El Salvador becomes first country to make bitcoin legal tender

Bitcoin banners are seen outside of a small restaurant at El Zonte Beach in Chiltiupan, El Salvador on June 8, 2021. (REUTERS/Jose Cabezas)
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Bitcoin banners are seen outside of a small restaurant at El Zonte Beach in Chiltiupan, El Salvador on June 8, 2021. (REUTERS/Jose Cabezas)
A couple make a Bitcoin transaction at a Bitcoin support office at El Zonte Beach in Chiltiupan, El Salvador on June 8, 2021. (REUTERS/Jose Cabezas)
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A couple make a Bitcoin transaction at a Bitcoin support office at El Zonte Beach in Chiltiupan, El Salvador on June 8, 2021. (REUTERS/Jose Cabezas)
People make a Bitcoin transaction and learn how to use it at a Bitcoin support office at El Zonte Beach in Chiltiupan, El Salvador, on June 8, 2021. (REUTERS/Jose Cabezas)
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People make a Bitcoin transaction and learn how to use it at a Bitcoin support office at El Zonte Beach in Chiltiupan, El Salvador, on June 8, 2021. (REUTERS/Jose Cabezas)
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Updated 10 June 2021

El Salvador becomes first country to make bitcoin legal tender

El Salvador becomes first country to make bitcoin legal tender
  • Will become legal tender in 90 days
  • Prices can be expressed, taxes paid in bitcoin

SAN SALVADOR: El Salvador became the first country in the world to adopt bitcoin as legal tender after Congress on Wednesday approved President Nayib Bukele’s proposal to embrace the cryptocurrency, a move that delighted the currency’s supporters.
With 62 out of 84 possible votes, lawmakers voted in favor of the move to create a law to adopt bitcoin, despite concern about the potential impact on El Salvador’s program with the International Monetary Fund.
Bukele has touted the use of bitcoin for its potential to help Salvadorans living abroad to send remittances back home, while saying the US dollar will also continue as legal tender. El Salvador does not have its own currency.
“It will bring financial inclusion, investment, tourism, innovation and economic development for our country,” Bukele said in a tweet shortly before the vote in Congress, which is controlled by his party and allies.
In an idea he appeared to have developed overnight, Bukele later said he had instructed state-owned geothermal electric firm LaGeo to develop a plan to offer bitcoin mining facilities using renewable energy from the country’s volcanoes.
He said the idea was to build a bitcoin mining hub around the country’s geothermal potential. He also said that El Salvador would offer citizenship to people who showed evidence they had invested in at least three bitcoins.
The use of bitcoin will be optional for individuals and would not bring risks to users, Bukele said, with the government guaranteeing convertibility to dollars at the time of transaction through a $150 million trust created at the country’s development bank BANDESAL.
Under the law, bitcoin must be accepted by firms when offered as payment for goods and services. Tax contributions can also be paid in the cryptocurrency.
“If you go to a McDonald’s or whatever, they cannot say we’re not going to take your bitcoin, they have to take it by law because it’s a legal tender,” Bukele said in an online conversation he held with crypto-currency industry figures in parallel to the debate in Congress.
Its use as legal tender will begin in 90 days, with the bitcoin-dollar exchange rate set by the market. Bukele said the government and Central Bank did not currently hold any bitcoin.
Cryptocurrency supporters hailed the move as legitimising the emerging asset, but its impact on bitcoin regulation, taxation or adoption in other countries remains to be seen.
There were no immediate signs that other countries would follow El Salvador’s embrace of bitcoin.
“Whether this becomes the first in what becomes a trend and then snowballs, or whether this will be a blip, we will only know through history,” said Brandon Thomas, partner at advisory firm Grayline Group.
Analysts have also said the move could complicate talks with the IMF, where El Salvador seeks a more than $1 billion program.
Bukele said he will meet with the IMF on Thursday to discuss the bitcoin law, among other issues. He said in setting up the meeting he had tried to explain to them that the shift was “not going to change our macroeconomics.”
Bitcoin enjoyed its best day in two weeks, rising as much as 6 percent to $35,200.
“The market will now be focused on adoption through El Salvador and whether other nations follow,” said Richard Galvin of crypto fund Digital Asset Capital Management. “This could be a key catalyst for bitcoin over the next two to three years.”

