Information Bulletin of the BRICS Trade Union Forum
Issue 10.2019
2019.03.04 — 2019.02.10
Investment and Finance
Investment and finance in BRICS
BRICS New Development Bank to issue bonds in South Africa, commercial paper in U.S. dollar (Новый банк развития БРИКС выпустит облигации в ЮАР и коммерческие бумаги в долларах США) / China, March, 2019
Keywords: ndb, economic_challenges

SHANGHAI, March 6 (Xinhua) -- The BRICS New Development Bank will issue bonds in South Africa and commercial paper in U.S. dollars in the first half of 2019, said the bank's president, K.V. Kamath, during an exclusive interview with Xinhua.

"Most of the work is done and it's basically finalizing the launch," said Kamath. According to him, the new bonds in South Africa will be denominated in the local currency and will be placed at the Johannesburg Stock Exchange.

The bank had approved 30 projects with combined contract value amounting to 8 billion U.S. dollars by the end of 2018, and will approve another 20 to 25 projects involving loans of between 7.5 and 8 billion U.S. dollars this year, Kamath said.

"By the end of 2021, we will do about 100 projects and the total loan amount could be 35 to 40 billion U.S. dollars," Kamath said.

The bank has approved nine projects in China, with loans totaling 2.8 billion dollars so far. It expects to approve another eight to 10 projects in the country this year, with loans likely to top 2 billion dollars.

The BRICS New Development Bank successfully placed 3 billion RMB-denominated bonds (about 448 million U.S. dollars) in the China Interbank Bond Market last week. The bonds were more than 3 times oversubscribed with more than 20 orders from financial institutions from both China and abroad.

The New Development Bank is a multilateral development bank founded in 2014 by BRICS member countries -- Brazil, Russia, India, China, and South Africa, with the aim to support infrastructure and sustainable development projects in BRICS countries and other emerging economies. It formally opened in Shanghai in 2015. Enditem

South Africa: Attracting Investment the Focus of Brics Business Meeting (Южная Африка: привлечение инвестиций было в фокусе деловой встречи БРИКС) / South Africa, March, 2019
Keywords: investments, business_council
South Africa

Trade and Industry Minister Rob Davies says positioning the country as a destination for investment is expected to be the agenda of the newly-appointed BRICS Business Council.

Davies said this when he held a joint media briefing with the members of the Black Business Council in Cape Town on Tuesday.

The media briefing was held after Davies held a meeting with the newly-appointed council members.

"We had a discussion at which we all agreed that the BRICS relationship is an important, strategic relationship for South Africa. It is the most significant grouping of the emerging economies in the world. It has the business council which has done invaluable work, in particularly in our estimation, in promotion of practical business to business relations.

"When we look at the relationship within BRICS, the most important relationship we want to build as government is the investment relationship given that BRICS companies are looking into directing investment into South Africa and of course South African companies are also invested into those countries.

"We indicated to them as government that we want to have a strong ongoing conversation and coordination with the members of the BRICS Business Council as they identify practical business opportunities, as they make recommendations, we want to make sure that there is a strong Team SA message that is finding its way through," he said.

The new BRICS Business Council is made up of five members with extensive business experience locally and internationally. This includes Busi Mabuza from the Industrial Development Corporation - who is the chairperson, Dr Ayanda Ntsaluba from Discovery Ltd, Bridgette Radebe from Mmakau Mining, Dr Stavros Nicolaou from Aspen Pharmacare and Elias Monage from Afrika Group.

Speaking for the council, Mabuza said they remain committed to taking the interests of the country through the council's activities. The council is also committed towards supporting SMME participation and new business, thus contributing to an inclusive economy.

"We have had a minute to [engage] with the Minister, who has reaffirmed our mandate to facilitate investment-led trade between ourselves, our continent with the other BRICS partners through practical projects.

"This business council is looking forward to engagement with the other Chapters. We have already on the ground for over a month now and we have already engaged with the global partners," she said.

Through the BRICS Business Council, the five-member countries will, in the time ahead, focus on nine working groups in terms of areas of cooperation and business facilitation. This includes agribusiness, deregulation, digital economy, financial services, energy and green economy, infrastructure, manufacturing, regional aviation and skills development.

