Business

WASHINGTON — Ajay Banga began his first day at the helm of the World Bank Group on Friday, taking charge of the development lender as it grapples with questions about its future direction.

"We are at a critical moment in the arc of humanity and the planet," Banga wrote Friday morning in an email to staff obtained by AFP, calling on the bank to "evolve" to meet the challenges it now faces.

An Indian-born, naturalized US citizen, Banga was nominated to the position by US President Joe Biden after a successful business career which included a long stretch running the payments company Mastercard.

Banga, 63, has taken over from David Malpass as the bank's 14th president on a pledge to expand the role of the private sector in addressing the world's development needs.

"The scale and diversity of our challenges — poverty and development, pandemics, climate change, conflict, and fragility — are deeply intertwined and threaten our collective ambitions, as decades worth of hard-won progress erode," Banga said in his email. 

"The World Bank's challenge is clear: It must pursue both climate adaptation and mitigation, it must reach out to lower income countries without turning its back on middle income countries, it must think globally but recognise national and regional needs, it must embrace risk but do so prudently," he added. 

"Change is appropriate for the World Bank," he said. "It isn't a symptom of failure or drift or irrelevance, it is a symptom of opportunity, life, and importance." 

Banga took over the top job at the World Bank from Malpass, who stepped down early from his five-year term amid questions about his stance on climate change.

Under an increasingly contentious unwritten arrangement, a US citizen has historically held the presidency of the Washington-based development lender, while the International Monetary Fund has been run by a European.

In his final message as World Bank president on Thursday, Malpass touted the World Bank's role in "quickly" mobilizing resources to respond to the COVID-19 pandemic and war in Ukraine, and highlighted the doubling of climate financing for developing countries under his watch.

"One of my key priorities while at the Bank has been to foster more debt transparency and sustainability — both essential to bolster investment and growth in developing economies," he wrote in the statement posted on LinkedIn.

SYDNEY — Global mining giant BHP said Thursday it had been underpaying thousands of Australian staff for more than a decade, an error that will cost at least $280 million to fix.

The company said 28,500 current and former employees were stripped of paid leave they were entitled to. 

BHP Australia president Geraldine Slattery said the error would be rectified "as quickly as possible" and "with interest".

The company did not explain how the error occurred.

"We are sorry to all current and former employees impacted by these errors. This is not good enough and falls short of the standards we expect at BHP," Slattery said.

BHP expects to have a fuller estimate of the cost of the error when it reports earnings in August, but it put the initial price tag at "$280 million pre-tax".

The company's share price fell almost one percent on the news.

BHP is one of the world's largest companies, and a leading producer of metallurgical coal, iron ore, nickel, copper and potash.

Australia has some of the world's strongest labour protections and it is not uncommon for companies to discover problems with past payrolls and be forced to rectify the situation.

BEIJING — Elon Musk and China's industry minister discussed ways to develop new energy vehicles Wednesday, a day after the Tesla CEO flew into Beijing and declared he wanted to expand his business in the world's second largest economy.

The mercurial billionaire, one of the world's richest men, is on his first trip to China in more than three years.

On Wednesday he met Jin Zhuanglong in Beijing to discuss "the development of new energy vehicles and intelligent connected vehicles", the Ministry of Industry and Information Technology said in a readout.

It did not share further details. Tesla representatives did not respond to AFP requests for further information on Musk's itinerary.

Musk has extensive business interests in China and on Tuesday told foreign minister Qin Gang that his firm was "willing to continue to expand its business in China", according to a foreign ministry readout.

Chinese media reported Tesla welcomed its CEO to Beijing on Tuesday with a 16-course dinner that included seafood, New Zealand lamb and traditional Beijing-style soybean paste noodles. 

China is the world's biggest electric vehicle market and Tesla announced in April it would build a second massive factory in Shanghai, which would be its second plant in the city after Gigafactory, which broke ground in 2019.

In his meeting with Qin on Tuesday, Musk also expressed his opposition to an economic "de-coupling" between China and the United States, Beijing said.

"The interests of the United States and China are intertwined, like conjoined twins, who are inseparable from each other," Musk added.

Musk's extensive business ties to China have raised eyebrows in Washington, with President Joe Biden saying in November that the executive's links to foreign countries were "worthy" of scrutiny.

And he has caused controversy by suggesting the self-ruled island of Taiwan should become part of China — a stance welcomed by Chinese officials but which deeply angered Taiwan.

Critics point to the industrial ties linking Musk to China, which has increasingly fraught ties with Washington.

Chinese foreign ministry spokeswoman Mao Ning said on Tuesday that the country welcomed visits by international executives "to better understand China and promote mutually beneficial cooperation".

