Commentary

[SCMP Column] Keeping the Trade Doors Open

July 16, 2017

In short “one third of China’s GDP in recent years has been generated by the investments, operations and supply chains of foreign invested companies”. Impacts are higher still when you use economic impact tools to calculate the cascading benefits to the economy – by modernising China’s industries, introducing supplier and distributor networks, research and development impacts, introduction of modern business practices, management training and education, legal and regulatory reform. A company like P&G, for example, is calculated to contribute US$11bn a year to China’s GDP, and over 610,000 jobs.

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[SCMP Column] Ageing Challenges

July 15, 2017

Most important, since a rising proportion of our 350,000 foreign domestic helpers are by default becoming the foundation of our elderly carer network, Dr Law is talking about ensuring they can get basic medical and elderly care training.

How refreshing it would be if Carrie Lam’s team could begin its term by making headway in a socially critical area like this – after years of filibuster and perpetual mastication over issues.

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[SCMP Column] Frustration in Hamburg

July 10, 2017

While many were predictably protesting against globalization and US withdrawal from the Paris Climate Accord, the militancy was perhaps more forcefully fuelled by anger at widening inequality across the world’s economies over the past decade. That should carry a powerful message to China, which is today one of the world’s most unequal economies, and to Hong Kong which among the world’s cities is second only to New York in terms of the extremity of the divide between rich and poor.

 

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[SCMP Column] Honey Bee Crisis

July 08, 2017

While New Zealand’s exporters make extraordinary claims for their manuka honey, none of them have been scientifically verified. But that cannot be said for Mauri’s “mad honey”, which until recently sold for six or more times the price of normal honey in the markets of Kathmandu. Apparently the Himalayan giant honey bees make different kinds of honey depending on the flowers in season – and the “mad honey” for which Mauri so endangers his life is only made when the bees are feasting every March and April on the pink, red and white blossoms of the rhododendron trees that grow on the north-facing hillsides of the nearby Hongu valley.

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[SCMP Column] Multilateral Deals Superior

July 03, 2017

So when our Australian friends knocked on the door proposing an FTA, this was for Hong Kong a big deal – perhaps not as big as the undeniably significant China-ASEAN agreement, but not to be sniffed at. With a GDP of US$1.4tr, and a population of 24m, it offers the prospect of almost doubling the scope of our FTAs. As Hong Kong’s 8th trading partner (their main export to us is gold) and with 600 Australian companies based in Hong Kong, there is serious business here. Splice in too the fact that 100,000 Australian nationals live in Hong Kong, and a further 98,000 Hong Kong-born people live in Australia, and the people-movement elements of FTAs could be of particular importance. Australia’s services exports to Hong Kong have grown five-fold in the past five years, driven by Hong Kong kids going to Australian schools and universities, property investment, and tourism.

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[SCMP Column] Swept Up in the Storm

July 01, 2017

What a shock it was, barely a month later, to watch the “Black Monday” stock market crash wipe US$2.9bn off Hong Kong’s stock market capitalisation, and the HK$ peg to the US$ come under ruthless assault from a number of powerful US predators. Even more of a shock to see property values crash to 30 per cent of 1997 values. The sobering lesson was that Hong Kong, with no local market of consequence, was an economy that depended on flows – and when the flows dried up as the crisis deepened, so Hong Kong rapidly joined the wounded.

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[SCMP Column] Get on with Running This City

June 26, 2017

Hong Kong has gone through a very tough couple of decades since the 1997 handover, but this has little if anything to do with the transfer of power. Much more it is to do with the Asian Financial crash of 1998, the dot.com crash in 2000, SARS in 2003, and the global financial crisis of 2008 – and the perverse impacts on property and share prices of the low interest rate universe in place since then.

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[SCMP Coumn] World Still Integrating

June 24, 2017

Empirically, there is little evidence to underpin King’s claim that globalisation faces a life-threatening crisis. Global foreign investment outflows that rose to US$1.9tr in 2006 tumbled hard to US$1.2tr during the global financial crisis years of 2008 and 2009, but have since recovered to US$1.75tr last year. Imports and exports worldwide took a tumble in 2009, but have otherwise continued to grow – not at the flamboyant pace of the 1980s and 1990s, but still around 3 per cent a year. Between 2007 and 2015, for example, imports have grown from US$16.9tr to US$20.75, while exports have risen from US$17.3tr to US$21.3tr.

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[SCMP Column] The Need for Legal Rethink

June 19, 2017

Even if they decide they have to act, the challenge is how. How does one create competition when a company like Google offers online shoppers its search services for free? How does a regulator prove anti-competitive intent when the offender is an algorithm? As a recent OECD report asked: “Finding ways to prevent collusion between self-learning algorithms might be one of the biggest challenges that competition law enforcers have ever faced.” Understanding how digital dominance works, and how to regulate it, is at present an unanswered challenge.

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[SCMP Column] Bridging the Skills Gap

June 17, 2017

In APEC for the past five years we have been trying to persuade the Hong Kong government to provide data into a region-wide skills database that would help us see the skills shortages as they emerge across the region (not just in the medical profession). Still the Hong Kong government has failed to provide input. If it is so robustly reluctant to provide data for APEC’s skills map, why is it suddenly likely to discover enthusiasm for data in the medical sector where so many vested interests have scant interest in tackling our skills shortages?

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[SCMP Column] Cost of Miscalculations

June 12, 2017

Instead, they discovered that their own internal Conservative Party concerns about immigration and decision-making in Brussels did not match the wide public’s concerns – which in the 10th year of recession since the 2008 financial markets crash are focused on stagnating wages, unemployment, a loss of job security, and anxiety over savage cuts to health care and old age care.

Electoral missteps on financing health care for the elderly undermined support from traditional elderly supporters of the Conservative Party – supporters who had come out in huge numbers to support the Brexit campaign.

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[SCMP Column] Reign of Terror

June 10, 2017

So Teresa May, wringing her hands over the possible failings of Britain’s security services, and Donald Trump, dreaming he has just brokered the terrorism-smashing deal of the century, are missing the point. The wicked and distorted belief systems of this growing army of jihadi martyrs are not for changing. Their beliefs are so fundamentally at odds with the democratic, freedom-of-speech cultures of which we are part, that compromises are logically impossible.

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[SCMP Column] China Shines as Trump Stumbles

June 05, 2017

For China, the global warming initiative seems a perfect platform. Less motivated by Europe’s anxieties to save the earth than a very direct domestic crisis over appalling environmental degradation, it nevertheless has a strong common interest in attacking the global warming crisis. It is also in the process of capturing the opportunity to dominate the globally dynamic renewable energy industry. China is today by far the world’s biggest manufacturer of clean energy technologies ranging from solar and wind to nuclear.

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[SCMP Column] Dangerous Portents

June 03, 2017

Compared to fish, very little is known about squid and their lifestyles. But there is a dangerously naïve belief that it is impossible to overfish them. Why? Because almost all squid have an astonishingly short life-span – rarely more than two years. Like octopus and cuttlefish, they race to maturity with barely decent haste, predate ferociously on fish and other cephalopods, mate, nurture their eggs, and die.

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[SCMP Column] Lessons from Tech Age

May 29, 2017

There will be job carnage in some unexpected areas – among surgeons, actuaries, insurance agents, and para-legals, for example. As the cost of sequencing a genome has fallen from US$100 million in 2001 to US$100 today, and approximately 3 cents by 2020, so the health insurers’ task of anticipating health risks will fall dramatically, according to Steve Monaghan at Gen.Life. The result: insurance premiums will tumble; the actuaries and insurance agents selling us health insurance products will be laid waste; and early warning of possibly serious illnesses will preempt the need for many operations, and spill our surgeons’ gravy train.

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[SCMP Column] Obsessive Addiction

May 27, 2017

This irritates Greenpeace campaigners because of the waste. Apparently, it takes 5,000 gallons of water to make a T-shirt and a pair of jeans – which means China’s garment-makers discharge over 2.5 billion tonnes of waste water every year. In Hong Kong, they say we send 253 tonnes of textiles to landfills every day – the equivalent of 1,400 T-shirts being thrown out every minute.

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[SCMP Column] Harnessing the ocean wealth

May 22, 2017

Laminaria – or brown sea kelp – may not be a deep ocean resource, but is a good example of the still-underdeveloped economic potential of our maritime resources. It is noteworthy that in English, we call kelp seaweed – yes weed. But in the Chinese and Japanese languages the word for seaweed is “hai cai” – literally sea vegetables. Therein lies a deep cultural difference in our perception of the value of this critically important maritime resource.

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[SCMP Column] Price of misjudgment

May 20, 2017

It is not yet too late for the US to reverse Obama’s diplomatic misjudgment. A welcome mat remains in place whenever it decides to join either the Belt and Road, or the AIIB as they begin to gain importance in coming years. But I sense our American Apprentice may not be the man willing to knock at the door. On the contrary, if his over-hasty withdrawal from the 12-economy Trans-Pacific Partnership (TPP) is any guide, he seems inclined to repeat Obama’s mistakes rather than to learn from them. If the “TPP 11” economies, meeting this weekend in Hanoi alongside the APEC Trade Ministers meeting, can salvage a deal in spite of US withdrawal, he will be left to repent at leisure. American companies – and America’s diplomatic standing in Asia – will be the victims.

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[SCMP Column] The Value of Science

May 15, 2017

Already over the decades conservative figures in US politics have constrained and skewed federally-funded science. David Hemenway, professor of health policy at the Harvard T H Chan School of Public Health, last month pointed an awkward spotlight on research awards by the Centres for Disease Control and the National Institutes of Health (NIH): over the past 40 years, the US has seen 2,000 deaths from cholera, diphtheria, polio and rabies, and these diseases have attracted 486 NIH research awards. Over the same time frame, the US has suffered 4 million gun deaths, but received just three research awards on guns and gun-related issues.

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[SCMP Column] Against All Odds

May 13, 2017

The Symposium was launched with some explosive numbers: according to a 2011 study by the World Health Organisation and the World Bank, around 15 per cent of the world’s population lives with some form of disability. That is over a billion people. The price we pay for failing to ensure people with disability can contribute in the workforce amounts to something between US$1.37 trillion and US$1.94 trillion. As for the Asia-pacific region, we have around 650m people living in hardship or poverty because of their exclusion from the workforce because of disability of one form or another. Around 85 million of these are in China.

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[SCMP Column] Instagram’s Big Appetite

May 08, 2017

When once the written word was the message, with pictures to provide visual validation, today it is often the picture itself that is the message, propagated with a viral force and speed that is almost impossible to get your head around. In less than seven years since Instagram launched it has gathered 700m active users – over 100m of those added in the four months since the beginning of this year. These are at the heart of a snaphappy global community that this year is expected to take 1.2 trillion photos, with around 100 billion being added every year. About 85 per cent of these will be taken on smart phones, with just 10.3 per cent taken with what I used to know as a camera.

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[SCMP Column] A City Unwell

May 06, 2017

For a country that is supposed to be among the most advanced in the world, the US is burdened with a seriously malfunctioning healthcare system – egregiously expensive, with large parts of the population lacking insured access to medical care, and eroding health demographics that would rank the country among many developing economies. The OECD says US health care costs amount to US$8,713 per person (about 18 per cent of GDP), compared with an OECD average of US$3,453 (8.9 per cent of GDP). One recent study of cancer care costs put median monthly costs in the US for eight different cancer drugs at US$8,694 – compared with US$2,587 in the UK and US$2,741 in Australia. Recent international comparisons of the cost of an overnight hospital bed put New York at the top, at between US$16,000 and US$21,500, with Canada second at US$10,000 and France and Germany not far behind at US$9,500.

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[SCMP Column] Resurgence of Optimism

May 01, 2017

Here in Seoul, at the year’s second meeting of APEC’s Business Advisory Council, the voices have been unanimous that Trump’s flamboyant January withdrawal from the Trans-Pacific Partnership (TPP) should not be allowed to exterminate one of the world’s biggest and most ambitious trade agreements. At least, not without a fierce fight – likely to be staged during the meeting of APEC Trade Ministers in Hanoi in just under a month’s time.

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[SCMP Column] Honour Female Geniuses

April 29, 2017

The discriminations that keep women out of the workforce, or suppress their capacity to contribute to their full potential, inflict an even higher cost. McKinsey last year shockingly calculated that if women’s participation in the workforce rose worldwide to the participation rate for men – up from the present 50 per cent to 77 per cent – an awesome US$28 trillion would be added to global GDP. China alone would add US$2.5 trillion to its GDP, and the US would add US$3.1 trillion.

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[SCMP Column] Europe at Crossroads

April 24, 2017

But while we hold our breaths this morning over “le French May”, across the Channel in the UK a political master-stroke by “la May Anglaise” has for the first time in nine months made me feel that all is not lost for the UK in the Brexit process. If she wins her snap election with a historic landslide on June 8, as most pundits expect, she will have achieved multiple Houdini miracle escapes at one go. She will get off her back the hard-line Brexit fringe that is threatening to hold her to ransom in the exit process. She will win herself the flexibility to make the difficult and perhaps unpalatable compromises that will inevitably have to be made with the EU over the next 23 months of exit negotiations.

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[SCMP Column] Grave Challenge

April 22, 2017

And credit to them. The World Health Organisation has just released a report that claims over 320m people worldwide are suffering depression, with a similar number crippled by anxiety disorders. This amounts to around 40 per cent of all illness (by contrast, strokes, cancer, heart disease and diabetes together account for 20 per cent). Almost half of these are in Asia, and India and China alone account for 100 million cases – but most of them are either never recognized, or hidden as guilty family secrets.

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[SCMP Column] Global Trade Comes First

April 17, 2017

The report reminds that when the US in 2009 slapped punitive tariffs on allegedly-dumped Chinese tyres in defence of US trye manufacturers, the cost was US$900,000 for each US job saved – equivalent to 22 years of salary for an average tyre worker. In other words, the US could have gifted a 22-year pay-out to those tyre workers, and saved American tyre-users the punishing cost of having to buy more expensive tyres.

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[SCMP Column] Arduous Flight Ahead

April 17, 2017

But the challenge is not small. The competitive backdrop is ferocious as Mainland airlines become stronger and more ambitious. Revenues from business travelers will continue to be squeezed as the post-2008 contraction of the financial services industry continues unabated. Profit margins will continue to be horribly mean.  And the splenetic outbursts of us armchair experts must be recognized as a constant while international air travel remains so intrinsically stressful. Welcome to the unfriendly skies.

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[SCMP Column]Scooping up the Mess

April 10, 2017

In New York, which apparently deals with 100,000 tonnes of dog-poo a year along its 12,750 miles of sidewalk from its population of 600,000 dogs, former-mayor Ed Koch introduced the Canine Waste Law almost 40 years ago. That was when the “pooper-scooper” was first invented, and pooper bags first started to be distributed, often for free.

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[SCMP Column] Hypocrisy of Fair Trade

April 08, 2017

All too often local companies – and industry associations funded to lobby on their behalves – do use such regulations, standards and a myriad arcane tripwires to keep pesky foreign products out of their home market. The hypocracy of “fair trade” is its failure to recognize that our upright local companies are in truth identical to their perfidious foreign counterparts. Wilbur Ross will without question discover numerous examples of unfair practice by foreign companies. What he will discretely fail to notice or acknowledge is those same unfair practices thriving around him in the US, nourished by powerful local manufacturing lobbies, and equally effective in keeping pesky non-American companies at bay in their efforts to sell goods and services to US consumers.

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[SCMP Column] Careless tweets

April 03, 2017

Just as Hong Kong people might have targeted their ire a little less masochistically, so Trump – with a little help from some TIAs – might have done the same. One wonders just how many jobs will need to be lost before Trump discovers what British war-time posters warned seven decades ago: “Careless Talk costs lives”. In this case, “Careless Tweets cost jobs”.

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[SCMP Column] Beyond the horizon

April 01, 2017

This “internationalness” (forgive me, a horrible word) is pivotal for Hong Kong’s successful future – and is likely to be valued as much by Mainland companies listing here or setting up international headquarters and fund-raising operations here as it is by companies from Germany, France, Singapore or the US. It involves widespread fluency in English and Mandarin. It should include the Hong Kong University being China’s strongest English-language university. It involves cross-cultural tolerance that has been a hallmark of Hong Kong for most of my working life here.

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[SCMP Column] Equation for Happiness

March 27, 2017

But then the challenges begin to appear. Generosity in society seems to be in short supply, and trust across the community has been sabotaged by increasingly extreme inequality and severe demoralization over soaring property prices as family incomes have stagnated. Most obviously, anxieties over the embrace of Beijing since 1997 have seriously undermined the population’s sense of freedom. These anxieties seem unlikely to have fallen over the course of the election campaign for our future Chief Executive.

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[SCMP Column] Technology Quest

March 25, 2017

China’s engineers – whoops, party officials – have not simply been driven by the quest for technology leadership, or fear of reliance on technology from overseas. They hate its gigantic deficit in royalty and licence fees to foreign technology-holders. From zero payments for IP in 2000, China today pays royalty and licence fees of almost US$20bn. Since its companies currently earn a meager $1bn a year in such payments from foreign companies, that means an IP deficit of over $18bn.

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[SCMP Column] Playground Rule Explains Trump’s Disdain for Global Trade

March 20, 2017

So our trade negotiators need to be clear: they are doing us in business no favours by spending thousands of hours, and millions of dollars of taxpayer money, negotiating bilateral trade deals. If they want to make a difference – take note Mrs May – they must instead spend their time working on multi-country (plurilateral) deals, and making sure they embrace the tough behind-the-border reforms, rather than on border tariffs.

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[SCMP Column] Where the City Fell Short

March 18, 2017
We were right to see the transformation of Hong Kong from an entrepreneurial to a managerial economy, as middle class parents pushed their kids into the professions. We were right to see Mainland entrepreneurs coming to settle in Hong Kong to keep the entrepreneurial flame alive, but overestimated their stimulus. 
But there was so much I failed to see. First, and perhaps worst, was the failure to notice shortcomings in Hong Kong’s political institutions. When Britain’s colonial rulers walked away, they left behind a competent and honest administration, but departed with the strategic policymakers, who had always been seconded to Hong Kong from ministries in Britain’s government. Administrators were excellent at administering, but were untrained and ill-equipped to forge the policies to be administered. 
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[SCMP Column] Face-to-Face Challenges

March 13, 2017

Set Europe’s deep economic fragility against signs of reasonably robust economic recovery and job growth in the US – with a rise in the Fed’s interest rate predicted on Wednesday this week – and a fistful of powerfully stimulative policies being promised by the new Trump administration, and the surprise must be that the Euro is not weaker than it is.

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[SCMP Column] Saudis Tilt Towards Asia

March 11, 2017

The choice of destinations speaks volumes about Saudi Arabia’s aims and priorities – including a weakening of confidence in a Trump-led US as its primary international ally. Malaysia, Indonesia and Brunei – as Asia’s most important majority-Moslim countries – are important Sunni allies in the ongoing battle with Iranian-led Shiites, as well as long-standing trade and investment partners. China and Japan are not only among Saudi’s most important oil and natural gas export markets, but critically important sources of future investment as the country arm-wrestles itself away from its extreme reliance on oil and gas.

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[SCMP Column] Eat, Drink and be Merry

March 06, 2017

Now, 2000 years later, Europeans undisputedly consume more alcohol that any other community in the world. Against a worldwide average of 6.5 litres of alcoholic content (pick your poison – beer, wine, spirits) consumed per year, Europeans on average consume 12.11 litres, with Russians, Moldovans and Lithuanians far in the lead with up to 17.5 litres a year.

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[SCMP Column] Wages Up for All

March 04, 2017

First, and most important, China’s economic planners recognized that the era of cheap contract labour for export manufacturing operations must inevitably come to an end. As company value chains were broken down – as with Apple, which manufactures all of its iPhones in the Mainland – economic planners realized that China was earning just US$7 per iPhone for its humble, labour intensive assembly role, out of a total sales value of US$500-600. This was a mug’s place in the value chain which simply immiserated the millions of contract migrant labour that filled export manufacturers’ production lines.

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[SCMP Column] At the heart of migration

February 27, 2017

One of our biggest headaches has been that the minute we start talking about international workers, immigration officials come into the room, and begin talking about national security and illegal immigration. In the wake of the “9-11” terrorist attack on New York’s World Trade Centre, the problem perhaps inevitably became even more fraught. These immigration officials had no interest in talking about the increasingly severe problems businesses are facing with labour shortages. That was not their job. Their job is to protect their countries’ borders against attack.

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[SCMP Column] Rare trade deal

February 25, 2017

But realists in Bangkok and elsewhere acknowledged that the celebration was rather hollow. The TFA was a crumb on the table of the now-defunct Doha round of global trade negotiations. It was proposed by WTO director General Roberto Azevedo – and endorsed by the world’s trade ministers – in Bali in late 2013 as a single salvageable initiative after more than a decade of fractious and ultimately fruitless efforts to bring global trade rules into the 21st century.

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[SCMP Column] A world without trust

February 20, 2017

In the US, the contrast is even more breathtaking. An S&P Top 500 CEO earns 335 times more than the average US employee. For the average citizen three questions arise: what miraculous talent can possibly justify such disproportionate reward? Is a company’s success truly mainly due to the talent of a CEO – what about the contribution of a conscientious and highly skilled workforce? And what extraordinary personal spending needs justify an executive demanding such huge rewards.

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[SCMP Column] Absolute measurement

February 18, 2017

I feel sort of sentimental about those innocent early days when an inch was the width of a man’s thumb, which was 1/12th of a man’s foot (reduced by 20% when Britons converted from large Anglo-Saxon feet to daintier Roman feet). A yard was what King Henry I decided was the distance from his nose to the thumb of his outstretched arm. And an acre was the area of land an ox-drawn plough could cover in a day.

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[SCMP Column] Testing times for Apec

February 13, 2017

For the APEC Business Advisory Council (ABAC), this is even more starkly true. As the region’s businesses face an unprecedented assault from an “America First” President flirting with trade war, so their mettle will be tested on  how clearly and persuasively they can challenge the chilling localist and protectionist winds that have been strongly stirred in the US.

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[SCMP Column] Projects for the people

February 11, 2017

The first shock on reviewing Donald’s project list was to see just how glacially these plans have moved. Among the six transport-related plans, the South Island Line is at last open (though it was scheduled to begin operations in 2015). The Shatin-Central Link is not expected to be finished until 2021. The High Speed Rail link to Guangzhou may begin operation late in 2018 if we are lucky – against an original opening date targeted for 2015. The Hong Kong-Zhuhai-Macau bridge should open in 2018, against an original target of 2016. And the bridge to Tuen Mun from the Airport – linked to the Zhuhai bridge – is inevitably also delayed. The fast train to Shenzhen airport has been abandoned altogether.

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[SCMP Column] Ruling the waves

February 06, 2017

China has similarly for many years dominated global fishing – both marine fishing, and inshore aquaculture. Out of a total world marine fish catch of 93.4m tonnes a year, China accounts for nearly 15m tonnes. Of 56m people employed worldwide in fisheries, China accounts for around 14m – 9m at sea and 5m fish farming inside China. Of a total world fishing fleet of 4.6m vessels, China accounts for an estimated 700,000 – around twice the total of the world’s second largest fishing fleet in Japan. But before anyone breaks into a sweat, we should remember that more than two thirds of these vessels are less than 10m long, and only one third have engines.

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[SCMP Column] Calm before the storm

February 04, 2017

I am thinking in particular about the Philippines’ two main foreign exchange earners, and major contributors to the economy – Overseas Filipino Workers (OFW), and Business Process Outsourcing (BPO). Surely both of these pillars of the Philippine economy have to be vulnerable while the Pinocchio Apprentice is railing against migration, and the imperative to bring America’s jobs back home. Given the importance of OFW and BPO to the Philippine economy, the cause for concern must be high.

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[SCMP Column] The Great Wall

January 30, 2017

Even today, we have around the world at least 35 border barriers in “working order”, over half of them constructed since 2000. Many of their stories are quaintly unveiled in the 2008 travelogue “Walls: Travels along the Barricades” by Canadian Marcello Di Cintio – including the berm built by Morocco’s King Hassan II to keep the desert Sahawaris at bay, Indira Gandhi’s 4000km barbed wire barrier separating India from Bangladesh, and of course the Apprentice’s cherished wall along the US-Mexico border, which currently and ineffectually covers 640 miles of the 1,954-mile border.

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[SCMP Column] The Art of Trade War

January 28, 2017

But in terms of direction, the signals make uncomfortable reading for the US. In Prof Simon Evenett’s Global Trade Alert, widely regarded as the leading tracker of emergent protectionism since the 2008 global crash, the US has launched a breathtaking 3705 discriminatory trade measures against trading partners, making it by far the worst initiator of new discrimination in the entire G20. Even India and Russia rank far behind, while China is a comparative innocent, responsible for just over 1268 discriminatory measures.

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[SCMP Column] Dangerous Allegations

January 23, 2017

Similar gains have arisen from Nafta – both for the US and the Mexican economy. Today, Mexico is the US’s second largest goods export market, with exports amounting to $236bn in 2015. That is equal to US exports to China, Japan, Germany and the UK combined, and it is a five-fold increase from 1993 before Nafta was signed. It is true that Mexico’s gains are even greater – up seven-fold to $295bn – leaving it with a trade surplus of $58bn – but to suggest that US negotiators did a bad job because of some misplaced “asymmetrical” charitable urge is ludicrous. And to abandon this framework in favour of old-style mercantilism can only be harmful for us all.

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[SCMP Column] An Unbreachable Chasm

January 21, 2017

The challenge is not that people are poor, even though Hong Kong has always been home to a significant number of poor people. Nor is it that the gap between Hong Kong’s rich and poor is wider than it has ever been – and wider than in most economies in the world. No, the challenge is that the chasm between Hong Kong’s poor and rich feels unbreachable. It no longer seems possible that we can start dirt poor like Li Kashing, and a generation later feel affluence as a reward for our steady and uncomplaining labour.

