SoftBank-backed Gympass Announces Plans for LatAm Expansion, Brazilian President Bolsonaro’s Pension Reform Expected to Pass in the Upcoming Week, Why Latin America’s Left Loves the Petroleum Economy, and more from the Region…
Other featured stories include: Twitter Trolling Centers: Social Media Trolls in Ecuador and Beyond, Chile’s Emerging Role as a Global Climate Leader, Fitch Expects Argentine Dollar Bondholders will Face Haircut, Satellites to be manufactured in Yucatan, Mexico, and more.
SoftBank-backed Gympass Announces Plans for LatAm Expansion
Gympass has announced plans to expand out of Brazil and into the rest of Latin America. The company will establish new offices and corporate leadership in Argentina, Mexico, and Chile to allow citizens from these countries to be able to enjoy the wide variety of activities Gympass offers.
Gympass works with a network of over 48,000 gyms worldwide. Big companies such as Tesco, Unilever and Activision Blizzard and over 2,000 firms have reportedly already started using the product. In Latin America, there are more than 65,000 gyms, which turn over more than US$6 billion per year.
New arrangements in the region will pan out as follows:
With 1,800 gyms across 287 Argentine cities, Gympass users will be able to browse and choose between a catalog of 390 different class types and activities.
Chile has over 700 gyms and sporting facilities on the Gympass platform. Notably, 80% of Chileans tend to work out less than the recommended amount by the World Health Organization.
As reported by Contxto, Mexican authorities enacted new legislation to tackle workplace-health issues in 2016. The new law, which will go into effect on October 23, will require companies to monitor and potentially decrease their employees’ stress levels. More than 3,500 Mexicans have joined Gympass in efforts to achieve this goal.
According to recent correspondence with Gympass, Mexico will experience the most amplification following foreign expansion.
Brazilian President Bolsonaro’s Pension Reform Expected to Pass in the Upcoming Week
Brazil’s pension reform bill, which restructures how and when public employees can retire, will finally be approved by the Senate next Wednesday.
According to Forbes, 66 Senators out of 81 will approve the bill, which is enough to give investors the security that this is a done deal.
Next on the agenda are the country’s desperately needed tax cuts. A forthcoming public proposal is expected to be made within the next two weeks, according to reports in the Brazilian press.
“There are structural impediments in Brazil even with pension reform passing, but this new government is giving us some light at the end of the tunnel. If they can finally pass this, it will send a positive message to the market.”
Brazil’s debt-to-GDP has been steadily climbing: a factor that could prove to be a hindrance to any emerging market that needs credit to grow. The country spends heavily on public pensions, and other social programs, such as education, which are non discretionary spending items.
It’s a difficult balancing act for a relatively poor country. Although there is a lot of money going out, there is not a lot coming in. Additionally, the country’s two-and-a-half-year recession caused demand to collapse. This weak demand has kept inflation in check, allowing Brazil’s Central Bank to cut interest rates. High costs of capital have been an ongoing roadblock to domestic corporate investment and consumption in Brazil. Domestic credit is now cheaper than it has ever been.
Brazil’s economy is moving in the right direction. In the last 15 years, the country’s economic growth soared, thanks to the external factors of a commodity super cycle.
“If Brazil can take this first step in fixing all of its structural problems, and Bolsonaro brings local governments on board with it, then this will be very positive for Brazil. You’re starting to see the conversation of tax reform coming to the table, and you have privatization too. They are going in the complete opposition direction of where they’ve been going for the last 20 years,” Zevallos told Forbes.
Why Latin America’s Left Loves the Petroleum Economy
Mexican President Andrés Manuel López Obrador wants to raise oil output by nearly half, and is positioned to build Dos Bocas: an $8 billion refinery that will be the largest in the country. The Mexican President has defended this approach, positioning it as a move aimed at boosting the country’s energy security and sovereignty.
Meanwhile In Brazil, Jair Bolsonaro, the country’s far-right president, has made claims that environmentalism is a “left-wing plot”.
The Latin American left’s enthusiasm for oil refineries suggests otherwise, however. In Brazil, Luiz Inácio Lula da Silva (president from 2003 to 2011) ordered the state-controlled oil company Petrobras to build four refineries. In Ecuador, former President Rafael Correa oversaw a $2.2 billion upgrade to a refinery. Peru’s former President Ollanta Humala began a similar $3.5 billion upgrade during his time in office.
AMLO has good reason to want to exploit his nation’s natural resources to the full. As reported by The Economist, oil can help power growth and fill the treasury. In May, the government announced that no private bidders had met the terms for Dos Bocas’s construction, so the project will now be handled by the state. The President is throwing public money at Pemex, without requiring its reform.
According to The Economist, in private, officials admit concern.
“Mexico has no trouble importing gasoline from refineries on the United States’ Gulf coast,” says David Shields, an energy consultant in Mexico City.
This money would be better spent on repairing inefficient existing refineries, or on expanding distribution grids for electricity and natural gas (though private investment could do those jobs).
