SPIEF 2018 was held under the slogan “Building a Trust Economy,” and this year reached new heights, both in terms of scale and results. With its numerous achievements, it would be fair to call it an innovative, technological, and indeed breakthrough event.
“In spite of the sanctions imposed by a number of countries, the St. Petersburg International Economic Forum demonstrated that Russia is a land of opportunity. The 17,000-plus participants arriving from 143 countries is testament to that fact. Over the past few years, SPIEF has developed to become an international platform, with its main achievement being the creation of a space where the spirit of trust prevails. Trust is a key asset in the business world, and discussions at the Forum focused on this crucial aspect,” said Advisor to the President of the Russian Federation and Executive Secretary of the SPIEF Organizing Committee Anton Kobyakov at the event’s closing press conference.
Guests from every continent, and representatives from international organizations such as the UN, IMF, OPEC and others spoke ever more profusely on the need to operate in a single economic space and find new areas of common ground in a changing world. President of France Emmanuel Macron was one of the honoured guests at the Forum. He commented that “Russia must have a leading voice in the Council of Europe.” He also expressed the belief that Russia and the EU’s united approach to the inviolability of underlying multilateral agreements in international politics was a key factor for the world today.
Prime Minister of Japan Shinzō Abe commented, “The slogan of our Forum this year is ‘Building a Trust Economy.’ It is my belief that we can deem Japan and Russia as together engaged in building this economy of trust… We now stand at a historical turning point; the path we should take and efforts we should make are all entirely clear. It is working for future generations in Japan and Russia. It is Japan and Russia becoming a major force for safeguarding and fostering regional and global prosperity for the Japanese and Russian peoples, further deepening their relationship, mutual trust, concluding the peace treaty and building up lasting peace and stability between our two nations.”
Speaking at the Forum plenary session, Christine Lagarde, Managing Director of the International Monetary Fund, noted that “Russia has put in place an admirable macroeconomic framework – saving for a rainy day, letting the exchange rate float, introducing inflation targeting, and shoring up the banking system.”
“This year, the Forum has come to resemble a crossroads of civilizations. Only at SPIEF has everything been put in place to ensure that discussions are open, as opposed to politically charged. It is where participants from various countries and growing economies discuss economic issues. There is no place in the world other than SPIEF that provides such an opportunity, which is why we have seen the numbers of participants grow from year to year,” said Anton Kobyakov.
During this year’s St. Petersburg International Economic Forum, over 3,000 flights arrived at and departed from Pulkovo Airport, including over 800 private flights. By way of comparison, SPIEF 2017 saw over 2,500 flights, including over 700 private flights.
The main programme incorporated over 150 business events across the Forum’s numerous venues. These events were split into four distinct themes: “Technology for Leadership,” “Harnessing Russia’s Growth Potential,” “Human Capital in the Digital Economy,” and “The Global Economy in an Era of Change.”
The Forum’s central event was the plenary session, featuring President of the Russian Federation Vladimir Putin. He commented: “Today what we need are not trade wars, or even temporary trade armistices, but rather a fully-fledged trading world. The slogan of this year’s Forum in St. Petersburg is ‘Building a Trust Economy’. I am convinced – and experience bears this out – that the role of trust as a factor affecting development will grow further.”
Events Held On the Eve of SPIEF
In the run-up to the FIFA World Cup, SPIEF held a special event entitled “From the First to the Twenty-First” for officials and business figures from Latin America and the Caribbean. In a ceremony broadcast live on Russia 24, television presenter Sergey Brilev handed a capsule of earth from the Estadio Centenario to the government of St. Petersburg. The Estadio Centenario in Montevideo (Uruguay) has a special place in global football history as the stadium that hosted the first World Cup in 1930.
23 May also saw the “Australia–Russia Business Re-connection: How and Why?” business breakfast take place for the first time. The event was organized by the Roscongress Foundation’s partners in Australia: the Australia–Russia Dialogue Forum and the ADC Forum. Later on, a business lunch took place entitled “Development of Trade and Economic Cooperation between the EAEU and ASEAN. Russia’s Role in the Process.” The event was attended by business representatives from EAEU and ASEAN.
The discussion platforms Russian Small and Medium-sized Enterprises Forum (SME Forum) organized by the Roscongress Foundation together with All-Russian Non-Governmental Organization of Small and Medium Business OPORA ROSSII and the SME Forum partner Russian Small and Medium Business Corporation saw lively debates on business practices, some of which were held in a new, interactive format. The topic of small and medium enterprise continued as part of the main SPIEF 2018 business programme.
This was the third year that issues related to women in business also took centre stage on the eve of SPIEF 2018. An international forum entitled “Increasing the Contribution of Women to Economic Growth and Prosperity: Creating an Enabling Environment” brought together around 200 female participants representing the Russian regions.
