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Global tourism crash may cause $4 trillion loss to world economy

The slump in tourism caused by Covid-19 will cost the global economy more than $4 trillion for 2020 and 2021, much worse than anticipated, as an uneven vaccination rollout crushes developing countries that are highly dependent on international visitors.
 
The losses this year alone could amount to $1.7 trillion to $2.4 trillion, even as international tourism rebounds in the second half in countries like the U.S., the U.K. and France, which have higher vaccination rates, the United Nations Conference on Trade and Development said in a report.
 
The study highlights the costly impact from an unequal access to vaccines around the world. Developing countries may account for as much as 60% of the estimated losses to global gross domestic product, according to the UNCTAD.
 
The report also shows that the tourism crisis is far from over, with travel restrictions and bans still in place in many regions with low vaccination rates. The world may not see a return to pre-pandemic arrivals of international tourists until 2023, according to the study, which was done in collaboration with the UN World Tourism Organization.
 
Countries such as Thailand and Turkey, which rely on foreign tourists to boost their economies, bore the brunt of the impact. The drop in tourism also threatens closely linked sectors such as food, beverages, retail trade, communications and transport.
 
Overall, the crash in tourism has led to an average rise of 5.5% in unemployment of unskilled labor, hitting a sector that employs many women and young people.
 
"Tourism is a lifeline for millions, and advancing vaccination to protect communities and support tourism's safe restart is critical to the recovery of jobs and generation of much-needed resources, especially in developing countries," said UN World Tourism Organization Secretary-General Zurab Pololikashvili.
 
In developed countries, the prospect of a vacation overseas is looking up. A rising number of Americans are planning a trip to a foreign country, according the Conference Board's June consumer confidence index.
 
By: Syndication Washington Post, Bloomberg · Peyton Forte

Incubation Programs Help Small Businesses, Contribute to Global Value Chains

The government needs to enhance capability of small and medium enterprises through entrepreneurial development and incubation programs in order to fully maximize and grow their businesses, a senior official has said.

Kasan Muhri, head of Trade Analysis and Development Agency at the Trade Ministry, said if local companies can maximize know-how and technological skills by linking with the transnational companies (TNCs), they can build their own capacities based on these incentives and even expand their businesses by using the TNC’s networks. 

“The government needs also to strengthen the regulatory working environment to expand employment, upgrade technology and contribute to global value chains,” Kasan added.

Aside from that, the government also needs to develop science, technology and innovation infrastructure to enable companies to build more efficient business practices, he emphasized.

Kasan raised those points during a webinar organized by ASEAN-Japan Center (AJC) on May 27, 2021, in response to AJC’s paper titled “Non-Equity Modes of Trade in ASEAN: Promoting new forms of trade between Japan and ASEAN: Paper 3 Indonesia”. 

According to the paper, non-equity modes (NEMs) of trade in Indonesia is foreseen to potentially play a role in expanding opportunities to participate in global value chains and are critical for inclusive economic development especially during the COVID-19 pandemic.

In general, Kasan added, host country governments prefer equity modes (EMs) to NEMs, because EMs give higher level of commitment and bigger impact of the foreign presence to the performance of local economy.

He added non-equity modes are essentially contractual modes, such as leasing, licensing, franchising and management-service contracts.

A smaller degree of ownership means lower commitment on the investment. It shows strategic policy to mitigate business risk in host country. The higher the business risks faced by foreign investor the lower the level of commitment an investor has, he added.

Data shows, Indonesia is the seventh largest economy in the world, and one-third of the country’s economy is contributed by investments. 

Contract-based business or NEMs in Indonesia exists in natural rubber industries in the form of contract farming, in footwear industry through outsourcing and subcontracting, in fast-food and convenience stores through franchising, and in international hotel chains through management contracts or licensing agreements. 

The enforcement of Law No. 11/2020 on Jobs Creation aims to ease the main obstacles to investing in Indonesia, and benefits also NEMs by attracting investors to Indonesia with the expected ease of doing business in the country.

NEMs present opportunities that are not found in foreign direct investment (FDI). For example, it is an attractive choice for international brand owners and TNCs considering their flexibility to enter the Indonesian market through contractual agreements with local companies. 

