Sunday Business News

New insurance law in the offing
Nazmul Ahsan

The government is going to enact the Insurance Regulatory Authority Ordinance, 2008 with the provision of a mandatory policy holders’ protection fund. The new law will prevent Islami life insurance companies from doing business in traditional way and provide that each insurance company board must have seven directors appointed from policy- and share holders, sources in the bureaucracy New Age. The draft of the law, sent by the commerce ministry to the Cabinet Division Wednesday, is expected to be placed at the council of advisers meeting today. If endorsed, the law will end the commerce ministry’s control over insurance companies and place those under the finance ministry. Besides, the number of directors of an insurance company will be reduced to 15 from 20 now, while a provision will be there to establish brokerage houses to help both insurance companies and policy holders. The new ordinance will provide that a life insurance company will have to raise its paid-up capital to Tk 30 crore from Tk 7.5 crore now and a general insurer will have Tk 40 crore as capital, which is now Tk 15 crore. General insurers will be renamed as ‘non-life insurance companies. Currently, there are 18 life insurance companies including six Islami life insurers and 44 general insurance companies in the country. The reforms planned under the new law include liquidation of the insurance controller’s office at the commerce ministry and formation of an authority to regulate the insurance sector which saw a phenomenal growth in recent years, but was dogged by allegations of hassles in settling claims. The post of chief controller of insurance will be vanished and the four-member authority will have a chairman as its head. The sector is now laxly overseen by the 1938 insurance act, which is unfit for regulating a fast-growing sector like insurance, officials said. ‘The changes will be made to safeguard the interests of the insured individuals and businesses, and bring transparency and accountability in the sector,’ said a commerce ministry official. The commerce ministry earlier proposed that the number of sponsor directors of an insurance company must not exceed eight in a 15-member board, which now has 20 members. Five directors will be appointed from public category and the remaining will come from independent category. The proposal, however, did not clarify the terms for public and independent categories. Sources in the controller of insurance office said they would issue clarification and directives regarding the terms soon after the ordinance was promulgated. They said the term ‘public’ might be referred to both policy holders and share holders, while academics having no insurance policy and share might be appointed as directors from independent category. For a life insurance company, a policy holders’ protection fund has been made mandatory to protect the interests of policy holders amid allegations of deceitful acts by unscrupulous companies, officials said. Currently, many Islami life insurance companies are suffering from image crisis for mixing Islamic and traditional policies in their operations as well as for lacking fund and professionalism, they said. ‘The proposed law will make the Islamic life insurance companies more professional and dedicated,’ a high official in the commerce ministry told New Age The criteria of solvency margin to be applicable only to the new companies will be fixed soon after the approval of the proposed ordinance, sources said.
DSE remains dull for third week Staff Correspondent
Dhaka stocks ended downbeat last week as investors remained unnerved due to the SEC’s decision on closed-end mutual funds baring them from increasing their sizes, said market operators. The general index of the Dhaka Stock Exchange lost 5.33 points or 0.18 per cent in the week to close at 3019.14 on Thursday, while all its share price index shed 9.84 points or 0.38 per cent to close at 2588. The bourse’s blue chips index, DSE20, however, gained 46.83 points or 1.86 per cent to close at 2564. A merchant bank official said the market remained downbeat due to significant fall in the share prices of mutual funds after the SEC decided that closed-end mutual funds would not be allowed to increase their sizes. Mutual funds suffered losses on three trading days of the week. But share prices of mutual funds gained on Thursday due to institutional buying to avail the lower prices of the mutual funds’ units, he said. Of the top ten losers in the week, nine were from mutual funds and one from insurance issue. The trading days of the DSE was shortened to four days from five days as market remained closed on July 1 because of bank holiday. On Sunday, a group of retail investors staged demonstration in front of the DSE building, upset with the SEC’s decision on closed-end mutual funds. Market lost steams also in previous two weeks because of selling pressure from investors, frustrated with the DSE’s market cooling measures. Daily average turnover at the DSE, however, increased last week by 32.16 per cent to Tk 283 crore from the previous week’s Tk 214 crore. Last week’s total turnover at the bourse was Tk 1,133 crore. No share of the Titas Gas Transmission and Distribution Company Ltd, which debuted on bourses on Wednesday, was sold on its first trading day as the buyers offered lower prices than that expected by the company. However, on the second trading day, a total of 59,150 shares worth Tk 2.28 crore were traded at the DSE. Share price of the state-owned enterprise Titas Gas closed at Tk 386 on Thursday. Face value of shares of the SoE is Tk 100 each. The trading of the shares of Titas Gas remains closed today (Sunday) to allow the market to distribute shares that were traded since its debut. Titas Gas made its debut on the bourses under direct listing regulations for offloading of shares worth Tk 214.12 crore. Of the total 242 issues traded at the DSE last week, 53 advanced, 184 declined and five remained unchanged. Forty-five issues recorded no transactions during the period. Square Pharmaceuticals was the top turnover leader with shares worth Tk 92.33 crore traded, accounting for 8.15 per cent of the total market turnover.
