The tenth anniversary of the collapse of Lehman Brothers is a good opportunity for us all to reflect on the global financial crisis and the lessons we have learned from it.

By now, there is widespread agreement that the crisis was caused by excessive risk-taking by financial institutions.

There were increases in leverage and risk-taking, which took the form of excessive reliance on wholesale funding, lower lending standards, inaccurate credit ratings, and complex structured instruments.

But why did it happen?

How could such a crisis originate in the United States, home to arguably the most sophisticated financial system in the world?

At the time, my colleagues and I argued incentive conflicts were at the heart of the crisis and identified reforms that would improve incentives by increasing transparency and accountability in the financial industry as well as government.

After all, if large, politically powerful institutions regularly expect to be bailed out if they get into trouble, it is understandable that their risk appetite will be much higher than what is socially optimal.

So, where are we now, after ten years of reform?

There has been progress in some dimensions: banks have stronger capital positions, and there is emphasis on higher-quality capital. Reliance on wholesale funding instead of deposits has decreased. There is greater oversight of the largest institutions, with stress tests and requirements to submit living wills (resolution plans). Derivative markets are smaller. Bank governance and pay policies have received greater scrutiny.

But much has remained unchanged.

The crisis was resolved in a way that bailed out large institutions, which inevitably makes them more willing to risk insolvency in the future—the so-called “moral hazard” problem.

Safety nets and deposit insurance coverage expanded in countries all around the world. It is particularly difficult to resolve insolvent banks, especially across borders.

This “too-big-to-fail” subsidy not only makes banks more eager to take risk in the future, but also gives them incentives to become larger and more complicated to maximize the subsidy. It is possible to observe in the data how market participants valued this subsidy for large international banks after the crisis, but also by observing simple trends in bank size: From 2005 to 2014, the total asset size of the world’s largest banks increased by more than 40 percent.

This greater concentration and market power in the banking sector is likely to be associated with lower levels of systemic stability. Our research also shows “good” corporate governance of large banks—defined in terms of their board composition, compensation, and independence—is associated…

Source link : Ten Years after Lehman: Are we Ready for the Next Crisis? by World Bank

American publisher Meredith announced on Friday that it has agreed to sell Fortune for $150 million to Fortune Media Group Holdings Limited, wholly owned by Chatchaval Jiaravanon.

Mr. Jiaravanon is affiliated with the Charoen Pokphand Group (www.cpgroupglobal.com), an international conglomerate with businesses in telecom and media; agro-food; retail and distribution; e-commerce and digital; property development; automotive and industrials; finance and investment; and pharmaceutical sectors.

Owned by the Chearavanont/Jiaravanon family, the C.P. Group operates public companies such as CP Foods, CP ALL and True Corporation, and multiple private firms.

Mr. Jiaravanon will own FORTUNE as a personal private investment independent of C.P. Group’s family businesses.

Mr. Jiaravanon is involved in C.P. Group’s technology, media and telecom businesses. He serves as a Board Member of True Corporation, a leading public company in Asia with more than $10 billion in assets, $4 billion in revenues, and 23,000 employees.

He intends to increase investment in FORTUNE’s digital capabilities, geographic expansion, and editorial talent as part of a strategy to become the premium business content provider worldwide.

“Our vision is to establish Fortune as the world’s leading business media brand, with an always-on reach and global relevance,” Jiaravanon said in a statement. “The demand for high quality business information is growing, and with further committed investment in technology and brilliant journalism, we believe the outlook for further profitable growth is excellent both for the publication and the events business.”

Alan Murray, a veteran journalist who will be president and chief executive of Fortune, said: “I am pleased that we have found an owner for Fortune who believes in our mission, values our editorial independence, wants to invest in our journalism … We will be doing big things in the future.”

Founded in 1930 at the outset of the Great Depression, FORTUNE has become synonymous with business success.

In recent years, it has evolved from a traditional print publication into an international multiplatform, multimedia business that includes a monthly magazine with multiple international editions; a digital news and video platform that reaches nearly 20 million people each month; and the world’s preeminent live event series for top executives, all overseen by a high quality editorial team.