To meet TNCs’ standards, local companies are expected to be equipped with management and technological skills and capacity. However, as transnational corporations can easily terminate contracts, a long-term deal is not guaranteed particularly when the quality of goods and services does not meet the TNC’s standards. 

While FDI may have a better advantage than NEMs in terms of bringing in capital, NEMs expand the operational methods to have local Indonesian firms engaged in international networks of production.

Source: MadeInIndonesia.com

Original published date: 02 June, 2021


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Thailand Cross-border trade rises 29% in May

Thailand's cross-border trade rose more than 29 per cent in May, increasing for the fifth consecutive month, the Commerce Ministry reported on Tuesday.
 
Total trade of 677.078 billion baht (21.158 billion USD) represented a rise of 29.15 per cent, with exports up 33.6 per cent to 408.3 billion baht (12.759 billion USD) and imports up 22.93 per cent to 268.777 billion baht. (8.399 billion USD) Thailand registered a trade balance of 139.524 billion baht (4.360 billion USD) spurred by recovery in neighbouring economies.
 
Efforts to boost trade and exports would be boosted by the opening of 11 more checkpoints as early as possible, said the ministry. Currently, more than half (51) of Thailand’s 97 border checkpoints remain closed under Covid-19 restrictions.
 
Thailand’s direct border trade with its four neighbours – Malaysia, Myanmar, Laos and Cambodia – rose 19.85 per cent to 371.04 billion baht (11.595 billion USD) in May.
 
Meanwhile cross-border trade via neighbouring countries to important markets such as China, Singapore and Vietnam grew 42.57 per cent to 306.038 billion baht (9.563billion USD). China remained the biggest trading partner, followed by Singapore, Vietnam, the United States, Taiwan, Japan and South Korea.
 
The Commerce Ministry said border and cross-border trade is on course to exceed the target of 1.4 trillion baht (43.712 billion USD). 

Source: The Nation Thailand
Photo Credit: Bangkok Post

Policy rate very low, liquidity not impeding recovery - BoT chief

Thailand's policy rate is very low and liquidity in the banking system is ample and not impeding economic recovery, the central bank governor said, as the country struggles with the effects of a recent spike in coronavirus infections.
 
Financial measures introduced so far have been sufficient and the central bank is ready to implement more if necessary, Governor Sethaput Suthiwartnarueput said in a video clip posted by the Bank of Thailand's (BoT) YouTube channel on Wednesday.
 
The BoT has left its key rate steady at a record low of 0.50% since the middle of last year after three cuts to mitigate the pandemic impact.
 
It has since focused on relief measures including 350 billion baht of soft loans recently and a so-called "asset warehousing" scheme to help businesses.
 
However, there has been a problem of liquidity distribution to small and medium enterprises, Mr Sethaput said.
 
"Large businesses still have access to loans, retail ones are already heavily indebted and what they need is income, not more debt," he said.
 
The BoT chief said it would take Southeast Asia's second-largest economy until the first quarter of 2023 to return to pre-Covid-19 levels and tourism could take "five years plus" to normalise.
 
The lengthy recovery will increase inequality partly due to very high household debt, which will be a drag on recovery for households, he said.
 
"We will be out of this crisis ... but the recovery will take time and won't be smooth," Mr Sethaput said.

Source: Bangkok Post / Reuters

EXIM bank (Thailand) wants 100,000 Thai SMEs to target foreign markets

The Export-Import Bank of Thailand (Exim Bank) wants to boost the number of Thai SMEs exporting products abroad from the current level of 30,000 to 100,000 within the next four years.

Thailand has an estimated 6 million small and medium-sized enterprises (SMEs), of which 3.1 million are registered and 2.7 million are informal, according to Exim Bank managing director Rak Vorrakitpokatorn.

These entrepreneurs compete in a market of just 70 million people, where yearly GDP growth is a modest 2 per cent over the past 10 years, Rak said. Also, only 1 per cent of Thai SMEs are exporters, compared to more than 10 per cent in competitor countries.

“The Thai economy is growing at an average of 2 per cent per year, while the country has become an ageing society,” he said.

Compared to neighbours such as Vietnam and Indonesia which have far younger populations, with 60-70 per cent of people of working age, Thailand has little potential because the market is small, said Rak. “Boosting sales is difficult, so what we should do is go to the international market.”

