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NIK ZAFRI BIN ABDUL MAJID,
CONSULTANT/TRAINER
Email: nikzafri@yahoo.com, nikzafri@gmail.com
https://nikzafri.wixstudio.com/nikzafriv2

Kelantanese, Alumni of Sultan Ismail College Kelantan (SICA), Business Management/Administration, IT Competency Cert, Certified Written English Professional US. Has participated in many seminars/conferences (local/ international) in the capacity of trainer/lecturer and participant.

Affiliations :- Council/Network Member of Gerson Lehrman Group, Institute of Quality Malaysia, Auditor ISO 9000 IRCAUK, Auditor OHSMS (SIRIM and STS) /EMS ISO 14000 and Construction Quality Assessment System CONQUAS, CIDB (Now BCA) Singapore),

* Possesses almost 30 years of experience/hands-on in the multi-modern management & technical disciplines (systems & methodologies) such as Knowledge Management (Hi-Impact Management/ICT Solutions), Quality (TQM/ISO), Safety Health Environment, Civil & Building (Construction), Manufacturing, Motivation & Team Building, HR, Marketing/Branding, Business Process Reengineering, Economy/Stock Market, Contracts/Project Management, Finance & Banking, etc. He was employed to international bluechips involving in national/international megaprojects such as Balfour Beatty Construction/Knight Piesold & Partners UK, MMI Insurance Group Australia, Hazama Corporation (Hazamagumi) Japan (with Mitsubishi Corporation, JA Jones US, MMCE and Ho-Hup) and Sunway Construction Berhad (The Sunway Group of Companies). Among major projects undertaken : Pergau Hydro Electric Project, KLCC Petronas Twin Towers, LRT Tunnelling, KLIA, Petronas Refineries Melaka, Putrajaya Government Complex, Sistem Lingkaran Lebuhraya Kajang (SILK), Mex Highway, KLIA1, KLIA2 etc. Once serviced SMPD Management Consultants as Associate Consultant cum Lecturer for Diploma in Management, Institute of Supervisory Management UK/SMPD JV. Currently – Associate/Visiting Consultants/Facilitators, Advisors/Technical Experts for leading consulting firms (local and international), certification bodies including project management. To name a few – Noma SWO Consult, Amiosh Resources, Timur West Consultant Sdn. Bhd., TIJ Consultants Group (Malaysia and Singapore), QHSEL Consultancy Sdn. Bhd.

He is also currently holding the Position of Principal Consultant/Executive Director (Special Projects) - Systems and Methods, ESG, QHSE at QHSEL Consultancy Sdn. Bhd.* Ex-Resident Weekly Columnist of Utusan Malaysia (1995-1998) and have produced more than 100 articles related to ISO-9000– Management System and Documentation Models, TQM Strategic Management, Occupational Safety and Health (now OHSAS 18000) and Environmental Management Systems ISO 14000. His write-ups/experience has assisted many students/researchers alike in module developments based on competency or academics and completion of many theses. Once commended by the then Chief Secretary to the Government of Malaysia for his diligence in promoting and training the civil services (government sector) based on “Total Quality Management and Quality Management System ISO-9000 in Malaysian Civil Service – Paradigm Shift Scalar for Assessment System”

Among Nik Zafri’s clients : Adabi Consumer Industries Sdn. Bhd, (MRP II, Accounts/Credit Control) The HQ of Royal Customs and Excise Malaysia (ISO 9000), Veterinary Services Dept. Negeri Sembilan (ISO 9000), The Institution of Engineers Malaysia (Aspects of Project Management – KLCC construction), Corporate HQ of RHB (Peter Drucker's MBO/KRA), NEC Semiconductor - Klang Selangor (Productivity Management), Prime Minister’s Department Malaysia (ISO 9000), State Secretarial Office Negeri Sembilan (ISO 9000), Hidrological Department KL (ISO 9000), Asahi Kluang Johor(System Audit, Management/Supervisory Development), Tunku Mahmood (2) Primary School Kluang Johor (ISO 9000), Consortium PANZANA (HSSE 3rd Party Audit), Lecturer for Information Technology Training Centre (ITTC) – Authorised Training Center (ATC) – University of Technology Malaysia (UTM) Kluang Branch Johor, Kluang General Hospital Johor (Management/Supervision Development, Office Technology/Administration, ISO 9000 & Construction Management), Kahang Timur Secondary School Johor (ISO 9000), Sultan Abdul Jalil Secondary School Kluang Johor (Islamic Motivation and Team Building), Guocera Tiles Industries Kluang Johor (EMS ISO 14000), MNE Construction (M) Sdn. Bhd. Kota Tinggi Johor (ISO 9000 – Construction), UITM Shah Alam Selangor (Knowledge Management/Knowledge Based Economy /TQM), Telesystem Electronics/Digico Cable(ODM/OEM for Astro – ISO 9000), Sungai Long Industries Sdn. Bhd. (Bina Puri Group) - ISO 9000 Construction), Secura Security Printing Sdn. Bhd,(ISO 9000 – Security Printing) ROTOL AMS Bumi Sdn. Bhd & ROTOL Architectural Services Sdn. Bhd. (ROTOL Group) – ISO 9000 –Architecture, Bond M & E (KL) Sdn. Bhd. (ISO 9000 – Construction/M & E), Skyline Telco (M) Sdn. Bhd. (Knowledge Management),Technochase Sdn. Bhd JB (ISO 9000 – Construction), Institut Kefahaman Islam Malaysia (IKIM – ISO 9000 & Internal Audit Refresher), Shinryo/Steamline Consortium (Petronas/OGP Power Co-Generation Plant Melaka – Construction Management and Safety, Health, Environment), Hospital Universiti Kebangsaan Malaysia (Negotiation Skills), Association for Retired Intelligence Operatives of Malaysia (Cyber Security – Arpa/NSFUsenet, Cobit, Till, ISO/IEC ISMS 27000 for Law/Enforcement/Military), T.Yamaichi Corp. (M) Sdn. Bhd. (EMS ISO 14000) LSB Manufacturing Solutions Sdn. Bhd., (Lean Scoreboard (including a full development of System-Software-Application - MSC Malaysia & Six Sigma) PJZ Marine Services Sdn. Bhd., (Safety Management Systems and Internal Audit based on International Marine Organization Standards) UNITAR/UNTEC (Degree in Accountacy – Career Path/Roadmap) Cobrain Holdings Sdn. Bhd.(Managing Construction Safety & Health), Speaker for International Finance & Management Strategy (Closed Conference), Pembinaan Jaya Zira Sdn. Bhd. (ISO 9001:2008-Internal Audit for Construction Industry & Overview of version 2015), Straits Consulting Engineers Sdn. Bhd. (Full Integrated Management System – ISO 9000, OHSAS 18000 (ISO 45000) and EMS ISO 14000 for Civil/Structural/Geotechnical Consulting), Malaysia Management & Science University (MSU – (Managing Business in an Organization), Innoseven Sdn. Bhd. (KVMRT Line 1 MSPR8 – Awareness and Internal Audit (Construction), ISO 9001:2008 and 2015 overview for the Construction Industry), Kemakmuran Sdn. Bhd. (KVMRT Line 1 - Signages/Wayfinding - Project Quality Plan and Construction Method Statement ), Lembaga Tabung Haji - Flood ERP, WNA Consultants - DID/JPS -Flood Risk Assessment and Management Plan - Prelim, Conceptual Design, Interim and Final Report etc., Tunnel Fire Safety - Fire Risk Assessment Report - Design Fire Scenario), Safety, Health and Environmental Management Plans leading construction/property companies/corporations in Malaysia, Timur West Consultant : Business Methodology and System, Information Security Management Systems (ISMS) ISO/IEC 27001:2013 for Majlis Bandaraya Petaling Jaya ISMS/Audit/Risk/ITP Technical Team, MPDT Capital Berhad - ISO 9001: 2015 - Consultancy, Construction, Project Rehabilitation, Desalination (first one in Malaysia to receive certification on trades such as Reverse Osmosis Seawater Desalination and Project Recovery/Rehabilitation), ABAC Centre of Excellence UK (ABMS ISO 37001) Joint Assessment (Technical Expert)

* Has appeared for 10 consecutive series in “Good Morning Malaysia RTM TV1’ Corporate Talk Segment discussing on ISO 9000/14000 in various industries. For ICT, his inputs garnered from his expertise have successfully led to development of work-process e-enabling systems in the environments of intranet, portal and interactive web design especially for the construction and manufacturing. Some of the end products have won various competitions of innovativeness, quality, continual-improvements and construction industry award at national level. He has also in advisory capacity – involved in development and moderation of websites, portals and e-profiles for mainly corporate and private sectors, public figures etc. He is also one of the recipients for MOSTE Innovation for RFID use in Electronic Toll Collection in Malaysia.

Note :


TO SEE ALL ARTICLES

ON THE"LABEL" SECTION BELOW (RIGHT SIDE COLUMN), YOU CAN CLICK ON ANY TAG - TO READ ALL ARTICLES ACCORDING TO ITS CATEGORY (E.G. LABEL : CONSTRUCTION) OR GO TO THE VERY END OF THIS BLOG AND CLICK "Older Posts"


 

Showing posts with label RUSSIA. Show all posts
Showing posts with label RUSSIA. Show all posts

Thursday, April 17, 2025

CHINA RETALIATION TOWARDS US TARIFFS AND WHAT WOULD BE THE IMPACTS TO BOTH COUNTRY AND THE GLOBAL ECONOMY? AN OVERVIEW BY NIK ZAFRI

This article is based on the available data and my analysis up to 2025. It doesn't accurately predict future events but analyzes what could occur if the US-China tariff tensions continue. It's wise for us to prepare, as all around the world have already taken steps in case it worsens. 

Photo Source : Google

1.0 THE FUTURE

I think the world is moving into an era of economic realism and strategic alignment. Tariffs, trade blocs, and new financial instruments are only the surface. Underneath lies a deeper transformation in how nations perceive sovereignty, resilience, and growth. In this fluid landscape, agility and diplomacy not dominance will define future prosperity.

By now, I am sure that everyone is aware of how China responded to the United States’ imposition of import tariffs and how China response to it.


Photo Source : Google

1) Retaliatory Tariffs

In response to the U.S. imposing tariffs up to 145% on Chinese goods, China has enacted 125% tariffs on U.S. imports, intensifying the trade conflict.

2) Boeing Aircraft Orders Halted

China has suspended deliveries of Boeing aircraft and related equipment, affecting pending orders from major Chinese airlines. This move significantly impacts Boeing, as China represents a substantial portion of the global aviation market. 

