Author: CensorBiz

Indonesia will exclude coal-fired power plants operated by industrial estates from its investment plan for a G7-led funding program to decarbonize its power sector, sources drafting the document told Reuters.

The decision means Jakarta will not lay out a path to shut the so-called captive coal power plants in its comprehensive investment and policy plan (CIPP) that it needs to secure $20 billion in funding pledged under the Just Energy Transition Partnership (JETP).

The plan is due to be published on Wednesday for public feedback.

JETP, a financing scheme made up of equity investments, grants and concessionary loans from members of Group of Seven (G7), multilateral banks and private lenders, is aimed at helping developing countries shift to cleaner energy in the power sector.

Coal-fired power plants operated by industries were being excluded from the plan because authorities needed more time to work out how to protect the nickel smelting sector, said one of the sources, who declined to be identified, adding that the exclusion would be temporary.

The exclusion will make it more difficult for Southeast Asia’s largest economy to meet its JETP target to cap power sector emissions at 290 million metric tons of CO2-equivalent by 2030 because the public sector will now be saddled with a greater share of the reduction burden.

Captive coal power stations with 13.74 gigawatt (GW) of capacity are operating in the Southeast Asian archipelago and 20.48 GW are being planned. The recent surge is due to the expansion of the metal processing sector, according to a July report that the Asian Development Bank commissioned.

Indonesia has pledged to stop commissioning new coal power plants but still allows new ones for smelters.

Indonesia’s decision not to include the industrial coal plants in its plan follows complaints from officials that the JETP financing terms were not as expected, with high interest on loans and only a small portion in grants. Half of the JETP commitments come from private lenders.

Indonesia is not the only country facing problems in implementing a JETP deal. 

G7 members offered Vietnam just 2% of its total $15.5 billion JETP financial package in grants, while the biggest chunk of its loans will carry market-determined interest rates, documents reviewed by Reuters showed.

There have also been questions over the inaugural JETP deal with South Africa, which is facing rolling blackouts. South Africa secured a $8.5 billion financing pledge.

‘Good decision’

Experts have said ensuring the success of Indonesia’s JETP is important not just because it is the biggest deal but it is also seen as a test of G7 commitment to work with developing nations.

Fabby Tumiwa, executive director of the Institute for Essential Services Reform think tank, part of a JETP technical working group, said it was better to exclude the coal-fired plants for now rather than delay the plan.

“If we wait for the analysis for captive power, we’re afraid JETP will not move forward. I think this is a good decision, so we can start with the information that we have,” Tumiwa said.

The International Partners Group of donors and lenders, with which Indonesia is making the agreement, has approved of the decision to focus on decarbonization by the state utility, provided that the carbon reduction targets will remain unchanged, said the source who declined to be identified.

The utility operates a grid with 69 GW power generation capacity, at the end of 2022, half powered by coal.

Indonesia has also said it is concerned about the extent of compensation from Western countries to shut coal power plants early to make way for renewable energy.

The CIPP will show only $2.5 billion of JETP funding is earmarked for closing coal plants, said Pradana Murti, a director at PT Sarana Multi Infrastruktur (SMI), a state-owned financing company managing energy transition funds.

Tumiwa said the plan would show Indonesia needs $95 billion until 2030 to reach JETP goals, while the first source said the figure could reach $120 billion. 
…

Alan Mazzotti can see the Rocky Mountains about 30 miles west of his pumpkin patch in northeast Colorado on a clear day. He could tell the snow was abundant last winter, and verified it up close when he floated through fresh powder alongside his wife and three sons at the popular Winter Park Resort.

But one season of above-average snowfall wasn’t enough to refill the dwindling reservoir he relies on to irrigate his pumpkins. He received news this spring that his water delivery would be about half of what it was from the previous season, so he planted just half of his typical pumpkin crop. Then heavy rains in May and June brought plenty of water and turned fields into a muddy mess, preventing any additional planting many farmers might have wanted to do.

“By time it started raining and the rain started to affect our reservoir supplies and everything else, it was just too late for this year,” Mazzotti said.

For some pumpkin growers in states like Texas, New Mexico and Colorado, this year’s pumpkin crop was a reminder of the water challenges hitting agriculture across the Southwest and West as human-caused climate change exacerbates drought and heat extremes. Some farmers lost 20% or more of their predicted yields; others, like Mazzotti, left some land bare. Labor costs and inflation are also narrowing margins, hitting farmers’ ability to profit off what they sell to garden centers and pumpkin patches.

This year’s thirsty gourds are a symbol of the reality that farmers who rely on irrigation must continue to face season after season: they have to make choices, based on water allotments and the cost of electricity to pump it out of the ground, about which acres to plant and which crops they can gamble on to make it through hotter and drier summers.

Pumpkins can survive hot, dry weather to an extent, but this summer’s heat, which broke world records and brought temperatures well over 100 degrees Fahrenheit (38 degrees Celsius) to agricultural fields across the country, was just too much, said Mark Carroll, a Texas A&M extension agent for Floyd County, which he calls the “pumpkin capital” of the state.

“It’s one of the worst years we’ve had in several years,” Carroll said. Not only did the hot, dry weather surpass what irrigation could make up for, but pumpkins also need cooler weather to be harvested or they’ll start to decompose during the shipping process, sometimes disintegrating before they even arrive at stores.

America’s pumpkin powerhouse, Illinois, had a successful harvest on par with the last two years, according to the Illinois Farm Bureau. But this year it was so hot into the harvest season in Texas that farmers had to decide whether to risk cutting pumpkins off the vines at the usual time or wait and miss the start of the fall pumpkin rush. Adding to the problem, irrigation costs more as groundwater levels continue to drop — driving some farmers’ energy bills to pump water into the thousands of dollars every month.

Lindsey Pyle, who farms 950 acres of pumpkins in North Texas about an hour outside Lubbock, has seen her energy bills go up too, alongside the cost of just about everything else, from supplies and chemicals to seed and fuel. She lost about 20% of her yield. She added that pumpkins can be hard to predict earlier in the growing season because the vines might look lush and green, but not bloom and produce fruit if they aren’t getting enough water.

Steven Ness, who grows pinto beans and pumpkins in central New Mexico, said the rising cost of irrigation as groundwater dwindles is an issue across the board for farmers in the region. That can inform what farmers choose to grow, because if corn and pumpkins use about the same amount of water, they might get more money per acre for selling pumpkins, a more lucrative crop.

But at the end of the day, “our real problem is groundwater, … the lack of deep moisture and the lack of water in the aquifer,” Ness said. That’s a problem that likely won’t go away because aquifers can take hundreds or thousands of years to refill after overuse, and climate change is reducing the very rain and snow needed to recharge them in the arid West.

Jill Graves, who added a pumpkin patch to her blueberry farm about an hour east of Dallas about three years ago, said they had to give up on growing their own pumpkins this year and source them from a wholesaler. Graves said the pumpkins she bought rotted more quickly than in past years, but it was better than what little they grew themselves.