Elsewhere, the Chamber of Commerce and Industry of Leningrad Region’s “Women as Leaders” conference saw animated discussions on the involvement of women in a changing economy.
The initial discussions on these topics will continue in just a few months’ time, with St. Petersburg hosting the Second Eurasian Women’s Forum on 21–22 September.
Officical SPIEF Programme
The official opening ceremony took place on the first day of the Forum – 24 May. Welcoming addresses were given by Governor of St. Petersburg Georgy Poltavchenko, and Under-Secretary-General of the United Nations Achim Steiner. Poltavchenko made assurances to Forum participants that Russia has been and will always remain a reliable partner.
In total, 68 business events took place that day in various formats. Topics under discussion included digitalization, the future of the labour market, energy, and a breakthrough in the Far East. Participants at the Valdai Discussion Club session focused on the effect the crisis in international relations is having on the global economy, and possible ways to resolve the standoff between Russia and the West. The first day ended with a discussion on smart cities.
Issues concerning international cooperation came under focus on the second day, which also saw a number of business dialogues between countries take place. Participants identified new opportunities for implementing joint projects, modern mechanisms by which to promote exports on overseas markets, and ways to cooperate on removing administrative barriers. The business programme for 25 May included 51 events. The highlight was the plenary session, featuring President of the Russian Federation Vladimir Putin, President of the French Republic Emmanuel Macron, Prime Minister of Japan Shinzō Abe, Vice President of the People’s Republic of China Wang Qishan, and Managing Director of the International Monetary Fund Christine Lagarde. Furthermore, country’s leaders conversed again during Russia–France and Russia–Japan bilateral dialogues. Additionally, Vladimir Putin met with the heads of world’s information agencies and a held a meeting with the leaders of international companies.
Events took place as panel sessions, roundtables, and business dialogues. They provided platforms by which leading specialists, experts, and politicians could discuss topics such as the resources and economy of the Global Ocean, the potential of the Arctic, and the in-demand technologies of the future.
The closing day of the Forum saw 41 events take place, including 22 events held as part of the International Youth Economic Forum – a permanent SPIEF fixture for the younger generation. The day began with a business breakfast for representatives of the IT industry. According to those present, as much as 20% of global GDP today is tied to digital transformation, making it perilous to underestimate its impact. On the same day, American Chamber of Commerce in Russia and EY unveiled the results of a joint study on trade and economic ties between Russia and the USA.
The B20 Regional Consultation Forum was a special event at SPIEF 2018, and saw participants discuss recommendations for G20 leaders for the forthcoming summit in Buenos Aires, which will take place this year from 30 November to 1 December.
In what has now become tradition, SPIEF hosted the presentation of the results of the Russian Regional Investment Climate Index for the fourth time. Tyumen Region climbed five places to convincingly take first position. Completing the top five were Moscow, Tatarstan, Leningrad Region, and Tula Region.
The Roscongress Foundation is a socially oriented non-financial development institution that puts a special emphasis on the health care in the Russian Federation, including improving the quality of life (creating the system of long-term care for senior citizens, developing palliative care in Russia, promoting healthy life style, etc.).
SPIEF 2018 held a number of sessions and interviews on increasing life expectancy that brought in representatives of the Government of the Russian Federation, as well as Russian and foreign experts.
Investing special effort in this area, the Roscongress Foundation strives to become the leading single platform for discussing national goals, objectives and priorities to improve the quality of life in Russia (in accordance with Executive Order of the President of the Russian Federation “On National Goals and Strategic Objectives for Development of the Russian Federation through to 2024” dated 7 May 2018).
The global character of SPIEF was made even more apparent – and the communication platform even more attractive for talks – by the number of major projects and agreements that took shape. As of 30 May, 593 agreements had been signed at SPIEF, worth a total of RUB 2.625 trillion (counting agreements where the figures were not classified as commercial secrets).
The biggest of these were the following:
- A strategic cooperation agreement between Rosneft, Vnesheconombank and VEB Leasing worth up to RUB 400 billion for financing projects and providing leasing services.
- An agreement of intent between the Eurasian Development Bank and Belkomur Interregional Company to form a syndicated loan of up to RUB 278 billion to fund the construction of the Belkomur railway line.
- Several long-term contracts with a total value of USD 2.1 billion between Rosneft and 12 importing companies based in Mongolia for the supply of petrol and diesel fuel.
- An agreement worth USD 1.5 billion to construct a natural gas processing plant in the town of Ust-Luga (Leningrad Region), signed by the Russian Direct Investment Fund, the Japanese company Marubeni Corporation, the Baltic Gas Chemical Company, and Invasta Capital. The plant, which will convert natural gas to methanol, will have a capacity of 1.7 million tonnes per year.
