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Brics Business Council Second Annual Report 2014-2015

Ufa, Russia 2015

FOREWORD

The Chairpersons of the BRICS Business Council (BBC) countries are honored to submit the “BRICS Business Council 2014-2015 Second Annual Report” to the Governments of the BRICS nations.

The current world economic situation is characterized by low growth, low trade flows, low investment, combined with high equity prices and high debt levels. According to the United Nations World Economic Situation and Prospects 2015 Report (Update as of mid-2015), growth of world gross product is projected to  improve slightly from 2.6 per cent in 2014 to 2.8 per cent in 2015. In 2016, global growth is forecast to improve to 3.1 per cent, which is still well below the pre-crisis pace. The report notes that the growth divergence between the various regions will likely widen in 2015 because of the differing impacts from the recent drop in the prices of oil and other commodities. The short-term growth prospects of most commodity-exporting economies have been downgraded; by contrast, commodity-importers tend to benefit from the lower prices in the form of reduced inflationary, fiscal and balance-of- payment pressures.

There are still significant downside risks to the forecast related to the impact of the upcoming monetary policy normalization in the United States, ongoing uncertainties in the euro area, potential spillovers from geopolitical conflicts and persistent vulnerabilities in emerging economies. These individual risk factors are interconnected and could be mutually reinforcing, potentially leading to a weaker than expected expansion of the global economy. The broad-based weakness in investment worldwide not only holds back current growth, but also reduces potential growth in the future.

During the last years, the emerging countries have had an important role on the world stage, even as they faced a huge financial crisis. Their image has undergone a radical change through the most dynamic growth in the world and through the diminishing of the population growth rate which has led to an increase in GDP per capita. This was possible due to the increasing degree of economic integration of emerging countries in the global  economy materialized in the trade and financial sectors.

BRICS countries are part of those emerging countries, and they have been playing an important role on the global economy. They are developing countries with relevant global economic performance and high potential and with systemic importance for the world economy. In this respect, their national performances have profound implications both regionally and globally. All these features together with a number of common interests’ shows that BRICS countries have emerged as a group of developing countries where government representatives have some  weight in decision-making at the international level.

However, it should be noted that there are important differences in the five countries in terms of production structure by sector, opening outward, exchange rate regime etc., and social challenges that need to be considered.

The BBC is aiming at articulating the opportunities of cooperation from the perspective of the private sector communities of the BRICS countries, and suggesting initiatives and actions to the BRICS Governments in order to foment and enhance trade and investments ties.

Considering the above mentioned scenario, the BBC recognizes that  public finance is essential for providing public goods and services, increasing equity, enhancing macroeconomic stability, and protecting sustainability. The emergence of new public development finance institutions in developing countries presents new opportunities to transform the outlook for international public finance to promote sustainable development. In this sense, the BBC congratulates the BRICS governments on the New Development Bank (NDB) initiative, which presents potential for scaling up financing for sustainable development and infrastructure.

In relation to sustainable growth, the BBC considers that climate change is a real issue that confronts all the countries, and that there is a collective responsibility to contribute to the mitigation effort. On the path towards energy efficiency and the use of renewable sources of energy, the achievement of a balanced agreement on climate change and sustainable growth at the global level is equally important, including all aspects related to climate action plan such as adaptation, emission reduction, availability of finance and transfer of technology at affordable cost. The energy sector should be based on three principles: affordable, reliable, sustainable energy for all; low carbon economy; and energy sector to be dovetailed as a catalyst to create sustainable economy and long term jobs, thereby attaining energy security in the BRICS region.

Considering this background, the BBC adopted this Second Annual Report, themed “Facing Challenges, Building Confidence”. Our work program for 2015-2016 is focused on the following priorities:

  • Creating a favorable business environment;
  • Trade in local currencies;
  • Facilitating business travel;
  • Implementing trade facilitation;
  • Regulatory cooperation;
  • Promoting cooperation in infrastructure development;
  • The New Development Bank;
  • Enhancing investment ties;
  • Business promotion;
  • Recognizing the advisory role of the BBC and establishing dialogues within the governmental structures of the BRI

The above list of priorities identified by the BBC under the Brazilian leadership was  built  having  in  mind  the  current  macroeconomic  situation  and  based  on  the

recommendations made by members in the First Annual Report, developed with the guidance of South Africa and delivered to BRICS Heads of State during the VI BRICS Summit, in Fortaleza, Brazil.

