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PGEO Boosts Net Profit in 2022 through Efficiency Programs

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PGEO Boosts Net Profit in 2022 through Efficiency Programs
PGE - Ilustrasi WKP Lahendong

Telegraf – PT Pertamina Geothermal Energy Tbk. (PGE) (IDX: PGEO), a subsidiary of Pertamina engaged in the geothermal sector, achieved a positive performance in 2022. This positive performance was due to the efficiency program, steam and electricity sales, and other revenue contributions that led to a 49.7 percent increase in the company’s net profit compared to 2021.

The increase in profit was recorded in the company’s audited financial report, which was publicly released on March 30, 2023. In the report, PGE recorded a net profit of USD 127.3 million in 2022, significantly higher than its 2021 achievement of USD 85 million.

Throughout 2022, the company recorded a 4.7 percent year-on-year (yoy) increase in operational revenue, contributing to a USD 17 million increase in revenue. One of the contributing factors was the higher selling price of steam and electricity, referring to the US Producer Price Index (PPI) and Consumer Price Index (CPI). Additionally, the increase in profit was supported by the significant reduction of operational costs as a result of the company’s efficiency program. From the other revenue side, PGE also recorded carbon credit sales as a new revenue generator.

As part of PGE’s efforts to increase its installed capacity by 600 MW in 2027, the company is currently constructing the Lumut Balai Unit 2 Geothermal Power Plant with a capacity of 55 MW, which is expected to operate commercially by the end of 2024. Additionally, PGE has completed the Front End Engineering Design (FEED) for the Fluid Collection and Reinjection System (FCRS) facility. This phase is part of the project to develop the Hulu Lais Unit 1 and 2 Geothermal Power Plants with a total installed capacity of 2 x 55 MW, which is expected to operate commercially in 2026.

Moving forward, the company will focus on optimizing its existing geothermal assets. One way to do this is by increasing production capacity through co-generation technology, utilizing the available hot water (brine) to generate electricity. Co-generation technology has already been implemented at the Lahendong Geothermal Power Plant, utilizing the residual brine from steam production to generate 700 KW of power.

From an ESG perspective, in 2022, PGE achieved an ESG Rating 2 from Sustainable Fitch. This rating indicates that PGE is in the good performance category in terms of ESG management. The ESG initiatives carried out by PGE in 2022 include several programs, such as co-generation technology (brine to power) utilization in the Lahendong area, emission reduction and carbon credit sales, biodiversity programs, occupational health and safety management, corporate social responsibility (CSR), enterprise risk management (ERM), cyber security, and the implementation of an anti-bribery management system (SMAP).

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Step Forward: PROPAMI Ready to Join as an Extraordinary Member of KADIN

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Step Forward: PROPAMI Ready to Join as an Extraordinary Member of KADIN

Telegraf – The Indonesian Capital Market Professional Association (PROPAMI) responded to an invitation from the Indonesian Chamber of Commerce and Industry (KADIN) by sending its delegation to an audience held today in Jakarta (5/3/24).

In order to encourage business actors to be active in building a business ecosystem in Indonesia, yesterday (5/3), WKU for Associations and Associations, Wisnu W. Pettalolo, held an audience for the Indonesian Capital Market Professional Association (PROPAMI), a candidate for extraordinary members of the Indonesian Chamber of Commerce and Industry.

This meeting focused on discussing procedures and selection of associations that would join the Indonesian Chamber of Commerce and Industry.

This is done so that associations affiliated with the Indonesian Chamber of Commerce and Industry can continue to be active in making a real contribution to building a healthy and productive business ecosystem in Indonesia.

This hearing is a valuable opportunity for PROPAMI to become an extraordinary member of KADIN, a step which is expected to strengthen the synergy between the two entities in facing the dynamics of the Indonesian capital market.

Located in the Mochtar Riady Meeting Room, Menara KADIN Indonesia, the presence of PROPAMI, as well as other associations and associations greeted each other.

They were received by the Management of Associations and the Indonesian KADIN Association, a meeting filled with hope and collaboration.

