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Volume 05 Issue 01 | 2021
DRIVING INNOVATION IN QATAR AND BEYOND An insight into the work of a second-generation enterprise in key economic industries
FINANCE | TECHNOLOGY | ENERGY | REALTY | BRANDS | EDUCATION | GBO AWARDS
2 | Jan 2021 | Global Business Outlook
sc.com/gh
Editor's note January 2021
Awe-inspiring advances in global markets Power International Holding, a second-generation business conglomerate, has a strong vision to lead every industry that it undertakes. The conglomerate’s focus is channeled into five main sectors: general contracting, industries and services, agriculture and food industries, real estate, lifestyle and services, which are of utmost importance to enhance Qatar's economic appeal on a global scale. Although the traditional market of the conglomerate has been Qatar for many years, it is observed that the group of companies have become prominent in their industries nationwide and in regions of the world. Qatar is preparing to host the FIFA World Cup in 2022. This momentous event is characterised by vigorous activity and progress in developing the country’s economic infrastructure. Ramez Al-Khayyat, vice chairman and CEO of Power International Holding, in an interview with Global Business Outlook, sheds light on the relentless work of the conglomerate and how it is accelerating digital adoption to build sustainable growth. He also explains the conglomerate’s readiness to host visitors for the World Cup and for future generations to come. The conglomerate has also developed several assets that have a wider social significance in the country. As we move into 2021, there are a lot of global developments expected to take place in technology, banking, economy and other industries. This issue touches upon developments that are underway for readers to gain market insights into developing and developed countries around the world. For example, Nigeria has rolled out a special bill to boost its financial market, which is also crucial to its economic growth. In another example, Germany’s real estate market has stunned the world with its resilience despite the downside effects of the pandemic. Then, there is the world’s largest trading bloc that was formed by leaders from 10 Southeast Asian countries to define trade and commerce in the region.
Thomas Kranjec Editor thomask@gbomag.com
Global Business Outlook | Jan 2021| 3
Content January 2021
The quest for a futuristic economy
International Holding 20 Power is one of the big players in modernising Qatar, as it prepares for the 2022 FIFA World Cup
Features
Analysis
28
12 | The formation of world's largest trading bloc
06 | Is China’s African
42 | How is Islamic
investment ebbing away?
finance performing?
48 | Will special bills foster Nigeria’s growth?
28 | Germany shows
66 | Blockchain's active
76 | Challenged by the big
resilience in real estate
role in global development
tech’s power grab
4 | Jan 2021 | Global Business Outlook
Interview
Director & Publisher Krushikesh Raju
Banking
Ammar Akhtar Chief executive officer An era of next-gen banking begins with cloud
60
Technology
Lior Lamesh CEO and co-founder, GK8 Air-gapped vault for the crypto world
72
Production & Design Brian Williams David Brenton Ian Hutchinson Shankara Prasad Editorial Alice Parker, Lucas Cooper, Lukas Wilson, Rachel Taylor, Rohit Baruah, Stanley Rogers, Business Analysts Avinash Nair, David Pereira, Nick Luis, Ron Athelstan
Insight Oil and gas
34
Editor Thomas Kranjec
How the pandemic weighed on global oil
Business Development Manager Benjamin Clive, Mike Lloyd Marketing Danish Ali
84 2020
Winners of the 12th GBO Awards 2020
Research Analysts Richard Sam, Sophia Keller Accounts Manager Edyth Taylor
Regulars
Press & Media Contact Craig Penn
Editors Note News
Registered office: Global Business Outlook Magazine is the trading name of Business Outlook Media Ltd Winston House, 2 Dollis Park, London, England, N3 1HF Phone: +44 (0) 207 193 3740 Fax: +44 (0) 203 725 9247 Email: media@gbomag.com
Global Business Outlook | Jan 2021| 5
Economy Geopolitical influence
Is China’s African investment ebbing away? Feature
China is becoming the most active non-traditional lender in Africa. But investors' sentiment has changed significantly
6 | Jan 2021 | Global Business Outlook
The pandemic has made investors cautious about their investment and they are expected to be more prudent when it comes to future investments. Even though Chinese investments will not completely dry up, there will be a decline in the amount of Chinese money coming into projects on the African continent.
Investors worry about Africa’s debt repaying ability
GBO correspondent
O
ver the years, or possibly in the last two decades, China has invested heavily in the African continent. The level of Chinese investment in the continent has only been growing each year. China has undertaken huge developmental projects in Africa, from developing ports to logistics to infrastructure to hydropower stations among others. However, things are likely to change in the post-pandemic era. This could be due to the fact that the coronavirus pandemic has pushed the global economy into recession and most African nations, which are either developing or are under-developed economies, are struggling to repay their loans. Data released by the ChinaAfrica Research Initiative showed that China extended loans worth $148 billion between 2000 to 2018, mostly towards infrastructure development in Africa. US-based consultancy Rhodium Group said that around 12 African countries are currently renegotiating their debt repayment structure with China, estimated to be worth $28 billion.
The coronavirus has forced almost all countries to announce lockdowns to contain the spread of the infection. The halt in economic activities across the globe has led to a global recession. This has also led to investors being cautious about their funds. The uncertain economic situation in Africa, mostly caused by the coronavirus pandemic, will lead to reduced lending from China. Over the years, China has acquired equity stakes in mines and oil fields across Africa, and fully understood the continent's potential at a very early stage. With that, it was quick to seize control over the region’s infrastructure, transport and raw materials. This has ultimately led to China becoming the most active non-traditional lender in Africa. However, investors' sentiment appears to have changed significantly. In this regard, Mark Bohlund, a senior credit research analyst at REDD Intelligence told the media, “I think it is clear that [Belt and Road] lending will be further curtailed due to the economic pressures brought on by the coronavirus but I think some projects in less-distressed countries will continue.” Many experts agree to the fact that the coronavirus is only partially responsible for the anticipated lending slowdown, because the trend had started three years ago.
What are the reasons for investing then? The reason for China investing heavily in the African continent over the last couple of years is due to various factors. Many argue that resources remain the primary focus of China's investments in Africa. However, China’s
Global Business Outlook | Jan 2021| 7
Economy Geopolitical influence
According to Rhodium Group, around 12 African countries are currently renegotiating their debt repayment structure with China, which is estimated to be worth $28 billion
investments in Africa are not just limited to procuring natural resources or minerals. Africa is rich in natural resources and China has a close eye on it. Africa is estimated to contain 90 percent of the entire world supply of platinum and cobalt, 50 percent of the world's gold supply, two-third of world's manganese, and 35 percent of the world's uranium. In fact, China’s investment in Africa extends across every sector, from infrastructure to food processing. Chinese investments are also visible in key areas such as utilities, telecommunications, port construction and transportation. Most of the funding made by China in Africa is through stateowned firms. This gives China an advantage when it comes to bidding procurement contracts in African
8 | Jan 2021 | Global Business Outlook
countries since the state-owned agencies can procure substantial subsidies from the Chinese government. Over the last decade, China has also been expanding its military presence in the region and rivaling the US on investment and military activities on the African continent. In fact, China imports a substantial amount of its resources and commodities from Africa. Many Chinese private companies are also operating in the agricultural and mining sectors in Africa, which imports products to the Chinese mainland. These Chinese businesses also acquire technical tools or machinery used in their day to day operations from China. The Asian superpower buys one-quarter of Africa’s trade, making it one of its biggest trading partners. China, which has a huge manufacturing sector, also sees Africa as a potential market for its products and it also imports non-oil products from various parts of the continent. It imports coal from South Africa, ore from Gabon, timber from Equatorial Guinea and copper from Zambia.
Feature \ Geopolitical influence
Africa is vital to China’s economic expansion. Its leaders recognise the increasing need for natural resources, food and product markets necessary for continued economic growth. Another factor here is that nearly onethird of China's total foreign direct investment in African nations has gone to the mining sector. By working to secure a solid base of critical raw materials, China is strengthening its economy for decades to come. China also sees Africa as a good destination to extend its geopolitical influence. While China has already established itself as a superpower in Asia, it soon wants to establish itself as a global superpower and counter the US. In an effort to fulfil its ambitions, China sees Africa play an important part in achieving that. China’s investments in African infrastructure has to do with its geopolitical ambitions. Major investments in African infrastructure have been made through the China-Africa Development Fund. If China can rise to a position where it exerts major control over essential economic elements such as the utility sector and telecommunications in African countries, while also developing military influence, then it also holds considerable political alliance in those nations. The Asian superpower has also invested heavily in other Asian emerging markets, as well as in Latin America; however, African economies provide another sensible choice to take advantage of excellent growth
opportunities both for political reasons and investment returns.
Establishing presence through economic engagements China has several economic engagements with both developed and less developed economies. It has engagements in Africa too. Through the Forum on China-Africa Cooperation (FOCAC), China established its presence on the continent. Since its inception in 2000, several economic packages and investment programmes have been structured to develop infrastructure and boost trade in the continent. However, prior to the Forum on China-Africa Cooperation, China continued to have economic cooperation with Africa as well. If we go back in time, China has been an ally of Africa for hundreds of years. Through the Forum on ChinaAfrica Cooperation, China has carried out various growth initiatives in Africa, with the biggest being the China One Belt Road or Silk Road initiatives. Its opus magnum aims to connect Africa with railway and shipping links to major markets in the Middle East and Central Asia. While China’s investment in Africa is widespread, its investments in the continent can be traced to at least 46 countries under different investment portfolios. Around 2200 Chinese private and state-owned companies are currently operating in Africa. In the last decade, China has also developed hundreds of educational projects and healthcare centres on the continent. Chinese banks such as the People’s Bank of China, the China Development Bank, and the Export-Import Bank of China (Exim Bank of China) have financed large-scale investment projects on the African continent. Investments in China sharply
Key milestones in Africa-China investment
Beijing loaned
$152
billion to 49 African nations from 2000 to 2018
Commodity trade almost doubled to
$204 billion in 2018
Global Business Outlook | Jan 2021| 9
Economy Geopolitical influence
increased after the 2015 Forum on China-Africa Cooperation Summit where China committed $60 billion towards various developmental works on the African continent. It is also important to note that investments in Africa have been geographically concentrated in oil rich countries, like Nigeria and Angola. According to the China Africa Research Initiative, Beijing has handed out $152 billion as loans to 49 African nations during the period between 2000 and 2018. Data from the World Bank has revealed that the amount of Chinese loans to sub-Saharan African nations stood at $64 billion as of 2017. Similarly, Chinese foreign direct investment in Africa increased significantly from $7.8 billion in 2008 to $46 billion in 2018. Commodity trade between China and Africa almost doubled from $107 billion to $204 billion in 2018, according to data provided by Beijing. If we look country wise, China has invested in upgrading Nigeria’s railway connectivity, which will lead to improved logistics. In
10 | Jan 2021 | Global Business Outlook
Nigeria, China funded two major standardgauge rail projects: One is a line from Lagos to Kano, the other is a coastal railway from Lagos to Calabar. Besides Nigeria, China is also involved in building railways in other African nations such as Kenya, Ethiopia, and Zambia. It is noteworthy that around 85 percent of the funding for the $475 million Addis Ababa Light Rail, which serves 4 million of the city’s residents, was provided by the Chinese ExportImport Bank. China has also made notable investments in the energy sector in Africa. African countries do not have the sole power to build the infrastructure they need to suit the growing population. In Africa, about 70 percent of the affected payments, which is equal to $8 billion are owed to China, and it accounts for 62 percent of Africa’s official bilateral debt. In October, Zambia defaulted on a $42.5 million interest payment on a dollar-denominated bond. It was also close to defaulting on its foreign debt worth $12 billion, equivalent to half its GDP. Then, it was the Chinese creditors who eased the pressure to a great extent. For foreign direct investments, mining and construction still account for the bulk with a 54 percent share. It was reported that the stock of manufacturing foreign direct investment
Feature \ Geopolitical influence
increased to 13 percent of China’s FDI stocks in Africa in 2015. It is also interesting that Chinese foreign direct investments increased more rapidly in Africa’s fastest-growing economies during the period between 2012 and 2015, compared to the rest of Africa.
The leading outcome of China's efforts Factors such as depleting oil prices and the coronavirus pandemic have battered the global economy since the beginning of last year. The coronavirus, which originated in Wuhan last year, has also taken its toll on the Chinese economy. All these factors also dealt a severe blow to Chinese economic, political and investment activities. China was the first country to enter a state of lockdown and as a result, its economic output fell by 6.8 percent in the first quarter of 2020. The poor economic conditions of many poor countries in Africa have led to tremendous pressure on China to pardon billions of dollars of loans that it had offered to Africa in the last two decades. This has led to many questioning the future of China’s trillion-dollar deal Belt and Road Initiative (BRI) infrastructure programme with Africa. Despite the size of investments made in the region, many critics question whether China could have increased its trade to Africa differently: a system that did not involve $200 billion in bilateral loans and foreign direct investments. While the very purpose of the investment was to have direct control on the African resources, China’s critics argue that the mainland actually shelved more money than the open market rates. China’s foreign direct investments into Africa are creating fewer jobs per unit of investment. To put things into perspective, what China needs to be is more successful in its African investment strategy. In this regard, the superpower needs to move from focusing its investment in natural resources and infrastructure to manufacturing, which is more labour-intensive. In the last couple of years, a substantial amount of funds were poured into mines or oil fields across Africa by China. Despite that, Beijing never actually had the power to call the shots. In fact, they were being called by the regional
An influx of Chinese investments In the past, China has invested in upgrading Nigeria’s railway connectivity, which will lead to improved logistics. In Nigeria, China funded two major standard-gauge rail projects: One is a line from Lagos to Kano, the other is a coastal railway from Lagos to Calabar. Besides Nigeria, China is also involved in building railways in other African nations such as Kenya, Ethiopia, and Zambia. It is noteworthy that around 85 percent of the funding for the $475 million Addis Ababa Light Rail, which serves 4 million of the city’s residents, was provided by the Chinese Export-Import Bank. China has also made notable investments in the energy sector in Africa. Being one of the leading investors in renewable energy, it has made significant investments in Africa too.
government. If in the future, any government decides to nationalise any of the assets China has heavily invested in, It would have no power to influence the decision or to reverse it. If supply interruption happens due to conflict in Africa or along China’s long sea lines of communication, the so-called benefit of direct control will be ineffective, because for now, Beijing lacks the military muscle to defend its mines and other investments in Africa. Many experts also argue that China has made wrong investment decisions at the wrong time. They believe that Chinese firms paid a higher price for assets that lost a massive value after the downfall in the commodity prices. Now. with the coronavirus pandemic already affecting the global economy, China might soon seek a realistic exit strategy.
Global Business Outlook | Jan 2021| 11
Economy RCEP negotiations
Analysis
The formation of the world’s largest trading bloc Lukas Wilson
The trading bloc is even bigger than the European Union and US-Mexico-Canada Agreement
12 | Jan 2021 | Global Business Outlook
Leaders from 10 Southeast Asian countries, along with South Korea, China, Japan, Australia and New Zealand have signed a mammoth trade agreement that will define trade and commerce in the Asia Pacific region for decades. Known as the Regional Comprehensive Economic Partnership (RCEP), it is a trade agreement signed by Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, Philippines, Singapore, South Korea, Thailand and Vietnam. The deal has taken nearly a decade to be formulated following numerous meetings and discussions among leaders and diplomats from the Association of Southeast Asian Nations members. Finally, the leaders penned the deal on November 15, 2020. The trading bloc created by the Asian nations will be the largest in the world by both population and economic size. It will account for 30 percent of the world’s population, which is around 2.2 billion, and 30 percent of global GDP. What is appealing about the trading bloc is that it is even bigger than the European Union and the US–Mexico–Canada Agreement.
Economy \ RCEP negotiations
RCEP negotiations got underway in May 2013, originally involving 16 East Asian countries which include the 10 members of the Association of Southeast Asian Nations, plus China, Japan, Korea, Australia, New Zealand, and India (the six countries with which ASEAN had existing free trade deals). India, however, pulled out in the end largely due to political pressure and organised rallies against the deal. Many in India fear that the trade deal would open the Indian markets to Chinese consumer products and agricultural goods from Australia and New Zealand, which in turn might harm local producers and sellers in the market. Nevertheless, there is
hope that India might reunite and rejoin the pack if its demands are met, which includes safeguard mechanisms among others. Despite India’s withdrawal, the 15-nation RCEP is still poised to be the world’s largest megafree trade agreement. Why is the trade deal so significant? The RCEP framework is based on existing trade agreements signed by the ASEAN and it effectively combines them into a single agreement that also includes Australia, China, Japan, New Zealand, and South Korea. This makes RCEP the first trade agreement between China, Japan and South Korea—the three of the largest
economies in Asia—and one of the first multilateral trade agreements signed by China. According to a research report, RCEP will strengthen the supply chain synchronisation among the regional members that has been disrupted by the recent Covid-19 pandemic and China-US decoupling; additionally, it will speed up the labour intensive sector’s supply chain relocation from China to ASEAN countries. India was initially part of the RCEP, but it has since pulled out. But the opportunity for the country to rejoin still stands. The deal covers roughly one-third of the world's population and just under one-third of the global
Global Business Outlook | Jan 2021| 13
Economy RCEP negotiations
GDP. The Brookings Institute estimates that the deal will increase global GDP by $500 billion in the next 10 years, but estimates vary widely as with all trade deals. Most analysts agree that the RCEP has the potential to add more than $100 billion to national incomes within the trading bloc. Many experts also predict the deal will increase the market size of Asia Pacific. The deal will create additional opportunities for Asian companies to produce and sell within the region. The RCEP is indeed a milestone for regional economic integration and post-pandemic economic recovery for member countries.