Mabuza also said that with the next BRICS Summit set to take place in Brazil in November, the local chapter of the BRICS Business Council, which currently chairs the global business grouping, will hand over its chairmanship to the Brazilian chapter of the BRICS Business Council at a meeting in Johannesburg on 3 April.
BRICS Pay - Single Payment System of the BRICS Countries (BRICS Pay - единая платежная система стран БРИКС) / Russia, March, 2019
Keywords: economic_challenges, digital, expert_opinion
Author: Alexander Losev

The BRICS countries are creating a single payment system, BRICS Pay, as part of the drive to establish a common system for retail payments and transactions between the member countries. In the near future, these countries plan to introduce a special cloud platform, which will connect their national payment systems. An online wallet will be developed with access to these payment systems, as well as a mobile application similar to Apple Pay, which can be installed on smartphones for purchases in any of the five BRICS countries, regardless of which currency the payment and the money in the account of the buyer are denominated in.

Thus, Brazil, Russia, India, China and South Africa will be able to use their own national currencies as a direct basis of exchange for external payments. This is being heralded as a serious step on the path to de-dollarization.

Innovative systems like Apple Pay and Samsung Pay are already popular in China and India, and have recently appeared in Russia, where on 4 March 2019, the Mir Pay payment service was established for Mir cards users; it is now available on Android-based smartphones.

The BRICS Pay contactless payment system will not duplicate the national payment systems; it will simply serve as a service for linking the credit or debit cards of the citizens of the five BRICS countries to online wallets, which will offer them the ability to pay using a smartphone.

At the same time, BRICS Pay will increase the popularity of national payment systems, which are gradually replacing Visa and MasterCard. This process is especially noticeable in Southeast Asia, where the Chinese system UnionPay is the leader; in 2015 it surpassed Visa in terms of total operations. UnionPay has already issued over 6 billion national cards.

The scale of China's economy and the sheer size of its domestic market, number of people and the development of outbound tourism have all contributed to the growing popularity of UnionPay. Now, China's Huawei telecommunications corporation, together with the UnionPay payment service, is launching its own system in Russia: Huawei Pay. Russia will become the second country after China where Huawei Pay will function.

The national payment systems of the other BRICS nations are smaller in scale than China's, but have demonstrated promising dynamics. India's RuPay payment system has already issued 500 million national cards, Brazil's ELO has issued 120 million cards, and Russia's Mir system has issued about 50 million cards.

The Russian media have cited the country's Federal Antimonopoly Service as saying that in 2018, the Mir national card system took approximately 5.5 percent of the market for payment systems away from Visa, as well as 6 percent of MasterCard's market share. The usage of Visa cards by Russian citizens in non-cash payments decreased from 45% of the total market to 39.5%, and MasterCard's market share dropped from 42% to 36%. Now Mir cards account for 24.5% of the volume of non-cash payments; the volume of transactions conducted using the Mir national cards during 2018 amounted to 2.7 trillion rubles.

Why is it important for the BRICS countries to move towards payment system integration? Currently, external settlements using UnionPay non-cash transactions, ruble-yuan for example, require a conversion into US dollars, which necessitates the use of US banks. This process creates additional operational risks, stemming from the threat of sanctions. Similarly, UnionPay payments involving euro cards pass through European banks. US protectionism and Trump's trade wars are compelling the regional powers to forge financial and economic ties with their neighbours and partners outside the "dollar zone".

In order for settlements in national currencies to bypass the dollar, the People's Bank of China has to open lines for currency swaps to partner banks to support the exchange trade in yuan in regional currency markets. Similar lines should be opened by the central banks of Brazil, Russia, India and South Africa. In this case, a settlement mechanism based on a basket of currencies of the BRICS countries and a separate financial infrastructure will appear. This, in turn, will support the diversification of the global financial system and currency multi-polarity. BRICS Pay, as a contactless transfer system, will give the citizens of the BRICS countries a convenient means of conducting transactions.

The Chinese Belt and Road megaproject and Russian integration initiatives within the EAEU can serve as a step towards creating a "larger space economy", where the rules will be determined by the leading powers of the region, and investment resources will be concentrated in their respective national currencies.

