How Persistent Inflation Is Causing Procurement to Adapt

It has been almost two years since the first signs of inflation, ignited by the COVID-19 pandemic, began appearing across the global industrial landscape. From the summer of 2020 through late 2021, prices rose steadily across the board — on everything from raw materials to labor.

Since then, conditions have begun to moderate. Most nations are lifting pandemic-related mandates, and the massive labor shortages that plagued companies in 2020 and 2021 are starting to subside. The one major exception, of course, is China where full-lockdown conditions akin to 2020 have returned, following recent COVID variant outbreaks.

In the United States, for example, rising wages and the phaseouts of foreclosure moratoria and extended unemployment insurance have coaxed more people back to work. Unemployment in March was just a tenth of a percentage point above its level in February 2020. The labor force participation rate, which measures the percentage of the population either working or actively looking for work, was 62.4% in March, up from a multidecade low of 60.2% in April 2020. While that isn’t quite back to the pre-pandemic level of 63.4% recorded in February 2020, the trend is clear.

Photo: Unsplash

Aggravated by Geopolitical Conflict

What hasn’t reversed is inflation, particularly in raw materials prices. For many commodities, the world is dealing with successive and excessive increases that have, in some cases, doubled or even tripled the prices. While the increases were initially fueled by COVID-related supply chain disruptions and the rapid rebound in economic activity in 2021, they were driven even higher by the Russian invasion of Ukraine on February 24. For example, as Russian tanks rumbled across the border, the cost of plastic spiked — 71% above its pre-pandemic level in the United States and 112% higher in Europe. Today, U.S. steel prices are 76% higher than in March 2020 and 184% higher in Europe. On the London Metal Exchange, spot prices for aluminum were 98% above March 2020 levels.

Although the global economy remains very much in flux, companies with unwavering focus can identify and capture the opportunities bred by the current supply chain scramble.

Perhaps no single commodity tells the global economy’s inflationary tale of woe more than overseas shipping container rates. As measured by the Freightos Baltic Index of China/East Asia to Northern Europe, these rates jumped an astounding 822% higher than they were on the eve of the pandemic. Simply put, while labor shortages are showing signs of easing in some sectors, raw materials prices aren’t anywhere close to normalizing. Obviously, the implications of such unrelenting inflation are enormous for businesses trying to get on an even keel.

Yet, uncertainty breeds opportunity, and today’s mixed-bag economy is opening opportunities that companies should be more willing to exploit rather than take a wait-and-watch approach. Some of the biggest openings for an innovative business approach will come on the value-add side of manufacturing, where companies can tap their growing workforces to optimize cost structures.

Exploiting the Value-Add

In today’s seemingly chaotic but value-rich sourcing environment, the biggest key to success will be in drawing the distinction between purchased items with meaningful value-add steps and components that are 80% or more raw material-dependent. Examples of components with meaningful value-add steps include plastic and aluminum extrusions, stamped or machined metal parts, molded plastic products, motors, fans, and other semi-finished goods. Raw material-dependent components include steel wire rod, plastic resin, metal ingots, and other items.

In the current environment, cost structures of components with higher value-add steps have been somewhat insulated from wild raw material price fluctuations, given that raw materials generally comprise no more than 15% of the total cost of the component. In contrast, heavy raw material-dependent components have been susceptible not only to continued rising prices but also to extreme swings, which have made planning difficult.

In addition, many previously “underrepresented” markets have gained meaningful share from the more established raw material markets. For example, several types of lumber and wood products like furniture, previously thought of as a stronghold for Chinese and East Asian products, are now being sourced from Eastern Europe at a growing rate. The massive hike in ocean shipping rates from Asia has made European and U.S. suppliers significantly more cost competitive. Of course, the conflict in Ukraine might change the dynamics when it comes to Europe.

Capitalizing on Variables

The COVID-19 outlook in China remains the biggest variable on the supply chain front, while the conflict in Ukraine holds the potential to cause continued price increases of many raw materials and energy, particularly in Europe.

Private capital investors and operators need to act now to seize value-creation opportunities centered on optimizing the costs of procured materials while simultaneously identifying potential acquisition targets with true latent value.

Although the global economy remains very much in flux, companies with unwavering focus can identify and capture the opportunities bred by the current supply chain scramble.

This article was made possible with the support and insights from Tushar Narsana and Karina Swette.

Apurva Nair
Partner at Oliver Wyman

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

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

ACCI welcomes closer economic ties with India

The Australian Chamber of Commerce and Industry (ACCI) welcomes the Morrison Government’s continuing focus on strengthening economic ties with India, the world’s largest democracy.

As a member of the International Chamber of Commerce (ICC) and Business at the OECD, ACCI plays an active role in advocating on behalf of Australian business for open markets and private sector-led growth.

“Given local businesses have been hard hit by COVID, now is the perfect time to continue to bolster economic relations with India and work towards finalising a comprehensive Free Trade Agreement (FTA) as soon as possible” ACCI CEO Andrew McKellar said.

“What we know is that our high-quality Australian made products are in demand overseas and a free trade agreement with India would make it easier and more accessible for local enterprises to sell their products to one of the world’s largest and fastest growing economies.”

“We welcome the Government’s efforts in launching the three Maitri initiatives allowing high achieving Indian talent to study in Australia, supporting professionals to collaborate on research and boosting the role of creative industries. These initiatives continue to build the groundwork for an FTA.”

“The renewal of the Australia-India Memorandum of Understanding on Tourism Cooperation is also a step in the right direction.”

“Even though our international border is opening on 21 February, what was previously our biggest source of tourists, China, remains largely closed due to outbound travel restrictions so it is important that we look to diversity our tourism sector so that it can open and continue to operate.”

“Over 300,000 Australian tourism businesses and their 700,000-strong workforce are set to benefit in growing our tourism relationship with India.”

“The immediate removal of the import tariff on Australian lentils is also a welcome and important move. Many farmers will reap significant benefits from this new trade condition given they saw a record grain harvest this year.”

“Two-way trade with India was worth over $24 billion in 2020 and in the five years before the pandemic this two-way trade and investment doubled. A free trade partnership between our two countries would work to further cement our strong and growing trade relationship.”

“As we have seen with other free trade deals, this would not only benefit Australian businesses but individuals as well through increased job opportunities.”

ACCI Newsroom

Cyber Disaster Risks Are Mounting

As the U.S. kicks off the 2022 hurricane season, another potential disaster looms large. With the Russian invasion of Ukraine and other ever-present the criminal and terrorist threat actors, the risk of a cyber disaster is mounting. Meanwhile, those responsible for responding to such a disaster remain largely focused on “traditional” disasters.

As the head of the U.S. Department of Homeland Security agency responsible for managing these risks, Cybersecurity & Infrastructure Security Agency (CISA) Director Jen Easterly described the threat landscape and identified potential targets in a recent 60 Minutes interview. “We are seeing evolving intelligence about Russian planning for potential attacks. And we have to assume that there’s going to be a breach. There’s going to be an incident. There’s going to be an attack.” Director Easterly identified the energy and finance sectors as particularly likely targets.

Most assume cybersecurity to be the domain of technology professionals. As Carolyn Harshman, president of the International Association of Emergency Managers told me: “Too often, cybersecurity is thought of as a business continuity or IT issue.” The reality is that those on the front lines of managing the physical consequences of a cyber disaster would be the same who respond to hurricanes, tornadoes and floods. “These are the emergency managers at all levels of government and the first responders in each of our communities,” said Harshman.

Recall the ice storm that crippled the electric grid in Texas last year. The cold weather exacerbated the power loss, as those impacted struggled to stay warm and care for themselves and their families. Imagine instead it was a cyberattack that caused the disruption. The consequences would be the same, or worse. Such an attack could be timed to coincide with high energy demand, such as the summer months when health risk from heat is highest. Thousands could die if timed for greatest impact.

Just as emergency managers and first responders prepare for “traditional” disasters, so too must they prepare for cyber disasters.

Photo: Getty Images

Pandemic Lessons

Not only is the cyber threat real, but a seemingly unrelated disaster demonstrates why preparing for a cyber disaster should be a priority. The pandemic has yielded lessons that a cyber preparedness plan should include.

First, the pandemic exposed vulnerabilities in many sectors. From inadequate security safeguards for largely remote workforces to supply chain shortages of critical technologies, COVID demonstrated the potential shortfalls in the nation’s ability to protect itself from future cyberattacks. These vulnerabilities could amplify any impacts from an attack, thereby complicating a response to the physical consequences of a cyber disaster.

Second, the pandemic forced the cancellation of a major cyber exercise that we had spent years planning at the Federal Emergency Management Agency (FEMA). National Level Exercise 2020 (NLE 2020) would have been the nation’s largest cyber exercise. Without it, the realistic scenario it envisioned was not tested, and the gaps it would have likely exposed have not been closed.

Americans are ill equipped to defend against the increasing sophistication and volume of cyberattacks.

Third, the pandemic also laid bare the challenges facing emergency managers as “all hazards” practitioners. Just as many mistakenly believed early in the pandemic that COVID was a health emergency and only belatedly realized the role of emergency managers, so too are catastrophic cyber incidents also almost certain to fall to emergency managers.

What Can Be Done?

What can be done to prepare those charged with protecting us from the consequences of cyber disasters? Much like a “traditional” disaster, preparing for future contingencies is critical. This should include core elements of preparedness such as planning, training, equipment and exercises.

Having overseen FEMA preparedness programs from 2017-2020, I directed an internal review of agency cyber preparedness program. In 2019, I publicly released our findings: “We offer over 20 online and in-person courses, focused on everything from network assurance and digital forensics, to information security and cyber incident response. Since 2004, FEMA has trained more than 87,000 federal, state, local, tribal and territorial officials on cybersecurity.”

Today, FEMA offers over 40 such courses. The challenge, says IAEM President Harshman, “is to ensure that emergency managers are aware of and have access to these courses.” Further, “Cybersecurity must be integrated into existing ‘traditional’ emergency management courses to ensure cyber response becomes a core competency of our profession.”

I also found during our earlier FEMA review that the agency had provided $165 million over 10 years to strengthen state and local government cyber preparedness. While it seemed substantial at the time, it pales in comparison to the overall need. Thus the $1 billion cyber grant program included in the recently enacted infrastructure law represents an unprecedented opportunity to bolster state and local preparedness for cyber disasters. FEMA and CISA are currently finalizing the grant guidance for the new program, which is anticipated to be released this summer.

To ensure a robust response should a catastrophic cyber disaster occur, a strong working relationship between the government agencies responsible for cybersecurity and disaster preparedness is necessary. At the federal level in the U.S., this is principally FEMA and CISA. When I was at FEMA, we made it a priority to collaborate with CISA. Whether it was grant guidance, exercises such as NLE 2020, or response planning, we worked with our sister DHS agency as partners. Going forward, such a partnership will be critical.

In a January 2022 position paper, the National Emergency Management Association (NEMA) stated that “questions abound relating to the federal government’s processes for responding to major cybersecurity attacks.” To address these concerns, the association representing state emergency management directors proposed an Integrated Program Office between FEMA and CISA to “coordinate all policy and response doctrine as it would apply to cybersecurity, critical infrastructure protection, and any other subject of shared interest.”

The same collaboration should be a priority at the state and local levels and with the private sector. State and local governments should pair their technical experts (Chief Information Security Officers), with their operational responders (emergency managers). And given that the vast majority of the nation’s critical infrastructure is owned by the private sector, this is not a challenge the government alone can solve. Strong partnerships between industry and all levels of government will be necessary to confront this threat.

Finally, at the individual level, we must all take our cyber responsibilities seriously. Brian Hastings, director of the Alabama Emergency Management Agency, told me “Americans are ill equipped to defend against the increasing sophistication and volume of cyberattacks.” Hastings, who also chairs the NEMA Homeland Security Committee added: “Humans are simultaneously the vulnerability, the target, the enemy, and the solution on the front lines making cybersecurity awareness, training, and education a shared responsibility and crucial to reducing our collective risk to attacks.”

Cyber Preparedness Must Be a Priority

A new RAND study finds that responding to a cyber disaster will likely be far more challenging than responding to a traditional disaster. Largely this is because of the nation’s inexperience with responding to catastrophic cyber incidents and thus officials must develop plans and test these capabilities before an incident occurs. The study provides yet more evidence that bolstering the nation’s cyber preparedness now should be a national priority.

Just as emergency managers and first responders prepare for “traditional” disasters, so too must they prepare for cyber disasters. Just because there isn’t a cyber disaster season, doesn’t mean it isn’t time to prepare now.

Related themes: CYBERSECURITY

Daniel Kaniewski
Managing Director, Public Sector at Marsh McLennan Advantage@dankandc

Daniel Kaniewski is the managing director of Public Sector at Marsh McLennan Advantage. Prior to joining the firm in February 2020, Dr. Kaniewski was the deputy administrator for resilience at the Federal Emergency Management Agency (FEMA). In this role he was FEMA’s second-ranking official and led the agency’s pre-disaster programs. He was unanimously confirmed by the U.S. Senate on September 14, 2017.

FEMA Could Be America’s Climate Adaptation Agency — What Is the Biden Administration Waiting For?

When a 100-Year Disaster Strikes

The Value of Disaster Planning Outweighs Its Cost — Sixfold

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

9 Takeaways From Davos

The annual World Economic Forum took place in Davos last week for the first time in three years. The high-profile gathering of corporate executives and politicians was smaller than usual and was held in May instead of January. Here are some of the highlights.

The managing director of the International Monetary Fund sought to dispel the gloom at the World Economic Forum, saying a global recession isn’t in the cards, but “it doesn’t mean it’s out of the question.” Kristalina Georgieva noted that the IMF expects economic growth of 3.6% for 2022, but acknowledged that it’s going to be a “tough year.”

A global buyers’ club of more than 50 companies, including Microsoft and Ford Motor, say they will buy “green” steel, aluminum and other commodities by 2030. The idea behind the buyers’ club, known as the First Movers Coalition, is to stoke demand for green versions of materials that have proved difficult to manufacture without significant carbon dioxide emissions.

The aviation industry, decimated during the pandemic, is rebounding strongly, said Hassan El Houry, CEO of National Aviation Services. He predicted the airline industry would return to pre-pandemic levels at the end of this year or the middle of next, earlier than airline industry group IATA’s forecast of 2025. “Almost every airline I speak with is reporting a huge rebound, especially for this summer and particularly in leisure travel.”

Klaus Schwab, founder of the World Economic Forum, introduces Ukrainian President Volodymyr Zelenskyy during the 2022 World Economic Forum Annual Meeting.

Photo: World Economic Forum/Sikarin Fon Thanachaiary via CC

Ukrainian President Volodymyr Zelenskyy says that his country will not give up land to end Russia’s war. Speaking by video link Wednesday, Zelenskyy said through a translator that “Ukraine is not going to concede our territory. We are fighting in our country, on our land.” Meanwhile, Henry Kissinger, the 98-year-old former secretary of state urged Ukraine to cede territory to make peace with Russia.

Cryptocurrencies … ‘are not currencies at all …they are speculative assets, the value of which changes enormously over the course of time … coin issuers should have to back up their coins with as many dollars as they have coins.’

The Chairman of Volkswagen, Herbert Diess, says Volkswagen is seeing a “clear improvement through summer” on the supply of microchips it needs for its vehicles. Audi board member Hildegard Wortmann said the VW-owned brand has its “highest level of orders at the moment,” but customers are facing wait times of about a year or more.

An international deal to force the world’s biggest multinational companies to pay a fair share of tax has been delayed until 2024, amid fresh wrangling over the painstakingly negotiated agreement. Mathias Cormann, the secretary-general of the Organisation for Economic Co-operation and Development (OECD) said he remained confident an agreement would eventually be implemented to let countries levy more tax on the world’s largest firms based on the sales generated within their borders.

Israeli President Isaac Herzog called on other nations to consider a “renewable Middle East” as a resource for sustainable food, water and energy solutions. He appealed for a new partnership with nations in Europe, Asia and Africa modeled in part on the economic agreements Israel has struck with four Arab nations. He said such new links would expand a “zone of understanding, despite wide gaps and conflicting narratives” about a surge in violence between Israel and the Palestinians.

The World Economic Forum has unveiled an initiative to develop the metaverse. The forum said that it will work with businesses, regulators, civil society and academic experts to help define and build the metaverse. The focus will be on governing the metaverse as well as how to create economic and societal value.

European Central Bank President Christine Lagarde criticized cryptocurrencies, saying that they “are not currencies at all …they are speculative assets, the value of which changes enormously over the course of time … coin issuers should have to back up their coins with as many dollars as they have coins. That needs to be checked, supervised, and regulated.” Lagarde’s latest comments come after she told a Dutch talk show: “My very humble assessment is that [crypto] is worth nothing, it is based on nothing — there is no underlying asset to act as an anchor of safety.”

Related themes: CLIMATE ADAPTATION INFLATION METAVERSE UKRAINE

Editorial Staff BRINK
Despite Progress, Food Insecurity Remains Key Global Challenge
U.S. Within 15 Years of Energy Independence

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

Global Insurance Pricing Increases in First Quarter 2022

Global commercial insurance prices rose 11% in the first quarter of 2022, marking the fifth consecutive reduction in rate increase since global pricing increases peaked at 22% in the fourth quarter of 2020.

It was, however, the eighteenth consecutive quarter that composite prices rose, continuing the longest run of increases since the inception of the Marsh Global Insurance Market Index in 2012.

Cyber insurance pricing continues to show significant rate increases — 110% in the U.S. and 102% in the U.K. for the quarter — and has driven up average pricing in financial and professional lines, globally.

Q1 2022 marks the fifth consecutive reduction in insurance rate increases since global pricing increases peaked at 22% in the fourth quarter of 2020. from their high in 2020.

Photo: Unsplash

The U.K. had the highest average increase, with composite pricing increases at 20%, down from 22% in the fourth quarter of 2021. Both the U.S. and Pacific also saw composite pricing increases in the double digits — 12% and 10%, respectively.

Latin America and the Caribbean was the only region to see its composite pricing increases rise, from 4% in the fourth quarter of 2021 to 6% in the first quarter of 2022.

All three major product lines showed increases in average pricing globally, though less than the prior quarter: financial and professional lines (26%), property (7%), and casualty (4%).

Cyber Claims and Systemic Exposure Concerns Escalate Financial and Professional Lines in US

The average rate of composite price increase in the first quarter of 2022 in the U.S. was 12% — a slight reduction on the prior quarter (13%). This again was driven by cyber insurance pricing.

Average property insurance pricing for the quarter increased 7%, as it did in the fourth quarter of 2021. Clients with significant losses, poor risk quality, or significant exposure to secondary catastrophe (CAT) perils — including wildfire, convective storm, and pluvial flood — continued to experience above average rate increases.

Casualty insurance pricing increased 4% on average in the first quarter of 2022, which was the same increase as the prior quarter.

Financial and professional lines pricing increased 28% on average this quarter. Though increases are still being driven significantly by cyber insurance price increases, this quarter’s average increase was lower than that of the fourth quarter of 2021 (34%).

Directors and officers (D&O) liability insurance pricing for publicly traded companies increased 3% on average — this was lower than the 6% increase of the prior quarter.

Pricing for cyber insurance increased 110% on average, in large part due to the re-pricing and re-underwriting of cyber risks. Prolific claims activity contributed significantly to pricing increases. The conflict in Ukraine also exacerbated concerns relating to systemic exposures and accumulation risk.

UK Pricing Moderates Despite Rising Cyber Pricing Increases

Composite insurance pricing in the first quarter of 2022 in the U.K. increased 20%, compared to 22% in the fourth quarter of 2021.

Cyber insurance pricing increased by 102% on average, again driven by ransomware claims.

Financial and professional lines pricing increased 39%, on average, down from 43% in the prior quarter. D&O pricing increases demonstrated a degree of moderation, with average pricing increases of 16% in the first quarter of 2022, compared to 24% in the fourth quarter of 2021.

Cyber insurance pricing increased by 102% on average, again driven by ransomware claims; this was up on the prior quarter, which had an average increase of 92%.

Property insurance pricing increased by 9%, compared to 10% in the prior quarter; and casualty insurance pricing increased 3% on average, down from a 4% increase in the prior quarter.

Pace of Pricing Increase in Asia Continues Decline

Composite insurance pricing in the first quarter of 2022 in Asia increased 3%, down from 4% in the prior quarter, as price increases continue to moderate.

Both property insurance and casualty insurance saw average pricing increases of 2% in the quarter; while property insurance was down on the prior quarter’s pricing increases of 3%, casualty insurance increases were 2% for both quarters.

Financial and professional lines pricing increased 13% on average, down from 17% in the prior quarter. The cyber market remained challenging, with ransomware placing considerable pressure on premiums.

Insurance Pricing by Region

Other regional highlights in the first quarter included the following:

In the Pacific, composite insurance pricing increased 10%, on average, down from 13% in the prior quarter. Property insurance pricing increased 8%, on average, mirroring the increases seen in the prior quarter. Losses from the New South Wales and Queensland floods reduced any potential pricing relief. Casualty insurance pricing rose 15%, while financial and professional lines pricing rose 10% — a decrease from 18% in the prior quarter.

Composite insurance pricing in the first quarter of 2022 in Continental Europe increased 6%, compared to 9% in the prior quarter. Property insurance pricing rose 6%, a decrease from 10% in the prior quarter, with CAT-exposed risks experiencing the largest increases. Financial and professional lines pricing increased 9% on average, down from 13% in the prior quarter. The D&O market had an influx of new capacity, which led to rate reductions on select programs with adequate pricing. Average casualty insurance pricing rose 6%.

Average composite insurance pricing in the first quarter in the Latin America and Caribbean region increased 6%, up from 4% in the prior quarter. Casualty pricing in the region was flat, marking a potential shift from decreasing rates in the space. Property insurance pricing increased 8%, up from 7% in the previous quarter. Financial and professional lines pricing rose 11%, down slightly from the 12% increase in the prior quarter.

Related theme: INSURANCE

Lucy Clarke
President of Marsh Specialty and Global Placement
Lucy is president of Marsh Specialty, president of Marsh Global Placement, and is a member of the Marsh executive committee. Lucy joined Marsh in April 2019 as part of the acquisition of JLT Group, where she worked for 17 years in key leadership roles, including CEO of JLT Specialty, the insurance and risk arm of the JLT Group. Lucy graduated from Vanderbilt University and has worked in London since 1990.

Global Insurance Pricing Increases in Fourth Quarter 2021

Global Insurance Pricing Increases in Third Quarter 2021

Ransomware Attacks Are Becoming More Frequent, Severe and Expensive

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

We Need a More Resilient Food System

The World Food Program has warned that 275 million people are facing starvation as a result of global food shortages caused by the Ukraine conflict, bottlenecks in the supply chain, and crop failures in India and China.

Sheryl Hendriks, a food security expert at the University of Pretoria in South Africa, says that one of the big problems is the lack of private sector involvement in the food sector in many countries.

A man harvests tea on a mechanized tea estate in Kericho, Kenya. To learn from the current global food shortages, countries will need to invest in mechanization and encourage private sector development.

Photo: Patrick Sheperd/CIFOR via CC

HENDRIKS: David Beasley, the head of The World Food Program, says that the situation is already so bad that they are having to choose between the hungry and the starving. What’s unfolding is both a short- and a longer-term crisis. A third of the world’s grain supplies and a large proportion now of oil seeds are tied up in Russia and Ukraine.

There’s food sitting from the previous harvest that can’t be moved out to the places that need the food. Much of the rail infrastructure and some ports in Ukraine have been damaged or destroyed, so while the silos are full, food can’t get out to those who need it. And countries in Africa are particularly reliant on imported grain from those two countries.

Banning Food Exports Is Short Sighted

There’s a secondary aspect to this crisis because Ukraine and Russia also provide significant amounts of fertilizer for agriculture. Higher processing costs and lower availability will be major constraints to future harvests. Fertilizer prices were already going up last year, because fertilizer prices are linked to crude oil prices, so we were seeing farmers in Africa using less fertilizer, and that affects their harvests.

BRINK: Some countries are banning food exports as a way to husband their own resources. Will that make things worse or not?

HENDRIKS: Absolutely. There is some logic to holding back a proportion of food in order to meet your domestic requirements, but for example, Indonesia’s outright ban on the export of palm oil is going to have major repercussions. What happens if they run short of another commodity? Their neighbors are not going to be very friendly about sharing what they have.

So in terms of neighborliness, bans are fairly shortsighted. It also means that countries could lose their market share because somebody else will step into the market and fulfill their requirements. The palm oil restriction is going to affect a huge proportion of processed foods in particular, such as snack foods and many cheaper brands of ready-to-eat foods that are the go-to foods for busy urban communities.

BRINK: Let’s turn to possible solutions. How do you make sure that this crisis isn’t wasted as an opportunity?

HENDRIKS: Good question. We wasted the learning opportunities from the previous two high food price crises in 2007/8 and 2013. Countries should have responded to these crises by looking at their domestic production and seeing how they could diversify to ensure higher domestic supplies.

The response to the 2007/2008 food crisis in many African countries was to provide free or highly subsidized fertilizer and seeds to boost the production of grains. And for example, in West Africa, there was a significant response by farmers. But then the upstream distribution, storage, and transport components were lacking, and so a lot of that excess harvest just rotted the next year. We haven’t really learned much in terms of creating the right balance between import, export, and domestic production.

The Complicated Role of Governments

One of the dynamics in many developing countries is that, unlike in the West, governments have a huge role to play in the food market. Land is typically owned by the government, the seed supply system is either owned or managed by the government, the fertilizer distribution is highly subsidized, and so are the seeds.

In developing countries, the government is very often the price setter, and the government is the major procurer of grain. It’s not an entirely free market economy. There’s huge government control, and governments see themselves as custodians of the food supply, especially for the staple grains. There are big risks in that.

There’s considerable fear and hesitancy around private sector development in developing countries, but it’s really important for us to support private sector development in order to drive innovation, job creation and economic growth.

BRINK: There’s no shortage of scientific research around food systems and reducing starvation. Why hasn’t that translated into a more secure global food system?

HENDRIKS: Because food is an instrument of politics, I guess. Particularly in the developing world, where the government plays such a big hand in food systems, any major shortfall is going to lead to food riots, and policy change in terms of food is viewed as extremely risky by governments.

In my engagement with government officials, particularly across Africa and with the Malabo Montpellier Panel that I work with, the nervousness of government officials to adopt policy change is very tangible. And scientists are not good at engaging with governments to support decision-making.

The Need to Understand Consumers’ Trade-Offs

BRINK: Do you have any concrete recommendations for how there could be some improvement to food systems?

HENDRIKS: The digital domain provides many opportunities. A colleague, Athula Ginige, has developed a digital app to help farmers make their crop choices, so as an individual farmer, you can keep real-time knowledge of who’s planting what. The app then gives an estimation of the predicted price when it comes to harvesting.

But one thing we don’t understand very well are the trade-offs that consumers are making for convenience products, such as bread. Bread is not a staple food in many African countries, but it’s the go-to because if you have nothing else, you can eat just like that. You don’t need power, you don’t need energy to cook it, you don’t need energy to store or warm it, and because it’s so full of preservatives, it lasts a week.

But there’s a trade-off between convenience and the energy required to prepare alternative  meals that require cooking. The complexity lies in the connectedness of food and energy prices. If we were able to invest in producing more ready-to-eat, minimally processed natural foods, rather than additive-laden ultra processed foods, we could perhaps sway consumer choices to healthier meals.

Mechanization Is Critical

Countries also need to invest a lot more in mechanization. There’s considerable fear and hesitancy around private sector development in developing countries, but it’s really important for us to support private sector development in order to drive innovation, job creation and economic growth.

There are some shining examples of mechanization success. In Rwanda for example, the government classified the entire country by agro-ecological zones and then identified the best varieties, for example banana, that would grow in each particular agricultural zone. They then re-orientated their entire extension system to deal with the specific diseases and pests per agricultural zone. There are very clever strategies to encourage people to grow what is relevant for their particular agro-ecological conditions.

Rwanda also invented an Uber-inspired tractor service, where, when a farmer needs a tractor service, they can call the Uber service. And there’s an incentive to keep the tractor maintained, have it full of fuel, and have it ready to run at any time. Rwanda has taken a very holistic approach to development with win-wins for the whole economy. We need more such initiatives where government and private entrepreneurs cooperate.

Related Themes: FOOD SECURITY UKRAINE

Sheryl Hendriks
Professor at University of Pretoria

Professor Sheryl L. Hendriks is a professor and head of the Department for Agricultural Economics, Extension, and Rural Development in the Faculty of Natural and Agricultural Sciences at the University of Pretoria. She is a member of the Academy of Science of South Africa.

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

The Changing of the Guard in South Korea — What Does It Mean for Business?

The new president elected in South Korea. Yoon Suk Yeol is a populist conservative politician, who narrowly beat President Moon Jae-in from the progressive Democratic party. President-elect Yoon is likely to move South Korea to the right and perhaps take a more confrontational approach to the North.

Andrew Yeo, the SK-Korea Foundation Chair in Korea Studies at Brookings Institution, spoke to BRINK about what this means for the region and for business.

YEO: There’s definitely going to be a change in direction in how the country is governed under this new conservative leadership, even if structural constraints prevent leaders from veering too far off course from the current trajectory.

On domestic policy, we will see less government intervention and deregulation of various industries and sectors to promote economic growth. The government will offer more market-oriented solutions to address domestic problems, particularly the shortage in affordable housing.

President Yoon Suk Yeol stands before a microphone on a podium to address an audience.

Flickr via CC

BRINK: Can you give us a sense of who Yoon Suk Yeol is?

YEO: Yoon Suk Yeol is considered an elite in South Korea, in contrast to the more humble, social activist background of current president Moon Jae-in. He is a lawyer by training and attended Seoul National University. Yoon’s biggest claim to fame is his role as the prosecutor- general under the Moon government, where he played a leading role convicting former conservative president Park Geun-hye on corruption charges.

Yoon seems to demand loyalty from his followers, and thus far, he has surrounded himself with trusted advisers, including many who served under former President Lee Myung-bak in the late 2000s and early 2010s. This is in contrast to former President Moon Jae-in, who sought greater diversity and inclusiveness among his staff.

The clearest shift in South Korean foreign policy will be the new government’s engagement policy toward North Korea. All Korean governments, whether progressive or conservative, want inter-Korea relations to improve. How you get there, however, differs between progressives and conservatives.

Championing Small Business Over Big Conglomerates

BRINK: How would you characterize his relationship with South Korea’s business community?

