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Integration into GVCs brings huge gains for developing economies: WTO report

Amid recent global shocks to international trade, global value chains (GVC) continued to expand and demonstrate resilience and sustainability in 2022, benefiting more developing countries in the process, according to a new World Trade Organization (WTO) report.

The report titled “GVC Development Report 2023: Resilient and Sustainable GVCs in Turbulent Times” notes that international production networks remain a central part of globalization despite mounting pressures. Foreign inputs comprised a record-high of 28% of global merchandise exports last year. Moreover, GVC participation rates of almost all economies were higher in 2022 compared to their pre-pandemic levels in 2018.

This bodes well for spreading the benefits of trade to more firms, workers and developing economies, according to the report jointly published with the Asian Development Bank, Institute of Developing Economies-Japan External Trade Organization, and Research Institute for Global Value Chains.

However, the study also warns that ongoing global shocks, including the Russian war in Ukraine, lingering COVID-19 pandemic effects, and US-China trade tensions threaten to derail this trajectory.

At the same time, the GVCs’ intricate networks of international flows of goods, services, capital, and technology currently face exceptional challenges arising from the impacts of climate change.

Moreover, the paper finds that the export value and share of potential bottleneck products—products that are exported by very few economies—has more than doubled since 2000, from 9% to 19% of total trade, contributing to the vulnerability of GVCs. Also, there has been considerable concentration in sources of foreign inputs. In addition, US-China trade tensions have led to an increase in the number of stages in GVCs from 2018 to 2020.

These troubling developments underline the need to assess the potential vulnerable points of GVCs to shocks, stresses the study issued on November 16.

The report emphasizes that GVCs can drive inclusive development in developing economies by improving productivity and alleviating constraints and can result in higher wages and better working conditions.

“GVC integration leads, on average, to better outcomes for firms and workers in developing economies. The evidence consistently shows that local suppliers to MNCs and firms exporting intermediates outperform other firms in developing economies,” it says.

In particular, GVCs provide micro, small and medium enterprises (MSMEs) with chances for quality upgrading, knowledge spillovers, technology transfers, and innovation through their affiliations with lead firms. In this regard, firms in developing economies with higher GVC integration tend to have substantially better management practices. Furthermore, becoming part of GVCs can assist in alleviating credit constraints, a substantial challenge encountered by MSMEs.

The benefits spill over to workers as well. Being employed at MNCs or their suppliers generally results in higher wages and better working conditions, including a higher likelihood of formal employment. Women often benefit from these developments in particular.

These findings have important policy implications, declares the report. “Since GVC integration tends to benefit firms and workers, the focus should be on facilitating entry into GVCs and spillovers to the domestic economy to ensure that GVCs are truly inclusive.”

Online training channel helps ASEAN SMEs trade overseas, grow business

More entrepreneurs in the ASEAN region, whether those just starting in international trade or looking for additional  channels to grow their business in new markets, can access an online training channel free of charge.

Wachira Kaewkor, Deputy Director General of the Office of Small and Medium Enterprises Promotion (OSMEP) from Thailand, said that as the ASEAN Access Network grows, features of international trade support services need to be updated to enable businesses to meet the growing demands. 

Kaewkor said international trade support services should cover all areas that are relevant for cross-border trade, including skill building and knowledge sharing.

“This is why, today, the ASEAN Access Network is launching ASEAN Access LEARN to help even more ASEAN businesses to trade internationally. International trade is a key driver of business growth,” he said on Nov. 23.

He added these ASEAN businesses need to be equipped with knowledge particularly about import, export and e commerce.

Reinhold Elges, Country Director of GIZ Thailand, said SMEs need to understand the local traditions, market entry conditions and barriers to be successful in the global arena. 

Elges said ASEAN Access LEARN will organize live online training sessions in English and self-study courses on commerce and international trade taught by experts from ASEAN and around the world.

“LEARN brings new knowledge to your doorstep. LEARN means knowledge is literally at your fingertips and there is no need to spend time and money on travel to access it,” he added.