WDB takes up project to boost salt, agri output Bangladesh Sangbad Sangstha . Chittagong
The Bangladesh Water Development Board has taken a project to re-excavate Cankhali canal to boost salt and agriculture production in the southern part of Chittagong during the next dry season. WDB officials said the government has allocated Tk 1.35 crore for re-digging nearly 2.06 km of the canal stretching from north side of the River Karnaphuli to south side of the River Sangu. Sources said the objective of the project is to restore smooth communication through the river route for ensuring proper growth of traditional salt industry on both sides of the canal in Indarpool area in Patiya and to promote agriculture by bringing more lands under irrigation programme in the area. Apart from a good number of small and cottage industries, 40 salt industries are located at the Indarpool industrial zone which are mainly dependent on the water route for transporting their raw materials as well as finished products.
Wholesale privatisation blocks public sector CSR: Muzaffer Staff Correspondent

Wholesale privatisation of industries in Bangladesh blocked the corporate social responsibility of the public sector enterprises having good records in this regard, economist Professor Muzaffer Ahmed said on Saturday. A persistent feudal culture had been hindering the emergence of a true corporate culture in the private sector here, the economist told a roundtable on ‘CSR and Bangladesh’ held at National Press Club. Economist Rehman Sobhan, National Board of Revenue chairman Abdul Mazid and Bangladesh Garment Manufacturers and Exporters Association president Anwar Ul Alam Chowdhury Parvez also spoke at the discussion organised by Development Strategy Forum. ‘Privatisation destroyed the corporate culture in public sector enterprises having good records of social contributions,’ said Muzaffer Ahmed, the chairman of Transparency International, Bangladesh. He observed that in private sector, a sound corporate culture has yet to take ground as the business is widely dominated by families. He noted that a new generation in the private sector started feeling the necessity of being socially responsible. To make truly and socially responsible corporate, he stressed the need for changing the mindset especially diversion from feudal culture and to be democratic in dealing with workers and employees. Professor Rehman Sobhan said due to dependence on exports, industries in Bangladesh were obviously facing pressure from rights groups and trade unions in the USA and EU. But the corporations in western countries especially giant apparel importers were continuing with cutting the prices on garments, procured from Bangladesh, and pressing to improve working environment, said Sobhan, also chairman of Centre Policy Dialogue. The NBR chairman said businesspeople should develop a sense of belongingness among their employees and clients. ‘CSR is not spending some money but implanting missions those deserve sustainable returns for society in the long run.’ The chairman also said his department might think of tax exemptions from spending on the corporations doing tasks with long-term and sustainable benefits for society. Anwar Ul Alam Chowdhury said businesspeople had understood that more attention to CSR especially ensuring eco-friendly production and rights of workers was vital for the sustainability on business in global market.
Barisal co-op societies flout rules Our Correspondent . Barisal
Different cooperative societies in Barisal district and city are flouting rules and regulations of profit distribution among the shareholders and charging interest on small loans at their will. Sources in the office of the Barisal district registrar of cooperative societies said there are about 1,100 multipurpose cooperative societies at the ten upazilas of the district, including 45 societies in the city. As par rules of registration, cooperative societies have to pay 10 per cent of their annual profit to the registrar office for yearly audit, 3 per cent is to be deposited for development fun and 10 per cent would be reserve fund of the societies while the rest 77 per cent should be distributed among the shareholders. The cooperative societies also offer micro credit and other funds, including offering loan against gold-security. Members of the societies said they pay per head Tk 100 for membership, Tk 30 for purchasing form and Tk 100 for collecting first instalment of loan. Tk 20 is charged with each instalment of a loan worth Tk 10,000. The rate of interest against the loan is not same for all cooperative societies and it varies from 2.5 per cent per month to 25 per cent per annum from one organisation to another. Mainly small earning groups like small businessmen, day labourers and housewives of poor families register for micro-credit loans and none of them know about the process of distributing the yearly profits among the shareholder members. The capital which is deposited with any scheduled in the name of the society is often misappropriated by most of the societies, the sources added. Some cooperative societies like Aryalaxmi Cooperative Society and Barisal Janata Credit Union, BDS Credit Union enrol only members of particular religious communities. Advocate Manabendra Batabayal, chairperson of Aryalaxmi Cooperative Society, and Henry Swapan of Barisal Credit Union, acknowledging the fact, claimed that they hold annual general meetings of their organisations regularly and distribute profit among the shareholders. Abdur Rashid Khan, a slum dweller of Palashpur and member of Palashpur Multipurpose Cooperative Society, said they only receive loans from the society and deposit instalments but never heard about distribution of profits among members or shareholders. Registrar of the Barisal District Registrar of Cooperative Societies said regular audit of more than one thousand cooperative societies is never possible with limited manpower of his office and they will take action if any allegation against any cooperative house is proved.
