More than a notion

The WorldBank defines the blue economy as the sustainable use of ocean resourcesfor economic growth, improved livelihoods and jobs, and marine and coastalecosystem health.

Source: Whatis the Blue Economy? (worldbank.org)

Awareness of the challenges and opportunities of the blueeconomy has broadened in recent years. One challenge is to find the rightbalance between improving peoples living standards by drawing upon the richesof the marine environment and preserving the seas and oceans.

In Principles for aSustainable Blue Economy, the World Wide Fund (WWF) for Nature, the largestnature conservation organisation in the world, seesa role for the blue economy in contributing to foodsecurity and the eradication of poverty, and providing income, employment, andpolitical stability. A responsible approach restores, protects and maintainsthe diversity,productivity, and resilience of this naturalcapital. A blue economy is based on clean technologies, renewable energy,and circular material flows, according to the WWF.

Seas and oceans are a unique natural capital.

Given the role of the oceans and seas in regulating theclimate effectively, acting as a reservoir of biodiversity and a trove ofeconomic resources, their protection would seem essential. Yet, the marineenvironment is facing serious threats from both land and maritime-basedactivities.

Ocean warming and the increase in carbon dioxide in theatmosphere are resulting in the acidification of oceans. This keeps the shellsof many marine organisms from hardening and reduces their survival rate.Overfishing is reducing fish stocks and unregulated and undeclared fishinghampers their ability to rebuild numbers.

Eighty percent of marine pollution originates on land. Eightmillion tonnes of plastic end up in the ocean every year and if businesscontinues as usual, we face a future with more plastic in the ocean than fishby 2050. The plastic plague affects ocean life. In the case of oysters aspecies that provides an indication of ocean health plastic particlesresulting from the fragmentation of waste havebeen found to damage their reproduction cycle. Microplastics are found notjust in seafood. They are omnipresentin the environment, including the human food chain.

The declining health and biodiversity of marine ecosystemsmake it even more urgent to step up efforts to reduce emissions of pollutantsand the disposal of dangerous substances. As land-based natural resources arebeing depleted, it is incumbent on us not to exhaust those found in marine andocean areas. That includes the as yet untouched resources of the oceans, seasand coasts.

New sectors are emerging beyond traditional activitiessuch as fishing, aquaculture, ship and port construction, passenger and cargotransport, port operations, and tourism.

The new sectors have strong growth potential and willcreate jobs and require new skills. For example, renewable marine energysources can play an important role in a world that is both hungry for energyand keen to see sustainable cuts in greenhouse gas emissions. They include windenergy, and tidal and wave power devices. Improvements in the energy efficiencyof ships and switching to less carbon-intensive energy sources are otheraspects of blue economy development.

A further area is marine biotechnology, with applicationsin pharmaceuticals and cosmetics. There is the considerable task of wastemanagement given the impact of land pollution on the seas. That includes theprevention of marine waste.

Finance can play a major role in the energy transition andpush companies linked to the blue economy to adopt better practices. Thoseinvestors who consider the preservation of marine resources as an absolutepriority are set to see investment opportunities in companies that developmarine and ocean projects opening up as awareness of the blue economys appealgrows.

This particular area already has its own index: the ECPI Global ESG Blue Economy index. It comprises 50 companies whose activities are related to the blue economy. It includes five categories: coastal livelihood (protection, eco-tourism), energy & resources (offshore wind, marine biotech, wave & tidal), fisheries & seafood, pollution reduction (recycling/waste management, environmental services) and maritime transport. [3]

Also read:

Howocean states can benefit from a blue recovery from COVID-19

Water:a pervasive resource and a portfolio staple

Read more about sustainable investing

[1] The above points are based on data from National Geographic 28 February 2018; European Union 2017/ourocean2017; ocean-climate.org; Maritime transport study 2018, United Nations/UNCTAD; Ifad.org/15 January 2019

[2] The above points are based on data from https://wwfeu.awsassets.panda.org/downloads/wwf_marine_briefing_principles_blue_economy.pdf

[3] Click here for more information

Any views expressedhere are those of the author as of the date of publication, are based onavailable information, and are subject to change without notice. Individualportfolio management teams may hold different views and may take differentinvestment decisions for different clients. This document does not constituteinvestment advice.

The value ofinvestments and the income they generate may go down as well as up and it ispossible that investors will not recover their initial outlay. Past performanceis no guarantee for future returns.

Investing in emergingmarkets, or specialised or restricted sectors is likely to be subject to ahigher-than-average volatility due to a high degree of concentration, greateruncertainty because less information is available, there is less liquidity ordue to greater sensitivity to changes in market conditions (social, politicaland economic conditions).

Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.

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The great blue economy wave - Investors' Corner - Investors' Corner BNP Paribas

The issue of economic diversification has gained a renewed sense of urgency in Gulf Arab countries. A global economic slowdown induced by the coronavirus pandemic pushed Brent crude prices down from $64 per barrel at the start of 2020 to a low of $23 in April 2020 (see Figure 1).1 Oil prices are expected to remain below $50 per barrel through 2022.2 This has placed substantial pressure on the fiscal positions of Gulf Cooperation Council (GCC) countries,3 which are expected to run budget deficits averaging 9.2 percent in 2020 and 5.7 percent 2021.4

GCC countries have been concerned about the sustainability of their hydrocarbon revenues for decades. In the long term, oil and gas reserves will eventually run out. Bahrain and Oman are in the most precarious position, with reserves expected to run out within the next decade for Bahrain and within 25 years for Oman.5 In the medium term, revenues from oil are expected to decline in the face of reductions in global demand starting around 2040, if not sooner.6 This will be driven by higher demand for renewable energy and improvements in energy efficiency and storage. In the short term, GCC countries are already tapping into $2 trillion in financial assets accumulated over decades and invested in sovereign wealth funds (SWF) for future generations (see Figure 2).7 Before the pandemic, the International Monetary Fund (IMF) estimated that, unless GCC countries undertake substantial fiscal and economic reforms, they will deplete their conserved wealth by 2034.8 The pandemic has likely shortened this timeline.

The expected fall in hydrocarbon reserves and revenues has long motivated GCC countries to diversify their economies by developing productive sectors outside oil and gas.

There has been no shortage of policy advice from think tanks, international organizations, and consultants on what GCC governments can do to diversify their economies and prepare for a post-hydrocarbon future. However, this policy advice has often failed to address the political-economic realities of the governing social contract, in which GCC governments rely on specific economic channels to transfer hydrocarbon wealth to their citizens. These channels often stand in the way of necessary reforms. This policy brief aims to outline the economic reforms that GCC countries must take in order to diversify their economies and promote sustainable growth, taking into consideration the constraints imposed by the governing social contract.