In cooperation with GIZ Thailand, the ASEAN Coordinating Committee on Micro, Small and Medium Enterprises (ACCMSME) and the OSMEP officially launched the online training channel under ASEAN Access.

Launched in June 2021, ASEAN Access https://aseanaccess.com serves as a “one-stop shop” for ASEAN SMEs who look to do business within the region beyond their country borders.

Updated OECD guidelines compel adoption of responsible business practices

It is high time Philippine businesses of all sizes and in all sectors adopt responsible business conduct (RBC) as a way to build organizational resilience as more and more governments impose measures enforcing good business practices, according to a management expert.

Dynah Avigail Basuil of the Asian Institute of Management (AIM) in a webinar said RBC is particularly crucial for exporters to the European Union (EU) with the recent publication of the revised “OECD Guidelines for Multinational Enterprises on Responsible Business Conduct.”

The updated Guidelines, published in June 2023, are recommendations addressed by governments to multinational enterprises. They aim to encourage enterprises to make positive contributions to economic, environmental and social progress, and to minimize adverse impacts that may be associated with an enterprise’s operations, products and services.

The Guidelines cover all key areas of business responsibility, including human rights, labor rights, environment, bribery, consumer interests, disclosure, science and technology, competition, and taxation, said Sarah Reso of the Organisation for Economic Co-operation and Development (OECD) in the same forum conducted recently by the Department of Trade and Industry’s Export Marketing Bureau.

The 2023 edition of the Guidelines provides updated recommendations for responsible business conduct across key areas, such as climate change, biodiversity, technology, business integrity, and supply chain.

Basuil, who is the executive director of the AIM’s Ramon V. Del Rosario Sr. Center for Corporate Responsibility, said RBC goes beyond just complying with the law but should be “part of core business and risk management, including in the supply chain and business relationships.”

She added that the Guidelines recommend that enterprises conduct due diligence in order to identify, prevent or mitigate actual and potential adverse impacts and account for how these impacts are addressed. This involves a six-step cyclical process:
Embed responsible business conduct into policies and management systems
Identify and assess adverse impacts in operations, supply chains and business relationships
Cease, prevent or mitigate adverse impacts
Track implementation and results
Communicate how impacts are addressed
Provide for or cooperate in remediation when appropriate
Basuil underscored that RBC is a must for exporters to the EU because all companies in the region are already being directed to undertake due diligence across all of their supply chains.

“So if you are an exporter and you’re exporting to a company that’s based in the EU, you are part of that due diligence, and your clients that are based in the EU have to ensure that you as a supplier to them are incorporating responsible business practices,” she said.

EU-based companies that have suppliers that don’t meet those standards are going to be penalized, she continued.

The executive said the EU Generalised System of Preferences+ (GSP+) program, of which the Philippines is a beneficiary until 2027, is one of the EU policies that support sustainable development and good governance by slashing tariffs to zero.

“This is a good opportunity for exporters to not just improve in terms of their competitiveness but also be able to sell their services at a much more competitive pricing because relative to the domestically produced ones, our products don’t get taxed. There’s no tariff when it comes to exporting to the EU as a result of this GSP+ revolving around the Philippines’ commitment to the RBC,” said Basuil.

She also urged exporters to see the benefits of the OECD Guidelines, noting how they compel the Philippine export industry to improve organizational practices and build resilience to be able to enter these markets while also contributing to Philippine economic development.

Industry players urged: Embrace AI tech to improve packaging operations

Packaging industry players should proactively embrace artificial intelligence (AI) technologies and invest in research and development to improve various aspects of packaging operations from optimization to design.

“AI has already infiltrated nearly every aspect of the packaging supply chain. Brands and package manufacturers are marrying materials, components, and insights with AI to create next-generation purchase, use, and end-of-life experiences,” David Luttenberger, Global Packaging Director at Mintel Group Ltd., said during the Usapang Exports organized by the Department of Trade and Industry-Export Marketing Bureau.

Luttenberger said AI technologies such as machine learning and robotics automation can analyze vast amounts of data from multiple sources in real time to consistently optimize supply chain operations.

