Business

SYDNEY — The world’s top economies have embraced a goal of generating more than $2 trillion in additional output over five years while creating tens of million of new jobs, signalling optimism that the worst of crisis-era austerity was behind them.

The final communique from the two-day meeting of Group 20 (G-20) finance ministers and central bankers in Sydney said they would take concrete action to increase investment and employment, among other reforms. The group accounts for around 85 per cent of the global economy.

“We will develop ambitious but realistic policies with the aim to lift our collective gross domestic product by more than 2 per cent above the trajectory implied by current policies over the coming 5 years,” the G-20 statement said. 

Australian Treasurer Joe Hockey, who hosted the meeting, sold the plan as a new day for cooperation in the G-20.

“We are putting a number to it for the first time — putting a real number to what we are trying to achieve,” Hockey told a news conference. “We want to add over $2 trillion more in economic activity and tens of millions of new jobs.”

The targeted acceleration would boost global output by  more than the world’s eight largest economy Russia produces in a year.

The deal was also something of a feather in the cap of Hockey, who spearheaded the push for growth in the face of some scepticism, notably from Germany.

“What growth rates can be achieved is a result of a very complicated process,” Germany’s Finance Minister Wolfgang Schaeuble said after the meeting. “The results of this process cannot be guaranteed by politicians.”

Australia is acting as president of the G-20 this year, following Russia in 2013 and ahead of Turkey next year.

While shifting the focus to reforms that would lift and sustain global growth in years to come, the group acknowledged that monetary policy would need to “remain accommodative in many advanced economies and should normalise in due course”.

The growth plan borrows wholesale from an International Monetary Fund (IMF) paper prepared for the Sydney meeting, which estimated that structural reforms would raise world economic output by about 0.5 per cent per year over the next five years, boosting global output by $2.25 trillion.

The IMF has forecast global growth of 3.75 per cent for this year and 4 per cent in 2015.

As yet there was no roadmap on how nations intend to get there or repercussions if they never arrive. The aim was to come up with the goal now, then have each country develop an action plan and a growth strategy for delivery at a November summit of G-20 leaders in Brisbane.

“Each country will bring its own plan for economic growth,” said Hockey. “Each country has to do the heavy lifting.”

Agreeing on any goal is a step forward for the group that has failed in the past to agree on fiscal and current account targets. And it was a sea change from recent meetings where the debate was still on where their focus should lie: On growth or budget austerity. 

Financial markets had been wary of the possibility of friction between advanced and emerging economies, but nothing suggested the meeting would cause ripples on Monday.

“The text of the communique indicates that the standard US line that what is good for the core of the world economy is good for all seems to have won out,” said Huw McKay, a senior economist at Westpac, noting there was nothing that could be taken as “inflammatory” about recent volatility in markets.

There was a nod to concerns by emerging nations that the  Federal Reserve (Fed) consider the impact of its policy tapering, which has led to bouts of capital flight from some of the more vulnerable markets.

“All our central banks maintain their commitment that monetary policy settings will continue to be carefully calibrated and clearly communicated, in the context of ongoing exchange of information and being mindful of impacts on the global economy,” the communique read.

There was never much expectation the Fed would consider actually slowing the pace of tapering, but its emerging peers had at least hoped for more cooperation on policy.

Hockey said there had been honest discussions among members on the impact of tapering and that newly installed Fed Chair Janet Yellen was “hugely impressive” when dealing with them.

The G-20 also stated that it “deeply regrets” that progress on giving emerging nations more say in the IMF had stalled.

Major emerging powers including India, China, Brazil and Russia, have long lobbied for increased voting power in the IMF to reflect their growing share of the world economy, but the changes agreed in 2010 have been blocked by the US Congress.

The G-20 urged the United States to ratify the reforms before the next meeting of policy makers in April.   

 The group is also progressing with plans to “make sure multinational companies pay their fair share”, said US Treasury Secretary Jack Lew. 

