Multilateral Newsletter, July 2014
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Multilateral Newsletter, July 2014

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A new cycle of BRICS Summit has begun as Brazil hosted the Sixth Summit in the city of Fortaleza from 14-16 July 2014. A major milestone in the short history of BRICS enabled the leaders to prepare a ...

A new cycle of BRICS Summit has begun as Brazil hosted the Sixth Summit in the city of Fortaleza from 14-16 July 2014. A major milestone in the short history of BRICS enabled the leaders to prepare a road map to strengthen and promote global economic growth, peace and stability.

The two major outcomes from the Summit, first being the establishment of the New Development Bank, to be located in Shanghai and will help fund infrastructure and sustainable development projects not only in the BRICS countries but also in other developing economies. An excellent move by the leaders could hedge off any possible future economic crisis as well as be a very important step towards reconfiguration in the international economic governance. As the first Presidency is being taken by India for a period of five years, it gives a unique opportunity to play a proactive role in giving shape to the Bank.

Secondly, The Contingent Reserve Arrangement is especially significant achievement for the BRICS countries and the developing world. The Arrangement will give us a supplementary means of cushion aligned with any sudden external pressures on the rupee and is particularly helpful at a time of persisting risk of volatility in international financial markets.

In order to strengthen intra-BRICS cooperation, a number of proposals were made in the areas of online education, affordable health care platform, a virtual BRICS University, small and medium enterprises, tourism, youth exchange and science and technology.

The July 2014 edition of the Multilateral Newsletter highlights the key pointers from the Sixth BRICS Summit. In addition, it also tracks the key recommendations from the B20 Summit held in Sydney and the major happenings at World Bank, Asian Development Bank, International Trade Centre and UNCTAD.

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Multilateral Newsletter, July 2014 Multilateral Newsletter, July 2014 Document Transcript

