Latest information on novel coronavirus (COVID-19) for exporters



*Updated 4 May 2020

Austrade is open for business and our network of 1,100 staff is committed to helping you through this time.

As part of ‘Team Australia’, Austrade is working closely with the network of government departments and industry agencies to help Australian businesses overcome complex and fast-evolving COVID-19–related challenges.

This site provides updates on markets and logistics, and links through to the Government’s extensive business support programs.

Support for businesses impacted by Coronavirus

On 1 April, the Australian Government announced measures to help secure freight access for Australian agriculture and fisheries exporters.

The new $110 million International Freight Assistance Mechanism (IFAM) will assist Australia’s agricultural and fisheries sector by helping them export their high-quality produce into key overseas markets, with return flights bringing back vital medical supplies, medicines and equipment.

Exporters wishing to access the mechanism can register their interest or call the Department of Agriculture, Water and the Environment on (02) 6272 2444.

On 1 April, the Government also announced increased funding for the Export Market Development Grant (EMDG). Funding for the scheme will increase by $49.8 million in the 2019-20 financial year, allowing exporters and tourism businesses to get additional reimbursements for costs incurred in marketing their products and services around the world.

This supplements the additional $60 million already committed by the Government, and brings EMDG funding to its highest level in more than 20 years at $207.7 million for the 2019-20 financial year.

For details about the full range of programs the Australian Government has launched in support for Australian businesses go to business.gov.au




Latest insights from Austrade




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ASEAN update

4 May 2020

Lockdowns remain stringent: Indonesia is broadening its movement controls, while Singapore’s measures are stable and Malaysia moves to easing. Traders across Southeast Asia are wrestling with severely dislocated supply chains. Ports are clearing container backlogs, but air freight is precarious. The appetite for Australian foodstuffs – especially soft fruits and vegetables – remains healthy, including in Thailand. In Malaysia, food and beverage importers who have shifted products to e-commerce platforms report strong sales. Investment capital in Singapore’s tech market is pivoting towards companies with COVID-19-related solutions, with cyber security, AI and robotics companies attracting funding.

General news

  • Philippines – The Philippines business process outsourcing (BPO) industry is struggling to maintain efficiency during the lockdown. A large proportion of employees cannot work from home due to poor telecommunications infrastructure, and privacy laws which prohibit taking personal customer information into non-secure environments. Some large customer-service companies report that less than 30% of their workforce can transit into work.
  • Thailand – Importers who wish to utilise tariff privileges under AANZFTA can now submit electronic copies of their AANZFTA Certificate of Origin (COO) direct to the Customs Department effective through to September 30, though a hard copy still needs to be provided within 30 days.

Impacts on key industries

Agribusiness and food

  • Malaysia – Food and beverage importers who have shifted products to e-commerce platforms – including Lazada and FoodPanda – report roaring sales. Importers are currently offsetting poor margins by fast-tracking home deliveries. Fruit importers report increased demand for apples and citrus, regardless of country of origin.
  • Philippines – Importers of Australian products so far have been able to clear shipments within the prescribed period and have not been affected by Abandonment proceedings.  
  • Singapore – Following changes to regulations on chilled and frozen meat imports, a number of Australian companies are engaged in regulatory processes to allow their frozen poultry, and chilled and frozen pork products into Singapore. Fresh produce and dairy consolidators continue to express concern over the cost of freight.
  • Thailand – Demand for fresh and packaged foods through retail and online channels continues to rise with demand rising through online channels and convenience stores. However, the Thai Alcoholic Beverages Association is predicting sales of alcoholic beverages to decline by 60% this year due to the collapse of the tourism industry, the closure of restaurants and hotels, and the government’s ban on alcohol sales.
  • Vietnam – The Government’s rice export quotas for May will stay in place. Vietnam is the world’s second largest rice-exporting country in the world, after Thailand.

Logistics and supply chains

  • Indonesia – Indonesian logistics technology company Kargo completed a US$31 million investment round, with its focus on electronic proof-of-delivery, easing e-commerce delivery, and disrupting logistics services for the retail sector.
  • Malaysia – Exporters report that air freight costs for Malaysia are approximately 2.5 times pre-COVID-19 levels, with instability including scheduling changes and cancellation higher than usual. The Ministry of Transport has conducted a fourth port-clearing exercise to decongest sea-borne freight bottlenecks.
  • Philippines – The Manila International Container Terminal has reported that cargo traffic and yard utilisation has returned to normal levels thanks to government intervention to remove empty or unclaimed containers. Sea freight is now scheduled for April and May.
  • Thailand – The Finance Ministry is expected to guarantee a $2 billion loan to rescue Thai Airways. Airbus has pulled out of a planned $525 million joint venture with Thai Airways to develop a Maintenance, Repair and Overhaul facility at U-Tapao airport in Thailand’s Eastern Economic region. Thai Airways will seek other investors and proceed with plans to develop the facility.

Manufacturing

  • Malaysia – Local automotive companies, including Proton, have repurposed their production lines to make PPE. Output includes face shields for frontline medical staff. Sapura Industrial is repurposing production lines to manufacture medical devices and is looking for appropriate joint-venture partners — potentially from Australia. 
  • Thailand – The March manufacturing production index (MPI) declined by 11.25% year-on-year, but increased by 1.8% on February. This reflects an uptick in exports, primarily electronics, electricals, pharmaceuticals and agrifood products.

Technology

  • Malaysia – The Ministry of Health and the Malaysian Communications and Multimedia Commission are beta testing an app called Gerak Malaysia, which performs location tracking and contact tracing. Developed with the support of local telcos, Gerak Malaysia is based on contact tracing models from Korea and China.
  • Singapore – The Singapore FinTech Association is partnering with Razer Fintech to provide support for the Singapore fintech community, including possible bridge financing, equity or equity-linked instruments worth US$100,000–US$1.5 million for eligible companies.
  • Singapore – Funds are scarce for tech scaleups. Singapore-based tech companies report that pre-seed round due diligence is taking longer than anticipated. On the positive side, some tech companies report an acceleration of interest and investment in robotics, unmanned systems, artificial intelligence and cyber security. 
  • Thailand – The Thai Cabinet approved a plan to upgrade Thailand’s food processing capabilities to help position the country as ASEAN’s processed food hub and a top 10 global food exporter. This will lead to more companies upgrading their processing capabilities, as well as drive the growth in bio-foods and use of digital technologies to support innovative food production.

Property and finance

  • Thailand – Many SMEs are struggling to access bank loans to secure cash flow. Anecdotal reports show Thai banks are particularly nervous about lending to foreign companies unable to provide local assets as collateral.

Government responses

  • Indonesia – The Indonesian Travel Ministry announced restrictions on all Indonesian passenger transportation to domestic and overseas destinations (with some exceptions) on April 23, until 1 June. Local lockdowns have been extended in Jakarta (to May 22) and its surrounding areas (to May 13), and new regional lockdowns have been approved in Surabaya, and parts of East Java, Kalimantan and West Sumatra. This adds to regional lockdowns already in place for three provinces and 16 cities. There is also a formal ban on the annual Idul Fitri tradition of ‘mudik’, where citizens travel to visit their families.
  • Malaysia – On April 15, the first day of Phase 3 of Malaysia’s lockdown, the Government received 18,650 applications from companies seeking approval to operate during the shutdown. The Malaysian economy is estimated to be operating at 45% of capacity.
  • Myanmar – There is a mandatory three-week quarantine for anyone arriving in Myanmar. This is hampering resources companies that need to get professional staff to mine sites.
  • Philippines – President Rodrigo Duterte announced the extension of the Enhanced Community Quarantine in the National Capital Region as well as other high-risk areas until May 15. Priority and essential construction projects will be allowed to resume subject to minimum health standards, physical distancing and barracks for workers. Public transportation is supposed to operate with reduced passenger loads.
  • Thailand – The Thai Government has started to ease social restrictions by opening markets, small eateries and outdoor recreation areas. Alcohol sales have recommenced but only for home consumption. The ban on international passenger arrivals for non-Thais continues, as do night-time curfews and limits on inter-provincial travel. Government offices remain open and operational. Economic relief measures are continuing for businesses in the form of debt and tax relief, as well as soft loans.

24 April 2020

Freight costs are hampering imports of Australian foods into Southeast Asia, including into Singapore. Port congestion remains an issue, although decongestion efforts in Malaysia are clearing container backlogs. Supply issues and changed consumer behaviour are leading to shortages, surpluses and price volatility. Consequently, opportunities in food and consumer products abound. Grocery e-commerce is catching on in Thailand and Malaysia, and Australian brands are getting on board.

Impacts on key industries


Agribusiness and food

  • Myanmar – Due to COVID-19 impacts on courier services and mail, phytosanitary certificates are not always reaching the market before shipment arrivals. As a consequence, importers have asked Myanmar’s Plant Protection Division to accept electronic certificates from exporters.
  • Singapore – A consolidator for a major grocery chain notes high freight prices are making some Australian egg and dairy exports cost prohibitive and limiting their appearance on Singapore shelves.
  • Thailand – Leading supermarket chains have noted stronger than usual online sales. This includes staples as well as imported fruit and vegetables. Tesco and the Australian Table Grape Association have commenced a two-month, online promotion in response to this change in buyer behaviour. However, products linked to tourism and hospitality such as beef, lamb and some dairy lines have seen demand declines.
  • Vietnam – There is a decline in the quantity of imported food products including Australian agrifood due to ongoing social distancing measures and a sharp drop in international travellers. Import turnover of agricultural, forestry and fishery products were down 6.7% compared to the same period in 2019. The Vietnamese Customs authority has also imposed a temporary rice export quota for April and May 2020. Pending review, this may limit rice exports from Vietnam, the world’s third-largest rice exporter.

Manufacturing 

  • Indonesia – While Indonesian manufacturing has seen its largest ever contraction, according to official figures released in mid-April, the Government is seeking to support industrial activity amid broadening lockdowns. The Industry Ministry has made a portal available for manufacturers and other industrial companies to apply for permits to continue operating, and has already issued 11,172 such permits.
  • Malaysia – Malaysian subsidiaries of Sony, Panasonic and Sharp are keeping their factories shuttered until the end of April. While Sony had previously endeavoured to resume operations, the decision has been shelved following the recent extension of the MCO. There are looming concerns that continued shutdowns of electrical manufacturing in Southeast Asian countries may impede the rebound of the global electronics industry, as the region may become a bottleneck in the overall global supply chain.
  • Thailand – With consumer buying power reduced, the market for non-essential items such as passenger cars, motorcycles and luxury goods is experiencing a downturn. Factories across Thailand can continue to operate despite soft lockdowns but are challenged by decreased demand and workforce and supply chain disruptions.
  • Vietnam – Several automobile companies including Toyota, Nissan, Ford and Honda have temporarily suspended production. While most manufacturing operations can continue operating, social distancing measures, uncertainty in supply chains (particularly from China), and dampening demand is having a negative impact on output. 

E-commerce

  • Malaysia – Austrade is working to onboard Australian nutraceuticals and F&B brands onto Zalora’s e-commerce platform. Efforts to connect F&B importers and pharmacy chain Alpro have met warm responses.
  • Thailand – Online purchasing and home delivery services are continuing to see a surge as shops and restaurants remain under lockdown and more staff work from home. Online retailer JD Central’s sales grew three-fold during its March Super Sales campaign over last year. The fleets of last-mile delivery service providers including Kerry Express, Flash Express, Grab and Line Man have grown substantially. The home delivery sector is up 14%, year-on-year, with leading platform GrabFood citing 100% growth. The number of food merchants on its platform has increased by 30%.
  • Vietnam – Vietnamese consumers and retailers continue to purchase food, beverage and consumer products via e-commerce platforms. Lazada Vietnam, one of the leading players, has launched a touch-free delivery solution to provide a safe shopping experience for consumers.

Healthcare

  • Vietnam – Under a government mandate, Vietnamese PPE equipment manufacturers must sell 70% of their supplies to the Government, prior to domestic sales or export. This, along with a low case load and a domestic manufacturing base, means Vietnam is increasingly confident it has surplus PPE equipment. The country is exporting PPE to other countries, including 550,000 masks to Europe. Vingroup, Vietnam’s leading conglomerate, also plans to manufacture around 55,000 ventilators each month.

Education

  • Vietnam – The COVID-19 pandemic has revealed a growing demand for online education. There are gaps to fill in Vietnam, especially in higher education, vocational education and training, early childhood education and school.

Supply chain

  • Malaysia – The Ministry of Transport conducted a third round of decongestion exercises in Malaysian ports from 13 to 15 April. After the second round, congestion in the import-side container yards across most ports reduced by 40% to 60%. Only Johor Port in Pasir Gudang and Westport recorded a high container yard usage at nearly 70%.
  • Philippines – Philippine Airlines will start operating repatriation flights from April 29 and has opened air cargo options between Melbourne, Sydney and Manila (this is in addition to earlier flights on April 1718). Cargo options are also available on Cebu Pacific.
  • Philippines – Shipping lines had stopped taking bookings bound for Manila due to the port congestion in the city and in transhipment hubs such as Singapore and Malaysia. The International Container Terminal Services Inc. (ICTSI)-managed Manila International Container Terminal says cargo traffic and yard utilisation has returned to normal levels, thanks to government intervention to remove empty or unclaimed containers.
  • Singapore – Singapore Airlines has been contracted to deliver freight services under the International Freight Assistance Mechanism alongside 14 other air freight service providers and freight forwarders. This will accelerate the delivery of agricultural and fisheries exports into key overseas markets.
  • Vietnam – With international flights suspended, manufacturing supply chains in Vietnam are reliant on shipping cargo. While sea freight remains open, some manufacturers say sea freight costs are increasing significantly and schedules are getting tighter to book due to competing freight, which previously transited into and out of Vietnam by air.  

Government response

  • Indonesia – Indonesia’s central government has permitted three provinces and 16 cities and districts to impose ‘large-scale social restrictions’ (partial lockdowns), including Jakarta, Bogor, Bekasi, Tangerang, Bandung, and Makassar. The annual ‘mudik’ return to family villages undertaken by tens of millions of people was banned in recent days. Freight and essential travel between Jakarta and other provinces will still be permitted.
  • Malaysia – Putrajaya has allowed additional critical sectors to operate during the second extension of the Movement Control Order (MCO). These include the automotive (limited to exports of completely built-ups, parts and components, as well as after-sales services such as maintenance), machinery and equipment, aerospace and construction industries. Operational approvals, operation hours and operating capacity are subject to the discretion of MITI, the National Security Council and related local authorities. 
  • Malaysia – The Sarawak state government is considering allowing companies on MITI’s most recent list of sectors approved to operate during the third phase of the MCO to resume work. Only the construction industry (road construction and open site maintenance works) has been granted approval in Sarawak.
  • Philippines – The Philippines has extended its lockdown measures to May 15. The lockdown will cover additional high-risk areas including Cebu, Antique and Iloilo in the Visayas, and Davao del Norte and Davao City in Mindanao.
  • Singapore – The Singapore Government has tightened a number of its COVID-19 response measures and extended the circuit breaker period until June 1.
  • Thailand The Thai Government continues to unveil measures to alleviate the impacts of COVID-19 on the economy. These include fiscal measures such as tax relief, debt relief and soft loans, as well as initiatives to shore up businesses and minimise the impacts on households and employees. New customs exemptions for imported goods related to curing, diagnosing or preventing COVID-19 are being introduced. The Ministry of Industry has proposed a A$490 million economic recovery plan to help local farmers, SMEs and community enterprises. The government has ordered all state agencies to map out their own economic recovery plans to repair the economy from the bottom up.
  • Vietnam – On April 8, the Vietnamese Government announced incentives to dampen the economic impact of COVID-19. These include providing tax breaks, delaying tax payments and delaying land-use fees for businesses. The incentives will cost the Government A$1.84 billion. The State Bank of Vietnam has also cut interest rates from February 2020.

Economic insights

  • Indonesia – The Indonesian Government’s 2020 growth forecast is 2.3%, although the IMF recently reduced its 2020 forecast from 5.1 to 0.5% growth. Around 1.5 million Indonesians are no longer being paid according to official data, but this data excludes the approximately 70 million people working in the informal sector.
  • Malaysia – According to Wong & Partners, an international legal firm, Malaysia’s manufacturing sector is poised to benefit from disruptions in global supply chains from the COVID-19 outbreak. The firm says the country’s well-established and business-friendly manufacturing framework, infrastructure and support ecosystem should lend confidence to foreign manufacturers looking to penetrate ASEAN markets. This opinion stands in contrast to the general consensus of reshoring and ‘indigenising’ elements in the supply chains of critical manufacturing sectors.
  • Malaysia – Malaysian economists foresee a surge in inter-industry labour movement post-MCO as the country adjusts to a ‘new normal’. Most see surplus labour being reallocated to priority sectors such as logistics, groceries, food retailing, healthcare and the digital ecosystem. However, they say reskilling and training programs are needed to facilitate this transition and ease structural unemployment created by COVID-19.
  • Thailand – Thailand’s economy is forecast to contract by as much as 6.7% in 2020 off the back of a collapse in the tourism sector, a decline in manufacturing and flow-on effects of the drought-impacted agricultural sector. However, some analysts also predict a bounce back of over 6% in 2021.
  • Vietnam – It is estimated that 17% of Vietnam’s economy is exposed to trade with China, the highest among ASEAN nations. Around 30% of components used by manufacturers come from China, 20% of agricultural exports go to China, and 32% of all tourists are Chinese. This heavy reliance on China has induced the government to lower its economic growth forecasts for 2020 to 5.96% if disruptions to supply chains continue.

9 April 2020

Markets in Southeast Asia face severe disruption as government restrictions impact supply chains and freight charges rise. Across the region, logistics operations are having to adapt fast. Food security measures are being introduced in some countries, including Vietnam and the Philippines.

Economic impacts

  • Indonesia – The Jakarta regional government has announced legally enforceable large-scale social distancing measures from 10 April. This includes closing most public facilities and houses of worship, prohibiting wedding receptions and other social events, and introducing new limits on operations of office buildings and public transport. Most physical business activities other than working from home are limited, except for those in public governance, those directly addressing COVID-19 needs, and those in specific sectors. The sectors permitted to continue are health, food, energy, communications, finance, logistics, retail, and strategic industries.
  • Indonesia – President Widodo’s government is focused on preventing unemployment and poverty from increasing. The government has lifted Indonesia’s longstanding legal cap on its fiscal deficit to increase expenditure, and has announced a third stimulus package which focuses on social transfers for the poor.
  • Malaysia –The Malaysian Health Ministry (MOH) promulgated the Movement Control Order (MCO) on 18 March initially for a two-week period, which was subsequently extended. On 4 April, MOH announced it would review the need for a second extension on 10 April and there is a strong likelihood of extension. The Malaysian Government has launched three stimulus packages valued at MYR 35 billion (approximately A$13 billion).
  • Philippines – The regional economic think tank Asean+3 Macroeconomic and Research Office has cut its 2020 growth forecast for the Philippines from the predicted 6.2% to 4.5%. The COVID-19 pandemic is impacting the key pillars of the economy: domestic consumption (driven down by community quarantine restrictions in place since 14 March and now extended till the end of April, and rising unemployment); remittances from overseas Filipino workers; the Business Process Outsourcing industry (which has largely shifted to working from home); and tourism. The Government passed a bill to provide cash aid to 18 million low-income families. The private sector is pushing for an easing of restrictions at the end of April to kick-start the economy.
  • Thailand – The Bank of Thailand is forecasting the economy will shrink by more than 5% this year. Most companies are grappling with issues related to supply chain, staffing and liquidity. As an exporting nation, the global economic downturn is also expected to affect many industries. With tourism contributing more than 12% of GDP and around 15% of employment, the decline in this sector in particular will have a major impact. The Thai Government has introduced stimulus packages to alleviate pressure on business liquidity and employee incomes. The Bank of Thailand has also instructed financial institutions to ensure uninterrupted services to minimise disruption to industry.
  • Myanmar – The World Bank has forecast economic growth will decrease from 6.8% to 2–3% in 2019–20. The Myanmar Government has announced an initial stimulus package, including 100 billion kyats (nearly US$70 million) worth of loans, eased deadlines for tax payments, and provided tax exemptions for Myanmar-owned businesses that have been hit by the global pandemic.
  • Singapore – The Singaporean economy is expected to enter a recession this year, with GDP growth projected at −4% to −1%. As a result, the Monetary Authority of Singapore has relaxed its exchange rate policy process to keep prices relatively stable in order to ease the impact on the economy. The Singapore Government has released a third economic stimulus package worth S$5.1 billion, bringing the total value of packages to date to S$60.1 billion.
  • Vietnam –Vietnamese businesses, especially those in the manufacturing sector, are experiencing a slowdown or stop in production, largely due to a lack of raw materials from China. The Government has targeted economic growth of 6.8% for 2020 but has warned that if disruptions to supply chains continue, growth could slow to 5.96%. The Government’s economic stimulus measures include tax breaks, delaying tax payments, and land-use fees for businesses.

Industry impacts

Agribusiness and food

  • Indonesia – Demand forbasic foods is strong and supply chains are responding, but the food service and Bali tourism sectors have experienced steep declines. Some specific fresh produce including onions have become scarce on local supermarket shelves. Indonesia’s Minister for Trade has announced that onion and garlic imports will be allowed without any import licences or a ministerial recommendation to import. This is in sharp contrast to normally restrictive permitting processes for horticultural imports. Some retailers are trimming product ranges to focus on the basics.
  • Malaysia – Demand for basic foods remains strong in the retail sector and significant efforts to shore up supply are being put in place. Significant price hikes and a reduction in the availability of airfreight has importers resorting to sea freight for some commodities. While this is a stop-gap option for some items, the supply of perishable products, such as fresh produce, that require airfreight are being significantly disrupted. There are adequate supplies of dairy, and demand for premium Australian beef is strong in the retail sector but low overall due to the food service channel being reduced. Long transit times are challenging stable supply.
  • Philippines – Demand for agrifood, especially fresh produce, remains high. Leading retailer Rustan’s increased its overall fresh (produce, meat) category sales by 57% since the lockdown and e-commerce sales are on the rise. Rising unemployment could reduce purchasing power. It is still possible to import using sea freight but there have been considerable delays. Airfreight is largely through chartered flights, at three to four times the normal costs.
  • Singapore – Higher airfreight costs are impacting the price competitiveness of Australian food produce in the market. However, Singapore’s focus on food security is opening new opportunities for Australian exporters. The Singapore Food Authority will now allow AA-stamped frozen poultry to be imported into Singapore, with immediate effect until 31 July 2020.
  • Thailand – Supermarkets report stronger-than-usual retail sales, with many Thais opting to cook and eat at home, and stock up on staples. Australian products are selling well via supermarkets and through online channels. In contrast, the food service sector has been hit hard. Significant reductions in tourist numbers has led to the closure of many hotels. Most restaurants have closed, and those that remain open can only provide takeaway service. Some traditional food service suppliers have switched to providing direct-to-home delivery services of products including Australian beef.
  • Vietnam – There is a decline in the quantity of imported food products including Australian agrifood products. The Vietnamese Customs authority temporarily cancelled registrations for clearance of rice-export shipments from 24 March. Pending review, this may limit or end rice exports from Vietnam, the world’s third-largest rice exporter.

E-commerce

  • Malaysia – Online retailers are scaling up delivery and logistics capabilities to cater for a large increase in demand. Key grocery delivery players experienced a surge in demand in late March. The online stores of supermarket chain Jaya Grocer and delivery service HappyFresh reported a jump in activity of around 600% compared to the first half of March. E-commerce and logistics are restricted to the provision of essential services only. Cross-border logistics are not affected with ship fulfilments running as usual. However, the Movement Control Order is impacting final in-market delivery.
  • Philippines – With the closure of most food-service outlets (restaurants and hotels), importers and distributors have started facilitating direct-to-consumer orders via online channels.
  • Thailand – There has been significant growth in e-commerce sales with Thailand’s e-Commerce Association reporting an almost doubling in online sales, particularly in healthcare-related products. The Thai Government is encouraging retail businesses to go online to capitalise on the popularity of social commerce and the country’s strong logistics infrastructure. Food delivery companies have also seen a healthy growth in demand.

Logistics: Air

  • ASEAN – The cancellation of most commercial passenger airlines is impacting international supply chains for premium foods. Besides Australian premium produce, such as beef, this is impacting time-sensitive and premium food imports from Europe.
  • Malaysia – Malaysian customers and importers have had to secure alternative supply routes which may be less time and cost-efficient. This is placing upward pressure on goods prices. Food importers are reverting to sea freight as a more reliable alternative to air freight where possible; however, this is causing significant challenges for time-sensitive perishable items.
  • Philippines – There is no available cargo through Qantas and Cebu Pacific. While Philippine Airlines still offers cargo between Sydney and Manila, prices have increased. Dairy (yoghurt and cheese) and fresh vegetables are the most affected items and inventory in-market is running low.
  • Singapore – Singapore Airlines published its pared-back international passenger flight schedule for April, noting that flights to Sydney would carry both passengers and cargo. Singapore Airlines Cargo has confirmed the regular weekly schedule of six airfreight services to Melbourne and Sydney would continue. Singapore Airlines’ subsidiary Scoot has also resumed flights to Perth as of 3 April. These flights will carry both passengers and cargo. Sea freight connectivity is under further consideration.
  • Thailand – With few airlines operating in the region, and the full closure of Suvarnabhumi Airport from 3–18 April (with the exception of freight and cargo flights), importers are diverting orders to sea containers or securing limited freight services at higher cost.
  • Vietnam – There are currently no direct flights between Vietnam and Australia, meaning exporters have to identify alternative supply routes.

Logistics: Sea

  • ASEAN – Border closure announcements and travel bans have triggered increased concern among importers and distributors about the availability of supplies from Australia — food products in particular.
  • Malaysia –The MCO has restricted depot operating hours from 8am–8 pm, significantly slowing down sea freight shipments. However, the government is working to reduce these delays. As depot operations constitute a crucial element of haulage operations, early closure will have a significant impact on delivery and collection.
  • Philippines – Import permits are being delayed as issuers struggle with reduced workforces and restricted hours at government agencies such as the Bureau of Customs. Sea freight remains the main option for imports.
  • Vietnam – Some manufacturers have noted that sea freight (while still open and moving) is becoming tighter to book due to the flow on effects of less air freight options.

Logistics: Road

  • Malaysia – Logistic services (including transport and warehousing services) were gazetted as an essential service by the National Security Council, but operations are challenged by variations in enforcement.
  • Philippines – Domestic land, air and road transportation is banned unless delivering essential items (food and medicine). Due to a lack of workers and the establishment of checkpoints, some importers have stopped distribution to other provinces or areas outside Metro Manila. Delivery or courier services such as GrabDelivery or Lalamove are still operating.
  • Thailand – Freight companies servicing some manufacturers and retailers are seeing strong demand for their services. Suppliers to malls and restaurants have seen a decline in their business. Trucks from most parts of Thailand are allowed to enter Bangkok 24 hours a day. With around-the-clock transportation, analysts report sufficient stock in the supply chain network to meet metropolitan needs. While many provincial borders are locked down, there have been no reports of this impacting on the movement of essential goods.

Retail

  • Indonesia – Jakarta’s local government has ordered cinemas, sporting venues and other entertainment zones to close for at least two weeks. Banks have closed some branches in central Jakarta and businesses are starting to close as customers stay home. Most large shopping malls in Jakarta have reduced hours of operation, and some have temporarily closed. A large number of restaurants have also closed indefinitely. Traditional markets in Surabaya have reported a decrease in shopper numbers and the worst trading conditions in over 20 years.
  • Malaysia – The MCO will have a major impact on the retail industry. According to the Malaysian Retailer’s Association, the industry might lose up to 90% of overall revenue during the initial 14-day lockdown. Malaysian wholesalers are changing the way they physically operate as access to wet and dry markets becomes restricted. Delivery services such as Grab Food have seen considerable increases in demand given restaurants are only open for delivery.
  • Philippines – Only grocery stores and pharmacies remain open on reduced hours. All malls, restaurants and cafes are closed under the quarantine. There has been a rise in e-commerce platforms and food delivery.
  • Thailand Supermarkets and fresh ‘wet markets’ remain open, as are pharmacies and medical services. The city-wide curfew between 10pm–4am has not had significant impact on access to these services. In retail, grocery items including toilet paper, cleaning products, tinned vegetables, tinned tuna, packet soups, eggs and UHT milks have seen sales growth, as has functional drinks, instant coffee and staples such as cooking oil, instant noodles, rice and sugar. Household stockpiling may slow consumption of these items in the longer term.
  • Vietnam – Some importers and retailers report that total sales have dropped by up to 60% since the COVID-19 outbreak. Vietnamese consumers are stocking up on staple food items (rice, noodles), and household products.

Manufacturing

  • Malaysia – All manufacturing companies require an exemption to the MCO to operate and only those deemed as essential services are granted exemptions. The Malaysian Government is allowing glove manufacturers to operate at full capacity. Malaysia is the largest global manufacturer of rubber gloves and the country supplies approximately 65% of global demand. MARGMA has received requests from 190 countries for rubber gloves.
  • Philippines – Luzon Island, which accounts for 70% of the country’s economy, has been placed under quarantine until 30 April. Food manufacturing is designated an essential service but is being challenged by the workforce’s inability to travel.
  • Thailand – Manufacturing and retail companies that are seeing a rise in demand for their products have been increasing inventory, opening up temporary warehouses and hiring more staff. Increased production has led to strong demand for some raw materials. Businesses are concerned the government may close factories and distribution networks in the future to quell the spread of the virus and how this will impact their operations and staff.

China update

1 May 2020

Economy and stimulus

According to China’s National Development and Reform Commission, almost all large manufacturing businesses have resumed operations, at around 95% capacity, while 84% of smaller businesses had reopened.

SMEs

According to a survey by Qinghua (Tsinghua) University in Beijing, revenues among China’s SMEs were down 59% in March year-on-year. This has led to speculation that SMEs are not benefiting substantially from lower interest rates. There are also reports SMEs are hoarding cash by investing relief funding into short-term financial products with higher interest rates from the shadow banking sector, rather than using funds to support their own operations.

Household debt

A new report by the People’s Bank of China (PBOC) shows urban households were weighed down by debt prior to COVID-19. A survey of 30,000 households in October 2019 found middle-class wage earners, young mortgage holders and small business owners faced the greatest challenges from debt burdens.

Property made up 59% of household assets but also accounted for three-quarters of liabilities. Only 20% of assets held by households were financial assets, which were easier to liquefy at times of crisis. China’s household leverage, measured in terms of debt to GDP, stood at 54% in September 2019, an increase of 36% on a decade earlier.

Hubei

Hubei Province, the epicentre of the COVID-19 outbreak in China, reported that GDP contracted by 39.2% year-on-year in Quarter 1. Hubei was the seventh largest provincial economy in China in 2019 and is a centre for automotive and pharmaceutical manufacturing, as well as a major inland port and hub for rail links to Europe. This result represents the largest published drop for any province since the founding of the PRC in 1949.

Transport and logistics

Domestic passenger volumes have started to increase across the country. China’s Civil Aviation Administration reported that for the week between April 15–21, air passenger volumes increased by 15.8% from March, at 30.5% of the same period in 2019. There were 1,989 cargo flights (1,050 all-cargo flights, 939 passenger-to-freight flights) last week, a 17.7% increase from the previous week.

Significant increases in all-cargo and passenger-to-cargo flights means there may be delays processing flights and air freight on arrival. Pudong airport is now processing double the number of cargo flights in April 2020, compared to March 2020. The Ministry of Transport has established an ‘international logistics working group’ to develop measures to cope with the additional demand. As well as air cargo, the working group is also tasked to look at improved border processes at ports and increasing the volume and frequency of trains on the rail line between China and Europe.