 

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[SCMP Column] Lasting Legacy of Obama

January 16, 2017

Paradoxically, his achievements in the economic domain would have done credit to the most dyed-in-the-wool Republican: the GDP has grown by 16% over the course of his presidency, and unemployment has been reduced from an alarming 10% to less than 5%. Despite the upheaval of the financial crisis, average wages have risen by almost 6.5% - faster than at any point since the early 1970s. Extraordinarily for any democratic presidency, corporate profits have jumped by 57%, and federal spending has fallen by 16%. Perhaps more predictably, public debt has jumped by 36%, but that has more to do with QE than with any Democrat agenda.

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[SCMP Column] Praise Whistle-blowers

January 14, 2017

Whether Hong Kong truly needs a specific whistleblower law is open to debate. The ICAC, which brought the cases against both Donald Tsang and Raphael Hui to court, depends heavily on the Prevention of Bribery Ordinance and carefully created whistleblowing arrangements, and has over its 43 year history built a formidable reputation worldwide for cracking down effectively on corruption.

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[SCMP Column] C-suite team in politics

January 09, 2017

So if Donald Trump’s C-suite team bring into government a zeal to work more efficiently and to eliminate redundant or duplicative processes, all well and good. But if they bring to their new jobs a naïve zealot view that they can impose business-like efficiencies into the US administration, they will either spend their lives frustrated and in constant warfare with officials, or they will inflict serious damage on the “checks and balances” that sit at the heart of all of our functioning democracies.

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[SCMP Column] APEC's Day of Reckoning

January 07, 2017

Imagine the US officials’ plight as they arrive in Nha Trang. The new Trump team will have been in office for just a month. Trade strategy will still be unclear. But all signals to negotiators will have been negative: kill the Trans-Pacific Partnership; prepare for sanctions targeted at China; block any initiative aimed at making it easier for US companies to invest in (and therefore divert jobs to) Asia’s economies.

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[SCMP Column] Health Matters

January 02, 2017

Meticulous dental care ought to make sense anyway, given that dental ill-health is the most widespread source of ill-health on the planet, and that one third of the people my age around the world no longer have their own teeth. Untreated tooth decay affects one third of the world’s population – 2.4bn people, with a further 740m suffering severe periodontal disease. According to the World Health Organisation and other expert bodies, the worldwide cost of dental disease is around US$300 a year, and costs over 160 million work hours due to absenteeism in the US alone.

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[SCMP Column] Movie Magic Still Elusive

December 31, 2016

While China may have more cinema screens than anyone else, and a bigger population, this does not directly or automatically point to global box office dominance. China may have boasted 1.26bn cinema ticket sales in 2015, but the fact that American’s watch at least four times as many films every year means that US box office admissions still outrank China (1.36bn admissions last year). And of course India and Bollywood put both the US and China in the shade, selling more than 9bn admissions last year.

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[SCMP Column] Dismiss thriving desert hub Dubai at your peril

December 26, 2016

As China has extended its international reach, in particular towards the long-neglected African economies, Dubai has become an increasingly important westward hub for China, with a potentially significant role in China’s long term “One Belt, One Road” strategy. It may not yet quite match Hong Kong as a China entrepot, but it is getting there.

In 2015, China’s trade with Dubai amounted to US$48bn – and 60% of Dubai’s imports from China are re-exported, mostly to Africa. From a trickle of trade between China and Africa in 2000, it had surged by 2015 to US$160bn, with Dubai a significant conduit.

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[SCMP Column] Let’s drop ‘stuff’

December 24, 2016

These were years when 11 months of the year were empty of gifts or indulgences. That precious Christmas gift was the one indulgence for which you had craved and prayed for more than 11 hold-your-breath months. My daughters were still in primary school when we officially designated and distinguished “un-birthday” presents to try to remind them how lucky they were. Nowadays, the year is so littered with “un-Christmas” and “un-birthday” gifts that the specialness of Santa’s mystical visit has gone, just as homes have become cluttered graveyards for the  barely-used stuff of Christmases-past.

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[SCMP Column] Cost of Trade War

December 19, 2016

Remember out of the US$179 export value attributed to each iPhone exported to the US from China, the total value-added in China is just US$7. At least one US electronics company that supplies components for the iPhone earns over $40 in exports to China for each iPhone. Hit iPhone exports from China, and you inflict more harm on that US company than you do on Foxconn in China where iPhones are assembled.

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[SCMP Column] Collateral Risks

December 17, 2016

But is this likely to inflict any real harm? Unlikely. China is active and well protected in the WTO itself. It is active in ASEAN’s Regional Comprehensive Economic Partnership (RCEP). It has a large number of significant free trade agreements of its own – not least that with ASEAN. It is active in the formation of the long term vision for a Free Trade Area of the Asia Pacific (FTAAP). And a primary casualty of such a frost would be the finely-balanced US-China Bilateral Investment Treaty, which would make it easier for US companies to invest in China, and for which US companies have been clamouring for several years.

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[SCMP Column] In the Pursuit of Accuracy

December 12, 2016

By disingenuously calling themselves technology groups rather than media groups, the bosses of Facebook, Google, Twitter et al are willfully and unacceptably trying to side-step the ethical and legal responsibility they have to their readers and audiences, and in the process exposing our democracies to grave danger. They allowed entirely fictional entities like the “Denver Guardian” and the “Event Chronicle” to “report” that George Soros as dead, and to “report” that Hillary Clinton had suffered brain damage, had alcohol and drug addiction problems, and had links to money laundering and even sex crimes against children.
 

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[SCMP Column] Diminishing Act

December 10, 2016

But many shrinkflationary ploys must on balance be regarded as helpful. It strikes me that efforts to reduce overpackaging, even if motivated by a desire to reduce costs and bolster profit margins, are a good thing. So too efforts to reduce the use of plastic bags, and to trim food waste, and to make us print on the clean side of printed sheets of paper. So are the efforts to miniaturize mobile phones or cameras, which greatly reduce the pace at we exhaust so many raw materials. Those little devices in public toilets that ration the use of soap and speedily turn off the water tap surely also have beneficial shrinkflationary effects.

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[SCMP Column] Lasting Sense of Despair

December 05, 2016

But the political cultures of China, Vietnam or Cuba were never truly communist in any philosophical or doctrinal sense of the word. They were all countries in which acute poverty and inequality had arisen as a result of foreign political and economic connivance with corrupt and incompetent political elites. Leaders like Mao and Ho and Castro found resonance with local people not because they were communists or spouted communist mantras, but because they spoke to the pain of local people.

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[SCMP Column] Perilous Day in Europe

December 03, 2016

If alarming dominos fall in Austria and Italy tomorrow, the stage is set for numerous other dominos to wreck political and economic momentum in Europe over the coming year. First, in March, in National elections in Holland, pollsters currently forecast a victory for Geert Wilders’ Party of Freedom. Mr Wilders is currently on trial for inciting racial hatred, in particular against Dutch Moroccans and against Moslems in general. The unrepentant Wilders simply said in a television statement on the last day of the trial that if he is convicted, “millions of Dutch citizens will be convicted with me.” Such is the rising confidence of extremist politicians in Europe today. And Holland is a country that has always in the past been seen – along with the UK – as a champion in Europe for openness and free trade and investment.

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[SCMP Column] Hard Reality of Shipping

November 28, 2016

Industry experts have inclined to call Hanjin’s collapse a “black swan” event, but given the very real likelihood of further collapses in the near future, this swan looks very much more white than black. And the crisis cascades into the massive ship-building industries of China and Korea (Hyundai Heavy Industries laid off 10% of its ship-building workforce earlier this month), and into the viability of leading ports. China, as home to seven of the world’s top 10 ports, faces a massive challenge, with an overcapacity estimated at more than 50m TEUs.

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[SCMP Column] Challenges of Aging

November 26, 2016

So far, so obvious. Except that this is precisely not what our own Hong Kong government is doing. In 2014 (the latest year for which we have numbers) 90% of the 46,000 people who died did so in a hospital bed. Over 40% of our 38,000 hospital beds are occupied by elderly patients. As the Hospital Authority makes the case for a HK$200bn programme to build more hospital wards and add elderly care homes, so the Housing Authority says it does not have the funds to build more housing for the elderly, nor to “retrofit” existing homes to make them safe and livable for the elderly infirm. We are failing to build convenient community clinics embedded close to peoples’ homes. We are actively ignoring the role that private sector care homes might play. And we are head in the sand in terms of training carers in the numbers that will be needed for our rapidly ageing society.

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[SCMP Column] Renewing the Air We Breathe

November 21, 2016

With just 6,200 electric vehicles in Hong Kong out of a total of more than 530,000 cars on the road, it is unclear how quickly policies can be changed. Since vehicle emissions account for 14% of Hong Kong’s greenhouse gases, 14% of harmful respirable suspended particulates, and 20% of volatile organics, it is clear that government leadership is required. There is potential here for Hong Kong and the Mainland to lead the world. Lift electric car ownership to Norwegian levels, and the air that we breathe will be transformed. But maybe I am letting my enthusiasm get ahead of me.

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[SCMP Column] Hope for the future

November 19, 2016

Asia now accounts for around a quarter of Peru’s trade, compared with just 18% in 2000. Despite Peru’s “resource curse” – the global collapse of commodity prices and demand has hurt the economy hard – commitment to globalization and open trade remains unflinching. The selection of President Kuczynski was an encouraging and symbolic reaffirmation of this commitment – in stark contrast with the moods in the US and the UK that have conceived Trumpism and Brexit.

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[SCMP Column] Shopping City Losing its Sheen

November 14, 2016

If this change is indeed structural, then we in Hong Kong face a significant social and economic challenge. We have a large proportion of our workforce facing a stagnant and declining future. Significant policy attention must be paid to finding the well-paying job opportunities of the future. Noteworthily, Shenzhen may be leading the way, with an economy being built around innovative green and high-tech activity – from Huawei’s telecoms to DJI’s world-leading drones.

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[SCMP Column] Looming Challenges

November 12, 2016

As APEC leaders gather in Peru in the coming week, with President Obama flying in for his “swansong” (is there such a thing as a black swansong?), the Trump victory will cast a long and ominous shadow. Trump’s bark may prove worse than his bite, but leaders in Peru would be rash to understate the challenge looming ahead. The commitment to liberal trade and investment that has unified APEC’s 21 member economies for the past 27 years is under unprecedented threat.

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[SCMP Column] A Year of Tough Challenges

November 07, 2016

Unnoticed, but equally important for Hong Kong, a further casualty may be the Trade in Services Agreement (TiSA). Almost no one pays any attention to this 23-country plurilateral negotiation that has been going swimmingly for the past two years, but for services economies like Hong Kong, this is hugely significant.

Top negotiators are in Geneva as you read this, with the aim of dotting “i”s and crossing “t”s on a deal that is slated to be ratified by Ministers on December 5-6. But key differences remain unresolved between the US and other negotiators – in particular on the freedom of data flows and the treatment of State-owned Enterprises (SOEs).

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[SCMP Column] Stretching the Limits

November 05, 2016

But where are equivalent Hong Kong regulations limiting such monstrous abuse by developers? Bear in mind that a typical car parking space is 160 sq ft, and shipping containers are 200 sq ft (containers are being fitted out and used as temporary student housing in Holland). If they exist, it seems major property groups are taking scant notice.

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[SCMP Column] Shaping Future Trade Patterns

October 31, 2016

The new production chains constructed around China allowed manufacturers radically to lower their production costs, giving to the world for 20 years or more what I call “China’s deflationary gift”. This once-off structural lowering of costs drove massive trade growth, and massive wealth dividends to the advanced economies where most high-value-adding activity remained. But by the early 2000s most of this dividend had been reaped.

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[SCMP Column] Much Ado about Tattoos

October 29, 2016

In some ways, the corporate prejudice seems odd. After all, tattooing has been around for a very long time. Oetzi the Ice Man discovered high in the Alps a few years ago carried tattoos from 5000 years ago. Mummified remains sporting tattoos have been discovered from as far afield as Alaska, Siberia, Egypt, the Philippines and the Andes. And the earliest residents of the UK were called “painted people”, or  Pritoni – from which the word Britain comes. The word tattoo comes from the Tahitian word “tatau”, meaning “to write”. Through time immemorial, Maoris from New Zealand have carried their “moko”, or unique facial tattoo as a sign of their unique identity and bravery. They even signed treaties with faithful renditions of their unique moko. No wonder the New Zealand All Blacks sport so many acres of finely-honed body art.

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[SCMP Column] The Only Way to Democracy

October 24, 2016

Already the country has paid a significant economic price for its failure to forge some form of democratic reconciliation. As the second largest economy in the 10-member ASEAN grouping, with a population of just under 70m, its economy has grown by just 3-3.5% in the recent past, compared with 11.7% in Indonesia, 8.7% in Singapore, and 12.9% in nearby Vietnam. With tourism contributing directly or indirectly about 21% of the country’s GDP, and 2.4m jobs, the frequent coups and red shirt-yellow shirt clashes have had a powerful negative impact on tourism growth and the livelihoods of millions of Thais working in the tourism sector. Many argue that the country has lost its economic edge - neither technologically sophisticated enough to compete with the likes of Korea or Japan, nor cheap enough to compete with neighbours like Vietnam or Cambodia.

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[SCMP Column] Losing Glimmer?

October 22, 2016

In principle, Mainland Chinese demand has a long way to grow. Only 30% of Shanghai women claim to own a diamond, whereas in Hong Kong over 80% own a diamond or three. Annual growth in demand for diamond and gold jewellery from the Mainland was growing a 7% a year for most of the past decade, but has now slipped to barely more than 4%. This will arguably improve as China’s middle classes grow (almost 300m households are expected to earn over US$15,000 a year by 2030, by comparison with 153m last year) but big bets had been put on faster growth, with a result that the supply of diamonds has swollen much faster than demand.

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[SCMP Column] A Show of ‘Soft Diplomacy’

October 17, 2016

In one respect, China has no choice but to embrace the Lusophone world: the preposterous decision to base Macau’s legal system on the Portugese legal system means it is almost wholly dependent on legal professionals flown in from Portugal (undoubtedly a large proportion of the 8,100 Portugese living in Macau). There was some modest sense in retaining the British Common Law legal system in Hong Kong given the pervasiveness of common law contracts in international business, but contracts built upon Portugese Law? Surely this is not much of a competitive advantage in terms of international business connectivity.

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[SCMP Column] First Real Test

October 15, 2016

This is why, before judging him, it is important to review what he has achieved in Davao since he first became Mayor in 1988. Duterte is as close as you can get in Davao to political “royalty”. His father Vicente was once provincial governor to Davao. His daughter Sara is also prominent in local politics. His reputation may have been built on a long-standing “law and order” and anti-drugs platform (he has tough anti-smoking policies in place too) but to his credit Davao counts among the Philippines’ better performing municipal economies. He has build a better transport infrastructure than can be boasted by most municipalities in the country, and Davao is for example one of the few regions that have buried electricity and telephone cables underground – eliminating the shanty raggle taggle of power and telephone lines that decorate most Philippine cities. As a Financial Times commentator noted last week: “He has shown a common touch in promising measures to improve the everyday lives of ordinary Filipinos by restarting delayed rail projects and easing Manila’s notorious traffic gridlock.”

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[SCMP Coumn] Wage Talks cannot Fix ‘Real’ Problems

October 10, 2016

In truth, there are few major economies worldwide that are not currently wringing their hands over the challenges facing their communities’ poorly paid, and how most appropriately to respond. In Switzerland, this took the form of a formal referendum on whether to introduce a national basic wage to all citizens, regardless of whether they work or not (voters firmly rejected the idea). In the UK and the US where the travails of the blue-collar middle – who have seen so few improvements in their livelihoods over the past three decades – have poisoned local politics, the arguments have moved on from minimum wages and welfare measures to job-protection and barriers against foreign workers.

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[SCMP Column] Essential Growth Catalyst

October 08, 2016

The now almost inevitable failure of the TPP means that the China-ASEAN-led Regional Comprehensive Economic Partnership (RCEP), which includes Australia, New Zealand, Korea, India and Japan, excludes the US, and is due to be completed by the end of the year, will provide the primary architecture for driving trade liberalization in the Asia-Pacific. As a Financial Times journalist wrote last week: “Not only would (RCEP) exclude the US, but it would also include worse safeguards for intellectual property, internet freedom, workers’ rights, wildlife and the environment.” Most important, China is at the heart of the rule-making process, while the US is not even at the table. Grimly, it seems that neither Trump nor Clinton greatly care.

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[SCMP Column] High Price of Big Scientific Research

October 03, 2016

These last two scientific endeavours must surely be candidates for an Ig-Nobel Prize, with this ignominious list released only last week in Harvard. As with the Ig Nobels, they surely amuse, but make us think. Like this year’s Ig Nobel Reproduction prize – to Egyptian Ahmed Shafik for studying the effects of wearing polyester, cotton or wool trousers on the sex life of rats - or the Economics Prize to a New Zealand team which assessed the perceived personalities of rocks – or my personal favourite, the Peace Prize to a Canadian team that studied “The Reception and Detection of Pseudo-Profound Bullshit”.

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[SCMP Column] The Bigger Crisis Within

October 01, 2016

According to the Global Report on Internal Displacement (GRID), prepared by the Norwegian Refugees Council and its Norway-based sister, the Internal Displacement Monitoring Council, a total of 27.8m people were last year forced to flee their homes without crossing into a second country – 8.6m to escape conflicts, and a sobering 19.2m people fleeing natural disasters like earthquakes, floods or typhoons. For comparison, Europe has suffered an influx of around 1.8m, with Germany accepting perhaps a half of them thanks to Angela Merkel’s controversial compassion – a compassion that is costing her and her party dear ahead of next year’s national elections.

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[SCMP Column] Alarm over global trade

September 26, 2016

Focusing in particular on steel, where accusations against China for “dumping” surplus steel on global markets has put in jeopardy China’s recognition as a market economy, the latest Global Trade Alert reveals that at the end of last year 91% of all steel traded worldwide was affected by trade discriminatory measures – compared with 50% of world steel trade in 2009. Today Government export incentives provide sweeteners for 88% of world steel trade, compared with 77% in 2010.

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[SCMP Column] Painful progress

September 24, 2016

The International Labour Organisation (ILO), which contributes to our problem of winning proper attention for the challenges of managing the international movement of labour by muddling its statistics, says that 150m of the 330m migrants worldwide are simply international workers living outside their home countries. Around 30m of these are in the Asia Pacific.

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[SCMP Column] Appeal of ‘sin taxes’

September 19, 2016

I see sin taxes falling into three clear areas: biasing tax charges onto items that are self-indulgent wants rather than basic needs; disincentivising spending that harms our health; and punishing spending that harms our environment (or contributes to global warming). At the heart of such a system would need to be a fundamental and controversial shift in our tax system, away from taxes on salaries and towards VAT- or GST-type taxes on spending.

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[SCMP Column] The high cost of bad air

September 17, 2016

Both the World Bank and UNEP are emphasizing that these pollution-driven ailments inflict not only social harm and personal tragedy, but carry a very high economic cost too. I recall a World Economic Forum study released almost exactly two years ago that said the six main contributors to premature death and poor health worldwide – cardiovascular disease, strokes, diabetes, respiratory illness, cancer and mental ill-health – would cost the global economy US$47 trillion in the 20 years from 2010 to 2030 – with impacts heavy enough to bankrupt many of Asia’s health care systems.

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[SCMP Column] HK’s deepening inequality

September 12, 2016

As I have already written three times so far this year, the deepening inequality that has been marked worldwide, but nowhere more than Hong Kong, has poisoned democratic politics in all corners of the globe – from the US, to the UK, to the Philippines. The fact that the world’s top-earning 1% - a total of 70m families that earn US$71,000 or more a year – have walked away with most of the economic gains delivered by the growth of the past three decades – has created deep resentments across the world’s middle classes, who have felt income stagnation and job uncertainty throughout this long period and see no future prospect of improvement.

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[SCMP Column] Political Mess

September 10, 2016

Interestingly, we have a younger, more militant and confrontational set of Legislators. The youngest Legco member in our last Legco was 35, and the average age of Legislators was 58. Today our youngest member is 23, and 8 are younger than 35. We don’t yet have the average age of our 70 new legislators, but it will be significantly below 58. The youthfulness of geographically elected members contrasts sharply with the greyer age profile of functional constituency members. (Should we not feel embarrassed that every single functional constituency member is a man?)

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[SCMP Column] Economic conundrum

September 05, 2016

The demographic challenge among today’s poorer economies is rather different, but they account for only a small proportion of world consumption, and are likely to remain weak drivers of global economic growth. India – by 2050 expected to become the world’s most populous country – is predicted to have a working population of more than 1bn by mid-century – up almost 300m from today. Its workforce is set to overtake that of China somewhere between 2025 and 2030. At the same time, Nigeria is predicted to become the world’s third most populous country, and Indonesia the world’s fifth, by 2050. Indonesia’s workforce is set to almost double over the half century to 190m.

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[SCMP Column] Big is not Good

September 03, 2016

AB InBev’s publicity materials betray how oblivious they are to the poverty of their offering. Under the ridiculous broad strap-line of “Dream People Culture”, they say their dream is “to be the Best Beer Company Bringing Together People for a Better World”. Pardon? As Financial Times reports more soberly noted, the deal has more to do with strengthening presence in Latin America and Africa, “whose markets have not been disrupted by a shift in tastes towards craft beers”.

 

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[SCMP Column] Why We Need APEC

August 29, 2016

As the voices of protectionism and xenophobia have risen, perhaps APEC’s work is more important than ever. For those of us that through the past 30 years of experience are confidently convinced that openness and globalization are on balance a very good thing, these paranoid voices need to be addressed – and no place better than APEC. Perhaps those mind-numbing plane journeys are worthwhile after all.

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[SCMP Column]A pension crisis unfolds

August 27, 2016

For Hong Kong’s MPF savers, the message is similarly grim. If you earn HK$35,000 a month (which puts you firmly among Hong Kong’s upper middle class), then your MPF savings would amount to HK$36,000 a year, or HK$1.4m over a 40 year working career. Real investment returns of 3% a year would give you around HK$4.6m – enough to last for about 17 years if you can live on 75% of your final salary. But since 2000, MPF investment returns have been negative for five of the 15 years. HK$500,000 of contributions since 2000 would have earned just HK$100,000.

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[SCMP Column] Economic role of women

August 22, 2016

Worldwide, the labour force participation rate for men is around 77%, says McKinsey. This compares with 50% for women. Eliminate the gap, and you get the US$28 trillion boost to the world economy.

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[SCMP Column] Building Blocks

August 20, 2016

An alarming aspect of recent political developments like Brexit and Trump – and Hong Kong’s Occupy movement no less – is the erosion of trust they imply. So too with controversy over registration requirements for Legco election candidates. It is only a small step from distrust in our ruling elites to distrust in the legal systems that they have designed. This is doubly true when the cost of access to the law is prohibitive for ordinary Hong Kong people. Access to legal protection has become a privilege of the wealthy Hong Kong elite – as a result of which trust in our rule of law is debased and undermined.

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[SCMP Column] Unwelcome Intruders

August 15, 2016

Procter & Gamble, the world’s biggest advertiser, spends 11% of its total annual revenues – approximately US$7.24bn – on advertising its washing powder, dypers and so on. If everyone else were like me, studiously avoiding adverts wherever and whenever they appear, then this would be money that is wholly wasted It could almost certainly be put to much better use.

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[SCMP Column] Crazy Strategy

August 13, 2016

It only took the opening up of the global iPhone supply chain to make them realise they were playing a manufacturing mug’s game. Foxcon’s 800,000-odd Mainland workers may boast a monopoly on the supply of millions of svelt new iPhones every year, but when officials discovered that China captured just US$7 of the US$500 value of an iPhone, locking hundreds of thousands of dormitory-based workers in permanent poverty, they quickly changed tack: they began asking “Where along the value chain are the high-value-adding activities, and how can we attract them?” Of course, most of these high-value-adding activities are services in one form or another, and so that is where efforts are being focused to enhance productivity, protect competitiveness, and generate jobs that add more value and pay better salaries. Their riposte to Trump would be simple: if you want those manufacturing jobs back, have them. Lock your manufacturing workers in low-wage poverty if you want. If you think that will make American great again, dream on.

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[SCMP Column] Unravelling the Myths

August 08, 2016

Significant and fast-growing as this economic relationship is, many myths confuse understanding of China’s economic relationship. Of course the first myth is that China and Chinese companies are “Johnny-come-latelies” in Africa. As my own China Daily memories confirm, China’s interest in building close economic ties with Africa was being forcefully pursued four decades ago. Not for nothing was a towering Mao Zedong so often depicted in paintings and ceramic tributes as a father to the world’s peoples, with men and women of all races clustered around him holding aloft Mao’s “Little Red Book”.

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[SCMP Column] Economics of Olympics

August 06, 2016

By these many measures, the Rio Olympics look set to be a disaster of reasonably epic proportions. Venues and the metro system are incomplete. The ocean is polluted. Zika haunts every nook and cranny. The country is buried in its worst recession for almost a century. And Dilma Roussef’s impeachment shows a country in political chaos. The doping scandals that are keeping so many Russian athletes away are not of Brazil’s making, but coming in the wake of corruption scandals in Fifa and doping scandals in other sports like cycling they have tainted the games. So many today question how many of the medals have been won on the back of chemical enhancement. From the shaming of sprinter Ben Johnson in the 1988 Seoul Olympics, doping scandals have become graver and graver. A widely-quoted study in Sports Medicine estimates that between 14 and 39% of athletes dope. Whatever the true number, the suspicion of winners tarnishes even the most awesome of performances. Whether it is the dominant teams coming from the US, Germany, Brazil, Germany or China (all with more than 400 competitors), or little teams like that from Hong Kong, which is just 37-strong, and has only ever won one medal, potential drug scandals hover not far away.