“Ideology in part explains the enthusiasm for such projects among leftists. Fossil-fuel nationalism is a throwback to the concerns of the Latin American left of the mid 20th century. amlo’s adviser for the project is José Alberto Celestinos, aged 90, who was in charge of building refineries for Pemex in the 1970s.”
Big state projects provide an opportunity for many to make money. Very few people expect Dos Bocas to hit its budget. The only one of Lula’s refineries to be completed cost $20 billion, nine times its original estimate. Half of the $5 billion that Mr. Correa’s government spent on oil projects was stolen, according to his successor.
In terms of energy, Latin America cannot be accused of being a “dirty region”. The region has the world’s cleanest energy matrix, largely because of its large hydroelectric dams, and most of Latin America’s carbon emissions come from land-use changes and transport, as growing middle classes jump into cars.
“Some Latin American countries have encouraged non-conventional renewable technologies, such as wind and solar, whose price has fallen steeply. Rather than copy European subsidies, they have done so by fixing targets and by using auctions in which the market determines the supply price” (The Economist).
According to Lisa Viscidi, an energy specialist at the Inter-American Dialogue, over 40% of Uruguay’s electricity comes from wind, while solar plants provide 8% of Chile’s. Both countries have had left-wing governments—but have no significant oil. Costa Rica, has set (and appears to be on track to meet) a target of producing all of its electricity from renewable sources by 2021.
Chile’s Emerging Role as a Global Climate Leader
Last year, when Brazil backed down from hosting the United Nations’ 2019 COP 25 climate talks, Chile’s environment minister Carolina Schmidt proposed that Chile step up to the plate. This act of stepping in as COP 25 host is just one of many actions that suggest that Chile is emerging as a global climate leader.
This past June, Piñera launched an ambitious national climate change agenda. Chile plans to close its 28 coal-fired power plants by 2040; proposing to fill the resulting 40% gap in its electricity mix- plus all future growing demand- with renewable energy. The agenda includes a goal of achieving carbon neutrality by 2050.
“Being the host of the summit puts the eyes of the world on what the country is doing to be consistent between discourse and action to address the challenge of climate change.”
In 2013, renewables made up just 5% of the country’s electric power capacity; with the remaining amount coming from coal, natural gas and hydroelectricity. By 2019, this number has risen to 20.8%: which is ahead of schedule to meet the goal of 20% electricity production from non-hydro renewable sources by 2025.
Chile is on the way to meet its additional goals of 60% by 2035 and 70% by 2050. The Chilean National Electricity Coordinator predicts that solar energy (9.4%) will overtake natural gas (8.6%) as a larger share of the Chilean electricity mix by the end of the year.
Susana Jiménez, Chile’s former minister of energy, recently told the Columbia Energy Exchange, stated,
“Nobody expected this technological change. It’s just good news for us. It’s an opportunity to explore our potential, to have access to cheaper energy — and why not to think about exporting our clean energy to our neighboring countries?”
Twitter Trolling Centers: Social Media Trolls in Ecuador and Beyond
In Ecuador, a relatively peaceful and secluded nation, a phenomenon takes place in which politicians don’t require armed guards, but instead require the digital equivalent. Ecuadorian politicians are requiring Twitter troll centers, or businesses that sell online harassment as a service.
In fact, the majority of the country’s public debate- or lack thereof- is defined by anonymous Twitter accounts that threaten - and ultimately strive to silence- voices of dissent. Though Ecuador may be relatively too small to gain attention from Twitter’s executive team, this lucrative business of weaponizing the social media platform is already being exported to other countries throughout Latin America. This abuse of Twitter through troll centers not only threatens the company’s vision to become “the world’s agora”, but could potentially be putting lives at risk.
This phenomena is best demonstrated by the media tactics of Rafael Correa, former populist president of Ecuador, who has raged against the country’s elites, including the news media.
Due to his inherent distrust of journalists, Correa uses Twitter to launch “divisive rhetoric” to his followers. At his disposal is an audience of die-hard supporters, ready to use their anonymous accounts to echo his messages and attack anyone who disagrees.
From the beginning of his time in office (beginning January 2007), Correa was determined not to suffer the fate of his overthrown predecessors. He removed his tyrannical constraints and became increasingly belligerent on and offline. He continued his battle against journalists who wrote things with which he didn’t agree, often times insulting and threatening them. According to Tech Crunch, he would sometimes hit these journalists with multi-million-dollar lawsuits.
It was leaked that the Ecuadorian government spent millions on the Italian firm Hacking Team to spy on its citizens. On his weekly traveling Saturday Show, Correa would read tweets from people who insulted him and then reveal their true identities and addresses, calling for retaliation.
A company close to Rafael Correa was the first in Ecuador to begin monetizing the practice of Twitter trolling. Ximah Digital was founded by young businessmen from Guayaquil whose main asset was their close relationships to the government.