YEO: Conservative governments in South Korea tend to have a better relationship with big business in part because they’re more keen in promoting market-oriented policies. But in this case, there might also be some tensions, as the president-elect has emphasized promoting small and medium enterprises (SMEs), which may lead to some competition with the big conglomerates. Yoon seems keen in cultivating the digital economy and may promote policies which support innovation among SMEs in the emerging technology space. Overall, the relationship between government and business should be generally positive, however.

The Trade Relationship With China

BRINK: What about the commercial relationship with China — do you see that changing much?

YEO: Given Yoon’s pro-U.S. stance, some might assume that the new government will adopt a more hardline position toward China.

President-elect Yoon has indicated more willingness to speak out against China on issues such as human rights and freedom of expression. The new government will be less tepid in how it engages China and more willing to assert its own geopolitical interests.

However, we have to be careful regarding this expectation that Seoul will suddenly hop onto the anti-China bandwagon. There are still strong Korean corporate interests and stakeholders in China, even as we see more South Korean companies shifting operations outside of China to Southeast Asia, South Asia and elsewhere, including the United States. For large companies such as Samsung, SK or Hyundai, China is a very large market. There will be pressure from companies to not completely decouple from China. Thus the Yoon government will have to navigate between national and corporate interests.

In sum, there may be reduced trade with China relative to the past as Korean companies seek to diversify risk, but it would be unrealistic to expect a mass exodus or complete decoupling from Chinese trade.

South Korea’s Approach to the North Will Shift

BRINK: And what about North Korea — is there going to be a noticeable shift?

YEO: The clearest shift in South Korean foreign policy will be the new government’s engagement policy toward North Korea. All Korean governments, whether progressive or conservative, want inter-Korea relations to improve. How you get there, however, differs between progressives and conservatives.

The new conservative government will be much more skeptical in its approach to North Korea.

President-elect Yoon has been very clear that North Korea needs to take steps toward denuclearization before offering any sanctions relief or aid package. There are rumors that a North Korean long range missile test may occur to coincide with the anniversary of former President Kim Il-Sung’s birth on April 15. If something like that were to happen, we will see much stronger language from the Yoon government directed at North Korea and most likely a prolonged period of non-engagement.

In the meantime, nothing is happening on the engagement front while North Korea remains locked in its shell under its self-imposed pandemic border lockdown.

Where we might see some shift is if the North Koreans decide that the food or humanitarian crisis becomes unbearable. North Korea may want to begin talking again to the U.S. or South Korea. I think then we may see some opportunities for inter-Korea engagement and more flexibility from the Yoon government in how it approaches North Korea.

Related themes: CHINA INTERNATIONAL RELATIONS

Andrew Yeo
Senior Fellow and SK-Korea Foundation Chair in Korea Studies at Brookings Institution’s Center for East Asia Policy Studies

Andrew Yeo is a senior fellow and the SK-Korea Foundation Chair in Korea Studies at Brookings Institution’s Center for East Asia Policy Studies. He is also a professor of politics at The Catholic University of America in Washington, D.C. His latest book, State, Society and Markets in North Korea is out now with Cambridge University Press.

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

How the Ukraine Conflict Is Impacting India’s Economy

India’s trade with Russia is approximately $10 billion, which is 1.3% of India’s total trade. India imports a significant amount of precious and semi-precious stones, mineral oil, boilers, nuclear reactors and fertilizers from Russia, and all of this trade is being affected, with a cascading impact on the Indian economy.

After the U.S. and China, India is the world’s third-largest consumer of oil, over 80% of which is imported, and oil and food prices have always haunted the Indian economy.

Two months into the conflict, faced with a steep upward movement of oil prices, with a projection to touch upon $140 per barrel, India’s business leaders and policymakers are seriously evaluating the impact of this crisis just as business has started to come out of the pandemic.

As the price of these commodities are reaching new highs, it opens up new markets for Indian farmers and trades.

Impact of  Oil Price Hike

India imports about 2% of its oil needs and $1 billion worth of coal from Russia per year. Indian oil companies have multibillion-dollar investments in Russian oil fields, which is still relatively small compared to India’s oil requirements. On the converse side, Russian oil giant Rosneft has a controlling stake in the 20 million metric tons per annum of India’s Nayara Energy.

The most obvious impact of high oil prices is inflation. There has been a steep hike in diesel and petrol prices in the last four weeks; and LPG prices were steadily moving up even before the conflict. Fuel and power have a 13% weighting in the wholesale price index, and fuel and light have a 6.5% weighting in the consumer price index. Moreover, fuel and food prices have a cascading effect on the economy as they push up costs at every stage of agriculture and industrial production.

In its latest update, the IMF has projected a slowdown of India’s economic growth to 6.6% from 7.2% in 2022, mainly due to changes in oil price assumptions. The key assumption behind the GDP growth in the Economic Survey of India last year was that oil prices would be $70-$75 per barrel, instead of $100.

The crisis has also pushed up the price of imported fertilizers to India, particularly Urea and Potash from Russia. This threatens to increase the agriculture fertilizer subsidy bill of the government by about $1.3 billion, and the state and central governments will have to rework their budgets to accommodate these cost escalations.

If other trading partners of Russia shift to their own currency-based trade like the Indian rupee-Russian ruble arrangement, and if an alternative to bank transactions can be found, the move away from dollar-based trade and finance can accelerate.

The Silver Lining for India’s Food Exports

However, the Russia-Ukraine conflict is also creating an unlikely opportunity for select Indian agriculture exporters, especially in wheat, maize, millet and processed food.

As the Russia-Ukraine conflict unfolds, the world has been looking for Indian wheat to fill the huge shocks in the supply chains originating from Russia and Ukraine. Ukraine is one of the world’s top wheat exporters — when combined together Russia and Ukraine have a 25% share in the global market. A ban on freight from Russia also means more opportunities for Indian exporters of nuts, confectionery, fruits and pulses.

As the price of these commodities are reaching new highs, it opens up new markets for Indian farmers and trades. Until June, no fresh wheat is expected from other major markets such as Australia, Pakistan and Brazil.

Several reports say India will be able to export 10-12 million metric tons of wheat this year to markets vacated by Russia and Ukraine. Expectations of a normal monsoon season this year will further boost a growth cycle in the rural economies of India, but harnessing the opportunities also depends on how quickly the buyer-seller market is established and enhancing the freight infrastructure.

Significant Outflow in Foreign Investment

The impact of all this could have severe implications for India’s balance of payments. Due to the inelastic nature of energy demand and current difficulties in coal imports, any further increase in crude oil prices invariably leads to higher import bills for the country. If the conflict continues, this will worsen the current account deficit.

This problem is more acute in India because business is witnessing one of the most significant outflows of foreign institutional investors over the first quarter of 2022. The looming threat of a U.S. Fed rate hike makes it an extremely challenging task for the Reserve Bank of India. This will also have implications for the exchange rate. Thanks to the prudent policies and forex management strategy, the rupee did not experience any abnormal pressure.

On the other hand, if other trading partners of Russia shift to their own currency-based trade like the Indian rupee-Russian ruble arrangement, and if an alternative to bank transactions such as SWIFT can be found, the move away from dollar-based trade and finance can accelerate. These kinds of developments post the Russia-Ukraine conflict can have a far-reaching impact beyond India.

Volatility is the most likely prospect in the near future. As the country starts to recover from the pandemic-induced economic slowdown, India’s public and private sectors will need to work on resolving legacy issues of energy security, inflation and resiliency. Supply-side shocks, demand variations, the course of the conflict, and the extent of global sanctions will all impact the future of the Indian economy, while also opening some new doors for opportunity.

Related themes: INFLATION SUPPLY CHAINS TRADE

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

Venkatachalam Anbumozhi is Director, Research Strategy and Innovations at the Economic Research Institute for ASEAN and East Asia (ERIA). Previously he worked at the Asian Development Bank Institute in Tokyo. He has written books, research articles, and project reports on natural resource management, climate-friendly infrastructure design, and private-sector participation in green growth. He was a member of the APEC Expert Panel on Green Climate Finance and the ASEAN panel for promoting climate-resilient growth.

What Will India’s Post-COVID Recovery Look Like?

Can India Pull Off a Sustainable Economic Recovery?

Can a Self-Reliance Strategy Pull India Out of Recession?

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

How Long Can China’s Economy Handle Zero COVID?

An interview with David Dollar
Senior Fellow of the John L. Thornton China Center at Brookings Institution

President Xi Jinping’s policy of zero tolerance toward COVID kept cases down during the first two years of the pandemic. But the infectiousness of the omicron variant is making it much harder to pull off.

It’s estimated that 87 of the 100 largest cities in China are now under some kind of restricted movement. Shanghai is under an intense lockdown, severely impacting living conditions for its 25 million inhabitants.

This is starting to impact global financial markets and supply chains. BRINK spoke to David Dollar, an expert on the Chinese economy at Brookings, to assess the economic impact.

DOLLAR: It seems like the zero-tolerance policy is starting to have a negative effect on the Chinese economy. According to official data released last week, China’s economy expanded 4.8% in the first three months of this year compared to the same period last year. However, much of that growth was recorded in January and February only. There’s no question the Chinese economy has slowed down, and there are anecdotal reports about certain ports suffering big backlogs and cities that have shut down.

China’s a big country, so shutting down a couple of cities doesn’t necessarily have an overwhelming effect, but it is definitely going to be negative for China’s growth.

BRINK: Its impact will depend on how long this goes on — do you have any sense of whether the government is determined to stick to the policy?

A truck driver wearing a protective mask walks past containers at Yangshan port in Shanghai, China. Shanghai is under an intense COVID lockdown, as are an estimated 87 of the 100 largest cities in China

Photo: Yves Dean/Getty Images

DOLLAR: China has an important Communist Party congress in November, so I would be surprised if they changed policy before November. But President Xi has sent out a message to local officials to pay attention to growth, and there are examples of cities modifying their quarantine policies, for example, by moving from a three-week quarantine to one week. Or in Shenzhen, the factory that produces a lot of Apple products was allowed to keep operating. So I would say, you see some local flexibility, but they are basically sticking to their zero-tolerance policy.

BRINK: Are you seeing any sign of this rippling through global supply chains yet?

DOLLAR: The Ukraine [conflict] is having a big effect on the global economy, and the spread of COVID in China is an additional negative factor, but on a smaller scale, so far. However, the longer it goes on, the more it’s going to take away from China’s annual growth rate.

The financial markets hate the uncertainty around the Ukraine [conflict], the effect on the global economy, and what’s happening with China.

One thing about China, which we saw with the first wave of COVID, is if things shut down for a month or two, then they seem to work extra hard to recover. And that’s kind of a natural tendency, but China’s particularly good at it. Oftentimes, they get close to annual targets, they have a couple of bad months, and then they work super hard for a few months. But if the spread of cases continues throughout the year, then of course, you’re not going to be able to make up for this during 2022.

BRINK: I’ve seen some projection suggesting it could knock a point off the GDP growth. Do you think that is overly pessimistic?

DOLLAR: They set a target for the year of around 5.5% growth in GDP, and they made that decision before the Ukraine [conflict]. Frankly, even leaving aside COVID, that already seemed like a very ambitious target, given the challenges that they were already facing domestically with their real estate and the tech crackdown.

When you add in the Ukraine [conflict], the notion that COVID could take a point or more off of that 5.5 target seems realistic. The financial markets hate the uncertainty around the Ukraine [conflict], the effect on the global economy, and what’s happening with China. So it’s not surprising to see stock markets bouncing around a lot.

When it comes to Ukraine, China happens to be the poster child for a country that imports a lot of petroleum, natural gas and wheat. And the [conflict] has affected prices globally, so it doesn’t even matter where China is importing its oil and gas from — those prices have gone up very dramatically. That’s a big shock for the Chinese economy.

BRINK: How does this play with inflation if the Ukraine crisis drags on and there’s this continued zero COVID policy?

DOLLAR: Well, China has much lower consumer inflation than we do in the U.S., or even in Europe. And so, that actually puts them in a position where they can ease up their monetary policy, while we’re going to be tightening our monetary policy. So that gives them some room to stimulate the economy with both fiscal and monetary policies.

It’s a little bit of a mystery how their consumer pricing inflation has stayed so low. This latest spread of COVID has been going on long enough now that prices for a lot of services have gone down because people are not traveling or going to restaurants as much. So you’ve got price declines in services. And compared to Americans, people don’t drive nearly as much, so high gas prices don’t have as much effect on household budgets. So their inflation is quite modest and they’ve got room to stimulate.

Related themes: CHINA UKRAINE

David Dollar
Senior Fellow of the John L. Thornton
China Center at Brookings Institution

David Dollar is a Senior Fellow in the John L. Thornton China Center at the Brookings Institution and the host of the Brookings trade podcast, Dollar & Sense. He was the World Bank Country Director in China (2004-2009) and the U.S. Treasury representative in Beijing (2009-2013).

Will China Ever Become a Fully Developed Economy?

The original article can be viewed at the Brink’s website HERE.

Global Trade Is Battling Demand and Price Shocks

The invasion of Ukraine and renewed COVID-19 outbreaks in China will hit global trade with a double whammy in 2022: lower volumes and higher prices. We now expect trade to grow by 4.0% in volume terms in 2022 (2 percentage points lower than expected before the crisis), while trade in value terms surges by 10.9% (vs. 7.2% previously expected).

After the contraction in Q3 2021, the risk of a double-dip in global trade volume in H1 2022 has increased further – not only due to supply-chain bottlenecks, but also because of lower demand. The economic consequences of Russia’s invasion of Ukraine will slow GDP growth around the world, especially for economies in Europe. The resulting confidence and demand shock explains more than half of the downward revision in our forecast for trade growth in volume in 2022 (see Exhibit 1). Conversely, trade prices growth has been revised upwards by 5.7 percentage points, with commodity prices and additional supply chain disruptions contributing roughly equally.

Global trade will take a hit, particularly in Europe, as the conflict in Ukraine continues.

Photo: Unsplash

After the contraction in Q3 2021, the risk of a double-dip in global trade volume in H1 2022 has increased further – not only due to supply-chain bottlenecks, but also because of lower demand. The economic consequences of Russia’s invasion of Ukraine will slow GDP growth around the world, especially for economies in Europe. The resulting confidence and demand shock explains more than half of the downward revision in our forecast for trade growth in volume in 2022 (see Exhibit 1). Conversely, trade prices growth has been revised upwards by 5.7 percentage points, with commodity prices and additional supply chain disruptions contributing roughly equally.

Exhibit 1: Breakdown of 2022 trade growth forecast revisions (percentage points)

The Demand Shock

The confidence and demand shock will result in a loss of $480 billion in exports to Russia and Eurozone countries in 2022 (roughly evenly split between the two destinations), with companies in Eastern Europe the most exposed. While Russia as an end-demand market is not systemic at the global level (representing just 1.2% of global imports on average in 2015-2019), the multi-year recession it is likely to face could lead to losses in the region.

The most exposed countries are Moldova, Slovakia, Serbia, Slovenia and Czech Republic, where exports exceed 1.5% of GDP. Among the biggest Eurozone exporters, Germany and Italy are among the top 20 most exposed, with potential losses of up to 0.6% ($21 billion) and 0.5% of GDP ($90 billion) respectively, in the worst-case scenario where relationships with Russia are completely frozen.

Looking at Russia as a supplier in global and regional value-chains, Eastern Europe remains the most at risk, while a complete cut-off of relations would mean the Eurozone’s largest four economies losing up to 0.4% of their GDPs and 1.1% of their exports.

Focus on Commodities

Looking at the world’s exposure to goods produced in Russia, the sectors of focus are energy (e.g., oil, gas), metals (e.g., aluminum, palladium, nickel) and agrifood (e.g., wheat, corn) as Russia respectively represents around 9%, 3% and 2% of each sector’s global exports. By looking precisely at the amount of energy, metals and agrifood inputs produced in Russia that end up in other countries’ outputs (through direct and indirect trade linkages), we find that Bulgaria (close to 9% of GDP), Lithuania (more than 5% of GDP) and Hungary (more than 2% of GDP) are the most exposed (see Exhibit 2).

Some Western and Northern European countries are also among the top 20 most exposed, including the Netherlands (0.8% of GDP), Sweden (0.6%), Italy (0.6%) and Germany (0.5%). This compares with 0.3% of Chinese GDP depending on Russian inputs, and 0.1% for the US. Looking at how much Russian value-added is used in other countries’ exports yields similar results, with Eastern European economies the most exposed, while up to 1.1% of exports from the largest four economies of the Eurozone could be at risk (compared with 0.7% for China and 0.2% for the US).

Exhibit 2: Russian energy, metals and agrifood inputs used in respective countries’ output (% of GDP), top 20 exposed in relative terms

Supply Chain Bottlenecks

Europe is thus by far the most at risk of supply-chain disruptions caused by the Russian invasion of Ukraine and ensuing sanctions. Beyond food and energy commodities, which can be easily substituted with other suppliers, metals are actually more sensitive products. Indeed, they are often part of an industrial process that has been designed to take into account the particularities of a certain supplier. As such, changing suppliers, even when possible, is not an easy task as it might require industrial adjustments. Based on the critical materials analysis from the European Commission, we observe that Russia represents over 10% of imports for about 20 metals, with key applications in transport equipment, high-end electronics (batteries, semiconductors, smartphones), construction and automotive.

To account for second-round supply-chain effects of ongoing events, value-added that needs to transit via Russia before reaching its final destination also needs to be taken into consideration, on top of that directly produced in Russia. We find that the latter has a much larger impact than the former, which is even negligible outside Europe. This confirms Russia’s limited role in global and regional supply chain logistics. Indeed, even if high-frequency data show that the number of tankers moving in the Black Sea and Baltic Sea, and the number of container vessels anchored in Russian ports, have declined since the start of the conflict, it is important to keep in mind that Russia represents just around 2-3% of the global tanker fleet and containerized trade.

New COVID-19 outbreaks in China are the larger issue for global supply chains as the sustained zero-COVID policy is likely to keep delivery times elevated throughout 2022. Local lockdowns and more restrictions in response to rising infections in cities such as Shenzhen and Shanghai are likely to impact production and logistics in China. Data show that congestion waiting times and anchorage outside the Yantian port and the outer Pearl River Delta have risen over the past few weeks. For now, they remain below the levels seen during summer 2021, when outbreaks led to temporary port closures.

However, this new bottleneck comes at a time when the global maritime shipping industry is still fragile. A repeat of the temporary port closures in China could have ripple effects on global logistics: The historical relationship between our proprietary China port congestion index and the global manufacturing PMI suppliers’ delivery times index (see Exhibit 3) suggests that delivery times are likely to remain above the pre-pandemic average for most of 2022, and even lengthen slightly at the start of 2023 – though remaining below 2021 peaks.

Exhibit 3: China port congestion index and global manufacturing sector delivery times

Ana Boata
Global Head of Economic Research at Allianz Trade

Ana Boata is the global head of Economic Research at Allianz Trade. Ana started her career in the banking sector before joining Euler Hermes in November 2012 as Eurozone economist. In 2018 she received the Best Forecaster Award for the Eurozone by Consensus Forecast. In 2019, she became head of Macroeconomic Research of Euler Hermes Group and led its thematic research on SMEs. Ana also teaches macroeconomics at the University of Paris Dauphine and Sciences Po Paris.

Françoise Huang
Senior Economist for Asia-Pacific at Allianz Trade

Françoise joined Allianz Trade in 2019 as a senior economist for Asia-Pacific. Prior to this, Françoise worked as an Economist for over five years at the equity broker Exane BNP Paribas in London. There, she was in charge of the macroeconomic analysis of the Chinese economy and Emerging Markets. She also worked on global and European topical themes. Her other work experiences include the ACPR, the French supervisor for the banking and insurance sectors.

Ano Kuhanathan
Sector Advisor and Data Scientist at Allianz Trade

Ano Kuhanathan has held various positions in the financial industry in trading, research and consulting. He was the Eurozone economist at Axa Investment Managers from 2016 to 2018. Before joining Allianz Trade in 2020, he was the head of economic advisory and advanced analytics at EY Advisory. Ano regularly teaches economics, sustainable finance and applied data science at Neoma Business School.

A version of this article originally appeared in Unravel.

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

Revolutionary Changes in Transportation Could Slow Global Warming — If They’re Done Right

Around the world, revolutionary changes are under way in transportation. More electric vehicles are on the road, people are taking advantage of sharing mobility services such as Uber and Lyft, and the rise in telework during the COVID-19 pandemic has shifted the way people think about commuting.

Transportation is a growing source of the global greenhouse gas emissions that are driving climate change, accounting for 23% of energy-related carbon dioxide emissions worldwide in 2019 and 29% of all greenhouse gas emissions in the U.S.

The systemic changes under way in the transportation sector could begin lowering that emissions footprint. But will they reduce emissions enough?

Electric cars are shown charging in a garage. Electric vehicles and other changes in transportation can help significantly lower the greenhouse gas emissions that cause climate change.

Photo: Unsplash

In a new report from the Intergovernmental Panel on Climate Change released April 4, 2022, scientists examined the latest research on efforts to mitigate climate change. The report concludes that falling costs for renewable energy and electric vehicle batteries, in addition to policy changes, have slowed the growth of climate change in the past decade, but that deep, immediate cuts are necessary. Emissions will have to peak by 2025 to keep global warming under 1.5 degrees Celsius (2.7 F), a Paris Agreement goal, the report says.

Source: IPCC Sixth Assessment Report

The transportation chapter, which I contributed to, homed in on transportation transformations – some just starting and others expanding – that in the most aggressive scenarios could reduce global greenhouse gas emissions from transportation by 80% to 90% of current levels by 2050. That sort of drastic reduction would require a major, rapid rethinking of how people get around globally.

The Future of EVs

All-electric vehicles have grown dramatically since the Tesla Roadster and Nissan Leaf arrived on the market a little over a decade ago, following the popularity of hybrids.

In 2021 alone, the sales of electric passenger vehicles, including plug-in hybrids, doubled worldwide to 6.6 million, about 9% of all car sales that year.

Strong regulatory policies have encouraged the production of electric vehicles, including California’s Zero Emission Vehicle regulation, which requires automakers to produce a certain number of zero-emission vehicles based on their total vehicles sold in California; the European Union’s CO2 emissions standards for new vehicles; and China’s New Energy Vehicle policy, all of which have helped push EV adoption to where we are today.

Beyond passenger vehicles, many micro-mobility options – such as autorickshaws, scooters and bikes – as well as buses, have been electrified. As the cost of lithium-ion batteries decreases, these transportation options will become increasingly affordable and further boost sales of battery-powered vehicles that traditionally have run on fossil fuels.

An important aspect to remember about electrifying the transportation system is that its ability to cut greenhouse gas emissions ultimately depends on how clean the electricity grid is. China, for example, is aiming for 20% of its vehicles to be electric by 2025, but its electric grid is still heavily reliant on coal.

With the global trends toward more renewable generation, these vehicles will be connected with fewer carbon emissions over time. There are also many developing and potentially promising co-benefits of electromobility when coupled with the power system. The batteries within electric vehicles have the potential to act as storage devices for the grid, which can assist in stabilizing the intermittency of renewable resources in the power sector, among many other benefits.

Other areas of transportation are more challenging to electrify. Larger and heavier vehicles generally aren’t as conducive to electrification because the size and weight of the batteries needed rapidly becomes untenable.

For some heavy-duty trucks, ships and airplanes, alternative fuels such as hydrogen, advanced biofuels and synthetic fuels are being explored as replacements for fossil fuels. Most aren’t economically feasible yet, and substantial advances in the technology are still needed to ensure they are either low- or zero-carbon.

Other Ways to Cut Emissions From Transportation

While new fuel and vehicle technologies are often highlighted as decarbonization solutions, behavioral and other systemic changes will also be needed to meet to cut greenhouse gas emissions dramatically from this sector. We are already in the midst of these changes.

Telecommuting: During the COVID-19 pandemic, the explosion of teleworking and video conferencing reduced travel, and, with it, emissions associated with commuting. While some of that will rebound, telework is likely to continue for many sectors of the economy.

Shared mobility: Some shared mobility options, like bike and scooter sharing programs, can get more people out of vehicles entirely.

Car-sharing and on-demand services such as Uber and Lyft also have the potential to reduce emissions if they use high-efficiency or zero-emission vehicles, or if their services lean more toward car pooling, with each driver picking up multiple passengers. Unfortunately, there is substantial uncertainty about the impact of these services. They might also increase vehicle use and, with it, greenhouse gas emissions.

New policies such as the California Clean Miles Standard are helping to push companies like Uber and Lyft to use cleaner vehicles and increase their passenger loads, though it remains to be seen whether other regions will adopt similar policies.

Public transit-friendly cities: Another systemic change involves urban planning and design. Transportation in urban areas is responsible for approximately 8% of global carbon dioxide emissions.

Efficient city planning and land use can reduce travel demand and shift transportation modes, from cars to public transit, through strategies that avoid urban sprawl and disincentivize personal cars. These improvements not only decrease greenhouse gas emissions, but can decrease congestion, air pollution and noise, while improving the safety of transportation systems.

How Do These Advances Translate to Lower Emissions?

Much of the uncertainty in how much technological change and other systemic shifts in transportation affects global warming is related to the speed of transition.

The new IPCC report includes several potential scenarios for how much improvements in transportation will be able to cut emissions. On average, the scenarios indicate that the carbon intensity of the transportation sector would need to decrease by about 50% by 2050 and as much as 91% by 2100 when combined with a cleaner electricity grid to stay within the 1.5-degree Celsius (2.7 Fahrenheit) target for global warming.

These decreases would require a complete reversal of current trends of increasing emissions in the transportation sector, but the recent advances in transportation provide many opportunities to meet this challenge.

A version of this article originally appeared in The Conversation.

Related themes: CITIES CLIMATE ADAPTATION RENEWABLE ENERGY

Alan Jenn
Assistant Professional Researcher at The Institute of Transportation Studies at the University of California, Davis

Alan Jenn is an assistant professional researcher at the Plug-in Hybrid and Electric Vehicle (PH&EV) group of the Institute of Transportation Studies (ITS) at the University of California, Davis, and an affiliate at Lawrence Berkeley National Laboratory. Alan’s research is focused on plug-in electric vehicles (PEVs): integration with the electric grid, adoption of the technology, use in ride-hailing companies (such as Uber and Lyft), and its impact on transportation finance.

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

How the Ukraine Crisis Is Disrupting Global Supply Chains, Part 2

Experts are assessing the ripple effects that the Ukraine crisis is having across a wide variety of global supply chains that have already been frayed by the upheaval from the pandemic.

In the second article in our series (you can read the first piece here), we spoke to Sarah Schiffling, senior lecturer in Supply Chain Management at Liverpool John Moores University.

SCHIFFLING: We see a variety of impacts from the crisis in Ukraine on global supply chains. The most obvious is energy, but we’ve also got agricultural supply chains. Ukraine is a massive agricultural producer for wheat, corn, sunflower oil, and also metals and rare materials that are feeding into some already strained supply chains. For example, neon, which is needed in the production of semiconductors.

The rise in oil prices is going to affect transport around the globe, an area where there’s already been a lot of disruption with very high container prices over the past year or so. The closure of Russian airspace to most airlines means much longer routes, particularly from Europe to Northeast Asia.

We’re looking at additional flight times of several hours being added to these routes, and because of that extra flight time, the planes need more fuel on these flights, which reduces the capacity space on these aircraft.

Having a broader supplier base helps prevent businesses from being too impacted by a geographically constrained issue like the Ukraine crisis.

Photo: Unsplash

The Closing of Odessa

BRINK: How about the sea supply chains — are they being equally impacted?

SCHIFFLING: Black Sea shipping is pretty much suspended. Commercial shipping in and out of Ukraine is non-existent right now. The closure of the port at Odessa is a big concern for wheat exports. There are quite a few countries that are heavily dependent on Ukrainian wheat, such as Egypt, Turkey, but also areas of global crisis such as Yemen and Lebanon, where the main grain silos were destroyed in the 2020 explosion.

But it could also impact you if you are a supermarket chain that gets wine from Moldova. That was probably scheduled to go through Odessa and then shipped onward. Where I live, near the port of Liverpool, we had a Russian tanker coming here and dockers refused to unload it so it had to be turned back.

Worrying Rise of Food Insecurity for Many Countries

BRINK: Is this likely to increase food insecurity in some countries?

SCHIFFLING: Absolutely, this crisis comes on top of existing issues in many countries. We’re seeing, for example, stunning numbers from the World Food Programme, which supports so many people around the world. In a normal year, the WFP gets 50% of its wheat from Ukraine, and it’s now estimating that their costs will rise by around $700 million, due to the crisis in Ukraine.

Countries that have limited ability to shift to other supplies or to pay an extra premium are likely to be the most heavily affected, which is particularly tragic if you’re looking at a country like Yemen, where we already have many people on the brink of starvation, and now they’re facing rising food prices.

BRINK: How much impact is this going to have on the whole idea of just-in-time supply chains that’s really expanded in the last 15 or so years?

SCHIFFLING: This ties into the wider conversation that has been triggered by the pandemic and the resulting supply chain effects. It is showing us once more that it’s really important to understand your supply chains and to be prepared. It’s another argument for more of a “just in case” approach rather than just in time.

You need to have higher inventory to be able to weather these storms. But there’s also huge responsibility on the customer side. If customers are demanding highly customized deliveries at low prices, then it’s very difficult to build up your buffer to make sure that you’ve got the resilience in that supply chain.

You might have a very good spread in your first-tier suppliers, but in the end, it’s not much help if you discover that it all comes back to the same second- or third-tier supplier.

It helps to build up your partnerships in your supply chain and make sure that you are working with partners who are valuing you and will be supporting you in any changes that you might experience so you can rely on them. Of course, that’s all very nice, but even if you have the best relationship in the world with a Ukrainian supplier right now, they’re not able to help you.

A China-Plus Approach

Another approach is to diversify geographically in terms of suppliers, having a broader supplier base so you’re not too impacted by a geographically constrained issue within supply chains. We’ve seen that in previous crises. We are increasingly seeing a China-plus policy, where companies continue to import from China but also invest in a supplier closer from home to broaden out their base. So if you do have these transport disruptions that we have been seeing, you have more local options and shorter supply chains that might be more flexible to respond if there are disruptions.

BRINK: Do most companies know where their supplies come from, at least in the kind of first and second degree? Is it possible to map that now with technology?

SCHIFFLING: Most companies will know their first-tier suppliers. But a lot of companies were surprised to see how much they’ve been affected by events in the Black Sea region right now and are trying to figure out what exactly comes from there or through there.

It’s not necessarily just your raw material suppliers. You will also be looking at, is there maybe transport providers that need to be on board as well? If I’m talking about getting my wine out of Moldova, then I don’t just need my wine supplier, I also need to know which tanker is transporting that wine because if that tanker is currently in the port of Odessa, then I’m probably not going to get my delivery, even if I’m not supposed to be shipping out of Odessa.

