World Business Today

Investors protest at SEC decision Dhaka stocks remain flat Staff Correspondent
A group of retail investors on Sunday formed a human chain in front of the Dhaka Stock Exchange building in protest against the SEC’s decision baring closed-end mutual funds to increase their sizes through issuing bonus or right shares. The investors demanded that the Securities and Exchange Commission rescinds its decision on closed-end mutual funds soon for the interest of small investors. They also urged the government to look into why the regulatory body took the decision in so late. On June 26, the SEC at a meeting decided in principle to amend its mutual fund rules to bar closed-end mutual funds from increasing their size. Witnesses said the aggrieved investors staged demonstration forming human chain on the street in front of the DSE building for about half-an-hour. A demonstrating investor said the SEC decision went against the interest of small investors, who were encouraged to buy shares of mutual funds after the ICB 1st Mutual Fund and the Aims 1st Mutual Fund were allowed last year to increase their capital bases through giving bonus shares as dividend. The share prices of the mutual funds suffered heavy losses last week due to the SEC’s decision and retail investors were worst losers as they bought shares at higher prices, he said. Earlier on June 29, a group of retail investors staged a half-an-hour demonstration in front of the DSE building being upset with the SEC’s decision on closed-end mutual funds. They also submitted memorandum to the SEC and the DSE. In the previous day, a group of retail investors at a meeting held in the Dhaka city also protested at the SEC’s latest decision on the closed-end mutual funds. Dhaka stocks closed flat on Sunday as investors remained worried amid the recent bearish trend in the market, said market operators. DSE general index gained 1.16 points or 0.04 per cent to close at 3020.30 while its blue chips index, DSE20, advanced by 33.79 points or 1.32 per cent to close at 2598.20. The bourse’s all share price index lost 2.39 points or 0.09 per cent to close at 2585.61. A DSE stock broker said bearish trend in recent weeks pushed the investors to take cautious move. Dhaka stocks ended last week downbeat as investors remained unnerved due to the SEC’s decision on closed-end mutual funds. Market lost steams also in previous two weeks due to selling pressure from investors, frustrated with the DSE’s market cooling measures. Of the total 222 issues traded at the DSE, 105 posted gains, 104 declined and 13 remained unchanged. Turnover at the DSE, however, increased to Tk 312.8 crore from the Thursday’s Tk 277.4 crore. ACI topped the turnover leaders with a total transaction of Tk 28.56 crore. Square Pharmaceuticals, LankaBangla Finance, Beximco, Aims 1st Mutual Fund, Beximco Pharmaceuticals, Fareast Life Insurance, Keya Cosmetics, Prime Finance and Investment and National Bank were also among the top 10 turnover leaders.
Remittance jumps 33pc in last fiscal Staff Correspondent
The country’s remittance figure jumped by 33 per cent in the just concluded fiscal year as a huge number of people went abroad in 2007-08. Expatriates in June sent $778.37 million, which rose to $7.94 billion in the last fiscal, according to the central bank data. In the FY07, the country received remittance worth $5.978 billion. In the first 10 months of the FY08, about 7.3 lakh Bangladeshis went abroad as workers, the data revealed. Remittance flow has been increasing gradually over the years as more funds are coming through legal channel, said a central banker. ‘The government has taken a tough stance against money laundering and encouraged the expatriates to send money through legal channel,’ he said. Foreign exchange rate is also steady and the remitters get good return against their remittance, he added. The highest amount of remittance came from Saudi Arabia followed by the United States and United Kingdom. In the July-May period of the last fiscal, workers in KSA sent $2.1 billion, US $1.25 billion, the UAE $1.02 billion, the UK $824 million and Kuwait $779 million, contributing 75 per cent of the total remittance inflow. Remittance from Saudi Arabia started to increase from January as deportation fear gripped the expatriates in the kingdom after a crackdown on illegal workers. In the first six months of the last fiscal, average remittance per month was $158 million whereas it jumped to $232 million in January-May period.
Sarkozy urges G8 to lift food export bar Agence France-Presse . Toyako
French president Nicolas Sarkozy said in remarks published Monday that leaders of the Group of Eight rich nations should lift export restrictions to ease a global food crisis. Sarkozy told Japan’s Yomiuri Shimbun newspaper in an interview published ahead of his arrival for Monday’s G8 summit in Hokkaido that he backed the move to give the most needy countries access to the surplus food of rich nations. ‘I hope that these export restrictions on food will be lifted,’ he said. ‘I note with interest that several countries, including Russia, have recently made announcements on the subject. ‘I think the G8 will call on states that have not yet done so to adopt this course of action,’ he said. The Yomiuri had earlier quoted Japanese government sources as saying that the G8 powers plan to create a food crisis task force that would look into the possibility of lifting certain restrictions on exports. Sarkozy said the global food crisis, that has triggered worldwide protests and even riots in Egypt and Haiti, was a major challenge for the world. ‘In the 21st century, we should be able to feed the planet,’ he said, adding that following an ‘urgent’ response to the soaring food price rises, the world should also look for medium and long-term solutions.