- An agreement between Nizhnekamskneftekhim and Deutsche Bank (Germany) to open a credit line of EUR 807 million, to be provided by a consortium of five European banks.
In addition, the Roscongress Foundation signed cooperation agreements with the Association of Lawyers of Russia and 21 Russian federal subjects: the Leningrad, Kaliningrad, Kirov, Murmansk, Novgorod, Penza, Pskov, Rostov, Ryazan, Samara, Saratov, Sverdlovsk, Tver, Tomsk, and Chelyabinsk Regions, and the Republics of Adygea, Altai, Buryatia, Karachaevo-Cherkess, Crimea, and Khakassia. The aim of the agreements is to build collaboration between the parties on raising the investment attractiveness and export potential of the regions.
The Roscongress Foundation’s international partner network is continuing to increase. SPIEF 2018 saw the signing of agreements with the Association of European Businesses; the Federation Of Pakistan Chambers Of Commerce & Industry; the Union of Chinese Entrepreneurs in Russia; the ASEAN Business Club, the Norwegian-Russian Chamber of Commerce; the Mexican Business Council for Foreign Trade, Investment and Technology (COMCE); the General Confederation of Entrepreneurs of Argentina; the Croatian Chamber of Economy; the Israeli Russian Business Council; the Polish Investment and Trade Agency; the Ladies in the Frontline business association, MEDEF International; the Boao Forum for Asia; the Moscow Centre for International Cooperation; and the Centre for the Development of Women’s Entrepreneurship.
A number of agreements with charity and socially oriented organizations has been signed as part of a plan to develop the social platform launched by the Roscongress Foundation.
The agreements cover cooperation within the social development sphere.
Additionally, agreements have been signed with sports organizations, such as the Russian Golf Association and the Golf Estate Management Company. This cooperation will focus on running sporting programmes for economic forums, including golf tournaments held at Peterhof Golf Club under the aegis of the St. Petersburg International Economic Forum to promote sport, both in the corporate sphere and among the general public.
Other organizations to sign cooperation agreements with Roscongress were the Central Union of Consumer Societies of the Russian Federation; the Boris Yeltsin Presidential Library; Rosconcert; Rostelecom; VSK; MZS and Partners; the Deposit Insurance Agency; the Water Supply and Treatment Cluster Management Company in St. Petersburg; SVEKO FSUE; and Electrificatciya PJC.
In 2019 under the auspices of the United Nations Organization Russia will host the Global Manufacturing and Industrialization Summit (GMIS). The event will take place at the INNOPROM venue in Yekaterinburg. The appropriate agreement has been signed during SPIEF 2018.
Importantly, an agreement was signed between the management of the Made in Russia national brand and Novgorod Region to work together on promoting the Novgorod Rus regional brand. An agreement with Zenden Group will result in the establishment of Made in Russia’s first regional office, also in Novgorod Region.
International Youth Economic Forum (IYEF)
Following the decree of the President of the Russian Federation on establishing an on-going youth platform during SPIEF, the Forum hosted the International Youth Economic Forum (IYEF) organized by the Roscongress Foundation and the Federal Agency on Youth Affairs (Rosmolodezh). During the event young leaders of local and international business discussed contemporary challenges and awarded the winners of the All-Russia competition My Country – My Russia.
IYEF brought together graduate and post-graduate students from more than 15 Russian universities, including St. Petersburg State University, Moscow State Institute of International Relations, Higher School of Economics, National University of Science and Technology MISIS, Russian Social University, People’s Friendship University of Russia, St. Petersburg State University of Economics, etc.
The youth platform created by the Roscongress Foundation together with partners allows future managers to take part in the forum with no participation fee. They get a chance to network with big business representatives and hear their success stories. Direct communication between different generations helps raise future entrepreneurs, foster international relations, and get acquainted with potential employers. Within the next five to ten years the entrepreneurs return to the Forum as new participants ready to share their experience, eager to represent their company on the international level, and take part in the international global processes.
A great example of SPIEF 2018 of the latter is presence of opinion leaders from academic, business and media environments from G20, BRICS and EEU invited by the Russian Centre for Promotion of Internal Initiatives supported by the Roscongress Foundation and the Government of St. Petersburg. Among them were the participants of the meeting of President of the Russian Federation Vladimir Putin with youth G20 leaders at SPIEF 2013. During this brief period they managed to find their way in politics and business and now they head various youth, research and civic organizations. Five years later young leaders meet in St. Petersburg again.