3) Luxury Brand Manufacturing Exposed

Chinese manufacturers have highlighted that many luxury brands, such as Gucci and Louis Vuitton, produce their goods in China. This revelation challenges traditional perceptions of luxury brand origins and may influence consumer sentiment. 

1.1 THE POTENTIAL IMPACTS

1) Economic Tensions Escalate

The tit-for-tat tariffs intensified the trade war, leading to uncertainty in global markets and disruptions in supply chains.

a) Aviation Sector Losses

Boeing, one of the U.S.'s top exporters, could face substantial financial losses due to halted Chinese orders, which traditionally represent a significant share of its business.

b) Brand Reputation and Consumer Perception - by exposing the manufacturing origins of high-end Western brands, China may influence consumer sentiment-especially among nationalist buyers in both China and the West. This could lead to reduced demand or increased scrutiny over pricing and branding strategies.

c) Shifts in Manufacturing Strategies

Brands might reassess their manufacturing base to diversify away from China, potentially accelerating the trend of "friendshoring" or relocating production to other countries.

d) Diplomatic Strain

These economic measures often ripple into diplomatic relations, potentially stalling cooperation in other critical areas such as climate change, technology, and regional security.


2.0 BRICS AND BRICS+

Photo Source : BNE IntelliNews


2.1 Diversification of Alliances

Southeast Asian nations are strategically balancing their relationships between Western powers (like the US and EU) and emerging powers. BRICS (Brazil, Russia, India, China, South Africa, now also including countries like Egypt, Ethiopia, Iran, etc. possibly Malaysia anytime soon) offers an alternative pole to the Western-dominated institutions like the IMF and World Bank.

2.2 Economic Opportunities

China and India, the two largest BRICS economies are major trading partners and investors in the region. With the rise of the Belt and Road Initiative (BRI), infrastructure investments from China have been pouring into SEA, making the economic pivot even more appealing.

2.3 DE-DOLLARIZATION??

There’s a growing trend among BRICS countries to move away from reliance on the US dollar in trade settlements. This appeals to SEA nations who want to shield themselves from dollar-based sanctions and the volatility of US monetary policy.

 2.4 Inclusive Development Philosophy

BRICS often promotes a narrative of mutual development without the governance and policy strings typically attached to Western aid and loans. This resonates with many SEA leaders who prefer more autonomy in domestic affairs.


3.0 WILL THE YUAN EVENTUALLY DOMINATE REGIONAL CURRENCY USE?

I would say possibly, but with caveats.

3.1 Increasing Use

Some ASEAN countries have started using the Yuan in bilateral trade and as part of foreign reserves (e.g., Malaysia, Indonesia).

But there are still possible hurdles to jump:

a) The Yuan may still not fully convertible. 

b) Trust and transparency issues with China’s monetary policy persist.

Currently most SEA countries still prefer a basket of currencies rather than dependence on any single one be it the USD or Yuan.

Yuan usage may grow regionally as an alternative or in parallel with the dollar, but a complete shift or dominance is unlikely in the short term unless China introduces greater financial transparency and liberalization.


4.0 WILL GOLD BE REPLACED BY OTHER PRECIOUS METALS TO BACK A CURRENCY?

Photo Source : Investopedia

For now, I would say unlikely, but everyone must know alternative hedging is rising and trending.

4.1 Gold’s Role

Gold has always been the most stable and globally accepted store of value. BRICS countries (especially Russia and China) are already increasing their gold reserves as a hedge against the dollar. 

4.2 Alternatives like Rare Earths or Platinum?

These are valuable, but they lack the same liquidity and price stability and may not be universally accepted role as gold.

However, in a diversified reserve strategy, countries might add platinum, silver, or strategic resources (like lithium) into sovereign wealth portfolios but not necessarily to directly back a currency.

4.3 Digital Currencies with Metal Backing?

There's growing interest in CBDCs (Central Bank Digital Currencies) backed partially by tangible assets including metals, but this is still exploratory.


5.0 IMPORT TARIFFS ON CHINESE AUTOMOBILE

Photo Source : carlogos dot org

Then came the issue of import tariffs on Chinese automobiles to the U.S. is heating up again and it's quite layered.  Here's a breakdown of the current state, why it's happening, and what it means going forward.


5.1 Current Status (as of 2025)

a) High Tariffs Still in Place

The U.S. continues to impose significant tariffs on Chinese-made vehicles, often around 27.5% or more, combining the base tariff and additional duties from the Trump-era trade war (ironically which Biden-era policy hasn't fully reversed).

b) EV-Specific Concerns

The U.S. is particularly wary of cheap electric vehicles (EVs) from China (like BYD, NIO, XPeng), fearing they could flood the market and undercut American automakers like Tesla, Ford, and GM.

c) National Security and Technological Transfer

Concerns aren’t just economic, Washington worries that Chinese EVs could pose data privacy risks due to smart car features, and could be a vector for technological espionage or influence.

d) Why the U.S. Is Maintaining (or Even Considering Raising) These Tariffs

i) Protecting Domestic Industry 

With massive investments under the Inflation Reduction Act (IRA) and CHIPS Act, the U.S. is trying to rebuild its manufacturing and EV ecosystem. Chinese imports are seen as a threat to that goal.

ii) Political Pressure

In an election year or geopolitical tension (e.g., Taiwan Strait, South China Sea), being "tough on China" scores bipartisan political points. Tariffs are one of the few tools with support across the aisle. 

e) Leveling the Playing Field 

U.S. officials argue that China’s auto sector enjoys heavy state subsidies, skewing competition. Tariffs are a way to counteract that imbalance.


WHAT WOULD BE THE LIKELY IMPACTS AND IMPLICATIONS

(Both countries including the consumers could be affected)

A) For China

i) Limited U.S. Market Access

Chinese automakers are turning to Europe, Latin America, and Southeast Asia instead.

ii) Brand Recognition Lag

Without presence in the U.S., Chinese EV brands may miss out on one of the world's largest and most influential auto markets.

B) For the U.S.

i) Slower EV Adoption? Tariffs may keep prices high for consumers in the short term, especially for affordable EV options.

 ii) Domestic Growth - on the plus side, tariffs give U.S. automakers more breathing room to innovate and scale.

C) For Consumers

Less variety and potentially higher prices in the short term, especially for entry-level EVs that China could offer at lower cost.


WHAT’S NEXT THEN


a) WTO Challenges

China may raise disputes in the World Trade Organization, but the U.S. has deprioritized WTO rulings in recent years.

b) Possible Tariff Adjustments?

Future U.S. administrations might revise tariffs depending on domestic EV competitiveness and broader U.S.-China relations.

c) Chinese Automakers Going Indirect

Some companies are considering setting up plants in Mexico or Southeast Asia to bypass tariffs under trade deals like USMCA.


6.0 US 90-DAY HALT OR TARIFF FLOAT

Will this help?

6.1 Short-Term Halts Offer Limited Relief

Personally I feel that the 90-day tariff suspension or "float" - was intended to ease tensions and allow room for negotiation again, based on what’s going on right now, it did little to reverse the underlying issues:

6.2 Market Skepticism

Investors and global markets largely saw the pause as a tactical delay rather than a genuine shift in U.S. trade policy.

6.2 No Structural Changes

The core grievances, such as intellectual property concerns, subsidies for Chinese industries, and national security risks, remained unaddressed.

6.4 Policy Whiplash

With no long-term roadmap, the halt created confusion among businesses relying on stable trade frameworks.

6.5 Minimal Impact on Supply Chains

The uncertainty discouraged companies from making major investments or altering supply chain strategies, knowing tariffs could snap back at any time.


7.0 GLOBAL ECONOMIC IMPACTS OF US-CHINA TARIFF TENSIONS AND BRICS REALIGNMENT

7.1 Slower Global Growth

  • The IMF and World Bank have warned that prolonged trade wars between the U.S. and China could shave off 0.5% - 1% from global GDP annually,
  • Supply chain disruptions, higher input costs, and export/import barriers slow trade momentum globally.

7.2 Rising Inflation Pressures

Tariffs on goods (e.g., automobiles, electronics, food items) raise production and retail costs, feeding inflation not only in the U.S. but also in countries dependent on those trade routes.

7.3 Global Supply Chain Realignment

Companies are diversifying away from China (the “China+1” strategy), shifting manufacturing to countries like Vietnam, Mexico, and India.

Friendshoring and nearshoring gain traction, but reconfiguring supply chains is costly and can take years, causing short- to medium-term instability.

7.4 Currency Volatility and DeDollarization

Moves by BRICS to de-dollarize assuming if successful may weaken the dollar’s dominance, leading to :

  • Exchange rate fluctuations,
  • Higher hedging costs for global businesses,
  • A possible rise in regional currency blocs, complicating international trade settlements.

7.5 Technological and Standards Fragmentation

As the U.S. restricts tech access to China (semiconductors, AI, etc.) and China develops parallel systems (e.g., its own 5G, EV, and payment standards),

I would predict :

  • a bifurcation of global technology ecosystems,
  • Businesses forced to choose between Western and Chinese standards, raising R & D and compliance costs.

7.6 Reduced Consumer Choice and Higher Prices

  • Fewer global options in goods (especially EVs, tech, luxury items).

  • Consumers may face fewer affordable choices, particularly in lower-income markets.

7.7 Trade Bloc Polarization

The rise of BRICS+ and possible alignment of countries like Saudi Arabia, Iran, Malaysia and Indonesia suggests a multipolar economic world, with parallel systems forming trade blocs may prioritize internal trade within BRICS or Global South, bypassing traditional Western markets.

WTO’s role could diminish further.

7.8 Capital Flow Redirection

Global investment funds may pivot to BRICS nations or emerging markets aligned with China/India as infrastructure and trade ties deepen.

U.S. and European firms may face barriers or political scrutiny for investing in or importing from China.

7.9 Global Cooperation Undermined

Trade disputes and power polarization make climate cooperation, global health (like post-pandemic coordination), and digital governance more difficult.


8.0 IMPACTS ON THE GLOBAL STOCK MARKET AND OTHER FORMAL INVESTMENTS

8.1 Short-Term Impacts on Global Stock Markets

a. Increased Volatility

  • Trade wars and tariff announcements tend to spook investors, especially in export-heavy sectors like tech, automotive, aviation, and manufacturing,
  • Stock indices (S&P 500, Nikkei, Hang Seng, etc.) may react with sharp swings as market sentiment responds to escalating tensions or diplomatic breakthroughs.

b. Tech and EV Sector Pressures

U.S. tech firms with global supply chains (like Apple, Tesla) could face higher costs and reduced sales if retaliatory tariffs are expanded.

