EMIA Week in Review: Temer Corruption Investigation Continues, Russia & India Ready for Eurasian FTA

June 5, 2017

EMIA

Brazilian President Ordered to Reply in Writing Questionnaire from Federal Police

MercoPress

  • Brazil’s Supreme Court has ordered President Michel Temer to be questioned in writing, the latest development in an explosive corruption scandal that has him fighting for his political life.

  • The embattled leader will have 24 hours to respond to questions from the federal police in a case involving Brazil’s largest meat company JBS, a court statement said yesterday.

  • The court authorization of Temer’s testimony was expected, as police continue their investigation.

  • At the heart of the case is a conversation Temer had with an executive from the JBS meat packing business in which the president allegedly blesses monthly payments of hush money to jailed former lower house speaker Eduardo Cunha.

 

Russia, India Ready To Proceed With Eurasian Free Trade Negotiations

Silk Road Briefing

  • Indian Prime Minister Narendra Modi is visiting St.Petersburg on 1st and 2nd June and is expected to formalize the proposed Free Trade Agreement between the Eurasian Economic Union and India.

  • Modi is due to meet Russian President Vladimir Putin with both sides having said they have completed a joint feasibility study into the FTA.

  • Negotiations over terms will then commence from July 1st.

  • Several countries have expressed interest in having a FTA with the EAEU, including China as well as India, and the India FTA when agreed is expected to triple on-going trade volumes between India and the EAEU nations by 400%. Current Indian trade with the EAEU is about USD11billion.

 

China Regulatory Brief: Amendments to New Cybersecurity Law, and New Regulation for Bike Sharing

China Briefing

  • Changes to the language of China’s new cybersecurity law, which will come into force on July 1, could implicate a wider range of products and services, and provide the government with access to foreign companies’ sensitive data and technologies.

  • China has announced plans to open oil and gas exploration to the private sector, allowing foreign companies access to a previously state monopolized industry. Qualified entities that operate in a protective and sustainable way will be permitted to engage in the industry.

  • The reform was made with the aim to make the industry more competitive, improve resource allocation, and ensure national energy security.

  • China has issued its first set of regulations for the country’s bike sharing industry. Customers registering to use bike sharing apps and platforms are now required to use their real identities, and must be over 12 years of age.

 

New Public-Private Partnership Models can change Healthcare Industry in Africa

BizNis Africa

  • Increased spending on healthcare in the public and private sectors across the African continent has resulted in improved health indicators and life expectancies.

  • The private healthcare sector, as well as non-government organisations (NGOs) are well placed to help improve healthcare across the continent, and while there have been Public-Private Partnerships (PPPs), these need to be stepped up if Africa wants to beat its healthcare challenges.

  • Leader of Deloitte Digital Africa and leader for Healthcare and Life Sciences, Valter Adão says “Healthcare spend is often sizeable in dollar terms but low relative to GDP, like in Nigeria, or reasonably comparable to European countries but the outcomes are poor, like in South Africa.”

  • “The deviation from the traditional PPP models is that governments would not be the recipients, but owners or implementers and perhaps even the investors into these solutions,” Adão recently told the World Economic Forum.

 

New Justice Minister and Personal Friend of Temer Triggers Concerns in Corruption Investigators

MercoPress

  • The union representing Brazil's federal police investigators expressed concerns on Monday about how probes into government corruption will be handled by the newly named justice minister, who is a personal friend of President Michel Temer.

  • Torquato Jardim, who will oversee the investigators and other members of the federal police department, in the past has criticized the “Car Wash” corruption probe that has now spread to include alleged bribes by a construction company of politicians around Latin America.

  • Jardim was appointed to the post on Sunday by Temer, who himself is under investigation for alleged obstruction of justice and corruption.

  • The union of federal police investigators said in a statement on Sunday night that members had no idea the appointment of Jardim was coming. It added that the change in justice ministers “brings concerns and uncertainty over the possibility of interference in the work performed by the federal police.”

 

How to Invest in Cambodia: Asia’s Best Frontier Market

Invest Asian

  • Cambodia is one of the fastest growing countries in the world. Unexplored and undervalued, international firms such as Starbucks, Samsung and Nike are just now to starting to invest in Cambodia.

  • GDP is growing by over 7% per year and while practically all other countries are revising their GDP growth downwards, Cambodia raises it upwards, exceeding its already high expectations.

