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Business

Global supply chains buckle as virus variant and disasters strike

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LONDON/BEIJING, July 23 (Reuters) – A new worldwide wave of COVID-19. Natural disasters in China and Germany. A cyber attack targeting key South African ports.

Events have conspired to drive global supply chains towards breaking point, threatening the fragile flow of raw materials, parts and consumer goods, according to companies, economists and shipping specialists.

The Delta variant of the coronavirus has devastated parts of Asia and prompted many nations to cut off land access for sailors. That’s left captains unable to rotate weary crews and about 100,000 seafarers stranded at sea beyond their stints in a flashback to 2020 and the height of lockdowns.

“We’re no longer on the cusp of a second crew change crisis, we’re in one,” Guy Platten, secretary general of the International Chamber of Shipping, told Reuters.

“This is a perilous moment for global supply chains.”

Given ships transport around 90% of the world’s trade, the crew crisis is disrupting the supply of everything from oil and iron ore to food and electronics.

German container line Hapag Lloyd (HLAG.DE) described the situation as “extremely challenging”.

“Vessel capacity is very tight, empty containers are scarce and the operational situation at certain ports and terminals is not really improving,” it said. “We expect this to last probably into the fourth quarter – but it is very difficult to predict.”

Meanwhile, deadly floods in economic giants China and Germany have further ruptured global supply lines that had yet to recover from the first wave of the pandemic, compromising trillions of dollars of economic activity that rely on them.

The Chinese flooding is curtailing the transport of coal from mining regions such as Inner Mongolia and Shanxi, the state planner says, just as power plants need fuel to meet peak summer demand.

In Germany, road transportation of goods has slowed significantly. In the week of July 11, as the disaster unfolded, the volume of late shipments rose by 15% from the week before, according to data from supply-chain tracking platform FourKites.

Nick Klein, VP for sales and marketing in the Midwest with Taiwan freight and logistics company OEC Group, said companies were scrambling to free goods stacked up in Asia and in U.S. ports due to a confluence of crises.

“It’s not going to clear up until March,” Klein said.

MORE PAIN FOR AUTOMAKERS

Manufacturing industries are reeling.

Automakers, for example, are again being forced to stop production because of disruptions caused by COVID-19 outbreaks. Toyota Motor Corp said this week it had to halt operations at plants in Thailand and Japan because they couldn’t get parts.

Stellantis temporarily suspended production at a factory in the U.K. because a large number of workers had to isolate to halt the spread of the virus.

The industry has already been hit hard by a global shortage of semiconductors this year, mainly from Asian suppliers. Earlier this year, the auto industry consensus was that the chip supply crunch would ease in the second half of 2021 – but now some senior executives say it will continue into 2022.

An executive at a South Korea auto parts maker, which supplies Ford, Chrysler and Rivian, said raw materials costs for steel which was used in all their products had surged partly due to higher freight costs.

“When factoring in rising steel and shipping prices, it is costing about 10% more for us to make our products,” the executive told Reuters, declining to be named due to the sensitivity of the matter.

“Although we are trying to keep our costs low, it has been very challenging. It’s just not rising raw materials costs, but also container shipping prices have skyrocketed.”

Europe’s biggest home appliances maker, Electrolux (ELUXb.ST), warned this week of worsening component supply problems, which have hampered production. Domino’s Pizza (DPZ.N) said the supply-chain disruptions were affecting the delivery of equipment needed to build stores.

U.S. AND CHINA STRUGGLE

Buckling supply chains are hitting the United States and China, the world’s economic motors that together account for more 40% of global economic output. This could lead to a slowdown in the global economy, along with rising prices for all manner of goods and raw materials.

U.S. data out Friday dovetailed with a growing view that growth will slow in the last half of the year after a booming second quarter fueled by early success in vaccination efforts.

“Short-term capacity issues remain a concern, constraining output in many manufacturing and service sector companies while simultaneously pushing prices higher as demand exceeds supply,” said Chris Williamson, chief business economist at IHS Markit.

The firm’s “flash” reading of U.S. activity slid to a four-month low this month as businesses battle shortages of raw materials and labor, which are fanning inflation. read more

It’s an unwelcome conundrum for the U.S. Federal Reserve, which meets next week just six weeks after dropping its reference to the coronavirus as a weight on the economy. read more

The Delta variant, already forcing other central banks to consider retooling their policies, is fanning a new rise in U.S. cases, and inflation is running well above expectations.

‘WE NEED TO SUPPLY STORES’

Ports across the globe are suffering the kinds of logjams not seen in decades, according to industry players.

The China Port and Harbour Association said on Wednesday that freight capacity continued to be tight.

“Southeast Asia, India and other regions’ manufacturing industry are impacted by a rebound of the epidemic, prompting some orders to flow to China,” it added.

Union Pacific (UNP.N), one of two major railroad operators that carry freight from U.S. West Coast ports inland, imposed a seven-day suspension of cargo shipments last weekend, including consumer goods, to a Chicago hub where trucks pick up the goods.

The effort, which aims to ease “significant congestion” in Chicago, will put pressure on ports in Los Angeles, Long Beach, Oakland and Tacoma, specialists said.