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[SCMP Column] City of extreme inequality

August 01, 2016

It is worth remembering the extremity of inequality in Hong Kong. According to economist Branko Milanovic in his recent book “Global Inequality”, for a household to sit among the 70 million households worldwide that occupy the “evil empire” – the “Top 1%” that have captured most of the economic gains achieved in the world economy over the past three decades – that household has to earn US$71,000 a year. That is about HK$46,000 a month. Take a quick look at Hong Kong’s household income statistics and you discover that over 23% of Hong Kong families have household incomes above that level. By comparison, just 12% of American families have household incomes above this level, and in Japan and Switzerland just 9%. That makes Hong Kong an extraordinarily lucky and privileged place for the richest quarter of the population.

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[SCMP Column] Welcome measures

July 30, 2016

China is not among the most grievous sinners. The IEA says China’s fossil fuel subsidies – mainly focused on oil and coal – have almost halved since 2008, from US$42 billion to around US$22 billion. This is far behind Saudi Arabia and Iran, which provide fossil fuel subsidies of US$69 billion or more, and even behind India and Russia, which in 2014 provided subsidies of more than US$40 billion.

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[SCMP Column] Grand football ambitions

July 25, 2016

To build local expertise, a clutch of Chinese billionaire business barons have gone aggressively overseas to acquire control of top clubs which will build knowledge of the the way the global football business works, and at the same time earn them a handsome profit. Suning Holdings has paid €270m for 18-time Italian champion Inter Milan, while Wanda Sports Holdings, controlled by Wang Jianlin, reputed to be China’s richest man, has bought a 20% stake in AC Milan. Which means the next “local-derby” between the two top Milan sides will be as much a Chinese contest as an Italian one.

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[SCMP Column] Growing risks

July 23, 2016

last year in the United States there were 372 mass shootings, killing 475 people and wounding nearly 2000. Of these, 64 were school shootings. Yet after just three terrorist atrocities in 18 months in France, a nation is in shock and a national witch hunt is under way to blame officials for failing to anticipate the Nice rampage.

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[SCMP Column] Bargaining for advantage

July 18, 2016

Unlike the International Court, which is funded by the UN, the PCA to this day earns its living on the fees paid by arguing parties, not unlike Hong Kong’s own Arbitration Centre. It is unclear who paid for its year-long South China Sea deliberations. Definitely the Chinese paid nothing since they objected to the process from the outset. If all costs were met by the Philippine Government, what can we say about the PCA’s independence?

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[SCMP Column] Turning the Tide

July 16, 2016

Back in 2003, some Chinese neighbours gathered a large mountain of leaves on the jetty in front of my house after an energy-sapping day of chopping overgrown trees. They then set light to the mountain, and wandered off leaving it smouldering into the sunset. Inevitably, the tide washed in, doused the fire, and swilled the loose par-burned leaves into the water. Today, 13 years later, those leaves still swill back and forth from the beach to the jetty. They have not decomposed. They have not gone anywhere. Lesson 1: once rubbish washes into your beach, it is going to stay there for far longer than you can dare to imagine. My village neighbours were not lacking energy, nor lacking concern to keep the village trim. But in spite of perhaps 150 years living on the sea-edge overlooking that beach, they had failed to recognize that waste dumped into the water stays in the water. It seems that still today they believe that the ocean is an infinitely huge dumping ground where lap sap can be swallowed and forgotten.

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[SCMP Column] Rebuild Case for Liberal Trade

July 11, 2016

Making things worse, in the recession since 2008 trade has stagnated and actually fallen since 2014. From trade growth averaging 16% a year between 2003 and 2008, it has slowed to annual growth of just 1.5% since 2010. Confidence in the benefits of free trade has been rocked. As manufacturing demand has fallen inside China, so raw material exporters worldwide have suffered sharp declines. At the same time China has begun to “domesticate” more high-value-added parts of global supply chains, so shortening the chains and reducing export opportunities for component makers along these supply chains.

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[SCMP Column] Language lessons

July 09, 2016

Whatever the pace of Britain’s decline as a global colonial power, there is one area where the sun still never sets on Britain’s hegemonic reach – the use of the English language.

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[SCMP Column] The Way to Equality

July 04, 2016

Hong Kong’s 10 richest men earn the equivalent of one third of Hong Kong’s GDP (compared with 3% in the US and the UK, and less than 2% in China). Hong Kong has historically been tolerant of such wealth disparities, but that tolerance has been sapped since the Asian Financial Crash in 1998. During this long and challenging two decades, a large part of Hong Kong’s families have felt nothing but uncertain employment prospects, sagging incomes, and no prospect of improvement in sight. The eccentric QE policies worldwide, which have brought interest rates to historic lows, have aggravated resentments by lifting asset markets – in particular property prices – into the unreachable stratosphere.

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[SCMP Column] Fragrant Success

July 02, 2016

By today, China’s perfume market seems as much to do with prestige and status as with any personal preference to smell nice over the day. Surveys suggest that just 1% of Chinese today use perfume – compared with around 60% in the US or the UK. Most sales are in a dozen or so first tier cities like Beijing, Shanghai or Chengdu, and over 70% of perfumes are bought as gifts, and 30% of the year’s business is concentrated on Valentines Day. Because they are bought as gifts, then brands and brand status are paramount – which is why two thirds of sales in the country are of foreign brands. The market leader by far is Chanel, whose Chance, Coco Madamoiselle and Chanel No 5 help to give the French group a 14% market share (similar to their dominant market share in Japan). Christian Dior captures 2% of the market and close behind are Lancome, and Calvin Klein.

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[SCMP Column] Ahead Lies Madness

June 27, 2016

As the Financial Times’s Martin Wolf noted two months ago: “Avoiding needless and costly risks is how adults differ from children.”  Last Thursday, British people voted as children, with a terrible temper tantrum, for which the price to be paid will be incalculable. Clearly the inchoate desire to hit someone, from a population that has felt patronized and manipulated by their political elites for too long, was irresistible. If Britain has left the EU in haste, it will now suffer the pain of separation at leisure.

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[SCMP Column] Soaring to New Heights

June 25, 2016

Supercell so far has just four products – or “titles” – Clash of Clans, Hay Day, Boom Beach and Clash Royale. But on the foundations of these four games it has in the world of mobile gaming, become a global leader. These are the elite of games, attracting millions of fans and gamers worldwide. They earned profits last year for Supercell’s 190 staff of Euros 848m on sales of Euros 2.1bn. Mobile apps like Clash of Clans may not yet rank alongside League of Legends in the universe of professional video gaming, but now as part of the Tencent stable of companies who knows where we will be within the next decade.

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[SCMP Column] Realities for Retirement

June 20, 2016

These simple demographics put a devastating time-bomb under just about any pension scheme in place anywhere in the world today, and underscore why so many state pension schemes worldwide are unsustainable and close to bankruptcy. A fictitious Jimmy, aged 40 today, would need to save 17% of his income every month to be able to retire at the age of 65 with a retirement income of 50% of his present salary (most people polled worldwide seem to agree that 50% is the minimum they would like to cope on in retirement, assuming they already own their own home). And our fictitious Jimmy has only one response to this savings news: dream on! He sees no realistic possibility of saving so much on a regular basis, without the help of Mark 6. If he chooses to work on until he is 77, then his savings rate could fall to 8%. Even that would be a challenge.

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[SCMP Column] Banking in Fear

June 18, 2016

Given the pressing importance of this problem, surely more parties need to get involved. In APEC, Finance Ministers last autumn called on the 21 APEC economies “to build capacity to address financial crimes, which threaten everyone’s economic and social well?being”. They called for a report “exploring ways to strengthen capacity in tackling tax crimes and other related crimes”. But beyond these fine words, our region’s officials have sat on their thumbs. Surely cooperation to share suspicious information is not too much to ask.

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[SCMP Column] Quiet Comfort from Peru

June 13, 2016

It would be difficult to find a better case study of democracy working as we all hope it could work. Despite dreadful domestic hardships in Peru triggered by the global recession, and huge falls in export earnings from Peru’s mainly-commodity economy, the electorate baulked at populist or protectionist “solutions”, and instead voted for a textbook technocrat who on paper is as well-qualified to run a country as anyone I recall. Kuczynski, who is already 77 years old, first came to South America with his Polish-German father, who ran a leper colony in the Amazon. He studied at Oxford and Princeton. He worked as an economist at the World Bank. He has previously served as Peru’s finance minister, mining minister and prime minister. His election campaign targeted the moderate political centre in Peru, promising economic growth and social investment.

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[SCMP Column] Code Matters

June 11, 2016

With delivery of letters being a declining global industry, some would argue that it will get easier, not more difficult, to deal with future volumes of postal traffic – and hence less important to introduce postal codes. The Universal Postal Union says that the global volume of letters fell 2.6% in 2014 – the latest year for which we have data – to 327.4 billion, with international traffic, which accounts for just 1% of all letter traffic, falling by over 6%. Pressures in Asia are also insignificant by comparison with the US and Europe, where 301 letters per capita are posted every year. The comparable number for Asia is less than 6 per year. The same picture emerges with parcel delivery. While parcel deliveries grew by 3% in 2014 to 7.38 billion, by far the majority of pressure is in the US and Europe, with 7.5 parcels delivered per capita per year – 100 times more than in Asia. So the comparatively massive volumes of letter and parcel traffic in Europe and the US mean that the case for postal codes there is clearly more powerful.

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[SCMP Column] Driving towards Driverless Cars

June 06, 2016

But higher ambitions are going to take years. Amend that: decades. Main barriers are going to be regulators and safety experts who insist that automated driving systems, once unleashed in our communities, will be no less safe than human drivers – which means bettering the current situation where a fatal crash occurs one in every 3.3 million hours of driving, and where crashes resulting in injury occur once every 64,000 hours of driving: “Reaching this level of reliability will require vastly more development than automation enthusiasts want to admit,” says Shladover.

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[SCMP Column] Unsung Advantage

June 04, 2016

Today, China is home to close to 200 million cars – over 5 million of them clogging the boulevards of Beijing. Only the US is home to more cars (around 260 million). Its auto industry is one of the largest in the world, making 24.5m vehicles a year (twice the total made in the US, and four times the output of German carmakers). More than 24 million vehicles were bought last year, compared with 17.5m in the US, 3.5m in Germany 2.3m in France. And that is just new vehicles. China’s car ownership is such a recent phenomenon that the second-hand car market (which accounts for two-thirds of the US car market for example) has barely begun to develop. Only in recent weeks has the Government lifted laws blocking the sale of second hand cars between provinces. China’s streets are set to become as aggressively gladiatorial as the worst in the world, with congestion matching Mexico City, Istanbul and Bangkok.

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[SCMP Column] Closed for Business

May 30, 2016

The reality seems to be that the recent global regulatory overkill defined by Dodd-Frank and other legislation in the US and elsewhere is forcing banks sheepishly to refuse accounts to even long-standing and trusted clients. Shellshocked by the US$200 billion in fines imposed on financial institutions since 2008, and the ongoing fear of regulatory witch hunts that might arise if you fail to “know your customer”, banks are finding the cost of achieving regulatory “comfort” too burdensome and onerous to achieve for all but the most globally established enterprises.

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[SCMP Column] Invasive Species

May 28, 2016

A study by the Royal Botanic Gardens at Kew near London found that thousands of plant species are today at risk of extinction from threats ranging from climate change, habitat loss, disease and invasive species. Conservationists have now logged around 5,000 invasive species around the world, and the global cost of tackling invasive species alone is estimated at nearly 5% of global GDP. The annual cost just to the United States economy is estimated at $120 billion a year, with over 100 million acres (an area roughly the size of California) suffering from invasive plant infestations, according to The Nature Conservancy.

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[SCMP Column] Pointless Trade Rhetoric

May 23, 2016

Trade has stagnated since 2011, and actually fallen since 2014. From trade growth averaging 16% a year between 2003 and 2008, it has slowed to annual growth of just 1.5% since 2010. Confidence in the benefits of free trade has been rocked as politicians across the world have wrestled with the awful consequences of the 2008 crash, and the recession that has followed. And putting to one side the bigoted and ill-informed rhetoric of aspiring leaders like Donald Trump, sympathy for protection against foreigners’ “unfair” trade practices has begun to take root.

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[SCMP Column] Costs of Migrantion

May 21, 2016

In APEC, we have begun to discuss the creation of an “international worker card” that would not only facilitate the movement of such workers to and from their overseas jobs, but would also embody standardized access to health insurance and maintenance of retirement benefits. Jokowi would serve us well by lending Indonesia’s support to this initiative. 

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[SCMP Column] Your digital afterlife

May 16, 2016

By 1995, the digital revolution was pretty much limited to music, videos and photos. By 2010 it had swallowed the print media, retailing, TV programming, travel and tourism services and the human resources profession. By last year, it was engulfing financial services, healthcare, education, the auto industry, and agriculture. It is now lapping at the door of two even more fundamental activities in our economies – accounting and legal services.

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[SCMP Column] Real Inequality

May 14, 2016

This leads Milanovic to some tough conclusions: the shift in economic power away from the rich west to Asia has been strong, and will continue; the economies of the west face decades of stagnation ahead, with their middle classes hurting the most; we see the emergence of a “global plutocracy” built around the interests of the “Top 1%”, which will compromise our democracies, and possibly trigger populist and “localist” backlashes. We can see this already in the US with Donald Trump, in the UK with the right wing call for exit from the European Union, and this week in the election of Davao Mayor Duterte as the Philippines’ new president. Our Occupy movement and youthful unrest are likely part of the same phenomenon.

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[SCMP Column] Costly Divorce

May 09, 2016

For the British debate, there is of course an unusual convergence of bad things at work: eight years of post-2008 recession have fuelled unemployment and job uncertainty at a time when migrant worker flows from poorer eastern European economies have run strong. The recent tragic refugee floods across Europe, with the UK being a preferred target destination, has aggravated prejudice and xenophobia. People also seem to forget that this in-or-out debate on the EU has raged for decades inside David Cameron’s conservative party, and is as much as anything else an ill-conceived attempt to settle this battle. It is of course not helpful that the Brussels apparatus is such an easy whipping boy. Its combination of bureaucratic bombast and French legal opacity makes it easy to be irritated and angry about the unaccountable ways in which it works.

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[SCMP Column]Tip of the Iceberg

May 07, 2016

China’s gamblers are expected soon to make China the world’s largest gambling market, overtaking the US. But numbers are patchy, unreliable, and almost certainly massive underestimates. What impact they will have in future is literally anyone’s guess. Richard Scudamore, chief executive of Britain’s Premier League, was talking about Leicester’s shock victory, but he could have been talking about China, when he said: “We have all become completely hopeless at predicting anything.. No-one saw this coming.” In Leicester this week, at least the snooker industry saw China coming.

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[SCMP Column] Spreading Pain

May 02, 2016

Steel is a sore subject in many parts of the world as recent recession, in particular a sharp cut back in steel consumption in China, has left most of the world’s steel manufacturers haemhorraging horribly. And as China was in the boom years the main driver for plump profits for the world’s steelmakers, so it is fair to acknowledge that in the downturn, China has played a large part in spreading pain.

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[SCMP Column] Resource Curse

April 30, 2016

If you want evidence of the “commodities curse”, look no further than Port Moresby, the raggle-taggle capital of Papua New Guinea.

Of course, the curse is not PNG’s problem alone – the global collapse in price of so many key commodities is creating wrenching challenges in economies ranging from Venezuela, Peru and Brazil to Mozambique, Indonesia and Russia – but PNG lays out the challenges in stark and basic terms.

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[SCMP Column] China: pollution beater

April 25, 2016

A recent study on China’s resource efficiency funded by the UN Environment Programme, the Commonwealth Scientific and Industrial Research Organisation in Australia, and the Chinese Academy of Sciences is frank about China’s responsibility for rising demand for, and pressure on, a wide range of natural resources over the past decade and a half, and summarises China’s  challenge well: “It is unrealistic to expect China to achieve the extremely high apparent resource efficiency levels of those countries which have transferred most of the materials and energy intensive production processes to external jurisdictions.

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[SCMP Column]Monarch's lasting legacy

April 23, 2016

Like Kissinger or Carter, Elizabeth is also a living reminder of how in general terms the world has changed for the better – and of how so many of today’s terrible problems have all been tackled – and overcome – before. The damage wrought by the First World War as still strongly felt in the UK and across Europe. Times were hard and turbulent. As she was being born on that dull London day in 1926, so trade union militants launched a 10 day General Strike across the UK that led to the imposition of Martial Law. She was just three when the Great Depression engulfed the US and Europe’s economies. I wonder what parallels she might draw as we enter the 8th year of our “great recession”.

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[SCMP Column] What third runway? Hong Kong needs another airport

April 18, 2016

My sense is that Hong Kong’s air services negotiators will need to be endowed with magical powers of foresight to know how best to negotiate rights from Mainland cities to and from Hong Kong, and to best capture passenger flows onward to destinations worldwide. With close to 20 Mainland cities now handling 20 million passengers a year or more, surely only a magician can work out how to assign the burgeoning passenger services from these cities onto Hong Kong’s two runways. The question we need to ask is not whether we need a third or fourth runway. It is where do we put the next airport.

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[SCMP Column] Four amazing things I learned about China’s top leadership this week

April 16, 2016

Of course, as the former dean of Qinghua University’s Law faculty, it is reasonable to raise an eyebrow and say “Wang would say that, wouldn’t he”. He is almost certainly talking his own profession’s book to depict the coming three decades in China as being defined by the “Rule of Law”, since I am sure Beijing has other strategic priorities that might equally well describe the aspirations of the coming three decades.

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[SCMP Column] The Offshore Case

April 11, 2016

So let us focus on what should be focused on: the opacity that disguises the flight of corrupt money, the financing of terror, and illegal manoevres circumventing legal obligations. Expecting banks to “know your customer”, and enabling them to share information on suspect movements of money, would be helpful. Governments can also help here by making tax systems more simple. This might not be as glamorous as a peek into the lives of the super-rich, or of Putin’s favourite Cellist, but it would be a good start.

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[SCMP Column]Dumbing Down

April 09, 2016

But a successful democracy needs more than just well educated and well informed people. We have shockingly realized since the “great recession” engulfed us eight years ago that politicians need growth to get elected. No politician ever got elected promising “less bad” than his rival. Growth in an economy allows politicians to promise new and exciting goodies. It generates the wealth needed to invest in communities and to improve the amenities we value. Growth fundamentally underpins a mood of optimism that encourages cooperation and compromise.

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[SCMP Column] Smelling the Air

April 05, 2016

Get out on the street, and the reality most people are feeling is much more dispiriting than Ms Yellen’s statisticians are telling her. So instead of relying on data modeling, she and her counterparts around the world ought to be sending more people out onto the streets to “smell the air”.  As one anthropologist put it: “What we need is not just economic analysis but on-the-ground ethnographic analysis of how consumer perceptions of prices actually operate.”

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[SCMP Column] Confidence Crisis

April 02, 2016

So perhaps the Lee Bo mess was the result of some unapproved overzealous overreach on the part of local security personnel in Guangdong. If that was so, would it not be wonderful if Beijing officials could have the confidence and modesty to say as much? Clearing the fog would do much to restore badly damaged business confidence.

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[SCMP Column] Food for Thought

March 28, 2016

As food adulteration problems increase, and governments step in with increasingly strict regulations and increasingly clever technologies to detect adulteration, so it is clear that food fraud problems will never be stamped out. As soon as a new smart test is invented so some smart fraudster with a strong financial incentive will invent some way of circumventing it.

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[SCMP Column] Why Go Glum

March 26, 2016

Over the past four years, according to the OECD’s World Happiness Report, Hong Kong has tumbled from the 46th happiest place in the world to the 75th happiest. That makes us happier than Indonesians(79th), Filipinos(82nd) and Chinese (83rd), but significantly less happy than Singaporeans (22nd), Taiwanese (35th) and Japanese (53rd).

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[SCMP Column] Crowded Skies Add to Woes for Airports

March 21, 2016

For leading airlines like Cathay Pacific or Singapore Airlines the biggest challenge will not be to win agreement at home to add capacity in home airports – though we know from painful local experience this is hard enough – but to persuade other governments around the region to take seriously the challenge of finding sufficient slots for their aircraft to land.

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[SCMP Column]Harbour Matters

March 19, 2016

To see the harbour abused, degraded and neglected at the hands of uncoordinated piecemeal policymaking by successive administrations through the last decades of the 20th century was particularly painful and regrettable. It has been similarly painful to watch the glacial progress of efforts to regain planning control of the harbour, and with it progress in enabling ordinary Hong Kong folk to regain access to this shoreline that inspires our sense of community.

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[SCMP Column] Chilling Effect

March 14, 2016

But it would perhaps be complacent and naïve to imagine that Wang Qishan’s anti-graft drive might not at some point reach more deeply into Hong Kong. Given the sheer size of Mainland corporate and private investment in Hong Kong over the past 30 years, it is surely inconceivable that corrupt money has not found its way here. Perhaps we should ask the City University researchers to interview a few 14K triads in Hong Kong.

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[SCMP Column] Paying the Price

March 12, 2016

In short: as many women graduate with honours from Hong Kong universities as do men, but social and cultural attrition means that a decade later they are massively under-represented in the skilled areas of the economy. And even where women persist, they on average earn 17% less than their male counterparts for the same work. This discrimination is particularly apparent in the “STEM” area of the economy that is playing such a massive role in driving the digital economic revolution. Even a modest reversal of these imbalances is likely to drive massive rewards in future economic competitiveness.

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[SCMP Column]Aerial Torture

March 07, 2016

This might just make these long-haul journeys commercially viable: up to now, such long flights have been commercially disastrous. In 2004, Singapore airlines launched direct flights from Singapore to New York and Los Angeles. A year later, Thai Airways tried direct flights from Bangkok to Los Angeles, and American Airlines began flying from Chicago to Delhi. But by 2013 all of these services had been cancelled. Of course, soaring fuel prices did not help, but the economics proved impossible. In order to carry enough fuel for the journey, Singapore Airlines had to cut its passenger load from the normal 300 down to 170. Even making the flights business-class only could not make them pay.

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[SCMP Column]Signs of Life

March 05, 2016

In short, the reasons why companies and consumers are still unwilling to begin relaxing and spending seem very clear. Quite why so many economic policymakers don’t recognize or acknowledge these forces perplexes me. Whatever the reason, it seems much more adversity lies ahead before the patient on the emergency room table begins to show signs of sustainable life. 

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[SCMP Column] Banking on Change

February 29, 2016

Already it is clear that the “FinTech” revolution is being driven by two very different populations: radical new start-up disrupters who are using the potential of new technologies to develop fundamentally new ways of living our financial lives; and incumbent behemoths that have on the one hand recognized that unstoppable forces have been unleashed, and on the other have seen economies and efficiencies embedded in the new technologies that can save them big money, improve services to customers, and help them retain their hard-fought competitive leadership.

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[SCMP Column] Eyes Wide Shut

February 27, 2016

In Hong Kong, where “localist” xenophobes are railing against the Mainlanders in our midst, the seeming indifference of our administration to these rising pressures is a source of serious concern for our future competitiveness. A recent survey by the HK Institute of Human Resource Management reported that already today 90% of surveyed companies find it quite difficult or extremely difficult to find the right talent to fill vacancies. This must get worse. Shortages are most acute in logistics and transport services, IT, business and professional services, wholesale import and export trading, and restaurants and catering. Talk to most of these companies about their efforts to bring skilled people in from outside Hong Kong after local recruitment efforts have failed, and most boil with frustration at government reluctance to hear their cries for help.

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[SCMP Column] Keep on Pushing

February 22, 2016

Low birth rates mean that there will be fewer and fewer working people carrying the cost of supporting people in retirement. While we in Hong Kong (where we have about 15% of our population over the age of 65) are far better off demographically than a country like Japan, where today 26% of the population is over 65, and a shocking 38% will be over 65 by 2055, we are worse off in terms of retirement security because our official pension scheme – the MPF – is underfunded, and was only introduced in 2000. People retiring today have just 16 years of contributions – far too little to provide financial security through a retirement that might stretch for 30 years. And even in 2040 when people will be retiring with a longer lifetime of contributions, the amount saved will last most families for little more than 5 years.

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[SCMP Column] Milk for Life

February 20, 2016

China is of course hugely important for baby milk formula, accounting for sales worth $14.8bn in 2013 – three times bigger than the US market, and six times larger than Indonesia. Interestingly, Hong Kong has become the world’s fourth largest market for baby milk formula – not because of demand from Hong Kong mothers, but as a proxy for Mainland demand. Boosting China’s birth rate by 2m a year will only augment this huge demand.

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[SCMP Column] Life Goes On

February 15, 2016

Reflexivity may seem a big deal to George Soros and colleagues on the world’s equity markets, but in the bigger scheme of things, this is barely a bump in the night. Perspective is a wonderful thing.

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[SCMP Column] Weird Weather

February 13, 2016

As the US reported 10 different “weather and climate disaster events” in 2015, each costing US$1 billion or more in damage, the National Oceanic and Atmospheric Administration (NOAA) announced that 2015 was the warmest year on record – and that 15 out of the 16 warmest-ever years have occurred since 2000.

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[SCMP Column] Tourism Gold Mine

February 06, 2016

China’s capacity to transform the shape of international tourism is considerable. Hong Kong’s opportunity to benefit from this is clear. If we don’t benefit in the process, it will be our own fault.

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[SCMP Column] Tough Year for APEC

February 01, 2016

Peru is also keen to introduce us all formally to the Pacific Alliance, the new and significant trade block that includes Mexico, Colombia, Chile and Peru. For me, in a continent populated by “bad guys” like Venezuela, Brazil and Argentina, these are the “good guys” – committed liberalisers keen to build stronger links across the Pacific. While the Pacific Alliance is (sensitively) dominated by Mexico, which accounts for almost two thirds of its GDP, the Pacific Alliance as an integrated region of over 200m people would make the world’s 8th largest economy. China’s President Xi Jinping may not have included them in his “One Belt, One Road” vision (with 64 other economies embraced by One Belt One Road, I puzzle why not), but they deserve keen attention from our part of the world. And what Peru is kick-starting in 2016, Chile will continue in 2019 – when it in turn becomes chair of APEC.