Still, she thinks they’ll try again next year. “They worked perfect the first two years,” she said. “We didn’t have any problems.”

Mazzotti, for his part, says that with not enough water, you “might as well not farm” — but even so, he sees labor as the bigger issue. Farmers in Colorado have been dealing with water cutbacks for a long time, and they’re used to it. However, pumpkins can’t be harvested by machine like corn can, so they require lots of people to determine they’re ripe, cut them off the vines and prepare them for shipping. 

He hires guest workers through the H-2A program, but Colorado recently instituted a law ensuring farmworkers to be paid overtime — something most states don’t require. That makes it tough to maintain competitive prices with places where laborers are paid less, and the increasing costs of irrigation and supplies stack onto that, creating what Mazzotti calls a “no-win situation.”

He’ll keep farming pumpkins for a bit longer, but “there’s no future after me,” he said. “My boys won’t farm.” 
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Jeep maker Stellantis reached a tentative contract agreement with the United Auto Workers union on Saturday. 

The Stellantis deal, which still must be ratified by members, leaves only General Motors without an agreement with the union.  

Later Saturday night, the union walked out at a GM factory in Spring Hill, Tennessee, in an effort to increase pressure on the company to reach a deal. 

The Stellantis deal mirrors one reached earlier this week with Ford. The union says the contract also saves jobs at a factory in Belvidere, Illinois, that Stellantis had planned to close. 

GM said it was disappointed with the additional strike at the Spring Hill assembly and propulsion systems plant “in light of the progress we have made.” The company said in a statement that it has bargained in good faith with the union and wants to reach a deal as soon as possible. 

Spring Hill is GM’s largest manufacturing facility in North America with about 1 million square meters of building space and almost 4,000 employees. It makes the electric Cadillac Lyriq as well as the GMC Acadia and Cadillac XT5 and XT6 crossover SUVs. 

A message was left Saturday night seeking comment from the union. 

‘We have moved mountains’

UAW President Shawn Fain confirmed the Stellantis agreement in a video appearance Saturday evening and said that 43,000 members at the company still have to vote on the deal. 

About 14,000 UAW workers who were on strike at two Stellantis assembly plants in Michigan and Ohio, and several parts distribution centers across the country, were told to drop their picket signs and return to work. The agreement will end a six-week strike at the maker of Jeep and Ram vehicles. 

The pact includes 25% in general wage increases over the next 4½ years for top assembly plant workers, with 11% coming once the deal is ratified. Workers also will get cost-of-living pay that would bring the raises to a compounded 33%, with top assembly plant workers making more than $42 per hour. At Stellantis, top-scale workers now make around $31 per hour. 

Like the Ford contract, the Stellantis deal would run through April 30, 2028. 

Under the deal, the union said it saved jobs in Belvidere as well as at an engine plant in Trenton, Michigan, and a machining factory in Toledo, Ohio. 

“We’ve done the impossible. We have moved mountains. We have reopened an assembly plant that was closed,” Fain said. 

The deal includes a commitment by Stellantis to build a new midsize truck at its factory in Belvidere, Illinois, that was slated to be closed. About 1,200 workers will be hired back, plus another 1,000 workers will be added for a new electric vehicle battery plant, the union said. 

“We’re bringing back both combustion vehicles and electric vehicle jobs to Belvidere,” Fain said. 

Vice President Rich Boyer, who led the Stellantis talks, said the workforce will be doubled at the Toledo, Ohio, machining plant. The union, he said, won $19 billion worth of investment across the U.S. 

Fain said Stellantis had proposed cutting 5,000 U.S. jobs, but the union’s strike changed that to adding 5,000 jobs by the end of the contract. 

In a statement, the UAW said the Stellantis agreement has gains worth more than four times the improvements in the 2019 contract with the UAW. Through April of 2028, a top-scale assembly plant worker’s base wage will increase more than all the increases in the past 22 years. 

Starting wages for new hires will rise 67% including cost-of-living adjustments to more than $30 per hour, the union said. Temporary workers will get raises of more than 165%, while workers at parts centers will get an immediate 76% increase if the contract is ratified. 

Like the Ford agreement, it will take just three years for new workers to get to the top of the assembly pay scale, the union said. 

The union also won the right to strike over plant closures at Stellantis, and it can strike if the company doesn’t meet product and investment commitments, Fain said. 

Workers expected to OK deal

Bruce Baumhower, president of the local union at a large Stellantis Jeep factory in Toledo, Ohio, that has been on strike since September, said he expects workers will vote to approve the deal because of the pay raises above 30% and a large raise immediately. 

The union began targeted strikes against all three automakers on Sept. 15 after its contracts with the companies expired. At the peak, about 46,000 workers were on strike against all three companies, about one-third of the union’s 146,000 members at the Detroit three. 

With the Ford deal, which established the pattern for the other two companies, workers with pensions will see small increases when they retire, and those hired after 2007 with 401(k) plans will get large increases. For the first time, the union will have the right to go on strike over company plans to close factories. Temporary workers also will get large raises, and Ford agreed to shorten to three years the time it takes for new hires to reach the top of the pay scale. 

Other union leaders who followed more aggressive bargaining strategies in recent months have also secured pay hikes and other benefits for their members. Last month, the union representing Hollywood writers called off a nearly five-month strike after scoring some wins in compensation, length of employment, and other areas. 

Outside the Sterling Heights plant, some workers said they looked forward to a ratification vote and going back to work. 

“The tentative agreement is excellent,” said Anthony Collier, 54, of Sterling Heights, Michigan. “We hear that it’s going to be parity, at least, with Ford, so we believe a lot of people are looking forward to signing. Most of us had to dip into savings, get loans. Everybody knows the economy went up on all of us, so it’s a little tight to be out on strike pay.” 
…

Ugandan economists and officials expressed confidence in the country’s economy and urged investors to ignore a U.S. government advisory about risks they may face if they conduct business there.

The advisory, in the U.S. 2023 Investment Climate Statements, warned of the financial and reputational risks posed by endemic corruption in Uganda.

The statement also noted Uganda’s enactment of the Anti-Homosexuality Act in May, a move condemned by LGBTQ+ advocates worldwide.

Morrison Rwakakamba, chairperson of the Uganda Investment Authority, a government arm mandated with promoting investment in the country, told VOA that organizations such as the Oxford University Center of African Economies have ranked Uganda as one of the least risky economies on the continent.

The African Development Bank’s 2023 report also ranked Uganda among the top investment destinations in East Africa.

According to the African Development Bank, Uganda’s gross domestic product is projected to grow 6.5% in 2023 and 6.7% in 2024, assuming any global growth slowdown will be short lived.

Rwakakamba said current investors are rational and know they will continue to make money in Uganda.