The Chinese Government continues to focus on ‘new infrastructure’ spending. On April 17, the NDRC released guidance on the integration of airport and rail ‘smart transit’ systems. The policy focuses on the connection between international hub airports, and intercity and intra-city rail services so these networks can reach a radius of 800–1,000km. For regional airports, the target is an interconnected flight/rail transit system reaching 300–500km, while other airports with an annual throughout above 10 million passengers should connect with intercity or intra-city rail transit ‘where possible’.

China’s first full-cargo airport in Ezhou, Hubei province, is expected to commence operations by the end of 2021. It will have an estimated handling capacity of 3.3 million metric tons of freight a year by 2030. This is around the same volume of freight processed at Shanghai’s Pudong airport, one of the world’s busiest airports.

Health

Data released by China’s National Health Commission showed that non-COVID-19 related patient visits to hospitals in January–February 2020 were down 26% year-on-year. Across this period, average hospital bed utilisation rates stood at 60%.

Large numbers of patients are now re-engaging with the hospital system for non-urgent and elective surgeries and industry sources are predicting significant strains on the system. This will continue to drive demand for quality clinical services, training and accreditation services, and digital health solutions, including from Australia. 

China’s NDRC has released a strategy for growth in the digital economy, with a focus on digital healthcare, particularly for first-stage diagnostic services.

Food and beverage

Wine Australia has released its Quarter 1 2020 report. The overall value of Australian wine exports grew in the 12 months to March 31, 2020; however, Q1 figures show a 7% decline year-on-year.

The imported alcohol market in China has declined markedly in Q1 2020, with wine import volumes dropping 30% year-on-year for January–February 2020. Hong Kong saw even more significant declines in sales, from 39% (wine) to 43% (spirits) year-on-year in March. This was due in part to the Hong Kong Government’s decision to extend the ban on bars and pubs through March and April, until May 7.

China Customs statistics show that China imported more than 45,000 tons of infant formula in January and February 2020, a 3% decrease from the same period last year. Australia (with only 3.7% of total import volumes) ranked sixth after the Netherlands, New Zealand, Ireland, France and Germany.

Sales of infant formula on e-commerce platforms have increased markedly in recent months. Dutch company Friso’s sales increased 50% on Tmall and JD.com in March alone. A number of Australian infant formula brands reported sales growth in China in Q1 2020, while sales of infant formula in Taiwan (where Australia ranks fourth in terms of import volumes) remained largely stable.

Agribusiness

According to the Australian Bureau of Statistics (ABS), China imported more than 120,000 breeding cattle (mainly dairy heifers) and nearly 45,000 slaughter cattle from Australia in 2019. Australia’s exports of breeding cattle to China represent 80% in value and 23% in quantity of our total exports in the industry, and demand from China is not slowing.

In January–February 2020, China imported more than 7,500 head of Australian purebred breeding cattle valued at A$18 million, an 18% increase from 2019. Australian live industry sources report they have seen no major impact on demand as a result of COVID-19. Supply issues (particularly the drought) rather than demand have impacted the industry, keeping prices high.

Around 21,000 tons of cotton were exported to China in January and February 2020, representing an 81% decrease from the same period last year, largely as a result of drought in Australia. China is Australia’s largest customer for cotton, taking around 85% of total production in recent years. ABARES forecasts that Australia’s total cotton exports to the world will fall by 45% in 2020–21, as a result of drought-affected harvests.

In addition to supply constraints, Australia’s cotton exports to China face pressure due to high stocks currently on hand and decreased global demand for cotton in 2020. Nantong Cotton Association confirmed with Austrade that many cotton contracts have been postponed, reduced or cancelled by importers, some forfeiting deposits to avoid further losses. Demand is estimated to return in July.

China’s General Administration of Customs (GACC) has announced a policy adjustment around the inspection of imported cotton from April 5. Customs inspections will now be conducted at the importer’s request, rather than at China Customs’ initiation (although China Customs retains the right to inspect where necessary). GACC estimates this change in process will help relieve port blockages and save seven days on average for cotton shipments clearing customs.

E-commerce

Guangzhou-based VIP.com, one of China’s most influential e-commerce platforms, has recently added other product lines (including vegetables and fruit, over-the-counter medical devices, and meat and poultry) to its current fashion and accessory brands. It now competes in the field of general e-commerce platforms dominated by Alibaba and JD.com.

The Guangzhou provincial government has announced a target of training 10,000 new livestreaming influencers and encouraging more new e-commerce media companies to move to the city, in part driven by the success of Shenzhen in the e-commerce and broader technology fields.

Hangzhou-based Wahaha, one of China’s largest beverage makers, has made the move into e-commerce, establishing its own e-commerce platforms at a cost of RMB 200 million in March. 

Online cosmetic sales growing 3,000% from March 18–27, compared to the previous 10 days, as lockdowns end and consumers go out in public.

Energy and resources

The Chinese Government has issued a policy statement around significantly expanding China’s natural gas storage infrastructure. China currently has 27 gas storage bases with a peak capacity of 10 billion cubic metres. This accounts for less than 4% of China’s total natural gas consumption in 2019, and less than a third of the international standard of 12–15%. The Government plans to build another 23 bases, to allow for the total storage of 27bcm by 2025, and 100bcm by 2030. International competition remains strong.

On April 17, BP signed an agreement with Foran Energy to supply 600,000 tonnes of LNG per annum. Several LNG cargos departed for China from the US recently after 13 months of trade suspension.

Digital gaming

The China Audio-video and Digital Publishing Association has released the China Game Industry Report Quarter 1 2020. Due to the outbreak of COVID-19, people spent more time on online games. In Q1 2020, the total income of the China game market reached RMB73.2 billion, a 25.2% increase compared to the same quarter last year. Mobile games dominate the market, with income of RMB55.4 billion. RPG (role play games), MOBA (multiplayer online battle arena) and SLG (simulation games) accounted for 70% of the market.

Education

The Ministry of Education has set a target of 100,000 Chinese postgraduate students enrolling in universities around the country in 2020. This is a small increase from around 95,000 last year but still the largest intake of postgraduate students on record. The focus on postgraduate students comes as all Chinese provinces, including Hubei, announce a resumption in university entrance exams (Gaokao) on July 7–8.

China’s universities and colleges will offer courses in English to international students via an international online teaching platform to promote massive online open courses. The international platform is still under construction, and two online education websites, www.icourse.cn and https://next.xuetangx.com/ will be among the first to be included in the program.

Travel and tourism

Shanghai-based online travel agency Ctrip reported a 282% month-to-month increase in the number of travellers for the May Labour Day holiday. China Railways in Shanghai is expecting more than 1 million passengers to make train trips from Shanghai between 30 April and 6 May. This growth indicates domestic tourism is recovering.


24 April 2020

Economy

Economic data recently published for Quarter One shows China experienced a major slump in activity across all indicators, but also signs of recovery in March.

China’s GDP contracted 6.8% year-on-year in the quarter. Urban unemployment rates remained high but fell slightly, down from 6.2% in February to 5.9% in March. 

A joint survey by Peking University and recruitment platform Zhaopin found new job listings fell 27% year-on-year in the first quarter. This was led by job losses across the entertainment and services sectors, down by 40%, and export-oriented companies, down by 26%.

China is still waiting for a wave of ‘revenge spending’ to assist recovery but given depressed household incomes and wealth, it may be some time before spending commences.

Retail sales fell another 15.8% in March after a 20.5% decline in the first two months of the year. Around 30 Chinese municipalities have issued approximately RMB30 billion in vouchers to drive consumption.

Around 61% of 3,143 households said their income in 2020 would shrink compared with 2019, according to a March survey by the Southwest University of Finance and Economics in Chengdu, an institution known for its work in assessing household consumption trends in China.

A quarter of households surveyed said the drop in earnings would be significant, with 42% planning to reduce consumption this year.

The People’s Bank of China has cut China’s benchmark interest rate by 20 basis points, from 4.05% to 3.85%. 

Transport and logistics

There has been a small decline in cargo volumes through sea ports. A significant rise in freight-only air shipments is unlikely to fill the gap left by the decline in cargo carried in passenger aircraft.

Total cargo throughput at the eight major hub ports decreased by 6.6% and container throughput decreased by 5% from the previous week. Sources advised it may be due to softer demand but quarantining arrangements for ships’ crew may be affecting the speed at which cargo is unloaded.

There have been no reports of backlogs and the Wuhan river port has returned to 90% of pre-COVID-19 volumes.

For quarter one 2020, the Civil Aviation Authority of China (CAAC) reported that the Chinese aviation industry saw a total loss of RMB39.82 billion, with airlines taking the majority of that loss at RMB33.62 billion. CAAC additionally reported that total air cargo throughput for March was 484,000 tons, a 23.4% decrease from March 2019. Non-passenger cargo throughput has risen to 253,000 tons, an increase of 28.4% from March 2019.

Health

Rapid expansion of China’s leading digital health platforms during the COVID-19 crisis is likely to generate commercial opportunities for Australian companies. However, cybersecurity risk, commitment to marketing and business development require careful management. 

Alibaba is offering a range of services internationally, including AI cloud computing services for medical researchers, online health consultations for overseas Chinese communities, and AI-driven drug design and diagnostic products. 

There are emerging opportunities for Australian mobile health, digital diagnostics and telemedicine providers. China led the world in digital health uptake prior to COVID-19, with 94% of Chinese health professionals using digital tools according to a 2019 survey by Philips.

China’s largest gathering of hospital design, management and service delivery companies and organisations, the China Hospital Construction Conference, has been postponed from June to late September 2020 and shifted from Wuhan to Shenzhen. Organisers expect a majority of the program to be delivered digitally. 

Food and beverage

The wholesale price of Australian table grapes in China has dropped by 30–50% (depending on varieties). The Guangzhou Wholesale Market estimates that over 100 containers of imported grapes are currently in stock, and importers are reluctant to place orders with the current low retail price.

Major importers report they are accepting the loss to maintain market share, but smaller importers have ceased orders. In Beijing, Thompson seedless grapes were selling in a local market at RMB16 per kilogram (A$3.65 per kilogram), a low price for imported grapes.

The situation is better in high-end retail supermarkets. Shenzhen HEMA Fresh reports that the total sales volume and value of Australian table grapes sold through its stores remained unchanged through March. Online sales of table grapes increased markedly through quarter one and now represent more than 50% of total revenue from seedless grape sales.

Wine Australia reports that wine exports to China for quarter one 2020 were down 14% by value and 21% by volume compared to the same period in 2019. The decline was more pronounced in February and March.

A decline in imports of live pigs from the mainland to Hong Kong is seeing a significant shift in consumer and distributor demand for imported chilled/frozen pork. This may offer opportunities for Australian pork suppliers. Hong Kong is the fourth largest export destination for Australian pork (Australia exported A$7.8 million of pork to Hong Kong in 2019).

China’s buyers of Australian produce – especially retailers such as HEMA Fresh (which is part of the Alibaba Group) and distributors of Australian fresh milk, yoghurt, salmon and lobster – have advised they welcome the International Freight Assistance Mechanism (IFAM). Distributors of Australian products are keen to see IFAM expand beyond Shanghai to more destinations in China.

Energy and resources

China Customs trade data for quarter one shows that bulk commodity imports including coal, iron ore and natural gas have increased. China coal imports increased 28.4% year-on-year in volume and 21% in value. Iron ore imports increased 1.3% year-on-year in volume and 11.7% in value. Natural gas imports increased 1.8% in volume but decreased 17% in value. 

Infrastructure

Twenty-two provinces have released planned investment projects totalling RMB8.87 trillion in 2020, including projects in traditional sectors such as major infrastructure, transport, environment, urban development and energy. According to the Chinese Ministry of Housing and Urban-Rural Development statistics, as of early April, 90% of building and civil infrastructure projects (186,600 in total) have resumed construction.

Technology

According to ITJUZI.com, investments in tech-based industries, including artificial intelligence, Internet of Things, fintech and web-based services, saw a 31.3% decline to RMB119.1 billion in quarter one 2020, from RMB173.5 billion in the same period last year.

Online enterprise and education services were among the most attractive for investment, as demand for remote working and learning has increased. Semiconductor, artificial intelligence and e-commerce startups also continued to attract investment in the first quarter.

Working for digital gaming companies has become more lucrative in China, thanks to rapid growth in market share and rising revenues. Abacus Research reports that China’s video gaming industry has experienced significant growth in recent years and has probably benefited from COVID-19 restrictions with more people staying home. China is the world’s biggest gaming market and its video games sector is expected to generate US$36 billion in revenue this year.

To help take advantage of the opportunities created by this surging demand for digital gaming, the Shanghai Landing Pad and the International Gaming and Entertainment Association are partnering to run a virtual bootcamp for Australian video game developers in mid-May 2020. Participants will learn about IP protection and business and pitching strategies before being introduced to key industry players including Tencent Game and TapTap. This will be the first virtual bootcamp for the Shanghai Landing Pad.

Education

The Ministry of Human Resources and Social Security has launched a large-scale free online vocational training program for over 5 million people whose livelihoods have been affected by the COVID-19 crisis. Digital training resources cover over 100 job types. There are emerging significant opportunities for education technology companies in China.

Chinese universities will admit more doctoral students in 2020 to meet a target of 100,000 set by the Ministry of Education. In particular, the country will boost the number of postgraduates in the field of artificial intelligence to further advance China’s research capabilities.

Travel and tourism

Jane Sun, CEO of C-Trip, China’s biggest online travel service, has told CNN that Chinese consumer confidence for travel services is returning. A recent survey C-Trip had conducted of its customers found more than 60% of Chinese tourists would be ready to travel again by August.

Given most countries have placed restrictions on travel, Ms Sun sees the majority of this travel being domestic for at least the next six months. Domestic travel currently makes up more than 95% of China’s domestic aviation market. Capacity has recovered to almost 8.8 million seats per week.


16 April 2020

Economy

China’s economy is estimated to be operating at around 80% of its normal output with most people having returned to work. Demand, and prices, for many Australian exports will remain subdued until the economy returns to normal levels and consumer confidence rises.

According to official data, consumer inflation eased to its lowest levels in five months. China’s consumer price index (CPI) rose 4.3% year-on-year in March, down from 5.2% in February.

China’s State Council announced that preferential tax policies supporting small business would be extended to the end of 2023. The measures include waiving VAT on interest payments to financial institutions for loans of RMB 1 million or less, and providing a 10% discount on tax collected from financial institutions for loans of RMB 100,000 or less to agricultural households.

According to Tianyancha, a commercial database, it is estimated that 460,000 Chinese companies went out of business in Q1 2020, almost double the usual rate of corporate failures in a normal quarter. Many of these firms are likely to have been in the food-service and entertainment sectors and customers for Australian exporters of agricultural produce.

Most provinces with the exception of Hubei have announced staged returns for schools beginning from late April. 

Hong Kong Chief Executive Carrie Lam announced a further stimulus package worth HK$137.5 billion to support the city’s economy, with a focus on job retention. The spending package will include a HK$80 billion job security program to subsidise 50% of wages for affected workers for six months.

Transport and logistics

On April 9, China’s Civil Aviation Administration reported that from April 6–12, a total of 4,445 cargo flights filed flight schedules. This represents a 338% increase on pre-COVID-19 averages of 1,014 weekly flights.

According to government sources, major ports in China have achieved 90% of the average throughput of the same period last year. Ningbo Zhoushan Port, the world’s leading port by throughput volume, restored most of its handling capacity in March with a total of 2.28 million TEUs. This was 2.5% less than last year, and comprised 62.66 million tons of cargo, 9.2% less than 2019.

China’s National Railway Group reports that China witnessed an increase in the number of trains, and rail cargo volumes, to and from Europe in the first quarter of 2020. In March, the number of containers and open wagons on China–Europe train lines increased by 36% and 30% year-on-year respectively. These shipments had a 98.9% full container rate.

Agribusiness

A number of countries have announced temporary export restrictions or bans on some agriculture commodities including rice from Vietnam and Cambodia; buckwheat, rice and oat flakes from Russia; wheat flour, buckwheat, sugar, sunflower oil and some vegetables from Kazakhstan; beans from Egypt; and sunflower seed from Serbia. 

It is unlikely that these export bans will significantly impact China’s domestic food supply. The Chinese Government has reassured the population that China’s rice and grain reserves are at very healthy levels.

Opportunities for Australian agribusiness exporters

Export restrictions, increased domestic demand and supply interruptions in Europe and North America do present opportunities for Australian companies.

Australian sorghum, oat and barley are in high demand, although supply side challenges, largely as a result of the drought remain. 

Concerns have been growing about food supply in Hong Kong, given that 95% of Hong Kong’s food and beverages are imported. The cancellation of passenger flights globally has increased pressure on freight options. This presents an immediate short-term opportunity for Australian suppliers to meet supply gaps in Hong Kong.

Research by Meat and Livestock Australia on the impact of COVID-19 on Chinese consumers indicate sustained opportunities for high-value Australian red meat exports. The online survey of 800 affluent Chinese consumers across four Tier 1 cities found that home isolation and lockdown measures have driven some shifts in consumer attitudes and behaviour that have seen stronger demand for Australian red meat, particularly beef.

Before the COVID-19 outbreak, the top three considerations of consumers buying beef was safety, freshness and quality. During COVID-19, there has been a shift in attitudes to safety, boosting immunity and quality

Demand for premium seafood is slowly growing but it remains uneven and prices are still well below pre-COVID-19 levels. The recent closures of a number of large well-known seafood restaurants in Guangzhou and Hong Kong brought on by the COVID-19 outbreak (not necessarily the only reason for the closures) illustrates a shift in consumer attitude.

According to the Guangzhou Catering Association, seafood restaurants, especially large-scale ones, are experiencing significant difficulties. Estimates across the sector suggest that up to 25% of restaurants are now closed permanently across China. The outbreak has changed consumption habits, with people buying raw materials to cook at home.

According to the Wool Market Company, Chinese buyers are continuing to support Australian wool auctions, although prices and volumes are down. The China Wool Textile Association surveyed 17 mills in the week commencing 30 March. According to the survey, all mills have returned to full operation. Disruptions in key export destinations and the cancellation of orders has kept pressure on Chinese textile mills. 

Energy

On April 3, the National Development Reform Commission approved a 5 MPTA LNG Terminal proposal by the Beijing Gas Group. The terminal, located at South Port Industry Zone in Tianjin, includes 10 containment tanks of 200,000 cubic metres and a 229-kilometre transmission pipeline to Tianjin, Beijing and Hebei province.

This RMB 20.1 billion investment, with phase 1 to be completed in 2022, will potentially provide significant opportunities for Australian LNG exporters.

Health and medical

Due to challenges in recruitment and site access in China, the US and the European Union, Australian contract research organisations are reporting increased interest from Chinese biotech firms in conducting clinical trials in Australia. There is also resurgent demand in Hong Kong and Taiwan for locally conducted trials.

The review and approval of non-COVID-19 clinical trials is proceeding as normal in Hong Kong and Taiwan. All Taiwan sites and around 75% of Hong Kong sites are open for recruitment and participant visits. 

China’s Ministry of Commerce advised that new regulations are aimed at ensuring the quality of medical exports and that they apply to all exporters equally. Chinese government agencies have reached an agreement that should result in a number of Australian companies receiving clearance to bring personal protective equipment back to Australia. 

E-commerce

Social media and e-commerce platforms will be crucial tools to Australia’s business recovery post-COVID-19 in the China market.

Despite an already strong online consumer base, even more Chinese have shifted to purchasing goods online. Digital marketing strategies and understanding China’s social media environment will amplify and reinforce branding as well as aid distribution.

Technology

China’s large technology firms are looking to collaborate with international partners to help them develop their China digital strategies. JD.com, one of China’s most successful e-commerce platforms, is seeking to partner with larger firms as well as startups to drive expansion and innovation.

JD.com recently announced a year-on-year increase of 18.6% to 362 million active customer accounts in 2019. JD.com’s small services business unit grew more than 43% in the fourth quarter of 2019. This may also provide a new avenue for Australian tech companies to enter the China market.

PingAn Insurance is also actively looking for international startups that it can incubate, accelerate and weave into its own service offerings, to compete more effectively.


8 April 2020

Ports, aviation, transport and logistics

  • There are now only 108 international passenger flights into China per week under new restrictions to minimise the risk of COVID-19 cases entering the country.
  • The number of weekly international cargo flights has increased to 1,195 (up 28.5% in the past week and 17.85% compared to pre-COVID-19 levels).
  • The Civil Aviation Administration of China (CAAC) is encouraging passenger airlines to use their aircraft for freight-only flights. In the past week, CACC has approved 102 freight-only flights on existing passenger routes – including daily flights to Australia by China Southern from Guangzhou and China Eastern from Shanghai.
  • The Ministry of Transport has issued stricter guidelines for international cargo ships after five crew members of the super-freighter Gjertrud Maersk tested positive for COVID-19. Crew will now not be allowed to disembark from their ships unless the Ministry gives them prior approval. Currently, around 500 ships carrying 7,000 crew arrive in China’s 128 ports daily.
  • Rail transportation is being used as an alternative to air and sea freight, particularly out of Europe. China National Railway Group reported that the ‘China Railway Express’ is maintaining freight connections between China and European countries.

E-commerce

  • Alibaba’s e-commerce platform Taobao is expanding its direct-to-customer selling platform for bargain-seeking consumers due to competition with other platforms such as Pinduoduo.
  • Taobao’s new Taobao Special Offer Edition app allows buyers to purchase unbranded items like electronics and home appliances directly from manufacturers. The app was the most downloaded free app on Apple’s China App Store following its release.
  • In response to store closures worldwide, more of the world’s luxury brands are establishing shops on China’s e-commerce platform TMALL for specific categories and labels.
  • The skincare and beauty sector is expected to rebound quickly. Many brands are focusing on ‘health’ and ‘wellbeing’ as their core message, and on products that suggest a healthy lifestyle, with beauty a part of that lifestyle. Strong anecdotal evidence suggests the growth in online sales will continue. In 2019, online sales accounted for 30% of sales by value for skincare and 38% for colour cosmetics. Last year, the value of China’s beauty, wellbeing and personal care sector was estimated at around US$66 billion.

New infrastructure and technology

  • China’s COVID-19 stimulus spending on infrastructure is projected to be around RMB 3.5 trillion in 2020 (around 3.5% of GDP). Investment has previously been in transport networks (high-speed rail and roads), power production and industrial capacity.
  • New infrastructure investment will focus on 5G, ultra-high-voltage cables, intercity high-speed railway, electric vehicle charging stations, big data centres, artificial intelligence and the Internet of Things (IoT).
  • China’s Academy of Information and Communications Technology (CAICT) forecasts that 5G infrastructure investment will reach RMB 1.2 trillion over the next five years. More than 50% of the world’s 5G base stations are in China, and CAICT forecasts 600,000 more stations will be built by the end of 2020.
  • China’s State Grid will invest more than RMB 400 billion in power grid construction for ultra-high-voltage grids (UHV) and interprovincial electricity projects. Five UHV alternating current projects will commence between March and December 2020.
  • The central government will continue to enhance investment into strategic and significant infrastructure projects. This includes constructing and expanding the intercity rail network to link metropolitan areas to remote regions, bringing higher levels of economic development to those areas and benefitting regional commuters.
  • The new intercity rail network is expected to test IoT-driven technologies, including automated vehicles, new battery and energy storage, and artificial intelligence.

Agriculture and food

  • Local importers and distributors estimate that Australian seafood imports were around 10–20% of 2019 volumes in January/February 2020. There has been some growth from mid-March due to stock depletion and the gradual recovery of restaurant and in-house dining. Other countries (Canada, New Zealand, US) all report low volumes of exports due to soft demand, with logistical challenges for live product.
  • During the pandemic, some dairy suppliers saw strong demand, although dairy exporters had to adapt their logistics business model, due to reduced capacity and higher airfreight costs.
  • Demand for wine remains very soft, especially at the premium end. Wine suppliers estimate consumption for Q1 2020 is at 30% of normal levels, although the consumption rate is slowly recovering. Current sales are estimated to be around 25% of normal levels for bars, 50% for hotels and restaurants and 75% for direct premises, such as supermarkets. There has been growth in e-commerce channels. 
  • According to the Department of Agriculture, Water and the Environment, around 56,000 tons of beef were exported in the first three months of 2020, compared with nearly 52,000 tons for the same period last year – a 7.7% increase by volume.
  • Just over 26,000 tons of sheep meat were exported to China in Q1 2020, a 17% decrease by volume compared with 31,000 tons for the same period last year.

Health

  • According to China’s Ministry of Commerce, as of 4 April 2020, 54 countries and three international organisations have signed medical and PPE procurement contracts with Chinese enterprises. More agreements are expected to be signed with another 74 nations and 10 international organisations in the near future. 

Latin America update

30 April 2020

Chile is one of the first governments in Latin America to announce the start of a major infrastructure stimulus package. It has approved US$2 billion for new rail works that will create 100,000 new jobs. Mexico is also launching major rail projects. Mining operations across the region remain largely suspended or in care and maintenance mode.

Impacts on key industries

Mining

  • Mexico – According to S&P Global Ratings, Mexican mining giants Grupo Mexico, Industrias Penoles and Fresnillo can withstand the impact of a shutdown of up to three months because they have sufficient ‘financial flexibility’. In S&P’s opinion, these companies can absorb a drop in EBITDA of 15% to 20% before a potential rating action, which translates into around three months of mine closure.
  • Panama – In early April, the Ministry of Health of the Republic of Panama asked Canadian miner First Quantum Minerals to temporarily suspend activities at its Panamanian subsidiary as a sanitary control measure. The company has placed the Cobre Panama copper mine under care and maintenance and is evacuating 800 people who are in preventative quarantine at the mine.
  • Peru – Most mining operations are suspended or in care and maintenance mode. The quarantine has resulted in a 60% drop in production and a 30% reduction in exports in March. Miners are now developing protocols to restart operations when the quarantine period ends on May 10. Experts estimate it will take no less than seven days for companies to implement new COVID-19 protocols, mobilise personnel and restock supplies. Peruvian miners are looking to Australia as a model for COVID-19 mining protocols.

Infrastructure

  • Chile – The Chilean Government has approved US$2 billion for state-owned railway company EFE to carry out new projects to 2022, creating 100,000 jobs. When complete, the railway will carry up to 150 million passengers a year. The projects require new traffic control, security and electronic signalling systems to be implemented, and infrastructure to be built and renovated. There are opportunities for Australian firms to tender for work, the scope of which will be seen once tenders are released.
  • Mexico – President Andrés Manuel López Obrador has confirmed the government’s priority projects will begin or continue as planned. The president said works for the first stretch of the US$6.7 billion Maya train will begin on April 30. Construction at the US$3.9 billion Felipe Ángeles international airport and the expansion of Benito Juárez international airport will continue. He also confirmed work on the US$5 billion Mexico-Toluca interurban train, the US$2 billion third line of Guadalajara city’s light train system, and the Tehuantepec isthmus interoceanic rail corridor linking the Pacific and Atlantic coasts, will continue.
  • Mexico – Infrastructure operator Aleatica has reassured its staff in Mexico and across the LATAM region that no jobs will be cut. Aleatica’s activities are considered essential in all the LATAM jurisdictions in which it is active. In Mexico alone, Aleatica operates and maintains seven toll roads and one airport in Mexico City’s metropolitan region.

Agriculture

  • Mexico – The National Agriculture Council has launched a national food bank that will help the poorest communities in Mexico. This project is in collaboration with the private industry. Once the COVID-19 crisis is over, the council wants to take advantage of Mexico’s network of free trade agreements and collaborate closely with countries like Australia.

Advanced manufacturing and defence

  • Argentina – The country’s largest steel manufacturing company, Ternium, has stopped production due to the forced quarantine with a few exceptions: tins for the food industry and plate roofs for new hospitals.
  • Mexico – The US is actively urging Mexico to reopen factories. The Pentagon said closures are affecting major prime Department of Defense contractors. US and Mexican business organisations have also urged Mexico’s President to standardise essential activities between the two countries to reopen factories and supply chains, and avoid further economic damage.
  • Mexico – General Motors Mexico will begin manufacturing 9 million level 1 surgical masks at the end of April. The masks will be donated to the hospitals with the highest rates of infected patients, as well as employees and distributors. Zodiac Aerospace, Mabe and the Queretaro Automotive Cluster will collaborate to assemble and manufacture 700 ventilators by mid-May.

Economic impacts

  • Mexico – On April 15, Fitch downgraded Mexico’s credit rating from ‘BBB’ to ‘BBB-‘, with a stable outlook. In late March, S&P cut Mexico’s credit rating from ‘BBB+’ to ‘BBB’, while Moody’s has kept Mexico at ‘A-’.
  • Mexico – IATA estimates the Mexican aviation sector has lost US$5.3 billion as a result of the COVID-19 crisis. The sector has lost 97,000 direct and 437,000 indirect jobs. Around 88% of the national aircraft fleet is grounded.

Government response

  • Chile – The Chilean Government has launched three fiscal stimulus packages equivalent to 7% of the country’s GDP. The first is focused on supplementing household incomes for the lower socio-economic class and informal workers (predicted to reach almost 2 million households). The second protects employment for the independent workforce. The third is a fast-tracked loan scheme equivalent to three months’ working capital for SMEs in partnership with major banks. Repayment terms include a six-month grace period and instalments over 24–48 months.
  • Mexico – On April 16, Mexican President Andrés Manuel López Obrador unveiled plans to expand the COVID-19 emergency loan program, tacking on another 1 million loans for small family businesses. Half the loans would go to formal businesses and the other half for informal businesses that have been evaluated as meeting special conditions. Like the 1 million loans announced earlier, these new loans are set at 25,000 pesos (around US$1,000) each. They will have to be repaid within three years.
  • Mexico – On April 21, Mexico’s central bank unveiled around $31 billion in support for the financial system and cut its benchmark rate by 50 basis points. The overnight interbank interest rate stands at 6%. Coupled with previously announced measures, the support amounts to 3.3% of last year’s GDP.

24 April 2020

The number of COVID-19 cases continues to grow in Chile, Colombia and Mexico. Governments in these countries have announced schools will stay closed until at least May 31 with strict lockdowns in place. Mexico will likely become one of the hardest hit in the LATAM region, with a projected 6.6% fall in GDP in 2020. Social unrest and security threats are already increasing. Across the region, automotive manufacturing facilities, mining operations and related supply chains have been shut, paused or placed on care and maintenance until late April to mid-May. Many manufacturing operations are winding down because supply chain shortages from China are becoming strained.

Impact on key industries

Resources and energy

  • Chile – Demand for copper and lithium may slow as electric vehicle (EV) manufacturers in Europe, the US and China cease production. Ultra-low oil prices are also hammering projections for EV sales. Chile is the currently the world’s largest producer of copper.
  • Chile – Six large miners have teamed up to launch a COVID-19 challenge, seeking technology solutions in areas such as sanitisation, infrastructure, safety protocols and early detection. A number of Australian METS companies have submitted their solutions.
  • Chile – Expomin, Latin America’s premier mining exhibition, has been rescheduled to November 9–13, 2020.
  • Mexico – Mexico’s mining companies are preparing for extended suspensions as the country grapples with the growing number of COVID-19 cases. Suspensions could be lifted by late May or early June, as opposed to April 30 as originally planned.
  • Mexico – The COVID-19 pandemic is hampering mining exploration in Mexico and Central America. Junior miners have halted drilling at a string of precious and industrial metals projects to protect workers from a spreading viral caseload. This may slow development of the mining sector into the medium term.
  • Mexico – Silver mine closures in Mexico may soon impact global markets. With 23% of global supply, Mexico is the world’s largest producer. The shut-down – due to last until at least the end of April – means that 40% of global silver production is now restricted in some fashion. Silver is used in the manufacture of electronics, the minting of coins and in medicine.

