Right now the biggest issue we face is the world’s refugee crisis. It’s a horrible situation. But with a problem on this scale it’s going to create demand and opportunity in certain industries.
These industries won’t take advantage of this crisis. They will just do their bit to help people in need. The outcome will create an increase in demand for their products and services. And it will also create an increase in their profits as government money flows through the door.
Displacing the entire eastern seaboard
It’s hard to understand how big a problem this is. So let’s put it in perspective.
Around four million Syrians have been displaced externally. That means they’ve had to leave the country. Around three million of those are in Turkey and Lebanon. And now they’re heading towards Europe.
That’s like the entire population of Melbourne having to leave the country and find somewhere else to live.
Source: Google Maps
Take a look at the map of Melbourne above. Now imagine every single person leaving. Taking the bare essentials and fleeing the country. By bare essentials I mean what you can carry on your back. That’s it.
That’s just the start of it too.
In Syria another 7 million people have been displaced internally. That means having to relocate from home somewhere else in the country. More than likely to an overpopulated refugee camp.
That’s like every person in Sydney, Brisbane and Adelaide, relocating to Perth.
Can you imagine how it would be if half Australia’s population all moved to one city? What kind of strain that would put on existing services and infrastructure? Imagine how much need there would be for more of everything. More homes, more food, more energy.
What if that really did happen in Australia? What if Indonesia declared war on Australia? What if you had to flee your country because of war?
Number 12 versus Number 13
GlobalFirePower.com compares the military power of countries. Unsurprisingly you have the US at number one. Russia is number two. And China is number three. Australia comes in at number 13. But just one place above us at number 12 is our friendly northern neighbour Indonesia.
I decided to do an Indonesia versus Australia comparison. Here are some of the results…
- Active military personnel – Australia: 58,000 / Indonesia: 476,000
- Aircraft (all types) – Australia: 408 / Indonesia: 405
- Tank strength – Australia: 59 / Indonesia: 468
- Fighter Aircraft – Australia: 79 / Indonesia: 30
When you go through the results it’s neck and neck. Although Indonesia’s personnel dwarfs Australia’s.
It’s probably fair to say in a one-on-one war, it’d get pretty messy on both sides.
Of course I’m not saying that’s going to happen. But can you imagine the global reaction if it did?
Markets would crash and it would have nothing to do with currency or commodities or slowing economic growth. Millions of people in Australia, innocent people, would have to flee for the safety of their families.
It’s pure speculation that war will ever break out on Australian shores. But the reality is there is a war in Syria right now. It’s affecting millions of innocent people. And it’s leaving the developed world to pick up the slack.
Aid agencies ‘financially broke’
Of the four million externally displaced Syrians we face a stark realisation. The people have to go somewhere.
And that somewhere is now Western Europe. Also these people need shelter, food and clothing.
Of course it’s not just Syrian refugees. Wars all over the world are forcing people to flee their countries in record numbers.
For the first time since the Second World War,the UN Refugee Agency say the number of displaced people globally has topped 50 million.
The problem is aid agencies can’t afford this spike in refugees.
The Guardian reports, ‘This year the World Food Programme cut rations to 1.6 million Syrian refugees.’
The UN High commissioner for refugees, Antonio Guterres said to The Guardian,
‘[Our] budgets cannot be compared with the growth in need. Our income in 2015 will be around 10% less than in 2014. The global humanitarian community is not broken – as a whole they are more effective than ever before. But we are financially broke.’
Syria might be the focus. But this is a global problem. And this is creating a whole new set of problems surrounding how to manage all these people.
Major cities turning into slums
Budapest shut down its main train station last week. Hungary was only trying to abide by the EU’s Schengen zone laws. But there were thousands of refugees trying to get from Hungary to Vienna and Munich. All of them were stuck on the steps of Budapest station. It turned central Budapest into a slum overnight.
The BBC did a live report from Berlin last week. The reporter was walking through a park in central Berlin. Around him were groups of people sat down under trees and around park benches. These weren’t residents having lunch. They were refugees with suitcases just looking for somewhere to get five minutes sleep.
Germany estimate they will take somewhere between 800,000 to one million refugees this year. A part of that may be based on lingering guilt from the Second World War. But at least they’re doing their bit.
That’s a lot of new people for a country The World Bank states has a population density of 232 people per square kilometre of land.
Australia will have to rethink the hard line stance on immigration. We will have to take on more refugees. With a population density of 3 people per square kilometre of land, it makes sense.
Of course not all land in Australia is habitable. But we certainly have more space for more refugees than Germany does.
The reality is that every developed country will have to pull their weight.
Countries that don’t will not be viewed well by allies and trading partners down the track. If Australia continues its hard stance on immigration it will hurt the country long term when we perhaps need a bit of extra help, or a trade agreement signed.
The way I see it, it’s not a matter of if but when the thousands of refugees will hit the shores of Australia.
It’s likely to be tens of thousands. It should be in the hundreds of thousands. Either way it’s a lot of people.
What this does both in Australia and in other developed countries is create a bit of a logistical problem. As I said earlier, these refugees will need housing, food and water, clothing and the basic to maintain an existence.
And Australia won’t be able to ship them off to a detention centre for ‘processing’.
That’s going to put a strain on existing infrastructure wherever they land.
That strain however will create demand for things like portable housing. It’s going to create an increased need for basic staples like milk, meat, fruit, vegetables and bread.
An increase in refugees will actually stimulate industry as the basic need for their products and services increases.
For example, Red Sea Housing Services [TADAWUL:4230] is a stock listed on the Saudi Stock Exchange.
They manufacture and provide large scale housing solutions around the world. They primarily work with mining and oil companies. However they have also provided a Housing Camp for the Australian Government on Manus Island. This project was a $47 million government contract for a 432-person accommodation to process refugees.
The demand for this kind of accommodation is only set to increase.
And that demand will come from Australia, Germany, the UK or any developed country taking on an influx of refugees.
You might not like the fact Australia needs to take on more refugees. But it’s got to happen. And it’s going to change the social structure of many countries around the world.
You also need to look on the brighter side of it all. There are companies that will have an increased need for services and products. These companies can help to do the humane thing and assist people who don’t want to die in a horrible war. And if government helps to foot the bill, then it’s going to also assist the profit margins of these companies.
Editor, Australian Small-Cap Investigator
Ed Note: This article was first published in Money Morning.