Services-demand growth down, PRC spurs consumption 

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To deal with indications that China’s growing youth unemployment and weakening domestic demand may have formed a vicious cycle, the country plans to promote “new consumption,” which refers to a retail model emphasizing online sales and mobile payment.

The government made that call following a slowdown in the growth of China’s services activity in the second quarter of this year. The Caixin China services purchasing managers’ index (PMI) decreased from 57.1 in May to 53.9 in June, the slowest growth rate since January this year, according to a statement published on Wednesday.

An official argued that by promoting “new consumption,” which refers to the use of online and offline shopping and mobile payments to upgrade sales channels, China can create new space for domestic demand and stabilize the job market.

“In order to form a strong domestic market, it is necessary for our country to firmly implement the strategy of expanding domestic demand,” the official, Zheng Shanjie, chairman of the National Development and Reform Commission, said in an article published by the Qiushi Journal on Tuesday. Specifically, he said, it’s necessary to “comprehensively promote consumption, accelerate the upgrading of consumption quality, expand investment space and support the innovation of new products.” 

Zheng’s remarks follow a June 29 decision by China’s State Council to enact a program that is aimed at encouraging people to buy furniture and home appliances. Under the program, the government will support private companies’ efforts to develop new innovative home-use products to upgrade people’s homes and in the process support China’s economic recovery. 

‘Slow employment’

Many young people who cannot find satisfactory jobs and prefer to stay home or go traveling rather than take what’s available now describe their status as having “slow employment,” instead of being jobless. About 18.9% of graduates will choose to have “slow employment” this year, up from 15.9% last year, according to a survey conducted by Zhilian Recruitment, a Chinese human resource agency.

On June 15, the National Bureau of Statistics (NBS) said the jobless rate in China’s urban areas remained unchanged at 5.2% in May from April. The unemployment rate of people aged between 16 and 24 was 20.8% while that of those aged between 25 and 59 was 4.1% last month.

NBS spokesperson Fu Linghui said only about six million young people in China were still searching for jobs – but he did not count the 11.6 million graduates about to enter the job markets. June is graduation season in China as it is in many countries around the world.

For Chinese graduates it’s hard to find good jobs. Image: China Daily

A commentary published by the state-owned Economic Daily said the society should find out why young people choose to have “slow employment,” which has so far remained a neutral term but can become another form of “lying flat” over the long run. 

“Lying flat” is used in China to describe young people’s rejection of societal pressures to overwork and over-achieve.

The opinion piece said local governments should hold more job-matching activities for those who don’t want to have “slow employment” and more apprenticeship programs for those who want to enter the advanced manufacturing sector.

It said local governments should also regulate and improve working conditions in the private sector so that young people will no longer want to wait and see but take jobs.

On June 25, the Ministry of Human Resources and Social Security launched a nationwide program to create new jobs and push promote job matching in the country. It said that between July and December, each fresh graduate will be given the opportunity to receive at least one vocational guidance session, three job recommendations, one skill training program and one internship opportunity. It said the government may subsidize private firms to increase headcount.  

Targeted measures

The 53.9 June growth in the PMI was below the market forecast of 56.2 as consumers scaled back spending on services such as travel and restaurants. Any reading over the 50-point mark indicates a month-on-month expansion while a number below that suggests contraction.

“Both supply and demand of services expanded further in June, but at a slower pace,” Wang Zhe, senior economist at Caixin Insight Group, says in the statement published by Caixin and S&P Global. “The gauges for business activity and total new orders both stayed above 50 for the sixth consecutive month, but logged their lowest readings since January and December, respectively, as the services market saw a weaker-than-expected recovery.”

“A slew of recent economic data suggests that China’s recovery has yet to find a stable footing, as prominent issues including a lack of internal growth drivers, weak demand and dimming prospects remain,” Wang says.

The newly-announced Caixin China services PMI matched with the official non-manufacturing PMI, which fell from 54.4 in May to 53.2 in June. 

“It has been the non-manufacturing sector, buoyed by consumer spending, that has been keeping China’s economy growing in the first half of this year,” Robert Carnell, regional head of research, Asia-Pacific, ING, says in a research report published June 30. “But what this data confirms is that the initial surge contained a lot of pent-up demand.”

“Domestic tourism, and dining out have been making up for lost time in the early part of the year. But there is only so long that this can go on,” he says. “Other indicators of retail sales suggest that it remains well above historical trends, and suggests some further moderation over the second half of this year.”