PROPAMI’s presence in this hearing cannot be separated from the drive to strengthen inter-institutional ties amidst increasingly complex capital market dynamics.

As a forum for capital market professionals, PROPAMI views the importance of establishing close relationships with various related parties, including leading business organizations such as KADIN.

In the hearing, NS Aji Martono emphasized PROPAMI’s commitment to contribute positively to the development of the Indonesian capital market ecosystem.

It is hoped that extraordinary membership in KADIN will open wider doors for PROPAMI to actively participate in various strategic activities related to national economic development.

Not only as a formality event, this meeting is an important moment for both parties to exchange views, ideas, and explore potential cooperation that can be established in the future.

In an atmosphere full of collaborative spirit, PROPAMI and KADIN share a vision to increase the competitiveness of the Indonesian capital market at regional and global levels.

The General Chairperson of PROPAMI also expressed deep appreciation for the initiative of the Indonesian Chamber of Commerce and Industry in inviting PROPAMI to join as an extraordinary member.

It is believed that this step will enrich PROPAMI’s insight and expand its network in carrying out its role as the front guard in advancing the Indonesian capital market.

At the end of the meeting, both parties agreed to continue to maintain intensive communication and strengthen cooperation in various aspects, from policy advocacy to human resource development in the capital markets sector.

It is hoped that this joint step will have a significant positive impact on the growth and development of the Indonesian economy as a whole.

As a closing note, PROPAMI’s presence as an extraordinary member of the Indonesian Chamber of Commerce and Industry today is not just a formal achievement, but a real commitment to be actively involved in advancing the Indonesian economy through the capital market sector.

With the strong synergy between PROPAMI and KADIN, the hope of realizing a shared vision in building a brighter economic future is increasingly real.

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Anticipating Election Challenges, JCI in February 2024: Most Promising Stocks and Investment Strategy

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Anticipating Election Challenges, JCI in February 2024: Most Promising Stocks and Investment Strategy
Attendees look at stock trading movements during the trade opening ceremony at the Indonesia Stock Exchange (IDX) in Jakarta on Jan. 2, 2024. The IDX Composite index strengthened on the last trading day of January, closing 0.22 percent higher at 7.207,94, on Jan. 31, 2024. (Antara/Asprilla Dwi Adha)

Telegraf – The CSA Index for February 2024 was 59.7, indicating a decline in the level of optimism compared to January, which reached 83.7. This decline
suggests that market participants are less enthusiastic about trading in February.

The reasons cited by many market participants for this decline are the elections held this month and the weakening of the Rupiah exchange rate. Despite the decrease, a number above 50 indicates that more market participants are predicting IDX Composite to be bullish in February.

The consensus for IDX Composite’s February 2024 closing is 7,258, indicating a slight increase from the January 2024 closing at 7,207.

Based on the results of in-depth interviews, it is evident that market participants perceive the uncertainty due to the election as quite high.

If the election concludes in one round, it will be a positive development, allowing market participants to promptly allocate their assets to adjust to the election results.

CSA Index IHSG Konsensus Feb 24 (Source : CSA Institute)

CSA Index IHSG Konsensus Feb 24 (Source : CSA Institute)

However, if there are two rounds, uncertainty will persist until the second round of elections is held.

Additionally, the weakening Rupiah and the potential increase in geopolitical tensions are believed to make it harder for IDX Composite to advance.

The heightened geopolitical tension is thought to have a significant impact on global supply chains, while expectations of an interest rate cut by the Fed in March are diminishing. 93.4% of market participants remain optimistic that the IDX Composite will experience a bullish trend over the next twelve months.

This figure is higher than the 93.0% optimism recorded for the annual IDX Composite movement in January.

The most influential positive sentiment is that market participants believe economic growth will still be good in 2024, and there is hope that the Fed will continue to cut interest rates this year.

CSA Index IHSG Konsensus 12M Forecast. (Source : CSA Institute)

CSA Index IHSG Konsensus 12M Forecast. (Source : CSA Institute)

The expectation of improved performance by issuers after the election is also a reason why investors believe the IDX Composite will continue to grow in 2024.

