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For Bigger Role in Global Trade, Indonesia Should Reshape Industrial Policy

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Indonesia should reshape its industrial strategy to become more closely integrated into global production networks and enjoy the long-term benefits of growing global trade, says a new study from the Asian Development Bank (ADB) and the Islamic Development Bank (IsDB).

The study, The Evolution of Indonesia’s Participation in Global Value Chains, notes that Indonesia’s participation in global value chains declined between 2000 and 2017. Forward linkages, where the country’s intermediate products are exported for use in the production of final goods elsewhere, declined from 21.5% of total exports to 12.9%, while backward linkages, or the share of foreign value-added in Indonesia’s exports, dropped from 16.9% to 10.1%.

“Indonesia’s limited participation in global value chains means it doesn’t benefit from global trade growth to the same extent as its Asian neighbors and isn’t benefiting from trade redirection resulting from trade tensions between the United States and the People’s Republic of China,” said ADB Vice-President for Knowledge Management and Sustainable Development Mr. Bambang Susantono at the launch of the study. “Globalization of production helps economies and workers overall. It also raises awareness of the environment and climate change, contributing to the achievement of the Sustainable Development Goals.”

“Value chains have facilitated the participation of developing countries in advanced production processes without having the necessity to develop entire production ecosystems,” said IsDB President Mr. Hajjar. “Value chains have also entered the digital space, creating opportunities and challenges for individuals, firms, and nations. Such participation in global value chains has increased income and spurred economic progress in many developing countries which is why the IsDB prioritizes assisting its member countries enter specific global networks.”

The study makes four recommendations to support Indonesia’s participation in global value chains.

Forging stronger links among domestic industries would help firms to innovate, expand, and offer greater value to companies overseas. This can be done through coordinating industrial policies and addressing governance bottlenecks to help firms thrive.

Infrastructure investment is critical in an archipelagic nation like Indonesia to ensure efficient transportation of goods and people and fast transmission of information. Reliable energy is also needed, particularly for capital-intensive manufacturing firms. Good infrastructure can also attract investment in global value chain-related firms.

To manage the impact of technological change, Indonesia should consider labor policies that encourage agricultural workers to shift to other sectors and to ensure workers can upgrade their skills to remain relevant to industry needs.

Finally, Indonesia should seek to develop its innovation capacity by attracting foreign direct investment in non-extractive and research and development industries, notably those that are closely linked to other sectors within the domestic economy.

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Millions of Moscow residents manage their everyday lives through their smartphones

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The creators of My Moscow, a mobile application of the Russian capital’s urban services, have analysed how and why Muscovites use it. It turned out that, more often than not, the city’s residents prefer to pay bills and submit water and electricity meter readings via their smartphone.

The mobile app appeared in the Russian capital at the beginning of 2019, and its first functions allowed to solve the simplest housing and utility services: to enter meter readings and pay bills. Since its launch, the app has already been downloaded more than three million times. Now it can be used to make an appointment with a doctor or for a COVID-19 test, get a referral for an antibody test and coronavirus vaccination, get information on children’s school performance and even check the history of a car in Moscow before buying it. Muscovites appreciated the convenience of paying bills through the app service – in August 2021, the number of payments made online using a smartphone doubled. People pay utility bills, car fines, children’s extracurricular activities – payment takes only a couple of minutes, and the Russian payment system allows making these transfers without commission. In addition, the My Moscow app has recently introduced a charity service, through which every user can donate money to verified foundations. Muscovites do not ignore the opportunity to help: since the launch of the function in the app, users have transferred 245,000 rubles to charity.

The city services app is constantly being updated: not only does it change the design or add new functions, but also integrates new technologies. In the near future, a voice assistant will be added to the My Moscow service. It is currently available to 40% of users in test mode, but by the end of the year, it will work in smartphones of all app owners. Voice assistant knows how to show homework and children’s school schedule, dates of scheduled hot water outages, helps cancel a doctor’s appointment, and answers popular questions, such as how to transfer a child to another school or get an international passport. The assistant is being actively trained, and by the end of the year it will help Muscovites to view electronic medical records, look at children’s school grades, pay fines, receive data on utility and educational bills.

In October 2020, My Moscow mobile app won the silver prize in the Smart Sustainable City Awards of the World Organisation for Smart Sustainable Cities (WeGO) in the Government Efficiency category. In Russia, people actively use digital services to resolve everyday issues, and the experience of using the My Moscow app showed that 60% of city residents prefer to use these features specifically from a smartphone. Every month, app users access the digital city services more than 500,000 times, which is efficient and saves time in managing everyday life in the rhythm of the megacity.

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Africa Today

Nigeria becomes the first country in Africa to roll out Digital Currency

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The Central Bank of Nigeria joined a growing list of emerging markets betting on digital money to cut transaction costs and boost participation in the formal financial system.

“Nigeria has become the first country in Africa, and one of the first in the world to introduce a digital currency to her citizens,” President Muhammadu Buhari said in televised speech at the launch in Abuja, the capital. “The adoption of the central bank digital currency and its underlying technology, called blockchain, can increase Nigeria’s gross domestic product by $29 billion over the next 10 years.”

The International Monetary Fund projects GDP for Africa’s largest economy to be $480 billion in 2021.

The issuance of the digital currency, called the eNaira, comes after the central bank earlier in February outlawed banks and financial institutions from transacting or operating in cryptocurrencies as they posed a threat to the financial system.

