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Slower growth and higher inflation the hallmarks of a post-COVID-19 world

The Straits Times published a commentary by Ruchir Sharma, formerly chief global strategist at Morgan Stanley, chair of Rockefeller International, on how slower growth and higher inflation are hallmarks of a post-COVID-19 world. A hot spurt for global growth is generating breathless headlines. India is on pace to be "the world's fastest-growing large economy" and France is posting its "strongest growth in 52 years". President Joe Biden cites the latest quarterly growth data as evidence that the US economy is growing "faster than China's" for the first time in two decades and is "finally building an American economy for the 21st century". Alas, 2021 looked so good only because so many economies contracted sharply the year before. This bounce-back blip says nothing about the 21st century. The question is how fast economies can grow after the pandemic, once base effects fade and stimulus recedes. Trends in demographics and productivity suggest the global economy is likely to grow even more slowly in the 2020s than it did in the last decade.

A brief history shows why. After the Second World War, the baby boom nearly doubled global population growth to 2 per cent, a historic high. Productivity growth tripled to around 2 per cent, boosted by new technologies and a massive investment boom. With more workers, each producing more, global gross domestic product growth also doubled to an unprecedented level, close to 4 per cent. The postwar miracle was in full swing by the 1950s. In the 1980s, cracks appeared. Population growth ebbed as fertility rates declined. Productivity growth started to slow, for a number of hotly debated reasons. But new forces emerged to keep the growth miracle era alive. First, a debt boom. With inflation under control, central banks could slash interest rates to record lows, while financial liberalisation allowed for much more lending and borrowing. Second, a new free-market consensus opened borders to trade, money, workers and, later, data. Juiced by debt and globalisation, global gross domestic product kept growing at nearly 4 per cent. The financial crisis of 2008 marked a major turn. Flows of trade and people slowed; flows of money collapsed. Only data flows carried on growing. Global productivity growth fell back towards 1 per cent, even as labour-saving digital technology continued to spread. With a predictable lag, falling birth rates started to cramp growth in the working population (aged 16 to 64), which has dropped from 1.5 per cent to about 1 per cent.

That was why the global economy grew at barely more than 2.5 per cent a year in the 2010s - the slowest decadal pace in postwar history. The four "Ds" - depopulation, declining productivity, deglobalisation and debt - all weighed on growth. The pandemic has only magnified those factors. The virus triggered a baby bust, a migration bust and a wave of retirement and quitting that is adding to the pressures of depopulation on growth. Though productivity typically surges early in a recovery, this time it continued to languish in many economies. As governments spent heavily to counter national lockdowns, debt levels hit new highs. But now, as interest rates head higher, borrowers of all kinds will be reluctant to take on more debt to fuel growth. The deepening impact of the four Ds suggests the trend towards slower growth will continue.

High-income countries such as the US that still aim for 3 per cent annual growth will be lucky to top 2 per cent in this decade. Lower-income nations such as India need to lower their benchmark for success from 7 per cent to 5 per cent or better. Complicating this picture is that inflation has returned, driven by temporary supply shortages and heavy stimulus, but likely to be sustained by shrinking labour forces and rising wages. With inflation back, policymakers will no longer feel empowered to keep growth alive with constant doses of stimulus. Investors, who have grown accustomed to central banks propping up markets at the first sign of trouble, will need to wean themselves off the comforts of constant state support. Rather than hyping a temporary spike in growth data, it is time to recognise that a post-pandemic world shaped by the four Ds is likely to result in even slower growth and higher inflation.