Market participants are targeting the IDX Composite to strengthen to the level of 7,697 in the next twelve months.

This indicates that the IDX Composite is expected to strengthen by 489 points or 6.78% from its closing position at the end of January 2024.

This target is based on the recognition of several negative sentiments with longterm effects, such as increased geopolitical risks and a slowdown in the world economy.

Despite volatility in commodity prices and exchange rates in the next 12 months, Indonesia’s economy is still expected to grow.

Market participants are eagerly anticipating the policy direction of the government to be elected in the next election, which is expected to further support IDX Composite growth.

CSA Index Sektor Pilihan Feb 24. (Source : CSA Institute)

CSA Index Sektor Pilihan Feb 24. (Source : CSA Institute)

Dr. David Sutyanto, CSA, General Chair of AAEI responded to the results of the CSA Index Feb 24 “CSA Index Feb 24 shows that market players’ optimism is decreasing in facing trading in February 2024.

This is due to the election event and the decreasing possibility of the Fed reducing interest rates in the near future.

However, the JCI is projected to still strengthen even though it is limited.

The election is the main factor that creates uncertainty, with the market tending to “wait and see” until a new president is elected.

The CSA Index also examines the sectors that will be the main drivers for the IDX Composite in February.

The financial sector is the top choice for the majority of market participants as a sector that can spur the IDX Composite.

The release of banking financial reports with results above expectations and low valuations makes this sector favoured.

Apart from the financial sector, the non-primary consumer goods sector is also the second most preferred.

This indicates that the level of domestic consumption is still maintained, reflecting optimism about domestic economic conditions.

In the view of NS. Aji Martono, the Chairman of PROPAMI, the market is likely to adopt a “wait and see” approach, evaluating the future vision for Indonesia, particularly in economic sectors and policies impacting the capital market.

While acknowledging the historical technical and fundamental significance of the CSA Index, Aji emphasizes the importance of caution, even during election-related market upswings, by considering both technical and fundamental analyses.

Foreign investors in early February bought up shares with a net buy of IDR 886.17 billion.

Throughout 2024, foreign investors’ net buy will reach IDR 9.21 trillion.

5 Top Gainers

  1. Shares RSCH (34.69%)
  2. SOTS (34.36%)
  3. PTMP (16.98%)
  4. INPS (15.13%)
  5. CBUT (12.00%)

5 Top Losers Shares

  1. MPXL (-19.44% )
  2. MLPT (-10.56%)
  3. SMGA (-10.08%)
  4. SMMA (-9.13%)
  5. TRUS (-9.09%)

5 Shares Net Buy Foreign Investors

  1. BBCA IDR 543.6 billion
  2. TLKM IDR 198.8 billion
  3. BBRI Rp. 131.0 billion
  4. BBNI Rp. 103.5 billion
  5. ADRO Rp. 35.3 billion

5 Shares Net Sell Foreign Investors

  1. KLBF (Rp. 31.6 billion)
  2. FILM (Rp. 28.5 billion)
  3. MEDC (Rp. 21.5 billion)
  4. BRPT (Rp. 15.2 billion)
  5. INKP ( IDR 15.2 billion)

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Breaking the Shackles of Coal Power

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Breaking the Shackles of Coal Power
The coal-fired Plant Scherer, one of the nation's top carbon dioxide emitters, stands in the distance in Juliette, Ga., Saturday, June, 3, 2017. (Branden Camp/AP)

In the classic movie “The Shawshank Redemption,” there’s a moment where Andy Dufresne dreams of a life beyond the prison’s walls, symbolizing the power of hope and ambition against all odds. This beautifully mirrors the scenario faced at COP28. Just as Dufresne faced the formidable walls of Shawshank, world leaders at COP28 set ambitious targets to escape from fossil fuels in a “just, orderly, and equitable manner.”