In addition, the BRICS Pay contactless payment system utilises the latest FinTech: technology and innovations which make it possible to successfully compete with traditional banks in the financial services market.

It is in the interest of the BRICS countries to develop FinTech standards and technology for secure data transfers from smartphones to terminal readers.

At one time, the control of advanced technology by the United States and the West, and the ability of their corporations to broaden the use of their established standards in the financial sector to reach international markets led to the division of the world into a financially privileged technological metropolis and a periphery. This led to the erosion of political sovereignty and reinforced the inferior economic status of the developing world.

Therefore, any steps the BRICS countries take to create and maintain their own technology and infrastructure are economically viable and will help ensure the independence of the respective countries' policies and economies.
BRICS customs cooperation (Таможенное сотрудничество БРИКС) / Russia, March, 2019
Keywords: trade_relations, expert_opinion, digital

Yana Grigoryeva, Intern at the Russian National Committee on BRICS Research - special for InfoBRICS

The BRICS members had been developing friendly relations with each other for a long time, also through cooperation in customs matters. Customs offences undermine economic, social and financial interests of any country. Cooperation between countries contributes to effective prevention and elimination of such violations. That is why it is extremely important to maintain close relations.

Customs cooperation between the BRICS countries began to develop in 2012 In 2013, the First Meeting of the Heads of Customs Administrations of the BRICS countries was held in South Africa. There was prepared the "Report of the meeting" and were formed few of cooperation mechanisms between the BRICS countries, such as a meeting of the heads of customs departments, a meeting of working groups, etc. They also decided to organize inter-ministerial and working meetings in World Customs Organization and other structures.

During 2015, the Federal Customs Service of Russia held meetings of the BRICS countries` customs services heads and experts. During the events, the parties finalized a draft regulation on the Committee of Customs Cooperation of the BRICS countries and agreed to conduct interstate procedures for its coordination in order to subsequent signing. On October 16, 2016, the Regulation on the BRICS Customs Cooperation Committee, which was the first result of customs cooperation, was signed in the Indian city of Goa. This event was an important step towards creating a regulatory framework in the field of customs cooperation within the framework of this association. The task of the Committee is to coordinate and develop customs cooperation between the BRICS countries. All problems of the BRICS countries in the field of customs should be discussed and resolved within the Committee.

On September 4, 2017, during the 9th BRICS summit, the heads of the national customs services signed the "BRICS Strategy for Customs Cooperation". This document is intended to fix the strategic framework for BRICS customs departments cooperation, to simplify customs procedures in mutual trade, to bring together customs administration rules and procedures and to use unified approaches in information exchange. The guideline of the strategic cooperation will be the "3M" concept - mutual exchange of information, mutual recognition of controls and trusted trader programs, and mutual administrative assistance.

What are the key points of this strategy?

The BRICS Customs Services have agreed to share practical experience in the implementation of the WTO Trade Facilitation Agreement. Due to the Strategy, customs administrations of the BRICS countries have to support economic activities in order to increase trade, to maintain social stability and to generate employment. They have to set up the implementation and mutual recognition of the Authorized Economic Operators within the framework of the five customs administrations.

It is necessary to promote the acceleration of customs clearance, including transit goods, which constitute a mutual interest to the BRICS countries. For example, New Silk Road Initiative will bring a lot of advantages to Russia because of the transit. Russia acts as a key backbone in all transit system from China to Europe. Facilitation of this procedure will entail greater flow of goods and, consequently, greater level of customs revenue collection.

It is very important to exchange new trends, methods and experience in the implementation of enforcement activities, security and anti-smuggling measures. All BRICS participants are transit countries of drugs. And therefore, the fight against illicit traffic in narcotics becomes a crucial element in customs borders' security. Also, one of the most important points of the Strategy is the establishment of a mutual response mechanism to fight against illegal financial flows. Corruption has a negative impact on the sustainable development of every country. The BRICS participants are going to compile a compendium on fighting corruption in BRICS. An important moment lies in the risk management framework. All BRICS countries have to identify risk profiles of traders to increase the efficiency of customs control.