In this document, BBC reports on its initiatives during 2014-2015 and sets out practical actions that BRICS economies could take to advance greater economic, trade and investment ties amongst the BRICS countries.

The reports of the six BBC Working Groups are annexed to this report, bringing detailed information of their activities and recommendations in the following areas: Agribusiness, Energy and Green Economy, Financial Services, Infrastructure, Manufacture, and Skills Development.

This Second Annual Report brings also the document “Recommendations for the NDB”, prepared jointly by the Working Groups, and the text of the “BRICS Business Council Declaration on Investment Principles”, which will be also delivered to the BRICS Leaders during the VII BRICS Summit in Ufa, Russia.

BBC commends this report to the BRICS Leaders and looks forward to discussing its recommendations during a future dialogue between the private sector and the Governments of the BRICS economies.

Ufa, 8th July 2015.

Mr. Sergey Katyrin (Russian Federation)

Mr. José Rubens de La Rosa (Federative Republic of Brazil)

Mr. Onkar Kanwar (Republic of India)

Mr. Ma Zehua (Peoples Republic of China)

Mr. Brian Molefe (South Africa)

KEY RECOMMENDATIONS FOR THE BRICS GOVERNMENTS

The recommendations of the BBC to the BRICS Governments in this Second Annual Report are summarized, as following:

  • Favorable business environment – Concentrate efforts in deepening the provision of information on how to do business in their respective countries, focusing on transparency promotion over local legislations and requirements for trade and investments, and establishing national focal points, where business doubts could be resolved;
  • Trade in local currencies – Develop the infrastructure to support payment in the local BRICS currency, including the settlement system, and to formulate the relevant supporting policies, establishing an on-lending cooperation mechanism and also improving the arrangements on bilateral currency swaps;
  • Business travel facilitation – Initiate discussions about developing a “BRICS Business Travel Card”, as well as to agree on Reciprocal Visa Exemption Arrangements and Visa Facilitation Agreements;
  • Trade facilitation – Reinforce their cooperation on ratification of the Protocol of Amendment to insert the Trade Facilitation Agreement into Annex 1A of the WTO Agreement, organize a roundtable among BRICS customs authorities on trade facilitation, and sign mutual recognition agreements of the Authorized Economic Operator programs;
  • Regulatory cooperation – Begin negotiations on regulatory coherence and convergence between the BRICS countries, and promote a closer relationship amongst regulatory authorities;
  • Cooperation in infrastructure development – Invest in infrastructure, particularly in integral development projects, which ensure not only the basis for economic growth, but also for improvement of the population’s quality of life, and for environment preservation; and cooperate in the existing regional physical integration initiatives within the five countries;
  • Investment ties – Prioritize the initiatives related to investment facilitation and cooperation in the BRICS, develop joint initiatives and studies on foreign investment, and endorse the BBC Declaration on Investments Principles;
  • Advisory role – Recognize the advisory role of the BBC through presenting its recommendations to BRICS Leaders at Annual Summits and sharing its recommendations with the CGETI, and also in relation to the NDB;
  • NDB – Endorse the recommendations of the BBC concerning the NDB, as stated in this document, particularly those affirmed in the Annex X of this Second Annual Report, called “Recommendation for the NDB”.

SUMMARY

I.          ENSURING   GREATER   ECONOMIC,   TRADE   AND   INVESTMENT   TIES AMONGST THE BRICS COUNTRIES
 

1.         Trade and investment ties

1.1.      Favorable business environment
1.2.      Trade in local currencies
1.3.      Business travel facilitation
1.4.      Trade facilitation
1.5.      Regulatory cooperation
1.6.      Cooperation in infrastructure development
1.7.      The New Development Bank
1.8.      Investment ties
 

2.         Business promotion

 

 

2.1.      BRICS Business Portal and BBC National Websites
2.2.      Fairs, Exhibitions and Forums
2.3.      Business Interests
 

3.         The advisory role of the BRICS Business Council

 

 

 

II.         BEST PRACTICES OF SPECIFIC PARTNERSHIPS FORGED VIA THE BRICS BUSINESS COUNCIL DURING 2014-2015

 

 

 

ANNEXES

 

 

