Thursday, February 7, 2019

The EU Is No Longer Fit For Purpose - Hell, Recalling Ambassadors!?

Donald tusk special place un hell for brexiteers


Donald Tusk special place in hell for brexiteers


Oh, dear we seemed to have rattled the EU Lords and Masters. I suggest they put this deal to bed in a sensible way, before they implode. Italy and France are fractured, France is faced with industrial strife that will ensure they are relegated to the Southern league of countries. As the economies continue to splutter under the regulatory burden then France's ability to mask their non-compliance with regulations, that they produce will become more visible, fractures will deepen. What on earth France to recall its EU ambassador to Italy. 



The EU is not fit for purpose! Mrs May made clear, WTO rules In her Lancaster House speech are better than a ‘bad deal’. This was widely interpreted as meaning that the UK would be prepared to walk away from the negotiations if an agreement can not be reached. We will rely on WTO rules as a framework under which to conduct trade. This was supposed to strengthen the UK’s negotiating hand because it implied that if the EU did not play ball with the UK there was a perfectly acceptable fall-back position. Then came remainers, doom sayer's creating many synonyms: Crashing Out, Cliff Edge, Falling off a cliff, falling into the clutches of WTO etc. This of course suited their narrative. But it's wrong, its pure sensationalism to distort the facts. For a start the UK was a founding member of the WTO and still holds its seat at the table. 

Only Stupid People Call People Stupid

Such sound bites have in fact influenced the outcome, but not in a way the EU expected. On one hand the EU have taken comfort that the powers will prevent a no deal. Therefore, the EU offered the worst deal possible. Probably encourage by Blair in order that the people of Britain will see the folly of their way and overturn the vote. On the other hand, people have seen through this and reacted to being labelled as stupid little Englanders. The EU should of known, when we are backed into a corner we rarely emerge in a way the opposition expects. Has history taught these guys' nothing. 

WTO as a proposition is perfectly acceptable.

However, that didn't stop eminent vested parties expressing their fear of a no deal outcome. In October 2016, the heads of four industrial lobby groups, the CBI, the EEF, the ICC and techUK, published an open letter to the Prime Minister saying: …



“Every credible study that has been conducted has shown that this WTO option would do serious and lasting damage to the UK economy and those of our trading partners. The Government should give certainty to business by immediately ruling this option out under any circumstances”. 

Again project fear. At no time have they identified what these ‘credible studies’ were. It's as though they want to portray the WTO is some sort of monster organization that consumes its members — especially juicy new ones like the UK. As I said before it is our brainchild, and we have our place at the WTO table.


USA trades with the EU under WTO


The USA and 111 other countries trade with the EU
US - EU trade under WTO
For the monster that it is the EU trades with 111 countries including China (and Hong Kong), India, Russia, Brazil, Indonesia, Singapore, and the United States they do this perfectly well under WTO. In fact, they do it better, since the formation of the Single Market in 1993, the growth rate of UK exports to these ‘WTO Only’ countries has been four times faster than the growth of UK exports to the EU. Meanwhile, over this same period, the growth rate of exports from the 14 top ‘WTO Only’ countries to the EU has been 27% higher than exports to the EU from the UK. 

If trading under WTO is so scary then let's just rename it to the ‘American Version’ — because America trades with the EU, including the UK, extremely well. In fact, as umpteen countries do. Suddenly it doesn’t sound so disastrous. Indeed, when you examine the facts about different trading relationships, as collated by the redoubtable Michael Burrage,19 ‘WTO Only’ (Micheal Burrage Senior Research Fellow at Civitas) does not sound unappealing at all. Trading on a ‘WTO Only’ basis rely on the rules of the WTO for their trading arrangements and to settle any disputes. The WTO rules dictate only the maximum tariffs that may be applied. It is perfectly possible for a member country to reduce these tariffs or, indeed, to abolish them altogether. 



It shows that ‘the WTO clutches’ are not at all clutch-like.

Wednesday, February 6, 2019

Should We Fear China's Belt And Road - Possibly

Belt and road to replace silk road

Imagine a world where 1.5 billion people are forced to live in a desert of their own making, China is just that.

BELT AND ROAD 


Beijing is a dangerously polluted city surrounded by agricultural lands which have turned to dust. In 2012 the World Health Organization reported on 1M Chinese deaths due to air pollution. At times the air pollution has been so bad that it was termed an airpocalypse. The PM (Particle Matter) levels are frequently recorded as reaching all time highs affecting 800M people. PM relates to the term for a mixture of solid particles and liquid droplets found in the air. Some particles, such as dust, dirt, soot, or smoke, are large or dark enough to be seen with the naked eye others equally harmful can not be seen.