Big budget deficits and revelations that companies such as Apple and Google use structures that lawmakers have labelled “contrived” to avoid billions of dollars in taxes, have led to growing calls to close corporate tax loopholes. The companies say they follow the existing tax rules.

AMMAN –– A delegation of Jordanian businesspeople and representatives of different economic sectors will pay a visit to Indonesia on Monday in an attempt to raise commercial exchange between the two countries. Jordan Chamber of Commerce (JCC) President Nael Kabariti underlined the Kingdom’s commitment to boost economic cooperation with the Asian country. The business delegation will include representatives from the sectors of trade, tourism, transport, construction, automobile, renewable energy, food, olive oil, IT and healthcare among other fields, according to Kabariti. 

AMMAN –– President of the Amman Chamber of Commerce (ACC) Issa Murad on Saturday met with British Ambassador in Amman Peter Millett and discussed bilateral cooperation and ways to boost commercial exchange between the two countries. Murad called on the UK embassy to arrange a business trip for Jordanian businesspeople as a means to  explore investment opportunities. He noted that the chamber has established a special unit for developing international business relations. On Friday, the ACC head met with Hungarian Ambassador to Jordan Bela Jungbert and discussed means to activate joint agreements and establish investment partnerships. Murad described trade volumes between the two countries as modest. 

AMMAN — Work to construct a $18 billion oil pipeline from Iraq’s Basra to Jordan’s port city of Aqaba may start soon, as officials from both coutries are meeting with international firms interested in the mega-project, an official said Saturday. 

Jordan and Iraq are speeding up their measures and efforts to construct the pipeline, a senior official at the Aqaba Special Economic Zone Authority (ASEZA) told The Jordan Times.

The official, who preferred to remain unnamed,  said that Jordanian and Iraqi officials held meetings last week in Aqaba with several international companies that showed interest in carrying out the scheme, adding that work on the project is set to begin soon. 

Once completed –– the pipeline is projected to export 2.25 million barrels of oil per day through the Kingdom. It would generate between $2 billion and $3 billion a year in revenues for the Kingdom, according to estimates of Iraqi and Jordanian officials.

The source said that Jordanian and Iraqi officials had agreed to prepare copies of the tenders from the Iraqi side.

ASEZA Chief Commissioner Kamel Mahadin, who attended the meeting, said it is one of the mega-projects that would further enhance economic ties between Jordan and Iraq. 

“Iraq will provide Jordan with oil at preferential prices,” Mahadin added.
In addition to securing the Kingdom’s oil needs, 120,000-150,000 barrels a day, the 1,700 kilometre-long pipeline is expected to create around 10,000 jobs in Iraq and over 3,000 opportunities for Jordanian engineers and workers. 

The double pipeline may also include extending a sub-pipeline to Jordan’s sole refinery in Zarqa.

Last week meetings came just days before the launching of the Basra investment forum that will take place in Amman between February 27 and 28, and will focus on the Basra-Aqaba oil pipeline project. 

SYDNEY –– Australia on Saturday called for better advance notice of policy changes by central banks to avoid shockwaves for emerging economies, at a meeting of G-20 finance ministers where rifts over US monetary policy loomed large.

Australian Treasurer Joe Hockey said he wants the summit to stay focused on ways to stimulate growth and create jobs in the aftermath of the 2008 financial crisis, adding he was confident of tangible results.

“I must say there is tremendous goodwill in all the meetings I have attended,” he told reporters just before Saturday’s meetings in Sydney.

But the fallout being felt by some emerging economies, which have suffered sharp capital outflows and losses to their currencies they blame on the Federal Reserve easing back its mammoth stimulus programme, remains a lightning rod issue.

Countries led by Indonesia and South Africa, which is not attending the Sydney meeting, along with Mexico and Brazil have called on the US to provide more clarity on its wind-back and better communication to subdue the impacts on emerging markets.