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[SCMP Column] A New Pandemic

January 30, 2016

In all societies, including Hong Kong, there are people with cherished prejudices who do not want those prejudices ruffled. They constantly seek the anecdotes that support their prejudices and allow them to enter discussions with “Ah, but…” They are supporters of Donald Trump and subscribers to Fox News. They are voters for Marine Le Pen in France, and the Independence Party in the UK. They sit at both ends of the political spectrum, and the challenge facing our “fifth estate” is to stay above those prejudices, and to try to make sure the wider truths are heard. The challenge facing our politicians and leaders is to hear those wider truths, and adjust their prejudices accordingly.

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[SCMP Column] Putting the PR Spin into Trust

January 25, 2016

Oxfam shockingly calculates that the world’s 62 richest business leaders control as much wealth – about US$1.76 trillion – as the 3.6 billion people that count among the poorest half of the world. While the wealth of the top 1% has jumped by 44% in the past five years, the “wealth” of the poorest half of the world has shrunk by 41%. Of the wealth accrued since 2000, half has gone to the richest 1%, and just 1% has gone to the poorest in the world.

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[SCMP Column] Myanmar's hope

January 23, 2016

First, large numbers in the country’s military leadership retain kleptocratic control of many key industries and industrial franchises. Myanmar is one of the world’s most resource-rich countries – ranging from marine resources off its shores to minerals, rubies and jade, and to forests full of some of the best hardwood in the world – but much of this resource wealth today enriches the families of the military elite. Without “defector” amnesties and other comforting gestures, the potential for backlash remains.

Second, the military retain significant real power despite the electoral success of the National League for Democracy. For example, they automatically retain 25% of the seats in parliament, have reserved the power to run the security and home affairs ministries, and control the country’s “administrative spine” right down to township level. Even if The Lady’s party passionately wanted to sweep military-connected people out of office, the huge “technocratic deficit” that exists in a country that has been cut off from the outside world for most of the past half century would make this impossible. The country is going to remain chronically short of technocratically equipped people for decades to come.

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[SCMP Column] Time to count the winners in global commodity crash

January 18, 2016

So what do I make of all this? On balance, I think the panic about oil prices is overdone and that low prices will actually do us some good as we try to breathe life back into the global economy. But I think the gloom emanating from the commodity economy tells a darker story, suggesting a long haul ahead before we get any spring back in our step. The scale demands inside China driven by new cities, new airports, new mass transit systems, and 400 million or more emergent “middle class” consumers will in due course come to our rescue, but it will take time. Our year of the fire monkey might not quite be an outright disaster. But for most of us, it is unlikely to be fun either.

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[SCMP Column]Political Eclipse

January 16, 2016

CY’s legacy is not yet set in stone. Like Obama, he has been dogged by global recession, and against this recessionary backdrop has had to wrestle with the awesome centripetal forces of China’s awakening economy – but if he harbours hopes of staying in office to 2022, he must surely harbour hopes that his final years will see an economic upswing that will lift spirits, reduce the xenophobic partisanship of “localist” political forces, and leave him with a creditworthy legacy. That is perhaps why he devoted so much of his mind-numbing two-hour presentation to property, to Hong Kong’s role as the One Belt One Road “superconnector”, and on innovation.

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[SCMP Column] Dumping Grounds

January 11, 2016

When China joined the WTO in 2001, its understanding was that after 15 years of WTO membership (that is, the end of 2016) it would be allowed to “graduate” from non-market to market economy status. There have been recent indications from the European Union that they are agreeable. But guess who has thrown a spanner in the works? As a Financial Times article noted last week: “Beijing is an easy target in the crowded US presidential field.” A study by the Washington-based Economic Policy Institute concluded that giving China market economy status would result in a surge in Chinese exports, and a loss of 1.6 million jobs in the US: “China has extensively subsidized a range of industries and used currency manipulation to support production and exports, allowing it to accumulate widespread gluts of goods that it can export at discount prices.” Of course, the US’s plucky, honest and principled companies would expect nothing less from those conniving, untrustworthy foreign competitors. Always was it so.

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[SCMP Column] Saving for Old Age

January 09, 2016

The crude arithmetic is simple, but almost always terrifying. If you earn the average Hong Kong household income of HK$24,000 a month, and want to maintain that level of income after you retire, then your savings at retirement will need to be HK$24,000 times 12 months times 20 years – which comes to almost $5.8 million. That is a number that makes most families turn white: it means that you have to save HK$128,000 a year, or just under over HK$10,000 a month for the whole of your working life. What family do you know that earns HK$24,000 a month and can afford to save almost half of it?

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[SCMP Column] Light without Progress

January 04, 2016

The lesson for us in Hong Kong? That 30 years of perpetual haggling over constitutional architecture has disserved us horribly. Our politicians should not measure themselves in terms of progress towards “one man, one vote”, but in terms of improving our health care system, of giving security in old age to our elderly poor, of giving us access to affordable housing, or giving us clean air. Until we start measuring our political representatives – and our government officials – in terms of “performance legitimacy”, then we will get what we deserve – pretentious political posturing, and procrastination. If we want our “one country two systems” arrangement to live beyond 2047, we have to do better than this.

 

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[SCMP Column] No Consensus Please

January 02, 2016

Without really being sure, I have wondered whether the obsession with “consensus” has its roots in Confucian thought. Whether yes or no, the reality is that there is no place for consensus in politics. I repeat today what I said a year ago during that tracking exercise: “Modern complex societies are riddled with large and perfectly reasonable differences of opinion, and the very essence of democracy is to broker those differences… The concept of democracy is fundamentally founded on a recognition that there can never be consensus – and that to be held hostage to it can only cripple decision making and lead to political inertia.”

To make the tough decisions and compromises that political leaders have to make in the interests of our society, a leader – whether CY Leung, or Barak Obama, or Xi Jinping – has to roll up sleeves, arm-wrestle compromises with different interests, and broker plans that are in the interests of the majority. In a democracy driven by party politics, this messy process happens naturally: political parties build coalitions of support around a compromise policy document – a manifesto – and if they win an election based on that manifesto then two things naturally happen: the government has a mandate to act, even in the face of opposition; and the groups that signed on to the coalition of support that forged the manifesto are bound to lobby in support.



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[SCMP Column] Off Life Support

December 21, 2015

So as we edge into the Year of the Monkey, and drink toasts to the future, the main message is that several years of austerity and belt-tightening still lay ahead, even though we can more credibly today talk about “green shoots”. Patience and risk aversion may still be well advised. We are more than half way through our “lost decade”. And while China’s domestic restructuring is at present causing us all heartburn, on balance we remain lucky to live on China’s doorstep. As the global economy begins to rally back towards boisterous good health, there will be nowhere more exciting to be than in China, where a seismic digital revolution is taking place – but I think that is a story for another day.

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[SCMP Column] Cartel Conundrum

December 19, 2015

Perhaps the single most important conundrum for me is something the government has always stayed silent on: in a small city market like Hong Kong, how will you define the relevant market? No-one will ever be able to prove abuse of market power if in the first place you can’t define the market in which abuse has allegedly occurred. In a large country like the US or China, defining the market may be easy. But in Hong Kong, this is not so. For example, is Hactl or Cathay Pacific, which handle the huge majority of Hong Kong’s air cargo, capable of abusing local market power if their true competitors are in Singapore, Shenzhen and Guangzhou? Can Hong Kong’s port operators truly be tried for abuse of market power if their competitors are ports in Shenzhen and dispersed across the length of Asia. And could Hutchison Telephone or PCCW be credibly scrutinized for market dominant behaviour when Mainland mobile operators already hover over the local market with customer bases 100 times larger than our local “behemoths” could ever dream of? The work of our competition regulator is likely to be fascinatingly complicated by the increasing “fungibility” of the Hong Kong and Mainland markets.

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[SCMP Column] Time for Wimps to Lead

December 14, 2015

Since this discovery, China has moved hard and fast to build its services economy. Recent research driven by former WTO Chief Economist Patrick Low and a team in Hong Kong, along with researchers in APEC’s Policy Support Unit, has provided even more provocative food for thought. In researching over 40 manufacturing industry case studies, they have found consistently that even manufactured goods are mainly services. One fresh cherry exporter from Chile had 72 services embedded in its value chain. A Chilean wine exporter had 70. A Hong Kong watch exporter had 43. A Mexican company that made brake hose end fittings had 54 services in its value chain.

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[SCMP Column] The "Good Guys"of Pacific Alliance Mean Business

December 12, 2015

Just as we on the Pacific’s western shores have suddenly begun to realise that we need to know more about South America’s economies, so too have the Pacific Alliance partners begun to turn attention to Asia, and the potential for a “Puente Pacifico”, or Pacific Bridge – even though so few of us speak Spanish. For Mexico and Columbia, there is the “push” factor that they are anxious to reduce their reliance on the US as the dominant export market. But for all four, even though China’s demand for raw materials may have faltered for the time being, there is a rising awareness of, and interest in, China (and ASEAN) as significant future consumer markets. We should ensure the Asian end of the “Puente Pacifico” lands here in Hong Kong. If it lands elsewhere, we will be the losers.

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[SCMP Column]The Art of Innovation

December 07, 2015

Most business chambers – including most in Hong Kong I presume – would be arguing for tax breaks, subsidies and various cash incentives for bright-idea start-ups. But the data worldwide suggest that regardless of what tax breaks or subsidies you provide, 80-90% of start-ups fail. Therefore, lots of money goes down the drain. Many argue that this is an inevitable fact of life, and governments should shower water on a hundred flowers in confidence that a dozen or so will bloom. Measure the gains from the successful dozen they say.
These advocates have a case, and many governments follow that principle - though the rules they then set for how a bright entrepreneur, might qualify for support seem to baffle and frustrate even the keenest and most creative innovator. And there seems to be a very poor correlation between the amount of funding disbursed in a country, and the level of innovation. A Economist report claimed the best link with innovation was gross R&D spending: “Innovation-led “smart” growth has occurred mainly in countries with a big group of medium to large companies, and a small group of SMEs that is spun out from (them) or universities.”

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[SCMP Column]Tip of the Melting Iceberg

December 05, 2015

With global commodity prices at their lowest levels for over a decade, almost without exception, many of you might dismiss my concern. Oil and coal prices, coffee and sugar prices, soya and wheat prices, are all down 50% to 70% from their post 2000 peaks. But I am not sanguine. The price collapse is a direct result of the global recession that began 7 years ago, and it may still be several years before the global economy begins to recover. But if we assume recovery will begin in earnest by 2020, with consumers in China and then later in India adding literally billions of people to our “stuff” consuming classes, then pressures on these resources will immediately soar. I am still betting that conflicts linked with competition for resources in increasingly short supply will create serious global conflicts long before we begin to pay any serious price for our failure adequately to address the climate challenge.

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[SCMP Column] Gucci Set is Here to Stay

November 30, 2015

On the back of this explosion, the world’s luxury goods industry has flocked into China. Brand names like Louis Vuitton, Chanel, Prada and Gucci have proliferated across China’s top cities. But paradoxically, in spite of explosive sales growth for most of the past decade, these China-based stores have struggled. This is because over 65% of the US$65 billion luxury goods bought by Chinese in 2014 were in fact bought outside China – either during overseas holidays (there were 120 million overseas visits by Chinese last year), or through a shadowy “daigou” network. These “daigou” are people who base in key cities like Paris or Milan, take orders for whatever the Chinese tai tai demands, and then mail the goods back to China below the radar of frustrated tax and customs officials. Fascinatingly, one response has been to go “virtual”, with some luxury goods companies foregoing the posh high-street shop, and focusing all efforts on selling on-line.

The canny Chinese habit of buying tax free overseas has for many years enormously benefited Hong Kong, which is of course normally the first overseas destination for China’s international travelers. But this Hong Kong windfall has faltered – not just because Hong Kong people have proven so xenophobically unwelcoming to Mainlanders in recent years, nor because bankers’ bonuses have withered as 325,000 banking jobs have been shed worldwide – but because so many of China’s increasingly sophisticated travelers are now choosing to do their shopping further afield – in South Korea and Japan, or directly in Europe. Bain predicts that luxury goods sales will contract in Hong Kong by 25% this year. And with this, jobs are being cut, and stores being closed – most recently Coach, TAG Heuer and Burberry.

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[SCMP Column] It's Time to Bridge the Gap

November 28, 2015

But without a Zhuhai bridge, Hong Kong has never been able to perform the same catalytic role for Zhongshan and Jiangmen. The drive from Hong Kong was too long for a factory boss to go and return in a single day. And the task of getting freight from the west Pearl River Delta either by small river vessels, or along traffic gnarled roads was troublesome and uncompetitive.

The bridge to Macau and Zhuhai can be transformative even today for the western PRD – if we can ever get our act together and built it. Cargos could be moved swiftly to the Hong Kong port, and the travel time from Hong Kong would be more than halved.

So why the procrastination? Undoubtedly the task of agreeing construction plans between at least three governments (Hong Kong, Macau and Zhuhai), and sometimes Guangzhou and Beijing too, was always going to be challenging. But the reality is that still today many in our administration have only a half-hearted interest in stronger integration with the Pearl River Delta, even though it is our natural market today and the richest and most dynamic part of a Guangdong economy that is about the size of Spain.

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[SCMP Column] Not Welcome Here

November 23, 2015

And the extent to which this has created wealth for those inside the banking sector can only be imagined. This thought occurred to me last week as I read that Barclays Bank faces new fines of around US$100m for electronic trading abuses – which follows a $485m fine paid in May to New York’s banking regulators for manipulation of forex spot trading. Moody’s says that bank litigation costs since the 2008 crash have reached almost US$219 billion – led by Bank of America which has paid out US$70 billion. As I read these numbers wide-eyed, I ask a single simple question: What on earth were the profits these institutions were sharing amongst themselves before 2008 if they are able now to afford to pay fines of US$219 billion, and still be in business? Financial rape and pillage comes to mind.

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[SCMP Column] World City? Not Any More

November 21, 2015

PwC’s 2015 “Building Better Cities” study*, released this week at the APEC meetings in Manila, should provide a powerful wake-up call for anyone in Hong Kong who cares for our future. This survey of the livability of 28 cities across the APEC region puts Hong Kong a drab 11th, with shocking ratings for culture and “social health”, health and welfare, and environmental sustainability. We might not be surprised to see Toronto and Vancouver up in the top two places, but it is irritating to see us lag behind Singapore (3rd), Tokyo (4th), Seoul (7th) and Osaka (10th).

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[SCMP Column] Meeting of Minds

November 16, 2015

For me, the most fascinating breakthrough here is the now-widespread recognition that service sector liberalization – in particular in finance, IT and logistics – is critical for competitiveness across all parts of our economies. Inefficient or expensive services destroy the competitiveness of manufacturers and service providers alike. Three years ago, there was an almost willful neglect of services in APEC liberalization discussions. Practical agreements on the behind-the-border liberalization or harmonization of standards and regulations may still be a long way off, but it is encouraging to see the leaders and top officials recognise how important services liberalization is for future competitiveness.

In deference to the fact that Peru will take over chairmanship of APEC in 2016, much attention is also likely to be given this week to the critical importance of strengthening links between Asia and the South American economies – in particular the four liberalizing economies grouped in the recently-formed Pacific Alliance – Mexico, Chile, Peru and Colombia.

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[SCMP Column] Hong Kong ignores food security at its own peril

November 14, 2015

While Hong Kong’s fleet is negligible, we nevertheless have a huge stake in the vitality of the South China Sea. Hong Kong is one of the most “food insecure” communities in the world. Over 90% of our foods are imported, and our obsession with seafoods is legendary. We may only have a population of 7.2 million people, but our appetite for fish, crabs and lobsters, and a wide range of shellfish makes us one of the world’s highest consumers of seafoods per capita, and the world’s 10 largest importer of marine products (much of the value of this is accounted for by sharks fin, but that is an embarrassment for another day).

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[SCMP Column] The Two-for-One Trauma

November 09, 2015

None is willing to admit the uncounted billions that have been gouged from the country’s families in the name of the policy, but the sums are self evidently enormous. While the fees charged to obtain permission to have the first child have been cancelled, still the hassle and documentation tasks have remained onerous and resented. And the punishments that are now called “Social Fostering Fees” can be eye-watering. Responses from 17 provinces revealed fees in 2012 totaling RMB16.5 billion for that year alone – with no information on how the money was used.  It was not uncommon for a family to be “fined” over RMB200,000 for the sin of bearing an unpermitted child. Famously, the film-maker Zhang Yimou was fined a total of RMB7.48 million for defiantly fathering four children.

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[SCMP Column] Changing the Guard

November 07, 2015

So we have entered a period when the US, above all others, needs to come gradually to terms with the need to share hegemonic power. No doubt Russia and India nurture (less plausible) hegemonic aspirations, but the serious challenge is to recognise the irreversible reality of China’s ascent, and to embrace it, rather than try to crush it.

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[SCMP Column] Hong Kong: a feisty city on ‘borrowed time’

November 02, 2015

Today, I have the rare opportunity to begin a new column for the SCMP. In broad terms it will aim to understand and describe the Hong Kong that has been home for over 30 years. It will explore the forces that are changing Hong Kong, both from the outside in, and from the inside out. – hence the name of the column.

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[SCMP Column] Pacific Trade Deal Welcome, Despite Geopolitical Baggage

October 08, 2015

Such US rhetoric makes me deeply queezy. As the Financial Times Trade Editor during the Uruguay Round of trade liberalization talks, I travelled the world for five years listening to Trade Ministers and local chambers of commerce making the same complaint: “If it were not for those pesky deceitful foreign businesses and manufacturers twisting and breaking the trade rules, our fine, upstanding exporters would perform much better in global markets.” Slipped into this rhetoric was always the call for “fair” trade – code for “our right to do protectionist things to frustrate the deceit and manipulation of those pesky foreigners”. On cue, Obama talked of the US negotiating “free and fair trade that would support our workers, our businesses and our economy as a whole.”

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[SCMP Column] China's painful restructuring couldn't come at a worse time

September 24, 2015

Over the past three decades, a pragmatic and fiercely reform-minded Chinese leadership have brought this huge and complex country from ignominious poverty to a nation of respectable middle income earners. This progress seems set to continue, albeit at a less frantic pace than we have seen since 1980. A Beijing teacher who in 1978 was bicycling to work and subsisting much of the year on cabbage today drives a car, WeChats on a smartphone and takes holidays every year to Japan and Thailand. Perhaps China’s greatest challenge at present is not to sustain indefinite growth, but to prepare its population to recognize that no booms can continue indefinitely. In the west we have tended to let the market lead that process, however brutal that sometimes can be. 

 

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[SCMP Column] Vision Critical in City Planning as Metropolises Set to Boom

September 10, 2015

Today, 55% of the world’s population lives in cities – and that population is growing by 1.4 million people a week. Already cities account for 80% of global GDP.

The developing world is home to most of these cities – China alone is in the process of building more than 40 new cities of more than 1m people between now and 2030, and developing-world cities are expected to account for 93% of all future urban growth. But more than 30% of our urban residents are currently living in slums. So planning cities right is a need that presses urgently on us.

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[SCMP Column] Why Blame China for the Funk over Global Economic Malaise?

August 27, 2015

In 2007 – the year of strongest global growth ahead of the 2008 crash – the US, with an economy of UD$14.48tr, and 1.78% growth, added UD$260bn to the global GDP (according to the IMF). Meanwhile, the EU, growing at 3.34%, on a GDP of US$17.67tr, added about UD$511bn. And China, with a smaller US$3.5tr economy but 14.2% growth added US$1.33tr to the global economy. Amazing how helpful to the world economy China’s heady GDP growth was. So the three together added US$2.1tr in value to global economic output.

Turn to 2014, seven years into the global recession, and the numbers tell a fascinating story: the US, with a GDP of US$17.4tr, and growth up to 2.39%, added US$375bn to the global economy. But the EU, flatlining at 1.4% growth, added just US$200bn. China’s growth had tumbled to 7.4%, but with a GDP valued by then at US$10.4tr, it added US$1.32tr to the global economy – steady as she goes from 2007. Of course, together, the three only added US$1.9tr – a headache compared with global growth of US$2.1tr in2007.

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[SCMP Column] Time to put in place ‘Earn, Learn, Return’ initiative in Hong Kong and Asia

August 12, 2015

ABAC’s first step into this issue was driven by business recognition that the international movement of workers is not a blight but a blessing. As Asia’s wealthy societies like Japan, Korea, Hong Kong and Singapore rapidly age, so skills shortages have become progressively more acute, intensifying our reliance on such international workers to keep the wheels of our own economies humming.

This is as true for the 350,000 relatively low-skilled home helpers in Hong Kong as it is for welders in the Middle East, or nurses and factory workers in Korea.

ELR aims to purge the blight that currently infects this critically important regional labour flow. It calls for employers – not workers – to pay the fees needed to get them their jobs. It calls for health and pension arrangements that provide continuity with the schemes they would have had if they had stayed working at home. It aims to ensure that workers can return home regularly to their families, to minimize the risk of family break-downs. And it calls for overseas working experience to be recognised and properly valued on return.

Such moves in combination would help to reduce the abuse that so often blights the lives of overseas workers in economies like Hong Kong – illegal underpayment, withholding of passports, insufferable working and living conditions. Other steps in Hong Kong would include allowing domestic helpers to live outside their employer’s home if they wish – a recommendation made by the judge in the Erwiana court case as she sentenced the employer to seven years in prison for her far-from-uncommon abuses.

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Information Technology Agreement - Ready to Sign

July 20, 2015

The US, China and the EU now are set to reach agreement on the long-delayed update on the range of the tarrif-free information and communications technology products. The breakthrough on the negotiation over the 1996 Information Technology Agreement (ITA) would make it the biggest tariff agreement under World Trade Organisation in 18 years. 

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[SCMP Column] Reshaping the World Order through ‘One Belt, One Road’

July 15, 2015

But three things seem to make the concept distinct. First, the inclusion of the vast and neglected region of “stans” – from Kazakhstan to Turkmenistan to Uzbekistan – and the convulsive Islamic states around Iran and Iraq, and north Africa. Second, the clear priority of infrastructure-building, whether roads and railways, or gas and oil pipelines. And third, attention willfully turned away from the United States.

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[SCMP Column] The top 10 fixes needed if Hong Kong is to be Asia’s world city

July 02, 2015

This might be a vain hope: too many legislators – shame on them – seem interested to focus on nothing except electoral “architecture”. It is to their eternal shame that they have so neglected the very real challenges that face Hong Kong people, like improved housing, better health care, improved care for the elderly, improved education…

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[SCMP Column]MERS - taking the fear and putting it in perspective

June 17, 2015

A true global pandemic is likely to cull millions – maybe hundreds of millions. For example the Black Death that raged across Europe between 1346 and 1353 killed an estimated 75 to 200 million people. The good news is that MERS is probably not “the one”.

And in the course of research it seems I have discovered something new, which I am calling SYPPS: the Six Year Pandemic Panic Syndrome. Exactly six years ago today, I was writing about panic over Swine Flu (H1N1); and six years before that trying to dampen hysteria over SARS.

Of course six years before that we had those graphic photos of mountains of chickens being disposed of in efforts to snuff out Avian Flu. Gosh, we have had a torrid time since Hong Kong reverted to Chinese sovereignty in 1997.

I know I should not jest over something as awful as a global pandemic – especially since I only recently stumbled upon, and disposed of, the large stock of Tamiflu pills that I panic bought in 2003. But it really does take a good pandemic panic to remind us of how badly we judge the life-threatening risks around us.

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[SCMP Column] Mainland Wife migration flow about to return?

June 04, 2015

My guess – and at this point it is only a guess – is that many tens of thousands of those women who have arrived in Hong Kong since 1995 through the one-way permit process will in the coming decade be strongly tempted to return to the PRD as the ties to Hong Kong loosen. The death of the husband will be key.

So too will the emergence of their children from the Hong Kong school system. The Hong Kong hospital system may still attract them to stay. So too might our rule of law and comparative absence of corruption.

But the desire to be close to ageing parents will be increasingly important. And as communities in the PRD become more prosperous, so Hong Kong’s comparative attractiveness will weaken.

If I am right, and we have reached a migratory tipping point, then a number of positive changes may occur. First, links between Hong Kong and the PRD will strengthen as families buy homes in the PRD while retaining rights to be in Hong Kong. Second, many who find it tough to get good jobs in Hong Kong will have a chance to find better careers. Pressure on Hong Kong’s welfare system will be reduced, as will housing pressures.

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[SCMP Column] China’s astute decision to abandon export processing by upgrading manufacturing base

May 20, 2015

 

Statistically, and in terms of Customs measurements, China was exporting items at $180 – which greatly boosted apparent export earnings. But most of this export value was accounted for by the import of high value components and services that had earlier been imported from countries like the US, Germany, Korea and Japan.

Since this discovery, China’s leaders have steadily raised minimum wages in the coastal export zones to where they are more than double today what they were in 2000. This has forced manufacturers out of this immiserating part of the value chain. They have had to boost productivity, raise value added, and move into higher technology areas, or they have withered.

From this discovery forward, China’s leaders have recognized that providing rich consumers in the West with low-cost consumer goods may have been right for the emergent 1980s, but by locking their own work force in low-wage poverty, they were throttling the growth of their own domestic consumer market, and were also building social discontent problems for themselves in the future. Since the early 2000s, and in particular since the crash of the global financial markets in 2008, they have recognized the logic and urgency of building their own consumer middle classes.

Hence the priorities of the China manufacture 2025 Plan, and the recognition that development of their services economy (to drive efficiency and productivity in their supply chains) has to play an essential part in building a competitive future manufacturing economy. We saw this very clearly in APEC last year in China’s fierce advocacy of services development.

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[SCMP Column] Great Games between China and the US is alive and well

May 11, 2015

But in the US and in China, the great game is being played out by more traditional rules: in the TPP the US is bringing together 11 allies, above all else Japan and excluding China, that alongside its economic agenda is intended to balance Pacific power in its favour, underpinned by its relationship with Japan.