When the social media platform began selling ads in Latin America in 2012, Twitter hired the Latin American firm Internet Media Services (IMS) to re-sell its advertising products in the region. IMS did not have an established office in Ecuador, and therefore used Ximah Digital as its official national re-seller. This was a strange decision, considering the small digital agency did not have established relationships amongst the country’s largest brands. Ximah did, however, have high-level government connections, and the government rapidly became Twitter’s largest client in Ecuador.(Tech Crunch).
According to past reporting, and confirmed by previous and current employees, the government would disguise contracts as general social media management RFPs, or request-for-projects, then ensure their provider won the contract. Other times, companies were overpaid to provide legitimate services, but there would be an agreement made beforehand to provide trolling services as an add-on to their legitimate work.
In his article for Tech Crunch, Matthew Carpenter-Arévalo eloquently states,
“Twitter threatens the concentration of power of the old system, which is why Twitter becomes the battleground between tyranny and democracy. The winners in the old system, as discussed here, are fighting back, and that fight is coming to a democracy near you. By not taking sides, Twitter is ultimately taking a side. By siding with the trolls in the name of free speech, Twitter is standing against everyone else’s free speech. Twitter’s troll centers in Latin America aren’t an unfortunate minor externality or a regional nuance: they’re a business model that threatens to take away any value that the platform might create. The stakes are unimaginably high.”
Fitch Expects Argentine Dollar Bondholders will Face Haircut
Last month, the Argentine government announced plans to extend the maturities on roughly $100 billion in debt. This move was a response to the financial meltdown following President Mauricio’s defeat in last month’s primary election.
Charles Seville, senior director at Fitch, stated,
“One of the issues Argentina has had is its refinancing needs have been very high on the domestic side so the debt got shorter and shorter term and became harder to refinance at long maturities. That will continue to be a vulnerability for Argentina.”
As reported by Business Recorder, after downgrading Argentine sovereign debt to “restricted default” following the government’s decision to extend some debt maturities, Fitch upgraded the rating to “CC” after the country’s payment of short-term debt instruments on August 30.
The winner of October’s presidential election, expected to be opposition candidate Alberto Fernandez, faces a substantial fiscal consolidation that could be higher than the IMF’s estimate of 3 or 4 percentage points of GDP.
“That requires reforms to social security and other areas that haven’t been touched. That’s one of the reasons we think bondholders will have to make a contribution. The IMF, having stayed fairly quiet until now, are clearly talking to the administration and the potential incoming administration. Having until now signed off on debt sustainability (the IMF) may well decide that if they’re going to stay involved, bondholders also need to provide some financing,” Seville said.
Last year, the IMF agreed to a $57 billion line of credit with Argentina. The disbursement, initially set for this month, was further complicated by Macri’s primary election defeat, followed by the Argentine government inflicting capital controls to try to curb a crash in the peso.
Satellites to be manufactured in Yucatan, Mexico
Earlier this month, Yucatan’s Governor Mauricio Vila Dosal signed a letter of intent with Spanish company Deimos Elecnor group to make an investment in the aerospace and satellite industry in the State.
The deal was agreed upon an approximate amount of $130 million dollars in its first stage. The proposal is to install a technology center in satellite and space, where 200 engineers will work directly and 600 additional employees will collaborate indirectly, with the purpose of building communication and research satellites.
In addition, a new investment of 700 million dollars was made for the installation of two wind farms in Panabá and Sucilá. The construction of which will generate roughly one thousand new jobs.
With this investment, Yucatan is positioned at the forefront of technology. Yucatan will be the first state in Mexico where communication and research satellites will be built, which means the consolidation of the state in the world of the aerospace industry. These new investments for Yucatan are the result of the work mission carried out last June to Paris, France, during the “53 International Paris Air Show 2019”. During this time, Vila Dosal met with directors and representatives of some of the most prominent aeronautical companies in the world.
“The Spanish investment for the satellite manufacturing space center will be completed in approximately two years. The first year for the installation of the Space Center satellite-manufacturing complex, taking into account that the preparation of a satellite takes, more or less, two years,” Yucatan Times reports.
Because they require specialized professionals such as engineers, programmers, and those who can read and interpret the images emitted by the satellite, these projects will generate highly paid jobs.
The information collected by these satellites can be used for coastal surveillance, security, search for lost fishermen, transit of vessels, airplanes, migration issues, meteorology, hurricane monitoring, damage control, control of forest fires, and more. This information has infinite applications, which can be sold to other Mexican state or countries in Central or South America.
Elecnor is one of the leading global corporations in engineering, development and construction of infrastructure projects. The Spanish company is also a prominent promoter and investor in the fields of renewable energy, concessions for energy and environment infrastructure and space. With over 13,000 employees worldwide, 250 of them in Mexico, Elecnor operates in 53 countries on five continents, with special emphasis on America, where it has nine of its 11 stable markets. Among them, Mexico is one of the most important in terms of turnover, investment and number of employees.
Photo Courtesy of Yucatan Times
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