The Gobi desert once the protector of the Chinese empire revered and fortified. It now has turned from protector to invader. 500,000 Miles of Northern China and Southern Mongolia is now a Barren wasteland, consisting of just sand. Once fertile land is now arid dust bowls blanketing entire areas of China. The Gobi desert is the fastest growing desert on earth each year transforming 2250 miles (ca. 3,621 km) of grassland in a sandy desert. 




These sands are whipped up by winds polluting over 1M square miles, are then combined with Industrial pollution. Beijing air quality index recently reached a peak of 620, a rating classified as ‘beyond index’. To put into perspective the US government label above 200 as very unhealthy, above 301 to 500 it is ranked hazardous. 

Desertification is a type of land degradation whereby previously fertile soil is transformed into arid land. Effectively, it is the process of areas turning into deserts, and the causes are both man-made and climate-induced. China’s frenzied developmental campaigns in the 20th-century ravaged the country’s timber resources and this deforestation along with overgrazing, wind erosion, and depletion of water resources accelerated desertification in the latter half of the century.

I won't dwell on this point but China's military aspirations which are rapidly coming to fruition. The South China sea is a casing point. Add all this together and consider the use of China's Belt and Road Scheme then wonder starts to be suspicion.

Let's cover the Chinese government guidelines which as we all know are set in stone. China’s State Council set out three rules or categories for overseas investment, what can and can't be purchased by Chinese companies: “prohibited”, “restricted” and “encouraged”. Prohibited are casinos and military technology, while restricted includes hotel and property development. But agriculture and infrastructure investment is encouraged. Then consider the usage for the new silk road.

HEADLINE 1 CHINA TO BECOME THE BIGGEST FOREIGN OWNER OF AUSTRALIAN FARMLAND 


In 1850 Chinese arrived in droves searching for wealth from the new gold rush. Afterwards they stayed on, employed to assist in creating some of the most fertile farms anywhere in the world. They are now back in a form of another gold rush: They are buying farms such as Cubbie Station in Queensland, the Van Diemen’s Land Company dairy operation in Tasmania, Nicoletti Farms in Western Australia and a share in the vast S Kidman & Co cattle empire are just some well-known farming businesses now wholly or partially in Chinese hands. Over recent years Chinese investors have been on an unprecedented buying spree of Australian farmland. According to the latest Register of Foreign Ownership of Agricultural Land, Chinese ownership of Australian farmland has increased tenfold in the past year alone. They now control 14.4 million hectares. China is set to overtake the United Kingdom as the biggest foreign owner of Australian farmland, a mantle dating back at least to the last gold rush. The buying spree comes with the blessing of the Chinese Government even at a time when Chinese government is worried about the flow of capital out of China.




HEADLINE 2 CHINA BELT AND ROAD SCHEME OWNS PORTS ACROSS THE WORLD, CHINA'S SEAPORT SHOPPING SPREE:


What China Is Winning By Buying Up The World's Ports, China through its state owned shipping and maritime companies have historically quietly purchased ports around the world. Now under their 21st century Maritime Silk Road (MSR), the seafaring part of their Belt and Road initiative has significance, their ambitions are taking shape. News emerges almost daily of a new port acquisition. Ports from Greece, Brazil, Sri Lanka, across Africa and Australia have already been acquired. 

HEADLINE 3. CONTROL OF THE WEST INFRASTRUCTURE, POWER TELECOMS ETC. 


Huawei have the ability to eavesdrop and access the most sensitive information flowing freely over networks worldwide. Maybe all of this is innocent but given their size, given the abject destruction of lands. They clearly are concerned for the welfare of their citizens.

A good friend once said to me the belt scheme in theory is good but in practise it is way for China to leave China. Think on that!  I for one am suspicious as to their intentions.





Tuesday, February 5, 2019

Indonesia P.7. Government Development Plans.


Government Development Plans of Indonesia.

The Indonesian government since early 2000 has operated a three tier development plan - short, medium and long term with the objective by 2025 to be an established major economic power. This is well underway, on schedule to be achieved. PWC the consulting firm have Indonesia as the 5th largest economy by 2030.

The government of Indonesia places high priority on nationwide economic and social development. It has drafted a number of ambitious objectives that should be reached by the year 2025.

These objectives include:

An orderly, developed, peaceful and socially just society
A competitive and innovative population
A just democracy
Social and developmental equality among all people and all areas in the country
To become an important global economic and diplomatic force.




For many years I have claimed the growth of Indonesia should not be missed. Today I will add to this claim by highlighting the tax structure designed and developed in accordance with Indonesia's long-term goals to become an established self-reliant country whilst acting as a responsible global player. 


On January 22nd 2019 The Organization for Economic Co-operation and Development (OECD) released its Corporate Tax Statistics report. Several interesting conclusions were made in the report. Firstly, (corporate) taxes that are paid by legal entities (specifically companies) remain a key source of government revenues, particularly in developing nations. Secondly, over the past two decades there is a clear worldwide trend visible, namely: falling corporate tax rates.