Strict execution of laws in shipbreaking industry stressed Bangladesh Sangbad Sangstha . Chittagong
Speakers at a seminar on Saturday strongly advocated for formulation of a comprehensive policy and its strict execution side by side with undertaking measures for the ship breaking industry to check human casualty and lessen the environment pollution in the country. They said the ship breaking industry has been contributing significantly towards the national economy, but its negative affect on marine environment and resources as well as human casualty are more grievous. In this respect, the speakers stressed the need for updating the existing laws and proper compliance of the local and international regulations to restore discipline in this vital sector through upholding the workers’ rights and using modern technologies in ship dismantling. Prestigious english daily ‘The Independent’ and YPSA, a voluntary organisation, jointly arranged the seminar on ‘Human Cost and Environment Pollution Due to Unregulated Ship Breaking Industry: An Immediate Solution’ at Chittagong Press Club auditorium. Former adviser to the caretaker government and editor of the Independent Mahbubul Alam was the chief guest while professor emeritus Dr Jamal Nazrul Islam and deputy commissioner of Chittagong Mohammad Ashraf Shamim were special guests on the occasion. Professor Shafiq Haider Chowdhury, Dr Maruf Hossain and Nasrullah Bahadur of Chittagong University, divisional director of the department of environment Nazmul Haq, joint director of the department of labour Abdul Khaleque, advocate Iftekhar Saimul Chowdhury, trade union leaders AM Nazimuddin and comrade Tapan Dutta, journalists Abu Sufian, Mohammed Shah Nowaz and Nazimuddin Shayamol and ship breaking yard worker Suruj Meah, among others, took part in the discussion. Chittagong bureau chief of the Independent Nurul Amin moderated the seminar while the executive of YPSA Mohammad Ali Shaheen presented a key- note paper on the background and present condition of the sector. The discussants said the local officials must carry out a thorough physical inspection of any ship before it enters the Bangladesh water territory for dismantling. This kind of inspection will help identify materials, detrimental to human health and environment. Besides, they called for cleaning these ships and freeing them from the toxic gases before declaring such vessels for scrapping. Mahbubul Alam said three key factors-workers’ rights, proper protection of environment and healthy growth of the industry- should be treated equally for smooth survival of this sector. In this respect, he called for immediate steps for proper application of the existing laws to uphold the rights of workers and protect the environment, particularly the marine resources. The former adviser stressed on introduction of participatory committee with involvement of owners and workers representatives to oversee the interests of both the sides, licensing system for industry owners, prior inspection before arrival of a ships for dismantling and adoption of strong safeguard for checking the environment pollution. ‘Despite many constraints, Bangladesh has bright prospects to be a developed country in all respects,’ he said. Jamal Nazrul Islam said time has come to give the sector a shape, through which the poor workers would get their legitimate rights and the environment would not be degraded further. ‘Bangladesh has many positive aspects of a truly functional state but many lobbies outside the country are active to label it as a failed country by tarnishing its image,’ he said. Abdul Khaleque said poor workers of the sector have been deprived of their lawful rights for years due to absence of a unified guideline and single regulatory body and also for non- cooperative attitude of the ship yard owners. Nazmul Haq said the ship-breaking industry is meeting only 7 per cent of the total demands of local iron raw materials but its affect on the environment, particularly on marine bio-diversity, is far reaching and grievous causing heavy economic losses. Dr Maruf Hossain of the Institute of Marine Science of Chittagong University said 40 per cent fish resources in Swandip channel and Sitakunda coast areas of the Bay of Bengal declined compared to other areas of the sea due to heavy marine pollution caused by toxic oil and harmful materials. He called for a broad-based regional understanding among India, Pakistan and Bangladesh to set up a pre-cleaning plant and adequate number of dockyards with all modern technologies to dismantle the scrapped ships.
Malaysia offers huge potential for Bangladeshi workers : Iftekhar United News of Bangladesh . Kuala Lumpur
Foreign adviser Iftekhar Ahmed Chowdhury Saturday said there is a huge potential for Bangladeshi workers’ jobs in Malaysia which the government would take every step to tap. ‘Malaysia is planning at least four major development projects in the future. If we can plan carefully and our workers are able to satisfy employers, there is no reason why we should not be able to send hundreds of thousands in the coming years,’ he told members of the Bangladesh community in Kuala Lumpur. The adviser is currently in the Malaysian capital to attend a summit meeting of the Developing-8 (D-8) countries of the Islamic world. The ministerial component of the conference commences today in preparation for the July 8 summit. Iftekhar, who is also in charge of the Ministry of Overseas Employment and Expatriate Welfare, said contrary to some earlier reports, the Bangladeshi labour market in Malaysia is continuing to expand. ‘Already there are over 445,000 Bangladeshis employed here from the reports I have received. If the current trend continues, by year-end the number should exceed half a million,’ he said. Later in the evening, he visited the Bangladeshi workers’ shelter house ‘Semenyin Hostel’ at Kajang, 60 kilometers away from the city, where about 200 Bangladeshi job-seekers are currently being looked after by the high commission, providing them food and accommodation. ‘I have listened to some of the issues of the workers that require to be addressed as we intend to accord top priority to welfare. I intend to discuss some of these problems with Malaysian home minister Syed Hamid Albar, whom I shall be meeting day after tomorrow,’ Iftekhar said.
China should be alert to stagflation: economist Xinhua . Beijing
Li Yining, one of China’s leading economists, said on Friday that China is facing a pressing challenge of preventing inflation turning into stagflation. He said stagflation, the co-existence of high unemployment and high inflation, might occur if improper measures were taken to fight inflation so as to disrupt market expectations, or the economy failed to survive the global slowdown. Improper anti-inflation measures may lead to investors shying away, widespread unemployment worries or hard times for small and medium-sized companies, resulting in frustrated consumption, Li told the Second Meeting of the Standing Committee of the 11th National Committee of the Chinese People’s Political Conference (CPPCC), the country’s political advisory body. The global slowdown, on the other hand, would affect the domestic production and consumption or employment by cutting exports, and it could also lead to outflows of capital, said Li, a member of the Standing Committee. The economist said China should continue to take a firm grip on the country’s foreign exchange flows, and be alert to problems that might occur in the context of a global slowdown given the huge forex reserves. He said the government should not over-reach itself in fighting inflation or be misled by the concept that only a low inflation rate would be a complete success in the anti-inflation campaign. ‘The inflation rate, if controlled at about 60 per cent of the growth rate, would be appropriate, such as keeping the rate at around six per cent for a 10-per cent growth in economy,’ he said. The country’s inflation rate hit an 11-year high of 8.7 per cent in February, and eased to 7.7 per cent in May, still above the government-set goal of three per cent for the whole year. He said the national economy was running on a good course, according to economic data, despite new challenges from home and abroad including the may 12 earthquake.
