Newsletter - Esteri · troduce this special issue of the newsletter of Italian Economic ... the...

10/14Anno X

NewsletterDiplomazia Economica ItalianaDossIEr

Ministero degli Affari Esterie della Cooperazione Internazionale

Asia and Europe meet in Milan to focus on Business

14 October 2014

INDICE

Asia and Europe meet in Milan to focus on Business ............................... p 1

Diplomacy and business for the future of two continents ............. p 2

Task Force Trade and InvestimentMultilateral agreements must be defended ................................. p 4

Joerg Wuttke: China’s new role ........... p 5

Task Force Infrastructure and ConnectivityAttracting more private capitals is key .................................................... p 8

Stefano Poli: the challenge of the ASEAN Economic Community ...... p 9

Masterplan on Asean Connectivity ........p 12

Task Force EnergyA strategic role for Central Asia ..........p 13

Reserves, production and consumption..................................p 14

Task Force Food and Water security The winning approach: technology and integrated projects ........................p 18 Giuliano Pisapia: Milan’s commitment to a sustainable planet .................................p 19

Diana Bracco: an international event open to businesses ...............................p 21

Main business federations of Asia-Pacific ASEM partner countries .................. p 23

Main Europeanbusinesses federations ..................... p 25

The Asia-Europe Business Forum (AEBF) organised by Confindustria and Busi-nessEurope, representative of the main European business federations, brings together in Milan 300 of the ASEM countries’ business leaders. It promotes

the articulate exchange of views on the main challenges to economic and financial cooperation and provides a platform for communicating the demands of the private sector to the European and Asian political leaders participating in the ASEM sum-mit. The overall theme of this year’s Forum is the promotion of business relations between Europe and Asia, particularly with reference to four priority topics: trade and investment, food security, energy and green technologies, infrastructures. Four task forces composed of European and Asian entrepreneurs addressed these topics and will present their reports with specific recommendations at the Forum. These will be included in the Final Declaration conveyed to political leaders on occasion of the Forum’s concluding session.

Diplomazia Economica Italiana - 14 October 20142

It is with great pleasure that I in-troduce this special issue of the newsletter of Italian Economic

Diplomacy dedicated to the fourte-enth edition of the AEBF - Asia-Europe Business Forum. The event is organised back-to-back with the tenth ASEM summit, the main event of the Italian EU Council Presidency and only a few months before the opening of Expo 2015.

As you all know, the chosen theme for this year is “Enhancing business relations to foster economic inte-gration between Europe and Asia”, with a focus on four sectors of ab-solute priority for both European and Asian countries: trade and in-vestment, food security, energy and green technology, infrastructures. Four task forces composed of Euro-pean and Asian entrepreneurs will be in charge of producing a report for each of these areas and provide specific recommendations. These will be appended to the Final De-

claration and presented to Europe-an and Asian political leaders in the concluding sessions of the Forum.This exchange with the political summit is the distinguishing feature of the event, a forum where high-level Asian and European business representatives meet and debate and have the opportunity to present their proposals to the leading politi-cal authorities.The Ministry of Foreign Affairs wor-ked alongside Confindustria and BusinessEurope on the organisation

of the Business Forum, facilitating exchanges with the institutional parties involved and contributing through its diplomatic-consular net-work to identifying the business le-aders to participate in the summit.This special issue of Italian Econo-mic Diplomacy, featuring important information and interviews with sector experts, provides additional support to AEBF organisers and par-ticipants contributing to the debate on the four topics focus of the Fo-rum.I wish all Forum participants and re-gular readers of this newsletter all the best in their work, with a view to further strengthening the alrea-dy close ties between the business communities of Europe and Asia.

Andrea MeloniDirector General

for the Country Promotion of the Ministry of Foreign Affairs

and International Cooperation

Diplomacy and business for the future of two continents

Andrea Meloni


The Asia-Europe Meeting (ASEM) is a forum bringing together EU member states and the European countries of Switzerland, Norway, and Russia, with the thirteen members of the Association of South-East Asian Nations (ASEAN) and the Asia-Pacific countries of China, India, Pakistan, Bangladesh, Australia and Mongolia. The Organisation’s objective is to promote cooperation and dialogue between Asia and Europe on economic, political and cultural issues. ASEM’s distinctive aspect is to be found in the deliberately “informal” characteristics of its Ministry-level meetings on themes related to foreign policy, economics, culture, the environment. This allows participating Institutions greater freedom of debate. Every two years, ASEM organises a Summit with the member countries’ Heads of State, alternatively in Europe and Asia. This year’s meeting takes place in Milan on 16 and 17 October. ASIA-PACIfIC ASEM MEMBER STATES ANd ORgANISATIONS Australia, Bangladesh, Brunei, Cambodia, China, India, Indonesia, Japan, Korea, Lao PdR, Malaysia, Myanmar, Mongolia, New Zealand, Pakistan, Philippines, Singapore, Thailand, Vietnam, ASEAN

(Association of Southeast Asian Nations).

EUROPEAN ASEM MEMBER STATES ANd ORgANISATIONSAustria, Belgium, Bulgaria, Cyprus, Czech Republic, denmark, Estonia, finland, france, germany, greece, Hungary, Ireland, Iceland, Italy, Latvia, Lithuania, Luxembourg, Malta, Norway, Netherlands, Poland, Portugal, Romania, Russian federation, Slovakia, Slovenia, Spain, Switzerland, United Kingdom, European Union.

COUNTRIES PENdINg MEMBERSHIPCroatia, Kazakhstan.