Chinese EV stocks may struggle with restricted access to Western markets (especially the U.S.), though they could gain traction in BRICS or developing countries.

c. Flight to Safety

In uncertain times, investors often shift toward safe-haven assets: gold, U.S. Treasuries, Swiss francs, and defensive stocks (healthcare, utilities).

Emerging markets may suffer temporary outflows unless they are seen as benefitting from supply chain realignments (e.g., Vietnam, India, Mexico).

8.2 Medium-to-Long-Term Impacts on Formal Investment

 a. Rerouting of Foreign Direct Investment (FDI)

Southeast Asia, India, and Latin America are becoming new magnets for FDI as companies "de-risk" and reduce dependence on China.

Investments in infrastructure, logistics, and digital ecosystems in these regions are expected to grow, boosted by Chinese and BRICS funding.

b. Reshoring and Friendshoring Boosts Developed Markets

The U.S., Europe, and Japan will attract capital for high-tech manufacturing, clean energy, and semiconductor fabs, backed by incentives from government stimulus packages (e.g., CHIPS Act, IRA).

This will shift long-term investor focus toward industrial and clean-tech sectors in developed markets.

c. Rise of Sovereign Wealth Funds and State-Controlled Capital

Countries in BRICS+ and resource-rich states (e.g., UAE, Saudi Arabia, Russia) may channel more capital through sovereign wealth funds, focusing on strategic assets and geopolitical leverage.

This trend will challenge traditional Western institutional investors, like pension funds and private equity, especially in infrastructure and energy.

d. Currency Diversification and Portfolio Shifts

As countries increase trade in Yuan or local currencies, demand for U.S. dollars may weaken slightly, impacting dollar-based assets and Treasuries.

Portfolio managers might diversify more aggressively into gold, commodity ETFs, or Yuan-based instruments, albeit cautiously due to transparency concerns.


MY ADVICE TO INVESTORS

The age of passive investing in a “globalized” world may be giving way to active, geo-aware investment strategies. Markets will become more fragmented, and geopolitical literacy will become as crucial as financial analysis.

Investors will need to track:

  • Currency shifts
  • Regional alignments
  • Tech and trade regulation changes to navigate the new world economy.

Top Opportunities:

  • Southeast Asia: Manufacturing, logistics, digital infrastructure
  • India: Infrastructure, renewable energy, tech platforms
  • Defense/Cybersecurity: Global demand surge amid geopolitical tensions
  • Gold and critical minerals: Hedge assets with long-term growth

Investment Strategy Tips

  • Diversify across emerging markets - focus on India, Vietnam, Brazil.
  • Look for ETFs and funds with exposure to critical minerals, defense, or green infrastructure.
  • Watch central bank policies - especially regarding Yuan, gold-backed assets, or BRICS currency talks. 
  • Stay updated on trade policy headlines, especially in an election year or diplomatic flashpoints.


9.0 JAPAN AND KOREA

Japan and South Korea are in a delicate position amidst the growing BRICS+ influence and the US-China tariff tensions. Both countries are allies of the U.S., but are also deeply economically tied to China. Here's how their reaction might play out:

9.1 Japan

a. Cautious Alignment with the West

  • Japan will likely maintain its strategic alignment with the U.S., especially through Quad (with India, U.S., and Australia),
  • Concerned about BRICS+ weakening Western economic influence, particularly if BRICS+ pushes for a new trade or financial system (like reducing USD reliance),
  • Quiet Diplomacy in Asia - Japan may seek to strengthen bilateral ties with ASEAN countries and India as a counterbalance to China-led coalitions.
  • Increased investment in alternative trade routes (e.g., Indo-Pacific economic frameworks).

b. Economic Guardrails

Japanese companies may diversify supply chains away from China (China+1 strategy) to reduce exposure amidst tariff uncertainty.

Possible deeper engagement with the EU and TPP countries.


9.2 South Korea

a) Economic Pragmatism

South Korea is more economically dependent on China than Japan, so it may adopt a pragmatic dual-track strategy :

i) Align "politically" with the U.S.?

ii) Maintain economic ties with China.


b) Watchful but Non-Committal on BRICS+

i) Korea is unlikely to join or support BRICS+ directly, but may observe closely to avoid economic isolation in the region.

ii) Will likely support multilateral forums like the G20 or APEC as neutral grounds.


c) Tech and Supply Chain Strategy

Korea have may to push harder for tech sovereignty and work with Japan, Taiwan, and the U.S. to build resilient chip and battery supply chains (especially in semiconductors).

Increase investments in Southeast Asia is likely to happen as alternative markets.


10.0 IMPACT OF THE TRUTH IN LUXURY BRANDS MADE IN CHINA

Yes, many European and U.S. luxury brands do manufacture in China; often quietly; for cost reasons. But once that becomes widely known to average consumers, it creates a crisis of perception, especially for brands that rely heavily on exclusivity, heritage, and craftsmanship.

10.1 What Might Happen to Luxury Brands?

a) Lowering Prices?

Unlikely. Luxury brands thrive on perceived value, not cost of production. Lowering prices would - 

  • Undermine brand prestige,
  • Confuse their market positioning,
  • Alienate their core high-end clientele

INSTEAD THEY MIGHT

  • Diversify production (move some operations to Italy, France, or other "prestige" locations?)
  • Use "Made in" "rebranding " (e.g., "Designed in Paris", "Assembled in Europe")


b) Go Busted?

Not in the near term. 

But they risk losing the middle-class aspirational buyer, especially in the U.S., if that group starts buying directly from China (via Temu, AliExpress, DHgate, etc.).

Gen Z and Millennials are value-driven and increasingly brand-skeptical, which could gradually erode the luxury market’s mass segment.


c) Shift in Consumer Behavior

U.S. consumers are getting savvier realizing that a $1,200 bag may cost $60 to make in China.

Platforms like Temu, Shein, and Alibaba offer stylish knockoffs or similar-quality goods for a fraction of the price.

This shift threatens mid-tier luxury more than ultra-premium (e.g., Hermes, Patek Philippe).


d) Internet Restrictions? : Is the U.S. Blocking Access to China Shopping Sites?

So far, not fully, not yet , but there’s growing scrutiny:

  • Temu and Shein have faced U.S. congressional attention for labor practices and data concerns,
  • TikTok Shop was targeted with potential bans.
  • The U.S. may increase tariffs, restrict app operations, or limit financial flows, rather than impose a complete internet block.

Google Ads, Facebook Ads, and Instagram promotions from Chinese vendors are still very active, and many ship freely to the U.S.


11.0 RUSSIA

Russia’s next moves in this evolving global landscape will be highly strategic and driven by its goal to counterbalance Western influence, protect its economy from sanctions, and solidify its leadership role within BRICS+ and the multipolar world order. Here’s what Russia is likely to do:

11.1 Russia’s Strategies for 2025 and Beyond

a. Strengthen BRICS+ as an Economic Bloc

Russia is pushing for a multipolar financial system less dependent on the U.S. dollar or Western institutions.

It will continue championing the creation of a BRICS settlement system, possibly backed by gold or commodities, to facilitate trade between member states.

Key actions:

  • Promote Yuan, Ruble, Rupee-based trade with SEA, Middle East, Africa, and Latin America,
  • Push for an alternative to SWIFT, like the SPFS (Russia’s financial messaging system) or China’s CIPS.

b. Resource Diplomacy

Russia may leverage on : 

  • Energy (oil, gas exports to China, India, Turkey),
  • Fertilizers, wheat, and grains (to Africa and Middle East)
  • Rare earths and industrial metals (critical to green transitions)

The goal is to secure long-term bilateral trade deals outside Western systems, priced in local currencies or through barter-style arrangements.

c. Military and Strategic Alliances

Deepen military cooperation and defense exports to non-Western nations:

  • Southeast Asia (Vietnam, Myanmar),
  • Africa (Mali, Central African Republic, Sudan),
  • Iran, Syria, and Central Asia

Russia may present itself as a reliable alternative to NATO-aligned arms suppliers.

d. Geopolitical Counterweights

Continue engagement via diplomacy through:

  • Peace talks or arbitrage roles (e.g., between Iran and Arab states, or in African conflicts)
  • Participation in regional blocs (EAEU, SCO) to deepen integration outside of the West

Example: Russia positioning itself as a strategic backer of Iran, Syria, and the Sahel region while simultaneously trying to broker "stabilizing" roles.

e. Digital and Financial Innovation

Russia is fast-tracking digital ruble development (CBDC), and may explore a BRICS-backed crypto or commodity-linked stablecoin,

Could use blockchain-based systems to evade sanctions, attract crypto-aligned investors, or facilitate cross-border trade in non-dollar terms.

CHALLENGES FOR RUSSIA

a) Economic

Sanctions continue to block access to tech, banking, and markets

b) Military

Overextension due to ongoing conflicts (Ukraine) and defense budget strain

c) Demographics and Workforce

Shrinking population and brain drain

d) Global Perception

Limited appeal in Western-aligned countries due to war and governance issues

Russia is no longer trying to reintegrate with the Western economic system. Instead, it's building a parallel ecosystem with BRICS+, based on sovereignty, resource control, and multipolar diplomacy.


12.0 PALESTINE

The shifting global power dynamics especially around BRICS+, China-Russia strategies, U.S. tariffs, and de-dollarization may not directly impact Palestine in the short term, but there are subtle and long-term ripple effects worth exploring.

How Global Geopolitical Shifts May Impact Palestine

12.1 Greater Political Support from the Global South

Countries like Russia, China, Iran, South Africa, and Turkey have increasingly expressed support for Palestinian rights at international forums.

As BRICS+ grows in strength, Palestine may gain a stronger diplomatic platform outside of the U.S.-led global order. 

12.2 Shift in Aid and Investment Flows

As BRICS nations increase economic coordination, new channels of development aid or investment (e.g., through the BRICS New Development Bank) could become available to the Palestinian Authority or Gaza reconstruction, bypassing Western donors.

However, actual disbursement would depend heavily on regional stability and governance.

12.3 Reduced Leverage of Western Powers

If U.S. influence weakens due to trade wars or loss of dollar hegemony, it could reduce Washington’s ability to shape Middle East policy unilaterally.

This may open the door for multi-party mediation (China, Russia, or Arab League-led) on the Israeli-Palestinian conflict.

12.4 Proxy Dynamics Intensify

In a polarized world, Palestine may become a symbolic battleground between pro-West and pro-BRICS blocs.

Conversely, Gulf countries (e.g., UAE, Saudi) may balance cautiously to preserve ties with both the U.S. and BRICS.