The Dubai Consensus marks a pivotal moment in the history of climate agreements. For the first time since the inaugural COP in Berlin in 1995, there’s an explicit reference to fossil fuels and the need to transition away from them to halt global warming. Previous agreements have broadly referred to just reducing greenhouse gas emissions. This general approach persisted until the 26th COP in Glasgow in 2021 when a more specific commitment was made to address the most polluting of fossil fuels, coal. There, nations consented to a gradual reduction in its usage. The Dubai Consensus, however, has also recognized the need to triple renewable energy capacity globally by 2030 and accelerate efforts toward the “phase down of unabated coal power.”

Achieving these ambitious goals is undoubtedly a daunting challenge. The deep-rooted dependence on fossil fuels, the disparate economic strengths of nations, particularly those in the developing world, and the hurdles presented by existing technology create formidable barriers. Like the imposing walls of  Shawshank, they are seemingly insurmountable yet not entirely impervious. The path forward is difficult but not unattainable, demanding perseverance and concerted global effort.

The journey toward phasing out coal presents three significant challenges, particularly for developing countries. 

The first concern is energy security. Phasing out coal is a complex task; it currently accounts for approximately 26 percent of the world’s energy consumption. Notably, 81 percent of coal used in energy production is in countries outside of the Organization for Economic Cooperation and Development, indicating that it’s predominantly developing nations relying on coal to meet their energy needs. 

Consequently, eliminating coal usage substantially threatens their energy security, placing the onus of the transition away from fossil fuels on these countries. However, the lack of affordable and clean alternative energy sources and difficulties in technology transfer make this transition particularly challenging.

Second, a rapid transition away from coal could exacerbate poverty, particularly in regions within developing countries where coal is a critical economic pillar. Many developing countries have states or provinces that depend heavily on coal for revenue and employment. A swift phase-out could disrupt these economies, leading to increased poverty and socio-economic instability.

Further, the costs of energy transition in developing countries often directly impact household budgets. These measures can lead to higher costs for electricity, water, and transportation. The increased expense can be particularly burdensome in countries where a significant portion of the population already struggles with economic instability. While these policies are crucial for long-term environmental sustainability, their immediate financial impact on households in developing nations poses a significant challenge. Therefore, the transition needs to balance environmental goals with economic feasibility and the socio-economic well-being of the populations most reliant on coal.

 Developing countries often argue that global discussions on reducing fossil fuel usage disproportionately focus on coal instead of equally addressing oil and natural gas. These nations, with significant coal reserves and a heavy reliance on coal for their energy, see the rapid phasing out of coal as a risk to their economic stability. 

Moreover, there’s a sense of inequity in how developed countries, traditionally large coal, oil and gas consumers, advocate for diminishing coal usage – a vital energy source for many emerging economies. While the coal usage of OECD countries has declined, according to the Statistical Review of the World Energy 2023, oil consumption by OECD countries increased by 1.4 million barrels per day in 2022. This viewpoint suggests a bias in international climate negotiations, advocating for a more balanced approach that equally considers the reduction of all types of fossil fuels.

 A third challenge for developing nations in transitioning to clean energy is access to capital and financing. The UN Environment Program’s Adaptation Gap Report estimates these countries need $215–387 billion yearly until 2030. The Independent High-Level Expert Group on Climate Finance’s second report reveals a stark reality: only 7 percent of 2022’s clean energy investments were in low and lower-middle-income nations (except China). These countries face daunting barriers like high-interest rates, vague policies and expensive capital. 

To achieve the Paris Agreement, a substantial boost in renewable energy is crucial for emerging markets and developing countries. The key lies in a fivefold increase in concessional finance by 2030, as this is the most crucial yet scarce funding source for pressing needs. Developed nations must triple their bilateral concessional contributions by 2030. However, the scale of need surpasses what  official development assistance can provide.

Similar to Shawshank’s formidable barriers, these obstacles make the path forward extremely challenging but not impossible. Addressing these hurdles is crucial, for without overcoming them, the transition will remain as elusive as Andy Dufresne’s dream of freedom within the confines of Shawshank.

