Middle East executives have ‘potential blind spot’ over climate change risk

The Noor solar complex in Morocco. Regional business leaders run the risk of underestimating the threat of climate change, a World Economic Forum report has warned. (AFP/Getty)
Updated 05 April 2019
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Middle East executives have ‘potential blind spot’ over climate change risk

  • New analysis of regional risks found economic and governance issues rank most highly as topics of concern
  • Report released ahead of World Economic Forum on the Middle East and North Africa

LONDON: Regional business leaders run the risk of underestimating the threat of climate change, a World Economic Forum report has warned.
A new analysis of regional risks found that economic and governance issues rank most highly as topics of concern among executives in the Middle East and North Africa.
But environmental factors are “not top of mind,” despite being a real risk, the World Economic Forum (WEF) report found.
The WEF’s “Middle East and North Africa Risks Landscape” report published on Thursday draws on data from the forum’s Executive Opinion Survey 2018 and Global Risks Perception Survey 2018-2019.
Global respondents to the latter survey ranked “economic confrontations between major powers” as the greatest risk for 2019, and climate-change-related issues as the leading risk over the next 10 years.
Yet the environment was not seen as a big risk by regional executives, despite the Middle East and North Africa (MENA) being home, for example, to numerous coastal ports that would be affected by rising sea levels caused by climate change.
“Notably, business leaders in the MENA region who responded to the Executive Opinion Survey did not rank environmental change as a risk to doing business — a potential blind spot given the potential implications of global warming,” the report said.
“Instead, business leaders ranked economic and governance-related issues — ‘energy price shocks’ and ‘unemployment or underemployment’ — as well as ‘terrorism’ as the top three risks to doing business in the region.”
Mirek Dusek, the deputy head of the Center for Geopolitical and Regional Affairs and a member of the Executive Committee at the World Economic Forum, said that no one country was insulated from global risk factors.
“In today’s interconnected world, risks no longer stop at borders on a map or are confined to one industry in an economy,” he said.
“Because global risks are shaping regional landscapes and vice versa, it is important to take a ‘glocal’ approach to risk assessment. Our analysis offers a combination of global and local analysis so that stakeholders can gain a better understanding of what is necessary for risk mitigation and resiliency.”
The report was released ahead of the World Economic Forum on the Middle East and North Africa event being held on April 6-7 at the Dead Sea in Jordan.


Foreign investors hope India dials back policy shocks after Modi win

Updated 33 min 37 sec ago
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Foreign investors hope India dials back policy shocks after Modi win

  • Modi’s pro-business image and India’s youthful population have lured foreign investors
  • After Modi’s win, about a dozen officials of foreign companies in India and their advisers said they hoped he would ease his stance and dilute some of the policies

NEW DELHI: Foreign companies in India have welcomed Prime Minister Narendra Modi’s election victory for the political stability it brings, but now they need to see him soften a protectionist stance adopted in the past year.
Modi’s pro-business image and India’s youthful population have lured foreign investors, with US firms such as Amazon.com , Walmart and Mastercard committing billions of dollars in investments and ramping up hiring.
India is also the biggest market by users for firms such as Facebook Inc, and its subsidiary, WhatsApp.
But from around 2017, critics say, the Hindu nationalist leader took a harder, protectionist line on sectors such as e-commerce and technology, crafting some policies that appeared to aim at whipping up patriotic fervor ahead of elections.

Opinion

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“I hope he’s now back to wooing businesses,” said Prasanto Roy, a technology policy analyst based in New Delhi, who advises global tech firms.
“Global firms remain deeply concerned about the lack of policy stability or predictability, this has sent a worrying message to global investors.”
India stuck to its policies despite protests and aggressive lobbying by the United States government, US-India trade bodies and companies themselves.
Small hurdles
Modi was set to hold talks on Friday to form a new cabinet after election panel data showed his Bharatiya Janata Party had won 302 of the 542 seats at stake and was leading in one more, up from the 282 it won in 2014.
After Modi’s win, about a dozen officials of foreign companies in India and their advisers told Reuters they hoped he would ease his stance and dilute some of the policies.
Other investors hope the government will avoid sudden policy changes on investment and regulation that catch them off guard and prove very costly, urging instead industry-wide consultation that permits time to prepare.
Protectionism concerns “are small hurdles you have to go through,” however, said Prem Watsa, the chairman of Canadian diversified investment firm Fairfax Financial, which has investments of $5 billion in India.
“There will be more business-friendly policies and more private enterprise coming into India,” he told Reuters in an interview.
Tech, healthcare and beyond
Among the firms looking for more friendly steps are global payments companies that had benefited since 2016 from Modi’s push for electronic payments instead of cash.
Last year, however, firms such as Mastercard and Visa were asked to store more of their data in India, to allow “unfettered supervisory access,” a change that prompted WhatsApp to delay plans for a payments service.
Modi’s government has also drafted a law to clamp similar stringent data norms on the entire sector.
But abrupt changes to rules on foreign investment in e-commerce stoked alarm at firms such as Amazon, which saw India operations disrupted briefly in February, and Walmart, just months after it invested $16 billion in India’s Flipkart.
Policy changes also hurt foreign players in the $5-billion medical device industry, such as Abbott Laboratories, Boston Scientific and Johnson & Johnson, following 2017 price caps on products such as heart stents and knee implants.
Modi’s government said the move aimed to help poor patients and curb profiteering, but the US government and lobby groups said it harmed innovation, profits and investment plans.
“If foreign companies see their future in this country on a long-term basis...they will have to look at the interests of the people,” Ashwani MaHajjan, an official of a nationalist group that pushed for some of the measures, told Reuters.
That view was echoed this week by two policymakers who said government policies will focus on strengthening India’s own companies, while providing foreign players with adequate opportunities for growth.
Such comments worry foreign executives who fear Modi is not about to change his protectionist stance in a hurry, with one offical of a US tech firm saying, “I’d rather be more worried than be optimistic.”