01_The Global Investor_Summer_Edition_2020

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Romain Gerardin-Fresse

The Man of 2020 “Why companies are turning to the award winning crisis management strategist”

Globalization • Cybersecurity • Supply Chain Finance • Artificial Intelligence Future of Airlines • African Industrialization • Tokenization • 5G • Covid Crisis • Change Management • Blockchain Technology

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Table of contents 8 10 14 16 18 20 22 24 26 33 34 40 42 44 50 53 56 58 60 62 64 65 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 100 101 106

News Blogger The remaking of Elusive Elon Musk ‘Denmark’s supply chain finance programme targets business bounce back with $55bn working capital injection.’ Atradius and Kemiex shake-up the raw material trading landscape in pharma, veterinary, food and feed How AI can save JOURNALISM Why Africa should focus on industrialisation to increase free trade Integrating urban and rural safety nets in Africa during the pandemic Interview - Romain Gerardin-Fresse The challenges and complexities of restarting a business after lockdown The Future of the airline Industry Strong Real Estate Sector Despite All the Challenges: Qatar Shows Us How Global Trade is Not the Same Anymore: How New Trends and Demands Changed the Game Interview - Graham Bright Health and Wealth: The Covid Crisis Coronavirus shaking up Globalization Digital and Physical Worlds Set to Collide as Cybersecurity Takes Center Stage Why now is the time to Tokenize the World AI In Banking: Hype Or Revolution The implications of Brexit for the UK Economy Global stocks rise after Trump holds back on China retaliation Interview - Thomas Dunstan A Hub for the Global Enterprise: Why You Should Consider Starting a Business in Bermuda 3D Printed Drugs - A Godsend European Commission announces targeted “quick fix” amendments to EU banking rules Putting change management at the heart, and start, of hr projects Your Brand: What’s at Risk? Dark Clouds Over EU’s Manufacturing Industry: Worst Numbers in Six Years The Revolution of 3d Printing Blockchain Technology and the Banking Industry: Changes Are Here and Here To Stay Interview - Steven Koch EU budget chief seeks backing for business levy to fund recovery Ireland Railing Against deficit and job losses Brazil’s investors withdraw en masse for fears of Bolsonaro Glimmer of hope as UK economy starts to emerge from the ashes: Majority of businesses have a positive outlook for next 12 months Estonia: A small country that conceals great digital possibilities Virgin Atlantic Bailout Rejected in isolation: 24 strangers, 1 COVID-19 APP, and 6 lessons on ‘how to fail successfully’ as a tech entrepreneur Operational Risk expert on the real cost of businesses returning to ‘normality’ A phantom risk? Tesla’s Elon Musk Spearheads Anti-Lockdown Movement



M A G A Z I N E Managing Editor Amr Shabana Deputy Editor Anthony Ricketts Associate Publisher Paul Matthews Features Editor Patricia Cullen Head of Production Vladimir Mladenovski Head of Design Vladimir Mladenovski Subscriptions Manager Peter Knowles Head of Business Development Rob Shaw Advertising Sales Vaneesa Beeley, Tara Duckworth , Andy Ellis, Mark Holburn, Derek Ryan, John Power Contributing writers Peter Nicol, Patricia Cullen, Richard Fitzpatrick, Bala Murali Krishna, Shilpa Meen, Argee Laraya, Gordana Ristic, Jonathan Hooker, Jose Ignacio Latorre Head of Digital Stephen Scott Photographer Ben Fisher Publisher Pan European Publishing Ltd Contact The Global Investor Studio F 26 Lewin Road London SW166JR Phone +44 2032902473 www.theglobalinvestor.com e-mail Info@theglobalinvestor.com

the global investor

Lufthansa and Germany Agree on a Rescue Deal After extended talks, Lufthansa and Germany have finally reached an agreement regarding the rescue plan for Europe’s second-largest airline by passenger numbers, with a deal worth a bit more than $10 billion. The German airline has been severely affected by a decline in travel due to the coronavirus pandemic and also had to close its budget airline Germanwings in April. The German government will take a 20 percent stake in the company, which it intends to sell by the end of 2023. As part of the rescue package, the government will also inject $6,4 billion in non-voting capital, also known as a “silent-participation“. The deal makes the German government the company’s biggest shareholder.The bailout deal is the result of weeks of talks between Lufthansa and the German government about financial aid and will Tesla and Virgin Galactic Stocks Rise The summer of 2020 started more than impressive, help save up to 10 thousand jobs, but it still has to be as the world witnessed the first launch of a US-based approved by the company’s shareholders and the Eurospace mission in nearly a decade.A partnership between pean Commission. NASA and Elon Musk’s privately held launch company SpaceX was responsible for sending two astronauts to the International Space Station. After the successful The US to Borrow a Record $3 Trillion launch, SpaceX became the first company ever to send to Support the Economy astronauts into space on a commercial flight. As the The US government stated it plans to borrow a record company isn’t publicly traded, investors found another sum of $3 trillion in the second quarter of 2020 amid way to celebrate, and Tesla recorded almost a 6 percent economic rescue efforts in the country that has been rise in shares. What is more, Richard Branson’s space hit hard by the coronavirus pandemic. The Treasury flight company Virgin Galactic that plans to offer com- Department noted in the statement that “The increase mercial flights into orbit for customers who want to view in privately-held net marketable borrowing is primarily Earth from space, also recorded an immediate 10 per- driven by the impact of the COVID-19 outbreak, includcent jump in shares. ing expenditures from new legislation to assist individAdam Jonas, an analyst at Morgan Stanley, a global uals and businesses, changes to tax receipts including financial services company, noted that “The successful the deferral of individual and business taxes from April launch was arguably the most important milestone in — June until July, and an increase in the assumed endof-June Treasury cash balance.” Last quarter, the Treasthe US space program in nearly 40 years.“ ury borrowed about $500 billion, and it plans to borrow another $677 billion in the third quarter.The US borrows by selling government bonds. It has historically enjoyed Forbes Drops Celebrity from Billionaire List relatively low-interest rates since its debt is viewed as Kylie Jenner’s status as a billionaire has been called into relatively low-risk by investors around the world. question by Forbes. The magazine, which once declared Kylie Jenner a billionaire on its cover, says that she no longer deserves the title and that her company Kylie Cosmetics is smaller and less profitable than she always claimed. In a newly released story, Forbes noted that an examination of financial filings after Jenner sold a majority share in her cosmetics company revealed that her worth was inflated. Jenner sold 51 percent of her company to Coty for around $600 million early this year. “Kylie’s business is significantly smaller and less profitable than the family has spent years leading the cosmetics industry and media outlets, including Forbes, to believe,” the magazine said in the story. “Forbes now thinks that Kylie Jenner, even after pocketing an estimated $340 million after taxes from the sale, is not a billionaire.”



summer edition

Zoom Video Jumps to a Record Market Cap As the coronavirus pandemic has forced many global companies, schools, non-profit organizations, and consumers to start working from home and switch to video conferencing, Zoom Video Communications recorded a jump in shares. The maker of video conferencing software rose 9,7 percent to $179,48 per share, giving it a record high market value of $50,6 billion. The company’s management has also reported that the number of daily meeting participants had exceeded 300 million at the end of April, up from 10 million in December. Eric Yuan, Zoom’s founder, and CEO saw his net worth rise by more than $800 million on the last days of May to $9,3 billion, according to the Bloomberg Billionaires Index. Volkswagen Closes a $2,6 Billion Interestingly, even before the coronavirus outbreak, Investment in Argo AI Zoom’s revenue growth rate was already impressive: German automaker Volkswagen AG has closed a $2,6 during its fiscal year 2020 ending on January 31, revenue billion investment in Argo AI, the Pittsburgh-based jumped to $622,7 million, up to 88 percent year over year. self-driving startup. Argo, founded in 2016 by Bryan Salesky and Peter Rander, is now jointly controlled by VW and Ford Motor Co, which made an initial investment in Argo shortly after it was founded. Details of the Volkswagen investment, which does not include an agreement to purchase $500 million worth of Argo stock from Ford, was announced last July. Argo AI noted that Volkswagen committed $1 billion in funding as well as the transfer of its Munich-based autonomous intelligent driving business, valued at $1,6 billion. “The news not only solidifies our well-capitalized position but differentiates us as the only self-driving technology platform company with partnerships and commercial agreements for deployment across the US and Europe,“ said Argo AI Chief Executive Bryan Salesky and Argo Munich Vice President Reinhard Stolle. Gaming Giant Zynga Acquires Turkey’s Peak Games Amazon’s Jeff Bezos invests in British Logistics Startup US mobile game maker Zynga will acquire Istanbul-based Amazon CEO Jezz Bezos has invested $15 million in the gaming company Peak for $1,8 billion. The purchase British digital logistics startup Beacon Technologies Ltd. includes $900 million in cash and $900 million in stock The startup was founded in 2018 by two former Uber and is expected to boost Zynga’s daily active users by Technologies Inc executives, and it is also a supply chain more than 60 percent. The deal comes as Zynga experifinance firm that provides real-time data of cargo deliv- ences a financial boost due to the coronavirus pandemic. ery and a marketplace view of global shipping costs “We are honored to welcome Peak to Zynga. Peak is and prices. one of the world’s best puzzle game makers and we Sky News noted that the backing of Bezos is a major could not be more excited to add such creative and boost for a company that aims to become a global passionate talent to our company,” Frank Gibeau, CEO leader in logistics and trade finance. Beacon, which pro- of Zynga, noted in a statement. “With the addition of vides logistics services for the global air, ocean, and Toon Blast and Toy Blast, we are expanding our live sertruck freight industries, said it will use the funds raised vices portfolio to eight forever franchises, meaningfully in the Series A round to invest in new hires, technology, increasing our global audience base and adding to our and market expansion.“With digitalization accelerating exciting new game pipeline.As a combined team, we are globally as a result of COVID-19, we believe the future of well-positioned to grow faster together.” the traditional freight forwarder is more precarious than The acquisition is expected to close in the third quarever,” Beacon CEO Fraser Robinson said in a statement. ter of 2020.



the global investor

Innovative turbochargers to become boon for lowering emissions in Europe


utomakers have been utilizing turbochargers in engines for various benefits including lowering vehicle emissions, maximizing power, and complying with stringent regulatory scenario in Europe. Efficient and economical engines have become the central force that drives manufacturers to implement turbochargers in the design. Turbochargers have been implemented in both types of engine, petrol and diesel. Market players have collaborated with other players to improve design and launch new products. In addition, new concepts such as eTurbo have come up, and will gain a considerable demand in coming years. The market in the Europe is booming with production of turbocharged vehicles with rise in fuel prices and stringent regulations. According to the report published by Allied Market Research, the Europe turbocharger market would register a significant growth in the next few years. Following are some of the activities taking place in the European region. Automakers have been trying to introduce their new lineup with the inclusion of turbocharged engines. One of the leading automaker across the world, Toyota, intends to extend lineup of Supra in the European region with implementation of the turbocharged 2.0-litre engine. This inline-four engine is coupled with a ZF eightspeed automatic gearbox. The mill offers nearly 254 bhp (190 kilowatts) of power and 295 pound-feet (400 Newton-meters) of torque. This turbocharged 2.0-litre engine can reach 0–62 miles per hour (0-100 kilometers per hour) in only 5.2 seconds. It reaches the top speed of 155 mph (250 kph) with an electronically governed power. In addition, the less-powered engine reduces the overall weight of the car by 220 pounds (100 kilograms), which enables the car to gain a 50:50 front-rear weight balance with the positioning of mill closer to the center of vehicle. The company’s Supra with turbocharged 3.0litre is already available in the market. However, the 2.0litre engine cannot make up in terms of power the former; this engine would reach the wider customer base for Toyota. In the European market, Renault, one of the leading automakers in the world, launched its 1.0-litre 3-cylinder turbocharged petrol engine. This engine has been developed in collaboration with Nissan. This new turbocharged engine offers 100PS of optimum power along with 160Nm of maximum torque. This engine is complemented with a 5-speed manual gearbox. The company made its two turbo-petrol engines, 1.0-litre and 1.3-litre, available in Europe. The company plans to launch one of these two engines in India if it takes a decision to eliminate diesel engine. The French automaker intends to replace its current 1.5-litre dCi diesel engine with the


1.3-litre petrol engine. In the European market, the company made the 1.3-litre turbocharged engine available in two versions. Its lower-specification version offers 130PS of power and 240Nm of torque; however, the higher-spec version is good for 150PS and 250Nm. The launch of new turbocharged engines continues as the German automaker Volkswagen launched a range of clean diesel engines (TDI) with twin turbochargers. This engine contains low nitrogen oxide emissions (NOx), and complies with the Euro 6 NOx norms. The Touareg V8 TDI offers an efficient and economical engine performance with the inclusion of a variable twin-turbo system. It generates 900Nm of torque at 1,250 rpm using only one turbocharger. This engine is capable of generating a huge torque at low speed. The single turbocharger can lower emissions and consumption. However, the second turbocharger comes into picture only when the vehicle achieves the speed of over 2,200 rpm with the help of an electrical valvelift system. The innovations have led in lowering emissions and consumption along with complying with the European emission norms. With the launch of new models equipped with less-powered engines that offer maximum outputs, some of the companies have been winning contracts for supply of their innovative eTurbo. BorgWarner won the contract from a European OEM for the supply of its eTurbo for passenger vehicles. This becomes the first contract for mass production of eTurbo, which is expected to begin by 2022. eTurbo is made up of mechanical turbocharger with a coupling of electric motor and shaft that acts as generator or motor. This combination provides the benefits related to standard turbocharger along with electrified boost. Joe Fadool, the GM and President of BorgWarner Emissions, Thermal, and Turbo System, stated that the company’s eTurbo offers an efficient and powerful solution that can offer vital benefits such as lowered emissions, improved fuel economy, and efficiency usage of energy. The company outlined that its eTurbo offers more than 200% improved transient boost response in addition to constant state torque. This results in the downsizing of the engine, which in turn, reduce the size of emissions without compromising on performance. In addition, the exhaust energy can be utilized and converted into electrical energy for various purposes such as charging battery. Though the company is supplying eTurbo for passenger vehicles, it expects that this type of turbocharger will be adopted for commercial vehicles in the future. For more information visit: https://www.alliedmarketresearch.com/european-turbocharger-market


spring edition

Partnerships and Rapid Launches Propel the European Market of Robo-Taxis


he advent of ride-hailing apps started a revolution in the taxi industry. While the existing firms have focused on making their service more transparent and modernize, other tech-savvy companies are incorporating artificial intelligence (AI) to give rise to a new force: robo-taxis.

Although the partnership propels the growth of the robo-taxi in the region, it brings more benefits to AutoX. With this partnership, AutoX becomes the second company in the world to be permitted by the California Public Utilities Commission to work on the robo-taxi program and launch of its service, xTaxi.

Thanks to the development in AI and autonomous vehicles industry, the demand for robo-taxis skyrocketed over the last couple of years. According to Allied Market Research, the global robo-taxi market is expected to hit $16.89 billion by 2030 with a CAGR of 74.2% from 2023 to 2030. That’s because of increased demand for fuel-efficient and emission-free vehicles and need for better road safety and traffic control.

Initially, AutoX was focused on developing self-driving vehicles for delivering packages. However, recently the company raised around $58 million from strategic investors and ventures to launch its robo-taxi service.

In a nutshell, robo-taxis or self-driving taxis are nothing but autonomous vehicles that are operated by an on-demand mobility service. A robo-taxi is equipped with several sensors such as LiDAR and RADAR, making the vehicle more efficient to operate. This further supplemented the market growth, especially across Europe, owing to increase in number of startups and surge in investments in the robo-taxi industry by the major market players.

Recent developments across Europe Goggo Network, a Madrid-based startup decides to run a fleet of robo-taxis in Europe within the next five years. Recently, the startup secured €44 million from SoftBank to bring robo-taxis on the roads of Europe. Despite the prominent competitors such as Google’s Waymo and China’s Pony.ai that are way ahead in the autonomous industry, Goggo Network aims to develop a regulatory framework across Europe. On the other hand, increase in partnerships to develop and launch robo-taxis has boosted the market growth in the European region. For instance, AutoX, the autonomous vehicle start-up, and NEVS, a Swedish electronic vehicle manufacturer teamed up to improve the existing autonomous drive technology of AutoX in the architecture of NEVS. With this partnership, the companies aim to deploy large-scale robo-taxi pilots in Europe by the end of 2020. This integration of technologies is inspired by NEVS’s “In-Motion” concept that was shown at CES Asia in 2017. Ultimately, the companies aim to deploy a large fleet of robo-taxis across the globe.


Competitors across the globe Waymo One, Google’s internal self-driving vehicle project is the biggest competitor, owing to its–as per its website–paramount experience with real-world conditions. What’s more, Waymo’s self-driving technology has already reached around 10mn miles on real-world roads. However, Waymo One’s robo-taxi relies on its app, but the company has recently partnered with Lyft, the ride-hailing company, which is expected to help its ecosystem. Another strong competitor is Tesla. Although the vision of the company about the future of the robo-taxis is slightly different from the rest, the company plans to launch its autonomous ride-sharing network by the end of 2020. The company aims to create a distributed network of personally-owned vehicles to be used as a taxi when not in use by their owners. This strategy offers one crucial advantage over other competitors that it uses the existing fleet of vehicles that can be upgraded through software. What’s more, according to Elon Musk, the company would have over a million robo-taxis on the road within a year. Tesla plans to earn around 25% of the revenue generated by this service and the rest would go to the vehicle owners. Keeping in mind the ever-increasing pollution across the globe, ride-hailing is bound to change the way we travel. Furthermore, the benefits of AI and advancements in autonomy would make the robo-taxis the future of transportation for sure. For more information visit: https://www.alliedmarketresearch.com/robo-taxi-market


the global investor

Ease, Comfort, and Convenience - Wireless Chargers for Electric Vehicles Define the Same


fter the modern battery was designed and developed in the year 1800, battery technology has actually come a long way indeed. Ever since then, the technology has been thrived and evolved into something that could probably protect and safeguard our species as well as planet. When there are a number of benefits of using batteries, still several other concerns make them quite annoying and exasperating to use. Charging, among them, is one of the main issues. Charging a car might sound to be simple, but range issues and the availability of proper charging infrastructure can create a big impact on the same. However, with the running drift of time, there’s been huge advancement in technology, and many companies have come up with wonderful electronic cars integrated with amazing wireless charging technology. However, a residential street in London has recently come out as the first ever road in the United Kingdom to propound a complete EV charging solution for its citizens. The joint venture of two renowned companies namely Siemens and ubitricity has instigated a solution that has proved to be immensely helpful to innumerable denizens in the city. With around twenty four lampposts along 800m of Sutherland Avenue converted into high-end EV charge points, driving has become quite hassle-free and convenient for the common people. Monitoring each charging event by the users pretty minutely, the roadside chargers are designed to send invoices to the respective drivers on monthly basis. Based on the amount of utilized power and their electricity cost, the invoices are prepared and then generated to the corresponding individuals. On the other hand, drivers can also take recourse to their own customary charging cables and link through a mobile application that states the QR code on every street lamp, before being owed and portrayed on the basis of kWh. As per Siemens, it takes less than an hour to transform and transmute a street lamp. And, compared to the cost levied to installing a complete separate charging station, this conversion comes out as a cost-effective solution indeed. At the same time, charging an electric vehicle is pretty simple, as long as you know where exactly the well-attuned charging points exist on your ride. Although Google Map is there to pinpoint the available charging station locations, but it doesn’t really provide the suitable payment options or complementary EV community facts and figures. This is one of the reasons one can now avail a plethora of standard and free-to-download EV charging station finder applications in Europe. Nevertheless,


in order to make a payment, you may need to download and check into the operator’s application and follow the relevant instructions. To the users’ utter ease and convenience, most of the apps happen to support a single payment option for multiple charging operators. ChargePoint, PlugShare, Chargemap, NextCharge, and Greenlots are quite a few most popular apps to refer to in this context. Companies like Tesla have also introduced innovative wireless charging solutions that have created a missile in the industry. A recent survey says that Norway has the highest rate of electric car proprietorship in the world. More than fifty percent of new cars sold in the last year were the electronic power-driven ones. An array of lucrative financial inducements and spurs doled out by the government have played a major role in the same. If the same demand for electric vehicles subsists, the country is expected to be on the right track to attain its goal of deducting on fossil fuel cars by the year 2025. According to Allied Market Research, the wireless electric vehicle charging market is expected to grow at a significant CAGR from 2018 to 2025. The wireless charging concept is basically based on the broadcast and radiation of energy from a power source to an electric device without any cords or connections. In a nutshell, wireless chargers for electric vehicles can be considered as a consistent, expedient, and safe technology to power up the electrical and rechargeable vehicles. Moreover, it lays out effective, resourceful, economical, and much secured features over the standard or conventional charging systems by removing the need for physical clamps and fasteners. On the other hand, governments are also giving more focus on the use of electric vehicles as they endeavor to lessen down tail pipe emanations. Emergence of electric vehicles has increased the demand for EV charging stations in more than one way. When the plug-in charging posts take significant amount of time charging the cars, the mobile wireless electric vehicle chargers make it pretty simpler for the operators to power up their vehicles. Catering to the all-inclusive needs of the users, wireless charging applications have now become highly preferred by both the commercial fleet and the personal car owners, thereby fostering the global market to a considerable extent. To sum up, it can be stated that the market has started growing pretty fast, and in the next few years to come, it would mount up yet more. For more information visit @ https://www.alliedmarketresearch.com/wireless-electric-vehicle-charging-market


spring edition

Ride Hailing Services has Become More Versatile: Companies to Offer Numerous Services Amid Covid-19


he advent of technology has offered a lot to the world. There could barely be any area left without the impact of technology. Moreover, transportation has been amongst the major areas, where technology has played an essential role. In the same way, the emergence of ride-hailing services has started a revolution in the taxi industry. Ride-hailing service is a current way of getting a private taxi for transportation. This service has completely eradicated the conventional way of a taxi ride. Where on one hand the companies are focusing on offering transparent and modernize services to the customers. On the other hand, various firms are making the headway in the transportation sector using different strategies based on technological advancements, and IoT solutions. No denial of mobile applications, in today’s world has come out to be a key to luck. Using mobile applications and services to improve the transportation experience is implausible. Moreover, mobile applications have majorly contributed to bringing advancements in the transportation industry. Such online platforms aid ride-hailing services to be more useful. Furthermore, the application allows the customer to hail a vehicle anytime anywhere, along with offer a door-to-door service. Which makes it one of the most comfortable means of transportation. Likewise, the ride-hailing via applications also exchange the information of the passenger and the driver making the services safer than conventional ones. The development & advantages and trend of on-demand transportation have lead the growth of these services to be escalated, in the last few years. According to a report published by Allied Market Research the global ride-hailing service market has is expected to hit $126.52 billion by 2025 supporting with a CAGR of 16.5% from 2018 to 2025. This is owing to the low rate of car ownership among millennial, and an increase in the trend of mobility as a service. Ride-hailing services have also lead to an increase in employment opportunities in various regions. On the other hand, the rise in the user base for ride-sharing and advancements in connected and automated vehicles and an increase in startup companies as well have supplemented the growth, especially in the European region. All of us have been affected by this year's pandemic; no business could foresee this challenge, let alone the ride-hailing market. However, the market players in the European region have developed several strategies to accelerate the growth of the ride-hailing business. A very well-known and leading ride-hailing company Uber is


taking the initiative to serve people in various ways. After curtailing down the business as per the lockdown regulation, various drivers are struggling to meet their end demands. However, Uber has come out with multiple solutions to serve both its employees as well as customers. After covering various other regions, the cab-hailing company is now serving in the UK as well. Uber, in the UK, has collaborated with online retailer Ocado for food deliveries. Companies in Europe are also integrating with web mapping services. Earlier, in Feb, European leading transportation platform Bolt, assimilated with Google maps in order to expand mobility options. The company announced that its ride-hailing service is now registered with Google maps to enhance the mobility options in London. Along with offering the ride, the tab in Google maps would also provide additional information including the estimated cost of the ride, and vehicle categories along with offers. The estimated pickup and journey time would also be shown via the integration. No denial, ride-hailing services have been way longer with technology. Along with offering an incredible experience ride-hailing has come out to be a cost-efficient and time-saving option as well. Variations in price and increased passengers in public transport have been real issues to opt for ride-hailing services. On the other hand, the time required to get a taxi was unpredictable earlier. Ride-hailing has eliminated the situation of time lapses with improved comfort. And most importantly, all transactions associated with ride-hailing can be done using a mobile application. In addition, to attract the customers the key players also entitle these applications with various offers and discounts. With ride hailing apps, on the other hand, transportation has become a way easier and comfortable. Oneclick on smartphones offers almost everything related to the journey including the estimated time of pick up and departure, distance, and vehicle type. These technological advancements have led the customers to enjoy stress-free rides. On the other hand, it also offers you a chance to rate the journey and service offered by the driver. Most importantly, nobody required to know routes. Visiting a strange address in different cities is no more a problem. Ride-hailing services have eased the lives of millennial. Moreover, with further technological advancements, automated vehicles, and other activities by the market players leads the market to grow exponentially. For more information visit: https://www.alliedmarketresearch.com/ride-hailing-service-market


the global investor

The remaking of Elusive Elon Musk


s you may already know, Tesla’s stock prices have gone through the roof in recent months. This has come as a shock to many who wrote off Elon Musk and his now-thriving company after their rocky start to 2019. There were concerns surrounding demand and profitability, as Tesla posted losses of around $1 billion in early 2019, however their stock managed to bounce back by the end of the year. Not only did it bounce back, it skyrocketed. Share prices reached all time highs, and the company reported profits in the final two quarters. Tesla hit another big milestone when it became the first US automaker to reach a market cap of $100 billion


in early 2020. This number has only increased since then, and means that Tesla is nearly double the size of General Motors and Ford combined, with only Toyota ahead of them. But how did we get here? How did Elon Musk, the company’s CEO and biggest shareholder with a net worth of just under $40 billion, push Tesla out of the darkness and back into the shining light of success? Let’s take a look at some of the recent moves made by Elon and Tesla to figure it out.

the past, and more ambition than competitors and peers as reasons for this. He says Musk’s company poses a very real threat to others who are not able and/or willing to innovate at a pace that matches that of Tesla.

Oppenheimer analyst Colin Rusch’s target price on Tesla went from $385 to $612, which is an almost 60% increase. Rusch cited Tesla’s risk tolerance, implementation of lessons from errors in


summer edition

Despite reporting losses at the beginning of 2019,Tesla proved profitable by the third quarter.This came as a delight to investors around the holiday season.

China Elon decided to take his company to China, with the first vehicles being sold in December 2019. This step is a big one towards the CEO’s goal of Tesla becoming a global automotive company, spreading his electric vehicles all over the world. This move allows the Chinese to avoid hefty tariffs when choosing to purchase American cars. Wall Street has been impressed by Tesla’s rising number of deliveries as well as their new China factory. The company has vowed to improve sales by over a third in 2020 in order to exceed half a million units “comfortably”. In 2019, the company delivered 367,000 vehicles globally. Tesla has plans for its China branch to deliver 150,000 vehicles per year alone.

Underground Tunnels Musk’s drive to innovate and create something that strays from the norm shows both in his desire to create underground tunnel systems, as well as in the final product of his Cybertruck. Unlike the Cybertruck, the tunnels have yet to fully come to fruition. However, this does not mean Musk is done with the idea, as he believes these tunnels could do wonders for congestion. The construction of the first of two tunnels has been completed underneath the Las Vegas Convention Center, and they are set to debut in January 2021. This project is meant to help people get around the convention centre quickly and easily, reducing a 15 minute walk to a 1 minute ride. However, Musk has much bigger plans for these tunnels, with the end goal being to connect Los Angeles with Las Vegas. Some believe this will only spread the congestion, but Musk thinks


“The deepest mines are much deeper than the tallest buildings are tall, so you can alleviate any arbitrary level of urban congestion with a 3D tunnel network.”

for processing costs, however this is not the same as a deposit. For a pre-order to become a successful sale, there is a purchase agreement that must be signed. It has not been revealed how many of the original 250,000 pre-orders and the others that followed turned into actual sales.

The Cybertruck

The Future

When discussing the design of the Cybertruck on a Third Row Tesla Podcast episode earlier in the year, Musk said: “You want to have these things that inspire people and feels different,” Adding: “Everything else is the same, like variations on the same theme.”

The future is looking bright for Tesla, as ARK Investment Management updated their valuation model. The firm has estimated that the by 2024,Tesla’s stock could be priced at a whopping $7000 per share. They also say this could go up to as much as $15,000 in a best case scenario.

people are underestimating the potential of what underground tunnels could do:

His inspiration for the unique design came partially from the car he bought in 2013 that had been used in The Spy Who Loved Me, the classic James Bond movie from 1977. Musk paid just shy of $1 million for the 1976 Lotus Esprit sports car. The failure of the “bulletproof” windows demonstration at the unveiling of the Cybertruck did cause Tesla’s stock to decrease by 6%, however this did not impact the amount of pre-orders made. Musk announced on Twitter near the end of November 2019 that there had already been 250,000 pre-orders. It’s important to note that a pre-ordering a Cybertruck only costs $100

While the company has yet to be profitable on an annual basis, the third and fourth quarter of profitability last year gives hope to Tesla and its investors that it will continue on this path. The company is not looking to be a niche manufacturer, but rather a global electric-vehicle producer.This transformation is looking more and more promising as the stocks have seen an increase of almost 170% in the last six months. However, the construction of Tesla’s new factory near Berlin has been temporarily halted due to environmental concerns, so this expansion is not without its obstacles.

Possible Issues The coronavirus outbreak could lead to some issues for Musk and his company. While the factory in China has, until now, been seen as a purely positive, smart move for Tesla, that view may change very quickly. The virus has already killed just under 2000 people globally, and has infected tens of thousands all over the world. The spread of the virus is terrifying to people across the globe, and this fear has the ability to negatively impact Tesla’s results. Tesla has been on a steady road to recovery after last year’s rocky start, but will China be its next downfall? 15

the global investor

‘Denmark’s supply chain finance programme targets business bounce-back with $55bn working capital injection.’

Katie Fisher reports

of Economics at Aarhus University Philipp Schröder,


The dramatic slowdown in trade over the past two months has seen many larger organisations extend payment terms to suppliers. According to a recent study by B2B Artificial Intelligence platform Sidetrade, late payments to UK suppliers have soared by 23% since 11th March. This clogging up of cash flow is putting significant pressure on otherwise healthy businesses, and risks slowing down dramatically any potential bounce-back after the current conditions lift. The problem has been made more severe by traditional trade finance

radeshift, in collaboration with EKF, has developed a model that encourages banks to extend favourable credit lines to large organisations with export turnover in order to pay their suppliers earlier. EKF will underwrite these lines of credit. The Danish initiative is being touted as a cost-efficient alternative to government-backed loans and stimulus packages designed to help ease liquidity pressures placed on businesses as a result of COVID. It has also been endorsed by leading academics including Professor 16

insurers threatening to pull out of the market, and government-issued ‘helicopter relief’ money struggles to flow to businesses that would most benefit. By effectively removing the risk and reducing cost elements around access to supply chain finance, it becomes a virtual ‘no-brainer’ for large organisations and their suppliers to use the system. By targeting the top 250 large buyers in Denmark, Tradeshift claims that up to $55bn in working capital can be made available to suppliers between in Denmark from June 2020, to June 2021.