And in China, President Xi’s visit to Russia, Kazakhstan and Belarus – alongside his recent visit to Pakistan and a visit by India’s prime minister to Beijing – marks China’s own efforts to rebalance power in Asia and the Pacific around its own interests and priorities.

Since the Ukraine conflict, Russia’s relations with the West have been strained.

Friends are in short supply. Out of invitations to 68 countries to stand alongside him to commemorate Russia’s Victory Day marking the 70th anniversary of the end of World War II, fewer than 30 world leaders have agreed to join. Japan, Israel, the US, France, Germany – and even North Korea’s Kim Jong-un – have given Putin the cold shoulder.

President Xi’s presence has huge diplomatic importance.

For China, alongside the raw diplomatic importance, Kazakhstan, Russia and Belarus are three anchors for their new Silk Road initiatives that look west towards parts of the world ignored by the West for almost a century.

Russia’s isolation has hurt Belarus and Kazakhstan economically, so the arm of China’s political and economic friendship has great attraction. For example, Belarus’s exports dropped 22.7 per cent in the first quarter of 2015 following the Ukraine conflict.

Meanwhile, China’s ties with this region long ignored by the West have grown steadily in recent years – driven strongly by China’s ever-growing need for natural resources as well as the need to stabilise potentially disruptive Islamic forces in China’s west.

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[SCMP Column] World's middle class set for sea change within 15 years

April 23, 2015

In short, whereas today Europe and North America dominate world middle class consumption, accounting for 64 per cent of a total of $21.3 trillion (a dominance that has stayed steady for most of the past 200 years), by 2030, that share will have fallen to 30 per cent of a total of nearly $56 trillion. The Asia-Pacific, driven by consumers in India and China, will have risen from 23 per cent of consumption today, to 59 per cent.

If these predictions are anywhere near accurate, and if I were CEO of a manufacturer based in Frankfurt or Birmingham or Dallas, the message is clear: build an Asian presence as soon as possible.

I had a surreal feeling absorbing all this data, because India’s economy seems as quagmired as ever, and because we are still obsessively anxious about faltering growth in the Chinese economy, and the dramatic impact of the anti-corruption campaign on luxury spending on the Mainland.

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[SCMP Column] Why is Jetstar so keen on becoming a Hong Kong airline

April 08, 2015

What is the prize that so powerfully motivates Jetstar – or its bankrollers, Qantas, China Eastern and Shun Tak - to bleed so heavily and for so long? For low-cost carriers like Jetstar, Hong Kong can offer only lean pickings. Competition is ferocious on almost all routes. Access to landing and take-off slots is a nightmare at any reasonable time of day. As a fast-turnaround, low-cost carrier Jetstar will have no capacity to capture cargo revenues, which so bolster the earnings of full-service competitors operating wide-bodied fleet through Hong Kong. Access to mainland cities (the holy grail for future airlines perhaps) is fraught with delays that take a savage toll on cost control.

In Asia as a whole, just Air Asia out of almost 20 low-cost carriers has in recent years reliably made money. Jetstar’s sister airlines in Japan, Vietnam and Singapore all appear to be struggling to keep their heads above water. And as the sorry plight of the now-bankrupt Oasis Airlines reminds us, the ferocious competition through the Hong Kong hub makes it one of the toughest hubs in the world through which to earn money.

So where is the logic to make all this pain worthwhile? Having sat through the tedium of the ATLA courtroom drama, with Jetstar and its Qantas lawyers pitching barristers against the arrayed objections of Cathay Pacific, Hongkong Express and Hong Kong Airlines, there seems only one thing: the right to sit alongside the Hong Kong government in its many air traffic negotiations, with the government negotiating on its behalf for air traffic rights to international destinations in Asia and further afield.

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[SCMP Column] US needs to adapt to an engaged China

March 25, 2015

One reality is clear: China is emerging as an economic and diplomatic force more rapidly than is comfortable for many in the Asia-Pacific. Lacking any legacy debt to the regional power architecture created in the 1950s, Beijing’s efforts to create some new architecture that reflects its needs – like a Brics Bank, the maritime Silk Road, new credit-rating agencies, dilution of the dominance of US dollar-denominated global capital markets, and the China-Asean free-trade agreement (and beyond that the free-trade area of the Asia-Pacific) – makes reasonable sense.

US diplomacy would be better spent not boycotting such initiatives, but getting inside them and making sure they can mesh effectively with the massive global architecture already in place. I am sure that Lee Kuan Yew would say that someone in Washington is losing the plot.

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[SCMP Column] Polarising media just feeding prejudices

March 11, 2015

Hong Kong’s upheavals are uncomfortable, but they are not difficult to understand, and the causes of unrest are clear. Any youngster joining the Hong Kong workforce since 1998 has felt only stagnant earnings, job uncertainty, an absence of any bright light in the future, and home prices rising up into the unreachable stratosphere. By now, those youngsters will be in their mid-30s, and will be unable to paint any optimistic scenario for the decades ahead – for themselves, for their parents, or (if they have them) for their children.

Our task is not to punish and corral those at the heart of current protests, but to start building a strategy that restores a sense of purpose and hope. Most likely, our futures are going to be entwined with those of our Pearl River Delta neighbours, so the sooner we see them as neighbours and not enemies the better. The polarising media must meanwhile realise the harm they are inflicting on a community that remains still today among the most cohesive, cooperative and tolerant in the world.

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[Commentary] The AIIB: writing Asia's new rules

March 09, 2015


For those who see US opposition to the AIIB as part of a strategy to keep China from the diplomatic epicentre in Asia, there is seen to be a common motive in US efforts to complete the Trans-Pacific Partnership (TPP), which includes 12 Asia Pacific countries and leaves China out. But even clearer evidence has emerged in the 22-economy Trade in Services Agreement (TiSA) negotiations in Geneva. China initially stood aloof from these services liberalising negotiations, but has in the past year formally sought to join. The US is today the only TiSA participant  blocking China’s engagement, after an EU shift in March last year after Chinese President Xi Jinping’s high profile visit in Europe.

Given the lesson of the AIIB, the next big question is whether the US will stand firm to block its emerging rival in global trade talks or whether it will change its geopolitical strategy?

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[SCMP Column] Hong Kong has much to gain from a higher minimum wage

February 24, 2015

For Hong Kong too, the message should be clear. This is a high-price, high-cost economy which will never win a game based on low-wage competition. If a company depends on such low wages, it has no place in Hong Kong, and should migrate elsewhere. A higher minimum wage will do Walmart no harm. And it will do Hong Kong no harm. On the contrary, slightly more youngsters might then one day be able to afford their own home.

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[SCMP Column] Empowerment of women needs to start with basics

February 11, 2015

Recent debate inside Abac has made it clear to me that a further, critically important barrier to women’s full participation in the workforce is our failure to recognise the wide range of uniquely female health challenges and illnesses. Some of these unique challenges are sexual (breast cancer, cervical cancer and so on), some are hormonal (like thyroid complaints, where women are up to eight times more likely to suffer than men, and lupus, the auto-immune illness that strikes women 10 times more often than men). Some are linked with the simple medical threats linked with childbirth. Some, more tragically, are linked with what the World Bank calls “intimate partner violence” which leads to injuries, unwanted pregnancies, sexually transmitted infections, depression and other serious mental disorders.

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[SCMP Column] Denise of Dymocks may not signal end of books after all

January 27, 2015

So what a shock to learn that Mark Zuckerberg, Facebook founder and ultimate e-geek, has set up a book club, confesses a love of reading books, and promises to post two books a month for his Facebook followers to digest and debate. Sales of his first chosen book – Moises Naim’s The End of Power – have surged, with hard copies of his book sold out in days, and 180,000 Zuckerberg fans signing up to debate the book within a week.

And a further shock to learn that book sales have not collapsed as consultants were predicting until very recently. Consultancy PwC told us just two years ago that e-books would overtake physical books by 2015. Today, Deloitte says printed books still account for 80 per cent of sales by value. The leading UK bookstore Waterstones says sales of real books were up 5 per cent in December. In the US, sales of physical books rose 2.4 per cent last year to 635 million.

I’m confused. Am I really a dinosaur, or is the world really moving with me on this?

Data from Hong Kong would suggest I am not so extinct after all. Sales of new book titles in 2013 in the city were down 50 per cent from two years earlier to 4,000, but Hong Kong’s 77 libraries remain as busy as ever. Some 11.4 million books were on offer in our libraries at the end of 2014 – up 3 per cent from two years earlier, and book borrowers rose over the same period by 5 per cent to 4.2 million.

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[SCMP Column] Stop consulting, just do it!

January 13, 2015

In light of the sobering lessons of the recent months’ Occupy Central activity, our leaders’ interest in inequality and youth is telling. In nine years in office, Tung mentioned the word “inequality” just twice in his policy address. Tsang paid little more attention to the problem – except in 2011 when he used the word nine times as he wrung his hands about improving people’s well-being, reflected on the unaffordability of housing, and introduced his “My House Purchase” scheme.

In his three policy addresses, amounting to a total of more than 50,000 words, Leung has never used the word. If any lessons have been learned from the alienated youngsters at the heart of the Occupy demonstrations – and from the embarrassing influence-buying revelations of the Rafael Hui Si-yan corruption trial – then surely this must change, and fast.

Tung by and large ignored the issue of youth – except in his 1998 policy address when he used the word 18 times as he talked about raising education spending, committed the government to whole-day schooling for all, funded the introduction of information technology in schools, and established the Employee Retraining Board.

 

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[HKEJ Article] Real Value of APEC

November 17, 2014


There have been numerous other markers of progress over the course of the 80-odd days of meetings spanning 2014 that no outsider will notice or much care about, but which are significant nevertheless – making our supply chains more efficient; liberalizing our services economies; cooperating on development of the “blue economy” – shipping, fishing, seabed mining, coastal tourism and so on; running uncountable numbers of capacity building courses and best-practice learning workshops for officials to learn how to put these glamorous headline initiatives into practice.

As someone who spends almost three months a year in unglamorous APEC meetings in unglamorous cities across the region throughout the year, it is mildly irritating to be in Beijing and to recognize that for most people, the APEC party that has just come to an end, with its funny-dress photo-ops, will be regarded as the total sum of what APEC amounts to – an inconsequential talk-shop.

In truth, the real value of APEC sits elsewhere – in unsexy workshops where top officials learn from each other, and without the distraction of political theatre, help to train officials to implement the ambitious liberalization initiatives embodied in high-sounding “leaders’ declarations”. But this doesn’t make headlines. It does not get the pulse pumping in the way that putting Putin and Obama in the same room together does.

As Beijing’s Party comes to a close, attention now begins to turn to 2015, and an APEC year under Philippine leadership. Solid foundations have been laid by Beijing this year, and it is possible that Manila – with much more modest resources than China – will achieve more that we might expect from one of APEC’s less developed economies.

The Philippine “Motto” for the year ahead makes the direction of the year clear: “Forging Resilient, Inclusive Growth: A fair deal for all”. This is solidly the agenda of a developing, not a rich economy. For APEC, which from 2007 to 2012 was chaired by successive “developed” economies ranging from Australia and Singapore to Japan and the US, policy focus has now shifted to the concerns of our developing member economies. Starting from Indonesia’s leadership in 2013, chairmanship has passed to China and now the Philippines – and after the Philippines come Peru, Vietnam, Papua New Guinea and Chile. There will be added developing economy momentum during 2015 as ASEAN economies focus on completing their “ASEAN Economic Community” by the end of 2015.



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[SCMP Column] Give APEC credit - it's far more than just a talking shop

November 06, 2014

When China took over chairmanship of the Asia Pacific Economic Cooperation Grouping from Indonesia at the beginning of the year, it set an ambitious three-pronged agenda worthy of the landmark anniversaries being celebrated: regional economic integration; economic reform and innovative development; and building infrastructure and regional connectivity.

From the outset, the centerpiece of the first prong – regional economic integration – was in jeopardy. China decided it wanted its main deliverable to be an APEC commitment to a Free Trade Area for the Asia Pacific – FTAAP – that would by 2025 embody the iconic “Bogor Goals” of free and open trade and investment in the region. It was a brave thing to shoot for. The US and others negotiating the Trans-Pacific Partnership have been adamant that no regional initiative should be allowed to put the TPP in jeopardy. They have blocked and tackled from day one on the FTAAP plan. Beijing’s cold dry air has literally crackled with static electricity as China and the US have arm-wrestled over the FTAAP.

Even days before the leaders meet, it is unclear what will be agreed. US hopes that a TPP deal could be cut by the time of the APEC Party have come to nothing, and hopes are not high that the US will commit to any ambitious FTAAP until the TPP is sealed. Quite how face will be saved on this issue is not clear.


 

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[SCMP Column] Ignoring mental illness creates an economic burden for us all

October 23, 2014


The WHO measures the mental illness problem in terms of Disability-adjusted Life years, or “DALYs” – years lost due to suicides, other premature death, inability to work, or impaired productivity - and says that worldwide we lose 199 million DALYs every year. It is hard to get your head around such an awesome number, but the message is clear: it is big. They say an estimated 154 million people suffer mental illness worldwide, 100 million of these suffering from alcohol or drug abuse, and almost 900,000 commit suicide every year – almost double the number that are murdered, and three times the number that die in wars.

Here in Hong Kong, based on limited data, we know there are 190,000 patients currently being treated for varying degrees of mental illness, and an estimated one in seven suffer various levels of neurotic symptoms. Hong Kong’s suicide rate is twice that of New York or Singapore. There is a wide gap between demand for treatment and the supply, because of shortages of mental health professionals. We have an average 4.6 psychiatric specialists for every 100,000 people, compared with an average in high income countries of 8.6.

Dr Layard’s conclusions for the UK are highly relevant to us here in Hong Kong: depression and anxiety cause more misery in our society than all physical illness put together; this is unacceptable because effective remedies exist but are not used; these remedies are not expensive and would pay for themselves in terms of enhance workplace productivity; failure to give mental illness the attention it deserves is both grossly inefficient, and grossly unjust. More of us should have been running in last Sunday’s Rat Race.


 

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[SCMP Column] Why Xi's corruption purge may soon make its way here

October 09, 2014


So Xi’s anti-corruption purge seems barely to have started, with huge and unsettling ramifications for Hong Kong and our power elite. The Chinese Academy of Social Sciences estimates that more than 20,000 officials have fled China since 1995, taking with them over US$150 billion in spoils. Alongside legitimate overseas investment, these flows have made Chinese the biggest overseas investors in the US and Australian property markets, and have made Macau the world’s gambling Mecca. As the purge has become serious, no wonder the share prices of all of Macau’s casinos have slumped by between 27 and 40%. With the minimum price of a VIP casino chip set at HK$10,000, and RMB10,000 being the maximum a Chinese can legally bring out of the Mainland, it seems that Wang Qishan and the Central Discipline Inspection Commission need to do little more than put a video camera up on the VIP exits, and escort people to a nearby interview room!

But if Macau is set for a period of turbulence, so too must Hong Kong. The simple volume of Mainland money channeled through Hong Kong over the past three decades must surely mean that significant billions have corrupt origins. As Beijing is now forging links overseas to pursue corrupt funds channeled overseas, it is surely not insignificant that links are being built with our cherished ICAC, and with more than 40 other anti-corruption agencies around the world. If the ICAC has the mettle to handle the challenge, and whatever the outcome of the Raphael Hui courtroom case, this may be but the first of many inquiries to come.


 

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[SCMP Column] China needs urgent reality check on infrastructure needs

September 25, 2014


So we should be pleased that China recently hosted a major APEC Public Private Dialogue on promoting infrastructure investment through public-private partnerships (PPPs). After all, China is going to account for an awful lot of infrastructure investment.
 
But I came away schizophrenic – encouraged, but concerned. So many seemed to believe that challenges start and end with the supply of money. That is why China is proposing this Asia Infrastructure Investment Bank (AIIB) to supplement the infrastructure-building work being done by the World Bank and the Asian Development Bank.
 
Unfortunately, my own understanding after dozens of private sector discussions over the past year on the region’s infrastructure-building challenges is that even though the dollar numbers are awesome, money shortages are not the main blockage point: on the contrary, two key problems have to be addressed: first, projects need to be properly structured and “packaged” - and governments lack the expertise to construct large, long term infrastructure project proposals.


 

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David's Blog on SOM3 Beijing - Post 7

August 25, 2014

Summary of Key Issues in SOM3 Beijing
 
My blog reports were woefully inadequate over the last three weeks of Senior Official meetings in Beijing. Feeble as it may seem, the work pressure just to stay on top of the many important issues we were listening to, and contributing on, overwhelmed the need to write daily reports back. Here are some of the issues and initiatives that I failed to give proper attention to. Many we will need to follow up in ABAC:


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David's Blog on SOM3 Beijing - Post 6

August 20, 2014

APEC Transportation Working Group (TPTWG) meetings at the Hong Kong International Airport
 

From the milling corridors of SOM3 in Beijing, where my ABAC colleagues are preparing input for the final meetings of Senior Officials, I have flown back down to Hong Kong – not to put feet up in my locked-and-bolted home, but to camp out at the Hong Kong International Airport where officials are huddled for the APEC Transportation Working Group meetings.


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David's Blog on SOM3 Beijing - Post 5

August 18, 2014

China’s hosting Public Private Dialogue on promoting Infrastructure Investment through PPPs
 
We should be pleased that China agreed to host, under the auspices of the Investment Experts Group, a huge one-day Public Private Dialogue on promoting Infrastructure Investment through PPPs. After all, infrastructure development needs are acute – an estimated $50-60 trillion over the coming decade – and will need private sector engagement if sufficient funds are to be found. But I came away schizophrenic – encouraged, but concerned.


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David's Blog on SOM3 Beijing - Post 4

August 16, 2014

New Forum Created: Public Private Partnership on Environmental Goods and Services (PPEGS)
 
Among several new fora created and inaugurated by APEC this week, the PPEGS may have an interesting role to play. But first, one has to wrestle with confusions over acronyms. This is not a PPFS or a PPSTI, or a PPWE. Let’s unscramble.
 
These last three are “Policy Partnerships” – on Food Security (PPFS), Science Technology and Innovation (PPSTI) and Women in the Economy (PPWE). But this new forum is a Public Private Partnership  – not a Policy Partnership - on Environmental Goods and Services. 


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David's Blog on SOM3 Beijing - Post 3

August 15, 2014

APEC Business Travel Card
 
One of the first meetings out of the blocks in Beijing was the Business Mobility Group – home of all things to do with the APEC Business Travel Card. Mika Takahashi from ABAC Japan gave an update on our own ABAC positioning on the Card, but our key points are really not very different from those already made: we need cards to be processed more quickly; we need the cards to stay “alive” if and when our passports change; and we want the Cards to live for five years rather than the present three. In APEC terms, in-principle agreement to this extension is a big deal for business.


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David's Blog on SOM3 Beijing - Post 2

August 14, 2014

Food Security Issues in APEC


Note: This is a big week for Food Security issues in APEC, with an array of meetings from Thursday. But I am unable to attend them because of meeting conflicts. Instead, here are some thoughts on the issue that I contributed to the South China Morning Post today (August 14):

 
What do Mount Tambora and MH17 have in common? Since you probably don’t know anything about Mount Tambora, the question is a cruel one, but the answer is simple: they both offer big lessons on food security.

And food security is much on my mind at present, because of big APEC meetings on the subject up in Beijing this week, and some pretty serious anxieties on how business can engage most effectively to keep us on track to achieve food security in the region by 2020 – APEC’s declared aim since leaders met in Vladivostok two years ago.


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[SCMP Column] Issue of food security erupts on to agenda of APEC leaders

August 14, 2014


While food production is looking steady, and food consumption in the rich western economies is stable, China’s fast-rising appetite for more meat protein and processed foods is pushing global demand inexorably upwards. China’s wheat imports have jumped 50-fold since 1980, while pork consumption has jumped five-fold to 50m tonnes a year – half of world consumption, and six times more per capita than Americans consume.

The flip side of marvelous success in cutting the world’s under-nourished from over a billion to 840 million is that food consumption is rising sharply in the poor developing parts of the world. Along with this, land and water resources are under increasing stress, and environmental damage is immense.

The fact that APEC officials are dedicating serious attention to food security is commendable. But the fact that they have after two years still refused to define what they mean by “food security” is a source of concern. We are hoping there will not be another Mt Tambora, nor three volcanic winters, any time soon. But even without such a catastrophe, the challenges we face in providing the world’s 7 billion people with food security are more acute than many presume.


 

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David's Blog on SOM3 Beijing- Post 1

August 11, 2014

Highlights on Beijing 

For a battle-hardened former journalist like me, it is hard to walk through the fortified portals of the Beijing Hotel, on Changan and on the north east corner of Tiananmen without some slightly querulous feelings. This classic of colonial Soviet architectural style is as close as any hotel – or set of hotels – can get to a mausoleum. It is barely changed from those far distant days of 1982 when I was here in Beijing to train journalists in the freshly-minted China Daily. Despite superficial facelifts and makeovers, it is as intimidating and un-navigable as ever, the grande dame of hotels from Mao’s hayday. The fusty carpet smells are unchanged. The air outside is as hazed as ever. You can tell I love Beijing!


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[SCMP Column] Economies at risk if root causes of sick workers are not tackled

July 17, 2014


A recent World Economic Forum study estimated that the six key contributors to premature death and poor health – cardiovascular disease, strokes, diabetes, respiratory illness, cancer and mental ill health – would cost the global economy $47 trillion in the two decades from 2010 to 2030. About one third of this would be due to mental ill-health, which is unmeasured in many economies.

Losses on this scale are not just a heavy burden on the sick, on companies, and on governments around the region – they are also large enough to bankrupt many of our region’s health care systems.

As our societies become steadily older, with the population over 65 expected to double by 2050, so this arithmetic will get steadily worse, with a dwindling workforce carrying the cost of funding care for the elderly in their societies. Japan faces the severest of these challenges, with about one third of its population expected to be over 65 by 2035. But none of the rest of us can be complacent because all of us are close behind.


 

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[SCMP Column] Constitutional crunch crimps HK competitiveness

July 03, 2014


In 2007 the Bauhinia Foundation asked Mike Enright and I to revisit the Hong Kong Advantage book 10 years on, to examine the competitive changes that had occurred. This we did, and the findings were generally positive, despite the unanticipated adversities arising from the 1998 Asian Financial crisis, the dot-com crash, and the SARS crisis of 2003. Against the odds – and the forebodings of many – Hong Kong remained robustly competitive, and Beijing interference remained laudably light-handed. 

But the Bauhinia Foundation asked us to add a chapter – on how political changes were affecting Hong Kong’s competitiveness. This we also did, but so politically sensitive was our chapter that the foundation chose not to release it.

I was irritable at the time, and I was equally irritable when I reread the chapter last week. So much of what we addressed remains untackled today, and must be tackled if the ugly political developments we are now witnessing are not to get worse.

“There has clearly been some erosion (in competitiveness),” we concluded in 2007: “The huge amount of political and administrative energy that has been diverted over the past decade into debate on constitutional reform has been an exhausting distraction and has often been counterproductive. It has diverted the administration from other practical issues in the community, making it tougher to dedicate time and attention to the factors and forces that will underpin Hong Kong’s future competitiveness.” Surely this is true in spades seven years later.


 

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[SCMP Column] Case of Tolerance

June 19, 2014


But more important, we should remember that emerging affluence across the Mainland and China’s steady integration with the rest of the world after many decades of isolation, are for most Hong Kong people the best thing that has happened to us in our lifetimes. China’s opening up has brought massive stimulus and huge benefits to the entire global economy – and nowhere have these benefits cascaded more prodigiously than here in Hong Kong. As China’s GDP has exploded 80-fold between 1978 and today, from US$188 billion to US$14.8 trillion, rising from less than 1% of global GDP to almost 16% today, no community has benefited more than Hong Kong. China’s exports – a mere US$21 billion in 1978 – have soared 200-fold to more than US$4 trillion, with much of this trade managed through Hong Kong.

The reality is that China’s extraordinary emergence is reshaping the global economy, and creating uncomfortable transformations for everyone, everywhere. Shock waves may be more powerful here, but they are no less significant in Europe or the US or Latin America as they reshape our world.

China’s tourism boom is but one manifestation of this – and this boom is just in its infancy. Our challenge is not to build a wall against it, but to channel it as fluently as we can. 


 

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[SCMP Column] Unfinished Business

June 05, 2014

As we move into year six of the “great recession”, with the economies of the US, Europe and Japan still spluttering unprettily along, two issues worry me most of all: the emergence of protectionist, anti-foreign political forces in many communities around the world; and the largely-invisible curse of youth unemployment.

Gone is the boisterous, flamboyant optimism and excess of the 1980s and 90s. In its place, we have either xenophobia and protectionism at worst, or at best a gloomy resignation to hard times stretching far over the horizon. The  Japanese have a fitting word for it: “Gambarimasu” - “We must struggle on”.

These trends can be seen most alarmingly across Europe, with unemployment rates among under-25 males stuck above 30% for most of the past six years, and with fascist, right wing parties rising to political significance in recent European parliamentary elections.
In theory, here in Hong Kong, things are not so bad. Unemployment rates are at historic lows, and the worst effects of the great recession are not evident – thanks largely to the lucky nearness of China’s fast-emerging economy.

But I fear problems in Hong Kong are much more troubling than bare data suggests. 