“AI is bringing intelligence to pack design by rapidly evaluating design elements, resulting in design solutions that are efficient, user-centric and visually appealing,” he said, adding this replaces time-consuming and expensive traditional consumer research.

Luttenberger said AI is being used to rapidly create, package and target demographically specific product innovations.

It is likewise utilized for waste identification and sorting to improve recycling quality and efficiency, he said.

“By using machine learning algorithms, it is expected that the system will identify different types of packaging materials -for example, separating food packaging from non-food packaging- thereby improving recycling efficiency and reducing contamination,” he added.

Luttenberger recommended the packaging industry to collaborate with AI experts to leverage the full potential of AI technologies in improving operational efficiency, quality control, supply chain optimization and sustainability practices.

He said industry players need to approach technology logically as they also take accountability for social issues.

Luttenberger underscored the need to use technology and packaging to create brand harmony to enable consumers see how this benefits their life and get the real value for their money.

”Sustainability is about more than recycling and reducing plastic. For brand and package manufacturers, accountability for land and water use, job creation, equitable pay, inclusion, hunger and poverty will be as important as the product and package,” he said.

Luttenberger said navigating tough economic times will also require package manufacturers and brands to collaborate and use resources wisely.

“Succinct messaging will enable consumers to discover the tangible benefits of products and understand measurable packaging attributes,” he added. 

Cambodia leads FDI growth in SE Asia

Cambodia stands at the forefront of foreign direct investment (FDI) in Southeast Asia, anticipating a robust influx of capital in 2024, buoyed by a solid economic recovery.

The International Monetary Fund (IMF) projects the country’s growth to reach 6.1% next year, as highlighted in the annual FDI Standouts Watchlist from fDi Intelligence, the industry analysis division of Financial Times (FT) Group Ltd.

The report underscores that the study, evaluating the macroeconomic and FDI trends of the world’s top 50 FDI destinations using data from the IMF and fDi Markets, identifies countries poised to enter the new year with strong momentum, as the world continues to navigate an uneven post-pandemic recovery.

“Asia has performed admirably in this year’s Watchlist, with six countries in the top 10: Cambodia, leading the list, followed by the Philippines, Iraq, Kazakhstan, Azerbaijan and India. Only three African countries feature in the top 10: Kenya, Namibia and Morocco. Serbia is the sole country outside Asia and Africa to secure a spot in the top 10, ranking ninth,” stated the report.

Chea Vuthy, deputy secretary-general of the Cambodian Investment Board (CIB) and the Cambodian Special Economic Zone Board (CSEZB) at the Council for the Development of Cambodia (CDC), noted at a recent business forum that the country boasts economic potential, peace, security, and political and economic stability. 

He emphasised the crucial role of the private sector in driving national economic development.

“We see that FDI annually approaches $4 billion. In 2020, ASEAN experienced a steep 40% decline, but our FDI remained stable at around $3.6 billion,” said Vuthy.

He added that Cambodian investors took the lead in the first half of the year, buoyed by confidence in the country’s investment climate and “trust in its leadership”.

To read full article, click here.


Author: May Kunmakara
Source: The Phnom Penh Post

New Train Route Connects Beijing to Vientiane

The Lao-China Railway officially launched a cross-border passenger train on 13 November connecting Vientiane Capital, Laos, to China’s capital Beijing.
According to China’s government website, the round trip between Vientiane Capital and Beijing will take up to 15 days, covering an approximate distance of 3,660 Km.
The route will pass by tourist attractions in China such as Xishuangbanna in Yunnan Province and Chibi City in Hubei Province, and in Laos, including Luang Prabang and Vang Vieng.
The official first journey of the Vientiane-Beijing train took off on Monday from the Fengtai Railway Station in China and will travel along the Beijing-Guangzhou and Shanghai-Kunming train lines. Following its arrival to Kunming, the train will cross over the border into the Lao-China railway (LCR).
Since its introduction on 3 December 2021, the LCR has become crucial for the regional trade and Laos’ economic development. As of September this year, the railway has facilitated over 3.1 million passengers, with daily numbers averaging 4,889. It also transported more than 26.8  million tons of cargo, including agricultural products, rare and precious metals and minerals, and manufactured goods.
A New Trade Hub
This success caught the attention of the Tourism Authority of Thailand, which plans to incorporate the LCR into its 2024 strategic direction. This initiative is expected to open up new opportunities for cross-border tourism, and foster economic growth.
Cambodia has also shown interest in the LCR, as the country is taking steps to improve the transportation of Cambodian agricultural products to Chinese markets, according to Kong Vimean, a spokesperson for Cambodia’s Ministry of Public Works and Transport.
The proposed route will begin in Phnom Penh and traverse Kampong Cham, Tbong Khmum, Kratie, and Stung Treng provinces before entering Laos and moving onward to China, with the expectation of lowered transport costs and simplified procedures, unlike those faced when transporting through Thailand or Vietnam.
By Jonathan Meadley
 