Annex I: Fairs, exhibitions, and forums
Annex II: Business Interests
Annex III: Agribusiness Working Group Report
Annex IV: Energy and Green Economy Working Group Report
Annex V: Financial Services Working Group Report
Annex VI: Infrastructure Working Group Report
Annex VII: Manufacturing Working Group Report
Annex VIII: Skills Development Working Group Report
Annex IX: Recommendations for the New Development Bank
Annex X: BRICS Business Council Declaration on Investment Principles
  1. ENSURING GREATER ECONOMIC, TRADE AND  INVESTMENT  TIES AMONGST THE BRICS COUNTRIES

1. Enhancing trade and investments

  • Favorable business environment

In its First  Annual Report, the BBC  suggested that the BRICS  Governments should create a favorable environment to promote trade, business, investments and manufacturing ties amongst BRICS countries. In this context, the BRICS Governments should establish an economic environment that is favorable to BRICS companies doing business in the BRICS countries and treat BRICS businesses, corporations and investments similar to local businesses, corporations and investments.

With the aim to collaborate with BRICS Governments, the BBC elaborated and shared information on how to do business in their respective countries through the BRICS Business Portal (www.brics-info.org), developed by the FUDAN University. The Council has also managed to assist companies solving specific problems and barriers that hinder their business in BRICS countries.

Although the above mentioned progresses, the public private partnership is fundamental in order to eliminate obstacles that hinder trade, business, investment and manufacturing ties amongst BRICS countries.

Therefore, the BBC encourages Governments to concentrate efforts in: deepening the provision of such information; focusing on transparency promotion over local legislations and requirements for trade and investments; and establishing national focal points, where business doubts could be resolved.

The BBC will work through close communication with the Government to achieve a more favorable business environment. The “BRICS Business Council Declaration on Investment Principles” assumes great relevance in this challenge and brings many recommendations for the Governments regarding investment issues.

1.2. Trade in local currencies

Aiming at promoting the common interests and objectives of BRICS countries on trade, business, investment and manufacturing ties, the First Annual Report of the BBC stated that the BRICS countries should expand the scope and scale of pricing and payments in local currency for BRICS deals and transactions. The BBC also encouraged them to develop the necessary infrastructure to support payment in the local BRICS currency, including the settlement system and formulate the relevant supporting policies.

In order to implement local currency settlement in bilateral trade among BRICS countries, expand the scope and size of settlements, and address the risks caused by exchange rate fluctuations, the BBC suggests that:

  • The governmental authorities and financial institutions of the BRICS countries shall work together to establish an on-lending cooperation mechanism;
  • The central banks of BRICS countries should establish and improve the arrangements on bilateral currency swap Currency swap agreements shall be signed among all BRICS countries. Such mechanisms have already been announced between China and Brazil, and between China and Russia. The current situation and potential of bilateral trade should be considered in designing the scale of currency swaps. Meanwhile, the exchange rates of countries within the swap mechanism should be stabilized in order to avoid risks caused by exchange rate fluctuation.
  • The BRICS countries should consider allocating a certain quota in their existing bilateral currency swap agreements to support their trade and investments with other BRICS countrie With the authorization of the central banks of two BRICS countries, the banks of one country may, within the quota limit, directly provide borrowers from the other BRICS country with loans in currencies that the borrowers need.

The Financial Services Working Group shall analyze during the next years how the announced agreements are evolving in order to learn from their experience and develop new propositions.

1.3. Business travel facilitation

In its First  Annual Report, the BBC  suggested that the BRICS Governments should make special arrangements on visas to facilitate and encourage BRICS people- to-people exchange, including simplifying the visa approval procedures and reducing the time of approval.

The BBC is analyzing the feasibility of the adoption of a “BRICS Business Travel Card”, through a study of the pros and cons of similar initiatives within other economic integration frameworks, namely the Asian Pacific Economic Cooperation (APEC) Business Travel Card.

The BBC urges BRICS Governments to also initiate discussions about developing a “BRICS Business Travel Card”. As it may be a challenge to get all the BRICS countries to agree to a common card system, alternative measures should be considered in short and medium terms. The BBC recommends BRICS Governments to:

  • Agree on Reciprocal Visa Exemption Arrangements in order to permit visa-free entry for a limited time under certain conditions (g. Brazil and Russia and Brazil and South Africa arrangements); or
  • Conclude Visa Facilitation Agreements, which provide procedural facilitations of the issuance of visas for nationals of BRICS countries (g. reduction of the visa fee, issuance of multiple-entry visas for specific categories of applicants, shorter processing times) ; or
  • Issue ten-year-multiple-entries visa to bonafide business executives of all BRICS countries, as the South African examp

1.4.              Trade facilitation

The Trade Facilitation Agreement (TFA), adopted in the World Trade Organization (WTO), contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area. The BBC considers that the implementation of the Trade Facilitation Agreement is decisive for reducing transaction costs in international trade.

