Monthly Archives: May 2020

The world's oceans are now facing a multidimensional crisis, of which human-made climate change, overfishing, plastic pollution and ocean acidification are all factors. There is an urgent need to step up our efforts to protect the marine environment by averting this crisis. This is a matter of national security.

The protection of the marine environment is an urgent issue for Japan as well, an island nation surrounded by the sea, but its policies are fragmented and insufficient, and lag behind those of many other developed countries.

We need to fundamentally change the structure of policy-making and to strengthen efforts to achieve a sustainable marine environment, as well as making a positive contribution to the international community.

As a maritime nation, as a large consumer of marine products, and also as a country that is heavily dependent on marine ecosystem services, it is Japan's international responsibility.

Last year, the Intergovernmental Panel on Climate Change (IPCC) compiled a Special Report on the Oceans and Cryosphere in a Changing Climate, which showed us a clear picture of the ocean's current state and grim future.

The oceans contribute to climate stability by absorbing 90% of the excess heat stored in the global climate system thanks to the use of fossil fuels. As a result, however, sea surface temperatures continue to rise and abnormally high water temperatures persist for long periods of time, sometimes for more than a year, resulting in 'ocean heat waves'.

The ocean has absorbed 20%-30% of the CO2 generated by human activities since the 1980s. The result is ocean acidification. There are concerns that this increased acidity of seawater will have significant negative effects on many organisms important in the marine food chain, including plankton and crustaceans with calcium carbonate shells, as well as shellfish and sea urchins.

Rising sea surface temperatures are also intensifying stratification between surface and sub-medium seawater, leading to the spread of ocean regions around the world in which oxygen concentrations are very low and life is difficult to sustain.

As the oceans have absorbed more CO2 (green), they are growing more acidic (blue)

Image: NOAA

We must understand that human activity has altered the temperature, acidity, and distribution of oxygen in the world's 1.4 billion cubic kilometres of ocean.

The crisis goes beyond that, however. Overfishing is becoming a serious problem, and if the current trend continues, combined with the climate crisis, it will have a major negative impact on the food security of many countries. Illegal, unreported and unregulated (IUU) fishing, ignoring international regulations and agreements, is rampant in the world's fisheries, According to the Food and Agriculture Organization of the United Nations (FAO), IUU accounts for an annual landing of 26 million tonnes of fish, 30% of the total annual catch worth up to $23 billion in value. This has become a huge burden for poor fishermen mostly in developing countries.

While there is an urgent need to step up efforts to prevent a multidimensional ocean crisis, international efforts to-date have been insufficient when measured against the magnitude of the problem.

Last year, the 25th Conference of the Parties (COP25) to the United Nations Framework Convention on Climate Change (UNFCCC) in Spain was positioned as a 'Blue COP' at the request of the Government of Chile, the presiding country, which put the relationship between the oceans and climate change at the top of the agenda. However, it is far from the case that marine environmental conservation was properly addressed.

Negotiations on an international agreement for the conservation and sustainable use of 'marine biodiversity in areas beyond national jurisdiction' (BBNJ) under the United Nations Convention on the Law of the Sea are now coming to a close, but the interests of each country are complex and there is no prospect of a positive conclusion anytime soon. Negotiations have been postponed in the wake of the new coronavirus epidemic.

A number of Regional Fisheries Management Organizations (RFMOs) have been established to oversee sustainable management of endangered fish stocks like bluefin tuna. Although some have contributed to the recovery of resources, others have performed disappointingly. Efforts to protect marine biodiversity and endangered species under environmental treaties, such as the Washington Convention and the Convention on Biological Diversity, are also very limited.

Although marine plastic contamination has attracted a lot of attention in recent years, it is very sad to see that there is no international framework for promoting measures to reduce ocean plastic pollution. The Blue Ocean Vision, which Japan spearheaded at the G20 meeting in Osaka in 2019, offers very little in the way of concrete measures to reduce plastic waste.

Using the discussions at the BBNJ as a starting point, it will be necessary for the international community to establish a forum for comprehensive discussion and decision-making systems on the conservation and sustainable use of the marine environment. It must cover everything from the climate crisis, biodiversity and fishery resource management to plastic waste, by promoting the participation of multiple stakeholders, including industry and civil society.

