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Commercial banks have failed to keep their promises to bring down the average lending rate to single digit level by December 31.
   Statistics available with Bangladesh Bank shows that in most cases commercial banks are charging interest at rates ranging from 9 to 12 per cent on term loans, working capital and trade financing.
   Even, a few many banks are charging interest at as high as 13 per cent on commercial lending, statistics revealed.
   Despite the failure of the commercial banks, the central bank still expects that lending rate will come down to a single-digit level by the end of the current fiscal year.
   The central bank statistics also revealed that the average lending rate, breaking a 15-year static mode, was reduced 2 per cent to 10.9 per cent only in 15 months, as of September 30, 2004.
   Over the years, the central bank is pursuing the commercial banks to bring down the lending rate at below 10 per cent. The banks also agreed to reduce the rate to single digit by the end of 2004.
   But, in reality, the commercial banks have reduced deposit rates faster depriving the depositors of their real return.
   At present, the banks’ average interest rates on savings deposit is 5 per cent while average interest rate on fixed deposit is seven per cent varying from 6 to 9 per cent based on different tenures of maturity thus widening the gap between lending and deposit rates.
   The central bank, taking into account the interests of depositors, asked the banks to narrow this huge gap between the lending and deposit rates without reducing the deposit rate.
   The central bank found that the interests of depositors are being ignored due to continued reduction in interest rates on savings without making corresponding adjustments in the lending rates.
   Lending rate for term loan to large and medium industries ranges from 9 and 12 per cent while some banks are charging the rate for small industries at 13.5 per cent.
   Interest rate on trade financing is also above 12 per cent in most of the banks while lending rate for house financing ranges from 12 to 13.5 per cent.
   The central bank also asked the commercial banks to increase credit flow to housing and agri-sector with reduced interest rate.

The government will provide jute-pulp technology to local private investors in jute sector with a view to invigorating the sector.
   Dissemination of the technology will take place through a workshop based on data related to scientific results and investment opportunity this month.
   The textiles and jute minister, Shajahan Siraj told BSS that a study on extracting pulp from green jute has ended with significant results. ‘What we need now is to invest for its commercial production,’ he added.
   The executive director of the Jute Diversification Promotion Centre, Dr ABM Abdullah said, ‘At the beginning, the government wants to move with pilot projects before going for the new venture’.
   He said the jute or kenaf pulp manufacturing industry is not a new idea. China has been producing pulp from kenaf, a jute-like fibre, in a big way from many years ago.
   ‘If we can move according to the plan in January, it would be most commendable efforts in the post MFA-era,’ added Dr Abdullah.
   He said the feasibility study found that the jute-pulp technology has many implications on the socio-economic pattern related to traditional jute growing. A Japanese firm, Techno Forest Ltd, conducted the survey.
   According to the study, the annual demand for paper and paper board will increase to 5.80 lakh tonnes this year against last year’s 4.73 lakh tonnes while the country has the capacity to produce around 3 lakh tonnes.
   The four existing pulp and paper producing mills need 1.44 lakh tonnes of bamboo, 87,000 tonnes of sugarcane waste and 47,000 tonnes of `Gewa’ wood, it said.
   The study also reveals that 2.5 tonnes of green jute are needed to produce one tonne of pulp. If the technology is proved to be business worthy, the present level of the annual jute production between 35 and 45 lakh bales would be doubled in the future, which will help the country to increase its jute goods, said Dr. Abdullah.
   Initially, the government has a plan to set up jute-pulp mills with production target of 5 to 7 tonnes of pulp daily from green jute. Each mill may cost around Tk 3 crore to Tk 3.5 crore each, he said.
   The official statistics says around 3.5 crore or 25 per cent of the population in the country, who are cultivators and exporters, involve in the jute sector. Bangladesh earned around Tk 2,000 crore from exports of raw jute and jute goods last year. Jute has four per cent contribution to the GDP and 10 per cent to the national employment.
   The JDPC estimates that at present 10 million US dollars are being earned from export of Diversified Jute Products (DJP) annually. The export will increase to 140 million dollars by 2010 excluding jute-pulp.
   If the jute-pulp production takes off smoothly, it will stop import of pulp worth of millions of taka and Bangladesh will turn into a major exporter of jute pulp, according to sources.
   But both the government officials and private entrepreneurs said transformation of the new jute technology needs at least Taka 1,000 crore which is yet to be available.
   The government-run jute mills have been incurring losses and over-dues in the nationalised banks stand at Taka 2,396 crore till last June. So, the Ministry of Jute does not get approval for its any new proposals for investment on jute from the ECNEC, according to the sources.
   ‘Yes, nobody believes that there is any good news on jute,’ said the jute minister. He said jute has earned such a bad reputation because of wrong policies of the governments in early seventies.
   The minister said he is hopeful of getting some funds as the ministry is moving with some unique measures which is profitable and has long-term marketing facilities.
   Some entrepreneurs suggested that the policies of former Pakistan Industrial Development Corporation be followed to establish jute-pulp industries, according to JDPC sources.