Then, once we get into second-tier, third-tier suppliers, it gets a lot more difficult. We’re seeing how crucial it is from a business perspective to actually understand what we are dependent on. You might have a very good spread in your first-tier suppliers, but in the end, it’s not much help if you discover that it all comes back to the same second- or third-tier supplier.

Related themes: GEOPOLITICAL CONFLICT SUPPLY CHAINS TRADE

Sarah Schiffling
Senior Lecturer in Supply Chain Management of Liverpool John Moores University
Sarah Schiffling is a senior lecturer in supply chain management at Liverpool John Moores University, UK, and an international research fellow with the HUMLOG Institute in Helsinki, Finland. She previously worked as lecturer in logistics and operations management at the University of Lincoln, UK.

Supply Chains in 2022: Shortages Will Continue

The original article can be viewed at the Brink’s website HERE.

How the Ukraine Crisis Is Disrupting Global Supply Chains, Part 1

Global supply chains were starting to recover from two years of upheaval caused by the pandemic when the Ukraine crisis hit. The further disruption caused by Russia’s invasion of Ukraine could cause many companies to rethink their suppliers.

BRINK spoke to Mark Millar, the author of Global Supply Chain Ecosystems and a supply chain expert based in Hong Kong, and asked which supply chains are being most impacted by the crisis.

MILLAR: Even though this is a very fluid and fast-moving scenario, and notwithstanding the terrible humanitarian calamity, it is already clear that the Russia-Ukraine conflict will have far-reaching ramifications for many supply chains.

In particular, there are immediate consequences for ground-based freight networks transporting goods between Asia and Europe by road and rail.

Last year, shippers suffering from the chaotic uncertainty in container shipping caused by COVID turned to rail transport as an alternative freight option for the Asia-Europe trade routes. This year, the war in Ukraine will impact supply chains again.

Photo: Unsplash

The Asia-Europe Land Route

Last year, shippers suffering from the chaotic uncertainty in container shipping caused by COVID turned to rail transport as an alternative freight option for the Asia-Europe trade routes. In 2021, rail operators ran more than 1,200 freight trains per month between China and Europe, transporting almost 1.5 million containers. Many of these trade routes from China transit through Russia, Ukraine and Belarus on their way to Western European destinations.

The risks for such containerized rail-freight are now prohibitively high, so traders are frantically searching for alternative routes, at a time when the containerized shipping sector is still besieged by port congestion, shipping delays and container shortages resulting in extensive delays and record-high freight rates.

However, just about every supply chain will suffer a negative impact from this crisis, for example, with fuel prices surging and shipping routes being cancelled or diverted.

A Nail in the Coffin of Over-Globalized Trade Routes

Unfortunately, this is another massive disruption for today’s globalized supply chains, on top of two years of COVID-induced supply chain chaos, from which many businesses (or economies) have still not recovered.

There is enormous uncertainty as to whether this crisis could be over by the end of the month, whether it could drag on for years, or worst-case scenario, could trigger a direct military conflict between NATO and Russia.

Whichever the outcome, I think it is another nail in the coffin of our modern-day over-globalized supply chains.

The cumulative disruptions over the last five years from ever-increasing costs in Asia, geopolitical tensions and trade tariffs, the pandemic’s turbulence in global shipping and now the military conflict in Europe have exposed the profound interdependencies and inherent vulnerabilities in globalized supply chains.

BRINK: Are there any critical products that come from Russia and Ukraine (besides oil and gas) that will be disrupted?

MILLAR: In addition to gas and oil, Russia’s top exports include coal, iron, platinum, raw aluminum, sawn wood and copper. So many global commodities markets will be squeezed, and we can foresee some shortages of raw materials.

Food Supplies Will Be Impacted

As both countries are major exporters of agricultural products, we can also expect global food supply chains to be impacted.

Russia exports over $6 billion of wheat annually and is a major producer of vast amounts of the essential raw ingredients for the fertilizer products that are used in produce grown around the world.

Many of the finely tuned just-in-time and lean systems will be replaced or supplemented with business models incorporating buffer inventories and safety stocks. In many scenarios, just-in-time will become replaced by just-in-case.

Meanwhile in Ukraine, two-thirds of its GDP relate to international trade, the foundation of which is a strong agricultural sector. Fifteen percent of global grain exports come from Ukraine, as well as cereals, animal and vegetable oils, and seed oils, together representing 35% of Ukraine’s exports.

A further quarter of Ukraine’s exports are iron ore and steel, including refined electrical machinery, equipment and other mechanical appliances.

BRINK: Do you think this crisis is likely to cause companies to rethink their supply chains and develop suppliers nearer to home?

MILLAR: Absolutely. As a result of COVID, many companies were already re-evaluating their supply chains, exploring options for near-shoring and/or reshoring of their sourcing and production closer to home.

However, reconfiguring and relocating your global supply chain is much easier said than done.

Today’s Supply Chains Cannot Easily Be Moved

Today’s global supply chain ecosystems have been built and fine-tuned over many years. They cannot easily be untangled, unpacked and moved elsewhere. Whether near-shoring or re-shoring, this is a major undertaking. And, of course, you can’t stop your business whilst you’re reconfiguring your supply chain.

The entire ecosystem needs to be reviewed from end to end, considering potential future sources — both the suppliers and their locations — for essential inputs, such as materials and components. Ideally, the new supplier network will be within the same vicinity as the newly relocated manufacturing operations.

For finished goods distribution, new channels and business partners may need to be established — and alternative logistics service providers evaluated and appointed.

Companies must undertake any supply chain reconfiguration initiative as a parallel project, alongside the business-as-usual activities of day-to-day supply chain execution. In terms of resources, the project will consume plenty of management bandwidth and demands on your A-team. It will incur considerable costs, some inevitable disruption, as well as sizable risk. The timeline to complete the relocation would be measured in years, not months.

So, reconfiguring your supply chain is not for the fainthearted.

But this Ukraine crisis on top of two years of COVID disruptions has surely brought many companies to a tipping point that will result in real action during the coming years on near-shoring and reshoring initiatives. Supply chain 2025 will undoubtedly look significantly different for many companies.

The Knock On Effect for China

BRINK: Is there likely to be a knock-on effect on China?

MILLAR: Inevitably. China is the largest trading partner for both Russia and Ukraine, so those respective bilateral trade flows are going to be curtailed by the conflict.

More importantly, China’s trade with the world will be adversely affected as established trade flows and supply chains become increasingly disrupted.

In particular, the various Silk Road rail-freight corridors — via Belarus and Poland, or Ukraine, or St. Petersburg and Finland — will become dislocated. There are over seventy rail freight routes from China connecting into 174 cities across 23 countries in Europe, offering transit times of just 12-17 days, shaving several weeks off sea freight transit times.

Many of these routes are now completely impractical and unfeasible, resulting in goods becoming stranded en-route and inventory shortages in destination markets.

This will have the greatest impact on goods exported from factories that have relocated inland to China’s midwest, for whom rail freight is a particularly relevant alternative to sea freight. Chengdu in Sichuan province, for example, is almost two thousand kilometers inland from the main export container port in Shanghai.

China will also experience knock-on effects from the broader supply chain implications, such as near-shoring initiatives and regionalization trends, which over the medium term will result in some manufacturing being relocated out of China.

The End of Just in Time?

BRINK: How should companies build greater resilience into their overseas supply chains to avoid being impacted by this kind of crisis?

MILLAR: Supply chain resilience has become the key strategic priority for this decade. Multiple initiatives need to be undertaken, including revisiting the supply base to identify sources closer-to-home and adopting wider deployment of dual- or multi-sourcing strategies, featuring multiple suppliers in multiple locations.

Many of the finely tuned just-in-time and lean systems will be replaced or supplemented with business models incorporating buffer inventories and safety stocks. In many scenarios, just-in-time will become replaced by just-in-case.

Over the medium term, I foresee some large-scale near-shoring activity with many companies adopting a more regional approach — e.g., producing in Latin America for the USA, and serving developed EU markets with products made in lower-cost European nations such as Poland, Hungary or Turkey, potentially also in some north African countries.

The technological advancements and reducing costs in robotics and automation will also enable some businesses to re-shore their production activities back into high labor cost markets, further empowered by increasing availability of Robotics as a Service (RaaS) solutions, which eliminate the need for upfront capital costs, which hitherto proved prohibitively expensive, especially for small- and medium-enterprise businesses.

Related themes: GEOPOLITICAL CONFLICT SUPPLY CHAINS

Mark Millar
Author of Global Supply Chain Ecosystems
Mark Millar is author of the widely acclaimed book Global Supply Chain Ecosystems that help business leaders make better informed decisions about strategies for competitive advantage in today’s complex, connected world.

Mark serves on the Advisory Board of the Foundation for Future Supply Chain, is a Visiting Lecturer at Hong Kong Polytechnic University and has won multiple awards including “Thought Leadership Champion” and “Most Inspiring Supply Chain Professional”.

Supply Chain Disruption Impacts Cost, Quality and Risk

The original article can be viewed at the Brink’s website HERE.

Click HERE to read Part 2 of “How the Ukraine Crisis Is Disrupting Global Supply Chains”

FBCCI wants corporate tax rate cut to 10-15%

The country’s apex trade body has demanded that the government lower corporate tax rate to 10-15%, in order to help the backward linkage industry flourish.

Since most of the backward-linkage industries in the country are small and medium-sized enterprises, corporate tax rate in this sector should be less, it further said.

The Standing Committee of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) on Backward Linkage Industries came up with the proposal at its first meeting at FBCCI Icon in the capital on February 10.

Chairman of the committee Abul Kalam Bhuiyan said lowering the corporate tax rate to 10-15% would help develop the backward linkage industry. He also suggested that the entrepreneurs should get plots at affordable prices for expansion of the industry.

Speaking as the chief guest at the meeting, FBCCI Vice President M A Momen said that most of the giant companies today started their journey as backward linkage industries. “Therefore, the role of this sector in the overall development of the country is undeniable,” he said.

Mr. Momen said industrialisation was not possible without development of the backward linkage industry. If there is no such industry, the supply chain will break down, said the FBCCI leader, putting emphasis on the development of this industry for greater good.

At the same time, he called upon the government to give due importance to this sector while adopting policies.

Director-in-charge of the FBCCI standing committee Joshoda Jibon Debnath called upon the entrepreneurs of the backward linkage industry to take concerted initiatives to establish a separate industrial zone for the sector. He assured them of cooperation in accessing necessary bank loans in this regard.

Mr. Debnath said the expansion of the backward linkage industry was essential to meet the challenges of post-LDC industrialisation.

The Financial Express

Chey Tae-won conducts sweeping reshuffle at KCCI

The Korea Chamber of Commerce and Industry (KCCI) Chairman Chey Tae-won, who is also SK Group chairman, has conducted sweeping organizational restructuring to strengthen communication between Korea’s largest lobby group and its member firms, KCCI said.

The restructuring marks the first of its kind since Chey was inaugurated as KCCI Chairman in February 2021.

“Instead of downsizing the existing management planning headquarters, we established a planning and coordination headquarters to enhance the communication platform and also revived the Sustainability Management Institute that will lead communication efforts with society,” KCCI said.

First, the key role of a communication platform will be to incorporate diverse voices at home and abroad to find solutions to economic and social problems through the establishment of the Planning and Coordination Headquarters.

The Planning and Coordination Headquarters is in charge of operating the communication platform, discovering agendas, and new entrepreneurship.

The Sustainability Management Institute was also revived, which had previously led environmental management. The institute will lead efforts to commercialize national development projects, ESG management, and aid in the implementation of carbon neutrality measures.

The public relations room was also expanded and reorganized. The purpose is to integrate and unify external communication functions by newly establishing the Corporate Relations Team (CR) and New Media Team within the existing public relations (PR) team.

The KCCI also conducted a largescale personnel reshuffle transferring 30 team leader level staff to head other departments within the firm.

“This reorganization is aimed at strengthening the ‘communication’ capability, which has been continuously emphasized since the inauguration of Chairman Chey Tae-won. We will seek ways to gather opinions from all levels of society to pave the way for the country to achieve sustainable growth, where all members are satisfied,” KCCI Executive Vice Chairman Woo Tae-hee said.

Korea Times

New program to ensure Turkish SMEs e-trade with US

Ankara is Capital of Turkiye

The Union of Chambers and Commodity Exchanges of Turkey (TOBB) and the American business association (AmCham Turkey) will provide local companies with mentorship services to enable those firms to have the chance to conduct e-trade businesses with the United States.

The “e-Commerce Mentoring Program” will benefit small and medium scale enterprises (SMEs), TOBB said in a statement.

The firms that will be selected among the applicants will be matched with mentors. Market analysis will be carried out with the companies, enabling them to conduct e-exports to the United States market.

According to the project, potential companies in priority sectors will be determined. Strategic planning, consultancy and business development support will be given to these companies so that they can mature their e-export processes.

Companies that aim to e-export to the U.S. in sectors such as furniture, textile, ready-made clothing and machinery sub-industries will have the opportunity to review their current cross-border e-commerce processes, increase their business volumes and accelerate their processes once mentoring applications have been approved.

The Turkish Trade Center established by TOBB in Chicago will also play an active role in expanding the presence of local firms in the U.S. market.

TOBB President Rifat Hisarcıklıoğlu said that they continue to provide active support to entrepreneurs for new trade opportunities.

Emphasizing that they want to increase Turkey’s share in global foreign trade, Hisarcıklıoğlu said: “As TOBB, we are working to increase the participation of our SMEs, which are an indispensable element of economic development, in the global value chain and to improve our companies’ access to markets.”

Representing more than 110 U.S. companies with investments of more than $50 billion in Turkey, AmCham Turkey Chairperson Tankut Turnaoğlu stated that they hope to bring together SMEs aiming to enter the U.S. market with their members.

“As an association, one of our priorities is to enable Turkish companies to participate more in the global value chain. Thus, we are carrying out the ‘e-Commerce Mentoring Program’ in cooperation with TOBB and with the support of our member UPS,” Turnaoğlu said.

Daily Sabah

Having up-to-date machinery a must: ICCIMA head

Head of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) has said having advanced and up-to-date production lines and machinery is the prerequisite for developing export-oriented industries, the ICCIMA portal reported.

Mentioning a meeting of the country’s industrial manufacturers with Leader of the Islamic Revolution Seyed Ali Khamenei on February 1, Gholam-Hossein Shafeie said: “Having employment-generating and export-oriented production requires bridging the gap between the technology level of domestic and global production lines.”

In the meeting with the country’s producers the leader had stressed the need to pay attention to “employment-creating and export-oriented production” in order for the country to overcome its economic problems.

According to Shafeie, the decline of the value of the national currency against the U.S. dollar along with the sanctions have prevented domestic producers from upgrading their production lines, and this has created a gap between Iran and the world in terms of technology.

Tehran Times

Irfan Iqbal Sheikh is new chairman of FPCCI

Irfan Iqbal Sheikh has been unanimously announced as the Chairman of the Management Committee of FPCCI by its Executive Committee. It has extended its full support and expressed their full confidence in the leadership and the statesmanship of Mr. Irfan Iqbal Sheikh.

A large number of the executive committee members participated physically; from the Head Office (Karachi), capital office (Islamabad) and the regional offices of Lahore, Peshawar and Quetta. The whole process was conducted amicably and harmoniously under the directions of the Director General of Trade Organizations (DGTO). Representatives of the DGTO office were also present on the occasion to ensure its transparency and integrity.

Irfan Iqbal Sheikh expressed his profound gratitude to the executive committee members for the honor bestowed upon him and articulated his resolve to fulfil the myriad responsibilities as the head of country’s apex trade body.

The Management Committee will also include Mr. Muhammad Suleman Chawla as its Vice Chairman; and, Shabbir Hassan Mansha, Mr. Muhammad Nadeem Qureshi and Qazi Muhammad Akbar as its members.

The committee has been empowered to induct new members into the management committee, if needed; appoint members of FPCCI’s Standing Committees to represent various sectors; constitute FPCCI’s Business Councils for various countries; nominate FPCCI’s representatives to International Forums; manage all the operations and affairs of the federation; prepare FPCCI’s budget proposals and represent the business, industrial and trade community of entire Pakistan on all forums.

Daily Times

FNCCI objects to banks raising interest rates on deposits

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has objected to the agreement reached among commercial banks to increase the interest rate on deposits.

The Nepal Bankers Association, an association of chief executive officers of commercial banks, had on February 11 agreed to raise the interest rate on deposits to 11.03%.

The FNCCI has issued a statement objecting to the news of the agreement among banks. It urged to reconsider the agreement.

The statement said that the private sector is worried that the industries and businesses are going through a crisis, and in such situation if the interest rates on loans taken by the industrialists increase again, the sector will strain further and industrialists will end up on the streets.

The FNCCI concluded that the decision to increase interest rates in the country will further weaken the industries and businesses as the industry and business sectors will be subject to all-round pressure due to hiked interest rates.

Khabarhub

Russia-Ukraine Crisis Amplifies Growth and Inflation Risks in Asia

The crisis in Ukraine will raise food, energy, and other prices, while sanctions will disrupt financial markets in Asia.

Photo: Unsplash

The sharp escalation of the Russia-Ukraine crisis has led us to change our global baseline. This assumes a prolonged period of instability following the installation of a “friendly” government in Ukraine by Russia.

Our new baseline incorporates higher energy, food and other commodity prices over the medium term, as well as more financial market disruption and tougher EU and U.S. sanctions on Russia.

The impact of these changes on our global forecasts is expected to be significant, with Russia bearing the heaviest impact.

We estimate that global growth will be 0.2ppts lower in 2022 from our no-crisis baseline, while inflation could be 0.7ppts higher. For Asia-Pacific (APAC), GDP growth will likely be lower, by 0.1ppts-0.15ppts in 2022, and inflation higher, by 0.3ppts-0.4ppts (Exhibit 1).

Exhibit 1: The Crisis Will Impact Both Growth and Inflation Adversely

Limited Links With Russia and Ukraine, but Asia Not Completely Insulated

Asia’s geographical distance from the center of the crisis, and its weak trade and investment linkages with both countries, should shield it from a significant impact from either a collapse in Russian imports or any trade or investment barriers imposed by Russia’s administration.

Russia and Ukraine together account for less than 1% of total exports for most Asian economies (Exhibit 2). The notable exception is China. But even there, the share is not big enough to be of great concern. The picture is similar for imports. While import dependency is slightly higher compared to exports, Russia is not the main source of energy or other commodity imports for Asian economies. They largely depend on the Middle East for energy supplies and on intra-regional trade for other raw materials.

Exhibit 2: The Trade Channel Represents a Minor Source of Risk

Russia is also not an important source of FDI, with a minuscule share of total FDI inflows into Asia. Despite its political proximity to India and China, it does not feature in the top 10 sources of FDI for either.

Oil and Commodity Prices

But this doesn’t mean that global developments will have no consequence for Asia. We see two main channels of impact. The first, and the most important channel, is via higher oil and commodity prices. We now expect oil prices to remain above $100/barrel until the early stages of the second half and also see the plausibility of the crisis pushing up base metal and food prices. This will result in a negative terms-of-trade shock for Asia, as it is a net commodity importer.

Simulations on our Global Economic Model show that an average oil price of $100/barrel in 2022 will lower Asia’s GDP growth by 0.2ppts, while raising inflation by 0.5ppts. Higher inflation will squeeze household spending across the board. But the eventual GDP growth impact will vary substantially across the region, with large oil importers such as South Korea, Singapore and India being most affected. Meanwhile, Malaysia will suffer less as it’s an oil exporter, and the cost for Indonesia will likely be offset to a large degree by it being a net commodity exporter (Exhibit 3).

Exhibit 3: Higher Oil Prices Will Boost Inflation and Weigh on Growth

External Demand Under Pressure

The second channel is lower foreign demand. With all major economies globally now expected to grow at a slower pace in 2022 and 2023, external demand will come under pressure. This has implications for the growth outlook of the more export-oriented Asian economies.

Other than these, risks to cross-border financial flows need to be monitored closely. At first sight, risks to Asia’s financial sector from the sanctions imposed on Russian banks appear low. Australia and Japan are the only APAC economies so far that have joined the West in announcing sanctions against Russia. Taiwan has announced its intention to do so.

We expect China to continue its economic engagement with Russia. But the latest energy deals and potentially new agriculture deals will likely be denominated in renminbi. Also, China’s commercial banks may scale back their financial transactions with Russia given their exposure to the U.S. dollar system.

Still, as past crises have highlighted, in an increasingly integrated global financial system that is dominated by the U.S. dollar, unexpected disruptions may materialize quickly. It’s likely that Asian markets will remain volatile for the foreseeable future in a risk-off environment (Exhibit 4).

Exhibit 4: Markets Will Likely Remain on an Uncertain Footing for Now

But eventually we are likely to see more differentiation based on economic fundamentals. Some Asian markets could benefit as relative havens of stability and increase their share of global capital flows. These risks, however, are likely to increase for the twin deficit countries — India, Indonesia, and the Philippines, and also Malaysia to some degree, given its dependence on foreign borrowings.

From a policy perspective, higher inflation and deteriorating deficits will increase the pressure on the Reserve Bank of India and the Bangko Sentral ng Pilipinas to act more aggressively, even as growth is slowing. How they navigate this policy dilemma will be crucial for investor sentiment and the future growth outlook. For now, we maintain our view of a more widespread, but relatively muted, tightening in Asia ex-China this year.

A version of this piece originally appeared on Unravel.

Related themes: EUROPE INTERNATIONAL RELATIONS TRADE

Priyanka Kishore
Head of India and Southeast Asia Economics at Oxford Economics
Priyanka Kishore is the head of India and Southeast Asia economics at Oxford Economics. She has more than a decade of experience in macroeconomic research and forecasting across emerging markets, with a special focus on India and ASEAN. She currently leads Oxford Economics’ Singapore Global Macro Services team and is responsible for overseeing the firm’s South and South East Asia research.

Asia: A Growth Puzzle, Once Again

How will the U.S. Presidential Election Impact Asian Economies?

The original article can be viewed at the Brink’s website HERE.

Sheikh Fazle Fahim elected IORBF chairman

Sheikh Fazle Fahim, CACCI Vice President and former president of FBCCI, has been elected as the chairman of Indian Ocean Rim Business Forum, better known as IORBF.

IORBF is the primary body for business representatives to formulate policies and project recommendations to IORA (Indian Ocean Rim Association) member states.

Since the establishment of IORA in 1997, Bangladesh has been elected for the first time as its Chair for 2021-2023. The 23rd Committee of Senior Officials meeting of IORA took place on November 15-16 November, 2021 while the 21st Council of Ministers was on November 17, 2021, said a press release.

In a speech given in the CSO meeting, Fahim talked about his plans with the IORBF to take it forward. While discussing the geo-economic importance of the Indian Ocean as a vital trading hub for the entire world, Fahim pointed out the challenges imposed on IORBF’s operations in the aftermath of Covid-19.

Fahim stressed on supply chain disruptions, the rising cost of trade logistics, decline of investments in the private sector, economic stagflation and inflation. He then proceeded to suggest possible solutions which can be implemented to combat these challenges.

IORA works to improve regional cooperation through the creation of sustainable development within the Indian Ocean region. IORA has 23 Member States and 9 dialogue partners. The primary focus of IORA lies in disaster risk management, tourism & cultural exchanges, maritime safety & security, fisheries management, trade & investment facilitation, and academic, science and technological cooperation. Their two other focus areas are blue economy and women’s economic empowerment.

New Age

“2022 Global Economic Outlook” Forum

CACCI is pleased to invite members, partners and friends to join the CNAIC 70^th Anniversary Forward-thinking Forum – 2022 Global Economic Outlook and Regional Economic Integration to be held on March 15, 2022 at 14:00-16:20 hrs., Taipei Time.

According to the “World Economic Outlook” released by the International Monetary Fund (IMF) in October 2021, the global economy is projected to grow by 4.9 percent in 2022. While the global economy is seen to be on the path to recovery, many challenges remain, including the continued worldwide spread of the Omicron variant of the Covid-19 virus; the slowdown in employment growth; the rapid rise of inflation in the US and in some emerging markets and developing economies; and food security and climate change, among others. As the global supply chain is likely to remain impacted, the outlook of the economic development seems gloomy.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which entered into force on December 30, 2018, is considered a regional trade agreement which upholds the rules-based scope and high-quality standards of the world trading system. It opens to economies which comply with its high standards, and has started accepting the second batch of membership applications in 2021. The Regional Comprehensive Economic Partnership (RCEP), which took effect on January 1, 2022, is currently the largest global free trade agreement with 15 member countries comprising 30 % of the global population and almost 30% of the global GDP. The development of CPTPP and RCEP as well as the regional economic integration in the future will certainly play an important role in deciding the global deployment of businesses.

To be held in a hybrid format, this Forum – which is co-organized by CNAIC and CACCI to commemorate CNAIC’s  70^th Anniversary – will feature speakers and panelists who will share their insights on the latest global economic trends and the outlook of economic integration in the region.

Participation is free of charge.

For the complete Program and to register, please click HERE.

Confirmation Message, along with the Forum link and other relevant information, will be sent to registered participants on March 11.

“The Role of ASEAN in the Global Supply Chain” webinar

CACCI is pleased to convey an invitation from the ASEAN Business Advisory Council (ASEAN-BAC), of which CACCI is an Associate Member of its Joint Business Councils, to attend the virtual event “The role of ASEAN in the Global Supply Chain” on Tuesday, 18 January 2022 at 9:00-11:00 AM (SGT GMT+8).

Synopsis of the webinar

The recent supply chain crisis, caused by events such as climate disasters and new COVID-19 variants, has had a severe impact on businesses, consumers, and the global economy. Companies both small and large have been prompted to restructure their global supply chains, and find new ways to mitigate risk. Supply chain diversification and digitalisation have become of increasing importance, as these strategies provide the potential for companies to operate more sustainably and resiliently across borders. Southeast Asia is home to some of the fastest-growing economies in the world, and presents many opportunities for Canadian companies looking to expand and diversify their businesses internationally. Singapore is often considered a regional hub and a gateway to the rest of Southeast Asia, while other ASEAN countries such as Vietnam are well-positioned to become alternate production hubs in the global supply chain.

Join the Canada-ASEAN Business Council and our partners to find out more about the strategies that are being taken by companies and policy makers to future-proof supply chains, and why the ASEAN region is playing an increasingly important role for companies’ global operations. This event is part of the Canada-ASEAN Business Leaders Series, organized by the CABC, in partnership with the Government of Canada.

Objectives

• Outline the drivers of the current supply chain crisis, and what strategies have proved successful.
• Understanding the current and future impact of COVID-19 variants on global supply chains.
• Understanding the impact of major weather conditions in Canada and ASEAN, and how this affects supply chain management.
• Hear from successful companies/organisations who will share their strategies for diversifying supply chains, and how this can improve the ease of business, investment, and mobility.
• Understand how supply chains are being reimagined in Asia amidst the digital revolution.
• Networking opportunities for the Canada-ASEAN business community.

Click HERE for more information and to register.

Webinar on Asian Economic Integration – Register now

CACCI would like to invite its members and friends to join the 40th Asian Impact webinar on 9 February 2022, Wednesday, 10:00 AM, Manila time, Asian Impact Webinar: Asian Economic Integration Report 2022 Launch.  Rapid digitalization and the COVID-19 pandemic are spurring growth of digital services trade in Asia and the Pacific. ADB’s flagship report explores how the region can capitalize on these opportunities through structural reforms and cooperation.

As a webinar under the Zoom platform, registration is required to attend. Please register in advance of the webinar date at https://asianimpact.adb.org. A confirmation email containing the webinar link and password will be sent once you have successfully registered.

To view the past Asian Impact webinars, please visit: https://www.adb.org/news/events/webinar/asian-impact

What Surprised You the Most About 2021?

2021 A survey of BRINK contributors

To round out 2021, we asked a cross section of our BRINK experts to name — in a couple of sentences — what they had learned that surprised them the most in their areas of expertise over the last year or so since the pandemic began.

Jo Owen, Author of Smart Work: The Ultimate Handbook for Remote and Hybrid Teams

The speed with which firms and people can change. In March 2020, remote working was transformed from unthinkable to essential in one weekend.

Mona Sloane, Sociologist and Senior Research Scientist, New York University

Literacy around AI systems and their risks and benefits has increased over a very short period of time.

David Dollar, Senior Fellow, Brookings Institution

The difficulty of establishing scientific certainty in real time; policies keep changing.

Businesses and populations have quickly adjusted to the “new normal” that the pandemic caused, despite poor performances across the globe by governments.

Source: Pexels

Ellen Ernst Kossek, Basil S. Turner Distinguished Professor of Management, Purdue University, Krannert School of Management

How much COVID-19 negatively impacted the work-life equality, labor force participation and careers of women; perhaps setting them back at least a generation.

Larissa van der Lugt, Director, Erasmus Center for Urban, Port and Transport Economics

The difficulty of achieving cooperation, while the pandemic urged that even more.

Scenario planning in good times is excellent planning for the challenging times.

Deborah Gordon, Senior Principal at Rocky Mountain Institute

How easily the work world adapted to virtual interactions and maintained productivity. I’m eager to see how hybrid working (both in-person and virtual) shapes up in the year ahead.

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

The extent to which the use of ICT has been scaled up over the past two years in most African countries, especially in the areas of banking, finances and education and health. Going forward, there is an opportunity to accelerate the use of ICT for nation-building by addressing the infrastructure challenges.

RM Charan, President of Charan Associates

How little U.S. business leaders were aware of the implications of the evolving U.S. China relations.

Sarah Tong, Senior Research Fellow at the East Asian Institute at the National University of Singapore

That there are social groups who would oppose efforts to contain the spread of the pandemic.

Alicia Garcia Herrero, Senior Research Fellow, Bruegel

Supply chain disruptions.

Richard Wilding, Professor of Supply Chain Strategy, Cranfield University U.K.

That scenario planning in good times is excellent planning for the challenging times.

Ben Hoster, Director, Transformative Technologies, Marsh McLennan Advantage

The pace of technology adoption and related perils. The second and third order effects of increased remote work and related cyber/digital risks. Technology is at once a key enabler and also a threat vector at increasingly large scale.

Bart W. Edes, Distinguished Fellow at the Asia Pacific Foundation of Canada

How quickly our work environment could dramatically change, with long-term impacts now embedded for the post-pandemic era.

John West, Executive Director, Asian Century Institute

I have been surprised at the incompetent management of COVID in most advanced countries and the lack of a serious effort to uncover the origin of COVID. Against that, I have been equally surprised at how rapidly effective vaccines were developed.