In the Fortaleza Declaration and Plan of Action, the BRICS Leaders state that they looked forward to the implementation of the Agreement on Trade Facilitation, and they called upon international partners to provide support to the poorest, most vulnerable WTO members to enable them to implement this Agreement, which should support their development objectives. The BBC applauds their commitment and asks to the BRICS Leaders to reinforce their cooperation on ratification of the Protocol of Amendment to insert the Trade Facilitation Agreement into Annex 1A of the WTO Agreement.

The BBC recommends to the BRICS Leaders, the organization of a roundtable among BRICS customs authorities, for a discussion of measures that could be adopted by BRICS Governments to facilitate trade as well as to advance cooperation initiatives, including the provision of technical assistance to all countries on the implementation of their commitments related to the TFA.

The BBC believes BRICS customs authorities’ meetings should be regularly organized to facilitate movement of goods and services as well as to advance cooperation initiatives. A final goal suggested to the BRICS customs authorities could be the signature of mutual recognition agreements of the Authorized Economic Operator programs, as soon as their respective programs are concluded.

Information on steps being considered by Governments to facilitate trade amongst BRICS countries and between the BRICS countries is of great interest to the

BBC. We ask the Government to put attention on this subject and to share information on the public initiatives in this area.

1.5.              Regulatory cooperation

Technical barriers and sanitary and phytosanitary measures are becoming a source of concern in international trade. Regulations and private standards are proliferating and creating barriers to trade, particularly when they are set individually by countries outside of the umbrella of international organizations. The BBC defends the observance of the WTO rules on technical barriers and sanitary and phytosanitary measures, so they are developed in a transparent manner and avoiding unnecessary discrimination against imported products.

The BBC believes that the regulatory cooperation across key industries is fundamental to support investment and trade. Through the BBC Working Groups, the BBC will work to gather a list of standards and regulations identified as bottlenecks to trade among BRICS countries.

The BBC suggests that the BRICS Governments would consider beginning negotiations over some specific issues, including regulatory coherence and convergence between the BRICS countries, aiming to promote equivalence and mutual recognition agreements on regulations, standards, tests and certifications in specific sectors. A closer relationship is also required amongst regulatory authorities.

1.6.              Cooperation in infrastructure development

Infrastructure expansion is a fundamental driver of sustainable economic, social, and environmental development. In the BRICS nations, the rapid increase in the urbanized working populations requires the investment in infrastructure, and particularly, the promotion of integral development projects. These projects ensure not only the basis for economic growth, but also for improvement of the population’s quality of life, and for environmental preservation.

Aiming to exploit the BRICS infrastructure development potential, the Infrastructure Working Group actively tracked existing regional physical integration initiatives within the five countries, and shared success stories among members. Attention was placed on the Integration Priority Agenda (API) in Latin America, the Programme for Infrastructure Development in Africa (PIDA), the Belt and Road Initiative and the Trans-Eurasian Belt “Razvitie”, both in Eurasia.

Based on the information gathered, each BBC chapter selected key integral development projects to promote, in order to establish infrastructure cooperation among the BRICS countries. Further information regarding the selected initiatives and projects are presented in the annexes of this Annual Report, namely the Annex VI – Infrastructure Working Group Annual Report and on the Annex II – Business Interests, respectively.

1.7.              The New Development Bank

The BBC is following the progress concerning the establishment of the NDB, which will promote and facilitate trade, business, investment and manufacturing ties amongst the BRICS countries and expand their influence and respect at  the international level.

In this context, the BBC commemorates that all the five BRICS Governments have given attention to the ratification process of the “Agreement of the New Development Bank” and the “Treaty  for the Establishment of a BRICS  Contingent Reserve Arrangement” (CRA). The Brazilian Government, as Depositary State of the CRA, registered that the receiving process of ratification of the Treaty of letters was completed in 30 June 2015. In the case of NDB, the ratification letters of Brazil, Russia, India and South Africa were already received. China indicated that the ratification will be completed soon.