This is a major challenge for Japan as well. While recognizing itself as a maritime nation, it cannot be said that the Japanese government has played an active role in international efforts to protect the marine environment. Japan has always taken an opposing stance on the protection of endangered marine life under the Washington Convention, and even after the decision is made, has filed a 'reservation' indicatingit will not accept international regulations for many marine species. Japan's Fisheries Agency, which participates in the RFMO meetings, has based its actions on its position as the representative of domestic fishermen and has always backed away from strong regulations; those participating in the BBNJ negotiations are not high-level persons, and politicians have shown virtually no interest. Here, too, the Japanese government has remained reluctant to establish marine protected areas on the high seas.

Our oceans cover 70% of the worlds surface and account for 80% of the planets biodiversity. We can't have a healthy future without healthy oceans - but they're more vulnerable than ever because of climate change and pollution.

Tackling the grave threats to our oceans means working with leaders across sectors, from business to government to academia.

The World Economic Forum, in collaboration with the World Resources Institute, convenes the Friends of Ocean Action, a coalition of leaders working together to protect the seas. From a programme with the Indonesian government to cut plastic waste entering the sea to a global plan to track illegal fishing, the Friends are pushing for new solutions.

Climate change is an inextricable part of the threat to our oceans, with rising temperatures and acidification disrupting fragile ecosystems. The Forum runs a number of initiatives to support the shift to a low-carbon economy, including hosting the Alliance of CEO Climate Leaders, who have cut emissions in their companies by 9%.

Is your organisation interested in working with the World Economic Forum? Find out more here.

At the UN General Assembly in December 2017, the UN decided to designate 2021-30 as the UN Decade of Marine Science for Sustainable Development to strengthen scientific input for the sustainable use of the oceans. Many Japanese marine scientists have been involved in the resolution and are expected to contribute in the future. A number of research institutions in Japan have advanced ocean research tools, as well as long-term observation data about climate change, acidification and so on. Some policy recommendations have been made by scientists, but unfortunately, these have not been accepted by policy-makers. On the contrary, marine research funding is in a sharp decline.

In order to continue contributing to increasingly important international research and policy formulation, the Government of Japan, together with other like-minded countries, must promote science-based policy development as well as increased investment in scientific research.

And most importantly, Japanese citizens should have an understanding and clear view of the worsening marine environmental, should raise their awareness, and also raise their voices to demand stronger actions.

License and Republishing

World Economic Forum articles may be republished in accordance with our Terms of Use.

Written by

Tetsuji Ida, Senior Staff Writer and Editorial Writer, Kyodo News

The views expressed in this article are those of the author alone and not the World Economic Forum.

Go here to see the original:

The world must pull together to stem the crises in our oceans - World Economic Forum

Guy on Rocks is aStockheadseries looking at the significant happenings of the resources market each week.

Former geologist and experienced stockbroker Guy Le Page, director and responsible executive at Perth-based financial services provider RM Corporate Finance, shares his high conviction views on the market and his hot stocks to watch.

It looks as if investors are feeling more comfortable to return to riskier stocks, particularly in the resources space.

According to Bloomberg data, miners and explorers raised nearly $2.1bn alone in May.

Weve had a general increase in sentiment with a belief in the economic recovery after the virus, so weve had a flow of funds back into the resources sector broadly and I suppose its risk-on again, Guy Le Page told Stockhead.

We continue to see some of the stocks weve mentioned like ABR (American Pacific Borates) make some very strong moves up over 70c, from the high 20s when we talked about it [in April].

Le Page said Chinas retaliatory tactics in response to Australias calls for a COVID-19 inquiry had, and would continue to have, little impact on the demand for iron ore.

Interestingly, despite the noise that China has been making about tariffs on iron ore, Australian iron ore imports are just over 63 per cent of total Chinese imports, so I think thats a game of brinkmanship that one, he said.

I think as long as Brazil, in particular Vale, is struggling with iron ore exports and that 100-million-tonne decline in shipments annualised, I think its going to be hard for China to muscle Australia to any significant level.

Another thing working in Australias favour is the fact that Brazil is still battling to get on top of the COVID-19 pandemic.

Certainly in Brazil the virus is far from under control and I think thats going to have a continued impact on global supply, Le Page said.

He expects the impact of the pandemic to flow through to copper and nickel stocks also.

Thats contributing to some fairly wild fluctuations in forecasts for in particular supply for the likes of copper and nickel, Le Page noted.

Interestingly copper has had a 14 per cent gain in imports into China year-on-year. On the other hand, nickel looks like it is in oversupply according to the consensus economics.

Based on the review of forecasts we did last week, it will be interesting to see how prices actually respond with this anticipated improvement in the economy.

Le Page ran his ruler over some nickel stocks this week, saying its not easy to find good nickel sulphide plays right now.

