The largest regional group to boost post-Covid-19 recovery

 The 15 nations in the Indo-Pacific region today signed Regional Comprehensive Economic Partnership (RCEP) agreement – one of the world’s largest trade and investment pacts – that could give a significant boost to foreign direct investment (FDI) in the region.

According to the agreement, the investment provisions in the agreement mostly consolidate existing market access as contained in myriad bilateral agreements. “However, the provisions related to market access and disciplines in trade, services and e-commerce are highly relevant for regional value chains and market-seeking investment,” it claims, adding that the RCEP is already an important FDI destination. “It accounts for 16 per cent of global FDI stock and more than 24 per cent of flows, while global FDI has been stagnant for the last decade, the RCEP group has shown a consistent upward trend until last year.”

The agreement comes at a time of major upheaval caused by Covid-19. The pandemic will lead to a drop in FDI in the region of about 15 per cent. However, this compares favourably to a fall of 30 per cent to 40 per cent in global FDI, and the region looks set to lead the FDI recovery.

“A key challenge for RCEP will be to follow through on economic integration efforts at a time of global and intra-regional geopolitical and trade tensions,” it reads, adding that the global economic recession caused by the pandemic will also limit the potential of RCEP to expand trade, investment GVCs in the short term. “However, a key opportunity lies in the diversity within RCEP, which can lift investment prospects through complementary locational advantages and catch-up development potential.”

Among the members, FDI stock relative to the size of the economy ranges from less than 5 per cent to a multiple of GDP.

The Intra-regional investment – at about 30 per cent of total FDI in RCEP – has significant room for further growth. It is relatively low compared to other major economic partnerships. The ASEAN group, at the heart of RCEP, will play an important role. Already about 40 per cent of investment in ASEAN comes from RCEP members. The agreement is signed by 10 member states of ASEAN, apart from Australia, Japan, China, New Zealand and South Korea. 

According to the agreement, the likely investment policy priorities for the partnership will include boosting investment in sustainable post-pandemic recovery. This requires investment in infrastructure, clean energy and healthcare, all of which rely on increasing international project finance. RCEP includes several top source countries for project finance. There is room for growth, for example RCEP attracts projects in line with its global FDI share but accounts for only about 12 per cent of projects in renewable energy.

Likewise, supporting resilience-seeking FDI is also a part of agreement. The need for multinational enterprises (MNEs) to diversify supply sources and strengthen regional value chains should translate not only in shifting FDI patterns within the region but also in renewed overall growth of international investment in industry. Greenfield investment in trade-exposed manufacturing in the region has decreased by more than 40 per cent over the last decade.

The agreement also aims at promoting investment for development. “The least developed country (LDC) signatories including Cambodia, Myanmar and Lao People’s Democratic Republic respectively receive more than 70 per cent, 80 per cent and 90 per cent of their FDI from other RCEP members,” the agreement reads, adding that economic cooperation under the partnership could further boost both project finance in infrastructure and industrial investment to increase their GVC participation.

WHO recognises Nepal for public health achievements

World health Organisation (WHO) recognised Nepal for public health achiement.
Ministers of Health of six member countries of WHO South-East Asia Region have been felicitated today for public health achievements like measles elimination, hepatitis B control, and elimination of mother-to-child transmission of HIV and Syphilis, in recent months, according to a press note issued by the WHO. "Nepal, Bangladesh, Bhutan and Thailand are recognised for becoming the first four countries from the region to control Hepatitis B; Sri Lanka is recognised for eliminating measles and Maldives for eliminating mother-to-child transmission of HIV and Syphilis."
Presenting citations to the ministers for their public health achievements at a side event during the 72nd session of WHO Regional Committee of South-East Asia in New Delhi, the regional director Dr Poonam Khetrapal Singh said that disease eliminations have always been high on the WHO agenda. “When I talk about sustain, accelerate and innovate, ‘accelerate’ is to step up efforts to eliminate diseases like the neglected tropical diseases,” she said.
The minister of Health, Nutrition and Indigenous Medicine of Sri Lanka Dr RajithaSenaratne was presented the citation for measles elimination as Sri Lanka is the fifth country in the Region to eliminate measles, a flagship priority program of WHO in South-East Asia since 2014.
The citations for Hepatitis B control were presented to deputy prime minister and health minister Upendra Yadav, Bhutan’s minister of Health DechenWangmo; Thailand’s deputy minister of Public Health Sathit Pitutecha, and additional secretary of Health Services Division of Bangladesh Md Saidur Rahman. Controlling hepatitis B by reducing disease prevalence to less than one per cent among five-year-old significantly reduces chronic infections and cases of liver cancer and cirrhosis in adulthood.
This is the fourth consecutive year that the public health achievements awards were presented to member countries on the sidelines of the Regional Committee Session. With focused and concerted efforts, member countries are making substantial progress around the priority health issues, the press note reads.

ADB to provide $180 million to improve East–West Highway

The Board of Directors of the Asian Development Bank (ADB) has approved a loan of $180 million to support improvements to East–West Highway, the country’s main domestic and international trade route also known as the Mahendra Highway.
“The highway’s road surface – Nepal’s busiest route – is in fair to poor condition and does not segregate oncoming traffic or slow-moving vehicles and pedestrians,” said ADB transport specialist Johan Georget. “Improving the road will boost the efficiency of Nepal’s transport system, strengthen national and regional connectivity to promote growth and trade, and improve road safety.”
Nepal’s road network, which includes eight north–south and three east–west corridors, carries more than 90 per cent of passengers and goods in the country. The project road carries an average of 8,600 vehicles daily, with more than a quarter of them heavy vehicles. This average is forecast to grow to 25,400 vehicles a day by 2033.
The project will improve and rehabilitate about 87-km between Kanchanpur and Kamala on the East–West Highway, and will upgrade the highway section to a four-lane dual carriageway to cater to the projected increase of traffic demand, including a new road surface and drainage. Road safety will be significantly improved, as a center median will reduce head-on collisions, while service lanes in populated areas will reduce rear-end, sideswape, and side-on collisions, particularly for pedestrians, motorcycles, and cyclists.
The project will also finance civil works and equipment packages to improve road safety along the entire 1,027-km of the East–West Highway, and support road safety campaigns. The loan will also finance preparation of detailed designs for future road projects along the corridor. Accompanying the loan is an ADB technical assistance grant of $750,000 to help prepare a national road safety policy and action plan, strengthen the road safety council, carry out a road safety assessment of the corridor, identify the location of potential service areas, and promote gender equality measures in the transport sector.
Contractors are currently invited to purchase bidding documents and submit their proposals, and construction is expected to start in the first quarter of 2019. Civil works contracts will include a performance-based maintenance period of 5 years after completion of construction, which is due to finish in 2022.
The total project cost is $256.4 million, of which the government will $76.4 million.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 67 members, 48 from the region. In 2017, ADB operations totaled $32.2 billion, including $11.9 billion in cofinancing.