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Dodwell's blog on SOM2 Qingdao - Post 5

May 24, 2014

APEC Austerity

 
The really bad news out of Qingdao was how the financial squeeze since the global financial crash of 2008 has exerted a massive squeeze on APEC project funding. Out of almost 130 projects in search of funding, less than 30 were successful in attracting funds. The warning from Qingdao was that funding pressures are unlikely to lift any time soon. There is likely to be an increasing reliance on self-funded projects (where, in proposing a project, an economy agrees to provided necessary funding). Since APEC’s unique contribution is in its huge programme of capacity-building activity, and many of the projects in search of funding are workshops aimed at such capacity-building, then this funding squeeze is no small matter. [ Read More ]

Dodwell's blog on SOM2 Qingdao - Post 4

May 23, 2014

APEC Business Travel Card

 
I am currently in the process of applying for my third APEC Travel Card. The process is as painful as ever. More than a month after putting in my application, still not a single APEC economy has approved me. When I last applied three years ago, the process took three months, and even then I won approval from only 15 economies. I wonder how or whether processing has improved between 2011 and 2014. What was that in the last Business Mobility Group about member economies striving to clear applications within a week? Perhaps I was dreaming. [ Read More ]

Dodwell's blog on SOM2 Qingdao - Post 3

May 22, 2014

FTAAP and TPP

I intended today to move on from FTAAP and TPP antics to other Qingdao themes, but forgive me for a couple more thoughts.
 
First, since yesterday’s blog, I have seen the Trade Ministerial statement, and it is telling that specific references to a deadline for creating an FTAAP, and to a Feasibility Study, have been expunged. Setback for China here, though there is a commitment for officials to tie up a deal within 2014 – so China should still be able to claim a meaningful FTAAP “deliverable” under its 20-14 chairmanship. [ Read More ]

[SCMP Column] India's moment

May 22, 2014


In short, therefore, India’s economy remains a pygmy, but mismanagement and bureaucratic corruption have been so egregious that even modest improvements by a new Modi administration have the potential to make a massive difference. For the first time in 30 years I believe there is a chance the country may at last begin to move towards its potential.

An important litmus will remain my alma mater the Financial Times: if the Indian government at last allows it to publish and distribute inside India, then that will be an important sign of change in the wind. It is a tribute to Mr Modi that he has hoisted me out of 30 years of cynicism and pessimism to believe that at last things might change.



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Dodwell's blog on SOM2 Qingdao - Post 2

May 21, 2014

Contested pathways to a Free Trade Area of the Asia Pacific
 
When in Ningbo in February China tabled its concept note for a meeting on the margins of Qingdao SOM2 on how the various Asian regional integration initiatives might be used to build towards a Free Trade Area of the Asia Pacific, I had expected a saloon-bar fight to break out immediately. Surely the US would  never tolerate such an initiative, since it has always a) insisted that there is only one route to FTAAP, shaped by the Trans-Pacific Partnership (TPP), and b) would not welcome a Chinese move that stole momentum from the TPP process.


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Dodwell's blog on SOM2 Qingdao - Post 1

May 20, 2014

Meeting issues

Forgive the recent blog silence. A couple of issues have muddied the waters. First, since ABAC no longer has an Action Plan and Advocacy Working Group, of which Anthony Nightingale was chair and I the lead staffer, I no longer have “standing” to attend and report back on Senior Official meetings. I now attend, but really only out of habit and nosiness.

Second – and more material – terrible calendar clashes between our ABAC2 meetings in Santiago Chile, and the first ten days of Senior Official cluster meetings meant that none of us ABACers were able to get to Qingdao for the SOM2 cluster until close to the end of the cluster. Awkward and frustrating to have missed so much, and to be so rushed at the end of the cluster to catch up. It was also challenging for us to fly 30-35 hours back from Santiago to Qingdao without our brains being somewhat numbed.
 
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[SCMP Column] China's Tech leap forward

May 08, 2014


China still has a long way to go truly to “sorpasso” the US: GDP per capita is still barely one tenth of the US, and productivity barely a fifth of US productivity. China is still below Peru in terms of per capita incomes, and the purchasing power of GDP per capita places China 99th in world rankings. And of course, the coyness is also deeply embedded in Deng Xiaoping’s appeal to “hide your brightness, cherish obscurity”.

But for all the caveats and cautionary words, this “sorpasso” is genuinely a big deal. Already China is the world’s leading trading power. Less comfortably, it is the world’s biggest emitter of CO2, and the leading consumer of a host of raw materials. And it is emerging from a century of ignominy and poverty at warp speed.

Nowhere is this clearer than in the internet and telecoms areas, where stunning developments must be sending shudders through Silicon Valley’s internet community. Unfettered by the legacy telecoms technologies dependent on copper wire, the Chinese have adopted social media on a scale that very few outside the country appear to recognize. Today over 700 million Chinese own a mobile phone – and according to fascinating KPMG research, 78% of these are smartphones (compared with 47% in Germany and 40% in the US).

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[SCMP Column] Politics is the deal

April 24, 2014


Two months ago I flew down to Singapore to give a presentation titled: “Are FTAs history?” There was a particular mischievous pleasure in taking this to a Singapore audience, where the government, more than any in Asia, has invested massively in securing Free Trade Agreements (a total of 38 at present counting).

The message was simple, and persuasive: today in Asia, around 80% of all trade is in intermediate goods that are progressing along long and complex supply chains that embrace a dozen or more economies. Negotiating bilateral trade agreements that secure preferential tariffs for the export of finished goods from one economy to a second economy is, without much exaggeration, a total waste of time. It gave me great pleasure telling off Singapore officials for wasting so many thousands of hours, and so many millions of taxpayer dollars, negotiating deals that were useless and would never be used.

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[SCMP Column] Running out of options

April 10, 2014


Can Shenzhen airport and the other PRD airports ride in like white knights to save the day for Hong Kong’s increasingly congested Chek Lap Kok airport? As environmental lobbyists continue to grab at any available straw to block construction of a third runway at the airport, it has often been claimed that the PRD airports can fly in to Hong Kong’s rescue.

These lobbyists are not wrong to force the Hong Kong government to turn over every possible stone to discover an alternative to building a third runway. It will be horribly expensive and the construction period will inevitably result in inconveniences and dislocations.

But I can say with confidence now that they will find exactly what I found when I went through the same stone-turning exercise three years ago: The frustrating but consistent finding of the study I published in June 2011* was that we have no choice but to press ahead as speedily as possible with a third runway. From as early as 2016 we face increasingly severe airport congestion whatever temporary palliatives are discovered. The longer the delay, the more severe will be the diversion of business activity to other regional competitor hubs.




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Dodwell's blog on SOM1 Ningbo - Post 7

February 27, 2014
APEC officials seem at last to have got excited about services. It would be nice to think that this is a result of ABAC’s persistent nagging over the ubiquity of services in all parts of our economies, and the importance of efficiently delivered services in enhancing productivity and improving competitiveness. But we may have an inflated idea of our influence. Clearly important was the unexpected entry into the fray of Chatib Basri, Indonesia’s Finance Minister, in Surabaya last year, when he chided local industrialists that they would for ever be uncompetitive and vulnerable to outside competitors as long as they paid over the odds for services – in particular telecoms, financial services and logistics costs. Chatib Basri is a powerful and influential ally in an economy that has traditionally been highly suspicious about opening up its services economy.
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[SCMP Column] The Card to Travel

February 27, 2014


The APEC Business Travel Card (ABTC) is perhaps the one reliable thing that any business person knows about APEC, and one of a tiny number of achievements over APEC’s 25 year life that really do seem to have made a difference. It took the APEC Business Advisory Council many years to get APEC officials to buy into the idea that regular business travelers should be given high speed access through immigration queues, and easier visa access to the region’s economies.

 For those that have the card (and there are fewer than 500,000 in active use at the moment) it is up there with the gold Marco Polo card that gives you access to Cathay Pacific executive lounges.

But for all the passionate support the card gets, most conversations are animated by complaints and grim stories of travel adversity and angst.


 

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Dodwell's blog on SOM1 Ningbo - Post 6

February 26, 2014
Ningbo has not been only about services, supply chains and services in supply chains…. There have been some interesting developments too on the health agenda that was “mainstreamed” early last year by Indonesia, only to peter out for unclear reasons. A year ago, ABAC too was finding it hard to accept the health issue as a priority, but in recent months, driven by keen attention from our US colleagues, we are at last taking the issue seriously. The importance of the health issue for business is of course self evident: literally billions of productive working hours are lost or impaired every year through ill health – whether it is contagious illness like dengi fever or malaria, or a non-communicable illness like heart disease, diabetes or simple obesity. Better late than never that we engage. [ Read More ]

Dodwell's blog on SOM1 Ningbo - Post 5

February 25, 2014
Our Chinese APEC chair has the most surprising talent for springing surprises. Today, for example, as we meandered to the close of a rather content-light Market Access Group, the Malaysian MAG chair passed over to the Chinese official present for the final agenda item – Date of next meeting. Hardly climactic material. Most of us were half listening as we packed our papers away. But then I could hardly believe my ears: “The next MAG will be in September at a date we have yet to finalise during SOM3. We will tell you the place when we know it.”
 
With chair’s permission, I flicked on the microphone: “Do you mean you don’t know whether the meeting is in Harbin or not? Or that you don’t know the hotel?” [ Read More ]

Dodwell's blog on SOM1 Ningbo - Post 4

February 24, 2014
Given that the Government-Business Dialogue on Food Security in Ningbo yesterday was China’s opening statement as PPFS 2014 Chair, under the leadership of the State Administration of Grain, there probably should have been no surprise when we were carpet bombed by a full day of 10 minute presentations on every aspect of China’s impressive grain industry.
 
Of course, grain was not the only issue tabled, but a dialogue it was not. Perhaps understandable given China’s need to set a clear direction for the year clearly had to show allegiance to the largest and probably most complex component of its vast food economy.
 
All was not lost however. As always, the real business gets done over food. The many mealtime conversations with Chinese officials, Chinese businessmen, and other participants from APEC economies, showed a level of willingness and flexibility to share and contribute that was refreshing, given the difficult birth that PPFS has historically endured. [ Read More ]

Dodwell's blog on SOM1 Ningbo - Post 3

February 20, 2014
After a day of singleminded focus on the Business Mobility Group and our cherished APEC Business Travel Card, Mika and I have now split across different working groups – Mika on Emergency Preparedness, Customs and E-Commerce, and I on the Human Resources Group – a monster of a gathering that comes together only once a year, has three substantial working groups, and takes four days to plough through its agenda. Meanwhile, outside the cosy confines of the Shangri-la, Ningbo disappeared in swirls of sleet and snow. No snow settled, but anyone putting a nose out into the open air recoiled from clear evidence of an enduring winter. I keep reminding myself of Moscow in March 2012 to remind myself not to be a wimp.
 
One fascinating question arises out of the Human Resources Meeting: When is a Ministerial not a Ministerial? At iSOM in Beijing in December, our Beijing hosts very thoroughly listed all of the year’s ministerial, dates and locations. And I faithfully passed them on – all nine of them. Well it now turns out that Human Resources Ministers are meeting too – in September. I asked our Chinese hosts why this Ministerial had not been mentioned in the iSOM briefing, and was given a beguiling answer: the iSOM list only included the Ministerials being held in China. It so happens the Human Resources Ministerial will be in Danang in Vietnam. So now I am wondering whether there are further Ministerials out there that I am currently ignorant of, simply because they are intended to take place outside China. [ Read More ]

Dodwell's blog on SOM1 Ningbo - Post 2

February 18, 2014
 
Monday was the Business Mobility Group and the day of the APEC Business Travel Card – and we were tantalizingly close to that rare APEC phenomenon – a truly newsworthy development. We got within a hair’s breadth and winning full and formal endorsement to extend the life of the ABTC to five years. Even now, it is possible in the coming week or so that we might wrestle to closure on this breakthrough. Between 20 approving economies and success was just one bureaucratic and procrastinating economy. No names mentioned. They know who they are.
 
Despite the tantalizing frustration of failing to get closure on extension of the life of the ABTC, there was a second quieter but very significant success – agreement that a change in passport, with the inevitable changes in passport number, date of issue and date of expiry, would no longer kill the ABTC. For those economies lacking the technology to manage this, our officials agreed there would be investment in capacity building.
 
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Dodwell's blog on SOM1 Ningbo - Post 1

February 17, 2014

At last we have descended into the steel grey middle earth chill of Ningbo – home for the coming two weeks of the first set of APEC Senior Official meetings under China’s chairmanship.
 
The city, just south of Shanghai on China’s Pacific coast in Zhejiang, one of China’s richest provinces, and through 7000 years one of China’s most open and worldly centres, is still sufficiently locked in winter to be austerely monochrome. I’ve braved the cold to jog along the Fenghua river, and am pleased to say that the pollution that normally greets visitors to most Chinese cities is mercifully absent. But the air is grey, and the river is a wintry brown, and this lends a cheerless air.
 

 
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[SCMP Column] Food of Gods

February 13, 2014


In short, therefore, our love affair with chocolate is under threat. Just as China’s 1.3 billion population come into enough money to become basic consumers, and begin to develop the west’s sweet tooth and learn our romantic customs, so the world’s crop looks like it is under threat. Prices have whipped and sawed - from a 32-year peak of US$3,520 per tonne in 2010 down to US$2,200 in 2011, and back up close to record highs again today

Add to this volatility in cocoa prices a similar volatility in sugar prices – sugar and cocoa being the most important ingredients in chocolate and many naughty Valentine desserts – and the scene looks set for an expensive Valentine’s Day. Worldwide, there are many good and worthy arguments that can be made for improving food security. Here is a romantic one.



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[SCMP Column] China Syndrome

January 30, 2014


Of course Hong Kong businesses are anxious to learn all they can about China. Obviously, for Hong Kong businesses, China’s chairmanship of APEC is a big deal. Not only is 2014 the 25th anniversary year of APEC, and the 20th anniversary of the “Bogor Declaration” that in 1994 famously and ambitiously set a target for free and open trade and investment in the Asia Pacific by 2020 - even more important, Beijing clearly intends to use its year of APEC chairmanship to give substance to the economic reform programme that was tantalizingly sketched out in the “Decision” of the Third Party Plenum in November last year.

But there is a story behind Hong Kong’s obsession with developments in China that troubles me, and gives me sleepless nights over our future competitiveness.

I have always argued that if Hong Kong was able to survive – and thrive – when China was closed to the world, then surely it should prosper even more as China opens and reengages with the global economy. But today I am no longer so sure. The “China vortex” has now become so powerful an influence on Hong Kong – and is set to become steadily so much more powerful in the years to come – that the very internationalness that has underpinned our value in past decades is being put in jeopardy.


 

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[SCMP Column] Betting on that extra mile

January 16, 2014


I and other fans of the Hong Kong economy have often reminded nay-sayers that anyone who has ever bet against Hong Kong has lost. For the past 35 years, we have been right. But the nay-sayers are still around, and are still willing to bet against Hong Kong. I went last night to my first Happy Valley race night of the year of the horse. I was still betting on Hong Kong. And I won. I am not taking it for granted that I will always win, and our government would be well advised to do the same.

 

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Dodwell in SOM3 Medan - Post 12

July 08, 2013

 


Keeping the best for last. Services liberalization is close to Hong Kong’s heart, and so the presentations in Medan to the Group on Services and the CTI on our ABAC Services agenda – in particular the headway made in Surabaya in our “Services Dialogues” – were deeply gratifying.

Since the Surabaya Dialogues, which allowed ABAC and PECC together to table for APEC officials the reasons why we believe services liberalization is so fundamental to our region’s future competitiveness, recent research from the OECD and the WTO has made steadily clearer how high a price economies pay for denying their manufacturers access to competitively priced services – in particular logistics and communications services.

 

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Dodwell in SOM3 Medan - Post 11

July 06, 2013


After the “mid-life crisis” of the Investment Experts Group in Surabaya in April, ABAC was tasked to facilitate a workshop in Medan with the broad theme “Whither the IEG”.

Since we had no formal ABAC meeting between Surabaya and Medan, it was in technical terms impossible for ABAC to comply – even though investment related issues have emerged to be as important today as they have ever been for us, and for APEC in general.

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Dodwell in SOM3 Medan - Post 10

July 05, 2013


In freezing Moscow in March last year, APEC launched a grand experiment in private sector-public sector collaboration. The aim was to bring business thinking – and discipline – to the APEC table more effectively than in the past. The new-born infant was the “Policy Partnership” – specifically the Policy Partnership on Food Security (PPFS).

15 months later, we have three policy partnerships, including the Policy Partnership on Science Technology and Innovation (PPSTI) and the Policy Partnership on Women in the Economy (PPWE). I would not be surprised if new “PPs” are being fledged.

 

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Dodwell in SOM3 Medan - Post 9

July 04, 2013


As I fly out of Medan, I depart with a nagging guilt. I normally try to provide readers with a prompt and comprehensive report-back on all key discussions taking place during the SOM cluster meetings. This time I have been remiss, and a number of key summaries need still to be written. I have several lame excuses: logistics in Medan, with meetings spread across four different hotels in a traffic jammed city, made coverage of all meetings almost impossible; the Medan menu was also massive. I’m told there were more meetings in San Francisco in 2011, and I’m told that my estimate of 82 meetings is slightly exaggerated by some duplications. But either way, covering more than 70 diverse meetings has been deeply challenging.

 

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Dodwell in SOM3 Medan - Post 8

July 03, 2013



There was cause for celebration today for the team that has slogged patiently over the past four months to win APEC officials' backing for ABAC’s proposals for wider adoption of Global Data Standards. Our proposals have at last won broad endorsement.

We are now tasked to work with APEC officials to build a programme of voluntary capacity-building, drawing on the many economy-level examples and experiences. This will be focused on the many identified chokepoints along the supply chain, and will form a foundation stone for cutting costs along the supply chain. APEC officials are tasked to cut 10% out of supply chain costs by 2015.

 

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Dodwell in SOM3 Medan - Post 7

July 01, 2013


Back in 2011, our Marshall School report revealed that 77% of interviewees saw inconsistent standards and regulations across economies as a significant barrier to trade. In the same year the pacific Economic Cooperation Council (PECC) survey cited regulatory impediments in overseas markets as the second biggest challenge to doing business in the region.

In short, we in the business community have been anxious for a very long time to see officials in the region move towards harmonization of regulatory standards. For companies operating along long and complex supply chains, regulatory “friction” in each economy along a production chain can accumulate to add massive extra costs to production. The incentive to reduce or minimize such cumulative costs can mean economies are “bypassed” by such companies, who today account for a very large share of total trade. The result: that country’s export potential is stunted.

 

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Dodwell in SOM3 Medan - Post 6

June 29, 2013


For the first time ever, ABAC presented at the Mining Task Force this week. They wanted to know about ABAC, and so the priority was to provide an ABAC 101 introduction to what we are trying to achieve. Tougher was to identify issues of priority to ABAC that would concern the Mining Task Force – though several emerged after a little digging: first was the recognition that mining companies are less miners than they are managers of extremely long and complex supply chains: they are profitable depending less on the price of the mineral coming out of the ground than they are on the efficiency with which they can transport the mineral to destination consumers around the world. So discovery number one, they have keen interest in eliminating chokepoints in the supply chain.

 

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Dodwell in SOM3 Medan - Post 5

June 28, 2013

Alongside the massive Food Security Meetings, the first week of the APEC SOM cluster was dominated by another giant affair – the annual gathering of the Human Resources Development Working Group. On top of the main working group were workshops, and deliberations by its four sub-groups – a three dimensional labyrinth of meetings.

ABAC was interested for one reason above all others: a chance to get a first glimpse of the web-based Skills mapping Tool which is due for completion at the end of the year. You might remember that ABAC sponsored this initiative in 2011 as a first step to rebuild regional momentum behind the need to tackle serious and costly problems linked with regional labour mobility.

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Dodwell in SOM3 Medan - Post 4

June 27, 2013

ABAC was tasked this week to update on our concerns about the APEC Business Travel Card with the Business Mobility group (BMG). Even though our position has not in any significant way moved since we met in Jakarta in January, this was not an opportunity to be missed – in particular because of the survey on business attitudes to the ABTC currently under way with ABAC Japan.

 

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Dodwell in SOM3 Medan - Post 3

June 26, 2013

The Ocean Fisheries Working Group focuses on shipping, marine mining and marine tourism and environmental protection as well as fisheries management, but the group devotes a huge share of its agenda to food-related issues. Slightly alarming, then, that when it opened at the weekend, its members seemed genuinely unaware of the intense fisheries-related agenda of the PPFS’s Working Group 2. Nor that the PPFS has been vested with the authority to provide strategic oversight to all food-related initiatives in APEC.

 

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Dodwell in SOM3 Medan - Post 2

June 25, 2013


At last, after 18 fractious months, the Policy Partnership on Food Security is through the starting gate. To the intense relief of those who began to call for an APEC Food Security body more than a decade ago, we now have an Action Plan, a Road Map, Vision and Mission statements – and fairly firm commitments that private sector voices will play a significant role.

It took three days of fairly intense behind the scenes negotiation between Saturday and Monday to get final agreement on a Roadmap to the goal of food security by 2020. From a Niigata Declaration – which provides the Action Plan”, comprising a laundry list of 62 action items – we have now got a Roadmap of just three pages. It plausibly passes muster as “strategic, result oriented, and comprehensive”, but there will be many in the APEC business community who say this still lacks the discipline of a corporate plan, with concrete and measureable objectives, timetables, milestones, and metrics by which progress is measured.


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Dodwell in SOM3 Medan - Post 1

June 24, 2013



After five visits to Indonesia’s teeming cities over six months, I am becoming acclimatized to traffic bedlam. Medan, the capital of North Sumatra and Indonesia’s third largest city, is no exception – which has been the source of extraordinary challenges, because our hosts have chosen to split the Senior Official meetings across four different hotels. The result: many amenities are quadruplicated (if there is such a word), and most delegates are spending large chunks of every day playing dodgems through swarms of motorbikes to get from hotel room to meeting venue.

 

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Dodwell in SFO Manado - Post 3

May 28, 2013


While JC Parrenas’ ABAC presentation on the APFF was my main reason for flying to Manado, for the Senior Finance Officials, this was “Any Other Business”. Despite the temptations around the thunderstorms of the coral reefs and the national reserves teeming with  wildlife, they waded through a heavy agenda that ranged from Trade Finance and debate on the state of the global economy, to disaster risk management, finance for the region’s unbanked poor,  and infrastructure investment.

 

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Dodwell in SFO Manado - Post 2

May 27, 2013




In the densely packed Senior Finance Officials’ agenda in Manado, the main reason for me being there was to listen to the ABAC “report back” from the Sydney Asia Pacific Financial Forum (APFF) meeting, provided by JC Parrenas from ABAC Japan. The report back was necessarily tentative, since ABAC’s full menu of insights and recommendations will not be fully discussed and agreed until ABAC3 in Kyoto in July, but it was comprehensive nevertheless.

 

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Dodwell in SFO Manado - Post 1

May 26, 2013


There were a number of very good reasons for this journey outside safe and familiar territory: mainly, I had been unable to attend the Sydney Asia Pacific Finance Forum (APFF) that ABAC organized with the Australian Treasury (because of the Surabaya SOM2 cluster), and wanted to hear ABAC colleagues summarise outcomes and next steps – and to gauge senior finance officials’ views.

 

But then there were two other very good reasons: first, Indonesia has encouraged much talk of closer links between the “SOM track” and the “SFOM” track, as the trade/commerce meetings and finance official meetings are contrasted, and I have a strong sense that financial system reform, and  investment liberalization and facilitation are going to be high priorities for China during its 2014 leadership of APEC.

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Dodwell in 2013 SOM2 Surabaya - Post 14

April 22, 2013


While I was flying out from Surabaya over the weekend in search of a day of rest before work resumed in Hong Kong, APEC Trade Ministers and their senior officials toiled on through the weekend, haggling the Ministerial Statement and – perhaps surprisingly – a separate long statement in support of the WTO and multilateralism.

After all of the talk over the past two weeks on regional trade agreements – the Trans-Pacific Partnership (TPP), the Regional Comprehensive Economic Partnership (RCEP) and the newly-cooked Pacific Alliance embracing the liberalizing economies of central and south America – the reassertion of concern to complete the Doha Round, and to reaffirm the importance of multilateralism, came out of left field.

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Dodwell in 2013 SOM2 Surabaya - Post 13

April 21, 2013


As our APEC sherpas girded their loins midweek for the Senior Officials Meeting, and the weekend’s Trade Minister meeting, so our ABAC focus turned to Services, and the two Dialogues that had been in preparation for two full months.

First, on Wednesday, was our ABAC-SOM Dialogue on Services, jointly arranged with PECC. The prime aim here was to inject the services liberalization imperative to the heart of APEC discussion, emphasizing as we did a year ago how services are pivotal to the efficient and competitive delivery of manufactured goods, just as they are important in their own right as a lubricant for trade and investment.

 

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Dodwell in 2013 SOM2 Surabaya - Post 12

April 19, 2013


It was Yuri Thamrin, Indonesia’s SOM convenor who reminded us this week that APEC’s new Executive Director, Dr Alan Bollard, is a man of many parts. And I am not simply talking about Alan Bollard’s extraordinary range of carefully understated but very artistic lapel pins he sports daily to liven the staid suits we are compelled to wear.

As if governorship of the Reserve Bank of New Zealand, and now leadership of APEC were not accomplishments enough, Yuri Thamrin alerted us that the self-effacing Dr Bollard is also an accomplished author. His first novel, “The Rough Mechanical: the man who could” is just published. Reviewers in New Zealand at least have been snooty and dismissive, I understand – saying he should stick to the economic books that he has authored in the past – his assessment of the 2008 global financial meltdown, “Crisis”, was published in March last year, and has apparently received much more enthusiastic attention.

 

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Dodwell in 2013 SOM2 Surabaya - Post 11

April 18, 2013

 


After the long and patiently synchronised sequence of meetings up to the CTI at the weekend, Monday and Tuesday provided a chance to explore themes close to Indonesia’s heart – Monday a workshop on Infrastructure Development and Investment, and Tuesday on Connectivity.

Of course, both themes had threaded through many of the discussions of last week, but here was a chance to step back and explore the issues, and perhaps most important to explore how we in APEC might develop initiatives in these areas that could provide our Indonesian hosts with some deliverables for Bali.