“Investors follow money. Investors don’t follow geopolitics,” he said. “They don’t follow cultural wars that seem to be what is embedded in that advisory. … We even also continue to encourage our American investors that there is money to be made in Africa. There’s money to be made in Uganda because of the market, because of the return on investment. We are not worried about these advisories.”

The Uganda Investment Authority said the country has seen exponential growth in direct foreign investment over the past four years from investors in United Arab Emirates, China, Germany, Japan and the Netherlands, among others.

However, Corti Paul Lakuma, a senior research fellow and head of the macroeconomics department at the Economic Policy Research Centre in Kampala, said the advisory is a disadvantage for Uganda because the country still wants to attract investors.

Despite investments from China, India and Europe, Lakuma said, Uganda cannot disregard the fact that the United States is still the biggest social and public investor in the sectors of health and education.

“Those other countries, yes, they are good and dependable, but their kind of investments are different from the investments America makes,” Lakuma said. “America makes investments with long-term repayment period and return period. Not many countries are willing to take that risk.”

Rwakakamba argued that even though there is corruption in Uganda, the East African country has set up online mechanisms that enable direct contact between potential investors and Ugandan officials, in an effort to cut out middlemen who demand bribes.

Regarding the Anti-Homosexuality Act, Uganda has experienced a political backlash for what has been described as the harshest law against the LGBTQ+ community in the world.

Lakuma said Uganda may need to reconsider the law.

“The world is becoming very sensitive [to] issues of diversity, inclusivity,” he said. “I think it demanded for some sensitivity from our lawmakers. We don’t live in a vacuum, even though we want to keep our cultures and morals. But also, you must observe what is the changing world order.”

In August, the World Bank said the Anti-Homosexuality Act contradicted its values. The bank said it would halt new loans to Uganda until it could test measures to prevent discrimination in the Ugandan projects it finances.
…

The U.S. economy grew at its fastest pace in nearly two years in the third quarter as higher wages from a tight labor market helped to power consumer spending, again defying dire warnings of a recession that have lingered since 2022.

Gross domestic product increased at a 4.9% annualized rate last quarter, the fastest since the fourth quarter of 2021, the Commerce Department’s Bureau of Economic Analysis said in its advance estimate of third-quarter GDP growth. Economists polled by Reuters had forecast GDP rising at a 4.3% rate.

Estimates ranged from as low as a 2.5% rate to as high as a 6.0% pace, a wide margin reflecting that some of the input data, including September durable goods orders, goods trade deficit, wholesale and retail inventory numbers were published at the same time as the GDP report.

The economy grew at a 2.1% pace in the April-June quarter and is expanding at a pace well above what Fed officials regard as the non-inflationary growth rate of around 1.8%.

While the robust growth pace notched last quarter is unlikely sustainable, it was testament to the economy’s resilience despite aggressive interest rate hikes from the Federal Reserve. Growth could slow in the fourth quarter because of the United Auto Workers strikes and the resumption student loan repayments by millions of Americans.

Most economists have revised their forecasts and now believe that the Fed can to engineer a “soft-landing” for the economy, pointing to strength in worker productivity and moderation in unit labor costs growth in the second quarter, which they expected carried through into the July-September period.  

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was the main driver.

A strong labor market is providing underlying support to spending. Though wage growth has slowed, it is rising a bit faster than inflation, lifting households’ purchasing power.  

Labor market resilience was highlighted by a separate report from the Labor Department on Thursday, showing the number of people filing new claims for state unemployment benefits rose to a seasonally adjusted 210,000 during the week ending Oct. 21 from 200,000 in the prior week.

The GDP data likely has no impact on near-term monetary policy amid a surge in U.S. Treasury yields and stock market selloff, which have tightened financial conditions.  

Financial markets expect the Fed to keep interest rates unchanged at its Oct. 31-Nov. 1 policy meeting, according to CME Group’s FedWatch. Since March, the U.S. central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25% to 5.50% range. 
…

Zimbabwe’s vice president on Wednesday said the country has lost more than $150 billion due to sanctions imposed by the European Union and countries such as the United States following reports of election rigging and human rights abuses in the early 2000s.

Speaking to protesters rallying against the sanctions, Vice President Constantino Chiwenga said the measures were also hurting the entire southern Africa region.

He called the sanctions an “albatross” around Zimbabwe’s neck, as they include financial restrictions that isolate Zimbabwe from global access to capital.

“Since 2001, we estimate that Zimbabwe has lost or missed over $150 billion through frozen assets, trade embargos, export and investment restrictions from potential bilateral support, development loans, IMF and World Bank balance of payments support and commercial loans,” Chiwenga said, calling the sanctions “heinous and illegal.”

Stevenson Dhlamini, an economics professor at National University of Science and Technology in Zimbabwe, said the figure of $150 billion is consistent with what the Zimbabwean government has been saying over the years.

“The cumulative effect of the sanctions by the U.S., EU and the U.K. do have a cumulative impact that could be to that level,” Dhlamini said.

Not everyone agrees. 

Prosper Chitambara, senior economist with the Labor and Economic Development Research Institute of Zimbabwe, said multiple factors have affected the country’s economy, not just the sanctions.

“How do you then separate the effects of sanctions, say, from the effects of corruption, or from the effects of external shocks or climate-induced shocks?” he said, “Coming up with a number is a very difficult and tedious exercise to do.”

After the protest, which attracted mainly civil servants and ruling Zanu PF supporters, Chiwenga vowed that Zimbabwe’s economy will prevail over the sanctions.

“Sanctions are really hurting Zimbabweans,” he said. “By now, we could have gone far in terms of our economic growth. Our sin is that we took land [from white commercial farmers] and gave it to our people. Nothing else. The rest they are talking about is nonsense.

“But we think outside the box,” he said. “So, sanctions or no sanctions, Zimbabwe will prosper.”

Hopes of lifting the sanctions were dashed after many observer missions to Zimbabwe’s August 23 general election, including the Southern African Development Community, said the polls were not credible.
…

Billions of dollars in international economic aid will be needed to reverse decades of border closures, military operations and de-development in Gaza, according to a report published Wednesday by the United Nations Conference on Trade and Development, UNCTAD.

“While lifting all restrictions is a necessary condition for sustainable recovery, it is by no means sufficient,” the report said.  

“Donors and the international community need to extend significant economic aid to repair the extensive damage Gaza has experienced under prolonged restrictions and closures and frequent military operations, which has stifled the economy and decimated infrastructure,” it said.

The report documents economic conditions in the Occupied Palestinian Territories through the end of 2022, prior to the current chain of disastrous events triggered by the October 7 assault on Israel by Hamas militants.

“The economic consequences of the current and ongoing humanitarian crisis in Gaza are important to determine,” said Richard Kozul-Wright, UNCTAD director, division on globalization and development strategies.

He said it was incredibly difficult to assess the damage.  