Aside from Rox (ASX:RXL), St George (ASX:SGQ), Poseidon (ASX:POS), Duketon (ASX:DKM), Cassini (ASX:CZI) and Mincor (ASX:MCR), theres not that many active nickel sulphide explorers, Le Page said.

One that has come onto Le Pages radar is Auroch Minerals (ASX:AOU).

The junior, which has a market cap of just $10m, is exploring for nickel 65km northwest of Kalgoorlie at the Saints project and just south of Leinster at the Leinster project.

Le Page says the Leinster region is host to some world-class deposits such as BHPs (ASX:BHP)Yakabindie nickel mine and Western Areas (ASX:WSA) Cosmos nickel operation.

Whats interesting about that is that the Norseman-Wiluna Belt has obviously got a fantastic track record, but Auroch has a resource of about 1 million tonnes at 2 per cent.So its pretty high grade. Its just over 20,000 tonnes of contained nickel, he said.

Auroch recently booked some pretty impressive intersections like 31m at 1.66 per cent nickel, and it has done further drilling and down hole electromagnetics.

Theres some pretty prospective ground along that belt and the mineralisation looks like its open along strike and down dip, Le Page says.

I think thats going to get pretty interesting. Im reasonably optimistic they are going to hit some high-grade nickel sulphide.

Another stock to watch that Le Page briefly mentioned, and plans to elaborate more on next week, is Ansila Energy (ASX:ANA).

It started off with some unconventional gas in Poland. That didnt work out, so we saw the share price retreat from almost 6c back to 0.8-0.9c. Its just poked its head up above 1.5c, Le Page explained.

Theyre putting a bid in for the Hartshead gas project in the North Sea. So that asset could have a very significant valuation of well over $50m.

That is definitely one to put on the watch list.

At RM Corporate Finance, Guy Le Page is involved in a range of corporate initiatives from mergers and acquisitions, initial public offerings to valuations, consulting and corporate advisory roles.

He was head of research at Morgan Stockbroking Limited (Perth) prior to joining Tolhurst Noall as a Corporate Advisor in July 1998. Prior to entering the stockbroking industry, he spent 10 years as an exploration and mining geologist in Australia, Canada and the United States.

Get the latest Stock & Small Caps news and insights direct to your inbox.

It's free. Unsubscribe whenever your want.

You might be interested in

Link:

Guy on Rocks: Investors flip the switch to risk-on, resources sees the money roll in - Stockhead

Debapriya Bhattacharya | Published: May 28, 2020 21:56:58 | Updated: May 28, 2020 22:04:59

As announcement of the national budget for the fiscal year 2020-21 (FY21) draws close, my transcendental thought process goes haywire trying to figure out how this document is going to square the circle!

Our childhood learning of Euclidian geometry reminds us that the Greek geometers in the 4th century BC developed three-dimensional thinking. One of the problems that Hippocrates of Chios posed was, "can you construct a square having the same area as a given circle" with a finite number of steps and with only two instruments? Since then, this proposition has often been used as a metaphor for trying to do the impossible. The great poet Dante compares squaring the circle to his own inability to comprehend Paradise. However, subsequent advancement of mathematics, fueled among others by the illustrious Srinivasa Ramanujan, did find an approach to it through derivation of a "Golden Ratio." More on this later.

It is a severe understatement when one says that formulating the Bangladesh's budget for the next one year-while the stressed economy is reeling under growing, yet uncertain, devastating impact of the Covid-19 (C19) pandemic-will be a "challenging" exercise. For me, it is the closest to the mentioned impossibility theorem!

To my mind, the upcoming budget will have to "circle a square," i.e. reverse of squaring a circle. Through a circular causation, it will have to link up at least four linear segments of the task at hand. Let me first lay out the "four angles" of the square that I have in my mind.

FIRST, HOW TO LINK SHORT-TERM PERSPECTIVES TO MID-TERM RECOVERY?: The government has decided to stick to the routine and go for the annual budget as a regular event. This may be interpreted as a political signal indicating that everything is under control, and no need to deviate from the "business as usual" practice. However, this is being done when there is no reliable projection regarding how the pandemic curve with all its consequences will play out in the coming weeks. This creates the problem of not having a dependable benchmark based on a robust assessment of the damages done to different parts of the economy and the different segments of the society by the still unfolding scourge. Thus, the year-closing projected readings of macroeconomic variables for the Budget21 will remain under suspicion.

It is well-recognised by now that for Bangladesh economy to recover and rebound from the debilitating impact of C19 will take a couple of years, to say the least. So, the mid-term macroeconomic framework for upcoming three years, which usually accompanies the annual budget, will be on extremely shaky grounds because of the above.