Taiwanese investors keen to shift factories to Bangladesh United News of Bangladesh . Dhaka
Taiwanese businessmen, who invested heavily in China’s furniture sector, are now interested to shift their factories to Bangladesh to maximise their profit, Taiwanese investors and officials have said. With Bangladesh’s better facilities, tax incentives and cheap labour, many of the investors are increasingly showing interests in Bangladesh, while a few of them have already set up their offices in Dhaka, they said. An official with Taipei Representative Office in Dhaka said that the liaison office is hosting more and more Taiwanese investors who want to relocate their factories to Bangladesh from China. ‘You see, Bangladesh is a very good place to invest money, and our furniture-sector investors want to move here,’ the official said on condition of anonymity in line with official policy. ‘Many of our investors are researching their scope here,’ the official said. The official’s statement carries weight, as Taiwan’s Dhaka office has brought in some $268 million in new investment since 2004 when the office was first established in Bangladesh. The official said the amount of Taiwanese investment was only $32 million in 2004 but now it is about $300 million. A total of 36 Taiwanese companies, including 10 trading agencies, are operating here. ‘And many more want to come, many of them want to shift their factories from China,’ he said. ‘The furniture sector is one of the thriving sectors, in that case,’ he said. ‘Most importantly our factories want joint venture with Bangladesh’s furniture companies.’ What is prompting the Taiwanese investors to relocate their factories to Bangladesh from China? ‘There are various reasons that a business always needs to be taken care of,’ said Mark Seed of Trendex Furniture Industry, a company that has opted to shift factories from China. Trendex has opened an office in Chittagong and the Bangladesh Export Processing Zones Authority has already approved its investment proposal to set up furniture factories in Karnaphuli EPZ, Mark said. He explained why he wants to move to Bangladesh. ‘It’s simple. We had a huge plan in China but we have planned to move here because of China’s changed policy,’ he said. ‘In China, the cost of workers is getting 15 to 20 percent higher a year. Currency is an issue since we are one hundred percent export-oriented company.’ ‘I am losing money there,’ he said, adding: ‘I am coming to Bangladesh for the reasons for what we had gone to China 15 years ago.’ Mark would not disclose the size of his planned investment in Bangladesh but said: ‘I tell you I am a small man (investor), if you can give much better facilities big, big investors from Taiwan are ready to invest their money here.’ ‘Bangladesh is a good place to invest in. But I would say it must provide (us with) a system (for long-term benefits),’ he said. ‘Ten-year tax holiday is a good incentive.’ Another Taiwanese investor who has furniture factories in China’s Guang Dong Province said he was visiting Bangladesh recently to explore scope for relocation of his setups to Bangladesh. ‘We will visit Chittagong and see what facilities we may get,’ he said on condition of anonymity to maintain secrecy of his business plan. The investors and Taiwanese officials said joint venture could be a very good option for Taiwanese investors in the furniture sector. ‘Our investors are very much interested for joint ventures with local companies in the sector,’ the official said. ‘I must say Bangladesh’s furniture industry will learn a lot, especially from designing aspect, from Taiwanese companies,’ he said.
‘Quality seeds to help boost output’ Bangladesh Sangbad Sangstha . Rangpur
Education and commerce adviser Hossain Zillur Rahman has said quality seeds and their proper preservation by using the latest technology will greatly help increase crop production in the country. In this respect, he suggested increased use of the latest technologies to raise quality seed production, especially of the major crops, throughout the country. The adviser said this while inaugurating a five-day ‘Seed and Fruits’ Tree Fair- 2008’ organised by the Department of Agriculture Extension and the District Administration on the local town hall premises Saturday evening. Agriculture secretary M Abdul Aziz, director general of the DAE M Shamsul Alam and director general (seed wing) of the ministry of agriculture M Anwar Faruque also addressed the function as special guests. Deputy commissioner Khondker Atiar Rahman was in the chair. Later, the chief guest declared the fair open by cutting a ribbon in presence of the government and NGO officials, agri-scientists, businessmen, elite, journalists and representatives of different professional groups. A total of 43 stalls are displaying more than 150 varieties of saplings and locally produced quality seeds by different organisations, private bodies, successful farmers and entrepreneurs. Agri- machinery and technologies are also being displayed in the fair. Zillur said the agriculture sector should be further advanced in a pragmatic and comprehensive manner through ensuring production of quality seeds locally. ‘To make the country totally self-reliant in food production ensuring food security, we must meet our demand for seeds through the area-based initiatives,’ he added.
City Bank marks 25th anniv Changes logo with new slogan Staff Correspondent
The City Bank Limited unveiled its new logo with new slogan ‘making sense of money’ on Saturday. Finance adviser Mirza Azizul Islam, chairman of City Bank Aziz Al Kaiser and its managing director K Mahmood Sattar unveiled the logo through a function held at Radisson Water Garden Hotel, mark the silver jubilee of the bank. The finance adviser urged the bank to invest in agriculture, small and medium enterprises and rural areas. ‘Food security is extremely important for any country and the government has encouraged banks to invest in the agriculture sector in general and staple food in particular,’ he said. Banks have operational responsibilities and they had to compete and collaborate in the modern banking business sector, he added. Any bank is accountable to four types of people — depositors, borrowers, shareholders and employees, the adviser said. City Bank has been relentless in giving service to its clients and the economy for the last 25 years, said the bank chairman. ‘We want to make the bank as supermarket for financial products where all clients can get their desired service,’ he said. The bank has identified three types of clients – retailers, SME and corporate – and process to decentralise its operation has started, he added. The bank staff are ready to give efficient and timely service to the clients, said the managing director. The bank has taken a prudent policy of ensuring operational efficiency for sustainability rather than increasing the number of branches to enhance the balance sheet, he said. The bank also unveiled its new website, www.thecitybank.com, at the programme. Faruq Ahmed Siddique, chairman of the Securities and Exchange Commission, chairmen, directors, and managing directors of nationalised and private commercial banks, leading businessmen and a number of guests attended the programme.
Investors stage demo at CSE Staff Correspondent . Chittagong
About 300 investors staged demonstration in front of the Chittagong Stock Exchange on Sunday to protest against the role of the Securities and Exchange Commission in controlling the share markets, CSE sources and witnesses said. The agitators under the banner of National Investors’ Forum marched to the premises of the CSE, chanting slogans against the SEC, they added. The agitators also submitted a memorandum to the CSE authorities, calling for withdrawal of restriction imposed by the SEC on mutual fund bonus and rights share, a CSE official said. Later the demonstrators melted away while security was tightened with the deployment of a large number of police in and around the CSE, the police and witnesses informed.
Iftekhar meets Malaysian counterpart United News of Bangladesh . Kuala Lumpur
Foreign adviser Iftekhar Ahmed Chowdhury met with his Malaysian counterpart Rais Yatim Sunday on the sidelines of the D-8 Conference being held in the Malaysian capital and discussed the issue of welfare of Bangladeshi migrant workers. They discussed ways and means of strengthening bilateral relations between the two friendly countries. ‘It was an excellent meeting and we discussed a whole range of issues, including those pertaining to the large number of Bangladeshi workers in Malaysia,’ Iftekhar said to the media afterwards. He further said, ‘I told him it was our way of making a modest contribution to the development of the Malaysian economy.’ They also discussed the subject of reactivating the Joint Economic Commission between the two governments. ‘The welfare of our migrant workers is a priority issue with us. We have even included this matter in the D-8 Declaration Document. Tomorrow I shall discuss some of these matters with Malaysian Home and Immigration Minister Hamid Albar,’ the foreign adviser further said.
