Virus slows China’s Asia projects

Some Chinese workers in Colombo have not returned after the holidays. (AFP)
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Updated 29 February 2020

Virus slows China’s Asia projects

COLOMBO: From an artificial island in Sri Lanka to a bridge in Bangladesh and hydropower projects in Nepal and Indonesia, China’s trillion-dollar Belt and Road plan is stuttering under the effects of the deadly coronavirus.

The outbreak that emerged in China in late December and spread to dozens of countries has cut off the Chinese labor supplies and equipment imports needed to keep major infrastructure projects running.

More than 133 countries have imposed entry restrictions on Chinese citizens or people who have visited China to prevent the spread of the disease, data from China’s National Immigration Agency showed.

China itself has imposed quarantines and travel curbs across the country to contain an epidemic that has killed more than 2,700 and infected around 79,000.

Sri Lanka requires 14-day quarantine for people arriving from China, and insists projects ensure Chinese staff are restricted to construction sites and their dorms.

At Colombo’s Port City — an artificial island the size of central London that is to house one of South Asia’s biggest financial centers — work was progressing at a snail’s pace as nearly a third of the Chinese workers who left for the Lunar New Year holidays have not returned.

The March opening of South Asia’s tallest free-standing communications tower — built with Chinese state funding in the heart of Colombo — has also been delayed by two months.

“Major construction projects in Sri Lanka that are funded by China mostly employ Chinese construction workers and they have hit a snag,” Nissanka Wijeratne, secretary of the Sri Lanka Chamber of Construction Industries, told AFP.

At the Port City project, the cafeteria for Chinese workers was half-empty recently.

“Most of our Chinese colleagues want to return, but the local staff are afraid to work with them,” said a Chinese foreman who only offered his surname, Xia. “Work is slow and it isn’t clear when things would return to normal.”

Temperatures of all workers at the site are taken several times a day and masks and hand sanitisers have been distributed.

Two top Chinese decision-makers at the Port City project who returned to prevent work from coming to a stop were quarantined at a five-star hotel, said project manager Bimal Gonaduwage.

“At the beginning there was a lot of panic among local workers, but now things have subsided,” Gonaduwage said.

A small pharmacy near the Port city project was doing a brisk sale in an “ayurvedic-amulet” used to “ward off infections.”

The red strings with a ball of crushed wild turmeric coated in Asafetida powder tied to its center are mostly bought by workers at “China projects,” the pharmacist Anjana Paramesh said.

The regulator of Chinese state-owned companies last week said the outbreak had caused “difficulties” for some overseas investments.

Some Chinese state-owned enterprises were “isolating the personnel to be dispatched (overseas) for 14 days in China and then another 14 days upon their arrival in the host countries before they begin work,” said Peng Huagang, secretary general of the state-owned Assets Supervision and Administration Commission.

Bangladesh has stopped issuing visas to Chinese visitors, including Chinese workers.

The China-funded $2.5 billion Bangladesh China Power Company at the port of Payra employs 3,000 Chinese workers.

Nearly two-thirds of them had returned to China during the Lunar New Year in January, said project manager Abdul Moula: “Our plan is to start full-scale operation by next month. But if at least 300 Chinese workers don’t come back by this month ... power production could be delayed.”

At the $3.5 billion Padma Multipurpose Bridge, being built by state-owned China Major Railway Bridge Company, nearly one-third of the 980 Chinese workers have yet to return, said project manager Dewan Abdul Kader.

On Indonesia’s Sumatra island, work at the China-backed Batang Toru hydropower plant has ground to a halt due to a lack of Chinese workers, after Indonesia halted all flights to and from mainland China.

In Nepal — home to more than a dozen Chinese-backed hydropower projects — many Chinese workers who left on holiday have also not returned.

“In their absence, projects are being delayed or slowed down,” said Vishnu Bahadur Singh from the Nepal Hydropower Association.

The setback from the coronavirus comes after a pushback against Belt and Road projects in several countries including Sri Lanka, Malaysia and Indonesia, where contracts were renegotiated to cut costs or ensure better environmental compliance.

But Chinese Foreign Minister Wang Yi last week denied that disruption from the virus could slow work on China-backed investments in Asia, saying it “won’t have any negative impacts.”