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We spoke to Mikel Hippe Brun, Co-founder of Tradeshift to gain insight into the financing model. Why was it important for Tradeshift to keep the IP open on this model? We have a global pandemic and economic crisis. We have come up with what we believe is a great and very scalable idea. This is not the time to protect ideas that could possibly save the livelihood of millions of people. We just wanted to encourage others to do what we have done in Denmark without fearing that we would chase them down afterwards for IP infringements. That’s it. What’s your prediction for the future of supply chain financing? The model we have just proposed is supply chain financing in its most crude form. It is equivalent to financing supply chains with a shovel. It is highly effective, but it is also a one-size-fitsall model. With nine trillion USD tied up in global supply chains, it has clearly been demonstrated that current practices do not scale. The next generation of supply chain financing can be targeted needs of each individual company. They will have options to choose from, and they will not be at the mercy of their customers’ payment terms and their banking partners’ tight credit facilities. Optionability with regards to supply chain financing is the future, and we are already pretty far.


EKF Director Kirstine Damkjæ has stated: “We want to do our bit to motivate companies to pay immediately, so we’ve made our full arsenal of solutions available to export companies that choose to show their support for suppliers. Under our model companies can pay suppliers ahead of time without compromising their own liquidity”. The Danish initiative is dependant on access to invoicing data exchanged between buyers and sellers to build up an accurate picture of existing invoice liquidity that is eligible for finance. As the technology partner in Denmark, Tradeshift will help businesses deliver the necessary visibility into these transactions to enable the system to roll out rapidly and at massive scale. Companies that rely on paperbased invoices will not be able to access the program.

Tradeshift, a European fintech specialising in supply chain payments, is working alongside the Danish Export Credit Agency (EKF) to create a technologydriven supply chain financing model that will open up muchneeded liquidity to businesses in Denmark.

Tradeshift has kept the IP open on this model, allowing other fintech companies or organisations to provide solutions and help facilitate the digital requirements for the system. While the financing model is currently available only in Denmark, Co-founder and SVP, APAC, for there is no reason why it could not Tradeshift, Mikkel Hippe Brun, says: be introduced in other countries. “The immediate payment scheme Tradeshift is currently in talks with has the potential to become a vital several governments across the support package for companies dur- world who are considering the model ing the corona crisis. Not only is the as a way to make working capital economic potential inherent in itself, available to businesses. An estimated but it also avoids the behavioural nine trillion dollars of working capdeath spiral, where all companies in ital is currently trapped in supply a value chain withdraw their pay- chains globally, due to lack of suitments simultaneously,” able supply chain financing options. 17

the global investor

Atradius and Kemiex shake-up the raw material trading landscape in pharma, veterinary, food and feed An online trade platform designed and introduced by Kemiex and Atradius is revolutionizing the B2B global trade landscape for APIs, vitamins and other food and feed additives by integrating digitalization and credit insurance in a sophisticated network ecosystem.


he annual trade volume for active pharmaceutical ingredients (APIs), vitamins and other food & feed additives is estimated at USD 300 billion, of which approximately 90% are traded based on long-term contracts.With a secular shift of production to China and India and increasingly volatile markets, the share of spot transactions is growing. The new solution brings low and transparent fees structures into the rather secretive spot market brokerage industry. Current trading processes are often time consuming, opaque and limited to personal networks. In this complex environment,


trading network Kemiex and credit insurer Atradius are the first to offer an online trading platform that helps to easily identify reliable and compliant counterparties and conduct trade in a safe way at the click of a button.

Trusted and secure Nowadays, technology and digitalization are disrupting multiple and traditional trade ecosystems progressively and at a fast pace. In line with this trend, the partnership between Atradius and Kemiex is setting new and unparalleled standards for security and trust in B2B marketplaces

for raw materials in the life sciences industries by means of a revolutionary online platform. With this digital solution the future of exchanging raw materials between buyers and sellers on the global spot market are brought in today. The platform aims to decrease the number of touch points in the sourcing process, and yet, secure that all stakeholders comply with restrictions and regulations accordingly.

Combined expertise The Swiss-based Kemiex is an independent online trading platform for commerce of commoditized


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additives, vitamins, amino acids, APIs and other substances for the human and animal health and nutrition industries.With this digital solution the future of exchanging raw materials between buyers and sellers on the global spot market is realized today. The platform aims to decrease the number of touch points in the raw material sourcing process, and at the same time, ensure that all stakeholders comply with restrictions and regulations accordingly. Kemiex’s success and market acceptance are noteworthy and outstanding.The platform has attracted hundreds of B2B companies in the respective sector by now, and its premium network is flourishing rapidly. Atradius, operating across 54 countries, is one of the world’s leading credit insurers and an avid supporter of innovative technologies to serve customers in the most efficient way. Apart from credit insurance, Atradius is also leading in other financial services such as bonding, collections and reinsurance.

transactions occurring on the platform can be insured right away.Atradius will provide Kemiex’s customers credit risk insights and invoice credit insurance for single transactions between traders, sellers and buyers. In order to build a holistic network and assure a high level of trustworthiness and product quality among stakeholders, Kemiex has outlined strict on boarding rules and a quality management system overseen by a qualified person. In addition, the platform has a systematic monitoring structure that renews members’ trade excellence scoring after every finalised transaction.This provides a meticulous account of the entire trade stream by continuously assessing the behaviour and reliability of the transaction counterparts throughout the transaction.

Through the unprecedented strategic partnership with Atradius, transactions occurring in the platform can be insured at a mouse click.Atradius provides Kemiex’s customers credit risk insights and invoice credit insurThrough the first of its kind stra- ance for single transactions among tegic partnership with Atradius, traders, sellers and buyers


Added value Being a Kemiex stakeholder minimizes transaction lead times and allows businesses to offer more competitive prices while staying in full control of trading activities from A to Z. Simultaneously, Atradius is using its years of risk mitigation expertise to provide, through Kemiex’s platform, single invoice insurance and financial insights, supporting Kemiex’s customers in making smarter decisions across their trade deals. The platform has already benefited multiple buyers in the acquisition of raw materials, and they have been able to increase product availability and reduce purchase prices in parallel. At the same time, sellers kept their margins stable. Both effects positively influenced businesses short- and long-term growth. In a world where trade increasingly takes place online, Kemiex and Atradius offer the comfort of doing this in a trusted environment that is ready for the future. Why wait any longer to join? 19

the global investor

How AI can save JOURNALISM

Patrick White, professeur de journalisme, Université du Québec à Montréal (UQAM)


he economic fallout from the COVID-19 pandemic has caused an unprecedented crisis in journalism that could decimate media organizations around the world. The future of journalism — and its survival — could lie in artificial intelligence (AI). AI refers “to intelligent machines that learn from experience and perform tasks like humans,” according to Francesco Marconi, a professor of journalism at Columbia University in New York, who has just published a book on the 20

subject: Newsmakers,Artificial Intel- been closely following the evolution ligence and the Future of Journalism. of this profession since 1990, and I Marconi was head of the media am mostly in agreement with him. lab at the Wall Street Journal and the Associated Press, one of the largest news organizations in the world. His thesis is clear and incontrovertible: the journalism world is not keeping pace with the evolution of new technologies. So, newsrooms need to take advantage of what AI can offer and come up with new a business model.

In Canada, The Canadian Press news agency is, for example, one of the rare media outlets to use AI in its newsrooms. It has developed a system to speed up translations based on AI. The _Agence France-Presse_ news agency (AFP) also uses AI to detect doctored photos.

owners are missing out and AI needs to be at the heart of journalism’s business model in the future. As a professor of journalism at the Université du Québec à Montréal, I have

Artificial intelligence is not there to replace journalists or eliminate jobs. Marconi believes that only eight to 12 per cent of reporters’ current tasks will be taken over by

AI does not replace For Marconi, journalists and media journalists


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Journalism is not keeping up with new technologies, writes Francesco Marconi in Newsmakers, Artificial Intelligence and the Future of Journalism. Newsrooms need to take advantage of what AI can offer and come up with new a business model. AI can also save reporters a lot of time by transcribing audio and video interviews. AFP has a tool for that. The same is true for major reports on pollution or violence, which rely on vast databases. The machines can analyze complex data in no time at all. Afterwards, the journalist does his or her essential work of fact-checking, analyzing, contextualizing and gathering information. AI can hardly replace this. In this sense, humans must remain central to the entire journalistic process.

A broken business model Marconi is quite right when he explains that the media must develop a paid subscription model, get closer to their communities with even more relevant content, develop new products (newsletters, events, podcasts, videos) and new content.AI can facilitate some of this by generating personalized news: recommendations for readers, for example. machines, which will in fact reorient editors and journalists towards value-added content: long-form journalism, feature interviews, analysis, data-driven journalism and investigative journalism. At the moment, AI robots perform basic tasks like writing two to six paragraphs on sports scores and quarterly earnings reports at the Associated Press, election results in Switzerland and Olympic results at the Washington Post. The outcomes are convincing, but they also show the limits of AI. AI robots analyzing large databases can send journalists at Bloomberg News an alert as soon as a trend or anomaly emerges from big data.


In this sense, AI is part of a new business model based on breaking down media silos. There needs to be a symbiosis in the sense of establishing a “close collaboration” between the editorial staff and other media teams such as engineers, computer scientists, statisticians, sales or marketing staff. In a newsroom, more than ever before, databases must be used to find stories that are relevant to readers, listeners, viewers and internet users. And there are already various AI tools available to detect trends or hot topics on the internet and social media. These tools can also help newsrooms distribute content.

Beware of bias Of course, newsroom size must be taken into account. A small weekly or a hyper-local media organization may not have the means to act quickly in adopting AI. But for the others, it’s important to start taking action right away. Journalists need to be better trained and begin to work with start-ups and universities to get the best out of this. AI is not a fad. It is here to stay. Take the current example of COVID19.This is an opportunity to analyze public health data to make connections, analyze and dig into the data neighbourhood by neighbourhood and street by street.AI can help with that. But it takes well-trained data reporters to do this work. One of the dangers of AI, on the other hand, is algorithm bias. Because algorithms are designed by humans, there will always be biases that can alter data analysis and lead to serious consequences.And human verification of content before publication will always remain a safeguard against errors. AI has also helped developing systems for detecting fake videos (deepfakes) and fake news, which are of course supported by experienced journalists from Reuters and AFP, for example. In this sense, the transformation of newsrooms is only just beginning and Marconi’s essay is a must-read for identifying survival scenarios for media organizations and journalists. Because that’s what it’s all about.We need to better equip our newsrooms and completely rethink the workflow to achieve better collaboration and better content that will attract new and paying subscribers. 21

the global investor

Why Africa should focus on industrialisation to increase free trade Michael E Odijie, Post Doctoral esearcher, University of Cambridge

alone could boost intra-African trade by 33% and increase manufacturing in Africa.


This line of argument is that free trade leads to industrialisation and structural change. But in my view it works the other way round: industrialisation leads to free trade.

he African Continental Free Trade Area is a continental agreement which came into force in May 2019. It covers trade in goods and services, investment, intellectual property rights and competition policy. Of the 55 African Union member states, only Eritrea has yet to sign it. The immediate objective of the free trade area is principally to boost trade within Africa by eliminating up to 90% of the tariffs on goods and reducing non-tariff barriers to trade. In 2017, the exports and imports between African countries represented only 16.6% of Africa’s total exports. This figure is low compared with exports within other regions: 68.1% in Europe, 59.4% in Asia, and 55.0% in America. Proponents of the free trade area say that increasing intra-Africa trade will provide larger markets for African producers and encourage manufacturing. It will also help achieve a better connection between production and consumption. The United Nations Conference on Trade and Development argues that the phase of transition to the free trade area 22

Industrialisation should come first Low intra-Africa trade is indeed an indication that African countries do not consume what they produce. But this is a problem of production (product focus), not trade. The export products of most African countries, which follow the colonial pattern, influence the trade strategies, trade agreements and traderelated infrastructure. For example, it is cheaper for Côte d’Ivoire to export products to the Netherlands than to some other African countries. This is simply because Côte d’Ivoire’s main export product is cocoa beans and the Netherlands (as well as France and other European countries) is the main destination for the product. Côte d’Ivoire has developed its trade strategy and infrastructure accordingly. If Côte d’Ivoire alters its production focus, its target

market will be altered and it will build a trade strategy accordingly. African countries have to change their production focus to change their trade focus. For example, Nigeria recently started to export cement products. In my research I showed how this led the government of Nigeria to invest in alternative freight schemes, upgrade terminals and create a cross-border trade facilitation committee to aid the cement industry’s export strategy. It also set up a senior trade committee to resolve the non-tariff barriers imposed by Nigeria’s neighbours and countries of interest to the cement sector. Trade-related infrastructure is specific to the products that countries


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does, the sector will eventually be able to start exporting. At this point, the government will help the sector with trade strategies – finding and accessing a market and create an appropriate trade infrastructure. The free trade area could deprive states of the policy space to select and protect specific sectors. It could create numerous coordination problems when states use their ‘sensitive products’ to pursue industrialisation. For example, industrial policies could be duplicated by countries in the free trade area. This would undermine the advantage of having a large market. There could be contradictory policies, such as one country attempting to reduce intensive agriculture while another seeks to increase it. One country might make decisions that create problems for the industrial policies of other countries.These contradictions have occurred at the regional level, but they are easier to solve when fewer countries are involved.

have to sell. It’s similar to traders renting their shops according to the products they sell. Developing free trade that is not product-based would be like a prospective trader renting a shop in the hope of developing a certain product in the future. The problem with such an approach is that the features of the shop confine the trader to certain lines of business.

GDP has been falling in sub-Saharan Africa over the past three decades.

The problem of coordination

Industrialisation would flourish under the African free trade area if industrial policies were to be implemented at the continental level, as opposed to the state level, with no state sensitive products. But even the European Union has not attained such a high level of integration. And there are political interests that suggest it would be impossible in Africa. There are other obvious problems with the agreement.

One is implementation. Even regional integration in Africa faces hurdles, In my research I showed how the though it involves fewer countries African free trade area could impede and less commitment. Expecting industrial policy through a lack of more than 50 African countries to coordination between the policies of implement free trade efficiently is different countries. idealistic. Nigeria recently closed its This is how industrialisation works: borders, violating both the spirit of Likewise, negotiating and signing a a government decides to promote the Africa Union agreement and the free trade agreement could confine a particular sector (as Nigeria did letter of its commitment to the Ecoa country’s efforts to industrialise. in 2002 for cement) and grant play- nomic Community of West African This is important because manufac- ers in the sector several incentives. States. Sudan, Rwanda, Kenya and turing plays a key role in the pro- These could be a domestic mar- Eritrea did the same earlier this year. cesses of economic transformation ket (through protection), subsidies It is more reasonable to concentrate required for high quality growth, and tax breaks to reduce the risk on building regions and industrialjob creation and improving incomes. of investment. Industrial policy does ising before attempting the African Yet the share of manufacturing in not always succeed. But when it free trade area.



the global investor

Integrating urban and rural safety nets in Africa during the pandemic Astrid R.N. Haas, Policy Director, International Growth Centre and Rachel Strohm, PhD Candidate in Political Science, UC Berkeley


n countries across Africa, the public health restrictions imposed to deal with the COVID-19 pandemic have thrown many people out of work. Cities face the risk of widespread hunger, with the collapse of urban incomes and disruptions in food supply chains. And where there are government-run relief programs, many have only reached a fraction of the people who have lost their incomes. Most African countries are experiencing rapid urbanisation. But this trend can temporarily slow or even reverse during civil war or economic crisis. This is due to the fact that in crisis, as food prices rise and incomes fall, many people turn to farming to support themselves. Migration to rural areas to access agricultural land thus provides an important type of informal safety net. Yet one of the unique challenges of this crisis is that restrictions on movement in and out of cities are being used to curb transmissions. For example, countries such as Ghana, Kenya and Nigeria have prohibited people from leaving major cities, effectively cutting off many from the informal social safety net during this time of crisis. Most African governments are struggling to provide adequate relief to jobless people. Not only COVID19 but also hunger are real risks to public health. Therefore, it is imperative to develop containment strategies that further ensure people do not go hungry. Many African governments lack the financial and administrative capacity to launch new large-scale formal safety net programs. But they


may still be able to run smaller programs which help people safely migrate back to more food-secure rural areas, simultaneously reducing the risk of transmission.

likely that the people who remain can receive other targeted support.

What a safe programme would entail

What might a safe rural migration program look like?

There are a number of important considerations for the design of a The basic idea is straightforward: safe rural migration program. help urban residents cover the First, the safe rural migration costs of returning to stay with their approach is only appropriate for extended families in the countryside, countries which already have adeprovide sanitary supplies to reduce quate food stocks in rural areas. It the risk of infection in transit, and will be difficult for governments to scale up health system surveillance intervene to scale up food producto catch and contain potential rural tion for returnees if it is not already outbreaks early. sufficient. And encouraging people It is important to note that this solu- to migrate to areas which are likely tion will not work for all urban res- to be affected by drought, floods, idents, nor indeed for all African or locusts, will only make it more difcountries. However, in some places ficult to provide assistance to them and if done properly, it could at least later if their harvest fails. take some of the pressure off surviv- Second, people should also only be ing in urban areas, and make it more encouraged to consider migrating if


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Markets in Africa’s cities are central to the food chain. But many had to close because of COVID-19 measures. There is currently no easy way to compare the known risk of hunger in cities like Nairobi, where over 60% of residents in poor neighbourhoods report that they are already going hungry, to the potentially high risk of COVID-19 outbreaks in rural areas. There are major factors to consider if an infected but asymptomatic person does travel back to a rural area. In particular, access to sanitation and healthcare tends to be worse in rural areas, which could result in more rapid transmissions. It’s important for governments to take steps to minimise the risk of transmission. The surest approach would be requiring everyone who wished to travel to pass a COVID19 test before departure.

Scaling up rural health surveillance The recent Ebola epidemics in West Africa and the Democratic Republic of Congo have offered many lessons about containing outbreaks in rural areas. Building on local knowledge, for example, they have helped develop realistic strategies for patient isolation. This needs to be a key component in a policy on safe migration, as all returnees should strongly be encouraged to self-isolate for 14 days after their trip.

Furthermore, ensuring that new outbreaks of COVID-19 are identified and contained quickly will be a further important part of any safe rural migration plan.To do this, healthcare workers must build trust with local communities so that they can carry However, given that African coun- out proper surveillance on the spread tries have struggled to scale up test- of the disease.These types of surveiling even for frontline health workers, lance and support can build on comIt isn’t feasible for governments to it is unlikely that a mass testing pro- munity health worker systems which independently verify whether people gram for rural returnees could be already exist in many rural areas. will have a place to stay in a rural organised quickly enough. Safe rural migration programmes will area if they’d like to migrate. But one A second-best strategy would be to not be an adequate substitute for forway to handle this issue is to have organise safe travel for the return- mal social protection, or for support the government provide only small ees. At an individual level, this would to both urban and rural food syssubsidies to cover the cost of a one- involve providing them with masks tems. Furthermore, given the potential way bus ticket. This will encourage and hand sanitiser. health risks, any migration plan should people to travel only if they believe From a public transport perspective, be piloted on a small scale first. Govthey can find a place to stay at the it would ensure regular disinfection ernments should make sure to colother end. of selected transport modes and lect regular data on food security and This subsidised-ticket approach has collection points, as well as arrang- public health in the participating rural recently been studied in Bangladesh, ing transport on buses, rather than areas, in order to make sure that the albeit to encourage urban migra- lower capacity vehicles, that would program is working effectively. tion rather than rural, and before allow adequate ventilation and two But there are no simple solutions for the pandemic began. meters of distance between each the COVID-19 pandemic. Time is of passenger. Governments could also the essence – to contain new infecReducing public health offer to temporarily cover some of tions, and to prevent people from the costs of bus companies running going hungry. This is just one idea risks in rural areas that could buy some African govA safe migration program must at half capacity. also consider the potential trade-off People wishing to return to rural ernments time, in the absence of an between reducing food insecurity in areas should also be provided with effective vaccine, to begin developcities, and increasing the risk of the information about the risks of trans- ing more formalised support provirus in rural areas. This is a difficult mission and the importance of hand- grammes, while importantly also keeping people from going hungry. decision. washing and phyisical distancing. they have an extended family support network already available in a rural area. This way, the extended family can help to provide housing and access to farmland for new returnees. If people travel to a rural area without a place to stay or access to land, this could create a new rural poverty crisis.



the global investor

int er v i ew

Romain Gerardin-Fresse “Man of 2020�



in t er v i ew Q You once mentioned that throughout your working life your role has been to advise business leaders, and that in some sense you have always been a counsellor. Would you say that this comes naturally to you? I see the notion of being able to advise others as a real asset. I like my job. Humanly and intellectually, my function is extremely enriching. The hindsight that we must have and the omniscience that we must demonstrate are all concepts that educate personal character and allow us to further enhance our development. Maintaining a foolproof self-control in order to be able to support a client, whatever the difficulty they are going through and the challenges they have to face, forges an armour which gets further reinforced whilst the business gets handled. We must not overlook the pressure that advisors face, particularly when the clients are prominent figures, governments or have an important reputation to uphold. There is no place for error, regardless of the client. The rigour that governs our mission is the same as that which we owe to ourselves. But intellectual gymnastics, through the study of the doctrine and researching jurisprudence in order to relentlessly support and defend a position, is almost enjoyable.

Q Vous avez dit un jour que, tout au long de votre vie professionnelle, votre rôle a consisté à conseiller les chefs d’entreprise et qu’en un sens, vous avez toujours été un conseiller. Pourriezvous dire que cela vous vient naturellement ? www.theglobalinvestor.com

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The Global-Investor catches up with our front cover featured “Man of the 2020” and multiple award winning Romain Gerardin-Fresse founder and Ceo of Gfk ConseilsJuridis. He has been in the spotlight a lot of late and featured throughout global media and business press due to his unique services that his firm offers to global business organizations and business leaders. His reputation for helping companies through crisis to his uniques strategies when restructuring is reaching dizzy heights amongst the business community. To pay tribute to this French jurist, we chose to publish the interview in French and English.

Je conçois la notion de pouvoir conseiller autrui comme un véritable atout. J’aime mon travail. Humainement et intellectuellement, ma fonction est extrêmement enrichissante. Le recul que nous devons avoir, l’omniscience dont il faut faire preuve, sont autant de notions qui éduquent le caractère personnel et permettent d’accroitre par ailleurs son épanouissement. Conserver un self control à tout épreuve afin de pouvoir soutenir son client, quelle que soit la difficulté qu’il traverse et les assauts qu’il doit affronter, forge une carapace qui se renforce avec les affaires traitées. Il ne faut pas négliger la pression que conseiller induit, a fortiori lorsque les clients sont des personnalités de premier plan, des gouvernements ou jouissent d’une notoriété. Le droit à l’erreur d’ailleurs n’existe pas, quel que soit le client. La rigueur qui régit notre mission est la même que celle que l’on se doit à soi-même. Mais la gymnastique intellectuelle, par l’étude de la Doctrine et le recherches de jurisprudences qui permettront d’étayer implacablement une position à défendre, est presque jouissive.

Q Being a counsellor and having a crisis management company also means sometimes having to make tough decisions and stand by them. What has been the hardest decision that you have had to make for the company? I always refuse to give specific examples of cases I have dealt with, firstly because confidentiality is an extremely important notion to our clients and it would be unbearable if one of them recognised himself in an interview that I have given, but also because the presentation of a decontextualised situation can always appear partisan. 27

int er v i ew

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de conseil, et avons posé un postulat différent de ce qui était connu L’enjeu est de pouvoir appréhen- jusque lors, en cherchant à lever les The most unbearable is having to der une situation avec omniscience, barrières qui rendaient hermétiques nombre de professions pourtant telchoose between two paradigms, comme je le rappelais avant. each as important as the other when Ne pas se laisser emporter par ses lement mutuellement bénéfiques et taken indifferently, but because it is émotions, et agir de manière prag- dont la synergie de l’inter entrainement est parfaitement vertueuse. our mission, and because it some- matique. times depends on the sustainability Cela a pu froisser certains à la vision or the resolution of a situation that Là est parfois est la plus difficile des rétrograde, qui séculairement consihas become problematic, we must décisions. déraient qu’ils pouvaient avoir le decide against one or the other. E.g. monopole. the famous ‘train track dilemma’ of Q You established Gfk ConseilsMais comme tous, ils se sont vites Juridis back in 2017, and Philippa Foot. rendus à l’évidence, et ont fini par since then the company has The challenge is to be able to grasp considérer que c’était l’exacte défiexperienced phenomenal a situation with omniscience, as I nition du conseil de demain : said before. To not get carried away success. Looking back on La multidisciplinarité et le service by your emotions, and act pragmatthose three years, what were continu de qualité. ically. the biggest challenges that Là est la réelle attente du tout à This is sometimes the most difficult both you and the company chacun. decision. That said, in general, it is a dominant and recurring theme that is unquestionably the hardest aspect:

Le fameux dilemme du tramway de Philippa Foot.

have had to overcome?

Quite frankly, there have been very Q You once said that you wanted few difficult challenges. We have to build a company that developed a new concept of advice, could serve any business, in and have posed a different proposiany situation, in every way tion by seeking to remove the barripossible. ers that tightly sealed many profesCould you say that this is what sions which were in fact so mutually beneficial and whose synergy of makes Gfk Conseils-Juridis inter-training is perfectly virtuous. different from other crisis management companies? Je me refuse toujours à donner This may have offended some professionals with a more retrograde And after three years, do you un exemple d’une affaire traitée, think that the company has d’abord parce que la confidentialité vision, who secularly considered that est une notion extrêmement chère they could have a monopoly. achieved this intention? à nos clients et qu’il serait insuppor- But like all of them, they quickly saw I definitely believe it, and the numtable que l’un d’entre eux se recon- the obvious, and ended up realising bers speak for themselves. An exponaisse dans une interview que j’au- that this was the exact definition of nential growth in turnover, three rais donnée, mais aussi parce que the council of tomorrow: new geographic destinations per l’exposé d’une situation décontex- Multidisciplinarity, and continuous year, and a clientele that is growing tualisée peut toujours apparaître quality service. week after week, both in terms of partisane. That is everyone’s real expectation. volume and in the customer profiles Ceci étant, de manière générale, il who trust in us. est un leit-motiv qui demeure sans Q Vous avez créé Gfk ConseilsOur missions, diverse as they are conteste ; Juridis en 2017. Depuis, la in their essence – whether it is the Le plus insupportable est de devoir administration of a football club, the société a connu un succès choisir entre deux paradigmes aussi international development of prophénoménal. importants l’un que l’autre pris indifAvec le recul, sur ces 3 années, motion for real estate behemoths, féremment. the emergence of a new brand of quels ont été les plus grands perfumes and haute couture, the Pourtant, parce que c’est notre misdéfis que l’entreprise et vousrestructuring of a multinational or sion, et parce qu’il en va parfois de la même avez dû relever ? the drafting of a bill – they all come pérennité ou de la résolution d’une situation devenue problématique, il Très honnêtement il y a eu très peu together in terms of approach and faut trancher en défaveur de l’un ou de défis difficilement surmontables. semantics: auditing, understanding, Nous avons fait évoluer la notion finding, solving, treating, preventing. de l’autre.

Q Être un conseiller - et avoir une entreprise de gestion de crise - signifie aussi parfois devoir prendre des décisions difficiles et les soutenir. Quelle a été la décision la plus difficile que vous ayez eu à prendre pour une entreprise ?



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Q Vous avez dit chez un de nos confrères il y a quelques temps que vous vouliez créer un cabinet qui pourrait assister n’importe quelle entreprise dans n’importe quelle situation, quelle qu’en soit la manière. Pourriez-vous dire que c’est ce qui différencie Gfk Conseils-Juridis des autres sociétés de gestion de crise ? Au bout de 3 ans, pensez-vous que l’entreprise a atteint son objectif ? J’en suis intimement persuadé, et les chiffres parlent d’eux même. Une croissance exponentielle du chiffre d’affaire, trois nouvelles destinations géographiques conquises par ans, et une clientèle qui s’étoffe semaines après semaines, tant au titre du volume que des profils de clients qui désormais nous accordent leur confiance. Nos missions, aussi hétéroclites soient-elles dans leur essence, qu’il s’agisse de l’administration d’un club de football, du développement à l’international de mastodontes de la promotion immobilières, de l’émergence d’une marque de parfums et de haute-couture, que de la restructuration d’une multinationale ou la rédaction d’un projet de loi, se rejoignent toutes dans l’approche et la sémantique : Auditer, comprendre, trouver, résoudre, traiter, prévenir.

Q Speaking about the extraordinary success of the company, it has won many awards – Best Business Law Firm and Luxury MultiFamily Office 2019 and 2020, Luxury Crisis Management Firm of the Year 2019, Best Reputational Consultancy Law Firm 2020, and many others. As you see it, what is the main secret behind the company’s success? www.theglobalinvestor.com

Rigour. I am extremely uncompromising. Sometimes even an extreme perfectionist.

seek the answer, we dig deep, we rely on external logistical support in order to be able to meet the request.

But I consider that in such a demanding field, with high-profile clients, mistakes are not allowed. Availability is also an asset particularly appreciated by our customers. We are all reachable every day of the week, including at night: jet lag requires this.

Nothing is impossible for Gfk Conseils-Juridis!

When a request is out of the ordinary – and it happens regularly – we

Reliability is priceless, as is hard work.

The median fee rate of the firm is certainly high, but our fees are unanimously accepted by each of our clients as they reflect the quality of the service provided.


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Q Parlez-nous du succès extraordinaire du cabinet. Il a remporté de nombreux prix - Meilleur cabinet juridique d’affaires et Multi-Family Office de Luxe 2019 et 2020, Cabinet de gestion de crise de luxe de l’année 2019, Meilleur cabinet de conseil en réputation 2020, et bien d’autres. Selon vous, quel est le principal secret du succès du cabinet ?

title and “Strategist of the Year 2020” by European Business Magazine. You even received a letter of congratulations from a President of the Republic for your career and were decorated by heads of government. Are there any specific qualities that you need, more than others, to succeed in your job? “Heavy is the head that wears the crown,” as Shakespeare said!

