http://www1.mastercard.com/content/intelligence/en/topnav/topics/insights2019-01-18T22:52:52.781ZInsightsAdobe Experience ManagerMasterCard Advisor's Cashless Journey: The Global Journey from Cash to Cashless MasterCard Advisors’ Cashless Journey<p>The Global Journey From Cash to Cashless</p> <p>Today, around&nbsp; <b>85% of all retail payment transactions are done with cash</b>, which equates to 60% &nbsp;of retail transaction value<b>. </b>Even though much of the world’s population has access to many different options for making payments other than cash, cash still persists. Cash takes time to get at, is riskier to carry, and by most estimates, cash costs society as much as 1.5% of GDP. Electronic payments, &nbsp;on the other hand, have been proven to boost economic growth, &nbsp;while advancing financial inclusion. It is for these reasons that countries around&nbsp; the world are working to make their payment systems less dependent on cash.</p> <p><img width="615" height="93" src="/content/dam/intelligence/content-assets/reports/cashless1.JPG"></p> <p>The Cashless Journey Study was developed to track nations’ progress towards &nbsp;more cashless economies. It offers insights into how some nations have made the journey from cash to cashless, and how other nations can continue their journeys.</p> <p>The study helps to shape the conversation about &nbsp;consumer &nbsp;payment &nbsp;patterns across countries around &nbsp;the globe. The information it provides was designed &nbsp;to assess the impact of different factors, such as regulatory measures &nbsp;or financial inclusion initiatives, on changes &nbsp;to these patterns. The study explores the evolution of consumer &nbsp;payment patterns in 33 countries from five regions, representing more than 85% &nbsp;of global GDP, taking into account &nbsp;both developed and developing nations, using a single methodology.</p> <p><img width="623" height="330" src="/content/dam/intelligence/content-assets/reports/cashless2.JPG"></p> A FOCUS ON THE VALUE OF CONSUMER PAYMENTS<p>Government, banks and payment &nbsp;networks &nbsp;all look at cash usage and broader payment habits through different lenses. MasterCard &nbsp;looks at payments through different lenses, depending on the audience, product or region.</p> <p>The Cashless Journey Study chose a consistent global methodology focusing on consumer &nbsp;payments, or payments initiated by individuals. Consumer payments for goods and services account for about 11% of the value of payments around &nbsp;the globe, but more than 90% of volume of payments (or number&nbsp;of transactions).</p> <p>The study focuses on the value of consumer payments ($63 trillion in total spend), rather than the volume of payments (total transactions), as estimates of payments value are more readily available, and have also been found to be more representative of broader trends in payments preference.</p> <p>Finally, it should be noted that this study looks at all consumer payments, including those that happen beyond retail point of sale. This is an important consideration to underscore, as by including non-retail categories like housing and bill payment, the total figure for consumer payments is far larger than the value of retail point of sale payments. So, while cash accounts for 60% of the value of total retail payments in shops or online, when these other large consumer payments (e.g. wire transfer to buy a car, direct debit to pay mortgage) are included, the value of payments represented by cash falls to 34%.</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/cashless3.JPG"><img width="610" height="430" src="/content/dam/intelligence/content-assets/reports/cashless3.JPG"></a></p> <p><img width="614" height="74" src="/content/dam/intelligence/content-assets/reports/cashless4.JPG"></p> <p>The Cashless Journey Study measures nations’ progress towards more modern, efficient payment processes by looking at the current share of cash versus non-cash payments for consumers (Share), how this Share has shifted in the past five years (Trajectory), and whether conditions exist for cash payments to move to electronic (Readiness).</p> <p>The study measures <b>three indicators </b>of progress:</p> <p>1. <b>Share: </b>the percentage of the value of all consumer payments that are presently done by a means other than cash</p> <p>2. <b>Trajectory: </b>a measure of the shift in cash share of consumer payments’ value between 2006 and 2011</p> <p>3. <b>Readiness: </b>a measure of the future potential for conversion of cash payments to electronic payments based on macro-economic preconditions observed in highly cashless markets</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/cashless5.JPG"><img width="611" height="139" src="/content/dam/intelligence/content-assets/reports/cashless5.JPG"></a></p> HOW THE SCORE FOR SHARE WAS CALCULATED<p>The first indicator, Share, was estimated using consumer &nbsp;expenditure data developed by the World Bank, combined with data on other payment values taken from central bank sources. Consumer cash payments were estimated by comparing data on total consumer expenditures at the category and income quintile level (via the World Bank International Comparison Program) with MasterCard’s own research into consumer payment patterns for these same categories and income quintiles. Finally, the figures for expenditures were adjusted to reflect typical ratios between expenditures and payments, resulting <b>in an estimate of the value of consumer payments done using cash.</b></p> <p>To estimate non-cash &nbsp;consumer &nbsp;payments, central bank figures for total payments &nbsp;for credit transfers, direct debits, credit cards, debit cards, checks and other non-cash payment &nbsp;methods were used as the starting point. These figures were adjusted to get consumer payments &nbsp;based on benchmarks/secondary research estimating ratios of consumer to total payments.</p> <p>The score for Share reflects the percentage of all consumer payments, by value, conducted by a means other than cash. The results for Share are presented as a number from 1-100.</p> SHARE INDICATORS REFLECT FOUR DISTINCT STAGES OF EVOLUTION<p>The figures below reflect the findings for the Share indicator. They show the rank order of non-cash payments’ share of the total value of consumer payments &nbsp;in the nations considered. The major break points in Share scores suggest that the countries examined fall into four categories based on their score for Share. These categories will return as other indicators of the study are discussed:</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/cashless6.JPG"><img width="592" height="550" src="/content/dam/intelligence/content-assets/reports/cashless6.JPG"></a></p> CALCULATING THE SCORE FOR TRAJECTORY<p>The second indicator, Trajectory, uses historic data from the same sources used to create the score for Share to <b>estimate how cash share has shifted in the five most recent years for which data is available. </b>The score for Share reflects Advisors’ estimates of the change &nbsp;in share of consumer payment for cash. The results for Trajectory are indexed across all countries to a scale of 1-100.</p> TRAJECTORY SCORES SUGGEST THAT SEVERAL NATIONS WITH LOWER SHARE SCORES ARE SHIFTING SHARE QUICKLY<p>The chart below shows the Trajectory indicator score for the 33 nations evaluated. The Trajectory indicator score reflects the estimated change in share for cashless payment products between 2006 and 2011.</p> <p><a href="/content/dam/intelligence/content-assets/reports/cashless7.JPG" target="_blank"><img width="613" height="584" src="/content/dam/intelligence/content-assets/reports/cashless7.JPG"></a></p> CALCULATING THE SCORE FOR READINESS<p>The third indicator, Readiness, looks at factors found to be correlated to consumer cash usage, to provide a measure of the degree to which conditions exist for a move away from cash. The factors comprising the score for Readiness fall into four broad categories of nearly equal weighting:</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/cashless8.JPG"><img width="565" height="427" src="/content/dam/intelligence/content-assets/reports/cashless8.JPG"></a></p> READINESS SCORES TYPICALLY CORRELATE POSITIVELY WITH SHARE SCORES WHILE EXCEPTIONS MERIT FURTHER INVESTIGATION<p>The chart below shows the Readiness score for the 33 nations evaluated. The Readiness score is an estimate of the degree to which the conditions are present for a move away from cash, based on experience in other markets.</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/cashless9.JPG"><img width="616" height="619" src="/content/dam/intelligence/content-assets/reports/cashless9.JPG"></a></p> THERE IS A TYPICAL JOURNEY TOWARD A MORE CASHLESS ECONOMY<p>Improvements to the score for the Readiness indicator should cause a move away from cash, and growth in use of cashless solutions. This, in turn, should drive higher scores for the Trajectory indicator, as improvement to the factors that drive Readiness (i.e. infrastructure, financial inclusion, ease of doing business) should be creating a shift in payment behaviour.</p> <p>As the Trajectory score rises, it’s expected the share of cash would diminish and, in the case of this plot, the bubble representing share of cash to get smaller.</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/cashless10.JPG"><img width="601" height="546" src="/content/dam/intelligence/content-assets/reports/cashless10.JPG"></a></p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/cashless11.JPG"><img width="624" height="624" src="/content/dam/intelligence/content-assets/reports/cashless11.JPG"></a></p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/cashless12.JPG"><img width="628" height="628" src="/content/dam/intelligence/content-assets/reports/cashless12.JPG"></a></p> INNOVATION CAN CREATE SHORTCUTS ON THE JOURNEY<p>Kenya provides a unique example of where an innovative payments solution available to Kenyans of all income levels has accelerated the cashless journey.</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/cashless13.JPG"><img width="575" height="379" src="/content/dam/intelligence/content-assets/reports/cashless13.JPG"></a></p> <p>M-Pesa, a remittance and payment scheme using mobile phones, has found broad uptake among Kenyans of all income levels. By enabling anyone with a mobile phone to pay, or send money electronically, M-Pesa has essentially removed many of the traditional barriers to going cashless, such as a buyer having a bank account and a seller having a land line connection to inter-bank networks. The Kenyan government explicitly allowed market forces to drive innovation and uptake of M-Pesa, and the results speak for themselves, with Kenya’s Trajectory score among the five highest of all countries examined, despite its Readiness score being well towards the lower end of the scale.</p> CONSUMERS PREFERENCES AND OTHER FACTORS CAN SLOW THE JOURNEY<p>Many of the developed nations in the study use more cash than expected. &nbsp;Given their scores for the Readiness indicator, it’s expected to see less cash being used (higher cash share being indicated by smaller sized bubbles on the plot). With all the macro-economic prerequisites in place, why does so much cash persist?</p> <p><a href="/content/dam/intelligence/content-assets/reports/cashless14.JPG" target="_blank"><img width="575" height="478" src="/content/dam/intelligence/content-assets/reports/cashless14.JPG"></a></p> <p>Consumer needs appear to play a role in Germany, Japan and Taiwan, where low rates of street crime mean little risk in carrying large amounts of cash. Extensive and inexpensive ATM networks, and slow growth of POS acceptance, particularly for debit, have likely also kept cash share high in these markets.</p> <p>Spain has been among the countries hardest hit by the financial crisis, and this has likely spurred growth in use of cash, as larger numbers of Spanish citizens work outside the formal economy.</p> CONCLUSIONS<p>The burden of cash usage on society is substantial, as much as 1.5% of GDP, and heavy cash usage is also often an indicator of other economic problems. Electronic payments have made substantial inroads with consumers in numerous markets, but in most countries the cashless journey has only just begun.</p> <p>This Cashless Journey Study offers insights into the paths that 33 countries have followed on their journeys. The study highlights some of most important requirements for success, factors that can accelerate the cashless journey and some constraints.</p> <p>Many markets have made real progress on their journeys by establishing basic infrastructure over long periods of time. Affordable and broadly available financial products, a vibrant and competitive merchant market place, a transparent and productive business environment — all of these basics are strongly correlated with progress in the cashless journey. Australia has followed this path and is now nearly cashless. Brazil is another country putting the basics in place and reaping the benefits but they are less far along in their journey.</p> <p>Five years of rapid progress in Kenya and China have shown us that encouraging payment product innovation and strong government cash reduction leadership can dramatically accelerate the cashless journey.</p> <p>Some Tipping Point markets like Germany and Japan show us that, despite having the necessary infrastructure in place for decades, markets can plateau on their journey before consumers &nbsp;become &nbsp;nearly cashless. If specific consumer attitudes and behaviors towards cash usage are not well understood or accommodated, consumers may prevent the cashless journey’s completion.</p> AUTHORS<p><img src="/content/dam/intelligence/content-assets/reports/author1.JPG"></p> <p>Hugh Thomas has worked as a consultant to the payments industry for more than 15 years, providing expertise in areas such as product and concept assessments, acquisition assessments and long term strategy development and planning.<br> </p> <p>Prior to joining Advisors, Hugh led projects for other payment networks, and numerous issuing banks in North America and Europe. Hugh has also consulted extensively on technologies such as EIPP, SRM and supply chain finance. Hugh is a graduate of the University of Manitoba and resides in Toronto, Canada.</p> <p><img width="226" height="262" src="/content/dam/intelligence/content-assets/reports/author2.JPG"></p> <p>Amit Jain is part of the Global Payments Strategy Knowledge Center in MasterCard Advisors. The Payments Strategy team works with MasterCard clients around the world to develop and implement successful strategies across their payments businesses.<br> </p> <p>Amit is a seasoned professional with nearly 15 years experience in the industry including financial services, management consulting, venture capital and technology. A key focus of Mr. Jain’s career has been to work with senior executives on key strategic issues affecting their business.<br> </p> <p>In his current role at MasterCard, Mr. Jain is responsible for coordinating the creation and distribution of thought leadership globally across the company. Mr. Jain has also led large global payment strategy projects including Global expansion strategy for MasterCard Bill Pay, Impact of Durbin and E-Commerce trends in Europe. Prior to MasterCard, Mr. Jain worked in a senior strategy role at Citi where he played a key part in the creation of the Enterprise Payments Business and driving relationships with emerging payment players like Apple and Google. Mr. Jain joined Citi from Booz Allen where he was an engagement manager in the strategy practice.<br> </p> <p>Amit received an MBA from the Ross School of Business at University of Michigan, Ann Arbor and a BS (eng) from Indian Institute of Technology, Delhi.</p> <p><img src="/content/dam/intelligence/content-assets/reports/author3.JPG"></p> <p>Michael Angus is Group Head, Payments Strategy. In this role, he leads the Global Payments Strategy Knowledge Center in MasterCard Advisors. His team works with MasterCard clients around the world to develop and implement successful strategies across their payments businesses.<br> </p> <p>Michael has been a management consultant for over two decades and for the last 15 years he has focused on the financial services sector and the business of payments. He led regional strategy practices at Gemini Consulting and The Capital Markets Company and co-led the Global Payments Practice at Capgemini.<br> </p> <p>Michael has spent half his consulting career based in Europe and half based in the U.S. He has helped senior bank executives improve their payments businesses at many of the top banks in the U.S., Europe, Asia and Latin America. He has worked with banks on every facet of the business of payments from helping a multi-national bank create, build and run its global wholesale payments line of business to establishing strategies and governance for new payments opportunities, including healthcare.<br> </p> <p>Michael received an M.B.A. from the Amos Tuck School of Business.</p> CONTRIBUTORS<p>Garry MacKinlay<br> Martin Schmidt<br> Fabrizio Burlando<br> Pierre Burret<br> Joerg Ruehle<br> Ted Iacobuzio<br> Eric Schneider<br> Andre Pimenta<br> Raul Escribano<br> Bin Chen<br> Pradeep Shekhawat<br> Steven Cheon<br> Mato Hoshino<br> Andrea Zannier<br> Ignacio Quian<br> Marcos Peralta<br> Thomas Kuncheria<br> John MacKinnon<br> Fiona Anderson<br> Raul Padron<br> Anastasia Teologlou<br> Giorgio Manoni<br> Vincenzo Bofise<br> Dirk Ettlinger<br> Onur Kursun<br> Bolade Atitebi<br> Anna Yip</p> EXECUTIVE EDITORS<p>Kevin Stanton<br> Mark Barnett</p> “The Cashless Journey” tracks how 33 major economies are progressing from cash-based to cashless societies. The report, produced by MasterCard Advisors, identifies new technologies, government programs and consumer preferences as key factors that are driving this shift, creating more productive and inclusive economies.http://www1.mastercard.com/content/intelligence/en/research/reports/2013/mastercard-advisors-cashless-journey--the-global-journey-from-ca2013-09-29T16:00:00.000Z2013-09-29T16:00:00.000ZThe Road to Inclusion: A Look at the Financially Excluded and Underserved About This Paper<p>There has been a growing need to understand what financial inclusion means and gain insight into the way in which people are included financially across emerging markets. Specifically, insights are needed on what the impact of being financially ‘excluded’ or ‘underserved’ is on people’s everyday lives. Those who are financially excluded have little access to many of the services that others may take for granted. While these target groups may have access to a basic bank account, this still does not automatically provide access to electronic payments.</p> <p>There is a growing need to look at how organizations can mobilize around these groups towards financial inclusion.</p> <p>A key part of this seeking of knowledge relates to profiling and gaining insights on those target groups across various markets that are not currently part of financial inclusion; instead deemed as financially excluded or financially underserved.</p> <p>Definitions of these two key groups are:</p> <ul> <li>Financially excluded – target groups without any access to formal banking services or any traditional relationship with a financial institution</li> <li>Financially underserved – target groups who are likely to have some sort of traditional account, but no access to any form of electronic transactions such as debit, credit or prepaid cards</li> </ul> <p>In general, those who are financially excluded have little access to many of the financial services that others take for granted, including the everyday bank account. Those who are financially underserved may have access to more basic financial services, but remain excluded from the technologically advanced, mostly electronic offerings.</p> <p>Focusing our research on these two key groups provides untapped insights into the everyday lives and perceptions of those who are currently ‘hidden’ from most financial institutions. It uncovers their reasons for not generally being part of their market’s financial inclusion, and provides a better understanding of how they could become involved in the future.</p> <p>Wanting to better understand and address the needs of these two key target groups from a cross country perspective, MasterCard commissioned Ipsos to conduct a research study which consists of ethnographic and quantitative approaches across six culturally diverse markets–– namely, India (Mumbai), Indonesia (Jakarta), Vietnam (Ho Chi Minh City), Philippines (Metro Manila), Egypt (Cairo), and Nigeria (Lagos).</p> <p>An in-depth understanding of thirty six (36) households was conducted across markets (n=6 per market), looking qualitatively at how these target groups live day-to-day. In each market, we targeted five segments: young persons, migrants, small business owners, retirees and Opt Outs (used to be financially included – six months ago or less, but no longer either by choice or due to circumstances).</p> <p>The quantitative phase of this study consists of a total of n=604 people of the two target groups across six markets. These were face-to-face interviews, conducted on a door-to-door and/or street intercept basis. Each survey took, on average, 20 minutes to complete.</p> <p>For the quantitative element, no quotas set to be nationally representative among these target respondents. This is because there are no reliable official estimates of people belonging to the two target groups. This survey may, therefore, not be truly representative of the actual profile of financially excluded or underserved in the market surveyed.</p> <p>In summary, the two broad research objectives of this study were to:</p> <ul> <li>Generate a detailed understanding of the financially excluded and underserved target groups across different markets</li> <li>Understand the entry points to financial inclusion, including the target group’s potential/propensity to adopt electronic payments/prepaid accounts</li> </ul> <p><b>More similarities than expected</b></p> <p>Even though the markets that were researched are culturally diverse and geographically dispersed, some similar outcomes and trends have evolved across the study. This has enabled the emergence of some common themes which we have focused on in this paper, to deliver combined insights that can be applied to a wide variety of markets.</p> <p>In addition to providing a combined profile of the average financially excluded and underserved target groups, the common themes are that money management mostly remains via traditional means, financial institutions like banks are currently not playing a larger role in their lives, prepaid cards could be an entry point into financial inclusion, and access to technology is limited.</p> <p><b>In conclusion</b></p> <p>These themes, which are generated from the research data, form the narrative of this paper.</p> <p>This research was conducted by Ipsos on behalf of MasterCard from Quarter 4 2013 to Quarter 1 2014.</p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebTable-1.jpg" target="_blank"><img width="526" height="259" src="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebTable-1.jpg"></a></p> Who are the Financially Excluded/Underserved groups?<p><b>A comprehensive study of the financially excluded and underserved</b></p> <p>These research results provide some thought-provoking, perhaps even stereotype-challenging insights into who are the financially excluded and underserved target groups.</p> <p>The average age ranges from 28 years in Nigeria to 41 years in Philippines. Thus, a typical member of the target groups could be said to fall in the economically active age group. Most do, in fact, claim to be currently working. More than 50% in Indonesia, Vietnam, Egypt and Nigeria say that they are currently working. The proportion of working people was relatively lower in India (just 26%) and Philippines (at 42%).</p> <p>Given the current levels of employment, the lack of financial inclusion among these target groups seems significant.</p> <p>What is even more revealing is that most of them have achieved secondary education or above. The education levels are very high in Philippines, Vietnam, Egypt and Nigeria (ranging from 79% to 91% for secondary level and above education).</p> <p>These education levels indicate a stronger potential than may have been expected to reach out and educate these target groups about the benefits of financial inclusion.</p> <p>However, with the average monthly household income ranging from US$ 200 to US$500, there could be a common issue of low disposable income, translating into a lower likelihood of wanting to take on what they could perceive as extra financial expenses and commitments.</p> <p>As will be seen in a later section on savings and expense habits, this lack of disposable income may be one of the primary reasons for being financially excluded/ underserved.</p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-1.jpg" target="_blank"><img width="499" height="289" src="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-1.jpg"></a></p> <p>Vietnam has relatively higher household income compared with the rest–– potentially providing greater opportunities to target for financial inclusion.</p> <p>Over half of the target groups interviewed have lived in their current city all their life. This could indicate a level of familiarity and comfort with the economic and financial workings of their country.</p> <p><b>Stronger role of neighborhood/friends/family</b></p> <p>Based on the ethnographic research it is evident that political unrest in some countries leads to a sense of insecurity which in turn may exacerbate the need to control finances in a way that is familiar and trusted. This unrest causes anxiety over job security and general future prospects–– a bigger problem than how to transact money you potentially may not ever earn!</p> <p style="text-align: center;">“I’m worried about not being able to graduate and find my dream job due to the current political situation which is affecting living standards in Egypt.”<br> ~ (Egypt, 19 years old, Excluded)</p> <p style="text-align: center;">“Our government is not stable and it’s affecting everything. Our education quality is deteriorating and there are no employment opportunities even after graduating with a university degree.”<br> ~ (Nigeria, 24 years old, Excluded)</p> <p>The ethnographic research also revealed issues with current infrastructure especially in Nigeria. Frequent power outages which occur at irregular times is a way of life for the target group in Nigeria. As will be seen later, this has implications in their adoption levels of technology.<b></b></p> <p><b>Does financial exclusion lead to social dependency?</b></p> <p>This research has shown, for various reasons that conventional forms of banking and financial inclusion are not working for these groups. Financial exclusion and social dependency seem to be inextricably linked, and being financially excluded/underserved clearly leads to a strong reliance on their social network in times of need.</p> <p>Vinod in India, because of unforeseen circumstances like sickness, turns to his trusted community to borrow money. At the age of 51, Vinod had a heart attack. With limited income, he had no extra money to pay for unbudgeted and big-ticket expenses like hospitalization. As his community’s way to support him and his family and on their own initiative, his neighbors pooled money together and paid for all his bills. Though repayment was expected, there was no pressure to pay back within a certain period and there was no interest charged. He explained that this was not an unusual situation in his local area: at times of dire need, sympathy and good will of close friends drive community spirit. Many people come to such agreements, and it is preferred to borrowing from an institution.</p> <p>Another example is Dele, a 57 years old man in Nigeria, who owns a small packaging business. Due to the slowing down of the economy, sales have also slowed down and cash flow has been a problem. This is a big issue for businesses as there are operating expenses, such as purchase of materials that need to be procured before the customer makes full payment. To solve this, Dele comes to an agreement with some of his loyal customers for a payment scheme that requires full payment when the project is commissioned. This way, he has cash on hand to not only buy the necessary things for the project but also help fund the operating expenses of other projects. Again, an agreement like this is preferred compared to an institution, as there is no interest charged on the loan.</p> Money Management<p>In most markets, salary is the most common payment type received; ranging from a high of 59% in Vietnam to a low of 15% in Philippines.</p> <p>An encouraging feature is that there is a small section of the target group who use banks for receiving these payments. Of those receiving a salary, the proportion of those using a bank in some form (direct debit, receive cash but deposit in bank) ranges from 20% in the Philippines to a high of 75% in Nigeria.</p> <p>Both the financially excluded and financially underserved still live within a cash economy. This is unsurprising given their current perceptions about banks (mentioned in detail later in this document).</p> <p>Besides salary, relying on friends and family for money is also prevalent across markets, especially in Vietnam (63%), Philippines (51%) and Indonesia (40%).</p> <p>When it comes to expenses, the majority of their expenses are for items such as clothes, transportation, food and telecom.</p> <p>Given their current lack of access/familiarity with payment cards or electronic payment methods such as direct debit, these expenses are paid predominantly in cash.</p> <p>Most also claim that they do not pay rent for their current accommodation either because they are living with others (friends/family/funded home) or someone else pays their rent. The proportion of those claiming to not pay rent ranges from a high of 71% in Philippines to 21% in Egypt. Of those who pay their own rent, they still use cash to do so.<b></b></p> <p><b>Savings regimen/controlling expenses</b></p> <p>The ethnographic research shows interesting savings habits across markets. Most tend to not save with financial institutions.</p> <p>Money is saved either in the form of cash at home or through some social saving schemes.</p> <p>For those with families, the savings were primarily for their children. Putting aside money for education is a priority we see across markets. A significant portion of Vinod from India’s income goes to support his son who is pursuing his MBA. In a highly competitive workforce market, having a post graduate degree is an advantage. He believes that this is key in getting a good job thus securing his son’s future. This led him to being prudent about other expenses especially when it comes to himself and his wife, such as not replacing their very old box-type TV at home.</p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-2.jpg" target="_blank"><img width="598" height="343" src="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-2.jpg"></a></p> <p>In Egypt and Nigeria, instead of saving money for the future, having money to spend now was perceived as important. In these markets, having money to spend among friends or buy goods was seen as necessary to maintain one’s status among their peer group.</p> <p>Nora of Egypt, 17 years old, depends on her parents to pay for everything. She feels there isn’t a pressing need to save for the future, as she has her parents’ financial backing. She spends without thinking and splurges on branded clothes and bags. In her peer group, there is pressure to maintain a certain image through material things, so as to not stand out as someone who is not ‘cool.’</p> <p><b>Keeping cash in closets</b></p> <p>The ethnographic research allowed us to observe where excess cash is kept. A common safekeeping area is in their cupboards, where it is often not noticeable to others. There are many reasons for such behavior, other than the prevention of getting their money stolen in situations of house theft; it also reduces the temptation of spending their money if they constantly see it. Saving in coin jars is still prevalent for some markets such as Vietnam, Philippines, and Egypt. It is also common for housewives in India to accumulate a little from their daily household budget to use as an emergency fund for unexpected spending.</p> <p style="text-align: center;">“I save my money in my cupboard, where I can’t see it. So I don’t have the temptation to spend.” ~(India, Retiree, 63 years old, Underserved)</p> <p>In India, savings were also done by buying some gold items whenever they could afford it. This was also seen as preparing for their children’s wedding as buying gold jewelry is perceived as customary on such occasions.</p> <p style="text-align: center;">“Once every two years, I would buy gold with my savings. It is good because when my children get married, we have to give gold, so it’s a sort of an investment.”<br> ~(India, Migrant, 39 years old, Excluded)</p> <p><b>Saving with a group of people</b></p> <p>Specific to markets like Egypt and Indonesia, saving is often with a group of people. For example, Indonesians save through ‘Arisan’ (a form of rotating savings, through social gathering), and savings for Egypt through Gam’eya (social money pooling).</p> <p style="text-align: center;">“I save my money with a guy in the village that I know. He is a prominent figure who everyone recognizes and I feel that my money is safe with him...”<br> ~(Indonesia, Migrant, 31 years old, Excluded)</p> <p>There is perhaps an opportunity to use such respected “neighborhood opinion leaders” to educate the target groups on the benefits of financial inclusion.</p> <p><b>Borrowing is the last resort</b></p> <p>Findings from the ethnographic research indicate that across the markets, borrowing is seen as a last resort. In Egypt, it is seen as negative and demeaning. In many cultures the preference would be to borrow from relatives or close associations than financial institutions. This appears to be tied in with the need for control over one’s financial situation and is linked with lack of familiarity/perceived transparency with both bank cards and credit cards in general.</p> <p style="text-align: center;">“I can control my daily expenses because I know how much money I spend every day rather than through a bank card. A bank card balance won’t be easily visible, to feel and control my purchasing as well.” ~(Vietnam, Opt Out, 47 years old, Excluded)<b></b></p> <p><b>Keeping track of expenses</b></p> <p>Tracking expenses is a daily task for the underserved and excluded. A habit of meticulous planning has been put in place to ensure that their hard earned money is well spent. With these groups of people, they find joy knowing their expenses are kept within their budget, with a little more to spare. The most common way of tracking expenses is usually through mental accounting where people have a very clear idea of where their money goes without much formal accounting. This is critical in order to ensure that there is enough money to tide them over until the next inflow of income. There are also people like Jennylyn, 27 years old, in the Philippines that prefer to keep a record of the expenses. She regularly keeps receipts and lists of expenditure in a notebook dedicated for this purpose. Though it is cumbersome to keep a paper trail, she finds this critical to keep account of her own spending. Another way to ensure that she spends within her means is to create a list of items to buy before going to the store. This helps her stay focused on the task on hand and avoids the temptation of picking up unnecessary items. By doing this, she feels rewarded at the end of the day.</p> Banking<p><b>Easing safety concerns</b></p> <p>A point of entry into financial inclusion is by addressing safety concerns with cash. Across markets, there are concerns in carrying cash. These concerns are of three types</p> <ul> <li>Perceived safety in keeping cash at home</li> <li>Fear of losing cash/being robbed</li> <li>Fear of overspending if carrying cash</li> </ul> <p style="text-align: center;">“I like the idea of a card because I don't have to carry cash in my pocket. When I travel, I won’t be afraid of the armed robber. Since there is nothing on me, they will not expect me to have anything.”<br> ~(Nigeria, 63 years old, Underserved)</p> <p style="text-align: center;">“I feel that our house is safe so I don't feel the need to deposit my money in the bank.”<br> ~ (Vietnam, Opt out, 47 years old, Excluded)</p> <p>Security is perceived as the main benefit a bank can offer. Almost half the target group cited banks as a safer place to keep money than as cash at home.</p> <p>Another benefit of banks is the interest that they offer on the money kept in bank.</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-3.jpg"><img width="602" height="320" src="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-3.jpg"></a></p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-4.jpg"><img width="599" height="314" src="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-4.jpg"></a></p> <p>Current household incomes are generally low (around USD 200 per month). This results in lower disposable income and thus leading to the perception that they do not have enough money for using a full bank account i.e. an account that enables them to take out loans, overdrafts, credit/debit cards or cheque accounts.</p> <p>Not having sufficient money is cited as one of the main reasons for not having a full bank account (as high as 41% in Nigeria and 34% in India).</p> <p>Many simply say that they do not need a bank account.</p> <p>For Ayinde in Nigeria, 50 years old, the inconveniences that come with owning a bank account outweigh any perceived benefit. Standing in line to be served takes up most of her day, something that she cannot afford as a small business owner. Most telling also is that many of the excluded and underserved in Nigeria are not literate. Processes such as registration and ordinary bank transactions are perceived to be complex and intimidating.</p> <p>There is also the issue of perceived transparency of banks when it comes to bank fees. Susi Indah of Indonesia, a 37 year old, used to have a bank account where she kept her savings. Three years ago, she had IDR 35 million in the bank. She withdrew most of it when she was building her home and left IDR 1-2 million in the account. Not being aware of bank fees, she claims that ‘her money started disappearing’ without explanation. This incident made her distrustful of banks in general and pushed her to end her relationship with the institution.</p> <p>Across all markets, there is reluctance to adopt the usage of ATM cards. From a financial standpoint, this is considered a risk–– there is high possibility of forgetting the pin code and in turn “money is stuck.” There is a perception especially among older people that there is a possibility of never regaining access to the money anymore. Other reasons of potential loss of money to the ATM are technology failure; offline ATMs that “eat your card.”</p> <p>The ethnography also revealed the lack of knowledge on how to use an ATM, especially when it comes to withdrawing money. In India Harishchandra, 63 years old, owns an ATM card but almost never uses it. He felt that the process of withdrawing money from the ATM machine is complicated and one mistake on his part would cause him to lose his money. Hence, as a precaution, he avoids using the ATM card at all.</p> <p style="text-align: center;">“There is so much tension especially when I am going to the ATM machine. If I can’t remember my pin number, my money will get eaten up...”<br> ~ (India, 63 years old, Underserved)</p> <p><b>Trust with Banks and Other Financial Institutions</b></p> <p>Trust levels are generally high for local banks. This ranges from as high as 80% and above in Egypt and Nigeria, above 70% in Indonesia and Philippines and above 60% in India and Vietnam.</p> <p>Trust levels for multinational banks and global payment card brands, perhaps due to low familiarity, are generally lower than that of the local banks.</p> <p>Bank officers are also seen as credible sources of information on financial products and services.</p> <p>Communicating safety and interest on money could potentially encourage the financially excluded to start using banks and would also encourage the financially underserved to use banks more often than cash. This could also, perhaps, make the banks more relevant to their current life and could result in fewer people saying ‘they do not need a bank account.’</p> <p>Global financial institutions could tie-up with trusted local banks could leverage on the perceived credibility of the bank officers towards financial inclusion of this target group.</p> Prepaid Cards <p><b>Awareness, Perceived Advantages and Disadvantages</b></p> <p>In the ethnographic research, the first association to the term ‘prepaid card’ was a prepaid card for mobile phones. The association with mobile phones and the term ‘prepaid cards’ is very strong.</p> <p style="text-align: center;">“Prepaid card? This is where the amount you put in is balance amount you can only spend. Yes I have heard about this and I know it is only used for the mobile phone.”<br> ~ (India, Opt out, 29 years old, Excluded)</p> <p>In the quantitative survey, prepaid cards were explained as bank cards where you top up the balance on your card to then buy goods and services.</p> <p>Most claimed to be aware of prepaid cards, ranging from a high of over 80% in India, Indonesia and Vietnam to 59% in Philippines.</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-5.jpg"><img width="599" height="347" src="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-5.jpg"></a></p> <p>Encouragingly, most mentioned control over spending and not having to carry cash around as the key advantages of a prepaid card.</p> <p>Managing day to day expenses, as seen in the ethnographic research, is very important to the financially underserved/excluded groups. In the survey, as high as 40% of the target group across markets mentioned ‘control on my spending’ as a key benefit to owning a prepaid card.</p> <p>As mentioned earlier in this document, there are strong safety concerns with carrying cash among the target group. Across markets, as many as 30% and more mentioned ‘not having to carry cash around’ as an advantage of owning a prepaid card.</p> <p>These two perceived advantages</p> <ul> <li>Ability to control spending, and</li> <li>Not having to carry cash</li> </ul> <p>could be used as entry points towards financial inclusion for the financially underserved/excluded.</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-6.jpg"><img width="599" height="346" src="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-6.jpg"></a></p> <p>The main concern across markets with prepaid cards is that they might lose the card. In the ethnographic research, it was clear that many were unsure of the process of replacing a lost card and generally assumed that it would be a difficult process. A related concern is that somebody may pick up their lost card and use it.</p> <p>Education about the ability to block a card that has either been lost or stolen, in order to protect their money, as well as the ability to receive/obtain a replacement card, should be promoted in order to increase the uptake of prepaid cards amongst this group.</p> <p>The ethnographic research revealed instances in India of the target group keeping their ATM card in the inner pocket of their wallet and, in some instances, into a pocket inside their shirt.</p> <p style="text-align: center;">“I am scared about losing my card, so I don’t use it.”<br> ~(India, Retiree, 63 years old, Underserved)</p> <p><b><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-7.jpg"><img width="602" height="348" src="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-7.jpg"></a></b></p> <p><b>Transparency of fees and limits</b></p> <p>Another concern in most markets is the perception that they would have to pay money to own a prepaid card. This is around 10% in most markets and is relatively higher in Indonesia (22%). Vietnam, especially, also has concerns that there would be regular fees charged for using a prepaid card (13%).</p> <p>These perceptions probably stem from lack of familiarity with prepaid cards and transparency of fees involved could help address these concerns.</p> <p><b><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-8.jpg"><img width="599" height="361" src="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-8.jpg"></a></b></p> <p><b>General Interest in Prepaid cards</b></p> <p>A prepaid card concept<sup>[<a href="#_ftn1">1</a>]</sup> was introduced in the quantitative research across these three measures of in-market success – ‘Relevance,’ ‘Unique and Different’ and ‘Likely to Apply.’</p> <p>The results are positive.</p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-9.jpg" target="_blank"><img width="596" height="370" src="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-9.jpg"></a></p> <p>Many found prepaid cards to be relevant; this was as high as 60% in Nigeria and India. The relevance level was generally in the 30%-40% range for other markets.</p> <p>Prepaid cards were also seen as unique and different across markets.</p> <p>When asked how likely were they to apply for a prepaid card, markets generally fall into three distinct groups.</p> <ul> <li>Highly receptive markets: Three markets were highly receptive to prepaid cards after the concept was explained. They are India, Egypt and Nigeria. More than 50% of the financially excluded/underserved in these markets state that they are likely to apply for a prepaid card.</li> <li>Moderately receptive market: Philippines is a moderately receptive market with around 30% stating that they would apply for a prepaid card.</li> <li>Less receptive markets: Vietnam (23%) and Indonesia (17%), compared to other markets, showed less enthusiasm to apply for a prepaid cards.</li> </ul> <p>It is worth mentioning again that the target group is largely educated (as mentioned earlier in the document). Communicating the prepaid card in detail is likely to encourage uptake of these cards and shift the financially excluded/underserved into the financially included group.</p> <p style="text-align: center;">“After being explained what a pre-paid card is, I like it now because I don’t have to carry any money. I don’t have to be afraid of getting robbed when I take the bus. I can relax a bit now.” ~(Nigeria, Opt out, 55 years old, Excluded)</p> <p><a name="_ftnref1"></a><i>[1] Prepaid card concept was explained in detail as below:</i></p> <p><i>A prepaid card is a card that allows you to:</i></p> <ul> <li><i>Buy goods and services electronically at the point of sale –– wherever it is accepted at home or abroad</i></li> <li><i>Purchase goods and services securely, online over the internet</i></li> <li><i>Pay money to other people, family or friends</i></li> <li><i>Withdraw cash from ATMs</i></li> </ul> <p><i>Using this card is safer, faster and more convenient than cash. You can keep track of your spending with the added peace of mind that you can only spend up to the limit of the money that’s been loaded on to the card–– there’s no risk of going overdrawn or being charged any over limit fees. The card is also easy to obtain from a wide range of locations like post offices and supermarkets even if you don’t have full identification documents and, there is no credit check involved. The card can either be topped up by you with cash or, in some cases, by your employer or local social welfare benefits office.</i></p> Access to Technology<p><b>Mobile phones are dominant</b></p> <p>While the majority of people in these groups have access to some form of technology, for the largest proportion, this is to a standard mobile phone only, and access to more advanced technology is much more limited. Mobile phones are easily accessible across the markets (70% and higher)–– and is far ahead of all other forms of technology.</p> <p>The next most accessible technical device is a smartphone, particularly in Indonesia and Vietnam. Vietnam, especially, tends to have higher access to various technological devices than other markets. As seen earlier, among all the markets in this study, monthly household income in Vietnam is the highest–– almost twice of India, Egypt and Nigeria.</p> <p>Across markets, usage of mobile phone banking is low.</p> <p>Ethnographic findings indicated younger target groups are more inclined to owning a smartphone. Thus, it is not surprising that there is high familiarity of social media (i.e. Facebook, Twitter) among the younger target groups. Especially for Trinh, in Vietnam, who is very keen on online shopping through her phone after watching how her friend does it. However, some concerns holding her back would be the security of online transactions as fraud is prevalent. Older target groups on the other hand own a cell phone mainly for its basic communication functions–– Call and Texting. For them, there is no pressing need to be on social media, as long as they are in contact with their friends and families which they are able to do through more traditional channels.</p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-10.jpg" target="_blank"><img width="600" height="491" src="/content/dam/intelligence/content-assets/reports/2014/FinancialInclusion/WebCharts-10.jpg"></a></p> <p>Though Abiodun in Nigeria owns a smartphone and is open to explore more advanced functions such as online shopping, the current power infrastructure does not allow him to do so. Without a constant source to electricity, there is a challenge to plan around charging electronics to fuel technology.</p> <p>It is also observed in the ethnography that these target groups are still very much inclined to using mobile top up cards where they are not prone to over usage.</p> <p>Managing day to day expenses was seen as very important across markets in the ethnographic research. Currently this is being done either by keeping paper bills or some form of mental accounting.</p> <p>A hypothesis here is that a simple ‘app’ that served to educate, as well as facilitate easy budgeting, could be one of the ways to help the target group. As smartphones increase their market share, the potential for these groups to make use of technology in relation to their finances grows. A simple budget app on a mobile phone would be helpful for everyday budgeting and work as a simple extension of the mental accounting that already takes place.</p> How are women different?<p>Among the financially excluded/underserved group, findings among women generally are similar to that of men. In some markets, on some measures mentioned below, we do see some differences by gender.<b></b></p> <p><b>Regular source of income an issue</b></p> <p>In some markets, a much lower proportion of women than men claim to have received income by salary. In India, only 8% of women received a salary payment in the past three months as compared to 38% of men. Similar differences observed in Indonesia (19% women vs. 63% for men), Philippines (7% women vs. 32% men), Nigeria (6% women vs. 32% men).</p> <p>In these markets, not having a regular source of income in the form of a salary could make it more challenging towards financial inclusion of women.<b></b></p> <p><b>Banking perceptions</b></p> <p>Perceived benefits of a full bank account did not show any major differences by gender. Similar to men, women too feel that keeping money in bank accounts is safer. Communicating safety of money in banks vs. cash is likely to resonate as strongly with women as with men.<b></b></p> <p><b>Prepaid cards</b></p> <p>Awareness of prepaid cards is as high among women as among men. Similar to men, women too feel that prepaid cards allow for better control over money and are as concerned about losing the card. After the prepaid card was explained, women are equally likely as men to show interest in applying for a prepaid card. The only exception observed was in Vietnam where only 11% women said they would apply for a prepaid card as against 43% of men.<b></b></p> <p><b>Technology</b></p> <p>Access to a standard mobile phone among women is as high as men. Smartphone access, in some markets, showed some differences by gender. In Nigeria, only 13% women said they have access to a smartphone as against 49% of men. Likewise, in Vietnam, 52% of women have smartphone access as against a high of 84% of men. In these markets, targeting women through financial services that require smartphones would be challenging.</p> Call to action<p>This paper highlighted the impact of being financially excluded/underserved, including what this means for inclusion in wider society, how electronic payments could benefit these groups of people and the way in which they could be positioned in order to have the most far-reaching impact with regard to increasing financial, and thus social, inclusion across the emerging markets. As a way forward, these are some of the implications from this research towards financial inclusion of those currently financially excluded/underserved:</p> <p>A large proportion of the people interviewed are employed and also most have completed secondary school and above. Given their current employment and education levels, the lack of financial inclusion among these target groups seems significant. These education levels indicate a stronger potential than may have been expected to reach out and educate these target groups about the benefits of financial inclusion.</p> <p>Neighborhood social network including friends and family play a dominant role in the lives of the target group. There is perhaps an opportunity to use such respected “neighborhood opinion leaders” to educate the target groups on the benefits of financial inclusion.</p> <p>Though cash as a payment method is widely prevalent, there are strong concerns related to safety in carrying cash. Banks on the other hand are seen as safe as well as providing interest on money. Communicating bank safety and interest on money could potentially encourage the financially excluded to start using banks and would also encourage the financially underserved to use banks more often than cash. This could also, perhaps, make the banks more relevant to their current life and could result in fewer people saying ‘they do not need a bank account.’</p> <p>Local banks are seen as trustworthy and bank officers are seen as credible sources of information on financial products/services. Global financial institutions along with trusted local banks could jointly promote relevant financial products/services to the target group.</p> <p>The paper highlights that prepaid cards could be used as an entry point for financial inclusion. The two main perceived advantages of prepaid cards are:</p> <ul> <li>Ability to control spending, and</li> <li>Not having to carry cash</li> </ul> <p>These advantages are likely to strike a chord with the target group as managing and tracking expenses and safety concerns in carrying cash are uppermost in their minds.</p> <p>Also, a hypothesis here is that a simple ‘app’ that served to educate, as well as facilitate easy budgeting, could be one of the ways to help the target group. As smartphone uptake increases, the potential for these groups to make use of technology in relation to their finances grows. A simple budget app that could be used on a mobile phone would be helpful for everyday budgeting and work as a simple extension of the mental accounting that already takes place.</p> <p>There are some concerns around prepaid cards which would need to be addressed. These concerns are primarily about losing the card and someone else using their lost/stolen card. Education about the ability to block a card that has either been lost or stolen, in order to protect their money, as well as the ability to receive/ obtain a replacement card, should be promoted in order to increase the uptake of prepaid cards amongst this group.</p> <p>Communicating the benefits of the prepaid card in detail is likely to encourage uptake of these cards and shift the financially excluded/underserved into the financially included group.</p> <p>When we look to the future, it is important to bring the financially excluded and underserved on this transformational payments journey and, as part of this, prepaid cards and other types of basic payment accounts have a real role to play in the drive for greater financial inclusion.</p> <p>All people, irrespective of their own personal circumstances, should have an opportunity to participate in the global economy. However, millions of people around the emerging markets lack access to the most basic financial tools, and this limits their personal options. They don't have secure places to save money, reliable ways to transfer it, or safe ways to transport it.</p> <p>Financial exclusion can perpetuate poverty. It slows the economy down. Bringing basic financial services to the financially excluded/underserved is, clearly, an obvious commercial opportunity, but more importantly, it’s a meaningful opportunity for society as well.</p> The report looks at the financially excluded and underserved in six culturally diverse markets across APMEA – India, Indonesia, Vietnam, Philippines, Egypt, and Nigeria. It was commissioned by MasterCard to better understand what financial exclusion or underservice means to the millions of people within this group, and what has triggered their choices. This is in order to better provide services that engage this marginalized audience and help them to reap the benefits of financial inclusion.http://www1.mastercard.com/content/intelligence/en/research/reports/2014/the-road-to-inclusion2014-05-18T16:00:00.000Z2014-05-18T16:00:00.000ZMasterCard Affluent Report EXECUTIVE SUMMARY<p>Based on an estimated growth rate of 7% from 2012 to 2017, more than 70%, one billion of the total affluent population will be located in APMEA by 2017<sup><a href="#_ftn1">[1]</a></sup>. In terms of wealth growth, given a projected increase of 8% per annum, APMEA is well-placed to be the wealthiest region in the world as early as 20157<sup><a href="#_ftn2">[2]</a></sup>.</p> <p>MasterCard’s proprietary research of over 1,000 affluent individuals in selected key markets in APMEA (China, Hong Kong, Japan, Singapore, South Africa, South Korea, and UAE) throughout 2013 revealed that they are young, well-traveled, curious, pragmatic and discerning with a multi-dimensional view of wealth and success. At an average age of 37, the affluent in APMEA tend to be married with one child (aged 4) and have investible assets of at least USD200, 000.</p> <p>Increasingly assuming the identity of global citizens, they have a worldwide mindset, traveling for business or leisure at least six times a year, with a preferred airline and hotel chain, pre-registered seat and room requirements.</p> <p>Our studies also revealed a shifting tendency among the affluent to seek and discover authentic experiences as opposed to purchasing and owning physical luxury items. While they aspire to be financially independent through hard work, they also place high value in spending quality time with their families and loved ones. Wealth is perceived to be a means to experience the world and to truly live life, with travel being the best medium to explore the world.</p> <p>Increasingly discerning and savvy, we find them to be highly specific in what they want and what is considered to be important. In terms of banking, fee waivers, rewards, cashback, shopping and local dining are features that are the most appealing. Among their many passions and interests, Dining, Travel and Golf are the most highly desired. They also show a distinct preference for curated Experiences relevant to their lifestyle as opposed to just discounts and promotions.</p> <p></p> <p><i><a name="_ftn1"></a>[1] 2012 World Wealth Report<br> <a name="_ftn2"></a>[2] 2012 World Wealth report, Capgemini and RBC Wealth Management</i></p> INTRODUCTION<p>From a financial perspective, these affluent–– the majority of which are in their 40s–– are at a stage in their lives where they can afford to reassess their values, objectives and outlook in life. They are rapidly evolving and increasingly passionate about things that are valued and important in life.</p> <p>With these insights, MasterCard wanted to design a portfolio of products and services that is aligned with these traits and concepts of the affluent–– solutions that connect them with the world and other like-minded individuals, supports them in living their lives the way they want to, and enables them to share experiences and travel with passion. We wanted to bring to the affluent experiences that make them feel unique, differentiated and inspired.</p> <p>It was with this inspiration that led MasterCard to commission a series of studies and surveys in 2013 that were focused on the affluent in APMEA, where the growth of the affluent has not only been remarkable, but is earmarked to be among the fastest growing markets globally in the coming years. The results and key findings from these studies will be presented in the ensuing sections of this Affluent Report.</p> PSYCHOGRAPHIC ANALYSIS: VALUES & ATTITUDES<p>Across the markets, MasterCard’s surveys revealed various traits and trends to be evident among the affluent. There is a desire to look at the core pillars of happiness such as family, health/fitness, material wealth, and spiritual wealth (self-enrichment and self-fulfillment). While they aspire to strike a harmonious balance between work and life, there is also a greater sense of satisfaction in terms of what they have - this is reflected in them being more averse to risk-taking with their financial decisions</p> <p>Our findings indicated that there is an inclination among the affluent to associate ‘globality’ and ‘world’ with travel and experiences outside of their home country. More than ever, they are placing greater emphasis on seeking experiences (e.g. travel, fine dining), creating stories, mastering a new skill, or making unique journeys- all things that drive personal growth and happiness - as opposed to the ownership of opulent material possessions (e.g. home and personal luxuries, automobiles), status symbols, or reaching a destination.</p> <p>To the majority of the affluent, new experiences (especially cross border) are important in defining a sense of self, implying an inherent desire within the affluent to be unique and differentiated individuals.</p> VIEW ON SUCCESS<p>There is an underlying belief among the affluent that their global mindsets and experiences are key to their current success. Specifically, financial success is perceived as the foundation that allows them to be the best person they can be. In addition, their strive towards financial independence (freedom) is motivated by their belief that such status will grant them the choices, resources and time they need in life.</p> <p>The findings also revealed the affluents’ view on success and wealth to be multi-dimensional. In addition to achieving financial freedom, being successful also means being able to strike a balance between creating a successful family environment and making time to enjoy worthwhile experiences. For the majority, success is internally recognized but externally expressed through rewarding oneself to enjoy higher quality brands and services.</p> <p>Across the markets, success is generally determined by how life is lived and includes both financial and spiritual wealth. However, some variations across the markets are observed:</p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Table1.jpg" target="_blank"><img width="601" height="311" src="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Table1.jpg"></a></p> ‘GLOBALIZED’ MARKETS VS. ‘GLOBALIZED’ MINDS <p>The findings from MasterCard’s surveys revealed two distinct dimensions to be relevant to and evident among the affluent in the region: ‘Globalized’ Markets and ‘Globalized’ Minds.</p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Chart1.jpg" target="_blank"><img width="409" height="473" src="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Chart1.jpg"></a></p> FINDING ON EXPERIENCES<p>In order to find out which types of experiences and benefits are desired, affluent consumers were asked to rate among five different types of experiences:</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Chart2.jpg"><img width="462" height="534" src="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Chart2.jpg"></a><br> </p> ‘GLOBALIZED’ MARKETS VS. ‘GLOBALIZED’ MINDS<p>Of the five major experience categories, those that were travel-related were consistently rated to be the most motivating and unique, followed by dining and golf.</p> <p>Chart 3 below summarizes the share of experiences liked at both the regional and individual market levels:</p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Chart3.jpg" target="_blank"><img width="595" height="189" src="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Chart3.jpg"></a></p> <p>In terms of Travel, UAE topped the region with one in three (33%) affluent considering travel to be their top passion, followed by Singapore and Japan (32%), China (31%) and Hong Kong (25% and the only market lower than the regional average of 30%).</p> <p>In terms of Dining, China had the highest proportion of affluent (25%) choosing dining to be one of their top passions, followed by UAE and Hong Kong (24%), and Japan and Singapore at 22% and 20%, respectively, both being lower than the regional average of 23%.</p> <p>In terms of Golfing, the survey found it to be popular among the affluent in the region, with an average of two in every five (40%) having played golf in the past 12 months.</p> TRAVEL & EXPERIENCE<p>The desire to travel, gain unique experiences and discover authentic tastes around the world are evident across all markets; however subtle nuances that differentiated each market from one another were observed. For instance, the Chinese perceived travel as a way to expand worldview and gain knowledge that can be used for networking and establishing connections, while in Hong Kong, travelling was more to relieve stress, unwind, share time with family. In UAE, world travel was about fun, enjoyment, adventure, and spending time with family but at same time being tuned in to opportunities, new experiences and establishing connections with people. These similarities and differences are summarized below.</p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Table2.jpg" target="_blank"><img width="491" height="287" src="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Table2.jpg"></a></p> INSIGHTS TO THE AFFLUENT GOLFER<p>The popularity of golf continues to grow. Driven by the rising number of affluent enthusiasts and a robust golf tourism industry, fans and aficionados are spending more on the sport. MasterCard’s research revealed the following insights on the popularity of golf:</p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Table3.jpg" target="_blank"><img width="595" height="468" src="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Table3.jpg"></a></p> GOLF AS A LIFESTYLE<p>Golf is perceived as the intersection of social time and personal time which provides an avenue for one to recharge and to connect with others. As a part of lifestyle, golf fulfills both social and emotional needs.</p> <p><b>Golf &amp; Travel</b><br> Golfers travel often for both business and leisure. However, golf is seldom an ‘add-on’ activity but a dedicated trip. Golf-specific trips tend to be short weekend trips. Longer male-dominated golf trips are seen as a time for making memories and bonding with friends.<b></b></p> <p><b>Golf Experiences</b><br> The affluent golfer survey revealed that the shared experience on the golf course is not only vested in the game itself, but also encompasses the conversations which took place such as: (i) discussions of current sporting and golf events; (ii) home, work and life ambitions and pressures; and (iii) exchange of tips and advice.</p> <p>There are also elements of challenge and moments of truth in the game: the belief that the true character of the person will be revealed on the course, and the notion that playing with someone provides insight into their character.</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Table4.jpg"><img width="590" height="344" src="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Table4.jpg"></a></p> <p>The study on the affluent golfers revealed that golf transcends differences and emotional drivers are universal, but market nuances do exist. In general, female affluent golfers have the same emotional drivers and functional needs as male affluent golfers. However, while the all-male golf tour is perceived as a male bonding experience, the equivalent is not mentioned by the female counterpart. The study also showed that female affluent golfers are more likely to play with their spouses.<b></b></p> <p><b>Golf &amp; Sign Up Intent</b><br> Similar to dining, golf is also one of the three most motivating passions for card sign-up intent. Specifically, the findings revealed that affluent golfers aged under 40 share the following traits:</p> <ul> <li>Typically aged 30-39 years (45% vs. 41% of general affluent consumers)</li> <li>Tend to be interested in team sports (20% vs. 16% general), bars/clubs (31% vs. 26% general), or technology (43% vs. 38% general)</li> <li>Have played golf in the last 12 months (49% vs. 40% general)</li> <li>Among their many passions, travel, dining and golfing are considered to be the most important</li> </ul> <p>Among the markets, China had the largest proportion affluent golfers (63%), followed by Japan (52%). Hong Kong and Singapore, both at 41%, were closest to the regional average of 40%. UAE had the lowest proportion at only 7%.</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Chart4.jpg"><img width="598" height="314" src="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Chart4.jpg"></a></p> SUMMARY OF THE AFFLUENT GOLFERS<p>The table below is a summary of the values, lifestyles, leisure activities, golf-consumption habits, and travel habits/preferences of affluent golfers.</p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Table5.jpg" target="_blank"><img width="537" height="323" src="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Table5.jpg"></a></p> TOP EXPERIENCE PILLARS<p>The overall findings of the surveys revealed the top three experience pillars to be Traveling, Dining and Golf. In order to find out which experiences are best suited to our affluent consumers’ perspective and needs, we went one step further to find out how they would like different experiences to be presented and offered. Based on the five main categories of experiences, we segregated them further into 4 sub-categories of ‘Motivating Reasons to Believe’: (1) Curation, (2) Branded Curation, (3) Privileged Access, and (4) Complimentary.</p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Table6.jpg" target="_blank"><img width="474" height="458" src="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Table6.jpg"></a></p> TOP MOTIVATING REASONS TO BELIEVE (RTBS)<p>The survey revealed a clear preference among the affluent for Curated Experiences rather than the generic offerings of discounted goods and services. Specifically, Curation Reasons to Believe (RTB) are the most appealing to the affluent and are considered to be the most important in all markets: China (32%), Hong Kong, Japan &amp; UAE (31%, same as the Regional Average), and Singapore (30%).</p> <p>The findings also showed that over three-quarters of affluent consumers (80%) are interested in a choice of Travel, Lifestyle or Dining RTBs.</p> <p>Privileged Access also has a fairly strong appeal, although this is more pronounced in the Singaporean (25%), Chinese (24%), and Japanese (23%) markets for Travel and Dining RTBs.</p> <p>In Hong Kong, Branded Curation related to Dining and Retail RTBs is the second most appealing to the affluent, while in UAE, Branded Curation RTBs related to Dining is the second most appealing.</p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Chart5.jpg" target="_blank"><img width="603" height="191" src="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Chart5.jpg"></a></p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Chart6.jpg" target="_blank"><img width="592" height="290" src="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Chart6.jpg"></a></p> TRAVEL<p>MasterCard’s research indicated that Travel benefits drive up to 60% of card sign-up rates. This led = to the design of a focused experience program that creates optimal value to the affluent consumers–– one that is geared towards providing meaningful cross-border experiences and bringing new discoveries of the world closer to the affluent global citizens. At the heart of this refocused program is a deep appreciation of our affluent consumers’ global outlook and the desire to include passion to travel experiences.</p> DINING<p>Our studies revealed that culinary experiences involving the exploration and discovery of different tastes and flavors around the world, the privilege of enjoying priority bookings at the world’s most sought after restaurants, participating in private cooking classes, or a personal meeting with top chefs from Michelin-starred restaurants are considered to be some of the most appealing and important motivating passions among the affluent consumers across all markets that would drive card sign-up intent.</p> PAYMENT CARDS<p>The attitude towards payment cards in general is different across the seven markets. In UAE, China, South Africa and Japan where access to premium cards are more limited, a greater sense of status and specialness is attached to the cards. In other markets such as Hong Kong and Singapore where premium cards are more readily accessible and privilege programs such as frequent flyer points are common, there is less sense of status and specialness attached.</p> <p>Privileged Access also has a fairly strong appeal, although this is more pronounced in the Singaporean (25%), Chinese (24%), and Japanese (23%) markets for Travel and Dining RTBs.</p> <p>In Hong Kong, Branded Curation related to Dining and Retail RTBs is the second most appealing to the affluent, while in UAE, Branded Curation RTBs related to Dining is the second most appealing.</p> KEY DRIVERS OF CARD USAGE<p>In general, the survey found the affluent to be in search of a card that would not only allow them to travel around the world with ease and simplicity, but provide all the emotional and functional benefits they desire. They want a card that is relevant to their lifestyle and helps them create the time to enjoy worthwhile experiences.</p> <p>Their ideal card will fulfill and balance the following priorities:</p> <p><b>Emotional</b></p> <ul> <li>Feels premium, aspirational</li> <li>A bit special, unique, new &amp; fresh</li> <li>Like belonging to a World-club</li> </ul> <p><b>Functional</b></p> <ul> <li>Assume better currency rates</li> <li>No handling charges</li> <li>Making for easier global travel/transactions</li> </ul> <p>When choosing a card, the affluent consumers consider travel, dining and golfing features to be the most appealing and attractive, while rewards and benefits such as fee waivers, rich rewards and cashback, and shopping &amp; local dining are considered to be the most important and also the top key drivers of card usage in the region.</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Table7.jpg"><img width="566" height="203" src="/content/dam/intelligence/content-assets/reports/2014/AffluentReport/Table7.jpg"></a></p> <p>MasterCard’s studies have revealed the affluent consumers of today to be believers of work-life balance, charming, sociable, and well-traveled with good tastes in wining and dining. Our in-depth analysis of the findings validated that World MasterCard is a card that is truly aligned with our affluent consumers’ concept of wealth and living well through meaningful experiences–– a card that connects them with the world and other like-minded individuals, supports them in living their lives the way they want to, enables experiences to be shared, and connects passion with travel.</p> <p>Our identification of the top motivating passions has allowed us to focus on curating those experiences that are considered to be worthy experiences by the affluent consumers.</p> <p>Our search for the top drivers of card usage means that our customers will be able to get the optimal value and benefits from the card they have chosen.</p> <p>In essence, the insights from the surveys and research work have allowed MasterCard to craft for the affluent consumers a Passport to the World that makes them feel unique, differentiated and inspired–– a card that can be used by our consumers with prestige and confidence that it will guide them and their families to places they never knew existed.</p> <p><a name="_ftn3"></a><i>[3] MasterCard’s proprietary research was based on online methodology, face-to-face interviews and fieldwork with over 1,000 affluent individuals aged 30 to 55 in 7 key markets in APMEA.</i></p> The Affluent Report presents the results and key findings from a series of studies and surveys commissioned by MasterCard. These findings will help MasterCard understand the mindset of affluent consumers, and how we can develop the most relevant and innovative payment solutions, and to curate meaningful and unique experiences for them. http://www1.mastercard.com/content/intelligence/en/research/reports/2014/mastercard-affluent-report2014-05-26T16:00:00.000Z2014-05-26T16:00:00.000ZConsumer Confidence in a Weak Global Economy: An Index of Resilience Desmond Choong, Yuwa Hedrick-WongConsumer Confidence in a Weak Global Economy: An Index of Resilience<p><b>&nbsp; &nbsp;</b></p> 1. Slowing Global Growth and Emerging Markets<p>The global economy &nbsp;has &nbsp;been &nbsp;recovering from the 2008/09 financial crisis, albeit slow and in a haltingly manner. The longer term outlook is likely to be more of the same, with a slower growing global economy being the norm. In the decade of 2000 to 2010, the global economy expanded on average by 6% per year in real terms. Breaking down this 6% annual growth by source shows that over a fifth came from China, about a tenth from the Euro Zone, and the remaining from the rest of the world.1 In the coming decade, should China’s growth slow by one-third, the Euro Zone’s growth by fourth-fifths, and the rest of the world by two-thirds; then the global economy would expand by only 2.3% a year. If such a scenario comes about, &nbsp;it would be a dramatically different global economy compared with the past.</p> <p>Such a scenario cannot be easily dismissed because the booming global economy in the 2000 to 2010 period was driven by unprecedented liquidity, which provided a powerful lift to growth everywhere, especially in emerging &nbsp;markets. &nbsp;In 2000, &nbsp;private capital flow to emerging markets was estimated at US$200 billion. &nbsp;By 2010, it had jumped to US$1 trillion. Between 2005 and 2010, the rate of growth of private capital flow to emerging markets grew by an astonishing 478%. &nbsp;Indeed, in 2007 just before the global financial crisis un-folded, all but three of the 182 countries monitored by the IMF registered positive economic growth, and 114 of them grew by 5% or more, a phenomenon never seen before. In the two decades prior to 2007, only 50 countries had managed &nbsp;to grow by 5% or more, and most of them for only a few years at a time. So the decade of 2000 to 2010 is in many ways unique and a repeat performance is highly unlikely.</p> <p><a href="/content/dam/intelligence/content-assets/reports/SlowingGlobalGrowthandEmergingMarkets.jpg" target="_blank"><img width="392" height="293" src="/content/dam/intelligence/content-assets/reports/SlowingGlobalGrowthandEmergingMarkets.jpg"></a></p> 2. Consumer Confidence, Exports, and Domestic Demand<p>For many markets in Asia/Pacific and the Middle East, especially the export-oriented &nbsp;ones, the outlook of a slower growing global economy will mean weaker demand for exports. As summarized in Table 1, among these markets total merchandise exports as a percent- age of GDP in 2011 ranges from as high as 176% and 159% &nbsp;in Hong Kong and &nbsp;Singapore respectively, to 14% in Japan. Trade within the Asia/Pacific accounted for the lion’s share of their total exports, followed by exports to North America and Europe. Weaker global demand &nbsp;in the future will mean slower growth in ex- ports at best for many of these markets.</p> <p>How would &nbsp;a &nbsp;weaker &nbsp;global economy, &nbsp;hence &nbsp;a slowdown in exports affect the level of consumer confidence in Asia/Pacific and the Middle East? This is not an academic question, but one with far-reaching practical consequences. With external demand weakening, domestic demand becomes an important factor in sustaining economic growth; and private domestic consumption is an integral part of domestic demand. To the extent that private domestic consumption is affected by consumer confidence (lower consumer confidence leading to less private consumption), then the resilience of the latter in the face of weak exports will be very beneficial in sustaining growth. Chart 1 illustrates that there is indeed a prima facie correlation between levels of ex ports and consumer confidence as measured &nbsp;by the MasterCard Worldwide Index of Consumer Confidence (MWICC).</p> <p><a href="/content/dam/intelligence/content-assets/reports/ConsumerConfidenceExportsandDomesticDemand.jpg" target="_blank"><img width="520" height="365" src="/content/dam/intelligence/content-assets/reports/ConsumerConfidenceExportsandDomesticDemand.jpg"></a></p> <p></p> 3. Index of Resilience of Consumer Confidence<p>In this report, an Index of Resilience is constructed &nbsp;to assess the extent to which consumer confidence is correlated with merchandise export growth –– the higher the correlation, the more vulnerable consumer confi- dence is to a slowdown in merchandise exports. On the other hand, if the correlation is shown to be low, then consumer confidence is less affected by a slowdown in exports, and therefore it can be considered to be more resilient. Launched in 1993, the MWICC has the advantage of being the longest running regional consumer confidence survey in Asia/Pacific; thus there are long data series that can be used for sufficiently rigorous correlation analysis. Currently, there are 25 markets covered by the bi-annual MWICC survey. However, only 17 of these 25 markets are included in the Index of Resilience. The markets that are excluded from the analysis are those whose coverage by MWICC is of relatively recent vintage.</p> <p>The correlation analysis is conducted between merchandise export growth &nbsp;and overall consumer confidence level, as well as separately with the five dimensions of consumer confidence: economy, employment, regular income, stock market, and quality of life. The additional analysis at the level of the five dimensions, which collectively constitute the overall consumer confidence, &nbsp;provides more &nbsp;specific insights &nbsp;on &nbsp;how &nbsp;a change in merchandise exports may affect consumer confidence in the market in question. For example, two markets, A and B, may have similar level of merchandise exports as a percentage &nbsp;of GDP, but differ significantly in the diversity of their exports. In market A, for instance, most of exports may come from a single sector (oil for instance), &nbsp;whereas &nbsp;in market &nbsp;B &nbsp;exports &nbsp;are broadly based on many sectors (a mix of manufacturing, commodities and capital goods). Consequently, with a similar drop in demand for their exports, the effects may be very different between A and B. In market A, the impact on the economy and the stock market could be more severe than the impact on employment and regular income, if the sole export sector is very capital intensive and dominates the valuation in the stock market. In contrast, a similar drop in demand for exports in market B may create more stress in employment, regular income and thereby the quality of life, if the many sectors that participate in exports are labor intensive, but are not very dominant in the valuation of the stock market.</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence.jpg"><img width="422" height="323" src="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence.jpg"></a></p> <p>Such differences between &nbsp;markets A and &nbsp;B would be reflected in differences in the correlation coefficients between merchandise export growth and the five dimensions of consumer confidence. Thus, the secondary correlation analysis at the level of the five dimensions &nbsp;of &nbsp;consumer &nbsp;confidence &nbsp;yields a &nbsp;more nuanced and market-specific picture on how changing global demand for exports would affect consumer con fidence in different markets in spite of similar dependence on exports. Details of analysis are described in Section 4.</p> <p>Chart 2 presents &nbsp;the &nbsp;outcome &nbsp;of the &nbsp;correlation analysis at &nbsp;the &nbsp;overall &nbsp;consumer &nbsp;confidence &nbsp;level through &nbsp;color-coding the markets. Markets shown in red are those with a correlation coefficient larger than 0.5, suggesting that their consumer confidence is very vulnerable to a slowdown in demand for its exports. At the other end of the spectrum, markets shown in blue are those with correlation coefficient less than 0.2, suggesting that their consumer confidence is very resilient to any weakening demand for exports. In between &nbsp;are the color codes of orange (relatively vulnerable), yellow (neutral – neither vulnerable nor resilient), and green (relatively resilient), representing correlation coefficients of 0.4-0.5, 0.3-0.4, and 0.2-0.3 respectively.</p> <p><a href="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence2.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence2.jpg"></a></p> <p>China and India are found to be at roughly the mid-point (neutral) between &nbsp;very vulnerable and very re- silient in their consumer confidence, with the correlation coefficients estimated to be 0.37 and 0.34 respectively, as shown in Chart 3. At first glance, the results may seem counterintuitive as China is so much more export oriented than India. However, both China and India have very large domestic markets, and their merchandise exports as a percentage &nbsp;of GDP are not that &nbsp;different: 26.1% &nbsp;in China and &nbsp;18.7% &nbsp;in India (though China’s GDP is more than four times larger). Thus, consumer confidence in both markets is affected by export performance only to a limited degree. Their large domestic markets suggest that there are other important domestic determinants of consumer confidence, and it is not easily eroded by a decline in their exports.</p> <p><a href="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence3.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence3.jpg"></a></p> <p>Compared with China and India, the correlation between merchandise export growth and consumer con fidence is higher in both Australia and New Zealand, as shown in Chart 4. Their correlation coefficients are estimated to be 0.41 and 0.45 respectively, putting them in the relatively vulnerable category. It is well known that Australia’s exports of resource and commodities to China have become the single most important driver of its economy in recent years, so it is not that surprising that consumer confidence in Australia is well correlated with its merchandise exports. Consumer confidence in New Zealand, however, turns out to be more vulnerable than Australia to a slowdown in export growth.</p> <p><a href="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence4.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence4.jpg"></a></p> <p></p> <p>Consumer confidence in Japan, South Korea, and Taiwan exhibit very different correlations with their respective merchandise exports. As seen in Chart 5, Japan’s correlation coefficient is 0.24, putting it in the relatively resilient category. South Korea, at 0.47, is in the relatively vulnerable category. Taiwan, on the other hand, is in the neutral category. In spite of having a higher export to GDP ratio of 66.6% than South Korea’s 50.4%, Taiwan’s consumer confidence is less vulnerable to a slowdown in exports than South Korea.</p> <p><a href="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence5.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence5.jpg"></a></p> <p>Chart 6 shows a sharp contrast between Singapore and Hong Kong, in spite of their similar, and very high, export to &nbsp;GDP ratios (158.6% &nbsp;and &nbsp;176.4% &nbsp;respectively). While both are small, open, and trade-oriented economies, Singapore is in the very vulnerable category whereas Hong Kong is in the relatively resilient category. This contrast illustrates that consumer confidence in dif ferent markets can be sustained by very different market specific factors, resulting in significant differences in the resilience of their consumer confidence in re sponse to a slowdown in exports.</p> <p><a href="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence6.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence6.jpg"></a></p> <p>The correlations between consumer confidence and merchandise exports in the five key Southeast Asian markets are summarized in Chart 7, which show very different results. Malaysia and Vietnam are in the relatively vulnerable category with correlation coefficients of 0.47 and 0.49 respectively. And they both have high merchandise export to GDP ratios; 81.5% in Malaysia and 75.2% in Vietnam. Indonesia and Thailand are in the neutral category, with identical correlation coefficient of 0.32, even though they differ significantly in their export to GDP ratios: 24.1% in Indonesia and 65.5% in Thailand. Philippines stands out in the relatively resilient category with a correlation coefficient of 0.29. And its export to GDP ratio is also relatively low at 22.6%.</p> <p><a href="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence7.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence7.jpg"></a></p> <p>The correlations between consumer confidence and merchandise exports in the three Middle East markets of &nbsp;Saudi Arabia, United &nbsp;Arab Emirates (UAE), &nbsp;and Kuwait are shown in Chart 8. All three are in the very vulnerable category with coefficients higher than 0.5. At 0.87, the correlation coefficient of UAE is the highest among all 17 markets covered. In spite of concerted efforts to diversify its exports away from resource and commodities, notably in Dubai’s investment in becoming a tourism and convention hub, UAE’s merchandise export to GDP ratio, at 66.8%, remains higher than 57.3% in Saudi Arabia and 44.2% in Kuwait.</p> <p><a href="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence9.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence8.jpg"></a></p> <p>Table 2 summarizes the ranking of the 17 markets in terms of the Index of Resilience of Consumer Confidence. Japan and Hong Kong are in the first rank with the lowest correlation coefficient of 0.24, whereas UAE is in the last rank with the highest correlation coefficient of 0.87. &nbsp;Philippines ranks second behind Japan and Hong Kong. Indonesia and Thailand tie for the third rank, while Taiwan and India come in fourth and China ranks fifth; all five are in the neutral category. The next five markets are Australia in sixth rank, New Zealand in seventh, South Korea and Malaysia in eighth, and Vietnam in ninth; and they are in the relatively vulnerable category. Finally, four markets are in the very vulnerable category: Singapore in tenth rank, Saudi Arabia in 11th, Kuwait in 12th, and UAE in 13th.</p> <p><a href="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence8.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/IndexofResilienceofConsumerConfidence9.jpg"></a></p> 4. Correlations with the Five Dimensions of Consumer Confidence<p>Chart 9 shows graphically the color codes of the corre lation coefficients of the 17 markets in terms of how merchandise export growth would affect consumer confidence in the state of the economy (the economy dimension of the overall consumer confidence index). All color codes are present with the exception of blue (very resilient). For most of the 17 markets, the correlation coefficients between &nbsp;(i) export growth and overall consumer confidence, and (ii) export growth and confidence in the state of the economy, are similar. Singapore, however, shows that its confidence in the state of the economy is more vulnerable to a slowdown in merchandise exports than its overall consumer confidence; the coefficient of the latter being slightly higher at 0.54 than the former at 0.50. Hong Kong, Taiwan, Thailand, and Vietnam, on the other hand, show an opposite tendency of their confidence in the state of the economy with this being more resilient to a slowdown in merchandise &nbsp;exports than &nbsp;their overall consumer confidence.</p> <p><a href="/content/dam/intelligence/content-assets/reports/CorrelationswiththeFiveDimensionsofConsumerConfidence.jpg" target="_blank"><img width="375" height="367" src="/content/dam/intelligence/content-assets/reports/CorrelationswiththeFiveDimensionsofConsumerConfidence.jpg"></a></p> <p></p> <p>Chart 10 illustrates the color codes of the coefficients between &nbsp;merchandise &nbsp;export growth &nbsp;and &nbsp;the employment dimension. All color codes are present, ranging from very vulnerable to very resilient. Nine of the 17 markets exhibit more resilient consumer confidence in their employment situation than the overall consumer confidence. In fact, in Japan consumer confidence in employment is in the very resilient category, a reflection of the sense of security in employment in Japan. Japan is followed by Hong Kong, China, India, Philippines, Taiwan, and Thailand; all with consumer confidence &nbsp;in the &nbsp;employment &nbsp;dimension &nbsp;showingstronger resilience than their overall consumer confidence, securely in the relatively resilient category. UAE’s consumer confidence in the employment dimension, though slightly more resilient than its overall consumer confidence, is also in the very vulnerable category. In contrast, consumer confidence in the employment dimension is less resilient in Australia (relatively vulnera ble), Malaysia (relatively vulnerable), Singapore (very vulnerable) and Vietnam &nbsp;(very vulnerable) compared with overall consumer confidence.</p> <p><a href="/content/dam/intelligence/content-assets/reports/CorrelationswiththeFiveDimensionsofConsumerConfidence2.jpg" target="_blank"><img width="379" height="371" src="/content/dam/intelligence/content-assets/reports/CorrelationswiththeFiveDimensionsofConsumerConfidence2.jpg"></a></p> <p>The correlations between &nbsp;merchandise export growth and the regular income dimension of consumer confidence are shown in color codes in Chart 11. The entire range of color codes is present, from as low as 0.10 (very resilient) in India to as high as 0.72 (very vulnerable) in Saudi Arabia. Consumer confidence about their regular income is more vulnerable than &nbsp;overall consumer &nbsp;confidence &nbsp;in China, Kuwait, Philippines, Saudi Arabia, and Vietnam. In contrast, it is more resilient than overall consumer confidence in Australia, India, Indonesia, Japan, South Korea, New Zealand, and Singapore.</p> <p><a href="/content/dam/intelligence/content-assets/reports/CorrelationswiththeFiveDimensionsofConsumerConfidence3.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/CorrelationswiththeFiveDimensionsofConsumerConfidence3.jpg"></a></p> <p>The correlations between &nbsp;merchandise export growth and consumer confidence in the stock market are shown in Chart 12. China has the lowest correlation at 0.20 (very resilient), suggesting that changes in merchandise export do not much affect its stock markets. Kuwait, on the other hand, shows the highest correlation at 0.74 (very vulnerable), indicating that its stock market is very sensitive to changes in Kuwait’s merchandise exports (primarily oil). Consumer confidence in the stock market in China, South Korea, and Saudi Arabia is more &nbsp;resilient than &nbsp;overall consumer &nbsp;confidence; whereas the reverse is the case for Hong Kong, Japan, Kuwait, New Zealand, Singapore, and Thailand.</p> <p><a href="/content/dam/intelligence/content-assets/reports/CorrelationswiththeFiveDimensionsofConsumerConfidence4.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/CorrelationswiththeFiveDimensionsofConsumerConfidence4.jpg"></a></p> <p>Chart 13 presents the correlations between &nbsp;merchandise export growth and consumer confidence regarding quality of life. The lowest correlation coefficient is found in Japan at 0.13 (very resilient), suggesting that Japanese consumers do not see much impact from a change in merchandise exports in their quality of life. At the other end of the spectrum is Kuwait with the highest correlation coefficient at 0.56 (very vulnerable), implying that Kuwaitis believe that their quality of life is closely intertwined with oil export. Along with Japan, consumer confidence with respect to their quality of life in Malaysia, New Zealand, Saudi Arabia, Singapore, Taiwan, Thailand, and Vietnam is more resilient than overall consumer confidence; whereas the opposite is true in Kuwait and Philippines.</p> <p><a href="/content/dam/intelligence/content-assets/reports/CorrelationswiththeFiveDimensionsofConsumerConfidence5.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/CorrelationswiththeFiveDimensionsofConsumerConfidence5.jpg"></a></p> 5. Internal Analysis by Markets<p>As summarized in Table 3, while the overall consumer confidence in Australia is relatively vulnerable to a slowdown of its merchandise exports, consumer confidence is more resilient with respect to regular income and the stock market, suggesting that these two dimensions are less affected by changes in exports. Consumer confidence regarding the economy and employment, however, mirror the overall consumer confidence, and both are relatively vulnerable to a decline in&nbsp;exports.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets.jpg"></a></p> <p>Hong Kong’s situation is summarized in Table 4. In spite of a small, open, and trade-oriented &nbsp;urban economy, Hong Kong’s overall consumer confidence is relatively resilient to a slowdown in merchandise exports. Its consumer confidence regarding the economy is actually very resilient, suggesting that consumers in Hong Kong do not see exports as the most important determinant of their economy, employment, regular income; nor does it unduly affect its stock market and the general sense of quality of life.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets2.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets2.jpg"></a></p> <p></p> <p>The five dimensions of &nbsp;consumer &nbsp;confidence &nbsp;in China behave very differently with respect to merchandise exports as seen in Table 5. Consumer confidence about the economy and quality of life closely track their overall confidence (neutral). But Chinese consumers see their regular income being highly affected by changes in exports, and less so for employment; and they see their stock markets being relatively unrelated to export performance.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets3.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets3.jpg"></a></p> <p></p> <p>While India’s overall consumer confidence is in the neutral position with respect to merchandise &nbsp;export growth, consumer confidence regarding employment and regular income are stronger in the relatively resilient and very resilient categories as Table 6 shows. It can be concluded that consumer confidence in India is either unaffected by or relatively resilient to changes in its merchandise exports. This is consistent with India’s less export-oriented economy.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets4.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets4.jpg"></a></p> <p></p> <p>Table 7 shows the situation in Indonesia, like India, where consumer confidence is relatively unaffected by or relatively resilient to changes in its merchandise exports. This is in spite of Indonesia being a strong ex- porter of resources and commodities. Indonesia’s very strong private consumption growth in the last decade,which became a key driver of overall economic growth as well as employment and income generation, may be the explanation. In other words, Indonesia has well-balanced support from both exports and domestic consumption in its economic growth.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets5.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets5.jpg"></a></p> <p>Japan exhibits a generally resilient profile in its consumer confidence in regard to merchandise exports as seen in Table 8. This should not come as too much of a surprise as Japan’s domestic consumer market is second only to the US, and in the past two decades leading exporters have been investing and building production capacities overseas instead of in Japan. The one dimension that shows a stronger connection to exports is Japan’s consumer confidence regarding the stock market. This reflects the dominance of large Japanese corporations with strong exports in the stock market. It should also be noted &nbsp;that Japan’s consumer confidence has been chronically weak, stuck in the pessimistic range for over a decade; which in turn suggests that its exports performance, weak or strong, is largely irrelevant to Japan’s consumer confidence; which is clearly more affected by domestic factors.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets6.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets6.jpg"></a></p> <p></p> <p>Table 9 shows South Korea’s consumer confidence being relatively vulnerable to changes in its merchandise exports. &nbsp;While consumer &nbsp;confidence &nbsp;regarding &nbsp;the economy, employment and quality of life track the overall consumer confidence; consumer confidence regarding regular income and the stock market appears to be less affected by changes in merchandise exports.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets7.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets7.jpg"></a></p> <p></p> <p>Kuwait’s consumer confidence profile, as seen in Table 10, is one of vulnerability to its merchandise ex port (oil). The least vulnerable is consumers’ perception of their quality of life, which is in the relatively vulnera ble instead of the very vulnerable category.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets8.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets8.jpg"></a></p> <p></p> <p>Malaysia’s consumer confidence profile is similar to Kuwait’s, albeit showing slightly less vulnerability to a slowdown &nbsp;in its merchandise &nbsp;exports, &nbsp;as &nbsp;Table &nbsp;11 shows.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets9.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets9.jpg"></a></p> <p></p> <p>New Zealand’s consumer confidence profile exhibits relative vulnerability in all but the regular income dimension, as summarized in Table 12. Apart from this one exception, it is very similar to that &nbsp;of Malaysia. New Zealand’s consumer confidence regarding regular income being more resilient is likely due to its more generous social welfare support, which acts as a buffer that cushions the impact from any slowdown in merchandise exports.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets10.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets10.jpg"></a></p> <p>Table 13 shows that the Philippines has a relatively resilient profile in its consumer confidence in relation to merchandise exports. The weakest are with respect to the regular income and quality of life dimensions (both are in the neutral category).</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets11.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets11.jpg"></a></p> <p></p> <p>Consumer confidence in Saudi Arabia is very vulner able to any slowdown in its merchandise export (oil), as shown in Table 14. The least vulnerable is Saudi Arabians’ confidence in their quality of life, which is the least affected by exports.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets12.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets12.jpg"></a></p> <p></p> <p>Singapore’s consumer confidence is generally vulnerable to its merchandise exports, with the sole exception of confidence in quality of life, which is relatively resilient to potentially negative impacts from a slowdown in exports. As seen in Table 15, consumer confidence regarding regular income is also less affected by exports, being in the neutral category.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets13.jpg" target="_blank"><img width="445" height="110" src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets13.jpg"></a></p> <p></p> <p>Taiwan has a more resilient profile in its consumer confidence in relation to merchandise exports, as Table16 shows. The most vulnerable is in the stock market dimension, which reflects the dominance of large and export-oriented Taiwanese companies in its stock market.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets14.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets14.jpg"></a></p> <p>Thailand also exhibits a relatively resilient profile of its consumer confidence in relation to its merchandise exports. The resilience of Thai consumer confidence is weakest in the two dimensions of regular income and stock market as Table 17 shows; both are in the neutral category. None of the five dimensions of consumer confidence are in the vulnerable category with respect to merchandise exports, however.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets15.jpg" target="_blank"><img width="486" height="141" src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets15.jpg"></a></p> <p></p> <p>Consumer confidence in the UAE is very vulnerable to a slowdown in its merchandise exports, as Table 18 shows. In fact, the correlation coefficients in the UAE are the highest seen in the 18 markets, suggesting that even a minor slowdown &nbsp;in its merchandise &nbsp;exports could quickly erode consumer confidence.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets16.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets16.jpg"></a></p> <p></p> <p>Vietnam’s consumer confidence is relatively vulnerable to a slowdown in its merchandise exports as seen in Table 19. It is most vulnerable in the employment and regular &nbsp;income &nbsp;dimensions, &nbsp;and &nbsp;less so in when &nbsp;it comes to consumer confidence regarding the economy and their quality of life.</p> <p><a href="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets17.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/InternalAnalysisbyMarkets17.jpg"></a></p> <p></p> 6. Resilience of Consumer Confidence and Growth Potential of Domestic Consumption<p>Resilience of consumer confidence is one of the factors that determine the potential of domestic consumption as a growth engine in a slower growing global economy. The other important factor is the strength of consumer confidence to begin with. Combining these two factors then positions each of the markets in a two dimensional matrix indicating their potential in leveraging private domestic consumption. Markets with the strongest potential are those with the highest level of consumer confidence, &nbsp;as well as most resilient to a slowdown in merchandise exports. At the opposite end of the spectrum are markets with least potential, which are those with very low consumer confidence, and are also most vulnerable to a slowdown in merchandise ex- ports. Chart 14 positions each of the markets in such a two dimensional matrix. Markets with the greatest potential are in the upper left corner, and those with least potential are in the lower right corner. Hong Kong, Indonesia, Thailand, Philippines, India and China are well positioned with the strongest potential to leverage private domestic consumption to support economic growth. &nbsp;While Malaysia, Singapore, &nbsp;Vietnam, Saudi Arabia and Kuwait all have relatively strong consumer confidence; their consumer confidence is also more vulnerable to a slowdown in merchandise exports. Japan’s consumer confidence is very resilient to external shocks, but it is also very low, being stuck in pessimism for over a decade and a half, which is a persistent damper on private consumption. The UAE occupies a position all on its own, &nbsp;with historically strong &nbsp;consumer confidence while being very vulnerable to a slowdown of its exports.</p> <p><a href="/content/dam/intelligence/content-assets/reports/ResilienceofConsumerConfidenceandGrowthPotentialofDomesticConsumption.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/ResilienceofConsumerConfidenceandGrowthPotentialofDomesticConsumption.jpg"></a></p> Appendix A: Methodology for Calibrating Consumer Confidence Resilience<p>The objective of this project was to investigate the degree to which consumer confidence in key markets in Asia/Pacific and the Middle East is correlated with their exports. Lower correlations indicate higher resilience as the market in question is less affected by weakening external demand. To that end, a correlation analysis of the MasterCard Worldwide Index of Consumer Confidence (MWICC) and &nbsp;its 5 sub-components &nbsp;was conducted against merchandise export growth &nbsp;for 17 countries across Asia/Pacific and the Middle East.</p> <p></p> Data Sources<p>Domestic consumer confidence data was sourced from The MasterCard Worldwide Index of Consumer Confidence survey. It is the most comprehensive and longest running (20 years) survey of its kind in the region. The survey comprising the Asia/Pacific markets began in the first half of 1993 and has been conducted twice yearly since. Markets from the Middle East and Africa were included in the Index from 2004. &nbsp;Twenty five markets now participate in the survey: Australia, China, Egypt, Hong Kong, India, Indonesia, Japan, Kenya, Kuwait, Lebanon, Malaysia, Morocco, New Zealand, Nigeria, Oman, Philippines, Qatar, Saudi Arabia, South Korea, South Africa, Singapore, Taiwan, Thailand, United Arab Emirates and Vietnam.</p> <p>The Index is calculated based with zero as the most pessimistic, 100 as most optioptimistic and 50 as neutral. Five dimensions associated with consumer confidence are measured: employment, the economy, regular income, stock market and quality of life. The responses are consumers' outlook for the six months ahead. Data collection was via internet surveys and face to face interviews, with the questionnaire translated to the local language wherever appropriate and necessary. The survey has a margin of sampling error of plus or minus four to five percentage points at the 95% confidence level.</p> <p></p> Data Period Used<p>The time period of the correlations was constrained by the MWICC time series and varies by country. The cor relations for Australia, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Singapore and Taiwan used the period 1993 to 2012; India, Philippines and Thailand used the period 1995 to 2012; China used the period 1996 to 2012; Vietnam used the period 2003 to 2012; and Kuwait, UAE and Saudi Arabia used the period 2004 to 2012. Although 25 countries are covered by the MWICC, 5 of the countries were excluded from the correlation analysis due to insufficient data points as these &nbsp;countries joined the survey much later (Kenya (2009), Nigeria (2009), Morocco (2009), Qatar (2008), Oman (2011).</p> Data Transformations<p>As the MWICC is surveyed on a biannual basis, exports were aggregated &nbsp;at 6 month intervals to produce cor- responding biannual points in 3 versions: 6 month leading, coincident and 6 month lagging. Finally, in addition to &nbsp;total &nbsp;merchandise &nbsp;exports, regional export series were also created. &nbsp;Correlation analysis of the overall MWICC Index score and its 5 components &nbsp;were conducted separately against the 6 month leading, coinci dent and 6 month lagging biannual export growth of total &nbsp;merchandise &nbsp;exports and &nbsp;on a regional export basis to ascertain which of the three versions would give the best correlations. At this point, three countries were excluded from the analysis as correlations were negative for all three versions (Lebanon, Egypt and South Africa). The table below shows the export version selected (coincident, 6 month leading, or 6 month lagging) based on the best correlations produced.