Why did India pull out of the deal? Despite being involved in year-long negotiations, on November 4, 2019, India decided to exit discussions mainly due to political pressure from opposition and different stakeholders. According to a government official, India raised various concerns throughout the period of negotiations; however, those concerns were not addressed during the time of negotiations. The Indian government felt it was important to prioritise the interests of its industries like agriculture and dairy and to give an advantage to the country’s services sector. India feared that
Leaders from 10 Southeast Asian countries, along with South Korea, China, Japan, Australia and New Zealand have signed a mammoth trade agreement
14 | Jan 2021 | Global Business Outlook
Economy \ RCEP negotiations
the elimination of tariffs would open its markets to imports, which in turn could harm local producers. Indian Prime Minister Narendra Modi said during a RCEP Summit in Bangkok that the present form of the RCEP agreement does not fully reflect the basic spirit and the agreed guiding principles of RCEP. It also does not satisfactorily address India’s outstanding issues and concerns. In such a situation, it is not possible for India to join the RCEP agreement. Prior to the exit, India suggested remedial measures imposing some kind of barriers, if imports rise a particular threshold, however, the other members did not agree. The other member nations have, however, maintained that India is welcome to rejoin the pact at any point of time in the future. Singapore Prime Minister Lee Hsein Loong even said that it joined the trade pact with the hope that India will be able to come on board eventually. While India was still part of the negotiations, there was an uproar in the country among oppositions and different stakeholders that local producers would not be able to compete with their counterparts, especially in the agricultural and dairy sector. Indian producers, many of whom are still rural based, and do not possess advanced technologies that are available in the global market, will face pressures from both high-end producers from countries such as Australia and New Zealand. Experts also believe that India’s metal producers would become vulnerable from greater competition. Escalating tensions and border disputes with China was another major reason for India’s decision to not sign the agreement. India wanted to reduce its exposure to China and not let its product flood the Indian market. It has also feared that there were inadequate protections when it comes to a surge in imports, and even argued
that there should be a possible circumvention of rules of origin. It has feared that third countries could dump their products by routing them through a country that enjoys lower tariffs. India’s trade deficit with RCEP nations stood at $105 billion, while trade deficit with China alone stood at $53.5 billion. The cost of not joining the RCEP While many economists and analysts believe that India made the right decision to not join the pact, Chinese media states that the decision was a strategic blunder. However, the issue is complicated from India’s point of view. While it could have gained in terms of welfare improvement for consumers, there were also risks of the domestic market flooded with foreign products, which would harm local producers. It seems like India has decided to focus more on the disruption of local producers over welfare improvement of consumers. Some critics argue that the protection and promotion of domestic industry or producers should not be a major concern. This would ultimately harm the country as a whole in the long term. While India did some kind of temporary relief in the form of restrictions or rather limitations, its concerns were not addressed by other members of the pact. What the country wanted to ensure amid the negotiations was countermeasures such as an auto-trigger mechanism to raise tariffs on products when their imports crossed a certain threshold. At the same time, India also wanted RCEP to exclude mostfavoured nation (MFN) obligations from the investment chapter as it did
RCEP is the first trade agreement between China, Japan and South Korea—the three of the largest economies in Asia— and one of the first multilateral trade agreements signed by China
India, China trade deficit with RCEP nations
India $105 billion China $53.5 billion
Global Business Outlook | Jan 2021| 15
Economy RCEP negotiations
not want China to enjoy the same benefits it was giving to other strategic allies. India felt the agreement would force it to extend benefits given to other countries for sensitive sectors like defence to all RCEP members. If India would have remained in the pact, global trade would have also increased. Given its huge population and market size, the pact members understand the potential it holds and thus has left the door open.
The effective work of RCEP The RCEP framework is based on existing trade agreements signed by the ASEAN and it effectively combines them into a single agreement that also includes Australia, China, Japan, New Zealand, and South Korea. This makes RCEP the first trade agreement between China, Japan and South Korea—the three of the largest economies in Asia—and one of the first multilateral trade agreements signed by China. According to a research report, RCEP will strengthen the supply chain synchronisation among the regional members that has been disrupted by the recent Covid-19 pandemic and China-US decoupling; additionally, it will speed up the labour intensive sector's supply chain relocation from China to ASEAN countries. India was initially part of the RCEP, but it has since pulled out. But the opportunity for the country to rejoin still stands. The deal covers roughly one-third of the world's population and just under one-third of the global GDP. The Brookings Institute estimates that the deal will increase global GDP by $500 billion in the next 10 years, but estimates vary widely as with all trade deals. Most analysts agree that the RCEP has the potential to add more than $100 billion to national incomes within the trading block. Many experts also predict the deal will increase the market size of Asia Pacific.
16 | Jan 2021 | Global Business Outlook
A geopolitical win for China RCEP was a significant geopolitical win for China, a big diplomatic success. It shows that China can pursue its aggressive political and economic policies without cost and that the world cannot unlink itself from the Chinese market. Tighter integration will thus bring the region closer into China’s economic orbit. In December, local media reported that China will accelerate the implementation of trade liberalisation measures promised under the RCEP deal. China will exert its influence being the largest economy in the region, on regulations and standards setting within the bloc. Notwithstanding the symbolic and strategic victory of the RCEP for China, analysts expect that China’s gains from the RCEP deal would likely be marginal, and are not expected to offset the negative impact of its ongoing trade war with the US. In short, it will allow China to expand its sphere of influence in the region in the face of broader US economic pressure. The deal will likely help China to avoid losing relevance in international value chains shifting in the wake of the Covid-19 pandemic. According to Morgan Stanley’s chief China economist Robin Xing, RCEP may help accelerate negotiations on other trade deals such as the China-Japan-South Korea free trade agreement and a China-European
Economy \ RCEP negotiations
Union bilateral investment treaty. The impact of RCEP on the rest of the world From a global viewpoint, the RCEP could be understood as a free trade agreement between three Asian manufacturing giantsChina, Japan and the Republic of Korea. However, the trade pact should not be a major source of concern for the European Union (EU). The direct economic impact of the RCEP on other countries or pacts are rather small in nature, however they are not negligible. The implementation period of such deals are also unusually long, sometimes extending to 20 years. Customs and other types of trade-enhancing regulatory reform provisions will help accelerate the region’s integration, but the deal will do little to free trade in services, where only selected sectors will benefit. What would really worry the EU is displacement of its exports to RCEP members due to the preference margins accorded to the other signatories. The EU has important trade agreements with major Asian superpowers such as China and Japan and they are unlikely to be displaced. However, of the EU’s total exports to RCEP in 2019, most are not covered by trade agreements, including to China. It is noteworthy that China is the EU’s second largest export destination, where the applied trade-weighted tariff was 9.15 percent in 2017. The geopolitical factors associated with the RCEP deal should also be a source of concern for the EU as well as the US. Despite a trade war with the US, China’s trade and foreign direct investment (FDI) continued to thrive. The RCEP signifies the failed attempt by the Trump Administration to isolate China and to sever it from global value chains. Countries which are part of the RCEP pact such as Australia, New Zealand, South Korea and
Japan are US allies. Them joining the RCEP means they simply cannot sever their economic ties with China and the role it plays in the region. Despite being allies of the US, it is hard for them to ignore the fact that China’s manufacturing sector is today almost twice as big as that of the US. Newly elected US President Biden has promised to be tough on China, but his policies are still unclear in dealing with China or the other Asian countries. Economists expect the Biden administration to resurrect the TPP in the shape of a modified CPTPP. What is very clear is that Biden will not adopt the same policies or strategies adopted by his predecessor Donald Trump. The RCEP deal shows that Donald Trump’s approach has proved to be insignificant in dealing with China.
RCEP negotiations got underway in May 2013, originally involving 16 East Asian countries which include the 10 members of the Association of Southeast Asian Nations
Global Business Outlook | Jan 2021| 17
News
Economy
Bahrain exports surged in Q4 2020
T
he national origin exports of Bahrain surged 12 percent to BD 599 million in the fourth quarter of 2020 compared to BD 532 million in the same period in the previous year, according to the Information and eGovernment Authority (iGA) report.
It is reported that 72 percent of value of national origin exports in December came from the top 10 trading partners, while the remaining 28 percent came from other economies. The report also highlighted data on imports, the balance of trade and re-exports. Furthermore, the Kingdom of
Saudi Arabia ranked first with BD 127 million among those economies that received Bahraini exports of national origin. The US ranked second with BD 52 million, while the Emirates ranked third with BD 51 million. The report indicates that the value of re-exports slumped 28pc to BD 157 million in the fourth quarter compared to BD 220 million for the same period in 2019. The top ten trading partners accounted for 83pc of the re-exported value. The top exporter to Bahrain was China with BD 166 million, while the Kingdom ranked second with BD 96 million.
Malaysia Covid-19 package
Malaysia’s fresh relief package in response to Covid-19 The Malaysian government has announced a fresh relief package worth $3.7 billion to tackle the new cases of Covid-19. It is reported that the government will provide cash to the
18 | Jan 2021 | Global Business Outlook
lower class of the society, subsidise wages, reduce tax and bolster the existing initiatives aimed to assist people in coping with the pandemic’s impact. The decision by the government comes after it announced a state of emergency, where new rules and regulations were floated to contain the pandemic and support the economy. The moves have raised concerns about the government’s potential to control economic activity despite limited fiscal space and a high debt load. The country’s economy slumped during the second quarter and fourth quarter of 2020. The fourth quarter data is not released yet. However, the government was expecting an economic contraction between 4.5 percent and 5.5 percent for 2020. The government floated 305 billion ringgit of relief measures, which is more than 20 percent of the country’s GDP.
The country’s economy slumped during the second quarter and fourth quarter of 2020. The fourth quarter data is not released yet. However, the government was expecting an economic contraction between 4.5 percent and 5.5 percent for 2020.
Egypt’s imports record 12 percent slump in 2020
China FDI
China’s FDI growth rate fastest in 5 years China’s FDI surged a record high last year despite the outbreak of the Covid-19 pandemic. The growth rate was the fastest in five years. The FDI surged $144.37 billion in 2020, marking the highest level since 1983. However, the FDI was not recorded from these sectors: banking, securities and insurance. The FDI grew 4.5 percent more than in 2019, which points to the fourth consecutive growth year. The FDI into China surged $14.90 billion last December, which is 8.4 percent higher than 2019. It also marks the highest growth rate since June 2020. The FDI stood at ¥ 999.98 billion last year in terms of yuan, also marking the largest level on record after surging 6.2 percent in 2019. China added an additional 127 segments to its list of
industries in which FDI is permitted. The segments were included mainly in China’s investment starved areas, such as the central, western and northeastern regions. The mainland’s FDI in services segment surged 13.9 percent in terms of yuan in 2020, while there was a 11.4 percent surge in investment in the high-tech industries segment and 11.4 percent 28.5 percent growth in high tech services segment.
Egypt’s imports recorded a loss of about $63.587 billion, marking a 12 percent slump, compared to $71 .862 billion in 2019. It is reported that the country’s imports suffered after the government embarking on domestic manufacturing of some production requirements instead of importing them. However, the move aims to bolster local production to fulfil the goals of the national programme rolled out by the government. This is to focus on local manufacturing and network manufacturing chains. It is reported that Egypt’s trade deficit also recorded a 17 percent slump last year, which stands at $38.3 billion compared to $46.22 billion in 2019. Furthermore, the slump was recorded because the foreign trade performance indicators achieved positive rates, amounting to $88.88 billion. The country’s exports slumped 1 percent last year to $25.3 billion, compared to $25.6 billion in 2019. The government even decided to slash gas and electricity prices for Egypt’s productive segments. The economies that received Egypt’s exports of building material were: The Emirates, Canada and Italy.
China added an additional 127 segments to its list of industries in which FDI is permitted Global Business Outlook | Jan 2021| 19
Coverstory Key economic industries Power International Holding
20 | Jan 2021 | Global Business Outlook
The quest for a futuristic economy Alice Parker
Power International Holding is one of the big players in modernising Qatar, as it prepares for the 2022 FIFA World Cup Global Business Outlook | Jan 2021| 21
Coverstory Key economic industries Power International Holding
P
With Qatar’s growing population and demand for medical services, a key focus for us will be strengthening our healthcare arm. We are confident that this could be a significant growth area for us in the coming years Ramez AlKhayyat
ower International Holding is a diverse business conglomerate that was founded in Qatar, with a strong vision to lead in every industry that it undertakes. The conglomerate's focus is channelled into six main sectors: general contracting, industries and services, agriculture and food industries, real estate, lifestyle and services, which are of utmost importance to enhance Qatar's economic appeal on a global scale. Although the traditional market of the conglomerate has been Qatar for many years, it is observed that the group of companies have become prominent in their industries nationwide and in regions of the world. A recent addition to the conglomerate's diverse portfolio is healthcare. Elegancia Healthcare, a subsidiary of Power International Holding and Elegancia Group, has signed a partnership agreement with Cedars-Sinai in Los Angeles for The View Hospital. The 250-bed facility is scheduled to open in August 2022. There is a sense of trepidation knowing that the coronavirus pandemic has made thriving economies heavily reliant on healthcare. “With Qatar’s growing population and demand for medical services, a key focus for us will be strengthening our healthcare arm. We are confident that this could be a significant growth area for us in the coming years," Ramez Al-Khayyat, the vice chairman and Group CEO of Power International Holding, told Global Business Outlook. Despite the pandemic, the conglomerate is showing commendable work in reinforcing sustainability and success for its group of companies through a simple approach: It acts as a powerhouse for each of its business units by providing them with the tools and resources that are necessary to maintain sustainable growth. Digital adoption is on the rise An example of that is the conglomerate’s
22 | Jan 2021 | Global Business Outlook
string of efforts in combining technological and operational improvements, coupled with profound experience under the leadership of Ramez Al-Khayyat, who pointed out that “This year more than ever has shown that business leaders cannot relax and expect things to improve on their own. At Power International Holding, we look to install a sense of pride in going that extra mile, to be brave, try something different and in most cases our efforts have been rewarded.” His due diligence in ensuring that the group of companies continue to remain efficient, responsive and agile—not only in improving margins but also in their ways to deliver topclass customer experience—is remarkable. In
Coverstory \ Al Safat Investment Company
Ramez Al-Khayyat, Vice Chairman and Group CEO of Power International Holding
his views, “the hard work is paying off.” The conglomerate has realised the power of digital adoption to become an intelligent enterprise. Last year, it embarked on a sophisticated three-year digital transformation programme across its group of companies, especially because its portfolio was becoming increasingly complex. “Investing in digital innovation, which includes creating digital loyalty platforms of our shopping venues, or using machine learning to monitor and predict footfall across our buildings, is just another tool for us as we further modernise and improve our offering," Ramez Al-Khayyat said. Essentially, the conglomerate sought a future-proof system that will provide a common framework with flexibility for it to expand into new industries. Now the conglomerate has become data-driven from top to bottom. “We have always had the courage to invest in
new ideas and technologies to help the group reach new levels of success," he added. What is interesting about the new process is that the data seamlessly flows directly into the SAP systems and all activities are reflected on the dashboards. Ramez Al-Khayyat explaind that through the integration of these SAP systems, the conglomerate will be able to achieve its ambition of driving lean, agile and efficient operations across every function. "Becoming more data-driven will also ensure that we are ready for all challenges and opportunities that the future holds.” On a macro level, the conglomerate has encouraged digitisation across its group of companies. “We have embraced digital
Global Business Outlook | Jan 2021| 23
Coverstory Key economic industries Power International Holding
transformation across all our businesses and technology has played a vital role in aiding economic recovery and giving consumers confidence," Ramez Al-Khayyat said. "Some of this innovation delivers seemingly small improvements that can make a really big difference.” For example, AURA Group has expanded digital solutions across all its restaurants, which even includes scannable QR codes to replace food menus, and in-app ordering for food delivery services. In another example, the Mall of Qatar is able to offer its shoppers an enhanced digital shopping experience through a customer data platform that provides them with a generous loyalty programme that is perfectly tailored to specific preferences. Likewise, UCC Holding and Elegancia Group utilises bestin-class tender management software to streamline their tendering processes, which in turn saves project costs and provides complete visibility of all project tenders. For Baladna, its agriculture experts use the most advanced dairy management software programme for managing the herd, monitoring cows’ milk production, handling terminals and defining daily tasks. Building a path to self-sufficiency In June 2019, Baladna first started exporting milk to neighbouring countries in the Middle East. “We now have plans to expand our operations in Southeast Asia and North Africa for 2021,” Ramez Al-Khayyat said. Baladna has significantly contributed to Qatar’s food security and safety during a diplomatic crisis and a blockade. The group believes that adopting a self-sufficiency model is imperative to any nation that seeks to modernise itself. Also, the group is developing sustainable trade and international collaboration with other nations. For one: Qatar is already the UK’s third biggest market in the region, and both nations are exploring trade opportunities as part of their individual efforts in economic recovery. The cows at Baladna farms produce an average of 37 litres of milk per day against the production levels of 22 litres and 30 litres in the UK and the US. At the same time, there is anticipation that the UK is set to begin a post-Brexit trade and investment review of Gulf markets—which can lead to a huge growth opportunity for the group and Qatar.
24 | Jan 2021 | Global Business Outlook
For Qatar, having a secondgeneration conglomerate this diverse is a boon to its economy. The conglomerate has already expanded its presence with offices and projects in the UK, France, Morocco, Turkey, Lebanon, Oman and Maldives. Again, “we will be looking to expand into North Africa and Southeast Asian markets soon because there is a huge amount of potential as the world rebounds from the pandemic,” Ramez Al-Khayyat said. The Ministry of Finance expects Qatar's GDP to grow by more than 2 percent in 2021. With the conglomerate’s expansive nature, Qatar will certainly find itself in the position of having a desirable economic growth. Ramez Al-Khayyat, meanwhile, said “from everything that we see on the ground, I am confident that this can be achieved or even exceeded. We see a bright future for Qatar as it prepares to host one of the greatest shows in the world.” Efforts in developing the national economy The conglomerate’s influence is increasing in size on the back of having employed 41,000 people across eight regions of the world. Its workforce is ranging from expert tradesmen to experienced engineers to highly-skilled chefs to well trained hospitality staff. “Just as Qatar’s economy has grown and diversified, we have too,” Ramez Al-Khayyat said. “We are proud to play a major role in Qatar’s economic development. From a brick-and-mortar
perspective, our general contracting division has developed more than 60 million m2 of built up area in construction. In the hospitality sector, we now run more than 40 premium restaurants in prime locations throughout the country. We are also proud to have contributed towards Qatar’s dairy self-sufficiency, with Baladna now supplying eight out of 10 glasses of milk taken in Qatar, while producing 500 thousand litres of fresh milk every day.” Although the pandemic struck Qatar while it was enjoying a construction boom, the relentless work of UCC Holding and Elegancia Group is outstanding, especially as the nation is gearing up for the FIFA World Cup in 2022. “We have worked on several significant infrastructure projects that have helped to prepare the country to successfully host the 2022 FIFA World Cup,” Ramez Al-
Khayyat said. Also, large-scale projects are underway on the back of making significant investments in the expansion of Qatar's road and rail network. This is a good time to realise those projects because it will sophisticate Qatar's transport infrastructure, as it is preparing to host the World Cup. A big moment is about to come into play Qatar hosting the World Cup will be a big moment in its economic history. The highlight of this opportunity is that Qatar will be the smallest nation so far to host the global finals— and more importantly, it seeks to be a grand World Cup host like no other. The nation
Global Business Outlook | Jan 2021| 25
Coverstory Key economic industries Power International Holding
has spent years constructing some of the most environmentally-friendly and state-of-the-art sporting facilities in the world for fans arriving in 2022. “We expect many people will come for the game and then come back time and again for luxury hospitality, fine dining and attractive investment opportunities. This is an exciting time for Qatar and we at Power International Holding are proud to be playing our part,” Ramez Al-Khayyat said. When Qatar was named host for the World Cup, it sought a few pledges that would make it go miles ahead of the curve to suit the 21stcentury high-density game. For that reason, the conglomerate is drawing up plans and working on projects to reinforce the nation’s allure in terms of infrastructure and self-sufficiency. The Qatari government, on its part, has developed initiatives to expand the private sector and introduce 100 percent foreign ownership which could further shape the industry to greater heights. Last June, UCC Holding had announced Golden Sponsorship of its first conference that sought to develop partnerships with the private and public sector.