He adds that although the government has already offered companies some tax exemptions, lowered financing costs and stimulated domestic demand during the pandemic, it should continue to monitor the business environment and launch more targeted and effective measures.

Read: China retail sales growth slow, job markets shaky

Follow Jeff Pao on Twitter at @jeffpao3

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MAS to adjust tax incentives to encourage single family offices to invest ‘more purposefully’ in Singapore

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SINGAPORE: The Monetary Authority of Singapore (MAS) announced on Wednesday (Jul 5) adjustments to its tax incentives for single family offices, such as recognising a broader range of investments in Singapore as well as overseas climate-related investments.

These changes hope to encourage single family offices to deploy capital “more purposefully to benefit Singapore and the region” and increase contributions towards environmental and social causes, said MAS chief Ravi Menon at a press conference for the central bank’s annual report. 

Family offices are private organisations set up to manage the wealth of one or multiple families.

A single family office is not required to be registered or licensed by the MAS as they do not manage third-party funds. The number of such entities that were awarded tax incentives by the MAS has increased to 1,100 as of end-2022, up from 700 in 2021, said Mr Menon.

To encourage single family offices to invest further in Singapore, MAS is expanding the scope of tax incentives to recognise all investments in non-listed Singapore operating companies, including private credit.

It will recognise twice the amount invested in Singapore-listed equities, eligible exchange-traded funds and unlisted funds that invest primarily in Singapore-listed equities.

Single family offices will also be required to have at least one non-family member among the investment professionals it is hiring.

In addition, all new SFO applicants will have to meet the business spending requirement with spending solely from Singapore, unlike previously where overseas spending counted towards meeting the requirement.

The new changes will expand the pool of available jobs for professionals in Singapore, as well as channel greater benefits to Singapore-based businesses and service providers, said Mr Menon.

In tackling climate change, MAS will broaden the scope of eligible investments to cover blended finance structures and recognise climate-related investments overseas, not just those in Singapore.

“Climate change is a global problem that is not bounded by national borders,” said Mr Menon.

“As a low-lying island state, Singapore is particularly vulnerable to climate change. We should thus recognise all efforts made to address climate change issues.”

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Indonesia’s mineral export bans face hot global fire

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JAKARTA – Indonesia is under rising fire at the World Trade Organization and by the International Monetary Fund (IMF) for the government’s seemingly haphazard policy of banning mineral ore exports, a market intervention Jakarta insists is just and necessary to maximize its economic and industrial growth.

In a sharply worded statement accompanying its 2022 country report, the IMF called for Indonesia to phase out the restrictions and not extend them to other commodities. “The increasing use of trade measures and industrial policies may destabilize the multilateral trade system,” the IMF said.

The Joko Widodo administration has so far been unyielding, insisting that Indonesia is well within its rights to add value to its minerals, specifically nickel, bauxite, copper and tin, to become a newly industrialized state.

Nickel exports were banned in January 2022 and bauxite shipments followed on June 10. Tin and copper bans are scheduled to come next. “We have to dare to take these steps,” Widodo, a fervent advocate of the value-added policy, said last year.

Economic Coordinating Minister Airlangga Hartarto has described efforts by developed nations and international organizations to push for controls on other countries’ export policies as a form of modern-day colonialism that will inhibit Indonesia’s economic growth and development.

The WTO ruled last November that Indonesia’s restriction on mineral exports violated Article XI of the 1994 General Agreement on Tariffs and Trade, but US opposition means there is no mechanism to enforce the decision through the organization’s dispute resolution panel.

The European Union (EU), which brought the complaint to the WTO, said the nickel ban had unduly and illegally restricted EU access to raw materials needed for stainless steel production and, in doing so, had distorted the world market production of mineral ores.

The WTO panel has argued that Indonesia’s measures didn’t fall under the exemption for prohibitions or restrictions temporarily applied to prevent or relieve critical shortages of products essential to Indonesia. What happens next isn’t clear, but Indonesia has made it clear it isn’t backing down.

A nickel mine in Sulawesi, Indonesia. Joko Widodo’s government has banned exports of the raw mineral. Image: Twitter

Despite Indonesia’s large volume of mineral exports, the mining sector contributed only 5% to gross domestic product (GDP) in 2019. After the government introduced the nickel ban, the mineral’s value-added increased from US$1.1 billion to $20.8 billion in 2021 alone.