A cyber attack hit South African container ports in Cape Town and Durban this week, adding further disruptions at the terminals. read more

If all that were not enough, in Britain the official health app has told hundreds of thousands of workers to isolate following contact with someone with COVID-19 – leading to supermarkets warning of a short supply and some petrol stations closing.

Richard Walker, managing director of supermarket group Iceland Foods, turned to Twitter to urge people not to panic buy.

“We need to be able to supply stores, stock shelves and deliver food,” he wrote.

Additional reporting by Anna Ringstrom in Stockholm, Lisa Baertlein in Los Angeles, Hilary Russ in New York, Joe White in Detroit, Lucia Mutikani and Howard Schneider in Washington and Heekyong Yang in Seoul;
Editing by Simon Webb, Dan Burns and Pravin Char

Our Standards: The Thomson Reuters Trust Principles.

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World

Once its strength, water now threatens Germany

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  • Heavy rains cause trail of destruction in Germany
  • Germany’s waterways backbone of industrial success
  • Floods threaten Germany more than its neighbours

BAD MUENSTEREIFEL, Germany, July 23 (Reuters) – Bad Muenstereifel’s transformation from picturesque but sleepy German tourist town into an outlet shopping centre put it on the map for millions of visitors.

Then floods laid waste to its medieval streets and half-timbered buildings, highlighting the vulnerability of Europe’s top economy to an increasingly unpredictable climate.

Beyond the town, the flooding stretched from an area close to the western city of Cologne down to southern Bavaria, hitting the historic centres of Aachen and Trier and leaving a trail of destruction behind it.

In recent years, other heavy floods have hit other parts of Germany, overflowing the banks of the waterways that have played such a key role in its prosperity.

Those floods have caused tens of billions of euros of damage – a much bigger economic hit than any of Germany’s neighbours have suffered from inundations, according to a study by Swiss Re, which insures insurers.

In Bad Muenstereifel, the focus was on the immediate damage. As scores of soldiers passed orange buckets of debris and sludge, Marita Hochguertel recalled the town’s revamp after 2014, when an investor brought in dozens of outlet shops to fill empty storefronts.

Visitors more than doubled to 2.5 million a year, sparking a renovation boom, said Hochguertel, who has worked for the town government for 42 years.

“It brought life to the town,” she said outside the council building as muddy crews worked with bulldozers to clear wreckage, from broken chairs to the stray legs of mannequins.

Rubbish piles grew bigger as the day wore on. The smells of diesel-fuelled water pumps and dust polluted the air. A crushed car lay lodged sideways in the narrow river.

The images have shocked Germany, prompting a debate ahead of national elections that could loosen the hold on power of Chancellor Angela Merkel’s Christian Democrats and bolster the Green party.

COSTLIEST EVER

Much of Germany’s industry, including metals giant Thyssen Krupp and chemicals giants Bayer and BASF, developed in centres close to waterways such as the Rhine – which was also impacted in the recent flooding.

The network of rivers and canals remains the most extensive in Europe and is used to move around 200 million tonnes of freight each year, from grain to coal and oil. But it is fast becoming a threat.

These were the third major floods to hit Germany since the turn of the century.

In 2002, the Elbe river flooded, affecting Dresden and other cities. In 2013, floods hit Bavaria hard along the Danube and Inn rivers.

Damage for both years totalled 42 billion euros, and less than a quarter of it was insured, according to Swiss Re.

July’s floods are set to be Germany’s costliest ever, according to the German Insurance Association, which estimated claims alone at up to 5 billion euros.

The total cost, with torn roads, train tracks and phone lines, already seen in the billions, will far outstrip that.

A man looks on outside a house in an area affected by floods caused by heavy rainfalls in Bad Muenstereifel, Germany, July 19, 2021. REUTERS/Wolfgang Rattay/File Photo

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ICEYE, which monitors flood zones for insurers using satellite images, estimates that more than 37,000 German buildings have been affected by in July, compared with fewer than 1,700 in the neighbouring Netherlands.

Even before this most recent catastrophe, Swiss Re estimated the economic cost of flooding in Germany in recent decades at more than twice that of France or Britain.

But public debate, in a heavily industrialised country that relies on diesel cars, machinery and other goods to prosper, had been muted among large parts of the population.

That may be about to change.

Anders Levermann, who has advised the German government on the climate, said he feared that floods could upend the economy and political order if they become much more common events.

“What will happen if weather extremes become so frequent that we don’t have time to recover in between?” he said. Germany’s role as exporter means that supply chains across the globe could also be at risk, Levermann added.

A LONG SLOG

In the Netherlands, where roughly half the country is below sea level and where they have spent centuries holding back water, planning has been ongoing for decades. It fared better in the recent floods.

“We’ve been anticipating this for a long time,” said Marjolijn Haasnoot, a Dutch climate scientist.

“This amount of flooding will occur much more frequently … because of climate change.”

The Dutch are also slowly embarking on a debate that may have to be had in Germany – over whether they should just surrender land to advancing water.

“A lot of people think they can protect everything with dykes. What they don’t realise is that sea water is seeping inland under the dykes,” said Maarten Kleinhans of Utrecht University.

“In the long term, half of the country is under threat,” he said, of Holland. “We’ve seen it in the past – that villages and towns were washed away or disappeared into the ground. You can build sea walls to defend the cities, but you can’t do that everywhere.”