La rigueur.

Having the recognition for the work Je suis extrêmement intransigeant. one has done is obviously extremely Parfois même perfectionniste à l’ex- satisfying. This is an extension of all the efforts and requirements I instil trême. in the company. Mais je considère que dans un domaine aussi exigeant, avec des But the reputation this brings induces clients à hauts profiles, l’erreur n’est us to consistently maintain this level of quality at its maximum, and to pas permise. always further perfect and improve La disponibilité est également un the missions we carry out. atout particulièrement apprécié par Legal monitoring and real-time studnotre clientèle. ying of current events and geopoliNous sommes tous joignables tics are also an absolute necessity; chaque jour de la semaine, y comthey allow us to constantly adapt Cela nécessite-t-il des pris la nuit, décalage horaire oblige. to the immediate evolution of situaqualités spécifiques Lorsqu’une demande sort de l’ordi- tions and to refine our strategy. supplémentaires, dont vous naire, et cela arrive régulièrement, To be considered one of the best nous cherchons, creusons, nous avez davantage besoin que requires remaining so, or you risk facappuyons sur des soutiens logisd’autres dans votre travail ? ing the penalty of being dishonoured! tiques extérieurs afin de pouvoir « Lourde est la tête qui porte une donner satisfaction. couronne » disait Shakespeare ! Q Vous êtres l’un des 10 À l’impossible nul n’est tenu, sauf Gfk Avoir la reconnaissance du travail meilleurs experts juridiques Conseils-Juridis ! fourni est bien évidemment extrêd’Europe et vous avez mement satisfaisant. Le montant médian des honoraires également remporté du cabinet est certes élevé, mais C’est le prolongement de tous les beaucoup de récompenses, unanimement accepté par chacun efforts et de l’exigence que je m’atdont le titre de « Conseil en des clients, en ce qu’ils reflètent la tache à insuffler. Droit bancaire et financier de qualité du service apporté. Mais la renommée qui en résulte l’année 2020 » par Business La fiabilité n’a pas de prix, si ce n’est induit devoir maintenir ce niveau de Worldwide Magazine et qualité à son maximum, et toujours celui de l’ardeur. de « Stratège de l’année perfectionner davantage les missions conduites. » par European 2020 Q You are named as one of Business Magazine. Vous La veille juridique et l’étude en temps the top 10 legal experts in avez même reçu une lettre de réel de l’actualité et de la géopoEurope and have also won litique sont aussi une nécessité félicitations d’un Président quite a few awards yourself, absolue ; elles permettent de coller de la République pour votre including Business Worldwide constamment à l’évolution immédiate carrière et avez été décoré par des situations et d’affiner notre straMagazine’s “Banking and Finance Lawyer of the Year” tégie. de chefs de gouvernements. 30


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Les clients nous accordant leur confiance, ils saisissent tout à fait que nous suivons un schéma bien réfléchi. Je n’ai pas, et je mesure ma chance, de difficultés relationnelles à déplorer. Ceci étant, il est parfois plus simple de s’adresser à un décideur unique, que de devoir composer avec une flopée d’intervenants, tous investis d’un pouvoir de décision, et qui doivent conjointement se prononcer.

Q Last year, Gfk Conseils-Juridis expanded by opening offices in New York and Dubai. What destinations do you have in mind next? Also, are there any new projects coming up in the near future that you are particularly excited about?

Être considéré comme l’un des meilleurs oblige à le rester, sous peine de s’en trouver déshonoré !

Q You get to work with many interesting people – from wealthy individuals, celebrities and royal families to certain governments and leaders of large international groups. Do you prefer working with individuals, or companies?

than to have to deal with a slew of stakeholders, all of whom have decision-making powers and who must jointly decide.

Q Vous travaillez avec de nombreuses personnes intéressantes – depuis de nombreux individus fortunés, des célébrités et des familles royales jusqu’à certains gouvernements et dirigeants de grands groupes Different profiles induce different speinternationaux. cificities. I would say that I have no real preference for one or the other. Préférez-vous travailler avec des individus ou des We set our pace. This is one of the conditions of our intervention. entreprises ?

Our firm is a truly high-end multifunctioning tool that meets even the slightest requirement of its customers. Our role is to absorb the problems encountered by our customers and then dissect, analyse and solve them, without neglecting any aspect. This is why we strive to surround ourselves with the best collaborators and partners in the fields of law, taxation, accounting, communication and auditing. We have one of the most developed and effective relationship networks, whether it be business, political or diplomatic circles. And we will continue to further strengthen them. We are able to solve problems, define short-, medium- or long-term strategies, and support our clients in their international growth and development.

Des profils différents induisent des spécificités différentes.

And the confidence of our customers is growing.

Je dirais que je n’ai pas de réelle préI do not have, and I measure my luck, férence pour l’un ou pour l’autre. any relationship difficulties to regret. Nous imposons notre rythme. C’est That said, it is sometimes easier une des conditions de notre interto address a single decision-maker vention.

We record double-digit annual growth, and we are expanding our group internationally by strengthening our presence in these destinations.

Customers trust us, and they understand that we follow a well thoughtout scheme.



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Having opened an office in Dubai and New York in 2019, we will now open one in London and Singapore this year, in order to meet the high demand from the British and Asian markets. We are a multi-functional support that encompasses the most demanding new tax, legal and financial strategy. This is why we constantly seek to broaden our service panel so that our offer is as complete and complementary as possible, and at the highest level.

Notre cabinet est un véritable outil multifonction haut de gamme qui répond à la moindre exigence de ses clients. Notre rôle est d’absorber les problèmes rencontrés par nos clients pour ensuite les disséquer, les analyser et les résoudre, en ne négligeant aucun aspect.

Q L’année dernière, Gfk Conseils-Juridis a ouvert des bureaux à New York et Dubaï. Quelle destination avez-vous en tête pour la suite ? Y a-t-il de nouveaux projets dans un avenir proche qui vous intéressent particulièrement ?

Nous disposons d’un réseau relationnel parmi les plus développés et les plus efficaces, qu’il s’agisse des milieux d’affaires, des milieux politiques ou diplomatiques. Nous allons encore les renforcer.


C’est pourquoi nous nous attachons à nous entourer des meilleurs collaborateurs et partenaires dans les domaines du droit, de la fiscalité, de la comptabilité, de la communication et de l’audit.

Nous sommes en mesure de solutionner les problèmes, définir des stratégies à court, moyen ou long terme, et d’accompagner nos clients

dans leur croissance et leur développement à l’international. Et la confiance de nos clients est grandissante. Nous enregistrons une croissance annuelle à 2 chiffres, et nous développons notre groupe à l’international en y renforçant notre présence. Après avoir ouvert un bureau à Dubaï et New-York durant l’année 2019, nous allons en ouvrir un à Londres et à Singapour cette année, afin de répondre à la forte demande qui émane du marché anglo-saxon et asiatique. Nous sommes un support plurifonctionnel qui englobe la stratégie fiscale, juridique et financière, au plus haut nouveau d’exigence. C’est pour cela que, sans cesse, nous cherchons à élargir notre panel de service pour que l’offre soit la plus complémentaire possible, au plus haut niveau.


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The challenges and complexities of restarting a business after lockdown


hen the lockdown ends and the government finally announces that you are allowed to reopen your business, it's never going to be as simple as opening the doors and asking your workforce to return. COVID-19 has ushered in a 'new normal' for both our society and our economy. Once the lockdown restrictions have been removed business owners around the world are going to have to approach the working day with a fresh pair of eyes.

Social distancing in the workplace Over the past few months, whether it's been taking the dog for a walk or getting our groceries, we've all been taking care to practise social distancing in our personal lives.The reopening of factories, offices, cafe's or restaurants will have to adhere to the new levels of personal space that need to be incorporated into a working day. With many firms choosing to install items such as Perspex barrier screens between desks to protect colleagues from one another, there's a sudden unexpected expense to budget for now. Other options can include leaving the appropriate amount of space between workers on the assembly line or factory floor, and only calling perhaps 50% of your workforce back at any one time. However, you will also need to take into consideration how your employees will travel to work and, depending on which industry you're in, you may need to make arrangements for them to do so safely.


A different state of mind It's easy to make light of an enforced period away from work but, for many people, the experience has been mentally challenging. Shut away from friends and family for a prolonged period, the consumption of alcohol at home is reported to have significantly increased. As an employer, you have a duty of care to ensure that this isn't something that carries on into the working day. Lab confirmation tests can be done discreetly and quickly with reliable and accurate detection allowing you to be aware of any potential issues before they become a severe problem for an employee, their colleagues and the overall performance of your business.

Protecting your employees and your customers People will understandably be very apprehensive about returning to work, so it's essential to make them confident in their environment and know that you take their safety seriously. However, with the economy having been effectively closed for the past few months, it may be that you need to think about restructuring your workforce to cope with the financial impact that lockdown has had. For many businesses to survive, job losses and redundancies are sadly inevitable. You will need to have a very clear plan in mind for how your business is going to survive before you do this so that you can make the most effective changes without the risk of losing highly regarded talented members of staff.


the global investor

The Future of the airline Industry


irlines face an unprecedented international crisis in the wake of the coronavirus pandemic. The International Air Transport Association (IATA) estimates that the global industry will lose US$252 billion in 2020. Many airlines are cutting up to 90% of their flight capacity. On March 1, more than two million people in the US were flying per day. A month on, fewer than 100,000 people are going through airport security daily. Some climate activists have welcomed the emptied skies, pointing to the dramatic fall in carbon emissions. But others worry that the bounce back and attempts to take back some of the losses might mean that an opportunity for fundamental, sustained change may be missed. In the US, a federal government US$50 billion bailout fund – part of which will fund cash grants going towards airline workers, and the other part loans for the airlines themselves – was rolled out piecemeal in March, with revisions announced on April 14.

Darren Ellis, Lecturer in Air Transport Management, Cranfield University; Jorge Guira, Associate Professor of Law and Finance, University of Reading; Roger Tyers, Teaching and Research Fellow in Sociology, University of Southampton


More than 200 airlines applied. American Airlines will get US$5.8 billion, Delta US$5.4 billion, and Southwest US$3.2 billion, among others. Donald Trump, the US president, stated that the airline bailout was needed to return the industry to “good shape” and was “not caused by them”. Another US$4 billion is available for cargo airlines and US$3 for contractors. In the UK, it was initially announced that no industry-wide bailout would be offered. Instead, the industry would have to rely on broader aid packages covering 80% of salaries (below a cap) for furloughed employees. But subsequently, the government quickly gave easyJet a £600 million loan (US$740 million). Flybe, a smaller regional or “secondary” airline with pre-crisis financial issues, was not bailed out and collapsed. Many money-making routes Flybe ran have since been picked up by others.


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Continental Europe is in worse shape. Italy has re-nationalised Alitalia, forming a new state-owned entity and investing €600 million (US$650 million). France has indicated it will do whatever it takes to bailout Air France/KLM (France owns 15% and the Dutch 13%), with a possible €6 billion bailout package (US$6.5 billion). Meanwhile, Australia’s Qantas secured a A$1 billion loan (US$660 million). Debt-laden Virgin Australia, meanwhile, was denied a A$1.4 billion loan (US$880 million) and has subsequently plunged into voluntary administration. Singapore Airlines, however, got a US$13 billion aid package. The airline industry has faced many crises before – 9/11 and the 2010 Icelandic volcano eruption, for example. But these pale in comparison to the economic hit that airlines are currently facing. Some are asking: can it recover? Is this an economic crisis that could reshape how we travel and live? Or will it turn out to be more of a pause, before returning to business as usual? And what role does the climate crisis play in all this – how will sustainability figure in any rebooting of the industry going forward? We are all experts in the airline industry. Darren Ellis (Lecturer in Air Transport Management) considers these questions first, looking at the industry’s structure and response. Jorge Guira (Associate Professor in Law and Finance) then explores bailout options and likely future scenarios for the industry. Finally, Roger Tyers (Research Fellow in Environmental Sociology) considers how the industry might just be at a turning point in terms of how it tackles climate change. Most of the global airline industry is currently grounded. Although some routes are still managing to operate, and there is evidence of a gradual domestic air market rebound in China, 2020 will certainly not see the 4.6 billion annual passengers of 2019. The long-term trend


of ever-rising air passenger numbers year on year has been brought to a dramatic and rapid halt. What this means for the global airline industry is vividly on display at airports around the globe as terminals remain empty and aircraft occupy any available parking space. Like the predominately national response to the virus, so the airline industry is also seeing a wide range of policies and practices tailored and implemented almost exclusively at the national level.This means that some airlines, thanks to well-chosen national policies, will fare better, while others will flounder. This is because beyond the multilateral single air market of Europe, the global industry remains firmly structured on a bilateral system. This web of country to country air service agreements (ASAs) is basically made up of trade treaties which governments sign with one another to determine the level of air access each is willing to permit. Even in Europe, the single air market essentially acts as one nation internally, while externally, individual European countries continue to deal with many countries on a bilateral basis. The bilateral system is based on a bundle of rules and restrictions, including airline ownership (typically, a minimum of 51% of an airline must be owned by people from the country where the airline is based), national control, single airline citizenship and home base requirements. This effectively locks airlines into a single country or jurisdiction. Despite this structure, global cooperation in aviation is strong, particularly across safety standardisation, but less so on the economic front. A lot of this cooperation happens via the International Civil Aviation Organization (ICAO), the industry’s specialised UN agency. Meanwhile, the IATA supports and lobbies on behalf of member airlines.

Likewise, international mergers and acquisitions are rare – aside from in Europe, where partial mergers have created dual and multiple brands like Air France/KLM. Where single airline brands have been created with cross border mergers – such as LATAM Airlines in South America – national aircraft registration and other restrictions remain in place, thereby reflecting multiple airlines in these respects. Consequently, national responses will be front and centre as the industry responds to the current pandemic. In countries where a single flag carrier is based, such as Thailand and Singapore, governments are unlikely to let their airlines fail. While in others, where multiple airlines operate, a level playing field of assistance and support is more likely, even if outcomes differ widely. This is not to say that all airlines will necessarily survive what is likely to be an extended U-shaped crisis, unlike the more V-shaped crises of the past, such as 9/11 and the 2008 global financial crisis. The national structure of the industry also highlights why major airlines failing is relatively rare.Yes, airlines have merged in domestic air markets like the US, and individual brands have disappeared as a result, but few major airlines have gone out of business because they failed. Even Swissair, which was famously bankrupt and defunct in late 2001, soon reappeared as Swiss International Airlines. And so, although airline brands have come and gone, the industry had remained on a growth path for decades. It will take time to recover from the pandemic. Some airlines will fail. But widespread changes to the industry’s structure are unlikely to occur. People will, of course, need and want to travel by air again when this pandemic is over. Which airlines survive – and which go on to thrive – will largely depend on how successful individual countries’ economic support packages turn out to be. 35

the global investor

Bailout essentials The global outcomes of the crisis, then, are firmly anchored in national responses. The airline industry is cyclical: it is used to peaks and valleys. Bailouts have repeatedly been vital for airlines, so many countries have some sort of precedent to go by. In any bailout, the key question is whether this is a solvency or liquidity crisis. Solvency means that the airline will be very unlikely to ever remain financially viable. Liquidity means that the airline has a high risk of running out of cash flow but should be solvent soon, if supported. Assessing this is sometimes complex. Cash is king. “Streamlining” – a fancy word for cost cutting – can help. Unencumbered assets such as aeroplanes can be sold, or used as collateral for loans. But many planes are often leased, so this may be problematic. Existing contracts must be reviewed. Breach of covenants, which are legally binding promises to do (or to refrain from doing) things in a certain way, may need to be waived. For instance, lease agreements for the planes often require flights to carry on, and business as usual is suspended at present. Other agreements require flights to maintain landing spaces in airports – leading to the “ghost planes” many were appalled by earlier on in the crisis, and that still continue. Certain financial tests may not be met, such as how much debt there is compared to earnings. These can alarm creditors. And this can lead to deterioration in bond credit ratings, reflecting increased financial distress. Other triggers may also arise. Defaulting on one financial contract usually requires informing other creditors. This can trigger defaults on other agreements, creating a domino effect. So renegotiating operating and financial contracts is crucial.Airlines may have to pick and choose who to pay first. Unions must be kept happy, 36

and other stakeholders must focus on recovery. All this means that state bailouts, help and other guarantees are crucial for the industry to survive. In the US, for example, net operating losses are carried forward and used to shield revenues and offset these from tax for when things return to normal. If liquidity is the problem, the real issue is time: how long will it take for the airline to get back on its feet and resume flying more normally? If solvency is the problem, the company cannot survive the demand collapse it is facing.The COVID-19 pandemic is such a fraught time for airlines because of the difficulty in predicting when the crisis will end.This can complicate determining whether it is a more temporary liquidity crisis or a deeper solvency concern. After 9/11, the airline industry completely shut down in the US. People witnessing the horrifying scenes of the Twin Towers’ collapse were hardly eager to board a plane. So, the government chose to step in to restore confidence. And it did so, successfully, by offering aid including loans and used warrants, which involves investing in airlines when the stock is at a reduced or rock bottom price and waiting for it to go up again. The US government’s COVID-19 financial rescue package parallels this approach. The US approach is noteworthy because of its size and scale, and the fact that it is built on the 9/11 case and has been modified for the unique present circumstances. It is also an interesting counterpoint to the strategy of the strongly free market-oriented UK, and Australia, which has been more restrained in its approach. Airline norms suggest that 25% of revenues should be kept in case of any emergency, but this has tended not to happen recently. Corporate earnings have generally not been held for a rainy day, and now that rainy day has arrived.This creates a

classic moral hazard problem: many airlines seem to act as if they are too important to fail, because in the end, they believe they will be bailed out. And regulation does not otherwise hold any excesses in check. Compounding this, some US airlines have recently been accumulating cheap debt, due to low interest rates and lots of credit availability. The five big US carriers, instead of paying off debt, have been spending 96% of available cash on stock buybacks. Many question whether airlines should be bailed out in these circumstances. Limits on paying dividends, buyback of stock, and other terms would logically apply here, as in the earlier US bailout measures announced in March. While the US case may provide a helpful initial focus, the UK approach is likely to be highly influential, perhaps more so given the reduced resource level – and greater level of


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this aspect may well play a vital role in the repackaging of airlines going into the future. Much of it begins with how emissions targeting interacts with the COVID-19 crisis.

Aviation and climate change As Jorge says, for the growing number of people concerned by aviation’s rising carbon emissions, this pandemic may be a rare chance to do things differently.When air travel is eventually unpaused, can we set it on a more sustainable trajectory? Even before this pandemic hit, aviation faced increasing pressure in the fight against climate change. While other sectors are slowly decarbonising, international aviation is forecast to double passenger numbers by 2037, meaning its share of global emissions may increase tenfold to 22% by 2050.

climate awareness – there. As Darren pointed out earlier, one model does not fit all but this may offer a useful comparative framework for other approaches that favour national champions or nationalisations. The UK is reportedly considering partial nationalisation, such as in the case of British Airways. British Airways has furloughed 35,000 employees, with many pay packets supported by the government – for now. British Airways appears better placed to cherry pick key routes, assets and companies as it ranks in the top group for liquidity. If Virgin Atlantic were to collapse, its size means it may fit in the too important to fail category. It appears that bailout talks are ongoing but Richard Branson’s life as an offshore UK resident, and Delta’s ownership of a 49% stake, present potential political clouds. Questions


about whether it should get state aid given current crisis conditions also arise.This is generally forbidden, although the EU has temporarily indicated a COVID-19 relaxation of the rules. No environmental strings have apparently been attached, as former EU officials and others have suggested should be the case. Overall, the survival of the global industry therefore depends on bailouts, not only to keep airlines afloat but also for the wider travel and leisure ecosystem. The lack of of sustainability conditions in UK and indeed US bailouts appears to be mirrored globally. But a Green New Deal in a second recovery phase of aid could provide this. And greater awareness of the issue thanks to the likes of Greta Thunberg, an increased culture of working from home, and ongoing measures to increase accountability and reporting of emissions means

Most flights are taken by a relatively well-off minority, often for leisure reasons, and of questionable necessity. We might wonder whether it is wise to devote so much of our remaining carbon “allowance” to aviation over sectors like energy or food which – as we are now being reminded – are fundamental to human life. Regulators at the UN’s ICAO have responded to calls for climate action with their Carbon Offset and Reduction Scheme for International Aviation (CORSIA) scheme. Under this, international aviation can continue to expand, as long as growth above a 2020 baseline is “net-neutral” in terms of emissions. While critics cite numerous problems with it, the idea is to reduce emissions above the 2020 baseline through a combination of fuel efficiencies, improvements in air traffic management and biofuels. The remaining, huge shortfall in emissions will be covered by large-scale carbon offsetting. Last year, IATA estimated that about 2.5 billion tonnes of offsets will be required by CORSIA between 2021 and 2035. 37

the global investor

This plan has been thrown into disarray by the COVID-19 crisis. The emissions baseline for CORSIA was supposed to be calculated based on 2019-20 flight figures. But given that the industry has come to a standstill – demand may take a 38% hit in 2020 – that baseline will be much lower than expected. So once flights resume, emissions growth post-2020 will be much higher than anyone predicted. Airlines will need to purchase many more carbon offset credits, raising operating costs and passing these onto customers. Airlines trying to get back on their feet will be hostile to any such additional burdens, and will probably seek methods to recalculate the baseline in their favour. But for environmentalists, this might be an opportunity to strengthen CORSIA, which despite its flaws is the only current framework for tackling aviation emissions globally. Some still consider CORSIA to be an elaborate sideshow. The real game-changer for sustainable aviation would be fuel tax reform, which might receive more scrutiny when attention shifts onto how to repay the eye-watering levels of public debt incurred during lockdown. Since the 1944 Chicago Convention, which gave birth to ICAO and the modern aviation industry, putting VAT on flight tickets and tax on kerosene jet fuel has been effectively illegal. This is the primary reason why flying is relatively cheap compared to other transport modes, and arguably why the industry has under-invested in research into cleaner fuels. With the most-polluting form of transport enjoying the lowest taxes, this regime has long been questionable in terms of emissions. It may soon become untenable in terms of tax justice, too. In 2018, France’s Gilets Jaunes movement was partly motivated by anger at increased fuel tax for cars and vans, while air travel continued to benefit from historic 38

tax exemptions. This anger may return when governments inevitably raise taxes to repay their multi-billion-dollar COVID-19-related debts. Campaigners are already demanding that any airline bailout be linked to tax reform, and there is huge potential there. Leaked EU papers in 2019 suggest that ending kerosene tax exemptions in Europe could raise €27 billion (US$29 billion) in revenues every year. Such sources of revenue may soon become irresistible, and national governments might seek to collect them unilaterally,

with or without a coordinated ICAO response. Tony Blair, the former UK prime minister, once said that no politician facing election would ever vote to end cheap air travel. But – to state the obvious – these are unprecedented times, and public attitudes to flying may well change. On the demand side, once borders reopen, there could be a short-term travel boom as postponed flights are rebooked and stranded people fly home. But even after an official virus “all-clear”, those considering


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vibrancy while reducing climate risk. But not all governments will factor this in. Events are moving fast, with Emirates in Dubai starting to test passengers for COVID-19 before boarding. Meanwhile, easyJet is considering social distancing on planes as part of a “de-densification” policy, with fewer passengers and higher prices, albeit across more routes. Longer term, there are various ways this could play out. All depend upon the duration of the crisis and the confluence of political, legal and economic factors. It is possible that market structure remains unchanged, with ownership of airlines staying relatively stable, supported by bailouts. Under this business-as-usual scenario, sustainability would incrementally be enhanced through airlines retiring older, less carbon efficient planes and replacing them with better ones. But this scenario is subject to tremendous uncertainty.

holidays may think twice before sharing cramped plane cabins with strangers. Business travellers, crucial to airline profits, may find that they’ve got so used to using Zoom, they don’t need always to fly to meetings in person. As members of the industry admit, by the time passengers return to air travel in significant numbers, the airlines, routes and prices they find may look very different. Governments will face huge industry pressure to safeguard jobs and return to business as usual as soon as possible.


But managed properly, this could be the start of a just and sustainable transition for aviation.

The future’s up in the air All three of us feel the airline industry is at a key turning point.The size and scale of bailouts will vary. Government political will and philosophy, access to capital, and the viability of the industry itself are key factors that will inform whether a company is worth saving. Any future must be based on the premise of preserving economic

Or, sustainability might become more important after the crisis, thanks to increased environmental awareness, demand loss, and new green investment. This would take place at different speeds, with Europe perhaps being more proactive through government incentives and serious emissions targeting.The US would lag behind, but making some advances due to increased stakeholder concerns. In this scenario, there is some scaling down of travel to meet demand, which is reduced. Increased sustainable investment emerges. Due to partial recovery, a new normal emerges. It is also possible that prolonged, severe shortage of capital and an awareness of the climate crisis could, hypothetically, lead to massive change. But governments’ concern for jobs is likely to crowd out environmental concerns. Political forces on the left and right would have to mend fences and agree that, in a depression-like scenario, a new world is needed, not just a new normal. 39

the global investor

Strong Real Estate Sector Despite All the Challenges:

Qatar Shows Us How


atar — that little country in the Persian Gulf — is a power player with a lot of money and ambition, even on the real estate sector stage. In just 50 years this tiny Middle Eastern nation has gone from a poor pearling and fishing country to an oil giant with one of the highest per-capita gross domestic products (GDP) in the world. Alongside the rapid population growth, these factors contribute to making the Qatari real estate market one of the most successful markets in the region, either in residential, commercial, or retail real estate.

that “Qatar’s property sector has been one of the main casualties from the blockade that was imposed in mid-2017.“ But it didn’t stop Qatar from becoming worldwide famous for its architectural masterpieces, such as the Pearl-Qatar, Msheireb Downtown Doha, Lusail City, and various other projects. It also managed to come at the forefront for adapting ‘proptech’ — an emerging field that implements the use of technology in real estate to produce the best results.

about 50 percent and office space by 40 percent due to expected demand from the World Cup, according to a report by DTZ, the longest established global real estate advisor in Qatar. FIFA requires Qatar to have at least 60 thousand hotel rooms in place for the month-long tournament, which is estimated to draw about 1,5 million fans to Qatar — more than half of its roughly 2,8 million population.

The biggest number of new buildings will be constructed in Lusail City — the coastal metropolis located 16 With its National Vision 2030, Qatar kilometers from Doha, which is being is on its way to becoming a role developed by a state-controlled model for sustainable urban living. Qatari Diar real estate company.The However, a few years ago the sitEco-friendly and smart high-tech project was initially conceived back uation in the Qatari real estate buildings are trending in the Qatari in 2005, but development truly took sector was not so vibrant. At that real estate market right now, and off when Qatar was announced as time, Qatar had to face a diploas the real estate projects are exe- the host of the 2022 FIFA World Cup. matic, trade, and transport boycott imposed by Saudi Arabia, the cuted in a short duration without Also known as one of the largest United Arab Emirates, Bahrain, and compromising on quality, Qatar also commercial projects in the Middle Egypt over allegations that Doha demonstrates its commitment to be East, Lusail City is a futuristic green supports Islamist terrorist groups. ready for the 2022 FIFA World Cup. city project, which is expected to be Jason Tuvey, an economist at Capi- To be more specific, in the few completed by 2022. It will hold the tal Economics, an economic research upcoming years Qatar has to largest stadium by capacity at the consultancy based in London, noted increase its residential space by first FIFA World Cup hosted in the



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And he was right — as the combined value of real estate transactions in 2019 reached $22,8 billion, reflecting the strong interest of investors in Qatar’s growing market. Today, the Qatari real estate sector is considered to be one of the most important pillars of the economy of the country. Mohamed Amer, General Manager at Al Hattab Holding, one of the leading construction companies in its classification, noted that “Qatar’s real estate market is more robust and vibrant compared to other markets in the region. The market volatility over the last couple of years was temporary, understandably due to some apprehensions among investors about the geopolitical situations, which had some impact in 2018, but now things are much better and demand is picking up which is expected to be accelerated in the immediate future.“ Gulf, and after the global finals stadium’s infrastructure will be converted into a community space, including schools, shops, cafes, sporting facilities, and health clinics. Let’s look at Qatar’s real estate sector numbers real quick. In 2017, the total value of the real estate transactions in Qatar reached $32,7 billion — a 20 percent higher number than in 2016. However, in 2018, as both public and private sectors started adapting to previously mentioned regional geopolitical challenges, the total value of the real estate transactions recorded a significantly lower number — $19,7 billion. Something needed to be done to stabilize the situation. “If you are going to be subject to a blockade, then you better have a lot of money,“ one banker told Reuters at that time. Searching for a solution, in the early months of the crisis, Qatar liquidated nearly $3 billion in US treasury investments and drew down


Interestingly, as many economies and markets around the world are over $40 billion in foreign reserves suffering the far-reaching aftereffects to support its currency and banks. of the Covid-19 right now, Qatar The economy has stabilized, growing refused to join this list. 2,2 percent year-on-year in the third quarter of 2018. Qatar’s banks have According to a new report by the been replenished by foreign depos- real estate company Al-Asmakh its replacing much of the Saudi and Projects, which was released at the Emirati money that left, and its stock very end of March 2020, the effects market was the top performer in the of the Coronavirus pandemic on the Middle East that year. real estate sector in Qatar in terms Then, keeping in mind that foreign of market demand are “limited”.The citizens account for 75 percent of its report also noted that Qatar’s real population, Qatar opened its real estate sector “is strong, durable and estate sector to foreign investors able to overcome this crisis, supby easing restrictions on property ported by the precautionary measures and measures taken by the ownership. government, in addition to its assoAt that time, Pawel Banach, Genciation with a system of real estate eral Manager at ValuStrat Qatar, laws and legislations, as well as modthe Middle East’s leading consultern regulations for this sector that ing group, noted that “The recent have proven a positive impact on its reform to change freehold ownership law will contribute to a positive performance.” transformation of the real estate sector which will now embrace its cultural diversity through new initiatives designed to encourage investments and positively change business perspectives to ultimately result in overall economic growth.“

But perhaps we shouldn’t be surprised about this. All in all, as we’ve seen from history, during these past years, the Qatari real estate sector was able to overcome the global and regional crisis — and was emerging from it stronger than before.


the global investor

Global Trade is Not the Same Anymore:

How New Trends and Demands Changed the Game


oday, both the global trade and cross-border payment landscape is at the center of several trends. Technology innovation, greater competition, changing customer demands, the need for increased security and safety in payments has created a new industry dynamic that values speed and agility. “It is an exciting time for payments,” noted Victoria Cleland, executive director for banking, payments, and innovation at the Bank of England (BoE). And she is right. It’s been 70 years since the global multilateral economic system was born and countries decided to build bridges and establish partnerships through trade. General Agreement on Tariffs and Trade, followed by the World Trade Organization, opened up borders to the free flow of goods and services and helped nations reach substantial progress and great results. Among other things, increased global trade also created opportunities for entrepreneurs, perhaps the biggest being the growing demand for simple, fast, secure, and convenient cross-border payments. We have an impressive number for your right here: international payments are expected to reach $3 trillion by 2023. What is more , the boom in cross-border commerce is writing the next chapter in global payments as well. In 2019, online sales hit a record high and as much as 57 percent of global online shoppers are


now cross-border shoppers. Today, e-commerce is considered one of the key drivers of the digital transformation taking place in our economy and society. During recent months, digital commerce witnessed an extremely rapid acceleration in growth — and the main thing behind it is the Covid19 crisis. As trade in traditional goods and services decreased, trade in digital goods and services became even more important. Before the coronavirus pandemic, cross-border e-commerce was already rapidly expanding, but since the crisis, growth has become exponential. For instance, in the US and Canada, overall e-commerce orders have increased by 129 percent compared with last year. Similarly, the digital payments market is now expected to grow this year by 11 percent worldwide and as high 15,9 percent in places like

China. What is more, experts say that growth in digital services and digital trade will be critical to a global economic recovery. When you think about it, the Fourth Industrial Revolution not only brought new innovative technologies to the game but also managed to change the nature of global trade itself, as data flows are becoming more important than physical trade. Susan Lund, an economist, and partner at McKinsey & Company, a global management consulting firm that advises many of the world’s largest and most powerful institutions, noted that “Trade is no longer coming only in big boatloads and cargo container ships. The growing segment today is the trade of digital goods and services — for example, downloading a book or a movie or making a phone call on Skype.“ It’s hard to measure, but McKinsey found that cross-border bandwidth


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is 45 times larger compared to 2005. It also calculated that the flow of data across borders contributed more to global GDP than the trade in physical goods. However, some challenges in the industry — even if we get to witness digitalization trends at their best — remain. Euro Exim Bank, a revolutionary financial institution with a ‘Class A’ international banking license from Financial Services Regulatory Authority of St. Lucia, which serves clients in over 100 countries, noticed that some common barriers, such high cross-border transfer fees, low settlement timescales, poor foreign exchange rates, trade bureaucracy still make things tough in the global trade arena.

regions, opening up a global market and global customer base. But the practicalities and costs of payments often stand in the way of this progress. Half of the merchants who responded to our survey said their biggest concern about making and accepting cross-border payments is the transaction fees. 40 percent are concerned about getting the best foreign exchange rate, and the speed of processing payments is a concern for 29 percent. These are all issues emanating from the traditional correspondent banking infrastructure.” While we’re at it, foreign exchange rates have actually been a serious challenge for cross-border payments and global trade. The global foreign exchange market is by far the largest financial market with its daily trading volume of over $5 trillion.

and geopolitical risk. However, when currencies fluctuate in a big way, they can create economic uncertainty and instability, affecting capital flows and international trade. A good example was the current conflict between the US and China over international trade, which had serious consequences for foreign exchange rates and the prices of other assets — think stocks, bonds, and precious metals. But as in this trade war there will be no winners, it looks like the year 2020 still has some surprises up its sleeve when it comes to cross-border payments.