Predicting that figure would rise to more than $30 billion, Widodo said: “That is just one commodity. The government will continue to consistently carry out down-streaming so that added value is enjoyed domestically for the advancement and welfare of the people.”

He estimates the industrialization of bauxite, mainly found in West Kalimantan, will see revenues increase from $1.3 billion to $4.1 billion due to the value-added impact of the ban. Eight bauxite smelters currently under construction will boost existing production from 4.3 to 9.1 million tonnes.

But progress has been painfully slow and the government’s loss of patience in imposing the export ban may be because bauxite ore exports earned only $500 million in the first nine months of 2022, or 20% of the value of copper concentrate exports, which are already 95% refined metal.

Progress on copper giant Freeport Indonesia’s (PTFI’s) new $3 billion copper smelter at Gresik in East Java has been equally slow and is now due to be commissioned in May next year, the deadline for the export ban to go into force.

PTFI is alsomajority owned by the government, which in 2018 took a controlling interest from US mining giant Freeport McMoRan Copper & Gold, still the operator of the hugely profitable Grasberg mine in Papua’s Central Highlands.

Indonesian-owned Amman Mineral Nusa Tenggara is about halfway through building a third copper smelter at the site of the Batu Hijau copper and gold mine on the island of Sumbawa.

Critics of the policy point out, however, that one mineral ban won’t necessarily work for another. While it welcomed Indonesia’s value-added efforts, the IMF said they should be accompanied by comprehensive cost-benefit analysis and designed to minimize cross-border spillovers.

Brazil, Canada, China, Japan, South Korea, India, Russia, Saudi Arabia, Singapore, Turkey, Ukraine, United Arab Emirates and the US have all joined as third parties in the EU’s nickel dispute at the WTO.

America’s 2022 Inflation Reduction Act, marking the most significant action Congress has taken on clean energy and climate change, provides up to $7,500 in subsidies for electric vehicles (EVs) that contain a certain percentage of critical minerals processed in the US.

EU President Ursula von der Leyen has also recently proposed passage of a Critical Raw Materials Act aimed at addressing the 27-nation organization’s dependence on imports of critical raw materials.

Home to 22% of the world’s nickel reserves, concentrated in Sulawesi and Maluku, Indonesia’s ban has caused major shifts in the supply chains of EVs and on other strategic products such as rocket engines.

More than 75% of nickel is processed into stainless steel, but it is also critical to the manufacture of EV battery cathodes, which currently consume only 7% of global production.

Minister of Industry Agus Kartasasmita (far left) together with Coordinating Minister for the Economy Airlangga Hartarto (second left) and President Joko Widodo (third left) during a visit to the PT Obsidian Stainless Steel (OSS) production line, during a series of events for the inauguration of the China-invested nickel smelter factory PT Gunbuster Nickel Industry (GNI) in Konawe, Southeast Sulawesi, in a file photo. Image: Twitter / Doc Palace / Agus Suparto

It is for that reason that car companies are seeking to secure nickel supplies from Indonesia and other suppliers like the Philippines, New Caledonia, Russia, Canada and Australia.

The world’s two largest economies, the United States and China, have only limited reserves of nickel and rely heavily on the import of nickel ore or refined nickel.

China remains the world’s largest nickel importer, but over the past decade, Chinese companies have poured $14.2 billion into three major Indonesian processing complexes aimed at locking up supplies for the foreseeable future.

While Indonesia may have the world’s largest reserves, they mainly comprise class 2 nickel, which is not suitable for EV batteries. Recent efforts have been made to develop ways to convert class 2 to class 1.

The most effective process involves high-pressure acid leaching (HPAL) of the class 2 ore to produce mixed hydroxide precipitate (MHP), which is then further refined to where it can be used for battery cathodes.

The operation is costly, however, requiring large volumes of water and considerable energy ­– equivalent in this case to about a sixth of the capacity of Indonesia’s main Java-Bali power grid. It also produces toxic tailings.

The two main production facilities at Morawali, Central Sulawesi, and Weda Bay, Maluku, will eventually rely on 5,400 megawatts of coal-fired power, leaving potential customers questioning whether the process meets environment, social and corporate governance (ESG) standards.

Another major ESG issue is the environmental degradation arising from nickel mining in eastern Indonesia, which has turned the sea red in some areas and destroyed coastlines.

