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ADB Forecasts Robust Growth for Cambodia, Sees Risks to Competitiveness

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Cambodia’s economy is expected to grow at 7% in 2018 and 2019, bolstered by solid global economic growth, according to the Asian Development Bank (ADB)’s flagship annual economic publication, Asian Development Outlook (ADO) 2018, released today.

“Cambodia’s strong economic growth in the near term is supported by robust exports, as well as higher foreign direct investment inflows, tourism activities, and domestic demand. However, rising wages, difficulty in doing business, and intensifying competition can undermine the country’s competitiveness,” said Jan Hansen, ADB’s Senior Country Economist. “Policies to support ease of doing business will boost entrepreneurship, deepen the integration of local businesses in the manufacturing sector, and create more and better jobs.”

Cambodia’s industrial output is likely to continue to grow by 9.6% this year, with a slowdown in the garments and footwear industries offset by stronger growth in emerging industries, such as electrical parts, automobile components, bicycles, milled rice, and rubber, according to the report. Growth in services is expected to remain robust at 7% this year, supported by solid numbers of tourist arrivals. Assuming favorable weather conditions, Cambodia’s agriculture is expected to growth at 1.8% in 2018.

Fiscal policy is expected to be more expansionary this year than in 2017, with continuing revenue growth more than offset by higher spending and the fiscal deficit target rising to 5.1%.  The current account deficit (excluding official transfers) is seen widening this year as costs for oil and other imported products rise in a fast-growing economy. Higher investment inflows and official loans from abroad will cover the current account deficit and build up gross foreign reserves to about $10 billion by the end of 2018, providing 6.1 months of import cover.

The economic outlook is subject to downside risks, heightened by the vulnerability of Cambodia’s financial sector to global financial volatility traceable to an almost doubling bank credit-to-gross domestic product ratio over the past 5 years to 76% last year. While recently introduced credit risk and capital buffer regulations have helped push down the bank credit growth to 15% by the end of last year, credit related to the real estate sector is growing much faster.

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Will Pandemic Disruption Drive More Legal Operations Transformation?

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While 86% of in-house counsel surveyed said they see opportunity to modernize legal services provided to their stakeholders, Deloitte’s “2020 Legal Operations Survey” found that challenges remain. Respondents described their corporate legal departments’ maturity level for technology as just “foundational.”

Ashley Smith, Deloitte Risk & Financial Advisory managing director, Deloitte Transactions and Business Analytics LLP said, “Organizations everywhere have undergone massive change as a result of the COVID-19 pandemic and related economic uncertainties. As business strategies shift and the corporate legal department is called on to do more to help organizations navigate through disruption, focusing on legal operations transformation could help in-house counsel and their teams to evolve beyond heavy manual, tactical work – into leveraging technology to offer more strategic insights and value.”

Corporate legal departments face a number of challenges in legal transformation. Many survey respondents (71%) report that their teams spend a significant amount of time on manual tasks. In addition, the majority of respondents (74%) felt they do not have clear and accurate metrics on the work being completed by internal and external resources, and very few respondents (13%) have a process to validate that work and resource levels are properly aligned. From a process perspective, 71% of respondents do not have dedicated project management software for corporate legal department use.

Smith added, “Unfortunately, there’s no ‘easy button’ to corporate legal department modernization. Many legal professionals want to modernize and their organizations often have good systems already within the enterprise to help them achieve it. The challenge lies in the clean-up work needed to get the right data into those systems and to get disparate systems working well together. That step into change management doesn’t seem to be one most legal departments have the appetite or bandwidth to take on presently. But, as demands on the corporate legal department seem only to increase, it’s a goal worth setting as the pandemic continues.”

Looking forward, 62% of respondents agree that establishing better processes around their existing systems would help solve their current technology challenges.

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The Great Reset: A Global Opening Moment to Turn Crisis into Opportunity

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H.M. King Abdullah II ibn Al Hussein of Jordan opened the World Economic Forum’s Sustainable Development Impact Summit 2020 with a call for a Great Reset, urging drastic action to address problems laid bare and exacerbated by the global COVID-19 pandemic.