Kaushik Punjani, Director at Euro Exim Bank, noted that “2020 is expected to be a big year for further application of technological innovation in trade finance. As Free Trade Then there’s also slow cross-borAgreements (FTA’s) ease the moveTo put it simply, ever since counder payments — an area, which ment of goods and oil the wheels of tries abandoned the gold standis still considered a time-consumcommerce, coalitions are forming to ard, national currencies have ing and overall tense for financial provide faster and more approprifloated against one another on a institutions. The main reason why is ate trade finance services to meet global market. Their values fluctuate simple: cross-border payments are not only the logistics but the finandepending on several factors, includinherently complex, involving multicial needs of producers, customers, ing a country’s economic activity ple parties, currencies, regulations, and growth prospects, interest rates, and shippers.“ markets, risks, and systems. Besides, as of today, banks dominate cross-border payments with a market share of 95 percent, but their money transfers are characterized by a lack of transparency, high fees, and delays.These long-standing inefficiencies have opened the door to new players that use cutting-edge technologies, such as AI, blockchain, internet of things — to provide innovative and customer-centric services to both businesses and consumers. However, while new cutting edge technology gets a lot of attention, the short-term future of facilitated global trade depends on more grounded payments innovations. Saxo Payments Banking Circle, the global transactions services provider, surveyed 200 merchants that are already conducting international trade. Anders la Cour, CEO of Saxo Payments, commented on the results, noting that “The digital landscape is breaking down barriers between



the global investor

interv i ew

Graham Bright The Global Investor talks to Graham

Bright (Pictured),

Head of Compliance and Operations of

Euro E xim Bank

about the dynamics of global trade, how they have changed, and

the technology that is helping to improve the cross-border

payment industry



i nte r v i ew Q Global trade transactions have traditionally been seen as complex, costly and timeconsuming, but in just five years Euro Exim Bank (EEB) has helped to change the way people see and manage their trades. What can be done to make borderless trade even more popular and accessible?

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and without the requirement to use costly fiat currency, companies in countries that depend on local currencies can transact seamlessly with one another, with an underlying use of XRP cryptocurrency supporting the trade.

Use of alternative finance providers A growing market has emerged in the form of financial technolBorderless trade, with its complex ogy companies offering alternative ecosystem, is not just about payfinancing options to those of tradiments. tional banks. Often unencumbered What businesses across the globe by local restrictions and with cloudcrave is good transport systems, based systems built with non-legacy faster access to verified data, fewer technology, they provide online cash intermediaries, seamless exchange management, crowd funding, FX Risk and inter-operability of IT processes, Management,Trade Finance and fortransparent transaction and settle- eign exchange hedging, all of which ment times, and above all, reasona- are essential to companies trying ble fees. to improve their cash flow, compete, There are consistent barriers and and be successfully paid in internachallenges, but borderless trade can tional markets. be improved with the following con- These innovative, blockchain-enasiderations: bled payment platform technologies enable companies to access and More use of Free Trade maintain a full suite of cross-border Agreements (FTAs) capabilities and supply chains in one Today more than 400 agreements digital space. Clearly, those compaare in place across the globe, nies working with a payment/service designed to improve the flow of provider with the right technology goods and funds between groups of and local expertise are more likely neighbouring countries, by unlocking to maintain and grow market share. tariffs, freeing up movement across once-complex borders, reducing the Understanding the culture bureaucracy and tightening trade Localisation is critical for any comalliances. FTAs are a valuable and pany selling to another country significant component in assisting or region. Understanding the culfrictionless trade, and companies ture, market and customer needs, should be encouraged to seek out and ensuring that their marketing, and participate where possible. websites and customer experience encompass appropriate language, Improving liquidity prices in local currencies and cusAvailability of funds and access to tomised contractual issues. foreign currency continue to be a barrier to successful borderless Understanding customs trade. Banks in smaller countries regulations with lesser-traded local currencies Incorrect documentation that causes are not as able to support large for- customs to hold shipments usually eign transactions requiring access to incurs excessive demurrage, which costly fiat currencies. then compromises cash flow and By using Ripple as a provider of causes many small firms to struggle almost unlimited liquidity through or even be forced out of business. By the On-Demand Liquidity system ensuring a focus on understanding


local regulations, companies can control excessive operating and warehousing costs, reduce wasted time, product delays, emergency shipments and logistical disruptions, as well as avoid costly penalties issued by customs agencies.

Q The dynamics of global trade have changed, and technology now has the promise of improving crossborder payments even more. AI, DLT, blockchain, Big Data implementation – in your opinion, how will these technologies impact the trade finance industry in the near future? AI Artificial Intelligence is intelligence demonstrated by machines, in contrast to the natural intelligence displayed by humans. At EEB, AI is used within applications to aid our staff in reviewing trade transactions faster, identifying exceptions and supporting complex risk-based decisions. Unlike the programmed, automated trading systems prevalent in high-volume, real-time derivatives and equities markets that are employed to capitalise with competitive advantage, our ultimate decision-making process remains in experienced human hands. AI has helped to streamline time-consuming, highly manual processes associated with reviewing growing volumes of global trade transactions. And, its implementation and continual refinement ensures a better operating experience internally, expanding the use of digitisation and advanced analytics. DLT The case for using Distributed Ledger Technology is well proven for payments where structured data is standard, and we see that it may also be successfully applied when assessing the issues and possible remedies in tackling fraud with KYC/ AML and compliance. 45

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DLT can also provide the technology to improve heavy non-standard data-bound processes. Addressing the fundamental issues of internal, intra and interbank data sharing, DLT may assist submissions and oversight with regulators, and more rapidly identify activity in foreign accounts used for illegal and fraudulent drugs- and terrorist-financing transactions. For KYC, AML and due diligence across an enterprise, the proliferation of paper, identification of false positives, multiple submissions of data, uncertainty in identity assurance and manual reconciliation times may be drastically reduced. Combined with a more efficient verification of KYC data, rapid cost-effective client on-boarding, faster loan servicing, and efficiency in creation, communication and one-touch handling of trade documents will enable banks to offer long-lasting cost-effective customer experiences. Whilst banks should not underestimate the investment and commitment in terms of budget and resource to implement such DLT/ blockchain technologies, failure to plan, act and compete will have a serious impact on long-term institution viability. Big Data Big Data is a massive volume of both structured and unstructured data that exceeds processing capabilities of traditional database and software techniques. In trade, with the complexity and scope of the ecosystem, it is easy to see how multiple parties, goods, services, buyers, sellers, freight specialists, insurers, inspectors, customs regulations and compliances across more than 200 cultures and jurisdictions can create data on a massive scale. And volumes are growing year on year. We have identified 12 distinct Big Data “V’s” common to our business, namely: Volume, Variety, Veracity, Velocity, Viability, Value, Variability, 46

Visualisation,Validity,Venue,Vocabulary and Volatility. Finding individual data elements and understanding the impact on operations and management is challenging, and we are fortunate in that today we deal with relatively small trading volumes, where identification, measurement and management are relatively simple.

integrated processes covering identity assurance, real-time company data access, PEP and sanction lists, with the benefits of full compliance and due diligence.

Q You once mentioned that Euro Exim Bank’s participation with Ripple has been game changing when it comes to For larger companies, having a liquidity for cross-border meaningful high-level view and trade. What problems understanding all the elements and challenges has this and getting value from the data is partnership solved so far? a major challenge. The only way to ensure effective management is investment in and implementation of technologies where standardisation, data normalisation across platforms, rationalising of systems and re-usability of information are commonplace. As part of our “future-ready” system capabilities, our Simplex trade platform embeds DLT/blockchain technology with payment APIs and more automated, digitised and

Firstly, it is important to remember that Ripple is not just about cryptocurrency. It is an innovative technology company with a financial network capability (RippleNet) handling real-time, frictionless transmission of payments across a secure de-centralised DLT infrastructure, covering both fiat and non-fiat currencies. Implementing any new service can be time-consuming and problematic, however, rather than


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speeding up and securing real-time payments, and subsequently ODL (On-demand Liquidity): enabling pay-outs in local currencies without the need for exchange into dollars, fiat currency or the need for traditional correspondent banks, through the use of the XRP digital asset – ultimately reducing capital liquidity requirements. Whereas in the past client access to funds and foreign currency meant competition in world markets was impossibly expensive and restrictive, through service delivery with other RippleNet participants, customers can achieve high-volume, frictionless, low-cost, secure, fast, guaranteed payments and instrument movement across the globe.

encountering problems and challenges, our participation with Ripple was smooth due to managing expectations and planning and taking time for learning, collaboration, investigation, integration and a careful ramp-up. From the earliest conversations, we structured our on-boarding as a phased approach, getting to grips with each service before venturing onto the next, and taking time and consulting with experts in our IT teams and Ripple technical teams to ensure that our investment was on time and on budget. For clients facing problems of moving funds fast, this cost-effective foreign exchange, real-time view of where the funds were throughout the payment life-cycle, and fast access to almost unlimited liquidity easily resolved their issues of getting value and immediate credit to their accounts. We provided clients with two unique Ripple services, namely xCurrent:


Excellent question.Aside from securing our networks with more IT spend to protect us from a new and constantly evolving set of cyber threats and assault from fake emails, our due diligence and KYC processes start from first receipt of a proforma invoice (PI). Throughout a transaction, we take extreme care to analyse the elements of the trade and also look “beyond� the paper. It is amazing how many PI documents have been fraudulently manipulated with the intent to deceive, and we have become adept in spotting problems at the earliest opportunity.

We investigate how documents have been printed, company letterheads, addresses, style of writing, position We have always seen the value and of text, multiple font sizes and typeimpact of technology, and as such faces, photoshopped elements and continue to automate and improve use of colour, trying to make a docour internal Simplex trade finance ument too perfect, and generally platform capabilities, and impor- assessing if the paper itself is genuine. tantly, keep extending real-time pay- This is followed by further checks for ment functionality with Ripple for unusual marks or text positioning, an enhanced customer experience. and then checking the text itself: the Additionally, we are creating sophis- buyer and seller details, phone numticated mobile apps, and in light of bers, descriptions of goods and so on. recent crypto-currency regulations and opportunities, are building a Only once the first checks are all complete does the document crypto exchange. become the first part of the trade Today, innovation is the answer to and we create a first draft for the serving the world's 3 billion unbanked buyer. This is still subject to scrupeople, with better identity checking, tiny, and only once all indemnity faster remote account opening and and KYC documents are completed, access and control through mobile notarised and confirmed do we prophones in developing markets allow- ceed to level 2 compliance. ing more control to the end-user. We check shipping records, vessels, Ultimately the partnership with Rip- containers, history of transactions ple will lower account maintenance and the like, and by the time we get costs and increase overall coverage to issuing an instrument, with the with immutable blockchain-enabled appropriate collateral and fees paid, technology, making delivery, mainte- we can be fairly sure that the trade nance, security, trusted services and will be successfully completed. We banking-system participation easier. also verify that the buyer has the means and intent to complete and Q We cannot ignore the fact that settle once the conditions of the Bill as global trade becomes more of Lading and the instrument (LC or sophisticated and markets SBLC) have been completely fulfilled.

become more diverse, so do the cyber-criminals. How is Euro Exim Bank preparing for these possible threats?

Identity, passports, financials, PEP records, sanctions, AML and KYC checks are carried out as a matter of course, and our team have had to 47

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apply forensic investigation in some cases, where everything adds up but there may be continued causes for concern. Our trade platform provides us with the workflow tools, document repository and action processes to ensure safe, trusted store and action on viable trades, with full audit record for regulators.

dictate the movement within international trade.

• Inability to compete with bigger firms – pure economies of scale in manufacturing, and having skilled experienced people to undertake business in differing supply chains.

Protecting home industries by imposing additional costs or limits on imports may direct larger economies (i.e. the US with its Trump mantra of “Made in America”), however, • Trade bureaucracy – the comthis is heavily disadvantaging emergplexity of the ecosystem, terms ing economies, specifically in Africa, and conditions, timings and oblirendering their goods non-competgations can put off potential itive. importers and exporters such that even with world-beating Other challenges for SMEs can be products, they find the process categorised as follows: too onerous and expensive to • Corruption – still a factor wherprogress. ever foreign currency is involved.

With many people involved in the process we remain vigilant at all times. As risk, trust and reputation are vitally important in this industry, we must be pragmatic, report suspicious activity (SARS) and refuse to trade where any suspicion arises. • High shipping costs – transporting small volume is not always economically viable. Q In your opinion, what are

Q The cross-border payments market is growing fast, and it is valued at nearly $21 trillion • Poor infrastructure – road and the biggest challenges in the with a 90% compound annual rail is often low-speed, over large current world environment growth rate. At this point, distances from land-locked counwhen it comes to reaching responding to the growing tries to ports. the dream of true borderless demand and customer needs • Lack of access to capital – local trade? is crucial. How does the Euro banks in domestic retail markets The challenges are many and varExim Bank manage to stay on are not immediately supportious, especially for SMEs and spetop of the game? ing the financing of international cialist providers, from rising geo-political threats such as nationalism, protectionism and self-interests, to slow settlement, lack of trust and handling complex paper-based processes. Coupled with lack of experience in international trade, ever-complex instruments and costly fiat currency and exchange, companies are seeking alternative sources of liquidity and the ability to compete effectively across continents and borders.

transactions with large values. Staying on top of the game requires Cost of obtaining fiat currency constant review, specialisation and differentiation. can be prohibitive.

Even with the good intentions of Free Trade Agreements, more alternative finance providers and a growing global mindset to enter international markets, trade barriers and trade wars are still prevalent, as witnessed with the ever-changing tensions around US– China trade. When trying to establish a trusted foothold in international supply chains with cost-effective goods, the ability of small companies to become anything more than an afterthought remains untenable for many, as governments, not markets, 48


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Striving to be the best you can be in b Bank Guarantees – enabling cusa focused area of operation requires tomers, or debtors, to acquire management vision, ambition, direcgoods, buy equipment or draw tion and hands on participation. down a loan. Being all things to all people does c Performance Bonds – to guarannot work in a global economy, and tee satisfactory completion of a as such we have purposefully identiproject by a contractor. fied our market and created the solid foundations and infrastructure for d Online Bank Accounts – with 24/7 availability, providing safe long-term sustainability and support. banking facilities. We are serving markets such as India, Africa, UAE, Singapore and e Merchant Bank Accounts – for buyers and sellers who operate China, where we are offering comacross the globe, the merchant petitive rates with appropriate colaccount facility accepts online lateral, enabling smaller corporates payments, using any type of card, which may not have imported before with low rates and safe, secure to compete and perform in their transactions. local markets. Unlike a high-street bank with retail outlets, we exist to serve the corporate community in facilitating global trade by providing the following services:

Q Let’s talk about the future. Financial institutions are expected to play an important role in creating a sustainable and socially responsible future. a Financial instruments facilitatWhat practices does Euro Exim ing trade for importers – such Bank use to achieve that? as Letters of Credit and Standby Letters of Credit providing rapid processing of digitalised documentation with minimum time on paperwork.

the past three years, we have sponsored major fundraising events with themed concerts in London, resulting in donations of thousands of pounds to local and international charities. Some of the organisations that have already benefitted include, The Cerebral Palsy Association of St. Lucia, Montgomery Heights Children’s Foundation in Zimbabwe, UK Downs Syndrome charities, London's Great Ormond Street Hospital, and the Maa Kupa Foundation which assists local charities for the poor and needy in the UK, India and Africa. With our strong CSR policy, we had already seen incredible results and built local respect and trust. Today, we are all too aware of restrictions and difficulties that COVID-19 has made on everyone, and we are especially humbled to share the latest experiences from our India team on their philanthropic work in Chennai:

Euro Exim Bank is already known for fundraising efforts in St Lucia, the UK and for international char- Whilst starting up a new commerities across Africa and Asia. Over cial business venture, Fasta Pizza, all efforts have been diverted from the initial profit goals into a philanthropic operation instead, providing and transporting vitally important free meals to essential workers, vulnerable groups and the poor. The entire product and distribution network ramped up production, and is now able to supply over 300 units per day, proving the production process and creating a readiness for post-COVID operations at an even greater volume. This gift of food, now in its eighth week, is providing a lifeline for people unable to return to their own villages as a result of the severe restrictions of lockdown, and where work and the opportunity to earn a daily wage has, for many, been taken away in the short term. We are justly proud of our affiliate company in India and their contribution to the local community.



the global investor

Health and Wealth:

The Covid Crisis Covid-19 has to be the worst health crisis humanity has faced, perhaps, since, the Spanish Flu of 1918. Many of us right now, will be furloughed, working from home or even, unfortunately, having to claim Universal Credit.

Nicholas Bishop reports

Some are predicting mass unemployment in the wake of COVID-19. Rishi ealth, of course, is para- Sunak has admitted there could be a mount, but another equally recession, in an interview with BBC's important thing, for many, is Laura Kuennsburg. While not saying it will be the worst economic downthe economy. turn in a long time(as some have preMany are asking, how is COVID-19, dicted) Sunak, for his part, was not affecting the economy? Many busiencouraging in his words, either. nesses are temporarily closed and some smaller outlets have closed The nation has endured 10 years for good. Of course, large busi- of austerity, before, COVID, took nesses like the pub-chain Wether- effect and the lockdown began on spoons, for example, will be able to, 23 March. Obviously, with the govmuch better, weather the economic ernment's austerity programme, it downturn. The owner and founder has been the poorest, in our sociof the UK pub-chain, Tim Martin, ety, which has been the hardest hit. wants to re-open in June. Whether The government have two choices, this will be practical in reality, along to balance the books, in a certain with other pub, restaurant and cafe event, of a recession. The Johnchains, remains to be seen. How- son government may have to reimever, it would appear now, that such pose some sort of austerity or raise outlets may be allowed to open in taxes on the highest earners. Cera limited fashion, if phase 3 of the tainly, when appearing on BBC's, government's lockdown plan, goes 'Question Time', former Chancellor, George Osborne, said the according to plan.



government may have to consider either option. When Fiona Bruce, challenged Mr Osborne, over the 10 years of austerity, instigated by the Cameron government, he was a member of, Mr Osborne, replied, "At the time, it seemed the right thing to do". Certainly, if either option is necessary, the government will be on a losing wicket with many sectors within the British public. For example, if austerity is re-imposed, it will again, hit the poorest in society, already reeling from the last 10 years of cuts. If higher taxes are imposed, on the better off, then politically the Conservatives could find themselves damaged in future elections. On a political note, according to the latest 'You Gov' poll, Labour leader, Sir Keir Starmer, is already 1 point ahead of Boris Johnson, based solely, on both men's appearances and performances, at Prime Minister's Question Time. The survey


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the scheme would be extended until October. The government would carry on paying 80% of salaries, up to a value of £2.500, however, come August, there would be slight changes to the scheme. Namely, that in that month, companies would have to come to some arrangement One of the reasons, the UK govern- with the government, to help pay ment is lifting the lockdown par- their employees wages. Of course, tially, is because the government has if the lifting of the government's been coming under pressure, from 3-point plan is successful in holding COVID-19 at bay, and as more its donors. industries come back on stream, this Those who are furloughed will be could also be an important factor, in managing, while others will be strug- the furloughing scheme. Of course, gling to keep a roof over their head some employees, who have been furand food on the table. Certainly, loughed, may, unfortunately, have when Rishi Sunak introduced the already lost their jobs, without realjob retention scheme or furlough- ising it. ing, paying 80% of workers salaries, it was the biggest state intervention One of the sectors hit badly, by the in a long time. Many from all sectors lockdown, has been housing. The welcomed this, including the opposi- housing market has nearly ground to tion parties. The scheme along with a halt in recent weeks. With 373,000 other measures seems highly gen- property transactions have been put erous, however again, when com- on hold because of the lockdown. pared to other countries paying Meanwhile, in the world of finance, 100% of workers wages, the British the Pound is currently stronger than scheme has been criticised by some. the Dollar, but, weaker than the Euro, Mr Sunak has addressed fears about as the worldwide impact of Coronathe job retention scheme and the virus as hit the global economy. fact government payment of work- The total cost to the UK economy ers wages would drop to 60%. Mr because of the subsequent lockdown Sunak announced in parliament, that over COVID-19 are as follows:

gave Sir Keir Starmer, a + 23 points Minister's Question Time, held up lead over his rival, with Mr Johnson, Japan and other nations, as exambeing on + 22. ples, of nations to follow, who lifted Mr Johnson, last Sunday, announced their lockdown too early, with tragic an easing of the lockdown. This results. Also, other nations who had comes, however, with a proviso, of successfully had low deaths and still keeping the 2-metre distance, infections, Sir Keir explained, should but ultimately, encouraging people be nations the UK should look to. to go back to work if they can, with employers, being responsible for the safety of their employees. The government has announced a 3-point plan on easing the lockdown, however, that will be based, on COVID, the number of deaths and the number of infected, falling, in all sectors. The re-opening of businesses and people returning to work, however, will have to be handled carefully. However, despite apparent government successes in the battle against COVID-19, the virus has not gone away and will remain, a clear and present danger for some time. The casualty figures, from the virus, in the UK, remain the highest in Europe. Countries like Japan that lifted their lockdown too early, because of economic reasons, found, to their cost, a spike in infections and deaths, once more. Consequently, Japan had tp re-impose lockdown with restrictions. Sir Keir Starmer, when questioning Mr Johnson at Prime

£39 billion furlough scheme


billion health services, local authorities, measures to support the vulnerable, supporting rail services, and funding for devolved administrations (who have a different approach to lockdown from the UK government and England).


£800 £500 million in additional costs to helping charities.

million also, to local authorities, etc.


billion for the self-employed income support scheme.


billion in business rates package


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Finally, the economic fall out from COVID, not just in the UK, but around the world will reverberate for many years to come. Some have said the great recession that is surely coming will be as great as the 1930s. Others have predicted the recession and downturn will be the biggest disaster for 300 years. Either way, the scenario is not good, unless as others have predicted, some sectors of the economy can bounce back quickly.

minorities, men, and other at-risk groups have been horrifying. Could more have been done to prevent this great loss of life particularly in the UK? The answer has to be probably a resounding yes, as the UK government was warned back in December, this health crisis was coming. Had the government acted sooner in confronting COVID-19, would we have had the enormous loss of life, that we have now? It is hard to predict but had we have been more like Last but not least, the cost in human Germany, South Korea, et al, one lives, particularly among the old, would like to think things would not those with underlying illnesses, ethnic have been that bad. Then there is 52

our brave NHS, already struggling for various reasons, who, have done a remarkable job in battling COVID19, losing so many of their staff, even with PPE, like soldiers on a front line in war. Humanity has proved itself time and again, to be resilient, in whatever, has confronted us. When historians look back on the economic cost and lives lost, but also, those saved, in this crisis, the COVID battle will be up there with the other great challenges humankind has faced, down the ages.


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Coronavirus shaking up Globalization The COVID-19 pandemic is now expected to trigger the worst economic downturn since the Great Depression. Many argue it could unravel globalisation altogether

Jun Du, Professor of Economics, Centre Director of Lloyds Banking Group Centre for Business Prosperity (LBGCBP), Aston University; Agelos Delis, Lecturer in Economics, Aston University Mustapha Douch, Research Fellow in Economics, Lloyds Banking Group Centre for Business Prosperity (LBGCBP), Aston University, and Oleksandr Shepotylo, Lecturer in Economics, Aston University



lobalisation relies on complex links – global value chains (GVCs) – that connect producers across multiple countries. These producers often use highly specialised intermediate goods, or “inputs”, produced by only one distant, overseas supplier. COVID-19 has severely disrupted these links.

China plays a key role in this. According to Chinese customs statistics, the value of Chinese exports in the first two months of 2020 fell by 17.2% year on year, while imports slowed by 4%.

Although the global economy was fragile at the start of 2020, many hoped for increased international trade following the US-China Phase One trade deal. COVID-19 has

This drop in Chinese trade impacted some markets more than others. Comparative figures between the first two months of 2019 and the first two months of 2020 reveal a

scuppered those hopes, bringing the world’s factories to a standstill and severely disrupting global supply chains.


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collapse in Chinese trade with the EU and US. Chinese exports to the EU fell by 29.9%, while imports from the EU declined by 18.9%. Exports to and imports from the US tumbled 27% and 8% respectively. These substantial declines are likely related to the strong interdependence between European and US firms and Chinese ones.

The scale of the shock To understand the magnitude of the supply shock in China and its global propagation, the Lloyds Banking Group Centre for Business Prosperity (LBGCBP) at Aston University has mapped China’s global trading networks using official Chinese data.

reactors, intermediate goods like iron, and labour intensive final goods such as furniture.

commonly used intermediate goods (those that are used for producing other goods).

The most disrupted Chinese imports include intermediate goods such as organic chemicals, a likely result of factory closures in China, and capital goods like electrical machinery. Hardest hit were precious stones and metals, highlighting the emergence of a sophisticated middle-class of Chinese shoppers and how COVID-19 has reduced their demand for luxury goods.

Under normal circumstances, such goods would be traded back and forth between China and other countries as part of the heavily interconnected global production system. This significant drop in their international trade highlights the devastating effect of COVID-19 on GVCs.

Interestingly, Chinese imports of meat and mineral fuels increased sharply in 2020. The first can be explained by China’s weakened domestic supply of food during lockdown. The second highlights China’s growing demand for crude oil.

In 2019, the US had the highest trade dependence on China, followed by seven European countries and Japan. Four product categories have By 2020, European countries had been particularly hard hit as both moved even further up the rankings. imports and exports: nuclear reacAs the pandemic continues, the tors, electrical machinery and equipworst affected Chinese exports ment, plastics, and organic chemiinclude capital goods such as nuclear cals. These categories include some

An uncertain future But an unprecedented, synchronised and likely deep fall in demand is now developing. And China was again among the first to feel its impact. Chinese workers returned to work in April but many no longer had jobs. Widespread cancellations of international orders and delayed payments have led to liquidity problems and mass closures of businesses reliant on global demand. Investment also tumbled. During February and March 2020, official Chinese statistics report 24.4%

Exports and imports between China and the regions of the world (%change) between Jan and Frb, 2019 and Jan and Feb, 2020

Africa Asia EU Europe Latin America North America Oceania TOTAL -30



Export growth, % YoY



Import growth, % YoY

Source: General Administration of Customs of People’s Republic of China (GACC)



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Trade has tumbled between the EU and China

fewer new foreign trade enterprises established in China compared to the same period last year. Meanwhile, 12,000 existing foreign trade enterprises closed down. Agriculture, logistics and those producing raw materials, textiles and clothing have been hardest hit. But, on a more positive note, there has been a surge in demand for medical supplies.

by investing at home in the high tech and medical sectors. So is this the end of globalisation? No. But a reconfiguration of GVCs is inevitable.

A way forward Global supply chains are extremely complex, and no sector or country is an island.


This is good news for globalisation’s survival.While efficiency remains the main target, businesses will continue to shop globally. Concerns about an overreliance on complex GVCs are justified in the case of products related to national security, such as medical supplies. Many countries will now ensure they can produce such goods without relying on imports.

Many are now highlighting the dangers of relying on global value chains – and in particular, those linked to China – leading to talk of “de-globalisation”. The European Commission president, Ursula von der Leyen, for example, has called for the “shortening” of global supply chains because the EU is too dependent on a few foreign suppliers. Similarly, the French president, Emmanuel Macron, has argued for a strengthening of French and European “economic sovereignty”

But GVCs follow the principle of efficiency. They are the result of businesses sourcing the best possible inputs to meet their production needs at the lowest cost – wherever those inputs come from.

World Input-Output Database (WIOD), 2014. Based on author’s calculation

Nobody can predict the next crisis. But the most reliable and efficient insurance by far is to build a strong international cooperation network. As yet, global political consensus on this remains elusive. But that doesn’t mean we should ever lose the ambition.