ASEM Summit in Milan (16-17 October 2014)


The session on Trade and In-vestment identified two main lines of discussion:

- the fight against the different forms of non-tariff barriers that still exist in several countries;- ways of avoiding that a growing number of bilateral or regional free trade agreements be detrimental to the World Trade Organisation (WTO)’s multilateral system of rules and rela-ted dispute settlement system.Several countries all over the world have reintroduced protectionist mea-sures in response to the recent finan-cial crisis. The emergence of new eco-nomic powers such as China, further, has not always been accompanied by a corresponding commitment to the de-fence and development of the multila-teral system. Lastly, lack of progress in the Doha Round negotiations gave an impetus to the finalisation of bilateral and plurilateral trade agreements. Pro-minent examples of this are the Tran-satlantic Trade and Investment Partner-ship (TTIP) between the United States and Europe, the Trans-Pacific Partner-ship (TPP) between various American and Asian countries, and the plurila-teral TiSA agreement (Trade in Servi-ces Agreement). Such initiatives can have a positive impact as intermediate steps in the development of a stron-ger multilateral system. But they also risk going in the opposite direction, to-wards the geographical fragmentation of trade and investment flows and of global supply chains in general. In this context, alongside the general support of WTO action and a commitment to overcoming the different forms of pro-tectionism, the ASEM group on Trade and Investment proposes the following specific recommendations:

- the effective implementation of the Trade Facilitation Agreement as establi-shed on occasion of the WTO Ministerial Conference in Bali in December 2013;- the conclusion of the Doha Round with ambitious objectives;- the definition of a WTO work pro-gramme that includes new generation topics such as investment, compe-tition, export restrictions, subsidies, energy, raw materials;- the encouragement of all ASEM countries to join the WTO GPA (Go-vernment Procurement Agreement) and take on related commitments pointing to ambitious objectives;- the strengthening of cooperation with international organisations other than the WTO such as the Internatio-nal Monetary Fund, Organisation for Security and Cooperation in Europe, World Bank, International Labour Or-ganisation;

Multilateral agreements must be defended

- a commitment on the part of ASEM countries to further liberalising their respective economies according to their competitiveness levels and eco-nomic weight;- a commitment to guaranteeing coherence between bilateral and plu-rilateral trade agreements;- the adoption of global standards to avoid regulatory divergences;- the efficient protection of intellec-tual property rights;- the facilitation of technological exchange carried out voluntarily, wi-thout favouring local investment or a restricted selection of partners;- the strengthening of communica-tion between the private sector, go-vernments and multilateral institutions with a view to enhancing trade and investment and guaranteeing transpa-rency and the rule of law to prevent corruption.

1 - Task Force Trade and Investiment


Interviews

Joerg Wuttke: China’s new role

Over the past few years, China has come to play a central role in global trade. Its ap-

proach however has at times met with the disagreement of other European and Asian countries. The European Chamber of Commerce in China (EUCC) plays an important advocacy role for the interests and views of European businesses in the country. We interview its President Joerg Wuttke.

Is China’s ascent over the past 14 years an unprecedented pheno-menon in the history of world commerce?The starting point was China’s entry in the WTO in 2001, an event that had great significance at the global level. It is worth remembering that at the time, the Central Government faced great resistance and had to convince its country that the Chinese economy would greatly benefit from this without risking to be “overpo-wered” by Western countries. The following events prove it was a win-ning choice: today China controls 15% of world exports. Before 2001, this statistic was below 3%.

Is this change an accomplished fact?That is not entirely correct. I perso-nally think the Beijing Government should enter a new phase, repea-ting this passage inside the country. Today we can not speak of China as of a really integrated market. In-dividual Province administrations, with dimensions similar to Europe-an states, often use different in-struments to protect their markets and their businesses and so-called “local champions”. To be sure, the

Central Government and the Party leadership are extremely powerful and they can impose severe dispo-sitions. But then, in such a big and diversified country, a lot depends on the effective application of these rules. Local “protectionism” inter-venes at this level, often resting on informal power relations - similarly to what happens in other countries.

China does not just have “lo-cal champions”. Are “national champions” also granted special treatment?Things get more complicated here. There are certain strategic sectors such as the defence or energy indu-stries in which the protection of na-tional rights is understandable. But in other sectors this can not be ju-stified. Many big state-owned com-panies in sectors such as banking,

telecommunications, the metallur-gical and petrochemical industries and others, have acquired a strong awareness of their weight and try to use this to further their interests. This creates obstacles to both local private companies and foreign com-petitors who would in fact add effi-ciency to the system.

Was there not mention in the latest Party plenum of the mar-ket’s “decisive” role in “normali-sing” the Chinese economy?Yes and this was a point we hi-ghlighted also in the recent issue of the yearly European Chamber Position Paper. It remains to be as-sessed whether this attitude is ef-fectively free from “preconditions” or whether on the other hand the market is here intended as a sports match in which the referee openly


Interviews

plays for the home team. The Par-ty’s considerations certainly help to overcome the internal protectioni-sms I mentioned above that hinder the country’s competitiveness. I am not sure they would be as effective in terms of foreign competitors as they are for private Chinese compa-nies however, because in this case, competition is thought of as a sti-mulus, not as a principle to be pro-tected as such.

It would seem that Chinese po-litical culture is little inclined to protecting regulatory “princi-ples”, particularly in economics. The recent financial crisis destroyed the conviction of the greater effective-ness of the Western model, especially when compared with the unquestio-nable success of the Chinese model. This is a change we have to take into consideration when we highlight the presence of numerous obstacles to competition even though we know they are ultimately detrimental to the quality of Chinese growth itself.

How to respond?We try to adopt a concrete appro-ach. We need rules to establish eco-nomic and business relations based on mutual advantage. Let us not forget that China and Chinese com-panies are also looking outwards. They aim to directly enter new mar-kets. To acquire companies, market shares, and technologies. And they frequently meet with resistance. In this sense, the promotion of a “le-vel playing field” valid for everyo-ne is in China’s interest too. There are sectors that share this appro-ach, both within the Chinese Go-vernment, particularly the Ministry of Trade, and in the new Chinese managerial class. We can rely on these sectors to persuade China of the importance of respecting the rules and the principle of “neutrali-ty” of intervention also at home. A work of this kind requires presence, information, dialogue. And an ac-tion that the European Chamber of Commerce in China is determined to see through to completion.

There is widespread diffidence in Europe as to China’s approach to many foreign markets, whe-re it comes with “all-inclusive packages” including finance, tra-de, investment, and a patent di-sregard for ethical and political aspects. There are different sides to this pro-cess. A first aspect is undoubtedly positive: many countries have a new interlocutor and a new “client” on which they can rely on for suppor-ting their development. As to other aspects of its approach, it’s open confrontation. These countries have a public opinion. If Europe thinks its model is more careful to the values of democracy, sustainability, and consensus building in the medium to long term, then it will likely come out on top. But it must believe in itself and act accordingly.