12.5 Media and Narrative Battle

With China and Russia investing heavily in global media influence (e.g., CGTN, RT), Palestinian narratives may gain more visibility in the Global South, challenging Western media framing.


13.0 UKRAINE AND OTHER NATIONS

Ukraine? Where the Shifts Leave It?

13.1 Continued Dependence on the West

Ukraine remains deeply reliant on U.S. and EU military, financial, and humanitarian aid.

As U.S. attention shifts to China and the Indo-Pacific, Ukraine fears donor fatigue, especially in Congress and Europe.

If the U.S. economy slows or faces a political shift, Ukraine could see delays or cuts in aid packages.

13.2 Diplomatic Gridlock at the UN

With China and Russia holding veto power, meaningful action against Russia through the UN Security Council remains impossible.

Ukraine must instead rely on non-binding UNGA resolutions and bilateral coalitions.

13.3 BRICS+ May Mediate, But with Bias

Some BRICS+ members (like Brazil or South Africa) have tried to propose peace frameworks.

13.5 Other Conflict Zones (e.g., Syria, Sudan, Yemen, Myanmar)

a)  Reduced U.S. Focus

As the West focuses on China containment, energy security, and reindustrialization, these conflicts get less attention, especially if they’re not strategic to Western supply chains or critical resources.

b) Will Russia and China Step In?

Russia and China increasingly position themselves as peace brokers or allies to regimes sidelined by the West.

c) Proxy Warfare Intensifies

In places like the Sahel, Sudan, and parts of the Middle East, conflicts are turning into proxy battlegrounds between: 

  • Western allies (France, U.S., NATO)
  • BRICS-aligned or non-aligned forces (Russia via Wagner, Iran, Turkey)


14.0 MICROSOFT DATA CENTERS

Photo Source : CNET

The ongoing tariff tensions between China and the US could definitely affect Microsoft Data Center projects, especially those that depend heavily on Chinese contractors, equipment, or materials. 

14.1 Possible Construction Delays?

  • Reason: If Microsoft is using Chinese contractors or sourcing key components (like prefabricated modules, HVAC systems, or even electrical switchgear) from China, tariffs or export controls could cause delays,

  • Impact: Delivery schedules may be extended due to customs hold-ups or the need to find alternative suppliers.

14.2 Cost Increases

  • Reason: Tariffs can increase the cost of imported Chinese construction materials, tech components, or services,
  • Impact: Microsoft (or its subcontractors) may see higher build costs, which can impact budgets for new data centers or expansions.
14.3 Supply Chain Disruptions

  • Reason: Tensions may lead to restrictions on certain technology transfers, materials (e.g., rare earth metals), or components,
  • Impact: Supply chain risks might require Microsoft to diversify vendors, possibly leaning more on domestic or non-Chinese suppliers.
14.4 Security and Compliance Concerns

Reason: US national security policies increasingly scrutinize foreign involvement especially Chinese - in critical infrastructure like data centers,

Impact: Microsoft might face pressure (or even be required) to reduce reliance on Chinese firms, especially in roles involving sensitive IT infrastructure or network setup.

14.5 Shift in Strategy

a) Long-Term Outlook

  • Microsoft may restructure procurement strategies to emphasize local or allied-country contractors,
  • Greater localization of design and build processes might be implemented to avoid geopolitical risk,
  • Expect more investment in automation and modular construction to mitigate labor and supply vulnerabilities.

14.6 Mitigation Steps Microsoft Could Take

  • Diversify supply chain (multi-country sourcing),
  • Shift data center builds to local EPC (Engineering, Procurement, and Construction) partners,
  • Stockpile critical components or use alternate technologies not sourced from China,
  • Strengthen risk assessment in project planning stages.
14.7 Semiconductors

The core issue in the US - China tensions, and it has massive implications, especially for companies like Microsoft that rely on high-performance chips for cloud computing, AI, and of course, data centers.

a) Dependency on Advanced Chips

Use in Data Centers: Microsoft relies heavily on advanced GPUs and CPUs (e.g., NVIDIA, AMD, Intel) for AI workloads, edge computing, and virtual machines in Azure.

Issue: Many of these chips are either manufactured in Asia (e.g., TSMC in Taiwan) or use components that originate from or pass through China.

b. US Export Restrictions

Background: The US has placed restrictions on exports of high-end semiconductors and manufacturing tools to Chinese companies, especially those linked to AI or military use.

Impact: If Microsoft’s Chinese contractors or suppliers are involved in chip assembly or testing, they may get caught up in these restrictions - leading to supply delays or redesigns of component sourcing.

c. Supply Chain Fragility

The semiconductor supply chain is complex and global - even if a chip is designed in the US, parts of it may be:

  • Fabricated in Taiwan or South Korea,
  • Packaged or tested in China,
  • Assembled with Chinese components

Impact: Any disruption - tariffs, blacklists, or even political instability can cause ripple effects across data center deployment timelines and costs.

d. Cost of Semiconductors Rising

Due to demand surges, export restrictions, and geopolitical tensions, the price of key chips (especially GPUs like NVIDIA’s H100s) has skyrocketed.

Impact on Microsoft: Higher capital expenditure (CapEx) for deploying AI infrastructure in their data centers, potentially impacting the rollout speed of new Azure regions or services.

e. Shift Toward Self-Sufficiency

Microsoft's Response: Like other tech giants, Microsoft is investing in developing its own chips (e.g., the Azure Maia AI chip and Cobalt CPU) to reduce reliance on third-party semiconductors.

Trend: Expect more in-house silicon development, strategic partnerships (like with AMD or Intel), and closer relationships with non-Chinese foundries (e.g., TSMC, Samsung).

f. National Security Pressures

The US government may pressure companies like Microsoft to ensure that no Chinese-sourced semiconductors are used in critical infrastructure (e.g., government cloud services or defense-related computing).

This could limit Microsoft’s supplier flexibility and force more expensive workarounds.


15.0 FUEL PRICES

Fuel prices are highly sensitive to the kinds of geopolitical and economic shifts we're discussing especially BRICS+ expansion, U.S.-China tensions, and global market realignment. 

15.1 BRICS+ Influence on Oil Markets

BRICS+ includes major oil producers like Russia, Saudi Arabia, Iran, and the UAE.

They’re increasingly trading oil in non-dollar currencies, like the yuan, rupee, or even a potential BRICS+ currency.

If this trend continues, it could weaken the petrodollar, shift global pricing mechanisms, and cause volatility in fuel markets.

Effect: 

Fuel prices could become less predictable and fluctuate depending on currency and alliance-based deals.

15.2 U.S.-China Tariff Tension

Tariffs can raise the cost of refined oil products and industrial fuels, especially if supply chains are affected.

If the U.S. imposes new restrictions on Chinese technology or energy logistics, China might respond by reducing cooperation or redirecting oil flows from U.S.-aligned nations.

Effect:

Short-term fuel price spikes, especially in Asia and the U.S., due to logistical reconfiguration.

15.3 OPEC+ and Strategic Alliances

With more nations joining BRICS+, including top OPEC players, the group could start controlling production more tightly.

If BRICS+ uses oil as a bargaining chip in global power plays, we could see intentional supply cuts (as we’ve seen with Saudi Arabia and Russia).

Effect:

Artificial price inflation especially during elections, major diplomatic events, or sanctions,

15.4 Alternative Energy Acceleration

The West (especially EU and the U.S.) may double down on green energy investments to avoid dependence on BRICS+ fossil fuels.

In the transitional period, fuel prices may spike due to uncertainty and investment gaps.

Effect:

Medium-term volatility, but possible long-term downward pressure on fuel as renewables grow.


16.0 PRESIDENT XI-JINPING’S CURRENT VISITS 


Photo Source : SCMP dot com

President Xi Jinping's recent state visits to Vietnam, Malaysia, and Cambodia from April 14–18, 2025, could be closely linked to the broader geopolitical and economic shifts discussed earlier. These visits aim to strengthen China's regional ties amid escalating trade tensions with the United States.

The likely key objectives of the visit would be :

a) To counter U.S. Tariffs and Protectionism

In response to the U.S. imposing significant tariffs on Chinese goods, President Xi emphasized the importance of multilateral trade systems and criticized protectionist policies during his Southeast Asia tour.

b) Strengthening Economic Partnerships

Malaysia : China and Malaysia signed 31 agreements covering sectors such as trade, tourism, railway transportation, and agriculture,

Vietnam: The two countries signed memorandums on cooperation in supply chains, railroads, and environmental protection,

Cambodia: Discussions focused on infrastructure projects like the $1.7 billion Funan Techo Canal, with Cambodia seeking increased financial support from China. 

c) Promoting Regional Stability and Security

President Xi's visits could also be aimed to reinforce China's commitment to regional peace and stability, particularly in the South China Sea, and to deepen defense partnerships, as seen in agreements with Vietnam.

d) Advancing the Belt and Road Initiative (BRI)

The visits provided opportunities to integrate regional infrastructure projects into the BRI framework, enhancing connectivity and economic integration across Southeast Asia.

e) Global Economy

i) Shift in Trade Dynamics

China's efforts to strengthen ties with ASEAN countries may lead to a realignment of trade relationships, potentially reducing reliance on Western markets.

ii) Diversification of Supply Chains

Enhanced cooperation between China and Southeast Asian nations could result in more diversified and resilient supply chains within the region.

iii) Increased Regional Influence

By solidifying economic and political partnerships in Southeast Asia, China positions itself as a central player in regional affairs, potentially challenging U.S. influence.


17.0 CONCLUSION

THE GLOBAL ECONOMIC ORDER ARE NOW AT CROSSROADS

The unfolding events, from retaliatory tariffs between China and the U.S., rising protectionism, Southeast Asia’s pivot toward BRICS, and President Xi Jinping’s assertive diplomacy signalling a deep transformation in the global economic and geopolitical landscape.

What me and you all are witnessing is not just a trade dispute or regional realignment. It is the reshaping of the post–Cold War economic order:

17.1 Multipolarity Is Replacing Unipolar Dominance

The U.S.-led global system, anchored by the dollar and Western institutions like the IMF and WTO, is increasingly being challenged by a multipolar structure led by coalitions like BRICS+, which promise alternative development models, financial frameworks, and geopolitical alliances.

17.2 Southeast Asia Balances Prudently

ASEAN countries are not fully turning their backs on the West, but they are diversifying alliances. The Belt and Road Initiative, local currency swaps, and infrastructure deals with China offer economic pragmatism over ideological alignment. This reflects a growing desire among Global South nations to avoid being caught in great power rivalries.