26 | Jan 2021 | Global Business Outlook
The public-private partnership model has gained global interest from a governance perspective, which is essentially important to activate this partnership on the basis of accountability, transparency and mutual benefit. At a macro level, corporate governance plays a huge role in building investor confidence and strengthening economic capabilities to attract investments in the future. “We are also proud to have developed several assets that have a wider social significance, including new schools, health centres, university buildings and housing developments,” Ramez Al-Khayyat said. The construction sector has become the nation’s biggest non-mineral sector, contributing 15 percent to the GDP. That said, the conglomerate is even optimistic about the economic readjustment that is anticipated to be sharp enough— creating a value for the nation’s construction sector to reach previous estimations of $71.65 billion by 2025. This estimation illustrates an extraordinary growth rate and more opportunities for a nation that is recognised for having one of the highest per capita incomes in the world. “Our many restaurants, hotels and shopping destinations are all ready to host visitors for the World Cup and for future generations to come," Ramez Al-Khayyat said.
Another pronounced element of hosting the World Cup is the power it is giving to Qatar's real estate sector. “We expect these measures will help to attract more expatriates, foreign buyers, as well as real estate funds. Qatar is an incredibly welcoming and exciting place to live and do business,” he explained. In line with that, ASSETS Real Estate’s profound work in project developments have added a significant value to the nation’s economic development. The real estate unit operates various properties in Qatar, including the Baywalk Viva Bahriya in the Pearl, Com39 Tower and THE e18theen Tower, located in Lusail City. Why Lusail is so important Lusail Stadium will be one of the eight stadiums where the World Cup will be hosted. The stadium will be world-renowned for its water and energy efficient building. Ramez AlKhayyat pointed out that “If you take Lusail as an example, there will be 22 hotels with various international star ratings, making it a worthy destination for visitors. But more than that, the city will boast numerous new residential units, modern office buildings and attractive retail and dining venues. Lusail will have all of the things required to support a highly successful
international sporting event, and its transformed skyline will also help to build the foundation for many more years of continued local growth and prosperity.” The conglomerate will help the nation's legacy of innovating solutions to endure long after the tournament has come to an end. Lusail is in fact one of the host cities for the World Cup and is a thriving new area with an expected capacity that can house up to 450,000 people during the premier sporting event. Even though the nation’s real estate has been hard hit by the pandemic, the World Cup “is expected to be a major growth driver” attracting hundreds of thousands of tourists. Thriving on these developments, the conglomerate seeks to grow vertically and horizontally in the next few years. “This may well include exploring new opportunities and further diversification into healthcare and education. We are also looking to expand locally in oil and gas and secure additional international consulting and construction projects, particularly in Africa," Ramez Al-Khayyat concluded.
We expect these measures will help to attract more expatriates, foreign buyers, as well as real estate funds. Qatar is an incredibly welcoming and exciting place to live and do business
Global Business Outlook | Jan 2021| 27
Industry Munich home prices
Real estate in Germany is showing resilience Feature
28 | Jan 2021 | Global Business Outlook
Feature \ Real estate
The housing market is holding up remarkably well—as it emerges as ‘concrete gold’ at the moment Lukas Wilson
A
s the Covid-19 crisis takes a toll on most of the industries worldwide, the real estate sector in Germany emerges as gold, according to British investment manager M&G. Many developed countries in Europe and in the rest of the world are witnessing increasing home prices amid the coronavirus pandemic. According to Switzerland-based banking giant UBS, prices rose in eight out of 10 high-and middle-income countries during the second quarter of the year, with prices in the US rising by 5 percent a year earlier and in Germany by 11 percent. However, the crisis has impacted real estate markets differently. The rapid spread of the coronavirus across countries in the world has resulted in governments introducing strong countermeasures such as social distancing rules, lockdowns and containment measures, which have led to a sharp decline in GDP rates across Europe, to an extent never seen since 1945. That said, the housing markets in Europe are expected to face a sluggish recovery after months of lockdowns to curb the spread of the coronavirus, and in turn has brought sales to a standstill. Many German investors expected the coronavirus pandemic to cause slack in Germany’s property market. According to a survey published by consulting firm Ernst & Young (EY), around 76 percent of real estate
companies in Germany expected a declining transaction volume this year, while the figure was only 16 percent at the end of 2019. Also, during that time, only four percent of real estate companies expected an increasing transaction volume. The survey carried out by EY took into account 300 participants across the real estate industry in Germany.
Germany real estate sector shines amid crisis Despite the Covid-19 crisis and the economic meltdown, the real estate market in Germany is not as volatile compared to real estate markets in England or Spain. Due to this, experts believe investors will jump into the market since the residential market in Germany is significantly stable. Richard Gwilliam, head of property research at M&G Real Estate believes the impact differs based on the countermeasures introduced by the government of the region to deal with the virus. The difference in government policy approaches has manifested itself in various ways in terms of economic hits, he said. Speaking about Germany’s real estate market, he said that the industry is holding up remarkably well and investments have actually grown this year compared to last year. According to him, this is not surprising as the real estate fundamentals in Germany have been pretty solid for years with vacancy rates as low as 2 percent in Munich and 3 percent in Berlin. "Even if businesses had to think differently about how they use real estate, it hasn't really stopped them from showing they do want to occupy real estate in Germany. Rents have continued to grow," he said. Gwilliam also cited Germany’s economic backdrop as a reason for the German real estate sector’s strong performance. Amid the crisis, Germany had a much more solid fiscal position than other countries in Europe. In this regard, M&G head of investment strategy Jose Pellicer said that the German economy is driven by the manufacturing sector, whereas
Global Business Outlook | Jan 2021| 29
Industry Munich home prices
August marks a turning point for the country
Q2 2020
€2,921 per square metre
Q2 2012
€1,500 per square metre
economies such as Spain and France are more service oriented, with much greater dependency on the tourism and hospitality sector. While the tourism and hospitality sector was battered by the pandemic, the manufacturing sector Comparatively incurred much lesser damage.
Home prices continue to accelerate The coronavirus pandemic has not dampened the German real estate market as previously expected, with residential property prices in the country having continued to rise—both in the city and in the countryside. If we look at the average purchasing price for apartments in Germany in the second quarter of 2020, they were around €2,921
30 | Jan 2021 | Global Business Outlook
per square metre, compared to just €1,500 per square metre back in 2012. Among all the major cities in Germany, Munich has proved to be the most expensive when it comes to buying properties, with real estate prices rising 6.1 percent since the third quarter of 2019. In the third quarter of 2020, prices for new apartments in Frankfurt averaged €7,200 per sq metre, which is up 8 percent from the same quarter of 2019. Since 2014, apartment prices have been growing around 10 percent annually, according to the property company JLL. Strong growth has been witnessed in the real estate sector in rural Germany as well. It was reported earlier this year that the residential properties were 8.9 percent more expensive in the second quarter of 2020 when compared to the same period in 2019. In short, Germany’s housing market continues to remain strong despite the coronavirus pandemic and the global economic recession. According to a Global Property Guide report, the average price of apartments in Germany increased by 10.85 percent during that year into the second quarter of 2020, following a year-on-year rise of 12 percent in the first quarter of 2020, 11.15 percent in the fourth quarter of 2019, 9.46 percent in the third quarter of 2019, and an 8.21 percent increase in the second quarter of 2019. Deutsche Bank also predicts that prices will continue to rise at a similar rate until at least 2022. When it comes to the demand in the market,
Feature \ Real estate
it remains strong, for reasons attributed to low interest rates, urbanisation, and financial soundness of most German citizens. The European migration crisis has also helped in sustaining the demand for residential properties in major cities across Germany. Residential construction activities also continue to rise despite the pandemic, which came as a shock to many. During the first half of this year, dwelling permits increased by 8.2 percent year-on-year to 157,103 units, following a 1 percent growth in 2019, data from the German Federal Statistical Office revealed. It is important to note that residential property prices were rising when the German economy plunged deeper into recession, with real GDP shrinking by a whopping 10.1 percent in the first quarter of 2020, when compared to the previous quarter. It was also the biggest quarterly drop ever recorded by Germany since it started publishing quarterly GDP calculations back in the 1970s. Overall, the German economy is expected to shrink by 6.3 percent this year after recording a growth rate of 0.6 percent in the previous year. As a result of the pandemic, Germany’s unemployment rate stood at 4.2 percent in the second quarter of 2020, up from 3.8 percent in the previous quarter. However, it was still lower than the EU’s average jobless rate of 7.1 percent.
Spain's property prices to be Europe's biggest drop Contrary to the German real estate market, the Spanish real estate market is expected to see the biggest price drop across Europe, according to various experts. While all of them agree that there will be a drop in prices, they can’t seem to agree over just how sharp this price reduction will be, in case of one. US-based credit rating agency S&P predicts that Spain will record higher prices fall among other European countries due to the pandemic. According to the credit rating agency, the fall in property prices in Spain this year will be 1.4 percent, the second steepest decline after Ireland, which is forecasted to drop by 1.6 percent. So, while prices of residential properties are
expected to rise in Europe’s biggest economies amid the pandemic, Spain on the other hand, will record a decline in prices. Even the IMF in its October report said that the Spanish economy will be among the most affected of all major economies globally. It is also important to note that the impact of the coronavirus crisis on Spain’s real estate is nowhere close to the impact of the 2008 financial crisis. In 2014, during the height of the financial crisis, properties were sold at a 35 percent lesser value than the average in 2008. However, S&P also predicts that prices will rise in Spain at a rate of 1.8 percent next year, in line with the rapid increases predicted for Germany for that period. By 2022, S&P expects a rise of 4.5 percent, when it comes to Spain’s residential houses market. Only Ireland and Portugal are expected to record a higher growth rate than Spain in 2022. In short, within a period of one year, residential property prices in Spain will experience one of the biggest price fluctuations among the European countries, starting from a drop of 1.4 percent in 2020 to a 4.5 percent rise in 2022. Besides S&P, Bankinter predicts a 9 percent drop between 2020 and 2021. Similarly, consulting firm Forcadell and the University of Barcelona are forecasting a drop of 16 percent in 2021. The property markets in Ireland, Portugal and the Netherlands are also expected to record similar price fluctuations. According to S&P, in France and the UK, residential property prices will increase by around 1.5 percent in 2020. In Italy, they are expected to rise by 0.5 percent, in Belgium by 1.8 percent, while in Germany and the Netherlands the upswing will be around 4.5 percent and 6 percent.
Blockchain for the win
Rise in European real estate markets
Germany 4.5% France 1.5% UK
1.5%
Belgium 0.5% Italy
1.8%
The housing markets in Europe are expected to face a sluggish recovery after months of lockdowns to curb the spread of the coronavirus, and in turn has brought sales to a standstill
Major German real estate group
Global Business Outlook | Jan 2021| 31
Industry Munich home prices
Vonovia is using blockchain to transfer ownership of real estate rights. It has issued a 20 million euro bond using the Stellar blockchain to issue security tokens for the transfer of real estate rights. The company’s move into bond digitisation comes after German regulators officially legalised issuance of digitised securities last year. It is reported that Stellar network has enjoyed popularity in recent months.
Covid-19 play in the European real estate
The European migration crisis has played an active role in sustaining the demand for residential properties in major cities across Germany
The coronavirus pandemic has hit the estate market hard across the European continent. The Covid-19 outbreak has proved to be a stumbling block for European Real Estate markets. Besides price fluctuations, a range of issues have surfaced for the European real estate market. Some of the other issues impacting the European real estate market include providers struggling to reduce health risks for their employees. Similarly, many developers across Europe have struggled to obtain permits due to the pandemic, which subsequently led to construction delays. Also, the pandemicinduced lockdowns and subsequent decline in the GDP activities also took a toll on the European real estate sector. According to one of the reports by Natixis, residential properties are expected to be more
32 | Jan 2021 | Global Business Outlook
resilient across Europe, followed by offices and retail. The report forecasts that residential property prices would drop by around 5 percent by the end of this year. Natixis conducted a study about the impact of the Covid-19 crisis on real estate valuations in the form of an econometric exercise, with a focus on four main European markets which are Germany, France, Spain and Italy. To deal with the ill effects of the pandemic on the economy and on various other sectors, including real estate, governments across Europe have introduced their own policies to deal with it. For example, countries such as Germany, UK and France have suspended evictions. While some countries such as Italy and the UK are providing temporary mortgage relief to their citizens. Governments in many European countries have also asked their banks to give relief to their customers. Similarly, in many cities across Europe, tenants are being offered mortgages and rent holidays. Not only this. France and Italy have also suspended construction until further notice. The impact of the coronavirus pandemic varies across all real estate sectors in Europe. To understand the true impact, we must study each and every sector differently and with many further details, which is a gigantic task given there are 44 countries in Europe. While we have looked at the impact of the pandemic on the residential property market in some major European countries such as Germany and Spain, we can conclude that some European nations have witnessed a much harsher effect of the pandemic compared to others. However, with different governments now relaxing the lockdown measures put in place to deal with the spread of the Covid-19 virus, Europe’s housing market may show signs of life. Germany has built a well established ecosystem of land registers that are managed by the local courts. While there are various reports forecasting which countries will perform better in the deepening recession, most of them suggest Germany has a far better resilience. Since the pandemic, Germany has accounted for more than half of all transactions in Europe.
Global Business Outlook | Jan 2021| 33
Industry Insight Oil and gas
The global consumption is expected to remain below its prepandemic trend for the next few years
The pandemic weighs on global oil ROHIT BARUAH
China’s record on oil last December Refined oil products exports
5.9 million tonnes LNG imports
9 million tonnes Year-on-year fall
1.8 million bpd 34 | Jan 2021 | Global Business Outlook
The outbreak of Covid-19 pandemic walloped the global oil market last year and the residual effects of it continue to affect the sector. The global oil price slump began last April. However, after the immediate downturn, partial rebound was registered towards a steep production slump, particularly among the OPEC nations and allies. Currently, the global oil consumption remains well below its pre-pandemic levels. The pandemic’s impact on global oil consumption is expected to last longer than expected and the demand is expected to fully rebound only by 2023. This year the oil prices are expected to surge $44 per barrel from last year’s projection of $41 per barrel, as the gradual surge in demand is in line with an easing of supply restraint among the OPEC+ economies. The price fluctuation of oil depends on the duration of the pandemic, including fresh waves in many parts of the globe, and the speed at which the vaccine is produced and implemented. The global oil demand growth was significantly weaker even before the outbreak of the pandemic as the market was already mired in a series of challenges and the implementation of new vehicle efficiency rules and regulations have started to weigh on transport fuels. The refining capacity
Insight Opec and non-Opec
Global petroleum and other liquids Value milion bpd
2019
2020
Non-Opec production
65.98
63.67
Opec production
34.63
30.56
Opec crude oil portion
29.27 expansion in recent years have outstripped the growth in demand, throwing a tough competition for an industry mired in strict product specifications. And notably, the fresh rules were floated in the beginning of 2020 by the International Maritime Organisation (IMO). Slump in global production led to price growth The prices of crude oil recorded a strong rebound after dipping in March and April. The price per barrel was $42 in the third quarter. However, the prices were one-third lower than their 2019 average. The price rebound was driven by a steep production slump, especially by OPEC and OPEC+. The organisation agreed to lower production by almost 10 percent of oil supply to 9.7mb/d. Furthermore, the supply also recorded a sharp dip in the US and Canada. The surge in oil prices bolstered consumption rebound after some nations eased pandemic restrictions and travel. The global oil price plunged from 100mb/d to 88mb/d in May last year and has remained below the pre-pandemic level since then. The slump was due to the OPEC+ agreement where it collectively decided to cut production by 9.7mb/d. Furthermore, the new compliance has been higher than the previous agreements. The OPEC+ decided to ease the restraints over two years, and this began in August with increased production of 2mb/d. The organisation is looking for an 2mb/d increase in January this year, although this increase can be postponed if the oil prices fail to rebound. Libya, which is a member of the OPEC but not included in the OPEC+, has witnessed production slump close to zero in mid-2020 due to internal geopolitics issues in the country, from an average of 1.1mb/d in the preceding year. However, the government last year vowed to rebound the country’s oil segment and oil recovery by bringing back stability. The US Gulf coast became the largest seaborne crude oil export hub outside the Middle East in 2019. The region supplied 2.6 mb/d to
25.29
Total world production
100.61
94.23
Source: EIA
Forecast for WTI crude oil prices: EIA
2021
$3/b < Brent 2022
$4/b < Brent
Global Business Outlook | Jan 2021| 35
Industry Insight Oil and gas
Breakdown of refined product barrel
Gasoline 45% Kerosene 9% Ultra-Low Sulphur Diesel 25% Hydrocarbon Gas Liquids
4%
Other distillates /heating oil
2%
Other products
13%
Residual fuel
2%
Comparison in consumption of petroleum and other liquids Value milion bpd
2019
2020
OECD consumption
47.52
41.92
Non-OECD consumption
53.66
50.29
Total world consumption
101.18
92.21
Source: EIA
36 | Jan 2021 | Global Business Outlook
world markets, surpassing Black Sea ports including Russian and Caspian crude, and Nigeria. The US Gulf Coast will bolster its position as the largest seaborne export hub outside the Middle East during the medium term, adding another 2 mb/d to seaborne crude oil exports. The US witnessed a one-fifth slump in oil production in May last year amid low demand and prices. While output has since rebounded, it remains about 10 percent lower compared to 2019. The country also witnessed a frail investment in the fresh oil production. Fresh drilling activity, which is called the oil rig count, also recorded a 75 percent slump, marking an alltime low in August last year despite showing a modest rebound. According to the Federal Reserve Bank of Dallas, the majority of the shale companies in the country expect a major surge in fresh drilling until the price of WTI surge above $50/bbl—$10/bbl above its current level. The oil production is expected to remain nearly to 3 percent in 2021 due to a result of weaker levels of fresh investments. Air travel collapse resulted in weaker consumption The transportation segment accounts for two-thirds of oil consumption globally. The outbreak of Covid-19 pandemic has walloped one of the three primary transport fuels due to air travel collapse. The least affected fuel is diesel, as it was utilised for activities such as freight and shipping, which have been driven by the e-commerce segment. The consumption of diesel and petrol have seen a rebound in OECD economies after reaching a trough in April. However, the consumption of jet fuel is expected to remain lower. The global consumption is expected to remain below its prepandemic trend for the next few years. The pandemic has the potential to shift
oil consumption rate through change in people’s behaviours in the long run. The demand for air travel may not return to the normal level as business travel is curtailed in favour of remote meetings. As a result, the demand for jet fuels will also drop. The rising trend in remote work has the capability to slash demand for petrol, however, if there is a surge in the usage of private vehicles then this could somewhat offset the situation. The overall impact of the pandemic on the global oil price is complex to quantify due to uncertainty such as fresh waves of the virus and change in corporate investment decisions among others. There are few industry scenarios which have indicated that the oil demand may have peaked in 2019, and several oil producing firms have unveiled changes in their long-term strategy plans, which even includes stalling fresh hydrocarbon projects. Global transition from oil to green energy Global leaders and organisations are urging the oil and gas companies to become carbon neutral in the future in order to mitigate the risks of climate change. Therefore, the demand for petrol is expected to be weak between 2019 and 2025 as economies have started to follow fresh rules and regulations citing efficiency and reducing CO2 emissions. Global refiners, nevertheless, continue to develop new refiners in order to meet product demand. However, the green energy transition impact on oil supply remains unclear as many oil firms are focusing on short-cycle projects for the coming years. The announcements by global oil majors on cutting carbon dioxide emissions till date have tended to prioritise on long term goals. Global investors, nevertheless, continue to push the industry to sharpen its
Insight Opec and non-Opec
focus on sustainability issues while the industry faces similar pressure from global environmental activists at the same time, especially in North America and Europe. The global oil segment faces headwinds over demand and supply uncertainty and changes in strategy and business models. The global oil majors are expected to buckle their seat belts in order to meet the global demand as well as achieve their carbon neutrality goals. In one of the reports produced by EIA indicates that the global oil demand is seen ramping up Brent prices to $76/b by 2030. The prices are expected to be $90/b in the next 20 years. The cheap oil resources are expected to have been exhausted by then and the price will drastically surge. The report indicates that oil prices will touch $105/b by 2050. The reports also assume that petroleum demand will flatten out as the demand for cleantech energy grows. Furthermore, the report indicates that on an average the global economy grows 2 percent annually, while energy usage slumps by 0.4 percent a year. According to OECD, when oil prices surge, it results in demand destruction. People change their buying preferences if the high price prevails for a longer duration. The demand destruction occurred after the 1979 oil downturn. After that, the oil prices dipped for years. The situation worsens when demand goes down and supply is ramped up. Global oil industry has a long way to go The global oil supply has been mired in geopolitical tension apart from the outbreak of the Covid-19. The production losses of these three nations: Iran, Libya and Venezuela have touched 3.5 mb/d since the beginning of 2018 and even before the onset of the pandemic, things were
haywire. However, by keeping these things in mind such as oil oversupply and OPEC+ cuts, the global oil supply is still expected to be buyout till 2025. The global oil demand growth is expected to weaken oil consumption following a contraction last year as consumption of transport fuels surges steadily than expected. The global oil demand is forecasted to surge at an average annual rate of just below 1 mb/d between 2019 and 2025. Half of the growth is driven by the surge in the use of petrochemicals, LPG, naphtha and ethane. The oil demand is forecasted to surge by a total of 5.7 mb/d in the next four years. Furthermore, the world’s oil production capability is expected to record a 5.9 mb/d at the same time. The oil production supply by the nonOPEC economies is expected to surge 4.5 mb/d while the OPEC is developing another 1.4 mb/d of crude and natural gas liquids capacity irrespective of the oil situation in Iran and Venezuela. The US has the potential to produce more oil in the coming years with its abundant resources despite its high price and is expected to lead from the front in terms of supply. Economies such as the Emirates, Brazil, Guyana and Iraq are also expected to deliver positive gains. Robust growth in Asian oil demand is paving the path for oil producing economies to boost exports amid the pandemic. However, it is believed that non-OPEC oil producing economies are set to lose momentum and the OPEC+ economies will drive the show. The expansion rate in the US is slowing because independent producers are reducing spending and scaling back drilling activities in response to investor’s pressure.
