*Updated 20 April 2020
Austrade is open for business and our network of 1,100 staff is committed to helping you through this time.
As part of ‘Team Australia’, Austrade is working closely with the network of government departments and industry agencies to help Australian businesses overcome complex and fast-evolving COVID-19–related challenges.
This site provides updates on markets and logistics, and links through to the Government’s extensive business support programs.
Support for businesses impacted by Coronavirus
On 1 April, the Australian Government announced measures to help secure freight access for Australian agriculture and fisheries exporters.
The new $110 million International Freight Assistance Mechanism (IFAM) will assist Australia’s agricultural and fisheries sector by helping them export their high-quality produce into key overseas markets, with return flights bringing back vital medical supplies, medicines and equipment.
Exporters wishing to access the mechanism can register their interest or call the Department of Agriculture, Water and the Environment on (02) 6272 2444.
On 1 April, the Government also announced increased funding for the Export Market Development Grant (EMDG). Funding for the scheme will increase by $49.8 million in the 2019-20 financial year, allowing exporters and tourism businesses to get additional reimbursements for costs incurred in marketing their products and services around the world.
This supplements the additional $60 million already committed by the Government, and brings EMDG funding to its highest level in more than 20 years at $207.7 million for the 2019-20 financial year.
For details about the full range of programs the Australian Government has launched in support for Australian businesses go to business.gov.au
Latest insights from Austrade
9 April 2020
Markets in Southeast Asia face severe disruption as government restrictions impact supply chains and freight charges rise. Across the region, logistics operations are having to adapt fast. Food security measures are being introduced in some countries, including Vietnam and the Philippines.
- Indonesia – The Jakarta regional government has announced legally enforceable large-scale social distancing measures from 10 April. This includes closing most public facilities and houses of worship, prohibiting wedding receptions and other social events, and introducing new limits on operations of office buildings and public transport. Most physical business activities other than working from home are limited, except for those in public governance, those directly addressing COVID-19 needs, and those in specific sectors. The sectors permitted to continue are health, food, energy, communications, finance, logistics, retail, and strategic industries.
- Indonesia – President Widodo’s government is focused on preventing unemployment and poverty from increasing. The government has lifted Indonesia’s longstanding legal cap on its fiscal deficit to increase expenditure, and has announced a third stimulus package which focuses on social transfers for the poor.
- Malaysia –The Malaysian Health Ministry (MOH) promulgated the Movement Control Order (MCO) on 18 March initially for a two-week period, which was subsequently extended. On 4 April, MOH announced it would review the need for a second extension on 10 April and there is a strong likelihood of extension. The Malaysian Government has launched three stimulus packages valued at MYR 35 billion (approximately A$13 billion).
- Philippines – The regional economic think tank Asean+3 Macroeconomic and Research Office has cut its 2020 growth forecast for the Philippines from the predicted 6.2% to 4.5%. The COVID-19 pandemic is impacting the key pillars of the economy: domestic consumption (driven down by community quarantine restrictions in place since 14 March and now extended till the end of April, and rising unemployment); remittances from overseas Filipino workers; the Business Process Outsourcing industry (which has largely shifted to working from home); and tourism. The Government passed a bill to provide cash aid to 18 million low-income families. The private sector is pushing for an easing of restrictions at the end of April to kick-start the economy.
- Thailand – The Bank of Thailand is forecasting the economy will shrink by more than 5% this year. Most companies are grappling with issues related to supply chain, staffing and liquidity. As an exporting nation, the global economic downturn is also expected to affect many industries. With tourism contributing more than 12% of GDP and around 15% of employment, the decline in this sector in particular will have a major impact. The Thai Government has introduced stimulus packages to alleviate pressure on business liquidity and employee incomes. The Bank of Thailand has also instructed financial institutions to ensure uninterrupted services to minimise disruption to industry.
- Myanmar – The World Bank has forecast economic growth will decrease from 6.8% to 2–3% in 2019–20. The Myanmar Government has announced an initial stimulus package, including 100 billion kyats (nearly US$70 million) worth of loans, eased deadlines for tax payments, and provided tax exemptions for Myanmar-owned businesses that have been hit by the global pandemic.
- Singapore – The Singaporean economy is expected to enter a recession this year, with GDP growth projected at −4% to −1%. As a result, the Monetary Authority of Singapore has relaxed its exchange rate policy process to keep prices relatively stable in order to ease the impact on the economy. The Singapore Government has released a third economic stimulus package worth S$5.1 billion, bringing the total value of packages to date to S$60.1 billion.
- Vietnam –Vietnamese businesses, especially those in the manufacturing sector, are experiencing a slowdown or stop in production, largely due to a lack of raw materials from China. The Government has targeted economic growth of 6.8% for 2020 but has warned that if disruptions to supply chains continue, growth could slow to 5.96%. The Government’s economic stimulus measures include tax breaks, delaying tax payments, and land-use fees for businesses.
Agribusiness and food
- Indonesia – Demand forbasic foods is strong and supply chains are responding, but the food service and Bali tourism sectors have experienced steep declines. Some specific fresh produce including onions have become scarce on local supermarket shelves. Indonesia’s Minister for Trade has announced that onion and garlic imports will be allowed without any import licences or a ministerial recommendation to import. This is in sharp contrast to normally restrictive permitting processes for horticultural imports. Some retailers are trimming product ranges to focus on the basics.
- Malaysia – Demand for basic foods remains strong in the retail sector and significant efforts to shore up supply are being put in place. Significant price hikes and a reduction in the availability of airfreight has importers resorting to sea freight for some commodities. While this is a stop-gap option for some items, the supply of perishable products, such as fresh produce, that require airfreight are being significantly disrupted. There are adequate supplies of dairy, and demand for premium Australian beef is strong in the retail sector but low overall due to the food service channel being reduced. Long transit times are challenging stable supply.
- Philippines – Demand for agrifood, especially fresh produce, remains high. Leading retailer Rustan’s increased its overall fresh (produce, meat) category sales by 57% since the lockdown and e-commerce sales are on the rise. Rising unemployment could reduce purchasing power. It is still possible to import using sea freight but there have been considerable delays. Airfreight is largely through chartered flights, at three to four times the normal costs.
- Singapore – Higher airfreight costs are impacting the price competitiveness of Australian food produce in the market. However, Singapore’s focus on food security is opening new opportunities for Australian exporters. The Singapore Food Authority will now allow AA-stamped frozen poultry to be imported into Singapore, with immediate effect until 31 July 2020.
- Thailand – Supermarkets report stronger-than-usual retail sales, with many Thais opting to cook and eat at home, and stock up on staples. Australian products are selling well via supermarkets and through online channels. In contrast, the food service sector has been hit hard. Significant reductions in tourist numbers has led to the closure of many hotels. Most restaurants have closed, and those that remain open can only provide takeaway service. Some traditional food service suppliers have switched to providing direct-to-home delivery services of products including Australian beef.
- Vietnam – There is a decline in the quantity of imported food products including Australian agrifood products. The Vietnamese Customs authority temporarily cancelled registrations for clearance of rice-export shipments from 24 March. Pending review, this may limit or end rice exports from Vietnam, the world’s third-largest rice exporter.
- Malaysia – Online retailers are scaling up delivery and logistics capabilities to cater for a large increase in demand. Key grocery delivery players experienced a surge in demand in late March. The online stores of supermarket chain Jaya Grocer and delivery service HappyFresh reported a jump in activity of around 600% compared to the first half of March. E-commerce and logistics are restricted to the provision of essential services only. Cross-border logistics are not affected with ship fulfilments running as usual. However, the Movement Control Order is impacting final in-market delivery.
- Philippines – With the closure of most food-service outlets (restaurants and hotels), importers and distributors have started facilitating direct-to-consumer orders via online channels.
- Thailand – There has been significant growth in e-commerce sales with Thailand’s e-Commerce Association reporting an almost doubling in online sales, particularly in healthcare-related products. The Thai Government is encouraging retail businesses to go online to capitalise on the popularity of social commerce and the country’s strong logistics infrastructure. Food delivery companies have also seen a healthy growth in demand.
- ASEAN – The cancellation of most commercial passenger airlines is impacting international supply chains for premium foods. Besides Australian premium produce, such as beef, this is impacting time-sensitive and premium food imports from Europe.
- Malaysia – Malaysian customers and importers have had to secure alternative supply routes which may be less time and cost-efficient. This is placing upward pressure on goods prices. Food importers are reverting to sea freight as a more reliable alternative to air freight where possible; however, this is causing significant challenges for time-sensitive perishable items.
- Philippines – There is no available cargo through Qantas and Cebu Pacific. While Philippine Airlines still offers cargo between Sydney and Manila, prices have increased. Dairy (yoghurt and cheese) and fresh vegetables are the most affected items and inventory in-market is running low.
- Singapore – Singapore Airlines published its pared-back international passenger flight schedule for April, noting that flights to Sydney would carry both passengers and cargo. Singapore Airlines Cargo has confirmed the regular weekly schedule of six airfreight services to Melbourne and Sydney would continue. Singapore Airlines’ subsidiary Scoot has also resumed flights to Perth as of 3 April. These flights will carry both passengers and cargo. Sea freight connectivity is under further consideration.
