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U.S. water and power are shockingly vulnerable to cyberhacks

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When the Los Angeles Department of Water and Power was hacked in 2018, it took a mere six hours. Early this year, an intruder lurked in hundreds of computers related to water systems across the U.S. In Portland, Oregon, burglars installed malicious computers onto a grid providing power to a chunk of the Northwest.

Two of those cases — L.A. and Portland — were tests. The water threat was real, discovered by cybersecurity firm Dragos.

All three drive home a point long known but, until recently, little appreciated: the digital security of U.S. computer networks controlling the machines that produce and distribute water and power is woefully inadequate, a low priority for operators and regulators, posing a terrifying national threat.

“If we have a new world war tomorrow and have to worry about protecting infrastructure against a cyberattack from Russia or China, then no, I don’t think we’re where we’d like to be,” said Andrea Carcano, co-founder of Nozomi Networks, a control system security company.

Hackers working for profit and espionage have long threatened American information systems. But in the last six months, they’ve targeted companies running operational networks like the Colonial Pipeline fuel system, with greater persistence. These are the systems where water can be contaminated, a gas line can spring a leak or a substation can explode.

The threat has been around for at least a decade — and fears about it for a generation — but cost and indifference posed obstacles to action.

It isn’t entirely clear why ransomware hackers — those who use malicious software to block access to a computer system until a sum of money has been paid — have recently moved from small-scale universities, banks and local governments to energy companies, meatpacking plants and utilities. Experts suspect increased competition and bigger payouts as well as foreign government involvement. The shift is finally drawing serious attention to the problem.

The U.S. government began taking small steps to defend cybersecurity in 1998 when the Clinton administration identified 14 private sectors as critical infrastructure, including chemicals, defense, energy and financial services. This triggered regulation in finance and power. Other industries were slower to protect their computers, including the oil and gas sector, said Rob Lee, the founder of Dragos.

One of the reasons is the operational and financial burden of pausing production and installing new tools.

Much of the infrastructure running technology systems is too old for sophisticated cybersecurity tools. Ripping and replacing hardware is costly as are service outages. Network administrators fear doing the job piecemeal may be worse because it can increase a network’s exposure to hackers, said Nozomi’s Carcano.

Although the Biden administration’s budget includes $20 billion to upgrade the country’s grid, this comes after a history of shoulder shrugging from federal and local authorities. Even where companies in under-regulated sectors like oil and gas have prioritized cybersecurity, they’ve been met with little support.

Take the case of ONE Gas Inc. in Tulsa, Oklahoma.

Niyo Little Thunder Pearson was overseeing cybersecurity there in January 2020 when his team was alerted to malware trying to enter its operational system — the side that controls natural gas traffic across Oklahoma, Kansas and Texas.

For two days, his team was in a dogfight with the hackers who moved laterally across the network. Ultimately, Pearson’s team managed to expel the intruders.

When Richard Robinson at Cynalytica fed the corrupted files into his own identification program, ONE Gas learned it was dealing with malware capable of executing ransomware, exploiting industrial control systems and harvesting user credentials. At its core were digital footprints found in some of the most malicious code of the last decade.

Pearson tried to bring the data to the Federal Bureau of Investigation but it would only accept it on a compact disc, he said. His system couldn’t burn the data onto a CD. When he alerted the Department of Homeland Security and sent it through a secure portal, he never heard back.

Robinson of Cynalytica was convinced a nation-state operator had just attacked a regional natural gas provider. So he gave a presentation to DHS, the Departments of Energy and Defense and the intelligence community on a conference call. He never heard back either.”We got zero, and that was what was really surprising,” he said. “Not a single individual reached back out to find out more about what happened to ONE Gas.”

The agencies didn’t respond to requests for comment.

Such official indifference — even hostility — hasn’t been uncommon.

The 2018 break-in to the L.A. water and power system is another example.

These weren’t criminals but hackers-for-hire paid to break into the system to help it improve security.

After the initial intrusion, the city’s security team asked the hackers to assume the original source of compromise had been fixed (it hadn’t) while hunting for a new one. They found many.

Between the end of 2018 and most of 2019, the hired hackers discovered 33 compromised paths, according to a person familiar with the test who wasn’t authorized to speak publicly. Bloomberg News reviewed a report produced by the hackers for Mayor Eric Garcetti’s office.

It described 10 vulnerabilities found during their own test, along with 23 problems researchers had discovered as early as 2008. (Bloomberg News won’t publish information that hackers could use to attack the utility.) The person familiar with the operation discovered that few, if any, of the 33 security gaps have been fixed since the report’s submission in September 2019.