Investment Corporation of Bangladesh (ICB) is planning a new Islamic Mutual Fund of Tk 25 crore exclusively for the non-resident Bangladeshis (NRBs), building on responses to a previous such fund that made debut in Dhaka Stock Exchange today.
   ‘It will contribute to increase the remittance inflow as well as help save some of the remitted money,’ ICB general manager Mohammed Fayekuzzaman said at the launching ceremony of the trading of Tk 10 crore ICB AMCL Islamic Mutual Fund at the DSE conference room.
   The fund has been over-subscribed eight-fold. The ICB AMCL fund, with face value of Tk 100 per unit, was traded between Tk 168 and Tk 203 on the first day of trading today, according to the DSE sources. Some 76,400 units changed hands on the day.
   Earlier, an agreement was signed between Dhaka Stock Exchange (DSE) and ICB AMCL Islamic Mutual Fund Limited for launching the trading of the fund.
   DSE chairman Ahamed Iqbal Hassan, ICB AMCL Islamic Mutual Fund Ltd Chief Executive Khandoker Mohammed Iqbal and DSE chief executive officer Salahuddin Ahmed Khan were present at the function.

A company, which defaults annual general meeting, does not require prior approval from High Court for holding the AGM unless any member of the company concerned appeals to the court, according to a clarification of the Company Act 1994.
   The Securities and Exchange Commission conveyed the clarification through letters to all the listed companies, Bangladesh Bank, stock exchanges and concerned stakeholders on Wednesday.
   The commission earlier sought clarification of the related clause of the Company Act 1994 from the finance ministry in the backdrop of confusions over the clause which put AGMs of many defaulter companies on hold for long.
   The finance ministry then referred it to the law ministry that gave the clarification.
   The law ministry made it clear that it is not mandatory for a company to take prior approval of the High Court if it fails to hold annual general meeting in time.
   According to clause 81(1) of the Company Act 1994, each company must hold annual general meeting every year and the second AGM would be held no later than 15 months from the first one.
   If any company fails to hold the meeting in time, it can apply for date extension to the registrar of the joint stock company within 30 days of the expiry of date. In that case the
   registrar can ask the company to hold the AGM within next 90 days or within December 31 of the year.
   Since the Act does not detail how a company would get date extension if it fails to apply within 30 days, it often leads to confusions prompting many companies to seek High Court opinion and further delaying the AGM process.
   However, a member can force the defaulter company to hold the AGM, the clarification said.
   According to clause 81 (2), the High Court can declare the date or order a defaulter company to hold the AGM, if any ‘member’ of the company appeals to the Court.
   ‘The vagueness of the Act
   has so far been creating confusions among the concerned stakeholders,’ said Mansur Alam, executive director of the commission.
   ‘Now it is clear that an AGM defaulted company does not need to wait for the High Court approval to hold the AGM in every case,’ said the SEC spokesperson.
   At present, around 12-15 listed companies’ cases are pending at the High Court for its approval for holding AGMs, commission sources said.

Kuwait has made a fresh pledge of $75 million to finance three projects, including the construction of third Karnaphuli Bridge in Chittagong.
   The two other projects to be financed by the Kuwait Fund for Arab Economic Development (KFAED) are Greater Chittagong Power Transmission and Distribution project (supplementary loan) and Shahid Ziaur Rahman Medical College and 500-bed Hospital in Bogra.
   Bangladesh Ambassador to Kuwait Nazrul Islam Khan apprised journalists here Wednesday of the Kuwaiti funding plan.
   Briefing the members of Diplomatic Correspondents Association Bangladesh at National Press Club, he said Bangladesh has so far received $387 million in loan from the Gulf state for project financing.
   Giving break-up of the pledged soft credits, Khan said $40 million would be provided for third Karnaphuli Bridge project, $15 million for Greater Chittagong Power Transmission and Distribution project and $20 million for Ziaur Rahman Medical College and Hospital.
   In reply to a question, he said negotiations are on with the Kuwaiti government for the recruitment of skilled manpower from Bangladesh in IT, engineering and other sectors.
   Recently, the state minister for Expatriate Welfare Qamrul Islam visited Kuwait. During the visit, he held a meeting with the Kuwait mabour minister and discussed manpower export from Bangladesh.
   At present, some 180,000 Bangladeshi workers, mostly unskilled, are employed in different development sectors of Kuwait, altogether remitting the second-highest amount of wage earnings from the Middle East after Saudi Arabia.
   Besides, some 4,500 defence personnel (both in-service and retired) are working in Kuwait for cleaning ammunition abandoned by Iraq during the Kuwait-Iraq war. Sixty medical doctors are also employed over there.