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Digital and Physical Worlds Set to Collide as Cybersecurity Takes Center Stage

Author: Steve Durbin, Managing Director ( Pictured ) of Information Security Forum (www.securityforum.org )


he digital and physical worlds are on an irreversible collision course. By 2022, organizations will be plunged into crisis as ruthless attackers exploit weaknesses in immature technologies and take advantage of an unprepared workforce. At the same time, natural forces will ravage infrastructure.

resilience will be crucial as a hybrid threat environment emerges.

to threats that will outpace and overwhelm them.

The impact of threats will be felt on an unprecedented scale as ageing and neglected infrastructure is attacked, with services substantially disrupted due to vulnerabilities in the underlying technology. Mismanagement of connected assets will provide attackers with opportunities to exploit organizations.

Let’s take a quick look at a few of the threats on the horizon and what they mean for your organization:

Invasive Technology Disrupts the Everyday

New technologies will further invade every element of daily life with sensors, cameras and other devices embedded in homes, offices, factories A failure to understand the next and public spaces.A constant stream generation of workers, the concerns of data will flow between the digital of consumers and the risk posed and physical worlds, with attacks on Over the coming years organizations by deceptive technology will erode the digital world directly impacting will experience growing disruption the trust between organizations, the physical and creating dire as threats from the digital world consumers and investors.As a result, consequences for privacy, well-being have an impact on the physical. the need for a digital code of ethics and personal safety. Invasive technologies will be adopted will arise in order to protect brand As the digital and physical worlds across both industrial and consumer reputation and profitability. become increasingly difficult to sepmarkets, creating an increasingly Organizations will have to adapt arate, it will be an imperative for turbulent and unpredictable security quickly to survive when digital and organizations to understand how environment. The requirement for a physical worlds collide. Those that disruptive technologies and pracflexible approach to security and don’t will find themselves exposed tices will impact their operations. 56


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wrong people and controls, and use technology in unethical ways will be publicly condemned. This crisis of trust between organizations, employees, investors and customers will undermine organizations’ ability to conduct digital business.

About the Author Steve Durbin is the Managing Director of the Information Security Forum (ISF). His main areas of focus include strategy, information technology, cyber security and the emerging security threat landscape across both the corporate and personal environments. He is a frequent speaker and commentator on technology and security issues.

Consumer privacy and safety will be a major consideration for new and existing businesses strategies that utilize increasingly invasive technologies. In order to defend against attackers and stem a consumer backlash, organizations should consider not only how they secure hardware and software assets but also the information in their supply chains.

Neglected Infrastructure Cripples Operations The technical infrastructure upon which organizations rely will face threats from a growing number of sources: man-made, natural, accidental and malicious. In a world where constant connectivity and real-time processing is vital to doing business, even brief periods of downtime will have severe consequences. It is not just the availability of information and services that will be compromised – opportunistic attackers will find new ways to exploit vulnerable


To remain steadfast during this impending crisis of trust, organizations will need to improve operational transparency, update business continuity plans and overhaul or evolve technical security controls to consider the range of disruptive technological and human threats. Careful protection of the brand will remain high on the corporate agenda, with information security playing a key role in ensuring that the reputations of organizations are maintained.

The Time to Prepare is Now

By 2022, organizations will be unable to disentangle the digital from the physical and will be forced to respond to a growing blend of threats from new technologies, people and nature. infrastructure, steal or manipulate While the prospect for commercial critical data and cripple operations. success will be enticing, this hybrid As man-made, natural, accidental world will bring with it increasing and malicious attacks intensify, dangers that will have devastating organizations will need to secure consequences for businesses, employees their physical and digital estates and consumers alike. or face destruction. Technical In the face of mounting global threats, infrastructure must be hardened and organization must make methodiprotected against new and traditional cal and extensive commitments to attacks, or strategic decisions must ensure that practical plans are in be made to transfer risk away from place to adapt to major changes the organization.Those that neglect soon. Employees at all levels of the the security of their infrastructure organization will need to be involved, will have their operations crippled. from board members to managers in non-technical roles.

A Crisis of Trust Undermines Digital Business

Bonds of trust will break down as emerging technologies and the next generation of employee’s tarnish brand reputations, compromise the integrity of information and cause financial damage. Those that lack transparency, place trust in the

The threats highlighted above could impact businesses operating in cyberspace at break-neck speeds, particularly as the use of the Internet and connected devices spreads. Many organizations will struggle to cope as the pace of change intensifies. These threats should stay on the radar of every global organization, both small and large, even if they seem distant. 57

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Why now is the time to


s we emerge from the coronavirus-induced economic lockdown, it is vital to consider what comes next for business.

In the UK, the Office for Budget Responsibility estimates that government’s life-saving interventions to prop up the country through the crisis could cost over £100bn. Meanwhile, the European Union has predicted that a recession of “historic proportions” will happen this year. What this means is that fiat currencies linked to sovereign governments are going to become very expensive. Someone has to pay for the mountain of debt being racked up by governments, and that will potentially mean higher taxes, or higher inflation which erodes the value of wages and savings.

Larger companies may be able to raise capital through traditional measures, but it is going to become more expensive. And what about pubs, independent restaurants, and local football clubs? These places are often cornerstones for communities, and they are likely to be hammered by a recession. They cannot issue equity on the stock market -- it is prohibitively expensive. As the economy reopens, what role could crypto play in helping these businesses access capital and get back on their feet? Perhaps now is the time to normalise a practice called tokenisation. Many will already be aware of cryptocurrencies like Bitcoin and Ethereum. These digital coins are gradually


becoming more accepted around the world, and the current crisis is likely to accelerate their wider adoption -especially as many may fear physical coins and paper money could transmit the coronavirus. Politicians from the US to China are discussing creating digital equivalents to their currencies, as they are easier and cheaper to distribute, and prevent fraud. Meanwhile, regulators are becoming more understanding and accepting of crypto, as technology provides more robust protection and oversight. Even leading financial institutions, from Fidelity to Goldman Sachs, are taking cryptocurrency seriously. Cryptocurrencies are effectively tokens that represent a store of value and can be exchanged. But while a cryptocurrency is traded publicly, crypto tokens can be created privately, and for specific purposes. Tokenisation is the process of taking an asset, and dividing ownership of the asset into several cryptographic tokens. Much like a share certificate or loan note represents that the holder owns equity in a company or a stake of a debt, so too can tokens represent fractional ownership of an asset. The difference is that it is a much cheaper and more efficient process than traditional share ownership. Selling shares in a business often requires dealing with an investment bank and financial institutions, as well as paying for a registrar to handle and distribute share certificates. It is a high-cost and complex process.


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In contrast, because crypto token exchanges are recorded onto a blockchain, it is more decentralised, democratised, and low-cost. After the Covid-19 crisis, private institutions looking to liquidate their assets should consider issuing tokens as a cheaper and more direct approach to raising capital. This is not uncharted territory.The beer chain BrewDog has raised millions of pounds by selling shares directly to customers through its “Equity for Punks” scheme, while crowdfunding websites like Crowdcube and Seedrs have transformed how businesses can raise capital from everyday investors, by largely digitising the process of issuing shares. Tokenisation offers similar benefits, enabling that local pub or restaurant to sell token-based fractional ownership to loyal customers. These tokens can offer other bonuses, such as a discount or a share of profits. And unlike crowdfunding-based equity, these tokens are inherently tradeable, thanks to being recorded on a blockchain; they don’t need to be listed on a stock market, the tokens are tradeable in and of themselves. Of course, if you’re a small business owner, the idea of becoming a blockchain expert in order to issue tokens will seem daunting. But you won’t have to. In addition to liquidity (i.e. the ability to buy and sell) being offered via crypto-issuing platforms, big tech is also limbering up to offer infrastructure solutions for the rapid issuance of tokens via a recognised currency that is automatically incorruptible.

But Apple, Google, or even Japan’s Rakuten could also pull out in front.The latter already has “Super Points”, a cashback-based loyalty scheme that can be used to pay for goods on other ecommerce platforms, and even in branches of McDonalds.These points could be tokenised, which leads to all sorts of possibilities. For instance, if they could be exchanged with Libra, you then have a potentially cheaper alternative to traditional forex markets and entirely new ways to generate wealth.

Facebook is the leading household name here. Libra, its cryptocurrency, will enable the social media giant to connect its communication solutions with ecommerce, and it may eventually lead to the creation of infrastructure for companies to issue tokens via Libra. Imagine paying for your friend’s pint with Libra coin over WhatsApp or Instagram.

The underlying point is that, while it is easy to fret over how businesses will cope with the economic repercussions of the pandemic, it’s also possible to be excited by the solutions that will emerge. Now may be the time for crypto coins like Libra to become mainstream, and tokenisation could become a crucial way for communities to support their local businesses in the coming years.



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AI In Banking

Hype Or Revolution


everal years ago, the CEO of Deutschebank stated in an interview that he thought AI would replace up to half of its staff. The prediction sent shockwaves through the industry and made a lot of employees feel uncomfortable about the longevity of their roles. The bank soon fired him and replaced him with somebody else, so he won’t be responsible for the organization’s sweeping changes. But it did reveal just how much hype there is in financial circles about the promise of AI. Other people have joined the fray, calling for the end many routine jobs in the banking industry. Citigroup executives believe they will say goodbye to around a third of workers. Japanese financial group Mizuho says that it is looking to replace more than 19,000 by the end of the present decade. But whether the digital transformation in banking will bear fruit remains to be seen. Currently, there’s a problem right at the core of AI research. The people at the forefront of the movement know that the technology is very good when it has an objective function - something to optimize - but it isn’t so good in other situations. So, for example, it can maximize the probability that an image shows a cat. Still, it can’t engage very well in regular conversation - the sort of thing you need for healthy client relationships. Artificial intelligence is also a long way from becoming what you might call “general intelligence.” The software is good at performing cognitive tasks, but it has no subjective experience of them. It doesn’t know what it is doing - it just goes through the motions.


This fact of the matter means that some of the more outlandish predictions probably won’t come true. What we seem to be looking at is something that will allow software to perform a subset of cognitive tasks. However, it is doubtful we will see programs with subjective agency any time soon. When you tell them what to do, they’ll do it well. But they won’t be running their own companies just yet. That’s very futuristic. AI, however, is a wishy-washy concept. Unlike the tech revolutions of the last decade - like the cloud - you can’t easily pin it down. AI doesn’t just do one thing - it is a solution for a whole bunch of tasks. The banking sector, therefore, is going to have to figure out how to deploy it sensibly. For now, it won’t replace people. Instead, it’ll be more like a tool that makes them more valuable. It is, in a sense, a form of cognitive assistance, just like machines are assistance for manual labor. Robots can’t do all the work themselves, but they can dramatically increase the output per worker. The same may

now be coming to the banking industry.You’ll still need officers to process business banking customers manually, but AI could speed up aspects of the process, like credit checking. The banking sector needs to be careful not to set unrealistic expectations of AI. The people at the forefront of the field are more than willing to point out that the science isn’t done yet. They can replicate some aspects of intelligence, but they can’t fabricate it wholesale. Researchers still need to make fundamental breakthroughs to usher in that exciting and giddy new world. To call AI in banking pure hype, though, is taking it too far.There are n umerous examples of AI in banking already, and the technology only continues to improve.

Biometrics For Added Security We first saw biometrics in banking in the film Blade Runner. But advances in technology and AI have made it


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to make it a reality. And it’s already been done. British bank Natwest, for instance, now allows customers to open accounts with a selfie. It then stores their data securely, linking their biological profile to their financial information. The security benefits of AI could be quite extraordinary. It might sound unsafe, but it is actually a massive improvement over the current system of using government-mandated IDs like passports and driving licenses. Biometric forms of identification are much more challenging to forge and, generally, safer than their paper-backed rivals.

Investment Trading Currently, bankers rely on seasoned traders’ quick wits to make investment decisions in the equity markets on behalf of their clients. Movements, however, are often so fast-paced and unpredictable, that many traders struggle to equal the market, let alone beat it.

Fraud Protection

block on it, protecting money until Banking fraud is currently a mas- the owner confirms that it made the sive issue for the banking sector. transactions. Every day, thousands of people lose money from their accounts because Better KYD Checks of fraudsters usually operating over The Patriot Act introduced a bunch of new security requirements for the internet. online transactions. But ensuring AI tech, however, offers a potenthat all these are being met is diftial solution. Because AI can conficult, even for experienced banking nect the dots between vast troves professionals.The idea now is to use of customer information, it can often AI to check a range of data, from a spot potentially fraudulent activity customer’s social security to their quickly. social media, to determine whether Fraudsters trying to access accounts fraud or money laundering is taking from an unknown IP or location, for place.The technology should reduce instance, could trigger a denial of the amount of time that it takes to service. Similarly, if an AI suddenly assess an applicant. And that might detects unusual account activity bring banking fees down and make (consistent with fraud), it can put a the process more efficient.

Banks and other financial institutions, therefore, are wondering whether there is a way to use the data-crunching abilities of AI to make better split-second decisions. Artificial intelligence could theoretically evaluate firms based on publicly available data, establish fair value, and then conduct trades based on those insights. By using data better than any human could, it might be better at determining value - at least in the short-term.



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The implications of Brexit for the

UK Economy


ow the United Kingdom has finally left the European Union, but what does the British economy have in the future? After a recent LSE forum, Gerard Lyons, Vicky Pryce, and John Van Reenen raised questions on the economic impact of Brexit from LSE staff, students and members of the general public. Much attention was paid to the economic impact of Brexit including inflation in the UK (can also be checked on calculators.tech), but most votes for Brexit come from outside of the country. What is Brexit going to provide for the people living in these areas? We talked to Gerard Lyons is an Economist (British)- He is also a co-writer of Clean Brexit: How to Make a Success of Leaving the European Union. Vicky Pryce who is an Economist (Greek) and former Joint Head of the United Kingdom's Government Economic Service and John Van Reenen- Professor of Management and Economics at the Massachusetts Institute of Technology (MIT). Vicky Price: This was after the vote that people in London decided to show how they were different from the rest of the United Kingdom and how much they voted in the referendum. London was recommended to have its own immigration policy. Some people have actually created articles on what can be achieved for London alone. In many major cities, of course, the vote was like London and substantially different from other places in the country. And I must confess, I live in London and maybe we haven't really seen what happens outside the capital. What the government is now planning is to really change this and 62

ensure that these northern areas are profitable. We have already seen their commitment to helping the Flybe airline in national matters. Remember many people are concerned about state aid to say that you can't do what they do as EU members for Flybe–it's, in any case, addressed to the EU. But you can also do different things for the areas that are allowed. State aid has always been used as a reason to avoid money being given to certain sites. But what has changed in the last ten years has been that the money going to the regions has been significantly reduced.The Regional Development Agencies (RDAs) have been dropped. They were substituted by what are referred to as local business alliances (LEPs), which effectively put together different actors from specific regions.

John Van Reenen: One little aspect I just want to write. They claim the people in the North have supported Brexit. Okay, there was a Brexit alliance. Many of the electors were traditional Conservatives residing in the affluent countryside, and they are not only those who reside in the northern regions.

They didn't necessarily know what they were doing, and for quite some time they received very little income. This takes a long time for this to be resolved and many of the regions that have voted Leave are impacted by the loss in productivity.We will be very unfair, where everyone else is relegated, and the world is so much more complicated.

What's going to happen? They'll be worse off. For example, residents in Sunderland, where the Nissan car plant is based, are potentially worse off as more development shifts out of these places. It will be the reverse of what those voters in conventional Labor regions that voted in favor of Brexit endorse. Such men, due to Brexit, would, unfortunately, be worse off.

I believe that due to the needs of those countries, any infrastructure spending should take place. But the effect on those areas is going to be so lengthy that it is virtually wasted of time and money. It might be viewed as something optimistic, but without a major repartition–one that really impacts London really badly we won't just see an effect on northern areas, so I believe there will be a great disappointment for people living in them.

Gerard Lyons: The National Statistics Service encompasses the United Kingdom in 12 areas. Of the 12 countries, 3 voted Remain: Northern Ireland, Scotland, and England. Leave was voted by nine other states: Scotland and the 8 areas in England beyond Town.The 8 areas were the most Euro-enthusiastic and the most Eurosceptic from 1975 and the first referendum to the 2016 referendum.


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Gerard Lyons: In many ways, it was quite obvious what people voted for. It was so much reported that leaving the Single Market and quitting the customs union was unthinkable. There are many common reasons why people vote. Some polling also showed that people opted first for freedom, secondly for resettlement and thirdly for the environment, which was demonstrated by NHS and other factors.

So, under Lord Salisbury, you have a formal cross-party group set up. At the end of the day, the whole issue is about devolution.Tony Travers has performed some excellent work on If you had the UK on average 100, the London devolution process for Northern Ireland is 121, so you get the previous Mayor of London–and 21% more public spending per citi- possibly for the current one. And zen than the UK average. Scotland is there are many concerns about this around 119, Wales and London are being moved across the world. about 118, East England is about 91, There is no reason to believe and East Midlands is about 91. that these areas are going to be South East England is about 90, worse. When you look at what the South West England 90. South-west present Japanese ambassador to England has about 90. One thing, Great Britain said a few months therefore, is more spending. ago, apart from Honda, he emphaControl is another thing. Essentially, sized how other Japanese autosmall and medium-sized companies firms wanted to invest more in the do not care about specific regula- UK for R&D purposes. It's quite fun, so let's see at the end of the day tions and are concerned about the what happens. whole scale of regulators and about their enormous nature. So, what one Much of the confusion created by wants to suggest is that the North- the referendum is that people who East of England, listed, now comes to voted for the Leave didn't know the fore with issues such as free ports. what Brexit they voted for. What kind of Brexit the UK government One of the major problems in aca- will be pursuing is still uncertain, demic work is who serves the pub- but it seems more and more like a lic. When in London you ask people weak alignment plan. Which infludoes Parliament serves them, they ence will this have after the end of say yes. If you question people in 2020, in particular on the market the rest of Britain, they claim no on effects of food, salaries and other average. issues impacting ordinary people? This subject is now attracting scholarly focus, but when you look at it a number of issues are illustrated. One is government expenditure.


Green Brexit' is a book I co-authored with Liam Halligan that speaks not only to remaining but to Leavers. Therefore, the United Kingdom needs to invest more. One of the issues recently listed growing concerns the problem of EU migrants is the lack of investment in schools and training in the UK. I now assume that the State expects that companies can spend more on their UK staff's skills and training as a result of a point-based relocation scheme, but we will see how that works. I assume that the UK economy should be optimistic. The United Kingdom is moving away from the EU, but we want a reasonable future relationship with that. Nevertheless, the EU still poses several major challenges, like the UK. It's not just the west or everyone else when you look at the last decade. The United States has grown rapidly in the western part of Europe. Western Europe will reposition itself in this evolving, growing global environment, including the United Kingdom. And if we get the benefits right perhaps spend in then some of the issues raised by people can continue to be answered. This article is an edited transcript of a Q&A which took place on 27 January at an event held at LSE. Members of the audience posed several concerns. 63

the global investor

Global stocks rise after Trump holds back on China retaliation


lobal stocks pushed higher and the dollar weakened on Monday ( June 1st ) , after Donald Trump’s latest escalation of his dispute with China fell short of traders’ worst fears. European markets rose, as the FTSE 100 and CAC 40 each gained about 1.5 per cent in the first hour of trading.The moves take the Stoxx Europe 600, a composite index of the region’s largest companies, within sight of three-month highs. Speaking after markets closed in Asia and Europe on Friday, Mr Trump said he would revoke special trade privileges for Hong Kong in retaliation for Beijing’s decision to impose a controversial security law on the former British colony. But he failed to unveil any specific measures against the financial hub, and analysts said the phase-one trade deal with China appeared safe for now. “China’s response to [the] US around the Hong Kong issue [will] probably be mild and [the] US-China phase-one deal is likely to hold,” added Johanna Chua, chief Asia-Pacific economist at Citigroup. Hong Kong “protests have been on a smaller scale since the news of the national security law, which also helps soothe market sentiment”. Shares in Hong Kong and mainland China jumped on Monday in the first day of trading after the US president spoke. Hong Kong’s Hang Seng index rallied 3.4 per cent while China’s CSI 300 gauge of Shanghai- and Shenzhen-listed shares added 2.7 per cent, as investors deemed that Mr Trump had pulled his punches in a press conference on Friday. China’s onshore traded renminbi added 0.3 per cent to trade at 7.1157 per dollar. The dollar index, which tracks the greenback


against a basket of currencies, lost 0.3 per cent. “Market participants are relieved that President Trump did not announce more meaningful policy actions to hit back at China at last Friday’s press conference,” said Lee Hardman, a currency analyst at MUFG. “While President Trump’s speech was heated in rhetoric, it lacked specific measures that would directly impact China,” he added. Futures trade pointed to gains of 0.3 per cent for the S&P 500 on Wall Street, after the US benchmark reversed earlier losses to close up 0.5 per cent after Mr Trump spoke on Friday. Investor sentiment in mainland China was also supported on Monday by data that showed manufacturing activity in the country expanded in May for the first time since January. The results of the Caixin-Markit purchasing managers’ index, however, indicated that the global effects of the coronavirus pandemic would continue to weigh on exports from the world’s second-largest economy. Iris Pang, chief economist for Greater China at ING, said China’s recovery “should take a long time” due to weak global demand. Elsewhere in Asia, Japan’s Topix added 0.3 per cent on Monday while South Korea’s Kospi index rose 1.8 per cent. In Australia, the S&P/ASX 200 gained 1.1 per cent. Oil prices slipped with Brent crude, the international benchmark, dropping 0.2 per cent to trade at $37.79 a barrel. WTI, the US marker, was down 0.1 per cent to $35.45. US government bonds slipped slightly, as the yield on the 10-year Treasury rose 0.025 percentage points to 0.6689 per cent.


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Thomas Dunstan

Q You’ve been the Director General at BCAA for 8 years now, but before that, you’ve spent a decade at Bermuda’s International Airport. It’s safe to say that you’re an expert in aviation. As you see it, what are the main benefits of registering aircraft — and companies — in Bermuda over other jurisdictions? Registering an aircraft in Bermuda offers many benefits both through customer experience and cost benefits. The Bermuda Aircraft Registry has built a team of knowledgeable and highly experienced staff in Airworthiness, Operations and Regulation. Bermuda has a reputation for high standards of regulation, and its aircraft registry is no different. We have a solid international reputation for offering high regulatory standards and excellent service levels.This includes an International Civil Aviation Organization (ICAO) based


safety oversight system, which was audited last year with extremely positive results. Another benefit for aircraft owners and lessors is the flexibility of our requirements, such as Type Certificate acceptance. We accept ANAC (Brazil), EASA, FAA and Transport Canada certificates. This helps to minimize the cost of registering an aircraft. Bermuda is also a lowtax jurisdiction with a consumption-based tax regime. Owners registering an aircraft on the Bermuda Aircraft Registry may be in a position to take advantage of favourable tax treatment in their principal place of business.

for meeting global requirements around anti-money laundering, terrorist financing and economic substance, to name a few.

Q In 2016, BCAA went through some interesting changes and completed the transition from a government-run department to a semiautonomous administration. What were the biggest challenges during the transition? As a few years have already gone by, what are the most important differences that this move has brought — for BCAA and your clients?

The Bermuda Registry also offers asset protection through both the Cape Town Convention and our Air- The biggest obstacle that the BCAA craft Engine and Mortgage Registers. had to overcome was transitioning In terms of setting up a company, the processes from operating as a Bermuda’s legal and business infra- Government department to funcstructure makes it a very secure and tioning as a business. An independattractive location. Bermuda’s reg- ent Board of Directors is responsible ulatory authorities are recognized for the actions of the authority, and 65

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The Global-Investor talks to Thomas Dunstan (pictured) Director General of Bermuda Civil Aviation Authority who has been at the helm for 8 years. He tells us why so many companies are flocking to his jurisdiction, the changes that have taken place and what the future holds for the BCAA.


general administration of its affairs Q You once said that BCAA is and business, which is made up of “always looking to take a directors from a variety of business leading position in showing backgrounds including; finance, legal, the marketplace that we administration and aviation. All Board members had to gain a thorough understanding of the business operations and structure in a very short amount of time. The benefit of the Board is the diversity that has brought new thinking and provided some innovative strategies to enhance the Registry further. The decision was ultimately made to transition to an authority to reduce the restrictions that apply to the public sector. Over the last few years we have been able to grow the team, increase productivity and enhance customer satisfaction.

are maintaining the highest standards or regulation.” What’s the secret behind managing to stay on top of the game and meeting an ever-growing demand for the business aviation industry and competition of the new jurisdictions?

I think what makes us unique is our first-class customer service.We offer an unparalleled, seamless, client-focused service. You may have seen the line ‘Putting You at the Centre of Everything We


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Q The whole world and every industry are dealing with the Covid-19 pandemic and its consequences right now. What are the main changes that BCAA had to implement in its everyday routine?

state. This is important, particularly at a time like this, when many aircraft are parked or only minimally used and operators may be restructuring their fleets. Of course, we recognize that the Coronavirus has had a huge impact on our industry, and we are doing everything we can to assist operators so that they can remain in business.

We are quite lucky in that many of our staff were already working remotely, at least on a part time basis. Of course, for the safety of Q Could you say a few words our staff and keeping in line with about the future? In your Government protocols our physical opinion, how will the aviation offices have been closed since March, industry evolve over the next so we implemented a few meas5, 10 years? And what about ures to ensure that all staff were the BCAA — how it will look 5 equipped to work from home on a years from now? full-time basis. I think that this pandemic has forced Working in the aviation sector usually involves quite a bit of travel- us to review the way that the avialing, and as a global provider, many tion industry functions, and in ways of our staff members would have that were not previously considtypically been travelling for meet- ered. At BCAA, we have accelerated ings, industry events and inspections. some changes, that we had planned Like many other industries, our staff in coming years, to assist with the have been communicating to cli- new way of working.As far as workents through virtual meetings and ing remotely, I believe that it is here our inspectors have set up desktop to stay. We are proving that it can audits supplemented by photo and work and we see that it offers staff and customers more flexibility. video evidence. Through technology (phone, email This industry is always evolving, but and video conferencing) and with with recent events it is clear that offices in four different time zones we need a thorough review of regaround the world, the team are avail- ulations, procedures and policies to able and ready to help at any time. allow regulators and customers to Do’ on one of our advertisements. continue operating during crises. That is not just a slogan, it is at the Clients can stay up to date on any very core of our business philosophy. changes by signing up to our news The Bermuda Aircraft Registry is the alerts on our website and follow us world’s oldest offshore registry and we have been through many changes on Facebook and LinkedIn. Q Currently, the Bermuda over the years. As we move forward, Aircraft Registry is among the we will continue to focus on servicing Q What impacts of the most popular with Russian Coronavirus pandemic do you our clients in the most efficient manairlines. A few months ner and adapting as necessary. see as the most important

ago, BCAA also signed an agreement with Kazakhstan airlines. What other clients would you like to attract in the near future?

I cannot divulge specifics, but we are always looking at new opportunities where our expertise can assist and enhance aviation. The political climate in many countries determines where we place our focus and often this can change quite quickly.


ones for the BCAA in both the short and long term?

How will it look in 5 years from now? Let me find my crystal ball …

Our focus is to ensure that we can still service clients in a timely manner.We implemented a digital signature format to assist with the turnaround of Certificate renewals and approvals in these circumstances.

As we have seen all too clearly in recent months, life is very complex to make precise predictions. However, we are resilient and by sticking to our vision and values, with continued focus on our goals, we will adapt and even reinvent ourselves, to navigate these turbulent times.

We are continuing to work with operators and leasing companies to maintain aircraft in an airworthy

Visit www.bcaa.bm 67

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A Hub for the Global Enterprise:

Why You Should Consider Starting a Business in Bermuda


f you mention Bermuda to most people, chances are they will either think of its famous beaches or its high standard of living. However, these two elements do not tell the full story, as striving for a unique profile has always set Bermuda apart from other international financial centers. For many decades, Bermuda’s pursuit to meet high standards and align itself with the best practices worldwide has distinguished it from other offshore centers. It’s all about reputation and quality over quantity, and such companies like Airbus, Boeing, BMW, Land Rover, Sperry and Bremont, Louis Vuitton and Moet & Chandon chose to register in Bermuda for all the same reasons.

the telecommunications infrastructure, information on how favorable are the regulations for companies, government effectiveness indexes, and indexes on the perception of corruption, among others. According to the latest GFCI ranking, Bermuda is now the third-highest ranked financial center in the Latin America and Caribbean region, having been overtaken by the Cayman Islands and the British Virgin Islands.

One of the reasons why Bermuda dropped in this list was the fact that the Council of the European Union added it to its blacklist of non-cooperative jurisdictions for tax purposes. Being added to this list amounts to a move to “name and shame“ rather than to impose practical measures. The offshore financial centers in the However, Bermuda immediately Caribbean have become economi- took some steps towards changing cally successful in the last 30 years. this situation and introduced ecoToday, the Cayman Islands, Bermuda, nomic substance rules, expressing British Virgin Islands appear in the hope and expectation that it will be most important ranking worldwide, removed from the blacklist on the the Global Financial Centres Index next evaluation. (GFCI), which is the main tool that The efforts did pay off, and Berpoints out how attractive financial muda was removed from a Eurocenters are around the world and pean Union list of non-cooperaallows us to understand their growth tive tax jurisdictions in May 2019, and competitiveness over time. The with the EU council saying Bermuda factors taken into account include had taken positive steps, and that it evidence on the competitiveness of “remains committed to addressing 68

EU concerns in the area of collective investment funds.” Today, Bermuda’s attitude is crystal clear — “Quality rather than quantity of the financial transactions.“ Curtis Dickinson, Bermuda’s Finance Minister, noted that Bermuda has a strong message for those who see this offshore financial center just as a perfect place to hide misdeeds: “We will rat you out, plain and simple as that, because our reputation is a critical part of our calling card, and unless we can demonstrate how serious we are about this, then people will not take us seriously.“ As one of the leading offshore financial centers, Bermuda has all the essential components necessary for a robust international business community. There are many advantages of doing business here — think progressive regulatory regime, lower tax jurisdiction, the wide availability of experienced service providers, modern infrastructure, a stable political and economic climate, and the quality of life that is enjoyed on the Island. One of Bermuda’s biggest attractions is its tax-neutral jurisdictional status, with zero tax on profits, income, dividends, or capital gains. What is more, it is relatively easy to start a business here, as company


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Bermuda is also a top destination for private jet travelers. Aoife O’Sullivan, partner with the Air Law Firm noted that “The main reason is flexibility.“ And even though the travel industry has been exposed to the sudden drop in the tourism sector due to the coronavirus pandemic, the private jet industry has been on a roll, especially in the Caribbean. Anthony Tivnan, President at Magellan Jets, one of the leading private jet providers, noted that “The Caribbean Islands are extremely popular right now: Puerto Rico, the Turks, and Caicos, Barbados, Bermuda… Island travel is extremely active, and we’re counting on it to replace some of the European travel we typically do in the summer months.“ registration is a fast and simple process. The length of time it takes to incorporate in this country is about 3 to 5 days, and it is typically affordable to run a corporation, as there is only an annual government and agent fee. Ross Webber, CEO of the Bermuda Business Development Agency (BDA), which has been pro-actively engaged in assisting start-ups, multinationals, and other corporate ventures since it was established in 2013, says that “We are committed to keeping international business here. We are pro-actively advising the sophisticated international business community about our conducive business environment and we are continually refining, augmenting, and simplifying the process to start, relocate, or grow a business here. Now is the perfect time to come to Bermuda. We are continuing to build on our success and well-deserved reputation as a jurisdiction that caters superbly to the global marketplace.” Bermuda’s location is also an important component of the list. Ideally located between Europe and the US, Bermuda is easy to get to with daily direct flights to and from London and US gateway cities. Webber noted that “As an international financial center, Bermuda is particularly


well-positioned for European companies looking to add an offshore component.“ What is more, Bermuda has its own stock exchange (BSX), which is one of the largest offshore electronic securities markets in the world. It specializes in the listing and trading of equities, debt issues, derivative warrants, funds, hedge funds, insurance-linked securities, and other capital market instruments. Dickinson noted that “In as much as you have an international business that needs an offshore presence, we would argue that Bermuda is a great place to put it.“ And we have a few related numbers for you right here. Today, there are as many as 18000 Bermuda-based exempted and international businesses on this 20,6 square miles Island. Bermuda is ranked Number 1 in the world as an offshore center for insurance and reinsurance, with approximately 1500 businesses in this industry. The sector also consistently accounts for about 85 percent of the Island’s GDP. To be even more specific, in the global insurance and reinsurance sector, Bermuda is second only to London and New York. It’s also in the Top 3 for shipping and investment. More than 75 percent of the Fortune 500 companies have some presence in Bermuda.