Since the launch of the eNaira platform, it’s received more than 2.5 million daily visits, with 33 banks integrated on the platform, 500 million c ($1.2 million) successfully minted and more than 2,000 customers onboarded, central bank Governor Godwin Emefiele said at the launch.

Central bank digital currencies, or CBDCs, are national currency — unlike their crypto counterparts, such as Bitcoin and Ethereum, which are prized, in part, because they are not tied to fiat currency. The eNaira will complement the physical naira, which has weakened 5.6% this year despite the central bank’s efforts to stabilize the currency.

“The eNaira and the physical naira will have the same value and will always exchange at one naira to one eNaira,” Emefiele said.

The digital currency is expected to boost cross-border trade and financial inclusion, make transactions more efficient as well as improve monetary policy, according to the central bank.

“Alongside digital innovations, CBDCs can foster economic growth through better economic activities, increase remittances, improve financial inclusion and make monetary policy more effective,” Buhari said. Digital money can also “help move many more people and businesses from the informal into the formal sector, thereby increasing the tax base of the country,” he said.

The Central Bank of Nigeria in August selected Bitt Inc. as a technical partner to help create the currency that was initially due to be introduced on Oct. 1.

Nigeria joins the Bahamas and the Eastern Caribbean Central Bank in being among the first jurisdictions in the world to roll out national digital currencies. China launched a pilot version of its “digital renminbi” earlier this year. In Africa, nations from Ghana to South Africa are testing digital forms of their legal tender to allow for faster and cheaper money transactions, without losing control over their monetary systems.

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Development

Multilateralism ‘struggling’ to solve world challenges

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While multilateralism remains “committed to solving global challenges”, the deputy UN chief said on Sunday, United Nations Day, it is “struggling to find the path to effective implementation”.

“In the space of six months of the COVID-19 crisis, cooperation among the world’s top scientists had developed vaccines and multilateralism had delivered a vehicle to ensure their distribution across the world – the COVAX facility”, Deputy Secretary-General Amina Mohammed said at Expo 2020 in Dubai, United Arab Emirates.

“And yet today, we are still struggling to get the resources and cooperation required to ensure vaccine equity and to muster up a recovery that would put us on a better path”.

‘More to give’

In 2015, the landmark Paris Agreement and 2030 Agenda for Sustainable Development were established to deal decisively with the climate crisis and end poverty by 2030.

Yet, there have since been struggles to “translate global commitments and the goodwill of a host of stakeholders into national actions and international finance commensurate with the challenge”, explained the deputy UN chief.

And although the world has the tools, knowledge and forums to prevent conflict, it continues as the planet experiences “the largest humanitarian crisis since the beginning of the second world war”, she added.

“This points to an international order that is not yet capable of following through on its own best intentions”, said Ms. Mohammed. “International cooperation and the United Nations have come a long way, but we have so much more to give”.

Living the goals

With 192 nations represented, the deputy UN chief described the Expo is “an auspicious occasion” to mark 76 years of multilateralism, guided by the founding UN Charter.

“The focus of Expo 2020 on sustainability and connecting minds to change the future is at the heart of…Our Common Agenda…vision for ensuring that multilateralism ensures that we – as one human family – breakthrough together”, said the UN official.

Against the backdrop of a global crisis of confidence, trust and collective action, she upheld the need for more effective multilateralism, renewed social contract, deepened solidarity, and stronger investments in youth – with the Sustainable Development Goals (SDGs) at its core.

It is only through inclusion that we can renew our social contract and rebuild trust. And inclusion can only be achieved if we place our youth and women at the centre of the equation”, Ms. Mohammed spelled out.

UN works toward ‘decisive breakthrough’

As the UN climate conference (COP26) in Glasgow fast approaches, the world “must do better” at ensuring both women and young people are shaping “the critical decisions we need to make as a global society”, argued the UN official.

“What gives me immense hope is that UN staff right across the world are dedicated to nothing more and nothing less than securing that decisive breakthrough”, she stated.

From troubled corners like Afghanistan or Ethiopia to the world of diplomacy, common ground and solutions in New York or Geneva and from teams on the ground in Small Island States to UN Country Teams around the world, UN staff is working hard to achieve the Organization’s aspirations.

And sustainability is not only a common theme in all pavilions but the SDGs are incorporated in many of the Expo’s presentations and exhibits.

“Let us mark this day in full knowledge of the fact that the United Nations is not some abstract international organization but the will and commitment of the nations and peoples of the world to secure a better future”, said the Deputy Secretary-General.

“And let us capitalize on the powerful opportunity Expo offers us to unite in solidarity to end poverty, protect the planet, secure peace and improve the lives of everyone, everywhere in this critical Decade of Action”, she concluded.

Work together for peace

The Emirates Youth Symphony Orchestra also performing a special “Hymn to the United Nations”, which was composed 50 years ago by legendary cellist, composer and conductor Pablo Casals to commemorate the UN’s work on 24 October 1971.

“Our presence at Expo 2020 offers the opportunity to build awareness about and support for the SDGs, the importance of individual actions, solidarity, hope and engagement”, said Maher Nasser, Commissioner-General of the UN at Expo 2020.

“To build a world in which everyone thrives in peace, dignity and equality on a healthy planet, we need to work together”.

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