The Bank is an important maneuver in growing cooperation between the countries of the BRICS and is a concrete contribution of this group of countries to systemic challenges related to international development. The NDB is an institution open to any United Nations member country. The BRICS countries, however, given their status as founding members, maintain a voting power set of at least 55%. Moreover, no other individual country will have the voting power of a country of the BRICS. This forecast provides the BRICS a privileged position at the Bank’s governance.

The BBC would like to work more closely to the BRICS Governments on the institutionalization of the NDB, in order to recommend  specific lines for financing private projects on sustainable development, infrastructure, skills development and renewable energy. The  BBC strongly believes that it  could play an important and constructive role as an advisory body to the BRICS Leaders, and in particular to issues related to the NDB, in preparatory frameworks and during the functioning of the Bank.

The NDB should highlight regional infrastructures, energy and mineral resources, connectivity and skills development requirements in developing countries, and finance investment projects with medium and long term loans.

The NDB is suggested to play a positive role in the following areas:

  • To strengthen the economic, trade and investment ties among BRICS countries;
  • To promote trans-regional industrial cooperation and unleash the comparative advantages of BRICS countries;
  • To push forward infrastructure construction for better connectivity among BRICS countries, as well as between BRICS countries and their surrounding regions;
  • To optimize the allocation of financial resources among BRICS countries;
  • To act as an assurance bank for the intra‐BRICS commerce of manufactures;
  • In the domain of skills development, to establish a “Skills Development Fund”, designed to promote investments in the quality and access to technical, vocational education and training (TVET), taking as a starting point the concept note prepared by the Skills Development Working Group of the BBC. This funding mechanism would provide a platform for sharing of knowledge and lessons learned on improving systems and responses to evolving demands on TVET in BRICS and emerging/developing economies;
  • To collaborate with commercial financial institutions, so as to reduce costs and risk It should provide diversified financial products including loans, guarantees and consultation, the price of which need to be lower than that of commercial products. The current conditions of the developing countries need to be considered when devising relevant standards of the Bank;
  • To enhance its risk prevention mechanism by establishing reserve funds, improving reserve structures, and creating effective guarantee model for project financin It should also consider providing guarantees  to large scale projects in BRICS and other developing countries;
  • To serve as an information plat An effective mechanism could be established through the NDB to share information on major projects among BRICS countries.

The reports of the Working Groups also bring specific suggestion on the role of the NDB. Furthermore, the six Working Groups agreed on a document, which is annexed to this Annual Report (Annex IX), with recommendations on the role and functioning of the NDB.

1.8.              Investment ties

The increasing internationalization of national economies is one of the most obvious changes in recent years. According to UNCTAD data, in 1980, the stock of foreign direct investment (FDI) in the world amounted to only 4.7% of the sum of gross domestic product (GDP) of all countries. In 2000, this ratio had risen to 24.8% and in 2012 reached 33.1%. Throughout this period, developed countries remained the main sources of FDI in the world. However, its share of world FDI stock declined significantly. In turn, developing and emerging countries have emerged as important sources of FDI. Regarding the BRICS, its share in global FDI inflows rose from meager 0.6% in 2000 to 10.5% in 2012 – or $ 7.2 billion to $ 145.4 billion. This data shows the potential of investments between the BRICS countries.

In this context, the BBC welcomes the commitment of the leaders of the BRICS countries to raise the economic cooperation to a qualitatively new level with a view to

intensifying trade and investment flows among BRICS countries as well as between BRICS and other partners around the world, according to the Fortaleza Declaration and Action Plan adopted in the Sixth Summit 2014.

The BBC also applauds the adoption of the BRICS Trade and Investment Plan during the VI Summit in 2014 and of the BRICS Perspective on International Investment Agreements.

The BBC understands that there is an imperative need to provide a level playing field to businesses from all BRICS countries in whichever geography they are in operation, and emphasizes the importance of promoting domestic environments that are conducive to attracting foreign investment including stable growth, adequate infrastructure, adequately developed human resources, and protection of intellectual property rights.

Aware that the BRICS countries are both sources and recipients of  foreign investments, and that the investment flows among them have potential to be improved considering their sectoral compatibilities and the adoption of facilitation and cooperation initiatives by the governments, the BBC adopted the Declaration on Investment Principles aimed at contributing to the implementation of the BRICS Trade and Investment Plan, especially in the area of investment.