What is more, today Bermuda has earned a global leader in fintech and innovations involving blockchain title. Over the past several years and with the leadership David Burt, the youngest Premier ever elected to this position, Bermuda’s government agencies passed a string of new regulations aimed at creating infrastructure and ecosystem for innovation and technology with a specific focus on the applications of blockchain. The legislation, which included leading-edge fintech regulations for digital assets, has put Bermuda at the forefront of the blockchain revolution and made it a sought after destination for companies in the industry. On the end note, Ross noted that “While (re)insurance is our domicile’s most prominent industry, the strength of Bermuda’s economy is its multi-sector scope. The Island is a thriving center for investment management, trusts, private client and family office structures, as well as a global aircraft & ship registry, ship-management firms − plus new-economy ventures ranging from marine-sourced pharmaceuticals to e-commerce and technology start-ups. Bermuda’s sophisticated infrastructure and the corporate synergy it engenders have made the jurisdiction a hub for the global enterprise.“ 69

the global investor

3D Printed Drugs A Godsend


s the population ages and rates of chronic disease rise, an increasing number of people are taking multiple pills for several conditions, often at different times throughout the day.Taking the right pill at the right time can be a hassle and potentially dangerous if a mistake is made. It is especially tough for people with dementia, for obvious reasons. It would be convenient and safe if people could take just one pill a day – a pill that delivers


all the right medication at the right time in the right dose. Pills normally work by releasing drugs into the body when their outer shell is dissolved in the digestive system. The drug inside then enters the bloodstream. But a cleverly designed pill could have many layers.After the first drug has been released, the next shell of the pill is exposed, which then dissolves, releasing a different drug. This would continue until the entire pill is dissolved.

It would also be possible to time the delivery of each drug by placing the drugs in layers that dissolve at different rates. This is not a future dream. These “polypills” are already being made, mostly for type 2 diabetes, high blood pressure and heart conditions. It is not difficult to mass produce these polypills. But there is a drawback. A polypill with a specific combination of drugs doesn’t necessarily help all patients. Some people might


summer edition

Drugs either need to readily dissolve after entering the body or need to be dissolved before, for efficient absorption. And these limitations also apply to polypills. We have recently published research on a type of material that has been used to contain water-insoluble drugs in the past, but that has never been 3D printed before.These matenot need one of the drugs or they rials are known as “surfactant-polymight need them in different doses electrolyte complexes”.These mateto those in a mass-produced polypill. rials are gels made mostly of water, Making personalised polypills but their chemistry allows them to through the usual drug manufac- carry drugs that cannot be dissolved turing techniques is very expen- in water. sive as they are produced in very Surfactants are molecules with two small amounts – often for just one parts: one part that likes to mix with patient. A much cheaper way of water and the other that doesn’t. making these polypills is 3D print- This means that surfactants tend ing, in which thin layers of materials to clump together with other molare built up according to the design ecules of the same type when they are placed in water so that the parts to make a final product. that don’t like water are shielded from it. These structures can store Printed pills A 3D-printed drug has already been drugs inside them. approved by the US Food and Drug Administration (FDA), but it is not a polypill. The FDA-approved pill is made of a water-soluble drug, but many drugs are not water soluble.


The surfactants in our study had a negative electrical charge, and the polymers (polyelectrolytes) had a positive electrical charge. So when the oppositely charged surfactants

and polyelectrolytes came into contact, they were attracted to one another to form a “complex” (hence “surfactant-polyelectrolyte complexes”). That is to say we, they formed a 3D drug-carrying system. We 3D printed alternating layers of polyelectrolyte and surfactant to make these complexes. These have the potential to store and deliver drug molecules in the form of pills. The pill can be made into a polypill simply by printing different layers with different drugs.

Not there yet Although lots of research has already been done, this new form of drug delivery has much further to go, especially as it requires regulatory approval. These approvals take up to five years, after passing clinical trials. Maybe in five years, some of us will get a prescription for customised polypills made on a 3D printer at our local pharmacies. People with multiple conditions will take one 3D-printed pill a day instead of a complex schedule of many pills, or perhaps even have the drugs implanted in their bodies. 71

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European Commission announces targeted “quick fix” amendments to EU banking rules Katie Fisher Reports


he Interpretative Communication defines how banks and regulators can flexibly apply the accounting and prudential rules. The flexibility in the EU’s regulatory framework covers the rules regulating how banks’ risk-assess of a borrower. It takes into account the inevitable event that some borrowers will not repay a loan due to the sudden economic crisis ensued by the COVID-19 pandemic will affect the amount of money set aside by the bank for any possible losses. It also considers flexibility within the prudential rules on the classification of non-performing loans in the case that relief measures, such as


guarantee schemes and moratoria, an opportunity for banks to accelhave been provided by EU Member erate their digital finance developStates or banks. ment. However, the Commission The Interpretative Communication also advises banks to approach digalso underlines areas where banks ital banking with caution.The risk of are encouraged to act responsibly. financial crime is likely to increase It highlights circumstances regarding under the current COVID circumdividends and variable remuneration. stances. For example, banks should avoid the distribution of dividends to shareholders and assuming a conservative approach to variable remuneration payments. Moreover, the Commission illustrates the role banks can play in helping businesses and citizens during the pandemic. This includes digital services, such as contactless and digital payments. The Interpretative Communication highlights this as

The ‘Quick Fix’ The European Commission proposes some ‘quick fix’ amendments to EU prudential banking rules due to the coronavirus. The targeted changes affect specific aspects of the Capital Requirements Regulation (CRR). It aims to maximise the capability of banks to lend and to absorb COVID-related losses, while still offering security.Valdis Dombrovskis, Executive


summer edition

On 28th April, the European Commission announced a banking package proposed to facilitate bank-lending in an effort to support the economy and mitigate the harsh economic impact of the coronavirus pandemic. The response aimed to encourage banks to utilise the flexibility within the EU’s prudential and accounting frameworks. The package includes “quick fix” amendments to EU banking rules as well as an Interpretative Communication on the EU’s accounting and prudential regulations. Vice President of the European Commission for An Economy that Works for People said: “We are supporting households and businesses as much as we can to deal with the economic fallout of the Coronavirus. The banking sector can do a lot to help here. We are using the full flexibility of the EU’s banking rules and proposing targeted legislative changes to enable banks to keep the liquidity taps turned on, so that households and companies can get the financing they need. I will soon also be launching roundtable discussions bringing together consumer and business groups with the financial sector so that we can address the most urgent needs of our citizens and companies.” The specific aspects of the CRR affected include the current transitional arrangements for mitigating


the impact of IFRS 9 expected credit-loss provisions on banks’ regulatory capital. The amendment proposes a two-year extension to these arrangements. It also suggests deferring the application date of the leverage ratio buffer requirement on global systemically important institutions to 1st January 2023. The temporary baking changes include extending preferential treatment of publicly guaranteed loans under the prudential backstop for Non-Performing Loans and a difference in how central bank reserves impact banks’ leverage ratio calculations. The proposed date of application for some capital benefits has also been advanced. This includes the treatment of certain software assets, specifications on particular loans

backed by salary or pension, the revised supporting factor for small and medium-sized enterprises, and the new supporting factor for infrastructure finance. It is clear that the Commission is encouraging banks to make full use of the flexibility within the EU banking rules. The temporary legislative changes have been imposed to enable banks to keep liquidity flowing, ensuring that households and companies have the financing they need. With this relaxation of banking accounting rules lenders are able to continue extending loans to companies struggling during the crisis.The announcements presents a coordinated EU response to the financial implication of the pandemic and is a great effort in avoiding national fragmentation. The Commission is taking an active role in engaging with the European financial sector to consider how best to develop further support systems for citizens and enterprises. There is also strong encouragement for banks to promote digital banking services which have seen a massive spike in engagement. The European Parliament and Council of the EU are in the process of considering this legislative proposal as a matter of urgency. It is hoped that it will be adopted as early as June.


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Putting change management at the heart, and start, of hr projects By Kate Mathias Global Head of Resourcing Standard Chartered Bank


he new tech adoption report from UNLEASH, ‘Why HR Projects Fail’ makes for interesting reading. Research conducted for the report found that 85% of the business leaders surveyed were not fully satisfied that their programmes achieved their intended goals. 74

If this is concerning to you there is good news. The report goes on to provide HR professionals with some guidance the report goes on to reveal 8 Golden Rules for successful HR Tech projects. One of these rules is: ‘Change Management Matters: As organisations move into a phase of nearly constant change, it is more important than ever to prepare

employees for and support them through technological upheaval and organisational transformation.’ Having spent much of my time at Standard Chartered Bank as head of HR Change, Portfolio and Transformation this is an area close to my heart. I passionately believe that change management should be at the heart, and the start, of a successful project.


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end user, greatly increasing the chances of adoption and success at launch and beyond.

more important than ever. Situations are unique and, for global business, very different in different We also structure our funding to parts of the world with some counallow us to keep the adoption pro- tries slowly coming out of lockcess going for much longer too. down, others still in it and some We know the go-live is when the only just starting to face the chalhard work starts, not finishes. This lenges it presents. These situations is when we need to investigate must be considered, and decisions whether people are using the tech- taken accordingly. nology the way we thought they There are positives organisations would and whether it is bringing can take out of the pandemic expeabout the change we hoped for, and rience. The speed with which change if they aren’t, why aren’t they? Peo- has come about, and the fact that ple often look for an end point to a this change and these new ways project, almost with the view that of working are working, for examit will be finished, and a line drawn ple. Prejudices have been thrown under it. In fact, being more incre- out of the window, productivity is mental and continuing to work good and beliefs about what’s poswith people to review projects after sible and the roles people can play go-live dates allows us to deliver in making change happen have been greater success. Tech on its own turned on their head. Despite the doesn’t drive transformation but gravity of the situation the pace of change is fast, the learnings are change in behaviour does. Timings and tools are crucial too. really impressive and confidence Being able to deliver support in the building.

I am often asked when change management should be introduced to a project. I actually believe that change management is the project. A successful project is about more than the technology you are introducing, more than the process change you want to bring about. The adoption of the project through successful change management is what is going to get you your results.

moment, with the right tools, is key. People don’t want to watch a webinar about something three months before it is introduced – they will be less engaged and forget the details. We need to provide the right support at the time the individual is experiencing their version of the change you are introducing if you want them to do something different.

It’s important to remember HR projects often deal with emotive subjects too. We deal with people and cover things like pay, performance, career progression, development Here at Standard Chartered Bank, opportunities, promotions and even adoption of change is something leave. Those leading HR projects we consider at the very start of need to recognise that the change projects. We onboard our regional curve you will take people through teams much earlier than is tradi- might get into people’s feeling and tionally done. This means they can personal matters and account for help land change from the outset. this when planning change manWe involve them in project design, agement. testing, planning the roll-out, every The pace of change is fast, this year aspect of the project. This ensures in particular and this should be facthat the people we are asking to do tored in to. The current situation things differently have been listened means that thinking about people to throughout. It means the user and their situations and how they experience will reflect the actual will experience things, is arguably


If change management isn’t given its rightful place at the heart of transformation, then HR projects can and will go wrong. Money will be wasted, new technology won’t be adopted and investment returns will be non-existent. The emotional impact of projects that don’t succeed can be damaging on a deeper level too. In short HR projects will continue to fail and business leaders will continue to be disillusioned To summarise, I agree wholeheartedly with the Golden Rule in the UNLEASH report that ‘Change Management Matters’. Change management is the project, it is integral to the whole programme. If you want to succeed start early, make sure you have the tools you need, think about the end user when you design the experience and make sure your funding is designed to allow you to maintain momentum well beyond your go live date. Download your copy of the UNLEASH report ‘Why HR Projects Fail’ containing the 8 Golden Rules from Thursday 28th May. 75

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Your Brand:

What’s at Risk?


uilding and maintaining a strong brand identity is not a simple task. It was not an easy job a few decades ago, and now, as we thrive in the digital age, it has become even more complicated. European Business Magazine Reports ( Nick Staunton) The internet, social media, mobile development — consumer expectations have changed so rapidly in the last ten years that businesses need to find new ways to adapt — and keep up. Today, people want to be a part of an experience. They want it all, and they want it immediately, and this is perhaps the most significant change to branding: it’s in real-time, and besides finding an emotional connection with their customers,


brands need to pay considerable attention to staying protected.

it more challenging to keep brands and businesses safe online.

As businesses have moved online, so have the counterfeiters and pirates, causing significant risks for the supply chain, product integrity, as well as threats to revenue as well as the overall reputation of the brand that took time to earn.

Tremendous effort, time and budget are spent on securing product integrity through the supply chain; however online tools can help customers destroy a brands name in just a few seconds. In the age of the internet, words spread like a virus, and a single mistake can erase years of hard work dedicated to growing a reputable brand.

With this in mind, a brand’s reputation is — without a doubt — one of the most important things to consider. Research, commissioned by the Confederation of British Industry (CBI), has shown that over half of customers are willing to pay a premium price for a product if it comes from a company they consider having a particularly good reputation. However, the digital age has made

Cybersquatting, hacking, domain hijacking, intellectual property theft — are all potential threats for brands, and it doesn’t end there. Counterfeit products and pirated products online are an approximately 350-billion-dollar market — and it’s still a relatively new phenomenon.


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Typically, brandjackers set up fictitious social media accounts or hack legitimate accounts to spread anti-commercial, misleading or provocative messages that are inconsistent with the brand’s communication strategy. These actions have one goal: damaging the brand’s reputation, and not necessarily for financial reasons, although, there are many brands out there that have suffered financial losses due to spurious actions. Brandjackers create entire websites that look like the original ones but aren’t. A few years ago, yours truly was a lucky coffee break away from buying a luxury watch from one such site. As the price was quite high, I decided to ring them to confirm if I could pick up the watch in Spain, where they said they were based. When they explained that they had moved to Germany — alarm bells began to ring. Suffice to say after a little more digging around and discovering more miserable customers; I realised that the website was merely a front for nothing! Brandjackers find ways to attract customers who find it difficult to tell the difference between the original brand’s website and the fake one. To make it believable, they add various supporting channels, including social media pages, claiming to represent the original brand. Step by step, many customers find themselves buying products from these fake websites, escalating the severity of the problem, which is one of many reasons why it is imperative to keep a brand’s identity and reputation safe. So how can you protect your brand from theft in this digital age? Firstly, it starts by registering the brand’s trademarks. Signs, logos, imaging, letter font, numbers, slogans and even sounds (the luxury brand Hermes has a horse sound when you ring their offices) — everything that distinguishes your brand from competitors needs to be registered and trademarked with the competent authority in your country.


Then there’s content marketing. With so many businesses building an online presence, content marketing has become one of the most critical aspects to attract consumers and turn them into action takers. It’s essential to copyright a brands content, including images, written posts, and videos, to prevent plagiarists from stealing and using the material as their own, Thinking globally is imperative: successful brands don’t merely focus on their home countries. On the contrary, they move into other jurisdictions and register their trademarks and patents, especially if the business is evolving and there’s a prospect of opening a foreign branch or division in the future which, over time, is used to protect the brand in building a strong brand presence. Building a powerful brand presence is where brands need to invest, creating a high-level consumer experience, especially online, which makes it harder to imitate the brand’s presence for pirates. Many brands nowadays respond to reviews, comments, and messages while always keeping a calm, collected, professional and polite tone. It’s all about ensuring customers know what to expect from the brand and how it communicates, once they do — it’s easier to spot if something is wrong or unusual. Another check-point for every brand to consider is developing a set of digital guidelines. Having clear

guidelines makes representing the brand easier, while consistency in communication helps customers to spot the possible identity theft more quickly. Then there are visual elements: using the brand’s logo and other visual design elements consistently — and everywhere, from physical products to social media pages — makes the identification process more manageable. Brands have regular checks on the main search engines from time to time, searching for your business taglines and other relevant keywords. Not only does it help to keep an eye on the market and your competitors, but it’s also an excellent tool for finding out if they are copying your brand’s visual elements or identity. If an idea or product has the potential to become the next big thing and information is leaked before the launch, huge revenues could be at risk as counterfeiters and pirates will act immediately and flood the market before the actual authentic product is on the market. Even after you’ve taken appropriate actions, it’s difficult to remove the stolen product or service from the market entirely. There are thousands of examples of slightly redesigned logos, slogans, and designs of existing brands, and pirates manage to pass them off as an entirely new business. 77

the global investor

Dark Clouds Over EU’s Manufacturing Industry:

Worst Numbers in Six Years


orrible’.This is how Claus Vistesen, Chief Eurozone Economist at Pantheon Macroeconomics, has described the fourth quarter of 2018 for the Eurozone’s manufacturing industry. 78

Felix Huefner, Senior European Economist and Chief German Economist at UBS noted that ‘[the] weakness is no longer confined to the car sector, but it’s getting broader.’

The manufacturing industry has perhaps long been the most important one in Europe, generating 14% of the continent’s GDP. From automobiles to food, it is Europe’s manufacturing capacity that supports


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what this really means, the answer is simple: a reading of between 50 and 55 shows that the sector is balancing near the line of recession, while any reading below 50 indicates an actively shrinking industry. According to the survey, Germany’s manufacturing PMI was finalised at an 80-month low with 44.1, Italy reached a 69-month low with 57.5 and Spain hit a 63-month low with 49.9. France has shown a slight improvement, but the overall growth remained historically weak with the manufacturing PMI increasing to just 51.5 in February, from 51.2 in January. Chris Williamson, Chief Business Economist at IHS Markit, which compiled the Index, commented on the results saying that,‘With factory order books deteriorating at an increased rate, the rate of contraction in the goods-producing sector will likely worsen in coming months.’ With Germany, France and Italy taking the front row with the most dramatic declines, multiple economists around the world say that it looks as though Europe is heading into recession. Analysts at both the Institute of International Finance (IIF) and Oxford Economics have come to the same conclusion regarding the big question of ‘why did it happen in the first place?’, highlighting that the dramatic drop in the manufacturing industry is actively connected to one core political choice made by EU governments in recent years: austerity. and drives a large number of businesses across the Eurozone, whilst also making the continent an attractive trading partner for other markets such as the US and China. However, recent numbers have revealed that Europe’s manufacturing industry is in real trouble, and is shrinking at its fastest rate in six years. The IHS Markit Purchasing Managers’ Index (PMI), a key economic indicator for the manufacturing industry, hit its lowest point since 2013 in March this year, marking a fall down to 44.5. If you’re wondering


Governments efforts to reduce the deficit spending, to cut the fiscal stimulus and to balance their budgets in the 10-year aftermath of the 2008 financial crisis has shrunk the potential size of the European economy and seriously damaged its ability to grow again. But wait, there’s more!Oxford Economics analyst Rosie Colthorpe says that “since 2008, Europe has lost economic activity equivalent to Spain’s entire GDP. By making its economy smaller, Europe has become less able to handle its debts.”

IHS Markit noted that there are a number of reasons behind such a dramatic fall, including uncertainty over Britain’s exit from the European Union, as well as concerns over the global trade slowdown and tariffs war with China. Chris Williamson commented on this, saying that ‘the downturn is being led by Germany and Italy, but Spain has also now fallen into contraction and only modest expansions are being seen in France, Austria and the Netherlands. In addition to widespread trade war worries – often linked to US tariffs – and concerns regarding the outlook for the global economy, companies report that heightened political uncertainty, including Brexit, is hitting demand and driving increased risk aversion.’ Talking about the future of the EU’s manufacturing sector, the latest data from the Manufacturing Industry Output (MIO) Tracker predicts that the manufacturing economy will grow by just 0.7% in 2019, compared to the 2.5% that was projected in May 2018. So faced with the biggest questions right now – can the European manufacturing industry recover, and how – experts tend to have different opinions. Nick Andrews, Senior Analyst at Gavekal Capital, says that Europe has no control over its future anymore, whilst Paul Miller, Senior Analyst at Forrester Research, believes that the future of Europe’s manufacturing industry relies on large-scale changes in terms of both skill sets and industry structure, for which governments, employers and employees all share responsibility. What is clear is that EU policymakers need to find a new, effective approach to control a situation that seems to be worsening every month, and experts say that in order to stabilise the manufacturing industry, officials in Brussels have to focus on developing a clear plan to counter the challenges posed by weaker international trade, a possible ‘no-deal Brexit’, and structural woes in the Eurozone’s financial sector. 79

the global investor

The Revolution of 3d Printing


anufacturing as we know it will never be the same again, and 3D printing is the phenomenon responsible.It is estimated that the global 3D printing market will be worth $17.7 billion by 2020, $30 billion by 2022 and $55.8 billion by 2027 – the significant growth illustrating just how important it is now becoming. European Business Reports.

only by our imaginations and willingness to act. Until now, much of this new advanced manufacturing technology was considered too complex and too expensive for production level applications. By combining additive manufacturing with subtractive capabilities, the goal of KAM is to lead the way for the next industrial revolution by making these technologies more accessible.’

Although it originally appeared as though it would be a niche market, 3D printing started to hit the headlines a few years ago, fascinating people all around the world with a visually stunning creation process. Now, it is used everywhere – aerospace, fashion, food, automotive, healthcare… the list goes on.

But let’s go back to the basics for a minute. 3D printing, also known as additive manufacturing, is a manufacturing process whereby a 3D printer creates three-dimensional objects by depositing materials, layer by layer, in accordance with the object’s 3D digital model.

Giants like General Electric (GE), Boeing, Bombardier, Launcher, Stryker, Adidas and General Motors (GM) have perfectly illustrated how 3D printing can be used to print highly specific, expertly designed parts of airplanes, cars and spaceships, as well as joint replacements, dentures, bicycles and much more.

What’s more, 3D printing is expected to drastically change several more industries.

3D printing techniques have in fact been around for decades. However, it was in 2009 that a consumer-friendly version of 3D printing called FDM (fused deposition modelling) became publicly available, after its patent expired. This was the tipping point for 3D printing becoming more mainstream, as

Another three powerhouse companies – Siemens, Johnson&Johnson’s and BMW – have announced the construction of their own additive manufacturing facilities. Such a move is expected to position these companies and their partners at the very front of the manufacturing revolution.

Famous NASCAR driver Brad Keselowski, the owner of Keselowski Advanced Manufacturing (KAM), commented on using 3D printing in his business, saying, ‘The capabilities of new technologies are limited 80

it led to a boom in affordable 3D printing devices. Nowadays, many people even have 3D printers in their homes. We live in times when it has become cheaper, faster and more customisable to 3D print something at home than to find and buy it from a store. Companies around the world have also started to embrace this technology.


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Another company that wants to strengthen its position on the 3D printing market is Henkel, a large multinational with successful brands in both the consumer and industrial sectors; the company has announced a series of partnerships for the joint development of new industrial 3D printing solutions. And believe it or not, these companies are just the tip of the iceberg. There are many more players embracing this technology that you should be familiar with, as they are in fact the biggest companies in the 3D printing industry by market cap. Hewlett-Packard (HP), with a market cap of $40.79 billion, is making inroads with Multi Jet Fusion – a new 3D printing technology offering more possibilities for lower-cost, complex parts, and in 2017 the company unveiled the world’s first state-of-the-art laboratory to help companies develop, test and deliver the next generation of materials and applications for 3D printing. Then there’s Proto Labs, a company that won a Manufacturing Leadership Award by Frost & Sullivan, and that has a market cap of $4.36 billion. It was founded in 1999 and has eight manufacturing locations across three continents.

Other leaders topping the bill with the adoption of this technology are 3D Systems, Stratasys, Materialise, SLM Solutions Group and Nano Dimension. In the last four years, over $13 billion has been spent on 3D printing. Looking ahead, however, GE estimates that $280 billion will be spent on this technology in the next ten years. Jason Oliver, President and CEO of GE subsidiary GE Additive, once said, ‘3D printing is about redesigning processes and rethinking production lines. It’s about remaking the manufacturing process for a modern society. This is the digitalisation of manufacturing.’ And in fact, 3D printing has the power to change more aspects of our lives than we could have ever expected. Many companies around the world are starting to invest in continuous photopolymer systems. Gartner, the world’s leading research and advisory organisation, predicts that the growth in photopolymer 3D printers will be in the region of 75% over the next few years. Then there’s healthcare, an industry that 3D printing is set to revolutionise in several different ways, with the biggest impact expected

to be in bioprinting. Such printing of 3D objects using biological material could lead to the creation of replacement organs – manufactured from a patient’s cells, tissues and more, to potentially overcome organ rejections risks. 3D printing even gets us one step closer to a pharmaceutical revolution, as 3D printed pills that are tailored to treat the unique ailments of each patient are about to become a reality as well. And there’s one other exciting prediction for 2019. As manufacturing industries, healthcare providers and supply chains accelerate their practical uses of 3D printing, another technology is making an appearance: 4D printing, which makes it possible to change the shape of 3D printed object after it’s been published. C o m p a n i e s s u c h a s A ir b u s , Autodesk, HP and Stratasys are already working on 4D printing. The current market share of 4D printing is $28 million, and is expected to reach $537 million by the end of 2025. Gartner also predicts that by 2023, start-up companies working to commercialise 4D printing will attract $300 million in venture capital. 4D printing has already contributed immensely to the field of medicine. To minimise the procedures involved in carrying out surgery, doctors use 4D printing to put self-transforming components into the patient’s body. It is expected that 4D printing will bring further previously unimaginable capabilities in industries such as construction, aerospace, health and automotive. There is no denying that 3D printing and its effect on human lives is vast. At this very moment, 3D printers around the globe are creating new shapes, innovating products and giving eco-friendly alternatives to other production methods. It has brought the future closer – and it’s definitely here to stay.



the global investor

Blockchain Technology and the Banking Industry:

Changes Are Here and Here To Stay The world of banking as we know it is changing, and the biggest reason is blockchain technology.


et us ask you one simple question:What do you know about the global financial system? It moves trillions of dollars a day and serves billions of people around the world. But that’s not all. It’s also slow, incredibly complex, and expensive – as inter-bank transactions need to rely on a trusted third party to maintain a central ledger as the record of authority. Perhaps this would have continued to be the case for many more years, but in 2008 blockchain technology was developed, and this has been changing everything. Originally created as the technology behind cryptocurrencies such as Bitcoin, it is in fact responsible for the massive disruptions in every industry around us, such as the Internet of things (IoT), the government, healthcare, banking and payments, and many others. It’s no secret that in the early days of its appearance, banks and financial institutions around the world treated it with scepticism. According to P. V. Singh, Carnegie Bosch Associate Professor of Business Technologies, the original hope for blockchain technology was that it would simply reduce transaction


costs and make micropayments possible – as a result, bringing underbanked or unbanked individuals into the system. Now, in 2019, we’ve seen it disrupting and revolutionising many different industries and sectors, but despite that, we keep coming back to the same question – wondering just how useful it really is for the banking sector, and whether it is here to stay for good. Blockchain technology supporters believe that it can be used to create secure and convenient alternatives to time-consuming and often expensive banking processes. An interesting example of which comes from Capgemini’s Digital Transformation Institute, who released a report stating that consumers could save up to $16 billion

on banking and insurance fees each year via blockchain-based applications. Blockchain is still considered to be a young technology. Despite this, however, Harvard Business Review claims that,‘it will do to the financial system what the Internet did to media.’ And it looks as though we really are headed in this direction, as up to 99% of banks and investment companies around the world are now either exploring blockchain technology, or already utilising it, and according to Accenture, a global management consulting company, the world’s banking sector will save up to $20 billion by 2022 through the implementation of blockchain. In terms of the adoption of blockchain technology to date, the Bank of America is currently a leading


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company based on the number of blockchain patents it holds, along with such giants as IBM and Alibaba. JPMorgan Chase & Co has created a separate division that is purely responsible for exploring the potential of blockchain technologies, and Goldman Sachs is already known as one of the most crypto-friendly banks. In Europe, Santander Group – a multinational commercial bank in Spain, was one of the first to start using the blockchain network RippleNet to power its ‘Santander One Pay FX’ service, responsible for conducting cross-border transactions. Russian banking giant Sberbank has been in the blockchain technology game since 2017, and the biggest Polish banks are right behind it, currently testing blockchain-based platforms for storing and managing customers’ personal data. In 2018, Deutsche Bank also joined the party, starting a collaboration with IBM and testing bank transfers that are powered by blockchain technology. Even more interestingly, the European Union has just – in April 2019 – launched the newly formed International Association of Trusted Blockchain Applications (INATBA), the main goal of which is to bring blockchain and Distributed Ledger Technology (DLT) into the mainstream so as to unlock and harness the full potential and benefits for businesses. Over 100 companies have joined so far as founding members, including names such as IBM, the IOTA Foundation, Ripple, ConsenSys, and many more. Blockchain technology is on the rise in the rest of the world as well. As reported by the Economic Times in February of this year, Asia, the Middle East, Africa and Latin America have also started to adopt blockchain technology in the banking industry. The demand for the adoption of blockchain technology in the banking industry is in fact growing so fast that the trend has led to the creation of a completely new generation of banks – 100%


blockchain-powered banks, such as FOTON Bank, Celsius Network and Bankera. Banks and financial institutions are exploring blockchain technology for several reasons – namely cost savings, efficiency, international transfers and better data quality. However, not only is this technology capable of enabling transparent network infrastructure, decentralization, and a reduced cost of all operations, but it also provides a high level of safety in storing and transmitting data. Blockchain is thus being recognised as the only technology that may be able to reduce fraud in the financial world, where 45% of financial intermediaries, such as stock exchanges and money transfer services, are prone to being targets of financial crimes every day. The combination of these features can help banks and financial institutions around the world save billions of dollars, by substantially reducing processing costs. However, there’s another important thing to note. As previously mentioned, blockchain technology is still considered to be going through the very early stages of its development, which means that it also faces some specific challenges in the banking industry: There is no global coordination, no common standards

between banks and financial institutions worldwide that can help utilise the technology, and no proper legal framework around the use of this new technology, meaning that it is not always clear what to expect in terms of protection, privacy, and potential risks. The fact that blockchain technology is still a relatively new phenomenon also means that not everyone understands it.According to a PwC report, only 24% of executives in the banking industry are familiar with blockchain technology. Such lack of awareness leads to controversial opinions, so while some believe that blockchain technology is capable of replacing the traditional banks altogether, others think that it will only supplement the traditional financial infrastructure, making it more efficient. One thing is clear – blockchain technology and the banking industry are colliding, making financial markets more efficient, secure, and transparent. The Business Blockchain author W. Mougayar once aptly said,‘The blockchain cannot be described just as a revolution. It is a tsunami-like phenomenon, slowly advancing and gradually enveloping everything along its way by the force of its progression.’ And we are right in the centre of this action.