Youth agenda at SPIEF 2018 included meetings with officials, representatives of international companies, members of business communities, and experts. Young leaders of G20 and EEU held a series of brainstorms about the place Russian economy occupies in the global world, and about the future of digital economy. Additionally, they discussed creating a youth entrepreneurial network that would help develop horizontal interaction of G20 and EEU young leaders, as well promote business projects among the SME participants.
Financial Bubbles in the Coronavirus Era
There is reason to believe that the coronavirus will not be going anywhere soon. What is more, IMF experts warn that problems that existed before the pandemic will only worsen in the coming decades. One of these problems is the state of the global financial market, which is more susceptible to all kinds of financial bubbles than ever before.
When we talk about financial bubbles, we usually mean a sharp increase in the value of assets in an economic climate that has either stagnated or started to deteriorate. A similar situation is currently unfolding on the American stock market, which is experiencing an extraordinary rise in the value of hi-tech companies against the background of a record drop in GDP (by over 30 per cent in the second quarter of 2020) and a projected budget deficit (−15.5 per cent). This rise has been caused by three factors: 1) a soft monetary policy as a result of the need to service the rapidly growing public and corporate debt; 2) the huge liquid resources at the disposal of legal entities and individuals that are frantically looking for ways to make a profitable investment in anticipation of the increased risks and systemic uncertainties brought about by COVID-19; and 3) the speculative excitement caused by the technologies of the fourth industrial revolution. In order for us to judge how likely the optimistic sentiments of the global financial markets are to change, let us consider the impact of these factors separately.
The Debt as it Stands
A key element of the “new abnormality” that has characterized both the development of the global economy as a whole and the U.S. economy, in particular, is the debt model of economic growth. Investment and business activity has stagnated as interest rates around the world are hovering around zero, while the U.S. dollar (a key reserve currency) stubbornly refuses to depreciate and has even strengthened its value on the forex markets on a number of occasions, despite the fact that the situation at home is worsening. For example, U.S. national debt increased by $4 trillion in the first nine months of 2020, from $22.7 to $26.7 trillion. This is the largest increase in U.S. national debt ever. A considerable amount of this debt is financed through the extraordinary growth of the U.S. stock market, which currently accounts for over half of the combined capitalization of the world’s stock markets. A correction on the stock market (caused by an increase in interest rates, for example) could trigger numerous defaults on debt obligations. According to Fitch Ratings, more defaults were announced in the first five months of 2020 than in the whole of 2019 and may reach record numbers by the end of the year (the current record holder is 2009). And more than half of all corporate defaults around the world have occurred in North America.
Let us recall that the value of financial assets dropped by $50 trillion during the 2008–2009 crisis. However, central banks and the fiscal authorities compensated for these losses by injecting roughly the same amount of liquidity into the market. But the newly created financial resources did not jolt consumer demand, as had been hoped. Rather, they were largely swallowed up by various segments of the global financial market. International portfolio investments alone more than doubled in 2008–2019 – by $35 trillion.
The history of capitalism is not short on examples where the state tried to solve debt problems at the expense of the market, leading to the creation of financial pyramids. In 1720, for example, two giant financial bubbles burst at almost the same time in Europe. In an effort to clear themselves of the massive debts they had accumulated during the War of the Spanish Succession, the governments of France and England encouraged the growth of cash in circulation. This money was pumped into equity securities of Mississippi Company in France and the South Sea Company in England, which were joint-stock companies created with backing from their respective governments. The companies promised their investors huge profits that would come from overseas territories. The proceeds from the sale of shares were used to buy back government debt instruments. The stock market bubbles that appeared in France and Great Britain were the result of the governments trying to rid themselves of their excessive debt burdens and to stimulate their respective economies through inflation and debt-equity swaps. In a way, the current excitement on the U.S. stock market is reminiscent of the situation three hundred years ago.
A New Digital Bubble?
As of late September 2020, the four largest companies in the world by market capitalization were American digital brands: the computer giants Apple and Microsoft and the internet companies Amazon and Alphabet (Google). The total market capitalization of these companies has more than doubled this year to over $6 trillion. “Pessimists” believe that the U.S. over-the-counter (OTC) market is currently experiencing another boom similar to the dot-com bubble that burst in 2000. Meanwhile, “optimists” point to the huge success of FAANG stocks, Facebook, Apple, Amazon, Netflix and Google, as justification for the current market explosion. Shares in these companies outperformed the market throughout the 2010s, and prices have soared against the background of the pandemic. They currently make up 23 per cent of the total capitalization of the U.S. S&P 500 Index.
The growth in the market value of these companies is directly related to the activities of private and institutional investors around the world, who invest their savings in banks and various investment funds with their highly developed infrastructure in order to receive guaranteed profits. A number of retail investors have given an additional impulse to the dynamics of the OTC market by purchasing shares in newly created companies in the digital economy that have connected to free trading platforms such as Robinhood.