It gets worse.

Soon after the hackers produced the report, Mayor Garcetti terminated their contract, according to a preliminary legal claim filed by the hackers hired from Ardent Technology Solutions in March 2020. The company alleges the mayor fired the hackers as a “retaliatory measure” for the scathing report.

Ellen Cheng, a utility spokeswoman, acknowledged that Ardent’s contract was terminated but said it had nothing to do with the report’s substance. She said the utility frequently partners with public agencies to improve security, including scanning for potential cyber threats.”We want to assure our customers and stakeholders that cybersecurity is of the utmost importance to LADWP and that appropriate steps have been taken to ensure that our cybersecurity is compliant with all applicable laws and security standards,” Cheng said in a statement.

Garcetti’s office didn’t respond to a request for comment.

The case of the Oregon network — the Bonneville Power Administration — is no more encouraging.

The testing went on for years beginning in 2014 and involved an almost shocking level of intrusion followed by a pair of public reports. One published in 2017 admonished the agency for repeatedly failing to take action.

By 2020, two-thirds of the more than 100 flaws identified by the Department of Energy and the utility’s own security team hadn’t been resolved, according to interviews with more than a dozen former and current Bonneville security personnel and contractors and former members of the Department of Energy cyber team, in addition to documents, some accessed via Freedom of Information Act request.

Doug Johnson, a spokesperson for Bonneville, didn’t respond to requests for comment on whether the vulnerabilities have been resolved, including some detailed in documents reviewed by Bloomberg in 2020.

Dragos estimated in its 2020 cybersecurity report that 90% of its new customers had “extremely limited to no visibility” inside their industrial control systems. That means that once inside, hackers have free rein to collect sensitive data, investigate system configurations and choose the right time to wage an attack.

The industry is finally focused on fighting back.

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“If the bad guys come after us, there has to be an eye-for-an-eye, or better,” observed Tom Fanning, chief executive officer of Southern Co., at a conference this week. “We’ve got to make sure the bad guys understand there will be consequences.”

Published : June 13, 2021

By : Syndication Washington Post, Bloomberg · Kartikay Mehrotra

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https://www.nationthailand.com/business/40001554

Covid third wave hurts economic recovery but export growth robust

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The growth forecast for the Thai economy has been revised down to 1.9 per cent from 2.0 per cent for 2021 by the Economic Intelligence Unit (EIU) of Siam Commercial Bank.

The revised forecast follows downward revision of tourist arrival projections and the impact from the longer-than-expected domestic Covid outbreak, although the economy is propped by robust export recovery and government’s stimulus measures.

The EIU said the Thai economy was greatly impacted by the domestic pandemic resurgence, which is projected to take approximately four months (April-July) to contain, leading to significant decline in private consumption, especially face-to-face activities.

Bleak tourism prospects

Meanwhile, foreign tourist arrivals are projected at only 0.4 million people, despite reopening plans in the latter half of the year, as many countries remain cautious about easing restrictions for international travel due to concerns about new Covid variants. Subdued tourism will add to deeper economic scars among businesses and workers, particulary in tourism-related sectors, the EIU said. However, the Thai economic growth will not be much slower than the previous forecast, owing to robust export growth in line with the global economic recovery, especially among developed economies with accelerated vaccination pace.

Stimulus support

Another equally important push factor is the government support from the THB240 billion stimulus from the THB1-trillion loan decree, and a projected additional THB100 billion stimulus under the newly launched THB500-billion decree.

Going forward, the Thai economy is expected to gradually recover to reach pre-Covid levels in early 2023 and still face downside risks from the possible longer-than-expected pandemic containment timeline and slow progress in vaccination, which could delay economic recovery and make the economy more fragile, the EIU said. Therefore, improvement in the pace of vaccination to help boost confidence and jump-start short-term economic recovery, followed by economic restructuring towards the new normal, would be crucial for minimising permanent output loss for the Thai economy, the EIU added.

The global economic recovery is expected to be robust this year, but uneven across countries, mainly hinging on the effectiveness of pandemic containment, the vaccination pace, and the size of fiscal stimulus support.

The EIU revised its 2021 global economic growth projection to 5.8 per cent from the previous projection of 5.6 per cent. The global recovery is led by earlier lockdown easing among developed economies after rapid vaccination along with sizable and continuous fiscal support.

With improving consumer confidence, households may bring forward accumulated savings from last year and gradually spend on additional consumption.