Beach inspiration
It was not immediately clear how long Bukele had been working on the bitcoin plan, but he said on Wednesday he was inspired by a project called Bitcoin Beach that introduced the cryptocurrency in an El Salvador beach town last year.
He worked on the idea with Jack Mallers, CEO of Strike, a digital wallet that uses the Lightning Network to enable small payments in Bitcoin.
Bukele has also pointed out a tweet of his from 2017, before he was a presidential candidate, in which he suggested using bitcoin.
Emerging economies — where bank penetration is much lower than in developed countries and reliance on money transfers from abroad much higher — have quickly warmed to cryptocurrencies.
Outside the United States, countries with the highest crypto production and trading volumes are all developing nations, according to BofA, including China, Colombia and India.
Bukele says some 70 percent of people in El Salvador lack access to traditional financial services.
But the use of digital currencies in general can also pose risks for dollarized economies, analysts say.
“The root cause of dollarization is high local inflation, which could worsen, too, if digital currencies prove inflationary,” said David Hauner at BofA.
El Salvador relies heavily on money sent back from workers abroad. World Bank data showed remittances to the country made up nearly $6 billion or around a fifth of GDP in 2019, one of the highest ratios in the world. The cryptocurrency offers, in theory, a quick and cheap way to send money across borders without relying on remittance firms typically used for such transactions. It is not clear what proportion of remittances sent to El Salvador are in bitcoin.
Converting local currencies to and from bitcoin often relies on informal brokers, while trading often demands technical knowledge.
El Salvador will promote training and mechanisms to allow access to bitcoin transactions, the law said.
Financial regulators and policymakers warn bitcoin facilitates money laundering and other illicit uses.
Bukele brushed off the fears, saying criminals already use US dollars and other assets to launder money.
“The problem is not the dollar, it is the criminals,” he said. 


Saudi National Development Fund targets infrastructure projects

Saudi National Development Fund targets infrastructure projects
Updated 15 June 2021

Saudi National Development Fund targets infrastructure projects

Saudi National Development Fund targets infrastructure projects
  • The capital of the new fund could "reach several billion royals"

RIYADH: The Saudi National Development Fund is preparing to launch a new fund targeting infrastructure projects in the Kingdom.
The capital of the new fund could "reach several billion royals", Asharq Business reported, citing unidentified sources.
Muhammad bin Mazyad Al-Tuwaijri, deputy chairman of the National Development Fund said in February that the Kingdom had started to work  on the launch of an infrastructure fund.
Saudi Arabia launched an ambitious SR12 trillion ($3.2 trillion) program in March to boost the role of the private sector in diversifying the economy.
Under the 'Shareek program', private sector businesses will be helped to invest SR5 trillion between now and 2030, along with SR3 trillion from the country's sovereign wealth fund, the Public Investment Fund (PIF), and SR4 trillion as part of a new national investment strategy.

 


Omani Octal said to weigh $800m majority stake sale

Omani Octal said to weigh $800m majority stake sale
Updated 15 June 2021

Omani Octal said to weigh $800m majority stake sale

Omani Octal said to weigh $800m majority stake sale
  • A sale could value Octal at about $800 million

RIYADH: Octal, an Omani plastics packaging manufacturer, is considering a majority stake sale, Bloomberg reported citing people familiar with the matter.
A sale could value Octal at about $800 million, one of the people said. The company is working with JPMorgan Chase & Co., the people said, asking not to be identified for information confidentiality.  
The Muscat-based company has already attracted strategic suitors in Asia and the US, they said.
Octal was founded in 2006 and produces plastic used to package food and consumer products. The company is present in Oman, Saudi Arabia and the US and ships its products to more than 75 countries, according to its website.
The potential sale would add to the $96 billion of deals targeting companies in the Middle East and Africa this year, according to data compiled by Bloomberg.