Philippines central bank intervenes as peso falls to new 10-month low Asia News Network . Manila
Currency dealers said the market sold down the peso on reports that year-on-year inflation surged to a 14-year high of 11.4 per cent in June. But as the Bangko Sentral ng Pilipinas unloaded dollars between P45.60 to P45.70, the market saw a good opportunity to lock in gains. As a result, the local currency closed slightly stronger than Thursday’s P45.50 to the greenback. The peso, now Asia’s second worst performing currency next to the South Korean won, would have fallen deeper if not for BSP’s dollar sales. Some traders estimated that the central bank accounted for as much as half of Friday’s volume of $847.8 million at the Philippine Dealing System. But despite the slight bounce that allowed it to close near the day’s high of P45.43, the local currency tumbled by nearly P1 or 2.2 per cent this week from last week’s close of P44.46 to the dollar. Since the start of the year, the peso has depreciated by about 9.2 per cent, wiping out nearly half of the gains against the greenback recorded last year when the local unit was acclaimed as the region’s best performing currency. ‘The BSP was intervening aggressively but the market knew that the exchange rate had already moved up fast and that the central bank may tighten monetary policy anytime given the clear and present danger of inflation. Knowing that the BSP may even raise interest rates by 50 basis points, and might not even wait for the next policy rate setting (July 17) so some had taken profits,’ a bank treasurer said. Other dealers said there was heavy corporate demand for dollars, which added to pressures from a string of bad news on the local and global front. For instance, state utilities were sourcing dollars for maturing debt payments and other requirements, a banker said. ‘People are nervous on what will happen during the weekend so they’re buying dollars,’ another dealer said. ‘There’s still not much incentive to take the peso yet so investors are staying on the sidelines, believing that the local currency could hit P46 to P47 to the dollar,’ the dealer added. As the BSP was still ‘behind the curve,’ or its interest rates are still too low compared with what the market believed was needed to address rising inflation, the dealer said the trend was still bearish for the peso. ‘There’s a recurring theme of risk aversion given the US (credit) crisis and also the surging oil and other commodity prices are affecting the whole world,’ said Rizal Commercial Banking Corp. senior vice president Marcelo Ayes. ‘It will take major move, intervention by G8 (world’s eight richest economies) to support the US dollar and collapse oil prices. I see that happening within one or two weeks,’ Ayes said.
BASIC Bank registers Tk 84.64 crore profit Business Desk
BASIC Bank Ltd, a fully state-owned scheduled commercial bank, achieved a profit of Tk 84.64 crore in the first half of 2008 registering a 38 per cent growth over the previous half yearly profit. The bank’s deposit and advances also grew by 70 per cent and 35 per cent respectively. Accordingly, senior executives of the bank, after reviewing half-yearly position, in a meeting held recently expressed their satisfaction on overall performance of the institution, said a press release. They also expressed high aspiration for a successful year-ending exceeding targets set for all operational areas. The meeting, however, stressed close monitoring of all loans and advances and utmost attention to the deceleration of non-performing loans.
GP signs bill payment servicedeal with Titas Gas Business Desk
Grameenphone and Titas Gas Transmission and Distribution Company recently signed an agreement to jointly launch the electronic bill payment service BilIPay. Khalequzzaman Faruk, secretary of Titas Gas, and Delwar Hossain Azad, deputy director and head of financial services of Grameenphone, signed the agreement at a function in the Dhaka city, said a press release. Mohammad Mohsin, secretary of energy and mineral resources division, Jalal Ahmed, chairman of Petrobangla, and Rubaba Dowla, director marketing of Grameenphone, among others, were present on the occasion. BillPay service will offer Titas Gas consumers to pay their bills either from handset with GP SIM or at any GP authorised BillPay centres.
Foreign businesses seek Thai policyreview: deputy prime minister Agence France-Presse . Bangkok
Foreign business owners in Thailand want lower taxes and harmonised corporate policies to attract more investors, the country’s deputy prime minister said Friday. Suwit Kunkitti said foreign business leaders had met him to seek a review of the tax system and policies related to investment and business activities. He spoke to reporters after a meeting between Thailand’s Board of Investment and the Joint Foreign Chambers of Commerce in Thailand. ‘The suggestions from JFCCT are very instructive and the meeting today has helped to improve the investment climate in Thailand,’ Suwit said. Both sides agreed to hold a quarterly meeting to exchange information and ideas and said they would cooperate to promote investment in Thailand.
