Categories
Security Economy

Leveling the Afghan Playing Field

Afghan farmer works in the field
An Afghan farmer works in the field.

NEW YORK – Afghanistan’s security and political situation remains plagued by uncertainty, stemming from the withdrawal of United States and NATO combat troops, the upcoming presidential election, and the stalled peace negotiations with the Taliban. Recognizing that continued economic insecurity will exacerbate this perilous situation, the government has announced a new package of economic incentives aimed at attracting foreign direct investment.

The package includes the provision of land to industrialists at dramatically reduced prices, tax exemptions of up to seven years for factory owners, and low-interest loans of up to ten years for farmers. Such incentives are targeted at foreign investors and the local elite, with the aim of stopping or even reversing capital flight. But the new measures ultimately amount to more of the same: a fragmented policy approach that will prove inadequate to solve Afghanistan’s fundamental economic problems.

Categories
Global Voices

Chinese Investment: Boon or Bane for Southeast Asia?

Spontaneous protests against Myanmar’s power blackouts received news coverage in May because the government seldom permits anti-government activities. Even more significant were the protests that took place in front of the Chinese embassy in Yangon.

Protesters came together to raise their voice against the government’s decision to sell Myanmar’s limited energy reserves to China. Below is a comment from the Facebook page of Eleven Media Group [my], one of the largest private media organizations in Myanmar, which echoed the sentiment of many consumers in Myanmar:

“70% of electricity supplied to Yangon is from Law Pi Ta and Ye Ywar hydro-powered stations, that from the Shwe Li station goes to China, so there is a shortage of electricity in Yangon. Why? Go and cut China’s power!”

Protest against electricity shortages around City Hall, Yangon. Image from Facebook page of CJMyanmar.
Protest against electricity shortages around City Hall, Yangon. Image from Facebook page of CJMyanmar.
Categories
International Relations Government Elections Foreign policy Economy

Mongolia: Between a Rock and a Hard Place

Ulan Bator - Bejing
Ulan Bator - Bejing. Photo: Dave Gray/flickr.

Given Mongolia’s potential to become a future commodity powerhouse, it does not seem strange that recent legislation that aims to cap foreign investment and ownership was a cause for concern among the domestic and global business community. The Strategic Foreign Investment Law  aims to confront two major challenges to Mongolia’s social and economic development. Firstly, the regime has to respond to domestic demands that resource wealth is used to benefit the wider population.  Moreover, Mongolia also seeks to reduce its dependence on its two powerful neighbors and in particular to limit Chinese influence over its economy. Neither of these dilemmas will be easily resolved.

After intense domestic lobbying, the Mongolian Parliament approved a watered-down version of the Strategic Foreign Investment Law on 17 May. Initially, the law stipulated that foreign investors seeking to buy a stake of more than 49% in Mongolian companies required the approval of Mongolia’s Foreign Investment and Foreign Trade Agency (Fifta) and Parliament.  However, following amendments aimed at appeasing foreign investors, the conditions only apply to companies involved in Mongolia’s ‘strategically important’ mining, financial, and media and telecommunications sectors and when deals are valued at above $76 million. Yet deals in which the buyer company is even partially in state ownership will require approval regardless of the sector of the business.

Categories
Social Media Internet Economy

Google in Indonesia

Indonesian coffee klatsch. Photo: Emmy La Imu

Google will expand its operations in Indonesia and plans to open a local office by 2012, government officials announced, after encouraging talks between the Indonesian vice president and Google Chairman Eric Schmidt. The reasons for the investment are obvious: Indonesia is the largest and fastest growing online market in Southeast Asia, and its ‘bright and promising’ digital start-up scene is ready to take off.

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Environment

100% Green Electricity: the Battle over Investment

Countries look forward to attract investment. Photo: Tim Snell/Flickr

Scotland and Albania want to produce 100% of their electricity from renewable sources by 2020. Their commitment, both prime ministers argue, is not only a huge step towards a more sustainable society but will also comprise the creation of thousands of “green collar” jobs. This is good news for the environment and also for their respective populations. But with little more than 8 years to go, isn’t this target too ambitious for the nations’ actual capacities?

The governments’ announcements come at a crucial moment. Investors have started to shift their business to China, and last month a report by the group CBI warned that the United Kingdom was not attractive for investment in renewables. But the recent disaster at the Fukushima nuclear plants and the long-standing urge for clean energies have shifted public opinion in Europe to make way for a new reality. A second green revolution is building as European countries renew their commitment to clean energies as the way forward.