The US has the potential to produce more oil in the coming years with its abundant resources despite its high price and is expected to lead from the front in terms of supply. Economies such as the Emirates, Brazil, Guyana and Iraq are also expected to deliver positive gains
Estimation of global petroleum and other liquid consumption Value milion bpd
2021
2022
OECD consumption
44.39
46.05
Non-OECD consumption
53.38
55.03
Total world consumption
97.77
101.08
World Real Gross Domestic Producta
5.4%
4.3%
Real U.S. Dollar Exchange Rateb
-2.1%
-0.7%
Note: aWeighted by oil consumptioN/ bForeign currency per US dollar
Global Business Outlook | Jan 2021| 37
News Industry
Cybersecurity jobs demand to rise in Emirates
T
he demand for cybersecurity professionals in the Emirates is expected to surge as the industry has been volatile due to the outbreak of the Covid-19 pandemic. In addition, other reasons such as malware threat in the healthcare sector have also
raised concerns for the government to deploy more cybersecurity experts apart from all other sectors. The Emirates is also looking to expand its digitalisation operations. It is reported that there is a shortage among the global cybersecurity experts globally and the Emirates also falls under one
of those economies where the problem persists. It is reported that the cloud migration for companies without an effective cybersecurity strategy possesses a serious threat towards data breach and other hackings. According to Kaspersky, hackers will use medical and healthcare related topics or information as a tool to bait organisations and will remain relevant until the pandemic ends. The development of the vaccine against Covid-19 has drawn hackers’ attention towards medical research. The surge in digital security in hospitals is likely to see more partnerships take place.
Dramatic rise in real estate
Lebanon‘s real estate transactions stuns the world The real estate transactions in Lebanon surged 63 percent last year, especially at a time when people had lost their trust in commercial banks in terms of long-term investments. The real estate transactions touched the $14.4 billion mark compared to $6.84 billion in 2019, marking a 110.4 percent surge. According to Byblos Bank, the real estate transactions in Lebanon had surged 63.3 percent to 82,202 deals compared to 50,352 deals in 2019. The real estate transaction deals in 2018 were 60,718, while it recorded 73,541 in 2017. The total number of transactions recorded in December last year were 13,391. The figures
38 | Jan 2021 | Global Business Outlook
According to Byblos Bank, the real estate transactions in Lebanon had surged 63.3 percent to 82,202 deals compared to 50,352 deals in 2019. The real estate transaction deals in 2018 were 60,718, while it recorded 73,541 in 2017. surged drastically from 6,038 transactions in November. It was much above 6,189 deals recorded in the same period in 2019. The increase in real estate activity reflects the continuous migration process of few deposits moving from the banking industry towards the real estate industry. The private segment deposits recorded slump in the first eleven months of 2020.
Record-high oil output
Petrobras crude oil production hit record high Brazil’s oil and gas major Petrobras has outshined many global refiners in terms of crude oil output at an average 2.3 million barrel per day last year despite the global downturn. It is reported that the production rate is higher compared to that of Kuwait. The surge in production has helped fulfil Brazil’s requirements, especially in the second quarter of last year. The unexpected oil output result can be considered as a miracle and has boosted Petrobras’ longterm goals. The production boost is a result of the development of fields in the pre-salt zone offshore Brazil. The region produces some of the lowestcost deposits of crude in the world. Furthermore, the surge in production output is pretty
much in accordance with the company’s guidance for average daily production for 2020. The production stood at 2.28 million barrels per day. The company moved into a fresh phase of development at the Mero field in the presalt zone. The development aims to add 180,000 barrels per day in daily production based on the capacity of the floating production which was commissioned last year. Petrobras has rolled out a tender for another three FPSOs. The company seeks to become the best among its Asian counterparts and build a flourishing future.
The development aims to add
180,000 barrels per day in daily production
QED Naval acquires Dutch Oosterschelde Tidal Power project QED Naval, a Scottish marine renewables specialist has taken over the Dutch Oosterschelde Tidal Power (OTP) project. The project is considered the largest tidal array in the world. The deal was secured in the final quarter of last year following the buyout of Tocardo, a Dutch turbine developer and has formed a joint venture with Hyrowing. QED Naval has secured funds worth €3.5 million from the European Union earlier this month and has also secured a place on Interreg’s €46 million Tidal Stream Industry Energiser Project (TIGER). The company has launched its own first-ever crowdfunding campaign on the Seedrs platform. The funds are expected to be used for the development of the existing sites and acquiring fresh locations for its tidal platform. The company has also rolled out a self-deploying foundation system called Subhub. The system has the capability to cut down 60 percent of the cost used for activities such as maintenance, deployment and de-risk offshore operations.The Tiger project has paved the path for QED Naval to launch the next generation Subhub.
Global Business Outlook | Jan 2021| 39
Prince Bank
Advertorial
s
Six years ago, Prince Bank first started as a microfinance institution and it became a full-fledged commercial bank in 2018. Since then, Prince Bank has expanded to become one of the best emerging commercial banks and is also the fastest growing digital bank in Cambodia.Although Prince Bank is relatively young, it already has various developments under its belt. It has also received several prestigious awards. One of the most appealing factors about the bank is the speed at which it is developing. This includes its growth as the first bank to launch Visa and Mastercard debit and credit cards in less than two years after becoming a commercial bank. Prince Bank is the first to open 19 branches and roll out 32 self-service terminals within 12 months across Cambodia. To date, Prince Bank has received 11 major international and regional awards, despite it being a new bank. Prince Bank is among the
40 | Jan 2021 | Global Business Outlook
newest players in a highly- competitive field. The remarkable achievements are attributed to its strategic vision, shareholders’ commitment, board’s consistent support, guidance from regulators and management team’s hard work. The shareholders and the board of directors have made the necessary resources available and firmly believe in long-term investments, so that the bank can differentiate itself from its industry peers.
Expanding for growth and wide-reach
The team at Prince Bank has worked tirelessly to implement numerous projects, while delivering business results, to ensure they build a solid foundation for future growth. According to Prince Bank, without committed and competent staff, it would not have been able to come this far today. Furthermore, the business
Advertorial \ Prince Bank Cambodia
The rise of Prince Bank
in Cambodia Prince Bank is the first to launch Visa and Mastercard cards in recordtime in its home market partners and customers have been very supportive in its growth journey. Prince Bank is notable for possessing a strong capital base, robust technological capabilities, solid expertise and extensive knowledge of the local market. For customers, Prince Bank offers differentiated financial solutions through a mix of channels. Prince Bank has rapidly expanded its geographical footprint. To date, the bank has 31 operating branches. Of the branches, 10 are located in Phnom Penh and 21 are in provinces across the Kingdom, and it seeks to continue expanding operations in 2021. On the operational front, Prince Bank has introduced and grown a comprehensive products and services offering for retail and business markets, launched featurepacked digital banking channels and, expanded selfservice terminals—all with the intention of delivering convenience and better experience to its customers. In addition, full-fledged products and services such as savings, checking accounts, term deposits, local and overseas funds transfers, home loans, personal loans, business loans and overdraft facilities have
been launched to the public. The bank has opened two Priority Banking Lounges, which are exclusively designed for high-net-worth customers, who are seeking a personalised banking experience to meet their financial goals and to suit the lifestyle they are accustomed to.
Aligning goals with digitisation
Aligned with the National Bank of Cambodia (NBC)’s digital and payment direction, Prince Bank has ensured full participation as a member bank in initiatives such as FAST, Bakong, Cambodian Shared Switch (CSS) and Retail Pay System. To ensure a wide customer reach, the bank has deployed 33 in-branch ATMs or CDMs and 26 offsite ATMs nationwide, with a plan to roll out more in 2021. In digital banking, Prince Bank’s innovative mobile banking app provides customers with plenty of convenient services, such as inter-bank funds transfers, bill payments, mobile phone top up, Bakong ewallet, term deposit top-up, virtual cards, instant account opening and more. Customers can easily make QR payments to more than 1,800 merchants around the Kingdom through the Prince Mobile app. The branch staff and relationship managers are able to on-board customers digitally through a tablet, whether on premise or remotely at customers’ convenience, anytime, anywhere. Prince Bank has continued to make progress in financial performance. Its total loan portfolio climbed from around $110 million in 2018 to more than $300 million in 2019. Around the same time, its assets increased from $170 million in 2018 and reached almost $410 million a year later. Prince Bank holds an optimistic outlook about its future in serving customers, community and country’s economic development. It aims to offer more innovative products and services to customers through digital channels.
Global Business Outlook | Jan 2021| 41
Banking and finance Global sukuk
Feature
The assets of global Islamic finance were expected to be worth $4 trillion by the end of 2020
How is Islamic finance performing? Rohit Baruah
T
he Middle Eastern and few Southeast Asian economies are seeing developments in Islamic finance. Islamic banks have been considered as one of the greatest innovations in the global banking industry. There are over 350 Islamic banks and financial institutions operating globally in 60 economies. Furthermore, the majority of them can be found in Islamic economies. The assets of global Islamic finance are expected to be worth $4 trillion by the end of 2020. The Emirates
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has experienced notable growth in Islamic finance in the last two decades.
How are Islamic banks in the Emirates performing? According to Emirates Islamic, Islamic banking products demand fell from 60 percent to 58 percent, while conventional banking products recorded a 64 percent slump from 65 percent in 2020 compared to 2019, marking a small reduction in the overall penetration of both conventional
and Islamic banking. The slump in overall penetration is due to the global economic downturn because of the outbreak of the Covid-19 pandemic. The penetration of Islamic banking products has surged to 58 percent from 47 percent since 2015 and is expected to grow more in the long run. However, conventional banking products have seen a 64 percent slump from 70 percent over the years. Wasim Saifi, Deputy CEO-Consumer Banking and Wealth Management at Emirates Islamic, told the media, “No industry has been
untouched by Covid-19, as consumers have changed the way they live, preferring reduced face to face contact, more time spent in the home, and financially conservative behaviour in a climate of economic uncertainty. However, while the global economic downturn has impacted consumer’s banking habits, Islamic banking continues to be perceived as more supportive of the community and trustworthy as well as having better value to customers as compared to conventional banking.” The survey indicated that 70 percent
Global Business Outlook | Jan 2021| 43
Banking and finance Global sukuk
Emirates’ response to the pandemic The Emirates’ strategy and response towards the pandemic crisis have been effective with the objective to contain the spread of the virus and boost economic activities as far as possible. The government has developed a robust infrastructure empowering authority to test and track the infection level and boost the current situation. The government has set up a new set up of fresh testing and healthcare facilities to cater the domestic as well as foreign nationals. The central bank has eased the burden of Islamic banks including the conventional banks towards customers’ repayment worries that stress both capital and liquidity.
of the Muslim respondents contributed to the overall penetration of Islamic finance products in 2019, while 69 percent contributed in 2020. Furthermore, 28 percent of the non-Muslim population applied for credit cards in 2020 compared to 24 percent a year ago. That said, 32 percent of non-Muslims opened Islamic savings accounts in 2020, compared to 28 percent a year ago. The perception for Islamic banks surpassed conventional banking perception with 38 percent in line with 2019, but has improved by 12 percentage points from 26 percent in 2015. It is reported that the driving force behind the surge in perception toward Islamic banks is low fees, better finance and profit rates including trustworthy services and catering to all communities. The shift towards digital services has spurred 2020 and it will be a good test for Islamic banks including Emirates Islamic, which is expected to lead from the front to innovate and bolster its ecosystem in order to create a strong relationship with customers.
Fostering growth and development The Emirates is fostering the growth of Islamic finance by rolling out fresh initiatives. Earlier, the country’s Ministry of Finance floated plans to establish a unified global legal and legislative framework for the segment. The Dubai International Finance Centre (DIFC) has been pouring fresh capital to ramp up the growth of the Islamic finance industry. Furthermore, the Dubai Islamic Economy Development Centre (DIEDC) and various Islamic banks have been partners with the FinTech Hive accelerator. The green sukuk market is driven by DIEDC which established partnerships with the Dubai financial market, DIFC and climate bonds. The partnership bolsters the promotion of green sukuk issuance. There has been a boom among the investors who are willing to carry out investment in the Islamic finance segment.
44 | Jan 2021 | Global Business Outlook
The Dubai Islamic Bank and the Emirates Islamic have successfully generated sukuk and oversubscriptions, which have attracted many foreign investors. Mr Wasim Saifi said that banks are continuing to see a surge in uptake on Islamic finance products, particularly on the retail segment due to lockdown relaxations and re-opening of economies. Farad Al Mullah, Deputy Head of Consumer Banking and Wealth Management at Emirates Islamic, told the media, “As an Islamic financial institution, it is now up to us to champion this new way of life, by embracing digital solutions and creating customer-centric ecosystems.”
Emirates Islamic launches digital banking platform despite sluggish performance The new digital platform, businessonline is a comprehensive digital global cash management ecosystem equipped with features such as trade, treasury, virtual accounting, collections and liquidity management functionality, which will assist businesses in the Emirates’ manage all their banking needs on a single secure, intuitive platform. The new digital banking platform supports the Emirates’ vision to transform itself into a global hub for Islamic banking. It can be described as one of the leading next-gen banking innovations among the Islamic banks. The platform has been effective towards the urgent demand among regional businesses for anytime, anywhere visibility amid the Covid-19 pandemic and has bolstered digital transformation across all sectors.
Abu Dhabi Islamic Bank shows rebound amid the pandemic The retail banking business of the Abu Dhabi Islamic Bank (ADIB) has seen a favourable rebound amid the pandemic. The digital transformation of the bank has been the driving force in its recovery from the
Feature \ CBUAE, Emirates Islamic
crippling effects of the coronavirus crisis. The bank’s ADIB’s global head of retail banking, Philip King said that the bank’s digital operations success will not be at the expense of its physical branches. The bank will ensure that digitalisation will remain a choice for the customers and the branches will be more digitised and automated to produce a seamless customer experience. The bank sold 50 percent of its cover cards (credit cards) were carried out remotely as customers signed up through an app on their phone. The company would have had 50 percent card sales less if the online services were not available. ADIB, with a total asset of $34 billion, remains the fourth largest Islamic bank in the world. The banks' net profit surged AED1.12 billion and net revenue by AED3.93 billion for the first nine months of the year.
In the larger scheme of things in the UAE The Emirates has swiftly responded to mitigate the pandemic impacts on Islamic
banks. Furthermore, The Central Bank of the UAE (CBUAE) has been active towards safeguarding the Islamic banks against any kind of downturn. The CBUAEA floated a stimulus package worth $27.2 billion in the beginning of the pandemic in the Emirates in March. The stimulus included Zero-Cost Funding (ZCF) Support Facility worth DH 50 billion for the banks. The liquidity support paved the path for banks to utilise their capital conservation buffer effectively. The CBUAE has taken another tremendous step towards the banks as it has paved the path for them to draw down their liquidity by $25.9 billion. The move will drop down the liquidity coverage ratio to 70 percent and also bring down the level of eligible liquid asset ratio to 7 percent. In addition, the CBUAE has made positive changes towards the requirement for funding real estate and SMEs other than the techniques focused on the expansion of the capital and liquidity. The central bank’s criteria for real estate allowed for higher loan-to-value by 5 percent for fresh
The penetration of Islamic banking products has surged to
58 percent from 47 percent
since 2015 and is expected to expand further in the long run
Global Business Outlook | Jan 2021| 45
Banking and finance Global sukuk
The wide reach of Islamic finance
350 -plus Islamic banks and financial institutions in operation
60
countries Global economic presence
Activity in Islamic banking products in 2020
Demand decline
58% Surge in penetration rate
58%
buyers and the exposure cap for the banks were relaxed to 30 percent from 20 percent, however, they must possess more capital. Furthermore, the central bank has cut down the risk-weighting on SME financing to 15 percent from 25 percent in order to boost SME financing. The financing including the implementation of measures to mitigate the impacts of the pandemic involved around $69.7 billion worth of capital, which is about 17 percent of the country’s GDP last year. The CBUAE has been trying their level best to bring stability in the country as well as the Islamic banks. The central banks have provided financial assistance through the TESS to some businesses and consumers. The CBUAE has also issued guidance on how the banks should treat their financing impairments, in addition to the capital and liquidity relief offered to banks in the region. The guidance was issued with assistance from Abu Dhabi Global Market (ADGM) and the Dubai Financial Services Authority (DFSA). The response towards the pandemic crisis within the Emirates for them for the time being is sustainable. However, Islamic banks may find it complex to adhere to certain elements than normal banks due to a different mix of financing assets.