- Thailand – With few airlines operating in the region, and the full closure of Suvarnabhumi Airport from 3–18 April (with the exception of freight and cargo flights), importers are diverting orders to sea containers or securing limited freight services at higher cost.
- Vietnam – There are currently no direct flights between Vietnam and Australia, meaning exporters have to identify alternative supply routes.
- ASEAN – Border closure announcements and travel bans have triggered increased concern among importers and distributors about the availability of supplies from Australia — food products in particular.
- Malaysia –The MCO has restricted depot operating hours from 8am–8 pm, significantly slowing down sea freight shipments. However, the government is working to reduce these delays. As depot operations constitute a crucial element of haulage operations, early closure will have a significant impact on delivery and collection.
- Philippines – Import permits are being delayed as issuers struggle with reduced workforces and restricted hours at government agencies such as the Bureau of Customs. Sea freight remains the main option for imports.
- Vietnam – Some manufacturers have noted that sea freight (while still open and moving) is becoming tighter to book due to the flow on effects of less air freight options.
- Malaysia – Logistic services (including transport and warehousing services) were gazetted as an essential service by the National Security Council, but operations are challenged by variations in enforcement.
- Philippines – Domestic land, air and road transportation is banned unless delivering essential items (food and medicine). Due to a lack of workers and the establishment of checkpoints, some importers have stopped distribution to other provinces or areas outside Metro Manila. Delivery or courier services such as GrabDelivery or Lalamove are still operating.
- Thailand – Freight companies servicing some manufacturers and retailers are seeing strong demand for their services. Suppliers to malls and restaurants have seen a decline in their business. Trucks from most parts of Thailand are allowed to enter Bangkok 24 hours a day. With around-the-clock transportation, analysts report sufficient stock in the supply chain network to meet metropolitan needs. While many provincial borders are locked down, there have been no reports of this impacting on the movement of essential goods.
- Indonesia – Jakarta’s local government has ordered cinemas, sporting venues and other entertainment zones to close for at least two weeks. Banks have closed some branches in central Jakarta and businesses are starting to close as customers stay home. Most large shopping malls in Jakarta have reduced hours of operation, and some have temporarily closed. A large number of restaurants have also closed indefinitely. Traditional markets in Surabaya have reported a decrease in shopper numbers and the worst trading conditions in over 20 years.
- Malaysia – The MCO will have a major impact on the retail industry. According to the Malaysian Retailer’s Association, the industry might lose up to 90% of overall revenue during the initial 14-day lockdown. Malaysian wholesalers are changing the way they physically operate as access to wet and dry markets becomes restricted. Delivery services such as Grab Food have seen considerable increases in demand given restaurants are only open for delivery.
- Philippines – Only grocery stores and pharmacies remain open on reduced hours. All malls, restaurants and cafes are closed under the quarantine. There has been a rise in e-commerce platforms and food delivery.
- Thailand – Supermarkets and fresh ‘wet markets’ remain open, as are pharmacies and medical services. The city-wide curfew between 10pm–4am has not had significant impact on access to these services. In retail, grocery items including toilet paper, cleaning products, tinned vegetables, tinned tuna, packet soups, eggs and UHT milks have seen sales growth, as has functional drinks, instant coffee and staples such as cooking oil, instant noodles, rice and sugar. Household stockpiling may slow consumption of these items in the longer term.
- Vietnam – Some importers and retailers report that total sales have dropped by up to 60% since the COVID-19 outbreak. Vietnamese consumers are stocking up on staple food items (rice, noodles), and household products.
- Malaysia – All manufacturing companies require an exemption to the MCO to operate and only those deemed as essential services are granted exemptions. The Malaysian Government is allowing glove manufacturers to operate at full capacity. Malaysia is the largest global manufacturer of rubber gloves and the country supplies approximately 65% of global demand. MARGMA has received requests from 190 countries for rubber gloves.
- Philippines – Luzon Island, which accounts for 70% of the country’s economy, has been placed under quarantine until 30 April. Food manufacturing is designated an essential service but is being challenged by the workforce’s inability to travel.
- Thailand – Manufacturing and retail companies that are seeing a rise in demand for their products have been increasing inventory, opening up temporary warehouses and hiring more staff. Increased production has led to strong demand for some raw materials. Businesses are concerned the government may close factories and distribution networks in the future to quell the spread of the virus and how this will impact their operations and staff.
16 April 2020
China’s economy is estimated to be operating at around 80% of its normal output with most people having returned to work. Demand, and prices, for many Australian exports will remain subdued until the economy returns to normal levels and consumer confidence rises.
According to official data, consumer inflation eased to its lowest levels in five months. China’s consumer price index (CPI) rose 4.3% year-on-year in March, down from 5.2% in February.
China’s State Council announced that preferential tax policies supporting small business would be extended to the end of 2023. The measures include waiving VAT on interest payments to financial institutions for loans of RMB 1 million or less, and providing a 10% discount on tax collected from financial institutions for loans of RMB 100,000 or less to agricultural households.
According to Tianyancha, a commercial database, it is estimated that 460,000 Chinese companies went out of business in Q1 2020, almost double the usual rate of corporate failures in a normal quarter. Many of these firms are likely to have been in the food-service and entertainment sectors and customers for Australian exporters of agricultural produce.
Most provinces with the exception of Hubei have announced staged returns for schools beginning from late April.
Hong Kong Chief Executive Carrie Lam announced a further stimulus package worth HK$137.5 billion to support the city’s economy, with a focus on job retention. The spending package will include a HK$80 billion job security program to subsidise 50% of wages for affected workers for six months.
Transport and logistics
On April 9, China’s Civil Aviation Administration reported that from April 6–12, a total of 4,445 cargo flights filed flight schedules. This represents a 338% increase on pre-COVID-19 averages of 1,014 weekly flights.
According to government sources, major ports in China have achieved 90% of the average throughput of the same period last year. Ningbo Zhoushan Port, the world’s leading port by throughput volume, restored most of its handling capacity in March with a total of 2.28 million TEUs. This was 2.5% less than last year, and comprised 62.66 million tons of cargo, 9.2% less than 2019.
China’s National Railway Group reports that China witnessed an increase in the number of trains, and rail cargo volumes, to and from Europe in the first quarter of 2020. In March, the number of containers and open wagons on China–Europe train lines increased by 36% and 30% year-on-year respectively. These shipments had a 98.9% full container rate.
A number of countries have announced temporary export restrictions or bans on some agriculture commodities including rice from Vietnam and Cambodia; buckwheat, rice and oat flakes from Russia; wheat flour, buckwheat, sugar, sunflower oil and some vegetables from Kazakhstan; beans from Egypt; and sunflower seed from Serbia.
It is unlikely that these export bans will significantly impact China’s domestic food supply. The Chinese Government has reassured the population that China’s rice and grain reserves are at very healthy levels.
Opportunities for Australian agribusiness exporters
Export restrictions, increased domestic demand and supply interruptions in Europe and North America do present opportunities for Australian companies.
Australian sorghum, oat and barley are in high demand, although supply side challenges, largely as a result of the drought remain.
Concerns have been growing about food supply in Hong Kong, given that 95% of Hong Kong’s food and beverages are imported. The cancellation of passenger flights globally has increased pressure on freight options. This presents an immediate short-term opportunity for Australian suppliers to meet supply gaps in Hong Kong.
Research by Meat and Livestock Australia on the impact of COVID-19 on Chinese consumers indicate sustained opportunities for high-value Australian red meat exports. The online survey of 800 affluent Chinese consumers across four Tier 1 cities found that home isolation and lockdown measures have driven some shifts in consumer attitudes and behaviour that have seen stronger demand for Australian red meat, particularly beef.
Before the COVID-19 outbreak, the top three considerations of consumers buying beef was safety, freshness and quality. During COVID-19, there has been a shift in attitudes to safety, boosting immunity and quality.
Demand for premium seafood is slowly growing but it remains uneven and prices are still well below pre-COVID-19 levels. The recent closures of a number of large well-known seafood restaurants in Guangzhou and Hong Kong brought on by the COVID-19 outbreak (not necessarily the only reason for the closures) illustrates a shift in consumer attitude.
According to the Guangzhou Catering Association, seafood restaurants, especially large-scale ones, are experiencing significant difficulties. Estimates across the sector suggest that up to 25% of restaurants are now closed permanently across China. The outbreak has changed consumption habits, with people buying raw materials to cook at home.
According to the Wool Market Company, Chinese buyers are continuing to support Australian wool auctions, although prices and volumes are down. The China Wool Textile Association surveyed 17 mills in the week commencing 30 March. According to the survey, all mills have returned to full operation. Disruptions in key export destinations and the cancellation of orders has kept pressure on Chinese textile mills.
On April 3, the National Development Reform Commission approved a 5 MPTA LNG Terminal proposal by the Beijing Gas Group. The terminal, located at South Port Industry Zone in Tianjin, includes 10 containment tanks of 200,000 cubic metres and a 229-kilometre transmission pipeline to Tianjin, Beijing and Hebei province.