GCC countries have been blessed with an abundance of natural resources. They have invested this wealth in improving the lives of their citizens, developing their infrastructure, and preparing for a future without oil. GCC countries have made substantial progress toward the first two goals.9 They have built modern cities and the infrastructure to service them, providing a solid foundation for future economic development. All have Human Development Index scores above 0.8, placing them collectively ahead of all other Middle East and North African (MENA) countries and on par with some countries of the European Union (EU).10

However, GCC countries have struggled to achieve progress on the third goal: diversifying their economies. Despite good intentions, reflected in their national visions and economic development plans,11 GCC economies remain stubbornly dependent on hydrocarbons.12 Reducing this dependence has several dimensions. First and foremost, it involves replacing oil and gas production with the production of goods and services that are not dependent, directly or indirectly, on the oil and gas sector. It also involves replacing government revenues derived from oil and gas with revenues from other sources, such as taxes on consumption and non-oil sectors, but not to the extent that these emerging sectors become hampered and uncompetitive. Thus, to succeed, economic diversification requires other key ingredients, including moderating government spending, increasing non-oil exports, and increasing foreign direct investment (FDI).

While GCC states have made some progress over the past decade (see Figure 3), oil and gas production continues to represent over 40 percent of gross domestic product (GDP) in most countries, except for the United Arab Emirates (UAE) (30 percent) and Bahrain (18 percent).13 Even so, much of the regions other economic activities, such as construction and infrastructure development, are directly supported by revenues from oil and gas. In Bahrains case, oil accounts for a small share of GDP because it has largely depleted its oil reserves;14 however, oil continues to support economic activity indirectly through transfers and spending from neighboring countries. Similarly, while improvements have been made in diversifying government revenues, hydrocarbons account for 70 percent or more of total revenue (see Figure 4), except for Saudi Arabia (68 percent) and the UAE (36 percent). Even so, again, many of the diverse revenue streams in those two countries derive from economic activities supported by oil and gas.15

Gulf countries do produce goods and services within their borders, mainly for domestic consumption. These include agricultural products, manufactured goods, and business services. However, domestically produced goods and services will not soon replace the vast quantities of imported goods and services that are needed to support the 27 million citizens and 29 million expatriates living in the region.16 Furthermore, real economic diversification requires producing goods and services, other than hydrocarbons and their derivatives, that can be traded with the rest of the world. Here, Gulf countries still have a long way to go. In 2018, hydrocarbons and related products represented over 90 percent of total exports in Kuwait and Qatar, over 80 percent of total exports in Saudi Arabia and Oman, and over 50 percent of total exports in the UAE and Bahrain (see Figure 5).17

Another indicator of an economys potential competitiveness is FDI, which reflects the willingness of foreign entities to invest in a country. FDI too is lagging in the GCC. Between 2015 and 2019, only Oman and the UAE had FDI inflows (as a share of GDP) that were higher than the world average of 2.5 percent.18 Net inflows of FDI into the GCC as a whole were only 1.1 percent of GDP; this represents less than half the global average and almost three times less than FDI inflows into high-income economies (see Figure 6).19 The weak business environment in most GCC states is part of the reason behind such low FDI inflows. It is difficult for firms that are not connected to insiders to enter and compete in the market.20 Furthermore, policy changes often occur on an ad hoc basis with little warning or recourse. These might include limiting work permits from specific countries, limiting the transfer of funds overseas, and cutting off economic ties with neighbors. Such policy uncertainties increase the risk to international, and even local, businesses wishing to invest in the region. When they were flush with revenue from oil and gas, GCC states had the luxury of making arbitrary policy decisions and even costly policy mistakes. However, the tighter fiscal realities of today require them to be more responsive to the needs and concerns of investors.

The key to economic diversification remains developing non-hydrocarbon sectors in which GCC economies can compete. While it is not clear what these sectors might be, this is a difficult question to answer without trial and error. While the GCC is unlikely to become competitive in agriculture, this can be a source of import substitution. Manufacturing has promise, but GCC economies must build infrastructure and create free zones to compete against low-cost manufacturers in Asia. Dubai has positioned itself as a financial, business, and logistics hub for the region, something that might have been difficult to imagine fifty years ago. Can the region accommodate other such hubs? Most GCC countries want to create high-tech knowledge economies, but this requires a level of skills and research facilities that remain in short supply. The GCC might be able to build a competitive technology ecosystem by importing talent from other Arab and Asian countries. Tourism has shown promise in Oman, Saudi Arabia, and the UAE, while Qatar is trying to position itself as a hub for cultural and sports tourism. Islamic banking could be an area where the GCC might develop a competitive advantage.21

Successful economic diversification and sustainable economic growth require building sectors that are truly independent of oil and gas. Over time, as oil and gas revenues fall, these independent sectors can expand as economic activity shifts away from hydrocarbon-supported sectors. The ability to create independent sectors rests on three pillars: (1) introducing a fiscal framework that allocates oil and gas revenues into either short-term rents or long-term investments with minimum economic distortions; (2) enabling an export-oriented private sector that is not dependent on oil and gas to grow and thrive; and (3) building a capable and motivated workforce outside the public sector, including entrepreneurs.22 Gulf countries have made some progress on all three fronts. However, they have been more apt to pursue partial reforms that provide the illusion of economic diversification but, in reality, continue to rely to a large extent on revenues from oil and gas.

GCC governments have sought to diversify their economies by supporting sectors that often reflect the preferences of policymakers more than the competitive strengths of their economies. However, most GCC states have come to realize that these diversification models are themselves unsustainable and have begun creating space for real private sector development. These efforts were initially led by Bahrain, which had the most limited oil reserves in the GCC. However, Bahrain has since been eclipsed by the emirate of Dubai, which also has limited oil reserves, and which has set the pace for the rest of the UAE.23 The UAE has been leading the other GCC countries in terms of providing an enabling environment for business and entrepreneurship. For example, over the past decade, all GCC countries have made significant progress in terms of ease of starting a business based on the World Bank Ease of Doing Business Index (see Figure 7).24

Gulf countries have also developed more holistic approaches to their diversification efforts in recent years. They have embedded economic diversification into their national visions and established commissions to better integrate the private sector into ongoing economic activities.25 They have also established agencies to support small and medium enterprise (SME) development and financing, such as Saudi Arabias Small and Medium Enterprise Authority,26 Qatar Development Bank,27 and Omans Riyada.28 SMEs are the cornerstone of diversification efforts, as their growth creates real economic value and jobs.