How are Islamic banks coping with the pandemic? The central bank policies are currently focused on relieving those who are impacted by the pandemic and are defensive. The actions taken by the CBUAE is good enough, however it may not be sufficient for the banks. The banks have the opportunity to cater and support its customers to go through the current tough times provided with the support by the central bank. Islamic banks can be benefitted from the framework to support their customers as the economy rebounds following the pandemic downturn due to the ethical principles that drive the industry. The top most Shariah council of the Emirates’ emphasised Islamic banks to
46 | Jan 2021 | Global Business Outlook
support the critically affected economic segments and customers. The efforts towards rebuilding the damaged economic sectors is vital because the damage caused by the pandemic is unpredictable. The economic transformation for recovery from the pandemic needs fresh investment in addition to the financial support towards immediate response. The existing financial tool can be postponed for a shorter period of time but needs to be supplemented with fresh financing as well.
CBUAE extends Tess Scheme to bolster economic recovery The central bank planned in November to extend its Tess until June next year to support economic recovery from the pandemic until a strong stability in the region is witnessed. Abdelhamid M. Saeed Alahmadi, governor of the Central Bank of the UAE, told the media, “The Central Bank remains committed to supporting the financial system of the UAE by taking the required measures to accelerate economic recovery from Covid-19 repercussions. The extension of applicability period of the Tess will provide relief for retail, small and medium sized enterprises, and corporate banking customers. We believe that this initiative will shield the economy from the impact of the pandemic and place us in an ideal position to recover, once the pandemic is over.” The Islamic finance segment was poised for notable performance in 2020, prior to the pandemic outbreak, however, the outlook changed due to the pandemic and slump in oil prices. Standard & Poor’s report has stated that the Islamic finance industry will still record low to mid-single-digit growth in 2020-2021 despite the current challenging conditions. The industry recorded a 11.4 percent growth last year due to a robust sukuk market’s performance. The report indicated that the volume of issuance will surge to the $ 100 billion mark in 2020-end, which is higher than the previous year’s $162 billion.
Feature \ CBUAE, Emirates Islamic
The Emirates’ strategy and response towards the pandemic crisis have been effective with the objective to contain the spread of the virus and boost economic activities as far as possible. The government has developed a robust infrastructure empowering authority to test and track the infection level and boost the current situation. The government has set up a new set up of fresh testing and healthcare facilities to cater the domestic as well as foreign nationals. In addition, the government has also floated regulations supporting the banking sector and other sectors. The central bank has eased the burden of the Islamic banks including the conventional banks towards customers’ repayment worries that stress both capital and liquidity. Furthermore, the central bank has been effective in stabilising interbank rates, which is
The green sukuk market is driven by DIEDC which established partnerships with the Dubai financial market, DIFC and climate bonds. The partnership bolsters the promotion of green sukuk issuance often considered as an indicator of financial strain. Islamic banks could face challenges within the Islamic bank’s marketplace. The challenges could be competitive pressure due to accelerating trends in digitization, that they need to address concurrently. Islamic banks will better understand the risk and opportunity through the development of ESG practices in the banking segment. Islamic banks can unlock more resources by turning more resilient and will support businesses that can flourish in the post-pandemic world but are tottering in the current environment.
An ESG effort is expected to be more effective towards balancing the risk management then traditional methods for Shariah-compliant financial institutions. The fintech segment is expected to play a vital role in development of the Islamic finance industry against the backdrop of the pandemic outbreak which has jeopardised several economies. The fintech segment will enhance the industry’s access to the financial services and transform Islamic social finance as well. The pandemic has disrupted global economies, especially the oil and banking industries.
Global Business Outlook | Jan 2021| 47
Economy Central Bank of Nigeria
Analysis
Will special bills foster Nigeria’s growth? Rohit Baruah
48 | Jan 2021 | Global Business Outlook
Analysis \ Nigeria’s GDP
T The central bank has rolled out a fresh licence categorisation and capital requirements for payment service providers
he Central Bank of Nigeria plays a pivotal role in shaping up the economy and it has been looking after the monetary policy on a serious note amid the outbreak of Covid-19. The apex bank has strived hard to maintain price stability, exchange rate and curb unemployment during the pandemic. The government has introduced the 2020 Appropriation Bill to maintain a yearly budget cycle for Nigeria as part of its fiscal policy. In addition, the government has also signed a new finance act earlier this year. The central bank has introduced special bills this month to manage liquidity control or money supply in the economy. Along with the introduction of these bills, there are many more policies that have come into effect. According to the National Bureau of Statistics, Nigeria’s economy has entered recession for the second time in five years due to a slump in GDP for the second consecutive quarter. The reports were produced in mid-November. The Central Bank of Nigeria has been compelled to introduce fresh monetary policies that could rebound Africa’s largest economy because of the negative third quarter growth of 3.62 percent.
Special bills: Why do they matter? The Central Bank of Nigeria has rolled out special bills to foster economic recovery from the Covid-19 pandemic and bolster the financial market. The special bills will be valid for a period of 90 days. Furthermore, the special bills will be tradable amongst banks, institutional investors and retail. The bill will include features such as zero-
coupon, 90 days tenor and Central Bank of Nigeria’s applicable yield at issuance. The instrument is not applicable for repurchase agreement transactions related to the central bank and shall not be discountable at the central bank’s window. The Central Bank of Nigeria has sequestered more than N6 trillion since May this year. The banks are expected to maintain a loan to deposit ratio of 65 percent in accordance with the central bank. Furthermore, the accounts of the banks will be deposited if they fail to comply with the excess deposits target. The special bills pave the path for banks to provide an instrument to investors in exchange for a return. For instance, the special bills can be sold to investors who will need fixed income instruments. The Central Bank has floated a fresh licence categorisation and capital requirements for payment service providers. The Central Bank of Nigeria’s move is in accordance with its commitment to encourage a robust and effective payment system. According to the new development, the minimum capital requirement is N250 million for payment solution services (PSS), and N50 million for super agents. Furthermore, the minimum capital requirement for payment solutions service providers (PSSP) and payment terminal service providers (PTSP) is N100 million.
The banking sector continues to grow Nigeria’s banking sector continues to thrive amid the macroeconomic pressures even after the 2008 financial downturn and the 2014 oil crisis. The banking segment has been tough amid the pandemic including a surge
Global Business Outlook | Jan 2021| 49
Economy Central Bank of Nigeria
in inflation, unemployment rates and slump in the real GDP growth rates. S&P Global reports indicate that Nigeria’s crude oil production recorded a 3.6 percent slump in Q3, after recording Q2 fall down of 6.1 percent. Furthermore, the GDP is expected to contract by 3.8 percent by the year end. The report produced by S&P Global indicates that 30 percent of the bank’s material is exposed to the oil segment, which weighs on asset quality and earnings. The reports indicate that restructured loans are expected to surpass the 10 percent mark of 2019 this year with 20 percent
on the back of lower oil prices. The loans under forbearance are expected to reach between 20 percent to 25 percent. While there will be an increase between 10 percent to 12 percent of non-performing loans compared to 6.1 percent a year ago. In addition, this year, the credit loss will surge about 2.5 percent and is expected to fall down to 2 percent next year, from an estimated 1.2 percent in 2019. The net banking segment will continue to remain stable at around 13 percent of worldwide loans in 2020-21 even after external continue to persist. The bank’s foreign exchange
The Q3 performance for Nigeria remains low due to weak oil demand. However, the results also reflect an offset due to a rebound in the non-oil economy
50 | Jan 2021 | Global Business Outlook
shortages have re-emerged despite the rollout of the Nigerian Autonomous Foreign Exchange Fixing Rate Mechanism (Nafex). The reports indicate that the financial performance of the top tier banks will stay strong with return on equity averaging 14 percent this year amid weaker profitability. According to a report published by Banker Database, the biggest banks in Nigeria in terms of assets are: Guaranty Trust Bank, Access Bank, United Bank for Africa, First Bank of Nigeria and Zenith Bank. The report by S&P Global indicates
Analysis Analysis \ Debt \ Nigeria’s restructuring GDP
that the private sector will witness a subdued bank credit even though the Central Bank of Nigeria has floated a minimum loan-to-deposit ratio of 65 percent to spur credit growth.
2022: The year for Nigeria to flourish Nigeria’s central bank governor Godwin Emefiele expressed his concerns over recession and said that the country’s economy will surge 2 percent in 2021. The recession is a result of the Covid-19 pandemic and low oil prices. However, Mr Godwin Emefiele believes that the recession is temporary and will end when there is a rebound in the global economy. Mr Godwin Emefiele supports the central bank’s foreign exchange policies which were empowering the county’s local currency to be in line with the best practices in other economies. He also expects double-digit inflation to moderate by the first half of next year. According to analysts, Nigeria’s currency Naira has recorded a 28 percent slump this year. The Q3 performance for Nigeria remains low due to weak oil demand. However, the results also reflect an offset due to a rebound in the nonoil economy. The reports by Capital Economics indicate that output in the non-oil segment recorded a 2.5 percent year-on-year slump compared to 6 percent in non-oil GDP in the second quarter. The manufacturing and construction segments showed signs of a rebound after strict restrictions on activities were gradually lifted by the government. There was double-digit growth for the telecommunication segment, while there was a 3.2 percent third quarter growth for the finance and insurance segment compared to the same period last year. Capital Economics reports stated
Nigerian government shows full support The driving force behind Nigeria’s strong growth in offshore exploration and production activities has been the government. The country is on the cusp of altering refined products' supply dynamics in Africa with the assistance from the Dangote refinery from 2021, which is expected to be Africa’s biggest refinery. In addition, the refinery will pave the path for Nigeria to produce and export refined petroleum products without any challenges. Nigeria’s gas sector is expected to flourish more than the oil segment because the country has a huge gas reserve and has witnessed a massive LPG demand in the past few years. The oil market is one of the vulnerable markets because Nigeria is slowly making a shift towards use of gas over oil. It is also exploring new opportunities to replace oil consumption with gas in the power and transportation segment. The Nigerian government believes that oil reserves will dry up in the coming three to four decades. For that reason, it is pushing the adoption of natural gas. With that, natural gas has a brighter perspective over fossil fuels.The oil and gas companies are keeping an eye on gas production as a result of robust investment in gas-to-power projects across Nigeria.
that Nigeria’s oil output is likely to be hampered in the coming months due to the 23-country Opec+ coalition which planned to cut production this year in order to offset a major slump in the oil global oil sector. However, growth and rebound will continue in other sectors amid some headwinds. Furthermore, the Central Bank of Nigeria held its lending rate at 11.5 percent this November to ramp up economic growth. The services sector represents 52 percent of the GDP and is responsible for employing 52 percent of the population in Nigeria. Sectors
such as telecommunications, retail and finance are very dynamic. Moreover, the tourism industry is also a significant sector towards fostering the country’s growth. The government has established the Ministry of Culture, Tourism, and National Orientation to spur growth of the sector. However, the sector continues to struggle due to proper infrastructure, power supply and poor water quality. FocusEconomics observed that Nigeria’s GDP will surge 1.9 percent next year, which is 0.2 percent lower than the actual estimate, before
Global Business Outlook | Jan 2021| 51
Economy Central Bank of Nigeria
surging 2.9 percent in 2022. According to COFACE, the Nigerian economy will finance its deficit through foreign sources. The country has to face another challenge, which is the burden of debt service.
How is the Nigerian oil performing? The current global oil market downturn has different implications on different oil producers. In the case of Nigeria, more than 50 percent of the country’s exports are linked to the oil and gas segment, and oil rents have been critical to maintaining ruling coalitions in power and also maintaining political stability in the country. The surge in investments in the upstream and downstream sectors of Nigerian oil and gas industry has strengthened the market. However, the Nigerian oil and gas segment has been affected by the outbreak of insurgent
Nigeria’s expected credit loss Surge in
2020
2.5% Drop in
2021
2%
Capital requirements in the Nigerian economy Payment solution services
N250 mn
Super agents
N50 mn
52 | Jan 2021 | Global Business Outlook
problems in the past couple of years and not just because of the pandemic. Furthermore, oil theft has also contributed to the industry's losses. According to reports produced by Research and Markets, Nigeria’s oil and gas segment is expected to grow at less than 5 percent CAGR between the 2020 and 2025 period. The offshore oil and gas industry are expected to make progress steadily and open more market opportunities. The driving force behind the strong growth in offshore exploration and production activities has been the government. The country is on the cusp of altering refined products' supply dynamics in Africa with the assistance from the Dangote refinery from 2021, which is expected to be Africa’s biggest refinery. In addition, the refinery will pave the path for Nigeria to produce and export refined petroleum products without any challenges. Nigeria’s gas sector is expected to flourish more than oil because the country has a huge gas reserve and has witnessed a massive LPG
demand in the past few years. The oil market is one of the vulnerable markets because Nigeria is slowly shifting towards using more gas and is exploring new opportunities to replace oil consumption with gas in the power and transportation segment. The Nigerian government believes that oil reserves will dry up in the coming three to four decades. For that reason, it is pushing the adoption of natural gas. With that, natural gas has a brighter perspective over fossil fuels. The oil and gas companies are keeping an eye on gas production as a result of robust investment in gas-to-power projects across Nigeria. Minister of State for Petroleum Resources, Chief Timipre Sylva, told the media at the 13th International Conference of the NAEE in Abuja, “The ongoing transformation of the Nigerian National Petroleum Corporation, NNPC into a diversified energy company and the increased focus on domestic gas utilization, were major strategies adopted that would strengthen the oil and gas
Analysis \ Nigeria’s GDP
For Nigeria, more than 50 percent of the country’s exports are linked to the oil and gas segment, and oil rents have been critical to maintaining ruling coalitions in power
industry and help cushion the effect of a future crash in crude oil price. The Covid-19 pandemic and progressive decline in crude oil prices in 2020, had made it imperative for Nigeria to aggressively pursue the diversification of its portfolio to non-oil businesses so as to cushion the effect of a future crash in crude oil prices and position the oil and gas industry for growth in a post-Covid world. The government had come to terms with the application of domestic gas as a platform to drive a truly sustainable in-country economic diversification. Our strategy to strengthen the Nigerian oil and gas industry in a post-Covid-19 world is to transform our national oil company into a diversified energy holding company to enable us respond swiftly to the twin challenges of a future crash in crude oil prices and decarbonization, by moving rapidly to becoming an energy holding company with more diverse interests. Consequently, we have strategically focused on our vast natural gas resources, as a critical transition
fuel to help battle global warming and function as a bridge between the dominant fossil fuel of today and the renewable energy of tomorrow.”
Peek into the Nigerian healthcare in the pandemic world Nigeria’s health workers and the existing health system has been critically challenged by the outbreak of the Covid-19 pandemic. The challenge is getting intense as the sector continues to face a shortage of proper hospitals, medical equipment and doctors in rural areas. The government of Nigeria had agreed to spend 15 percent of the overall healthcare segment in 2001. However, the current government has just spent 3.9 percent every year in the last three years. The pandemic has changed the outlook of the sector as the government has bolstered its efforts to improve the current situation. Medical tourism in the country is currently shut out. The pandemic continues to take a toll on the current situation because every government which has ruled
the country has not been able to fully develop the country’s healthcare properly. The country’s scientists have made several claims of getting an herbal cure for the Covid-19. However, this herbal cure has been validated by the presidential task force on Covid-19 and the National Agency for Food and Drug Administration (NAFDAC) is yet to examine it. The current situation remains a threat to the Nigerian healthcare segment. The pandemic has turned out to be a game changer for many economies and the Nigerian government must look after the healthcare sector in a serious manner. The real challenge for Nigeria is the risk of demographic explosion despite its dynamism and the outbreak of the pandemic. The United Nations’ reports indicate that Nigeria’s population could touch the 730 million mark by 2100, which is huge. However, the country’s concern remains over the militancy issues, poverty, outbreak of other serious illnesses such as tuberculosis and HIV, other than Covid-19 coupled with unemployment. The government expects a comeback in 2021 as local and foreign demand recovers from the shock. The global economy is scrambling to rebound from the pandemic. It will be interesting to see how Nigeria’s economy will fare in the coming years. The Nigerian energy sector will strive hard to make a comeback.
Global Business Outlook | Jan 2021| 53
Banking and Finance Forex Investment
Analysis
Will forex trading in South America flourish?
54 | Jan 2021 | Global Business Outlook
Analysis \ Forex Investment
The majority of the unregulated forex brokers carry out trading in the Asian subcontinent, especially in Southeast Asia
Rohit Baruah
T
he majority of the unregulated forex brokers carry out trading in the Asian subcontinent, especially in Southeast Asia. Therefore, forex trading has just become overly competitive. Furthermore, there are only a few brokers in the US which have expressed their interest to put an enormous amount of cash in exchange for NFA regulation because the market is heavily regulated. The European subcontinent has been the hotbed for forex traders. However, the situation has changed after regulators such as the ESMA and CySEC have changed some of the rules and regulations for forex brokers. Retail brokers have considered South America as a profitable market for forex trading with a large potential client base. However, incoming brokers find it difficult to enter the regions because they face a wide range of challenges and barriers. The region is different from the European subcontinent because it doesn’t operate as a bloc, rather with diverse rules, demographics and opportunities. Several brokers have forayed into the region with a hope to make profits and replicate their existing business, however, they have not demonstrated full success. Today, the developing markets are able to see lucrative opportunities in investment, since Europe, Africa and Southeast Asia are the biggest contributors to the forex rise. It is reported that close to 60 percent of the beneficiaries are countries in those regions, and there has been a steep trend in the markets owing to low investor confidence over volatile prices of various commodities. These commodities include gold valuation, oil prices and real estate. The prospects of the coronavirus vaccine are still trailing, some countries are slowly picking up pace in their economic activity. That said, naive traders foraying into these markets, small scale brokers and limited physical interaction due to social protocols are considered to be exhaustive factors that could deteriorate the growing trend in forex and lead to financial crises sooner than expected. It is important to understand South America to grasp the knowledge on why brokers have historically found it difficult to sustain in the region.