Meanwhile, Indonesia persists in its efforts to create a global nickel cartel, similar to that of the Organization of Petroleum Exporting Countries (OPEC), which seeks to coordinate the petroleum policies and outputs of member states to keep oil market prices high and stable.

Investment Minister Bahlil Lahadalia says Indonesian trade officials are in “intense talks” with three other unidentified nickel suppliers, following up on Widodo’s attempt to pitch the plan to the G7 summit in Hiroshima, Japan, where he was an invited participant.

“I hope G7 countries can become a partner in these industrial downstream policies,” he was quoted as saying on the Presidential Secretariat website. “It is time to establish an OPEC-like group for other products such as nickel and palm oil.”

Indonesia has imposed a ban on raw nickel exports the EU, WTO and IMF all oppose. Image: Facebook

Bahlil first proposed the idea of a nickel cartel to Canadian International Trade Minister Mary Ng on the sidelines of their G20 summit in Bali; Canada has two million tonnes of nickel reserves, with mine production reaching 134,000 tonnes in 2021.

The average price of nickel rose to a record $25,83418 a tonne last year, an increase of $7,000 over 2021 on the back of demand for batteries. Previously, the price had been linked to stainless steel production, peaking at $20,390 in 2012. 

Noting that EV-producing countries implement their own protectionist policies, Bahlil says that Indonesia and other raw material producers want to ensure they gain the optimum added value from their inputs to the fast-accelerating industry.

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The complicated truth about North Korea sanctions

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On the surface, sanctions seem to have had little impact on North Korea’s behavior. At the time of writing, the world is waiting for the launch of a new North Korean military spy satellite that Supreme Leader Kim Jong Un announced on April 19, 2023.

North Korea is under one of the harshest multilateral sanctions regimes of any country in the world. But the country still circumvents sanctions regularly through complex smuggling operations at which it is by now very adept. This situation raises questions about whether sanctions on North Korea have failed.

It is true that sanctions have not reached the stated political goal of inducing North Korea to give up its nuclear weapons. The country has made impressive advances in missile technology and is evidently capable of acquiring the necessary technology despite sanctions. 

The “spy satellite” launch would be one of around 30 missiles tested in 2023. Though North Korea has ways to evade sanctions, this does not mean sanctions have no impact. 

Sanctions interplay with domestic governance and economic systems in ways that are complex and often hard to fully evaluate. The alternative to sanctions is not an open, liberal and free-trading North Korea, but likely a slightly more well-off version of its current state.

The issue of evasion illustrates why the impact of sanctions is so hard to evaluate. Sanctions-evading actions are not rare events but are institutionalized within North Korea’s economy. 

Since the 1970s, North Korea has systematically smuggled alcohol, tobacco, drugs and other contraband through its diplomatic networks abroad. These activities continue today and with North Korean capabilities expanding into the cyber realm, sources of illicit income will likely continue to constitute an underestimated part of the regime’s hard-currency revenue flows.

But sanctions evasion and smuggling are very expensive activities. For Chinese, Taiwanese and Singaporean trading companies and entities to risk smuggling oil to North Korea, Pyongyang must pay a massive risk premium on its purchases. North Korea has to pay well above market prices to give sellers a reason to take the risk of arrest and prosecution for sanctions violations.

A North Korean coal port is pictured in 2017. Photo: Asia Times Files / AFP / Ed Jones

The same is true for illicit North Korean exports. Sanctions do not stop coal exports entirely, but they slash the prices that North Korea can charge. Any buyer — almost always China — will only risk importing from North Korea if prices are cheap enough to outweigh the risks. 

Even prior to the harsher sanctions levied in 2016 and 2017, China, through its position as a virtual monopoly buyer, consistently paid below-market prices for North Korean coal. This dynamic is likely even stronger today, as Chinese imports of coal and other sanctioned North Korean goods continue but go mostly unrecorded.

Despite North Korea’s evasion tactics, sanctions are indisputably hurting the North Korean economy. The country’s exports are estimated to be worth only a few hundred million dollars per year – much smaller than its trade losses. 

The UN Panel of Experts estimated, for example, that North Korea earned around US$370 million from sanctions-violating coal exports in 2019. This is only a fraction of the $1.19 billion it earned from such exports in 2016, before the harsher sanctions.

