While the global economy is still struggling with inflation, the fall of the stock markets across the world continues unabated. What is alarming is the civil unrest in smaller South Asian countries like Sri Lanka. The present crisis on the island began due to multiple factors -- tax cuts, money printing, and a policy to shift to organic farming. However, it was the COVID-19 pandemic that struck the final blow to the tourism-reliant economy.
Other emerging-market economies with similar unsustainable debt are also facing the possibility of default, with disruptions from Ukraine and Russia accelerating the process. Sovereign debt restructuring is the biggest challenge for these nations.
In South Asia, Pakistan is teetering on the edge of economic peril. If the government doesn't take corrective steps soon, the country is in danger of defaulting. It needs an International Monetary Fund (IMF) handout to avoid this eventuality.
Though Bangladesh is much more comfortable than Sri Lanka, some economists predict that Bangladesh's increasing trade deficit and foreign debt could lead to a similar crisis in the coming years.
Bangladesh is seeking a $4.5 billion bailout from the IMF; Pakistan might receive its own $1.7 billion rescue deal soon. Neither of the two nations want to go the Sri Lankan way.
Despite all the downturns, the real estate sector in MENA (Middle-East and North Africa), a favorite destination of the global elite, is flourishing. Our cover story this time is about one such real estate company.
PHILIPPINE CRISIS Philippine economy ranks among the best in in recent years
MAKING LIVES EASIER FOR HUMANS all the pros, chatbots are still not perfect, and a human backup is still a necessity
C-COMMERCE & MENA MARKET like TikTok may serve 20 million micro, small, and medium-sized enterprises AFFECTS cuts show central banks willing to economies into recession to halt price rises AND THE WORLD
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Low-income earners in Singapore will face the lowest growth in wages and the biggest jump in household expenses as inflation rises, according to research by DBS bank. Wages for those earning less than 2,500 Singapore dollars ($1,815) a month rose by only 2.5% between May last year and this year, the study showed. Expenses for Singaporeans earning less than $2,500 grew 13.8% between May 2021 and May this year —5.6 times more than their income growth of 2.5%, the study showed. Expenses for millennials, who have been spending more after COVID restrictions eased, rose by almost 30% over the past year.
China’s banks face mortgage losses of $350 billion in a worst-case scenario as confidence plunges in the nation's proper ty market and authorities struggle to con tain deepening turmoil. A spiraling crisis of stalled projects has dented the confidence of hundreds of thousands of homebuyers, triggering a mortgage boycott across more than 90 cities and warning of broad er systemic risks. The nation’s banks face a challenging 2022 as the government pressures them to support the economy at the cost of earnings. Also the disposable income growth is slowing down.
The proportion of nurs es in public hospitals who resigned reached a five-year high last year, Senior Parliamentary Secretary for Health told Parliament on August 2. Last year, 8% of local nurses in the pub lic sector left their jobs. This was up from 6%, 6.3%, 7%, and 5.4% in each of the years from 2017 to 2020. For foreign nurses, it was 8.2%, 9.1%, 9.4%, and 7% in each of the years from 2017 to 2020. The median annual salaries for staff nurs es ranged from $42,800 to $53,700 in 2017 and rose to $46,300 to $58,500 in 2021. Senior staff salary also increased. nurses
The move by the country’s central bank would take bor rowing costs to 1.75% as the bank battles soaring inflation and would be the first halfpoint hike since it was made independent from the British government in 1997. UK inflation hit a new 40-year high of 9.4% in June as food and energy prices continued to soar. Berenberg Senior Economist Kallum Pickering said that Governor Bailey will likely carry a majority of the nine-member MPC if he backs a 50 basis point hike.
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Breaking through the months-long Russian blockade of Ukraine’s Black Sea ports, a ship loaded with corn became the first to sail out since the invasion, raising hopes that desperately needed grain will soon reach destinations in the Middle East and Africa and ease a global food crisis.
The ship, the Razoni, which had been stuck at the port of Odesa since February 18, was manned mostly by Syrian seamen and led out of the mined
waters by an Odesa port authority tugboat on the high-risk and closelywatched mission.
Ukraine has mined the waters off its Black Sea ports to forestall any attempt by Moscow to launch an amphibious assault on Odesa. A rescue ship followed and Russia’s Navy, which controls the Black Sea, granted safe passage. Oleksandr Kubrakov, Ukraine’s infrastructure minister said, “Ukraine has taken steps in preventing world hunger”.
When US House Speaker Nancy Pelosi touched down in Taiwan, Chinese government condemned the visit and warned of its "severe impact" on US-China relations.
Billionaire Gautam Adani became second richest person in the world sur passing Amazon founder Jeff Bezos, according to Bloomberg Billionaires Index.
Charles III is King of the Unit ed Kingdom and 14 other Commonwealth realms. He acceded to the throne on 8 September 2022 upon the death of his mother, Elizabeth II.
Iris Pang, chief China economist at ING Bank said the 5.5% growth target is no longer a must for China China condemned the visit as ‘a major political provocation’ and said it would launch ‘targeted military operations’
China has signaled that it may miss its annual economic growth target, as COVID restrictions weigh on the world's second-largest economy. The Politburo - the ruling Communist Party's top policy-making body - said it aims to keep growth within "a reasonable range". It did not mention the official growth target of 5.5% it had earlier set. China is continuing to pursue a zero-COVID policy that has put major cities into full or partial lockdowns.
In a statement after its quarterly economic meeting, the 25-member Politburo, which is chaired by President Xi Jinping, said lead ers would "strive to achieve the best results possible". However, it also called on stronger provinces to work to meet their growth targets.
Economic analysts said the lack of a GDP mention was notable, though economists had earlier predicted it would be difficult for China to reach its 5.5% target. "The 5.5% growth target is no longer a must for China," Iris Pang, chief China economist at ING Bank, had told the Wall Street Journal.
The analysts have also added that China was urging larger provinces to make up for those that were more affected by the lockdown. "Beijing requested that provinces which are relatively well-positioned should strive to achieve economic and social targets for this year," Nomura analysts Ting Lu, Jing Wang and Harrington Zhang said in a note. In early July China said that its economy had contracted sharply in the second quarter of this year.
Large Chinese cities, including the major financial and manufacturing hub Shanghai, were put into full or partial lockdowns during this period. China's once-booming property market is also in a deep slump, and domestic sales have fallen for 11 consecutive months.
Several Chinese developers have halted the con struction of dwellings units that had already been sold, because of concerns over cash flow. Recently, few buyers had threatened to stop paying their mortgages until the work restarts. In 2020, China made the rare decision to scrap its GDP targets, in light of the pandemic.
US House Speaker Nancy Pelosi went to Taiwan despite threats from Beijing of serious conse quences. United States House Speaker and vet eran Democratic politician Nancy Pelosi arrived, marking the most high-level political engagement from the US to Taiwan in 25 years.
China condemned the visit as “a major political provocation” and said it would launch “targeted military operations” as countermeas ures, even as Beijing scrambled Su-35 fighters across the median of the Taiwan Strait in a show of force, placed restrictions on several Taiwanese exporters, and announced live-fire drills to be held in six regions surrounding the island of Taiwan.
US House speaker Nancy Pelosi has pledged America’s “crucial” solidarity with Taiwan, in a historic meeting with Taiwan’s president, Tsai Ing-wen, who vowed not to back down in the face of military threats from China.
At a press conference, Pelosi questioned the motivations of Chinese president Xi Jinping when asked about his strong response to her visit.
China has vowed “consequences” and has said it will begin live fire drills close to Taiwan.
“It’s really important for the message to be clear .. [the US] is committed to the security of Taiwan ... but it’s about our shared values of democracy and freedom and how Taiwan has been an example to the world … Whether there are insecurities of the pres ident of China relating to his own political situation I don’t know.”
Pelosi is in Taiwan for a controversial visit that has prompted a furious reaction from China, includ ing planned missile tests and military “operations” around the island, which Taiwan has said breach international law. She addressed Taiwan’s parliament before having a public meeting with Tsai.
“Our delegation came to Taiwan to make unequivocally clear that we will not abandon Taiwan, and we are proud of our enduring friendship,” Pelosi said. Now more than ever, US solidarity with Taiwan was “crucial”. Pelosi said 43 years ago the US made a “bedrock promise to always stand with Taiwan”. “On this strong foundation we have built a thriving partnership,” she said.
IMF chief economist Pierre-Olivier Gourinchas said the aftershocks of the ongoing COVID-19 pandemic and the Russia-Ukraine war continue to haunt global economic recovery
Bill Russell family posted the news on social media, saying Russell died with his wife, Jeannine, by his side
The International Monetary Fund has bad news for the big 3 - the United States, China, and the Euro area – and the global economy. "The world may soon be teetering on the edge of a global reces sion, only two years after the last one," writes IMF chief economist Pierre-Olivier Gourinchas in his latest blog", Global Economic Growth Slows Amid Gloomy and More Uncertain Outlook. The after shocks of the ongoing COVID-19 pandemic and the Russia-Ukraine war continue to haunt global economic recovery. The US, China, and the Euro Area comprise about 50% of the global economy. Meanwhile, the pan-European STOXX 600 slipped 0.2%, soon after declining on concerns about a cooling global economy following disappointing euro zone manufacturing activity data.
Saudi Arabia’s year-on-year economic growth hit nearly 12% for the second quarter, led by a surg ing oil sector. The Middle East’s largest economy has benefited from a spike in oil prices triggered by Russia’s invasion of Ukraine and has largely resisted appeals from Western countries to raise output in order to bring prices down. Growth in the second quarter was 11.8% compared to the same period last year. This dynamic growth was mainly due to the increase in oil activities by 23.1%. Non-oil economic activities grew by 5.4% and government services grew by 2.2% compared to the second quarter of 2021, it said. On the other hand, China's industrial sector has lost steam in recent months with annual industrial output growth falling to 12.4%.
Bill Russell, the NBA great who anchored a Boston Celtics dynasty that won 11 champi onships in 13 years — the last two as the first Black head coach in any major US sport — and marched for civil rights with Martin Luther King Jr., has died. He was 88. His family posted the news on social media, saying Russell died with his wife, Jeannine, by his side. The statement did not give the cause of death. “Bill’s wife, Jeannine, and his many friends and family thank you for keeping Bill in your prayers. Perhaps you’ll relive one or two of the golden moments he gave us”, the family statement said. Russell led the USF Dons to consecutive NCAA champi onships in 1955 and 1956 and was acclaimed as a first-team all-American both years.
The global travel portal Airbnb has announced that travel demand was strong, despite concerns about an economic slowdown and rising prices hitting households. Nearly 104 million flights were booked on the platform in the April through June period, a record high for the lodging web site. Long-term stays continued to be the fastest growing type of travel, a shift driven by the rise of remote work. But international and city travel, which had lagged, have also recovered in this pe riod. The company said it was now in the middle of its strongest peak summer travel season yet. Overall, bookings in the April-June period rose 25% from last year to 103.7 million and up 24% from 2019, chief executive Brian Chesky said.
There is insufficient Liquefied Natural Gas storage capacity, particularly in Europe and Asia
The energy shock that's occurred this year is the worst to hit the world since the 1973 and 1979 oil crises that shook Middle Eastern part of the world. Similar to those previous disasters, it is expected to cause immediate suffering while ultimately transforming the energy sector.
As a result of rising fuel and power costs, the majority of the world's economies are experiencing slow development, lowered living standards, inflation, and a vicious political backlash.
However, the long-term impact is far from certain. Inefficient government action could trigger a return to the use of fossil fuels, making it much more difficult to stabilize the climate.
Instead, they must travel a risky route that combines energy supply security with climate security. What was formerly predicted in Europe like a nightmare of icy midwinter evenings has now emerged as a July fever dream. The Spanish gas demand has reached almost record levels due to the hot wave. But at the same time, Russia started to reduce the flow of gas through the Nord Stream 1 pipeline to Western Europe. Due to this course of action, the prices have skyrocketed by 50% and sparked
concerns that rationing would be implemented later this year.
In other countries, Americans spend USD 5 a gallon of gasoline (EUR 1.25 per liter), feeding the inflation that polls show is Americans' top concern and President Joe Biden's biggest challenge. The power market in Australia has failed and also there are deficiencies and fragility everywhere you turn.
Political catastrophes can result from energy shocks. Rising fuel and power prices may account for one-third of the 8% inflation rate in the wealthy world. Families who are having trouble making ends meet are feeling the heat and are angry about having to go through the situation. This is leading to policies that try to protect them and increase the development of fossil fuels.
Joe Biden, who won the presidency on a platform of a green revolution, intends to suspend petrol taxes and visit Saudi Arabia to urge it to increase the production of oil.
Europe has subsidies, price limits, emergency windfall levies, and more. In Germany, coal-fired power plants are being revived as well. Contrary to what those worried about the environment had expected, state-run mining companies in China and India are extracting record amounts of coal.
Although this improvised chaos is reasonable, it could be dangerous since it could delay the shift to renewable energy. It will be challenging to end
Majority of the world's economies are experiencing slow development, lowered living standards, inflation, and a vicious political backlash
tax incentives and public subsidies for fossil fuels. The owners would have greater motivation to fight against the phase-out of fossil fuels if they owned dirty new power stations and oil and gas fields with 30 to 40-year lifespans. Governments must concentrate on solving the major issues the energy industry is facing even as they involve in fire-fighting.
Finding a way to speed up fossil fuel projects that have an artificially shortened lifespan of 1520 years, especially clean natural gas projects, is a top priority in order to align them with the goal of drastically decreasing emissions by 2050. There is insufficient Liquefied Natural Gas (LNG) storage capacity, particularly in Europe and Asia, which must gradually wean themselves off Russian gas and coal, respectively.
The trick is to convince businesses to support short-lived programmes. As an option, the governments and energy grids may provide guaranteed contracts over this time frame that ensures a satisfactory return with the awareness that capacity will be shut down early. Another is to promise eventual state support to make these projects cleaner, for instance, by utilizing carbon capture and storage.
This does not imply a global push toward
renewable energy, which has thus far been the best part of the world's generally poor response to the climate catastrophe, should be slowed down. Every kilowatt-hour of solar energy delivered into the electricity grids in Europe means one less that comes through a Russian pipeline.
The governments must also enhance the capacity, reach and storage capabilities of their grids and also remove the obstacles that play a key role in making it harder to add renewable capacity than it should be. The power grid's design and markets are squarely a matter for governments and are often entrapped in 20th-century thinking.
According to the Technology Quarterly reports, 21st-century thinking turns on new ways to supply resilient grids with the zero-carbon firm power that makes reliance on renewables effective and safe. Hydrogen extraction from water using renewable power or extraction from natural gas using steam in emission storage facilities may be significant.
Atomic enthusiasts who concentrate on the environment often focus on innovative but unproven small-scale nuclear facilities. What counts more is to enhance the building of big ones.
The report from Finland states that the governments must win support by exhibiting that there is better protection against mishaps and new
ways to store waste, especially where there is coordinated and strong anti-nuclear opinion. The voters need to be told by the politicians that their desire for an energy transition that eschews both nuclear power and fossil fuels is a destructive illusion.
Making the market predictable is the last necessity. Given that energy markets in the 20th century had to face situations like wars, coups, revolutions, increasing Chinese demand, and new technologies, that may seem strange.
However, the climate transition has increased further while also calling for a considerable increase in investment. The International Energy Agency estimates that yearly investment must treble to USD 5 trillion annually in order to achieve net-zero emissions by 2050. The possibility exists that this most recent crisis and the disorganized government reaction to the crisis may make investors more cautious.
To boost investment, one must avoid gimmicks like green washing, protectionist attempts to establish local green supply chains, and absurd bans on gas projects by banks.
Instead, it will be required to gradually increase the measures while having more confidence in the kind and duration of the energy sources that may be utilized.
To achieve this, more information must be disclosed in order for businesses to understand the externalities they create, carbon prices must rise in order for them to understand the financial burden of pollution, and regulations must
be put in place to force the phaseout of unclean technology.
The massive energy shock of 2022 will be a catastrophe. Better government policy at this time might also stimulate the necessary investment to resolve the conflict between having a safer energy source and a cleaner environment.
What does the current global energy crisis mean for energy investment?
In addition to creating a serious humanitarian crisis, Russia's invasion of Ukraine has had deep effects on the world energy system, disturbing patterns of supply and demand and shattering decadesold trade relationships.
Prices of energy have increased for many consumers and businesses globally, harming households, industries, and entire economies. This is very much true in developing nations where people
have the least financial means to pay for it.
Additionally, it poses a risk of derailing attempts to address the urgent problem of cutting greenhouse gas emissions globally swiftly enough to prevent catastrophic climate change. One cannot allow the fight against climate change to fall victim to Russian hostility once more.
Russia's unruly actions have substantially complicated the situation for investors, governments, and businesses as they try to decide which energy projects to support, finance, or develop due to the global energy concern and market turbulence they have caused.
The world was far from meeting its common energy and climate goals even before Russia's invasion of
Ukraine happened. In 2021, the world's CO2 emissions peaked, and the fuel markets were already beginning to collapse.
The world must solve this challenging issue if it is to have any hope of keeping global warming to 1.5 °C. At the same time, investment in clean energy technology has remained considerably below the levels required to bring emissions down to net-zero by mid-century.
In November, positive steps were taken at the COP26 Climate Change Conference in Glasgow. There has been an increase in the amount of clean energy spending in the government's economic recovery, but the level of policy and investment efforts worldwide that is required to move us onto a netzero pathway is yet to be witnessed.
Companies, investors, and governments all need to do be contributing much more and at a faster pace in order to bring clean and
affordable energy into the system.
Sterling Bank Plc and Stears Data in a new report on Nigeria’s electricity crisis, advocated the adoption of renewable energy as a viable solution to complement domestic and commercial supply, Oluchi Chibuzor presents excerpts of the report.
As Nigeria looks to several sources to end its intractable power supply crisis, stakeholders are working out solutions that if adopted by the federal government, will help solve the problem.
As part of their contribution towards solving Nigeria’s electricity crisis, Sterling Bank Plc and Stears Data recently released a report, which advocated the adoption of renewable energy as a viable solution to complement domestic and commercial supply.
The report entitled, “Powering Nigeria: How solar energy can become a sustainable electricity alternative,” is divided into five parts namely: Nigeria’s electricity problem; the impact of Nigeria’s problem; the case for solar energy in Nigeria; limitations to solar adoption in Nigeria, enabling Nigeria’s energy market and conclusion.
The report showed that despite the privatisation of Nigeria’s electricity industry, the country still has one of the lowest electrification rates in the world as 43% of its population have no access to grid electricity, an indication “that 85 million Nigerians are not connected to –
and cannot receive electricity from – the Nigerian transmission grid.”
The report in a comparative electrification rate analysis noted that Ghana has electrification rate of 84%, Kenya 70%, South Africa 85%, sub-Saharan Africa 47%, India 98%, Europe 100%, global 90% and Nigeria 55%. It noted that while Nigeria’s electrification rate is above the sub-Saharan Africa regional average of 47%, it lags significantly behind its peers across the continent and the global average.
According to the report, Nigeria’s grid-supplied electricity is grossly insufficient, thereby making the country to have the largest electricity access deficit in the world. Nigeria’s electricity supply value chain is broken into generation, transmission and distribution. The entire value chain used to be controlled by a stateowned facility, National Electricity Power Authority (NEPA) from 1972 to 2005, until the Power Holding Company of Nigeria (PHCN) was formed to transition to unbundling and privatising components of the power supply companies and form successor companies that will handle distinct parts of the value chain: generation, transmission and distribution with the aim of creating smaller, nimbler and more efficient corporations.
editor@ifinancemag.com
The Philippine economy ranks among the best performers in Asia in recent years. Still, the economy faces constraints from its outdated and insufficient infrastructure
Inthe early 1980s, Edgardo Perea worked on a project that would provide Metro Manila, a region in the Philippines, with a consistent supply of clean water. But even after forty years, he is still waiting. The project has not been finished yet.
Perea was employed by the government agency named 'Metropolitan Waterworks and Sewerage System' as a member of a team that started construction on a dam. At that time, he and his co-workers thought they would utilize the abundant fresh water resources in the region. Perea said that all the feasibility studies were done, all it needed was implementation, but politics got in the way.
In 1986, the Philippines People Power revolution led to the removal of dictator Ferdinand Marcos. Under the new government, many projects that had been approved under the previous regime languished or were cancelled altogether.
Perea has been thinking about his experiences a lot these days as his country prepares for another transfer
of power, while many of the old problems linger. Besides being deeply personal, they are emblematic of the struggles to improve infrastructure in the Philippines, an archipelago of about 110 million people, where many people still live without basic amenities. In an added layer of irony, the incoming president is the son of the ruler who was pushed out 40 years ago.
New President Ferdinand Marcos Jr, known commonly by the nickname Bongbong, will take office. His predecessor, Rodrigo Duterte, made infrastructure a key policy as part of an initiative he called Build, Build, Build. Duterte promised that the programme would create jobs and improve the quality of life for many Filipinos for whom severe traffic jams and other inconveniences are a fact of life.
Duterte, who described spotty infrastructure as the 'Achilles’ heel' of Philippine economic development, pledged to allocate between 8 and 9 trillion Philippine pesos to the programme he said would usher in a 'golden age of infrastructure,' adding bridges and railways while expanding a major airport north of Manila.
Filipino voters and political analysts are not sure how Marcos Jr will govern. Throughout his election campaign, he invoked nostalgia for what some Filipinos, accurately or otherwise, think of as a happy time under his father’s rule. But he has been short on policy specifics, leaving unanswered the question of whether he will continue Duterte’s infrastructure drive as he gets set to start his term.
Duterte has called on the new president to continue with Build, Build, Build and the Asian Development Bank has pledged to continue supporting the initiative even with the change of administration.
The programme has a mixed record, with some analysts arguing that it made helpful improvements to underserved parts of the country, while others contend that it fell far short of its objectives.
Ronald U Mendoza, dean of the School of Government at Ateneo de Manila University, said Philippine politicians use public infrastructure to show voters that they have brought home the bacon, though the longerterm desirability of such projects is questionable.
“During an infrastructure boom –not just Marcos’s but also Duterte’s – the effect on various parts of the country is stimulative and job-creating and hence it is much welcomed by citizens and quite palpable and visible,” Mendoza said.
“It is easy to be nostalgic about an infrastructure boom when you fail to appreciate the crisis and difficulty that is associated with the bad decisions and corruption during the spending part of that debt-fuelled experience. If there’s bad governance and bad decisions, then the party has to end at some point", he added.
According to Jan Carlo Punongbayan, an assistant professor at the University of the Philippines School of Economics, the execution of the ambitious initiative was also flawed.
“Good, though its intention was, Build, Build, Build unfortunately failed to live up to expectations,” Punongbayan said.
“Spending plans that were not well thought out led to repeated changes in the initiative’s project master list. Only a portion of the promised projects was executed", Punongbayan added.
The Marcos dynasty also has a reputation for corruption. Observers of Philippine politics worry that such corruption could cloud the next administration.
“Marcos Jr comes from a known kleptocratic family that flourished during the martial law years through crony capitalism. Hence, he is not expected to do much work to stop corruption and in fact, he may very well worsen it.”
The Philippines ranks poorly on global corruption assessments, coming in 117th out of 180 countries on the most recent ranking by Transparency International. Parts of the Philippine electorate appear to have accepted the stubborn presence of corruption in government and business.
Though Duterte took office depicting himself as a swashbuckling outsider who would pull the plug on corruption,
the same elite has retained control of Philippine business, according to analysts.
Josh Kurlantzick, a senior fellow for Southeast Asia at the Council on Foreign Relations said that Duterte never really intended to root out the old power networks, and he thinks there is a degree of resignation now.
Meanwhile, the basic needs of much of the population go unmet. According to the Sustainable Development Goals Fund, substantial numbers of people suffer water scarcity and lack access to basic sanitation, putting them at risk of water-borne disease.
A report by the World Health Organization and UNICEF found that just 47% of Filipinos had access to safely managed drinking water in 2020, a slight improvement from 46% in 2015. The country’s infrastructure challenges are connected to large-scale rural-tourban migration, as many Filipinos leave the countryside to seek jobs in large cities, particularly Metro Manila, causing severe traffic gridlock that results in exorbitant commuting times and delays in the transport of goods to points of sale.
Duterte has called on the new president to continue with Build, Build, Build and the Asian Development Bank has pledged to continue supporting the initiative even with the change of administration
The International Finance Corporation (IFC) announced an additional $8.3 million in direct equity investment in EdgePoint Infrastructure (EdgePoint)—a tower platform with operations in Indonesia and Malaysia— to support the company's entry into the growing Philippines tower market, improving mobile connectivity for people and businesses.
The investment will increase mobile network capacity and create a competitive market for tower collocations in the country. IFC's investment in EdgePoint is part of a larger investment in digital infrastructure assets across emerging markets managed by affiliates of DigitalBridge Group, a leading global digital infrastructure investment firm. IFC's investment involves the acquisition of more than 2,900 towers from the Philippines Long Distance Telecoms Company (PLDT) through a sale-leaseback transaction and the construction of additional new build-tosuit towers.
"This equity investment in EdgePoint marks a significant milestone in digital
development in the Philippines, paving the way for more people and businesses to have access to mobile services," said Isabel Chatterton, IFC's Regional Industry Director for Infrastructure Asia and the Pacific.
"With the Philippines poised to grow, strong consumer demand and a vibrant labour market will undoubtedly lead to even greater calls on telecom services. This investment will help meet future needs, which is vital as digital connectivity is so fundamental to helping ensure people and businesses can flourish", he added.
The quality of mobile connectivity in the Philippines is lacking due to pervasive network congestion. The country ranks 95th out of 142 countries for mobile internet download speed. The number of mobile subscribers per tower—a measure of network congestion—is comparable to that of lowincome countries and more than three times above the average of countries in the East Asia and Pacific region. Such capacity challenges are compounded by limited access to reliable electricity for mobile towers—an estimated 5% of towers in the Philippines are expected to
be located in off-grid areas.
Suresh Sidhu, EdgePoint's Chief Executive Officer, and Founder said that his company is committed to building a world-class operation and expanding next-generation connectivity solutions, bridging the digital divide in the Philippines, and creating new job opportunities in the sector. "The Philippines telecoms sector has tremendous potential, and we look forward to being part of its future," he added.
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In the fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty.
editor@ifinancemag.comThailand has long been promoting and supporting the energy development agenda, especially in the field of renewable energy and energy efficiency. The Thai government has been promoting renewable energy to reduce the use of fossil fuels, especially natural gas, and reduce the environmental impact from traditional energy sources. In support of the country's initiative, B.Grimm Power, an energy company under the umbrella of B.Grimm Group, has come up as a dominant player in the renewable energy sector.
B.Grimm Group, Thailand’s oldest German-Thai infrastructure developer founded in 1878, has had a deep-rooted history in Thailand for 144 years, starting as a manufacturer of European modern medicines for Siam in the reign of King Rama V. Since then, B.Grimm has grown from a venture business to a large-scale infrastructure developer entrusted with landmark national projects such as the construction of Rangsit irrigation canals with a total length of 1,500 km, the operation of the country’s first telegraph license, and many other major industrial and trading activities. Today, B.Grimm Group is a conglomerate company with widely renowned expertise in building and industrial systems, healthcare, transportation, real estate, lifestyle, and emerging digital technologies; and now is also a country’s key player in the energy business.