FORTUNE’s major franchises include the FORTUNE 500; 100 Best Companies to Work For; Most Powerful Women; World’s Most Admired Companies; 40 Under 40; Fastest-Growing Companies; and the Change the World list. Its wide range of annual conferences include FORTUNE Most Powerful Women; FORTUNE Brainstorm Tech; FORTUNE…

Source link : Thai Businessman Chatchaval Jiaravanon buys Fortune for $150 Million by Olivier Languepin

‘Brighter prospects, optimistic markets, challenges ahead’: That was the title of the IMF’s World Economic Outlook update in January this year.

How quickly things have changed. Since that report was published, turbulence, volatility and crises have dominated the economic landscape.

Argentina is in crisis. Turkey is not far off. Markets have been rattled in Indonesia, Myanmar, Italy and Spain as financial conditions tighten.

The fallout from Brexit is more uncertain than ever. Populist politicians continue their rise. The trade war between the United States and China has escalated at an alarming rate.

The clock is ticking before the WTO dispute settlement appellate body shuts-down. China’s financial system remains precarious.

Geopolitical tensions remain high

The United States faces bitterly contested Congressional and Presidential elections with macroeconomic policies that are at odds with the direction of the economy.

Geopolitical tensions remain high with Iran, North Korea and Russia. With all these risks, now is a good time to think about Asia’s capacity to respond to economic crises. It’s appropriate to be exploring this issue this year.

It is the 10-year anniversary of the collapse of Lehman Brothers. Just last year, we marked the 20-year anniversary of the Asian financial crisis.

Should Asia plunge into another crisis, would we be ready?

The latest edition of East Asia Forum Quarterly (EAFQ), launched today, seeks to answer that question. The news is not good. There are major risks facing the region and its economies.

With trade wars, financial turmoil, institutional weakness, rising populism, territorial disputes and geopolitical tensions there is plenty of risk to go around. EAFQ assesses the capacity of global institutions, like the IMF, to respond in different crisis scenarios.

The resources of the IMF have been increased substantially since the global financial crisis. But with more countries calling on those resources, have they been increased by enough?

Are the IMF’s lending facilities flexible enough? Will countries go to the IMF if they get into trouble? Or does the IMF’s reputation since the Asian financial crisis haunt it still?

Since the Asian financial crisis, a plethora of regional financing mechanisms have been developed, particularly in Asia. What role should these institutions, such as the Chiang Mai Initiative Multilateralization, play in supporting stability.

Are these regional financing mechanisms competitors or complements to the IMF? How would they work together in a crisis, given they are untested? One line of defence against crisis is bilateral currency swap lines.

Swap lines with the US Federal Reserve, some of which still exist today, were…

Source link : Asia’s next financial crisis: are we ready ? by Boris Sullivan

To drive concrete development of the Eastern Economic Corridor (EEC), Thailand’s Board of Investment (BOI) has recently approved investment incentive scheme.

New incentives apply for the bidding winners of U-Tapao Airport’s Passenger Terminal 3 and Digital Park Thailand (EECd) development projects, two among six major development projects in EEC.

With the biddings for the development of both projects planned for late 2018, BOI has offered the incentive scheme to attract more investors to participate in the biddings.

The investment incentive scheme is aimed to increase investors’ confidence and success opportunity.

When completed, the two projects will play a key role in moving the EEC forward as a new regional business hub and accelerate the government’s plan to transform Thai economy.

Tax exemptions for new U-Tapao terminal

The bidding winner of U-Tapao Airport’s Terminal 3 development project will be granted exemption of import duty on machinery and 8-year corporate income tax (CIT) exemption.

In case the developer has cooperation with an educational institution to develop human resources, and BOI will grant 50% reduction of CIT for another three years under the EEC investment incentive scheme.

The U-Tapao Airport’s Terminal 3 is part of the Aerotropolis development project.

Under public-private partnership format, the Aerotropolis would include the construction of a 7.1 billion-USD (233-billion-baht) Passenger Terminal 3 which will increase the airport’s passenger handling capacity from 5 million passengers to 22 million passengers in 2033, and increase flight handling capacity from currently 25,000 units per year to 120,000 aircraft per year by 2033.

When completed, the project will cover additional passenger terminals, cargo zone, cargo & logistics village, commercial gateway, MRO zone, and the aviation training center.

While the development of Aerotropolis is taking shape, the government is working on other infrastructure development to build seamless road, rail, sea and air transportation network.