Meanwhile, recoveries among emerging markets (EMs) will remain sluggish as delayed vaccinations have forced governments to prolong strict lockdown measures. Also, fiscal support for EMs are smaller in size due to limited fiscal space compared to developed countries, the EIU said.

Higher inflation

A strong recovery in global demand, together with limited global supply from shortages of some commodities and production factors, has caused inflation rates to rise across many countries. Recently, global inflationary pressures came from:

▪︎ pent-up demand and excess savings, causing prices of goods and services to spike after reopening;

▪︎ rise in commodity prices adding to higher production costs;

▪︎ continuous expansion of the global housing market, especially in developed countries such as the US and UK, leading to higher rental costs;

▪︎ higher wages as labour markets in some countries (such as the US) continued to be tight: low-wage workers have not yet fully returned to work as they are still discouraged by both the pandemic and generous fiscal support as unemployment benefits. Inflationary pressures are expected to gradually subside in the second half of 2021, as fiscal support measures are gradually wound up, commodity supply adjustments follow price increases, as well as from slowing wage pressure with more workers returning to the market. As of now, global inflation spikes have already caused government bond yields to rise in many countries.

Nonetheless, the EIU expects major central banks to maintain accommodative monetary policies.

Policy rates are expected to remain on hold, but central banks could start to signal tapering of quantitative easing (QE) in the latter half of this year, potentially leading to volatilities in asset prices and cross-country funds flows.

Exports lead the way

Thai exports have seen robust recovery in line with the improving global economy and trade. In the first four months of 2021, Thai exports, excluding gold, remarkably expanded 12.8 per cent year on year, and the expansion was broad-based across essentially all key products.

For the rest of year, speeding up global growth, particularly among developed countries, coupled with thriving prices of export products following rising commodity prices, should further boost Thailand’s export performance, especially during May-July with low base support, the EIU said.

With these factors, the EIU has revised Thailand’s exports growth projection up to 15 per cent from the previous forecast of 8.6 per cent. Thailand’s improving exports will help boost private investments, particularly in tools and machinery. Nevertheless, private construction investments remain largely subdued following sluggish recovery in the real estate sector.

Regarding tourism, the EIU has lowered the projection for foreign tourist arrivals in 2021 to 0.4 million, from the previously projected 1.5 million. Despite Thailand’s relaxation of lockdown measures to accept more foreign tourists, such as the Phuket sandbox, many countries are still imposing strict travel restrictions in fear of new virus variants. For example, the UK, despite high domestic vaccination rates, continues to maintain tight travel restrictions under Traffic Light system while UK returnees must be quarantined for durations according to the colour scale of their travel destinations. In the UK, countries are classified into red, yellow, and green scale, from strictest to most relaxed quarantine requirement. Thailand is in the yellow zone, requiring a 10-day home quarantine upon return to the UK.

If countries with early herd immunity like UK choose protective measures like the one in the UK, recovery for global travel could be further delayed. As a result, the EIC has adjusted foreign tourist arrival projection downward for this year.

On the domestic front, the economic damage from the third Covid-19 wave could be larger than expected. Even though the government has avoided strict lockdown measures to limit economic impacts, large and continuous spread of the pandemic has made residents more cautious about travel and significantly lowered their levels of economic activities, as suggested by high-frequency indicators such as various mobility data.

In its previous forecast, the EIU had projected that containment of the third wave could take up to three months. However, the situation has recently worsened from rising number of cases and clusters. The EIU now expects that this round of the pandemic could take up to four months to contain and cost around THB310 billion in economic damage to private consumption, including losses from declining domestic tourism.

Rising unemployment

The prolonged pandemic could potentially cause deeper economic scars.

Recent data indicated that unemployment rate rose again in the first quarter of 2021 to 1.96 per cent, from 1.86 per cent in the previous quarter. The number of unemployed people was at 0.76 million people, which already exceeded the number during the first lockdown last year. As rising unemployment in the first quarter has not taken into account the impact of the severe third wave, it is likely that Thailand’s unemployment rate could rise further this year, the EIU said.

At the same time, the average working hours shrank 1.8 per cent as the number of underemployed people (working less than 35 hours per week) rose, including 0.78 million furloughed workers who had not lost jobs but reported zero working hours. This furloughed worker figure more than doubled from 0.36 million in the previous quarter while the number of full-time and overtime workers decreased. In addition, work income, including salary, bonus, and overtime pay, significantly declined 8.8 per cent from the same period of last year across most major non-agricultural business sectors. Consequently, deeper scars in the labour market would negatively impact household incomes and confidence, resulting in slower consumption recovery and more sluggish restoration of household balance sheets from higher debt-to-income ratio, the EIU said.

