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The growing importance of emerging economies, along with the increasing integration of the global economy and financial markets, underscore the importance of broadening the scope of international economic and financial co-operation.
The establishment of G20, comprising around 90 per cent of the global GDP, 80 per cent of the world trade and more than two-third of the world’s population, recognized considerable changes in the international economic landscape.
The G20 plays a vital role in supporting globalization, development of domestic financial markets, regional economic integration, demographics and resource security. Independent business associations from G20 countries formed a coalition named as Business 20 (B20). The coalition acts a bridge between government and business communities of the G20 countries.
The November 2014 edition of the Multilateral Newsletter highlights the key deliberations made at the G20 and B20 Summits. In addition, it covers key points of major happenings from the recently held ASEAN Summit in Nay Pyi Taw, Myanmar.
Read the Newsletter for more information with reference
Brisbane G-20 Summit 2014.................................................2
Key Highlights: ASEAN Summit..............................................5
ASEAN, UNCTAD Launch ASEAN Investment Report
ASEAN Welcomes Principles for Public-Private Partnership Framework............................................................................7
November 2014, Volume 2, Issue 11
Message from Mr Chandrajit Banerjee, Director General, CII
India along with other emerging economies is concerned about the volatile capital flows resulting from quantitative easing by some of the advanced economies. The recent meeting of the G20 Summit held in Brisbane, discussed in great details the global economy, which is witnessing uneven growth and also discussed other key points which included development of financial markets, regional economic integration, demographics, and resource security.
On the margins of G20 Summit, a 26 member delegation of B20 business leaders and numerous international & national business associations, representing the G20 countries also met with the G20 leaders and officials to discuss the strategy to take forward the business agenda, in sync with priorities of G20 as well the recommendations and press the need for action on creating the right environment for businesses to invest and create jobs.
The November edition of the Multilateral Newsletter highlights the key outcomes of the B20 Summit and its interactions with G20 leaders. In addition, the Newsletter also covers the key deliberations at the ASEAN Summit held in November in Nay Pyi Taw, Myanmar as also the 12th India-ASEAN Summit, 9th East Asia Summit, 11th ASEAN Business and Investment Summit, which were held alongside the event and a brief on some of the reports which were thereby launched.
India Needs to Improve Manufacturing Sector Performance
to Return to High-growth Path: World Bank Report....................8
Government of India and World Bank Sign $200 Million Agreement to Enhance Productivity, Improve Skills of
Micro, Small and Medium Scale Enterprises............................9
In September 1999, the finance ministers and central bank governors of the Group of Seven countries (G7) announced their intention to “broaden the dialogue on key economic and financial policy issues among systematically significant economies and promote co-operation to achieve stable and sustainable world economic growth that benefits all”. This announcement marked the official birth of what subsequently became known as the Group of Twenty countries (the G20). The G20 comprises around 90 per cent of the global GDP. 80 per cent of the world trade and more than two-third of the world’s population.
The establishment of the G-20 recognized the considerable changes in the international economic landscape over the previous decades. The growing importance of emerging economies, along with the increasing integration of the global economy and financial markets, underscored the importance of broadening the scope of international economic and financial co-operation.
It was soon realized that without the participation of private enterprises in policy recommendations, the objective of G20 nations to achieve strong, sustainable and balanced growth would remain incomplete. As a result, independent business associations from G20 countries formed a coalition named as Business 20 (B20). This coalition bridges governmental agenda with the interests of business communities of G20 nations. It is a representative group of approximately 6.5 million businesses across the world. India is one of the founding members of the B20 coalition. The B20 represents today’s job creators and it is important that the key priorities identified by it be tackled with strong intent by G20 leaders.
On the margins of Brisbane G-20 Summit, business leaders from 18 G-20 countries met to discuss the strategy to take forward the business agenda forward, in sync with priorities of G-20 leaders. A delegation of 26 members of the B20 community representing 18 countries, as well as numerous international and national business associations, met with G20 leaders and officials to discuss recommendations and press the need for action on creating the right environment for businesses to invest and create jobs.
Good business engagement with G20 Leaders
The B20 leaders met with some of the G20 Leaders on 14 November evening.
On Saturday 15 November afternoon, in the first, of the formal closed sessions for G20 Leaders, Mr Alejandro Ramirez of Mexico and Mr Richard Goyder directly addressed the Leaders on the imperative of growth and the need to reestablish confidence to encourage greater investment, trade and job creation.
In addition to meetings with Leaders, the B20 had a briefing session by the Turkish B20 Sherpa Mr Rifat Bey and the Turkish B20 Executive Committee on their plans and agenda for 2015, when Turkey takes over the Chair of the G20.