Allianz predicts oil at $200 Agence France-Presse . Berlin
German insurance giant Allianz expects the oil price to hit 200 dollars a barrel in the next two years, according to a press report to be published Monday. ‘I cannot imagine that post-2010 we will have an oil price of below 200 dollars a barrel in the long term,’ Allianz board member Joachim Faber told Monday’s edition of Der Tagesspiegel newspaper. In May, US investment bank Goldman Sachs’s star analyst Arjun Murti also predicted that the oil price could strike 200 dollars within the next two years.
Tour operators of Taiwan sceptical about China boom Agence France-Presse . Taipei
The launch of regular direct flights between China and Taiwan has been hailed as a symbol of progress and a boon to tourism, but industry workers here are not all convinced. Around 700 mainland tourists arrived on the island to much ceremony over the weekend after taking the charter route, seen as ushering in a new start and the most visible sign yet in the thawing of cross-strait relations. Taiwan has restricted trade and travel since its split from the mainland in 1949 but the election of Beijing-friendly Ma Ying-jeou in March opened the door to warmer ties. In a sign of rapprochement, the two sides last month held their first direct talks in a decade and signed agreements to launch the flights and treble the number of Chinese allowed to visit the island to 3,000 daily. Tourism officials hope the extra visitors, beside promoting cordial people-to-people exchanges, will bring in 60 billion Taiwan dollars (1.97 billion US) annually, a big boost to local trade. But some tour operators are sceptical. ‘The agreements might look good on paper but I dare not think how much I can profit from that with a slow economy, rising inflation and high fuel prices,’ said Wu Shih-chih, who hires out yachts to tourists. ‘I will not consider buying a new yacht or other equipment unless I can see a steady increase in business within six months,’ said Wu, who has four craft taking visitors around Sun Moon Lake, a popular destination in central Taiwan. Others are concerned that Chinese tourists, sometimes seen as loud and ill-mannered, could drive away other international travellers. ‘We have fewer Japanese visitors since the government opened up to more mainlanders,’ lamented a bus driver who works for a leading travel agency in Taipei. ‘I am not thrilled at receiving the mainlanders because they can be proud and impolite, they think China is so important in the world,’ said the driver, who asked not to be named. Jack Lee, manager of a Taipei travel agency, said he often gets complaints from restaurants or shops that Chinese tour groups are too noisy or pay no attention to no-smoking signs. ‘Some waiters also complained that Chinese customers throw bones or leftovers on the floor instead of leaving them on the plates or let cigarette ash fall everywhere,’ Lee said, although most were willing to oblige when told. Restaurateur Liu Ming-sung was blatant in expressing his dislike for mainland tourists, putting up a sign reading ‘refusing Chinese communists’ at his establishment in southern Kaohsiung city. ‘I think president Ma is wrong to see opening up to mainland investments and tourists as an elixir for Taiwan’s economy,’ Liu said.
With G8 meet Japan relishes chance as Asia’s ‘good guy’ Agence France-Presse . Toyako
One month before the world’s spotlight turns to Beijing for the Olympics, Japan is hoping that this week’s Group of Eight summit will show it to be the ‘good guy’ of Asia. Japan, the only Asian nation in the elite club of eight industrial powers, is pulling out all the stops for the three-day G8 summit starting Monday at the secluded mountain retreat of Toyako. With 15 other nations’ leaders also invited, Japan has billed its G8 summit as the biggest yet and allocated a 31.9 billion-yen ($300m) budget to put it on, including building a state-of-the-art eco-friendly media centre. In the months before the G8, Japan pledged to double its aid to Africa, offered 250 million dollars in emergency aid to address the global food crisis and drafted plans to force industry to cut emissions blamed for global warming. The issues are all set to be high on the agenda for the summit, which includes US president George W Bush and the leaders of Britain, Canada, France, Germany, Italy and Russia. ‘I think Japan still takes the G8 a bit more seriously than everyone else,’ said Robert Dujarric, director of the Institute of Contemporary Japanese Studies at Temple University’s Tokyo campus. ‘This is an idea that goes back in Japan to the 19th century, the notion that they have become a country of the first rank,’ he said. ‘They want to be seen as the only respectable Asian country.’ The summit comes one month before the Beijing Olympics, which China hoped would showcase the country’s rising clout, but which has become a lightning rod for foreign criticism over China’s human rights record, particularly in Tibet. The G8 meeting ‘at least reminds the world of the other Asia giant,’ said Ralph Cossa, head of the Pacific Forum of the Washington-based Center for Strategic and International Studies. ‘The comparison between Japan and China can be a good one for Tokyo, when it comes to showcasing democracy and values,’ Cossa said. Japan has uneasy ties with China and South Korea owing to the legacy of Japanese aggression and occupation of several Asian nations. Japanese prime minister Yasuo Fukuda has been trying to repair relations with its neighbours and has invited presidents Hu Jintao and China and Lee Myung-Bak of South Korea to an extended session of the summit. But Japan has made clear it has no enthusiasm for growing calls to expand the G8 to include China, India or other rising emerging economies. ‘I think this is a comfortable format for Japan, so we will continue to put emphasis on this format,’ a senior Japanese foreign ministry official said on condition of anonymity. ‘We share common values and it is a format in which leaders can discuss in a very cordial and frank manner,’ he said.