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the global investor

Steven Koch

Last week, Click it Local, the delivery service hoping

to help independent usinesses compete with the likes of Amazon, launched in

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lready, 20 local retailers in the UK have signed up to the platform, including Barney’s Deli, stationary shop Pen to Paper, and pet supply shop The Pet Shed. For a flat rate of £3, customers can get the best these shops have to offer delivered to their door the very same day.This local delivery service will be looking to expand globally soon.


up my first design agency which specialised in retail design and strategy for many global brands. Over time, the agency began to focus on creating the future of retail through the integration of technology on the high street to innovate both shop and shopper experience. This background in retail and tech gave me the skill set and knowledge to create Click It Local.

Their founder Steven Koch says the company’s mission is “to allow independent shops to offer their customers all the convenience of online ordering and same day delivery, without the need to comprise the environment, local community and employee welfare.”

Q What made you want to start Click it Local, and how did you go about setting it up?

We caught up with Steven for the inside story of the UK’s most exciting new enterprise…

Q Hello Steven! What is your business background? As a dyslexic individual, I’ve always thrived within the creative industry throughout school and my early career. You could argue my business acumen started in my early teens with countless ideas for ways to make my pocket money! But skip forward a few years, after graduating from Central Saint Martins, I started my career as an industrial designer, setting up a collective with other graduates who I still work with to this day.Then at 23 I set

I personally love to buy from local independent shops and work really hard to make environmentally friendly choices about where I buy from and how I live my life. I’m also, like many others, faced with the challenge of juggling a busy home and work life. With four home-schooled children and a busy work schedule, limited time means convenience sometimes takes precedence. Current shopper behaviour and consumerism needs to change long-term and across the board to help ensure we all move to a more sustainable future. Whilst many see the value in shopping local in terms of sustainability and supporting the local economy, there is still a larger portion of the population who have no option but to rely on large online monopolies such as Amazon.


inte r v i ew The way to change customer behaviour is not to change the behaviour itself but change the model that delivers and sources the product. This way we are able to provide everyone with a super convenient same day / next day delivery service akin to Amazon, but based solely on the local independent infrastructure.

Q Did you encounter any stumbling blocks along the way? Touch wood most parts of the puzzle have fallen into place seamlessly so far, in part because we are a very positive business which many people wish to be involved with, which is great! The team and partners are naturally growing as we scale up. One challenge with any marketplace is the need to gain critical mass of both customers and stores on day one in one area, so we are continually looking at fun new ways to engage with shops and shoppers to overcome the balance. How to scale, where to scale and how fast to scale is another continual internal battle we have. We know we need to scale in multiple locations across the UK and hopefully the world to become a true alternative to Amazon, but we are not prepared to compromise our ethics in order to do so. So our plan is to continue to scale up but not at the expense of our core ethics to support shops, local communities and the environment.

Q What has the response been so far, from retailers and customers? The response from both retailers and customers has been exceptionally positive, with many customers ordering multiple times from multiple stores.We have also had requests to bring Click it Local to other areas which we hope to be able to do in the not so distant future.

Q How do you envisage Click it Local aiding small local businesses? www.theglobalinvestor.com

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We want to take away the common notion that the online retailer will kill our high streets and instead empower our independents to fight back and use the online revolution to their advantage.

Q Do you think Click it Local has the potential to really change the way we shop and to allow independents to compete with the likes of Amazon? Yes, absolutely! It’s all about levelling the playing field. With Amazon, you can buy everything in one place and have it delivered the next day, and now with Click It Local every small independent retailer can offer the same – and they can offer it ethically. “The power of the people is so much stronger than the people in power” – I believe the same can be said for independent businesses.Together we are stronger than the online giants!

Q Some people are saying the Covid-19 pandemic is really going to change the way we shop, speeding up the total transition to online shopping. What do you think about this? I think Covid-19 will have a lasting effect on retail and change the way we interact with each other, but, on a more positive note, I also think that we will see many innovations, and many retailers and consumers adopting new technologies to support the sector as a result.

As humans we seek meaningful, personal experiences, which is why physical retail will always exist.

Q The company seems to have a very strong ethical focus, in its commitment to zero emissions and paying a living wage. Could you talk a bit about this please? Do you have a vision of a fairer economy, with more companies prioritising people and the planet? There are too many monopolistic tech giants worth billions that are only viable, profitable businesses because they do not prioritise people or the planet. In my view this is not a sustainable approach, but a short sighted way to make big profits! Since the government are not putting in place adequate restrictions to force these types of businesses to change, we seek to demonstrate a business model that innovates an industry at scale, one that can be both viable and have a positive impact on the environment, the economy and people in equal measure.

Q What’s your long term plan for the business? To create an ethical business accessible for everyone, one that forces billion-dollar monopolies to re-evaluate their business models.

The online vs offline retail battle we see covered in media should not be looked at as two separate entities where only one can survive. I believe it is more about a journey to a point that we no longer talk about online and offline and it simply becomes one seamless journey where both will coexist and complement each other.Click It Local seeks to create the best of both the online and offline shopping experience, without threatening or compromising independent businesses.


the global investor

EU budget chief seeks backing for business levy to fund recovery


he EU’s budget commissioner has called on member states to back new taxes including an annual levy on 70,000 big companies to access the single market, as part of a package of measures to help fund the bloc’s recovery. Johannes Hahn told the Financial Times that there was no practical alternative but to hand the European Commission new sources of direct revenue — or “own resources” — to service the debt it would take on under the €750bn recovery plan unveiled last week. These could include a mooted €10bn annual levy that Mr Hahn said would affect 70,000 companies in Europe with global turnover 86

I do not see appetite [from] anybody.” The proposals would make the EU budget less dependent on the national contributions that make up the overwhelming majority of the bloc’s revenues. But the plans would face formidable political obstacles; EU states have traditionally been The only options other than rais- deeply wary of creating new own ing these new revenues would be resources on top of existing ones, a politically unacceptable squeeze such as customs duties. Ursula von on spending or higher budget con- der Leyen, European Commission tributions by the member states, he president, last week called for new explained. “I don’t see real alterna- own resources as part of plans for tives,” he said. “A smaller budget the €750bn recovery fund, which she will not be acceptable for the huge hopes member states will put at the majority of member states. And heart of their common response to concerning future contributions, the crisis. exceeding €750m. “What we are aiming at is — at the latest by the end of 2027 — that we will have a functioning, steady flow of new own resources to our budget,” the commissioner said in an interview, adding that he was ultimately targeting €15bn-€20bn a year.


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We are not financing past debts, we are not providing budgetary support, we are raising money at the capital market in order to invest in the recovery and resilience of our countries and companies Johannes Hahn The levy on large companies, which is at a very early stage of discussion in the commission, would take the form of an annual lump sum payment for using the single market. The scale of this “access fee” would vary depending on the company’s size, Mr Hahn said, adding that large enterprises could be divided into two or three categories. It is part of a menu of possible revenue-raising options including a carbon border adjustment levy, revenue from an expansion of the bloc’s emissions trading scheme, and a tax on digital companies. Mr Hahn insisted the new tax proposals “do not target individual taxpayers, but on the other hand fit perfectly into our political priorities” — such as addressing climate change. He dismissed suggestions from some commentators that the new tax and debt plans represented a “Hamiltonian moment” in which


the EU leaps towards a fully fledged fiscal union similar to the jump under then-US treasury secretary Alexander Hamilton in 1790. “What we are doing here is strictly time-limited, it is not introducing something by the backdoor,” he said, insisting there would be a de facto sunset clause on the new borrowing in 2024. “It is the dimension which is maybe making some people nervous, but we are not financing past debts, we are not providing budgetary support, we are raising money at the capital market in order to invest in the recovery and resilience of our countries and companies. It should be seen as an investment.” He emphasised that the spending would be accompanied by reforms in individual member states, making them less reliant on the support of others in the case of future crises. “It is not sustainable if a country is always asking for support because they are not able to finance the recovery on their own. It is a kind of wake-up call for some countries.” Among the key barriers to the plan is opposition among so-called frugal

countries — Austria, Denmark, the Netherlands and Sweden — to the idea that the commission hands out grants to struggling member states using borrowed money. However Mr Hahn, who is Austria’s commissioner, argued that the frugal countries benefit disproportionately from the single market and so should swing behind the proposals. The investments and reforms triggered by the recovery fund should make European member states and companies “more resilient, more fit, and better equipped for a future crisis”, he argued. This would be in the interests of the whole bloc. “If you look into the past, some countries were always more affected by a crisis than others — and usually the same ones,” he said. “We are talking so much about convergence, solidarity: this means to help those who have more problems currently or in the past to improve the situation in order to be better prepared, and less dependent on the support of others in case there is another crisis.”


the global investor

Ireland Railing Against deficit and job losses


reland fought hard to control its towering debt load after the financial crisis. But now coronavirus has plunged its finances back into deficit and pushed swaths of people out of work, sparking fierce political debate about what spending to cut and how large any reductions should be. The economic consequences of the pandemic are set to push Ireland into its worst-ever recession, with gross domestic product forecast to fall 12.4 per cent this year and possibly as much as 17 per cent according to the Economic & Social Research Institute think-tank in Dublin. It is a sharp turnround for a country that had rebounded from an international bailout and a €29.8bn austerity drive to achieve full employment


and a budget surplus before Covid19 struck. “The scale of the shock that we have faced is completely unprecedented and without equivalent in modern economic times,” said Conor O’Toole, senior researcher at the ESRI. The challenge is a central focus for the country’s political leaders, who are attempting to form a coalition government in difficult, slow-moving talks which could lead to a deal by mid-June. At issue in the talks is a deficit-reduction plan to kick in from 2022 or 2023 after a stimulus package, although it remains unclear whether there will be specific dated targets.

Economists say the country should aim to turn the corner within two to three years, which will need a big stimulus plan. They also warn that Dublin will have to cut spending or raise taxes once growth is restored, in a bid yet again to tackle the national debt. “The next government will need to make some important and difficult decisions about its competing spending and tax objectives,” said Sebastian Barnes, acting chairman of the Irish Fiscal Advisory Council, a statutory budget oversight body.

He estimated that a sum “of the order” of €10bn in stimulus could One person close to the talks said be needed over a two-year period the deficit question was a “key area to help restore the economy to of sensitivity” in the negotiation. growth, but warned that after that,


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popular vote. Fine Gael and Fianna Fáil have been in coalition talks for several weeks with the Green party. Mr Varadkar and Mícheál Martin, Fianna Fáil’s leader, refused talks with Sinn Féin. With plans under discussion to build more social housing, boost healthcare and invest in environmental retrofitting of houses to counter climate change, Dublin hopes the next government will benefit from EU pandemic recovery efforts. On Wednesday, Mr Varadkar said he welcomed the “broad thrust” of plans from Ursula von der Leyen, European Commission president, to borrow €750bn to pump money into the economy. “We need to kick-start economic and social recovery and get funds flowing to the sectors and regions that need them most,” he said. But even as the fiscal council and ESRI called for a big stimulus plan from the next government, the prime minister said one of its first decisions will be to taper special coronavirus welfare payments that were introduced in March as almost 600,000 people lost work during the lockdown.“We face a summer of discontent as the economic issues crystallise,” said Ms Reidy. “Right now the nation is in a kind of crisis mode — and crisis mode is very different to normal politics. As the pandemic supports are unwound, the the incoming government will face budget surpluses and forecasts of realities of the economic impact are €2bn-€3bn in “fiscal adjustments” rapid growth, making it even harder going to become much more eviannually for three or four years. for political parties attempting to dent for individual voters.” Kieran However the council is optimistic seal a coalition agreement to decide McQuinn, ESRI research professor, that the severe austerity of the post- on cuts. Theresa Reidy of Univer- said the focus for the next couple 2008 period can be avoided; it could sity College Cork, a political analyst, of years should be on stabilising the take two to three-and-a-half years said the dominant political issue now economy, maintaining income supto regain pre-coronavirus levels of was Ireland’s “fiscal black hole”.“The port mechanisms and reigniting ecoeconomic activity, according to the election campaign was built around nomic activity. “Certainly I think the council — a far sharper recovery a best-case scenario in terms of eco- incoming government needs to be than the 11 years it took to recover nomic growth. I aware that at some stage there will from the 2008 crash.This leaves pol- n terms of what we’re seeing now, to be a need for some fiscal adjustiticians with the difficult decision of call it a worst-case scenario doesn’t ment down the road,” he said. But how to make the necessary budget fully capture the extent of the eco- adjustments too soon could comadjustments given that the spending nomic impact,” she said. Leo Varad- pound the coronavirus shock, meancutbacks and tax increases that fol- kar’s Fine Gael trailed into third ing “ironically” that larger adjustlowed the 2008 crash remain polit- place in the election behind the cen- ments would be needed over the ically controversial. The election in trist Fianna Fáil, which won the most longer term. “That’s the key balancFebruary was fought over spend- seats in the Dáil assembly, and Sinn ing act that has got to be achieved. ing plans developed at a time of Féin Irish nationalists, who won the It’s not easy, for sure,” he said.



the global investor

Brazil’s investors withdraw en masse for fears of Bolsonaro


oreign investors in Brazil’s stock and bond markets continue to withdraw money en masse from Latin America’s largest economy, frightened off by hardright president Jair Bolsonaro even as investment returns to many other emerging markets. Cross-border flows from Brazil have dwarfed those of most other emerging economies. Foreign investors took $11.8bn from Brazil’s stock market


in the four months from February to May and $18.7bn from its bond market between February and April, the most recent month of available data, according to the Institute of International Finance, an industry association that gathers emerging market data. The record outflows, said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics in Washington, “reflect investors’ fears regarding

the evolution of the pandemic but, most importantly, the fear of Bolsonaro as an agent of economic, political, institutional and health crises himself”. Foreign investors have always been wary of Mr Bolsonaro’s promises of fiscal discipline, and money trickled out of the Brazilian stock market last year. But since March, foreign money has flooded out of Brazilian assets, according to the IIF. At the same time, emerging


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markets as a whole have seen a partial reversal of the almost $83bn of outflows they saw that month, with nearly $23bn returning in April and May as investors look for bigger returns than those available in developed economies. In Brazil, Mr Bolsonaro is at the centre of a political crisis that has put his grip on power in question, but he continues to shrug off the seriousness of coronavirus even as Brazil has seen more than 500,000 infections and an estimated 30,000 deaths so far. Business and consumer confidence have been shaken, putting the country’s already rocky public finances under further pressure. The central bank’s latest weekly poll of market economists predicts that the economy will contract nearly 7 per cent this year. Health officials expect the first wave of the disease to peak in Brazil between July and September, meaning the cost of an emergency support package assembled to fight the economic hardship of the pandemic will rise. Alberto Ramos, Latin American economist at Goldman Sachs, expects this to result in a fiscal deficit equal to 19 per cent of gross domestic product this year.

situation is getting worse and on top of that is Covid-19 and messy politics”. Investors have been unnerved by the firing of two health ministers and the resignation of Sérgio Moro, the popular justice minister, amid allegations that Mr Bolsonaro This has forced Paulo Guedes, the attempted to interfere with federal economy minister, to shelve his police inquiries. The country now reformist agenda, unnerving inves- faces the possibility of either an tors. Brazil used to be a favourite ugly and drawn-out impeachment investment destination because it process or a constitutional crisis promised high rates of economic as the president ramps up a camgrowth and was on a path of fis- paign of attacks on the Supreme cal reform. Its high interest rates Court. “Investors always felt that offered rich returns from the “carry Bolsonaro was happy to outsource trade” — borrowing money where decision making, with Guedes in interest rates are low, such as in the the economy ministry and Moro US and Europe, to invest in local at the justice ministry,” Mr Greer bonds where rates are high. How- said. “But now it looks as though he ever, even before the pandemic, is trying to take hold of executive growth stalled and interest rates power, which is something the marwere slashed. The central bank cut ket really doesn’t want.” its policy rate to 3 per cent this The result, said Robin Brooks, month, less than annual inflation chief economist at the IIF, is that and down from 14 per cent in late cross-border outflows from Brazil’s 2016. Now, said Paul Greer, emerg- stock and bond markets have been ing market fixed income portfolio “off the charts”, running at double manager at Fidelity International in their rate following the onset of the London, “the macro is ugly, there’s global financial crisis in September no growth and no carry, the fiscal 2008. This is despite the fact that


Brazil was one of the few emerging economies to be granted a currency swap facility by the US Federal Reserve as the pandemic struck, giving it ready access to dollar funding. The Fed has injected trillions of dollars into global financial markets, allowing several other emerging economies to issue new external bonds to help fund their response to the crisis. Mr Brooks blamed Brazil’s politics for scaring investors away — as well as its economic policymaking during the crisis, particularly the central bank’s plan to buy government bonds in a programme based on the Fed’s quantitative easing. “People are pretty sceptical that policy experiments in the US should be tried out in Brazil,” he said. Nevertheless, Tony Volpon, chief economist at UBS in São Paulo, pointed out that while foreign investors have pulled masses of money out of stock and bond markets, Brazilian investors have poured roughly the same amount in, as they search for higher yielding assets now that real interest rates have fallen into negative territory. “Brazilians are certainly more optimistic,” he said. 91

the global investor

Glimmer of hope as UK economy starts to emerge from the ashes:

Majority of businesses have a positive outlook for next 12 months


he number of businesses with a positive outlook for the next 12 months exceeds the number with a negative outlook for the first time, in the clearest sign yet that parts of the economy are slowly springing to life, according to the latest wave of the Opinium-Cebr Business Distress Tracker. However, despite the marginal improvements the UK is still not out of the woods.The latest Tracker suggests that more than half a million (544,000) businesses are at a high risk of entering insolvency as a result of coronavirus-related disruption – up from 510,000 two weeks ago.

Business Distress Tracker topline results • The picture varies considerably across sectors. Half of businesses


(50%) in manufacturing & construction say that current trading conditions are good, compared to just over a quarter (28%) of service sector firms. • The survey results pour more cold water on the notion of a V-shaped recovery, as the average anticipated recovery time rises by three weeks to 31 weeks. The pattern observed in recent weeks suggests that the longer the lockdown persists, the longer the recovery will take. • The most commonly cited drivers of the delay in raising production are reduced demand from customers, a weakening of business-customer relationships, and reduced access to inputs necessary for production. Meanwhile, more than two-fifths (43%) of

businesses are concerned about a deterioration in the skills and productivity of workers that have been placed on furlough. James Endersby, CEO at Opinium said “Although the situation remains extremely challenging for many businesses, the easing of lockdown in recent weeks have led some to anticipate the end of prohibitive restrictions on their operations. We are far from being out of the woods yet, but the direction of travel has injected greater positivity into the business community. The number of us going back to work is accelerating and many are seeing the prospects for their business improve. “The challenge facing us is the disjointed return to normal. Large numbers are facing disruption to demand from their customers and


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combined with issues further up the supply chain. Even once lockdown measures are removed business leaders still expect months of hard work until levels of production return to normal.


Pablo Shah, Senior Economist at Cebr said “The gradual easing of restrictions in May has helped some businesses to come out of hibernation – particularly in the manufacturing and construction sectors – while providing a more general boost to sentiment throughout the economy. Workforce measures to weather the storm – such as pay cuts and reduced hours – are being reigned in, while less than a third (29%) of businesses have a negative outlook for the next 12 months.


“The survey results suggest that many businesses have transitioned from a state of emergency to a state of heightened caution. However, the longer the lockdown lasts, the longer it will take for businesses to rebound. Among firms that anticipate needing more than a month to recover, the majority (56%) fear that financial or operational difficulties among clients or customers will affect demand for their products or services, while 51% are concerned about reduced access to necessary inputs.”

90% 80% 70% 60%

40% 30% 20% 10% 0% 1 week

2 weeks

1 month

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month if trading conditions remain as they are currently. This marks an improvement on the situation in the previous edition of the Tracker, when 5% of firms faced imminent collapse within a month if trading conditions remained as they were.

Employment impacts The number of businesses making workplace adjustments has remained largely stable since the second wave of the Distress Tracker. Here, 84% of UK senior decision makers state that their company has made changes to their operations because of the pandemic, compared to 83% two weeks ago. More encouragingly, there has been a sizeable reduction in the average number of employees on furlough (26% Business Distress Tracker down from 32%), and there is posifull findings tive news in terms of working hours - businesses say that an average of Business insolvency risks 29% of employees have had their Although the share of businesses hours reduced, compared to 32% that feel they are safe from insol- in the second wave. Finally, wages vency has risen from 58% to 63%, and salaries have also seen improvethere has also been a small increase ments, with the average number of in the share that say there is a high employees facing pay cuts down to risk of them entering insolvency 27% from 34%. as a result of coronavirus related disruption.[1] These results sug- Business activity rates gest that while many businesses The latest business survey was conhave been able to transition from ducted between May 21st and May a state of emergency to a state of 27th. The results therefore proheightened caution, more than half vide one of the first glimpses into a million (544,000) remain in a per- how the partial easing of restricilous position. tions introduced at the beginning 2% of firms surveyed indicated that of the month have affected differthey could not survive another ent parts of the economy. On 10th


9 months

1 year

2 years

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May, the government updated its guidance, urging those who could not work from home to go to work. This appears to have had a significant impact on the manufacturing and construction sectors. Although profits over the past 30 days remain 28% below what would have been expected during more normal times, this is an improvement compared to the 35% shortfall in profits recorded two weeks prior to the latest survey. Economic recovery The results of the latest Tracker reinforce the message that the longer the lockdown lasts, the longer it will take for most businesses to rebuild once restrictions are eventually lifted. On average, businesses anticipate needing 31 weeks to return to their pre-crisis levels of production – up from 25 weeks four weeks ago. For the first time, the Tracker also examines the specific factors that will be driving this delay in the economic recovery. 56% of those expecting their recovery to take longer than a month cite concerns about demand for their products or services once restrictions are lifted, while 51% state that difficulties obtaining inputs from suppliers will limit their ability to bounce back. 52% indicate that a weakening of customer relationships will slow down their recovery, while more than twofifths (43%) are concerned about deteriorating skills and productivity among furloughed workers.


the global investor


A small country that conceals great digital possibilities


stonia is a small Eastern European country that shares a border with Russia. It has 1.3 million citizens and an area of 14 thousand (17 thousand ). It has young democracy that has been restored in 1991 after the collapse of the Soviet Union. In 1994, the government decided to popularise IT, all schools received Internet access and IT classes were added to the teaching programme. Technology education and computer skills as a basic knowledge were popularized among both young and old, largely on the initiative of the private sector. Later in 2002, Estonia started using


ID cards as the main identity document which allowed for a digital breakthrough to happen. Jelizaveta Katsan reports. Estonians benefit from e-country ideology on multiple levels. Currently, statistics show that 98% of 16 to 44 year olds in Estonia use the Internet on a daily basis while 90% of households have the Internet at home. Use of ID cards as a primary document and government webpage eesti.ee allowed to link all the services to one platform – education, health care, policing, voting, legislation, taxes and banking. Last year, 99% of bank transfers were made

electronically, 98% of tax returns were filed electronically and 95% of prescription drugs were purchased on digital prescription. Every digital service is available through personal identity ID card, that gives access to the database with all the relevant information about individuals’ relatives, medical history, working experience, taxation etc. Recently, Estonia became very friendly towards foreign businesses. If you decide to expand your business and open a branch in Estonia, you could apply for an E-Residency. In 2014 Estonia was the first country that allowed foreign entrepreneurs to


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transfer price adjustments, expenses and payments not related to business, gift, donation or entertainment expense). From 1 January 2019, a reduced tax rate of 14% may be applied if your company's taxable profit for a calendar year is less than or equal to its average taxable profit for the previous three calendar years. Estonia was not always the desired place for immigrants because of the low social benefits package and rather a cold climate. Though, during last year’s Estonia has seen an influx in working immigrants. Since 2015 immigrant net rate is positive and growing. Immigrant flow from Ukraine was so high that in 2019 Estonian government suppressed its decision of 2010, which exempted Ukrainian citizens from paying the state fee for considering applications for long-term visas. According to Minister of Popular Affairs Riina Solman, recent foreign immigration rate is at worrying levels. Solman pointed to 2018's figures, saying non-Estonian citizens accounted for over 80 per cent of net immigration that year. It happened mostly due to the rise in temporary residence and short-term employment in Estonia, mainly among Russian and Ukrainian citizens – these groups had seen around a 25 per cent rise last year.

establish and administer an EU-based paperless business, from anywhere in the world. E-Residency allows businesspersons to start an EU company, grow business remotely, complete all paperwork online and most importantly, to be location independent. If an application is successful, the entrepreneur received an ID card that allows accessing government services online. According to statistics, so far more than 70,000 people from more than 170 countries have applied for e-Residency, establishing over 12,000 Estonian companies. It is important to understand that it is not a travel document or a visa that


Between 500 and 600 people apply for Estonian citizenship every year. Usually, it is a combination of Russian and Ukrainian citizens with allows you to enter the country. It residents with Alien passports or is suited for freelancers, consultants, “undefined citizenship”. Becoming an solo entrepreneurs and other digital Estonian citizen is a straightforward entrepreneurs interested in estab- process: you should live in Estonia lishing a digital services company five to seven years (depending on they can manage from anyplace in your residence permit), you should the world. Currently, only Estonia pass Estonian language examination, and Azerbaijan offer E-residency for you should pass the examination of knowledge of the Constitution of entrepreneurs. the Republic of Estonia and the CitAn additional bonus is that in Estonia, izenship Act, lastly, you should have the corporate income tax rate is 20%. a permanent legal income. All retained earnings are tax-free. In Estonia, corporate income tax is pay- While in Covid-19 era a great numable only on profits, which are dis- ber of businesses moved online, Estotributed as follows: dividends; share nia as a highly developed digitally repurchases; capital reduction; liqui- country has a lot to offer to foreign dation section; profit allocations (eg entrepreneurs.


the global investor

Virgin Atlantic Bailout

Written By Rebecca Maguire


hile the world is in the grips of a global pandemic, government-funded bail-outs have become an essential tent-pole to keep businesses, small and large, above water. The reactions to said bail-outs have been broadly positive, with many deeming them both justified and economically viable; however public opinion has been divided in the case of Virgin Group’s subsidiary, Virgin Atlantic. When news broke of founder Sir Richard Branson’s plea for financial aid from the UK government, backlash immediately ensued with many begging the question...why? Branson’s current net worth is estimated at 4.4 billion dollars, and Virgin Atlantic alone has 1.886 billion pounds


worth of assets as of 2018. Not only has Branson’s Twitter account been awash with criticism, he has drawn the ire of parties as wide and varied as The Guardian, who published a letter branding him “shameless”, as well as fellow business magnates Simon Cowell and Duncan Bannatyne. Chief among these criticisms is one question, why can’t Branson bail out Virgin Atlantic from his own pocket? Although Branson is a majority stakeholder in Virgin Atlantic, that majority is minuscule. 51% is owned by Branson, while the other 49% was acquired by the US airline Delta in December 2012. It is unclear as to whether Branson consulted with Delta before making an appeal to the UK government, however it would make little financial sense for him to personally bail-out a company of

which he owns little more than half. Perhaps a refusal by Delta to match a hypothetical personal contribution could have forced Branson into seeking state aid? Furthermore, it has been reported by the Financial Times that Branson has been seeking prospective investors for the airline via investment bank Houlihan Lokey, which could provide the financial aid it would need without requiring government funds. However, after attempts to secure private investment were deemed unsuccessful by Branson, applications for state aid went ahead, as more governments closed borders and instated travel bans. Though Branson reportedly offered his ultra-luxury private resort, Necker Island, as collateral during talks for state aid; his bid was nonetheless


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companies from holding back passenger revenues for future bookings from the airline.”. Although it is perfectly legal to use any form of aid to refund customers for cancelled flights and unused airport parking spaces, this can be seen as a temporary measure to reduce backlash from customers. From the information that is publicly available, Virgin Atlantic seem not to be considering that if they do not invest money back into the functionality of the business, like paying staff wages for example, planes will not be able to fly, and therefore, there will be no flights for the foreseeable future. Branson claims that: “there won’t be any competition left and hundreds of thousands more jobs will be lost.” without any form of financial aid. Branson has also lashed out at critics posing the theory that he could bail out the company himself, saying: “I’ve seen lots of comments about my net worth - but that is calculated on the value of Virgin businesses around the world before the crisis, not sitting as cash in a bank account ready to withdraw.” This is true, Branson’s wealth, like that of many high net-worth individuals, is largely concentrated in his shares in successful companies. It is not a liquid asset he may spend at any given time. deemed insufficient by the UK government. They were reportedly left “unimpressed”, and felt that Branson did not explore or consider enough alternatives to find a buyer or enough investors to come up with the £500 million the airline was asking for in its state aid bid. When posing the question, “Should Virgin Atlantic be given state aid?”, it is worth noting that the aid provided would mostly benefit those that have chosen to book flights with Virgin Atlantic. According to the Financial Times: “Virgin Atlantic is asking for about £500m, which would come from a split of commercial loans to cover fixed costs over the coming months, such as ticket refunds and airport parking charges. The remainder would come in the form of a credit guarantee that would stop credit card


Critics feel that Branson is in no position to organise and negotiate financial affairs, with many considering his business practices “shady”, and others noting a lack of transparency in terms of his own wealth. Branson has paid no income tax since moving to the British Virgin Islands in 2006, which is a tax-free zone. Due to said practices, public support largely lies with the government, opening the door for other airlines, such as EasyJet, to rip government funding out from under Branson. It is known that most airlines are large businesses, and with not much in terms of figures separating them on the surface, there was little clear reason to favour one above the other. When comparing the figures of the two companies, EasyJet’s total revenue stands at £6.4 billion as of 2019, while Virgin Atlantic’s revenues as

of 2018, stood at just £2.78 billion, according to Virgin’s official financial report for that year. EasyJet is considered a listed company, and runs completely independently from the owner and majority stakeholder, Stelio Haji-Ioannou. EasyJet’s figures over the past few years are also much more appealing to investors, while after years of losses, Virgin Atlantic seems to have lost that appeal. The losses reported by Virgin Atlantic are staggering, in 2018, the company recorded losses of £60.8 million, with the biggest losses being reported in regards to “physical fuel”, “airline traffic direct operating costs” and “aircraft costs”, essential factors to keeping a successful airline running in good working order. So there is a possibility that the UK government are taking a company’s future prospects into consideration when dishing out financial aid. With that in mind, and with EasyJet’s revenue and passenger numbers having steadily risen for the past decade, the government decision suddenly seems less like bowing to popular opinion, and more like one solely based on economic viability. With all things considered, it seems that Virgin Atlantic would be struggling financially, even without a pandemic. Government-funded financial aid is being given to keep businesses afloat during these unsure times, but it seems that Virgin Atlantic are struggling to stay afloat regardless, with essential parts of the business dragging down profit for the company. While budget airlines are soaring to new and profitable heights, it seems that Virgin Atlantic could do with vast amounts of investment, however the company’s financial reports show clear financial reasons as to why state aid may have been denied. Only time will tell if Virgin Atlantic will be able to find some way rejuvenate its finances, especially while planes are stuck on the ground and no end to the non-essential travel ban is in sight. And as for the unanswered question of Branson paying out of his own pocket, it seems we will just have to take his word on the fact that it cannot be done.


the global investor

Rejected in isolation:

24 strangers, 1 COVID-19 APP, and 6 lessons on ‘how to fail successfully’ as a tech entrepreneur Written by Mark Bamford, Founder Viktrs

to build tech and that Apple and Google perhaps have alternative motives.