</p> <p><a href="/content/dam/intelligence/content-assets/reports/ResilienceofConsumerConfidenceandGrowthPotentialofDomesticConsumption2.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/ResilienceofConsumerConfidenceandGrowthPotentialofDomesticConsumption2.jpg"></a></p> Exports as a percentage of GDP<p>This indicator was used as a guide to the overall impor tance of exports to the economy. Merchandise exports at the total and at the regional level were calculated for each country for the 2011 period and the average of the 1993 to 2011 period. The ratios vary widely across the countries with Japan, Australia and India in the sub 20% range at one end of the spectrum and Singapore and Hong Kong at the other.</p> <p>When mapped against the correlations of total merchandise exports to the MWICC index over 1993 &nbsp;to 2011, the relationship of a higher ratio of exports to GDP giving higher correlations of exports and domestic consumer confidence is not always maintained. Some countries like Hong Kong, Taiwan and Thailand have a very high ratio of merchandise exports to GDP but a relatively low correlation of merchandise export growth to domestic &nbsp;consumer &nbsp;confidence, &nbsp;while countries like Australia and New Zealand have a lower ratio of merchandise exports to GDP but a relatively higher correlation of merchandise export growth to domestic consumer confidence. Details of the correlation analysis are summarized in the following table.</p> <p></p> Index of Resilience of Consumer Confidence and Growth Potential of Domestic Consumptionhttp://www1.mastercard.com/content/intelligence/en/research/reports/2013/consumer-confidence-in-a-weak-global-economy-an-ndex-of-resilience2013-01-22T16:00:00.000Z2013-01-22T16:00:00.000ZAround The World In 5 Personas: How Global Consumers Think About Their Data Online The MasterCard Global Insights GroupEXECUTIVE SUMMARY<p>Using state-of-the-art techniques, MasterCard has designed a methodology to gauge global consumer attitudes regarding the use of personal data in social and commercial settings. Consumers are by and large fully aware of how their data is harvested and leveraged by the sites they visit. Globally, they separate into five quite clearly defined segments, which MasterCard calls personas, determined by their online behaviors. These behaviors are indicative of their attitudes toward their own data, its value, and, most important, what they go online to accomplish.</p> BACKGROUND<p>The subject of information sharing, active or passive, on the part of consumers online has recently been prominent in the news.i Newspapers, blogs, and trade publications around the world have disseminated stories about how personal data is a new type of currency, how companies use consumers’ data for marketing and offers, and how a person’s web experience is becoming more personalized and customized through the use of observed behavior as a guide.</p> <p></p> <p>While these stories cast light on how data is used and what companies do with it, they often don’t ask other important questions: Why do consumers want to share their data online? What do they expect to get out of such sharing? How do they manage the sharing of information? </p> <p>MasterCard’s Digital Sharing and Trust Project seeks to add the actual experience of consumers online to the materials of debate. By asking the online public in nine global markets what they know about how merchants, search engines, social media sites, browser providers, and marketers use their information, and ascertaining why those consumers share—or don’t share—such information online, MasterCard has centered the conversation about the new framework of personal information on the individual, and how what the consumer wants will drive the future of data.</p> <p></p> KEY FINDINGS<p>The research reveals five global personas of equal size that exhaustively segment the global online consumer market. These personas are determined by behaviors, attitudes, and awareness regarding sharing personal information. Along with this finding, there are several high-level themes that emerged across the nine markets:</p> <p><b>Social Citizenship</b></p> <p>Around the world, consumers venturing online in large measure shed their national characteristics and assume what MasterCard is calling social citizenship. Online, their attitudes and behaviors are determined not by their country of origin, but by their needs and goals regarding commerce, communication, and information. Behavior Is Ingrained and Semiconscious Consumers’ behavior online is largely ingrained and semiconscious. When confronting the question of what to share, web users globally have a set of principles that are pretty effectively hardwired into their online DNA and are answered not explicitly, but by behavior: &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</p> <ul> <li>Am I aware of what I am being asked to share?</li> <li>Do I trust the site with which I am sharing information?</li> <li>Is it relevant to the benefit I am looking for?</li> </ul> <p><b>Age Is Not a Determinant of Willingness to Share Online</b></p> <p>Young people are not more likely than their elders to be open to sharing personal information online. Attitudes regarding sharing are in actuality driven by personality, rather than demographics.</p> <p><b>The Value of Digital Identity</b></p> <p>Many consumers understand the value of their digital identity and decide how to share their personal information accordingly. Fully 64 percent believe their personal data has value to merchants and advertisers.</p> <p><b>Data Hierarchy&nbsp;</b></p> <p><b></b>Consumers are willing to share certain types of data more than others. The ranking of these types holds across all countries.</p> <p><b>Data Collection</b></p> <p>Data collection methods strongly influence how consumers feel about sharing online. They are less comfortable when they feel they are passively “tracked,” as opposed to actively “sharing” their information. As many as 55 percent appreciate when companies tailor their offers to them based on the information they share, e.g., suggestions that online commerce sites such as Amazon offer based on their order history. At the same time, a significantly smaller portion, 33 percent, approves of companies tracking online activity if there is some benefit perceived in the exchange.</p> <p><b>Transparency</b></p> <p>Those consumers with higher awareness of targeted marketing are also those who understand the benefits and prefer shopping online. Thirty-two percent of those aware that marketers place ads targeted at consumers with specific interests also said that when it comes to shopping, they do as much online as they can.</p> <p><b>Savvy Consumers</b></p> <p>Consumers are increasingly knowledgeable about the way they leverage technology to shop and surf online. They are generally informed about the online world, with more than half of consumers venturing online between five and 10 times per day. They use technology to research, interact, and bargain with retailers, both in-store and online.</p> <ul> <li>&nbsp;57 percent of consumers love getting discounts just for “checking in”</li> </ul> <ul> <li>Nearly half of consumers (49 percent) check prices on their mobile devices when in-store to make sure they are getting the best offers</li> <li>60 percent of consumers know how to change the privacy settings on their browser</li> </ul> METHODOLOGY<p>The Digital Sharing and Trust Project is a proprietary MasterCard asset that is the result of both qualitative and quantitative research conducted in nine markets: the United States, Canada, Germany, United Kingdom, India, South Africa, United Arab Emirates, Brazil and Colombia.&nbsp;</p> <p>The qualitative portion was executed on an innovative online platform consisting of 128 in-depth interviews over a three-day period where consumers reported on their online behavior and answered questions about their attitudes toward online sharing.</p> <p> The quantitative portion of the research sought to test, and if, possible substantiate findings derived from the qualitative hypotheses. MasterCard surveyed a representative sample of digital consumers aged 16 to 65, all of whom engage in some type of online activity at least once a week. The survey captured 9,029 global responses to more than 50 questions, including demographic, psychographic, attitudinal, and behavioral information.</p> <p>The five unique personas emerged out of a vigorous statistical examination, which included exploratory factor and cluster analysis. The factor analysis grouped like variables together, creating six distinct dimensions which define and describe online behavior and attitudes. The five unique personas then emerged from subsequent cluster analysis, which grouped respondents together based on the similarity of their answers to the questions in each of the six dimensions. All analysis leveraged globally standardized data to aid the comparison of responses across the nine markets surveyed.</p> THE SIX DIMENSIONS<p>The six distinct dimensions are comprised of 50 quantitative data variables, with no variable used twice. Interplay between and scoring of each of the dimensions is fundamentally the metric delimiting the five personas.</p> <p style="text-align: center;"><a href="/content/dam/intelligence/content-assets/reports/digital-sharing2.JPG" target="_blank"><img height="454" width="284" src="/content/dam/intelligence/content-assets/reports/digital-sharing2.JPG"></a></p> <p style="text-align: center;"><img height="223" width="456" src="/content/dam/intelligence/content-assets/reports/digital-sharing3.JPG"></p> <p>Open Sharers are highly digital consumers. They are progressive in their mobile and social attitudes, exemplifying open behavior in both. These consumers tend to lead a less risk-averse lifestyle in general, including travel and clothing, but especially regarding online activities. Open Sharers are online consumers and creators—half are online more than 10 times per day, using the web to help organize and share their lives. Along with daily social networking, Open Sharers strongly believe online shopping saves a lot of time and hassle: they store their shipping information on sites they purchase from regularly. Eight in 10 Open Sharers love getting special offers and discounts just for “checking in” via a mobile device, emphasizing not only their willingness to trade location data for deals, but also the sophisticated use of their mobile phone. They are particularly aware of targeted marketing, with nearly full understanding of the value of their data and how merchants, marketers, and consumers interact online. Nearly all of them know that social media sites, search engines, and marketers use their personal information to tailor specific search results and advertising. When they share their personal information, they expect deals, access, and offers in return. At the same time, Open Sharers also know how to manage the privacy settings on their browsers, ensuring that they only share when they know how their information will be used.</p> <p style="text-align: center;"><img src="/content/dam/intelligence/content-assets/reports/digital-sharing4.JPG"></p> <p style="text-align: center;"><a target="_blank" href="/content/dam/intelligence/content-assets/reports/digital-sharing5.JPG"><img src="/content/dam/intelligence/content-assets/reports/digital-sharing5.JPG"></a></p> <p>&nbsp;</p> <p style="text-align: center;"><img height="267" width="536" src="/content/dam/intelligence/content-assets/reports/digital-sharing6.JPG"></p> <p>&nbsp;</p> <p>Simply Interactors are the ultimate social networkers, with nine in 10 accessing Facebook daily. They view social networks as an easy way to stay connected, and feel themselves “missing out” when they are unable to connect with others online. While Simply Interactors are dedicated social networkers, they are not particularly tech-savvy consumers: their usage of smartphones and tablets is basic. When it comes to online shopping, while 80 percent research products online, 63 percent prefer to do their shopping in person. When looking to shop online, seven in 10 Simply Interactors will look for reviews about unknown companies before making a purchase. Simply Interactors are aware of targeted marketing, but don’t see their data as that valuable, and so do not express significant concern about it.</p> <p style="text-align: center;"><img height="327" width="312" src="/content/dam/intelligence/content-assets/reports/digital-sharing7.JPG"></p> <p style="text-align: center;"><a target="_blank" href="/content/dam/intelligence/content-assets/reports/digital-sharing8.JPG"><img src="/content/dam/intelligence/content-assets/reports/digital-sharing8.JPG"></a></p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;"><img height="261" width="553" src="/content/dam/intelligence/content-assets/reports/digital-sharing9.JPG"></p> <p>Solely Shoppers are characterized by their reliance on the Internet for their shopping needs, both in product research and actual purchase. Indeed, it’s shopping that drives this persona online, as 73 percent believe online shopping saves a lot of time and hassle. Ninety percent research products before buying, and half of Solely Shoppers use their mobile phone to price check in-store to get the best deals: their primary use of personal technologies is for enacting savvy shopping strategies. Though they view the Internet as a convenient and safe way to shop, they are much less involved in other online activities, such as social networking and entertainment (streaming music or videos). They have very little awareness of targeted marketing, as only 37 percent of this segment are aware that social media sites use their personal data to inform targeted ads. They generally do not see their personal information as valuable to merchants and advertisers, though they appreciate getting special offers and discounts for checking into a store.</p> <p style="text-align: center;"><img height="315" width="289" src="/content/dam/intelligence/content-assets/reports/digital-sharing10.JPG"></p> <p style="text-align: center;"><a target="_blank" href="/content/dam/intelligence/content-assets/reports/digital-sharing11.JPG"><img src="/content/dam/intelligence/content-assets/reports/digital-sharing11.JPG"></a></p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;"><img height="240" width="487" src="/content/dam/intelligence/content-assets/reports/digital-sharing12.JPG"></p> <p>Passive Users are not fully convinced of the value of the Internet, and they use the web less than other segments. Broadly speaking, they’re risk-averse, not just with the Internet but with their career, travel, clothing styles, and financial management. Passive Users have a low awareness of targeted marketing and low levels of privacy management. Only 41 percent see their personal data as having value to merchants and advertisers, likely a result of their more offline lifestyle. They are less frequent social networkers than the average— 48 percent find social networks an easy way to stay connected, and 41 percent feel they’re missing out when they don’t check their social networks daily. Passive Users are not heavy online shoppers, but they are more likely than other personas to shop via a mobile device—this follows from their preference for practical mobile applications that have a clear benefit like mobile banking and location-based recommendation services. Passive Users are more willing than other personas to trade their data for something in return, which explains their preference for the practical. This also explains why 42 percent use mobile banking apps and 18 percent use location-based recommendations apps.</p> <p style="text-align: center;"><img height="333" width="329" src="/content/dam/intelligence/content-assets/reports/digital-sharing13.JPG"></p> <p style="text-align: center;"><a target="_blank" href="/content/dam/intelligence/content-assets/reports/digital-sharing14.JPG"><img src="/content/dam/intelligence/content-assets/reports/digital-sharing14.JPG"></a></p> <p style="text-align: center;">&nbsp;</p> <p style="text-align: center;"><img height="241" width="503" src="/content/dam/intelligence/content-assets/reports/digital-sharing15.JPG"></p> <p>Proactive Protectors are guarded when it comes to sharing online. They are highly aware of targeted marketing and the ways their data is used to tailor marketing to them, and as a result are very active in privacy management. Fully 82 percent know marketers can target them based on their search and browsing history, but only 26 percent are willing to be tracked online in exchange for a benefit. As many as 79 percent know their data has value to merchants and advertisers, but they don’t trade or reveal that data lightly, and they take steps to control their digital footprint. Fully 90 percent say they only share information about themselves online when they know how it will be used, and 76 percent clear the cookies stored on their browser. Proactive Protectors are unlikely to use social networking sites, seeing them as not having much value. While they shop online because it saves them time, they are not willing to trade information about themselves to access deals.</p> <p style="text-align: center;"><img height="326" width="330" src="/content/dam/intelligence/content-assets/reports/digital-sharing16.JPG"></p> <p style="text-align: center;"><a target="_blank" href="/content/dam/intelligence/content-assets/reports/digital-sharing17.JPG"><img src="/content/dam/intelligence/content-assets/reports/digital-sharing17.JPG"></a></p> IMPLICATIONS<p><img src="/content/dam/intelligence/content-assets/reports/digital-sharing18.JPG"></p> <p>The five personas comprising the top-level learnings of the MasterCard Digital Sharing and Trust Project present a challenge for merchants.While the personas represent five discrete, identifiable, and globally applicable segments for marketing, merchandising, and risk management, they do not differentiate from each other based on the traditional demographic markers of age, income, and geography. Rather, they are delimited solely in terms of online behavior, essentially a new paradigm for merchants on the Internet.</p> <p>This in itself could be good news for merchants. Rather than seek to infer demographic delineations by correlating behaviors to other factors or try to obtain that information from other databases, merchants have the opportunity to profile consumers based solely on their behaviors online. Careful observation of buying patterns, triangulated with other data sources, allows merchants to gain greater efficiency by tailoring offers to specific segments. Merchants need to develop knowledge of what they must to do to gain the trust of the different segments and cater to their needs.</p> <p>At the same time, merchants collecting data need to understand the clear hierarchy of sensitivity that exists and drives those consumers who are prospects. They must understand that the merchant community is not generally the most trusted link in the cyber buying chain and that financial services institutions retain the highest level of consumer trust. Partnerships with financial services institutions, along with a strict regard for the data sensitivity hierarchy that exists alongside the trust hierarchy, represents a way forward for retailers globally.</p> <p><b>Governments</b></p> <p><img src="/content/dam/intelligence/content-assets/reports/digital-sharing19.JPG"></p> <p>While local nuances abound, in general it is evident that there are two data-usage models in place globally: bottom-up, putting the consumer in charge of his own data usage preferences based on need and behavior (as exemplified by the U.S.), and top-down, with data usage determined by existing regulation (as exemplified by the E.U.). Most other countries take the lead from one or the other of these paradigmatic regulatory frameworks. That is to say, in the U.S. and those countries following the bottom-up line, regulators set looser guidelines,and it is up to consumers themselves, using the tools at their disposal, to create their own digital profiles regarding sharing information about themselves and receiving offers and discounts in turn. In the top-down world, regulation limits the amount of consumer data merchants and others are able to use freely. Merchants have a greater burden to adjust their goals to the regulator’s vision of what is and is not appropriate to share.</p> <p>But the Digital Sharing and Trust Project reveals that attitudes relating to data sharing are global, not local or even regional. The concept of Social Citizenship means that consumers globally shed their national characteristics when entering cyberspace. Consumers make decisions regarding what to share based on how much value they get from sharing. To the extent that governments can design clear standards for what information merchants should have access to, how consumers can exercise some control over how their data is applied, and how clearly those standards are explained, they can safeguard consumer protections in the smartest possible way—by providing consumers the means to make that value judgment in an educated way.<br> <br> </p> <p><b>Financial Service Institutions</b></p> <p><img src="/content/dam/intelligence/content-assets/reports/digital-sharing20.JPG"></p> <p>A dual hierarchy emerges from MasterCard’s 5 Personas work. On the one hand consumers have a clear rank-ordered preference of the kinds of information they are comfortable sharing at the variety of sites with which they interact online. But there is also another hierarchy, comprised of the sites themselves by type, that determines which category of website generates what levels of trust.</p> <p>Consumers have a higher level of trust in financial services institutions—banks—than they have in any other kind of site with a widespread presence on the World Wide Web. What’s interesting is that banks are at the very pinnacle of the information hierarchy— custodians of the kind of information consumers are most sensitive about, such as Social Security or tax identification number, financial information, and payment information by type of purchase. Banks have earned this trust by their reputation. The scope of the data in their care is limited, but of the highest importance to the consumer. For financial services institutions to retain that trust, they need to be very clear: What are they collecting, and how do they plan to use it?</p> <p>From the standpoint then of marketing and product design, financial services institutions, especially those enabling consumer payments, are in the position of honest brokers.</p> <p>The card relationship—including, potentially, the mobile payment device—then becomes the housing for the consumer’s own data-sharing preferences and guidelines, largely because the relationship is managed by the highest level of the trust hierarchy.</p> <p><b>Consumers</b></p> <p><img src="/content/dam/intelligence/content-assets/reports/digital-sharing21.JPG"></p> <p>Consumers are aware of the level of trust they have in different components of the value chain. But “awareness” is different from knowledge, and education could be the key to responsible online behavior moving forward. Consumers act from habit, that is to say semiconsciously, online, and unless that behavior is founded on knowledge, there could be trouble ahead for them.</p> <p>Merchants, financial services institutions, and the regulator alike must understand that rather than a timid and fear-driven population, consumers online are in search of value as well as utility and are capable, by and large of judging for themselves their own risk tolerance based on the reward they’re looking to receive.</p> <p>What the 5 personas work does not suggest, however, is how a greater level of trust among those not already shopping online could boost overall ecommerce online. In the U.S., for example, a reasonable proxy for the developed world, ecommerce is still just 10 percent of total salesii (seven percent is a likely figure for the EUiii), which belies the Internet’s promise.</p> IMPLICATIONS<p>The development of targeted advertising, personalized offers, and sophisticated tracking and profiling techniques has been around for a long time—but not as long as the Internet itself. The industry is fast approaching the 20th anniversary of the widespread availability of web browsers and the concomitant birth and growth of Internet retailing and payments. Indeed, many of the “innovative” solutions to data security and privacy issues currently roiling the industry (e.g., digital wallets) date back to the late ’90s, if not earlier.</p> <p>This means that the majority of consumers are both used to and comfortable with the Internet. Consumers are largely aware but not able to quantify the value of their data—they know that it has some value, but need help understanding the nature and amount of that value.</p> <p>The emergence in the Digital Sharing and Trust Project of financial services institutions as the most trusted members of the online value chain suggests that these institutions have a key role to play. As custodians of consumers’ most sensitive information, especially data relating to payments and the liquidity that lies behind payments, they have only to leverage this trust into their product design and implementation to become the honest broker in the world of online payments.</p> <p><a href="http://www.usatoday.com/story/tech/2013/04/22/microsoft-launches-free-consumer-privacy-toolx/2104571/" target="_blank">http://www.usatoday.com/story/tech/2013/04/22/microsoft-launches-free-consumer-privacy-toolx/2104571/</a></p> <p><a href="http://www.informationweek.com/security/privacy/consumers-concerned-about-online-data-pr/240153296" target="_blank">http://www.informationweek.com/security/privacy/consumers-concerned-about-online-data-pr/240153296</a></p> <p><a href="http://www.washingtonpost.com/business/technology/germany-fines-google-as-facebook-microsoft-launch-privacy-campaigns/2013/04/22/c350bf92-ab5f-11e2-b6fd-ba6f5f26d70e_story.html" target="_blank">http://www.washingtonpost.com/business/technology/germany-fines-google-as-facebook-microsoft-launch-privacy-campaigns/2013/04/22/c350bf92-ab5f-11e2-b6fd-ba6f5f26d70e_story.html</a></p> <p><a href="http://techcrunch.com/2013/04/23/boomerang-rewards-lets-web-mobile-publishers-give-out-free-gift-cards-earn-extra-money/" target="_blank">http://techcrunch.com/2013/04/23/boomerang-rewards-lets-web-mobile-publishers-give-out-free-gift-cards-earn-extra-money/</a></p> <p>Fourth Quarter U.S. Marketshare Survey Highlights, ComScore Forrester Research</p> <p><a href="http://www.usatoday.com/story/tech/2013/04/22/microsoft-launches-free-consumer-privacy-toolx/2104571/" target="_blank">www.usatoday.com/story/tech/2013/04/22/microsoft-launches-free-consumer-privacy-toolx/2104571/</a></p> <p><br type="_moz"> </p> The Digital Sharing and Trust Project is a new global study from MasterCard that shows how consumers actually shed their “real-world” identities when they go online to assume “digital personas” that better reflect how they feel, what actions they take around their personal information and how much value they place on their own data. These five personas –Open Sharers, Simply Interactors, Solely Shoppers, Passive Users and Proactive Protectors—are spread evenly throughout the global population and ignore any regional or demographic boundaries.http://www1.mastercard.com/content/intelligence/en/research/reports/2013/around-the-world-in-5-personas--how-global-consumers-think-about2013-10-02T16:00:00.000Z2013-10-02T16:00:00.000ZIt's Time for Banks to Profitably Enter the Remittances Market Ben IsaacsonIt's Time for Banks to Profitably Enter the Remittances Market<p>In the booming global remittances market, banks can capitalise on their strengths in global payments and harness new banking products and technology. This is true whether they decide to compete against money transfer organisations (MTOs) and exchange houses in banked-to-banked transactions or partner with them on the sending side. By leveraging Internet service and distribution capabilities, the low-cost infrastructure afforded by reloadable prepaid cards and mobile technologies, as well as their access to superior foreign exchange (F/X) rates, banks can gain share.</p> <p><b>*</b>&nbsp;After achieving $443 billion in global gross dollar volume (GDV), remittances are projected to grow by 9.2 percent in 2010 to 2011.1</p> <p><b>*</b>&nbsp;While banks handle 70 percent of receiving volume globally, MTOs have the largest share of sending volume.2</p> EXECUTIVE SUMMARY<p>As remittance pioneers, MTOs built significant infrastructure on both the sending and&nbsp;receiving sides of key remittance routes (called corridors) in response to consumer needs.</p> <p>On the sending side, MTOs provide convenience, payment assurance, and multiple language&nbsp;capabilities; on the receiving side, they made it possible for clients to receive money in places&nbsp;where banks simply didn't exist. The increase in banked consumers reduces the importance&nbsp;of MTOs' distribution network, formerly their great advantage on the receiving side. On the&nbsp;sending side, the advent of the Internet and innovative bank-sponsored products, such as&nbsp;general purpose reloadable prepaid cards, mitigate MTOs' advantages, or at least make banks&nbsp;attractive partners for MTOs. These technology advances will not only allow banks to solidify&nbsp;their advantage with white-collar workers, who are mostly banked, but to capture share with&nbsp;blue-collar workers, who (even if banked) tend to remit through MTOs/exchange houses.</p> A LARGE AND GROWING OPPORTUNITY<p>The remittances market is large and growing, representing an attractive&nbsp;opportunity for banks in both sending and receiving markets. In 2008, globalremittances stood at $443 billion, with $315 billion, or 71 percent, flowing from the developed world to developing economies.&nbsp;3&nbsp;&nbsp;After a slight decline in 2009, MasterCard expects remittances to achieve positive growth in 2010 (see&nbsp;Figure 1). New payment providers and facilitators are also entering the market,&nbsp;contending for customers across all segments. As the competition increases,&nbsp;the providers that best meet evolving consumer needs will win.</p> <p>This paper will show that banks are now in an excellent position to meet these&nbsp;consumer needs, whether the banks go it alone with an end-to-end solution&nbsp;for banked senders and receivers, or partner with MTOs for a hybrid solution.&nbsp;Indeed, the challenges facing the remittance world parallel those in more&nbsp;traditional consumer banking environments: It all comes down to moving share&nbsp;from paper to electronic payments. This is one of the reasons banks are so well&nbsp;suited to be the long-term providers of remittance payments.</p> <p><a href="/content/dam/intelligence/content-assets/reports/alargeandgrowingopportunity.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/alargeandgrowingopportunity.jpg"></a></p> <p>&nbsp;Currently, the main drivers of global remittance growth are:</p> <p><b>*</b>&nbsp;The shift from informal to formal electronic channels of payment</p> <p><b>*</b>&nbsp;An increasing reliance on the part of developed economies for labor from the&nbsp;developing world</p> <p>The first of these drivers reflects efforts on the part of banks and governments&nbsp;globally to expand access to banking. Their changing policies are catalyzing&nbsp;bank access and making remittances easier.</p> <p>Meanwhile, rising demand for low-cost labor from developing economies enables&nbsp;those workers to find work and send their wages back to their home countries.</p> TWO TOP REMITTANCE CORRIDORS<p>In order to better understand the dynamics of the remittance opportunity, this&nbsp;paper focuses on two of the world's largest corridors: the United Arab Emirates&nbsp;(UAE) to India and Singapore to the Philippines.</p> <p><b>United Arab Emirates to India:&nbsp;</b>India is the largest recipient of remittances&nbsp;in the world, receiving $49 billion in 2008;4&nbsp;$6.2 billion or 12 percent of this&nbsp;amount comes from the UAE. The flow of funds from the UAE to India is the&nbsp;most important corridor for the home country, representing 27 percent of the&nbsp;UAE's remittances.5</p> <p><b>Singapore to Philippines:&nbsp;</b>Despite the global downturn, remittances in the&nbsp;Singapore-Philippines corridor totaled $6.98 billion in the first five months of&nbsp;2009, growing 2.8 percent over the same period in 2008.6&nbsp;Successful initiatives&nbsp;on the part of the Philippine government to increase the banked population&nbsp;have mitigated the need to build receiving infrastructure to serve remittance customers. Seventy percent of total remittances to the Philippines is destined to&nbsp;banked recipients, compared to 50 percent in 2005.7</p> <p>The size and favorable market dynamics in these two corridors make them ideal&nbsp;focal points for banks looking to increase their remittance business. While there&nbsp;is still significant work to be done to unseat incumbent providers, banks can&nbsp;capture share by capitalising on existing strengths to meet consumer needs.</p> KEY CONSUMER DYNAMICS<p>Consumers in the two remittance corridors share many remittance needs.&nbsp;They need to transfer money quickly and inexpensively and want a system that&nbsp;makes obtaining the funds easy for recipients. These needs can be divided&nbsp;into three categories: the end-to-end payments process, service reliability, and&nbsp;customer service (see Figure 2).</p> <p>The&nbsp;<b>end-to-end payments process -&nbsp;</b>including accessing the bank or&nbsp;exchange house, wait time, and documentation needs- should be as painless&nbsp;as possible. The reality, however, is quite different. Senders find it difficult&nbsp;to gain access to banks or exchange houses, encounter long wait times at&nbsp;the physical location (sometimes in excess of half a day), and face complex&nbsp;documentation demands.</p> <p>MasterCard research shows that&nbsp;<b>service reliability-</b>the ability to guarantee&nbsp;that money will be received safely and without incident-is a major driver of&nbsp;consumer choice, as fraud and robbery are well-founded concerns.9&nbsp;When&nbsp;dealing with trusted remittance providers, consumers are more likely to believe&nbsp;a real-time alert (such as an SMS) telling them that the money has been&nbsp;transferred. In this regard, banks' and their technology partners' reputations for&nbsp;reliability give them a big advantage. Many MTOs are not able to send real-time&nbsp;authentication messages, so consumers require nothing less than cash in hand&nbsp;to believe the remittance has gone through.10</p> <p><b>Customer service&nbsp;</b>is also essential, including a system for tracking funds in&nbsp;the event of disputes, convenient hours of operation, representatives who&nbsp;speak the customers' language, and a method for properly collecting essential&nbsp;customer details.</p> <p><a href="/content/dam/intelligence/content-assets/reports/keyconsumerdynamics.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/keyconsumerdynamics.jpg"></a></p> THE COMPETITIVE LANDSCAPE<p><b>United Arab Emirates to India</b></p> <p>In the UAE-India corridor, two major types of remittance providers compete&nbsp;with banks for consumers' business: MTOs or exchange houses (which partner&nbsp;with a variety of MTOs) and hawala (see Figure 3). There are over 100 MTOs&nbsp;operating in the UAE,11&nbsp;with vast differences in size, service, and pricing. The&nbsp;largest players, such as Western Union, tend to be the most reliable but also&nbsp;the most costly. Other providers compete on price, but with lower reliability&nbsp;and more limited options.</p> <p>While banks in India receive fully 75 percent of remittances, on the UAE sender&nbsp;side, MTOs are the dominant provider. Blue-collar workers, who make up&nbsp;between 65 and 70 percent of Indians in the UAE, mainly remit from MTOs to&nbsp;bank accounts in India. MasterCard estimates that hawala makes up 20 to 25&nbsp;percent of the market.12&nbsp;The dominance of MTOs on the sending side becomes&nbsp;clearer in light of the competitive landscape. In terms of consumer needs-the&nbsp;end-to-end payments process, service reliability, and customer service-MTOs&nbsp;outperform their competitors and are uniquely positioned to serve blue-collar&nbsp;workers, especially with regard to customer service and local language support.&nbsp;As a result, banked senders remitting to banked receivers represent the most&nbsp;promising prospects for banks seeking to take market share in remittances.&nbsp;However, even banked customers will send remittances through MTOs due to&nbsp;better infrastructure on the sending side.</p> <p><a href="/content/dam/intelligence/content-assets/reports/thecompetitivelandscape.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/thecompetitivelandscape.jpg"></a></p> <p>Regarding the features that matter most to receivers-reliability and ease of&nbsp;receiving funds-banks and hawala operators have different strengths. While&nbsp;hawala boasts a superior delivery network and no taxes, they are also illegal&nbsp;and do not comply with foreign exchange requirements. Therefore, consumers&nbsp;view banks as more reliable and secure. White-collar workers who wish to</p> <p>transfer large amounts of money also prefer banks, as remittances to India via&nbsp;MTOs are currently capped at $2,500. For banked senders who have access to&nbsp;e-banking, bank-to-bank transfers are the most robust option.</p> <p>An analysis of various pricing schemas shows that current bank pricing clearly&nbsp;favors white-collar workers with high-value remittance needs, as shown in&nbsp;Figure 4. By moving consumers who do not require high-value services to online&nbsp;channels or alternative products, banks can reduce these pricing discrepancies&nbsp;while maintaining the exclusivity of the branch. Leveraging online channels-&nbsp;without the costly service infrastructure that MTOs have put in place-can give&nbsp;banks a cost advantage that should allow them to offer lower prices than MTOs.</p> <p><a href="/content/dam/intelligence/content-assets/reports/thecompetitivelandscape2.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/thecompetitivelandscape2.jpg"></a></p> <p><b>Singapore to Philippines</b></p> <p>In Singapore, the three major remittance providers are MTOs/exchange houses,&nbsp;mobile phone companies/telcos, and banks (see Figure 5).</p> <p><a href="/content/dam/intelligence/content-assets/reports/thecompetitivelandscape3.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/thecompetitivelandscape3.jpg"></a></p> <p>Initiatives by the Philippine government have brought the banked population&nbsp;to 70 percent, making blue-collar workers-who typically have preferred using&nbsp;MTOs because of their speed and foreign exchange capability-attractive&nbsp;prospects for banks. While many banks have partnered with MTOs to capture&nbsp;pieces of this opportunity, these partnerships require banks to share revenues&nbsp;and often rely on MTOs to set pricing. However, banks offer MTOs many&nbsp;attractive reasons to join forces, including security and F/X cushions unavailable&nbsp;to non-banks. Just as important, partnerships allow receiving-side banks to&nbsp;get their brand and service story in front of a large portion of the remittance sending&nbsp;population.</p> <p>For these reasons, in this corridor as in others, e-banking is the optimal choice&nbsp;for the banked-to-banked segment, which values reliability and security as well&nbsp;as convenience and price.</p> STRATEGIES FOR BANKS<p>Using the banked receiver population as a revenue base, banks can leverage&nbsp;technology to grow their business on the sending side and take share away&nbsp;from both MTOs and hawala, while keeping the option open to partner with&nbsp;the former for the business of the unbanked. In competing against MTOs, banks&nbsp;should promote price, speed, and convenience. To unseat hawala, banks should&nbsp;emphasise security and legality of transfers, which should outweigh the tax&nbsp;advantages hawala offers. In making the decision whether or not to partner&nbsp;with MTOs and exchange houses, banks must keep in mind that while the&nbsp;increase in the size of the banked population neutralises the investment MTOs&nbsp;have made over the years in a receiving infrastructure, their investments on the&nbsp;sending side are more difficult to overcome.</p> <p>Counteracting specific MTO advantages may require banks to offer some new&nbsp;services, while others will draw on core bank competencies. Banks need to identify&nbsp;the areas in which they have a cost advantage over MTOs-and can afford to&nbsp;reduce margins-versus the areas where they need to enhance capabilities.&nbsp;A range of potential solutions that address key needs is provided in Figure 6;&nbsp;naturally, it is up to each bank to build the solution that makes sense for them.</p> <p><a href="/content/dam/intelligence/content-assets/reports/strategiesforbanks.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/strategiesforbanks.jpg"></a></p> <p><b>Capitalising on Banks' Core Competencies</b></p> <p><b>Global payment capabilities.&nbsp;</b>Through direct payment or bilateral agreements,&nbsp;moving money globally is a core bank competency-and something they ought&nbsp;to be able to do more cost-effectively than other businesses. The largest global&nbsp;banks have an edge here, which manifests itself in three areas:</p> <p><b>*</b>&nbsp;Direct access to payment systems</p> <p><b>*</b>&nbsp;F/X rates</p> <p><b>*</b>&nbsp;Multicurrency reserves</p> <p>For banks that rely on correspondent relationships for access to the networks&nbsp;of the Society for Worldwide Interbank Financial Telecommunication (SWIFT),&nbsp;assurance and reporting of payments aren't always seamless.</p> <p>Additionally, for larger banks, access to F/X trading desks and spot rates should&nbsp;give them lower-cost F/X transactions than any but the largest MTOs can provide.&nbsp;Banks that don't have significant global banking infrastructure won't be quite as&nbsp;well positioned relative to their competitors.</p> <p>That said, in order to mitigate daily F/X volatility, global banks must have&nbsp;sufficient currency reserves in each remittance denomination to equal out thedaily gains/losses in individual markets. Establishing the global infrastructure and&nbsp;keeping currency reserves big enough to manage this volatility are both expensive&nbsp;and complicated. On a practical level, banks that haven't already undertaken&nbsp;this initiative as part of a separate global treasury services business are in no&nbsp;position to start now. This makes it difficult for all but the largest global banks&nbsp;to capitalise on the inherent advantages that banks have over MTOs. However,&nbsp;as alternative payments systems build remittance capabilities, national banks can&nbsp;benefit from direct access to a truly global clearing and settlement system. For&nbsp;example, by December 2010, all Maestro cardholders in the Philippines will be&nbsp;able to have remittances deposited directly into their bank accounts.</p> <p>Alternative networks also have a distribution advantage over the current&nbsp;infrastructure. Western Union, the largest MTO in the world, has 410,000locations worldwide.13&nbsp;However, with over 1.7 million ATM locations around the&nbsp;world as of December, 2009,14&nbsp;MasterCard provides more than four times as&nbsp;many outlets for consumers to withdraw cash.&nbsp;Domestic banks may feel the need to price their remittances higher in order to&nbsp;provide a large enough spread to cover F/X risk. Nonetheless, when compared&nbsp;with MTOs, even domestic banks enjoy cost advantages. What is often different&nbsp;is risk tolerance. While banks may need to charge a premium for higher-risk&nbsp;services, their lower cost structure relative to MTOs puts them in a good position&nbsp;to conduct a profitable remittance business.</p> <p><b>Secure money transfers.&nbsp;</b>The stringent regulatory environment for banks&nbsp;is designed to ensure that the banking system is secure from fraud, money&nbsp;laundering, and financial loss. Banks can leverage their trusted brands and&nbsp;superior technology to provide consumers with the comfort of reliable&nbsp;transactions through real-time communications indicating when a remittance&nbsp;has been received. If banks and other parties in the transaction (including the&nbsp;technology providers) are perceived as trusted brands, consumers are more&nbsp;likely to utilize banks than most MTOs or hawala.</p> Maximising Bank Opportunities<p><b>Through Sending-Side Innovations</b></p> <p>Banked senders remitting to banked receivers is currently the target for most&nbsp;banks competing in this market. However, as mentioned earlier, even banked&nbsp;customers will send remittances through MTOs due to better infrastructure on&nbsp;the sending side. Banks looking to break through this barrier can capitalise on&nbsp;the following opportunities:</p> <p><b>Enhance self-service and electronic capabilities to provide extended&nbsp;hours and better service.&nbsp;</b>Online and mobile capabilities provide an&nbsp;elegant solution to this challenge by helping banks solve service issues&nbsp;without necessitating costly branch infrastructure investments. Additionally,&nbsp;online solutions can store key documentation information, providing a faster&nbsp;and more efficient user experience than consumers encounter offline, where&nbsp;they must complete extensive forms for every remittance.</p> <p><b>Extend bank reach on the sending side through new products such&nbsp;as prepaid cards.&nbsp;</b>As prepaid card functionality continues to improve and&nbsp;channels extend to online and mobile, reloadable prepaid solutions can meet&nbsp;the needs of unbanked remittance senders and receivers.</p> <p><b>Reduce the need for multi-currency account maintenance and&nbsp;investment through partnering.&nbsp;</b>For banks that have not been able to</p> <p>justify the investment required to maintain sufficient currency reserves to&nbsp;manage F/X volatility in all remittance markets, finding a partner that isalready doing so is critical. Whether it is another bank or a non-bank financial&nbsp;institution, the critical success factor is the ability to transfer F/X settlement&nbsp;risk while minimising the impact of the partnership on the consumer.</p> <p><b>The Optimal Solution</b></p> <p>A comprehensive, sender-based solution that would allow banks to serve the&nbsp;largest share of this market without significant investment would have the&nbsp;following components:</p> <p><b>*</b>&nbsp;For both banked and unbanked senders,&nbsp;<b>online and/or mobile&nbsp;capabilities&nbsp;</b>can achieve critical service goals, such as providingextended bank hours and language support without requiring costly&nbsp;branch infrastructure changes. An electronic option can also address keydocumentation needs by storing all necessary information after initial&nbsp;instance. This can allay consumer fear of fraud, an important outcome, as&nbsp;some of the desire for speedy remittance is actually fear of theft.</p> <p><b>*</b>&nbsp;For unbanked senders, in addition to online and mobile capabilities,&nbsp;<b>''lite''&nbsp;banking platforms based on reloadable prepaid accounts&nbsp;</b>offer banks&nbsp;the ability to compete for this segment without establishing significant incountry&nbsp;physical infrastructure.</p> <p><b>*</b>&nbsp;Partnering with employers to provide&nbsp;<b>payroll cards with payment&nbsp;functionality&nbsp;</b>will allow otherwise unbanked consumers the ability to&nbsp;use banks for remittances and will provide a built-in distribution channel.&nbsp;Developing an attractive pricing structure with partner MTOs and exchange&nbsp;houses can make this advantage even more compelling for the unbanked and&nbsp;pry them from hawala.</p> CONCLUSION<p>The changing banking dynamics of countries on the receiving end of&nbsp;remittances, in combination with new technology, make the future of theremittance business very attractive for banks. While there will still be segments&nbsp;of the population that banks won't be able to serve profitably on their own,&nbsp;partnerships offer them the opportunity to gain a portion of the revenue they&nbsp;would have otherwise missed altogether. Innovations in electronic and mobile&nbsp;channels as well as prepaid functionality give banks a path forward that doesn't&nbsp;require heavy branch infrastructure investments. The ongoing migration to&nbsp;electronic payments will make this opportunity even more appealing, and as&nbsp;banks formalise the remittance market, all parties-consumers, businesses, and&nbsp;governments-will benefit.</p> <p><a href="http://www.masterintelligence.com/asset/upload/263/186/APMEA_Remittances_FINAL.pdf"><b>Click here to download this report in PDF format.</b></a></p> <p><i>1 World Bank, 2010.</i></p> <p><i>2 World Bank, December 2006 and 2009; MasterCard and Synovate analysis.</i></p> <p><i>3 World Bank staff estimates based on the International Monetary Fund's Balance of Payments Statistics</i></p> <p><i>Yearbook 2008.</i></p> <p><i>4 World Bank staff estimates based on the International Monetary Fund's Balance of Payments Statistics</i></p> <p><i>Yearbook 2008.</i></p> <p><i>5 World Bank, December 2006 and 2009; MasterCard and Synovate analysis.</i></p> <p><i>6 World Bank, 2009.</i></p> <p><i>7 World Bank, December 2006 and 2009; MasterCard and Synovate analysis.</i></p> <p><i>8 MasterCard research conducted by Synovate, 2009.</i></p> <p><i>9 MasterCard research conducted by Synovate, 2009.</i></p> <p><i>10 Ibid.</i></p> <p><i>11 Ibid.</i></p> <p><i>12 MasterCard estimates based on research conducted by Synovate, 2009.</i></p> <p><i>13 Western Union Company website, as of May 2010.</i></p> <p><i>14 MasterCard 2009 Annual Report.</i></p> By leveraging Internet service and distribution capabilities, the low-cost infrastructure afforded by reloadable prepaid cards and mobile technologies, as well as their access to superior foreign exchange (F/X) rates, banks can gain share.http://www1.mastercard.com/content/intelligence/en/research/reports/2011/its-time-for-banks-to-profitably-enter-the-remittances-market2010-12-31T16:00:00.000Z2010-12-31T16:00:00.000ZConsumer Spending Outlook and Value Creation in the New Global Economy Carlos Fonseca, Yuwa Hedrick-Wong, Theodore IacobuzioConsumer Spending Outlook and Value Creation in the New Global Economy<p style="text-align: center;">&nbsp;<a href="/content/dam/intelligence/content-assets/reports/Insights_Report_MasterCard-in-Red-HiRes.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/consumerspendingoutlookandvaluecreationinthenewglobaleconomy.jpg"></a></p> Consumer Spending Outlook<p>There are three key drivers that raise private household consumption. The first is growth of employment, the second, wage increases, and the third, expanding consumer credit. These key drivers work either independently, or, more potently, in combination. For example, wage increases leading to rising household income and consumer demand will trigger in turn more business investment that creates more jobs--a phenomenon typically seen in a robust recovery phase of the business cycle. And, when household debts are generally low and wages are rising, household consumption can be boosted&nbsp; by more credit being made available to consumers without the increase in consumer debt becoming a concern. Indeed, under such circumstances, consumer credit acts as a healthy multiplier that allows the consumer to monetize some of tomorrow's income for today's use.</p> <p>Since the 2008/09 global financial crisis, however, it is quite clear that none of these key drivers of private household&nbsp; consumption&nbsp; is working properly. For instance, in the US, the largest consumer market in the world, unemployment&nbsp; has remained stubbornly high, and households are trying to pay down their debts with any spare cash that they have. From a peak of 135% of average annual disposable income in 2008, household debts in the US have steadily declined to around 123% in early 20111. While this is a move in the right direction, the amount&nbsp; of household income that is used to pay down debt also automatically reduces households' consumption demand. So the growth of the consumer market in the US is unlikely to return to the pre-crisis level for quite some time to come.</p> <p>What is true for the US is equally true for other developed markets. In the Euro Zone, the volume index of retail sales has been flat since 3Q 2010. Any data showing increases in retail sales only reflect price increases, in other words, inflation. Data coming out of the strongest and best-performing economy in Europe, Germany, are indicative. Since the beginning of the year, German consumer-durable orders from the Euro Zone have been contracting.&nbsp; It is exports outside the Euro Zone that have kept the German economy humming, while domestic durable-goods orders are up a modest 5% year- on-year.&nbsp; This is&nbsp; in&nbsp; spite&nbsp; of&nbsp; Germany's&nbsp; record-low unemployment and strongest GDP growth in 20 years.</p> <p>In fact, the challenge of the situation today can be summarized&nbsp; in terms&nbsp; of&nbsp; a&nbsp; contrast&nbsp; between&nbsp;&nbsp; three groups of markets: developed, emerging, and transitional; and their respective shares of growth&nbsp; in consumer demand&nbsp; before&nbsp; and&nbsp; after the&nbsp; 2008/09&nbsp; crisis. Collectively, these three groups account for the lion's share of the growth of global household consumption. Transitional markets, the key drivers of Eastern Europe--are&nbsp; included because&nbsp; of&nbsp; their&nbsp; superfast&nbsp; growth&nbsp; in household consumption in the decade prior to the crisis. As Table 1 shows, the average annual growth rates over the 2000 to 2008 period ranged from 7% for developed markets to an amazing 35%&nbsp; for transitional markets, with the most significant emerging markets averaging over 19% per year.</p> <p><b>Table 1. Average Annual Growth Rates in Household Consumption, 2000 - 2008</b><br> Source: CEIC, Eurostat</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/table1averageannualgrowthratesinhouseholdconsumption20002008.jpg"><img src="/content/dam/intelligence/content-assets/reports/table1averageannualgrowthratesinhouseholdconsumption20002008.jpg"></a></p> <p>Due to the massive difference in the size of their consumer markets, the picture looks completely different&nbsp; when&nbsp; comparing&nbsp; the&nbsp; share&nbsp; for&nbsp; each&nbsp; group&nbsp; in overall consumption growth. For example, in 2008, the size of the consumer market of the group of developed markets is estimated at US$22.2 trillion. In comparison, the size of the consumer markets for the emerging and transitional markets are estimated at US$5.6 trillion and US$0.9 trillion respectively.<br> <br> <b>Chart 1. Global Shares of Household Consumption Growth</b></p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/chart1globalsharesofhouseholdconsumptiongrowth.jpg"><img src="/content/dam/intelligence/content-assets/reports/chart1globalsharesofhouseholdconsumptiongrowth.jpg"></a></p> <p>Source: CEIC, Eurostat, IFS</p> <p>Consequently, as seen in Chart 1, developed markets accounted&nbsp; for 65.5%&nbsp; of the&nbsp; increases in household&nbsp; consumption&nbsp; during the 2000 to 2008 period; whereas the emerging markets accounted for only 28.7% of the total. The transitional markets trailed even further behind with a 5.7% share of total growth.</p> <p>It is this preponderancy of household consumption in the developed markets that is of concern in the post-crisis global economy. Even though&nbsp; emerging markets have appeared&nbsp; to be able to keep powering ahead in spite of the crisis and the anemic recovery, the question is whether the growth of consumer spending in emerging markets (in combination with transitional markets) is enough&nbsp; to compensate&nbsp; for the stagnation&nbsp; in developed&nbsp; markets.&nbsp; This concern is illustrated in Table&nbsp; 2, which shows the growth rates in household consumption for the three groups from 2009 to 2010. As expected,&nbsp; growth in the developed markets averaged a miniscule 0.13% a year, in sharp contrast with 8.8% in the emerging markets. The transitional markets actually went into contraction, shrinking by 8.5%&nbsp; a year over this period. Thus, in spite of an otherwise respectable performance of 8.8% growth in consumer spending in the emerging markets, the overall growth for the three groups of markets came to only 1.6% in this period.</p> <p>It is therefore&nbsp; an important question to ask today where growth in the consumer market will come from in the global economy in the next five years, given the poor prospects in the developed markets and the uncertain outlook in the transitional markets. This is not just an academic exercise in number crunching. There are far-reaching implications for global businesses when the dynamics of demand change in the consumer markets. This is because consumption lies in the heart of value creation in a market economy. It's consumer demand that ultimately determines whether&nbsp; businesses, after the investments required to develop their products and&nbsp; services, have succeeded&nbsp; in creating&nbsp; value.</p> <p><b>Table 2. Average Annual Growth Rates in Household Consumption, 2009 - 2010</b><br> </p> <p><a href="/content/dam/intelligence/content-assets/reports/table2averageannualgrowthratesinhouseholdconsumption20092010.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/table2averageannualgrowthratesinhouseholdconsumption20092010.jpg"></a><br> Source: CEIC, Eurostat</p> <p>For global businesses, an understanding of how and where growth will originate in the consumer marketplace will be crucial to their success.</p> <p>The role that consumption plays in economic growth and value creation is often misunderstood&nbsp; as well as underappreciated. In many societies, frugality is praised, and by implication this means saving and investing are good, and consumption is at best to be kept modest. In the aftermath of the 2008/09 financial crisis, such sentiments&nbsp; are&nbsp; further&nbsp; boosted&nbsp; by a&nbsp; backlash against the&nbsp; debt-fueled&nbsp; consumption&nbsp; of the&nbsp; US and much of Western Europe in the past decade. And, yet, investment and production, without the guiding hand of consumer choices and demand,&nbsp; inevitably lead to capital misallocation and&nbsp; business failure. It is consumption, and consumption alone, that ultimately creates value. History abounds with such examples, if we know where to look.<br> </p> Value Creation and Consumer Choices<p>An American clipper sailed up the Hooghly River to deliver a most peculiar cargo in Calcutta in the late 1870s. It carried in its hull large blocks of ice chipped from lakes in Massachusetts, in northeast US. Shippers found that when properly insulated with sawdust and stored in the hull of ships, about&nbsp; two-thirds of the ice blocks could survive the six-month long journey to India.</p> <p>In the 19th century, the hot weather was probably one of the most daunting challenges to the British colonialists in India. Perspiring British colonial officials first discovered the hills--places at higher elevation where the temperature&nbsp; was cooler, especially during the summer. Hill stations were established all over India, and the most famous was Simla, nestled in the foothills of the Himalayas, to which the viceroy and his army of clerks and officials escaped for the summer. The hill stations were a partial solution to the British yearning for cooler weather. Another solution was to import it. In 19th-century India, this meant importing ice from New England. It is estimated that in the 1870s New England exported 12,000 tons of ice a year to India.</p> <p>One can only imagine what went through the minds of Indians unloading the 'ice ships' and the New Englanders who&nbsp; were&nbsp; paid to&nbsp; saw and&nbsp; pack ice to&nbsp; be shipped to India. As long as the British in India wanted ice and were prepared to pay for it; that consumption choice set into motion a complicated supply chain made possible with ingenious innovations.</p> <p>This example of shipping ice to India highlights a profound truth about value creation that is often misunderstood. There is a natural bias to focus on the pro- duction process as the source of value creation. Superficially it seems to make sense that value is created when something is being produced. After all, if we paid X dollars for a gadget, then surely the producer of that gadget produced X dollars' worth of value. In this instance,&nbsp; common&nbsp; sense&nbsp; is utterly&nbsp; and&nbsp; completely wrong.</p> <p>Take for example, a car being displayed in a show-room. Regardless of how costly the manufacturing, how brilliant its design, or how lavishly it is upholstered,&nbsp; it has exactly zero value before it's sold, whatever its price tag states. The economic value of this car comes into existence the moment a consumer makes the decision to buy it. The price willingly paid by the buyer is the value of the car. The creation of economic value, therefore, is intimately intertwined with the act of conducting a&nbsp; transaction,&nbsp; and&nbsp; value is created&nbsp; at&nbsp; the&nbsp; very moment that the exchange is made between the buyer and the seller. Thus, while value creation lies at the heart of the economic process, consumption lies at the heart of value creation.</p> <p>Consumption choices are driven by consumer tastes, which can vary greatly from place to place, and from time to time. Consumer taste&nbsp; ultimately determines how consumption choices are made. Taste is, by definition, subjective. But, consumer taste, however arbitrary and fanciful, has been one of the most powerful driving forces in history in mobilizing societies to venture at great risk into the unknown, and, as a consequence, affect how people and societies interact, propelling advances in technology, and stimulating innovations in business and commerce.</p> <p>Some may think that we are grossly exaggerating our case, and dismiss as trivial, the example of shipping ice to India in order for well paid servants of the British Empire to indulge in their iced gin tonic in the sweltering heat. Let's look at two other examples of how consumer taste and choice which stand out as having had powerful impact in shaping world history in the past two millennia--silk and spices. The appreciation for silk is easier to relate to, even by today's standard of affluence and abundance.&nbsp; The taste for spices, on the other hand,&nbsp; may seem more quixotic, and the prices they fetched, outright bizarre. Yet, both have been immensely important in changing history in virtually every corner of the planet.</p> <p>In ancient Rome, silk from China was an item of rare luxury and much sought after by the patricians, the elite of Roman society. Traditional local materials for clothing were predominantly scratchy wool or crinkly linen; supplemented by heavy animal skins. In sharp contrast, silk was soft, light and came in a variety of luxuriant colors; outclassing the dull monotone of wool and linens. So it is not surprising that silk became an instant hit when it arrived in Rome around the first century AD.</p> <p>Silk arrived in Rome before&nbsp; the&nbsp; fabled Silk Road came into existence. Traders in southern China loaded their ships with silk and sailed along the coasts of Indochina, then around the Malay Peninsula into the Bay of Bengal. They exchanged&nbsp; goods&nbsp; with Indian merchants there, who in turn sailed across the Arabian Sea to trade with Greek and Arab middlemen. Then the cargo of silk was transported up the Red Sea by barges. At the northern tip of the Red Sea, it was loaded onto camels that carried it across the desert to reach the Nile. From the Nile it was transferred to ships and ferried to Alexandria, where&nbsp; Greek and&nbsp; Roman ships awaited. These vessels then carried the silk across the Mediterranean to its final destination, Rome.</p> <p>This long supply chain linked the Roman and the Chinese Empires in the first century AD. Neither the Romans nor the Chinese had firsthand knowledge of each other. All the Chinese knew was that there were people living in a land far to the west who wanted&nbsp; their silk. The Romans, on the other hand, had heard all sorts of stories about&nbsp; China; mostly fanciful exaggerations or sheer fabrications. They had no idea whether&nbsp; silk was fauna or flora, or how it was produced.</p> <p>Silk in China was expensive but in Rome, it was easily a hundredfold higher. The fact that wealthy patrician Romans were prepared&nbsp; to pay the high prices for silk justified this long and arduous supply chain, rendering the immense amount of logistics engaged profitable. It also brought&nbsp; about&nbsp; sustained&nbsp; cultural exchange&nbsp; between the different communities involved in the trade. For example, some Christian communities in South India today trace their roots to this period, at least 1,500 years before the arrival of European missionaries in the 17th and 18th century.</p> <p>An equally long and difficult supply route started to operate in the second century AD from Western China during the Han Dynasty across Central Asia to reach Rome. This is the famous Silk Road. The Silk Road was never&nbsp; actually a&nbsp; single road,&nbsp; but&nbsp; rather,&nbsp; two&nbsp; main routes, the northern and the southern routes, each with many branches. It was the trade along the Silk Road that bought fortunes to the fabled cities of Samarkand, Isfahan, and Herat; populated by multi-ethnic communities of Jewish, Armenian, and Syrian middlemen. Buddhism eventually found&nbsp; its way to China from India along the Silk Road. The traffic along the Silk Road fostered the development of the practice and protocols of diplomacy between&nbsp; the Chinese Empire and rulers of Central Asia; encouraged&nbsp; the invention of travel accommodations, the caravanserai; and stimulated innovations of&nbsp; rudimentary&nbsp; forms of&nbsp; trade&nbsp; finance&nbsp; and credit. All these came about because of the Roman patricians'taste for silk.</p> <p>If the Roman taste for silk is understandable; the European craze for spices in the Middle Ages would seem bizarre to the&nbsp; modern&nbsp; eye. The spices that&nbsp; were so sought after in Europe came from a few islands in tropical Asia. Cloves, for instance, originally grew only on five tiny specks of land in north Moluccas, an island group in today's eastern Indonesia. Nutmeg and mace came from the Bandas, a group of nine small isles; in the southern Moluccas. These were the fabled Spice Islands and they are very far away from Europe indeed, even with today's transcontinental flights. To reach the Spice Islands from Western Europe in the Middle Ages would be the equivalent of a space flight today. For one thousand&nbsp; years after the appearance&nbsp; of spices in Europe, no Europeans, not until the 16th century, had any clue as to where these Spice Islands were.</p> <p>Spices were exotica personified for medieval Europeans. They were associated with myths of one kind or another.&nbsp; Some spices were believed to be endowed with potent&nbsp; medicinal effects, and were used to treat all sorts of ailments, including as a prophylactic against the&nbsp; plague.&nbsp; Spices were&nbsp; popular&nbsp; as an&nbsp; aphrodisiac; wealthy households used them to flavor their food and drink to and fumigate their clothes and closets. Wealthy Europeans were prepared&nbsp; to pay a small fortune&nbsp; for such spices.</p> <p>For centuries, Europeans lived without spices, and there is no evidence that the use of these spices significantly improved the quality of life for the Europeans. Yet, once these tropical spices arrived, Europeans became enamored with them. And they were very expensive. The splendor and power of Venice, at the height of its glory, embodied the wealth generated&nbsp; by the spice trade, with its grand and magnificent architecture, artwork, public squares, and canals; all built on the profits generated by Venetian dominance in the Mediterranean trade in cinnamon, nutmeg, mace and cloves. Venetian galleys transported&nbsp; three and a half million pounds of spices each year, prior to the Portuguese penetration of the&nbsp; Indian Ocean&nbsp; at&nbsp; the&nbsp; turn&nbsp; of&nbsp; the&nbsp; 16th&nbsp; century. Clearly, the Europeans loved their spices.</p> <p>The tropical spices reached Europe from the Spice Islands via a supply chain that rivaled the complexity and difficulty of that&nbsp; of silk from China. Islanders of the Spice Islands did not&nbsp; have much&nbsp; use for the&nbsp; spices themselves, and since the spice trees were found in nature and not cultivated, they had practically no economic value for the islanders. So the islanders happily traded with the legendary Bugis, the seafarers from Sulawesi, the territory situated halfway between the Spice Islands and the island of Java. The Bugis transported the spices north across the South China Sea; and traded with Chinese and India merchants; who in turn took the goods westward; following roughly the same trade pattern of silk.</p> <p>The strong demand and the exorbitant profit of the spice trade led inevitably to business and technological innovations in attempting&nbsp; to cut out the middlemen that dominated the trade. In today's marketing speak, it would be characterized as the disintermediation of the incumbents. This was what the Portuguese tried to do.</p> <p>In the 16th century, the Portuguese made major advances in their ship design, navigation skills, and map-making. This time period became known in history as the age of exploration; but, as it turned out, it was also the age of business disintermediation. In the 16th century, conquistadors like Bartholomew Diaz and Vasco da Gama, hugging&nbsp; the coast of Africa, rounded&nbsp; the Cape of Good Hope and sailed into the Indian Ocean. From there they started to cut out the Indian and Arab middlemen; and fought&nbsp; to control the shipping and trading of spices to Europe themselves. In fact, it was the Portuguese who first recognized the strategic value of the deep harbor sheltered among several closely clustered islands in the west coast of India and established a toehold there, calling it Bom Bahia, the 'good&nbsp; bay.' It was anglicized into Bombay when&nbsp; it passed&nbsp; into British hands later.</p> <p>In 1512, Ferdinand Magellan, a veteran Portuguese conquistador&nbsp; who&nbsp; had&nbsp; sailed, fought,&nbsp; and&nbsp; survived many skirmishes in the Indian Ocean; conceived the idea of circumnavigating the globe by sailing round the extreme&nbsp; end&nbsp; of&nbsp; South&nbsp; America; which he&nbsp; believed would lead him to the Indies from the opposite direction of the route that rounded the Cape of Good Hope in Africa. He argued that in so doing it would also allow him to pin down the exact whereabouts of the Spice Islands; and take control of them while he was at it. By 1517, he secured the backing of the Spanish court for his enterprise, and two years later he led a multinational crew in five vessels to sail into the Atlantic in one of the most astonishing voyages of discovery.</p> <p>After crossing the&nbsp; Atlantic and&nbsp; sailing across the South Pacific, Magellan himself was killed in an altercation with natives on an island in today's Philippines (that did not prevent the expedition naming the islands after the Spain's King Philip). Finally, two surviving vessels, leaky and manned by emaciated crews, guided by a captured local pilot, found one of the Spice Islands; Tidore. The crew traded with the local sultan, and loaded their hulls full with cloves and set sail for Spain. Only one vessel managed to complete the voyage. And yet the value of the cargo, based on the willingness of wealthy Europeans to pay for the spices, was so high that the profit margin of the lone surviving vessel, Victoria, which arrived in Spain with 26 tons of cloves, paid for the entire expedition with some change to spare. The King of Spain awarded Juan Sebastian de Elcano, who guided the ship back to Spain, a handsome pension and a coat of arms of two cinnamon sticks, three nutmegs, and a dozen cloves.</p> <p>What followed was four centuries of the rise of European colonial expansion, technological progress, and last but not least, spread of evangelical Christian missionaries to all corners of the world. It would be simplistic to say that all these were the result of the Europeans' taste for spices and their willingness to pay for them. Counterfactual historical hypotheses may suggest that if it were not for the spices, it would have been something else that would have driven the Europeans overseas to conquer, loot, pillage, preach, and convert; and on the positive side of the ledger, to trade, invest, educate, and enlighten. Counterfactual history or otherwise, however, it could not be denied that it was a consumption choice that ignited much of what came after during this age of exploration. This is because consumption choices create value, and it is this value creation process that mobilized not only businesses, but adventurers, royal courts, and whole societies in pursuit of such values, and, in the case of the trade in silk and spices, molded world history.</p> <p>The common thread in all three examples, ice, silk and spices, is the disparity in value between the place of their origination and production, and the place of their consumption. This is a direct reflection of the difference in the value placed on these products by the consumers; ice in the winter had practically no value for New England farmers but huge value for the British in India; silk always commanded good value for the Chinese but even greater value for the Roman patricians; spices were literally indistinguishable from weeds for the islanders on Bandas and Tidore but meant fantastic value for Europeans. In all instances, the physical nature of the products remained unchanged;&nbsp; the only difference lay in how they were consumed. In other words, it is the act of consumption that created fantastic values for ice in India, silk in Rome and spices in Europe.</p> <p>The value creation process described by these three examples remains fundamentally unchanged&nbsp; today. Of course, things move much faster now. Many more goods are also being moved from one end of the earth to the other; and not just luxury items. It is not an exaggeration to say that our planet today resembles more and more a gigantic bazaar. Yet, now as in the past, at the very center of this global bazaar is the consumer. It is the consumer's choice, ability, and willingness to pay that creates value for all the goods and services that are on display in the global bazaar.</p> Global Consumer Spending Outlook and Business Implications<p>In the post-crisis global economy, the dynamics of consumer markets are undergoing a profound transformation&nbsp; that&nbsp; is both&nbsp; quantitative&nbsp; and&nbsp; qualitative.&nbsp; The quantitative aspect is a result of the diverging growth rates between&nbsp; the developed and the emerging markets in their economies and consumer markets, resulting in what has sometimes been referred to as the 'two speed' global economy. The qualitative side, however, is far more important in terms of business implications, and it comes about because of the role of consumption in value creation. In the coming years, choices by consumers in emerging markets will begin to dominate in determining how value is being created in the consumer markets. On this critical point, it is not just the difference in overall growth that matters, but it is the rising share in the growth of discretionary consumption in the emerging markets that will be decisive.</p> <p>A scenario of consumer market growth for the next five years was developed to illustrate the changing dynamics of global consumer markets. Conservative assumptions are used for projecting the average annual real GDP growth over the 2011 to 2016 period. It is 2% for developed markets, 6% for emerging markets, and 4% for transitional markets; all significantly below their respective average in the previous decade. The ratio between household consumption and real GDP growth is also assumed to be lower for the all markets.&nbsp;&nbsp; As Table 3 shows, in developed markets where every 1% growth in real GDP in the 2000 to 2008 period induced 2.55% growth in household consumption, the forecast is that every 1% growth in real GDP will induce only an equivalent 1% growth in household consumption in the next five years. Similarly, the ratio is reduced from 3.24 to 2.5 for emerging markets, and from 6.18 to 2.0 for transitional markets.</p> <p>The shares&nbsp; of total&nbsp; household&nbsp; consumption&nbsp; between the three groups of markets between 2008 and 2016 are shown in Chart 2. The developed markets'share will drop from 77.4% in 2008 to 58.3% in 2016. The share of the emerging markets, on the other hand, will increase from 19.5%&nbsp; in 2008 to 38.7%&nbsp; in 2016. The share of the transitional markets will remain basically unchanged.&nbsp; From a simply quantitative point of view, this means that the size of household consumption in emerging markets will be around two-thirds of that of the developed markets by 2016, up from being one-quarter in 2008.<br> </p> <p><b>Table 3.Ratios of Household Consumption to Real GDP Growth</b></p> <p><a href="/content/dam/intelligence/content-assets/reports/table3ratiosofhouseholdconsumptiontorealgdpgrowth.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/table3ratiosofhouseholdconsumptiontorealgdpgrowth.jpg"></a></p> <p>Estimated with data from CEIC, Eurostat</p> <p>In annual&nbsp; consumer&nbsp; spending&nbsp; growth,&nbsp; emerging markets will pull ahead of developed markets. As Chart 3 shows, over the 2012 to 2016 period, emerging markets will add an average of US$1.2 trillion of consumer spending to the global economy per year, whereas developed markets will add only around US$700 billion annually. Transitional markets will add another&nbsp; US$95 billion. It is this difference in the incremental increases in consumer demand that will firmly put emerging markets in the driver's seat.</p> <p>A great deal of increased household consumption in emerging markets is undoubtedly for basic necessities. From a business perspective, if the change in incremental growth&nbsp; is driven by consumption&nbsp; of basic necessities and nothing else, then the impact may not be that significant. It is change in discretionary consumption that the business impact will be strongly felt. As it turns out, the change&nbsp; in shares of growth&nbsp; in discretionary consumption&nbsp; will be no less dramatic in the coming years in the global economy.</p> <p>Chart 2. Global Shares of Total Household Consumption<br> Estimated with data from CEIC, Eurostat, IFS</p> <p><a href="/content/dam/intelligence/content-assets/reports/chart2globalsharesoftotalhouseholdconsumption.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/chart2globalsharesoftotalhouseholdconsumption.jpg"></a><br> Chart 3. Increase in Global Household Consumption</p> <p><a href="/content/dam/intelligence/content-assets/reports/chart3increaseinglobalhouseholdconsumption.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/chart3increaseinglobalhouseholdconsumption.jpg"></a></p> <p>Table 4 summarizes estimates made on such changes for the developed, emerging and transitional markets, contrasting the 2000 to 2008 period with the 2012 to 2016 period. Between 2000 and 2008, developed markets accounted for 88.2% of the global growth in discretionary spending, while emerging markets accounted&nbsp; for only 9.2%,&nbsp; followed by transitional markets&nbsp; with 2.6%. Under these conditions, it would not be an exaggeration to say that consumers in developed markets, due to the dominance of their demand, single-handedly drove the value creation process through their choices, tastes and preferences. In the coming five years, however, the shares of growth in discretionary spending will be about equal between&nbsp; the developed and emerging markets (49.0% versus 47.8%).&nbsp; This is a significant milestone, very possibly the first time in the last 200 years when consumers in emerging markets (the Third World, the under-developed,&nbsp; or the colonies as they were previously known) drive value creation in equal measure with consumers in the developed markets.</p> <p>That being the case, consumer choices, tastes and preferences&nbsp; in emerging markets will also become a much important consideration for global businesses regarding where and how investment is to be made, and what products and services to create.</p> <p>Table 4. Shares of Growth&nbsp; in Discretionary Consumption<br> </p> <p><a href="/content/dam/intelligence/content-assets/reports/table4sharesofgrowthindiscretionaryconsumption.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/table4sharesofgrowthindiscretionaryconsumption.jpg"></a><br> Estimated with data from CEIC, Eurostat, IFS</p> <p>In many important aspects consumers are different between&nbsp; the developed, emerging markets and transitional markets. Chart 4 highlights one such aspect, the age of the consumer. The size of 'active consumers,' defined as those aged 15 to 65, as expected, is much larger in emerging markets than&nbsp; the developed or transitional markets. More importantly, however, the numbers of active consumers are expected to continue to rise in the coming years in the emerging markets, whereas they are projected to be basically unchanged in the developed markets, and declining in transitional markets. This implies that consumers are much younger in the emerging markets than in either developed or transitional markets.</p> <p>The younger consumers in emerging markets will have far-reaching business implications in terms of how to leverage technology trends, engage information and marketing channels, and prepare for the pace and direction of consumer lifestyle trends.&nbsp; The youth consumer segment&nbsp; is also all about&nbsp; the future, and consequently, businesses must become much more forward&nbsp; looking than&nbsp; before.&nbsp; Younger consumers&nbsp; also tend to be more optimistic. Thus, the rise of the youth consumer market will inject much needed&nbsp; optimism into the global economy as well.</p> Resilience of the Global Consumer Market<p>There is a recurring theme in popular media that blames the emerging markets (and China in particular) for producing cheap consumer goods that fed bargain-hungry American consumers; that led to a global imbalance, which in turn contributed to the 2008/09 global financial crisis. It also blames the 'greedy'&nbsp; American consumers who overextended themselves, then pulled in their horns when things turned sour, precipitating a collapse of demand when the crisis hit. There is an element of truth here. US consumers, at the time of the Lehman Brothers' collapse, were heavily overleveraged. The ratio of debt payments in relation to household income rose from 11.7% in 1995 to 13.9% in 2007.9 And the majority of the debt was real estate borrowing, which was the source of the US economy's woes from 2007 to the present.</p> <p>But there&nbsp; is no doubt&nbsp; that&nbsp; American consumers have started&nbsp; to&nbsp; save and&nbsp; pay down&nbsp; their debts.&nbsp; As stated in the opening section of this report, American households' debt to annual disposable income ratio has dropped from a peak of 135%&nbsp; of average annual disposable income in 2008 to around 123% in early 2011. As American consumers cut back on their spending in the context of high unemployment,&nbsp; it would appear that the US consumer markets, the largest in the world, could be down for the count for the foreseeable future.</p> <p>Chart 4. Active Consumers (Aged 15 - 65)</p> <p><a href="/content/dam/intelligence/content-assets/reports/chart4activeconsumersaged1565.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/chart4activeconsumersaged1565.jpg"></a></p> <p>Source: United Nations</p> <p>This is certainly what some are saying, and there is no shortage of new prophets who herald the end of consumerism as a result of the crisis. Their argument is that a wholesale collapse of the consumer market in the US would lead to the collapse of demand for exports in the emerging markets, thereby undermining growth of income and employment there, thus nipping in the bud the growth of consumer spending in the emerging markets as well. The result is a collapse of consumer demand in both the developed and the emerging markets, and the end of consumerism worldwide.</p> <p>This doom and gloom scenario is, however, widely off the mark. For example, while the deleveraging of US consumers is impressive thus far, their appetite&nbsp; for revolving credit at the point of sale has by no means collapsed. The revolve rate, as opposed to absolute volume, went from 44% in 2008 to 41% in 2010--a decrease, and a considerable one, but it is far from being a&nbsp; catastrophic&nbsp; implosion of&nbsp; demand&nbsp; for&nbsp; consumer goods paid on revolving instruments at the point of sale. This resilience is even reflected at the more macro level numbers: the U.S. trade deficits went from a low of $25 billion in June 2009 (the height of the crisis), only to exceed $50 billion in July 20111,0&nbsp; as seen in Chart 5. While the total balance of trade is not simply a matter of low-cost Asian-manufactured consumer goods, such merchandise represents a significant part of it, and the appetite of U S consumers, chastened though they are, would still appear&nbsp; robust. So the demise of U S consumers as a force in global growth has been greatly exaggerated.&nbsp; The fact of the&nbsp; matter&nbsp; is that&nbsp; American consumers are still spending, albeit much more carefully than before. The real risk to businesses today is to unthinkingly buy into this fallacy and underestimate&nbsp; the resilience of American consumers.</p> <p>For emerging&nbsp; markets,&nbsp; their resilience has&nbsp; been amply demonstrated by their ability to rebound from a collapse of exports in the range of 30% to 45% year- on-year in 2009. By 2010, for example, virtually all the emerging markets in Asia had returned to pre-crisis levels of growth and more. And in the past two years, domestic demand&nbsp; in many emerging markets has risen sufficiently to compensate&nbsp; for the decline in their exports. In the case of China, the change has been very impressive; whereas in 2007 net exports accounted for 7.3% of GDP, it has dropped to 3.1% in 2010.&nbsp; Apart from their ability to mobilize domestic demand to sustain growth, there is also an additional factor at work that&nbsp; is providing extra&nbsp; growth&nbsp; momentum&nbsp;&nbsp; to&nbsp; the emerging markets--rapidly rising trade between them.</p> <p>Take the example of intra-Asia trade, which is now acting as an effective counterforce to the weakened demand from developed markets.</p> <p>Chart 5. No Let-Up in US Trade Deficits</p> <p><a href="/content/dam/intelligence/content-assets/reports/chart5noletupinustradedeficits.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/chart5noletupinustradedeficits.jpg"></a></p> <p>Source: U.S. Census&nbsp; Bureau</p> <p>According to the Asian Development Bank, intra-regional (non-oil) trade between&nbsp; emerging markets in Asia is now much higher compared&nbsp; to that of intraregional trade in the North American Free Trade Agreement zone, which rose from 20% in 1985 to over 52% by 2008.1 This is in spite of the fact there is no pan-regional free trade agreement in Asia. Such trade flows is significant for two reasons: first it represents a well-trodden path in terms of infrastructure, finance, imports and regulation that can be used for goods consumed domestically at some future time, and not simply as components used as assembly work for manufacturing within the region; and that as the workforce engaged in the production of such components&nbsp;&nbsp;&nbsp; increases,&nbsp;&nbsp; whether&nbsp;&nbsp;&nbsp; by&nbsp;&nbsp; organic&nbsp;&nbsp; growth, or through&nbsp; the stimulus of such moves as the easing of internal migration on the part of China in its latest five-year plan1,&nbsp; that&nbsp; workforce represents&nbsp; a cadre of consumers, potential or actual, to populate as it were, the path first beaten by the wholesale trade flows.</p> <p>Consumers in both&nbsp; the developed and emerging markets are showing greater resilience than what the prophets of doom are saying. As illustrated in the five-year projections&nbsp; shown&nbsp; earlier, the&nbsp; really profound change in the coming years will be a shift in the weight of the spending power of consumers in emerging markets, which will open a whole new chapter of how values are being created in the global market. Part of this shift will also have far reaching implications on how technology and innovations in technology are to be applied in the consumer markets.</p> Implications for Technology: Coming of the Age of Mobile Payments<p>Technology and consumers are interacting today more dynamically than ever before, exerting powerful influences on each other. Technology can channel and magnify&nbsp; specific&nbsp; aspects&nbsp;&nbsp; of&nbsp; consumer&nbsp;&nbsp; behavior&nbsp; with far-reaching impact on demand. At the same time, consumers are more directly involved in driving technological innovations, and increasingly in the very early stages of the innovation and development process. Nowhere are these trends more pronounced&nbsp; than in the emerging markets. And the&nbsp;fast evolving technology and applications of mobile telephony stand out as a powerful example of how emerging markets are changing the way technology and consumers interact.</p> <p>To achieve widespread adoption, technology needs to respond to people's day-to-day needs.One such example can be found at the Fitzwilliam Museum in Cambridge,&nbsp; England.&nbsp; It's&nbsp; a&nbsp; folding&nbsp; implement&nbsp; with&nbsp; a three-pronged&nbsp; fork, spatula, pick, spike and knife that was used in the Roman Empire between&nbsp; AD 201 to 300. The functions of this instrument reflect the primary day-to-day needs of a person living close to two thousand years ago.&nbsp; Fifteen centuries later, in 1886,&nbsp; the Swiss Army decided to equip every soldier with a regulation multi-tool instrument. Since then, tens of millions of Swiss Army Knives have been sold worldwide. Today, the most advanced Swiss Army Knife includes a laser pointer and a 32 GB detachable flash drive, which has a capacity a thousand times larger than the one used in the computer onboard Apollo 11!</p> <p>Mobile phones are arguably the essential survival tool today, serving an ever-expanding range of human needs from communication, information access, payments and to even status symbols. According to estimates by the International Telecom Union, there were&nbsp; 5.3 billion mobile subscriptions worldwide at the end of 2010, including 940 million subscriptions to 3G services. Access to mobile network signal is now available to 90% of the world population (80% of the population living in rural areas), and users are moving rapidly from 2G to 3G platforms, in both developed and emerging markets. It is projected that by 2015, the mobile phone will surpass the PC as the device of choice for accessing the internet.</p> <p>However, the&nbsp; global average&nbsp; cited here&nbsp; masks a yawning gap that is opening up between the developed markets and the group of most significant emerging markets analyzed in this report. Using the same grouping of the developed and emerging markets, in 2005 there were some 690 million mobile subscriptions in the developed&nbsp; markets&nbsp; versus about&nbsp; 570&nbsp; million in the emerging markets. Five years on, in 2010, it is estimated that while the number of mobile subscriptions in the developed markets reached 940 million, it is dwarfed by the emerging markets at over 1.6 billion. More importantly, the growth momentum&nbsp; is much stronger in emerging&nbsp; markets.&nbsp; While mobile subscriptions have been growing on average at around 7% a year in the developed markets, it has been growing at an astonishing 37% a year in the emerging markets.<br> <br> It is this divergence in subscription numbers and growth rates that will see consumers in the emerging markets driving the way mobile telephony will be used, with direct implications for technology and business innovations.</p> <p>Take the consumer purchase cycle as a relatively simple example. Typically, the purchase cycle involves four distinct stages: choosing what to purchase, the location where the purchase takes place, paying for the purchase, and post-purchase services. Mobile connectivity is revolutionizing the entire consumer purchase cycle today. And because of their much higher mobile subscriptions and dramatically faster growth rates, emerging markets will also lead in this revolution.</p> <p>In terms of making a decision of what to buy, consumers have at their fingertips the power to access information that was unimaginable a mere ten years ago. Cloud computing can conduct some 40,000 searches per second using Google and 7,000 tweets per second.In Facebook, some 1.2 million pictures are viewed per second. From the&nbsp; consumer's perspective, these&nbsp; impressive numbers all point to one thing: a massive increase&nbsp; in the&nbsp; choices available, and&nbsp; the&nbsp; ability for consumers to communicate&nbsp; with one another&nbsp; about such choices.</p> <p>In the second stage of the purchase cycle, mobile connectivity is also expanding the range of available purchase locations, both physical and virtual, all done with the explicit objective of making everything more convenient for the consumer. The purchase experience is now hugely enriched with customization of products, and of delivery services for the consumer. Technology is also enabling the retailer to capture more information about&nbsp; the&nbsp; consumer and&nbsp; his/her spending&nbsp; behavior, taste and preferences.</p> <p>When it comes to paying for the purchase, mobile payment is also leading the charge in providing greater convenience and flexibility for consumers, while accelerating&nbsp; transaction&nbsp; flows and&nbsp; reducing&nbsp; transaction costs. An important implication of mobile payment is that it can effectively connect the unbanked population in many emerging markets and for that matter, the unbanked in the developed markets as well, in ways that could not be done before. It is estimated that there are some 2.7 billion people worldwide (45% of the world's population) that&nbsp; have no access to financial services simply because they do not have a bank account. By 2012, however, 1.7 billion of these unbanked will have a mobile phone in spite of their inability to open a bank account.16&nbsp; The potential of mobile payment for the un- banked population is therefore immense, and it is going to be a hot bed of payment innovations in the years to come, and, again, with emerging markets leading the way.</p> <p>Finally, in terms of post-purchase services and activities, such as the design and functions of loyalty programs, the extraordinary prevalence of mobile connectivity in emerging markets will also usher in new innovations. Evidence is mounting that consumers in emerging markets are more enthusiastic about&nbsp; loyalty programs. Not only are they keen to take advantage of such programs, they are more discerning as well, and they communicate constantly with one another to share tips and their experiences of how loyalty programs have served or not served them. Take the Chinese consumer for instance&nbsp;--China now has the highest number of internet users and mobile subscriptions among the BRIC countries. Through mobile connectivity, Chinese consumers are able to share their buying and post-purchase experiences instantly, and more openly, without having to worry too much about the issue of 'face.'&nbsp; When it comes to a face-to-face conversation, many Chinese consumers are less forthcoming and direct, especially about bad experiences that they have had. As a consequence, mobile connectivity&nbsp; is a powerful enabler in the empowerment&nbsp; of the consumer; and for businesses that are able to understand&nbsp; and use this development&nbsp; to their advantage,&nbsp; they could reap great benefits in unlocking unmet consumer needs and desires.<br> </p> <p>To sum up, there is a virtuous cycle of consumer and technology interacting to drive innovations faster and deeper. Consumer feedback is now incorporated in real time to guide innovations. In this process, knowledge of the consumer is paramount.&nbsp; And the share of consumer power in the global economy is changing, as argued&nbsp; in this report.&nbsp; Emerging markets are poised to take the lead in the coming years. This puts the emerging market consumer in the driver's seat in technology innovations as well. In so doing, they are also driving value creation.</p> Conclusion<p>The current backlash against big business and unbridled consumption is intertwined with a deepening pessimism about the future. The fact is that there is an abiding tendency in the human psyche of seeing the future in bleak terms. Consider the&nbsp; opening&nbsp; words of Agenda 21 of the United Nations Conference convened in Rio de Janeiro in 1992, signed by world leaders unanimously, 'Humanity stands at a defining moment in history. We are confronted with a perpetuation&nbsp; of disparities within and between nations, a worsening of poverty, hunger, ill health and illiteracy, and the continued deterioration of the ecosystems on which we depend for our well-being.' And yet, according the United Nations' own data, the following decade saw the fastest decline in poverty, hunger, ill health and illiteracy in human history.</p> <p>The same kind of pessimism about the future is once again rearing its ugly head today. An alliance of traditional anti-business lobby and new fangled anti-growth activists is becoming more assertive, usurping the moral high ground in the aftermath&nbsp; of the 2008/09 crisis to proclaim the&nbsp; end&nbsp; of&nbsp; progress&nbsp; and&nbsp; demise&nbsp; of&nbsp; consumerism. Listening to them, the world is stumbling toward&nbsp; either&nbsp; an&nbsp; ecological apocalypse,&nbsp; or&nbsp; financial anarchy, or political chaos; or all of the above. Rising household consumption in the emerging markets, and the vigor of their consumers, will powerfully mitigate the prevailing tide of pessimism. It also presents a strategic window of opportunity for global businesses to create new value for the future.</p> Appendix: Estimation of Discretionary Consumption<p>The estimation of discretionary consumption as a percentage of total household consumption (HHC) is done with the following steps:</p> <p>1.&nbsp; Converting HHC per capita in PPP$</p> <p>2.&nbsp; Establish the range of minimum and maximum HHC in PPP$ per capita for the 34 countries across 2000 to 2016 (PPP$561 from Nigeria 2000 to max of PPP$45,224 of USA in 2016).</p> <p>3.&nbsp; Within this range a sliding scale is approximated and applied to the range, with the lower cutoff point set at US$6,000 (in PPP$). The sliding scale is shown graphically below.</p> <p><b>Methodology for Estimating Discretionary Household Consumption<br> </b></p> <p><br> <a href="/content/dam/intelligence/content-assets/reports/methodologyforestimatingdiscretionaryhouseholdconsumption.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/methodologyforestimatingdiscretionaryhouseholdconsumption.jpg"></a></p> <p>4.&nbsp; Once the discretionary HHC in PPP$ is estimated for all 34 countries, then the PPP$ is converted back to actual dollars for calculating the discretionary HHC as a percentage&nbsp; of the total HHC in each of the 34 countries. These percentages are shown in the chart below.<br> </p> Methodology for Estimating Discretionary Household Consumption<p><a href="/content/dam/intelligence/content-assets/reports/methodologyforestimatingdiscretionaryhouseholdconsumption2.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/methodologyforestimatingdiscretionaryhouseholdconsumption2.jpg"></a></p> <p>1. US Federal Reserve.<br> 2. These three groups of markets are: (i) developed:&nbsp; US, Japan, Australia, South Korea, Hong Kong, Singapore, UK, Austria, Denmark, Finland, France, Germany, Italy,<br> Netherlands, Norway, Sweden; (ii) emerging:&nbsp; China, India, Brazil Russia, South Africa, Turkey, Mexico, Nigeria, Egypt; (iii) transitional: Belarus, Bulgaria, Czech Republic, Georgia, Hungary, Poland, Romania, Slovakia, Ukraine.<br> 3. Beattie, A. 2009.&nbsp; False Economy - A Surprising Economic History of the World. New York: Riverhead Books.<br> 4. Warmington, E.H. 1995.&nbsp; The Commerce&nbsp; between the Roman Empire and India New Delhi: Munshiram Manoharlal.<br> 5. See Lane, F.C. 1973.&nbsp; Venice: A Maritime Republic. Baltimore: Johns Hopkins University Press.<br> 6. Bernstein, W.J. 2008.&nbsp; A Splendid Exchange: How Trade<br> Shaped the World. New York: Atlantic Monthly Press.<br> 7. The exception is China, where the next five years is likely to see a structural&nbsp; shift in its domestic economic rebalancing,&nbsp; which will see household consumption's share in GDP rise steadily. See GEMS Close-Up Report, Keeping Steps with the Dragon's Dance: China's Rebalancing and Global Implications. April 2011.<br> 8. Discretionary consumption refers to consumer&nbsp; expenditures that&nbsp; are not of a routine&nbsp; nature&nbsp; such as basic food items, daily transport needs,&nbsp; and basic housing.&nbsp; In emerging markets,&nbsp; a household with an annual income below US$6,000 is likely to spend most of the disposable income on basic necessities, with little left for discretionary spending. Hence the rise in discretionary spending&nbsp; in emerging&nbsp; markets is highly correlated&nbsp; with rising numbers of households with annual income exceeding US$6,000.<br> 9. US Federal Reserve.<br> 10.The United States Balance of Trade,' Trading Economics,&nbsp;<a href="http://www.tradingeconomics.com/united-states/bal">http://www.tradingeconomics.com/united-states/bal</a>- ance-of-trade'<br> 11. Estimated with CEIC data.<br> 12. 'Asian Trade Flows: Trends, Patterns and Projections,' by Prema-chandra Athukorala,&nbsp; Asian Development&nbsp; Bank, January 2011.<br> 13. See 'China's Economic Rebalancing and Global Impli cations,'&nbsp; Yuwa Hedrick-Wong, MasterCard&nbsp; Worldwide Insights 3Q2011.<br> 14. Source: ITU World Telecommunication/ICT Indicators database<br> 15. Source: ITU World Telecommunication/ICT Indicators database<br> 16. Estimates by the Department of International&nbsp; Development, Government of the UK.<br> 17. Colloquy Cross-Cultural Loyalty Study, 2011.&nbsp; This study shows two distinct patterns in terms of loyalty: 3 E's in emerging&nbsp; markets: Energy, Engagement and Enthusiasm while developed&nbsp; countries demonstrate 3 T's: Tired, Turned Off and Tuned Out.</p> There are three key drivers that raise private household consumption. The first is growth of employment, the second, wage increases, and the third, expanding consumer credit. These key drivers work either independently, or, more potently, in combination. http://www1.mastercard.com/content/intelligence/en/research/reports/2011/consumer-spending-outlook-and-value-creation-in-the-new-global-economy2011-09-30T16:00:00.000Z2011-09-30T16:00:00.000ZTaking Stock: The State of Sub-Saharan Africa Taking Stock: The State of Sub-Saharan Africa<p>&nbsp;</p> <p></p> 1. Taking Stock<p>In years gone by, Africa was seen as the dark continent, characterized by poverty, low economic growth, political instability, fiscal and monetary indiscipline, dictatorships, low levels of human development, with seemingly little prospect of improvement. In particular, Sub-Saharan Africa was seen as one of the least interesting regions of the world for economic development notwithstanding the recognition that the continent was probably very rich in natural resources. In May 2000, The Economist magazine published a piece on Africa with the front-page cover caption of The Hopeless Continent. Ironically, this publication appears to have marked the turning point in perceptions of economic opportunities on the continent. Ever since then, driven in large measure by the insatiable demand for natural resources on the part of the world economy, global investor interest in Africa has resurfaced with a vengeance. Rapidly growing and urbanising emerging markets, led first and foremost by China, have resulted in a demand for raw materials which has pushed up commodity prices strongly, raising the benefits of investments in new resource ventures on the continent. Furthermore, a relative reduction in political instability, coupled with significant improvements in macroeconomic management have seen investment into the continent increasing at an unprecedented rate. The result has been a liftoff in economic growth in Africa to the extent that in recent years the continent has emerged as the third fastest economic growth region of the world, behind China and India. This is the first of a series of four reports on Sub-Saharan Africa that aims to construct a fresh perspective on how this vast continent may perform economically in the coming decades. In this first report of the series, we seek to take stock of the state of Sub-Saharan Africa in terms of both opportunities and challenges in its physical, economic, and social environments.</p> Topography<p>When taking stock of the economic environment presented by the African continent, it is important at the outset to recognize the physical magnitude of the continent. This can serve to highlight the potential richness of access to resources and also the opportunities to develop the continents infrastructure, while at the same time bringing to the fore the enormity of the infrastructural development challenge posed. Africas size is 11.7 million square miles or 30.3 million square kilometers, which is more than three times the size of either the United States or China. Alternatively, one can conceive of fitting China, the USA, Western Europe, India and Argentina all into the continent, as shown in Chart 1.</p> <p></p> <p>(Source:Maps of the world)</p> <p>Sub-Saharan Africa accounts for roughly two thirds of the African continent, is characterized by relatively rich vegetation, either of a grassland or savannah nature, or by tropical rainforests and jungles. In turn, this region provides enormous potential as a breadbasket for the rest of the world in the longer term. The pockets of desert or semi-desert in Sub-Saharan Africa are essentially relatively small in relation to the remaining surface area.</p> <p></p> Population<p>From an economic viewpoint, one of the potentially biggest attractions of Sub-Saharan Africa is its population growth rate, which is the highest of any region in the world. While population growth has been falling in recent years globally and is projected to continue declining over the coming decade, the actual rate of population growth predicted for Sub-Saharan Africa is higher than any other region, as Chart 2 shows. This growth trend has important economic implications. Firstly, this implies that the potential growth in market size, other things equal, is set to outpace that of the rest of the world. Within about six years, Africa ought to have more than one billion people, accounting for close to 15% of the world?s population of which Sub-Saharan Africa would account for about two thirds. More importantly, the potential growth of the continent's workforce is set to outpace that of any other region.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population.jpg"></a><br> (Source: World Bank)<br> </p> <p><a href="/content/dam/intelligence/content-assets/reports/Population2.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population2.jpg"></a><br> (Source: World Bank)</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population3.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population3.jpg"></a></p> <p></p> <p>(Source: World Bank)</p> <p>Rising life expectancy around the world due to improvements in medical care, nutrition and related factors, is resulting in a situation where a growing section of the population is becoming ever more dependent upon income from pensions and welfare payments generated by the younger working-age population.Chart 3 shows that in high-income markets almost 20% of populations are over the age of 65 and so the strain exacted of governments in using a diminishing pool of productive income-generating taxpayers to finance the welfare and healthcare of the elderly, is increasing. The resultant increase in taxation and/or public debt could prove to be a constraint on economic growth in many advanced economies. By contrast, in Sub-Saharan Africa, more than 40% of the population is under the age of 14 while less than 5% have reached retirement age. It follows that the potential increase in the available workforce is set to outpace that of other regions. For example, whereas the working-age population over the next 40 years is set to grow by 125% in Africa, the corresponding growth rates are 26% for Latin America, 22% for Asia, 16% for North America and -23% for Europe. By 2040, it is estimated that there will be no fewer than 1.1 billion Africans of working age, accounting for almost a quarter of the worlds working-age population.</p> <p></p> Urbanization<p>In addition to the regions high rates of population growth, Sub-Saharan Africas rate of urbanization is also likely to be among the fastest in the world. Global population over the past two decades has been characterized by rising urbanization, with saturation in urbanization at levels close to 80% as in the case of high-income markets, as well as some in Latin America and the Caribbean, as seen in Chart 4. Sub-Saharan Africa has been part and parcel of this trend, but what differentiates the region from many of the other regions is that the level of urbanization is still relatively low, at 36%, providing far more scope for further urbanization than is the case with most other regions. It is estimated that more than 50% of Africans will be living in cities by 2030. If one combines the rapid rate of population growth with the growth in urbanization, one concludes that the potential increase in the urban population of Sub-Saharan Africa is likely to surpass that of every other region in years to come. In turn, this generates a huge requirement for infrastructural development, but also offers enormous opportunities for the expansion of services and consumer markets to accommodate the rapid growth in urban populations. There are already 52 cities in Africa with populations of more than one million, which is more than double the number in 1990 and is already the same number as in Western Europe.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population4.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population4.jpg"></a></p> Commodities <p>Africas legendary richness in commodities lies at the heart of the potential economic progress of the continent. Historically, Sub-Saharan Africa was known for its wealth of minerals, being the worlds richest source of gold, platinum group metals and diamonds. However, in recent years the importance of its coal, copper, iron ore, manganese, uranium and other mineral reserves have also assumed increasing importance. Over and above this, discoveries of crude oil and natural gas have seen the continent accounting for 12% of the worlds reserves in this source of energy. Nonetheless, probably the most important potential resource waiting to be exploited in the region is for Sub-Saharan Africa to provide the worlds food resources in a global population which has quadrupled over the past century and is set to rise by a further 25% or so over the next 40 years. As Chart 5 shows, Sub-Saharan Africa comprises more than 60% of the potentially available cropland in the world, far in excess of the potential contribution of any other region. Hitherto, the regions contribution to the provision of the worlds nutrition has been minimal.