Global Business Outlook | Jan 2021| 55
Banking and Finance Forex Investment
Foreign brokers have operated in the region through known contacts, country managers or people and the contacts aren’t made overnight. In addition, even large foreign brokers have found it difficult to sustain in the South American market because of the shortcomings in marketing efforts, which often do not properly cater to the existing demographics. Sebastián Rivas, Co-founder and Managing Partner at Latam Forex Solutions, told the media, “Although we speak the same language there are notorious cultural differences between countries in Latam. To settle successfully in this region,
Retail brokers have considered South America as a profitable market for forex trading with a large potential client base, but incoming brokers find it difficult to enter the regions you need to understand this is a process that will take a while to give results. We specialise in shortening that process.” Different economies are compelled to adhere to different means of compliance due to irregular forex regulation policies in South America. While the market in the region is still robust, there is a strong potential to carry out business and make a profit. The higher ceiling is mired in challenges of diversity and market penetration. Several brokers have committed a similar mistake over time and have struggled to understand the regions' as an autonomous sector, which needs more planned strategies. The first step for incoming brokers to flourish in South America is to make stronger contacts because the challenges can prove to be daunting despite abundant availability of resources. If anyone wants to enter the South American market, using
56 | Jan 2021 | Global Business Outlook
the correct personnel can assist them to understand and get insights of the market seamlessly. Risk and competitiveness A company known as Latam Forex Solutions can assist anybody to outsource their business and conduct a successful marketing campaign. The company has perfect knowledge about its customers and has an on-the ground experience for more than a decade. The company has been successful in hiring country managers, ramping up sales, building relationships, providing education for clients and has the potential to assist people to achieve their long-term goals. Latam Forex Solutions is operated by Co-founders and Managing Partners, Federico Jelen and Sebastian Rivas. Both people are famous in the South American market for their good relationship management and proficiency in the region. They have strong knowledge about the forex market and have served senior roles in the forex segment for more than a decade. The marketing plan is specially designed for the South American market, making it the perfect intermediary for new brokers who are looking to make profits and learn at the same time in the region. The retail forex brokers have always expressed their interest to tap beyond the European market amid stringent regulation over the past few years. The situation has led to a surge in fresh interest in the South American market, making the correct personnel and plan more vital than ever. People are expected to understand the company’s strategies and solutions in promoting their business and help embark on a fresh journey seamlessly. Furthermore, the company is believed to be proficient in lowering entry costs and optimising time through strategic agreements and a flexible marketing approach.
Analysis \ Forex Investment
Forex trading activity in South America
There is less competition among local brokers in South America than in Asia or Europe. However, if people’s brokerage converts the traffic through a call centre in countries such as Israel or Cyprus, then it might be tough to compete with brokers that actually have some local experience. Capitaria is the only large forex broker that is headquartered in South America. The other players with a local presence: XTB, Saxo, Admiral Markets. Brazil has majority Portuguese speakers and there are economies such as Suriname where Spanish is not spoken largely, However the population of South America is estimated to be around 630 million and if we separate the non-Spanish speaking clients, there will still be 400 million potential clients. The market in South America is comparatively smaller compared to other regions due to the level of internet penetration. Not one South American economy is highly developed.
For instance, in economies such as Mexico, there are only 45 percent of the population which access the internet. However, the growth has been exponential, as the rate was below 20 percent a decade ago, while economies such as Argentina and Chile have online rates corresponding to Europe. It is believed that the clients from South America are less well off than Europe. Therefore, a client may onboard more clients at lower costs, while the earnings per client tend to be smaller too. However, the cost per acquisition is lower than other economies. Thus, a broker may onboard more clients at lower costs, while the earnings per client tend to be smaller too. The operating expenses are lower in South America than countries such as Israel, Cyprus or any other EU economy.
Households exposed to forex trading
70% Trading among Brazilian investors
$70 billion per day Market cap of Infinox
$715 billion
Global Business Outlook | Jan 2021| 57
Banking and Finance Forex Investment
Highlights from the Triennial Survey in OTC forex markets
Trading in forex markets in April
$6.6 trillion Forex trade exceed interdealer trading volumes
$3.6 trillion
Drop in share of spot trades
30%
Forex swap accounting total market turnover
49% Souce: BIS I As of April 2019
The brokers in South America can operate without any kind of regulation, which is much easier than it could be in Europe. Furthermore, a broker can serve clients from South America through ASIC licence, therefore, the continent is less dependent on ESMA policies. Uruguay and Chile are believed to be among the most popular countries for forex brokers. CFD Forex provider Infinox forays into South America British CFD provider Infinox has entered into the South American marketplace by launching forex futures trading in the region. The development will pave the path for Brazilian investor access to S&P 500 Micro futures. The platform has been selected by the country’s B3 stock exchange. The B3 stock exchange has been considered as a market maker for the hugely popular equity futures contracts, which allow investors affordable exposure to the S&P 500 index. The new development has also paved the path for B3, which was the world’s third-largest derivatives exchange by volume two years ago to trade micro futures contracts that track the S&P 500 index of large-cap US companies in their home market. Robert Berkeley, CEO of Infinox, told the media, “The scale and potential of Brazil’s untapped market is truly exciting. Brazilian investors already trade over $70 billion per day on just two futures products, so the arrival of S&P 500 Micro futures is a gamechanger. Earlier this year Infinox took the strategic decision to use our high levels of liquidity to diversify into market making for established and successful exchanges like the B3. We blazed a trail by enabling Brazilian investors to trade forex futures, and we’re now proud to offer them access to the S&P 500, one of the world’s best-known and most highly traded equity indices. We have more than a decade of
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experience in our home market, and now have a presence in 15 countries. We pride ourselves on providing competitive trading conditions and premium client service, and look forward to unlocking US equity futures trading to a new wave of ambitious Brazilian investors.” Surge in middle class household is driving forex trading: World Bank South America is considered as one of the emerging markets for forex companies. According to the World Bank, the middle class in South America grew by 50 percent in the past decade. The expanding middleclass population in the region has corrected a market flaw such as lack of net worth among the forex companies which have kept them away from entering the forex market in the region. The appetite for risk assets and alternative investments also improves as the income among the people surges. Therefore, the demand for forex trading is growing steadily in the region seamlessly. The deep penetration of the internet has paved the path for forex firms to enter the South American marketplace seamlessly. Currently, 70 percent of South American households are now exposed to forex trading because of the advancement in internet connectivity. However, there are forex trading firms that are providing offline and online trading platforms because they have a long-term view of the market. Forex trading sites such efxto have contributed towards the market’s development by building a good reputation with customers through face-to-face meeting and understanding the dynamics of the market. Brokers are opening offline offices in South America because of the growing demand for forex investing opportunities. The early forex traders in the region were bustling while providing forex investment
Analysis \ Forex Investment
knowledge, which is vital to establish a customer base and also avoid regulatory issues in accordance with the global forex trading environment. The demand for forex trading in South America has also spurred due to volatility and weakness in stock and other investment products apart from the middle-class expansion, awareness and penetration. Forex trading is also gaining momentum in the region because a growing number of the population knows that alternative investment opportunities exist. Most of the South American nations still have a long way to go in getting along with regulating the financial segment. Forex companies are striving hard to work with authorities in order to assist industries to follow regulations which are followed in Europe where the forex industry is blooming. The forex companies are attracting budding markets such as South America because of the saturated developed markets. The future of forex market The pandemic has brought the world to a standstill; however, the sudden instability of the market has not walloped the forex trading segment. Instead, it motivated the traders to carry out more trading. In fact, the crisis has pushed the majority of traders to use online methods to complete their transactions. The pandemic outbreak may have compelled various industries to halt operations or shut down, however, it has driven the forex markets to be in a better position. The forex trading segment can be solidified by tightening security. The developers are working harder to ensure that forex trade security is guaranteed so that it can manage fresh traders in the future. In addition, current and interested traders must understand the forex market trend to succeed in the future.
The forex market is expected to flourish more than it has now. Many people believe that it’s impossible, but the reality is that the demand for forex trading is surging. There are people across the globe who have only heard about forex trading. Therefore, one thing is clear that people must be provided with the knowledge of the forex market and trading so that they understand and earn money in the future. It is suggested that people must try the demo forex trading platform which is provided by companies such as Olympic trade. Once people learn about forex trading, then they can go through various analysis, trade ideas, systems, strategies and expert advisors. The retail forex market has established itself strongly in the majority of the economies and it has become extremely complex for brokers to produce a perfect combination of its geographies. There are many brokers that have embarked on operations without setting up a call centre. It may push the brokers to set up a local office in one of the South American economies and expand its presence on the continent. The strict regulations will also affect the market participants, which is expected to attract more conservative traders. However, the unregulated forex traders will also remain popular because some traders will value the cheapness and the flexibility of trading over the comfort of being safeguarded by the law. The new marketing technique will do the job, enriching all those who are willing to develop their own to get richer strategy to earn money smartly. Forex trading will still remain in a high-risk speculative activity in the midst of fresh developments with huge earning potential and high probability of loss.
The first step for incoming brokers to flourish in South America is to make stronger contacts because the challenges can prove to be daunting despite abundant availability of resources
Global Business Outlook | Jan 2021| 59
Banking and Finance
Interview Ammar Akhtar CEO of Yobota
An era of next-gen banking begins with cloud GBO correspondent
W
hen it comes to traditional core banking systems, they are highly inflexible. But the banking and the overall financial space is changing fast due to new disruptive technological innovation. In the UK, we
things are now changing. Technologies such as cloud now allow banks and financial institutions to store data and applications and access advanced software applications through the internet. While the coronavirus found its way out of China to other parts of Southeast Asia, the Middle East and then Europe, it pushed the global economy into a recession. The pandemic was expected to limit the growth of the fintech sector, however, that does not appear to be the case. Even with Brexit, the fintech sector in the UK is expected to remain strong. Over the years, London has been established as a financial hub in Europe. And it is expected to maintain its position despite
Our platform is not tied to any particular geography, and many of the challenges faced by banks and fintechs are the same globally
have seen new challengers in fintech that are making significant traction in customer adoption. This is because challengers have the ability to innovate and are not burdened by legacy systems. The traditional banks with their core banking systems were deployed decades ago and over the years have not seen much technological change. Huge cost associated with it has often restricted significant changes in the banking system, however,
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uncertainties loomed over the outcome of Brexit for a long period of time. With Brexit finally done, the fintech sector in the UK is expected to grow in the coming years. Brexit will significantly change the financial services landscape in the UK as well as in Europe. Changes are expected when it comes to regulations, trade deals and investments. However, how big and impactful the changes will remain is to be seen. Despite its ups and down, t he number of startups popping up in the UK fintech space has
Banking and Finance
| Cloud banking
The technology has the potential to generate enormous cost efficiencies and create better customer propositions
also grown with time. Also, fast digital transformation is on the rise. Most banks have embarked on some level of digital transformation already. Today, leaders across the financial landscape have understood the potential of cloud and what it brings to the table. Many banks have understood the potential of cloud and how it can lead to cost efficiencies and create better customer propositions. Some experts believe that banks can save up to 50 percent of their costs by adopting cloud technology to serve their customers. The technology allows banks to implement new operating models that lead to improved revenue generation and cost savings. It also helps to deliver market-relevant products quickly and efficiently, and helps to monetise enterprise data assets. While challengers are already disrupting the industry, because of their ability to meet the increasing demand of digitalisation that banking customers often demand, it is likely that all traditional banks in the future will fully adopt cloud to run their operations. Unless a new disruptive technological innovation comes knocking on the door. Be it the traditional, cloud-native or serverless applications, it will reshape the banking industry. However, there is a difference between a genuinely cloud-native, next-generation core banking system and simply moving legacy technologies into the cloud. Cloud-native was designed with the very purpose to facilitate and utilise the cloud to its maximum potential. Cloud-native helps in designing, building and running applications on the cloud. The modern-day consumer is more demanding with their own distinctive requirements. Nowadays, when it comes to finance, consumers expect 24 hours access to their financials and in real-time and across many different devices. Most customers now prefer to carry out banking activities from the comfort of their
home rather than walking into a brick and mortar office. The modern tech-savvy generation is even more demanding. This possesses a tremendous challenge in front of the banks, especially the traditional banks with legacy data. There are a number of companies that have the ability to solve these problems for the banks. With digitalisation taking place in almost every other sector, these companies have the cutting edge technology to help banks meet the demands of their customer and in a much efficient way. One such company is Yobota which is based in London. Yobota’s core banking platform allows established and challenger financial institutions to launch innovative, user-centric products in a fast and reliable way. According to its website, the Yobota Platform allows established and challenger financial institutions to create innovative, user-centric financial products, and run them from origination and through the life of the account. Chief executive officer Ammar Akhtar in a conversation with Global Business Outlook discusses the importance of cloud and how Yobota with its cloud services is bringing digital transformation to the UK banking and financial services landscape.
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Banking and Finance
Interview Yobota cloud
GBO What is the purpose of Yobota’s multibrand capabilities on its core banking platform and what is the value proposition that differentiates itself from industry peers? Ammar Akhtar: Yobota’s multi-brand management capabilities enable banks to create, launch and manage new brands quickly and at low costs. In years gone by, high street banks and traditional institutions will have needed to invest heavily, both in terms of time and cost, if they wanted to launch additional brands – with no guarantee of success. Now they can enter new markets easily and much more affordably. This was a breakthrough moment for the financial services sector at large. This innovation is particularly important at a time when banks must respond quickly to evolving customer needs, by launching offerings that target financial products for different demographics. Chetwood Financial, for example, is one of our clients that has already been taking advantage of the platform’s multi-brand capabilities. The digital bank recently launched the BetterBorrow lending brand to complement their reward and loan savings brands, and it can now launch any additional brands at pace. We give our clients, whether this is financial services firms or businesses stepping into the world of fintech, the power to take a far more agile, responsive, and brave approach when it comes to meeting changing customer needs. No longer do they have to be held back by unresponsive and inflexible systems.
Yobota has developed a cloud-native banking platform that enables clients to run financial products. What does this new platform mean for financial services companies looking to thrive despite heavy competition? Yobota offers financial services companies a distinct advantage: the power of flexibility. Our cloud-native banking platform enables progressive and innovative businesses to take advantage of proven technologies so they can stand out from their competitors. With our platform, they can create more responsible, customisable and customer-friendly products and experiences. Fintech is evolving all the time, and so are the demands of banking customers. Finance companies must be able to adapt quickly—our platform enables them to be responsive and spin out new offerings at a high-speed and low-cost, which is essential if they are to gain a competitive advantage.
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Our cloud-native banking platform enables progressive and innovative businesses to take advantage of proven technologies so they can stand out from their competitors. With our platform, they can create more responsible, customisable and customerfriendly products and experiences
Are challenger financial institutions in the UK overtaking high street banks and what are the attributable reasons for their swift development in a highly competitive industry? The debate is not so much about whether challenger financial institutions will take over the UK’s high street banks, but rather how the two will work together to push the whole sector forwards. Already we are seeing more and more partnerships being forged between the two parties, which will be encouraged further by developments like the open banking initiative that require a mutual understanding of best practices. Collaboration has become unavoidable in the financial services space. Another area for observation is the changing dynamic between banks and their customers. The way in which people engage with and remain loyal to a particular financial institution is markedly different today than it was 20 or even 10 years ago. So, while traditional banks often enjoy the benefits of established reputations and proven user base, they cannot be complacent. They must work together with smaller and nimbler counterparts that can help them move forward into the digital age, and most importantly, offer a better user experience for their customers. Indeed, it is in this area that challenger banks have a leg up. They typically recognise the importance of an unencumbered, sleek user experience.
Banking and Finance
Is Yobota planning to expand into emerging markets and why are those markets being considered? Our platform is not tied to any particular geography, and many of the challenges faced by banks and fintechs are the same across the globe—namely innovation, regulation, modernisation, and competition from big tech. As such, we are confident that we can help clients in other regions in the same way that we support our UK clients.
How has the coronavirus pandemic disrupted digital banking in the UK and how is Yobota planning to capitalise on those industry disruptions? The coronavirus pandemic has highlighted the importance of digital banking. Indeed, it has brought about a sharp rise in people’s reliance on financial technology. An independent study of more than 2,000 UK consumers by Yobota earlier this year offered some insight into the issue. For one, it showed that 66 percent of people were regularly using fintech between March and July 2020 at the height of the pandemic—an increase of over 50 percent compared to 2019’s usage figures. Rather than inspiring new trends, however, the pandemic has accelerated trends that were already taking shape. The reliance on legacy IT and on-premise data storage has been highlighted as a weakness within many
| Cloud banking
institutions. On the positive side, however, the pandemic has provided an impetus to make more progressive technology choices going forward. As customers become accustomed to new technologies and ways of managing their finances, the appeal of a bank will no doubt be shaped by the online and mobile banking solutions it provides going forward. Yobota is on hand to offer modern solutions to modern problems. We will continue to help the financial services sector keep pace with the demand for better technology, and support their long-term digital transformation plans. Importantly, we provide interoperable fintech built on a cloud platform, which not only breaks down the geographical barriers imposed by legacy IT systems, but also removes the roadblocks standing in the way of people accessing and managing their financial products.
What are Yobota’s plans for challenger financial institutions in the next two years, given that the UK is in a tough position over Brexit? The UK’s fintech sector will remain strong. It has an inherent ability to adapt to challenges that are thrown its way: whether this is Brexit or a global pandemic. Indeed, Atomico’s latest State of European Tech report highlights that a massive $25 billion has been invested in European fintech companies since 2015, even in the midst of ongoing political and economic uncertainty. While it is important to have contingency plans in place to mitigate any potential fallouts from the transition, fintech companies are entering 2021 from a position of strength. At Yobota, we will continue to bridge the gap between traditional banks and their younger counterparts, and continue pushing the financial services sector into the digital age through innovative applications of technology. As we do so, we will continue to focus on hiring top talent. At Yobota, we pride ourselves on being a very diverse company with a team of extremely talented and motivated people behind our platform. Regardless of the challenges that Brexit will bring, we will continue to look for the best talent to power our future growth and support our clients.
Global Business Outlook | Jan 2021| 63
Banking Finance Virtual currency
Feature
Blockchain market size is forecast to expand to $39.7 billion from $3 billion by 2025, at a 67.3% CAGR
Blockchain might be a path to global development Rohit Baruah 64 | Jan 2021 | Global Business Outlook
D
igital transactions across the globe have become seamless after the inception of blockchain technologies. However, many people don’t have any idea about it. In simple terms, blockchain is a digital record of transactions that are used to record in virtual currencies such as Bitcoin, Litecoin, etc. Blockchain technology have spurred digital transformation in various segments amid the outbreak of Covid-19 pandemic. Therefore, it is expected that the blockchain market size will expand to $39.7 billion from $3 billion by 2025, at CAGR of 67.3 percent between 2020 and 2025. Global blockchain market size will exponentially grow in the coming years.