China is aiming to increase its in-fluence on multilateral organisa-tions such as the WTO and IMF but at the same time is multiplying its


Interviews

bilateral free trade and payment regulation agreements with indi-vidual countries or areas. The problem of a “twin track” is not exclusive to China, and is one of the topics that will be discussed at the Milan Convention. But China is not always on the winning side. For example, the great Trans-Pacific Partnership currently under discus-sion explicitly excludes China. These signs should convince everyone of the importance of shared principles in the common interest. China cur-rently seems uninterested in partici-pating in many international initia-tives, such as OECD, that have real significance. This does not mean it will always be like that.

A controversial issue is the use of “big deals” and trade rela-tions as a way of applying poli-

tical pressure on countries that are not aligned with Beijing’s positions.I would not give these episodes too much importance. They are limited to a few cases. China is perfectly aware of its economic and commer-cial weight. So of course it tries to use this to obtain the most favou-rable conditions, just as anyone else would. It looks at quality, price and convenience. This is what we must insist upon: there are sectors such as health and hospital activities as well as banks and services in general in which European companies have a lot to give. But the country’s diverse administrative divisions, most of all the individual Provinces, still have an attitude of closure.

There was a recent case of fo-reign car manufacturers being

fined millions of dollars for vio-lation of competition rules. Is this a warning signal to discou-rage foreign producers such as Volkswagen or General Motors who currently dominate the Chi-nese market?This is a case of what you Italians call “dietrologia”. There is the im-pression that these measures are directed only to foreign companies. As a response, the European Cham-ber calls for greater transparency in these decisions. What are the facts and considerations they are based on? The role of the authorities is not to issue fines that force compa-nies to lower their prices, but rather through their judgements to set the standards of behaviour which fur-ther healthy competition. Compe-tition alone will then impose price moderation.

China has the biggest car market in the world. This was confirmed in 2013: last year, the Asian country resumed its double-digit growth, bringing the numbers of vehicles sold on the Chinese market back to record levels. According to data from the Association of Automobile Manufacturers (CAAM), in 2013 13.87% more vehicles were sold in China than in 2012. The total amount was of 21,993,343,000 of vehicles, of which 17,927,997 were cars and 4,065,346 commercial vehicle.


2 - Task Force Infrastructure and Connectivity

Attracting more private capitals is key

The availability of infrastructu-re plays a fundamental role in promoting economic deve-

lopment (trade and investment) both within countries and across different countries and areas. The need for infrastructures is set to grow in the next few decades, driven by several factors: economic growth, urbanisa-tion and growing traffic congestion, supply chain globalisation. The chan-ging context will also have to take into consideration environmental challenges, the growing mobility of people, the development of services and more in general of interactions at the levels of culture and informa-tion. Within this scenario, several is-sues still need to be resolved: many parts of infrastructure systems, also in Europe, are now obsolete, public finances are becoming increasingly limited and the launch of new initia-tives appears increasingly complex. Greater involvement of private ca-pital is needed. But most of all it is important to develop coordinated action: infrastructures are complex systems which are more than the sum of individual sectors and sepa-rate initiatives.

The main topics the Milan Forum is called upon to address in this con-text are:

- The definition of a strategy of co-operation between Europe and Asia to tackle these challenges that re-quire growing coordination at the regional and global levels.

- More specifically, the identification of specific actions capable of streng-thening the institutional, organisa-

tional and financial aspects of this cooperation.

- The identification of best practices with an eye particularly to cross-bor-der infrastructures.In particular, the Infrastructures, Connectivity Networks and Space Technology group proposes the fol-lowing specific recommendations: - the strengthening of the different countries’ financial markets and their contextual coordination with international financial institutions;- the strengthening of the different countries’ institutional capacity to predisposing adequately structured projects with a precise identifica-tion of the different aspects involved (definition of responsibilities and po-

wers of all subjects involved, pricing of services);- the training of technicians and ex-perts and the exchange of knowled-ge and methodologies to address the interdisciplinary and evaluation aspects of the various projects;- the identification and finalising of “bankable” projects, i.e. suited to being subject to bank financing;- the introduction of regulations aimed at accelerating approval pro-cedures, favour new forms of par-ticipation to the different projects, introduce greater competition in procurement policies, guarantee the adoption of adequate techno-logies;- adequate long-term programming of requirements and interventions.

The Siduhe Bridge (or Sidu River Bridge) is a 1,222 metre (4,009 ft) long suspension bridge crossing the valley of the Sidu River near Yesanguan in Badong County of the Hubei Province of the People’s Repubic of China. The bridge spans a 500 metre (1,600 ft) deep valley and is the highest bridge in the world


Interviews

Stefano Poli: the challenge of the ASEAN Economic Community

ASEAN: 10 countries, over 610 million inhabitants, a regio-nal integration plan (AEC:

ASEAN Economic Community) in many ways inspired by the Europe-an Union. The objective is to form a real Economic Union starting from an already existing free trade area. Infrastructure plays a strategic role in this picture. Stefano Poli, Presi-dent of the Singapore European Chamber of Commerce and mem-ber and past chairman of the EU ASEAN Business Council Board of Directors, explains this in the fol-lowing interview.

Why do most economists see the ASEAN region as an area with great potential?On the whole, the Region’s eco-nomies are reaching GDP growth rates similar to pre-crisis levels. Pre-dictions for the next three years are in the range of 5.4% yearly. The main challenge now is to reduce the inequalities existing within the-se economies. By means of exam-ple, the average per-capita income in Singapore, which is equal to 38 thousand dollars a year, is 58 times greater that of Myanmar which is of 658 dollars. But inequality is not just between states. Inequali-ties within states are just as signi-ficant. These do not solely concern income levels, but also and most of all different aspects of society: human resources, institutions and services. These differences natural-

ly slow down ASEAN’s project of achieving real economic integration that would favour the growth of the business sector. In this context, the availability of adequate infra-structures has a fundamental role. It is evident for example that there can be no productive integration and development of areas without adequate transport infrastructure. For this reason, one of the strategic commitments of the ASEAN com-munity is the so-called Masterplan on ASEAN Connectivity (see article below) which covers both physical infrastructure and economic regula-tions, as well as the mobility of hu-man resources and capitals.

Let’s start with the physical in-frastructures.Top priorities are transport and ener-gy. This alone will cover 80% of the required investments in the next few years, which are estimated at 480 billion dollars.