The civilian impact of sanctions is unclear. On one hand, sanctions have likely dealt a harsh blow to labor-intensive industries like textiles, where a high proportion of workers are women, resulting in increased unemployment and lower wages. 

The falling incomes of North Koreans working in sanctioned industries substantially dampen the wider economy. On the other hand, there is no evidence that sanctions have driven up the price of food or other essential goods.

Sanctions have undoubtedly worsened North Korea’s food shortage by hindering imports of fertilizer and spare parts for agricultural equipment. North Korea’s own border closure, though, likely also provided an obstacle to foreign trade. 

But the impact of sanctions on North Korea’s food system is minimal compared with the regime’s refusal to undertake basic reforms in agriculture. The government bristles at dismantling collective farms or letting farmers sell their products on open markets.

Trade by evasion should logically become easier and cheaper. For sanctions to be effective against North Korea, China – which constitutes more than 90% of North Korea’s foreign trade – would have to implement them. As US-China tensions continue to grow, reasons for China to implement sanctions on North Korea are diminishing.

Reports of North Korean trade deals in weapons and labor with Russia in the wake of Russia’s invasion of Ukraine are already circulating. Very little is confirmed about these transactions, but there is evidence to support increased economic exchange between the countries. 

Earlier this year, satellite imagery from the border area indicated that Russia was increasing oil exports to North Korea while exporting unknown goods that could be arms destined for the Wagner Group.

But this does not change North Korea’s situation. Combined with its poor global reputation, sanctions will continue to make North Korea dependent on a very small number of trade partners – mainly China and Russia – who can charge highly unfavorable prices.

None of this is to say that the current thinking on North Korea sanctions is without serious flaws. The demand that denuclearisation should come before any relief on sanctions, for example, is unrealistic. 

People in Seoul on January 1, 2020, watch a television news program showing file footage of a North Korean missile test. Photo: Asia Times files / AFP / Jung Yeon-je

But many also exaggerate the possible gains of abolishing sanctions. A common misperception is that, were sanctions to be lifted, North Korea would open its doors to foreign investors who would flock to the country for its strategic geographic location and cheap labor.

Removing sanctions would not change the basics of North Korea’s economic system. Despite a permissive attitude towards markets during former Supreme leader Kim Jong Il’s reign and the first few years of Kim Jong Un’s, harsh state control over the economy best serves the regime’s political and social goals by allowing it to control the distribution of resources. 

Sanctions hurt, but removing them is no silver bullet for political or economic progress.

Benjamin Katzeff Silberstein is Associate Fellow at the Swedish Institute for Foreign Affairs and a Postdoctoral Fellow at the Safra Center for Ethics at Tel Aviv University.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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165 firms with over S0 million in shareholders’ equity headed by Singaporean CEO, managing director

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SINGAPORE: A total of 413 companies in Singapore with more than S$500 million (US$370 million) in shareholders’ equity have filed CEO or managing director information with the Accounting and Corporate Regulatory Authority (ACRA).

About 40 per cent of these CEOs or managing directors, or about 165, are Singapore citizens, said Deputy Prime Minister and Finance Minister Lawrence Wong on Tuesday (Jul 4).

Mr Wong was writing in response to a parliamentary question by Non-Constituency Member of Parliament (NMP) Leong Mun Wai (Progress Singapore Party), who asked how many such companies have Singaporean chief executives.

Potential presidential candidates looking to qualify under the private sector service requirement must have served for at least three years as chief executive of these companies.

Those in the public sector must have held office – for at least three years – as a minister, chief justice, Speaker of the House, attorney-general or permanent secretary among others. Chief executives of key statutory boards or government-owned companies like Temasek also qualify.

It was revealed in parliament in May that there are around 50 public service positions that may fulfil the public sector service requirement to run in Singapore’s next presidential election.

Potential candidates must also satisfy the committee that they are people “of integrity, good character and reputation”.

A Presidential Elections Committee – made up of members such as chairpersons of the Public Service Commission and Accounting and Corporate Regulatory Authority – determines whether candidates are eligible to run.

Senior Minister Tharman Shanmugaratnam and businessman George Goh, founder of Harvey Norman Ossia, have both announced their intention to run for the presidency.

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Biden officials must limit contact with social media firms

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US President Joe Biden speaks at the White House on 30 June.Getty Images
By Annabelle Liang
BBC News

A US federal judge has limited the Biden administration’s communications with social media companies which are aimed at moderating their content.