This RMB 20.1 billion investment, with phase 1 to be completed in 2022, will potentially provide significant opportunities for Australian LNG exporters.
Health and medical
Due to challenges in recruitment and site access in China, the US and the European Union, Australian contract research organisations are reporting increased interest from Chinese biotech firms in conducting clinical trials in Australia. There is also resurgent demand in Hong Kong and Taiwan for locally conducted trials.
The review and approval of non-COVID-19 clinical trials is proceeding as normal in Hong Kong and Taiwan. All Taiwan sites and around 75% of Hong Kong sites are open for recruitment and participant visits.
China’s Ministry of Commerce advised that new regulations are aimed at ensuring the quality of medical exports and that they apply to all exporters equally. Chinese government agencies have reached an agreement that should result in a number of Australian companies receiving clearance to bring personal protective equipment back to Australia.
Social media and e-commerce platforms will be crucial tools to Australia’s business recovery post-COVID-19 in the China market.
Despite an already strong online consumer base, even more Chinese have shifted to purchasing goods online. Digital marketing strategies and understanding China’s social media environment will amplify and reinforce branding as well as aid distribution.
China’s large technology firms are looking to collaborate with international partners to help them develop their China digital strategies. JD.com, one of China’s most successful e-commerce platforms, is seeking to partner with larger firms as well as startups to drive expansion and innovation.
JD.com recently announced a year-on-year increase of 18.6% to 362 million active customer accounts in 2019. JD.com’s small services business unit grew more than 43% in the fourth quarter of 2019. This may also provide a new avenue for Australian tech companies to enter the China market.
PingAn Insurance is also actively looking for international startups that it can incubate, accelerate and weave into its own service offerings, to compete more effectively.
8 April 2020
Ports, aviation, transport and logistics
- There are now only 108 international passenger flights into China per week under new restrictions to minimise the risk of COVID-19 cases entering the country.
- The number of weekly international cargo flights has increased to 1,195 (up 28.5% in the past week and 17.85% compared to pre-COVID-19 levels).
- The Civil Aviation Administration of China (CAAC) is encouraging passenger airlines to use their aircraft for freight-only flights. In the past week, CACC has approved 102 freight-only flights on existing passenger routes – including daily flights to Australia by China Southern from Guangzhou and China Eastern from Shanghai.
- The Ministry of Transport has issued stricter guidelines for international cargo ships after five crew members of the super-freighter Gjertrud Maersk tested positive for COVID-19. Crew will now not be allowed to disembark from their ships unless the Ministry gives them prior approval. Currently, around 500 ships carrying 7,000 crew arrive in China’s 128 ports daily.
- Rail transportation is being used as an alternative to air and sea freight, particularly out of Europe. China National Railway Group reported that the ‘China Railway Express’ is maintaining freight connections between China and European countries.
- Alibaba’s e-commerce platform Taobao is expanding its direct-to-customer selling platform for bargain-seeking consumers due to competition with other platforms such as Pinduoduo.
- Taobao’s new Taobao Special Offer Edition app allows buyers to purchase unbranded items like electronics and home appliances directly from manufacturers. The app was the most downloaded free app on Apple’s China App Store following its release.
- In response to store closures worldwide, more of the world’s luxury brands are establishing shops on China’s e-commerce platform TMALL for specific categories and labels.
- The skincare and beauty sector is expected to rebound quickly. Many brands are focusing on ‘health’ and ‘wellbeing’ as their core message, and on products that suggest a healthy lifestyle, with beauty a part of that lifestyle. Strong anecdotal evidence suggests the growth in online sales will continue. In 2019, online sales accounted for 30% of sales by value for skincare and 38% for colour cosmetics. Last year, the value of China’s beauty, wellbeing and personal care sector was estimated at around US$66 billion.
New infrastructure and technology
- China’s COVID-19 stimulus spending on infrastructure is projected to be around RMB 3.5 trillion in 2020 (around 3.5% of GDP). Investment has previously been in transport networks (high-speed rail and roads), power production and industrial capacity.
- New infrastructure investment will focus on 5G, ultra-high-voltage cables, intercity high-speed railway, electric vehicle charging stations, big data centres, artificial intelligence and the Internet of Things (IoT).
- China’s Academy of Information and Communications Technology (CAICT) forecasts that 5G infrastructure investment will reach RMB 1.2 trillion over the next five years. More than 50% of the world’s 5G base stations are in China, and CAICT forecasts 600,000 more stations will be built by the end of 2020.
- China’s State Grid will invest more than RMB 400 billion in power grid construction for ultra-high-voltage grids (UHV) and interprovincial electricity projects. Five UHV alternating current projects will commence between March and December 2020.
- The central government will continue to enhance investment into strategic and significant infrastructure projects. This includes constructing and expanding the intercity rail network to link metropolitan areas to remote regions, bringing higher levels of economic development to those areas and benefitting regional commuters.
- The new intercity rail network is expected to test IoT-driven technologies, including automated vehicles, new battery and energy storage, and artificial intelligence.
Agriculture and food
- Local importers and distributors estimate that Australian seafood imports were around 10–20% of 2019 volumes in January/February 2020. There has been some growth from mid-March due to stock depletion and the gradual recovery of restaurant and in-house dining. Other countries (Canada, New Zealand, US) all report low volumes of exports due to soft demand, with logistical challenges for live product.
- During the pandemic, some dairy suppliers saw strong demand, although dairy exporters had to adapt their logistics business model, due to reduced capacity and higher airfreight costs.
- Demand for wine remains very soft, especially at the premium end. Wine suppliers estimate consumption for Q1 2020 is at 30% of normal levels, although the consumption rate is slowly recovering. Current sales are estimated to be around 25% of normal levels for bars, 50% for hotels and restaurants and 75% for direct premises, such as supermarkets. There has been growth in e-commerce channels.
- According to the Department of Agriculture, Water and the Environment, around 56,000 tons of beef were exported in the first three months of 2020, compared with nearly 52,000 tons for the same period last year – a 7.7% increase by volume.
- Just over 26,000 tons of sheep meat were exported to China in Q1 2020, a 17% decrease by volume compared with 31,000 tons for the same period last year.
- According to China’s Ministry of Commerce, as of 4 April 2020, 54 countries and three international organisations have signed medical and PPE procurement contracts with Chinese enterprises. More agreements are expected to be signed with another 74 nations and 10 international organisations in the near future.
15 April 2020
Most European Governments anticipate sharp economic contractions, although economists in Germany forecast a rapid economic bounce-back next year. On April 9, European finance ministers agreed to a €500 billion package to help badly stricken economies; Italy and Spain are expected to be the primary beneficiaries. In UK and Germany in particular, the pandemic has triggered widespread innovation in medical equipment development and expedited the introduction of new equipment into hospitals.
- European Union – EU finance ministers agreed to almost €500 billion of measures to help governments manage the financial cost of coping with coronavirus-related dislocation. These included: a €100 billion unemployment-insurance scheme; a €200 billion fund to support businesses; and €240 billion of lending via a bailout fund, the European Stability Mechanism. Loans are earmarked for medical expenses and – with conditions – economic support.
- France – On April 13, President Macron announced a month-long extension to France’s nationwide lockdown, lasting until May 11. After that date, nurseries, primary and high schools will gradually reopen, but higher education is suspended until autumn. Restaurants, cafés, hotels, cinemas and other leisure activities will remain closed after May 11, and there will be no summer festivals before mid-July.
- France – Minister of Economy Bruno Le Maire declared France would enter its worst recession since 1945 due to the COVID-19 pandemic. He told a Senate Commission that France’s economy may shrink by ‘much more than’ 2.9% in 2020.
- Germany – The ifo Institute predicts that Europe’s biggest economy would contract by 4.2% this year before expanding by 5.8% next year.
- Israel – The Israeli Government has announced more stringent lockdown protocols in eight cities and 15 neighbourhoods in Jerusalem where populations are most concentrated.
- Italy – The Italian Government has proposed closer collaboration between technology, research and innovation organisations to fight COVID-19 more effectively. Called ‘Innova per l’Italia’, the initiative targets businesses, universities and research centres among others. The aim: to enhance the prevention, diagnosis, monitoring and containment of COVID-19 infections.
- Poland – The EU’s major copper producer, KGHM, reports that to date production has not been impacted by responses to the pandemic.
- Sweden – Swedish company Mölnlycke has raised the issue of France’s export ban on key medical supplies. Mölnlycke’s main distribution warehouse for southern Europe is in Lyon and the company’s entire stock of four million surgical masks has been seized. This is impacting the company’s ability to supply medical equipment across Europe.
- UK – The UK’s export credit guarantee agency, UK Export Finance, will expand the scope of its Export Insurance Policy to cover transactions with the EU, Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland and the US with immediate effect.
- UK – The Government is considering ‘immunity passports’ for key workers as a way of getting people who have had COVID-19 back into the workforce more quickly. The principal challenge is administrative. The idea of post-recovery certificates is also under consideration in Germany.