How can these be financed?The adequate availability of capital is one of the great challenges. Un-fortunately, we are still far from the great levels of private investment in infrastructure which before the 1997 Asian crisis had reached over of 23 billion dollars. Today these are down to little more than 15 billion and they cover only 20% of the total amount.

ASEF Deputy Executive Director Amb Nguyen Quoc Khanh, with President of the Singapore European Chamber of Commerce Stefano Poli


Interviews

The majority of this, i.e. 70% is covered by public investments which however are not sufficient. The data shows that the share of public budget dedicated to infrastructure in ASEAN countries has gone down on average from 6 to 4 percent. In other words it was reduced by a third. And direct aid from Western and Asian countries such as South Ko-rea, Japan or China certainly will not make up for the deficit.

What are the reasons for this de-crease in private and public in-vestment?It is likely that regulations in the Ni-neties were not as concerned with environmental and social aspects and thus allowed for extremely high margins. Now governments are more aware of these issues but they still have not found the right balance.Simultaneously, regional integration plans entail an increased demand for capital and many governments are still working to find the necessary funds to dedicate to this project. This is also be-cause they are very focused on national

social aspects, more than on interregio-nal ones.

What can be done?There is shared consensus that the main tool to bridge the gap is effec-tive forms of Public Private Partner-ship. The theme is also one of the discussion topics in the Milan Forum.

Do many countries already have legislation on this matter?Yes, but the solutions proposed are in many cases unsuitable. There remains a widespread problem of transparency in legislative provisions and decision-making processes. With the conse-quence that investors do not have the certainty of achieving the predicted cash flows and being able to repatriate their profits. There is also the need for sufficiently structured financial markets to allow for the potential liquidation of the position undertaken.

Are you pessimistic?Quite the opposite. But we need to work with governments and institu-

tions to identify so-called “best practi-ces”. There is no lack of examples.

Can international financial institu-tions contribute to this process?They certainly can, they are in fact very important. Two years ago the ASEAN Infrastructure Fund was laun-ched with an investment capacity of around 232 billion a year, co-finan-ced by the Asian Development Bank (ADB). It has already started operating with several projects involving power networks in Indonesia and Vietnam. This is definitely a case of best practi-ce. It is important also to intervene in the phase of identification and struc-turing of projects suitable for PPP. This is the task undertaken by another fund, also set up by the ADB with In-ternational Enterprise, an organisation of the Singapore Government. Lastly, ADB has launched a system of credit guarantee for private investors (CGIF Credit Investment & Guarantee Facili-ty) with the participation of ASEAN, China, Japan and South Korea. The role of these institutions is however


Interviews

not all-encompassing: their presen-ce in individual operations acts as a form of guarantee for attracting additional investors. They thus acti-vate financial leverage. But on their own they certainly do not dispose of sufficient resources for satisfying the demand for funds.

What about financial markets?Things are moving also in that di-rection. An important initiative for example is the ASEAN Trade Link, an agreement between the Stock Exchanges of Singapore, Malaysia, Thailand, Philippines and Vietnam establishing the interconnection of the different stock markets and a shared clearing system. On the whole, this market capitalises over 1,500 billion dollars. It took several years to achieve this agreement but it is now a reality. This could provide an efficient platform for channelling savings and investment towards in-frastructural projects. Savings are si-

gnificant in these countries and this attracts real interest on the part of international investors external to the area. It is a matter of channelling these funds in the right direction.

Have banks in the region also grown in strength?Yes, and in certain business sectors they are very active. They could do a lot more in the infrastructure sec-tor however. Some institutions have started to evaluate the opportunity. For example the investment portfo-lio of Bank Central Asia - the main Indonesian private investment bank - amounts to 1.5 billion dollars.

Infrastructures are a business op-portunity also for European con-structors and manufacturers, howe-ver they do not seem to adequately take this into consideration.We need to make a distinction here. In terms of construction, the companies working alongside the big local groups

are mainly Korean, Japanese and Chi-nese. This is also because apart from a few big companies, French ones in par-ticular, few European companies have the necessary structure, size and finan-cial resources required to take on the role of prime contractor in Asia. There remains however significant space for the supply of services (planning in par-ticular) and more specific specialised activities: tunnelling, subsoil techno-logies, complex artefacts, sustainable construction. This requires a real pre-sence on the ground, often with the establishment of partnerships with local groups. This is one of the objec-tives that the European Chambers in Asia and in particular the EU-ASEAN Business Council intend to promote. There are also great opportunities in terms of infrastructure engineering activities: power plants and networks, railways, etc. European countries have unrivalled technological expertise in some specific areas, and their presen-ce is stronger in these sectors.

The EU-ASEAN Business Council is an institution representing and protecting the interests of European businesses operating in the Southeast Asian region in their relations with local authorities, the ASEAN secretariat, the Brussels Commission. It provides important support to European businesses working in the region. It organises missions, conferences, high level meetings with representatives of the Ministries and local authorities, including a yearly summit with the participation of the Ministers of ASEAN and EU member states. The EU-ASEAN Business Council supports the EU Commission in promoting the rapid and efficient conclusion of negotiations undertaken for the establishment of free trade agreements with ASEAN and with individual member stats. It encourages the exchange of experiences and information between companies.

EU-ASEAN Business Council websitehttp://www.eu-asean.eu/

EU ASEAN Business Council


Strategic projects

Masterplan on Asean Connectivity

The Masterplan on ASEAN Con-nectivity (MPAC) is an ambi-tious project the general guide-

lines of which were first adopted on occasion of the 2010 ASEAN summit in Hanoi and subsequently updated. It envisages a large number of inter-ventions in the field of physical infra-structure as well as in custom proce-dures, technical regulations, services and the mobility of people, with the aim of accelerating regional integra-tion. In particular, it identifies nu-merous interregional initiatives with strategic value in the transport sec-tor (motorways, railways, ports, river and sea navigation, airports), the energy sector (gas and oil pipelines, electrical networks) and the informa-tion sector (broadband networks). These projects often build on alrea-dy existing structures in the different countries - motorways, railways, pi-pelines, power networks - but they aim to coordinate and complete interventions enabling interconnec-tion of these systems at the regio-nal level. A relevant example in the transport sector is the construction of the SKRL: Singapore Kuming Rail Link - a railway axis that goes from Kunming in Western China across the entire peninsula towards Viet-nam, Cambodia, Thailand, Malaysia and into Singapore, spanning over 7 thousand kilometres, with a branch going into Lao PDR and a connecting half-ring across Thailand in the direc-tion of Myanmar. Over 4 thousand kilometres of track are still missing or require rehabilitation to comple-te the project. Another important example, in the field of roadworks, is the completion of the ASEAN Hi-ghway Network (AHN) which spans over 38 thousand kilometres of route