“It is buildings.  It is hospitals.  It is very difficult to make a proper assessment until the fighting stops but it has got to be in the billions of dollars … in the tens of billions of dollars,” said Kozul-Wright. “What I think the report emphasizes is the worrying trend in aid to the Palestinian economy, plus its inability to generate its own fiscal revenues in an independent way.”

The report says Israel’s decades-long blockade of Gaza has hollowed out its economy, leaving 80% of the population dependent on international aid. It also says nearly half of Gaza’s population is unemployed and that real GDP per capita is close to its lowest level since 1994.

Authors of the report note that since three-quarters of Palestinian trade is with Israel and the Israeli shekel is the main currency in circulation, Israel has a lot of control over the Palestinian Authorities’ fiscal policy.

“Israel collects Palestinian trade taxes because all Palestinian import and export goes through Israel or through Israeli controlled borders,” said Mutasim Elagraa, coordinator of UNCTAD assistance to the Palestinian people.

“Israel effectively controls two-thirds of Palestinian tax revenue and transfers it to the Palestinian government,” he said noting that Israel sometimes delays the transfer or even freezes the transfer, which “makes Palestinians fiscally vulnerable.”

On October 21, Israel partially lifted its siege of Gaza, allowing several convoys of food, water, and medical supplies to enter the territory.  However, the Israeli government has refused to allow fuel into the Gaza Strip, claiming that Hamas has fuel that it is hoarding for use in military operations.

“Lack of fuel will have a profound impact on the humanitarian support that the U.N. is currently providing and is an essential lifeline of many of the inhabitants of Gaza,” said Kozul-Wright.  “So, I think the impact will be immediate on the ground, but it will be difficult to know what its longer-term impact will be on the Gazan economy.”

In its concluding remarks, the UNCTAD report recommends that the “vicious circle of destruction and partial reconstruction [of Gaza] needs to be broken by negotiating a peaceful solution, based on international law, and relevant United Nations and Security Council resolutions, to end hostilities.”

While increasing donor support will be important for the recovery of Gaza’s economy, the report notes that this “should not be viewed as a substitute for ending restrictions and closures” and calls on Israel and all parties “to bear their responsibilities under international law.”
…

Nigerian authorities are praising a London high court ruling Monday that overturned $11 billion in damages stemming from a collapsed gas project between Africa’s largest economy and a private company.

In a statement, Nigerian President Bola Tinubu lauded the London Business and Property Court’s ruling in the 2010 gas deal, calling it a victory for what officials termed the “long exploited” African continent.

“Nation states will no longer be held hostage by economic conspiracies between private firms and solitary corrupt officials,” Tinubu said.

Nigeria and Process and Industrial Developments, a firm based in the British Virgin Islands, signed the contract to construct a gas processing plant in Nigeria’s oil-rich region.

The deal, however, fell through, and P&ID took the Nigerian government to court in Britain.

In 2017, an arbitration tribunal ordered Nigeria to pay a $6.6 billion contract award and interest to P&ID.

The government appealed that decision.

The court on Monday said the company had in 2010 paid a bribe to a Nigerian oil ministry official in connection with the deal.

The court also said that P&ID did not disclose that information when the deal failed to materialize and that two British lawyers defending the company stood to benefit if the court ruled in favor of the firm.

Nigerian political analyst Rotimi Olawale said the decision is a relief for Africa’s biggest economy.

“Nigeria literally dodged a major bullet, knowing the foreign exchange issues the country is facing at the moment,” Olawale said. “Getting a judgment of $11 billion would’ve been a big blow to Nigeria’s financial situation.”

The company’s lawyers say they’re disappointed by the outcome and are considering next steps. The firm has denied the fraud allegations and accused Nigeria of incompetence.

Nigeria’s economy has been struggling with spiraling inflation and mounting debts for years. More recently, government reform policies have seen Nigeria’s foreign exchange reserve dwindle significantly, increasing the scramble for U.S. dollars and weakening the local tender.

The $11 billion would have been about one-third of Nigeria’s foreign exchange reserves.

Ebenezer Oyetakin, founder of the Anti-Corruption Network, said the ruling couldn’t have come at a better time.

“It is an example of how many African countries have been mortgaging their economy,” he said. “Definitely it would be of huge help to the dwindling Nigerian economy as we’re witnessing currently. But we should not rest on our oars. We should continue to absolutely stand against corruption.”

Olawale said Nigeria and all of Africa must address institutional corruption.

“The judgment should also give us an opportunity to tidy our home front,” Olawale said. “I feel that Nigeria, like many developing countries, goes into all kinds of dubious contracting. It is on us as a nation to ensure that we do our due diligence and that we harmonize the process in which we do contracting with other parties.”

Reports say the London court could decide to send the case back to arbitration or abandon it without delay.
…

The International Monetary Fund is cautioning African nations about the possibility of a regional economic downturn and the ripple effects that China’s slowing economy could bring.

Africa and China have forged economic ties over the past 20 years, making the Asian giant the continent’s largest trading partner. Africa exports metals, minerals and fuel to China, while importing manufactured goods and machinery from that country.

The IMF says the partnership is threatened by China’s economic slowdown and aging population, trade tensions, geopolitics and the ongoing impacts of the COVID-19 pandemic.

Kenya-based businessman Adan Ibrahim, who imports vehicle parts from China, said it was difficult for a long time to access Chinese companies due to COVID-19 regulations, including visa restrictions that allowed relatively few people into the country per month.

“Up to now they have not reopened well,” Ibrahim said. “In terms of movement of people within the country, they even restricted when you travel to China. You [had to] undertake serious checks on health issues. There were … challenges, both economic and health wise.”

In December 2022, China lifted coronavirus restrictions that had prevented easy movement of goods and people.

Gerrishon Ikiara, an international economics lecturer, said the economic problems faced by China and African countries affect their trade relations.

“When African economies are affected either by drought or other problems that may affect various sectors, the negative effect is felt in China,” Iriara said. “If it’s … happening in China, the negative effect is felt in Africa.

“So, it’s important that both the Chinese and African economies are doing well to create a more healthy trading relationship,” he said.

Ibrahim said that as China shifts away from COVID-19 controls, the price of goods has increased and they go unsold.

“The goods that we used to buy with the relatively cheap prices before the COVID are now triple the price that we currently buy with,” he said.

China’s economic recovery from the pandemic slowed in recent months due to a sluggish property market and weak consumer spending. China’s trade data showed that exports and imports continued to decline as demand for Chinese goods waned.

Ikiara said Africa needs to find new trading partners to develop its economies.

“If the Chinese economy is slowing down, Africa needs to diversify its trading partners and to diversify either imports or exports to Asia, other parts of Africa, Latin America and the U.S.,” he said. “If there is a problem with our exports to China, we need to look for new markets.”