Moreover, under normal circumstances, the budget for FY21 would have been the first year of the Eighth Five Year Plan (8FYP, 2021-25) of the country. Arguably, the 8FYP now has to be fundamentally rearticulated in view of the damages done by the pandemic, which is yet to be estimated comprehensively. Thus, we are yet to have any clue regarding the preparedness of the 8FYP document to provide operative guidance to the upcoming national budget.

Finally, the country has aligned itself with the global agenda (2015-30) espousing the Sustainable Development Goals (SDGs) with the explicit commitment to "leave no one behind." It is obvious, the ongoing pandemic is hurting the traditionally left behind groups and communities in Bangladesh more than the others. One wonders, how the budget for FY21 will bond with SDGs priorities for Bangladesh during the United Nations' Decade of Action (2020-30).

In the absence of a realistic assessment of the impact of the pandemic, without a credible three-year macroeconomic framework and with an incomplete five-year planning exercise, the annual budget will be seriously handicapped in linking short-term emergency measures with mid-term rebound and recovery strategy, with an eye on those who are left behind. It is to be seen how the best of the intentions of the budget-framers take us beyond rhetoric in this regard.

SECOND, WHAT ARE THE GROWTH-EQUITY TRADE-OFFS TO BE MADE?: It is no secret that the economic growth story is bitingly embedded in the development narrative of Bangladesh. In the recent past, however, independent sources have raised issues regarding the serious lack of consistency between GDP growth figures and related performance indicators of the economy.

It has now been empirically established that, parallel to robust GDP growth over the last decade, economic inequalities have not only deepened, but have also accelerated. In fact, income inequality has grown faster than consumption inequality, and asset inequality has grown faster than income inequality. The rate of poverty reduction has also slowed down in the elapsed decade. Indeed, Bangladesh has the dubious distinction of being the country, where rich is being produced faster than anywhere else in the world. Concurrently we have been labelled as a country which is "least committed" to reducing the rich-poor gap.

The C19 pandemic is definitely going to accentuate the pre-existing structural disparities within the country, but also create new vulnerabilities for certain groups of people. For example, the lower segment of the middle class as well as a large part of those employed in the informal sectors are emerging in the country as the nouveau-pauvre.

In view of the above, Budget21 will be scrutinised against the extent to which it can overcome economic growth paranoia to give way to distributive fiscal policies. As is known, in developing economies like ours, fiscal policies are more potent than monetary policies; while within the former, public expenditures are more powerful than the taxation measures. Till date, the government has front-loaded its C19-related stimulus packages with monetary policy measures; the upcoming budget will provide the government an exclusive opportunity to undertake inclusive fiscal measures as well.

Currently, there is limited flexibility to reorder priorities within the revenue as well as the development budget components. At the margin, some additional funds may be allocated to certain sectors such as health and agriculture. Yet a number of innovative and redistributive fiscal measures could have been designed, such as allocation of the estimated savings, on account of fuel import at very low global price, to the health sector. In fact, the substantial subsidy kitty (more than Tk. 30,000 crore) has to be revisited taking note of the current priorities. It would be quite reasonable to expect that the huge subsidy given to the rental power plants, largely a patronage distribution, is to be redirected towards expanding the safety net programmes based on cash transfers to the newly unemployed.

Similarly, within the tax measures, with a view to increasing disposable income in the hands of the low-paid wage-earners, the minimum taxable income level needs to be enhanced from Tk. 2.5 lakh to Tk. 3.5 lakh, while the minimum personal income tax may be lowered to 5.0 per cent, with the highest rate being 15.0 percent (instead of 10.0 and 20.0 per cent, respectively). From revenue perspectives, there is little rationale for decreasing the corporate tax rates, particularly for the commercial schedule banks. One will observe with great vigilance that the pandemic-related adversities are not used as an excuse to provide discriminating and discretionary tax benefit to unearned and undeclared monies. Rather one would welcome radical measures to expand the tax base and plug the illegal financial outflows.

At the same time, due to the subsidence of the exports and remittance incomes, it would be a win-win strategy if the upcoming budget extends helpful supports to the domestic market-oriented productions and services with a view to having employment-oriented productivity growth. This approach would call for a comparative review of the effective rate of protection accorded to different industrial activities in the country.

Indeed, to what extent the budget is promoting inclusive distribution of fiscal resources can become transparent, if the finance minister in his speech explicitly mentions the empirical outcomes of his fiscal measures and who benefit from them. This was, in fact, the general practice during the tenures of the late lamented Shah AMS Kibria and Saifur Rahman.