If we look to the period of 2000 the corporate tax rate on average was 28.6%, this was based on a survey of 94 countries. In 2018 the Corporate tax rate average was 21.4% with 20% of the countries surveyed had rates above 30%. If, you look to the chart below you will see a selection of countries detailing their tax rates. Indonesia whilst lower continues at approx. 25%. This is a measure of how reliant they are on the success of the business sector. It is also an indication that the individual salaries generally are still highly competitive in the global world. 


When you anaylse the data you start to see a competitive edge between various countries not the least Indonesia, there is a realization that inward investment is increased by a lower Corporate tax rate. 

Other points worthy of note sentiment:

CEOs in Indonesia Enter 2019 with Positive Perceptions of the National Economic Politics.


Every quarter we interpret the latest update of the Kontan CEO Confidence Index (KCCI). The KCCI is an index compiled by Kontan, an Indonesian newspaper and magazine that focuses on business and investment. Each quarter, 30 chief executive officers (CEOs) of big Indonesian companies - covering a range of sectors - are surveyed. Their feedback is important because these CEOs are decision-makers in influential companies.
The full report is available for purchase. You can purchase this report by sending an email to info@statura.co.uk.

In keeping with previous blogs here is an example/highlights of a small selection of projects underway.




New Priok Port, Jakarta.


To ramp up the quality and quantity of its infrastructure, the Indonesian government has tasked its state-owned company Pelindo II to develop and operate an extension of the current Tanjung Priok harbour in North Jakarta, Indonesia's busiest trading port. This new port will be known by the names New Priok Port or Kaliburu Port and will serve as a world-class port. The construction of this mega-project started in 2012 and completion is expected by 2023.
Read more about the New Priok Port email me on info@statura.co.uk I will reply with a link. 


Mass Rapid Transit (MRT) Jakarta.


The Mass Rapid Transit (MRT) project in Jakarta is a USD $1.7 billion infrastructure project aims to relieve great traffic congestion in Indonesia’s capital city. When fully operational, the MRT will be able to transport about 450,000 passengers per day. The MRT consists of two corridors: (1) the North-South corridor and (2) the East-West corridor. Currently, the North- South corridor is being constructed. This corridor will be built in two phases.
Read more about Jakarta's Mass Rapid Transit email me on info@statura.co.uk I will reply with a link. 

Flyover Roads (Non-Toll), Jakarta.


The Flyover Roads project in Jakarta constitutes two additional non-toll roads on an altitude of ten meters above the existing roads that connect Blok M to Antasari in South Jakarta and Tanah Abang in Central Jakarta to Kampung Melayu in East Jakarta. This USD $140.8 million public project aims at reducing the constant and grave traffic congestion in parts of Jakarta by adding over seven KM of road to its infrastructure.



Read more about Jakarta's Flyover Roads email me on info@statura.co.uk I will reply with a link

Monday, February 4, 2019

Indonesia P.6 A Country Planning Its Capital City Move


Yesterday I spoke about a new airport, in fact 10 new airports. However, I singled one airport in particular, Tjilik Riwut. This airport is significant as it will most likely become the hub for the new capital city. For many years it has been a plan to move the government from Jakarta to potentially Kalimantan. This was considered back in the 60s during the reign of Sukarno, prior to Suharto. In fact, it has been a dream since the 40s, first considered at the time of their independence.

There is a pressing reason in which to do this, Jakarta is sinking. Over the last 10years Jakarta has sunk 2.5Metres with almost half the city now below sea level. The ground is absorbing the city. Some areas to the North are losing 25 cm per year. Worldwide many megacities close to coastal regions have a similar problem but Jakarta's problem is double the global average.


Kalimantan or to use its old designation Borneo is a perfect location for a new capital city. Again another example of the dynamic nature of this country.

The beneficiaries will of course be the infrastructure providers. Power,  Water purification,  "Telecommunications network", roads, rail, bridges, ports, distribution, Cement manufacturers etc. The new airport terminal at a cost of $100sM whilst sizable is only a small part of the overall activity.

Jakarta is home to over 10M people and if this absorption continues unchecked then by 2050 most of the city will be underwater. It's predicted 95% of North Jakarta will have disappeared. The East and the West is not immune as they are sinking yearly at a rate of 15 cm and 10 cm respectively. Jakarta sits on swampy land with 13 mayor rivers passing through, whilst also having the Java sea lapping at its door.

Of course, significant work is required to prevent this city disappearing. Dykes, drainage, underpinning etc.  Overall in this vast archipelago we are still just touching the surface for the overall development taking place, this country marches forward to become the 5th largest economy.

Indonesia is located on what is known affectionately as the ring of fire, although there is nothing pleasant about it, situated on the World's major tectonic plates. Kalimantan is as far as you can be from these plates with earthquakes and Volcanic activity risk minimized.