ROK cuts back on driving to save energy Agence France-Presse . Seoul
South Korea said Sunday it would drastically reduce the use of government vehicles from next week as part of its first major contingency plan aimed at saving energy amid soaring oil prices. Prime Minister Han Seung-Soo said more than 15,000 vehicles at 819 government offices or state-run bodies would be forced to remain idle every other day from July 15. Vehicles with even-numbered licence plates would be banned from running on even-numbered days, and those with odd-numbered plates restricted from operating on odd-numbered days, Han said. The mandatory move would take effect for the first time since the 1988 Olympics in Seoul when South Korea took the same step to ease traffic and air pollution. ‘Even oil-producing countries are tightening their belts to save energy in the era of the ultra high oil prices,’ Han told a news conference, stressing the government should lead the energy-saving campaign. ‘To take concrete measures to save energy is not a matter of choice but a matter of survival.’ South Korea, the world’s fifth-largest oil importer, buys all of its oil overseas. The recent surge in oil prices has increasingly strained its economy. The price of oil is at a historic high approaching 150 dollars a barrel, an increase of more than 100 per cent in the past year. Strategy and finance minister Kang Man-Soo said citizens would be forced to take mandatory energy-saving steps if prices exceed 170 dollars a barrel. Sunday’s package of emergency measures aimed at saving energy stipulates that the government would replace half of its vehicles with energy-efficient compact or hybrid cars by 2012. It also obliges government buildings to adjust air conditioning or heating systems up or down one degree to save energy. It recommends citizens voluntarily cut back on driving and commercial lighting at stores or restaurants in the evening. South Korea’s finance ministry last week cut its growth forecast for this year to below five per cent due to the global slowdown and soaring oil prices. The central bank also cut its growth projection to 4.6 per cent from 4.7 per cent, a sharp drop from president Lee Myung-Bak’s election pledge last year to achieve seven per cent annual growth. Lee’s government is now focusing on fighting inflation, which hit an annual rate of 5.5 per cent in June — close to a 10-year high. The government has announced a 10.5 trillion won ($10b) package, including tax rebates, to ease the pain of high energy costs. The weak won is raising import prices and fuelling inflation.
Hyundai cuts, Kia lifts domestic sales target Reuters/Bdnews24.com . Seoul
Hyundai Motor Co, South Korea’s top auto maker, said on Sunday it had cut its local sales target for this year by 6 per cent as record-breaking oil prices are hitting consumer sentiment in Asia’s fourth-largest economy. But its affiliate Kia Motors Corp and the country’s No 2 car maker said it had raised its domestic sales target by 11 per cent, helped by the popularity of its fuel-efficient mini-car and new model launches. Hyundai, which controls about half of the South Korea’s car market, said in a statement that it aimed to sell 630,000 vehicles in the higher-margin domestic market, compared to its previous target of 670,000 units. The maker of Sonata sedan and the Santa Fe sport utility vehicle sold a revised 625,275 vehicles last year in South Korea. ‘We lowered the local sales target as the outlook is not that bright. South Korea’s auto companies have been hit by weaker consumer sentiment because of surging oil prices,’ a Hyundai official told Reuters by telephone. In June, domestic sales of South Korea’s five auto makers fell 7.5 per cent from a year earlier as higher oil prices and weaker consumer sentiment hit demand for new models, especially SUVs, Korea Automobile Manufacturers Association data showed. Hyundai’s domestic sales dropped 14.6 per cent from a year ago last month, although its sales for the whole of the first half rose 4.8 per cent to 318,756 units, according to the company. Local sales of Hyundai and other South Korean auto makers are expected to remain sluggish in coming months as fuel prices are likely to rise further, analysts said. An economic slowdown and higher inflation are also expected to weigh on demand. South Korea’s annual inflation in June jumped to its highest in almost a decade, denting consumers’ disposable incomes, and the central bank forecast the slowest economic growth since 2005 due to soaring commodity prices. ‘We are worried about a weaker economic growth and sluggish local consumption because of higher oil and commodity prices,’ Kim Dong-jin, Hyundai’s vice chairman said in a statement. Shares in Hyundai, the world’s No.5 auto maker along with Kia, fell about 14 per cent since June. Global auto makers have been hit by soaring prices of oil and raw materials, slower US economy and global inflation. However, Kia raised its domestic sales target to 364,000 units in 2008 from the previous 327,000, fuelled by strong sales of its Morning mini-car. Last year, Kia sold 271,809 vehicles at home. ‘Soaring oil prices have helped sales of the Morning and we plan to launch the Forte small sedan in August, expected to attract more customers amid higher oil prices,’ a Kia official told Reuters by telephone. Kia’s sales in the first half rose 15.3 per cent to 154,030 units as sales of the mini-car more than tripled.
Singapore’s property boom cooling Agence France-Presse . Singapore
Singapore’s booming residential property sector is finally showing signs of cooling but projects including two casino developments should underpin long-term prices, analysts say. The market was described by real estate giant Jones Lang LaSalle as the world’s hottest in 2007, when the city-state’s property prices surged 31 per cent overall. But this year the sector has not escaped wider concerns over a US-led global economic slowdown and inflationary pressures. Private home prices rose 0.4 per cent in the second quarter, the slowest increase in four years, the government’s preliminary figures showed last week. The second-quarter rise was also much slower than the 3.7 per cent increase recorded in the previous three months but prospective buyers waiting for huge bargains may be disappointed. Property analysts say prices are likely to fall further in the third quarter but experts rule out massive declines because of the multiplier effect from two multi-billion dollars gaming resorts now under construction. Housing demand is expected to pick up when the first of the two casinos opens next year, employing thousands, said Chua Yang Liang, head of Southeast Asia research with Jones Lang LaSalle. Some of the workforce for the resorts will likely come from foreign countries, creating possible demand for housing, he said. ‘To staff these people, you need housing so there will be a potential effect,’ Chua told AFP. Foreigners currently make up more than 20 per cent of Singapore’s 4.6 million population. The Marina Bay Financial Centre, a new financial district under construction which will also feature luxury apartments, should also underpin the market in the longer term, analysts said. Tan Huey Ying, director for research with Colliers International real estate consultants, said prices are not about to spiral downwards even though second quarter figures indicate the residential property market may have peaked. ‘Singapore’s positive mid-term prospects on the back of the completion of the two integrated resorts and the Marina Bay Financial Centre will help to prop prices up,’ said Tan. Values may hold, or decline by no more than three per cent, in the third quarter but overall for 2008 home prices could still rise four to eight per cent, said Tan. Analysts from DTZ real estate consultancy said buyers are still interested in project launches. ‘Some residential projects are enjoying sell-out status while others are being well received,’ said Margaret Thean, DTZ’s executive director for residential. Government approval for the two gaming resorts in 2005 was one of the major factors behind the revival of Singapore’s property market, which had been stuck in a rut stemming from the 1997 Asian financial crisis.