- Germany– The FIT Additive Manufacturing Group has developed a ‘filter holder’ that can be combined with almost any filter material to form a makeshift, multi-use mask. The 3D printable blueprint can be downloaded free of charge from the company’s website. FIT Group invested last year in two 3D printers from Australian company SPEE3D.
- Germany – Mondi’s plant in Gronau, which usually produces hygiene products such as baby diapers, has converted its production line to manufacture soft, elastic straps for clinical masks.
- Sweden – H&M has repurposed parts of its supply chain to produce personal protective equipment for hospitals.
- UK – There is mutual official interest in increasing UK–Australia collaboration with respect to the provision of personal protection equipment.
- Sweden – Sales at H&M, the world’s second-largest clothing retailer, decreased by 46% during March. The company has closed stores across its global network until further notice, although stores in China have largely reopened. The closures include 49 stores in Australia, affecting 1,300 people. H&M still plans to launch an online shopping portal in Australia later this year.
- UK – There has been a 45% increase in sales year-on-year at convenience stores in the four weeks to 22 March. Supermarket sales grew just 7.6%.
- UK – Major UK department store chain, Debenhams, and retailer Cath Kidston are lining up administrators, with over 23,000 jobs at risk.
- Germany – E-commerce sales in March were almost 20% below last year. In the clothing segment, sales slumped by more than 35%. Consumer electronics sales dropped by over 20%, and computers and accessories saw a 22% drop despite spending on home office solutions. Online bookings for travel, events and flight tickets fell more than 75%.
- Germany – Online demand for medicines rose by more than 88% and food orders by 55% in March (year on year). For drugstores, the increase was just under 30%.
- UK – Over 400,000 people are receiving prescriptions via online pharmacy, Pharmacy2U. The fastest-growing customer segment is among the 70+ age group.
Agriculture and food
- Germany – The German Government will relax border closures to allow seasonal harvest workers to enter the country. German farmers usually depend on around 300,000 seasonal workers each year to bring in the harvest.
- Israel – The number of eggs purchased jumped from 6 million a day to 10 million a day during the COVID-19 crisis. The country is aiming to import up to 28 million eggs (by ship and air) from Spain and Turkey to address the shortage.
- Netherlands – Dutch farmers have been left with one million tonnes of potatoes from last season. With restaurants closed since mid-March, the market for potatoes collapsed overnight.
- UK – The Horticulture Trade Association warned plants worth ₤200 million would have to be destroyed and a third of horticultural businesses might not survive the current crisis. The horticultural industry contributes more than ₤20 billion to the UK economy each year.
Energy and resources
- Poland – Famur, Poland’s largest mining equipment manufacturer, reports that its activities have not been significantly disrupted as a result of the COVID-19 pandemic.
- Poland – A sharp drop in production among coal power plants is affecting domestic producers of steam coal.
- Germany – There is an emerging political consensus that Singapore’s smartphone tracking approach may be politically viable without compromising legal and cultural barriers in Germany. Tracking of close-proximity Bluetooth ‘handshakes’ between smartphones would be the answer.
- Germany – The Fraunhofer Institute for Telecoms said it was working with others across Europe to develop a COVID-19 contact-tracing app. The app would enable the proximity and duration of contact between people to be saved for two weeks on cell phones anonymously and without the use of location data.
- Italy – Italian fintechs have launched support mechanisms to address the COVID-19 crisis. These include crowdfunding campaigns for the Civil Protection Authority to support crisis management, fundraising for intensive care units, collecting and distributing donations for hospitals, and providing free messaging services for the health system.
- Israel – There has been a general slowdown in funding for seed-stage companies, according to the Israel Venture Capital Association. Investors seem to be focusing on larger companies with later stage rounds.
- UK – More than 500,000 people have signed up with edtech firm Seneca in the past two weeks, more than doubling its weekly active users to 1.4 million.
- Czech Republic – The tender submission deadline for constructing the Pankrac and Olbrachtova underground stations and connecting tunnel has been postponed by two months. The tender remains open and the value of the project is estimated to be 10.8 billion CZK.
Advanced manufacturing and defence
- UK – Jaguar Land Rover, UK’s largest vehicle producer, told staff and suppliers it will extend its shutdown by ‘a few more weeks’. The shutdown is estimated to be costing the carmaker ₤1 billion a month.
Government stimulus program
- France – Since its inception, the system of loan guarantees set up by the French Government has covered more than €20 billion of loans submitted by 100,000 companies. This represents 6.7% of the €300 billion of guarantees promised by the government.
- UK – Government body, Innovate UK, is providing £20 million for proposals that will help retailers respond to spikes in consumer demand and improve deliveries, as well as help families assist elderly relatives with food deliveries, doctor’s appointments, bill payments and new home-based education tools.
Latin America update
14 April 2020
Coronavirus infection rates in Latin America are lagging the pandemic in the US and Canada, but are growing quickly with Brazil, Chile, Ecuador and Mexico the most advanced. In Mexico, a combination of logistics disruptions and changing consumption is impacting Australian food exports, while mining operations in Latin America have slowed or been placed on a care-and-maintenance basis. There are no reported delays at Brazilian or Chilean ports.
Argentina – The Argentinian Government has extended a nationwide lockdown to April 26. The country has also closed its air, land and maritime borders. International trade operations and cargo transport, food retailers, chemists, oil and gas companies, food manufacturers, health workers and security forces were exempt from the lockdown. All non-essential workers are working remotely. Citizens are only allowed to leave their homes to visit supermarkets and pharmacies.
Mexico – All non-essential economic activities have been suspended and only hospitals, markets, supermarkets, grocery stores, pharmacies and take away restaurants remain open. The state-owned and oil and gas company, PEMEX is still operating but at a significant loss. Mexico’s Federal Government has not announced any economic stimulus packages and seems unlikely to do so beyond small loans for micro businesses.
Impacts on key industries
Agriculture and food
Argentina – Since the nationwide lockdown was implemented, Argentina has experienced ongoing supply chain disruptions, labour and input shortages, and pre-emptive consumer demand, which has increased food prices. Export performance has varied; demand for beef in China is rebounding but European demand is softening. With a few exceptions, demand for Argentina’s fresh horticultural products, grains, edible oils and dairy remain positive in key markets in Latin America, Europe, the Middle East and Southeast Asia.
Mexico – A reduced demand for premium food, the cost and availability of airfreight, disruptions to supply chains and the value of the Mexican Peso are impacting Australian food exports. Currently the only entry into Mexico for premium food is via the US. The mayor of Mexico City has ordered restaurants to only offer takeaway service, with little uptake from customers. This will affect Australian meat exports. Gapa Food Services, one of Mexico’s main importers of Australian meat, is now selling directly to consumers online and via social media influencers, with some interest.
Argentina – The Argentine Chamber of Mining Companies has established a procedure to support minimal operations (security and environmental protection) and the safe movement of personnel to and from mine sites. It has also created a biosecurity protocol that will remain in place once mines return to regular operations. Mining projects in the production stage only will resume activities from April 1.
Chile – Production has slowed at several mines, with the focus now on maintaining operational continuity and strong sanitary protocols. The industry is also grappling with falling copper prices. Codelco, a state-owned mining company and the world’s largest copper producer, has temporarily stopped construction of three structural projects. The stop will not affect current copper production at the sites.
Colombia – The Colombian Government has extended the national quarantine period to April 23. Mining is one activity that may continue. In reality, however, mining companies are reducing operations to guarantee the health and safety of their employees, families and communities. They are only implementing maintenance, care and security measures in their operations.
Mexico – The Mexican Government’s COVID 19 Emergency Task Force designated mining as a non-essential industry despite lobbying from the mining sector. Miners can, however, request an exemption from the care, maintenance and security mode to keep operating if the mine’s closure significantly impacts on the community’s economic security; that is, if mining is the only employer in the community and the only provider of healthcare. This is on a case-by-case basis. All exploration and expansion projects are on hold until April 30.
Peru – The majority of mine production has stopped for the past two weeks. The only activities that remain operational are related to environmental safety and critical equipment maintenance. With two more weeks of mandatory isolation across the country, miners are concerned about the impact of mobility restrictions on their supply chain. Like Chile, the Peruvian mining industry is facing low metal prices, with copper at its lowest level since 2008.
Mexico – Ten of the twelve companies that manufacture vehicles in Mexico will partially close their plants. These companies include BMW, GM, Nissan and Volkswagen. The COVID-19 outbreak has forced their auto parts suppliers to shut their factories, given the low demand for units worldwide and border closings.
Brazil – Operations at public and private ports and cargo-handling facilities continue without disruptions other than a reduction in the labour force, particularly in administrative roles. Disinfection, and heightened safety and health protocols are in place at ports.
Chile – Most ports are operating as normal with minimal impact on supply chains.
Middle East and Africa update
14 April 2020
Saudi Arabia and UAE have announced economic stimulus packages to minimise the impact of disruptions to their economies and boost business confidence. Major airlines are stepping up the number of airfreight flights to Australia to improve the flow of goods to and from the region. Mining activities across the Sub-Saharan region have stopped or are in care and maintenance mode.
