Category: Economy

The governments of India, Japan, and Sri Lanka, through a tripartite agreement, have decided to develop a container terminal at Port of Colombo.

A Memorandum of Cooperation (MoC) was signed in Colombo by Sri Lankan Port Minister Salaga Ratnayake, Indian High Commissioner to Sri Lanka Taranjit Singh Sandhu, and Japanese delegate to develop East Container Terminal (ECT).

According to media reports, the new container terminal is located at the recently developed south part of Post of Colombo and will enable the related countries to develop a facility for large container ships.

After getting approval from the Sri Lankan cabinet, the three countries will set up a company to operate the terminal.

The cost of developing the container terminal is estimated around $500-700 million and is owned by Sri Lanka Port Authority holding 51% majority stake and rest 49% jointly by India and Japan. Japan is going to provide a soft loan at an interest rate of 0.1% for the duration of 40 years with a grace period of 10 years.

Participation of India and Japan in the development of Sri Lanka’s container terminal is being seen as strategic development as more than 70% of India’s transshipment is handled at Colombo ports. Moreover, it’s going to neutralize the growing Chinese influence over the island nation in which the country has poured money under its Belt and Road Initiative (BRI) plan.

This new East Container Terminal will be developed next to $500 million Colombo International Container Terminal whose majority 85% stake is owned by China and rest 15% by Sri Lanka’s SLPA.

Hong Kong’s stock market has overtaken Japan to become the World’s 3rd largest stock market. The city’s equity market has become the 3rd most valuable, and just closely behind the US and mainland China.

The market value of the companies listed on Hong Kong bourses stood at $5.78 trillion, overtaking Japan’s stock market value that pegged at $5.76 trillion. Hong Kong’s stock market benchmark Hang Seng Index rose 17% since the beginning of the year, adding $937 billion of market value for stock trading with a major contribution from Tencent Holdings Ltd. that gained 22%. The bourse closed at its highest since June 2015. During the same period, Japan’s Topix Index climbed 8.3%. A stronger 2019 is predicted for Hong Kong and China expecting positive trade relations between China & US.

India is now the 6th wealthiest country in the world with fortunes raised massively from the year 2016 to an astounding $8,230 Billion in 2017.
It has been rated as the best performing market globally.
New World Wealth is a global wealth intelligence and market company that specializes in ratings, surveys, country reports and wealth statistics. It uses the total wealth of a country as an indicator
to assess the economic patterns and determine the wealthiest of nations, and refers to the fortunes owned by all individuals living in each state, city or constituency. It includes cash, property
stocks, and business interests and excludes government funds.
According to their recent report, during the review period 2006-2016, India’s volume of High Net Worth Individuals (HNWIs) increased by a whopping 290% and is the 9th largest in the world. The acquisition of this wealth is mainly attributed to the following Industries – Manufacturing (18%) followed by Basic Materials (15%), Technology (10%) and Financial and Professional services (10%).
Statistics as of 2017 show that 330,400 HNWIs reside in India, which is one of the highest in the world. There are also at least 119 billionaires living in the country, and the number is again much higher in contrast to Germany, Canada, France, Australia China and Russia.
The report stated that with India’s massive entrepreneurial population, a good educational system and an English speaking population, private wealth will grow by 200% over the next ten years with growth in financial services, Information Technology, Business Process Outsourcing, Real Estate, Healthcare and Media Industries.

Reported in June 2018, a sell-off of Chinese stocks due to the trade war between the two biggest economies of the world has resulted in lowering Asian equities to a 4-month low. United States President Donald Trump has further threatened new tariffs on Chinese goods. A 10 per cent imposition on $200 Billion worth goods is expected as a comeback to China’s decision of raising tariffs on $50 Billion U.S goods.

China has warned Washington that it will take substantial measures if any more additional list of tariffs on its products were published. Asian Economies like Taiwan, South Korea and Southeast Asia are among the largest exporters of “intermediate goods” to China, which is the assembler of those pieces into finished products and ships
them to destinations such as U.S. Hence, these economies become the most susceptible to the trade-off and likely to get badly affected if the tensions between the two countries heat up any further.

Furthermore, trade frictions are evident by the blows on the financial market, and have created an increasingly nerveracking situation for investors and businesses that fear a fullfledged trade-off could derail global growth.

Morgan Stanley Capital International’s broadest index of Asia-Pacific shares outside Japan lost 1.2 per cent to its lowest, dragged by a fall in Chinese shares.

India has been designated as the world’s fastest growing economy with the World Bank’s projection of its growth rate at 7.3% for the year 2018.
The World Bank is an international financial institution that provides loans to countries of the world for capital projects. The Global Economic Prospects is a World Bank Group flagship report that examines global economic trends, developments and prospects, with a special emphasis on upcoming markets and developing economies.
After five consecutive slow quarters, India’s GDP growth bottomed out in the middle of 2017 and finally rose vigorously in 2018. This acceleration of pace for India in the current fiscal year is supported by strong private consumption and increase in public spending on wages and infrastructure investments. Moreover, private investment is expected to revive as the private sector adjusts to the Goods and Services Tax and a global trade recovery lifts exports. India is said to be growing at a rate faster than its assessed potential.
Ayan Kose, Director, Development Prospects Group at the World Bank stated, “India’s economy is robust, resilient and has potential to deliver sustained growth.”
He also added, “In terms of economic growth, the fact that India is able to deliver a robust consumption growth, robust investment… All these are good news. The big issue is now that India has a potential to sustain this growth and we are optimistic about India to realize that potential.”

Saudi Arabian Monetary Authority and UAE Central Bank announced the launch of common digital currency ‘Aber’ to forge closer financial ties. On 29th Jan 2019, both the apex monetary bodies released a joint statement mentioning that the new digital currency will be used in financial statements between the two countries through Blockchains and Distributed Ledgers technologies.

This new digital currency also serves as an additional medium for financial remittances between the two countries. In the initial stages, this pilot project concentrates on the technical aspects and focuses on the practical application of the modern technologies and finding out their impact on the reduction of remittance costs and assessment of technical risks involved in it and ways to deal with them. Initially, the use of this digital currency will be restricted to a limited number of banks in each state. If no technical issues are encountered, economic and legal requirements for future users will be discussed. It is the first time when monetary authorities of both countries are cooperating to use blockchain technology. With the implementation of the project, it is also possible to use the system as an additional reserve system for the settlement of domestic central payments in case of any disruption.

The Union Cabinet chaired by Prime Minister Narendra Modi gave its approval of USD 75 Billion for entering into a Bilateral Swap Arrangement (BSA), a currency swap agreement, between India and Japan thereby authorizing RBI to sign an agreement between Reserve Bank of India and Bank of Japan.

The agreement is concluded between the premiers of both the countries at a summitlevel meeting at Yamanashi, Japan. It is essentially meant to exchange and re-exchange a maximum amount of USD 75 Billion for maintaining the appropriate levels of the balance of payments for meeting short-term deficiencies in foreign payments.

This arrangement enables both countries to use the agreed amount of capital. Such an agreement is an exemplar mutual cooperation between the two countries for helping each other.