Argentina grain tax bill clears lower house Agence France-Presse . Buenos Aires
A controversial grain tax bill cleared the Chamber of Deputies Saturday by a 129-122 vote, giving a first-round win to president Cristina Kirchner in her struggle to defuse a months-long farmers’ strike. The bill raising grain export tariffs from 35 to 47 per cent, on a sliding scale, threatens to rekindle a 100-day export strike by farmers and truckers that emptied store shelves of staples, in Kirchner’s first major crisis after 18 months in office. ‘This is the first round. The second one will take place in the Senate next week,’ farm sector leader Eduardo Buzzi told reporters after the vote, which followed a 17-hour debate by lawmakers. Depite losing the vote, Buzzi was pleased social democrats and other leftist political groups had opposed the bill, which the government proposed only after weeks of strike and social pressure against its initial tax hike decree in March. Kirchner decided to raise the tax on grain exports to redistribute the farming sector’s growing wealth from spiraling commodities prices. The farmers balked at the measure, claiming it would devastate one of the country’s most profitable businesses. Argentina is one of the biggest food producers in the world, leading with exports of soybean oil and products — 24 billion dollars a year. It is also the second-biggest corn exporter, after the United States, and the fifth-biggest wheat exporter. The March-June strikes dealt a heavy blow to the country’s economy. The impact was compounded by roadblocks by farmers and truck drivers, causing food shortages around the country. Farmers suspended their strike in early June after they accepted a confidential deal with Kirchner’s administration. Buzzi said that until the Senate takes up the grain tax bill there would be no further strike action. ‘There’s no way we’ll launch a new union struggle while government institutions are at work,’ he said, adding however that the sector ‘is under alert and farmers are holding meetings’ across the country. The government bill calls for lower tariffs for small producers — 30 per cent tariff for up to 300 tons of grain exports per year, and 35 per cent for up to 750 tonnes, which would benefit 85-90 per cent of Argentine farmers, officials said.
Non-sponsoring drinks banned at Olympic venues Xinhua . Beijing
Beijing is to overhaul advertisements in the city to ban any unauthorized use of Olympics logos in ads. Chen Feng, a marketing official with the Beijing Organising Committee of the Olympic Games, was quoted by the People’s Daily on Sunday as saying that inspection teams will be dispatched to airports, railway stations, places near Olympic venues and other public areas as from July 11 to check whether ads contain unauthorised Olympic logos and the Beijing Olympic signs. The overhaul will last till Septenmber 17 when the Paralympics end in Beijing, the newspaper said.
Rich nations poised to tackle soaring oil, food prices Agence France-Presse . Toyako
The United States and Japan called Sunday for urgent action on red-hot oil and food prices that could derail the global economy on the eve of a summit of the world’s richest nations. As US president George W Bush arrived at this mountain resort, authorities sealed off Japan’s northern island of Hokkaido, with demonstrations relegated to its largest city, Sapporo. Group of Eight leaders will hold three days of talks in the resort town of Toyako that will be dominated by the fragile world economy, global warming and problems ranging from Zimbabwe to North Korea and Iran’s nuclear ambitions. Bush met with Japanese prime minister Yasuo Fukuda that also touched on climate change, North Korea’s nuclear programme and aid to Africa. Fukuda said the leaders of the world’s two largest economies had agreed that urgent efforts are needed to tackle surging oil and food prices. The dual-crises ‘are having a negative impact on the world economy,’ Fukuda told a joint press conference. ‘We agreed there’s a need for swift efforts on these fronts.’ Security was formidable across picturesque Hokkaido, with around 21,000 police deployed to protect the leaders as they huddle in a luxury hilltop hotel. The leaders of the G8 — Britain, Canada, France, Germany, Japan, Italy, Russia and the United States — will be joined by those of some 15 other countries including China, India, Brazil, Australia and eight African states for expanded sessions on global warming and poverty alleviation. German Chancellor Angela Merkel said the G8 leaders would agree on steps to fight the soaring price of food and to guarantee supplies. The steps will provide short-term relief to the crisis and a long-term strategy to increase world agricultural production. Rising food prices have pushed 100 million people below the poverty line, the World Bank estimates, and have sparked street riots around the world. Japanese press reports have said the G8 will agree to set up a task force on the food crisis or create a system of food reserves much like oil reserves. But aid groups warned that record food and oil prices should not be allowed to derail the leaders’ talks on Africa on Monday as the crisis had simply worsened the plight of the poor. On Wednesday, climate change will top the agenda when an expanded group of nations meets. The leaders are expected to pledge to spearhead efforts to halve emissions of greenhouse gases by 2050 after agreeing a year ago to ‘consider seriously’ that goal. The Yomiuri Shimbun newspaper said negotiations were in the final stages for a leaders’ declaration, saying ‘the G8 will take the lead in making efforts to halve’ emissions or something similar. Bush, who has argued that the summit is not the right forum to make hard decisions on climate change, said Sunday he would play a ‘constructive’ role in efforts to curb carbon emissions. But he warned that India and China must be part of any long-term agreement, a long-standing sticking point that renewed pessimism that there would be any breakthrough. While Hokkaido will mark Bush’s G8 swansong before he leaves office, it will be the first for Fukuda, Russian president Dmitry Medvedev, British prime minister Gordon Brown and South Korean president Lee Myung-Bak. Major leaders from the developing world, including Chinese president Hu Jintao, Indian prime minister Manmohan Singh and South African president Thabo Mbeki, will also attend G8 events. But the atmosphere behind closed doors may get heated.