Speaking Friday, US Treasury chief Jacob Lew said he was monitoring global volatility and was encouraged that some economies had taken action to get their houses in order.

“We’re seeing a substantial differentiation in the marketplace in the economies that have made those decisions and in the economies that haven’t,” he said.

“Emerging markets need to take steps of their own to get their fiscal house in order and put structural reforms in place.” 

‘Reasonable warning’ 

Hockey agrees that countries must make their own reforms to bolster their economies, but said central banks in the world’s most advanced nations should give each other better notice of policy changes to avoid market turbulence. 

“I think if there is a policy of no surprises in relation to monetary policy activity and that central banks around the world have reasonable warning of what may be events that create market volatility, I think that’s not unreasonable,” he said.

“I think that’s what central bank governors are aiming for.”

Bilateral meetings were held Saturday morning ahead of a session on the global economy in which delegates discussed the latest reports from the Organisation for Economic Co-operation and Development (OECD), International Monetary Fund (IMF) and World Bank.

The OECD warned Friday that declining global productivity would usher in a new and extended era of low growth unless reforms are accelerated.

These include freeing up labour markets, encouraging infrastructure investment and undertaking the structural reforms needed to boost domestic demand.

Hockey has been pushing his fellow ministers to agree to faster global growth targets, and a draft of the communique due to be issued Sunday, cited by Bloomberg, said they would agree on “concrete measures” to achieve this.

It said collective gross domestic product could be raised by “at least 2 per cent” above current projections over the next five years.

This could not be confirmed, but a G-20 official said ministers were likely to adopt a global growth goal, although targets for individual countries are not expected.

OECD data released Thursday showed growth in advanced economies slowed down slightly in 2013 to 1.3 per cent from 1.5 per cent in 2012.

Hockey said he was confident the meeting would provide results.

“All the finance ministers and central bank governors I have spoken to understand that whilst the globe is facing some challenges, that there is some level of international market volatility,” he said.

“Through greater cooperation, realistic goals, and importantly a tangible process for achieving those goals, we can have very real outcomes this weekend.”

But he admitted that some of his counterparts –– notably Germany –– were reluctant to put their names to a global economic growth target.

“I understand that there is some reluctance from some to have a goal or a target or an ambition, but we need to reach high to deliver more,” he said.

“There needs to be a tangible plan presented by each jurisdiction that helps to achieve our collective goal. “

TOKYO –– Honda Motor Co. is considering diversifying its all-Japanese, all-male board by appointing a foreigner and could move as early as Monday, when it unveils its next slate of directors, sources close to the company said.

“I think we have to think quite seriously, and we are thinking very, very seriously,” Honda Executive Vice President Tetsuo Iwamura told Reuters when asked about naming a non-Japanese to the board. He was speaking on the sidelines of a plant opening in Celaya, Mexico, on Friday.

Japan’s third biggest carmaker, long considered a pioneer of Japanese globalisation with the likes of Sony Corp., now lags far behind Toyota Motor Corp. and Nissan Motor in building diversity in its executive ranks.

Japan’s big companies are under pressure to bring in outsiders to bolster governance, risk management and global perspective, having traditionally chosen board members from senior male managers who had spent their careers at the company.

Honda started assembling cars in the United States in 1982 — a Japanese first — and now makes and sells about 80 per cent of its vehicles overseas.

It has nevertheless resisted bringing foreigners into the upper echelons of its Tokyo headquarters, sources close to the company said, believing its largely autonomous regional operations, that include locally hired managers, have made it global enough.

That attitude now appears to be changing as it seeks faster growth and puts more emphasis on emerging markets.

The automaker recently consulted a major Japanese bank about diversifying its management board, an individual with knowledge of the matter said.

Sources close to Honda also said the company was considering appointing a foreigner to the board within the next several years and did not rule out that it could name one among board members and executives to be announced on Monday for the new financial year that starts in April. They added, however, that the company was in no hurry to diversify.

The company declined to comment on executive changes.