Infrastructure

  • Mexico – Mexico’s federal government has declared three infrastructure projects as essential activities, including the US$6.7 billion Maya rail line. The successful bidder to build the second stretch of the rail line will be announced on April 30. The 1,500-kilometre passenger and freight project will link five states in the southeast.
  • Chile – The Chilean government has approved US2b budget for EFE (state-owned railway company) to carry out new projects thru 2022. This will create 100,000 new jobs (25% direct and 75% indirect). EFE’s objective by implementing all new projects is to triple the number of train passengers, reaching 150m per year.

Agriculture and food

  • Brazil – The state-run National Supply Company (Conab) says Brazil looks set for its largest grain harvest in history. Despite the COVID-19 pandemic, farmers will deliver a bumper crop of approximately 251.8 million tons into grain silos. Year on year, Brazilian agricultural exports grew 13.3% in March. Agribusiness accounts for 48.3% of Brazil’s exports.
  • Mexico – Mexican meat importer and distributor GAPA reports Australian meat constitutes 52% of its current total sales. GAPA is now selling directly to consumers online and says Australian meat has been very popular among its customers. 

Advanced manufacturing

  • Mexico – Toyota and Nissan expect to resume operations by May 4. Honda, Volkswagen and Audi expect to resume by April 30. Kia, GM, Ford and Fiat Chrysler Automobiles have all suspended activities but have not yet announced a reactivation date.

Government stimulus program

  • Brazil – The Brazilian Government will subsidise a suspension of contracts and a reduction of wages and hours of work as part of its economic stimulus program. The Government has also approved an emergency aid grant to informal workers and single-parent families.
  • Chile – The Chilean Government has responded quickly with three fiscal stimulus packages equivalent to 7% GDP. One is focused on supplementing household incomes for the lower socio-economic class and informal workers, one is aimed at protecting employment for the independent workforce. The third is a fast-tracked loan scheme for SMEs in partnership with major banks.

14 April 2020

Coronavirus infection rates in Latin America are lagging the pandemic in the US and Canada, but are growing quickly with Brazil, Chile, Ecuador and Mexico the most advanced. In Mexico, a combination of logistics disruptions and changing consumption is impacting Australian food exports, while mining operations in Latin America have slowed or been placed on a care-and-maintenance basis. There are no reported delays at Brazilian or Chilean ports.

Economic impacts

Argentina – The Argentinian Government has extended a nationwide lockdown to April 26. The country has also closed its air, land and maritime borders. International trade operations and cargo transport, food retailers, chemists, oil and gas companies, food manufacturers, health workers and security forces were exempt from the lockdown. All non-essential workers are working remotely. Citizens are only allowed to leave their homes to visit supermarkets and pharmacies.

Mexico – All non-essential economic activities have been suspended and only hospitals, markets, supermarkets, grocery stores, pharmacies and take away restaurants remain open. The state-owned and oil and gas company, PEMEX is still operating but at a significant loss. Mexico’s Federal Government has not announced any economic stimulus packages and seems unlikely to do so beyond small loans for micro businesses.

Impacts on key industries

Agriculture and food

Argentina – Since the nationwide lockdown was implemented, Argentina has experienced ongoing supply chain disruptions, labour and input shortages, and pre-emptive consumer demand, which has increased food prices. Export performance has varied; demand for beef in China is rebounding but European demand is softening. With a few exceptions, demand for Argentina’s fresh horticultural products, grains, edible oils and dairy remain positive in key markets in Latin America, Europe, the Middle East and Southeast Asia.

Mexico – A reduced demand for premium food, the cost and availability of airfreight, disruptions to supply chains and the value of the Mexican Peso are impacting Australian food exports. Currently the only entry into Mexico for premium food is via the US. The mayor of Mexico City has ordered restaurants to only offer takeaway service, with little uptake from customers. This will affect Australian meat exports. Gapa Food Services, one of Mexico’s main importers of Australian meat, is now selling directly to consumers online and via social media influencers, with some interest.

Mining

Argentina – The Argentine Chamber of Mining Companies has established a procedure to support minimal operations (security and environmental protection) and the safe movement of personnel to and from mine sites. It has also created a biosecurity protocol that will remain in place once mines return to regular operations. Mining projects in the production stage only will resume activities from April 1.

Chile – Production has slowed at several mines, with the focus now on maintaining operational continuity and strong sanitary protocols. The industry is also grappling with falling copper prices. Codelco, a state-owned mining company and the world’s largest copper producer, has temporarily stopped construction of three structural projects. The stop will not affect current copper production at the sites.

Colombia – The Colombian Government has extended the national quarantine period to April 23. Mining is one activity that may continue. In reality, however, mining companies are reducing operations to guarantee the health and safety of their employees, families and communities. They are only implementing maintenance, care and security measures in their operations.

Mexico – The Mexican Government’s COVID 19 Emergency Task Force designated mining as a non-essential industry despite lobbying from the mining sector. Miners can, however, request an exemption from the care, maintenance and security mode to keep operating if the mine’s closure significantly impacts on the community’s economic security; that is, if mining is the only employer in the community and the only provider of healthcare. This is on a case-by-case basis. All exploration and expansion projects are on hold until April 30.

Peru – The majority of mine production has stopped for the past two weeks. The only activities that remain operational are related to environmental safety and critical equipment maintenance. With two more weeks of mandatory isolation across the country, miners are concerned about the impact of mobility restrictions on their supply chain. Like Chile, the Peruvian mining industry is facing low metal prices, with copper at its lowest level since 2008.

Manufacturing

Mexico – Ten of the twelve companies that manufacture vehicles in Mexico will partially close their plants. These companies include BMW, GM, Nissan and Volkswagen. The COVID-19 outbreak has forced their auto parts suppliers to shut their factories, given the low demand for units worldwide and border closings.

Logistics

Brazil – Operations at public and private ports and cargo-handling facilities continue without disruptions other than a reduction in the labour force, particularly in administrative roles. Disinfection, and heightened safety and health protocols are in place at ports.

Chile – Most ports are operating as normal with minimal impact on supply chains.






Middle East and Africa update

30 April 2020

Saudi Arabia’s largest construction projects are still inching forward but are also planning for delayed delivery in light of the low oil price and cost/handbrake of COVID-19. Saudi authorities will invite Australian junior mining companies to bid for 54 recently released mining reserve sites. Air Mauritius has entered voluntary administration. Until recently it carried Australian produce to the high-end resorts in the country. The Mauritanian economy, dependent on tourism, has been very badly derailed by the COVID-19 crisis.

Lockdown reversals

  • South Africa – The South African Government will lift some lockdown restrictions from May. The movement of people in and out of the country, and across provincial borders, remains banned. The easing of restrictions will provide some relief for Australian companies operating in mining and manufacturing, although the government has stipulated that no more than one-third of a company’s workforce can be at work at any one time. Work-from-home arrangements will continue for some time. A nationwide curfew from 8pm to 5am will come into effect on May 1.

Impacts on key industries

Resources and energy

  • Saudi Arabia – Most Saudi Giga infrastructure projects are planning to maintain their delivery dates. Some project teams are undertaking sensitivity studies investigating different scenarios based on the length of time, the oil price and the effect of COVID-19 on the Kingdom. If work on projects is halted or significantly altered, this may affect Australian architecture and engineering consulting firms working on sites.
  • Saudi Arabia –The Saudi Arabian Government has issued decisions on the largest allocation of mining reserve sites, which included 54 sites with an area of approximately 4,000km2. These sites include known deposits of gold, copper, rare earth elements, silver, zinc, led, iron ore, quartz ore and tin. The Saudi Geological Survey will start detailed exploration and study of these mineral reservoirs so they can be offered to local and international investors. There may be opportunities for Australian junior miners.

Agribusiness and food

  • Kuwait – Authorities have announced temporary changes to document requirements for importing food products and have moved to electronic documentation and certification. At this stage, it is not known how the changes will affect the document stamping services provided by the Australia Arab Chamber of Commerce and Industry.

Logistics

  • Mauritius – National carrier Air Mauritius went into voluntary administration on April 22. Air Mauritius was an important channel for Australian premium beef, fruits, vegetables and wine to the island. The COVID-19 crisis eliminated high-end tourism to the island’s many five-star resorts, which were the buyers of Australian produce. The drop in tourism, especially from Europe, had a major impact on Air Mauritius’ revenue. Before COVID-19, quite a lot of Australian air freight also came through Dubai, where Emirates flew two A380 flights to Mauritius per day.

Infrastructure

  • Middle East North Africa – The infrastructure sector across the Middle East North Africa region (MENA) has been facing three major challenges since March 2020: reduced oil prices, funding limitations, and the impact of coronavirus on supply chains and movements. The value of contract awards in MENA dropped by 80% to A$6 billion in March, compared to A$22 billion in February 2020. Saudi Arabia remains the largest project market across MENA, with around A$3 billion of projects awarded in March, followed by the UAE at A$900 million, Oman at A$850 million and Qatar at A$500 million. Most of the Giga-cities’ projects in Saudi Arabia are continuing with the plan and design and initial construction phases due to existing budget allocations. In the UAE, the industry is considering the positive impact of the postponement of Expo 2020 Dubai (to October 2021), with additional infrastructure maintenance and support projects over the next 18 months.
  • Dubai – There are still opportunities for Australian engineering services firms to provide business optimisation and cost-cutting solutions for Gulf Cooperation Council projects.

Government response

  • South Africa – The South African Government has announced an economic and industry assistance package worth $500 billion rand (approx. A$50 billion), equivalent to 10% of the country’s GDP. The main areas of expenditure will be company loan guarantees, job support incentives, tax and payment deferrals and social grants. The support is aimed at individuals and SMEs.

24 April 2020

The tightening of liquidity in the UAE and the region has made clear the often disadvantageous business environment for SMEs, despite genuine government efforts to encourage innovative entrepreneurs. Australian mining firms operating in South Africa have benefited from a recent decision to reopen limited operations in the country. Opportunities are emerging to supply fintech to the region. Expo2020, which will likely start in 2021, is being seen by many participating countries as a platform to showcase COVID-19 recovery efforts and success stories.

Economic impacts

  • UAE – In mid-April, Oxford Economics says job losses in the UAE could be in the region of 300,00 to 400,000, concentrated in resource-intensive, low-labour productivity sectors including tourism, retail and food service.

Impacts on key industries

Logistics

  • Middle East – COVID-19 offers an opportunity to push for more efficient export/import procedures in the GCC region, particularly for Australian foodstuffs, which the region desperately needs. The Australian Government is currently working to streamline the verification process for export documents.

Digital technology

  • Middle East – There are opportunities to supply financial technology to the region, particularly insurance technology (nearly 40% of the UAE population is uninsured and the numbers are higher in other regional countries) and solutions that automate regulatory processes. There is also demand for know-your-customer technology, anti-money laundering solutions, and systems that facilitate SME loans, digital payments and digital on-boarding.
  • UAE – While there are multiple accelerators and government-backed programs to encourage entrepreneurship and turn Dubai into the Middle East’s Silicon Valley, there are not enough outcomes to sustain innovative SME efforts without an increase in private-sector support. For example, banks need to provide more liquidity, the venture capital system needs to be better developed, and disproportionate punishments for failure need to be reformed.

Resources and energy

  • Egypt – The deadline for the International Gold Mining Bid, which was scheduled for 15 July, may be postponed due to the impacts of the COVID-19 pandemic.
  • Morocco – Phosphate mining is operating almost unchanged with safety measures in place. All sectors and products that are either linked to agribusiness and food or would increase currency reserves is being strategically encouraged.
  • Morocco – The three key oil and gas projects that are under development are running at minimum capacity. Refined fuel and gas import and distribution is fully operational with safety measures in place.
  • Morocco – The mega solar plant in Ouarzazate, which aims to supply energy to 1 million people for 20 hours each day, is fully operational and running at full capacity. Hydraulic energy, which provides around 20% of the nation’s electricity, is also operating as normal.
  • Saudi Arabia – METS companies and mine operations across the country are still running with extensive workplace health and safety measures in place, reduced staff numbers and shifts, and using PPE for all operations. Oil and gas, and renewable energy operations are running at full capacity. The Saudi Shura council (equivalent to a parliament) has approved the new Saudi Mining Strategy, which will elevate the sector to become the third pillar of Saudi industry.
  • South Africa – The South African Government has partially lifted restrictions placed on the local mining industry. The sector can recommence production, but only up to 50% of total production capacity. Strict workplace health and safety and COVID-19 measures will be in place, including screening employees, making available quarantine facilities and providing transport arrangements for workers.
  • South Africa – The South African Government has also lifted restrictions on transportation, handling and export of minerals. Although not back to normal production levels, the changes have been welcomed by the Minerals Council of South Africa, Australian mining companies and Australian METS suppliers operating in the country.
  • Turkey – Most mineral mine operations (particularly gold mines) across the country are running with extensive workplace health and safety measures in place. Most underground coal mining operations have stopped production but maintain safety staff to prevent spontaneous combustion explosions. The government has issued a new legislation and support package to assist the resources industry and delay the financial obligations of mining companies.

Expo2020

  • On 22 April, the Executive Committee of the Bureau International des Expositions (BIE) collectively agreed to recommend the postponement of Expo 2020 Dubai to 1 October 2021–31 March 2022.
  • As changing the dates of an Expo requires the support of two-thirds of the 12 Member States of the BIE, delegates will now vote on the Executive Committee’s recommendation. Voting will take place remotely from 24 April–29 May 2020.
  • The recommendation was made after the Expo 2020 Dubai Steering Committee met on March 30. Participating nations expressed their need to postpone the Expo due to the effects and challenges posed by the COVID-19 pandemic.
  • Many of the 192 participating nations are positioning Expo 2020 Dubai as a critical trade and investment platform as part of their international post COVID-19 economic recovery plans. 
  • China, Canada, Spain, Italy, Germany and New Zealand are increasing their event budgets and reshaping business programming for this purpose. China increased its US$133 million Expo 2020 budget by 25% to showcase its economic capabilities and resilience, with a focus on digital technology and advanced manufacturing.
  • The Expo’s postponement will create additional opportunities for Australia’s well-regarded infrastructure and mega-event companies. There is demand for project management and business optimisation expertise. Australian SMEs and large entities were awarded $150 million worth of contracts on Expo projects in 2019–20.
  • The Expo will play an important short-, medium- and long-term role in supporting Australia’s post COVID-19 economic recovery policies.
  • Australia’s commercial priorities around Expo 2020 Dubai will be managed by Austrade and include Food and Agriculture; Resources and Energy; Education and Advanced Manufacturing. These will be expanded to include emerging priorities such as Digital Technology and Healthcare (research and education).

14 April 2020

Saudi Arabia and UAE have announced economic stimulus packages to minimise the impact of disruptions to their economies and boost business confidence. Major airlines are stepping up the number of airfreight flights to Australia to improve the flow of goods to and from the region. Mining activities across the Sub-Saharan region have stopped or are in care and maintenance mode.

Impacts on key industries

Logistics

Middle East – Major airlines including Etihad, Emirates and Qatar are increasing the number of airfreight flights to Australia. Etihad and Emirates have converted passenger jets to move cargo, with freight rates between 7 and 10 times more expensive than normal rates. Qatar is using dedicated freighters.

Qatar – The combined Qatar Airways cargo service from Melbourne and Perth (via Singapore) is expected to operate at a reduced load to support the import and distribution of medical equipment. According to GWC Logistics, the majority of imports into Doha are being stored in controlled environments to secure food and to prepare for Ramadan.

Food and agriculture

Middle East – Many countries in the Middle East are reassessing their food security situation and easing restrictions on labelling and documentation in a positive development for Australian exporters.

Health

Middle East – Interest is increasing in digital health solutions, and in Australian healthcare providers with a presence in the region or with the ability to offer solutions virtually.

Infrastructure

Middle East – Major state-owned infrastructure and building companies including Damac and Emaar have offered suppliers between 60–70% of the value of their invoices. Companies are told that if they agree to the reduction, they will be paid quickly.

Mining and METS

Saudi Arabia – All mines are still operational. Mining companies have ordered enough supplies to last up to three months, and plan on ordering additional supplies as required. For now suppliers are able to deliver on time but mining companies have contingency plans in case there are shortages. The main challenge for companies is employee mobility, as tighter restrictions are being imposed throughout the nation.

Sub Saharan Africa – Much of the mining production across the region is either shut down (e.g. South Africa) or in a ‘care and maintenance’ mode. This situation has a knock-on effect on downstream processing (smelters) through to supplies for exports. Demand for mineral products from other countries has diminished significantly as a result of the COVID-19 pandemic.

Economic measures

The non-oil sectors of the Gulf States’ two largest economies, UAE and Saudi Arabia, are decelerating rapidly. Business confidence is also declining. The Gulf’s private sector relies on state spending and the low oil price and COVID-19 will result in drastically lower economic activity and large-scale lay-offs.

Saudi Arabia – The country has announced a US$32 billion stimulus package.

UAE – The UAE’s central bank has doubled its banking stimulus package to Dh256 billion ($70 billion) as business sentiment deteriorated. The measures include Dh95 billion in assistance to banks as the UAE extended a program to defer retail and corporate debt payments until the end of 2020.






New Zealand/Pacific Islands update

29 April 2020

New Zealand moved from level 4 to level 3 restrictions on April 28. Around 400,000 people will be able to return to work with many businesses resuming operations within strict distancing and hygiene guidelines. Retail businesses, however, will still operate on a collect-only basis.

Many small Pacific nations face extreme economic dislocation, with ANZ Bank predicting employment will fall by up to 40% in some countries. Tourism activity has ceased due to travel restrictions, flight cancellations, diminished travel appetite and falling incomes in source markets. Australia and New Zealand are working with the Pacific Island Forum to deliver urgent supplies of food, water, medicine and technical expertise to severely affected South Pacific states.

Economic stimulus

  • New Zealand – The Government’s NZ$12.1 billion stimulus package includes the Employer Wage Subsidy Scheme. The subsidy is a lump sum payment for employers to pass onto employees. It covers 12 weeks of income per employee for all employees of negatively impacted businesses.
  • New Zealand – The Government has set aside NZ$600 million for a freight capacity support package. Under the package, airlines and other airfreight businesses will receive financial support to deliver freight capacity on key routes.
  • New Zealand – The Government and the Reserve Bank of New Zealand are working with commercial banks to relieve financial stress. These include a mortgage-repayment holiday scheme, whereby retail banks defer residential mortgage repayments for up to six months for households financially affected by COVID-19.
  • New Zealand – Cash flow remains the biggest issue for SMEs. Wellington Chamber of Commerce said the Government’s Business Finance Guarantee Scheme had assisted some but the eligibility requirements meant it was not available to all SMEs.
  • Papua New Guinea – The World Bank forecasts a drop in PNG’s commodity prices and export volumes, which will result in lower export revenue and pressure on GDP growth, foreign exchange and government spending. This will lead to a higher fiscal deficit and additional debt distress. 

Impacts on key industries

Infrastructure

  • New Zealand – Companies closed during Level 4 restrictions will have limited opportunities to reopen under Level 3 restrictions from April 28. A recent survey of 1,000 Auckland businesses undertaken by the Auckland Business Chamber found one in three businesses felt unable to reopen after the lockdown.
  • New Zealand – The Minister for Economic Development, Transport and Urban Development has foreshadowed a pipeline of more than 500 projects worth NZ$21.1 billion. This is in addition to NZ$48 billion of transport infrastructure investments and the NZ$12 billion New Zealand upgrade program.
  • Fiji – Infrastructure projects have been delayed due to the pandemic.
  • Papua New Guinea – New infrastructure projects, including hospitals and energy plants, have ceased construction in line with government work directives. Quarantine restrictions have prevented expat workers – mainly project supervisors – from entering the country. This has resulted in projects being delayed. The building and construction industry is experiencing a shortage of materials due to supply issues.

Logistics/supply chain

  • New Zealand – Air New Zealand is receiving Government assistance to maintain limited services. Virgin Australia has closed its office in New Zealand. The tourism sector has been significantly affected.
  • New Zealand – There is some movement on trans-Tasman routes, with charter flights commencing. Some air routes to China are also open. Airfreight rates are typically three to five times the amount charged before the pandemic.
  • Fiji – Fiji Airways has announced a dedicated weekly Sydney-Fiji freight service.
  • Fiji – Freight/shipping costs have increased and there are limited opportunities to despatch goods and produce.
  • Fiji – Disrupted supply chains are affecting Fijian businesses. A garment manufacturer reports production is severely curtailed due to retail outlets closing in key markets such as Australia and New Zealand.
  • Papua New Guinea – Air Niugini has ceased passenger flights from Sydney, Brisbane and Cairns, with only freight services carrying essential items such as PPE, medicines, and healthcare and medical supplies operating. No-contact freight settlement has increased the use of digital settlements, forcing a shift in practices for freight operators.
  • Solomon Islands – Solomon Air has a weekly flight freight from Brisbane.

Tourism

  • All Pacific Islands – report close to zero occupancy rates in resorts and hotels. The cruise industry is closed. All air traffic has either ceased or is available only on an ‘essential use’ basis.
  • Papua New Guinea – Outbound international passenger flights will resume from the middle of the first week in May (five times a week to Brisbane; twice a week to Cairns; and four times a week to Singapore). Kokoda treks have stopped and tour operators are expected to go under.
  • Fiji –Approximately 97% of tourism businesses are partially or fully closed. Close to 40,000 people working in the hotel and tourism sector are on leave without pay or working reduced hours. With approximately 40% of Fijian GDP dependent on tourism, the country expects long-term impacts on its economy. The Fijian Government is providing support packages and more will be required as recovery is unlikely until winter 2021 (peak season). Tourism Fiji has started a global tourism campaign to keep Fiji top of mind for visitors.
  • Fiji – The International Finance Corporation, the Australian Infrastructure Financing Facility for the Pacific and other partners are discussing ‘innovative’ finance solutions to assist the Fiji tourism industry. The two organisations and Austrade are also working with the Fijian Government on an SME survey to understand pain points and responses required from government.
  • Vanuatu – Vanuatu has launched a tourism campaign to encourage visitors to travel to the nation when it is safe again.

Mining and resources

  • Papua New Guinea – Oil and gas companies have moved into care-and-maintenance mode. Key personnel have left the country or are self-isolating in Papua New Guinea.
  • Papua New Guinea – The PNG Government has resumed talks with ExxonMobil for the P’nyang gas field project (one of two liquefied natural gas projects in the country).
  • Papua New Guinea – PNG has not renewed Canadian company Barrick’s mining licence for the Porgera Mine. The Government has decided to operate the mine as a government business.

Manufacturing

  • Fiji – Fiji’s leading alcohol beverages manufacturer, Paradise Beverages, has commenced producing more than 25,000 litres of hand sanitisers for free distribution across the country.

Food and Beverages

  • All Pacific Islands – are trying to ramp up local production for domestic consumption. There are protein shortages across the region.

Banking and finance

  • All Pacific Islands – report growing liquidity constraints and foreign exchange deficits due predominantly to the downturn in tourism. Estimates by the World Bank and the Asian Development Bank point to significant reductions in growth across countries in the Pacific. Banks such as ANZ and Westpac have put in place business continuity plans, made arrangements to defer loan repayments and will offer interest-free loans to Pacific Island nations.
  • Fiji – The banking sector is sound, with the Reserve Bank of Fiji (RBF) maintaining adequate liquidity levels and the commercial sector (e.g. Westpac and ANZ) working within financial metrics. RBF and the Fiji National Provident Fund are contributing substantial amounts to fund the Fijian Government’s COVID-19 Response Budget.
  • Fiji – The Reserve Bank of Fiji has announced three facilities targeted at small and medium-sized enterprises.
  • Fiji – The Fiji National Provident Fund (FNPF) has paid out F$18.9 million to date in response to the COVID-19 crisis. The FNPF payout is expected to reach close to F$40 million.

Health and humanitarian response

  • Pacific Islands – Multilateral funds and government aid programs are being deployed to address economic and social issues (detailed below). Civil unrest may become a challenge.
  • Fiji – Fiji has imposed a curfew from 10pm till 5am. Social gatherings of up to 20 people are allowed from April 27. Inter-island travel is allowed from April 26.
  • Fiji – China has donated US$300,000 to assist with COVID-19 response measures.
  • Fiji – The Australian Air Force arrived on April 19 with supplies to help communities affected by Tropical Cyclone Harold, and PPE for the healthcare sector. Two more flights are expected this week with additional supplies.
  • Papua New Guinea – The World Bank has approved an emergency US$20 million project to support the country’s COVID-19 pandemic response.
  • Papua New Guinea – The US Government will donate US$1.2 million to help the government prepare lab systems, support rapid response and preparedness efforts, develop risk communication campaigns and implement infection prevention and control measures.
  • Papua New Guinea – The China PNG Friendship Association donated K300, 000 to PNG’s Health Department.
  • Papua New Guinea – The Australian Government has provided 10 containerised health facilities to boost the country’s health infrastructure. These mobile units can support existing health facilities to treat COVID-19 patients, reducing pressure on hospitals.
  • Papua New Guinea – The Rita Flynn Courts COVID-19 Centre opened on April 10 in Port Moresby. The centre consists of 76 beds to treat mild to moderate positive cases. It was set up with support from bilateral partners, businesses and donors.
  • Vanuatu – On 21 April, a Royal Australian Air Force (RAAF) C-17 Globemaster aircraft delivered urgent medical supplies, shelter, hygiene and kitchen kits, water containers and generators. This is the second delivery of humanitarian relief supplies from Australia.
  • Kiribati, Tuvalu, Tokelau, The Federated States of Micronesia, Vanuatu and Solomon Islands – These Pacific countries are eligible for the UN COVID-19 response and recovery fund, which will provide around US$1 billion over the next five months to low- and middle-income countries.
  • Federated States of Micronesia – The Asian Development Bank (ADB) has released $6 million to help the Government respond to the COVID-19 pandemic.
  • Marshall Islands – The World Bank has provided a US$2.5 million grant to help the Marshall Islands respond to the threat posed by COVID-19 and strengthen national public health systems.
  • Palau – The ADB is providing $15 million in support to Palau.
  • Samoa – The ADB is providing a $2.9 million grant to help the Samoan Government respond to the COVID-19 pandemic. The Samoan Government will use $2.5 million earmarked for food security to acquire equipment to scale up production of made-in-Samoa goods to substitute imports. The IMF has approved a US$22.03 million loan to Samoa.
  • Solomon Islands – The ADB has provided $6 million to help the Solomon Islands respond to the COVID-19 pandemic.
  • Tonga – ADB released a $6 million grant from its Pacific Disaster Resilience Program (Phase 2) to help finance the Government of Tonga’s response to the COVID-19 pandemic.

Economic stimulus

  • Fiji – In its COVID-19 Response Budget, the Fijian Government has established a A$630 million economic support package, worth the equivalent of around 8.7% of GDP. The Government is providing a one-off payment of A$700 to people who work in the tourism sector who have lost their jobs or have had their hours reduced. A sliding scale applies for people in other industries. In addition, it will pay the cost of 21 days’ sick leave for people on low salaries that test positive for COVID-19.
  • Fiji – Commercial bank loans will not charge interest for six months.
  • Fiji – To assist businesses affected by COVID-19, the Reserve Bank of Fiji is expanding the Natural Disaster Rehabilitation Facility by A$42 million. Impacted businesses can access funds through their respective commercial banks, licensed credit institutions or the Fiji Development Bank at an interest rate of up to a maximum of 5%.
  • Papua New Guinea – Prime Minister Marape has announced an economic stimulus package that will permit easier repayment terms for individuals and families. He has also asked superannuation funds to allow members to gain access to their savings.

23 April 2020

A gradual relaxation in restrictions in New Zealand from April 27 should see many businesses resume operations within strict distancing and hygiene guidelines. Retail businesses, however, will still operate on a collect-only basis.

Many small Pacific nations face extreme economic dislocation, with ANZ Bank predicting employment will fall by up to 40% in some countries. Tourism activity has ceased due to travel restrictions, flight cancellations, diminished travel appetite and falling incomes in source markets. Australia and New Zealand are working with the Pacific Island Forum to deliver urgent supplies of food, water, medicine and technical expertise to severely affected South Pacific states.

Economic stimulus

  • New Zealand – The Government’s NZ$12.1 billion stimulus package includes the Employer Wage Subsidy Scheme. The subsidy is a lump sum payment for employers to pass onto employees. It covers 12 weeks of income per employee for all employees of negatively impacted businesses.
  • New Zealand – The Government has set aside NZ$600 million for a freight capacity support package. Under the package, airlines and other airfreight businesses will receive financial support to deliver freight capacity on key routes.
  • New Zealand – The Government and the Reserve Bank of New Zealand are working with commercial banks to relieve financial stress. These include a mortgage-repayment holiday scheme, whereby retail banks defer residential mortgage repayments for up to six months for households financially affected by COVID-19.
  • New Zealand – Cash flow remains the biggest issue for SMEs. Wellington Chamber of Commerce said the Government’s Business Finance Guarantee Scheme had assisted some but the eligibility requirements meant it was not available to all SMEs.
  • Papua New Guinea – The World Bank forecasts a drop in PNG’s commodity prices and export volumes, which will result in lower export revenue and pressure on GDP growth, foreign exchange and government spending. This will lead to a higher fiscal deficit and additional debt distress. 

Impacts on key industries

Infrastructure

  • New Zealand – Companies closed during Level 4 restrictions will have limited opportunities to reopen under Level 3 restrictions from April 28. A recent survey of 1,000 Auckland businesses undertaken by the Auckland Business Chamber found one in three businesses felt unable to reopen after the lockdown. The lack of certainty was cited as the biggest challenge for SMEs. A number of companies said they could manage the four-week lockdown but the future would be bleak if the lockdown went for longer.
  • Fiji – Infrastructure projects have been delayed due to the pandemic.
  • Papua New Guinea – New infrastructure projects, including hospitals and energy plants, have ceased construction in line with government work directives. Quarantine restrictions have prevented expat workers – mainly project supervisors – from entering the country. This has resulted in projects being delayed. The building and construction industry is experiencing a shortage of materials due to supply issues.

Logistics/supply chain

  • New Zealand – Air New Zealand is receiving Government assistance to maintain limited services. Virgin Australia has closed its office in New Zealand. The tourism sector has been significantly affected.
  • New Zealand – There is some movement on trans-Tasman routes, with charter flights commencing. Some air routes to China are also open. Airfreight rates are typically three to five times the amount charged before the pandemic.
  • Fiji – Fiji Airways has announced a dedicated weekly Sydney-Fiji freight service.
  • Fiji – Freight/shipping costs have increased and there are limited opportunities to despatch goods and produce.
  • Fiji – Disrupted supply chains are affecting Fijian businesses. A garment manufacturer reports production is severely curtailed due to retail outlets closing in key markets such as Australia and New Zealand.
  • Papua New Guinea – Air Niugini has ceased passenger flights from Sydney, Brisbane and Cairns, with only freight services carrying essential items such as PPE, medicines, and healthcare and medical supplies operating. No-contact freight settlement has increased the use of digital settlements, forcing a shift in practices for freight operators.
  • Solomon Islands – Solomon Air has a weekly flight freight from Brisbane.

Tourism

  • All Pacific Islands – report close to zero occupancy rates in resorts and hotels. The cruise industry is closed. All air traffic has either ceased or is available only on an ‘essential use’ basis.
  • Papua New Guinea – International travel is still banned except for inbound medical supplies and equipment, including PPE.
  • Fiji – At the end of March, approximately 93% of tourism businesses were partially or fully closed. This number has increased to 97% over the last two weeks. With approximately 40% of Fijian GDP dependent on tourism, the country expects long-term impacts on its economy. The Fijian Government is providing support packages and more will be required as recovery is unlikely until winter 2021 (peak season). Tourism Fiji has started a global tourism campaign to keep Fiji top of mind for visitors.
  • Vanuatu – Vanuatu has launched a tourism campaign to encourage visitors to travel to the nation when it is safe again.