New Lao-Thai Friendship Bridge Project to Be Completed

Construction is currently underway for the 5th Lao-Thai Friendship Bridge Project, with an anticipated completion date set for the end of 2024, according to Vatthana Phandanouvong, the deputy head of the project.
On 29 November, Vatthana reported that 81 percent of the project had been completed. This includes 69 percent of the bridge and 93 percent of related facilities. Underscoring the project’s strategic importance, Kikeo Khaikhamphithoune, Lao Deputy Prime Minister, highlighted the project’s role in bolstering the enduring friendship and cooperation between Laos and Thailand.
The project broke ground in August 2019, funded by a loan of over THB 1.38 billion (USD 39 million) from the Neighboring Countries Economic Development Cooperation Agency (NEDA) in Thailand. Spanning a total length of 1,350 meters across the Mekong River, the bridge connects the Paksan district in Bolikhamxay Province, Laos, to Bung Kan province in northeastern Thailand.
Within the Paksan district, the bridge’s location is in Kuy Oudom village, situated approximately 10 kilometers north of the district’s administrative center.
By Chono Lapuekou
 

EU keen to invest in PH transition to regional digital hub: expert

European companies are ready to invest in the Philippines and turn it into a digital hub in the region, but the country should strongly implement policies that support a digital trade environment and accelerate technological transformation, an international trade expert said.

Colette van der Ven, trade policy expert with the International Trade Centre, has underlined the importance of a Philippine-European Union free trade agreement (FTA), saying it can help transform the Philippines into a regional digital hub through the launch of the EU’s Digital Economy Package for the country. The FTA will also support the implementation in the Philippines of Global Gateway, the EU’s overarching cooperation framework to deliver sustainable investments accompanying a state’s transition to a green and digital economy.

Van der Ven, who gave a talk at the EU-Philippines Partnership Conference on December 5, said trade is a digital enabler because it can “unleash digital growth in the Philippines and support SMEs.”

Robust trade can provide opportunities for digital acceleration because it can lead to the enhancement of the digital infrastructure, creation of a digitally enabling environment, and access to goods, services, and technologies needed for the country’s digital transition, she continued. Moreover, it can open up new market opportunities for digitally enabled products and services from the Philippines. 

However, Van der Ven at the same time noted that the Philippines has more restrictive regulations on foreign direct investments (FDIs) compared to some of its ASEAN peers like Malaysia, Vietnam, Thailand, and Indonesia.

Citing the FDI Regulatory Restrictiveness Index 2019 of the OECD, she said, “You can see that the Philippines is much more restrictive across the board except for the retail sector… so FDI inflows have not been as strong as compared to other regional countries.” But Van der Ven said the passage of new laws liberalizing trade and foreign ownership in the country can only help to loosen this restrictiveness.

Meanwhile, asked about policy improvements that can enhance digital trade opportunities in the country, reactors said there are actually very few regulations that need to be drafted or amended.

Senen Perlada, executive vice president of the Philippine Exporters Confederation, Inc. (PHILEXPORT), pointed out that the laws in the country are more than sufficient, but that some of these are still missing their implementing rules and regulations.

“We have enough laws. We just need to implement and follow the spirit of the law and provide resources,” he said.