In a 155-page ruling on Tuesday, judge Terry Doughty barred White House officials and some government agencies from contacting firms over “content containing protected free speech”.

It is a victory for Republicans who have accused officials of censorship.

Democrats said the platforms have failed to address misinformation.

The case was one of the most closely-watched First Amendment battles in the US courts, sparking a debate over the government’s role in moderating content which it deemed to be false or harmful.

The White House said the US Department of Justice was reviewing the ruling and deciding on its next steps.

“Our consistent view remains that social media platforms have a critical responsibility to take account of the effects their platforms are having on the American people,” the White House said in a statement.

It added that platforms should “make independent choices about the information they present”.

The ruling comes after a lawsuit by the Republican attorneys general of Missouri and Louisiana alleged that US officials had pressured social media platforms to address posts on topics including Covid-19 policies and election security.

Judge Doughty, who was an appointee of former US President Donald Trump, said the plaintiffs had “presented substantial evidence in support of their claims”.

“Evidence produced thus far depicts an almost dystopian scenario,” Mr Doughty said in his ruling.

He added: “During the Covid-19 pandemic, a period perhaps best characterized by widespread doubt and uncertainty, the United States Government seems to have assumed a role similar to an Orwellian ‘Ministry of Truth.'”

The ruling limited communications by government agencies including the Department of Health and Human Services and the FBI.

It also restricted US officials including Department of Homeland Security Secretary Alejandro Mayorkas and Jen Easterly, who heads the Cybersecurity and Infrastructure Security Agency.

However, it made exceptions for contacting firms to warn them about risks to national security and criminal activity.

Judge Doughty also referred to several e-mail exchanges between White House executives and social media companies.

This included an April 2021 email by Rob Flaherty, who was formerly the White House’s director of digital strategy, to employees at technology giant Google.

In the email, Mr Flaherty said Google’s video-sharing platform YouTube was “funneling” people into vaccine hesitancy.

“This is a concern that is shared at the highest (and I mean highest) levels of the WH,” he wrote.

Google did not immediately respond to a BBC request for comment.

Social media platform Twitter, which is owned by multi-billionaire Elon Musk, did not directly to a respond to a request for comment.

Meanwhile, Facebook and Instagram owner Meta declined to comment on the ruling.

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MRANTI partners pitchIN as it targets to help 15 startups/spinoffs raise funding by end 2023

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aims to plug into the specialized Funding Accelerator program of pitchINA vibrant and dynamic technology environment may be made possible by collaboration and nbsp.A partnership between Malaysian Research Accelerator for Technology & amp, Innovation( MRANTI ), a catalyst for commercialization in the technology and innovation ecosystem, and MANAn & nbsp( a…Continue Reading

India’s Micron deal follows a curious business model

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A significant scientific advancement and a new era for India’s chip-making sector have been announced by the agreement with Micron that was reached during Prime Minister Narendra Modi of India during his visit to the United States.

The fact that India has totally missed the bus on the key systems andnbsp, involved in chip-making, is inherent in this jubilation for the Micron offer. And those who are familiar with systems do understand that the Micron offer only applies to the chip package, council, and testing, which is a relatively low end of the technology sector.

It has nothing to do with the fundamental technologies of nbsp, design, construction, and chips, much less the holy blood: the printed machines that are essential to chip fabrication.

India’s refusal to support Russia or join forces with the West and Group of Seven on a” rules-based foreign order” where the Western world sets all the rules had caused US-India relations to sour.

President Joe Biden and Prime Minister Modi both face upcoming votes that could be challenging, so a resurgence of US-India relations is immediately required. For India, it is obtaining systems for crucial industries and announcing” a fresh sun.” For Biden, India is a part of its long-term schedule, de-risking, withdraw, industries, and industry from China.

Even though it is already late, the Modi administration is suddenly starting to realize that engineering is not something you can purchase on the international market if you have money. It is the widely held awareness of nations and businesses.

From the field to unnatural intelligence, from your cheap washing machines to the priciest fighter planes, everything in today’s world is powered by technology.

Everything from inexpensive robots to the priciest aircraft and missiles in the Ukraine conflict is built with a few dollars’ worth of chips. In battle, tanks and artillery are even integrated with missiles and drones to shape the contemporary battle, and radar and spacecraft give those in charge of the wars real-time data.