  • 1Multilateral Newsletter this IssueInside Focus Story BRICS:The Power of Five.......................................................2 B 20 Business offers G20 blueprint for economic and jobs growth.......4 The World bank Government of India and World Bank sign $500 Million Agreement to Accelerate Highway Development in India........6 World Bank Approves Neeranchal National Watershed Project, India.........................................................................6 ADB ADB $300 Million Loan to Continue Power Upgrades in India’s Assam State...............................................................7 July 2014, Volume 2, Issue 7 Message from Mr Chandrajit Banerjee, Director General, CII With combined GDP around 21% of global volume, 20% of global trade and 11% of accumulated investments, the five countries constituting the BRICS grouping represent one of the largest markets in the world. With enormous strengthen in various sectors several opportunities for fruitful cooperation exist among the countries. The initiatives taken during recently concluded sixth BRICS summit held from 14-16 July 2014 in Fortaleza, Brazil aim to strengthen South-South engagement, provide avenue to advance the regional and global strategic interests and offer new investment vehicles to the member countries. The Summit emerged as a platform to appraise substantive achievements and prepare a road map to strengthen the grouping in future. The cooperation has come a long way in diverse areas. There is a storehouse of knowledge, know-how, capacities and best practices available in countries to be shared and on which meaningful cooperation can be built for the benefit of people. There is a need to explore new areas towards a comprehensive cooperation and a closer economic partnership to facilitate market inter-linkages, financial integration, infrastructure connectivity as well as people-to-people contacts. The July edition of the Multilateral Newsletter highlights the key highlights from the sixth BRICS Summit. In addition, the edition covers key highlights from World Bank, Asian Development Bank, International Trade Centre, UNCTAD and B20. Chandrajit Banerjee Multilateral ADB Equity Investment to Boost Renewable Energy Pipeline in India.................................................................................7 ADB Investment to Improve Access to Quality Preschool Programs in Rural India..............................8 ITC India-EastAfrica trade to strengthen through knowledge, technology sharing.................................................................8 UNCTAD World Investment Report 2014 launched around the world; findings point to FDI recovery...................................................9 NEWSLETTER
  • 2 Multilateral Newsletter Born after the repercussions of the global financial crisis, the first BRIC summit was held in the Russian city of Yekaterinburg in the year 2009. Subsequently, the another four summits were held in Brasilia in 2010, followed by Sanya in China in 2011, New Delhi in 2012 and Durban in 2013. Diverse in size and resources, the BRICS nations (Brazil, Russia, India, China and South Africa) as a cluster are massive: 20% of global GDP amounting to $24 trillion at PPP, 40 per cent of the world’s population and 1/4th of the world’s landmass. The grouping has natural resources, financial resources and consumers that enable to generate demand for products thereby providing a momentum to manufacturing, innovation and technological advancement. Over the period, BRICS has evolved in an incremental manner, in areas of consensus amongst its members, strengthening its two main pillars: (i) coordination in multilateral fora, with a focus on economic and political governance; and (ii) cooperation between members. Focus Story BRICS: The Power of Five A new cycle of BRICS summits began as Brazil hosted the 6th summit in the picturesque beach city of Fortaleza July 14-16. The sixth summit themed "Inclusive Growth: Sustainable Solutions" enabled to shape up the post- 2015 Development Agenda being discussed in the United Nations.  Leaders at the sixth BRICS summit looked to appraise of substantive achievements in the last few years as well as prepared a road map to strengthen the grouping and cement its status as a powerful voice and a counterpoint to the West-dictated narrative on global affairs. India has been a proactive player and attaches high importance to the BRICS forum for promoting global economic growth, peace and stability. In the course of the past five summits and several ministerial and official processes, BRICS has made major strides in pursuit of these goals. Some of the key highlights from the sixth BRICS summit include: 1. The new development bank of the group of BRICS countries will be headquartered in Shanghai, China, with the presidency held by India for the first five years.
  • 3Multilateral Newsletter 2. The BRICS also set up a $100 billion currency reserves pool to help countries forestall short-term liquidity pressures. 3. The bank will begin with a subscribed capital of $50 billion divided equally between its five founders, with an initial total of $10 billion in cash put in over seven years and $40 billion in guarantees. 4. Uncertainty in terms of economic growth and policy responses in developed countries could lead to increased volatility in financial markets and further affect the international economy. Updating international governance structures remains a necessity for better policy coordination and for the promotion of global economic prosperity. 5. The BRICS Trade Ministers noted the successful outcome of the WTO Ministerial Conference held in Bali in December 2013. They undertook to pursue vigorously the achievement of the objectives and timelines set out in the Bali Ministerial decisions. They reaffirmed the importance of an open and rules-based multilateral trading system and underlined the central role of the WTO in setting rules for global trade. 6. The Ministers emphasized that the conclusion of the Doha Round on the basis of its development mandate remains central to the objective of promoting the full integration of developing countries into the global trading system. 7. Trade and investment make a vital contribution to the creation of jobs and to the promotion of strong, sustainable and balanced growth and development. 8. Increasing engagement with other countries, particularly developing countries and emerging market economies, as well as with international and regional organizations is vital, with a view to fostering cooperation and solidarity in our relations with all nations and peoples. 9. Strengthened dialogue among BRICS and South American countries can play an active role in enhancing multilateralism and international cooperation, for the promotion of peace, security, economic and social progress and sustainable development in an interdependent and increasingly complex, globalizing world. 