 

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Dodwell in 2013 SOM2 Surabaya - Post 10

April 17, 2013


Since ABAC is not a “Friend of the Chair” in terms of APEC’s “Friends of the Chair” (FotC) discussions, the pivotal day (last Friday) devoted to an FotC examination of how APEC officials should manage their supply chain connectivity agenda, and in particular ABAC’s call for adoption of a regional approach to adoption of GlobalData Standards (GDS), had us trying to peek through the keyhole from outside the door.

Happily, there was a comprehensive report-back in CTI by APEC Hong Kong China, which is chairing the “Supply Chain Connectivity” issue. Even more happily, the discussion appears to have moved things constructively forward from the faltering start we had in SOM1 in Jakarta. This is in spite of an embarrassing short-circuit arising from the administrative accident that our ABAC proposal on GDS had been sent to our APEC officials under an ABAC New Zealand letterhead. This seemed to give them the idea that the proposal was a New Zealand proposal to ABAC, and that it would be submitted to CTI once ABAC approved it. Two times I had to clarify, painstakingly: Yes, this is an ABAC proposal, fully endorsed in the ABAC Plenary in Singapore. Yes, this was a complete accident, and the proposal should have been sent to them under a full ABAC letterhead. Mea culpa, mea culpa… Slaps on the wrist all round… But in the end officials agreed to accept that this was a proposal that had been empowered by the whole ABAC plenary. Phew.


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Dodwell in 2013 SOM2 Surabaya - Post 9

April 16, 2013


Committee on Trade and Investment (CTI) meetings seem to be reaching epic proportions. They are a test to the stamina of even the hardiest government officials. It is astonishing how chair John Larkin paces patiently through a tricky and detailed agenda that only with good fortune squeezes into two days. There is an almost tantric calm around him as he unhurriedly waits, listens, summarises. For us, the most important discussion focused on supply chain connectivity, and in particular our Global Data Standards initiative. I will devote my next blog to this. But beside this, the agenda was rich.


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Dodwell in 2013 SOM2 Surabaya - Post 8

April 14, 2013


The Investment Experts Group’s (IEG) “accidental hero”, the blunt speaking convenor John Kitchen, flew back home to Australia on Saturday a happy man – mission accomplished. The mid-life crisis of the IEG was given careful attention by colleagues in CTI, with the decision to cut meetings from three to two a year. Potential successors as Convenor have also come forward. And we in ABAC have been put on the hook, tasked to organize a half-day workshop at IEG3 in Medan in June on “Setting the Agenda” – providing a business view of what we would like our Investment Experts to do. Looks like yet another task for our Regional Economic Integration Working Group, but a valuable one – to reexamine the structure of our business relationship with this important group of APEC officials, to clarify how the important investment-related work of APEC is divided between the Trade officials’ track (SOM), and that of the Senior Financial Officials (SFOM). Our Indonesian chair of APEC keeps telling us they are trying to bring Senior officials and Senior Financial Officials together, perhaps in Medan, to explore the synergies between their two tracks of work – but no firm outcomes yet.


 

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Dodwell in 2013 SOM2 Surabaya - Post 7

April 13, 2013





Having been incarcerated in the Marriott meeting rooms for an entire week, a gang of us managed on Saturday to break away to taste the city streets. Every day, we have walked forlornly into meetings past flamboyantly-dressed Surabaya Tourism people who have been tantalizing with a raft of city tour options. The most exotic is an overnight trek up Mt Bromo to see the sun rise over the lava moonscape of Surabaya’s majestic active volcano. Of course for all of us that have to work every day, we know we will never manage this, but it is tantalizing nevertheless.


 

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Dodwell in 2013 SOM2 Surabaya - Post 6

April 12, 2013




Friday’s Group on Services meeting was as rich as the early Market Access Group had been barren. Apart from an eccentric and untypical bureaucratic eruption by our US officials blocking progress on an initiative to facilitate cross border education services, the meeting was popping with fresh and interesting initiatives. Quite why the US got itself into such a tangle on education services remained unclear right through the weekend, as blocking and tackling continued into the CTI agenda, but it was unusual and bemusing to see virtually every other APEC member give the US a bad time.

 

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Dodwell in 2013 SOM2 Surabaya - Post 5

April 11, 2013


I walked into the third and final morning of the inaugural Policy Partnership on Science, Technology and Innovation five minutes late – and already up on the screens was the proposed PPSTI Vision Statement – all long words and lots of colours – the clear victim of editing by committee. Forty minutes, and heaven knows how many taxpayer-funded executive working hours later the final, final was agreed and was brought back into monochrome black. As a former journalist, the process of editing by committee was painful to watch, as a Chinese official called for a comma here, and New Zealand and US officials jousted over whether a future perfect tense (“will have been”) should be used rather than a simple future tense, and another called for the cooperation between “government, academics and private sector” to become cooperation between “government, academic and private sector stakeholders”. Can someone tell me the difference between an academic and an academic stakeholder?


 

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Dodwell in 2013 SOM2 Surabaya - Post 4

April 11, 2013


When is a “policy partnership” not a policy partnership? When out of a meeting of around 80 people, just three at the table are representing business, then it is difficult to see where “partnership” – or any material form of business input – exists.

 

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Dodwell in 2013 SOM2 Surabaya - Post 3

April 10, 2013


I walked yesterday into an Investment Experts Group riven with angst. I had expected simply to deliver our now-routine ABAC presentation on the investment-related discussions of ABAC2 which confirmed an apparently ever-rising interest in investment-related issues at the heart of our trade and investment liberalization and facilitation agenda.

 

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Dodwell in 2013 SOM2 Surabaya - Post 2

April 09, 2013


Through Sunday and Monday, APEC’s Counter-Terrorism Task Force monopolised the APEC action. From my memory, this is normally highly technical and inevitably a bit insensitive to our ABAC trade and investment liberalization priorities, given their own focus on security.

But I found some surprises. First, the US provided an excellent presentation on securing the supply chain which would deserve some attention at our next ABAC meeting in Kyoto. Second, the US also summarized progress in the Travel Facilitation Initiative, which gave more information than we have seen before, and suggested quite encouraging progress.

 

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Dodwell in 2013 SOM2 Surabaya - Post 1

April 08, 2013


The contrast between Surabaya and Singapore’s Marina Bay Sands – where ABAC just held its second meeting of the year - could hardly be starker. With its three gigantic curvaceous towers topped with the world’s largest bathtub, the “MBS” is parked in lonely splendour on land only claimed by newly-planted botanical gardens, teeming with tourists taking subterranean journeys into Singapore’s largest casino.

Surabaya by contrast feels like it has emerged organically over the centuries, a sprawling jumble of battered single-storey shanties that spread as far as you can see. Like Ho Chi Minh city or Hanoi, this is a city teeming with motorcycles and it is a death defying challenge to cross the road to the tantalizing local restaurants steaming invitingly opposite the Marriott Hotel.


 

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Dodwell in 2013 SOM1 Jakarta - Post 9

February 05, 2013


Monday saw us bright and bushytailed to kick off the day’s CTI agenda with the services presentation – which was pretty much a rerun of the presentation given two days earlier at the Group on Services. Again this seemed to go down well, with high interest in ABAC’s 2013 agenda – the decision to focus the Marshall School this year on obstacles to foreign investment, our continuing call for an “experts group” to drive the services liberalization agenda, the priority need to understand the implications of the new OECD-WTO work on global trade balances as reflected once you break down where value is actually added – and perhaps most important, our interest in holding a Public Private Dialogue during SOM2 in Surubaya. There seems to be keen interest in the Dialogue, with calls for us now to come up with the over the coming few days.


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Dodwell in 2013 SOM1 Jakarta - Post 8

February 04, 2013


It was Sunday and all normal people were at rest – including our local ABAC team. That left us travelling sherpas traipsing back and forth along the underground tunnel that links the Marriott and Ritz Carlton Hotels to hold the fort through the first day of an absolutely huge CTI agenda.

 

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Dodwell in 2013 SOM1 Jakarta - Post 7

February 03, 2013


Saturday had our resources divided hard between the Economic Committee, where we were summarizing the ABAC1 meeting in Manila, and the Services Group, where I was tasked to present on ABAC’s services agenda. Needlesstosay, our services agenda aligns extremely well with that of the Group on Services, and there seems to be strong support for us preparing a Symposium or joint workshop at GOS2 in Surubaya in April on services – we need to move speedily to define the exact theme.

 

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Dodwell in 2013 SOM1 Jakarta - Post 6

February 02, 2013


Yesterday I was in “emergency response” mode: Pak Amin was tied up at the Economic Committee presenting his summary of our ABAC1 in Manila, but his Indonesian government colleagues were insistent: please can you have someone participate in our “Emergency Response Travel Facilitation Policy Dialogue” which someone must for sure be calling the ERTFPD. Of course, with the Great Japanese Earthquake and Tsunami, the Christchurch earthquake, and the US’s Hurricane Katrina to anchor the discussion, there was a great deal of sobering experience to get teeth into.


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Dodwell in 2013 SOM1 Jakarta - Post 5

February 01, 2013


We strove to listen in to discussions at the Economic Committee, the Market Access Group, and the Investment Experts Group. As John Larkin, the new CTI Chair, has been addressing all of these working groups, it has been gratifying to hear him talk forcefully of the need to converge discussions on services liberalization with those on investment liberalization (of course including foreign investment liberalization).

 

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Dodwell in 2013 SOM1 Jakarta - Post 4

January 30, 2013


At short notice, an informal meeting of the PPSTI Informal Working Group – formed to plan the launch of the PPSTI - was convened on the margins of a large APEC science meeting – the APEC Research and Technology (ART) Programme – that was being held not cosily up alongside the SOM cluster meetings at the comfortable Ritz Carlton, but across town in the long and functional wifi-less corridors of the LIPI Building – the Indonesian Institute of Science.

 

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Dodwell in 2013 SOM1 Jakarta - Post 3

January 28, 2013


Monday in Jakarta was a day of workshops: Intellectual Property protection; Anti-Corruption; Customs; and my own pick – a Business Mobility Group workshop on improving the APEC Business Travel Card.

 

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Dodwell in 2013 SOM1 Jakarta - Post 2

January 27, 2013


After all the stress and discord of PPFS on Friday, it was warming to see peace break out on Saturday, as members got down to agreeing Working Group agendas, and setting their timetables to deliver into PPFS2 planned for Medan in July. As if in empathy, the skies cleared, and we actually saw blue sky outside.

Despite the haggling over Food Security working groups on Friday, with pressure to reduce them to three, we find we still have four working groups – though their names and responsibilities have been altered.

 

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Dodwell in 2013 SOM1 Jakarta - Post 1

January 25, 2013


After an unusual four month gap in APEC and ABAC activity, the APEC 2013 show is back on the road. After four days at the year’s first APEC Business Advisory Council meeting in Manila, where the region’s business leaders combed through their priority concerns for the year ahead, I flew on Thursday to Jakarta for the year’s first APEC Senior Official cluster. Between now and February 7, discussions driven by Indonesia as APEC chair will range from Chemicals and Illegal logging, to investment liberalization and facilitating business travel.

 

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Dodwell introducing 2013 APEC

December 21, 2012

On January 1, one of APEC’s founding members – Indonesia – formally takes over from relative neophyte Russia as APEC Chair and host. What better time to review the achievements of the past year and to look forward to what can be expected in 2013? [ Read More ]

Dodwell in iSOM Jakarta - Post 7

December 08, 2012

 

Indonesia’s iSOM agenda was mostly familiar and expected – but a few issues came out of the blue from an ABAC point of view. Perhaps the most interesting of these was the intention focus on health issues as part of APEC’s “inclusiveness” agenda. As far as I am aware, health issues have attracted negligible attention in ABAC over the past five years, but this may be about to change – and that is probably for the good.

Our Indonesian hosts plan to focus on two health related issues in particular: health financing; and the damaging impact on economic productivity of a poor health environment. Both of these should be of keen interest to ABAC.


 

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Dodwell in iSOM Jakarta - Post 6

December 08, 2012


One of Indonesia's three key priorities for 2013 is "sustainable and inclusive growth". So a big chunk of Thursday's iSOM Syposium was devoted to the topic. On behalf of business and ABAC, Steven Lee, Alternate Member from Taiwan, gave a well received presentation on "Inclusive Growth", which I thought would be worth circulating to members - and in particular to our SDWG members who are likely to be pressed over the course of 2013 to come forward with concrete business sector contributions to this agenda. I won't woffle on separately about it - the short powerpoint and supporting notes speak for themselves. Regard "inclusiveness" firmly on our agenda.

 

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Dodwell in iSOM Jakarta - Post 3

December 07, 2012

The 2013 APEC logo unveiled by Indonesia’s foreign minister Dr Marty Natalegawa today – a strong bamboo tree bending resiliently to the force of the wind. Twenty one bamboo fronds representing the 21 APEC members. Strong deep blue background representing the ocean, and – in Indonesian culture – wisdom. APEC in yellow, representing the sun. A dedicated website for APEC Indonesia 2013 has also been launched today.

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Dodwell in iSOM Jakarta - Post 4

December 07, 2012

Indonesia’s foreign minister Dr Marty Natalegawa set the tone for the day when he opened the APEC iSOM in Jakarta: “Get the Bogor Goals done!” He also set the tone for Indonesia’s hospitality by deciding that his welcome to APEC officials should not be at the JW Marriott ballroom where all of the other iSOM discussions were being held, but at the Gedung Pancasila, the historic Foreign Ministry building that was the site of the signing of Indonesia’s independence constitution in 1945. The setting was impeccable: a fine old colonial building set in soft green lawns with flame of the forest trees in flower all around.

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Dodwell in iSOM Jakarta - Post 5

December 07, 2012


After bludgeoning our way painfully through Jakarta’s teeming streets to meet with the Indonesian Foreign Minister at the historic Gedung Pancasila, the APEC bus cavalcade finally got back to the JW Marriott, home of all of the iSOM discussions, in time to start the day’s meetings at 10.00. The task ahead: to review in detail the three priorities for 2013 laid out in the Symposium the day before – getting the Bogor Goals done; sustainable and inclusive growth; and improving connectivity. Over the next four hours and in three separate sessions, these three priority areas were laid out and debated in detail in three separate sessions.

 

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Dodwell in iSOM Jakarta - Post 2

December 06, 2012


ASEAN, Indonesia can naturally look to melding some of the initiatives that have proven successful in ASEAN with development plans for the wider APEC region. Equally unsurprising was the priority being given to sustainable and inclusive growth: Indonesia shares rising international concern about how much of the “growth” of the past two decades has benefited a tiny proportion of the region’s population, widening the rich-poor divide in virtually every economy in the region.

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Dodwell in iSOM Jakarta - Post 1

December 05, 2012



This week the curtain falls on a Russian year of APEC Chairmanship. Senior officials gather in Jakarta on Thursday and Friday to pass the baton to Indonesia, review achievements of the past year, and to debate Indonesia’s thoughts on priorities for 2013. No offence to our Russian friends, but it will be nice to exchange the refrigerated charms of Moscow and St Petersburg for the familiar steamy sprawl of Jakarta.

Because the Vladivostok APEC Leaders’ meeting fell so early this year, in deference to Siberia’s gripping winters, we have had an unusual pause in activity. But inevitably, the region’s challenges have not gone away, and in certain respects they have deepened: the threat of global recession remains as acute as ever, as does the danger of backsliding into protection. Since the Vladivostok meetings, conflicts over islands in the South China Sea have tested strong regional relationships, and elections in the US, China and (next week) Japan throw political uncertainties into the mix. But those APEC members involved in ASEAN have had positive meetings in recent weeks, so it is our hope and expectation that the collegial and collaborative mood that characterizes APEC activity holds firm.
 

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APEC ASPIREs to make a difference

September 14, 2012


In Vladivostok last week at the APEC Leaders’ Meeting, Professor Chiu was the star of a very special party – winner of the US$25,000 APEC Science Prize for Innovation, Research and Education (ASPIRE) Prize.

Professor Chiu is a discrete and unassuming chemical pathology professor at the Chinese University of Hong Kong’s Morningside College, but her prize provides a valuable illustration of a hidden talent that Hong Kong has in science and innovation – in spite of general views that Hong Kong has little to boast about in science and R&D.

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Dodwell in APEC China CEO Summit at Beijing - Post 1

June 07, 2012


Refreshed from three shimmering days in the bazaar they call Istanbul, I flew Wednesday into Beijing on the last leg of a three week APEC odyssey – now for the China CEO Summit.

If China’s Vice Premier Hui Liangyu took pride of place at the inaugural China CEO Summit as it began this morning (Thursday), the charisma sat with Kevin Rudd, the former Australian Prime Minister, who had the audience swooning with his ability and willingness to flip back and forth from Mandarin to English in his Keynote role at the two-day meeting. His analysis of the future of the Asia-Pacific region, as seen from the vantage point of Australia’s “creative middle power security”, was also acute for his mainly-Chinese audience. For  ABAC, his compliments for APEC were kindly taken (this was, after all, an APEC Summit): “If APEC had not existed, I wonder what would have happened in the region over the past 20 years,” he commented, recalling the traumatic decades that only came to an end in the mid-70s with the end of the Vietnam War.

 

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Dodwell in SOM 2 Meetings at Kazan - Post 9

June 05, 2012


My sense is that ABAC Members will need to identify a number of key priority initiatives to formulate and take forward from our ABAC3 meeting in Ho Chi Minh City in mid-July. We might also do well to encourage next year’s Indonesian hosts to kick off the year early –  bringing forward the “iSOM” meeting normally held each December to prepare priorities for 2013, and perhaps even by arranging a “mini-cluster” of meetings around the “iSOM”. They might also think about pulling the first APEC senior officials cluster forward into January. I wonder whether Chinese New Year would allow that?


 

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Dodwell in SOM 2 Meetings at Kazan - Post 8

June 03, 2012



After a week of robust, and sometimes short-tempered debate in the newly-formed Policy Partnership on Food Security, the week’s work ended well with a substantive Ministerial Meeting, and a “Kazan Declaration” that embodies many of ABAC’s concerns and priorities, and will shape policies aimed at future food security for many years to come.

Tony Nowell, Chair of ABAC’s Regional Economic Integration Working Group and a long-time passionate advocate of governments and the private sector working together on food security, was able to report to Food Ministers a substantive menu of tasks that we need to roll up sleeves on straight away. For ABAC, that will mean discussions and decisions from our Sustainable Development Working Group in Ho Chi Minh in a month’s time.

 

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Dodwell in SOM 2 Meetings at Kazan - Post 7

June 02, 2012


Over the course of the past week, four APEC committees have asked me to present to them on what ABAC has been up to – the Market Access Group, the Investment Experts Group, the Economic Committee, and the Committee on Trade and Investment. This gave a timely opportunity to report back on the outcomes of the year’s second ABAC meeting in Kuala Lumpur, which finished just a week ago (seems a lifetime ago after a week running around Kazan!).

 


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Dodwell in SOM 2 Meetings at Kazan - Post 6

June 01, 2012

 


Through the early part of this week our long-standing staffer from ABAC Japan, Omamu Kamikawa, Japan kept lonely vigil at the APEC Business Mobility Group (BMG). It seems he has been faithfully attending the BMG, and speaking on ABAC’s behalf, for years.

The BMG folks are all about managing people across borders – visas and that kind of stuff. Much of their work is dull and technical, but what has made it important for ABAC, and justifiable for Kamikawa-san, is that BMG is home of discussion on the much-loved APEC Travel Card. While we always talk glowingly of the Travel Card as one of APEC’s iconic successes, truth is that we have been troubled by developments in the past couple of years, and Kamikawa-san has been our voice on these issues. It still takes months to get a card with a critical mass of APEC economies signed up; and many business travelers have found it increasingly difficult to qualify for a card. Many immigration departments don’t like the additional work involved. We are calling for quicker approval and issuance, and we are keen to see a five year card replace the current three year card. We are keen to see arrangements put in place that mean your card stays valid even if you have to change your passport. In short,  Kamikawa-san presses our case every SOM. Important, thankless work.

 

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Dodwell in SOM 2 Meetings at Kazan - Post 5

May 30, 2012





Wednesday’s inaugural Policy Partnership on Food Security (PPFS) could so easily have become a fiasco. The baldest of agendas meant that most participants arrived without any clear knowledge of what was going to be discussed or how. Conspiratorial huddles on the margins of the meeting created a highly charged and combative air as the meeting began. Some wanted to plunge straight into discussion of projects. Others wanted to work on defining long term strategic objectives and a framework for achieving them.

The Russian Chair, Sergey Aleksashenko, had his hands full managing this unprecedented amalgam of government officials and business leaders. Stress levels were high in part because of high expectations. As one member noted: “We can make such a big difference in so many peoples’ lives.” As the Chairman noted in a letter circulated immediately after the boisterous meeting:  “All of us became participants of an experiment – political leaders of the APEC economies (for the first time) decided to listen to the opinion of the business community.”

 

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Dodwell in SOM 2 Meetings at Kazan - Post 4

May 29, 2012

After several days of discussion here in Kazan on the importance of services in all of our economies, and the need for – and value of – services liberalization, there was some dismay on Monday to discover that the draft statement of Ministers Responsible for Trade (MRT) made the vaguest passing reference to services and services liberalization, and similarly little reference to investment liberalization. As a result, some urgent informal advocacy was cranked up to press our Trade Ministers to pay services and investment a little more attention.

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Dodwell in SOM 2 Meetings at Kazan - Post 3

May 28, 2012


A fresh wave of conference folks swept in on Monday – clearly not the usual APEC people – all headed for the inaugural meeting on food security – the Policy Partnership on Food Security that ABAC has fought for more than a decade to create. No sooner had they arrived than they swept away, to visit a massive Tatarstan dairy herd. For me, one dairy herd looks very like another, and as a non-meat-eater I don’t feel keenly motivated to spend a day with a bunch of Russian cows, so I gave the field trip a miss, and instead knuckled down to a very productive Investment Experts Group.

Apart from providing the group with a comprehensive report back from our Kuala Lumpur meeting, there was a solid review of the IFAP – the Investment Facilitation Action Plan – which is also very close to ABAC’s heart. We were able to reiterate our support for this programme, and for the need for metrics that measure progress on the various plans. So it was gratifying to learn that the Policy Support Unit is planning an audit that should be ready by the end of the year.

 

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Dodwell in SOM 2 Meetings at Kazan - Post 1

May 27, 2012



Everyone seems to have their own exotic stories of how they flew into Kazan, the capital of Tatarstan and - for three weeks - home to the second huge cluster of APEC Senior Officials meetings. Despite the difficulties in getting to Kazan from our ABAC2 in Kuala Lumpur, ABAC has arrived in moderate force – a total of four Members, and a solid crowd of staffers like myself.

 

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Dodwell in SOM 2 Meetings at Kazan - Post 2

May 27, 2012


The weekend in Kazan was devoted to supply chains and services liberalization, with workshops organized by the Group on Services that offered us rich opportunities to further ABAC’s agenda for the liberalization of services. ABAC members Anthony Nightingale from Hong Kong and Tony Nowell from New Zealand spoke jointly on “The Governance of Services” at a Pacific Economic Cooperation Council (PECC) on Saturday.

This was followed on Sunday by a Trade Policy Dialogue orchestrated by APEC Singapore on Facilitating Global Supply Chains – an excellent opportunity for Tony Nowell to recount ABAC’s efforts over the past two years on identifying choke points in the supply chain, and to outline the work being done this year by the Marshall School research team from the University of Southern California on chokepoints in services supply chains. The Workshop included excellent  presentations both from business and from public bodies like the WTO, Jetro and the OECD. Our sense at the end of the day was that while there is a long way to go, ABAC’s efforts to get officials to pay more policy attention to liberalizing trade and investment in services are beginning to bear some fruit.

 

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Dodwell in CTI Meetings at Singapore - Post 6

April 05, 2012

With four other highly competent staffers in situ for the April 4-5 Innovation and Trade  Conference, I decided to cut from Singapore at the end of the CTI meeting on Tuesday, and fly home to Hong Kong to squeeze a couple of days work ahead of the Easter break. It seems there are so many inconclusive ends from the CTI that a huge amount of work looks necessary between here and Kazan. The shortening of this year’s APEC sequence is really creating significant pressures. They will be severe for ABAC too, since the ABAC 2 in Kuala Lumpur overlaps with the first five days of Kazan – meaning that we will miss the first stages, and then have a mad scramble to feed into the meetings of the last 10 days. A large number of ABAC members and staffers will be poring over maps and flight schedules to work out how best to get from KL to Kazan as quickly as possible after the end of APEC2 on May 25.

Early departure after the CTI did not mean the blog had to die. The following is an edited (day 1) summary from NCAPEC’s David Boman from the Innovation and Trade Conference on Wednesday.

 

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Dodwell in CTI Meetings at Singapore - Post 5

April 02, 2012


While Singapore’s business centre quietened out over the weekend for all sensible people to take a break, APEC’s Group on Services officials trudged loyally into the vast empty spaces of the Sands Expo and Convention Centre. The area was not entirely desolate – there were some Singaporeans sidling into the glitzy Sands Casino next door – but the earnest business areas populated by APEC were pretty lonely places. 

In spite of – or maybe even because of – the isolation, a remarkably interesting and substantial agenda was pursued. I reckon there were at least five areas of interest to the business community.

 

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Dodwell in CTI Meetings at Singapore - Post 4

April 02, 2012

Sunday promised to be another richly instructive day: a morning focused on supply chain connectivity, and in the afternoon a key “Friends of the Chair” discussion on compilation of an APEC list of Environmental Goods and Services. Instead, it proved frustrating and unproductive.

First, the hugely technical supply chain connectivity discussion swept high over my head. The meeting was undoubtedly valuable and productive for those technocrats working on how, in practical terms, to squeeze 10% of costs out of the region’s supply chains. But to a lay business person, it was as tedious and tortuous as it was worthy and necessary. Some meetings we can safely miss and leave to our officials.