Reserve decline blamed for oil price increase Xinhua . New York
US investor Jim Rogers has said that the decline in known oil reserves across the world is the main reason behind the skyrocketing oil prices that have already topped 145 US dollars a barrel. While admitting that factors driving up oil prices are various, Rogers insisted that short of oil supply was the fundamental factor pushing oil prices up all the way. ‘Nobody has discovered any major oil fields in over 40 years, while known oil reserves are declining amid a situation that the demand is boiling,’ he said, adding that oil prices will no doubt go higher unless somebody finds a lot of oil quickly, Rogers said in a telephone interview with Xinhua Thursday. ‘Nearly every oil company has declining oil reserves, nearly every oil country in the world has declining oil reserves,’ he said, noting that ‘the known oil reserve will not last 100 years.’ Rogers said that he was ‘not good at short-term trading’ and predicting the price trend in a short period, but it is obvious that oil prices ‘will maintain an upward trend over a longer period’ because the conflict between oil supply and demand is a big problem. Rogers blamed the US government for driving down the value of the dollar, saying that the US government should do something about the currency. He said he has been ‘very vocal’ about the US dollar policy and criticized its ‘mistakes’ as having been printing a lot of money since last August and lowering interest rates dramatically. All these factors have helped drive up the prices of the dollar- dominated crude oil, he said. Noting that the sharp rise in oil prices will change people’s lives, he said they have to change their lives ‘accordingly.’ Rogers highly recommended the use of nuclear fuel, saying that it is cheaper and cleaner than anything else, adding ‘if you are careful with it, it is safe.’ In September 2007, Rogers sold his mansion in New York City for about 15 million dollars and moved to Singapore, mainly due to his belief that this is a ground-breaking time for investment potential in Asian markets.
US share of foreign tourists slips Associated Press . Las Vegas
Despite the weak US dollar, a boom in international travel around the world hasn’t translated into an explosion of foreign tourists to the United States. Explanations range from post-9/11 security headaches and lower airfares elsewhere to poor marketing by the US. Whatever the cause, travel industry experts say the US is missing an opportunity to make up for the shortfall in domestic tourism caused by high fuel prices. At Heli USA Airways, one of several operators that whisk visitors on aerial tours of the Las Vegas Strip and nearby Grand Canyon, vice president of marketing and sales John Power said the faltering US economy and competition from other countries are crimping business. ‘Right now, there’s some other worldwide destinations that are taking some of the marketplace,’ said Power. According to the UN World Tourism Organisation, the United States had 51 million international visitors in 2000, more than 7 per cent of the 682 million international arrivals worldwide. But as international arrivals worldwide jumped to 846 million in 2006, the US saw roughly the same number of visitors as it used to — dropping its share to 6 per cent. The US share of international tourism dollars has slipped too, though the US still drew more money than any other single country in 2006 and more than it did in 2000. From 16 per cent of the market in 2000, or $82.4 billion, the US took in 12 per cent of the $733 billion worldwide tourism market, or $86 billion in 2006. Major destinations such as Los Angeles, Orlando, San Francisco, Miami, Honolulu, Las Vegas, Chicago, Washington, D.C., and Boston all saw 20 per cent to 34 per cent fewer travelers in 2006 compared with 2000. Of the top 10 cities, only New York saw more visitors in 2006 than in 2000, with a 9 per cent increase to 6.2 million arrivals, according to the US Commerce Department. Nearly 26 million people travelled to the United States from overseas in 2000. But that dropped drastically after 9/11, according to data from the US Commerce Department’s Office of Travel & Tourism Industries. The number bottomed out in 2003 with 18 million overseas visitors, and with 24 million last year still had not returned to previous levels. The figures do not include visitors from Canada and Mexico, whose numbers are up substantially from 2000 but who tend to spend less than other international travellers to the US. Part of the problem is the perception of frosty US attitudes toward foreigners starting at customs, said Roger Dow, president of the Travel Industry Association. That and other factors make it difficult to attract more overseas travellers. The US should decode its complex entry rules and boost staffing at customs checkpoints, Dow and others said. ‘The perception is in spades that we’re less welcoming’ than other countries, he said. Vivian Dapal of EuroUSA, a travel agency that caters to groups from Europe, Asia and the Middle East, and Theresa Belpusi, who promotes Washington, DC, with Destination DC, said American airports are particularly confusing. ‘I don’t think that people are questioning that we’re trying to get our arms around security,’ Belpusi said. But she said the government should communicate better with ‘the people that are probably affected the most’ — the tourists. Frequent US visitor George Somerville, of Glasgow, Scotland, said international flights are generally cheaper to places other than the United States. ‘In the last 12 months, destinations my colleagues have travelled to include China twice, Singapore, India and Thailand,’ he said. ‘Much of that is to do with the price of flights — Air Asia, Emirates and Singapore airlines are doing great deals from the UK.’
EU newcomers to see slower growth in 2009 Agence France-Presse . Vienna
EU newcomers from eastern Europe are likely to see slower economic growth in 2009, although momentum will remain well above the average in the rest of the bloc, the Vienna Institute for International Economic Studies said in a report published Friday. Average growth in the 10 new EU members that joined the bloc in 2004 and 2007 was expected to fall to 4.9 per cent in 2009 from 5.2 per cent in 2008 and 6.2 per cent last year, the WIIW said in its report. This was far ahead of the older EU members however, who could only expect 1.5 per cent average growth next year, compared to 1.7 per cent in 2008 and 2.7 per cent in 2007. Maximum growth rates of 6.0 per cent were expected in Bulgaria and Slovakia, the report also said. ‘The resilience of the new member states of the EU derives from growing labour productivity partly offsetting the combined effects of appreciating currencies and rising wage costs,’ the WIIW said in a statement ahead of the publication of the report. The exceptions were Latvia, Estonia and to a certain extent Hungary, which could expect 1.0-per cent, 2.0-per cent and 3.4-per cent growth next year respectively. But the WIIW expected them to catch up with the other newcomers by 2010, bringing average growth to 5.2 per cent. The same trend was likely to be seen in EU accession candidates Croatia and Turkey as soon as 2009, with growth rising to 4.5 and 5.0 per cent respectively from 4.2 and 4.0 per cent in 2008.