Mining and resources

  • Papua New Guinea – Oil and gas companies have moved into care-and-maintenance mode. Key personnel have left the country or are self-isolating in Papua New Guinea.

Manufacturing

  • Fiji – Fiji’s leading alcohol beverages manufacturer, Paradise Beverages, has commenced producing more than 25,000 litres of hand sanitisers for free distribution across the country.

Banking and finance

  • All Pacific Islands report growing liquidity constraints and foreign exchange deficits due predominantly to the downturn in tourism. Estimates by the World Bank and the Asian Development Bank point to significant reductions in growth across countries in the Pacific. Banks such as ANZ and Westpac have put in place business continuity plans, made arrangements to defer loan repayments and will offer interest-free loans to Pacific Island nations.
  • Fiji – The banking sector is sound, with the Reserve Bank of Fiji (RBF) maintaining adequate liquidity levels and the commercial sector (e.g. Westpac and ANZ) working within financial metrics. RBF and the Fiji National Provident Fund are contributing substantial amounts to fund the Fijian Government’s COVID-19 Response Budget.

Health and humanitarian response

  • Pacific Islands – Multilateral funds and government aid programs are being deployed to address economic and social issues (detailed below). Civil unrest may become a challenge.
  • Fiji – The Australian Air Force arrived on April 19 with supplies to help communities affected by Tropical Cyclone Harold, and PPE for the healthcare sector. Two more flights are expected this week with additional supplies.
  • Papua New Guinea – The World Bank has approved an emergency US$20 million project to support the country’s COVID-19 pandemic response.
  • Papua New Guinea – A small number of riots and looting have occurred but were managed by Defence forces. PNG has imposed a 9pm to 6am curfew in Port Moresby and the Western Province. Initial stock piling occurred when the first COVID-19 case was announced.
  • Papua New Guinea – The Australian Government has provided 10 containerised health facilities to boost the country’s health infrastructure. These mobile units can support existing health facilities to treat COVID-19 patients, reducing pressure on hospitals.
  • Papua New Guinea – The Rita Flynn Courts COVID-19 Centre opened on April 10 in Port Moresby. The centre consists of 76 beds to treat mild to moderate positive cases. It was set up with support from bilateral partners, businesses and donors.
  • Vanuatu – On 21 April, a Royal Australian Air Force (RAAF) C-17 Globemaster aircraft delivered urgent medical supplies, shelter, hygiene and kitchen kits, water containers and generators. This is the second delivery of humanitarian relief supplies from Australia.
  • Kiribati, Tuvalu, Tokelau, The Federated States of Micronesia, Vanuatu and Solomon Islands – These Pacific countries are eligible for the UN COVID-19 response and recovery fund, which will provide around US$1 billion over the next five months to low- and middle-income countries.
  • Samoa – The Asian Development Bank (ADB) is providing a $2.9 million grant to help the Samoan Government to respond to the COVID-19 pandemic.
  • Tonga – ADB released a $6 million grant from its Pacific Disaster Resilience Program (Phase 2) to help finance the Government of Tonga’s response to the COVID-19 pandemic.

Economic stimulus

  • Fiji – In its COVID-19 Response Budget, the Fijian Government has established a A$630 million economic support package, worth the equivalent of around 8.7% of GDP. The Government is providing a one-off payment of A$700 to people who work in the tourism sector who have lost their jobs or have had their hours reduced. A sliding scale applies for people in other industries. In addition, it will pay the cost of 21 days’ sick leave for people on low salaries that test positive for COVID-19.
  • Fiji – Commercial bank loans will not charge interest for six months.
  • Fiji – To assist businesses affected by COVID-19, the Reserve Bank of Fiji is expanding the Natural Disaster Rehabilitation Facility by A$42 million. Impacted businesses can access funds through their respective commercial banks, licensed credit institutions or the Fiji Development Bank at an interest rate of up to a maximum of 5%.
  • Papua New Guinea – Prime Minister Marape has announced an economic stimulus package that will permit easier repayment terms for individuals and families. He has also asked superannuation funds to allow members to gain access to their savings.

21 April 2020

A gradual relaxation in restrictions in New Zealand from April 27 should see many businesses resume operations within strict distancing and hygiene guidelines. Retail businesses, however, will still operate on a collect-only basis.

Many small Pacific nations face extreme economic dislocation. In Papua New Guinea, mines are focusing on care and maintenance operations; in Fiji, tourism is virtually at a standstill. Australia and New Zealand are likely to collaborate on plans to deliver urgent supplies of food, water, medicine and technical expertise to severely affected South Pacific states.

New Zealand

Restrictions

  • With daily infections in low single-digits and a transmission rate of less than 1 to 0.48, New Zealand is set to ease its current ‘Level 4’ lockdown restrictions from April 27.
  • It is anticipated that new ‘Level 3’ restrictions will be in place for two weeks. Businesses accessed by the public such as retail, hardware stores, cafes and restaurants may open but only for purchases made online or by phone (for delivery), or by contactless payments (for collection).
  • Businesses only accessed by staff and without a customer-facing function – including in the construction or forestry sectors – may open under strict health, safety and physical distancing rules. Builders and tradespeople can work on domestic premises so long as they comply with these rules.

Economic stimulus

  • The New Zealand Government’s NZ$12.1 billion stimulus package includes the Employer Wage Subsidy Scheme. The subsidy is a lump sum payment for employers to pass onto employees. It covers 12 weeks of income per employee for all employees of negatively impacted businesses.
  • The Government has set aside NZ$600 million for a freight capacity support package. Under the package, airlines and other airfreight businesses will receive financial support to deliver freight capacity on key routes.
  • The New Zealand Government and the Reserve Bank of New Zealand are working with commercial banks to relieve financial stress. These include a mortgage-repayment holiday scheme, whereby retail banks defer residential mortgage repayments for up to six months for households financially affected by COVID-19.

Impacts on key industries

  • Airlines – Air New Zealand is receiving Government assistance to maintain limited services. Virgin Australia has closed its office in New Zealand.
  • Infrastructure – Many companies and support services are struggling. Because of the lockdown, construction companies can only work on essential or critical infrastructure or carry out work required to address immediate health or safety risks. Exemptions include, for example, hospitals that need to build negative pressure facilities.
  • Supply chain – There is some movement on trans-Tasman routes, with charter flights commencing. Some air routes to China are also open. Airfreight rates are typically three to five times the amount charged before the pandemic.
  • Consumer behaviour
  • Early panic buying created shortages of essential supplies. Consumers have been requested to shop normally rather than stockpile. Limits have now been placed on items such as toilet paper, hand sanitiser, personal wash, Panadol, wipes, pasta and rice. 

Papua New Guinea

Economic impact

  • The World Bank forecasts a drop in Papua New Guinea’s commodity prices and export volumes, which will result in lower export revenue and pressure on GDP growth, foreign exchange and government spending. This will lead to a higher fiscal deficit and additional debt distress. 
  • Domestic flights resumed on April 6, ensuring a flow of goods and people for services such as healthcare.
  • No-contact freight settlement has increased the use of digital settlements, forcing a shift in practices for freight operators.
  • The Australia-Papua New Guinea Business Council is helping local businesses respond to COVID-19.

Mining and resources

  • Oil and gas companies have moved into care-and-maintenance mode. Key personnel have left the country or are self-isolating in Papua New Guinea.

Infrastructure

  • New infrastructure projects, including hospitals and energy plants, have ceased construction in line with government work directives.
  • Quarantine restrictions have prevented expat workers – mainly project supervisors – from entering the country. This has resulted in projects being delayed.
  • The building and construction industry is experiencing a shortage of materials due to supply issues.

Food and beverages

  • Initial stock piling occurred when the first COVID-19 case was announced.
  • PNG is experiencing protein shortages.

Economic stimulus

  • Prime Minister Marape has announced an economic stimulus package that will permit easier repayment terms for individuals and families. He has also asked superannuation funds to allow members to gain access to their savings. 

Fiji

Economic impact

  • Supply chains that affect Fijian businesses are being disrupted. A garment manufacturer reports production is severely curtailed due to retail outlets closing in key markets such as Australia and New Zealand.
  • Infrastructure projects have been delayed due to the pandemic.
  • Freight/shipping costs have increased and there are limited opportunities to despatch goods and produce.

Tourism

  • Fiji’s economy is high susceptible to a downturn in visitor numbers. Approximately 40% of Fijian GDP is dependent on tourism and at the end of March, approximately 93% of tourism businesses were partially or fully closed. This number has increased to 97% over the last two weeks.
  • Supplies of consumables for the tourism market are reduced or extremely limited.
  • One prominent local cruise operator is maintaining a skeleton staff and paying employees a ‘maintenance’ wage. The company’s cruise fleet is not operating.

Economic stimulus

  • In its COVID-19 Response Budget, the Government has established a A$630 million economic support package, worth the equivalent of around 8.7% of GDP.
  • The Fijian Government is providing a one-off payment of A$700 to people who work in the tourism sector who have lost their jobs or have had their hours reduced. A sliding scale applies for people in other industries. In addition, the Government will pay the cost of 21 days’ sick leave for people on low salaries that test positive for COVID-19.
  • Commercial bank loans will not charge interest for six months.
  • To assist businesses affected by COVID-19, the Reserve Bank of Fiji is expanding the Natural Disaster Rehabilitation Facility by A$42 million. Impacted businesses can access funds through their respective commercial banks, licensed credit institutions or the Fiji Development Bank at an interest rate of up to a maximum of 5%.

Other Pacific Island countries

Economic impact

  • With most Pacific islands dependent on trade, tourism or overseas investment, multiple economies are now highly fragile. Multilateral funds will be required to help countries remain solvent and maintain employment. Civil unrest may become a challenge.
  • Besides current dislocation, reduced commodity prices and low future tourism levels may severely impact some countries’ long-term economic prospects. Some Pacific countries have now begun programs to boost local agricultural production.

Economic stimulus

  • Vanuatu has started a global tourism marketing campaign – ‘we will keep it beautiful for you’ – highlighting the crucial role of tourism in helping the nation bounce back from the pandemic.
  • Samoa is receiving assistance from several multilateral organisations: Samoa National Provident Fund (A$5.9 million); the World Bank (A$9.8 billion); and the Asian Development Bank (A$4.6 billion).

North America update

30 April 2020

COVID-19 EMERGENCY RESPONSE

The oil price collapse is taking its toll on Texas with 50,000 jobs lost to date and a further 60,000 predicted in the coming weeks. Meanwhile, the Pentagon anticipates a three-month delay to major project milestones. In the US, various levels of government are eyeing infrastructure projects to kick-start economic activity and reduce unemployment. The hurdles are formidable: state revenues have been hammered; there’s a paucity of shovel-ready projects; and private sector participants will struggle to calculate returns on investment if ‘new normals’ emerge in work and travel patterns.

Specific Industry impacts

Defence and Advanced Manufacturing

USA – The Pentagon anticipates a three-month delay to major acquisition ‘key milestones’. The Department of Defense’s acquisition chief, Ellen Lord, said that she expects the delay will cost the Pentagon ‘billions’ of dollars. She noted that the Department plans to ask Congress for federal funding to fill that gap as part of the Coronavirus Aid, Relief, and Economic Security Act.

Boeing – The world’s leading plane-maker, Boeing, expects the aviation industry will take 2–3 years to return to pre-2019 levels of activity. Speaking on April 27, Chief Executive, David Calhoun said that even after aviation does return to levels achieved last year, it may take an additional few years after that for aviation to resume its long-term trend growth.

Energy

USA – Within just five weeks, the supply of motor gasoline to retail markets has fallen 40% to 5.3 million barrels per day (b/d). Before March 13, the volume supplied was 8.9 million b/d. US consumption of jet fuel experienced the largest drop in relative terms, declining 62% from a pre-shutdown average of 1.6 million b/d to just 612,000 b/d on April 17.

USA The decline in distillate fuel oil consumption – primarily in the form of diesel – has been less severe. Before March 13, distillate product supplied averaged 3.9 million b/d in 2020. By the week ending April 17, distillate product supplied was 20% lower, at 3.1 million b/d. These fuels are primarily used in the trucking, locomotive and agricultural sectors.

USA – Halliburton announced a net loss of $1.0 billion for Q1 2020 and a plan to reduce its 80,000 workforce by 8%. The causes: crashing demand and crushing oversupply. Schlumberger, Weatherford International and other oil-services companies are also reducing headcounts.

Canada The CHFCA (Canadian hydrogen and fuel cell association) wants support for SMEs in the tech and cleantech sectors. It is also arguing against any delay or watering down of the Clean Fuel Standard to counter pleas from the petroleum sector. THE CHFCA is monitoring the reactions of other governments that have initiated national pro-Hydrogen fuel policies.

Agriculture & food

USA – Major facilities continue to close down temporarily due to COVID19 concerns and gyrations in in demand. A number of meat processing plants shut this week following virus outbreaks.

USA Arnotts, owned by US private equity firm, Kolberg Kravis Roberts, reports that the company has been working flat out to service Australian market demand for soup and biscuits. It has had to search for new suppliers to meet demand for raw ingredients. Arnotts is Australia’s largest producer of biscuits and second-largest producer of snack foods.

Technology

Canada – Vancouver-based Virtro Entertainment Inc (owned by Australian Expats) is working with the Immigrant Employment Council of British Columbia to develop job interview simulations. VIRTRO has also submitted an RFP response to a COVID initiative, (Canadian Fed. Gov – Digital Supercluster), to help with practical training in healthcare using their competency-training platform.

Government Stimulus

USA – State and federal governments are attracted to the idea of an infrastructure-led recovery, but hurdles are high. Federal funds available for infrastructure are likely to be tight. The planning and environmental permit lead times may be long. On the positive side, transport infrastructure projects – for upgrade and maintenance – will be easier and less costly to execute while usage is ultra-low.

Austrade Services

San Francisco Lading Pad – The San Francisco Landing Pad is continuing to support Australian companies looking to enter the US market. Like many organisations, we are looking for new ways to deliver our services, and are now rolling out a suite of virtual services to support new market planning and discovery. See Landing Pads during COVID-19 for more information, and email San Francisco Landing Pad webinars if you would like to join.

 


 

22 April 2020

The US President has unveiled a three-phased approach for relaxing lockdowns, called, Opening Up America Again. State Governors are discussing how to best manage this process with both sides seeking compromise. As commercial lockdowns bite, over 20 million US workers have applied for unemployment benefits. Energy companies were left reeling in US and Canada on April 20, when the price of West Texas Intermediate turned negative. Meanwhile, horticulture is suffering supply chain woes, with US and Canadian farmers dumping vast volumes of milk.

Impacts on key industries

Resources and energy

  • US – On April 20, the price of West Texas Intermediate crude for May delivery plunged momentarily to US$-36.2. This is a unique event in energy futures markets. A huge glut in oil supplies will likely severely impact the prospects of shale oil companies, many of which are highly leveraged.
  • Canada – Also on April 20, the price of Canadian Western Select turned negative. As oil companies drastically reduced steam-driven oil sands production in Alberta, the premier, Jason Kenney, called on Canada’s federal government to provide financial support. Canada’s substantial oil sands industry is concentrated in Alberta.
  • US – Conoco Phillips announced on April 16 that capex will fall by $1.6 billion. Reductions are in addition to cuts announced on March 18 and will be focused in North America.
  • Houston – The Railroad Commission of Texas, which regulates oil and gas production in the state, is mulling a mandated cut in oil production. Sources suggests reductions in the region of 20%. The agency’s objective is to support prices: prior to OPEC, the commission exerted a major influence on world prices.
  • US – According to latest data from the Federal Reserve, US chemical output dropped by 1.7% in March, with an annualised rate of -4.1% over the first quarter. This was due to the closure of many chemicals factories at the end of March. Nevertheless, the chemicals sector appears more resilient than other industries to the COVID-19 pandemic.

Medical supplies

  • US – As of April 8, the Federal Emergency Management Agency (FEMA) is required to issue explicit approval for the export of Personal Protective Equipment (PPE) including gloves and masks from the US. This may inhibit supplies of PPE or components thereof to overseas purchases.
  • US – PPE manufacturers are at full capacity, and report that demand volumes and delivery urgency have never been higher. Many are attempting to increase capacity. Demand excess is having an impact on supply chains, with most PPE manufacturers noting extended delays and shortages with raw materials.
  • Canada – Fresh investment is wafting across the Pacific. Via its Australian subsidiary, Vancouver-based Asterion Cannabis Inc. will commence Phase 1 of a US$400 million canneboid facility at Toowoomba, Queensland. The site will include horticulture and pharmaceutical processes.

Food and beverage

  • North America – Agricultural products, especially milk, is being dumped as supply chain disruptions hamper timely transportation to markets.
  • North America – An imminent lack of seasonal workers looms. This will likely present challenges to planting and harvesting. 
  • Canada – Agriculture minister, Marie-Claude Bibeau, has announced C$50 million in funding to help farmers and food processing companies overcome labour challenges that result from foreign-worker quarantine measures.
  • Canada – With restaurants struggling, the hospitality industry launched ‘Takeout Day’ on April 16. The aim is to encourage citizens to order takeaway meals each Wednesday.

Defence and aerospace

  • US – Having closed its Everett main site three weeks ago, Boeing is planning to re-open production in Washington State the week beginning April 20. Workers will wear protective face masks. With 16,000 passenger jets currently on the tarmac – which is two-thirds of the global airliner fleet – demand may be weak.
  • US – Final assembly of F-35s is proceeding at the principal Lockheed production facility in Dallas–Fort Worth. Lockheed had previously paused F-35 production in Japan over COVID-19 fears; workers at the other F-35 final assembly plant near Milan, Italy, were asked to work from home.
  • US – According to Jane’s, the US Department of Defense’s classified and unclassified networks are facing an increase in attempted breaches and cyber attacks. This digital assault comes as a majority of Pentagon and service-centric operations shift online.
  • Canada – Canadian drone companies are encountering mixed fortunes. Those skewed towards the oil and gas sector have taken a nosedive, while drone retailers report buoyant sales. This may reflect newfound interest in drones among furloughed workers.
  • Canada – Enjoyment may be short-lived, however. The majority of parts and accessories that Canadian drone companies procure are sourced from China. Organisations have experienced supply disruption as medical equipment and PPE take precedence.
  • Canada – Leading aerospace company, Bombardier, announced it will produce 18,000 ventilators for the Ontario government at its temporarily closed plant in Thunder Bay, Ontario.

Government response

  • Canada – The Canadian Government is discussing a wage top-up plan with provinces and territories. The scheme would be open to essential workers – such as caregivers and nursing assistants – who earn less than C$2500 per month.
  • Canada – A new program, the Canada Emergency Business Account, is helping small businesses that are struggling with cash flow. Banks are offering government-backed loans of up to C$40,000 to companies with payroll budgets of C$20,000–C$1.5 million. More than 195,000 loans have been approved.
  • Canada – The Canadian Government is discussing a small-business rent-relief initiative with the country’s provinces and territories. The Canada Emergency Commercial Rent Assistance program would be operative for the second quarter.

20 April 2020

The US and Canadian governments have announced multibillion-dollar programs to support businesses. Much of this aid will be delivered via wage support and loan guarantees to small and medium-sized enterprises. The US tech sector reports a surge in demand – in particular for cloud-based video collaboration and streaming services. The dramatic fall in oil prices is leading some analysts to reconsider the pace at which consumers will switch to electric-powered vehicles – with implications for investment in battery production, and lithium and rare-earths mining projects.

Impacts on key industries

Manufacturing

Canada – The Canadian Government has requested proposals for remote autonomous projects and solutions that could help tackle the economic and social impacts of COVID-19. This includes drones that could alleviate bottlenecks in supply chains, deliveries and agriculture.

US – The US Government expects defence companies to continue to deliver products and services to the Pentagon on time, despite the challenges defence companies face in terms of supply chains and workforce availability.

San Francisco – Tesla has halted operations at factories in the Bay area until at least the end of April. Demand for new electric vehicles is falling in US and European markets. There are fears that low oil prices will retard the adoption of electrically powered vehicles.

Energy

Canada – Canada is proceeding with plans for an oil patch bailout. Federal and Alberta government programs are likely to include enhanced access to credit, especially for small and medium-sized companies, according to news reports.

US – With oil prices at close to US$20/barrel and expected to drop to $10/barrel, gasoline prices are expected to hit $0.99/gallon in many parts of the country. Current prices are equivalent or better than 1960 prices adjusted for inflation. This will lower transport costs in the US and benefit logistics companies.

US – Less fortunate is the US oil industry. Record low crude prices threaten hundreds of thousands of jobs, especially in Texas. The US Government and its agencies hope Saudi Arabia and Russia will curb production to shore up prices.

Houston – US energy companies have reduced the number of active oil rigs for the third week in a row, in their biggest weekly cut in five years. Spending on new drilling has been slashed.

Resources

US – The prospect of sustained low oil prices is leading analysts to fear that adoption rates for electric vehicles will slow, lowering the sector’s demand for rare-earth minerals and lithium. There is concern that as investors flock to low-risk investments, rare-earths mining projects will struggle to secure funding, except in cases where governments wish to secure a strategic supply.

Telecoms and technology

North America –Telstra Americas reports a surge in demand with technology customers looking for new capacity. As more people work, study and entertain themselves at home, all platforms – video, collaboration, content streaming, gaming – are experiencing unprecedented usage.

US – According to news reports, there is a surge in demand for cloud-based collaboration services. Microsoft reports a 775% increase in cloud services in areas affected by lockdowns. ZDNet reports daily usage of Google’s enterprise videoconferencing tool, Hangout Meets, is now 25 times higher than in January. Cisco’s CSCO reports a doubling of meeting minutes on its Webex videoconferencing platform. As of March 22, Zoom reports a 378% (YoY) increase in daily active users.

US – In the US, streaming activity jumped 27% in the week ending March 23. Market analyst Nielsen predicts that streaming will increase 60% during the current pandemic. Netflix, Amazon, Hulu and Disney are among the beneficiaries.

US – Most CIOs believe spending on PCs will fall in the coming year, according to a survey reported in Maketwatch. Almost half think spending on artificial intelligence and servers will also decline. The tech sectors with enhanced prospects were security and cloud services, with 86% and 68% of CIOs respectively believing these sectors will become higher priorities.

US – According to a recent CB Insights report, the number of corporate deals in the fintech sector has fallen to one-half to one-third the usual rate, although a decline was apparent before the COVID-19 outbreak. The number of deals fell 27.5% between February and March 2020. This appears a global trend, with fintech funding reportedly falling to 2017 levels.

US – Consumer lending platforms have seen a large increase in new users, while payment platforms have experienced a decrease in transactions. Analysts say COVID-19 will greatly accelerate the ‘digital-only’ trend, providing much-needed growth for payments firms in the future.

Government programs

US –The Payout Protection Program, worth up to US$300 billion, will help businesses with fewer than 500 employees to retain their workforce.

US –The Economic Injury Disaster Loan Program will disperse loans of up to US$2 million with proceeds used for fixed debts, payroll, accounts payable, and other debts that can’t be paid due to the impact of the COVID-19 outbreak.

US –The Coronavirus Economic Stabilization Act (2020) is a US$454 billion Treasury program that aims to provide direct loans to businesses with 500–10,000 employees. The funding will be used for loans, loan guarantees and other investments.

Canada –A 75% wage subsidy will be available to companies, charities and non-profit organisations to keep employees on payrolls during the pandemic.

Canada – The Canadian Government is establishing a Business Credit Availability Program to provide CA$65 billion for small and medium-sized enterprises.

Canada – Until August 31, 2020, businesses may defer income tax payments for amounts that are due between March 18 and September 2020. Businesses and self-employed people may defer payments of Goods and Services Tax/Harmonized Sales Tax (GST/HST) until June 30, 2020, as well as customs duties owing on their imports.

Canada – The Canadian Government has announced an Emergency Response Benefit to provide temporary income support of CA$500 a week for up to 16 weeks to those who stopped working because of COVID-19.

Industry support programs

Canada – The Canadian federal agriculture financial institution, Farm Credit Canada, is gaining an extra C$5 billion in lending capacity for producers, agribusinesses and food-processing companies.

Canada – Prime Minister Trudeau has announced that CA$50 million has been made available for members of the Next Generation Manufacturing Supercluster to develop or scale up production of in-demand technologies, equipment and medical supplies.

Canada – The Federal Government is calling for volunteers to support frontline healthcare workers and is offering full-time jobs to Canadian Forces reservists.

Ontario –The province announced it is launching a new web portal to connect workers with employers looking to fill positions in the agri-food sector.

Austrade services

On 17 April, AmCham and Austrade held a COVID-19 US market update webinar. The webinar was hosted by Nicola Watkinson, Austrade’s General Manager for the Americas, and included opening remarks by The Hon. Arthur Sinodinos AO, Australian Ambassador to the United States.

Watch the webinar

Panellists will share first-hand insights on the current business situation in the US. They will discuss the potential impact of the pandemic on Australian businesses currently operating in US, and also on Australian business that plan to expand there. Panelists will also share feedback on how US investors view Australian opportunities. The session will include an opportunity for Q&A.

San Francisco Lading Pad – The San Francisco Landing Pad is continuing to support Australian companies looking to enter the US market. Like many organisations, we are looking for new ways to deliver our services, and are now rolling out a suite of virtual services to support new market planning and discovery. See Landing Pads during COVID-19 for more information.

Email San Francisco Landing Pad webinars if you would like to join.






North East Asia update

4 May 2020

Japanese Prime Minister Abe is set to extend Japan’s state of emergency through to May 31 amid concerns the continued spread of COVID-19 could flood hospitals with patients. Japanese business and consumers will benefit from rock-bottom oil prices as the country imports all its crude, but low fuel prices increase the risk of deflation. Over in Korea, President Moon’s government has COVID-19 under firm control, with fewer than 15 new infections per day. Authorities remain vigilant in case new clusters emerge in hospitals, churches and care homes. Mongolia appears well-insulated, with only 35 confirmed cases – all traced to overseas transmission.

General economic news

  • Japan – On April 23, the Japanese Government downgraded its economic assessment for the second consecutive month and warned that the economy is worsening rapidly. Personal consumption is ‘decreasing rapidly’ and so is business sentiment – to levels far below those seen during the global financial crisis.
  • Japan – The central bank has downgraded its forecasts, and now predicts a contraction in GDP –3% to –5% in the 2020 fiscal year. The official unemployment rate has so far only risen from 2.4% in February to 2.5% in March.
  • Japan – Demand for commercial lending increased sharply in the March quarter as SMEs and larger companies run short of liquid funds. Japan Finance Corporation, one of several government-backed lenders, says requests for funding have tripled since the end of March.

Impacts on key industries

Agribusiness and food

  • Japan – MAFF will act to reduce over-stocks of frozen wagyu beef (6,000 MT) through its affiliated group the Agriculture & Livestock Industry Corporation (ALIC). ALIC will use its wagyu sales promotion program to move stock. ALIC will also provide subsidies to cover cold storage costs and incentive payments for wholesalers whose sales plans are approved by ALIC (1,000 yen/kg for the first year and 850 yen/kg in the second year).
  • Japan – Snack producers are continuing to make products from Australian freeze-dried produce that is air-freighted twice a week to Narita.

Manufacturing

  • Korea – Rio Tinto reports no reduction in demand or deferment of shipments to date, although there is a significant drop in demand for Korea’s automakers – domestically and across the globe. There are concerns the second quarter will show a much sharper drop in demand for cars globally.
  • Korea – In-country reports say ship orders could drop by as much as 70% owing to reduced demand for bulk carriers. Shipbuilding is one of Korea’s principal industries, with an export value of US$20–40 billion per year.

Energy

  • Japan – The spot price for LNG cargo to Japan fell from US$5.9/mm Btu in January, down to US$3.4/mm Btu in February–March, and US$2.76/mm Btu for May deliveries. In February last year, the price was US$8.1/mm Btu.
  • Japan – With a 100% reliance on imported crude oil import, Japan may benefit from the oil price crash. Refineries are getting hit, though. Idemitsu Kosan has already seen its credit rating lowered, as financial institutions worry that price volatility could cause a material credit deterioration in the sector.
  • Japan – Some trading companies are heavily exposed to oil and gas production levels, including exchange traded funds (ETFs). The price of Nomura’s Crude ETF collapsed by 46.2% on April 22 to its lowest price since listing. ETF fluctuations could also potentially affect asset managers, as well as major public ETF holders like the Bank of Japan.

Infrastructure

  • Japan – Major construction firm Obayashi Corp announced it will stop activities at all 350 construction projects until May 6.

Financial services

  • Japan – Japan’s regional banks are increasing tie-ups with each other or with other non-bank businesses in an attempt to survive tough times. With negative interest rates and a falling population to contend with, stresses are becoming acute. Finance Minister Taro Aso told bankers recently: ‘The crunch moment for regional finance will come in the next two years’.
  • Japan – Fintech may be one survival strategy. Several regional banks are partnering with SBI Holdings Inc, a major financial services and asset management business. The new alliance is expected to jointly develop new online and fintech solutions. 

Retail

  • Japan – Department store owner, Isetan Mitsukoshi Holdings, is looking at losses. Sales at Isetan Mitsukoshi’s domestic outlets declined 7% in January and 16% in February. Sales then plunged 40% year-on-year in March, as Japan’s Government intensified efforts to keep residents at home.
  • Japan – Japan’s largest shopping mall developer and operator, Aeon, will provide part-time and casual workers with a special allowance. Payments will cover in-store service staff as well as workers at distribution centres and processing centres.
  • Japan – Pharmacy chains are also providing special allowances. Sugi Holdings (Aichi Prefecture) is to pay a special allowance to all employees including part-timers (who number 26,000). The company has approximately 1,300 stores. Maruki will provide special rewards to all staff including part-time staff.
  • Japan – Osaka-based supermarket chain, Life Corporation, has allocated a budget of ¥300 million to be paid to all staff as a gratuity for their work during the COVID-19 pandemic.

Travel and tourism

  • Japan – Japanese airlines may weather COVID-19-related storms better than others, owing to their relatively high working capital ratio: ANA’s is 42% while United’s is 20%, and Delta’s 24%. Regardless, both ANA and JAL are still on the verge of bankruptcy, and in the process of securing big bank facilities.
  • Japan – The Japan National Tourism Organization (JNTO) announced that the number of international visitors to Japan had plummeted 93% year on year to 193,700 in March 2020 due to global travel restrictions. The number of Australian tourists was down 80%.
  • Japan – Japan’s hotel occupancy rate nationwide tumbled to 32.5% in March, from 84.7% in March 2019. The occupancy rate in Tokyo was 25.5% and 24.4% in Osaka. Some hotels are temporarily shutting down or limiting the services they provide. 

Consumer behaviour

  • Japan – Many supermarkets are reducing flyers for special sale days as stores cannot secure the promised sale products owing to shortages or delivery delays. This has increased shopper anxiety, since consumers want to decrease the frequency of shop visits.
  • Japan – Consumers are frustrated with not knowing when some specific products such as masks and hand sanitisers will become available in their local stores. Frustration is also mounting over changes in store opening hours, and the reliability of ‘live’ information on store congestion.
  • Korea –COVID-19 is enhancing the appeal of online shopping for the 50+ age bracket. It is expected that online shopping sales vs offline will continue to grow, even after the social distancing period ends.