Customs administrations of the BRICS countries are going to implement the Digital customs, which includes electronic processing of customs data, electronic duties and taxes payment, mobile services for traders, submission of preliminary additional information before the loading of cargo. The main aspects of digital customs are handling Big Data. use of the Internet and mass-media (including social networks), transport telematics (satellite monitoring of transport); telematics services (business, commerce, logistics, government), mobile technologies and cellular networks. Particular attention is paid to Single Window system. This system helps to increase the efficiency of information exchange between business and government, helps to reduce time and cost of international trade, simplifies trade procedures for all parties involved. All BRICS countries have launched the process of creating a Single Window system in their national economies.

The BRICS countries also support new business formats, including e- commerce. The BRICS members are creating a single payment system, which will be called BRICS Pay. Thanks to this system it will be possible to make purchases in any BRICS country. One of the versions of the project is to create the E-wallet that combines payment systems of all five countries. All BRICS members will participate in the creation of BRICS Pay, but the main role in the project will play China and India due to the possession of high-technologies in this sphere. The working system of the wallet will work in same way with Samsung Pay or Apple Pay.

The next stage of developing the legal framework for customs cooperation should be the Intergovernmental Agreement of the BRICS countries on cooperation and mutual assistance in customs matters.

According to customs statistics, in 2017, the volume of Russia's foreign trade with the BRICS countries was 102.4 billion USD, what is 30% higher than in previous year. There is also increase in export by 35% ($ 47.6 billion) and import - by 26% (54.8 billion dollars). Mutual trade of all five countries have positive trends. The number of contracts is growing, throughput is increasing. Countries decline the rates of customs duties and adopt preferential regimes. The volume of Russian exports to the BRICS countries is projected to rise to 49.7 billion dollars, and imports to 68.5 billion dollars by 2020.

Integration process within the framework of customs cooperation is always very complex. The participating countries are bound by their own national interests and features of economic development, numerous bilateral agreements, regional and global international agreements. But also, with the successful development of cooperation, the benefits for all BRICS participants are obvious. The BRICS member countries have all the opportunities for a long and mutually beneficial cooperation.

World of work
Social policy, trade unions, actions
Minister Davies appoints 5 new members to BRICS council (Министр Дэвис назначил 5 новых членов в совет БРИКС) / South Africa, March, 2019
Keywords: business_council
South Africa

CAPE TOWN - Trade and Industry Minister Rob Davies has appointed new members to the BRICS (Brazil, Russia, India, China and South Africa) Business Council following nominations from Business Unity South Africa and the Black Business Council. The team has extensive business experience: Busi Mabuza is chairperson of the Industrial Development Corporation; Dr Ayanda Ntsaluba is group executive director of Discovery; Bridgette Radebe is chairperson and chief executive of Mmakau Mining; Dr Stavros Nicolaou is Aspen Pharmacare executive director responsible for strategic trade development and Elias Monage is chief executive of the Afika Group.

Each BRICS country nominates a five-member business council. These chapters meet from time to time to discuss how better to foster business-to-business relationships and investments between the countries.

Mabuza is the global chairperson of the BRICS Business Council, a position that will shift to Brazil at the BRICS Business Council Midterm meeting in April in Johannesburg.

The BRICS Business Councils were first established in 2013 and arose from a recognition among attendees of the business forums, held at every BRICS Summit, that there needed to be more continuity in the business-to-business trade and investment promotion activities in the Brics countries.
Mabuza said the new team had "been on the ground" for a month already and would meet the other business councils face-to-face for the first time in April.

Davies said trade and investment opportunities would be sought in a number of key sectors of the economy: agribusiness, deregulation, digital economy, financial services, energy and green economy, infrastructure, manufacturing, regional aviation and skills development.

He said it was important that the SA BRICS Business Council remained located within the ambit of organised business in South Africa, and was appropriately representative and accessible to all business.

Mabuza said the council would support small and medium enterprise participation. She said it was also important that the council foster alignment between the government and business in relation to the commercial opportunities offered by the BRICS relationship.

Mabuza said they would ensure the interests of organised and sectoral business entities were properly articulated in the nine industry sectoral working groups that spanned the business councils of the five BRICS countries.
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