17.3 Trade and Tech Wars Disrupt Global Integration

Tariffs, tech restrictions, and manufacturing reshoring are unraveling decades of globalization. While they may protect domestic industries in the short term, the long-term costs include:

  • Slower global growth
  • Higher consumer prices
  • Less cooperation on global challenges like climate change and pandemic preparedness

17.4 China’s Strategic Countermoves Are Multi-Layered

China’s response to U.S. tariffs, by halting key imports like Boeing, exposing the manufacturing base of Western luxury brands, and tightening ASEAN partnerships demonstrates a calculated and resilient economic strategy. Xi Jinping’s recent diplomatic visits underline a push to secure China's influence in a region crucial to global supply chains and maritime security.

17.5 Currency and Commodity Shifts Are Coming?

If so, Yuan usage in trade will likely increase, but a full replacement of the dollar is unlikely without greater transparency and capital mobility. Gold will remain a key reserve asset, though some nations may begin hedging with other precious metals or strategic resources as part of broader diversification strategies.

SOME PEOPLE ARE CONCERNED THAT THIS MAY TRIGGER ANOTHER WORLD WAR

For the time being - HIGHLY UNLIKELY!

While the China-US tariff conflict has caused significant economic and geopolitical tension, it's unlikely to directly trigger another world war. The situation is more of a trade and diplomatic standoff, rather than an outright military conflict. Both nations are heavily intertwined economically, and a full-blown war would be devastating not only for them but for the global economy. That said, ongoing tensions could lead to further economic fallout, disruptions in global supply chains, and increased military posturing, which can destabilize international relations.

The real concern lies in the broader competition for global influence, particularly in regions like the South China Sea, Taiwan, and trade routes. But while economic and political rivalries could intensify, it's important to remember that modern conflicts are more likely to manifest through proxy wars, cyberattacks, and economic pressure rather than direct military confrontation. Still, the world has learned much from the devastating consequences of past wars, so it's in the best interest of both powers to manage their differences diplomatically to avoid escalating into something much larger.

WHAT DO I THINK?

I think the world is moving into an era of economic realism and strategic alignment. Tariffs, trade blocs, and new financial instruments are only the surface. Underneath lies a deeper transformation in how nations perceive sovereignty, resilience, and growth. In this fluid landscape, agility and diplomacy not dominance will define future prosperity.

Wednesday, October 30, 2024

SCARCITY OF SUPPLY IN THE OIL AND GAS AND HOW ESG COULD HELP EASE THE PROBLEM - Nik Zafri



It is an acknowledged fact that there is a scarcity of supply in the oil and gas industry. This will definitely affect both global markets and energy strategies 

We are feeling the pinch whether we realize it or now. As supply dwindles or becomes unstable, oil and gas prices rise. This affects everything from transportation to manufacturing, as oil and gas are key to energy production and as raw materials for many industries. In 2022, the U.S. faced significant spikes in oil and gas prices, possibly due to Russian-Ukraine conflict. This led to higher gasoline prices, with some regions seeing prices over $5 per gallon. Rising energy costs also increased the price of goods and services, contributing to inflation and squeezing consumers' disposable income. 

Countries that heavily rely on oil imports may face national security risks due to dependence on unstable or hostile regions. This could lead to geopolitical tensions as nations compete for remaining supplies.

Germany has long been dependent on Russian natural gas, which made up a significant portion of its energy supply. When Russia cut gas supplies during the Ukraine war, Germany faced an energy security crisis. Nigeria, one of Africa’s largest oil producers, has an economy highly dependent on oil exports. In recent years, declining global oil prices have severely impacted its economy. For example, the 2014-2016 oil price crash caused a recession in Nigeria as government revenues and foreign exchange reserves plummeted.

Energy-intensive industries, such as transportation, manufacturing, and logistics, would face increased operational costs. Inflation could rise as the cost of goods and services increases.

Governments may be pushed to accelerate policies aimed at reducing reliance on fossil fuels, speeding up transitions to greener energy sources. Denmark has been a leader in climate change action, using the oil and gas supply issues as an opportunity to accelerate its renewable energy transition. In 2020, Denmark announced a plan to phase out all oil and gas exploration in the North Sea by 2050 and committed to cutting greenhouse gas emissions by 70% by 2030.

Countries whose economies are heavily reliant on oil exports, such as those in the Middle East and Africa, might face economic instability as revenues decline, especially if global demand shifts due to green energy policies.

Environmental, Social and Governance (ESG)

Pushing the Environmental, Social, and Governance (ESG) initiatives and Sustainable Development Goals (SDGs) is critically important in addressing the challenges posed by oil and gas scarcity, rising energy prices, energy security concerns, economic disruptions, and climate change. 

Renewables are abundant, sustainable, and have become increasingly cost-effective. Solar and wind, in particular, have seen significant technological advancements, making them scalable and more affordable. 

Nuclear power is a low-carbon energy source with a high energy output. It's a reliable alternative that can provide consistent baseload power.

Hydrogen can be used as a clean fuel, especially for industries where electrification is difficult (such as aviation, shipping, and heavy industry). When produced using renewable energy (green hydrogen), it becomes a low-emission alternative.

Biofuels are derived from organic materials and can serve as a direct substitute for conventional fuels in vehicles and other equipment, reducing dependence on oil.

Geothermal energy is another renewable source that provides consistent energy output and can complement other renewable sources like solar and wind.

  • Environmental Impact Reduction (ESG: Environmental / SDG 7, 13)

One of the primary drivers of oil and gas scarcity is environmental degradation, fossil fuel dependence, and rising demand. ESG and SDG frameworks prioritize a transition to cleaner, renewable energy sources like solar, wind, and geothermal, reducing reliance on finite resources. For instance, SDG 7 (Affordable and Clean Energy) promotes increasing the share of renewable energy in the global energy mix, while SDG 13 (Climate Action) targets urgent actions to combat climate change. Enhancing Energy Security (ESG: Governance / SDG 7):

Countries dependent on oil and gas imports are vulnerable to geopolitical instability and supply shocks (e.g., the European energy crisis due to the Ukraine war). SDGs, particularly SDG 7, encourage the development of diversified, renewable energy sources that can enhance energy security.

Companies like #Tesla and countries like Denmark are leaders in this space, shifting toward renewable energy as a core part of their ESG commitments, reducing emissions, and ensuring long-term sustainability.

  • Mitigating Economic Disruptions (ESG: Social and Governance / SDG 8, 9):

Economic disruptions due to rising oil prices can impact businesses, households, and governments, particularly in countries reliant on fossil fuel industries. ESG’s social focus on fair labour practices and economic inclusion aligns with SDG 8 (Decent Work and Economic Growth) and SDG 9 (Industry, Innovation, and Infrastructure), which encourage innovation and investments in sustainable infrastructure and technology. This promotes resilient economic systems that are less vulnerable to fossil fuel price fluctuations.

Countries and corporations that diversify their energy sources and invest in green technology can build more stable economies. For instance, Iceland, which relies heavily on geothermal energy, enjoys energy security and price stability, even during global oil shocks, making its economy more resilient. Furthermore, oil-dependent economies like Nigeria need to invest in renewable energy and technology to reduce vulnerabilities to oil price volatility and ensure more sustainable economic growth.

  • Accelerating Climate Action (ESG: Environmental / SDG 13):

Climate change is driven by greenhouse gas emissions, most of which come from fossil fuels. SDG 13 (Climate Action) emphasizes the urgent need to combat climate change by reducing emissions, and ESG frameworks push companies and governments to take immediate action in line with these goals.

Climate action is not just a moral obligation but also a financial and security necessity. ESG investments often outperform fossil-fuel-heavy companies in the long term, as markets and regulations increasingly favor sustainability. Furthermore, focusing on decarbonization efforts through ESG and SDGs not only mitigates the effects of climate change but also protects vulnerable populations from its worst impacts.

Countries like Sweden and companies like #Unilever have shown that ambitious climate action can drive innovation and financial success. These entities have incorporated ESG principles and have actively pursued SDG-aligned strategies to decarbonize their operations.

Pushing ESG and SDG initiatives is essential to solving the interconnected challenges of oil and gas scarcity, energy security, economic disruption, and climate change. By fostering cleaner, more sustainable industries and infrastructures, ESG and SDG goals create resilient, future-proof systems that can adapt to resource constraints while also addressing environmental and social issues at their core. These frameworks not only help mitigate the current problems but also lay the foundation for a more sustainable, equitable future.

Saturday, August 06, 2011



PRIVATE PLACEMENT BUSINESS - BEWARE OF SCAMS! - (A little research by Nik Zafri)

UPDATE : AUGUST 2011 (BETWEEN SCAM AND THE REAL THING)

I can almost recall the early 90s; those good old days; genuine entrepreneurs now reaping lots of benefits and profits due to the great progress in private placement business. Their businesses grow from small timer to big timer. Many of these companies become large corporations today even turned themselves into bluechips listed in the Main Board of Bursa Malaysia. Despite some appear not to be so successful, but they are always bullish to make a comeback - even indulge themselves fully into corporate debt restructuring programs.

Today; when talking about private placement business in Malaysia, many people approached me (to do business plans) and say they have some good projects needed to be funded. Some of them even go to the extend of telling me that some VVIPs are indirectly involved in such projects. (What a joke...take a hike!!)

Based on their papers; on first impression; I was almost fooled as it appears that they do have what it takes. Great looking business plans with all the mission, vision, objective and goals, marketing, viability, gearing/financial ration, projected P & L etc., But as I delve further, I saw layers of brokers hiding behind the business plan. There are many places considered hotspots for brokers.

The normal ones, I did see a few of them in the only 'kampung' in Kuala Lumpur - mostly their brokerage 'network' are associated together with politics (so they claimed) - "Yes, I know this guy like the back of my head, I can bring you to him but I need a million ringgit upfront".

While, the 'higher class' are relaxing comfortably either at the lounge or coffee house; with laptops and gadget phones; in 4 stars hotels but the funniest part is that, I notice that they are taking only plain water (not even Evian) - and never offer you if you like to have something to eat or drink, being snobbish, displaying some dilapidated construction drawings, agreements, letters etc. Sometimes they talked boastfully about Fractal & Fractional Reserve Banking with many times leverage of deposits, cost of fund etc. Don't make they feel comfortable, don't pay for their drinks and food. Trust me - you'll be doing yourself a great favour.

The smart 'scam' brokers will seek ways to capitalize on entrepreneurs demand - mostly at the cost of entrepreneurs. Be careful businessmen and entrepreneurs, learn to smell elements of scam. New 'funding schemes' in private placement are one of them.