Government response

  • Japan – The Bank of Japan announced a second round of support measures on April 27. Its focus is helping companies secure funding more easily and preventing dislocation in financial markets. Measures include: increased bond purchases; an easing of lending terms for businesses; and increased purchases of government debt.
  • Japan – New foreign investment rules aim to protect sectors deemed critical to national security. Restrictions on investment in nuclear power and telecommunications will be expanded to cover the medical sector — specifically companies involved in vaccines, medicine and advanced medical equipment like ventilators.
  • Japan – Local governments will add their own financial support to local businesses. Buttressing national stimulus measures, 33 of Japan’s 47 prefectures say they will provide cash payments to businesses that have been asked to close under the state of emergency declaration.
  • Korea – On April 22, the Government announced an additional A$109 billion of commercial support. A boost of A$51 billion is aimed at businesses in seven key industries: aviation, shipping, shipbuilding, automobiles, machinery, power generation, and telecommunications. An additional A$45 billion will aid SMEs and small business owners. The remainder will be spent on job creation.
  • Mongolia – The Bank of Mongolia lowered its principal interest rate to 9%, its lowest rate since 2007. The central bank thinks the economy may shrink in the first half of 2020, and hopes it may grow 1.8% in the second. 
  • Mongolia – The Government will exempt 108,000 organisations from having to pay social insurance premiums for six months. The exemption covers employers and employees. The Finance Minister noted that companies involved in gold will not be exempted from the fees. This is due to the rising price of gold.

20 April

Japan declared a state of nationwide emergency on April 16 and COVID-19 infections broke the 10,000 mark three days later. In Korea, where infections plateaued six weeks ago, the rate of daily infections has fallen to its lowest level since Feb 18. The IMF predicts a major economic contraction for Japan in 2020 (-5.2%) and a minor one in Korea (-1.2%). Low export demand among Korean auto makers may impact demand for steel – and Australian iron ore and coal. Increased consumer interest in nutrition foods in Japan, e.g. honey, could trigger export opportunities for Australian companies.

Health & restrictions

Japan 

  • The total COVID-19 infection rate passed 10,000 on April 18, with over one-quarter concentrated in the Tokyo area.
  • Government authorities have requested citizens and businesses to exercise self-restraint and stay indoors.

Korea

  • In Korea, total cases have plateaued at just over 10,000, with under 30 new cases now being reported per day. Analysts attribute successful containment to aggressive testing, well-resourced health infrastructure, and domestic industries that produce vital medical supplies and devices.
  • The Korean Government is likely to reduce the intensity of its social distancing campaign to a ‘new everyday life’ quarantine campaign. This would require low-intensity distancing while allowing engagement in some economic and social activities. 

Mongolia

  • As of April 17, there were confirmed COVID-19 cases in Mongolia. Since January 2020, schools and universities have started online classes. The Prime Minister of Mongolia intends to extend all school and kindergarten opening until September 1 2020.

Economic Impact

Japan – the IMF forecasts GDP will fall by 5.2% in 2020. Private sector economists predict GDP will fall 6% in the June quarter.

Korea – The IMF has revised its 2020 GDP forecast to -1.2%, down from 2.2%. Korea’s growth prospects could be constrained by very weak external demand. This is due to the Korean economy’s heavy reliance on exports and low growth projections among principal trading partners.

Government Stimulus

Japan – A two-phased, A$250 billion stimulus package is intended to boost emergency responses and promote a V-shaped economic recovery. Phase One aims to support the medical system, households and employment. Phase Two will aid transportation, hospitality, events and entertainment. It will also promote economic resilience via digital transformation and more secure supply chains.

Korea – The Korean Government has committed more than A$200 billion in economic relief.  The stimulus ranges from household-level incentives to local retail spending. It also includes trade finance, support for start-ups and stimulus packages for financial markets. 

Mongolia –Companies and the self-employed will be exempted from social insurance payments and personal income taxes during the pandemic. The Bank of Mongolia, Ministry of Finance, Mongolian Mortgage Corporation and commercial banks have postponed mortgage repayments for three months.

Impacts in Key Industries

Food & Beverages

Japan – Food services companies report high inventory levels, due to the downturn of the high-end restaurant business. A lack of availability for some F&B product lines (e.g. from Europe) may create new entry opportunities — including Australian exporters with stable delivery systems. Once lost, supermarket shelf space is often difficult to regain in Japan.

Japan – Consumers are becoming increasingly sensitive to nutrition and immunity issues. For example, a local TV program broadcast on March 10 highlighting the health benefits of honey led to an immediate jump in sales of honey.

Korea – The closure of restaurants and schools has led to a decrease in domestic rice consumption. This has led to exports of surplus rice stock to Hong Kong and Malaysia at up to three times the normal market rate. 

Korea–Retail sales of Australian beef have increased by 10%. However, this is offset by the severely impacted restaurant and hotel trade, where sales of Australian beef have decreased by 40–50%. Shipment delays of Australian beef is causing concerns amongst Korean importers and food processors.

Exporters of perishable or high value agriculture and seafood products can apply for the Australian Government’s International Freight Assistance Mechanism (IFAM).

Manufacturing

Japan – Automakers and steelmakers have temporarily suspended production and shut down plants/blast furnaces to halt the spread of the virus and cope with declining demand.

Korea – Hyundai Motors and Kia have experienced significant decreases in their export volumes and have temporarily closed production plants. This fall in automotive demand and production may impact Australian exports of both iron ore and coal as the demand for steel production decreases. 

Retail

Japan – Supermarkets and convenience stores are considered necessary and so remain open, although some may have reduced hours. Restaurants and pubs are requested to shut down by 8 pm. Cafes are not required to close down but major coffee chains have voluntarily closed or have reduced operating hours.

Japan – Shopping centres over 1000m2 have been requested to cease operations until

May 6. Department stores in metropolitan areas were already voluntarily closing businesses one weekend before the government order came into effect.

Korea – There has been a sharp decrease in retail sales of non-food consumer items with all major department stores reporting sluggish sales.

E-commerce

Japan – Online sales of food staples and fresh foods have grown strongly, leading to some shortages and delays. Some supermarkets have stopped selling food via ecommerce as a result, although the Government is assuring consumers that supply chains are sound. E-commerce sites are required to stop selling masks and other scarce items at significant mark ups.

Korea – Korea’s well established e-commerce and integrated logistics networks have helped e-commerce to thrive. Online sales mostly compensate for the downturn in retails sales of food and beverages.

Education

Japan – Most universities have delayed the start of their new term until May 7. Traditional preferences for paper-based materials and face-to-face meetings are being challenged, although many institutions are struggling to establish alternative online programs and teaching modules.

Japan – Digital learning is more prevalent among private education companies, such as cram schools, than at schools and universities. However online overseas study holds limited attractions as parents and teachers see the value-add in terms of overseas lifestyle experiences. Therefore, an uptick in overseas study will likely only occur after travel restrictions have been lifted.

Korea – The travel ban has severely impacted the education sector. The new school year will start a phased introduction of online classes from April 9, with online classes opening for year 9 and year 12 students first. Universities are offering lectures online but students have raised concerns about quality.

Defence and Security

Japan – A supplementary budget to improve the Japanese Ministry of Defense and Japan Self Defense Forces capabilities for COVID-19 response was approved, for disbursement in the April 2020–March 2021 fiscal year. Spending will likely focus on negative pressure isolation treatment rooms, artificial respirators, more ambulances, ‘maneuverable medical units’ and – potentially – a hospital ship.

Telecommunications

Japan – The volume of internet data used in Japan has grown 40% in the last month, prompting overload concerns. Japan’s largest telecommunications provider, NTT Communications, says it has the capacity to handle twice the current data load. As data usage continues to rise, however, the network may come under pressure. 

Tourism

Japan – The number of inbound tourists fell by 93% year-on-year in March. Japan National Tourism Organization (JNTO) is building a post-COVID recovery strategy. Local regions and tourism providers have halted marketing and promotional activity until the COVID-19 situation improves.

Logistics

Japan – The cessation of most commercial passenger flights between Australia and Japan has cut freight options. However, ANA has announced that it will increase its freight-only services between Australia and Japan.

Japan – The closure of several airports in Japan has disrupted logistics and increased distribution costs. There are delays to sea shipments due to delayed port operations and a lack of sea containers. Exporters should keep in touch with freight forwarders to check the latest flight or sea shipment schedule as these could change at any time.

Professional services

Japan – M&A, project finance and start-up business activities have slowed. Many professional and financial services firms are now marketing ‘business-recovery advisory’ and ‘risk mitigation’ services to manage the impact of corona virus services.

Cosmetics

Japan – The increased use of face masks has triggered a rise in skin-irritation complaints. The sales of skincare products including exfoliators, cleansers and wipes and facial masks are 50% higher year-on-year; the make-up category is depressed. 






South Asia update

1 May 2020

With one week of Lockdown 2.0 still to run, the total number of coronavirus cases in India reached 28,000. The most affected areas are Delhi, Gujarat and Maharashtra: these are among India’s most industrialised areas, so the economic recovery may be slow. Current reports indicate the lockdown will be lifted in phases, with most urban centres set to face ongoing restrictions. In Bangladesh, exports have dropped by over one-quarter as apparel orders dry up. Despite severe economic dislocation, Sri Lanka will press ahead with Parliamentary elections scheduled for June 20.

General news

  • South Asia – Remittances to South Asia are projected to decline by 22% to US$109 billion in 2020. This is a significant deceleration compared with the growth of 6.1% in 2019. A World Bank report has projected that remittances to India could fall by about 23% to US$64 billion in 2020 – a striking contrast from the growth of 5.5% with receipts of US$83 billion in 2019. 
  • Bangladesh – Bangladesh exports have taken a fall as a result of the COVID-19 crisis, missing their March target by 28.61%. The country exported goods worth $2.7 billion in March, which represents an 18.3% year-on-year drop.
  • India – With about a week to go before the second lockdown period ends, the total number of COVID-19 cases in India has reached 28,000. Maharashtra, Delhi and Gujarat are the states most affected by the disease. Most states have prevented industry from reopening their factories and many are recommending that the lockdown be extended further.
  • India – Experts claim Indian GDP may turn negative if the economy doesn’t gain a reboot. A stimulus package worth 5% of GDP is mooted. The IMF’s predictions for most countries’ GDP is currently either negative or sub-2%. 
  • Sri Lanka – Parliamentary elections are scheduled to be held on June 20. This avoids a constitutional crisis but carries the risk of increased COVID-19 infections.

Impacts on key industries

Agribusiness and food

  • Bangladesh – Australia may see a significant drop in milk powder exports as a result of coronavirus fear. A rumour on social media that ice-cream consumption would lead to catching coronavirus has seen ice-cream sales drop dramatically. Igloo Ice Cream, which has a 42% share of the market, reported that sales have ‘nosedived’. The rumour also emerged at the start of the peak season for the A$280 million ice-cream industry (March to June).

Retail

  • India – India is allowing smaller neighbourhood stores to reopen, including standalone stores in housing complexes in municipal areas. However, shops in marketplaces within municipal areas and all malls will remain closed until May 3. This means premium Australian products are likely to suffer as malls and department stores remain closed.
  • Sri Lanka – Flitch Ratings says demand for non-essential goods and services will be severely hit in Q2 2020, with a gradual moderation of the impact in Q3 and Q4 of 2020, provided the pandemic is brought under control. The Sri Lankan retail market is worth A$500 million. With discretionary spend impacted, it is expected that demand for clothing, whitegoods and consumer durables will slow down. Import restrictions may further dampen retail activity. 

E-commerce

  • India – A combination of extended lockdowns and a government prohibition on the selling of non-essential items by e-commerce companies has started to have an impact. The sale of non-essential items makes up 85% of turnover for e-commerce platforms. Without a clear e-commerce roadmap to improve logistics and restrain costs, it will be harder for the industry to recover, and for import and export activity to ramp up. This will affect the availability of several brands from Australia.
  • India – Reliance has started testing its online shopping portal days after Facebook said it would invest US$5.7 billion in digital assets controlled by the company’s billionaire Chairman Mukesh Ambani. JioMart, an e-commerce venture of Reliance Retail, is serving users in three neighbourhoods surrounding Mumbai. The shopping app is available via Facebook’s WhatsApp platform, which has about 400 million users in India.

Infrastructure and construction

  • India – Labourers are returning to work on railway, road and steel projects. The labourers, who had been stranded in states across India, were surveyed for their skills and then mobilised and dispatched to project sites within those states. The process began after the government gave its nod to restart core sector activities from April 20.

  • India – Property brokerage firm Anarock said cash-starved builders are sitting on 78,000 ready-to-move-in housing units worth A$13.5 billion across Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad and Pune. The unsold ready-to-move-in units comprise 12% of the total unsold stocks of over 650,000 units. The remaining 88% are under construction. This is likely to impact Australian architects, urban planners, technical consultants and product suppliers.

  • India – An Indian analytics company, CRISIL, forecasts zero demand for steel and allied components for the building, construction and infrastructure sectors – until at least mid-May. Weak government demand is the apparent cause. However, social welfare projects that trigger rural employment and development are likely to pick up. This could benefit Australian steel manufacturers, timber exporters and building material suppliers.
  • India – Indian Railways will carry out its long-term capacity-upgrade plan. The Minister of Railways has identified 19 areas which need policy and technology interventions, including increasing the average speed of trains; enhancing track capacities; deploying artificial intelligence solutions; reducing train turnaround times; and increasing surveillance using CCTVs.

Logistics and supply chain

  • India – Logistics service providers look set to only handle shipments when they receive full advance payments. This arrangement will be in place for the next six months. The move is intended to help logistics companies improve cash flow.
  • India – The Ministry of Shipping has ordered major ports to remit various charges to port users, including storage charges, lease rentals and penalties. Ports must also offer additional land for storage at no charge. The moves should enable Australian logistics service providers to renegotiate commercial contracts.
  • Sri Lanka – Container trans-shipment business at Colombo Port has been hit by lockdowns in India and Bangladesh. The port’s three container terminals have been operating throughout the crisis at full capacity, but vessel callings are starting to fall. There are now close to 40,000 TEUs at the port, which has caused massive difficulties and delays. With port congestion and supply disruptions, wholesale and retail trade may face significant challenges, as Sri Lanka relies heavily on imports. In addition, worsening exchange rates, import restrictions and declining real incomes are expected to hamper economic recovery.

Technology

  • India – Following the A$8 billion tie-up between Facebook and Reliance, collaboration between the two companies is expected to focus on JioMart, which is Jio’s small business initiative. With regulatory clearance for the services, the JV will enable customers to purchase goods from small shops and business on mobile devices. The new retail platform – and others like it – provide new market entry opportunities for Australian producers.
  • India – The US$150 billion Indian IT outsourcing industry has had domestic challenges. Given the equipment and data security issues involved in home working, some companies have invited staff to live at their place of work. Vodafone India has organised temporary stay arrangements at data centre locations, and made food and groceries available. The outsourcing industry employs four million people in India.
  • India – Robots are making their presence felt. Indian company Milagrow has deployed two of its locally developed robots at the COVID-19 ward of AIIMS Delhi. The Milagrow iMap 9 cleans floors, while the Milagrow Humanoid ELF robot enables doctors to remotely monitor and interact COVID-19 patients.

Health 

  • India – The Indian Council of Medical Research (ICMR) has halted the use of China-made COVID-19 test kits, citing performance concerns. Lack of reliable testing is making it harder to check and contain the pandemic.
  • India– On April 24, ICMR approved a probe-free COVID-19 detection assay, or test, developed at the Indian Institute of Technology in Delhi (IIT-D). The institute becomes the first to have obtained ICMR approval for a real-time diagnostic assay that uses polymerase chain reaction (PCR) techniques. This achievement may signal increased opportunities for international collaboration.
  • India – Vaccine maker Serum Institute of India will begin production of a COVID-19 vaccine developed by Oxford University in the next two to three weeks. This would enable the vaccine to become publicly available in October if human clinical trials are successful. The Pune-based company is one of seven global manufacturers to partner with Oxford. Serum Institute hopes to produce 5 million doses per month for the first six months, then double production.

Resources and energy

  • India – Coal India Limited is continuing full production, despite high stockpiles. It anticipates low production during the June–September monsoon and a pickup in future demand.
  • India Government-owned coal and lignite company, NLC India, resumed operations on April 9 after a two-week shutdown.
  • India Ore-mining companies are resuming operations. Hindustan Copper, Hindustan Zinc, Hindalco and Vedanta Aluminium had either curtailed or discontinued production. They are now planning to ramp up activity. Aluminium miner, NALCO, continued operations at normal levels. 
  • India –Most large steel manufacturing plants are operating at a lower-than-normal capacity, while others are planning to resume operations shortly. However, many small plants are closed. Similarly, large iron ore mines tend to be operating, while several smaller mines are not.

  • India Iron ore exports are expected to decline by about 25% due to the closure of ports, a shortage of workers and transport restrictions.
  • India – With the transport sector operating at low capacity, demand for oil will stay weak for a while. As a massive net importer of oil, however, purchasers are likely eyeing Middle East cargoes to increase its strategic petroleum reserves (SPRs). India’s capacious SPR caverns are currently only 56% filled – and the country imports 80% of its crude needs.
  • India – Gas is a different story. With Indian LNG storage tanks nearly full, Indian LNG importers continue to refuse cargoes citing force majeure. There has been a sharp decrease in natural gas demand with the COVID-19 lockdown, due to a fall in industrial consumption – in particular in the chemicals and ceramics sectors – as well as for transport and domestic use.

Manufacturing 

  • India The Indian PM has urged state premiers to develop policies to attract foreign investment into manufacturing and to delineate special economic zones. Commentators say the policy move may seek to capitalise on positive global sentiment towards India. India’s labour costs are approximately one-third of China’s.
  • India The southern Indian states of Karnataka and Tamil Nadu have declared aerospace and defence industries to be ‘essential public utilities’. Local companies make precision aero-structures components for Boeing and Airbus, and other defence companies. Manufacturing companies in these sectors are now resuming work at some sites, albeit with leaner workforces.
  • India To support the fight against COVID-19 and accelerate global collaboration, Lyonbiopole, Evaluate Ltd. and Inova are organising a free Virtual Partnering Event for organisations with solutions for COVID-19 testing, treatment and prevention. The event is supported by

24 April 2020

India has revised its Foreign Direct Investment (FDI) regulations to limit opportunistic takeovers. Investors from China will likely be most impacted; those from Japan, South Korea and US may benefit. There is widespread dislocation of food supply chains, but demand for some Australian produce is rising, including almonds in India and lentils in Bangladesh, with e-commerce taking a significant leadership role across Tier 1 cities. This week, media has reported that Facebook has taken a 10% stake in Reliance Retail. The US$5.7 billion investment is a significant boost of FDI in the e-commerce sector in India. With a ban on passenger flights since March 22, Indian airlines are encountering financial turbulence.  

General news

  • India – In a strategic move to ward off opportunistic overseas takeovers, the Indian Government has amended its FDI regulations. Investment from companies whose ‘beneficial ownership’ originates in China will not be able to make corporate investments by the so-called ‘automatic’ route. Henceforth, such investments will require official approval.
  • India – Reversing an earlier decision, the Indian Government will now permit e-commerce platforms to deliver non-essential goods. Small retailers – kirana stores – welcome the news. Food delivery apps such as Zomato and Swiggy have joined Dunzo to deliver groceries and online pharmacy. Netmeds has teamed up with Reliance Retail.
  • India – The Indian Government has revised movement restrictions for stranded labourers. From April 19, labourers can travel to their place of work if it is within the same state – though with conditions. Home Secretary Ajay Bhalla confirmed no inter-state movement of workers would be allowed during the lockdown, which is due to last until May 3.
  • Sri Lanka – Sri Lanka’s lockdown will be eased from April 27. Government departments and agencies within Colombo District will open offices to one-third of their regular staff. Transport services will run at full schedule, but the government wants buses, vans and rail carriages to operate on 50% passenger loads.
  • Sri Lanka – The Finance Ministry will restrict imports of 156 items to maintain currency reserves and prevent a steep depreciation of the Sir Lankan Rupee. Restrictions include rice, flour, sugar, apparel and liquor. The rules will be enforced via payments regulations, and the ability of banks to accept letters of credit. Restrictions will last until July 15.
  • Bangladesh – Bangladesh’s vital textile industry is in crisis. Up to 2.2 million workers are now affected by the cancellation of A$3.17 billion worth of orders from global clothing brands, including Walmart, H&M, Gap and Target. Approximately 1,140 factories are impacted.

Impacts on key industries


Agriculture and food

  • India – In India’s northwest provinces, low urban prices and labour shortages are compromising harvests, with some produce being left to rot. Incomes for poor, rural workers are also falling, leading to reduced consumption of fruits and vegetables.
  • India – Many non-fresh foodstuffs are in high demand, including almond meal. India is Australia’s largest almond export market and these products are viewed as ‘healthy’ and a post to immune systems.
  • India – With hotels shut and liquor stores closed, importers of Australian wines and beers report that sales have dried up. Australia has a 30% stake in the imported wine market in India in 2018 – the largest supplier country of wine to India by volume. Importers are optimistic that sales will rebound when lockdowns are reversed. Rumours are rife of excise-duty increases, although importers believe consumers of overseas brands will shoulder price rises.
  • Bangladesh – Australian lentils are in demand as a cheap source of protein for stranded daily labourers and the poor. In 2019, Australia exported about 210,000 MT of chickpeas and 242,000 MT of red lentils. Australia supplies around 80% of Bangladesh’s consumption of chickpeas. With Ramadan approaching – when 50% of the annual consumption happens – the Bangladeshi Government is keen to ensure imports of essential commodities.

Resources and energy

  • India – Mining continues at pits belonging to Coal India and Singareni Collieries. Lower power demand has led to record stockpiling at pitheads and power stations. To boost liquidity, Coal India is trading with power station customers via usance letters of credit – which are forms of deferred payments.
  • India – The steel sector and related mines are running at reduced capacity owing to logistics and supply chain constraints. SAIL, RINL and Tata Steel are maintaining substantial production levels; JSW and AMNS have suspended operations. Other metal production and mining activities are halted or running at low capacities.
  • India – Some aluminium, copper and zinc producers have suspended operations. These include Hindustan Copper, Hindalco and Hindustan Zincan, although all three are now considering a phased resumption.
  • India – The contract mining sector is heavily affected, and most, smaller mine developers and operators (MDOs) have suspended operations. JMS and BGR are operating; Thriveni and Sainik are closed.
  • India – Demand for oil and gas products has drastically reduced. Force majeure clauses have been widely invoked, both between suppliers and intermediaries, and intermediaries and end customers. 

Modern retail

  • India – According to corporate leaders contacted by Austrade, retailers are likely to tweak their supply chain and distribution strategies over the next 12 months to focus on online sales. According to sources, approximately 40% of consumers say they will increase their online purchases by more than 20% in the post-COVID-19 environment.
  • India – Online grocers in major cities are juggling surging demand and staff shortages. Nevertheless, India’s largest online grocer, BigBasket, is reportedly hiring 10,000 permanent staff to clear its backlog. Flipkart is also mobilising its resources.
  • Bangladesh Sales in Bangladesh’s 250-plus supermarkets are surging. Since the outbreak began on March 8, supermarkets have posted a 40–50% spike in sales. This may reflect customer sentiment that modern-style retail grocery stores expose them to fewer hygiene risks than traditional outdoor markets. Demand for Australian packaged food and juice has risen strongly.
  • Sri Lanka – A steep increase in online retail has led to availability issues for e-commerce vendors. Taking advantage, fraudsters have stepped in, promising to satisfy ‘lockdown cravings’. Legitimate online retailers are learning to cope with demand.

Infrastructure and construction 

  • India The value of infrastructure and construction tenders has declined by 48%, compared to this time last year. Projects involving roads, irrigation, railways, real estate and new hospital contracts are most impacted. The A$1.3 trillion National Infrastructure Pipeline may be delayed, and the 2020–21 National Highways Authority of India construction program may be curtailed.
  • India – A Knight Frank India survey shows sentiment in the real estate industry at a low ebb. Currently, transactions are at a standstill: new projects are difficult to launch; existing projects are difficult to complete. Australian architects, urban planners and technical consultants may encounter tough conditions in the medium term.
  • India – The Indian Government has announced a A$5 billion stressed asset fund (AIF) to provide last-mile funding for stalled affordable housing projects. The Reserve Bank of India (RBI) has allocated A$2 million to the National Housing Bank. To aid cash-starved developers, the RBI is easing terms for project loans to commercial real estate projects.
  • India – The government’s move to stop toll collection during the 21-day nationwide lockdown is set to push toll collection into negative territory for FY 2020 and 2021. The last time toll operations halted, a restart took two quarters.
  • India – Last week, Japan’s government earmarked $2.2 billion to help manufacturers diversify supply chains and reduce dependency on China. Australian logistics, consulting firms and equipment suppliers active in Japan and India have started targeting these potential customers.

Supply chain

  • India E-commerce is pushing hard into fresh delivery opportunities. Electric bike sharing platform Yulu is partnering with Big Basket, Licious and Dunzo. Medlife is fulfilling around 1,000 orders every day across major Tier 1 cities. Another bike rental startup, Bounce, has partnered with around a dozen companies to deliver essential items.
  • India – The Aviation Ministry has directed airlines to issue refunds to customers who purchased tickets pre-lockdown. Airlines had initially relied on issuing credits. Ticketing liabilities are estimated at A$1.25 billion. The deteriorating financial health of airlines in India will likely impact cadet training programs, some of which take place in Australia.
  • Bangladesh – Cargo-handling activities have increased in Chattogram/Chittagong to permit the handling of essential commodities in the run-up to Ramadan. Currently, port authorities are operating 24 hours a day to maintain throughput. Australian lentil and chickpeas are mostly imported via containers; however, bulk vessels are also used.

Technology

  • India IT and IT-enabled services companies plan a phased return to work, in line with official guidelines. Employees will likely encounter an increased demand for service digitisation throughout the economy, and in particular in education and health. Cyber security skills will also be in demand. 

Health

  • India – The Indian Council of Medical Research (ICMR) has received 99 applications from institutes wanting to participate in a COVID-19-related randomised controlled study. The study will assess the safety and efficacy of using convalescent patients’ plasma to limit complications associated with the disease.
  • India – India has removed export curbs on formulations from Paracetamol. This means that formulations made from Paracetamol, including FDC (fixed dose combinations), under any ITCHS code, are made ‘free’ for export with immediate effect. However, Paracetamol APIs will remain restricted for export.
  • India – From May, India is set to locally produce one million kits each per month of RT-PCR and rapid antibody detection tests for COVID-19. This will reduce dependence on imports amid soaring global demand.
  • India – At present, India’s ventilator manufacturing capacity is 6,000 per month. India has identified 1,919 facilities across the country suited to becoming dedicated COVID-19 facilities. These facilities contain 173,746 isolation beds and 21,806 ICU beds.

Manufacturing

  • India Plans for electric vehicle (EV) manufacturing in India are taking a knock. Analysts anticipate that, to be viable, there needs to be greater localisation of components – including EV battery manufacturing. Also, existing motor-manufacturing supply chains may have to be widened. Currently, China, Japan, Korea and Taiwan predominate.

Education

  • India – The Indian Government will launch online training, called iGOT, for frontline COVID-19 health workers. It will deliver courses in Clinical Management, Infection Prevention through PPE, Infection Control and Prevention, ICU Care and Ventilation Management. There may be partnership opportunities for Australian edtech companies.

Government stimulus programs

  • Bangladesh – The Bangladeshi Government has asked the World Bank to disburse US$250 million of credit. It forms part of a US$750 million credit facility agreed with the World Bank to provide budgetary support.
  • India Migrant labourers and poorer communities will likely gain priority support from a soon-to-be-announced government stimulus package. Support for the aviation industry looks less imminent.
  • India – The Ministry of Defence will need to cope with a tighter budget during the first quarter of the 2020-2021 financial year, reports Jane’s.

16 April

Indian Prime Minister, Narendra Modi, announced on April 14 that the current lockdown will be extended until May 3. Migrant and low-income workers have been the hardest hit. Labour availability is constraining supply chains, port infrastructure and the movement of goods across state borders. Manufacturing analysts estimate that production of essential items is currently operating at 20–30% of capacity, although this is an improvement on a week ago. Edtech is booming, and startups are marketing products in the digital learning sector.

The pandemic is accelerating evolution in retail and e-commerce. A new Insight article by our Trade Commissioner explores the trends and opportunities.

General News

Bangladesh – The delivery of perishable goods from refrigerated containers at Chittagong port has slowed, as storage facilities for refrigerated containers has surpassed capacity.

India – The lockdown has left millions of migrant workers in limbo. Most are unable to return to their villages or towns; workers that did return are unwilling to venture back. The sectors most impacted are farming, construction and logistics. Food security is a growing concern.

India – In his April 14 announcement, Prime Minister Modi said some essential activities could be allowed after April 20 in parts of the country that showed improvement in fighting the infection. All passenger flights remain suspended until May 3.

India – Aggregate demand will weaken significantly in the near future, which will impact growth prospects for the year as a whole. Despite this, the IMF predicts India’s GDP will grow 1.9% in 2020 – one of the few major economies to maintain growth this year.

Nepal – The Government aims to save foreign exchange by temporarily banning the import of high-end vehicles and alcoholic beverages.

Sri Lanka – In lockdown since March 18, Sri Lanka’s economy is in crisis. Almost all industries are shut, apart from essential services such as water, electricity, fuel and food distribution and medical supplies manufacturers. Exports and imports are seriously affected.

Impacts on key industries

Agriculture

Bangladesh – Farm-level dairy milk prices have dropped substantially due to a lack of processing facilities and buyers. Supply chain disruptions, coupled with low demand, have put a strain on farmers. Australian dairy cattle are being used by four of the large dairy farm companies in Bangladesh, which is around 500+ dairy cattle.

India – The lockdown will exacerbate disruptions to food supply chains. The principal hurdles are labour shortages and transport availability. As a result, harvesting, storage and the transport of foodstuffs from farm to local markets is becoming patchy in some areas. Labour shortages mean perishable products may spoil at multiple points in the supply chain.

India – The winter harvest in the northern ‘bread basket’ provinces of Punjab, Haryana and Uttar Pradesh are being impacted by the non-availability of migrant labour. Mechanical harvesting would need to appear by mid-April to save crops.

India – The Indian Pulses and Grains Association (IPGA) estimates output for 2019–20 will suffer owing to erratic rains. The production target for pulses and grains for 2019–20 is 26.3 million metric tonnes (MT); there is now an anticipated shortfall of 10%. Approximately 2.5 to 3 million tonnes of imports – including lentils – will be needed, according to the IPGA.

Food

India – There are growing concerns about food security in India, as a result of migrant labour shortages, breakdowns in logistics (see below), and interruptions to warehousing activities. Presently, Australian lentils are in high demand and are being shipped from Port Adelaide and Melbourne in substantial volumes.

Sri Lanka – Sri Lanka imports a range of essentials, including rice, wheat, sugar, dhal and milk powder. There are worries that prospective export restrictions from South Asian countries and China may severely impact supplies.

Modern retail

India – Alcohol has been flagged as a ‘non-essential’ commodity and cannot be sold during India’s lockdown. Australia supplies around 30% of the imported wine market. Although retail sales will restart after the lockdown, importers forecast that trade sales in hotels and restaurants may take about six months post-lockdown to return to normal. A ban on foreign wine imports in Nepal and the decline of the tourism industry in Sri Lanka will also have a significant effect on Australian wine exports to the region.

India – According to the Retailers Association of India, by the end of February 2020, business had dropped 20–25%, with a further fall of 15% since then. India has over 1.5 million retail stores that generate A$101.9 billion worth of business and employ almost 6 million people.  

India – Modern retail is functioning with lower staffing levels and supplies, and social distancing rules are being promulgated. In Tamil Nadu, authorities have allowed retail to operate until 2.30pm only. Media reports anticipate that up to 30% of modern retail stores face closure if the current lockdown continues.