Mandelson fires salvo in free trade row with Sarkozy Agence France-Presse . London
EU trade commissioner Peter Mandelson hit out again Sunday in his battle with French president Nicolas Sarkozy over world trade talks by attacking ‘populist and self-serving’ rhetoric on the issue. Mandelson wrote that the latest Doha round of negotiations ‘is not about individual personalities’ and warned that public disagreements ‘come with a cost to our ability to defend our interests’ in a Sunday Telegraph article. ‘There is increasing rhetoric about the need to protect people from change, some of it sincere but much of it populist and self-serving,’ he wrote. ‘I want president Sarkozy and other world leaders to accept that securing trade is an important part of the solution’ to current global economic woes. Mandelson’s comments came after his disagreements with Sarkozy surfaced last week when the French president said Monday he would block any WTO deal that sacrificed farm production on the ‘altar of global liberalism.’ France is Europe’s biggest agricultural power and the largest recipient of EU farm subsidies. The next day, Mandelson told the BBC that he was ‘being undermined and Europe’s negotiating position in the world trade talks is being weakened.’ Sarkozy later retorted by saying that Mandelson would be loving the publicity created by their disagreement.
IMF for tightening money flow to check Indian inflation Press Trust of India . Washington
With high inflation not expected to abate this year, a senior International Monetary Fund official said the RBI should further tighten money supply to minimise the ripple effect of price rise. Kalpana Kochhar, senior adviser in the Asia Pacific division and mission chief for India, told the news agency that the options available before RBI are to raise interest rates, use exchange rate mechanism to allow rupee to appreciate and give guidance to markets about future inflation rate. ‘Our advice is to look past the first round of effects and try to minimise the second round effects of inflation. What this means is that, in the first round you have higher fuel and higher food prices... The so-called second round effects are when they spill over into wages and to other more general prices,’ she said. That is where the monetary policy has to play a role in terms of tightening to signal that the authorities are not going to allow the second round effects to become entrenched. ‘In that sense, we do think there is further tightening to be done in India, notwithstanding the most recent interest rate increases with the repo rate increased from 8 per cent to 8.5 per cent,’ the IMF official said. On using exchange rate, Kochhar said,’In countries where there is appreciating pressure, our advice is generally to allow the exchange rate to appreciate because it is an easy shock absorber for fighting inflation.’ The more appreciated the currency is, the cheaper the imports are and any given international oil price will translate to lower prices in domestic currency, she said. The IMF official added that inflation is actually going to continue to rise, until about the end of this year because of a low base.
‘Auto sector woes could spur deals’ Reuters/Bdnews24.com . Aix-En-Provence, France
A current slump in the global automotive sector could give fresh impetus to plans for consolidation within the industry, the head of French carmaker Renault said on Saturday. ‘Something will have to happen,’ Renault chief executive Carlos Ghosn told delegates at a business conference in this southern French city. Ghosn said the problems of the US sector could spur deals. ‘What is happening in the States at the moment does not bode well for the future,’ he said. The world’s largest automobile market is reeling from record petrol prices, tighter credit conditions from banks and a slump in the American housing market. US auto sales plunged in June to a 15-year low. Although General Motors Corp held onto its number one spot in the American market, some analysts have raised concerns over the financial state of GM, whose shares fell to a 54-year low earlier this month. Ghosn has consistently said that Renault and its Japanese partner Nissan could revisit plans drawn up two years ago to expand their alliance to a third party, although he has also said that Renault is in no rush to do so. Billionaire investor Kirk Kerkorian suggested a three-way union involving Renault, Nissan and General Motors two years ago. Analysts have also speculated as to whether Nissan could expand its ties with Chrysler LLC after they signed a deal this month to supply each other with vehicles. At the conference, Ghosn also highlighted the cost pressures facing car manufacturers. He said he had recently discussed the issue of rising steel prices with the European Central Bank and reiterated his support for a low euro compared to the dollar. The weakness of the dollar has impacted European groups’ overseas sales. ‘As a car manufacturer, I want the lowest possible price for the euro,’ he said. Renault shares closed down 0.3 per cent at 52.23 euros on Friday. The stock has fallen around 46 per cent since the start of 2008. Renault owns a controlling, 44 per cent stake in Nissan, while Nissan in turn has a 15 per cent stake in Renault.
Dollar losing as int’l banking currency Associated Press . Washington
The almighty dollar is mighty no more. It has been declining steadily for six years against other major currencies, undercutting its role as the leading international banking currency. The long slide is fanning inflation at home and playing a major role in the run-up of oil and gasoline prices everywhere. Vacationing Europeans are finding bargains in the US, while Americans in Paris and other world capitals are being clobbered by sky-high tabs for hotels, travel and even sidewalk cafes. Northern border-city Americans who once flocked into Canada for shopping deals are staying home; it’s the Canadians flocking here now. Everything made in America — from goods to entire companies — is near dirt cheap to many foreigners. Meanwhile, American consumers, both those who travel and those who stay at home, are seeing big price increases in energy, food and imported goods. The dollar has lost roughly a quarter of its purchasing power against the currencies of major US trading partners from its peak in 2002. Since oil is bought and sold in dollars worldwide, the devalued dollar has made the recent surge in energy prices even worse for Americans, leading to $4 gasoline in the United States. Analysts suggest that of the $140 a barrel that oil fetches globally, some $25 may be due to the devalued dollar. Further declines in the dollar will add to oil’s appeal as a commodity to be traded. Oil, suggests influential energy consultant Daniel Yergin, is ‘the new gold.’ The limp greenback has had one big benefit to the US economy: Since it makes American goods cheaper overseas, it has helped manufacturers who export and other US based companies with international reach. Exports have been one of the few bright spots in an otherwise darkening US economy. Franklin Vargo, vice president of international economic affairs at the National Association of Manufacturers, welcomes the dollar slide, as do members of his organisation. ‘We can see that, when the dollar’s not overpriced, that people around the world want American goods and our exports are going gangbusters now,’ he said. He doesn’t see the dollar as undervalued. He sees it as having being overpriced in the 1990s — and what’s happened since as something along the lines of a correction. Still, Vargo acknowledges the dollar’s decline has brought a measure of pain to some consumers. ‘As the dollar has gone down in value, that has added to the dollar cost of oil. No question. So having the dollar decline is not unambiguously a plus. That’s why we say there’s got to be a balance there somewhere. What we want is a Goldilocks dollar. Not too strong, not too weak. But just right. And only the market can determine that,’ Vargo said. Mark Zandi, chief economist at Moody’s Economy.com, said expanding exports due to a weak dollar are ‘an important source of growth, but it doesn’t add a lot to jobs, it doesn’t mean very much for the average American household. For the average American, for the average consumer, these are pretty tough times.’ The loss of the dollar’s purchasing power and international respect has some experts worrying that the euro might one day replace the dollar as the so-called primary reserve currency. And that could trigger a dollar rout as foreign governments and international investors flee from US Treasury bonds and other dollar-denominated investments. Making matters worse: The gaping US current-account deficit — the amount by which the value of goods, services and investments bought in the US from overseas exceeds the amount the US sells abroad — and the low levels of domestic savings means that foreigners must purchase more than $3 billion every business day to fund the imbalance. Since roughly half of the nation’s nearly $10 trillion national debt is held by foreigners, mostly in Treasury bills and bonds, such a withdrawal could have enormous consequences.