At the same time, the “optimists” believe that the comparisons with the dot-com bubble of 2000 are not entirely appropriate. A number of arguments support this claim: 1) the ratio between the market value of shares and the total annual profit is lower – 26.9 in September 2020 versus 45.8 in March 2000; 2) companies in the digital economy turn in real profits, as opposed to expected future returns; and 3) Nasdaq OTC hi-tech growth rates are more moderate – 23 per cent per year on average, compared to 43 per cent per year in the seven years before the tech bubble burst in 2000.
The dynamics of the market on the eve of the financial crisis in 2008–2009 were also characterized by an “irrational euphoria” similar to what we are seeing today. Back then, in the depths of the crisis, the G20 introduced a supranational financial monitoring system that was designed to prevent destabilizing spikes and falls in asset prices. However, experience has taught us that regulation cannot keep up with market innovation and is perennially unprepared for new challenges, primarily the digitalization of the global economy.
Technology and Politics
Historically, financial bubbles have tended to form whenever new revolutionary technologies have appeared, be it the invention of railways, electricity, automobiles, etc. Many new technologies have appeared during the Fourth Industrial Revolution (from smartphones and 3D printers to blockchain technologies and artificial intelligence) that have led to the mass automation of business processes and, consequently, the loss of jobs for a large part of the workforce, thus reducing production and operating costs significantly.
At the same time, we have not seen galloping inflation as a natural market reaction during this global crisis (all other things being equal) to the cheap money policy that has dominated the past decade. On the one hand, prices have been kept in check by the pandemic, which has pushed households and companies to hold onto their savings and made consumption more difficult due to the partial blocking of the economy. On the other hand, in the present context, a sizeable portion of the newly created liquidity is immediately swallowed up by the stock market, the U.S. stock market in particular, which continues to grow thanks to the advance funding of new technologies that are being developed at a fantastic pace. Exactly how long such a model can survive depends on at least three factors: 1) whether or not the soft monetary policy of near-zero or negative interest rates pursued by central banks will continue; 2) the ability of the market to adapt to new technological transformations; and 3) the smooth running of the international monetary system based on the U.S. dollar.
As for the latter, its functioning largely depends on the political system in the United States, and on the results of the November presidential elections in particular. One of three things will likely happen after that: 1) the current configuration of the global financial system will remain in place, with a few minor alterations here and there; 2) the existing system will undergo a major upheaval; and 3) the global financial system as we know it will collapse and a new model will take its place.
If the first scenario plays out, then the world economy will most likely continue to function in the same institutional format that we know today. If the second scenario prevails, then the radical reform of the existing system of global institutions could give the RIC countries (Russia, India and China) the bargaining power to insist on more favourable conditions for their integration into the world economy (for example, by moving away from reliance on the U.S. dollar in international transactions, promoting the use of their national currencies more actively, re-evaluating their positions within the International Monetary Fund and the World Bank alongside their partners in BRICS in order to effectively obtain a collective veto power, etc.). The third scenario would make it possible to create regional monetary and financial systems (as full-fledged independent financial structures of the emerging multipolar world) on the basis of various regional financial institutions that already exist, increasing the role of national currencies in mutual settlements and international financial instruments (or through the creation of new international liquidity in the form of national collective settlement monetary units).
Where Does Russia Stand amid the Global Turbulence?
The Russian economy demonstrated greater resilience during the first wave of the coronavirus crisis than the economies of both developed countries and the economies of its partners in BRICS. Despite the sharp decline in world prices for carbon fuel (Russia’s main export), in terms of key macroeconomic indicators, Russia has managed to maintain more stable positions than the G7 countries. As a result, the IMF predicts that Russia will have the lowest budget deficit among the world’s major economies by the end of 2020 (−4.8 per cent), with relatively low unemployment (4.9 per cent).
The Russian Federation is, in a sense, protected from financial bubbles as (unlike the United States) as it is more focused on developing the real sector of the economy rather than the financial sector. At the same time, the main problem of Russia’s integration into the global economy is the lack of stabilizing mechanisms to counter the volatile and hard-to-predict elements of the global financial market. We are talking here about the lack of a reserve currency, something that many countries use to protect themselves against external shocks, especially during periods of global crisis, when the demand for reserve assets rises sharply. Let us consider the following example. Russia has been a net creditor in the global financial system for years. As of year-end 2019, Russia’s external financial assets exceeded its external financial liabilities by $358 billion. Meanwhile, its investment income balance amounted to −$50 billion. This lop-sidedness is down to the fact that Russia places its international reserves in low-yield foreign assets and serves its foreign financial liabilities at higher interest rates. What this means is that the Russian Federation has been subsidizing those countries that issue reserve currencies for years while not always receiving adequate compensation and now living in economic isolation in the form of economic sanctions. In this context, Russia urgently needs to create its own reserve currency similar to the transferable rouble that the Soviet Union used in its trade with the Council for Mutual Economic Assistance in 1964–1990 and which existed long before other collective currencies (such as the special drawing rights, the European Currency Unit and the euro) were developed. This mechanism removed a number of inconsistencies at the regional level (the problem of imbalances in particular) that we are now seeing in connection with the use of the U.S. dollar as a means of carrying out international settlements, loans and investments around the world.