India – Soft fruit importers in Tamil Nadu report that retail operations were disturbed intermittently last week, due to intra-city logistics and local policing. The ‘new normal’ involves retailers taking orders through WhatsApp, and delivering through Dunzo/Store pickup. Labour shortages at ports in the south are also impacting import capacity.

Supply Chain

India – The complete stoppage of Indian public railways is having a profound impact on labour availability. The rail network is the principal mode of transport in India. The 121,407 kilometre rail network conveys over 8 billion passenger journeys per year. Usually vital urban networks are also at a standstill.

India – Warehousing operations across the country are slowing. This is partly owing to a widespread refusal on the part of local labour to travel into logistics centres in towns and cities, fearing infection. Workers also fear transmitting infection into their villages. Food wholesale markets are also threatened as they rely on hired labour.

India – Road haulage is also in crisis. Almost 90% of goods move on trucks across India, and currently an estimated 350,000 of them are stranded, carrying A$7.52 billion of goods. A telling indicator of the recovery in supply chains, will be when trucking operations return to normal, since that will show that cash flows are easing and goods are changing hands.

India – Congestion at ports is exacerbated by truck stoppages. As of April 9, thousands of trucks loaded with inventory are stuck at warehouses, ports and highways, blocking supply chains. Food and beverage importers from Australia are impacted, including those importing grains, processed foods, wines and health foods.

India – E-commerce companies have witnessed a surge in their orders but have hit supply chain and labour challenges. Indian Railways will now start special trains for e-commerce. So far, Indian Railways has loaded 30 special parcel trains and are looking to identify various other routes, across the country. Indian Railways is also providing on-demand train services for essential commodities. In the last three days, it has delivered more than 7,195 wagons of food grains and other essential commodities.

Ports

Bangladesh – As yard storage approaches 92% capacity at Chittagong Port, carriers are putting shipping agents on the hook for reefer-related charges. The port has a capacity of 1,400 plug-in facilities for reefer-containers and all of them are occupied, forcing the port to arrange additional plug-ins for reefer-containers. These additional plug-ins are now also occupied.

Bangladesh – With near-zero reefer capacity at Chittagong, shipping companies are holding back their reefer-containers in Malaysia or Singapore. As of April 15, only 500 TEU containers were delivered from the port instead of the usual 4,000–4,500. Congestion is likely to last at least until the end of April.

India – The largest port in India, DP World Nhava Sheva (JNPT), and Mumbai Port Trust are both coping with heavily reduced workforces. Disrupted export-import trade and slipping carrier schedules have led shipping lines to start skipping JNPT and Mundra port, with weekly services now running every fortnight.

India – Port operators at Mundra and JNPT are urging importers to evacuate containers quickly, as operations are becoming choked. Ship owners are reluctant to dock at Indian ports as they fear having to sail without export containers, which are scarce because of non-clearance. This may lead to an increase in freight rates for imports. JNPT has waived dwell-time charges on alternate transport routes until April 14.

Property and construction

India – On March 28, the Reserve Bank of India injected liquidity, cut the repo rate and instigated a three-month moratorium on all term loans by financial institutions. This will aid developers. If uncontained, however, the pandemic will adversely hit developers’ cash flows and project delivery capabilities.

India – Maintaining labour is a major challenge for contractors. According to latest intelligence, most construction workers remain on-site, but delays in receiving construction materials is impacting schedules. Even if construction ceases, workers still need to be paid to keep them on site. Conversely, labourers who have returned to their towns and villages will need to be enticed back when construction resumes.

India – Demand has slowed in the residential and commercial segment, which has reduced sales, delayed project launches and arrested the growth in India’s urban infrastructure sector.

India – The COVID-19 outbreak has closed malls, retail outlets and entertainment venues. This could put future real estate deals and projects on hold. Home buyers are likely to postpone purchasing a property as they wait for clarity on their job security.

India: With many government departments adopting austerity measures (see below), India’s planned US$1.5 trillion spending on infrastructure projects will be temporarily curbed. Until spending restrictions are lifted, this will likely limit opportunities for foreign consultants and equipment suppliers – particularly for projects funded by departments that are deemed ‘non-essential’.

Technology

India – Edtech companies are witnessing a surge in demand. Some companies are offering free online classes or attractive discounts on e-learning modules. Well-known companies like Byju’s and Unacademy are offering classes for free until the situation improves.

India – Analysts say the disruption caused by the COVID-19 lockdown will: accelerate innovation in digital technologies; speed migrations to the cloud; boost adoption of Industry 4.0 technologies; increase collaboration among startups; encourage utilisation of B2B supply chain platforms; and expedite the role of digital technologies in retail.

India – The new ‘work from home’ norm poses security challenges for government departments and businesses. Pre-pandemic, neither technology nor operations nor policies were typically geared for secure home working. In the past few weeks organisations report a spike of 40–50% in phishing alone. Most organisations believe that cyber vulnerability will have long-term negative impacts on their organisations.

Industrial

India – The lockdown has led to a drastic reduction in fuel demand and most refineries in India are running at approximately half capacity. With storage capacity exhausted, refining companies have cut their run rates and issued force majeure notices to global suppliers, deferring most April deliveries.

India – GAIL, the state-owned natural gas processing and distribution company, has received force majeure notices from large fertilizer, power and refinery customers. As a result, GAIL is invoking force majeure clauses with suppliers, Gazprom, Petronet and ONGC.

India – Petronet LNG, India’s largest gas importer, has declared force majeure with respect to purchase contracts with suppliers from Qatar and Australia. Demand cut notices from GAIL, GSPC and other smaller buyers have forced an 18% gas output cut at ONGC, India’s largest gas producer.

India – Domestic power demand will likely rise as more people stay indoors and work from home. Commercial and industrial electricity demand is likely to fall. India’s peak electricity demand dropped from 163,729 MW on March 20 to 145,495 MW on March 23. This drop may cast doubts on anticipated additions to conventional energy power-generating capacity.

Manufacturing

Bangladesh – The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) says buyers have so far cancelled orders worth A$3 billion. Approximately 1,092 factories reported that 943 million product items have either been cancelled or held up, as of the first week in April. This impacts 2.16 million Bangladeshi workers. There will likely be a knock-on impact for Australian cotton exports to Bangladesh.

India – Production of fast-moving consumables may be improving slightly. A prominent biscuits maker has reported the company’s manufacturing facilities are running at 25% capacity, while a detergent and shampoo manufacturer said its facilities were operating at 25–30% capacity. This compares with 15–20% capacity last week at biscuit factories and less than 10% at detergent and soap facilities.

Consumer sentiment

India – Online food delivery aggregators such as Zomato and Swiggy are eager to deliver food, but customers are afraid of placing orders from restaurants. The two main concerns are the health of the delivery person and the hygiene standards of the restaurant.

Government stimulus programs

India – Both Union and State Governments acknowledge supply chain disruption and the potential for widespread food shortages, and are seeking to provide solutions. These include providing tractors, labour subsidies and assistance with freight movement. It is not clear how soon measures taken now can have a practical effect.

India – The Government of India has asked some departments to adopt austerity measures, which include cutting expenditure by 20%. Some ministries critical to combating the Covid-19 outbreak are exempted, and these include ministries responsible for health, pharmaceuticals, consumer affairs, rural development, railways and civil aviation. Conversely, those responsible for road transport, petroleum, food processing, water and sanitation will be reviewing their projects.

India – The National Innovation Foundation (NIF) will fund citizens who have developed COVID-19 related solutions and with to scale up their innovations. The NIF, an autonomous institute under the Department of Science and Technology, has invited citizens to participate in its Challenge COVID-19 Competition and share ideas that can supplement national efforts.

Sri Lanka – Weather-related challenges are compounding fears of coronavirus-induced food shortages. The Government hopes to increase self-sufficiency, which includes encouraging home gardening. This may provide opportunities for Australian seed exporters.






UK, Europe, Russia and Israel update

29 April 2020

The big automakers – including Volkswagen, Daimler and Skoda – are revving up their European plants. Across the continent, the race to find a COVID-19 vaccine sees established pharmaceutical firms wooing nimble biotechs, with Pfizer partnering with Germany’s BioNTech. Oxford’s Jenner Institute looks like being first into human trials. Phased lockdown reversals are underway, though consumers may impose a new normal on retail businesses – especially in the food sector. The EU predicts the pandemic will trigger a 9.2% drop in EU27 exports, and an 8.8% drop in imports. Meanwhile, in UK’s locked-down households, wine merchants are rushing in where brewers cannot tread, and the average price of retail wine shows a steady rise. Australian winemakers could benefit.

Lockdown reversals

  • Czech Republic – On April 24, the ban on free movement was lifted. People can meet in a group of up to 10. Church services can be attended by up to 15 people. Shops up to 2,500m2 can open. Gyms and fitness centres can also start operating (with some hygiene restrictions). Driving schools, zoos and botanical gardens are also open.
  • Czech Republic –On April 27, EU citizens travelling for business and university students from EU countries were permitted to enter the country. Czech citizens can travel abroad; however, on return they must submit to a 14-day quarantine period or undergo a COVID-19 test with a negative result. The government would like to extend the lockdown until May 25.
  • France – On April 28, Prime Minister Edouard Philippe presented a national strategy to reopen the French economy from May 11. The National Assembly immediately approved the plan. It includes asking the public to wear masks in public, a target to conduct 700,000 tests per week from May 11, and a gradual opening of businesses. Shops and markets will be opened, bars and restaurants will remain closed. Plans for a COVID-19 contract-tracing app are still being formulated.
  • Israel –On April 26, open malls and street-facing stores (including hairdressers) were allowed to operate, restaurants can sell takeaway food, and the need to maintain a 500-metre radius from home was lifted. Face masks are now obligatory outside.
  • Italy – The Italian Government has released its Phase 2 plan for the gradual reduction in restrictions to take place from May 4 onwards. The ‘low-risk’ industries set to recommence next week include manufacturing (particularly export production), textiles and fashion, automotive (including Fiat Chrysler) and construction. Strict health safety measures will apply, including staggered shifts, distancing, face masks and regular sanitisation. Laboratories and all other research activities will also recommence from May 4. Going forward, the retail sector, as well as museums, exhibitions and libraries, will reopen on May 18. Bars, restaurants and hairdressers are expected to resume operating on June 1.
  • Poland – Poland is considering when it will start lifting restrictions as part of the second stage of reactivating its economy (currently either May 4 or May 11). The third stage would include opening hotels, hostels and DIY stores on weekends, and opening some public institutions.
  • Russia – Twenty-one regions in addition to Moscow are introducing digital passes to enable travel by public transport or private cars.
  • UK – Plans are being drawn up for a return to commuting, with train services to increase gradually but passenger numbers are likely to be capped at 30%. Certain professions, such as office staff, will initially be discouraged from travelling to the workplace. The construction industry is planning to restart worksites and some fast food retailers are opening stores.

Agribusiness and food

  • Europe – The Commission has announced additional support for the agrifood sector, including subsidising the temporary private storage of dairy and meat. This involves relaxing competition law to allow collective action in the milk, flower and potato sectors, and further reallocation of market support programs to crisis management priorities. 
  • Europe – Member states also agreed to additional financial support for the fishing industry.
  • Poland –Polish wine importers are being flooded with offers from European wineries who hold stock and need to make a space for the new vintage.
  • UK – The average selling price for wine is on the rise – which is potentially good news for Australia.
  • UK – According to a survey, almost half of all smaller food producers are faced with potential collapse. Temporary de-listings have hit many startups as retailers look to ensure availability of key items, which are mainly big brands and own brand. On the plus side, supermarkets have reduced payment terms for smaller suppliers to just a few days.

E-commerce

  • Israel – Israeli delivery services startup Bring raised US$30 million in April as the COVID-19 crisis strengthens the position of companies in the logistics/food supply chain sector.
  • UK – E-commerce sales of beer, wine and spirits in the UK surged 50% (volume) in the first week of the lockdown compared to the same period last year. Wine retailer Majestic has enjoyed Christmas-period sale levels, and now uses its shops to manage home deliveries.
  • UK – Amazon is set to launch an ultra-fast grocery delivery service in the UK. To roll out the project, Amazon’s nine existing UK depots would need to be refitted to process and pack fresh produce. The first one tipped to be refitted is in London, followed by one in Leeds.

Health

  • Czech Republic – Covmask.cz has developed COVID-19-specific PPE that is now available for international markets. The plastic adapter allows for the Decathlon Easybreath diving mask to be modified as an improvised protective device with a certified replaceable filter compatible with NATO filters.
  • Denmark –Denmark has joined Australia, Austria and New Zealand in an alliance of ‘like-minded’ smaller countries that want to secure PPE supplies. The alliance will foster ’strategic cooperation’, to enable self-sufficiency in PPE, medical devices and vaccines.
  • Germany – Germany has approved human trials of potential coronavirus vaccines developed by German biotech company BioNTech. The trial – only the fourth worldwide of a vaccine targeting the virus – will be initially conducted on 200 healthy people, with more subjects, including some at higher risk from the disease, to be included in a second stage. The company is partnered with Pfizer, and currently has four vaccine candidates.
  • Germany – Two-thirds of Germany’s medical technology companies say the current business situation is deteriorating. In a survey, three-fifths of companies have recorded lower demand for medical technology products. Almost half complain of logistical bottlenecks, and two-fifths report missing supplier products. Most support moves to free trade in products.
  • Israel – Adoption rates for telemedicine and digital medicine are exponentially increasing. One symptom is ultra-close collaboration between Israeli health service providers, government regulators and startups. Examples include: Binah.AI, which senses vital signs via smartphones; and telemedicine specialist Tyto Care.
  • Poland – With plans to open shopping malls, there is increased anticipated demand for thermal cameras and scanning thermometers. Large manufacturing plants are also expected to require devices to monitor the health of employees.
  • Spain – More than a thousand healthcare workers are in isolation and thousands more will have to be tested for SARS-CoV-2 after being exposed due to defective face masks. The batch of faulty material was ordered to be withdrawn last Friday. The batch was not made in Europe.
  • Switzerland – Rochedeveloped an antibody test for Covid-19 that it plans to start selling early next month. Monthly production could reach the high double-digit millions by June. Roche shares rose as much as 2.5% early Friday in Zurich, having gained 23% over the past 12 months.
  • Switzerland – The country’s large pharmaceuticals sector has sent Swiss exports higher in the first quarter. Swiss exports increased by 1% in nominal terms compared to the previous quarter, while imports contracted by 2.8%.
  • UK – Oxford University’s Jenner Institute may be leading the global race to find a vaccine. Prior to 2019, the institute had already proved that a vaccine against a similar coronavirus to SARS-CoV-2 was safe for humans. The institute hopes to conduct human trials on 6,000 candidates during April/May. Tests on rhesus monkeys have proved highly encouraging.
  • UK/France –French clinical diagnostics company Novacyt has signed a supply contract with the UK’s Department of Health & Social Care (DHSC) to supply its coronavirus test for an initial term of six months, starting from May 4. Initially, it will commit to supply 288,000 tests per week to the DHSC for use in the NHS with the option to expand the agreement.
  • UK – The government has published guidance for how essential workers can get tested for COVID-19. The new online portal will allow essential workers and their households in England and Scotland to book a test if they show symptoms. Eligible workers include those working on the front lines in IT and data infrastructure sector.

Energy and resources

  • Poland – Most mining companies have reduced production and switched from four daily shifts to three. There are now 1.5-hour breaks in between shifts. Mining companies are trying to sell pithead stockpiles.
  • Poland – Mines and coal companies are reducing investment outlays and extending payment deadlines for liabilities to suppliers of goods and services, with major flow-on effects on the sector. Almost 80% of energy production in Poland is from coal.
  • Poland – Mining equipment manufacturer the Famur Group is laying off over 200 employees due to decreased demand for its products.
  • Spain – Berkeley Energia, a subsidiary of Western Australian company Berkeley Resources Ltd, is making progress in its bid to gain the necessary approvals to begin constructing a uranium mine in Salamanca in western Spain.
  • UK – The UK’s biggest steel producer needs about £500 million in government support to see it through the COVID-19 crisis, according to Welsh MP Stephen Kinnock. Tata Steel has approached the UK and Welsh governments for a bailout after its European customers halted production.

Digital technologies

  • Switzerland – Orell Füssli, a 500-year-old company with a monopoly on producing Swiss money, passports and driving licences, has taken a stake in PROCIVIS, which specialises in electronic ID systems. The company envisages a Swiss hub for digital identity services.

Infrastructure

  • UK – KPMG predicts a downturn in public transport use but a sharp increase in road congestion as people switch to driving their own cars and online deliveries surge. City transportation providers will have to shift their focus from managing overcrowded rail systems to managing congestion using real-time data and smart transportation systems.
  • UK – Leading housebuilders including Bellway, Redrow, Persimmon, Barclays and Barratt Homes are making plans to reopen construction sites.

Advanced manufacturing and defence

  • Czech Republic – Monthly revenues of carmakers have fallen by an estimated CZK50 billion (A$3.1 billion). Companies in the supply chain have lost over CZK17 billion (A$1.1 billion) per month. All three of the Czech Republic’s main automakers halted production in the middle of March. Only Hyundai has reopened. Skoda restarted production on April 27 and Toyota Peugeot Citroën will resume the following week. The industry is fundamental to the Czech economy – Skoda alone accounts for around 9% of Czech exports.
  • Czech Republic –Around 786 experts and other key employees from Korea will visit the Hyundai Motor Manufacturing Czech facility, to provide advice and assistance.
  • France – The three major professional associations representing the defence and security industry (GIFAS for aerospace, GICAN for maritime and GICAT for land and security) have set up programs to support SMEs facing economic hardship. This support includes working with large defence and aerospace companies to integrate SME products, solutions and expertise into their supply chains.
  • France – The French Government is negotiating a €5 billion loan with a state guarantee for car manufacturer Renault. The company is slowly restarting its plants in Europe, in line with other manufacturers such as Toyota. The outlook for the car manufacturing sector is bleak after a 55% fall in new vehicle registrations in March.
  • France – In his latest letter to Airbus employees, Guillaume Faury, CEO of Airbus, claims the existence of the company is at stake. ‘Ambitious measures’ are under consideration. However, no new announcements are planned or expected in the short term. Airbus did not apply for government support and has only advocated support for its supply chain in France.
  • France – Representatives of the three major professional associations in the defence sector met with the French Parliament to argue for the protection of the current military procurement law. The law states that from 2019 to 2023, defence spending should increase by €1.7 billion a year and, from 2023 to 2025, by €3 billion, in order to fund the renewal of nuclear deterrence forces.
  • Germany – On April 23, Volkswagen restarted production in Saxony. Other plants are set to follow next week. VW subsidiaries MAN and Audi partially restarted production on April 27. Competitor Daimler started production on April 19. These restarts are expected to have flow-on benefits for suppliers. 
  • Poland – The Aviation Valley Industry Cluster companies are mainly operating as normal. Only the Safran factory has stopped production until May 15. A slowdown in the sector is expected towards the end of the year. The manufacturing of Boeing 737 MAX planes is expected to restart in September. Aviation Valley is negotiating with the government to secure long-term government orders.
  • Poland – At this stage the MSPO Defence Expo scheduled for September has not been cancelled and preparations are in progress. Team Defence Australia has booked space for an Australian pavilion.
  • Sweden – Volvo Cars launched a ‘Stay Home Store’ in several quarantined European markets on April 24. The concept allows customers to buy or lease a Volvo car from their homes.
  • UK – While a small number of manufacturers reported some growth in the area of food and healthcare products, the UK Purchasing Managers’ Index for April indicated a collapse in activity more broadly due to business shutdowns that were far worse than expected. Around 81% of UK service providers (compared with 38% during the worst month of the GFC) and 75% of manufacturing companies reported a fall in business activity during April.
  • UK –A study by the Centre for Progressive Policy concluded that regions depending on manufacturing such as the Midlands or North West could experience a decline in economic output closer to 50% in the second quarter of this year (compared to the Office for Budget Responsibility figure of 35% for the UK).

Travel and tourism

  • Poland – LOT Polish Airlines has suspended all passenger flights until May 15. Hungarian low-cost carrier Wizz Air has suspended flights on the Polish route network until May 9.
  • Spain – Large hotel chains such as Iberostar, AC, Barceló, Meliá and NH are working on security protocols and are opening reservations from May 10, despite the lack of certainty around the lifting of lockdown conditions for the sector. 
  • UK – More than 5,500 jobs could be at risk as a result of an extended shutdown of the cruise industry. The warning from trade body Clia came as all lines continued suspensions and Fred Olsen Cruise Lines announced it had cancelled cruises indefinitely beyond May 23.
  • UK – Merlin Entertainment has closed all but nine of its 130 attractions around the world. The company has reduced its planned capital expenditure by 40% (excluding LEGOLAND New York and LEGOLAND Korea) to focus on projects, essential maintenance and infrastructure work in its existing portfolio.
  • UK – Wizz Air will restart selected flights from London Luton airport on May 1. The Hungarian carrier said it would initially operate flights ‘subject to no further restrictions’.

Retail, consumer and creative industries

  • Spain – The Spanish Government has capped public sale prices for surgical masks, gloves and hydroalcoholic solutions. Surgical masks will cost a maximum of €0.96 each. Gels and hydroalcoholic solutions, depending on the amount purchased, will cost between €0.015 and €0.021 per millimetre.
  • UK – The Centre for Retail Research estimates 20,620 stores will close by the end of 2020 with 250,000 jobs at risk.
  • UK – Retail Economics estimates half of all non-food shopping will be done online by the end of the year compared to 30% currently. The analyst says consumers will need financial incentives and solid assurances of safety before they would be comfortable returning to shops. It predicts the ‘forced holiday from consumption may lead to reduced materialism’.
  • UK – Amazon donated £250,000 to help UK bookshops weather the coronavirus pandemic.

Supply chains

  • Europe – The EU extended its PPE export restrictions for a further 30 days from 26 April. However, it did not narrow the scope as much as foreshadowed: restrictions remain on protective spectacles, garments and face masks. The Western Balkans have been added to the list of exempted countries.
  • UK – The construction industry reports a massive disruption to supply chains. While ports in China appear to be reopening and shipping supplies, there have been delays with deliveries. In some instances, it has taken two weeks or more to get supplies to the UK. In addition, many supply chains consist of SMEs with a significant number of self-employed workers who are assessing government support before making firm commitments to keeping supply chains fully operational.
  • Czech Republic – In the last week of March, traffic at Prague Airport fell by 88% year-on-year. There has, however, been a significant increase (26.5%) in the number of cargo flights. Media reports attribute much of the increase to the transport of medical equipment.

Consumer behaviour 

  • UK – Consumers are rising to the challenge of a ‘lockdown larder’ as a result of the pandemic, ignoring recommendations on best-before and use-by labels and piling less food on to their plates, new research has revealed. Overall, 90% of consumers say their shopping and cooking habits have changed since lockdown started, with 57% admitting they value food more now, and 43% enjoying food more.

Government response

  • Europe – On April 23, EU leaders endorsed the ₤540 billion safety net package – comprising employment insurance (‘SURE’), loan guarantees for business and a ‘Pandemic Crisis Support Fund’ (European Stability Mechanism credit line for member states) – with all three elements to be operational by June 1. Leaders also agreed to coordinate on exit strategies. 
  • Europe – On 6 May, the Commission will present a revised draft proposal for the 2021–27 EU budget, including an economic recovery plan. Council President Michel circulated a ‘Roadmap for recovery’ identifying four action areas: the single market; an investment strategy; a global recovery strategy; and resilience and governance. Inter alia, it calls for a ‘Marshall Plan-type investment effort’ at the member state and EU level; a ‘dynamic industrial policy’ to build strategic autonomy; and strengthened foreign investment screening to prevent predatory acquisitions. 
  • Europe – Trade Commissioner Hogan outlined the EU’s plans for a plurilateral agreement on medical tariffs to the European Parliament’s trade committee on April 21. The Commission is rethinking the EU’s post-COVID trade policy, with a focus on diversifying supply chains, strengthening trade defences and investment screening, and pursuing multilateral agreements. 
  • Europe – DG Trade predicts the COVID-19 related economic contraction will result in a 9.2% (€285 billion) reduction in EU27 exports, and an 8.8% (€240 billion) decrease in imports (goods and services).
  • Russia – Prime Minister Mishustin has expanded the list of industries affected by the COVID-19 pandemic. The list now includes a new category: ‘Retail Trade of Non-food Products’. The Ministry of Industry and Trade has also approved a list of 246 organisations to increase the sustainable development of the Russian economy across different sectors, including metallurgical, agriculture, heavy engineering, medical and pharmaceutical.

Government stimulus program

  • Czech Republic –The Czech lower house has approved a bill to provide state guarantees on commercial bank loans to small and mid-sized companies. The guarantee scheme is worth up to A$9.2 billion and is designed to help companies with up to 50 workers.
  • France – The French Government is helping restaurants, bars and hospitality venues. Measures include tax cancellations, new tax-payment deadlines and the prolongation of temporary unemployment schemes. It will also create an investment fund to support stressed businesses in these sectors.
  • Israel – The Government has announced an additional US$2.2 billion of assistance for the self-employed.
  • Italy – The Italian Government is considering measures to temporarily co-invest in SMEs that plan to increase their capital. If confirmed, the plan would be available to companies with up to 250 employees.
  • Italy –The Italian Investment Agency, Invitalia, will manage a €50 million fund to help local companies to convert/expand facilities to manufacture PPE, ventilators, masks, protective goggles and gowns, disinfectants and diagnostic kits. To date, 102 companies have been approved with textiles and fashion companies at the fore.
  • Spain – The Government has announced additional financial and employment measures, which favour the agricultural and fishing sectors among others. The Government will also approve a second loan of almost €14 billion for the National Health System to guarantee the payment of pensions.
  • UK – The Devolved Administrations of Scotland and Wales are creating additional support packages for business. Scotland announced an additional £140 million fund to support businesses in the creative, hospitality and critical industries.
  • UK – The Coronavirus Job Retention (or Furlough) Scheme has proved popular, attracting 140,000 online claims on its first day. The scheme aims to make payments within six working days. It will now run until June 30. Subject to guidance, foreign nationals on any type of visa will be eligible, even if they are ineligible for social security benefits.

Workforce

  • UK – The Welsh Government will allow furloughed workers to undertake training.
  • UK – Unemployment figures released on April 21 showed a modest increase to 4%. However, on April 20, the Institute for Employment Studies reported that job vacancies had fallen to their lowest levels in 20 years.
  • UK –The Joseph Roundtree Foundation found that job advertisements had fallen 42% since the lockdown. Job openings in hospitality and catering were the hardest hit, down 70%, with areas in northwest England most affected.

24 April 2020

Summary

Most European countries have begun to ease lockdowns and governments are attempting to kick-start businesses without triggering a COVID-19 resurgence. The economic impact so far is immense: power consumption dropped 10% over the first quarter – the biggest percentage drop since 1945. Renewables held up though: they now contribute 46% of power generation in Europe and the UK. Australian organisations are pursuing new opportunities. Dutch company Viroclinics Xplore is partnering with the University of Queensland on pre-clinical studies for UQ’s potential COVID-19 vaccine. Brisbane-based EGR Group is seeking to supply UK’s NHS with Australian-made visors. Meanwhile Italian fashion houses are starting to stir; this should benefit Australian wool exporters.

Lockdown reversals

  • Austria – Museums and other cultural venues will be allowed to reopen in mid-May. They will be among the first major institutions in Europe to reopen their doors.
  • Czech Republic – Government offices return to standard operations as of April 20, though the general public will have to maintain strict hygiene measures and minimise personal contact.
  • Denmark – Schools opened last week, and hairdressers, physiotherapists, accountants, dentists and other small businesses are now following suit. Cafes, restaurants and bars, and places of further education will remain closed until at least May 10.
  • Finland – The lockdown in the Helsinki metropolitan region has been lifted, but most restrictions have been extended until May 13.
  • France – Continued lockdowns are facing a new challenge – civil unrest. Despite stringent restrictions on public movement, social tensions appear to have surfaced, with violence flaring in Paris suburbs and cities across France.
  • Germany – Gradual lockdown reversals have allowed stores up to 8,600m2 to reopen from April 20. Bookshops, bike shops, car dealerships and large furniture stores have also opened their doors. First reports say shoppers seem hesitant.
  • Israel – Manufacturing and services organisations will be allowed to admit 30% of their usual staff members back into their places of work, with no restrictions on numbers below 10. Face masks must be worn, and workers must stay two metres from each other.
  • Norway – Kindergartens opened on April 20, and schools and universities will start reopening from April 27. Services that require personal contact, such as hairdressers and physiotherapists, will resume gradually; restrictions on large sporting and cultural events will stay in place until June 15.
  • Spain – Spanish Prime Minister Pedro Sanchez says he will ask Congress to extend the lockdown for a further two weeks until May 9.
  • Switzerland – The Swiss Government will partially reopen five border crossing points with France in the Geneva canton on Monday. These crossings were previously closed as part of measures to combat the pandemic.
  • UK – Amidst calls for the UK Government to announce when lockdowns can be lifted, the Prime Minister’s spokesman said avoiding a second peak of infections was the “big concern”. Sports events may gain a slight reprieve.

Impacts on key industries

Agribusiness and food

  • UK – Industry groups are calling on the government to help prevent tens of thousands of tonnes of food intended for the hospitality industry from going to waste. Ideas include looking at ways to redistribute foodstuffs, including to charities.
  • UK – The UK’s Food & Drink Federation says supply chains may gradually reactivate during May. Producers will likely start moving supplies to warehouses, forecourts and shops in anticipation that social restrictions will start to ease in late May and early June. 
  • UK – The UK meat processing industry is scrambling to adapt to high retail orders and collapsed food service orders. Meanwhile, the National Farmers Union is concerned that farms may collapse, with a permanent loss of UK farming activity.
  • UK – The Government has announced a temporary relaxation of UK competition law to support the dairy industry through the outbreak.
  • UK – Although much of the wheat used to make flour in the UK is sourced domestically, supermarket shelves are empty because millers are not able to fill enough of the small 1.5-kilogram bags needed to meet record levels of demand.

Health

  • Europe – Following a vote in the European Parliament, implementation of the Medical Device Regulation will probably be delayed by one year.
  • Germany – Multinational pharmaceutical company, Bayer, plans to donate eight million chloroquine tablets to the German Government this week. Four million Bayer tablets have been sent to badly affected countries, including China, Italy and the US. CEO Werner Baumann said production currently only takes place in Pakistan.
  • Italy – The Italian medical diagnostic group Diasorin has been awarded European conformity approval (CE Marking) for its fully automated serology test to detect antibodies against Sars-CoV-2 in COVID-19 patients.
  • Italy – The Sacco Hospital in Milan has launched a coronavirus biobank that will collect and preserve biological samples of the virus. It aims to support scientific and clinical research and the development of new therapies.
  • Netherlands – Viroclinics Xplore is partnering with the University of Queensland (UQ) on crucial pre-clinical studies for UQ’s potential COVID-19 vaccine. The company will facilitate testing in its specialist biosecurity facilities in the Netherlands.
  • UK – The UK Government is being urged to scrap VAT on PPE for the social care sector, following its removal of VAT on PPE for the NHS earlier in April.
  • UK – A new COVID-19 Capacity Planning and Analysis System uses machine learning to predict upcoming demand for intensive care unit (ICU) beds and ventilators. The tool is designed to help hospitals predict how many patients may need an ICU bed, how many may require ventilators and how long patients are likely to be in hospital.