The most popular one today that is attacking the Malaysian PP market is the good old trick known as "leasing using Standby LC. Sounds good huh? The broker are smart enough to say that they know people in the banking and financial sector that you only need to pay an upfront of 10% out of the total value issued by the bank. This is a SCAM!

Standby Letter of Credit is an instrument alright but it's NOT discountable. Just walk into any bank and ask! If you need a 20 million SBLC, you need to pay 20 million! So, the scam brokers will convince you that upon issuance of SBLC by the bank, it can be used as a warranty or some sort of collateral to get more money from other projects (usually they will whisper to you that it's 'money laundering') There is no way you can use a leased SBLC to do business.

Another alternative, a smaller amount for big money (small PP), another scam. Behind small money, there is big money awaiting to be robbed from your pocket. Who would give big money for small money? Then; they say to you; you have assets to be liquidated? Yeah..that's where big money comes in. Although there is some logic in it, but wait till you see the levels of overriding commissions the broker will ask from time to time.

So, what else - leasing of bank instrument - is much the same as the SBLC. You have a leased property and trying to make money out of it when the property is not even yours. I don't think the bank will be convinced to take leased property as collateral. The brokers tell you that you can make money is because they want an upfront - that's all.

Another back-end scam is through JV funding which has little to no recourse to you. The scam brokers will ask an upfront (with some more profits from PP) once the so-called 'partner' lease an instrument. They use 'technical words' such as high yields and you're duped into spending so much money by not even bothered to look into the leased instrument.

So, it's all about upfronts. Many people has been tricked and I told them to make proper reports to the authorities - at least to stop others from being duped.

My advise, if you have so much money, go to the bank and ask for true professional advise. Private Placement Business do exist and can be of great assistance to you but try to avoid 'unlicensed and unqualified' brokers.
-------------------------
Here's a good article

Swift MT 760 and MT 799, the Real Story

Submitted by InsideTrade Staff on Friday, 4 December 2009

If you have been in the private placement business for a while, you probably know that there are plenty of acronyms associated with trade programs. As someone new to the business, you may hear phrases like: “MTN”, “BG”, “SBLC”, “PPP”, “DTC”, “CIS”, “POF”, and say, “what the heck are they talking about”? Well, though it is good to know private placement lingo, cool sounding terms do NOT close deals. If you want to protect yourself and succeed in private placement, you MUST understand the 2 most important acronyms of all, the “MT 760” and “MT 799”.

Whether you are a client, broker, consultant, or even just a beginner, the MT 760 and MT 799 are two terms that are critical to learn inside and out!. Many times, if you speak to brokers who claim to have trade programs, you can tell if their investment is real by asking just one question, “Explain the MT 760 and MT 799, what are the risks and fees?” If you get an answer that sounds similar to the explanation we give below, then you may want to dig a little deeper! If you don’t, recognize that these people are less educated than they claim, and may not be the best option. First things first, let’s explain the definition and application of these terms in the modern day private placement business.

The MT 799 is a swift message used between banks to communicate in written form, and is usually referred to as “pre-advice”. For example, Bank “A” may send a MT 799 to Bank “B” stating: “We confirm “XXX” amount on deposit and are ready to block this amount via MT 760 in favor of account “XXX” at your bank. Please confirm readiness and receipt.” Typically, the MT 799 will be needed directly before the MT 760 is issued, and there may be small fees. Despite what most brokers may claim, the MT 799 is NOT used as collateral,and can NOT be used to enter a private placement program. Now that we know about the MT 799, let’s take a look at it’s cousin, the Swift MT 760.

The MT 760 is a swift message used to block funds in favor of someone other than the owner, collateralizing the asset via this message, while allowing for loans and liens against it. For example, most private placements require the investor to send a MT 760 to the trader’s account, allowing the trader to use this swift as a collateral guarantee for their bank. Again, despite what many brokers may claim, this is NOT everything you need to know about the MT 760. Now that you do know the definitions and applications, let’s cover the key points no one ever brings up about the MT 760: the FEES, and the RISKS…

First and foremost, the fees for blocking a large amount of funds via MT 760 can be more than you would expect. In most cases, your bank will charge 1-2% of the value being blocked for this service. For example, on a 100M bank instrument this can be 1-2M that the owner must come out of their pocket with, unless they have a special relationship with their bank. You may say to yourself, “Wow, that is a lot to spend on fees for something I’m not sure will work”! Well, even more importantly, let’s take a look at the risks if you did move forward.

If you complete the MT 760 and pay the fees, you should observe everything very closely from that point on. Once the MT 760 has hit the account of the trader, the line of credit should become available within 72 hours. At that time, the trader should be able to make their first bank instrument purchase, and give you a DEFINITE TIMELINE for your first profit disbursement. You may say, “Why do I need to watch this process so closely?” Well, here is the part that most brokers don’t tell their clients…

When blocked in someone’s favor, the MT 760 collateralizes assets in the form of a swift guarantee, and by doing so, allows the beneficiary to draw credit against it. This means, if the loan to the “trader” was defaulted on, the bank would seize the collateral and you would be out of your money! Though this scenario is possible, I would consider it rare for two reasons… In today’s world, no bank will loan Millions of dollars to someone they haven’t vetted, no matter what collateral is on hand. Second, the MT 760 is quite rare, and this usually draws attention to the beneficiary of the swift.

In summary, the MT 760 can be safe, or it can blow up in your face. As always, the key is having a real trader and most importantly, getting your payments as scheduled. If the trader makes a statement about yields and a time line, they must ALWAYS keep in line with their promises. Over the THOUSANDS of transactions we have been involved in, the only ones that have closed have been smooth from the start, with NO hiccups.

Remember, both RISK and FEES are a part of blocking funds via MT 760!!!! In addition, by understanding the MT 760 and MT 799, you can clear out the TIME WASTING brokers from your network, and work MORE EFFICIENTLY towards your goals.

Let’s face it, very few people know as much as you do after reading this article. Use it to your advantage to qualify the private placement investments you come across, and it will make life a lot easier. Ask yourself, if someone can’t explain the MT 760 and MT 799 in thorough detail, do you think they have ever closed a deal? Then ask yourself, do I want to risk Millions with someone that has NEVER been successful? It’s not hard to see, education is the key!

----------------------------------------------------
SAMPLE- S.W.I.F.T. MT760 – WIRE FORMAT EXAMPLE

NOTIFICATION :

DELIVERY STATUS :
PRIORITY / DELIVERY :
MESSAGE INPUT REFERENCE :

-----------MESSAGE HEADER----------------------------

SWIFT INPUT : MT760 CONFIRMATION OF BLOCKED FUNDS

SENDER :
BANK NAME :
BANK ADDRESS :
SWIFT CODE :
BANK OFFICER :
AMOUNT :
ACCOUNT NAME :
ACCOUNT NUMBER :
RECEIVER :
BANK NAME :
BANK ADDRESS :
SWIFT CODE :
BANK OFFICER :
ACCOUNT NAME :
ACCOUNT NUMBER :
IN FAVOR OF :

-----------SWIFT MESSAGE TEXT----------------------

TRANSACTION CODE :
TRANSACTION NUMBER :

WE, [INSERT NAME & LOCATION OF SENDING BANK] ON BEHALF OF OUR CLIENT [INSERT NAME OF ACCOUNT HOLDER/SIGNATORY], HEREBY PRESENT OUR CONFIRMATION OF FUNDS IN THE AMOUNT OF [INSERT WRITTEN AMOUNT]UNITED STATES DOLLARS (USD $XXX,XXX,000.00) IN ACCOUNT NUMBER [XXXXXXXX] AS OF THE DATE OF THIS TRANSMISSION.

BY VIRTUE OF THIS INSTRUMENT WE [INSERT NAME & LOCATION OF SENDING BANK] CONFIRM WE HAVE PLACED SAID FUNDS ON ADMINISTRATIVE HOLD FOR A PERIOD OF [INSERT WRITTEN NUMBER] (XX) [INSERT TIME PERIOD] IN FAVOR OF THE BENEFICIARY LISTED ABOVE

THIS INSTRUMENT IS IRREVOCABLE AND VALID FOR A PERIOD OF SIXTY (60) DAYS, AND THE FUNDS SHALL REMAIN UNENCUMBERED FROM ANY OTHER BENEFICIARIES.

WE, ---INSERT NAME & LOCATION OF SENDING BANK--- CONFIRM THE FUNDS IN OUR CUSTODY WILL NOT BE CHANGED, ALTERED, AMENDED OR PLEDGED FOR A PERIOD OF [INSERT WRITTEN NUMBER] (XX) [INSERT TIME PERIOD] FROM THE DATE OF THIS TRANSMISSION.

BANK OFFICER, TITLE: BANK OFFICER, TITLE:

PIN: PIN

------------------MESSAGE TRAILER-----------------------

NOTIFICATION :
DELIVERY STATUS :
PRIORITY / DELIVERY :
MESSAGE INPUT REFERENCE :

-----------------MESSAGE HEADER--------------------------

SWIFT INPUT : MT760 CONFIRMATION OF BLOCKED FUNDS

SENDER :
BANK NAME :
BANK ADDRESS :
SWIFT CODE :
BANK OFFICER :
AMOUNT :
ACCOUNT NAME :
ACCOUNT NUMBER :
RECEIVER :
BANK NAME :
BANK ADDRESS :
SWIFT CODE :
BANK OFFICER :
ACCOUNT NAME :
ACCOUNT NUMBER :

IN FAVOR OF :

--------------SWIFT MESSAGE TEXT------------------------

TRANSACTION CODE :
TRANSACTION NUMBER :

WE, [INSERT NAME & LOCATION OF SENDING BANK] ON BEHALF OF OUR CLIENT [INSERT NAME OF ACCOUNT HOLDER/SIGNATORY], HEREBY PRESENT OUR CONFIRMATION OF FUNDS IN THE AMOUNT OF [INSERT WRITTEN AMOUNT]UNITED STATES DOLLARS (USD $XXX,XXX,000.00) IN ACCOUNT NUMBER [XXXXXXXX] AS OF THE DATE OF THIS TRANSMISSION.

BY VIRTUE OF THIS INSTRUMENT WE [INSERT NAME & LOCATION OF SENDING BANK] CONFIRM WE HAVE PLACED SAID FUNDS ON ADMINISTRATIVE HOLD FOR A PERIOD OF [INSERT WRITTEN NUMBER] (XX) [INSERT TIME PERIOD] IN FAVOR OF THE BENEFICIARY LISTED ABOVE

THIS INSTRUMENT IS IRREVOCABLE AND VALID FOR A PERIOD OF SIXTY (60) DAYS, AND THE FUNDS SHALL REMAIN UNENCUMBERED FROM ANY OTHER BENEFICIARIES.