Alexander Privitera, Head of European affairs at Commerzbank AG

The resilience of banks.

Blair Chalmers, Director, Marsh McLennan Advantage

The ability of firms to conduct due diligence on acquisitions virtually (in the face of travel restrictions).

Marcus Courage, CEO at Africa Practice

The constraints of labor laws in managing remote and distributed workforces.

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

The resilience of value chains and digitalization.

Haig Nalbantian, Senior Partner, Mercer

The ease of adaptation to flexible work arrangements in response to COVID and the ability to sustain productivity and engagement under these circumstances is beyond anything I predicted.

Jason Clay, SVP Markets, ED Markets Institute, WWF

The pandemic is getting all the headlines, but climate change will disrupt and kill more lives and economies. It is already here and is having much more profound impacts than expected.

VADM (Ret) John Miller, CEO, The Fozzie Miller Group

I’ve been impressed by how quickly businesses and populations have adjusted to the “new normal” that the pandemic caused, despite poor performances across the globe by governments, which was slow, oppressive in the establishment of restrictions and regulations, and largely ineffective in easing the burdens caused by the virus.

Kavitha Hariharan, Director, Healthy Societies, Marsh McLennan Advantage

The continued failure to appreciate that in a pandemic, no one is safe until everyone is safe. Lack of vaccine access in poor countries and vaccine hesitancy anywhere result in persistent transmission of SARS-Cov-2, which rolls the dice in favor of the emergence of new variants.

The original article can be read at Brink’s HERE.

CCC sets up liaison office in Japan

To further augment and give a major thrust to the commercial sector between Cambodia and Japan, the Cambodian government has established a broad liaison of the Cambodia Chamber of Commerce (CCC) in Japan.

In a sub-decree on December 17 and signed by Prime Minister Hun Sen, the CCC’s liaison was established in Sendei city, Japan’s Tohoku Region.

The CCC’s liaison will be chaired by Susuma Tai, honorary consulate of Cambodia in Japan. The process of setting members of the liaison will be made soon, said Lim Heng, CCC’s Vice-President.

“Now, we have already established a liaison in Sendei city of Japan. The next procedures will be in the process of electing members and president. It will not take long to see the liaison put into commence,” Heng said yesterday, adding, “The establishment of a representative office of the Cambodian Chamber of Commerce in Japan is another good sign for the friendly relations, trade and investment cooperation between the two countries.”

The Cambodian government just endorsed new investment law which will be incentives offered to new investors from abroad to Cambodia, Heng said.

The official launch of the CCC liaison will be run under the presence of senior officials of relevant ministries, he added. This is the first liaison abroad and the CCC plans to set up its liaisons in other countries of China, EU, the US and Canada.

Nguon Mengtech, director-general of the CCC said in June this year that the liaison in Japan will work functionally attracting new investment from Japan to Cambodia.

“In Japan, we don’t have any representative office so, once operational, the CCC’s representative office will play an important role in facilitating investment and businesses from Japan to Cambodia,” Meng Tech said.

Khmer Times

ICCIMA Energy Committee holds meeting to discuss consumption issues

The members of Energy Committee of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) gathered on December 25 in a meeting attended by the Head of Iran’s Energy Exchange (IRENEX) Ali Naghavi to discuss energy-related issues.

As reported by the ICCIMA portal, offering Energy Saving Certificates (ESCerts) at IRENEX was one of the major subjects discussed in the mentioned meeting.

Speaking in the gathering, Head of ICCIMA Energy Committee Arash Najafi mentioned some of the existing issues regarding the government policies in energy consumption management and asked the IRENEX head to explain some of the exchange’s plans and policies to improve the situation.

Naghavi for his part noted that so far, the government’s major policy with regard to energy consumption management has been tariff-based, which means that the government has only increased or decreased energy tariffs to manage consumption in various sectors.

TEHRAN – The members of Energy Committee of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) gathered on Saturday in a meeting attended by the Head of Iran’s Energy Exchange (IRENEX) Ali Naghavi to discuss energy-related issues.

The government and the ministries of oil and energy, as the major entities in charge of energy in the country, have been looking to manage consumption by reforming the tariff system. But what is common in the world, and is also designed in the Iranian energy exchange, is a system based on punishment and reward, Naghavi explained.

One of the main policies of the Iran Energy Exchange, however, is to communicate with market stakeholders; we have had collaborations with ICCIMA and positive cooperation has been also started with the electricity market, the refining industry, and so on, he said.

Mentioning the offering of ESCerts at the market, the official said: “This tool has two types: the certificate of energy-saving; based on which the industries who have saved energy are given bonds equivalent to their saving and they can offer this as ESCerts in the market.”

“The second type of certificate is a financing certificate; If a company or industry wants to implement a new technology to save energy, it will publish this certificate in the market for financing the project for implementing this technology,” he added.

Tehran Times

Kadin calls for local protection under 2022 fishing policy

The Indonesian Chamber of Commerce and Industry (Kadin) has called on the government to protect local fishing companies ahead of a ministerial plan to auction commercial fishing rights covering a total quota of several million tons to both local and foreign investors starting 2022.

Joseph Pangalila, Kadin’s deputy chair for marine affairs and fisheries, told Kontan.co.id on Wednesday that businesses expected the fishing quota licensing system to attract more investment, especially foreign investment, as the policy made it easier for investors to calculate returns while it also ensured sustainable production.

The government should therefore require foreign companies to work with their Indonesian counterparts “so the policy does not kill off local businesses”, he said.

In November, the Maritime Affairs and Fisheries Ministry announced plans to start offering in 2022 an annual fishing quota of 4.89 million tons, worth an estimated Rp 110.2 trillion (US$7.71 billion) per year.

The policy is the government’s solution to the long-standing problem of illegal, unreported and unregulated (IUU) fishing in Indonesian waters, which it aims to reduce by requiring both foreign and local companies to obtain a license to fish certain areas.

By opening the fishing industry to investments, the ministry aims to boost the share of gross domestic product (GDP) contributions from the “blue economy”, which refers to the sustainable use of a country’s marine resources and environment.

Fisheries minister Sakti Wahyu Trenggono has also pledged to reserve part of the quota allocations for traditional fishermen as well as recreational fishing. “That’s what we will do. We will build thousands of fishing villages over the next three years,” Trenggono said.

The Jakarta Post

Differentiating Oil and Gas Emissions Will Be a Big Deal in 2022

An interview with Deborah Gordon, Senior Principal at Rocky Mountain Institute

One of the most important successes of COP26 was the Global Methane Pledge, in which 100 countries agreed to cut 30% of methane gas emissions by 2030 from 2020 levels. Methane is 84 times more potent than carbon and is relatively easy to remove from oil and gas production.

However there is a huge range of carbon emissions from different oil and gas producers, depending on their extraction, handling and transportation. Back in November, Deborah Gordon of the Rocky Mountain Institute told BRINK that methane’s moment had arrived.

Next year, she predicts, will become the year of differentiations when markets start to choose their oil and gas supplies based on the degree of carbon emissions, thereby putting further pressure on the O&G sector to decarbonize rapidly.

In this BRINKPod with BRINK’s executive editor Tom Carver, Deborah Gordon explains how the market is hungry for this kind of information, how the sector is likely to be shaken up over the next 12 months, and what is likely to happen at next year’s COP summit in November in Egypt.

Oil and gas companies are starting to take seriously the need to differentiate their assets and understand where the emissions are coming from.

Photo: Anrune Smenes-reite/Pexels

A Lightbulb Going Off

GORDON: The oil and gas companies are really taking to heart differentiating their assets and [understanding] where the emissions are coming from. So we’re seeing things that are starting to make me realize the companies are finally starting to see this as a way forward. For example, Shell is an interesting example. They probably have been thinking about this for quite some time, but they’re selling off a lot of their worst and dirtiest assets.

From a company’s point of view, that realization that your assets are pretty variable and some of them have much more risk associated with them than others, to me, it’s a light bulb going on.

Exxon is signed on to differentiate assets in New Mexico; BP just signed on to differentiate assets that are in Louisiana. … They’re starting to pilot differentiating their assets and grade their gas: How low-emitting, how low in methane is their gas? So to me, those are all real positives because it has the industry actually taking note and doing something about it.

Markets don’t work if you don’t differentiate assets. I mean, if everything’s the same, there’s no choice. I was just talking to a colleague who’s working on just the liquified natural gas portion of the supply chain. And it was a factor of 20 times between worst case and best case just in the handling of the gas from a liquefaction and gasification and transshipping point of view. And that’s not even considering upstream.

Consumer Behavior

We’re working on a project at RMI to digitize all these attributes. So you can actually track them through the supply chain. Someday, you could be a consumer at a gas pump and add up the average, almost like the grades over a semester in college. Your average emission of your gas, at that pump, at that time, is a B plus.

Right now, when there are three gas stations on a corner, you may choose a gas station just because the company’s actually selling your favorite candy. Which is not differentiated on climate at all.

Related themes: CLIMATE CHANGE INFRASTRUCTURE

Deborah Gordon
Senior Principal at Rocky Mountain Institute@dxgordon
Deborah Gordon is a senior principal in the Climate Intelligence Program at Rocky Mountain Institute where she is leading RMI’s Oil and Gas Solutions Initiative. Gordon also serves as a senior fellow at the Watson Institute of International and Public Affairs at Brown University. Her new book, “No Standard Oil: Managing Abundant Petroleum in a Warming World,” will be published by Oxford University Press this fall.

This Is Methane’s Moment: Battling Methane to Win the Climate War

Managing Methane Needs to Become a Top Priority

Not All Oil Is Equal. As Economies Recover, Which Oils Should Stay in the Ground?

The article can be read at Brink HERE.

Jewelry can be a major export-oriented sector: FBCCI president

The jewelry sector in Bangladesh holds the potential to be one of the major export-oriented sectors after readymade garments, said the President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Jashim Uddin.

He also called upon the government to provide policy support to the sector and focus on building the capacity of those involved so that the sector can truly flourish.

The FBCCI president was speaking at the assumption of responsibility ceremony of the 2021 – 23 committee of the Bangladesh Jewelers Association (Bajus) at a city hotel on December 15.

“To make the jewelry sector more export-oriented, the focus must be given to technological development as well,” Jashim Uddin added.

He also requested the government to eliminate the existing inequality in corporate tax. He said a fixed rate of corporate tax should be established.

“In India, VAT on jewellery is 3% but in Bangladesh, it is 5% and it is causing Bangladesh to fall behind in the competition,” he added.

At the event, Managing Director of Bashundhara Gold Refinery Sayem Sobhan Anvir, chairman of the new committee of Bajus, took over the responsibility from Enamul Haque Khan, chairman of the old committee.

The new committee of Bajus consists of 35 members, including seven vice presidents. Earlier on 29 November, the result of the election of Bajus’s new committee was announced.

The Business Standard

Business set to benefit from Australia-UK free trade agreement

Businesses in Australia and the United Kingdom have been brought closer with the signing of a bilateral free trade agreement between the two countries.

“Business has played an important role in the development of the Australia-United Kingdom trade deal and welcomes the opportunities this partnership provides,” ACCI chief executive Andrew McKellar said.

“The longstanding relationship between Australia and the United Kingdom is taken to new heights by this agreement that will greatly strengthen the ties with a key economic ally.   Australian businesses are set to reap the advantages of increased access to the UK market, and it’s 65 million consumers.”

“When the agreement comes into effect, exporters are set to benefit from the abolition of 99 per cent of tariffs on Australian goods exported to the United Kingdom.  These products are valued at approximately $9.2 billion.”

“The deal also opens access for our service exports, including professional services is also of high value to our service-based economy.”

“After a long period of closed borders, it will be of great benefit for our tourism industry to welcome more British working holiday makers.”

“As Australia and the world begins to reopen, establishing open and free trade partnerships will play a pivotal role in driving our economic recovery.  It is vital that this agreement is ratified as soon as possible so that Australian businesses can begin to enjoy increased market access.”

ACCI Media Release

New Director of New Zealand Trade Office in Taiwan

The Wellington Employers’ Chamber of Commerce has announced Mark Pearson as the new director of the New Zealand Commerce and Industry Office (NZCIO) in Taipei. NZCIO is a subsidiary of the Wellington Chamber and promotes New Zealand’s trade, economic and cultural interests in Taiwan.

Mr. Pearson is currently lead adviser for business partnerships at APEC New Zealand and has a long career in trade, international security and diplomacy at the Ministry of Foreign Affairs and Trade. He has previously held roles at the New Zealand embassies in Tokyo and Seoul as well as head office positions involving North Asia, ASEAN and disarmament.

Chamber chief executive Simon Arcus says New Zealand and Taiwan are both island economies driven by exports. “We share similar philosophies on international trade and trade liberalisation. ANZTEC (Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu) is the backbone of our trading relationship and will eventually lead to the removal of tariffs on all of New Zealand’s exports to Taiwan,” Mr. Arcus says.

Wellington Chamber of Commerce

Good Business Foundation Announces Partnership with ygap

The Good Business Foundation (GBF) has recently announced its partnership with ygap aimed at supporting inclusive business and entrepreneurship that results in reducing global inequality.

Under the partnership, the GBF and ygap will work together over the next three years to build inclusive entrepreneurship into traditionally mainstream business systems and networks, thereby allowing people previously marginalised and left out of the process to sit behind the driver’s seat of their own future.

“Most practically this partnership will work in fostering entrepreneurship within new migrant and refugee communities here in Australia and work in places like Fiji and Kenya to back local entrepreneurs. It will support women led entrepreneurs and leverage ygap’s expertise in gender lens investing,” GBF Founder Mr. Peter McMullin and GBF Executive Director Mr. Stuart Thomson said in a joint statement announcing the partnership.

Established in 2019, GBF is a for-purpose organisation leveraging expertise, relationships and resources to further social and environmental good. The team behind GBF believe that investing in an equitable future is essential for both business and communities to thrive.

GBF Founder Mr. McMullin, who is also CACCI Vice President, believes that the private sector has an important role to play in the resolution of many of today’s pressing social issues. He has made a significant contribution throughout his career forging positive, constructive partnerships between the private sector and governments, the not-for-profit sector and educational institutions. In furthering these objectives, he has established GBF to look at engaging business in social good.

ygap is an international organisation that aims to create positive change by making entrepreneurship more inclusive.by increasing their capacity to run successful businesses and by reducing the barriers that inhibit access and inclusion within the entrepreneurial ecosystem Since 2008, it has run 57 programs that have supported 589 ventures working to make a social or environmental change in their communities. It has offices led by local teams in Africa, South Asia, the Pacific Islands and Australia.

CACCI Women Entrepreneurs Newsletter available now

Taipei – CACCI is pleased to inform members and friends that the 24th Volume of Grow, the publication of CACCI Women Entrepreneurs Council is available HERE.

We hope that this publication will serve as an effective platform for an exchange of information among women entrepreneurs in the CACCI region.  Members are, therefore, encouraged to contribute articles for our future issues.  Kindly forward your materials (preferably with accompanying photos) to wendy.yang@cacci.biz

ACCI Elects New President

The Australian Chamber of Commerce and Industry (ACCI) elected Ms. Nola Watson as its new President during its Annual General Meeting held in Canberra on December 1, 2021, making her the first female to assume the position. She replaces Mr. Ray Sputore, who was ACCI President for the past two years.

Ms. Watson has served as the Deputy President of ACCI, President of Business NSW, and Chairman of International Chamber of Commerce Australia. Aside from her involvement in the chamber movement, Ms. Watson was executive General Manager of Insurance Australia Group, and spent many years in senior executive positions within New South Wales and Commonwealth governments.

“Over the past two years as Deputy President of ACCI, I have seen Australian business rise to meet the unprecedented challenges posed by the Coronavirus pandemic, I am honoured to continue to represent them as President,” Ms. Watson said.

“Alongside Chief Executive Andrew McKellar and the Board, I look forward to building ACCI’s advocacy efforts, maximizing our economic potential to ensure our future prosperity.

“With great uncertainty and major challenges in the national agenda, it is critical that business has the strongest leader and advocate to represent its interest. ACCI is that voice, representing businesses large and small, across the economy, from all corners of Australia. ACCI and its affiliates share one ambition, to make Australia the best place in the world to do business.”

Whittaker’s win top prize at Wellington Export Awards

A household name has shown its quality to the world, as Whittaker’s were crowned Exporter of the year at the 2021 ExportNZ ASB Wellington Export Awards, in front of a socially distanced and fully vaccinated audience at Te Papa.

“Whittaker’s success, despite a turbulent global environment, and domestic restrictions, shows the best of Wellington’s export community,” said Simon Arcus, Chief Executive of the Wellington Chamber of Commerce, which delivers ExportNZ in Wellington.

“After the past year, it’s more important than ever to acknowledge the contribution exporters make to keeping Wellington’s economy running. They have persevered through lockdowns, closed borders and supply chain shocks,” Mr. Arcus added.

“Every one of this year’s finalists deserves recognition for their hard work, and Whittaker’s success in international markets shows just how successful Wellington can be.”

ASB’s Executive General Manager for Corporate Banking Nigel Annett said he was impressed by the calibre of this year’s regional finalists. “At ASB, we’re extremely impressed by all of the 2021 ExportNZ ASB Export Awards winners and finalists. Every business involved this year demonstrated their relentless pursuit of an identified market niche, supported by highly developed product innovation. We’re proud to support the range of diverse companies involved in this year’s awards, all doing a remarkable job representing New Zealand on the global stage.”

The judges found that Whittaker’s were set apart by their ability to reorient their product and use data to adapt to new markets, all while remaining true to their values.

The judges were Chair of Business Central Vaughan Renner, NZTE Customer Director Ann Clifford, and ASB International Trade Consultant Paul Gestro.

Whittaker’s also claimed the CentrePort Wellington Best Established Business Award. Peanut Butter maker Fix & Fogg won the Southeast-Asia CAPE Best Emerging Business Award, as the judges were impressed by their rapid expansion into new markets.

Tube perforator manufacturer Sanpro Industries won the WellingtonNZ Excellence in Innovation Award, as the judges recognised the committed customer support and continuous innovation that has allowed the Petone based company to lead its industry worldwide.

Method Recycling claimed the Toitū Envirocare Excellence in Sustainability Award, recognising both their own commitment to sustainability, and the potential of their product to help others on their journey.

Hutt Valley staple Woolyarns claimed the Wellington School of Business and Government Judge’s Choice Award – recognising their exceptional resilience to in navigating a challenging pandemic.

Wellington Chamber of Commerce

PCCI: Senate OK of PSA amendments a Christmas gift

Senate approval of amendments to the Public Service Act (PSA) to allow 100-percent foreign ownership of a wide range of local business enterprises was described as “sort of a Christmas gift” by the Philippine Chamber of Commerce and Industry (PCCI).

The Philippine Senate had approved on the third and final reading Senate Bill 2094, which amends the PSA to allow full foreign ownership of ventures in telecommunications, air carriers, domestic shipping, railways and subways, canals and irrigations.

The Senate bill will still have to be consolidated with the version approved by the House of Representatives before a final proposed measure is brought before the President for signing.

Under SB 2094, the 40-percent limit on foreign ownership will remain for those considered as public utilities such as distribution or transmission of electricity, petroleum and petroleum products pipeline transmission or distribution systems, water pipeline distribution systems and wastewater pipeline systems, airports, seaports, public utility vehicles, expressways and tollways.

Overall, PCCI President Emeritus George Barcelon said that PCCI believes this measure – along with other reforms such as the Corporate Recovery and Tax Incentives for Enterprises Act, proposed amendments to the Retail Trade Liberalization Act, and amendments to Foreign Investments Act – would help open the country to more investments which are needed, given the impact of the pandemic on the economy.

The Philippine Star

The RCEP will boost Central Bank Digital Currencies (CBDCs) in Asia

By Dr. Oriol Caudevilla, FinTech Advisor, Co-Leader of the CBDC and Blockchain Working Groups at the Global Impact FinTech Forum (GIFT)

Central bank digital currencies (CBDCs) have been referred to as “the future of payments”, or even “the future of money”, and not without reason.

A CBDC is a new form of central bank money accessible to the public, accepted as a means of payment, legal tender, safe store of value by all citizens, businesses, and government agencies. Undoubtedly, the pandemic has turbocharged a global financial technology revolution.

CBDCs can serve many different purposes and can be designed accordingly: they can replace physical notes; they can be used to improve financial stability as a monetary policy tool, to promote financial inclusion, to fight against financial crime, improve payment efficiency and reduce intermediary risks, etc.

However, CBDCs are not cryptocurrencies, even though there is of course some relation between both categories.

The rationale behind CBDCs and cryptos is actually the opposite: whilst CBDCs are Central Bank Money adopting a digital form (therefore, legal tender issued by a central bank, representing a claim against that central bank) and thus centralized, cryptocurrencies are a key pillar of the movement known as DeFi (Decentralized Finance).

FNCCI preparing business code of conduct to end unfair practices

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) is preparing a comprehensive business code of conduct as growing unfair and irresponsible practices have been hurting the corporate and business environment, the country’s apex private sector body said.

The FNCCI has started collecting views from stakeholders as an input for the protocol for its members.

The move comes ahead of two crucial elections slated for next year when donation drives and extortion by political parties are expected to accelerate as they raise money to fund their campaigns.

Industry insiders say the code of conduct is indirectly meant to control donation drives by the political parties.

Consumers are already bearing the brunt of rising prices which shows election preparations have started, consumer rights activists say.

The general convention season is on with major political parties holding mass gatherings of their members which has led to price increases in the market.

These jamborees are held with funding by industrial entrepreneurs and traders, and they have passed on their expenses to the Nepali consumer, Madhav Timalsina, president of the Consumer Rights Investigation Forum, told the Post.

A study carried out by the Election Observation Committee, Nepal showed that the government, political parties and candidates spent an estimated Rs131.63 billion in total during the 2017 elections. “And the costs of campaigning are taken out of the consumer’s pocket by hiking the prices of goods and services,” Timalsina said.

At the same time, traders are having a free hand in setting market prices because the Ministry of Industry, Commerce and Supply has been headless for more than five months now,” Timalsina added.

In 2013, the FNCCI for the first time released codes of conduct dealing with six areas—consumer rights, competitive market, taxation, labour management, environment protection and corruption control.

FNCCI President Shekhar Golchha said the time had come to revise the code of conduct as the private sector aspires to achieve economic prosperity.

The private sector has introduced a vision paper for economic prosperity that also includes a key feature for a reputable private sector.

The FNCCI is revising the code of conduct under the leadership of Padma Jyoti, a past president of the organisation. Work on drafting the code of conduct has already started, and a Business Code of Conduct Forum has been formed, the federation said.

The Kathmandu Post

Fiber Broadband: Here’s How Governments Could Support Balanced Coverage

Worldwide, there has been an exponential growth in government and end-user appetites for high-speed fiber broadband; the number of OECD countries reaching 70% fiber has doubled from 2018 to 2020 alone. Key reasons for this shift include the fact that fiber networks send data about 20 times faster than legacy copper counterparts and require far less maintenance and energy input.

A worker drives a specialized vehicle that is laying tubing used for running fiber optic cable underground during the installation of broadband infrastructure near Haldensleben, Germany. Historical choices about communications infrastructure can impact future fiber coverage growth.

Photo: Photo by Sean Gallup/Getty Images

Fiber connections have also been linked to numerous desirable government outcomes — increased corporate innovation, increased labor productivity, increased data security, higher property values, reduced unemployment and increased access to education and health care. A study of fiber rollout in France found that fiber provisions boosted the creation of new businesses in the transport, services and commerce sectors by about 10% and reduced unemployment by about 5-8%.

Challenges

While plans for future investment in fiber rollouts globally are significant, the current reality is that coverage varies significantly across countries. A country’s natural environment, particularly its size and topography, will impact the speed and overall cost of extending fiber coverage to all towns and businesses.

Where a government leaves the progress of a rollout to market forces alone, this can lead to an imbalance of coverage where urban areas are prioritized based on operator profits.

Historical choices about communications infrastructure can also impact future fiber coverage growth.  Where legacy infrastructure is a mix of copper wiring, cables and other technologies, prior investment in these technologies can slow the willingness of operators to migrate to an expensive fiber-only business model. Re-skilling telco workers for fiber rollout has also been a significant challenge for operators. In 2021, a group of bipartisan leaders both within and outside of the telecommunications industry in the U.S. penned a letter to President Joe Biden, urging that the government spend more money on apprenticeship programs to support the federal rollout of broadband projects. Other providers have opted for private training options instead; for example, Etisalat in the United Arab Emirates (UAE), has trained over 2,000 technical laborers via their Etisalat Academy, which has become the largest telco training center in the MENA region.

Potential Ways Forward

There are a number of ways that governments can help guide or stimulate fiber rollouts, potentially generating significant interest from industry participants and private capital if the right environment is created.

Many nations that have progressed at speed with a fiber rollout have done so in parallel with supportive government policies that strike the right balance between supporting incumbent operators and new entrants to ensure competition, innovation and coverage of more rural areas. South Korea, for example, vaunts one of the highest fiber penetration rates in the world, at 83.9% as of 2020. Much of its success has been attributed to the 2012 Giga Korea Project, which received a total of  550 billion won ($470 million) investment at a 3:1 ratio of government to private sector contribution. Additionally, a fair regulatory environment has encouraged the entry of new players, keeping fiber infrastructure costs low and consumer choice wide, enabling the rapid rollout of 5G across the country.

The U.K.’s Project Gigabit, a 5 billion pound ($6.6 billion) government infrastructure plan to enable and deliver fast and reliable digital connectivity across underserved areas in the U.K., has also been highly impactful. Run by Building Digital U.K., the project has boasted one of the fastest fiber rollouts across Europe: 60% of U.K. households are to have access to gigabit speeds by the end of 2021, contrasted against the 10% coverage in 2019. In addition, households and businesses still awaiting coverage from the project are eligible for the U.K.’s 210 million pound ($278 million) Gigabit Broadband Voucher Scheme, which subsidizes the costs of fiber installation.

Along with financial support, ensuring that national targets are clear and aligned with private sector goals is key to a successful rollout. The U.S. Congress recently passed a $1.2 trillion bipartisan infrastructure bill, of which $80 billion has been designated for the deployment of symmetrical 100Mbps broadband in underserved areas. Some price cap operators have criticized the 100Mbps policy requirement citing its impracticability: Operators would face massive costs in overhauling legacy copper systems and believe that symmetrical 100Mbps speeds are both unnecessary for most homes and small businesses while also resulting in higher costs for consumers.

In addition to understanding and being aligned with ambitions that are set by a national government for fiber roll-outs, potential investors will also be keen to understand the current regulatory environment and intended future direction of travel.  Where a regulatory body is known to be willing to engage with the private sector and outline longer-term ambitions, this can help provide the confidence that is needed to attract new investors into this sector.

Conclusion

The positive externalities incurred by broad-based fiber rollouts are numerous, extending beyond market competitiveness to alleviating socioeconomic disparities. However, where rollout progress is left to market forces alone it is clear that network coverage can be uneven and diverge from national targets. The public sector therefore plays a pivotal role in partnering with private operators to capitalize on these externalities, while distributing fiber services in an efficient and equitable manner for end users.

Related themes: CYBERSECURITY INFRASTRUCTURE

Blair Chalmers
Director of Marsh McLennan Advantage
Blair Chalmers is a director in Marsh McLennan Advantage and leads the unit’s agenda for the infrastructure and construction sectors. Prior to this role, he worked for Oliver Wyman, the management consultancy, with a focus on clients in asset intensive industries.

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Rachel Juay
Research Analyst at Marsh McLennan Advantage
Rachel is a Singapore-based research analyst at Marsh McLennan Advantage. She holds a Masters in Public Policy and is interested in the intersection between government policies, business, and social change.

The original article can be read at Brink HERE.

7 Risks to Asia’s Economic Resilience in 2022

Across Asia, vaccination rates are rising, e-commerce is soaring, trade has rebounded and supply chain problems are starting to ease, delivering hope for the new year. Moody’s Analytics predicts that, by the end of 2022, all major Asian economies will have achieved a full recovery as measured by real GDP that exceeds its level of the fourth quarter of 2019.

Yet optimism is tempered by several risks to sustained economic recovery and regional stability. Here are seven to watch for in the months ahead.

COVID-19 Halts the Global Recovery

The slow roll out of vaccines in several countries, waning vaccine effectiveness and the emergence of the Omicron variant (and potentially others), constitute the biggest threat to the region’s sustained recovery in 2022. The situation could worsen if new variants prove resistant to existing vaccines and spread quickly across borders, straining health care systems.

Because of its reliance on manufacturing, Asia is particularly exposed if there is continuing disruption to global supply chains. Expect more localized lockdowns and targeted travel bans that could spook investors, unsettle stock markets, inflict more pain on the battered travel and tourism industry and generally raise concerns about a deferred exit from the pandemic.

The IMF warns that higher commodity prices and shipping costs, coupled with continued disruption of global value chains, are amplifying concerns about inflation persistence and export resilience.

People walk by construction workers as they work on a traditional style building in a shopping district in Beijing, China. The Evergrande crisis and volatility at other Chinese real estate companies have stoked concerns about how the government is managing the unsettled property sector, which accounts for the bulk of household wealth.

Photo: Kevin Frayer/Getty Images

China Misjudges Its Response to Domestic Challenges

The Evergrande crisis and volatility at other Chinese real estate companies have stoked concerns about how the government is managing the unsettled property sector, which accounts for the bulk of household wealth. Regulatory crackdowns on different sectors (internet services, education tutoring) have caused investors to wonder what industry will be targeted next and what measures Beijing intends to apply in its drive to reduce wealth disparities and achieve “common prosperity.”

China’s zero-tolerance approach to COVID-19 translates into a ban on most foreign travel and regular shutdowns at ports for mass testing. The knock-on effects on supply chains are contributing to persistent product shortages and delays globally and, in turn, contributing to inflation globally.

Local economies within China have been disrupted by lockdowns and curbs on inter-provincial travel. Consumer confidence remains below pre-pandemic levels, construction has slowed and power cuts have forced businesses to reduce their operations.

The IMF reports that the rapid withdrawal of policy support and the lagging recovery of consumption are also slowing economic recovery. In short, China is juggling multiple domestic challenges, and if it does not perfectly calibrate its responses, growth could be further constrained, negatively impacting other Asian economies.

Asia Is Particularly Exposed to Cybercrime

Asia is particularly exposed to cybercrime because of its large populations, relatively low awareness of cyber threats, absence of disclosure regulation and outdated and unlicensed technology.

While the region accounts for 60% of the countries that are very highly exposed to cyberattacks, it is also the top originator of cyberattacks, including state-backed actions supported by China, Iran and North Korea.