</p> <p>This exemplified in a comparison of the fertilizer consumption in the Sub-Saharan region compared with most other regions of the world as illustrated in Chart 6. The potential of increased output is clearly immense, with more intensive fertilizer use, coupled with advanced technologies and knowhow. Such a scenario is still a long way off, but the potential for Sub-Saharan Africa to provide the solution to the worlds future demands for food is enormous.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population5.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population5.jpg"></a></p> <p></p> Economic Growth and Structure <p>Currently, Africa’s collective GDP, at around $1.8 trillion, is roughly equal to that of Brazil or Russia. Sub-Saharan Africa accounts for approximately half of the continental economy and accounted for only 1.5% of world GDP in 2009. When one compares this with the approximate 10% share that Sub-Saharan Africa has of the worlds population, one recognizes the enormous scope for economic development in the region if living standards are appropriately raised. Encouragingly, there are many signs to suggest that the start to this process has begun. Consumer spending on the continent already exceeds that of India and is approaching the $1.0 trillion mark. Estimates are that the figure will be $1.5 trillion by 2020. After languishing with growth of no more than 2% to 3% per annum in the last three decades of the 20th century, GDP growth in Sub-Saharan Africa has averaged more than 5% over the past decade. As seen in Table 1, the share of global GDP taken up by Sub-Saharan Africa has risen from 1.1% in 1995, to 1.5% in 2009.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population6.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population6.jpg"></a><br> (Source: International Monetary Fund)</p> <p>Africa was only one of two regions in the world, stripping that of advanced economies by a fairly wide Asia being the other, where growth in the collective margin, as illustrated in Chart 7. economy rose through the global recession of 2009. Whereas in the last two decades of the 20th century.Sub-Saharan African growth had frequently fallen behind that of much larger and advanced economies the situation has been conclusively reversed since the start of the 21st century with the region's growth outstripping that of advanced economies by a fairly wide margin, as illustrated in Chart 7.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population7.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population7.jpg"></a><br> (Source: IMF World Economic Database, October 2010)</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population8.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population8.jpg"></a><br> (Source: McKinsey &amp; Company)</p> <p>It is no coincidence that this development has coincided with the strong growth of the Chinese economto a magnitude where it has started exerting a major influence on the overall international economic environment. The demand for resources from Africa by China has been at the forefront of the continents improvement in growth over the past decade.1 The knock-on benefits are reflected in the fact that sectoral growth has by no means been dominated by mining and resources. In general terms, the breakdown of imports and exports classified into manufacturing, ores and metals, fuel, agricultural raw materials and food, is not all that different from that in other regions. Furthermore, over the period 2002 to 2007, the fastest-growing sectors of the African economy were, in order of importance, hotels and restaurants (8.7% annual growth), financial services (8.0%), transport and communications (7.8%), construction (7.5%) and utilities (7.3%). The contribution to growth of mineral resources came in at only sixth position, with average growth of 7.1%. Sadly, reflecting the shortfalls in infrastructure, technology and human resource capacity, the slowest growth was recorded in real estate and business services (5.9%), agriculture (5.5%) and manufacturing (4.6%).</p> <p>On the negative side, one of the biggest draw-backs in Africas economic picture is the fact that, relative to other regions in the world, intraregional trade remains extremely low as shown in Chart 8. Whereas over 60% of trade between European markets is among themselves and the figure in the Asia/Pacific region is around 40%, no more than 12% of trade with African markets is between each other. The figure is slightly higher in the case of southern Africa, at around 15%, but even here the plethora of rules and regulations and tariff barriers covering trade relations between markets, coupled with logistical constraints, limits the potential benefits to be derived from increased intraregional trade.</p> <p></p> Foreign Direct Investment <p>The improvement recorded in the continent's economic growth has gone hand-in-hand with a general improvement in political stability, general governance and macroeconomic management over the past decade. Although there are still several wars going on throughout the continent, the number of conflicts has diminished, with an increasing number of African societies embracing democracy as opposed to dictatorship. From a macroeconomic perspective, more responsible monetary policy has resulted in a decline in the average inflation rate on the continent from 22% in the 1990s, to 8% over the past decade as Chart 9 shows. Simultaneously, debt forgiveness, together with more conservative fiscal policies, have resulted in the ratio of government debt to GDP declining from around 82% in the 1990s, to less than 60% over the past decade. The average size of budget deficits, which was close to 5% of GDP in the 1990s, has narrowed to less than 2% of GDP during the first decade of the 21st century. Ironically, given the prototype image of African dictatorships spending their market's fortunes extravagantly, the level of indebtedness of African governments has assumed a magnitude that could be the envy of many advanced economies.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population9.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population9.jpg"></a></p> <p></p> <p>Impressive growth opportunities, coupled with gradually-increasing recognition of improved governance and macroeconomic policy among African markets, in turn has resulted in a significant increase of foreign direct investment inflows into Sub-Saharan Africa; so much so that through the global recession in 2008 and 2009, Sub-Saharan Africa was the sole region to experience an increase in foreign direct investment inflows, as Charts 10 and 11 demonstrate.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population10.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population10.jpg"></a><br> (Source: World Bank)</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population11.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population11.jpg"></a><br> (Source: World Bank Development Indicators 2010)</p> <p>This has provided fresh impetus in improving the region's infrastructural capacity. Indeed, the ratio of gross fixed capital formation as a percentage of GDP in Sub-Saharan Africa has risen significantly, from a meager 16% at the start of the millennium, to over 20% in recent years. The latter figure is still not particularly high, but the direction in which the ratio is going is the right one. Similarly, one has seen a deepening in regional financial markets, with the ratio of market capitalization of listed companies rising strongly from around 90% of GDP in 2000, to around 150% of GDP more recently.</p> <p></p> Risk Profile<p>The accelerating pace of foreign investment and capital inflows into Sub-Saharan Africa is also linked to a growing recognition that the return on capital and profitability of investment on the continent is among the highest of any region, outpacing both Africa overall and Asia, as shown in Charts 12 and 13.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population12.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population12.jpg"></a><br> (Source: Centre for Studies of African Economies, University of Oxford)</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population13.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population13.jpg"></a><br> (Source: Centre for Studies of African Economies, University of Oxford)</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population14.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population14.jpg"></a><br> (Source: Centre for Studies of African Economies, University of Oxford)</p> <p>Over many decades there has been a reluctance to invest into the African continent on account of the fact that risks of all sorts have been perceived to be too high. Such risks have included fears of nationalization, expropriation, bureaucratic hurdles, political upheaval and instability, and uncertainty surrounding the ability to export earnings. However, as seen in Chart 14, in recent years it has become increasingly recognized that even if one does take into account the risks involved, the risk-adjusted level of returns from investment in the region exceeds that of most other regions.</p> <p></p> Infrastructure <p>Nevertheless, one cannot overlook three important shortfalls currently affecting the African continent, viz. the poor level of infrastructure, the extremely low level of human resource capacity and the appalling state of health facilities in most of the continent. On the infra'structural side, Sub-Saharan Africa falls behind virtually every other region of the world. Furthermore, even the official figures are highly skewed by relatively high levels of infrastructural investment by South Africa specifically. Excluding South Africa, the picture looks much worse. The average road density is 137 km per square kilometer compared with 211 km per squarekilometer in the rest of the world. Only a fraction of these roads are paved, so that the paved road density shortfall is even greater, at 31 km per square kilometer compared with 134 km per square kilometer in the rest of the world. No more than a third of rural Africans have access to roads of any kind. The continent has seen very little expansion of its rail network over the past decade, with the proportion of passengerscarried on rail networks a tiny fraction of that in other regions. The shortfall in power generation is even greater, at 37 MW per million inhabitants, compared with 326 MW worldwide. Chart 15 shows what Africa looks like at night where only a minute fraction of the vast continent is illuminated by electricity, with only 16% of the Sub-Saharan African population having access to electricity, compared with 41% worldwide.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population15.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population15.jpg"></a><br> (Source: World Bank)</p> <p>Even in regard to access to reliable water, only 60% of the Sub-Saharan population enjoys such access, compared with 72% worldwide. Worse still, only 5% of Africa's farmland is irrigated. Similarly, only 34% of the Sub-Saharan Africans have access to decent sanitation compared with 51% in the rest of the world. Official sources estimate that poor infra-structure cuts Africa's GDP by 2% every year and reduces business productivity by 40%. Almost $100 billion is needed to address Africa's infrastructural deficit every year, two thirds for investment and one third for maintenance. This compares with current expenditure of just $45 billion per year on infrastructure. There is obviously an enormous funding gap to accommodate such infrastructural projects, even if one recognizes that substantial gains could be achieved by improving the efficiency of existing infrastructure.</p> <p>Another important consideration with regard to Africa's infrastructure is its cost. In respect of power tariffs, water tariffs, road freight tariffs, mobile telephony and internet access costs, infrastructure in Sub-Saharan Africa is roughly twice as expensive as in other developing regions. The one area in which significant progress has been made with regard to infra'structure in recent years has been information technology and mobile telephony. For example, over the past decade Nigeria has seen the addition of 11 million Internet users and has overtaken South Africa as the African market with the highest number of mobile cellular users. In recent years, investment in telecommunications has accounted for more than half of overall fixed capital formation in Sub-Saharan Africa. In contrast, investment in energy generation has been less than 10% and in water and sanitation a mere fraction of total investment. However, even in the information technology and communications arena, much more progress could be achieved if the cost of usage of this form of infrastructure were reduced.</p> <p></p> Health<p>Apart from infrastructure, the low level of human development compared with the rest of the world is another serious impediment in Sub-Saharan Africa. The poor level of healthcare in the region is reflected in the fact that the level of life expectancy is the lowest in the world, at just 52 years in 2008, as Chart 16 shows. While one can point to a marginal increase in life expectancy in Sub-Saharan Africa over the course of the last decade, the improvement has been significantly less pronounced than in most other regions. Conversely, the incidence of infant mortality remains by far the highest in the world. The burgeoning HIV/AIDS epidemic in Sub-Saharan Africa has much to do with the lower level of life expectancy in the region. South Africa alone accounts for almost 6 million of the 24 million people worldwide infected with the virus. Unlike the 18.1% prevalence of HIV within the population aged 15 to 49 in South Africa and the 5.0% preva-lence in Sub-Saharan Africa, the figure in most other regions of the world is less than 0.5%. Whereas in Sub-Saharan Africa the incidence of tuberculosis is 352 per 100,000 people, the figures in developing markets elsewhere are less than 200 and in high-income markets no more than 14. In most African markets the number of physicians per 1000 people is substantially less than 1.0 compared with figures of 1.5 or more in other developing regions and 2.5 or more in developed economies. Likewise, the number of nurses and midwives per 1000 people in Sub-Saharan Africa is between a third and a fifth of the number in most other regions. These poor figures emerge notwith-standing a relatively high level of expenditure on health as a percentage of GDP. The problem is that in absolute terms health expenditure per capita in Sub-Saharan Africa is less than $100 compared to more than $4000 in high-income markets.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population16.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population16.jpg"></a><br> (Source: World Bank)</p> <p></p> Education<p>A similar picture emerges when comparing the educational standards of Sub-Saharan Africa with the rest of the world. Although enrolment at primary schools in Sub-Saharan Africa is quite high, at 97% of the relevant age group, the figure falls dramatically for secondary school, to just 33%, with only 6% of the relevant age group enrolling at tertiary institutions. As Chart 17 shows, in high-income markets there is a 100% enrollment ratio even at secondary schools and a 69% enrollment figure for tertiary education, i.e. 10 times as high as in Sub-Saharan Africa. It is therefore not surprising to see that the number of graduates emerging from the formal educational institutions in Sub-Saharan Africa is a pittance compared with most other regions. Irrespective of the enrollment ratio, there is an additional problem in schooling in Sub-Saharan Africa in that the pupil-per-teacher ratio averages 49 compared with figures between 16 and 25 in most other regions. Youth literacy in Sub-SaharanAfrica averages no more than 75% compared with almost 100% in most other regions.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population17.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population17.jpg"></a><br> (Source: World Bank)</p> <p>Furthermore, in many instances, the quality of that literacy is also open to question. Yet, expenditure on education as the portion of GDP in Sub-Saharan Africa is among the highest in the world. There is therefore a problem with the effectiveness of that expenditure; the money has not been well spent in terms of results. As with infrastructure, another important constraint on the rollout of education lies with the cost of the process. Whereas in the US, for example, the cost of a university education per year is between 20% to 65% of per capita income on average; in Sub-Saharan Africa the comparable figure is 170%, unaffordable except for a privileged few. Sub-Saharan Africa is also losing out heavily in terms of a high level of emigration of educated and skilled persons, with a relatively small proportion of such immigrants returning to their homeland. Although this may have resulted in an increase in the quantum of remittances to the continent from abroad, the benefit is small relative to the loss for the continent caused by the emigration of professionals.</p> <p>Linked to the low level of secondary education is a relative shortage of artisanal skills. Vocational training programs in such skills and trades are few and far between and in many instances very inefficient. These skills are almost as critical to the process of economic development as professional skills. The result is that the region has become ever more dependent upon importing skills from other regions of the world, which comes at a relatively high cost to say the least. It is also in respect of public administration and management that the region is in short supply and it in turn con'strains its ability to implement policy programs effectively.</p> <p></p> Conclusion <p>There is no question that the emerging market growth story is becoming more important as we enter the second decade of the 21st century; and Africa is becoming an important part of this story. As the Taking Stock section of this report shows, the relatively rapid growth of the continent's population and working-age workforce stands to put it at the forefront of longer-term growth in market size and production worldwide. Improvements in governance and macroeconomic stability have also encouraged a recognition that the risk-reward tradeoff for Africa has improved significantly over the past decade. Nonetheless, the region faces significant challenges, as outlined earlier, if its potential is to be realized. However, addressing some of these challenges in itself offers significant opportunities for businesses prepared to venture into providing solutions. Thus, from the Taking Stock perspective, it is clear that the African economic story looks a lot more promising at present than at any stage during most people's lifetimes.</p> 2. State of the Nations <p>In the second part of this report the current state of the major Sub-Saharan African economies and the factors driving the phenomenal growth that have recently been witnessed in these markets are evaluated; with the role that traditional players as well as emerging economies are playing in the region highlighted and assessed.</p> Traditional Sources of Capital <p>The markets of Sub-Saharan Africa have received enormous amounts of capital from various sources over the centuries. Chart 18 highlights the various traditional sources of financing that the region has engaged with. These relationships often date back centuries to the initial investments made by European states that established colonies in Africa and administered them until the mid-20th century. The influence of the colonial presence and capital input is still entrenched in most African states today, dictating their political alignment, economic relations and even linguistic traits.</p> <p>Following on obtaining of independence, international financial institutions such as the World Bank and the International Monetary Fund have continually provided much-needed financial support to African states. The Soviet Union was also a key financier for certain states during the Cold War period. Additionally, one cannot discount the role that multinationals from developed markets, and more recently from South Africa, have played in providing capital to Sub-Saharan Africa. The resultant effects of the decades of investments by traditional partners on Sub-Saharan Africa is arguable but the poor developmental state of many states is reflected in the relatively low GDP per capita ($1,225 in 2008 for Sub-Saharan African markets according to the World Bank), high poverty ratios, relatively low life expectancy and high infant mortality rates among other poor statistics.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population18.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population18.jpg"></a><br> (Source: Frontier Advisory Research, 2010)</p> <p><a href="/content/dam/intelligence/content-assets/reports/Population19.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Population19.jpg"></a><br> (Source: Frontier Advisory Research, 2010)</p> <p></p> Emerging Sources of Capital <p>Recently new forms of financing have emerged to complement the traditional sources from new emerging markets and challenge the existing status quo in the region leading to a fresh geopolitical context. The new forms of financing are increasingly coming from China, India, Brazil and the Middle East. The upsurge of China's activity in Africa has led to the rise in the trade, investment and financing figures between the two and is underscored by deepening political engage-ment with Beijings involvement in Africa at the highest level.</p> <p>Indias emerging multinationals are beginning to establish a presence in Sub-Saharan Africa beyond these traditional regions. Other emerging forms of capital witnessed in the region include sovereign wealth from Middle Eastern markets and the investment of South African corporations which have constituted a significant source of capital since 1994.</p> <p></p> Economic Growth <p>The growth in the GDP of Sub-Saharan Africa as a whole since 2000 has been very robust, exceeding that of the industrialized nations and the global average. Even in the wake of the recent economic crisis, the GDP growth rates for the region proved to be very resilient. Table 2 highlights Africa's growth decade between 2001-2010 during which time six of the ten top growth economies (according to The Economist) were Sub-Saharan African markets, notably Angola which was the top global performer with a GDP growth rate of 11.1% and Nigeria which had an average GDP growth rate of 8.9%.&nbsp;<br> </p> <p></p> <p><a href="/content/dam/intelligence/content-assets/reports/EconomicGrowth.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/EconomicGrowth.jpg"></a></p> <p>(Source:Economist and IMF Forecast)&nbsp;&nbsp;&nbsp;</p> <p><a href="/content/dam/intelligence/content-assets/reports/EconomicGrowth2.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/EconomicGrowth2.jpg"></a></p> <p>(Source:Economist and IMF Forecast)</p> <p><a href="/content/dam/intelligence/content-assets/reports/DriversofGrowthinSub-SaharanAfrica.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/DriversofGrowthinSub-SaharanAfrica.jpg"></a><br> (Source: Economist and IMF Forecast)</p> <p>The Economist has also provided GDP growth forecasts for the period of 2011 to 2015, which includes seven Sub-Saharan African markets among its top ten fastest growing economies with the GDP of Ethiopia, Mozambique, Tanzania, Congo, Ghana, Zambia and Nigeria all forecast to grow at rates in excess of 6%. These are summarized in Table 3.</p> <p></p> Drivers of Growth in Sub-Saharan Africa <p>Africas economic growth over the past decade has been driven largely by strong commodity prices that reached unprecedented levels in the run-up to the 2008 financial crisis. Since the price collapse in late 2008, prices have largely recovered to pre-crisis levels for the bulk of commodities.</p> <p>Increasing trade and investment from emerging market economies have also been a critical source of capital for Sub-Saharan Africa, with the BRIC economies playing a particularly important role in this. Additional factors driving the strong growth in the region, as summarized in Table 4, are increasing private equity flows and growing investments from sovereign wealth funds into the region, coupled with increasing remittances from Africa's migrant workforce. Providing additional impetus to the growth being experienced is improving governance and macroeconomic frameworks which have ensured that the economic gains won can be reinvested and better managed. While improvements can still undoubtedly be made in terms of governance in general in the region, the signs of improvement are encouraging. The rehabilitation and development of infrastructural networks that continue to be undertaken in several markets serve to increase the region's competitiveness. Sub-Saharan African capital markets&nbsp; while still tiny by global standards&nbsp; are growing, as is the trade between markets in the region (estimated though at only between 8-10% of total trade) and the growing stratum of middle-class consumers which provide an increasingly sizeable and important market.</p> <p><a href="/content/dam/intelligence/content-assets/reports/DriversofGrowthinSub-SaharanAfrica.jpg" target="_blank"><img width="370" height="191" src="/content/dam/intelligence/content-assets/reports/DriversofGrowthinSub-SaharanAfrica.jpg"></a><br> (Source: World Economic Forum)</p> <p></p> The Competitiveness of Sub-Saharan African Economies <p>The ability of Sub-Saharan African states to improve the competitiveness of their economies will ultimately determine their ability to entrench their development and compete at a global level. Despite robust growth, Sub-Saharan African markets have by and large been unable to enhance their competitive positions.</p> <p>Table 5 shows rankings of global competitiveness as compiled by the World Economic Forum. During the period 2005 to 2010, the top performing African economies have been South Africa, Mauritius, Botswana and Namibia. However, it must be noted that the top performing African economy (South Africa) placed 54th in the world. There clearly still remains a lot of scope for improvement in the competitiveness of these economies and this is particularly so for most of the Sub-Saharan African economies which have consistently been lowly placed in the global competitiveness rankings.</p> <p><a href="/content/dam/intelligence/content-assets/reports/TheCompetitivenessofSub-SaharanAfricanEconomies.jpg" target="_blank"><img width="423" height="219" src="/content/dam/intelligence/content-assets/reports/TheCompetitivenessofSub-SaharanAfricanEconomies.jpg"></a><br> (Source: UNICTAD, 2010)</p> <p><a href="/content/dam/intelligence/content-assets/reports/TheCompetitivenessofSub-SaharanAfricanEconomies2.jpg" target="_blank"><img width="409" height="125" src="/content/dam/intelligence/content-assets/reports/TheCompetitivenessofSub-SaharanAfricanEconomies2.jpg"></a><br> (Source: EMPEA 2010)</p> <p></p> Increasing Levels of Foreign Direct Investment <p>An encouraging sign for many Sub-Saharan African markets is the increasing flows of Foreign Direct Investment (FDI), both from traditional players as well as from emerging market economies. As highlighted in Chart 20, the major recipients of FDI on the African continent have been South Africa, Nigeria, Angola and Egypt. UNCTAD reports that FDI flows into Africa as a whole increased from $9.8 billion in 2000 to a record $72 billion in 2008. Total 2009 FDI inflow into African economies was $58.5 billion lower than 2008, largely on account of tightened global economic conditions. A substantial portion of the FDI flows has gone into the resources sector such as oil and gas, and precious and base metals, but other sectors such as ICT and finance have also received relatively large investments.</p> <p></p> Growing Private Equity Investment <p>The growth in private equity investments has been strong. Chart 21 highlights private equity fundraising figures for three regions over the period 2001 to 2010.A clear upward trend is discernible for Latin Ameri-ca, Middle East and North Africa (MENA) and Sub-Saharan Africa. Coming off a low base, private equity figures in Sub-Saharan Africa increased from $92 million in 2001 to a high of $2.2 billion in 2008, repre'senting a very rapid CAGR of 57.8%. While private equity figures across the globe took a sharp dip in 2009, there are growing indications of recovering an upward trend going forward.</p> <p><a href="/content/dam/intelligence/content-assets/reports/GrowingPrivateEquityInvestment.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/GrowingPrivateEquityInvestment.jpg"></a><br> (Source: World Bank)</p> <p><a href="/content/dam/intelligence/content-assets/reports/GrowingPrivateEquityInvestment2.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/GrowingPrivateEquityInvestment2.jpg"></a><br> (Source: World Bank)</p> <p>Chart 22 shows the cumulative growth of market capitalization of listed companies as a percentage of GDP in all key regions of the world between 2000 and 2008, and Sub-Saharan Africa has clearly performed well. Between 2000 and 2008, for instance, the market capitalization of the region's listed companies increased from 89.9% of GDP to 147.5% of GDP. This represents a CAGR of approximately 8.6% which is one of the largest increments over the period for the regions selected and displayed on Chart 22, only exceeded by that of South Asia.</p> <p>Chart23 shows clearly that market capitalizatin in Sub-Saharan Afarica(Not inculding south Afarica) started to take off in 2011,and has outperformed other regions since as a percentage of GDP.</p> <p><a href="/content/dam/intelligence/content-assets/reports/GrowingPrivateEquityInvestment3.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/GrowingPrivateEquityInvestment3.jpg"></a><br> (Source: World Bank, 2010; World Federation of Exchanges)</p> <p>The performance of Africa's leading stock markets is highlighted in Chart 24. These include South Africa, Egypt, Nigeria, Morocco and Kenya. The market capitalization of all the bourses selected increased during the period 2003 to 2008. The largest stock exchange is South Africa, whose market capitalization increased from approximately $268 billion in 2003 to $483 billion in 2008 representing a CAGR of 12.5%. Also the region's largest economy, South Africa's ratio of market capitalization to nominal GDP was 1.74 in 2008 indicating the great extent of capitalization in the market. The growth in the market capitalization of the other exchanges has also been significant as is shown by their CAGR for the period 2003 to 2008, ranging from 21% for Kenya to 38.3% for Nigeria. The ratios of the market capitalization to nominal GDP for the rest of the markets, compared to South Africa's, are markedly lower with most of them ranging from 0.23 in the case of Nigeria to 0.76 in the case of Morocco. This provides an indication of the lower capitalization of these markets relative to the size of their economies.</p> 3. Conclusions <p>The overview of the state of development of Sub-Saharan Africa provided in this report shows three key striking features: (i) the state of socio-economic underdevelopment in all aspects of Sub-Saharan Africa has been the worst in the world in the past 50 years; (ii) growth acceleration in the last decade has been very impressive, with emerging markets from Asia and Latin America playing a new role in the region; and (iii) the region has immense potential for growth and development in Sub-Saharan Africa going forward if the region can begin to effectively tackle many of the crippling constraints that have held the region back in the past. Subsequent reports in this series will systematically address these issues.</p> When taking stock of the economic environment presented by the African continent, it is important at the outset to recognize the physical magnitude of the continent. This can serve to highlight the potential richness of access to resources and also the opportunities to develop the continents infrastructure.http://www1.mastercard.com/content/intelligence/en/research/reports/2011/taking-stock-the-state-of-sub-saharan-africa2011-03-31T16:00:00.000Z2011-03-31T16:00:00.000ZChina's Economic Rebalancing and Global Implications China's Economic Rebalancing and Global Implications<p>Rarely is a comment made on the global economy without referencing the global imbalance,and China's part in perpetuating it.At its simplest, the global imbalance is seen&nbsp; as a case of China producing/exporting&nbsp; too much and not consuming enough; and the US consuming too much and not saving enough.The typical narrative in this context is that China has become an export machine&nbsp; in order&nbsp; to&nbsp; support&nbsp; its breakneck&nbsp; pace&nbsp; of growth; with its competitiveness based on cheap labor, increasingly efficient infrastructure, and an under-valued currency. The label of 'currency manipulator' is thrown in occasionally as the debate heats up. In fact, an export machine is not an inaccurate description. Twenty years ago, China accounted for a mere 2% of total world exports, and it rose to 11%&nbsp; in 2010. In that&nbsp; narrative, China's growth in exports puts the current accounts of the US and other big importers of Chinese goods in chronic deficits (and worse,&nbsp; destroying local jobs in these countries), while weak domestc consumption in China means growth&nbsp; has to continue to depend&nbsp; on more exports.</p> <p>Regardless of how China is portrayed in the global imbalance debate, the fact of the matter is that in thepast decade China has been reshaping the pattern&nbsp; of global trade, not just as an 'export machine, but as a trading partner in terms of imports/exports of goods and services, investment and capital flows. Today, China is a key trading partner, sometimes the single most important&nbsp; one, for many of the world's most important economies. Table 1 shows China's rising importance as a trading partner (imports plus exports) between&nbsp; 2000 and 2009 in the global economy. The list in the table includes the richest economies in the world, the largest emerging markets, and the most important commodity producers,&nbsp; spanning across five continents.&nbsp; So what happens&nbsp; to China now matters a great deal more to practically everyone in the global economy.</p> <p>This Global Insights report explains China's role in the global imbalance in terms of its domestic imbalance. While not&nbsp; denying&nbsp; the&nbsp; importance&nbsp; of&nbsp; currency exchange rates, I&nbsp; believe that neither China's success in exports nor its rise as a trading partner can be explained in terms of its under-valued currency. The 'currency- centric view' &nbsp;would mean that the global imbalance cannot be resolved without the Chinese currency appreciating to a much higher market driven level.1 Given the apparently snail's pace of the appreciation of the Chinese currency in recent years,&nbsp; it would appear that the global imbalance is here to stay.</p> <p>Table 1. China's Rank as a Trading Partner<br> &nbsp;<a href="/content/dam/intelligence/content-assets/reports/table1chinasrankasatradingpartner.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/table1chinasrankasatradingpartner.jpg"></a></p> <p>Source: Estimated with IMF Direction of Trade Data</p> <p>In contrast,I hold the view that China's role in the global imbalance is due primarily to its internal economic imbalance,mostly as a result of a series of developments in the&nbsp; past&nbsp; decade. From this perspective,China's under-valued currency has at best played a tangential role. The media hype on China as an export machine&nbsp; and&nbsp; being&nbsp; the&nbsp; factory of&nbsp; the&nbsp; world&nbsp; has&nbsp; the unintended&nbsp; consequence&nbsp; of focusing attention&nbsp; on the export side of the current account. Chinese exports are on track to continue to grow in the coming decade, and I have estimated that it could reach 18% of the world total by 2020, thereby matching the previous record set by the US in the 1950s during the height of America's global economic dominance. What will make all the difference is how fast China's imports will grow in relation to its exports. And this in turn is strongly affected by how China will rebalance itself domestically.</p> <p>For example, China's current account surplus dropped&nbsp; from its peak of 11.3% of GDP in 2007 to 4.6% in 2010,while the Chinese yuan's trade-weighted exchange rate rose by an average of only 2.2% a year over the same period.What has brought about the reduction in China's surplus is a much faster growth of imports over exports. In 2010, for instance, China's imports grew by 39%,outpacing&nbsp; growth of exports of 31%.</p> <p>This trend has apparently accelerated in the first two months of this year, with imports growing by 36% versus growth of exports of 21%,&nbsp; year-on-year. When China's internal rebalance gains traction, imports will rise much faster in relation to exports, and consequently the global (external) imbalance will adjust as well. So the key is how China will deal with its internal imbalance. I believe China is now at the cusp of a profound structural shift in its economy, and in the coming years, coinciding with the 12th Five Year Plan, domestic private consumption will likely rise much faster than before. This will fundamentally change&nbsp; China's imports/exports dynamics, as well as domestic conditions such as where the majority of the Chinese people will live, and how they will work. But let's begin by taking a closer look of China's domestic economic imbalance.</p> China's Domestic Economic Imbalance<p>It is ironic that in a country run by a communist party,the share of national output&nbsp; accruing to the workers has shrunk over a period of super fast growth. But that is exactly what has been happening in China. As shown in Chart 1 (right side of the chart), the share of wages as a percentage of GDP in China fell from over 50% in 2001 to 42% in 2009.Over the same time period, however, corporate profit as a percentage of GDP rose from 23% to 29%. As a result, private consumption as a percentage of GDP in China has also declined, and was estimated at 36% in 2010.</p> <p>Chart1. China's Domestic Imabalance</p> <p><a href="/content/dam/intelligence/content-assets/reports/chart1chinasdomesticimabalance.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/chart1chinasdomesticimabalance.jpg"></a></p> <p></p> <p>Source: CEIC;Estimates with Data from China&nbsp; Statistics Yearbook, Various Years</p> <p>This compares unfavorably with 55% in Thailand and 56% in India (left side of the chart).Weak wage and consumption growth are at the heart of China's domestic imbalance. How is it that in a country run by a communist party with socialism as its guiding ideology (albeit with 'Chinese characteristics') the corporate sector is apparently outpacing the success of the working class?</p> <p>Several key developments in the last decade converged to create China's internal imbalance.The first is the state-owned&nbsp; enterprise (SOE) reform that created a new breed of corporate players that were in a position to maximize monopoly profit, while benefiting from declining real labor costs (labor productivity rising faster than wages). The second is China's rapid pace of urban- ization which has been luring migrant workers to urban areas, swelling the&nbsp; supply of the&nbsp; urban&nbsp; labor force. These two key developments then interacted with some of the unintended consequences of the One Child Policy to keep household savings high, thereby suppressing private consumption.</p> <p>In 2009, three Chinese companies, all SOEs, were listed in the top ten of the Fortune Global 500.They were: Sinopec in seventh place,State Grid in eighth, and China National Petroleum in tenth. In fact, there were 44 Chinese companies, the vast majority of them SOEs,in the Fortune Global 500 that year6.A decade earlier,the&nbsp; notion&nbsp; of any companies from mainland China being ranked in the top 500 of the world could not be imagined. The fact is that&nbsp; by the end of the 1990s, the state-owned&nbsp; industrial sector in China was basically bankrupt.The non-performing loans of the banking sector in China were over 3.5 trillion yuan in 1999,about 18% of all loans outstanding.Virtually all of the bad loans were lent to SOEs.In the beginning of the 1990s, SOEs were the beneficiaries of a lending binge by the banks that was made in the wake of the famous ?southern&nbsp; tour? of Deng Xiaoping. By the end of that decade all that SOEs had to show were mountains of bad loans.<br> By then, Zhu Rongji, the prime minister, was preparing China for WTO membership. To do so, he launched a wide-ranging economic reform program, part of which was SOE reform. Different options were mooted. Just prior to the 1997 Asian financial crisis, the Korean chaebols were intensely studied, and at one time it was thought a suitable model for China's SOEs to emulate. Post-1997, with many chaebols going bust, that option was quickly dismissed. A more hard-nosed&nbsp; alternative argued for wholesale privatization of the SOEs, but it was&nbsp; quickly recognized&nbsp; that&nbsp;&nbsp; genuine&nbsp; privatization would mean letting the market decide the fate of the SOEs, and giving up state control of the massive industrial sector, hence government's leverage over a significant&nbsp; portion&nbsp; of employment&nbsp; and&nbsp; investment&nbsp; in the economy. Instead, Zhu opted to shut down a portion of the SOEs that&nbsp; were clearly beyond salvage, and consoli-dated the rest to make them viable.And an important step in the process was to order the banks to forgive all the SOE bad loans. This meant,&nbsp; of course, leaving the banks on the spot. To save the banks, Asset Manage- ment Companies (AMCs) were created to take over the bad loans, allowing the banks to be recapitalized. The AMCs were then tasked with recovering as much of the loans as they could from the defaulters, the SOEs.</p> <p>The cleaned up and consolidated SOEs then started to perform extraordinarily well after China's entrance to WTO.Foreign direct investment continued to rise (it ac- tually started accelerating prior to China's WTO membership), exports boomed, and the economy expanded; consequently SOEs rose like ships being lifted in a rising tide. Many SOEs also operated&nbsp; in either strictly protected or in quasi monopolistic sectors such as telecom, transportation,&nbsp; energy, and assorted heavy industries, thereby enjoying monopoly rent; which was then made even more lucrative by the commodity upswing cycle that started mid-decade.Meantime, they were not required to pay dividends to their shareholders, the government. For SOEs involved in resource extraction, they did not pay royalties to the owner of the resource either, which once again, was the government. The SOEs continued&nbsp; to&nbsp; enjoy preferential&nbsp; access to&nbsp; bank&nbsp; lending whenever they needed new funds, and at exceptionally low interest rates. The net result was, not surprisingly, extraordinary SOE profits.</p> <p>One of the factors driving up corporate profits overall, not just for SOEs,has been the labor market dynamics in that decade.Urbanization accelerated, averaging some 20 million people in urban areas a year. Rapid growth was evident across the entire spectrum of urban areas, from megacities like Shanghai, Beijing and Shenzhen, and second tier cities like Wuhan, Xian, Nanjing, all the way down to small third-tier cities (more on urbanization later). To put things in perspective, in 1981 it is estimated that only 18% of China's population lived in urban areas. By 2010, it was close to 50%8. Urban expansion of such a scale drew in an army of migrant workers from the farms. Migrant workers are not the same as rural-urban migrants, at least not in the beginning (though many ended up becoming residents of the cities in which they have been working, only after they managed&nbsp; to&nbsp; acquire the&nbsp; residency permit,&nbsp; the hukou). Many migrant workers work only part of the year in cities, and spend the rest of the time, back on the&nbsp; farm to help with planting and&nbsp; harvest. Like all farmers, planting and harvesting are the busy times, and it is the in-between period that they are underemployed, hence their migratory pattern to seek paid work in cities. Many migrant workers are recruited into the construction sector, powering the massive infrastructure rollout&nbsp; across&nbsp; the&nbsp; country.&nbsp; Many others,&nbsp; especially young&nbsp; women,&nbsp; work in light manufacturing&nbsp; in the southern and the eastern coastal region, producing exports that give China the reputation of being the factory of the world.</p> <p>It is this army of migrant workers, variously estimated to be between 100 to 120 million, tht has had the net effect of keeping&nbsp; wages low in relation to growth&nbsp; of productivity and&nbsp; corporate&nbsp; profit. Due to their part-time status, their wages proximate the equilibrium price of labor, determined solely by demand and supply at any given time and, until very recently, not protected by any minimum wage regulation and which did not obligate the employers to cover their healthcare, pension, and other related social benefits. In any sectors where migrant workers can be employed on a regular basis, which include construction and light manufacturing, migrant workers have made a huge contribution, while receiving the absolute minimum in return. High corporate profits and low wages mean, however, low private consumption&nbsp; by households. Consumption is kept even lower due to the relatively high household savings rate. Chinese urban households tend to save around 20% of their disposable income9, compared with the 10 to 12% average seen in many other Asian markets. This higher household savings is due to several unique factors in China. The first is the One Child policy, which motivates parents to save as much as they can to make sure that&nbsp; they can afford the best healthcare money can buy should their single child get sick and the best private education that money can buy to ensure the child's future success. For the young singles being able to afford a private condominium is now a prerequisite for being able to marry, hence the presure to save for a down payment. All these contribute to China's higher household savings and subdued consumption.</p> <p>It is common to hear in media commentaries that Chinese households save too much and do not spend enough. It follows that the remedy for rebalancing the global economy is to encourage&nbsp; the Chinese to spend more. The reality is that given what they earn, and what they have to put aside for the proverbial rainy days, Chinese consumers are actually very enthusiastic spenders. They more or less spend as much as they can, and cannot be accused of causing the global imbalance because of their supposedly extraordinary frugality. They certainly play a role in the internal imbalance of the Chinese economy, but it is more the role of victims of the internal imbalance than its cause. To rebalance the Chinese economy, wages will have to grow much faster in relation to productivity and corporate profit, and households will have to feel that they need to save less even as their income is rising faster than before. These may well happen in the coming years.</p> The Dragon's Dance: The 12th Five Year Plan<p>It would be naive to suggest that the leadership in Beijing is not aware of China's domestic imbalance and the challenges associated with it. The question is what are they going to do about it? The answer, at least in part, can be gleaned from the broad outline of the 12th Five Year Plan, which was approved by the People's Congress on March 14, and is due to take effect this year. While many of the specifics are yet to be spelled out,11 the Plan does aim to create a new economic model that could rebalance the Chinese economy. It recognizes that in spite of having survived the 2008/09 global financial<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br> crisis, the economy today suffers from problems of unbalanced, uncoordinated, and unsustainable developments. The key solution,which is seen as the prime driver of change, is to continue and accelerate the pace of urbanization. Getting people to move into towns and cities at a pace even faster than that of the past decade would, at one stroke, deal with the challenges of rural underemployment,&nbsp; over-investment in the industrial sector, weak household consumption, income disparity, and chronic current account surpluses. It is no surprise that Vice Premier Li Keqiang, has consistently focused on how to get urbanization right as his theme&nbsp; whenever he spoke to the press and in public forums in the past year.</p> <p>Getting urbanization right in China could indeed address many of the country's major problems of economic development overall, and the internal imbalance in specific. A proper discussion of urbanization in China will, however, require a great deal more space than a section of a single report of this kind. Instead, the focus here is on how urbanization could address the internal economic imbalance that has been built up in the past decade as described earlier. First and foremost is the difference in propensity to consume, especially in discretionary spending, between rural and urban households. Adjusted for income, an urban household tends to spend more on consumption than a rural household12 .Clearly in urban areas the consumer lifestyle is able to spread faster and wider, with the proverbial 'word of mouth' and 'peer persuasion' being more powerful in propagating&nbsp; new consumer market trends. On the supply side, the high concentration of consumers in urban centers facilitates the development&nbsp; of shopping malls and markets, offering consumers choices that are simply not available in rural markets. Shopping, socializing, dining out, and entertainment&nbsp;&nbsp; tend&nbsp; to&nbsp; blend&nbsp; seamlessly into&nbsp; an&nbsp; urban lifestyle, driving up consumer spending. Incomes are also higher in urban areas. Even for migrant workers, what they earn in cities is still higher than what they would have earned had they stayed on the farm. Their pay looks low only when compared with regular urban incomes. And there is no mystery as to why urban wages are higher. Better urban infrastructure means workers have better&nbsp; tools to work with, and hence, more productive1.3&nbsp; Urban economies also benefit from more powerful economies of scale and economies of scope, which offer more opportunities for specialization, thereby boosting urban productivity. As a result, urban wages tend&nbsp; to increase a lot faster than&nbsp; rural ones; and that is exactly what has been happening&nbsp; in China in the last decade. With higher urban wages, the stronger&nbsp; propensity&nbsp; to&nbsp; consume&nbsp; observed&nbsp; in urban households is then amplified by their larger household wallet.</p> <p>The urban&nbsp; economy&nbsp; is also more&nbsp; conducive for faster growth in the service sector in China, which has been&nbsp; a laggard compared&nbsp; with the&nbsp; industrial sector. With rising incomes, urban households' marginal spending shifts quickly from goods to services, creating more potential for the service sector to expand and create more jobs. It has been estimated that with the same increase in demand,&nbsp; the domestic service sector tends to create up to 45% more jobs than the export sector. 14 Again, there is no mystery as to why this is so. The multiplier effect is simply higher in the urban service sector compared with exports. An increase in service demand quickly ripples across the urban service economy to generate new demand for other services, which has a positive ?knock-on' effect on yet other services and so on. Think of the opening of an upscale restaurant in Shanghai. Architects and designers are likely involved in creating the ambience commensurate&nbsp; with the prices on the menu. Advertising agencies are needed to promote it to targeted&nbsp; customers. For branding purposes, the restaurant&nbsp; may decide to sponsor a show in a gallery with a gala reception,&nbsp; engaging&nbsp; event management and public relations specialists.&nbsp; All these generate&nbsp; new activities in a wide range of professional services, apart from jobs created in the actual operations of the restau- rant itself. In contrast, an increase in demand in exports is more likely to generate a one-off increase in production activities, especially if the production is in assembling manufacturing&nbsp; with&nbsp; a&nbsp; high&nbsp; level of&nbsp; imported components.Urbanization and the service sector are therefore mutually reinforcing, with the net effects of raising household incomes and boosting consumption.</p> <p>As suggested earlier, an important factor in raising household consumption lies in reducing their savings. Chinese households'precautionary savings are high because of poor public provisions of health care and&nbsp; education services as well as patchy coverage of retirement pensions. It happens that it is more cost-effective to upgrade&nbsp; health and education&nbsp; services in urban&nbsp; rather than in rural areas, due to urban population density and associated economies of scale. Therefore for every extra yuan spent&nbsp; on health and education&nbsp; by the government, it has a greater impact in urban areas when it comes to reducing households' precautionary savings and raising their consumption. And increasing investment in public health and education is what the government&nbsp; intends&nbsp; to&nbsp; do&nbsp; in the&nbsp; context&nbsp; of&nbsp; accelerating urbanization in the 12th Five Year Plan.</p> <p>Finally, faster urbanization also has the added benefit of reducing income disparity. Assuming the average income levels of urban&nbsp; and&nbsp; rural China remain unchanged&nbsp; for the foreseeable future, the fact that the urban population will expand while the rural population will shrink at a faster rate in the next five years would improve income distribution overall. Shifting workers from rural to urban areas simply means more workers are earning higher urban wages. Chart 2 illustrates the projection of China's urbanization to 2020.It is expected&nbsp; that&nbsp; by the&nbsp; end&nbsp; of this decade, some 70% of China's population will be living in urban areas, up from 48% in 2005. This implies an addition of 320 million to China's urban population.Some 100 million of this increase will come from 'organic growth,' consisting of population growth from today's urban population, and conversion of rural areas (and the population) into urban areas in the coming years. Another 220 million will come from rural-urban migration. In addition to the positive multifaceted impacts of urbanization, a number of regulatory changes in the governance of the SOEs will also help China's internal rebalancing. SOEs are now required to pay dividends, and SOEs in resource extraction are also required to pay royalties. These measures will reduce SOE profit while boosting government revenues. The new revenues generated will in turn allow the government to invest more in expanding the coverage of the social safety nets and in improving service delivery. It is expected that government spending on health and education services will go up significantly during the 12th Five Year Plan, with coverage expanding to include migrant workers as well. A national pension plan that is universal and portable is also being planned for implementation. It remains to be seen, however, the extent to which the intended objectives of the Plan will be implemented, and once implemented,&nbsp; the extent to which they are effectively enforced.&nbsp; Even if the&nbsp; measures&nbsp; outlined above are only partially successful, they could still go along way in rebalancing China's domestic economy.</p> <p>Chart 2. China's Urban Future</p> <p><a href="/content/dam/intelligence/content-assets/reports/chart2chinasurbanfuture.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/chart2chinasurbanfuture.jpg"></a></p> <p>Source: MasterCard Asia/Pacific</p> <p>Chart3. Faster Comsumption Growth Needed in the Future</p> <p><a href="/content/dam/intelligence/content-assets/reports/chart3fastercomsumptiongrowthneededinthefuture.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/chart3fastercomsumptiongrowthneededinthefuture.jpg"></a></p> <p>Chart 3 summarizes a simple simulation of the kind of progress that can be achieved with a modest level of success in policy implementation. Assuming that real GDP growth rate will average 8% a year between 2010 and 2020, the GDP share of private consumption could rise from the current 36% to 50% if private consumption can grow in real terms by 12% a year. Given the average real growth rate of private consumption in the past decade is around 8%, this means private consumption will have to grow by about one-third faster in the future. Can this be achieved? If household income growth begins to match overall real GDP growth in the coming years, this means an average growth rate of 8% a year. Using a conservative assumption of household consumption growing at the same pace as household income, then income-induced growth of household consumption will be 8% a year as well. If a household's precautionary savings rate is reduced due to better public health and education services and pension coverage, to around 12%&nbsp; from the current 20%, then it would add another 3% growth to household consumption. So the 12% increase per year in private household consumption is possible under the right circumstances.</p> China's Demographic Shift<p>Apart from the potential impacts arising from policy measures related to the 12th Five Year Plan, China's demographic dynamics are giving the rebalancing a powerful push. In the past three decades, the One Child policy has slowed population growth significantly, and, in the process, accelerated population aging. The average age of a population rises when there are more older people, as a result of rising life expectancy, and fewer young people. The result is a powerful demographic shift. China's school enrollment rate is very high, with primary school enrollment approaching 100% so changes in student enrollment numbers in primary and secondary schools, which are good indicators of the overall number of young children and teenagers. According to data from the Ministry of Education, primary school enrollment peaked&nbsp; in 1998,&nbsp; and&nbsp; by 2008&nbsp; it was 25% lower than the peak level. Secondary school enrollment peaked in 2003, and has since been declining, albeit at a&nbsp; much&nbsp; slower rate.&nbsp; The fact&nbsp; that&nbsp; peak&nbsp; secondary school enrollment lags peak primary school enrollment by some five years also makes sense. At their respective peak&nbsp; years,&nbsp; these&nbsp; primary and&nbsp; secondary&nbsp; students would have been born in the second half of the 1980s, when the One Child policy, though&nbsp; introduced earlier,began to be more rigorously enforced, and started to take full effect.</p> <p>Chart 4. China's Demographic Tectonic Shift</p> <p><a href="/content/dam/intelligence/content-assets/reports/chart4chinasdemographictectonicshift.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/chart4chinasdemographictectonicshift.jpg"></a></p> <p>Source:Estimated with Data from the US Census Bureau and Chinese Academy of Social Science</p> <p>These declining enrollment trends are the&nbsp; telling leading indicators of how&nbsp; the&nbsp; supply of young workers will shrink as a result of China's demographic shift.Expanded opportunities&nbsp; for higher education further aggravate the trend of a shrinking supply of young workers. More young people attending&nbsp; tertiary education means a lower labor force participation rate in their age groups. Chart 4 shows a projection of changes in the numbers of 15 - 24 year olds in China that will be available for the labor force in the next few years, assuming a participation rate of 50%, down from the 65-70%&nbsp; level in previous decades. The projection shows unmistakably a shrinking supply of young workers in the labor force. A 50%&nbsp; participation rate means that half of the 20 -24 year olds will be studying instead of working in the&nbsp; future,&nbsp; up&nbsp; from around&nbsp; 25 - 30%&nbsp; a decade ago, thus squeezing the dwindling supply further. This demographic&nbsp; shift, in combination&nbsp; with the wide ranging impacts of faster urbanization, will push wages to rise faster than&nbsp; before, thus systematically changing the industrial structure of China itself. A good indicator is migrant workers' wages which, as argued earlier, proximate the equilibrium price of labor as dictated by the raw supply and demand conditions. Chart5 shows growth of migrant worker wages in real terms from 2002 to 2008 as estimated by the Chinese Academy of Social Sciences. It basically rose continuously since 2002, and it spiked in 2008 to 18.5%. In 2009, in spite of the near collapse of China's exports due to the global financial crisis, migrant workers' wages nevertheless grew in real terms by 3%, followed by a strong rebound of an estimated 12% growth in 2010. These growth rates clearly reflect a gradual tightening of labor supply, puncturing the myth of the 'inexhaustible supply of Chinese labor.' As new policy measures associated with the 12th Five Year Plan begin to kick in this year, wages in general not just for migrant workers, will begin to rise faster than&nbsp; in the past. This makes the prospects of wage growth keeping pace with real GDP growth, a&nbsp;pre-condition for domestic rebalancing as argued above, much more likely.</p> Keeping Step with the Dragon's Dance: Global Implications<p>China's domestic&nbsp; rebalancing&nbsp; will have far-reaching global implications. The most obvious is that China's current account surplus will shrink over time. Make no mistake, China will continue to be a strong exporter in&nbsp;the&nbsp; foreseeable&nbsp; future, and&nbsp; its current&nbsp; account&nbsp; will likely continue to chalk up annual surpluses.the&nbsp; foreseeable&nbsp; future, and&nbsp; its current&nbsp; account&nbsp; will likely continue to chalk upannual&nbsp;&nbsp;&nbsp;surplus.</p> <p>Chart 5. Higher Wage Growth in the Future</p> <p><a href="/content/dam/intelligence/content-assets/reports/chart5higherwagegrowthinthefuture.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/chart5higherwagegrowthinthefuture.jpg"></a></p> <p>However, domestic rebalancing could reduce the surplus to around 1%-2% of GDP from its previous peak of over10%, thereby&nbsp; reducing&nbsp; the&nbsp; global imbalance. With faster urbanization, rising consumption, and more jobs being created in the service sector; China's import composition will also change. While infrastructure investment&nbsp; will continue&nbsp; to&nbsp; be a key driver of growth&nbsp; in China, thus necessitating continuing imports of commodities like iron ore and copper, a more service-intensive economy simply means a less resource-intensive one.</p> <p>Chart 6. Monthly Manufacturing Wages Compared<br> </p> <p><a href="/content/dam/intelligence/content-assets/reports/chart6monthlymanufacturingwagescompared.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/chart6monthlymanufacturingwagescompared.jpg"></a><br> Source: MasterCard Asia/Pacific</p> <p>China will gradually import more to meet household consumption&nbsp; needs, and less industrial components&nbsp; and&nbsp; raw materials to feed&nbsp; the&nbsp; manufacturing sector. As a 'swing' buyer of many key commodities in the world market, China's reduced appetite&nbsp; for resources, however marginal, could have significant impacts on their global demand/supply dynamics.<br> Part of the change in China's industrial structure is that low value-added assembly manufacturing will become less viable as wages rise. It is my estimate that monthly manufacturing&nbsp; wages in China today are already higher than many neighboring countries. Chart 6 compares&nbsp; monthly manufacturing&nbsp; in 2009&nbsp; between China and Thailand, Philippines, Vietnam and Indonesia. The wage gap between China and these Southeast Asian countries are set to widen even further in the future.<br> China today has the world's largest manufacturing labor force, which has been estimated to be around 165 million. If 1% of China's manufacturing&nbsp; capacity is to relocate to the four countries of Thailand, Philippines, Vietnam and Indonesia, adjusted for productivity, this would entail an increase in manufacturing employment of these four countries by up to 15%. So quite apart from shrinking the current account surpluses and altering global demand/supply dynamics in commodities, China's domestic rebalancing would also be a source of new growth in many countries in Asia and beyond.</p> <p>1. How exactly is a market driven exchange&nbsp; rate determined is itself fiercely debated, however. There are three key methodological approaches: a fundamental equilibrium exchange&nbsp; rate (the so called FEER), a purchasing&nbsp; power parity based exchange&nbsp; rate, and a unit labor cost productivity-based exchange&nbsp; rate (the so called REER). While all three approaches agree that&nbsp; the Chinese currency is undervalued, they differ hugely on the degrees&nbsp; of under-valuation, ranging from 12%&nbsp; to 50%.<br> 2. The Chinese yuan has been appreciating against&nbsp; the US dollar in nominal terms in the past five years at around&nbsp; 5% a year.<br> 3. It is worth pointing out even if the Chinese yuan were to appreciate at an improbable&nbsp; pace of, say, 50%,&nbsp; in the next year or so; there is still no guarantee that&nbsp; the US current account&nbsp; deficits will be eliminated.&nbsp; In the two years following the 1985 Plaza Accords, the exchange&nbsp; rate of Japanese yen doubled&nbsp; against&nbsp; the US dollar, and yet the US current account&nbsp; deficits against&nbsp; Japan persisted.<br> 4. PBoC data.<br> 5. Bank of International&nbsp; Settlement&nbsp; data.<br> 6. Fortune, July 26, 2010.<br> 7. PBoC data.<br> 8. China Statistical Yearbooks, various years.<br> 9. The regularly reported figures of 40 to 50%&nbsp; of GDP saved in China refer to total national&nbsp; savings, the bulk of which is actually savings by the corporate sector.<br> 10. See the MasterCard&nbsp; MasterIndex of Consumer&nbsp; Confidence,&nbsp; Spending and Savings Priorities.&nbsp;<a href="http://www.masterintelligence.com/">www.masterintelligence.com</a><br> 11. A great deal of policy details will be developed&nbsp; by the two dozen or so ministries and local governments.<br> 12. Recent survey evidence of Chinese urban households' higher propensity to consume&nbsp; is observed in MasterCard's Insights Report Government Stimulus and Consumer&nbsp; Response in China --Implications for Future Growth, 3Q, 2009.<br> 13. In economic terms, this means a less skewed labor-capital ratio, and in the context of a developing economy with low capital stock per capita, marginal returns on capital tend to be higher than&nbsp; marginal returns on labor.<br> 14. Derived from estimates&nbsp; by Feenstra, R.C. and Shang-Jin Wei, 2009,&nbsp; China's Growing Role in World Trade, National Bureau of Economic Research Working Paper.<br> 15. In the coming decade, China's export composition&nbsp; will shift increasingly to capital and knowledge intensive goods as opposed to labor intensive light manufacturing.</p> At its simplest, the global imbalance is seen as a case of China producing/exporting too much and not consuming enough; and the US consuming too much and not saving enough.http://www1.mastercard.com/content/intelligence/en/research/reports/2011/chinas-economic-rebalancing-and-global-implications2011-06-30T16:00:00.000Z2011-06-30T16:00:00.000ZSingapore Inflation Expectations: Expecting the Unexpected Aurobindo Ghosh, Jun YuForeword from Singapore Management University<p>The study of inflation expectations of Singapore house-holds is a multi-disciplinary industry-relevant research that &nbsp;comes out of a partnership &nbsp;between &nbsp;Singapore Management University (SMU), which prides itself to be a University for the world of business and management, and a truly iconic corporate institution –– MasterCard. The research team for this MasterCard-SKBI Singapore Index of Inflation Expectations (SInDEx) project applied rigorous methods &nbsp;using current internet-based marketing survey tools for data-collection and advanced econometric techniques to analyse the data. The updates &nbsp;from the quarterly waves are keenly followed by policymakers, market watchers and the media because of the enormous importance of cost of living to individuals and businesses alike.</p> <p>The inflation expectations &nbsp;measured &nbsp;are perceptions of future average rise in prices over a medium term of one year or a long term of five years. Policy-makers in central banks around the world, while formulating their monetary policies, keep a keen eye on the inflation expectations, among other things. Even then, &nbsp;their projections are mostly based &nbsp;on the &nbsp;expected &nbsp;rise in prices of a fixed basket of goods and services at current &nbsp;or prevailing prices, popularly termed as ‘Consumer Price Index Inflation’ or ‘CP I Inflation.’ This usually proxies for the future rise in overall prices to enable policymakers to decide on their monetary policy to keep prices stable while at the same time encouraging growth and generating employment.</p> <p>One of the biggest challenges for policymakers &nbsp;is to ascertain the inflation expectations of households before and after any policy statement is made. While the experts have access to vast levels of macroeconomic data to formulate informed opinions about inflation expectations, for the common man who has to make&nbsp;purchasing decisions as unprecedented levels of global economic uncertainty unfolds, the reality can be quite different. Our research at SMU-SKBI brings out the nature and influences of such individuals’ inflation expectations from cross sections of Singaporean households.</p> <p>The early results are indeed fascinating in terms of both response and predictability which lay testament to how informed the &nbsp;Singaporean &nbsp;households &nbsp;are and how grounded &nbsp;they are in forming their inflation expectations. It also brings out the effectiveness of our methodology that is founded upon rigorous multi-disciplinary research expertise by SKBI researchers. Lastly, this would not have been possible without the generous support from MasterCard, and the constant efforts of MasterCard and SMU teams in disseminating the research results to the public-at-large through quarterly updates to the media.</p> <p>I would like to take this opportunity to extend my sincere thanks &nbsp;and &nbsp;offer a toast &nbsp;to &nbsp;President Vicky Bindra and his team from MasterCard for their strong support &nbsp;towards &nbsp;this unique partnership &nbsp;that &nbsp;brings about &nbsp;the true spirit of a community in this cycle of knowledge creation.</p> <p>Professor Arnoud De Meyer<br> President<br> Singapore Management University</p> <p></p> Foreword from MasterCard<p>It has been &nbsp;a year since MasterCard &nbsp;and the Singapore Management University (SMU) jointly launched the Singapore Index of Inflation Expectations. The objective of establishing the Index was to provide valuable insight into the behaviour and sentiments of household decision makers in Singapore. This collaboration affirms MasterCard's commitment to researching, &nbsp;understanding and forecasting &nbsp;consumer behaviour that &nbsp;will in turn contribute to more effective and successful monetary &nbsp;policy management in Singapore, with far-reaching &nbsp;benefits to the business and household sectors in the years to come.</p> <p>This past year, MasterCard &nbsp;has developed a strong and collaborative partnership with the team &nbsp;at SMU as we worked &nbsp;closely to release this important piece of research &nbsp;on a quarterly basis. Owing to the relevance of this analysis to both businesses and individuals alike, we have been approached and referenced by multiple media, research analysts and other industry experts –– a sure sign of the growing influence of this Index.</p> <p>Looking back, 2012 &nbsp;presented a number &nbsp;of economic challenges and milestones, including the Euro-zone crisis, rising inflationary conditions in China and persistent &nbsp;unemployment in western &nbsp;markets. All this and more led to a year characterised by global economic uncertainty.&nbsp;Amidst such changes in the economic environment, the Singapore Index of Inflation Expectations remained an accurate barometer forecasting inflation expectation amongst consumers in Singapore. Notably, the Index provided a snapshot of how Singapore consumers are affected by both the domestic economy as well as changing global economic conditions. The Index showed us that Singaporean consumers were at times troubled by uncertainty in the&nbsp;global economic environment, however, for the most part &nbsp;they remained &nbsp;cautiously optimistic in light of the resilience of Singapore's &nbsp;economy.</p> <p>Over the years, MasterCard &nbsp;has dedicated significant resources to developing a deeper &nbsp;understanding of the business and economic &nbsp;dynamics that &nbsp;shape the &nbsp;region, &nbsp;as well as the &nbsp;fast-evolving Asian consumer market, &nbsp;through surveys and independent research studies. In the process, we have built a robust knowledge and insights platform, adding value through the &nbsp;continuation of cutting &nbsp;edge &nbsp;research but also through the &nbsp;sharing of knowledge in new areas.</p> <p>As we enter 2013, &nbsp;we are excited to continue &nbsp;our fruitful relationship with Singapore Management University.</p> <p>Vicky Bindra<br> President<br> Asia/Pacific, Middle East &amp; Africa<br> MasterCard &nbsp;Worldwide</p> <p></p> Singapore Inflation Expectations: Expecting the Unexpected<p>Aurobindo Ghosh and Jun Yu<br> Sim Kee Boon Institute for Financial Economics<br> Singapore Management University<br> 27 December 2012</p> Abstract<p>The slowdown in the post Global Financial Crisis (GFC) has meant soaring unemployment in the US and Euro-zone periphery economies compared to historical standards. &nbsp; This in &nbsp;turn &nbsp; has &nbsp;sent &nbsp; warning &nbsp; signals &nbsp;to policymakers around the world. Having learnt hard lessons from prolonged periods of slump after the Great Depression, some central banks in the developed world adopted &nbsp; expansionary &nbsp;monetary &nbsp;policy and &nbsp;implemented several rounds of stimulus spending termed as Quantitative Easing to spur productive activities in a period of declining demand. While it had mixed successes in generating demand and lowering unemployment in the US and Eurozone, small open economies like Singapore &nbsp;became &nbsp;susceptible to inflationary pressures from different fronts.</p> <p>First, with sound monetary and fiscal policy and a strong balance sheet, Singapore has become an investment for discerning investors and employment destination for talented &nbsp;and qualified professionals. Second, being a city-state with only urban population and limited space both &nbsp;real estate &nbsp;sector and private transportation cost have elevated. Finally, imported inflation and “hot money” have flown to Singapore with an ensuing upward pressure on prices. Consequently, policymakers have an unenviable task of balancing the dual mandate &nbsp;to maintain low unemployment and price stability.</p> <p>Since September 2011, we have interviewed 400 randomly selected individuals quarterly across the cross section of the Singapore society to ascertain their expectations of inflation in both medium and long term. This is intended to help policymakers &nbsp;(a) to anchor inflation expectations in line with their adopted monetary policy through exchange rates, (b) to fathom the effectiveness of communications and (c) to influence informed decision making by Singaporean households.&nbsp;We found that using an innovative internet based survey we can identify the inflation expectations of the individuals in the short duration. It turns out the one-year-ahead predicted quarterly Headline Inflation rate of 4.68% &nbsp;is closer to the realised CPI-All Items inflation rate of 4.2% than even the Survey of Professional Fore-casters who predicted 2.8%. &nbsp;Currently, the one-year- ahead Headline Inflation rate of 4.37% &nbsp;(CPI All Items) is slightly lower than &nbsp;the &nbsp;composite &nbsp;weighted &nbsp;SKBI- MasterCard Singapore Index of Inflation Expectations (SInDEx1) of 4.4% collected in December 2012.</p> <p></p> Inflation and the World<p>Post Global Financial Crisis (GFC) the world economy has been going through a prolonged economic slump reminiscent of the phase of slow or no growth &nbsp;after the Great Depression in the 1930s. Western economies had to wait for the Second World War reconstruction in 1940s to get back on the fast track to recovery. The lessons learned from the past crises in Asia and the West prompted &nbsp;policymakers, particularly in the &nbsp;US Federal Reserve Board, the European Central Bank and the &nbsp;Bank of Japan, &nbsp;to &nbsp;be &nbsp;proactive. &nbsp;They have &nbsp;responded &nbsp;to an impending crisis in the best way they knew through prolonged periods of expansionary monetary &nbsp;policies. However, Federal Reserve Board Chairman Ben Bernanke (at the Monetary Economics Workshop of the &nbsp;National Bureau of Economic Research Summer Institute, Cambridge, Massachusetts, July 10, &nbsp;2007) &nbsp;had &nbsp;reemphasised &nbsp;that &nbsp;most &nbsp;central banks work under the dual mandate &nbsp;of price stability and employment &nbsp;generation. &nbsp;So while expansionary monetary policy might be good for growth and lowering unemployment, &nbsp;the adverse impact on inflation is often a cause of concern.</p> <p>With an ongoing slowdown in the Western economies or the &nbsp;so called G3 (US, Eurozone and Japan) and consequently, plummeting world demand, inflation is currently not rampant throughout the world but only some pockets, particularly in some sectors in the emerging world including China and India. In fact, inflation was at a very ebb in the US, Europe, China and India as recently as August 2012, recording the lowest levels in the post GFC period. Naturally, the policymakers had to shift their attention to other more serious part &nbsp;of &nbsp;their &nbsp;mandate &nbsp;vis-à-vis &nbsp;employment generation. In the same period, the embattled Euro-zone periphery economies like Spain and Greece were looking down with nearly one out of every four of their employable population &nbsp;out of jobs and a staggering 50% youth unemployment. In the US, the country was facing unprecedented 8% unemployment nearly into their fourth &nbsp;year with a historic average &nbsp;of around 5.8% &nbsp;since 1948. &nbsp;The US unemployment &nbsp;number turned out to be pretty persistent despite near zero interest rate along with strong communication from the US Federal Reserve Boards’ Federal Open Market Committee (FOMC) about their stance of holding the rates low in the foreseeable future until around &nbsp;middle of 2015.</p> <p>With traditional monetary policy doing little to assuage the persistent unemployment rate, the US Federal Reserve Chairman Ben Bernanke decided for the most recent round of stimulus package termed as QE3 or quantitative easing to buy back Mortgage &nbsp;Backed Securities in the order of US$40 billion per month. This would shore up the banks’ balance sheets to enable them to lend more aggressively until unemployment reduces significantly below current &nbsp;rates. &nbsp;In the &nbsp;same note the European Central Bank (ECB) president Mario Draghi had previously announced &nbsp;the so called OMT (Outright Monetary Transactions) to enable the ECB to buy back unlimited quantities &nbsp;of troubled &nbsp;Eurozone Government bonds in the secondary market. This would reduce the cost of borrowing money for these governments which in turn is aimed at spurring growth to facilitate Eurozone’s struggling economies to get out of the current economic quagmire. In the world’s third largest economy, Bank of Japan facing an imminent slowdown &nbsp;in production &nbsp;and &nbsp;growth &nbsp;also contemplated further stimulus plans through aggressive easing of their monetary policy. Inflation was of little less concern than &nbsp;a possible cycle of deflation that &nbsp;plagued Japan, and the spectre of a lost decade of no growth might continue was definitely in the mind of the policymakers.</p> <p>The effectiveness of such expansionary policies together with other macro-prudential measures is often mixed. On the positive side we have observed that current unemployment rate in the US has unexpectedly climbed down to around 7.7% &nbsp;in November 2012 while countries like Spain now face a lower interest rate in borrowing for the financial market. While on</p> <p>the other hand, US was looking at a possible “fiscal cliff” (or a “fiscal slope”with 11th hour legislation) of US$600 billion from government &nbsp;coffers in spending cuts and expiry of tax reductions which can drive the US economy from a fledging growth to recession. This is compounded by Eurozone economies already tottering near the brink of double or triple-dip recession with no &nbsp;end &nbsp;in sight to &nbsp;persistently high unemployment rates.</p> <p>Such expansionary &nbsp;policies popularly termed &nbsp;as “printing money” meant for encouraging growth and hence reducing unemployment could have an adverse consequence &nbsp;on inflation. The inflation that such availability of the &nbsp;freshly minted &nbsp;so called “hot &nbsp;money” generates could have an unintended consequence across the globe, in particular, in small open economies like Singapore. Loose monetary policy would tend to reduce the value of that currency and make its exports more competitive to the outside world. At the same time such policies will also make the &nbsp;foreign goods more expensive hence spur the demand &nbsp;for domestically produced and sourced goods, giving the right fillip to the local economy. However, countries that are export-oriented &nbsp;and have to import a lot of their consumables have to face imported &nbsp;inflation in a world of “easy money” or excess liquidity. With capital mobility the &nbsp;world over and &nbsp;exceptionally low interest rates, policymakers have an arduous task to control inflation when &nbsp;the &nbsp;priority of &nbsp;unemployment &nbsp;has &nbsp;been &nbsp;addressed.</p> <p></p> Impact of the Region<p>Inflation has been a thorny issue until very recently in several economies in the region including the regional block ASEAN. Inflation rates in Vietnam are hovering around a historical average of about 7%. However, it has gone up slightly from a recent low of 5% but definitely much lower than near 20% inflation just around a year back. The fluctuation has been quite high over the last couple of years of turmoil in the banking sector. Australia has been quite resilient in terms of inflation and has hovered around 2%, of their two year high of 3.6% but definitely higher than near 1% in July this year. Indonesia has a stable 4.6 % latest in October 2012, off from its two year high of about 7%. China was at their historic low at 1.7% in October off from near 6.5% about 2 years back. Further with a&nbsp;Flash PMI in China going over 50 in a recent survey by HSBC, they seem to show a positive outlook. US Inflation has also been a low of about 1.7% before a slight spike after the announcement of latest stimulus. The CPI-All Items Inflation Singapore has dropped to 3.6% in November 2012 from around 4% a month before.</p> Inflation in Singapore<p>Singapore is unique in several different ways. In an increasingly globalised world, Singaporean policymakers also face an uphill task on one hand to ensure full employment and on the other hand to provide price stability. Singapore headline inflation could be attributed to both increase in real estate and private transportation, and &nbsp;structurally due &nbsp;to increase in rentals and wages affecting the cost of doing business. Such costs more often than not get passed through &nbsp;to the consumers. Since the inception of the Singapore Index of Inflation Expectations (SInDEx) &nbsp;launched &nbsp;in January&nbsp;2012, there have been several quarterly updates &nbsp;that were &nbsp;released &nbsp;to the &nbsp;media and &nbsp;public that &nbsp;gave a unique insight to the psyche of the Singaporean household. It also helped the researchers to fine tune the questions to identify the source of uncertainties and expectations among the responding public.</p> <p>The main challenge in a small open economy like Singapore with sound policy and economic base is imported inflation. Furthermore, a tight monetary policy to accommodate &nbsp;for the &nbsp;imported &nbsp;inflation coupled with &nbsp;worsening &nbsp;investment &nbsp;climate &nbsp;elsewhere &nbsp;has made Singapore a coveted investment destination with an appreciating currency. The policymakers have an unenviable job to maintain price stability given that they have already addressed unemployment issues remarkably well through a downturn &nbsp;in the global economy. In the short run, besides imported inflation increasing wages and rental costs and consequent increase cost of doing business will probably maintain an upward pressure on inflation. On a brighter side, this might ease somewhat with an improving consumer confidence and sentiment in the emerging markets, in particular China in &nbsp;2013, &nbsp;and &nbsp;recovering conditions though nascent in developed markets like the US.</p> <p>Investors are becoming savvier by the day with increasing access to information, financial services and advice. They are also wary of the unlimited horizon&nbsp;easy monetary policy in the Western economies including comments and action by Ben Bernanke and Mario Draghi, to do whatever &nbsp;it takes to improve business conditions and growth. &nbsp;In fact, more recently Nobel laureate Paul Krugman, among others, termed it “QE Infinity” because of the unlimited horizon of the Fed’s action (for excerpts of Paul Krugman delivering his SKBI Public &nbsp;Lecture &nbsp; visit &nbsp;http://skbi.smu.edu.sg/events/&nbsp;2012/11/07/skbi-public-lecture-nobel-laureate- paulkrugman). However, there could be two direct unintended consequences of the low interest rate regime into foreseeable future for open Asian economies like Singapore.</p> <p>First, there could be flight to quality investment in Asia including Singapore. We would like to call this attracting “smart money” and not just “hot money” into the region. This will probably cause run up in real estate prices in the short run when housing supply cannot go up. Second, a more subtle but more damaging consequence &nbsp;is the decrease in purchasing power or to be precise, the real interest rate. The genesis of such a problem lies with the possibility of unhinged long term inflation expectations. A low nominal interest rate together &nbsp;with a moderate &nbsp;to high actual inflation rate might cause a decrease in purchasing power, and affect retirees or other &nbsp;investors particularly ones &nbsp;depending only on fixed income securities like long term bonds.</p> <p></p> Cost of Living<p>As a city state, &nbsp;Singapore is at a privileged position both geographically and historically. In fact, a recent forward looking if not a perfectly rigorous academic survey by the Economist Intelligence Unit (part of The Economist team) puts Singapore at no. 6 globally on its where-to-be-born in 2013 index. It highlights a comment made by world’s &nbsp;best known investor Warren Buffet’s claiming that he was born in the right country (US) and at the right time (1930s) when asked about why good things happened to him (The lottery of life: Where to be born in 2013, The Economist, Nov 21,</p> <p>2012). Incidentally, Switzerland &nbsp;is ranked first while US&nbsp;and Germany are tied at 16th position in the same index (after being first and third respectively in the inaugural Where-to-be-born survey in The World in 1988) that takes into account not just wealth but life expectancy, civil society, safety and security as well. The liveability coupled with investment and work destination of talented &nbsp;professionals possibly did come at a slight cost… the cost of living increase. It probably is likely to be in the eye of a perfect storm with a floundering global growth, unemployment spikes in the US and the Eurozone, and consequent &nbsp;regulations in the banking and financial sector. This might have led to a significant exodus from the Eurozone and the US. Furthermore, &nbsp;a growing and outward &nbsp;looking educated middle class in India and China and an attractive business and living environment in Singapore.</p> <p></p> Singapore Inflation Expectations<p>MasterCard-SKBI survey of Singapore Index of Inflation Expectations &nbsp;(SInDEx) &nbsp; started &nbsp; in &nbsp;September &nbsp; 2011 where approximately 400 participants were interviewed online with questions on their demographic details, household activities and perceptions on current and &nbsp;future &nbsp;economic and &nbsp;investment environments. The first two quarterly waves of the SInDEx Survey was analysed and presented &nbsp;at the official launch of the Singapore Index of Inflation Expectations (SInDEx) on January 10, 2012. The quarterly surveys reflected the adaptive expectations of various individuals in Singapore vis-à'vis their role as informed decision makers of the household. &nbsp;In particular, the initial surveys highlighted the nature of the characteristics that seem to influence the composite inflation expectations of individuals including economic awareness, long term horizon and exposure to media (cf. Singapore Consumers’ Inflation Expectations and Creation of Singapore Index of Inflation Expectations by A. Ghosh and J. Yu, 2011).</p> <p>We proposed two new index measures of inflation expectations, namely, the one-year-ahead &nbsp;SInDEx1 and the &nbsp;five-year-ahead &nbsp;SInDEx5. &nbsp;SInDEx1 &nbsp;is an &nbsp;equally weighted average of Headline (CPI-All Items) Inflation, Core Inflation (without Food and Energy related expenses) and finally, the Singapore Core (without the Accommodation and private transportation related costs). While the preliminary results were encouraging, the subsequent waves of the survey provided nothing short of a revelation. In particular, the Headline (closely related to the CPI-All Items, Figure 1 blue solid line with diamonds) Inflation and the composite one-year-ahead Sin- gapore Index of Inflation Expectations (SInDEx1, Figure&nbsp;1 purple dotted line with crosses) seem to closely track the movements of the prevailing 2012 Inflation forecast (Figure 1 Orange broken line) better &nbsp;than &nbsp;the earlier consensus forecast of the MAS Survey of Professional Forecasters (Figure 1, red line with rectangles). In fact, the first release of one-year-ahead headline inflation expectations of September 2011 of 4.68 is almost oracle- like with an ultimate realisation of 4.7% year on year. However, upon closer scrutiny, the just released third quarter value of CPI-All Items inflation is at 4.2% which is indeed fairly close to the projected inflation expectations of 4.68%. &nbsp;In the same period, the consensus median forecast for 2012 by the MAS Survey Professional Forecasters in September &nbsp;2011 &nbsp;was at &nbsp;2.8% &nbsp;nearly 50% lower than the realised outcome.</p> <p>To the best of our knowledge, the MasterCard-SKBI SInDEx survey &nbsp;is the first of its kind in the region. Hence, unfortunately we do not have a good comparison benchmark. In order to compare, we cite the example of the Consumer Confidence Inflation Rate Expectations&nbsp;12 Month Hence surveys conducted by The Conference Board in the US. The survey reported that the 12-month ahead rate dipped from a high of 6% in end August to 5.6% in end November 2012. These inflation expectations are consistently too high compared to the actual CPI inflation rate of 2.16% in October 2012 or for that matter, the actual CPI inflation of 1.7% recorded in August 2012. The Survey of Professional Forecasters published by the &nbsp;Federal Reserve Bank of &nbsp;Philadelphia calculated a consensus CPI Inflation &nbsp;forecast of 2.2% in the last quarter of 2012 which is substantially less than the 5.6% &nbsp;projected by current The Conference Board survey. It is a conventional wisdom that inflation expectations based on surveys reflect sentiment in the market and possibly overestimate the actual inflation rates unlike the inflation expectations backed out from the yield of Treasury Inflation Protected Securities (TIPS). (Source: 2012 Fourth Quarterly Survey of Professional Forecasters, Federal Reserve Board of Philadelphia, Aug 10, 2012, &nbsp; http://www.philadelphiafed.org/research-and-data/real-time-center/survey-of-professional- forecasters/2012/survq412.cfm &nbsp;and &nbsp;The Conference Board Consumer Confidence Inflation Rate Expectations 12 Month Hence, Bloomberg, http://www.bloomberg. com/quote/CONCINFL:IND).</p> <p>One-year-ahead SInDEx1 inflation expectations indices suggest that while it is quite responsive to communications by the &nbsp;policymakers, &nbsp;we find that &nbsp;the&nbsp;inflation expectations did not react excessively to short term fluctuations in the external market including food and oil price supply shocks due to turmoil in the Middle East or short term food inflation. It did, however, react with a slight dip in response &nbsp;to a tightening &nbsp;of the monetary policy through a steeper slope of the band of trade &nbsp;weighted &nbsp;exchange &nbsp;rate &nbsp;announced &nbsp;by MAS. This implies that at least in the medium term the infla- tion expectations measured by the composite inflation index &nbsp;(SInDEx1, &nbsp;Figure 1: &nbsp;Purple &nbsp;dotted &nbsp; line &nbsp;with crosses) seem to be fairly well “anchored” around the&nbsp;4.5% mark, the upper end of the projected band communicated &nbsp;by MAS. It did, however, increase slightly with supply shortages &nbsp;of Certificates of Entitlements (COE) affecting private car prices and increase in demand &nbsp;for &nbsp;private &nbsp;accommodation. &nbsp; Consistent &nbsp;with such expectations in the current December 2012 issue of recent developments of the economy, MAS economists expect that for the year 2012 the inflation rate will come out to a little higher than 4.5%. In the latest wave of the survey in December 2012, the one-year- ahead inflation expectations of the headline (or CPI-In- flation) &nbsp;rate &nbsp; is &nbsp;at &nbsp; 4.37% &nbsp; &nbsp;while &nbsp; the &nbsp; composite one-year-ahead &nbsp; inflation &nbsp;expectations &nbsp;index &nbsp;fell to 4.4%, &nbsp; down &nbsp;from &nbsp;the &nbsp;previous &nbsp;quarter’s &nbsp;high &nbsp;of 4.57%.</p> <p><a href="/content/dam/intelligence/content-assets/reports/SingaporeInflationExpectations.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/SingaporeInflationExpectations.jpg"></a></p> <p>While the one-year-ahead &nbsp;headline inflation expectations seem to be more or less anchored, &nbsp;the &nbsp;five- year-ahead &nbsp;one &nbsp;is still suffering from excessive uncertainty emanating &nbsp;from the bleak global macro- economic outlook where the risks of a global economic slowdown are described as “alarmingly high”(World Economic Outlook, IMF Publications, October 2012).&nbsp;Although the five-year-ahead headline inflation rate elevated from 5.37 to 5.56% &nbsp;(Figure 2, in solid blue and blue diamonds) from the second to the third quarter of 2012, the weighted composite five-year-ahead Singapore Index of Inflation Expectations (SInDEx5, Figure 2, in dotted &nbsp;purple with crosses) only inched up from 5.08% &nbsp;to 5.24% &nbsp;indicating there is some level of stabilisation in the expectations even under severe global economic uncertainty. This is furthered bolstered by a substantial easing of the five-year-ahead headline inflation expectations &nbsp;of 5.21%, &nbsp;and &nbsp;a lowering of the composite five-year-ahead inflation expectations (SIn- DEx5) of 4.97% &nbsp;in the latest wave of the SInDEx Survey in December 2012.</p> <p><a href="/content/dam/intelligence/content-assets/reports/SingaporeInflationExpectations2.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/SingaporeInflationExpectations2.jpg"></a></p> <p>However, the level five-year-ahead inflation expectations might still be an object of concern for policy-makers and needs &nbsp;some level of communication including a strong stance at putting controlling inflation in the forefront of the policy framework so as to anchor the long term inflation expectations along with the medium term one. In the absence of a benchmark we focus on the MAS Survey of Professional Forecasters projection for 2013, and observe that the five-year-ahead inflation expectations are indeed dominating the 2013 &nbsp;economic forecasts even though &nbsp;SPF inflation projects have an upward trajectory (Figure 2, red solid line with small boxes). Such future expectations of inflation in a period of record low fixed interest inevitably moves to the negative real rate of return on investment in such assets or in other &nbsp;words a steady erosion of purchasing power.</p> <p>The one-year-ahead Singapore core inflation rate (Figure 1, green solid line with triangles) is, without accommodation and private transportation &nbsp;in the SInDEx survey 4.67% &nbsp;in September 2011. This is significantly higher than 2.4%, the actual figure published by MAS. While there is no obvious reason for such an overestimation, we can conjecture some contributing factors. First, it is possible that respondents &nbsp;might be biased by the price changes of frequently purchased items that they have made in the recent past and ignoring less frequent purchases like the big ticket items (sometimes termed as the “frequency bias”). This would mean that individuals might &nbsp;expect &nbsp;higher &nbsp;inflation rate &nbsp;even though general price levels (excluding accommodation and private transportation) have not increased as much but food items, which form a small portion of their budget, &nbsp;has &nbsp;increased &nbsp;substantially. Second, &nbsp;media might have had a role to play in highlighting price increases in real estate and private transportation, &nbsp;which in turn might have had a knock on effect on inflation perception. Finally, there might have been some expectations of imported inflation that in reality was dampened &nbsp;by an &nbsp;appreciating Singapore dollar. Similar effects might have also transpired in the five-year- ahead Singapore core inflation expectations (Figure 2, green line with triangles) that the survey indicates &nbsp;is at&nbsp;5% annual rate. Having said that, a recalibration might be needed to compare the actual numbers but any systematic bias would potentially be attenuated &nbsp;for a composite index obtained through weighting different indices, for example, the SInDEx1 and SInDEx5.</p> <p></p> Conclusion<p>There are three &nbsp;major challenges or pitfalls facing a central banker. First, one of the biggest challenges facing a policymaker is the possibility of “unhinged” inflation &nbsp;expectations &nbsp; that &nbsp; might &nbsp;be &nbsp;fuelled &nbsp;by &nbsp;mass hysteria or irrational exuberance. &nbsp;Second, the &nbsp;other policy challenge is the possibility of a deflationary cycle that &nbsp;engulfed &nbsp;a G3 country like Japan and meant &nbsp;a long period of recession or no growth as seen in the&nbsp;1990s. Finally, the third one is a period of stagflation seen in the US in late ‘70s early ‘80s where the period is marked by both stagnation &nbsp;and inflation. Many of the western economies are suffering from prolonged period of high unemployment owing mainly to lack of demand &nbsp;or very low new job creation. This has put a downward &nbsp;pressure in inflation and the second scenario has become a real possibility. Hence policymakers have chosen the path of stimulating the economy at the expense of some level of inflation which might be beneficial to the growth of the economy.</p> <p>Having gone &nbsp;through &nbsp;a significant period &nbsp;of restructuring themselves post the Asian Financial Crisis, the export driven Asian Economies outside Japan were less affected by rampant unemployment like the West but had a dip in the demand &nbsp;from the west and imported (or some pockets in domestic markets in India and China) inflation due to record low interest rates. Hence, many of the central banks could not adopt &nbsp;a very expansionary policy but a measured tightening to shore up consumer confidence and control inflation. This approach might also address the issue on stagflation in the absence &nbsp;of high inflation rates. The right balance in stimulus spending to reduce unemployment, monetary &nbsp;policy tightening &nbsp;and &nbsp;macro-prudential processes like changing reserve requirements by central bankers and the economic policy community might help the &nbsp;global economy to &nbsp;get &nbsp;back on track of growth.</p> <p></p> The study of inflation expectations of Singapore households is a multi-disciplinary industry-relevant research that comes out of a partnership between Singapore Management University (SMU), and MasterCard.http://www1.mastercard.com/content/intelligence/en/research/reports/2012/singapore-inflation-expectations-expecting-the-unexpected2012-12-26T16:00:00.000Z2012-12-26T16:00:00.000ZA New Perspective On Bill Payment--A Demand-Based Path To Financial Inclusion Amit Jain, Gidget Hall A New Perspective On Bill Payment--A Demand-Based Path To Financial Inclusion<p>If asked to name a consumer&nbsp; payment&nbsp; category with billions of transactions globally, one that&nbsp; touches&nbsp; nearly every household and is still primarily cash-based, not many would come to mind. If then&nbsp; asked which of those listed could transform&nbsp; the financial and payments&nbsp; market,&nbsp; probably a very small number&nbsp; would remain on your list, and bill payment&nbsp; would not likely be one of them.&nbsp; This is not surprising. Very few people think of transformation when they think of bill payment.&nbsp; This study tries to change&nbsp; that mindset by illustrating how bill payment&nbsp; can be a potential&nbsp; path&nbsp; to financial inclusion, thus transforming the payments&nbsp; and financial industry.<br> <a href="/content/dam/intelligence/content-assets/50FINANCIALINCLUSION.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/50FINANCIALINCLUSION.jpg"></a> </p> EXECUTIVE SUMMARY<p>Financial inclusion is seen as a key path to poverty alleviation and therefore is widely embraced by both developed&nbsp; and developing countries across the globe. The threshold&nbsp; to financial inclusion is typically understood to be the ownership&nbsp; of a payment&nbsp; transaction account, but achieving active usage of non-cash&nbsp; payment&nbsp; methods represents a major challenge worldwide. This paper shows that to address this challenge,&nbsp; financial inclusion should start with promoting non-cash&nbsp; methods of bill payment.&nbsp; This is a new way of thinking about&nbsp; both bill payment&nbsp; and financial inclusion that has not been explored before.&nbsp; A key distinction is defining financial inclusion as a hierarchy of financial needs starting with the most basic needs versus a binary state encompassing all financial needs. Bill payment&nbsp; is one of the most basic financial needs because&nbsp; it generally represents the essential living expenses of consumers,&nbsp; payments&nbsp; that every household has to make to survive. Therefore, financial inclusion should start by addressing&nbsp; the consumer's need for better&nbsp; alternatives to cash for bill payment.</p> <p>There are four reasons discussed in this paper (the large scale of bill payment,&nbsp; the potential&nbsp; for electronic bill payment&nbsp; to create value for all stakeholders, the ability to drive electronification&nbsp; of other payment&nbsp; categories&nbsp; and the potential&nbsp; to achieve greater&nbsp; financial inclusion by accelerating lending) as to why bill payment&nbsp; is well positioned&nbsp; to initiate financial inclusion and drive it forward. This is a new way of looking at bill payment&nbsp; and one of the many ways in which bill payment could transform&nbsp; the payments&nbsp; and financial industry. It also approaches financial inclusion from the demand side by addressing&nbsp; consumers' financial needs,&nbsp; which, when joined with the product/ supply-side view (e.g., prepaid cards, mobile phones),&nbsp; could be a powerful combination.</p> Alternative Definition of Financial Inclusion<p>A common&nbsp; definition of financial inclusion is having access to and leveraging financial products&nbsp; and services to serve one's payments&nbsp; (beyond cash), investments /savings, borrowing&nbsp; and insurance needs1.&nbsp; However, there are two challenges to this definition. The first is that&nbsp; it seems to imply that&nbsp; financial inclusion is a binary state that&nbsp; is achieved when all financial needs are met. While it is important to address all needs,&nbsp; this definition does not offer any flexibility in recognizing progress in financial inclusion as partial needs are met. The second challenge&nbsp; is that&nbsp; this definition does not provide any guidance&nbsp; as to the right path to financial inclusion.</p> <p>Therefore, this study thinks of financial inclusion as a progression&nbsp; and defines a hierarchy of needs,&nbsp; with higher levels of financial inclusion achieved as more needs are fulfilled. Figure 1 below depicts this hierarchy, beginning&nbsp; with the most basic/foundational needs,&nbsp; such as a secure account&nbsp; for holding payment transaction funds and bill payment,&nbsp; and moving to more complex needs like borrowing&nbsp; and insurance. this study&nbsp; defines financial inclusion as a hierarchy of financial&nbsp; needs that should start by promoting non-cash methods of bill payment.<br> </p> <p><a href="/content/dam/intelligence/content-assets/FIGURE1-HIERARCHY-OF-FINANCIAL-NEEDS.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/FIGURE1-HIERARCHY-OF-FINANCIAL-NEEDS.jpg"></a></p> <p>This study&nbsp; defines financial inclusion as a hierarchy of financial&nbsp; needs that should start by promoting non-cash methods of bill payment.</p> <p>There are two important reasons to define the hierarchy of needs in this manner: (1) people are likely to be more concerned about&nbsp; addressing&nbsp; their foundational needs first and more receptive to solutions that&nbsp; address these needs; and (2) more importantly, by serving people's needs in the order defined by the hierarchy, more of these&nbsp; needs can be met. For example, if consumers' payments&nbsp; can be tracked, that&nbsp; information&nbsp; can be used to assess their risk and extend loans to them.&nbsp; If people get credit, they will have greater&nbsp; opportunity<br> to create&nbsp; wealth and invest /save, which in turn will create&nbsp; a need for insurance products.&nbsp; The following example illustrates this consumer&nbsp; progression.</p> <p>Bill payment is one&nbsp; of the most foundational/basic financial needs because it generally represents the essential living expenses of consumers, payments that every&nbsp; household has to make to survive.</p> <p><a href="/content/dam/intelligence/content-assets/PROGRESSION-OF-CONSUMER-FINANCIAL-INCLUSION.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/PROGRESSION-OF-CONSUMER-FINANCIAL-INCLUSION.jpg"></a></p> <p>Bill payment&nbsp; is one of the most foundational/basic financial needs because it generally represents the essential living expenses of consumers,&nbsp; payments that&nbsp; every household has to make to survive. Therefore, financial inclusion should start by addressing&nbsp; the consumer's need for better&nbsp; alternatives to cash for bill payment.</p> BILL PAYMENT: AN EFFECTIVE DEMAND-BASED APPROACH TO FINANCIAL INCLUSION<p>Financial inclusion is seen as a key path to poverty alleviation and therefore is widely embraced by both developed&nbsp; and developing countries across the globe. Based on research conducted by Financial Access Initiative, a consortium&nbsp; of researchers&nbsp; from institutions including Yale, Harvard, and New York University, around&nbsp; 50 percent&nbsp; of the adult population&nbsp; of the world is financially unserved. Even in high-income&nbsp; Organization&nbsp; for Economic Cooperation and Development (OECD) countries,&nbsp; 8 percent&nbsp; or 60 million adults are financially unserved.&nbsp; The U.S., which is the world's largest and most developed&nbsp; economy,&nbsp; has 15 to 20 million such adults. One key reason for this high percentage is that,&nbsp; historically, access to financial services and products&nbsp; has been closely tied to people having bank accounts.&nbsp; At the same time, the infrastructure&nbsp; costs and regulatory requirements of offering bank accounts&nbsp; have made it economically unviable for banks to offer accounts&nbsp; to the large segment of the population&nbsp; that&nbsp; is below a certain income threshold</p> <p><a href="/content/dam/intelligence/content-assets/FIGURE2-ADULTS-WHO-DO-NOT-USE-FORMAL-FINANCIAL-SERVICES.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/FIGURE2-ADULTS-WHO-DO-NOT-USE-FORMAL-FINANCIAL-SERVICES.jpg"></a></p> <p>Clearly, using bank accounts as an enabler for financial inclusion has shown its limitations. New emerging solutions such as mobile payments and prepaid cards are trying to provide alternatives to bank accounts to drive financial inclusion. Like bank accounts, most of these solutions take a product/supply-focused view to address the problem although they are more viable given the lower cost and regulatory hurdle. To some extent, this approach makes sense. For example, over half the population of the world has mobile phones. Attaching a payment account to the phone or leveraging the phone account as the payment account could quickly drive penetration of payment solutions, especially for P2P payments, as evidenced by M-Pesa in Kenya.</p> <p>The other potential approach to driving financial inclusion is to take a demandside view. Based on the financial inclusion needs hierarchy shown above, this would mean starting with bill payment. There are four concrete reasons why bill payment is well positioned to initiate financial inclusion and drive it forward:<br> 1.&nbsp;The large scale/size of bill payment.<br> 2.&nbsp;The large potential for making bill payment electronic by creating a value proposition for all stakeholders.<br> 3.&nbsp;The potential to drive electronification of other payment categories by creating stickiness for an electronic payment method.<br> 4.&nbsp;The potential to achieve greater financial inclusion beyond payments; for example, giving individuals access to non-cash methods for bill payment could lead to companies ability to track those payments, and over time this could provide insights for analyzing credit risk and driving lending such as microlending in developing/emerging countries.</p> <p>These four reasons are likely to be relevant in any country in the world, making bill payment a universal phenomenon that could accelerate financial inclusion in any market. The solutions based on this demand-side approach may still use mobile phones or prepaid cards as the underlying technology, suggesting that the right answer would likely combine the supply/product view with the demand-side view. This study looks in depth at the four reasons why bill payment could accelerate financial inclusion and why combining the product view with the demand-side view is the right approach.