An oft-cited report by Goldman Sachs predicts that Brazil, Russia, India and China (the BRIC countries) will all be among the world’s top five economies by 2050 and, tellingly, the stock market is not the main source of financial resources for any of them. A common problem for the BRIC countries is the need to develop the enormous potential of their domestic markets by implementing large-scale infrastructure projects. A kind of dual system of monetary circulation whereby foreign trade is carried out using monetary units of account could help make this happen. Such a model would make it possible to separate the intrinsic value of money (its purchasing power) from its extrinsic value (its exchange rate). This is necessary to prevent newly created value (through the financial market) flowing from regions with low productivity to regions with high productivity. This is precisely what is happening in the Eurozone, and it is deepening the structural imbalances in the single European market. In addition, such a system would help resolve the issue of creating international liquidity without the need to move the national currency out of circulation to form unproductive national reserves or carry out speculative transactions.
The global economy has fallen into the trap of “new abnormality,” where incessantly creating money does not solve pressing socioeconomic problems. Other countries are following in the footsteps of the United States, repeating its domestic policy. This has resulted in the further deepening of social inequalities and imbalances at the national and global levels. Bearing in mind the fact that the United States’ share of global gross domestic product has been falling over the past 20 years, it is entirely possible that the U.S. dollar may be used less frequently in international transactions, even though the exchange rate proves favourable from time to time. To make matters worse, the unusual reaction of the markets to the monetary policy of the Federal Reserve System, along with the growing political tension in the United States, increases the risk of the destabilization of the current financial system. It should be stressed here that global economic leadership has always been tied to the leading countries consolidating their positions in both the economic and financial spheres. Clearly, we have reached the point where the only thing that will help stabilize the world economy in the long term is the more active involvement of the BRICS countries in the functioning of the global financial system.
From our partner RIAC
Innovative ideas and investment opportunities needed to ensure a strong post-COVID recovery
After the huge success of its opening day, AIM Digital, the first digital edition of the Annual Investment Meeting, continued to gain momentum as it reached Day 2. The three-day mega digital event, an initiative of the Ministry fo Economy, under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, concluded its second day with interactive activities that catalysed investment-generation, knowledge-enhancement, and local, regional and international collaborations.
Joined by more than 15K participants from over 170 countries, including 70+ high-level dignitaries from across the globe, the second day of AIM Dıgital witnessed a wide range of major events, from the Conference, Exhibition, Investment Roundtables, and Regional Focus sessions to Conglomerate Presentations and Startups competitions; all geared towards providing opportunities to achieve a digital, sustainable & resilient future.
In his keynote speech in the FDI session, Ministers Roundtable: Adapting to the New Flow of Trade and Investment, His Excellency Dr. Thani Al Zeyoudi, the UAE Minister of State for Foreign Trade, said: “It is my distinct honor to welcome you to the UAE’s first-ever digital edition of the Annual Investment Meeting. Thank you to everyone participating, including our panelists from the Governments of Costa Rica, Canada, Nigeria and Russia. Today’s discussion on how countries are ensuring the free flow of trade and investment could not be more timely, especially as the world grapples with the economic recovery and moves toward building a more resilient, post-COVID economy. The pandemic has significantly impacted global markets that created new challenges for trade and investment. While the challenges ahead are enormous, the UAE sees tremendous opportunity for governments and business leaders to work together through trade and investment to reshape policies, create new partnerships, leverage new technologies, and build a future global economy that is more diverse, inclusive, and sustainable. We know that FDI can bring new technology and know-how, lead to new jobs and growth, and is often the largest source of finance for economies – making today’s discussion even more imperative.”
He further stated that FDI has played a critical role in the UAE’s economic growth, with policies and measures in place, such as the Foreign Direct Investment Law enacted in 2018 to further open the UAE market to investors in certain sectors, and the issuance of Positive List, which allows for greater foreign investment across 122 activities, and increasingthe UAE’s FDI value by 32% in 2019. He also mentioned that the UAE came in 16th of 190 countries in the World Bank Ease of Doing Business 2020 Ranking due to the country’s digitization strategies and promising business regulatory environment.
