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From the Editor's Desk ***** 9 July 2014 | Vol. 5, № 24. From the Editor’s Desk Dear FDI supporters, Welcome to the Strategic Weekly al-Barrak. While further demonstrations Analysis. seem likely, even after al-Barrak’s release, the record level of public expenditure in We open this week’s edition with a the latest Budget should help to counter discussion of the new star-rated healthy at least some grievances. food rating system, to be introduced to Australian consumers next month. This week’s edition concludes with an assessment of the promise made by both Next, we turn to Pakistan and analyse the candidates in Indonesia’s presidential importance to its economy of its booming election to extend the compulsory length textile industry and mango exports and of schooling from nine to 12 years. If also the interest that it holds for investors implemented, the measure will be an from China and the United States. important step in improving the country’s Our next article looks at India and education system. highlights the importance of the National I trust you will enjoy this edition of the Food Security Act – and the difficulties Strategic Weekly Analysis. being experienced in its implementation. Major General John Hartley AO (Retd) Moving next to the Middle East, we Institute Director and CEO evaluate the possibility of widespread Future Directions International civic unrest, in Kuwait, following the detention of opposition leader Musallam ***** Nutrition Rating System Given Green Light for Australian Food Packaging A voluntary, five-star, healthy food rating system will begin in Australia and New Zealand in August, following a public education campaign. It remains to be seen, however, whether the opt-in scheme will be adopted by the largest food manufacturers – a prerequisite if the system is to be effective in helping to prevent obesity in Australia. Background The new scheme was initiated as a result of a Review of Food Labelling Law and Policy in 2009. The review, in consultation with health and food industry stakeholders, made 61 recommendations for changes current packaging laws. The 50th of these, which was accepted, brought about the new front-of-pack rating system. The initial website launch for the system, in February this year, was marred by controversy. It lasted only 20 hours online, before it was shut down by Assistant Health Minister Nash’s Chief of Staff, Alistair Furnival. Mr Furnival subsequently resigned, after links were revealed between him and the junk food lobby group Australian Public Affairs. Comment Australia is experiencing the second-fastest rate of growth in overweight people and obesity globally. The health burden in caring for these people is immense, projected at a cost of $56 billion annually. Deteriorating domestic dietary trends highlight the need for improved nutritional education to the Australian consumer. Australia’s new scheme to rank the nutritional content of our food reflects a global trend towards improved food labelling. The new rating system is an adaptation of the “traffic- light” nutritional ratings model, adopted by the United Kingdom in June 2013. The Australian system will rank food products from 0.5 to five stars, instead of the UK’s green, amber and red symbols, which refer to fat, sugar, salt and energy levels. The effectiveness of the scheme as a public health tool relies on broad support from major food companies. Food production group Sanitarium and the Woolworths supermarket chain have already agreed to the new system. Woolworths will package its entire home-brand range of products using the new ratings. Other supermarket chains, such as Coles and Aldi, may also adopt the scheme. Even with support from supermarkets and some large food manufacturers, however, the initial support will be well below the UK’s labelling frequency of 60%. The new rating information will feature alongside the existing dietary management guide, found on the majority of products. This may, however, be overkill. In 2011, a study by researchers from Oxford University found that over-labelling of packaging is often seen by customers as time-consuming and requiring too much effort, which discourages many people from analysing the product. A planned review of the system after two years may allow for improvements to the model. Page 2 of 10 A US ratings system – known as NuVal – demonstrates the potential of nutritional ratings for product improvement. The system scores products out of 100 using similar parameters; it publishes the rating improvements of many products online. Suppliers using this system are thus encouraged to improve the integrity of their products. The involvement of major interests in the domestic food market, such as Sanitarium and Woolworths, is likely to place pressure on other suppliers and retailers to also reveal their products’ star ratings. Depending on the future prevalence of the new labels, suppliers may be provoked to improve the nutritional integrity of their products. Such pressure on suppliers to appeal to health conscious consumers