The B20 in July 2014 finalised its recommendations on five core issues and presented them to B20 Chair HE Tony Abbott, Prime Minister of Australia.
Brisbane G-20 Summit 2014: Outcomes of B-20 Summit and its Interactions with G-20 Leaders
The recommendations have concentrated on identifying the impediments to a more conducive environment for investment and growth through five task forces focused on the core economic drivers of trade, infrastructure, human capital, finance and transparency and anti-corruption.
International trade is the world’s growth engine. It is essential to securing global job creation and higher living standards. A targeted set of four high impact B20 recommendations, if implemented, could generate up to $3.4 trillion in GDP growth and support more than 50 million jobs across the G20 economies. This would be akin to adding another Germany to the global economy. Business therefore encourages each G20 economy to incorporate an ambitious domestic reform agenda, which explicitly targets trade-enhancing measures, into their Country Growth Strategies. This will encourage countries and businesses to allocate their scarce resources to the industries and activities where they are most competitive, acknowledging that ‘Made in the World’ is the reality of modern global trade.
Infrastructure & Investment
High quality economic infrastructure underpins economic activity within and across national borders. It promotes development in emerging economies, growth and employment in developed economies and trade between all. However, it is estimated that by 2030 there will be a gap of ~$15-20 trillion in infrastructure capacity. Over the long run, closing this gap could create up to 100 million additional jobs and generate $6 trillion in economic activity every year. A big part of the solution is greater private sector investment in productive infrastructure, partnering with governments to build and manage public investments more effectively, and communicating infrastructure benefits to the public.
Economic growth must be accompanied by growth in jobs. There is evidence of a modest recovery in some advanced economies, but the increase in global employment is below pre-crisis trends and is inadequate to absorb the expanding global labour force, with young people and the long term unemployed remaining particularly affected. Without continued investment in people, countries will be unable to fully realise the potential of trade and infrastructure investments or increase the quantity and quality of the labour force and employment opportunities, which in turn drive continued productivity and sustainable economic growth.
Overall, the challenge of stimulating growth will be facilitated by finalising core reforms to the financial system and implementing them according to agreed timelines. This would address the uncertainty that may have constrained the provision of credit in some markets and enable the financial regulatory agenda to transition from the crisis response phase. As part of this transition, it is timely to review financial regulatory processes at the Financial Stability Board and the other standard setting bodies. B20 also supports complementing the financial regulation agenda with reforms that deepen the range of sources of financing for investment in order to strengthen sustainable medium-term growth.
If corruption were an industry, it would be the world’s third largest, worth more than $3trillion and five per cent of global GDP. Corruption is a major obstacle to sustainable economic, political and social development as it increases the cost of doing business, decreases cross border investment and trade facilitation, and generates
4 Multilateral Newsletter
waste and inefficiency in the use of public resources. Incentivising business to act responsibly is important to reduce the supply of corruption. At the same time, business wants to see a concerted effort to enforce existing laws that reduce the demand for corruption, building capacity for integrity and penalising corruption in public
Business Recommendations Reflected Strongly in G20 Communiqué
The G20 Leaders’ communiqué released at the conclusion of the meeting on Sunday 16 November contains commitments to deliver on four distinct aims: individual country growth strategy commitments to meet the 2 per cent additional growth target (outlined in the Brisbane Action Plan); acting together to lift growth and create jobs; building a stronger, more resilient global economy; and strengthening global institutions.
Around half the commitments in the communiqué reflect recommendations that were made by the B20 Australia in July and almost all of the B20’s recommendations (14 out of 20) are reflected in the communiqué; touching each of the 5 taskforce and working group issues. This is a comprehensive endorsement of the relevance of the B20's input this year and the significance of that input was specifically acknowledged by Prime Minister Abbott in his closing press conference.
Among specific commitments in the communiqué, the G20 Leaders have:
• Financial regulation – committed to finalise the remaining elements of the global financial regulation framework and welcomed the Financial Stability Board’s proposal to report on the implementation and effects of these reforms.
• Infrastructure – committed to establish a Global Infrastructure Hub as the delivery mechanism for the Global Infrastructure Initiative announced at the meeting of G20 Finance Ministers and Central Bank Governors in Cairns in September and endorsed in the communiqué.
• Trade – welcomed the agreement on food security which clears the way for the Bali Trade Facilitation Agreement to be ratified and implemented on a multilateral basis, and the commitment to maintaining the standstill on protectionism.
• Human Capital – committed to the goal of reducing the gap in participation rates between men and women by 25 per cent by 2025 to bring more than 100 million women into the labour force and significantly increase global growth and reduce poverty and inequality.
• Anti-corruption – agreed to implement the G20 High-Level Principles on Beneficial Ownership Transparency as part of the 2015-16 G20 Anti-Corruption Action Plan.