Thai SMEs can plug into the international trade cycle in two ways, Rak said.

The first is to upgrade to an exporter – which may require time in order to build knowledge and experience in various fields.

The second way, which can be done immediately, is via the exporter's supply chain.

“Many Thai SMEs are already part of the exporter supply chain in one way or another. This is because 70 per cent of Thailand’s total export value relies on domestic raw materials,” said Rak.

Source: The Nation Thailand

Russian firms urged to invest in PH

The government has invited more Russian companies to invest in the Philippines, particularly in digital infrastructure, as it is in continuous pursuit in making the country a top investment destination in Asia. 

Department of Trade and Industry (DTI) Undersecretary and Board of Investments (BOI) Managing Head Ceferino Rodolfo said the Philippines has access to overseas markets while it has recently enacted a law offering incentives to investors and undertaken important reforms in various areas.

“For instance, we know that in digital infrastructure, Russia has very fast and affordable internet connection averaging speeds of 200 MBPS (megabits per second) as well as very affordable service rates. In cashless payment, Russia is also among global leaders in this segment so please consider investing in the Philippines,” he said in a webinar.

Rodolfo expressed hope that the Philippines-Russia Joint Commission on Trade and Economic Cooperation (JCTEC) would pave the way for increased collaboration between the two countries in key industries such as electronics, aerospace, automotive, agriculture and agri-business, and information technology (IT) services and digital technologies.

The JCTEC is a mechanism to improve bilateral economic relations between the Philippines and Russia.

Rodolfo said investing and locating in the Philippines for manufacturing will provide Russia greater market access to more countries capitalizing on the country’s free trade agreements (FTAs) and preferential tariff agreements, and also greater access for sourcing of inputs. 

He said investors will have access to Association of Southeast Asian Nations (ASEAN) and ASEAN-related FTAs, including the newly-signed Regional Comprehensive Economic Partnership (RCEP) agreement.

“And for those who would like to leverage lower cost of highly skilled labor, products you manufacture here, you can export to Russia or any EU (European Union) country at GSP (Generalised Scheme of Preferences) rates,” he added.

On the trade and export side, Rodolfo said that as part of global value chains, there are Philippine companies supporting Russian firms by providing important technology components as well as global services.

He also underscored the passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law allowing the availment of income tax holiday from four to seven years depending on the level of technology and location of the project, and subsidies for key cost items.

“The income tax holiday will be followed by another 10 years of either enhanced deductions or special corporate income tax of 5 percent on gross income earned in lieu of all other taxes,” he added.

Rodolfo said President Rodrigo Duterte has also issued Executive Order (EO) No. 130 lifting the moratorium on granting mining permits, and EO 127 liberalizing access to satellite services which in turn opens opportunities for telecommunication companies to provide better internet service and access nationwide.

He said the Supreme Court also promulgated a decision for leveling the playing field between domestic and foreign construction companies, including Russian, in terms of the issuances of licenses.
“These are important reforms in areas where Russian companies have strong interest -- in mining, telecoms and construction,” Rodolfo said.

“We would like to assure that the DTI-BOI as well as our Philippine Trade and Investment Center in Moscow remain steadfast in our pursuit of further improving the country’s investment climate by making this more conducive to businesses,” he added.


June 25, 2021

Federal trademark registration provides more protection

Businesses can obtain a federal trademark registration which offers more protection.

Deborah Greaves, Partner at Withers Bergman LLP, said the registration provides protection throughout the 50 states in the United States (US).

She said applications are filed with the US Patent and Trademark Office (USPTO).

Greaves said a federal-registered trademark has broader enforcement capabilities as it may be recorded with US Customs and border patrol.

“Criminal enforcement may be achieved through both state and federal law enforcement agencies,” she said in a virtual briefing, adding that businesses do not get enforcement through any of the federal authority with state registration.

Greaves said state trademark registration is not valid outside of the state.

She added there are two filing basis --intent to use and use based.

“The mark must be used in commerce on all of the goods in the application before the
trademark registration will be issued,” she said.

Greaves further said the first renewal is at the five-year anniversary and thereafter, each renewal is at the 10-year anniversary of the registration.