B.Grimm Power thrives towards its goal to enlarge clean-power proportion in its energy portfolio, as part of the effort to reduce global warming and achieve environmental sustainability
Dr. Harald Link, President of B.Grimm Power Public Company Limited
The company ventured into the energy sector in the 1990s with B.Grimm Power as its strong investing arm and has been a listed public company limited since 2017. Notably, B.Grimm Power has grown from its first greenfield industrial power plant in Amata City in Chonburi to one of Thailand’s fastest-growing industrial and renewable power producers.
B.Grimm Power is committed to creating value for society in the form of a “Sustainable Utility Solution Provider” by producing high-quality energy and a full range of services to fulfill the needs of its associates, business partners, and society at large. The company focuses on the development, financing, construction, and operation of greenfield power plants, has successfully developed gas-fired electricity and steamgenerating power plants, purchased additional projects, and will look for many more opportunities in the upcoming future.
B.Grimm Power is also working strenuously to expand its investment in renewable energy, including solar energy, hydropower, wind energy, and energy storage systems (ESS) which are primed to be the epicenter of future energy generations.
At B.Grimm Power, sustainability is the core principle that reflects the company’s commitment to “Empowering the world compassionately” through sustainable business practices covering economic, environmental, and social dimensions, underpinned by commendable corporate integrity and governance. In doing so, B.Grimm Power constantly applies worldclass standards and procedures; growing in a sustainable way domestically and internationally; working as a team with ethics under good governance, unity, and professionalism; creating long-lasting value for stakeholders and society; and being environmentally responsible and caring for the community in all respects.
In view of global climate change,
B.Grimm Power has expanded its renewable energy business and has already produced a remarkable amount of renewable energy (solar, hydro- and wind power plants) in Thailand and many other countries. Besides Thailand, the firm is also an active energy player in global economic powerhouses including China, South Korea, and Japan, as well as rising economies in the ASEAN region such as Vietnam, Cambodia, Malaysia, Laos, and the Philippines.
In parallel, B.Grimm Power is also proactively pursuing various business opportunities with potential partners in Europe; the success of which would help accelerate the company’s future growth even further.
In 2019, B.Grimm Power successfully inaugurated the commercial operation of the largest solar power generation project in Southeast Asia in Tay Ninh, southwest Viet Nam, as well as the country’s largest single PPA installed capacity, 257 MW Phuyen TTP JSC, the latter of which was also awarded the Best Power Plant Project Developer - Solar, International Finance Awards 2019.
In 2021, the B.Grimm Power-Energy China consortium brought a new era for renewable energy development in Thailand by successfully completing work at the world’s largest hydro-floating solar hybrid project at the Sirindhorn Dam for the Electricity Generating Authority of Thailand (EGAT). The work included the installation of seven sets of solar cell panels, buoys, a concrete underwater anchor system, and a switchgear building at the site in northeastern Ubon Ratchathani province.
The solar farm at Sirindhorn Dam covers a surface area of more than 450 rai (one rai = 1,600 m2) of the dam’s reservoir. The solar panels and related equipment are mounted on buoys made from High-Density Polyethylene (HDPE) carefully selected to ensure it would be harmless to aquatic animals and the environment. The solar panels used for the scheme are double glass type and the system is moisture resistant with the ability to withstand water movement of the reservoir and substantial wind force.
The system shares various existing resources at the dam
including transformers, transmission lines, and high voltage stations, thus making the operation cost-effective by translating into lower tariffs. It also helps to reduce greenhouse gas (CO2) emissions by about 47,000 tonnes per year.
“We are pleased and proud to be a part of the endeavor that brings a new era for renewable energy development in Thailand by integrating solar and hydroelectric power in a hybrid system,” according to Dr. Harald Link, President of B.Grimm Power.
Furthermore, B.Grimm Power is also committed to expediting its solar rooftop business in the country and overseas. The emphasis on solar rooftops is in response to greater awareness of clean energy use to address environmental issues. At this juncture, B.Grimm Power is committed to supporting and collaborating with organizations around
COVER STORY B.GRIMM POWERB.Grimm Power’s Cambodia solar farm in Banteay Meanchey wins IFM Award 2021 as Best New Solar PV project. The award underscores the company’s commitment in developing clean energy as part of its mission to deal with the global warming
the world to increase the share of clean energy in the overall power portfolio to help alleviate global warming problems and achieve environmental sustainability
By expanding the renewable energy business to cover solar rooftops and floating solar, B.Grimm Power can offer a distribution and maintenance model to customers in an integrated and effective manner in order to address environmental issues. These factors provide a critical explanation as to why the company is proactively pursuing the solar rooftop business.
“The solar rooftop business model is in response to social and environmental needs as well as to help us to build long-term partnerships with customers. Today, the solar rooftop has made us more accessible and conveys a symbolic message for others to understand what it means to conduct business with compassion,” said Dr. Harald Link.
B.Grimm Power’s vision of “Empowering
the world compassionately” has seen the company’s expansion accelerate into renewable energy with investments in solar, wind, and hydropower projects. Along with its decarbonization initiatives, impeccable safety record, and human rights advocacy across the entirety of its value chain, B.Grimm is a rare example of a company that matches its words with deeds.
With a strong foothold across priority locations around the world, business areas from which to expand its business, supported by excellent partners, the strategic initiatives of B.Grimm Power will empower the company to be a leading Utility Solution Provider and grow from strength to strength in the future.
Cambodia’s Ray Power Supply venture contributes to B.Grimm Power Ray Power Supply Co., Ltd., a wholly-owned subsidiary of B.Grimm Solar Power 1 Co., Ltd., is a project company operating a 38MWp ground-mounted solar power facility in Banteay Meanchey Province, Cambodia. The project is a new addition to B.Grimm Power Public Company Limited’s power portfolio in 2020. B.Grimm Power, a company reputed to be Thailand’s
B.GRIMM POWER
COVER STORY RENEWABLE ENERGY
Amata B.Grimm Power plants in Rayong province, Thailand.
leading industrial power producer, will seek to accomplish the strategic roadmap by continuing to embrace its traditional principles of conducting businesses with compassion.
B.Grimm Power is evolving to be a “Sustainable Utility Solution Provider” powered by reliable and clean energy sources, providing integrated services to meet changing customer needs, Dr. Harald Link, President of B.Grimm Power explained. B.Grimm Power will also continue to gear up business cooperation with congenial partners to further the company's synergies and growth prospects both at home and abroad.
Ray Power Supply’s power plant successfully achieved commercial operation on 15 December 2020 and began
supplying electricity to state-run utility Electricite Du Cambodge (EDC)’s grid under a 20-year power purchase agreement. This indeed marks the first solar energy project in Cambodia to secure a firm power supply guarantee from the government. Furthermore, the project is Cambodia’s only solar power project which could be constructed and successfully achieved commercial operation in 2020.
Amidst numerous obstacles and difficulties in the development and construction of this project including the Covid-19 pandemic which had a direct adverse impact on labor arrangements and equipment logistics, as well as the devastating floods that seriously affected the construction sites throughout 2020, B.Grimm Power considered the development of this project as a great example of a diligent endeavor with a high degree of professionalism and perseverance of B.Grimm Power’s team spirit to overcome the various restrictions along the way.
In June 2022, the project successfully achieved a financial close of 15-year term financing from a syndicated group of Thai lenders consisting of KASIKORNBANK PLC, Export-Import Bank of Thailand, and Bangkok Bank PLC. The loan is a vote of confidence by preeminent Thai financial institutions in B.Grimm Power, especially at a time when fundraisings, in general, are significantly hampered by the effects of Covid-19 and global economic uncertainty. Ray Power Supply’s project development is pursuant to changing energy demand that has led various domestic and international organizations to come up with a policy toward reducing carbon dioxide in the long term and embracing renewable energy.
B.Grimm Power’s expanding solar power business is a concrete response to the adaptation of energy demand platforms as an increasing number of organizations,
B.Grimm Power has already produced a remarkable amount of renewable energy solar, hydro and wind power plants
particularly international ones, is turning to renewable energy as a means to reduce carbon dioxide emissions. This scheme also aligns with B.Grimm Power’s goal to rapidly enhance clean energy in its generation portfolio as well as fulfilling its mission of “Empowering the world compassionately.”
Currently, B.Grimm Power has a total of 56 power plants in commercial operation. The company aims to ramp up its total installed capacity from 3,058 MW at the end of 2020 to at least 7,200 MW of secured power purchase agreements by 2025, and further to 10,000 MW by 2030 with an annual revenue target of over 100 billion Baht. The company is also eyeing investment opportunities in Thailand, Asia, Europe, and the US as part of its move to become a leading global energy producer. More importantly, B.Grimm Power is moving strenuously towards realising net-zero carbon emissions by 2050.
Dr. Harald Link: Business must prosper together with society
Dr. Harald Link is the Chairman of B.Grimm Group and President of B.Grimm Power Public Co., Ltd. He is touted as one of Thailand’s foremost philanthropists. Like all his forefathers, Dr. Link believed that business must prosper together with the society that it operates. A good example is the B.Grimm Boworn Smart Village Project, a model village of sustainable development, covering a village, school, and temple in Aranyaprathet district, Sa Kaeo province. The project applies the sufficiency economy approach with the participation of the local people.
Education is always at the forefront of Dr. Link’s agenda, and in his capacity as Chairman of the Princess Mother’s Charities Fund of Thailand, he provides nursing scholarships to nursing colleges throughout the country. Vocational education is supported in the Chitralada Vocational School as well as in B.Grimm’s
power plants by way of the dual vocational system.
Dr. Link has also ensured that B.Grimm continues to support the Little Scientists’ House of Thailand, one of the most successful education projects under the auspices of HRH Princess Maha Chakri Sirindhorn Foundation. The project is based on the curriculum developed by the Haus der Kleinen Forscher Foundation, Germany, which aims to instill a love of science learning in preschool children aged three-to-six years old. Since the project launched in
The installation of solar rooftops at B.Grimm Head Office is in response to greater awareness of clean energy use to address environmental issues
2010, it has been taught in more than 22,000 kindergarten schools throughout Thailand.
The natural environment is equally important as the social environment. Apart from its reforestation projects, B.Grimm plays a leading role in supporting WWF-Thailand’s ambitious “Save the Tigers” conservation programme. Dr. Link firmly believes that Thailand still has a chance to save its majestic tigers. He also believes that, with compassion, a business can exist in harmony with nature and community. Tigers are at the top of the food chain – one of the top predators that maintain the balance of the ecosystem. When the top species are endangered, the ecosystem in which they live is endangered as well. There are only approximately 150 tigers remaining in the wild in Thailand, so strong actions are needed to increase the population.
Art and culture are also areas of interest for the company. B.Grimm is one of the major supporters of the Royal Bangkok Symphony Orchestra (RBSO) under the Royal Patronage of HRH Princess Sirivannavari Nariratana Rajakanya. Presently, Dr. Link
serves as the Chairman of the RBSO Foundation. He leads the foundation through its fourth decade with the mission to cultivate classical music for the younger generation and to make classical music accessible to all by empowering music education through the Royal Bangkok Symphony Music School (RBSS). Today, RBSO is one of the best orchestras in Southeast Asia and the orchestra provides a musical career to several outstanding musicians in the country.
For sports, Dr Link is not only a keen equestrian personally but also supports polo and equestrian sports in Thailand, elevating Thailand’s talents to world-class levels. In his role as the Chairman of the Thailand Equestrian Federation, Dr. Link gives full financial support to Thailand National Team riders. His proudest achievement came when the Thai Polo & Equestrian Club was selected by the International Federation for Equestrian Sports (FEI) to host the FEI Asian Championships, the first of its kind to take place in Asia, during 1-8 December 2019. Through his initiative, Thailand became the first country in Asia to host the Asian Championship. In 2021, with Dr. Link’s full support, Thailand made history by sending its first national equestrian team to the Tokyo Olympics.
There is no doubt that Dr. Harald Link embodies B.Grimm’s mission statement: “We remain committed to good governance and business responsibility for the economy, society, and the environment, with an important long-term goal to become a net-zero carbon emissions organization by 2050.” STORY B.GRIMM POWER
In a proposed energy plan, the European Commission labeled some gases and nuclear energy as 'green'
Russia has a stranglehold on the European economy today because the EU continuously increased its dependence on Russian oil & gas after the cold war. Moscow supplies about 12% of the global oil and natural gas output, and Europe is its most important consumer. However, the Russian invasion of Ukraine has disrupted trade and alliances.
Europe is now trying to wean itself off Russian energy. To handle the resulting scarcity, it has approached OPEC and non-OPEC allies, who have promised to hike production to 432,000 barrels per day in June. The increased output will be enough to meet the EU's short-term energy demands.
Europe was committed to meeting its climate control targets in the pre-war era. However, many question the continent's commitment since the European Commission proposed a plan to consider some gas and nuclear energy as "green." Climate change activists have staunchly opposed this move. This proposal could be law by 2023 if most member states back it. The proposed bill aims to commission 30 gas projects in the EU.
Critics dubbed this move "greenwashing" and warned that the bloc's bid to become climate-
neutral by 2050 is in danger.
The Russian invasion was a catalyst for this sudden shift, which environmental groups might contest legally.
Europe has been taking the moral high ground for the last two decades. European governments are among the first in the world to take proactive steps against climate change. Despite their best efforts, their economy remained dependent on cheap Russian fossil fuel imports. Vladimir Putin used this energy dependency as an economic and political weapon in times of crisis.
Following the invasion of Ukraine, EU leaders decided to phase out Russian energy imports by the end of 2022. The commission said it wanted to REPower the EU by quickening the pace towards clean energy systems. They hoped to increase the utility of hydrogen and biomethane through imports or domestic production. Irrespective of the advertised clean energy movements, renewable energy will only make up 45% of total energy consumption by 2030. Fossil fuel and nuclear energy will still be the primary driver of European nations.
The European Commission's chief Ursula Von Der Leyen is outspoken about the importance of climate action. Her climate-neutral rhetoric is glorious as she called the European Green
Many question the continent's commitment since the European Commission proposed a plan to consider some gas and nuclear energy as "green"
Deal "Europe's man on the moon moment." She claimed that being the first continent with net-zero emissions is "our European destiny."
Despite the flamboyant language, the big question is how the EU intends to achieve these goals.
The European Commission has a green investment rulebook to save the planet by 2050- a taxonomy or "a classification system, establishing a list of environmentally sustainable economic activities."
However, are taxonomical changes sufficient to make gases and nuclear energy green?
In June, The EU's executive arm, the European Commission, gave natural gas and nuclear energy the green label. Though they said that some strings remain attached. For example, nuclear power plants could only be classified as green if they manage to dispose of radioactive wastes safely. It is important to note that there isn't a single permanent disposal site anywhere in the world thus far.
As per the commission, gas plants will be classified as green if they switch to low-carbon or renewable gases like hydrogen or biomass created with renewable energy by 2035.
Mairead McGuiness, the EU commissioner of financial services, denied the allegations claiming there was no "greenwashing" as the institution labeled nuclear and gas as "transitional" energy sources under the proposed plan. She iterated that the European Commission's credibility is still strong.
Environmental groups are having none of it. They see this as a jeopardy to the EU's climate neutrality goals. The Climate Action Network Europe said that the European Commission is sacrificing the scientific integrity of the taxonomy for gas and nuclear lobbies.
According to environmentalists, the EU plans to redirect finances that would have funded climatepositive investments.
Apart from activists, experts advising the EU have also raised concerns about the environmental impact of these projects.
The nuclear plant initiative is a debated issue in the European parliament with many supporters and dissenters. Some prefer gas to atomic energy.
The two great leaders of Europe, Germany & France, are at loggerheads on what should be considered "green."
The French camp heads the pro-nuclear faction because nuclear power plants generate 70% of the
electricity in France. The French have the support of Poland, Hungary, the Czech Republic, Bulgaria, Slovakia, and Finland.
France wants to invest in new nuclear plants with small modular reactors. Expert at the Foundation of Strategic Research Think Tank in Paris, Nicola Mazzucchi, supports the French government's initiatives. He said that automated factories could produce quality reactors cheaply at an industrial level.
Germany has pledged to shut down all plants by 2023. They have been slowly phasing out nuclear energy following the Fukushima disaster in 2011. Denmark, Austria, and Luxembourg are in the German camp, asking where the opposing faction intends to store or dispose of highly radioactive nuclear waste.
In a letter to the European Commission, Germany's ruling coalition remarked that gas is an interim energy source till renewables and green tech are available. However, German chancellor Olaf Scholz said the taxonomical debate was completely overrated in an EU meeting last year to avoid conflict with France.
A senior fellow at Brusselsbased Bruegel Think Tank, Georg Zachmann, who follows the EU's climate and energy policy, said that the union would not take any steps to prevent France from building new atomic plants.
Zachmann says that the new taxonomy would be the gold standard in the fight against climate change. But he added that no investor would be interested in gas or nuclear plants when the union has so much political capital
invested in pushing its member states towards renewable energy.
He also pointed out that onshore wind and solar energy alternatives aren't very costly in many member states.
The 30 proposed gas projects in the EU will ensure Europe's economic independence from Russia. For example, the EastMed pipeline project will require billions of euros to build a 1900 km pipeline connecting offshore gas fields to Greece and Italy. The proposed plan contradicts the Paris agreement in 2015, where world leaders pledged to curb global temperature rise to less than two degrees. The ideal temperature rise agreed upon was below 1.5 degrees above pre-industrial temperature by the end of the century.
Methane is 85 times more harmful to the atmosphere than carbon dioxide. The Baltic Pipe project is a pipeline that could conduct Norwegian gas to Poland and develop the Cyprus gas infrastructure. Under the proposed plans, this program could spend
13 billion euros to boost transport, digital infrastructure, and energy. However, climate change activists believe this move will trap the EU in fossil fuel dependency for decades and goes against the principles it has been preaching to the world.
The union cannot build new gas projects under the current system. The EU Commission is acting slyly and exploiting a loophole in EU regulations. Biannually a compilation of beneficial energy infrastructure projects is presented to all members. Though EU members cannot build new gas infrastructure, the dossier may contain projects that ensure continuous energy supply and are vital to the continent.
Europe is now flouting the guidelines set by the International Energy Agency and the Intergovernmental Panel on Climate Change which bans the installation of new oil and gas extraction projects to keep global warming below 1.5 degrees above pre-industrial levels.
The EU’s biggest importers of Russian gas in 2021 Germany Italy
France Poland 1.70 trillion 0.92 trillion 0.62 trillion 0.37 trillion
The European parliament and the 27 EU member states will review the commission's proposal soon.
The European Commission has opted for a delegated act, a fast-track legislative procedure. A majority in the EU parliament of 20 member states must vote against it to scrap the bill from becoming law.
While the taxonomy is unlikely to be rejected by the EU states (there are substantial economic benefits from fossil fuels during a global financial crisis), many parliamentarians from different political camps are enraged over the proposal to greenwash gas and nuclear energy.
The Greens in the European parliament will fight this bill and try to gather a majority against it. Rasmus Andersen, a Green lawmaker, said the new proposal disappointed him greatly. Joachim Schuster of the German Social Democrats thought the EU parliament would vote to scrap the bill.
Austria and Luxembourg have threatened to sue the European Commission over the altered taxonomy even if the parliament passes the bill.
Meanwhile, the OPEC countries will increasingly cut production shortly. It is a move likely to create an unexpected supply deficit in the coming months. Though this might lead to a bull market for oil traders, it does not bode well for energy importers like India, China, Japan, and the EU.
The time is ticking for Europe. Russia is gearing up for strategic reductions of gas supplies to Europe to increase their leverage in the winter. The pipeline Nord Stream 1 is already running at 40% capacity, with Russia citing technical issues. Many experts are skeptical about these claims.
There are shortfalls in gas supply across Europe, with Italian energy firm Eni stating it has only received half of the anticipated Russian gas supply. Austria and Slovakia have the same complaints. France has
not received gas since 15 June, and Denmark, Finland, Netherlands, Bulgaria, and Poland have their supply cut off after these countries refused to buy gas in roubles.
Europe has committed to reaching maximum capacity or at least 80% of gas stocks before November. There is data hinting that it might have reached 55% already.
Before the invasion, Europe bought 40% of its gas from Russia. Now, that share has dropped to 20%. The continent also imports 45% of its coal imports from Russia.
Russia will tactically starve the continent of gas, and Europe might struggle to heat its homes this coming winter. Gas prices are likely to go up, and the EU cannot overlook the possibility of energy rationing.
The European Commission's Energy Prices Toolbox has been assisting citizens and businesses for a while now. About 25 member states have adopted suggestions from the toolbox, and it is helping 70 million households struggling with the soaring gas prices.
EU is in a tricky spot. It wants to maintain its image as a leader in the fight against climate change while ensuring it does not slip into an energy crisis. The OPEC alliance is temporary and might help out in the short term. But in the long run, Europe must transition from a consumer to a gas producer while accelerating the adoption of renewable energy.
The EU’s biggest importers of Russian gas in 2020 France Austria Italy Netherlands Poland Source: Seair.com
INDUSTRY FEATURE LOGISTICS AIRLESS TYRES
Despite the fact that some spokes deform and some even break, the structures of airless tyres are well intact and safely continue to perform AIRLESS TYRES
Couldflat tyres soon become outdated? A person taking out a jockey to change the tyre by the side of the road or a car wobbling along on a nearly flat tyre is nevertheless a regular sight.
Replacing tyres that have prematurely worn-out is also an expensive affair, due to the negligence of the drivers who don't check the pressure on a regular basis.
Sometimes it can be challenging not to think of tyres as a car's weak point. But now things are about to change for the better.
Are we about to see the end of the unbreakable, difficult-to-recycle black rubber air-filled doughnut that was by us since the 1890s?
A Tesla Model 3 is making emergency stops, accelerating quickly, and turning through tight curves on a test track in Luxembourg. Reason - the car is resting on four airless
tyres manufactured by US-based company Goodyear.
A thin, strengthened rubber tread is supported by special plastic spokes. As the car moves swiftly, the spokes flex and twist.
Michael Rachita, Goodyear's senior program manager for non-pneumatic tyres (NPTs), shared his thoughts about the limitations of airless tyres as well. He said, "There will be noise and some vibration. We're still learning how to soften the ride. But we think you'll be surprised at the performance."
Autonomous mobility and electric cars are changing tyre requirements. Products that are low-maintenance, puncture-proof, recyclable, and have sensors that map road conditions are desired by shuttle services
and delivery companies.
Carpooling is certainly on a rise in the cities as well. A car with a flat tyre is something that any driver despises.
"While air-filled tyres will always have their place, a mixture of solutions is needed. As we move into a world where autonomous vehicles are becoming more common and many cities are offering transport-as-a-service strategies, having a maintenance-free tyre is hugely important," Rachita said.
Sometimes the tyres are tested for 24 hours on a trot at Goodyear's labs under different speeds and loads. Despite the fact that some spokes deform and some even break, the structures are well intact and safely continue to perform.
"It's test-learn, test-learn. But we're at a stage that's given us a huge amount of confidence. This is the real deal," an elated Rachita added.
Since 2019, Michelin, a competitor of Goodyear, has been collaborating with GM on airless tyres. According to media reports from February, GM's upcoming Chevrolet Bolt electric vehicle could have Michelin's Unique Puncture-proof Tyre System (Uptis) as early as 2024.
Uptis tyres are made up of highstrength resin embedded with composite rubber and fibreglass which helps in creating a mesh structure that shrouds an aluminium wheel.
Cyrille Roget, a scientific and innovation expert at the French tyre maker, neither confirmed nor denied the Bolt reports, but stated that Michelin will have more to say later this year.
When it comes to airless wheels, Michelin has been a market leader. Since 2005, their tyre-wheel (Tweel) has been used on slow-moving vehicles.
Roget believes that using airless
tyres for road vehicles is a completely different ballgame.
He said, "We have 130 years of experience and knowledge in perfecting inflatable structures like pneumatic tyres. Airless technology is very recent."
Having a multi-year plan, Uptis wants to create a tyre that is connected, airless, 3D-printed and made up of materials that can be melted and re-used.
According to Michelin, apart from occasional re-treads, it would be zero maintenance. Airless tyres will be well fit for electric vehicles which usually have heavy battery weight. Rachita said, "You can carry more load with a more compliant feel than in an air tyre."
Conversely, airless tyres have a larger area of contact with the road, which increases drag. The battery life and range are affected because the rolling resistance requires more energy to propel the tyres forward. And let's not forget the noise that comes along when the rubber hits the road.
Matt Ross, editor-in-chief of Tire Technology International, said, "With engine sound removed on an electric car, tyres become the dominant source of the noise."
In addition, the rigidity of plastic spokes transmits more vibration through the suspension. Drivers long used to the response and performance of air tyres could take some convincing, he feels.
Additionally, the stiffness of plastic spokes causes the suspension to transmit more vibration.
Matt also feels that the drivers who are used to driving air tyre vehicles might not get easily convinced to change over to vehicles using airless tyres.
What regulators decide, however, is more significant than how consumers perceive things. Governments will
expect strict safety inspections and uniformity in the rules. In addition, tyre manufacturers would need to make significant investments in new manufacturing facilities and supply chains, which is sure to take many years.
Tyre makers believe that the sectors that adopt this one earlier will push the technology to move forward.
In an interview with BBC, Klaus Kraus, head of European research and development at Hankook, said, "Nonpneumatic tyres (NPTs) are of particular interest to sectors like the military, disaster response, security vehicles, and specialist machinery."
In January, the South Korean company unveiled the new version of its i-Flex NPT.
The company said, "Smaller than a conventional tyre, a honeycomb of interlocking polyurethane spokes is a breakthrough in coping with lateral and horizontal stresses."
Bridgestone, the world's largest tyre maker, is interested in industrial applications in farming, mining and construction, where demand could be
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high from customers that see a costly loss of productivity when tyres fail.
Initially, the airless tyres would carry a premium price, but it is believed that the ability for regular re-treading and 3D printing could be the real deal.
Some experts suspect that consumers won't even be required to buy tyres outright. Rather they would get it free and pay-per-mile, with sensors monitoring usage.
Sosia Causeret Josten, an expert at Goodyear's Sightline Tyre Intelligence division, says, "It's an illustration of where the technology is taking the tyre of the future."
Tyres have a lot of potential because they are a vehicle's only point of contact with the road.
Just in case the government authorities are to be informed about the need for road repairs during the days of harsh weather, the connected vehicle could deliver the necessary information thanks to cloud computing and algorithms.
"If the anti-lock braking system (ABS) can tell that the vehicle is driving
on half-worn summer tyres, it can react quicker. This advantage can play an important role in an autonomous future, where the vehicle has to react itself," Sosia added.
It is not necessary for all of them to be airless tyres and not all factories are buying that NPTs are the future.
Denise Sperl, a director of car tyre research and development at Germany's Continental, said, "To this day, we believe that pneumatic tyres are the best choice for most vehicles. Tyres will always need to simultaneously meet multiple requirements for safety, comfort, performance and sustainability."
A self-inflating system where pumps and sensors in the wheel keep the pressure at optimum levels is being developed by Continental.
The company is ready to go "green" as they are looking to use polyester derived from recycled plastic bottles to be used in its tyres.
Both Continental and its competitor Goodyear are also performing research on the dandelion flower from which latex is produced that is often compared
to rubber trees.
Sperl stated that sustainable alternatives have their own limitations because of their limited availability. Air tyres have been there for quite some time now for a reason which is to do the best job. "We remain convinced of this," she concluded.
Forecast CAGR (2021-2026): 5% Expert Market Research recently came up with a report titled 'Global Airless Tyres Market Report and Forecast 2021-2026'.
• AIRLESS TYRESThe report provided an in-depth analysis of various aspects that included the global airless tyres market assessing the market based on its segments like sales, type, channel, material, vehicle type, and major regions like Asia Pacific, Europe, North America, Middle East and Africa and Latin America.