  • Cambodia just barely has a stock market. Investing in real estate in Cambodia is a better bet – if you know what you’re doing. Most of the new condo projects are way overpriced. But there’s great deals to be had in buying shophouse apartments in certain areas.

  • Opportunities can also be had in private equity and venture capital in Cambodia. But this is arguably even more difficult than buying real estate in the country. Again, lots of research, due diligence, and effort is needed.

 

Why Made in Nigeria Will Give Small Businesses a Major Boost

BizNis Africa

  • Nigerian Federal Government should be commended for putting the spotlight on local manufacturers through initiatives such as the Made-in-Nigeria Dress Days and an Executive Order compelling state agencies to direct at 40% of procurement to Made-in-Nigeria goods and services.

  • That’s according to Magnus Nmonwu, Sage in West Africa Regional Director, who says a strong government push to encourage Nigerians to support locally made goods and services will help encourage entrepreneurship.

  • This, in turn, could help spur diversification of the economy, create local jobs, and decrease unemployment.

  • Made-in-Nigeria resonates with the theme of Africa Day, 25 May 2017 “Building a better Africa and a better world”.

 

China Faces OBOR Criticism Following The Belt & Road Forum

Silk Road Briefing

  • There has been some fallout following China’s Belt-Road Forum last week, with concerns being made both by various institutional bodies and political media over a number of issues concerning China’s intentions.

  • While the Chinese state media have naturally talked the forum up, comments from other sources have not been so kind.

  • Concerns are broadly split into two categories; either suggesting the OBOR plans are neo-colonialist, or promote corruption.

  • The negative feedback, while disappointing to Beijing, will not come as a surprise. In fact the Forum itself was largely intended to act as a barometer to how far the global community would accept China’s intentions to take a lead in global development issues.

 

Temer Urges Top Electoral Court to Decide Quickly and Lift Political Uncertainty

MercoPress

  • President Michel Temer urged Brazil's top electoral court to decide quickly on a case alleging illegal funding of his 2014 campaign in order to lift political uncertainty overshadowing a recovery in Latin America's largest economy.

  • Helped by bumper soy and corn harvests, Brazil's economy managed to grow in the first quarter following its most painful recession in more than a century, senior officials said on the eve of an investment summit in Sao Paulo.

  • Finance Minister Henrique Meirelles told reporters the economy likely grew by around 0.7% in the first quarter versus the previous one, with the incipient recovery evident in several sectors of the economy.

  • However, the minister said growth probably sagged in the second quarter. Uncertainty over the government's reform agenda and a broadening graft scandal was capped this month by plea bargain deals by executives at meatpacking company JBS who accused Temer of endorsing the alleged bribery of a potential witness in a corruption probe.

 

FDI in China during 2017 Shows More Cautious Approach

China Briefing

  • China attracted a record high US$139 billion of foreign direct investment (FDI) in 2016, making it the third largest FDI destination in the world.

  • While global FDI flows fell by 13 percent year-on-year to US$1.52 trillion, China received an increase of 2.3 percent FDI inflow.

  • However, FDI trends through the first four months of 2017 show that foreign investors are taking a more cautious approach to investing in China.

  • Many investors harbor some hesitancy about investment prospects in China, given the country’s multi-year trend of declining GDP growth, which is set against an increasingly unstable global political and economic environment.

 

EU and Argentina Confident a Trade Deal with Mercosur can be Reached by the End of the Year

MercoPress

  • The High Representative and Vice President of the European Commission, Federica Mogherini who visited Argentina on Monday praised the rapid progress made in negotiations on a renewed EU/Mercosur trade agreement and was confident remaining obstacles could be overcomes and a deal can be reached by the end of the year.

  • Bilateral political and economic relations, as well as support to regional integration and to multilateralism were at the core of Ms Mogherini second visit to Argentina, where she met in Buenos Aires with President Mauricio Macri and Foreign Affairs minister, Susana Malcorra.

  • Mogherini stressed with both interlocutors that Argentina can count on the European Union's support during its G20 presidency next year and in preparation of the WTO ministerial meeting in December.

  • Mogherini praised Argentina as the pro tempore Mercosur presidency, in particular in advancing negotiations on a new EU-Mercosur trade agreement. Rapid and good progress has been made so far, and both sides agreed to maintain their focus on shared objectives so as to overcome any remaining obstacles and to reach a deal by the end of the year.