The IMF is urging African governments to diversify their economies, increase regional trade integration and create a favorable business environment so that local and international corporations can thrive.
…

South Africa is hosting a summit for participants in the U.S. government’s duty-free Africa Growth and Opportunity Act from November 2 to 4 as the act comes up for renewal. Kate Bartlett spoke to the owners of one South African company about how the trade initiative — which benefits more than 30 countries on the continent — helped them grow their business and enter the U.S. market. VOA footage by Zaheer Cassim.
…

All of West Maui except for burned-out sections of historic Lahaina will reopen to tourism on Nov. 1 following the deadliest U.S. wildfire in more than century, the mayor of Maui County said Monday.

Mayor Richard Bissen said he made the move after talking about it with his Lahaina advisory team, the Red Cross and other partners.

West Maui has about 11,000 hotel rooms, or about half of Maui’s total. Travelers evacuated those hotels after the Aug. 8 fire raged through Lahaina town, killing at least 99 people and destroying more than 2,000 buildings.

Hawaii Gov. Josh Green last month declared West Maui would officially reopen to tourism on Oct. 8 to bring back badly needed jobs and help the economy recover. Bissen modified the governor’s declaration with a phased plan, allowing a small section on the northern edge of West Maui to open first with the rest to follow at an undetermined date.

The community has had an impassioned debate about when to welcome travelers back to the disaster-stricken region. Some residents drafted a petition opposing the return of tourists, saying the community wasn’t ready.

Bissen said Monday that workers are ready to return to their jobs while acknowledging “this isn’t for everyone.”

Those who aren’t prepared to go back to work on Nov. 1 should talk to their employers and “continue to seek the help and attention that they need,” Bissen said at a news conference in Lahaina that was livestreamed online.

The mayor said many residents are also concerned about not having child care. He said the county’s partners are working on that issue.

Residents who have been staying in West Maui hotels and other short-term accommodations after losing their homes in the fire won’t lose their lodging, the mayor said.

“We’re assured by the Red Cross that their housing will not be in jeopardy,” Bissen said.

The mayor said the reopening schedule was voluntary and said some properties have already reopened on their own. 
…

Fifty years after the 1973 Arab oil embargo, the current crisis in the Middle East has the potential to disrupt global oil supplies and push prices higher. But don’t expect a repeat of the catastrophic price hikes and long lines at the gasoline pump, experts say.

The Israel-Hamas war is “definitely not good news” for oil markets already stretched by cutbacks in oil production from Saudi Arabia and Russia and expected stronger demand from China, the head of the International Energy Agency said.

Markets will remain volatile, and the conflict could push oil prices higher, “which is definitely bad news for inflation,” Fatih Birol, executive director of the Paris-based IEA, told The Associated Press. Developing countries that import oil and other fuels would be the most affected by higher prices, he said.

International benchmark Brent crude traded above $91 a barrel on Thursday, up from $85 per barrel on Oct. 6, the day before Hamas attacked Israel, killing hundreds of civilians. Israel immediately launched airstrikes on Gaza, destroying entire neighborhoods and killing hundreds of Palestinian civilians in the days that have followed.

Fluctuations since the attack pushed oil prices as high as $96.

The price of oil depends on how much of it is getting used and how much is available. The latter is under threat because of the Hamas-Israel war, even though the Gaza Strip is not home to major crude production.

One worry is that the fighting could lead to complications with Iran, home of some of the world’s largest oil reserves. Its crude production has been constrained by international sanctions, but oil is still flowing to China and other countries.

“In order to get a sustained move (in prices), we really would need to see a supply disruption,” said Andrew Lipow, president at Lipow Oil Associates, a Houston-based consultant.

Any damage to Iranian oil infrastructure from a military strike by Israel could send prices jumping globally. Even without that, a shutdown of the Strait of Hormuz that lies south of Iran could also shake the oil market because so much of the world’s supplies goes through the waterway.

Until something like that happens, “the oil market is going to be like everyone else, monitoring the events in the Middle East,” Lipow said.

One reason 1970s-style gas lines are unlikely: U.S. oil production is at an all-time high. The U.S. Energy Information Administration, an arm of the Energy Department, reported that American oil production in the first week of October hit 13.2 million barrels per day, passing the previous record set in 2020 by 100,000 barrels. Weekly domestic oil production has doubled from the first week in October 2012 to now.

“The energy crisis of 1973 taught us many things, but in my mind, the most critical is that American energy strength is a tremendous source of security, prosperity and freedom around the world,” said Mike Sommers, president and CEO of the American Petroleum Institute, the U.S. oil industry’s top lobbying group.

In a speech Wednesday marking the 50th anniversary of the 1973 oil embargo, Sommers said current U.S. production contrasts sharply with “America’s weakened position during the Arab oil embargo.” He urged U.S. policymakers to heed what he called the lessons of 1973.

“We cannot squander our strategic advantage and retreat on energy leadership,” said Sommers, who has repeatedly criticized President Joe Biden’s policies restricting restricting new oil leases as part of Biden’s efforts to slow global climate change.

“With an unstable world, war in Europe, war in the Middle East, and energy demand outstripping supply, energy security is on the line,” Sommers said in a speech at the Hudson Institute, a Washington think tank.

“American oil and gas are needed now more than ever,” Sommers said. “Let’s take to heart the lessons we learned from 1973 and avoid sowing the seeds of the next energy crisis.” 

For now, the crisis isn’t a repeat of 1973. Arab countries aren’t attacking Israel in unison, and OPEC+ nations have not moved to restrict supplies or boost prices beyond a few extra dollars.

There are several wild cards in the energy market. One is the supply of Iranian oil. Eager to avoid a spike in gasoline prices and inflation, the U.S. has quietly tolerated some exports of Iranian oil to destinations such as China instead of going all in on sanctions aimed at Iran’s nuclear program.

If Iran, which has warned Israel not to undertake a ground offensive, escalates the Gaza conflict — including a possible attack by Hezbollah militants in Lebanon supported by Iran — that might change the U.S. stance. “If the U.S. were then also to enforce the oil sanctions against Iran more strictly again, the oil market would tighten noticeably,” say commodities analysts at Commerzbank.

Lawmakers from both parties have urged Biden to block Iranian oil sales, seeking to dry up one of the regime’s key sources of funding.

Another wild card is how Saudi Arabia would respond if Iranian oil is restricted. Oil analysts say that while the Saudis may welcome recent oil price hikes, they don’t want a massive price spike that would fuel inflation, higher central bank interest rates and possible recession in oil-consuming countries that ultimately would limit or even kill off demand for oil.

A third unknown is whether more oil will reach the market from Venezuela. The U.S. agreed Wednesday to temporarily suspend some sanctions on the country’s oil, gas and gold sectors after Venezuela’s government and a faction of its opposition formally agreed to work together on election reforms.

Venezuelan production could increase in 2024. In the next six months, however, production could ramp up by some 200,000 barrels a day, a relative drop in the ocean, according to Sofia Guidi Di Sante, senior oil market analyst at Rystad Energy.