The report not only kept track of the latest trends in the industry but also studied their impact on the overall market. It also evaluated the dynamics of the market which also covered the price indicators and key demand.
The demand for maintenancefree tyres is one of the major reasons behind the growth of the global airless tyre market. Many sectors like defence, construction, and agricultural vehicles have a higher requirement.
They are in high demand, thanks to their good fuel efficiency and loadbearing capability which will eventually lead to market growth.
Emission of less carbon, no requirement for spare tyres, and use of recyclable materials are some of the key aspects why experts are projecting a bring future for the airless tyre market across the globe in the coming years.
The Kingdom of Saudi Arabia focuses on utilizing its strategic location and expanding the economic base by stimulating the private sector to launch projects and initiatives that accelerate the development of the economy. The country focuses on developing flexible systems to launch strategic partnerships that help attract global investments, create opportunities for qualified national cadres and reduce unemployment rates. It also aims to enable distinguished leadership competencies, increase per capital income, and achieve community well-being.
Within a supportive investment and
stimulating economic environment, Al Fozan Holding, a business conglomerate has emerged as one of the well-known family businesses in Saudi Arabia. The company has grown and created a diversified investment portfolio covering many sectors, including industrial, retail, manufacturing, real estate development, and trading.
The Holding company is also known for its leadership in humanitarian work. The empowerment provided to the community by the group has proved its role in contributing to society's welfare.
Al Fozan Holding is one of the fastestgrowing success stories in the region, thanks to its integrated economic and social system.
Al Fozan is one of Saudi Arabia’s most renowned family businesses. The company is driven by an entrepreneurial spirit, unwavering belief, and rock-solid values. Even today, these three pillars continue to be a guiding force in the success story of the Company.
Al Fozan Holding is pursuing a portfolio management strategy, expansion, and diversification for many subsidiaries and emerging companies with promising potential. It also actively seeks to build partnerships and launch joint ventures with major players that enhance its position in the market.
With the dynamic transformations in the local and foreign markets, Al Fozan Holding was interested in strengthening its presence as a private company
that actively contributes to the development of the Saudi market and the building of a steady national economy.
the company is known for balancing its social roles with its investment aspirations. All group components follow a straightforward approach that combines business and social responsibility.
Therefore, Al Fozan Social Foundation was established in 2005 as an institutional approach and a comprehensive umbrella for all social responsibility efforts aiming to develop social initiatives that empower the community and serve the economy and the environment.
The social initiatives are providing pioneering experiences in developing education, enabling technology, stimulating creativity, and encouraging innovation.
Al Fozan Holding looks forward to continuing its approach to work and enhance its presence in the economic scene, committed to its position as a supportive entity of the transformation, and as an organization with social initiatives that perform its role towards its society in line with the objectives of the Kingdom's Vision 2030.
Major international companies tend to follow advanced management methods, which contribute to generating opportunities through new and attractive economic horizons. Therefore, during six decades of its history, Al Fozan Holding Company has been keen to follow elaborate and effective governance based on fundamental values of transparency, equity, accountability, social responsibility, and sustainability.
The system is designed to preserve the rights of all parties, serve the interests of partners, and achieve a positive impact on employees and stakeholders. Moreover, it is committed to the rules and regulations that govern corporate law in the Kingdom. Additionally, it adheres to the principles of governance followed locally and globally.
Among its various activities, the group's companies have provided high-quality services and products that add value and meet the expectations of their customers and partners by applying high international standards to continue its efforts to maintain the trust, relying on its teams of professionals.
Its commercial companies have also attracted international brands that have established a strong presence in the local and regional markets and are consumer favourites.
In addition, Retal Real Estate Development represented a cosmopolitan model in residential projects and provided a distinguished experience in the real estate sector.
These efforts enabled ‘Retal’, one of the subsidiaries, to gain the trust of its customers as the ‘Best Real Estate Developer’ in the Eastern Province of the Kingdom for two consecutive years, from 2019 to 2021.
Amid this supportive environment, Al Fozan Holding approaches the future with confidence. The dedication of the group's efforts is to expand its reach and explore new horizons. It aims to strengthen its presence in the region and develop further in global markets, guided by its vision of "creating a brighter future for everyone around us".
Al Fozan Holding is a business conglomerate which has expertise in business sectors such as industrial, real estate development, retail, trading and more
Card fraud events cost the global economy approximately USD 27.85 billion in 2018, or roughly 6.86 cents for every USD 100 spent using cards
Initially, there was a revolution of contactless transactions, but now debit cards and credit cards are going numberless.
Increasingly, banks are removing information such as the expiry date present on the back of the card and the 16-digit long number on the front. Some of them are not even printing them anywhere.
For decades, bank cards had a largely looked uniform. They were rather utilitarian, with the account holder's name, a long number, and the "valid from" and "expires end" dates, and carried the short code and account number on the front of the card and the three-digit card security code on the back.
Now, with the personal information and numbers printed on the back of the card, it is now more typical to have a rather plain and uncluttered front or even an eye-catching image.
A payment service called Curve, in early 2020 launched the "first numberless cards in Europe". The company’s investors were provided these cards that did not have the numbers on them.
Since then, Chase has been providing the current account holders with a numberless debit card which has become a huge hit in the UK. It is believed that this provides the customers with an additional layer of security.
While some consumers have lauded the change, others have stated that payments over the phone or online are much simpler. There is a recent trend when it comes to the high street banks.
Earlier this year, Barclaycard had redesigned its credit cards to remove numbers from the front, while a new-look debit card was rolled out by NatWest where "all the usual card info is now on the back".
HSBC, Halifax, and First Direct have also followed suit. Some might wonder that moving the numbers to the back of the card and other design changes were about aesthetics, but for the banks, it's all about wooing the 'Instagram generation' by making these refreshing changes.
However, there are other factors that come into play as well, some of which are a result of the quick rise of digital wallet services like Apple Pay. According to First Direct, the redesign will make it simpler to locate your card when browsing via a digital wallet.
Meanwhile, HSBC stated that it wanted the front card design “to be simple, clean and effective to benefit our customers with disabilities. By moving all the text to the back of the card, we were able to go bigger and bolder with the text without interrupting the front design of the card.”
By moving the numbers to the back there is a level of improved security as the details of your card will be less visible to the people nearby.
It is believed that this provides the customers with an additional layer of security
Chase, which launched last September in the UK, said, "A customer’s card details are stored behind a secure login on its app, so people are not putting their personal details at risk if they lose their physical card. It adds that should a customer ever need to replace their card details, they can instantly generate new ones in the app."
However, one customer put out a tweet stating that the numberless card was "annoying".
“Each time I pay, I have to open the account and find the number instead of simply looking at a card and typing the number. Pretty pointless bit of security," the customer added.
The bank claims that by tapping the blue card at the top of the home screen and then selecting the "view details" option, you can easily access your card information within the app.
If you are returning or collecting something and are asked for a card number, it says you need to find the transaction in the app and scroll to “card ending with”.
It states you must locate the transaction in the app and scroll to "card ending with" if you are asked for a card number while returning or picking up something.
It further added that most places only need to see the last four digits.
A spokesperson said, "We hear consistently from customers that they view having a numberless card as an advantage in protecting against fraud and theft."
A customer tweeted that shifting to Chase was "the best thing I’ve ever done".
The customer went on to add that if al all there were problems with the numberless cards "they just change the card number remotely, and no need to send one out unless you lose it. If you do lose it, there are no details on it for a scammer to use."
Armen Najarian at Outseer, which specialises in anti-fraud solutions, believes that despite Chase having no numbers on their cards, they are still vulnerable since "digitally" a card number does exist.
"In the overwhelming majority of fraud cases, the fraudster never sees the card as these attacks tend to happen online... So, if a card number exists – physically or digitally – it’s up for grabs," he warned.
Santander said it does not currently have any intentions to bring out numberless cards in the UK, despite having introduced them in countries like Mexico.
Guardian Money had gotten in touch with one UK bank which said that they had thought of going the numberless route but later decided against it and backed out.
“Removing all card details forces customers
to obtain these digitally. And moreover, many people are not digitally active,” the bank said.
However, David Griffiths at the payment technology firm Contis said, "Not printing the card numbers on the back of the card is presently a bit of a novelty. But if people come to believe it makes their details more secure, demand for such cards will grow. Primarily, I think numberless cards look neat, and we are going to see more of them because they look neat.”
While information like the card number and expiration date, which are typically written on standard cards, would instead be retained in the physical card's chip, the numberless physical card just displays the cardholder's name. These details would be shown on the digital card via the bank's mobile app, further strengthening privacy and security standards, along with the card verification value (CVC2) typically written at the back of traditional cards. To access the necessary information for online buying, cardholders need to log in to the bank's mobile app and confirm their identities.
Card fraud has been a major problem everywhere. Card fraud events cost the global economy approximately USD 27.85 billion in 2018, or roughly 6.86 cents for every USD 100 spent using cards. One of the most popular methods of card
fraud entails thieves gaining access to data like the card number and CVV before duping cardholders into disclosing pin codes or one-time authentication passwords provided via SMS for fraudulent transactions made with the card. There is no way for criminals to discover your card number and subsequently carry out a scam to obtain your authentication credentials when numbers are removed and all data is securely encrypted in the EMV chip on the card.
The "digital-first" philosophy is applied to the numberless physical card. Through the online channels offered by the issuing bank, applicants could apply for digital cards, which could then be activated in accordance with the bank's guidelines and linked to the
electronic wallets of cardholders. The payment process is identical to how it is when utilising current mobile payment options. The bank also provides customers with a numberless physical card to handle their daily needs based on their preferences.
How to use numberless physical card?
Similar to how standard physical cards are handled, cardholders and merchants can choose to settle transactions using contactless, chip, or magnetic stripe technology when using a numberless physical card.
In addition to the transaction cap set by the bank, certain financial institutions may allow cardholders to customise monthly spending caps
for each consumption category using their mobile banking apps based on their individual spending patterns.
The system will automatically cap the transaction once their corresponding consumption amounts have been reached. In order to dramatically increase the effectiveness of financial management, cardholders can also examine transaction records in realtime using the bank's mobile app.
Every major economy in the world is seeing a rapid increase in the number of banking and fintech companies introducing cutting-edge numberless payment card services. Customers find the advantages of holding a numberless card to be more alluring as the ecosystem develops because competition keeps prices low and services profitable.
Mastercard launches numberless card in Pakistan and MEA Building on the partnership announced in Pakistan in 2020, SadaPay and global payments technology company Mastercard are issuing numberless and contactlessenabled cards in the Middle East & Africa (MEA) region which is said to benefit users to transact in a simple, fast and secure way.
The announcement further strengthens Mastercard’s commitment to promoting financial inclusion in emerging markets and encouraging the adoption of secure digital payment methods.
The new offering has been designed to provide SadaPay users with a safe and simple way to transact both online and offline.
The physical version of the card is completely numberless, both front and back, thus providing the ultimate protection from the
prospect of theft of personal and financial information. Cardholders can use the card to make e-commerce payments as their card details are safely stored within the SadaPay app.
The launch of the numberless card is the first implementation of Mastercard’s Digital First program in Pakistan and the wider MEA region. This technology will set the stage for a more advanced digital payment landscape in the country offering cardholders with contactless and safer ways to transact.
“Our focus is to deliver a safe and secure digital experience to all cardholders. Mastercard is a trusted partner that enables issuers and merchants to leverage technologies such as the numberless cards to ensure safety of e-commerce and over-the-counter transactions in order to protect consumers and merchants against fraud. We are truly excited to be launching the first numberless card in Pakistan and the MEA region in partnership with SadaPay. We continue to partner with digital players across the region to launch exciting digital solutions and share innovations to advance financial inclusion, bringing us closer to a world beyond cash,” said Ngozi Megwa, Senior Vice President, Digital Partnerships MEA, Mastercard.
editor@ifinancemag.com
Without even having to open a linked bank account, many numberless card providers allow users to procure a payment card
Leading Spanish bank Banco Santander claims that its numberless card reduces the risk of fraud by over 90%
Socialmedia and chat app penetration in the Middle East and North Africa (MENA) is high. It is natural for traders to capitalize on these technologies and cultural shifts.
MENA's trillion-dollar economy is transforming because E-commerce and Connected Commerce (C-commerce) are becoming extremely popular and may serve 40% of the retail market and connect 20 million micro, small and medium-sized enterprises in the geopolitical area.
Zbooni, an E-commerce platform in MENA, introduced the first white paper in the region on the flourishing sector and claimed businesses could improve sales by trading on the platform and engaging with channels that customers prefer to watch.
The platform shared opinions and insights from leading brands like Checkout.com, Tik Tok, and Chalhoub Group. The research found C-commerce in action in social,
chat, and messaging apps like Whatsapp and Snapchat, which provide both online and physical stores with a way to convert real-time conversations into sales.
The CEO of Zbooni, Ramy Assaf, said the region missed the first wave of E-commerce and has been trying to catch up with the rest of the world. But he added that MENA is taking full advantage of the new wave of C-commerce. "We are at the cusp of an exciting retail transformation built around personalized selling. C-commerce has the potential to serve businesses across a wide variety of industries, whether they are brick-and-mortar, online-only or omnichannel. C-commerce shines when
Platforms like TikTok may serve 20 million micro, small, and medium-sized enterprises, and account for 40% of retail spending
there is an interaction preceding a transaction," he added.
He claimed that many in the region are hooked on social and chat apps. Ramy iterated that C-commerce is the future, and shopping will naturally evolve to be as simple as chatting online.
There is a remarkable finding in Zbooni's data compilation. C-commerce helped traders and customers connect online and offline. Moreover, they had a sales conversion rate of over 80%, while traditional E-commerce had only 3% of potential customers.
Group director and partner at Al Maya Group Kamal Vachani believe that digital media is a powerful tool in boosting retail sales in the area.
He added that in this digital era, people are comfortable buying online. E-commerce and C-commerce blew up exponentially during the pandemic, and businesses expect the trend to continue.
The Al Maya Group director remarked that people are scrolling through different platforms to get the best deal on their purchases.
In the first quarter of 2022, the E-commerce sector grew by double the rate of point-of-sale transactions in the UAE, as per Network International.
Network International is a leading enabler of digital commerce in MENA. They pointed to increasing online spending, including credit and debit card transactions. A large chunk of it is digital payments in the government sector, but transactions at supermarkets, restaurants, and convenience stores were significant.
Ian Jiggens, head of advisory and information services at Network
International, said that the phenomenon was not just because consumers were taking businesses from physical stores online; they were also transitioning from cash to digital payments.
Human-to-human conversations have higher sales conversion than bots or impersonal experiences on a website. C-commerce allows a merchant to peddle and speak with his customers and provides an enhanced sales experience with fewer sales friction, sales conversion, and increased customer loyalty while reducing potential refunds and returns.
TikTok's middle east user base is skyrocketing. Almost 95% of web users in MENA use Instagram, YouTube, and TikTok. TikTok, which uses short-form content less than two minutes duration, has been exceptionally popular. The byte-sized clips are highly informal and lucrative and make engagements exciting. Some TikTok creators earned more than an average S&P 500 CEO.
TikTok has reached billions of subscribers rapidly. Some studies suggest that TikTok was more popular than Google in 2021. The platform's success is evident because its competition keeps mimicking its features. For example, YouTube introduced shorts, and Instagram launched Reels to compete with TikTok.
Users spent about 80 minutes daily on the Chinese platform, the most duration among all social media apps. TikTok has also grown 50% in 2021 and had a 100% rise in the number of people using the digital space for discoveries.
The statistics are mindboggling because TikTok was already successful
in 2020 and had a large user base. The rapid acceleration in tech adoption during the pandemic could be responsible for some of that conversion. But the tech updates must have aided other platforms as well. So, why is TikTok such an outlier?
The algorithm of TikTok is robust and can learn a user's affinities and interests and quickly personalize their feeds. It also has one of the simplest designs, with the interface displaying only one video at a time, making navigation easy. These uncomplicated features draw a lot of young people to the platform.
Plus, the short-form video format is time-conserving, engaging, and similar to natural communication. Short videos are like quick chats with friends, while long ones are like formal presentations.
TikTok has pioneered short-form video content in MENA, which has seen a massive adoption of the format, with 20% of digital media time spent on it.
The real secret behind TikTok's
• More than half of the world now uses social media (58.4%)
• 4.62 billion people around the world now use social media, and 424 million new users have come online within the last 12 months
• The average daily time spent using social media is 2h 27m
• TikTok users spend 80 mins per day in the age bracket of 4 to 15. Others spend 52 minutes per day
• In the US, the users spend 500 mins monthly
• TikTok gets more than 100 billion average monthly video views
• 9 out of 10 users open the TikTop app daily. For US users, it is 8 out of 10
following could connect with new customers using authentic and genuine TikTok content.
TikTok will begin testing new commerce features to make discovering Shopify merchants easier for users in MENA and shop their products within the app as a part of the partnership.
• Each session lasts 4.9 minutes or more, which is more than other social media platforms C-COMMERCE
Source: Techjury
success is its creator community. The app has made content creation democratic and opened a creative outlet for everybody. Almost anyone can make a TikTok video, which feels very personalized.
TikTok's micro-influencers are its foundation. They have created quality content while expressing themselves and building a robust online community. Many studies show that while making a purchase, consumers value microinfluencer endorsements more than celebrity endorsements.
Micro-influencers promote brands they care about, spread brand awareness, and boost sales through C-commerce. Over 50% of consumers in MENA cite micro-influencers as critical to their buying decisions. TikTokers can monetize their content and endorse products while building lasting relationships with their audience.
TikTok's reach in the market is so strong that brands can no longer afford to overlook it. Historically, brands
followed where their consumers went. They advertise on TV, Google search, Facebook, YouTube, and Instagram.
Brands will have to adopt TikTok for advertisements sooner or later. Big brands only spend 5% of their ad revenue on a platform where customers spend 20% of their time and provide 80% sales conversion.
TikTok has already planned and has introduced Spark Ads in MENA. It's a new native ad display format that amplifies the community's relevant content.
Brands can use Spark Ads to amplify original creative videos and build an effective content strategy. They also provide the Duet and Stitch features which enable the community to reinvent, rebuild and reinterpret their community.
Another major event was TikTok's partnership with the e-commerce building platform Shopify. It's a bridge between Shopify merchants and TikTok influencers.
Shopify's Vice president of product Satish Kanwar said that even Shopify merchants without a strong TikTok
C-commerce is now a pivotal force that merchants utilize to expand their audience and reach their customers, thanks partly to the Coronavirus pandemic. Market research company eMarketer expects the C-commerce sector to soar by 36% to $36.62 billion in the US.
As users discussed and learned more about new devices and virtual technologies, the consumption of technology-related material on the site increased by 302% last year across the Gulf Cooperation Council region. According to TikTok's most recent What's Next report, beauty-related content surged by 169% in the area, with many users posting makeup lessons and skin-care routines. Additionally, among the top content categories, food and fashion saw growth of 197 and 287%, respectively.
The rise of #TikTokMadeMeBuyIt has been one of the platform's most noticeable recent trends. As of June 2022, videos that included the hashtag had received a combined 13 billion views worldwide.
An Indian ex-pat in Saudi Arabia, Mohammed Sabir KT, said he books all his flight tickets from agents who advertise on TikTok.
Even small businesses like Japa nese cheesecake franchise Uncle Fluffy in Dubai are utilizing the network for boosting brand recognition and to gain fans to capitalize.
editor@ifinancemag.com
The Access Bank UK Limited provides Trade Finance, Commercial Banking, Private Banking and Asset Management products and services for customers.
The Access Bank UK Limited is a wholly-owned subsidiary of Access Bank Plc, a Nigerian Stock Exchange-listed company.
The Access Bank UK Limited provides Trade Finance, Commercial Banking, Private Banking, and Asset Management products and services for customers in their dealings with Organisation for Economic Cooperation and Development (OECD) markets and supports companies wishing to invest in and trade in Sub-Saharan Africa, MENA and Asian markets.
The company is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA.
Located at a prime location in the iconic Gate Building of Dubai International Financial Centre (DIFC), the Access Bank UK Limited – Dubai Branch is regulated by the Dubai Financial Services Authority (DFSA).
The Access Bank UK Limited is committed to developing a sustainable business model for the environment in which it operates. This is apparent in its moderate appetite for risk, a passion for customer service and a commitment to working in close partnership with the customers to forge long-term relationships with them.
In 2018 the Bank had become a direct member of the three key UK payment clearing systems: Bacs (Bankers’ Automated Clearing Services), C&CCC (Cheque and Credit Clearing Company’s Image Clearing System), and Faster Payments.
Speaking about this achievement, The Access Bank UK’s Chief Executive Officer and Managing Director, Jamie Simmonds said, “This is a great landmark for us, enabling us to build a sustainable platform with direct entry into the UK payment clearing system. This will enable us to enhance the level of service our customers receive. We have a clear commitment to strong customer service and we anticipate and respond quickly to market needs with the right technology, products, and services. Joining the UK payment clearing system is a clear example of meeting the needs of our customers."
The Access Bank UK Limited provides a number of services to support business activities in Sub-Saharan Africa and the MENA region.
Having been awarded Confirming Bank status by the International Finance Corporation as part of their Global Trade Finance Programme has resulted in strengthening their Trade Finance capabilities further.
Being the first Nigerian Bank in the UK to be appointed as a correspondent bank to the Central Bank
Jamie SimmondS, Ceo/ md at the aCCeSS Bank Uk Limited The Access Bank UK Limited offices in the heart of the City of Londonof Nigeria to undertake infrastructure work on behalf of the Nigerian government, the bank also issued Letters of Credit on behalf of the Nigerian government and Nigerian National Petroleum Corporation (NNPC).
Their Commercial Banking team offers relationshipbased service for corporate and individual customers. In addition, they also offer a wide range of products and services with a choice of competitive rates, marketleading systems, and high-quality service.
The Global Private Bank has been built around a passion for delivering excellent service. With the delivery of innovative investment solutions to discerning customers who value trust, integrity, and accountability as well as investment performance, the bank has gained a lot of recognition.
A proactive approach to product and service delivery and offering unique investment solutions are the key aspects of the bank which is tailored to customers’ needs by a highly experienced Private Banking team.
The Access Bank UK - Dubai Branch offers a broad range of products and services to assist customers in the MENA region with trade and investment needs in Nigeria and Sub-Saharan Africa.
The DIFC Branch is committed to building a longlasting relationship in the region in line with the approach that has proven so effective for The Access Bank UK Limited. The combination of both the branches in the UK and Nigeria delivers a wealth of expertise that significantly benefits our customers.
The Access Bank UK Limited takes time to build longterm relationships and work closely with the customers to understand their goals in order to create a strategy designed to meet their needs.
The bank also provides constant support and development opportunities for the employees, which reflects in their dedication and professionalism.
The bank is led by a team of accomplished individuals determined to deliver superior financial solutions for businesses and individuals. The staff is highly experienced and many have spent time working in the Sub-Saharan, West African and international marketplaces.
The Access Bank UK Limited is firmly committed to the diversity of the workforce. The bank encourages a sense of individual ownership while also fostering team spirit. The end result is to help employees realise their potential through the provision of continuous learning opportunities and the tools and training to support professional growth.
"Our people are fundamental to our bank’s continued development. They provide the skills that deliver our focus on service and customer relationships. Reflecting
this, during the year we selectively recruited additional members to the team and also invested more in professional development. We were the first Nigerian bank to achieve Investors in People accreditation. We have now advanced our status to Platinum. We believe that our consistently low staff turnover rate reflects in part the advances we have made in training and development. The Bank is currently working in partnership with the Chartered Institute of Personnel & Development (CIPD) programmes," Jamie Simmonds said.
According to the Report and Statutory Accounts for 2021, the bank has demonstrated yet another year of significant all-round growth, achieving and exceeding the target for all the main growth strategies.
Entitled “Charting a course for the future” the report highlights a strong operational performance by the main Strategic Business Units and continued growth and expansion in Sub-Saharan Africa and the MENA region.
Continuing income growth saw the Bank pass the USD 100 million milestones for the second year in succession and achieve USD 111.1 million for the year, an increase of 10%.
Trade Finance maintained its upwards trajectory, with income up 9% year-on-year to USD 55.8 million and correspondent banking income growing to USD 27.8 million, up 12% year-on-year.
The Commercial Banking income has reached USD 37.6 million while Asset Management income rose by 52% to USD 5 million. The retail products continued to attract interest, with GBP 152.2 million flowing into our 1, 2, and 3-year bonds during the year. Also, the bank was pleased to announce the launch of its new Visa debit card to both personal and business customers.
Commenting about the recent results and growth of the bank, Jamie Simmonds said, "A challenging external environment and trading conditions failed to dent another strong performance, as the Bank passed the USD 100 million income milestone for the second year running to generate operating income of USD 111.1 million, representing year-on-year growth of 10%. The performance once again reinforced the effectiveness of our proven income-driven strategy, in which we deepened relationships with key customers and retained relationships that we have had for a decade or longer."
Echoing similar views, Chairman and Non-Executive Director Herbert Wigwe stated that the Bank has emerged fitter through the continued growth.
He said, "In achieving another strong set of results in 2021, the Bank has emerged fitter through the continued growth and retention of its customers and an increase in staff, despite another year made difficult by the restrictions of the ongoing COVID-19 pandemic."
Source: Datapoint
FEATURE DEBT DEFAULT IF CORRESPONDENTRussiahas defaulted on its international debts for the first time in a century. It has left Vladimir Putin into a humiliating blow and it further isolated his nation from the Western financial system.
Russia failed to pay $100 million of coupons on bonds due last month, for which a 30-day grace period ended on June 26. Since beginning an invasion of Ukraine in late February, Russia had already come close to going into default multiple times.
Russia has the ability and inclination to pay its obligations but was unable to do so because the White House's decision to restrict avenues to creditors in the West effectively prevented payment. A previous domestic debt default occurred in 1998 when the country faced a post-Soviet economic transformation.
According to Russia, the US allegedly staged the default as a ruse. Last week, it announced that it would
pay off its debt with roubles, a plan that creditors have already rejected. The scenario has been referred to as a "farce" by finance minister Anton Siluanov.
Siluanov said anyone can declare whatever they like. But anyone who understands what’s going on knows that this is in no way a default.
A default would be declared by one of Wall Street’s ratings companies, likely S&P, Fitch or Moody’s. But European Union sanctions have forced the firms to withdraw their coverage of Russia.
However, the bonds on which the payment was missed allow their holders to declare a default if 25% agree non-payment has occurred. Documents attached to the debt instruments give three years for a claim
Kremlin vows to service its debt in roubles – an option that's already been rejected
to occur – meaning some investors may wait to see whether Russia is rehabilitated into the global financial system during that time.
If they do take action, doing so through the legal system could prove difficult because Russia has said it will reject the jurisdiction of any foreign court.
Foreigners held about $20 billion of Russian eurobonds at the start of April. Several payment deadlines have now passed, so it is possible Russia will soon be deemed to have defaulted on multiple debts.
The default was not for lack or willingness or means on Russia’s part. The country runs a huge trade surplus predominantly because of lucrative oil exports. it exported goods and services worth $58.2bn more than the value of its imports in the first quarter of 2022, according to the Central Bank of Russia. It also has relatively low debt levels.
However, Russia’s coupon payments were rendered impossible by the United States. The Office for Foreign Asset Control – the branch of the US Treasury Department that deals with financial sanctions – had allowed Western investors to continue to receive debt payments as part of the initial volley of sanctions at the start of the war in Ukraine. That exemption was allowed to lapse last month, meaning payment became effectively impossible.
Recovering from a default can be a slow and arduous process and may be even more complicated for Russia given it is being squeezed out of the global financial system.