Source: The Straits Times

Date: 14 February 2022

Link: Here

Manufacturers in semiconductor, electronics and pharma sectors are global leaders in digital transformation: Report

The Straits Times reported that the manufacturers in semiconductor, electronics and pharmaceutical industries are at the forefront of digital transformation globally, with companies in these sectors being early adopters of advanced manufacturing concepts, technologies and applications. This was among the key findings in the second edition of the Manufacturing Transformation Insights Report, which was launched by the Singapore Economic Development Board (EDB) and World Economic Forum (WEF) on Thursday (Feb 10). The report is based on data from close to 600 manufacturing companies across 30 countries that underwent the Smart Industry Readiness Index (SIRI) assessment. Mr Francisco Betti, head of the Shaping the Future of Advanced Manufacturing and Value Chains Platform at WEF, told The Straits Times it is not a surprise that semiconductor, electronics and pharmaceutical manufacturers are leaders in Industry 4.0 transformation efforts. This is especially given the efforts and investments they have made in digital transformation to cope with the increase in demand and disruptions the world has faced in recent years, he said.

"The future of manufacturing is not about technology, but it's about technology and people. Unless you are able to bring your people on board, it will be extremely hard to deploy new use cases and enable a successful digital transformation strategy," said Mr Betti, who is also an executive committee member of WEF. WEF’s Managing Director, Jeremy Jurgens noted that the Global SIRI Initiative is one of the forum's fastest-growing initiatives, having scaled internationally over the last 18 months. EDB Chairman, Beh Swan Gin said the agency's partnership with WEF has established SIRI as an independent and international benchmark to accelerate the pace of transformation for the manufacturing sector around the world. "The insights and real-life case studies presented in this report will provide public- and private-sector stakeholders with the ability to develop tailored interventions and uncover new opportunities that digital transformation can offer," he added.


Source: The Straits Times

Date: 10 February 2022

Link: Here

Economic recovery in ASEAN expected to be strong this year, but some risks lie ahead

Economic recovery in Asean is expected to be strong this year, bolstered by pandemic fatigue and countries shifting its strategies from grappling with Covid-19 to living with it.


But there are some uncertainties about whether governments will re-impose restrictions and growth will be collective, given that some economies are more badly impacted than others by the pandemic.


These were some of the points highlighted by economists and other experts at panel discussion organised by the European Union-Asean Business Council on Thursday (Jan 27), after the Asian Development Bank forecast South-east Asia's growth for this year at 5.1 per cent.


Mr Joseph Incalcaterra, chief economist for Asean at HSBC, said last year, some countries were not prepared for the Delta wave.


"Policymakers are now more realistic and they understand that Covid-19 is not going away. Countries that were sticking to a zero-Covid-19 policy last year have abandoned those," he said, adding that the commitment to live with Covid-19 will allow Asean countries to be more flexible with their policy actions.


"By and large, it is very clear that we are not going to see the same lockdowns that we saw, I don't think there is a political appetite nor economic capacity to have that again."

Mr Andrew Naylor, the regional chief executive of Asia Pacific (excluding China) at the World Gold Council, said how governments react to an emergence of a new variant is an uncertainty that may hamper growth.


He said: "The key is whether there will be an emergence of a new variant that perhaps escapes the vaccine...I think that is the main major immediate headwind that I see."


Dr Marty Natalegawa, former Indonesian foreign minister, also said growth may not be equal across all countries in Asean as the pandemic has had varied effects on different segments of societies.


The pandemic had a disproportionate impact on lower-income and emerging economies, as these countries tend to have less resources to defend against external shocks and support their economy.


Countries also have different degree of exposure to external factors around them. For example, Singapore would be far more integrated and exposed to international development than Indonesia, Dr Natalegawa said.


How well ASEAN can recover also depends on how well it can ride on global trends, such as the focus on environmental, social and governance, the panellists said.


Mr Incalcaterra said producers, especially companies in the West, will be looking at the carbon footprint of the country and how electricity is being derived before choosing to make an investment.


He said: "If you are producing components of electric vehicles' batteries, but those components are being made with (coal-fired) electricity, then that makes it very difficult to sell to investors."


Source: The Straits Times

Date: 27 January 2022

Link: Here

Solar energy in nat’l grid up 10%

The amount of solar energy transmitted through the national grid is around 10 per cent higher than in the same time last year, and authorities are encouraging more investment in clean and renewable energy, according to the head of the state electric utility.

Electricite du Cambodge (EdC) director-general Keo Rottanak told The Post on February 7 that the Ministry of Mines and Energy and EdC have been working to increase the power supply capacity and meet the growing demand inspired by economic growth.