ISTANBUL — Turkey's economy is in a double bind: analysts see its current policies leading to imminent peril and the prescriptions incurring massive pain.

President Recep Tayyip Erdogan campaigned round the clock to win the toughest election of his two decades in power in a historic runoff last weekend.

He also poured billions of dollars into campaign pledges — and tens of billions more into keeping the lira from suffering politically sensitive falls before the vote.

Analysts at Capital Economics think Turkey now faces its post-election "day of reckoning".

Turkey's once-vibrant economy — driven by relatively cheap labour and a well-oiled banking system — is confronting a self-inflicted problem few other countries have faced.

Erdogan has waged a lifelong war on high interest rates that he occasionally attributes to his faith in Muslim rules against usury.

He calls high rates "the mother and father of all evil" promoted by a foreign "interest lobby".

Erdogan sped through a series of central bankers before finding one willing to follow through on his desire to slash rates at all costs in 2021.

The results were dire.

Freefall 

The lira entered a freefall and the official annual inflation rate soon touched 85 per cent. The unofficial one estimated by economists — and believed by most Turks — neared 200 per cent.

Analysts see the most recent period of chaos as the culmination of Erdogan's gradual departure from the prosperous policies of his first decade of rule.

Foreign investors have largely abandoned Turkey because of its political instability and Erdogan's takeover of state institutions that were once run by impartial technocrats.

"The balance sheet so far of Erdogan's two decades in power has been the progressive destabilisation of the economy," Conotoxia investment firm market analyst Bartosz Sawicki said.

"Foreign equity exposure to Turkish bonds is estimated to have declined by around 85 per cent since 2013, during which time the lira has lost around 90 per cent against the dollar."

Turkey's most immediate problem is that its central bank is running out of cash.

It burned through nearly $30 billion supporting the lira this year alone.

The bank's net international reserves — a technical measure of how much it has to spend on emergencies — have dropped into negative territory for the first time since 2002.

"The current setup is just not sustainable," London-based emerging markets economist Timothy Ash said.

Export competitiveness

Analysts have two simple solutions: Quickly hike interest rates and let the lira float freely again.

Turkey's currency support measures have wiped out the benefits low interest rates gave its loan-dependent producers.

The cars and jewellery Turkey exports in places such as the United States and Europe now simply cost too much.

Analysts at Allianz said the lira has "appreciated by around 35 per cent in real effective terms since the unorthodox monetary policy stance took full effect in December 2021".

The lira was hovering near a record 20.3 to the dollar on Tuesday. Analysts at JPMorgan think it could reach the 30 mark if the government stopped intervening.

This would further erode people's purchasing power and potentially require the government to find billions of dollars to spend on new social support measures.

The vicious cycle could be broken by a sharp interest rate hike — something Erdogan has repeatedly ruled out during the campaign.

Atilla Yesilada, analyst at Turkish consultancy GlobalSource Partners, worries that they country may simply start printing money to pay for the huge hikes in benefits and wages Erdogan promised during the campaign.

'Soft capital controls' 

Turkey must also find vast sums — estimated at roughly $100 billion — to pay for the reconstruction of cities destroyed by a February earthquake that claimed more than 50,000 lives.

"How any government would finance the reconstruction effort without printing money and leading to hyperinflation is a question that people prefer not to address at this point," Yesilada said.

Analysts agree that Turkey would eventually have no choice but to raise rates.

Emre Peker, Europe director at the Eurasia Group political risk consultancy, said Turkey would first try to contain demand for dollars through "soft capital controls on locals".

But Erdogan could relent and raise rates once March 2024 municipal elections involving Turkey's biggest cities are out of the way.

Allianz said they should go up from the current 8.5 per cent to at least 20-25 per cent — the current rate of bank deposits.

But that would create still more problems.

"Raising rates will reduce bank capital," Yesilada warned. "Banks will not be able to lend for a long time."

TAIPEI — Nvidia chief Jensen Huang said the world was at "the tipping point of a new computer era" as he unveiled a raft of AI-related products Monday in his first public speech in four years at a Taiwan tech trade show.

The US firm, which specialises in chips coveted in the artificial intelligence boom, saw its value surge to nearly $1 trillion last week, after the company's quarterly earnings report blew past expectations.

Nvidia is known for creating graphics chips long coveted by gamers but which have become engines for the kind of complex processes involved in artificial intelligence, known as accelerated computing.

Its chips are a central ingredient to the generative AI revolution, capable of delivering the computing heft needed to churn out complex content in just seconds from data centres around the world.

In Taipei on Monday, the Taiwanese-American CEO expressed excitement to be back at the Computex forum, one of the largest trade shows for the sector.