B20 Turkey Priorities
From 1stDecember 2014, the B20 Turkey assumes responsibility for managing the B20 agenda. B20 leaders met over breakfast and discussed the plan and priorities of B20 Turkey. B20 Turkey will build on the work of B20 Australia and previous B20s in facilitating dialogue between the business world and G20 leaders. In previous years, B20 formed core Task Forces that covered a large and diverse range of agenda items. B20 Turkey will follow up on previous B20 recommendations, and further build on these to form the basis of discussions for this year’s taskforces. Based on the survey conducted amongst 200 members of B20 network, the overwhelming majority favoured launching a new taskforce on SMEs and Entrepreneurship as part of B20 Turkey agenda.
Click here to read the op-ed piece by Mr. Chandrajit Banerjee, Director General, CII on G20
Multilateral Newsletter 5
India and ASEAN have the capacity for dynamic growth and are playing a major role in the global economy. ASEAN sees India as an emerging power in Asia and is keen to develop relations with it that would be beneficial to member nations and to the region as a whole. Currently, India is collaborating closely with many Southeast Asian countries in various areas such as trade, science and technology, human resource development, healthcare, space science, agriculture, new and renewable energy among others.
India perceives economic engagement with ASEAN as a way to develop its northeastern states, while ASEAN views India’s economic linkages with Cambodia, Laos, Myanmar, Vietnam (CLMV) as an opportunity to help these new, less developed members of the organization to catch up with the others and further strengthen intra- ASEAN trade and unity.
Key highlights of the Statement by Prime Minister at the 12th India-ASEAN Summit, Nay Pyi Taw, Myanmar
ASEAN has established its own identity and voice in global political and economic affairs.•
ASEAN and India have the vigour and enthusiasm of its youth and wisdom and understanding of its ancient • civilizations.
Today, the entire Asia-Pacific region desires integration and cooperation. •
The ASEAN community is India's neighbour. Ancient relations of trade, religion, culture, art and traditions • exist and are being enriched through our interaction.
Rapidly developing India and ASEAN can be great partners for each other. We are both keen to enhance • our cooperation in advancing balance, peace and stability in the region.
A new era of economic development, industrialization and trade has begun in India. Externally, India's 'Look • East Policy' has become 'Act East Policy'.
There are many similarities and convergences between us. India and ASEAN are second and third in terms • of population. We are among the largest economies and among the three fastest growing economies in this century. Majority of us here belong to the developing world.
We have the strength and the potential of a young population. In India, 800 million people below the age • of 35 years constitute a huge opportunity.
The Regional Comprehensive Economic Partnership Agreement can be a springboard for economic integration • and prosperity in the region. However, we should aim for a balanced Agreement, which is beneficial to all; and, is truly comprehensive in nature, by equally ambitious agenda with similar timelines for goods and services.
Key highlights of remarks by Prime Minister at the 9th East Asia Summit, Nay Pyi Taw, Myanmar
The East Asia Summit is an important pillar of this policy. No other forum brings together such a large • collective weight of global population, youth, economy and military strength. Nor is any other forum is so critical for peace, stability and prosperity in Asia-Pacific and the world.
Over the last eight Summits, significant progress has been made in a number of areas and work has been • done on number of important issues.
Key Highlights: ASEAN Summit
6 Multilateral Newsletter
Our region has a number of complex and unresolved questions in the area of security. There is a need • for a serious and sustained dialogue to strengthen the climate of understanding and confidence among all stakeholders in the region.
In a world of inter-dependence and globalization, there is no option but to follow international laws and • norms. This also applies to maritime security. For this reason, following international law and norms is important for peace and stability in South China Sea as well. This also includes the 1982 UN Convention on Law of the Sea, which should be the basis for resolving disputes peacefully. We also hope that the efforts to conclude a Code of Conduct on South China Sea by a process of consensus would be successful soon.
Key highlights of the 11th ASEAN Business and Investment Summit
The ASEAN business community held its own parallel event at the sidelines of the 25h ASEAN Summit. The 11th ASEAN Business and Investment Summit (ASEAN-BIS) was held in Nay Pyi Taw from 11-13 November 2014 with the theme “Inclusive Connectivity: New Growth Paradigm.”
ASEAN-BIS sessions focused on the need for inclusive connectivity in growth, noting that ASEAN needs to • better leverage on its cultural bonds, historical ties and infrastructure growth to further advance the region’s potential.
ASEAN-BIS also deliberated on the region’s economic opportunities and implementation strategies that could • enhance ASEAN regional integration. Another important focus of the 11th ASEAN-BIS was on MSMEs, with participants seeking to gain a better understanding of the developments within ASEAN and the role of MSMEs towards the realisation of the economic community. Other issues considered were the potential of the ASEAN consumers, the need to narrow the development gap, financial inclusion and the digital landscape.
