Pressure mounts after Dhaka factory collapse, but change remains unlikely

On April 29, 2013,

Pressure mounts after Dhaka factory collapse, but change remains unlikely. Photo credit Wikimedia

By Ryan Aherin

The 25 April 2013 collapse of the Rana Plaza, which resulted in the deaths of at least 300 workers, has brought further scrutiny over poor working conditions in Bangladesh. International and domestic pressure is mounting on the Bangladeshi government to take action towards improving labour standards in the country. However, the garment industry has significant political influence, and factory owners face great pressure from their clients to maintain competitive pricing amidst tense regional competition. These factors, combined with general political instability, will make it difficult for significant improvements in labour standards to be achieved in the short term.

Political influence of garment industry inhibits change

Bangladesh’s economy relies heavily on the export of ready made garments (RMG). In 2012, RMG exports accounted for 78.6% of the country’s total of US$24.2bn (according to the country’s Export Promotion Bureau). In 2012, Bangladesh’s total value of exports to the US and EU combined was US$15.4bn, second only to China. However, regional competition in the industry is fierce – Vietnam’s own RMG sector is growing rapidly, and is threatening Bangladesh’s position, with total export value of US$12.6bn in garment exports to the US and EU in 2012. Furthermore, Vietnam’s participation in the Trans Pacific Partnership and a relatively more stable (albeit authoritarian) government will only increase its competitiveness in years to come. This will place increasing pressure on Bangladesh’s manufacturers to keep costs down. (more…)

If you would like to comment on this article, request further in-depth analysis, or contact the analyst for media comment please contact: blog@maplecroft.com

in Economics, Issues, South Asia, Supply chain risk, by Jason McGeown

Tagged with: Asia • Bangladesh • China • Dhaka • Generalized System of Preferences • Rana Plaza • United States • Vietnam

EU disclosure rules target increased transparency in resource management, expanding compliance challenges for extractives companies

On April 11, 2013,

EU disclosure rules target increased transparency in resource management, expanding compliance challenges for extractives companies

By Chris Dixon

On 9 April 2013, European Union (EU) ministers reached agreement on new transparency rules for the extractives sector aimed at countering mismanagement of resources in developing economies. The EU is following in the footsteps of the US, which introduced transparency requirements under the Dodd-Frank Act in 2010. The rules are expected to be finalised by June 2013. Industry efforts to win concessions in the implementation of the law can be anticipated, however, and may delay implementation. Key business concerns include the costs of compliance and implications for data privacy.

The proposed rules put forward by the EU go beyond those introduced by the US. Notably, the rules apply to both private and publicly listed companies and extend to the forestry industry, in addition to oil, gas and mining. The EU will require companies in these sectors to disclose any payment to government over €100,000, as well as earnings by country. The rules will apply to any company with more than €40m in profits, €20m in assets or 250 employees. (more…)

If you would like to comment on this article, request further in-depth analysis, or contact the analyst for media comment please contact: blog@maplecroft.com

in Economics, Issues, Political risk, Regions, Western Europe, by Jason McGeown

Tagged with: BRIC • Dodd–Frank Wall Street Reform and Consumer Protection Act • Equatorial Guinea • European Union • London Stock Exchange • SEC • United States • US Securities and Exchange Commission

Chemical weapons in Syria – trigger for intervention or deterrent?

On March 20, 2013,

Chemical weapons in Syria – trigger for intervention or deterrent?
Image credit: syriafreedom

By Torbjorn Soltvedt
It remains unclear whether chemical weapons were used by the regime or parts of the armed opposition in an attack that killed 25 people in the al-Assal region north of Aleppo, on March 19^th 2013, however, both the risk of chemical weapons being used and the risk of a proliferation of such weapons to non-state actors is increasing.