Energy and resources

  • Europe Electricity demand has dropped by one-tenth in the first three months of 2020 – the biggest drop in demand since the Second World War. Coal currently makes up only 12% of total EU and UK generation. By contrast, renewables delivered almost half (46%) of generation in the first quarter – an increase of 8% compared to 2019.
  • Austria – Power provider Verbund has shut its coal-fired district heating plant, the last coal power plant in Austria. With coal power generation now ended, this paves the way for a switch to a 100% renewable power supply by 2030.
  • Poland – One Polish mine is using thermal imaging cameras to check miners’ health, reducing queues and thermometer check points. Coal group Polska Grupa Górnicza has proposed shifting to a four-day week.
  • Switzerland – The Swiss Government will provide an additional $47 million worth of solar incentives to counter a potential slump in the photo-voltaic market. The increase means US$387 million worth of rebates will be available for solar systems.
  • UK – SSI Energy, a provider of medics and technicians to the oil and gas and renewable sectors, has entered a partnership with Texo Accommodation, a construction company, to deliver modular coronavirus screening stations in the UK.

Digital technologies

  • Italy – The President of ItaliaFintech, which promotes the use of financial technology in Italy, has called for fintechs to be involved in facilitating the liquidity measures announced by the government.
  • Russia – There is a growing interest in online education. In the first COVID-19 lockdown week, more than one million new users registered for courses offered by Netologiya, Russia’s leading edtech company. There is growing interest in courses that can help executives run a business digitally, including via online collaboration, management, sales and marketing.
  • UK – The Department for International Trade (DIT) is looking at setting up a central portal with online learning resources which the UK higher education sector is making available for free. DIT is also circulating a list of free or discounted online education resources to British embassies around the world.

Infrastructure

  • UK – The Department for Transport has approved the construction phase of the £106 billion High Speed 2 rail project (HS2), Europe’s largest infrastructure project. An estimated 400,000 supply chain contract opportunities will be created.
  • UK – Flexible office provider IWG is exploring options on how to sell and lease back offices to raise £200–250 million to ease cash flow.

Advanced manufacturing and defence

  • Czech Republic – TPCA – a joint venture between Toyota and PSA Group – will extend the shutdown at its Kolin-Ovčáry plant in eastern Bohemia until May 4. 
  • France – The French Defence Innovation Agency received more than 1,000 applications after its call for proposals for solutions in the fight against COVID-19. Some Australian companies are considering a submission.
  • Israel – Remote auto diagnostics startup Engie will cease its services. The company’s efforts to bring on investors from the Asian market failed due to fallout from the coronavirus crisis that forced the investors to make cutbacks.
  • Spain – Car manufacturer, Renault will resume activity on April 29 at its body and assembly factories in Valladolid and Palencia. Renault’s factories in Valladolid and Seville restarted on April 16.
  • UK – The UK is to pause work on its Defence Review (the Integrated Security, Defence and Foreign policy Review) until after the COVID-19 crisis is over, according to a report by Janes.
  • UK – According to Janes, UK’s BAE Systems will work with Australia-based suppliers to ensure supply chains meet COVID-19 related challenges. The company is a major defence contractor in Australia, and is due to commence building a fleet of nine frigates in Adelaide in December.

Health manufacturing

  • France – Australian company Atomo Diagnostics has signed an agreement with NG Biotech to supply 2.46 million rapid tests to France and the UK, including the French Ministry of Armed Forces.
  • Germany – Melitta, a German coffee filter maker, has begun producing masks. The company made a million masks from April 6–10, and hopes to reach a million masks a day in the near future. 
  • Germany – Heating engineering company Viessmann has converted its facilities to start producing mobile ventilation devices. Once approved, the company says it can produce up to 600 units a day.
  • Israel – A new device for diagnosing COVID-19 in under a minute has been authorised for testing. Based on a breathing machine developed by Israeli companies Next-Gen and Scentech Medical, it is similar to breathalyzers that police forces use.
  • Sweden – Retailer H&M has repurposed some of its production and will deliver one million protective aprons within two weeks.
  • UK – Brisbane-based manufacturing company EGR Group, which has a presence in the UK, is seeking to supply the UK NHS with PPE visors manufactured in Australia.
  • UK – The availability of PPE has become a critical issue. Logistics and procurement complexities are hampering deliveries. A new PPE ‘Tsar’ has been appointed, tasked with expediting deliveries. 
  • UK –BOC, the largest provider of medical gases in the UK, has asked vets, dentists and rugby clubs to return bottled oxygen. There are mounting fears of NHS shortages.

Travel and tourism

  • Austria – Austria is considering opening its borders this summer to tourists from Germany and other countries that keep their COVID-19 cases under control.
  • UK – The UK is considering ₤4 billion of support for the tourism industry. If social distancing and travel restrictions are not lifted in time for the summer holiday period, tourism officials warn the impact on the industry will become more severe.

Retail, consumer and creative industries

  • France – According to the Union des Métiers de l’évènement, the French events sector has lost one-third (more than €15 billion) of its annual revenue. More than 4,500 events have been cancelled and over 3,000 postponed since the onset of the crisis. The sector is currently developing new business models to restart operations as soon as possible.
  • France – Amazon’s French warehouses will be closed until 22 April following a court order to shut down six sites due to the lack of sanitary protection measures for employees. Despite this shutdown, Amazon continued delivering to customers from its global logistics sites.
  • Israel –Retail stores – including those selling electrical goods, household goods, opticians, and others – are allowed to operate as long as they follow health requirements. Deliveries can be made from all stores, as well as pickups from stores that adhere to health regulations.
  • Spain – The Mango fashion group has started reopening stores in Germany, Austria and the Netherlands, where COVID-19 restrictions have been lifted.
  • UK – According to a survey by the British Fashion Council, 35% of new designers may not be able to continue business operations past the summer – if current conditions persist. The survey indicates half the fashion industry may be wiped out by the end of 2020.
  • UK – Leading supermarket Asda is cancelling clothing orders and reneging on full payments, despite enjoying record food sales. Its ‘George’ clothing brand is the UK’s fourth largest clothing retailer with a 3.4% share of the ₤53.8 billion market.

Supply chain

  • Italy – Industrial warehouses have reopened, allowing container traffic and goods purchased or produced prior to the lockdown to flow. This should ease congestion in logistics hubs such as ports and airports. The action paves the way for companies to start procuring raw materials and resume production, once lockdown restrictions are lifted.
  • Sweden – Getinge, a major manufacturer of advanced ventilators, is planning to increase production by 260% in 2020. It is working with other major producers to build capacity in the global supply chain. Getinge’s CEO is concerned new entrants will add to supply chain pressures.
  • UK – The National Endowment for Science and Technology (NEST) predicts COVID-19 will have major impacts on the UK’s supply chain, including a shift from ‘just-in-time’ manufacturing toward practices that reinforce resilience; and a return to re-shoring to avoid international dependencies.
  • UK – NEST also postulates a post-epidemic interest in remote working models which may lead to further falls in commercial rents.

Consumer behaviour 

  • Switzerland – According to a survey by the Postfinance bank, since lockdown measures were introduced, Swiss consumers have spent 53% less on hygiene and cosmetics than a year ago. Spending on clothes has fallen by more than half and spending on shoes by more than 80%. Basic services have become more important. Spending on food increased by 18.6%.
  • UK – A survey into online purchasing behaviour found 60% of consumers have purchased more goods since the lockdown began. The survey reported 53% of respondents had increased their online shopping while 77% expect to continue purchasing online post-lockdown. Some 39% said they had purchased products they had not considered before, such as pet food and shoes.

Government response

  • Austria – The government is planning to test all 130,000 aged care residents plus staff for COVID-19 to head off a ‘second wave’ of infections. Health minister Rudi Anschober says testing at the country’s 918 homes will be the “central focus” as Austria enters phase two of the pandemic and begins to ease lockdown measures.
  • Czech Republic – The Czech Government is rolling out two contact-tracing apps to replace quarantine measures.
  • Israel – Israel is establishing a new innovation lab for digital health. The lab will focus on pharmaceutical tech and artificial intelligence with $9 million in funding over five years.
  • Italy – The Italian Government is reportedly considering ways to encourage retail investors to buy government debt as part of its post-coronavirus economic recovery plan.
  • Netherlands – The four coalition parties, VVD, CDA, D66 and ChristenUnie, want better protection for Dutch companies whose balance sheets have become temporarily shaky. They fear opportunistic takeovers from overseas entities.
  • Spain – The Bank of Spain calculates that GDP could fall up to 13.6% this year. Prime Minister Pedro Sánchez will propose a recovery fund of around €1.5 trillion financed through perpetual EU debt, allocated via grants among the countries most affected by the crisis at the European Union summit on Thursday.
  • UK – The UK Government has announced a £1.25 billion package for high-growth and innovative companies which have suffered from a reduction in investment and poor business conditions due to COVID-19. The £500 million ‘Future Fund’ provides investment for high-growth equity-backed companies. There will also be £750 million in grants and loans for R&D-focused SMEs.

21 April 2020

Many European countries, including Italy, Spain and Austria, have commenced a partial relaxation of their lockdown restrictions. Automakers, including Volkswagen and Volvo, plan to commence partial or trial production restarts, although Germany’s car industry anticipates 100,000 job losses. Plane-maker Airbus Industrie will reduce production by one-third. Hardest-hit Spain looks set to embark on a vast program of clinical trials to help protect health workers from COVID-19. As UK’s lockdown continues, British pub-owners contemplate the disposal of 50 million pints of unsold ale.

Highlights

  • Austria – The Austrian Government plans to reopen parts of the economy. Thousands of shops reopened on April 14 – including premises up to 400 m2 – as well as DIY stores and garden centres. Shopping centres, larger shops and hairdressers will reopen from May 1.
  • Czech Republic – The Government has loosened measures taken to limit free movement and allowed some markets to reopen. Overseas travel will be allowed for family, health, or work-related reasons, though subsequent quarantining will be required.
  • France – The French Government is considering using a digital tracking mobile app, allowing authorities to trace potential contaminations as employees go back to work. The proposal is contentious, and will be discussed in the National Assembly.
  • GermanyThe interim findings of Germany’s first cluster study on COVID−19, conducted in hard-hit Heinsburg, found 15% of those examined tested positive. The mortality rate in the test area, measured by the number of people infected, was 0.37% – far lower than the national average due to a higher proportion of reported infections.
  • Italy – Although the current lockdown remains until May 3, restrictions have been lifted in some regions. Stores selling books, stationery and children’s clothing will reopen, and timber and computer-production industries restart. Other key industrial sectors, including automotive, fashion and metal-working businesses, could soon restart. 
  • Poland – According to the Health Ministry, Poland will start ‘defrosting’ the economy in stages from April 19. Stage One involves a minor easing of restrictions including greater access to forests and parks, and allowing an increased number of people to enter shops and attend religious services.
  • Spain – The government has partially relaxed its lockdown restrictions, with a general return to work in the construction and industrial sectors. Industrial conglomerate Ferrovial has reopened its construction business. Volkswagen will partially reopen its plant in the Navarra region and ramp up shifts if the supply chain allows.
  • Sweden – OEMs are slowly recommencing production, while monitoring national pandemic measures, supply chains and demand.
  • UK – The country remains in lockdown. New infections have likely peaked.

Economic insights

  • France – The French Ministry of Economy forecasts that GDP will fall by 8% (previously estimated at –6%) and public debt will reach 115% of GDP in 2020. 
  • Germany – The Federal Cabinet has approved a draft amendment to the German Foreign Trade and Payments Act to allow the German Government to audit foreign investments and examine critical company acquisitions more proactively. The aim to is protect ‘German and European interests’ and would align Germany with EU regulations.
  • UK – The National Institute of Economic and Social Research predicts a second quarter GDP fall of 15–25%, with each month of lockdown costing some 20% of GDP (₤40 billion) in lost output. The Centre for Economics and Business Research estimates an even bigger impact, with just over 30% of GDP (₤60 billion) in lost output every month.
  • UK – The Resolution think tank reports as many as 1.2 million of the poorest households do not have enough money to cover a 25% reduction in income for a three-month period. This implies millions of citizens are likely to keep on working despite the risks.

Impact on key industries

Agrifood

  • UK – Publicans will have to dispose of an estimated 50 million pints of ale, lager and cider if the lockdown continues into the summer. Farmers are already dumping thousands of litres of milk each day because they cannot find alternative markets. At least 2,000 dairy farmers are suffering severe financial pressure.

Health

  • France – Tyre manufacturer Michelin will produce up to 400,000 surgical masks a week for its employees and the health sector.
  • Germany –  Australian company Sonic Healthcare continues to deliver 25% of COVID-19 tests in Germany. Sonic is also heavily involved in validating antibody tests and test specifications: this will enable a broader use of its tests in the coming weeks.
  • Germany – Pharmaceutical company, CureVac, is working on a coronavirus vaccine. A clinical trial should begin in early summer, with the first results expected a few weeks later. The European Union is providing €80 million towards the research.
  • Netherlands – Sister companies Thirona and Delft Imaging, which specialise in tuberculosis screening, have adapted their X-ray-based AI technology to assess COVID-19-related lung damage. The system, CAD4COVID, indicates the extent of COVID-19-related abnormalities via a heat map.
  • Netherlands – Telecare solutions company, Essence Group, will install its Care@Home technology at makeshift ‘Corona Hotels’. This will free up Intensive Care Unit beds and provide a safe location for patients to recover from symptoms that do not require ongoing treatment.
  • Spain – With health workers representing 15% of all confirmed COVID-19 infections, Spain will begin mass clinical trials to determine how best to stop transmission among health workers. Called the ‘Clinical Trial for the Prevention of Coronavirus Infection in Health Workers’ (Epicos), it will be the largest such program in Europe, and include 4,000 health workers at 62 hospitals in 13 regions across Spain.
  • Switzerland – Medical diagnostics company Quotient has adapted machines to test for coronavirus antibodies. Each machine can conduct 3,000 tests a day. The company will sell the testing machines, called MosaiQ, at cost.
  • Switzerland – Researchers in Lausanne have developed an artificial intelligence-based app called Coughvid that can listen to coughs and analyse whether users have COVID-19. The app has a 70% accuracy rate.
  • UK – Big pharma rivals AstraZeneca and GSK have teamed up with Cambridge University; together they aim to conduct 30,000 COVID-19 tests per day by early May. Meanwhile, the US’s Thermo Fisher Scientific will continue to supply tests needed to reach the UK Government’s 100,000-per-day target, and ramp up manufacturing.
  • UK – There are concerns about PPE availability. The Health Minister has said it is impossible to know when supplies of PPE will meet demand across NHS and the social care sector.

Energy and resources

  • Austria – Trade body, Photovoltaic Austria, says sustainable investments must remain a priority for the government. Previously set targets stipulate a fully renewable electricity system by 2030.
  • UK – British Gas will furlough 3,800 workers. Individuals will be paid 80% of their salaries under the government’s jobs retention scheme with the remaining 20% paid by British Gas’ owner Centrica.

Digital technologies 

  • France – Viva-Tech, a major tech event due to take place in June, has been cancelled. The Paris Blockchain Summit in July has been postponed to 9–10 December 2020.
  • Netherlands – Dutch edtech providers have identified secure online testing as a major challenge for schools during COVID-19. Many companies are providing free access to their platforms to education providers. Dutch edtech companies view Australian universities as better prepared to deal with disruptions than European counterparts, owing to Australia’s openness to edtech.
  • UK – Online learning developer, Twinkl, is teaming up with the BBC to offer 850,000 free Twinkl accounts to schools and parents during the crisis.
  • UK – SME lending fintechs are reporting high demand for the fast-tracking of products/credit lines as alternative solutions to the UK Government’s Coronavirus Business Interruption Loan Scheme (CBILS). CBILS has so far given support to around 4,200 businesses, with a recent report stating only 1.4% of those who have applied for finance have been successful.

Infrastructure

  • UK – Eighty per cent of respondents to a Royal Institute of British Architects survey report project delays and more than half say turnover has been hit. More than a third of architects have had schemes cancelled and over 75% say projects have been delayed. The survey reported 57% of respondents are experiencing lower cash flows, with a similar percentage reporting decreased workloads and new business enquiries.

Advanced manufacturing and defence

  • Czech Republic – Skoda Auto’s manufacturing facilities will be closed until April 27. Hyundai reopened production on April 14 and will keep running two shifts.
  • France – The French aerospace industry will face its first recession in 20 years, and Toulouse-based Airbus will reduce production capacity by one-third, impacting supply chains. French SME Aequs Aerospace Aubigny has filed for bankruptcy. The company supplies major aerospace prime contractors such as Airbus, Dassault Aviation and Safran.
  • France – Car manufacturer PSA has signed a ‘solidarity contract’ with unions to guarantee the full payment of salaries. Under the terms of the public temporary unemployment scheme, the income of 70% of unemployed workers is subsidised. Renault has signed a similar agreement. Automotive supplier Valeo has negotiated an extra €1 billion line of credit to face the current crisis.
  • Germany –  The automotive industry expects 100,000 job losses (out of 830 000) due to massive overcapacity in production and an expected 15–30% drop in demand. BMW and Porsche have extended their production stop until the end of April. At the same time, March saw record registrations for the German Government’s scheme for electric and hybrid plug-in cars.
  • Sweden – OEMs are recommencing production. Bus and truck maker Volvo Group is planning to restart production at selected plants in Sweden and France. Some production in Asia has already restarted (e.g. China, Japan). Volvo Cars is planning to restart production in Sweden and Belgium on April 20. Bus and truck maker Scania will commence a trial restart on April 21. Production is halted in Brazil until April 27.

Transport/logistics

  • France – Air France-KLM is looking to secure €10 billion in financial support.
  • Germany – Lufthansa Group is permanently retiring over 40 of its aircraft at Lufthansa, Lufthansa Cityline and Eurowings, as well as making further cuts at subsidiaries Austrian and Swiss. Germanwings will be dissolved. Lufthansa CEO Carsten Spohr said the airline loses about €1 million of its liquidity reserves every hour. The airline currently carries fewer than 3,000 passengers every day instead of the usual 350,000. 
  • UK – Manchester Airport’s owner wants the UK Chancellor to prop up Virgin Atlantic as the airline makes a last-ditch pitch for a ₤500 million taxpayer bailout. Airbus and Rolls-Royce also lobbied for the airline, the biggest long-haul operator at Manchester.

Retail, consumer and creative industries 

  • France – The A$26 billion acquisition deal of Tiffany & Co by French luxury company LVMH will be put on hold after regulators requested an extension, owing to COVID-19. 
  • France – The French Government has restricted Amazon deliveries to essential products only (pharmaceutical, sanitary and alimentary goods) until the company undertakes a COVID-19 risk assessment on its warehouses. The company will be fined €1 million per day if it does not apply this measure.
  • UK – High street retailer Primark has cancelled or suspended ₤256 million worth of orders from suppliers in Bangladesh. Primark has ₤16 billion of stock in its supply chain: 373 stores have closed and there is no online business.

Government restrictions

  • France – All events, including tradeshows, fairs, concerts including professional and cultural gatherings, are cancelled until mid-July. Borders to non-EU countries will remain closed after May 11. 
  • Russia The Moscow Government is tightening lockdown rules. It introduced digital travel permits on April 15, which are mandatory for public and private transport in Moscow and its hinterland. Most enterprises have suspended work, except for medical establishments, government, law enforcement agencies, food producers and retailers, the media and public transport. 
  • Spain – From April 20, many workers are expected to return to work, including in the construction and industrial sectors. The government will distribute up to 10 million face masks to passengers on public transport. Official relaxations do not extend to retail stores, entertainment and leisure businesses, bars or restaurants – unless engaged in home delivery.

Government stimulus programs

  • Czech Republic – CzechTrade has established a hotline for entrepreneurs. The network of 50 offices across the world has started offering fee-based services free of charge until September 30, 2020. According to CzechTrade, interest is extremely high. 
  • Finland – Prime Minister Sanna Marin has announced an additional €1 billion to help enterprises hit by the pandemic. The new funding supplements existing bailout measures worth €1.15 billion and €10 billion of company loans. 
  • France – 150,000 companies will receive loan guarantees from the French Public Investment Bank (BPI) worth in aggregate up to €22 billion. According to Nicolas Dufourcq, BPI General Director, further loans applications are being reviewed representing €40 billion. Existing unemployment insurance and financing-support measures will be extended and reinforced.
  • Germany – The Federal Employment Agency announced on April 9 that the number of companies applying for government subsidies for workers who are forced to work reduced hours (Kurzarbeit) had risen almost 40% within a week. Under the scheme, the government pays a proportion of the wages that workers forego owing to reduced hours.
  • Italy – The government’s latest liquidity decree will mobilise a further €400 billion to supplement the €350 billion ‘Cure Italy’ decree. A large proportion will be channelled to businesses via banks. Delays to implementation are possible.
  • Switzerland – The Financial Times reports that Switzerland’s small loans program is easier to access than equivalent programs in France, Germany or the UK. In total, 121 Swiss banks are participating in the Swiss scheme. The largest participating bank, UBS, processed 10,000 requests in the first two days of the scheme – apparently using 100 robot algorithms.
  • UK – The UK Government’s Coronavirus Business Interruption Loan Scheme (CBILS) has been criticised for not including challenger banks, alternative finance providers and other non-bank lenders. Thousands of small UK companies currently have no relationship with a traditional bank.

BY INDUSTRY





Advanced manufacturing and defence update

24 April

ASEAN

  • Malaysia – All manufacturing companies require an exemption to the MCO to operate and only those deemed as essential services are granted exemptions. The Malaysian Government is allowing glove manufacturers to operate at full capacity. Malaysia is the largest global manufacturer of rubber gloves and the country supplies approximately 65% of global demand. MARGMA has received requests from 190 countries for rubber gloves.
  • Philippines – Luzon Island, which accounts for 70% of the country’s economy, has been placed under quarantine until 30 April. Food manufacturing is designated an essential service but is being challenged by the workforce’s inability to travel.
  • Thailand – Manufacturing and retail companies that are seeing a rise in demand for their products have been increasing inventory, opening up temporary warehouses and hiring more staff. Increased production has led to strong demand for some raw materials. Businesses are concerned the government may close factories and distribution networks in the future to quell the spread of the virus and how this will impact their operations and staff.

Europe

  • Czech Republic – Skoda Auto’s manufacturing facilities will be closed until 27 April. Hyundai reopened production on 14 April and will keep running two shifts.
  • France – The French aerospace industry will face its first recession in 20 years, and Toulouse-based Airbus will reduce production capacity by one-third, impacting supply chains. French SME Aequs Aerospace Aubigny has filed for bankruptcy. The company supplies major aerospace prime contractors such as Airbus, Dassault Aviation and Safran.
  • France – Car manufacturer PSA has signed a ‘solidarity contract’ with unions to guarantee the full payment of salaries. Under the terms of the public temporary unemployment scheme, the income of 70% of unemployed workers is subsidised. Renault has signed a similar agreement. Automotive supplier Valeo has negotiated an extra €1 billion line of credit to face the current crisis.
  • Germany – The automotive industry expects 100,000 job losses (out of 830 000) due to massive overcapacity in production and an expected 15–30% drop in demand. BMW and Porsche have extended their production stop until the end of April. At the same time, March saw record registrations for the German Government’s scheme for electric and hybrid plug-in cars.
  • Sweden – OEMs are recommencing production. Bus and truck maker Volvo Group is planning to restart production at selected plants in Sweden and France. Some production in Asia has already restarted (e.g. China, Japan). Volvo Cars is planning to restart production in Sweden and Belgium on April 20. Bus and truck maker Scania will commence a trial restart on 21 April. Production is halted in Brazil until 27 April.

Latin America

  • Mexico – Ten of the 12 companies that manufacture vehicles in Mexico will partially close their plants. These companies include BMW, GM, Nissan and Volkswagen. The COVID-19 outbreak has forced their auto parts suppliers to shut their factories, given the low demand for units worldwide and border closings.

North America

  • Canada – The Canadian Government has requested proposals for remote autonomous projects and solutions that could help tackle the economic and social impacts of COVID-19. This includes drones that could alleviate bottlenecks in supply chains, deliveries and agriculture.
  • US – The US Government expects defence companies to continue to deliver products and services to the Pentagon on time, despite the challenges defence companies face in terms of supply chains and workforce availability.
  • US – In San Francisco, Tesla has halted operations at factories in the Bay area until at least the end of April. Demand for new electric vehicles is falling in the US and European markets. There are fears that low oil prices will retard the adoption of electric vehicles.

North East Asia

  • Japan – Automakers and steelmakers have temporarily suspended production and shut down plants/blast furnaces to halt the spread of the virus and cope with declining demand.
  • Japan – A supplementary budget to improve the Japanese Ministry of Defense and Japan Self Defense Forces capabilities for COVID-19 response was approved, for disbursement in the April 2020–March 2021 fiscal year. Spending will likely focus on negative pressure isolation treatment rooms, artificial respirators, more ambulances, ‘manoeuvrable medical units’ and – potentially – a hospital ship.
  • Korea – Hyundai Motors and Kia have experienced significant decreases in their export volumes and have temporarily closed production plants. This fall in automotive demand and production may impact Australian exports of both iron ore and coal as the demand for steel production decreases. 

South Asia

  • Bangladesh – The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) says buyers have so far cancelled orders worth A$3 billion. Approximately 1,092 factories reported that 943 million product items have either been cancelled or held up, as of the first week in April. This impacts 2.16 million Bangladeshi workers. There will likely be a knock-on impact for Australian cotton exports to Bangladesh.
  • India – Production of fast-moving consumables may be improving slightly. A prominent biscuits maker has reported the company’s manufacturing facilities are running at 25% capacity, while a detergent and shampoo manufacturer said its facilities were operating at 25–30% capacity. This compares with 15–20% capacity last week at biscuit factories and less than 10% at detergent and soap facilities.

Agribusiness and food update

24 April

ASEAN

  • Indonesia – Demand for basic foods is strong and supply chains are responding, but the food service and Bali tourism sectors have experienced steep declines. Some specific fresh produce including onions have become scarce on local supermarket shelves. Indonesia’s Minister for Trade has announced that onion and garlic imports will be allowed without any import licences or a ministerial recommendation to import. This is in sharp contrast to normally restrictive permitting processes for horticultural imports. Some retailers are trimming product ranges to focus on the basics.
  • Malaysia – Demand for basic foods remains strong in the retail sector and significant efforts to shore up supply are being put in place. Significant price hikes and a reduction in the availability of airfreight has importers resorting to sea freight for some commodities. While this is a stop-gap option for some items, the supply of perishable products, such as fresh produce, that require airfreight are being significantly disrupted. There are adequate supplies of dairy, and demand for premium Australian beef is strong in the retail sector but low overall due to the food service channel being reduced. Long transit times are challenging stable supply.
  • Philippines – Demand for agrifood, especially fresh produce, remains high. Leading retailer Rustan’s increased its overall fresh (produce, meat) category sales by 57% since the lockdown and e-commerce sales are on the rise. Rising unemployment could reduce purchasing power. It is still possible to import using sea freight but there have been considerable delays. Airfreight is largely through chartered flights, at three to four times the normal costs.
  • Singapore – Higher airfreight costs are impacting the price competitiveness of Australian food produce in the market. However, Singapore’s focus on food security is opening new opportunities for Australian exporters. The Singapore Food Authority will now allow AA-stamped frozen poultry to be imported into Singapore, with immediate effect until 31 July 2020.
  • Thailand – Supermarkets report stronger-than-usual retail sales, with many Thais opting to cook and eat at home, and stock up on staples. Australian products are selling well via supermarkets and through online channels. In contrast, the food service sector has been hit hard. Significant reductions in tourist numbers has led to the closure of many hotels. Most restaurants have closed, and those that remain open can only provide takeaway service. Some traditional food service suppliers have switched to providing direct-to-home delivery services of products including Australian beef.
  • Vietnam – There is a decline in the quantity of imported food products including Australian agrifood products. The Vietnamese Customs authority temporarily cancelled registrations for clearance of rice-export shipments from 24 March. Pending review, this may limit or end rice exports from Vietnam, the world’s third-largest rice exporter.

China

  • A number of countries have announced temporary export restrictions or bans on some agriculture commodities including rice from Vietnam and Cambodia; buckwheat, rice and oat flakes from Russia; wheat flour, buckwheat, sugar, sunflower oil and some vegetables from Kazakhstan; beans from Egypt; and sunflower seed from Serbia. It is unlikely that these export bans will significantly impact China’s domestic food supply. The Chinese Government has reassured the population that China’s rice and grain reserves are at very healthy levels.
  • Local importers and distributors estimate that Australian seafood imports were around 10–20% of 2019 volumes in January/February 2020. There has been some growth from mid-March due to stock depletion and the gradual recovery of restaurant and in-house dining. Other countries (Canada, New Zealand, US) all report low volumes of exports due to soft demand, with logistical challenges for live product.
  • During the pandemic, some dairy suppliers saw strong demand, although dairy exporters had to adapt their logistics business model, due to reduced capacity and higher airfreight costs.
  • Demand for wine remains very soft, especially at the premium end. Wine suppliers estimate consumption for Q1 2020 is at 30% of normal levels, although the consumption rate is slowly recovering. Current sales are estimated to be around 25% of normal levels for bars, 50% for hotels and restaurants and 75% for direct premises, such as supermarkets. There has been growth in e-commerce channels. 
  • According to the Department of Agriculture, Water and the Environment, around 56,000 tons of beef were exported in the first three months of 2020, compared with nearly 52,000 tons for the same period last year – a 7.7% increase by volume.
  • Just over 26,000 tons of sheep meat were exported to China in Q1 2020, a 17% decrease by volume compared with 31,000 tons for the same period last year.

Export restrictions, increased domestic demand and supply interruptions in Europe and North America do present opportunities for Australian companies.

  • Australian sorghum, oat and barley are in high demand, although supply side challenges, largely as a result of the drought, remain. 
  • Concerns have been growing about food supply in Hong Kong, given that 95% of Hong Kong’s food and beverages are imported. The cancellation of passenger flights globally has increased pressure on freight options. This presents an immediate short-term opportunity for Australian suppliers to meet supply gaps in Hong Kong.
  • Research by Meat and Livestock Australia (MLA) on the impact of COVID-19 on Chinese consumers indicates sustained opportunities for high-value Australian red meat exports. The online survey of 800 affluent Chinese consumers across four Tier 1 cities found that home isolation and lockdown measures have driven some shifts in consumer attitudes and behaviour that have seen stronger demand for Australian red meat, particularly beef.
  • Before the COVID-19 outbreak, the top three considerations of consumers buying beef was safety, freshness and quality. During COVID-19, there has been a shift in attitudes to safety, boosting immunity and quality. 
  • Demand for premium seafood is slowly growing but it remains uneven and prices are still well below pre-COVID-19 levels. The recent closures of a number of large well-known seafood restaurants in Guangzhou and Hong Kong brought on by the COVID-19 outbreak (not necessarily the only reason for the closures) illustrates a shift in consumer attitude.
  • According to the Guangzhou Catering Association, seafood restaurants, especially large-scale ones, are experiencing significant difficulties. Estimates across the sector suggest that up to 25% of restaurants are now closed permanently across China. The outbreak has changed consumption habits, with people buying raw materials to cook at home.
  • According to the Wool Market Company, Chinese buyers are continuing to support Australian wool auctions, although prices and volumes are down. The China Wool Textile Association surveyed 17 mills in the week commencing 30 March. According to the survey, all mills have returned to full operation. Disruptions in key export destinations and the cancellation of orders has kept pressure on Chinese textile mills.

Europe

  • UK – Publicans will have to dispose of an estimated 50 million pints of ale, lager and cider if the lockdown continues into the summer. Farmers are already dumping thousands of litres of milk each day because they cannot find alternative markets. At least 2,000 dairy farmers are suffering severe financial pressure.