</p> <p><b>1. Bill Payment Represents A Large Scale Consumer Payment Type</b></p> <p>Three aspects of the scale of bill payment make it particularly well suited for driving financial inclusion.<br> &nbsp;<b>1.&nbsp;High Penetration:</b>&nbsp;Bill payment touches nearly every household in the world. As mentioned earlier, bill payment generally represents payment of consumers' essential living expenses, often the most basic survival requirements such as electricity, water and cell phone. Nearly every household has to make these<br> payments; if they do not, they lose critical services.<br> <b>2. Recurrence:</b>&nbsp;Bill payment is not a one-and-done phenomenon; each person has to regularly pay bills. This has two important implications: a) finding the right solution becomes a key priority for consumers, and once they determine what works for them, they are likely to adopt that solution; and b) this creates stickiness for the bill payment solution and could lead to other levels of financial inclusion along the hierarchy.<br> <b>3.&nbsp;Size:</b>&nbsp;Bill payment is a large enough segment for stakeholders to focus on. Globally, there are billions of consumer bill payment transactions. All three aspects of the scale of bill payment apply to every country in varying degrees. For example, in a developing economy like India, every household pays four or five bills per month or 10 to 12 billion bills per year2. In a developed market like the U.S., every household pays around 15 bills per month or over 20 billion bills per year3.</p> <p><b>2. Electronic Bill Payment Can Create a Value Proposition for All Stakeholders</b></p> <p>A key reason that&nbsp; payment&nbsp; solutions fail is that&nbsp; they do not create&nbsp; a value proposition&nbsp; for all stakeholders&nbsp; in the value chain but rather focus on just one or two stakeholders. Making bill payment&nbsp; electronic has the potential&nbsp; to create&nbsp; a value proposition&nbsp; for all stakeholders&nbsp; and drive financial inclusion, an important first step for initiating financial inclusion on a large scale.</p> <p>The following three examples demonstrate this ability:<br> <b>Mexico:</b>&nbsp;Mexico has a large unbanked population (~70%)4, making financial inclusion a key priority. In Mexico, 65 percent of consumer bills are paid with cash at the biller's office, and 27 percent are paid with cash at a bank branch or retail outlet5. Only 8 percent of bills are paid online at the biller website or through online banking6. Banks and retailers in Mexico have each built their own direct connections to the billers to settle bills. Biller aggregators like Checkfree that provide a single point of connection to several billers are a recent phenomenon primarily serving smaller mom-and-pop retailers.</p> <p><a href="/content/dam/intelligence/content-assets/FIGURE3-BILL-PAYMENT-CHANNELS-IN-MEXICO.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/FIGURE3-BILL-PAYMENT-CHANNELS-IN-MEXICO.jpg"></a></p> <p>Interestingly, most of the unbanked consumers&nbsp; in Mexico receive their salary on salary cards (a type of prepaid card) but choose to withdraw&nbsp; the entire amount on payday and use the cash for payments,&nbsp; including bill payment.&nbsp; Taking a closer look at the needs and pain points of all stakeholders&nbsp; shows that&nbsp; making bill payments&nbsp; electronic may create&nbsp; value at all levels and at the same time accelerate&nbsp; financial inclusion.</p> <p><b>Consumers:</b>&nbsp;The key pain point for consumers&nbsp; is that&nbsp; they have to travel to a physical location like a biller's office or bank branch to pay a bill. As a result, they not only have to wait in long queues&nbsp; but also have limited flexibility in terms of the time of day they can pay a bill. Internet penetration in Mexico is also very low (~30%)7 and primarily among&nbsp; the banked&nbsp; population, leaving paying at a physical site as the primary method of bill payment&nbsp; for the unbanked. Alternate remote&nbsp; payment&nbsp; methods that&nbsp; are cost-efficient are a key need for the unbanked in Mexico.</p> <p><b>Billers:</b>&nbsp;The biggest pain point for billers is the high cost associated&nbsp; with accepting&nbsp; bills at their offices (e.g., staff, office space). Billers have been moving bill payment&nbsp; to alternate low-cost channels like banks and retailer locations for a fee, but most of the bills are still paid at their offices. Billers would be open to an electronic payment&nbsp; solution that&nbsp; materially moves payment&nbsp; volume to other channels,&nbsp; and would be willing to pay for it as long as it lowers their total cost.</p> <p><b>Banks:</b>&nbsp;On the one hand,&nbsp; banks in Mexico see bill payment&nbsp; as an important source of revenue&nbsp; (charging the biller a fee for each bill) and a way of engaging and acquiring customers, but on the other hand they are facing the high cost of serving bill payment&nbsp; customers&nbsp; at bank branches. Another concern is low usage of the salary cards they issue. As mentioned, most of the unbanked withdraw all the money from their salary card on payday and subsequently use cash for making payments.&nbsp; A key need for banks is to be able to offer bill payment using lower-cost channels and salary cards issued by them.</p> <p><b>Government and Telcos:</b>&nbsp;A key priority for the Mexican government is to reduce the black economy and make transactions easier to track, which they hoped&nbsp; to accomplish by introducing&nbsp; a tax on certain cash deposits.&nbsp; Telcos are looking for new sources of revenue,&nbsp; and major players like Telmex and Telefonica have already launched&nbsp; mobile payment&nbsp; initiatives.</p> <p>Current cash-based bill payment&nbsp; clearly has significant pain points for all stakeholders. But there is a common&nbsp; theme:&nbsp; the need for an alternate low-cost channel.&nbsp; This could be the key for developing a solution that&nbsp; creates value for all stakeholders. Given a nearly 75 percent&nbsp; penetration of mobile phones, one answer could be a mobile bill payment&nbsp; solution that&nbsp; uses the salary card as the funding source. This would enable consumers&nbsp; to pay their bills from their mobile phones, the billers to use a more cost-efficient channel for accepting payments,&nbsp; the banks to engage with consumers&nbsp; and drive usage of salary cards, the government to drive electronification&nbsp; of payments,&nbsp; and mobile phone&nbsp; companies&nbsp; to engage in payments.&nbsp; By creating value for all stakeholders, financial inclusion would accelerate&nbsp; as consumers&nbsp; start using salary cards instead&nbsp; of cash for payments.</p> <p><b>India:</b>&nbsp;In India, probably only half the population has bank accounts, making financial inclusion an important priority. Eighty percent of bills in India are paid at the biller's office, 90 percent of these with cash10. Roughly 15 percent of bills are paid online either through online banking or biller website11--options primarily available for the banked population. For the unbanked population, the primary alternative to the biller's office is walk-in payment at a retail outlet using cash, but currently this accounts for less than 5 percent of the bill payment volume12.</p> <p><a href="/content/dam/intelligence/content-assets/FIGURE4-INDIA-BILL-PAYMENT-CHANNELS.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/FIGURE4-INDIA-BILL-PAYMENT-CHANNELS.jpg"></a></p> <p>A key trend over the last 10 years in bill payment&nbsp; in India has been the emergence of bill payment&nbsp; aggregators. There are two types: biller aggregators like BillDesk, who build connections to billers and offer a common&nbsp; point for accessing a large network&nbsp; of billers for bill payment,&nbsp; and front-end aggregators like Suvidha, who connect&nbsp; retail outlets to biller aggregators to enable acceptance of payments&nbsp; from consumers.&nbsp; Despite the emergence of these aggregators, 80 percent&nbsp; of bills in India are still paid at the biller's office13. This is interesting&nbsp; because&nbsp; mobile operators have been able to leverage the same retail network&nbsp; in India to accept payments--90 percent&nbsp; of mobile top-ups&nbsp; in India are at retail outlets14.</p> <p>The pain points and needs for billers, consumers&nbsp; and government in India are similar to those in Mexico. Banks do not seem to have significant pain points as they appear&nbsp; content to focus on the banked&nbsp; population&nbsp; using currently offered low-cost channels like online banking.&nbsp; Mobile penetration in India is over 50 percent15, rapidly growing and significantly higher than Internet penetration (15%-25%)16, making mobile bill payment&nbsp; a potential&nbsp; longer-term solution. Right now, the retail network&nbsp; appears&nbsp; to be the most likely candidate for creating an alternate network&nbsp; for bill payment&nbsp; based on the success of mobile top-ups.<br> The pain points and needs for billers, consumers and government in india are similar to those in mexico. Banks do not seem to have&nbsp; significant pain points as they&nbsp; appear&nbsp; content to focus&nbsp; on the banked population using&nbsp; currently offered low-cost channels like online banking.</p> <p><b>Retailers:</b>&nbsp;Retailers consider bill payment&nbsp; an important source of revenue and foot traffic. Any solution that provides higher bill payment&nbsp; volume without&nbsp; disrupting their core retail business would appeal to them. In the current setup, two key issues that retailers face limit bill payment volume through this network.&nbsp; The first is that the current experience of accepting bill payment is fairly complicated, especially compared to mobile top-ups.&nbsp; This makes it very difficult for retailers to offer bill payment&nbsp; as an ancillary service. The second pain point is the cost of handling cash, which is significant. To accept bill payment,&nbsp; the retailer is required to prepay the amount to the front-end aggregator so that every time the retailer receives the cash payment,&nbsp; the aggregator can debit the prepaid account. This is a significant burden&nbsp; on retailers in terms of working capital requirements and is unsustainable to support large volumes.</p> <p><b>Aggregators:</b>&nbsp;The primary challenge for front-end aggregators is to efficiently solve the two retailer pain points. Biller aggregators have already invested in building connections to the billers and would like to see higher volume.</p> <p>As in Mexico, current cash-based bill payment&nbsp; is creating significant pain points for all stakeholders&nbsp; in India. And also like Mexico, the common&nbsp; theme&nbsp; across all stakeholders&nbsp; is the need for a low-cost network&nbsp; for accepting&nbsp; bill payment. Two issues must be addressed to enable this large-scale network.&nbsp; The first is<br> to simplify both the technical requirements and the process for accepting&nbsp; bill payments&nbsp; for retailers. Mobile operators have done a great job at simplifying this so only a consumer's mobile number&nbsp; and a retailer's phone&nbsp; are required for accepting&nbsp; payments.&nbsp; Therefore, there is no reason that&nbsp; something cannot&nbsp; be done for other types of bill payments.</p> <p>The second issue is the cost of handling cash in the system. The mobile top- up value chain faces a similar challenge, but because of its narrow focus, it is still manageable. For broader bill payment,&nbsp; one solution could be prepaid bill-pay cards that consumers could use to pay bills at retail outlets with retailers using their phones as acceptance devices. There are several ways in which the underlying mechanics could work, but the key is that it creates a value proposition&nbsp; for all stakeholders. Retailers do not have to lock in their working capital for accepting bills, consumers&nbsp; have more bill payment&nbsp; channels, billers can move more traffic away from their office locations, aggregators get more volume through their network,&nbsp; and more volume moves to electronic payments' a key priority for the government. Just as in Mexico, the process of creating value for all stakeholders would also accelerate financial inclusion as consumers&nbsp; start using prepaid bill-pay cards instead of cash for payments.</p> <p><b>The United States:</b>&nbsp;As mentioned earlier, financial exclusion is not limited to developing/emerging economies;&nbsp; the U.S., the world's largest and most developed&nbsp; world economy,&nbsp; also has a fairly large unbanked population. And these people need to pay their bills. The most popular ways for this population to pay bills are with cash at the biller's office and at small check-cashing&nbsp; shops where consumers&nbsp; pay very high fees. The pain points for stakeholders, including billers and consumers,&nbsp; are similar to those in India and Mexico with equally significant potential&nbsp; to offer an alternate low-cost channel for paying bills.</p> <p>One solution in the U.S. could be to partner&nbsp; with the U.S. Postal Service (USPS) to offer a prepaid bill-pay card. Consumers&nbsp; would be able to pay with this card at any post office location, a huge acceptance network&nbsp; that they are already familiar these three&nbsp; examples show that bill payment could accelerate financial&nbsp; inclusion not only in developing markets&nbsp; like india and mexico, but also in developed markets&nbsp; like the U.S.with. The Postal Service would benefit from a new source of revenue at a time when they are looking for alternatives. In addition,&nbsp; billers would get a new, huge alternate bill acceptance network.&nbsp; And, as in India, use of the prepaid card versus cash would simplify the flow of money through the value chain, making the economics even more attractive.</p> <p>These three examples show that bill payment&nbsp; could accelerate&nbsp; financial inclusion not only in developing markets like India and Mexico, but also in developed markets like the U.S. The key would be to take a holistic look at the ecosystem in the three countries and develop solutions that create value for all stakeholders, something that clearly seems possible. The three examples also emphasize the point made earlier, which is that the right approach to accelerating&nbsp; financial inclusion is to marry the supply-side/product view (e.g., mobile, prepaid) with the demand- side view of bill payments.&nbsp; In all cases, payment&nbsp; efficiency is essential to bill payment&nbsp; for all stakeholders, and is something that is applicable in any market.</p> <p><b>3. Bill Payment Has the Potential to Drive Electronification of Other Payment Categories</b></p> <p>As mentioned earlier, bill payment&nbsp; is not a one-and-done phenomenon; rather, people have to regularly pay their bills. Therefore, it is logical that using an electronic payment&nbsp; method like a prepaid card for paying bills would be so habit forming that people would start using it for other types of payments&nbsp; like retail purchases. For example, in Mexico and India it is probable&nbsp; that consumers will start using their salary or bill payment&nbsp; cards for other types of retail purchases.&nbsp; This phenomenon of creating stickiness to the payment&nbsp; method by its regular use is also supported by research. Based on a study done by MasterCard,&nbsp; consumers in the U.S. who make recurring payments on their credit cards tend to use their cards more for other spend versus consumers&nbsp; who do not make recurring payments&nbsp; (see Figure 5).</p> <p><a href="/content/dam/intelligence/content-assets/FIGURE5-OVERALL-SPEND-LIFE-IN-CONSUMER-CREDIT.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/FIGURE5-OVERALL-SPEND-LIFE-IN-CONSUMER-CREDIT.jpg"></a></p> <p><b>4. Bill Payment Has the Potential to Achieve Greater Financial Inclusion by Driving&nbsp; lending</b></p> <p>The potential&nbsp; for bill payment&nbsp; to drive financial inclusion is not limited to providing alternatives to cash for payments.&nbsp; Bill payment&nbsp; could lead to greater financial inclusion beyond payments&nbsp; by driving other financial activity, such as lending. This is because&nbsp; when consumers&nbsp; have access to electronic payment methods to pay their bills, their payments&nbsp; can be tracked by companies. Companies&nbsp; could then analyze these&nbsp; payments&nbsp; to get useful insights into the creditworthiness of consumers&nbsp; and assess their risk for loans. This is true not only in emerging/developing countries,&nbsp; but also in developed&nbsp; countries.</p> <p>For example, a growing trend over the last several years in India has been microfinance loans, small loans typically made to the lower-income&nbsp; segment of society. Based on a study by ACCESS Development&nbsp; Services, a not-for-profit company that&nbsp; specializes in microfinance, the total outstanding microfinance loan amount in India at the end of 2010 was around&nbsp; $8 to $10 billion with approximately 85 million people leveraging these&nbsp; loans. While this has more than doubled&nbsp; since 2007,&nbsp; the penetration of microfinance loans still remains small, given that&nbsp; 37 percent--or around&nbsp; 400 million Indians--are below the country's national&nbsp; poverty line, based on data from the United Nations Development&nbsp; Programme.</p> <p>A key reason for this low penetration is the lack of data needed by lenders to assess the credit risk of borrowers.&nbsp; However, if these&nbsp; borrowers&nbsp; start paying their bills electronically, the information&nbsp; on their payment&nbsp; behavior could be tracked by companies&nbsp; and used as an indicator of their creditworthiness and could drive higher lending. In fact, vegetable&nbsp; traders in Bhubaneswar, India, are already using their bill payment&nbsp; receipts as proof of payment&nbsp; to secure loans. But because&nbsp; this process is paper based,&nbsp; it has significant pain points such as lost receipts; making bill payment&nbsp; electronic could make it much more efficient.</p> <p>Similarly, in the U.S., the recent financial crisis has irreversibly damaged the credit worthiness&nbsp; of millions of Americans. For these&nbsp; people,&nbsp; the traditional approach of building creditworthiness by taking loans won't work since they are unlikely to get any new loans. An alternative for them could be leveraging their bill payment&nbsp; behavior as a means of building credit when all other avenues may have closed.</p> <p><a href="/content/dam/intelligence/content-assets/FIGURE6-GROWTH-OF-MICROFINANCE-LOANS-IN-INDIA.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/FIGURE6-GROWTH-OF-MICROFINANCE-LOANS-IN-INDIA.jpg"></a></p> CONCLUSION<p>It is time to look at bill payment in a totally different light that focuses on its ability to transform the global payments and financial markets. Enabling financial inclusion is one approach, and bill payment needs to be a key consideration for those hoping to benefit from it--from governments that want to develop a more efficient society to businesses looking for new sources of revenue. Additionally, given the scale of bill payment and the inefficiencies that exist in bill payment methods today, there could be several other ways in which bill payment can play a role in shaping global financial markets.</p> Financial inclusion is seen as a key path to poverty alleviation and therefore is widely embraced by both developed and developing countries across the globe.http://www1.mastercard.com/content/intelligence/en/research/reports/2012/a-new-perspective-on-bill-payment-a-demand-based-path-to-financial-inclusion2012-09-30T16:00:00.000Z2012-09-30T16:00:00.000ZThe Challenges of Urbanization in Sub-Saharan Africa: A Tale of Three Cities Yuwa Hedrick-Wong, George AngelopuloThe Challenges of Urbanization in Sub-Saharan Africa: A Tale of Three Cities<p>&nbsp;<br> </p> MasterCard Worldwide A Global Knowledge Leader<p>MasterCard&nbsp; Worldwide&nbsp; is widely recognized&nbsp; as&nbsp; a knowledge leader around the world. Over the years, the global payment solutions company has devoted extensive resources&nbsp; to developing a deeper&nbsp; understanding of the payments card markets and the business and economic environment through&nbsp; surveys and independent research studies. Some of these initiatives include the MasterCard Worldwide Index of Consumer Confidence, MasterCard Worldwide Index of Women's Advancement, MasterCard Worldwide Centers of Commerce, MasterCard Worldwide Index of Consumer Purchasing Priorities, MasterCard Worldwide Index of Consumer Resilience and MasterCard Worldwide Index of Consumer Spending Capability. Today, these MasterCard offerings are much sought after by analysts, academics and decisionmakers in financial institutions, government&nbsp; agencies and multi-national organizations.</p> <p>Launched&nbsp; in 1993,&nbsp; the&nbsp; MasterCard&nbsp; Worldwide Index of Consumer Confidence has proven to be an excellent barometer&nbsp; of the general consumer pulse in Asia/Pacific. The twice-annual survey analyzes prevailing consumer perceptions of economic conditions for the next six months.&nbsp; Its insights into the dynamics of consumer sentiment, and the market paradigm deliver value to a variety of audiences, including customers and business partners.</p> <p>In 2003, MasterCard established the MasterIntelligence&nbsp; Knowledge&nbsp; Panel, which comprises&nbsp; leading economists and business strategists from China, Hong Kong, India, Japan,&nbsp; Korea and&nbsp; South&nbsp; East Asia. In 2006, it was expanded to become a global knowledge panel,&nbsp; which now&nbsp; conducts&nbsp; research&nbsp; and&nbsp; provides insights on the economic and business environment globally. The panel is headed&nbsp; by Dr. Yuwa Hedrick- Wong, Economic Advisor, MasterCard Worldwide. In 2009, an African Knowledge Panel was established.<br> Today, MasterCard continues&nbsp; to demonstrate its commitment&nbsp; by not only adding value with cutting edge research but also through&nbsp; sharing knowledge in new areas.&nbsp; Its knowledge&nbsp; leadership is well recognized and unrivaled.</p> Foreword: A Tale of Three Cities<p>Urbanization is one of the most significant trends in Sub-Saharan Africa at present,&nbsp; with rural populations migrating at unprecedented rates to urban hubs in search of employment and economic growth.</p> <p>In this report, the second in the MasterCard series of research reports&nbsp; into Africa entitled: 'The Challenges of Urbanization in Sub-Saharan Africa: A Tale of&nbsp; Three&nbsp; Cities',&nbsp; the&nbsp; research&nbsp; team&nbsp; of&nbsp; Dr. Yuwa Hedrick-Wong and Professor George Angelopulo offer insights into urbanization&nbsp; in three&nbsp; significant African cities-Lagos, Nairobi and Maputo.</p> <p>The report highlights that&nbsp; urbanization&nbsp; is key to boosting productivity and economic activity in developing markets, but unless it is carefully planned&nbsp; and implemented,&nbsp; it can lead to structural weaknesses and even breaking points in cities that&nbsp; are not adequately prepared&nbsp; for the uncontrolled&nbsp; influx of rural populations&nbsp; seeking to improve their lives.</p> <p>Each of the three cities discussed in the report has noteworthy&nbsp; successes in servicing their growing populations, but each has also been challenged in under-estimating the scale of urbanization and the planning and development&nbsp; needed&nbsp; to accommodate it.</p> <p>The consequence of this includes, among&nbsp; others, the mushrooming&nbsp; of slums, pressure on infrastructure and the social problems that&nbsp; accompany&nbsp; unemployment in an urban setting. Failing to prepare for these, or to address them&nbsp; adequately,&nbsp; could see emerging markets fall into the trap of replacing rural underdevelopment with urban underdevelopment-a destructive scenario that betrays the enormous potential that is so apparent&nbsp; on the African continent.</p> <p>So where and how can African markets find the balance between&nbsp; the benefit of increased economic activity of urban dwellers with the costs of accommodating them with appropriate&nbsp; infrastructure&nbsp; and systems?</p> <p>While getting urbanization right is key to positionng for future&nbsp; economic growth,&nbsp; it is important&nbsp; to note&nbsp; that&nbsp; there&nbsp; is no&nbsp; single&nbsp; fast-fix that&nbsp; can&nbsp; be applied&nbsp; to&nbsp; any&nbsp; of&nbsp; the&nbsp; problems&nbsp; afflicting Africa's urbanized&nbsp; populations.&nbsp; There is significant cultural, social and economic diversity from region to region, and indeed&nbsp; city to city?and the key to success in these&nbsp; markets&nbsp; will be&nbsp; careful management of the resource-driven expansion, with local solutions that respond to local situations.</p> <p>Earlier this year, the first in a series of four MasterCard Worldwide Insights reports&nbsp; on Africa was released entitled: 'Taking Stock: The State of Sub-Saharan Africa' by Dr. Azar Jammine and Dr. Martyn Davies and offered an overview of the current status quo on the continent and insights into the opportunities and inhibitors for those seeking to do business on a continent&nbsp; that&nbsp; is variously seen as challenging to invest in or as the world's current greatest&nbsp; opportunity for significant growth.&nbsp; Should you wish to view that report, please visit&nbsp;<a href="http://www.masterintelligence.com/">www.masterintelligence.com</a></p> <p>I&nbsp; trust that&nbsp; you will find this second MasterCard Insights report into African markets a comprehensive and useful tool for your future business planning.</p> <p>Yours sincerely,</p> <p>Michael Miebach<br> Division President, Middle East &amp; Africa<br> MasterCard Worldwide</p> The Challenges of Urbanization in Sub-Saharan Africa: A Tale of Three Cities<p>&nbsp;<br> </p> Introduction: Urbanization and Development<p>Urbanization is today a truly global phenomenon. Even though many of the developed markets had experienced rapid urbanization when they industrialized in the 19th and 20th centuries, their urbanization process has never really stopped, and has been gaining new momentum recently. A dramatic illustration of this is in Germany, where in the last decade the wolves have returned to rural regions as small towns and villages are increasingly becoming depopulated as young people continue to move to live in cities. For the developed markets, a renewed momentum in urbanization is critical for revitalizing their economies. Their large urban regions have become the cradle for nurturing their creative industries, facilitating business innovations, and driving economic growth with ideas and human ingenuity.</p> <p>In emerging markets, urbanization is even more important&nbsp; as a key driver of development&nbsp; and growth. Shifting underemployed rural people to more productive employment in urban areas is fundamental to lifting productivity overall, which in turn constitutes a sustainable platform for future investment and growth. Getting urbanization right, however, has been a major challenge for emerging markets everywhere. Indeed, managing urbanization effectively requires emerging markets to succeed in areas where they are typically the weakest: sufficient investment in physical and human infrastructure, effective policy coordination between central and municipal govern- ments, appropriate and forward planning and enforcement, creating a supportive environment for private businesses to thrive and create jobs, provision of law and order, and assuring effective governance at all levels of administration. It is therefore not surprising that in many emerging markets urbanization has been poorly managed. The results are plain for all to see in many cities in emerging markets: massive slums, lack of basic services for most urban dwellers, high urban unemployment and underemployment, chronic traffic congestion and gridlocks, chaotic zoning and lack of enforcement, and overall poor and deteriorating urban quality of life. Thus, in failing to get urbanization right, many emerging markets risk falling into the trap of creating massive urban sprawl of poverty that merely replaces rural underdevelopment with urban underdevelopment.</p> <p>Among the most important emerging markets today, rapid urbanization has been one of the most salient features&nbsp; of China's development&nbsp; success. China appears to have gotten urbanization right. It is therefore worthwhile examining China's urbanization experience in some detail to identify appropriate lessons learned. The record so far is an impressive one. In the mid-1980s, urban population represented less than a quarter of China's total population. By 2009, urban population had risen to over half of the total population. In the past decade and a half, over 20 million people were urbanized each year on average. Thus, the net addition of urban population each year in China is about equal to the entire population of Australia. This rate of urbanization is historically unprecedented. Urbanization in China is expected to continue to grow at a high rate of about 2.7% per year in the foreseeable future. Rapid growth of urban population in China has not been limited to a few key cities, however. In the last decade and a half, secondary cities away from the coastal region have actually been growing faster than the big three of Beijing, Shanghai&nbsp; and&nbsp; Guangzhou,&nbsp; making urbanization more evenly spread than in many other emerging markets.</p> <p>In spite of this rapid pace of urbanization, there is something distinctive about China's cities; making them unique among cities in the developing world. Many first time visitors notice it the moment they leave the airport in one of the big cities on their drive to downtown; or when they travel within China from one city to the next. Chinese cities do not have the sprawling slums that are the hallmarks of cities in emerging markets such as Philippines, India, Nigeria, or Brazil. The fact that Chinese cities have escaped the curse of urban slums is a result of both its socialist legacy of highly centralized control of people's movement, and an unintended consequence of its rural reform.</p> <p>Under socialist central planning, population movement was strictly controlled in China. For much of the period from 1949 when the Communist Party won the civil war to 1978 when economic reform began; permission was needed from one's govern- ment work unit to buy a simple bus or train ticket to go to a nearby city. For the first three decades after the founding of the People's Republic, there was virtually no rural-urban migration. In order to stay in a city, a person had to have an official permit, the hukou, without which they would not have been able to find a job, rent a flat, enroll their children in school, or receive medical care. In other words, a rural person would have all the basic amenities denied them without a hukou, even if they were enterprising enough to sneak into a city unofficially. Given that the government owned and allocated all urban housing, ran all the healthcare facilities and schools, and assigned all the jobs, it was very easy to enforce migration control: no hukou, no nothing.</p> <p>Today, an urban hukou can be obtained relatively easily once a person can prove that they have a job in the city. In fact, the city governments of many second-and third-tier cities, in order to expand faster, offer an official hukou to anyone from the outside who has purchased a private condo above a certain minimum value. Under these conditions, rural-urban migration could have exploded into uncontrolled torrents of opportunity seeking migrants, following the patterns seen in many other other third-world cities. But it didn't happen in China.<br> The fact that it didn't has a lot to do with land ownership in rural China. There is, strictly speaking, no private land ownership yet. Land reform had given rural households a long-term lease (30 years) for the use of a plot of land; and recent reform measures allow them to use the land as collateral for investment loans, or to lease it to other households to consolidate the plots into a a larger-size farm, etc. But, if the rural household were to obtain an urban hukou, it would automatically lose the right to the land in its home village. So it is an either/or choice; no household can be both urban and rural at the same time. This creates a de facto cost-benefit calculus that the rural household has to consider carefully. Is the urban job secure enough to give up the land in the village? Is the pay sufficiently high to compensate for the higher costs of living in the city? Or is it better to work in the city as a migrant worker (officially defined as working in a host city for more than six months at a time) and then return to the home village to work on the land just before the planting season starts, with extra cash in pocket saved from working in the city? Thus, because of the trade-off between the land in the village and the hukou, in the city, rural-urban migration is self-regulated. A new arrival in the city tends to be someone with a relatively secure job and a pay level good enough to cover the higher costs of urban living with something to spare. Rural-urban migrants with no jobs and poor employment prospects in a city, in other words, potential slum dwellers, are therefore extremely rare; and hence the absence of sprawling urban slums in China's cities.</p> <p>This self-regulated nature of rural-urban migration then responds directly to employment opportunities created in the cities. Between 1995 and 2007, about 150 million new urban jobs were created in China, which were sufficient to lure some 300 million people (workers and their families) to resettle in China's cities. So China's cities are very powerful job creation machines. And an important factor that enables China's cities to function as job creation machines is their rapidly improving infrastructure. Better infrastructure has been critically important in lowering the costs of logistics and enhancing information flow, thereby attracting new investments into urban areas. It also allows cities to expand physically.</p> <p>A more detailed look at the components of the 300-million increase in urban population over the last decade and a half reveals the importance of infrastructure development. Based on official data, about one-third of this increase has come from rural migration and about 15% from organic growth. The majority, about 52%, however, has come from cities expanding into adjacent rural areas--a process where areas previously rural are transformed into urban. Both expanding cities and newly-urbanized rural areas require significant infrastructure improvements, including transportation and telecommunications links, water and electricity supply, housing development, and typical urban facilities such as shopping malls, tertiary health care and higher education services, and financial districts--all of which require massive investment. While investment in infrastructure creates jobs, this is only the beginning of the process. Once the infrastructure is in place, business development then follows, creating even more jobs. Infrastructure development, business investment, and urbanization are therefore three mutually-reinforcing trends that characterize China's economic growth.</p> <p>This quick review of China's urbanization experience shows both lessons learned that could be transferred to other emerging markets, and the limits of this transferability. A high level of investment in infrastructure is clearly crucial to ensure that urbanization is generating&nbsp; the kind of economic efficiency that attracts business investment and job creation, while building a better environment for people to live and work. This is true for urbanization generally, and especially so for emerging markets that lack such infrastructure to begin with. On the other hand, China's political system and its central planning allow the authorities to control rural-urban migration, fast track investment projects, and direct the flow of financial resources to fund the investment, often with draconian means. These conditions are not easily replicable in most emerging markets, especially in places where the democratic process is better established, and where decision-making requires at least some form of consensus at grassroots level. So China's model of urbanization, as successful as it may have been, could not be simply copied, nor should it be. So for better or worse, many emerging markets will have to meet the challenge of urbanization by the means that are at their disposal, inadequate as they frequently are. The Sub-Saharan Africa region is no exception.</p> <p>At present, the urbanization level of Sub-Saharan Africa is estimated at around 36% of its total population. As shown in Table 1, South Africa is the most urbanized, with 60% of its population considered urban. This is followed by Angola at 55%, Ghana at 49%; and Nigeria at 47%. Among the nine key markets in the region listed in Table 1, Kenya is the least urbanized at 21%.</p> <p>In terms of urbanization rates, however, Mozambique's urban population has been growing the fastest among the nine key markets over the 2005 to 2008 period, at an average of 2.2% per year, with Angola and Tanzania tied for second place at 1.7%, as seen in Table 2. The slowest is South Africa 0.8%. This is not surprising as South Africa is already a highly urbanized society with some 60% of its population being urban.</p> <p></p> <p><a href="/content/dam/intelligence/content-assets/reports/IntroductionUrbanizationandDevelopment.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/IntroductionUrbanizationandDevelopment.jpg"></a></p> <p></p> <p><a href="/content/dam/intelligence/content-assets/reports/IntroductionUrbanizationandDevelopment2.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/IntroductionUrbanizationandDevelopment2.jpg"></a></p> <p>Among the nine key markets in Sub-Saharan Africa, there is great variance in their average urban per capita income, from as low as US$191 in Zimbab we to South Africa's US$6,266. Consistent with other emerging markets, the urban economies of Sub-Saha-ran Africa are also more developed with higher incomes than their rural counterparts. As Table 3 shows, however, there are significant differences between the nine key markets in the region in the size of the urban-rural gap. The urban-rural gap is repreented by urban per capita income as a percentage of average per capita income for the country as a whole. When examined in such a way, Kenya has the biggest urban-rural gap, with the urban per capita income being 60% higher than the national average. Angola, on the other hand, has the smallest urban-rural gap; its urban per capita income is only 24% higher than the national average. The higher per capita income in the urban economy is the primary cause of rural-urban migration. The bigger the gap, the more motivated rural people are to move to urban areas to seek a better life. Hence, an important part of getting urbanization right is to ensure that there are enough jobs created in urban areas to absorb the rural inflow; otherwise urban unemployment and underemployment, slums, and endemic poverty will become part of the features of urban life.</p> <p>This brief overview of urbanization in Sub-Saharan Africa suggests that with the exception of South Africa, the region is still in a relatively early phase of urbanization. But the region is urbanizing, as seen in the data shown in Table 2. So the region must get urbanization right in order to ensure its future development success. As suggested above, there is no simple one-size-fits-all solution to the urbanization challenge. The conditions on the ground are a lot more nuanced that the usual generalizations may portray, and, as the saying goes, the devil is in the detail. In order to illustrate the current conditions of the urban environments in Sub-Saharan Africa, three cities are chosen for an indepth review: Lagos, Maputo, and Nairobi.</p> A Tale of Three Cities: Lagos, Nairobi, and Maputo<p>The prognosis for Africa's cities remains mixed. In the past three decades few have predicted a bright future for Africa's urban areas. The overriding sentiment is encapsulated&nbsp; by the assessment that 'Africa boasts many huge,&nbsp; rapidly growing cities, but&nbsp; it's hard to identify many of these places--like Lagos, Luanda or Kinshasa--as bright prospects.'&nbsp;&nbsp;But an alternative view is increasingly being heard. 'Africa has a larger middle-class population than India. It is undergoing rapid&nbsp; urbanization,&nbsp; bringing&nbsp; millions out&nbsp; of&nbsp; rural employment. Growth in Sub-Saharan Africa will be between 4% and 7% this year, a figure at least double anything expected in Europe or America. There will be plenty of traps for the unwary, but just as five years ago everyone said investors should look to China, we may be on the verge of a dash to Africa.' The view of trade and its urban environment is certainly changing.</p> <p>In assessing urbanization in Sub-Saharan Africa, it is worthwhile looking at specific cases, and in this discussion it is three prominent cities in the African landscape that fall under the microscope. Lagos, Maputo and Nairobi are geographically dispersed and they vary in size and importance in their regions and on the continent as a whole. They are unique, but they also share certain&nbsp; characteristics with many of Africa's&nbsp; urban agglomerations,&nbsp; and serve well to reflect the current state of the African city.</p> Lagos<p>Lagos was originally part of the Kingdom of the Yoruba. Following the arrival of the Portuguese in the early<br> 1400s it became a major slave port, continuing with the&nbsp; trade&nbsp; of&nbsp; slaves up&nbsp; to&nbsp; the&nbsp; mid&nbsp; 1800s.&nbsp; It was annexed by Britain in 1861, ostensibly to stop the slave but also as a way of controlling palm and other trade in the region.In 1914 Nigeria became a British colony with Lagos as its capital, and it remained the capital through Nigeria's independence&nbsp; in 1960 up to 1991 when Abuja was made the capital. Despite its loss of political status, Lagos has continued to develop and grow.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Lagos.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Lagos.jpg"></a></p> <p><a href="/content/dam/intelligence/content-assets/reports/Lagos2.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Lagos2.jpg"></a></p> <p>The city abuts&nbsp; the&nbsp; Atlantic Ocean in an area of swamps, islands, rivers and an expanding region of the mainland. Lagos Harbor, the foundation of the modern city, is situated&nbsp; in the main water&nbsp; channel that drains into the Atlantic Ocean. As Lagos has grown it has incorporated smaller towns and settlements.&nbsp; The city grew&nbsp; steadily during&nbsp; the&nbsp; colonial period&nbsp; and expanded&nbsp; markedly after&nbsp; independence.&nbsp; From&nbsp; the 1970s it has experienced a population explosion fuelled by the oil boom, rapid economic growth and rural migration, as Chart 2 shows. Lagos is today the seventh fastest growing city in the world and projections are that its rapid growth will continue.</p> <p>At 18,000 people per square kilometer, Lagos has the fourth highest population&nbsp; density in the world. Based on the Global Livability Report's assessments of stability, health care, culture, environment, education and infrastructure, Lagos is ranked the fourth least appealing to live in of the 140 cities in the survey. It ranks 137th of 183 countries in ease of doing business, down three places since 2010.&nbsp;&nbsp; Even in Nigeria itself, it is not the easiest place to do business--Lagos ranks 25th out of 37 regions in the country. The fact is that urbanization has occurred haphazardly in Lagos. Little coherent urban planning has occurred for decades,&nbsp; and&nbsp; the&nbsp; city's&nbsp; tentacles&nbsp; extend&nbsp; outwards along its roadways. The prime reason for its haphazard development is that the city has no single municipality. Instead it is run by a number&nbsp; of Local Government Areas that share responsibility with the state government. From an administrative point of view, there is a lack of central authority, clearly a serious detriment in terms of governance.</p> <p>A direct consequence&nbsp; is the&nbsp; absence&nbsp; of proper urban zoning, and attempts at introducing and enforcing zoning have been sporadic and inconsistent. Provision of basic infrastructure like sanitation and water is haphazard,&nbsp;&nbsp; land&nbsp; use&nbsp; regulation&nbsp; non-existent,&nbsp; and urban burials are not uncommon. Due to rapid population growth, most of the land of Lagos, including its slums, is relatively valuable because it is scarce and can always be rented.</p> <p>In spite of having the best road infrastructure in West Africa, Lagos' road density per capita is very low. Only a few roads carry most of the traffic, these often flood when it rains, and many roads are in poor condition. No allowance is made for parking, even in the business districts. Road safety is negligible and Lagos has one of the highest accident rates in the world. Water&nbsp; transportation&nbsp; is underutilized,&nbsp; carrying less than 1% of Lagos' traffic, and Nigerian Railways operate only one train per day within the city.</p> <p>The city faces the ongoing problem of supplying sufficient water&nbsp; for an&nbsp; ever-increasing population. Only half of Lagos' population receives potable water, but&nbsp; much of this is intermittent.&nbsp; Many inhabitants build wells and boreholes for their water needs and private water distribution is a thriving business. Lagos' power supply is notoriously inadequate&nbsp; and unpredictable due to intermittent&nbsp; gas supply, faulty infrastructure, lack of maintenance&nbsp; and corruption. In the past four years, the city has experienced a decrease in power supply, and those who can, utilize generators for their own electricity.</p> <p>Lagos has no central sewage&nbsp; system and&nbsp; many dwellings resort to the use of septic tanks. The city has a little over half the treatment&nbsp; plant capacity it needs, and trucks empty surplus sewage&nbsp; into the adjacent lagoon. Life can be difficult even for the middle classes in Lagos. As one&nbsp; commentator&nbsp; observed,&nbsp; they are 'resigned to doing everything for themselves. There's little public transport,&nbsp; so you drive. The state schools aren't&nbsp; good, so you aspire to send your children to a private school. There are few landlines, so you have mobile phones. There is almost no central water supply, so you dig your own well. There are no sewers, so you have a septic tank. Mains electricity works only a few hours a day, so you have your own generator.&nbsp; No money?&nbsp;&nbsp; Work&nbsp;&nbsp; harder,&nbsp;&nbsp; pray&nbsp;&nbsp; harder,&nbsp;&nbsp; get&nbsp;&nbsp; better cronies.'</p> <p>These unavoidable facts certainly dominate&nbsp; any assessment of Lagos. So what is the upside? Much of Nigeria's wealth&nbsp; is concentrated&nbsp; in Lagos. It is the country's most prosperous city and the centre of its economic activity. Its $30bn economy is roughly the size of Kenya's. While there is massive poverty in the city there&nbsp; is also a huge&nbsp; spread of affluence. Lagos attracts the best skills from Nigeria and West Africa. Many professionals who had emigrated&nbsp; returned&nbsp; to Lagos after the global financial crisis in 2008/09 with their international experience and scarce skills. While corruption remains a problem, wholesale looting by politicians is a thing of the past.</p> <p>Quality of life is also relative. In spite of the litany of woes mentioned above, Lagos nevertheless offers a higher standard of living than other cities in the region and the best opportunities&nbsp; for success. A variety of industries are thriving in Lagos' urban economy. Lagos has a thriving commercial music industry and is the home&nbsp; of&nbsp; Nigerian hip-hop,&nbsp; highlife, juju, fuji and Afrobeat. It is the centre of ?Nollywood,' the name given to the Nigerian movie industry, which produces more movies than the USA and fewer only than India. Nollywood is the second-largest employer in Nigeria after the oil industry. Most of its low budget&nbsp; films are shot in Lagos and move directly to market throughout Africa. Lagos has&nbsp; one&nbsp; of&nbsp; the&nbsp; most&nbsp; vibrant media scenes in Africa with multiple print media, state-run and private radio and TV stations. Despite a number of restrictive media regulations, the press is relatively free. Twenty-nine percent of Nigerians use the internet, and within Lagos the&nbsp; percentage&nbsp; is higher.&nbsp; Bandwidth increased fivefold in 2010 with a new undersea fiberoptic cable. While mobile phone&nbsp; usage far outstrips fixed line, the increase in demand for internet services and broadband&nbsp; capabilities support the fixed-line sector, which still has a market penetration&nbsp; of less than 5%.</p> <p>Affluent Nigerians spend&nbsp; $1.2&nbsp; billion on&nbsp; luxury goods in Dubai every year, and Lagos State is intent on creating an alternative retail industry in Lagos. Retail opportunities have increased with more outlets and accessibility to greater numbers of people. Lagos has numerous higher-end retail outlets such as the Palms Shopping Mall with 20,000&nbsp; square&nbsp; meters&nbsp; of retail space, 69 stores, a cinema complex and parking for a thousand&nbsp; cars that&nbsp; was originally developed&nbsp; as an Actis Capital/Tayo Amusan joint venture.<br> Lagos is also the end point of major trans-African roads to Algiers, Benin and further on to Dakar. The Port of Lagos is one of the busiest in Africa, with three sections that include a container terminal and a rail-head. The port is a major point for the export of petroleum products. More than five million airline passengers,&nbsp; half&nbsp; of&nbsp; all&nbsp; Nigeria's,&nbsp; pass&nbsp; through&nbsp;&nbsp; Murtala Mohammed International Airport every year. The airport has recently been expanded with the addition of a terminal, and a new cargo complex is to be added.</p> <p>Lagos' strategic&nbsp; location&nbsp; has&nbsp; attracted&nbsp;&nbsp; foreign investment in recent years. For example, the Leki Free Zone, a multi-billion dollar free trade zone is being developed with Chinese investment on the edge of Lagos in order to develop a local manufacturing base. Complete basic infrastructure including water, power and roads will be provided. A joint Nigerian-Chinese project will see one of three new oil refineries built in the city. Together, these should supply Nigeria's refined oil needs (currently Nigeria is a net importer of refined petrol products).</p> <p>There has been steady progress in infrastructure development in the past five years. A Bus Rapid Transit scheme was launched in 2006 and its first phase completed&nbsp; in 2008.&nbsp; Okada motorbike&nbsp; taxis have been banned&nbsp; from central roads in an attempt&nbsp; to reduce traffic injuries and congestion. Lagos is working with private companies to develop new toll roads in addition to those that already exist. A railway line running through Lagos is being constructed with planned completion in 2012. Ferry transport&nbsp; has been regulated and new waterway routes with regular services are planned.</p> <p>The supply of potable water should reach 70% of the population in the next decade with the improved supply of electricity to pumping stations and projects like the&nbsp; recently commissioned Independent&nbsp; Power Project. Plans are in place to supply a minimum of 16 hours per day of continuous supply 'soon' by restructuring the national grid and increasing power supply with projects such as the construction of an independent power plant in partnership with the Singapore Power Company. Besides the municipal waste authority, there are 211 small and four large private waste disposal operators&nbsp; who&nbsp; in combination&nbsp; dispose of more than two million metric tons of waste per year. The city has just developed the capacity to dispose of medical waste. A high profile and ambitious project is Eko Atlantic City, an&nbsp; urban&nbsp; development&nbsp; on&nbsp; land reclaimed from the Atlantic Ocean. The development will return a section of the Lagos coast to its position in the 1950s and 1960s, reversing the damage of erosion. Most of the land has been reclaimed, and when complete&nbsp; the&nbsp; development&nbsp; will have 400,000&nbsp; residents and 250,000 daily commuters.</p> <p>These developments will not, even if they are successfully implemented as planned, supply the needs of the whole population of Lagos, but they will certainly improve the current situation. It is also encouraging to see that many of these projects are developed by the private sector, including foreign investors, or in public- private partnerships,&nbsp; which is a very positive break from patterns of the past. Compared to Stockholm or Tokyo, conditions in Lagos will certainly be considered dire for the foreseeable future, but if one considers the city's&nbsp; prospects,&nbsp; it is easy to&nbsp; recognize the&nbsp; upside. Lagos is beginning to exhibit the positive characteristics of economies of scale and economies of scope, especially in creative industries and&nbsp; services--hall-marks of a successful city. By most standards Lagos is West Africa's dominant city, and some believe that it will become the continent's dominant city within the next decade. Rem Koolhaas, an architect and urbanist, believes that Lagos' chaos is the reason why it thrives and&nbsp; grows. Its inhabitants&nbsp; have learned&nbsp; to convert some of its disadvantages to advantages.</p> Maputo<p>The region in which Maputo is now situated was originally occupied by the Shangaan people. Vasco da Gama explored the area in 1498, and it was colonized by Portugal in 1505. Louren?o Marques was created by Portugal as a minor fortress settlement, which it remained until 1850. In that year it was developed as a port, primarily as a conduit for the neighboring Transvaal Republic's trade, and in 1898 it was declared the capital of Mozambique. The city was renamed Maputo following Mozambique's independence in 1975. Two years after independence, Mozambique suffered a civil war that lasted until 1992, resulting in economic collapse. Between 1987 and 1990 Mozambique changed from a command economy to a free market with one of the fastest growing economies in the world, albeit off a very low base. Maputo is a cultural melting pot. Indigenous African culture dominates with strong Portuguese and South African influences, and Chinese, Arab and Indian cultural influences are also evident. It is a diverse metropolis, a tourist destination, and is independently administered as a province. Maputo is a short distance from Swaziland and South Africa, and is an important harbor that serves both countries.</p> <p>Modern day Maputo has been clearly molded by its recent history. Following independence in 1975, large-scale emigration drained the city of its professionals, businesspeople and administrators. The colonial structure of its society, the 1977-92 civil war and the economic policies that followed independence&nbsp; made Maputo one of the world's poorest cities. In the early 1990s for example, it was impossible for a family to survive on the income of a single formal sector job and it was common that middle-income households produced their own food to supplement what they could buy. Mozambique is still classified by the United Nations as a 'least developed' country.</p> <p>Social, economic and political conditions in Mozambique have resulted in high rates of urbanization. As mentioned&nbsp; in the&nbsp; introductory section, Mozambique has the highest urbanization growth rate among the nine key Sub-Saharan African markets reviewed--estimated at 2.2% a year. Maputo's population, which is currently estimated at over 1.6 million as seen in Chart 4, continues to grow rapidly.</p> <p>With market reform and liberalization, the economy has been improving. In 2010, Mozambique's GDP grew by 8.3%, the 11th highest growth rate internationally, and industrial production growth was around<br> 8%, the 36th highest in the world (CIA 2011). Growth over the past decade has been over 8%, and current growth projections remain higher than the 4-5% forecast by the World Bank for southern Africa as a whole.</p> <p>For the city of Maputo, the harbor, industry production, and tourism are its economic foundations. Existing industries in the city include food, beverages, chemicals, petroleum products, textiles, cement, glass, asbestos and tobacco. But Maputo also benefits significantly from activity in the rest of the Mozambican economy. Foreign investment in Mozambique has had a profound impact on the city, directly and indirectly. BHP Billiton operates the Mozal aluminum smelter 17km from Maputo. Further afield there is significant foreign interest in titanium extraction, processing, and coal mining. Brazilian miner Vale opened a $1.7 billion coal mine in May 2011, the largest investment in Mozambique to date, with the expectation that it will double its investment over the next four years. Australia's Riverside and India's Tata Steel and Kindal Steel and Power are also developing coal mines in the country.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Maputo.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Maputo.jpg"></a></p> <p><a href="/content/dam/intelligence/content-assets/reports/Maputo2.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Maputo2.jpg"></a></p> <p>With some delays, inland railways are being rehabilitated and port infrastructure is being developed to get the coal to market. Other significant investment projects by foreign investors include the reconstruction of an inland international airport, establishment of an HIV drug factory and exploration into the viability of fuel production. Although not all these projects are in Maputo, their economic effects on the economy have important spinoffs for the city as it remains the major business, political and transit hub of the country.</p> <p>In sharp contrast to Lagos, Maputo's electricity supply is secure, but not evenly distributed among its inhabitants. Mozambique produces far more electricity than it needs at the Cahora Bassa hydroelectric facility, but this is largely exported to South Africa. The demand for more power exists for new projects in garment manufacturing, titanium extraction and processing, and Chinese, Australian and Brazilian interests are planning to develop new power plants downstream from Cahora Bassa.</p> <p>Maputo's infrastructure has undergone development and rehabilitation in a number of areas including public transport and water supply, which has increased the number of inhabitants with access to fresh water from 700,000 to 1.5 million. Media are relatively free and internet usage is growing. From 350,000 internet users in 2008 the number grew to 612,000 by 2010, and most of these were in Maputo (Internet World Stats<br> 2011). While there has been stagnation in fixed line telephony, there has been rapid growth in the mobile phone industry--36% of Mozambicans use cell phones and there are 6.5 million subscribers.</p> <p>Maputo has a high incidence of disease. Malaria affects 11% of the city's population. HIV/AIDS is a major problem, with a higher prevalence in the city than the rest of the country. HIV/AIDS accounts for a shocking<br> 39% of deaths in Maputo, even though UNAIDS has noted a drop off in new HIV infections throughout the region in 2010. Maputo reflects the country's situation overall in incidence of infectious diseases. Tuberculosis is a national emergency, as is cholera, with Mozambique accounting for a third of notified cholera cases in Africa over the past decade. Life expectancy is 48 years and the death rate per 1000 is the 5th highest in the world. In Mozambique, Maputo is most at risk for the rapid spread of disease because of its population density.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Maputo3.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Maputo3.jpg"></a></p> <p>Unemployment in Maputo is high at around 20%, and more than half the city's population lives below the poverty line. Unfortunately, extreme income inequality exists and is growing, and patronage, corruption, organized and violent crime are on the increase in Maputo. Car hijackings, rape and armed robbery occur, and mugging, bag snatching and pick-pocketing are increasingly common.</p> <p>The city is also highly susceptible to extreme weather and climactic conditions, including rising sea levels, storms and cyclones. A rise in sea level will have a significant impact on the harbor and eastern residential areas. The government has undertaken a number of steps to protect the city from the sea following the devastating floods of 2000. It has built embankments and water channels, but more extensive measures are required to adequately protect the city from sustained, extreme weather events.</p> <p>With its extreme poverty and increasing income disparity, the threat of social instability in Maputo remains<br> relatively high. In 2008 and 2010 soaring food, transport, water and electricity costs sparked riots. Maputo's<br> 2010 riots coincided with the government's announcement that it was ending it unsustainable subsidy of fuel, bread and rice, but these were reintroduced in the face of the violence. The subsidies were phased out in mid-<br> 2011 and replaced by a more targeted system that is aimed specifically at the urban poor, and includes subsidies for transport and a wider range of food than before.</p> <p>The harsh economic conditions evident in Maputo are a reflection of the situation of the country as a whole. In spite of increasing GDP growth rates, the country, and Maputo in particular, are still struggling with the creation of enough jobs to meet the rapidly expanding labor force. And for Maputo, the challenge is to create enough new urban jobs to meet the demand of the increasing number of rural-urban migrants each year. The situation is made more difficult due to the economy's over-dependence on aluminum production and exports. As Chart 5 shows, the world price of aluminum tends to be very volatile even in good times, and remains suppressed in the post-2008/09 crisis period. This has in turn made the challenge of job creation more difficult.</p> <p>Maputo's development has clearly been handicapped by the massive social and economic dislocation as a result of the civil war and its aftermath. The challenge today is that it is experiencing one of the fastest urbanization rates in Sub-Saharan Africa, with its employment growth clearly lagging behind its population growth (organic growth plus rural-urban in-migration). While high urban unemployment poses the risk of political instability, there is as yet no real evidence of the kind of innovative energy that is seen in Lagos that results from the agglomeration effects of concentrated human interactions and exchanges in large urban areas. In spite of its fast growth, Maputo's population, at around 1.6 million, is after all much smaller than Lagos' over 10 million. Recent increases in foreign investment in the resource sector offers only a partial solution at best, as production in this sector is typically very capital intensive but weak in job creation. For the time being, there appears less reason for optimism for Maputo there is for Lagos.</p> Nairobi<p>Of the three cities, Nairobi is the youngest, not having had a settled population for most of the 1800s. The area was sparsely populated by the Kikuyu and occasionally traversed by the Maasai until the British chose it as a railway camp when building the Uganda Railroad in the 1890's. It was the midpoint between Mombasa and Lake Victoria, and was selected because of its highland location, temperate weather, good access to water and productive farmland. By 1907 Nairobi had become a commercial centre, and it replaced Mombasa as the capital of what was then known as British East Africa. The city expanded, supported by the growth of its administrative functions and tourism, which initially began in the form of big game hunting. A significant Indian community, originally brought to Kenya to work on the railways, settled in Nairobi. The ability of the indigenous population to live off the surrounding land was curtailed with the development of farms owned by white settlers, and a rural exodus to Nairobi ensued.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Nairobi.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Nairobi.jpg"></a></p> <p>Nairobi developed as a racially segregated colonial town with specific areas allocated to Europeans, Indians and Africans. The European areas enjoyed good infrastructure, but for the other groups infrastructure varied from fair to non-existent. What is now the Kibera informal settlement, for example, was allocated to demobilized African soldiers returning from the Second World War who expected, but never received, land tenure. People streaming in from the surrounding countryside rapidly occupied the informal settlement. The legacy of this is that segregated infrastructure remains. Parts of Nairobi today are affluent with good infrastructure while the less affluent areas have poor infrastructure.</p> <p>By many standards Nairobi is the most important city in East Africa. It is the capital of the largest economy in the region, Kenya, and a centre of industry, education, tourism and diplomacy. It is the world head- quarters of two UN agencies and the regional headquarters of others. It is the primary communication and financial hub in East and Central Africa. Leading domestic and international banks such as Kenya Commercial Bank, Barclays, Standard&nbsp; Chartered&nbsp; and Citibank operate out of Nairobi. International companies such as Goodyear, GE, Siemens, Coca-Cola, Citibank, Toyota and Google have regional headquarters and manufacturing plants in the city, and it is seen as an alternative to cities such as Johannesburg or Lagos for entry into the African market. Ease of doing business compares very favorably to Lagos and Maputo, ranking substantially better than the other two at 98th of 183 countries.</p> <p>Manufacturing accounts for only 14% of Kenya's GDP, but it is mostly concentrated around Nairobi. Other industries with a strong presence in the city include cement production, consumer goods and food processing, and small-scale manufacturing in the informal sector. Although inadequate for the demand, Nairobi has the best human resources and communications infrastructure in the region. The Nairobi Stock Exchange, established in 1920, has around 50 companies listed, and ranks 4th in Africa in terms of market capitalization.</p> <p>The areas around Nairobi are prime agricultural lands with food and cash crops such as maize, sorghum, cassava, beans, fruit and coffee. Horticulture is a developing agricultural sector and flower exports are an important source of foreign exchange. Tourism, and particularly wildlife tourism, has replaced coffee as the primary source of foreign exchange, and it contributes significantly to the local and national economies with well-developed infrastructure and resources. Jomo Kenyatta International Airport is a major point of entry into East Africa.</p> <p>Nairobi has crowded markets and trading areas, with ample evidence of affluence in its middle-class suburbs, cinemas and restaurants. It also has vast, overcrowded tenements and slums, and high unemployment. Most of the land in Nairobi is public land, of which half is privately leased for 99-year periods. The city experienced a boom in top and middle level housing that peaked in 2007, and in this sector substantial gentrification is evident. Housing investment has a primarily local base, but is supported by the Kenyan diaspora and Somalis, Southern Sudanese, Rwandan and Congo nationals who see Nairobi as a safe investment.</p> <p>Low-income housing has also grown but the financial burden for this has fallen on government. There is a massive shortfall of low income and informal housing upwards of 120,000 units per year, with the problem exacerbated by the inflow of refugees from Kenya's neighboring countries, particularly Somalia and Sudan. In the early 2000s Kenya was absorbing 400,000 Sudanese refugees per year, with many moving to Nairobi and avoiding the refugee camps. Half of Nairobi's population live in informal settlements, and Kibera, the largest of these, has over a million inhabitants. Despite government attempts to involve the private sector, and a number of innovative private sector projects such as Bora Capital's establishment of a low-cost property fund, the extent of public-private partnerships in the sector has not met expectations. In large part this is because of government's delay in introducing adequate regulation for real estate investment. Roughly 80% of Nairobi's population rent, and 20% own their dwellings.</p> <p>The population density of the city is 3,080 people per sq km, but density is unevenly spread, ranging from 22,000 per square kilometer in Central to 2,100 per square kilometer in the Westlands suburb. Nairobi was characterized from the beginning by a severe skew in gender because migrants to the city were primarily men. In 1962, for example, there were 2.5 males to every female. This anomaly is no longer evident among the youth but is still evident among residents 35 years of age and older. Like Lagos and Maputo, Nairobi has experienced massive growth, which is expected to continue in the coming decades.</p> <p><a href="/content/dam/intelligence/content-assets/reports/Nairobi2.jpg" target="_blank"><img src="/content/dam/intelligence/content-assets/reports/Nairobi2.jpg"></a></p> <p>Administratively, Nairobi is a province made up entirely of its urban area, with the municipal district the responsibility of the Nairobi City Council, which provides the city's services. For decades these have been acknowledged to be inadequate. While the number of private cars has quadrupled over the past decade, the city's roads have until recently remained undeveloped, with more than half in poor or very poor condition. Water supply is adequate in meeting demand, but distribution is problematic. Less than half of Nairobi's households have satisfactory water connections and as much water is legally consumed as that lost through leakages and illegal connections. Sanitation in some form is accessible to most of the population, but water-borne sewage disposal suffers from poor maintenance, illegal use for irrigation and garbage disposal, and very low access in the city's informal settlements.<br> </p> <p>Nairobi is a major contributor to Kenya's economy. By 2006 it was generating 45% of GDP and employing 25% of working Kenyans, but the anomaly is that the city has been unable to meet the economic, social or service requirements of its population. Nairobi's facilities were developed for far fewer than the ever increasing numbers residing in the municipal area, and the city's technical and management capacity have rarely met the city's requirements, with its resource base low and revenue collection weak. A contributing factor is that regional authority lies with the national Minister for Local Government, and the council lacks the executive and financial authority to undertake many of the projects necessary for the city's development.</p> <p>Poor infrastructure is therefore one of the greatest impediments to growth. Without significant improvement in infrastructure, by 2025, it is expected that Nairobi could face water stress, increased violence, and some forms of social, economic and environmental collapse. In the face of these pressures government has responded. In 2008 the Nairobi Metropolitan Development Plan was produced with ambitious plans to expand the city limits, develop integrated mass transport, replace informal settlements with affordable low cost housing, enforce urban regulations, improve water and waste management, develop public utilities, and boost the infrastructure required to make Nairobi a regional capital for finance, information and communications technologies, health, education, business and tourism. A number of these plans have passed the talk stage, have budgets allocated, and the city is visibly undergoing physical change. Government investment has increased 20% compounded per year for a number of years on these and similar programs, at a rate that outstrips economic growth, even though the longer-term sustainability of this program is by no means assured.</p> <p>Today, Nairobi's immediate future appears more promising than its recent past. Following government deregulation, the middle class has grown swiftly and continues to grow. Upward of 17% of Nairobi's population can be considered middle class, and they are a driving economic force in the city. Literacy in Nairobi is the highest in Kenya at roughly 93%. Free primary school education has been accessible to all since 2003, even though education is inadequately funded, and its quality relatively low.</p> <p>There has also been a significant reduction in the level of absolute poverty in the city. The absolute poor--those who live below the threshold of being able to afford minimal standards of food, clothing, health and shelter--has decreased from 51% of the population in 1997 to 44% in 2006. It is estimated that the percentage has fallen further since then. The figure in slum areas is higher, at about 73%, but even these areas hold some promise as a significant number of households in the slums operate an enterprise or have at least one member with some education--two conditions that show a negative correlation with continuing poverty in Nairobi. Interestingly, the group called 'jua kali,' Swahili for ?hot sun,' describes those that subsist as outdoor vendors and entrepreneurs in the informal sector but are officially listed as unemployed. Their numbers increased from 27% in the early 1990s to 38% in the latter 2000s--three and a half times the growth rate of employed wage-earners during the same time period.</p> <p>But the city still faces enormous challenges. It is an integral part of Kenya's low-income economy with annual per capita income averaging about $360, ranking 148th of the 177 countries in the UNDP's Human Development Index and 106th of the 139 countries in the WEF's 2010 Global Competitiveness Index. Although ameliorated by the growth of the middle class, Nairobi is one of the world's most economically unequal cities. The gap between the urban affluent and the rural poor is smaller than that between the urban affluent and the urban poor. If the current trend continues, in a decade Kenya's starkest poverty will be found in cities like Nairobi, and not in the remote rural areas.</p> <p>The greatest differences in health status are also to be found between urban affluent and urban poor and no longer between urban affluent and the rural poor. Philippa Crosland Taylor of Oxfam GB observes that, 'An increasingly disenfranchised and poverty-stricken urban underclass is set to be the country's defining crisis over the next decade. [Nairobi] is a city of a small minority of 'haves' and millions of 'have nothings'..Nairobi is one of the biggest and most prestigious cities in East Africa, yet it is crumbling before our eyes.'</p> <p>Among this 'urban underclass' there is resentment over patronage, inequality, poor economic prospects and harsh living conditions. From its earliest days Nairobi has been at the centre of Kenyan politics. During the Mau Mau insurrection in the 1950s the city was practically in a state of siege. More recently, events like the 1988 American embassy bombing and&nbsp;the riots of the 2007 presidential elections emphasize the symbolic importance of the city and its central position in Kenyan society and politics.</p> <p>With a population size midway between Lagos and Maputo, Nairobi is distinctive in its better and improving infrastructure, and, more importantly, an apparently more responsive and capable administrative structure, with more effective project implementation. The economic, social and environmental challenges facing Nairobi are certainly no less intense than those facing Lagos and Maputo, but its record of policy response so far seems to be more successful.</p> Conclusion<p>Lagos, Maputo and Nairobi vividly illustrate the reality of many Sub-Saharan cities. While most of Africa's cities are defined by their large and rapidly growing populations, resource limitations and inability to meet the health, security, education, governance and skills requirements of all their inhabitants, this tale of three cities shows&nbsp; that&nbsp; important&nbsp; differences&nbsp; also&nbsp; exist between&nbsp; them. Africa's cities are in fact very different societies, and in many ways better societies, than they were a decade ago. How they perform in the coming years and decades will influence the future of the continent in many important ways. At present, Africa is benefiting from the resource-driven expansion of its economies and this is having a significant impact on its urban and rural communities. How to leverage this resource-based boom to benefit other sectors of the economy as well as the general population, including its urban development, will be the defining challenge of the region.</p> <p>As this tale of three cities shows, there is unlikely to be a magic pill that can solve all the development difficulties of the region's cities, even though&nbsp; there is a great deal in common in terms of the challenges that they face. More specifically, there is not going to be some&nbsp; kind of&nbsp; a&nbsp; 'China&nbsp; model'&nbsp; that&nbsp; Sub-Saharan Africa can copy to repeat China's urbanization experience. Successful solutions to the region's urbanization challenges will have to be crafted locally, one&nbsp; at a time,&nbsp; taking&nbsp; full account&nbsp; of&nbsp; local conditions&nbsp; that include location-specific constraints and capabilities. The origins of Africa's prosperity may well reside in its mines and oil wells, but its extent and sustainability will largely depend on the resourcefulness of its people and the dynamism of the enterprise that exists in its cities.</p> <p>&nbsp;</p> The report highlights that urbanization is key to boosting productivity and economic activity in developing markets, but unless it is carefully planned and implemented, it can lead to structural weaknesses and even breaking points in cities that are not adequately prepared.http://www1.mastercard.com/content/intelligence/en/research/reports/2011/the-challenges-of-urbanization-in-sub-saharan-africa-a-tale-of-three-cities2011-09-30T16:00:00.000Z2011-09-30T16:00:00.000ZRejuvenating Japan: Back to the Future Yuwa Hedrick-WongRejuvenating Japan: Back to the Future by Yuwa Hedrick-Wong<p>Introduction:</p> <p>In the midst of the ongoing global economic turmoil involving the world's richest economies, the most dynamic emerging markets, and a revolving cast of countries in crisis, Japan has featured&nbsp; in neither the causes of the crisis, nor its solutions. This is indicative of the degree to which Japan has been sidelined in the global economy, two decades after the burst of the bubble economy.</p> <p>In spite of an initial wave of enthusiasm and high hopes when the Democratic Party of Japan (DPJ) gained power three years ago, unseating the long ruling Liberal Democratic Party of&nbsp; Japan (LDP), the outlook for economic and political reform today has certainly dimmed. Once again, huge&nbsp; spending increases are being directed at farmers and households, with the share of tax revenue to total spending in this fiscal year expected to slip below 50%.&nbsp; This is something that&nbsp; has never been seen before in Japan's entire post-war history. The fact is that all political parties,to varying degrees&nbsp; are&nbsp; dependent on&nbsp; an&nbsp; aging constituency. This effectively neuters their urge to call for radical change, even when they are tempted to do so.</p> <p>Throughout Japanese history, seismic disasters have seemed to mark the dramatic end of an era. For example, shortly after Commodore Matthew Perry's conclusion of a trade&nbsp; treaty in 1854&nbsp; to open up Japan to foreign trade,&nbsp; (signed by the Japanese literally under&nbsp; the&nbsp; guns&nbsp; of American warships) came the Ansei Great Earthquakes of 1854&nbsp; and&nbsp; 1855.&nbsp; The&nbsp; advent&nbsp; of&nbsp; Japan's&nbsp; lost decades coincided with the Great Hanshin Earthquake in 1995. Today, speculations are rife of what momentous changes the March 2011 triple disasters may bring.</p> <p>This Insights report argues that in spite of its turbulent political leadership and change-resistant government, there is a viable and sustainable path to social and economic rejuvenation in Japan. This process of rejuvenation, however, will not come from radical reforms as advocated&nbsp; by many, the March 2011&nbsp; earthquake&nbsp; and tsunami anotwithstanding. Instead, the way forward to a more sustained, stable, and broad-based&nbsp; economic rejuvenation in Japan is ironically in its past. Recasting Japan's traditional strength in the context of a high tech future is one of the keys to unlocking the potential of the domestic consumer market, boosting business activities and sustaining employment at the grassroots level. In the aftermath of the March 2011 triple disasters, the behavior of ordinary Japanese people highlighted some of Japan's most abiding strengths that provide the most promising grounds for charting a course for future rejuvenation. In their behavior we could see a pattern&nbsp; of self-reliance, resolve, and creativity at the grassroots level that suggest a way forward.</p> <p>The patience, courtesy, and the fortitude of the Japanese who lost homes and loved ones in the earthquakes&nbsp; and tsunami is truly impressive. Their ability to maintain social order even as the whole world seemed&nbsp; to crumble about&nbsp; them is nothing short&nbsp; of inspirational; and&nbsp; the&nbsp; rest of Japan also seems to have gained a newfound sense of unity and solidarity. In the aftermath&nbsp; of disasters in many other countries military forces are mobilized because&nbsp; of the&nbsp; need&nbsp; to prevent looting and other opportunistic crimes. On the contrary, in Japan, soldiers were mobilized for rescue and relief operations, not to patrol the streets and impose curfews.</p> <p>The stories, appeared&nbsp; one by one, but gradually coalesced into a general pattern showing how the people coped with the devastating aftermath of the disasters. In many affected towns in the days immediately after the earthquake, people queued patiently to buy limited supplies of essentials, knowing that the supplies could not possibly meet everyone's needs. Yet no one tried to jump the queue or hoard the supplies. Many store owners sold goods to customers who had lost everything, accepting their IOUs on scraps of paper as payment.&nbsp; Operators in stores where the power supply had been cut off moved their perishable goods that required refrigeration to other stores where the power supply was uninterrupted for safekeeping, even though&nbsp; some of these stores are technically competitors. This pattern of spontaneous mutual assistance and generosity speaks volumes about&nbsp; the resilience and social trust at the community level.</p> <p>This powerful sense of mutual assistance and social trust has also led to many instances of creative solutions and business innovations in addressing the needs of the community, a kind of self-reliant 'can do'&nbsp; spirit that&nbsp; is completely at odds with the stereotypes of conformity, inertia, and herd behavior. In many small rural communities in affected prefectures,&nbsp; suppliers that delivered food and other necessities to the elderly in their homes (often with only a single elderly woman living alone), abandoned their regular delivery schedules, to find ways to stay in contact with these&nbsp; elderly households on a daily basis, sending them supplies of fresh food and other essentials as soon&nbsp; as they&nbsp; were&nbsp; available. Rural households in remote areas or in places isolated by destruction of transport&nbsp; links; self-organized into relay networks that sent food orders to the nearest supermarket on a daily basis for delivery. Delivery workers improvised to reach more remote households by motorbikes or even bicycles when&nbsp; road&nbsp; access was blocked. Many delivery workers&nbsp; doubled up&nbsp; to&nbsp; operate&nbsp; as healthcare providers when they visit elderly households, quickly learning enough for them to collect basic information on their customers' health situation which they in turn reported to the nearest hospitals&nbsp; or clinics.&nbsp; No one&nbsp; from the&nbsp; government ordered these improvisations. These are spontaneous acts by businesses and workers in seeking solutions to their customers? problems in order to care for them. These are spontaneous innovations at the grassroots.</p> <p>We believe that the rejuvenation of the Japanese economy could be made successful by tapping into this deep source of resilience and traditional strength embedded&nbsp; in local communities. Such an approach differs and contrasts sharply with the standard&nbsp; diagnoses of Japan's stagnation. It is an alternative narrative that suggests a very different future for Japan. However, to understand&nbsp; why such an alternative approach is&nbsp; necessary, we&nbsp; need&nbsp; to&nbsp; make&nbsp; clear why the remedies offered by the standard diagnoses won't work.</p> Problems with the Standard Diagnoses<p>Since the&nbsp; burst&nbsp; of Japan's bubble&nbsp; economy,&nbsp; a growth industry has sprung up that addresses the causes of and remedies for Japan's economic stagnation. While there are competing interpretations of the causes of Japan's stagnation, there is surprisingly little disagreement&nbsp; on what&nbsp; has to be done to turn Japan around. It is clear that Japan has&nbsp; a&nbsp; leadership&nbsp; challenge&nbsp; today.&nbsp; In order&nbsp; to change, Japan needs new and bold leadership, infusing it with younger leaders with bright ideas who are ready to challenge the status quo. Japan's domestic economy has been made feeble as a result of too much protection from competition, thus competitive pressure has to be ratched up sufficiently to get the gale of creative destruction blowing. The Japanese corporate sector is coddled by the government--an unhealthy link that has to be severed. Japan's aging population means that Japanese families will have to have more children. The shrinking workforce on the other hand will have to be supplemented with more immigrants. The rigid education system that emphasizes rote learning has to be reformed to empower students who can think independently and creatively. Japan's public sector debts are also too high, and may soon reach the threshold where further government borrowing would become problematic--the government must curb spending and start paying down its debts. If Japan can implement even parts of this assortment of remedies, it would be making headway in terms of economic growth,</p> <p>These remedies are not wrong. In fact, from a purely diagnostic point of view, they are all spot on. They are marred by just one small detail, no one has been able to come up with the idea of how to implement them.&nbsp; Take for example the problem of leadership shortfall. In the next few years, the first wave of baby boomers, born in a burst of procreative enthusiasm between&nbsp; 1947 and 1952, will hit sixty-five. Leaders of the two key political parties, the ruling DPJ and opposition LDP, are elected and supported&nbsp; by this boomer generation, who arrived at the peak of their careers just as Japan's economic bubble burst in the early 1990s. This boomer generation is therefore a traumatized one, worn down by two decades of rising insecurity and anxiety. Their political leaders merely reflect their inward-looking orientation and risk-averse approach&nbsp; to life. There may well be younger aspiring leaders waiting in the wing who think differently and are prepared&nbsp; to introduce radical reforms, but with Japan's aging population, they are probably not going to get the necessary electoral support to take over Japan's political leadership.&nbsp;</p> <p>A more open&nbsp; immigration policy could certainly mitigate Japan's labor shortage. But obstacles to implementing such a policy are likely to be insurmountable. The first is language barrier. Very few of the prospective immigrants are fluent in Japanese, a language not widely taught&nbsp; outside of Japan. Lacking fluency in Japanese, immigrants are unlikely to perform well in Japanese society, regardless how&nbsp; skilled and&nbsp; well educated&nbsp; they may be. Then the Japanese society itself is not well positioned to deal with strangers, especially when&nbsp; they are&nbsp; there&nbsp; to&nbsp; work and&nbsp; live among them; a situation not to be confused with foreigners visiting Japan for short duration, who are invariably treated with gracious courtesy and hospitality. Elderly Japanese, particularly in rural areas and small town Japan, find it even harder to assimilate with foreigners. So an open immigration policy is simply a non-starter for Japan.</p> <p>Recognizing Japan's continued dependency on exports to drive economic growth, which shackles Japan to overseas demand,&nbsp; many policy analysts and&nbsp; economists have long advocated wholesale deregulation&nbsp; and liberalization of the domestic economy. They think promoting competition to streamline Japan's notoriously cumbersome and rigid supply chains would also be beneficial. Making the domestic economy more competitive would raise productivity, which would in turn support higher incomes for workers in the domestic sector. This accounts for more than 80% of total employment. Again, a sound remedy for a serious problem that is a primary contributor to Japan's stagnation. But implementing such a policy means pitting domestic businesses against one another in head-to-head competition, and driving out those that are less inefficient. This means asking Japanese domestic businesses, (most of them are small and medium-size enterprises and often family-owned) to possibly ditch their longtime suppliers with whom they may have dealt with for generations, or to undercut businesses owned by people in their own communities, and perhaps even by their neighbors. Thus, such a policy would amount to upending Japan's social order, unraveling long established social and communal bonds in Japanese lives which are the very fabric that holds them together.&nbsp; For most Japanese, the social costs of such a policy are simply too high, regardless of its obvious economic benefits.</p> <p>The bottom line is that while the standard diagnoses of Japan's economic ills are not wrong, they are just impractical given Japan's social, cultural, and&nbsp; demographic realities. Last but&nbsp; not least, it has often been pointed out Japan is not good at dealing with gradual, long-term challenges, especially when the origin of the problems are home grown. The analogy of boiling a frog in a pot of water with the temperature being raised slowly, with the result that the frog stays in the pot barely aware of the rising temperature only to die later, has frequently been used to describe the apparent inertia that has gripped Japan. As severe a shock the March 2011 triple disasters has been,&nbsp; many observers do not&nbsp; think it was big enough&nbsp; to&nbsp; move Japan from its inertia. Thus, there is the fear that in Japan the collective choice is not to make a choice, but to opt for the devil that it thinks it knows--gradual decline instead of radical changes that come with great uncertainty and no guarantee&nbsp; of success.</p> <p></p> Misleading Diagnoses<p>Compounding the difficulty of implementing the various remedies based&nbsp; on&nbsp; the&nbsp; standard&nbsp; diagnoses are misleading diagnoses. Take for example the fact that Japan's past is repeatedly referred to as the&nbsp; 'lost decades.'&nbsp; This implies that &nbsp;Japan wasted the decades after the burst of the bubble economy when it lost its way, the way in which it boomed&nbsp; in the 1980s. This characterization obscures a reality that is however, much more complex and nuanced.</p> <p>The fact of the matter is that in the late 1980s Japan had become seriously inflated, in reputation and self-perception as much as in asset values. Japanese popular books and the media often asserted Japan would displace the United States as the world's leading economy by the turn of the century, and it became fashionable for Japanese bureaucrats&nbsp; and&nbsp; business leaders to crow that Japan had nothing left to learn from the West. Reinforcing such views are serious works by leading scholars, such as Ezra Vogel's well known and best selling Japan as Number One, Lessons for America.</p> <p>In retrospect, it was a classic case of hubris before nemesis and by the time the bubble economy burst in the early 1990s, the moment&nbsp; of hubris proved to be relatively short-lived. The system that enabled Japan to achieve what some outside observers&nbsp; saw as&nbsp; superior&nbsp; performance actually worked for only a brief period in the 1980s, which also sowed the seeds of its demise. With hindsight, the kind of bureaucratic capitalism practiced in Japan at that time, often referred to as 'Japan Inc.,' and much admired by its cheerleaders as superior to the classical Anglo-Saxon market capitalism, is very much part and parcel of the bubble economy itself. It is not an exaggeration to say that&nbsp; without Japan Inc., there&nbsp; would have been no bubble economy, hence no stagnation. By the late 1980s, this system had led to egregious misallocation of capital on a gigantic scale, rendering its collapse all but inevitable.</p> <p>However, the &quot;lost decades&quot; characterization has&nbsp; the&nbsp; unfortunate&nbsp; connotation&nbsp; that&nbsp;&nbsp; Japan needs to find its way back to the boom years of the 1980s. The solution to stagnation is therefore to recreate and reapply the formula that seemed to&nbsp; have worked&nbsp; so well before.&nbsp; In the&nbsp; 1980s, there was ample financing by the banks to the corporate sector, so in the 1990s politicians working with the banks sought to provide even more liquidity to businesses. But there was a critical difference&nbsp; between&nbsp;&nbsp; the&nbsp; corporate&nbsp; sector&nbsp; in&nbsp; the1980s and the 1990s; in the 1980s the Japanese corporate&nbsp; sector was expanding and investing, whereas in the 1990s the Japanese corporate sector was heavily in debt, and was either shrinking, relocating overseas in order to survive global competition in their exports, or both. So while cheap loans in the&nbsp; 1980s&nbsp; led to job creation and&nbsp; increases in household income, cheap loans on a much bigger scale in the&nbsp; 1990s&nbsp; merely led to bankrupt&nbsp; companies being kept on life support. This had disastrous consequences for the banking sector and the fiscal position of the government.</p> <p>Apart from the misguided attempt&nbsp; to &quot;re-create&quot; the Japan of the 1980s, there is yet another aspect of the misdiagnosis that is no less damaging. This has to do with how certain glib and superficial generalizations of Japan that have over time become self-evident truths. Journalists and pundits are forever quoting the Japanese aphorism: &quot;the nail that sticks up will be hammered down,&quot; with the implication that Japan is irrevocably shackled by herd behavior. The Japanese media is quick to hurl charges against intransigent bureaucrats and change-resistant institutions. Its business culture is believed to be hidebound and governed&nbsp; by groupthink. A society itself, that prizes harmony and homogeneity above all else, is believed to lack the DNA for change. Repeated characterization of the Japanese society and its institutions in such ways quickly leads to the conclusion that Japan is neither willing nor capable of change&nbsp; regardless of what&nbsp; happens.&nbsp; These are grossly superficial stereotypes. They are no more accurate&nbsp; for Japan than&nbsp; for other&nbsp; countries. In fact, similar stereotypes are found in all societies; take for instance popular sayings in English like &quot;don't stick your neck out,&quot; and &quot;don't rock the boat.&quot;&nbsp; Nevertheless, they are repeated&nbsp; so often in Japan that the perceptions of a conservative, change-resistant Japanese culture and its change-resistant society are by now deeply entrenched. This in turn leads to a sense of futility and hopelessness. In order to move forward to rejuvenate its economy and society, Japan needs to find the middle path&nbsp; between&nbsp; the two extremes of impracticality of radical reforms and fatalistic inertia.</p> <p></p> Back to the Future: The New Rise of Old Japan<p>We believe Japan can change,&nbsp; and the time for change is now. The stability of Japan's public finance,&nbsp; in spite of the inexorably rising government debts, has been due to the deep resource provided by household savings. Japan's total public sector debt&nbsp; now approaches&nbsp; 200%&nbsp; of GDP; but household savings are still higher, hence the lack of panic. However that&nbsp; bedrock of private savings is becoming more shaky, being gradually undermined&nbsp; by endless government&nbsp; borrowing.Depending on assumptions on tax revenues and fiscal outlays, it is projected that in as short a time as five years, but&nbsp; no more than&nbsp; ten&nbsp; years, the amount of Japanese government debt could exceed the total net assets of Japanese households. At that point, government debt will no longer be backed up by taxpayers' assets, and confidence in the Japan Government Bond market would decline dramatically.</p> <p>Japan's aging population will add to the stress on government's fiscal position. Japan's elderly,who have the longest lifespans in the world, will draw down their savings to fund their retirement, as a consequence the household savings rate will decrease in the coming years. This will make it more difficult for the domestic private sector to finance the budget&nbsp; deficit of the government&nbsp; in the coming decade. Japan's aging population will in turn create new demands&nbsp; for more fiscal expenditures in areas of pension and healthcare, compounding the government's fiscal difficulties.</p> <p>The most urgent reason that Japan must change now, however, is the young. Persistently slow economic growth has produced millions of young Japanese who feel left out, unwanted, and alienated. Although overall unemployment rate remains low in Japan, youth unemployment has been rising. In recent years, it is estimated that 10%&nbsp; of the 15-to 24-year-olds and 6%&nbsp; of the 25-to 34-year olds are unemployed, much higher than the national average. Furthermore, these unemployment rates&nbsp; do not&nbsp; take&nbsp; account&nbsp; of the many young women dropping out of the workforce or the huge number of young workers who are employed as part-time workers, with lower and less stable incomes. In 2009,&nbsp; for instance, part-time workers&nbsp; accounted&nbsp; for 34%&nbsp; of&nbsp; the labor force, up from 20% in 1990. So the burden of economic stagnation has been disproportionately heavy for the young people of Japan, a situation that bodes ill for the long term if allowed to continue.</p> <p>So the water temperature in the pot may well be rising faster than&nbsp; before,&nbsp; and the&nbsp; frog may begin to feel the heat, and be stirred to try to do something to get out of the pot. The question is what to do and how to do it. As argued earlier, instead of coming up with solutions that are at odds with Japan's traditional values, the way forward is for Japan to tap into some of the abiding strengths embedded in its traditions and local community, and to make them serve the cause of Japan's rejuvenation.</p> <p>Ordinary Japanese are entirely capable to act decisively and creatively in responding to challenges to their communities, precisely because of their deep sense of communal solidarity and trust. As described earlier, within their communal context, the rank and file of Japanese people has the wherewithal for self-directed spontaneous actions. This 'can&nbsp; do'&nbsp; spirit is entirely consistent with their traditional strengths embedded in communal solidarity, trust, and mutual assistance. It is therefore a powerful platform upon which efforts to rejuvenate the Japanese economy and its society must be based.</p> <p>From a business perspective, small and medium-size enterprises (SMEs) are in the best position to leverage this source of strength by refocusing energies and&nbsp; deepening relationships with local communities. It has long been observed that Japanese consumers value quality and simplicity of services, more&nbsp; than&nbsp; consumers&nbsp; elsewhere. SMEs, in getting close and personal with local communities, can provide exactly such services based on deeper understanding of their customers.&nbsp; With a strong community focus, SMEs themselves can in turn tap into another&nbsp; one of Japan's traditional strengths&nbsp; to create and innovate in serving local communities--their ability to excel in process. The Japanese are masters of continuous improvement, and no one executes like them. They embody focus, discipline, relentless effort, and uncompromising quality control. To the extent that SMEs can embed themselves in local communities, a synergistic relationship can evolve: local communities are being better served, and their demand in turn stimulates SMEs to improve and adapt to the needs of local communities through relentless process innovations.</p> <p>Japan has a long cultural history of devotion to mastery in whatever they do. This single-minded focus on excellence transpires through in all sorts of products and endeavors; ranging from crafts to theater to food to factories. Even an ordinary bowl of noodles displays their attention to detail. There is a strong sense of pride in both doing something well and doing something uniquely different to distinguish their local community. Consumers in turn value such excellence in products and services. Businesses, SMEs especially, when strongly connected to their customers in local communities, can exploit this appreciation of, and devotion to, mastery to excel. When this happens,&nbsp; there is then business rejuvenation at the grassroots level.</p> <p>This is not a pipe dream. It has already happened in the luxury goods sector. Many industry analysts have noticed that&nbsp; Japanese consumers have become more frugal and are spending less on foreign designer brands and premium products, after two decades of stagnation. The reality is far more nuanced.&nbsp; Many former luxury goods consumers--the ones who transformed Japan in the early 1990s into the world's second-largest luxury goods&nbsp; market,&nbsp; behind only the&nbsp; United States--have already&nbsp; migrated&nbsp; to a new consumption space. They have rediscovered the skills and traditions of Japan's best craftsmen&nbsp; and a new&nbsp; generation of homegrown&nbsp; designers and producers. They are launching handmade&nbsp; brands that&nbsp; employ ancient manufacturing techniques and traditional materials. This has in turn led to the revitalization of many small and highly specialized craft workshops.</p> <p>This is a phenomenon of return to authenticity. This almost obsessive search for the lesser-known, and often hard-to-get,&nbsp; yet exquisitely crafted local product&nbsp; has become&nbsp; a new&nbsp; trend&nbsp; in Japanese spending patterns. One direct consequence is that it is revitalizing the fashion scene in Japan, with home grown designers, often utilizing local materials and rediscovering traditional methods, taking center stage. These products and services are typically no less costly than foreign designer brands. It has the potential of bolstering a whole new generation of entrepreneurs, designers, craftsmen, and even chefs, all operating as SMEs, to turbocharge Japan's creative industries. This is business innovation based on deep traditions.</p> <p>Counter-intuitively, this process of business rejuvenation by leveraging traditional values and strengths can be even stronger if SMEs embrace the&nbsp; internet.&nbsp; Recent&nbsp; research&nbsp; has&nbsp; shown&nbsp; that e-commerce&nbsp; has immense growth&nbsp; potential in Japan.3&nbsp; The 'Internet-GDP,' defined as the industry's direct contribution to GDP through consumption, investment, government purchases, and trade via online activities, and 'Indirect internet consumption,' defined as purchases researched online prior to buying them physically, is currently estimated&nbsp; at 7.7%&nbsp; of GDP, or 41.6 trillion&nbsp; yen (US$547 billion). It has been expanding at around 8% a year in the past five years, outperforming all other industries which averaged only 5% growth per year.</p> <p>As impressive as these&nbsp; figures are,&nbsp; Japan's highly developed internet infrastructure is grossly underutilized by SMEs. Virtually every single household has an internet account,&nbsp; and survey data have consistently shown that elderly Japanese, both urban and rural, are no less avid internet users than the young. But businesses are still very slow to exploit the new opportunities offered, especially the SMEs. For instance, at present, it is estimated that only one in four SMEs hosts its own website. Websites can help give a face to small businesses, especially those in rural areas and in small communities, and open new sales channels cost-effectively. An online presence can deepen SME's connections with their customers, allowing local customers, especially the elderly, to get in touch instantly and as frequently as they wish, thereby further strengthening their sense of solidarity with the local community. For some of the SMEs with the right products and capacity, building an online presence could also lead to new export opportunities.</p> <p>Available data provides a glimpse of a tantalizing potential. For example, in prefectures where 40%&nbsp; of SMEs have&nbsp; developed their own web sites, their annual sales are estimated to be 20-30% higher than SMEs in prefectures where less than 20% have their own web sites. SMEs with web sites tend to have more employees and pay them more. Thus&nbsp; the e-commerce potential&nbsp; in Japan provides a contemporary context for recasting traditional strength&nbsp; with new technology in business rejuvenation. Combining the old with the new in this fashion could prove to be a practical and sustainable way forward--back to the future.</p> <p>This back to the future strategy, fusing the traditional with the latest communications technology, is not confined to SMEs in rural and small town Japan. It can be applied just as effectively in large cities, including Tokyo. In urban Japan, most neighborhoods are effectively a local community. With appropriate modifications, SMEs offering local community-focused products and services can thrive. A powerful illustration of this trend is perhaps the 7-Eleven stores, which in Japan have evolved into something completely different from their&nbsp; foreign&nbsp; counterparts.&nbsp; In&nbsp; urban&nbsp; Japan, 7-Eleven stores function as the local neighborhood's kitchen, post office, courier, ATM, in addition to being a convenience store. They are more like a neighborhood concierge.</p> <p>Tokyo, by virtue of its size, complexity and cosmopolitan orientation, provides unique opportunities that aren't available elsewhere in Japan. It is arguably easier to have selective immigration in Tokyo, targeting highly-skilled foreign professionals for well-paid positions, which are accepted with minimal social friction. Some recent trends may well be a harbinger of things to come, leading to a different kind of future for Tokyo, if not for all of urban Japan. Today, increasing numbers of foreigners dominate the&nbsp; top&nbsp; ranks of sumo wrestling, which is&nbsp; the&nbsp; most&nbsp; traditional of all Japanese sports, considered at one time to be a sacred combat with divine origin. The increasing numbers of swaggering Mongolian and European sumo grand champions have had no difficulty in being accepted in Tokyo. Less exotic is the growing presence of foreign staff in the service sector (mostly Chinese, Korean and Southeast Asian)--a novelty&nbsp; some two decades ago--is now so commonplace in Japan's large cities that people barely notice it. In urban Japan, then, there is the possibility for a moderate&nbsp; influx of foreign talent to inject new vigor to its pool of human resource, generating new&nbsp; energy, fresh ideas, and&nbsp; more risk-taking appetite.</p> <p>The best model for Tokyo is London. Once the imperial capital of an insular island nation, it is now one of the most dynamic and creative capitals of the world. The rapid internationalization of London was not the result of the government and the British people suddenly deciding to open up their culture and society to foreigners. London merely offers more opportunities and freedom for talented people from other&nbsp; countries to follow their own interests and passions, and build their dreams there.&nbsp; It is much easier for enterprising and gifted young people to start a business, sell art, open a studio, or launch creative enterprises in London than it is in other, more bureaucratic, more tightly-regulated cities in Europe. To be realistic, Tokyo is unlikely to become the London of Asia. However, even a very partial opening of Tokyo to an influx of foreign talent with new skills and ideas could make a huge difference.</p> <p>The rejuvenation of Japan, based on a back to the future strategy, could therefore ride on a two-tiered transformation: Tokyo and rest of Japan. In both cases, traditional values and practices are to be honored&nbsp; and leveraged, not&nbsp; discarded. It is worth noting that in the Meiji Restoration, the so called 'westernizers' of Japanese society were in fact no less nationalistic and traditional than the 'traditionalists' who opposed changes modeled on the West. The 'westernizers' believed that Japan's traditions can adapt&nbsp; to changing conditions without losing their core value, whereas the 'traditionalists' refused any modifications. History proved that the 'westernizers' were right. Once&nbsp; again, in a&nbsp; new&nbsp; transformation, a &nbsp;new Japan can thrive in today's economic and business environment by tapping into its traditional values and strong communal bonds. At the end of the day, all successful economies are built on thrift, hard work, and individual initiative. Japan's traditions and values can be made to support and nurture these essential elements for success.</p> <p>1. Japan has very little exposure to foreign debts.&nbsp; It is estimated that only some 7% of total public sector debts in Japan are held by foreigners,&nbsp; which is the fundamental difference between Japan and the Euro Zone crisis countries.</p> <p>2. The potential&nbsp; impact of such business rejuvenation is huge:&nbsp; some 99.7% of businesses are SMBs, employing around&nbsp; 70%&nbsp; of company employees.</p> <p>3. Value of the Japanese&nbsp; Internet Economy. 2011. Joint report by Google Japan and the Nomura Research Institute.</p> <p></p> About the Author<p>Yuwa Hedrick-Wong, Ph.D.</p> <p>Yuwa Hedrick-Wong is currently HSBC Visiting Professor of International Business at the University of British Columbia, Canada.</p> <p>Yuwa is an economist and business strategist with 25 years of experience gained in over thirty countries. He is a Canadian who grew up in Vancouver, British Columbia, and spent the last 20 years working in Europe, Sub-Sahara Africa, the Indian Sub-continent, and Asia/ Pacific. He has served as strategy advisor to over thirty leading multinational companies in the Asia/Pacific region.