The BBC requests the leaders of the BRICS countries to prioritize the initiatives related to investments facilitation and cooperation in the BRICS agenda, and to endorse the BBC Declaration on Investments Principles.

The BBC also suggests that the BRICS Governments develop joint initiatives and studies on foreign investment, through their respective agencies responsible for investment promotion, in order to discuss common goals, identify priority sectors and focus on building mutually beneficial long-term relations that will promote trade, manufacturing and investment ties amongst the BRICS countries.

2.                   Business promotion

  • BRICS Business Portal and BBC National Websites

The BBC has engaged in the promotion of economic, trade, business and investment ties amongst the BRICS countries and between the BRICS countries and Africa.

The BRICS Information Sharing and Exchanging Platform (http://www.brics- info.org) was established with the valuable support of the Chinese Fudan University, creating a dedicated BRICS Business Portal to stimulate and accelerate the exchange of trade, business and investment information, and partnership opportunities in  the BRICS countries.

The BBC is engaged to assure that this portal works as a repository of all the relevant information sought by the BRICS business community. Practical business information and best practices have been shared through the Portal by the BBC, such as the official Investment Guides of the BRICS countries, and the website of the “Make in India” initiative. The BBC Working Groups also gathered significant information on investment, trade, development and technical exchange interests, which are being constantly updated on the BRICS Business Portal.

The BBC has established a Database of Major BRICS Businesses on the Portal, which has the potential to become an important source of consulting to the private sector.

The BBC has worked closely together with Fudan University in producing and circulating video seminars, instructing ordinary users to obtain information from the Portal, and authorized BBC coordinators to post information on the Portal remotely. The BBC is assisting Fudan University in creating an Internal Online Forum on the Portal, where only the BBC and its Working Groups members would be able to log in, in order to share internal information and documents.

The BBC will make continuous efforts to provide the relevant information to the larger business community through the BRICS Business Portal. The Chinese Chapter of the BRICS Business Council has signed a cooperation agreement with Fudan University, with a view to further promoting the cooperation between the University and the BBC.

The national chapters of the BBC developed a special section on the website of each one dedicated to the BBC, containing the basic information. The national websites of Brazil, Russia and India have been connected with the BRICS Business Portal.

2.2.              Fairs, exhibitions and forums

The BBC, in partnership with the Business communities in the BRICS countries, will continue to support the holding of sector specific trade fairs, exhibitions and forums within the BRICS nations to promote trade, business, investment and manufacturing ties amongst BRICS countries.

The BBC members, in partnership with the BBC Working Groups, listed key trade fairs, exhibitions and forums, in which they consider relevant the participation and engagement of BBC sections. The information, mainly prepared by the Working Group on Manufacture, is annexed to this Annual Report (Annex I) and is also available at the BRICS Portal.

2.3.              Business interests

In order to create opportunities to increase the trade  and investment ties amongst the BRICS countries and for the establishment of globally competitive partnerships and joint ventures, each BBC Chapter identified key industries/sectors

and projects that it wants to promote domestically as well as industries/sectors and projects that it wants to pursue in the other BRICS countries.

The updated and refined list of interests (Annex II of this Annual Report) was elaborated by the BBC sections, with the support of the BBC Working Groups. The efforts focused on the achievement of practical results, which could showcase projects and partnerships among BRICS members in the future.

It is also important to highlight the initiatives of the Manufacture Working Group that provided us in its report with a cross-matching exercise on the areas of complementarity in the BRICS economies.

Global value chains have become a dominant feature of the global economy, involving economies at all levels of development. When value chains are global, economies’ trade and investment policies become more interdependent and the costs of restraints measures are higher and more pervasive. This growing fragmentation of production across borders reinforces the need to focus on complementary sectors within the BRICS economies.

3.                   The advisory role of the BRICS Business Council

The BBC was established during the V BRICS Summit, in 2013, in Durban, South Africa, in terms of the Declaration on the Establishment of the BBC.

The Declaration states that:

The BBC will constitute a platform which will strengthen and promote economic, trade, business and investment ties amongst the Business communities of the five BRICS countries. The BBC will ensure that there is regular dialogue between the Business communities of the BRICS nations and the Governments of the BRICS countries. The BBC will also identify problems and bottlenecks to  ensure greater economic, trade and investment ties amongst the BRICS countries and recommend solutions accordingly.