Impacts on key industries
Middle East – Major airlines including Etihad, Emirates and Qatar are increasing the number of airfreight flights to Australia. Etihad and Emirates have converted passenger jets to move cargo, with freight rates between 7 and 10 times more expensive than normal rates. Qatar is using dedicated freighters.
Qatar – The combined Qatar Airways cargo service from Melbourne and Perth (via Singapore) is expected to operate at a reduced load to support the import and distribution of medical equipment. According to GWC Logistics, the majority of imports into Doha are being stored in controlled environments to secure food and to prepare for Ramadan.
Food and agriculture
Middle East – Many countries in the Middle East are reassessing their food security situation and easing restrictions on labelling and documentation in a positive development for Australian exporters.
Middle East – Interest is increasing in digital health solutions, and in Australian healthcare providers with a presence in the region or with the ability to offer solutions virtually.
Middle East – Major state-owned infrastructure and building companies including Damac and Emaar have offered suppliers between 60–70% of the value of their invoices. Companies are told that if they agree to the reduction, they will be paid quickly.
Mining and METS
Saudi Arabia – All mines are still operational. Mining companies have ordered enough supplies to last up to three months, and plan on ordering additional supplies as required. For now suppliers are able to deliver on time but mining companies have contingency plans in case there are shortages. The main challenge for companies is employee mobility, as tighter restrictions are being imposed throughout the nation.
Sub Saharan Africa – Much of the mining production across the region is either shut down (e.g. South Africa) or in a ‘care and maintenance’ mode. This situation has a knock-on effect on downstream processing (smelters) through to supplies for exports. Demand for mineral products from other countries has diminished significantly as a result of the COVID-19 pandemic.
The non-oil sectors of the Gulf States’ two largest economies, UAE and Saudi Arabia, are decelerating rapidly. Business confidence is also declining. The Gulf’s private sector relies on state spending and the low oil price and COVID-19 will result in drastically lower economic activity and large-scale lay-offs.
Saudi Arabia – The country has announced a US$32 billion stimulus package.
UAE – The UAE’s central bank has doubled its banking stimulus package to Dh256 billion ($70 billion) as business sentiment deteriorated. The measures include Dh95 billion in assistance to banks as the UAE extended a program to defer retail and corporate debt payments until the end of 2020.
North America update
20 April 2020
The US and Canadian governments have announced multibillion-dollar programs to support businesses. Much of this aid will be delivered via wage support and loan guarantees to small and medium-sized enterprises. The US tech sector reports a surge in demand – in particular for cloud-based video collaboration and streaming services. The dramatic fall in oil prices is leading some analysts to reconsider the pace at which consumers will switch to electric-powered vehicles – with implications for investment in battery production, and lithium and rare-earths mining projects.
Impacts on key industries
Canada – The Canadian Government has requested proposals for remote autonomous projects and solutions that could help tackle the economic and social impacts of COVID-19. This includes drones that could alleviate bottlenecks in supply chains, deliveries and agriculture.
US – The US Government expects defence companies to continue to deliver products and services to the Pentagon on time, despite the challenges defence companies face in terms of supply chains and workforce availability.
San Francisco – Tesla has halted operations at factories in the Bay area until at least the end of April. Demand for new electric vehicles is falling in US and European markets. There are fears that low oil prices will retard the adoption of electrically powered vehicles.
Canada – Canada is proceeding with plans for an oil patch bailout. Federal and Alberta government programs are likely to include enhanced access to credit, especially for small and medium-sized companies, according to news reports.
US – With oil prices at close to US$20/barrel and expected to drop to $10/barrel, gasoline prices are expected to hit $0.99/gallon in many parts of the country. Current prices are equivalent or better than 1960 prices adjusted for inflation. This will lower transport costs in the US and benefit logistics companies.
US – Less fortunate is the US oil industry. Record low crude prices threaten hundreds of thousands of jobs, especially in Texas. The US Government and its agencies hope Saudi Arabia and Russia will curb production to shore up prices.
Houston – US energy companies have reduced the number of active oil rigs for the third week in a row, in their biggest weekly cut in five years. Spending on new drilling has been slashed.
US – The prospect of sustained low oil prices is leading analysts to fear that adoption rates for electric vehicles will slow, lowering the sector’s demand for rare-earth minerals and lithium. There is concern that as investors flock to low-risk investments, rare-earths mining projects will struggle to secure funding, except in cases where governments wish to secure a strategic supply.
Telecoms and technology
North America –Telstra Americas reports a surge in demand with technology customers looking for new capacity. As more people work, study and entertain themselves at home, all platforms – video, collaboration, content streaming, gaming – are experiencing unprecedented usage.
US – According to news reports, there is a surge in demand for cloud-based collaboration services. Microsoft reports a 775% increase in cloud services in areas affected by lockdowns. ZDNet reports daily usage of Google’s enterprise videoconferencing tool, Hangout Meets, is now 25 times higher than in January. Cisco’s CSCO reports a doubling of meeting minutes on its Webex videoconferencing platform. As of March 22, Zoom reports a 378% (YoY) increase in daily active users.
US – In the US, streaming activity jumped 27% in the week ending March 23. Market analyst Nielsen predicts that streaming will increase 60% during the current pandemic. Netflix, Amazon, Hulu and Disney are among the beneficiaries.
US – Most CIOs believe spending on PCs will fall in the coming year, according to a survey reported in Maketwatch. Almost half think spending on artificial intelligence and servers will also decline. The tech sectors with enhanced prospects were security and cloud services, with 86% and 68% of CIOs respectively believing these sectors will become higher priorities.
US – According to a recent CB Insights report, the number of corporate deals in the fintech sector has fallen to one-half to one-third the usual rate, although a decline was apparent before the COVID-19 outbreak. The number of deals fell 27.5% between February and March 2020. This appears a global trend, with fintech funding reportedly falling to 2017 levels.
US – Consumer lending platforms have seen a large increase in new users, while payment platforms have experienced a decrease in transactions. Analysts say COVID-19 will greatly accelerate the ‘digital-only’ trend, providing much-needed growth for payments firms in the future.
US –The Payout Protection Program, worth up to US$300 billion, will help businesses with fewer than 500 employees to retain their workforce.
US –The Economic Injury Disaster Loan Program will disperse loans of up to US$2 million with proceeds used for fixed debts, payroll, accounts payable, and other debts that can’t be paid due to the impact of the COVID-19 outbreak.
US –The Coronavirus Economic Stabilization Act (2020) is a US$454 billion Treasury program that aims to provide direct loans to businesses with 500–10,000 employees. The funding will be used for loans, loan guarantees and other investments.
Canada –A 75% wage subsidy will be available to companies, charities and non-profit organisations to keep employees on payrolls during the pandemic.
Canada – The Canadian Government is establishing a Business Credit Availability Program to provide CA$65 billion for small and medium-sized enterprises.
Canada – Until August 31, 2020, businesses may defer income tax payments for amounts that are due between March 18 and September 2020. Businesses and self-employed people may defer payments of Goods and Services Tax/Harmonized Sales Tax (GST/HST) until June 30, 2020, as well as customs duties owing on their imports.
Canada – The Canadian Government has announced an Emergency Response Benefit to provide temporary income support of CA$500 a week for up to 16 weeks to those who stopped working because of COVID-19.
Industry support programs
Canada – The Canadian federal agriculture financial institution, Farm Credit Canada, is gaining an extra C$5 billion in lending capacity for producers, agribusinesses and food-processing companies.
Canada – Prime Minister Trudeau has announced that CA$50 million has been made available for members of the Next Generation Manufacturing Supercluster to develop or scale up production of in-demand technologies, equipment and medical supplies.
Canada – The Federal Government is calling for volunteers to support frontline healthcare workers and is offering full-time jobs to Canadian Forces reservists.
Ontario –The province announced it is launching a new web portal to connect workers with employers looking to fill positions in the agri-food sector.
On 17 April, AmCham and Austrade held a COVID-19 US market update webinar. The webinar was hosted by Nicola Watkinson, Austrade’s General Manager for the Americas, and included opening remarks by The Hon. Arthur Sinodinos AO, Australian Ambassador to the United States.
Panellists will share first-hand insights on the current business situation in the US. They will discuss the potential impact of the pandemic on Australian businesses currently operating in US, and also on Australian business that plan to expand there. Panelists will also share feedback on how US investors view Australian opportunities. The session will include an opportunity for Q&A.
San Francisco Lading Pad – The San Francisco Landing Pad is continuing to support Australian companies looking to enter the US market. Like many organisations, we are looking for new ways to deliver our services, and are now rolling out a suite of virtual services to support new market planning and discovery. See Landing Pads during COVID-19 for more information.
Email San Francisco Landing Pad webinars if you would like to join.
North East Asia update
Japan declared a state of nationwide emergency on April 16 and COVID-19 infections broke the 10,000 mark three days later. In Korea, where infections plateaued six weeks ago, the rate of daily infections has fallen to its lowest level since Feb 18. The IMF predicts a major economic contraction for Japan in 2020 (-5.2%) and a minor one in Korea (-1.2%). Low export demand among Korean auto makers may impact demand for steel – and Australian iron ore and coal. Increased consumer interest in nutrition foods in Japan, e.g. honey, could trigger export opportunities for Australian companies.