 
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Dodwell in CTI Meetings at Singapore - Post 3

March 31, 2012



If you think an “environmental good” is hard to define, then wait until you start to wrestle with “environmental services”. In the austere and arcane world of trade policy, few issues are as fascinating – or frustrating – as environmental goods and services. So we attended Friday’s full day workshop on environmental services with some trepidation. The workshop had been organized by China as part of a capacity-building initiative, but a clear majority of presentations came from Americans – and most were fascinating.

Profound insight number one: in environmental services, the market does not work. There is no natural demand for them. As Dale Andrews, head of the OECD’s Environment Division noted: “Who would purchase, for example, sewage or air cleaning services out of sheer altruism?” In effect, regulations (for which read Government officials responding to public opinion) determine the market. This means that Government officials by necessity play an extraordinarily significant role in determining the size and nature of trade in environmental services.

 

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Dodwell in CTI Meetings at Singapore - Post 2

March 31, 2012


Friday’s Market Access Group discussion seemed a rather flaccid affair. There was clearly great enthusiasm for the two workshops of the previous day – one driven by Caterpillar on “Remanufactured Goods”, and the second on updating the Information Technology Agreement (ITA), which was originally drafted in 1995 – but it proved hard to sustain the animation into the full MAG meeting.

On “Reman”, it is perplexing to hear the same demands today that were heard in Washington a year ago for clearer definitions of what we mean by a “remanufactured good”. Are so many people really so obtuse that after at least three comprehensive debates on the issue, they still don’t understand, or are some quiet political games being played? A visit to Caterpillar’s massive and impressive regional remanufacturing centre in Singapore clearly “wowed” every participant, and one can only hope this helped to move the discussion forward towards some form of concrete conclusion.

 
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Dodwell in CTI Meetings at Singapore - Post 1

March 28, 2012


The contrast with the Moscow APEC Senior Officials meeting in February could not be starker: from 25-30 degrees below zero, to a sweltering 25-30 degrees above; from the tight, dark streets around the Moskva River to the green and humid open spaces around the Sands Casino resort on land reclaimed along Singapore’s sheltered coastline; from Moscow’s Crowne Plaza, the “grand dame” of western hotels in the former soviet capital, to the vast unused spaces of the spanking-new Sands Expo and Convention Centre.

The scale of the APEC Committee on Trade and Investment cluster (CTI2) is also noticeably more modest than the full Senior Officials Meeting in Moscow – a mere 7 committees or working groups meeting, compared with the 30-or-more in February.


 

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Hong Kong and the fine art of LIN-kage

March 02, 2012


Mr Greg So, our cherished Secretary for Commerce and Economic Development, sees Hong Kong as Asia’s “point guard”: “Hong Kong can facilitate movement of goods and components in the region, and help enhance participation by small and medium enterprises in regional and global production chains.”

As Mr So’s metaphor sunk in, a light went off inside me. He is absolutely right. Hong Kong is indeed the quintessential “point guard”. By comparison with other economies, Hong Kong is, like Jeremy Lin, comparatively small. But we are quintessentially a team player: if the economies along a product’s value chain can be imagined as a team, then Hong Kong’s clear role and expertise is to manage the chain, make sure the team is pulling together effectively, and to make sure each team player is in the right place, and is doing what he does best. Hong Kong’s role is to have a clear understanding of the comparative strengths of each member of “the team”, and our value-added derives from helping them play to those strengths. Their success is our success. To baudlerise Greg So’s quote: “Hong Kong’s responsibility is getting all the players (read “economies”) playing for the name on the front of the jersey, not the one on the back.”  Nevertheless, Jeremy Lin’s No 17 shirt has been soaring in value.

 

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Dodwell in SOM1 Moscow - Post 11

February 19, 2012

Focus on my return to Hong Kong is now very much on the ABAC meetings, which start on Tuesday with a big SME Summit on Entrepreneurship, and then shift into the three days of formal ABAC meetings. A high point will be the meeting between ABAC members and Senior APEC Officials, most of them flying in directly from Moscow. This dialogue with Senior officials happens just once a year, and is significant both for Senior Officials to brief the region’s business leaders on APEC priorities for the year ahead, and for the opportunity it provides for ABAC members to drive home our own business priorities for the year.

There will inevitably be much discussion based on the SOM just finished in Moscow. I raced away to Moscow’s Domodedovo airport on Saturday morning with the full SOM still in progress, shortly after our ABAC Chair, Ziyavudin Magomedov, presented ABAC’s 2012 work plan to Senior Officials. He made a perfectly workman-like presentation hampered only by the fact that ABAC has yet to meet this year, and so has not yet finalized its 2012 workplan.


 

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Dodwell in SOM1 Moscow - Post 10

February 18, 2012

The final day before Senior Officials meet in earnest, was devoted to two “Friends of the Chair” discussions – on Food Security, and on Innovation – two of Russia’s four priorities for 2012.

The Food Security issue has now been very well “cooked” – first with the PPFS Management Council almost two weeks ago, and then with an extended discussion at Thursday’s “SEC-COW” meeting on the logistics of getting members appointed and in harness. The Friends of the Chair discussion involved our Russian colleagues tabling a total of 20 specific proposals to be driven forward in the coming months – and in particular up to the Food Security Ministerial planned for the end of May in the Tatar capital of Kazan. With the exception of “post harvest loss”, or food waste, where there seems to be fairly universal agreement that progress should be made, my own sense was that there is an understandable but inappropriate sense of haste.


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Dodwell in SOM1 Moscow - Post 9

February 16, 2012

One of APEC’s most improbable acronyms - SCE-COW – produced an unexpectedly fertile opportunity for inputs from ABAC on Thursday. SCE-COW stands for Steering Committee on EcoTech – Committee of the Whole. I must be frank – I walked into the huge meeting room wondering what on earth I was going to learn in this “COW”.

Much was procedural and dull but a Russian presentation on plans for pursuing the Food Security priority allowed a robust discussion of arrangements for the newly-created Policy Partnership on Food Security.  

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Dodwell in SOM1 Moscow - Post 8

February 15, 2012

At 30 minutes notice on Tuesday afternoon I was marched down to the Economic Committee (EC), where I was told I was on the Agenda to present on ABAC’s 2012 priorities. Woops. No-one had told me. So I begged time, and appeared on Wednesday morning at 9.30 with powerpoint in hand. Heaven knows whether I covered everything I should cover on ABAC’s behalf, but I did my best. Going forward, the Economic Committee says it wants to hear more from us.

Both the EC agenda and the CTI agenda are gigantic affairs. Documents are compendious – books’-worth of reading, if anyone had the time to be that conscientious. And with so much turf to cover, discussions can be totally sleep-making.  The challenge here is that in the midst of the ponderous, technical detail, some little gems fall out – and it’s hard to make sure you are awake when they drop.
 

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Dodwell in SOM1 Moscow - Post 7

February 14, 2012


In Honolulu last November, APEC leaders gave instructions for officials to draw up a clear list of Environmental Goods and Services that would carry tariffs of 5% or less. So ABAC officials have dedicated themselves to a fascinating but inconclusive debate over the goods that would qualify to sit on an EGS list. It took an APEC official from Indonesia to remind all that APEC first tried to draw up an EGS list in 1995. Sobering thought. Experts from the World Bank, General Electric, Environmental Business International, Beijing Normal University and the International Center for Trade and Sustainable Development reminded us of how complicated it is simply to define an “environmental good”.

ABAC’s own Takeshi Hajiro from ABAC Japan presented views from Japanese business – and very sensibly called for officials to build a larger list, which should include (for example) environmentally-friendly vehicles and energy-efficient electrical appliances. Let’s see if our officials can rise to the challenge. Drawing up an EGS list remains one of 2012’s key priorities, so for APEC’s Senior Officials, the pressure is on.

 

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Dodwell in SOM1 Moscow - Post 6

February 13, 2012

Competitiveness, how we are progressing on liberalization, and the “dashboard” measuring APEC member economy progress towards achieving the Bogor Goals of free and open trade and investment were the focus of the APEC Committee on Trade and Industry (CTI) and the Economic Committee (EC) which both began their long sequences of meetings in Moscow on Sunday.

While the Economic Committee focused on the “Ease of Doing Business” indicators devoted to the metrics measuring how our member economies are progressing in their liberalization efforts, the CTI was host to long, technical presentations from the World Bank, the IFC, the World Economic Forum and APEC’s own Policy Support Unit, on how they build their global country rankings on competitiveness. There was even a presentation from the Turku School of Economics in Finland on competitiveness in the Logistics Sector, based on an assumption that competitiveness in this sector is a good proxy for broader trade competitiveness.

 

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Dodwell in SOM1 Moscow - Post 5

February 12, 2012

 

While most of you lucky people have been capturing a bit of family and relaxation time over the weekend, the APEC circus has continued to roll. It is one of the fine traditions of APEC Senior Official meetings that they continue to meet right through weekends. Sensible, really, when hotel rooms cost US$300 a night, and every day away from home is an additional cost to the taxpayer. Doubly sensible when it is -20 degrees outside, with every incentive to stay huddled in the warmth of the hotel!

The weekend’s meetings were particularly important for ABAC: we were able to present to the Investment Experts Group on the “Investing for Growth” report (full report) prepared over last summer by NC APEC in the US; and we were able to contribute to a special workshop on “Regulatory Coherence” based on a substantial report brought together by ABAC New Zealand and NC APEC which described the practical damage and cost to business of regulatory “divergence” in three sectors – dairy, electronics and off-road transport.

 

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Dodwell in SOM1 Moscow - Post 4

February 11, 2012

This weekend, ABAC brought trade negotiators for both goods and services together in Moscow for a rare joint meeting. The aim was to demonstrate that liberalizing services trade is just as important for boosting trade and competitiveness in goods as it is for services.

ABAC proposed to trade negotiators back in the San Francisco SOM3 last year that officials from the two important trade policy groups – one dealing with services, the other with goods (“the stuff you can drop on your foot” as one Market Access Group (MAG) official put it) – could valuably meet together to examine embedded and embodied services. It had been a clear conclusion from the Services liberalization report championed by ABAC Hong Kong China and ABAC Philippines through summer last year, and endorsed by leaders in Hawaii last November, that the long-standing neglect of services trade and investment liberalization was hurting the export competitiveness of goods producers – in particular high value-adding ones, and goods produced along long transnational supply chains.
 

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Dodwell in SOM1 Moscow - Post 3

February 09, 2012
  Over five days of meetings for APEC’s Human Resources Development Working Group – the biggest human resources meeting since Washington in March last year -  the need for closer links with business has been a constant theme. I think business needs to take note, and examine how we can link with them in tackling some of the labour market challenges that are likely to intensify over the coming decade.

But for now, ABAC’s priority for the business community has been a major Skills Mapping initiative, which was launched in September 2010 in Beijing at APEC’s first Human Resources Ministerial in nine years. There have been times over the past year when it seemed the initiative would flounder, but now, under the meticulous stewardship of Australia, there is rising confidence that the project will get the go ahead. We will know in a couple of days, when APEC’s Budget Management Committee finalizes the projects that will get APEC funding in the year ahead.
     
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Dodwell in SOM1 Moscow - Post 2

February 06, 2012

Monday in Moscow was dedicated to ABAC’s favourite subject – the APEC Business Travel Card (ABTC). The Business Mobility Group, which has nurtured the development of the ABTC for more than a decade, had a meaty 17-item agenda dominated by issues of long-standing interest to APEC’s business community: extending the ABTC validity period from 3 to 5 years; shortening and simplifying the time needed to process ABTC renewals; coverage of the ABTC beyond the APEC region; and development of a “trusted traveller” scheme to build on the ABTC.

 

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Dodwell in SOM1 Moscow - Post 1

February 05, 2012

Russia’s welcome to the first Senior APEC Officials meetings of 2012 has been warm, but Moscow has not. Arriving in the bleak morning darkness with officials cheerfully telling us to wrap up because it is -21 degrees outside, one could only recall with fond affection the balmy Hawaiian weather that welcomed us to the APEC leaders meeting in November last year.

For many outside observers, APEC starts and ends with just one event – the  APEC Leaders Meeting every November, with its associated APEC CEO Forum. But for those of inside the process the Leaders Meeting is the culmination of a huge amount of work that starts every February with the Senior Officials Meetings. I say meetings, because these SOMs are actually “clusters” of anything up to 60 separate meetings on issues ranging from Foreign Investment and Customs Regimes to Human Resources Development and Services Liberalisation. These Senior Official “clusters” usually occur four times a year and this first – in Moscow – is important in setting the 2012 agenda for many of the region’s officials.
 

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Russia joins the party

December 17, 2011

 

Russia is celebrating accession to the World Trade Organisation (WTO) after a marathon 18-year negotiation – longer, even, than China’s 16-year marathon.

There was a neat symmetry in Russia joining the WTO almost exactly 10 years after China joined – and the symmetry begs comparisons. Were Russia’s terms of accession tougher than China’s? How significant a liberalizing effect has WTO membership had for China 10 years on – and what might this imply for Russia’s economic development in the decade ahead?

     


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Getting Stuff Done in Hawaii

November 18, 2011

 

Lots of journalists – and a lot of business leaders too – tend to be dismissive. They see APEC as just another “hot air-fest” – an opportunity for high profile posturing to election-focused domestic audiences, and grand-sounding declarations that melt to nothing once they are carefully scrutinized. I suppose the TPP – or the Trans-Pacific Partnership – would be counted as one of these.

But I think they are wrong. After a year of heavy engagement in the APEC Business Advisory Council (ABAC) and a week camped in Honolulu meeting rooms looking forlornly out on surfers and Japanese honeymooners making more appropriate use of Waikiki beach, I believe some very important things are happening both in APEC, and in particular around the TPP.


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The Air Passenger paper trail

November 04, 2011

I spend much time at APEC meetings across Asia listening to people talking about the imperative of “regulatory convergence” – the politically correct term is in fact “regulatory coherence”. Why not start on something simple like converging the immigration forms, health and customs forms and – better still – using the data stored electronically to save us having to fill out paper forms in the first place? I wonder how many millions of sheets of paper would be saved in the process.

At our next set of APEC meetings in Hawaii next week, there will be earnest an interesting discussion on an “APEC Travel Facilitation Initiative” that will aim to “improve the overall travel experience for passengers”. They are talking about building “trusted traveler” programmes to speed and simplify immigration procedures, and to improve security screening. Why can’t they just start by clearing up the crazy paper trail?


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Five stages of grief

October 08, 2011

I have consistently been in the “Dr Doom” camp over the past six years or more. It’s just that I find it hard to accept that it has taken until now for so many who should know better to recognise the seismic upheavals that occurred in 2008 – the consequences of which have been clear to see for the past three years. The paradoxical result of all this is that for the first time in several years, I find myself more optimistic than the market, and convinced that stocks are now stupidly oversold – in the Asian region at least. Yes, the US economy is teetering on the brink of an aggressive and painful recession in spite of trillions of dollars of QE stimulus. Yes, Europe’s economies are staring into an abyss, with Greece now almost certain to default on its debts within weeks, possibly having to be manoevered out of the Eurozone, and several more significant European nations facing significant and painful structural adjustments – job losses, welfare service cuts, and so on. But what’s new?? This has been glaringly clear for a year or more. How can it be that stock market investors and analysts have only now stumbled on the discovery, and dived in panic for the exits? 

I suspect it all comes down to Kubler Ross’s “Five stages of Grief” – devised for understanding how individuals cope with bereavement after the loss of someone dearly loved. Stage 1 is Numbness and Denial – an incapacity to acknowledge the dreadful event that has just occurred. 


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The search for jobs

September 23, 2011

Whether or not the doom-mongers are right that economic growth has stalled, and we are slipping relentlessly down into the New Great Depression, for most of the world’s politicians – and Obama in particular – the nightmares are about jobs.

President Obama acknowledged this formally two weeks ago with his US$450 billion “American Jobs Act”, which aims to cut unemployment to 8% by creating 1.9 million jobs. In Spain, where youngsters calling themselves “los indignados” – the “indignants” – have mounted street protests in face of youth unemployment stretching past 40%, and in the UK, where violence, riots and looting recently shocked the nation, the nightmare is the same. In crisis-striken Greece, where unemployment has passed 20% and must undoubtedly rise as government cuts ever further into spending, riots and street demonstrations have become almost routine. This is not a setting in which politicians get reelected. And if the “Arab Spring” is any guide, it is setting where even well engtrenched governments can be overturned – witness Egypt and Tunisia, and perhaps more to come.

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Peru, poverty and some lessons for Hong Kong

September 09, 2011

Yes, I could write about the crisis rolling on in Europe, or the traumatic reliving of “9-11”, but these all seem a very long way away in Peru, where I have spent the past two weeks attending meetings of the APEC Business Advisory Council (ABAC).

Yes, Peru, like Hong Kong, is a member of APEC, the group of 21 Asia-Pacific economies – a sharp reminder of the reach of this forum, which has seen its importance explode since the crash in the global markets in 2008, and the floundering of the Doha Round of trade liberalization talks.

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Typhoon Season for World Markets

August 12, 2011

Whether or not we are finally at the bottom of what is now formally being acknowledged as “the Great Recession” is hard to tell. After the shocking losses of the past week, I know many in the markets who are praying so. But perhaps most important, the events of the past week may finally mark the end of “policy fudge”.

If that is so, then this is a time to celebrate – not that the globe’s problems have been solved, because of course they have not, but that Governments are at last poised to deal with the core problems – cleaning up banks’ balance sheets, dealing with millions of underwater mortgages, reining in on unsustainable public services, and – yes – raising taxes, no matter what the Tea Party says.

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Welcoming Russia to Asia?

July 29, 2011

About this time next year the Russian tall ship Nadezhda will sail grandly into Hong Kong as part of a 300-day tour of the Asia Pacific Economic Cooperation (APEC) economies. The voyage is intended to tell the world that Russia is keenly engaged in Asia. It coincides with a year of Russian chairmanship of APEC which begins in four months time. It is perhaps not an accident that Nadezhda, in English, means “hope”.

Because for sure, Russia’s engagement with Asia remains more “hope” than substance for most of the region’s economies. Nowhere is this better illustrated than in the 68bn cubic metre Siberian gas deal that China and Russia have now been negotiating inconclusively for several years. Russia and China had been expected to sign an agreement on this in June during Hu Jintao’s visit to Moscow, but even now, haggling over the price of gas continues to hold up a deal.

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Days of Reckoning in the Global Economy

July 01, 2011

You remember all of that rubbish back in 2009 about “green shoots” appearing to mark the beginning of the end of the global market crash? I recall dismissing this premature optimism, and saying instead that we had perhaps reached the end of the beginning. But I now realize I was wrong – only now are we reaching the end of the beginning. In fact, when our grandchildren look back at this horrid period, it may be this very week that is recalled as the watershed point from which the crisis was at last honestly faced, enabling the start of decisive remedial action.

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Down but Not Out in the PRD Economy

June 03, 2011

Funny how little things catch your attention… but there it was, right in the middle of an SCMP article: “Sources close to the Hong Kong Economic and Trade Office in Guangdong said the number of Hong Kong factories (in the Pearl River Delta) dwindled to about 35,000 at the end of last year… from a 2007 peak of 80,000”.

Pardon? The number of Hong Kong factories in the PRD has genuinely more than halved in the past four years? Yes, I know Hong Kong’s manufacturers have seen bad times in the recent past as the PRD governments have begun to favour high-value adding, non-pollutive industry, at the same time lifting labour costs – but so bad? And if the claim is true – and sourced to Hong Kong’s official Government presence in Guangzhou, why shouldn’t it? – why is this story not shouting at us from the front page?

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Big Sky Dreaming

May 20, 2011

For the past two weeks, I have been buried in the snow-clad mountains of Big Sky Montana, huddled with a thousand or so government officials from the 21-member APEC region discussing trade liberalization. For light relief, I decided to take a peak at the state of the residential property market in this affluent community of 1,400 homes at the heart of one the US’s largest and most exclusive ski resorts.

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Doha Round Miracles Needed

May 07, 2011

In April 1982 Britain’s immensely unpopular Prime Minister, Margaret Thatcher, declared war on Argentina, which had grasped control of the Falkland Islands, a remote and inconsequential island outpost with a population of a few hundred, and a few sheep. With much patriotic theatre, she sent Britain’s navy nearly 13,000 kilometres to fight off the upstart Argentine invaders. Within three months, the Argentine navy had been routed, Britain’s naval forces returned to Britain as heroes, and Mrs Thatcher had transformed her political future.  Before the invasion, everyone predicted that her Government would be kicked out. After the invasion, she emerged the heroic guardian of her nation, and comfortably won elections held less than 12 months later. Mrs Thatcher with one inspired and audacious move transformed her political future, proving that political miracles can happen.

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Sendai's Supply Chain Stress Test

April 01, 2011

Two weeks after Japan’s catastrophic earthquake and tsunami, the task of measuring the grim consequences has only just begun. Even now, the bleak images of physical devastation in the coastal towns in north east Japan defy imagination. Clearly it is going to take many patient years – and hundreds of billions of dollars – to bring local peoples’ lives back to any kind of normality.

Equally appalling, the scale of the nuclear disaster seems to grow by the day. We are still far from guessing what the ultimate consequences will be – both inside Japan and around the world.

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Keeping the Trade Bicycle Moving Forward

December 17, 2010

The DDA is dead. Long live KORUS, the TPP and the FTAAP – so say APEC and the G20, between the lines, at least. And if you manage to wade your way through this “acronym soup”, there is actually something quite important here. I promise.

Outside the logistics industry, the world of international trade negotiation is as impenetrably acronym-laden as any I know. Some perhaps think this insiders’ code language is cool. I must confess I find it impossible – especially in those notoriously sleepy conference sessions that happen straight after lunch.

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What a Waste

September 04, 2010

I was in Chongqing. It was July. And it was very hot. Having asked to look at some of the city’s food export operations, officials compliantly led me into a factory in a drab suburb where hundreds of women spent their days handling pigs intestines. Literally millions of them. Sichuan slaughters over 300 million pigs a year, and the intestines from most of them ended up here.

With unsmiling efficiency, the intestines were flushed clean, wrapped into bundles of 12 intestines at a time, smothered in salt, and laid carefully in vast ceramic urns. Once full, each urn was trundled deep underground, to be stored until summer passed, and temperatures fell. At that point, the urns were raised back to the surface, put on boats down the Yangze to Wuhan, then on trains to Beijing. From Beijing they transferred to the long, slow train to Russia and into Europe. These urns of salted intestines provided sausage casings for a very large share of Europe’s sausages.

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When Growth is Not Growth

July 30, 2010

After wrestling through four conferences on “Knowledge-based growth” in the past three months, I am at the end of my tether. Not only have I come to the conclusion that most people who use the phrase “knowledge-based” don’t in fact know what they are talking about (or are simply lobbying for more government funding for company or university R&D budgets), but that most are clueless too about “growth”.

I will come to the “knowledge-based” stiff in a minute, but first “growth”. Surely you have to be brain-dead not to notice that the large proportion of the “growth” that the world’s rich western economies boasted over the 15 years to September 2008 disappeared in a puff of smoke in the wake of Lehman Brothers’ collapse. We had been counting the illusory gains of property and stock market bubbles and debt-funded leverage. All of a sudden, most European economies – and most of the complacent citizens living in them – found the growth had gone, and they were no longer as wealthy or economically prepared for retirement as they thought they were. The same happened in Hong Kong of course, as property prices crashed in the Asian Financial Crisis in 1998.

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The PRD’s Fleeing Manufacturers – Not

July 16, 2010

In the wake of the “Foxconn crisis”, media tell us that manufacturers are fleeing the Pearl River Delta in their thousands in search of cheaper production locations in Vietnam, Indonesia or Cambodia. They say that the jump in labour costs, combined with likely appreciation of the RMB, are undermining the region’s hard earned competitive advantage. What utter nonsense.

Let me start with a prediction: the Pearl River Delta will remain Asia’s largest and most competitive export manufacturing base for the next two decades and beyond. Some companies will establish manufacturing operations in places like Vietnam and Cambodia, but these will be hedging strategies linked with precautionary diversification, and will do nothing to dilute the powerful competitive advantage of manufacturing in the PRD. Some low value activity, focused mainly in garments and footwear, may be transferred on a larger scale, but this is manufacturing that the PRD can do without.
 

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Decoupling – Just in Time

May 21, 2010

Is it only me that is puzzled? Asia’s economies are supposed to be heavily dependent on the export markets of Europe and the United States – that’s what the old argument about decoupling is all about. So how is it that as debts mount in Europe and the US, with government spending being cut, taxes raised, consumers cutting back, and unemployment still moving in the wrong direction that Asia’s economies continue to bound forward?

I suppose the simplest – and most plausible – answer is that the impact of contraction in Europe and the US has yet to hit us. After all, the US Government’s various stimulus initiatives have yet to expire, and so may still be buoying the consumer market. A group of US department store chains including Macy’s and JC Penny, accounting for about 3,000 stores and annual sales of about US$70 billion, said last week that sales in the early part of this year were tentatively up from the gloom of spring 2009. 

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Greece and Boiling Frogs

May 07, 2010

In recent weeks, I have thought a lot about the old Chinese story about boiling frogs. You will recall the story says that if you throw a frog into boiling water, it will leap out in shock. But if you drop the frog into cold water, then slowly boil the water, the frog dies without ever recognizing the danger.

For me, Europe’s economies have for many years been frogs originally dropped in cold water. European friends have smiled smugly and dismissively as outsiders like me have talked about the impossible unsustainability of Europe’s complacent, comfortable lifestyles. As the water has crept closer and closer to boiling point, so Europeans have continued to lounge, oblivious to the imminent threat of death.

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America’s Obsession with Exchange Rates – Seeing the Trees, Ignoring the Wood

April 09, 2010

A good friend, weary of my persistent pessimism about the state of the global economy, insisted last week that we should all now be at least “cautiously optimistic” about the prospects for recovery. No, I said – everyone is “prematurely cautiously optimistic”.

This is all very perplexing. I see myself as a happy, positive, optimistic person. Even some of my friends accept this to be so. Why am I so weighed down by the forebodings ahead, when so many others are full of talk of “green shoots”, a consumer rebound, and resurgent exports?

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