These policy actions have been supplemented by free trade zones and special economic zones that operate to various degrees outside the regulatory distortions of the private sector. These zones help attract FDI and serve as hubs for innovation that could be absorbed over time into the national economy. The UAE has 45 free zones that allow 100 percent foreign ownership.29 Bahrain has gone a step further and allows 100 percent foreign ownership in several sectors including real estate, communication, and administrative services.30 Gulf states also introduced hubs for innovation within their ecosystems, such as Bahrains International Investment Park,31 Qatars Science and Technology Park,32 and Saudi Arabias Prince Abdullah Science Park.33

Gulf states have also introduced educational reforms aimed at better aligning graduates skills with market needs.34 In countries where a vast majority of young people typically indicate a preference for public sector jobs, interest in entrepreneurship and private sector employment has risen. Initiatives supporting young entrepreneurs and providing them with training and counseling have spread across the Gulf. In Oman, vocational training centers and technical colleges have introduced the Know About Business (KAB) program, developed by the International Labour Organization (ILO) to support knowledge on the private sector.35 INJAZ Al-Arab, a regional non-governmental organization (NGO), targets aspiring young entrepreneurs in all six GCC countries and provides them with needed support and training.36

Yet, even though business regulations have improved and the startup ecosystem has developed significantly over the past two decades, GCC countries continue to lag in providing an enabling business environment and continue to suffer from weak capacity among their nationals.37 The private sector in the GCC, as in much of the MENA region, is overregulated and governed by an entrenched system of clientelism and connections. This is further exacerbated by the fact that much private sector activity is run through public or quasi-public enterprises, relies on government contracts, is financed through public financial institutions, and is supported through government subsidies or handouts. In such an environment, it is difficult for the private sector to grow organically or for someone who is not politically connected to establish and grow a successful business. These factors have their origins in the political economy and the governing social contract of the GCC states.

Gulf states began exporting oil in the 1940s and 1950s, leading to substantial increases in their incomes and wealth. GCC governments have been passing on this wealth to their citizens through three main channels. First, they have expanded and improved public benefits and services, including education, health care, and access to finance. Second, they have provided their citizens with access to public sector employment opportunities at substantially higher wages and benefits than those offered by the private sector.38 Citizens flocked into government jobs and public sector employment rates among citizens reached 90 percent in some states.39 Third, Gulf states have provided business owners with access to economic rents through government contracts and exclusive licenses, allowing them to generate excess income and profits from their businesses.

Understanding the nature of this social contract is important and has implications for the kinds of policy reforms that are both needed and might succeed. The key point is that these channels exist for a reason: they allow citizens to access their legitimate share of their countrys hydrocarbon wealth. The channels operationalize the social contract and will not be easy to renegotiate even as oil revenues decline. Aligning public sector salaries with those in the private sector means that citizens will receive fair compensation for their efforts, but citizens will cease to access their share of the wealth through public sector wage premiums. Limiting the access of citizen-owned businesses to exclusive contracts means that they will earn profits dictated by the market but, again, citizens will cease to access their share of the wealth through exclusive business contracts. Instituting such reforms, without first identifying and putting in place alternative channels for sharing natural resource rents, is both unfair and doomed to failure.

That said, reforms are needed. Channeling economic rents through expanded public services, government employment, and exclusive business contracts has weakened efforts to develop a competitive, dynamic private sector that is capable of generating sustainable economic growth in a post-hydrocarbon future. Yet, any policy effort to reduce rent-seeking behavior requires addressing the constraints of the governing social contract or introducing new channels. Once natural resource rents run out, Gulf countries will be in a precarious position of having to maintain the deadweight of channels that no longer serve a purpose. What can a country do when it can no longer afford to cover the costs of a large public sector workforce that has long-term contracts and does not have the skills to transition to jobs in the private sector?

Reexamining policy reforms through the lens of the social contract can present novel policy insights. Each of these requires policy changes that increase private sector and private citizen activity. This will not be easy in countries that subscribe to a state-led development paradigm.

As GCC countries began accumulating wealth, they initially focused on improving public goods and services. This started with education, health, and utilities, but quickly expanded to other sectors, including banking, finance, telecommunications, and transportation. In terms of basic public services, GCC governments have done a remarkable job of improving access for all their citizens. For example, educational attainment has improved considerably in the region. However, quality remains a concern. GCC students are among the lowest-scoring students on standardized international tests. While reform efforts have improved outcomes, they have not resulted in major shifts.40 In the long run, GCC governments should consider granting hospitals, schools, universities, and other purveyors of public services greater financial autonomy and establishing endowments to ensure their long-term sustainability. States can also encourage wealthy citizens to fund social services through private non-profit initiatives. Privately established endowments (known as awkaf) have a long and rich history in the Gulf region but were largely displaced by government initiatives after the discovery of oil. Bringing them back would allow private citizens to contribute to their countrys future and support a deeper change in the social contract.

Many industries across the Gulf have come to be dominated by large state-owned or state-run enterprises, even in industries that are normally the purview of the private sector, such as banking, construction, fuel distribution, and insurance. These state-owned enterprises played an important role in stimulating modernization, innovation, and economic growth. However, over time, they came to dominate their respective sectors. They erected bureaucratic barriers to entry, preventing smaller enterprises from growing and competing in their space.41 Indeed, many public enterprises effectively serve as the main regulators of their industries. Furthermore, while some state-owned enterprises have extended their operations internationally, a closer examination suggests that they were able to do so because of public subsidies and support, such as paying no taxes or paying below market price for inputs such as energy, land, and capital. There is little evidence to suggest that these state-owned enterprises can compete in a global economy without continued support. Rather than serving as a source of new revenue, they draw resources away from more promising economic sectors.

Still, state-owned enterprises remain a valuable source of public services, innovation, and employment. GCC governments are not likely to consider privatization unless they have to. However, reforms can be introduced to create a more competitive environment around them. GCC states need to develop a clear strategy for delineating the sectors and industries where public enterprises will operate and leave other sectors free from their interference. They also need to be transparent about record-keeping and ensure that all subsidies and support are clear and limited. Finally, GCC governments must build a firewall between public enterprises and their regulatory agencies. This would not only be a form of good governance, but would also improve competition and help to spur innovation and economic growth in the long run.

Much private sector activity in GCC countries continues to be linked directly or indirectly to government contracts and spending that, in turn, are funded through revenues from oil and gas. This tends to benefit public enterprises and private companies that are connected to ruling elites, at the expense of more competitive SMEs and startups, which should form the foundation upon which future growth and prosperity are built. In addition, members of the ruling elite may simultaneously hold government positions and head their own companies, gaining an ability to tilt the playing field to their advantage.42 Such constraints to private sector activity and competition reduce the incentive for entrepreneurs to introduce the kind of disruptive innovation that can create globally competitive industries that drive true economic diversification. Consequently, the private sectors contribution to GDP remains low. While official estimates are difficult to come by, in Saudi Arabia, for example, it was below 40 percent in 2018.43

This kind of rent-seeking is part of the governing social contract and will likely continue, but it can be moderated and limited to specific economic sectors and activities. For example, holding a government job while owning a business that benefits from government contracts represents double-dipping and has the potential to be mitigated. GCC states should also keep growth-oriented, export-driven sectors that are not dependent on revenues from oil and gas free from insider meddling. Also, they should continue to expand their free zones and economic zones, especially those that are developed around influence-free sectors. GCC states must also continue their efforts to reduce burdensome laws and regulations. These include introducing bankruptcy laws, removing the need for virtual companies to have a physical address, reducing the time and number of steps it takes to register a business, allocating a minimum share of government contracts to SMEs, ensuring that government payments are made on time, and improving access to finance for SMEs.