Aditya Sinha is an Officer on Special Duty, Research, at the Economic Advisory Council to the Prime Minister of India. X: @adityasinha004

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Red Sea Shipping Attacks Threaten Global Economy

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Red Sea Shipping Attacks Threaten Global Economy
This handout screen grab captured from a video shows Yemen's Houthi fighters' takeover of the Galaxy Leader Cargo in the Red Sea coast off Hudaydah, on November 20, 2023 in the Red Sea, Yemen. (Photo by Houthi Movement via Getty Images)

To understand the implications for international shipping of the Yemen-based Houthi militant attacks in the Red Sea, it may be useful to start thousands of kilometers away, in the Port of Singapore. One of the busiest container shipping ports in the world, Singapore is a regular stop for all of the worlds leading shipping companies, and a key hub for Asia-Europe trade.

 Now, lets imagine a major container ship sailing the 17,000 kilometers from Singapore to Rotterdam. After exiting the port, it heads for its first major choke point, the Malacca Strait. Once through that vital waterway, it finds open seas, traversing the Indian Ocean and the Arabian Sea. As it approaches the coast of Yemen, it faces the Bab Al Mandeb Strait, another key chokepoint, before it enters the Red Sea onward to the Suez Canal.

 If everything goes according to plan – and it usually does – the container ship passes through the Suez and will find itself sailing the Mediterranean headed for the Gibraltar Strait, another key choke point, between Morocco and Spain. Then, it will be on an Atlantic Ocean run north to the key Dutch port that is a major hub of northern Europe.

 Everything is timed, synchronized, planned, and mapped for smooth sailings. After all, the global economy – and the bottom line of the shipping company – depends on it. Roughly 80-90 percent of world trade by volume is shipped by sea, according to the UN. 

 So, when something goes wrong in any part of that journey, its not just individual ships or shipping companies that feel the pain. We all do.

 The recent attacks by the Houthi militants on international shipping in the Red Sea has scrambled supply chains, pushed up oil and natural gas prices, and raised geopolitical tensions far beyond the states surrounding the Red Sea. Some of the worlds largest shipping companies – MSC, Maersk, CMA CGM Group, and Hapag-Lloyd – have suspended their sailings in the Red Sea. Energy giant BP has also declared it will avoid the Red Sea until further notice.

The implications for world trade are serious. Roughly 15 percent of global trade and 30 percent of container traffic passes through the Suez Canal. The Red Sea and the Suez Canal are vital links in the global economy, playing a pivotal role in the global supply chain of oil, natural gas, food, manufactured products and more. Some 40 percent of Asia-Europe trade passes through the Suez Canal, including vital liquid natural gas supplies. In 2021, when a ship became lodged across the canal, blocking it completely, economists estimated that some $10 billion of trade was affected for each day the waterway was blocked.

 The US military has announced an international coalition to protect Red Sea shipping lanes and provide security for the some 400 ships that are traversing the Red Sea at any given time. The US plan has not entirely soothed insurers, who have raised prices on Red Sea passages and expanded the areas considered high-risk. Prospects of US strikes against the Houthi militants, which are backed by Iran, have been raised. Oil prices are inching upward after several weeks of decline.

 The Houthis, which control parts of north and west Yemen, have declared their attacks are in response to Israels war in Gaza and that they are targeting ships linked to Israel or using Israeli ports. Most of Americas regional allies have been cautious about joining the coalition. Across the Arab world, even in capitals where the Houthis are seen as a serious threat to regional stability, aligning with the US at a time of rising public anger over the Israel-Gaza war has made several countries uncomfortable. As a result, the US may be required to lead this operation without a large Middle East contingent to its coalition.

 Meanwhile, the role of China will also be closely watched. Chinese shippers regularly traverse the Red Sea. China is also the only major purchaser of Iranian crude oil, giving it a degree of leverage over Tehran. Irans links with Houthi militants are clear, but it remains to be seen if Beijing will seek to exert pressure on Tehran to rein in the Houthi attacks – or, at least, to keep them targeted at non-Chinese vessels.