</p> <p>In 2010, Yuwa was appointed as Global Economic Advisor to MasterCard Worldwide. Prior to this role, he was Economic Advisor to MasterCard in Asia/Pacific, a position he held since 2001. His other appointments are: Advisor at Southern Capital Group, a private equity fund (since 2007); member of the Investment Council of ICICI, India's largest private bank (since 2008); and Adjunct Professor at the School of Management, Fudan University, Shanghai, China (since 2006).</p> <p>Yuwa is a frequent speaker at international conferences and a regular commentator&nbsp; in the broadcast and print media on economic, policy and business issues. He is a published author&nbsp; on consumer markets, economic development, trade, and international relations. He was voted 'Communicator of the Year' in Asia in 2006 by the Asia/Pacific Association of Public Relations Professionals. He wrote a regular column in Forbes Asia called 'Asian Angles' in 2005 and 2006.and guest lecturer at the Graduate School of Business, University of Chicago from 2004-06. As a student&nbsp; of philosophy, political science, and economics, Yuwa studied at Trent University and pursued post-graduate training at the University of British Columbia and Simon Fraser University in Canada, where he received his Ph.D. He also received training, at the post-doctoral level, in health economics, energy and environmental economics, and scenario forecast and planning.</p> <p>He lives with his wife and two cats on Salt Spring Island, off the west coast of Canada, and is an eager apprentice in the fine art of gardening.</p> <p></p> In the midst of the ongoing global economic turmoil involving the world's richest economies, the most dynamic emerging markets, and a revolving cast of countries in crisis, Japan has featured in neither the causes of the crisis, nor its solutions. http://www1.mastercard.com/content/intelligence/en/research/reports/2012/rejuvenating-japan-back-to-the-future2011-12-31T16:00:00.000Z2011-12-31T16:00:00.000ZSingapore, India Top List of Region’s Big Spenders: MasterCard Survey Georgette Tan, Robert O’Brien MasterCard and its Suite of Research Properties<p>The MasterCard Worldwide Index suite in Asia/Pacific, Middle East and Africa includes the long-running MasterCard Worldwide Index of Consumer Confidence, as well as the MasterCard Worldwide Index of Women’s Advancement, Online Shopping, Index of Financial Literacy, and the Index of Global Destination Cities. In addition to the Indices, MasterCard’s research properties also include a range of consumer surveys including Ethical Spending and a series on Consumer Purchasing Priorities (covering Travel, Dining &amp; Entertainment, Education, Money Management, Luxury and General Shopping).</p> <p>MasterCard also regularly releases Insights reports providing analysis of business dynamics, financial policies and regulatory activities in the Asia/Pacific, Middle East and Africa region. Over 80 Insights reports have been produced since 2004.</p> <p>MasterCard has also released a series of four books on Asian consumer insights, authored by Dr. Yuwa Hedrick-Wong, Global Economic Advisor for MasterCard Worldwide and published by John Wiley &amp; Sons.&nbsp;</p> <p></p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> The MasterCard Survey on Consumer Purchasing Priorities, released twice yearly, provides valuable insights into consumers’ discretionary spending priorities for the six months ahead. The latest survey was conducted from March to April 2011 and involved 6,022 consumers from 8 markets. http://www1.mastercard.com/content/intelligence/en/research/press-release/2011/singapore-india-top-list-of-regions-big-spenders-mastercard-survery2011-09-25T16:00:00.000Z2011-09-25T16:00:00.000ZEmerging Markets to Drive Global Economy in Huge Consumption Shift: New MasterCard Report Georgette Tan, Robert O’Brien The MasterCard Worldwide Knowledge Platform<p>The MasterCard Worldwide Knowledge Platform develops and shares new perspectives on the dynamics of global economic growth and the evolution of consumer markets across the world through its research properties and advisory services.</p> <p>MasterCard’s suite of research properties includes its Insights series of reports, its family of consumer market Indexes, and a range of consumer spending surveys. The Insights reports focus on analysis of economic dynamics, business conditions, and government policies at the regional and global levels.&nbsp; The consumer market indexes include the long-running MasterCard Worldwide Index of Consumer Confidence as well as the MasterCard Worldwide Index of Global Destination Cities launched in 2011. Also, MasterCard regularly conducts surveys examining economic and consumer trends – including seasonal consumer spending, consumer purchasing priorities, and consumer adoption of emerging payment products and services.</p> <p>MasterCard Advisors, the professional services arm of MasterCard Worldwide, provides payments consultancy services to financial institutions and merchant partners worldwide. MasterCard Advisors regularly issues SpendingPulse reports, a macro-economic indicator tracking national retail and service sales, across all payment forms including cash and check.&nbsp; SpendingPulse reports are currently available in the U.S. and UK.</p> <p>Serving as MasterCard’s Global Economic Advisor, Dr. Yuwa Hedrick-Wong carries 25 years of international experience gained in over 30 countries. As economic advisor, he serves as author and chief editor of MasterCard’s Insights series of reports; and chairs a MasterCard Knowledge Panel comprising leading economists, policy advisors, academics and business strategists for regular discussions, debates, and knowledge sharing.</p> <p></p> About MasterCard <p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> <p></p> The latest Index from MasterCard is a new approach to understanding the global economy and the dynamic flow of commerce across the world. It ranks cities by their total international visitor arrivals and the cross-border spending by these same visitors in the destination cities, and gives visitor and passenger growth forecasts for 2011.http://www1.mastercard.com/content/intelligence/en/research/press-release/2011/emerging-markets-to-drive-global-economy-in-huge-consumption-shift2011-12-12T16:00:00.000Z2011-12-12T16:00:00.000ZDigital Planet: Readying for the rise of the e-consumer Bhaskar Chakravorti, Christopher (Rusty) Tunnard, Ravi Shankar ChaturvediAcknowledgements<p>The authors are grateful for the support and counsel of their colleagues and sponsors. Without the advice and critiques of many distinguished experts, this work would not have been possible. The views expressed in this report and any remaining errors are the authors’ alone. A special thanks to Yuwa Hedrick-Wong, Ajay Bhalla, Kevin Stanton, Elisa Romm, Elena Carroll, Ted Iacobuzio, John Gaffney, Alissa Saoutina and Nitin Sumangali of MasterCard Worldwide, Andrea Scerch and Carly Smith of DataCash, Desmond Choong of The MasterCard Center for Inclusive Growth, Jennifer Choi of Institutional Limited Partners Association, Dr. Harshavardhana Singh of The World Trade Organization and Senior Fellow at The Fletcher School’s Council on Emerging Market Enterprises, Maryam Haque of EMPEA, Brendan Hughes of Dow Jones VentureSource, Brett Hammond and Brandon Nott of VML, Jen Heady of Stern Associates and from The Fletcher School, Benjamin Mazzotta, Daniel Popko, Dorothy Orszulak, Jessica Smith and Taraneh Pettinato.</p> Authors<table cellspacing="0" cellpadding="0" border="0"> <tbody><tr><td><img src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/authors-bhaskar.jpg"></td> <td><p><b>Bhaskar Chakravorti<br> </b><i>Senior Associate Dean for International Business and Finance</i></p> <p>The Senior Associate Dean of International Business and Finance at The Fletcher School, Bhaskar Chakravorti is also the Executive Director of Fletcher’s Institute for Business in the Global Context (IBGC) and a Professor of Practice in International Business. Dean Chakravorti has extensive experience in academia, strategy consulting and high-tech R&amp;D. Prior to Fletcher, Dean Chakravorti was a Partner at McKinsey &amp; Company and a Distinguished Scholar at MIT’s Legatum Center for Development and Entrepreneurship. He has also served on the faculty of the Harvard Business School and the Harvard University Center for the Environment. Chakravorti’s book, The Slow Pace of Fast Change: Bringing Innovations to Market in a Connected World, Harvard Business School Press; 2003, was rated one of the best business books of the year by multiple publications and was an Amazon.com best seller on innovation.</p> </td> </tr><tr><td><img src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/authors-rusty.jpg"></td> <td><p><b>Christopher (Rusty) Tunnard&nbsp;<br> </b><i>Professor of the Practice of International Business Christopher</i></p> <p>(Rusty) Tunnard is Professor of the Practice of International Business at The Fletcher School and a Senior Fellow at the Center for Emerging Market Enterprises. A recognized expert on technology-led change in the international communications, travel and financial service industries, he was for many years a Principal at Arthur D. Little (ADL) in its Travel and Technology practice in Brussels and London. Prior to joining ADL, he directed worldwide strategy and technology partnerships for the Travel Division of American Express. At Fletcher, he teaches courses in global consulting and in social network analysis. His research interests include the impact of social networks and social media on institutions, organizations and civil society. Dr. Tunnard holds MA, MALD and Ph.D. degrees from Fletcher and he received an AB from Harvard.</p> </td> </tr><tr><td><img width="99" height="105" src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/authors-ravi.jpg"></td> <td><p><b>Ravi Shankar Chaturvedi;</b><br> <i>Research Fellow for Innovation and Change</i></p> <i></i><p>Ravi Shankar Chaturvedi is a Research Fellow for Innovation and Change at IBGC where he leads the Planet eBiz study, which analyzes the forces that drive digital evolution and the future of global commerce. He has extensive experience in emerging markets, strategy and business management and the payments industry. Prior to Fletcher, Chaturvedi was the Head of Portfolio and Products for the Middle East and North Africa region at American Express. He also worked in various capacities in parts of Asia for a decade with organizations such as Standard Chartered, HSBC and Hewlett Packard. Chaturvedi holds the MIB degree from The Fletcher School, where he was&nbsp;an Emerging Markets Enterprise Scholar. He also has an MBA from the Asian Institute of Management, Philippines.</p> </td> </tr><tr><td>&nbsp;</td> <td><p><b>Editor</b><br> Elke Jahns-Harms</p> <p><b>Research Team</b><br> <b></b>Caroline Troein<br> Cassandra Pagan<br> Christina Filipovic<br> Panagiota Kaltsa<br> Ruiruo Wu<br> Sarah Ryan<br> Shruti Viswanathan<br> Trisha Taneja<br> </p> </td> </tr></tbody></table> About<table cellspacing="0" cellpadding="1" border="1"> <tbody><tr><td><img src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/institute-business-global.jpg"></td> <td><p><b>Institute for Business in the Global Context</b><br> </p> <p>The Institute for Business in the Global Context (IBGC) connects the world of business to the world. It is the hub for international business at The Fletcher School, the oldest graduate school of international affairs in the United States. The Institute takes an interdisciplinary approach, preparing global leaders who can cross borders of many kinds and integrate business skills with an understanding of the geopolitical, legal, financial, security, macroeconomic, humanitarian and environmental impacts on business. The Institute is organized around four core activity areas: education, research, dialogue and a lab. The Master of International Business degree and leadership development programs are at the heart of the education mission. These offerings, coupled with original research in multiple areas — inclusive growth, innovation and economic development at scale, sovereign wealth and global capital flows, among others — facilitate a vibrant dialogue on contemporary global issues through conferences, symposia and speaker events. The lab creates opportunities for student teams to take knowledge into the “field” to effect change through entrepreneurial startups and consulting projects. The Institute also houses the Council on Emerging Market Enterprises, a think tank comprising distinguished practitioner-scholar experts, who collaborate with the Institute and The Fletcher School on a variety of initiatives, such as research&nbsp;programs, symposia and conferences.</p> </td> </tr><tr><td><img src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/fletcher-school-tufts-university.jpg"></td> <td><p><b>The Fletcher School at Tufts University&nbsp;</b><br> </p> <p>The Fletcher School of Law and Diplomacy at Tufts University is the oldest exclusively graduate school of international affairs in the U.S., working to solve the world’s most pressing problems through a collaborative, cross-disciplinary approach to research and education. Since 1933, The Fletcher School has prepared the world’s leaders to become innovative problem-solvers in government, business and non-governmental organizations with strategic cross-sector networks. Through our ongoing commitment and rigorous approach to advancing world knowledge through research and scholarship, The Fletcher School continues to inform and build bridges to meaningful&nbsp;global solutions.</p> </td> </tr><tr><td><img src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/anabel-gonzalez.jpg"></td> <td><p><b>A Message From Anabel González</b><br> <i>Senior Director of the Trade and Global Competitiveness Practice, The World Bank<br> </i><br> I congratulate The Fletcher School at Tufts University for taking the lead in measuring the digital evolution of nations in a dynamic and integrative manner and it is with great pleasure that I am introducing the Digital Evolution Index (DEI) to the wide set of users who would find it of interest and use. The DEI and this Digital Planet Report are the culmination of six years of data that illuminate the unique trajectories of 50 countries as they usher their citizens and economies into the digital future. The six years following the great global economic decline in 2008 and the ongoing developments make for an interesting study. The report has many rich insights on the regenerative capacities of countries, governments, consumers and businesses as they dust themselves off and prepare to meet the challenges and opportunities of a rapidly digitizing world. &nbsp;</p> <p>For policymakers and governments, this Index provides the insights necessary to design policies that can boost digital competitiveness. For businesses, investors and entrepreneurs in the digital economy, the DEI uncovers patterns that can inform their strategies as they seek to expand globally. While there is a great deal of optimism around the potential economic and social gains from improved information and communication technologies, countries would need to improve policies and businesses would have to formulate cogent strategies based on a strong grasp of the quality and depth of digital ecosystem. They need also a means to compare the quality of digital ecosystems across markets. The old adage “we can’t improve what we don’t measure” rings true as we consider the economic impact of digital technologies on humankind. To measure and offer pointers for improvement requires knowledge and the DEI distinguishes itself as a knowledge asset in this regard.&nbsp;</p> <p>The Fletcher School’s dynamic classification of evolution zones captures the journey of individual countries and adds a refreshing element of nuance to understanding complex digital ecosystems. Rather than use a static ranking system, the DEI illustrates how countries evolve over time through the interplay between innovation, institutional policies, demand and supply conditions. This approach allows countries not only to benchmark against the best, but also to track their own progress and identify where policy improvements may be made.</p> <p>While the countries represented in this maiden initiative cover 73 percent of the world’s population, the remaining countries — many of which are developing — would also benefit from knowledge shared through this Index. I am sure that the Fletcher School will continue to consolidate this Index and even expand the scope of this important study in the coming years.</p> <p>I welcome you to discover the insights, patterns and surprises in this report.<br> <br> <img src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/anabel-gonzalez-signature.jpg"></p> </td> </tr></tbody></table> Overview<p>This report introduces the Digital Evolution Index (DEI) as a way to gauge the transformation of economies in the advanced and developing world from traditional brick-and-mortar to digitally enabled. The DEI measures the digital trajectories of 50 countries to provide actionable, data-informed insights for businesses, investors and policymakers. Created by The Fletcher School, in collaboration with MasterCard Worldwide and DataCash, the DEI analyzes the key underlying drivers and barriers that govern a country’s evolution into a digital economy: Demand, Supply, Institutional Environment and Innovation. A longitudinal analysis of these four drivers during the years 2008 to 2013 reveals both the current state of a country’s digital economy, as well as changes over time. Combining these two measures allows us to assign each country to one of four Trajectory Zones:</p> <ul> <li>Stand Out countries have shown high levels of digital development in the past and continue to remain on an upward trajectory.&nbsp;<br> <br> </li> <li>Stall Out countries have achieved a high level of evolution in the past but are losing momentum and risk falling behind.<br> <br> </li> <li>Break Out countries have the potential to develop strong digital economies. Though their overall score is still low, they are moving upward and are poised to become Stand Out countries in the future.<br> <br> </li> <li>Watch Out countries face significant opportunities and challenges, with low scores on both current level and upward motion of their DEI. Some may be able to overcome limitations with clever innovations and stopgap measures, while others seem to be stuck.<br> </li> </ul> <p><a href="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure1.jpg" target="_blank"><img width="300" height="251" src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure1.jpg"></a></p> <div><b>&nbsp;</b></div> <div>The DEI reveals actionable insights for governments, businesses and investors:<br> <br> </div> <ul> <li>Break Out countries such as India, China, Brazil, Vietnam and the Philippines are evolving rapidly. If their evolution rates sustain, these countries will emerge as strong digital economies. However, the next phase of growth is harder to achieve and requires a concerted effort across drivers by all actors concerned. The greatest challenges to growth and opportunities for improvement in the medium term in these markets lie in improving supply infrastructure and in nurturing sophisticated domestic consumers.<br> <br> </li> <li>Stand Out countries such as Singapore, Hong Kong, the United States and New Zealand have highly evolved digital ecosystems, with very competitive e-commerce markets supported by cutting edge infrastructure and sophisticated domestic consumers. Sustaining upward trajectories at this level is difficult. To remain Stand Out markets, these countries need to continue to fast-track innovation and seek markets beyond their borders.</li> </ul> <ul> <li>Stall Out countries (most of Western and Northern Europe, Australia and Japan) can only jumpstart their economies by following what Stand Out countries do best: redoubling on innovation and continuing to seek markets beyond domestic borders. Stall Out countries are also older and aging: Attracting highly talented young immigrants could help revive innovation.<br> <br> </li> <li>Watch Out countries are home to 2.5 billion people. The biggest among them — Indonesia, Russia, Nigeria, Egypt and Kenya — have institutional uncertainty and a low commitment to reform. The other distinguishing aspect of Watch Out countries is that they possess one or two outstanding qualities — predominantly demographics — that make them attractive to businesses and investors. These countries expend a lot of energy innovating around institutional and infrastructural constraints. Unclogging these bottlenecks would enable these countries to direct their innovations where they matter most.</li> </ul> <p>The report begins with an explanation of how the DEI is constructed and then presents country scores and rankings. This is followed by a discussion of the Trajectory Zones at the end of Section 2. In Section 3, we present key patterns, insights and surprises gleaned from DEI data. We conclude with emerging implications for businesses, investors and policymakers.</p> <p></p> 1. Introduction<p><b>The Internet has come of age.</b> Twenty-one years since the marketplace first took notice, the World Wide Web today is the heart of the global economy, channeling interactions for nearly 40 percent of the world’s population.<sup>1 </sup>It took the internet 12 years to gather its first billion users and a third of that time to amass its third billion.<sup>2</sup> Meanwhile, the emerging world is leapfrogging toward mobile phones at an astonishing pace, opening more avenues to internet adoption. Broadband subscriptions on mobile phones, now 34 percent of global mobile phone subscriptions, have tripled since 2008.<sup>3</sup> The next billion Internet users, logging on in an era of near-universal mobile connectivity, offer promise of greater economic growth and increased business opportunities.</p> <p><b>The next billion will be different.</b> The current 3 billion started off primarily as Internet users, surfing and emailing, before they became consumers of digital marketplaces. The next billion, already mobile customers used to interacting and transacting in a mobile ecosystem, will start off not as mere users, but rather as e-consumers: it’s a small step from downloading a ringtone to downloading a book. This has profound implications for the future of global commerce. Where the future e-consumers will come from, who they are, what they are like and how they will shape the digital marketplaces of the future are questions of great importance to businesses and investors globally. The answers depend on how governments, businesses and consumers co-evolve to face the challenges and opportunities of the digital future.</p> <p><b>Investor interest is driving competitive activity and innovation in digital marketplaces.</b> In anticipation of universal mobile Internet access, institutional investors and sovereign wealth funds are pouring money into e-commerce ecosystems and digital marketplaces in the emerging world. In just one week in July 2014, India saw investments of $3 billion flow into competing digital marketplaces Amazon and Flipkart.<sup>4</sup> The Chinese e-commerce giant Alibaba’s IPO in September 2014 ranks among the largest public offerings on record and Rocket Internet, the German startup conglomerate aiming to be the Amazon of the developing world, has been valued at $4.3 billion following a stake sale to the biggest telecom operator from the Philippines.<sup>5&nbsp;</sup></p> <p><b>Understanding the many forces that drive digital evolution will help in designing regulatorypolicies, steering innovation and allocating resources.</b> To measure the digital trajectories of countries and to provide actionable, data-informed insights for businesses, investors and policymakers, The Fletcher School, in collaboration with MasterCard Worldwide and DataCash, created the <b>Digital Evolution Index</b> (DEI). The DEI analyzes the key underlying drivers and barriers that govern a country’s evolution into a digital economy: Demand, Supply, Institutional Environment and Innovation. A longitudinal analysis of these four drivers during the years 2008 to 2013 enables us to make sense of the evolving global digital landscape, reveal patterns and provide insights into both current consumers and those to come.</p> 2. The Digital Evolution Index<p>&nbsp; &nbsp; &nbsp; &nbsp;&nbsp;</p> 2.1 The Drivers of Digital Evolution<p>The Digital Evolution Index analyzes the key underlying drivers that govern a country’s evolution into a digital economy:&nbsp;<b>Demand Conditions, Supply Conditions, Institutional Environment and&nbsp;</b><b>Innovation and Change.&nbsp;</b>To gain a comprehensive view of digital readiness across countries, we further divided these drivers into 12 components, measured using a total of 83 indicators. (The four drivers, 12 components and sample indicators are laid out in Figure 2.)</p> <p>Very early in our research, we recognized that digital evolution isn’t governed by just one, two or a few silver bullets such as technology, government regulation, consumer behavior or fulfillment networks. It is these factors and many others, often in different combinations in different countries. An insight into the drivers of the digital economy helps us move beyond a static snapshot and appreciate the systemic nature of forces at play. It enables us to explain why some countries are transitioning more quickly than others from brick and mortar to digital systems and outline the contributions that specific actors in the private and public space can make to unclog bottlenecks and to get innovation moving. Finding these key leverage points could propagate changes through the entire system. This systemic approach also helps explain why change may be slower than expected: The interlocking nature of these indicators could keep the status quo frozen until certain essential barriers are overcome.</p> <p><b>Figure 2: The Drivers of Digital Evolution</b></p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure2.jpg"><img width="399" height="224" src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure2.jpg"></a></p> <p><b>Supply Conditions</b></p> <p><img src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/supplyconditions.jpg"></p> <p><i>How developed is digital and business infrastructure?<br> </i>The Index looks at both digital supply conditions, such as available bandwidth and security of transactions, as well as physical infrastructure like quality of roads. Developing countries with fledgling infrastructure comprise the low end of the scores on the Supply driver.</p> <p><b>Demand Conditions</b></p> <p><img src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/demandconditions.jpg"></p> <p><i>Are consumers willing and able to transact in the digital environment?<br> </i>While high demand is always a welcome sign, low demand scores can be interpreted as an indication of untapped market potential that investors and businesses can take advantage of in an enabling institutional environment. Income, Internet usage and use of financial services all play a role in determining demand.</p> <p>Demand fell in many of the developed countries most affected by the Great Recession. As the majority of these countries already have high levels of Internet usage, strong social media participation and a robust electronic payments culture, consumption will be a key factor in improving this driver over time. By contrast, emerging markets are seeing steady growth across all three components. As a result, these countries have headroom for demand growth over a longer period of time before leveling out.</p> <p><b>Institutional Environment</b></p> <p><img src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/institutional-environment.jpg"></p> <p><i>Are government policies and regulations facilitating the creation of digital ecosystems?<br> </i>Political stability and rule of law are basic starting points. Beyond those, the institutional environment is measured on more than simply tax rates and openness of government policies. It takes into account how governments enact business-friendly regulations while also helping to build common infrastructure to facilitate trade. Internet and communications regulation plays a role: The network neutrality debate in the United States and instances of Internet censorship in many parts of the world highlight the ability of governments to fundamentally alter and control the nature of the Internet. On the other hand, enabling governments are creating new opportunities for businesses by bringing their citizens online.</p> <p>Changes in government policies and practice tend to be slow and gradual. From 2008-2013, emerging markets showed a slight decline in the Institutional Environment driver, while developed countries displayed gradual improvement.</p> <p><b>Innovation and Change</b></p> <p><img src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/innovation-change.jpg"></p> <p><i>What is the extent of innovation happening in the digital commerce realm?<br> </i>The Index considers investments into digital ecosystems (with private equity inflows as a proxy) and ease of creating startups. While many of the elements that are important to startups have deep connections to the other three drivers, this driver uses proxies to help measure the quality of innovation in our 50-country sample. Though developed countries do dominate the top rankings for the first three drivers, emerging and frontier markets, buoyed by investor interest, make a strong showing in the Innovation and Change driver.</p> <p></p> 2.2 Country Scores and Rankings<p>The 50 countries we chose for our analysis span a wide range between developed and emerging economies and together represent almost three quarters of the global population (5.2 billion). These are where most of the world’s current Internet users live and where the next billion users are likely to come from.</p> <p><b>Figure 3: Digital Evolution Index 2013 Map</b></p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure3.jpg"><img width="345" height="275" src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure3.jpg"></a></p> <p><b>Figure 4: Composite DEI Score and Rankings (2013)</b></p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure4.jpg" target="_blank"><img width="355" height="307" src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure4.jpg"></a></p> <p>The 2013 DEI score tells us the current state of a country’s digital landscape. However, digital development is not static: DEI score alone in any year does not tell us how a country has progressed over time or where it is likely to go in the future. One way to measure this change is simply to look at how scores have increased or decreased in the recent past. We chose 2008 as a starting point to look at how countries have been faring after the Great Recession. Figure 5 lists changes in DEI score (in absolute terms) between 2008 and 2013 and ranks countries from rapidly advancing to rapidly receding. China has seen the largest increase in score, while the Netherlands shows the largest decrease.</p> <p><b>Figure 5: Change in Scores Since 2008</b></p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure5.jpg" target="_blank"><img width="386" height="287" src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure5.jpg"></a></p> <p></p> 2.3 Mapping Digital Trajectories<p>Whether and how consumers engage in e-commerce will depend on the evolving ecosystems around them: both where they are today and where they might go tomorrow. We created the<b>&nbsp;DEI&nbsp;</b><b>Trajectory Chart&nbsp;</b>to address precisely these questions. We arrayed countries’ current (2013) status on the vertical axis against the five-year change in each country (positive or negative, in absolute points) on the horizontal axis. To classify the performance of countries, we divided the trajectory chart into four distinct Trajectory Zones:&nbsp;<b>Watch Out, Break Out, Stall Out and Stand Out.&nbsp;</b>Each of these is described in Figure 6. Countries move between zones as their digital ecosystems evolve and change and can embody qualities of two zones at the same time during these transition periods.</p> <p><i>The Four Trajectory Zones Defined</i></p> <p><b>Stand Out</b>&nbsp;countries do not merely have highly developed digital ecosystems, they are also continuing their upward trajectories. It is difficult for countries to sustain high improvement rates at this level; it requires continual innovation and market expansion. Those unable to maintain their momentum risk becoming&nbsp;<b>Stall Out</b>countries.</p> <p>In spite of their high scores in 2013, most parts of Northern and Western Europe are losing momentum. They straddle the Stall Out and Stand Out zones, reflecting the challenges Europe has faced since the start of the credit crisis and particularly the loss of focus on innovation. The United States, despite its role in the global financial crisis, has managed to keep its head above water, while Singapore, South Korea and Hong Kong have been consistently pushing the frontiers of digital readiness.</p> <p><b>Break Out</b>&nbsp;countries have low current scores but are evolving rapidly. If their evolution continues at this rate, these developing countries will grow into strong digital economies. Though highly attractive to investors, their development is being held back by limitations in infrastructure, the absence of government policies and initiatives and a lack of adequate sophistication in consumer demand. Of great interest are the trajectories of Malaysia, China, Chile, South Africa and other leading Break Out nations: They are prime candidates for becoming the Stand Out nations of the future.</p> <p><b>Watch Out</b>&nbsp;countries face both significant challenges and opportunities, with low scores on both current level and upward motion of their DEI. Some of these countries are showing remarkable innovation in the face of serious infrastructural gaps and institutional constraints, creating clever stopgaps to overcome and work around these limitations. The rest seem to be stuck or receding&nbsp;and risk being left behind as others embrace digital opportunities.</p> <p><b>Figure 6: Trajectory Chart</b></p> <p><b></b><a href="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure6.jpg" target="_blank"><img width="339" height="353" src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure6.jpg"></a></p> <p></p> 3. Patterns, Insights and Surprises<p><b>&nbsp; &nbsp; &nbsp; &nbsp;</b></p> 3.1 The Rest evolve differently from the West<p>It is tempting to conclude that countries progress in a defined pattern — moving from Break Out to Stand Out and then to Stall Out — given that many developed markets, formerly Stand Out countries, are Stalling Out today. However, our research shows that countries, particularly emerging economies, are following unique paths and that&nbsp;<i>there is very little about the digital past and&nbsp;</i><i>present of the West that instructs us about the digital present and future of the Rest.</i></p> <p>The momentum and direction of countries over time result from the interplay of the many systemic elements (in at least 83 categories spanning four drivers) that govern their digital transition. While there isn’t one grand pattern, to the extent that the four drivers are correlated, the evolution follows a linear path. When drivers are not correlated — as is often the case in emerging markets — the trajectory is nonlinear and more often a random walk. Demographics and innovation factors may push these countries ahead, while institutional and contextual factors often slow them down.</p> <p></p> 3.2 Neighborhoods matter<p>While the DEI reveals no predetermined path of digital evolution, geography clearly matters: countries are more likely to grow and change with their neighbors. Shared cultural norms; similar social, political and economic environments; and demonstration effects could all play a role.</p> <p><b>Figure 7: Trajectory Chart Regional View – Europe<br> Figure 8: Trajectory Chart Regional View - Asia</b></p> <p><img width="429" height="187" src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure7-8.jpg"><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure7-8.jpg"></a></p> <p>Though Europe as a whole is spread over three evolution zones, Northern (especially the Nordics), Central, Eastern and Southern Europe display comparable rates and states of digital development within their subgroups (see Figure 7).</p> <p>Elsewhere in the world, a similar pattern emerges (see Figure 8). Countries within East Asia have moved forward together, as have members of the ASEAN. The African countries in the Index are clustered, as are those in South America, the Middle East, North America and Australasia.</p> <p>Thus, we can reasonably infer that a country’s position on the Trajectory Chart is partly affected by its regional location, which presents both opportunities and challenges: A country can be pushed forward or held back by its neighbors. Regional economic groupings and related harmonization of institutions and supply chains have had a positive impact on some individual country scores over time, as seen in Poland, Estonia and Malaysia. The countries that are likely to evolve differently from their neighbors are those in the Break Out zone, gearing up to leave many of their neighbors behind.</p> <p></p> 3.3 Innovative Hybrids: Combining cash and e-commerce<p>In some innovative emerging economies, hybrids combining two or more elements of the digital commerce value chain — access, marketplaces, transaction and delivery — are springing up to bridge infrastructure gaps. Cash on delivery where electronic payments are thin; tablet-toting vendors where access is patchy; and delivery personnel doubling up as sales persons to cross-sell or upsell are but some of the strategies showing great success in these markets.</p> <p><i>The Rest pay differently than the West</i></p> <p>Conventional wisdom suggests that the digital economy requires a population able and willing to conduct financial transactions online. After all, developed economies have created efficient e-commerce models by relying on strong electronic payment networks: Amazon’s success in the West was built on consumers’ willingness to transact online and on its ability to make payments with credit, debit or prepaid cards to purchase goods and services.</p> <p>The Western experience would suggest that countries with a heavier reliance on cash over electronic transactions in retail purchases would have a longer path to travel before achieving high levels of digital commerce activity. However, data from the Index points to the contrary. A combination of fledgling infrastructure, cultural preferences and distrust of electronic payments have entrenched cash into emerging digital ecosystems without necessarily slowing their evolution. Figure 9 shows countries’ speed of digital evolution plotted against their level of cash reliance (which takes into account savings and credit profiles, digital money footprints, interactions with formal financial systems, prevalence of debit and credit cards, and the amount of Internet retailing). Countries on the upper left of the graph such as India, Indonesia and Colombia all have high cash dependence and indeed preference, yet digital marketplaces in these countries have been innovating at a remarkable pace. E-commerce players are simply working with and around the persistence of cash.</p> <p><b>Figure 9: Cash in the Digital Economy</b></p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure9.jpg" target="_blank"><img width="277" height="224" src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure9.jpg"></a></p> <p><b><i>Innovative companies in these countries have been crafting solutions that accommodate society’s predilection for cash.</i></b></p> <p>Indian businesses lead this trend: They have found that allowing consumers to touch and feel the product before paying up helps build consumer trust in e-commerce.<sup>6</sup>&nbsp;Gaining this trust at an early stage becomes particularly important in a country with a young population that has yet to reach the height of its purchasing power. Indian companies such as Flipkart and Snapdeal offer cash on delivery (COD) options. In fact, 50 percent of Snapdeal’s transactions use this payment method.<sup>7&nbsp;</sup>Amazon also localized its approach in India to offer COD as a service. Startups such as Delhivery that offer fulfillment and last mile services across India, including COD reconciliation and remittances<sup>8</sup>, have been garnering investor interest.<sup>9</sup></p> <p>Other companies outside India offer similar services. Kaymu, an online marketplace in more than 20 countries in Africa and Asia and Lazada, an online retail giant in Philippines, both offer COD as a mode of payment.<sup>11</sup>&nbsp;Indeed, consumers have a high preference for the COD mode in many of the fastest-moving economies in our index.</p> <p><b></b></p> <p>Cash on delivery is not the only alternative payment model. The Indian Internet and technology company Sify allows customers to pay cash offline for e-commerce transactions at its browsing centers; 90 percent of the center’s transactions are paid for in this way.<sup>12</sup>&nbsp;In Indonesia, bank transfer via ATM is emerging as the preferred payment method. To accommodate this, a majority of online portals allow a 24-48 hour payment window, after which the transaction is automatically cancelled.<sup>13</sup></p> <p>Cash is here to stay for the short to medium term in many emerging economies and digital marketplaces that make room for cash in their models will gain market share and consumer trust. Investors are funding startups that are innovating around cash in e-commerce, to shorten the cash cycle for merchants and to make cash transactions faster and safer.<sup>14</sup>&nbsp;Such innovations will reinforce consumer preference for dealing in cash, entrenching cash further in the digital economy of the emerging world.</p> <p><b><i>By contrast, fast-moving China is embracing digital money.</i></b></p> <p>Third-party payments are becoming increasingly competitive, partly thanks to the proliferation of phone apps. Alibaba, Baidu and Tencent, China’s three tech giants, are continuing to add features to their online payment systems that link finance, e-commerce and social media.<sup>15</sup>&nbsp;As a result, China’s total m-commerce revenue was estimated at $3.7 billion in the second quarter of 2014 alone.<sup>16&nbsp;</sup>Thus, while India, Indonesia, Vietnam and other fast-moving markets are entrenching cash in their digtal economies, China is moving firmly in the other direction.</p> <p></p> 3.4 Untapped potential: attractive demographics and underinvestment<p><b><i>Young, large and growing</i></b></p> <p>Some of the countries that appear in the Break Out zone and on the cusp are also some of the world’s most populous nations, including China, India, Mexico, Indonesia, Brazil and the Philippines. Figure 10 shows the relative population size of these countries. Since all our components that measure demand are calculated on a per capita basis to allow for comparability, the growing per capita demand score multiplied by the size of populations reveals immense demand potential. The existence of this potential begs a key question: Are investment dollars chasing these attractive demographic segments?</p> <p><b>Figure 10: Trajectory Chart and Populations</b></p> <p><b></b><a href="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure10.jpg" target="_blank"><img width="271" height="228" src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure10.jpg"></a></p> <p><b><i>Under-invested high momentum markets</i></b></p> <p>The analysis of private equity investments in digital ecosystems, our proxy for the overall state of investment in a country’s digital economy, reveals that the most populous nations such as India, China and Brazil are attracting the highest share of investment dollars. At the same time, mid-sized and smaller countries that are evolving quickly and have a young, growing population are left underinvested. As shown in Figure 11, countries such as the Philippines, Chile, Colombia, Thailand and Malaysia are evolving quickly despite much lower investor interest. The ASEAN nations should be particularly attractive to investors due to growing opportunities associated with their increasingly integrating common market and its high momentum.</p> <p></p> <p><b>Figure 11: Private Equity Investment in Digital Ecosystems</b></p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure11.jpg" target="_blank"><img width="283" height="253" src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure11.jpg"></a></p> <p><b><i>Growing demand sophistication driving digital growth in South America</i></b></p> <p>South American countries in the Index have witnessed remarkable growth in digital services and usage. With 85 percent of the population expected to have a mobile connection by 2015, Brazil is a Break Out country ranked as the 11th fastest-moving economy in our Index. Today, Brazil is the center of e-commerce in the region, representing 59 percent of Latin American e-commerce revenues.<sup>18</sup>&nbsp;Further, Brazilian consumers are more likely than those in other countries to join social media and to use it for making online purchasing decisions.</p> <p></p> <p>While Brazil has attracted investor interest largely by its population size, other Latin American countries are not drawing their fair share of investments. In spite of low private equity investment, Chile (another Break Out market) is ranked as the eigth fastest evolving country in the Index, due to strong growth in the Innovation and Demand drivers. Chileans, like Brazilians, are e-commerce veterans. More than 70 percent of Chileans have used a laptop or personal computer to buy online. 17 percent of online shoppers have been doing it for more than six years and 77 percent have been using it for more than two years. There is no need to acquaint these users with online markets; they already transact there.<sup>19</sup></p> <p><b><i>Sparks of innovation amid political unrest in Africa</i></b></p> <p>The four African countries in the DEI are among the most attractive consumer markets in the region. However, they represent some of the lowest scores in the Index, making the future prospects for e-commerce growth uncertain. Nonetheless, there are reasons for hope as well. Egypt, having gone through a tumultuous political period since the Arab Spring, has fallen 7 percent in its DEI score since 2008. However, it has strong growth in its Demand driver, backed by a young population. With businesses and consumers eager to exploit online opportunities, Egypt may have a bright digital future both in its domestic market and as a regional hub for the wider Arabic speaking Levant and North African region — if it is able to improve government policies, encourage innovation among its entrepreneurs and attract investors to improve its supply infrastructure. Businesses that are keen to take advantage of Egypt’s pent up demand must be poised to act as the country stabilizes and find ways to operate with resilience and redundancy as the political situation changes. Egyptians themselves are becoming more digitally savvy, as displayed by the extensive use of social media during the Arab Spring.</p> <p>Kenya, another Watch Out country, has also had economic and political challenges. It shows slow digital evolution despite important innovations, such as its M-Pesa mobile payment system that has become a benchmark for the rest of the world. M-Pesa, whose customer base accounts for more than two-thirds of Kenya’s population,20 lets people without links to formal banking systems conduct financial transactions via mobile phones.21 Mobile is clearly a part of Kenya’s digital future: in 2013, more than 31 percent of Kenya’s GDP was spent through mobile phones. For businesses, this growth in mobile usage is an immense opportunity. With local businesses and consumers already comfortable with transacting on mobile phones and given its strong mobile payments network, Kenya’s digital commerce prospects look bright.</p> <p></p> 3.6 Institutions: Boosters or bottlenecks?<p>Policy and regulatory environments can have a disproportionate effect on e-commerce growth. Environments that promote rather than restrict the digital economy are a competitive advantage: Chile, Malaysia and Estonia are reaping the benefits of their forward-looking governments. By contrast, the lack of effective institutions can stymie the growth potential of e-commerce in some of the biggest emerging economies, including China, India and Brazil.</p> <p>Figure 12 illustrates the impact of the “Government and the Digital Ecosystem” component, which measures government interaction with and regulation of the e-commerce and ICT sectors. This component correlates strongly with composite 2013 DEI score, though it is only one of three components in the Institution Driver (and each Driver is weighted 25 percent of the composite score). Countries such as Singapore, Sweden, the United States, the Netherlands, Germany and Japan have all promoted competition and innovation and made many government services available online. All of them perform well on the “Government and Digital Ecosystem” component and score well overall. On the other end of the spectrum, countries such as Nigeria, Kenya and Egypt all perform poorly on this component and have a corresponding low composite score.</p> <p><b>Figure 12: Governments and the Digital Ecosystem</b></p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure12.jpg" target="_blank"><img width="309" height="257" src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure12.jpg"></a></p> <p>Estonia’s careful government stewardship showcases the positive role that institutions can play in digital advancement. Since regaining independence in 1991, Estonia’s government has promoted the latest technology, choosing to integrate IP telephony instead of cheaper switchboards, adding chip identification to national ID cards and expanding WiFi and mobile Internet to cover the entire country. It has managed to develop an integrated and seamless digital health record system that surpasses that of the UK. As a result, Estonia now ranks 11th in Institutional Environment score and 24th overall.</p> <p><b><i>Outliers</i></b></p> <p>Even though the Institutional Environment driver as a whole is relatively stable or improving in many countries, there are notable exceptions. While Egypt has declined the most — unsurprising given its recent political challenges — some developed Stall Out countries have also experienced worsening institutional environments. For example, Denmark’s and Austria’s scores decreased slightly in both the “Government’s Digital Ecosystem” and “Government Policy Toward Businesses” components.</p> <p></p> <p>Interestingly, some countries remain in a Break Out trajectory, with strong increases in digital evolution, despite restrictive institutions. China is particularly notable; it is the most rapidly evolving country in the Index, yet has a highly limiting digital content regime, ranking 37th on the Institutions driver. China has seen profound growth of domestic Internet companies, while proving a hostile environment for foreign companies such as Google that want to follow Western digital content conventions. So far, China has succeeded in remaining attractive to foreign companies because of its significant demand growth, making some companies willing to deal with its restrictive regulations. Still, China typifies the challenge that countries with restrictive governments must face: By making themselves less attractive to foreign companies and investments, they must carefully grow their own domestic companies to meet and nourish the appetites of their citizens.</p> <p>To date, it does not appear that the world is converging on a particular model of digital governance. Ongoing global e-governance discussions reveal that governments are generally pursuing three different approaches: the Chinese model of “orderly flow of information,” the Russian model of “network control” or the Western model of “free flow of information” — or some combination of the three. It remains to be seen which, if any, of these models becomes dominant.</p> <p></p> <p><b><i>Regional institutions matter as well</i></b></p> <p>Institutions are not just important within a country’s borders: Regional cooperation can allow countries to pool resources and expand both their digital capacity and reach. This goes beyond the “neighborhood effect” discussed earlier, in which some neighbors appear to have comparable evolution trajectories due to demonstration effects and shared cultural norms. The formation of the European Union has allowed the continent to move ahead on contentious issues where wider international agreement remains lacking. The EU has been a world leader in digital policy in the realm of cybercrime and consumer privacy, partly because of the strength of its coalition. Further, the European common market has provided smaller local markets with access to a wider consumer base and increased investment. While European states are evolving at varying speeds, there remains an important role for collaboration.</p> <p></p> <p>Similar patterns of collaboration are taking root in Asia. ASEAN’s steps toward a liberalized economic zone within its 10-member bloc would create the world’s seventh largest economy — ahead of India — with a combined GDP of $2.4 trillion and a combined population of more than 620 million. 22 This promise of freer flow of goods, services, skilled labor and capital opens up opportunities for businesses and investors seeking an investment counterweight to India and China.</p> <p></p> 4. Emerging Implications<p>The Digital Evolution Index is a comparative framework that reveals how Supply, Demand, Institutions and Innovation Drivers are shaping the digital economy. Governments, entrepreneurs, businesses and investors would all benefit by considering the entire ecosystem rather than focusing on a single silver bullet. Businesses of all stripes — the players directly involved in the digital commerce ecosystem and the intermediaries and technology firms that cater to these players — tend to seek out opportunities to fill gaps between supply and demand: here they have the greatest leverage and payoffs in the short run. It is their ability to innovate and navigate institutional constraints — where their leverage is lower and the payoffs more distant — that will determine their economic success in the long run. For their part, governments and policymakers would do well to look to the best performers on the Index as models for improving their own institutional and infrastructural environments. Below are some of the observations for each of the evolution zones and actionable implications for actors — public and private — that emerge from our research.</p> 4.1 Break Out Countries<p><b>Break Out</b>&nbsp;countries such as India, China, Brazil, Vietnam and the Philippines are evolving rapidly. If their evolution rates sustain, these countries will emerge as strong digital economies. However, the next phase of growth is harder to achieve and requires a concerted effort across drivers by all actors concerned. The greatest challenges to growth and opportunities for improvement in the medium term in these markets lie in improving supply infrastructure and in nurturing sophisticated domestic consumers.</p> <p></p> <ul> <li><b>National Governments</b>: Easing bottlenecks in supply conditions ought to be a top priority. Policymakers and regulators would do well to create conditions favorable for private and foreign investors to step in and compete to improve the quality of digital and physical infrastructure. Upgrading ICT infrastructure and reach, deepening access to financial services and building transportation facilities that can cater to the needs of a growing population will help sustain high evolution rates.</li> </ul> <p></p> <ul> <li><b>Businesses</b>: Significant opportunities exist for businesses engaged with components of the supply driver, especially for telecom and ICT enterprises, financial services organizations and infrastructure firms. At the same time, entrepreneurs and businesses involved in consumerfacing digital commerce need to create, nurture and improve the quality of demand. Businesses in China and India offer an interesting contrast in demand sophistication and approaches to payment methods. In China, digital commerce players such as Alibaba and WeChat have made great strides in integrating mobile payment systems into their businesses, whereas in India, Snapdeal and Flipkart cater to the consumer’s predilection for cash.</li> </ul> <p></p> <ul> <li><b>Investors</b>: Break Out markets are home to 3.35 billion people in some of the fastest moving countries on the DEI and provide a wide range of opportunities for institutional investors to improve supply conditions. The vibrant digital commerce space in these markets is ripe for private equity and venture capital investments. Owing to their large size, China, India and Brazil have garnered the highest interest from private equity players, while the increasingly integrating ASEAN economies, most of which are Break Out markets, have received relatively little private equity investment. ASEAN’s integration and tariff harmonization will generate opportunities for the creation of regional marketplaces and delivery networks.</li> </ul> <p></p> <ul> <li><b>Regional and International Organizations</b>: With the exception of Singapore, most of the ASEAN members are in the Break Out zone. The ASEAN Economic Community, due in December 2015, will facilitate the free flow of goods, skilled labor and capital and is crucial to the overall development of the region. Rising protectionism in Indonesia could derail progress, however. The most populous nation in the region, it is lagging behind its neighbors on the DEI and has implemented measures in the recent past to restrict the free flow of labor and skilled workers. Collaboration at a regional level and a commitment to shared regional prosperity are paramount.</li> </ul> <p></p> <ul> <li><b>Areas for Public–Private Collaboration</b>: Financial inclusion remains a challenge in most of the Break Out markets. This is an area ripe for public-private partnerships. PPPs can also help plug the gaps in inadequate infrastructure, freeing up government budgets to attend to other pressing priorities.</li> </ul> <p></p> 4.2 Stand Out Countries<p><b>Stand Out</b>&nbsp;countries have highly evolved digital ecosystems, with very competitive e-commerce markets supported by cutting-edge infrastructure and sophisticated domestic consumers. Sustaining upward trajectories at this level is difficult. To remain Stand Out markets, these countries need to continue to fast-track innovation and seek markets beyond their borders.</p> <ul> <li><b>National Governments</b>: To remain on the cutting edge of digital innovation requires a highly skilled talent pool. Thus, governments of Stand Out countries would do well to invest in education and open their doors to highly skilled immigrants. Estonia leads on both counts. First graders learn coding skills in public schools and well before it joined the EU, talent from neighboring Denmark and Sweden collaborated with locals to set up Skype in the country. The United States, though a Stand Out nation, risks losing its edge given its lack of commitment to immigration reforms.</li> </ul> <p></p> <ul> <li><b>Businesses</b>: Digital commerce companies based in Stand Out nations operate in highly sophisticated and competitive home markets, but their domestic consumers number only 500 million. Hence, these businesses must seek out new markets to export their digital innovations. Israel, a nation famous for startups, leads the way on this. Israel’s Waze Mobile, a geographical navigation app that can be used anywhere in the world, was bought by Google in 2013 for $1.3 billion.<sup>23<br> <br> </sup></li> <li><b>Investors</b>: Given their sophisticated domestic markets, these countries are also home to investment funds that can and do invest in regional and global digital ecosystems, giving a boost to e-commerce globally. GIC and Temasek, Singapore’s two investment funds, lead on this front, investing a combined $3 billion into digital ecosystems and e-commerce firms during 2013–2014 in India, China and other markets.<sup>24</sup></li> </ul> <p></p> <ul> <li><b>Regional and International Organizations</b>: It is in the best interest of these economies and their businesses to seek deeper regional economic integration with their neighbors, particularly in the case of businesses based in city-states and entrepôts such as Singapore, Hong Kong and Dubai. Stand Out countries would do well to take the lead in strengthening regional institutions and promoting the free flow of goods, services, labor and capital.</li> </ul> <p></p> <ul> <li><b>Areas for Public–Private Collaboration</b>: Staying in the Stand Out zone requires a tremendous amount of stamina. Private enterprise cannot do this alone, nor can governments — it requires collaboration between these groups. Businesses, governments and academics can and must create thought-leading initiatives on sustaining digital commerce ecosystems to avoid Stalling Out.</li> </ul> 4.3 Stall Out Countries<p>As of 2013, most Western and Northern European countries, Australia and Japan have Stalled Out. The only way they can jump-start their recovery is to follow what Stand Out countries do best: redouble on innovation and continue to seek markets beyond domestic borders. Stall Out countries are also older and aging: attracting highly talented young immigrants could help revive innovation.</p> <p></p> <ul> <li><b>National Governments</b>: There is a tendency for Stall Out countries to lean toward protectionism. This is a mistake. Governments must renew their commitments to investing in the education of domestic talent and attracting highly skilled immigrants who can take advantage of the high quality ecosystems to restart the innovation engines. Reforming immigration laws and enabling businesses to hire foreign talent would help; it could also attract investors back into these countries.</li> </ul> <p></p> <ul> <li><b>Businesses and Investors</b>: Stall Out nations are home to an aging population of under 500 million. While language divides many of these countries, businesses could take advantage of increased regional integration and shared cultural norms to expand their markets beyond domestic borders. Common language and shared history could make it easier for businesses and investors in these economies to expand into former colonies that are emerging and frontier markets today.</li> </ul> <p></p> <ul> <li><b>Regional and International Organizations</b>: Stall Out countries generally score highly on institutional quality. These countries would do well to lend their institutional expertise to Watch Out and Break Out markets on creating and sustaining enduring institutions.</li> </ul> <p></p> <ul> <li><b>Areas for Public – Private Collaboration</b>: Jump-starting these Stalling Out economies cannot be the job of private enterprise or governments alone. These countries, more than any others, would do well to draw on the best minds from the fields of policy, academia and business to develop strategies to regain their Stand Out status.</li> </ul> <p></p> 4.4 Watch Out Countries<p><b>Watch Out</b>&nbsp;countries are home to 2.5 billion people. The biggest among them — Indonesia, Russia, Nigeria, Egypt and Kenya — have in common institutional uncertainty and a low commitment to reform. The other distinguishing aspect of Watch Out countries is that they possess one or two outstanding qualities — predominantly demographics — that make them attractive to businesses and investors. These countries expend a lot of energy innovating around institutional and infrastructural constraints. Unclogging these bottlenecks would enable these countries to direct their innovations where they matter most.</p> <p></p> <ul> <li><b>National Governments</b>: A commitment to political stability and reform and to easing bottlenecks in supply conditions ought to be top priorities for these markets. Policymakers and regulators would do well to create conditions favorable for private and foreign investors to step in and improve the quality of digital and physical infrastructure. Upgrading ICT infrastructure and reach, deepening access to financial services and building transportation facilities that can cater to the needs of a growing population will help these economies move into the Break Out zone.</li> </ul> <p></p> <ul> <li><b>Businesses</b>: Significant opportunities exist for businesses that are involved with the components of the supply driver, especially for telecom and ICT enterprises, financial services organizations and infrastructure firms. Entrepreneurs and businesses will want to create, nurture and improve the quality of demand. Transparency of local businesses is a big concern for investors. Businesses in these markets would do well to learn from successful enterprises in Break Out markets on how to make themselves attractive to investors.</li> </ul> <p></p> <ul> <li><b>Investors</b>: The wide range of opportunities for improvement in supply conditions offer a great play for institutional investors. The nascent digital commerce space in these markets is ripe for private equity and venture capital investments. However, transparency and rule of law are major concerns that need to be addressed by governments before investors can step in.</li> </ul> <p></p> <ul> <li><b>Regional and International Organizations</b>: Despite their own institutional gaps, countries based in volatile neighborhoods, such as Egypt, Nigeria, Kenya, Russia and Saudi Arabia, are relatively better off than their neighbors. Each of them has the potential to be the anchor for a regional organization — some already are, albeit more implicitly than some others. Given the neighborhood effect, taking a leadership role in regional cooperation would benefit them and their neighbors. Some of these countries are already active in their regions in different ways. Nigeria is in ECOWAS and member of a West African monetary union. Saudi Arabia is a power broker in the Arab world and a member of the GCC. Egypt is the leading international player in its region — even brokering peace talks between Israel and Hamas. Kenya is the hub of all things digital in East Africa. Russia ... enough said.</li> </ul> <p></p> <ul> <li><b>Areas for Public–Private Collaboration</b>: Access to financial services remains a challenge in most of the Watch Out markets. This is an area ripe for public-private partnerships. PPPs can also help plug the gaps in the inadequate infrastructure, freeing up government resources to attend to other developmental priorities.</li> </ul> <p></p> <p>The Digital Evolution Index provides a deeper understanding of how the shifting digital landscape affects e-commerce growth and reveals surprising patterns and actionable insights. As we consolidate this initiative, we will continue to incorporate new countries and additional data points that capture the complexity of digital ecosystems, in order to share with stakeholders the patterns and insights we glean from digital evolution as it happens.</p> <p></p> Appendix<p><b>Methodology</b></p> <p><b>1. Structure of the Index</b></p> <p>The Index uses 83 indicators to measure the state and quality of the digital ecosystem in a country. It is structured at four levels: indicators, clusters, components and drivers. Indicators are data points that answer a specific question. Clusters are a statistical grouping of indicators; they combine and capture information from several indicators to illuminate a particular aspect that impacts the digital economy. Combinations of clusters roll up to form components, which are the building blocks for the drivers. Components are built to provide a comprehensive understanding of factors that shape and define the drivers. Lastly, the four drivers encompass forces that influence a country’s digital economy: Supply Conditions, Demand Conditions, Institutional Environment and Innovation and Change. The table below explains the structure of the Index with specific examples from the Demand driver and Financial Savviness component.</p> <p></p> <p><b>Figure 13 Sample of Index Structure</b></p> <p><a href="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure13.jpg" target="_blank"><img width="353" height="201" src="/content/dam/intelligence/content-assets/reports/2014/DigitalEvolutionIndex/figure13.jpg"></a></p> <p><b>2. Indicator Selection</b></p> <p>We chose each indicator based on two major criteria:</p> <p>a) Relevance: How vital is this data point in understanding the drivers of a country’s digital economy?</p> <p>b) Data validity:</p> <ul> <li>We chose variables from well-established data banks such as The World Bank and Euromonitor.<br> <br> </li> <li>It was also essential that the data was available for all 50 countries across the six years in order to maintain a high level of data integrity.<br> <br> </li> <li>We prioritized original data, instead of using data that had already been processed, analysed and cited by other individuals and organizations.</li> </ul> <p></p> <p>Despite our best efforts, it was impossible to collect original, raw data for all 50 countries across all variables. In such rare cases, missing data points were statistically estimated.</p> <p><b>3. Data Collection and Standardization</b></p> <p>After collecting the raw data, we transformed these variables into a 0.1-to-5 scale in order to allow for the comparability of each indicator under the same cluster. For every country, each indicator was assigned a value between 0.1 and 5, based on the relative performance of that country as compared to the others on the Index.</p> <p></p> <p>Higher scaled scores (i.e., toward “5”) indicate positive contributions to the digital performance of a country, but do not necessarily correspond to a higher raw data score. Example: For the indicator “Number of ATMS/100,000 people,” a higher number of ATMs would indicate a better supply infrastructure and better digital performance for a country (thus a higher scaled score), whereas for the indicator “Time required to enforce a contract (days),” a higher number of days required to enforce a contract would reduce a country’s ease of doing business and would thus impede digital performance, translating to a lower scaled score.</p> <p></p> <p>For certain variables, categorical 1-2-3-4-5 scaling was used instead of 0.1-5 scaling for two reasons. First, this reduced the bias from vast differences in raw data among countries by assigning countries with similar performance to the same category. Hence, countries with a range of scores that resulted in a similar performance for the indicator in question could be assigned the same categorical score. Second, a categorical scale allowed us to scale variables with qualitative answers. For example, for the Internet censorship variable, the values 3, 4 and 5 were applied to quantify survey responses that indicated “not free,” “partly free” and “free” for the Internet transparency of a country.</p> <p></p> <p>All missing data was estimated prior to being scaled.</p> <p></p> <p><b>4. Score Computation and Variable Weighting&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></p> <p>After scaling and standardizing the indicators, we aggregated the scaled scores to the next level — a cluster score. Cluster scores were further cumulated to provide scores for components, which were again cumulated to provide the final driver scores. The four driver scores were then aggregated to provide the final score for each country. The countries were ranked relative to each other according to their final scores.</p> <p></p> <p>We used weighted arithmetic aggregation for each level of score computation. This procedure weights each of the variables that are being aggregated (indicator, cluster, component) and then combines the scores according to the weights. This had two primary benefits.</p> <p></p> <p>First, it reduces the possibility that any shortcoming in the value of one variable could affect the score at the next level or the final score of the Index; because multiple variables are aggregated to calculate the next level score, values of other variables compensate for any possible shortcomings in one variable. This allows us to track the behavior of countries according to a broad trend rather than according to the value of a single indicator. For example, to test how evolved a country is in spending money digitally, we track the behavior of that country through several indicators (percentage of electronic payments made, ratio of Internet retailing to total retailing and purchases made via smartphone) that contribute to a broader trend, in this case the cluster named “Digital Money Savviness.”</p> <p></p> <p>Second, a weighted arithmetic aggregation reduces the redundancy of the weighting process. All variables at each level (except for driver) were assigned a weight of either 0.5 or 1 through Pearson Correlation. Variables with a correlation coefficient over 0.5 (i.e., variables that were highly correlated with each other) were assigned a half weight instead of a full weight of 1. Hence, variables that were theoretically similar and demonstrated statistical correlation were assumed to be capturing similar information and were each assigned a half weight of 0.5 so that the score at the next level would not be inflated due to double counting the same information. For certain variables where a larger amount of missing data had to be estimated, a 0.5 weight was assigned to minimize concerns of data reliability. For some specific variables that were estimated, we assigned a quarter weight of 0.25.</p> <p></p> <p>Drivers were each weighted equally to determine the final score, because conceptually, all four drivers of Demand, Supply, Institutional Environment, and Innovation and Change represented different (but equally important) aspects that contributed to the evolution of a country’s digital economy.</p> <p></p> <p><b>5. Robustness Check</b></p> <p>We validated the robustness of the model by running a Monte Carlo simulation. We verified the accuracy of the weighting process and determined how the weighting process affected the final index scores and rankings.</p> <p></p> <p>The Monte Carlo simulation comprised 10,000 runs, each corresponding to an assigned set of weights to variables at all levels (indicator, cluster, component). The weights were randomly generated from uniform continuous distributions centered in 0.5 and the range for the weights’ variation was (0.1, 1) because the weighting systems used had a scale “0.5-1.”</p> <p></p> <p>In general, the ranking of all the four drivers showed robustness while running the Monte Carlo simulation. Specifically, for the demand driver, the correlations between the ranks generated by using the assigned weights and the Monte Carlo simulated weights were around 95 percent (2008 to 2013). However, the behavior of Korea in the demand is greatly affected by the weights. The range of rankings calculated using the assigned weights and the simulated weights is as wide as 16. For the supply driver, the correlation coefficient is as high as 98 percent; the rankings of this driver were robust at the application of different weights. Similarly, we also found the other two drivers, Institutional Environment and Innovation and Change, to be robust during calculations using assigned and simulated weights.</p> <p></p> <p><b>6. Model Limitations</b></p> <p>The model we created captures data from secondary sources only. The lack of primary data is balanced by second-hand sources that are of high credibility and ones that have publicly established their data collection methodology.</p> <p></p> <p>The Index showcases the progress of whole countries, rather than cities or urban agglomerations. While the availability of country-level data makes measuring digital evolution at a national level possible, cities are known to evolve faster than other rural areas in the country and tend to offer higher growth opportunities for businesses and investors. Unfortunately, owing to paucity of data at a city-level, this dynamic of urban progress is not captured in our index.</p> <p></p> <p>As with any model and despite our best efforts, the Index is not all encompassing. We chose indicators that addressed certain questions we asked ourselves about the digital economy of a country; however, as this is a developing landscape, there is always scope for additional questions. For example, under the Supply Driver and the Fulfillment component, the indicators we chose only address questions of product delivery, not of product storage and packaging.</p> <p></p> <p>Despite our best attempts to find data for indicators across all 50 countries and six years, there were instances where data was incomplete or unavailable. In such cases, we had to estimate data for the missing years and countries. In general, indicators that had missing data were weighted less (0.5 or less) to mitigate the effect of estimation on our final results and to reduce inaccuracies. This limitation is particularly relevant for the Innovation and Change driver of the Index, as described below.</p> <p></p> <p>The Innovation and Change driver (and specifically the Extent of Disruption component) comprises data from Google that was largely incomplete. Data was only available for the years 2012-2013. Because much of the data was missing and estimating data for 4 years would have diluted our data integrity and accuracy, these indicators with missing data were left out in score estimations of earlier years. The theoretical rationale behind this is that by definition the Innovation and Change driver should capture improvements in ways of capturing information and that adding new indicators and data as they become available is a true representation of the changing digital landscape of a country. However, this addition of indicators from the year 2012 is reflected clearly in the Innovation and Change driver score; from 2012 onward there is a slight dip in the score of the Innovation and Change driver across all 50 countries. This dip in the driver score is also mirrored in overall scores since the Innovation and Change driver is the most volatile of all drivers and the final index score is sensitive to volatility (i.e., movement in scores across time).</p> <p></p> <p>Therefore, although users of the Index will notice a slight dip in Innovation and Change driver scores and overall scores from 2012, this is due to the addition of a new indicator (and a better way of measuring extent of disruption) rather than any worldwide external factor causing a deterioration of the digital economy globally. Furthermore, the reflection of this dip in driver scores in the overall score is due to the sensitivity of the Index score to the most volatile driver (i.e. the driver that changes its score most across the 6 years). We expect that as we continue to collect data for future years, the scores will level out and look smoother.</p> <p></p> This report introduces the Digital Evolution Index (DEI) as a way to gauge the transformation of economies in the advanced and developing world from traditional brick-and-mortar to digitally enabled. The DEI measures the digital trajectories of 50 countries to provide actionable, data-informed insights for businesses, investors and policymakers.http://www1.mastercard.com/content/intelligence/en/research/reports/2014/digital-planet--readying-for-the-rise-of-the-e-consumer2014-10-08T16:00:00.000Z2014-10-08T16:00:00.000ZMasterCard Global Destination Cities Index Report 2015 Dr Yuwa Hedrick-Wong and Desmond ChoongIntroduction<p>With data going back to 2009, the Global Destination Cities Index charts how 132 of the most important cities in the world are connected through air travel - how many international visitors arrive at each of these 132 cities from the other cities; and how much these visitors spend during their visit.<sup><a href="#1">1</a><br> </sup></p> <p>The Index is therefore a map of a key human dimension of global connectivity. And over the five years since its launch in 2011, this map shows consistently great dynamism and growth in air travel between these 132 cities, driven by improving infrastructure, rising discretionary spending power (especially in the expanding middle class in emerging markets), and the seemingly unquenchable thirst of an ever-increasing number of people from all walks of life to visit the world.<a target="_blank" href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Introduction.jpg"><img width="602" height="275" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Introduction.jpg"></a></p> <p>An interesting aspect of the dynamism of air travel can be seen in the top ten fastest growing destination cities over this seven-year period. As shown in <b>Chart 1</b>, the top ten include cities from most regions of the world except Western Europe and North America, as well as cities in both developed and developing countries. All of these fastest-growing cities show double-digit cumulative annual growth rates (CAGR).</p> <p>Colombo in Sri Lanka is the fastest growing destination city among the 132 cities covered by the Index at 21.1 percent CAGR between 2009 and 2015. Tourism there is clearly recovering strongly after the ending of its longrunning civil war. Three cities in Greater China and two in Japan are also in the top ten, so are two in the Middle East. Many of these are coming off a very low base such as Colombo and Chengdu, but some of them, such as Tokyo, are already a leading destination city in terms of number of international visitors and yet are still showing impressive growth.</p> <p><b>CHART 1 Fastest Growing Destination Cities by International Overnight Visitors (2009-2015 CAGR)</b></p> <p><b><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/DestinationCities.png"><img width="599" height="335" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/DestinationCities.png"></a></b></p> <p>For comparison of destination cities with similar international visitor numbers, Chart 2 shows the five fastest-growing over the 2009-2015 period among the top 20 destination cities in the world. Avery different picture emerges in this comparison. Four out of five are in Asia led by Taipei, with the fifth, Istanbul, in Central Europe. These are destination cities that have big enough numbers of international visitors to put them in the top 20 of the world, and yet are still growing at double digits. And for the four Asian cities, their strong growth in visitors has come mostly from the massive increase in outbound travel from China.</p> <p><b>CHART 2 Fastest Growing Destination Cities within the Top 20(2009-2015 CAGR)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/DestinationCities2.png" target="_blank"><img width="610" height="301" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/DestinationCities2.png"></a></b></p> Growth Potential of Destination Cities<p>A prerequisite for any destination city that aspires to attract more international visitors is to increase the capacity of its airport(s) and frequency of flight connections between the airport and the rest of the world. A &quot;connectivity score&quot; is constructed to assess the destination cities in this regard.<sup><a href="#2">2</a></sup><br> <br> The top five destination cities and changes in their connectivity scores since 2009 are shown in <b>Chart 3</b>.<br> London led the world in 2009, and by 2015 its connectivity score increased by 4.2 points. Paris is second, but its connectivity score has dropped by 13 points since 2009. Next is Dubai, increasing its score by an impressive 20.4 points, and surpassing Frankfurt between 2009 and 2015. Frankfurt slipped to fourth, with its score basically unchanged. Rounding out the top five, Istanbul increased its score by 26.0 points, exceeding the growth rate of Dubai. Not surprisingly, Dubai and Istanbul are dynamic destination cities moving rapidly up the ranks.<br> </p> <p style="text-align: center;"><img width="168" height="266" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/London.png"></p> <p>While these changing scores of air connectivity are indicative of the potential of the destination cities, they are not directly correlated with, at least not immediately, their international visitor arrivals. The international arrivals figures also include transit passengers, city residents returning from overseas trips, and passengers arriving from other domestic airports, which are excluded in the estimates of international overnight visitors.&nbsp;</p> <p><b>CHART 3 Top 6 Global Leading Hubs by International Connectivity Score (London 2009 = 100)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart3.png" target="_blank"><img width="599" height="310" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart3.png"></a></b></p> <p>A different way to gauge the performance of a destination city is to take into account the size of the city's resident population, and look at the number of international overnight visitors that it attracts per city resident. From this perspective, Dubai is the unmistakable world champion as shown in <b>Chart 4</b>. It went from 4.9 visitors per resident in 2009 to 5.7 in 2015, basically in a league of its own.<br> <br> In contrast, some of the leading and most successful destination cities in the world have much lower visitor to resident ratios because of their large resident population, such as London and NEW York. Dubai is such an outlier because of both the large number of international visitors and the very small size of its resident population.</p> <p><b>CHART 4 Top 20 Global Destinations by Overnight Visitor Arrivals per city resident 2009 versus 2015</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart4.png" target="_blank"><img width="602" height="325" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart4.png"></a></b></p> <p>Similarly, Dubai Leads the world in terms of international visitor spending per city resident, estimated at US$4,668 in 2015 as shown in Chart 5. It is almost double the second-ranked Barcelona at US$2,793. Singapore, London and Kuala Lumpur are in third, fourth and fifth ranks with international visitor spending per city resident estimated at US$2,639, US$2,480, and US$1,933 respectively.</p> <p style="text-align: center;"><b><img src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Dubai.png"></b></p> <p><b>CHART 5 Top 20 Global Destinations by Overnight Visitor Arrival Expenditure per City Resident in 2015</b></p> <p><b><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart5.png"><img width="579" height="309" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart5.png"></a></b></p> <p>Last but not least, a note-worthy feature of the human connectivity dimension captured by the Index is that international visitor numbers and their cross-border spending have been consistently growing faster than world real GDP since 2009, as illustrated in <b>Chart 6</b>.</p> <p><b>CHART 6 World GDP Growth Versus the Growth of International Visitor Arrivals and Spend by the 132 Destinations</b></p> <p><b><img width="415" height="239" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart6.png"><img width="169" height="250" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/InternationalVisitors.png"></b></p> <p>This is extraordinary given the generally weak and uneven global economic recovery in the aftermath of the 2009 global financial crisis, as well as the fact that world trade grew slower than world GDP since 2009. International air travel is clearly a powerful trend that will persist in the years to come. In 2015, it is expected that 382.9 million trips will be made by international visitors by air between the 132 cities covered by the Index, spending a total of US$360 billion during their visits. These numbers represent a massive source of demand for goods and services, generating business opportunities for a wide range of industries, benefiting companies large and small, and creating jobs that cover the spectrum from the highly skilled to the low-skilled. Because the demand comes from visitors from outside of the country, it is equivalent to exports, hence serving to simulate the local economies as a force multiplier that further strengthens domestic demand. In connecting the world, air travel is also vital to the well-being of the local economies in the destination cities.</p> <p style="text-align: center;"><img width="138" height="245" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Trips.png"></p> Top 20 Global Destination Cities in 2015<p>London is again the world top-ranked destination city with 18.82 million international visitors expected in 2015, slightly ahead of the second-ranked Bangkok with 18.24 million. London has topped the Index in five out of seven years, except 2012 and 2013, when Bangkok held the lead position. Given the very thin margin that London has over Bangkok, about half a million international visitors, their rivalry for the top rank is likely to persist. They are followed by Paris, Dubai, Istanbul, New York, Singapore, Kuala Lumpur, Seoul and Hong Kong in the world top ten. Apart from Istanbul moving up from seventh to fifth rank, pushing New York and Singapore down by one rank, the top 20 in 2015 are identical to the top 20 in 2014.</p> <p><b>CHART 7 Global Top 20 Top Destination Cities by International Overnight Visitors (2015)</b></p> <p><b><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart7.png"><img width="435" height="399" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart7.png"><img width="134" height="398" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/London2.png"></a></b></p> <p><b>Table 1</b> shows the growth rates of the world top 20 destination cities between 2014 and 2015 (2014 rank in parenthesis). Istanbul shows the strongest growth at 11.4 percent, moving to fifth from seventh. Both Bangkok and Dubai grew by 8.0 percent, the second fastest after Istanbul. </p> <p><b>TABLE 1 Global Top 20 Destination Cities by International Overnight Visitors (2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table1.png" target="_blank"><img width="497" height="392" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table1.png"></a></b></p> <p>London is also the top city by visitor cross-border spending, estimated at US$20.23 billion in 2015. This is over 16 percent higher than the second-ranked New York at US$17.27 billion, underscoring London's preeminent position as a leading destination city. Even though Bangkok ranks second in international visitors, it ranks seventh in visitor spending, reflecting its lower costs of Living.</p> <p><b>CHART 8 Global Top 20 Destination Cities by International Overnight Visitor Spend (2015)</b> </p> <p><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart8.png" target="_blank"><img width="552" height="419" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart8.png"></a></p> <p>In spite of ranking only seventh in visitors' cross-border spending, however, Bangkok has the fastest growth rate in visitor spending at 11.8 percent between 2014 and 2015. Kuala Lumpur's growth is the second fastest at 8.7 percent; followed by Istanbul and Dubai respectively. However, eight of the top 20 show contraction in visitor cross-border spending in 2015 which is to a large extent the result of the depreciation of their currencies against the U.S. dollar, which is used to estimate cross-border spending for all the destination cities. The biggest contraction is seen in Tokyo (-6.8 percent), followed by Sydney, Barcelona, Taipei, Madrid and Rome. While the currencies of Thailand, Malaysia, Turkey and the UAE have also depreciated against the U.S. dollar, their visitor spending has increased strongly enough to compensate for the effects of currency depreciation to show robust growth.</p> <p><b>Table 2 Global Top 20 Destination Cities by International Overnight Visitor Spend (2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table2.png" target="_blank"><img width="545" height="633" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table2.png"></a></b></p> Top 10 Destination Cities in Asia/Pacific<p>The top ten destination cities in Asia/Pacific and their visitor numbers and cross-border spending are summarized in Table 3. Bangkok, ranked second in the world, is the top destination in Asia/Pacific. The Asia/Pacific ranking of the top nine out of ten are unchanged from 2014. But, Osaka moved into tenth, displacing Melbourne. In terms of cross-border spending, Seoul leads in Asia/Pacific with an expected US$15.2 billion, followed by Singapore at US$14.7 billion, Bangkok at US$12.4 billion, Kuala Lumpur at US$12.0 billion, and Taipei at US$9.3 billion.</p> <p style="text-align: center;"><img width="193" height="246" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Bangkok.png"></p> <p><b>TABLE 3 Asia/Pacific's Top 10 Destination Cities by International Overnight Visitors and Cross-Border Spending (2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table3.png" target="_blank"><img width="600" height="340" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table3.png"></a></b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Bangkok2.png" target="_blank"><img width="599" height="262" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Bangkok2.png"></a></b></p> <p><b>Chart 9</b> shows the contributions to Bangkok from its top five feeder cities. All five are in Asia/Pacific, and the most important feeder city for Bangkok is Hong Kong, accounting for 1.5 minion visitors and just over US$1 billion in spending. Singapore follows with about 1.3 million visitors and US$647 million spending, and so on.</p> <p><b>CHART 9 Bangkok's Top 5 Feeder Cities (2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart9.png" target="_blank"><img width="608" height="264" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart9.png"></a></b></p> <p>Singapore's top five feeder cities are also all from Asia/Pacific. Jakarta looms Large as the top feeder city for Singapore, contributing 1.7 million visitors and US$2.7 billion with an average spend per visit at impressively high at US$1,550. This is far above those from the other top feeder cities of Tokyo, Hong Kong, Manila and Shanghai.</p> <p><b>CHART 10 Singapore's Top 5 Feeder Cities (2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart10.png" target="_blank"><img width="600" height="552" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart10.png"></a></b></p> <p><b>CHART 11 Kuala Lumpur's Top 5 Feeder Cities (2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart11.png" target="_blank"><img width="601" height="264" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart11.png"></a></b></p> <p><b>Chart 11 </b>shows Kuala Lumpur's top five feeder cities, which are clustered in Southeast Asia and the two Australian cities of Sydney and Melbourne. Singapore is the most important feeder city for Kuala Lumpur, accounting for 1.2 million visitors and US$1.3 billion in spending.</p> <p>From the perspective of cumulative growth since 2009, the top ten fastest growing destination cities in Asia/Pacific are summarized in Table 4. Colombo in Sri Lanka is the fastest growing with a CAGR of 21.1 percent, albeit coming off a very tow base, with just over one million visitors in 2005. Chengdu in the Sichuan Province of China is the second fastest growing, with a CAGR of 20.7 percent. It is also growing from a tow base, with about 1.5 million visitors in 2015. Osaka is the third fastest, but it is already a top-ranked destination city with 4.6 million visitors in 2015. Osaka's strong growth in recent years is due to a massive increase of visitors from China, which has also driven up growth of visitors to Tokyo, making it the sixth fastest growing in Asia/Pacific. Bangkok, the world second-ranked, has managed an impressive CAGR of 11.7 percent, putting it in tenth, in terms of growth rates in the region.</p> <p style="text-align: center;"><img src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Colombo.png"></p> <p><b>TABLE 4 Asia/Pacific Fastest Growing Destination Cities by International Overnight Visitors (2009 - 2015 CAGR)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table4.png" target="_blank"><img width="594" height="390" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table4.png"></a></b></p> <p><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Bangkok.png" target="_blank"></a></p> Top 10 Destination Cities in Europe<p>London, the world's number one, is naturally the top-ranked in Europe as well. It is followed by Paris and Istanbul in second and third respectively. Istanbul, however, has a much higher growth rate than Paris. If these two cities continue to grow their international visitors' numbers at the current rates, in four years, Istanbul will overtake Paris to become second-ranked in Europe. In terms of visitor cross-border spending, London is also ranked first with over US$20 billion estimated for 2015, followed by Paris, Barcelona, Istanbul, Madrid and Munich.</p> <p style="text-align: center;"><img width="183" height="251" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/London3.png"></p> <p><b>TABLE 5 Europe's Top 10 Destination Cities by International Overnight Visitors and Cross-Border Spending (2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table5.png" target="_blank"><img width="603" height="282" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table5.png"></a></b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/London4.png" target="_blank"><img width="606" height="267" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/London4.png"></a></b></p> <p>New York is the most important feeder city for London, accounting for dose to a million visitors in 2015 and about US$1.2 billion of spending. New York is followed by Amsterdam, Dublin, Frankfurt and Stockholm. <b>Chart 12</b> summarizes the details of the top five feeder cities for London.<br> </p> <p><b>CHART 12 London's Top 5 Feeder Cities (2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart12.png" target="_blank"><img width="598" height="264" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart12.png"></a></b></p> <p>London is the most important feeder city for Paris in terms of visitors. Interestingly, two of the top five feeder cities for Paris are outside of Europe; New York (ranked second) and Tokyo (ranked fourth). As <b>Chart 13</b> shows, in spending terms, New York is the biggest feeder city for Paris, estimated at US$632 million in 2015.<br> </p> <p><b>CHART 13 Paris's Top 5 Feeder Cities (2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart13.png" target="_blank"><img width="601" height="550" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart13.png"></a></b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Istanbul.png" target="_blank"><img width="598" height="256" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Istanbul.png"></a></b></p> <p>All top five feeder cities for Istanbul are in Europe, and London is the most important, followed by Paris, Dusseldorf, Frankfurt and Amsterdam, as seen in <b>Chart 14</b>. London is also the biggest feeder city in terms of visitor spending, estimated at US$432 million in 2015.</p> <p><b>CHART 14 Istanbul's Top 5 Feeder Cities </b><b>(2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart14.png" target="_blank"><img width="599" height="263" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart14.png"></a></b></p> <p>Istanbul is currently the fastest growing destination city in Europe. Three cities in Eastern Europe are also among the top ten fastest growing European destination cities: Bucharest (ranked sixth), Budapest is ranked seventh), and Warsaw is ranked eighth). The details are summarized in <b>Table 6</b>.</p> <p style="text-align: center;"><img src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Istanbul2.png"></p> <p><b>TABLE 6 Europe's Fastest Growing Destination Cities by International Overnight Visitors (2009 -2015 CA GR)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table6.png" target="_blank"><img width="601" height="417" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table6.png"></a></b></p> Top 10 Destination Cities in Latin America <p>The top ten destination cities in Latin America in 2015 are identical to 2014, as Lima tops the list with almost 50 percent more international visitors than second-ranked Mexico City. The Brazilian cities of Sao Paulo and Rio de Janeiro are in third and seventh, respectively. In terms of visitor spending, however, Punta Cana in the Dominican Republic is in the top-ranked with an estimated US$2.7 billion in 2015, followed by Buenos Aires and Mexico City both with US$2.3 billion, Sao Paulo with US$2.2 billion and Lima with US$1.5 billion.</p> <p style="text-align: center;"><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Lima.png" target="_blank"><img width="156" height="284" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Lima.png"></a></p> <p><b>Table 7 Latin America’s Top 19 Destination Cities By International Overnight Visitors and Cross-Border Spending (2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table7.png" target="_blank"><img width="598" height="318" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table7.png"></a></b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Lima2.png" target="_blank"><img width="599" height="257" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Lima2.png"></a></b></p> <p>The top five feeder cities for Lima are shown in Chart 15. Santiago is its biggest feeder city, followed by Buenos Aires, Miami, Bogota, and Mexico City. In visitor spending, however, BuenosAires overtakes Santiago as Lima's biggest feeder city. </p> <p><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart15.png" target="_blank"><img width="600" height="294" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart15.png"></a></p> <p><b>CHART 16 Mexico City's Top 5 Feeder Cities (2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart16.png" target="_blank"><img width="602" height="273" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart16.png"></a></b></p> <p>For Mexico City, four out of the top five feeder cities are in North America. Miami is the biggest, followed by New York, Bogota, LosAngeles, and Houston. Miami is also the biggest feeder city in terms of visitor spending for Mexico City. </p> <p><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Mexico.png" target="_blank"><img width="601" height="255" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Mexico.png"></a></p> <p><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/SaoPaulo.png" target="_blank"><img width="599" height="261" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/SaoPaulo.png"></a></p> <p><b>CHART 17 Sao Paulo's Top 5 Feeder Cities (2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart17.png" target="_blank"><img width="599" height="265" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart17.png"></a></b></p> <p>Sao Paulo's top feeder cities, in comparison, are within the region with the exception of Miami, which is ranked third. The biggest is Buenos Aires in both number of visitors and their spending.</p> <p>Lima, apart from being the top-ranked destination city in Latin America, is also the region's fastest growing. Mexico City, which is ranked second in international visitors, is only the fourth fastest growing, lagging behind Bogota and Punta Cana. Details of the growth rates of the top eight destination cities in Latin America are summarized in <b>Table 8</b>. </p> <p><b>TABLE 8 Latin America's Fastest Growing Destination Cities by International Overnight Visitors (2009 -2015 CAGR)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table8.png" target="_blank"><img width="601" height="363" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table8.png"></a></b></p> Top 20 Destination Cities in Middle East & Africa <p>Dubai, fourth in the world, is the top-ranked destination city in the Middle East and Africa region. Dubai is very much in a league of its own in the region It attracts 14.3 million international visitors in 2015, over three times more than the second-ranked Johannesburg. Riyadh and Abu Dhabi follow in third and fourth, with 4.3 million and 2.7 million respectively. Another South African city, Cape Town, is in fifth, with close to 2 million international visitors. Dubai's is also in the top rank in terms of visitor cross-border spending, estimated at US$11.7 billion in 2015, four and a half times bigger than the second-ranked Johannesburg. As Chart 6.1 shows, the rest of the top ten destination cities in the region tend to have between US$1 billion to US$2 billion in visitor spending, with visitor spending in Casablanca estimated at US$600 million.</p> <p style="text-align: center;"><img width="169" height="272" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Dubai2.png"></p> <p><b>TABLE 9 Middle East &amp; Africa's Top 10 Destination Cities by International Overnight Visitors and Cross-Border Spending (2015)</b></p> <p><b><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table9.png"><img width="601" height="281" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table9.png"></a></b></p> <p><b><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Dubai3.png"><img width="599" height="253" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Dubai3.png"></a></b></p> <p>Dubai's top five feeder cities are Doha, London, Kuwait, Muscat, and Jeddah as shown in Chart 18. London's contribution as a feeder city to visitor spending in Dubai, however, is the biggest at US$1.34 billion estimated for 2015, which is about double the size of visitor spending from Doha at US$740 million.<br> </p> <p><b>CHART 18 Dubai's Top 5 Feeder Cities (2015)</b></p> <p><b><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart18.png"><img width="601" height="268" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart18.png"></a></b></p> <p><b>CHART 19 Johannesburg's Top 5 Feeder Cities (2015)</b></p> <p><b><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart19.png"><img width="600" height="275" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart19.png"></a></b></p> <p>The two top feeder cities for Johannesburg are in Europe - London and Frankfurt. They are followed by Harare, Maputo, and Windhoek in the southern Africa region. London and Frankfurt are also in the first and second ranks in terms of visitor spending in Johannesburg.</p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Johannesburg.png"><img width="603" height="257" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Johannesburg.png"></a></p> <p><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Riyadh.png"><img width="599" height="260" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Riyadh.png"></a></p> <p><b>CHART 20 Riyadh's Top 5 Feeder Cities (2015)</b></p> <p><b><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart20.png"><img width="601" height="266" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart20.png"></a></b></p> <p>Riyadh's top five feeder cities are all in the region. Cairo is in the top rank, followed by Dubai, Amman, Doha, and Alexandria. In terms of visitor spending in Riyadh, the ranking is almost the same, with exception that Alexandria is fourth and Doha fifth.</p> <p>In terms of grow rate, Abu Dhabi is the region's top-ranked destination city with an impressive CAGR of 20.4 percent between 2009 and 2015. Riyadh follows closely behind at 18.0 percent. The details are summarized in Table 10.</p> <p><b>TABLE 10 Middle East &amp; Africa's Fastest Growing Destination Cities Di International Overnight Visitors (2009 - 2015 CAGR)</b></p> <p><b><a target="_blank" href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table10.png"><img width="600" height="382" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table10.png"></a></b></p> Top 10 Destination Cities in North America <p>New York, ranked sixth in the world, is the top-ranked in North America in international visitors in 2015. It is followed by Los Angeles and Miami in second and third, respectively. The Canadian cities of Toronto and Vancouver follow in fourth and fifth, with Montreal in eighth. New York is also tops in the region in visitor spending, estimated at US$17.4 billion in 2015, which is more than 2.3 times bigger than the second-ranked Los Angeles at IJS$7.4 billion. The details of the top ten in North America are summarized in Table 11.</p> <p style="text-align: center;"><img width="155" height="267" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/NewYork.png"></p> <p><b>TABLE 11 North America's Top 10 Destination Cities by International Overnight Visitors and Cross-Border Spending (2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table11.png" target="_blank"><img width="603" height="291" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table11.png"></a></b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/NewYork2.png" target="_blank"><img width="599" height="265" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/NewYork2.png"></a></b></p> <p>With the exception of Toronto, four out of five of New York's biggest feeder cities are from outside of North America. The biggest is London, followed by Sao Paulo, Paris, Toronto, and Beijing. Even though Beijing is in the fifth rank in terms of visitor numbers, it is the biggest feeder city for New York in terms of spending, estimated at US$1.3 billion in 2015, more than Sao Paulo's US$1.2 billion, and London's US$1.1 billion, another sign if the far-reaching impact of the massive increase in outbound travel in China.<br> </p> <p><b>CHART 21 New York's Top 5 Feeder Cities (2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart21.png" target="_blank"><img width="599" height="269" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart21.png"></a></b></p> <p><b>CHART 22 Los Angeles' Top 5 Feeder Cities (2015)<br> </b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart22.png" target="_blank"><img width="599" height="272" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart22.png"></a></b></p> <p>Los Angeles also has very diversified feeder cities. London is the biggest, followed by Vancouver, Shanghai, Tokyo and Paris. In visitor spending terms, Shanghai is the biggest with an estimated US$896 million in 2015, much higher than Tokyo, in second place, at US$506 million. Like New York, Los Angeles is also feeling the impact of the massive increase of outbound travel from China. Paris followed with US$409 million, London with US$352 million, and Vancouver with US$101 million<br> </p> <p><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/LA.png" target="_blank"><img width="607" height="240" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/LA.png"></a></p> <p><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Miami.png" target="_blank"><img width="600" height="258" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Miami.png"></a></p> <p><b>CHART 23 Miami's Top 5 Feeder Cities (2015)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart23.png" target="_blank"><img width="601" height="264" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Chart23.png"></a></b></p> <p>Miami is closely connected with Latin America as four out of its top five feeder cities are in that region. The exception is London, which is in the third rank. Sao Paulo is top-ranked, followed by BuenosAires, London, Bogota and Caracas. Sao Paulo is also first, in terms of visitor spending in Miami, which is estimated at US$1.2 billion in 2015, almost twice as high as spending by visitors from second-ranked BuenosAires.</p> <p>In terms of CAGR, Houston is the fastest growing in North America since 2009 at 10.5 percent. It is the only destination city in North America with double digit CAGR. It is followed by Los Angeles, Miami, New York, and San Francisco. The details are summarized in <b>Table 12</b>.<br> </p> <p style="text-align: center;"><img width="148" height="160" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Houston.png"></p> <p><b>TABLE 12 North America's Fastest Growing Destination Cities by International Overnight Visitors (2009- 2015 CAGR)</b></p> <p><b><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table12.png" target="_blank"><img width="599" height="400" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table12.png"></a></b></p> Conclusions<p>International visitors and their spending play an increasingly critical role in boosting economic dynamism in destination cities around the world. As mentioned earlier, the global economic recovery remains tentative and uneven, and demand for exports continues to be weak. In this context, stronger growth in international visitors and spending can make a significant contribution to income and employment generation for the destination cities.