Finally, GCC governments should strive to disentangle politics and business. Too often, private economic activity is subordinated to impulsive political considerations. This increases risk and uncertainty and dampens international interest in investing in the region. The blockade of the UAE, Saudi Arabia, and Bahrain against Qatar is a case in point. The blockade disrupted supply chains, investment flows, business contracts, and even employee living arrangements.44 It came at a high cost to all countries involved with little political gain to show for it. GCC countries should remain mindful of the benefits of maintaining a stable and predictable investment climate and aim to keep politics away from the more crucial long-term objective of achieving sustainable economic growth and ensuring the prosperity of future generations. Equally important, GCC governments should establish formal mechanisms for regulatory notification and public comment. This would improve the quality and effectiveness of regulations as well as increase the transparency of the regulatory process, which would go a long way toward assuaging the concerns of potential investors.

GCC governments provide their nationals with access to public sector jobs at high wages and benefits as a means of accessing their share of the economic rents.45 The system affects the education and career choices of nationals, who typically seek the minimum credentials needed to access public sector jobs, with less concern for developing the skills needed to contribute to productive jobs in the private sector.46 The result is a segmented labor market, with citizens dominating the public sector and expatriates prevailing in the private sector.47 Furthermore, because public salaries include a share of economic rents, the civil service salary structure for nationals is both augmented and compressed. Those at the lower end of the salary scale with the least marketable skills are paid higher premiums over private sector alternatives compared to those with higher skills. This creates perverse incentives in terms of sector preference, with lower-skilled workers more resistant to accepting private sector work. Also, whenever GCC states wish to increase the share of oil rents distributed through the wage structure, in response to political conditions or increases in the price of oil, it results in an appreciation of the wage bill that is not easily reversed when circumstances change.

With the decline in oil revenues, public sector jobs have become scarce and GCC governments have transferred the responsibility for employing nationals to the private sector. However, peoples sense of entitlement has transferred with them.48 This is manifested in expectations of higher wages and benefits and weak motivation to work.49 In return, private sector employers typically avoid hiring citizens unless obliged to do so by the state. In such cases, they often treat this as a cost of doing business and do not develop the hired citizens productive capacities.50 This breaks the link between performance and reward and creates an entitlement mentality,51 which may persist after oil rents have been depleted. It has also resulted in high unemployment rates among young nationals, who queue for scarce public sector jobs despite the large supply of jobs in the private sector that are filled by expatriate workers. Youth unemployment rates among young nationals in most GCC countries with available data are high, reaching, for example, 40 percent in Saudi Arabia.52

GCC states have been reluctant to tackle this system of entrenched interests in employment. Attempts to bring public sector wages and benefits into alignment with those in the private sector have not been successful.53 For instance, Saudi Arabia was forced to reverse a decision to cut public sector benefits in 2017 after widespread grumbling.54 Some GCC governments have sought to maintain the wage gap between citizens and expatriates by increasing the latters work permit fees. However, this increases business costs and reduces their ability to compete globally, hampering long-run diversification efforts. A more effective strategy would be to make this channel for accessing economic rents more explicit. This could be done by introducing a scheme similar to an income tax credit. Employers would pay citizens a fair market wage, while the state would supplement this with a basic social wage or bonus that reflects their share of economic rents. This kind of transparency would better link wages for nationals to productivity and performance. It would also make it easier for GCC states to adjust the social element of the wages in response to changing economic circumstances, and can more easily be communicated to their citizens.

Policy efforts aimed at economic diversification must take legitimate rent-seeking behavior into account. GCC governments will have to engage in an honest conversation with their citizens regarding the financial constraints they face and the options going forward and then redraw the parameters of the governing social contract in a way that is perceived as equitable and fair. This renegotiation must involve both political elites and ordinary citizens giving up some of their benefits and privileges in light of reduced hydrocarbon reserves and lower prices that are expected to persist and decline further in the long run. Asking ordinary citizens to give up access to government jobs or reduce their salaries and benefits without business owners giving up excess profits from exclusive contracts will sow public resentment and social unrest. Over the past two decades, GCC countries have created free zones, innovation parks, and entrepreneurship hubs outside the frameworks of their rentier-based private sectors. Yet, these policies remain rudimentary. In preparing for a post-oil future, GCC states will have to further reduce public services, benefits, and jobs and limit opportunities for rent-seeking in the private sector.

The coronavirus pandemic and lower global oil prices have increased the pressure on Gulf states to push ahead with economic diversification efforts. GCC policymakers must look beyond the immediate impetus to cut budgets and focus instead on developing the necessary building blocks for a dynamic and sustainable post-hydrocarbon economy. The economic and political pressures facing Gulf states have already induced Saudi Arabia, the UAE, and Bahrain to end their three-and-a-half-year blockade of Qatar, opening the door to greater regional economic integration. Likewise, economic pressures have created space for a more open and honest dialogue between citizens and their states regarding financial constraints, economic rents, and channels for their distribution. Providing clarity on which parts of the economy will be allowed to grow unimpeded is central to creating incentives for young nationals to engage in these sectors. Market-based mechanisms can then be allowed to function in these sectors, disentangled from rent-seeking behavior. Together, more competitive economic sectors and greater regional integration can increase the global competitiveness of GCC economies and support their economic diversification efforts.

The rest is here:

Economic diversification in the Gulf: Time to redouble efforts - Brookings Institution

WHITEFISH, Mont. Area researchers have found two clear western Montana lakes Flathead and Whitefish generate home values that result in upward of $3 billion in tax revenues for local and state governments.

The study was conducted by the University of Montanas Flathead Lake Biological Station and the Whitefish Lake Institute (WLI).

We sought to economically quantify the aesthetic benefits landowners derive from living on or near lakes with exceptional water quality, Nanette Nelson, an FLBS research economist and lead author of the study, said. Our results suggest that highly desirable lakes like Flathead and Whitefish Lakes enhance surrounding property values, thereby contributing significantly to the local tax base and economy of both lake-based communities.

The study dataset included over 7,000 arms-length sales transactions occurring within 2 km of Whitefish Lake and Flathead Lake between 2004 and 2018.

Results revealed a 254% or $1.3 million average premium for the same home on the lakefront of Whitefish Lake versus 2 km from the lake. Flathead Lake exhibited a 114% or $0.5 million average premium. Summing across all properties within 2 km of both lakes yielded aggregate premiums upward of $3 billion.

The effect of Flathead Lake on surrounding lakefront parcels equaled $12 million to $17 million in property tax revenues, while Whitefish Lake generated $5 million to $8 million. This is important because, in the state of Montana, over 94% of local government and school district tax collections are derived from property taxes.