In Bad Muenstereifel, Michael Starkel, a hotel owner and head of the local business association, fears people will pack up and not return.

“I’ve talked to many people in the old town who really have thoughts to leave,” he said during a break from helping thecleanup crews clear riverbeds of tree trunks and other detritus.

If history is any indicator, people in the disaster zone are in for a long slog.

Deggendorf, a town of 37,000 residents in Bavaria hit by floods and a dam break in 2013, is still recovering, Viola Muehlbauer, the head of the mayor’s office, said.

“It will surely be a very, very long process until everything is back to normal.”

Writing by John O’Donnell; Editing by Andrew Heavens

Our Standards: The Thomson Reuters Trust Principles.

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World

EXCLUSIVE UK to warn EU it may deviate from Brexit deal on N.Ireland -sources

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  • UK prepares showdown with EU over N.Ireland
  • UK to warn it may deviate from Brexit deal
  • Frost says: Things have to change
  • Frost says: All options on the table

BRUSSELS/LONDON, July 19 (Reuters) – Britain will threaten this week to deviate from the Brexit deal unless the European Union shows more flexibility over Northern Ireland, one UK and three EU sources told Reuters, a move that could thrust the five-year Brexit divorce into tumult.

Deviating from the deal’s so-called Northern Ireland Protocol is a risky step: its aim was to prevent Brexit from disrupting the delicate peace brought to Northern Ireland by the U.S.-brokered 1998 agreement that ended three decades of sectarian conflict.

Prime Minister Boris Johnson, who signed the 2020 Brexit deal, has been dismayed by the protocol which has imposed paperwork and checks that London says could prevent British food staples such as sausages going to Northern Ireland.

David Frost, the British minister who leads Brexit negotiations, is preparing to announce a significant potential change on the protocol that could have far-reaching consequences for the relationship with the EU, one of the sources said.

The plans are being worked on by Downing Street. Frost is due to update parliament on Wednesday about Northern Ireland and Brexit, and will also present a paper on Brexit to lawmakers.

After the Reuters report, Frost told lawmakers the protocol was not sustainable in its current form and that if an agreement could not be reached then London would consider all options, including unilateral action through Article 16 of the protocol.

“All options are on the table,” Frost said, when asked if he would consider triggering Article 16. “We’ve said it’s not sustainable in the way it’s working at the moment, things have got to change.”

Frost said it was not yet clear whether or not a fundamental rebalancing of the protocol was possible.

Brussels expects Frost will push for a deviation from the protocol unless the EU agrees to compromise, said an EU diplomat who was briefed on talks with British negotiators.

“We will not agree to the reopening of the Irish protocol,” said a third source, a senior EU official.

Britain is expected to go beyond its demands for changes to veterinary rules. The senior EU official and a second EU diplomat said that London would seek to have the European Court of Justice (ECJ) removed from the arbitration process.

Preserving the peace in Northern Ireland while protecting the EU’s single market but without dividing up the United Kingdom was always the most difficult riddle of the Brexit saga since the 2016 referendum.

NORTHERN IRELAND

Since the United Kingdom exited the bloc’s orbit on Jan. 1, Johnson unilaterally delayed the implementation of some provisions of the protocol and Frost has said the protocol is unsustainable.

Frost is insisting on a bespoke veterinary deal based on equivalence which London says would remove the need for controls on goods crossing from Britain to Northern Ireland.

Britain is arguing that there should be a more flexible approach to agri-food rules to limit the impact on everyday lives and will spell out clearly what the options and risks are.

The 1998 peace deal largely brought an end to the “Troubles” – three decades of conflict between Irish Catholic nationalist militants and pro-British Protestant “loyalist” paramilitaries in which 3,600 people were killed.

An open Irish land border is seen as crucial to the spirit of that deal by aiming to safeguard peace, free trade and travel on the island.

But that became a problem after the 2016 Brexit vote. The EU could not close the land border between Northern Ireland and Ireland but feared it could become a backdoor into the EU’s single market.

The result was the 63-page “Protocol on Ireland/Northern Ireland”, which effectively keeps Northern Ireland in the EU’s single market for goods and having Northern Ireland apply EU customs rules at its ports.

But by putting checks on some goods crossing between mainland Britain and Northern Ireland, many pro-British unionists say the protocol has breached the 1998 peace settlement.

Loyalist paramilitary groups told Johnson in March that they were temporarily withdrawing support for the peace agreement due to concerns over the Brexit deal. read more

Writing by Gabriela Baczynska and Philip Blenkinsop in Brussels and Guy Faulconbridge in London; additional reporting by William James; Editing by Andrew Heavens, Catherine Evans and Toby Chopra

Our Standards: The Thomson Reuters Trust Principles.

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Business

EXCLUSIVE After pressuring telecom firms, Myanmar’s junta bans executives from leaving

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SINGAPORE, July 5 (Reuters) – Senior foreign executives of major telecommunications firms in Myanmar have been told by the junta that they must not leave the country without permission, a person with direct knowledge of the matter said.

A confidential order from Myanmar’s Posts and Telecommunications Department (PTD) in mid-June said senior executives, both foreigners and Myanmar nationals, must seek special authorisation to leave the country, the person said.