The reputational damage can also
be heavy. Many investors are bound by covenants preventing them from investing in countries deemed to be in default. If it cannot rebuild its reputation as a borrower, Russia may find there is limited interest next time it tries to tap international markets, although it isn’t expected to do so for some time.
The process will be unusual in this case. Countries usually default because they are destitute. That isn’t the case for Russia. Its fiscal strength means investors may be very willing to rehabilitate Moscow when, or if, it returns to Western markets.
The bigger impact may prove to be on Russia companies, which are more reliant on international funding. Some investors may rule out lending money to such companies as a result of the statelevel default.
At the time of the invasion of Ukraine, Russia had $39.7bn of outstanding external debt – comparatively small compared to the US which paid out almost $140bn on sovereign debt in 2020 alone. About half is held by foreigners. Another 3 trillion roubles of domestic debt is held by foreigners, according to pre-war data.
Most of that is held by financial institutions: banks, pension funds, asset managers and hedge funds.
Data from the Bank for International Settlements shows French banks held about $4.5bn of Russian government bonds as of last year, while US lenders held $3.8bn, Austria’s had $3.2bn and Italians $2.6bn. UK banks had just $520m of exposure.
A debt default is typically followed by a period of restructuring, when investors usually lose money. Moody’s estimates investors can expect to receive up to just
two-thirds of the bond’s value. Some could respond with legal challenges, although these would face difficulties because Russia will not recognise the jurisdiction of foreign courts.
The documents for the bonds Russia has defaulted on say holders have three years to make a claim following non-payment. Some investors may be tempted to wait it out and see what happens.
A global banking lobby group said that Russia's economy will shrink 15% this year and 3% in 2023. The downfall will be because of western sanctions, an exodus of companies, a Russian braindrain and due to collapse in exports wipe out 15 years of economic gains.
In its report on the Russian economy following its invasion in Ukraine on February 24, the Institute of International Finance (IIF) said it did not expect a ceasefire in the war and that it was likely sanctions would be expanded and tightened in the coming months.
Western sanctions following the invasion had triggered the full
"Western sanctions following the invasion had triggered the full disintegration of 30 years of investment"Elina Ribakova
disintegration of 30 years of investment, Elina Ribakova, the Institute of International Finance's (IIF) deputy chief economist, told reporters during a media briefing.
"What is the number you are going to put on ripping apart 15 years of value chains, adding that should Europe wean itself off Russian energy exports, the economy would be hit even harder in the medium-term, she said.
The United States, European countries and other allies have imposed sweeping sanctions aimed at punishing Russia and at impeding Moscow's ability to fund its war machine.
While Russia's economy is slowing sharply and its people's spending power is shrinking, a surge in oil and gas prices -- major Russian exports -- have lifted the country's current account surplus to record levels in recent months.
Ribakova said that the surplus, as well as a rebound in the rouble after an initial crash, should not be mistaken for thinking Russia's economy was holding up better than expected.
Russian banks were flush with foreign exchange reserves as imports collapsed, she said, but Russian
businesses and consumers had nothing to spend it on.
Instead, the impact of sanctions would hit harder with time, especially if Europe cut oil and gas imports significantly, although she noted this would take months if not years.
The IIF forecasts that Russian gross fixed capital formation will contract 25% in 2022, imports 28% and exports 25%.
"Despite the meaningful steps taken since late February, we are far from the top of the escalation ladder," the IIF authors said in their report.
"Additional measures, such as those related to the financial system and/or key Russian exports (and imports), would be possible and could lead to dramatic consequences for the Russian economy, as well as the government’s ability to continue its war effort in Ukraine. However, the costs of such actions could be significant for the sanctions-imposing countries as well", the IIF authors added.
Ribakova, just back from a trip to Kyiv, also said that while much attention was being paid to reconstruction costs, Ukraine was on the verge of a balance of
payments crisis as the war hammered its economy.
Russian stock market experiencing fifth worst crash in history
According to Bloomberg analysis the benchmark MOEX Russia Index closed 33% lower in Moscow, erasing $189 billion in shareholder wealth. That’s the fifth most brutal one-day selloff among 90 global equity indexes.
This is the first time since 1987 that a selloff of this magnitude has hit a market worth more than $50 billion. In the aftermath of the Black Monday crash that year, Hong Kong’s Hang Seng Index tumbled 33%. The single-day drop was of Argentina’s 53% slump in January 1990, when the country was battling economic crisis.
Zimbabwewill introduce gold coins as storehouses of wealth within the country. The African country is in chaos as its national currency plunged to a new low. Hyperinflation has been the bane of the nation for years. In June, inflation rose to an abysmal 192% from 132% in May.
John Mangudya, Zimbabwe's central bank chief, introduced the new gold coins, which will be available through usual banking institutions. He presides over the Monetary Policy Committee, which decided to mint gold coins.
The coins will be minted at Fidelity God Refineries (private) Limited, the sole refining and gold buying entity in the nation and is a subsidiary of the central bank.
The government has been trying to rescue Zimbabwe from hyperinflation, devaluing currency, 90% unemployment, and a free falling manufacturing output.
The Zimbabwean dollar, which currently trades at $1:650 on the black market, has
President Mnangagwa hopes to correct some of the systemic economic issues his administration inheritedZIMBABWE GOLD COINS
continued to lose value over the previous three months, increasing inflation pressures in the nation.
The central bank's printing of new currency has also made things worse by undoing the progress made over the previous two years, during which time inflation declined from a peak of 800% in 2020 to 60% in January of this year.
The central bank will increase the annual interest rate from 50% to 100% and more than triple the lending rate from 80% to 200% per year to stabilize the economy.
Independent economist Victor Bhoroma, based in
Harare, applauded the top bank's actions and claimed that positive interest rates would cut down on "speculative borrowing in the economy" and the expansion of the money supply.
According to Bhoroma, gold coins are a wise choice for safeguarding value. If offered in Zim dollars, it may be a means to stabilize inflation while easing pressure on the US currency. But they'll probably be indexed in US dollars, suggesting that the central bank uses this as a fundraising ploy to obtain USD from the market. Thus, the success will depend on public
trust in the central bank's ability to sell coins and the credibility of the promises that back them.
He added the market would continue to favor hard currency if confidence keeps falling.
The concept of gold coins appears to be winning over investment analysts.
The gold coin is a positive move in a market lacking in investment possibilities, according to Batanai Matsika, head of research for stockbroking firm Morgan & Co. It will also help investors hedge against inflation.
According to Matsika, there haven't been many investment alternatives on the market for a while, and this is a new asset class. The necessity to develop a tool that solves the inflation issues in the economy, where purchasing power has eroded, was what prompted the thought, he continued. Gold will be a great alternative as a store of value.
He added that the idea was not entirely new and that some fundamentals of gold enable it to act as a hedge against inflation and geopolitical risk.
The Kruger rands are being imitated, according to Matsika. It's also a method of allowing regular investors access to the gold market. It's a potentially exciting field from the perspective of investment advisory. It might turn out to be beneficial.
Tatenda Mabhande, an economist with Akribos Capital in Harare, voiced confidence in the gold coin's capacity to serve as a store of value.
Given the erosion of the value of the Zimbabwean dollar, Mabhande argued that the gold coin serving as a store value is a positive development. The US dollar was the primary store of value.
Although the move may lessen pressure on the US dollar, there will still be demand for the USD. However, he added that he doesn't think the gold coin will reduce exchange rate volatility.
He claimed that the government created the gold coin to lessen demand for the US dollar.
He continued by saying that there would still be a demand for dollars while Zimbabwe remained a net importer. Bad money will eventually push good money off the market. We'll probably also notice the coins vanishing.
Mabhande claimed that for the gold coins to be effective, buyers must be able to make their purchases using Zimbabwean dollars rather than US dollars to reduce the amount of extra local currency in circulation.
For the gold coins to be treated as money and for investors to utilize them as a substitute for the US dollar, Mabhande continued, the central bank must make sure that the face value of the coins "is always larger than its intrinsic value."
Isaac Muzambi, a spokesman for the central bank, did not react to questions regarding the anticipated launch date for the gold coins.
President Emmerson Mnangagwa, who has been in office since November 2017, is keen to solve some of the economic issues his administration inherited, which is why the central bank is taking these actions now.
Mnangagwa had pledged to reveal more economic measures recently to
stabilize the economy. Mthuli Ncube, the finance minister, made announcements that include, among other things, raising salaries for government employees and an upward review of education and the health sector employee allowances.
Ncube also attributed the inflation and devaluation of the Zimbabwe dollar to businesses and Zimbabweans.
Speaking to reporters in the city, he said that new "econometric studies done by the University of Zimbabwe" supported his statements and that inflation "is not being generated by the regular actual economic determinants but by behavioural characteristics such as confidence, unfavourable inflation expectations."
Additionally, Ncube forbade discounts on rates for payments made
in US dollars and warned that violators would face criminal charges and have their operating permits removed.
Bhoroma claimed that the minister's actions weren't very noteworthy.
He claimed that the USD is already recognized as legal currency under the Finance Acts of 2009 and 2012, and there was nothing significant about the Treasury announcement. A positive step toward bringing stability and assurance to banks who get lines of credit for future lending to the commercial sector is the law to ensure the protection of US Dollar credit.
He said that eliminating the diesel tax and reductions in the fuel levy would have little impact on the cost of fuel in the nation because Zimbabwe's prices remained the highest in the SADC, making local goods less competitive.
The World Bank (WB) predicted that Zimbabwe's economy would expand by 3.7% this year, less than the government's forecast of 5.5%.
Marjorie Mpundu, the WB's country manager for Zimbabwe, attended the Zimbabwe National Chamber of Commerce 2022 congress in Victoria Falls. She said that amid slowing growth and rising inflation, the country must concentrate on price stabilization to prevent stalled recovery.
The immediate challenge, she continued, is ensuring pricing and exchange rate stability. Global experience demonstrates that it is preferable to provide targeted assistance to the poor and take advantage of the chance to promote greater efficiency to hasten the transition to low-carbon energy sources rather than providing subsidies and other distortionary measures to lessen the effects of higher
energy prices.
In light of the heightened budgetary strains, it's critical to safeguard longterm growth by ensuring sufficient funds for social safety, education, and health.
She noted that eventually, streamlining corporate regulation and boosting trade facilitation will benefit any future growth.
Mpundu claimed that despite potential uncertainties, Zimbabwe's economic prospects appeared promising.
Due to increased global concerns, she stated there were considerable risks to the picture.
Domestic risks affect growth outcomes and are correlated with climate shocks, expansionary fiscal and monetary policies, and slower economic recovery, according to her.
WB also predicted that, despite being marginal, poverty levels would continue to reduce in 2022 even though the likelihood of a successful harvest decreases.
Having said that, Zimbabwe's price dynamics are likewise unfavourable globally. Yes, it is anticipated that the price of gold and nickel will rise this year, but these gains will be countered by lower fuel, food, and fertilizer imports. Additionally, she added, the anticipated fall in key prices over the next two years will strain the balance of payments and lower tax collections.
Mpundu claimed that this year's higher food costs and overall inflation levels put further strain on the budget and made things worse for Zimbabwe's extremely poor.
To lessen the impact on the most vulnerable segments of the population, she said, there would need to be more budget support for social protection. ZIMBABWE GOLD COINS
“Inflation is not being generated by the regular actual economic determinants but by behavioural characteristics such as confidence, unfavourable inflation expectations”
Mthuli Ncube, Finance minister
Hong Kong has long been a top destination for initial public offerings
How much longer will Hong Kong continue to defy predictions that it will lose its prominence as Asia's leading international financial centre? Proponents of the city claim that because of its rules, China can easily connect to international markets and point out that many major financial firms have established roots. Currently, Shanghai handles more stock trades than Hong Kong. Its wealth management industry is struggling to keep assets as Singapore grows. Rents are very expensive despite the low tax rates. Hong Kong's pro-democracy protests are currently upsetting daily life, sending the local economy into a recession, angering decision makers in Beijing. A large bank wishing to grow is likely to consider a number of factors before deciding on to set up in Hong Kong.
According to data compiled by Bloomberg, Hong Kong has long been a top destination for initial public offerings. The city raised US$36.8 billion (S$49.95 billion) in 2021, making it the world's busiest venue. K C Chan, the city's former secretary for financial services and the treasury said, "That is what matters".
"A financial centre's most important functions include fundraising and asset management,"
he said. He argues that when the city helps entrepreneurs sell stock, it has an advantage in winning their business for reinvesting the money.
Shanghai is establishing itself as a strong competitor, helped by the government's loosening of policies to encourage companies to rely less on borrowing and more on equity markets for financing. This year it may raise more money via IPOs than Hong Kong for the second time in a decade.
Hong Kong may be the favoured venue to tap capital from abroad, but Shanghai is where most Chinese companies go to raise money domestically. That, along with legions of retail investors and sometimes-dramatic market swings, has fuelled Shanghai's trading volume.
The former British colony suffered a setback last month when London Stock Exchange Group fended off a takeover bid from Hong Kong Exchanges & Clearing Ltd. An existing tie-up with the Shanghai Stock Exchange "is our preferred and direct channel to access the many opportunities with China," LSE said in rebuffing the deal.
Hong Kong is still ahead in money management, but the stockpile of assets it tends to plateaued last year as Singapore's kept growing. Now, Hong Kong clients are getting anxious. Goldman Sachs Group
It is believed that this provides the customers with an additional layer of securityFOREIGN DIRECT INVESTMENT HONG KONG, SINGAPORE
estimates investors probably moved as much as US$4 billion to Singapore amid Hong Kong's political unrest as of August. The demonstrations have since continued. Then there is the looming question: Where might China's massive pent-up wealth flow?
Deposits are less sticky, and in August they left Hong Kong at one of the highest rates in years. By the end of September, foreign currency deposits reached a record in Singapore. Banks including HSBC Holdings and Standard Chartered are playing down the shift, saying last week that even if some customers are weighing contingency plans for cash parked in the city, actual moves are modest.
Hong Kong's defenders say the local economy's slump has little bearing on the city's attractiveness as a financial centre. Yet growth can signal where companies are betting on the future. Shanghai's relatively rapid expansion underscores that.
"Shanghai is the financial centre of China and should continue to benefit from continued growth of the nation's massive economy and on-going efforts to internationalize the yuan," said Hubert Tse, a partner at law firm Boss & Young in Shanghai, who's advised global financial institutions in China
since 2003. Tse, who believes Shanghai, will establish itself as the dominant hub, moved there 16 years ago from Hong Kong and travels frequently to Singapore.
Still, China places leagues behind in a number of international rankings on doing business. It ranks 28th on the World Economic Forum's 2020 Global Competitiveness Index, a measure of productivity, following Hong Kong at number three and Singapore at number one.
The Economist Intelligence Unit also ranks Singapore as the top global business environment among 82 regions. Hong Kong is ranked 10th and China 56th. Nick Marro, Hong Kong-based global trade lead at the research and advisory firm, said China's closed capital account and its dense regulatory framework have weighed on its score. Another thing that is certain in Shanghai is taxes, with significantly higher rates than the competing hubs.
Singapore and Hong Kong are much more international and are used to making life easier for expats. More than a quarter of Singapore's population comes from abroad. And in Hong Kong, an Englishspeaking housekeeper typically costs about half as much as in Shanghai. But in terms of rents, Hong Kong property prices truly reign supreme. Lifestyle
considerations such as international schools and living standards also help determine how attractive a financial centre could be.
Meanwhile, the gap between two cities is narrowing given the recent outflow of capital and talent from Hong Kong. The Hong Kong dollar was at its weakest level in over three years, driven by traders selling to buy the US dollar to enjoy rising US interest rates.
This prompted the Hong Kong Monetary Authority to intervene in May 2022, when it bought the Hong Kong dollar back from the currency market to keep the currency’s tight peg to the US dollar.
As the city cut its growth forecast to a range of 1% to 2% in 2022 –down from the previous 2% to 4% –this capital outflow could reinforce itself as the gloom spreads across the market, leading to a downward spiral of the financial hub.
Unlike previous waves of staff relocation that Hong Kong has gone through since the British handover to China in 1997, this time the most experienced executives are flocking elsewhere for business stability and quality of life improvements.
As of March 2022, JPMorgan is moving top executives and key staff from Hong Kong to Shanghai, given restrictions on business travel to mainland China. Citigroup said in February that it will shift senior equities staff and directors to Singapore for their family reasons and client coverage – around the same time Singapore authorities’ streamlined COVID-19 travel and social restrictions.
Foreign direct investment, net inflows in Hong Kong
will contend with Hong Kong as the first choice for their Asia headquarters. Especially once a few major firms start to make a fully committed move, there might be a herding effect that will result in laggard firms following suit.
This was likely the case to some extent after Brexit – an EY tracker indicated that the number of financial services firms which moved or planned to move UK operations, staff and assets nearly doubled between March 2017 and March 2021.
Source: IMF % of GDP 2015-2020
More broadly, multinational companies, such as Bank of America and Wells Fargo, were reported to have been reviewing their Hong Kong businesses and looking to relocate employees or operations to Singapore.
As more companies look outside Hong Kong’s horizons, Singapore
Singapore growing strength as a financial hub
Meanwhile, Singapore is strengthening its status as a financial hub as more affluent investors worldwide set up base. Billionaire entrepreneurs from James Dyson to Haidilao cofounder Shu Ping have established family offices in Singapore, drawn in by attractive tax rates and a stable regulatory environment.
The Monetary Authority of Singapore approved more than 100 applications for family offices in the first four months of 2022
In addition to the capital brought to Singapore by family offices, these investors typically demand sophisticated financial services, creating jobs for wealth managers. The accumulation of financial and human capital goes towards increasing Singapore’s competitiveness as a financial hub.
Regional economic development is another tailwind for Singapore. China’s zero-COVID policies have triggered manufacturers to shift supply chains to countries like Vietnam, whose exports jumped by 14% in the first quarter of 2022 compared to the previous year. Singapore can potentially facilitate such relocations, given its longstanding business presence across Southeast Asia and familiarity with Chinese processes. Financial institutions can connect clients with investors, legal firms
can support the opening of new branches, and consultancies can advise on sourcing regional suppliers and training staff.
Until then, Singapore needs to accommodate the inflow of foreign talent while maintaining the social balance and keeping inflation down. The demand for living and working in Singapore can increase quickly but the supply of housing, education, and transportation takes much longer to catch up.
In the short term, there can be bottlenecks in travel from Hong Kong to Singapore, with major airlines offering fewer flights to and out of Hong Kong due to the city’s stringent quarantine rules. Nonetheless, the senior executives are wealthy enough to make the trip. Their sudden arrival in Singapore, however, heats up highend markets for private housing and education.
More and more wealthy Chinese are worried about keeping their money on the mainland and some see Singapore as a safe haven.
Since protests disrupted Hong Kong’s economy in 2019, affluent Chinese have looked for alternative places to store their wealth. Singapore proved attractive because of its large Mandarin Chinese-speaking community and, unlike many countries, it doesn’t have a wealth tax.
The trend appeared to pick up last year after Beijing’s sudden
crackdown on the education industry and emphasis on “common prosperity” — moderate wealth for all, rather than just a few.
That’s according to CNBC’s interviews with firms in Singapore that are helping wealthy Chinese move their assets to the city-state via the family office structure.
A family office is a privately held company that handles investment and wealth management for an affluent family. In Singapore, setting up a family office typically requires at least $5 million in assets.
Over the last 12 months, inquiries about setting up a family office in Singapore have doubled at Jenga, a five-year-old accounting and corporate services firm, according to its founder Iris Xu. She said the majority of inquiries come from people in China or emigrants from the country.
About 50 of her clients have opened family offices in Singapore — each with at least $10 million in assets, Xu said. According to Forbes, China’s rapid economic growth has minted hundreds of billionaires in just a few decades. Many more joined their ranks their last year.
That brought the total number of billionaires in China to 626, second only to the United States’ 724 billionaires, the data showed.
Xu said her Chinese clients “believe there are plenty of opportunities to make a fortune in China, but they are not sure whether it is safe for them to park money there,” according to a CNBC translation of the interview in Mandarin.
editor@ifinancemag.com2021 saw a seismic change in the payments landscape, with higher consumer demand for digital solutions. Some of the drivers behind this transformation were innovative technologies such as contactless payments, e-commerce and AI.
To discuss some of the trends and transformations occurring in the sector, we spoke to Abdullah Al Othman - the Founder and Chairman of Geidea, a leading fintech that is transforming the payments experience across the Middle East.
From your point of view, how has the digital payments market in the Arab region evolved? What will attract the most investment going forward?
I believe that the digital payments market in the Arab region is now at a very advanced level in terms of the solutions and technologies that are on offer. The majority of the Arab region’s consumers are tech-savvy and are used to transacting in multiple ways – be it through contactless cards, QR codes, mobile wallets or online solutions. A major driver is the high adoption of smartphones in the MENA region - with countries such as Saudi Arabia and the United Arab Emirates achieving close to (or above) 90 percent smartphone penetration rates.
Looking ahead, I believe the future of investment rests on the quality of innovation in the fintech sector - and its ability to fully leverage the power of artificial intelligence and analytics. This will enable all companies to explore new innovative concepts and take full advantage of the digital economy. The fintech industry has been growing at a
Abdullah Al Othman, Founder and Chairman of Geidea
rapid rate particularly in the Kingdom, and I believe with the support from Government and the infrastructure already, Saudi Arabia will emerge as the hub for fintech in the region. SAMA and the Capital Market Authority (CMA) have both continued to issue regulatory licenses and develop regulations to support fintech activities and innovation in the sector.
At Geidea, we have successfully leveraged this ecosystem to create POS terminals such as the ‘Geidea pro range’ which are multifunctional systems for businesses and merchants. These include solutions such as barcode scanners, biometric readers, and acceptance of contactless payments through QR codes, e-Wallets, Bluetooth, or NFC. These technologies are now a
prerequisite for most businesses and continue to attract strong interest. Ultimately, our goal is to create new experiences, new solutions and new value for consumers, banks, regulators, and most of all - merchants.
What role do you believe that artificial intelligence will play in terms of digital payments? And what new opportunities will it create?
Artificial intelligence (AI) has evolved significantly over the last few years, and we believe it is set to transform the digital payments landscape. It is an area we are paying close attention to, and from a Geidea perspective, what’s tremendously interesting to us is its potential to help businesses. In contrast to the average human, AI can process and generate insights from huge datasets in seconds; helping to find multiple patterns and opportunities to enhance the customer experience.
For companies in the financial services ecosystem, including us at Geidea, this means it will enable us to increase the personalization of our services to customers, improve the ways services are delivered and uncover new opportunities to tap into.
For example, I believe that in the future, AI will act
as an invaluable assistant that helps businesses with their decision-making. It will be able to predict cash flow events and repayment needs more accurately, thereby spotting liquidity gaps and helping businesses to redeploy funds as well as address any issues. It will also help merchants in terms of investigations and support – for example highlighting any issues with a businesses’ systems, as well as recommending ways to enhance the experience to meet customers’ expectations.
AI is also changing the actual way payment transactions happen; either through bio-metric applications such as facial recognition – or other smart applications. For example, Amazon’s ‘smart store’ model is an innovative example of AI which can automatically bill customers when they leave the store with products –without the need of any check-out counter.
What new trends have you spotted over the past year in terms of AI?
We are seeing a significant shift in the way businesses process payment transactions. Already, several organizations have developed chatbots to enable customers to transact with them in a more efficient and convenient manner. This is being done via automation, where AI can serve as a virtual agent by interacting with users on behalf of the business. Another example is when customers shop online. AI tools now learn from customers’ buying patterns to suggest additional products the customer might be interested in purchasing.
Biometric data is also helping to give a boost to AIpowered payment services. Tools such as facial recognition and fingerprint scanning are already enabling financial companies to simplify account opening processes, and there is an opportunity to use the same technology to authenticate transactions. While this is still a work in progress – and innovation such as this will be tremendously beneficial for both merchants and consumers alike; simplifying day-to-day activities and freeing up more time to improve convenience and efficiency.
What are your strategic priorities in 2022?
Our goal continues to be to empower merchants and make payments and commerce technology more accessible, affordable, and intuitive for everyone. With that in mind, 2022 will see us launch a variety of services, initiatives, and partnerships across KSA, as well as the UAE and Egypt.
As a homegrown Saudi Fintech brand, we want to reach out beyond our own borders and advance our mission of transitioning to a more cashless digital economy that empowers merchants. We believe both the UAE and Egypt represent immediate and important markets for us in addition to Saudi Arabia, and we look forward to providing our expertise, services and products to drive digital payments acceptance.
FEATURE ARTIFICIAL INTELLIGENCE DIGITAL TWINS
Theremight be a time when you would have come across a person who would have had an uncanny resemblance to you. Or you might have heard from your friend who would have met someone who looked similar to you.
But what if I tell you that you could create your own twin, an inchby-inch replica of yourself, but living in digital life?
We currently live in a world where things that exist in the real world are being digitally replicated, be it our cars, our homes, our cities, and even ourselves.
Digital twins have emerged as a new tech trend, just like the muchdiscussed metaverse—plans for a virtual, digital world where you might roam about as an avatar.
A digital twin is a distinct clone of something in the physical world with the specific goal of aiding in improving or proposing feedback to the real-world counterpart.
Before artificial intelligence (AI) and the internet of things, which uses sensors to connect physical objects to the network, it was
Technology analyst Rob Enderle acknowledges that we will have the first versions of thinking human digital twins before the decade ends
only possible to create sophisticated 3D computer models of these twins. However, thanks to AI and the internet of things, it is now possible to create digital twins that are constantly learning from and assisting in improving their physical counterparts.
Technology analyst Rob Enderle acknowledges that we will have the first versions of thinking human digital twins before the decade ends.
He said, "The emergence of these will need a huge amount of thought and ethical consideration, because a thinking replica of ourselves could be incredibly useful to employers. What happens if your company creates a digital twin of you, and says 'hey, you've got this digital twin who we pay no salary to, so why are we still employing you?'"
According to Enderle, the issue of who owns these digital twins will come to define the upcoming metaverse period.
As we have already started the journey towards human twinning via avatars, there is still that feeling of it being at the elementary level.
For instance, you might be able to give your avatar a face that might be similar to yours in Meta's virtual reality platform, Horizon Worlds, but you can't even give it hands or legs because of the fact that technology is still in its early stages.
Prof Sandra Wachter, a senior research fellow in AI at Oxford University, shared her views about creating digital twins.
The professor said, "it is reminiscent of exciting science fiction novels, and at the moment that is the stage where it is at."
"Whether someone will be successful at law school, get sick, or commit a crime - will depend on the still debated 'nature versus nurture question'. It will depend on good luck and bad luck, friends, family, their socio-economic background
and environment, and of course their personal choices," she added.
The most advanced and pervasive usage of digital twins is now found in the industries of product design, distribution, and urban planning.
Formula One giants Red Bull and McLaren are also using digital twins of their race cars.
To be more effective, DHL is currently constructing a digital map of its supply lines and warehouses.
Singapore and Shanghai both have digital twins that were designed to aid in enhancing the structure and functionality of transportation, networks, and streets.
The major task of the digital twin in Singapore is to guide people to navigate on the streets to avoid areas that are polluted. This innovative technology is also used to indicate where to build new infrastructure.
The Middle East has been building new cities simultaneously both in the digital as well as the real world.
French software giant Dassault Systemes says it is now receiving interest from thousands of companies for its digital twins technology.
Till now it has used the digital twins to help out a hair care company in digitally designing more sustainable shampoo bottles, in place of the regular real-life prototyping. This has eventually resulted in cutting down on waste.