of which at least 5,500 kilometres re-quire improvement and modernisa-tion and another 2,500 kilometres of new links are to be built in areas with high volumes of traffic. As regards maritime transportation, the plan is to make over 50 thousand kilometres of inland waterways navigable and 47 ports fully efficient. In the ener-gy field, there are projects to extend

the ASEAN Power Grid connecting also the networks of Indonesia, the Philippines, Myanmar, and strengthe-ning interconnection with Lao PDR and Vietnam. In the gas sector, there are plans to add 2,200 kilometres of interregional gas pipelines to the exi-sting 2,300 kilometres, creating a grid connecting all countries except, for the time being, Vietnam and Lao PDR.

.

Text by the MPACwww.scribd.com/doc/111869648/Master-Plan-on-ASEAN-Connectivity


3 - Task Force Energy

A strategic role for Central Asia

Demographic and economic growth entail constantly in-creasing levels of energy con-

sumption. 1.3 billion people in the world today still lack access to elec-tricity. It is estimated that by 2030, overall energy demand will surpass current consumption by 27%. The International Energy Agency predicts a cumulative global investment bill of around 48 trillion dollars by 2035, of which 40 trillion will be required to guarantee energy production and additional supply and the remaining 8 trillion to increase energy infra-structure efficiency. Whilst renewable energies will have an increasingly im-portant role, fossil fuels will continue to be the major source of energy. In substance, all possible energy sources will have to be mobilised. In the face of the uneven distribution of avai-lable resources, worldwide energy exchanges are extremely important. Both Europe and the Asia-Pacific re-gion are net energy importers whilst Russia, the Middle East and the Ca-spian Region are importers as well as exporters to the world market. Euro-pe imports a significant amount of oil and condensates and 45% of the natural gas it consumes. This quota is

set to rise to 60% by 2025, with the decline in local production. The Asia-Pacific region depends on the outside for 70% of its oil and condensates and such dependency is set to grow by an estimated 50% by 2040, con-comitantly with the growth in con-sumption. For similar reasons, natural gas imports are also set to grow from the current 15% to 35% of the total requirement, with a strong increase in liquefied natural gas (LNG). This is an extremely important challenge which must be addressed through constant intergovernmental dialogue and with a non-discriminatory approach.The working group’s recommenda-tions focus in particular on energy policies aimed at attracting signifi-cant private investment, limiting go-vernment action to regulation and monitoring functions thus allowing investors to make reliable predictions. Recommendations further suggest that objectives be set always with a view to environmental protection and to the development of renewable energy. This should be done in such a way as not to threaten security of sup-ply or negatively impact on competi-tiveness between different countries. In particular, they insist on the gradual

phasing out of subsidies to well-esta-blished sources of renewable energy and low levels of emissions and call for the adoption of neutral policies which would allow for market forces to de-termine the most competitive energy sources based on tariffs reflecting ac-tual production costs. The financial in-centives thus freed could be invested in research into and development of new technologies. The group refers to the negative example of the five major European countries where the total amount of incentives to renew-able energy sources amounts to 48 billion euros, exponentially surpassing the funds dedicated to research and development (315 million). A long list of strategic research and investment areas is outlined. As well as renewa-ble sources, these include smart grids, energy storage, nuclear fusion and modular nuclear plants, shale gas and oil, carbon monoxide capture techno-logy and emission reduction, energy efficiency technology in industrial pro-cesses, construction and transport. In this regard there are multiple potential areas of cooperation between Europe and Asia particularly in terms of Re-search Institutes, Universities and co-financed programmes.


Reserves, production and consumption

Oil and Natural GasCountry reserves in million barrels Compound average growth rate 2000 - 2013

Venezuela 297,570 11.9%

Saudi Arabia 267,910 0.2%

Canada 173,105 -0.4%

Iran 154,580 4.6%

Iraq 141,350 1.9%

Kuwait 104,000 0.6%

United Arab Emirates 97,800 0.0%

Russia 80,000 4.2%

Libya 48,010 4.1%

Nigeria 37,200 4.3%

WorLD ToP 10 1,401,525 2.7%

rest of the world 249,057 1.8%

WorLD ToTAL 1,650,583 2.6%

(Source: Oil& Gas Review 2013)

The table shows the classification of the top ten countries in the world in terms of proven oil reserves. Together, these countries control 84% of the world total oil reserves. The only ASEM member amongst them is Russia.Comparing data on production with data on demand, and excluding from the picture the Russian Federation, some significant observations emerge. Asia-Pacific and Europe figure respec-tively as the first and third countries for oil consumption and they occupy respectively the penultimate and last

positions in terms of production. On the whole, they are net oil importers for a quota equal to 37% of the world total. The quota is set to grow the ye-ars ahead to the double phenomenon of the steady increase in Asian con-sumption and the decline in produc-tion particularly in Europe. Europe co-vers 25% of its energy requirements through its own resources whilst in Asia this is slightly higher at 28%. The Russian Federation and Central Asia are both exceptions as they have a strategic role for both markets with

a coverage equal to 3.4 times the re-quirements of the Russian Federation. In the case of Azerbaijan, production exceeds demand by 10.7 times and for Kazakhstan the value is of 4.3 times. Up to now, these countries have mainly exported to Europe, but thanks to the new oil pipelines from Kazakhstan and West Siberia towards China, they now aim to operate in the direction of the Far East. Middle Ea-stern countries however remain the main suppliers for both the European and Asia-Pacific regions.