He highlighted two main goals in the undertaking – ensuring sufficient electricity supply and providing clean energy sources.

A 20MW solar farm in Monorom commune, Svay Teap district, Svay Rieng province was recently hooked up to the national grid through connection to a distribution network in Bavet town, bringing the province’s solar power generation capacity to 30MW, he said.

He added that this will curb reliance on electricity supply from the capital and hydropower sources such as the Sesan river, stimulate investment activities, and promote what he termed a “green-energy zone”.

He stressed that Cambodia regards the furtherance of clean energy generation as a major priority. “This results in the provision of sufficient energy in Cambodia, with the appreciation that the sustainability of environmental protection is ensured,” he said.

About 350MW of solar power has been integrated into the national grid, with Pailin province accounting for the lion’s share at 90MW or 25.7 per cent, followed by Kampong Speu (80MW; 22.9 per cent), Battambang and Kampong Chhnang (60MW; 17.1 per cent), and Banteay Meanchey and Svay Rieng (30MW; 8.6 per cent), he added.

For full article, please read here


Author: Hin Pisei

Source: The Phnom Penh Post 

JCA eyes Banteay Meanchey agriculture potential for Japan investment

The Japan-Cambodia Association (JCA) is seeking additional investment in the agricultural sector of Banteay Meanchey province, where most Japanese investors act in the electronics manufacturing and auto assembly markets.

During a visit to the northwestern province on the Thai border, JCA director and Nippon Koei Co Ltd general manager Tsutomu Tamura on February 1 met with provincial governor Um Reatrey.

Tamura said he had gone on the trip to learn more about the potential of the province, observe the rewards and challenges associated with the operation of the Japanese factories based in Poipet town, and gain other important insights.

“The JCA plans to lead Japanese investors on a visit to Cambodia, especially to Banteay Meanchey, a province with potential in agriculture, paddy rice, cassava and tourism,” he said.

The governor said that the Banteay Meanchey Provincial Administration is “always ready” to support the JCA’s initiatives and collaborate on any activities that could potentially bring economic prosperity to the province.

Reatrey called on the JCA to promote tourism and investment to Banteay Meanchey, especially in agriculture, saying that 85 per cent of the province’s 790,000 population is engaged in farming – highlighting the sector’s untapped potential for investment.

Banteay Meanchey provincial Chamber of Commerce president Chhoeung ChhivIen told The Post on February 2 that most high-rolling Japanese businesspeople based in the province invest in electronics manufacturing and auto assembly in the Sanco Poipet Special Economic Zone.

He suggested Japanese and other foreign investors look into agricultural product processing in the province, saying that major investments could have a meaningful impact on farmers, significantly helping them overcome market challenges.

Reatrey noted that the province has three primary border gates with Thailand – Poipet, Boeung Trakuon and Malai.

He also listed five major industrial zones in the province – Poipet-O’Neang Special Economic Zone, Sanco Poipet Special Economic Zone, Poipet PP Special Economic Zone and Ly Utny Special Economic Zone in Poipet town; and Sisophon Industrial Park in the provincial capital of Sisophon.

For original article, please read here


Author: Hom Phanet 

Source: The Phnom Penh Post 

Cambodia’s garment, footwear, travel goods exports up 15.2 pct in 2021

Cambodia’s garment, footwear and travel goods industry has seen a 15.2 percent rise in exports in 2021, according to a report from the General Department of Customs and Excise on Saturday.

The Southeast Asian nation exported the products worth $11.38 billion last year, up 15.2 percent from $9.88 billion in the year before, the report said.

The garment, footwear and travel goods industry is the largest foreign exchange earner for Cambodia. The sector consists of roughly 1,100 factories and branches, employing approximately 750,000 workers, mostly female, according to the Labor Ministry.

The sector is one of the four pillars supporting the kingdom’s economy.

