Commerce and Industry (CCCI) is inviting CACCI members to the Cebu Business Month (CBM) 2019 Innovation Expo on June 12 to 14 at the Waterfront Cebu City Hotel and Casino. The CBM is one of CCCI’s flagship projects held annually in order to inspire, promote and grow Cebu business by gathering […]
Invitation to Cebu Business Month Innovation Expo on June 12-14
The Cebu Chamber of Commerce and Industry (CCCI) is inviting CACCI members to the Cebu Business Month (CBM) 2019 Innovation Expo on June 12 to 14 at the Waterfront Cebu City Hotel and Casino.
The CBM is one of CCCI’s flagship projects held annually in order to inspire, promote and grow Cebu business by gathering industry stakeholders in a month of relevant businesses and projects in the following areas: tourism, information & communications technology/business processing management (ICT/BPM) and entrepreneurship.
CBM provides a platform for the chamber to boost its connection and collaboration established with new and existing partners, thereby, creating and strengthening linkages among the key players in the global market place.
CBM is celebrating its 23rd year in June 2019 with the theme “Innovation in Action.” The three-day event shall feature the following:
- Conference with High-powered Speakers who will share & discuss success stories, Live Cases or Breakthrough Ideas and ENTREP-ICT SOLUTIONS
- Break-out Sessions
- 3-IN-ONE Expo with an International Pavilion for Tourism/Travelmart, Entrepreneurship and ICT-BPM Thrusts. The event will be open to the public.
- Business forums, networking, B2B business matching
- Exhibitors presentation area at the Grand Ballroom Staging Area (to be arranged with Organizer)
For more information or registration, please email the CCCI through secretariat@cebubusinessmonth.com
Greetings from the 11th World Chambers Congress
Rio de Janeiro – The ICC trusts that you’ve had an opportunity to learn about our upcoming 11th World Chambers Congress, the largest international gathering for chambers of commerce and their business members, from our news feeds. Need guidance or more information? The Congress team is here for you. Don’t hesitate to contact them. Register […]
Greetings from the 11th World Chambers Congress
Rio de Janeiro – The ICC trusts that you’ve had an opportunity to learn about our upcoming 11th World Chambers Congress, the largest international gathering for chambers of commerce and their business members, from our news feeds.
Need guidance or more information? The Congress team is here for you. Don’t hesitate to contact them.
Register now and until 28 February to benefit from our early bird offer.
Looking forward to hearing back from you and #SeeYouInRio!
Best regards,
Julian Kassum
Global Membership & Services Director
Deadline extended for submission of nominations for the 2019 World Chambers Competition
Rio de Janeiro – CACCI wishes to inform Primary and Affiliate members that the deadline of submission of nominations for the 2019 World Chambers Competition has been extended to give all chambers the opportunity to send their innovative projects. The new deadline is on February 15, 2019. The 2019 World Chambers Competition will be held […]
Deadline extended for submission of nominations for the 2019 World Chambers Competition
Rio de Janeiro – CACCI wishes to inform Primary and Affiliate members that the deadline of submission of nominations for the 2019 World Chambers Competition has been extended to give all chambers the opportunity to send their innovative projects. The new deadline is on February 15, 2019.
The 2019 World Chambers Competition will be held in conjunction with the 11th World Chambers Congress scheduled to take place on June 12-14, 2019 in Rio de Janeiro, Brazil.
If your Chamber is interested to participate, please click HERE.
KCC Officers forge links with IEAT
Taipei – Secretary-General Mr. Peter Huang of the Importers and Exporters Association of Taipei (IEAT) (4th from right, left photo) received key officers of the Kowloon Chamber of Commerce (KCC) during the latter’s visit to Taipei on January 25. KCC Permanent Chairman Mr. Conrad Lee (3rd from left), KCC Vice Chairman Mr. Ernest Yuen (4th […]
KCC Officers forge links with IEAT
Taipei – Secretary-General Mr. Peter Huang of the Importers and Exporters Association of Taipei (IEAT) (4th from right, left photo) received key officers of the Kowloon Chamber of Commerce (KCC) during the latter’s visit to Taipei on January 25. KCC Permanent Chairman Mr. Conrad Lee (3rd from left), KCC Vice Chairman Mr. Ernest Yuen (4th from left) and KCC Vice Chairman Mr. Wyler Wong (2nd from left) formally – accompanied by CACC Director-General Mr. Ernest Lin (leftmost) – introduced KCC to IEAT and exchanged ideas on possible areas of cooperation between the two business associations. They agreed to formally sign a Memorandum of Understanding (MOU) during the next visit of the KCC officers to Taipei soon.
Nepal Investment Summit – March 29-30 in Kathmandu
Kathmandu – CACCI members are invited to Nepal Investment Summit (NIS) on March 29-30, 2019 at Soaltee Crowne Plaza in Kathmandu. The Summit aims to promote Nepal as a promising investment destination and brings together high-level government authorities, leading business executives from across the globe, senior officials of the international financial institutions, representatives of global […]
Nepal Investment Summit – March 29-30 in Kathmandu
Kathmandu – CACCI members are invited to Nepal Investment Summit (NIS) on March 29-30, 2019 at Soaltee Crowne Plaza in Kathmandu.
The Summit aims to promote Nepal as a promising investment destination and brings together high-level government authorities, leading business executives from across the globe, senior officials of the international financial institutions, representatives of global lending agencies, national and international experts, non-resident Nepalis and international development partners.
The two-day event is organized by the Office of the Investment Board of the Government of Nepal, with the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Confederation of Nepalese Industries, and Nepal Chamber of Commerce as co-organizers.
To be inaugurated by the Prime Minister of Nepal, the Summit will be addressed by prominent leaders from political, business and financial sectors. It will hold plenaries and breakout thematic sessions, covering various components such as policy environment, sector-specific potential investment areas, and experience sharing of investors, among others. The Summit will also provide a platform for foreign investors to interact with the representatives of Government agencies and domestic business representatives to explore business opportunities in Nepal.
Brochure of the Summit can be downloaded HERE:
Please visit Investment Summit Nepal for more information or email to 2019@investmentsummitnepal.com