His Excellency Al Zeyoudi furthered: “The UAE is continuing to refine and implement policies that will maximize competitiveness, increase collaboration, and provide opportunities to facilitate trade and investment. Our aim is to become the #1 country for foreign investment, target zero contribution from oil to our GDP in the next 50 years, and support research, development, and innovation. The UAE’s trade and investment strategy is centered on economic diversification and focuses on enhanced investment in industries such as communications, Blockchain, artificial intelligence, robotics, and genetics. We are also initiating measures to strengthen our position as a regional leader in supplying financial and logistical services, infrastructure, energy supplies, and other services.”
He added: “The UAE believes that increased partnership and cooperation with governments and the private sector will be key to achieving our objectives. We view platforms such as the Annual Investment Meeting as instrumental in bridging the gap between nations and supporting global efforts to strengthen international trade and investment. Through this platform, we hope that participants will uncover new, innovative ideas and investment opportunities needed to build back better and ensure a strong post-COVID recovery.”
Furthermore, world-class speakers shared their viewpoints in Day 2 of the Conference highlighting Foreign Direct Investment, Foreign Portfolio Investment, Small and Medium-sized Enterprises, Startups, Future Cities, and One Belt, One Road, including H.E. Amb. Mariam Yalwaji Katagum, Minister of State, Federal Ministry of Industry Trade and Investment of The Federal Republic of Nigeria; Victoria Hernández Mora, Ministry of Economy, Industry and Commerce of Republic of Costa Rica; Hon. Victor Fedeli, Minister of Economic Development, Job Creation and Trade of Ontario, Canada; and Sergey Cheremin, Minister of Moscow City Government Head of Department for External Economic and International Relations, among others.
Two Investment Roundtables were also held successfully at the second day of AIM Digital, concluding with strategies to facilitate sustainable, smart and scalable investments. The Energy Roundtable was led by Laszlo Varro, the Chief Economist of International Energy Agency, which works with countries around the globe to structure energy policies towards a secure and sustainable future. Among the notable participants include H.E. Arifin Tasrif, Minister for Energy & Mineral Resources of the Republic of Indonesia; and H.E. Gabriel Obiang, the Minister of Mines and Hydrocarbons of Equatorial Guinea. The Agriculture Roundtable was led by Islamic Development Bank Group, the multilateral development bank working to promote social and economic development in Member countries and Muslim communities worldwide, delivering impact at scale.
In addition, the second set of National Winners competed on Day 2 of the AIM Global National Champions League. Overall, a total of 65 countries competed at this international startups competition. The top five global champions that will win a total prize of USD50,000 will be announced on the last day of AIM Digital.The competition was launched in a bid to help startups in maximizing their potential to attract funding and promote their business ideas to a global audience, getting utmost exposure and expanding their network.
Participating in the Conglomerate Presentation feature of AIM Digital is Elsewedy Electric led by Eng. Ahmed Elsewedy, its President and CEO. Elsewedy Electric began as a manufacturer of electrical components in Egypt 80 years ago, and Electric has evolved into a global provider of energy, digital and infrastructure solutions with a turnover of EGP 46.6 billion in 2019, operating in five key business sectors, namely Wire & Cable, Electrical Products, Engineering & Construction, Smart Infrastructure and Infrastructure Investments. As part of its commitment to sustainability, it has established green energy and smart metering projects across Africa, the Middle East and Eastern Europe.
The Regional Focus Sessions featured the regions of Asia and Latin America and explored the risks, challenges and opportunities for growth and regional cooperation. Regional Focus Session on Asia brought together government officials and investment authorities from the ASEAN Member States and discussed their strategies to create a borderless and sustainable bloc that will push organic growth, as well as their approaches to gain resilience in the economy. Regional Focus Session on Latin America highlighted the significance of regional and international partnerships to combat the current pandemic and boost trade, investments and employment within the region.
Moreover, Country Presentations on Day 2 presented the outstanding features and investment opportunities in Colombia, Egypt and the Federal Democratic Republic of Ethiopia which highlighted the countries’ status as attractive investment destinations.
Another highly anticipated event in the largest virtual gathering of the global investment community is the announcement of winners for the Investment Awards and Future Cities Awards which will take place on Day 3 of AIM Digital.AIM Investment Awards will grant recognition to the world’s best Investment Promotion Agencies and the best FDI projects in each region of the globe that have contributed to the economic growth and development of their markets. Likewise, AIM Future Cities Awards will give tribute to the best smart city solutions providers and for outstanding projects that have resulted to enhanced operational efficiency and productivity, sustainability, and economic growth.