“This crisis should also be seen as an opportunity for all of us – if we act decisively, and act together,” he said. “We must begin by rethinking our entire global system to become more integrated, resilient and just. A globalized world cannot thrive by leaving its most vulnerable communities behind. We are all in this together. And the sooner we realize it, the better.”

“The way forward must be rooted in a re-globalization that fortifies the building blocks of our international community by enabling our countries to strike a balance between self-reliance and positive-positive interdependence, enabling us all to jointly mark a holistic response to all crises facing our world,” he said. “A response that strengthens our global economy but also addresses inequalities. A response that leads to technological and industrial progress but also ensures the sustainability of our shared environment.”

In the summit’s opening session, panellists drew attention to a wide range of issues that can and must be addressed as the world remakes itself in the wake of the pandemic. Disruptions to supply chains – including massive shortages of personal protective equipment and other medical supplies in the early months of the outbreak – highlighted not only the fragility of intricate global systems dependent on unimpeded transport but also the fact that existing supply chains were built for convenience and are not human-centred, said Grace Forrest, Founding Director of the Walk Free Foundation. “Supply chains were built to be efficient, irrespective of the cost locally,” she said.

She called for more locally focused and more transparent supply chains that centre communities, commit to sustainability and remove obstacles to the full and free participation of women and girls, who make up over 70% of the victims of modern slavery. “We need to be honest that we cannot keep moving forward when so many people are being held back,” she said.

Agricultural practices by the world’s farmers cannot be changed through shifts in consumption alone, said Anushka Ratnayake, Founder and Chief Executive Officer of myAgro. “It’s not a secret that farmers need tools to adapt to outdated agricultural practices, given climate change, and until now most of that change has been pushed by the consumer. But to truly reset this, change needs to come and start from the farmers and we can help support them to do that by deeply listening,” she said.

Ratnayake warned of a looming food security crisis, “particularly in countries where we work where governments have created restrictions on travel or closed weekly markets, which is the main way that farmers earn money”. She said: “During the dry season there was a lot of hesitance to spend money and make investments in their farms and so I think in the next coming six to 12 months, food security is going to be our biggest crisis – maybe even ahead of COVID.”

Rebecca Masisak, Chief Executive Officer of TechSoup Global, stressed that technology can and must be part of the solution but that unequal access to technology has so far proved to be a big part of the problem, worsening societal divisions in a time when, due to the pandemic, reliance on digital connectivity has markedly increased.

“Bill Gates has talked about the wide availability of digital technology that allows sharing of information global collaboration as being a critical factor in the speed of innovation,” she noted, “but digital technologies simply are not yet widely available to civil society at the grassroots level. We must invest in the necessary infrastructure for innovation. We need to support civil society workers and their communities in making all they know available to each other, to governments to business, so that the Great Reset is, in fact, a reset, and is improving both justice and opportunity for all.”

Alain Bejjani, Chief Executive Officer of Majid Al Futtaim Holding, said his company has seized on the pandemic to aggressively move forward on eliminating plastics from production and packaging – a move he said that both customers and partner companies have quickly accepted.

Ivan Duque, President of Colombia, noted that although his country has faced a number of crises this year, including a massive inflow of refugees from neighbouring Venezuela, Colombia has managed to meet the challenges and substantially reopen its economy without ignoring environmental commitments.

He said that Colombia has increased its intensive care unit capacity from 5,000 to over 10,000 beds and has kept deaths and contagions per million to levels lower than those of many countries with higher per capita income. In spite of this, Duque said, “we have not left the green agenda behind; we have even accelerated it.”

Colombia has pledged to plant 180 million trees by August 2022 as part of the World Economic Forum’s Trillion Trees Initiative and is on track to plant 50 million this year despite the pandemic. Duque also highlighted the way that executing state priorities can actually advance sustainability goals. He cited as examples the efforts to stamp out cocoa cultivation, noting that each hectare of cocoa planted results in the destruction of three hectares of tropical jungle, as well as illegal cattle ranching and timber harvesting.

Duque also called for the creation of a credit market modelled on carbon credit markets and aimed at mobilizing global resources to protect the Amazon Basin.