Lack of diversity 

Honda has already appointed non-Japanese to senior posts at regional subsidiaries. At American Honda Motor, John Mendel, formerly with Ford Motor Co. and Mazda Motor Corp., is executive vice president overseeing sales, and Mike Accavitti, previously with Chrysler, is senior vice president of auto operations.

Iwamura, their boss, serves as president and chief executive of American Honda.

It was unclear whether Honda was looking at potential foreign board candidates from inside or outside the company.

Honda’s relative lack of diversity at the top contrasts with Japan’s other big automakers.

Nissan, along with French partner Renault SA, is run by French-Lebanese Carlos Ghosn, while 15 of its 58 directors and auditors are non-Japanese and one is a woman.

Toyota, seen as a stalwart of traditional Japanese management, last year appointed American Mark Hogan, a former General Motors Co. executive, to its board. Of its 68 directors and auditors, seven are foreign and one is a woman.

Honda last year adopted an ambitious goal to expand global sales to six million cars annually by the year to March 2017, a 50 per cent jump from last year’s total.

Some executives see a need to work more closely across regions — including joint procurement of parts and materials — to boost efficiency, the sources said.

Honda is also aiming to raise the share of emerging markets in total sales and to revamp its vehicle development process, involving engineers across regions from the earliest stages.

WASHINGTON — The International Monetary Fund (IMF) on Wednesday called for the Group of 20 (G-20) to boost growth, warning of risks to the global economy, from deflation in Europe to high volatility in emerging economies.

According to the IMF,  advanced economies, which include most of the G-20, are still leading a pickup in economic growth overall around the world.

But it said more coordinated work is needed to keep output expanding and boost demand, as the world economy still struggles to leave behind the financial crisis that began in 2008.

“The recovery has been disappointing, with G-20 output still below longer-term trend,” the IMF added in a report ahead of a meeting of G-20 finance ministers and central bankers in Sydney beginning Saturday.

“Joint action is needed to boost output and to lower global risks substantially through more balanced growth,” the report stressed.

Despite the eruption of more financial turmoil in emerging-market economies last month, the IMF stuck to its forecast of the world’s economy expanding 3.7 per cent this year, after a 3 per cent pace in 2013.

It said it was assuming that the volatility that has unnerved emerging economic powers like Indonesia, Brazil and South Africa would be short-lived.

But it suggested that also depended upon further reforms in those economies as well as more work to boost demand in advanced countries.

“The recovery is still weak and significant downside risks remain,” the fund said, citing capital outflows, higher interest rates, and sharp currency depreciation in emerging economies as a “key concern”.

It added that tighter financial conditions globally, led by the US Federal Reserve’s (Fed) “tapering” of its stimulus, could further undercut growth in a number of countries.

In addition, extremely low inflation in Europe has the IMF worried about how an unanticipated shock to the economy could push the region into deflation, reversing many of the gains of the past year.

“The euro area is turning the corner from recession to a weak recovery that remains uneven and fragile,” it said.

It added that advanced economies need to maintain easy-money policies to keep boosting demand and enable government to improve their fiscal balances.

Facing tighter monetary conditions, emerging economies meanwhile need to do more work on their own economic policies and management to build their credibility with markets.

The IMF added, too, that advanced economy central banks in the process of pulling back from crisis-era monetary polices, like the Fed with its huge stimulus programme, could do well to better coordinate and communicate their actions to reduce the shock effect on the rest of the world.

“There is scope for better cooperation” between central banks on reeling back stimulus programmes and tightening ultra-low interest rates, so-called unconventional monetary policies, the IMF concluded.

AMMAN — Forty-two Jordanian companies will take part in the 19th International Food Fair, slated to be held in Dubai next week. The companies’ participation is organised by the Jordan Enterprise Development Corporation (JEDCO), according to a statement received by The Jordan Times. JEDCO Chief Executive Officer Yarub Qudah said the companies operate in the food sector, including meat, chocolate and yoghurt production, noting that more than 4,500 Arab and foreign countries will take part in the fair, which is considered one of the most important food exhibitions in the world. The trade volume between Jordan and the United Arab Emirates stood at JD697 million in the first eleven months of last year, of which  imports accounted for JD491 million. 