</p> <p>How resilient are the destination cities in this more challenging global economic environment? One way to assess it is to look at how many feeder cities account for 50 percent of their international visitors. The more the feeder cities, the more diversified the source of international visitors a destination city has, and, everything else being equal, the more resilient it becomes. Table 13 summarizes the estimates of number of feeder cities that account for 50% of international visitors for the top 20 most diversified destination cities in the world. It turns out that Istanbul, ranked sixth in the world in international visitors, is the most diversified, with 50 percent of its international visitors coming from 33 feeder cites. London, the top-ranked in the world, in the second most resilient with 26 feeder cities followed by Paris, Amsterdam and Dubai.</p> <p>Asian destination cities, which are among the fastest growing in the world, appear to be less diversified and hence less resilient. Bangkok, ranked second in the world as a destination city, is in seventh place in resilience, with only 13 feeder cities accounting for 50 percent of its international visitors. Singapore, ranked seventh in the world, is tenth in resilience, while Hong Kong, ranked tenth in the world, is in 12th place in resilience.</p> <p>The challenge going forward for many of these otherwise very successful destination cities is to diversify their sources of visitors while maintaining their robust rates of growth.</p> <p><a href="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table13.png" target="_blank"><img width="599" height="509" src="/content/dam/intelligence/content-assets/reports/2015/GDCI2015/Table13.png"></a></p> <p style="text-align: center;">[End of Report]<br> </p> <p><i><a name="1"></a>[1] Visitors are defined as those arriving from outside of the country and who stay at least one night in the destination city.<br> See Appendix for more details.</i></p> <p><i><a name="2"></a>[2] It is based on weekly non-stop flight frequencies to and from other destination cities, adjusted for capacity, with a heavier weight assigned to inter-region flights, and the value of London in 2009 is set as 100. Please see Appendix for more details.</i></p> The MasterCard Index of Global Destination Cities ranks cities in terms of the number of their total international overnight visitor arrivals and the cross-border spending by these same visitors in the destination cities, and gives visitor and passenger growth forecasts for 2015. Public data is used in deriving the international overnight visitor arrivals and their cross-border spending in each of the 132 destination cities, using custom-made algorithms; paying special attention to eliminate the hub effects for destination cities such as Singapore, Dubai, Amsterdam and Frankfurt. This Index and the accompanying reports are not based on MasterCard volumes or transactional data.http://www1.mastercard.com/content/intelligence/en/research/reports/2015/mastercard-global-destination-cities-index-report-20152015-06-02T16:00:00.000Z2015-06-02T16:00:00.000ZEmerging Markets to Drive Global Economy in Huge Shift in Consumption: MasterCard Worldwide Georgette Tan, Robert O’Brien About MasterCard <p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> The latest Index from MasterCard is a new approach to understanding the global economy and how consumers in emerging markets will drive value creation and growth in the global economy over the coming five years.http://www1.mastercard.com/content/intelligence/en/research/press-release/2011/emerging-markets-to-drive-global-economy-in-huge-shift-in-consumption2011-05-31T16:00:00.000Z2011-05-31T16:00:00.000ZInternational Visitor Spend in Beirut to Grow by 20% in 2011: New MasterCard Index Lebanon’s Capital to See International Visitors Spend US$ 6.5 Billion in 2011 <p><b>Beirut<i>, 14 September 2011 - </i></b>The world’s most prominent cities, including those hit hardest by the financial crisis, are leading global recovery through their connectivity and as destination cities for international visitors, according to the inaugural MasterCard Worldwide Index of Global Destination Cities™ released recently. Within Middle East and Africa, Beirut featured prominently on the Index coming in second in terms of international visitor spending and ninth in terms of numbers of inbound international visitors.</p> <p>The latest Index from MasterCard is a new approach to understanding the global economy from the perspective of connectivity between global cities, especially in terms of international travel and cross-border expenditures. The emergent picture depicting this network of connectivity between these global destination cities can serve as a new road map for a deeper understanding of the dynamic flow of global commerce.&nbsp;&nbsp;</p> <p>The Index estimates that 1.7 million international visitors will visit Beirut in 2011 – this reflects a robust growth of 13.9% compared to 2010. Beirut is also expected to draw in an international visitor spend of US$6.5 billion in 2011, making it the second most highly ranked city in this category across the Middle East and Africa and representing an increase of 19.6% compared to 2010.</p> <p>Dubai ranked among the top 10 arrival cities for Beirut. Beirut can expect increased spending in 2011, as the outbound passenger expenditure for Dubai-Beirut is anticipated to reach US$0.6 billion. Similarly, the outflow for<b> </b>Riyadh-Beirut is expected to reach US$0.58 billion in 2011.</p> <p>Other top cities for Beirut’s inbound travel and expenditure include Paris, London and Abu Dhabi. Paris is ranked as top inbound origin market, with 188 thousand travellers expected to come to Beirut, with an estimated expenditure of US$0.63 billion. London ranks fourth for inbound cities travelling to Beirut, but is the city with the highest percentage of business travellers, with 41.22% of travellers going to Lebanon’s capital for business.<b></b></p> <p>Doha, Paris and Istanbul emerged as the top three destination cities for Beirut in terms of the number of outbound passenger departures. The highest jump for outbound destinations was witnessed for Istanbul (42%) and Abu Dhabi (29%). Correspondingly, these two destination cities also recorded the highest jump in terms of growth in expected outbound spend, registering spikes of 52% and 39% respectively.</p> <p>The MasterCard Index of Global Destination Cities ranks 132 cities in terms of the number of their total international visitor arrivals and the cross-border spending by these same visitors in the destination cities, and gives visitor and passenger growth forecasts for 2011. The Index is part of MasterCard’s rich suite of research products, which include the MasterCard Worldwide Index of Consumer Confidence, the MasterCard Worldwide Index of Women’s Advancement, as well as over 70 Insights reports to date. <i>This Index and the accompanying reports are not based on MasterCard volumes or transactional data.</i></p> <p>“The MasterCard Index of Global Destination Cities is the newest addition to our knowledge leadership platform. We continually assess and innovate our knowledge leadership platforms to&nbsp; offer relevant and updated insights that support the acceleration of business and drive real value for our customers, associates, merchants and consumers in the region,” said Shaun Rashid, area head, Northern Africa and Levant, MasterCard Worldwide.</p> <p>“We are delighted to see Beirut’s continued growth as a destination for travellers from around the globe. Lebanon is renowned for its rich history and breathtaking scenery, and has established itself as a shopping and fashion hub in recent years. The Global Cities Index is a part of MasterCard’s endeavor to understand the wider economic significance and impact of inbound travel and expenditure into cities like Beirut, and reflects a healthy predicted growth and outlook for Lebanon’s capital,” added Basel Eltell, vice president, region manager, Levant.</p> <p>Overall <b>London</b><b> topped the world’s cities by visitor numbers</b> with 20.1 million inbound passengers expected in 2011, ahead of Paris in second with 18.1 million. Cities in Asia/Pacific account for eight of the top twenty<sup>[<a href="#1">1</a>]</sup>with Bangkok ranked third globally and, projected to have 11.5 million visitors this year, followed by Singapore with 11.4 million and Hong Kong with 10.9 million visitors. Only one city in North America is in the top twenty, New York, which is ranked twelfth with 7.6 million inbound passengers expected.&nbsp;&nbsp;&nbsp;&nbsp;</p> <p>MasterCard recently launched its MasterCard Cities website (<a href="http://cities.masterintelligence.com/" target="_blank"><b>http://cities.masterintelligence.com/</b></a>), a new microsite that offers&nbsp;a unique tool to discover the results of the Index through an interactive world map of international air travel between 132 cities across the world.<br> </p> <p></p> <p></p> <p><i><a name="1"></a>[1] All figures for Tokyo estimated in this Index will be subject to change as the impacts of earthquake and tsunami evolve going forward.&nbsp;</i></p> <p></p> <p></p> Additional Highlights<p><u>Middle East &amp; Africa</u></p> <p><b><u>Riyadh</u></b><b><u>’s rise confirmed by regional rise</u></b></p> <p>Huge visitor expenditure growth is recorded for the city of Riyadh for 2011, which ranks first in the region, with an impressive growth rate of 35.5%. Dubai and Abu Dhabi in the UAE ranked third and fourth respectively, with growth rates estimated at 24% and 21.8%.&nbsp;<b></b></p> <p><b><u>Nairobi edges Johannesburg in Sub Sahara</u></b><u></u></p> <p>According to the Index, visitor expenditures are expected to grow at 20.8% in Nairobi, exceeding the growth rate of Johannesburg, the only other Sub-Sahara African destination city in the top ten.<br> &nbsp;North America</p> <p><b><u>Houston</u></b><b><u> leads US cities on visitor numbers</u></b></p> <p>Houston, Texas ranks top of the US cities with a visitor growth increase of 14.3%, followed by New York with 11.7% and Washington DC with10%.&nbsp;<u></u></p> <p><b><u>Chicago</u></b><b><u> top on cross-border expenditure</u></b></p> <p>The Index records substantial growth in visitor expenditure for 2011 with Chicago ranked first with 18.8%, followed by Toronto with 17.8% and New York closely behind with 17.3%.&nbsp;</p> <p><u>Europe</u><u></u></p> <p><b><u>Istanbul</u></b><b><u> beats Europe’s established guard</u></b></p> <p>Turkey’s largest city ranks seventh with 9.4 million visitor arrivals, and also ranks highly on visitor growth, ahead of Western European destination cities such as Frankfurt, Rome and Amsterdam.</p> <p><b><u>European capitals low on visitor growth</u></b></p> <p>Seven out of the top ten European capital cities – behind Amsterdam (ranked 3<sup>rd</sup>) – record visitor growth in the single digits percentages. By comparison, out of the top ten Asia/Pacific cities by visitor growth, none falls below 10%.&nbsp;</p> <p><u>Asia/Pacific</u></p> <p><b><u>Chinese cities top Asia-Pacific on growth</u></b></p> <p>In the Asia/Pacific region, Beijing and Shanghai are in second and third ranks with visitor growth rates for 2011 estimated at 20.2% and 18.6% respectively, reflecting their rising attraction as China’s most important destination cities.&nbsp; Shanghai also ranks second regionally on visitor expenditure with growth rates of 24.3% for 2011. Beijing also ranks third in both number of visitors to Dubai and how much they spend there.&nbsp;</p> <p><b><u>Australia</u></b><b><u>: a big spending destination</u></b></p> <p>Australia’s two most prominent cities attract very high visitor expenditures. Globally, Sydney is ranked sixth with an estimated visitor expenditure of US$13.8 billion, even though the city does not even feature in the top ten by visitor arrivals. The city of Melbourne also ranked 19<sup>th</sup> with an estimated visitor expenditure of US$7.5 billion.</p> <p><u>Latin America</u><u></u></p> <p><b><u>Latin American cities record contraction</u></b></p> <p>Of the top ten destination cities in visitor arrivals, the Venezuelan capital Caracas, Quito (Ecuador), and Santo Domingo (Dominican Republic) are expected to see a contraction in growth rates for 2011 because many of their top origin cities are seeing a reduction in outbound traveler numbers.</p> <p><b><u>Lima</u></b><b><u> signals emerging market trend</u></b></p> <p>The Index finds emerging market destination cities recording both high visitor arrival and expenditure growth. Peru’s capital, Lima, growth rates for visitor arrivals and expenditure are 20.3% and 25.7% respectively.&nbsp;</p> <p>For the full report go to: <a href="http://www.masterintelligence.com"><b>www.masterintelligence.com</b></a></p> Methodology<p>The MasterCard Worldwide Index of Global Destination Cities is compiled using international flight and flight capacity information purchased from OAG Global, a provider of international aviation data. Flight schedules are also used for calculating flight frequency between pairs of cities.&nbsp; Airlines also publish on a regular basis their historical load factor, and advance flight schedules, which are then used to estimate the actual outbound passenger departures, and for forecasting outbound passenger departures in the coming year.</p> <p>On any given flight there are visitors from the departure country, returning residents of the destination city after visiting the departure country, and a third group: non-residents connecting through the departure country to the destination city on their way to a second destination city. This group can be a low proportion of the passengers for typically non-hub cities, but very high for destination cities that are “hubs” such as Singapore, Amsterdam, and Frankfurt.</p> <p>On a country level, the UN Database of “Trade in Service” in the “Travel Component” provides estimates of how much each year residents spend abroad (air fare paid in home country not included).&nbsp; An algorithm is applied to this total outbound expenditure and estimated total number of outbound passengers to derive an estimate of average per outbound passenger’s expenditure overseas.&nbsp;</p> <p>A margin of error is also unavoidable in such estimates, as not all outbound trips are of equal length, and the cost of living varies a great between arrival cities such that even if each trip of equal length, expenditure per passenger between different arrival cities would still be very different.&nbsp;</p> <p>This margin of error is reduced significantly by imposing a minimum of expenditures in the algorithm, after a number of iterative testing (US$500 per trip for bordering arrival country and US$700 per trip for non-bordering arrival country).&nbsp; </p> About Dr Yuwa Hedrick-Wong, Ph.D., Global Economic Advisor, MasterCard Worldwide<p>Dr Yuwa Hedrick-Wong is a business strategist and economist with 25 years of experience gained in over thirty countries. He was appointed Global Economic Advisor to MasterCard Worldwide in 2009.&nbsp; Prior to this role, he was Economic Advisor to MasterCard in Asia/Pacific, a position he held since 2001. As economic advisor, he chairs a MasterCard Knowledge Panel of leading economists, policy analysts, academics and business strategists for regular exchange and knowledge sharing.&nbsp; In 2007 he was appointed Advisor at Southern Capital Group, a private equity fund; and in 2008 he was appointed to the Investment Council of ICICI, India’s largest private bank.&nbsp;&nbsp;&nbsp;</p> <p>Yuwa is also currently Adjunct Professor at the Sauder School of Business, University of British Columbia, Vancouver, B.C. Canada, and is a frequent speaker at numerous international high-profile conferences. </p> About MasterCard <p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> The latest MasterCard Worldwide Index of Global Destination Cities is a new approach to understanding the global economy from the perspective of connectivity between global cities, especially in terms of international travel and cross-border expenditures.http://www1.mastercard.com/content/intelligence/en/research/press-release/2011/international-visitor-spend-in-beirut-to-grow-by-20-in-2011-new-mastercard-index2011-09-13T16:00:00.000Z2011-09-13T16:00:00.000ZInternational Visitor Spend in Amman to Grow by 20% in 2011: New MasterCard Index Jordan’s Capital 8th Most Popular City for Travellers in Middle East and Africa<p><b>Amman<i>,14 September 2011 - </i></b>The world’s most prominent cities, including those hit hardest by the financial crisis, are leading global recovery through their connectivity and as destination cities for international visitors, according to the inaugural MasterCard Worldwide Index of Global Destination Cities™ released recently. Within Middle East and Africa, Amman featured prominently on the Index, coming in eighth in terms of numbers of inbound international visitors and ninth in terms of international visitor spending.</p> <p>The latest Index from MasterCard is a new approach to understanding the global economy from the perspective of connectivity between global cities, especially in terms of international travel and cross-border expenditures. The emergent picture depicting this network of connectivity between these global destination cities can serve as a new road map for a deeper understanding of the dynamic flow of global commerce.&nbsp;&nbsp;</p> <p>The Index estimates that 1.8 million international visitors will visit Amman in 2011 – this reflects a robust growth of 14.1% compared to 2010. Amman is also expected to witness international visitor spend of US$1.3 billion in 2011, making it the ninth most highly ranked city in this category across the Middle East and Africa and representing an increase of 19.9% compared to 2010.</p> <p>Top cities for Amman’s inbound travel and expenditure are London, Dubai and Abu Dhabi. London is ranked as top inbound origin market, with 137 thousand travellers expected to come to Amman, with an estimated expenditure of US$104 million. Abu Dhabi ranks third for inbound cities travelling to Amman, but is the city with the highest percentage of business travellers, with 37.61% of travellers going to Jordan’s capital for business.<b></b></p> <p>Cairo, Istanbul and Beirut emerged as the top three destination cities for Amman in terms of the number of outbound passenger departures. Beirut and Cairo recorded the highest expected outbound spend, with an estimated expenditure of US$335 million and US$177 million respectively.</p> <p>The MasterCard Index of Global Destination Cities ranks 132 cities in terms of the number of their total international visitor arrivals and the cross-border spending by these same visitors in the destination cities, and gives visitor and passenger growth forecasts for 2011. The Index is part of MasterCard’s rich suite of research products, which include the MasterCard Worldwide Index of Consumer Confidence, the MasterCard Worldwide Index of Women’s Advancement, as well as over 70 Insights reports to date. <i>This Index and the accompanying reports are not based on MasterCard volumes or transactional data.</i></p> <p>“The MasterCard Index of Global Destination Cities is the newest addition to our knowledge leadership platform. We continually assess and innovate our knowledge leadership platforms to&nbsp; offer relevant and updated insights that support the acceleration of business and drive real value for our customers, associates, merchants and consumers in the region,” said Shaun Rashid, area head, Northern Africa and Levant, MasterCard Worldwide.</p> <p>“We are delighted to see Amman’s continued growth as a destination for travellers from around the globe. Amman is renowned for its rich history, and has established itself as a key business hub in the Middle East. The Global Cities Index is a part of MasterCard’s endeavor to understand the wider economic significance and impact of inbound travel and expenditure into cities like Amman, and reflects a healthy outlook for Jordan’s capital,” added Basel Eltell, vice president, region manager, Levant.</p> <p>Overall <b>London</b><b> topped the world’s cities by visitor numbers</b> with 20.1 million inbound passengers expected in 2011, ahead of Paris in second with 18.1 million. Cities in Asia/Pacific account for eight of the top twenty<sup>[<a href="#1">1</a>]</sup>with Bangkok ranked third globally and, projected to have 11.5 million visitors this year, followed by Singapore with 11.4 million and Hong Kong with 10.9 million visitors. Only one city in North America is in the top twenty, New York, which is ranked twelfth with 7.6 million inbound passengers expected.&nbsp;&nbsp;&nbsp;&nbsp;</p> <p>MasterCard recently launched its MasterCard Cities website (<a target="_blank" href="http://cities.masterintelligence.com/"><b>http://cities.masterintelligence.com/</b></a>), a new microsite that offers&nbsp;a unique tool to discover the results of the Index through an interactive world map of international air travel between 132 cities across the world.<br> </p> <p></p> <p></p> <p><i><a name="1"></a>[1] All figures for Tokyo estimated in this Index will be subject to change as the impacts of earthquake and tsunami evolve going forward.&nbsp;</i></p> <p></p> <p></p> Additional Highlights<p><u>Middle East &amp; Africa</u></p> <p><b><u>Riyadh’s rise confirmed by regional rise</u></b></p> <p>Huge visitor expenditure growth is recorded for the city of Riyadh for 2011, which ranks first in the region, with an impressive growth rate of 35.5%. Dubai and Abu Dhabi in the UAE ranked third and fourth respectively, with growth rates estimated at 24% and 21.8%.&nbsp;<b></b></p> <p><b><u>Nairobi edges Johannesburg in Sub Sahara</u></b><u></u></p> <p>According to the Index, visitor expenditures are expected to grow at 20.8% in Nairobi, exceeding the growth rate of Johannesburg, the only other Sub-Sahara African destination city in the top ten.</p> <p>North America</p> <p><b><u>Houston</u></b><b><u> leads US cities on visitor numbers</u></b></p> <p>Houston, Texas ranks top of the US cities with a visitor growth increase of 14.3%, followed by New York with 11.7% and Washington DC with10%.&nbsp;<u></u></p> <p><b><u>Chicago</u></b><b><u> top on cross-border expenditure</u></b></p> <p>The Index records substantial growth in visitor expenditure for 2011 with Chicago ranked first with 18.8%, followed by Toronto with 17.8% and New York closely behind with 17.3%.&nbsp;</p> <p><u>Europe</u><u></u></p> <p><b><u>Istanbul</u></b><b><u> beats Europe’s established guard</u></b></p> <p>Turkey’s largest city ranks seventh with 9.4 million visitor arrivals, and also ranks highly on visitor growth, ahead of Western European destination cities such as Frankfurt, Rome and Amsterdam.</p> <p><b><u>European capitals low on visitor growth</u></b></p> <p>Seven out of the top ten European capital cities – behind Amsterdam (ranked 3<sup>rd</sup>) – record visitor growth in the single digits percentages. By comparison, out of the top ten Asia/Pacific cities by visitor growth, none falls below 10%.&nbsp;</p> <p><u>Asia/Pacific</u></p> <p><b><u>Chinese cities top Asia-Pacific on growth</u></b></p> <p>In the Asia/Pacific region, Beijing and Shanghai are in second and third ranks with visitor growth rates for 2011 estimated at 20.2% and 18.6% respectively, reflecting their rising attraction as China’s most important destination cities.&nbsp; Shanghai also ranks second regionally on visitor expenditure with growth rates of 24.3% for 2011. Beijing also ranks third in both number of visitors to Dubai and how much they spend there.&nbsp;</p> <p><b><u>Australia</u></b><b><u>: a big spending destination</u></b></p> <p>Australia’s two most prominent cities attract very high visitor expenditures. Globally, Sydney is ranked sixth with an estimated visitor expenditure of US$13.8 billion, even though the city does not even feature in the top ten by visitor arrivals. The city of Melbourne also ranked 19<sup>th</sup> with an estimated visitor expenditure of US$7.5 billion.</p> <p><u>Latin America</u><u></u></p> <p><b><u>Latin American cities record contraction</u></b></p> <p>Of the top ten destination cities in visitor arrivals, the Venezuelan capital Caracas, Quito (Ecuador), and Santo Domingo (Dominican Republic) are expected to see a contraction in growth rates for 2011 because many of their top origin cities are seeing a reduction in outbound traveler numbers.</p> <p><b><u>Lima</u></b><b><u> signals emerging market trend</u></b></p> <p>The Index finds emerging market destination cities recording both high visitor arrival and expenditure growth. Peru’s capital, Lima, growth rates for visitor arrivals and expenditure are 20.3% and 25.7% respectively.&nbsp;</p> <p>For the full report go to: <a href="http://www.masterintelligence.com"><b>www.masterintelligence.com</b></a></p> Methodology<p>The MasterCard Worldwide Index of Global Destination Cities is compiled using international flight and flight capacity information purchased from OAG Global, a provider of international aviation data. Flight schedules are also used for calculating flight frequency between pairs of cities.&nbsp; Airlines also publish on a regular basis their historical load factor, and advance flight schedules, which are then used to estimate the actual outbound passenger departures, and for forecasting outbound passenger departures in the coming year.</p> <p>On any given flight there are visitors from the departure country, returning residents of the destination city after visiting the departure country, and a third group: non-residents connecting through the departure country to the destination city on their way to a second destination city. This group can be a low proportion of the passengers for typically non-hub cities, but very high for destination cities that are “hubs” such as Singapore, Amsterdam, and Frankfurt.</p> <p>On a country level, the UN Database of “Trade in Service” in the “Travel Component” provides estimates of how much each year residents spend abroad (air fare paid in home country not included).&nbsp; An algorithm is applied to this total outbound expenditure and estimated total number of outbound passengers to derive an estimate of average per outbound passenger’s expenditure overseas.&nbsp;</p> <p>A margin of error is also unavoidable in such estimates, as not all outbound trips are of equal length, and the cost of living varies a great between arrival cities such that even if each trip of equal length, expenditure per passenger between different arrival cities would still be very different.&nbsp;</p> <p>This margin of error is reduced significantly by imposing a minimum of expenditures in the algorithm, after a number of iterative testing (US$500 per trip for bordering arrival country and US$700 per trip for non-bordering arrival country).&nbsp; </p> About Dr Yuwa Hedrick-Wong, Ph.D., Global Economic Advisor, MasterCard Worldwide<p>Dr Yuwa Hedrick-Wong is a business strategist and economist with 25 years of experience gained in over thirty countries. He was appointed Global Economic Advisor to MasterCard Worldwide in 2009.&nbsp; Prior to this role, he was Economic Advisor to MasterCard in Asia/Pacific, a position he held since 2001. As economic advisor, he chairs a MasterCard Knowledge Panel of leading economists, policy analysts, academics and business strategists for regular exchange and knowledge sharing.&nbsp; In 2007 he was appointed Advisor at Southern Capital Group, a private equity fund; and in 2008 he was appointed to the Investment Council of ICICI, India’s largest private bank.&nbsp;&nbsp;&nbsp;</p> <p>Yuwa is also currently Adjunct Professor at the Sauder School of Business, University of British Columbia, Vancouver, B.C. Canada, and is a frequent speaker at numerous international high-profile conferences. </p> About MasterCard <p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> The latest MasterCard Worldwide Index of Global Destination Cities is a new approach to understanding the global economy from the perspective of connectivity between global cities, especially in terms of international travel and cross-border expenditures.http://www1.mastercard.com/content/intelligence/en/research/press-release/2011/international-visitor-spend-in-amman-to-grow-by-20-in-2011-new-mastercard-index2011-09-13T16:00:00.000Z2011-09-13T16:00:00.000ZAsia/Pacific Cities Rank among World’s Most Connected Destinations: MasterCard Index Georgette Tan, Robert O’BrienSingapore and Hong Kong Feature in Index’s Top Ten Global Destinations; Region’s Cities Expect a 15.3% Surge in Foreign Spending Led by Bangkok <p><b><i>Singapore, 18 June 2012: </i></b>Asia/Pacific cities continued their ascendance as global destinations in 2012, with nearly half of the world’s top 20 cities by visitor arrivals and expenditure heralding from the region, according to the MasterCard Global Destination Cities Index released today.</p> <p>This is the second installment of the MasterCard research, which is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world. The MasterCard Index of Global Destination Cities ranks cities in terms of the number of their total international visitor arrivals and the cross-border spending by these same visitors in the destination cities, and gives visitor and passenger growth forecasts for 2012. <i>This Index and the accompanying reports are not based on MasterCard volumes or transactional data.</i></p> <p>The Index projects sustained growth among emerging market cities with the top ten Asia/Pacific destinations expecting a 9.5% growth in visitor arrivals for 2012 and a 15.3% surge in cross-border spending. Singapore <sup>[<a href="#1">1</a>]</sup> (4<sup>th</sup>), Hong Kong (6<sup>th</sup>) and Kuala Lumpur (10<sup>th</sup>) feature in the Index’s top ten global cities. To view the Index as an interactive map, please click<b> <a href="http://cities.masterintelligence.com/">here</a></b>.</p> <p>Cities in Asia/Pacific once again led the charge globally with eight of the top 20 cities by international arrivals, with Bangkok ranked third globally with projected visitors to top 12.2 million visitors this year. Singapore was in fourth rank with 11.8 million visitors, with Hong Kong sixth with 11.1 million visitors, and Kuala Lumpur ranked 10<sup>th</sup> with 8.1 million visitors expected.&nbsp;</p> <p>The region also ranked highly on visitor spending with Bangkok ranked third globally with US$19.3 billion expected to be spent by inbound passengers in 2012, a 16.6% jump from last year. Singapore leapt two places to fifth overall with US$12.7 billion, up 12.7% on last year. Seoul moved into the top ten with US$10.6 billion in cross-border spend, an increase of 16.2%, while Tokyo, still recovering from the triple disasters of 2011 moved up four places to 14<sup>th</sup>, is officially the world’s third-fastest growing market (24.2%) in terms of cross-border spending.</p> <p>In terms of growth in visitor numbers six out of the top 20 fastest growing cities in the Index were from Asia/Pacific with Tokyo second globally behind Rio de Janeiro (28.6%) with a 21.5% growth in visitor arrivals. Taipei and <b><a href="http://www.pricelessbeijing.com/" target="_blank">Beijing</a> </b>also featured in both the top ten growth cities by visitor arrivals and cross-border spending.</p> <p>“Asia’s destination cities continue their rise, expecting a significant upward trend in visitor arrivals and cross-border spend—most of them on the back of large double digit growth,” observed <a href="http://newsroom.mastercard.com/people/dyuwa/" target="_blank"><b>Dr. Yuwa Hedrick-Wong</b></a>, global economic advisor, MasterCard Worldwide.</p> <p><a href="http://www.mastercard.co.uk/priceless-cities/london/" target="_blank"><b>London</b></a> once again topped the world’s cities by visitor numbers with 16.9 million inbound passengers expected in 2012, ahead of Paris in second place with 16 million inbound passengers expected.&nbsp;&nbsp;&nbsp;&nbsp;</p> <p>London also ranked first on cross-border expenditure, ahead of New York in second place, with estimated expenditures in these cities for 2012 amounting to US$21.1 billion and US$19.4 billion respectively.</p> <p>While cities in Europe and the US still ranked highly in the MasterCard Global Destination Cities Index, Dr. Hedrick-Wong said that the number of emerging market cities featuring in the Index showed Asia’s growing role in the global economy.</p> <p>“The leading Asian cities are some of the most sought after destinations for visitors from all over the world, and the Index indicates that they will continue to thrive into 2012,” he said.</p> <p>“Another interesting trend that we observe is a rise in cashless payments with many international travelers opting to do electronic transactions rather than using cash. The trend is a response to an increasing demand for safe, simple and smart payments, and highlights the rising importance of cashless commerce for both business and leisure travel,” Dr. Hedrick-Wong concluded.</p> <p><b>[<a name="1"></a>1] </b><i>City rankings from the 2011 MasterCard Index of Global Destination Cities are altered retrospectively as updates in data become available.</i></p> <p></p> <p></p> The World’s Top 20 Fastest Growing Destination Cities by Visitor Numbers<table cellspacing="0" cellpadding="0" border="0"> <tbody><tr><th class="table-description"><b>Destination City</b></th> <th class="table-description"><b>2012 Growth Rate</b></th> <th class="table-description"><b>Rank</b></th> </tr><tr><td>Rio de Janeiro</td> <td>28.6%</td> <td>1</td> </tr><tr><td>Tokyo</td> <td>21.5%</td> <td>2</td> </tr><tr><td>Quito</td> <td>18.8%</td> <td>3</td> </tr><tr><td>Abu Dhabi</td> <td>17.9%</td> <td>4</td> </tr><tr><td>Tunis</td> <td>17.7%</td> <td>5</td> </tr><tr><td>Dubai</td> <td>15.3%</td> <td>6</td> </tr><tr><td>Taipei</td> <td>15.1%</td> <td>7</td> </tr><tr><td>Istanbul</td> <td>14.7%</td> <td>8</td> </tr><tr><td>Beijing</td> <td>14.7%</td> <td>8</td> </tr><tr><td>Bogota</td> <td>12.6%</td> <td>10</td> </tr><tr><td>Lima</td> <td>11.7%</td> <td>11</td> </tr><tr><td>Riyadh</td> <td>10.4%</td> <td>12</td> </tr><tr><td>Nairobi</td> <td>10.0%</td> <td>13</td> </tr><tr><td>Singapore</td> <td>9.9%</td> <td>14</td> </tr><tr><td>Seoul</td> <td>9.8%</td> <td>15</td> </tr><tr><td>Cairo</td> <td>8.3%</td> <td>16</td> </tr><tr><td>Shanghai</td> <td>8.2%</td> <td>17</td> </tr><tr><td>Toronto</td> <td>7.6%</td> <td>18</td> </tr><tr><td>Washington</td> <td>7.2%</td> <td>19</td> </tr><tr><td>Caracas</td> <td>7.0%</td> <td>20</td> </tr></tbody></table> Asia/Pacific Top 10 Destination Cities by International Visitor Spend (2012)<table width="407" cellspacing="0" cellpadding="0" border="0"> <tbody><tr><th class="table-description" rowspan="2"><b>Rank</b></th> <th class="table-description" rowspan="2"><b>Destination City</b></th> <th class="table-description" rowspan="2"><b>Market</b></th> <th class="table-description" colspan="3"><b>Visitor Spend (US$ Billion)</b></th> <th class="table-description" rowspan="2"><b>%Growth 2011 &amp; 2012</b></th> <th class="table-description" rowspan="2"><b>2012 &nbsp;Visitors (Millions)*</b></th> </tr><tr><th class="table-description"><b>2010</b></th> <th class="table-description"><b>2011</b></th> <th class="table-description"><b>2012</b></th> </tr><tr><td>1</td> <td>Bangkok</td> <td>Thailand</td> <td>$11.1</td> <td>$16.6</td> <td>$19.3</td> <td>16.6%</td> <td>12.2</td> </tr><tr><td>2</td> <td>Singapore</td> <td>Singapore</td> <td>$9.0</td> <td>$11.3</td> <td>$12.7</td> <td>12.7%</td> <td>11.8</td> </tr><tr><td>3</td> <td>Sydney</td> <td>Australia</td> <td>$9.2</td> <td>$10.1</td> <td>$11.0</td> <td>9.7%</td> <td>2.5</td> </tr><tr><td>4</td> <td>Seoul</td> <td>South Korea</td> <td>$7.7</td> <td>$9.1</td> <td>$10.6</td> <td>16.2%</td> <td>8.0</td> </tr><tr><td>5</td> <td>Taipei</td> <td>Taiwan</td> <td>$6.1</td> <td>$8.7</td> <td>$10.5</td> <td>20.5%</td> <td>5.4</td> </tr><tr><td>6</td> <td>Tokyo</td> <td>Japan</td> <td>$10.2</td> <td>$8.0</td> <td>$9.9</td> <td>24.2%</td> <td>4.3</td> </tr><tr><td>7</td> <td>Hong Kong</td> <td>(SAR) China</td> <td>$7.3</td> <td>$8.6</td> <td>$9.5</td> <td>9.5%</td> <td>11.1</td> </tr><tr><td>8</td> <td>Shanghai</td> <td>China</td> <td>$5.6</td> <td>$7.3</td> <td>$8.3</td> <td>12.6%</td> <td>7.5</td> </tr><tr><td>9</td> <td>Beijing</td> <td>China</td> <td>$4.2</td> <td>$5.5</td> <td>$6.5</td> <td>19.2%</td> <td>6.2</td> </tr><tr><td>10</td> <td>Kuala Lumpur</td> <td>Malaysia</td> <td>$4.7</td> <td>$5.6</td> <td>$6.4</td> <td>13.7%</td> <td>8.1</td> </tr></tbody></table> <p><i>*Excludes passengers returning to arrival country and includes visitors on non-stop flights only</i><i></i></p> Methodology<p>The MasterCard Worldwide Index of Global Destination Cities is compiled using international flight and flight capacity information purchased from OAG Global, a provider of international aviation data. Flight schedules are also used for calculating flight frequency between pairs of cities.&nbsp; Airlines also publish on a regular basis their historical load factor, and advance flight schedules, which are then used to estimate the actual outbound passenger departures, and for forecasting outbound passenger departures in the coming year.</p> <p>On any given flight there are visitors from the departure country, returning residents of the destination city after visiting the departure country, and a third group: non-residents connecting through the departure country to the destination city on their way to a second destination city. This group can be a low proportion of the passengers for typically non-hub cities, but very high for destination cities that are “hubs” such as Singapore, Amsterdam, and Frankfurt.</p> <p>On a country level, the UN Database of “Trade in Service” in the “Travel Component” provides estimates of how much each year residents spend abroad (air fare paid in home country not included).&nbsp; An algorithm is applied to this total outbound expenditure and estimated total number of outbound passengers to derive an estimate of average per outbound passenger’s expenditure overseas.&nbsp;</p> <p>A margin of error is also unavoidable in such estimates, as not all outbound trips are of equal length, and the cost of living varies a great between arrival cities such that even if each trip of equal length, expenditure per passenger between different arrival cities would still be very different.&nbsp;This margin of error is reduced significantly by imposing a minimum of expenditures in the algorithm, after a number of iterative testing (US$500 per trip for bordering arrival country and US$700 per trip for non-bordering arrival country).&nbsp;</p> <p>Please note: the city rankings from the 2011 MasterCard Index of Global Destination Cities are altered retrospectively as updates in data become available.</p> About Dr Yuwa Hedrick-Wong, Ph.D., Global Economic Advisor, MasterCard Worldwide<p>Dr Yuwa Hedrick-Wong is a business strategist and economist with 25 years of experience gained in over thirty countries. He was appointed Global Economic Advisor to MasterCard Worldwide in 2009.&nbsp; Prior to this role, he was Economic Advisor to MasterCard in Asia/Pacific, a position he held since 2001. As economic advisor, he chairs a MasterCard Knowledge Panel of leading economists, policy analysts, academics and business strategists for regular exchange and knowledge sharing.&nbsp; In 2007 he was appointed Advisor at Southern Capital Group, a private equity fund; and in 2008 he was appointed to the Investment Council of ICICI, India’s largest private bank.</p> <p>Yuwa is also currently the HSBC Visiting Professor of International Business at the University of British Columbia, Vancouver, B.C. Canada, and is a frequent speaker at numerous international high-profile conferences.&nbsp; </p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Contacts:<p>Georgette Tan,<br> MasterCard Worldwide,<br> <a href="mailto:georgette_tan@mastercard.com">georgette_tan@mastercard.com</a>,<br> +65 6390 5971</p> <p>Robert O’Brien,<br> Weber Shandwick,<br> <a href="mailto:robrien@webershandwick.com">robrien@webershandwick.com</a>,<br> +65 6825 8064</p> This is the second installment of the MasterCard research, which is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/asia-pacific-cities-rank-among-worlds-most-connected-destination2012-06-17T16:00:00.000Z2012-06-17T16:00:00.000ZMasterCard and SMU Survey Shows Cautious Optimism Leads to Drop in Inflation Expectations Georgette Tan, Robert O’Brien, Kong Hwee Ting, Gladys NgMasterCard and SMU Survey Shows Cautious Optimism Leads to Drop in Inflation Expectations <p><b><i>Singapore, 24 April 2012</i></b> – Singapore households expect inflation to fall in the next one to five years. The third survey on inflation expectations Index released by <a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a> and <b><a href="http://www.smu.edu.sg/" target="_blank">Singapore Management University</a> </b>(SMU) shows that Singapore’s inflation expectations dropped in the first quarter of 2012. This may be attributed to more informed consumers and improved optimism towards the global economy.</p> <p>The SKBI-MasterCard Singapore Index of Inflation Expectations (SInDEx) was <b><a href="http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_753846.html" target="_blank">launched in January</a> 2012</b>. It was developed by Dr Aurobindo Ghosh and Professor Jun Yu from SMU Sim Kee Boon Institute for Financial Economics (SKBI), in collaboration with MasterCard. SInDEx is derived from an online survey designed to help researchers understand the behaviour and sentiments of decision makers in Singapore.</p> <p>This third SInDEx survey follows <a href="http://www.asiaone.com/Business/News/My%2BMoney/Story/A1Story20120110-320977.html" target="_blank"><b>two earlier surveys conducted in September and December last year</b></a>. The third online survey was conducted in March 2012 and it gathered feedback from around 400 individuals from Singapore households. Consumers were asked a variety of demographic and socioeconomic questions. The consumers also shared their views on perceived values of economic variables over the next one to five years.</p> <p>The March 2012 quarterly survey showed for the current year, the SInDEx1, a composite medium term inflation expectations index which measures inflation expectations over the next one year, was at its lowest at 4.2% since its inception. The Headline inflation expectations (which measures overall inflation expectations for the coming one year) was at 4.13 %, a drop from the 4.7% recorded last December. The March figure is also the lowest since the index was first created in September 2011. The medium term Singapore Core inflation expectations (excluding accommodation and private transportation) also reached a new low of 4.2 % in March.</p> <p>As for the next five years, SKBI-MasterCard Singapore Index of Inflation Expectations (SInDEx5, the composite weighted five-year inflation expectations) also fell from 5.16% to 4.97%. The five-year Headline inflation expectations (which measures overall inflation expectations five years from now) dropped slightly from 5.3% in December to 5.2%. The five-year Singapore Core inflation expectations (excluding accommodation and private transportation) also dropped from 5.09% to 4.8%.</p> <p>The researchers opined that the slow but steady decline in the annualised inflation expectations five years from now is a reflection of more effective “anchoring” of inflation expectations due to better communication between policy makers, media and the general public, since the SInDEx was launched in January this year.</p> <p>Some of the factors which might explain the difference between the higher Headline inflation and the lower Core inflation expectations, are the current sentiments arising from higher COE prices and property prices. After the newly instituted cooling measures late last year, Headline inflation expectations arising out of property price has probably come down.</p> <p>Dr. Aurobindo Ghosh, co-creater of SInDEx and Programme Director at SMU SKBI said “A well anchored long term inflation expectations measure is not expected to fluctuate frequently with short term movements like the upward price pressure coming from commodities like global oil prices or short term market sentiments.”</p> <p>“Academic research has also indicated that there might be a slight upward bias in the inflation expectations globally due to consumers’ personal experience. As an example, a recent publication from The Conference Board Consumer Research Center showed that even the US inflation expectations for March 2012 was at 6.3%, up from 5.5% in February. This is the highest level reached since May 2011 probably due to higher global oil prices although the US economy is looking more upbeat.</p> <p>“Given the downward trend in the Singapore Inflation Expectations Index, albeit nascent, we are cautiously optimistic that the public’s perception on inflation expectations is a good reflection of a more positive IMF World Economic Outlook (WEO, April 2012),” Dr. Ghosh added.</p> <p><a href="http://newsroom.mastercard.com/people/dyuwa/" target="_blank"><b>Dr. Yuwa Hedrick-Wong, global economic advisor, MasterCard Worldwide</b></a>, said, “Cautious optimism is the catch cry of 2012 as economies continue to slowly recover from the financial crisis. In this connection, a moderation in the reading of inflation expectations for Singapore supports the case for optimism. Everything else being equal, a continuation of this trend could gradually lead to a more competitive exchange rate of the Singapore dollar, hence Singapore exports. This will in turn support a stronger economic performance of Singapore in a global economy that is still facing serious challenges and weighed down by uncertainty.”</p> Methodology<p>Two indices were created, SInDEx1 and SInDEx5, to measure the 1-year inflation expectations and the 5-year inflation expectations. The data for the SKBI-MasterCard Survey was collected online from about 400 consumers. The sampling was done using a quota sample over gender, age and residency status to ensure representativeness of the sample. Employees in some sectors like journalism, marketing were excluded as that might have an effect on their responses to questions on consumption behaviour and expectations.</p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> About Singapore Management University<p>A premier university in Asia, the Singapore Management University (SMU) is internationally recognised for its world class research and distinguished teaching.&nbsp; Established in 2000, SMU’s mission is to generate leading edge research with global impact and produce broad-based, creative and entrepreneurial leaders for the knowledge-based economy.&nbsp; It is known to be a pioneer for its interactive and technologically-enabled pedagogy of seminar-style teaching in small class sizes which remains its unique hallmark.</p> <p>Home to more than 7,200 students, SMU comprises six schools: School of Accountancy, Lee Kong Chian School of Business, School of Economics, School of Information Systems, School of Law and School of Social Sciences, offering a wide range of bachelor’s, master’s and PhD degree programmes in business and other disciplines.</p> <p>With an emphasis on generating rigorous, high impact cross-disciplinary research that addresses Asian issues of global relevance, SMU faculty collaborates with leading foreign researchers as well as partners in the business community and public sector through its research institutes and centres.&nbsp; Through executive education, the university provides public and customised training for working professionals in meeting the needs of the economy.&nbsp; Close relationships with leading universities, including The Wharton School, Carnegie Mellon, the University of Pennsylvania and the University of Chicago’s Booth School of Business, allow SMU to draw on their academic and research strengths in various collaborations.&nbsp; The SMU city campus is a state-of-the art facility located in the heart of downtown Singapore, fostering strategic linkages with the business and wider community. <a><b>www.smu.edu.sg</b></a></p> About Sim Kee Boon Institute for Financial Economics<p>Established in July 2008, the Sim Kee Boon Institute for Financial Economics (SKBI) at the Singapore Management University promotes the study of Financial Economics and Financial Econometrics in areas of strategic relevance to Singapore's economy and the economies of the region. A significant addition to Singapore's efforts to be a financial hub in Asia, SKBI is a leading institute for academic research with strong industry application and practical dimension in the area of Financial Economics.</p> <p>The Institute has four major research centres for quantitative financial analysis and offers training programmes for professionals in the financial industry. Its work is conducted in close collaboration with leading scholars in financial economics and financial econometrics from around the world as well as leading international organisations and experts from industry. www.smu.edu.sg/institutes/skbife</p> Media contacts:<p>Kong Hwee Ting, SMU<br> +65 6808 5238,<br> <a href="mailto:htkong@smu.edu.sg">htkong@smu.edu.sg</a></p> <p>Gladys Ng, SKBI, SMU<br> + 65 6808 5229,<br> <a href="mailto:gladysng@smu.edu.sg">gladysng@smu.edu.sg</a></p> <p>Georgette Tan, MasterCard Worldwide,<br> +65 6390 5971,<br> <a href="mailto:georgette_tan@mastercard.com">georgette_tan@mastercard.com</a></p> <p>Rob O’Brien, Weber Shandwick,<br> +65 6825 8064,<br> <a href="mailto:robrien@webershandwick.com">robrien@webershandwick.com</a><i></i></p> The SInDEx, which was jointly developed by Singapore Management University’s Sim Kee Boon Institute for Financial Economics (SKBI) and MasterCard, is derived from an online survey of around 400 randomly selected individuals from Singapore households. http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/mastercard-and-smu-survey-shows-cautious-optimism-leads-to-drop-2012-04-23T16:00:00.000Z2012-04-23T16:00:00.000ZMasterCard and Singapore Management University Launch New Singapore Inflation Index Georgette Tan, Robert O’Brien, Kong Hwee Ting, Gladys NgMasterCard and Singapore Management University Launch New Singapore Inflation Index <p><b><i>Singapore, 10 January 2012</i></b> – Inflation expectation is an important economic gauge for many Singaporeans and businesses. A new Index highlighting the spectrum of factors that impact the inflation expectations was jointly launched by MasterCard and Singapore Management University (SMU) today.</p> <p>The SKBI-MasterCard Singapore Index of Inflation Expectations (SInDEx), which was jointly developed by Dr Aurobindo GHOSH and Professor Jun YU from SMU Sim Kee Boon Institute for Financial Economics (SKBI), and MasterCard, is based on a survey of around 400 randomly selected individuals from households in Singapore. The online survey helps researchers understand the behaviour and sentiments of decision makers in Singapore households.</p> <p>Two surveys were conducted last year through the joint collaboration: one in September and another in the first week of December. In the first survey, consumers were asked a variety of demographic and socioeconomic questions. Consumers then shared their views on perceived values of economic variables over the next one to five years. In the second survey, questions pertaining to investors’ sentiment on current and future equity investments were added.</p> <p>SMU President, Professor Arnoud De Meyer said, “For the past one year, inflation has been in the minds of many Singaporeans. Its movements affect how households, employers and central bankers make decisions. Understanding how inflation expectations are formed and its impact on various economic decisions is thus instrumental in any discourse on economic policy. It is with great pride that I introduce the inflation expectation index jointly developed by SMU SKBI and MasterCard. Since its launch in July 2008, SKBI has been developing and applying research on financial economics with special relevance to Singapore and Asia. The creation of the index is a great example to showcase how SKBI can help the industry and the public.”</p> <p>“Inflation has been a pressing issue for governments, economists, businesses and consumers in the last year and its role as a tool of economic management has been discussed, analysed and debated in the media around the world,” said Vicky Bindra, president of Asia/Pacific, Middle East &amp; Africa (APMEA) for MasterCard Worldwide.</p> <p>“The SKBI-MasterCard Singapore Index of Inflation Expectations will be a valuable addition to this debate and its creation is a testament to the emphasis MasterCard places on working with highly credible and innovative organizations for the benefit of industry and society.”</p> <p>For the current year, the SInDEx1 (which measures inflation expectations over one year) remained almost the same in both the September and December 2011 surveys at 4.62%. As for the next five years, SKBI-MasterCard Singapore Index of Inflation Expectations (SInDEx5, which measures inflation expectations over five years) decreased slightly from 5.2% in September to 5.16%&nbsp;in December.</p> <p>The study found that in the medium term of one year, households’ awareness of the economic conditions played a crucial role in forming current expectations. One of the strongest and most persistent factors found to have influenced inflation expectations was the exposure to media coverage on global economic issues. Those who followed media reports were found to have a lower inflation expectation.</p> <p>The study also found that inflation expectations were affected by the long term relationship of the individual through citizenship status or length of stay. For the long term (or five-year forecast), the level of confidence in future equity investment plays a crucial part in expectation formed by households. The level of uncertainty plays a significant role in periods of stress.</p> <p>Dr. Yuwa Hedrick-Wong, global economic advisor, MasterCard Worldwide, said, “The massive debt overhang in many developed economies has made rising inflation a more serious and ever-present threat and the central banks’ task of maintaining price stability more challenging.”</p> <p>“In 2012, for instance, governments in OECD countries will need to borrow an equivalent of 15% of world GDP. Thus, getting monetary policy right under such circumstances is critical in order to support economic growth while keeping inflation under control. A key insight in getting monetary policy right is a more precise estimate of inflation expectation, especially for a small and open economy like Singapore.”</p> Methodology<p>Two indices were created, SInDEx1 and SInDEx5, to measure the 1-year inflation expectations and the 5-year inflation expectations. The data for the SKBI-MasterCard Survey was collected online from about 400 consumers. The sampling was done using a quota sample over gender, age and residency status to ensure representativeness of the sample. Employees in some sectors like journalism, marketing were excluded as that might have an effect on their responses to questions on consumption behaviour and expectations.</p> <p>In the first wave, about 88% of the respondents were citizens and 99.3% have stayed in Singapore for more than two years. There is a slight decrease for both sets of respondents in the second wave. The median per capita personal income of the respondents in both waves is $37,500, while household income is on an average of $75,000 per annum.</p> About MasterCard <p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> About Singapore Management University<p>A premier university in Asia, the Singapore Management University (SMU) is internationally recognised for its world class research and distinguished teaching.&nbsp; Established in 2000, SMU’s mission is to generate leading edge research with global impact and produce broad-based, creative and entrepreneurial leaders for the knowledge-based economy.&nbsp; It is known for its interactive and technologically-enabled pedagogy of seminar-style teaching in small class sizes.</p> <p>Home to over 7,000 students, SMU comprises six schools: School of Accountancy, Lee Kong Chian School of Business, School of Economics, School of Information Systems, School of Law and School of Social Sciences, offering a wide range of bachelor’s, master’s and PhD degree programmes in various disciplines.</p> <p>With an emphasis on generating rigorous, high impact cross-disciplinary research that addresses Asian issues of global relevance, SMU faculty collaborates with leading international researchers as well as partners in the business community and public sector through its research institutes and centres.&nbsp; The University also conducts executive education programmes for working professionals. Close relationships with leading universities, including The Wharton School, Carnegie Mellon, the University of Pennsylvania and the University of Chicago’s Booth School of Business, allow SMU to draw on their academic and research strengths in various collaborations.&nbsp;</p> <p><a href="http://www.smu.edu.sg/" target="_blank"><b>www.smu.edu.sg</b></a></p> About Sim Kee Boon Institute for Financial Economics<p>Established in July 2008, the Sim Kee Boon Institute for Financial Economics (SKBI) at the Singapore Management University promotes the study of Financial Economics and Financial Econometrics in areas of strategic relevance to Singapore's economy and the economies of the region. A significant addition to Singapore's efforts to be a financial hub in Asia, SKBI is a leading institute for academic research with strong industry application and practical dimension in the area of Financial Economics.</p> <p>The Institute has four major research centres for quantitative financial analysis and offers training programmes for professionals in the financial industry. Its work is conducted in close collaboration with leading scholars in financial economics and financial econometrics from around the world as well as leading international organisations and experts from industry. <b>www.smu.edu.sg/institutes/skbife</b></p> Media contacts:<p>Kong Hwee Ting, SMU<br> +65 6808 5238,<br> <a href="mailto:htkong@smu.edu.sg">htkong@smu.edu.sg</a></p> <p>Gladys Ng, SKBI, SMU<br> + 65 6808 5229,<br> <a href="mailto:gladysng@smu.edu.sg">gladysng@smu.edu.sg</a></p> <p>Georgette Tan, MasterCard Worldwide,<br> +65 6390 5971,<br> <a href="mailto:georgette_tan@mastercard.com">georgette_tan@mastercard.com</a></p> <p>Rob O’Brien, Weber Shandwick,<br> +65 6825 8064,<br> <a href="mailto:robrien@webershandwick.com">robrien@webershandwick.com</a></p> The SKBI-MasterCard Singapore Index of Inflation Expectations (SInDEx), which was jointly developed by Dr Aurobindo GHOSH and Professor Jun YU from SMU Sim Kee Boon Institute for Financial Economics (SKBI), and MasterCard, is based on a survey of around 400 randomly selected individuals from households in Singapore. http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/mastercard-and-singapore-management-university-launch-new-singap2012-01-09T16:00:00.000Z2012-01-09T16:00:00.000ZTaiwan and New Zealand Top Asia/Pacific Region on Financial Literacy: MasterCard Survey Georgette Tan, Robert O’BrienResearch on Day-to-day Financial Planning Led by Mature Markets; Women in Emerging Markets Fare Better than Men on Basic Money Management<p><br> </p> <p><b><i>Singapore, 18 July 2012</i></b> – People in mature markets may prove to be better financial planners overall but it is women in emerging markets who remain dominant when it comes to basic money management, according to <b><a href="http://newsroom.mastercard.com/asia-pacific/" target="_blank">MasterCard</a>&nbsp;</b>research.<br> </p> <p>The MasterCard Worldwide Index of Financial Literacy is based on a survey conducted between 24 April 2012 and 10 June 2012 with 6904 respondents aged 18 – 64 in 14 Asia/Pacific<sup><a name="_ftnref1" href="#_ftn1"></a>[<a href="#1">1]</a></sup> countries. This is the 3rd survey of Financial Literacy conducted since 2010. The survey polled consumers on three aspects of financial literacy including their basic money management skills, investment knowledge and financial planning to determine the level of basic money management skills in terms of budgeting, savings, and responsibility of credit usage. <i>The survey and its accompanying reports do not represent MasterCard financial performance.</i></p> <p>In terms of overall financial literacy, Taiwan and New Zealand tied for first place with a score of 73 index points each, with Taiwan jumping up from 5<sup>th</sup> rank in 2010. Following close behind with 71 index points each are Hong Kong, Australia and Singapore. Notably, Hong Kong jumped up from 6<sup>th</sup> position <a href="http://www.masterintelligence.com/ViewInsights.jsp?hidReportTypeId=1&amp;hidReport=263&amp;hidSectionId=189&amp;hidUserId=null"><b>when the survey was conducted in 2010</b></a>. Thailand, first in the region two years ago, fell 10 rankings to 11<sup>th</sup> in 2012 with 65 index points. Japan and India ranked at the bottom of the financial literacy rankings with 60 index points each.</p> <p>New Zealanders (77%) fared the best when asked about basic money management skills such as day-to-day budgeting, keeping up with bills, credit commitments and setting money aside for big purchases, followed by Australia in 2<sup>nd</sup> (75%) and Hong Kong (72%) moving up one spot from 4<sup>th</sup> in 2010 to 3<sup>rd</sup> in 2012.</p> <p>Hong Kong (68%), Taiwan (67%) and China (65%) topped the investment component of the research. More respondents in these markets understood their bank statements and complex investment concepts such as diversification and inflation.</p> <p>Women showed slightly better scores than men&nbsp; in Asia/Pacific’s emerging markets with Philippines leading the region with financial literacy scores that were 9% better than men’s, followed by Vietnam (6%) and Malaysia (5%).</p> <p>Koreans proved to have the region’s most improved scores for financial planning (83%) up 12 places from the 2010 survey. Survey respondents from Taiwan (83%) and Vietnam (82%) also saved more regularly and were better prepared than their regional counterparts when it came to retirement preparations and emergency savings.</p> <p>In mature markets, respondents over 30 years of age appeared to score higher in financial literacy compared to their counterparts under the age of 30. This was especially seen in markets like New Zealand (76% vs. 65%), Australia (74% vs. 64%) and Taiwan (74% vs. 70%) where respondents over 30 years old were clearly leading the pack.</p> <p><a href="http://newsroom.mastercard.com/people/gtan/" target="_blank"><b>Georgette Tan</b></a>, group head, Communications, Asia/Pacific, Middle East &amp; Africa, MasterCard Worldwide, said: “Overall the MasterCard Worldwide Index of Financial Literacy paints a promising picture of financial understanding across the region. Households in Asia/Pacific are clearly taking responsibility when it comes to day-to-day financial planning, and it’s interesting to note that a growing proportion of women are taking the lead in financial matters. Notably, women in emerging markets continue to exhibit strong money management skills and this is a very encouraging sign.”<br> </p> <p style="text-align: center;"><a target="_blank" href="/content/dam/intelligence/content-assets/TaiwanNewZealandFinancialLiteracy.jpg"><img width="340" height="227" src="/content/dam/intelligence/content-assets/TaiwanNewZealandFinancialLiteracy.jpg"></a></p> <p></p> <p></p> <p><i><a name="_ftn1" href="#_ftnref1"></a>[1<a name="1"></a>] Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam</i></p> <p></p> <p></p> Methodology<p>The Index is based on a survey of consumers from 25 markets across APMEA and comprises questions covering three major components:</p> <ul> <li>Basic Money Management (50% weight): To determine the level of basic money management skills in terms of budgeting, savings, and responsibility of credit usage.</li> <li>Financial Planning (30% weight): To assess level of knowledge about financial products, services, and concepts, and ability to plan for long-term financial needs.</li> <li>Investment (20% weight): To determine basic understanding of the various risks associated with investment, different investment products and skills required.</li> </ul> <p>A Financial Literacy Index Score for each market was calculated out of the weighted sum of the 3 components.</p> <p>Regional Aggregates are calculated via the average of the individual country components before applying the weights described above.<br> </p> <p>Interviews for the MasterCard Worldwide Financial Literacy Index were conducted via internet surveys, personal, telephone and Computer Aided Telephone interviews, with the questionnaire translated to the local language wherever appropriate and necessary.</p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Contacts:<p>Georgette Tan,<br> MasterCard Worldwide,<br> <a href="mailto:georgette_tan@mastercard.com">georgette_tan@mastercard.com</a>,<br> (65) 6390-5971</p> <p>Rob O’Brien, <br> Weber Shandwick,<br> <a href="mailto:robrien@webershandwick.com">robrien@webershandwick.com</a><br> (65) 6825 8064</p> The MasterCard Worldwide Index of Financial Literacy is based on a survey conducted between 24 April 2012 and 10 June 2012 with 6904 respondents aged 18 – 64 in 14 Asia/Pacific countries. This is the 3rd survey of Financial Literacy conducted since 2010.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/taiwan-and-new-zealand-top-asia-pacific-region-on-financial-lite2012-07-17T16:00:00.000Z2012-07-17T16:00:00.000ZMasterCard Says Early Days for Mobile Payments Adoption with No Two Markets the Same Brian GendronSingapore, Canada, United States, Kenya and South Korea Most Ready to Adopt<p style="text-align: center;"><b><i>Young and affluent will drive early adoption</i></b><br> </p> <p style="text-align: center;"><b><i>Study identifies need for more industry partnership</i></b></p> <p><b>Singapore – May 8, 2012 </b>– <a href="http://newsroom.mastercard.com/asia-pacific/" target="_blank"><b>MasterCard Worldwide</b></a> today unveiled the <a href="http://mobilereadiness.mastercard.com/" target="_blank"><b>MasterCard Mobile Payments Readiness Index</b></a> (MPRI), an analysis of 34 countries and their readiness to use three types of mobile payments: person to person, mobile web commerce and mobile contactless payments at the point of sale. The MPRI found that while no two markets are the same, consumer readiness is the critical success factor to drive mobile payments adoption around the globe.</p> <p>The <a href="http://mobilereadiness.mastercard.com/globalreport.pdf" target="_blank"><b>MPRI</b></a> identified Singapore, Canada, the United States, Kenya and South Korea as the most prepared markets. The Index indicates that while it’s early stages for mobile payments adoption, all markets globally – either highly scaled and integrated ones like the United Kingdom or compact and technology-driven ones like Singapore – are making progress towards reaching an inflection point where mobile devices account for an appreciable share of the payments mix.</p> <p>The Index also found that in some markets such as Australia, young affluent consumers between the ages of 18 and 34 years old are the most willing to engage in mobile payments as they recognize the value of using mobile payments instead of cash or payment cards. While this demographic was predominantly male in most countries, women showed higher levels of interest in countries such as China, Egypt and the Philippines.</p> <p>In addition, findings of the MPRI reveal that partnerships among the key players in the mobile payments ecosystem are essential to accelerate the commercialization of mobile payments. Cooperation and collaboration among financial institutions, telcos, governments, technology providers and others can foster an environment that enables a market to reach critical mass.</p> <p>Other key findings include:</p> <ul> <li>Nine of the 10 markets with the highest consumer scores are in APMEA (Asia/Pacific, Middle East and Africa).</li> <li>Of the three mobile payment types, more consumers had engaged in m-commerce in 71 percent of the countries surveyed.</li> <li>In developing economies, consumers are typically drawn to mobile payments for access to the larger economy, both national and global, as well as to a regulated and secure economic infrastructure. Consumers in the developed world are drawn to the convenience of mobile phone payments.</li> </ul> <p>“Technology infrastructure, a responsive regulatory environment and a robust economy are table stakes for the advancement of mobile payments,” said <b><a href="http://insights.mastercard.com/author/theodore-iacobuzio/" target="_blank">Theodore Iacobuzio, vice president, Global Insights, MasterCard Worldwide</a>.</b> “The necessary conditions are consumer readiness and industry integration. As no one entity can develop and promote mobile payments by itself, key players in the ecosystem must work together to collectively advance the cause of mobile payments.”</p> <p>To download an executive summary of the MasterCard Mobile Payments Readiness Index, view an Interactive Global Map of the data or study the findings of the 34 countries that make up the Index, please visit <b><a href="http://mobilereadiness.mastercard.com" target="_blank">http://mobilereadiness.mastercard.com</a>.</b></p> Index Methodology <p>Research findings from the MasterCard Mobile Payments Readiness Index were compiled by MasterCard Global Insights between October 2011 and February 2012. The Index examined 34 global markets. Each market was ranked on a scale of 1 to 100 with scores derived from an algorithm comprised of over 50 quantitative and qualitative inputs including economic, demographic, telecommunications and payments industry data as well as proprietary consumer research. These inputs were then weighted and combined into six components including Environment, Financial Services, Regulations, Infrastructure, Consumer Readiness and Clusters and Partnerships. The six components were combined, yielding a single readiness score for each country. </p> About MasterCard <p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Contact:<p>For media inquiries, please contact Brian Gendron at MasterCard Worldwide, <a href="mailto:Brian_Gendron@mastercard.com">Brian_Gendron@mastercard.com</a> or 914-249-1284.</p> MasterCard Worldwide today unveiled the MasterCard Mobile Payments Readiness Index (MPRI), an analysis of 34 countries and their readiness to use three types of mobile payments: person to person, mobile web commerce and mobile contactless payments at the point of sale.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/mastercard-says-early-days-for-mobile-payments-adoption-with-no-2012-05-07T16:00:00.000Z2012-05-07T16:00:00.000ZAsian Visitors Splash Out in Sydney Says Global Study Chris Lawrence at The Origin Agency Asian Visitors Splash Out in Sydney Says Global Study<p><i><b>Sydney, 1 August 2012</b>: </i>Sydney continues to be a hot spot for big spending by international visitors, with predictions that tourists will spend $11.0 billion dollars in the emerald city in 2012, up 9.7% on 2011.</p> <p>The <i>MasterCard</i> Index <i>of Global Destination Cities</i>, which measures cross-border travel and spending across 132 of the world's most important cities, has revealed Sydney sits eighth in the world for international visitor spend. London tops the list with a predicted $21.1 billion dollar spend in 2012, followed by Paris, Bangkok and Singapore.</p> <p>The driving force behind Sydney's success has been visitors arriving from Asia-Pacific hubs including Singapore, from where visitors are expected to fork out $1.651 billion dollars, followed by Dubai with a total spend of $976 million dollars, and visitors travelling from Hong Kong who are expected to dole out $911 million in 2012.</p> <p>Tourism &amp; Transport Forum (TTF) Chief Executive John Lee said: &quot;Tourism operators should be buoyed by increased spending in Sydney, with the city now regarded as one of the most celebrated tourist hot spots worldwide. The growth experienced in the Asia/Pac region has strong flow-on effects for our operators.</p> <p>&quot;Sydney punches above its weight in terms of tourism spending compared to visitor numbers- once we get people here the benefits are high on a per-capita basis. It's vital we harness this opportunity and make Sydney a priority destination for Asian travellers,&quot; Lee continued.</p> <p>The Index results reveal while some regions of the world are suffering the effects of an economic slow-down, cross-border air travel and visitor spending continue to grow. Asia/Pacific destinations recorded the strongest growth in visitor arrivals and cross-border spending globally, with the region recording increases of 9.5% and 15% respectively.</p> <p>MasterCard Australia Country Manager, Andrew Cartwright said, &quot;Sydney continues to be a major feature on the bucket list for international visitors, both for business and pleasure. Australia's geographic isolation means visitors stay longer and spend more, a winning combination for travel and tourism operators. The index confirms what we all know - Sydney is a true world city.&quot;</p> <p></p> Methodology<p>The MasterCard Worldwide Index of Global Destination Cities is compiled using international flight and flight capacity information purchased from OAG Global, a provider of international aviation data. Flight schedules are also used for calculating flight frequency between pairs of cities. Airlines also publish on a regular basis their historical load factor, and advance flight schedules, which are then used to estimate the actual outbound passenger departures, and for forecasting outbound passenger departures in the coming year.</p> Asia/Pacific Top 10 Destination Cities by International Visitor Spend (2012)<table border="1" cellspacing="0" cellpadding="0" width="410"> <tbody><tr><th class="table-description"><b>Rank</b></th> <th class="table-description"><b>Destination City</b></th> <th class="table-description"><b>Market</b></th> <th class="table-description" colspan="3"><b>Visitor Spend(US$ Billion)</b></th> <th class="table-description"><b>% Growth 2011 &amp; 2012</b></th> <th class="table-description"><b>2012 Visitors(Millions)*</b></th> </tr><tr><td></td> <td></td> <td></td> <td><b>2010</b></td> <td><b>2011</b></td> <td><b>2012</b></td> <td></td> <td></td> </tr><tr><td><b>1</b></td> <td>Bangkok</td> <td>Thailand</td> <td>$11.1</td> <td>$16.6</td> <td>$19.3</td> <td>16.6%</td> <td>12.2</td> </tr><tr><td><b>2</b></td> <td>Singapore</td> <td>Singapore</td> <td>$9.0</td> <td>$11.3</td> <td>$12.7</td> <td>12.7%</td> <td>11.8</td> </tr><tr><td><b>3</b></td> <td>Sydney</td> <td>Australia</td> <td>$9.2</td> <td>$10.1</td> <td>$11.0</td> <td>9.7%</td> <td>2.5</td> </tr><tr><td><b>4</b></td> <td>Seoul</td> <td>South Korea</td> <td>$7.7</td> <td>$9.1</td> <td>$10.6</td> <td>16.2%</td> <td>8.0</td> </tr><tr><td><b>5</b></td> <td>Taipei</td> <td>Taiwan</td> <td>$6.1</td> <td>$8.7</td> <td>$10.5</td> <td>20.5%</td> <td>5.4</td> </tr><tr><td><b>6</b></td> <td>Tokyo</td> <td>Japan</td> <td>$10.2</td> <td>$8.0</td> <td>$9.9</td> <td>24.2%</td> <td>4.3</td> </tr><tr><td><b>7</b></td> <td>Hong Kong</td> <td>(SAR) China</td> <td>$7.3</td> <td>$8.6</td> <td>$9.5</td> <td>9.5%</td> <td>11.1</td> </tr><tr><td><b>8</b></td> <td>Shanghai</td> <td>China</td> <td>$5.6</td> <td>$7.3</td> <td>$8.3</td> <td>12.6%</td> <td>7.5</td> </tr><tr><td><b>9</b></td> <td>Beijing</td> <td>China</td> <td>$4.2</td> <td>$5.5</td> <td>$6.5</td> <td>19.2%</td> <td>6.2</td> </tr><tr><td><b>10</b></td> <td>Kuala Lumpur</td> <td>Malaysia</td> <td>$4.7</td> <td>$5.6</td> <td>$6.4</td> <td>13.7%</td> <td>8.1</td> </tr></tbody></table> About MasterCard <p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> This is the second installment of the MasterCard research, which is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/asian-visitors-splash-out-in-sydney-says-global-study2012-07-31T16:00:00.000Z2012-07-31T16:00:00.000ZNairobi Ranked as a Top Destination City in Africa - MasterCard Index Njeri Chege, Geraldine TrenneryProjected 16.7% increase in visitor spending for 2012 positions Nairobi as one of the fastest growing destination cities worldwide<p><b><i>Nairobi, Kenya, 01 June 2012</i></b> – Nairobi has been named one of the most popular destination cities in Africa in the 2012 <b><a href="http://newsroom.mastercard.com/wp-content/uploads/2012/06/MasterCard_Global_Destination_Cities_Index_2012.pdf" target="_blank">MasterCard Global Destination Cities Index</a>.</b></p> <p>The Index has revealed that a projected 1.8 million visitors are expected to visit Nairobi in 2012, injecting an estimated $1.5 billion into the city’s economy. These figures translate into a 10% growth in visitor numbers and a 16.7% growth in visitor spending over the 2011 Index results.</p> <p>The Index, now in its second year, is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world.&nbsp; The Index ranks 132 global cities by their total international visitor arrivals and the cross-border spending by these visitors in the destination cities, and gives visitor and passenger growth forecasts for 2012.</p> <p>Thirteen of these 132 destination cities are on the African continent and aside from Nairobi include: Accra, Cairo, Johannesburg, Casablanca, Beira, Cape Town, Dakar, Durban, Kampala, Lagos, Maputo, and Tunis.</p> <p>Charlton Goredema, vice president, market manager, East Africa and Indian Ocean Islands, MasterCard Worldwide comments, “A key finding of the Index is that Nairobi ranks fourth out of 13 cities surveyed in Africa - both in terms of visitor numbers and visitor spend - highlighting its status as the financial heart of the East African region and a significant African economic hub.”</p> <p>“In addition, the noteworthy 16.7% growth in projected visitor spending for Nairobi sees the city ranked in 10th position <i>globally</i> among the fastest growing destination cities examined in the Index,” adds Goredema.</p> <p>Other leading African cities in terms of visitor numbers were Cairo, which expects 3.3 million visitors in 2012; Johannesburg, which expects 2.5 million visitors; and Casablanca, which anticipates 2.1 million visitors in the coming year.</p> <p>“The Kenyan government’s identification of air transport capacity being vital to the continued growth of the country’s economy and the resulting investment in upgrading Jomo Kenyatta International Airport is now yielding results, as can be seen in the Index,” adds Gordema.</p> <p>The country’s official airline – Kenya Airways – is also readying itself for <a href="http://www.realafrica.co.uk/68/kenya-airways-announces-major-expansion-plans.htm" target="_blank"><b>growth in visitor numbers</b></a> with its publically stated <a href="http://www.centreforaviation.com/analysis/rapidly-expanding-kenya-airways-charts-growth-with-plan-to-serve-every-inhabited-continent-by-2017-71784" target="_blank"><b>2013 target</b></a> of becoming the leading carrier on the continent - interlinking every African capital city and connecting the rest of Africa to the world via its Nairobi hub.</p> <p>The three cities where most visitors to Nairobi are forecasted to originate from are London (203,000 people), Amsterdam (149,000 people), and Johannesburg (138,000 people).</p> <p>The visitors from these top three cities will contribute considerably to the overall projected growth in visitor spending in Nairobi.&nbsp; Londoners are expected to spend $339m during 2012 (a growth of 8.1% from 2011); those from Amsterdam are expected to spend $118m (a 6.7% growth from the 2011) while Johannesburg visitors are expected to spend $138m (a 10.2% growth from 2011).&nbsp;</p> <p></p> (Comment from third party - Kenyan Tourism etc.)<p>Dr Yuwa Hedrick-Wong, global economic advisor for MasterCard Worldwide and author of the report says, “An interesting trend that we are observing is a rise in cashless payments with many international travelers opting to make electronic transactions as opposed to paying with cash. The trend is a response to an increasing demand for safe, simple and smart payments, and highlights the rising importance of cashless commerce for both business and leisure travel.”</p> <p>“Many travelers to Nairobi and Kenya are accustomed to a world beyond cash in which they use their payment cards in multiple ways. They expect the same safety and convenience when traveling abroad. This is a significant opportunity for businesses within Nairobi, and if they are to benefit from the projected 16.7% growth in traveler spend in the coming year, they should already be considering how best to facilitate consumers’ payment preferences,” added Dr. Hedrick-Wong.</p> <p>In the global rankings, London topped the world’s cities by visitor numbers globally for the second consecutive year. Its number one ranking is based on a projected uplift of international visitor numbers by 1.1% to a record 16.9 million. Paris, in second position, is expecting 16 million inbound passengers, with Bangkok in third position, expecting 12.2 million visitors.</p> <p>London also ranked first in cross-border expenditure, ahead of New York in second place, with estimated spending in these cities for 2012 amounting to US$21.1 billion and US$19.4 billion respectively. Bangkok makes up the top three with expected visitor expenditure in 2012 of US$19.3 billion.</p> <p>While cities in Europe and the US ranked highly on the Index, Dr. Hedrick-Wong said that the strong growth figures of African destination cities - in both expected visitor numbers and spending - suggests that destination cities in Africa will continue to grow in importance in the global economy.</p> <p>“Aside from Nairobi’s impressive double digit growth figures, Tunis, after the political upheaval in early 2011, is expected to show growth of 19.8% in visitor spending with a 17.7% increase in visitor numbers. Additionally, Cairo, in spite of ongoing turmoil in Egypt, expects an 8.4% growth in spending and an 8.3% growth in visitor numbers,” explained Dr. Hedrick-Wong.</p> <p>“In spite of the ups and downs of the business cycle, the overall pattern is clear: cross-border travel by air is a resilient trend that is embraced by a growing number of people across Africa, underpinned by visitors’ robust willingness and capacity to spend,” concludes Dr. Hedrick-Wong.</p> <p><i>This Index and the accompanying reports are not based on MasterCard volumes or transactional data.</i></p> <p></p> Methodology<p>The MasterCard Worldwide Index of Global Destination Cities is compiled using international flight and flight capacity information purchased from OAG Global, a provider of international aviation data. Flight schedules are also used for calculating flight frequency between pairs of cities.&nbsp; Airlines also publish on a regular basis their historical load factor, and advance flight schedules, which are then used to estimate the actual outbound passenger departures, and for forecasting outbound passenger departures in the coming year.</p> <p>On any given flight there are visitors from the departure country, returning residents of the destination city after visiting the departure country, and a third group: non-residents connecting through the departure country to the destination city on their way to a second destination city. This group can be a low proportion of the passengers for typically non-hub cities, but very high for destination cities that are “hubs” such as Singapore, Amsterdam, and Frankfurt.</p> <p>On a country level, the UN Database of “Trade in Service” in the “Travel Component” provides estimates of how much each year residents spend abroad (air fare paid in home country not included).&nbsp; An algorithm is applied to this total outbound expenditure and estimated total number of outbound passengers to derive an estimate of average per outbound passenger’s expenditure overseas.&nbsp;</p> <p>A margin of error is also unavoidable in such estimates, as not all outbound trips are of equal length, and the cost of living varies greatly between arrival cities such that even if each trip is of equal length, expenditure per passenger between different arrival cities would still be very different.</p> <p>This margin of error is reduced significantly by imposing a minimum of expenditures in the algorithm, after a number of iterative testing (US$500 per trip for bordering arrival country and US$700 per trip for non-bordering arrival country).</p> <p>Please note: the city rankings from the 2011 MasterCard Index of Global Destination Cities are altered retrospectively as updates in data become available.</p> <p></p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Media Relations Contacts<p>Njeri Chege,<br> Hill+Knowlton Strategies,<br> <a href="mailto:Njeri.chege@hkstrategies.co.ke"><b>Njeri.chege@hkstrategies.co.ke</b></a>,<br.></br.></p> <p></p> <p>Geraldine Trennery,<br> Tribeca Public Relations,<br> <a href="mailto:geraldinet@tribecapr.co.za"><b>geraldinet@tribecapr.co.za</b></a>,<br> +27 82 677 5201</p> <p><i></i></p> <p></p> <p><i></i></p> <p></p> <p></p> This is the second installment of the MasterCard research, which is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/nairobi-ranked-as-a-top-destination-city-in-africa-mastercard-index2012-05-31T16:00:00.000Z2012-05-31T16:00:00.000ZAsia/Pacific Cities Rank among World’s Most Connected Destinations: MasterCard Index Julianty Moeljono, Thoriq HuseinJakarta Ranked No.10 For The Top 10 Destination Cities in Asia/Pacific With 2.8 Million Visitors<p><i>To tweet this release and related images, copy and paste</i><i> </i><b><i><u><a href="http://bit.ly/KaNZi0" target="_blank">http://bit.ly/KaNZi0</a></u></i> </b><i>to your Twitter handle with the hash tags #MasterCardAP and</i><i> <i>#DestinationCities</i></i></p> <p><b><i>Singapore, 19 June 2012: </i></b>Asia/Pacific cities continued their ascendance as global destinations in 2012, with nearly half of the world’s top 20 cities by visitor arrivals and expenditure heralding from the region, according to the <a href="http://www.masterintelligence.com/upload/325/262/Insights-GlobalDestinationCitiesIndex-S5.pdf"><b>MasterCard Global Destination Cities Index</b></a> released today.</p> <p>This is the second installment of the MasterCard research, which is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world. The MasterCard Index of Global Destination Cities ranks cities in terms of the number of their total international visitor arrivals and the cross-border spending by these same visitors in the destination cities, and gives visitor and passenger growth forecasts for 2012. <i>This Index and the accompanying reports are not based on MasterCard volumes or transactional data.</i></p> <p>The Index projects sustained growth among emerging market cities with the top ten Asia/Pacific destinations expecting a 9.5% growth in visitor arrivals for 2012 and a 15.3% surge in cross-border spending. Singapore<a name="_ftnref1"></a>[1] (4<sup>th</sup>), Hong Kong (6<sup>th</sup>) and Kuala Lumpur (10<sup>th</sup>) feature in the Index’s top ten global cities. To view the Index as an interactive map, please click <b><a href="http://cities.masterintelligence.com/" target="_blank">here</a>.</b></p> <p>Cities in Asia/Pacific once again led the charge globally with eight of the top 20 cities by international arrivals, with Bangkok ranked third globally with projected visitors to top 12.2 million visitors this year. Singapore was in fourth rank with 11.8 million visitors, with Hong Kong sixth with 11.1 million visitors, and Kuala Lumpur ranked 10<sup>th</sup> with 8.1 million visitors expected.&nbsp;</p> <p>In terms of the top Asia/Pacific Destination Cities bv International Visitors in 2012, Jakarta is ranked tenth, with 2.8 million visitors. Bangkok leads the rankings followed by Singapore and Hong Kong. &nbsp;</p> <p>The region also ranked highly on visitor spending with Bangkok ranked third globally with US$19.3 billion expected to be spent by inbound passengers in 2012, a 16.6% jump from last year. Singapore leapt two places to fifth overall with US$12.7 billion, up 12.7% on last year. Seoul moved into the top ten with US$10.6 billion in cross-border spend, an increase of 16.2%, while Tokyo, still recovering from the triple disasters of 2011 moved up four places to 14<sup>th</sup>, is officially the world’s third-fastest growing market (24.2%) in terms of cross-border spending.</p> <p>In terms of growth in visitor numbers six out of the top 20 fastest growing cities in the Index were from Asia/Pacific with Tokyo second globally behind Rio de Janeiro (28.6%) with a 21.5% growth in visitor arrivals. Taipei and <a href="http://www.pricelessbeijing.com/" target="_blank"><b>Beijing</b></a> also featured in both the top ten growth cities by visitor arrivals and cross-border spending.</p> <p>“Asia’s destination cities continue their rise, expecting a significant upward trend in visitor arrivals and cross-border spend—most of them on the back of large double digit growth,” observed<b> <a href="http://newsroom.mastercard.com/people/dyuwa/" target="_blank">Dr. Yuwa Hedrick-Wong</a></b>, global economic advisor, MasterCard Worldwide.</p> <p><b><a href="http://www.mastercard.co.uk/priceless-cities/london/" target="_blank">London</a> </b>once again topped the world’s cities by visitor numbers with 16.9 million inbound passengers expected in 2012, ahead of Paris in second place with 16 million inbound passengers expected. &nbsp; &nbsp;</p> <p>London also ranked first on cross-border expenditure, ahead of New York in second place, with estimated expenditures in these cities for 2012 amounting to US$21.1 billion and US$19.4 billion respectively.</p> <p>While cities in Europe and the US still ranked highly in the MasterCard Global Destination Cities Index, Dr. Hedrick-Wong said that the number of emerging market cities featuring in the Index showed Asia’s growing role in the global economy.</p> <p>“The leading Asian cities are some of the most sought after destinations for visitors from all over the world, and the Index indicates that they will continue to thrive into 2012,” he said.</p> <p>“Another interesting trend that we observe is a rise in cashless payments with many international travelers opting to do electronic transactions rather than using cash. The trend is a response to an increasing demand for safe, simple and smart payments, and highlights the rising importance of cashless commerce for both business and leisure travel,” Dr. Hedrick-Wong concluded.</p> <p></p> <p></p> <p></p> <p>[1] City rankings from the 2011 MasterCard Index of Global Destination Cities are altered retrospectively as updates in data become available.</p> <p></p> <p></p> <p></p> The World’s Top 20 Fastest Growing Destination Cities by Visitor Numbers<table border="0" cellspacing="0" cellpadding="0" width="409"> <tbody><tr><th class="table-description"><b>Destination City</b></th> <th class="table-description"><b>2012 Growth Rate</b></th> <th class="table-description"><b>Rank</b></th> </tr><tr><td>Rio de Janeiro</td> <td>28.6%</td> <td>1</td> </tr><tr><td>Tokyo</td> <td>21.5%</td> <td>2</td> </tr><tr><td>Quito</td> <td>18.8%</td> <td>3</td> </tr><tr><td>Abu Dhabi</td> <td>17.9%</td> <td>4</td> </tr><tr><td>Tunis</td> <td>17.7%</td> <td>5</td> </tr><tr><td>Dubai</td> <td>15.3%</td> <td>6</td> </tr><tr><td>Taipei</td> <td>15.1%</td> <td>7</td> </tr><tr><td>Istanbul</td> <td>14.7%</td> <td>8</td> </tr><tr><td>Beijing</td> <td>14.7%</td> <td>8</td> </tr><tr><td>Bogota</td> <td>12.6%</td> <td>10</td> </tr><tr><td>Lima</td> <td>11.7%</td> <td>11</td> </tr><tr><td>Riyadh</td> <td>10.4%</td> <td>12</td> </tr><tr><td>Nairobi</td> <td>10.0%</td> <td>13</td> </tr><tr><td>Singapore</td> <td>9.9%</td> <td>14</td> </tr><tr><td>Seoul</td> <td>9.8%</td> <td>15</td> </tr><tr><td>Cairo</td> <td>8.3%</td> <td>16</td> </tr><tr><td>Shanghai</td> <td>8.2%</td> <td>17</td> </tr><tr><td>Toronto</td> <td>7.6%</td> <td>18</td> </tr><tr><td>Washington</td> <td>7.2%</td> <td>19</td> </tr><tr><td>Caracas</td> <td>7.0%</td> <td>20</td> </tr></tbody></table> Asia/Pacific Top 10 Destination Cities by International Visitor Spend (2012)<table border="0" cellspacing="0" cellpadding="0" width="431"> <tbody><tr><th class="table-description" rowspan="2"><b>Rank</b></th> <th class="table-description" rowspan="2" valign="top"><b>Destination City</b></th> <th class="table-description" rowspan="2"><b>Market</b></th> <th class="table-description" colspan="3"><b>Visitor Spend</b> <b>(US$ Billion)</b></th> <th class="table-description" rowspan="2"><b>% Growth</b> <b>2011 &amp; 2012</b></th> <th class="table-description" rowspan="2"><b>2012 Visitors</b> <b>(Millions)*</b></th> </tr><tr><th class="table-description"><b>2010</b></th> <th class="table-description"><b>2011</b></th> <th class="table-description"><b>2012</b></th> </tr><tr><td><b>1</b></td> <td>Bangkok</td> <td>Thailand</td> <td>$11.1</td> <td>$16.6</td> <td>$19.3</td> <td>16.6%</td> <td>12.2</td> </tr><tr><td><b>2</b></td> <td>Singapore</td> <td>Singapore</td> <td>$9.0</td> <td>$11.3</td> <td>$12.7</td> <td>12.7%</td> <td>11.8</td> </tr><tr><td><b>3</b></td> <td>Sydney</td> <td>Australia</td> <td>$9.2</td> <td>$10.1</td> <td>$11.0</td> <td>9.7%</td> <td>2.5</td> </tr><tr><td><b>4</b></td> <td>Seoul</td> <td>South Korea</td> <td>$7.7</td> <td>$9.1</td> <td>$10.6</td> <td>16.2%</td> <td>8.0</td> </tr><tr><td><b>5</b></td> <td>Taipei</td> <td>Taiwan</td> <td>$6.1</td> <td>$8.7</td> <td>$10.5</td> <td>20.5%</td> <td>5.4</td> </tr><tr><td><b>6</b></td> <td>Tokyo</td> <td>Japan</td> <td>$10.2</td> <td>$8.0</td> <td>$9.9</td> <td>24.2%</td> <td>4.3</td> </tr><tr><td><b>7</b></td> <td>Hong Kong</td> <td>(SAR) China</td> <td>$7.3</td> <td>$8.6</td> <td>$9.5</td> <td>9.5%</td> <td>11.1</td> </tr><tr><td><b>8</b></td> <td>Shanghai</td> <td>China</td> <td>$5.6</td> <td>$7.3</td> <td>$8.3</td> <td>12.6%</td> <td>7.5</td> </tr><tr><td><b>9</b></td> <td>Beijing</td> <td>China</td> <td>$4.2</td> <td>$5.5</td> <td>$6.5</td> <td>19.2%</td> <td>6.2</td> </tr><tr><td><b>10</b></td> <td>Kuala Lumpur</td> <td>Malaysia</td> <td>$4.7</td> <td>$5.6</td> <td>$6.4</td> <td>13.7%</td> <td>8.1</td> </tr></tbody></table> <p><i>*Excludes passengers returning to arrival country and includes visitors on non-stop flights only</i><i></i></p> <p></p> Asia/Pacific Top 10 Destination Cities by International Visitors (2012)<table border="1" cellspacing="0" cellpadding="0"> <tbody><tr><th class="table-description"><b>Rank</b></th> <th class="table-description"><b>Destination City</b></th> <th class="table-description"><b>2012 Visitors</b></th> </tr><tr><td><b>1</b></td> <td>Bangkok</td> <td>12.2 mn</td> </tr><tr><td><b>2</b></td> <td>Singapore</td> <td>11.8 mn</td> </tr><tr><td><b>3</b></td> <td>Hong Kong</td> <td>11.1 mn</td> </tr><tr><td><b>4</b></td> <td>Kuala Lumpur</td> <td>8.1 mn</td> </tr><tr><td><b>5</b></td> <td>Seoul</td> <td>8.0 mn</td> </tr><tr><td><b>6</b></td> <td>Shanghai</td> <td>7.5 mn</td> </tr><tr><td><b>7</b></td> <td>Beijing</td> <td>6.2 mn</td> </tr><tr><td><b>8</b></td> <td>Taipei</td> <td>5.4 mn</td> </tr><tr><td><b>9</b></td> <td>Tokyo</td> <td>4.3 mn</td> </tr><tr><td><b>10</b></td> <td>Jakarta</td> <td>2.8 mn</td> </tr></tbody></table> Methodology<p>The MasterCard Worldwide Index of Global Destination Cities is compiled using international flight and flight capacity information purchased from OAG Global, a provider of international aviation data. Flight schedules are also used for calculating flight frequency between pairs of cities.&nbsp; Airlines also publish on a regular basis their historical load factor, and advance flight schedules, which are then used to estimate the actual outbound passenger departures, and for forecasting outbound passenger departures in the coming year.</p> <p>On any given flight there are visitors from the departure country, returning residents of the destination city after visiting the departure country, and a third group: non-residents connecting through the departure country to the destination city on their way to a second destination city. This group can be a low proportion of the passengers for typically non-hub cities, but very high for destination cities that are “hubs” such as Singapore, Amsterdam, and Frankfurt.</p> <p>On a country level, the UN Database of “Trade in Service” in the “Travel Component” provides estimates of how much each year residents spend abroad (air fare paid in home country not included).&nbsp; An algorithm is applied to this total outbound expenditure and estimated total number of outbound passengers to derive an estimate of average per outbound passenger’s expenditure overseas.&nbsp;</p> <p>A margin of error is also unavoidable in such estimates, as not all outbound trips are of equal length, and the cost of living varies a great between arrival cities such that even if each trip of equal length, expenditure per passenger between different arrival cities would still be very different.&nbsp;This margin of error is reduced significantly by imposing a minimum of expenditures in the algorithm, after a number of iterative testing (US$500 per trip for bordering arrival country and US$700 per trip for non-bordering arrival country).&nbsp;</p> <p>Please note: the city rankings from the 2011 MasterCard Index of Global Destination Cities are altered retrospectively as updates in data become available.</p> <p></p> About Dr Yuwa Hedrick-Wong, Ph.D., Global Economic Advisor, MasterCard Worldwide<p>Dr Yuwa Hedrick-Wong is a business strategist and economist with 25 years of experience gained in over thirty countries. He was appointed Global Economic Advisor to MasterCard Worldwide in 2009.&nbsp; Prior to this role, he was Economic Advisor to MasterCard in Asia/Pacific, a position he held since 2001. As economic advisor, he chairs a MasterCard Knowledge Panel of leading economists, policy analysts, academics and business strategists for regular exchange and knowledge sharing.&nbsp; In 2007 he was appointed Advisor at Southern Capital Group, a private equity fund; and in 2008 he was appointed to the Investment Council of ICICI, India’s largest private bank.</p> <p>Yuwa is also currently the HSBC Visiting Professor of International Business at the University of British Columbia, Vancouver, B.C. Canada, and is a frequent speaker at numerous international high-profile conferences. &nbsp;</p> <p></p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Contacts:<p>Julianty Moeljono<br> MasterCard Worldwide,<br> <a href="mailto:julianty_moeljono@mastercard.com">julianty_moeljono@mastercard.com</a> &nbsp;</p> <p>Thoriq Husein<br> Weber Shandwick,<br> <a href="mailto:thusein@webershandwick.com">thusein@webershandwick.com</a></p> <p></p> This is the second installment of the MasterCard research, which is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/asiapacific-cities-rank-among-worlds-most-connected-destinations-mastercard-index2012-06-18T16:00:00.000Z2012-06-18T16:00:00.000ZHong Kong Tops Asia/Pacific Region on Investment Knowledge: MasterCard Survey Gloria Lai, Matthew Liu Hong Kong Tops Asia/Pacific Region on Investment Knowledge: MasterCard Survey <p><i>Consumers in Hong Kong amongst the savviest in Asia/Pacific when it comes to financial literacy and money management</i></p> <p><b><i>Hong Kong, 2 August 2012</i></b>: Hongkongers are the most financially savvy in terms of investment knowledge and the city ranked third in terms of overall level of financial literacy, according to <a href="http://newsroom.mastercard.com/asia-pacific/" target="_blank"><b>MasterCard</b></a> research.</p> <p>The MasterCard Worldwide Index of Financial Literacy is based on a survey conducted between 24 April 2012 and 10 June 2012 with 6,904 respondents aged 18 to 64 in 14 Asia/Pacific<sup>[<a href="#1">1</a>]</sup> countries. This is the third survey of Financial Literacy conducted since 2010. The survey polled consumers on three aspects of financial literacy including their basic money management skills, investment knowledge and financial planning to determine the level of basic money management skills in terms of budgeting, savings, and responsibility of credit usage. <i>The survey and its accompanying reports do not represent MasterCard financial performance.</i></p> <p>In terms of overall financial literacy, Hong Kong scored 71 index points – alongside Australia and Singapore – following closely behind Taiwan and New Zealand who tied for first place with 73 index points each. Notably, Hong Kong jumped up from sixth position when the survey was first conducted in 2010.</p> <p></p> <p>Hong Kong (68%) continues to top the investment knowledge component of the research, followed by Taiwan (67%) and China (65%). The survey showed that respondents in Hong Kong have a particularly strong understanding of bank statements, and scored above the regional average for monitoring investments (82% vs. regional average of 67%), and working out the suitability of financial products (80% vs. regional average of 78%).</p> <p></p> <p>Hong Kong also moved up from fourth to third rank (72%) when asked about basic money management skills such as day-to-day budgeting, keeping up with bills, credit commitments and setting money aside for big purchases, just behind New Zealand (77%) and Australia (75%). However, on the financial planning front, Hong Kong ranked eleventh, scoring noticeably lower than most of the Asia/Pacific markets (72% vs. regional average of 76%).&nbsp;</p> <p></p> <p>“The MasterCard Worldwide Index of Financial Literacy has provided us with fresh insights into Hong Kongers aptitude for, and knowledge of, managing their finances,” said Jeroen van Son, head of Hong Kong and Macau, MasterCard Worldwide. “It is clear from the findings that people in Hong Kong possess strong investment skills and knowledge, reinforcing Hong Kong as an international finance hub. Notably, we are also seeing women in Hong Kong demonstrating strong money management skills and this is a very encouraging sign as there is a compelling need for women to be more capable of managing their finances in today’s society.”</p> <p></p> <p></p> <p></p> <p><i><b>[<a name="1"></a>1]</b></i><i> </i><i>Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam</i></p> <p></p> <p></p> <p></p> Greater China Highlights<ul> <li>In terms of overall financial literacy, Taiwan tied for first place with New Zealand, jumping from fifth rank in 2010.<b></b></li> <li>Taiwan performed well in a wide range of categories, coming in first place in the financial planning component of the research, in their understanding of unsecured loans, the need for emergency savings and insurance, early financial planning, as well as their understanding of the concept of inflation.</li> <li>China, despite its overall improvement in financial literacy, still ranked low when compared with other Asia/Pacific markets, coming in at 12<sup>th</sup> place and scoring three points below the regional average of 67 index points.</li> <li>Overall, the Index demonstrated higher levels of financial literacy amongst the above-average income earners, and those who held managerial positions, among the three Greater China markets.&nbsp;</li> </ul> <p></p> MasterCard Worldwide Index of Financial Literacy<table border="0" cellspacing="0" cellpadding="0" width="427"> <tbody><tr><th class="table-description" colspan="2" rowspan="3"><b>Ranking</b></th> <th class="table-description" colspan="4"><b>Scores (%) </b></th> </tr><tr><th class="table-description" rowspan="2"><b>Overall Financial Literacy Index</b></th> <th class="table-description" colspan="3"><b>Components of Financial Literacy Index</b></th> </tr><tr><th class="table-description"><b>Basic Money Management</b></th> <th class="table-description"><b>Financial Planning</b></th> <th class="table-description"><b>Investment</b></th> </tr><tr><td width="111" colspan="2" rowspan="2"><b>Asia/Pacific </b></td> <td><b>2012H1</b></td> <td><b>2012H1</b></td> <td><b>2012H1</b></td> <td><b>2012H1</b></td> </tr><tr><td>67</td> <td>65</td> <td>76</td> <td>59</td> </tr><tr><td><b>1</b></td> <td>Taiwan</td> <td>73</td> <td>70</td> <td>83</td> <td>67</td> </tr><tr><td><b>2</b></td> <td>New Zealand</td> <td>73</td> <td>77</td> <td>73</td> <td>62</td> </tr><tr><td><b>3</b></td> <td>Hong Kong</td> <td>71</td> <td>72</td> <td>72</td> <td>68</td> </tr><tr><td><b>4</b></td> <td>Australia</td> <td>71</td> <td>75</td> <td>69</td> <td>64</td> </tr><tr><td><b>5</b></td> <td>Singapore</td> <td>71</td> <td>69</td> <td>80</td> <td>61</td> </tr><tr><td><b>6</b></td> <td>Malaysia</td> <td>68</td> <td>64</td> <td>79</td> <td>60</td> </tr><tr><td><b>7</b></td> <td>Indonesia</td> <td>67</td> <td>65</td> <td>81</td> <td>51</td> </tr><tr><td><b>8</b></td> <td>Vietnam</td> <td>66</td> <td>60</td> <td>82</td> <td>60</td> </tr><tr><td><b>9</b></td> <td>South Korea</td> <td>66</td> <td>61</td> <td>83</td> <td>54</td> </tr><tr><td><b>10</b></td> <td>The Philippines</td> <td>65</td> <td>63</td> <td>73</td> <td>58</td> </tr><tr><td><b>11</b></td> <td>Thailand</td> <td>65</td> <td>60</td> <td>77</td> <td>58</td> </tr><tr><td><b>12</b></td> <td>China</td> <td>64</td> <td>55</td> <td>76</td> <td>65</td> </tr><tr><td><b>13</b></td> <td>India</td> <td>60</td> <td>55</td> <td>72</td> <td>55</td> </tr><tr><td><b>14</b></td> <td>Japan</td> <td>60</td> <td>61</td> <td>69</td> <td>43</td> </tr></tbody></table> Methodology<p>The Index is based on a survey of consumers from 25 markets across APMEA and comprises questions covering three major components:</p> <ul> <li>Basic Money Management (50% weight): To determine the level of basic money management skills in terms of budgeting, savings, and responsibility of credit usage.</li> <li>Financial Planning (30% weight): To assess level of knowledge about financial products, services, and concepts, and ability to plan for long-term financial needs.</li> <li>Investment (20% weight): To determine basic understanding of the various risks associated with investment, different investment products and skills required.</li> </ul> <p></p> <p>A Financial Literacy Index Score for each market was calculated out of the weighted sum of the 3 components.</p> <p></p> <p>Regional Aggregates are calculated via the average of the individual country components before applying the weights described above.</p> <p>Interviews for the MasterCard Worldwide Financial Literacy Index were conducted via internet surveys, personal, telephone and Computer Aided Telephone interviews, with the questionnaire translated to the local language wherever appropriate and necessary.</p> <p></p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Contacts:<p>Gloria Lai<br> (852) 2533 9983,<br> <a href="mailto:glai@webershandwick.com">glai@webershandwick.com</a></p> <p></p> <p>Matthew Liu<br> (852) 2533 9927,<br> <a href="mailto:mliu@webershandwick.com">mliu@webershandwick.com</a></p> <p><i><p></p> </i></p> <p></p> The MasterCard Worldwide Index of Financial Literacy is based on a survey conducted between 24 April 2012 and 10 June 2012 with 6904 respondents aged 18 – 64 in 14 Asia/Pacific countries. This is the 3rd survey of Financial Literacy conducted since 2010http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/hong-kong-tops-asiapacific-region-on-investment-knowledge-mastercard-survey2012-08-01T16:00:00.000Z2012-08-01T16:00:00.000ZWomen in India are Closing the Gender Gap on Financial Literacy: MasterCard Survey Neha Singhvi, Vani KhuranaResearch on Day-to-day Financial Planning Led by Mature Markets; Women in Emerging Markets Fare Better than Men on Basic Money Management<p><b><i>India 1 July 2012</i></b> – People in mature markets may prove to be better financial planners overall but it is women in emerging markets who remain dominant when it comes to basic money management, according to <b><a href="http://newsroom.mastercard.com/asia-pacific/" target="_blank">MasterCard</a>&nbsp;</b>research.</p> <p>The MasterCard Worldwide Index of Financial Literacy is based on a survey conducted between 24 April 2012 and 10 June 2012 with 6904 respondents aged 18 – 64 in 14 Asia/Pacific<sup>[<a href="#1">1</a>]</sup> countries. This is the 3rd survey of Financial Literacy conducted since 2010. The survey polled consumers on three aspects of financial literacy including their basic money management skills, investment knowledge and financial planning to determine the level of basic money management skills in terms of budgeting, savings, and responsibility of credit usage. <i>The survey and its accompanying reports do not represent MasterCard financial performance.</i></p> <p></p> <p>In terms of overall financial literacy, Taiwan and New Zealand tied for first place with a score of 73 index points each, with Taiwan jumping up from 5<sup>th</sup> rank in 2010. Following close behind with 71 index points each are Hong Kong, Australia and Singapore. Notably, Hong Kong jumped up from 6<sup>th</sup> position when the survey was conducted in 2010. Thailand, first in the region two years ago, fell 10 rankings to 11<sup>th</sup> in 2012 with 65 index points. China and India were ranked the lowest in the basic money management index scoring 55 index points each.</p> <p></p> <p>Women showed slightly better scores than men&nbsp; in Asia/Pacific’s emerging markets with Philippines leading the region with financial literacy scores that were 9% better than men’s, followed by Vietnam (6%) and Malaysia (5%).</p> <p></p> <p><b><a href="http://newsroom.mastercard.com/people/t-v-seshadri/" target="_blank">Mr. T.V. Sesha</a><a href="http://newsroom.mastercard.com/people/t-v-seshadri/" target="_blank">dri</a>,</b> Division President, South Asia, said: “The index has provided fresh insights into the aptitude and knowledge of managing finances for women in India. It is encouraging to see that women are at par with men when it comes to financial literacy, but there is still a lot of work to be done to improve levels of financial literacy across the board. As an organization <b><a href="http://newsroom.mastercard.com/2012/07/17/empowering-women-and-improving-lives-in-india-through-financial-inclusion/#comments" target="_blank">committed to the empowerment of women in our communities</a>,</b> MasterCard will continue to work towards raising levels of financial literacy in the region, enabling women to earn a livelihood and better the lives of their family and the community they live in.”</p> <p>As part of its commitment to economic empowerment for individuals, MasterCard recently pledged INR 2,500,000 to the <a href="http://www.sewa.org/" target="_blank"><b>Self Employed Women’s Association (SEWA)</b></a>, an organization that helps women in India secure employment opportunities, empowering them to self-reliance with supportive services. The financial aid helped fund the set-up of SEWA’s <b><a href="http://newsroom.mastercard.com/press-releases/mastercard-and-sewa-enable-womens-empowerment-in-india/" target="_blank">seventh Rural Urban Development Initiative (RUDI) Processing Centre</a> </b>at Bodeli, Gujarat. The centre will benefit approximately 2000 farmers and 400 SEWA members. Under this program supported by MasterCard, SEWA members will provide necessary training to empower the centre’s workforce with necessary skill sets as per the needs and demands of the market. As more women are trained to run the centre, they will become entrepreneurs, retailing in the neighboring areas, thereby sustaining the business activities of the centre.</p> <p>MasterCard recently also tied up with Literacy India to help 705 women from 16 centres to upgrade their skills in modern design and advanced finishing techniques. This works to support and encourage women to transform themselves into entrepreneurs and increase their earning power.