would prove invaluable in transforming Australian dietary trends; a transformation that is an integral measure in preventing endemic obesity in Australia. Jack Di Nunzio Research Analyst Global Food and Water Crises Research Programme [email protected] ***** Economic Growth in Pakistan: Strides towards Stability? Recent growth in Pakistan’s textile sector shows promise for further economic development. Such development, coupled with increased investment from the United States and China, has the potential to be a valuable stabilising influence. Background Since independence in 1947, Pakistan has been plagued by political instability and economic uncertainty. Recent economic developments, including growth of 5.96% from July 2013 to May 2014 in the textile industry, plus the decision by the European Union Parliament’s International Trade Committee to grant duty-free market access to Pakistani exports, are indications that the economy could be on the rise. Prospective Chinese and US investment in Pakistan’s under-performing energy sector is also promising. Such economic development could serve to strengthen public confidence in the political system. Comment Pakistan has often struggled to maintain political and economic stability and tensions with India have long played a role in impeding those outcomes. To achieve a stable, prosperous Pakistan, it is essential that the government encourage economic development in the private sector. The ensuing profits could then be re-invested, via the taxation system, into crucial public sector areas, such as education and health. Page 3 of 10 Recent reports of the growth of the textile industry are promising. Pakistan’s textile and clothing exports are now valued at close to $13.5 billion, compared with $12.7 billion last year. As the industry represents just over 50% of Pakistani exports, growth in this sector is essential for internal economic development. Currently, just over 20% of Pakistan’s exports go to the European market, with its major export partners being Germany and the United Kingdom. Over the past year, exports to this market have grown by $700 million. The decision of the EU Parliament’s International Trade Committee to grant duty-free market access to Pakistani exports will further increase these numbers and should greatly benefit the economy. Aside from the EU, Pakistan’s other major export markets include the United States and Afghanistan. Pakistan is also seeking to increase its hold in the US market, by diversifying its exports. In June this year, it increased its mango exports to the US. Pakistan produces over one million tonnes of mangoes a year and the US represents a significant 43.2% share of the global mango market. Moreover, US commercial interest in Pakistan is likely to rise, following a recent three-day conference in Houston, which promoted US investment in the Pakistani energy sector. China has also shown recent interest in Pakistan. Research is currently underway into the feasibility of building a railway to connect the strategically-located Pakistani port of Gwadar, with the western Chinese city of Kashgar, in the Xinjiang region. The Gwadar port, which recently came under Chinese control, is of crucial importance to Beijing. By providing an alternative route for Middle Eastern oil imports, it is intended to form part of the solution to China’s “Malacca Dilemma”. The development of the railway, should it go ahead, would provide a valuable boost to the Baluchistan region specifically and to the national economy in general. The trickledown effects of a growing economy could help to stabilise the country. If more money is available for public services, such as healthcare and education, overall satisfaction with the government is likely to increase. The role and power of the army is a factor that should not be overlooked, however. It has viewed itself as the guardian of the state and has occasionally demonstrated the will and ability to step in if it perceives the government to be failing in its duties. If disunity between the government and the army were to grow, the fallout could undermine economic development. Undoubtedly, Pakistan faces many challenges to its security and stability. Often, these challenges appear insurmountable and little weight is given to the positive changes that are occurring within the country. Recent economic developments, particularly in textile exports and, potentially, in foreign investment in its energy markets, provide some hope for a more promising outlook. Natasha Howells Research Assistant Indian Ocean Research Programme ***** Page 4 of 10 India Extends Deadline for Implementation of the Food Security Act The deadline for the implementation of India’s National Food Security Act has been extended by three months from the initial 5 July deadline. Difficulties and delays, including a change of government, have impeded the efficient implementation of the Act. Background Approved in September 2013, the National Food Security Act (NFSA) was due for country- wide implementation by 5 July.
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