Health & restrictions
- The total COVID-19 infection rate passed 10,000 on April 18, with over one-quarter concentrated in the Tokyo area.
- Government authorities have requested citizens and businesses to exercise self-restraint and stay indoors.
- In Korea, total cases have plateaued at just over 10,000, with under 30 new cases now being reported per day. Analysts attribute successful containment to aggressive testing, well-resourced health infrastructure, and domestic industries that produce vital medical supplies and devices.
- The Korean Government is likely to reduce the intensity of its social distancing campaign to a ‘new everyday life’ quarantine campaign. This would require low-intensity distancing while allowing engagement in some economic and social activities.
- As of April 17, there were confirmed COVID-19 cases in Mongolia. Since January 2020, schools and universities have started online classes. The Prime Minister of Mongolia intends to extend all school and kindergarten opening until September 1 2020.
Japan – the IMF forecasts GDP will fall by 5.2% in 2020. Private sector economists predict GDP will fall 6% in the June quarter.
Korea – The IMF has revised its 2020 GDP forecast to -1.2%, down from 2.2%. Korea’s growth prospects could be constrained by very weak external demand. This is due to the Korean economy’s heavy reliance on exports and low growth projections among principal trading partners.
Japan – A two-phased, A$250 billion stimulus package is intended to boost emergency responses and promote a V-shaped economic recovery. Phase One aims to support the medical system, households and employment. Phase Two will aid transportation, hospitality, events and entertainment. It will also promote economic resilience via digital transformation and more secure supply chains.
Korea – The Korean Government has committed more than A$200 billion in economic relief. The stimulus ranges from household-level incentives to local retail spending. It also includes trade finance, support for start-ups and stimulus packages for financial markets.
Mongolia –Companies and the self-employed will be exempted from social insurance payments and personal income taxes during the pandemic. The Bank of Mongolia, Ministry of Finance, Mongolian Mortgage Corporation and commercial banks have postponed mortgage repayments for three months.
Impacts in Key Industries
Food & Beverages
Japan – Food services companies report high inventory levels, due to the downturn of the high-end restaurant business. A lack of availability for some F&B product lines (e.g. from Europe) may create new entry opportunities — including Australian exporters with stable delivery systems. Once lost, supermarket shelf space is often difficult to regain in Japan.
Japan – Consumers are becoming increasingly sensitive to nutrition and immunity issues. For example, a local TV program broadcast on March 10 highlighting the health benefits of honey led to an immediate jump in sales of honey.
Korea – The closure of restaurants and schools has led to a decrease in domestic rice consumption. This has led to exports of surplus rice stock to Hong Kong and Malaysia at up to three times the normal market rate.
Korea–Retail sales of Australian beef have increased by 10%. However, this is offset by the severely impacted restaurant and hotel trade, where sales of Australian beef have decreased by 40–50%. Shipment delays of Australian beef is causing concerns amongst Korean importers and food processors.
Exporters of perishable or high value agriculture and seafood products can apply for the Australian Government’s International Freight Assistance Mechanism (IFAM).
Japan – Automakers and steelmakers have temporarily suspended production and shut down plants/blast furnaces to halt the spread of the virus and cope with declining demand.
Korea – Hyundai Motors and Kia have experienced significant decreases in their export volumes and have temporarily closed production plants. This fall in automotive demand and production may impact Australian exports of both iron ore and coal as the demand for steel production decreases.
Japan – Supermarkets and convenience stores are considered necessary and so remain open, although some may have reduced hours. Restaurants and pubs are requested to shut down by 8 pm. Cafes are not required to close down but major coffee chains have voluntarily closed or have reduced operating hours.
Japan – Shopping centres over 1000m2 have been requested to cease operations until
May 6. Department stores in metropolitan areas were already voluntarily closing businesses one weekend before the government order came into effect.
Korea – There has been a sharp decrease in retail sales of non-food consumer items with all major department stores reporting sluggish sales.
Japan – Online sales of food staples and fresh foods have grown strongly, leading to some shortages and delays. Some supermarkets have stopped selling food via ecommerce as a result, although the Government is assuring consumers that supply chains are sound. E-commerce sites are required to stop selling masks and other scarce items at significant mark ups.
Korea – Korea’s well established e-commerce and integrated logistics networks have helped e-commerce to thrive. Online sales mostly compensate for the downturn in retails sales of food and beverages.
Japan – Most universities have delayed the start of their new term until May 7. Traditional preferences for paper-based materials and face-to-face meetings are being challenged, although many institutions are struggling to establish alternative online programs and teaching modules.
Japan – Digital learning is more prevalent among private education companies, such as cram schools, than at schools and universities. However online overseas study holds limited attractions as parents and teachers see the value-add in terms of overseas lifestyle experiences. Therefore, an uptick in overseas study will likely only occur after travel restrictions have been lifted.
Korea – The travel ban has severely impacted the education sector. The new school year will start a phased introduction of online classes from April 9, with online classes opening for year 9 and year 12 students first. Universities are offering lectures online but students have raised concerns about quality.
Defence and Security
Japan – A supplementary budget to improve the Japanese Ministry of Defense and Japan Self Defense Forces capabilities for COVID-19 response was approved, for disbursement in the April 2020–March 2021 fiscal year. Spending will likely focus on negative pressure isolation treatment rooms, artificial respirators, more ambulances, ‘maneuverable medical units’ and – potentially – a hospital ship.
Japan – The volume of internet data used in Japan has grown 40% in the last month, prompting overload concerns. Japan’s largest telecommunications provider, NTT Communications, says it has the capacity to handle twice the current data load. As data usage continues to rise, however, the network may come under pressure.
Japan – The number of inbound tourists fell by 93% year-on-year in March. Japan National Tourism Organization (JNTO) is building a post-COVID recovery strategy. Local regions and tourism providers have halted marketing and promotional activity until the COVID-19 situation improves.
Japan – The cessation of most commercial passenger flights between Australia and Japan has cut freight options. However, ANA has announced that it will increase its freight-only services between Australia and Japan.
Japan – The closure of several airports in Japan has disrupted logistics and increased distribution costs. There are delays to sea shipments due to delayed port operations and a lack of sea containers. Exporters should keep in touch with freight forwarders to check the latest flight or sea shipment schedule as these could change at any time.
Japan – M&A, project finance and start-up business activities have slowed. Many professional and financial services firms are now marketing ‘business-recovery advisory’ and ‘risk mitigation’ services to manage the impact of corona virus services.
Japan – The increased use of face masks has triggered a rise in skin-irritation complaints. The sales of skincare products including exfoliators, cleansers and wipes and facial masks are 50% higher year-on-year; the make-up category is depressed.
South Asia update
Indian Prime Minister, Narendra Modi, announced on April 14 that the current lockdown will be extended until May 3. Migrant and low-income workers have been the hardest hit. Labour availability is constraining supply chains, port infrastructure and the movement of goods across state borders. Manufacturing analysts estimate that production of essential items is currently operating at 20–30% of capacity, although this is an improvement on a week ago. Edtech is booming, and startups are marketing products in the digital learning sector.
The pandemic is accelerating evolution in retail and e-commerce. A new Insight article by our Trade Commissioner explores the trends and opportunities.
Bangladesh – The delivery of perishable goods from refrigerated containers at Chittagong port has slowed, as storage facilities for refrigerated containers has surpassed capacity.
India – The lockdown has left millions of migrant workers in limbo. Most are unable to return to their villages or towns; workers that did return are unwilling to venture back. The sectors most impacted are farming, construction and logistics. Food security is a growing concern.
India – In his April 14 announcement, Prime Minister Modi said some essential activities could be allowed after April 20 in parts of the country that showed improvement in fighting the infection. All passenger flights remain suspended until May 3.
India – Aggregate demand will weaken significantly in the near future, which will impact growth prospects for the year as a whole. Despite this, the IMF predicts India’s GDP will grow 1.9% in 2020 – one of the few major economies to maintain growth this year.
Nepal – The Government aims to save foreign exchange by temporarily banning the import of high-end vehicles and alcoholic beverages.
Sri Lanka – In lockdown since March 18, Sri Lanka’s economy is in crisis. Almost all industries are shut, apart from essential services such as water, electricity, fuel and food distribution and medical supplies manufacturers. Exports and imports are seriously affected.
Impacts on key industries
Bangladesh – Farm-level dairy milk prices have dropped substantially due to a lack of processing facilities and buyers. Supply chain disruptions, coupled with low demand, have put a strain on farmers. Australian dairy cattle are being used by four of the large dairy farm companies in Bangladesh, which is around 500+ dairy cattle.
India – The lockdown will exacerbate disruptions to food supply chains. The principal hurdles are labour shortages and transport availability. As a result, harvesting, storage and the transport of foodstuffs from farm to local markets is becoming patchy in some areas. Labour shortages mean perishable products may spoil at multiple points in the supply chain.
India – The winter harvest in the northern ‘bread basket’ provinces of Punjab, Haryana and Uttar Pradesh are being impacted by the non-availability of migrant labour. Mechanical harvesting would need to appear by mid-April to save crops.