Business is the engine of economic growth. The BRICS Leaders recognize the integral role of business and representative business advice on key issues. In this regard, the BBC can play an advisory role through presenting its recommendations to BRICS Leaders at Annual Summits and sharing its recommendations with the CGETI.

The BBC will continue to work to realize its mission of ensuring regular dialogue between the business communities of the BRICS nations and the Governments of the BRICS countries. The BBC is prepared to provide advice on the implementation of the BRICS agenda and on other specific business sector priorities, and to respond when the various BRICS fora request information about business-related issues or to provide the business perspective on specific areas of cooperation

The BBC is willing to work in close partnership with and provide its recommendations to enrich the discussions with the Government of the BRICS economies. This interaction may avoid duplication of efforts and may maximize the results of the public initiatives. The BBC will also work closely with the following BRICS mechanisms:

  • Trade Ministers of the BRICS meetings;
  • CGETI, which reports to the Ministers of Trade and is responsible for proposing institutional framework and concrete measures to expand cooperation on economic and trade issues amongst the BRICS;
  • BRICS Think Tanks Council, established in 2013, which includes the following institutions: Institute of Applied Economic Research (Brazil); National Committee for BRICS Research (Russia); Observer Research Foundation (India); China Center for Contemporary World Studies (China); and Human Sciences Research Council (South Africa);
  • BRICS Finance Ministers meetings;
  • BRICS Financial Forum, which encompasses the cooperation between BRICS National Development Banks, since 2010;
  • The BRICS Ministers of Science and Technology meetings;
  • The BRICS Ministers of Agriculture and Agrarian Development meetings;
  • The BRICS Ministers of Education meetings;
  • Working Groups related to trade and investment issues meetin

II.        BEST  PRACTICES  OF  SPECIFIC  PARTNERSHIPS  FORGED  VIA  THE BRICS BUSINESS COUNCIL DURING 2014-2015

The BBC aims at creating opportunities to increase the trade and investment ties amongst the BRICS countries and for the establishment of globally competitive partnerships and joint ventures between companies from the BRICS countries. During 2014-2015, there were successful partnerships that clearly bring out the results being achieved through the BBC efforts.

In this perspective, it is important to highlight the business to business engagements that were organized between Indian and Chinese companies over the last few months and which resulted in Memorandum of Understandings (MoUs) being signed worth nearly US$ 3 billion. Another good example is the signing of a MoU between Federation of Indian Chambers of Commerce and Industry (FICCI) and “Delovaya Russia” – “Business Russia” for promoting engagement between entrepreneurs and businessmen from the two sides.

In March 2014, China South Rail (CSR) and China North Rail (CNR), two Chinese equipment manufacturers, signed a R 50.4 billion contract for the production of new- generation locomotives for Transnet South Africa’s state-owned transport company. This was South Africa’s largest locomotive supply contract to date. Transnet is a member of the BBC, while CSR and CNR are members of the Infrastructure Working Group of the BBC.

Healthcare is a priority sector for all BRICS nations and a team from India visited South Africa from 12-15 August, 2014 with the objective of understanding the policies and guidelines that facilitate private sector engagement in HIV/AIDS and other healthcare programs in South Africa. The Indian team met with Business Unity South Africa (BUSA) and Black Business Council. The visit received a lot of support from African Rainbow Minerals (Mr. Patrice Motsepe) and Aspen Pharma Care (Mr. Stavros Nicolau). In fact, African Rainbow Minerals deputed a senior official to India to participate in further discussions at FICCI at a seminar titled ‘Partnerships Beyond Borders: HIV/AIDS Health Conclave – India Africa Private Sector Engagement’.

On September 12, 2014, COSCO and Vale signed a Framework Agreement for Strategic Cooperation. Under the agreement, Vale shall provide a 25-year contract of ore transportation to China COSCO Bulk Shipping. Accordingly, China COSCO Bulk Shipping shall build 10 large ore carriers for Vale and acquire 4 large ore carriers currently owned and operated by Vale. The two companies are both members of the BBC. Their membership in the BBC has helped enhance  their mutual trust, settle disputes, and accelerate the process of negotiation.

On the side-lines of President Xi Jinping’s visit, FICCI organized an India-China Business Meeting on 17 September 2014 where Chinese companies signed buying orders from India for about US$ 740 million for the supply of products such as copper cathodes, marine products, industrial salt, cotton yarn & fabric.