And this doesn't stop there. It is also guiding other firms in churning out fresh futuristic projects. This includes jetpacks, motorbikes with floating wheels and flying cars.
However, digital twins will end up being more useful when it comes to the healthcare industry. The Living Heart project initiated by Dassault Systemes has produced a precise virtual model of
Source: Twi-global
the human heart that can be tested and analysed. This will enable surgeons to simulate a variety of 'what if' scenarios for the organ using different procedures and medical equipment.
Dr Steve Levine, who had founded
the project, has his own reasons to create a digital twin. His daughter was born with congenital heart disease and she was at a high risk of heart failure in her last 20s. This is when Dr Steve decided to recreate her heart in virtual reality.
Currently, Boston Children's Hospital with the help of this technology is mapping out the real heart condition of patients. A committed group of engineers is collaborating with medical professionals at London's Great Ormond Street hospital to test devices that could benefit kids with uncommon and challenging-to-treat cardiac problems.
Dassault Systemes' Global Affairs Director Severine Trouillet stated that experimentation taking place on a digital heart has knock-on effect of cutting down on the requirement to test on animals, which is considered one of the most controversial aspects of scientific research.
They are now planning for more digital organ twins, including the brain and eyes.
Trouillet said, "At some point we will all have a digital twin, so that you can go
to the doctor, and we can increasingly make preventative medicine, and make sure that every treatment is personalised."
What might be more challenging than replicating human organs is the vision of building a digitalised version of the entire planet.
Nvidia, a US software firm, runs a medium called Omniverse that is designed to create digital twins and virtual worlds. Building a digital twin of the Earth and collecting high-definition images of its entire surface is one of its most ambitious projects.
In order to simulate physical settings in the digital realm and develop climate change solutions, Earth-2, as it is now known, will combine neural networks and deep-learning algorithms.
Earlier this March, working alongside the European Space Agency and others, the European Commission revealed its own ambitious project to create a digital twin of the planet, called Destination Earth.
Hopefully, by end of 2024, it should have the acquired necessary data from simulations and realtime observations to have a digital twin that will concentrate on floods, drought, tsunamis, heatwaves, volcanic eruptions, and earthquakes. This information is ought to be shared with other countries which will definitely help save lives during the time of crisis.
Hexagon, Fujitsu Join Hands To Solve Societal Challenges For ‘Trusted Society’
Hexagon and Fujitsu Limited have collaborated on a new partnership where one will get to witness the two provide joint use cases leveraging their respective digital twin technologies to drive advancement towards ‘Trusted Society’.
Information and communications services firm Fujitsu describes its Trusted Society as promoting a safe, secure, and sustainable society by utilising technologies to address societal issues with the help of all stakeholders.
The safety, infrastructure, and geospatial branch of the information technology business will collaborate with Fujitsu as part of the cooperation.
The two will combine their digital twin technologies and solutions, including high-performance computing IoT sensors, infrastructure, AI analysis, data processing, and enhanced cloud data visualisation.
Fujitsu executive vice president and vice head, Yoshinami Takahashi said, "Our goal at Fujitsu is to realise our vision for a ‘Trusted Society’. Partnering with Hexagon will allow us to extend our reach and provide even greater value to cities and regions around the world.”
Echoing similar views, Hexagon’s safety, infrastructure & geospatial division president Steven Cost stated that cities are playing a huge role in solving challenges.
He said, "Cities are playing a leading role in solving global challenges, from addressing climate change to eliminating traffic fatalities. Our partnership with Fujitsu can help cities put data to work to solve these pressing problems and meet sustainability and safety goals."
This partnership was announced during Hexagon’s digital technology conference - HxGN LIVE Global 2022.
In1992 Neal Stephenson’s sci-fi classic Snow Crash coined the term 'metaverse'. The protagonist in the show wears a headset to escape reality and enter a virtual space where avatars stroll the streets, digital shops line the pavements and electronic currencies rule the roost.
After 30 years that vision is close to becoming reality. In October 2021, Mark Zuckerberg announced a plan to bring metaverse into life. He rebranded Facebook as 'Meta' and invested $10 billion in virtual space.
With this, several companies, including Apple and Microsoft are betting that the world of tomorrow will be carried out in the metaverse. Even Microsoft has recently acquired the video game giant Activision Blizzard for the US $68.7 billion.
Fashion brands like Nike, and Gucci are designing clothes and accessories for the metaverse. J.P. Morgan and Samsung have set up shop in Decentraland, a decentralized virtual reality platform. In the metaverse, people can operate their own Forever 21 stores and even sell their own designs.
There are some popular books that explain to people more about the metaverse. Books like Navigating the Metaverse, by Cathy Hackl, Dirk Lueth, and Tommaso Di Bartolo; The Metaverse Handbook, by QuHarrison Terry and Scott Keeney; and Step into the Metaverse, by Mark van Rijmenam, all set themselves up as Lonely Planet guides to the digital frontier.
Van Rijmenam a tech strategist says, "We are currently spending astronomical amounts of money to make our cities more liveable, equitable,
In the metaverse, real estate is a virtual ecosystem, where technologies such as virtual reality, and augmented reality, seamlessly come together to create a realworld user experience
and sustainable, but what good are these investments if the citizens of tomorrow will only experience the city virtually?".
According to Rijmenam, many urban attractions such as cinemas, restaurants, museums, and historical monuments will see a drop in the number of customers. Now, it is possible to visit several museums virtually, he added.
As the metaverse grows, it will need more money, land, and infrastructure to house the computer servers it runs on. Although the experiences are virtual, their costs — in terms of money, energy, and environment — are real and increasing.
According to Rijmenam, in the coming years, other social activities such as enjoying a coffee or a beer with friends may also take place online. "Not only will these virtual meetings eliminate the constraints of distance, reducing our use of urban transport, but they will also allow us to choose a location for a meeting anywhere on the planet", Rijmenam said.
In the metaverse, real estate is a virtual ecosystem, where technologies such as virtual reality, and augmented reality, seamlessly come together to create a real-world user experience. There are unique and non-replicable land parcels available. Visiting and creating a virtual landscape, conducting virtual events, and purchasing properties are opening new possibilities for real estate. According to a leading Analytics firm, real estate sales on major metaverse platforms reached $501 million in 2021 and are expected to double in 2022.
Users can claim ownership of a parcel of virtual land-based on blockchain ledgers. The landowners will
have complete control over how virtual land is utilized on their land which is identifiable by a set of geographic coordinates to locate the property.
The most popular metaverse environments also known as the Big 4 are Sandbox, Decentraland, Cryptovoxel, and Somnium. These four platforms together have a combined 268, 645 parcels of land. Land prices in Metaverse have risen by as much as 500% as of March 2022.
Transaction and ownership of land on metaverse can be done using cryptocurrency. For this, users can create an account on any of the crypto wallets such as Metamask, Bitski or Arkane. The actual token currency where the transaction takes place depends on the metaverse environment.
Several large companies have jumped onto the metaverse bandwagon. For instance, global consulting company PwC’s Hong Kong wing has purchased a land parcel in a metaverse space where it intends to construct a Web 3.0 advisory hub to facilitate a new generation of professional services. Sporting goods giant Adidas also aims to market exclusive branded content, experience, and merchandise in the metaverse.
South Korean mobile manufacturer Samsung recently launched its metaverse location design basis at its store location in New York named Samsung 837 store. In addition to this, popular music artists Snoop Dogg, Imagine Dragons, and BTS have conducted virtual concerts in the metaverse.
Real estate investors are exploring ways to incorporate real estate in the metaverse as an asset class in their investment portfolio. With low
Meta Reality Labs has already invested in the metaverse $50 million
Meta recently invested $50 million in non-profit funding groups to help the metaverse grow responsibly
Meta will also create 10,000 jobs in the EU over the next five years
In April 2021, Epic Games raised $1 billion to accelerate metaverse's long-term vision $800 billion
The metaverse may be worth $800 billion by 2024 due to a surge in interest during the pandemic. That's up from $47 billion in 2020
Decrentraland raised $24 million ahead of its February 2020 release. In just three months, Decentraland Games' casino earned $7.5 million
The global AR, VR, and MR market will roughly reach $300 billion by 2024
North America held the largest share of the worldwide metaverse market in 2020
Tech companies see metaverse as a reach expand medium
Source: Techjury
barriers of entry, metaverse allows a wider pool of investors with virtual land parcels available at various price points. Land on metaverse is also being bought by large brands looking to create an experiential center to showcase their products.
Also, there are several Indian investors who are reimagining real estate in the virtual world. For instance, Lepasa, which is a web 3.0 metaverse ecosystem, is creating 15-20 virtual cities, with each town having a different theme.
Real estate developers can also explore opportunities arising from the metaverse. Metaverse with its immersive landscape could one day be used to solve complex engineering challenges by providing a collaborative landscape for architects, engineers, and project managers to seamlessly interact and come up with solutions to realworld problems.
Unity, a cross-platform game engine developed by Unity Technologies can be used to create a virtual model on
metaverse. This virtual model could then be used as the reference model for the actual construction of the building.
Metaverse is at its earliest stage, currently used for gaming and virtual events, and could soon have the capability to solve real-world problems. With greater penetration of 5G technology and global brands investing, the metaverse landscape is expected to gain greater acceptability in the near future.
How do NFTs fit into the metaverse?
Non Fungible Tokens (NFTs) figure to play a big role in the usefulness and popularity of the metaverse. NFTs are a secure type of digital asset based on the same blockchain technology used by cryptocurrency. Instead of currency, an NFT can represent a piece of art, a song, or digital real estate. An NFT gives the owner a kind of digital deed or proof of ownership that can be bought or sold in the metaverse.
Metaverse Properties bills itself as the world's first virtual real estate company. The company acts as an agent to facilitate the purchase or rental of property or land in several metaverse virtual worlds -- including Decentraland, Sandbox, Somnium, and Upland. Offerings include conference and commercial spaces, art galleries, family homes, and "hangout spots."
While the metaverse has created opportunities for new companies such as Metaverse Properties to offer digital goods, established brick-andmortar companies are also jumping in. For example, Nike acquired RTFKT -- a startup that makes one-of-a-kind virtual sneakers and digital artifacts using NFTs, blockchain authentication, and augmented reality. On its website,
RTFKT said it was "born on the metaverse, and this has defined its feel to this day."
Prior to the acquisition, Nike filed seven trademark applications to help create and sell virtual sneakers and apparel. Nike and Roblox also partnered on "Nikeland," a digital world where Nike fans can play games, connect and dress their avatars in virtual apparel.
Nick Donarski, CEO of ORE System, an online community of gamers said that NFTs and blockchain lay the groundwork for digital ownership, content creators and game developers. Ownership of one's real-world identity will carry over to the metaverse, and NFTs will be this vehicle, he added.
While the basic idea of being able to engage in a virtual online world has been around for many years, a true metaverse where life-like interactions are possible is still years away. In his annual year in a review blog post, Microsoft co-founder Bill Gates noted that most people don't have the VR goggles and motion capture gloves to accurately capture their expression, body language, and quality of their voice.
But for business, Gates predicts that in the next two to three years most virtual meetings will move from two-dimensional square boxes to the metaverse -- a 3D space with participants appearing as digital avatars.
ABK constantly enhances its technology and adapts its processes and practises to drive 'Simpler Banking'
Laila Al-Qatami is the Chief Communications Officer at Al Ahli Bank of Kuwait (ABK). She was the Managing Director for the Sheikh Abdullah Al Salem Cultural Centre (ASCC) in Kuwait, one of the largest cultural complexes in the world. Laila has served in management across governments, financial institutions, and non-profit sectors. Prior to her appointment at ASCC, she oversaw Gulf Bank - Kuwait's external relations and corporate social responsibility. Speaking to International Fianance,
she shared the journey of Al Ahli Bank over the years.
Can you tell us about the state of play and elaborate on the banking landscape in Kuwait?
The banking sector is a cornerstone of Kuwait’s economy and has played a pivotal role in building the country’s reputation as a financial and commercial centre in the Middle East. Directly reflecting the diversity of the domestic financial landscape, ABK is one of ten
banks (five conventional and five Islamic) in operation within the country. In addition, the nation's banking sector is composed of more than nine foreign banks and a specialised bank. With a myriad of service provider options for the 4.2 million Kuwaiti citizens and residents to choose from, the domestic banking sector enables financial inclusion and empowers people and businesses to contribute to the growth of the national economy.
Guided by the leadership of the Central Bank of Kuwait (CBK), the official regulator of the state’s financial system, banks operating within Kuwait jointly offer a wide range of conventional banking services and products including loan facilitation, funds remittance, financial consultations, letters of credit and guarantees, effective foreign exchange and interest rate services, and more.
To ensure the financial sector’s stability within Kuwait, CBK launched a dedicated Financial Stability Office (FSO) to examine and report the latest developments in the financial sector, regionally, as well as globally. Based upon the department’s evaluations of the money market, foreign exchange market, capital markets (Kuwait Stock Exchange – Boursa Kuwait), and real estate market, FSO is capable of analysing a wide scope of factors and reporting on their direct and indirect implications for Kuwait’s banking sector and its key players.
ABK is one of many banks embracing new banking methods, as phygital (digital coupled with appropriate physical scale), digital-first and digital-only approaches to traditional banking methods begin to set the precedent for the future of the banking landscape globally. This includes digital payments, online transactions and mobile banking services, resulting in better customer service, acquisition and retention rates.
In further support of the drive toward digitization, CBK formally issued guidelines to establish digital banks within Kuwait in February of 2022. It has created a digital banking framework by studying the best practices of central banks and the experiences of digital banks around the globe.
How does ABK keep up with the shift towards digital banking, whether in branch networks or products and services?
During a period of worldwide uncertainties due to the COVID-19 pandemic, ABK witnessed first-hand how consumer preferences evolve in response to eventualities and external factors. The changing consumer needs and the shifts in their banking
behaviour presented a vital opportunity for ABK to continuously innovate its offerings and build lasting relationships with our customers.
As a result of our ‘Digital First’ ethos, the Bank has strategically invested in numerous innovative services, including contactless digital banking services. Keeping customers’ needs at the core, ABK has curated products and services to deliver a simpler yet dynamic banking experience. For instance, ABK’s 'Global View' platform enables customers to manage multiple accounts across Kuwait, Egypt and the UAE through a single login point.
ABK’s Mobile and Online Banking channels deliver enhanced functionality to our increasingly sophisticated customers, enabling them to conduct remote transactions securely and swiftly.
Launching the ‘PIN Self-Generation’ service enables customers to generate new PINs for their recently issued cards within seconds at ABK ATMs. The Bank also reached a key milestone, upgrading its Interactive Voice Response (IVR) service and introducing voice biometrics and fraud detection functions on the ‘Ahlan Ahli’ call centre, adding a layer of security and safeguarding customers’ data security.
Furthermore, ABK was one of the first banks in Kuwait to integrate Automatic Speech Recognition (ASR) in both Arabic and English within its digital capabilities. This service reinforces our ‘Simpler Banking’ promise and eliminates the need to navigate extended IVR menus, enabling seamless navigation of the main menu and enhancing users’ experience.
Bolstering its existing digital reach and technological infrastructure, ABK has also pioneered a virtual banking assistant in Kuwait, an artificial intelligence-driven chatbot for account queries and service requests. This demonstrates our determination to provide the best digital banking experience to customers, powered by the most innovative technology for the financial sector.
How have consumer preferences changed since COVID-19?
The pandemic fundamentally impacted economic activity worldwide, with consumer behaviour shifting and new attitudes and values emerging. Aspects such as delays in loan repayment, lost revenue, decrease in bond value, and increasing demand for credit are a few factors that impacted the global banking sector. There was also an urgent need to shift to online platforms.
The Kuwaiti banking sector was no exception. Before
the pandemic, we saw a slow and steady shift to digital channels. However, the pandemic brought the future forward overnight. As a result of government-imposed lockdowns, most consumers adopted digital channels to shop, maintain relationships, and conduct transactions.
According to a 2020 KPMG study, 70 of 82 government offices and independent agencies started accepting online payments due to the pandemic.
Overall, in 2021, global economies recovered from the depths of a pandemic-induced slowdown and we started to witness a rebound and the return of stability in Kuwait as well. Various factors such as pent-up customer demand, accommodative monetary policies and strong fiscal support have aided economic growth. The national economic outlook has taken a more optimistic turn, and Kuwait’s banking sector is well placed to grow, scale, and achieve new heights.
ABK has embarked on several innovative issues around customer experience. How did these, do you believe, help differentiate the Bank? How important are they to the Bank?
ABK differentiates itself from the competition with its unwavering philosophy of ‘Reimagining a Simpler Bank’ while keeping customers at the core of its operations. Customer experience and journey are of paramount importance to the Bank’s continued success.
ABK’s core values are centred on the customers’ interests by being open and transparent, prioritizing what is good for them, striving to make banking simpler, and pursuing excellence. We are proud to be recognized as one of the top three retail banks with the highest level of customer satisfaction by Service Hero in Kuwait.
Since the beginning of this year, the Bank has unveiled a suite of offerings that deliver on our ‘Simpler Banking’ promise and streamline customers’ banking journey. At ABK, our goal is to make every touchpoint in the customer’s journey as accessible as possible.
For instance, integrating the Automatic Speech Recognition service to 'Ahlan Ahli' in English and Arabic has enhanced the instant customer service experience using a seamless human-like conversational interface. In addition, the Bank’s virtual assistant, ‘Ask Sanad’, has reduced customer waiting periods and enables them to make transactions in the chat window of the mobile application.
To truly embrace digital transformation, banks must start from the back-end and look at their core. At ABK, we have established a new centralized operations unit that increases the speed of transactions and accuracy across
the branch network. ABK has also successfully completed Phase I of a Proof of Concept (POC) Blockchain solution for the electronic 'Know Your Customer' (eKYC) feature.
To make customers’ lives easier, we have also installed Public Authority for Civil Information (PACI) kiosks at five branches to enable customers to create e-signatures on their Kuwait Mobile ID app. In addition to saving time, the benefits of integrating the e-signature service include document security, eradication of fraud and simplification of processes, enabling customers to sign documents electronically through any device, and limiting the need to visit a branch.
Our customers’ satisfaction and journey are entwined with and enhanced by our consistent investment in technology and digitization. This makes transactions simpler, more accessible, and convenient for customers who have adopted digital banking.
Environmental sustainability has always been, and will continue to be, an extremely important consideration for our business. With our commitment to operating as a responsible corporate organization, ABK continuously implements policies and initiatives to utilize its resources most efficiently and reduce its carbon footprint.
ABK recognizes that companywide awareness is the first step to sustained change. In alignment with the United Nations’ Sustainable Development Goals (SDGs), ABK transparently assesses and reports the use of its resources and utilities, such as water and electricity, with the aim of comparing and lessening consumption year by year.
Laila Al-Qatami, Chief Communications Officer, Al Ahli Bank of Kuwait
Taking the lead in sustainability in the Kuwaiti banking sector, ABK is active in the creation and implementation of measurable actions that have a positive impact on the environment. Our Facilities Management Division (FMD) is specifically dedicated to resource levelling, aiming at smoothing the stock of paper and equipment resources on hand, while reducing excess inventory, waste, and shortages.
Water efficiency remains a key priority within ABK’s sustainability efforts as well. Therefore, we ensure that in-premise facilities are equipped with water aerators, sensor taps for water basins and small capacity flush tanks intended to lessen overall water consumption. In addition to key infrastructure construction, our bank emphasizes corrective measures to manage its greenhouse gas (GHG) emissions, plastic consumption and electronic waste.
What steps are the banks taking to raise financial awareness in Kuwait?
ABK firmly believes in empowering people to effectively utilize their assets to meet their obligations, desires and aspirations for the future. In actualization of this belief, our bank prioritizes building customers' financial acumen.
While market trends forecast an increased usage of e-wallets, mobile banking, contactless payments and other omnichannel-related features regionally, ABK aims to increase the financial literacy and aptitude of all our customers. This helps avoid issues such as identity theft, phishing, skimming, and a range of malpractices at ATMs.
Our initiatives to raise customers’ awareness regarding their banking activity is in parallel action with ongoing government initiatives to reinforce customer
rights and enhance their knowledge and understanding of banking products and services. To further safeguard these rights while improving public financial awareness, the Central Bank of Kuwait joined forces with Kuwait Banking Association (KBA) to launch the ‘Diraya’ (Let’s Be Aware) campaign.
Now in its second year, the Diraya campaign boosts public awareness of the banking sector’s role and how customers can use banks’ various services. The nationwide campaign sheds light on banks’ role as financial intermediaries, the importance of saving, the means to benefit from banks’ products, and customers’ rights when accessing consumer or housing financing. The campaign also addresses specific services provided to people with disabilities, grievance redress mechanisms, types of bank cards, and means to avoid scams and fraud. Serious issues such as loan encashment and high-risk investments are also covered.
ABK leverages all its communication channels to raise public awareness of the various themes under the campaign. The Bank follows a unique, interactive and diversified approach to communicating with followers on social media platforms. The approach encompasses banking tips, short descriptive videos, competitions, and top-notch social media community management by ABK staff.
How does Al Ahli Bank of Kuwait enhance the capabilities of its workforce and the banking sector?
ABK has continuously proven to be a key driver in enhancing the banking sector’s overall framework from technological advancement, employee development, and consumer empowerment. The Bank has invested significantly to create a workplace that encourages collaboration and holistic growth through its knowledgedriven approach. As we regard our employees as our most valuable asset, the Bank is committed to empowering its employees and developing their careers.
has spawned countless trends and subcultures on a wide variety of topics. Videos featuring the Microsoft spreadsheet program Excel are among those to recently become hugely popular on the platform.
Although data programming and digit calculation may not seem like it would make for the flashiest clips, Excel TikTok tutorials and comedy sketches have amassed millions of views and morphed into an entire genre of content, with an array of influencers that spans languages and continents.
The TikTok hashtag "excel" has over 1.8 billion views in total, and some of the biggest TikTokers in the space have hundreds of thousands of followers, thanks to their videos featuring jokes about Excel and how-to guides.
How has TikTok become a medium of putting information? According to the Nobel
TikTok is the seventh most used social media platform in the world after Snapchat, Instagram, Whatsapp, YouTube and Facebook
economics laureate Herbert Simon, in the world where information and entertainment is abundant, the critical scarce resource becomes attention and that is what makes the Chinese app so popular. Since attention is a finite resource competition, for companies like Facebook it becomes a zero-sum game. The more attention one attracts, the less there is for the others. And this is the area where TikTok appears to be easily winning.
Around 90% of its users visit the app more than once a day, and they spend an average of 52 minutes per day on it. According to Scott Galloway, the average session lasts 11 minutes, an average watcher can easily watch 26 videos, each lasting 25 seconds.
As TikTok receives millions of video rush daily, the threat of data mining is also increasing. There are various reports about TikTok privacy concerns, which has become a talk-point among various experts, questioning its security.
Data mining means sorting information to gather facts about an entity or someone. Companies and individuals collect information on the internet for many reasons. One of them is to analyze customers' behavioral patterns to tailor content and ads more accurately.
As the name implies, you can think of data mining as an excavation or gold exploration process that seeks to find fossil deposit patterns. Data miners can extract data points on a subject from right about anywhere.
For instance, an app developer might decide to gather more information about you from other services on your devices. Consequently, they might use this to analyze your content-consuming behavior.
Here's the concept: data mining allows someone or an organization to place data points on you. Invariably, they know more about you and your pattern of living than you think in the long run. They can even predict how you might behave in the future.
It is no crime to gather facts about publicly available data. But when data mining occurs on deeper webs like TikTok, it might raise privacy concerns since users' details are typically exposed and monitored. And no one is sure how they use such information.
TikTok isn't the only privacy intruder. For instance, Facebook also has several privacy issues that you can avoid. And its activity has leaked users' data in many ways.
But TikTok's data mining saga isn't all about users' privacy leaks, it appears more twisted than that. Reports have flown around in the past about how the app's algorithm efficiently suppresses visibility for content containing specific keywords. Part of this is a fact contained in a 2019 report by The Washington Post detailing how TikTok's algorithm repressed keywords featuring the unrest in Hong Kong at the time.
Many users also complain about how TikTok prevents their content from reaching a larger audience despite having many followers. All these make it look like TikTok uses the mined data to somewhat recognize and distinguish between users based on their races, colors, disparities, and abilities to determine what they can post. The company seems desperate about how it collects and uses information.
What is more outrageous? A part of TikTok's privacy policy points out that although users can choose to share
specific third-party data with them, they might collect this from those third-party apps automatically. Unfortunately, every user has to agree to this policy while registering on the app.
There are two categories of users on TikTok; unregistered content consumers and registered content creators or watchers. TikTok mines data from you if one is under the second category. These include information from your TikTok profile and the content you post on the app. But as mentioned, it digs further into third-party apps on your device to grab further information. This is even imminent if you register your TikTok account via third-party apps.
Companies that mine data might sell them, and this isn't anything beyond what TikTok can do. Worse, it's even without users' consent. Experts also believe that TikTok might be spying on its teeming users. Though there's still no evidence to back this claim.
Whether or not TikTok is safe depends on
how you view its data mining processes. While data mining isn't a security issue itself, it can lead to data misuse. As you have seen, TikTok primarily uses the mined data to censor content and probably pick trails on its users.
Nonetheless, many third-party TikTok data harvesters take advantage of this intruding attribute of TikTok. It is unclear whether it partners with these third-party scrapers to sell users' data. But there are web apps like Apify, 4K Tokkit, Bright Data, and more that offer automated TikTok scraping services, including profile data collection. To say this is disturbing isn't an overstatement.
Moreover, you can't say for sure what people might do with your data once they collect it from these scraping services. However, we can predict this might provide hints about you to threat actors.
And while TikTok mines the data to analyze patterns about you, there have been concerns that it sells the output information to the government so they can spy heavily on users. Pertinent to this is a 2019 lawsuit reported on BBC News which claims that TikTok sends US users' data to the Chinese government.
Can one prevent TikTok from min ing your data from third-party apps?
Preventing TikTok from tracking your details on third-party apps can be difficult since the app sometimes collects users' data without their consent. It means even if you set your device to prevent app tracking, TikTok might not respect your choice.
But there are a couple of ways to limit the data TikTok collects and shares about you. One way is to avoid registering or logging into your TikTok account with third-party social authentications like Facebook, Google, or Twitter login. However, if you are an iPhone user, you can use your Apple ID to register on the app. But you might want to use Apple's Hide My Email feature while using this feature.
While Android might not provide Apple's type of anonymity, you can use third-party blockers if you are an Android user. Specifically, you might want to try DuckDuckGo's new privacy feature to block TikTok's app tracking. And if you are accessing TikTok via the browser, you might want to use privacy plugins.
Although TikTok's data mining is shady,
some people are indifferent. Dumping the app is still a personal decision. So, it depends on your conviction. Nonetheless, it is needful to say you can delete your account from TikTok and dump it for other alternatives if you feel threatened or unsafe.
Launched in September 2016, TikTok has garnered a huge audience globally in mere six years. The app has ruled out its dominance among billions of TikTok users count worldwide. As per the latest TikTok statistics, almost every other video goes viral beyond the app, racking up billions of views on Twitter and Instagram. It is safe to say that TikTok’s popularity has skyrocketed and reached heights.
As per the reports of Statista’s TikTok user stats, the app had over 1 billion active users worldwide at the end of 2021, representing a 45% growth compared to the year 2020. TikTok has been welcomed enthusiastically, especially by Asian countries such as Cambodia, Japan, Indonesia, Malaysia, Thailand, and Vietnam. Currently, Ireland is one of the top countries with the fastest-growing Tik-Tok market.