Companies begin quest for oil, gas off Florida Associated Press . Pensacola
Oil companies once viewed drilling in the deep waters off Florida as cost prohibitive. Politicians feared even the slightest sign of support would be career suicide. No more. Record crude oil prices are fuelling support for oil and natural gas exploration off the nation’s shores. In Florida, movement was underway even before President Bush called on Congress last month to lift a federal moratorium that’s barred new offshore drilling since 1981. The early activity here stems from a 2006 Congressional compromise that allows drilling on 8.3 million acres more than 125 miles off the Panhandle — an area that had been covered by the moratorium, which was enacted out of environmental concerns. In exchange, the state got a no-drilling buffer along the rest of its beaches. Florida may turn out to be a prelude for other coastal states. If oil or natural gas deposits are found in the newly opened region, experts say it could further the push to explore other once-protected areas everywhere. It also could be a rallying point for critics, who say the new exploration isn’t a license to expand exploration. With gas topping $4 a gallon, recent polls show Americans, Floridians included, more supportive of drilling in protected areas. Some politicians — including Gov. Charlie Crist — have switched sides. ‘We think the public is way out ahead of the politicians on these issues. People are more open to (offshore drilling) now,’ said Tom Moskitis, spokesman for the American Gas Association, a trade group. At the same time, oil companies, driven by the record energy price, are more willing to risk $100 million or more to begin exploring new regions. The Interior Department estimates there could be 18 billion barrels of oil and 77 trillion cubic feet of natural gas beneath the 574 million acres of federal coastal waters that are now off-limits. Drilling activity off the Florida Panhandle has started and sputtered for decades. Some companies had leases to drill off the Panhandle before the 1981 moratorium. They were grandfathered in when the moratorium passed because they were already actively exploring in their lease areas. They continued their activity off and on into the early 1990s. In March, four companies — Australia-based BHP Billiton Petroleum Deepwater Inc., Houston-based Anadarko E&P Co., Shell Offshore Inc. and Italian oil and natural gas company Eni SpA — purchased leases on 36 Gulf of Mexico tracts under the 2006 compromise. Jeb Bachmann, an analyst with New Orleans energy consultant Howard Wiel, said the four understand the shifting political and financial realities. ‘It gives you an indication that some of these companies believe there is some light at the end of the tunnel,’ Bachmann said. ‘There is higher pricing and a belief that higher prices are going to ultimately drive some changes.’ Anadarko bought seven of the recently opened tracts south of Pensacola because of their proximity to its Independence Hub, a major natural gas field off Alabama that supplies 1.5 to 2 per cent of the natural gas consumed in the US every day, said Stuart Strive, the company’s vice president of exploration for the eastern Gulf. The newly leased tracts are between 50 and 75 miles east of the Independence Hub. But finding and producing natural gas in the new site will be expensive. Three-dimensional mapping of the ocean floor, which must happen before any drilling, could take up to two years, Strive said. If a promising site is found, engineers must drill up to three miles below the ocean surface to extract the oil or natural gas.
German industrial orders shed0.9 per cent in May Agence France-Presse . Berlin
German industrial orders fell in May for the sixth month in a row, official figures showed Friday, prompting analysts to voice alarm and declare an end to a vital boom in the manufacturing sector. Orders fell by 0.9 per cent in May from the previous month in Europe’s biggest economy, according to provisional and seasonally corrected figures released by the economy ministry. Analysts polled by Dow Jones Newswires had expected the leading indicator to gain 0.8 per cent. The decrease was nonetheless an improvement from April, when industrial orders fell by 1.8 per cent on a monthly basis. But for Natixis analyst Costa Brunner, the latest decline ‘is definitely an alarming sign for the German industry and the economy as a whole.’ Postbank’s Fabienne Riefer said the German industrial sector’s ‘best days are behind it,’ while Matthias Rubisch at Commerzbank declared: ‘The boom in the manufacturing sector is over.’ Germany, which is also the world’s leading exporter at present, has resisted a slowdown seen in other eurozone countries and the United States but is now headed for a patch of much weaker growth. ‘Western Europe now follows the US into a marked downturn,’ Rubisch said. For Brunner, the order data underscored ‘an accelerating risk to the cooling down of important trading partners.’ But while domestic orders fell by 2.7 per cent in May, foreign demand grew by 0.8 per cent, a ministry statement said. German industrial production figures are expected on Monday, and Rubish said that ‘no more than a stagnation of manufacturing output can be expected for the rest of the year.’
British households worse off by 15pc Xinhua . London
New research has found that Britons are 15 per cent worse off than they were five years ago following rises in the cost of living. The average household now has less than 20 per cent of their gross income left, compared with 28 per cent in 2003/2004 after paying tax and other monthly household bills, Sky news reported on Friday, citing accountancy firm Ernst & Young. Families are left with an average of 772.79 pounds ($1546) to spend each month after paying all of their fixed monthly bills, down from 909.84 pounds in 2003. Ernst & Young found that fixed monthly household costs had soared by nearly 45 per cent in the past five years, taking up about half of people’s total pay. Due to higher interest rates and bigger mortgages, homeowners now pay 78 per cent more in mortgage repayments than in 2003/2004 at an average of 735 pounds a month, Meanwhile, monthly energy bills have jumped by 110 per cent while petrol costs are 29 per cent higher at 193.61 pounds.