 Egypt, too, should be watched. The country faces an economic quandary. The Suez Canal Authority reported a record $9.4 billion generated in the 2022-2023 financial year. A serious dent in those revenues would further squeeze an Egyptian economy that is already reeling from a foreign exchange crunch and soaring inflation. Concerns mount that Egypt could default on its roughly $165 billion of foreign debt, one of the highest levels in emerging markets. 

 Meanwhile, some 100 container ships are actively avoiding the Red Sea route, according to logistics giant Kuehne+Nagel, and many more are likely to follow. The Singapore-Rotterdam route will now sail all the way around the coast of southern Africa and back up toward the Atlantic Ocean and Europe, adding weeks and rising costs to the journey.

 At a time of precarious recovery in the global economy and razor sharp geopolitical tensions, the Red Sea attacks are a reminder of how connected we are – and how dangerous it can be when those vital connections are severed.

Afshin Molavi is a senior fellow at the Foreign Policy Institute of the Johns Hopkins School of Advanced International Studies and editor and founder of the Emerging World newsletter. Twitter: @AfshinMolavi

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Bank of England under pressure to cut interest rates after surprise inflation fall

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Bank of England under pressure to cut interest rates after surprise inflation fall
Shadow chancellor Rachel Reeves with party leader Sir Keir Starmer. PA Wire

The Bank of England is under mounting pressure to cut interest rates to help homeowners after a surprise fall in inflation gave consumers “an early Christmas present”.

Falling petrol prices helped curb inflation to 3.9 per cent, the lowest rate in two years and well below Rishi Sunak’s target of 5 per cent by the end of the year.

But leading economists told The Independent that although “the bulge has made its way through the snake”, much of the “low hanging fruit” has been picked – and the central bank will struggle to reach its longstanding target of 2 per cent.

They also warned that many homeowners coming off fixed rates now face “a very different world”, while Britain’s slowing economy and higher mortgage costs mean living standards will “remain pretty desperate”.

Signalling a change in the political tide, work and pensions secretary Mel Stride said the inflation fall could allow the Bank to ease interest rates and aid those struggling with mortgage costs. Most economists had been expecting a dip to 4.3 per cent last month.

While he emphasised its independence, the cabinet minister said that the faster-than-expected fall in inflation “does take some pressure off [the Bank] in terms of keeping interest rates higher, which of course in time and in turn feeds into mortgage rates”.

Falling prices at the pumps helped push inflation to a surprise low, which the prime minister hailed as “good news for everyone in this country”.

Inflation also slowed on things like food, air travel and the cost of a second-hand car.

With just days to go before Christmas, Simon Pittaway, senior economist at the Resolution Foundation, said that “politicians and the public can all cheer this festive surprise”.

But the rampant inflation of recent years means prices are around 20 per cent higher than they were in 2020, and economist Laith Khalaf of AJ Bell warned that food price inflation remains at a “pretty concerning” 9 per cent.

Despite the latest figures, Mr Khalaf warned that UK consumers are still “heavily under the pump” – with mortgage holders set to come off fixed deals next year “facing a different world”.

“It’s almost like another leg of the cost of living crisis,” he told The Independent. “It started off with fuel and heating, it then moved onto food. There’s rising interest rates, and don’t forget taxation as well, where over the next five years the tax burden is expected to rise to highest since the Second World War.”

Suren Thiru, economics director at the Institute of Chartered Accountants, said that the “dramatic” fall in inflation showed there was light at the end of the tunnel. But they added that “living standards will remain pretty desperate as this boost is largely offset by a squeeze on incomes from higher mortgage costs and a slowing economy.”

Labour warned that more than a million people face higher mortgage payments “after the Conservatives crashed the economy”.

Following last week’s decision by the Bank of England to hold its base rate for a third time at 5.25 per cent, economists suggest the markets are pricing in interest rate cuts by May – and perhaps as early as March – as pressure intensifies on the central bank.