Today, TikTok is the seventh most used social media platform in the world sitting above its rivals Snapchat, however, trailing behind Instagram, Whatsapp, YouTube, and Facebook. When you compare the journeys, it took Instagram almost six years to gain the same amount of monthly active users that TikTok garnered in its first three years. Whereas, for Facebook to gain the same amount of monthly active users, it took over four years. TIKTOK
Crypto Social Media is an interesting concept, it would be a way to get rid of bots, and it could also be made traceable and relatively tamper-proof
Peter A Gloor is a Research Scientist at the Center for Collective Intelligence at MIT's Sloan School of Management where he leads a twenty-year project exploring Collaborative In novation Networks. He is also the founder and Chief Creative Officer of the software company Galaxyadvisors, and an honorary professor at the University of Cologne, and at Jilin Univer sity, Changchun, China.
He also taught at Universidad Cattolica in Santiago de Chile, Aalto University Helsinki, University of Rome Tor Vergata, University of Applied Sciences Northwestern Switzerland (FHNW), and University of Applied Sciences Lucerne (HSLU). Earlier he was a partner with Deloitte and PwC, and a manager at UBS. He got his Ph.D. in computer science from the University of Zurich and was a Postdoc at the MIT Lab for Computer Science.
His newest book, "Happimetrics - Leveraging AI to Untangle the Sur prising Link Between Ethics, Happiness and Business Success” will appear in fall 2022 at Edward Elgar Publishing.
In his interview with the International Finance, Peter Gloor shares his insights about Twitter bots, metaverse, the COIN project, social media trend predictions, and much more.
IF: Over 65% of B2B businesses use Twitter as a marketing tool. Is the B2B trend shifting to Twitter from Facebook and Instagram?
Peter Gloor: I don’t think Twitter is taking over from Facebook and Instagram. After all, Twitter has been around for a long time. Facebook is more about friends and family, and Instagram is communication by pictures. Twitter is for spreading the word quickly to everybody, it is
essential for politicians, companies/brands, and journalists to disseminate their thinking, ideas, and brand. Twitter is its echo chamber; a comparatively small subset is active on Twitter compared to Facebook. But it is a very vocal, active, and engaged subset, so it is like a probe into society, representative of the rest of the population.
Does the removal of bots impact the revenue and reach of Twitter?
Of course, bots disturb the metrics of Twitter, as the number of followers, being listed, etc., is a key metric of influence for a Twitter user. If 50% of the followers of a politician are bots, this inflates their importance.
The point is that this is an arms race between Twitter and bot writers, who have a huge incentive to game the system to their advantage, claiming much wider reach than they do.
Twitter is also in a conundrum, as on the one hand more users Twitter has, the higher its reach and valuation (if these users are hidden bots, Twitter still gets the marketing money). On the other hand, Twitter should be able to identify its human users correctly.
I can virtually travel to Bangalore from Boston, without leaving my office at MIT, and will have “almost” the same experience as traveling there in person by plane. The same will be for office meetings, where you and I can meet in a virtual room with the same interpersonal experience as if I would meet you in person
What are your views on metaverse? Is the metaverse going to rule the virtual world in the coming years?
I think it is a question of time until virtual reality and reality will fuse in a Matrix-like scenario. What this scenario will look like is still open to discussion.
But I imagine, for example, that I can virtually travel to Bangalore from Boston, without leaving my office at MIT, and will have “almost” the same experience as traveling there in person by plane. The same will be for office meetings, where you and I can meet in a virtual room, with the same interpersonal experience
CENTER FOR COLLECTIVE INTELLIGENCE SOCIAL MEDIA TRENDThe book will allow the individuals to learn about their strengths and weaknesses and the organization to improve teamwork and intra- and inter-organizational communication and collaboration
as if I would meet you in person. The big question will be “fake news”, as it will be difficult for the layperson to distinguish truth from fake in the metaverse.
Can you tell us about the "Sociometrics and Human Relationships" book you have authored? Give us some insights about the book?
The book describes a proven and tested framework for measuring interpersonal interaction using online media, such as email, slack, teams, Twitter, or Facebook. It will allow the individuals to learn about their strengths and weaknesses and the organization to improve teamwork and intra- and interorganizational communication and collaboration. I would also like to point out my new book “Happimetrics” (https://www.e-elgar.com/shop/usd/ happimetrics-9781803924014.html), which will come out this fall, extends these methods to direct faceto-face interpersonal interaction, and also measures ethics and moral values of a person, to distinguish truth from fake.
Voter manipulation on social media has become a global problem. What do you feel about it?
This is indeed a big problem. The remedy is transparency, i.e., educating the voter about all the potential ways of spreading fake information. It is a hugely important task for the trusted mainstream press. Artificial intelligence (AI) can also help by flagging fake news.
Can you tell us about the Collaborative Innovation Networks (COIN) project you are heading at CCI at MIT's Sloan School of Management?
The COIN project was started at MIT in 2002 to study all facets of swarm creativity. It was among the first to dispel the myth of the genius innovator locked away in his office and cranking out one invention after the other. The truth is, we can only innovate in intense collaboration with other like-minded people. In COINs, I have been studying how this collaboration functions in direct interpersonal interaction and online media for the last twenty years.
How will a person be able to predict trends on social media? What are the dos and don'ts? Machine learning makes it extremely easy to construct a time series of social media data, e.g., all the tweets talking about “Donald Trump”. We can then extend the frequency of these tweets and measure their emotionality. Based on previous analysis, we could be tempted to predict that Donald Trump will again win the next US Presidency. This example illustrates how easy it is to mechanically make predictions for the future – but I call this “predicting the past”, as it is far from certain that an AI machine learning model that has worked before will work again in the future.
Why do you think social media has become a major player for most industries in establishing themselves? It is the easiest and cheapest way to reach a broad group of influencers. The challenge is to be authentic; most corporate marketing departments do a miserable job in this regard on online social media. The most successful TikTok influencers are the most authentic ones, meaning that what they say comes from their heart. They genuinely believe in it. For example, Greta Thunberg has been doing this very well.
Can you tell us about your software company Galaxyad visors? What kind of services do you offer the clients? Galaxyadvisors builds software and provides consulting for coolfarming and coolhunting. Coolfarming means helping companies to innovate and create high-performing teams by building COINs.
IN CONVERSATION PETER GLOOR RESEARCH SCIENTIST, SLOAN SCHOOL OF MANAGEMENT TECHNOLOGYIt involves analyzing their online communication, such as email, MS teams, and slack, and showing them how their teams currently communicate. And how they can communicate better. Coolhunting is finding cool new trends by finding the COINs on online social media that develop and launch these cool new trends. For example, by discovering the virtual tribes that aggregate around cool new products, be it Tesla, Birkenstock, or “Harry Potter”.
Tracking social media trends has never been easy. How have you tracked them, especially after the social media boom?
It is comparatively easy to predict tomorrow’s trend, e.g., to predict the stock price of tomorrow or who will win an Oscar, based on a time series analysis of yesterday's data. It is impossible until now to predict “black swans”, i.e, unpredictable events, such as Donald Trump winning the elections, the outbreak of COVID, or Russia invading Ukraine.
With social media and Artificial Intelligence growing every day, what can we expect shortly? We will get a fusion of augmented and virtual reality
with the “true reality”. We might also get a further split into more segmented virtual tribes, across country boundaries, for example, believers in science and believers in “god”. To prevent this split, we need “ethical AI”, which assists in easily identifying fakes from reality, and tools that flag unethical behavior automatically. This is what my current research focuses on.
Crypto social media platforms are gaining traction across the world. What is your take on it? Crypto social media is an interesting concept, it would be a way to get rid of bots, and it could also be made traceable and relatively tamper-proof. However, the problem is that some vendors use beautiful words to mask their search for a quick buck by combining it with a new cryptocurrency. The other problem is that blockchain does not yet scale to the level needed for a system like Twitter.
Profuturo, a Mexico based pension funds management company has reached its first 25 years of existence with close to seven million clients, nearly 859 billion pesos managed, and the most competitive performance in the market, ranking second in this industry’s market share with 17.4%.
Backed by Grupo Bal, one of the most significant business conglomerates, the company has strengthened its market presence by establishing itself as one of the main pension funds and institutional investors in the country over the years—offering a host of banking services like retirement savings plans, pensions and loans.
The company has redoubled its commitment to offer the highest standards of quality and service in order to maintain its leadership and establish itself as the optimal alternative for Mexican workers. The company has been awarded as the Best Pension Fund Manager at the International Finance Awards for the fourth consecutive year.
Profuturo’s 25-year history is characterized by innovation and continuous improvement in order to remain at the cutting edge, and by its mission to properly satisfy the needs of its clients, providing them with the most advantageous advisory services for their retirement. Throughout these years, the company has developed and incorporated various new practices and criteria in accordance with international standards to ensure solid investment management with a longterm vision and exemplary governance.
Among the broad array of efforts made by Profuturo in this regard, the company continues to incorporate sustainable, innovative, and exceptional practices, so that it may continue to provide its clients
The company has been awarded the Best Pension Fund Manager at the International Finance Awards for the fourth consecutive year.
with significant benefits and attractive returns according to a long-term vision that will allow them to improve the quality of their lives in the future.
In line with this long-term vision and the company’s commitment to offer a better future for Mexican workers and for the country, since 2018 Profuturo has adopted ESG (Environmental, Social, and Governance) criteria in its portfolio management in order to offer its clients greater benefits while taking care of the environment.
For Profuturo, the incorporation of these types of criteria has been a natural step beginning that same year, when, within the framework of the signing of the cooperation and exchange agreement between the Green Finance Advisory Council (CCFV, Spanish initials) and the Green Finance Initiative of the City of London Corporation, Profuturo signed the investors’
and promotion of environmental, social, and governance elements in its investments. These principles are a set of six voluntary and aspirational precepts for the gradual incorporation of environmental, social, and governance criteria into investment practice.
“This type of practice allows us to maintain a more harmonious and sustainable economic development, in addition to helping Mexicans achieve their goals for the future. We confirm our commitment to the advancement of responsible investing regarding the economy and society by thinking in the long term, thus positively impacting the future of Mexicans,” said Arturo García, CEO of Profuturo.
In line with its commitment to strengthen its investment portfolio with a sustainable approach, Profuturo became the first pension fund manager in Mexico to sign an agreement with the globally prestigious CFA institute, in order to certify its entire investment and risk teams in environmental, social, and corporate governance (ESG) matters. Through this training, Profuturo is convinced that its team will be better prepared and have a greater understanding of the trends in sustainable development and their application in investment processes.
The ESG criteria also help Profuturo to better allocate investments and obtain positive results, allowing it to achieve one of the highest scores in the governance pillar of the PRI (Principles of Responsible Investment). Furthermore, these criteria are fully consistent with our long-term vision for the benefit of our clients and Mexico.
statement on disclosure of ESG information, which, with the support of 51 institutional investors, promotes greater incorporation of these aspects into investment management while increasing transparency, sustainability, and the social benefits of the corresponding investment projects.
Through this statement, Profuturo, a member of the CCFV, made a commitment to the inclusion of a greater proportion of green assets in its investment portfolio. The company also aims to promote the long-term development of sustainable infrastructure in Mexico and incorporate a greater number of environmental, social, and governance factors into its investment management process.
Subsequently, in 2019 Profuturo signed the United Nations Principles for Responsible Investment (PRI), representing another milestone on the company’s road to continued strengthening
In 2021, the Principles for Responsible Investment awarded the group an A rating for its responsible investment policy. This assessment is above average in Latin America and, internationally, which is only one step below the maximum for the category. Profuturo has also been recognized by ALAS 20, a Latin American initiative that comprehensively evaluates, scores, and recognizes excellence in the public disclosure of information regarding ESG practices.
Finally, Profuturo has reinforced its commitment to providing a friendly and ethical work environment by continually maintaining its status as a Socially Responsible Company, an award given by the Mexican Center for Philanthropy (Cemefi, Spanish Acronym), and the Alliance for Corporate Social Responsibility (AliaRSE, Spanish acronym), in recognition of its outstanding sustainability strategy.
TECHNOLOGY FEATURE AUTOMATION CHATBOTSDespite all the pros, chatbots are still not perfect, and a human backup is still a necessity
Over the past few days, Chatbots have been the talk of the town after a Google engineer claimed that the company's most cutting-edge system has developed human-like feelings.
A chatbot is a computer programme that has been specifically designed to emulate and react to human speech.
But how lifelike are these amazing products now available? These sophisticated virtual assistants are now present everywhere.
Be it Apple's Siri or Amazon's Alexa or even an ordinary retailer's website, around 80% of them use chatbots. They either respond via written text or verbally.
The growth of chatbots has been very fast and has become the go-to option for most brands to interact with their customers.
Sabina Goranova, a student at York University in Toronto, is one of those people who use chatbots on an
everyday basis.
Sabina uses Alexa at home and when it comes to her university she consults the institution's very own Savy system via her mobile phone whenever she wants information about the college.
Sabina said, "I appreciate the convenience of chatbots. I already used Alexa to save time, so Savy is another tool in my toolkit."
IMB made Savy for York University and its students. Be it career advice or daily lunch menus, Savy comes up with an answer immediately.
French chatbot firm Mindsay's chief executive Guillaume Laporte said, "Chatbots are beginning to mimic true human behaviour, but with robots essentially."
Mindsay is now a part of Chinese artificial intelligence (AI) and intelligent virtual assistant company Laiye. The firm has very top profile customers that include Nike, Walmart, Avanti amongst others.
"Chatbots are beginning to mimic true human behaviour, but with robots essentially," Guillaume said.
He added that compared to what chatbots were 10 years ago, now they are 10 times better. Following the initial programming, with the assistance of artificial intelligence (AI) and machine learning, they can comprehend and understand what the user is typing or saying as a result of which they know what to reply in return.
Despite all the pros, Guillaume cautioned that chatbots are still not perfect, and a human backup is still a necessity.
"So the understanding rate differs between different companies and different industries. It can vary between 30% and 90%," he added.
Jim Smith, professor in interactive artificial intelligence, at the University of the West of England, shared his views about chatbots.
He argues that it is crucial to distinguish between task-oriented agents that perform a service and agents who are supposed to engage in a more in-depth conversation when it comes to their capacity to appear human-like.
Smith said, "The former are the ones most used, and they can work really well. They are taught using masses and masses of text. So, if they are in a call centre, and they know the sort of question they will be asked, they can achieve human-like levels of [customer] service. And it is probably important, for the sake of transparency, that it is made clear to the caller that he or she is
not talking to a human."
Smith pointed out that chatbots analyse statistics to determine what they should probably say to you, due to which errors may happen.
"For chatbots that are expected to have more of a conversation with you, they can seem convincing to start, but they are doing statistics to work out what they likely should be saying to you next, and errors can keep multiplying. And ultimately if the systems get very good, say in 10 years [time], it is difficult to measure what is a humanlike performance. I mean, pet parrots appear to be talking to you! And I'm not sure that it is meaningful to ever say that a chatbot is sentient. After all, you can turn it off and on again, it is not a living thing," he added.
Prof Sandra Wachter, a senior research fellow in AI at Oxford University, stated that chatbots are presently "still far away from appearing lifelike, or humanlike".
"But as we move forward, we also need to think about ethical responsibilities. At first glance, chatbots might give the impression that we are chatting with actual humans. And we have an ethical responsibility to avoid this confusion because it can lead to potential harm. In the 'best' case, it merely leads to frustration when chatting with the bot - due to their limited functionality. In the worst case, we might trust them and share information that we otherwise would not," she added.
Meanwhile, IBM's global chief AI officer Seth Dobrin, emphasised the benefits of chatbots.
He specifically mentions how they were used more frequently to communicate important health messages during the COVID-19 pandemic.
He said, "Take the National Health Service Wales for example. In 2020, they launched a virtual agent, Ceri, to answer common questions from citizens in a conversational tone, on topics ranging from isolating safely and effectively, protecting yourself and family members, managing symptoms like fatigue, advice on how to deal with anxiety and uncertainty, and more."
Despite all the positive factors, some people still hate chatbots and prefer interacting with humans. Psychologist, Stuart Duff of UK practice, Pearn Kandola, says he comprehends this view.
Stuart said, "Many people dislike chatbots for a number of reasons, but especially when they try too hard to be human. Transparency, empathy and the ability to pick up on subtle tones in our communication are all important ingredients in building trust with other people. These are the reason why we can quickly 'click' with someone. But it is also why we put up our guard, if people don't understand our perspective or empathise with us."
Though chatbots have advanced over the years, according to him, "they are
For chatbots that are expected to have more of a conversation with you, they can seem convincing to start, but they are doing statistics to work out what they likely should be saying to you next, and errors can keep multiplying
still basic programmed communicators, prone to mistake essential words, tone, and humour in what we are saying."
The best chatbots of 2022 Forbes had recently come up with the list of 'Best Chatbots of 2022'. Here is the list.
HubSpot Chatbot Builder: People can get started with HubSpot Chatbot Builder for free as part of the Sales Hub. It's a superb solution for companies looking to automate processes like lead qualification and scheduling meetings. There is no need for coding knowledge to use the chatbot creator. One may design chatbot windows that complement the design of the website or product using the HubSpot Chatbot Builder. Create data that is directly collected from the customer relationship management to create natural chatbot sequences and even tailor the messages (CRM).
Intercom: Resolution Bot, the most recent version of Intercom's chatbot, has configurable pricing, with the exception of very small organisations. If your company falls under that category,
you'll be required to pay at least USD 74 monthly when billed annually. One will benefit from integrations, dynamic audience targeting, unique email templates, and logo customization. Product tours, WhatsApp, and surveys are add-ons. Its larger business solutions come with support, engagement, and conversion features.
Drift: Drift is famously known as a sales artificial intelligence (AI) bot. It was developed to assist businesses in scheduling meetings and qualifying leads. A customer success manager, strategy reviews, onboarding, and chat assistance are included with each plan. Bring in additional team members to covertly assist with a transaction utilising Deal Room with Drift. Additionally, it also helps in the training of new sales agents. It integrates more than 500 third-party products via Zapier and has more than 50 native integrations.
Salesforce Einstein: Any company that uses Salesforce, will have to check out Salesforce Einstein. It’s a chatbot that’s
developed to help you get the best out of Salesforce. Without ever leaving the comfort of the CRM, the bot can use it to find out information on leads and customers. Although it can be utilised for sales and marketing duties, Einstein works best for customer service. Businesses can even build their own bots using the Einstein Bot Framework.
WP-Chatbot: For anyone who works on the WordPress site, WP-Chatbot is the one that has to be looked into. It is a chatbot that enables you to interact with website visitors via Facebook Messenger. Without having to learn how to code, one can use it to develop automatic or manual chatbots because it is plug-and-play. With WP-Chatbot, users' Facebook inboxes retain conversation history, eliminating the need for a separate CRM. The team members can also view conversations and communicate directly on Facebook by using the company page.
LivePerson: Although LivePerson is most well-known for its live chat features, it can do so much more. It is an omnichannel messaging platform that aids companies in connecting with customers across various media. LivePerson stands out because it emphasises self-learning and Natural Language Understanding (NLU). It also provides features like engagement insights that assist organisations in determining how to interact with customers more efficiently.
Searching for unmet needs involves two main approaches: improving your vision of mainstream users and challenging your vision by looking at unconventional users
Entrepreneurship's basic principle is innovation, which is all about discovering and fulfilling people's unmet needs. The customers want services and products that can resolve their issues more effectively, swiftly, or cheaply than existing options.
However, even the ones who are known for scanning abilities, such as inventors and organisations, frequently struggle to sense and appropriately interpret those demands.
For example, let's consider Amazon. It turned a blind eye to the demands of its merchants, in its effort to be "customer-obsessed". The merchants were pressured on prices, pushed to compete against other sellers and their own knockoffs, had limited control over how their virtual stores looked, and had limited payment choices available to them.
Shopify intervened with a suite of user-friendly, cost-effective tools that enabled retailers to create their own online stores and maintain control over the client relationship. By addressing demands that Amazon had overlooked, it achieved USD 4.6 billion in net sales and a market worth of USD 171 billion in 2021. Amazon seemed to accept its mistake, by acquiring Selz, an Australian start-
up that created tools to aid companies in opening online storefronts.
Teachers, researchers, and consultants would have examined dozens of entrepreneurs, innovators, and organizations to learn how they went about identifying unfulfilled needs.
In order to increase the chances of accurately identifying customers’ concerns and aspirations, one must diversify how and where to look for.
This article presents a four-part framework that can assist you in accurately identifying customers’ concerns. We will take you through how each of its elements has been used by successful entrepreneurs and how digital technologies could replace more traditional search methods.
Searching for unmet needs involves two main approaches: improving your vision of mainstream users and challenging your vision by looking at unconventional users.
There are two basic ways to search for unmet needs: by broadening your perception of typical users and by narrowing your perception by examining unconventional users.
You can adopt a focused approach within each or a broader approach. You can use the "microscope strategy" to focus on certain mainstream users and their typical experiences or drawback to look for trends in their collective activity (the panorama strategy). Similar to the telescope method, you can look closely at users who are not part of your core
Shopify intervened with a suite of user-friendly, cost-effective tools that enabled retailers to create their own online stores
or try to get a bigger picture of the patterns that they display together (the kaleidoscope strategy).
One can easily identify demands that aren't brought to light by focus groups, interviews, or surveys by focusing on the real-world experiences of mainstream consumers. Many independent innovators start out in this manner. Frequently, a personal experience makes individuals aware of an unresolved problem that he or she is bound to confront.
Let us take the example of teenager Javier Larragoiti, who noticed that his diabetic father was constantly cheating on his diet because he despised the taste of sugar substitutes.
Javier, being a graduate student in biochemical engineering, developed a cost-effective means of producing xylitol, which has a similar taste to sugar but does not have the same impact on bloodsugar levels.
This has been used in many products including chewing gums over a long period, but due to the original production process, it was way too expensive to be used for everyday purposes as a standalone sweetener.
Javier realised that with the use of agricultural waste from Mexico’s cornfields it could be made
for a cheaper price. At the same time, it also has the advantage of lessening harmful emissions that comes from the burning of waste.
Some firms have drawn on concepts such as humancentered design and user experience to gather insights from the field. Others have turned to anthropologists, be it in-house experts or external consultants. The best example is Lego, whose first-hand observations of children’s play famously helped lift the company out of bankruptcy to become the world’s biggest toy maker when it comes to sales.
Close observation can be immensely valuable in the tech industry. Intel’s in-house anthropologists have spent days on end visiting gamers at home to better understand their needs, frustrations, passions, and wants, all to support the development of chips that can support those requirements and wants.
During an interaction with the Atlantic, Intel anthropologist Ken Anderson said, “Technology companies as a whole are in danger of being more disconnected from their customers than other companies are."
He pointed out that just because engineers fall in love with tech for their own benefit they think that users will too. But that's not the case.
It’s no surprise that Microsoft is considered to be the second-largest employer of anthropologists in the
world, after the US government.
Organizations may now collect data inconspicuously and in realtime to a much higher extent than ever before thanks to the widespread use of smartphones, IoT sensors, wearable technology, and smart home appliances.
In contrast to surveys and other traditional evaluation mechanisms, digital technologies may measure actual behavioural changes in realtime, avoiding self-reporting and retrospective biases. Health-related fields—and not just for people— can benefit significantly from the improved accuracy and depth of the data obtained.
In 2016 Mars Petcare, a division of the confectionary company, acquired a start-up that manufactures a smart collar Whistle Labs. The main function of this device is to help owners track the activity and health of their pets. It also helps them to track down the pets if they get lost.
The sales of the collars aren't the actual revenue for Mars, but the real value is that the app collects anonymized data. This not only helps Mars to get in direct contact with the owners of the pet but also gives a channel for recognising their unfulfilled needs.
By analysing the data, new details about the breed, age, and size differences in the exercise needs of dogs are revealed. As a result, it's driving innovations in premiumquality pet food. It also gives insights into the behavior of the pet, like increased scratching or licking and disrupted sleep, which might be a sign of illness.
The panorama strategy
In addition to focusing on specific mainstream consumers, aggregated data, such as errors, complaints, and accidents that amplify weak signals, can be used to determine the unmet demands of these users.
In 1989 Keith Alexander, a mechanical engineering professor in New Zealand, wanted to purchase a trampoline for his daughter. But his wife shot down the idea as she felt trampolines were unsafe. He wants to convince her but later realised that his better half was indeed right. The injuries sustained from trampolines were on the rise, Research showed.
Alexander did his research and discovered that the majority of the instances labelled as random accidents were actually caused by two aspects of the product: the metal springs and frame and the lack of a fall-prevention cage. In response, he created a springless, mesh-enclosed backyard trampoline, transforming a small niche market into a dynamic global one.
It is much easier to observe the behaviour of large numbers of individuals thanks to digital tools. Data can be gathered from numerous sources and examined for trends.
People with long-term illnesses like diabetes and heart disease, for instance, can receive digital health programmes from smartphones, and the devices' sensors can feed databases that provide general rates of adherence.
One might risk missing out-ofthe-box changes if you continue to
connect with and observe the same people, in the same atmosphere, and with the same tools. One might need to research extreme users, nonusers, or fringe users in order to challenge your preconceived notions. Demands from extreme cases are frequently dismissed as noise. But by focusing on users at the edge, you could find problems that affect the majority as well.
Live music events organizer Chris Sheldrick pointed out that musicians and their teams faced a unique problem. Concerts are frequently staged in secluded openfield places without a fixed address. Sixteen-digit GPS coordinates proved insufficient as well, but not because they were inaccurate; rather, it was because they were vulnerable to human errors and were mistyped, misheard, or misread.
Sheldrick recognised the need for a simpler manner to discuss location rather than brushing off the problem as an unavoidable
Image: what3words.comrisk of the business. He created an app that can recognise every three-meter square on the earth using three-word combinations. Organizations like Domino's Pizza, Airbnb, Lonely Planet, and UK emergency and car-breakdown services have all used What3words as a useful GPS substitute.
One can innovate by concentrating on people who have trouble with conventional offerings due to a personal difficulty; the answer you come up with for them might find wider reach. For those who have trouble seeing, audiobooks were developed, and the electric toothbrush was designed for those with weak motor abilities. After speaking with arthritis sufferers, home goods entrepreneur Sam Farber created the OXO Good Grips line of kitchen utensils. As with audiobooks and electric toothbrushes, it turns out that thick rubbery handles work better for everyone, and the devices swiftly transcended beyond their initial
niche to become commonplace goods used by millions of people.
People who are outliers, severe users, challenging users, or misusers have traditionally proven difficult to approach. Today, however, specialist groups frequently come together on social media platforms like Reddit, Facebook, Quora, and LinkedIn, making it much simpler to observe, interact with, and learn from them.
One might examine distant players collectively to question one's existing viewpoint and look for patterns that indicate unmet demands. Consider this to be similar to noticing patterns in a kaleidoscope. The challenge is to go beyond the typical suspects, such as suppliers, distributors, and competitors, especially for entrepreneurs working within an established organization.
The strategic emphasis and mindset of one's organization may
sometimes prevent one from seeing some constituencies. Consider Volvo, it built its reputation on making safer cars for many years and introduced numerous innovations that later became industry norms. But a decade ago, it began to pay attention to a completely different group of players: cyclists.
Massive amounts of data may be quickly sorted through and patterns found using social listening technologies, unstructured datascraping algorithms, and semantic AI. User-generated material, or UGC, usually captures insights at the "moment of experience," as opposed to focus groups and surveys, which shed light on consumers' emotional states in addition to certain malfunctions, challenges, or missing features in the product or service at hand.