THIRD, HOW DO YOU DESIGN A CREDIBLE FINANCING PLAN?: It is by now well-agreed that Bangladesh will have to push into more resources into the economy to cushion the impending slump triggered by C19 within the country as well as globally. The central bank has already initiated a number of policy and procedural measures to increase liquidity in the economy. It is now turn of the national budget to coalesce a set of budgetary measures to give substance to the counter-cyclical macroeconomic stance. This macroeconomic stance will critically hinge on the ability to announce a credible fiscal framework for the next fiscal year. Regrettably, the country's record in this regard, particularly in the area of resource mobilisation, is not very inspiring.

The finance ministry has always preferred to project its revenue target based on the revised budget figures of the outgoing year (instead of realistically projected actual collection). This resulted into imposing unrealistic collection figure on the National Board of Revenue (NBR). In order to balance the expenditure side, including the Annual Development Programme (ADP), the revenue targets (along with that of the non-NBR collections) are often enhanced further. This has led to secular increase of the gap between actual off-take by the NBR and its annual target. It has been estimated that such shortfall in the outgoing fiscal year would be around Tk. 100,000, which is more than a quarter of its target. Incapability to use external aid, particularly project loan, aggravated the resource situation. Knowing full well about the water in the target, the fiscal planners may have regularly banked on the possibility that the full bundle of public expenditures will not be delivered, thus demand on resources will remain manageable. Accordingly, the fiscal deficit figure till date has remained modest-at around 5.0 per cent of the GDP.

The second order problem of the fiscal framework lies in the targets set for financing of the programmed deficit. Shortfall in foreign aid utilisation resulted into heavy borrowing from the domestic sources-earlier through sale of costly National Saving Deposit (NSD) certificates, and now from the liquidity-starved fragile banking sector. In the outgoing fiscal year (till February 2020), the government has resorted to borrowing from the banking sector to the extent of about 200 percent of its net budget deficit (as against a target of about 55.0 per cent).

It may be safely assumed that the budget deficit figure for FY21 will be higher than the trend rate. A large part of the incremental deficit has to be underwritten by accessing new sources of external finance, including budgetary support. However, if that derived estimate is not based on reliable income-expenditure figures, then the whole fiscal framework will suffer from credibility gap, subsequently weakening the strength of other policy pronouncements.

FOURTH, WHAT ARE THE MEASURES FOR ENHANCING THE DELIVERY CAPACITY?: Capacity deficit affecting full and faithful implementation of its fiscal commitments had been the Achilles' heel of Bangladesh's budgetary programmes. Chronic delivery problems, underpinning the public financial management system, also undermined the quality of spending of the government's outlays. Years of neglect in undertaking structural reforms in the areas ranging from tax administration, ADP management, debt and capital markets to local government, public administration and deployment of social accountability tools has inhibited scope of the government to deliver its declared commitments. The C19 pandemic has brutally exposed these institutional weaknesses, as the government struggled to provide health and livelihood sustenance to its citizens. Learning from the gruelling experience, will the government initiate a series of reform measures to deal with C19 and thereafter more competently?

Accordingly, Budget21 has to come with a well-thought-out implementation plan, desirably with a set of time-bound interventions indicating the authorities responsible for them. Understandably, the suggested approach has to build on a "whole of the government," if not a "whole of the society" exercise, by including the non-government development organisations in dealing with the pandemic aftermath. A run-of-the-mill posture will hardly generate confidence in deliverability of the annual budget, even with its perceived drawbacks.

THE GOLDEN RATIO: So, will the Budget21 be able to capture the space located within the four stated angles with a dynamic causation? Great minds over the centuries have deduced that one may not fully capture the exact space of a circle in a square, but may come very close to it. In order to do that, one would need to know the "Golden Ratio"-usually portrayed by the Greek alphabet phi-of the task in hand. The Egyptians deployed the Golden Ratio while building the Pyramid, Da Vinci adopted it while painting Mona Lisa.

What would constitute the Golden Ratio of Bangladesh's Budget21? To my mind, the two wedges to define that ratio will be empirical robustness of the fiscal framework and reform disposition of the implementation plan. These two may unleash a virtuous causation by circling four corners of the square-embodying the core challenges of the upcoming national budget.

Dr Debapriya Bhattacharya is a Distinguished Fellow at the Centre for Policy Dialogue (CPD). deb.bhattacharya@cpd.org.bd

Link:

Circling the Square What is the golden ratio for Budget 21? - The Financial Express