"Our first live event in almost four years! I haven't given a public speech in four years — wish me luck!" he said.

Huang's two-hour presentation introduced a dizzying host of new products — including an AI supercomputer platform called DGX GH200, which he said is now "in full production".

"We're so excited that Google Cloud, Meta and Microsoft will be the first companies in the world to have access," he added.

"They will be doing be doing exploratory research on the pioneering front, the boundaries of artificial intelligence, with us."

The new supercomputer will — in theory — help the tech industry as it seeks to create more AI-related products, which require more complex computing tasks.

"This is really one of the first major times in history a new computing model has been developed and created," he said, referring to accelerated computing.

"We have now reached the tipping point of a new computing era."

Founded 30 years ago by Huang, Nvidia was initially a star in the video game world. The Silicon Valley-based company has since built its reputation on making graphics processing units, which ramp up image quality and vanquish response lag time for gamers.

Its shares soared more than 25 percent Wednesday after an earnings report showed the AI trend is fuelling demand for its sophisticated chips.

LONDON — US tobacco giant Philip Morris International (PMI) is fighting to get Britain, France and other countries to make it easier to promote alternatives to cigarettes such as heated tobacco and vaping.

PMI embarked on a strategic shift six years ago to become a smoke-free company, against a backdrop of increasingly stringent regulations in many countries, costly lawsuits and falling smoking rates. 

The group has injected more than $10 billion into new products, which now account for a third of its $32 billion sales for the financial year 2022. 

It has a very limited presence in the vaping e-cigarette market.

But in the UK, the promotion of conventional or heated tobacco is forbidden, while gleaming e-cigarette stores are popping up all over the place. 

In countries where "alternatives" are not allowed, such as Turkey, Belgium or Singapore, PMI has no plans to move away from conventional cigarettes.

Stopping the sale of traditional cigarettes will "make Philip Morris look better" but not affect the one billion smokers who can "continue buying a product from somebody else", chief executive Jacek Olczak told AFP. 

Instead, he wants to "convince the governments... [to] allow the alternatives and we can start reducing the sale of cigarettes much faster".

In countries open to alternatives, he sees this deadline within 10 years. 

"Our vision is of a smoke-free future," he added.

Risks 

Heated tobacco products, or HTPs, use a high heat to decompose tobacco, via a process called pyrolysis, which does not set it on fire or burn it, therefore avoiding creating smoke.

PMI acknowledges that alternatives to conventional tobacco remain addictive because they contain nicotine and are not "risk-free".

Health organisations are split about their level of harmfulness.

"In recent years, HTPs have been promoted as reduced harm products or products that can help people quit conventional tobacco smoking," the World Health Organisation (WHO) states.

"HTPs expose users to toxic emissions, many of which cause cancer and currently there is not enough evidence to suggest that they are less harmful than conventional cigarettes."

The US Centres for Disease Control and Prevention also stresses that tobacco, including heated tobacco, is "harmful" and "highly addictive".

It notes that: "Additional research is needed to determine whether adult cigarette smokers who completely switch to heated tobacco products might reduce their risks of tobacco-related disease." 

Tobacco kills eight million people a year worldwide.

However, the WHO, the UK's National Health Service and even anti-smoking groups agree with Olczak that alternatives to conventional tobacco can help some people to quit. 

"People smoke for the nicotine, they die from the tar," said Deborah Arnott, head of British NGO Action on Smoking and Health. 

"We support nicotine containing e-cigarettes as they help adult smokers quit, as does licensed medicinal nicotine replacement therapy which is recognised by the WHO as an essential medicine."

However, Arnott takes issue with PMI being allowed to promote heavily its new products, "when they are a tobacco product". 

She argued that PMI's sole objective is "to protect its future earnings streams". 

Habits 

For Olczak, the many restrictive policies — age verification, hidden packets at retailers, unmarked packs with health warnings — have had only a "minimal" impact.

He instead attributes the fall in smoking in Sweden and Japan to the marketing of so-called alternatives. 

Smoking in Japan has fallen from 84 per cent of men in the 1960s to around 30 per cent in 2018, with Japan Tobacco International attributing the decline to a growing public awareness of health issues, tougher regulations, price rises and an ageing population. 

Arnott notes that PMI's heated tobacco "has been most successful in Japan, where it can be actively promoted and electronic cigarettes are banned". 

In Sweden, the public health agency notes that the use of alternatives such as snus (a form of snuff popular in Nordic countries) or e-cigarettes increases the risk of switching to conventional cigarettes among new users — a particular concern for younger people.

On its website, the agency says it does not have enough data to say that the use of alternative products leads to a change in tobacco consumption.