One should use each of the techniques that have been outlined in order to maximize your capacity to identify unmet requirements. Although there is no predetermined place to start, most businesses find that expanding their understanding of mainstream users (using the microscope and panorama approaches) is simpler and more natural than expanding their understanding of the world (using the telescope and kaleidoscope approaches), as the latter requires calculated effort to look beyond established customers and markets.
editor@ifinancemag.com
AThailand based Thai Life Insurance Public Company Limited (TLI) is focusing on the importance of building strength and sustainability for themselves and Thai society. It is the first life insurance company that established a CSR Strategic master plan since 2008 in collaboration with Thaipat Institute, to be used to drive CSR operations for over 10 years.
Until 2019, Thai Life Insurance is also the first life insurance company to establish a Sustainable Development Master Plan to lead the organization's operations in response to changing factors and circumstances as well as ensuring that the various departments have a framework for sustainable development that is strategically linked by focusing on social responsibility in the business process (CSR-In Process) and the concept of Creating Shared Value (CSV), which leads to sustainable development for both the organization and society.
The situation has changed greatly after the COVID-19 pandemic which has affected the lifestyle of Thai people. Thai Life Insurance has adjusted its business processes to be ready for the change (Resilience) and announced its vision. “To be a Sustainability Life Insurance company” and set a business purpose in accordance with the vision "Aim to be all the answer of life insurance, health insurance and personal financial planning" or Life Solutions Provider, including determining the Brand Purpose to be a brand that is gain loved, trust and is a brand that inspires people in society.
At the same time, Thai Life Insurance has reviewed and formulated a three-year Sustainability Development Master Plan (Years 2022-2024) to be in line with business operations in the New Normal era and in accordance with the Company's future business directions, consisting of: The three-P strategy as following:
Thai Life Insurance is the first life insurance company to establish a Sustainable Development Master PlanUpholding promises to all stakeholders (Stakeholders), particularly consumers. with management adhering to good corporate governance and managing employees in a professional and ethical manner.
It is a customer-centric strategy through product development and responsible service. and can meet the needs of customers individually (Personalize) and focuses on managing risks that may occur both directly and indirectly. Customer sustainability includes the responsible management of customer data and information technology systems.
Creating a flourishing boom. Focusing on economic growth while contributing to the creation
of society and the environment. both community and social management in a sustainable manner, as well as environmental management.
To ensure sustainability performance is in line with the current situation, the company has defined sustainability targets in accordance with the ESG principles, including Environment. focuses on risk management and the impacts of climate change. to ensure continuity of business operations does not have an impact on the stakeholders, whether it is the establishment of a risk management committee, developing business continuity and disaster management plans including environmental management through the initiation of various projects that reduce the environmental impact of the company's business operations, such as replacing the digital system to reduce the use of resources, energy consumption or waste.
Social, concerned with human resource management Thai Life Insurance conducts
Committed to developing employees to be both smart and good people who can stand alongside customers and society. Manage people with regard for human rights, equality, safety, and fair treatment in line with the Company's regulations and laws, and in accordance with the corporate values and culture that believe that cooperation and dedication are the keys to mutual success.
operations in accordance with humanist values. Personnel is considered an asset and the most essential capital. Committed to developing employees to be both smart and good people who can stand alongside customers and society. Manage people with regard for human rights, equality, safety, and fair treatment in line with the Company's regulations and laws, and in accordance with the corporate values and culture that believe that cooperation and dedication are the keys to mutual success.
Thai Life Insurance focuses on Upskill and Reskill, including adjusting the Mindset of personnel to have the knowledge, Understanding Data (Data Literacy), Understanding Digital (Digital Mindset) Agility Mindset by elevating agents to be Life Solutions Agents ready to take care of customers in every Life Stage, every Life Event and every Lifestyle.
In addition, Thai Life Insurance also attaches great importance to customer care. through the products and services development that meet all needs and create opportunities for Thai people to have easier access to life insurance and more convenient by laying out guidelines to drive the organization with data in the form of a Data Driven Company. come to support the work in order to
create innovations that can meet the needs of customers (Innovation for Customer) and create Innovation for Organization.
Not only that, Thai Life Insurance also focuses on community and social management for sustainability through upgrading the quality of life and enhancing insurance knowledge, for example, initiating the Thai Life Insurance- Opportunity for Better Life, which is aiming to promote all-round potential for community enterprises across the country.
Thai Life Insurance operates its business with good corporate governance, with systematic monitoring of its performance and instilling in personnel with a Code of Conduct such as anticorruption, compliance with laws on social and economic matters, etc., while also realizing the Market Conduct, whether it is responsible management of customer data to ensure that the company's products and services presentation is complete, transparent, and has strong personal data security of customers.
As a financial institution, Thai Life Insurance therefore places a great importance on good governance. Specifically, the treatment of
customers with transparency and fairness, as well as maintaining information security, followed by social. Because life insurance is a business that involves people and communities. But we do not forget to take care of the environment as well.
In addition, Thai Life Insurance is also operating a sustainable investment policy in the form of ESG Investing, which is an investment in equity securities that consider three-R factors, i.e. risk, return, and the impact that companies have on society or the environment (Real Impact) by allocating funds for investments in listed companies with outstanding performance in environment, society and good governance.
The business’s operation both in terms of initiating and improving will integrate with the governance, social and environmental factors which play an important role in creating value for both the company and the stakeholders, which is
an important role in driving the company to strong and sustainable growth consists of six values. These are as follows:
1. Creating value for customers, is a life insurance company that customers love.
2. Creating value for people in the organization, is an organization that cares about the employees.
3. Creates value for partners, is a life insurance company that partners choose.
4. Creating value for shareholders, is an organization that provides a sustainable return on investment.
5. Creating value for society, is a responsible organization and to improve the quality of life.
6. Create value for regulators, is an organization that operates business in a strict manner. to lead to sustainable development together.
THAI LIFE INSURANCE'S SUSTAINABLE DEVELOPMENT MASTER PLAN COVERS 3 MAIN ARIEA: PROMISE / PROTECT / PROSPERFrom food to fuel, there has been an increase in rates of every essential product, something that has not been this high in the last 30 years
As there is a steady rise in the prices of various commodities, households across the UK are worried about how to deal with the rapid surge, claims a BBC survey.
From food to fuel, there has been an increase in rates of every essential product, something that has not been this high in the last 30 years. As a result of which people are responding to the price rise by cutting back.
More than half the people who took part in the survey claimed that they had skipped meals on multiple occasions in the past six months to save money
BBC spoke to many people across the UK to determine how they are adapting to this situation. Most of the respondents claimed to have cut down on food, clothing and travel.
The most essential aspect of human life - food, is one of the top picks for many. In the UK, many have cut down on food as they feel that it has been a major reason for burning a hole in their pockets.
Paul and Amanda shared their concerns about having to spend on food and how restricting the purchase of food has become the need of the hour.
They claim that despite the fact that once in a while they do opt for takeaways and go out for meals, it's not a regular affair like how it was in the past.
"We're just more mindful now, of expenditure," Amanda said.
They have also restricted themselves from purchasing branded products and are looking out for good deals and own-brand items.
Paul said, "We can't just go in there and buy what we like now, we have to think, Well, hold on a minute."
"We have to look at: What do we really want? What do we really need? Do we really need that luxury? Do we really need those sweets?"
Paul, who has been shopping around and buying products in bulk, claims that he has a reason for doing so.
"Just to make sure that if we buy this now, that will last a month or two," Paul said.
And it has not only been just Paul and Amanda, but about two-thirds of people have been consuming less food than before, while many have cut down on their takeaway meals.
More than half the people who took part in the survey claimed that they had skipped meals on multiple occasions in the past six months to save money.
Meanwhile, grocery analysts have predicted that food prices will rise this summer due to soaring costs.
Institute of Grocery Distribution (IGD) said that the prices are expected to increase by 15% as households usually spend money on staple food
like bread, meat, dairy, fruits and vegetables.
IGD also warned that the more vulnerable people will skip meals.
Prices would rise faster for longer than the Bank of England estimates, it predicted.
The IGD, which provides analysis to major grocers, said due to the Ukraine war the United Kingdom was facing the highest cost of living pressures since the 1970s.
Both Ukraine and Russia contribute to nearly a third of global wheat exports. Russia's invasion of Ukraine has resulted in increasing grain prices.
The cost of products such as bread, which is derived from grains, and chicken, which is fed on grains is expected to increase, according to IGD.
As chickens hardly take a few weeks for their growth, the price rise will be felt by the consumers sooner.
The driving fuel costs also will push the food prices higher. In addition, the price of fertilizers has nearly tripled since last year.
As a result of the invasion, the roads, ports, and warehouses in Ukraine have been heavily damaged in the war. Due to this, the volume of exports will be reduced for years to come, IGD said, piling up pressure on supplies of wheat and sunflower oil.
At least two-thirds of the people on the Seasonal
Agricultural Workers scheme last year were from Ukraine, but this year, Ukrainian men have been told to stay and fight against Russia.
The new workers need training and as a result of which those costs will feed into price rises, IGD said.
Since the UK gets around 40% of its food from other countries, it is well exposed to global food price rises.
Adding more worries, since Brexit, European Union producers are less likely to prioritize their customers in UK.
IGD stated that higher inflation could last longer than expected if there are more bans on food export or trade disruption because of Brexit border arrangements in 2023.
After food, the next thing most people spend their money is on clothing.
Thanks to the recent price rise in her food, electricity, and gas bills, Rebecca says that her family's shopping habits need to take a cut.
"We know the further rise in gas and electricity is coming in October, so we're just trying to get into good habits now," said Rebecca.
Despite Rebecca never being a "big spender" on her fashion needs, her daughter Jess is exactly the opposite.
"We have to rein back the amount of money that we're spending on clothes. We have to make sure we're making the most of what we've got, as opposed to going out and buying new," she said.
Much to Rebecca's relief, her daughter's school will be providing free school uniforms.
BBC cost of the living survey suggests that in the last six months, three-quarters of people have cut down on their clothing shopping expenses and nearly half of them have shelled out less money for their children's clothing.
Georgia feels that she can save money by spending a day out at Birmingham's Cannon Hill Park rather than shelling out extra bucks by taking her daughter HarperFaye to a visitor attraction.
"I haven't got the money to go to Sea Life Centres and stuff. That's like, GBP 25 a ticket," Georgia said.
As far as travel goes, she claimed that she is not taking her car out as much as did in the past.
"The diesel is absolutely crippling me. I can't go out as much as I used to, not a chance. I can't afford it. I need to make sure I can get to work and back, and that's my priority at the moment," she added.
Echoing similar views, Lisa, a disabled power chair user who lives near Ashford in Kent, also claimed that she's cutting back on her car use due to the rise in fuel rates.
Lisa said, "I am having to choose whether I can afford to go out. I have a wheelchair-accessible vehicle, but obviously, fuel is really expensive, so I'm having to make choices
Source: Rateinflation.com
on how often I can afford to go shopping - just to get to the shops, let alone affording the price rises once you get there as well."
The BBC survey revealed that nearly two-thirds of people have
restricted their travel and trips.
With all the three aspects coming into play one could say that it's going to be a rough ride ahead for everyone.
UK interest rates increased to 2% by the Bank of England. Due to the pace of soaring prices, the Bank of England has further increased the interest rates. The interest rates, which are the fifth consecutive rise, have increased from 1% to 2%, which has pushed them to the highest level in 13 years.
This has come at a time when the cost of living is increasing with every passing day. Inflation is currently at a 40-year high of 9%, with the Bank warning that it could surpass 11% later this year.
The average annual inflation rate in the first quarter of this year was at
Inflation rates for United Kingdomleast twice what it was in the first quarter of 2020, as COVID-19 was beginning its deadly spread. In 16 countries, first-quarter inflation was more than four times the level of two years prior. (For this analysis, Pwe Research used data from the Organization for Economic Cooperation and Development, a group of mostly highly developed, democratic countries. The data covers 37 of the 38 OECD member nations, plus seven other economically significant countries.)
Among the countries studied, Turkey had by far the highest inflation rate in the first quarter of 2022: an eye-opening 55%. Turkey has experienced high inflation for years, but it shot up in late 2021 as the government pursued unorthodox economic policies, such as cutting interest rates rather than raising them.
The country where inflation
has grown fastest over the past two years is Israel. The annual inflation rate in Israel had been below 2% (and not infrequently negative) every quarter from the start of 2012 through mid-2021; in the first quarter of 2020, the rate was 0.13%. But after a relatively mild recession, Israel’s consumer price index began rising quickly: It averaged 3% in the first quarter of this year, more than 25 times the inflation rate in the same period in 2020.
Besides Israel, other countries with very large increases in inflation between 2020 and 2022 include Italy, which saw a nearly twentyfold increase in the first quarter of 2022 compared with two years earlier (from 0.29% to 5.67%); Switzerland, which went from 0.13% in the first quarter of 2020 to 2.06% in the same period of this year; and Greece, a country that knows something about economic turbulence. Following the Greek economy’s near-meltdown in the mid-2010s, the country experienced several years of low inflation – including more than one bout of deflation, the last starting during the first spring and summer of the pandemic. Since then, however, prices have rocketed upward: The annual inflation rate in Greece reached 8% in this year’s first quarter – nearly 21 times what it was two years earlier (0.36%).
Annual US inflation in the first quarter of this year averaged just below 8% – the 13th-highest rate among the 44 countries examined. The first-quarter inflation rate in the US was almost four times its level in 2020’s first quarter.
Regardless of the absolute level
of inflation in each country, most show variations on the same basic pattern: relatively low levels before the COVID-19 pandemic struck in the first quarter of 2020; flat or falling rates for the rest of that year and into 2021, as many governments sharply curtailed most economic activity; and rising rates starting in mid- to late 2021, as the world struggled to get back to something approaching normal.
But there are exceptions to that general dip-and-surge pattern. In Russia, for instance, inflation rates rose steadily throughout the pandemic period before surging in the wake of its invasion of Ukraine.
In Indonesia, inflation fell early in the pandemic and has remained at low levels. Japan has continued its years-long struggle with inflation rates that are too low. And in Saudi Arabia, the pattern was reversed: The inflation rate surged during the pandemic but then fell sharply in late 2021; it’s risen a bit since, but still is just 2%.
Inflation doesn’t appear to be done with the developed world just yet. An interim report from the OECD found that April’s inflation rate ran ahead of March’s figure in 32 of the group’s 38 member countries.
editor@ifinancemag.comTheFederal Reserve of the United States has announced its largest rate hike in nearly three decades as it intensifies its fight to bring skyrocketing consumer prices under control. It increased the Federal Reserve's borrowing rate by three-quarters of a percentage point. The ramifications will be felt in practically every sector of the economy, both domestically and internationally. Here's how global inflation will affect you.
The immediate impact will be felt in the United States, where people will have to pay more for mortgages, credit cards, school loans, and other debt. The 30-year fixed-rate mortgage's average rate has already risen to about 6%, the highest level since 2008. Monthly payments for someone buying a median-priced home in the United States have increased by around $600 since the beginning of the year.
Delores Robinson, a retired educator from Ohio who recently purchased a new apartment, says, "I wish I had started looking earlier."
Ms Robinson says she was relieved to lock in a cheap rate, despite the fact that it was more than when she began her search. However, rising rates will put purchases out of reach for some buyers.
According to the National Asso ciation of Realtors, home sales in the United States are expected to drop 9% in 2022. This decrease may be distress ing for those who have been unable to purchase, but it is also predicted to slow price growth to 5% in 2022, after dou ble-digit increases in recent years. If this occurs, it will aid in the reduction of in flation, indicating that the Fed's actions are having an effect.
When interest rates rise, investors tend to reshuffle their portfolios dramatically. Those movements have been increasing ly prominent as general economic con cerns have grown. Those with money in vested in the stock market, such as those with 401k retirement plans (a feature of a qualified profit-sharing plan that al lows employees to contribute a portion of their wages to individual accounts), have seen their investments plummet in value. The S&P 500 has lost more than 20% of its value since January 1, signal ling a bear market, while the Nasdaq has lost over a third of its value.
Risky assets, like cryptocurrencies, have seen their prices fall, as the stock ex changes outside of the United States have also been hit. Investment firms are in creasingly backing away from more risky enterprises, seeking profitability from companies like Uber, which has been losing money for years. That implies in dividuals will have to pay more for things like cab trips and delivery, or such busi nesses would close down, as happened with a number of start-ups in New York that promised 15-minute groceries.
"In times of uncertainty, investors look for safety," Uber boss Dara Khos rowshahi wrote in a letter to staff last month about the steps the firm would
take to try to boost its bottom line, in cluding slowing hiring. "It's clear that the market is experiencing a seismic shift and we need to react accordingly", he said.
As demand declines, the robust post-pandemic labour market, which saw employers compete aggressively for workers, allowing new recruits to demand higher pay and other perks and encouraging many to move professions for better, is coming to an end.
Property giants Redfin and Compass announced plans to lay off hundreds of employees, citing the downturn and ris ing rates as reasons. A spate of major cor porations, including Amazon, Walmart, Tesla, and Spotify, has announced plans to reduce or eliminate employment.
Jerome Powell, the chairman of the US central bank, expressed optimism that the economy will escape wide spread job losses, despite the fact that the US labour market remains tight, with nearly double the number of open ings for job seekers. However, the econ omy was already suffering difficulties, as inflation raises business costs and re duces people's purchasing power.
In the first three months of the year, growth had already slowed. While this was initially attributed to a data anom aly in foreign trade, other indicators, such as retail sales, have begun to dete riorate. Analysts warn the bank risks causing a persistent downturn, as rising rates clash with a weaker economy, also known as a recession.
The US dollar has gained 10% this year as a result of the Fed's actions, which have prompted investors to migrate
money to America in search of higher yields, boosting demand for the cur rency. It's a silver lining for Americans considering holidays to destinations like the United Kingdom, where the pound fell below $1.20, its lowest level since the pandemic.
However, the rising value of the US dollar means that imports of goods such as energy and food, which are frequent ly traded in dollars, will be more expen sive. This adds to economic difficulties, particularly if a government has a large dollar-denominated debt.
Fiona Cincotta, a market analyst at City Index says, "Emerging markets tend to be the markets that really do stand to suffer the most."
The US is not alone hiking in a vacuum. Dozens of other countries have also an nounced rate rises in recent months, in cluding the Bank of England, and Swit zerland. Australia and Canada.
Inflation is a war that many people are battling. They are, nonetheless, in
fluenced by events in the world's great est economy. In nations where curren cies are pegged to the dollar, such as Kuwait and Saudi Arabia, the impact of US rate hikes is nearly immediate, with banks increasing in lockstep to stem a money drain to the US. The economic story in the United States will continue to be keenly monitored as those changes take effect.
Meanwhile, President Joe Biden says he's confident a US recession isn't inev itable, but inflation is soaring. Speaking to the Associated Press, Biden said the US economy wouldn't necessarily fall into recession, even as growth slows and inflation stays strong.
"First of all, it's not inevitable. Sec ondly, we're in a stronger position than any nation in the world to overcome this inflation", he said.
Inflation has been rampant in the United States, with an annual rate of 8.6% in May, the highest in 41 years. As
Western sanctions on Russian energy ex acerbate the general gap between global demand and supply, fuel costs are at the heart of the surge in consumer prices. However, the cost of basic commodities and shelter is also rising rapidly.
The Federal Reserve took a bold step, boosting the benchmark interest rate by 75 basis points to combat inflation. This was the greatest rate hike since 1994, and more is on the way, with Fed poli cymakers predicting that rates will need to rise to around 4% in 2023, the highest level since early 2008.
Despite the Fed's efforts and Bid en's optimism, a number of prominent economists and investors have warned of an imminent recession in the United States. Economists at Wells Fargo said the steep rate hikes will raise borrowing costs across the economy and are likely to tip the US into a "mild-recession," in mid-2023.
Morgan Stanley's chief strategist Mike Wilson, who correctly anticipated the last three stock market crashes, stat ed that the likelihood of a recession has
increased as a result of the introduction of higher rates.
Wilson, though, believes that even if the Fed achieves a soft landing, the stock market will remain chaotic. He expects the S&P 500 to drop another 10% from its current level to as low as 3,400 points, with the Nasdaq 100 following suit.
The stock market where millions of ordinary people invest is on track for its worst week of losses since March 2020 as inflation and recession fears mount. Ear lier this week, it officially tipped into a bear market, having lost more than 20% in value from a record high in January.
Richard Hunter, head of markets at trading platform Interactive Inves tor said for the moment, the mood is clear. Investors globally are questioning whether any global growth is possible amid the current monetary shackles and are giving risk assets a wide berth at the slightest excuse.
According to the American Auto mobile Association, consumer opinion toward the US economy is gloomy, as high petrol, food, and home prices affect Americans' wallets. As a result of Rus sia's sanctions, gas prices have surged to new highs, with the average national gas price now above $5 per gallon.
Consumer confidence has plummet ed to new lows. In June, the University of Michigan consumer confidence index fell to a new low of 50.2, as a failing econ omy, rising costs, and personal financial concerns hit home. For millions of Amer icans, the economic slowdown is a major concern. According to Google Trends, more people in the United States have searched for the term "recession" this year than at any point before 2004.
According to a financial analyst inflation rate of 9%, which is at a 40-year high, is putting pressure on Britain
Theresignation of British Prime Minister Boris Johnson increases the level of uncertainty facing the country's economy, which is already under pressure from double-digit inflation, possibility of a recession, and Brexit.
It might take a long time to find Johnson's replacement, till then the fifth-largest economy in the world would be at risk of further drift at a time when the pound is close to twoyear lows versus the dollar, and the Bank of England (BoE) is struggling to raise interest rates without hurting the economy.
There are many key questions hanging over like whether Britain's economic policy and Brexit were responsible for Johnson's resignation and what will happen to Britain's economy?
Graham K. Wilson, Professor Emeritus University of Wisconsin- Madison, Professor Emeritus Boston University, Political Science, USA told International Finance that during
the 2016 campaign that led to Brexit, Boris Johnson proclaimed his devotion to “Cakeism” (the wish to have or do two good things at the same time when this is impossible), he denied the old adage that you cannot have (keep) your cake and eat it and argued that it was possible both to have and to eat one’s cake.
Originally used as an implausible but popular argument that the UK could have the benefits of EU membership whilst leaving it, Cakeism came to define Jonson’s approach to governing. The UK could be committed to fiscal probity without constraining spending or raising taxes.
The government promised major spending projects such as HS2 (High Speed 2 railway line) and spending on “leveling up” (reducing the degree of inequality between regions), whilst also promising to cut taxes and reduce budget deficits. Affluent Conservatives in the
south east were promised tax cuts; the newly Conservative and formerly Labour constituencies in the north and midlands were promised better services and more government spending. The COVID crisis delayed confronting these contradictions.
According to Wilson, as in most developed democracies, the imperatives of containing the virus through lockdowns without devastating the economy resulted in large increases in government spending. As concern about COVID diminished, the consequences of the crisis measures on the budget became clear.
"Government expenditure as a percentage of GDP was higher than when Mrs Margaret Thatcher came to power in 1979", Wilson said.
Inflation carried more and more people into higher tax brackets and taxation was equivalent to the highest percentage of GDP since the Second World War. The British had acquired a very unsavory cake to eat and keep; high taxation, high taxes and high budget deficits. There was widespread agreement that key government services such as the National Health Service (NHS) were creaking under the strains of underfunding. To make matters worse, GDP is estimated to be about 5% lower than it would have been had the UK stayed in the EU.
"Because of Brexit and Johnson's policies, the UK had the lowest growth rate amongst advanced democracies. There was no prospect of the UK growing its way out of its problems", Wilson said.
According to Wilson, the fall of Boris Johnson was superficially related to these issues. Johnson’s conviction
for breaking rules on limiting social gatherings his government had created and a series of events during which he proved incapable of telling the truth were more directly related to his departure. However, Cakeism was another and deeper example of Johnson’s dishonesty, concealing from the public the hard choices that must be made.
"As the contest to replace him has unfolded, the contradictions of Cakeism became apparent. Candidates were differentiated on the basis of whether they were more concerned about cutting expenditure, reducing government deficits, maintaining “leveling up” or cutting taxes. Avoiding difficult choices had been the core of cakeism. It had been the basis of Johnson’s triumph on the 2019 General Election, adding formerly Labour constituencies to the Conservatives’ base in southern England. It was apparent, however, that cakeism was no longer possible", Wilson said.
"Moving on from cakeism will be difficult. The British have long and plausibly been accused of wanting Scandinavian levels of government services and American levels of taxation. Boris Johnson told voters that living this dream was possible. The reality is that it is not", Wilson added.
Meanwhile, Emad Mohammad a Financial analyst at Hamilton, Ontario told International Finance that after Johnson's resignation the inflation will increase more than other countries. He said that an inflation rate of 9%, which is at a 40-year high, is putting pressure on Britain. The BoE predicts that it will reach 11% later this year.
In April, the IMF predicted that the UK would experience slower growth
and more persistent inflation than any other large economy in 2023.
"The recent decline in the value of the pound has intensified inflationary pressures, the idea of higher government spending or tax cuts to boost the prospects of the Conservative Party helped to boost the pound a little. But whoever succeeds Johnson will only be able to mitigate the effects of the spike in food and energy prices to a limited extent", Mohammad said.
According to Mohammad, whoever replaces Johnson will have to make important fiscal and spending choices that may lessen the likelihood of a recession but potentially may raise the risk of inflation.
Mohammad said that Rishi Sunak had disagreed over policy with Johnson, who had long pushed for more tax cuts. Sunak's short-term priority before he resigned was to ease the burden of Britain's debt, which jumped above two trillion pounds during the coronavirus pandemic.
Priti Patel and Liz Truss, who
"Moving on from cakeism will be difficult. The British have long and plausibly been accused of wanting Scandinavian levels of government services and American levels of taxation. Boris Johnson told voters that living this dream was possible. The reality is that it is not"
- Graham K. Wilson
served as Johnson's interior and foreign ministries, are expected to argue for immediate tax cuts and more expenditure, while Sunak and the former health minister Sajid Javid are believed to be more fiscally conservative, according to analysts at US bank Citi. They will make decisions with significant long-term repercussions.
According to Britain's budget watchdog, if future administrations do not tighten fiscal policies, debt may more than quadruple to over 320% of GDP in 50 years.
According to a CNBC report, Modupe Adegbembo, G-7 economist at AXA Investment Management, said a key question is whether Johnson uses his 'caretaker' period as prime minister — should he be granted one — to push through short-term fiscal policies.
Adegbembo said, when a new Prime Minister is appointed, we see an increased likelihood of additional fiscal spending and/or tax cuts.
The potential to accelerate income tax cuts penciled in for 2024 may be floated by some candidates, although remains challenging in the light of public finance developments.
Her comments were echoed by strategists at UBS, who said a change in leadership makes further fiscal support more likely as a new prime minister will “want to prove themselves.”
“Any additional support for the UK economy would come at an opportune moment: The GDP growth estimate for March was –0.1% compared to February, and for April it was –0.3% versus March,” UBS CIO Mark Haefele’s team said.
“Another increase to the energy price cap means there is further pressure ahead, but while our base case is that the UK will narrowly escape recession, it is important to remember that the FTSE 100 generates just 25% of its revenues inside the UK", the team added.
The central bank of the United Kingdom
has increased interest rates five times since December, the steepest run of increases in 25 years, and it has indicated it would continue to do so at its next meeting in August, possibly by as much as half a percentage point.
However, recent reductions in investor betting on that kind of significant shift by the BoE are due to the prospect of a worldwide economic slowdown. Another reason to exercise caution could be the ambiguity around the course of Britain's fiscal policy.