Although the use of chemical weapons would likely trigger some form of external military intervention, it is possible that the regime will underestimate the resolve of the West, despite warnings from US president Barack Obama. The ‘red line’ drawn by the US president in August has shifted and therefore the possibility of a miscalculation by the Assad regime is increasing. While the Obama administration initially warned that it would consider intervention if the regime moved or utilised chemical weapons, its policy has shifted to only include the use of chemical weapons. (more…)

If you would like to comment on this article, request further in-depth analysis, or contact the analyst for media comment please contact: blog@maplecroft.com

in Chemicals, manufacturing and retail, Conflict, Issues, Middle East and North Africa, Regions, Sectors, by Jason McGeown

Tagged with: Ahrar al-Sham • Aleppo • Barack Obama • Bashar al-Assad • Chemical weapon • conflict • President of the United States • Syria • terrorism • United States

Afghanistan – Transition into uncertainty?

On February 19, 2013,

By Karl Sandstrom

Afghanistan – Transition into uncertainty?

The year 2014 approaches with the transition of control to Afghan authorities and an anticipated reduction in the presence of foreign combat troops. Against this backdrop, the Special Inspector General for Afghanistan Reconstruction (SIGAR) quarterly report from January 2013 raises cause for significant concern. The report projects a largely negative view of corruption levels, rule of law and human rights across Afghanistan. It is notable that SIGAR’s assessment largely reflects the positive claims of the security and governance situation made by US governmental and commercial stakeholders. SIGAR points to a shortfall of US$70bn that Afghanistan needs to secure its stability. In addition, the Afghan business and security environment will continue to be highly unstable and fraught with risks.

(more…)

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in Conflict, Issues, Political risk, by Jason McGeown

Tagged with: Afghanistan • Ismail Khan • Quetta Shura • Ryan Crocker • SIGAR • Special Inspector General for Afghanistan Reconstruction • Taliban • United States

Scrutiny of corporate political donations in US under consideration

On January 16, 2013,

Scrutiny of corporate political donations in US under consideration – Photo WikiMedia

By Chris Dixon

On 4 January 2013, the US Chamber of Commerce sent a letter to the Securities and Exchange Commission outlining its objection to corporate political spending disclosure requirements. This follows the announcement, in December 2012, that the SEC would consider new rules that would obligate all publicly listed companies to disclose political spending. The US Congress is also currently considering similar provisions.

Central to the objection of the Chamber of Commerce is the argument that such disclosure conflicts with the commercial interests of companies. The Chamber asserts that a disclosure rule would impose additional costs on companies, and therefore reduce shareholder returns. It also suggests that corporate boards and management should be trusted to make political donations in the interests of the company and stakeholders. (more…)

If you would like to comment on this article, request further in-depth analysis, or contact the analyst for media comment please contact: blog@maplecroft.com

in Economics, Issues, Political risk, by Jason McGeown

Tagged with: Barack Obama • campaign financing • Chamber of Commerce • Citizens United • election funding • Federal Election Commission • Mitt Romney • PACs • Political action committee • Super PACs • U.S. Securities and Exchange Commission • United States • US Politics

Maplecroft’s 2013 global outlook – Latin America

On January 9, 2013,

Maplecroft’s 2013 global outlook – Latin America

By Maplecroft’s Latin America Practice

Latin America remains an attractive destination for investment despite associated risks and challenges. In particular, the region boasts growing and increasingly sophisticated financial markets, high resource potential across a range of commodities including shale hydrocarbons, mining, and various crops, expanding consumer markets, and growing participation in globalised manufacturing supply chains.

Latin America’s appeal is reflected in foreign direct investment (FDI) flows, which registered a total of US$154bn in 2011, 28% higher than in 2010, demonstrating the strength of the region’s recovery following the global financial crisis. FDI flows further remained high in the first half of 2012, with South America (mainly Chile, Peru, Colombia and Argentina) and the Caribbean compensating for a decline in Central America.