If there is one regulation that still needs crafting, it is policies on blockchain, Perlada added. Blockchain is a distributed and public digital ledger that records transactions across many computers, and this record cannot be altered retroactively without altering all subsequent blocks and the consensus of the network.

Meanwhile, Roehl Gurango of the National ICT Confederation of the Philippines pressed for the urgent passage of the Open Access bill. This proposed legislation seeks to address the legal obstacles and outdated laws that put up high barriers to the entry of new ICT players and perpetuate a costly and inefficient way of installing broadband infrastructure.

Also suggested by the other panelists are the signing of more FTAs by the Philippines, further simplification of regulations and the political will for their implementation, especially the Ease of Doing Business law, and policies that will raise the awareness of the common Filipino about what the new laws are about and how these can benefit them.

Addressing digital infra deficits key to harnessing benefits digital finance

Countries need to adopt policies aimed at stimulating investment to address digital infrastructure deficits and harness the benefits of financial technology (fintech), according to Tokyo-based think tank Asian Development Bank Institute (ADBI).

In a blog, ADBI vice-chair of research and senior research fellow John Beirne and research associate Ngoc Dang said the increased use of fintech during the pandemic has been an important aspect in enabling many micro, small and medium enterprises (MSMEs) to remain economically viable, with financial services being faster, more efficient and cheaper than traditional banking.

Citing earlier studies, Beirne and Dang said those related to insufficient levels of development in digital payments infrastructure, internet connectivity and broadband penetration are among the factors impeding the financial inclusion impact of fintech.

They added that harnessing the benefits of enhanced financial inclusion and inclusive growth brought about by advances in digital finance requires policy action aimed at enabling greater use of digital finance while also managing risks.   

Beirne and Dang also underscored the need to address the main hurdles for policy makers relating to improving the level of digital and financial literacy across countries.

Earlier studies highlighted the importance of sufficient levels of digital and financial literacy for harnessing the financial inclusion impacts of digital financial services.

“Without having a sufficient level of competence in these areas, economies and communities may be unable to reap the benefits of fintech,” Beirne and Dang said.

Further, they said other constraints relate to effectively managing potential risks to financial stability and cybersecurity due to digital finance.

“A sustainable role for fintech for inclusive growth and development requires effective financial regulation and supervision to mitigate these risks, as well as the safeguarding of consumer trust concerns related to cybersecurity,” Beirne and Dang said.

Effective controls to manage the exposure to cyberattacks are key to ensuring consumer confidence in utilizing digital channels for engaging in financial services, they added.  

Beirne and Dang also underscored the importance of international policy cooperation on regulation given the substantial cross-border implications of digital finance. 

Color plays key role in capturing consumer attention

Brands can explore new opportunities for using color to stand out and drive engagement which plays a key role in capturing consumer attention as the world grapples with uncertainty and volatility, according to the world’s leading consumer trend forecaster.  

Candice Medeiros, strategist at WGSN, said factors driving disruption, including rising inflation and the climate crisis, have reshaped shopper priorities, driving emotionally charged purchasing that is increasingly driven by status and cultural clout.    

“Retailers should forge more meaningful relationships with their customers by anchoring their brand in a color narrative to create familiarity and rhythm in expectations,” she said in a sample report.

Medeiros said they can reinforce consistency by using your brand's hero colors as a status signifier.

 “Color that extends beyond seasonal categories, packaging or store design alone will be imperative to support a retailer's identity and enforce its archetype. Use color on a large scale and with authority, creating over-the-top popups, window displays and merchandising. Experiment with large swathes of monocolor rather than mixing several tones together,” she said.

Amid an era of rapid change, Medeiros said brands should enforce color as an extension of intellectual property, helping drive cultural capital and offering memorable consistency.

She also advised them to focus on the physiological and symbolic impacts of color –tones that can calm, energize or even unite individuals– which will appeal to a growing number of consumers with new chronic emotional perspectives and realizations.

Medeiros said that with 90 percent of WGSN survey respondents reporting that color impacts their mood, brands should harness color's emotional power to uplift and engineer glimmers into people's lives.