Such infrastructure development includes the construction of the 6.8 billion USD (224-billion baht) high-speed train linking the three airports — Don Mueang Airport, Suvarnabhumi Airport and U-Tapao, the 4.7-billion-USD (155-billion-baht) development of Laem Chabang Port Phase 3 which increases container throughput from 7.7 million TEUs per year to 18.1 million TEUs per year, and 306-million-USD(10.1-billion-baht) Map Ta Phut Port Phase 3 which be able to handle 19 million additional tons of cargo (petrochemicals and natural gas) upon completion.

The development of U-Tapao Airport, high-speed train, Laem Chabang Port, Map Ta Phut Industrial Port and MRO Center are included in the…

Source link : Thailand BOI’s Tax Incentive to Support Infrastructure Development for EEC by Pr News

South Korea tops the region in entrepreneurship environment with a score of 54%, according to the recently released Global Entrepreneurship Index.

The country jumped three spaces up from the last year.

The tech giant has been ahead of producing new technologies and introducing new products to customers. It is closely followed by Singapore and Japan with a score of 53% and 52%respectively.

China is ranked fourth in the region with a score of 41%

China’s physical infrastructure contributes to the country’s score followed by its market dynamics. It is followed by Brunei and Malaysia that have as score of 34% and 33% respectively.

India is ranked seventh in the region with a score of 28%

Despite various initiatives of the current government like “Make in India” the country is far behind as compared to other established regional leaders.

According to the report the country’s strong areas are in product and process innovation, opportunity start-up, and robust competition in the marketplace.

It is followed by Thailand, Philippines and Vietnam.

South Korea has the strongest entrepreneurship in Asia

The post South Korea tops entrepreneurship environment index in Asia appeared first on Thailand Business News.

Source link : South Korea tops entrepreneurship environment index in Asia by Boris Sullivan

1. Asia and the Pacific is the world’s largest food market. By 2030 it will likely account for half the global increase in annual beef and poultry consumption.
   Source: Asia’s Future Farms
2. Globally, 815 million people went to bed unfed or half-fed in 2016, compared to 777 million the year before. If unchecked, this trend could cause a mass exodus of rural populations to urban areas.
   Source: The State of Food Security and Nutrition in the World 2017
3. By 2030, there could be up to 26,000 child deaths annually in developing Asia due to undernutrition related to climate change.
   Source: Climate Change Impacts on Human Systems in Asia and the Pacific
4. In Central Asia, climate threats to food security could reduce livelihood options in agriculture, potentially triggering migration movements within the region or further abroad.
   Source: A Region at Risk: The Human Dimensions of Climate Change in Asia and the Pacific
5. Across developing Asia, water stress from reduced rainfall, salinity, glacial retreat, and desertification are expected to hit water stocks, drastically increasing food and water prices by 2060.
   Source: The Next Migrant Wave
6. Rice yields in the Philippines, Thailand, and Viet Nam could decline by as much as 50% by the end of this century without efforts to combat climate change.
   Source: Climate Change Impacts on Human Systems in Asia and the Pacific
7. Labor is becoming scarce on developing Asia’s farms. India’s agricultural workforce fell from 259 million in 2004-2005 to 228 million in 2011–2012.
   Source: Safe, Nutritious, and Affordable Food for All: ADB Food Security Forum 2016 Discussions and Recommendations
8. In the Mekong Delta, a major rice planting area, floods exceeding the normal depth of between 0.5 meters and 4 meters are becoming more frequent—increasing the risk of food insecurity.
   Source: A Region at Risk: The Human Dimensions of Climate Change in Asia and the Pacific
9. Developing Asia needs to improve irrigation to feed its rapidly growing population. Upgraded irrigation systems must yield more crop per drop.
   Source: Financing Asian Irrigation: Choices Before Us
10. Countries can produce more food with less inputs by giving women equal access to resources, education, and markets.
    Source: Women farmers can make Asia more food-secure
11. Modern agricultural cooperatives can increase food supply and boost farmer incomes, while helping them adapt to the impacts of climate change.
    Source: Asia’s Future Farms
12. Land tenure rights and migration policies need re-examining across the region, to organize small-scale farmers so they can produce more food with less.
    Source: Food Security in Asia and the Pacific

Source : ADB

The post 12 Things to Know about climate change and Food…

Source link : 12 Things to Know about climate change and Food Security in Asia and the Pacific by Boris Sullivan

Digital lifestyles, cashless societies, app-based businesses, “smart” nations, virtual services – there is a tremendous amount of excitement in Southeast Asia now about the growth of the digital economy.