A week later, telecom companies were sent a second letter telling them they had until Monday July 5 to fully implement intercept technology they had previously been asked to install to let authorities spy on calls, messages and web traffic and to track users by themselves, the source said. Reuters has not seen the orders.

The directives follow pressure on the companies from the junta, which is facing daily protests from its opponents and a growing number of insurgencies to activate the spyware technology. read more

A spokesman for the military did not answer multiple requests for comment. The junta has never commented on the electronic surveillance effort, but announced soon after seizing power its aim to pass a cybersecurity bill that would require telecoms providers to provide data when requested and remove or block any content deemed to be disrupting “unity, stabilisation, and peace”. It also amended privacy laws to free security forces to intercept communications.

The travel ban comes after intensified pressure from military officials to finish the implementation of the surveillance equipment. The source, who spoke on condition of anonymity for fear of reprisals, said the ban was meant to pressure telecoms firms to finish activating the spyware technology, although the order itself does not specify a reason.

Soldiers stand next to military vehicles as people gather to protest against the military coup, in Yangon, Myanmar, February 15, 2021. REUTERS/Stringer/File Photo

Three other telecoms sources, also speaking on condition of anonymity, said the authorities had stepped up pressure on the companies to implement the intercept, but declined to elaborate further. Two sources said companies had been warned repeatedly by junta officials not to speak publicly or to the media on the intercept.

Telenor declined to comment. There was no immediate response to requests for comment from Ooredoo, state-owned MPT and Mytel, a joint venture between Vietnam’s Viettel and a Myanmar military-owned conglomerate.

Months before the Feb. 1 coup, telecom and internet service providers were ordered to install intercept spyware to allow the army to eavesdrop on the communications of citizens, Reuters reported in May. read more

Reuters was not able to establish how broadly the surveillance technology has been installed and deployed, but four sources said Norway’s Telenor ASA (TEL.OL) and Qatar’s Ooredoo QPSC (ORDS.QA) had yet to comply in full.

Among the military’s first actions on Feb. 1 was to cut internet access and it has still not been fully re-established, with telecoms given regular lists of websites and activist phone numbers to block.

The moves have left the future unclear for Myanmar’s telecom sector, which had been one of the fastest-growing globally. Telenor said on Friday it is evaluating the future of its operations in the country, with a source telling Reuters it is eying a sale of its Myanmar unit. read more

Reporting by Fanny Potkin in Singapore; Additional reporting by Poppy McPherson in Bangkok; Editing by Matthew Tostevin, William Mallard and Daniel Wallis

Our Standards: The Thomson Reuters Trust Principles.

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Health

EXCLUSIVE S.Korea in talks with mRNA vaccine makers to make up to 1 bln doses -govt official

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South Korean senior citizens receive their first dose of the Pfizer-BioNTech coronavirus disease (COVID-19) vaccine at a vaccination centre in Seoul, South Korea April 1, 2021. Chung Sung-Jun/Pool via REUTERS

SEOUL, July 5 (Reuters) – South Korea is in talks with mRNA vaccine makers including Pfizer (PFE.N) and Moderna (MRNA.O) to produce COVID-19 shots in the country and is ready to offer the capacity to make up to 1 billion doses immediately, a senior government official said.

The plan, if agreed, would help ease tight global supply of COVID-19 vaccines, particularly in Asia which lags North America and Europe in vaccine rollouts, and put South Korea a step closer to its ambition to become a major vaccine manufacturing centre.

South Korea already has deals to locally produce three coronavirus vaccines developed by AstraZeneca (AZN.L)/Oxford University, Novavax (NVAX.O), and Russia. It also has a vaccine bottling and packaging deal with Moderna.

“We’ve been holding frequent talks with big pharmaceutical companies to produce mRNA vaccines,” Lee Kang-ho, director general for the global vaccine hub committee under South Korea’s health ministry, told Reuters in an interview.

“There are only a few mRNA vaccine developers – Pfizer, Moderna, CureVac and BioNTech. Thus there’s a limit to how much they can produce to meet global demand… South Korea is keen to help by offering its facilities and skilled human resources,” Lee said.

It’s not immediately clear how advanced these talks are and whether and when a deal will be agreed.

BioNTech (22UAy.DE) declined to comment, Moderna and CureVac (5CV.DE) did not reply to Reuters’ requests for comments.

A Pfizer spokesperson said the company is making efforts to enhance its COVID-19 vaccine supply chain but added “we do not have anything specific to announce at this time.”

Lee declined to name local vaccine makers which have the capacity to produce mRNA vaccines immediately, but a government source said they include Hanmi Pharmaceuticals Co Ltd (128940.KS) and Quratis Co Ltd.

Hanmi confirmed that it has a big capacity reserved for Sanofi’s (SASY.PA) diabetes drug and it can be used for COVID-19 vaccine production as the Sanofi project has stalled.

“We happen to have this facility available right now because our clinical trial (with Sanofi) was discontinued in the middle of last year,” Kim Soo-jin, senior vice president of Hanmi, told Reuters.

“It’s very timely that we have a fully ready, GMP, state-of-the-art facility available,” she said, referring to good manufacturing practice.