US home foreclosures to rise, who wins does not matter Associated Press . Washington
Home foreclosures will keep rising next year, no matter who is elected US president in November. Even the optimism that surrounds a new president taking office cannot resurrect home values overnight, and presidents have no direct ability to reduce rising mortgage rates. Nevertheless, Democrat Barack Obama and Republican John McCain both promise help for homeowners facing foreclosure. Obama supports a broader role for government than does McCain. Both envision the Federal Housing Administration providing new, cheaper mortgages to distressed homeowners who otherwise would have difficulty refinancing into more secure government-insured loans with lower monthly payments. For the plans to work, lenders would have to be willing to take a substantial loss by reducing the amount owed on the loan. But some would have a powerful incentive to do so. A refinancing deal could allow them to recover far more money than they would get from the costly process of foreclosing on the property and trying to resell it. Obama supports legislation along these lines by Sen Chris Dodd, D-Conn., that would help about 400,000 homeowners. People would not have to have good credit to qualify as long as they could show they can afford the new payments. ‘If the government can bail out investment banks on Wall Street, we can extend a hand to folks who are struggling on Main Street,’ Obama said. McCain’s plan would provide relief to 200,000 to 400,000 homeowners. The aid would be available only to people who could show they were creditworthy when they got their original loan. The plan offers ‘every deserving American family or homeowner the opportunity to trade a burdensome mortgage for a manageable loan that reflects the market value of their home,’ he said. The FHA piece of the Dodd plan would cost close to $1 billion. The money would come from diverting dollars in the early years from an affordable housing fund financed by the profits of the mortgage companies Fannie Mae and Freddie Mac. McCain’s FHA provision is estimated to cost from $3 billion to $10 billion and would mean either cutting federal spending elsewhere or having the government borrow more. The first choice is to trim spending, a McCain aide said. Experts predict foreclosures will continue to climb well into 2009. Some believe there is a chance for improvement in late 2009, but more think that will not happen until 2010. A long-term solution is tied to a turnaround in house prices. Slumping home values are blamed for the bulk of the increasing foreclosures. Troubled borrowers are left owing more to the bank than their homes are worth, so they walk away from their homes. Dumping more empty houses on the market adds to the pile of unsold homes, and that drives home prices down further. ‘This is uncharted territory,’ said Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School of Business. Some predict house prices will not climb until the spring selling season of 2010 — at the earliest. Lawrence Summers, a treasury secretary in the Clinton administration, predicted that more than 2 million foreclosures are coming over the next two years and that as many as 15 million homeowners will owe more than their house is worth. According to a recent AP-Yahoo News poll, 57 per cent of people said housing prices are important to them personally. For many, their home is their biggest asset. As home prices dropped, so did people’s net worth — leaving them feeling less financially secure and more gloomy about the direction of the economy. Which candidate would do a better job of handling housing prices? In the poll, 25 per cent said Obama and 17 per cent thought McCain. Nearly 30 per cent said neither. Although most voters think the next president will have a ‘great deal’ or ‘some’ influence over housing prices, the reality is there is no quick fix. ‘The odds of that are slim to none,’ said Cal Jillson, political science professor at Southern Methodist University. If the next president can make people more optimistic about the future, ‘the slow rebuilding of confidence will help to increase home values,’ he said. When it comes to handling the broader economy, which is the top concern of voters, the poll found that 32 per cent picked Obama and 28 per cent went with McCain. An additional factor is the Federal Reserve, which presidents do not control. If the central bank were to raise interest rates to fend off inflation, the step would increase payments for homeowners whose loan rates are resetting higher. That, in turn, could push up foreclosures. ‘We are very exposed to interest rate risks and mortgage payment shocks in 2009,’ Wachter said. Mortgage rates, including those on 30-year home loans, already are climbing, propelled by inflation worries. In addition to his FHA proposal, Obama wants to create a $10 billion fund to counsel distressed homeowners before they slide into foreclosure; help people sell homes they bought but could not afford; and team with state governments, community groups and lenders to ensure sure loans can be modified in a timely manner to avoid foreclosure or bankruptcy. His approach, reflecting the traditional Democratic preference for greater government intervention, would establish a 10 per cent mortgage credit for people who do not itemise their taxes. That would provide 10 million homeowners, most of whom earn less than $50,000 a year, with an average of $500 in savings, according to his campaign, and help those struggling to make mortgage payments. Obama also supports changing bankruptcy laws so homeowners going through that process can renegotiate terms of their mortgages — just as people or investors who own multiple homes or vacation homes can do. The Illinois senator also wants to combat mortgage fraud and improve mortgage disclosure. Deficiencies in those areas contributed to lax lending that allowed people to take out home loans that their incomes could not support, critics say. ‘This kind of transparency won’t just make our homeowners more secure, it will make our markets more stable, and keep our economy strong and competitive in the future,’ Obama said. McCain prefers a more limited government role in dealing with the housing crisis, a position consistent with traditional GOP leanings. The other component of his plan would have the Justice Department to set up a task force to investigate possible wrongdoing in the mortgage industry. The department has been pursuing cases of fraud and other mortgage-related matters.