She said like triggers, glimmers are personal and mood-based, and can be anything from hearing one’s favorite song playing to seeing a vibrant flower among a group of sidewalk weeds.

“Tap into mood-based store design to build larger-than-life experiences that jolt customers with awe or subliminal recognition. The intensity of recent times has also heightened our emotional awareness, crystallizing the important role that brands play in consumer well being. Lean into color theory, using it (to) promote wellness via joy-sparking dopamine brights or stress-relieving rainbow colors in VM and store design,” she added.

Cambodia makes $3.9 bln from export of agri-products in 11 months

Cambodia earned a gross revenue of $3.9 billion from the export of agricultural products in the first 11 months of 2023, said a Ministry of Agriculture, Forestry and Fisheries (MAFF) report on Tuesday.

The Southeast Asian country shipped 7.31 million tons of agricultural products to 75 countries and regions during the January-November period this year, a year-on-year drop of 4.6 percent, the report said.

Key agricultural items for exports included rice, rubber, cassava, mangoes, fresh bananas, pepper, cashew nuts, longan, and corn, palm oil, among others.

“Despite a slight drop in the commodity export in the first 11 months of this year, we’re optimistic that the growth will rebound soon because our export in November had seen a significant increase,” Ngin Chhay, director-general of the MAFF’s General Directorate of Agriculture, said in the report.

He added that the kingdom exported 1.03 million tons of agricultural products in November this year, up almost 50 percent from 0.69 million ton in the same month last year.

China, Vietnam and Thailand are the major importers of Cambodia’s agricultural items.

For authentic article, please visit here.

 

 

Author: Xinhua

Source: Khmer Times

Bright spots in Asean’s early-stage fintechs

AMID a global funding winter, fintech investors in South-east Asia are concentrating the limited funds they are willing to cough up in early-stage startups and alternative lending.

Fintech funding in the region – or more precisely, the six largest Asean economies of Singapore, Indonesia, the Philippines, Vietnam, Thailand and Malaysia – has fallen by 70 per cent for the year to Sep 30, 2023, said a report by UOB, PwC Singapore and the Singapore FinTech Association released on Thursday (Nov 16).

The report, based on data from Tracxn’s platform, said early-stage companies received half the total fintech funding of US$1.3 billion, which went to six of the top 10 funded companies in the first nine months of 2023.

Investors surveyed in the report said that, for them, the key attractions in this space were the new ideas being explored by these early-stage startups, and the smaller capital outlays being sought.

The average fintech deal size stood at US$13.5 million for 9M 2023, down from US$21.8 million for 2022. For comparison, the average deal size in 2019, before the Covid pandemic, was US$9 million.

Shadab Taiyabi, president of the Singapore FinTech Association, said: “While the landscape for fintech funding across the region has certainly been trickier to navigate, it is good to see Singapore retain its (2022) position as the region’s most vibrant destination, attracting the highest number of deals.”

A total of 51 deals were inked in Singapore, comprising 54 per cent of total deal volume of 94 logged for the six Asean economies. In terms of deal value, Singapore bagged 59 per cent, or US$747 million.

Among the nine categories of fintechs surveyed in the report, alternative lending led funding numbers across those six economies for the first time. This form of lending, which includes online lending and crowdfunding, attracted US$408 million, or 32 per cent of total fintech investments – a 22 percentage point increase from 2022.

Insurtech came in second at 25 per cent or US$325 million, increasing by 20 percentage points from 2022. In third place was payments, at 15 per cent or US$186 million, down 24 percentage points from 2022.

By deal volume, the cryptocurrency sector ranked first. However, its share of funding fell 10 percentage points from 21 per cent in 2022 to 11 per cent in 9M 2023, as investors avoided overvaluing the sector.

The fintech slump in the six Asean economies in 9M 2023 mirrors the global one. Fintech funding globally fell to US$43.5 billion as high interest rates and an uncertain economic environment crimped investor appetite. The decline follows the US$163 billion raised in 2021 and the US$107 billion in 2022.


Source: The Business Times. Link: Here.

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