Quratis, which makes a tuberculosis vaccine, said its new factory built last year can now be used for mRNA vaccine production.

Shares in Hanmi erased early losses and rose nearly 4% on Monday after the Reuters report.

COLLABORATION WITH WHO

South Korea has stepped up its effort to produce more vaccines since U.S. President Joe Biden in May agreed with South Korean President Moon Jae-in on a comprehensive partnership on COVID-19 vaccines. read more

Lee said his team is having frequent video conference calls with the vaccine makers and the World Health Organization (WHO).

WHO spokesman Tarik Jasarevic told Reuters the organisation is “talking with South Korea and other countries,” but did not elaborate.

The WHO said last month it will set up a hub in South Africa to manufacture mRNA vaccines within 9-12 months that will give companies from poor and middle-income countries the know-how and licenses to produce COVID-19 vaccines. read more

Lee said mRNA vaccine makers may be reluctant to share their technology, but they can take advantage of South Korea’s raw material suppliers to address a global shortage of such ingredients as lipids, nucleotides and capping reagents.

“They’re capable of manufacturing and developing such raw materials to help vaccine makers… and the South Korean government is committed to provide all necessary support including financial and administrative aid.”

Lee said the country also has a capacity for at least another 500 million doses of fill-and-finish vaccines apart from the deal Moderna announced with Samsung BioLogics (207940.KS) in May.

Reporting by Sangmi Cha in Seoul; Additional reporting by Stephanie Nebehay in Geneva, Michael Erman in New York and Ludwig Burger in Frankfurt; Editing by Miyoung Kim and Raju Gopalakrishnan

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World

Canada’s Hong Kong diaspora helps new arrivals with jobs, housing, psychotherapy

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OTTAWA, July 4 (Reuters) – Hong Kongers in Canada are banding together to help the latest wave of immigrants fleeing Beijing’s tightening grip on their city.

Networks across the country, some descended from groups set up after China’s crackdown on Tiananmen Square protesters in 1989, are offering new arrivals everything from jobs and accommodation to legal and mental health services and even car rides to the grocery store.

“We are in a battle. These are my comrades, people who share the same values,” one 38-year-old who asked to be identified only as Ho told Reuters. “Who is going to provide that helping hand if I’m not going to?”

Ho runs a cooking school near Toronto, and said he hired a former aide to a Hong Kong democratic politician to promote his business online, and recently took on a new kitchen assistant who took part in the city’s 2019 pro-democracy protests.

Ho, who came to Canada as a teenager before Britain handed Hong Kong back to China in 1997, is just one person helping the network of support groups that have been formed in Toronto, Vancouver, Calgary and Edmonton in the past two years.

Immigrants looking after each other is not unique. But people in Canada, which has one of the world’s biggest overseas concentrations of people from Hong Kong, told Reuters the situation is urgent because many of the people they are seeking to help fear they will be arrested for taking part in past protests and may not be able to afford professional help to resettle overseas.

“It’s my natural duty,” said Ho, who asked not to be identified by his full name, and did not name his new employees, for fear of problems with Hong Kong authorities. “If I was in Hong Kong, I would be in a desperate position. If there was a helping hand, I would hold onto it.”

Beijing imposed a sweeping national security law on Hong Kong a year ago, outlawing a wide range of political activities and effectively putting an end to public protests. Many pro-democracy activists and politicians, including prominent Beijing critics Joshua Wong and Jimmy Lai, have been arrested under the new law or for protest-related offences. Many people have already left the territory.

The Hong Kong government and China say the law was necessary to restore stability after the sometimes violent protests of 2019, and that it preserves freedoms guaranteed by Beijing after Britain handed Hong Kong back to China.

“The Hong Kong national security law upholds the rights and freedoms of Hong Kong people,” said a spokesperson for Hong Kong’s Security Bureau. “Any law enforcement actions taken by Hong Kong law enforcement agencies are based on evidence, strictly according to the law, for the acts of the persons or entities concerned.”

CANADIAN ‘PARENTS’

Britain and Canada are two of the most popular destinations for people leaving Hong Kong after the imposition of the national security law.

Some 34,000 people applied to live in Britain in the first two months after the country introduced a new fast-track to residency for Hong Kongers earlier this year, according to the Migration Observatory at the University of Oxford, citing government data.

About a fifth of that number applied for temporary and permanent residency in Canada in the first four months of this year, according to the government. The total number of Hong Kongers going to Canada is likely larger but hard to track as many already hold Canadian passports from earlier waves of emigration.

Hundreds of thousands of Hong Kongers moved there in the 1980s and 1990s for fear they would lose wealth and property, or much of their freedom, after Communist Party-ruled China took back control of the city.

But the city prospered and retained freedoms unavailable in mainland China, so many Hong Kongers returned home, or kept a foot in each country. The latest wave of emigration looks more likely to be permanent, as China stamps its authority on Hong Kong. read more

Canada loosened its restrictions on admitting Hong Kongers after the imposition of the national security law last year. It set up a new work visa programme aimed chiefly at young Hong Kongers with a degree or diploma from a post-secondary institution in the last five years, along with two pathways to permanent residency for Hong Kongers in Canada who have recently worked or completed post-secondary studies in the country.