“The first 25 basis point cut is now fully priced in for the Bank’s May meeting, with a decent chance of a start to cuts in March,” said Matthew Ryan, from financial services firm Ebury, while James Smith of ING bank said: “Markets are right to be pricing a number of rate cuts for 2024 … starting in May.”

Yael Selfin, chief economist at KPMG, told The Independent that, while the new inflation figures were good news “the Bank of England is likely to be quite cautious in cutting rates”.

Echoing these concerns, Rob Morgan, chief analyst at Charles Stanley pointed to the soaring prices of recent years as he said: “We’re sort of coming down the other side of [high inflation], so the bulge has made its way through the snake.

“Our worry is you’ve had the easy wins because you’ve had the energy bills coming down, fuel prices coming down quite a lot lower. It’s difficult to replicate that kind of disinflation going forward,” he added.

Citing looming increases in the national living wage and state pension, with borrowing costs and mortgage rates also starting to fall, Mr Morgan said: “It makes it difficult to get that last little bit of inflation out of the system. The low-hanging fruit for the Bank of England has been picked.”

Responding to the inflation figures, the chancellor Jeremy Hunt said the economy was back on the path to “healthy, sustainable growth”. But he acknowledged that “many families are still struggling with high prices so we will continue to prioritise measures that help with cost of living pressures”.

Shadow chancellor Rachel Reeves said the fall in inflation would come as a “relief” to families. “However, after 13 years of economic failure under the Conservatives, working people are still worse off,” she added.

“Prices are still going up in the shops, household bills are rising, and more than a million people face higher mortgage payments next year after the Conservatives crashed the economy.”

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Independent

 

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Kishida says Japan is ready to lead Asia in achieving decarbonization and energy security

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Kishida says Japan is ready to lead Asia in achieving decarbonization and energy security
Japan’s Prime Minister Fumio Kishida has pledged to lead efforts to simultaneously achieve decarbonization, economic growth and energy security in Asia. (AP Photo/Shuji Kajiyama, Pool, File)

Japan’s Prime Minister Fumio Kishida pledged to lead efforts to simultaneously achieve decarbonization, economic growth and energy security in Asia, an ambitious goal he set Monday at a regional climate summit attended by Southeast Asian leaders.

Kishida told the summit of the Asia Zero Emission Community, or AZEC, that the initiative will create “a new, huge decarbonization market in Asia that will attract global capital.”

Decarbonization in Asia will require 4,000 trillion yen ($28 trillion), Kishida said, and promised to establish a new organization to support AZEC countries in their effort to implement policies needed to achieve carbon neutrality.

Leaders of nine member countries of the Association of Southeast Asian Nations except Myanmar, in addition to Australia, expressed commitment to cooperate toward achieving carbon neutrality. The summit was held one day after Japan hosted a special summit Sunday commemorating 50 years of ties with ASEAN.

As part of the AZEC initiative, Japan is offering to help other members with technologies to cut emissions, including co-firing technology using ammonia or hydrogen, as well as bendable and more mobile solar panels.

Kishida said Japan will cooperate with AZEC members in setting a decarbonization roadmap and other measures, while also offering support in funding, technology and human resources by establishing the Asia Zero Emission Center in Indonesia.

Japan has achieved 20% emissions reduction and is on course to meet the targeted 46% by 2030, saying it will achieve its net-zero goal by boosting renewables as the main source of power, utilizing nuclear power and taking other measures.

Japan has faced criticism from environmental groups for not setting a timeline to stop using fossil fuel. Kishida, at the COP28 summit in Dubai, promised that Japan will end new construction at home of unabated coal fired power plants, in a show of clearer determination than in the past toward achieving net-zero.

Kishida has also pledged that Japan will issue the world’s first government transition bond with international certification. Japanese officials say Japan aims to fund 20 trillion yen ($135 billion) over the next 10 years to promote private sector investment worth 150 trillion yen ($1 trillion).

Japan will contribute to the expansion of lending capacity totaling about $9 billion through the provision of credit enhancements to the World Bank and the Asian Development Bank, and will also make a separate contribution of the new fund of the African Development Bank, Kishida said.

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Associated Press / ABC

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