Phishing, pharming, extortion, non-payment/non-delivery, personal data breaches, identity threats and spying will continue to challenge the defenses of individuals and organizations in the public and private sectors. Bots will be responsible for the vast majority of incidents. Continuous cyberattacks threaten to impose great costs and generate disruption.

Inflation Is On the Rise in Asia

Inflation has been on the rise across Asia, driven by shifting global demand, rising food and fuel prices, and supply chain disruptions. The Asian Development Bank forecasts higher inflation in developing Asia in 2022.

The IMF warns that higher commodity prices and shipping costs, coupled with continued disruption of global value chains, are amplifying concerns about inflation persistence and export resilience. Lasting delays in mining operations, shipment backlogs, semiconductor shortages, surging freight costs and snap quarantine restrictions in key manufacturing and shipping areas are magnifying inflation risk. They may also cause structural changes to production and delivery and storage capacity across sectors.

Higher rates in the U.S. could increase debt burdens, stimulate capital outflows and cause a tightening of financial conditions in Asian developing economies. It could also cause downward adjustments in stock markets globally. If Omicron and other variants boost infections globally and continue to spur new government restrictions this risk will decline as economies slow.

Divisions Deepen Between the United States and China

Strategic competition between the U.S. and China has increased and threatens to drive global fragmentation. The U.S. and its allies continue to promote defense, security and infrastructure development initiatives in the “Indo-Pacific” region with the aim of countering China’s ambitions. Building on the groundwork laid by his predecessor, President Joe Biden is urging allies to apply restrictions on China in the areas of finance, investment, technology and trade.

This effort is putting pressure on third countries to choose sides. Decoupling is underway in areas of advanced technologies. President Xi Jinping’s consolidation of power — and pride in accomplishments like containing COVID-19 and hosting the Winter Olympics — will bolster China’s confidence in the face of the prevailing anti-China sentiment in the American capital and growing concerns about Beijing’s actions among its neighbors and many democratic states globally. The geopolitical rivalry could depress investment and productivity growth.

Social Tensions from COVID and Climate

COVID-19 has generated immense human suffering in developing Asia, particularly among groups that were already challenged with poverty, vulnerability and marginalization. During the pandemic, many governments tightened control over their populations and used the crisis as cover for restricting civil liberties and suppressing dissent.

Having boosted public spending to ameliorate the immediate impacts of the crisis, state budgets will come under pressure, which may lead curtailing social programs. Environmental threats and climate change are adding to instability.

Asia remains the world region most at risk to the negative impacts of climate change. In some countries, populations already chafing against unrepresentative government, political repression, corruption and inequality may be agitated enough — by lost opportunities during the pandemic and further delays in recovery — to turn to protest. Countries where unrest may turn violent include Bangladesh, Myanmar, Pakistan and Thailand.

Potential Security Flash Points

The U.S. withdrawal from Afghanistan renews the threat of a safe haven for terrorist groups. Violent extremist media branches of al-Qaida and its affiliates, as well as the Islamic State of Iraq and as-Sham (ISIS), have celebrated the Taliban’s perceived victory over the U.S and encouraged the use of violence by their followers and supporters.

China and Central Asian states are casting a wary eye over developments. COVID-19 and natural disasters have hit North Korea particularly hard and could spur more provocations like missile tests as it seeks attention and aid.

China has ramped up the pressure on Taiwan from several angles, including military flights into Taiwan’s air defense identification zone. Meanwhile, the U.S. has scaled up its support to the self-governing island. Although an attempt by Beijing to take Taiwan by force in 2022 is highly unlikely, a miscalculation by involved parties could cause an incident that would have major global ramifications for international relations and the global economy.

Conclusion

Renewed pandemic waves, possibly driven by the emergence of more infectious and vaccine-resistant variants, the waning effectiveness of vaccines already administered and slower-than-expected vaccine rollouts could derail Asia’s recovery.

However, if China and the U.S. ratchet down their bilateral tensions and find ways to work together on major global challenges, investor sentiment will improve, along with business and consumer confidence.

Bart Édes
Distinguished Fellow at Asia Pacific Foundation of Canada

The original article can be read at Brink HERE.

PCCI organized “47th Philippine Business Conference and Exposition” on November 17-18

The Philippine Chamber of Commerce and Industry (PCCI) held the “47th Philippine Business Conference and Exposition (PBC&E)” on 17-18 November 2021 via Zoom.

As a dialogue, a showcase, and a learning platform, the 47th PBC&E, which carried the theme of “Innovation.ph: Economic Recovery for All,” was the biggest annual gatherings of local business and government leaders organized by PCCI.  The two-day event was expected to bring policy reforms, fresh actions, and a new mindset on how the Philippines rise from the ravages wrought by the Covid-19 pandemic.

In addition, PCCI hosted in their virtual conference site International Meeting Rooms for business-to-business matching with featured countries, Networking Rooms for government partners such as the Department of Trade and Industry (DTI) and Department of Science and Technology (DOST), and for lending institutions specializing in MSME financing.

“The 29th Joint Economic Cooperation Meeting between CIECA and FTI” was Convened at Taipei

The Chinese International Economic Cooperation Association (CIECA), Taiwan and the Federation of Thai Industries (FTI) jointly convened the “29th Joint Economic Cooperation Meeting between CIECA and FTI” on Nov. 29, 2021 at the Hua Nan Bank International Convention Center, Taipei. Dr. Pan, Wen-Whe, Chairman, Thailand Committee, CIECA, Taiwan and Mr. Supant Mongkolsuthree, Chairman, FTI, jointly presided over the video conference. A total of 115 Taiwanese and Thai participants attended the meeting.

The theme of this year’s meeting correlated to the New Southbound Policy being promoted by the government and continued to explore new opportunities for business cooperation. The topics included: “Circular Economy”, “Biotechnology” and “Green Energy”.

The expert speakers were:

“Circular Economy”: Dr. Lin, Chun-Hsu, Deputy Director, Center for Green Economy, Chung-Hua Institution for Economic Research and Mr. Phromphron Isarankura Na Ayutthaya, Quality Management Division Manager, PTT Global Chemical PCL

“Biotechnology”: Mr. Peter Chen, Manager, Business Development, Orient EuroPharma Co., Ltd. and Dr. Panit Kitsubun, COO, KinGen Biotech Co., Ltd.

“Green Energy”: Mr. Ben Pan, Vice President, United Renewable Energy Co., Ltd. and Dr. Phatiphat Thounthong, Professor, Department of Electrical Engineering, King Mongkut’s University of Technology North Bangkok

The meeting participants included Mr. Chokechai Puapattanakajorn, President, Bangkok Bank Public Co., Ltd.; Ms. Sophia Chiu, Chairman, TECO Electric and Machinery Co., Ltd.; Dr. Chen, Jen-Pin, President, Agricultural Technology Research Institute and other industry professionals and academics attended the meeting. Mr. Narit Therdsteerasukdi, Deputy Secretary General, Thailand Board of Investment (BOI) and Mr. Y. C. Tsai, Director General, Dept. of International Cooperation and Economic Affairs, Ministry of Foreign Affairs, R.O.C. (Taiwan) addressed the meeting during the opening ceremony. Mr. Kriengkrai Thiennukul, Vice Chairman, FTI delivered closing remarks in which he thanked all participants and the conference speakers to their efforts in introducing business opportunities.

Thailand’s petrochemical sector is the largest in Southeast Asia, and its plastics industry contributed 6.71% of GDP. To solve the problem of plastic waste, the Thai government has introduced its Roadmap on Plastic Waste Management and set the goal of recycling targeted plastic wastes by 100% by the year 2027 to serve the circular economy concept.

Since the outbreak of the COVID-19 pandemic, besides vaccine development, countries have been seeking a way to resolve the pandemic. The Thai government has also joined the relevant research market. It develops the biotechnology and biomedicine industry through its Bio-Circular-Green (BCG) economic model. In Thailand, biotech and biomedicine have expanded by around 10 percent annually in recent years, showing particularly robust growth in medical devices, natural extracts for cosmeceuticals, food supplements that is expected to continue in the future.

One-third of Thailand’s energy capacity comes from renewable sources. To lower greenhouse gas emissions to 20.8% in 2030, the Thai government encouraged green energy producers with tax breaks and easier access to financing options. Experts forecast Thailand will raise its renewable energy capacity from 15 GW to 60 GW by 2037.

CIECA has regularly held the Joint Economic Cooperation Meeting with FTI which has been an important platform for communications and exchanges between the business communities of the two nations.

Are Apps Becoming Gateways for Cybercrime?

How we travel and where we can go now depends on a smartphone. Freedom of movement is app-based.

This is a major change in the mechanics of doing business and our everyday lives that was drastically accelerated by COVID-19 and the need for touch-free access. Apps can make access quicker and easier to manage for events, venues, buildings and transport of any kind. And they can make business operations cheaper.

But relying on apps also opens up a much wider front across society in the battle with cybercriminals. The fundamental issue is that the more widely used an app is, the bigger and more attractive the target.

Photo: Getty Images

Companies should be making full use of the advantages of apps for security

Reportedly, hackers “defeated” Microsoft’s recent attempts to make a new hardware component compulsory to Windows 11 within the space of 30 minutes. The U.K.’s National Health Service Test and Trace app was immediately ripped apart to explore the data waiting there. It can be done for the fun of it, to purposely cause damage to organizations, or as the basis of extorting money or for committing fraud. An app-based life encourages a mix of criminal activity with a kind of gaming, offering an ongoing series of challenges to test skills.

The Risk of Loss of Trust

The danger in this is the potential for customer-facing systems to become plagued by chaos and suspicion. A snowballing of minor issues with entry and disrupted plans could create a lack of public trust in digital proof of COVID-19 evidence, for example, leading to an ongoing sense of insecurity when traveling or in other public places.

In practice, the use of app-based access is so fundamental to commercial activities that cybersecurity is being ramped up and will stay top of priority lists. When there are problems, there will be “patches.”

But that doesn’t mean there are solutions on the horizon. For the foreseeable future, the reputation of digital access is going to be involved in a constant battle, with another crisis for major brands always just around the corner.

The World Needs IT Talent — Lots of It

In the U.S. alone, figures suggest a shortage of more than 464,000 cybersecurity specialists. We might have skilled staff, but do we have skilled, creative, highly motivated people willing to keep up the relentless fight?

The flaw at the heart of app-design is human. App security is only as strong as the human team involved, and experience shows that, over time, people become predictable. They have their favorite ways of putting code together, meaning patterns of code, data structures and file locations that can be more easily anticipated and taken apart. Walls that look solid to organizations can be riddled with entry points.

We need freewheeling creativity to stay ahead. Rather than working in silos, software engineers should be embedded alongside the security experts. Start with the security element.

Layering on Security

There are approaches that businesses can take to make their “access” offerings less vulnerable. Fraud is made harder by as much layering of elements as possible — where each element has to be simulated. So, for an e-ticket, that might involve including both a QR code and an animated logo, for example.

There are other tactics, like removing the ability to take screenshots while an app is open or making sure digital tickets require registration linked to an email account or a personal digital device.

In principle, apps on specific devices can be made safer than web-based purchases, which are just based around an online user account and stored information is “controlled” by the browser. Sometimes the website might note location, or there might be two-factor authentication, but there is still a more limited number of potential factors for securing information. A fixed device can keep information and tie itself to that device.

Apps Offer a Greater Range of Security Than Browsers

Companies should be making full use of the advantages of apps for security. There are additional avenues that can be used to track down how fraud has occurred, for example, by checking app logs and contacting customers to check whether devices have been lost or stolen or by looking at data on whether cybercriminals have managed to generate the ticket in the app, built a separate app, or used a combination.

There is the opportunity to make use of biometrics and additional passwords, again used as layers on top of basic user accounts for the product.

App security can be built up by prompting permission requests from the device (location, phone number, unique serial information and other user data) to validate activity, identify fraudulent activity and catch criminals.

We’re going to be using our smartphones as a kind of passport for free movement, locally and internationally. That means this is an issue for whole societies to think about. We’re all going to have to start thinking about the part we play in the battle, add to the pipeline of cybersecurity talent and what’s needed to keep us all moving.

Related themes: CYBERSECURITY

Sarah Morris
Head of the Digital Investigation Unit at Cranfield University
Sarah Morris is head of the Digital Investigation Unit in the Centre for Electronic Warfare, Information and Cyber at Cranfield University.

The original article can be read in the Brink’s website HERE.

Chamber Leaders Join 12th World Chamber Congress

Over 3,800 chamber leaders, representatives and industry experts representing 110 countries – including those from CACCI member chambers – attended the 12th World Chambers Congress (12WCC) which took place from November 23 to 25 in Dubai.

Co-organised by Dubai Chamber, the International Chamber of Commerce and its World Chambers Federation, under the theme Next Generation: Chambers 4.0, the Congress was the first hybrid event of its kind, offering delegates a glimpse into what chambers of the future will look like.

More than 80 speakers took part in 44 interactive sessions over the three days of the Congress. The 12WCC in Dubai highlighted the need for chambers of commerce around the world to realign their services to drive business in a new era that is being defined by digitalisation, governance, and increasing concern for social and environmental issues.

In the closing session, H.E. Hamad Buamim, President and CEO of Dubai Chamber and Chair of the ICC-World Chambers Federation, said Dubai delivered a World Chambers Congress like no other that raised the bar, while challenging chamber leaders to rethink their strategies, innovate and adopt action plans for the future.

“This a proud moment for me to see to this major international event hosted in my home country and the successful outcome of this Congress in Dubai exceeded our expectations. Dubai proved to be an ideal host city to host the first Congress to be held in the Covid-era, and I believe that it did not disappoint and certainly brought in fresh perspectives and new elements that took the event to the next level,” he said.

“12WCC in Dubai offered a glimpse into the future and global opportunities and insights through the Expo 2020 Dubai platform, which complemented the delegate experience. We hope that we have been able to start important conversations about the need for chambers of commerce to change their services to adapt to the needs of our members in a world that has gone through unprecedented changes – changes that are here to stay,” he added.

Addressing delegates virtually, Fabienne Fischer, Minister, Geneva Department of Economy and Labour, Switzerland, praised Dubai Chamber for creating a unique experience for the global chambers community at 12WCC. She spoke about what Geneva will offer when it hosts the next World Chambers Congress in 2023, also highlighting the need for chambers of commerce to focus on sustainable actions moving forward.

“We surely hope that the 13th World Chambers Congress will take place in more, if I dare say, ‘normal’ circumstances. As a member of the green party, I personally believe that the discussions about reshaping free trade and global commerce across all sectors and within all organisations will be strongly influenced by climate action,” she said.

She shared her view that governments cannot be expected to foster innovation on their own and said chamber of commerce have a very important role to play in promoting best practices and sharing lessons learned.

“I am proud to say that the Geneva Chamber of commerce is among the local leading drivers in this effort and strongly promotes business transformation towards more sustainable behaviours and products,” she added.

12WCC opened on November 23, with His Highness Sheikh Ahmed bin Mohammed bin Rashid Al Maktoum, Chairman of Dubai Media Council inaugurating the event that was the first to be held in the region since 2013. His Excellency Omar Sultan Al Olama, Minister of State for Artificial Intelligence, Digital Economy, and Remote Work Applications, and Chairman of the Dubai Chamber of Digital Economy, delivered the opening address on day one, discussing how the global pandemic had presented new opportunities for international chambers of commerce.

Other highlights of 12WCC were the launch of Chamber Model Innovation framework for revamping chamber services and embracing innovation, the latest edition of the Dubai Innovation Index analysing innovation input across 39 cities, and the Digital Fitness Test designed for chambers of commerce to evaluate their digital capabilities.

Dubai Chamber released a whitepaper during the congress, with the report providing valuable insights into the concept of Chambers 4.0 and how technology is reshaping global trade.

Geneva, Switzerland’s second-most populous city and a capital for global diplomacy, will host Congress delegates in June 2023. The proposed theme is Achieving shared prosperity through multilateralism, as the Geneva Chamber of Commerce, Industry and Services firmly demonstrated the power of international trade as a means to achieve peaceful cooperation among nations.

                                                                                                                                                                Dubai Chamber

ASEAN’s Business Community Makes Recommendations for Greening ASEAN

In response to the call made during the 26th session of Conference of Parties (COP26) held in Glasgow to involve non-state actors to help deliver climate finance, the CARI ASEAN Research and Advocacy, in consultation with trade associations, chambers of commerce and foreign business associations in the ASEAN region, has prepared a report entitled “Pathway Towards Green Recovery for ASEAN” to better understand and socialise the climate agenda with the private sector operating in ASEAN.

The 29-page report consists of recommendations in green recovery for ASEAN proposed by over 26 chambers of commerce, business councils, industry groups and partners from all ten ASEAN member states, dialogue partner countries and regions including EU, UK, US, Japan, India, Canada and Russia.  It is the third instalment of a series of Pathway Reports following the release of A Pathway Towards Recovery and Hope for ASEAN (Pathway 225) in 2020 and Pathway for Malaysia 2021 that captures recommendations, perspectives and priorities from the private sector’s perspective.

This report captures 88 critical feedback and recommendations from two virtual Consultation Dialogues on business perspectives with regards to green initiatives following the COVID-19 pandemic, policy gaps affecting a green recovery, challenges and the required support for a green recovery in ASEAN. Key questions presented during the consultative sessions are as follows:

1. Key green areas critical to sustainable recovery for businesses
2. Green initiatives or green opportunity areas most relevant to businesses
3. Key areas of concern in adopting green initiatives
4. Government support that can encourage or further drive green initiatives
5. Key consideration in investment decisions for businesses

To read the full report, click here.

Urgent clarity needed for cruises to set sail: ACCI

As Australia’s summer season approaches, indications from the Federal Health Minister that the cruise industry will be permitted to set sail before Christmas are a promising sign. However, without a clear timeline to end the ban on cruise lines and a commitment to welcome cruising from State and Territory Governments there is little hope of cruises returning before the years end.

“With cruises resuming responsibly in other parts of the world, our own industry remains anchored,” Andrew McKellar, Chief Executive of the Australian Chamber of Commerce and Industry said.

“For our cruise industry to recommence operations they need a firm commitment and timetable to resume, indications are not enough.  We cannot expect the cruise industry to set sail again with so much uncertainty.”

“Restarting the industry is not as simple as the Federal Government just lifting the ban.  A restart to the cruise industry takes months of planning with staffing, catering and ship storage all needing to be considered.”

“The Federal Government must provide a clear timetable for ending the Biosecurity Determinations so that cruises can resume.  The COVID safe measures required for cruise ships to operate must also be outlined. Further, we need state and territory governments to commit to accepting cruise ship arrivals.”

Prior to the pandemic, the Cruise sector contributed $5.2 billion to the Australian economy, supporting more than 18,000 jobs.

“The economic impact of cruising is significant, with the industry bringing key tourism dollars to regional and remote communities, while also benefiting the accommodation, hospitality and retail sectors,” John Hart, Executive Chair at Australian Chamber – Tourism added.

“Just as the cruise ships that have recommenced operations internationally, the Australian cruise industry is ready and willing to operate within any required COVID safe measures, they just need to know what they are so they can start to prepare.”

ACCI Media Release

FBCCI signs MoU with MEDEF International to boost bilateral trade

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has signed a memorandum of understanding with MEDEF International (Mouvement des Entreprises de France International) to boost bilateral trade and investment.

The MoU was signed at France-Bangladesh Business Council Meeting organized by MEDEF International and Embassy of Bangladesh on November 11 at Paris in France.

Md Jashim Uddin, President of FBCCI and Pierre – Jean Malgouyres, Chairman of the France – Bangladesh Business Council, MEDEF International, inked the deal on behalf of their respective organizations, said a press release.

Addressing the meeting, FBCCI President Md Jashim Uddin stated that Bangladesh attaches great importance to its existing cordial relations with France. The two countries have a long-lasting bilateral relationship.

He also mentioned that France is the fifth largest export destination of Bangladesh with rising trend with major export products like woven garments, knitwear, home textile and footwear.

Jashim said Bangladesh offers best competitive fiscal and non-fiscal incentives for investment. Manufacturers of Bangladesh are adopting greener technologies and modern productions methods aligned with 4IR and challenges of climate change. Among the world’s top 10 green RMG factories, the top 7 are located in Bangladesh.

He hoped that the signing of MoU, would help further promoting cooperation between FBCCI and MEDEF for diversifying trade and expanding investment in an effective manner.

RTV News

KCCI warns S. Korea’s potential growth rate to drop amid low birth rates

The Korea Chamber of Commerce and Industry warned that South Korea’s potential growth rate could drop to the mid-one percent range as a result of low birth rates and a drop in labor productivity.

In a report released on November 10, the chamber’s sustainable growth initiative division said South Korea’s total fertility rate hit a record low of 0.84 last year as it has been also hit with the fastest aging population among OECD members.

Combined with a drop in labor productivity in the wake of the financial crisis, these factors are slowing down the country’s potential growth rate, the chamber said.

South Korea’s potential growth rate remained at around 4.7% on average between 2000 and 2009 before dropping to around 2 percent this year, according to the KCCI’s latest estimate.

If the demographic change and labor productivity slump continue at their current pace for another 10 years, the potential growth rate will drop further to 1.5% in 2030, the report warned.

To slow down the dwindling of the country’s potential growth, the KCCI said the government should introduce new measures to help raise birth rates and encourage women’s economic participation. “Raising child benefits or increasing the amount of child allowance depending on the number of children should be considered,” the report said.

The current child benefit scheme provides a monthly allowance of 100,000 won ($84.61) for a child below 7 years old. In Germany, the monthly child allowance for the first and second child is 219 euros per month.

Flexible work systems including remote work should be introduced more widely so women can continue to work after childbirth, the report also said.

When the women’s labor force participation rate rises from 52.8% in 2020 to the OCED European average of 55.3%, it will lead to a 0.25 percentage point increase in potential growth rates.

But fighting low birth rates will be a long-term solution rather than a short-term solution for a shrinking labor population as it will take around 15 years for a bump in birth rates to start positively affecting potential growth rates, the report said.

The Korea Herald

Philippine chamber releases ‘wish list’ for Duterte administration’s last months

The Philippines’ largest business group released its “wish list” of policies for the remaining months of the administration of President Rodrigo Duterte.

The Philippine Chamber of Commerce and Industry said it hopes the Duterte administration will implement the following measures for the remainder of its term:

• Institutionalize innovation for economic development
• Open the economy now and assist businesses to create new jobs
• Fully implement ease of doing business
• Fast-track internet connectivity at competitive rates
• Modernize agriculture for food security
• Innovate and digitize the education system,
• Balance industry growth and environmental protection
• Assure adequate power supply at a competitive cost
• Make infrastructure a cornerstone of economic development
• Fast track the completion of infrastructure and ensure transparency in bids and awards.

The PCCI released this during its 47th Business Conference and Expo, which was also attended by some of the country’s economic managers.

Socioeconomic Planning Secretary Karl Chua and Trade Secretary Ramon Lopez said they will continue to push for legislative reforms that will open up the Philippines to more foreign competition, especially in telecommunications, so that the public can get access to a wider range of services and products for their connectivity.

Lopez said they will also push Congress to ratify the Regional Comprehensive Economic Partnership or RCEP, which will open up opportunities for more trade across the region.

Information and Communications Technology Undersecretary meanwhile said the agency will pilot test satellite technology for internet communications in underserved areas.

PCCI president Benedicto Yujuico meanwhile lauded the Philippines’ jump in the Global Innovation Index from the 73rd spot in 2018 to 51st this year.

“Among the factors cited for the improvement in our GII are innovations particularly in the online sales via e-commerce and improved logistics in the delivery of goods and services. Our better GII performance proves that we are an efficient innovator and that we have the capacity to make things faster, better and more efficient,“ Yujuico said.

Vice President Leni Robredo, who delivered the keynote address to open the event, said that she will also push for some of the items on the ‘wish list’ of the PCCI.

ABS-CBN News

Supply Chain Issues Are Not the Biggest Threat to the Maritime Industry

The marine industry faces significant challenges in its effort to prepare for decarbonization and new environmental regulation.

While keeping a wary eye on COVID-19-related issues, the global marine industry sees environmental issues as potentially having the most impact in the coming decade, according to the Global Maritime Issues Monitor 2021 survey.

For the marine sector, key environmental risks involve the decarbonization of shipping, new environmental regulations, and the failure of climate change mitigation and adaptation. Each of these scored high among survey participants for their perceived impact and likelihood — and worryingly low on preparedness.

Alongside environmental issues, industry leaders see cyberattacks, sustainability and digitization among their key concerns, according to the annual report, a joint project of the Global Maritime Forum, the International Union of Marine Insurance and Marsh Specialty.

Photo: Getty Images

Interestingly, the industry gained confidence in its ability to manage pandemic risk — despite the disruptions COVID-19 has caused in supply chains, shipping and global economies. While the 2020 survey placed “pandemic” as the issue for which the industry was least-prepared, in 2021, it was placed among those issues for which the industry was most prepared, likely a reflection of many months of intense focus.

Impact of Environmental Issues Increases

For the first time across the survey’s four years, respondents ranked shipping decarbonization as the most impactful issue, followed by new environmental regulation. This concern, in large part, comes from increased pressure from investors, financial institutions and customers seeking to address climate change and related sustainability issues.

The marine industry faces significant challenges in its effort to prepare for decarbonization and new environmental regulation.

For example, the implications of decarbonization extend to fuel price increases, which the survey found to be an increasing concern as it moved five spots higher to 10th place in 2021 regarding its impact.

Environmental issues are also affected by the broad societal demand for sustainability, which can be seen in the increased interest and expectations from consumers in everything from energy use to how goods are manufactured, and ultimately, transported.

As part of its role in global efforts to rein in climate change, the maritime sector will need to reduce its carbon footprint — shipping emits about 3% of global greenhouse gas (GHG) emissions. Success will depend largely on implementing policy frameworks that enable the industry to reach global climate targets at scale and with urgency.

The entire ecosystem of the movement of goods is changing.

The International Maritime Organization (IMO) adopted an Initial GHG Strategy in 2018, aiming to reduce emissions from shipping by at least 50% by 2050 compared to 2008 levels; the strategy is scheduled to be revised in 2023.

Some experts say that a potential IMO 100% by 2050 target could have nearly as much impact as a global price on GHG emissions; however, only 23% of survey respondents believe such a measure will be adopted.

Simply reducing emissions in current vessels will not be enough to reach the goals; zero-emission ships must start entering the global fleet by 2030 and increasing their numbers significantly in the following years.

Survey respondents also said global policies and regulations would have more impact than regional ones, but that regional and domestic ones are more likely to be implemented. Regulatory uncertainty — including the pricing of GHG emissions and fuel mandates — generally are seen as more likely to be used than are incentives such as fuel and vessel subsidies.

Regarding pricing, some experts believe a key step in climate policy will be to place a price on GHG emissions; it’s also viewed as the most likely step to be implemented. Among survey participants, a global price was seen as the most impactful and ranked second for likelihood.

Still, agreeing to a global price on GHG emissions is fraught with political challenges, causing some regions to consider regulating shipping while global measures are worked out. In July, for example, the European Commission proposed to include shipping in the EU Emissions Trading System, while the U.S. and China have raised the possibility of similar steps.

Digital and Cyber Risks Increasing for Shippers

As in most other sectors, the marine industry sees cyberattacks and data theft as more impactful and more likely in 2021. Survey respondents raised a red flag, saying the industry is not fully prepared to tackle these issues.

In these days of never-ending cyberattacks, no organization in the marine industry can afford to feel “insulated” from targeted attacks. Upgrades involving technology and digitization are the norm across the industry, including changes to vessels, terminals, ports and other areas. While leading to vast improvements in shipping, these changes also open the door to increased attacks from bad actors — and increase the stakes.

As the industry continues to digitize and upgrade technology, organizations must at the same time reinforce and upgrade their ability to withstand the inevitable attacks. Training employees, being vigilant regarding IT protocols, and other steps are necessary to improve cyber resilience.

The entire ecosystem of the movement of goods is changing, and industry experts see the risks around big data and artificial intelligence as additional areas for which the marine industry needs to improve its preparedness.

For example, AI’s role in logistics operations is increasing, while autonomous driving systems are set to be ubiquitous in all means of transportation, including shipping. For the marine sector, impacts will include the interoperability of cargo booking and forwarding systems, electronic bills of lading, and more.

Not only are such developments rife with cyber risks, they are shifting liability and leading to the need to purchase new and/or expanded insurance programs that align with new laws.

The marine industry continues to adjust to a number of issues brought on or exacerbated by COVID-19, including shipping delays and a crew-change crisis. Looking beyond these immediate concerns, the industry is working to deliver changes needed to help meet the challenges of climate change and the increased cyber risks of a technologically driven global economy.

Marcus Baker
Chairman of Marsh Marine Practice

The original articles were be read in the Brink’s website HERE.

FNCCI and Investment Board to work together to increase foreign investment

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the Investment Board Nepal (IBN) will cooperate with each other to promote foreign investment in Nepal.

In the third meeting held at the IBN for the International Investment Promotion Committee under the FNCCI, the Chief Executive Officer of the IBN Sushil Bhatta and the FNCCI President Shekhar Golchha expressed their commitment to work together to promote investment in the country.

Bhatta also said that the IBN is actively working with the private sector to bring necessary policy reforms to attract foreign investment in Nepal. Stating that the investment sector should also be diversified, he added, “We have many potential areas for investment and investors should also be encouraged to invest in our diverse sectors. Similarly, no project can move forward without an in-depth study of the technical, environmental and financial condition.”

On the occasion, FNCCI President Golchha said that the federation is a responsible and capable body to hold discussions and ensure coordination with domestic and foreign private investors. He stressed the need for the IBN and the FNCCI to work together to reach out to foreign investors to attract investment in Nepal. “We have an active network, both at home and abroad. Using that network, we can easily reach out to investors and attract investment to Nepal,” said Golchha.

Republica Nepal

ICCIMA holds online meeting to explore trade opportunities in Croatia

Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) held an online meeting on October 30 to explore investment and trade opportunities in Croatia, the ICCIMA portal reported.

The meeting was attended by the Iranian Ambassador to Zagreb Parviz Esmaili, the ICCIMA Deputy Head for International Affairs Mohammad-Reza Karbasi, and representatives of provincial chambers of commerce as well as a number of businessmen interested in doing business in Croatia.

During the meeting, the capabilities and needs of each province were discussed, and accordingly, the existing capacities in Croatia, about which there is a possibility of joint investment and economic cooperation were also explored.