Egypt clothing exports hit by surging shipping costs

Egypt clothing exports hit by surging shipping costs
Updated 15 June 2021

Egypt clothing exports hit by surging shipping costs

Egypt clothing exports hit by surging shipping costs
  • Rising container costs are affecting both their imports of raw material as well as their export of finished garments according to Mohamed Kassem

RIYADH: Egyptian clothing manufacturers are being hammered by surging shipping costs.

Rising container costs are affecting both their imports of raw material as well as their export of finished garments according to Mohamed Kassem, a member of the Egyptian Exporters Association.

Fabrics from China account for most of the country’s clothing exports, he told Al Arabiya.
The cost of shipping a 40-feet container from Shanghai to an Egyptian port has rocketed to as much as $14,000 compared to $2,500 before the pandemic, he said.
That has led to increased competitive pressures for Egyptian textiles exporters from rivals in Asia.
He called on the state to intervene to help support the industry.


Indian shares close at record highs as pandemic curbs ease, cases fall

Indian shares close at record highs as pandemic curbs ease, cases fall
Updated 15 June 2021

Indian shares close at record highs as pandemic curbs ease, cases fall

Indian shares close at record highs as pandemic curbs ease, cases fall
  • Many Indian states eased coronavirus restrictions on Monday, including the national capital New Delhi, where authorities allowed shops and malls to open as the number of new cases dropped to the lowest in more than two months

BENGALURU: Indian shares ended at record highs on Tuesday, as declining COVID-19 infections prompted many states to re-open businesses, with a rally in broader markets also helping the sentiment.
The blue-chip NSE Nifty 50 index rose 0.36 percent to 15,869.25 and the benchmark S&P BSE Sensex climbed 0.42 percent to 52,773.05 at close.
Many Indian states eased coronavirus restrictions on Monday, including the national capital New Delhi, where authorities allowed shops and malls to open as the number of new cases dropped to the lowest in more than two months.
India on Tuesday reported 60,471 new infections, the lowest since March 31.
The sentiment also tracked global stocks that hit a record high, as investors bet likely “transitory” inflation pressures will restrain the US Federal Reserve from signalling a shift in policy settings.
Many investors expect the Fed to maintain its dovish stance at its two-day meeting starting on Tuesday. Some board members, however, have said the central bank should start discussing tapering its bond buying.
In Mumbai trading, financial stocks provided a boost to the Nifty 50, with ICICI Bank and HDFC Bank ending 1.6 percent and 0.7 percent higher, respectively.
The Nifty Bank Index and the Nifty Private Bank Index, which have so far gained more than 0.55 percent this week, were among the top performers across sub-indexes rising between 0.85 percent and 1.07 percent.
Software services firm Infosys rose 0.8 percent, lifting the Nifty IT index by 0.23 percent.
Shares of Future Retail closed 10 percent higher, after staying at those levels since early trade.


Abu Dhabi’s Eagle Hills ready to open biggest water park in Jordan

Abu Dhabi’s Eagle Hills ready to open biggest water park in Jordan
Updated 15 June 2021

Abu Dhabi’s Eagle Hills ready to open biggest water park in Jordan

Abu Dhabi’s Eagle Hills ready to open biggest water park in Jordan
  • It will open on July 3
  • The park was developed by Abu Dhabi-headquartered Eagle Hills, one of the largest developers in Jordan

DUBAI: The Saraya Aqaba Waterpark – billed as the biggest in Jordan – is opening its doors on July 3.
Located in the country’s only coastal city, Aqaba, the park spans an area of more than 28,500 square meters. It has rides, slides, as well as food and beverage stalls.
“At Saraya Aqaba Waterpark, guests from all around the world are in for an aquatic adventure like no other with slides, rides and experiences suitable for guests of all ages,” Chris Van Der Merwe, its general manager said in a statement.
The park was developed by Abu Dhabi-headquartered Eagle Hills, one of the largest developers in Jordan, and is operated by Abu Dhabi-based Farah Experience, which also handles Ferrari World Abu Dhabi.
Theme parks and other physical attractions have taken a hit when the pandemic forced countries to restrict people’s mobility, however some are now welcoming guests again as attractions make a gradual return.