Wyoming Sen. John Barrasso, the top Republican on the Senate Energy and Natural Resources Committee, slammed the U.S. action as a “gimmick” that appeases a brutal regime in Venezuela.

“Joe Biden’s energy policies put America last,” Barrasso said, citing the Democratic president’s decisions to kill the controversial Keystone XL oil pipeline and sell off significant portions of the nation’s Strategic Petroleum Reserve, taking it to its lowest level since the 1980s. The Energy Department said Thursday it will seek offers to start refilling the oil reserve in December, with monthly solicitations expected through May 2024.

“He eased sanctions on Iran, which funds terrorism across the Middle East. Now with Israel under attack, Biden is desperate for anything to mask the consequences of his reckless policies,” Barrasso said. “America should never beg for oil from socialist dictators or terrorists.”

The Treasury Department says it has targeted nearly 1,000 individuals and entities connected to terrorism and terrorist financing by the Iranian regime and its proxies, including Hamas, Hezbollah and other groups in the region.

“We will continue to take action as appropriate to counter Iran’s destabilizing activity in the region and around the world,” Treasury said in a statement.
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China remains the single leading source of imports to Kenya, accounting for over 20% of total imports, according to the country’s bureau of statistics. Many local manufacturers say the Chinese imports are hurting their bottom line. Juma Majanga reports from Nairobi, Kenya. Camera: Jimmy Makhulo.
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In Cambodia’s capital of Phnom Penh, 62-year-old produce seller Sok Ul is sanguine, despite the threat that a Belt and Road project could uproot him from his neighborhood. Construction will soon begin on a $60 million bridge that spans two of the city’s bustling southern sections along the Tonle Sap river, and Sok Ul’s modest vegetable farm may need to go.

“I am happy to see a bridge to ease traffic congestion,” he said, speaking with VOA’s Khmer Service from his roadside stall, where he sells cabbages and other produce. If he’s forced to move, he just wants a fair deal for his land.

The debt debate

The bridge is among dozens of projects across the country being funded by China as loans under Beijing’s Belt and Road Initiative, or BRI.

Prime Minister Hun Manet is leading a Cambodian delegation to join representatives from more than 150 countries in Beijing for a two-day forum to mark 10 years of China’s BRI on October 17 and 18. 

The initiative has invested billions of dollars globally, with many low-income Asian countries such as Cambodia seeing an outsized windfall, but BRI projects also account for a healthy chunk of Phnom Penh’s foreign debt.

The initiative is the central component of Chinese President Xi Jinping’s economic diplomacy as the communist party seeks to make China a global counterweight to the United States. 

The U.S., locked in a global rivalry with China, has warned countries against taking on large debts under China’s BRI infrastructure strategy. Some critics warn about a debt trap where China would gain economic and political leverage by lending more than what a country can pay. 

“The big risk arising from Cambodia’s engagement in the BRI is overreliance on Chinese investments and loans which might potentially induce Cambodia to fall into a debt trap,” say political scientists Vannarith Chheang and Heng Pheakdey in their 2021 paper “Cambodian Perspective on the Belt and Road Initiative.”

That, they warn, could result in “the loss of trust and autonomy as a sovereign state and the deterioration of its relations with other ASEAN member states.”

However, Jayant Menon, a former lead Asia Development Bank economist now at Singapore’s ISEAS – Yusof Ishak Institute, came to a different conclusion in his March paper, “The Belt and Road Initiative in Cambodia: Costs and Benefits, Real and Perceived.”

“In the case of Cambodia, concerns over possible debt traps and debt diplomacy associated with the BRI appear to be misplaced, even after factoring in the effects of the pandemic,” he wrote.

While recognizing the short-term damage to local communities and the environment, Menon said the costs of BRI projects were more than justified.

“This infrastructure development has increased the competitiveness of the tradable goods sector, boosted exports and lowered prices to consumers and producers in Cambodia,” he wrote.

Hun Manet has also been optimistic about Chinese investments since taking the reins from his father in August.

“For Cambodia, BRI has provided many benefits to people, especially in the field of transportation and logistics,” he said while addressing the 26th ASEAN-China Summit in Jakarta, Indonesia in September.

Heated debate

BRI benefits and pitfalls have sparked heated debates in many BRI member countries.

“I acknowledge that China has helped build a lot of roads, but the quality is still limited,” Em Sovannara, a political science professor in Phnom Penh, told VOA Khmer. “Some roads are just built and then broken and need to be repaired.”

The BRI “has provided benefits to Cambodia, but it is not like what politicians brag about,” he said.

The Phnom Penh-based Future Forum estimates as of June 2021, China had built eight bridges and 3,287 kilometers (2,042 miles) of roads totaling more than $3 billion in Chinese concessional loans, which are loans with more favorable terms such as lower interest rates when compared to those available on the market.

Cambodia’s total foreign debt stands at almost $10 billion, 41% of which is owed to China, according to a bulletin from Cambodia’s Ministry of Economy and Finance in December.

China’s loans and investments have transformed the Cambodia skyline, with a major expressway from Phnom Penh to Sihanoukville, a sprawling special economic zone in Sihanoukville with an energy plant to power it, a new airport in Siem Reap and dozens of smaller projects. 

The projects have benefited the ruling Cambodian People’s Party, offering tangible proof that it is modernizing the country, Vannarith Chheang and Heng Pheakdey wrote.

“The BRI helps strengthen the material capabilities as well as the legitimacy of the regime in Cambodia, which has greatly benefited from the influx of Chinese investment capital and development assistance,” they wrote.

However, the Cambodian academics noted the economic benefits don’t always reach the population these projects are built for.

“Even though Chinese investment is bringing wealth to Cambodia, this wealth is mainly kept within Cambodia’s Chinese community. Chinese residents and visitors in Cambodia buy from Chinese businesses, eat at Chinese restaurants and stay in Chinese hotels. The trickle-down effect to local businesses is minimal,” they wrote.

People vs elites

Sihanoukville has become a symbol of the risks and rewards of Chinese investment. While development and construction have skyrocketed, crime and casinos are also on the rise. The rapid development has also pushed up property costs, forcing many residents and business owners to move outside the city.

“The BRI needs to take into account the ‘people’ rather than solely focusing on ‘elites’ if it is meant to achieve a meaningful impact in Cambodia,” Chhay Lim, a visiting fellow at the Center for Southeast Asian Studies at the Royal University of Phnom Penh, wrote in an email to VOA Khmer.

He said the expected return on Chinese investment has been clear.

“We have observed that Cambodia has been offering support for key Chinese foreign agendas as well as the newly proposed narratives and slogan politics, including those of the Community of Shared Future, Global Security Initiative, Global Development Initiative, and Global Civilizational Initiative.”

Hun Manet visited Beijing last month to strengthen ties with China, picking up where his father Hun Sen left off. Hun Manet said Cambodia’s new government will maintain an “unchanged stance” on Beijing’s “One China” policy, and a “noninterference policy” toward China.