On March 1st 2020 I reached out and managed to pull together 24 techies and a handful of data scientists, marketers and lawyers, most of whom I have never met and somehow convinced them to work probono on a crazy 4-week sprint to build a COVID-19 Avoid, Trace and Track App in 4 weeks. You see I was in a rush. I assumed time was of the essence to protect the UK from COVID-19 as Taiwan and Korea had done.These countries were way ahead of us in creating great tech tools to protect their people.

However, I did want to reflect on what I have learnt these past 14 weeks about the key success factors for all tech when it comes to COVID-19.

We did it - we completed a successful test of a ‘phone to phone COVID19 infection alert’ for contact tracing on 30th March. That’s 10 weeks ago today and that is where this fairy tale ends.

3. Be ‘fit for purpose’ as an organisation - ok, simply put … the UK government should NOT try and build tech.They don’t even pass muster on my first 2 criteria! So, they were doomed even before they started building! There is too 2. Deliver value - no one wants to much red-tape, existing policy, old be ‘told to use an app’ by anyone, infrastructure, and legacy stakeespecially the Government who holder complexity. We needed to you probably didn’t trust to begin build an App quickly and effecwith, so they were doomed from tively. What is needed is a comthe start. NO APP IN THE HISpany and a team that ONLY HAS TORY OF THE WORLD is used ONE PURPOSE, to build trust, widely because the users are ‘told protect data and deliver value. I to use it’. So, work out how to am sorry - in this case, you cannot create value for the public, which teach old dogs new tricks! for our App was to help them 4. Adoption - all this technology AVOID hotspots, enable them is for nought if no one uses it. So, to order tests, self-report sympget the first 3 right, and you stand toms and would enable people to

It all came to a grinding halt as the ogres of this story appeared on the horizon… then all that talk of Government support to help ‘UK tech’ never appeared and the ‘Guardians of the Tech World’ Apple and Google stopped us from testing.This is where we are at today - sitting on our hands, waiting for someone to help us while the UK Gov stayed notably very very silent. This is not meant to be a rant about how Gov bureaucracy is all-consuming, that they should never try 98

1. Create trust - when it comes to privacy and data, only one thing matters - building trust with the public. Irrespective of all the tech, encryption, tokenisation, Bluetooth v GPS and other ‘new fandangled’ ways techies can protect and anonymise your data. They are all irrelevant if you cannot gain the trust of the public. You do this by being explicit about data - total, complete, proactive honesty, and transparency. Oh, and some world-class GDPR lawyers are also very useful!

safely visit loved ones, get back to their jobs and get the UK back to normal quicker.


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About Mark Bamford, CEO Viktrs Mark Bamford is CEO and Founder of Viktrs, which will be live in Q4 this year. Viktrs is a music video platform designed to monetize the dormant value in music videos to deliver new revenues to the music industry and new video-centric experiences to fans (www.viktrs.com). More recently, of course, I set up Soteria4Good, the ‘not-forprofit’ builders of the C19Tracker App. Mark currently lives in London, but his background is a really international one having worked across mobile tech, consulting, and startups over the last 24 years, in countries like HK, Sri Lanka, Australia, UAE, USA and UK. Working and leading international teams across cultures is his real passion, and certainly taking on conventional thinking has been a hallmark.

a chance of winning people over no one else seems to be doing it”. and getting them to use your app. I never thought I would be right; I 5. Nimbleness - this one is really thought a big corporate or the Gov simple. Don’t be old and slow - would beat us to it. Alas, they have sound like anyone you know? not yet, and 14 weeks later we are Be as fast, quick and trust peo- still stuck at the ‘Gates of Apple’ not ple to deliver to their expertise... allowed in, and with no support from “Simples” as a famous meerkat UK Gov. There is however a somewhat happy 6. Create Fun - this was in very ending to the story, I have proven to short supply in March and with myself that this could be done, I have 24 strangers sitting on endless met some amazing people in this ZOOM video calls till all hours, new virtual world. I now sit on the working their hearts out, all Smart Pandemic Management board without being paid - you’d better with a top American University and make it fun, even if the topic is a we are exploring numerous commercial uses for the C-19Tracker as deadly serious one. businesses and universities seek to So, back to the beginning. When I get back to work safely and people started this with a few calls to simply want to be able to hug their friends in Gov, Tech, and the NHS ‘at risk’ loved ones, who currently in late February and the question sit on ‘the other side of the window’. came “why are you doing this?”, My heartfelt belief is that we can still the answer was simple - “because make this happen. would say.


A BIG thank you to the whole team involved in the project who provided their time, energy, humour, and expertise effectively PROBONO to make this project possible: • Zanyar Outhman & the 5 members of the Zuse Digital team • Vivek Behl (JAO Enterprises) • Paul Eisenberg, Joy Taylor, Parris Ikuomola & Leah Furbert (Viktrs) • Amit Mehta, Christopher Caldwell, and Leon Vvedenskii (Harness) • Frank Meehan (SparkLabs) • Richard Green (RJSG Advisors) • Wilson Sonsini GR and several members of their Data Privacy and GDPR team. • Leon Mills Website: https://www.c-19tracker.com/


the global investor

Operational Risk expert on the real cost of businesses returning to ‘normality’


ver the course of the pandemic, ORX, experts in operational risk management and fraud, have been analysing how businesses, mainly financial services and banks have been impacted by Covid-19, including the high rise in social engineering crimes.These businesses are not just suffering through economical loss in late payments and insurance claims but reputationally through public scrutiny. Dr Luke Carrivick is Head of Research and Information at ORX and specialises in operational risk data. He analyses how the current pandemic is affecting many financial businesses and banks around the world and the measures that need to be in place to operate with data safely in this unusual environment.

“When the costs of coronavirus for business and society as a whole are finally counted, they are almost certain to run in to the trillions. In our regular conversations with over 100 banks and insurers from around the globe, we see how the financial services industry has been acutely


impacted. From stretching the resilience of global supply chains, to seeing cyber criminals exploiting public fears around the pandemic in fraud campaigns, the investment to manage the fallout of coronavirus has been significant. This inevitably has a knock-on effect on all business and society as a whole. Perhaps the biggest potential cost of all to businesses, though, is reputational.That’s why we’re seeing banks and insurers making real efforts to support customers in the face of an impending downturn and facilitate government financial support schemes. In the face of considerable public scrutiny, failure to ‘do the right thing’ could be extremely costly for businesses, particularly for the financial services industry which has had its fair share of public scandal. However, although coronavirus had the potential to cause financial apocalypse, this appears to have been avoided. Businesses have had to rapidly respond in the face of unprecedented financial and operational stresses, but efforts to ‘keep

the lights on’ and the world moving appear to have been largely successful so far. In key financial services, for example, we’re seeing that payments are still working, and insurance claims are being paid. In terms of normality, though, very few institutions that we have spoken expect a return to the world as it was pre-pandemic. There’s even frequent mention in our discussions with risk professionals of ‘BC’ (before coronavirus) and ‘AC’ (after coronavirus), proving just how fundamental a change this is. Instead of a return to established ways of doing things, we see the emergence of a new norm, and it’s not all doom and gloom. Some of the significant costs that have been incurred will of course be written off, but some will have created new efficiencies such as investment in digitalisation and in virtual working.Whilst we may be entering an economically tough time, we may well see those businesses who have rapidly transitioned to the new normal, and who come off well reputationally, thrive in the new post-coronavirus world.”


summer edition

A phantom risk? With our insatiable appetite for technology, and the soon to be implemented 5G network, wireless technology is back in the spotlight.

Kieran McMullan


t is true scientific literature has been warning us about wireless radiation for years. And recently, over 250 scientists, who have published peer-reviewed research on the health effects of electromagnetic field (EMF), signed the International EMF Scientist Appeal — a warning urging governments to reconsider the potential health hazards of 5G. Despite this, the effects


of EMF exposure on humans remain hypothetical, and of all the unanswered questions, we are left with one reliable answer: perhaps.

certain types of brain tumours and consumers should consider ways of reducing their exposure’.

Today, the average time spent on a mobile phone is three hours and 15 minutes daily. With the top 20% of smartphone users spending upwards of four and a half hours — Nine years ago the World Health according to research from RescueOrganisation (WHO) said mobile Time, an app that monitors phone phone use is ‘possibly carcinogenic’. use. Adding: ‘Using a mobile phone may Over the last decade smar tincrease the risk of developing phone ownership has dramatically In order to make this perhaps as reliable as possible, it is important to consider every bit of information available.


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increased. Ofcom data, 10 years ago, shows 17% of the population owned a smartphone; compared to 79% now—with 95% among 16-24 year olds. Moreover, The Office for National Statistics reported that 100% of 16-24 year olds have access to the internet via a smartphone.

or cause them to vibrate, but not enough to ionise; specifically, remove charged particles such as electrons.

Let’s start with the electromagnetic spectrum. Radiation exists across a spectrum from very high-energy to very low-energy. High-energy radiation includes x-rays, gamma rays, and UV radiation from the sun; examples of low-energy radiation are infrared, microwaves, and radio waves. In short, the electromagnetic spectrum is what scientists use to describe all the kinds of light or wavelengths, that exist. However, most of the light in the universe is invisible to the human eye.

a region of space under the influence of a force. So in respect to EMF, electrical fields consist of electrical forces exerted by charged particles such as protons and electrons.

For example, the sun's rays can heat our skin cells so powerfully we get burnt. Microwaves and radio waves penetrate more deeply into If over 250 scientists, from 40 dif- the body than radiation from the ferent nations believe their findings sun, and can therefore heat up tisstrongly support the dangers of 5G, sues at deeper levels. what does this mean for us? Physicists understand a field to be

Particles with like charges repel one another, while opposite charges attract one another. The result of this attraction: these elementary particles form the atoms, which in turn make up molecules, cells, organs, and living beings.

Charged particles in motion — in other words, electrical currents — The effects of energy can harm indi- generate a magnetic field. And it is vidual organisms, and at its worst, these electric and magnetic fields ionising radiation has enough scientists believe pose a range of energy to remove an electron from health concerns. an atom or molecule. This breaking apart of chemical bonds can dam- It has to be noted that thermal age the DNA inside of cells, which damage is directly proportional to can result in cancer. Non-ionising the strength and frequency of exporadiation has enough energy to sure. The more powerful the elecmove atoms in a molecule around tromagnetic fields and radiation,

or how frequently the person is exposed, the more probable thermal damage will occur. Mobile phones, Wi-Fi, televisions, and gaming consoles are playing an ever-greater part in our lives — a lifestyle that has to be factored into research on radiation exposure. Scientists now believe even the weakest signal can induce biological responses and affect organic tissue and processes. So the point in question within the scientific community is whether low-energy radiation, or, 5G, is bad for our health. Radio frequency (RF) radiation, a type of EMF, is non-ionising because it is low-energy. This form of radiation includes microwaves and radio waves, though does not cause cancer in the same way ionising radiation does. This is important to distinguish. There is concern, however, that some forms of RF radiation might cause biological effects that could result in cancer. Mobile phones, including 5G and all other generations of this technology, use RF waves in the sending and receiving of information. These waves are strongest at the antenna, but lose energy quickly as they travel away from the phone. A point to consider is this: the closer the antenna is to the head, the

Mobile phone antenna placements in regard to the thyroid gland (grey). Different localisations of the antenna depending on new generations of mobile phones are shown in the panels from left to right. https://www.saferemr.com/2014/07/is-mobilephone-use-contributing-to.html



summer edition

of an aggressive type of brain tumour called glioblastoma multiforme, found in the forehead and side regions of the brain, have risen sharply in recent years. The graph below from ONS shows the rise of Glioblastoma in the UK. The red line plots the tumours scientists would expect the maximum exposure of cellphone use in the temporal lobe and the frontal lobe of the brain. Other brain regions do not show the same increases. But where you would get the maximum exposure, the increases occurred. Other reported rates of increased brain cancers occurred in the US, with registered tumours found in children, adolescents, and young adults from birth to 24-years-old. Figure 6 The study shows an increase in neuJoinpoint regression analysis of age-standardised incidence of thyroid cancer for women, aged 20-39 years, 1970-2013. Incidence per 100,000 inhabitants for ICD-7 roepithelial brain cancers. Epithecode 194 according to the Swedish Cancer Register. lium is the thin tissue found on the body’s surface, and in regards to greater a person’s expected expo- evidence’ that two years of exponeuroepithelial, it is a type of episure to RF radiation increased cansure to RF energy. thelium containing sensory nerve The brain is the main target of the cer in male rats and damaged DNA endings. These are found in certain exposure to RF radiation during the in rats and mice of both sexes. sense organs, like your inner ear, use of handheld wireless phones, Interphone, an international study, retina, nasal membranes, and taste and so an increased risk of devel- shows similar findings, this time in buds. oping brain tumours has long been glioma cases—a type of tumour in All these studies clearly show the a cause for concern.Currently, the the brain or spine. The study shows lower the exposure to RF radiation, majority of smartphone models a two-fold risk after 10 plus years the lower the risk. have their antenna positioned at of use. Brain tumour cases here in the bottom of the phone, thus closer England have reportedly risen. Fig- The popularity, widespread use, and to the thyroid gland.The illustration ures from the Office of National increasing dependency on wireless above shows the positioning of the Statistics (ONS) show an increase technologies has prompted a teleantenna in regard to the thyroid in brain tumours from 1995 to communications industrial revolu2015. The results show that cases tion. Resulting in the rapid growth gland in the neck. The data on the graph below is sourced from the Swedish Cancer Register, and shows an increase in thyroid cancer for women aged 20-39 years, between 1970-2013. Incidences increased significantly during the period 1993-2013, with an average annual percent change (AAPC) rise of +4.38%. Another research study found heart and brain cancers in rats are the same cell type as tumours found in humans that have used cell phones for over 10 years. The $30 million study by the U.S. National Toxicology Program (NTP) found ‘clear



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of public exposure to broader and higher frequencies of the electromagnetic spectrum.This is the price we pay in order to transmit data through a variety of devices and infrastructure. In essence, to power the internet of things (IoT) — the interconnectivity via the internet, of computer devices in daily life. On the horizon, a new generation of high frequency 5G, is already set in motion. Fifth generation technology involves unlocking new spectrum bands in higher frequency ranges, using submillimeter and millimeter waves. Scientists do not yet know what dangers these unknown frequencies pose. Yet UK governments are rolling out 5G technology anyway. 5G cell towers cover a much smaller distance in the transmitting of information, hence why more are being deployed. This is because 5G uses millimeter wavelengths which are shorter than 4G wavelengths. Internet speeds could be up to 10 times faster than 4G, but cell towers on every street corner and increased mobile phone use, means we will be surrounded by radio waves on a regular basis. A Silicon-valley engineer turned technology health advocate, Jeromy Johnson, spoke in a recent TED Talk, outlining our dependency on technology and the dangers of wireless frequencies.

“I am contacted by people all around the world, every day, who are experiencing the exact same things. It can be when they have a wireless smart meter installed, or a new Wi-Fi router, or even a cell tower placed across the street from their home.” — Jeremy Johnson 104

In his talk, Johnson recounted headaches, ringing in his ears, insomnia, and brain fog he had never experienced before. One evening, he checked downstairs, below his apartment, and discovered a bank of wireless smart meters installed right below his bedroom. He is not the only person bearing symptoms associated with wireless frequency exposure: Frederica Lamech, a physician based in Melbourne, evaluated public complaints after the rollout of smart meters in Australia which began in 2006. Her case studies analyse the symptoms of 87 adults and five children. In her study published in the November/ December 2014 issue of Alternative Therapies in Health and Medicine, she notes the ‘most frequently reported’ incidences from exposure to smart meters were similar to the symptoms outlined in Johnson’s TED Talk. Lamech’s findings are also the most common ailments mentioned in the 2012 Austrian Medical Association’s Guideline for the Diagnosis and Treatment of EMF-related Health Problems and Illnesses. Lamech added: “the hypothesis that some people can develop symptoms from exposure to the radio frequency fields of wireless smart meters … cannot be disproven without further assessment of the

affected individuals and the electromagnetic fields (EMFs) in which they live.” In America, The Federal Communications Commission (FCC) is supposed to regulate wireless technology, though, according to Johnson in his TED Talk, the regulations are outdated and need re-evaluating. “Our most advanced technology is using a science that’s at least 20 years old”, Johnson said.These regulations are based on a concept that is nearly 50 years old, which states: if microwave radiation does not heat us, then it can’t possibly hurt us. Many churches and schools in Britain today have cell towers, with frequent incidences of children complaining about headaches. The illustration below shows the vulnerability of younger brains concerning the absorption of radiation. A child's brain contains more water than an adult’s, and the skull is thinner. Children also have smaller bones which means their bodies are susceptible to more absorption of radiation, especially in deeper tissues. The dangers of wireless technology is something society has not yet recognised. The science shows we are all affected on some level, whether we feel it or not. This is because our bodies are essentially electric. Every cell in our body communicates using

Microwave Cellphone Effects Absorption in the Brain According to Age

5 Year Old

10 Year Old


Image courtesy of Dr. Om Gandhi, University of Utah, 1996, IEEE Publication


summer edition

Globally there is still no consensus on the health impacts of 5G. While The generations now are the first some countries are rapidly movto experience cradle-to-the-grave ing forward with installation, other exposure of man-made RF radiation. countries are waiting for more research to be carried out — for It could be years or decades before instance, Switzerland has stalled the the effects are known and felt. rollout of 5G over health concerns. The danger is then magnified by Scientists are dealing with uncerother common health risk behav- tainty when it comes to whether iours — thus effects can be non-lin- low-energy radiation is bad for ear. Government officials and indus- our health. So the subject we must try representatives of the status quo instead focus on is how much uncerregard this as non-conclusive proof. tainty we are willing to accept and In Britain, 5G was officially launched live with. in May 2019; with coverage reaching EMF radiation is a solvable prob50 towns and cities, including some lem. Many claim current regulaof the most populated areas such tions set out by FCC and WHO, as London, Edinburgh, Manchester, and adhered to by companies, do Cardiff, Bristol, and Newcastle. not go far enough. tiny electric signals. It’s how our nervous system operates.


Moreover, if smart meters were designed to emit just once or twice a day, rather than 10,000 times, many people could avoid the health side effects of living with modern technology. Then there is our dependency on Wi-Fi. Most people simply do not need it in their homes. When it comes to children, do we really need Wi-Fi in schools? We are readily filling classrooms with radio waves. The safer alternatives are fibre-optics or ethernet cables. If international agencies were to reconvene and re-evaluate RF radiation, they would be bound to conclude: exposure is a human carcinogen. And governments could not ignore that.


the global investor

Tesla's Elon Musk Spearheads Anti-Lockdown Movement


f course it was going to be Elon Musk. This week, the Tesla chief executive thrust himself to the forefront of America’s anti-lockdown movement by threatening to “immediately” relocate the electric car group’s California headquarters to Texas or Nevada; filing a lawsuit; and then restarting production at the company’s Fremont plant in defiance of authorities. Mr Musk may be one of the world’s loudest clean energy advocates, having almost single-handedly jump-started the market for electric cars. But he has long displayed the same hatred of being told what to do that fuels the gun-toting protesters who stormed Michigan’s state house to protest anti-coronavirus measures. Mr Musk has repeatedly tangled with US securities regulators about what he can and cannot


tweet about his publicly traded company. His 2016 decision to have Tesla acquire a lossmaking solar energy company that he helped start was roundly criticised. And he embroiled himself in a defamation lawsuit with an online verbal assault on a British diver who had accused Mr Musk of grandstanding during the 2018 rescue of 12 boys trapped a Thailand cave. Mr Musk eventually prevailed in the case.This time, Mr Musk’s stand-off with California bureaucrats, which included a taunt to arrest him if they so dared, was largely theatrical. By the time he threatened to leave the state, local officials had already said he could probably reopen the factory the following week, with new safety precautions in place. But it also won him new fans in America’s heartland and the White House. US president

Donald Trump tweeted that “California should let Musk open the plant, NOW”. Alex Epstein, a critic of electric cars and author of The Moral Case for Fossil Fuels, says “Tesla now stands for freedom, versus just ‘green’”. Mr Musk’s stand-off is a deliberate, brilliant marketing ploy, argues Mario Herger, an electric vehicle advocate and author. Tesla is looking for a production site for the Cybertruck, its Blade Runner-inspired answer to the Ford F-150, America’s best-selling vehicle for the past 38 years. “With the cars he’s building now, and the Cybertruck, they aren’t aiming any more at the Silicon Valley freaks and geeks, they are aiming at the regular Joe, the red necks, the country boys, the contractors. Moving a factory to Texas brings them closer to this audience,” Mr Herger says.


summer edition

Mr Musk may also have had sound financial reasons to act out. UBS analyst Patrick Hummel estimates that Tesla is foregoing upwards of $500m in revenues a week amid the shutdown, money that a company that has never had a profitable year can ill-afford to forego. Scott Painter, founder of Fair, a car-subscription service, says Mr Musk’s approach has not changed. “There’s no politics behind it at all.

He made his first fortune as one of the founders of PayPal, the payments company, and then launched both SpaceX, his rocket company, and Tesla in the early 2000s. His other ventures include a high speed transport company, Hyperloop, and Neuralink, which seeks to integrate artificial intelligence with the human brain.

His dogged persistence, soaring visions and confrontational nature This is pragmatism and survival,” he have won him legions of fans — and says, describing his friend of nearly rabid detractors. “Often, in persontwo decades as a “very libertarian, alities this gifted, there is an offsetfree-market type” who has “never ting, manifest, almost incomprehenwavered on that stuff”. The South sible eccentricity and willingness to African-born entrepreneur, aged 48, defy convention,” says Bob Lutz, a has been railing against the pan- former GM executive who worked demic response for months, tweeting with him on a documentary. “Musk in early March, that “the coronavirus will fight anyone, or any institution, panic is dumb” and predicting that regardless of size or power, or politnew cases in the US would fall to ical orientation, if he perceives a “close to zero” by late April. He also real threat to the company’s viabilcalled shelter-in-place policies “fas- ity.” Back in 2014, when SpaceX was cist” on a Tesla earnings call in late being denied government contracts April. Mr Musk attended university to launch military satellites, Mr Musk in both Canada and the US before sued the US Air Force.“Nobody sues dropping out of graduate school at the Air Force if they’re trying to get them as a customer,” says Ashlee Stanford after only a few days.


Vance, Mr Musk’s biographer. “But it actually worked ...Now it flies tonnes of military satellites.” Mr Musk flouts convention in almost every way. Divorced three times from two women, he now dates Canadian singer Grimes, 32, who recently gave birth to a baby boy. They say his name, X Æ A-12, combines “the unknown variable”, the elven spelling of artificial intelligence, and an aircraft commissioned by the CIA. It is testimony to his extraordinary range that the lockdown feud may not even be the defining episode this month for the self-made billionaire. On May 27, two astronauts will board a SpaceX rocket bound for the International Space Station — the first time a private company will send humans into orbit and the first time in almost a decade a crewed mission will depart from US soil. It could be one of his most “heroic weeks”, says Mr Vance. “What is a more American dream than some South African immigrant coming here and picking up rockets mid-career and getting humans back into space for America?”


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Articles inside

Tesla’s Elon Musk Spearheads Anti-Lockdown Movement article cover image

Tesla’s Elon Musk Spearheads Anti-Lockdown Movement

pages 106-110
A phantom risk? article cover image

A phantom risk?

pages 101-105
Operational Risk expert on the real cost of businesses returning to ‘normality article cover image

Operational Risk expert on the real cost of businesses returning to ‘normality

page 100
Rejected in isolation: 24 strangers, 1 COVID-19 APP, and 6 lessons on ‘how to fail successfully’ as a tech entrepreneur article cover image

Rejected in isolation: 24 strangers, 1 COVID-19 APP, and 6 lessons on ‘how to fail successfully’ as a tech entrepreneur

pages 98-99
Brazil’s investors withdraw en masse for fears of Bolsonaro article cover image

Brazil’s investors withdraw en masse for fears of Bolsonaro

pages 90-91
Virgin Atlantic Bailout article cover image

Virgin Atlantic Bailout

pages 96-97
Estonia: A small country that conceals great digital possibilities article cover image

Estonia: A small country that conceals great digital possibilities

pages 94-95
Glimmer of hope as UK economy starts to emerge from the ashes: Majority of businesses have a positive outlook for next 12 months article cover image

Glimmer of hope as UK economy starts to emerge from the ashes: Majority of businesses have a positive outlook for next 12 months

pages 92-93
Ireland Railing Against deficit and job losses article cover image

Ireland Railing Against deficit and job losses

pages 88-89
Interview - Steven Koch article cover image

Interview - Steven Koch

pages 84-85
EU budget chief seeks backing for business levy to fund recovery article cover image

EU budget chief seeks backing for business levy to fund recovery

pages 86-87
Blockchain Technology and the Banking Industry: Changes Are Here and Here To Stay article cover image

Blockchain Technology and the Banking Industry: Changes Are Here and Here To Stay

pages 82-83
The Revolution of 3d Printing article cover image

The Revolution of 3d Printing

pages 80-81
Putting change management at the heart, and start, of hr projects article cover image

Putting change management at the heart, and start, of hr projects

pages 74-75
Dark Clouds Over EU’s Manufacturing Industry: Worst Numbers in Six Years article cover image

Dark Clouds Over EU’s Manufacturing Industry: Worst Numbers in Six Years

pages 78-79
Your Brand: What’s at Risk? article cover image

Your Brand: What’s at Risk?

pages 76-77
European Commission announces targeted “quick fix” amendments to EU banking rules article cover image

European Commission announces targeted “quick fix” amendments to EU banking rules

pages 72-73
Digital and Physical Worlds Set to Collide as Cybersecurity Takes Center Stage article cover image

Digital and Physical Worlds Set to Collide as Cybersecurity Takes Center Stage

pages 56-57
A Hub for the Global Enterprise: Why You Should Consider Starting a Business in Bermuda article cover image

A Hub for the Global Enterprise: Why You Should Consider Starting a Business in Bermuda

pages 68-69
3D Printed Drugs - A Godsend article cover image

3D Printed Drugs - A Godsend

pages 70-71
Interview - Thomas Dunstan article cover image

Interview - Thomas Dunstan

pages 65-67
Why now is the time to Tokenize the World article cover image

Why now is the time to Tokenize the World

pages 58-59
The implications of Brexit for the UK Economy article cover image

The implications of Brexit for the UK Economy

pages 62-63
Global stocks rise after Trump holds back on China retaliation article cover image

Global stocks rise after Trump holds back on China retaliation

page 64
AI In Banking: Hype Or Revolution article cover image

AI In Banking: Hype Or Revolution

pages 60-61
Health and Wealth: The Covid Crisis article cover image

Health and Wealth: The Covid Crisis

pages 50-52
Coronavirus shaking up Globalization article cover image

Coronavirus shaking up Globalization

pages 53-55
Interview - Graham Bright article cover image

Interview - Graham Bright

pages 44-49
Strong Real Estate Sector Despite All the Challenges: Qatar Shows Us How article cover image

Strong Real Estate Sector Despite All the Challenges: Qatar Shows Us How

pages 40-41
The Future of the airline Industry article cover image

The Future of the airline Industry

pages 34-39
The challenges and complexities of restarting a business after lockdown article cover image

The challenges and complexities of restarting a business after lockdown

page 33
Interview - Romain Gerardin-Fresse article cover image

Interview - Romain Gerardin-Fresse

pages 26-32
Integrating urban and rural safety nets in Africa during the pandemic article cover image

Integrating urban and rural safety nets in Africa during the pandemic

pages 24-25
How AI can save JOURNALISM article cover image

How AI can save JOURNALISM

pages 20-21
Atradius and Kemiex shake-up the raw material trading landscape in pharma, veterinary, food and feed article cover image

Atradius and Kemiex shake-up the raw material trading landscape in pharma, veterinary, food and feed

pages 18-19
Why Africa should focus on industrialisation to increase free trade article cover image

Why Africa should focus on industrialisation to increase free trade

pages 22-23
Denmark’s supply chain finance programme targets business bounce back with $55bn working capital injection article cover image

Denmark’s supply chain finance programme targets business bounce back with $55bn working capital injection

pages 16-17
News article cover image


pages 8-9
The remaking of Elusive Elon Musk article cover image

The remaking of Elusive Elon Musk

pages 14-15
Blogger article cover image


pages 10-13
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