FICCI organized the largest India-LAC Investment Conclave in New Delhi on 16- 17 October 2014. Nearly 175 business people and entrepreneurs from almost 15 Latin American and Caribbean Countries participated at this Conclave. 15 industry representatives from Brazil participated and firms like GERDAU supported this initiative.

FICCI set up an India Pavilion at “Agroprodmash” – an International Exhibition for Machinery, Equipment and Ingredients for the Food Processing industry from 6-10 October, 2014 at Expocentre Fairgrounds, Moscow, Russia and at Zdravoodukhniye (Healthcare Exhibition) in Moscow from 8-12 December, 2014.

Mr. Jack Ma, Executive Chairman, Alibaba joined the high powered 100- member business delegation to India led by H.E. Mr. Xia Baolong, Party Secretary of Zhejiang Province, the senior most political leader of the Province for the India-China (Zhejiang) Business Cooperation Conference organized jointly by FICCI and Zhejiang Federation of Industry and Commerce (26 November 2014). Eleven MoUs worth US$

2.40   billion   between   Chinese   and   Indian   Companies   were   signed   during   the

Conference followed by more than 1000 business to business meetings between them. FICCI and Zhejiang Federation of Industry and Commerce also signed an “Agreement for Cooperation” during this meeting.

Russian Deputy Prime Minister Mr. Dmitry Rogozin led an 80-member business delegation for the 8th India-Russia Trade and Investment Forum co-organized by FICCI and DIPP on 5 November 2014 in New Delhi. About 200 Indian companies participated in the Forum.

In November  2014, China section of BBC received a letter  from a Chinese association in South Africa, reflecting that the South Africa’s new regulation of Intra- Company Transfer Visa has posed great difficulty for local Chinese companies doing business there. Taking the opportunity of President Zuma’s state visit to China, the Chinese and South Africa sections of BBC held a meeting in Beijing. During the meeting, Chairman Ma Zehua reflected the problem to Chairman Patrice Motsepe. Both sides had a constructive discussion, and the problem was successfully resolved after the meeting.

FICCI signed an MOU with “Delovaya Russia”, an association of Russian entrepreneurs from the new and emerging sectors of the Russian Economy on 11 December, 2014 during the summit meeting between President Putin and Prime Minister Modi in New Delhi.

Mr. Denis Manturov, Minister for Trade & Industry of the Russian Federation visited FICCI on 12 December, 2014. The Minister emphasized engaging Russian regions with Indian states, offered Russia’s support to engineering institutes in India and invited Indian companies to participate in INNOPROM in Ekaterinburg.

FICCI in partnership with the Ark of China organized India-China (Liaoning) Business Conference on 24 April, 2015 in New Delhi. Several MoUs between Indian and Chinese companies in areas including E-Commerce, Consultancy, Animal Feedstock, Waste Management, Tourism and Infrastructure, generating business worth US$ 100 million, were signed during this meeting.

FICCI along with other partners including CCPIT from China co-organized the India-China Business Forum on 16 May, 2015 in Shanghai, China alongside the visit of Prime Minster Narendra Modi to China. As many as 21 agreements  were signed between Indian and Chinese firms worth US$ 22 billion across various sectors at the India-China Business Forum.

On advice of Ministry of External Affairs, Government of India and under the aegis of the BBC (India Chapter), FICCI and EXIM Bank of India have initiated a series of “Capacity Building Workshops on Promoting Trade and Investments with BRICS countries”. As part of this project, details on policies, financing frameworks and trade instruments available with institutions like EXIM Bank, ECGC, DGFT and Public Sector Banks for supporting export to and investments in BRICS nations are shared with Indian companies. Two such workshops have been held – New Delhi (17 April, 2015) and Ahmedabad (5 June, 2015).

FICCI organized a focused program – “Doing Business with Russia” – on 2 June

2015 with a view to encourage Indian companies to look at the Russian market as a key business destination. Nearly 60 Indian companies participated in this program wherein discussions were facilitated with senior representatives of VTB Bank, SBER Bank and Federal Customs Service of the Russian Federation.

The issuance by the South African Government of port of entry long-term multiple entry visas for BRICS Business Executives, announced in 2015 must be also pointed out as a best practice that facilitates trade in a broad sense.