“Each renewal, including five-year and 10-year, must be supported by submission of a specimen showing ongoing use of the mark in commerce. The USPTO conducts random use based audits,” she added.

In general, Greaves said marks may be registered in either as a standard character mark or a design or logo mark.

“The US is the first to use jurisdiction and recognizes common law rights. The US recognizes the Nice Classification system of defining acceptable goods and services and the classifications thereof,” she said.


June 25, 2021

PPA proposes import container monitoring system

The Philippine Ports Authority (PPA) is seeking to introduce an electronic container tagging and tracking system (CTTS) for all imports that could address long-running logistics issues, including the controversial container deposit.

Container deposit is a bone of contention between shippers and shipping lines, with the former accusing the latter of deliberately delaying return of deposits, an amount the importer is made to pay as guarantee for return of the container after goods in it have been discharged. Some shippers claim unreturned deposits held by some shipping lines run in the millions.

Under the proposed CTTS, a container insurance fee may be required in lieu of container deposits.

The proposal for a CTTS follows the issuance of PPA Special Order No. 216-2021 on May 26 that created an electronic container registry and monitoring committee which, in turn, proposed guidelines for electronic tagging of imported containers.

The system aims to monitor the journey of containers — from port discharge to their return to an empty depot then back to the port for re-export.

In a June 15 virtual public hearing, PPA assistant general manager for finance and administration Elmer Nonnatus Cadano said the idea of a monitoring system came up in discussions on logistics concerns and the role of ports in the country’s security between PPA, the Department of Trade and Industry, Bureau of Customs (BOC) and the private sector.

PPA Port Operations and Service Department (POSD) manager Atty. Hiyasmin Delos Santos said shippers’ complaints filed before the Shippers’ Protection Office (SPO) were considered in crafting proposed CTTS guidelines.

SPO was created last year as part of temporary measures to protect the public during a state of national calamity from “exorbitant and unreasonable shipping fees” that have resulted in high consumer prices. POSD is the SPO secretariat.

In her presentation, Delos Santos said complaints received by SPO were mostly about
container yard charges, return of empty containers, unreturned container deposit, demurrage and detention charges, and other alleged unreasonable charges imposed by shipping lines.

Delos Santos noted CTTS seeks to address these complaints, particularly unreturned container deposits, whose amounts range from P10,000 to P2.208 million based on shippers’ complaints.


June 25, 2021

Myanmar : India signs MOU to import matpe (bean) and pigeon pea from Myanmar and Malawi

According to Agriwatch.com, the Indian government has signed a Memorandum of Understanding (MoU) to import matpe (bean) and pigeon pea from Malawi, a landlocked country in Africa and Myanmar.

About 250,000 tonnes of matpe (bean)  will be imported from Myanmar, and 100,000 tonnes of pigeon pea will be imported from Malawi under a government-to-government contract.

Agriwatch.com quoted market sources as saying that the two types of pulses are intended to be imported annually and are planned to be purchased for five years.

Demand for pulses has risen since the Indian government recently changed its domestic demand for pulses and changed its import policy.

Although Last week, the price of red bean was lower, but Prices have risen due to the lowering domestic stocks; Increasing foreign demand; increasing demand from India and Pakistan.

On June 9, the price of a basket of Irrawaddy beans was 35,800 kyats, but on June 16, it rose to 37,170 kyats per basket, according to data from the Ayeyarwaddy Trade Center.

However, market observers say that while the Indian government will also make G-to-G contracts, the price of Burmese pulses may rise, but it is unlikely that the price will rise too much due to the underlying price controls based on Indian domestic prices.

 

Source: BETV Business (https://www.betvbusiness.com/mm/cheaangp/1228)

Photo: BETV Business

Originally published Date - 17.6.2021

High Time to Build Warehouses

Cross-border logistics service provider Janio Indonesia country head Widiatmoko said warehouse and fulfillment center business is robust especially with the growing number of e-commerce players.

With regard to B2B global e-commerce business, Widiatmoko said, the presence of warehouse or fulfillment center is very crucial. The warehouse for Indonesian products in Manila, for example, will speed up the distribution of those products when there are orders from Manila.

“Demand [for Indonesian products] from Manila will quickly be fulfilled by the fulfillment center,” he said at a recent Virtual Trade Show Indonesia-Philippines 2021 organized by MadeinIndonesia.com and Philippine Business Club Indonesia.