The new coronavirus has complicated matters for new arrivals. Under Canada’s latest travel restrictions, even those who have obtained permission to live and work in Canada through the new programme are only allowed to enter the country if they have a job offer.

That is where the support network comes in. The Toronto Hong Kong Parent Group has so far assisted 40 people, half of whom have already received three-year permits, according to Eric Li, co-founder of the group and former president of the Canada-Hong Kong Link, a rights advocacy organisation established in 1997.

Li said the group has encouraged 20 employers to offer jobs to people arriving from Hong Kong, including Ho’s cooking school, restaurants, a construction company, a travel agency, and a family who hired a Cantonese tutor for their children.

The Toronto group also has interpreters, lawyers and psychotherapists on hand to help new arrivals and has 10 rooms it can provide as free, temporary accommodation. The rooms are in the members’ or their friends’ homes.

Volunteers in Calgary said they have helped at least 29 asylum seekers, picking many up from the airport and driving them to doctors’ offices, grocery stores and banks.

STEPPING STONE

Canada has long had one of the largest populations of overseas Hong Kongers, some of whom came together in 2019 to hold rallies in solidarity with the protests back home.

Many of the new groups can trace their roots to activist organisations that formed in response to Beijing’s crackdown on pro-democracy protesters in and around Tiananmen Square in 1989, or the 1997 handover. The groups already have contacts with social agencies, such as Community Family Services of Ontario or the York Support Services Network, or with churches and professionals willing to help.

The Vancouver Parent Group, supported by the Vancouver Society in Support of Democratic Movement that formed in 1989, has raised more than C$80,000 ($65,963) to help Hong Kong protesters settling in Canada with living costs and legal fees.

Vancouver “parents” show new arrivals how to navigate public transport or get a library card, and organise donations of winter clothing or kitchenware, according to Ken Tung, one of the volunteers.

Tung said their aim is to “give them a stepping stone to move on.”

Alison, a protester who left Hong Kong last year after many of her friends there were arrested for taking part in protests, was one of those helped by the Calgary group.

Along with a few other new arrivals, she launched the Soteria Institute, named after the Greek goddess of safety and salvation, to offer free, weekly, online English lessons, resume-writing workshops and emotional support.

“We understand what they’re experiencing,” said Alison, who asked to be identified by only one name. “We try to use our experience to help out more Hong Kong exiles.”

Reporting by Sarah Wu in Ottawa
Editing by Marius Zaharia and Bill Rigby

Our Standards: The Thomson Reuters Trust Principles.

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Business

EXCLUSIVE Amazon, Tata say Indian govt e-commerce rules will hit businesses -sources

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NEW DELHI, July 3 (Reuters) – Amazon.com Inc (AMZN.O) and India’s Tata Group warned government officials on Saturday that plans for tougher rules for online retailers would have a major impact on their business models, four sources familiar with the discussions told Reuters.

At a meeting organised by the consumer affairs ministry and the government’s investment promotion arm, Invest India, many executives expressed concerns and confusion over the proposed rules and asked that the July 6 deadline for submitting comments be extended, said the sources.

The government’s tough new e-commerce rules announced on June 21 aimed at strengthening protection for consumers, caused concern among the country’s online retailers, notably market leaders Amazon and Walmart Inc’s (WMT.N) Flipkart.

New rules limiting flash sales, barring misleading advertisements and mandating a complaints system, among other proposals, could force the likes of Amazon and Flipkart to review their business structures, and may increase costs for domestic rivals including Reliance Industries’ (RELI.NS) JioMart, BigBasket and Snapdeal. read more

Amazon argued that COVID-19 had already hit small businesses and the proposed rules will have a huge impact on its sellers, arguing that some clauses were already covered by existing law, two of the sources said.

The sources asked not to be named as the discussions were private.

The proposed policy states e-commerce firms must ensure none of their related enterprises are listed as sellers on their websites. That could impact Amazon in particular as it holds an indirect stake in at least two of its sellers, Cloudtail and Appario.

On that proposed clause, a representative of Tata Sons, the holding company of India’s $100 billion Tata Group, argued that it was problematic, citing an example to say it would stop Starbucks (SBUX.O) – which has a joint-venture with Tata in India – from offering its products on Tata’s marketplace website.

The Tata executive said the rules will have wide ramifications for the conglomerate, and could restrict sales of its private brands, according to two of the sources.

Tata declined to comment.

The sources said that a consumer ministry official argued that the rules were meant to protect consumers and were not as strict as those of other countries. The ministry did not respond to a request for comment.

A Reliance executive agreed that the proposed rules would boost consumer confidence, but added that some clauses needed clarification.

Reliance did not respond to request for comment.

The rules were announced last month amid growing complaints from India’s brick-and-mortar retailers that Amazon and Flipkart bypass foreign investment law using complex business strcutures. The companies deny any wrongdoing.

A Reuters investigation in February cited Amazon documents that showed it gave preferential treatment to a small number of its sellers and bypassed foreign investment rules. Amazon has said it does not give favourable treatment to any seller.

The government will soon issue certain clarifications on the foreign investment rules, Indian commerce minister Piyush Goyal told reporters on Friday.