India – The Indian Pulses and Grains Association (IPGA) estimates output for 2019–20 will suffer owing to erratic rains. The production target for pulses and grains for 2019–20 is 26.3 million metric tonnes (MT); there is now an anticipated shortfall of 10%. Approximately 2.5 to 3 million tonnes of imports – including lentils – will be needed, according to the IPGA.
India – There are growing concerns about food security in India, as a result of migrant labour shortages, breakdowns in logistics (see below), and interruptions to warehousing activities. Presently, Australian lentils are in high demand and are being shipped from Port Adelaide and Melbourne in substantial volumes.
Sri Lanka – Sri Lanka imports a range of essentials, including rice, wheat, sugar, dhal and milk powder. There are worries that prospective export restrictions from South Asian countries and China may severely impact supplies.
India – Alcohol has been flagged as a ‘non-essential’ commodity and cannot be sold during India’s lockdown. Australia supplies around 30% of the imported wine market. Although retail sales will restart after the lockdown, importers forecast that trade sales in hotels and restaurants may take about six months post-lockdown to return to normal. A ban on foreign wine imports in Nepal and the decline of the tourism industry in Sri Lanka will also have a significant effect on Australian wine exports to the region.
India – According to the Retailers Association of India, by the end of February 2020, business had dropped 20–25%, with a further fall of 15% since then. India has over 1.5 million retail stores that generate A$101.9 billion worth of business and employ almost 6 million people.
India – Modern retail is functioning with lower staffing levels and supplies, and social distancing rules are being promulgated. In Tamil Nadu, authorities have allowed retail to operate until 2.30pm only. Media reports anticipate that up to 30% of modern retail stores face closure if the current lockdown continues.
India – Soft fruit importers in Tamil Nadu report that retail operations were disturbed intermittently last week, due to intra-city logistics and local policing. The ‘new normal’ involves retailers taking orders through WhatsApp, and delivering through Dunzo/Store pickup. Labour shortages at ports in the south are also impacting import capacity.
India – The complete stoppage of Indian public railways is having a profound impact on labour availability. The rail network is the principal mode of transport in India. The 121,407 kilometre rail network conveys over 8 billion passenger journeys per year. Usually vital urban networks are also at a standstill.
India – Warehousing operations across the country are slowing. This is partly owing to a widespread refusal on the part of local labour to travel into logistics centres in towns and cities, fearing infection. Workers also fear transmitting infection into their villages. Food wholesale markets are also threatened as they rely on hired labour.
India – Road haulage is also in crisis. Almost 90% of goods move on trucks across India, and currently an estimated 350,000 of them are stranded, carrying A$7.52 billion of goods. A telling indicator of the recovery in supply chains, will be when trucking operations return to normal, since that will show that cash flows are easing and goods are changing hands.
India – Congestion at ports is exacerbated by truck stoppages. As of April 9, thousands of trucks loaded with inventory are stuck at warehouses, ports and highways, blocking supply chains. Food and beverage importers from Australia are impacted, including those importing grains, processed foods, wines and health foods.
India – E-commerce companies have witnessed a surge in their orders but have hit supply chain and labour challenges. Indian Railways will now start special trains for e-commerce. So far, Indian Railways has loaded 30 special parcel trains and are looking to identify various other routes, across the country. Indian Railways is also providing on-demand train services for essential commodities. In the last three days, it has delivered more than 7,195 wagons of food grains and other essential commodities.
Bangladesh – As yard storage approaches 92% capacity at Chittagong Port, carriers are putting shipping agents on the hook for reefer-related charges. The port has a capacity of 1,400 plug-in facilities for reefer-containers and all of them are occupied, forcing the port to arrange additional plug-ins for reefer-containers. These additional plug-ins are now also occupied.
Bangladesh – With near-zero reefer capacity at Chittagong, shipping companies are holding back their reefer-containers in Malaysia or Singapore. As of April 15, only 500 TEU containers were delivered from the port instead of the usual 4,000–4,500. Congestion is likely to last at least until the end of April.
India – The largest port in India, DP World Nhava Sheva (JNPT), and Mumbai Port Trust are both coping with heavily reduced workforces. Disrupted export-import trade and slipping carrier schedules have led shipping lines to start skipping JNPT and Mundra port, with weekly services now running every fortnight.
India – Port operators at Mundra and JNPT are urging importers to evacuate containers quickly, as operations are becoming choked. Ship owners are reluctant to dock at Indian ports as they fear having to sail without export containers, which are scarce because of non-clearance. This may lead to an increase in freight rates for imports. JNPT has waived dwell-time charges on alternate transport routes until April 14.
Property and construction
India – On March 28, the Reserve Bank of India injected liquidity, cut the repo rate and instigated a three-month moratorium on all term loans by financial institutions. This will aid developers. If uncontained, however, the pandemic will adversely hit developers’ cash flows and project delivery capabilities.
India – Maintaining labour is a major challenge for contractors. According to latest intelligence, most construction workers remain on-site, but delays in receiving construction materials is impacting schedules. Even if construction ceases, workers still need to be paid to keep them on site. Conversely, labourers who have returned to their towns and villages will need to be enticed back when construction resumes.
India – Demand has slowed in the residential and commercial segment, which has reduced sales, delayed project launches and arrested the growth in India’s urban infrastructure sector.
India – The COVID-19 outbreak has closed malls, retail outlets and entertainment venues. This could put future real estate deals and projects on hold. Home buyers are likely to postpone purchasing a property as they wait for clarity on their job security.
India: With many government departments adopting austerity measures (see below), India’s planned US$1.5 trillion spending on infrastructure projects will be temporarily curbed. Until spending restrictions are lifted, this will likely limit opportunities for foreign consultants and equipment suppliers – particularly for projects funded by departments that are deemed ‘non-essential’.
India – Edtech companies are witnessing a surge in demand. Some companies are offering free online classes or attractive discounts on e-learning modules. Well-known companies like Byju’s and Unacademy are offering classes for free until the situation improves.
India – Analysts say the disruption caused by the COVID-19 lockdown will: accelerate innovation in digital technologies; speed migrations to the cloud; boost adoption of Industry 4.0 technologies; increase collaboration among startups; encourage utilisation of B2B supply chain platforms; and expedite the role of digital technologies in retail.
India – The new ‘work from home’ norm poses security challenges for government departments and businesses. Pre-pandemic, neither technology nor operations nor policies were typically geared for secure home working. In the past few weeks organisations report a spike of 40–50% in phishing alone. Most organisations believe that cyber vulnerability will have long-term negative impacts on their organisations.
India – The lockdown has led to a drastic reduction in fuel demand and most refineries in India are running at approximately half capacity. With storage capacity exhausted, refining companies have cut their run rates and issued force majeure notices to global suppliers, deferring most April deliveries.
India – GAIL, the state-owned natural gas processing and distribution company, has received force majeure notices from large fertilizer, power and refinery customers. As a result, GAIL is invoking force majeure clauses with suppliers, Gazprom, Petronet and ONGC.
India – Petronet LNG, India’s largest gas importer, has declared force majeure with respect to purchase contracts with suppliers from Qatar and Australia. Demand cut notices from GAIL, GSPC and other smaller buyers have forced an 18% gas output cut at ONGC, India’s largest gas producer.
India – Domestic power demand will likely rise as more people stay indoors and work from home. Commercial and industrial electricity demand is likely to fall. India’s peak electricity demand dropped from 163,729 MW on March 20 to 145,495 MW on March 23. This drop may cast doubts on anticipated additions to conventional energy power-generating capacity.
Bangladesh – The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) says buyers have so far cancelled orders worth A$3 billion. Approximately 1,092 factories reported that 943 million product items have either been cancelled or held up, as of the first week in April. This impacts 2.16 million Bangladeshi workers. There will likely be a knock-on impact for Australian cotton exports to Bangladesh.
India – Production of fast-moving consumables may be improving slightly. A prominent biscuits maker has reported the company’s manufacturing facilities are running at 25% capacity, while a detergent and shampoo manufacturer said its facilities were operating at 25–30% capacity. This compares with 15–20% capacity last week at biscuit factories and less than 10% at detergent and soap facilities.
India – Online food delivery aggregators such as Zomato and Swiggy are eager to deliver food, but customers are afraid of placing orders from restaurants. The two main concerns are the health of the delivery person and the hygiene standards of the restaurant.
Government stimulus programs
India – Both Union and State Governments acknowledge supply chain disruption and the potential for widespread food shortages, and are seeking to provide solutions. These include providing tractors, labour subsidies and assistance with freight movement. It is not clear how soon measures taken now can have a practical effect.
India – The Government of India has asked some departments to adopt austerity measures, which include cutting expenditure by 20%. Some ministries critical to combating the Covid-19 outbreak are exempted, and these include ministries responsible for health, pharmaceuticals, consumer affairs, rural development, railways and civil aviation. Conversely, those responsible for road transport, petroleum, food processing, water and sanitation will be reviewing their projects.