In this regard, Karbasi underlined establishing direct flights between the two countries, expansion of joint cooperation in the field of health tourism, and signing of sisterhood agreements between different provinces of the two countries as measures that could be taken for boosting mutual trade relations.

He also expressed ICCIMA’s readiness and willingness to implement a barter trade management in collaboration with Iranian specialized parent companies and called on the Iranian Embassy in Zagreb to list Croatian companies wishing to barter goods and services with Iran.

Referring to the high capacities in Iran and the Balkan region, as well as the importance of increasing Iran-Croatia trade interactions, the official underlined the need for using the potentials of the provincial chambers and the Iranian embassy in Croatia to strengthen cooperation in various fields.

He further suggested specialized meetings be held in various fields in cooperation with the Iranian Embassy in Croatia.

Karbasi stressed the need for establishing a joint Iran-Croatia Trade Committee under the supervision of the two countries’ chambers of commerce based on a memorandum of understanding signed between the two sides.

Tehran Times

Arun Chawla appointed as Director General of FICCI

The Federation of Indian Chambers of Commerce & Industry (FICCI) on October 30 said Arun Chawla has been appointed as its new Director General.

Chawla will assume charge with immediate effect. He joined FICCI in 2011 served as the Deputy Secretary General of the chamber prior to his appointment.

“We are delighted to welcome Arun Chawla in his new role. FICCI would surely benefit from his long experience in the organisation and his earlier stint in the corporate world,” FICCI President Uday Shankar said.

Data Localization Is Now a Big Part of Doing Business Globally

More than 100 countries now require their citizen data stored in servers physically located inside their borders. These laws are creating significant new technical challenges for chief information security officers (CISOs).

In this new data sovereignty era, the threat landscape is more sophisticated, and risks are typically no longer a binary yes/no but a scale of limitations based on the sensitivity of the data involved. The fact that a lot of data remains scattered in the cloud makes the CISO’s job an even more challenging affair.

Photo: Robin Bartholick / Getty Images

Many countries like Germany, France and Russia have laws that require citizens’ data to be stored on physical servers within the country’s physical borders.

Data localization or data sovereignty refers to restrictions placed on the ability of companies to move, store, process or otherwise handle their users’ personal data.

Many countries like Germany, France and Russia have laws that require citizens’ data to be stored on physical servers within the country’s physical borders. There are also countries where regulations only apply to certain industries that advocate the same local data flow, such as government agencies and military contractors.

These proposals can take different forms; some aim to make it harder for companies to move customer data outside the country, while others call for companies to maintain local copies of all user data.

GDPR Was a Game-Changer

When the European Union enacted the revolutionary General Data Protection Regulation (GDPR) in 2018, it was a challenge for CISOs in many companies to align with the demands of the law. Over 500 lawsuits have been filed against non-compliant companies, resulting in 260 million euros ($300 million) in fines so far. Meanwhile, the cost of GDPR compliance is expected to be around $8 billion per year for Fortune 500 organizations.

As the world transitions to a data-driven society, privacy seems set to play an even more important role than it already does.

Following suit, over a hundred jurisdictions — countries, states and cities — have now passed their own data privacy legislation. These “local GDPRs” add up to create a global tangle of regulatory responsibilities that will wreak havoc on the operations of nearly every global firm that interacts with consumers.

It’s like a second set of tax codes for CISOs, with high expenses, high risk, complex implementation and absolutely no room for noncompliance.

Barriers to Cloud Adoption

The 2019 Cloud Security Report highlighted some major concerns regarding a CISO’s migration to the cloud. Sixty-four percent of the surveyed population mentioned data loss as their primary challenge during the transition, while 62% highlighted data privacy.

Although the focus of a breach response is to remediate the damage and restore business, the cost of a data breach should not be taken lightly. The most contributing factors are third-party involvement, system complexities, operational technology, compliance failure and extensive cloud migration.

Another consideration is the legislation of the data itself. This can place restrictions on CISOs and their ability to access and work with user data. User privacy and security become a lot more than simply putting the right protective measures in place — there are rules, and they can sometimes be difficult to navigate as different countries have different laws.

Privacy Is No Longer an Accessory But an Essential

The privacy landscape has changed drastically in the last few years, so much so that privacy has become essential to business and is no longer an accessory. As the world transitions to a data-driven society, privacy seems set to play an even more important role than it already does.

Any CISO should be aware of the fact that customers will demand transparency from organizations, especially about their data. They need to tell their users where their data resides and who can access it.

CISOs can contribute significantly to the effectiveness of their organizations by taking an active interest in establishing robust data sovereignty practices. For example,

CISOs should consider the “entire stack” when developing and maintaining a solution that meets relevant compliance standards.

CISOs need to research and know how to comply with the local requirements. Knowing the local laws is now the standard operating procedure for navigating international business deals. You can’t do business in another country without understanding their data laws.

The Hybrid Cloud

A hybrid cloud made up of on-premises infrastructure, private cloud services and a public cloud gives CISOs more options and the chance to streamline operations and save money. If the business is using a public cloud model today, most of the applications will be in play with a hybrid cloud approach. These applications can be moved back to the on-premises environment when needed while also capitalizing on the advantages of the public cloud when applicable.

Protecting the most sensitive information, whether it is trade secrets, personally identifiable information, or intellectual property, is the core function of a CISO.

With more enterprises leveraging data analytics and business intelligence to gain business advantage, CISOs are challenged to balance strategies for achieving data sovereignty with the new realities of cloud computing and big data.

Related themes: CYBERSECURITY GLOBALIZATION INFRASTRUCTURE INTERNET OF THINGS REGULATION

Deepak Gupta
CTO and Co-Founder of LoginRadius@dip_ak

Deepak is the CTO and co-founder of LoginRadius, a rapidly-expanding Customer Identity Management provider. He’s dedicated to innovating LoginRadius’ platform, and loves fooseball and winning poker games.

Voice Technology Is in Demand — and Social Distancing Could Accelerate Its Adoption

The original article can be read in the Brink’s website HERE.

“Singapore International Energy Week 2021,” October 25-29

CACCI herewith forward an invitation to all CACCI officers and members to attend the Singapore International Energy Week (SIEW) 2021, of which CACCI is a Supporting Organization, to be held on October 25-29 at the Marina Bay Sands Expo and Convention Centre, Singapore.

Organized by The Energy Market Authority of Singapore (EMA), SIEW 2021 is a hybrid event with both onsite and online streaming elements.  Featuring the theme of “Advancing the Energy Transition,” the five-day event is an annual platform for energy professionals and policymakers to discuss and share best practices and solutions within the global energy space.  It aims to foster a robust exchange of views and perspectives among thought leaders and industry professionals in the energy industry, even as we adhere to safe management practices.

Anchor events at SIEW include the SIEW Opening Keynote (SOK) and Singapore Energy Summit (SES) which feature high-level keynotes and panel discussions around this year’s theme. Other key events include the SIEW Energy Insights, SIEW Thinktank Roundtables and In Dialogue with Youth. SIEW partner events, the Asia Clean Energy Summit, Asian Downstream Summit, and LNG & Hydrogen Gas Markets Asia provide an opportunity to focus in on industry-specific topics.

For more information on the event visit their website HERE or register online HERE.

Opportunities in Aircraft Leasing & Financing at GIFT IFSC

FICCI under the aegis of International Financial Services Centres Authority (IFSCA) is organising a digital roadshow on Opportunities in Aircraft Leasing and Financing at GIFT IFSC. IFSCA is keen to set up a facilitative regulatory framework with the objective of making GIFT City a highly attractive destination for aircraft leasing. A brochure and pdf flyer detailing the opportunities can de downloaded for further reference.

We invite interested CACCI members to join this roadshow scheduled on 29th October 2021 from 1600-1730 hrs (IST).

For any further query, you can write to finance@ficci.com.

What Does Globalization Look Like in a Post-Pandemic World?

The global economy is emerging from the pandemic with global supply chains in disarray and companies struggling to source products from around the world. In his new book with Anthea Roberts, Six Faces of Globalization, professor Nicolas Lamp argues that there is no longer a single narrative to describe globalization, but multiple. BRINK began by asking him how the pandemic has changed the nature of globalization.

LAMP: I don’t think the pandemic has changed the fact that we live in a globalized world. We will continue to have global supply chains. But there’s no question that we now think about those supply chains differently. The key narrative that has emerged in response to the pandemic focuses on the importance of resilience.

Resilience Is the New Ingredient

I believe that what we are going to see is a more balanced form of globalization, which balances the benefits of efficiency, of just-in-time supply chains and specialization, with the value of resilience.

There will be an awareness that it can’t always be the cheapest option, it can’t always be the quickest option, that sometimes we have to accept redundancies and make long-term investments, even if they are expensive.

We have to keep in mind that there are many different ways of achieving resilience. As defenders of globalization have pointed out, if you concentrate production at home, that could also be a danger to resilience. What’s happening in the United Kingdom right now is a striking illustration of how a lack of openness to the outside world can undermine your resilience.

Photo: Getty Images

Businesses now think about supply chains differently. The key narrative that has emerged in response to the pandemic focuses on the importance of resilience.

Workers in different countries are in the same boat, and it’s the corporations who are taking advantage of workers everywhere.

With a hard Brexit, the United Kingdom has made a big bet on domestic workers and has foreclosed the option of relying on workers from the European Union. Now it’s experiencing the consequences. Concentration is a problem for resilience, no matter whether you’re dependent on foreign or domestic suppliers.

We need to get away from the idea that resilience can only be achieved through reshoring. Often, it will simply not be practical to reshore the production of most of the goods that we purchase. Maybe the United States and European Union can build their own semiconductor industries. But you see the sums that are involved: $50 billion in the case of the United States, $20 billion in the case of the European Union, which is probably not going to be enough. For most countries, that is simply not in the cards.

Don’t Rely On a Single Narrative

BRINK: The book is about six different perceptions of globalization. So which is on the ascendant and which isn’t?

LAMP: It depends very much on the context. We don’t have a clearly dominant narrative, but rather different narratives in contestation, and our message to policymakers is that when you’re dealing with complex issues such as globalization, trade, climate change, the response to the pandemic, it’s dangerous to rely on a single narrative and to design policies on the basis of that narrative.

You need to look at your policy from the angle of all the different narratives and try to attend to the concerns of all the narratives if you want to have a policy that is going to stand the test of time and is not going to go down in flames.

Take President Emmanuel Macron’s diesel tax as an example in France. It made perfect sense from a sustainability perspective, and also from the perspective of what we call the establishment narrative, which favors market-based solutions.

But President Macron did not consider how the tax would be perceived by those who subscribe to the populist narratives, who saw the tax as an attack on people living in the countryside that did not impose any burdens on city-dwelling elites. And soon enough, President Macron had the “yellow vest” protests on his hands.

BRINK: Would you say that there is a corporate narrative of globalization?

LAMP: That’s a great question. Corporations are using these different narratives when it suits their interests. Perhaps the best example is when Facebook and the tech companies were being subjected to scrutiny because of antitrust and other regulatory concerns. One reaction was to say, “Well, look, the Chinese government is working together with its tech companies and supporting its tech companies. We also need to be team USA in order to be able to confront team China.” That argument, of course, doesn’t work as well anymore, since China cracked down on its own tech companies. But there was definitely an attempt to deflect attention from the role of corporations by reframing the issue as one of geo-economic competition.

BRINK: You talk about a corporate power narrative. Can you explain what you mean by that?

LAMP: The corporate power narrative is a narrative that identifies corporations as key actors in globalization and juxtaposes them with a transnational working class.

The argument here is that workers in different countries are in the same boat, and it’s the corporations who are taking advantage of workers everywhere. This narrative tries to rebut the perspective of former President Trump and other right-wing populists, who argue, for example, that Mexican and U.S. workers are in competition.

The corporate power narrative that was put forward by American and Canadian trade unions was very different: It said that the real fault is not with Mexican workers, the real fault is with corporations. When the corporations take the jobs to Mexico, they pay the Mexican workers poverty wages, which don’t reflect the productivity of those workers. So they’re screwing both the workers in Canada and the U.S. who are losing their jobs, as well as the Mexican workers who are not being fairly rewarded for their work.

BRINK: Will this debate ever be resolved, one way or the other?

LAMP: I don’t think the contestation between the narratives will ever be resolved. What may change is the focus of the debate. In recent years, the globalized world has been the meta-narrative of our time.

But there is a possibility that other issues become the center of our attention — the pandemic provided an example. When the pandemic started to dominate public life, all the narratives that we were studying suddenly became narratives about the pandemic and what should be done about it.

There are two other topics that might become the center of these debates. One is climate change. We consider the possibility that globalization becomes a sideshow, and the real debates on which these narratives focus is what to do and how to deal with climate change.

And the other potentially all-encompassing meta-narrative could be U.S.-China geopolitical competition, where suddenly everything becomes about the U.S.-China relationship, just as the Cold War dominated public debate in the second half of the 20th century. If that becomes the dominant frame, then the narratives will tell different stories about that issue.

So we don’t think the debate is going to be resolved, but our aim is to make the debate based on a better understanding of different types of views and pave the way to develop policies that integrate concerns from the different narratives and obtain a broader base of consensus.

Related themes: GLOBALIZATION SUPPLY CHAINS TRADE

Nicolas Lamp
Assistant Professor of Law at Queen’s University@nicolas_lamp
Nicolas Lamp joined the Faculty of Law at Queen’s University as an Assistant Professor in 2014. In 2020, he was cross-appointed to the Queen’s School of Policy Studies. He also serves as the Academic Director of the International Law Programs, an eight-week summer course that Queen’s Law offers at the Bader International Study Centre at Herstmonceux castle in England during the summer term. Since 2019, he has also been the Director of the Annual Queen’s Institute on Trade Policy, a professional training course for Canadian trade officials that is hosted by the Queen’s School of Policy Studies.

What Does 2021 Hold for Global Trade?

What Just Happened at the WTO? Everything You Need to Know

How Do We Think About the Winners and Losers from Globalization?

The original article can be read in the Brink’s website HERE.

Are Electric Vehicles Really Green?

When it comes to transport’s carbon footprint, increasing attention is being paid to the carbon impact not only of the fuel type but of the parts used in the assembly of a vehicle, whether electric or petrol-powered.

A new report on the materials used in the vehicle manufacture by the Brussels-based Transport & Environment think tank (T&E) shows that EVs should have far fewer carbon emissions in their manufacturing process, though much depends on how the battery is made.

Lucien Mathieu is road vehicles and mobility analysis manager at T&E. BRINK spoke to him about how the process of manufacturing a vehicle determines that vehicle’s carbon footprint.

Photo: Sean Gallup/Getty Images

A worker assembles the interior of an electric car on the assembly line at a production facility on June 08, 2021, in Germany. The process of manufacturing a vehicle, excluding the battery, generates around six tons of carbon emissions on average.

MATHIEU: The process of manufacturing a vehicle, excluding the battery, generates around six tons of carbon emissions, on average. Of course, it depends on the size of the vehicle, but that includes acquiring the primary materials and all the manufacturing processes.

The main difference in the carbon footprint of the materials used in an electric car versus a petrol car comes down to the battery. An electric engine is much smaller and much lighter than a petrol or a diesel engine, which is much more complex and, therefore, requires significantly more materials and manufacturing.

Sourcing the Energy

Even more important in terms of reducing the carbon impact of the production of a vehicle — whether electric or not — is the source of the energy used by the car producer on its site. It matters whether the car producers use renewable electricity and whether their manufacturing processes are energy efficient. This is essential when seeking to reduce manufacturing emissions and is especially true in the production of the EV battery.

We have a tool online that allows you to look at the entire lifecycle of a vehicle and compare the carbon emissions of any car, petrol or electric, to see where the battery is made, what type of electricity is used to recharge the electric car, etc.

For an EV, the second most critical element after the source of electricity is how the battery is actually made. Manufacturing an average battery will add between four to five tons of carbon dioxide emissions. We divide these impacts into two phases. The first phase, the upstream parts, is the extraction of the raw material for the battery and the refining of those materials.

The second stage is manufacturing in huge battery factories that are setting up shop around the globe. If you produce a battery with electricity generated by coal, then the battery cell production stage will have a relatively high impact, whereas, on the other hand, if you use renewal electricity, the impact of battery production is only between a third and a quarter of the impact of the upstream matter extraction. This offers a huge potential to reduce emissions from battery cell production.

Recycling Will Be Critical

BRINK: Right. How much is the carbon footprint dependent on recycling materials?

MATHIEU: We don’t have a lot of data on battery recycling because only a very small number of EV batteries have already reached their end of life. Batteries will stay on the road for 10, 15 years, so we have very few batteries that are coming to the recycling stage.

And the few that are coming to the recycling station are closely kept by the battery producers because, for them, it’s a very valuable opportunity to learn and develop their in-house recycling processes.

BRINK: How much impact will the EU’s new battery law have?

MATHIEU: The law is now being discussed at the EU level between the parliament and in the member states. And it’s a major breakthrough in terms of how we address batteries. This will oblige all batteries placed in the market to be collected and recycled. And it will have specific material recovery targets, such as 95%, when it comes to cobalt, nickel, manganese or copper. Ninety-five percent of those materials will have to be recycled and recovered to be used in new applications, like for a new EV battery.

There is still a bit of a gap in terms of the knowledge that we have, but we expect recycling to play a significant part in reducing the emissions from the battery footprint, in particular for reducing the amount of primary raw materials that we have to extract from the ground.

Responsible Mining

However, we’re still going to need so much more raw material in the future to meet expanding demand for decarbonizing the road transport sector, so extraction will still have to increase as well. There is a whole section in this new EU law about responsible mining, which obliges the battery-makers to do a full due diligence and risk assessment and mitigation of their supply chain in the identification of the risks linked to extracting the materials.

This can be an environmental impact, for example, on the water toxicity, but also the ethical and social impacts, for example, child labor in Congo. These are things that will be addressed as well in this new battery law.

The last pillar of the law is on the type of carbon footprint calculation.

The European Commission will be developing a methodology to calculate the precise carbon footprint of the batteries, taking into account all the different variations that you can have, for example, if the nickel is from Indonesia or it’s from South America, if the battery is produced with clean electricity or not. So all these questions will be taken into account.

The European Commission will then put in place strict requirements on the maximum carbon footprint of batteries placed in the market in Europe.

Related themes: CLIMATE CHANGE REGULATION

Lucien Mathieu
Road Vehicles and Emobility Analysis Manager at T&E@mat_lucien

Lucien Mathieu is a road vehicles and emobility analysis manager at T&E, the leading think tank and campaign group on sustainable mobility in Europe. His work is focused on accelerating the transition to electric mobility for cars and trucks, on the basis of evidence-based advocacy work. Mathieu has been the main author of several reports on CO2 emissions from cars and carmakers compliance with the EU car CO2 emission standards, as well as reports on electric mobility, notably on the EV market in Europe, EV batteries and charging infrastructure.

The original article can be read in the Brink’s website HERE.

Invitation to “FICCI-CACCI Business Delegation to Expo 2020,” Dubai, UAE, November 23-25, 2021

CACCI herewith forward an invitation from the Federation of Indian Chambers of Commerce and Industry (FICCI) to join the FICCI-CACCI Business Delegation to Expo 2020, Dubai, United Arab Emirates (UAE), to be organized on November 23-25, 2021.

To be hosted by Dubai, UAE, Expo 2020 is scheduled to be held from October 1, 2021 to March 31, 2022. As the world’s greatest show of human brilliance and achievement, the Expo will see millions of people from around the world meet and celebrate their collective humanity and is an opportunity to work towards a shared and sustainable future under the promise of “connecting minds, creating the future”.  It will also showcase innovation, inspiration, and the most brilliant talents from 192 countries in one spectacular futuristic destination.

By joining the Delegation, participants will have the opportunity to be engaged and entertained through immersive pavilions, cultural experiences, more than 60 live events per day and 200-plus food and beverage options, uniting visitors in a world-class extravaganza.

The tentative itinerary and estimated participation fee can be viewed HERE.

Evergrande Is the Consequence of An Unsustainable Economic Model

The Chinese real estate sector has long been too big and too risky, and it is not coincidental. It was central in the Chinese leadership’s plan to reflate the economy from the global financial crisis in 2008. Since then, the way forward for the sector has been to leverage debt so as to increase the supply of housing units, given Chinese households’ infinite demand for them.

In fact, housing has long been the most important asset to those in China as an investment of their savings, in light of the still draconian controls to capital outflows. Investment in housing has been El Dorado for Chinese households, as prices have been on the rise nearly continuously until recently.

Reasons for the Price Decline

Prices suddenly decelerated in 2021 for several reasons. First and foremost, there was a sudden regulatory push to control the overstretched balance sheets of real estate developers, which has resulted in restructuring some large real estate companies, such as China Fortune Land, even before Evergrande got into trouble.

In other words, Chinese households — even if flooded by a still rosy picture of the real estate sector and the Chinese economy in the local media — are increasingly wary about investing in real estate.

If Evergrande were not to deliver on its promises, pre-sales of housing units would dry up in China pushing most real estate developers to the brink.

The second reason is that the tighter controls do not only affect developers but also buyers of real estate who deal with huge down payments as well as the fear of a nationwide property tax, which has been rumored for quite some time.

Finally, Chinese households are feeling the brunt of an economy that has been decelerating rapidly for the last few years, pushed by its own overcapacity but also the U.S.-led trade and tech war and, more recently, the pandemic.

A man walks through the Evergrande changqing community in Wuhan, Hubei Province, China. China’s real estate sector is not bound to collapse out of Evergrande’s demise.

Housing Is a Major Source of China’s Inequality

The Chinese government’s crackdown on the real estate sector comes in the context of China’s rapidly changing long-term economic goal from growth “über Alles” to common prosperity. The crackdown involved the introduction of the so-called “three red lines” to limit their debt leverage, dependence on pre-sales, and short-term funding that was too short.

Common prosperity is President Xi-Jinping’s new economic mantra, following that of dual circulation, to highlight the importance of better income distribution and more equal opportunities. Excessively high — and growing — housing prices are probably the most important source of income inequality in China. Access to housing — or the lack thereof — is a key factor in explaining income disparity.

Evergrande could not but be the target of the government crackdown for a number of reasons. First, it is the largest real estate developer. Second, it is the most leveraged and does not fulfill any of the aforementioned three red lines.

Thirdly, Evergrande is heavily exposed to foreign investors, whether through the Hong Kong stock exchange or bonds issued in Hong Kong’s offshore market. The latter, which accounts for close to $20 billion, mostly denominated in USD, have mainly been bought by foreign private banks and asset managers for their high net worth clients.

It seems clear, after the lack of payment of a USD bond coupon last Thursday, that Evergrande’s offshore debt will go through a restructuring. Based on the example of China Fortune Land, which is finishing its own restructuring, this might not necessarily entail a nominal haircut but an extension of the maturity and the reduction of the interest due.

Foreign investors will probably be relieved if such restructuring is announced as they now lack clarity as to the future of their investment in Evergrande. Still, most of Evergrande’s debt is domestic and will need to be serviced, especially the amount received by Evergrande in pre-sales from Chinese households.

1.5 Million Are Waiting for Their Apartments

Close to 1.5 million Chinese households are waiting for Evergrande to finish their units, and this will surely happen. The main reason is the massive reliance of other real estate developers on pre-sales so that if Evergrande were not to deliver on its promises, pre-sales of housing units would dry up in China pushing most real estate developers to the brink.

In addition, President Xi-Jinping’s common prosperity is really not about dumping the losses on the households. As such, the Chinese government has already given clear signs that local governments will take care of the unfinished projects.

Two important takeaways follow. First, China’s real estate sector is not bound to collapse out of Evergrande’s demise, as public money is going to be put to work to solve its systemic consequences within China. This does not mean, however, that everybody, especially not foreign investors, will be fully bailed out. Evergrande needs to serve as a warning signal of the cost of excessive leverage.

The second takeaway is that China’s growth will suffer from all of this. Not only is the real estate sector — which is a key contributor to China’s investment, employment and growth — going to slow down after Evergrande’s demise, but investors, in general, will be increasingly wary of China’s drastic change in priorities.

Economic success is no longer the goal, and financial excess will be penalized. Contributing to common prosperity is now the key objective, even at the cost of disgruntled private investors and, thereby, a potential stagnation of the economy.

Related themes: CHINA DISRUPTION INVESTMENT

Alicia García-Herrero
Senior Fellow for Bruegel and Chief Economist for Asia Pacific at Natixis

Alicia García Herrero is chief economist for Asia-Pacific at Natixis and a senior fellow for Bruegel. Previously she was chief economist for Emerging Markets at Banco Bilbao Vizcaya Argentaria. She is a non-resident fellow at Cornell’s emerging market research centre and Senior Research Fellow at El Cano Royal Institute for International Relations. She is currently adjunct professor at City University of Hong Kong, visiting faculty at University of Science and Technology as well as at China-Europe International Business School.

Could the RMB Dislodge the Dollar As a Reserve Currency?

Asia-Pacific Must Phase Out Fossil-Fuel Subsidies

Is China About to Cap Its Coal Output?

The original articles can be read in the Brink’s website HERE.

Invitation to the ASEAN Leadership and Partnership Forum 2

CACCI is pleased to forward hereunder an invitation to CACCI officers and members from the ASEAN Business Advisory Council (ASEAN-BAC), of which CACCI is an Associate Member, to join the “ASEAN Leadership and Partnership Forum 2021” to be held on October 7, 2021.

Ransomware Attacks on Critical Infrastructure Are Surging

According to Temple University’s Cybersecurity in Application, Research & Education Laboratory, ransomware attacks on critical infrastructure are on the rise, with about 75% of recorded incidents since 2013 having taken place in the last 18 months. The increasing frequency and severity of ransomware attacks are reflected by the steady increase in cyber insurance prices.

Threat actors can target critical infrastructure with geopolitical or financial motivations. They are well aware of the potential knock-on impacts on businesses and economies, as these attacks can cripple unprepared organizations by halting operations for extended periods.

A failure to prevent or respond to ransomware incidents can lead to reputational and liability risks, with lasting impacts on trust dynamics between infrastructure operators and key stakeholders such as governments, investors and consumers. These trust implications are further discussed in Built to Last: Infrastructure and Trust In A Changing World, a new report from Marsh McLennan.

Source: Rege, A. (2021). “Critical Infrastructure Ransomware Incident Dataset”. Version 11.3. Temple University. https://sites.temple.edu/care/ci-rw-attacks/ • Critical infrastructure sectors are labelled according to definitions of the US Cybersecurity and Infrastructure Security Agency (CISA). * As of July 2021.

What Do Post-COVID Supply Chains Look Like?

Across the world, companies have been celebrating the return of more normal activity, more reliable supply chains and a boost from renewed consumer confidence. And that’s where they are going wrong.

A year ago, I described how the pandemic was changing supply chains in unexpected ways, and if a business’s supply chains have remained the same as they were before the pandemic, then it is going to have problems. Retail is just one immediate example. Post-lockdown sales might be sharply up, but profits remain down because the cost to serve is so much higher for online sales and delivery models. Businesses in all sectors need to move forward to a new normal for supply chains. Perhaps it can be a “new better.”

Photo: plus49/Construction Photography/Avalon/Getty Images

Container ships from China passing at Blankenese on the Elbe, Germany. In the short to medium term, the impact of COVID-19 is not going away, meaning sharp rises in shipping and air freight costs.

Cost to Serve Is Higher

A year on from the first waves of shocks, global supply chains are working in a fast and furious fashion. Working, but volatile — subject to local uncertainties and the potential for a difficult accumulation of disruption.

In the short to medium term, the impact of the COVID-19 pandemic is not going away, which means a changing picture of lockdowns and restrictions in different parts of the globe. Overall, that has meant sharp rises in shipping and air freight costs. And, in general, lead times for supply chains have needed to be extended.

The knock-on effect of this has been a need for more containers, more containers not moving and capacity being fully taken up — so, containers end up in the wrong places around the global supply chains system. It’s like supermarket trolleys. If processes to take trolleys back to the front of the store aren’t working, then they’re going to end up scattered all around the extremities of the car park.

Bottled Up Consumer Spending

Supply chain disruptions and shortages are continuing to happen because of the dramatic upturn in economies, a release of bottled-up consumer spending.

The microchip shortages in some sectors are also being exacerbated by parallel interactions, where there is increased competition from across different sectors competing for supplies, especially with the accelerated shift to computerization and autonomous systems in everything from the workplace to transport systems.

A question mark also remains over whether the surge in demand for products is real or just a bubble of stockpiling as businesses fill their stock rooms to pre-empt recovery. The danger is that customer demand doesn’t or won’t exist on the same scale and we enter a boom-and-bust cycle.

The pandemic crisis of 2020-21 has brought permanent, structural changes to supply chains. There is no return to 2019, and businesses need to take on board the lessons of the past 18 months and find the best blend of old and new.

Cost and value will always be fundamental, but resilience has to be the priority for protecting company survival for the longer-term.

Shorter, More Localized Supply Chains

We have seen how those supply chain managers with the strongest network of relationships have coped better. Businesses tend to focus effectively on the basic management of inventories, KPIs, information systems and people — but appear to think relationships happen by accident. Collaboration and proactively managed relationships are the key to future resilience.

Businesses have seen the need for shorter, more localized supply chains. Supplies of some high-demand raw materials, like cobalt and lithium, can only come from specific regions — nothing can change that situation — but there can be more near-shoring and on-shoring. There is also the need for multi-shoring, not basic multi-sourcing, which caught out some operations during lockdown that had arranged multiple different supply sources in the same region, all affected by COVID-19 transport restrictions.

The crisis has demonstrated the need for transparency: continuous monitoring and intelligence, real-time information across networks in order to anticipate and understand the impact of volatility and better deal with the complexity involved. Events like the blockage of the Suez Canal earlier this year had a heightened impact because it was a case of disruption on disruption.

The Need for a Strong Culture

A strong culture has been critical for ensuring there’s the necessary agility and flexibility in a supply chain operation. By ‘culture’ I mean what happens when people are left without instruction and under pressure? What do they do? Can they work together to find solutions?

People have been shown to be the most vulnerable element in an organization, adding to the momentum toward Robot Process Automation. This could both increase resilience within operations (not having to rely on the presence and movements of human employees) but also take the repetition out of human work roles.

There needs to be a working trade-off between property assets, information systems and HR. Organizations may no longer need physical offices to the same extent as a result of automation and remote working, but they need to invest into more than just new information systems. There has to be renewed attention and investment into HR and the management and leadership of dispersed workforces, all the processes that need to be re-engineered for a virtual world of work. The growing reliance on digitization and connectivity also means a new intensity of focus on cybersecurity.

A ‘New Better’?