An important event that accompanied ASEAN-BIS was the ASEAN Business Awards. A total of 21 ASEAN companies were honoured for their excellence in Innovation, outstanding MSMEs, Young Entrepreneurs, Women Leaders, Corporate Excellence and ASEAN Centricity.
Click here for more information
Multilateral Newsletter 7
On the occasion of the 4th ASEAN Investment Forum (AIF), ASEAN and UNCTAD jointly launched the ASEAN Investment Report 2013-2014. This Report was prepared under a technical cooperation arrangement between the ASEAN Secretariat and the UNCTAD Division on Investment and Enterprise (DIAE) with financial support from the Australian Government through the ASEAN-Australia Development Cooperation Program Phase II (AADCP II).
This latest ASEAN Investment Report is entitled “FDI Development and Regional Value Chains”. It highlights the continuing rise of foreign direct investment (FDI) flows into ASEAN, which performed well among the developing regions. The Report shows that ASEAN had attracted FDI inflows exceeding $122 billion in 2013 – about on par with those to China – up from $114 billion in 2012. Growing corporate income and cash reserves of ASEAN companies further supported strong intraregional investment.
The Report also provides analysis on the increasing regional value chains (RVCs) contributed by rising FDI. RVCs in ASEAN now involve more companies, more ASEAN countries, and a wider range of products and industries in the region. The Report further illustrates how RVCs strengthen regional connectivity through production, investment, trade and business linkages, complementing the three pillars of ASEAN Connectivity of physical, people and institutional connections.
Click here for more information
ASEAN Leaders highlighted the importance of infrastructure development and connectivity in ASEAN when they welcomed a set of ASEAN Principles for Public-Private Partnership (PPP) Frameworks
PPPs are seen to be beneficial in meeting ASEAN infrastructure needs, estimated by the Asian Development Bank at USD 60 billion per annum. Private participation in infrastructure provision can enhance existing public capacity in providing economic (e.g. transport, telecommunication, power, water and sanitation) and social (e.g. health and education) infrastructures. At the same time, effective infrastructure reduces transport costs, fosters competitiveness with positive impact on investment and trade flows, and the integration in global and regional value chains.
The Principles cover four main areas: policy and organisational framework for private participation; project selection, development and implementation; affordability and budget transparency; and transnational infrastructure connectivity. The Principles are relevant to a range of models of private participation in infrastructure ranging from relatively limited services and management contracts, traditional public-private partnerships and concession agreements, to full or partial public divestiture of existing assets.
These Principles were developed with the assistance of the Organisation for Economic Cooperation and Development.
Click here for more information
ASEAN, UNCTAD Launch ASEAN Investment Report 2013-2014
ASEAN Welcomes Principles for Public-Private Partnership Framework
8 Multilateral Newsletter
India Needs to Improve Manufacturing Sector Performance to Return to High-growth Path: World Bank Report
As economic reforms gain momentum, India’s growth is likely to accelerate towards its high long-run potential. Measures such as a national Goods and Services Tax (GST), accompanied by a dismantling of inter-state check posts, can be transformational and significantly improve the domestic and international competitiveness of Indian manufacturing firms, said the latest India Development Update of the World Bank.
According to its estimates, simply halving the delays due to road blocks, tolls and other stoppages could cut freight times by some 20-30 percent and logistics costs by an even higher 30-40 percent. This alone can go a long way in boosting the competitiveness of India’s key manufacturing sectors by 3 to 4 percent of net sales, thereby helping India return to a high growth path and enabling large scale job creation.
According to the Update, a twice yearly report on the Indian economy and its prospects, India’s economic growth is expected to rise to 5.6 percent in FY15, followed by further acceleration to 6.4 percent and 7.0 percent in FY 2016 and FY 2017.
Highlighting some of the significant trends in the Indian economy, the Update said growth has rebounded significantly due to a strong industrial recovery. Capital flows are back, signaling growing investor confidence as inflation has moderated from double digits, exchange rate has stabilized, and financial sector stress has plateaued.
India’s longer term growth potential remains high due to favorable demographics, relatively high savings, recent policies and efforts to improve skills and education, and domestic market integration. Improved growth prospects in the US will support India’s merchandise and services exports, while stronger remittance inflows and declining oil prices are expected to support domestic demand, the Update added.
The projections could, however, face risks from external shocks, including financial market disruptions arising out of changes in monetary policy in high income countries, slower global growth, higher oil prices, and adverse investor sentiment arising out of geo-political tensions in the Middle East and Eastern Europe.
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