10. Since its inception the BRICS have been guided by the overarching objectives of peace, security, development and cooperation. In this new cycle, while remaining committed to those objectives, there is a need to deepen partnership with a renewed vision, based on openness, inclusiveness and mutually beneficial cooperation. CONSLUSION As BRICS broadens its internal understanding of issue it will open on a broader range of issue. It has made attempts to coordinate their positions on regional and global affairs issues through various meetings. The cooperation has come a long way in diverse areas. There is a storehouse of knowledge, know-how, capacities and best practices available in countries to be shared and on which meaningful cooperation can be built for the benefit of people. There is a need to explore new areas towards a comprehensive cooperation and a closer economic partnership to facilitate market inter-linkages, financial integration, infrastructure connectivity as well as people-to- people contacts. Focus Story The Bank will help fund infrastructure and sustainable development projects not only in the BRICS countries but in other developing economies also. This is an excellent move by the BRICS leaders and could hedge off any possible future economic crisis as well as be a very important step towards reconfiguration in the international economic governance. Chandrajit Banerjee Director General, CII
  • 4 Multilateral Newsletter Business offers G20 blueprint for economic and jobs growth The international business community has laid out a blueprint for G20 leaders to promote global economic growth and employment outcomes and make the global economy more resilient to deal with future shocks. Mr Richard Goyder, B20 Australia Chair and Managing Director and CEO of Wesfarmers, said the B20 Australia Summit had brought together nearly 400 business leaders and policymakers to finalise and prioritise a set of recommendations for G20 leaders that drive growth and create jobs. “To meet the target, G20 countries must commit collectively to implement unilateral structural reforms that boost employment and prospects for diversified and sustained growth – more trade, better infrastructure, safely regulated, accessible and affordable finance, and human capital in the right place, at the right time with the right skills.” Mr Goyder said the B20 had concentrated on identifying the major impediments to growth through five groups focused on the core economic drivers of trade, infrastructure, human capital, finance and transparency. B20 recommendations The B20 has concentrated on identifying the impediments to a more conducive environment for investment and growth through five groups focused on the core economic drivers of trade, infrastructure, human capital, finance and transparency. Trade 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. B 20
  • 5Multilateral Newsletter Human capital 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 realize 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. Financing growth Overall, the challenge of stimulating growth will be facilitated by finalizing 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. Anti-corruption If corruption were an industry, it would be the world’s third largest, worth more than $3 trillion 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 waste and inefficiency in the use of public resources. Incentivizing 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 penalizing corruption in public office.  Click here for more information  B 20
  • 6 Multilateral Newsletter World Bank Government of India and World Bank sign $500 Million Agreement to Accelerate Highway Development in India. World Bank Approves Neeranchal National Watershed Project, India The Government of India and the World Bank signed a $500 million loan agreement for the National Highways Interconnectivity Improvement Project  to  help improve the  national highway network’s connectivity with economically lagging and remote areas. The project will focus on three low-income states – Rajasthan, Bihar and Orissa – and on less developed regions in the states of Karnataka and West Bengal. In recent years there has been an increasing recognition of the importance of improving transport connectivity in remote and economically lagging areas which do not fall under the National Highways Development Program (NHDP). The National Highways Interconnectivity Improvement Project will upgrade and widen about 1,120 km of existing single/intermediate lane National Highways to two-lane in Bihar, Orissa and Rajasthan and in less developed regions of Karnataka and West Bengal. Other key components of the project include enhancing the institutional capacity of the Ministry of Road Transport and Highways (MoRTH) to better manage the highway network.  Click here for more information  The World Bank Board of Executive Director’s approved a $178.50 million credit for the Neeranchal National Watershed Project to improve watershed management in rural rainfed areas. Today, watershed development is critical to India’s development as vast stretches of agricultural land are in rain fed regions, characterized by extensive land degradation, low rainfall, reduced agricultural productivity, and higher rates of poverty. The project will be implemented over a six-year period and will provide technical assistance to the Government of India’s national Integrated Watershed Management Program (IWMP), which is the second largest watershed program in the world after China. The project approved today will support IWMP activities in selected sites in the states of Andhra Pradesh, Chhattisgarh, Gujarat, Jharkhand, Madhya Pradesh, Maharashtra, Odisha and Rajasthan. It will cover about 400 sub-watersheds of about 5,000 ha each and reach approximately 482,000 farmer households and 2 million people.  Click here for more information 
  • 7Multilateral Newsletter ADB ADB $300 Million Loan to Continue Power Upgrades in India’s Assam State ADB Equity Investment to Boost Renewable Energy Pipeline in India The Asian Development Bank (ADB) has approved a $300 million loan to help India’s northeastern Assam state continue its drive to eliminate power sector inefficiencies that are hurting its consumers, its world-famous tea industry, and its environment. The project will bolster Assam Power Distribution Company’s finances by allowing it to lower purchases of expensive electricity from independent power producers. Meanwhile, the planned Lower Kopili run-of-the-river hydropower plant in central Assam will help the state avoid over 530,000 tons per annum of carbon dioxide emissions that would otherwise be produced by fossil fuel-driven generation. ADB has supported Assam’s power sector since 2003 with five loans totaling $450 million, which have helped the state enact key reforms and improve transmission and distribution systems. The new loan will continue past efforts to build up the capacity of power companies and regulatory agencies, and to further cut distribution losses, which have decreased from 40% in the fiscal year (FY) to the end of March 2002 to 24% in FY2012.  