Higher household debt

Thailand’s household debt-to-GDP ratio is expected to increase in the first quarter, due mainly to GDP contraction, and stay high throughout 2021 in line with ongoing debt forbearance measures.

With slow recovery of household income, debt overhang will be another obstacle for Thailand’s economic growth going forward, the EIU said.

Government fiscal support, with both on-budget and off-budget financing, will play crucial roles in shoring up economic growth in 2021. Regarding on-budget financing, the EIU expects construction investment in 2021 to expand 9.6 per cent from multiple construction projects, including the high-speed train between Bangkok-Nakhon Ratchasima, high-speed train linking three major airports, and dual-rail train etc.

Meanwhile, the off-budget financing would mainly come from the THB1-trillion loan decree with approximately THB530 billion of injection this year, consisting of THB290 billion approved before the third wave and an additional THB240 billion approved after the third wave, which depleted the THB1 trillion budget.

New relief measures include electricity and water fee subsidies, expansion of the Rao Chana and Mor33 Rao Rak Gun handout schemes, welfare card owner benefit payments, third-phase of Kon-la-krueng copayment scheme, and Ying-Chai-Ying-Dai subsidy. In addition, the government recently passed another THB500-billion loan decree with budget plan lasting up until next year. Based on the current state of the Thai economy, the EIU expects the government to inject another THB100 billion from this new budget decree in 2021.

These fiscal measures will be vital to limit the impact of the longer-than-expected third wave on Thailand’s private consumption.

The EIU has revised consumption growth down to 1.9 per cent this year from the previous projection of 2 per cent.

Monetary policy

In monetary policy, the EIU expects the Bank of Thailand (BOT) to hold the policy rate at 0.5 per cent for the rest of 2021 but will emphasise loan restructuring and widespread loan disbursement measures to increase the efficiency of monetary policy transmission. Thailand’s overall financial condition continues to be accomodative, as the BOT holds its policy rate at a record low and although inflation is expected to rise from the previous year due to higher oil prices, it remains at a low level. Headline inflation is forecasted at 1.3 per cent for 2021. However, rising long-term Thai government bond yields in line with rising US treasury yields have led to higher financing costs for businesses and the government. In particular, businesses with higher credit risks are more impacted since the credit spread has widened due to weaker economic conditions.

Going forward, the EIU expects the BOT to hold its policy rate steady at 0.5 per cent for the rest of 2021 alongside purchasing government bonds in the secondary market as necessary to maintain interest rates in the financial markets at a low level and support the economic recovery.

In addition, extensions for measures already in place which will expire soon are also necessary, including the Financial Insitutions Development Fund fee reduction scheme and relaxation of loan quality classification for financial institutions, which would assist financial institutions in maintaining support for their customers through both financing costs and loan restructuring.

Furthermore, the effectiveness of the rehabilitation loan scheme and the asset warehousing scheme must be monitored closely in order to improve the scheme’s conditions to ensure that SMEs have widespread and prompt access to the loans.

The way forward for the baht

The EIU expects the baht to depreciate year on year at the end of 2021 to a range of THB31-32 to the US dollar.

Since the beginning of the year, the baht has depreciated 4.2 per cent against the US dollar which is a greater depreciation than most other regional currencies, mainly as a result of lower economic growth outlook due to the new Covid-19 wave and lower current account balance.

For the rest of 2021, the EIU expects domestic factors to put downward pressure on the baht from the current account, which could see a deficit for the first time in eight years, and the sluggish Thai economic growth which would limit capital flows into the Thai financial markets. However, the baht compared to the US dollar would not depreciate much since the US dollar is also expected to depreciate in the second half of the year, as other major economies see an accelerated recovery going forward, especially in Europe, while economic recovery in the US may decelerate.

The European Central Bank (ECB) is expected to taper its quantitative easing programme before the Fed, which is expected to start tapering in early 2022. Nonetheless, the baht could appreciate again towards the end of the year and at the beginning of next year if progress in vaccination allows Thailand to almost achieve herd immunity, the EIU said.

Downside risks for the Thai economy going forward include:

▪︎ containment timeline for the third wave outbreak, which may be longer than expected, alongside potential new outbreaks as long as vaccination rate remains low; 

▪︎ slow progress in vaccination and low vaccine efficacy, which may not be effective enough against new virus strains;

▪︎ Covid-19 resurgence or new outbreaks in many countries, especially in Asia, which could impact Thai exports;

▪︎ deeper than expected impact from scarring effects such as a significant rise in non-performing loans.