region Production in million barrels per year

Consumption in million barrels per year

Compound annual growth rate in consumption

Europe 3,706 15,014 -0.7%

Asia-Pacific 8,280 29,169 2.8%

Russia and Central Asia 13,588 4,009 1.7%

Middle East 28,082 7,951 4.0%

Africa 9,996 3,404 2.7%

North America 12,918 21,235 -0.3%

Latin America 10,325 9,018 2.1%

WorLD ToTAL 86,895 89,799 1.3%




The imbalance of reserves, production and consumption is replicated, albeit with different characteristics, in the natural gas sector. In Europe, this makes up for over 28% of the primary energy sources and has a strong prevalence in the electricity sector, whereas in Asia natural gas is still third after oil and coal with a quota of only 11%.The difference with oil is given by the fact that the great majority of natural

gas exports takes place through gas pipelines that involve massive invest-ment on top of the investments neces-sary for extraction and for the estab-lishment of multi-year supply/purchase agreements between producer coun-tries and consumer countries. In this picture, Russia and the Central Asian states supplying Europe have a cru-cial role. These countries have already launched a series of projects to extend

their export gas pipelines into China and the Indian subcontinent. At the same time, to bridge the gap between consumption and production, the sup-ply chain of liquefied natural gas ex-ported via ship transport is growing, allowing importing countries – Asian ones in particular – to access supplies from a more extensive geographical area, with a view particularly to the Middle East.

reserves (billion m3) Production (billion m3) Consumption (billion m3)

Europe 5,764 295.01 597.04

Asia-Pacific 16,789 476.66 644.61

Russia and Central Asia 63,692 820.06 580.04

Middle East 79,940 553.57 419.95

Africa 14,682 200.86 116.64

North America 11,149 820.64 809.13

Latin America 7,887 225.74 232.05

WorLD ToTAL 200,741 3,392.53 3,399.47




In the current situation, renewable energies still play a marginal role. In 2013, European consumption – excluding Russia and Central Asia where production of renewable energy is irrelevant – amounted to 112.8 million tonnes of oil equiva-lent out of a total primary energy consumption of 1.185 billion barrels. Production was concentrated to a li-mited number of countries. In first place was Germany with 29.7 mil-lion tonnes of mainly wind energy, followed by Spain (16.8) and Italy (13) with a strong component of solar energy, and the UK (10.9). In the Asia-Pacific region on the other hand, production was of 782 million tonnes of oil equivalent of which 429 in China – mainly from wind farms – and 117 in India.

Renewable energy

In Europe coal still has a significant though decreasing role with 302.3 million tonnes of oil equivalent. The situation is similar in Russia and

CoalCentral Asia with 173.4 million ton-nes. In Asia on the other hand, coal is still second only to oil with 3826.7 million tonnes of which 1925.3 in

China, where it remains the primary source of energy.



In Europe, hydroelectric sources are already for the most part exploited and they cover a total of 139.1 mil-lion tonnes of oil equivalent. In Rus-sia and Central Asia, they cover 62.2 million and in Asia 308.7 million of which 206.3 in India alone.

Hydroelectric energy

This remains the primary source of energy in France with a production of 95.9 million tonnes of oil equiva-lent out of a European total of 205.1

Nuclear energymillion. Russia and Ukraine maintain a significant role with 57.9 million. In the Asia-Pacific region, South Ko-rea and China dominate the sector

with a production of 31.4 and 25 million respectively, out of a total of 77.8 million.


4 - Task force Food and Water Security

The winning approach: technology and integrated projects

Food security intended as the suf-ficient availability of food and the adequate access to water sup-

plies are some of the great concerns of the twenty-first century. These is-sues can be addressed through the use of efficient irrigation systems, the provision of adequate equipment for tillage and initial product processing, and the reduction of the massive los-ses due to product deterioration as a consequence of the lack of reliable sy-stems of storage and transport.

These are issues that individual agri-cultures cannot resolve by themsel-ves. They require capital and infra-structure, programmes of agricultural enhancement, technical knowledge,

demonstrative experiences, rules ai-med at opening up markets and ma-king them more efficient, and inclu-sive policies able to involve small and medium agricultural entrepreneurs. The involvement of the private sector in addition to public administrations is crucial to meeting these needs. This complex challenge is also at the he-art of the Universal Exposition taking place in Milan in 2015 with the tit-le: “Feeding the Planet. Energies for Life”.The AEBF task-force proposals on this theme are the following:- the establishment of a regulatory framework able to favour the deve-lopment of the necessary infrastruc-ture and incentivise private sector

involvement. This includes adequate policies for the pricing of services and for opening up the product market and the creation of investment funds and dedicated financing channels;- a better use of water resources through the adoption of appropriate technologies and management sy-stems based also on the indications of the World Economic Forum’s Wa-ter Resource Group;- the re-opening and conclusion of the Doha Round;- the coordination of the different interventions with an integrated ap-proach dealing with the whole value chain: from storage and transport to distribution and the efficient use of resources.


Interviews

Giuliano Pisapia: Milan’s commitment to a sustainable planet

Italy’s financial capital of Milan is preparing to host Expo 2015, which will be dedicated to the the-

mes of food security and global nu-tritional resources. We interview the city’s mayor Giuliano Pisapia.

Food and Water Safety and Se-curity are the two most impor-tant themes of Expo 2015. Why did an “industrial” city such as Milan choose these themes?Milan is the economic and finan-cial capital of Italy, it has innovation and creativity in its DNA. But Milan is also the country’s second agricul-tural city, with its farmhouses and agri-food sector. It is a city of water, with its Navigli - even Leonardo da Vinci worked on the city’s hydrau-lic system - and its Darsena, the ancient port which on occasion of Expo 2015 will once again become a point of reference in one of the city’s most ancient parts. It is also an inter-national city in the heart of Europe, connected with the entire world and perhaps most importantly with the other metropolises committed to building sustainable development. For all these reasons it was awarded Expo 2015 with the theme “Feeding the Planet. Energy for Life”. Differen-tly to the past, the challenge of food security has become a global issue and as such it requires global re-sponses. Expo Milano will thus be a strategic step in what has effectively become a race against time. With a twofold objective: the exchange of research and innovation between businesses to provide answers that are as concrete as possible, and the

necessary greater coordination of Food policy at the global level.

What initiatives are you taking to involve participating countri-es in these themes?I hope that a “Global agreement on the right to healthy and secure nutrition” will be undersigned by most - if not all - of the over 140 participating countries. This should be the greatest legacy of Expo Mi-lano 2015. The Italian Government is also working towards this goal in collaboration with other countries and the main international organi-sations, among them the Europe-an Union and the United Nations. For its part, Milan is working online with 50 other world metropolises to finalise the “Urban Food Policy Pact”, a project that I launched in quality of Mayor of Milan last year in Johannesburg, on occasion of the summit of the C40 – the network of metropolises working to fight cli-mate change and to build the Smart Cities of the future. We will produce

a protocol on urban policy for sustai-nable food which will be signed by the Mayors of the greatest possible number of world cities during a big international event in October 2015, at the closing of Expo Milano.