Indonesia for sure is ideal location to be established. Be aware the Chinese has targeted Indonesia with Indonesia signing up to the Chinese initiative known as the belt and road network.

Indonesia P.5. Infrastructure Projects New Airports

Ten New Airports.

Indonesia culturally is diverse, it spreads across 13,500 islands some of which are substantial. It may be known, due to recent publicity around the disasters such as the Sulawesi earthquake and subsequent Tsunami which devastated the towns of Palu and Donggala as well as the Lombok quake, that Indonesia lies on what they call the ring of fire. It has 63 active volcanoes and straddles many tectonic plates. I bring this up because this archipelago has seen this type of activity for millions of years since time began. The human cost in this has been really quite terrible.

However, as a result of this activity Indonesia is blessed with significant mineral wealth and natural attractions. Rolling hills, distant volcanoes and ample valleys of terraced rice paddies, all making for a simply stunning tropical backdrop.



As a result more and more travellers are looking to explore the outer reaches of this stunning set of Islands. The government recognizing this has started a program to build 10 new airports. Some of these airports will be in: Lampung, Central Sulawesi, Southeast Sulawesi, East Nusa Tenggara, Central Kalimantan, Bangka Belitung and North Sumatra. These airports will bring life to the areas that surround them. Already resort cities are in construction.

Tjilik Riwut Airport Central Kalimantan
One such airport the central government is targeting the construction of a new terminal for Tjilik Riwut Kalimantan. The new terminal is expected to be completed in early 2019. This was recently stated by the Head of the Central Kalimantan Regional Development Planning, Research and Development Agency, Yuren S. Bahat. The central government are inviting investors to participate in these projects and will even consider full private ownership. Of course the management will still come under the control of the central government, for security reasons. Regardless of your companies aspirations it's important to note that these areas will indeed come to life as the facilities come on stream. Needless to say the economic activity in each of these primarily virgin grounds will increase a hundred fold. You only have to look to the tourism numbers hitting Bali. Tourists from China and India are coming to Indonesia in vast numbers. 



Indonesia has so much beauty and diversity it's difficult to quantify it in a short blog of this type. I will attempt to do that in future blogs. But, my emphasis will always be on assisting companies to be aware of the untapped potential this market holds.



Can you afford to miss Indonesia!

Sunday, February 3, 2019

Indonesia P.4 - The Urban Middle Class Millennial Indonesia.

The Urban Middle Class Millennial Indonesia.

Taman Mini Jakarta
Much has been made of the Millennial definition for the generation born from the early 80s. Many books have been written typifying the character of these individuals. For clarity a person identified as a Millennial is a person born from early 80s through to early 2000. These individuals are most probably in the workforce and are perhaps the most productive at this time. Also known as generation ‘Y’.  Books have been written describing this generation as they are unlike any previous generation. They have invariably benefited from more life experiences, most probably they will have come from a more privileged environment than one that their parents grew up in. They will have had enormous access to information, technology and communication ensuring their uniqueness in being prepared for the world we find ourselves in today


Why is the term Millennial significant here in Indonesia. It's simple 50% of the population fall into this category. By 2030 the Millennial’s will represent 70% of the productive work force.  Therefore, it is important to understand the dynamics that encapsulate these individuals, their vision, their influences spread much wider than previous generations.  Therefore, their needs and expectations are somewhat greater, at times they appear unreasonable.  However, that aside they are invariably creative, confident, as well as extensively connected / networked.  The advantage Indonesia has of course is that vast numbers exist in the work environment, most of which are concentrated on the Capital Jakarta.  They are rich in ideas, their confidence enables them to speak out in support of their opinions and are able to articulate well.  This is significant as the dynamics change in the political arena, democracy has replaced authoritarianism, although it still lurks in the wings it is much harder to gain a foot hold again. Another point is of course they are well networked well able to socialize in a large array of communities and can take full advantage of social networks and social mobility.

Probably The World's Most Famous Millenials
I'm not suggesting they are a difficult entity just that more understanding is required.  I say this as Indonesia has such a vast number that are already influencing the workplace. In a way this is an advantage. Just one area that's vibrant is e-commerce. Their knowledge is key in mastering this important market sector.  Growth here is substantial.  The Government have an important role here as they see this is an easy way to change the balance from the elites and moving it towards the people. Whilst playing a substantial part in driving this economy forward.


In Indonesia there is a vast number of affluent Millennials termed the urban middle class.  Millennials who are familiar with the trappings of wealth etc.. therefore, it is important to understand their behaviour and requirements / needs buying patterns when entering this dynamic and vibrant market. Already they have demonstrated a remarkably savvy attitude to business, financial products.



The time is right it's time to be in Indonesia!

BBC, Blimp & phallic symbols