Day 1 of AIM Dıgital welcomed the presence of globally renowned personalities such as the UAE Minister of Economy, His Excellency Abdullah bin Touq Al Marri who emphasised the vision of UAE’s wise leadership for the post-COVID era, reflecting great significance to enhancing the readiness of the country’s government sector, raising efficiencies and performance at the federal and local levels. Keynote remarks were delivered by H.E. Juri Ratas, the Prime Minister of Republic of Estonia; H.E. Rustam Minnikhanov, the President of the Republic of Tatarstan; H.E. Dr. Bandar M. H. Hajjar, the President of Islamic Development Bank Group (IsDB Group); H.E. Mohammed Ali Al Shorafa Al Hammadi, the Chairman of Abu Dhabi Department of Economic Development (ADDED); and Dr. Mukhisa Kituyi, the Secretary-General of the United Nations Conference on Trade and Development (UNCTAD).
The UAE Minister of State for Entrepreneurship and SMEs, His Excellency Dr. Ahmad Belhoul Al Falasi, underlined in his Keynote Address for the SME Pillar, that it is crucial for Startups and SMEs to be given opportunities to bounce back from the impact of pandemic and provide a conducive environment that will empower them to have the capability of supporting growth and success.
The Global Leaders Debate featured prominent keynote debaters such as Armida Salsiah Alisjahbana, the Under-Secretary-General of the United Nations and Executive Secretary of United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP); Mohamed Alabbar, the Founder of Emaar Properties, Alabbar Enterprises and Noon.com; Mohammad Abdullah Abunayyan, the Chairman of ACWA Power; and Arkady Dvorkovich, the Chairman of Skolkovo Foundation, who discussed the strategies to restructure the economies in overcoming the consequences of the pandemic.
The first digital edition of the Annual Investment Meeting with the theme “Reimagining Economies: The Move Towards a Digital, Sustainable and Resilient Future, will be held until the 22nd of October 2020.
H.E. Dr. Thani Al Zeyoudi: Our aim is to become the #1 country for foreign investment
It is my distinct honor to welcome you to the UAE’s first-ever digital edition of the Annual Investment Meeting. Thank you to everyone participating, including our panelists from the Governments of Costa Rica, Canada, Nigeria and Russia. Today’s discussion on how countries are ensuring the free flow of trade and investment could not be more timely, especially as the world grapples with the economic recovery and moves toward building a more resilient, post-COVID economy.
As you know, the pandemic has significantly impacted global markets, creating new challenges for trade and investment. According to the United Nations’2020World Investment Report, global FDI flows are estimated to decrease by up to 40% this year, dropping well below their value of $1.54 trillion in 2019. This would bring global FDI below $1 trillion for the first time since 2005. Global FDI flows are expected to decline even further in 2021, by 5% to 10%, and only in 2022 do we expect to start seeing markets recover.
While the challenges ahead are enormous, the UAE sees tremendous opportunity for governments and business leaders to work together through trade and investment to reshape policies, create new partnerships, leverage new technologies, and build a future global economy that is more diverse, inclusive, and sustainable. We know that FDI can bring new technology and know-how, lead to new jobs and growth, and is often the largest source of finance for economies – making today’s discussion even more imperative.
For the UAE, FDI has played a critical role in our economic growth. In 2019, the UAE was the largest recipient of FDI in the region, largely due to our increased focus over the years on enhancing local conditions to attract FDI. With policies and measures in place, such as our Foreign Direct Investment Law enacted in 2018 to further open the UAE market to investors in certain sectors, and the issuance of our Positive List, which allows for greater foreign investment across 122 activities, the UAE was able to increase our FDI value by 32% in 2019. The UAE also came in 16th of 190 countries in the World Bank Ease of Doing Business 2020 Ranking due to our digitization strategies and promising business regulatory environment.
The UAE is continuing to refine and implement policies that will maximize competitiveness, increase collaboration, and provide opportunities to facilitate trade and investment. Our aim is to become the #1 country for foreign investment, target zero contribution from oil to our GDP in the next 50 years, and support research, development, and innovation. The UAE’s trade and investment strategy is centered on economic diversification and focuses on enhanced investment in industries such as communications, Blockchain, artificial intelligence, robotics, and genetics. We are also initiating measures to strengthen our position as a regional leader in supplying financial and logistical services, infrastructure, energy supplies, and other services.
The UAE believes that increased partnership and cooperation with governments and the private sector will be key to achieving our objectives. We view platforms such as the Annual Investment Meeting as instrumental in bridging the gap between nations and supporting global efforts to strengthen international trade and investment. Through this platform, we hope that participants will uncover new, innovative ideas and investment opportunities needed to build back better and ensure a strong post-COVID recovery.
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