This study reveals the economic importance of maintaining water quality in our lakes, Lori Curtis, WLI science and education director and study co-author said. Scientists from the bio station and WLI conduct research and continuously monitor the health of the two lakes, engage students in water quality education and make recommendations to help citizens and leaders make informed resource management decisions.

These study results provide us with an economic argument in communicating the significance of maintaining water quality and of our work, she said.

The complete report on the economic benefits of Flathead and Whitefish Lakes is available on the WLI website.

About the Flathead Lake Biological Station

The FLBS mission is to serve the Flathead Lake region, the state of Montana, the nation and the world by advancing cutting-edge research, monitoring, education and outreach platform for limnology, ecology and environmental science at Flathead Lake.

About the Whitefish Lake Institute

Founded in 2005, the Whitefish Lake Institute is committed to science, education and community stewardship to protect and improve Whitefish Lake and Whitefish-area water resources today and provide a collective vision for tomorrow.

See the rest here:

Study finds substantial economic benefits from Whitefish and Flathead Lakes - KHQ Right Now

Businesses across the South East can now register for a new network and support service.

The Clean Growth South East will help businesses identify opportunities in clean growth areas as set out in the Governments 10-point-plan for a Green Industrial Revolution.

Clean Growth South East is being led by Kent County Council with funding secured from the South East Local Enterprise Partnerships Sector Support Fund.

Susan Carey, Cabinet Member for Environment at KCC said: Clean Growth South East offers a real resource to businesses that want to expand in clean growth sectors, especially those wanting to move into new industries such as wind, solar, Electric Vehicles, hydrogen, and making our buildings greener.

Its a free service and I hope businesses across the South East will register and help us shape a cleaner future.

Based on research compiled by Opergy, who have been contracted to support the development of Clean Growth South East, there are more than 12,400 businesses currently active in sectors and industries that contribute to clean growth, contributing around 5.98 billion to the South East economy.

More than 84,800 people are employed, which has grown by 16% since 2015, with thousands of new jobs that could be created by 2050.

Significant new investment is projected in low carbon and renewable energy projects across the South East region.

More than 62 billion is forecast in offshore wind projects off the South and East England coastline and accessible from regional ports between 2021 2050, which could support a further 1 billion per year in operational costs, creating local jobs.

A further 60 million capital investments are forecast in other low carbon and renewable energy projects in this timeframe including new nuclear, solar, power transmission and transport.

Clean Growth South East is establishing a new network for businesses to access insights and advice to better understand the clean growth landscape, and to identify new opportunities that could support local business growth.

Clean Growth South East will deliver a range of industry insights, briefings on emerging sectors, technologies and highlighting opportunities for South East businesses. Registered businesses will be able to attend a series of targeted events and workshops. and receive regular updates on project and contract opportunities.

Register your business details for FREE to join the Clean Growth South East business network and receive more information on upcoming projects, events, and relevant news and insights.

Go to http://www.cleangrowthsoutheast.co.uk

For further information contact the project team at cleangrowthse@opergy.co.uk

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New business network launched to boost green economy in the South East - KCC Media Hub

Shawna Martinez moved to Santa Fe to attend school in 1989 and never left. Working at Hotel Santa Fe for nearly 30 years, she has had a front seat to the explosive growth of this tourist town in past years.

But late last year, on Martinezs 50th birthday, her landlady delivered news that she was selling the property where Martinez rents a small, two-bedroom casita for $900. Martinezs lease wouldnt be renewed and she would need to move.

Finding a place to call home in Santa Fe in 2021, however, requires navigating a market with abysmal rental vacancy rates and skyrocketing home prices. For $900 in Santa Fe, you find a studio with a hot plate and a mini fridge, Martinez said.

Already one of the tightest rental markets in the US with vacancy rates near 2%, residents of New Mexicos capital city face an acute crisis from the Covid-19 pandemics ravaging of the citys tourism-based economy as well as competition from an influx of newcomers crowding the housing market.

The so-called Zoom boom has brought remote workers seeking to stretch their dollar in relatively affordable places, while gaining proximity to nature and open spaces, to small and mid-sized cities across the mountain west. But they are often forcing locals out of their home towns entirely, at times exporting their former cities housing crises on to these mountain towns.

As Santa Fe leaders assess options for addressing their housing crisis, activists and some policymakers say part of the solution may lie in making second-home owners and Airbnbs pay for the problems they helped create.

We have an obligation to see that people with less means are still part of the picture and are taken care of, said Signe Lindell, a Santa Fe city councillor and the mayor pro tempore. And housing is a really basic need.

Lindell said Santa Fe has made some progress, with about 500 new or upcoming housing units affordable for people earning less than 60% of the area median income. However, she said, my sense is that its not nearly enough.

The Santa Fe area is short more than 7,300 rental units, according to the Santa Fe Association of Realtors 2020 housing report. Between 2017 and 2019, the citys average rent topped $1,000, the report found, an increase of nearly 12%. Average rents are likely even higher today.

Buying a home isnt feasible for many long-term residents, either. Last summer, as Santa Fe became a refuge for many wealthier remote workers to flee larger cities amid the pandemic, the countys median home price passed $500,000 for the first time ever. The median household income in this city of 85,000 people was less than $58,000, per 2019 census data.

In addition to people buying second homes and displacing locals, the mass conversion of houses and apartments into Airbnbs and other short-term rentals in recent years has likely been responsible for about 20% of Santa Fes housing cost increases, according to a 2019 study from Homewise, a housing organization. That year, there were more than 1,400 short-term rentals in the city, a number that was growing by 50% a year.

Its upsetting because with people with money, people from California or Texas or wherever, come here and buy up the property and the homes, said Jolene Eustace, an artist and former Santa Fean who is hoping to return to the city if she finds an affordable place. We dont have a chance.

One of the tools the city is eying as it looks for solutions is the Affordable Housing Trust Fund, a fund that helps with everything from rental assistance for low-income Santa Feans to affordable housing development to homeownership assistance.

Daniel Werwath, the executive director of New Mexico Inter-Faith Housing, has been a leading advocate for the housing trust fund and finding new ways to finance it. The trust, he said, helps insulate housing resources from changes in political priorities and market fluctuation like the economic crash caused by Covid-19.

I just keep thinking, Werwath said, how would March of 2020 gone down differently if we had $3m sitting there in our housing trust fund to just do immediate rental assistance?

If housing advocates like Werwath get their way, the trust will soon get new funding mechanisms to reach that amount or more without making cuts to other city services.

Currently, the trust accrues much of its funding through fees paid by developers, which means its funding can dry up in times of economic downturn. The city of Santa Fes affordable housing director, Alexandra Ladd, said diversifying how the trust is funded could help it become more useful.

Its not a panacea, its not going to end all of our problems instantly. But I think right now, what we struggle with is that the trust fund has various revenue sources, but they all depend on development, Ladd said. And so, right [now], coming out of a recession, theres no development, so theres no revenue.