Italy’s Fincantieri launches Saudi shipbuilding unit to strengthen collaboration 

Updated 23 May 2024

Italy’s Fincantieri launches Saudi shipbuilding unit to strengthen collaboration 

RIYADH: Italian shipbuilder Fincantieri plans to enhance collaboration with Saudi Arabia through a newly established unit, the company said. 

Fincantieri Arabia will bolster the Kingdom’s Vision 2030 development agenda in the cruise, defense, and offshore sectors, the group disclosed in a press release, issued on the sidelines of an industrial conference in Riyadh. 

Fincantieri is the only shipbuilding group active in all high-tech marine industry sectors, the release added. 

The new unit aims to highlight the group’s wide-ranging capabilities in shipbuilding, maritime equipment and systems, and naval logistic support services, including training and simulation.  

It will also manage stakeholder relationships in the Kingdom and seek out local partners.  

Moreover, Fincantieri said it plans to share its technological expertise in shipbuilding across cruise, defense, and offshore sectors, thus opening up opportunities for Saudi nationals. 

The firm’s CEO Pierroberto Folgiero: “Our commitment to the Kingdom of Saudi Arabia is steadfast. Fincantieri stands out in the shipbuilding industry for its vertically integrated model and our leadership across naval, cruise, and oil and gas sectors. We are proud to offer these world-class capabilities built on decades of naval heritage and excellence to help the Kingdom achieve its Vision 2030 objectives.”  

He added: “Given the maritime industry’s pivotal role under Vision 2030, we eagerly anticipate establishing strategic partnerships. Through these collaborations, we aim to enhance local technological capabilities, create opportunities for Saudi talent, and foster knowledge exchange.” 

The state-controlled Fincantieri has expanded its presence in the Middle East in recent years. In March 2023, Folgiero stated that the group would venture into the Saudi market and was strategically positioned for growth in the region. 

The Italian group is also aiming to enhance its focus on defense, a sector that presently contributes to around a quarter of its revenues. 

On May 20, Fincantieri concluded a shipbuilding joint venture, named Maestral, with Abu Dhabi-based EDGE Group. The two entities announced the signing of a €400 million ($433 million) contract with the UAE’s Coast Guard Forces for the supply of 10 advanced 51-meter offshore patrol vessels. 

Lebanon’s reforms insufficient for recovery, IMF says 

Updated 23 May 2024

Lebanon’s reforms insufficient for recovery, IMF says 

Lebanon’s economic reforms are insufficient to help lift the country out of its economic crisis, the International Monetary Fund said on Thursday. 

Ernesto Ramirez Rigo, the head of the IMF mission visiting Lebanon, said in a statement that Lebanon’s ongoing refugee crisis, fighting with Israel at its Southern border and the spillover from the war in Gaza are exacerbating an already dire economic situation. 

Israeli forces and Lebanon’s Hezbollah have traded fire across Lebanon’s southern border since the war in Gaza broke out in October last year. 

Israel launched its assault on Gaza following a Hamas-led attack on southern Israeli communities on Oct. 7 in which fighters killed 1,200 people and captured more than 250 hostages. 

Since then, Israel’s assault has killed more than 35,000 people, with thousands more feared buried under the rubble, according to Gaza health authorities. 

The conflict “has internally displaced a significant number of people and caused damage to infrastructure, agriculture, and trade in southern Lebanon. Together with a decline in tourism, the high risks associated with the conflict create significant uncertainty to the economic outlook,” Rigo said. 

Fiscal and monetary reforms carried out by Lebanon’s finance ministry and the central bank, including steps to unify multiple exchange rates for the Lebanese pound and contain a currency slump, have helped reduce inflationary pressure, according to Rigo. 

However, he said more needs to be done if Lebanon is to alleviate its financial crisis. 

“These policy measures fall short of what is needed to enable a recovery from the crisis. Bank deposits remain frozen, and the banking sector is unable to provide credit to the economy, as the government and parliament have been unable to find a solution to the banking crisis,” he added. 

“Addressing the banks’ losses while protecting depositors to the maximum extent possible and limiting recourse to scarce public resources in a credible and financially viable manner is indispensable to lay the foundation for economic recovery.” 

Since Lebanon’s economy began to unravel in 2019, its currency has lost around 95 percent of its value, banks have locked most depositors out of their savings and more than 80 percent of the population has sunk below the poverty line. 