The pandemic has strengthened countries' transition to blockchain technology. According to experts, 90 percent of blockchain projects will require replacement within a year due to factors such as decentralised consensus, tokenization and smart contracts. It is predicted that 30 percent of the blockchain projects will make it into the production stage globally. According to Gartner, over 40 percent of surveyed corporations have at least one blockchain pilot running and 30 percent of global projects will make it into production due to the outbreak of the pandemic. Furthermore, most of the networks that transit from the pilot to
the production stage will operate on private enterprise blockchain platforms. A new study has revealed that the United Kingdom is among the bestpositioned nations to benefit from blockchain technology. Blockchain technology could have the highest potential net benefit of $440 billion in China by 2030 and of $407 billion in the US. Furthermore, these are the four other economies that are expected to benefit by over $50 billion by 2030- India, France, Germany and Japan. J. Christopher
Global Business Outlook | Jan 2021| 65
Banking Finance
Giancarlo, Chairman of U.S. Commodity Futures Trading Commission, free markets foster , told the media “creativity and economic expression to promote human growth and advancement.” This assertion comes from the belief that “sustained prosperity” is a natural by-product of “open and competitive markets, free of political interference, combined with free enterprise, personal choice, voluntary exchange and legal protection of person and property.”
IDC predicts huge blockchain impact in 2021 Reduce transaction costs
35% Build digital trust
30%
What PwC has to say about the UK? According to PwC, the UK economy could be boosted by £57 billion by 2030 by blockchain technology, while the global economy could see a $1.7 trillion boost. Furthermore, the UK’s public sector will be the biggest benefactor. Blockchain technology initially entered the UK’s financial space. The technology has impacted industries such as energy, freight, logistics and automotive sectors other than the financial sector. Blockchain technology has the capability to boost the UK’s GDP by $72 billion by 2030. Economists have studied current usage of blockchain technology and understand its capability to develop value across sectors such as public services, industry, healthcare, government, finance, retail, logistics and manufacturing. The economists at PwC believe that these sectors will benefit from blockchain technology by £22 billion by 2030 by taking advantage of the efficiencies the technology will float to the world of credentials and identity. The reports have indicated that blockchain technology will boost business services by £15 billion followed by the wholesale and retail segment by £13 billion and the media segment by £5.3 billion by 2030. All these sectors will benefit from blockchain technology to attract consumers and fulfil the demand for factors such as provenance and traceability. Different organisations and experts are researching the consequences of the economic impact of broader technologies, partly as a positive sign of recovery despite
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the continued uncertainty, which is prevailing around the pandemic. Earlier, Nokia said that 5G technologies has the potential to add $8 trillion to global GDP by 2030. PwC reports indicate that a supportive policy environment is required for blockchain technologies to flourish and become more successful in the long run. The PwC reports state that many companies in the UK have been prioritising tracking and tracing since the outbreak of the pandemic, with the segment expected to bolster the nation’s economy by £30 billion by 2030. Furthermore, the report highlighted the wider applicability of such use cases, from industries such as heavy industries to fashion labels. The UK economy is expected to be bolstered by £13 billion by the payments and financial services with identity management at £8 billion. The customer management is pegged at £1.8 billion, while the dispute resolution is pegged at £3 billion, as loyalty programs further extend their capabilities into a much wider range of private and public segments. Steve Davies, global blockchain leader at PwC, told the media, “Blockchain has long been associated with cryptocurrencies such as Bitcoin, but it has much more to offer, particularly in how public and private organisations secure, share and use data. As organisations grapple with the impact of Covid-19, we have seen an acceleration in many disruptive trends. Our analysis shows the potential for Blockchain to support UK organisations in how they rebuild and reconfigure their operations, underpinned by improvements in trust, transparency and efficiency. One of the biggest mistake’s organisations can make with implementing emerging technologies is to leave it in the realm of the enthusiast in the team. It needs C-suite support to identify the strategic opportunity and value, and to facilitate the right level of collaboration within an industry. Establishing proof of concept uses which can be scaled up if successful will enable
Feature \ Virtual currency
businesses to identify the potential uses of Blockchain, while building confidence and trust in its ability to deliver.”
Global blockchain scenario in 2021 and how it will impact the world economy? In the first scenario, projects are expected to come to a halt. It is believed that the long-term strategic projects will be put on hold because of volatility and downturn caused by the outbreak of the Covid-19 pandemic which has compelled various corporates to pull back from some of their more long-term DLT-related projects temporarily. The projects which will need changes to the market structure for a longer-term are mostly operating to the extended timetable. Furthermore, these projects have been scrambling to schedule budgets for experimental and R&D projects during the pandemic. According to IDC research, prominent in-industry value chains powered by
blockchain technology will have broadened the scope of their digital platforms, reducing transactions by 35 percent. It is forecast that 30 percent of manufacturers and retailers globally will have established digital trust through blockchain technology, enabling collaborative supply chains. It is reported that this prediction is made beyond the reduction in transaction cost. For now, 42 percent of companies have already deployed at least one active blockchain pilot, but several of those projects were led by one or two companies. An example of that is Walmart. Blockchain technology is revolutionising processes to great length. In the second scenario, government agencies will need to adopt blockchain
The economists at PwC believe that select sectors will benefit from blockchain technology by
£22 billion by 2030 by taking advantage of its efficiencies
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Banking Finance
technology. The integration of blockchain technology into government agencies has not been encouraged by major economies. However, things have changed in recent times. These are the developments that have sparked the light for blockchain to prosper: The ministry of finance in Japan has said last year that blockchain technology could be vital in the continuing global fight against the pandemic. While Thailand will introduce a new juridical document storage system, the government in Colombia has vowed to support cryptocurrency and blockchain payment systems. In Vietnam, the government has already deployed a special blockchain platform called akaChain which will assist to spur the digital transformation of the country. Furthermore, the government in South Korea has integrated a blockchain system into the driver’s licence of millions of people. That said, digital transformation has become essential for corporates and therefore it can’t be considered as an option. There is a dire need for corporates to spur their digital transformation process to become more robust than before due to the pressure created
Value chains powered by blockchain According to IDC research, prominent in-industry value chains powered by blockchain technology will have broadened the scope of their digital platforms, reducing transactions by 35 percent. It is forecast that 30 percent of manufacturers and retailers globally will have established digital trust through blockchain technology, enabling collaborative supply chains. It is reported that this prediction is made beyond the reduction in transaction cost. For now, 42 percent of companies have already deployed at least one active blockchain pilot, but several of those projects were led by one or two companies. An example of that is Walmart. Blockchain technologies are revolutionising processes to great length.
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by the pandemic on them. In the coming years, blockchain technology is expected to transform the way businesses operate. Many companies and industries, therefore, have chosen blockchain technology as the tool to spur their digitalisation process.
Virtual currencies may touch new records The virtual currency market has been strong and resilient last year despite the pandemic and this year is anticipated to be in favour of virtual currencies such as Bitcoin, Litecoin and others. Therefore, the expectations are even higher than 2020. The virtual currencies have been proved to be a safe haven asset for investors during the pandemic and has become a key investment option. Bitcoin has proven itself to be a valuable form of digital gold, making it one of the strongest players in the digital currency space due to factors such as market uncertainty and government policies. This year, it looks like the demand for virtual currency will surge unexpectedly because of social distancing norms where people will prefer cashless transactions. However, anything can be expected with the constant fluctuations in the virtual currency segment. But there is anticipation of a virtual currency fraud on the rise. There is no doubt that 2020 has been a successful year for the virtual currency segment. However, the only thing that is affecting the sector is the surge in fraud cases. In recent times, the global crypto exchange has suffered downturn and high-profile hacks. Furthermore, over 20 percent of the total theft volume last year were the decentralized finance (DeFi) companies. The world may see a surge in crypto fraud such as fake crypto investment platforms, fake crypto wallet scams and crypto hijacking.
China will progress faster than any other nation China, being a progressive country, is leading the global blockchain stage and
Feature \ Virtual currency
will continue to dominate this year too. Blockchain technology has assisted China to transform its economy rapidly, which is well beyond the reach of other global virtual currency markets. China’s government is aiming to make blockchain an integral part of the country's digital infrastructure through a new infrastructure national initiative and is backed by the government’s blockchainbased service network. The country’s ambition is to provide global public infrastructure through blockchain technology. China is almost gearing up to launch its own Crypto Yuan, while other European economies are mulling to roll out their own digital currency.
How will the financial segment shape up? The world is also expected to witness that private blockchains are likely to retain the largest market size this year and will become the primary contributor towards the global market growth. The private blockchain delivers more opportunities to corporations in terms of utilising the blockchain technology for B2B use cases. Private blockchain has the capability to deliver higher efficiency, privacy, reliability and transparency. It is also secured through private keys that are only authorised to specific people in a company or organisation. The financial segment is deeply affected by the pandemic compared to other industries. Banks have been compelled to adapt and fulfil their customer requirements due to the profit dip and tight margins. Therefore, the adoption of blockchain technology and fintech will pave the path for them to enhance and streamline their operations. The process has the potential to spur the growth of a company in the field of contactless transactions and enhanced financial services. The banking and financial segment will exponentially adapt to blockchain technology in the coming years. Thus, the sector is likely to hold the largest market size in the global
blockchain market in the future. This trend is likely to be witnessed this year where several economies will intensify their search for stricter and tighter regulation. The governments are likely to implement a set of new fintech regulations over the next five years due to uncertainty and security issues including the growing digitalisation. The concerned topics for the economies will be blockchain, digital banking and virtual currencies. Regulators can’t ignore issues such as DEFI because there is a surge in finance transactions outside traditional institutions and mechanisms. Meanwhile, the European Union is planning to introduce an EU-wide regulatory system for crypto assets markets.
What does the future hold? The blockchain adoption has the capability to enhance cheaper and streamlined payments and it will transform world economies. Therefore, the global companies and organisations must try to embrace the innovation that the technology produces for the economies. People shall understand the mechanism of how blockchain technology may enhance and improve the remittance payments experience for individuals. It will also assist an economy to grow. The real impact of the distributed ledger technology is still under speculation; however, people have started to use it in real time. Blockchain technology will enter the industry sector soon. Garter in 2017 said that blockchain’s universality can be compared to all things digital.
The UK customer management is pegged at
£1.8 billion, while the dispute resolution is pegged at
£3 billion, as loyalty
programs further extend their capabilities into private and public segments
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Technology
Interview Lior Lamesh CEO and co-founder, GK8
Air-gapped vault for the crypto world GBO correspondent
B
lockchain is a technology of the future, and it is very likely that it will reshape various sectors including intellectual properties. However, blockchain is still in the stage of technological development. Over the years,
adoption in the future. Cryptocurrencies such as bitcoin and ether are increasingly gaining popularity among the masses despite their volatile nature. Bitcoin prices have soared significantly in the last year and have crossed the $30,000 threshold. At the beginning of 2020, bitcoin was at $8000. Technologies such as blockchain provide cryptocurrencies a future. It can help build up a distributed system with certification and integrity once a payment transaction is generated on the internet. In the case of a fiat currency, it will always require a central regulatory body to guarantee the value of the national currencies or transactions.
As a developer of a high-end, enterprise grade custody platform, GK8 plays a paramount role in safeguarding digital assets
the technology is set to further evolve and has a great role to play in the future when it comes to financing, trade, cryptocurrencies and cyber securities. According to reports, the market value for the blockchain industry was expected to exceed $60 billion in 2020. This highlights the fact there are great opportunities to pounce upon in this field for investors, businesses, developers, and even administrations. Blockchain is also expected to drive crypto
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Cryptocurrencies, on the other hand, through the use of blockchain, create a digital online distributed system of certification for transactions without any central authority. Bitcoin which is one of the first and definitely the most popular cryptocurrencies in the world operates on blockchain technology. Since the entire blockchain is retained on a huge network of computers and not just one server or a database, it means no person has control over it. This very complex nature allows blockchain
Cryptocurrency | Cryptographic techniques
An Israeli cybersecurity firm has developed state-of-the-art cryptographic techniques to block attackers’ influence
technology to be the most secure form of storing and sharing information online. This very functionality of blockchain has resulted in blockchain adoption in different sectors to prevent fraud, data protection and also increase efficiency. Over the last couple of years, we have already seen blockchain technology being used to tackle various other problems in other fields. Blockchain has been used to increase efficiency in the supply chain across the globe as well as carry out trade finance, which often required a substantial amount of time due to various reasons. As each day passes, more and more people join the world wide web which means more data gets produced and stored online. This further increases the chances of cybercrimes such as hacking. Blockchain is versatile and it allows users to better secure their data and protect it from hackers. By implementing rigorous encryption and data distribution protocols on a network, any business can ensure that their information will remain safely intact and out of the reach of hackers. Cybersecurity has been one of the major threats faced by crypto assets. Around $4.26 billion in crypto assets were stolen in 2019 alone. This is why blockchain has become so important. By combining cutting-edge technology with the classic concept of accountability, blockchain offers unprecedented data security. The Middle East and Africa (MEA) region have seen widespread digitalisation in the last decade especially in countries in the Middle East such as the UAE, Saudi Arabia and Israel. With digitalisation, comes the risk of cybercrimes. Amid the coronavirus, the Middle-eastern region is facing a surge in cybercrimes, with the UAE government’s top cybersecurity chief calling it a ‘cyber pandemic.’ The cybersecurity market in the Middle East and
Africa (MEA) region has grown significantly as a result of digitalisation and has undergone its own digital transformation across the vast region of over 1.7 billion people. According to a report from Mordor Intelligence, the cybersecurity market in MEA was valued at $7.174 billion in 2019 and was expected to register a compound annual growth rate (CAGR) of 14.08 percent during 2020-2025. Another report from ResearchAndMarkets.com forecasted that prior to Covid-19, the Middle East cybersecurity market was projected to grow from $16.1 billion in 2020 to $28.7 billion by 2025 with a CAGR of 12.2 percent. In its post-Covid-19 forecasts, the market is expected to grow at a CAGR rate of 13.8 percent with a 2020 figure of $15.6 billion to a 2025 forecast of $29.9 billion. This has given rise to a number of cybersecurity companies in the Middle East. One such company is GK8. It is based in Tel Aviv, Israel and is a cybersecurity company that offers a high-security custodian technology for managing and safeguarding digital assets. The technology allows financial institutions to execute the entire digital assets management process, including sending transactions to the blockchain, without the need for an Internet connection.
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Technology
Interview Lior Lamesh CEO and co-founder, GK8 Lior Lamesh, CEO and co-founder of GK8, in an interview with Global Business Outlook, provides insights into the outstanding work of GK8 in the cryptocurrency space.
GBO Can you tell us more about GK8’s efforts in developing the world’s first air gapped cold vault and how does it provide the ability to create transactions to blockchain while being fully offline? While we cannot get into the architecture of our solution, what we can say is that it is based on patented cryptography techniques and a unidirectional connection, enabling data to only go out from the vault, never in.
How common are cyber attacks in blockchain transactions and what is the role played by GK8 in building a robust environment against those attacks? Cyber attacks are a major challenge impacting everyone in the crypto space. According to blockchain research firm CipherTrace, $4.26 billion in crypto assets were stolen in 2019 alone. If we look at 2020 we see that the frequency of incidents are rising, with the recent KoCoin attack catching a lot of headlines. This threat is likely to grow worse in the coming year, as banks and traditional financial institutions begin to offer blockchain-based services—with PayPal being the most prominent recent example—the crypto economy is expected to grow exponentially, making hackers more incentivised than ever before. As a developer of a high-end, enterprise grade custody platform, GK8 plays a paramount role in safeguarding digital assets. Unlike other hot and cold wallets in the market, GK8 offers a radically different approach for protecting digital assets by keeping them in a 100 percent offline vault, which are out of reach for even state-level hackers. Our patented solution ensures 100 percent protection against cyberattacks, backed with the highest insurance coverage available today on digital assets—up to $500 million per vault.
How robust is GK8’s new solution in eliminating all potential attack vectors on users’ private keys, ensuring cent percent protection against malicious threats? Our slogan, “you can’t hack what you can’t reach”, really illustrates GK8’s offering in a nutshell: we’ve developed the world’s first true air-gapped vault
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Unlike other hot and cold wallets in the market, GK8 offers a radically different approach for protecting digital assets by keeping them in a 100 percent offline vault, which are out of reach for state-level hackers
that doesn’t require internet connection to send blockchain transactions, eliminating key attack vectors that hackers exploit. This isn’t just an incremental improvement in the never-ending cat and mouse chase between hackers and cyber companies; it’s a completely new approach for protecting digital assets: even the most skilled and experienced hacker can’t break into a device that’s completely off the grid.
Why is cryptography becoming an important practice for secure transactions ? Give an example. Cryptography is at the very core of all digital assets. The ability to provide robust cryptography ensures protection of users’ private keys, which is the premise of all blockchain transactions. If it was not for reliable cryptography, bitcoin would have never become a widely accepted asset, let alone rise to a peak of nearly $20,000 per unit—up from zero in just over a decade.
Prosegur Crypto combines the highest standards of physical protection and cyber security to prevent hacking attempts. How is GK8’s partnership with Prosegur creating a secure environment for the latter’s blockchain transactions? Prosegur built its business around cash management and physical security services, growing to become one of the largest traditional custodians in the world, with 200,000 employees serving customers in 24 countries and operating over 400 vault rooms. In order
Cryptocurrency | Cryptographic techniques
used in both public and permissioned blockchains. As a result, the platform supports INX’s security token. As for Aon, it was convinced that our patented solution indeed provides 100 percent protection against cyberattacks, enabling it to extend Aon’s insurance to GK8 customers and offer the highest available coverage on digital assets: up to $500 million per vault (which is not as a pooled insurance).
to maintain its growth, it wanted to expand into digital asset custody, getting a foothold in the emerging cryptoeconomy. As a global leader in physical security, Prosegur wanted to leverage GK8’s expertise in cybersecurity to bolster its market positioning. Since it had limited knowledge in safeguarding digital assets, Prosegur wanted an end-to-end solution that includes both a cold vault with 100 percent protection against cyber threats. The platform was implemented in a matter of days, without requiring the bank any special development effort or prior blockchain expertise. As a result, Prosegur was able to extend its brand reputation into a new line of service, meeting a growing market demand for safeguarding cryptocurrency out of hackers’ reach.
GK8 has also established profound partnerships with Aon and INX to safeguard assets trading platforms and provide insuranbale digital-asset storage tech. How are these developments giving GK8 a competitive advantage over its industry peers? These are actually two different examples of partnerships that GK8 has forged with reputable financial institutions: INX, apart from being an active exchange, it was also in a unique position being the first company to get approval from the SEC for issuing its security token. As such, INX’s needs were twofold: having a secured trading platform in place to serve its customers, as well as safeguarding its own security tokens. On top of providing 100 percent cyber protection, the GK8 platform is completely asset-agnostic, compatible with all types of digital assets, and supporting signing algorithms
How is the Israeli market progressing on the tech front in asset trading and blockchain transactions and what are the common setbacks observed within the industry? As a hub of innovation, Israel is the bedrock for dozens of start-ups in the field of blockchain technology. While the local regulation in Israel is still lagging in embracing crypto, several Israeli companies have become global leaders in the facilitation of financial services based on blockchain technology, such as social trading platform and crypto exchange eToro, which manages over $1 billion in digital assets, serving customers globally.