WE, ---INSERT NAME & LOCATION OF SENDING BANK--- CONFIRM THE FUNDS IN OUR CUSTODY WILL NOT BE CHANGED, ALTERED, AMENDED OR PLEDGED FOR A PERIOD OF [INSERT WRITTEN NUMBER] (XX) [INSERT TIME PERIOD] FROM THE DATE OF THIS TRANSMISSION.

BANK OFFICER, TITLE: BANK OFFICER, TITLE:

PIN: PIN

---------------MESSAGE TRAILER--------------------

S.W.I.F.T. MT760 – WIRE FORMAT EXAMPLE

NOTIFICATION :
DELIVERY STATUS :
PRIORITY / DELIVERY :
MESSAGE INPUT REFERENCE :

---------------MESSAGE HEADER----------------------

SWIFT INPUT : MT760 CONFIRMATION OF BLOCKED FUNDS


SENDER :
BANK NAME :
BANK ADDRESS :
SWIFT CODE :
BANK OFFICER :
AMOUNT :
ACCOUNT NAME :
ACCOUNT NUMBER :
RECEIVER :
BANK NAME :
BANK ADDRESS :
SWIFT CODE :
BANK OFFICER :
ACCOUNT NAME :
ACCOUNT NUMBER :
IN FAVOR OF :

-------------SWIFT MESSAGE TEXT--------------------

TRANSACTION CODE :
TRANSACTION NUMBER :

WE, [INSERT NAME & LOCATION OF SENDING BANK] ON BEHALF OF OUR CLIENT [INSERT NAME OF ACCOUNT HOLDER/SIGNATORY], HEREBY PRESENT OUR CONFIRMATION OF FUNDS IN THE AMOUNT OF [INSERT WRITTEN AMOUNT]UNITED STATES DOLLARS (USD $XXX,XXX,000.00) IN ACCOUNT NUMBER [XXXXXXXX] AS OF THE DATE OF THIS TRANSMISSION.

BY VIRTUE OF THIS INSTRUMENT WE [INSERT NAME & LOCATION OF SENDING BANK] CONFIRM WE HAVE PLACED SAID FUNDS ON ADMINISTRATIVE HOLD FOR A PERIOD OF [INSERT WRITTEN NUMBER] (XX) [INSERT TIME PERIOD] IN FAVOR OF THE BENEFICIARY LISTED ABOVE

THIS INSTRUMENT IS IRREVOCABLE AND VALID FOR A PERIOD OF SIXTY (60) DAYS, AND THE FUNDS SHALL REMAIN UNENCUMBERED FROM ANY OTHER BENEFICIARIES.

WE, ---INSERT NAME & LOCATION OF SENDING BANK--- CONFIRM THE FUNDS IN OUR CUSTODY WILL NOT BE CHANGED, ALTERED, AMENDED OR PLEDGED FOR A PERIOD OF [INSERT WRITTEN NUMBER] (XX) [INSERT TIME PERIOD] FROM THE DATE OF THIS TRANSMISSION.

BANK OFFICER, TITLE: BANK OFFICER, TITLE:

PIN: PIN

----------------MESSAGE TRAILER----------------------

Sample BANK GUARANTEE

[Illustration only]

TO: The Principal {"Principal"}

In consideration of the Principal at the request of Contractor ("Customer") and [name of bank] ("bank") agreeing to accept this undertaking in connection with a contract between Principal and Customer for Customer to provide Services to Principal, (Contract") the bank unconditionally undertakes to pay the Principal on demand in writing any sum or sums which may from time to time be demanded in writing by the Principal to an amount not exceeding ………. THOUSAND DOLLARS ($…,000.00) )("agreed sum") in total.

Payment of the agreed sum or any parts of it will be made by the bank to the Principal without reference by the bank to the Customer and notwithstanding any notice to the bank by the Customer not to pay to the Principal any monies payable under this undertaking and irrespective of the performance by the Customer or the Principal of the terms of the Contract.

The bank’s liability will not be affected or discharged in any way by any alterations which may be made to the terms of the Contract or by any extension of time or other forbearance on the part of the Principal or the Customer to the other.

This undertaking will continue in force until either notification in writing has been received by the bank from the Principal that this undertaking is no longer required by the Principal or until payment to the Principal by the bank of the whole of the agreed sum or the balance of it remaining after any part payment or payments which ever first occurs.

The bank will be entitled to terminate this under at any time on payment to the Principal of the agreed sum or the balance of it remaining after any part payments or any lesser amount which the Principal requires.

[Execution by Bank]
--------------------------------------------------------
SAMPLE LETTER OF CREDIT

(note that Malaysia is not yet a member of ICC)

TO: { BUYER} PROFORMA INVOICE:

YOUR REF.:
YOUR REF. DATE:

We have indicated below those terms and conditions that we would find acceptable in a letter of credit issued by your bank. Your efforts to gain compliance with these terms and conditions in the issuance of this letter of credit will ensure prompt dispatch of your order. If your bank is unable to issue the credit within the following guidelines, please contact us providing information on those areas that must be altered. This will eliminate needless delay and costs involved with amendments after the credit has been opened. Only those items marked with an "X" will apply.

1. [ ] The letter of credit is to be irrevocable and subject to the Uniform Customs and practice for Documentary Credits, as published and updated from time to time by the International Chamber of Commerce.

2. [ ] The letter of credit is to be [ ] Advised [ ] Confirmed by our bank:

X bank

Telex No.:
SWIFT No.:
ABA.:

3. [ ] The beneficiary is to be shown as:

4. [ ] The letter of credit is to be payable upon presentation of drafts drawn at:

A. [ ] At sight
B. [ ] ___ days after the date of the transport document (i.e., 90 days after date of B/L)
C. [ ] ___ days after sight (i.e., 90 days after sight)
D. [ ] Other: ____________________________

5. [ ] The letter of credit is to be available by negotiation with any bank.

6. [ ] The letter of credit is to be payable in:

[ ] U.S. dollars
[ ] Other: _______________________________

7. [ ] The amount of the letter of credit is to be specific as:

[ ] "Not to exceed “_____________ [ ] "About “_______________

8. [ ] The following documents are normally provided if required in the letter of credit. Please avoid the requirement for any other documents without prior agreement on our part.

A. [ ] Signed Commercial Invoice, one original and ______ copies.
B. [ ] Packing List in ______ copies.
C. [ ] Negotiable Marine/Air Insurance policy or certificate in duplicate for 110% of invoice value covering all risks and war risks and ____________________________

D. [ ] Full set of clean on board ocean bills of lading

issued to order of : __________________________

E. [ ] Clean air waybill consigned to:

__________________________________________

F. [ ] Other documents:


9. [ ] The letter of credit is to specify shipment of:

____________________________________________

____________________________________________

____________________________________________


10. [ ] Shipment is to be:



[ ] FOB ___________ From: __________________
[ ] CFR ___________ To: ____________________
[ ] CIF___________
[ ] EXW__________
[ ] Other __________ (i.e.: FCA, FAS, CIP, etc.)


11. [ ] The Bill of Lading is to be marked:

[ ] Freight Prepaid
[ ] Freight Collect

12. [ ] Transshipments:

[ ] Are permitted
[ ] Are not permitted


13. [ ] Partial shipments:

[ ] Are permitted
[ ] Are not permitted


14. [ ] Latest Shipment Date __________________

15. [ ] Latest Presentation Date of Documents to the Negotiating bank to be ____ days after each shipment date.

16. [ ] Expiration Date of letter of credit to be __________________

17. [ ] The letter of credit should specify that all banking charges outside the country of the applicant are for the account of the [ ] applicant [ ] beneficiary.

18. [ ] letter of credit to be transferable.

19. [ ] Other special instructions.

2. Complying with Documentary Requirements

Exporters and freight forwarders who frequently assist the exporter is preparing documents for shipment are aware that terms and conditions in letters of credit are to be fulfilled exactly as stated. The opening bank has set forth terms as requested by the applicant, or buyer, and neither the opening bank, negotiating bank or designated paying bank will honor documents other than those specified. Furthermore, some documents required under a letter of credit are specifically described as to the information which must be contained in the specified document.

----------------------------------------

SAMPLE - BUYER'S MANDATE

To be issued on Buyer’s Letterhead

Letter of Intent / Irrevocable Corporate Purchase Order

Date of Issue : ... . 2008 Buyer's Reference: ................
Valid Till: ... ..... 2008

To:

Seller Mandate :
Company
Address
Country

We the undersigned Name of Signatory of End Buyer's Company Name hereby state and confirm that we are ready, willing and able to purchase HMS (Grade.....) in the quantity and for the price as specified in the terms and conditions as stated below. This representation is made with full corporate authority and also responsibility of the above stated buyer.

Commodity HMS 1 & 2 (80:20)
Specifications ISRI 200 to 206
Loading Port XXXXX (Seller's Choice)
Packing Bulk / Container
Destination Port Destination Port Name
Shipment Terms CIF /CNF, (Buyers destination Port)
Total Contract Qty ...............MT (in xxx months /days)
Quantity per Shipment .............. MT (+- 5%)
No.of Shipments per Month ----Shipment per Month
Length of Contract ___Months / One time Spot deal
Delivery Period Within 60 Days after Opening of DLC/LD.SBLC

Yard Visit Seller’s Choice
Inspection SGS or CCIC or Equivalent at Seller's Cost Procedure Seller’s Choice
Price CNF / CIF / FOB............USD .... / MT
Mode of Payment Irrevocable, Confirmed, Non-Transferable,
100% payable at sight DLC. Activated by Sellers’s 2% PBG
Performance bond: 2% Operative PB from the seller.
End Buyer's Information

Company Name
Address
Country
Zip
Telephone No.
Fax No.
E-Mail

End Buyer's Bank Details (From Which LC Will be Issued)

Bank Name
Address
Zip and Country
Telephone No. and Fax No.
Account Name
Account No.

Bank Swift Code

Bank Officer's Name

Designation, Direct Phone and Fax No.

LC Confirming Bank's Details (can be same as above)

Bank Name
Address
Zip and Country

This exclusive LOI with the specific LOI reference number is the only current LOI. It takes precedence over any other LOI with the above-mentioned specific LOI reference number currently in circulation for this quantity and product. The Buyer is of the understanding that any and all offers are subject to final agreement on the details of sales contracts.

Signature .................
Printed Name .................

(Corporate Seal)

Title .................