Latin America

  • Argentina – Since the nationwide lockdown was implemented, Argentina has experienced ongoing supply chain disruptions, labour and input shortages, and pre-emptive consumer demand, which has increased food prices. Export performance has varied; demand for beef in China is rebounding but European demand is softening. With a few exceptions, demand for Argentina’s fresh horticultural products, grains, edible oils and dairy remain positive in key markets in Latin America, Europe, the Middle East and Southeast Asia.
  • Mexico – A reduced demand for premium food, the cost and availability of airfreight, disruptions to supply chains and the value of the Mexican Peso are impacting Australian food exports. Currently the only entry into Mexico for premium food is via the US. The mayor of Mexico City has ordered restaurants to only offer takeaway service, with little uptake from customers. This will affect Australian meat exports. Gapa Food Services, one of Mexico’s main importers of Australian meat, is now selling directly to consumers online and via social media influencers, with some interest.

Middle East and Africa

  • Middle East – Many countries in the Middle East are reassessing their food security situation and easing restrictions on labelling and documentation in a positive development for Australian exporters.

New Zealand /Pacific Islands

  • Papua New Guinea – Initial stock piling occurred when the first COVID-19 case was announced. PNG is experiencing protein shortages.

North East Asia

  • Japan – Food services companies report high inventory levels, due to the downturn of the high-end restaurant business. A lack of availability for some F&B product lines (e.g. from Europe) may create new entry opportunities — including Australian exporters with stable delivery systems. Once lost, supermarket shelf space is often difficult to regain in Japan.
  • Japan – Consumers are becoming increasingly sensitive to nutrition and immunity issues. For example, a local TV program broadcast on March 10 highlighting the health benefits of honey led to an immediate jump in sales of honey.
  • Korea – The closure of restaurants and schools has led to a decrease in domestic rice consumption. This has led to exports of surplus rice stock to Hong Kong and Malaysia at up to three times the normal market rate. 
  • Korea – Retail sales of Australian beef have increased by 10%. However, this is offset by the severely impacted restaurant and hotel trade, where sales of Australian beef have decreased by 40–50%. Shipment delays of Australian beef is causing concerns amongst Korean importers and food processors.

Exporters of perishable or high value agriculture and seafood products can apply for the Australian Government’s International Freight Assistance Mechanism (IFAM).

South Asia

  • Bangladesh – Farm-level dairy milk prices have dropped substantially due to a lack of processing facilities and buyers. Supply chain disruptions, coupled with low demand, have put a strain on farmers. Australian dairy cattle are being used by four of the large dairy farm companies in Bangladesh, which is around 500+ dairy cattle.
  • India – The lockdown will exacerbate disruptions to food supply chains. The principal hurdles are labour shortages and transport availability. As a result, harvesting, storage and the transport of foodstuffs from farm to local markets is becoming patchy in some areas. Labour shortages mean perishable products may spoil at multiple points in the supply chain.
  • India – The winter harvest in the northern ‘bread basket’ provinces of Punjab, Haryana and Uttar Pradesh is being impacted by the non-availability of migrant labour. Mechanical harvesting would need to appear by mid-April to save crops.
  • India – The Indian Pulses and Grains Association (IPGA) estimates output for 2019–20 will suffer owing to erratic rains. The production target for pulses and grains for 2019–20 is 26.3 million metric tonnes (MT); there is now an anticipated shortfall of 10%. Approximately 2.5 to 3 million tonnes of imports – including lentils – will be needed, according to the IPGA.
  • India – There are growing concerns about food security in India, as a result of migrant labour shortages, breakdowns in logistics, and interruptions to warehousing activities. Presently, Australian lentils are in high demand and are being shipped from Port Adelaide and Melbourne in substantial volumes.
  • India – Alcohol has been flagged as a ‘non-essential’ commodity and cannot be sold during India’s lockdown. Australia supplies around 30% of the imported wine market. Although retail sales will restart after the lockdown, importers forecast that trade sales in hotels and restaurants may take about six months post-lockdown to return to normal. A ban on foreign wine imports in Nepal and the decline of the tourism industry in Sri Lanka will also have a significant effect on Australian wine exports to the region.
  • India – Soft fruit importers in Tamil Nadu report that retail operations were disturbed intermittently recently, due to intra-city logistics and local policing. The ‘new normal’ involves retailers taking orders through WhatsApp, and delivering through Dunzo/Store pickup. Labour shortages at ports in the south are also impacting import capacity.
  • India – Food and grocery supply chains have been significantly impacted. This includes e-commerce platforms such as Amazon as delivery staff were not allowed to operate.
  • Sri Lanka – Sri Lanka imports a range of essentials, including rice, wheat, sugar, dhal and milk powder. There are worries that prospective export restrictions from South Asian countries and China may severely impact supplies.

Digital technologies update

24 April

ASEAN

  • Malaysia – Online retailers are scaling up delivery and logistics capabilities to cater for a large increase in demand. Key grocery delivery players experienced a surge in demand in late March. The online stores of supermarket chain Jaya Grocer and delivery service HappyFresh reported a jump in activity of around 600% compared to the first half of March. E-commerce and logistics are restricted to the provision of essential services only. Cross-border logistics are not affected with ship fulfilments running as usual. However, the Movement Control Order is impacting final in-market delivery.
  • Philippines – With the closure of most food-service outlets (restaurants and hotels), importers and distributors have started facilitating direct-to-consumer orders via online channels.
  • Thailand – There has been significant growth in e-commerce sales with Thailand’s e-Commerce Association reporting an almost doubling in online sales, particularly in healthcare-related products. The Thai Government is encouraging retail businesses to go online to capitalise on the popularity of social commerce and the country’s strong logistics infrastructure. Food delivery companies have also seen a healthy growth in demand.

China

  • China’s large technology firms are looking to collaborate with international partners to help them develop their China digital strategies. JD.com, one of China’s most successful e-commerce platforms, is seeking to partner with larger firms as well as startups to drive expansion and innovation.
  • JD.com recently announced a year-on-year increase of 18.6% to 362 million active customer accounts in 2019. JD.com’s small services business unit grew more than 43% in the fourth quarter of 2019. This may also provide a new avenue for Australian tech companies to enter the China market.
  • PingAn Insurance is also actively looking for international startups that it can incubate, accelerate and weave into its own service offerings, to compete more effectively.
  • The new intercity rail network linking metropolitan areas to remote regions is expected to test IoT-driven technologies, including automated vehicles, new battery and energy storage, and artificial intelligence.
  • Social media and e-commerce platforms will be crucial tools to Australia’s business recovery post-COVID-19 in the China market.
  • Despite an already strong online consumer base, even more Chinese have shifted to purchasing goods online. Digital marketing strategies and understanding China’s social media environment will amplify and reinforce branding as well as aid distribution.
  • Alibaba’s e-commerce platform Taobao is expanding its direct-to-customer selling platform for bargain-seeking consumers due to competition with other platforms such as Pinduoduo.
  • Taobao’s new Taobao Special Offer Edition app allows buyers to purchase unbranded items like electronics and home appliances directly from manufacturers. The app was the most downloaded free app on Apple’s China App Store following its release.
  • In response to store closures worldwide, more of the world’s luxury brands are establishing shops on China’s e-commerce platform TMALL for specific categories and labels.
  • The skincare and beauty sector is expected to rebound quickly. Many brands are focusing on ‘health’ and ‘wellbeing’ as their core message, and on products that suggest a healthy lifestyle, with beauty a part of that lifestyle. Strong anecdotal evidence suggests the growth in online sales will continue. In 2019, online sales accounted for 30% of sales by value for skincare and 38% for colour cosmetics. Last year, the value of China’s beauty, wellbeing and personal care sector was estimated at around US$66 billion.

Europe

  • France – Viva-Tech, a major tech event due to take place in June, has been cancelled. The Paris Blockchain Summit in July has been postponed to 9–10 December 2020.
  • France – The French Government has restricted Amazon deliveries to essential products only (pharmaceutical, sanitary and alimentary goods) until the company undertakes a COVID-19 risk assessment on its warehouses. The company will be fined €1 million per day if it does not apply this measure.
  • Netherlands – Dutch edtech providers have identified secure online testing as a major challenge for schools during COVID-19. Many companies are providing free access to their platforms to education providers. Dutch edtech companies view Australian universities as better prepared to deal with disruptions than European counterparts, owing to Australia’s openness to edtech.
  • UK – Online learning developer, Twinkl, is teaming up with the BBC to offer 850,000 free Twinkl accounts to schools and parents during the crisis.
  • UK – SME lending fintechs are reporting high demand for the fast-tracking of products/credit lines as alternative solutions to the UK Government’s Coronavirus Business Interruption Loan Scheme (CBILS). CBILS has so far given support to around 4,200 businesses, with a recent report stating only 1.4% of those who have applied for finance have been successful.

North America

  • North America – Telstra Americas reports a surge in demand with technology customers looking for new capacity. As more people work, study and entertain themselves at home, all platforms – video, collaboration, content streaming, gaming – are experiencing unprecedented usage.
  • US – According to news reports, there is a surge in demand for cloud-based collaboration services. Microsoft reports a 775% increase in cloud services in areas affected by lockdowns. ZDNet reports daily usage of Google’s enterprise videoconferencing tool, Hangout Meets, is now 25 times higher than in January. Cisco’s CSCO reports a doubling of meeting minutes on its Webex videoconferencing platform. As of March 22, Zoom reports a 378% (YoY) increase in daily active users.
  • US – Streaming activity jumped 27% in the week ending March 23. Market analyst Nielsen predicts that streaming will increase 60% during the current pandemic. Netflix, Amazon, Hulu and Disney are among the beneficiaries.
  • US – Most CIOs believe spending on PCs will fall in the coming year, according to a survey reported in Marketwatch. Almost half think spending on artificial intelligence and servers will also decline. The tech sectors with enhanced prospects were security and cloud services, with 86% and 68% of CIOs respectively believing these sectors will become higher priorities.
  • US – According to a recent CB Insights report, the number of corporate deals in the fintech sector has fallen to one-half to one-third the usual rate, although a decline was apparent before the COVID-19 outbreak. The number of deals fell 27.5% between February and March 2020. This appears a global trend, with fintech funding reportedly falling to 2017 levels.
  • US – Consumer lending platforms have seen a large increase in new users, while payment platforms have experienced a decrease in transactions. Analysts say COVID-19 will greatly accelerate the ‘digital-only’ trend, providing much-needed growth for payments firms in the future.

North East Asia

  • Japan – The volume of internet data used in Japan has grown 40% in the last month, prompting overload concerns. Japan’s largest telecommunications provider, NTT Communications, says it has the capacity to handle twice the current data load. As data usage continues to rise, however, the network may come under pressure. 
  • Japan – Online sales of food staples and fresh foods have grown strongly, leading to some shortages and delays. Some supermarkets have stopped selling food via e-commerce as a result, although the Government is assuring consumers that supply chains are sound. E-commerce sites are required to stop selling masks and other scarce items at significant mark ups.
  • Japan – Most universities have delayed the start of their new term until 7 May. Traditional preferences for paper-based materials and face-to-face meetings are being challenged, although many institutions are struggling to establish alternative online programs and teaching modules.
  • Japan – Digital learning is more prevalent among private education companies, such as cram schools, than at schools and universities. However online overseas study holds limited attraction as parents and teachers see the value-add in terms of overseas lifestyle experiences. Therefore, an uptick in overseas study will likely only occur after travel restrictions have been lifted.
  • Korea – Korea’s well established e-commerce and integrated logistics networks have helped e-commerce to thrive. Online sales mostly compensate for the downturn in retails sales of food and beverages.
  • Korea – The travel ban has severely impacted the education sector. The new school year will start a phased introduction of online classes from April 9, with online classes opening for year 9 and year 12 students first. Universities are offering lectures online but students have raised concerns about quality.

South Asia

  • India – Analysts say the disruption caused by the COVID-19 lockdown will: accelerate innovation in digital technologies; speed migrations to the cloud; boost adoption of Industry 4.0 technologies; increase collaboration among startups; encourage utilisation of B2B supply chain platforms; and expedite the role of digital technologies in retail.
  • India – The Indian IT sector has moved nearly two-thirds of its 4.3 million workforce to work from home (WFH). The $150 billion industry that primarily services overseas clients is allowing these workers to build software and maintain them for clients from remote locations.
  • India – The new ‘work from home’ norm poses security challenges for government departments and businesses. Pre-pandemic, neither technology nor operations nor policies were typically geared for secure home working. In the past few weeks organisations report a spike of 40–50% in phishing alone. Most organisations believe that cyber vulnerability will have long-term negative impacts on their organisations.
  • India – Edtech companies are witnessing a surge in demand. Some companies are offering free online classes or attractive discounts on e-learning modules. Well-known companies like Byju’s and Unacademy are offering classes for free until the situation improves.
  • India – India’s University Grants Commission is recognising higher education institutions that offer online programs. This could be an opportunity for Australian providers to engage Indian students through partner institutions and to commercialise the Australian curriculum.
  • India – India has moved to virtual and digital delivery with international schools, agents and institutions re-gearing to deliver remotely. All exams have been postponed.
  • India – Several online learning platforms are offering their services to a wider audience. Toppr made its services free for use for some time. Global platforms such as Coursera and edX also gave free access to their courses.
  • India – E-commerce companies have witnessed a surge in their orders but have hit supply chain and labour challenges. Indian Railways will now start special trains for e-commerce. So far, Indian Railways has loaded 30 special parcel trains and are looking to identify various other routes, across the country. Indian Railways is also providing on-demand train services for essential commodities. In the last three days, it has delivered more than 7,195 wagons of food grains and other essential commodities.

Health update

24 April

China

  • Due to challenges in recruitment and site access in China, the US and the European Union, Australian contract research organisations are reporting increased interest from Chinese biotech firms in conducting clinical trials in Australia. There is also resurgent demand in Hong Kong and Taiwan for locally conducted trials.
  • The review and approval of non-COVID-19 clinical trials is proceeding as normal in Hong Kong and Taiwan. All Taiwan sites and around 75% of Hong Kong sites are open for recruitment and participant visits. 
  • China’s Ministry of Commerce advised that new regulations are aimed at ensuring the quality of medical exports and that they apply to all exporters equally. Chinese government agencies have reached an agreement that should result in a number of Australian companies receiving clearance to bring personal protective equipment back to Australia.
  • According to China’s Ministry of Commerce, as of 4 April 2020, 54 countries and three international organisations have signed medical and PPE procurement contracts with Chinese enterprises. More agreements are expected to be signed with another 74 nations and 10 international organisations in the near future. 

Europe

  • France – Tyre manufacturer Michelin will produce up to 400,000 surgical masks a week for its employees and the health sector.
  • Germany – Australian company Sonic Healthcare continues to deliver 25% of COVID-19 tests in Germany. Sonic is also heavily involved in validating antibody tests and test specifications: this will enable a broader use of its tests in the coming weeks.
  • Germany – Pharmaceutical company, CureVac, is working on a coronavirus vaccine. A clinical trial should begin in early summer, with the first results expected a few weeks later. The European Union is providing €80 million towards the research.
  • Netherlands – Sister companies Thirona and Delft Imaging, which specialise in tuberculosis screening, have adapted their X-ray-based AI technology to assess COVID-19-related lung damage. The system, CAD4COVID, indicates the extent of COVID-19-related abnormalities via a heat map.
  • Netherlands – Telecare solutions company, Essence Group, will install its Care@Home technology at makeshift ‘Corona Hotels’. This will free up Intensive Care Unit beds and provide a safe location for patients to recover from symptoms that do not require ongoing treatment.
  • Spain – With health workers representing 15% of all confirmed COVID-19 infections, Spain will begin mass clinical trials to determine how best to stop transmission among health workers. Called the ‘Clinical Trial for the Prevention of Coronavirus Infection in Health Workers’ (Epicos), it will be the largest such program in Europe, and include 4,000 health workers at 62 hospitals in 13 regions across Spain.
  • Switzerland – Medical diagnostics company Quotient has adapted machines to test for coronavirus antibodies. Each machine can conduct 3,000 tests a day. The company will sell the testing machines, called MosaiQ, at cost.
  • Switzerland – Researchers in Lausanne have developed an AI-based app called Coughvid that can listen to coughs and analyse whether users have COVID-19. The app has a 70% accuracy rate.
  • UK – Big pharma rivals AstraZeneca and GSK have teamed up with Cambridge University; together they aim to conduct 30,000 COVID-19 tests per day by early May. Meanwhile, the US’s Thermo Fisher Scientific will continue to supply tests needed to reach the UK Government’s 100,000-per-day target, and ramp up manufacturing.
  • UK – There are concerns about PPE availability. The Health Minister has said it is impossible to know when supplies of PPE will meet demand across NHS and the social care sector.

Middle East and Africa

  • Middle East – Interest is increasing in digital health solutions, and in Australian healthcare providers with a presence in the region or with the ability to offer solutions virtually.

North East Asia

  • Japan – The increased use of face masks has triggered a rise in skin-irritation complaints. The sales of skincare products including exfoliators, cleansers and wipes and facial masks are 50% higher year-on-year; the make-up category is depressed. 

South Asia

  • India – Indian molecular diagnostics company, Mylab Discovery Solutions, has developed the first ‘made in India’ COVID-19 testing kit. Its Mylab PathoDetect COVID-19 Qualitative PCR kit screens and detects the infection within 2.5 hours, compared to 7+ hours taken by current protocols.
  • India –Indian conglomerate Mahindra & Mahindra, in partnership with two public sector units, is working with a manufacturer of high-spec ventilators to help simplify design and scale up capacity to produce devices for $150 as compared to $10,000–$20,000.
  • India – Small Industries Development Bank of India will provide loans up to $100,000 to micro and small enterprises that are manufacturing COVID-19 medical supplies.

Infrastructure update

24 April

China

  • China’s COVID-19 stimulus spending on infrastructure is projected to be around RMB 3.5 trillion in 2020 (around 3.5% of GDP). Investment has previously been in transport networks (high-speed rail and roads), power production and industrial capacity.
  • New infrastructure investment will focus on 5G, ultra-high-voltage cables, intercity high-speed railway, electric vehicle charging stations, big data centres, artificial intelligence and the Internet of Things (IoT).
  • China’s Academy of Information and Communications Technology (CAICT) forecasts that 5G infrastructure investment will reach RMB 1.2 trillion over the next five years. More than 50% of the world’s 5G base stations are in China, and CAICT forecasts 600,000 more stations will be built by the end of 2020.
  • China’s State Grid will invest more than RMB 400 billion in power grid construction for ultra-high-voltage grids (UHV) and interprovincial electricity projects. Five UHV alternating current projects will commence between March and December 2020.
  • The central government will continue to enhance investment into strategic and significant infrastructure projects. This includes constructing and expanding the intercity rail network to link metropolitan areas to remote regions, bringing higher levels of economic development to those areas and benefitting regional commuters.
  • The new intercity rail network is expected to test IoT-driven technologies, including automated vehicles, new battery and energy storage, and artificial intelligence.

Europe

  • UK – Eighty per cent of respondents to a Royal Institute of British Architects survey report project delays and more than half say turnover has been hit. More than a third of architects have had schemes cancelled and over 75% say projects have been delayed. The survey reported 57% of respondents are experiencing lower cash flows, with a similar percentage reporting decreased workloads and new business enquiries.

Middle East and Africa

  • Middle East – Major state-owned infrastructure and building companies including Damac and Emaar have offered suppliers between 60–70% of the value of their invoices. Companies are told that if they agree to the reduction, they will be paid quickly.

New Zealand/Pacific Islands

  • New Zealand – Many companies and support services are struggling. Because of the lockdown, construction companies can only work on essential or critical infrastructure or carry out work required to address immediate health or safety risks. Exemptions include, for example, hospitals that need to build negative pressure facilities.
  • Papua New Guinea – New infrastructure projects, including hospitals and energy plants, have ceased construction in line with government work directives.
  • Papua New Guinea – Quarantine restrictions have prevented expat workers – mainly project supervisors – from entering the country. This has resulted in projects being delayed.
  • Papua New Guinea – The building and construction industry is experiencing a shortage of materials due to supply issues.

South Asia

  • India – The COVID-19 outbreak has caused severe disruptions to demand and supply in the Indian infrastructure sector.
  • India – The lockdown is likely to have a major impact as the labour-intensive sector relies on contractual workers (who are mostly migrants). Even materials supply will take time to ramp up.
  • India – The government’s changing priorities may also affect infrastructure investment.
  • India – On 28 March, the Reserve Bank of India injected liquidity, cut the repo rate and instigated a three-month moratorium on all term loans by financial institutions. This will aid developers. If uncontained, however, the pandemic will adversely hit developers’ cash flows and project delivery capabilities.
  • India – Maintaining labour is a major challenge for contractors. According to latest intelligence, most construction workers remain on-site, but delays in receiving construction materials is impacting schedules. Even if construction ceases, workers still need to be paid to keep them on site. Conversely, labourers who have returned to their towns and villages will need to be enticed back when construction resumes.
  • India – Demand has slowed in the residential and commercial segment, which has reduced sales, delayed project launches and arrested the growth in India’s urban infrastructure sector.
  • India – The COVID-19 outbreak has closed malls, retail outlets and entertainment venues. This could put future real estate deals and projects on hold. Home buyers are likely to postpone purchasing a property as they wait for clarity on their job security. 
  • India: With many government departments adopting austerity measures, India’s planned US$1.5 trillion spending on infrastructure projects will be temporarily curbed. Until spending restrictions are lifted, this will likely limit opportunities for foreign consultants and equipment suppliers – particularly for projects funded by departments that are deemed ‘non-essential’.

Resources and energy update

24 April

China

  • On April 3, the National Development Reform Commission approved a 5 MPTA LNG Terminal proposal by the Beijing Gas Group. The terminal, located at South Port Industry Zone in Tianjin, includes 10 containment tanks of 200,000 cubic metres and a 229-kilometre transmission pipeline to Tianjin, Beijing and Hebei province. This RMB 20.1 billion investment, with phase 1 to be completed in 2022, will potentially provide significant opportunities for Australian LNG exporters.

Europe

  • Austria – Trade body, Photovoltaic Austria, says sustainable investments must remain a priority for the government. Previously set targets stipulate a fully renewable electricity system by 2030.
  • UK – British Gas will furlough 3,800 workers. Individuals will be paid 80% of their salaries under the government’s jobs retention scheme with the remaining 20% paid by British Gas’ owner Centrica.

Latin America

  • Argentina –The Argentine Chamber of Mining Companies has established a procedure to support minimal operations (security and environmental protection) and the safe movement of personnel to and from mine sites. It has also created a biosecurity protocol that will remain in place once mines return to regular operations. Mining projects in the production stage only will resume activities from 1 April.
  • Chile – Production has slowed at several mines, with the focus now on maintaining operational continuity and strong sanitary protocols. The industry is also grappling with falling copper prices. Codelco, a state-owned mining company and the world’s largest copper producer, has temporarily stopped construction of three structural projects. The stop will not affect current copper production at the sites.
  • Colombia – The Colombian Government has extended the national quarantine period to 23 April. Mining is one activity that may continue. In reality, however, mining companies are reducing operations to guarantee the health and safety of their employees, families and communities. They are only implementing maintenance, care and security measures in their operations.
  • Mexico – The Mexican Government’s COVID-19 Emergency Task Force designated mining as a ‘non-essential’ industry despite lobbying from the mining sector. Miners can, however, request an exemption from the care, maintenance and security mode to keep operating if the mine’s closure significantly impacts on the community’s economic security; that is, if mining is the only employer in the community and the only provider of healthcare. This is on a case-by-case basis. All exploration and expansion projects are on hold until 30 April.
  • Peru – The majority of mine production has stopped for the past two weeks. The only activities that remain operational are related to environmental safety and critical equipment maintenance. With two more weeks of mandatory isolation across the country, miners are concerned about the impact of mobility restrictions on their supply chain. Like Chile, the Peruvian mining industry is facing low metal prices, with copper at its lowest level since 2008.

Middle East and Africa

  • Saudi Arabia – All mines are still operational. Mining companies have ordered enough supplies to last up to three months, and plan on ordering additional supplies as required. For now, suppliers are able to deliver on time but mining companies have contingency plans in case there are shortages. The main challenge for companies is employee mobility, as tighter restrictions are being imposed throughout the nation.
  • Sub Saharan Africa – Much of the mining production across the region is either shut down (e.g. South Africa) or in a care and maintenance mode. This situation has a knock-on effect on downstream processing (smelters) through to supplies for exports. Demand for mineral products from other countries has diminished significantly as a result of the COVID-19 pandemic.

New Zealand/Pacific Islands

  • Papua New Guinea – Oil and gas companies have moved into care and maintenance mode. Key personnel have left the country or are self-isolating in Papua New Guinea.

North America

  • Canada – Canada is proceeding with plans for an oil patch bailout. Federal and Alberta government programs are likely to include enhanced access to credit, especially for small and medium-sized companies, according to news reports.
  • US – With oil prices at close to US$20/barrel and expected to drop to $10/barrel, gasoline prices are expected to hit $0.99/gallon in many parts of the country. Current prices are equivalent or better than 1960 prices adjusted for inflation. This will lower transport costs in the US and benefit logistics companies.
  • US – Less fortunate is the US oil industry. Record low crude prices threaten hundreds of thousands of jobs, especially in Texas. The US Government and its agencies hope Saudi Arabia and Russia will curb production to shore up prices.
  • US – In Houston, energy companies have reduced the number of active oil rigs for the third week in a row, in their biggest weekly cut in five years. Spending on new drilling has been slashed.
  • US – The prospect of sustained low oil prices is leading analysts to fear that adoption rates for electric vehicles will slow, lowering the sector’s demand for rare-earth minerals and lithium. There is concern that as investors flock to low-risk investments, rare-earths mining projects will struggle to secure funding, except in cases where governments wish to secure a strategic supply.

South Asia

  • India – The mining, power and metals sectors are less affected than other industries, with many units continuing operations, albeit below normal levels.
  • India – Public sector steelmakers are operating at capacity. Private companies (Jindal Steel W, AMNS) are scaling down production, both to support containment and to mitigate stock build-up as the automotive, industrial and construction sectors lock down, shrinking demand for steel.
  • India – Large steel producers, who produce around half of India’s steel, cannot have sudden blast furnace shutdowns as there would be significant wastage, damage and downtime costs. However, smaller producers are substantially cutting back or halting production.
  • India – Iron ore, manganese, chromite, limestone and dolomite mines are operating within constraints, although output is reduced, especially for the smaller, less mechanised mines.
  • India – All major copper units and one major zinc producer have shut mining and production operations. One major aluminium PSU maintains operations, while other major private players have substantially cut back or shut down.
  • India – For the first time, the Indian Government has issued a directive to state-level, local and police representatives to treat green energy plants as ‘essential services’.
  • India – The lockdown has led to a drastic reduction in fuel demand and most refineries in India are running at approximately half capacity. With storage capacity exhausted, refining companies have cut their run rates and issued force majeure notices to global suppliers, deferring most April deliveries.
  • India – GAIL, the state-owned natural gas processing and distribution company, has received force majeure notices from large fertilizer, power and refinery customers. As a result, GAIL is invoking force majeure clauses with suppliers, Gazprom, Petronet and ONGC.
  • India – Petronet LNG, India’s largest gas importer, has declared force majeure with respect to purchase contracts with suppliers from Qatar and Australia. Demand cut notices from GAIL, GSPC and other smaller buyers have forced an 18% gas output cut at ONGC, India’s largest gas producer.
  • India – Domestic power demand will likely rise as more people stay indoors and work from home. Commercial and industrial electricity demand is likely to fall. India’s peak electricity demand dropped from 163,729 MW on March 20 to 145,495 MW on March 23. This drop may cast doubts on anticipated additions to conventional energy power-generating capacity.

Webinars








Recorded Webinars

COVID-19 and e-commerce in Chia

On this Australia China Business Council National Briefing, Austrade’s Dane Richmond and Esther Sun discuss what the rise of e-commerce means for Australian exports to China, particularly for food and beverage products. China Skinny’s Mark Tanner also explains how this evolution in shopping behaviour has changed the profile of China’s e-commerce market and its online demographics.

» Watch the webinar

COVID-19 update for Cross Border e-commerce by Seko and Shippit

On 29 April, Austrade held a webinar with guest speakers from Seko and Shippit to discuss how COVID-19 has affected international logistics, and how to best plan for solutions.

» Watch the webinar

COVID-19 update for Cross Border e-commerce by Facebook and Shopify

On 27 April, Austrade held a webinar with guest speakers from Facebook and Spotify on the impact COVID-19 is having on consumer behaviour now, and the likely impact on retailing in the medium to long term.

» Watch the webinar

Regulatory update: Personal Protective Equipment (PPE) and medical product export requirements in China

China has in recent weeks updated its regulatory requirements for export of PPE and medical products. This 24 April briefing by Australian Government representatives in China covers China’s regulatory settings for PPE exports, as well as Australia’s import regulations and processes.

Related documents:

» Watch the webinar

COVID-19 Business Impact Webinar

On 17 April, AustCham China, Austrade and Department of Foreign Affairs and Trade (DFAT) discussed the latest COVID-19 news from China and the impact on Australian businesses.

» Watch the webinar

US market update: Impact of COVID-19

On 17 April, AmCham and Austrade held a COVID-19 US market update webinar. The webinar was hosted by Nicola Watkinson, Austrade’s General Manager for the Americas, and included opening remarks by The Hon. Arthur Sinodinos AO, Australian Ambassador to the United States.

» Watch the webinar

Mining Equipment, technology and services (METS): Impact of COVID-19 in Latin America

In partnership with the Australia-Latin America Business Council, hear from Austrade’s representatives in Mexico, Colombia, Peru, Chile and Argentina on the challenges and the opportunities for Australian METS firms in Latin American markets.

» Watch the webinar

LATAM Regional Snapshot: Impact of COVID-19

In partnership with the Australia-Latin America Business Council, Austrade provides the latest on-the-ground insights from Brazil, Argentina, Chile, Peru, Colombia and Mexico.

» Watch the webinar

Austrade International Health Webinar: Impact of COVID-19 in China

Market updates from China-based health industry experts and Austrade’s International Health team regarding China’s health policy response to COVID-19 and the impact of the outbreak for China’s health industry. Recorded on Friday 27 March 2020.

» Watch the webinar

Impact of Coronavirus in Australia and China

Hosted by Australia China Business Council on 20 March, the panel included Daniel Boyer (Austrade General Manager for Greater China) on the business impact on the ground in China, and Jenny West (Austrade General Manager for Trade and Investment) on the impact of the virus on Australian tourism and investment industries.

» Watch the webinar





State and Territory support

In addition to the Federal Government, States and Territories also provide support, resources and advice for businesses:

Going forward

Austrade will assist businesses and our partner agencies with strategies and initiatives aimed at rebuilding business links and restoring confidence as the worst of the disruption eases.

Students studying in Australia

For the latest information visit Study in Australia.

The COVID-19 outbreak has impacted thousands of Australia’s international students, and our institutions and regulators have moved swiftly to respond to the initial travel restrictions.

Wherever possible, educational institutions are offering courses online, and offering a wide range of support to affected students, including semester and staffing changes and a scale-up of digital course alternatives.

As the spread of the virus continues, our universities and education providers are well prepared to manage potential closures.

Students are advised to check with their individual institution to see what support is available to them.

International Education sector support

Austrade is working with our state and territory and federal partners to provide up-to-date information and advice to minimise disruption to the sector and our international students, both in Australia and abroad.

This Study Australia resource hub is a central source of messages, assets and resources for sector partners. The MIP Weekly Newsletter continues to distribute International Education sector relevant updates.

Useful links

  • Business.gov.au
  • Tourism Australia
  • Department of Home Affairs
  • Department of Foreign Affairs and Trade
  • Department of Health
  • World Health Organisation (WHO) has daily updates on the COVID-19 outbreak.



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