French bank body fines SocGen $6m Reuters/Bdnews24.com . Paris
France’s Banking Commission on Friday fined Societe Generale 4 million euros ($6.3m) for serious breaches in internal controls revealed by the French bank’s 4.9 billion euro rogue trading loss. In a decision e-mailed to Reuters, the Banking Commission also reprimanded France’s second-biggest listed bank for poor supervision that led to the unauthorized trades by Jerome Kerviel, the former SocGen trader blamed for the losses earlier this year. The commission said SocGen’s monitoring staff were insufficiently sensitive to fraud issues, and that the bank’s IT systems security presented ‘significant weaknesses.’ It also pointed to the absence of limits to Kerviel’s gross trading positions, but added that SocGen had been quick to implement efforts to correct these weaknesses once they were revealed.
CORPORATE BRIEFEastern Bank offers home loan Business Desk
The Eastern Bank Limited on Saturday launched a new loan facility ‘EBL Home Loan’ under its consumer banking. Ali Reza Iftekhar, managing director and chief executive officer of the Eastern Bank Limited, launched the loan facility through a press conference held in the Dhaka city, said a press release. EBL deputy managing director Mamoon Mahmood Shah and head of marketing Nazeem A Choudhury, among others, were present on the occasion. Under the EBL Home Loan facility an applicant can take loan up to Tk 75 lakh for a maximum period of 20 years for apartment purchase, home construction, extension or renovation.
Dhaka Bank celebrates13th anniversary Business Desk
The Dhaka Bank Limited on Saturday celebrated its 13th anniversary through a function held at DBL’s head office in the Dhaka city. Altaf Hossain Sarkar, chairman of Dhaka Bank, opened the celebration programme through cutting a cake, said a press release. The bank’s former chairman ATM Hayatuzzaman Khan, vice-chairman Mohammed Hanif, director Md Amirullah, Aminul Islam, Abdullah Al Ahsan, Matin Uddin Ahmed Barabhuiya, sponsor shareholder Reshadur Rahman, managing director Shahed Noman, among others, were present at the ceremony. Presently Dhaka Bank is operated in 17 districts with 41 branches, one business centre and one offshore banking unit.
Latest setback for beleaguered Detroit under probe Associated Press . Detroit
Auto industry cutbacks, double-digit unemployment and one of the nation’s highest home foreclosure rates have left Detroit with a dreary economic future. Now, a mayoral text-messaging sex scandal, federal investigation into a City Council-approved $47 million sludge recycling deal, and poorly run and deficit-plagued public school system have dashed inroads toward respect and reopened Detroit to outside ridicule. ‘When we’re out doing business and trying to get customers we sometimes get asked ‘You’re from Detroit? What’s going on there?’‘ Compuware Corp senior vice president Jason Vines said. ‘As taxpayers and residents, it has to be disheartening. When your city is used as a public joke, it’s not good.’ Like most major cities, Detroit is no stranger to scandal. Former City Council members, and even a police chief, have been indicted, arrested or imprisoned. But the current political crisis threatens to bury the city deeper in an economic grave. While the mayoral text-messaging scandal has been going on since the end of January, the past week alone has brought a new round of bad news for the city. On Monday, the same day the sludge contract probe was making headlines, the City Council voted down a plan that would have led to the sale of Detroit’s half of the Detroit-Windsor commuter tunnel and averted layoffs of 1,300 city workers. On Tuesday, the council did an about-face and approved the plan to set up a tunnel authority to run the U.S.-Canada border crossing. The city will get $65 million under the deal to fill its budget deficit. Also on Monday, the Detroit Board of Education approved a school district budget that calls for laying off 518 teachers and 900 other staffers this summer. The 106,000-student district gave pink slips to 300 other teachers earlier this year. Monday also was the day Council president Ken Cockrel Jr told colleagues he had been questioned in the sludge contract probe. Federal authorities are looking into a contract with Houston-based waste hauler Synagro Technologies that the City Council approved by a 5-4 vote last November. The Detroit Free Press, citing people with knowledge of the investigation that it didn’t name, has reported that the investigation involves four council members, staffers, City Hall employees and people outside city government. No one has been charged, but Cockrel’s chief of staff resigned last week. The Free Press and The Detroit News said he was videotaped accepting cash from a now-suspended Synagro official. The probe into the sludge deal only adds to investor skepticism about Detroit, Mackinac Centre for Public Policy analyst Michael D LaFaive said. ‘It’s got to raise the question: Where will the next curve ball come from?’ LaFaive said. ‘Reports suggest this is an expanding corruption investigation. So where will it expand next?’ The US attorney’s office and FBI officials won’t comment on the probe, but one other council member and a former consultant to another say they have met with investigators.