What companies and consumers value has changed. Lockdowns have moved a much larger proportion of the consumer population — including older demographics — over to the ease of online shopping. In other words, people have got used to shopping differently, and that means that whole supply chain processes, networks, information systems and organizations have to change.

Ultimately the lesson has been the need to procure for resilience and not solely cost. Cost and value will always be fundamental, but resilience has to be the priority for protecting company survival for the longer-term.

A new better for supply chains will bring some major changes for wider societies.

There will be benefits from more automation, digital systems and on-shoring, including higher quality jobs, the potential for more diversity in the workforce, a reduced transport footprint for the environment and less plastic waste. But at the same time, there will be challenges, including the need for new business models to ensure viability and maintaining the engagement and motivation of supply chain workers. The biggest barrier, though, will be complacency around the “return to normal.”

Related themes: CYBERSECURITY SUPPLY CHAINS TRADE

Richard Wilding
Professor of Supply Chain Strategy at Cranfield School of Management@SupplyChainProf
Richard Wilding OBE is the professor of supply chain strategy at Cranfield School of Management. He is also the chair of the Chartered Institute of Logistics & Transport (UK), and recognised as one of the world’s leading experts in logistics and supply chain management.

Coronavirus Is Changing Global Supply Chains in Unexpected Ways

The original articles were be read in the Brink’s website HERE.

99 of the World’s 100 Most Environmentally At Risk Cities Are in Asia

It’s clear that cities everywhere are uniquely threatened by the environment. Not just climate change, but other issues, such as air quality, water pollution and resource restrictions are becoming increasingly significant in mega-cities.

A recent report by global risk analytics firm Verisk Maplecroft concludes that 99 of the most environmentally threatened cities are in Asia. BRINK spoke to the author of the report, Will Nichols, head of Environment and Climate Risk Research at Verisk Maplecroft.

NICHOLS: One of the key things that is driving the Asian risk score so high is air quality. While we do have air quality issues in Europe, for example, in London and some of the Eastern European cities, Asia really is far and away ahead of that.

Photo: Sajjad Hussain/AFP via Getty Images

People walk along Rajpath near India Gate under heavy smog conditions in New Delhi on November 9, 2020. One of the key things that is driving the Asian risk score so high is air quality — aggravated by a growing population.

Air pollution and water pollution, alongside water stress — the availability of water and water demand — are all aggravated by a growing population, and we see quite high population growth rates in many of these Asian countries, which is compounding these risks.

There are also issues around natural hazards such as flooding or earthquakes or droughts in many Asian cities. So for example, Jakarta, which is the number one city on our index, not only has issues around air quality and water pollution and wood stress. It’s also got real threats from flooding and earthquakes. And all these impacts are all going to be exacerbated as climate change kicks in, as well.

The Threat to Urban ‘Wealth Generators’

BRINK: Did you rank all these risks equally?

NICHOLS: There are nine risk indices, such as air quality, water quality and so forth, as well as the exposure of the economy and transport infrastructure to natural hazards. In terms of natural hazards, there’s some consideration given to casualties, but we’re mainly looking at economic losses, so it’s geared toward businesses and economic impact.

If these risks are increasing, as we think they are, then they threaten the status of these cities as wealth generators. This has knock-on effects on investment, credit risk and how countries might organize their economies.

Climate change is often viewed with deadlines — “we’ve got 2030 targets.” etc. But it’s not like these environmental challenges occur with a switch. We’re trying to make people aware that these risks are rolling so they are better prepared to mitigate them.

Source: Verisk Maplecroft Global Risk Analytics Dataset © Verisk Maplecroft 2021

Why Asia’s Climate Risks Differ from Africa’s

BRINK: A lot of people would imagine that African cities would be somewhere near the top, places like Lagos, for example. Why don’t they feature as much as Asian cities?

NICHOLS: Natural hazard risks are comparatively lower in sub-Saharan Africa. So, there aren’t the threats of storms or earthquakes or volcanoes to the same extent that there are in Asia or South America.

Where African cities really do spike, is in terms of climate change vulnerability. That’s partly a result of the climate extremes these countries are facing, but it also is a factor around how well these countries are able to mitigate the impacts of climate change and adapt.

So, even though the climate extremes and the physical risks they’re facing might not be quite as severe as some parts of Asia, because African countries are poorer, they are less able to cope in terms of the strength of their institutions, and the funding needed to finance mitigation measures.

Population growth is also going to exacerbate these risks for cities, as you see migration from more risky cities to less risky cities taking place, which will put greater pressure on those cities that were previously seen as less risky.

What Does This Mean for Business?

BRINK: If you’re a company that has a presence in some of these cities, how do you process these findings?

NICHOLS: We recognize that it’s not always possible to pick up your operations, or your supply chain from one at-risk city, and move it to a less risky city. You need to be near the market. You need to be near a labor force. Whatever it is, there’s certainly other factors that will go into decision-making, here.

Nowadays, it’s difficult to find a company that hasn’t got some kind of climate change policy. However, all these environmental factors need to be a part of any long-term decision-making. especially if you’re investing in infrastructure, like an airport or railway line that’s going to be around in 20, 30 years. Otherwise, you risk the asset being potentially stranded or not useful.

In poorer countries, governments may lack the capacity to deal with these risks, whether that’s levies or building sea walls, etc., so the burden on mitigating climate change impacts and adapting may fall on businesses.

There are also going to be increasing limits around carbon — we’ve seen the enormous Chinese emissions trading market going ahead — and these have tended to happen first at a city level before they roll up to a national level. So, it really falls on companies to factor these potential threats into their investments at a city level before they move ahead.

Related themes: CITIES CLIMATE CHANGE RISK MITIGATION

Will Nichols
Head of Climate and Environment Research at Verisk Maplecroft@WillNicholsRisk
Will Nichols heads up Verisk Maplecroft’s global environmental and climate change research team. He generates data-driven insights to help financial and corporate clients identify and address ESG and climate risks impacting their operations, investments and supply chains.

The original articles were be read in the Brink’s website HERE.

Decentralized Finance: The Next Big Threat for the Finance Sector

Decentralized finance, or DeFi, is a fast-growing segment of the financial markets. Based on a blockchain platform, DeFi provides software services that can cut out intermediaries in financial transactions, thereby allowing for financial services, such as mortgages and investment, to be delivered at lower costs. The question is: Will it take off, or will the financial sector push back?

Kevin Werbach is the chair of the Department of Legal Studies and Business Ethics at the Wharton Business School, University of Pennsylvania.

WERBACH: At a broad level, DeFi is about reconstructing the entire financial system on decentralized blockchain-based foundations.

At the moment, we have a significant and growing market around cryptocurrency trading, as well as payments in things like Bitcoin. However, most of that activity still goes through centralized actors. If you buy Bitcoin on an exchange like Coinbase, for example, Coinbase is taking custody of your assets, and it’s providing a similar kind of intermediation function to a traditional financial services provider.

No One Takes Custody of Your Assets

DeFi is about taking the actual financial service provision and transforming it into software that is operating as what are called “smart contracts” on a blockchain.

Most of this kind of activity today is on the Ethereum blockchain, but there’s a number of other blockchains that are growing in their level of DeFi activity.

Photo: Chris McGrath/Getty Images

People use bank ATMs next to a Bitcoin ATM at a shopping mall in Istanbul, Turkey on April 16, 2021. There are now more crossovers where decentralized finance architectures are being built within the traditional financial services world.

There are three key attributes of DeFi.

The first is that settlement is done on a trust-minimized blockchain platform. The base layer is that these are digital assets — cryptocurrencies where the ultimate ledger of transactions is a blockchain — as opposed to some centralized database in a financial entity.

The second piece is that the services are non-custodial — no one takes ownership or full control custody over investors’ assets. The investor still has control of their assets — even though they are transacted — whether it’s a trade or a lending relationship through the financial services platform.

The third piece of DeFi is that services are open, programmable and composable. What that means is that all of these are just software components that are running on a blockchain network. So it’s easy to add in additional functionality or to combine functions from different services because everything is running on a standardized software environment.

Which of the Intermediaries Will Be Most Threatened?

BRINK: Which intermediaries are likely to be most disrupted by this?

WERBACH: We first need to question whether DeFi actually disrupts traditional finance, operates alongside traditional finance or integrates with traditional finance.

It probably will be some of all three, but the growing success of DeFi does not necessarily require undermining traditional financial institutions. The question that DeFi poses to traditional finance is whether intermediation is valuable.

If the things that a bank or an asset manager does turn out to be things that can be provided more cheaply and efficiently in an automated way through software, then that will ultimately lead to capital flowing away from those traditional intermediaries.

In terms of the infrastructure, staffing, processes and relationships that are wrapped around that basic intermediation function in traditional finance, what will happen to all of those if we move to a world where at the core is software and decentralized blockchains as opposed to existing finance structures?

BRINK: Can you describe any new services or new areas of financial activity that might open up as a result of this innovation?

WERBACH: Right now, there is a tremendous amount of experimentation in DeFi because these base functions in finance can be combined in different ways. So one area of experimentation we see are aggregators — where if, for example, you have multiple opportunities to earn yields for providing capital as liquidity, then that can be automated and optimized in very efficient ways.

So there’s a new layer of DeFi providers that have already sprung up on top of the first level of DeFi applications to do that automated management. We have things somewhat like that in traditional finance, but generally speaking, they’re only accessible to the largest investors, the hedge funds and the very sophisticated players. They also have a lot of manual activity and costs associated with them. So that’s one area of experimentation.

There are a host of technical risks and concerns about attacks and hacks that have been very significant in DeFi that costed hundreds of millions of dollars because these systems are not sufficiently mature, robust and resilient. 

Getting Your Mortgage via DeFi

Another area of experimentation is potentially opening up financial products that have not been accessible to retail level investors, or to the billion or so people in the world who don’t have bank accounts and access to the traditional financial system.

Now that has to be said with some caution because there’s risk involved, and DeFi today is very immature. Making complex financial services accessible to someone who doesn’t have the background or the knowledge or the legal protections that traditional banking customers enjoy is not a desirable outcome.

Right now with DeFi, we’re seeing people trying all sorts of creative things because they can — but that doesn’t necessarily mean that all those things are going to succeed or that they should.

BRINK: For example, one could potentially see mortgage services provided this way?

WERBACH: Sure, any kind of lending relationship can be done in DeFi. The idea is that the collateral pool can be drawn from multiple holders of these digital assets in very flexible ways. Lending can be done in an automated way that is fully-collateralized or even over-collateralized. This addresses some of the risk concerns with these assets.

That being said, markets, like mortgage markets, are extremely large, sophisticated and regulated based on experience of where things can go wrong. I think we will see DeFi integrating in and providing alternatives to some of those markets. But again, there’s a long way to go to the point where people would feel comfortable doing that at scale.

BRINK: What are the major risks that regulators should have an early lead on?

WERBACH: First of all, there are a host of technical risks and concerns about attacks and hacks that have been very significant in DeFi. There have been hundreds of millions of dollars lost because these systems are not sufficiently mature, robust and resilient.

Manipulating the Oracle

For example, DeFi systems depend on what are called oracles. A blockchain doesn’t know the price of an asset — it only knows what’s on the blockchain. There needs to be some decentralized mechanism to allow the price signal to be recorded in the blockchain. It turns out that those can be manipulated. If you can manipulate the price oracle, you can use that in some cases to drain funds from the DeFi application that depend on that price oracle.

Now there’s a lot of sophisticated technical work going on to harden these systems, but we still have a long way to go.

All of these applications are based on smart contracts, and they generally have fail-safes involved and mechanisms to address significant price volatility. But as we’ve seen time and time again in finance writ large, it’s impossible to fully predict how systems will respond to every possible scenario. We don’t entirely know what will happen if there are rapid price swings in these assets.

Legal Risks

There are legal risks as well, where regulators appropriately have concerns about things like money laundering and fraud that are going on in the larger blockchain and cryptocurrency world and as well as in DeFi specifically.

The value of these DeFi services is that they are decentralized, so there’s not one actor that is responsible for all of the transactional activity. However, that can’t simply open the door to eliminating any protections against various kinds of financial crime and fraud. That’s certainly an area that the regulators are looking at because there have been plenty of examples in the cryptocurrency world where this has happened.

BRINK: Ten years out, what percentage of the financial landscape do you think will be running through DeFi systems?

WERBACH: It’s a hard question to answer: probably still a relatively small amount because finance is so gargantuan around the world and is tied into so many different kinds of systems. The value of transactional volumes in trade finance, for example, is astronomical.

Finance is a Software Application

I think the basic concept that finance is increasingly becoming a software application is unstoppable, and that’s happening independently of DeFi. FinTech broadly is moving in this direction as well.

I think we will see more and more crossovers where DeFi-type architectures are being built within the traditional financial services world once we can get greater confidence about addressing risks and the regulatory questions.

And there’ll be more and more gateways where the activity may not flow predominantly through these new DeFi providers, but the line between DeFi and traditional finances is going to blur. So 10 years out, I think, some version of what we’re now calling DeFi is going to be fairly well-established as an element of the financial landscape.

Related themes: BLOCKCHAIN DISRUPTION INVESTMENT

Kevin Werbach
Chair of the Department of Legal Studies and Business Ethics at The Wharton Business School, University of Pennsylvania@kwerb
Kevin Werbach is the chair of the Department of Legal Studies and Business Ethics at the Wharton School, University of Pennsylvania. He examines business and policy implications of emerging technologies, such as artificial intelligence, next-generation wireless, gamification and blockchain. His books include For the Win: How Game Thinking Can Revolutionize Your Business and The Blockchain and the New Architecture of Trust.

The original articles were be read in the Brink’s website HERE.

The Clean Energy Transition Starts With Company Culture

Climate change is the biggest risk we are facing, according to the World Economic Forum’s 2021 Global Risk Report. In recent high-profile shareholder proposals and landmark court rulings on climate cases, it is clear the energy sector is an important stakeholder in climate change. Fossil-fuel combustion is responsible for around two-thirds of global greenhouse-gas emissions. Brands are under pressure and climate and investor activists are pushing energy companies to change.

The transition to clean energy is imposing immense risks to company valuations — but it is also creating tremendous opportunities for firms willing to act quickly.

Transformation Will Determine Survival

And how organizations respond will be critical to their future. According to Mercer’s 2021 Global Talent Trends survey, despite the pandemic, 56% of companies in the energy sector are continuing their work on ESG at equal pace. A further 22% have accelerated their shift toward ESG and a multi-stakeholder business approach.

Photo: Pexels

Although companies have begun to realize and feel the magnitude of the energy transition, many are still underestimating the pace required to deliver the change demanded.

Although companies have begun to realize and feel the magnitude of the energy transition, many are still underestimating the pace required to deliver the change demanded. We believe a key determinant of success will be how quickly these organizations transform from a traditional product-oriented mindset toward a customer- and solution-focused culture.

To become more sustainable and customer-focused, companies will need to transform their entire operating system — that is culture, structures, procedures and workforce — at the same time. This is a complex undertaking, with little margin for error. And we believe that changes to the business model and company culture also have to be done holistically to be successful.

However, the industry does have experience to fall back on.

Companies will have to start now when developing new capabilities and will need to be nimble and decisive to stay ahead of the pack.

We’ve Done This Before

We see this as the third major cultural transformation since the new millennium. The first was the safety cultural transformation and the second the digital cultural transformation.

Culture is an amorphous concept, but its importance is becoming increasingly evident. According to the latest Global Culture Survey from Virginpulse, 65% of executives state that culture is a more important driver of company performance than strategy or their choice of operating model. And 80% of employees are asking to see significant change in their corporate culture.

In addition to the pain that it has caused, the pandemic has had positive impacts on the way that many of us are working. Three-quarters of energy companies indicated the lockdown allowed them to relinquish central control of employees toward more autonomous work arrangements. Among the biggest questions during the cultural transition is whether or not to make these changes permanent.

Weave Sustainability Into Your Values

Other post-pandemic strategies could include designing a corporate purpose or values that incorporate sustainability at its core. A dedicated exercise to involve all employees would enable a greater sense of ownership over this new culture. Redesigning incentive schemes can be a powerful supplement to these interventions.

Fostering the necessary competencies will require new ways of managing both company performance and individual development. We are seeing a trend to combine these two to replace traditional annual performance reviews, supplemented by a new emphasis on paying for skills rather than pure performance. Modern learning practices, like nudging, will embed new competencies within daily routines. To complement in-house capabilities — especially for transforming the organization, flexible talent ecosystems are being developed that include temporary resources. All of this will require new ways of collaborating and networking, approaches that have already been developed and accelerated by the pandemic.

The cultural transformation will reach a tipping point. The same goes for developing new capabilities. Companies will have to start now and will need to be nimble and decisive to stay ahead of the pack.

Related themes: BOARDROOM CLIMATE CHANGE RISK MITIGATION

Kai Anderson
Head of International Transformation Services at Mercer
Based in Munich, Kai Anderson leads Mercer’s international Transformation services. He joined Mercer through the acquisition of his own company. Kai is a recognized keynote-speaker and author of books and publications on transformation and people management.

Milan Taylor
Global Energy Leader at Mercer
Milan Taylor is Mercer’s Global Energy Leader. Based in London, he works with energy and natural resources organizations to proactively manage their people risk agendas and ensure their people strategies are future-fit.

The original articles were be read in the Brink’s website HERE.

Here’s How Emerging Technologies Will Impact the Future of Infrastructure

The transformative and disruptive technologies of the Fourth Industrial Revolution are reimagining the possibilities for the built environment. Advances in data proliferation, connectivity, automation and sustainability technology are disrupting existing markets and creating new ones altogether in many infrastructure sub-sectors.

The COVID-19 crisis is also causing profound shifts in societal needs and consumer demands, hastening the adoption of certain technologies that threaten to erode the market share of assets that were conventionally highly used. Taken together, these dynamics are now shaking long-held assumptions about the essential and monopolistic nature of some infrastructure services.

As noted in the recent report from Marsh McLennan Advantage and the Global Infrastructure Investor Association (GIIA), Global Risks for Infrastructure: The Technology Challenge, these two forces have resulted in increased competition for owners and operators of certain assets while reducing or changing demand for others.

Photo: Loic Venance/AFP via Getty Images

Solar panels of a photovoltaic power plant are shown in Guignen, western France. New solar and wind projects are already cheaper than new coal plants in all major markets as well as existing coal-fired power plants in many regions.

Yet the infrastructure sector has historically been slow to understand and adopt new technology. In 2019, the World Economic Forum remarked that it remains “one of the least digitally transformed sectors of the economy.” This disconnect creates the potential for stranded assets — it is estimated that the disruptive power of renewables will strand almost $20 trillion worth of traditional fossil fuel-based energy assets worldwide within the next 30 years. As such, the time is now for the infrastructure sector to sit up and take notice of the risks that technological disruption entails.

An Evolving Competitive Landscape

Rapid technological developments have often lowered the traditionally high barriers to entry for infrastructure services that had previously been regarded as monopolistic in nature. As new technologies become cheaper or more efficient, opportunistic disruptors increasingly stake a claim for market share in many sub-sectors by offering attractive alternatives to existing products and services. This creates new risks for incumbent investors and raises hard questions about asset valuations and long-term contracting structures.

Technological disruption is particularly relevant to the energy sector, with renewable energy and energy storage technologies making large strides toward cost and efficiency parity with fossil fuel-based electricity generation. According to the International Renewable Energy Agency, the cost of utility-scale solar photovoltaic energy fell 82% between 2010 and 2019, while new solar and wind projects are already cheaper than existing coal-fired power plants in many regions and new coal plants in all major markets. Consequently, global coal power capacity has fallen for the first time on record, with more generators being shut down than commissioned in the first half of 2020.

Global coal capacity by year; Source: Marsh McLennan Advantage/Carbon Brief and Global Coal Plant Tracker

Renewable energy has already broken the monopoly of fossil fuel-based electricity generation by providing consumers with a genuine alternative that is moreover backed by the ongoing crusade against climate change. With green technology poised to become more commercially viable at large scales in the coming years — in part driven by the continuation of government-backed subsidies — fossil fuel power may eventually lose the centrality it has long enjoyed in the world’s energy system. Indeed, global energy infrastructure financing is already moving away from fossil fuel-based assets and toward renewables, with investment in the latter expected to overtake downstream oil and gas investment in the near future.

The rise of renewables is even threatening to strand assets in other infrastructure sub-sectors, such as freight rail tracks that exclusively transport coal to power plants. As the Fourth Industrial Revolution rolls on, the competitive pressure from emerging technologies will only continue to transform the outlook for incumbent infrastructure investors and operators.

Reduced Utilization Rates For Transportation Assets

The societal fallout from the COVID-19 crisis expedited a shift in customer needs and preferences, which could further undermine the fundamental and essential nature of assets and services.

For instance, the downturn in traffic for commuter rail and international air travel was matched by the rapid adoption of remote working technologies and shifting work practices. Data from the U.S. Bureau of Transportation Statistics suggests that, since the COVID-19 lockdowns began, more people stayed home in any given week of 2020 than in the corresponding week in 2019. The dramatic transformation in mobility patterns induced seismic shockwaves across various transportation sub-sectors. In early 2021, U.S. monthly urban rail use was down to almost a quarter of 2019 levels; total monthly air travel was down 65% year-on-year.

Average daily number of people staying home week beginning December 20, 2020. Source: Bureau of Transportation Statistics

It has become clear that technology-enabled, remote work models are seen as legitimate work spaces. This means business travel in particular, from intercity bus and rail to domestic or international flights, may no longer be as essential as before for some citizens in the “new normal.” Depending on the extent to which companies continue to embrace digital solutions such as video conferencing, the post-pandemic world could be marked by reduced demand for some commuter transportation services, which may, in turn, impact the nature and scale of future investment for many transportation assets.

Looking Ahead

While the sector’s technological revolution and the pandemic have no doubt resulted in increased demand and supply uncertainty, the need for new infrastructure across the globe continues to rise to levels beyond the capacity of governments alone. Private investment, at higher levels than has been allocated to date, will be needed in order to close the multi-trillion-dollar global infrastructure gap.

Looking at the core markets for Global Infrastructure Investor Association (GIIA) members, the challenges of decarbonization, climate resilience and digital connectivity will drive unprecedented levels of new investment opportunities.

As governments around the world look to bounce back from the economic damage inflicted by COVID-19, they will have to quickly determine the role they see for private investment in delivering our future infrastructure needs. Infrastructure asset owners stand ready to bring not only much-needed private capital, but also global expertise, innovation and project discipline to bear. The GIIA will continue to work with governments and regulators to create the right framework to encourage that investment in a way that works for all stakeholders.

A version of this piece originally appeared on the World Economic Forum Agenda blog.

Related themes: DISRUPTION INFRASTRUCTURE RENEWABLE ENERGY

Blair Chalmers
Director of Marsh McLennan Advantage
Blair Chalmers is a director in Marsh McLennan Advantage and leads the unit’s agenda for the infrastructure and construction sectors. Prior to this role, he worked for Oliver Wyman, the management consultancy, with a focus on clients in asset intensive industries.

Building Climate-Resilient Infrastructure in the Post-Pandemic World

Latin America Has Taken Steps to Curb Corruption and Boost Sustainability. Will Investors Bite?

Does Asset Recycling Actually Work?

Lawrence Slade
CEO of the Global Infrastructure Investor Association
Lawrence Slade joined the Global Infrastructure Investor Association as CEO in January 2020, having most recently been Chief Executive of Energy UK since 2015. He has been involved in the energy industry since the late 1990’s working in countries all over the world. Lawrence is a member of the UK Government’s Committee on Fuel Poverty, an Advisory Board member of Connected Kerb, a Board Trustee and Audit Committee member of the Money Advice Trust (who run the National Debtline and Business Debtline), and is also a fellow of the Energy Institute.

Building Climate-Resilient Infrastructure in the Post-Pandemic World

The original articles were be read in the Brink’s website HERE.

Construction Produces 25% of a Building’s Lifetime Emissions — But New Materials Are Changing This

The construction industry has demonstrated remarkable resilience in the face of the challenges and disruption posed by the COVID-19 pandemic — whether through practical worker safety steps at the coalface, or by navigating multiple pressures in the boardroom.

Now, attention is turning back to an equally pervasive challenge that is very much coming to the fore and is set to dominate the coming years: the need to accelerate the transition to a low-carbon economy.

Photo: Greg Baker/AFP via Getty Images

A worker prepares to weld a steel structure at a construction site in Beijing. Producing zero-emission cement and steel depends heavily on the continued development of carbon capture and hydrogen technologies.

Toward Zero Emission Building Materials

Net-zero construction is the responsibility of all stakeholders of a project — from owners, developers and financiers, to designers and those who turn the conceptual design into a tangible asset — the contractors. With construction material production accounting for an estimated 25% of the total lifetime emissions of buildings, decarbonizing this aspect of construction is a key building block of the industry’s support for global emissions targets. This area is undergoing rapid change, with the sustainable use of natural materials and adoption of net-zero techniques typically replacing the production of tried, tested and established traditional alternatives, like concrete and steel.

Producing zero-emission cement and steel depends heavily on the continued development of carbon capture and hydrogen technologies. But as the wait for these breakthrough technologies continues, considerable innovation is happening in the space of low-carbon materials, such as novel cements, material recycling — of concrete, rubber and metallurgical slag, for example — and a move back to natural materials like timber, straw and hemp. Wood-based materials, such as cross-laminated timber (CLT) may even offer the potential for negative emissions, by “locking up” carbon in buildings that was removed from the atmosphere by trees.

With global infrastructure investment of $6.3 trillion a year needed to meet development goals, the impact of these new materials alone on achieving climate change objectives could be truly profound. With new materials, of course, comes the introduction of new risks, and it is how these unknown risks are identified, managed, allocated and transferred that will be key to the part played by the construction industry — and the insurance market with which it works closely.

Managing Material Risk

Innovation inevitably brings with it unknown outcomes — the possibilities of failure during construction; injury to workers, third parties and the wider environment; long-term durability; and failure to perform as anticipated. Typically, new materials and ways of working are introduced gradually with innovation juxtaposed with the concept of prototypical design, and the construction industry and insurers working closely to apportion who takes what risk. To load any one party with all the risk inevitably stifles progress and the likelihood of a step-change toward achieving desired objectives is held back.

Isabelle Kowalski, global head of construction at SCOR, cites the example of the move away from asbestos in France: “The ban of asbestos from building materials for safety reasons led to huge decennial losses: liquefaction of window joints and collapse of roofs of corrugated sheets; we had to replace asbestos — that had known characteristics — with new materials that had unknown characteristics.”

With decarbonization, we are seeing innovation in the construction industry on a broad scale at seemingly breakneck speed — but can the insurance market keep up with it?

The challenge for the insurance market is pricing often-unknown risks while designing affordable products that cater to the needs of the construction industry.

Partnership Is Key

With decarbonization, we are seeing innovation in the construction industry on a broad scale at seemingly breakneck speed. The question is, can the insurance market keep up with this and be the partner that it has historically been? Timber frame building, and specifically the use of CLT, is a good example: The widespread and rapid increases in adoption in many regions has been accompanied by an increased frequency in fire losses and a resulting contraction in insurance capacity within the market.

This demonstrates the need for the construction industry and insurance sector to work together toward a common goal. Insurers recognize that they have an important part to play in facilitating the transition — from deployment of their risk management expertise, global overview and supporting data, to their provision of a financial backstop, tailored investment strategies and role in incentivizing early adopters.

The insurance market is uniquely placed to catalyze a dialogue among construction industry stakeholders about innovation on the horizon and how the new risks can be identified, allocated and managed appropriately — particularly with regard to new building materials. In areas like tunneling and fire risk, we have often seen practical loss experience drive regulation and a constructive dynamic between the two industries to develop risk management solutions. With climate change, things are likely to be different.

The regulatory agenda will be broader, with an objective to support the uptake of new materials while balancing safety concerns. The French government’s mandate that public buildings be built from at least 50% timber or natural materials is one example. While experience will, as it has always done, play a part in product design, terms, conditions and risk pricing, new materials and ways of working driven by decarbonization objectives will be employed, because they have to be.

Kowalski summarizes the conundrum very well: “Our challenge is global and spans across the entire construction industry. Construction companies and developers need to find insurance solutions, brokers need to find capacity, and insurers need to understand the risks. The end-goal is to reduce carbon dioxide emissions around the world. Every country is trying to find a solution, innovation is coming from everywhere, and good ideas, as well as increased exposure, need to be spread rapidly around the world. We are not in a situation of “innovate to be the first,” we are in a situation of “innovate together to save all.” We cannot fail. This will require collaboration between key professionals, sharing new and best practices and helping each other.”

As we have seen through the COVID-19 pandemic, when the world works together, amazing strides can be taken and outcomes achieved. There will perhaps not be a better example of history needing to repeat itself.

As we have seen through the COVID-19 pandemic, when the world works together, amazing strides can be taken and outcomes achieved. There will perhaps not be a better example of history needing to repeat itself.

Related themes: CLIMATE CHANGE INFRASTRUCTURE RISK MITIGATION

Richard Gurney
Global Head of Construction at Marsh Specialty
Richard Gurney is the global head of construction at Marsh.

The original articles were be read in the Brink’s website HERE.

When Will International Air Travel Reopen With a Health Passport?

Domestic air travel in the U.S. is getting back to 2019 levels with an average of 2 million passengers a day. However, many international routes remain closed as they await the arrival of a system for checking vaccinations.

IATA has been working on a digital travel credential for several years, and its Travel Pass is currently being trialed with several airlines. BRINK spoke to Nick Careen, who leads Operations, Safety and Security division at IATA.

CAREEN: Right now, international traffic is all but shut down. In order for governments to be confident in removing border restrictions, passengers will need to show some kind of health status. That could mean showing what your current status is with respect to your vaccinations; it could also mean illustrating that you’ve received a negative test, be it an antigen and/or PCR test, and those vary by country.

Currently, all those things are done manually. So in simplest terms, this is about taking a manual process and making it digital so that we can all travel seamlessly as international traffic resumes. If we don’t, we’re going to run into a major challenge in terms of manual processing in lines and queues.

Photo: Karim Sahib/AFP via Getty Images

A Flydubai aircraft is parked on the tarmac of Dubai International Airport, on April 6, 2020. Dubai has gone through a lot of pain over the last 18 months of flying and not flying, flying and not flying.

BRINK: What does the IATA Travel Pass contain, and how does it work?

CAREEN: It has a digital identity created by you against your passport information, which would be on your Travel Pass app. It will enable you to receive digital versions of your vaccination or immunity information to allow for traveling. And ultimately, it will also check the validation of what you have against where you’re going, to give you that “okay to travel.”

That “okay to travel” feature is important because it will subsequently allow for the use of self-service tools, like online check-in or airport kiosks that we’ve become accustomed to taking advantage of when we travel. So it has all those elements available to it now.