CAIRO — Egypt’s central bank said this week it would allocate 10 billion Egyptian pounds ($1.44 billion) for low-cost housing projects, one of the demands in protests that led to the ouster of autocratic President Hosni Mubarak in 2011.

Better living conditions, an end to official corruption and more democratic rights figured prominently in those protests. About half of Egypt’s 85 million people live under the poverty line, many in slums with no access to clean water or sewage.

Mubarak’s ouster drove the state into a deeper economic and political crisis. Last July, the army ousted Islamist President Mohammed Morsi, who was elected in 2012, after protests against his rule that failed to enact economic reforms.

The three-year turmoil led to a sharp fall in foreign reserves and currency value.     

The central bank said its investment in low-cost housing should have a positive effect on the state’s economic growth and social development.

The money will be deposited to banks for 20 years at a low interest rate to lend it to citizens who qualify to buy houses at a yearly interest rate of 7-8 per cent. Inflation is currently running over 11 per cent. 

Separately, a suicide bombing that killed three South Korean tourists in south Sinai has sent shockwaves through the resorts dotting its pristine coastline, with Egypt’s vital tourism industry in the crosshairs of militants.

The bombing of the tour bus on Sunday was claimed by an Al Qaeda-inspired group, Ansar Beit Al Maqdis, which said in a statement that the bus attack was “part of our economic war against this regime of traitors”.

The bombing threatens to hit the government’s efforts to revive the key tourism industry, which accounts for over 11 per cent of Egypt’s gross domestic product (GDP).

The jihadi group “is a threat to tourism and aims to hinder the roadmap”, Egyptian newspapers quoted Prime Minister Hazem Al Beblawi as saying.

Bus driver Fekri Habib said his company has already cancelled two tourist trips to Saint Catherine’s desert monastery, one of the south Sinai destinations that South Koreans had visited before their bus was attacked near a border crossing with Israel.

The peninsula’s southern coastline, popular among Western tourists for its animated resort towns, had been spared from the violence rocking the country.      In the past three years, “south Sinai was doing well in comparison with other areas, Cairo or Luxor for instance,” tourism ministry spokeswoman Rasha Al Azayzi said.

Azayzi indicated that 75 per cent of tourists to Egypt visited the Red Sea and south Sinai shores, including the resort city of Sharm El Sheikh.

With its sunny beaches and coral reefs, south Sinai was considered a safe haven isolated from Egypt’s turmoil.

“I asked my husband how far it [Sharm El-Sheikh] was from Cairo as I was cautious not to get close to the centre,” said Suzanne Peamon, a 55-year old English tourist visiting Sharm El Sheikh.

“I did think twice about visiting Egypt, but since Sharm El Sheikh is far enough from Cairo I said okay,” she added.

But standing in the gardens of Sharm El Sheikh International hospital with the brother of the Egyptian bus driver who was also killed in the Taba blast, fellow driver Habib, 51, said he expects the attack to have a huge impact on tourism.

“Most compagnies cancelled their trips” on Monday, a day after the attack, Habib said.

‘Bye bye to tourism’  

On the road linking the capital to the resort city of Sharm El Sheikh, cars are stopped at several security checkpoints, where policemen check for identification and ask for their destination.

Mohammed Hamdi, the owner of a souvenir shop in Sharm El Sheikh, remarked that it was to early to evaluate the impact.

“It will be clearer next week or in 10 days or so, when people who were expected to come cancel their trip or not,” he said.

He acknowledged, however, that a repeat of such an attack could deal a fatal blow to an already ailing tourism industry, a vital source of income for Egypt.

“If this happens in Sharm or Hurghada, you can say bye bye to tourism,” Hamdi said.