These figures show that investor appetite for investment in Latin America remains strong and the potential returns are high. Nevertheless, the outlook for growth in early 2013 looks less certain than previously, with Brazil in particular suffering a prolonged slowdown, and traditional risks look likely to be matched by new threats in Latin America’s largest economies. (more…)

If you would like to comment on this article, request further in-depth analysis, or contact the analyst for media comment please contact: blog@maplecroft.com

in Economics, Issues, Latin America, Political risk, by Jason McGeown

Tagged with: Argentina • Brazil • Chavez • Colombia • Dilma Rousseff • expropriation • FARC • fdi • Fernandez • Institutional Revolutionary Party • Latin America • Mexico • oil • Peña Nieto • Political risk • protests • regulatory • resource nationalism • security • tax • United States • Venezuela

Egypt: Islamist’s increasing control unlikely to result in vital economic stability

On January 8, 2013,

Egypt: Islamist’s increasing control unlikely to result in vital economic stability

By Oliver Coleman

Since President Mohammed Morsi issued his highly controversial constitutional decree on 22 November 2012 Egypt has lurched from one serious crisis to another. The decree which grants the president extensive and unprecedented new powers sparked weeks of widespread and violent protests. It allowed for the completion of a new draft constitution ahead of schedule and free from impending judicial interference. The constitution and the assembly drafting it have been extensively criticised for being Islamist-dominated and enshrining an Islamist vision of the state. Despite further opposition and protests, the constitution was passed in a referendum held on 15 and 22 December 2012, with 64% of voters approving the document.

Nevertheless, while the demonstrations appear to have calmed for the moment, Egypt’s economic woes are quickly mounting and the government’s strategy is unlikely to solve the problem. Dire socioeconomic conditions and lack of employment are likely to trigger further protests in the months if not years to come. Egypt’s economy has been in turmoil since the fall of the Mubarak regime in February 2011, with a spiralling budget deficit and foreign currency reserves that have been slashed in half down to US$15.015bn in December according to the Central Bank. The Egyptian Pound (EGP) that has lost 10% of its value against the US dollar since the revolution, with 4% of this loss coming in the first week of 2013. All of these problems pose a substantial challenge to Egypt’s government. (more…)

If you would like to comment on this article, request further in-depth analysis, or contact the analyst for media comment please contact: blog@maplecroft.com

in Economics, Issues, by Jason McGeown

Tagged with: Egypt • Egyptian pound • Hosni Mubarak • Islamism • Muslim Brotherhood • Oliver Coleman • Shura Council • United States

Honduras: political and institutional instability pose risks to investors

On December 13, 2012,

Honduras: political and institutional instability pose risks to investors

By David Franco

Honduras’ primary elections of 18 November 2012, in which the country’s political parties chose candidates for the 2013 general elections, were a preliminary test of the country’s return to democratic stability. In this regard, a coup against President Manuel Zelaya in 2009 had led to serious concerns over the future of democracy in the country, resulting in the exclusion of Honduras from the Organisation of American States (OAS) until June 2011. With international interest growing in the country’s mining and hydrocarbon potential, the elections constituted an opportunity for Honduras to project an image of national reconciliation and political stability ahead of general elections in 2013.

However, several factors indicate that political instability will remain high in the medium term.

As the first primaries since the July 2009 coup and the November 2009 general elections, the November 2012 polls were characterised by the expression of acute political tensions. In this regard, in line with Honduran electoral law, three out of the nine registered political parties took part in the primary elections – the centre-right Liberal Party, the ruling conservative National Party, and the left-wing Liberty and Refoundation Party (LIBRE), founded in 2011 by followers of Zelaya. (more…)

If you would like to comment on this article, request further in-depth analysis, or contact the analyst for media comment please contact: blog@maplecroft.com

in Issues, Political risk, by Jason McGeown

Tagged with: Honduras • Lobo • Manuel Zelaya • Porfirio Lobo Sosa • Supreme Court • Supreme Electoral Court • United States • Zelaya

UK turns to gas: Osborne announces new natural gas strategy

On December 6, 2012,

UK turns to gas: Osborne announces new natural gas strategy. Photo Wikimedia

Dr. Mark McClelland

In a shift to the trajectory of UK energy policy, on 5 December 2012, the British government announced its new ‘Gas Generation Strategy’. The proposals establish a new Office of Unconventional Gas and Oil, encourage the construction of up to 30 new gas-fired power stations by 2030, and demonstrate renewed resolve to harness shale gas reserves in the UK. The ‘Autumn Statement’ by the Chancellor of the Exchequer, George Osborne – a close ally of Prime Minister David Cameron – received headlines for its extension of public spending cuts, yet it was accompanied by new energy proposals that are likely to prove more significant in the long term.