</p> <p>The overall results of the survey for Asia Pacific also provided some interesting highlights. New Zealanders (77%) fared the best when asked about basic money management skills such as day-to-day budgeting, keeping up with bills, credit commitments and setting money aside for big purchases, followed by Australia in 2<sup>nd</sup> (75%) and Hong Kong (72%) moving up one spot from 4<sup>th</sup> in 2010 to 3<sup>rd</sup> in 2012.</p> <p></p> <p>Hong Kong (68%), Taiwan (67%) and China (65%) topped the investment component of the research. More respondents in these markets understood their bank statements and complex investment concepts such as diversification and inflation.</p> <p></p> <p>Koreans proved to have the region’s most improved scores for financial planning (83%) up 12 places from the 2010 survey. Survey respondents from Taiwan (83%) and Vietnam (82%) also saved more regularly and were better prepared than their regional counterparts when it came to retirement preparations and emergency savings.</p> <p></p> <p>In mature markets, respondents over 30 years of age appeared to score higher in financial literacy compared to their counterparts under the age of 30. This was especially seen in markets like New Zealand (76% vs. 65%), Australia (74% vs. 64%) and Taiwan (74% vs. 70%) where respondents over 30 years old were clearly leading the pack.</p> <p></p> <p></p> <p></p> <p><i><b>[1<a name="1"></a>] </b>Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietna</i>m</p> <p></p> <p></p> <p></p> Methodology<p>The Index is based on a survey of consumers from 25 markets across APMEA and comprises questions covering three major components:</p> <ul> <li>Basic Money Management (50% weight): To determine the level of basic money management skills in terms of budgeting, savings, and responsibility of credit usage.</li> <li>Financial Planning (30% weight): To assess level of knowledge about financial products, services, and concepts, and ability to plan for long-term financial needs.</li> <li>Investment (20% weight): To determine basic understanding of the various risks associated with investment, different investment products and skills required.</li> </ul> <p></p> <p>A Financial Literacy Index Score for each market was calculated out of the weighted sum of the 3 components.</p> <p></p> <p>Regional Aggregates are calculated via the average of the individual country components before applying the weights described above.</p> <p>Interviews for the MasterCard Worldwide Financial Literacy Index were conducted via internet surveys, personal, telephone and Computer Aided Telephone interviews, with the questionnaire translated to the local language wherever appropriate and necessary.</p> <p></p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Contacts:<p>Neha Singhvi,<br> Corporate Voice Weber Shandwick Pvt. Ltd.,<br> <a href="mailto:nsinghvi@corvoshandwick.co.in" target="_blank">nsinghvi@corvoshandwick.co.in</a>,<br> +91 - 9650033899</p> <p>Vani Khurana,<br> Corporate Voice Weber Shandwick Pvt. Ltd.,<br> <a href="mailto:vanikhurana@corvoshandwick.co.in" target="_blank">vanikhurana@corvoshandwick.co.in</a>,<br> +91- 9810947602</p> <p></p> The MasterCard Worldwide Index of Financial Literacy is based on a survey conducted between 24 April 2012 and 10 June 2012 with 6904 respondents aged 18 – 64 in 14 Asia/Pacific countries. This is the 3rd survey of Financial Literacy conducted since 2010.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/women-in-india-are-closing-the-gender-gap-on-financial-literacy-mastercard-survey2012-06-30T16:00:00.000Z2012-06-30T16:00:00.000ZSingapore Ranks Second in Asia/Pacific Region for Financial Literacy: MasterCard Survey Wendy Toh, Joey PhuaResearch on Day-to-day Financial Planning Led by Mature Markets; Women in Emerging Markets Fare Better than Men on Basic Money Management<p><b><i>Singapore, 24 July 2012</i></b> – People in mature markets may prove to be better financial planners overall but it is women in emerging markets who remain dominant when it comes to basic money management, according to<b>&nbsp;<a href="http://newsroom.mastercard.com/asia-pacific/" target="_blank">MasterCard</a></b>&nbsp;research.</p> <p>The MasterCard Worldwide Index of Financial Literacy is based on a survey conducted between 24 April 2012 and 10 June 2012 with 6904 respondents aged 18 – 64 in 14 Asia/Pacific<sup>[<a href="#1">1</a>]</sup> countries. This is the 3rd survey of Financial Literacy conducted since 2010. The survey polled consumers on three aspects of financial literacy including their basic money management skills, investment knowledge and financial planning to determine the level of basic money management skills in terms of budgeting, savings, and responsibility of credit usage. <i>The survey and its accompanying reports do not represent MasterCard financial performance.</i></p> <p></p> <p>In terms of overall financial literacy, Taiwan and New Zealand tied for first place with a score of 73 index points each, with Taiwan jumping up from 5<sup>th</sup> rank in 2010. Following close behind with 71 index points each are Singapore, Hong Kong, and Australia. Thailand, first in the region two years ago, fell 10 rankings to 11<sup>th</sup> in 2012 with 65 index points. Japan and India ranked at the bottom of the financial literacy rankings with 60 index points each.</p> <p></p> <p>New Zealanders (77%) fared the best when asked about basic money management skills such as day-to-day budgeting, keeping up with bills, credit commitments and setting money aside for big purchases, followed by Australia in 2<sup>nd</sup> (75%) and Hong Kong (72%) moving up one spot from 4<sup>th</sup> in 2010 to 3<sup>rd</sup> in 2012. Singapore moves in at 5<sup>th</sup> place (69%).</p> <p></p> <p>Hong Kong (68%), Taiwan (67%) and China (65%) topped the investment component of the research. Singapore is placed in 6<sup>th</sup> position, up two notches from 8<sup>th</sup> in 2010. More respondents in these markets understood their bank statements and complex investment concepts such as diversification and inflation.</p> <p></p> <p>Women showed slightly better scores than men&nbsp; in Asia/Pacific’s emerging markets with Philippines leading the region with financial literacy scores that were 9% better than men’s, followed by Vietnam (6%) and Malaysia (5%).</p> <p></p> <p>Koreans proved to have the region’s most improved scores for financial planning (83%) up 12 places from the 2010 survey. Survey respondents from Taiwan (83%) and Vietnam (82%) also saved more regularly and were better prepared than their regional counterparts when it came to retirement preparations and emergency savings.</p> <p></p> <p>In mature markets, respondents over 30 years of age appeared to score higher in financial literacy compared to their counterparts under the age of 30. This was especially seen in markets like New Zealand (76% vs. 65%), Australia (74% vs. 64%), Taiwan (74% vs. 70%) and Singapore (73% vs. 66%) where respondents over 30 years old were clearly leading the pack.</p> <p></p> <p><a href="http://newsroom.mastercard.com/people/gtan/" target="_blank"><b>Georgette Tan</b></a>, group head, Communications, Asia/Pacific, Middle East &amp; Africa, MasterCard Worldwide, said: “Overall the MasterCard Worldwide Index of Financial Literacy paints a promising picture of financial understanding across the region. Households in Asia/Pacific are clearly taking responsibility when it comes to day-to-day financial planning, and it’s interesting to note that a growing proportion of women are taking the lead in financial matters. Notably, women in emerging markets continue to exhibit strong money management skills and this is a very encouraging sign.</p> <p></p> <p></p> <p></p> <p><i><b>[1<a name="1"></a>] </b>Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam</i></p> <p></p> <p></p> <p></p> Methodology<p>The Index is based on a survey of consumers from 25 markets across APMEA and comprises questions covering three major components:</p> <ul> <li>Basic Money Management (50% weight): To determine the level of basic money management skills in terms of budgeting, savings, and responsibility of credit usage.</li> <li>Financial Planning (30% weight): To assess level of knowledge about financial products, services, and concepts, and ability to plan for long-term financial needs.</li> <li>Investment (20% weight): To determine basic understanding of the various risks associated with investment, different investment products and skills required.</li> </ul> <p></p> <p>A Financial Literacy Index Score for each market was calculated out of the weighted sum of the 3 components.</p> <p></p> <p>Regional Aggregates are calculated via the average of the individual country components before applying the weights described above.</p> <p>Interviews for the MasterCard Worldwide Financial Literacy Index were conducted via internet surveys, personal, telephone and Computer Aided Telephone interviews, with the questionnaire translated to the local language wherever appropriate and necessary.</p> <p></p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Contacts:<p>Wendy Toh,<br> Weber Shandwick,<br> <a href="mailto:wtoh@webershandwick.com">wtoh@webershandwick.com</a>,<br> +65 6825 8038<b></b></p> <p>Joey Phua,<br> Weber Shandwick,<br> <a href="mailto:jphua@webershandwick.com">jphua@webershandwick.com</a>,<br> +65 6825 8010</p> <p></p> The MasterCard Worldwide Index of Financial Literacy is based on a survey conducted between 24 April 2012 and 10 June 2012 with 6904 respondents aged 18 – 64 in 14 Asia/Pacific countries. This is the 3rd survey of Financial Literacy conducted since 2010.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/singapore-ranks-second-in-asiapacific-region-for-financial-literacy-mastercard-survey2012-07-23T16:00:00.000Z2012-07-23T16:00:00.000ZTaiwan Tops Asia/Pacific Region in Financial Literacy: MasterCard Survey Jonathan SeidmanConsumers in Taiwan Amongst Some of the Savviest in the Asia/Pacific Region When It Comes to Investing and Financial Planning<p><b><i>Taipei, 23 July 2012</i></b> –Taiwan emerged tops in MasterCard’s latest research on financial literacy in the Asia/Pacific region, reflecting respondents’ keen knowledge of financial products, services, and concepts, and ability to plan for their long-term financial needs.</p> <p>In terms of overall financial literacy, the Greater China markets fared very differently, despite all showing improved scores from the last survey conducted in 2010. Taiwan (and New Zealand) led the region with Taiwan jumping from 5<sup>th</sup> place in 2010 to the top spot with a score of 73 index points out of 100, while Hong Kong came in third with 71 index points, up from 6<sup>th</sup> place. China, despite its overall improvement in financial literacy, still ranked low when compared with other Asia/Pacific markets, coming in at 12<sup>th</sup> place, and scoring 3 points below the region’s average of 67 points.</p> <p></p> <p>Taiwan performed exceptionally well in a wide range of categories, coming in first place in&nbsp; the financial planning component of the research, in their understanding of unsecured loans, the need for emergency savings and insurance, early financial planning, as well as their understanding of the concept of inflation. Interestingly, the survey showed that men and women in Taiwan had an equally high level of financial literacy (73%).</p> <p>The MasterCard Worldwide Index of Financial Literacy is based on a survey conducted between 24 April 2012 and 10 June 2012 with 6904 respondents aged 18 – 64 in 14 Asia/Pacific<sup>[<a href="#1">1</a>]</sup> countries. This is the 3rd survey of Financial Literacy conducted since 2010. The survey polled consumers on three aspects of financial literacy including their basic money management skills, investment knowledge and financial planning to determine the level of basic money management skills in terms of budgeting, savings, and responsibility of credit usage. <i>The survey and its accompanying reports do not represent MasterCard financial performance.</i></p> <p></p> <p>Julie Yang, Head of Taiwan, MasterCard Worldwide said, &quot;The results of the latest MasterCard Worldwide Index of Financial Literacy show that Taiwanese are proving increasingly savvy among their counterparts in the APAC region in terms of understanding how money works as well as how to plan their finances effectively. We believe that possessing a solid understanding of finances is essential to securing one's financial future.&quot;</p> <p></p> <p>Other findings of the survey include:</p> <ul> <li>When it comes to Basic Money Management, where respondents were asked about their ability to budget, track expenditure, keep up with bills, save for big purchases and understand unsecured loans, all three Greater China markets improved overall.&nbsp; They also scored above the regional average on their budgeting ability, but differed in their tendency towards saving for big purchases, with Hong Kong scoring the highest (71%), followed by Taiwan, (59%) and China (38%).</li> <li>On the financial planning front, it is clear the Greater China markets are astute financial planners, with Taiwan again topping the region, and both China and Hong Kong showing improved scores. Respondents in Taiwan placed great importance on saving regularly, early financial planning, insurance and emergency savings, scoring higher than the regional average in all areas.&nbsp; While respondents in China met the regional average overall in this category, of least importance to them was the need for financial planning for the non-wealthy (65%) and retirement funds (47%). In these areas, the Chinese scored below the regional average.&nbsp; Hong Kong scored noticeably lower on early financial planning (45% vs. the regional average of 81%) but also much higher on retirement planning (62% vs. regional average of 50%).</li> <li>In terms of investing, scores for both Hong Kong (68%) and China (65%) improved overall with Hong Kong also maintaining its hold on the top spot, while Taiwan’s scores (67%) held steady, and ahead of the regional average (59%).&nbsp;&nbsp; All three markets scored above average for monitoring investments, working out the suitability of financial products, and the concept of inflation while Taiwan respondents, despite improving their score on reading financial statements (64%), still lagged behind the regional average (68%) on that front. Of the three markets, only Taiwan respondents scored above the regional average for their understanding of the concept of diversification.</li> </ul> <p></p> <p></p> <p></p> <p><i><b>[1<a name="1"></a>]</b> Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam</i></p> <p></p> <p></p> <p></p> Financial Literacy across the Asia/Pacific region<p>New Zealanders (77%) fared the best when asked about basic money management skills such as day-to-day budgeting, keeping up with bills, credit commitments and setting money aside for big purchases, followed by Australia in 2<sup>nd</sup> (75%) and Hong Kong (72%) moving up one spot from 4<sup>th</sup> in 2010 to 3<sup>rd</sup> in 2012.</p> <p></p> <p>Koreans proved to have the region’s most improved scores for financial planning (83%) up 12 places from the 2010 survey. Survey respondents from Taiwan (83%) and Vietnam (82%) also saved more regularly and were better prepared than their regional counterparts when it came to retirement preparations and emergency savings.</p> <p></p> <p>In mature markets, respondents over 30 years of age appeared to score higher in financial literacy compared to their counterparts under the age of 30. This was especially seen in markets like New Zealand (76% vs. 65%), Australia (74% vs. 64%) and Taiwan (74% vs. 70%) where respondents over 30 years old were clearly leading the pack.&nbsp;</p> <p></p> MasterCard Worldwide Index of Financial Literacy<table border="0" cellspacing="0" cellpadding="0" width="439"> <tbody><tr><th class="table-description" colspan="2" rowspan="3"><b>Ranking</b></th> <th class="table-description" colspan="8"><b>Scores (%)</b></th> </tr><tr><th class="table-description" colspan="2" rowspan="2"><b>Overall Financial Literacy Index</b></th> <th class="table-description" colspan="6"><b>Components of Financial Literacy Index</b></th> </tr><tr><th class="table-description" colspan="2"><b>Basic Money Management</b></th> <th class="table-description" colspan="2"><b>Financial Planning</b></th> <th class="table-description" colspan="2"><b>Investment</b></th> </tr><tr><td colspan="2" rowspan="2"><b><i>Asia/Pacific</i></b></td> <td><b>2012H1</b></td> <td><b>2010H2</b></td> <td><b>2012H1</b></td> <td><b>2010H2</b></td> <td><b>2012H1</b></td> <td><b>2010H2</b></td> <td><b>2012H1</b></td> <td><b>2010H2</b></td> </tr><tr><td>67</td> <td>67</td> <td>65</td> <td>65</td> <td>76</td> <td>76</td> <td>59</td> <td>61</td> </tr><tr><td><b>1</b></td> <td>New Zealand</td> <td>73</td> <td>74</td> <td>77</td> <td>78</td> <td>73</td> <td>74</td> <td>62</td> <td>64</td> </tr><tr><td><b>2</b></td> <td>Taiwan</td> <td>73</td> <td>71</td> <td>70</td> <td>66</td> <td>83</td> <td>83</td> <td>67</td> <td>67</td> </tr><tr><td><b>3</b></td> <td>Australia</td> <td>71</td> <td>72</td> <td>75</td> <td>76</td> <td>69</td> <td>70</td> <td>64</td> <td>65</td> </tr><tr><td><b>4</b></td> <td>Hong Kong</td> <td>71</td> <td>69</td> <td>72</td> <td>71</td> <td>72</td> <td>70</td> <td>68</td> <td>65</td> </tr><tr><td><b>5</b></td> <td>Singapore</td> <td>71</td> <td>73</td> <td>69</td> <td>71</td> <td>80</td> <td>82</td> <td>61</td> <td>61</td> </tr><tr><td><b>6</b></td> <td>Malaysia</td> <td>68</td> <td>67</td> <td>64</td> <td>65</td> <td>79</td> <td>77</td> <td>60</td> <td>59</td> </tr><tr><td><b>7</b></td> <td>Indonesia</td> <td>67</td> <td>64</td> <td>65</td> <td>59</td> <td>81</td> <td>79</td> <td>51</td> <td>57</td> </tr><tr><td><b>8</b></td> <td>Korea</td> <td>66</td> <td>56</td> <td>61</td> <td>50</td> <td>83</td> <td>66</td> <td>54</td> <td>56</td> </tr><tr><td><b>9</b></td> <td>Vietnam</td> <td>66</td> <td>69</td> <td>60</td> <td>62</td> <td>82</td> <td>82</td> <td>60</td> <td>66</td> </tr><tr><td><b>10</b></td> <td>Philippines</td> <td>65</td> <td>69</td> <td>63</td> <td>66</td> <td>73</td> <td>80</td> <td>58</td> <td>60</td> </tr><tr><td><b>11</b></td> <td>Thailand</td> <td>65</td> <td>74</td> <td>60</td> <td>68</td> <td>77</td> <td>87</td> <td>58</td> <td>72</td> </tr><tr><td><b>12</b></td> <td>China</td> <td>64</td> <td>60</td> <td>55</td> <td>53</td> <td>76</td> <td>73</td> <td>65</td> <td>59</td> </tr><tr><td><b>13</b></td> <td>India</td> <td>60</td> <td>63</td> <td>55</td> <td>59</td> <td>72</td> <td>69</td> <td>55</td> <td>63</td> </tr><tr><td><b>14</b></td> <td>Japan</td> <td>60</td> <td>60</td> <td>61</td> <td>61</td> <td>69</td> <td>70</td> <td>43</td> <td>42</td> </tr></tbody></table> About MasterCard Worldwide<p><b><a href="http://www.mastercard.com/index.html" target="_blank">MasterCard</a>&nbsp;</b>(NYSE: MA), <a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b> </b>is a global payments and technology company. It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@mastercardnews</b></a><b>, </b>join the conversation on <b><a href="http://newsroom.mastercard.com/blog/" target="_blank">Cashless Conversations Blog</a></b> and <a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a> for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> <p>For more information on the latest MasterCard activities and promotions, log on to the official MasterCard Weibo site at:&nbsp; <a href="http://weibo.com/mastercardchina" target="_blank"><b>http://weibo.com/mastercardchina</b></a></p> <p></p> Contacts:<p>Jonathan Seidman,<br> (886)2722-5799 Ext.124,<br> <a href="mailto:JSeidman1@webershandwick.com" target="_blank">JSeidman1@webershandwick.com</a></p> The MasterCard Worldwide Index of Financial Literacy is based on a survey conducted between 24 April 2012 and 10 June 2012 with 6904 respondents aged 18 – 64 in 14 Asia/Pacific countries. This is the 3rd survey of Financial Literacy conducted since 2010.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/taiwan-tops-asiapacificregion-in-financial-literacy-mastercard-survey2012-07-22T16:00:00.000Z2012-07-22T16:00:00.000ZJohannesburg Ranked the Second Most Visited City in Africa – MasterCard Index Nicky JamesJohannesburg to attract highest visitor expenditure on the continent<p><b><i>Johannesburg, South Africa, 11 June 2012</i></b> – Johannesburg will be the second most visited destination city in Africa, with a projected 2.5 million visitors expected to enter the city in 2012. This is according to the latest MasterCard Index of Global Destination cities released by MasterCard today.</p> <p>In addition, visitors are projected to spend more while visiting Johannesburg than any other destination city on the continent, with $3.3bn estimated to be injected into the city during 2012, an increase of 8.1% on 2011’s figures.</p> <p>“This is the second installment of this MasterCard Index, which is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world,” said Dries Zietsman, Country Manager, MasterCard Worldwide: South Africa “The Index ranks 132 global cities<sup>[<a href="#1">1</a>]</sup> by their total international visitor arrivals and the cross-border spending by visitors in the destination cities. It also forecasts visitor and passenger growth for 2012.”</p> <p>Thirteen African cities were ranked within the 132 cities including Cairo, Johannesburg, Casablanca, Accra, Nairobi, Beira, Cape Town, Dakar, Durban, Kampala, Lagos, Maputo, and Tunis.</p> <p>Ahead of Johannesburg in terms of visitor numbers, and taking the top position in Africa, is Cairo with 3.3m visitors expected in 2012, while Casablanca, with an anticipated 2.1m visitors, is third.</p> <p>Looking at visitor expenditure in the African cities surveyed for 2012; Cairo takes second place after Johannesburg, with the city expecting to attract $3.0bn in cross border spend followed by Casablanca at $1.9bn.</p> <p>The three cities where most visitors to Johannesburg originate from are London (328,000 people), Frankfurt (196,000 people) and Dubai (166,500 people). Combined, these visitors are expected to inject a $975m into the city’s economy in terms of cross border spend during 2012.</p> <p>In more detail, Londoners are expected to spend $638m during 2012 (an average of $1,945 per person), those from Frankfurt will spend $182m (an average $929 per person) while Dubai visitors will spend $155m (an average of $930 per person).</p> <p>Interestingly, 143,000 visitors are expected to travel to Johannesburg from Paris – however they will spend an anticipated $332m in the city during 2012, a substantial amount compared to visitor numbers and an average of $2,320 per person – the highest average spend per person of all visitors.</p> <p>“The Index also reveals the destination cities where those from Johannesburg are travelling to, and it was found that in most cases they are opting for African destinations before they travel overseas,” said Zietsman “Four of the top five outbound destinations for Johannesburg travellers are within Africa. Windhoek and Nairobi are the top two outbound travel destinations; London comes in third, followed by Harare and Luanda.”</p> <p>In addition to Johannesburg, Durban and Cape Town were also surveyed. The Index reveals that Durban will be the fastest growing city in Africa for both visitor numbers and expenditure and is predicted to be the second fastest growing city of all the 132 cities surveyed worldwide , with a projected 33.3% growth in the number of international visitors and 41.3% growth in visitor expenditure in 2012 – albeit off a low base.</p> <p>Supporting this growth is the fact that <a target="_blank" href="http://www.iol.co.za/news/south-africa/kwazulu-natal/emirates-confirms-durban-route-1.1310762"><b>Emirates Airlines has reaffirmed its confidence in Durban</b></a> as a leading South African tourist destination, by increasing its capacity on its Dubai-Durban route by 30% from June 2012 in direct response to increasing passenger demand on this route from the Middle and Far East, China and Dubai.</p> <p>“Additionally, the <b><a target="_blank" href="http://www.thenewage.co.za/51076-1010-53-Durban_to_flaunt_its_attractions">Durban International Convention Centre</a> </b>provides the largest flat floor, column free exhibition and conferencing space in Africa, attracting many international exhibitors to the city while playing host to some of the largest and most complex conferences and business events in the world over the past fifteen years,” says Zietsman.</p> <p>Looking at Cape Town, the majority of international visitors to the Mother City are from London, with 185,000 visitors expected to spend $361m throughout the year. This is followed by 127,500 travellers from Dubai spending $118m, and 76,000 visitors from Amsterdam spending $68m.</p> <p>In 2011, Tripadvisor, an influential online travel website, named Cape Town as <a target="_blank" href="http://www.iol.co.za/travel/travel-news/cape-town-is-top-holiday-destination-1.1076690"><b>the world’s top holiday destination</b></a>, which led to British Airways using bigger planes on this route to increase capacity, as well as increasing its weekly flight schedule.</p> <p>“Cape Town is popular with many travellers because of the wide-range of experiences it offers visitors, from surfing and sailing, mountain climbing and beaches, to its wine farms and world-renowned fine-dining establishments,” says Zietsman. “Its World Heritage Sites, magnificent natural surrounds and superior shopping opportunities add to its irresistible appeal.</p> <p></p> <p></p> <p></p> <p><a name="1"></a>[1] <i>Asia/Pacific (42); Europe (36); Latin America (19); Middle East &amp; Africa (21); North America (14)</i></p> <p></p> <p></p> <p></p> The world’s top destination cities<p>London topped the world’s cities by visitor numbers globally for the second consecutive year. Its number one ranking is based on a predicted uplift of international visitor numbers by 1.1% to a record 16.9 million. Paris, in second position, expects 16 million inbound passengers. Making up the rest of the top five global destination cities are Bangkok (12.2m visitors); Singapore (11.8m visitors) and Istanbul (11.6m visitors)</p> <p>Surprisingly, no US cities made the top 10 by visitor arrivals, with New York the first city to achieve a ranking at 13<sup>th</sup> spot, with 7.6 million inbound passengers expected.</p> <p>London also ranked first in cross-border expenditure, ahead of New York in second place, with estimated spend in these cities for 2012 amounting to US$21.1 billion and US$19.4 billion respectively. Bangkok, Paris and Singapore make up the rest of the top five with visitor expenditure at $19.3bn, $17.8bn and $12.7 to be spent in 2012 respectively.</p> <p>While cities in Europe and the US still ranked highly on Index, Dr. Yuwa Hedrick-Wong, global economic advisor for MasterCard Worldwide and author of the report, said that the number of emerging market Asian cities featuring in the top 10 global destination cities on the Index showed Asia’s growing role in the global economy.</p> <p>“In addition, cities in Africa are also showing strong growth. Tunis, after the political upheaval in early 2011, is expected to show growth of 19.8% in visitor spend with an increase in visitor numbers of 17.7%. Nairobi also expects double figure growth: a 10% growth in visitor spend is expected off a 16.7% growth in visitor expenditure. Cairo, in spite of ongoing turmoil in Egypt, expects an 8.4% growth in spend off an 8.3% growth in visitor numbers,” explains Hedrick-Wong.</p> <p>“This kind of growth pattern strongly suggests that destination cities in emerging markets in Africa will also continue to grow in importance in the global economy,” he says.</p> <p>“In spite of the ups and downs of the business cycle, the overall pattern is clear: cross border travel by air is a resilient trend that is embraced by a growing number of people across Africa, underpinned by visitors’ robust willingness and capacity to spend,” he concludes.</p> <p></p> Methodology<p>The MasterCard Worldwide Index of Global Destination Cities is compiled using international flight and flight capacity information purchased from OAG Global, a provider of international aviation data. Flight schedules are also used for calculating flight frequency between pairs of cities.&nbsp; Airlines also publish on a regular basis their historical load factor, and advance flight schedules, which are then used to estimate the actual outbound passenger departures, and for forecasting outbound passenger departures in the coming year.</p> <p>On any given flight there are visitors from the departure country, returning residents of the destination city after visiting the departure country, and a third group: non-residents connecting through the departure country to the destination city on their way to a second destination city. This group can be a low proportion of the passengers for typically non-hub cities, but very high for destination cities that are “hubs” such as Singapore, Amsterdam, and Frankfurt.</p> <p>On a country level, the UN Database of “Trade in Service” in the “Travel Component” provides estimates of how much each year residents spend abroad (air fare paid in home country not included).&nbsp; An algorithm is applied to this total outbound expenditure and estimated total number of outbound passengers to derive an estimate of average per outbound passenger’s expenditure overseas.&nbsp;</p> <p>A margin of error is also unavoidable in such estimates, as not all outbound trips are of equal length, and the cost of living varies a great between arrival cities such that even if each trip of equal length, expenditure per passenger between different arrival cities would still be very different.</p> <p>This margin of error is reduced significantly by imposing a minimum of expenditures in the algorithm, after a number of iterative testing (US$500 per trip for bordering arrival country and US$700 per trip for non-bordering arrival country).&nbsp;&nbsp;</p> <p></p> About MasterCard<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>(NYSE: MA), <a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>, is a global payments and technology company. It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>, </b>join the discussion on the <a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a> and <a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a> for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Contacts:<p>MasterCard&nbsp;Media Relations:<br> Nicky James,<br> <a href="mailto:nickyj@tribecapr.co.za" target="_blank"><b>ickyj@tribecapr.co.za</b></a><br> +27 (0)11&nbsp;208 5527</p> This is the second installment of the MasterCard research, which is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/johannesburg-ranked-the-second-most-visited-city-in-africa-mastercard-index2012-06-10T16:00:00.000Z2012-06-10T16:00:00.000ZTaipei Continues Ascent as One of APAC's Leading Tourist Cities: MasterCard Report Jonathan SeidmanThe Taiwan Capitol Also Led Greater China in Cross-Border Spending<p><b><i>Taiwan</i></b><b><i>, </i></b><b><i>14</i></b><b><i> </i></b><b><i>June</i></b><b><i> 2012</i></b> – Taipei continued its ascent among the Asia/Pacific cities listed as top global destinations in 2012, showing significant growth in the areas of both tourist numbers and cross-border spending, according to the MasterCard Global Destination Cities Index released on June 11<sup>th</sup>, 2012. With nearly half of the world’s top 20 cities by visitor arrivals and expenditure heralding from the APAC region, the Taiwan capitol's performance in this year's survey represents a noteworthy achievement.</p> <p>This is the second installment of the MasterCard research, which is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world. The MasterCard Index of Global Destination Cities ranks cities in terms of the number of their total international visitor arrivals and the cross-border spending by these same visitors in the destination cities, and gives visitor and passenger growth forecasts for 2012. <i>This Index and the accompanying reports are not based on MasterCard volumes or transactional data.</i></p> <p>The Index results revealed that Asia/Pacific exhibited the strongest growth in visitor numbers and international spending among all the regions of the world. The top ten Asia/Pacific destinations recorded a 9.5% growth in visitor arrivals for 2012 and a 15.3% surge in cross-border spending. To view the Index as an interactive map, please click <a href="http://cities.masterintelligence.com/"><b>here</b></a>.</p> <p>In 2012, Taipei displayed the second highest growth rates in APAC for both visitor numbers (15.1%) along with cross-border spending (20.5%). Visitor numbers to Taipei in 2012 were anticipated to hit 5.4 million, ranking the city at number 8, ahead of Tokyo and Jakarta.&nbsp;</p> <p>The rise in visits also accompanied a sharp increase in international visitor spending, in which Taipei ranked fifth in APAC with an anticipated $10.5 billion, up from $8.7 billion in 2011, highlighting the city's considerable potential as a standout tourism hub in the region.</p> <p>The MasterCard report attributed the increases to the impact of rising tourist visits from mainland China. Taiwan in 2011 opened tourism to individual Mainland visitors from certain Chinese cities; Mainland visitors previously could only tour the island in strictly controlled travel groups.</p> <p>Taipei's Tourism Bureau has also worked to promote a wide range of local attractions to drive more tourism to the northern Taiwan city, such as lively dragon boat races in Dajia Riverside Park along with Taipei's numerous hot spring hotspots.&nbsp;</p> <p></p> Taipei Ranks no.1 in Greater China in International Visitor Spend<p>Taipei also dominated the Greater China region in terms of international visitor spending, coming in ahead of Hong Kong ($9.5 billion), Shanghai ($8.3 billion), and Beijing ($6.5 billion), respectively. That's despite those cities' significant advantages in terms of their high number of world-famous landmarks and attractions, such as the Forbidden City in China and the World Expo in Shanghai.</p> <p>“The results of the latest MasterCard Global Destinations Cities Index reveal that more travelers are selecting Taipei as their latest tourist destination,&quot; said Julie Yang, head of Taiwan, MasterCard Worldwide. &quot;This points to the city's strong appeal and competitiveness among other cities in Asia/Pacific, the most rapidly growing region in the world for tourism. With exceptional growth in both of these areas, Taipei is poised to receive global recognition as one of the world's leading cities.”&nbsp;</p> <p></p> Asia/Pacific Top 10 Destination Cities by International Visitor Spend (2012)<table border="1" cellspacing="0" cellpadding="0" width="409"> <tbody><tr><th class="table-description" rowspan="2"><b>Rank</b></th> <th class="table-description" rowspan="2"><b>Destination City</b></th> <th class="table-description" rowspan="2"><b>Market</b></th> <th class="table-description" colspan="3"><b>Visitor Spend</b> <b>(US$ Billion)<u></u></b></th> <th class="table-description" rowspan="2"><b>% Growth</b> <b>2011 &amp; 2012</b></th> <th class="table-description" rowspan="2"><b>2012 Visitors</b> <b>(Millions)*</b></th> </tr><tr><th class="table-description"><b>2010</b></th> <th class="table-description"><b>2011</b></th> <th class="table-description"><b>2012</b></th> </tr><tr><td><b>1</b></td> <td>Bangkok</td> <td>Thailand</td> <td>$11.1</td> <td>$16.6</td> <td>$19.3</td> <td>16.6%</td> <td>12.2</td> </tr><tr><td><b>2</b></td> <td>Singapore</td> <td>Singapore</td> <td>$9.0</td> <td>$11.3</td> <td>$12.7</td> <td>12.7%</td> <td>11.8</td> </tr><tr><td><b>3</b></td> <td>Sydney</td> <td>Australia</td> <td>$9.2</td> <td>$10.1</td> <td>$11.0</td> <td>9.7%</td> <td>2.5</td> </tr><tr><td><b>4</b></td> <td>Seoul</td> <td>South Korea</td> <td>$7.7</td> <td>$9.1</td> <td>$10.6</td> <td>16.2%</td> <td>8.0</td> </tr><tr><td><b>5</b></td> <td>Taipei</td> <td>Taiwan</td> <td>$6.1</td> <td>$8.7</td> <td>$10.5</td> <td>20.5%</td> <td>5.4</td> </tr><tr><td><b>6</b></td> <td>Tokyo</td> <td>Japan</td> <td>$10.2</td> <td>$8.0</td> <td>$9.9</td> <td>24.2%</td> <td>4.3</td> </tr><tr><td><b>7</b></td> <td>Hong Kong</td> <td>(SAR) China</td> <td>$7.3</td> <td>$8.6</td> <td>$9.5</td> <td>9.5%</td> <td>11.1</td> </tr><tr><td><b>8</b></td> <td>Shanghai</td> <td>China</td> <td>$5.6</td> <td>$7.3</td> <td>$8.3</td> <td>12.6%</td> <td>7.5</td> </tr><tr><td><b>9</b></td> <td>Beijing</td> <td>China</td> <td>$4.2</td> <td>$5.5</td> <td>$6.5</td> <td>19.2%</td> <td>6.2</td> </tr><tr><td><b>10</b></td> <td>Kuala Lumpur</td> <td>Malaysia</td> <td>$4.7</td> <td>$5.6</td> <td>$6.4</td> <td>13.7%</td> <td>8.1</td> </tr></tbody></table> <p>*Excludes passengers returning to arrival country and includes visitors on non-stop flights only</p> <p></p> Methodology<p>The MasterCard Worldwide Index of Global Destination Cities is compiled using international flight and flight capacity information purchased from OAG Global, a provider of international aviation data. Flight schedules are also used for calculating flight frequency between pairs of cities.&nbsp; Airlines also publish on a regular basis their historical load factor, and advance flight schedules, which are then used to estimate the actual outbound passenger departures, and for forecasting outbound passenger departures in the coming year.</p> <p>On any given flight there are visitors from the departure country, returning residents of the destination city after visiting the departure country, and a third group: non-residents connecting through the departure country to the destination city on their way to a second destination city. This group can be a low proportion of the passengers for typically non-hub cities, but very high for destination cities that are “hubs” such as Singapore, Amsterdam, and Frankfurt.</p> <p>On a country level, the UN Database of “Trade in Service” in the “Travel Component” provides estimates of how much each year residents spend abroad (air fare paid in home country not included).&nbsp; An algorithm is applied to this total outbound expenditure and estimated total number of outbound passengers to derive an estimate of average per outbound passenger’s expenditure overseas.&nbsp;</p> <p>A margin of error is also unavoidable in such estimates, as not all outbound trips are of equal length, and the cost of living varies a great between arrival cities such that even if each trip of equal length, expenditure per passenger between different arrival cities would still be very different.&nbsp;</p> <p>This margin of error is reduced significantly by imposing a minimum of expenditures in the algorithm, after a number of iterative testing (US$500 per trip for bordering arrival country and US$700 per trip for non-bordering arrival country).&nbsp;</p> <p>Please note, the city rankings from the 2011 MasterCard Index of Global Destination Cities are altered retrospectively as updates in data become available.</p> <p></p> About Dr Yuwa Hedrick-Wong, Ph.D., Global Economic Advisor, MasterCard Worldwide<p>Dr Yuwa Hedrick-Wong is a business strategist and economist with 25 years of experience gained in over thirty countries. He was appointed Global Economic Advisor to MasterCard Worldwide in 2009.&nbsp; Prior to this role, he was Economic Advisor to MasterCard in Asia/Pacific, a position he held since 2001. As economic advisor, he chairs a MasterCard Knowledge Panel of leading economists, policy analysts, academics and business strategists for regular exchange and knowledge sharing.&nbsp; In 2007 he was appointed Advisor at Southern Capital Group, a private equity fund; and in 2008 he was appointed to the Investment Council of ICICI, India’s largest private bank. &nbsp;&nbsp;</p> <p>Yuwa is also currently the HSBC Visiting Professor of International Business at the University of British Columbia, Vancouver, B.C. Canada, and is a frequent speaker at numerous international high-profile conferences. &nbsp;</p> <p></p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Contacts:<p>Jonathan Seidman,<br> (886)2722-5799 Ext.124,<br> <a href="mailto:JSeidman1@webershandwick.com"><b>JSeidman1@webershandwick.com</b></a></p> This is the second installment of the MasterCard research, which is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/taipei-continues-ascent-as-one-of-apacs-leading-tourist-cities-mastercard-report2012-06-13T16:00:00.000Z2012-06-13T16:00:00.000ZGreater China Sees Rise in Financial Literacy Levels: MasterCard Survey Huanyu Wu, Tang Fei / Edward GuoConsumers in Greater China Amongst Some of the Savviest in the Asia/Pacific Region When It Comes to Investing and Financial Planning<p><b><i>Beijing, 24 July 2012</i></b> – Greater China markets – Hong Kong (68%), Taiwan (67%) and China (65%) topped the investment component of <a href="http://newsroom.mastercard.com/asia-pacific/" target="_blank"><b>MasterCard</b></a>’s latest research on financial literacy in the Asia/Pacific region. This means that more respondents in these markets understood their bank statements and complex investment concepts such as inflation as compared with the rest of the region. At the same time, China moved up one spot from last year to take eighth place in the area of financial planning, reflecting respondents’ keen knowledge of financial products, services, and concepts, and ability to plan for their long-term financial needs</p> <p>The MasterCard Worldwide Index of Financial Literacy is based on a survey conducted between 24 April 2012 and 10 June 2012 with 6904 respondents aged 18 – 64 in 14 Asia/Pacific[1] countries. This is the 3rd survey of Financial Literacy conducted since 2010. The survey polled consumers on three aspects of financial literacy including their basic money management skills, investment knowledge and financial planning to determine the level of basic money management skills in terms of budgeting, savings, and responsibility of credit usage. <i>The survey and its accompanying reports do not represent MasterCard financial performance.</i></p> <p></p> <p>In terms of overall financial literacy, the Greater China markets fared very differently, despite all showing improved scores from the last survey conducted in 2010.&nbsp; Taiwan (and New Zealand) led the region with Taiwan jumping from 5<sup>th</sup> place in 2010 to the top spot with a score of 73 index points out of 100, while Hong Kong came in third with 71 index points, up from 6<sup>th</sup> place.&nbsp; China, despite its overall improvement in financial literacy, still ranked low when compared with other Asia/Pacific markets, coming in at 12<sup>th</sup> place, and scoring 3 points below the region’s average of 67 <i>points.</i></p> <p></p> <p><a href="http://newsroom.mastercard.com/people/lhai/" target="_blank"><b>Ling Hai</b></a>, Division President, Greater China,<i> MasterCa</i>rd Worldwide, said: “These results paint a hopeful picture of financial understanding across the Greater China markets, with improvements on key components of the survey. Financial literacy is an important part of our daily lives, and necessary in today’s complex financial marketplace.&nbsp; As our urban areas grow in affluence, the knowledge of money management, investments and financial planning becomes increasingly important. At MasterCard, we are deeply committed to helping consumers and our cardholders successfully navigate the financial choices they face.”</p> <p></p> <p>When it comes to Basic Money Management, where respondents were asked about their ability to budget, track expenditure, keep up with bills, save for big purchases and understand unsecured loans, all three Greater China markets improved overall.&nbsp; They also scored above the regional average on their budgeting ability, but differed in their tendency towards saving for big purchases, with Hong Kong scoring the highest (71%), followed by Taiwan, (59%) and China (38%).</p> <p></p> <p>On the financial planning front, it is clear the Greater China markets are astute financial planners, with Taiwan again topping the region, and both China and Hong Kong showing improved scores. Respondents in Taiwan placed great importance on saving regularly, early financial planning, insurance and emergency savings, scoring higher than the regional average in all areas.&nbsp; While respondents in China met the regional average overall in this category, of least importance to them was the need for financial planning for the non-wealthy (65%) and retirement funds (47%). In these areas, the Chinese scored below the regional average.&nbsp; Hong Kong scored noticeably lower on early financial planning (56% vs. the regional average of 81%) but also much higher on retirement planning (62% vs. regional average of 50%).</p> <p>In terms of investing, both Hong Kong (68%) and China (65%) improved overall with Hong Kong also maintaining its hold on the top spot, while Taiwan’s scores (67%) held steady, and ahead of the regional average (59%). All three markets scored above average for monitoring investments, working out the suitability of financial products, and the concept of inflation while Taiwan respondents, despite improving their score on reading financial statements (64%), still lagged behind the regional average (68%) on that front.&nbsp; Of the three markets, only Taiwan respondents scored above the regional average for their understanding of the concept of diversification.</p> <p></p> <p>Overall, the Index demonstrated higher levels of financial literacy amongst the above-average income earners, and those who held managerial positions.</p> <p></p> <p>Unlike most other Asia/Pacific markets, male and female respondents in Greater China display approximately equal financial literacy knowledge.</p> <p></p> <p></p> <p></p> <p>[1] Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam</p> <p></p> <p></p> <p></p> Financial Literacy across the Asia/Pacific<p>New Zealanders (77%) fared the best when asked about basic money management skills such as day-to-day budgeting, keeping up with bills, credit commitments and setting money aside for big purchases, followed by Australia in 2<sup>nd</sup> (75%) and Hong Kong (72%) moving up one spot from 4<sup>th</sup> in 2010 to 3<sup>rd</sup> in 2012.</p> <p></p> <p>Koreans proved to have the region’s most improved scores for financial planning (83%) up 12 places from the 2010 survey. Survey respondents from Taiwan (83%) and Vietnam (82%) also saved more regularly and were better prepared than their regional counterparts when it came to retirement preparations and emergency savings.</p> <p></p> <p>In mature markets, respondents over 30 years of age appeared to score higher in financial literacy compared to their counterparts under the age of 30. This was especially seen in markets like New Zealand (76% vs. 65%), Australia (74% vs. 64%) and Taiwan (74% vs. 70%) where respondents over 30 years old were clearly leading the pack.&nbsp;</p> <p></p> MasterCard Worldwide Index of Financial Literacy<table border="0" cellspacing="0" cellpadding="0" width="439"> <tbody><tr><th class="table-description" colspan="2" rowspan="3"><b>Ranking</b></th> <th class="table-description" colspan="8"><b>Scores (%)</b></th> </tr><tr><th class="table-description" colspan="2" rowspan="2"><b>Overall Financial Literacy Index</b></th> <th class="table-description" colspan="6"><b>Components of Financial Literacy Index</b></th> </tr><tr><th class="table-description" colspan="2"><b>Basic Money Management</b></th> <th class="table-description" colspan="2"><b>Financial Planning</b></th> <th class="table-description" colspan="2"><b>Investment</b></th> </tr><tr><td colspan="2" rowspan="2"><b><i>Asia/Pacific</i></b></td> <td><b>2012H1</b></td> <td><b>2010H2</b></td> <td><b>2012H1</b></td> <td><b>2010H2</b></td> <td><b>2012H1</b></td> <td><b>2010H2</b></td> <td><b>2012H1</b></td> <td><b>2010H2</b></td> </tr><tr><td>67</td> <td>67</td> <td>65</td> <td>65</td> <td>76</td> <td>76</td> <td>59</td> <td>61</td> </tr><tr><td><b>1</b></td> <td>New Zealand</td> <td>73</td> <td>74</td> <td>77</td> <td>78</td> <td>73</td> <td>74</td> <td>62</td> <td>64</td> </tr><tr><td><b>2</b></td> <td>Taiwan</td> <td>73</td> <td>71</td> <td>70</td> <td>66</td> <td>83</td> <td>83</td> <td>67</td> <td>67</td> </tr><tr><td><b>3</b></td> <td>Australia</td> <td>71</td> <td>72</td> <td>75</td> <td>76</td> <td>69</td> <td>70</td> <td>64</td> <td>65</td> </tr><tr><td><b>4</b></td> <td>Hong Kong</td> <td>71</td> <td>69</td> <td>72</td> <td>71</td> <td>72</td> <td>70</td> <td>68</td> <td>65</td> </tr><tr><td><b>5</b></td> <td>Singapore</td> <td>71</td> <td>73</td> <td>69</td> <td>71</td> <td>80</td> <td>82</td> <td>61</td> <td>61</td> </tr><tr><td><b>6</b></td> <td>Malaysia</td> <td>68</td> <td>67</td> <td>64</td> <td>65</td> <td>79</td> <td>77</td> <td>60</td> <td>59</td> </tr><tr><td><b>7</b></td> <td>Indonesia</td> <td>67</td> <td>64</td> <td>65</td> <td>59</td> <td>81</td> <td>79</td> <td>51</td> <td>57</td> </tr><tr><td><b>8</b></td> <td>Korea</td> <td>66</td> <td>56</td> <td>61</td> <td>50</td> <td>83</td> <td>66</td> <td>54</td> <td>56</td> </tr><tr><td><b>9</b></td> <td>Vietnam</td> <td>66</td> <td>69</td> <td>60</td> <td>62</td> <td>82</td> <td>82</td> <td>60</td> <td>66</td> </tr><tr><td><b>10</b></td> <td>Philippines</td> <td>65</td> <td>69</td> <td>63</td> <td>66</td> <td>73</td> <td>80</td> <td>58</td> <td>60</td> </tr><tr><td><b>11</b></td> <td>Thailand</td> <td>65</td> <td>74</td> <td>60</td> <td>68</td> <td>77</td> <td>87</td> <td>58</td> <td>72</td> </tr><tr><td><b>12</b></td> <td>China</td> <td>64</td> <td>60</td> <td>55</td> <td>53</td> <td>76</td> <td>73</td> <td>65</td> <td>59</td> </tr><tr><td><b>13</b></td> <td>India</td> <td>60</td> <td>63</td> <td>55</td> <td>59</td> <td>72</td> <td>69</td> <td>55</td> <td>63</td> </tr><tr><td><b>14</b></td> <td>Japan</td> <td>60</td> <td>60</td> <td>61</td> <td>61</td> <td>69</td> <td>70</td> <td>43</td> <td>42</td> </tr></tbody></table> Methodology<p>The Index is based on a survey of consumers from 25 markets across APMEA and comprises questions covering three major components:</p> <ul> <li>Basic Money Management (50% weight): To determine the level of basic money management skills in terms of budgeting, savings, and responsibility of credit usage.</li> <li>Financial Planning (30% weight): To assess level of knowledge about financial products, services, and concepts, and ability to plan for long-term financial needs.</li> <li>Investment (20% weight): To determine basic understanding of the various risks associated with investment, different investment products and skills required.</li> </ul> <p></p> <p>A Financial Literacy Index Score for each market was calculated out of the weighted sum of the 3 components.</p> <p></p> <p>Regional Aggregates are calculated via the average of the individual country components before applying the weights described above.</p> <p>Interviews for the MasterCard Worldwide Financial Literacy Index were conducted via internet surveys, personal, telephone and Computer Aided Telephone interviews, with the questionnaire translated to the local language wherever appropriate and necessary.</p> <p></p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a> (NYSE: MA), <a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b> </b>is a global payments and technology company. It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@mastercardnews</b></a><b>, </b>join the conversation on <b><a href="http://newsroom.mastercard.com/blog/" target="_blank">Cashless Conversations Blog</a></b> and <a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a> for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> <p>For more information on the latest MasterCard activities and promotions, log on to the official MasterCard Weibo site at:&nbsp; <a href="http://weibo.com/mastercardchina" target="_blank"><b>http://weibo.com/mastercardchina</b></a></p> <p></p> The MasterCard Worldwide Index of Financial Literacy is based on a survey conducted between 24 April 2012 and 10 June 2012 with 6904 respondents aged 18 – 64 in 14 Asia/Pacific countries. This is the 3rd survey of Financial Literacy conducted since 2010.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/greater-china-sees-rise-in-financial-literacy-levels-mastercard-survey2012-07-23T16:00:00.000Z2012-07-23T16:00:00.000ZSingapore Ranks Among World’s Most Popular Destinations: MasterCard Index Joey Phua, Hong Mei Yu, Wendy TohFeatured in Index’s Top Ten Global Destinations; Visitor arrivals and spending up by 9.9% and 12.7% respectively<p><b><i>Singapore, 18 June 2012: </i></b>Asia/Pacific cities continued their ascendance as global destinations in 2012 with nearly half of the world’s top 20 cities by visitor arrivals and expenditure heralding from the region; and Singapore proves to be prominent on the international traveler’s list, according to the <a href="http://masterintelligence-stage-web.xm-apac.com/content/intelligence/en/research/reports/2012/mastercard-global-destination-cities-index.html"><b>MasterCard Global Destination Cities</b></a> Index released today.</p> <p>Singapore ranks among the top ten global destinations by visitor arrivals and cross-border spending. Among the world’s fastest growing destination cities, Singapore (apart from Tokyo that has recovered strongly following the 2011 disasters) is the highest ranking destination city in a developed market.</p> <p>This year’s Global Destinations Cities Index is the second installment of the MasterCard research, which is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world. The MasterCard Index of Global Destination Cities ranks cities in terms of the number of their total international visitor arrivals and the cross-border spending by these same visitors in the destination cities, and gives visitor and passenger growth forecasts for 2012. <i>This Index and the</i><i>&nbsp;accompanying reports are not based on MasterCard volumes or transactional data.</i></p> <p>The Index results reveal a sustained growth among emerging market cities with the top ten Asia/Pacific destinations recording a 9.5% growth in visitor arrivals for 2012 and a 15.3% surge in cross-border spending. Singapore<sup>[<a href="#1">1</a>]</sup> (4<sup>th</sup>), Hong Kong (6<sup>th</sup>) and Kuala Lumpur (10<sup>th</sup>) feature in the Index’s top ten global cities. To view the Index as an interactive map, please click<b> <a href="http://cities.masterintelligence.com/">here</a>.</b></p> <p>Cities in Asia/Pacific once again led the charge globally with eight of the top 20 cities by international arrivals, with Bangkok ranked third globally with projected visitors to top 12.2 million visitors this year. Singapore was in fourth rank with 11.8 million visitors, with Hong Kong sixth with 11.1 million visitors, and Kuala Lumpur ranked 10<sup>th&nbsp;</sup>with 8.1 million visitors expected.&nbsp;</p> <p>The region also ranked highly on visitor spending with Bangkok ranked third globally with US$19.3 billion expected to be spent by inbound passengers in 2012, a 16.6% jump from last year. Singapore leapt two places to fifth overall with US$12.7 billion, up 12.7% on last year. Seoul moved into the top ten with US$10.6 billion in cross-border spend, an increase of 16.2%, while Tokyo, still recovering from the triple disasters of 2011 moved up four places to 14<sup>th</sup>, is officially the world’s third-fastest growing market (24.2%) in terms of cross-border spending.</p> <p>In terms of growth in visitor numbers six out of the top 20 fastest growing cities in the Index were from Asia/Pacific. Apart from Tokyo, Singapore with a growth rate of 9.9% is the highest ranking destination city in a developed market.&nbsp;</p> <p>The largest number of travelers to Singapore comes from Jakarta, Hong Kong, London, and Manila (Table 1). Travelers to Singapore from London tend to be the biggest spenders (Table 2).</p> <p style="text-align: center;">Table 1: Top 3 markets for inbound visitors to Singapore by origin cities</p> <table border="1" cellspacing="0" cellpadding="0"> <tbody><tr><th class="table-description" style="text-align: center;"><b>Rank</b></th> <th class="table-description" style="text-align: center;"><b>City</b></th> <th class="table-description" style="text-align: center;"><b>Visitor numbers</b></th> </tr><tr><td style="text-align: center;"><b>1</b></td> <td style="text-align: center;">Jakarta</td> <td style="text-align: center;">1005,000</td> </tr><tr><td style="text-align: center;"><b>2</b></td> <td style="text-align: center;">Hong Kong</td> <td style="text-align: center;">690,000</td> </tr><tr><td style="text-align: center;"><b>3</b></td> <td style="text-align: center;">London / Manila</td> <td style="text-align: center;">616,000<sup>[<a href="#2">2</a>]</sup></td> </tr></tbody></table> <p style="text-align: center;">Table 2: Top 3 markets for cross-border spenders in Singapore by origin cities</p> <table border="1" cellspacing="0" cellpadding="0"> <tbody><tr><th class="table-description"><b>Rank</b></th> <th class="table-description"><b>City</b></th> <th class="table-description"><b>Expenditure</b></th> </tr><tr><td><b>1</b></td> <td>London</td> <td>USD 1383 million</td> </tr><tr><td><b>2</b></td> <td>Jakarta</td> <td>USD 1328 million</td> </tr><tr><td><b>3</b></td> <td>Hong Kong</td> <td>USD 867 million</td> </tr></tbody></table> <p>“Singapore continues her growth as one of Asia’s premier destinations, with the latest MasterCard Index of Global Destination Cities showing significant upward trend in visitor arrival and inbound spending,” said Ms Julienne Loh, vice president and country manager, Singapore, MasterCard Worldwide. “While travelers continue to be drawn to our city’s attractive retail, dining, entertainment, and leisure offerings, MasterCard will continue seeking ways to enrich cardholders’ experiences in Singapore to maintain our relevance as a sought-after travel destination.”</p> <p><a href="http://www.mastercard.co.uk/priceless-cities/london/" target="_blank"><b>London</b></a> once again topped the world’s cities by visitor numbers with 16.9 million inbound passengers expected in 2012, ahead of Paris in second place with 16 million inbound passengers expected.</p> <p>London also ranked first on cross-border expenditure, ahead of New York in second place, with estimated expenditures in these cities for 2012 amounting to US$21.1 billion and US$19.4 billion respectively.</p> <p>While cities in Europe and the US still ranked highly in the MasterCard Global Destination Cities Index, the number of emerging market cities featuring in the Index showed Asia’s growing role in the global economy.<br> &nbsp;</p> <p><b><a href="http://newsroom.mastercard.com/people/dyuwa/" target="_blank">Dr. Yuwa Hedrick-Wong</a>,</b> global economic advisor, MasterCard Worldwide, said, “The leading Asian cities are some of the most sought after destinations for visitors from all over the world, and the Index indicates that they will continue to thrive into 2012. Another interesting trend that we observe is a rise in cashless payments with many international travelers opting to do electronic transactions rather than using cash. The trend is a response to an increasing demand for safe, simple and smart payments, and highlights the rising importance of cashless commerce for both business and leisure travel.</p> <p></p> <p></p> <p></p> <p><a name="1"></a>[1] <i>City rankings from the 2011 MasterCard Index of Global Destination Cities are altered retrospectively as updates in data become available.</i></p> <p></p> <p></p> <p><a name="2"></a>[2]<i> London and Manila tied in number of inbound visitors to Singapore. There were 616,000 visitors to Singapore from each market.&nbsp;</i></p> <p></p> <p></p> <p></p> The World’s Top 20 Fastest Growing Destination Cities by Visitor Numbers<table border="1" cellspacing="0" cellpadding="0"> <tbody><tr><th class="table-description"><b>Destination City</b></th> <th class="table-description"><b>2012 Growth Rate</b></th> <th class="table-description"><b>Rank</b></th> </tr><tr><td>Rio de Janeiro</td> <td>28.6%</td> <td>1</td> </tr><tr><td>Tokyo</td> <td>21.5%</td> <td>2</td> </tr><tr><td>Quito</td> <td>18.8%</td> <td>3</td> </tr><tr><td>Abu Dhabi</td> <td>17.9%</td> <td>4</td> </tr><tr><td>Tunis</td> <td>17.7%</td> <td>5</td> </tr><tr><td>Dubai</td> <td>15.3%</td> <td>6</td> </tr><tr><td>Taipei</td> <td>15.1%</td> <td>7</td> </tr><tr><td>Istanbul</td> <td>14.7%</td> <td>8</td> </tr><tr><td>Beijing</td> <td>14.7%</td> <td>8</td> </tr><tr><td>Bogota</td> <td>12.6%</td> <td>10</td> </tr><tr><td>Lima</td> <td>11.7%</td> <td>11</td> </tr><tr><td>Riyadh</td> <td>10.4%</td> <td>12</td> </tr><tr><td>Nairobi</td> <td>10.0%</td> <td>13</td> </tr><tr><td>Singapore</td> <td>9.9%</td> <td>14</td> </tr><tr><td>Seoul</td> <td>9.8%</td> <td>15</td> </tr><tr><td>Cairo</td> <td>8.3%</td> <td>16</td> </tr><tr><td>Shanghai</td> <td>8.2%</td> <td>17</td> </tr><tr><td>Toronto</td> <td>7.6%</td> <td>18</td> </tr><tr><td>Washington</td> <td>7.2%</td> <td>19</td> </tr><tr><td>Caracas</td> <td>7.0%</td> <td>20</td> </tr></tbody></table> Asia/Pacific Top 10 Destination Cities by International Visitor Spend (2012)<table border="1" cellspacing="0" cellpadding="0" width="402"> <tbody><tr><th class="table-description" rowspan="2"><b>Rank</b></th> <th class="table-description" rowspan="2"><b>Destination City</b></th> <th class="table-description" rowspan="2"><b>Market</b></th> <th class="table-description" colspan="3"><b>Visitor Spend</b> <b>(US$ Billion)<u></u></b></th> <th class="table-description" rowspan="2"><b>% Growth</b> <b>2011 &amp; 2012</b></th> <th class="table-description" rowspan="2"><b>2012 Visitors</b> <b>(Millions)*</b></th> </tr><tr><th class="table-description"><b>2010</b></th> <th class="table-description"><b>2011</b></th> <th class="table-description"><b>2012</b></th> </tr><tr><td><b>1</b></td> <td>Bangkok</td> <td>Thailand</td> <td>$11.1</td> <td>$16.6</td> <td>$19.3</td> <td>16.6%</td> <td>12.2</td> </tr><tr><td><b>2</b></td> <td>Singapore</td> <td>Singapore</td> <td>$9.0</td> <td>$11.3</td> <td>$12.7</td> <td>12.7%</td> <td>11.8</td> </tr><tr><td><b>3</b></td> <td>Sydney</td> <td>Australia</td> <td>$9.2</td> <td>$10.1</td> <td>$11.0</td> <td>9.7%</td> <td>2.5</td> </tr><tr><td><b>4</b></td> <td>Seoul</td> <td>South Korea</td> <td>$7.7</td> <td>$9.1</td> <td>$10.6</td> <td>16.2%</td> <td>8.0</td> </tr><tr><td><b>5</b></td> <td>Taipei</td> <td>Taiwan</td> <td>$6.1</td> <td>$8.7</td> <td>$10.5</td> <td>20.5%</td> <td>5.4</td> </tr><tr><td><b>6</b></td> <td>Tokyo</td> <td>Japan</td> <td>$10.2</td> <td>$8.0</td> <td>$9.9</td> <td>24.2%</td> <td>4.3</td> </tr><tr><td><b>7</b></td> <td>Hong Kong</td> <td>(SAR) China</td> <td>$7.3</td> <td>$8.6</td> <td>$9.5</td> <td>9.5%</td> <td>11.1</td> </tr><tr><td><b>8</b></td> <td>Shanghai</td> <td>China</td> <td>$5.6</td> <td>$7.3</td> <td>$8.3</td> <td>12.6%</td> <td>7.5</td> </tr><tr><td><b>9</b></td> <td>Beijing</td> <td>China</td> <td>$4.2</td> <td>$5.5</td> <td>$6.5</td> <td>19.2%</td> <td>6.2</td> </tr><tr><td><b>10</b></td> <td>Kuala Lumpur</td> <td>Malaysia</td> <td>$4.7</td> <td>$5.6</td> <td>$6.4</td> <td>13.7%</td> <td>8.1</td> </tr></tbody></table> <p>*Excludes passengers returning to arrival country and includes visitors on non-stop flights only</p> <p></p> Methodology<p>The MasterCard Worldwide Index of Global Destination Cities is compiled using international flight and flight capacity information purchased from OAG Global, a provider of international aviation data. Flight schedules are also used for calculating flight frequency between pairs of cities.</p> <p>Airlines also publish on a regular basis their historical load factor, and advance flight schedules, which are then used to estimate the actual outbound passenger departures, and for forecasting outbound passenger departures in the coming year.</p> <p>On any given flight there are visitors from the departure country, returning residents of the destination city after visiting the departure country, and a third group: non-residents connecting through the departure country to the destination city on their way to a second destination city. This group can be a low proportion of the passengers for typically non-hub cities, but very high for destination cities that are “hubs” such as Singapore, Amsterdam, and Frankfurt.</p> <p>On a country level, the UN Database of “Trade in Service” in the “Travel Component” provides estimates of how much each year residents spend abroad (air fare paid in home country not included).&nbsp; An algorithm is applied to this total outbound expenditure and estimated total number of outbound passengers to derive an estimate of average per outbound passenger’s expenditure overseas.&nbsp;</p> <p>A margin of error is also unavoidable in such estimates, as not all outbound trips are of equal length, and the cost of living varies a great between arrival cities such that even if each trip of equal length, expenditure per passenger between different arrival cities would still be very different.&nbsp;</p> <p>This margin of error is reduced significantly by imposing a minimum of expenditures in the algorithm, after a number of iterative testing (US$500 per trip for bordering arrival country and US$700 per trip for non-bordering arrival country).&nbsp;</p> <p>Please note, the city rankings from the 2011 MasterCard Index of Global Destination Cities are altered retrospectively as updates in data become available.</p> <p></p> About Dr Yuwa Hedrick-Wong, Ph.D., Global Economic Advisor, MasterCard Worldwide<p>Dr Yuwa Hedrick-Wong is a business strategist and economist with 25 years of experience gained in over thirty countries. He was appointed Global Economic Advisor to MasterCard Worldwide in 2009.&nbsp; Prior to this role, he was Economic Advisor to MasterCard in Asia/Pacific, a position he held since 2001. As economic advisor, he chairs a MasterCard Knowledge Panel of leading economists, policy analysts, academics and business strategists for regular exchange and knowledge sharing.&nbsp; In 2007 he was appointed Advisor at Southern Capital Group, a private equity fund; and in 2008 he was appointed to the Investment Council of ICICI, India’s largest private bank. &nbsp;&nbsp;</p> <p>Yuwa is also currently the HSBC Visiting Professor of International Business at the University of British Columbia, Vancouver, B.C. Canada, and is a frequent speaker at numerous international high-profile conferences.&nbsp;</p> <p></p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Contacts:<p>Joey Phua,<br> Weber Shandwick,<br> <a href="mailto:jphua@webershandwick.com" target="_blank"><b>jphua@webershandwick.com</b></a>,<br> +65 6825 8010</p> <p>Hong Mei Yu,<br> Weber Shandwick,<br> <a href="mailto:myhong@webershandwick.com" target="_blank"><b>myhong@webershandwick.com</b></a>,<br> +65 6825 8045</p> <p>Wendy Toh,<br> Weber Shandwick,<br> <a href="mailto:wtoh@webershandwick.com" target="_blank"><b>wtoh@webershandwick.com</b></a>,<br> +65 6825 8038</p> <p><i></i></p> This is the second installment of the MasterCard research, which is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/singapore-ranks-among-worlds-most-popular-destinations-mastercard-index2012-06-17T16:00:00.000Z2012-06-17T16:00:00.000ZSMU-MasterCard Survey Shows more Anchoring in Inflation Expectations Georgette Tan, Robert O’Brien, Kong Hwee Ting, Gladys NgMethodology<p>Two indices were created, SInDEx1 and SInDEx5, to measure the 1-year inflation expectations and the 5-year inflation expectations. The data for the SKBI-MasterCard Survey was collected online from about 400 consumers. The sampling was done using a quota sample over gender, age and residency status to ensure representativeness of the sample. Employees in some sectors like journalism, marketing were excluded as that might have an effect on their responses to questions on consumption behaviour and expectations.</p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> About Singapore Management University<p>A premier university in Asia, the Singapore Management University (SMU) is internationally recognised for its world class research and distinguished teaching.&nbsp; Established in 2000, SMU’s mission is to generate leading edge research with global impact and produce broad-based, creative and entrepreneurial leaders for the knowledge-based economy.&nbsp; It is known to be a pioneer for its interactive and technologically-enabled pedagogy of seminar-style teaching in small class sizes which remains its unique hallmark.</p> <p>Home to more than 7,200 students, SMU comprises six schools: School of Accountancy, Lee Kong Chian School of Business, School of Economics, School of Information Systems, School of Law and School of Social Sciences, offering a wide range of bachelor’s, master’s and PhD degree programmes in business and other disciplines.</p> <p>With an emphasis on generating rigorous, high impact cross-disciplinary research that addresses Asian issues of global relevance, SMU faculty collaborates with leading foreign researchers as well as partners in the business community and public sector through its research institutes and centres.&nbsp; Through executive education, the university provides public and customised training for working professionals in meeting the needs of the economy.&nbsp; Close relationships with leading universities, including The Wharton School, Carnegie Mellon, the University of Pennsylvania and the University of Chicago’s Booth School of Business, allow SMU to draw on their academic and research strengths in various collaborations.&nbsp; The SMU city campus is a state-of-the art facility located in the heart of downtown Singapore, fostering strategic linkages with the business and wider community. <a href="http://smu.edu.sg" target="_blank"><b>smu.edu.sg</b></a></p> About Sim Kee Boon Institute for Financial Economics<p>Established in July 2008, the Sim Kee Boon Institute for Financial Economics (SKBI) at the Singapore Management University promotes the study of Financial Economics and Financial Econometrics in areas of strategic relevance to Singapore's economy and the economies of the region. A significant addition to Singapore's efforts to be a financial hub in Asia, SKBI is a leading institute for academic research with strong industry application and practical dimension in the area of Financial Economics.</p> <p>The Institute has four major research centres for quantitative financial analysis and offers training programmes for professionals in the financial industry. Its work is conducted in close collaboration with leading scholars in financial economics and financial econometrics from around the world as well as leading international organisations and experts from industry. www.smu.edu.sg/institutes/skbife</p> Media contacts:<p>Huang Peiling, SMU<br> +65 6828 0964,<br> <a href="mailto:plhuang@smu.edu.sg"><b>plhuang@smu.edu.sg</b></a></p> <p>Gladys Ng, SKBI, SMU<br> + 65 6808 5229,<br> <a href="mailto:gladysng@smu.edu.sg"><b>gladysng@smu.edu.sg</b></a></p> <p>Georgette Tan, MasterCard Worldwide,<br> +65 6390 5971,<br> <a href="mailto:georgette_tan@mastercard.com"><b>georgette_tan@mastercard.com</b></a></p> <p>Rob O’Brien, Weber Shandwick,<br> +65 6825 8064,<br> <a href="mailto:robrien@webershandwick.com"><b>robrien@webershandwick.com</b></a></p> Appendix 1<table width="408" cellspacing="0" cellpadding="0" border="1"> <tbody><tr><td width="204" valign="top"><p>Headline Inflation Expectations</p> </td> <td width="204" valign="top"><p>Overall inflation expectations</p> </td> </tr><tr><td width="204" valign="top"><p>Singapore Core inflation expectations</p> </td> <td width="204" valign="top"><p>Inflation expectations excluding accommodation and private transportation related expenses.</p> </td> </tr><tr><td width="204" valign="top"><p>SInDEx1</p> </td> <td width="204" valign="top"><p>A composite medium term inflation expectations index which measures inflation expectations one year ahead with lower weights on accommodation, private transportation, food and energy expenses.</p> </td> </tr><tr><td width="204" valign="top"><p>SInDEx5</p> </td> <td width="204" valign="top"><p>A composite five-year inflation expectations which measures inflation expectations five years ahead with lower weights on accommodation, private transportation, food and energy related expenses.</p> </td> </tr></tbody></table> The SKBI-MasterCard Singapore Index of Inflation Expectations (SInDEx), which was jointly developed by Dr Aurobindo GHOSH and Professor Jun YU from SMU Sim Kee Boon Institute for Financial Economics (SKBI), and MasterCard, is based on a survey of around 400 randomly selected individuals from households in Singapore. http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/smu-mastercard-survey-shows-more-anchoring-in-inflation-expectat2012-07-26T16:00:00.000Z2012-07-26T16:00:00.000ZSingapore Inflation Expectations Rise due to Concerns Over Uncertainty in Global Recovery Georgette Tan, Robert O’Brien, Kong Hwee Ting, Gladys NgMasterCard and SMU Research Shows Slowing Global Growth and Low Interest Rates in Foreseeable Future as Two Possible Reasons<p><i>TWEET: <a href="http://bit.ly/PFM8sA" target="_blank"><b>http://bit.ly/PFM8sA</b></a> #MasterCardAP, #Inflation #Singapore</i></p> <p><i><b>Singapore, 22 October 2012</b></i> – Singapore households are expecting inflation to rise due to perceived low interest rates and excess liquidity in the foreseeable future, according to the latest findings of the SKBI-MasterCard Singapore Index of Inflation Expectations (SInDEx).</p> <p>The SInDEx, which was jointly developed by <a target="_blank" href="http://www.smu.edu.sg/institutes/skbife"><b>Singapore Management University’s Sim Kee Boon Institute for Financial Economics (SKBI)</b></a> and <a target="_blank" href="http://newsroom.mastercard.com/asia-pacific/"><b>MasterCard</b></a>, is derived from an online survey of around 400 randomly selected individuals from Singapore households.</p> <p>The online survey helps researchers understand the behaviour and sentiments of decision makers in Singapore households. This is the fifth wave of the quarterly survey conducted under the collaboration and the indices were officially launched in January 2012. SInDEx was co-developed by Dr Aurobindo Ghosh and Professor Jun Yu from SMU SKBI.</p> <p>In the latest survey conducted in September this year, consumers shared their views on perceived values of economic variables over the next one to five years.</p> <p>Comparing the two waves of surveys conducted in<b> <a target="_blank" href="http://bit.ly/NMjiVc">June</a> </b>and September 2012, consumers expect inflation to inch higher. Their perception of the One-year-Ahead headline inflation (CPI-All Items) has gone up from 4.45% in June to 4.57% in September. At the same time, the forward looking SInDEx1, a composite weighted index of One-year-Ahead inflation expectations, has consequently increased to 4.57% (from 4.4% in June).</p> <p>The long term Five-year-Ahead overall (or CPI-All Items) Inflation expectations went up to 5.56% in September. The Five-year-Ahead Singapore Core Inflation rate (excluding accommodation and private transportation) is at 5.2% in the September wave, which is higher compared to 4.91% in June. This shows that, besides housing and private transportation, respondents also perceived a rise in commodities prices.</p> <p>The composite Five-year-Ahead Singapore Index of Inflation Expectations (SInDEx5) in September 2012 has consequently increased to 5.35%, from 5.08% in the survey conducted in June 2012.</p> <p style="text-align: center;"><a target="_blank" href="/content/dam/intelligence/content-assets/OneYearAheadInflationExpectations2.jpg"><img width="258" height="208" src="/content/dam/intelligence/content-assets/OneYearAheadInflationExpectations2.jpg"></a></p> <p style="text-align: center;"><b>Fig 1.</b></p> <p style="text-align: center;"><a target="_blank" href="/content/dam/intelligence/content-assets/FiveYearAheadInflationExpectations2.jpg"><img width="233" height="188" src="/content/dam/intelligence/content-assets/FiveYearAheadInflationExpectations2.jpg"></a></p> <p style="text-align: center;"><b>Fig 2.</b></p> <p>Dr. Aurobindo Ghosh, co-creator of SInDEx, and Programme Director of SMU SKBI said, “The slowdown of global economic activities and persistent unemployment in western economies &nbsp;have sent warning signals to policymakers on the urgency to create new jobs, &nbsp;thus resulting in expansionary monetary policies. These events might have created a perception that “smart money” will start flowing to financially and economically sound markets in Asia like Singapore.</p> <p>“With an impending slowdown of growth in India and China compared to their recent historic averages, Singapore is probably as good a bet as any other investment destination. This expected influx of “smart money” might have led to an increase in the medium and long term inflation expectations particularly through the real estate sector. This perception, coupled with domestic price pressures due to rising private transportation costs might have exacerbated the overall inflation expectations, although the price of oil and some other commodities have significantly eased in recent times.” Dr. Ghosh observed.</p> <p><a target="_blank" href="http://newsroom.mastercard.com/people/dyuwa/"><b>Dr. Yuwa Hedrick-Wong, global economic advisor, MasterCard Worldwide</b></a> said, “The global economic outlook today is affected by an unprecedented level of uncertainty, possibly the worst in over half a century. Accordingly, the increase in inflation expectation in Singapore reflects consumers’ concern over both domestic conditions as well as the global economy. The significant rise in the Five-Year Ahead expectation especially suggests that Singapore consumers are troubled by the persistent uncertainty in the global economic environment.”</p> Methodology<p>Two indices were created, SInDEx1 and SInDEx5, to measure the 1-year inflation expectations and the 5-year inflation expectations. The data for the SKBI-MasterCard Survey was collected online from about 400 consumers. The sampling was done using a quota sample over gender, age and residency status to ensure representativeness of the sample. Employees in some sectors like journalism, marketing were excluded as that might have an effect on their responses to questions on consumption behaviour and expectations.</p> About Singapore Management University<p><b>About the Singapore Management University</b></p> <p>A premier university in Asia, the Singapore Management University (SMU) is internationally recognised for its world class research and distinguished teaching.&nbsp; Established in 2000, SMU’s mission is to generate leading edge research with global impact and produce broad-based, creative and entrepreneurial leaders for the knowledge-based economy.&nbsp; It is known for its interactive and technologically-enabled pedagogy of seminar-style teaching in small class sizes.</p> <p>Home to more than 7,200 students, SMU comprises six schools: School of Accountancy, Lee Kong Chian School of Business, School of Economics, School of Information Systems, School of Law and School of Social Sciences, offering a wide range of bachelor’s, master’s and PhD degree programmes in various disciplines.</p> <p>With an emphasis on generating rigorous, high impact cross-disciplinary research that addresses Asian issues of global relevance, SMU faculty collaborates with leading foreign researchers as well as partners in the business community and public sector through its research institutes and centres. </p> About Sim Kee Boon Institute for Financial Economics<p>Established in July 2008, the Sim Kee Boon Institute for Financial Economics (SKBI) at the Singapore Management University promotes the study of Financial Economics and Financial Econometrics in areas of strategic relevance to Singapore’s economy and the economies of the region. A significant addition to Singapore’s efforts to be a financial hub in Asia, SKBI is a leading institute for academic research with strong industry application and practical dimension in the area of Financial Economics.</p> <p>The Institute has four major research centres for quantitative financial analysis and offers training programmes for professionals in the financial industry. Its work is conducted in close collaboration with leading scholars in financial economics and financial econometrics from around the world as well as leading international organisations and experts from industry. <a></a><a href="http://www.smu.edu.sg/institutes/skbife" target="_blank"><b>www.smu.edu.sg/institutes/skbife</b></a></p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Media contacts:<p>Kong Hwee Ting, SMU,<br> +65 6808 5238,<br> <a href="mailto:htkong@smu.edu.sg"><b>htkong@smu.edu.sg</b></a></p> <p>Gladys Ng, SKBI, SMU,<br> + 65 6808 5229,<br> <a href="mailto:gladysng@smu.edu.sg"><b>gladysng@smu.edu.sg</b></a></p> <p>Georgette Tan, MasterCard Worldwide,<br> +65 6390 5971,<br> <a href="mailto:georgette_tan@mastercard.com"><b>georgette_tan@mastercard.com</b></a></p> <p>Rob O’Brien, Weber Shandwick,<br> +65 6825 8064,<br> <a href="mailto:robrien@webershandwick.com"><b>robrien@webershandwick.com</b></a></p> The SInDEx, which was jointly developed by Singapore Management University’s Sim Kee Boon Institute for Financial Economics (SKBI) and MasterCard, is derived from an online survey of around 400 randomly selected individuals from Singapore households. http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/singapore-inflation-expectations-rise-due-to-concerns-over-uncer2012-10-21T16:00:00.000Z2012-10-21T16:00:00.000ZMasterCard Says Early Days for Mobile Payments Adoption with No Two Markets the Same Singapore, Canada, United States, Kenya and South Korea Most Ready to Adopt Consumers willing to use mobile payments in Indonesia Study identifies need for more industry partnership<p><b><i>Jakarta – 9 May, 2012</i></b>&nbsp;– MasterCard Worldwide today unveiled the MasterCard Mobile Payments Readiness Index (MPRI), an analysis of 34 countries and their readiness to use three types of mobile payments: person to person, mobile web commerce and mobile contactless payments at the point of sale. The MPRI found that while no two markets are the same, consumer readiness is the critical success factor to drive mobile payments adoption around the globe.</p> <p>The MPRI identified Singapore, Canada, the United States, Kenya and South Korea as the most prepared markets. The Index indicates that while it’s early stages for mobile payments adoption, all markets globally – either highly scaled and integrated ones like the United Kingdom or compact and technology-driven ones like Singapore – are making progress towards reaching an inflection point where mobile devices account for an appreciable share of the payments mix.</p> <p>The Index also found that in some markets such as Australia, young affluent consumers between the ages of 18 and 34 years old are the most willing to engage in mobile payments as they recognize the value of using mobile payments instead of cash or payment cards. While this demographic was predominantly male in most countries, women showed higher levels of interest in countries such as China, Egypt and the Philippines.</p> <p>For Indonesia, the MPRI highlighted that the<b> </b>twin tasks facing the country are improving its mobile payments infrastructure and preparing the ground for a greater degree of consumer willingness to use mobile<b> </b>payments.<b> </b>The study highlighted that<b> </b>before mobile payments can flourish, the Indonesian market needs to improve critical elements in the payments’ ecosystem and this includes increasing mobile phone penetration and expanding mobile network coverage.&nbsp; In addition, consumer education and marketing efforts are needed to build and communicate the value of mobile payments to Indonesian consumers. There are consumers who are willing to use mobile payments in Indonesia, and by enhancing the mobile payments environment, MasterCard believes the market could be ready to serve them in the future.</p> <p>In addition, findings of the MPRI reveal that partnerships among the key players in the mobile payments ecosystem are essential to accelerate the commercialization of mobile payments. Cooperation and collaboration among financial institutions, telcos, governments, technology providers and others can foster an environment that enables a market to reach critical mass.</p> <p>Other key findings include:</p> <ul> <li>Nine of the 10 markets with the highest consumer scores are in APMEA (Asia/Pacific, Middle East and Africa).</li> <li>Of the three mobile payment types, more consumers had engaged in m-commerce in 71 percent of the countries surveyed.</li> <li>&nbsp;In developing economies, consumers are typically drawn to mobile payments for access to the larger economy, both national and global, as well as to a regulated and secure economic infrastructure. Consumers in the developed world are drawn to the convenience of mobile phone payments.</li> </ul> <p>“Technology infrastructure, a responsive regulatory environment and a robust economy are table stakes for the advancement of mobile payments,” said Theodore Iacobuzio, vice president, Global Insights, MasterCard Worldwide. “The necessary conditions are consumer readiness and industry integration. As no one entity can develop and promote mobile payments by itself, key players in the ecosystem must work together to collectively advance the cause of mobile payments.”</p> <p>To download an executive summary of the MasterCard Mobile Payments Readiness Index, view an Interactive Global Map of the data or study the findings of the 34 countries that make up the Index, please visit <b><a href="http://mobilereadiness.mastercard.com/">http://mobilereadiness.mastercard.com</a>.&nbsp;</b></p> <p></p> Index Methodology<p>Research findings from the MasterCard Mobile Payments Readiness Index were compiled by MasterCard Global Insights between October 2011 and February 2012. The Index examined 34 global markets. Each market was ranked on a scale of 1 to 100 with scores derived from an algorithm comprised of over 50 quantitative and qualitative inputs including economic, demographic, telecommunications and payments industry data as well as proprietary consumer research. These inputs were then weighted and combined into six components including Environment, Financial Services, Regulations, Infrastructure, Consumer Readiness and Clusters and Partnerships. The six components were combined, yielding a single readiness score for each country.&nbsp;</p> about mastercard<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a> (NYSE: MA), <a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b> </b>is a global payments and technology company. It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>, </b>join the discussion on the <a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a> and <a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a> for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> MasterCard Worldwide today unveiled the MasterCard Mobile Payments Readiness Index (MPRI), an analysis of 34 countries and their readiness to use three types of mobile payments: person to person, mobile web commerce and mobile contactless payments at the point of sale.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/mastercard-says-early-days-for-mobile-payments-adoption-with-no-two-markets-the-same2012-05-08T16:00:00.000Z2012-05-08T16:00:00.000ZKuwait Tops Middle East In Terms of Residents Planning To Travel for Leisure: MasterCard Survey Nadia Ejaz,Jandré Nieuwoudt 94% of Residents in Kuwait Planning Leisure Travel for Coming Months<p>Kuwait City, Kuwait, 19 December 2012 – According to the latest findings of a <a href="http://newsroom.mastercard.com/asia-pacific/" target="_blank"><b>MasterCard</b></a> survey, 94% of respondents residing in Kuwait are set to travel for leisure in the coming months, an 11% increase from the 2011 results. The survey also shows that 72% of residents plan to increase or maintain their levels of leisure travel when compared to the previous year.</p> <p>Respondents from Kuwait also indicated that they are most likely to travel within the Middle East in the coming months, with the majority of respondents surveyed aiming to travel to these markets. The Middle East is followed by North America and Asia as the next most popular destinations.</p> <p>In terms of international destination countries, Egypt led the pack, with 31% of residents in Kuwait aiming to travel there in the coming months. Saudi Arabia (31%) and the UAE (20%) were also high on the list of destinations for travelers from Kuwait. While the UAE saw a 4% increase in popularity among respondents from Kuwait since 2011, a remarkable 15% more respondents are planning to visit Saudi Arabia in the coming months. In terms of domestic travel, respondents indicated that As-Sālimīyah (45%) remains a popular destination, followed by Hawalli (40%) and Al-Farwānīyah (31%).&nbsp;</p> <p>“It is remarkable to see that almost all of the respondents from Kuwait are planning to travel in the coming months. This represents a significant opportunity for the travel industry, and is bound to be good news for the sector. Our latest survey also looks at the most popular outlets for travel deals, and shows that social media and coupon sites and apps are gaining traction as travel deal sources,” said Safdar Khan, country manager, Qatar, Oman and Kuwait, MasterCard Worldwide.</p> <p>Other Kuwait highlights:</p> <ul> <li>Over the last year, 82% of respondents residing in Kuwait travelled internationally for leisure, while 95% travelled locally for vacation, marking an increase of 2% for international travel and a remarkable increase of 77% for domestic travel as compared to 2011.</li> <li>With regard to business travel, 25% of the people surveyed travelled abroad and 74% travelled domestically over the last year. Business travel has increased since the 2011 survey, when 15% of respondents travelled internationally in the previous year, and 6% travelled locally.&nbsp;</li> <li>Among the respondents travelling by airlines, budget carriers remained the most popular (66%), followed by national airlines (36%) and international carriers (17%). Interestingly, budget carriers have seen an increase of 22% in popularity since 2011.</li> <li>Travelers from Kuwait were most likely to stay with friends/relatives (42%) during their business travels, while almost half (49%) of respondents preferred to stay with friends/relatives when travelling for leisure. Luxury hotels have witnessed a 20% drop in popularity for business trips since the 2011 survey.&nbsp;</li> <li>Most travelers from Kuwait enjoy shopping at airports, with 74% of them indicating that they have purchased items at an airport during their travels in past months. Edible items (52%) and cosmetics/fragrances/personal care (43%) remain the most popular purchases at airports.</li> <li>Respondents from Kuwait are keen to find the best travel deals, and indicated that airline websites (64%) are the most popular outlet to find a bargain. Travel agents (44%) remain popular for bargain-hunters, and some travelers also look for deals in newspapers (16%). Coupon sites/apps (13%) and social media (11%) are also gaining traction when it comes to finding travel deals.</li> <li>Not surprisingly, 85% of participants residing in Kuwait cite their mobile phone as their must-have travel gadget, while 5% won’t leave home without their laptop. Two percent must have their MP3 device with them during their travels.</li> </ul> <p>Cash emerges as the most popular payment choice for travelers from Kuwait in relation to accommodation (76%), expenses under US$ 100 (62%) and transportation (55%). Debit/ATM cards are the second most popular method of payment for them in relation to the purchase of products over US$100 (49%), transportation (37%) and accommodation (18%). Credit cards are the least preferred for all categories.</p> Middle East findings:<ul> <li>Across the Middle East, consumers from Kuwait (82%) top the list when it comes to the percentage of consumers aiming to travel for leisure internationally in the coming months. They are followed by consumers in UAE (79%), Qatar (77%), Oman (52%), KSA (43%), Lebanon (19%) and Egypt (14%). Kuwait’s top ranking this year takes the place of Saudi Arabia’s position in 2011.</li> <li>Budget carriers have gained some presence in the Middle East in the last year, with the majority of consumers in Kuwait and Oman and substantial proportions in other markets using this mode of air travel in past months. National airlines were the most used airlines in the other Middle East countries surveyed.</li> <li>Purchases at airports remained popular in the region, with around 75% of Middle East air travelers making purchases in the last year. In general, edible items (45%), cosmetics/ fragrance (32%) and cigarettes/ tobacco (21%) are the most popular categories.</li> </ul> <p>The latest survey was conducted between April and June 2012 with respondents aged 18 – 64 in 25 markets<sup>[<a href="#1">1</a>]</sup>. Data collection was via internet surveys, personal, telephone and Computer Aided Telephone interviews, with the questionnaire translated to the local language wherever appropriate and necessary. <i>The Index and its accompanying reports do not represent MasterCard financial performance.</i><br> </p> <p></p> <p></p> <p><a name="1"></a>[1]<i> Australia, China, Egypt, Hong Kong, India, Indonesia, Japan, Kenya, Kuwait, Lebanon, Malaysia, Morocco, New Zealand, Nigeria, Oman, Philippines, Qatar, Saudi Arabia, South Korea, South Africa, Singapore, Taiwan, Thailand, United Arab Emirates and Vietnam</i></p> <p></p> <p></p> MasterCard and its Suite of Research Properties Asia/Pacific, Middle East & Africa <p>The MasterCard Worldwide Index suite in Asia/Pacific, Middle East and Africa includes the long-running MasterCard Worldwide Index of Consumer Confidence, as well as the&nbsp;MasterCard Worldwide Index of Women’s Advancement, Online Shopping,&nbsp;Index of Financial Literacy, and the&nbsp;<a href="http://newsroom.mastercard.com/digital-press-kits/mastercard-global-destination-cities-index-2013/" target="_blank"><b>Index of Global Destination Cities</b></a>. In addition to the Indices, MasterCard’s research properties also include a range of consumer surveys including Ethical Spending&nbsp;and a series on&nbsp;Consumer Purchasing Priorities&nbsp;(covering&nbsp;Travel,&nbsp;Dining &amp; Entertainment, Education,&nbsp;Money Management,&nbsp;Luxury&nbsp;and General Shopping).</p> <p>MasterCard also regularly releases Insights reports providing analysis of business dynamics, financial policies and regulatory activities in the Asia/Pacific, Middle East and Africa region. Over 80 Insights reports have been produced since 2004.</p> <p>MasterCard has also released a series of four books on Asian consumer insights, authored by&nbsp;<a href="http://newsroom.mastercard.com/people/dyuwa/" target="_blank"><b>Dr. Yuwa Hedrick-Wong</b></a>, Global Economic Advisor for MasterCard Worldwide and published by John Wiley &amp; Sons.</p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> The MasterCard survey on Consumer Purchasing Priorities – Travel was conducted between April and June 2012 with respondents aged 18 – 64 in 25 markets.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/kuwait-tops-middle-east-in-terms-of-residents-planning-to-travel-for-leisure-mastercard-survey2012-12-18T16:00:00.000Z2012-12-18T16:00:00.000ZSingapore Ranks First For Mobile Payment Readiness: MasterCard Study Joey Phua, Wendy Toh Young and affluent will drive early adoption Study identifies need for more industry partnership<p><b><i>Singapore – May 10 2012</i></b> – MasterCard Worldwide today unveiled the MasterCard Mobile Payments Readiness Index (MPRI), an analysis of 34 countries and their readiness to use three types of mobile payments: person to person, mobile web commerce and mobile contactless payments at the point of sale. The MPRI found that while no two markets are the same, consumer readiness is the critical success factor to drive mobile payments adoption around the globe.</p> <p>The MPRI identified Singapore, Canada, the United States, Kenya and South Korea as the most prepared markets. The Index indicates that while it’s early stages for mobile payments adoption, all markets globally – either highly scaled and integrated ones like the United Kingdom or compact and technology-driven ones like Singapore – are making progress towards reaching an inflection point where mobile devices account for an appreciable share of the payments mix.</p> <p>Singapore’s overall score of 45.6 (index average is 33.2) and first place in the MasterCard Mobile Payments Readiness Index can be attributed to its strengths in several areas: an efficient regulatory system, and advanced mobile phone infrastructure and financial services industry. However, consumers have not yet caught up with the infrastructure. Their willingness to adopt mobile payments and current frequency of use lags behind some less developed global economies.</p> <p>The Index also found that in some markets such as Australia, young affluent consumers between the ages of 18 and 34 years old are the most willing to engage in mobile payments as they recognize the value of using mobile payments instead of cash or payment cards. In Singapore, this demographic group is more inclined toward m-commerce where they use mobile phones to browse the Internet and make purchases but are less inclined to use their phones for remittance payments or at points-of-sale.</p> <p>In addition, findings of the MPRI reveal that partnerships among the key players in the mobile payments ecosystem are essential to accelerate the commercialization of mobile payments. Cooperation and collaboration among financial institutions, telcos, governments, technology providers and others can foster an environment that enables a market to reach critical mass.</p> <p>Ms Julienne Loh, vice president and country manager, Singapore, MasterCard Worldwide said, “In Singapore, the foundation is in place for mobile payments to take off. To drive consumer adoption,&nbsp; the benefits of mobile payments, such as speed, security and convenience, will need to be clearly demonstrated to consumers.”</p> <p>Other key findings include:</p> <ul> <li>Nine of the 10 markets with the highest consumer scores are in APMEA (Asia/Pacific, Middle East and Africa).</li> <li>Of the three mobile payment types, more consumers had engaged in m-commerce in 71 percent of the countries surveyed.</li> <li>In developing economies, consumers are typically drawn to mobile payments for access to the larger economy, both national and global, as well as to a regulated and secure economic infrastructure. Consumers in the developed world are drawn to the convenience of mobile phone payments.</li> </ul> <p>To download an executive summary of the MasterCard Mobile Payments Readiness Index, view an Interactive Global Map of the data or study the findings of the 34 countries that make up the Index, please visit <b><a href="http://mobilereadiness.mastercard.com/" target="_blank">http://mobilereadiness.mastercard.com</a>.&nbsp;</b></p> <p></p> Index Methodology<p>Research findings from the MasterCard Mobile Payments Readiness Index were compiled by MasterCard Global Insights between October 2011 and February 2012. The Index examined 34 global markets. Each market was ranked on a scale of 1 to 100 with scores derived from an algorithm comprised of over 50 quantitative and qualitative inputs including economic, demographic, telecommunications and payments industry data as well as proprietary consumer research. These inputs were then weighted and combined into six components including Environment, Financial Services, Regulations, Infrastructure, Consumer Readiness and Clusters and Partnerships. The six components were combined, yielding a single readiness score for each country.</p> <p></p> about mastercard<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a> (NYSE: MA), <a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b> </b>is a global payments and technology company. It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>, </b>join the discussion on the <a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a> and <a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a> for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Contact<p>Joey Phua<br> Weber Shandwick<br> <a href="mailto:JPhua@webershandwick.com"><b>JPhua@webershandwick.com</b></a><br> +65 6825 8010<br> <br> Wendy Toh<br> Weber Shandwick<br> <a href="mailto:wtoh@webershandwick.com"><b>wtoh@webershandwick.com</b></a><br> +65 6825 8038</p> MasterCard Worldwide today unveiled the MasterCard Mobile Payments Readiness Index (MPRI), an analysis of 34 countries and their readiness to use three types of mobile payments: person to person, mobile web commerce and mobile contactless payments at the point of sale.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/singapore-ranks-first-for-mobile-payment-readiness2012-05-09T16:00:00.000Z2012-05-09T16:00:00.000ZBangkok Ranks 1st among Asia/Pacific Cities in MasterCard Global Destination Cities Index Krittiya Nontanakorn, Nirachcha RuenroengMasterCard Index Reveals 12.2 Million Visitors with Cross-Border Spending of US$19.3 Billion in Bangkok <p><i>TWEET: http://bit.ly/KaNZi0 #MasterCardAP #DestinationCities</i></p> <p><b><i>Singapore, 18 June 2012: </i></b>According to the <a href="http://masterintelligence-stage-web.xm-apac.com/content/intelligence/en/research/reports/2012/mastercard-global-destination-cities-index.html"><b>MasterCard Global Destination Cities Index</b></a> released today, Asia/Pacific cities continued their ascendance as global destinations in 2012, with nearly half of the world’s top 20 cities by visitor arrivals and expenditure heralding from the region. Bangkok will welcome more than 12.2 million visitors in 2012, with visitor cross-border spending of US$19.3 billion which represents a growth rate of 16.6%.</p> <p>This is the second installment of the MasterCard research, which is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world. The MasterCard Index of Global Destination Cities ranks cities in terms of the number of their total international visitor arrivals and the cross-border spending by these same visitors in the destination cities, and gives visitor and passenger growth forecasts for 2012. <i>This Index and the accompanying reports are not based on MasterCard volumes or transactional data.</i></p> <p>The Index projects sustained growth among emerging market cities with the top ten Asia/Pacific destinations expecting a 9.5% growth in visitor arrivals for 2012 and a 15.3% surge in cross-border spending. In the Index’s top ten global cities, Bangkok ranks 3<sup>rd</sup> place, with a 6.5% growth in visitor arrivals for 2012 and a 16.6% growth in cross border spending, followed by Singapore<sup>[<a href="#1">1</a>]</sup> (4<sup>th</sup>), Hong Kong (6<sup>th</sup>) and Kuala Lumpur (10<sup>th</sup>). Bangkok is the number one destination city in Asia/Pacific, both in terms of number of visitor arrivals and cross-border spending, reflecting its strong and abiding appeal to tourists from the rest of the world. To view the Index as an interactive map, please click <b><a href="http://cities.masterintelligence.com/">here</a>.</b></p> <p>Cities in Asia/Pacific once again led the charge globally with eight of the top 20 cities by international arrivals, with Bangkok ranked third globally with projected visitors to top 12.2 million visitors this year. Singapore was in fourth rank with 11.8 million visitors, with Hong Kong sixth with 11.1 million visitors, and Kuala Lumpur ranked 10<sup>th</sup> with 8.1 million visitors expected.&nbsp;</p> <p>The region also ranked highly on visitor spending with Bangkok ranked third globally with US$19.3 billion expected to be spent by inbound passengers in 2012, a 16.6% jump from last year. Singapore leapt two places to fifth overall with US$12.7 billion, up 12.7% on last year. Seoul moved into the top ten with US$10.6 billion in cross-border spend, an increase of 16.2%, while Tokyo, still recovering from the triple disasters of 2011 moved up four places to 14<sup>th</sup>, is officially the world’s third-fastest growing market (24.2%) in terms of cross-border spending.</p> <p>In terms of growth in visitor numbers six out of the top 20 fastest growing cities in the Index were from Asia/Pacific with Tokyo second globally behind Rio de Janeiro (28.6%) with a 21.5% growth in visitor arrivals. Taipei and <a href="http://www.pricelessbeijing.com/" target="_blank"><b>Beijing</b></a> also featured in both the top ten growth cities by visitor arrivals and cross-border spending.</p> <p>“Asia’s destination cities continue their rise, expecting a significant upward trend in visitor arrivals and cross-border spend—most of them on the back of large double digit growth,” observed <a href="http://newsroom.mastercard.com/people/dyuwa/" target="_blank"><b>Dr. Yuwa Hedrick-Wong</b></a>, global economic advisor, MasterCard Worldwide.</p> <p><a href="http://www.mastercard.co.uk/priceless-cities/london/" target="_blank"><b>London</b></a> once again topped the world’s cities by visitor numbers with 16.9 million inbound passengers expected in 2012, ahead of Paris in second place with 16 million inbound passengers expected. &nbsp; &nbsp;</p> <p>London also ranked first on cross-border expenditure, ahead of New York in second place, with estimated expenditures in these cities for 2012 amounting to US$21.1 billion and US$19.4 billion respectively.</p> <p>While cities in Europe and the US still ranked highly in the MasterCard Global Destination Cities Index, Dr. Hedrick-Wong said that the number of emerging market cities featuring in the Index showed Asia’s growing role in the global economy.</p> <p>“The leading Asian cities are some of the most sought after destinations for visitors from all over the world, and the Index indicates that they will continue to thrive into 2012,” he said.</p> <p>“Another interesting trend that we observe is a rise in cashless payments with many international travelers opting to do electronic transactions rather than using cash. The trend is a response to an increasing demand for safe, simple and smart payments, and highlights the rising importance of cashless commerce for both business and leisure travel,” Dr. Hedrick-Wong concluded.</p> <p></p> <p></p> <p></p> <p><a name="1"></a>[1] <i>City rankings from the 2011 MasterCard Index of Global Destination Cities are altered retrospectively as updates in data become available.</i></p> <p></p> <p></p> <p></p> Asia/Pacific Top 10 Destination Cities by International Visitor Spend (2012)<table border="1" cellspacing="0" cellpadding="0" width="409"> <tbody><tr><th class="table-description" rowspan="2"><b>Rank</b></th> <th class="table-description" rowspan="2"><b>Destination City</b></th> <th class="table-description" rowspan="2"><b>Market</b></th> <th class="table-description" colspan="3"><b>Visitor Spend</b> <b>(US$ Billion)<u></u></b></th> <th class="table-description" rowspan="2"><b>% Growth</b> <b>2011 &amp; 2012</b></th> <th class="table-description" rowspan="2"><b>2012 Visitors</b> <b>(Millions)*</b></th> </tr><tr><th class="table-description"><b>2010</b></th> <th class="table-description"><b>2011</b></th> <th class="table-description"><b>2012</b></th> </tr><tr><td><b>1</b></td> <td>Bangkok</td> <td>Thailand</td> <td>$11.1</td> <td>$16.6</td> <td>$19.3</td> <td>16.6%</td> <td>12.2</td> </tr><tr><td><b>2</b></td> <td>Singapore</td> <td>Singapore</td> <td>$9.0</td> <td>$11.3</td> <td>$12.7</td> <td>12.7%</td> <td>11.8</td> </tr><tr><td><b>3</b></td> <td>Sydney</td> <td>Australia</td> <td>$9.2</td> <td>$10.1</td> <td>$11.0</td> <td>9.7%</td> <td>2.5</td> </tr><tr><td><b>4</b></td> <td>Seoul</td> <td>South Korea</td> <td>$7.7</td> <td>$9.1</td> <td>$10.6</td> <td>16.2%</td> <td>8.0</td> </tr><tr><td><b>5</b></td> <td>Taipei</td> <td>Taiwan</td> <td>$6.1</td> <td>$8.7</td> <td>$10.5</td> <td>20.5%</td> <td>5.4</td> </tr><tr><td><b>6</b></td> <td>Tokyo</td> <td>Japan</td> <td>$10.2</td> <td>$8.0</td> <td>$9.9</td> <td>24.2%</td> <td>4.3</td> </tr><tr><td><b>7</b></td> <td>Hong Kong</td> <td>(SAR) China</td> <td>$7.3</td> <td>$8.6</td> <td>$9.5</td> <td>9.5%</td> <td>11.1</td> </tr><tr><td><b>8</b></td> <td>Shanghai</td> <td>China</td> <td>$5.6</td> <td>$7.3</td> <td>$8.3</td> <td>12.6%</td> <td>7.5</td> </tr><tr><td><b>9</b></td> <td>Beijing</td> <td>China</td> <td>$4.2</td> <td>$5.5</td> <td>$6.5</td> <td>19.2%</td> <td>6.2</td> </tr><tr><td><b>10</b></td> <td>Kuala Lumpur</td> <td>Malaysia</td> <td>$4.7</td> <td>$5.6</td> <td>$6.4</td> <td>13.7%</td> <td>8.1</td> </tr></tbody></table> <p><i>*Excludes passengers returning to arrival country and includes visitors on non-stop flights only</i><i></i></p> <p></p> The World’s Top 10 Destination Cities by International Visitors (2012)<table border="0" cellspacing="0" cellpadding="0"> <tbody><tr><th class="table-description"><b>Destination City</b></th> <th class="table-description"><b>Visitor Numbers</b> <b>(Millions)</b></th> <th class="table-description"><b>Rank</b></th> </tr><tr><td>London</td> <td>16.9</td> <td>1</td> </tr><tr><td>Paris</td> <td>16.0</td> <td>2</td> </tr><tr><td>Bangkok</td> <td>12.2</td> <td>3</td> </tr><tr><td>Singapore</td> <td>11.8</td> <td>4</td> </tr><tr><td>Istanbul</td> <td>11.6</td> <td>5</td> </tr><tr><td>Hong Kong</td> <td>11.1</td> <td>6</td> </tr><tr><td>Madrid</td> <td>9.7</td> <td>7</td> </tr><tr><td>Dubai</td> <td>8.8</td> <td>8</td> </tr><tr><td>Frankfurt</td> <td>8.1</td> <td>9</td> </tr><tr><td>Kuala Lumpur</td> <td>8.1</td> <td>10</td> </tr></tbody></table> The World’s Top 20 Fastest Growing Destination Cities by Visitor Numbers<table border="0" cellspacing="0" cellpadding="0" width="405"> <tbody><tr><th class="table-description"><b>Destination City</b></th> <th class="table-description"><b>2012 Growth Rate</b></th> <th class="table-description"><b>Rank</b></th> </tr><tr><td>Rio de Janeiro</td> <td>28.6%</td> <td>1</td> </tr><tr><td>Tokyo</td> <td>21.5%</td> <td>2</td> </tr><tr><td>Quito</td> <td>18.8%</td> <td>3</td> </tr><tr><td>Abu Dhabi</td> <td>17.9%</td> <td>4</td> </tr><tr><td>Tunis</td> <td>17.7%</td> <td>5</td> </tr><tr><td>Dubai</td> <td>15.3%</td> <td>6</td> </tr><tr><td>Taipei</td> <td>15.1%</td> <td>7</td> </tr><tr><td>Istanbul</td> <td>14.7%</td> <td>8</td> </tr><tr><td>Beijing</td> <td>14.7%</td> <td>8</td> </tr><tr><td>Bogota</td> <td>12.6%</td> <td>10</td> </tr><tr><td>Lima</td> <td>11.7%</td> <td>11</td> </tr><tr><td>Riyadh</td> <td>10.4%</td> <td>12</td> </tr><tr><td>Nairobi</td> <td>10.0%</td> <td>13</td> </tr><tr><td>Singapore</td> <td>9.9%</td> <td>14</td> </tr><tr><td>Seoul</td> <td>9.8%</td> <td>15</td> </tr><tr><td>Cairo</td> <td>8.3%</td> <td>16</td> </tr><tr><td>Shanghai</td> <td>8.2%</td> <td>17</td> </tr><tr><td>Toronto</td> <td>7.6%</td> <td>18</td> </tr><tr><td>Washington</td> <td>7.2%</td> <td>19</td> </tr><tr><td>Caracas</td> <td>7.0%</td> <td>20</td> </tr></tbody></table> Methodology<p>The MasterCard Worldwide Index of Global Destination Cities is compiled using international flight and flight capacity information purchased from OAG Global, a provider of international aviation data. Flight schedules are also used for calculating flight frequency between pairs of cities.&nbsp; Airlines also publish on a regular basis their historical load factor, and advance flight schedules, which are then used to estimate the actual outbound passenger departures, and for forecasting outbound passenger departures in the coming year.</p> <p>On any given flight there are visitors from the departure country, returning residents of the destination city after visiting the departure country, and a third group: non-residents connecting through the departure country to the destination city on their way to a second destination city. This group can be a low proportion of the passengers for typically non-hub cities, but very high for destination cities that are “hubs” such as Singapore, Amsterdam, and Frankfurt.</p> <p>On a country level, the UN Database of “Trade in Service” in the “Travel Component” provides estimates of how much each year residents spend abroad (air fare paid in home country not included).&nbsp; An algorithm is applied to this total outbound expenditure and estimated total number of outbound passengers to derive an estimate of average per outbound passenger’s expenditure overseas.