A new report from the Santa Fe Housing Action Coalition, of which Werwath is a leader, found millions of dollars annually of new potential funding sources for the trust. One is adding a real estate transfer tax, which could bring the trust more than $1.5m a year. Attaching a small fee to property taxes could bring over $1m annually, the report said, and is a change the city council alone could enact.

The coalition also explicitly addresses tourism and second-home owners in its report. It suggests removing the states 3% cap on property taxes for second homes as well as pulling some money made on short-term rental taxes and fees to the trust. Given that Airbnbs and the like have been a major contributor to Santa Fes inflating housing costs, the report notes, such a funding mechanism would likely have broad support from the public.

Funding the trust is an investment that more than pays for itself, advocates say. Ladd gave the example of someone taking out $150,000 or more in loans to buy a home after receiving down payment assistance from the trust. But without that help putting down money, she said, they wouldnt have been able to get the mortgage in the first place.

Thats leveraging that kind of investment, she said. It works out to be about for every dollar of local funds in a home buying situation, anywhere from $14 to $20 is leveraged to a private resource.

The trust can help attract private investment in larger developments, too, such as Siler Yard, a rental housing project that will add 65 affordable units, more than half of which will be reserved for families.

The city committed about $2.5m to what wound up becoming a nearly $20m project.

Its not even how much the city can do without money, but its how powerful it is once it gets out to the partners in the community, Ladd said.

However, boosting the trust and creating more projects like Siler Yard could be a ways off, given that adding funding mechanisms requires changes to city ordinances and, sometimes, state law.

In the meantime, the exodus of working-class Santa Feans will only continue. Many flee the city for more affordable locales such as Albuquerque, about an hour away, or the closer town of Espaola.

Martinez is continuing to shop for a new rental in Santa Fe before her casita gets a new owner, but she might wind up packing her bags for the less-costly Albuquerque suburb, Rio Rancho.

I think Im probably going to have to [leave], Martinez said. Theres nothing reasonable and affordable here.

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As a 'Zoom boom' brings the wealthy to Santa Fe, locals are getting priced out - The Guardian

The following is a contributed piece from Marvin Weiss,retired professor of accounting and founding dean of the New York Institute of Technology School of Management. Opinions expressed are author's own.

CFOs are familiar with a big weakness of generally accepted accounting principles (GAAP): they don't recognize the investment characteristic of knowledge-based startups. As a result, these companies must tell their story using non-financial and non-GAAP metrics, for which there is no standardization.

To reiterate what has been stated by others as a set of standards, GAAP was developed when production was the primary driver of profitability, and labor was considered replaceable and expendable. While there was an element of intellectual capital, it was minor when compared to investment in production.

As the U.S. economy expanded and took on a global perspective, production was outsourced to lower-cost foreign producers, and companies were and are still being created that are knowledge- and service-based rather than production oriented.

Shares in publicly held knowledge-based companies have reached levels that cannot be explained solely on GAAP-based financial statements. That's because the large operating losses of these companies, as they invest in talent, is expensed in the current fiscal period while their most significant asset, workforce intellectual capital, is not recognized until the company is acquired, at which time the excess paid to acquire that talent is recognized as goodwill.

As a result of the limitations of existing GAAP, non-GAAP and non-financial metrics have been used by investors and analysts to evaluate company performance.

As these non-GAAP metrics have proliferated, organizations such as the Sustainability Accounting Standards Board (SASB) have been formed to standardize non-GAAP disclosures, and to eventually create a uniform reporting system that would incorporate both financial and non-financial data and to possibly extend the audit function to the entire report.

However, as the Securities and Exchange Commission (SEC) has demonstrated in its recent ruling requiring expanded disclosure in form S-K of non-financial data relating to several areas, including human capital management (HCM), not even regulators can decide what information should be provided by registrants.

They only specified that the information be material in understanding how the workforce-related data impacts company performance. What's more, there's no requirement this information be presented in monetary terms.

As a result, human resource consulting firms have been quick to fill in the absence of guidance by proposing what HCM data should be provided, leading to what can be best characterized as a kitchen sink approach.

The SEC also accepted the idea that what is material can vary from industry to industry.So, for example, a high turnover ratio would be material in a publicly held consulting firm but would probably be considered normal in the retail sector. This is reflected by the fact that SASB has also approached standardization on an industry-by-industry basis.

I do not think it relevant to detail why the accounting standards setters decided to treat certain internally generated intangibles as expenses, even if the outlays incurred are intended to produce future rather than current revenue, and thus meet the technical definition of an asset.

Some internally generated intangibles, such as patents, have led to identifiable and separable status, with definitive amortization periods. These intangibles are recognized as assets.

But what about the cost of developing the intellectual capital, represented either individually or collectively, by the workforce itself?

Standards setters rejected capitalization for workforce outlays because such "assets" were not identifiable or separable. There was no basis for amortization, and there was no legal ownership that would justify capitalization.

At one time that reservation might have been justified, because public policy the Employee Retirement Income Security Act (ERISA) is a good example actually encouraged labor mobility.

However, the economic environment has changed. Recruitment of talent in knowledge-based companies has become so competitive that, because of large initial outlays, retention of talent is crucial if these companies want to recoup their investment. That's why companies are offering expensive incentives such as profit sharing, stock options, "Cadillac" fringe benefits, at the same time that GAAP treats these outlays as period expenses.

I believe that the original basis for expense versus capitalization has changed. Companies would not incur these HCM costs if they expected their newly hired talent to leave, and they are willing to incur the costs required to retain that talent.

Will employees still leave prematurely? No doubt, but this is the exception, not the rule. From a behavioral perspective, when it comes time for those in the c-suite to make strategic decisions about their workforce, what will have the greater impact, information provided in financial terms in internal accounting statements, or the non-financial metrics proposed by the SASB and others?

With regard to amortization, actuaries are able to estimate average service life for pension and benefit programs, and these same estimates can form the basis for amortization and immediate write-off as a loss if employees leave prematurely.

Before environmental, social and governance (ESG) investing became the focus of attention, there were many proposals to incorporate workforce investment under the rubric of human resource accounting, or HRA. The problem with many of these proposals was that the amounts to be capitalized were based on esoteric methods that were far removed from the concepts underlying GAAP.

What seems to have been lost along the way was the idea to capitalize the original outlay cost of HR-related investments that met the definition of an asset (intended to produce future benefit) and amortize that asset using the expected service life of the employee. Those leaving prematurely would result in the unamortized balance written off as a loss. (Conventional GAAP treatment would apply for tax purposes).

Most HRA proponents rejected this as too simplistic and also not providing information about the value of the workforce in an ongoing organization.

However, the increase or decrease in the balance of this "asset" would be a clear indication of whether or not investment was being made to increase or retain the workforce, and the expression of this amount in traditional financial terms would be a common denominator in all industrial sectors. That's different from the industry-specific non-financial disclosures proposed by SASB.