At the moment, we’re trialing it and piloting it to learn from it. We are working with close to 60 airlines, and we foresee that in the next week or two, we’ll sign actual commercial agreements with some airlines that will take this one step further.

Source: IATA

Passport Adoption From Two Perspectives

There are two ways of looking at adoption. There’s broad acceptance from an airline perspective, which allows the airlines to fulfill their requirements by ensuring that travelers have what they need to meet entry requirements, as governments typically make airlines responsible for delivering passengers who are legal to enter the country.

The other element is government acceptance of digital documentation, and we’re working with governments to get that. We’re in various stages of discussions with them. That’s the more difficult one; it’s a work in progress.

BRINK: Does the IATA Travel Pass hasten the opening of an air corridor with either the U.K. or Europe?

CAREEN: It could, but I think there are considerations that are more important than the Travel Pass. There are politics involved in terms of a corridor being opened up.

But we are seeing an increase in Atlantic capacity, as certain European states begin to open up sooner than others. And so it’s just a matter of time. Will this particular app help give governments confidence in terms of the facilitation of that? Absolutely. Whether it’s ours or someone else’s, this kind of thing will be a requirement as we move forward in order to allow for better transit through the airport.

What About Privacy?

BRINK: There are a lot of concerns around privacy and the risk of someone’s personal data either getting into the wrong hands or being misused. How do you address that?

CAREEN: Well, with respect to the Travel Pass, the key is that we don’t house any data. Every piece of information that you have is on your phone, and you choose whom to share it with.

The airline typically needs to know that you have met the criteria that’s been established by a government — that “okay to travel” message is all they need, and in terms of the government, you were already sharing that information with them anyway. But it is coming from you and no one else, and no data is actually stored by the airlines. It is just verified and deleted.

BRINK: Couldn’t you do that just using a PDF?

CAREEN: Yes you could, but then that data wouldn’t be ingested into the airline’s systems, so it’s a bit more complicated than that — a PDF is just the same as a piece of paper in that sense.

International Travel Recovery

BRINK: Which of the international routes are closest to getting back to normal?

CAREEN: The Middle East, maybe. But keep in mind that Dubai has gone through a lot of pain over the last 18 months of flying and not flying, flying and not flying.

Inside the U.S., we’re getting close to 2019 levels of domestic traffic. Last week, there were 2 million passengers a day, on average. China’s domestic market has actually returned to positive growth compared to 2019, and other domestic markets are recovering as well.

Internationally, Europe is probably the best example of being a little bit ahead of everybody else. Canada just announced that as of July 5th, vaccinated Canadians and those eligible to enter the country can do so without the requirement for mandatory hotel quarantine. And we’re seeing more and more moves in that direction, but it is definitely happening at a different pace around the world. We estimate that it will be 2022 before we begin to see flying levels close to what we’re used to.

Related themes: DISRUPTION RISK MITIGATION

Nick Careen
SVP of Operations, Safety and Security for IATA
Nick Careen is the senior vice president of Operations, Safety and Security Division at International Air Transport Association (IATA). Nick is responsible for IATA’s relations with airports, safety, flight operations, fuel supply, passenger experience, cargo, security and ground handling for IATA member airlines and industry partners around the world. He also has corporate responsibility for IATA’s training, publications and consulting portfolios.

The original articles were be read in the Brink’s website HERE.

Asia-Pacific Must Phase Out Fossil-Fuel Subsidies

The extent to which Asia-Pacific is planning on decarbonizing will make or break the global fight against climate change. Asia-Pacific is home to 60% of the world’s population and the main engine of global economic growth. However, since the early 2000s, Asia-Pacific has been the main carbon dioxide emitting region, producing about half of the world’s total emissions.

Source: Bruegel based on BP Statistical Review of World Energy (2021).

Note: data refers to carbon dioxide emissions resulting from fossil-fuel combustion, as listed in the IPCC Guidelines for National Greenhouse Gas Inventories. Other sources of CO2 emissions, or other greenhouse gases, are not included.

Photo: Kevin Frayer/Getty Images

A laborer unloads waste coal and stone as smoke and steam rise next to an unauthorized steel factory in China.

 
Compared to other world regions, Asia-Pacific faces a specific decarbonization challenge: a need to rapidly decrease its reliance on coal that makes up about 50% of Asia-Pacific’s energy mix. In other regions, coal makes up from 10% to 20%.

Source: Bruegel based on BP Statistical Review of World Energy (2021).

The coal challenge is particularly pronounced in China and India, which respectively account for 60% and 14% of Asia-Pacific emissions. About 70% of electricity generation comes from coal in both countries, compared to about 20% in other major emitters including the United States, the European Union and Russia (Figure 3).

Source: Bruegel based on BP Statistical Review of World Energy (2021).

The Use of Coal Is Still Increasing

All in all, coal in China and India is currently the single biggest contributor to global greenhouse-gas emissions. Phasing down the use of coal in these two countries is absolutely critical if the world is to meet the Paris Agreement objectives and fight climate change.

As a second objective — but still important — the coal dependency of low-income countries in Asia-Pacific needs to be reduced. The share of coal in electricity generation in these countries is increasing rapidly with the expansion of electricity demand and infrastructure, with which natural gas and hydropower cannot keep up.

Asia-Pacific countries have increasingly adopted policy measures designed to fulfill their climate pledges under the Paris Agreement — ranging from air-quality regulations to renewable-energy subsidies, from vehicle emission standards to carbon-pricing mechanisms.

While welcoming, these measures will certainly not be enough without tackling the most pressing and significant problem of excessive reliance on coal in the energy basket. In fact, notwithstanding the adoption of climate policy measures, countries in the region continue to subsidize significantly the consumption of fossil fuels, including coal. China continues to subsidize coal for at least four reasons: 1) to provide cheap electricity and heating to citizens, as coal plants remain a low-cost electricity supply option compared to natural gas and offshore wind (and might remain so until 2026); 2) to foster industrial competitiveness by using cheaper electricity for production; 3) to enhance energy security by reducing the need for energy imports; and 4) to support the coal industry, which employs about six million workers, mainly in north-eastern provinces that suffered most growth-wise since 2015.

Diverting Fossil-Fuel Subsidies

The International Energy Agency (IEA) estimates that, in 2019, Chinese fossil-fuel subsidies amounted to $30 billion, while in India, they were $21.8 billion and in Indonesia, they were $19 billion (Table 1).

There is no justification for subsidizing fossil fuels in a context in which their share in the energy mix must be reduced drastically. In fact, for Asia to meet its carbon neutrality goals, no new coal mines should be constructed because there will be a sharp decline in fossil-fuel demand. According to the IEA’s May 2021 net-zero by 2050 roadmap, global coal demand should decline by 90%, to just 1% of total energy use, by 2050.

Not only are fossil-fuel subsidies counterproductive, they also divert resources from other potentially necessary subsidies for renewable energy. While data is not fully comparable, let alone transparent, estimates of China’s subsidies for renewables in 2019 hovered between $1.1 billion (27 times less than fossil fuels) and $13 billion (a little bit less than three times less). India only devoted $1.5 billion to renewables (more than 15 times less than fossil fuels), and Indonesia only devoted $1.1 billion (17 times less).

These subsidies represent a major stumbling block for decarbonization in Asia-Pacific. Consequently, the first climate policy must be to ensure that fossil fuels do not get direct or indirect government support.

Only by phasing-out these subsidies can market distortions be avoided and the potential deployment of renewable energy and energy efficiency solutions fully unleashed. Furthermore, the phase-out of these subsidies is important to free-up public finance resources that can be reallocated towards green investments and towards compensatory measures for the poor — to ensure climate justice.

In this context, the very rapid increase in the number of coal power plants in developing Asia in the last few years is very concerning. This shows that international coordination is needed to stop the financing of coal. The May 2021 announcement by the Asian Development Bank that it will stop financing coal is welcome, but others must follow. In particular, given the huge role of Chinese public banks in the financing of coal plants in the region, an international coordinated effort to stop such financing is needed to expedite the shift away from coal in these countries’ energy baskets.

Finally, it should be mentioned that while discussions on carbon pricing are important in Asia — as they are for the rest of the world — the sheer amount of fossil-fuel subsidies makes this issue rather secondary compared to the need to reduce the immediate distortions generated by fossil-fuel subsidies.

How China Is Approaching the Problem

Take China: After years of pilot schemes at regional and sub-regional levels, China announced in 2017 the creation of a national emissions trading system (ETS). The scheme’s first compliance period, initially due for 2020, will now start in mid-2021, covering coal- and gas-fired power plants (approximately 40% percent of national carbon emissions). While it is still too early to say how the ETS will develop, TransitionZero has estimated — using satellite images and machine learning to estimate operations at China’s biggest coal plants in 2019 and 2020 — that China is likely to have oversupplied the scheme by as much as 1.6 billion allowances for 2019 and 2020, potentially causing prices to quickly crash to zero when trading begins later this year. Should this happen, it might take several years before China’s ETS becomes an effective decarbonization tool. Considering the $12 billion in fossil-fuel subsidies provided to the electricity sector every year, China’s carbon price would be negative. This represents a major concern for global decarbonization efforts. In its Net-zero by 2050 roadmap, the IEA notes that China’s carbon price should reach $45 per ton by 2025 to be consistent with a net-zero scenario by mid-century.

All in all, the phase-out of fossil-fuel subsidies must be the first step in decarbonization of the Asia-Pacific region. It really is a key prerequisite for the development of properly functioning carbon-pricing systems and the unleashing of their vast potential for driving decarbonization in this region. Coal subsidies are not only an issue in Asia, of course. There is probably no more important issue on the climate change front, though much more attention is given to carbon pricing or carbon tariffs. For industrialized countries, helping create the incentives to dismantle coal subsidies in China and India, and stopping the building of more coal plants, especially in the rest of Asia, should be a priority in their international climate strategies.

This piece was originally published in Bruegel.

Related themes: CHINA CLIMATE CHANGE RENEWABLE ENERGY

Alicia García-Herrero
Senior Fellow for Bruegel and Chief Economist for Asia Pacific at Natixis
Alicia García Herrero is chief economist for Asia-Pacific at Natixis and a senior fellow for Bruegel. Previously she was chief economist for Emerging Markets at Banco Bilbao Vizcaya Argentaria. She is a non-resident fellow at Cornell’s emerging market research centre and Senior Research Fellow at El Cano Royal Institute for International Relations. She is currently adjunct professor at City University of Hong Kong, visiting faculty at University of Science and Technology as well as at China-Europe International Business School.

Could the RMB Dislodge the Dollar As a Reserve Currency?

Is China About to Cap Its Coal Output?

Will Europe and China’s Investment Agreement Amount to Anything?

Simone Tagliapietra
Senior Fellow at Bruegel
Simone Tagliapietra is a senior fellow at Bruegel. He is also an adjunct professor of Energy, Climate and Environmental Policy at the Università Cattolica del Sacro Cuore and at The Johns Hopkins University, School of Advanced International Studies (SAIS) Europe.

Is China About to Cap Its Coal Output?

The EU 2030 Climate and Energy Framework: More Governance Needed

The original articles were be read in the Brink’s website HERE.

“Sri Lanka Investment Forum 2021” – Virtual on June 7-9, 2021

In their continuous efforts towards attracting Foreign Direct Investments (FDIs) and Equity Capital Investments to the country, The Ceylon Chamber of Commerce, the Board of Investment of Sri Lanka and the Colombo Stock Exchange are jointly organising the “Sri Lanka Investment Forum 2021 – Virtual”, from 7^th to 9^th June, 2021.

The Virtual Forum will be centered on an overall theme of “Asia’s next Growth haven” and feature a three days’ event with Panel Discussions coupled with Virtual B2B Meetings. An introductory brochure can be downloaded HERE. Participation is free of cost.

The forum organizers are also glad to inform that His Excellency Gotabaya Rajapaksa, President of Sri Lanka will be the Chief Guest at the Forum on 7^th June, 2021.

CACCI wishes to encourage its members to register for the Forum HERE.

For further details visit the website at https://invest-srilanka.lk or contact the forum’s organizers at +9411 5588818, +9411 2421745-7 or +94-773215566 or by e-mail lilakshi@chamber.lk

What Will India’s Post-COVID Recovery Look Like?

Since the beginning of 2020, India has reported more than 25 million COVID cases, bringing the country’s total number of lost lives to 274,000 — a record, second only to the United States for infections.

A massive tsunami of COVID-19 is sweeping through India, with around 83% of the new infections reported in 10 states, including the western state of Maharashtra, which hosts India’s financial capital, Mumbai. The laxity in preventive measures during election rallies and religious gatherings coupled with the presence of new COVID variants are believed to have resulted in this nationwide crisis.

Photo: Abhishek Chinnappa/Getty Images

Patients who have contracted COVID-19 rest at a hospital on May 06, 2021, in Bengaluru, India. India launched its vaccine drive, the world’s largest inoculation program, in early January 2021.

A Year Ago, India’s Economy Was At a Crossroads

After growing at very high rates for several years, India’s economy had begun to slow down to 4% growth before the pandemic. Between 2016 and 2019, growth decelerated from 8.3% to 4%. In March 2020, the government imposed one of the world’s most stringent lockdowns to contain the spread of the virus, which brought the economy to a halt, as public movement was restricted, factories were shut and trains were stopped.

The three-month lockdown sent the economy into its worst ever contraction of -24% in the June 2020 quarter, followed by a -7.3% shrinkage from July to September, pushing the economy into a rare recession.

Since then, the economy has shown a gradual economic recovery. GDP grew 0.4% from September to December 2020, compared with the same period a year earlier.

The composite Purchasing Managing Index, an integrated measure of activity in the manufacturing and services sector continues to see improvement, rising to its highest levels in the post-pandemic phase at 57.30. A reading above 50 in the index indicates month-on-month expansion in business activity.

Rapid Growth Could Be Stunted

The IMF and ADB have upgraded India’s GDP forecast for FY 2021-22 to 12.5% and 11% respectively, while highlighting the downside risk to growth. But the ability of industry to bounce back depends on several uncertainties, such as the impact of a disrupted supply chain, business defaults, job losses and the stress on the financial sector.

If, like last year, the partial lockdowns announced by the state governments get extended due to uncontrolled infections, the economic damage could be extensive.

The impact on services such as travel, tourism and hospitality will have multiplier effects, as these sectors have strong backward links with other sectors of the economy. However, agricultural growth and rural demand have been quite robust until now and are expected to give further boost to the economy due to the timely onset of the monsoon season.

To build a modern, post-COVID economy, India will need to strategically evolve a global brand position and adopt a global market and innovation mindset.

Due to uncertainty regarding the path of the second wave, the private capital expenditure cycle will take some time to recover. Rising non-performing assets are a challenge for the banks. State-owned banks owned approximately 6.8 trillion rupees ($90 billion) in non-performing assets in 2020.

Though the government now has limited fiscal space to bring out a massive bailout program, production-linked incentive programs could bring some relief to manufacturers planning to make investments in fast-recovering sectors. But a 2020 study by NCAER suggests that it could take a couple of years to reach pre-pandemic output levels.

The Country’s Young Population Helps to Blunt Pandemic’s Impact

Experts speculate that two factors account for the drastic decline in India’s COVID-19 case numbers in the first wave: the country’s younger population and the possibility of rising herd immunity. Half of India’s population is 25-years-old or younger, and 65% are under the age of 35.

A younger population means largely mild disease. It is also an important fact that more than 60% of Indians live in rural areas, where ventilations are better, herd immunity is high and network contact circles are smaller compared to cities.

India launched its vaccine drive, the world’s largest inoculation program, in early January 2021, and has already vaccinated nearly 35 million people, with a target to cover 300 million priority people by the end of July. The country’s drug regulator has given emergency approval for two manufacturers: Bharat Biotech and Serum Institute. Bharat Biotech produces Covaxin, the homegrown government-backed vaccine, while the Serum Institute produces Covishield, the Indian version of Oxford AstraZeneca vaccine.

India’s Vaccine Diplomacy Faltering

Besides inoculating its own people, India is also supplying vaccines to neighboring South Asian countries and a host of other developing countries in Latin America and Africa. The pharmaceutical industry in India provides about 20% of generic drug exports globally, and so far, it has shipped 60 million COVID-19 vaccine doses to over 70 countries.

However, the second wave of COVID-19 and the accelerated domestic inoculation program for all people over 18 has meant the export of some vaccines has been postponed or called off, leaving many countries vulnerable to a fresh wave of the virus and probably delaying their efforts to return to normal. The Chinese authorities are also moving aggressively to promote their vaccines to other countries, in place of India’s.

The current transformation in creating new global platforms, cloud computing and digital data flows have been reflected in the emergence of nearly 12,000 digital tech startups in the last two years in India. New opportunities span such areas as data-driven lending and insurance payments.

Many of these digital innovations hold great promise for a new type of globalization, in which division of labor and resultant services can move freely from firms in developed countries to Indian firms. India’s path-breaking efforts in space technologies at a very low cost is also an opportunity for other countries to launch educational satellites, global navigation channels, broadband spectrum and so forth.

But to build a global role, the Indian corporate sector needs to acquire niche technologies through open innovation models, such as licensing, and forge multilateral partnerships with the governments and a new generation of social entrepreneurs. To build a modern, post-COVID economy, the government and corporate leaders must strategically evolve a global brand position and adopt a global market and innovation mindset. It will require Indian corporates to invest enough in R&D and overhaul organizational structures that inhibit new solutions, business models and approaches.

Related themes: GLOBALIZATION HEALTHCARE INVESTMENT

Venkatachalam Anbumozhi
Senior Economist at Economic Research Institute for ASEAN and East Asia
Venkatachalam Anbumozhi is a senior economist at the Economic Research Institute for ASEAN and East Asia (ERIA). Previously he worked at the Asian Development Bank Institute in Tokyo. He has written books, research articles, and project reports on natural resource management, climate-friendly infrastructure design, and private-sector participation in green growth. He was a member of the APEC Expert Panel on Green Climate Finance and the ASEAN panel for promoting climate-resilient growth.

Can India Pull Off a Sustainable Economic Recovery?

Can a Self-Reliance Strategy Pull India Out of Recession?

Will COVID-19 Devastate the Indian Economy?

The original article can be read at the Brink Asia HERE.

The Global Economy is about to become the Climate Economy

In the next 20 years, climate will move from being a sector of the economy to becoming the dominant force in macroeconomics. New forms of sustainability will disrupt virtually all industries: from manufacturing, the production and use of energy, food, fiber and material resources, to the expansion of transport options and consumer choices.

Many leaders suggest artificial intelligence will be the determining factor in the fate of the world in the coming years. While there is an argument to be made in support of this idea of an AI-controlled destiny, we believe that it will be climate that will ultimately define the global economic winners and losers of the next geopolitical era. The application of AI will then be viewed as either an important enabler or a limiting factor with respect to how nations adapt to climate variability in the decades ahead.

No aspect of the emerging 21st century global economy is likely to escape the influence of climate and sustainability factors; what we call the new climate economy will be the defining factor for companies, governments and societies alike.

Photo: Loic Venance/AFP via Getty Images

An electric windmill farm in Plomodiern, western France. Climate tech appears to have a sustainable presence in the minds of long-term investors.

The Shift From Clean Tech to Climate Tech

What was once a narrow purview around clean tech has recently morphed into the all-encompassing term of climate tech, and unlike the boom and bust cycle that accompanied the clean energy frenzy of the late 2000s, climate tech appears to have a sustainable presence in the minds of long-term investors.

During the boom and bust clean tech cycle, the narrow focus on energy production led to massive capital outflows when the market lost its legs. Venture-backed startups and their investors lost billions in this space, and the period following the crash kept capital out of the sector for years.

Today, the cost of capital outlay in climate-related innovation is becoming cheaper than the cost of climate-related impact on developed economies. More than 215 corporations are reporting climate-related costs to their businesses, at a cumulative cost of trillions of dollars. Unlike clean tech, climate tech opportunities are spread across all industrial and commercial sectors, rather than focusing solely on the supply side of the energy and/or transportation matrix.

Climate VC Activity Is Accelerating

Over the last seven years, climate tech investment has grown at five times the venture capital market rate, with venture capital and corporate investment in this sector growing faster than venture capital as a whole in the early 2010s.

Beyond investing in deep technology such as renewable energy, per the earlier clean tech movement, today’s climate tech VCs are looking more broadly at agriculture and other food production, such as meatless burgers Beyond Meat; eco-friendly transportation, such as scooter startup Bird; and a wide variety of startups that can impact society’s greenhouse gas emissions.

A number of recent early-stage investments into consumer and social tracking and sharing and optimizing personal climate-related contributions has also marked a technological shift into the consumer mainstream.

The Rise of the Chief Sustainability Officer

Environmental, social and governance (ESG) factors are now becoming standard parlance in the financial services sphere. What was once viewed as a fringe boutique industry has worked its way onto the agenda of nearly every global financial institution and risk manager as both a source of strategic competitive advantage and as an investment screening factor for discretionary and quantitative investors.

Viewing the global economy through the new climate economy lens is a unique yet appropriate viewpoint to inform our view of the world.

We have seen a significant rise to prominence of the chief sustainability officer; as corporate sustainability is no longer the domain of generalists, the CSO is an increasingly important member of the C-suite that can guide a transition to this new economic reality.

In the same way that the winners of the digital race were those organizations and economies that became digital-first, so this is likely to be replicated across the climate space, and the role of the chief sustainability officer is soon likely to permeate all other business units.

The Physical Environment Is a Primary Driver

Corporations and analysts continue to underestimate the impact that climate-driven volatility exerts on earnings, overall financial performance and broader downstream economic activity.

Whereas some corporations are beginning to include climate-related volatility in their projections, such as defense contractor Raytheon, which reports that 11%-20% of its future global revenue could be affected by water risk, there is upward of a trillion-dollar difference in unexpected global economic impact of climate change and reported corporate financial risk.

The growth of the global economy is currently focused in geographical regions that experience the most adverse of the climate impacts through both short-term disasters and long-term climate change. China and India, the world’s two fastest-growing economies, are ranked second and third, respectively, for the highest number of natural disasters after the United States.

However, unlike the U.S., China and India’s rapid economic development is outpacing their already limited capacity to withstand the impact of major disasters, leaving them highly vulnerable to the highest health and economic threats from natural disasters.

Embedding Climate Risk Into Corporate Planning 

Capturing opportunities within this climate-macro confluence needs to start with science and the data supporting the science. By using a combination of alternative and traditional data sources grounded in systems analysis and thinking, we can better understand the connections and risks associated with climate factors and material production, processing, physical flows and pricing as key drivers in order to predict directional macro performance.

For example, geographically indexing raw material exposures by sector and subsectors allows for early detection and signaling of climate-related cost changes.

Exploiting climate tech opportunities at the micro-level will require new sources of historical data, from meteorological data to reanalysis proxies. In turn, these can be used to back-test strategy formulation and to better characterize climate-induced financial and operational risk by quantifying its duration, magnitude and severity.

Supply chain mapping and network analysis will require the creation of a climate-first approach, with the forward-looking identification of physical supply derived from climate models.

Viewing the global economy through the new climate economy lens is a unique yet appropriate viewpoint to inform our view of the world, as we look to better anticipate and understand individual firm, market and economic behavior in the decades to come. Just as digital technology cemented long-standing winners and losers and ultimately created a new and more complex geopolitical order, we should expect climate to deliver similar opportunities.

Related themes: CLIMATE CHANGE DISRUPTION INVESTMENT

Michael Ferrari
Managing Partner at Atlas Research Innovations@MichaelRFerrari
Dr. Michael Ferrari is the managing partner at Atlas Research Innovations, providing clients with basic and applied bespoke research services towards a variety of scientific, technical and economic domains. He is also a senior fellow at The Wharton School’s Customer Analytics initiative.

A Systems Approach to Global Agriculture Could Solve Food Insecurity

Sinead O’Sullivan
Senior Fellow at MIT Sloan and MIT School of Computation@SineadOS1
Sinead O’Sullivan is a senior fellow at MIT Sloan and MIT School of Computation, as well as a fellow at the U.S. Center of Climate and Security and a network partner at Atlas Research Innovations.

The original article can be read at Brink Asia HERE.

Battery Technology Is About to Disrupt the US Power Sector

Until recently, the adoption of battery power storage solutions in the U.S. had fallen short of expectations. Yet, declining costs and advancing technology suggests that battery storage is ready to play a larger role in the U.S. power sector. This potential is now attracting significant investor interest, and from 2024 onward, S&P Global Ratings expects total capital investment in North American battery storage to exceed $3 billion annually.

The Inflection Point Has Arrived

With global installed capacity increasing at a 25% compound annual rate, growth in battery storage has been robust over the past five years. In the U.S., however, development has been slow. At the end of 2020, the U.S. had around 25 gigawatts of power in energy storage — 23 GW of which is pumped hydroelectric storage. This is minimal relative to the renewables already on the grid.

Photo by Philippe Desmazes PHILIPPE DESMAZES/AFP via Getty Images

A worker controls batteries in an electricity storage container in France. An increase in the uptake of battery storage will inevitably have implications for the wider power sector.

In the past five years, the U.S. has installed just over 1 GW of battery storage, with the majority of growth occurring in the Pennsylvania-Jersey-Maryland Interconnection and the California Independent System Operator region.

Pre-pandemic project delays and uncertainty surrounding trade tensions with China were to blame for declining forecasts, and in the near term, we anticipate some uncertainty around the impact of the pandemic on economic measures. Despite this, S&P now expects annual deployments to accelerate from 2022, as battery storage in the U.S. approaches an inflection point.

A Ninefold Increase in Battery Storage On the Way

S&P Global Platts Analytics, an affiliate of S&P Global Ratings, expects advanced battery energy storage to drive an almost ninefold increase in the U.S. storage market in the period 2020-2023, with cumulative deployment approaching 10 GW by 2024, suggesting large-scale deployment is now imminent.

Growth will be spurred on in part by state targets and surging mandates. Indeed, seven states — led by California and New York — are now targeting a total of 11 GW of battery deployment by 2036. Additionally, the rapid increase of battery projects in the interconnection queue provides anecdotal evidence of a potential growth surge on the horizon, while the continually declining cost curve and the potential for revenue stacking, a way of getting multiple revenue streams for one battery, will remain key to achieving a positive return on investments.

Economically Viable Alternative to Gas-Fired Plants

In addition to financial impetus, the development of technology — notably the growth of storage solutions to economical peak-shifting four-hour applications — is playing an important role in increased deployment. Indeed, when used for providing peak capacity, batteries are well on their way to becoming an economically viable alternative.

In certain markets, including California and Hawaii, battery costs have declined sufficiently to compete with gas-fired peaking generation. In addition, a four-hour grid-level battery storage unit requires less maintenance: With no moving parts and no fuel, long-term operation costs are more stable and predictable.

While battery storage creates opportunities for many businesses, it also poses a threat to those that focus on conventional generation.

What’s more, battery banks are scalable, with the capacity for more units to be added without pronounced cost increases. Our estimates show that a utility-scale battery solution would currently cost between $1,250 and $1,300 per kW, comparable with the cost of building a gas-fired peaker plant in California. Utilities are increasingly recognizing the value of storage in integrated resource planning, particularly in the vertically integrated markets, suggesting that the provision of peaking capacity will be a major use for batteries.

A Game-Changer for Solar Power

Given battery storage’s ability to solve issues pertaining to intermittency in solar power generation, we believe large-scale, co-located solar plus storage deployments are now imminent.

Solar power generation’s primary issue is that it is interruptible, and as the grid adds more solar plants producing electricity at the same time, daytime reliability issues are mitigated so effectively that the remaining reliability challenges move into the evening hours. This naturally diminishes the marginal effectiveness of adding more solar plants — unless battery storage systems are able to store energy and deliver it to the grid when most needed.

In the Electric Reliability Council of Texas (ERCOT), for instance, most battery projects are located in counties where major photovoltaic (PV) solar generation projects are expected. Indeed, co-located storage projects are increasing as capital costs continue to decline. Most projects co-located with solar PV installations have a battery capacity ranging from 50%-150% of the PV capacity, an indication that developers are seeking to contract with utilities for the provision of peaking capacity.

Not only does adding storage provide the potential for offering a firm power product, it has meaningful up-front benefits from qualifying for investment tax credits (ITCs). Storage effectively doubles the capital costs of a solar project, 26% of which can then immediately attract ITC benefits and avail of modified accelerated cost recovery system depreciation.

Together with declining PV solar installed capital costs, as well as lower operating and maintenance requirements, the falling cost of storage should result in a significant uptake in solar-plus storage in the coming years.

The Disruption Has Arrived

An increase in the uptake of battery storage will inevitably have implications for the wider power sector. Companies such as NextEra Energy and AES Corp. could benefit from significant growth if they add storage capabilities to existing renewables development sites, thanks to existing infrastructure.

Of course, while storage creates opportunities for many businesses, it also poses a threat to those that focus on conventional generation. As renewable costs continue to decline, they weigh heavily on both peak and off-peak power prices. While gas-fired assets should be able to coexist with renewables for the foreseeable future in some regions, companies that rely on coal-fired generation will face the threat of significant asset retirements.

Market participants have long acknowledged the declining cost curve of battery storage. In our view, however, the more compelling reason for the uptake of the technology is its complementary role improving the economics of solar power generation. With annual investment set to surpass $3 billion in the coming years, this technology is now well set to disrupt conventional generation in the North American power sector.

Related themes: DISRUPTION INVESTMENT RENEWABLE ENERGY

Aneesh Prabhu
Senior Director of Infrastructure at S&P Global Ratings
Aneesh Prabhu is a senior director and sector lead of the North American infrastructure at S&P Global Ratings.

How Can Offshore Wind Energy Be Profitable in the US?

The original article can be read at the Brink Asis website HERE.

Have the Wheels Come Off the Driverless Car Revolution?

Five years ago, Uber predicted it would have 200,000 driverless cars on the road by 2020. But to date, the widespread use of driverless cars has not arrived. So what has happened? The last five years have seen the hype surrounding the phenomenon slowly dissipate, as the industry wrestles with a number of hard technical 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 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 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 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 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, 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 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 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 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 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 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 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 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 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.

A summary document outlining the profiles of the Fintech Companies (click) who will be showcasing their solutions is also attached with this email. More companies are expected to join as we proceed with our preparations.

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
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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, 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 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 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 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 22^nd 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.

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, 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 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. 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 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 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 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 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 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.

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 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 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, 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.

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 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 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 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 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 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 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 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 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 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 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 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 / 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 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 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 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):

REGISTER

REGISTER

REGISTER

REGISTER

REGISTER

REGISTER

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 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 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