In-depth Country Risk Report - Malaysia
Maplecroft's in-depth Country Risk Report on Malaysia provides comprehensive analysis of the political and regulatory risks facing oil and gas companies investing in the country, as well as evaluations of the human rights situation, environmental concerns and the economic outlook.
As Malaysia looks to exploit its position at the centre of key shipping routes by moving towards a regional storage and trading hub, it continues to offer vast opportunities for foreign oil and gas companies, both in the upstream and particularly mid- and downstream sector. In the upstream sector, the government provides several incentives, particularly for deepwater exploration, with the target of increasing production by 5% each year by 2020 in order to meet rising domestic demand. Mid-and downstream, Malaysia already boasts a well-developed refinery and transportation infrastructure network, with Bintulu (in Serawak province) providing the world’s largest source of liquefied natural gas (LNG) produced at a single location.
Despite considerable opportunities, operational and strategic risks for foreign investors persist. However, these are generally lower than in neighbouring energy-producing countries and the risk outlook is unlikely to change significantly in the medium term. Nevertheless, rampant corruption, the lack of an independent judiciary and weak competition laws continue to pose operational risks to businesses. Additionally, Malaysia’s poor track record in upholding labour and civil and political rights may serve for complicity risks along the supply chain.
In-depth Country Risk Report - Spain
With economic risks spiralling, Maplecroft's Country Risk Report on Spain provides in-depth analysis of the risks and opportunities relating to the country’s business environment. The report analyses key developments in governance, economic issues, the legal and regulatory environment and labour rights.
Spain’s economic environment poses significant systemic risks to investors as the adverse effects of the crisis continue to unfold. As one of the primary casualties of the European sovereign debt crisis, the collapse of Spain’s real estate and construction sectors coincided with the onset of the 2008/2009 global financial crisis. Macroeconomic indicators have continued to deteriorate during 2012; with the International Monetary Fund estimating a -1.5% contraction in gross domestic product for the year, with recession continuing with an overall contraction of 1.3% in 2013. Weak domestic demand off the back of high unemployment and low consumer confidence continues to act as the main drag on a recovery to positive growth. The effectiveness of government policy to reduce public debt is likely to become compromised as further debt-ridden semi-autonomous regions ask for financial assistance.
The fourth and most recent austerity package, agreed with the EU in July 2012, albeit under pressure from the European Commission, demonstrated the willingness of the government to tackle the economic situation. However, the government would rather pursue a route of convincing investors and international finance authorities that the management of the economy’s finances are under control without reverting to a full-blown bailout from the EU, risking prolonging a situation of uncertainty and low confidence. Popular opposition against a series of austerity packages, the first of which was implemented in January 2012, as well as rising unemployment, have led to nationwide protests, reflecting a loss of support for the government which could compromise its authority going forward.
In-depth Labour Standards and Environmental Report - Ukraine
Maplecroft’s in-depth Labour Standards and Environmental Report on Ukraine includes detailed analysis and maps of the key labour issues affecting companies operating there, including: working hours; wages; health and safety; trade unions and labour unrest; discrimination; and forced and child labour. In addition, environmental risks, such as regulations; waste management; water stress; and energy are covered, to provide a comprehensive picture of the associated risks.
Although labour laws in Ukraine are broadly in line with international standards, their inconsistent enforcement poses reputational risks to foreign companies. Basic workplace protections are guaranteed by law, including working hour limitations, minimum wages, occupational safety, employment security and the right of workers to organise in unions. However, enforcement is inconsistent, especially in the informal economy, which accounts for more than 20% of total employment. Risks to investors of being associated with poor labour practices are especially pronounced in the construction and transportation sectors, where laws on working hours and minimum compensation are frequently violated. Entrenched discrimination against vulnerable groups, including women and migrant workers, pose additional risks.
In addition to labour standards challenges, an inadequate environmental infrastructure and poor regulatory framework poses compliance risks to multinational companies. Water quality, for example, is a concern due to inadequate treatment systems from industrial facilities. Additionally, energy inefficiencies are likely to increase operating costs, although the government has adopted new efficiency targets, which may reduce risks for investors in the long-term.
In-depth Country Risk Report - United States
Maplecroft’s latest Country Risk Report on USA evaluates the risks and opportunities for companies operating or investing in the country, with a focus on the hydrocarbons sector. The report includes in-depth analysis of the key political, legal and regulatory, security, social and environmental risks.
At least two more years of policy gridlock in Washington await Obama as he enters his second term, following the failure of his Democratic Party to retake control of the House of Representatives. The Republicans favour dramatic spending cuts to enable the US to slash both the national debt and budget deficit. The president and the Democrat-controlled Senate, however, favour a much larger role for tax increases in the overall policy mix. With both sides claiming a democratic mandate for their favoured policies, the United States appears headed for the “fiscal cliff”. This is the moment in January 2013, when a series of tax increases and spending cuts will be automatically enacted if bipartisan agreement is not reached on Capitol Hill. Failure to reach such a settlement would likely plunge the US into an immediate and sharp recession.
Given the unknown and potentially deeply damaging political ramifications of a failure to avoid the fiscal cliff, it is likely that both President Obama and Republican Speaker of the House, John Boehner, will come to a short-term agreement on taxation and public spending. However, it is expected that a long-term ‘grand bargain’ between the parties on economic policy and a plan to comprehensively address the economic position of the US will have to wait until the incoming Congress is in place in 2013. Speaker Boehner has repeatedly emphasised that the ‘lame duck’ session of Congress before January is not an appropriate landscape for framing a long-term solution to entrenched economic ills.
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