Whenever there are orders or demands for Indonesian products from consumers in the Philippines, they don’t have to wait shipment directly from Indonesia. The Filipino consumers can receive Indonesian products much quicker as they are taken from the inventories at the warehouse.

Trade Attache at Indonesian Embassy in Manila, Lazuardi Nasution, has expressed his agreement with the idea to build warehouse or fulfillment center of Indonesian products in Manila.

“Once, I had thought of the idea to build a warehouse. I later shared the idea to Indonesian community or diaspora in Manila. Unfortunately, they were not enthusiastic,” he said at the same event.

Author: Kurniawan Hari
Source: MadeinIndonesia.com

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Comprehensive food-tech incubation network in Thailand

As part of the Thai government’s consistent support for R&D and scaling innovation in food technology, advanced agriculture and biotechnology, the country houses integrated R&D centres linking the public sector’s high-quality facilities with universities and private sector labs. Central to the network is Food Innopolis, an integrated food innovation complex located at the Thailand Science Park, Pathum Thani Province. Under the supervision of the National Science and Technology Development Agency (NSTDA), the complex offers comprehensive services to R&D and business development, ranging from rental space for laboratory facilities, sourcing personnel and technical assistance in R&D and business development as well as applying for approvals for entrepreneurs from Food and Drug Administration. Food Innopolis also offers networking and knowledge sharing services to members and easy access to the public sector’s facilities in food technology, food standardization and food testing.

To-date, more than 40 local food conglomerates, multinational companies and SMEs have established R&D activities in the innovative food cluster for products including seafood, poultry, dairy, nutritional & functional foods as well as in the areas of food safety, automation and robotics. The centre also focuses on application of digital technology in farm, food innovation and food production processes. Future Food Lab zone adds a similar one-stop service centre to the facilities at Thailand Science Park. The Lab provides assistance to businesses in R&D and scaling innovations.
The cluster also offers an IoT test bed service for areas including precision farming, smart harvest and packaging, robotics for fruit harvesting and packaging, automated pilot plants, smart logistics, smart warehousing, retail distribution, and software system integration. The facility is also a research area for big data, AI (artificial intelligence) and machine learning applications to support database development and traceability for the farm and food industry. To strengthen the country’s food tech ecology, the facility helps develop similar operational concepts in seven well-regarded provincial universities that have a history of producing skilled human resources in the field of agricultural technology.
Source: Bangkok Post
Read the full article here
Read more about Food Innopolis here

Philippines commits to deepen commercial ties with Switzerland, calls for greater utilization of FTA

The Philippines (PH) reaffirmed its commitment to expand two-way trade and investment ties with Switzerland (CH) and deepen cooperation in cleantech and renewable energy, infrastructure, life sciences and digital healthcare sectors ahead of the fourth Joint Economic Commission (JEC) to be held this week and the 65th anniversary of PH-CH diplomatic relations next year.

“We enjoin Swiss businesses…to look closer in the Philippines and assess the merits of investing into the country given the set of incentives that we offer, matched with unparalleled abundance and cost efficiency of labor and of course, access to strategic markets,” Department of Trade and Industry (DTI) Undersecretary Ceferino S. Rodolfo said during the virtual business forum entitled “Philippines and Switzerland: Investing Together for a Better Future.”

Despite the pandemic, bilateral trade between the Philippines and Switzerland rose to USD 764M in 2020 and Philippine exports to the European country rose 8% over the same period, said Usec. Rodolfo. Over the last five years, approved investments from Switzerland reached P1B as Swiss entities like Nestle, Franke Food Service, and CHAMP Cargosystems, among many others, continue to thrive and make it happen in the Philippines.

“Next year, we will celebrate the 65th anniversary of the diplomatic relationship and we build upon a good trade and investment relationship. We have been doing this relationship with you [since 1956], but if I look at our trade and investment bonds, they date back way more than a century [before] we started the diplomatic relationship,” said Alain Gaschen, Swiss Ambassador to the Philippines.