Reporting by Aditya Kalra in New Delhi;
Editing by Euan Rocha and Louise Heavens

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EXCLUSIVE New Saudi airline plan takes aim at Emirates, Qatar Airways

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DUBAI, July 2 (Reuters) – Saudi Arabia plans to target international transit passenger traffic with its new national airline, going head-to-head with Gulf giants Emirates and Qatar Airways and opening up a new front in simmering regional competition.

Crown Prince Mohammed bin Salman, who is pushing economic diversification to wean Saudi Arabia off oil revenues and create jobs, announced a transportation and logistics drive on Tuesday aimed at making the kingdom the fifth-biggest air transit hub.

Two people familiar with the matter said the new airline would boost international routes and echo existing Gulf carriers by carrying people from one country to another via connections in the kingdom, known in the industry as sixth-freedom traffic.

The transport ministry, which has not released details of the plans, did not respond to a Reuters request for comment.

The strategy marks a shift for Saudi Arabia whose other airlines, like state-owned Saudia and its low cost subsidiary flyadeal, mostly operate domestic services and point-to-point flights to and from the country of 35 million people.

The Saudi expansion threatens to sharpen a battle for passengers at a time when travel has been hit by the coronavirus pandemic. Long-haul flights like those operated by Emirates and Qatar Airways are forecast to take the longest to recover.

Riyadh has already moved to compete with the UAE, the region’s business, trade and tourism hub. The Saudi government has said that from 2024 it would stop giving contracts to firms that do not set up regional headquarters in the kingdom.

“Commercial competition in the aviation industry has always been fierce, and regional competition is heating up. Some turbulence in regional relations is on the horizon,” said Robert Mogielnicki, resident scholar at the Arab Gulf States Institute.

Dubai, the world’s largest international air travel hub, has announced a five-year plan to grow air and shipping routes by 50% and double tourism capacity over the next two decades.

Riyadh has already moved to compete with the UAE, the region’s business, trade and tourism hub. The Saudi government has said that starting 2024 it would stop giving contracts to firms that do not set up regional headquarters in the kingdom.

Saudi Crown Prince Mohammed bin Salman attends a session of the Shura Council in Riyadh, Saudi Arabia, November 20, 2019. Bandar Algaloud/Courtesy of Saudi Royal Court/Handout via REUTERS

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Prince Mohammed is trying to lure foreign capital to create new industries including tourism, with ambitions to increase overall visitors to 100 million by 2030 from 40 million in 2019.

“Saudi Arabia has the ability to push forward with its aviation and tourism strategy when others will be retreating and retracting,” aviation consultant Brendan Sobie said.

“It is a risky strategy, but also sensible given its position and overall diversification objective.”

TOURISM PUSH

However, any airline requires substantial start-up capital and experts warn that if Saudi Arabia’s ambition is to compete on transit flights it may have to contend with years of losses.

Saudi Arabia’s large population generates direct traffic that could cushion losses as a new airline targets international transit traffic, aviation consultant John Strickland said.

Emirates reported a record $5.5 billion annual loss last month with the pandemic forcing Dubai to step in with $3.1 billion in state support.

Etihad Airways has scaled back its ambitions after it spent billions of dollars to ultimately unsuccessfully compete in building a major hub in United Arab Emirates capital Abu Dhabi.

People familiar with the matter said the new airline could be based in the capital Riyadh, and that sovereign wealth fund PIF is helping set it up.

PIF did not respond to a request for comment.

Saudi Arabia is developing non-religious tourism with mega projects backed by PIF. It has launched social reforms to open up the country, the birthplace of Islam, including allowing public entertainment.

Reporting by Alexander Cornwell; Editing by Tim Hepher and Alexander Smith

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Military coup puts Telenor’s future in Myanmar on the line

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Since Myanmar’s military ordered telecoms operators to shut their networks in an effort to end protests against its February coup, Telenor’s business there has been in limbo.

As one of the few Western companies to bet on the South East Asian country after it emerged from military dictatorship a decade ago, the return to army rule led to a $783 million write-off this week for Norway’s Telenor (TEL.OL).

The Norwegian state-controlled firm, one of the biggest foreign investors in Myanmar, must now decide whether to ride out the turmoil, or withdraw from a market which last year contributed 7% of its earnings.

“We are facing many dilemmas,” Telenor Chief Executive Sigve Brekke told Reuters this week, highlighting the stark problems facing international firms under increased scrutiny over their exposure in Myanmar, where hundreds have been killed in protests against the Feb. 1 coup.

While Telenor plans to stay for now, the future is uncertain, Brekke said in a video interview.

Although Telenor had won praise for supporting what at the time was a fledgling democracy, activist groups have long voiced concerns about business ties to the military, which have intensified since the army retook control of the country.

Chris Sidoti, a United Nations expert on Myanmar, said Telenor should avoid payments such as taxes or licence fees that could fund the military directly or indirectly, and that if it cannot be independently determined that Telenor is “doing more good than harm” in Myanmar, then it should withdraw.

However, Espen Barth Eide, who was Norway’s foreign minister at the time Telenor gained a licence in Myanmar in 2013, told Reuters that Telenor should stay and use its position as a well-established foreign firm to be a vocal critic of the military.