The crisis erupted after decades of profligate spending and corruption among the ruling elite, some of whom led banks that lent heavily to the state. 

The government estimates losses in the financial system total more than $70 billion, the majority of which were accrued at the central bank. 


Oil Updates – prices fall for fourth straight day as US rate hike prospects emerge

Updated 23 May 2024

Oil Updates – prices fall for fourth straight day as US rate hike prospects emerge

LONDON: Oil prices eased for a fourth straight session on Thursday after the minutes of a US Federal Reserve meeting revealed discussions of a further tightening of interest rates if inflation remained sticky, a move that could hurt oil demand, according to Reuters.

Brent crude futures fell 20 cents, or 0.2 percent, to $81.70 a barrel at 9:51 a.m. Saudi time. US West Texas Intermediate crude futures were down 29 cents, or 0.4 percent, at $77.28. Both benchmarks fell more than 1 percent on Wednesday.

Minutes released on Wednesday from the Federal Reserve’s last policy meeting showed the US central bank’s response to sticky inflation would “involve maintaining” its policy rate for now but also reflected discussion of possible further hikes.

“Various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate,” minutes of the Fed’s meeting said.

Higher interest rates boost borrowing costs, crunching funds that could boost economic growth and oil demand in the world’s largest oil consuming nation.

Also weighing on the market, US crude stocks rose by 1.8 million barrels last week, according to the Energy Information Administration, compared with an estimate for a 2.5 million-barrel draw.

Globally, physical crude markets have more recently been pressured by soft refinery demand and ample supply.

“Recent market softness has come on the back of weaker data, including rising oil inventories, tepid demand, and refinery margin weakness and the increasing risk of run cuts,” Citi analysts said in a note on Thursday.

Russia said it exceeded its OPEC+ production quota in April for “technical reasons” and will soon present to the Organization of the Petroleum Exporting Countries Secretariat its plan to compensate for the error, the Russian Energy Ministry said late on Wednesday.

Citi said it still expects that OPEC+, which groups together OPEC and allies led by Russia, will hold its production cuts through the third quarter of this year when it meets on June 1.

Citi also said it continues to see Brent averaging $86 a barrel in the second quarter of 2024. 

Saudi EXIM Bank signs 2 agreements with Japan’s SMBC and MUFG banks

Updated 23 May 2024

Saudi EXIM Bank signs 2 agreements with Japan’s SMBC and MUFG banks

TOKYO: On the sidelines of the Saudi-Japan Vision 2030 Business Forum in Tokyo, Saudi EXIM Bank signed two cooperation agreements with SMBC Business Banking and MUFG Bank.

The agreements aimed to foster cooperation and create co-financing opportunities to promote non-oil exports in target markets, according to the Saudi EXIM Bank.

The two agreements were signed separately by Saad bin Abdulaziz Al-Khalab, CEO of Saudi EXIM Bank, along with Akihiro Fukudom, CEO of SMBC Bank and Hironori Kamezawa, CEO of MUFG Bank, a statement confirmed.

Commenting on the partnerships, Al-Khalab stated: “This collaboration with Japanese entities is part of our joint efforts to strengthen economic relations between both countries and achieve the Saudi-Japan Vision 2030. The acceleration of commercial projects between our nations toward broader horizons comes as a result of the strength, advanced economic status, and promising investment opportunities.”

During the roundtable meeting, which brought together several ministers from both sides, Al-Khalab reviewed Saudi EXIM Bank’s activities with Japanese financial institutions and commercial companies to enhance economic and trade relations and identify projects of mutual interest.

During the financial sector’s roundtable meeting, Al-Khalab emphasized the critical importance of collaborative efforts between all financial institutions and business sectors. This is to ensure the provision of comprehensive, incentivizing credit solutions that can accelerate the pace of trade and mutual and global investment activities.

The Saudi EXIM Bank aims to empower the Kingdom’s non-oil national economy in accordance with Vision 2030. The bank is focused on enabling Saudi non-oil exports to expand and penetrate global markets by bridging financing gaps and reducing export risks.

Saudi Arabia’s non-oil exports up 3.3%: GASTAT 

Updated 23 May 2024

Saudi Arabia’s non-oil exports up 3.3%: GASTAT 

RIYADH: Saudi Arabia’s non-oil exports, including re-exports, saw an annual increase of 3.3 percent in the first quarter of this year, official data showed.    