“I think the Great Reset leaves us with the message that we have to find more humane solutions,” he said. “We have to acknowledge that whether it’s technology, whether it is with entrepreneurship, whether it’s through government, we all have to put the human being at the centre and that means the human being has to be more conscious about how to reduce the individual CO2 footprint, and at the same time, how they can all participate in building everlasting sustainable solutions.”

King Abdullah II captured the theme of the Sustainable Development Impact Summit well when he exhorted participants: “Instead of looking at problems to solve, I urge you to look at opportunities to seize and ways to collaborate to rebuild a truly global inclusive system that leaves no one behind.”

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World Economic Forum and IRENA Partner for Sustainable Energy Future

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image credit: IRENA

The President of the World Economic Forum, Børge Brende, and the Director-General of the International Renewable Energy Agency (IRENA), Francesco La Camera, signed a Memorandum of Understanding (MoU) alongside the 75th session of the UN General Assembly and the Sustainable Development Impact Summit.

The Forum’s Energy Transition Index has found that, without urgent stakeholder action, COVID-19 will compromise the transition to clean energy. And IRENA’s Post-COVID-19 Recovery Agenda shows that while renewables have proven their resilience throughout the crisis, targeted policy action and investment in energy transition can leverage socio-economic benefits while staying on course towards a fully decarbonised system by 2050. This MoU brings together two international organizations to collaborate and advance a sustainable energy future through the adoption of new technology, financing and ambitious policy frameworks. It aims to advance the necessary global energy transition, decarbonise hard to abate sectors, scale up the deployment of clean technologies and enhance the energy literacy of decision-makers and the public.

“Countries need to significantly raise their level of commitment towards environmental sustainability, leveraging diverse policies, technologies and financing options,” Brende said. “Formalising this ongoing partnership during the Sustainable Development Impact Summit is an important step in strengthening the mission of our organisations. It brings together the knowledge, insight and innovation expertise of IRENA with the Forum’s global network to ensure these higher commitments are realised in the near term.”

“The energy transformation is at the heart of economic recovery,” La Camera said. “Renewable energy offers a way to carbon neutrality by mid-century, aligning short-term policy and investment decisions with our medium- and long-term objectives of the Sustainable Development Agenda and 1.5°C goal of the Paris Agreement. International cooperation is vital to support business and the public sector in their efforts to reach our climate goals. This reinforced partnership combines IRENA’s leading expertise on energy transition with the Forum’s proven record of success in driving change through public-private dialogue in pursuit of a global energy system that is fit for the future.”

“The Forum and IRENA have worked together for several years to support the energy transition,” said Roberto Bocca, Head of Shaping the Future of Energy & Materials, World Economic Forum. “This MoU strengthens the collaboration between our organisations to further accelerate and shape the trajectory of the energy transition ensuring it is sustainable, inclusive and supports the economic recovery following COVID-19.”

The past decade has seen rapid transformations as countries move towards clean energy generation, supply and consumption. Coal-fired power plants have been retired, as reliance on natural gas and emissions-free renewable energy sources increases. Incremental gains have been made from carbon-pricing initiatives.

The current state of the sector is described in the World Economic Forum’s Energy Transition Index 2020. It benchmarks the energy systems of 115 economies, highlighting the leading players in the race to net-zero emissions, as well as those with work to do. This year’s report flagged that COVID-19 could threaten the rate at which economies adopt more sustainable power. Sweden tops the overall ranking for the third consecutive year as the country most ready to transition to clean energy, followed by Switzerland and Finland. There has been little change in the top 10 since the last report, which demonstrates the energy stability of these developed nations, although the gap with the lowest-ranked countries is closing. The United Kingdom and France are the only two G20 economies in the top 10.

The Forum’s annual Sustainable Development Impact Summit brings together almost 2,000 leaders from around the world to scale up solutions that address the economic, social and environmental challenges of our time. Heads of State, CEOs, and leaders from civil society engage in dialogue to initiate, accelerate and scale-up entrepreneurial solutions that advance sustainable development goals. The summit takes place virtually from 21-24 September.

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