Sluggish recovery

The EIU expects Thailand’s economic recovery in the next 2-3 years to remain sluggish, GDP would reach the pre-Covid level only in early 2023. This could result in a large permanent output loss mainly because the Thai economy is heavily reliant on the tourism sector, which is expected to see a slow recovery. Additionally several challenging factors remain, such as deep scarring effects on the Thai economy, pre-existing vulnerabilities from high household debt, and challenges for SMEs to adapt to new technological changes and stronger competition.

The EIU suggested that the public sector, which is the main economic driver amid the crisis, should implement measures to support a faster economic recovery and reduce the size of permanent output loss.

The EIU sees the THB500 billion additional borrowing by the government as suitable theoretically but in practice should be disbursed cost-effectively to build confidence and reduce scarring effects on the economy in the short-term. This could be done through accelerating vaccine procurement and distribution, supporting impacted people and SMEs, and promoting employment, the EIU said. In addition, the government should implement measures to restructure the economy for recovery in the medium and long term, such as upskiling and reskilling labour for the modern economy, especially in digital skills, educating SMEs about digital technologies and applying them practically, and supporting new growth industries which would become Thailand’s key economic drivers in the future.

The rising public debt remains managable despite likely crossing the 60 per cent of GDP threshold next year, as government bond yields remain low, which would limit the interest servicing costs to government revenue ratio, the EIU said. Nonetheless, going forward, the government would need to outline a clear practical plan to expand revenue base and manage expenses more efficiently to maintain fiscal sustainability, the EIU said.

(The writer is chief economist at the Economic Intelligence Unit, Siam Commercia Bank Plc)

Published : June 02, 2021

By : Yunyong Thaicharoen, Special to The Nation Thailand

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https://www.nationthailand.com/business/40001548

GWM set to open smart factory in Rayong, boosting Thailand’s EV ambitions

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Great Wall Motor (GWM) says its first smart factory in Southeast Asia will open in Rayong next week.

The launch comes seven months after the Chinese automaker took ownership of the plant from General Motors (GM). GWM is targeting production of 80,000 units per year at the Rayong factory – 40 per cent for export.

The Thai plant will make electric vehicles (EVs), becoming an important component of Thailand’s strategy to be a regional EV manufacturing hub. GWM will officially open the plant on June 9.

Published : June 01, 2021

By : The Nation

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https://www.nationthailand.com/business/40001423

U City Public Company Limited (U City) shares in strong demand

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U City, whose main business is the hospitality business with 51 hotels and 8,978 keys, is poised to benefit from what Airbnb CEO, Brian Chesky regards as ‘the Travel rebound of the Century’ as countries open their borders, and people are desperate to travel after more than a year of restrictions.

UCity Public Company Limited (U City) capital increase was strongly received with a total subscription for 22.5 bn shares. The results of the capital increase procedure, which ran from May 12 until May 21, were released by the Company on May 25. In total, shareholders injected about THB 15.7 bn into the Company, affirming a huge signal of support as it emerges out from a difficult COVID 19 pandemic period.

U City, whose main business is the hospitality business with 51 hotels and 8,978 keys, is poised to benefit from what Airbnb CEO, Brian Chesky regards as ‘the Travel rebound of the Century’ as countries open their borders, and people are desperate to travel after more than a year of restrictions.

U City Public Company Limited (U City) shares in strong demand

Some of the proceeds of THB 15.7bn will be used to repay debt, further boosting profitability. These proceeds are in addition to the potential THB 4.4bn from sales of noncore assets that the Company is progressing, which is expected to reduce the net/debt ratio to around 0.1 times.

Acting Chief Executive Officer and Chief Financial Officer Soraya Satiangoset commented “U City’s financial footing is now very secure following the capital increase and sale of lower profit operating lease hotels and other noncore assets. The remaining high quality hotel portfolio is set to benefit from pent up travel demand. The EU vaccine progress will exceed 50% of the population by June, with herd immunity within this Summer. Countries are already relaxing the travel restrictions”

U City has underperformed its hospitality sector peers and now has a Price to Book Value of only 0.38x, the lowest in the property sector. U City’s largest shareholder is BTS Group, one of the major shareholders of U-Tapao International Airport and Eastern Airport City Development Project, set to be one of the largest real estate developments on Thailand’s eastern seaboard.

For more information: Tel. 02 273 8838

Or https://www.ucity.co.th/en/contact-us/company-address

Published : May 29, 2021