What are the persistent cyber challenges that GK8 is facing amid the pandemic and how is the company preparing to address those challenges? Traditionally, banks are slow to adapt to market trends and embrace new technology. Covid-19 is changing this: we are seeing tier-1 banks aggressively issuing RFIs for blockchain solutions and already onboarding technology to support their customers. The pandemic has accelerated the digitisation process, with transformation projects that were initially predicted to take four to five years, being completed in four to five months.
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Analysis
Challenged by the big tech’s power grab Lukas Wilson
The growing dominance of technology firms has started to worry governments and policymakers globally
T
he growing dominance of tech firms has started to worry governments and policymakers across the globe. Be it in the EU, or the US, regulators are holding companies accountable for unlawful business practices or breach in competition laws. Recently, the UK said it will introduce new laws which will prevent the likes of tech giants such as Google and Facebook from using their dominance to push smaller firms out of competition. The EU has introduced new drafts to prevent tech giants from asserting their dominance, which many perceive as a threat to competition and even democracy. Beijing too, appears to have taken a harder stance against the country’s technology firms recently. However, Beijing is doing so to become a technological superpower in the coming years. Recently, social media giants came together to indefinitely ban former US President Donald Trump
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for instigating his followers who stormed the US Capitol on January 6. While this was perceived as a welcoming move by many across the globe, few raised concerns about the social media giants’ influence in modern day. Not only that, many are also questioning the business practices of these companies. While Facebook is under investigation, the DoJ filed one of the biggest lawsuits against a tech company in almost two decades. Will new competition laws curb dominance? Last month, the UK said it will impose new competition laws in the region to prevent tech giants from asserting their dominance and to prevent them from pushing smaller firms out of competition. Britain's competition regulator, the Competition and Markets Authority (CMA) said
Technology \ Monopolistic practices
that the UK needs new laws to keep the tech giants in check. US-based Google and Facebook have dominated digital advertising, with both tech giants accounting for around 80 percent of the $18.7 billion spent in 2019. Google and Facebook earn a huge chunk of their profits from advertising, however, in recent times, they are increasingly coming under antitrust scrutiny as a result of complaints against advertising spending shifts to the web. With regards to the new competition laws, which are being drafted by the UK, both Facebook and Google have said they are committed to working with the British regulators and promote ethical business practices.
It is not just competition that worries authorities and governments. Many also fear that concentration of power in a small number of companies will limit growth and impact innovation within the sector. Some fear it will also negatively impact those who are associated or using the services of these tech giants for the benefit of their own business. The new laws are expected to give regulators the power to suspend, block and reverse decisions made by technology firms and to impose financial penalties for non-compliance. The new code will pinpoint what exactly represents acceptable behaviour when interacting with competitors and users and the
biggest tech firm will be found to follow these laws. It is also believed that the new laws will demand greater transparency about the services they provide and how they are using consumers' data from platforms that are funded by digital advertising. Marketers for an Open Web (MOW), a coalition between technology and publishing companies, alleged that Google was modifying its Chrome browser and Chromium developer tools to give it greater control over publishers and advertisers. In its defense, Google said advertising practices needed to adapt to changing expectations around how data was collected and used. The
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CMA also said that it is looking into the matter and whether a complaint or a formal investigation will be necessary. EU creates a level playing field The EU also introduced new draft rules targeting tech giants like Google, Amazon and Facebook as it sees them as a threat to competition and even democracy. The recent developments come at a time when regulators around the world have increasingly become concerned about the financial and social power of big tech. The landmark proposals could change how tech giants go on with their business in the
future, as unlawful practices could now mean million-dollar fines. In response to the new regulations, Google said that they would study them, however, hinted that they believe these new regulations do target some of the companies in particular. Facebook, on the other hand, was appreciative of the new regulations. A spokesperson said the proposed regulations are on the right track to help preserve what is good about the internet. The new regulations are also seen as a way for authorities to tackle social media platforms when it comes to digital content such as extremist propaganda, hate speeches and
"The Digital Service Act and Digital Markets Act will create safe and trustworthy services while protecting freedom of expression" - EU competition chief Margrethe Vestager
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Technology \ Monopolistic practices
fake news. For the past decade, the EU has taken the lead when it comes to keeping the big companies under check, for example slapping billions in antitrust fines on Google, but critics argue the methods have been ineffective and that the EU needs to adopt a much stronger approach. The EU has not only gone after Google. It has also ordered smartphone maker Apple to pay billions of euros in back taxes to Ireland; however, that decision was quashed by the bloc's highest court. US lawmakers urge Congress to look into tech monopoly The growing dominance of the tech giants is also worrying authorities and lawmakers in the US. Recently, social media giants such as Twitter and Facebook came together to ban former US President Donald Trump from their platform. While many celebrated the move, others were concerned. Have these companies become too powerful? Recently, democratic lawmakers urged Congress to clamp down on the tech giants, as they believe these companies have too much power in their hands. The Democrats called for a 16-month congressional investigation into Google, Amazon, Facebook and Apple. They believe these firms such as Google, Amazon, Facebook and Apple have too much power, and that power must be reined in. However, not all republicans agree to the proposal, some even calling the measures suggested as too extreme. That said, they are open to hear suitable remedies to deal with issues such as amendment in competition laws and monopoly of the tech giants. In December, The Federal Trade Commission (FTC) ordered some of the biggest tech firms such as Amazon, Facebook and YouTube, to hand over information about how they collect and use data from users. The top US privacy
regulator intensified the US government's scrutiny of the tech industry's business practices. The FTC also sued Facebook for alleged violations of antitrust laws. Not only that, the FTC is also reviewing the acquisition history of these tech giants. FTC commissioners said in a statement, "Policymakers and the public are in the dark about what social media and video streaming services do to capture and sell users' data and attention. It is alarming that we still know so little about companies that know so much about us." DoJ slaps Google with the biggest lawsuits in two decades Over the years, Google has established itself as one of the topmost companies in the world. However, the company has seen multiple lawsuits against it over issues such as privacy, advertising, intellectual property and various Google services such as Google Books and YouTube. During the first five years of business, Google’s legal department expanded from one to nearly 100 lawyers, and by 2014 had grown to around 400 lawyers. Most recently, the United States DoJ filed one of the biggest lawsuits against a tech company in almost two decades. The justice department alleges that Google enters into exclusive contracts with other companies to set the company as the default search engine. The complaint said that Google paid Apple $12 billion each year to make it the default browser on Safari. It further alleges that Google’s 80 percent market share in search engine business was possible due to such exclusive
The growing dominance of the tech giants is also worrying authorities and lawmakers in the US. Recently, social media giants such as Twitter and Facebook came together to ban former US President Donald Trump from their platforms
Average traffic of big tech in South Korea
Google 25.9% Netflix 4.8% Facebook 3.2% Q4 2020
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contracts with other smartphone makers. This gave Google an edge over its rival and helped to capture a market with unethical business practice.
China is focused to become a tech superpower China is also amending laws to regulate its own tech giants are part of its broader push to become a technological superpower. Beijing appears to have taken a harder stance against the country’s technology firms recently. It was reported that it is working out how to regulate the technology sector when it comes to sensitive areas such as data protection and antitrust. Over the last two decades, Chinese tech firms have witnessed tremendous growth to find themselves among the biggest tech firms in the world. While already a number of regulations have come into effect so far, new regulations are further being drafted by China. China has drafted new rules to stop monopolistic practices by some of its internet platforms. There has been a wide-spread call in China to regulate its large tech companies. Last year, authorities in China also started probing Alibaba over monopolistic practices. In November, regulators forced Ant Group, the finance affiliate of Alibaba, to suspend plans for what would have been the world’s biggest initial public offering (IPO), while the company dealt with regulatory changes. Last month, Alibaba and two other firms were slapped with a fine for not making proper declarations to authorities about past acquisitions. Prior to that, China released a draft personal data protection law aiming to regulate how companies process user data. All these developments are part of Asian superpower’s big push to establish itself as a major global tech power.
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A group of 38 US states and territories also filed a lawsuit against Google. They allege that Google uses three forms of anticompetitive policies to maintain its monopoly in the search-related business. While the first argument is similar to that put forward by the justice department, the second argument is that Google restricts consumer freedom by restricting some specific sites and services out of its search results. The third argument is that Google discriminates against services offered by specialised vertical providers because in some cases a transaction can be completed without the help of Google or its search engine. But Google wants consumers to begin their search from Google rather than going directly to these designated websites or apps. Another lawsuit alleges that Google and Facebook entered into a secret deal where the social media giants would reduce its moves in the advertising space for special treatment during Google ad auctions. Google, which controls one-third of the global advertising industry, has been accused of abusing its monopoly over the digital ads market. South Korea’s administrate fine is just the beginning South Korea also recently introduced new regulations that would require tech giants such as Google and Facebook to comply with or face an administrative fine of up to $18,000, which is equal to almost 2 million won. South Korea can also now hold online content service providers such as Netflix accountable in case of growing complaints against them. Under the revised Telecommunications Business Act, tech giants or online content providers will now have to report service errors to the Ministry of Science and ICT. The new rules will apply to those companies which have more than 1 million daily users or account for 1 percent or more of the
Technology \ Monopolistic practices
country's average daily data traffic in the last three months of a year. According to the ministry, six companies namely Google, Netflix, Facebook and domestic companies Naver, Kakao and Wavve accounted for a total of 38.3 percent of the country's average daily traffic in the final quarter of 2020. While Google accounted for a whopping 25.9 percent, it was followed by Netflix with 4.8 percent and Facebook with 3.2 percent. If we look at the domestic companies, top portal operator Naver held the top spot at 1.8 percent, followed by rival Kakao at 1.4 percent and video streaming service Wavve at 1.18 percent. Data released by the ministry also revealed that Google's average daily user number during the period stood at 82.3 million, followed by Naver at 57 million, Kakao at 55.2 million, Facebook at 14.3 million, Netflix at 1.7 million and Wavve at 1 million. China’s actions to become a tech ‘superpower’ China, on the other hand, is also amending laws to regulate its own tech giants are part of its broader push to become a technological superpower. Beijing appears to have taken a harder stance against the country’s technology firms recently. It was reported that China too, is working out how to regulate the technology sector when it comes to sensitive areas such as data protection and antitrust. Over the last two decades, Chinese tech firms have witnessed tremendous growth to find themselves among the biggest tech firms in the world. While already a number of regulations have come into effect so far, new regulations are further being drafted by China. China has drafted new rules to stop monopolistic practices by some of its internet platforms. There has been a wide-spread call in China to regulate its
large tech companies. Last year, authorities in China also started probing Alibaba over monopolistic practices. In November, regulators forced Ant Group, the finance affiliate of Alibaba, to suspend plans for what would have been the world’s biggest initial public offering (IPO), while the company dealt with regulatory changes. Last month, Alibaba and two other firms were slapped with a fine for not making proper declarations to authorities about past acquisitions. Prior to that, China released a draft personal data protection law aiming to regulate how companies process user data. All these developments are part of Asian superpower’s big push to establish itself as a major global tech power. Kendra Schaefer, a partner at Trivium China, a research firm based in Beijing told the media, “Underneath all of this stuff I think China understands that if it’s going to become a technological superpower... then it has to lay a solid regulatory foundation. It has to lay that foundation in the way that it regulates company operations, but it also has to lay that foundation in terms of data. In fact, data might be the most important regulations that it has got to lay down. All of these things are foundational and it’s really just kind of setting a framework, a springboard from which China can develop and move forward faster.”
The Democrats called for a 16-month congressional investigation into Google, Amazon, Facebook and Apple. They believe these firms have too much power, and that power must be reined in. But not all republicans agree to the proposal
Average traffic of domestic firms in South Korea
Naver 1.8% Kakao 1.4% Wavve 1.18%
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News
Technology
Etisalat to launch smart monitoring services
T
he Emirates’ telecom major Etisalat has established a partnership with Ring, a safety solutions provider, to launch smart monitoring services in the region. The move will enable residents of the region to monitor their homes and keep them secured remotely
anywhere anytime. It is reported that the smart monitoring services comprises four bundles of existing services and ring devices, where each bundle is equipped with a security camera and a premium door bell. Furthermore, the package comprises a ring protect lifetime
basic plan with a warranty period of three years. The home monitoring service is available for both outdoors and indoors. The customers can choose the ring devices in accordance with the coverage area of their home. These are the eligible ring devices for the service: Ring Indoor Cam PlugIn, Ring Video Doorbell, Ring Stick Up Cam Battery and Ring Stick Up Cam Elite. The devices come with free installation with a warranty period of three years and the video storage is unlimited. The customers can purchase the devices in a monthly easy installation facility.
Aramco's supercomputer The new supercomputer points to one of Aramco’s biggest achievements in its digital transformation journey that are reshaping primary operations, ramping up efficiencies and bolstering its industry leadership in the field of geoscience.
Will Aramco’s supercomputer enhance E&P? Saudi companies Aramco and STC have introduced a new supercomputer known as Dammam 7. The supercomputer is ranked among the top 10 most powerful ones in the world. That said, the supercomputer has also paved the path for Aramco to strengthen its areas such as development and exploration and also enhances the company’s decisionmaking process in those areas. The new supercomputer points to one of Aramco’s biggest achievements in its digital transformation journey that are reshaping primary operations, ramping up efficiencies and bolstering its industry leadership in the field of geoscience.
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The supercomputer is developed in partnership with a subsidiary of STC, Solutions at the Dhahran techno valley. CRAY, a Hewlett Packard Enterprise subsidiary, has also provided support to develop Dammam 7. The super computer is powered by 55.4 petaflops of peak computing power, where it can process and imagine the world’s largest geophysical datasets seamlessly.
Foxconn in Vietnam
Vietnam grants licence for Foxconn’s new plan The Vietnamese government has provided a licence to a unit of Taiwan’s Foxconn Technology for new developments. The company is planning to establish a plant worth $270 million to manufacture electronics such as laptops and tablets. The plant will be established by Fukang Technology in the northern province of Bac Giang. The plant is expected to manufacture eight million units on a yearly basis. It is reported that Foxconn has invested $1.5 billion in
The company seeks to diversify production in the wake of the trade war between the US and China.
Vietnam so far. It also aims to invest another $700 million and employ 10,000 local workers this year. It is reported that the company is also planning to invest in Vietnam’s capital Hanoi. The development is expected to be worth $1.3 billion and will be carried out in the Thanh Hoa province. Foxconn is planning to shift some of its iPad and MacBook manufacturing units from China to Vietnam at the request of Apple. This is because the company seeks to diversify production in the wake of trade war between the US and China. Manufacturing has been accelerating steadily in Vietnam over the last eight years due to the availability of labour at cheaper costs. Vietnam has become the hotbed for investments.
Huawei ramps up investment in local chip manufacturers Huawei Technologies has increased its investment in local chip manufacturers in the wake of the crackdown by the US government on the company. The world’s largest telecom equipment maker and the second largest smartphone manufacturer is in talks with several chipmakers for investments and also striving to manufacture its own chip design development. The company has been boycotted by the majority of its global suppliers since the US imposed trade restrictions on the use of its technology. Even non-US firms are skeptical to supply equipment to Huawei. Huawei has acquired stakes in companies related to semiconductor in 2020, media reports said. More than half of the deals were secured over the past five months. The investment covers the chipmaking segment currently dominated by economies such as Taiwan, South Korea, Japan and the US. The investments by Huawei and the targets underscore its ambitions to ramp up production despite trade restrictions and strengthen development. It is reported that the company is developing a small-scale chip production line for research purposes in Shenzhen. Global Business Outlook | Jan 2021| 81
News
Technology
US households' response to smart devices Many households in the US have been against the purchasing of smart devices, according to a survey. It is reported that about 46.7 million broadband households are not ready to buy a smart home device, according to a survey carried out by market research and consulting firm Parks Associates. The survey found that 20.5 million households, equivalent to 44 percent, said that devices are expensive to purchase. That said, 17.7 million households or 38 percent did not find the gadgets’ useful. The remaining 16.3 million households or 35 percent of respondents expressed their concerns over data privacy and other related issues related to the devices. Another survey by IDC indicates that price sensitivity also played a major role for the backdrop. It is reported that pricing is one of the chief reasons for discouraging consumers
to purchase a smart device. Currently, there are more low-cost devices that are beginning to hit the market. Apart from the cost, privacy issues also remain a concern for consumers in devices such as speakers and cameras. Other factors such as interpretability and flexible usage can also be considered as reasons for them to refrain from acquiring them.
China seeks to curb tech monopoly The Chinese government has been stringent towards companies such as Alibaba and Tencent as they are looking to dominate the technology industry, affecting the mainland’s existing financial system. However, the government cannot
82 | Jan 2021 | Global Business Outlook
impose strict regulations on the companies due to their strong presence on the global front. The government is looking to use its digital Yuan as a weapon to stop the IT firms’ expansion by depriving them of their payment operations.
17.7 million households or 38 percent did not find the gadgets useful. The remaining 16.3 million households or 35 percent of respondents expressed their concerns over data privacy and other related issues
Alibaba has already started to rollout its consumer loan business through Alipay (Ant). Additionally, it also undertakes credit examinations through artificial intelligence. If it becomes successful, then it could become more powerful than the banks. The Chinese government has indirectly halted Alibaba’s technology ambitions by postponing Ant’s listing. It is believed that the government is planning to introduce strict measures which could jeopardise the expansion of Alibaba and other IT companies in the future. The Chinese government had initially supported Alibaba’s cashless payment services as a technology that could transform the finance and distribution sector. As a result, the services sector has flourished.
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Global Business Outlook Awards Global Business Outlook Awards seeks to recognise and reward excellence in businesses around the world. It is designed to facilitate the outstanding work of businesses and business leaders across industries. Global Business Outlook Awards extend to the private and public sector—again, marking a testament to the work of a myriad businesses in terms of performance, innovation and drive to create industry value. What is interesting about Global Business Outlook Awards is its expansive focus on businesses of all sizes, in both broad and niche sectors. Essentially, this could create competitive advantage for smaller market participants as well as larger firms adopting international models and techniques into their business strategies to create exceptional value. All businesses that operate at a regional, national or international levels are eligible to nominate for the Global Business Outlook Awards. In fact, these businesses will compete against those organisations or individuals based out of their own country. Thus, all participants are requested to specify the region of their business operations while submitting their application for Global Business Outlook Awards. It is of utmost importance that the process for selecting the winners for the Global Business Outlook Awards is carried out in an efficient manner. For that reason, the jury will consider all applicants during the first two weeks of the month and the winner applicants will be personally informed within six weeks. Global Business Outlook Awards prides itself on an efficient, fair and prompt judicial process. The outcome of the results will be announced at the earliest. All Global Business Outlook Awards winners will be entitled to their winnings for a period of 12 months. As we know, the world is growing at a fast pace. This means there are stories that need to be told to build exposure and knowledge on a deeper level. In this context, Global Business Outlook has established a meaningful focus on covering new developments in banking and finance, energy, industry and technology in markets covered by the publication.
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uab bank Limited Myanmar
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Best Bank for Use of Technology Absa Bank Zambia Plc Zambia
Best Digital Banking Platform Stanbic Bank Zambia
Best New Banking Product - Digital Loans Stanbic Bank Zambia
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GBO AWARDS