Monday, June 20, 2016
India opens up on FDI; Nigeria currency plummets on floatation; China to halve meat consumption
1 India opens up on FDI (Khaleej Times) India has announced sweeping reforms to rules on foreign direct investment, opening up its defence and civil aviation sectors to complete outside ownership and clearing the way for Apple to open stores in the country.
The move comes two days after central bank governor Raghuram Rajan, a darling of financial markets but under pressure from political opponents at home, announced he would not seek another term, a surprise move that raised concerns about whether reforms he set in motion will stall.
Prime Minister Narendra Modi hailed the changes to the foreign direct investment rules, stressing his government's reform credentials. In a tweet, he said the changes would provide a "major impetus to employment and job creation in India."
The new reform measures also relax restrictions on inbound investments in pharmaceuticals and single-brand retail. Defence contractors that have been reluctant to transfer technology to manufacture equipment in India would get the right to own local operations outright, with government approval, up from a cap of 49 per cent previously.
In other changes, India allowed 100 per cent FDI in civil aviation, following on from last week's launch of a new policy that lowered barriers to entry for airlines that want to fly international routes. The government also allowed foreign companies to own up to 74 percent in 'brownfield' pharmaceuticals projects without prior government approval. India already allows 100 percent ownership of greenfield pharma businesses.
2 Nigeria currency plummets on floatation (San Francisco Chronicle) Nigeria's currency plummeted on Monday, losing more than 40 percent of its value as the government floated the naira for the first time in the history of the oil-producing nation.
The move was forced by a spiraling economic crisis and massive shortage of foreign exchange created by slumping oil prices and aggravated by President Muhammadu Buhari's 16-month-long insistence that the Central Bank defend the naira at a fixed rate of 197 to the dollar. Other oil producers like Angola and Venezuela devalued months ago.
The naira started Monday at 255 to the dollar but ended with $530 million being traded at 280 to the dollar among 21 banks, according to traders who insisted on anonymity because the Central Bank has not published the figures.
"This is good news for the majority of Nigerians," Ayo Teriba, CEO of Economic Associates consultancy, said of the devaluation. "The biggest gain is on the appreciation of the parallel market because the parallel market devaluation has destroyed domestic activities, with prices of local goods skyrocketing." Imported goods also have doubled and trebled in price.
Inflation is soaring at nearly 16 percent this month, and analysts say it will get worse before it slows down. The devaluation is a boon for MTN, Africa's largest telecommunications company, which this month negotiated a deal to pay a fine of 330 billion naira, now effectively discounted by about 30 percent.
Among losers are companies with billions of naira trapped in Nigeria that they were not allowed to repatriate. Analysts said the devaluation could exacerbate bad debts already standing at 10 percent of bank loans. Bankers will adjust loans made in dollars to the new value of the naira, including more than $10 billion loaned to Nigerian companies to buy assets from oil multinationals in recent years.
3 China plans to halve meat consumption (Oliver Milman in The Guardian) The Chinese government has outlined a plan to reduce its citizens’ meat consumption by 50%, in a move that climate campaigners hope will provide major heft in the effort to avoid runaway global warming.
New dietary guidelines drawn up by China’s health ministry recommend that the nation’s 1.3 billion population should consume between 40g to 75g of meat per person each day. The measures, released once every 10 years, are designed to improve public health but could also provide a significant cut to greenhouse gas emissions.
Should the new guidelines be followed, carbon dioxide equivalent emissions from China’s livestock industry would be reduced by 1bn tonnes by 2030, from a projected 1.8bn tonnes in that year.
Globally, 14.5% of planet-warming emissions emanate from the keeping and eating of cows, chickens, pigs and other animals – more than the emissions from the entire transport sector. Livestock emit methane, a highly potent greenhouse gas, while land clearing and fertilizers release large quantities of carbon.
Meat has gone from rare treat to a regular staple for many Chinese people. In 1982, the average Chinese person ate just 13kg of meat a year and beef was nicknamed “millionaire’s meat” due to its scarcity.
The emergence of China as a global economic power has radically altered the diets of a newly wealthy population. The average Chinese person now eats 63kg of meat a year, with a further 30kg of meat per person expected to be added by 2030 if nothing is done to disrupt this trend. The new guidelines would reduce this to 14kg to 27kg a year.
China now consumes 28% of the world’s meat, including half of its pork. However, China still lags behind more than a dozen other countries in per capita meat consumption, with the average American or Australian consuming twice as much meat per person compared to China.