A spokeswoman for Norway’s Ministry of Trade, Industry and Fisheries, which represents the Norwegian government as a shareholder, said on Thursday that “under the current circumstances Telenor faces several dilemmas in Myanmar”.

“From a corporate governance perspective the investment in Myanmar is a responsibility of the company’s Board and Management. Within this framework the Ministry as a shareholder keep a good dialogue with Telenor regarding the situation,” the spokeswoman added in an emailed response to Reuters.

The Myanmar junta, which has said it seized power because its repeated complaints of fraud in last year’s election were ignored by the election commission, has blamed protesters and the former ruling party for instigating violence.

And it said on March 23 that it had no plans to lift network restrictions. It has not commented on the curbs since and did not answer Reuters calls on Thursday.

NEW MARKET

Telenor is no stranger to operating under military rule in both Pakistan and Thailand, where it challenged the Thai junta over what it said was an order to block social media access.

At around the same time, Telenor was signing up its first customers in Myanmar.

Its then-CEO, Jon Fredrik Baksaas, told Reuters that Telenor had thought “a lot” about the risk that Myanmar’s experiment with democracy might not last.

“But we argued at that time that, when we get in a western company that delivers telecommunication in a country, we stand also with some responsibility, and a bit of a guarantee that things are done correctly,” Baksaas said.

Its position had support internationally at the time after Barack Obama became the first U.S. President to visit Myanmar in 2012, the year after a military junta was officially dissolved and a quasi-civilian government installed.

For its part, the Norwegian government, which owns a majority of Telenor, had long supported democracy in Myanmar, hosting radio and TV stations reporting on it under military rule.

And in 1991, the Norwegian Nobel Committee gave the Nobel Peace Prize to Aung San Suu Kyi, who spent 15 years under house arrest in Myanmar before leading a civilian government which retained power in last year’s election.

Suu Kyi was detained after the coup and charged with offences that her lawyers say are trumped up.

While Norway was supportive of Telenor’s Myanmar venture, the government also warned of the risks, Barth Eide, Norway’s foreign minister at the time, said.

“We told them that it’s a complicated country which had a harsh military dictatorship. Telenor was very much aware of it … It’s not like they were novices,” he added.

Telenor was one of two foreign operators granted licences in 2013, alongside Qatar’s Ooredoo (ORDS.QA). The other operators in Myanmar are state-backed MPT and Mytel, which is part-owned by a military-linked company.

About 95% of Telenor’s 187 million customers worldwide are in Asia and it has around 18 million customers in Myanmar, serving a third of its 54 million population.

‘NO DIRECT LINKS’

For Telenor, doing business in Myanmar had its challenges, including trying to avoid commercial ties to the military.

Former CEO Baksaas said for the first couple of weeks after it began operations in Myanmar, staff had to sit on the office floor because Telenor refused to pay bribes to customs officials for furniture which it had imported.

He also said they had to navigate corruption risks when acquiring land to build mobile towers.

Then there was dealing with the military, whose economic interests range from land to firms involved in mining and banking. The military has faced allegations of human rights abuses including persecuting minorities and violently suppressing protests going back decades. It has repeatedly denied such allegations.

Activist group Justice for Myanmar said in a 2020 report that Telenor had shown “an alarming failure” in its human rights due diligence over a deal struck in 2015 to build mobile towers that involved a military contractor.

Another report by the United Nations in 2019 said Telenor was renting offices in a building built on military-owned land.

The report said firms in Myanmar should end all ties with the military due to human rights abuses.

A Telenor spokesperson said in an email on April 9 responding to Reuters questions that it had addressed the matter of the 2015 deal, without elaborating, and that its choice of office was “the only viable option” given factors like safety.

“Telenor Myanmar has been focused on having minimal exposure to the military and have no direct links to military-controlled entities,” the spokesperson said.

Since the coup, Telenor has cut ties with three suppliers after finding links to the military, the spokesperson added.

BALANCING ACT

On the day of the coup, the military ordered Telenor and other operators to shut down networks. Telenor criticised the move but complied. Services were allowed to resume but there have been intermittent requests to close since, and the mobile internet has been shut since March 15.

Ooredoo has also said it “regretfully complied” with directives to restrict mobile and wireless broadband in Myanmar, which hit its first quarter earnings. It declined further comment on the outlook for its Myanmar business.

Like other operators, Telenor paid license fees to the now military-controlled government in March, which critics argue may help it finance repression of public protest.

Telenor said in the emailed response to Reuters that it made the payment “under strong protest against recent developments”.

One of its major shareholders, Norway’s KLP, said it had been in a dialogue with Telenor after the coup to ensure it was identifying the human rights risks.

“It is a challenging situation because Telenor cannot choose what it can and can’t do. They get their directives from the authorities,” said Kiran Aziz, senior analyst for responsible investments at KLP. “It is difficult to assess how positive Telenor’s contribution can be in this context.”

Weighing up human rights is just one of the dilemmas Telenor now faces, said CEO Brekke, alongside safely serving its customers and maintaining network access for them.

“We work on that balance every single day,” he said.

And although that balance, for now, is tilted to Telenor staying in the country, it is not a given.

“We make a difference like we have done since we arrived. But with the situation being this unpredictable, it is impossible in many ways to speculate about the future and how this will develop,” Brekke added.

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