India – The National Innovation Foundation (NIF) will fund citizens who have developed COVID-19 related solutions and with to scale up their innovations. The NIF, an autonomous institute under the Department of Science and Technology, has invited citizens to participate in its Challenge COVID-19 Competition and share ideas that can supplement national efforts.
Sri Lanka – Weather-related challenges are compounding fears of coronavirus-induced food shortages. The Government hopes to increase self-sufficiency, which includes encouraging home gardening. This may provide opportunities for Australian seed exporters.
6 April 2020
India implemented a 21-day lockdown from 25 March. All non-essential businesses, retail outlets and government offices are shut, all domestic and international airlines have been grounded, and interstate bus and train services stopped. The population’s movement has also been restricted. Thousands of migrant workers are still trying to return to their hometowns.
Sri Lanka has declared an island-wide curfew and suspended its visa on arrival facility. Transit passengers are only allowed in Sri Lanka for six hours. Bangladesh has also imposed a nationwide lockdown with all domestic flights suspended.
- India’s economy is poised to shrink next quarter and full-year growth is set to suffer markedly.
- India is likely to see GDP contraction for the first time in two decades due to a halt in non-essential consumption. Full year GDP growth is forecast at 2.1%, down from 5–6% six weeks ago.
- The biggest impact is projected to be on private consumption, which accounts for 57% of India’s GDP. This is fuelled by all non-essential consumption dropping to zero for three weeks.
- More than one-quarter of India’s 69 million micro, small and medium enterprises may shut if the lockdown extends beyond four to eight weeks, as a majority of them will have cash flow issues.
- India’s University Grants Commission is recognising higher education institutions that offer online programs. This could be an opportunity for Australian providers to engage Indian students through partner institutions and to commercialise the Australian curriculum.
- The Ministry of Human Resource Development has asked schools and higher education institutions to draft an alternate academic calendar for 2020–21. The change in the academic calendar may have an impact on higher education applications to Australian universities in 2021.
- India has moved to virtual and digital delivery with international schools, agents and institutions re-gearing to deliver remotely. All exams have been postponed.
- Several online learning platforms are offering their services to a wider audience. Toppr made its services free for use for some time. Global platforms such as Coursera and edX also gave free access to their courses.
- Bangladesh has closed all academic institutions until 9 April.
- Sri Lanka closed schools and universities for five weeks from 12 March to 20 April.
Food and beverage
- Food and grocery supply chains have been significantly impacted. This includes e-commerce platforms such as Amazon as delivery staff were not allowed to operate.
- After industry and government interaction, supplies to mom-and-pop stores, modern retail and e-commerce supply chains are being restored across India. E-commerce supply chains have started opening and full services covering essential goods in the next week.
- However, there are significant concerns about food security and the logistics supply chain if lockdowns continue and farmers cannot access markets in major centres. Civil conflict arising from food insecurity is another concern.
Resources and energy
- The mining, power and metals sectors are less affected than other industries, with many units continuing operations, albeit below normal levels.
- Public sector steelmakers are operating at capacity. Private companies (Jindal Steel W, AMNS) are scaling down production, both to support containment and to mitigate stock build-up as the automotive, industrial and construction sectors lock down, shrinking demand for steel.
- Large steel producers, who produce around half of India’s steel, cannot have sudden blast furnace shutdowns as there would be significant wastage, damage and downtime costs. However, smaller producers are substantially cutting back or halting production.
- Iron ore, manganese, chromite, limestone and dolomite mines are operating within constraints, although output is reduced, especially for the smaller, less mechanised mines.
- All major copper units and one major zinc producer have shut mining and production operations. One major aluminium PSU maintains operations, while other major private players have substantially cut back or shut down.
- For the first time, the Indian Government has issued a directive to state-level, local and police representatives to treat green energy plants as “essential services”.
Services and technology
- The Indian IT sector has moved nearly two-thirds of its 4.3 million workforce to work from home (WFH). The $150 billion industry that primarily services overseas clients is allowing these workers to build software and maintain them for clients from remote locations.
- Indian molecular diagnostics company, Mylab Discovery Solutions, has developed the first ‘made in India’ COVID-19 testing kit. Its Mylab PathoDetect COVID-19 Qualitative PCR kit screens and detects the infection within 2.5 hours, compared to 7+ hours taken by current protocols.
- Indian conglomerate Mahindra & Mahindra, in partnership with two public sector units, is working with a manufacturer of high-spec ventilators to help simplify design and scale up capacity to produce devices for $150 as compared to $10,000–$20,000.
- Small Industries Development Bank of India will provide loans up to $100,000 to micro and small enterprises that are manufacturing COVID-19 medical supplies.
- The COVID-19 outbreak has caused severe disruptions to demand and supply in the Indian infrastructure sector.
- The lockdown is likely to have a major impact as the labour-intensive sector relies on contractual workers (who are mostly migrants). Even materials supply will take time to ramp up.
- The government’s changing priorities may also affect infrastructure investment.
Supply chain and logistics
- India’s logistics sector is in disarray because of disruptions caused by the nationwide lockdown. Across the country, the lockdown has resulted in labour shortages, which in turn has added to the limited availability of transportation facilities.
- The shutdown of non-essential businesses coupled with the lack of mobility for workers means the entire domestic manufacturing supply chain has come to a halt.
- India has asked countries with which it has free trade agreements to allow goods to be imported without a certificate of origin for the time being, as domestic authorities are not able to issue the document during the lockdown.
- Packaged food companies have been forced to cut production due to a lack of available workers. In towns where factories are still running, the workforce has been cut by half. Not only are many manufacturers are facing raw material shortages due to supply chain disturbances, they are also finding it hard to deliver finished products to retail stores due to restricted truck movements.
- The movement of cargo is severely impacted with several ports invoking force majeure.
- Fearing lockdowns, product shortages and soaring prices, Indian consumers have stockpiled food, medicines and toiletries, leading to empty shelves.
- The Indian Government has set up a control room to monitor the transportation and delivery of essential goods. It is also working with state governments to coordinate the movement of produce from farms to markets, and the movement of trucks carrying essentials and raw materials.
- India has announced a A$38 billion stimulus package, focused on alleviating impacts on India’s poorer populations. The package will provide food, cooking gas and cash payments, as well as make loans and medical insurance more accessible.
- India is close to finalising a second economic relief package that may include tax concessions for industry sectors hit hard by the COVID-19 outbreak, particularly micro, small and medium enterprises, services and exports.
- The government has also initiated talks with the World Bank for a package to speed up the creation of healthcare infrastructure that is urgently needed.
US market update: Impact of COVID-19
On 17 April, AmCham and Austrade held a COVID-19 US market update webinar. The webinar was hosted by Nicola Watkinson, Austrade’s General Manager for the Americas, and included opening remarks by The Hon. Arthur Sinodinos AO, Australian Ambassador to the United States.
Mining Equipment, technology and services (METS): Impact of COVID-19 in Latin America
In partnership with the Australia-Latin America Business Council, hear from Austrade’s representatives in Mexico, Colombia, Peru, Chile and Argentina on the challenges and the opportunities for Australian METS firms in Latin American markets.
LATAM Regional Snapshot: Impact of COVID-19
In partnership with the Australia-Latin America Business Council, Austrade provides the latest on-the-ground insights from Brazil, Argentina, Chile, Peru, Colombia and Mexico.
Austrade International Health Webinar: Impact of COVID-19 in China
Market updates from China-based health industry experts and Austrade’s International Health team regarding China’s health policy response to COVID-19 and the impact of the outbreak for China’s health industry. Recorded on Friday 27 March 2020.
Impact of Coronavirus in Australia and China
Hosted by Australia China Business Council on 20 March, the panel included Daniel Boyer (Austrade General Manager for Greater China) on the business impact on the ground in China, and Jenny West (Austrade General Manager for Trade and Investment) on the impact of the virus on Australian tourism and investment industries.
State and Territory support
In addition to the Federal Government, States and Territories also provide support, resources and advice for businesses:
- New South Wales
- South Australia
- Western Australia
- Northern Territory
- Australian Capital Territory
Austrade will assist businesses and our partner agencies with strategies and initiatives aimed at rebuilding business links and restoring confidence as the worst of the disruption eases.
Students studying in Australia
For the latest information visit Study in Australia.
The COVID-19 outbreak has impacted thousands of Australia’s international students, and our institutions and regulators have moved swiftly to respond to the initial travel restrictions.
Wherever possible, educational institutions are offering courses online, and offering a wide range of support to affected students, including semester and staffing changes and a scale-up of digital course alternatives.
As the spread of the virus continues, our universities and education providers are well prepared to manage potential closures.
Students are advised to check with their individual institution to see what support is available to them.
International Education sector support
Austrade is working with our state and territory and federal partners to provide up-to-date information and advice to minimise disruption to the sector and our international students, both in Australia and abroad.
This Study Australia resource hub is a central source of messages, assets and resources for sector partners. The MIP Weekly Newsletter continues to distribute International Education sector relevant updates.
- Tourism Australia
- Department of Home Affairs
- Department of Foreign Affairs and Trade
- Department of Health
- World Health Organisation (WHO) has daily updates on the COVID-19 outbreak.