Having dinner with her husband in a seafood restaurant, 55-year-old Italian tourist Rosalina Grumo said her friends cancelled a trip after learning of the Taba attack, but that she was already in Egypt at the time.

The government’s census agency said the number of tourists plunged in December 2013 by almost 31 per cent compared with the same month of 2012.

Tourists are still sunbathing on the beaches of Sharm El Sheikh in the morning and strolling the commercial downtown in the evening, but the town looks deserted in comparison to past years.

Tareq Hamad, owner of a beachwear boutique in a fancy mall, said he did not know if he will even be able to pay the rent at the end of the month.

“I really hope it will get better ... We can’t take any more,” he said, pointing to a steady deterioration over the past six months ever since Morsi’s ouster.

Georges Colson, chairman of French travel agency federation SNAV, said his organisation was advising people to choose alternative destinations. 

“The winter season is dead, and indications for Easter are that people are not fighting to go to Egypt,” he said. 

Tourism revenue slumped 41 per cent last year to $5.9 billion. 

In Hurghada, hundreds of kilometres south of Sinai on the Egyptian mainland, boat and beach resort manager Nasser Mazen said he was worried. 

“At the moment we only work at 25 per cent capacity of what we would normally do in February,” he said. “We hope that these attacks will stop. Tourists... see what’s happening in Egypt in the media and postpone their travel to next year or later.”

France’s Club Med, which runs the Sinai Bay resort in Taba, said it was keeping the site open but had stepped up security and was advising clients not to venture outside the village alone.

The new threats in Egypt are “a situation that is a source of concern for us”, a Club Med spokeswoman said. 

Some guests have cancelled trips, she said, and Club Med was offering refunds or the chance to book to other destinations. 

Marriott, Hilton and Accor have also stepped up security at their hotels in Sinai. 

Scaling back  

Foreign governments have warned their nationals visiting Egypt’s big cities since 2011, but the sense of urgency has grown after Sunday’s attack. 

The UK embassy in Egypt advised Britons on Wednesday against all but essential travel to most of southern Sinai, home of some of Egypt’s busiest resorts. That level of warning did not apply to the region’s biggest tourism zone, Sharm El Sheikh. 

A French diplomatic source said: “Given the Egyptian and regional context, all travellers should consider that there is a threat of terrorism. The situation in the Sinai is worrying”. 

Around 100,000 French tourists travelled to Egypt last year, already just a sixth of the number who visited in 2010.

Only days after the Taba attack, Russia’s tour operator association is reporting a fall in bookings and Germany’s travel association DRV is bracing for bad news. 

“Travel from Germany has simply not recovered since the Arab Spring and any further destabilisation only makes guests more wary,” said DRV President Juergen Buechy. 

About 975,000 Germans travelled to Egypt in 2013, 15 per cent down on 2012 and far below the 1.3 million who travelled there in 2010, the Egyptian tourist office in Frankfurt indicated. 

Russian, Germany and Britain are Egypt’s biggest source of tourists. Tour operators such as TUI Travel and Thomas Cook have scaled back the number of Egyptian holidays on offer during the past three years. 

European travel companies hit by weak local economies and the turmoil in Egypt now face more pain. The slump in Egyptian business already cut 19 million euros off TUI Travel’s operating profits in the first quarter, its parent company TUI AG  said last week.

For now, tour operators are not obliged to offer free cancellations and rebookings or to bring people home early. 

People already holidaying in the big Red Sea resorts of Sharm, Hurghada and Marsa Alam seemed untroubled by the latest news, tour operators and associations said. 

Guests are being kept up to date with news and travel advice, but none have asked to come home early, representatives of Italian and German tour operators told Reuters. 

But many have cancelled day trips to far-flung spots within Sinai such as St Catherine’s Monastery. 

“We cannot prevent clients from going to Egypt but it is our role to warn them about the risk,” said Colson of France’s SNAV.