China’s leaders affirmed continued support for economic development and the improvement of people’s livelihoods in Cambodia through projects such as rural roads, bridges, water supplies, schools and hospitals, according to a joint statement out of the meeting.

China and the future

Menon said there was also evidence that China was becoming more mindful of the social and environmental impact of its projects, perhaps to correct for local pushback over the past decade.

Menon and Chhay Lim agreed Hun Manet’s government would be well advised to ensure that it does not become overly reliant on China in the years ahead.

“The increasing reliance on a single country for both its economic and noneconomic needs carry obvious risks,” Menon wrote. “As the China growth juggernaut starts to slow, diversifying trade and investment partners can spread risk by reducing vulnerability to country-specific shocks.”

That may not be an easy feat, given Phnom Penh’s strained relations with the West over its democratic backslide in recent years, said Chhay Lim.

“It’s significant to note that Cambodia must ensure diversification and avoid sole reliance on China while simultaneously enhancing relations with the West without antagonizing China,” he said. “To achieve this balance, Cambodia must formulate both a robust China strategy and a Western strategy, which, in my opinion, Cambodia has not yet fully developed.”

Sok Ul, the vegetable farmer in Phnom Penh, is confident that China will not pressure Cambodia to repay its debt.

“We can pay it back when we have it,” he said, adding his belief that Beijing will forgive Phnom Penh if his country cannot pay on time.
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Nigeria’s inflation rate has risen to its highest level in two decades, 26.72%, according to the national statistics bureau. The latest figure keeps millions of people in Africa’s largest country struggling to cope with economic challenges that, analysts say, are exacerbated by government reform policies. 

Nigeria’s inflation rate in September rose for a ninth consecutive month from an already high 25.8%, recorded in August.

On a year-on-year basis, the inflation rate was 5.94% higher than when compared to the 20.77% recorded in September of 2022.

The National Bureau of Statistics says the trend was caused by an increase in prices of food items like bread and cereals, meat, vegetables, milk, cheese, tubers, fish, fruit, oil and fat.

But economic observers say recent government policies, including the elimination of fuel subsidies in May, are to blame for the surge and predict the trend might continue.

“The policies were not handled properly. When you’re doing reforms, there’s what we call sequencing of reforms,” said Ogho Okiti, the chief executive officer of ThinkBusiness Africa. “What is happening is that they’re learning on the job. We may actually reach 28-29% going by the pattern we’re seeing. The reason is simple: until the exchange rate stabilizes, inflation will not stabilize in Nigeria. We now have the value of naira devalued by over 100% between June and today, within the space of four months.”

Nigerian President Bola Tinubu embarked on bold policy reforms since entering office in May, scrapping the expensive fuel subsidy payments — a package that ensured fuel was kept within affordable limits at pumps.

The president, soon after that, floated the national tender — the naira — against other global currencies, causing it to lose more than half its value.

The reforms hurt the economy, triggering criticism of the government.

This month, a Nigerian workers union shelved plans to embark on a nationwide strike to protest the government policies after a meeting with authorities.

Okiti said pressures will continue to mount on government policymakers and consumers alike.

“The three kinds of pressures — social, political and economic pressures on the government,” Okiti said. “My hope is that this does not boil over into something very catastrophic, because there’s also this illusion that Nigerians will just accept [these realities]. That may not be the case.”

But economic analyst Emeka Okengwu argues Nigeria’s economy could have been worse without the president’s policy reforms.

“If he didn’t remove the fuel subsidy and you’re spending over 100% of your total revenue to be able to just support a social service, what do you think would’ve happened to the economy?” Okengwu asked. “It would’ve collapsed. You won’t be talking about inflation anymore, you’ll be talking about perflation. Sometimes economic development is a difficult thing, sometimes we need to pay some very hard prices.”

Nigeria has been recording double-digit inflation since 2016. During a national broadcast on October 1, President Tinubu defended his policies and urged Nigerians to be patient.

Last week, the Central Bank lifted a ban on the sourcing of foreign exchange from official markets for the importation of 43 items, including rice, cement, palm oil products, vegetable oils, and processed meat.
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Military rulers in Gabon on Tuesday threatened to arrest the heads of businesses who have collected money for work that was not performed.

While ordering the resumption of work at utility and construction sites after years of abandonment, Gabon’s military-appointed prime minister, Raymond Ndong Sima, told state TV that the junta-led government will ask contractors who abandoned work after collecting money to resume their projects or face arrest.

The announcement was part of a promised crackdown on corruption.

Sima said that scores of companies have resumed work after the central African state’s coup leader, Gen. Brice Oligui Neguema, visited several abandoned road, water and electricity projects in the capital, Libreville, on Saturday.

On Monday, Gabon’s state TV showed images of people celebrating as Nguema visited the sites in several poor suburbs. Women and children embraced and shook hands with Nguema, with some shedding tears. They said it was the first time a Gabonese leader had visited poor suburban neighborhoods, a claim VOA could not independently verify.

Civilians told Nguema that each time elections approached, ousted President Ali Bongo Ondimba would promise drinkable water, electricity and good roads and dispatch equipment to start construction. But after the elections, construction work would be abandoned, and the equipment removed.

Nguema said on TV that an anti-corruption task force created by the military junta has a list of companies that received money from the former regime but never executed projects.

Civilians said several companies resumed work as soon as Nguema left.

Barber Jacques Abossolo, who lives in Bizango-Bibere, said on state TV that some of the projects there had been abandoned for 10 years.

Joseph Dotse, a road construction engineer in Libreville, said Nguema asked his company to resume work it temporarily suspended due to heavy rains. He predicted that in 10 days, his company, Gabon Construction, would complete work on a 6-kilometer stretch of road Nguema visited.

Dotse said that Bongo paid half of the money for the road work and that he expects the military junta to settle the remaining bill.

He said Bongo, his family and friends own companies that never executed projects after receiving money. Bongo’s lawyers deny the accusations.

Gabon’s military-appointed government said that Nguema will visit other towns and villages in the days ahead to make sure work on abandoned sites is relaunched and that contractors who swindled state funds will be arrested if they do not refund the money.

Guy Roger Makongo, a political science lecturer at Omar Bongo University in Libreville, said on a messaging app that Nguema has been respecting the roadmap he set up to restore democratic rule following the August 30 bloodless coup.

Makongo said besides fighting corruption and carrying out consultations to organize a national dialogue by the end of this year, Nguema has set up a constitutional council and appointed a government and members of the senate and national assembly from the opposition, civil society and the army.

Many people, however, are skeptical that Nguema will hand power to civilian rule soon because he has not given a possible date for a return to constitutional order, Makongo said.

Last week, Gabon’s military junta promised to invest more than $10 million of what it called recovered ill-gotten wealth on water, electricity, roads and school infrastructure to improve living conditions, especially in the hinterlands.