The region is a hotspot for digital development, and it already leads the world in some indicators, such as Internet and social media use.

The signs of Southeast Asia’s digital transformation are obvious from its impressive tech “unicorn” companies, such as GoJek, Grab and Lazada, Sea, Tokopedia and Traveloka, to the entrepreneurs and small firms that are innovating and using technology to grow.

All of this is driving a high level of interest from the region’s governments, all of which are implementing various strategies to grow the digital economy.

In other words, the full potential of technology as a driver of private sector growth is not being realized. This is because the region still faces significant barriers to growing the digital economy.

Six priorities stand out to strengthen the enabling environment for the digital economy.

Improve the availability of affordable, high-speed Internet

Around half the population of ASEAN still lacks Internet access, and when available it tends to be through mobile broadband (for example using smartphones) rather than the fixed broadband needed for data intensive business applications.

Public and private investment will be needed to address this, but policymakers can also help through regulatory reforms.

In many countries, the broadband market is dominated by one or two large firms, and often these are state-owned.

Reforms that promote competition could help to lower prices and increase speeds.

Strengthen the population’s digital skills

Although the region already has good literacy and numeracy foundations, education systems need to be nimbler in developing the skills needed for the digital economy.

These range from basic computer usage to advanced skills like coding and data analytics, as well as “soft skills” like collaboration and communication.

Achieving this requires a focus on lifelong learning, not necessarily acquiring specific degrees but developing skills for life.

Singapore’s Skills Future initiative, which provides resources for ongoing re-training and skills development, is one example.

Expand the use of digital payments

Digital payments are an essential part of a digital economy, and expanding their use is another priority for Southeast Asia.

The latest World Bank Global Findex data shows that only 19% of financial account holders in the region access their accounts using a mobile phone or the Internet.

This is well below the average of the world’s middle-income countries, and Sub-Saharan Africa, respectively at 27%…

Source link : Six priorities to strengthen the digital economy in Southeast Asia by Victoria Kwakwa

The Greater Mekong Subregion (GMS) countries have made stunning progress over the past quarter century.

Once plagued by poverty, they are now economic success stories.

The GMS Economic Cooperation Program has contributed significantly to this transformation.

Since it was established in 1992 as a means to enhance economic relations and promote regional cooperation, its six member countries—Cambodia, the People’s Republic of China, Lao People’s Democratic Republic, Myanmar, Thailand, and Viet Nam—have built a platform for economic cooperation that has mobilized almost $21 billion for high-priority infrastructure projects.

Foreign direct investment has surged ten-fold

Foreign direct investment into the subregion has surged ten-fold and trade between its countries has climbed from $5 billion to over $414 billion.

But the subregion faces challenges to its prosperity. Further reducing poverty, climate change adaptation and mitigation, energy efficiency, food security, and sustainable urbanization remain priorities of the GMS Program.

Facing new challenges

Countries also face new challenges, including growing inequalities, rising levels of cross-border migration, and the potential impact on jobs of the fourth industrial revolution.

Moreover, GMS countries have agreed to significant commitments under the Sustainable Development Goals and the Paris Agreement on climate change.

There are also emerging opportunities for the region, including incorporating new technologies in various sectors such as education, agriculture, health, and finance. GMS countries are situated at the crossroads of South and Southeast Asia, and hence they can benefit from the increased momentum for growth in South Asia.

As GMS leaders gather this week in Ha Noi to chart the future of the program, it’s a good time to consider how a new generation of initiatives can ensure the GMS Program remains relevant and responsive to the subregion’s needs.

The Ha Noi Action Plan and the GMS Regional Investment Framework 2022, both proposed for adoption at the Summit, provide a platform for countries to strengthen their cooperation through continuous innovation. These two documents will have a sharpened focus on the GMS Program’s strategic goals of enhancing connectivity, competitiveness, and community in the subregion.

Connectivity has been dramatically improved

Connectivity, the first objective, has been dramatically improved. More than 10,000 kilometers of new or upgraded roads and 3,000 kilometers of transmission and distribution lines have been added under the program.

These transport networks have been transformed into an interconnected network of transnational economic corridors, building on 25 years of work to extend the…

Source link : Securing the future prosperity of the Greater Mekong Subregion by Takehiko Nakao