Minister of Economy and Finance Aun Pornmoniroth said earlier this week that the success of the national vaccination campaign in controlling the spread of COVID-19 has allowed the country to fully resume its socio-economic activities in all areas.

“With the success, Cambodia’s economy is projected to grow at a better-than-expected rate of 3 percent in 2021 from a 3.1 percent contraction in 2020, propelled by a swift rebound in garment sector and non-garment sector as well as agriculture,” he said.

“For 2022, the economy is predicted to grow at a higher rate of around 5.6 percent, buoyed by the expected rise of global demand and foreign investors’ confidence,” he added.

Pornmoniroth said Cambodia is one of a few countries in the region and in the world which have achieved high vaccination rates and induced strong COVID-19 herd immunity.

The country has so far administered at least one dose of COVID-19 vaccines to 14.37 million people, or 89.8 percent of its 16 million population, the Health Ministry said on Saturday.

Nearly 13.8 million people, or 86.2 percent of the population, have been fully vaccinated with two required shots, and 5.97 million, or 37.3 percent, have taken a third dose or booster shot, said the ministry.

For full article, please read here


Author: Xinhua

Source: KhmerTimes 

Cambodia: New platform set in motion to promote RD on food technology

While Cambodia is known for its wealth in natural resources and raw materials, it is still very much reliant on imported products including products of the sea.

Fisheries is one sector that is thought to be neither competitive nor reaching its full potential in the country, attributed to the lack of innovation and technology.

Director General of the Fisheries Administration Poum Sotha revealed that fishery processed products from Cambodia are behind in terms of added-value and product diversification as there has not been an optimised use of the resources from the sea.

To address this, a Food Technology, Research, and Innovation Platform has been set up. It is aimed at promoting research and development, knowledge transfer and enhancing collaboration between the post-harvest fishery production sector and higher education institutions.

The initiative which also received support from the European Union also aims to build a research and innovation ecosystem in Cambodia.

To initiate the establishment, a one-day discussion was held, headed by CAPFISH  Project of the United Nations Industrial Development Organization (UNIDO ) together with representatives from higher education institutions, the private sector, officials from the Fisheries Administration, and the Ministry of Industry, Science, Technology and Innovation.

The cooperation would benefit higher education institutions, research institutions and the private sector in promoting support for fisheries sub-sector development, both freshwater and sea aquaculture to meet the needs of both the domestic and export markets.

For full article, please read here 


Author: Sok Sithika

Source: Khmer Times 

‘Missing Digital Link’ to deliver e-commerce boost for small businesses in Cambodia

Online portal will speed shipments, open export markets. It will provide a lift for Cambodia’s MSMEs, which account for only 10 percent of its total exports despite a dominant role in the economy. That figure trails the 30 percent share of exports reached by MSMEs in other regional economies.

Expanding into new global markets will soon be easier for Cambodian businesses thanks to a project launched today by the Cambodian government and the Global Alliance for Trade Facilitation, which will digitalise paper-based customs clearing processes for small packages sent through the post.

Cambodia’s General Department of Customs and Excise (GDCE) and Cambodia Post already have established electronic systems for handling small package clearances but lack a digital link that would allow them to realise their full potential. So instead, customs declarations are still filled in and processed manually and only at or after the arrival of shipment.

Through its implementing partner Swisscontact, the Alliance is clearing that roadblock with this new project, which will develop the missing digital link between the two systems. That link will enable faster clearance of parcels, end the dependence on burdensome paper processes, and allow shipping information to be transmitted before a package arrives at its destination country.

The Alliance is also working with the Cambodian Women’s Entrepreneur Association (CWEA) to ensure that micro, small, and medium enterprises (MSMEs), many of them women-led, can take full advantage of these improvements. To this end, the project will be establishing a new online portal to act as an e-trade ‘one-stop’ service point for MSMEs to ship goods internationally and upscale their export capabilities.

Once implemented, the project will provide a lift for Cambodia’s MSMEs, which account for only 10 percent of its total exports despite a dominant role in the economy. That figure trails the 30 percent share of exports reached by MSMEs in other regional economies. Getting up to that level could potentially add USD3.2 billion in exports to Cambodia’s economy.