While Johnson's departure marks the end of another chapter in one of the most turbulent periods in modern British political history, it is unclear whether his successor will be able to bring order to the situation.
Kallum Pickering, an analyst at Berenberg said Britain's economy would benefit if Johnson was replaced by "a more diligent and serious individual". But the Citi analysts said they were skeptical that the different factions within the Conservative Party would unify around a clear strategy.
"In the months ahead, we see a UK heading into a once-in-a-generation squeeze in living standards, absent a defined strategy, and facing deep governmental division. The risk of profound policy error is therefore significant," they said. "An early election should also not be discounted, though we still expect a contest only in 2024", they added.
Talal Al Ajmi is a young Kuwaiti entrepreneur, and his passion for financial markets and trading has seen him become a well-known figures in the field, both in Kuwait and the wider region. He graduated from the University of Philadelphia with a bachelor’s degree in information technology, however, he had always seen himself as an entrepreneur and businessman. He started his journey of success at an early stage while at university, where he managed a couple of small family businesses with his cousins and brothers. Speaking to International Finance, he shared about the journey of becoming a successful entrepreneur.
Take us through your journey to becoming a successful entrepreneur?
VI Markets started as an idea, actually a need that the market lacked back in 2010. When I first started VI Markets, the main idea behind it was to educate the people who were interested and to change the wrong perception about online trading and brokerage firms. Educating and spreading awareness to our clients and potential ones via workshops and seminars was the vital element the market wanted and needed. Eventually, VI Markets fulfilled this gap.
How did you lead your company to the pinnacle of success and how has your role evolved since you began?
Leading any company through its ups and downs is a huge responsibility and with that responsibility,
VI Markets provides investors in Kuwait a tailored online trading service, partnered with One Financial Markets
many things should tag along. One main trait of the leader is to think outside the box and be open to new challenges and respond to these challenges efficiently and effectively. That is achieved through listening to what people want and need. From my research, I discovered that most clients needed and wanted the technology behind copy trading and we had invested in technology to provide it to them at any cost.
What have been the biggest challenges you have had to overcome?
Initially, the biggest challenge faced was the capital. Investors were hesitant to fund because this field was marked as a high-risk one. This was due to a lack of awareness in the market.
The second biggest challenge for us was the COVID-19 pandemic that hit the world, but we managed to get the best out of it and succeeded.
We invested in technology at a time when many companies shut down and cut costs. And to be honest this was one of the golden years the company encountered.
What are the core values, vision, and philosophy you and your company focus on?
VI Market's mission is to reinvent the way trading is done. We have the vision to become one of the prominent names in online trading internationally by empowering people by educating them and introducing the latest technology in the world of online trading. At Vi Markets we all strive to work by these core values that go hand in hand with our vision and mission, these values include: Integrity, Honesty, Respect, Value-centricity, Accountability.
Over the last few years, we invested heavily in technology to reach out to all our clients at home and provide them with the same service. This was an opportunity we actually sized to the fullest. People were at home and had the time and the money to invest especially in the Gulf regions. We studied the behavior of the market and based on that we aggressively invested in technology and kept our services running online. Although the countries were through a shut-down we witnessed a huge jump in revenue and growth rates through working remotely and online.
VI Markets is a trading platform specializing in global brokering. Can
you provide us with an overview of your offering?
VI Markets offer a wide range of instruments on both Forex and CFDs. In relation to Forex, we offer all the majors as well as a multitude of exotic currency pairs such as USD/SGD, and USD/ZAR. We also offer Commodity, Index, Energy and Gold/ Silver future CFD. In addition, VI Markets offer Crypto Assets.
What are some of the expansion plans you have in your pipeline?
During the last few years, we have planned to target the MENA region and specialize geographically to serve them and the aim is to always go big and international. We at VI Markets tend to be one step ahead of the others, as we invest heavily to respond to the demands and needs of our clients. Having said that our set of products and offering increased and we now offer "Crypto Assets". Only a few companies in the region do so.
We also strive to obtain more trusted regulations in the future – as we are already regulated by the FCA in London.
What is your outlook on the trends and market size of Kuwait and the region’s trading and financial industry?
The Gulf region and Kuwait in specific have always been keen to invest in the financial industry since – Souq Al Manakah. Kuwait per se was one of the first countries to look into cryptocurrencies, Forex and Stocks. I believe that the demand is high in such markets. The Middle east and the gulf tend to show high demand when it comes to this field - brokerage and trading online due to the high liquidity and disposable income.
Despite the slowdown prevailing in the stock market, what has been your approach to scaling your business and what advice would you give to entrepreneurs in the current market?
We can always find opportunities in hard times – I mean if we go back to 2008, a lot of people knew how to get money out of the huge downturn that the markets faced. Having said that, during the pandemic many governments around the world pumped a lot of money hence the market had a lot of liquidity. Also, the fed banks eased the regulations on interest rates and so on. This was a great opportunity for people to go ahead and invest in booming industries like the tech industry.
This year, Property firm Knight Frank had raised its forecasts of house price growth to 8% from 5%, just falling short of the 10% notched up last year
Thehousing market in Britain has constantly been growing despite all economic indicators beginning to flash red. In addition to regional data for the second quarter, the Nationwide Building Society will also release its most recent house price index for June this week.
The Bank of England's latest mortgage lending figures should also provide more insight into the status of the real estate market in
the UK. Although there has been an increase in prices by 5% this year, Nationwide is yet to release a projection for annual house price growth due to the larger economy's instability.
When estate agents shut their doors and home builders put their tools away at the start of the COVID pandemic, only a few would have expected such booming
conditions. But, due to the stamp duty holiday, the demand remains high which Rishi Sunak promptly enacted to support the market after it reopened. Also, many employees began working from home as they desired more space and greener surroundings. Rising costs were unabated despite the stamp duty holiday's
ending last summer and the sudden rise of the highly contagious Omicron strain.
As there are only a few houses available, many newly listed houses are picked up within a week or two, contributing to the housing market frenzy.
Surprisingly, the job market has been robust, with mortgage rates at historically low levels and the unemployment rate stood at 3.8% in April, considered one the lowest since the 1970s.
Nationwide’s chief economist Robert Gardner stated that Nationwide had recorded a slowing in annual house price growth to 11.2% in May from 12.1% in April. But this was due to base effects, and the monthly gain was strong at 0.9% – the 10th successive monthly increase, he added.
With inflation in the UK hitting a new 40-year high of 9% in May and five recent rate increases from the Bank of England, the crucial question is how long the market can withstand the costof-living problem.
Gardner says there are only tentative signs that there is a slowdown in the market, although, like other experts, he expects it to cool in the coming months amid the economic chill.
The mortgage approvals in the UK decreased to 66,000 in April from 69,500 in March and the amount of mortgage debt that was net borrowed decreased to £4.1 billion from £6.4 billion; both figures were marginally below pre-pandemic levels.
But analysts point to the strong labour market, a continued shortage of properties, and mortgage rates which are still cheap by historical standards.
Anthony Codling, an independent housing analyst and founder of the property website Twindig, said, "I did not expect house prices to rise when
the UK government closed the housing market. I thought at best house prices would be flat. UK house prices have scaled new heights and many will be hoping it is not a case of what goes up must come down."
This year, Property firm Knight Frank had raised its forecasts of house price growth to 8% from 5%, just falling short of the 10% notched up last year.
Since more than 80% of existing mortgage holders are on fixed-rate deals, the effects of rate rises are expected to be minimal. About 45% of mortgage balances had variable rates in 2007, at the start of the global financial crisis, and that percentage increased to 65% in 2013. The usual mortgage payment amounts to 31% of gross income, which is slightly higher than the long-term average of 29% but still well below than the highs of 45% witnessed right before the financial crisis.
However, Gardner stated that a 10% down payment on a first-time-buyer
home is equivalent to 56% of the average yearly salary.
Meanwhile, more than homeowners, life appears to be much more difficult for renters.
According to the Centre for Economics and Business Research, in the year leading up to May, rents agreed upon for new contracts increased by 11%, with those in London increasing at the fastest rate of 16%.
Housing market disruptions didn't seem to be affected by COVID shocks.
UK annual house prices slow for the third month in a row: Halifax
Meanwhile, for the third consecutive month, the annual rate of house price growth in the UK slowed in May, and Halifax, a mortgage provider, predicted that this trend will continue as people battle with high inflation.
During an interaction with Reuters, Halifax Managing Director Russell Galley claimed that despite a tighter cost-of-living squeeze as inflation
ECONOMY FEATURE BRITAIN REAL ESTATE UK HOUSING MARKETreaches 10%, a lack of available housing remained the primary factor driving up house prices.
He said, "However, the housing market has begun to show signs of cooling. Mortgage activity has started to come down and, coupled with the inflationary pressures currently exerted on household budgets, it's likely activity will start to slow. So, there is perhaps one green shoot for prospective purchasers; with overall buying demand down compared to last year, we may be past the peak sellers' market."
The asking prices for homes placed up for sale between May 15 and June 11 were 0.3% higher than a month earlier and down from a 2.1% increase in May's figures, according to the real estate website Rightmove.
Asking prices have increased by 10% compared to a year ago, which is less than the 11% increase seen in May.
Rightmove Director Tim Bannister said, "The exceptional pace of the market
is easing a little, as demand gradually normalizes and price rises begin to slow, which is very much to be expected given the many record-breaking numbers over the past two years."
Britons expect further increase in house price Research Director of market research company Ipsos, Ben Marshall shared his views about the housing crisis in Britain.
He said, "It is a sign of the pessimism surrounding housing in Britain that people expect things to get worse in terms of the two features of the housing crisis they consider to be the most important –rising house prices and building enough affordable homes. It is not that they see Governments as unable to do anything about housing; there continues to be a strong sense of ‘do something’ and ongoing support for different policy responses. The extension of Right to Buy receives majority support but so too do rent controls and giving local government more powers to tackle second and empty homes."
Why has the inner London prop erty market been flat?
Rightmove reports that asking prices in Zone 1 in London decreased by 3% while being unchanged in Zone 2 in the year before the Brexit referendum. Real estate prices in London may have increased as a result of the uncertainty brought on by Brexit.
In an interview with 'This Is Money', Charles Eddlestone, co-founder of the home selling platform, said, "Expectations of runaway gains in these prime areas of London — once a market awash with foreign cash — have been shattered. Put simply, the number of buyers chasing the market has softened drastically. Many foreign investors shied
away from London in the aftermath of the Brexit vote. This had an impact in many areas of the capital but it was most noticeable in Zone 1."
Rob Dix, the founder of the real estate forum Property Hub, believes it is typical that London and the South East see the quickest growth at the beginning of an economic cycle before slowing down.
The average asking prices in Zones 1-3 of London rose by over 80% in the seven years preceding Brexit. Between June 2009 and June 2016, the average asking price in several London boroughs more than doubled.
According to the English Housing Survey 2019-2020, there were 827,000 first-time buyers in England, an increase of 100,000 from the prior year.
In the UK, first-time buyers are now, on average, 32 years old, down from 33 in 2018-2019.
First-time buyers put down an average of £42,433, a 13% decrease from the prior quarter. The percentage of first-time purchasers who use savings to cover their deposit has increased somewhat over the previous 12 months, while the percentage who accepts a gift or loan from friends or family has decreased. UK HOUSING MARKET
"I did not expect house prices to rise when the UK government closed the housing market. I thought at best house prices would be flat. UK house prices have scaled new heights and many will be hoping it is not a case of what goes up must come down" - Robert Gardner
Peoplecomplain about canceled vacation flights, delayed deliveries, low-quality products, distasteful food, and unresponsive customer service. Has life become worse for everyone lately?
There is a cost-of-living crisis in British households unseen in the 80s recession. But economists hint at a new phenomenon making a bad situa tion worse.
They call it skimpflation – a term coined in the US, now a familiar word in the UK. Alan Cole, a writer at Full Stack Economics and a senior economist at the US Congress, summarised skimpflation as "when consumers get less for their money."
In inflation, you pay more for the same goods, but in skimpflation, you pay more for something worse. Cole said that having to wait longer for products is a symptom of this phenomenon. He remarks that slow deliveries and the loss of timeliness are a downgrade.
The current crisis has familiarized the average citizen with inflation: The cost of living will touch the moon. Now there is talk about skimpflation and shrinkfla tion. Shrinkflation is when you get less for the same amount you pay. It's getting half a chocolate bar for the price of one.
Skimpflation is hard to identify, but you can spot it when you become aware. You might bump into someone filling the shelves at a supermarket because there are no night shifts. Maybe your fa vourite brand is missing because some products are removed from supermar ket inventories to save warehouse costs.
ECONOMY FEATURE INFLATION GLOBAL ECONOMY in major (May 2022) in major 2022)
New clothes that tear on the first wear, rescheduled holiday flights, or charge able inflight meals exemplify skimpfla tion. And when you seek a refund, you realize the only customer service you can get is from a bot on a website.
US radio producer NPR's, Planet Money podcast came up with the term in 2021. The podcast remarked that it is stealthy inflation where consumers pay the same or more for services that are subpar to what they used to be.
They used the example of Magic Kingdom, where Disneyland and Disney World visitors had to walk a mile to get to the amusement park as the tram service from the car parking broke down.
It is difficult for consumers and busi nesses as the pandemic-battered econ omy is teetering on the precipice of a recession. Unlike Disney, a megacorp ca pable of weathering an economic storm, many small enterprises might perish in a full-blown recession.
These businesses barely outlived the pandemic lockdowns, only to be crushed by weak demand and high energy and material costs. For an average company, there are only three options. The first option is to pass on the added expense to the consumer already struggling with
Source: Statista
the unmanageable cost of living expens es. The second option is to forego profits, but many organizations aren't making much in these difficult times. The third option is to cut corners and replace parts or services with a cheaper alternative. And skimpflation is born.
When queried about the concept, Da vid Blanchflower, a professor of econom ics at Dartmouth College and a former member of the Bank of England's mon etary policy council, said that he always believed it was the [high-street] mod el with socks. He added, "I recall from many years ago: the cost of socks stayed constant, but as costs increased, so did the sock's thickness. I'm not sure how significant it [skimpflation] is. What I'd like to know is to what extent does infla tion gauge things accurately?"
For most of his economic career, Cole argued that because it was so hard to include increases in product quality in the data, official statistics exaggerated the severity of inflation. He now believes that the official numbers understate the severity of inflation.
Skimpflation, according to him, is more common when it's difficult to make goods or when the global economy is suffering. "Typically, as the globe be comes wealthy, you'll notice that goods and services are becoming more up scale. However, the COVID-19 pandemic reduced our productivity and made us poorer in numerous areas, pushing us to make cuts.
He adds that it is more common in "seller's markets" like the one we are in now. In that atmosphere, there is greater financial flow across the economy and numerous eager consumers of limited goods and services. In an economy sim ilar to one from 2008 to 2011, buyers with cash had the upper hand in trans actions, and sellers or workers had little negotiating power. If you could afford to be a buyer, the world was a "buyer's market" from 2008 to 2011. Money was significantly less abundant at this time.
You should expect to receive less val ue for your money if money is moving around at a faster rate than production. Some businesses raise prices, while oth ers make slight product compromises.
Before the Ukrainian conflict, food prices were already rising as a result of high energy prices as well as other prob lems. According to Jason Bull of the West Yorkshire-based ingredients company Eurostar Commodities, businesses are looking for more affordable recipes to pay for this inflation. To offset the increased prices of supplies and freight, he says, "all companies are looking at ingredients and thinking: Can we use something cheap
er to perform the same job — a different flour, or a different starch."
Bull claims that while the quality and flavour may not vary if the recipe changes, the price may. Food producers want to make it so that people can afford to eat a balanced diet. However, there is a chance that consumers will consume less nutrient-dense food.
Jason's point of view is shared by Andrew Selley, the chief executive of Bidfood, a significant UK food distrib utor, who warned last month that rising food prices will force school caterers to make "tough decisions." Kids will be un healthy if caterers serve fewer servings or utilize less expensive components.
Increasing food costs are a major concern for the hospitality industry as well, forcing restaurants to use "menu engineering" (the phrase for employing less expensive components) to make the math work for each meal. According to Peter Backman, a consultant to the res taurant business, this occurs frequently but is more pertinent now because of the "crazy" pricing increases for less dura ble textiles.
According to Jo Causon, chief execu tive of the ICS, "the number of custom ers facing an issue with an organization is at its highest ever level." When things go wrong, they can go very wrong, lead ing to aggravation and distress, espe cially when big life events are involved or for consumers who are fragile or who are less confident about participating through digital channels.
Ten thousand consumers were sur veyed, revealing that 16% of respondents had encountered an issue with a brand's service in the previous six months. There were fewer complaints about the employees, but many more regarding the quality of the products or the lack of inventory.
Source: Statista
Although skimpflation is a novel concept, Cole contends that economists should take it seriously. We are in a "you get less for your money" regime, where sellers have the power and companies can lower product quality for the same price.
It's very obvious that people are dis satisfied with the way services are being provided in the UK.
A&E wait times, ambulance re sponse times, and staffing levels in the NHS have all come under close scrutiny. However, other issues like the rising cost of train tickets and airport service have also come to light.
According to the Institute of Custom er Service's Customer Satisfaction Index, complaints have reached new heights.
Over the previous six months, over 16% of customers had complained about a brand's customer service; additional complaints related to product quality or
stock shortages also came in.
The main issues are with the calibre, dependability, and accessibility of goods and services.
In reality, a process that was already well under way has merely been hastened by the outbreak. Years before the epidemic started, the American Customer Satisfac tion Index (ACSI), a gauge of consumer satisfaction with businesses, was drop ping. It is currently at a 15-year low.
Service cuts have been made by busi nesses for a while; the pandemic has only given them a new green light to continue. Consumers are often subject ed to indignities by firms, including end less 800-line hold times, understaffed stores, hidden surcharges, outrageous pricing, and unclear messages. Even complaining has gotten harder because it now takes three interactions to fix a customer service issue with a business.
However, a lot of customers put up with these deteriorations in service. They give in to consumer inertia and continue to support unsatisfactory companies be cause they don't want to take the time to look for and use an alternative.
We are inherently lazy beings who follow the "rule of less labor," as promi nent American psychologist, Clark Hull put it. So, we remain with the institution that we despise, whether it be the bank, the insurance, the cell phone carrier, the internet service provider, or the soft ware store. We persuade ourselves that all rival companies and organizations are equally awful. The devil we are fa miliar with is preferable to the one we are not.
In these times, let the buyer beware is an adage that comes to mind when dis cussing customers.
According to data from the US Department of Agriculture, South, Southeast, and East Asia together produce and consume more than 80% of the world's rice
Due to Russia's invasion of Ukraine, the food prices have increased worldwide, but the situation is less grim in Asia because of the rise. Following successive bumper crops, rice has become a rare food item that is typically less expensive in 2022 than it was in 2021. That is great news for the billions of people who live throughout Asia, from India to Thailand, Vietnam, and Japan, where the grain is a common staple. According to data from the US Department of Agriculture, South, Southeast, and East Asia together produce and consume more than 80% of the world's rice.
Global corn and wheat prices were 27% and 37% higher, respectively, than in January. Rice prices were about 17% lower, according to the World Bank
By contrast, as Ukraine is a significant supplier of these essential commodities, the supply of wheat, corn, and vegetable oils have been hampered by the conflict. People that eat mostly bread, like those from Egypt and Lebanon, have been particularly hit hard. At the same time, higher prices of gas, animal feed, and fertilizer have made products like soy and chicken more expensive, contributing to growing world hunger.
Josef Schmidhuber, deputy director of the United Nations Food and Agriculture Organization’s trade and markets division said rice is the current anchor. It provides stability to global food security.
According to preliminary data from the Asian Development Bank, at just 4%, inflation in developing Asia in May was around half the rate in the US and Eurozone and about a quarter of the rate in Latin America and sub-Saharan Africa. The bank attributed the relatively low inflation in part to stable rice prices.
As of mid-June, global corn and wheat prices were 27% and 37% higher, respectively, than in January. Rice prices were about 17% lower, according to the World Bank.
The main reason is that rice has remained affordable because of its abundant supply. Good harvests in the world’s top producers — China, India, Bangladesh, Indonesia, Vietnam, and Thailand — caused global production to hit record levels last year, at 521 million metric tons, FAO data shows.
This year’s crop is expected to be nearly as large at 520 million metric tons. Ukraine isn’t a significant exporter of rice, so the supply of the grain isn’t directly affected by the war.
While high fertilizer and fuel prices remain a challenge for farmers, many Asian governments provide heavy subsidies to rice growers, which helps ensure steady production.
Sharif Bukhari, who runs a restaurant in New Delhi, India, selling biryani, a rice dish, says the high cost of bread means he is increasingly eating more rice at home. Before wheat prices rose, the family would often buy naan flatbread or flour to
make unleavened pieces of bread.
In the Philippines, Jennifer Jasme, a customerservice agent, says her family is dining out less in favor of simple home-cooked rice meals. Unlike prices for beef and chicken, the price of the brand of rice she buys hasn’t changed, Jasme said.
According to FAO, Iran and Iraq have accelerated purchases of rice from abroad. African countries are expected to import 10% more rice this year to an all-time high of 19.4 million metric tons, the organization says. In Vietnam, farmers are using cheap rice to feed pigs that would otherwise gobble corn and wheat.
Still, agriculture experts say rice alone can’t solve global hunger. Rice often relies on intensive irrigation, which means some varieties remain more expensive than wheat, making the grain less accessible to many of the world’s poor.
Another challenge is the high import duties some countries impose on grains, including rice, to support domestic production. In Uganda, for instance, authorities regularly intercept rice being smuggled on trucks covered with sand, concealed alongside cement, or hidden in bags of sugar.
There is one more factor limiting the global uptake of rice: Even when prices rise, people are attached to the grains they grew up eating. “You
wouldn’t make a carbonara with basmati, would you?” said Shirley Mustafa, a Rome-based rice economist with the FAO.
That’s less of an issue in Asia. India, the world’s second-largest rice producer after China, has added more rice in place of expensive wheat to its subsidized grain-distribution program. The exceptions are states in northern India where bread is the main staple.
“They will continue to get wheat,” Sudhanshu Pandey, secretary of India’s Department of Food and Public Distribution said.
In May, India joined many other countries in restricting wheat exports to shore up domestic supply. Rice continues to be exported freely, on the back of large surpluses.
Low rice prices could affect long-term supply. A recent survey by Japan’s agriculture ministry found more rice farmers are planning to shift to growing wheat and soybeans. On Indonesia’s Java island, farmer Nur Hadi says that with rice fetching low rates, some farmers are switching to planting peanuts and tomatoes. The price of fertilizer is rising, but the price of rice isn’t going up, it’s actually going down,” he said.
Global rice exports were estimated at 46 metric tonnes in 2020, rising by 10% from the previous year. In value
terms, supplies expanded notably to $25.2 billion, IndexBox estimated.
India represented the major exporting country with an export of around 15 metric tonnes, which accounted for 32% of total exports. It was distantly followed by Thailand (5.7 metric tonnes), Vietnam (5.6 metric tonnes), Pakistan (4 metric tonnes), the US (3.3 metric tonnes), and China (2.3 metric tonnes), together constituting a 45% share of the total exports. Myanmar (2 metric tonnes), Brazil (1.4 metric tonnes), Uruguay (1 metric tonne), Paraguay (0.9 metric tonnes), and Italy (0.8 metric tonnes) occupied a minor share of total exports.
In value terms, India ($8 billion) remains the largest rice supplier worldwide, comprising 32% of global exports. The second position in the ranking was occupied by Thailand ($3.7 billion), with a 15% share of global exports. It was followed by Vietnam, with an 11% share.
From 2018 to 2020, the average annual growth rate in terms of value in India amounted to +4.2%. In the other countries, the average annual rates were as follows: Thailand (-18.7% per year) and Vietnam (+3.2% per year).
The Bangladesh government has banned the exports of aromatic rice after it failed to control the price in the local market. Upon request from the food ministry, the commerce ministry has cancelled the aromatic rice export permission of 41 companies.
The ministry asked the National Board of Revenue (NBR) to take
Wolrd-wide in 2021-2022
In Metric tonnes
Source: Statista
necessary steps to prevent them from exporting rice. The commerce ministry had earlier allowed 41 companies such as Square, Pran, ACI, Ispahani, and Citi groups to export a certain amount of aromatic rice till December 2022.
Following the ban, the companies that have not yet exported within the approved quota will no longer be able to ship, officials at the ministry told the Business Standard. Square Group had received approval to export 3,000 tonnes of aromatic rice this year. Owing to the government's latest decision, the company will not be able to ship the amount it had planned to do so till December 2022.
According to the export policy order, the export of rice from
Bangladesh is prohibited. However, there was an opportunity to export aromatic rice with the prior approval of the commerce ministry.
In this context, different corporate groups and businesses were exporting fragrant rice to about 136 countries including the United Arab Emirates (UAE), Europe, America, the United Kingdom, Malaysia, Singapore, Brunei, and South Korea.
Bangladesh started exporting aromatic rice from fiscal 2009-2010 by shipping 663 tonnes that year. In the following years, the volume of exports increased to 10,879 tonnes in fiscal 2019-20.
Exports fell slightly to 9,517 tonnes in the last fiscal year due to the COVID-19 pandemic. The food
ministry said the price of rice in the country's market has been rising since 2020 due to the pandemic. And it fluctuated at different times, reaching its highest point in October of that year, and remained unchanged until December.
From the beginning of 2021, the prices of all types of rice had been rising again and in NovemberDecember, the price of coarse rice stabilized. But the price of medium, fine and aromatic rice is constantly rising.
The food ministry further said that the monitoring activities of the local administrations, as well as fieldlevel officials of the food directorate, are continuing to keep the market price of rice under control.
Besides, the Directorate of National Consumers' Right Protection is also conducting operations on a regular basis. Even
then, the market price of aromatic and fine rice is on the rise.
Last year, the price of Chinigura, Kalijeera, and Kataribhog rice varieties was Tk70-80 per kg in the local market. The price of these types of rice has increased by about 70% in one year and now it is being sold at Tk120-130 per kg.
The government carried out nationwide operations to control the market price of rice and found excessive stocks of paddy in the warehouses of different companies such as Square, Akij, ACI, Citi, and Pran groups. Of these, the administration found 5,140 tonnes of aromatic paddy in a warehouse of Square Group in Dinajpur, sealed it, and filed a case against the company.
Square Group later said in an application to the commerce ministry that it had the approval to export 3,000 tonnes of aromatic
rice by next December. Moreover, it also markets aromatic rice under the brand name "Chashi" in the local market.
Anjan Chowdhury, managing director of Square Food and Beverages Limited, fears that the aromatic rice will lose its market due to the export ban. Both export and production of aromatic rice have increased in Bangladesh.
According to the agriculture ministry, 7,66,305 tonnes of aromatic paddy were produced in fiscal 2018-19, which has increased to about 17,75,178 tonnes in the last fiscal year.
However, the demand for this rice has also gone up in the local market as the purchasing power of the people of the country has increased. The use of aromatic rice is also increasing in making various types of fast food items as well as polao, finni, pitha, payes and khichuri. Food Minister Sadhan Chandra Majumder has blamed the corporates for the rise in the price of aromatic rice in the country.
He said the crisis was created in the open market after the companies bought and stocked the entire paddy from the market. Cashing in on the opportunity, the companies sell the rice at high prices by packaging it.
Criticising the government's decision, Md Shah Alam, president of the Bangladesh Rice Exporters Association, told the Business Standard, "The decision to stop the export of aromatic rice is suicidal. Because no one in the country eats it as the main food"
editor@ifinancemag.com