Postbank sale may fail over target price Reuters/Bdnews24.com . Frankfurt
The sale of Germany’s biggest retail bank Deutsche Postbank could fail because the price potential bidders’ willing to pay does not meet the expectations of the lender’s parent, Deutsche Post, a German magazine reported on Saturday. Business weekly Wirschaftswoche cited sources close to Germany’s finance ministry as saying that Deutsche Post, which owns a stake of 50 per cent plus one share in Postbank, expected offers valuing the lender at more than 10 billion euros ($15.70b), but has received non-binding offers only of between 8 and 9 billion euros. ‘For Post, that is too little,’ the magazine quoted an insider as saying. Post’s supervisory board is fixed on attaining a valuation in the double-digit billions of euros, the magazine said. A finance ministry spokesman declined to comment and Deutsche Post was not immediately available. The German government indirectly holds a 30 per cent stake in Deutsche Post, giving it a say in the Postbank sale.
Asian currencies mostly down against dollar Agence France-Presse . Hong Kong
Major Asian currencies ended the week mainly lower against the dollar as US jobs data was not as bad as feared, although concern persisted over the state of the world’s largest economy. The yen fell back from a three-week high against the dollar but market players remained reluctant to buy the greenback due to worries over US economic weakness. The Japanese currency rose to the week’s high of 105.25 to the dollar on Monday on an upgrade of the Japanese government bond rating, but gradually lost ground to hit a low of 106.88 on Friday. It ended daytime trading at 106.72-75 to the dollar on Friday, slightly off from 106.34-36 a week earlier. There were persistent concerns over the US economy amid soaring oil prices and falls in US and Japanese stocks. The European Central Bank raised its key rate by a quarter point to 4.25 percent on Thursday as expected, but ECB chief Jean-Claude Trichet signalled the bank had not embarked on a series of hikes. Societe Generale senior forex manager Kenichi Yumoto said there was ‘no room for an interest rate hike in the United States either.’ ‘You can never be hawkish in monetary policy with stock prices falling and payrolls shrinking,’ he said. The US economy lost 62,000 jobs in June, well below the figure of 100,000 that some had feared, official figures showed on Thursday. ‘Despite a slight recovery in US stocks (on Thursday) overall global stock performance is still weak and players are nervous about volatile markets,’ Okasan Securieties senior trader Tsutomu Soma told Dow Jones Newswires. No significant US economic indicators are due next week but players may become more cautious ahead of the release of US financial institutions’ earnings results, traders said. The Australian dollar’s recent volatility is expected to continue next week as the currency pushes closer to parity with the greenback, dealers said. The Australian dollar was trading at 96.20 US cents at 5:00 pm (0800 GMT) Friday, up on the previous week’s 95.90 US cents. AMP Capital Investors chief economist Shane Oliver said high prices for coal and iron ore exports had helped Australia record its first monthly trade surplus in six years for April, which was likely to further boost the currency. ‘While the ride for the Australian dollar will remain volatile, Australia’s strong terms of trade and high relative interest rates are supportive of further gains,’ he said. ‘We remain of the view that it is only a matter of time before parity is reached. ‘The elimination of the monthly trade deficit on higher iron ore and coal prices will also likely be a positive for the Australian dollar,’ he added. The New Zealand dollar ended local trading Friday at 75.61 US cents, down from 76.05 at the end of the previous week. The currency lost ground midweek after central bank governor Alan Bollard said the economy would be flat in the second quarter before picking up later in the year. The kiwi rose against the greenback but weakened at the end of the week after the US dollar rallied on payroll data suggesting the US job market and economy were not as dire as many investors had feared. Bank of New Zealand currency strategist Danica Hampton said the local dollar was also dragged down against the greenback by the plunge in the euro against the US currency. This followed the European Central Bank taking a less hawkish tone on future interest rate rises, following its decision to raise rates by a quarter percentage point. The yuan closed at 6.8626 to the dollar Friday on the exchange-traded market, compared with Thursday’s close of 6.8510, and a closing price of 6.8609 to the dollar last Friday. On the over-the-counter market, it ended at 6.8589 to the dollar against 6.8510 in the previous day. The central bank had set the yuan central parity rate at 6.8639 to the dollar Friday, compared with 6.8529 on Thursday. The People’s Bank of China allows a trading band of 0.5 percent on either side of the midpoint. The US-linked Hong Kong dollar finished the week at 7.799 to the greenback compared with 7.8016 the week before. The rupiah ended the week’s trading at 9,215 to the dollar compared to 9,213 a week earlier. The Philippines peso fell to 45.45 to the dollar on Friday afternoon from 44.79 on June 27. The dollar was at 1.3600 Singapore dollars on Friday from 1.3646 the previous week. The won slumped to a 32-month low of 1,050.40 to the dollar Friday, compared with 1,041.5 won a week earlier, as oil price continued rising and foreign investors kept dumping local stocks. The government was forced to intervene Wednesday, when the dollar surged to 1,057 won. Authorities poured an estimated four billion dollars in a matter of an hour or so, dealers said. The dollar then plunged 22 won. But government intervention apparently eased the following days, after an unidentified senior official of the presidential Blue House reportedly said government authorities should take their hands off the market.
Alitalia to get 700-800m euros Reuters/Bdnews24.com . Milan
Alitalia will receive a capital injection of 700 million to 800 million euros from Italian businessmen as part of a plan to save the ailing carrier, newspaper Corriere della Sera reported on Sunday. The paper, without citing sources, said some 10 businessmen would take part in the rescue plan being drawn up by the government-appointed adviser, bank Intesa Sanpaolo, but did not name them. It said the plan included around 5,000-6,000 job cuts and aimed to make Alitalia a stronger player on the domestic market, with turnover of 4 billion euros. Intesa Sanpaolo could not be immediately reached for comment. Italian newspapers have cited at least 4,000 to 5,000 planned job cuts at Alitalia but Intesa Sanpaolo’s chief executive Corrado Passera has said the figures were ‘premature’. The bank is due to draw up a rescue plan by early next month for the state-controlled airline that lost 495 million euros last year. Corriere said the plan should be ready around mid-August and that it was still unclear whether Intesa Sanpaolo would itself take a stake in the airline. Corriere said a change in an Italian law regarding financial failure would be needed for the plan to work. Alitalia is being kept alive by a 300 million euro emergency loan from the Italian government. The loan is being investigated by the European Commission to determine whether it breaks rules on state aid. An initial auction to buy the state’s 49.9 percent stake in the airline collapsed in 2007 when all the bidders pulled out. A planned sale to Air France-KLM also fell through earlier this year after unions rejected proposed job cuts.