Food safety entails the use of adequate procedures and technologies. Do you believe Mi-lan and Europe in general have the experience and innovative skills required?Milan, Italy and Europe will be the protagonists of Expo 2015 in this field. Constant innovation in agri-culture, the high quality food chain, some of the most advanced regula-tions in the world in terms of controls and security, are some of the cards they can play on the world level. The numerous Italian and European best practices and the interactions between the research and business sectors will be confronted with other world leaders in agriculture. First of all the United States, who will put the best of their technology and in-


Interviews

novation on show with their “Food 2.0” pavilion and that in any case – just as much as many other countries from Asia to Latin America do – look to Europe and Italy as models of a healthy diet and a sustainable food supply chain. Millions of people all over the world still die each year of hunger or malnutrition. But today, as diets across the world are becoming more homogenised, more and more people suffer also the effects of an unhealthy or excessive nutrition: obesity, with its important social and economic costs, is now a plague affecting the global North as well as the global South. Europe and Italy have a lot to say on this.

Food security implies the deve-lopment of “sustainable” agricul-

tural models. Do you think Milan and the Lombardia region have experiences and best practices to share?For the city of Milan, there is a signifi-cant legacy of Expo 2015 that I want to highlight on this point. In line with the theme of the Universal Exposition, rethinking the entire urban food sup-ply chain has been central to the city’s agenda for some time. This is a signi-ficant step in the construction of the Smart City we are working towards. The smart and sustainable city we en-visage will guarantee a better quality of life to its citizens and will be com-petitive in the global world. This is a fundamental challenge for Milan. It is a challenge which is not just made of “km 0” food or suburban agriculture, or of a model based on small busines-

ses and cooperatives. It is most of all about the creation of a new and po-sitive relation between producers, di-stributors and those who deal directly with the consumers. This is what we are working on in collaboration with the best research institutions and the businesses and organisations active in this field. With particular attention to fighting food wastage: this will be one of the main themes of the Expo and one on which the city of Milan is working in connection with other important European cities.Expo Milano will not be a simple di-splay of products and technology, but rather a display of ideas and exchange of best practices for the right to a safe and healthy nutrition for all, for a su-stainable development for the future of the Planet.


Interviews

Diana Bracco: an international event open to businesses

Businesswoman and Expo 2015 President Diana Bracco explains how the organisers are prepa-

ring to welcome economic operators from all over the world.

The theme of food & water se-curity implies social aspects but also some very important busi-ness aspects: technology, servi-ces, networks. What space will be given to these elements in the Expo?Food and water security is a crucial theme of Expo 2015. Its title, “Fee-ding the Planet. Energy for Life”, raises the question of nutrition with a double aim. On the one hand, to guarantee sufficient resources to those living in conditions of malnu-trition. On the other, to tackle the great new social ills of our time – from obesity to cardiovascular dise-ases – exploiting innovations and practices allowing for a healthier way of living.The Expo will be in this sense a uni-que opportunity to identify concrete solutions, evaluating international experiences and opinions to give life to new projects in the fields of health and nutrition. Businesses will have a central role in this process.The agri-food industry is facing ex-tremely significant challenges. The-se do not necessarily have a clear name: increasing productivity in subsistence agriculture and in the broader food chain to respond to the issue of world hunger; tackling the problem of food wastage, which rather than diminishing over the past few years has increased by an

alarming 50%; nutritional education and so on.The Italian food industry has already largely accepted these challenges. It is world leader in terms of food sa-fety, and its water purification and desalinisation industries also stand out internationally.Innovation and technology will be the main drivers of Expo Milano. The entire Expo set up uses the most advanced technological solutions for welcoming visitors and guaran-teeing their comfort and security. Exposition spaces organised around thematic paths and “mappings” will present their content exploiting advanced techniques to increase ease of access and enhance visitor experience.

Will specific services and mee-tings be put in place to help bu-

sinesses make the most of the opportunity for international visibility provided by the Expo?Absolutely. The theme involves se-veral industrial sectors. The entire system of production, the food in-dustry, the health sector, tourism, fashion, design, furniture, services, transport and logistics, ICT, commu-nication and so on – are all crucial to adding value to the Expo and be-nefiting from its effects. Organisa-tions will be given the opportunity to support initiatives or exhibitions in the Pavilion’s events programme.One of the main tasks of the Italian Pavilion will be the promotion of the high quality of Made in Italy. Hun-dreds of foreign delegations will vi-sit the Pavilion over the six months of the Expo. We have set ourselves two very concrete objectives: to strongly support Italian businesses


Interviews

in their internationalisation pro-cess, for instance raising the export quota of our agri-food sector, and to relaunch tourism as a structural fact with a view to the long term. In substance, the Expo will be a great opportunity for promoting Italy.

The Asian-Europe Business Fo-rum task force recommendations stress the role of governments in creating the enabling conditions

for investment in the food and water industries and more in ge-neral of public-private partner-ship forms of collaboration.Investment in the food and water sectors is strategic for the whole of humanity. Water as well as food must be at the centre of any reflec-tion on resources and their efficient use. Water is the necessary compo-nent and lifeblood of every form of life on the planet, it is the food of

food itself. A relentless fight against wastage is just as necessary for wa-ter as it is for food. And certainly today collaborations and partner-ships are more essential than ever. A fairer distribution of resources and access to food contribute to social harmony and the peace amongst peoples. Sharing of food is a tool for integration, it encourages exchange and dialogue and fosters mutual understanding.