The military junta said it also recovered more than 300 luxury vehicles. Both vehicles and money, the junta said, were taken from Bongo family and friends.

The military-appointed government said Sylvia Bongo Ondimba Valentin, the Franco-Gabonese wife of Gabon’s ousted president; Bongo’s son, Noureddin Bongo Valentin; and eight of the deposed leader’s aides and members of his Cabinet have been arrested in an anti-corruption drive launched by the military junta.

They were charged with various crimes that include treason, corruption, embezzlement, money laundering, forgery and abuse of state institutions.
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Since China’s launch of the Belt and Road Initiative 10 years ago, trade with Southeast Asian nations has more than doubled. Beijing has poured billions into helping build rails, airports, ports, and other infrastructure, but the push for more connectivity comes with unintended consequences observers said.

Some key concerns include rising debt, the environmental impact of projects, and an increase in crime said analysts in the region who spoke to VOA’s Mandarin Service. 

According to the U.K.-based International Institute for Strategic Studies, between 2013 and 2021, Southeast Asia was the site of 131 Belt and Road projects, the most in the Asia-Pacific region. 

Chen Shangmao, a professor at the Department of Public Affairs at Fo Guang University in Taiwan, said with such a wide scope, the BRI has had some positive benefits. 

“For example, with respect to the entire economy, trade and investment, we can also see that, in recent years, the trade volume between China and Southeast Asian countries has continued to increase” Chen tells VOA.  

China’s State Council Information Office reported that in 2022 the volume of trade between China and the ten members of the Association of Southeast Asian Nations or ASEAN reached $975.3 billion, up from $443.6 billion in 2013.

What China wants 

One of the signature Belt and Road projects Beijing has completed in Southeast Asia is the China-Laos railway. The $6 billion-dollar 1,000 kilometer semi-high-speed rail line was finished in December of 2021. The project has cut the time of travel between Laos’ capital of Vientiane and China’s southern border.  

Eventually, the rail is expected to connect Beijing with Bangkok and even Singapore.

Pollasak Ruongpanyaroj, Executive Director of Panyapiwat Institute of Management in Bangkok, said the China-Laos Railway has brought only limited potential benefits for one of Southeast Asia’s poorest countries.  

“The high-speed rail between Laos and China has brought very little economic contribution to Laos. Do you see anything in Laos that can be sold to China? The repayment of loans is so high,” said Ruongpanyaroj.  

Fo Guang University’s Chen said this railway is what China, not Laos, needs because before other transportation networks are in place, the railway is currently not of much help to Laos, but the huge debt it has assumed has made the outside world extremely worried.  

“The debt that Laos owes to China accounts for about 60% of its GDP, that is scary” Chen said, adding that it raises other questions, such as: “How are you going to pay it back? What will you do when you can’t pay it back? And then, you may have to allow them to make whatever political demands as they please.”

Drugs, telecom fraud 

With massive investments, an increase in the number of Chinese nationals in the region and connectivity that has come with the BRI, organized crime groups have also followed and grown their footprint in Southeast Asia, analysts said.  

The port town of Sihanoukville in Cambodia, which became a special economic zone under China’s BRI is one place that has been linked to a range of problems from drug and human trafficking to telecom fraud, prostitution and gambling.

“In recent years, the Chinese people have engaged in telecom fraud and online gambling and (have) been cracked down by Myanmar, Cambodia and the Philippines,” said Ruongpanyaroj who described these criminal activities as gray industries. 

“So, those people involved in the gray industries have come to Thailand to open casinos and bars, and they also deal drugs,” he said.

“Trafficking in persons for the purpose of forced criminality to commit online scams and financial fraud, particularly occurring in Special Economic Zones (SEZs) and other areas of Cambodia, Lao People’s Democratic Republic (PDR), and Myanmar, as well as other destination countries (including Malaysia, and the Philippines), has emerged as a new and growing trend.,” stated a report released last month by the United Nations Office on Drugs and Crime.

Beijing has been stepping up its efforts to crack down on the problem both in China and with authorities in the region. In 2022, China’s party-backed Global Times reported that authorities resolved 464,000 cases related to online gambling and telecom fraud. 

“In recent years, online gambling and telecom fraud have caused social problems in China as well as in Southeast Asian countries such as Myanmar, Thailand and Sri Lanka, with some Chinese nationals falling victims to murder, kidnapping and human trafficking,” the report said

Environmental concerns  

Environmental concerns also weigh heavily on the residents in the Southeast Asia because of the various industries involved in projects across the region, including mining,

In July, the Indonesian government suspended PT Dairi Prima Mineral’s (DPM) mining license in July to investigate the potential environmental damages the company may have caused, barring it from mining Zinc in Dairi Regency in North Sumatra. China Nonferrous Metal Industry’s Foreign Engineering & Construction Co. Ltd. owns a 51% stake in DPM.  

Tongam Panggabean, executive director of Bakumsu, a legal advocacy group in North Sumatra representing local communities in Indonesia, told VOA, the company hasn’t released any public statements regarding the concerns. 

“As a company that always said that they are system sustainable, they respect the community or something like that, there should be a positive response to the verdict,” Panggabean said. “I assume by not responding openly to the case or to the demand of the community, it indicates that the government of China doesn’t really care about the impact of their company in other countries.”  

US-China competition 

BRI has not only had an impact on the infrastructure of Southeast Asian countries, but also politics in the region, including the gradual challenge of Western values, analysts said.

Felix K. Chang, a senior fellow at the Foreign Policy Research Institute, wrote about the connection between the BRI, politics and economics in an article last month.

“Whatever the path China chooses for the BRI, the more tortuous its economic logic becomes, the more pronounced its political dimension will be. While the BRI’s economic aims may be continuously shifting, its political goals remain focused,” Chang wrote. 

China’s soft power efforts in the region are having mixed results, observers found. 

According to surveys about the state of Southeast Asia released in 2022 and 2023, China was considered to be the most influential country politically and strategically in the region in both years. In 2023, 68.5 % of ASEAN respondents said they were worried about China’s growing regional political and strategic influence, according to a report of the survey by Singapore-based ASEAN Studies Centre at the ISEAS Yusof Ishak Institute. That was down slightly from 76.4 % in 2022.

Siwage Dharma Negara, a senior fellow at the ISEAS Yusof Ishak Institute, does not believe China is using the BRI to forcibly promote communism or authoritarianism in Southeast Asia. People in the region are aware of the political influence that comes with the BRI but that doesn’t mean that they see it as bad.

“As long as it can continue to provide the necessary resources for countries or partner to develop their own economy, their infrastructure, then I think there will be room for collaboration,” he said. 

Considering the intensifying competition between the U.S. and China, Negara said in the future, Beijing may change its approach to the BRI in Southeast Asia.

Adrianna Zhang contributed to this report.
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