As they are in almost every industry and device, contemporary electronic chips are the” brains” of all of this equipment.

India must start considering the & nbsp, the future of its electronics industry, if it is to maintain its independence in international affairs. The ability to produce the most recent generation of cards is at the core of the technology sector, nbsp.

And India must begin today because it missed the device manufacturing vehicle when it chose not to restore the SemiConductor Complex, a chip processing plant it had constructed in Mohali, Punjab. A crucial part of India’s reliance on electronics, & nbsp, the plant mysteriously burned down in 1989.

What is the offer with Micron?

One of the nation’s top companies in the semiconductor industry, Micron is a significant supplier of memory cards. It would have the necessary credentials if it chose to establish a ram processing facility in India, as opposed to the Foxconn-Vedanta construction plan, which was met with much fuss despite the fact that FoxConn has no prior experience in chip manufacturing.

However, that is not what Micron is providing. In order to” assemble, package, and test” chips that Micron has fabricated elsewhere, it has offered to set up a plant in Gujarat state.

For device fabrication facilities are located by Micron in the US and China, and their goods will be packaged and put to the test in India. Therefore, if making chips was India’s purpose, it won’t be accomplished through the Micron offer. India is assembling and testing chips that have been produced abroad, which is the lowest level of chip-making systems.

India competes with nations like Malaysia rather than the United States, China, South Korea, and Japan in the production of chips. With about & nbsp, 13 % of the global OSAT( outsourced semiconductor assembly and test ) market, Malaysia is already far ahead in this area.

Finding such facilities in Malaysia and now India will be a part of US companies’ de-risking strategy, where they move the low end of chip production to other nations while promoting the creation of new, high-end chips in Clay, Washington, such as & nbsp, Micron’s$ 100 billion mega-fab & ndrp.

Benefits vs. prices

Let’s examine the financial commitments made in setting up the Micron grow and who is footing the bill.

The core Indian government is expected to contribute a 50 % payment, and the Gujarat state government will contribute an additional 20 %. The total cost of setting up the herb is estimated to become$ 2.75 billion. Just 30 % of the total money is invested by Micron.

In other words, Micron does own a flower worth$ 2.75 billion that it would have only invested$ 825 million in. This is referred to as an” extraordinary degree of subsidy” also by industry publications like eeNews Europe.

In other words, this is a part of the public relations practice to improve Modi’s reputation, which has been damaged by the Bharatiya Janata Party losing the elections in Karnataka and the ongoing unrest in Manipur. India is” subsidizing” a top US manufacturer so that it can get together and check the cards built in Micron’s high-end plants in the United States and China if we look at this package for getting low-level technology – assembly and tests.

India is not the only nation that offers incentives for plant construction and systems. China and the US are also. The government of the United States has$ 52 billion set aside for scrap production and other essential activities. Both the National Fund and the Big Fund ( National Integrated Circuits Industry Development Investment Fund ) in China invest$ 73 billion in the country’s chip-making sector.

However, both of these nations are funding the high end of the electronics tech stack, including cutting-edge chip manufacturing, devices, CAD ( computer-aided design ), lithographic machines, and so on, with only about 5 % of that funding going toward chip assembly and testing.

Even when they do spend, they only spend a small portion of the total cost and spend less money. China has provided$ 1.75 billion in subsidies to 190 Chinese businesses, with China’s top chip manufacturer Semiconductor Manufacturing International Corp( SMIC ) receiving roughly 20 % of that amount, according to the South China Morning Post, & nbsp, which was cited by Yahoo Finance.

There is no doubt that India needs to step up its ambitions and start a flake manufacturing industry after missing the chip-making vehicle. It needs a strategy, where and how much money to invest, as well as an investment schedule in order to accomplish this efficiently.

Yes, it needs to go back to the old-fashioned arranging that BJP and RSS propagandists dismiss as” marxism.” And yes, every nation plans its science and technology, including how to create its citizens, which is essential for the advancement of technology.

What is India’s future course, and what does it require? In a market where nations like Malaysia are far ahead of India, paying 70 % of the cost while providing land and low-cost labor ensures that the US company receives 100 % ownership. It is merely a publicity stunt.

This article was created in collaboration with Globetrotter, which provided it to Asia Times, and Newsclick & nbsp.

The founding director of Newsclick is Prabir Purkayastha. in, a system for electronic media. He is a proponent of the free software movements and knowledge.

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