Davos session examines Indian Ocean Rim’s strategic outlook

DP World CEO Sultan Ahmed bin Sulayem attends a session at the 50th World Economic Forum (WEF) annual meeting in Davos, Switzerland, January 21, 2020. (Reuters)
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Updated 22 January 2020

Davos session examines Indian Ocean Rim’s strategic outlook

  • DP World’s chairman wants to see more cargo traffic between Indian Ocean Rim countries
  • Australia’s finance minister says country’s aim is to “beat” its emission-reduction targets

DUBAI: Technology and sustainable practices will increase investment opportunities in countries of the Indian Ocean Rim, the World Economic Forum in Davos, Switzerland, heard on its opening day.
The observation was made by Sultan Ahmed bin Sulayem, Group Chairman and CEO of DP World, during a panel discussion on Tuesday entitled “Strategic Outlook: The Indian Ocean Rim.”
The session examined the strategic priorities of a vital region that is home to 2.7 billion people and sees two-thirds of the world’s oil shipments — and half of all container ships -pass through its waters.
Sulayem said he wanted to see more cargo traffic between countries and fewer rules and regulations that create barriers to free trade.
“In our business we look at how to increase cargo,” he said. “One percent in GDP growth results in three percent increase in cargo,” in addition to higher employment.
Talking about DP’s investments in India, Sulayem said the company has poured a total of $2 billion into the country’s infrastructure sector, in projects such as double-stack train, cold-storage facilities and logistics parks, in the last two years.
“We are interested in investing more in India’s infrastructure and we believe there is a lot of growth prospects in the country,” he said.
Sulayem said India’s regulatory regime was partly responsible for the slow development of the country’s infrastructure.
“It is encouraging that the current political dispensation has done away with many legacy issues,” he said. “When you see their vision, (it is clear) they want to adopt tomorrow’s technologies for today’s (applications).”
Sulayem said he felt improving the investment climate is a top priority for the present Indian government.
On a global level, he said given the rapid pace of technological developments, automation everywhere will increase the number and quality of jobs.
“This is the age of the brain. It is all about the new ideas people can come up with and deploy,” he said. “If you have ideas, you make more money.”
Sulayem pointed out that phones, TVs and other devices are no longer manufactured by humans, but instead made by machines that are built by humans.
Participating in the same session, Piyush Goyal, the Indian Minister of Railways and Commerce and Industry, admitted that improving the country’s regulatory framework has long been a challenge for the government.
“Foreign investment is hesitant to come to India because of concerns over how the government functions, how licenses are issued, and whether there is fair opportunity,” he said.
“But we have made a conscious decision we would like India to be recognized across the world as an honest nation. We would like to come into the league of nations where everyone can come and do transparent business, where equal opportunity is provided for all.”
During what he called the transition phase, “short term pain” is bound to be felt by Indians, Goyal said, adding that this is a process the nation is ready for.
Arguing that India had allowed energy to be imported without significant efforts to tap into its own natural resources, he said: “This is another area of focus as we are looking to try and make India more attractive and self- sufficient.”
If there is a buzzword at the Davos forum this year, it is undoubtedly sustainability. Addressing the topic, Mathias Cormann, Australia’s Minister for Finance, said his country is strongly committed to effective action against climate change.
The aim of Australia is to not only “meet” but “beat” the emission-reduction targets set by the Kyoto Protocol, he said.
“We will reduce out emissions by more than 400 million tons of carbon dioxide. We are on track — and have the policies in place to meet that,” Cormann said.
As for trade, currently five out of Australia’s 15 top trading partners are in the Indian Ocean Rim and 90 percent of its exports are transported by ship, out of which half travel through the Indian Ocean, he said.
Furthermore, “30 percent of the people in the world live in the Indian Ocean Rim countries, yet we are only responsible for 11 percent of global trade,” Cormann said.
Commenting on the convergence of trade and the environment, Sulayem said a common misconception among companies around the world is that that adopting eco-friendly business practices is costly.
“It actually saves money,” he said. “In our ports we have done away with all the diesel used in equipment and we use electricity. We have changed all the bulbs to LED.
“We recovered the cost of the change in one year” through energy savings.
In this context, Sulayem praised the International Maritime Organization’s (IMO) decision to enforce rules that require the marine sector to reduce sulfur emissions by over 80 percent by switching to “green (low-sulfur) fuels.”

Oil slumps more than 4% on coronavirus fears

Updated 28 February 2020

Oil slumps more than 4% on coronavirus fears

  • Traders fret about impact of spreading virus on crude demand, particularly from China

LONDON: World oil prices tumbled by more than 4 percent on Thursday, as traders fretted about the impact of spreading coronavirus on crude demand, particularly from key consumer China.

Brent oil for April delivery tanked almost 4.2 percent to $51.20 per barrel, while New York’s WTI crude for the same month dived nearly 5 percent to $46.31.

“Concerns that the virus will prompt a global slowdown, weaker consumer confidence and reduced travel has raised concerns about lower demand, weighing on prices,” said CMC Markets analyst Michael Hewson.

Investors are growing increasingly fearful about the economic impact of the new coronavirus or COVID-19 outbreak. 

The virus continues to spread meanwhile, with Brazil reporting Latin America’s first case, and Denmark, Estonia, Greece, Georgia, Norway and Pakistan following suit.

Around 2,800 people have died in China and more than 80,000 have been infected. There have been more than 50 deaths and 3,600 cases in dozens of other countries, raising fears of a pandemic.

The spread of the virus to large economies including South Korea, Japan and Italy has raised concerns that growth in fuel demand will be limited. 

Consultants Facts Global Energy forecast oil demand would grow by 60,000 barrels per day in 2020, a level it called “practically zero,” due to the outbreak.

US President Donald Trump sought to assure Americans on Wednesday evening that the risk from coronavirus remained “very low,” but global equities resumed their plunge, wiping out more than $3 trillion in value this week alone.

“The negative price impact would intensify if the coronavirus were declared pandemic by the World Health Organization, something that looks imminent,” said PVM Oil Associates analyst Tamas Varga.

“The mood is gloomy and the end of the tunnel is not in sight – there is no light ahead just darkness. Not even a refreshingly positive weekly US oil report was able to lend price support.”

Gasoline stockpiles dropped by 2.7 million barrels in the week to Feb. 21 to 256.4 million, the Energy Information Administration (EIA) said on Wednesday, amid a decline in refinery throughput. Distillate inventories fell by 2.1 million barrels to 138.5 million.

US crude oil stockpiles increased by 452,000 barrels to 443.3 million barrels, the EIA said, which was less than the 2-million-barrel rise analysts had expected.

The crude market is watching for possible deeper output cuts by the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+.

“Oil is in freefall as the magnitude of global quarantine efforts will provide severe demand destruction for the next couple of quarters,” said Edward Moya, senior market analyst at OANDA. 

“Expectations are growing for OPEC+ to deliver deeper production cuts next week.”

OPEC+ plans to meet in Vienna on March 5-6.