Incorporating these "assets" in GAAP-compliant financial statements would bring this information under the attest function, a marked improvement over the non-financial disclosures that today are often the product of a company press release.

Critics of capitalizing and amortizing talent like the asset it is complain that deferring such costs would overstate income in the early stages of workforce development, but if a company cut back on its workforce investment, the reverse would be true.

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GAAP is obsolete; treat talent like the asset it is - CFO Dive

On the eve of the 2021-22 budget presentation, Finance Minister Nirmala Sitharaman has clearly earned her spurs just two years into the job.

Despite the economy being somewhere between 15 to 8% below last years level all through Q3 (October to December) this year, cumulative receipts by December were almost equal to last years at Rs 11.2 trillion (Rs 11.8 trillion 2019-20). A very welcome and significant change from the end of Q2 (July September) when receipts at Rs 5.6 trillion were barely two thirds of last years level of Rs 8.4 trillion. The tax departments have clearly worked long hours to make this happen.

It also speaks to the unhesitant responsiveness of government servants and systems in an emergency and the plucky resilience of Indian business, truckers and workers. Rishi Sunak, Chancellor of the UK garnered headlines by distributing GBP 10 cheques to get diners to eat out, albeit possibly prematurely, considering the second/third wave which have battered Europe.

Meanwhile, the supposedly fiscal stimulus shy India, quietly spent around 1.5% of GDP (Rs 3 trillion) on free food distribution to an estimated 800 million people, shielding the poor, including children deprived of meals in shut schools and the families of 40 million (now down to 15 million) workers who lost their jobs and returned to their villages, direct cash transfers to supplement farm incomes (although agriculture production and employment was robust) and doubling the outlay to provide productive short-term employment in rural areas through MGNREGA.

The real story however is the brilliant expenditure management strategy adopted as detailed in this years Economic Survey. The FM shunned the route of fiscal profligacy followed by her peers in the developed world continuing thereby the commitment to fiscal discipline which is the hall mark of the BJP.

She evolved a strategy of asymmetric rationing of fiscal resources instead. Against an average spend of 75% versus the annual budget, a select ten (out of fifty) ministries were allocated above average spend. Rural Development (MGNREGA) (129%), Consumer Affairs and Food Distribution with the free food program (121%), Chemicals (including Pharma) and Fertilizer (103%), Labour & Employment (102%), Health and Family Welfare (88%), Roads and Transport (79%). The Ministry of Planning (86%) is a surprise in this select group but possibly justified seeing the need to keep NITI Aayog the governments brains trust- well-funded.

Fifteen ministries have allocations between 56 to 75% of their budgets. Amongst them, the Ministry of Defence at just 72%, surely needs an upgrade, whilst the Ministries of Skills Development and Steel could be downgraded to the next lot of twenty-five ministries, each with allocations less than 56% of budget.

Till December, the FM spent Rs 1.45 trillion more than the annual budget in the priority spend areas. She funded Rs 1.33 trillion of this from the savings against lower than budgeted allocations to lower priority areas and the rest through borrowing.

By end December the fiscal deficit (FD) is Rs 11.2 trillion or 5.7 % of current GDP (CSO first advance estimate, January 21) of Rs 194.8 trillion. The actual FD last year was 3.8% though full disclosure of liabilities has been a problem. The FM is charting her way to an undisclosed FD target possibly 6.6% of current GDP the Laxman Rekha established during the post Trans-Atlantic Financial Crisis 2008-09 by the UPA government in 2009-10- a red flag, the report card conscious BJP would hesitate to cross.

The additional borrowing is virtuous since it feeds into maintaining the capital spend at the budgeted level of Rs 4.1 trillion. The spend thus far is Rs 3.1 trillion versus Rs 3.4 trillion during the last fiscal year even though capital receipts from disinvestment are less than 10% of the target of Rs 2.1 trillion.

Keeping the funds flow stable through the current year, whilst maintaining reasonable stability in the macro fundamentals (debt below 90% of GDP and inflation below 6%) has not been an easy battle for the government and the RBI.

Actual revenue receipts till December are just Rs 10.9 trillion. Q4 could generate additional receipts of around Rs 5 trillion (assuming last years levels) taking total revenue receipts to just under Rs 16 trillion -slightly lower than last years Rs 16.9 trillion but significantly lower by 20% against this years target of Rs 20 trillion. So, the asymmetric rationing will continue through this fiscal.

Next year is unlikely to be different. The need for tight treasury management will persist as will the need for emergency income and employment support to alleviate distress and stimulate domestic demand along with heightened outlays on health particularly for rolling out the vaccine program.

The lens of compelling need for allocating funds should not falter. The gains made this year in compressing non-essential expenditure should be hardwired into next years budget.

Second, enhancing exports to substitute for low domestic demand will be critical for sustained GDP growth. Rolling back import duties to ASEAN levels will sharpen the competitiveness of domestic industry and make us a credible partner for global supply chains whilst dumping can be combated per the existing rules.

Third, last year saw significant rationalization of direct tax. Next year should be a sleep year with no changes in exemptions, deductions or tax rates whilst the economy heals. Efforts to quickly raise resources by taxing global e-commerce platforms and services outside a broad, collaboratively developed framework, would be counterproductive. Efforts towards the ease of giving tax should be pursued along with a guillotine on government appeals in tax litigation.

Finally, governments obsession with directly managing the industrial economy through incentives to enhance private investments or direct public investment to generate jobs, serves to distract it from its real objectives to be the puppeteer rather than the puppet.

A massive disintermediation of government from management of banking, insurance, natural resource based mineral and metals industries and public utilities is overdue. Far from being supportive, this association has become the source of fiscal stress via low competitiveness.

Budget outlays on the key sovereign functions of domestic security, disaster assistance, defence, diplomacy, the rule of law, monetary regulation and fiscal management, together comprise less than one third of the Union budget.

Two thirds of the fiscal burden of managing the real economy can be off-loaded to private players who could transform these comatose public assets land, buildings, equipment, licenses or intellectual property. For a stable government with a massive parliamentary majority, light touch regulation should suffice to facilitate foreign and domestic private investment and ensure the quality of public services. Possibly, deleting the term, socialist inserted in 1977 into the preamble of our constitution, would be a good way to start.

Views expressed above are the author's own.

END OF ARTICLE

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FM Sitharaman earns her spurs raising expectations sky high - The Times of India Blog

NEW DELHI :Defence Minister Rajnath Singh on Monday said the Union Budget for 2021-22 is "unprecedented" in many ways, it will usher in a new era of inclusive growth and prosperity and set the ball rolling for making India a 5 trillion dollar economy.

Singh said the Budget will expedite economic transformation, generate jobs, create infrastructure and lay the foundation for a self-reliant India.

The defence minister said several new policies and programmes were announced in the Budget to support India's farmers, agriculture sector and to reinvigorate the human resources of the country.