Click here for more information  The Asian Development Bank (ADB) has made an equity investment of $50 million in a leading Indian renewable energy company ReNew Power Ventures Private Limited (ReNew Power), underscoring ADB’s commitment to help India meet its clean energy targets. The investment will help finance the company’s growing pipeline of wind power projects at various stages of development across India, with a total capacity of 1,000 megawatts (MW). India relies on expensive imports of coal and liquefied natural gas, as its energy demand rises and domestic supplies of conventional fuels decline. Renewables’ share of India’s energy mix dropped from 44% in 1970 to 31% in 2011. To reduce dependence on imported fossil fuels and cut greenhouse gas emissions, the Government of India has set a goal of maintaining renewables’ current share of installed capacity through to 2023. An extra 1,000 gigawatt-hours of electricity is expected to be generated annually by ReNew Power’s renewable energy projects, eliminating nearly 1 million tons of carbon dioxide emissions. More generally, increased private sector participation in Indian renewables will enhance the sector’s efficiency through increased competition and a deeper pool of invested funds. ReNew Power’s majority shareholder is the private equity arm of Goldman Sachs Group Inc. ReNew Power currently owns and operates nearly 500 MW of clean energy assets across India. So far, its portfolio has been focused on wind power, with projects selected in states offering the best combination of wind resources and feed-in tariffs – fixed payments to renewable energy producers for the electricity they generate. Energy access, renewable energy development, and energy efficiency are priorities at ADB. In 2013, ADB invested $2.3 billion in clean energy and has pledged to continue investments of at least $2 billion per year.  Click here for more information 
  • 8 Multilateral Newsletter ADB ITC ADB Investment to Improve Access to Quality Preschool Programs in Rural India A Rs.100 million equity investment from the Asian Development Bank (ADB) will enable Hippocampus Learning Centers (HLC) to expand its preschool programs to over 700 villages in Karnataka by 2016. The Annual Status of Education Report 2013 facilitated by Pratham shows that in rural India only 47% of children in grade 5 can read a grade 2 level text and only 52% of children in grade 5 can solve a grade 2 level subtraction problem. This learning deficit in early education needs to be urgently addressed. In addition to the poor quality of education provided in primary schools in rural areas, the lack of preschool education also contributes to this learning deficit. Without access to preschool education, children in rural areas are at a significant disadvantage in cognitive and social ability as compared to their counterparts in urban areas. “Our enrolments in preschool have grown 20-fold in 3 years, evidence of the demand for high quality education in rural India. Our robust, innovative and low cost framework has ensured that we deliver high learning outcomes consistently, creating the platform for us to scale rapidly across Karnataka and India.” said Mr. Malhotra, Founder and CEO of HLC.  Click here for more information  India-East Africa trade to strengthen through knowledge, technology sharing Private and public-sector representatives from India and five East African countries explored opportunities to improve the competitiveness of African businesses exporting goods and services to India, as part of the International Trade Centre’s (ITC) Supporting India’s Trade Preferences for Africa (SITA) project. SITA’s first Partnership Platform meeting was held at The Boma Nairobi Hotel in Nairobi, Kenya, from 9-11 July 2014. Some of the discussion topics included The emerging importance of South-South cooperation• India-East Africa trade relations• Promotion of Indian investment in Africa to create opportunities for partnerships• The goal of the project, which covers the period 2014-2020, will help boost exports from the selected East African countries to India; reduce over-dependence on the handful of primary commodities currently being traded; and encourage investment, technology transfer, and skills sharing from the Indian side.  Click here for more information 
  • 9Multilateral Newsletter UNCTAD World Investment Report 2014 launched around the world; findings point to FDI recovery The 2014 edition of UNCTAD's flagship World Investment Report, launched in June, sparks interest from policymakers looking ahead to the Sustainable Development Goals and how to achieve them. The  World Investment Report 2014, launched globally in 41 locations generated intense interest from the international development community and the media, where more than 500 articles have already appeared. The report's main findings on international investment trends show that foreign direct investment (FDI)• inflows increased by 9 per cent in 2013 to $1.45 trillion. Developing countries increased their global share of FDI inflows to a record level of 54 per cent, and developing Asia now attracts more inward FDI than either the EU or the United States. As investors, developing and transition countries have been steadily increasing their investments abroad• and last year they accounted for a record 39 per cent of global FDI outflows - up from just 12 per cent in the early 2000s. As the United Nations member States and other stakeholders are currently negotiating a post-2015 development• framework - the Sustainable Development Goals (SDGs) – the 2014 report focuses on how private finance can be mobilized for investment in sustainable development sectors, such as climate change adaptation, infrastructure development, food security, health, and education. The report outlines a Strategic Framework for Private Investment in the SDGs that addresses a number• of challenges facing private investment in developing countries. Clearly, the challenges are immense, but UNCTAD's analysis in the report shows that mobilizing the private sector to help meet the investment needs of developing countries is realistic. The report proposes an Action Plan that presents a range of policy options and a focused set of policy• packages that can help shape a big push for private investment in sustainable development.  Click here for more information  Copyright © 2014 by Confederation of Indian Industry (CII), All rights reserved. No part of this publication may be reproduced, stored in, or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of the copyright owner. CII has made every effort to ensure the accuracy of information presented in this document. However, neither CII nor any of its office bearers or analysts or employees can be held responsible for any financial consequences arising out of the use of information provided herein. However, in case of any discrepancy, error, etc., same may please be brought to the notice of CII for appropriate corrections. Published by Confederation of Indian Industry (CII), The Mantosh Sondhi Centre; 23, Institutional Area, Lodi Road, New Delhi-110003 (INDIA) Tel: +91-11-24629994-7, Fax: +91-11-24626149; Email: info@cii.in; Web: www.cii.in For suggestions please write to us at: multilateralforums@cii.in