For original article, please read here


Author: Khmer Times 

Source: Khmer Times 

Rules for implementing VAT on foreign E-commerce activities in Cambodia

Cambodia’s Prakas 542 provides the rules for implementing a value-added tax on non-resident foreign e-commerce suppliers.

Prakas 542 also clarifies that the non-resident entity must register for VAT purposes in Cambodia and file for VAT returns if their turnover from the e-commerce activities reaches a certain threshold.

Notified in September 2021, Prakas 542 provides the rules for implementing value-added tax (VAT) on foreign e-commerce activities in Cambodia.

Prakas 542 is an implementing regulation of Sub-decree 65, which was issued in April 2021. It mandates that non-resident e-commerce entities register for VAT with the local tax authority – if they do not have a permanent establishment in Cambodia. (E-commerce entities here refer to entities engaged in the digital supply of goods and services.)

Sub-decree 65 was issued in response to the growth of Cambodia’s e-commerce sector, which bolstered by the pandemic, saw revenue reach over $900 million in 2021 and could reach $1.7 billion by 2025.

Cambodia’s national e-commerce strategy
Further, in November 2020, the government established a national e-commerce strategy aimed at developing the domestic industry and preparing for a robust digital economy that can integrate Cambodia’s small and medium-sized enterprises (SMEs) into global value chains.

Cambodia’s national e-commerce strategy comprises 10 chapters:

Legal and regulatory frameworks;

Institutional coordination and policy focus;

Information and communications technology infrastructure;

Payment systems;

SME regulations;

Cross-border trade;

Domestic e-commerce logistics;

Access to finance;

Market support; and

Digital knowledge/skills infrastructure.

What are the compliance obligations for a non-resident e-commerce provider in Cambodia?

A non-resident e-commerce supplier in Cambodia must register for VAT within 30 days. This is applicable for business-to-consumer (B2C) and business-to-business (B2B) transactions.

For full article, please read here

 

 

Author: ASEAN Briefing.com

Source: Khmer Times 

FDIs expand for 6th straight month in November

MANILA, Philippines — Riding on the tailcoats of economic reopening in November in domestic and global economies, foreign direct investments to the Philippines grew for the sixth straight month, the Bangko Sentral ng Pilipinas reported Thursday.

What’s new

Data from the BSP revealed FDI tallied a net inflow of $1.1 billion in November 2021, sustaining its feverish pace of growth at 96% year-on-year.

On a monthly basis, FDI jumped 28.07%.

In 11 months, FDI net inflows to $9.2 billion, markedly improving 52.5% compared with the same period in 2020 and exceeding BSP's target of $8 billion net inflow for last year.

Why this matters

FDIs are firmer commitments that provide jobs for Filipinos, so the government wants to attract more FDIs and not only keep existing ones, unlike the so-called “hot money” which enters and leaves markets with ease.

For this year, the central bank revised its full-year forecast to $8 billion, which was already exceeded back in October 2021.

Other figures

  • Equity capital placements, a measure of new FDIs, sagged 1.4% on a yearly basis to $1.74 billion in the first 11 months of 2021. The majority of this fresh capital came from Singapore, Japan, and the United States. 
  • Intercompany borrowings between multinational companies and their local offices soared 82.1% year-on-year to $6.8 billion in the January-November period.
  • Reinvestment of earnings swelled 12.8% on-year to $1.02 billion in the first 11 months of 2021

ADB bewails delay in RCEP ratification

MANILA, Philippines — Firms waiting for the ratification of the Regional Comprehensive Economic Partnership (RCEP) should not be discouraged despite the delay as the Philippines can still catch up, according to the Asian Development Bank (ADB).

Still, the ADB said the deferment of the ratification of RCEP, which is considered as the world’s largest free trade agreement, is unfortunate.

During the launch of the Asian Economic Integration Report (AEIR) yesterday, ADB chief economist Albert Park said RCEP presents an avenue for economies such as the Philippines to find new opportunities and global value chains that are going to be facilitated by the agreement.