&nbsp;</p> <p>A margin of error is also unavoidable in such estimates, as not all outbound trips are of equal length, and the cost of living varies a great between arrival cities such that even if each trip of equal length, expenditure per passenger between different arrival cities would still be very different.&nbsp;This margin of error is reduced significantly by imposing a minimum of expenditures in the algorithm, after a number of iterative testing (US$500 per trip for bordering arrival country and US$700 per trip for non-bordering arrival country).&nbsp;</p> <p>Please note: the city rankings from the 2011 MasterCard Index of Global Destination Cities are altered retrospectively as updates in data become available.</p> <p></p> About Dr Yuwa Hedrick-Wong, Ph.D., Global Economic Advisor, MasterCard Worldwide<p>Dr Yuwa Hedrick-Wong is a business strategist and economist with 25 years of experience gained in over thirty countries. He was appointed Global Economic Advisor to MasterCard Worldwide in 2009.&nbsp; Prior to this role, he was Economic Advisor to MasterCard in Asia/Pacific, a position he held since 2001. As economic advisor, he chairs a MasterCard Knowledge Panel of leading economists, policy analysts, academics and business strategists for regular exchange and knowledge sharing.&nbsp; In 2007 he was appointed Advisor at Southern Capital Group, a private equity fund; and in 2008 he was appointed to the Investment Council of ICICI, India’s largest private bank.</p> <p>Yuwa is also currently the HSBC Visiting Professor of International Business at the University of British Columbia, Vancouver, B.C. Canada, and is a frequent speaker at numerous international high-profile conferences.</p> <p></p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Media contacts:<p>124 Communications Consulting Co., Ltd Tel 0 2718 1886<br> Krittiya Nontanakorn,<br> <a href="mailto:krittiya@124comm.com"><b>krittiya@124comm.com</b></a>,<br> ext 226</p> <p>Nirachcha Ruenroeng,<br> <a href="mailto:nirachcha@124comm.com"><b>nirachcha@124comm.com</b></a>,<br> ext 150&nbsp;<br> Mobile number : 081 347 8597&nbsp;</p> <p></p> This is the second installment of the MasterCard research, which is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/bangkok-ranks-1st-among-asiapacific-cities-in-mastercard-global-destination-cities-index2012-06-17T16:00:00.000Z2012-06-17T16:00:00.000ZRegulation and infrastructure in Malaysia conducive to mobile payments: MasterCard Mobile Payments Readiness Index Ashleigh Ow, Hazel HooHigh income males between the ages of 18-34 appear to be early adopters <p><b><i>Kuala Lumpur, 1 May 2012</i></b>&nbsp;– MasterCard Worldwide today unveiled the MasterCard Mobile Payments Readiness Index (MPRI), an analysis of 34 countries and their readiness to use three types of mobile payments: person to person, mobile web commerce and mobile contactless payments at the point of sale.</p> <p>An average of 1,000 consumers from each of the 34 countries were surveyed regarding their familiarity with, willingness to use and current usage of each of the three types of mobile payments. The survey measured each market based on 6 components – Environment, Infrastructure, Regulation, Consumer Readiness, Financial Services and Mobile Commerce Clusters.</p> <p>Malaysia attained an overall score of 34.3, excelling in the Regulation and Infrastructure components. The country saw a high score in the Mobile Commerce Clusters, reflecting some key collaboration currently in place. For instance, Nokia classic phones can be used at NFC-enabled merchant locations, including parking and transit. In addition, the survey reported that Malaysia’s regulatory framework is favorable for mobile payments because regulations are not burdensome for business, the legal environment is efficient, and communication and technology laws are well established.</p> <p>In terms of consumer sentiment, while consumer readiness for mobile payments is not as high as other countries surveyed, consumers in Malaysia show some willingness to use their mobile devices for P2P payments and m-commerce. Seven percent of consumers report that they are currently using their mobile devices for m-commerce and six percent are making P2P payments on their mobile devices. The index identified high-income males between the ages of 18 and 34 years to be the group most familiar with and willing to use mobile payments. &nbsp;</p> <p>&nbsp;“In Malaysia, the foundation is in place for mobile payments to take off. We are exploring opportunities with several Mobile Network Operators (MNO) to provide cardholders with advanced mobile payment solutions,” said Jim Cheah, vice president and senior country manager, Malaysia and Brunei, MasterCard Worldwide. “MasterCard is constantly looking for ways to encourage consumers to use their mobiles devices for purchases, be it online or at brick-and-mortar stores.”</p> <p>In addition, findings of the MPRI reveal that partnerships among the key players in the mobile payments ecosystem are essential to accelerate the commercialization of mobile payments. Cooperation and collaboration among financial institutions, telcos, governments, technology providers and others can foster an environment that enables a market to reach critical mass.</p> <p>Other key findings include:</p> <ul> <li>Nine of the 10 markets with the highest consumer scores are in APMEA (Asia/Pacific, Middle East and Africa).</li> <li>Of the three mobile payment types, more consumers had engaged in m-commerce in 71 percent of the countries surveyed.</li> <li>In developing economies, consumers are typically drawn to mobile payments for access to the larger economy, both national and global, as well as to a regulated and secure economic infrastructure. Consumers in the developed world are drawn to the convenience of mobile phone payments.</li> </ul> <p>“Technology infrastructure, a responsive regulatory environment and a robust economy are table stakes for the advancement of mobile payments,” said Theodore Iacobuzio, vice president, Global Insights, MasterCard Worldwide. “The necessary conditions are consumer readiness and industry integration. As no one entity can develop and promote mobile payments by itself, key players in the ecosystem must work together to collectively advance the cause of mobile payments.”</p> <p>To download an executive summary of the MasterCard Mobile Payments Readiness Index, view an Interactive Global Map of the data or study the findings of the 34 countries that make up the Index, please visit <b><a href="http://mobilereadiness.mastercard.com/" target="_blank">http://mobilereadiness.mastercard.com</a>.&nbsp;</b></p> <p></p> Index Methodology<p>Research findings from the MasterCard Mobile Payments Readiness Index were compiled by MasterCard Global Insights between October 2011 and February 2012. The Index examined 34 global markets. Each market was ranked on a scale of 1 to 100 with scores derived from an algorithm comprised of over 50 quantitative and qualitative inputs including economic, demographic, telecommunications and payments industry data as well as proprietary consumer research. These inputs were then weighted and combined into six components including Environment, Financial Services, Regulations, Infrastructure, Consumer Readiness and Clusters and Partnerships. The six components were combined, yielding a single readiness score for each country.&nbsp;</p> about mastercard<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a> (NYSE: MA), <a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b> </b>is a global payments and technology company. It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>, </b>join the discussion on the <a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a> and <a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a> for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Contacts<p>Ashleigh Ow<br> Weber Shandwick<br> <a href="mailto:aow@webershandwick.com"><b>aow@webershandwick.com</b></a><br> (03) 6209 5220<br> <br> Hazel Hoo<br> Weber Shandwick<br> <a href="mailto:hhoo@webershandwick.com"><b>hhoo@webershandwick.com</b></a><br> (03) 6209 5209<br> </p> MasterCard Worldwide today unveiled the MasterCard Mobile Payments Readiness Index (MPRI), an analysis of 34 countries and their readiness to use three types of mobile payments: person to person, mobile web commerce and mobile contactless payments at the point of sale.http://www1.mastercard.com/content/intelligence/en/research/press-release/2012/regulation-and-infrastructure-in-malaysia-conducive-to-mobile-payments2012-04-30T16:00:00.000Z2012-04-30T16:00:00.000ZSingapore Inflation Expectations Drop As Slowdown Continues in the BRICS Economies Tan Sook, Georgette Tan, Rob O’BrienMethodology<p>Two indices were created, SInDEx1 and SInDEx5, to measure the 1-year inflation expectations and the 5-year inflation expectations. The data for the SKBI-MasterCard Survey was collected online</p> <p>from about 400 consumers. The sampling was done using a quota sample over gender, age and residency status to ensure representativeness of the sample. Employees in some sectors like journalism, marketing were excluded as that might have an effect on their responses to questions on consumption behaviour and expectations</p> <p></p> About Singapore Management University<p>A premier university in Asia, the Singapore Management University (SMU) is internationally recognised for its world class research and distinguished teaching.&nbsp; Established in 2000, SMU’s mission is to generate leading edge research with global impact and produce broad-based, creative and entrepreneurial leaders for the knowledge-based economy.&nbsp; It is known to be a pioneer in Singapore for its interactive and technologically-enabled pedagogy of seminar-style teaching in small class sizes which remains its unique hallmark.</p> <p>Home to about 8,000 students, SMU comprises six schools: School of Accountancy, Lee Kong Chian School of Business, School of Economics, School of Information Systems, School of Law and School of Social Sciences, offering a wide range of bachelor’s, master’s and PhD degree programmes in business and other disciplines.</p> <p>With an emphasis on generating rigorous, high impact cross-disciplinary research that addresses Asian issues of global relevance, SMU faculty collaborates with leading foreign researchers as well as partners in the business community and public sector through its research institutes and centres.&nbsp; Through executive education, the university provides public and customised training for working professionals in meeting the needs of the economy.&nbsp; Close relationships with leading universities, including The Wharton School, Carnegie Mellon, the University of Pennsylvania and the University of Chicago’s Booth School of Business, allow SMU to draw on their academic and research strengths in various collaborations.&nbsp; The SMU city campus is a state-of-the art facility located in the heart of downtown Singapore, fostering strategic linkages with the business and wider community. <a href="http://www.smu.edu.sg/" target="_blank">www.smu.edu.sg</a></p> <p></p> About Sim Kee Boon Institute for Financial Economics<p>Established in July 2008, the Sim Kee Boon Institute for Financial Economics (SKBI) at the Singapore Management University promotes the study of Financial Economics and Financial Econometrics in areas of strategic relevance to Singapore's economy and the economies of the region. A significant addition to Singapore's efforts to be a financial hub in Asia, SKBI is a leading institute for academic research with strong industry application and practical dimension in the area of Financial Economics.</p> <p>The Institute has four major research centres for quantitative financial analysis and offers training programmes for professionals in the financial industry. Its work is conducted in close collaboration with leading scholars in financial economics and financial econometrics from around the world as well as leading international organisations and experts from industry. <a href="http://skbi.smu.edu.sg/" target="_blank">skbi.smu.edu.sg</a></p> <p></p> About MasterCard<p><a href="http://www.mastercard.com/index.html">MasterCard</a> (NYSE: MA), <a href="http://www.mastercard.com/">www.mastercard.com</a>, is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and</p> <p>territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank">@MasterCardNews</a>, join the discussion on the <a href="http://newsroom.mastercard.com/blog/" target="_blank">Cashless Conversations Blog</a> and <a href="http://newsroom.mastercard.com/subscribe/" target="_blank">subscribe</a> for the latest <a href="http://newsroom.mastercard.com/" target="_blank">news</a>.</p> <p></p> Media contacts<p>Tan Sook<br> SMU<br> +65-6828 0451<br> <a target="_blank" href="mailto:sooktan@smu.edu.sg">sooktan@smu.edu.sg</a></p> <p>Georgette Tan<br> MasterCard<br> +65 6390 5971<br> <a target="_blank" href="mailto:georgette_tan@mastercard.com">georgette_tan@mastercard.com</a></p> <p>Rob O’Brien<br> Weber Shandwick<br> +65 6825 8064<br> <a target="_blank" href="mailto:robrien@webershandwick.com">robrien@webershandwick.com</a></p> <p></p> The study of inflation expectations of Singapore households is a multi-disciplinary industry-relevant research that comes out of a partnership between Singapore Management University (SMU), and MasterCard.http://www1.mastercard.com/content/intelligence/en/research/press-release/2013/singapore-inflation-expectations-drop-as-slowdowncontinues-in-the-brics-economies2013-07-21T16:00:00.000Z2013-07-21T16:00:00.000ZSingapore Inflation Expectations Continue to Decline Amid Persistently Fragile Global Economic Environment Kong Hwee Ting, Georgette Tan, Rob O’BrienMethodology<p>Two indices were created, SInDEx1 and SInDEx5, to measure the 1-year inflation expectations and the 5-year inflation expectations. The data for the SKBI-MasterCard Survey was collected online</p> <p>from about 400 consumers. The sampling was done using a quota sample over gender, age and residency status to ensure representativeness of the sample. Employees in some sectors like journalism, marketing were excluded as that might have an effect on their responses to questions on consumption behaviour and expectations</p> <p></p> About Singapore Management University<p>A premier university in Asia, the Singapore Management University (SMU) is internationally recognised for its world class research and distinguished teaching.&nbsp; Established in 2000, SMU’s mission is to generate leading edge research with global impact and produce broad-based, creative and entrepreneurial leaders for the knowledge-based economy.&nbsp; It is known to be a pioneer in Singapore for its interactive and technologically-enabled pedagogy of seminar-style teaching in small class sizes which remains its unique hallmark.</p> <p>Home to about 8,000 students, SMU comprises six schools: School of Accountancy, Lee Kong Chian School of Business, School of Economics, School of Information Systems, School of Law and School of Social Sciences, offering a wide range of bachelor’s, master’s and PhD degree programmes in business and other disciplines.</p> <p>With an emphasis on generating rigorous, high impact cross-disciplinary research that addresses Asian issues of global relevance, SMU faculty collaborates with leading foreign researchers as well as partners in the business community and public sector through its research institutes and centres.&nbsp; Through executive education, the university provides public and customised training for working professionals in meeting the needs of the economy.&nbsp; Close relationships with leading universities, including The Wharton School, Carnegie Mellon, the University of Pennsylvania and the University of Chicago’s Booth School of Business, allow SMU to draw on their academic and research strengths in various collaborations.&nbsp; The SMU city campus is a state-of-the art facility located in the heart of downtown Singapore, fostering strategic linkages with the business and wider community. <a href="http://www.smu.edu.sg/" target="_blank">www.smu.edu.sg</a> </p> <p></p> About Sim Kee Boon Institute for Financial Economics<p>Established in July 2008, the Sim Kee Boon Institute for Financial Economics (SKBI) at the Singapore Management University promotes the study of Financial Economics and Financial Econometrics in areas of strategic relevance to Singapore's economy and the economies of the region. A significant addition to Singapore's efforts to be a financial hub in Asia, SKBI is a leading institute for academic research with strong industry application and practical dimension in the area of Financial Economics.<br> </p> <p>The Institute has four major research centres for quantitative financial analysis and offers training programmes for professionals in the financial industry. Its work is conducted in close collaboration with leading scholars in financial economics and financial econometrics from around the world as well as leading international organisations and experts from industry. <a href="http://skbi.smu.edu.sg/" target="_blank">skbi.smu.edu.sg</a></p> <p></p> About MasterCard <p><a href="http://www.mastercard.com/index.html" target="_blank">MasterCard</a> (NYSE: MA), <a href="http://www.mastercard.com/" target="_blank">www.mastercard.com</a>, is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and</p> <p>territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank">@MasterCardNews</a>, join the discussion on the <a href="http://newsroom.mastercard.com/blog/" target="_blank">Cashless Conversations Blog</a> and <a href="http://newsroom.mastercard.com/subscribe/" target="_blank">subscribe</a> for the latest <a href="http://newsroom.mastercard.com/" target="_blank">news</a>.</p> <p></p> Media contacts<p>Kong Hwee Ting<br> SMU<br> +65 6808 5238<br> <a target="_blank" href="mailto:htkong@smu.edu.sg">htkong@smu.edu.sg</a></p> <p>Gladys Ng<br> SKBI<br> SMU<br> + 65 6808 5229<br> <a target="_blank" href="mailto:gladysng@smu.edu.sg">gladysng@smu.edu.sg</a></p> <p>Georgette Tan<br> MasterCard<br> +65 6390 5971<br> <a target="_blank" href="mailto:georgette_tan@mastercard.com">georgette_tan@mastercard.com</a></p> <p>Rob O’Brien<br> Weber Shandwick<br> +65 6825 8064<br> <a target="_blank" href="mailto:robrien@webershandwick.com">robrien@webershandwick.com</a></p> <p></p> The study of inflation expectations of Singapore households is a multi-disciplinary industry-relevant research that comes out of a partnership between Singapore Management University (SMU), and MasterCard.http://www1.mastercard.com/content/intelligence/en/research/press-release/2013/singapore-inflation-expectations-continue-to-decline-amid-persistently-fragile-global-economic-environment2013-04-21T16:00:00.000Z2013-04-21T16:00:00.000ZNew Zealand Consumer Confidence Tied Closely to Export Growth Julian Light, Alexandria SorensenDomestic consumption: potential growth engine in a slow growing economy<p>With external demand weakening in the current, uncertain global economy, domestic demand becomes an important factor in sustaining economic growth. The Index of Resilience also evaluated the resilience of consumer confidence – and the strength of consumer confidence to begin with – as factors that determine the potential of domestic consumption as a growth engine in a slower growing global economy.</p> <p>New Zealand’s consumer confidence profile exhibits relative vulnerability in all but the regular income dimension, as summarised in Table 12 of the report. Stronger confidence levels around New Zealand’s regular income levels is likely due to its our generous social welfare support, which acts as a buffer that cushions the impact from any slowdown in merchandise exports.</p> <p>Elsewhere across Asia/Pacific the report found Hong Kong, Indonesia, Thailand, Philippines, India and China to be well positioned with the strongest potential to leverage private domestic consumption to support economic growth. While Malaysia, Singapore, Vietnam, Saudi Arabia and Kuwait are relatively strong in terms of consumer confidence; they are also more vulnerable to a slowdown in merchandise exports.</p> <p>For 15 of the 17 economies surveyed, exports to Asia/Pacific economies account for more than fifty percent of their total merchandise exports, and in New Zealand, this figure is 62.8%.</p> <p>“The good news is that although growth is slow, we’re seeing New Zealanders changing their behaviour around debt and saving more, which tends to help boost consumer confidence” said Naffah. <br> </p> <p>“Growth will also be stimulated and supported domestically by a substantial boost from the Canterbury rebuild, low borrowing costs, and ongoing solid demand and higher prices for our primary –particularly dairy – exports. All of which will drive our economy at a local level and help boost consumer confidence, and in turn resilience in the market if the forecast global slowdown does occur and impacts on our ability to grow our exports,” he concluded.</p> Notes to editors<p class="table-index">Index of Resilience of Consumer Confidence</p> <table width="415" cellspacing="0" cellpadding="0" border="1"> <tbody><tr><th class="table-description">Resilience Rank</th> <th class="table-description">Market</th> <th class="table-description">Correlation Coefficient</th> <th class="table-description">Category</th> </tr><tr><td>1</td> <td>Japan</td> <td>0.24</td> <td>Relatively resilient</td> </tr><tr><td>1</td> <td>Hong Kong</td> <td>0.24</td> <td>Relatively resilient</td> </tr><tr><td>2</td> <td>Philippines</td> <td>0.29</td> <td>Relatively resilient</td> </tr><tr><td>3</td> <td>Indonesia</td> <td>0.32</td> <td>Neutral</td> </tr><tr><td>3</td> <td>Thailand</td> <td>0.32</td> <td>Neutral</td> </tr><tr><td>4</td> <td>Taiwan</td> <td>0.34</td> <td>Neutral</td> </tr><tr><td>4</td> <td>India</td> <td>0.34</td> <td>Neutral</td> </tr><tr><td>5</td> <td>China</td> <td>0.37</td> <td>Neutral</td> </tr><tr><td>6</td> <td>Australia</td> <td>0.41</td> <td>Relatively vulnerable</td> </tr><tr><td>7</td> <td>New Zealand</td> <td>0.45</td> <td>Relatively vulnerable</td> </tr><tr><td>8</td> <td>South Korea</td> <td>0.47</td> <td>Relatively vulnerable</td> </tr><tr><td>8</td> <td>Malaysia</td> <td>0.47</td> <td>Relatively vulnerable</td> </tr><tr><td>9</td> <td>Vietnam</td> <td>0.49</td> <td>Relatively vulnerable</td> </tr><tr><td>10</td> <td>Singapore</td> <td>0.50</td> <td>Very vulnerable</td> </tr><tr><td>11</td> <td>Saudi Arabia</td> <td>0.51</td> <td>Very vulnerable</td> </tr><tr><td>12</td> <td>Kuwait</td> <td>0.53</td> <td>Very vulnerable</td> </tr><tr><td>13</td> <td>UAE</td> <td>0.87</td> <td>Very vulnerable</td> </tr></tbody></table> MasterCard and its Suite of Research Properties<p>The MasterCard Worldwide Index suite in Asia/Pacific, Middle East and Africa includes the long-running MasterCard Worldwide Index of Consumer Confidence, as well as the&nbsp;MasterCard Worldwide Index of Women’s Advancement, Online Shopping,&nbsp;Index of Financial Literacy, and the&nbsp;<a href="http://newsroom.mastercard.com/digital-press-kits/mastercard-global-destination-cities-index-2013/" target="_blank"><b>Index of Global Destination Cities</b></a>. In addition to the Indices, MasterCard’s research properties also include a range of consumer surveys including Ethical Spending&nbsp;and a series on&nbsp;Consumer Purchasing Priorities&nbsp;(covering&nbsp;Travel,&nbsp;Dining &amp; Entertainment, Education,&nbsp;Money Management,&nbsp;Luxury&nbsp;and General Shopping).</p> <p>MasterCard also regularly releases Insights reports providing analysis of business dynamics, financial policies and regulatory activities in the Asia/Pacific, Middle East and Africa region. Over 80 Insights reports have been produced since 2004.</p> <p>MasterCard has also released a series of four books on Asian consumer insights, authored by&nbsp;<a href="http://newsroom.mastercard.com/people/dyuwa/" target="_blank"><b>Dr. Yuwa Hedrick-Wong</b></a>, Global Economic Advisor for MasterCard Worldwide and published by John Wiley &amp; Sons.</p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Media Contacts<p>Julian Light<br> Acumen Republic for MasterCard<br> +64 4 494 5146<br> +64 21 243 8528&nbsp;<br> <a href="mailto:jlight@acumenrepublic.com">jlight@acumenrepublic.com</a></p> <p>Alexandria Sorensen<br> Acumen Republic for MasterCard<br> +64 4 494 5171<br> +64 27 469 1045<br> <a href="mailto:asorensen@acumenrepublic.com">asorensen@acumenrepublic.com</a></p> MasterCard’s Index of Resilience is based on a correlation analysis of the MasterCard Worldwide Index of Consumer Confidence (MWICC) against merchandise export growth for 17 countries across Asia/Pacific and the Middle East.http://www1.mastercard.com/content/intelligence/en/research/press-release/2013/new-zealand-consumer-confidence-tied-closely-to-export-growth2013-01-26T16:00:00.000Z2013-01-26T16:00:00.000ZConsumer Confidence Diverges Dramatically in its Resilience in Asia/Pacific and Middle East Georgette Tan, Robert O’BrienIndex of Resilience of Consumer Confidence<table cellspacing="0" cellpadding="0" border="1"> <tbody><tr><th class="table-description">Resilience Rank</th> <th class="table-description">Market</th> <th class="table-description">Correlation Coefficient</th> <th class="table-description">Category</th> </tr><tr><td>1</td> <td>Japan</td> <td>0.24</td> <td>Relatively resilient</td> </tr><tr><td>1</td> <td>Hong Kong</td> <td>0.24</td> <td>Relatively resilient</td> </tr><tr><td>2</td> <td>Philippines</td> <td>0.29</td> <td>Relatively resilient</td> </tr><tr><td>3</td> <td>Indonesia</td> <td>0.32</td> <td>Neutral</td> </tr><tr><td>3</td> <td>Thailand</td> <td>0.32</td> <td>Neutral</td> </tr><tr><td>4</td> <td>Taiwan</td> <td>0.34</td> <td>Neutral</td> </tr><tr><td>4</td> <td>India</td> <td>0.34</td> <td>Neutral</td> </tr><tr><td>5</td> <td>China</td> <td>0.37</td> <td>Neutral</td> </tr><tr><td>6</td> <td>Australia</td> <td>0.41</td> <td>Relatively vulnerable</td> </tr><tr><td>7</td> <td>New Zealand</td> <td>0.45</td> <td>Relatively vulnerable</td> </tr><tr><td>8</td> <td>South Korea</td> <td>0.47</td> <td>Relatively vulnerable</td> </tr><tr><td>8</td> <td>Malaysia</td> <td>0.47</td> <td>Relatively vulnerable</td> </tr><tr><td>9</td> <td>Vietnam</td> <td>0.49</td> <td>Relatively vulnerable</td> </tr><tr><td>10</td> <td>Singapore</td> <td>0.50</td> <td>Very vulnerable</td> </tr><tr><td>11</td> <td>Saudi Arabia</td> <td>0.51</td> <td>Very vulnerable</td> </tr><tr><td>12</td> <td>Kuwait</td> <td>0.53</td> <td>Very vulnerable</td> </tr><tr><td>13</td> <td>UAE</td> <td>0.87</td> <td>Very vulnerable</td> </tr></tbody></table> Domestic consumption: potential growth engine in a slow growing economy<p>With external demand weakening in the current, uncertain global economy, domestic demand becomes an important factor in sustaining economic growth. The Index of Resilience also evaluated the resilience of consumer confidence and the strength of consumer confidence to begin with, as factors that determine the potential of domestic consumption as a growth engine in a slower growing global economy.</p> <p>The report found Hong Kong, Indonesia, Thailand, Philippines, India and China to be well positioned with the strongest potential to leverage private domestic consumption to support economic growth. While Malaysia, Singapore, Vietnam, Saudi Arabia and Kuwait are relatively strong in terms of consumer confidence, they are also more vulnerable to a slowdown in merchandise exports. Japan’s consumer confidence is very resilient to external shocks, but it is also very low, being stuck in pessimism for over a decade and a half, which is a persistent damper on private consumption. The UAE occupies a position all on its own, with historically strong consumer confidence while being very vulnerable to a slowdown of its exports.</p> <p>“For 15 of the 17 economies surveyed, exports to Asia/Pacific economies account for more than 50 percent of their total merchandise exports,” said Desmond Choong, an independent research economist.</p> <p>“Clearly, these correlations between exports and consumer confidence not only assess the resilience of the latter to a slower growing global economy, but they also underscore the relative strength of the linkages between Asia/Pacific’s domestic markets. That is to say these correlations also indicate the degree to which the consumer confidence of some markets may have an indirect impact via increased consumption – and therefore&nbsp;increased imports – on the consumer confidence of other Asia/Pacific markets,” he concluded.</p> MasterCard and its Suite of Research Properties<p>The MasterCard Worldwide Index suite in Asia/Pacific, Middle East and Africa includes the long-running MasterCard Worldwide Index of Consumer Confidence, as well as the&nbsp;MasterCard Worldwide Index of Women’s Advancement, Online Shopping,&nbsp;Index of Financial Literacy, and the&nbsp;<a href="http://newsroom.mastercard.com/digital-press-kits/mastercard-global-destination-cities-index-2013/" target="_blank"><b>Index of Global Destination Cities</b></a>. In addition to the Indices, MasterCard’s research properties also include a range of consumer surveys including Ethical Spending&nbsp;and a series on&nbsp;Consumer Purchasing Priorities&nbsp;(covering&nbsp;Travel,&nbsp;Dining &amp; Entertainment, Education,&nbsp;Money Management,&nbsp;Luxury&nbsp;and General Shopping).</p> <p>MasterCard also regularly releases Insights reports providing analysis of business dynamics, financial policies and regulatory activities in the Asia/Pacific, Middle East and Africa region. Over 80 Insights reports have been produced since 2004.</p> <p>MasterCard has also released a series of four books on Asian consumer insights, authored by&nbsp;<a href="http://newsroom.mastercard.com/people/dyuwa/" target="_blank"><b>Dr. Yuwa Hedrick-Wong</b></a>, Global Economic Advisor for MasterCard Worldwide and published by John Wiley &amp; Sons.</p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Contacts:<p>Georgette Tan,<br> MasterCard Worldwide,&nbsp;<br> <a href="mailto:georgette_tan@mastercard.com">georgette_tan@mastercard.com</a>,<br> +65 6390 5971</p> <p>Robert O’Brien,<br> Weber Shandwick,&nbsp;<br> <a href="mailto:robrien@webershandwick.com">robrien@webershandwick.com</a>,<br> +65 6825 8064</p> MasterCard’s Index of Resilience is based on a correlation analysis of the MasterCard Worldwide Index of Consumer Confidence (MWICC) against merchandise export growth for 17 countries across Asia/Pacific and the Middle East.http://www1.mastercard.com/content/intelligence/en/research/press-release/2013/consumer-confidence-diverges-dramatically-in-its-resilience-in-a2013-01-22T16:00:00.000Z2013-01-22T16:00:00.000ZSingapore Inflation Expectations Fall Due To Weak Global Economic Outlook Aurobindo Ghosh, Jun YuMethodology<p>Two indices were created, SInDEx1 and SInDEx5, to measure the 1-year inflation expectations and the 5-year inflation expectations. The data for the SKBI-MasterCard Survey was collected online from about 400 consumers. The sampling was done using a quota sample over gender, age and residency status to ensure representativeness of the sample. Employees in some sectors like journalism, marketing were excluded as that might have an effect on their responses to questions on consumption behaviour and expectations</p> About Singapore Management University<p>A premier university in Asia, the Singapore Management University (SMU) is internationally recognised for its world class research and distinguished teaching.&nbsp; Established in 2000, SMU’s mission is to generate leading edge research with global impact and produce broad-based, creative and entrepreneurial leaders for the knowledge-based economy.&nbsp; It is known to be a pioneer in Singapore for its interactive and technologically-enabled pedagogy of seminar-style teaching in small class sizes which remains its unique hallmark.</p> <p>Home to about 8,000 students, SMU comprises six schools: School of Accountancy, Lee Kong Chian School of Business, School of Economics, School of Information Systems, School of Law and School of Social Sciences, offering a wide range of bachelor’s, master’s and PhD degree programmes in business and other disciplines.</p> <p>With an emphasis on generating rigorous, high impact cross-disciplinary research that addresses Asian issues of global relevance, SMU faculty collaborates with leading foreign researchers as well as partners in the business community and public sector through its research institutes and centres.&nbsp; Through executive education, the university provides public and customised training for working professionals in meeting the needs of the economy.&nbsp; Close relationships with leading universities, including The Wharton School, Carnegie Mellon, the University of Pennsylvania and the University of Chicago’s Booth School of Business, allow SMU to draw on their academic and research strengths in various collaborations.&nbsp; The SMU city campus is a state-of-the art facility located in the heart of downtown Singapore, fostering strategic linkages with the business and wider community. <a href="http://www.smu.edu.sg/" target="_blank"><b>www.smu.edu.sg</b></a></p> About Sim Kee Boon Institute for Financial Economics<p>Established in July 2008, the Sim Kee Boon Institute for Financial Economics (SKBI) at the Singapore Management University promotes the study of Financial Economics and Financial Econometrics in areas of strategic relevance to Singapore's economy and the economies of the region. A significant addition to Singapore's efforts to be a financial hub in Asia, SKBI is a leading institute for academic research with strong industry application and practical dimension in the area of Financial Economics.<br> </p> <p>The Institute has four major research centres for quantitative financial analysis and offers training programmes for professionals in the financial industry. Its work is conducted in close collaboration with leading scholars in financial economics and financial econometrics from around the world as well as leading international organisations and experts from industry. <a href="http://skbi.smu.edu.sg" target="_blank"><b>skbi.smu.edu.sg</b></a></p> About MasterCard Worldwide<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> Media contacts:<p>Kong Hwee Ting<br> SMU<br> +65 6808 5238<br> <a href="mailto:htkong@smu.edu.sg">htkong@smu.edu.sg</a><br> <br> Gladys Ng<br> SKBI, SMU<br> + 65 6808 5229<br> <a href="mailto:gladysng@smu.edu.sg">gladysng@smu.edu.sg</a><br> <br> Georgette Tan<br> MasterCard Worldwide<br> +65 6390 5971<br> <a href="mailto:georgette_tan@mastercard.com">georgette_tan@mastercard.com</a><br> <br> Rob O’Brien<br> Weber Shandwick<br> +65 6825 8064<br> <a href="mailto:robrien@webershandwick.com">robrien@webershandwick.com</a><br> </p> The study of inflation expectations of Singapore households is a multi-disciplinary industry-relevant research that comes out of a partnership between Singapore Management University (SMU), and MasterCard.http://www1.mastercard.com/content/intelligence/en/research/press-release/2013/singapore-inflation-expectations-fall-due-to-weak-global-economic-outlook2013-01-23T16:00:00.000Z2013-01-23T16:00:00.000ZMarkets across Asia/Pacific Vary in their Progress in the Race towards Becoming Cashless: New MasterCard Report Asia/Pacific Highlights<p>The study focuses on ten countries across Asia/Pacific – Australia, China, Malaysia, Taiwan, Thailand, Japan, Korea, Singapore, India and Indonesia – and shows a huge variation among the countries in the region in the progress they have made in their cashless journeys.</p> <ul> <li><b>Australia</b> is in the final stages of its cashless journey having moved the vast majority of the value of consumer payments to cashless methods and having removed all major roadblocks to cash conversion. A focus on innovative payment solutions including contactless solutions and new pricing schemes could accelerate the migration of low value payments to cashless.<br> <br> </li> <li><b>Japan</b>, <b>Korea</b> and <b>Singapore</b> are slightly less far along in their journey than Australia and are at a tipping point where the right measures can move them to the final stages of the journey. Although Japan seems to have plateaued in its progress, Korea and Singapore seem to be on track if they continue with their current cashless initiatives. To accelerate the Cashless Journey in these countries, consumer attitudes and behaviors towards cash usage need to be well understood and accommodated.<br> <br> </li> <li><b>China</b>, <b>Malaysia</b>, <b>Taiwan</b> and <b>Thailand</b> are in the middle of their transition to cashless, having created most of the requisite infrastructure to go cashless, but still with large pools of cash payments.</li> </ul> <p>The fastest movement away from cash was seen in <b>China</b>, where cash share of the value of consumer payments is estimated to have declined by as much as 20 percent between 2009 and 2011. In <b>China</b>, where an estimated 55% of the value of consumer spend was cashless, the government has taken strong leadership in promoting electronic payments to support their social and economic goals.</p> <ul> <li><b>India</b> and <b>Indonesia</b> are just beginning their cashless journey. These countries need to continue building the infrastructure for electronic payments as well as learn from other countries as to how to accelerate their journey. Initiatives by the Indian government such as electronic disbursement of benefits and innovative mobile payment solutions in Indonesia are steps in the right direction.</li> </ul> <p><a href="http://www.mastercardadvisors.com/experts/pierre-burret.html" target="_blank"><b>Pierre Burret, Region Head, Asia/Pacific, MasterCard Advisors</b></a>, concludes: “The diversity of the Asia/Pacific region is apparent in the varied progress that countries have made in their adoption of electronic payments. While countries such as Australia lead the cashless charge, others such as Japan, Korea and Singapore are on the tipping point where cashless payments may soon be ubiquitous. On the other hand, emerging markets such as China and India speak to the importance of government leadership in promoting electronic payments in order to bring more citizens into the economic mainstream ensuring financial inclusion for all.</p> <p>Overall, markets in Asia/Pacific have made real progress on their journeys by establishing basic infrastructure over long periods of time. In order to ensure this journey continues, a few things are vital including the availability of affordable financial products, a vibrant and competitive merchant market place and a transparent and productive business environment.”</p> <p></p> <p>MasterCard Advisors’ research indicates that how ready a country is to move to a cashless society is determined by factors like the accessibility and affordability of financial services; the scale and market share of retailers; the level of technology that is available; and participation of consumers in the formal economy. However, in countries such as <b>Germany</b> (where an estimated 76% of the value of consumer spend was cashless), <b>Japan</b> (62%), <b>Spain</b> (54%) and <b>Taiwan</b> (43%), cultural behavior appears to be keeping cash usage higher than market conditions would suggest.</p> <p></p> Methodology<p>The “Cashless Journey” report measure nations’ progress towards more modern, efficient payment processes by looking at the current share of cash versus non-cash payments for consumers (Share), how this share has shifted in the past five years (Trajectory), and whether conditions exist for cash payments to move to electronic (Readiness).</p> <p>The report measure <b>three components </b>of progress:</p> <ol> <li><b>Share</b>: the percentage of the value of all consumer payments (including utility, government, medical, loan, P2P payments for goods or services as well as merchant payments at retail point of sale) that are presently done by a means other than cash<br> </li> <li><b>Trajectory</b>: a measure of the shift in cash share of consumer payments’ value between 2006 and 2011<br> </li> <li><b>Readiness</b>: a measure of the future potential for conversion of cash payments to electronic payments</li> </ol> <p style="text-align: center;"># # #</p> <p></p> About MasterCard<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a> (NYSE: MA), <a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b> </b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>, </b>join the discussion on the <a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Pioneers Blog</b></a> and <a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a> for the latest news on the <a href="http://newsroom.mastercard.com/" target="_blank"><b>Engagement Bureau</b></a>.</p> About MasterCard Advisors<p>MasterCard Advisors, the professional services arm of MasterCard, provides clients around the world with insights and solutions that drive business impact and ROI. The company uses advanced analytics and deep payments expertise to translate data into actionable behavioral insights and customized services. With analyses based on more than 80 billion anonymous transactions processed in 210 countries worldwide, the company leverages aggregated information and a consultative approach to help financial institutions, merchants, media companies, governments and other organizations grow their businesses. For more information, go to <a href="http://www.mastercardadvisors.com/" target="_blank"><b>www.mastercardadvisors.com</b></a>.</p> Media Relations Contact<p>Georgette Tan,<br> MasterCard,<br> <a href="mailto:georgette_tan@mastercard.com">georgette_tan@mastercard.com</a>,<br> +65 6390 5971</p> <p>Vasundhara Subrahmanian,<br> Weber Shandwick, <br> <a href="mailto:vsubrahmanian@webershandwick.com">vsubrahmanian@webershandwick.com</a>, <br> +65 6825 8054</p> <p></p> “The Cashless Journey” tracks how 33 major economies are progressing from cash-based to cashless societies. The report, produced by MasterCard Advisors, identifies new technologies, government programs and consumer preferences as key factors that are driving this shift, creating more productive and inclusive economies.http://www1.mastercard.com/content/intelligence/en/research/press-release/2013/markets-across-asia-pacific-vary-in-their-progress-in-the-race-t2013-09-29T16:00:00.000Z2013-09-29T16:00:00.000ZWhat's Your Digital DNA? MasterCard Study Reveals Five Global Online Personas Georgette Tan, Vasundhara Subrahmanian, Angel TehMethodology<p>MasterCard conducted both qualitative and quantitative consumer research between November 2012 and March 2013 in nine markets: the United States, Canada, Germany, United Kingdom, India, South Africa, United Arab Emirates, Brazil and Colombia. The study included a survey of more than 9,000 digital consumers aged 16-65, all of whom engaged in some type of online activity at least once a week. The five unique online personas emerged out of a<b> </b>vigorous statistical examination, which grouped respondents together based on the similarity of their answers to questions across six dimensions: 1) awareness of targeted marketing; 2) social networking; 3) online shopping; 4) mobile sophistication; 5) privacy management; and 6) data as currency.</p> <p style="text-align: center;"># # #</p> About MasterCard<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a> (NYSE: MA), <a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>, </b>join the discussion on the <a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Pioneers Blog</b></a> and <a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a> for the latest <a href="http://newsroom.mastercard.com/asia-pacific" target="_blank"><b>news</b></a>.<b><u></u></b></p> Contacts<p>Georgette Tan,<br> MasterCard,<br> <a href="mailto:georgette_tan@mastercard.com">georgette_tan@mastercard.com</a>,<br> +65 6390 5971</p> <p>Vasundhara Subrahmanian,<br> Weber Shandwick,<br> <a href="mailto:vsubrahmanian@webershandwick.com">vsubrahmanian@webershandwick.com</a>,<br> +65 6825 8054</p> <p>Angel Teh,<br> Weber Shandwick,<br> <a href="mailto:ateh@webershandwick.com">ateh@webershandwick.com</a>,&nbsp;<br> +65 6825 8031<br type="_moz"> </p> The Digital Sharing and Trust Project is a new global study from MasterCard that shows how consumers actually shed their “real-world” identities when they go online to assume “digital personas” that better reflect how they feel, what actions they take around their personal information and how much value they place on their own data. These five personas –Open Sharers, Simply Interactors, Solely Shoppers, Passive Users and Proactive Protectors—are spread evenly throughout the global population and ignore any regional or demographic boundarieshttp://www1.mastercard.com/content/intelligence/en/research/press-release/2013/what_s-your-digital-dna--mastercard-study-reveals-five-global-on2013-10-02T16:00:00.000Z2013-10-02T16:00:00.000ZBoosting Female Labor Participation Rates Key to Offsetting Asia’s Deteriorating Demographics: New MasterCard Report Asian Markets at a Glance<ul> <li><b>Japan and Newly Industrialized Countries (NICs) </b>(Hong Kong, Korea, Singapore, Taiwan) – These markets have all achieved very high levels of secondary education enrollment for women, however, on average the labor force participation rate for women is approximately 50% suggesting that more needs to be done in order to make the best use of the large cohort of educated females.<br> <br> </li> <li><b>Asian Tigers</b> (China, Indonesia, Malaysia, Philippines, Thailand) - This grouping appears to be following in the NICs footsteps of achieving a well-educated female workforce over the last two decades however, there has been little sign of a surge in female labor force participation rates which is currently at approximately 55%. Thailand and China have been particularly successful in nurturing high participation rates, more so than their peers in the same grouping.</li> </ul> <ul> <li><b>South Asia </b>(Bangladesh, India,<b> </b>Pakistan, Sri Lanka) – With the exception of Bangladesh, labor force participation rates across the subcontinent are the worst in Asia, with average&nbsp; workforce participation rates amongst women coming in below 40%. While the region has made big strides over the last two decades in terms of primary and secondary education enrollment, much remains to be done in boosting the female workforce.&nbsp;</li> </ul> <ul> <li><b>Emerging ASEAN </b>(Cambodia, Myanmar, Vietnam) <b>– </b>On measures of female education and employment, the progress seem good. Universal primary education has been achieved while secondary enrolment rates for women are on the rise. This bodes well for future productivity growth, especially if labor laws remain employer and investor friendly, and infrastructure is successfully upgraded.<b></b></li> </ul> <p>For the full report, please visit:<a href="/content/intelligence/en/research/reports/2013/women-power-and-economic-growth-in-asia-by-simon-ogus-with-intro.html">Women Power and Economic Growth in Asia</a></p> <p></p> About MasterCard <p><a href="http://www.mastercard.com/index.html"><b>MasterCard</b></a> (NYSE: MA), <a href="http://www.mastercard.com/"><b>www.mastercard.com</b></a>,<b> </b>is a technology company in the global payments industry. We operate&nbsp;the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews"><b>@MasterCardNews</b></a><b>, </b>join the discussion on the <a href="http://newsroom.mastercard.com/blog/"><b>Cashless Pioneers Blog</b></a> and <a href="http://newsroom.mastercard.com/subscribe/"><b>subscribe</b></a> for the latest news on the <a href="http://newsroom.mastercard.com/"><b>Engagement Bureau</b></a>.</p> The MasterCard report titled ‘Women Power and Economic Growth in Asia’ examines the contribution to economic growth made by women through a detailed analysis of women’s labor force participation in the key economies of East, Southeast and South Asia. Specifically, the study which looks at 17 markets in Asia aims to identify the role of education in boosting labor productivity.http://www1.mastercard.com/content/intelligence/en/research/press-release/2013/boosting-female-labor-participation-rates-key-to-offsetting-asia2013-09-22T16:00:00.000Z2013-09-22T16:00:00.000ZMasterCard Study Reveals African Cities Economic Growth Potential Dr. Yuwa Hedrick-Wong Prof George AngelopuloMethodology<p>The MasterCard African Cities Growth Index is compiled from a range of verified data on variables of city economic growth.&nbsp; The Index uses <u>historical</u> data from the period 2009 to 2011 for:</p> <ul> <li>GDP Per Capita Growth (Canback Danglar)</li> <li>Household Consumption Expenditure Growth&nbsp; (Canback Danglar)</li> <li>Governance Factors (World Bank, World Governance Indicators) – included are Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Voice and Accountability, Rule of Law, Control of Corruption</li> <li>Doing Business (World Bank)<br> </li> <li>City Population Growth (Canback Danglar)</li> <li>National Urbanisation (World Bank, World Development Indicators)</li> <li>Middle Class Household Growth (Canback Danglar).</li> </ul> <p>Additionally, the Index uses <u>projected</u> data for the five years 2012 to 2017 for:</p> <ul> <li>GDP Per Capita Growth (Canback Danglar)</li> <li>Household Consumption Expenditure Growth&nbsp; (Canback Danglar)</li> <li>Human Development Index Factors (UN) – included are Health and Education</li> <li>Infrastructure Development Factors (World Bank, World Development Indicators) – included are Gross Fixed Capital Formation as Percentage of GDP, Access to Water, Access to Electricity, Access to Sanitation</li> <li>Mobile Telephone Subscriptions (ITU)</li> <li>Inbound Travel Factors (MasterCard Global Cities Project) – included are International Non-Resident Arrivals and International Non-Resident Arrivals Expenditure.<br> </li> </ul> <p>Cities were selected to include a range from all regions of Sub-Saharan Africa. The range is not exhaustive and additional cities are expected to be added in further research updates. The cities and their ranking are</p> <table cellspacing="0" cellpadding="0" border="0"> <tbody><tr><td>1.</td> <td>Accra</td> <td>Ghana</td> <td>11.</td> <td>Cape Town</td> <td>South Africa</td> </tr><tr><td>2.<br> </td> <td>Lusaka</td> <td>Zambia</td> <td>&nbsp;</td> <td>Mombasa</td> <td>Kenya<br> </td> </tr><tr><td>3.<br> </td> <td>Luanda<br> </td> <td>Angola<br> </td> <td>13.<br> </td> <td>Lagos<br> </td> <td>Nigeria<br> </td> </tr><tr><td>4.<br> </td> <td>Dar es Salaam<br> </td> <td>Tanzania<br> </td> <td>14.<br> </td> <td>Abuja<br> </td> <td>Nigeria<br> </td> </tr><tr><td>5.<br> </td> <td>Addis Ababa<br> </td> <td>Ethiopia<br> </td> <td>15.<br> </td> <td>Dakar<br> </td> <td>Senegal<br> </td> </tr><tr><td>6.<br> </td> <td>Nairobi<br> </td> <td>Kenya<br> </td> <td>16.<br> </td> <td>Harare<br> </td> <td>Zimbabwe<br> </td> </tr><tr><td>7.<br> </td> <td>Kampala<br> </td> <td>Uganda<br> </td> <td>17.<br> </td> <td>Kano<br> </td> <td>Nigeria<br> </td> </tr><tr><td>8.<br> </td> <td>Johannesburg<br> </td> <td>South Africa<br> </td> <td>18.<br> </td> <td>Abidjan<br> </td> <td>Côte d’Ivoire</td> </tr><tr><td>9.<br> </td> <td>Kinshasa<br> </td> <td>DRC<br> </td> <td>19.<br> </td> <td>Khartoum<br> </td> <td>Sudan<br> </td> </tr><tr><td>10.<br> </td> <td>Durban<br> </td> <td>South Africa<br> </td> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> </tr></tbody></table> <p>The assessment was undertaken in a five-step process:</p> <ol> <li>The variables of city economic growth were converted to a common 100 point scale.</li> <li>The variables were weighted to reflect their contribution to growth.</li> <li>The variables were aggregated using the geometric average method of the Potgieter-Angelopulo Index - <a target="_blank" href="http://www.potgieter.org/doku.php?id=mv_index">http://www.potgieter.org/doku.php?id=mv_index</a></li> <li>The results were presented in two dimensions – lagging (historical) indicators on the one and leading (projected) indicators on the other.</li> <li>The dimensional scores were consolidated and this data was used for the final city rankings.</li> </ol> <p><a href="/content/dam/intelligence/content-assets/SA-growth.jpg" target="_blank"><img width="399" height="549" src="/content/dam/intelligence/content-assets/SA-growth.jpg"></a></p> <p><i>Accra, Lusaka and Luanda, the capital cities of Ghana, Zambia and Angola respectively, have been identified as the Sub-Saharan African cities that have the highest potential for growth over the next five years, according to the MasterCard African Cities Growth Index.</i></p> Professor George Angelopulo, University of South Africa<p>Professor George Angelopulo is affiliated to the University of South Africa and CENTRUM Católica, the business centre of the Pontificia Universidad Católica del Perú.&nbsp; He develops and applies diagnostics in the corporate field, has published in peer reviewed journals, produced standard academic works used throughout Southern Africa, and authored a number of books.</p> MasterCard and its Suite of Research Properties<p>The MasterCard Index suite in Asia/Pacific, Middle East and Africa includes the long-running <a href="/content/intelligence/en/search.tagstart.ConsumerConfidence.tagend.html">MasterCard Index of Consumer Confidence</a>, as well as the <a href="/content/intelligence/en/search.tagstart.Women.tagend.html">MasterCard Index of Women’s Advancement</a>, <a href="/content/intelligence/en/search.tagstart.Shopping.tagend.html">MasterCard Survey on Online Shopping</a>, MasterCard Index of Financial Literacy, and the <a target="_blank" href="http://newsroom.mastercard.com/digital-press-kits/mastercard-global-destination-cities-index-2013/">MasterCard Index of Global Destination Cities</a>. In addition to the Indices, MasterCard’s research properties also include a range of consumer surveys including <a href="/content/intelligence/en/search.tagstart.EthicalSpending.tagend.html">Ethical Spending</a> and a series on Consumer Purchasing Priorities (covering <a href="/content/intelligence/en/search.tagstart.Travel.tagend.html">Travel</a>, <a href="/content/intelligence/en/search.tagstart.Dining.tagend.html">Dining &amp; Entertainment</a>, <a href="/content/intelligence/en/search.tagstart.Education.tagend.html">Education</a>, <a href="/content/intelligence/en/search.tagstart.MoneyManagement.tagend.html">Money Management</a>, Luxury and General Shopping).</p> <p>MasterCard also regularly releases Insights reports providing analysis of business dynamics, financial policies and regulatory activities in the Asia/Pacific, Middle East and Africa region. Over 80 Insights reports have been produced since 2004. MasterCard has also released a series of four books on Asian consumer insights, authored by <a target="_blank" href="http://newsroom.mastercard.com/people/dyuwa/">Dr. Yuwa Hedrick-Wong</a>, Global Economic Advisor for MasterCard and published by John Wiley &amp; Sons</p> About MasterCard<p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a> (NYSE: MA), <a href="http://www.mastercard.com" target="_blank"><b>www.mastercard.com</b></a>, is a global payments and technology company. It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter <a href="https://twitter.com/#!/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>, </b>join the discussion on the <a href="http://newsroom.mastercard.com/blog/" target="_blank"><b>Cashless Conversations Blog</b></a> and <a href="http://newsroom.mastercard.com/subscribe/" target="_blank"><b>subscribe</b></a> for the latest <a href="http://newsroom.mastercard.com/" target="_blank"><b>news</b></a>.</p> This is the first instalment in the MasterCard African Cities Growth Index, but is the fifth report in MasterCard’s portfolio of insight reports that examine the economic landscape and potential for growth on the African continent.http://www1.mastercard.com/content/intelligence/en/research/press-release/2013/mastercard-study-reveals-african-cities-economic-growth-potentia2013-01-28T16:00:00.000Z2013-01-28T16:00:00.000Z“Road to Inclusion” Report Challenges Previously-Held Notions of the Unbanked and Underbanked Profile of the Financially Excluded and Underserved<ul> <li>Across APMEA, they are most likely to fall within the economically active age group (average age ranges from 28 in Nigeria to 41 in the Philippines). Most have achieved secondary education or above and hold a job. For the majority of this group, financial transactions mostly involve the receipt of monthly salary, followed by payment from family and friends, and monthly pensions. The average monthly household income is low across the board, ranging from US$200 to US$500.</li> </ul> Four common themes appear from the research:<ul> <li><b>Money management is cash dominated</b> – In the area of money management, cash is predominant given their current lack of access/ familiarity with electronic payment methods. Most tend to save through social saving schemes or by storing cash in the cupboard or coin jars at home. Though cash as a payment method remains prevalent, there are strong concerns on safety in carrying cash around and many acknowledge the benefits a bank can offer in terms of security and the interest earned.</li> <li><b>Financial institutions like banks are currently not playing a large role in their lives</b> – When asked about the main reason for not having a full bank account, many cite not having enough money while others simply say they do not want or need a bank account. Some perceive banking services to have intimidating requirements and complex processes.</li> <li><b>Access to technology is limited and usage of mobile banking is low</b> – Whilst the majority of people in both groups have access to some form of technology, this is largely restricted to a standard mobile phone only (more than 69% across all markets). However, as smartphone uptake increases, the potential of using technology in relation to their finances grows.</li> <li><b>Prepaid cards could be an entry point into financial inclusion</b> – Although most have heard of prepaid cards (over 80% in India, Indonesia and Vietnam), usage is extremely low within those surveyed, at less than 5% across all markets. Interestingly, once educated about the concept, many of those surveyed found prepaid cards to be relevant for their financial needs. This was generally in the 30% to 40% range, but was as high as 60% in Nigeria and India.</li> </ul> <p>“The high use of mobile phones in these emerging markets also creates an opportunity to drive financial inclusion. We believe that a prepaid card linked to the mobile phone account can provide a simple entry point into the financial system and bridge the gap between the formal financial services sector and the millions of underserved or unbanked individuals, especially when combined with services such as bill payment and P2P capabilities. The key is providing relevant services with high convenience and low cost that empower them to change their lives for the better,” he added.</p> <p>This is echoed by those surveyed who are already using prepaid cards. As high as 40% mentioned ‘control on my spending’ as a benefit of owning a prepaid card, and as many as 30% allude to ‘not having to carry cash around’ as an advantage that prepaid cards offer.</p> About the Survey<p>This study, conducted by Ipsos MORI from Quarter 4’ 2013 to Quarter 1’ 2014, was a mixed method quantitative survey and ethnographic approach. Research was conducted in India, Indonesia, Vietnam, Philippines, Egypt, and Nigeria with the financially excluded (those that do not have access to the formal banking facilities) and the underserved (those that do not have access to any form of electronic payment). 604 people were surveyed and thirty-six households took part in a day long ethnographic interview, across six markets. Quotas were also set for those who are underserved but have access to prepaid card. For the quantitative element, because no representative database is available for ‘Excluded and Underserved’, nationally representative sampling is not possible for the two groups being researched. The definition of the target sample has been consistent across countries and the profile of respondents is based on a ‘1st available’ for recruitment basis.</p> MasterCard and its Suite of Research Properties<p>The MasterCard Index suite in Asia/Pacific, Middle East and Africa includes the long-running <a href="/content/intelligence/en/search.tagstart.ConsumerConfidence.tagend.html">MasterCard Index of Consumer Confidence</a>, as well as the <a href="/content/intelligence/en/search.tagstart.Women.tagend.html">MasterCard Index of Women’s Advancement</a>, <a href="/content/intelligence/en/search.tagstart.Shopping.tagend.html">MasterCard Survey on Online Shopping</a>, MasterCard Index of Financial Literacy, and the <a href="http://newsroom.mastercard.com/digital-press-kits/mastercard-global-destination-cities-index-2013/" target="_blank">MasterCard Index of Global Destination Cities</a>. In addition to the Indices, MasterCard’s research properties also include a range of consumer surveys including <a href="/content/intelligence/en/search.tagstart.EthicalSpending.tagend.html">Ethical Spending</a> and a series on Consumer Purchasing Priorities (covering <a href="/content/intelligence/en/search.tagstart.Travel.tagend.html">Travel</a>, <a href="/content/intelligence/en/search.tagstart.Dining.tagend.html">Dining &amp; Entertainment</a>, <a href="/content/intelligence/en/search.tagstart.Education.tagend.html">Education</a>, <a href="/content/intelligence/en/search.tagstart.MoneyManagement.tagend.html">Money Management</a>, Luxury and General Shopping).</p> <p>MasterCard also regularly releases Insights reports providing analysis of business dynamics, financial policies and regulatory activities in the Asia/Pacific, Middle East and Africa region. Over 80 Insights reports have been produced since 2004. MasterCard has also released a series of four books on Asian consumer insights, authored by <a href="http://newsroom.mastercard.com/people/dyuwa/" target="_blank">Dr. Yuwa Hedrick-Wong</a>, Global Economic Advisor for MasterCard and published by John Wiley &amp; Sons.</p> About MasterCard<p><u><b><a href="http://www.mastercard.com/index.html" target="_blank">MasterCard</a></b></u>&nbsp;(NYSE: MA),&nbsp;<b><u><a href="http://www.mastercard.com/" target="_blank">www.mastercard.com</a></u></b>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter&nbsp;<b><u><a href="https://twitter.com/#!/MasterCardNews" target="_blank">@MasterCardNews</a></u>,&nbsp;</b>join the discussion on the&nbsp;<b><u><a href="http://newsroom.mastercard.com/blog/" target="_blank">Cashless Pioneers Blog</a></u></b>&nbsp;and&nbsp;<b><u><a href="http://newsroom.mastercard.com/subscribe/" target="_blank">subscribe</a></u></b>&nbsp;for the latest news on the&nbsp;<a href="http://newsroom.mastercard.com/" target="_blank"><b>Engagement Bureau</b></a>.</p> Media contacts<p><b>Georgette Tan<br> </b>MasterCard,<br> +65 6390 5971,<br> <a href="mailto:georgette_tan@mastercard.com">georgette_tan@mastercard.com</a></p> <p><b>Samantha Yong<br> </b>Weber Shandwick,<br> +65 6825 8053,<br> <a href="mailto:samyong@webershandwick.com">samyong@webershandwick.com</a><i> </i></p> The report looks at the financially excluded and underserved in six culturally diverse markets across APMEA – India, Indonesia, Vietnam, Philippines, Egypt, and Nigeria. It was commissioned by MasterCard to better understand what financial exclusion or underservice means to the millions of people within this group, and what has triggered their choices. This is in order to better provide services that engage this marginalized audience and help them to reap the benefits of financial inclusion.http://www1.mastercard.com/content/intelligence/en/research/press-release/2014/road-to-inclusion-report-challenges-previously-held-notions2014-05-19T16:00:00.000Z2014-05-19T16:00:00.000ZLimits to Borrowing Taking Effect on Singapore Inflation Expectations Despite Upbeat Global Cues Methodology<p>Two indices were created, SInDEx1 and SInDEx5, to measure the 1-year inflation expectations and the 5-year inflation expectations. The data for the SKBI-MasterCard Survey was collected online</p> <p>from about 400 consumers. The sampling was done using a quota sample over gender, age and residency status to ensure representativeness of the sample. Employees in some sectors like journalism, marketing were excluded as that might have an effect on their responses to questions on consumption behaviour and expectations</p> <p></p> About Singapore Management University<p>A premier university in Asia, the Singapore Management University (SMU) is internationally recognised for its world class research and distinguished teaching.&nbsp; Established in 2000, SMU’s mission is to generate leading edge research with global impact and produce broad-based, creative and entrepreneurial leaders for the knowledge-based economy.&nbsp; It is known to be a pioneer in Singapore for its interactive and technologically-enabled pedagogy of seminar-style teaching in small class sizes which remains its unique hallmark.</p> <p></p> <p>Home to about 8,000 students, SMU comprises six schools: School of Accountancy, Lee Kong Chian School of Business, School of Economics, School of Information Systems, School of Law and School of Social Sciences, offering a wide range of bachelor’s, master’s and PhD degree programmes in business and other disciplines.</p> <p></p> <p>With an emphasis on generating rigorous, high impact cross-disciplinary research that addresses Asian issues of global relevance, SMU faculty collaborates with leading foreign researchers as well as partners in the business community and public sector through its research institutes and centres.&nbsp; Through executive education, the university provides public and customised training for working professionals in meeting the needs of the economy.&nbsp; Close relationships with leading universities, including the Wharton School of the University of Pennsylvania, Carnegie Mellon University, and the University of Chicago Booth School of Business, allow SMU to draw on their academic and research strengths in various collaborations.&nbsp; The SMU city campus is a state-of-the art facility located in the heart of downtown Singapore, fostering strategic linkages with the business and wider community. <a href="http://www.smu.edu.sg/" target="_blank">www.smu.edu.sg</a></p> <p></p> About Sim Kee Boon Institute for Financial Economics<p>Established in July 2008, the Sim Kee Boon Institute for Financial Economics (SKBI) at the Singapore Management University promotes the study of Financial Economics and Financial Econometrics in areas of strategic relevance to Singapore's economy and the economies of the region. A significant addition to Singapore's efforts to be a financial hub in Asia, SKBI is a leading institute for academic research with strong industry application and practical dimension in the area of Financial Economics.<br> </p> <p>The Institute has four major research centres for quantitative financial analysis and offers training programmes for professionals in the financial industry. Its work is conducted in close collaboration with leading scholars in financial economics and financial econometrics from around the world as well as leading international organisations and experts from industry. <a href="http://skbi.smu.edu.sg/" target="_blank">skbi.smu.edu.sg</a></p> <p></p> About MasterCard<p><b><u><a href="http://www.mastercard.com/index.html" target="_blank">MasterCard</a></u></b>&nbsp;(NYSE: MA),&nbsp;<b><u><a href="http://www.mastercard.com/" target="_blank">www.mastercard.com</a></u></b>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter&nbsp;<b><u><a href="https://twitter.com/#!/MasterCardNews" target="_blank">@MasterCardNews</a></u>,&nbsp;</b>join the discussion on the&nbsp;<b><u><a href="http://newsroom.mastercard.com/blog/" target="_blank">Cashless Pioneers Blog</a></u></b>&nbsp;and&nbsp;<b><u><a href="http://newsroom.mastercard.com/subscribe/" target="_blank">subscribe</a></u></b>&nbsp;for the latest news on the&nbsp;<a href="http://newsroom.mastercard.com/" target="_blank"><b>Engagement Bureau</b></a>.</p> Contacts<p>Teo Chang Ching, <br> SMU,<br> +65 6828 0451<br> <a href="mailto:ccteo@smu.edu.sg">ccteo@smu.edu.sg</a></p> <p>Georgette Tan, <br> MasterCard,<br> +65 6390 5971,<br> <a href="mailto:georgette_tan@mastercard.com">georgette_tan@mastercard.com</a></p> <p>Samantha Yong, <br> Weber Shandwick,<br> +65 6825 8053,<br> <a href="mailto:samyong@webershandwick.com">samyong@webershandwick.com</a></p> <p></p> The study of inflation expectations of Singapore households is a multi-disciplinary industry-relevant research that comes out of a partnership between Singapore Management University (SMU) and MasterCard.http://www1.mastercard.com/content/intelligence/en/research/press-release/2014/limits-to-borrowing-taking-effect-on-singapore-inflation-expecta2014-01-19T16:00:00.000Z2014-01-19T16:00:00.000ZSingapore Tops 'Digital Evolution Index'; China, Malaysia & Thailand have Fastest Growing Digital Economies Georgette TanHotbed of Digital Adoption<p>“Asia is a hotbed of digital adoption – we’re seeing developed markets in the region claiming the top spots in the Index, and emerging markets showing immense potential with their rapid pace of digital adoption,” said Raj Dhamodharan, group head, Emerging Payments, Asia/Pacific, MasterCard. “This new Index helps businesses and governments in Asia make sense of the evolving digital landscape in each of their markets, reveal trends and also provide valuable insights into current and future Internet users.”</p> <p>The study identified four interdependent drivers – supply, demand, institutions and innovation – that define each country’s digital evolution and can serve as strategic evaluation points for future growth.</p> <p>“There is very little about the digital past and present of the West that instructs us about the digital present and future of the rest,” said lead researcher <a href="http://fletcher.tufts.edu/eBiz/About/Team/Bhaskar-Chakravorti" target="_blank">Bhaskar Chakravorti</a>, Senior Associate Dean of International Business and Finance at The Fletcher School. “The momentum and direction of countries over time result from the interplay of these systemic elements. In the experience of the West the four drivers are more tightly connected.”</p> <p>&quot;In the case of emerging markets – where the next billion e-consumers are – some of these drivers move much faster than others; the trajectory is non-linear and you could end up with surprises such as Alibaba in China or Flipkart in India or M-Pesa in Kenya. Specifically, understanding the institutions and innovations in these parts of the world is essential to knowing where the world's digital evolution will pop next,” Chakravorti added.</p> Digital Growth Trajectory<p>While developed markets dominate the top spots, a different picture emerges when measuring the pace of digital adoption. The study analyzed each market’s evolution from 2008 to 2013 to understand country benchmarks, track progress and identify areas for improvement. Countries were grouped into four trajectory zones:</p> <ul> <li><b>Break Out </b>– These countries currently have low readiness scores, but are rapidly evolving. <b>India</b>,<b> China</b>, <b>Brazil, Vietnam</b>, and <b>the Philippines</b> are examples. If their evolution rates sustain, these countries will emerge as strong digital economies, but the Index shows that the next phase of growth may be harder to achieve.</li> <li><b>Stall Out </b>– While possessing a history of strong growth, these countries (most of <b>Western and Northern Europe</b>, <b>Australia</b> and <b>Japan</b>) have matured. Innovation and seeking markets beyond domestic borders will be critical to continuing growth.</li> <li><b>Stand Out </b>– These countries, such as <b>Singapore</b>, <b>Hong Kong</b>,<b> the United States</b>, and <b>New Zealand</b>, have and continue to maintain high levels of digital transactions, supported by cutting edge infrastructure and sophisticated domestic consumers. To remain Stand Out markets, these countries must continue to fast-track innovation.</li> <li><b>Watch Out </b>– These countries face challenges, but with a combined population of 2.5 billion people, they represent significant opportunities for investment. <b>Indonesia</b>,<b> Russia</b>,<b> Nigeria</b>,<b> Egypt</b>, and <b>Kenya</b> are examples.</li> </ul> <p>For additional detail, visit the&nbsp;<a href="http://insights.mastercard.com/digitalevolution" target="_blank">Digital Evolution Index website</a>&nbsp;and&nbsp;<a href="http://fletcher.tufts.edu/eBiz/Index" target="_blank">Digital Planet Report</a>, which outline the factors and implications of each of the trajectory zones.</p> <p>For the full report, please visit: <a href="http://mstr.cd/1oDVSBK" target="_blank">http://mstr.cd/1oDVSBK</a></p> About MasterCard <p><a href="http://www.mastercard.com/index.html" target="_blank"><b>MasterCard</b></a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank"><b>www.mastercard.com</b></a>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter&nbsp;<a href="https://twitter.com/MasterCardAP" target="_blank"><b>@MasterCardAP</b></a><b> </b>and<b> </b><a href="https://twitter.com/MasterCardNews" target="_blank"><b>@MasterCardNews</b></a><b>,&nbsp;</b>join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/asia-pacific/blog" target="_blank"><b>Cashless Pioneers Blog</b></a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/asia-pacific/subscribe/" target="_blank"><b>subscribe</b></a>&nbsp;for the latest news on the&nbsp;<a href="http://newsroom.mastercard.com/asia-pacific" target="_blank"><b>Engagement Bureau</b></a>.</p> About Fletcher<p><a href="http://cts.businesswire.com/ct/CT?id=smartlink&amp;url=http%3A%2F%2Ffletcher.tufts.edu%2F&amp;esheet=50707904&amp;newsitemid=20130912005977&amp;lan=en-US&amp;anchor=The+Fletcher+School+of+Law+and+Diplomacy&amp;index=7&amp;md5=74c8a81d4141e961ce9c01333f229478" target="_blank"><b>The Fletcher School</b><b>&nbsp;</b></a>&nbsp;at Tufts University (The Fletcher School)—the first exclusively graduate school of international affairs in the United States—has prepared the world’s leaders to tackle complex global challenges since 1933. The school’s alumni represent the highest levels of leadership in the world, including executive leadership of some of the world’s largest corporations; hundreds of sitting ambassadors; respected voices from distinguished media outlets; heads of global nonprofit organizations; and leaders of international peacekeeping and security initiatives. The Fletcher School offers a collaborative, flexible and interdisciplinary approach to the study of international affairs, featuring a distinguished faculty and diverse student body representing more than half the world’s countries. The&nbsp;<a href="http://fletcher.tufts.edu/IBGC" target="_blank"><b>Institute for Business in the Global Context</b></a>&nbsp;is the hub at Fletcher that focuses on the intersection of business and international affairs. Follow Fletcher’s insights on global digital trends on Twitter<a href="https://twitter.com/Fletcher_eBiz" target="_blank">‪<b>@Fletcher_eBiz</b>‪</a></p> Note to Editors: <p>The Digital Evolution Index is an output of the study conducted by researchers at The Fletcher School with the support of MasterCard. Analyzing datasets from public sources, such as The World Bank, and private sources such as EMPEA and Dow Jones VentureSource, the research team created an analytical framework for recognizing patterns and making sense of the global digital landscape, discerning country trends and evaluating their relative strengths and weaknesses.</p> <p>The methodology for the Digital Evolution Index measures the current ability of countries to deliver on consumer demand and business supply capabilities, in combination with governmental policy and climate for innovation – four drivers defining digital readiness that were identified in the research hypothesis. In addition to the current state, the study measured each country’s trajectory across the four drivers from 2008 through 2013. The index then layers a quadrant matrix to visualize the trajectory of a particular country. </p> Media contacts<p><b>Georgette Tan</b>,<br> MasterCard, <a href="mailto:georgette_tan@mastercard.com"><br> georgette_tan@mastercard.com</a>,<br> +65 6390 5971</p> <p><b>Samantha Yong</b>,<br> Weber Shandwick,<br> <a href="mailto:samyong@webershandwick.com">samyong@webershandwick.com</a>,<br> +65 6825 8053</p> MasterCard has unveiled the Digital Evolution Index, a study conducted in partnership with The Fletcher School at Tufts University that measures the progress of 50 countries towards digital commerce.http://www1.mastercard.com/content/intelligence/en/research/press-release/2014/singapore-tops-digital-evolution-index2014-10-08T16:00:00.000Z2014-10-08T16:00:00.000ZEvolution of Luxury: New Affluent Seek Rich Experiences over Material Wealth Changing Notions of Success and Achievement<p>This shift in mindset can be attributed to an expanding view the affluent hold toward success and wealth. Across the region, success is increasingly being measured by the way of life, with some variations across the markets. The diagram below highlights the different notions of success and achievement across the APMEA region:</p> <p style="text-align: center;"><a href="/content/dam/intelligence/content-assets/Affluent_PressRelease_Chart.JPG" target="_blank"><img width="502" height="304" src="/content/dam/intelligence/content-assets/Affluent_PressRelease_Chart.JPG"></a><br> <i>Chart 1: Notions of success and achievement across the APMEA region</i></p> Consumers with Experiential Needs<p>The survey found that this shift in attitude is transforming the consumption patterns of the affluent. More than ever, the affluent are placing greater emphasis on seeking new and unique experiences, such as mastering a new skill or making a unique journey, as opposed to the ownership of opulent material possessions, status symbols, or visiting a destination.</p> <p>For these affluent global citizens, products that cater to their aspirations of a deep and fulfilling life are essential. International travel (30%), which allows them to gain unique experiences, reconnect with family through shared leisure activities, and unwind while creating unforgettable memories, is rated as their most desired experience. This is followed by culinary experiences (23%), which involve the exploration and discovery of different palates and flavors from around the world, and golfing which allows the otherwise busy individuals to recharge and to connect with others (12%).</p> <p>Porush Singh, senior vice president for Core Products, Global Products &amp; Solutions, Asia/Pacific, Middle East &amp; Africa, MasterCard, said,&nbsp; “The affluent in APMEA are increasingly looking for things that drive personal growth and happiness, as opposed to the ownership of material possessions. This report helps us understand the mindset of affluent consumers so that we can continually develop the most relevant and innovative payment solutions as well as curate meaningful and unique experiences for them,” </p> Case-in-Point: The Affluent and Golf<p>In terms of unique experiences, golfing is one of the most popular categories that APMEA’s affluent are interested in. Two in every five affluent individuals across APMEA have played a round of golf in the past 12 months, and the rising number of affluent enthusiasts has led to a robust golf tourism industry, with fans and aficionados spending more on the sport.</p> <p>The affluent perceive golf as the intersection of social time and personal ‘me’ time which provides an avenue for one to recharge and also connect with others. As part of the lifestyle, golf fulfils both the social and emotional needs. </p> <p>“Our research has shown that affluent golfers from APMEA desire not just better quality brands, but also once-in-a-lifetime experiences such as training sessions with golfing legends and access to exclusive world-renowned courses that they view as a reward for their hard work,” he added.</p> <p>Some interesting nuggets about the rise of the golfing movement in APMEA:</p> <ul> <li>There are almost 40 million golfers in China alone – nearly twice as many engaged in the sport than in USA.</li> <li>The golf tourism industry in Thailand is expected to grow 15% to USD$4 billion by 2015.</li> <li>The daily spend of a golf traveler is double that of the average leisure tourist.</li> </ul> MasterCard and its Suite of Research Properties<p>The MasterCard Index suite in Asia/Pacific, Middle East and Africa includes the long-running <a href="/content/intelligence/en/search.tagstart.ConsumerConfidence.tagend.html">MasterCard Index of Consumer Confidence</a>, as well as the <a href="/content/intelligence/en/search.tagstart.Women.tagend.html">MasterCard Index of Women’s Advancement</a>, <a href="/content/intelligence/en/search.tagstart.Shopping.tagend.html">MasterCard Survey on Online Shopping</a>, MasterCard Index of Financial Literacy, and the <a target="_blank" href="http://newsroom.mastercard.com/digital-press-kits/mastercard-global-destination-cities-index-2013/">MasterCard Index of Global Destination Cities</a>. In addition to the indices, MasterCard’s research properties also include a range of consumer surveys including <a href="/content/intelligence/en/search.tagstart.EthicalSpending.tagend.html">Ethical Spending</a> and a series on Consumer Purchasing Priorities (covering <a href="/content/intelligence/en/search.tagstart.Travel.tagend.html">Travel</a>, <a href="/content/intelligence/en/search.tagstart.Dining.tagend.html">Dining &amp; Entertainment</a>, <a href="/content/intelligence/en/search.tagstart.Education.tagend.html">Education</a>, <a href="/content/intelligence/en/search.tagstart.MoneyManagement.tagend.html">Money Management</a>, Luxury and General Shopping).</p> <p>MasterCard also regularly releases Insights reports providing analysis of business dynamics, financial policies and regulatory activities in the Asia/Pacific, Middle East and Africa region. Over 80 Insights reports have been produced since 2004. MasterCard has also released a series of four books on Asian consumer insights, authored by <a target="_blank" href="http://newsroom.mastercard.com/people/dyuwa/">Dr. Yuwa Hedrick-Wong</a>, Global Economic Advisor for MasterCard and published by John Wiley &amp; Sons.</p> About MasterCard<p><b><u><a href="http://www.mastercard.com/index.html" target="_blank">MasterCard</a></u></b>&nbsp;(NYSE: MA),&nbsp;<b><u><a href="http://www.mastercard.com/" target="_blank">www.mastercard.com</a></u></b>,<b>&nbsp;</b>is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter&nbsp;<b><u><a href="https://twitter.com/#!/MasterCardNews" target="_blank">@MasterCardNews</a></u>,&nbsp;</b>join the discussion on the&nbsp;<b><u><a href="http://newsroom.mastercard.com/blog/" target="_blank">Cashless Pioneers Blog</a></u></b>&nbsp;and&nbsp;<b><u><a href="http://newsroom.mastercard.com/subscribe/" target="_blank">subscribe</a></u></b>&nbsp;for the latest news on the&nbsp;<a href="http://newsroom.mastercard.com/" target="_blank"><b>Engagement Bureau</b></a>.</p> Media contacts<p><b>Georgette Tan</b>,<br> MasterCard,<br> +65 6390 5971,<br> <a href="mailto:georgette_tan@mastercard.com">georgette_tan@mastercard.com</a></p> <p><b>Samantha Yong</b>,<br> Weber Shandwick,<br> +65 6825 8053,<br> <a href="mailto:samyong@webershandwick.com">samyong@webershandwick.com</a> &nbsp;</p> The Affluent Report presents the results and key findings from a series of studies and surveys commissioned by MasterCard. These findings will help MasterCard understand the mindset of affluent consumers, and how we can develop the most relevant and innovative payment solutions, and to curate meaningful and unique experiences for them.http://www1.mastercard.com/content/intelligence/en/research/press-release/2014/evolution-of-luxury2014-05-26T16:00:00.000Z2014-05-26T16:00:00.000Z90% of Consumers in Asia Pacific Strive to be “Rainy Day” Ready Georgette TanMASTERCARD AND ITS SUITE OF RESEARCH PROPERTIES<p>The MasterCard Index suite in Asia/Pacific, Middle East and Africa includes the long-running <a href="http://www.masterintelligence.com/content/intelligence/en/search.tagstart.ConsumerConfidence.tagend.html" target="_blank">MasterCard Index of Consumer Confidence</a>, as well as the <a href="http://www.masterintelligence.com/content/intelligence/en/search.tagstart.Women.tagend.html" target="_blank">MasterCard Index of Women’s Advancement</a>, <a href="http://www.masterintelligence.com/content/intelligence/en/search.tagstart.Shopping.tagend.html" target="_blank">MasterCard Survey on Online Shopping</a>, MasterCard Index of Financial Literacy, and the <a href="http://newsroom.mastercard.com/digital-press-kits/mastercard-global-destination-cities-index-2013/" target="_blank">MasterCard Index of Global Destination Cities</a>. In addition to the indices, MasterCard’s research properties also include a range of consumer surveys including <a href="http://www.masterintelligence.com/content/intelligence/en/search.tagstart.EthicalSpending.tagend.html" target="_blank">Ethical Spending</a> and a series on Consumer Purchasing Priorities (covering <a href="http://www.masterintelligence.com/content/intelligence/en/search.tagstart.Travel.tagend.html" target="_blank">Travel</a>, <a href="http://www.masterintelligence.com/content/intelligence/en/search.tagstart.Dining.tagend.html" target="_blank">Dining &amp; Entertainment</a>, <a href="http://www.masterintelligence.com/content/intelligence/en/search.tagstart.Education.tagend.html" target="_blank">Education</a>, <a href="http://www.masterintelligence.com/content/intelligence/en/search.tagstart.MoneyManagement.tagend.html" target="_blank">Money Management</a>, Luxury and General Shopping).</p> <p>MasterCard also regularly releases Insights reports providing analysis of business dynamics, financial policies and regulatory activities in the Asia/Pacific, Middle East and Africa region. Over 80 Insights reports have been produced since 2004. MasterCard has also released a series of four books on Asian consumer insights, authored by <a href="http://newsroom.mastercard.com/people/dyuwa/" target="_blank">Dr. Yuwa Hedrick-Wong</a>, Global Economic Advisor for MasterCard and published by John Wiley &amp; Sons.</p> ABOUT MASTERCARD<p><a href="http://www.mastercard.com/index.html" target="_blank">MasterCard</a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank">www.mastercard.com</a>,&nbsp;is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter&nbsp;<a href="https://twitter.com/MasterCardAP" target="_blank">@MasterCardAP</a> and <a href="https://twitter.com/MasterCardNews" target="_blank">@MasterCardNews</a>,&nbsp;join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/asia-pacific/blog" target="_blank">Cashless Pioneers Blog</a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/asia-pacific/subscribe/" target="_blank">subscribe</a>&nbsp;for the latest news on the&nbsp;<a href="http://newsroom.mastercard.com/asia-pacific" target="_blank">Engagement Bureau</a>.</p> Contacts<p><b>Georgette Tan</b>,<br> MasterCard,<br> <a href="mailto:georgette_tan@mastercard.com">georgette_tan@mastercard.com</a>,<br> +65 6390 5971</p> <p><b>Samantha Yong,</b><br> Weber Shandwick,<br> <a href="mailto:samyong@webershandwick.com">samyong@webershandwick.com</a>,<br> +65 6825 8053</p> <p></p> Ninety percent of people in the Asia Pacific region are planning to either save the same or more in the second half of 2014 found the latest Consumer Purchasing Priorities – Money Management survey, released today by MasterCard.http://www1.mastercard.com/content/intelligence/en/research/press-release/2014/consumers-in-asia-pacific-strive-to-be-rainy-day-ready2014-12-03T16:00:00.000Z2014-12-03T16:00:00.000ZRBI-Led Decisions Help India Make Considerable Progress in Achieving Universal Financial Access, Reveals ‘Cost Of Cash In India’ Report Georgette TanCash And Non-Cash Transaction Profile For India<p><a href="/content/dam/intelligence/content-assets/transaction-india.jpg" target="_blank"><img width="583" height="211" src="/content/dam/intelligence/content-assets/transaction-india.jpg"></a></p> <p><i>Source: EuroMonitor Passport 2012</i></p> <ul> <li><b>Fewer than 35% of Indians</b> <b>above the age of 15</b> <b>have used a bank account</b> and less than 10% have ever used any kind of non-cash payment instrument. In fact, the percentage of India’s population that has accounts with formal financial institutions (35%) is significantly lower than that of Kenya (42%), Brazil (55%), and China (63%)</li> <li><b>Mobile banking remains a banking product and not a robust retail payments system</b>, with less than 3% of the value transacted by cards in the year ended March 2014.</li> <li><b>The total value of ATM transactions increased more than five times between 2007 and 2012</b>, from about 3 trillion to about 18 trillion rupees, while the value of card transactions barely doubled in the same period from 1 to 2 trillion rupees. However, when weighted for population, India fares poorly in terms of ATM access when compared to even lesser-developed markets such as Kenya, Nigeria, or Egypt.</li> <li><b>India’s cash intensity also stands out in contrast to other developing countries. </b>The value of notes and coins in circulation as a percentage of GDP in India is 12.04%, compared to 3.93% in Brazil, 5.32% in Mexico, and 3.72% in South Africa.</li> </ul> <p>he report also includes insight into how households pay differently for access to cash - according to their place in society, determined by income, employment, age, and place of residence; and their widely differing views on the risks of cash and strategies for risk management.</p> <p>Although conventional wisdom assumes that cash is free, the report found that the residents of Delhi together spend 6 million hours and Rs. 9.1 crores (US $1.5 million) to obtain cash. Hyderabad, which is smaller, spends 1.7 million hours and Rs 3.2 crores (US $0.5 million) to do the same, which corresponds to fees and transport costs about twice as high as Delhi on a per capita basis. These fees, along with cash balances and wealth overall, rise in line with age in Delhi.</p> <p>The report also notes that as women tend to remain in the home, outside of the labor force, their access to cash is cheaper.&nbsp; Employers, on the other hand, spend the most for access to cash, as they typically handle the largest amounts.&nbsp; They also appreciate the risks of large cash stocks the most, and most regularly breach their preferred cash ceilings[<a href="#_ftn1">1</a>].</p> <p><a href="#_ftn1" name="_ftnref1"></a><i>[1] Cash ceiling refers to the amount of money above which the respondent is unwilling to hold in cash. </i></p> About The Cost of Cash report<p>The report is the product of a research effort that analyzed the most pertinent policy documents, reports, scholarship, expert interviews, and payments data. It is the second in a series of country reports on The Cost of Cash by the Institute for Business in the Global Context (IBGC). The series seeks to ascertain the private costs and risks of cash management facing diverse stakeholders in society: consumers, business, government, and financial systems. It does not forecast the likelihood that cash will fall into disuse, or drop below any threshold in payment market share. It is different from much of the academic work in payment economics, which focuses explicitly on social costs with a view toward informing debates around payment clearing and settlement. Instead, it is analyzed through the private costs to households and businesses that arise from their use of cash, beginning when cash is received and ending when it is spent again. The estimates are based on original IBGC surveys, coauthors’ surveys and interviews, and a broad mix of academic studies and official statistics.</p> About The Institute for Business in the Global Context<p>The Institute for Business in the Global Context (IBGC) connects the world of business to the world. It is the hub for international business at The Fletcher School at Tufts University, the oldest exclusively graduate school of international affairs in the United States. The Institute takes an interdisciplinary and international approach, preparing global leaders who can cross borders of many kinds and integrate business skills with essential contextual intelligence. The Institute is organized around four core activity areas: education, research, dialogue, and a lab. The Master of International Business degree and executive education offerings, coupled with original research in the areas of inclusive growth, innovation, and global capital flows, facilitate vibrant conferences, symposia, and speaker dialogues. IBGC gratefully acknowledges support from The Bill &amp; Melinda Gates Foundation, Citi Foundation, Chicago Bridge &amp; Iron, The Global Fund, Hitachi Corporation, Hitachi Research Institute, K&amp;L Gates, MasterCard Foundation, MasterCard Worldwide, Oliver Wyman, The Rockefeller Foundation, Dr. Thomas Schmidheiny, State Street Corporation, and Tata Group.</p> About MasterCard<p><a href="http://www.mastercard.com/index.html" target="_blank">MasterCard</a>&nbsp;(NYSE: MA),&nbsp;<a href="http://www.mastercard.com/" target="_blank">www.mastercard.com</a>,&nbsp;is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter&nbsp;<a href="https://twitter.com/MasterCardAP" target="_blank">@MasterCardAP</a> and <a href="https://twitter.com/MasterCardNews" target="_blank">@MasterCardNews</a>,&nbsp;join the discussion on the&nbsp;<a href="http://newsroom.mastercard.com/asia-pacific/blog" target="_blank">Cashless Pioneers Blog</a>&nbsp;and&nbsp;<a href="http://newsroom.mastercard.com/asia-pacific/subscribe/" target="_blank">subscribe</a>&nbsp;for the latest news on the&nbsp;<a href="http://newsroom.mastercard.com/asia-pacific" target="_blank">Engagement Bureau</a>.</p> Media Contacts<p><b>Esha Khattar<br> </b>Weber Shandwick, <br> <a href="mailto:ekhattar@webershandwick.com">ekhattar@webershandwick.com</a>, <br> +91 9810840351</p> <p><b>Brijesh Kutty<br> </b>Weber Shandwick, <br> <a href="mailto:bkutty@webershandwick.com">bkutty@webershandwick.com</a>, <br> +91 9920460901</p> The Reserve Bank of India (RBI), has taken a number of decisions that greatly reduce the barriers to financial access, especially on the supply side, according to the findings of the inaugural ‘Cost of Cash in India’ report. The report is the second in a series of country reports on the ‘Cost of Cash’ by The Fletcher School’s Institute for Business in the Global Context (IBGC), with the support of MasterCard. The report notes that these decisions include a welcome set of innovations (universal ID cards, protocols, servers, and related-KYC regulations) which have served to lower the financial institutions’ cost of enrolling new customers. http://www1.mastercard.com/content/intelligence/en/research/press-release/2015/RBI-Led-Decisions2015-01-18T16:00:00.000Z2015-01-18T16:00:00.000ZFinancial Literacy Index Finds Progress has Stalled Across Asia/Pacific 12 of 16 countries record lower scores in MasterCard’s latest Financial Literacy Index<p style="text-align: center;"><i>Ahead of #WEFEastAsia #MasterCard’s Financial Literacy Index reveals progress has stalled across #AsiaPacific <a href="http://news.mstr.cd/1FE4vEy" target="_blank">http://news.mstr.cd/1FE4vEy</a></i></p> <p><b>Singapore, 14 April 2015 </b>– Ahead of the World Economic Forum on East Asia (19-21 April, Jakarta) <b><a href="http://newsroom.mastercard.com/asia-pacific/" target="_blank">MasterCard</a></b> has revealed that progress towards improving basic finance knowledge and skills across Asia/Pacific has stalled as 12 of 16 countries record lower scores in the latest Financial Literacy Index.</p> Top findings:<ul> <li><b>Taiwan</b> regains top spot followed by <b>New Zealand</b> (which drops from 1<sup>st</sup> place) and <b>Hong Kong</b>; Kiwis and Taiwanese over 30 years old the most financially literate in the region.</li> <li><b>Singapore</b> goes from 2<sup>nd</sup> to 6<sup>th</sup> place, with the biggest drop in score regionally.</li> <li>While developed markets tend to rank higher than emerging, <b>Japan</b> remains the outlier staying in the bottom spot for the 3<sup>rd</sup> consecutive year.</li> <li>Among the emerging markets, <b>India</b> advances the most, gaining 3 points to 62, placing it at 12<sup>th</sup> place in the region, and nearly at par with <b>South Korea</b> (62 points, rank 13 regionally).</li> <li><b>China</b> is top overall in ‘<b>Investment Know-How’</b> but among the worst in ‘<b>Basic Money Management.’</b></li> <li>Asia/Pacific is a region of savers with the majority of people knowing how to ‘<b>Budget’</b> and ‘<b>Save Regularly.’ </b>However<b>,</b> knowledge of ‘<b>Retirement</b> <b>funds</b> <b>needed’</b> is low in both developed countries and emerging markets.</li> <li>Knowledge of the risks associated with investment is poor across the region with the concepts of ‘<b>Inflation’</b> and ‘<b>Diversifying</b> <b>assets’</b> particularly badly understood, especially in emerging markets.</li> <li>The financial literacy <b>gender gap</b> is higher in developed markets (excluding Taiwan) than emerging markets. The gender parity gap in <b>South Korea</b> is the widest, followed by Hong Kong and Australia.</li> <li>In terms of <b>age</b>, people under 30 are less financially literate than those over 30 in all markets. With regards to <b>employment status</b>, with the exception of India and Bangladesh, people who are “Working” have superior financial literacy skills than those “Not Working.”</li> <li>Aside from Taiwan and India, <b>Vietnam</b> and <b>Indonesia</b> are the only markets to improve their score in 2014 than 2013.</li> </ul> Index data on final page.<p><b>T.V. Seshadri, Group Executive, Global Products and Solutions, Asia Pacific said: </b><i>“There is no one reason for the falling level of financial literacy across the region but the data clearly shows that the young and unemployed need additional support. Educating people so they can plan for the future is a crucial aspect of financial inclusion. In both developed and emerging markets, people are struggling to understand basic financial concepts such as inflation. In addition, while Asia Pacific is a region of savers, the lack of retirement planning should cause particular concern. It is not enough to provide access to financial services, we must ensure that everyone knows how to save, budget and invest so that their wellbeing can be secured over the long term.”</i></p> Issue specific insights<ul> <li><b>Taiwanese</b> <b>Financial Planning Savviness Shines - </b>Results from recent research conducted by Manulife suggest that 7 out of 10 Taiwanese investors are not confident that their mandatory pensions will be sufficient to cover their retirement expenses. This lack of confidence and know-how may be prompting the Taiwanese to be active and prudent savers (score for both “Save Regularly” and “Emergency Savings” is very high at 95). In fact, data from Directorate General of Budget, Accounting and Statistics Taiwan (DGBAS) show personal savings in Taiwan to have increased by 9.96% (1424600 TWD Million to 1582300 TWD Million) from 2011 to 2012 .</li> </ul> <ul> <li><b>Myanmar: Prudent Savings, Growth of Insurance Sector Earmarked to Accelerate - </b>Myanmar continues to score consistently higher than most of its regional peers in the savings and insurance-related categories of Financial Planning with a score of 81, placing it in the top 3. This could be due to the lack of social security benefits in the country, which has in turn inculcated a practice of prudent savings for costly essentials like healthcare, education and emergencies. The results also show Myanmarese to have high regards for insurance. This trend is likely to remain strong, in view of the recent ending of the government-owned company Myanmar Insurance’s 60-year monopoly of the country’s private insurance industry. This milestone reform will not only allow private and foreign insurance companies to enter the market, but will be beneficial to Myanmarese consumers through heightened awareness of both life and general insurance concepts and products.</li> </ul> <ul> <li><b>Japan’s</b> <b>lack of progress in Basic Money Management</b> - Japan’s score has been steadily declining since the survey was first launched and the latest results indicate further deterioration in money management skills. This is likely attributed to the country’s aging population and stagnant income growth.&nbsp; Currently the world’s oldest country, Japan’s aging population are now the biggest spenders of their savings and retirement funds. OECD figures show that compared to its G7 peers, Japan’s household savings rate is 0.6% of disposable household income, a stark contrast to other countries such as Australia (9.3%) and South Korea (5.3%).<br> <br> </li> <li><b>Explaining the gender gap</b> - Across the 16 regional markets, the gender disparity gap is most pronounced in the six developed markets (excluding Taiwan). In contrast, the difference in financial literacy scores is only slight in countries such as China, India, Indonesia, Malaysia, Vietnam and Bangladesh. The gender gap in developed markets could be due to the diminished amount of time afforded to day-to-day budgeting and tracking of expenditure with increased work responsibilities. The reason why women in emerging markets have more similar scores to men may be because financial systems are at infancy stage so women and men are more likely to be equally aware and informed. It may also be because income level is lower on average, making it necessary to be even more conscious of money and track expenditure on a regular basis.</li> </ul> <p></p> Methodology<p>Conducted for the 4<sup>th</sup> time between July and August 2014 on 8,087 respondents aged 18-64 in 16 countries in Asia/Pacific (Australia, New Zealand, China, Hong Kong, Taiwan, Japan, Korea, Malaysia, Philippines, Thailand, Indonesia, Singapore, Vietnam, India, Bangladesh, and Myanmar) the Index comprises questions covering three components: <i>Basic Money Management</i> (50% weight) which examines respondents’ skills with regards to budgeting, savings, and responsibility of credit usage; <i>Financial Planning</i> (30% weight) which assesses knowledge about financial products, services, and concepts, and ability to plan for long-term financial needs; and <i>Investment</i> (20% weight) which determines respondents’ basic understanding of the various risks associated with investment, different investment products and skills required. A <b>Financial Literacy Index Score</b> for each market is calculated out of the weighted sum of the 3 components.</p> About MasterCard<p>MasterCard&nbsp;(NYSE: MA),&nbsp;<b><a href="http://www.mastercard.com/index.html" target="_blank">www.mastercard.com</a></b>, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter&nbsp;<b><a href="https://twitter.com/mastercardap" target="_blank">@MasterCardAP</a></b>&nbsp;and&nbsp;<b><a href="https://twitter.com/MasterCardNews" target="_blank">@MasterCardNews,</a></b>&nbsp;join the discussion on the&nbsp;<b><a href="http://newsroom.mastercard.com/blog/" target="_blank">Beyond the Transaction Blog</a></b>&nbsp;and&nbsp;<b><a href="http://newsroom.mastercard.com/subscribe/" target="_blank">subscribe</a></b>&nbsp;for the latest news on the&nbsp;<b><a href="http://newsroom.mastercard.com/" target="_blank">Engagement Bureau</a></b>.</p> Media Contacts<p><b>Georgette Tan</b><br> MasterCard,<br> <a href="mailto:georgette_tan@mastercard.com">georgette_tan@mastercard.com</a>,<br> +65 6390 5971</p> <p><b>Samantha Yong</b><br> Weber Shandwick,<br> <a href="mailto:samyong@webershandwick.com">samyong@webershandwick.com</a>,<br> +65 6825 8053</p> Index data<p style="text-align: center;"><b>Country ranking and score</b><table cellpadding="1" cellspacing="0" border="1"> <tbody><tr><th class="table-description" style="text-align: center;">Rank</th> <th class="table-description" style="text-align: center;">Country</th> <th class="table-description" style="text-align: center;">Score</th> </tr><tr><td style="text-align: center;"><b>1</b></td> <td style="text-align: center;">Taiwan</td> <td style="text-align: center;">73</td> </tr><tr><td style="text-align: center;"><b>2</b></td> <td style="text-align: center;">New Zealand</td> <td style="text-align: center;">71</td> </tr><tr><td style="text-align: center;"><b>3</b></td> <td style="text-align: center;">Hong Kong</td> <td style="text-align: center;">70</td> </tr><tr><td style="text-align: center;"><b>4</b></td> <td style="text-align: center;">Australia</td> <td style="text-align: center;">69</td> </tr><tr><td style="text-align: center;"><b>5</b></td> <td style="text-align: center;">Malaysia</td> <td style="text-align: center;">69</td> </tr><tr><td style="text-align: center;"><b>6</b></td> <td style="text-align: center;">Singapore</td> <td style="text-align: center;">68</td> </tr><tr><td style="text-align: center;"><b>7</b></td> <td style="text-align: center;">Thailand</td> <td style="text-align: center;">67</td> </tr><tr><td style="text-align: center;"><b>8</b></td> <td style="text-align: center;">Philippines</td> <td style="text-align: center;">66</td> </tr><tr><td style="text-align: center;"><b>9</b></td> <td style="text-align: center;">Myanmar</td> <td style="text-align: center;">66</td> </tr><tr><td style="text-align: center;"><b>10</b></td> <td style="text-align: center;">China</td> <td style="text-align: center;">65</td> </tr><tr><td width="97" style="text-align: center;"><b>11</b></td> <td style="text-align: center;">Vietnam</td> <td style="text-align: center;">65</td> </tr><tr><td style="text-align: center;"><b>12</b></td> <td style="text-align: center;">India</td> <td style="text-align: center;">62</td> </tr><tr><td style="text-align: center;"><b>13</b></td> <td style="text-align: center;">Korea</td> <td style="text-align: center;">62</td> </tr><tr><td style="text-align: center;"><b>14</b></td> <td style="text-align: center;">Indonesia</td> <td style="text-align: center;">61</td> </tr><tr><td style="text-align: center;"><b>15</b></td> <td style="text-align: center;">Bangladesh</td> <td style="text-align: center;">60</td> </tr><tr><td style="text-align: center;"><b>16</b></td> <td style="text-align: center;">Japan</td> <td style="text-align: center;">55</td> </tr></tbody></table> <b></b></p> <p style="text-align: center;"><b>Score breakdown by component</b><table cellpadding="1" cellspacing="0" border="1"> <tbody><tr><th class="table-description"><br type="_moz"> </th> <th class="table-description">APAC</th> <th class="table-description">TW</th> <th class="table-description">NZ</th> <th class="table-description">HK</th> <th class="table-description">AU</th> <th class="table-description">MY</th> <th class="table-description">SG</th> <th class="table-description">TH</th> <th class="table-description">PH</th> </tr><tr><td><b>Overall FinLit Score</b></td> <td style="text-align: center;">65</td> <td style="text-align: center;">73</td> <td style="text-align: center;">71</td> <td style="text-align: center;">70</td> <td style="text-align: center;">69</td> <td style="text-align: center;">69</td> <td style="text-align: center;">68</td> <td style="text-align: center;">67</td> <td style="text-align: center;">66</td> </tr><tr><td><b>Basic Money Management (Overall)</b></td> <td style="text-align: center;">63</td> <td style="text-align: center;">69</td> <td style="text-align: center;">73</td> <td style="text-align: center;">71</td> <td style="text-align: center;">73</td> <td style="text-align: center;">66</td> <td style="text-align: center;">67</td> <td style="text-align: center;">63</td> <td style="text-align: center;">66</td> </tr><tr><td><b>Budgeting ability</b></td> <td style="text-align: center;">85</td> <td style="text-align: center;">87</td> <td style="text-align: center;">89</td> <td style="text-align: center;">86</td> <td style="text-align: center;">89</td> <td style="text-align: center;">89</td> <td style="text-align: center;">83</td> <td style="text-align: center;">86</td> <td style="text-align: center;">89</td> </tr><tr><td><b>Keeping up with bills</b></td> <td style="text-align: center;">62</td> <td style="text-align: center;">65</td> <td style="text-align: center;">74</td> <td style="text-align: center;">72</td> <td style="text-align: center;">73</td> <td style="text-align: center;">61</td> <td style="text-align: center;">68</td> <td style="text-align: center;">66</td> <td style="text-align: center;">64</td> </tr><tr><td><b>Saving for big purchases</b></td> <td style="text-align: center;">53</td> <td style="text-align: center;">57</td> <td style="text-align: center;">57</td> <td style="text-align: center;">72</td> <td style="text-align: center;">62</td> <td style="text-align: center;">52</td> <td style="text-align: center;">59</td> <td style="text-align: center;">47</td> <td style="text-align: center;">49</td> </tr><tr><td><b>Tracking expenditure</b></td> <td style="text-align: center;">68</td> <td style="text-align: center;">66</td> <td style="text-align: center;">77</td> <td style="text-align: center;">55</td> <td style="text-align: center;">75</td> <td style="text-align: center;">70</td> <td style="text-align: center;">68</td> <td style="text-align: center;">74</td> <td style="text-align: center;">88</td> </tr><tr><td><b>Unsecured loans</b></td> <td style="text-align: center;">45</td> <td style="text-align: center;">72</td> <td style="text-align: center;">71</td> <td style="text-align: center;">74</td> <td style="text-align: center;">68</td> <td style="text-align: center;">56</td> <td style="text-align: center;">60</td> <td style="text-align: center;">41</td> <td style="text-align: center;">38</td> </tr><tr><td><b>Financial Planning (Overall)</b></td> <td style="text-align: center;">75</td> <td style="text-align: center;">84</td> <td style="text-align: center;">73</td> <td style="text-align: center;">72</td> <td style="text-align: center;">68</td> <td style="text-align: center;">20</td> <td style="text-align: center;">77</td> <td style="text-align: center;">79</td> <td style="text-align: center;">73</td> </tr><tr><td><b>FP is not only for the rich</b></td> <td style="text-align: center;">74</td> <td style="text-align: center;">87</td> <td style="text-align: center;">81</td> <td style="text-align: center;">63</td> <td style="text-align: center;">74</td> <td style="text-align: center;">80</td> <td style="text-align: center;">75</td> <td style="text-align: center;">75</td> <td style="text-align: center;">83</td> </tr><tr><td><b>Starting early with FP</b></td> <td style="text-align: center;">78</td> <td style="text-align: center;">96</td> <td style="text-align: center;">86</td> <td style="text-align: center;">60</td> <td style="text-align: center;">82</td> <td style="text-align: center;">84</td> <td style="text-align: center;">87</td> <td style="text-align: center;">63</td> <td style="text-align: center;">54</td> </tr><tr><td><b>Save regularly</b></td> <td style="text-align: center;">90</td> <td style="text-align: center;">95</td> <td style="text-align: center;">91</td> <td style="text-align: center;">90</td> <td style="text-align: center;">89</td> <td style="text-align: center;">93</td> <td style="text-align: center;">91</td> <td style="text-align: center;">87</td> <td style="text-align: center;">98</td> </tr><tr><td><b>Emergency savings</b></td> <td style="text-align: center;">86</td> <td style="text-align: center;">95</td> <td style="text-align: center;">84</td> <td style="text-align: center;">84</td> <td style="text-align: center;">79</td> <td style="text-align: center;">91</td> <td style="text-align: center;">89</td> <td style="text-align: center;">86</td> <td style="text-align: center;">91</td> </tr><tr><td><b>Insurance is important</b></td> <td style="text-align: center;">76</td> <td style="text-align: center;">89</td> <td style="text-align: center;">63</td> <td style="text-align: center;">82</td> <td style="text-align: center;">54</td> <td style="text-align: center;">82</td> <td style="text-align: center;">79</td> <td style="text-align: center;">86</td> <td style="text-align: center;">77</td> </tr><tr><td><b>Retirement funds needed</b></td> <td style="text-align: center;">46</td> <td style="text-align: center;">41</td> <td style="text-align: center;">30</td> <td style="text-align: center;">53</td> <td style="text-align: cent