In the face of an extremely challenging macroeconomic environment, the financial crisis in the eurozone, and rising energy costs, Osborne increasingly sees shale gas production as an important factor in the long-term recovery of the UK economy. Having witnessed the dramatic expansion of the industry in the United States, it is clear that the government in London is seeking to emulate its success in the UK. Innovative hydraulic fracturing (fracking) techniques in the US have allowed large shale gas reserves to be exploited, causing the price of natural gas to plummet. This has had significant spin-off benefits for the industrial and manufacturing sectors, in addition to domestic consumers, who have all benefitted from low natural gas prices. (more…)

If you would like to comment on this article, request further in-depth analysis, or contact the analyst for media comment please contact: blog@maplecroft.com

in Climate change and environmental, Environment, Oil and gas, Sectors, Sustainability, Western Europe, by Jason McGeown

Tagged with: Autumn Statement • David Cameron • George Osborne • Government of the United Kingdom • London • Mark McClelland • Osborne • United States

Strikes, boat seizures and debt default – Argentina’s Fernandez facing multiple challenges

On November 28, 2012,

By Irenea Renuncio

Strikes, boat seizures and debt default – Argentina’s Fernadez facing multiple challenges

Strikes, boat seizures and debt default – Argentina’s Fernandez facing multiple challenges. Photo Wikimedia

Argentina’s President Cristina Fernandez has been having one bad week after another. In October anti-government protests were followed by the seizure of Argentina’s Navy cadet-training ship ARA Libertad in Ghana in a long-running dispute with US debt funds. In November, a New York court then ruled that the government must pay the US investors, described by Fernandez as ‘vulture funds’, which are pursuing Argentina over debt on which it defaulted in 2001. If the problems facing her government weren’t enough, on 20 November the country experienced the first general strike in ten years, followed by a 24-hour strike of oil workers in key hydrocarbon producing provinces: Neuquén, La Pampa and Río Negro.

Anti-government protests mount

On 13 September 2012 thousands of people took to the streets in the capital Buenos Aires and other major cities in the country to protest against the government of President Fernandez. The protests were prompted by discussions surrounding a possible reform of the Constitution to allow Fernandez to run for a third consecutive term in office in 2015. Fernandez has refused to explicitly reject rumours of constitutional reform, encouraging speculation that she will indeed seek a third term. (more…)

If you would like to comment on this article, request further in-depth analysis, or contact the analyst for media comment please contact: blog@maplecroft.com

in Latin America, Political risk, Reputational risk, by Jason McGeown

Tagged with: ARA Libertad • Argentina • Buenos Aires • Cristina Fernández de Kirchner • Fernandez • Hugo Moyano • Thomas P. Griesa • United States

« Previous Entries

Pressure mounts after Dhaka factory collapse, but change remains unlikely

EU disclosure rules target increased transparency in resource management, expanding compliance challenges for extractives companies

Chemical weapons in Syria – trigger for intervention or deterrent?

Afghanistan – Transition into uncertainty?

Scrutiny of corporate political donations in US under consideration

Maplecroft’s 2013 global outlook – Latin America

Egypt: Islamist’s increasing control unlikely to result in vital economic stability

Honduras: political and institutional instability pose risks to investors

UK turns to gas: Osborne announces new natural gas strategy

Strikes, boat seizures and debt default – Argentina’s Fernandez facing multiple challenges

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