“So it is unfortunate to delay the implementation of that agreement. But at the same time, the agreement just went into force in January and I think its impact is going to be quite gradual,” Park said.

The RCEP took effect on Jan. 1 as the required number of countries had deposited their instruments of ratification of the deal.

However, the Philippines failed to ratify the agreement. The Senate last week adjourned its session for the election break.

President Duterte ratified the RCEP last September. It has since awaited the concurrence of the Senate.

Amid the delay, Trade Secretary Ramon Lopez expressed hope that the Senate would give its concurrence once session resumes in May.

Park said the impact of RCEP would unfold over time as companies understand and then react to the changing opportunities brought about by the agreement.

“I don’t think companies in the Philippines or workers should feel discouraged as long as there’s an agreement to get there eventually. I’m sure as the years unfold, those opportunities will also be made available. And that’s true for any country, not just the Philippines,” Park said.

In particular, ADB economist Cyn-Young Park said the trade deal would significantly help the business process outsourcing (BPO) sector in creating jobs and income for many Filipinos.

“The Philippine government, I do believe, is taking measures to ratify. I share the optimistic sentiment that it will provide great potential for promoting more active employment generation in the BPO sector in the Philippines,” she said.

The Philippines is a major hub for services exports through BPOs such as call centers and high-end outsourcing or knowledge process outsourcing and business process management.

The Philippines accounts for over 12 percent of the global IT-BPO market and is expected to cover 15 percent of the global outsourcing market this year.

In an earlier report, ADB said the RCEP could provide the Philippines with an additional $7 billion in exports by 2030 even amid trade uncertainties, allowing total exports to hit $184 billion.

Meanwhile, the AEIR showed that trade among economies in Asia-Pacific jumped to its highest level in three decades amid recovery from the pandemic.

Trade in the region grew nearly 30 percent in the first three quarters of 2021 following a 3.1 percent contraction in 2020.

Intra-regional trade made up almost 60 percent of the region’s total trade last year, the highest share since 1990.

ADB said the strong intra-regional trade, along with the release of global pent-up demand and the early economic recovery in China, underpinned the region’s economic resilience.

Source: The Philippine Star

'Conversational commerce' to rise

CONVERSATIONAL commerce is among the digital trends that are seen to continue growing this year, a Viber executive said.

In a statement on Wednesday, David Tse, Rakuten Viber senior director for Asia-Pacific, underscored four digital trends, which include the further rise of conversational commerce.

"As we've witnessed on Viber, independent online business owners managed to get back on track and then move forward with more steady steps as they learn more about their customers' online behavior and preferences," Tse highlighted.

He said conversational commerce gained traction to replicate personal service without physical interaction, which increased the demand for chatbots.

"Before the pandemic, customers were used to receiving personalized services in traditional stores and their preference for an individual service shifted to digital and mobile shopping," he added.

Tse noted that Viber's Communities feature has seen a 22-percent growth in the country last year, especially those in business-related Viber Communities.

The feature allows brands and businesses to connect with consumers and have one-on-one conversations with members.

Tse also sees the trend for a person-to-person experience to continue this year, which he said online businesses can do by maximizing private chats with their customers.

"By increasing engagement with customers beyond just customer service support or promotional driven information, Communities allow businesses to create regular content to amplify the interest from the customers on the product category and organically create an interest-focused conversation rather than transactional conversation," he explained.

The digital era, likewise, highlighted more locally made products, according to Tse.

"This pandemic habit is likely to be embedded, as we've realized that going local can be very much part of our day-to-day life," Tse said.

Citing data from the trade and industry department, Tse noted that micro, small and medium enterprises or MSMEs accounted for 99.5 percent of business establishments in the country in 2020.

The segment also contributed around 36 percent to the country's economy in the past years.

Tse said data privacy would also be a priority for the consumers this year.

"Online business owners can better adapt and future-proof themselves by switching to partners that do not collect customer data for profit or by collecting data directly from consumers through conversational commerce, for instance," he said.

Source: The Manila Times

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