INTERNATIONAL CHAMBER OF COMMERCE ( I.C.C 400 / 500 / 600 )
NON-CIRCUMVENTION, NON DISCLOSURE & WORKING AGREEMENT

WHEREAS the undersigned wish to enter into this Agreement to define certain parameters of the future legal obligations, are bound by a duty of Confidentiality with respect to their sources and contacts. This duty is in accordance with the International Chamber of Commerce.

WHEREAS the undersigned desire to enter a working business relationship to the mutual and common benefit of the parties hereto, including their affiliates, subsidiaries, stockholders, partners, co-ventures, trading partners, and other associated organizations (hereinafter referred to as “Affiliates”).

NOW THEREFORE in consideration of the mutual promises, assertions and covenants herein and other good and valuable considerations, the receipts of which is acknowledged hereby, the parties hereby agree as follows:

1. TERMS AND CONDITIONS

A. The parties will not in any manner solicit, nor accept any business in any manner from sources or their affiliates, which sources were made available through this agreement, without the express permission of the party who made available the source and,

B. The parties will maintain complete confidentiality regarding each other business sources and/or their Affiliates and will disclose such business sources only to the named parties pursuant to the express written permission of this party who made available the source, and,

C. That they will not in any of the transactions the parties are desirous of entering into and do, to the best of their abilities assure the other that the transaction codes established will not be affected.

D. That they will not disclose names, addresses, e-mail address, telephone and tele-fax or telex numbers to any contacts by either party to third parties and that they each recognize such contracts as the exclusive property of the respective parties and they will not enter into any direct negotiations or transactions with such contracts revealed by the other party and

E. That they further undertake not to enter into business transaction with banks, investors, sources of funds or other bodies, the names of which have been provided by one of the

F. Parties to this agreement, unless written permission has been obtained from the other party (ies) to do so. For the sale of this agreement, it does not matter whether information obtained from a natural or a legal person. The parties also undertake not to make use of a third party to circumvent this clause.

G. That in the event of circumvention of this Agreement by either party, directly or indirectly, the circumvented party shall be entitled to a legal monetary penalty equal to the maximum service it should realize from such a transaction plus any and all expenses, including but not limited to all legal costs and expenses incurred to recover the lost revenue.

H. All considerations, benefits, bonuses, participation fees and/or commissions received as a result of the contributions of the parties in the Agreement, relating to any and all transactions will be allocated as mutually agreed.

I. This Agreement is valid for any and all transaction between the parties herein and shall be governed by the enforceable law in All Commonwealth Country’s, European Union Country’s, USA Courts, or under Swiss Law in Zurich, in the event of dispute, the arbitration laws of states will apply.

J. The signing parties hereby accept such selected jurisdiction as the exclusive venue. The duration of the Agreement shall perpetuate for (__) years from last date of signing.

2. AGREEMENT TO TERMS

A. Signatures on this Agreement received by the way of Facsimile, Mail and/or E-mail shall be an executed contract. Agreement enforceable and admissible for all purposes as may be necessary under the terms of the Agreement.

B. All signatories hereto acknowledge that they have read the foregoing Agreement and by their initials and signature that they have full and complete authority to execute the document for and in the name of the party for which they have given their signature.

3. ACCEPTED AND AGREED WITHOUT CHANGE

Party # 1 (Seller/Seller Mandate) Party # 2 (Buyer/Buyer Mandate)

Name : Name :
Passport No : Passport No :
Nationality : Nationality :
Company : Company :
Business Registered No. Business Registered No.

Address : Address :


Tel : Tel :
Fax : Fax :
Mobile : Mobile :
E-Mail : E-Mail :
Designation : Designation :
Date and Time : Date and Time :
Sign & Seal : Sign & Seal :


EDT ( Electronic document transmissions )
EDT (Electronic document transmissions) shall be deemed valid and enforceable in respect of any provisions of this Contract. As applicable, this agreement shall be:-

1- Incorporate U.S. Public Law 106-229, ‘‘Electronic Signatures in Global and National Commerce Act’’ or such other applicable law conforming to the UNCITRAL Model Law on Electronic Signatures (2001) and

2- ELECTRONIC COMMERCE AGREEMENT (ECE/TRADE/257, Geneva, May 2000) adopted by the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT).

3- EDT documents shall be subject to European Community Directive No. 95/46/EEC, as applicable. Either Party may request hard copy of any document that has been previously transmitted by electronic means provided however, that any such request shall in no manner delay the parties from performing their respective obligations and duties under EDT nstruments.

----------------------------------------

SAMPLE MANDATE - FULL CORPORATE OFFER (FCO)

Date:

XXXXXXXX
XXXXXXXX
XXXXXXXX

Dear SELLER’S REPRESENTATIVE NAME

In an effort to reach a successful resolution, we, MANDATE representing BUYER, have the pleasure of submitting, for SELLER, our Full Corporate Offer for supply of PRODUCT AMOUNT per month of PRODUCT for a period of XX months based on the following terms and conditions:

Product:
Origin:
Quantity:
Specification:
Delivery Terms:

DESCRIPTION
COUNTRY
QUANTITY/PER (MONTH,YR ETC)
As per Specification Sheet annexed herewith
CIF(OR FOB) ASWP
PRICE:

Price in US Dollar per barrel to be invoiced against three-day average, the day before, the day on, the day after (pricing days) of the COUNTRY .... published by .... Crude Oil Market.

PROCEDURE (Non-Negotiable):

1. Seller/Seller's mandate forward Full Corporate Offer (F.C.O) along with formats of bank capability and format of payment Guarantee for the payment of commission to the royality and to the Buyer Mandate.

2. Buyer returns the FCO and formats duly signed and accepted along with an ICPO having full bank details (TOP 20) and major AAA Bank, which acceptable from the Seller. ICPO to be addressed to XYZ, C.C.S.Z. ANYONE (aka AW), W.SMITH, XXX and must confirm financial capability as well as include details of the refinery, refinery codes processing and storage capacity.

3. Seller Mandate response with draft of Sale/Purchase Copy of Contract for the Buyer to sign.

4. Seller Mandate arranges for exchange document as below:

a. Buyer's bank capability as per specified format, duly issued by TOP20 major AAA Bank, which is acceptable from the Seller.

b. Buyer's bank letter informing Seller Mandate that it will issue the bank guarantee as per specified format on a specified date in their bank after checking and verifying the codes with SELLER.

Against the above, same day and same time:

i) Seller Mandate will provide "Authority to Sell" document duly endorsed by the Chamber of Commerce, Saudi Arabia in original.

ii) Seller Mandate will provide "Mandatory Letter" in original issued by the Allocation Holder authorizing to sign the copy of contract on their behalf.

5. After successful completion of (4) above, Seller Mandate and Buyer sign the copy of Contract, agreeing in principal of all the articles.

6. After the Soft Copy of Contract has been signed and completed, Seller Mandate shall send the Soft Copy of Contract to the Allocation Holder, who in turn, shall have the contract registered in the name of Buyer with SELLER, within the maximum period of 15 banking days.

7. After the Hard Copy is registered in the name of the Buyer, the Seller/Seller's Mandate shall provide to the Buyer's/End User's Bank with genuine codes for verification from SELLER , the Buyer's bank shall be permitted a maximum of 24 hours from receipt to confirm and verify from SELLER.

8. Allocation Holder after registration of the Contract in the name of the Buyer with SELLER shall have the original contract having Seller Code, Contract Number, Allocation Number, Seller Bank Details, send to the Seller mandate through courier.

9. Immediately after receipt of the Contract in Original, Seller Mandate coordinate with Buyer/End User for Verification with SELLER and to be followed by signing of the hard copy by the Buyer.

10. After signing the hard copies in Buyer's Bank, simultaneously the Buyer's/End User's bank officer shall hand over to the Seller Mandate the Pay Order Guarantee as attached for the payment of commission to the royalty and to the Seller Mandate.

Splitting of discount is as follows:

Gross: US $XXX.00 per (barrel OR gallon OR metric ton)
Net: UD $YYY.00 per (same as above) (Maximum Market Rate)
Buyer Mandate & Intermediaries: US $ZZZ.00 per (same as above)
Royality: US $MMM.00 per (same as above) (Closed)
Seller Mandate: US $NNN.00 (same as above) (Closed)

The above discount could change on every Monday (London Time) based on the global crude market price fluctuation.

ONCE the Contract is signed then the Gross/Net Discount figures REMAIN CONSTANT during Contracts Term for XX DURATION PERIODS

11. Sellers bank sends to Buyer's bank a 2% non-operative performance bond that guarantees revolving six shipments in favor of Buyer L/C opener.

12. Immediately upon receipt of Non-Operative Performance Bond, the Buyer shall open a IRREVOCABLE, CONFIRMED, REVOLVING AND ONCE TRANSFERABLE (to SELLER) OPERATIVE DOCUMENTARY LETTER OF CREDIT TO BE OPENED TO SHOW AMOUNT FOR THE XX MONTHS QUANTITIES OF THE CONTRACT. THIS LETTER OF CREDIT WILL HAVE VALUE EQUIVALENT TO ONE MONTH'S QUANTITIES BUT REVOLVING FOR THE ENTRY XX MONTHS PERIOD OF THE CONTRACT, FROM A TOP 20 PRIME BANK, PAYABLE BENEFICIARY'S BANK AS SPECIFIED UNDER APPENDIX.

13. The 2% non-operative performance bond submitted by the Seller will be operative immediately after the letter of credit as mentioned in clause 12 above has reached and attached and accepted at Seller's Bank

14. The bellow mentioned document will be sent by the Seller immediately after receipt of Letter of Credit from the Buyer:

a. Certificate of Authority to Sell
b. Certificate of Availability of products
c. Delivery Schedule.

15. At the time of each lifting of delivery, the Buyer / End User (Letter of Credit Opener) must provide the port authority at port of loading, the following documents:

a. A copy of nominated vessels charter party under the name of LC opener (the Buyer must be end user).

b. Proof of Refinery or processing Agreement under the name of Opener (the Buyer must be end user).

16. The Parties to the contract enter into this cycle and shall proceed with the execution of mutually agreed schedule to its full implementation.

17. The validity of this document is only for FIVE (5) days from today (XXX Time).

Note: Only the Original copy with original signatures and seal shall be considered as acceptable document.

Sincerely,
XXXXXXXX

TITLE
XXXXXXXX

---------------------------
SAMPLE BCL

(Note that some of the details have been altered, the following serves only as an example)




----------------------------

Here's the most classical oil scam article :


http://www.gulfoiltrading.com/Fake%20companies.htm

Other Links:

http://sites.google.com/site/blacklistscammersoilandother/file-manager
http://www.docstoc.com/docs/6545072/The-list-of-some-FAKEs-companies-in-Russia-The/
http://www.alees.com/Black_list.aspx