"This Budget is unprecedented in many ways and it will strengthen the sankalp (resolve) of 'Atmanirbhar Bharat' (self-reliant India)," Singh said on Twitter.

He said special attention has been given to economic reforms, employment generation, capital formation and creating infrastructure in India.

"Based on six pillars of good governance, this Budget will usher India into a new era of inclusive growth and prosperity," Singh said, adding the Budget has set the highest ever capital expenditure target in the history of Independent India.

He also thanked Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman for increasing the defence budget to 4.78 lakh crore, which includes capital expenditure worth 1.35 lakh crore.

"It is nearly 19 per cent increase in defence capital expenditure. This is highest ever increase in capital outlay for defence in 15 years," the defence minister said.

"Several new policies and programmes to support India's farmers, agriculture, infrastructure and reinvigoration of human resource have also been announced. I am glad that the Budget has proposed opening of 100 new Sainik Schools in the country," Singh said.

He also mentioned a series of economic measures unveiled by the government in the last few months.

"During the challenging times of COVID-19 pandemic the finance minister had presented five mini-budgets in the form of packages in 2020. This Budget is the biggest addition in that series. This Budget is unprecedented in many ways and it will strengthen the sankalp (resolve) of 'Atmanirbhar Bharat'," he said.

Singh said the budget will help in realising Prime Minister Modi's vision of inclusive development and expedite India's economic transformation.

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Budget 2021-22 will usher in new era of inclusive growth in India: Rajnath Singh - Mint

SEOUL, South Korea--(BUSINESS WIRE)--When compared to other transnational free trade agreements, the Regional Comprehensive Economic Partnership Agreement (RCEP), which was signed by South Korea and 14 other countries in November of 2020 and is expected to be implemented sometime in 2021, is unrivalled in its complexity and remarkably lays the framework for a pan-Asian basic standard for trade that surpasses the terms provided by the World Trade Organization (WTO), according to Tricor Groups 2021 Asia Pacific Trade Report.

The report, released today to media outlets and prominent business leaders, applies industry data from a multitude of research and media sources to offer perspectives, insights, observations and projections compiled by senior Tricor executives on how global trade trends will impact APAC trade and investment activity in the year ahead.

In particular, Tricor Groups 2021 Asia Pacific Trade Report focuses on how the landmark implementation of the RCEP in 2021 is likely to enhance market openness and create new opportunities for global enterprises in South Korea and APAC against the challenging backdrop of COVID-19 pandemic recovery. Within the report, Tricor details the provisions of the RCEP and offers a summary of steps companies can take to prepare themselves to capitalize on the agreement and the business growth potential it offers. The report also contains a detailed guide to doing business in South Korea as well as other key RCEP markets where Tricor maintains influential market presence, including Australia, mainland China, Japan, Malaysia, Singapore, Thailand and Vietnam.

The RCEP, according to Tricors report, is expected to be the shot in the arm that South Korea, a country that relies heavily on global trade, needs to thrive and better position itself on the global stage. According to the Korea Economic Research Institute, the official launch of RCEP is estimated to add an annual average of 1.1% to Koreas GDP and is expected to represent US $1.1 billion in consumer welfare.

Byung-Doo Choi, CEO, Tricor South Korea, said: The RCEP shines a new light on South Korea on the global trade and investment stage, enabling more foreign firms to enter the country as well as supporting South Korea-based firms in their foreign investment and expansion ambitions. In particular, the RCEP will reduce or remove tariffs in key industries that benefit South Koreas economy and will also greatly raise the standards for intellectual property protections throughout the zone. As we look toward full activation of the RCEP, Tricor South Korea is well-positioned to help firms in South Korea navigate the rapidly changing landscape and unlock their full potential.

Lennard Yong, Tricor Group CEO, said: The establishment of the RCEP trade bloc is indisputably a defining moment for global trade a pivotal development that could redirect foreign direct investment (FDI) flows in the months and years ahead. At Tricor, we are highly cognizant of gauging how this trade deal will potentially disrupt FDI and trigger new trends in international business. Tricor Groups 2021 Asia Pacific Trade Report provides a blueprint for global and local enterprises looking to leverage and capitalize on the new opportunities expected to be created by the RCEP. This expertise reinforces our leadership in the region as the go-to partner for enterprises seeking to expand throughout Asia Pacific and beyond.

Gary Tok, Tricor Group CCO, said: The signing of the RCEP is much welcome news for enterprises and investors across APAC and beyond, especially against the unparalleled strains the COVID-19 pandemic has placed on global supply chains. As the leading business expansion specialist in APAC, Tricor has been helping businesses face the headwinds of an unprecedented public health crisis and prepare for more uncertainty ahead. In light of this landmark agreement, we look forward to working with global businesses to review and adapt their business models so they can benefit from the vast supply chain networks and strengthened multilateral cooperation afforded by the RCEP.

Sunshine Farzan, Tricor Group Head of Marketing & Communications, said: The headlines of 2020 were largely dominated by one universal story: COVID-19. Few anticipated the distress and ubiquitous disruption the pandemic would present to economies around the world. Tricor Groups 2021 Asia Pacific Trade Report, which draws from qualitative and quantitative data, suggests that, despite numerous roadblocks and pending uncertainties ahead, new opportunities are on the horizon for global businesses in 2021, such as the numerous benefits offered by RCEP. By highlighting these emerging prospects and prescribing possible steps to take, this report can help business leaders and investors stay ahead of the curve in todays shifting landscape.

End

About Tricor South Korea

Tricor Korea specializes in company administration, payroll and executive search services, offering best practices and local knowledge to clients based in Korea. Staffed by experienced professional accountants as well as human resource and IT consultants, Tricor Korea is committed to customized solutions and excellence in service. Whether you are looking to set up shop or streamline your current operations, we can help you capitalize on the growing opportunities Korea has to offer.

Tricor Group (Tricor) is the leading business expansion specialist in Asia, with global knowledge and local expertise in business, corporate, investor, human resources & payroll, and corporate trust & debt services. Strategically headquartered in Hong Kong, we operate out of 21 countries/territories and across a network of 47 offices. Tricor serves 50,000 clients, including ~2,000 companies publicly listed in Asia and over 40% of the Fortune Global 500 companies. With 2,700 employees, of which 630 are certified professionals, we deliver critical functions to help ambitious companies accelerate their growth in Asia and beyond.

Tricors advantage comes from deep industry experience, committed staff, technology-driven processes, standardized methodologies, constant attention to changes in laws and regulations and wide industry contacts. Tricor is uniquely positioned to unlock the potential of your business, and help you stay one step ahead of todays diverse and fast evolving regulatory environment.

To learn more, please visit: http://www.tricorglobal.com/locations/south-korea

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Tricor Group Releases 2021 Asia Pacific Trade Report Focusing on Impact of RCEP on South Korea and COVID-19 Recovery - Business Wire