 

India Market Watch: Overseas Market for Indian Films Grows, IT Sector Lay-offs Lead to Unionization

India Briefing

  • Indian films are raking in record revenues in overseas markets, especially in recent years, as big-budget movies utilize more resources to invest in local distribution networks and marketing campaigns.

  • Recently, Elon Musk, the founder of electric carmaker Tesla, identified India’s 30 percent local sourcing norms as a barrier to the company’s entry into the country. In response, Indian policymakers clarified that India’s foreign direct investment (FDI) rules did not mandate manufacturers to comply with a minimum local component sourcing norm.

  • India’s IT industry is facing challenging times as its export-oriented services model responds to the spread of protectionist hiring norms in various countries, especially in the US and Australia. This is in addition to the growing role played by automation and cloud and digital technologies in the sector, forcing employees to upskill or reskill or become redundant.

  • The Real Estate (Regulation and Development) Act 2016 (RERA), India’s new realty law, came into force on May 1. It defines stringent norms for property developers and promoters, in an effort to introduce transparency and accountability in the real estate sector.

 

New Perspectives on Cyber Security: The Regulatory Challenge

Global Risk Insights

  • The vast majority of companies, institutions and other organisations underestimate both the significance and impact of a (slowly) changing legislative landscape – and therefore, often fail to respond to far-reaching challenges in proper time, damaging their own business and reputation.

  • Due to the volatility, force and pace with which technological innovation is moving through the global economy, cyber risk has become the biggest contemporary threat to all actors, especially companies.

  • About 72% of all global CEOs do not think that they are fully prepared for a cyber attack. Potential targets have to factor in multiple variableswhen building their cyber defense capacities.

  • And taking a regulatory perspective must be a key part of the overall equation. As regulations are growing increasingly complex, doing the minimum in compliance is not enough anymore.

 

Faurie New Argentine Foreign Minister; Malcorra Resigns but will Remain as Advisor

MercoPress

  • Argentine Foreign Minister Susana Malcorra resigned on Monday and will move to Madrid to be closer to her family, President Mauricio Macri announced.

  • Argentina's ambassador to France, Jorge Faurie, will be the new foreign minister and Malcorra will continue as an adviser to the government from afar.

  • “Our foreign minister is leaving us - not the team, but the role of foreign minister,” Macri told reporters at a press conference. “She is leaving this crucial role for strictly personal reasons.”

  • Faurie, a lawyer, has served as a diplomat for four decades and was briefly vice foreign minister in 2002, according to a resume distributed by the government.

 

Turkish Exports To Russia Rise 30% In 2017

Russia Briefing

  • The continuation of Russia seeking non-EU suppliers in wake of the controversial EU sanctions has resulted in a boom time for many Asian and Oriental exporters as they seek to fill the void left by EU products being barred from Russia markets.

  • The latest in a long line of eastern nations to benefit is Turkey, which has just announced a 30% increase in exports to Russia for the first four months of the year.

  • Turkish Exporters Assembly (TİM) Chairman Mehmet Büyükekşi, said that the recent normalization of ties between Turkey and Russia following various political frictions over Syria have given a momentum to Turkish exports, showing a large increase and promises of improving commercial relations.

  • Imports of Russian goods into Turkey also increased by 15%.

 

Moody’s Lowers Brazil’s Credit Outlook; Meirelles Confident the Reform Agenda will be Approved

MercoPress

  • Brazil's economy is clearly growing again after a severe recession and will be shielded from a political crisis by widespread support for the government's reform agenda, Finance Minister Henrique Meirelles said, despite the fact Moody's on Friday announced it was lowering the country's credit outlook.

  • Meirelles said the economy recovered quickly from previous episodes of political turbulence when there was no doubt about the future of economic policy.

  • But Moody’s Investors Service said that the corruption scandal ensnaring President Michel Temer poses a rising threat to the recovery of Latin America’s largest economy.

  • Moody’s reduced the nation’s outlook to negative from stable and kept its rating at two levels below investment grade at Ba2, according to a statement on Friday.

Tags: argentina, brazil, cambodia, china, corruption, eu, eurasia, eurasian union, fta, india, investigation, market watch, mercosur, nigeria, regulations, russia, temer
Posted in Global, Macro Economics, Macro Economics