“I would really like to take this forum to convince anyone out there that investing in the Philippines is not only something that will help your business, it will also be something that could help the country,” Dr. Urs Lustenberger, President of the Swiss-Asian Chamber of Commerce said. “The Philippines is a great place, has fantastic people – a hundred million of them – which provides not only a market for themselves [but also] a good base for expansion into Asia.”

Priority Investment Sectors

Three breakout sessions were held in parallel to focus on the Philippines’ priority investment sectors.  One of these sectors geared for closer collaboration is clean technology and renewable energy (RE), which is especially relevant as the Philippines seeks to increase the share of renewables to more than half of power generation mix by 2040. The investment opportunities in RE lie in upstream development, generation, retail, transmission, and distribution, according to Mylene C. Capongcol, Director, Department of Energy.

The breakout session was led by David Avery, Head of Cleantech at Switzerland Global Enterprise (S-GE) and featured insights from Marc Krebs, co-founder of Tide Ocean and Romil Jagunap, General Manager of DKSH Philippines.

Similarly, Swiss organizations can look into supporting the development of the Philippine infrastructure sector. Switzerland is a donor and shareholder of the Asian Development Bank since 1967, helping the Manila-based multilateral lender finance the growth aspirations of countries like the Philippines.

The break-out session was led by Patrick Renz, Board Member of Asian Developmen Bank (ADB) and Kelly Bird, Country Director of ADB. It featured insights from Department of Transportation Undersecretary Timothy John R. Batan and Michele Molinari, Member and CEO of Molinari Rail as well as a testimonial from Christophe Lejeune, General Manager of SIKA Philippines.

Health is another sector that can benefit from Swiss expertise, especially as the pandemic highlighted the urgent need to digitize and increase the resilience of the healthcare system.

The discussion was led by Dr. Dennis Ostwald, CEO at WifOR Institute, Sonja Haut, Head Strategic Measurement and Materiality at Novartis, and facilitated by Dr. Stephan Mumenthaler, Director General at ScienceIndustries. It featured insights from Jeff Williams of the Health Information Management Association of the Philippines, Diana Cortesi of Basel Area Business & Innovation, and Dr. Raymond Sarmiento of the National Telehealth Center.

Improving PH-EFTA Utilization

Swiss companies looking to expand their markets can leverage the PH-European Free Trade Association (PH-EFTA) free trade deal that was signed in 2018. Before the deal came into force, Swiss companies paid USD 10.5M in duties on USD 226.7M in exports per annum in 2017, according to an analysis by Professor Patrick Ziltener of the University of Zürich.

“In 2018, the year prior to entry into force of the PH-EFTA, we had a trade deficit vis-à-vis the EFTA countries to the tune of about USD 61 million. On the first full year of implementation in 2019, we turned that around so we already had a surplus of USD 47M,” said Usec. Rodolfo, adding that the experience was similar when the country’s bilateral FTA with Japan came into force.

When the deal came into effect in 2018, Swiss companies exporting to the Philippines managed to save roughly USD 234,000, but still shelled out USD 7M in duties, Ziltener’s study shows. In 2019, the year completely covered by the FTA, the utilization rate of PH-EFTA was around 14% and low on a product-by-product basis, with food preparation and pharma having low utilization rates, while textiles, many metal products, and machines at 0%. “Utilization to increase over time…but proactive information campaign seems necessary,” Ziltener noted.

In a separate study, Ambassador Markus Schlagenhof, State Secretariat for Economic Affairs, cited how Philippine exporters to Switzerland saved roughly half a million Swiss francs in 2019 thanks to PH-EFTA, translating to a 24% savings rate. Swiss companies exporting to the Philippines saved CHF 1.3M or 20% savings rate over the same period.

“We all agree these rates are still very low but the agreement is also very young…and the potential is still largely underutilized. I am confident that when economic cooperators learn more about this agreement, we further have to promote it, in a couple years’ time, it certainly will be much higher than it is right now,” Schlagenhof said.

 

The webinar was organized by the Philippine Trade and Investment Center in Bern together with the DTI Board of Investments, Philippines-Swiss Business Council, and the Swiss Embassy in Manila in coordination with Switzerland Global Enterprise and the Swiss-Asian Chamber of Commerce. It is part of an ongoing initiative to start a conversation on rebooting the economy through investments in targeted sectors.

Source: www. dti.gov.ph

Originally published last June 18, 2021.

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