According to the latest report released by the General Authority for Statistics, the value of re-exported goods increased by 31.5 percent during the same period, while national non-oil exports, excluding re-exports, decreased by 5.2 percent.    

The value of merchandise exports in March increased by 4.9 percent compared to the previous month. 

However, it declined by 5.7 percent in the first three months of 2024 compared to the same period in 2023, primarily due to an 8.3 percent decrease in oil exports. 

Chemical products constituted 25.1 percent of the total non-oil exports, recording an 18.3 percent decrease compared to the first quarter of 2023. Plastics, rubber, and their products followed, making up 22.8 percent of total non-oil exports, with a 0.6 percent decrease compared to the same period. 

Machinery, electrical equipment, and parts, constituted 22.7 percent of total imports, falling by 5.4 percent compared to the first quarter of 2023. This was followed by transportation equipment and parts, which represented 13 percent of total imports, with a 21.7 percent decrease. 

In a separate bulletin, GASTAT highlighted that non-oil exports and re-exports in March rose by 2.9 percent compared to February, and slipped by 0.8 percent compared to March 2023. 

While national non-oil exports, excluding re-exports, saw an annual decrease of 6.3 percent in March, the value of re-exported goods increased by 17.6 percent during the same period. 

During the first quarter of 2024, the proportion of oil exports out of total value declined from 78.2 percent to 76.1 percent. Imports, on the other hand, increased by 6.4 percent. 

In the first quarter, compared to the same period in 2023, both merchandise exports and non-oil exports, including re-exports, decreased by 1.4 percent and 0.2 percent respectively. Meanwhile imports saw a 0.3 percent decline, resulting in a 3.8 percent decrease in the merchandise trade balance surplus. 

In March, merchandise exports declined by 5.9 percent, largely driven by a 7.3 percent decrease in oil exports, leading to a drop in the proportion of oil exports from 78.1 percent to 76.9 percent compared to March 2023.

Conversely, imports increased by 1 percent, while the surplus of the merchandise trade balance decreased by 17.2 percent compared to March 2023. 

This period also witnessed a slight decrease in the ratio of non-oil exports, including re-exports, to imports, which fell to 34.7 percent from 35.8 percent in the previous year, attributed to a significant increase in imports by 6.4 percent, compared to a 3.3 percent rise in non-oil exports. 

In the first three months of this year, China was the main destination for the Kingdom’s exports, accounting for 14.9 percent of the total. South Korea and India followed with 9.8 percent and 9.5 percent, respectively. Exports to these and other top destinations made up 67.1 percent of the total. 

Similarly, China was the leading source of the Kingdom’s imports at 20.9 percent, followed by the US at 8.1 percent and the UAE at 6.8 percent. Imports from these and other top sources accounted for 63.4 percent of the total. 

King Abdulaziz Sea Port in Dammam was the major entry point for goods into the Kingdom, accounting for 27.4 percent of total imports. 

Other key ports included Jeddah Islamic Port with 18.8 percent, King Khalid International Airport in Riyadh with 14.2 percent, King Abdulaziz International Airport in Jeddah with 8.1 percent, and King Fahad International Airport in Dammam with 6.1 percent. 

Together, these five ports handled 74.6 percent of the Kingdom’s total merchandise imports. 

In March, key non-oil exports include chemical products, comprising 28.1 percent of total non-oil exports, marking a 12.9 percent decrease from March 2023. 

In contrast, primary imported goods include machinery, electrical equipment, and parts, constituting 24.1 percent of total imports, rising by 21.4 percent from March 2023. 

China also emerged as the Kingdom’s top destination for exports where they comprised 16.4 percent of Saudi Arabia’s total exports. 

Similarly, China ranked first for the Kingdom’s imports in March, constituting 21.2 percent of the total imports, followed by the US with 8.7 percent and the UAE with 6.9 percent. 

King Abdulaziz Sea Port in Dammam played a vital role as one of the primary ports for goods entering the Kingdom, comprising 28.9 percent of total imports. 

Other significant entry points included Jeddah Islamic Port, King Khalid International Airport in Riyadh, King Abdulaziz International Airport, and King Fahad International Airport in Dammam. 

Together, these five ports accounted for 76.3 percent of the Kingdom’s total merchandise imports in March.