WORLD COMMODITIES UPDATEOil, copper prices surge to record highs Agence France-Presse . London
The price of oil set a record high above 146 dollars a barrel this week owing to falling reserves of US crude, simmering tensions over Iran and a weak dollar, traders said. Oil: Brent North Sea oil for August delivery surged to a life-time peak of 146.69 dollars a barrel on Thursday, before cooling as traders banked their profits. ‘Prices rose to set new all-time highs ... supported by a decline in US crude oil inventories,’ said Barclays Capital analyst Kevin Norrish. Oil prices, which have doubled in value over the past year, were driven by news that American crude stockpiles fell by 2.0 million barrels to stand at 299.8 million barrels in the week to June 27. The US government’s Energy Information Administration had also revealed on Wednesday that crude inventories were 15.3 per cent lower than at the same stage one year ago. ‘It was the first time inventory fell below the psychologically critical 300-million-barrel threshold since January,’ said PetroMatrix analyst Olivier Jakob. The latest record-breaking price surge also came after Iranian Oil Minister Gholam Hossein Nozari said that Iran would react fiercely to any military attack against the oil exporter. The OPEC oil exporting group said it would be difficult to replace the crude output of Iran should the country face attack. There has been a surge in speculation recently that Israel might be planning a military strike against Iran’s nuclear sites. Iran has been locked in a five-year standoff with the West over its nuclear programme. Iran claims it is for generating electricity while Western powers fear the development of nuclear weapons. The oil market also found key support from the struggling US currency, which makes dollar-priced commodities cheaper for foreign buyers and tends to encourage demand, analysts said. By Friday, Brent North Sea crude for August jumped to 144.86 dollars a barrel from 140.81 dollars a week earlier. New York’s main oil futures contract, light sweet crude for August climbed to 144.10 dollars a barrel, from 140.85 dollars. Precious metals: Gold, seen as a haven in times of economic troubles, reached 946.40 dollars a tonne, the highest level since April. ‘You’ve got inflation, geopolitical risk, extremely high oil prices and a weak economy. All the pieces of the puzzle are there for gold to go higher,’ said Matt Zeman, a metals trader at LaSalle Futures Group. On the London Bullion Market, gold advanced to 931.25 dollars per ounce at Friday’s late fixing from 919.50 dollars a week earlier. Silver grew to 18.01 dollars per ounce from 17.40 dollars. On the London Platinum and Palladium Market, platinum dropped to 2,012 dollars per ounce at the late fixing on Friday from 2,053 dollars a week earlier. Palladium slid to 456 dollars per ounce from 467 dollars. Base metals: Copper prices soared to historic heights, boosted by a weak US currency and strike action by miners in Chile and Peru, traders said. On the London Metal Exchange, copper for delivery in three months hit 8,940 dollars a tonne, beating the previous high of 8,880 reached in April. ‘The move in copper was in reaction to a weaker dollar ... and concerns about the impact of strike action in Chile,’ said UBS analyst John Reade. The Latin American nation is the world’s biggest producer of copper, which is used for electrical wiring and plumbing. Copper futures also benefited from a weak dollar, which makes the base metal cheaper for buyers using stronger currencies. There were also strikes in Peru this week, affecting production of copper, zinc, lead and tin. By Friday, copper for delivery in three months surged to 8,645 dollars per tonne on the London Metal Exchange from 8,493 dollars a week earlier. Three-month aluminium jumped to 3,184 dollars per tonne from 3,086 dollars. Three-month lead fell to 1,610 dollars per tonne from 1,819 dollars. Three-month zinc dropped to 1,785 dollars per tonne from 1,946 dollars. Three-month tin declined to 22,850 dollars per tonne from 23,300 dollars. Three-month nickel retreated to 20,850 dollars per tonne from 21,860 dollars. Cocoa: Cocoa prices reached 3,290 dollars a tonne in New York, the highest point since March 1980, before falling on profit-taking. In London, prices reached a 22-year peak of 1,748 pounds a tonne. Cocoa futures are rising on concerns over tight supplies in leading producer Ivory Coast. By Friday on LIFFE, London’s futures exchange, the price of cocoa for September delivery dropped to 1,609 pounds per tonne from 1,695 pounds a week earlier. On the New York Board of Trade, the September cocoa contract fell to 3,136 dollars per tonne from 3,182 dollars. Coffee: Coffee prices extended gains in London on concerns about dry weather in Brazil which hampers output. By Friday on LIFFE, Robusta for September delivery rose to 2,480 dollars per tonne from 2,420 dollars a week earlier. On the NYBOT, Arabica for September delivery slid to 151.90 US cents per pound from 152.20 cents. Sugar: Sugar prices reached the highest levels since March as oil prices surged. The raw material is used in the production of ethanol, which is a cheaper alternative to motor fuel. By Friday on LIFFE, the price per tonne of white sugar for October delivery rallied to 393 pounds from 377.80 pounds the previous week. On NYBOT, the price of unrefined sugar for October delivery increased to 13.91 US cents per pound from 13.10 cents. Rubber: Malaysian rubber prices extended gains. ‘Rubber prices moved upwards in tandem with surging oil prices,’ said a dealer who requested anonymity. Crude oil is used to make synthetic rubber. On Friday, the Malaysian Rubber Board’s benchmark SMR20 rose to 325.50 US cents per kilogramme from 319.40 cents a week earlier. Wool: The wool market closed 0.5 per cent lower on average this week in major producer Australia. ‘Buyers for China were dominant, with strong support from buyers for Europe and India,’ said the Australian Wool Industries Secretariat. The Eastern Index was steady at 8.74 Australian dollars a kilo.