AustraliaAustralian federation of Employers and Industrieshttp://www.afei.org.au/Australian Chamber of Commerce and Industrywww.acci.asn.au/

BangladeshBangladesh Employers federationhttp://www.bef.org.bd/BIMP-EAgA Business Council Brunei darussalamhttp://bebcbrunei.org/

BruneiBrunei National Chamber of Commerce and Industryhttp://www.nccibd.com/

CambogiaCambodian federation of Employers and Business Associationshttp://camfeba.com/

ChinaChina Enterprise Confederation http://www.cec-ceda.org.cn/ All China federation of Commerce and Industrieswww.chinachamber.org.cn/

IndiaConfederation of Indian Industrieswww.cii.in/federation of Indian Chambers of Commerce and Industrieshttp://www.ficci.com/

IndonesiaKadin: Indonesian Chamber of Commerce and Industry http://www.bsd-kadin.org/The Employers’ Association of Indonesia (APINdO)www.apindo.or.id/

JapanJapan Business federation (Keindaren)www.keidanre Korea Employers’ federation (KEf)

Korea Korea Employers federationhttp://eng.kef.or.kr/ n.or.jp LaosLao National Chamber of Commerce and Industryhttp://www.laocci.com/

MalaysiaNational Chamber of Commerce and Industry ofwww.nccim.org.myMalaysian International Chamber of Commerce and Industryhttp://www.micci.com/ Malaysian Employers federation (MEf)www.mef.org.my

MyanmarUnion of Myanmar federation of Chambers of Commerce and Industryhttp://www.umfcci.net/

MongoliaMongolia National Chamber of Commercehttp://www.mongolchamber.mn/Mongolian Employers’ federationwww.owc.org.mn/monef

New ZealandBusiness New Zealandwww.businessnz.org.nz

PakistanEmployers’ federation of Pakistan (EfP)http://efp.org.pk/

Main business federations of Asia-Pacific ASEM partner countries


PhilippinesPhilippine Chamber of Commerce and Industryhttp://www.philippinechamber.com/Employers’ Confederation of the Philippines (ECOP)www.ecop.org.ph/Employers Confederation of Thailandhttp://www.ecot.or.th

SingaporeSingapore International Chamber of Commercehttp://www.sicc.com.sg/Singapore National Employers’ federation (SNEf)www.sgemployers.com

ThailandThe Thai Chamber Of Commerce and Board of Trade

http://www.thaichamber.org/Employers Confederation of Thailandhttp://www.ecot.or.th

VietnamVietnam Chamber of Commerce and Industry (VCCI)www.vcci.com.vn

ASEANAsean Confederation Of Employershttp://aseanemployers.org/

Main business federations of Asia-Pacific ASEM partner countries

Belgiumfédération des Entreprises de Belgique www.vbo-feb.be/fr-be/

BulgariaBulgarian Industrial Association www.bia-bg.com

CroatiaCroatian Employers’ Association (Croatian Association of Employers)www.hup.hr/en/Croatian Chamber of Economyhttp://en.hgk.hr/

CyprusCyprus Industrialists and Employers Associationhttp://en.oeb.org.cy/

Czech RepublicConfederation of Industry of the Czech Republicwww.spcr.cz

denmarkConfederation of danish Industry www.di.dkConfederation of danish Employerswww.da.dk

EstoniaEstonian Employers’ Confederation – ETTKwww.tooandjad.ee

finlandConfederation of finnish Industries www.ek.fi

franceMouvement des Entreprises de france (MEdEf) www.medef.fr

germanyBundesverband der deutschen Industrie e.V. www.bdi.euBundesvereinigung der deutschen Arbeitgeberverbände e.V. www.arbeitgeber.de

Main European businesses federations


greeceHellenic federation of Enterprises www.sev.org.gr

HungaryMgyosz-Businesshungarywww.mgyosz.hu

Icelandfederation of Icelandic Industrieswww.si.iswww.sa.is

IrelandIbecwww.ibec.ie

ItalyConfederazione generale dell’ Industria Italiana (Confindustria)www.confindustria.it

KazakhstanChamber of Commerce of Astanawww.chamber.kz/eng/Almaty Chamber of Commerce and Industrywww.chambercom.kz/

LatviaEmployers’ Confederation of Latvia www.lddk.lv

LithuaniaThe Lithuanian Confederation of Industrialistswww.lpk.lt

LuxemburgBusiness federation Luxembourgwww.fedil.lu

MaltaMalta Chamber of Commerce, Enterprise and Industrywww.maltachamber.org.mt

NetherlandsVereniging VNO-NCwww.vno-ncw.nl

NorwayConfederation of Norwegian Enterprise (NHO)http://www.nho.no

PolandPolish Confederation Lewiatanwww.konfederacjalewiatan.pl

PortugalAssociaçáo Industrial Portuguesa – AIPwww.aip.pt CIP Confederação Empresarial de Portugalwww.cip.org.pt

RomaniaAlianta Confederatiilor Patronale dinwww.confederatii.ro

RussiaRussian Union of Industrialists and Entrepreneurs (RSPP)www.rspp.ru/

San MarinoAssociazione Nazionale Industria San Marinowww.anis.sm/

SlovakiaRepublikova Unia Zamestnavatelovwww.ruzsr.sk

SloveniaEmployers’ Association of Sloveniawww.zds.si/

SpainConfederación Española de Organizaciones Empresariales www.ceoe.es



Newsletter Realizzata dal Sole 24 Ore in collaborazione con la Direzione Generale per la Promozione del Sistema Paese Ufficio I (Promozione e Coordinamento delle iniziative di internazionalizzazione del Sistema Economico) del Ministero degli Affari Esteri

Pubblicazione in formato elettronicoRegistrazione Tribunale di Milano n. 266 del 2 Maggio 2007sede legale: Via Monte Rosa, 91 20149 Milano Tel: 02.30221 - Fax: 02.3022.481

Direttore responsabile: Lorenzo Lanfrancone

Proprietario ed Editore: Il Sole 24 ORE S.p.A. Radiocor Agenzia d’informazione

responsabile linea editoriale: Nicola Lener

redazione: Massimo di Nola

Collaboratori Cristiana Alfieri di redazione MAE: Federico Bernardi Paola Chiappetta Veronica Ferrucci Sonia Lombardi

Progetto editoriale: Il Sole 24 ORE S.p.A. Radiocor Agenzia d’informazione Copyright 2012 - Il Sole 24 Ore S.p.A Radiocor Agenzia d’informazione

È vietata la riproduzione, anche parziale o ad uso interno con qualsiasi mezzo, non autorizzata. Per contattarci: http://www.sistemapaese.esteri.it [email protected]

SwedenConfederation of Swedish Enterprise www.svensktnaringsliv.se

Switzerlandfederation des Entreprises Suisseshttp://www.economiesuisse.ch

United KingdomConfederation of British Industrywww.cbi.org.uk

European UnionBusiness Europehttp://www.businesseurope.eu/


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