Bangladesh has requested Thai government to make arrangements, including duty-free access of Bangladeshi products to their market, for reducing the trade gap which is in favour of hailand.
   President Professor Dr Iajuddin Ahmed made the plea when the outgoing Thai Ambassador to Bangladesh, Pithak Phrombubpha, made a farewell call on him at Bangabhaban Wednesday.
   The envoy said his country would take initiative to reduce the trade gap between Thailand and Bangladesh. He will further look into “duty-concession access of more Bangladeshi goods”.
   The President referred to Bangladesh’s Look East Foreign Policy and said cooperation in the field of trade and investment would be beneficial to peoples of both the countries.

Prime Minister Begum Khaleda Zia Wednesday stressed on the planned use of land and urged the agriculturists to expedite research and training to help the country achieve self-sufficiency in food production.
   “The population is on the rise but cultivable land is declining. Therefore, agricultural research is essential to produce more crops on less land,” she told the newly elected office-bearers of Krishibid Instituion, Bangladesh, the apex body of the country’s 25,000 agriculturists.
   The 29-member executive committee of the KIB led by its newly elected president Ibrahim Khalil and secretary general Kabir Ahmed Bhuiyan called on the Prime Minister at the International Conference Centre at the Prime Minister’s Office.
   Stressing the need for proper use of every inch of land in the country, Begum Zia asked the agriculturists to help the farmers diversify their produces and suggest the right variety of crop for the land of a particular quality, including char (shoal) areas.
   “Only the cultivation of rice or paddy will not do. We have to increase production in the sub-sectors too,” she said.
   It is not respectful for an agriculture-based country to import onion, ginger, tarmaric, garlic and edible oil from other countries, the Prime Minister said and stressed on increasing production of spices, pulses and soyabean.
   She also laid importance on growing more fruits and vegetables using in the modern methods, cultivating fish and raising poultry and cattle to earn foreign exchange after meeting the local demand. Begum Zia urged the private sector to come forward along with government efforts in this regard.
   She referred to the achievements in agriculture sector by some countries in the region, including Thailand, Malaysia, Singapore and Sri Lanka and asked, “Why not we, If they can?”
   The country’s agriculturists would have to learn from the experience of the neighbouring countries which have made remarkable progress in agriculture.
   Referring to the huge population, fertile land and sufficient water in the country, she said coordinated use of these three elements can bring tremendous prosperity in agriculture.
   She assured the agriculturists of all cooperation for research and training to march forward in the farm sector and asked them to find out new ways and methods for rapid growth in agriculture.

Eastern Bank Ltd launched an automobile loan campaign at its Agrabad branch premises in Chittagong recently, hoping to meet the lifestyle needs of the port city people.
   Managing Director of the bank K Mahmood Sattar inaugurated the campaign through handing over the Mercedes Benz car key to a valued customer.
   Deputy Managing Director Ali Reza Iftekhar and other senior officials of the bank were also present at the launching ceremony.
   The auto loan programme is designed to help further the lifestyle of Chittagong people and meet their needs of personal vehicle, bank executives said.

India today offered 20 blocks for oil and gas exploration through the global competition route which are expected to attract an investment of $1 billion.
   Six deep-sea blocks, two shallow water and 12 on-land blocks, have been offered to public and private sector firms under the fifth round of the new exploration licensing policy (Nelp), which will close on May 31, petroleum minister Mani Shankar Aiyar announced at a press conference here today.
   Of the deep-water blocks, two each are on the east and west coasts and two in the Andaman area. The shallow water blocks are on the west coast, while the 12 on-land ones are spread across eight basins — Assam, Arakan, Cambay, Rajasthan, Kaveri, Ganga valley, Vindhya, Deccan Syneclise and Krishna Godavari.
   ONGC will also offer stakes in five deep-sea blocks, three in Krishna-Godavari basin, one in Kerala Konkan offshore and one in Gujarat Kutch offshore, at roadshows to promote Nelp blocks. Digital data rooms are being set up in Delhi, Houston, London, Calgary and Dubai to provide geological details.
   Roadshows to attract investors will be held in Delhi on January 18, London (January 20-21), Dubai (January 24-25), Houston (January 31 and February 1), Calgary (February 3-4), and possibly in Moscow (February 14), he said.
   Making a hardsell to woo global oil majors, Aiyar flaunted the over 14-trillion cubic feet of gas reserves struck by Reliance Industries and Niko Resources of Canada in the Bay of Bengal and Cairn Energy of the UK making a significant oil discovery in Barmer district of Rajasthan.
   “Domestic crude oil production is targeted to rise to 50 million tonnes by 2025 from the current plateau of 33 million tonnes,” Aiyar said. However, the over 5 per cent increase in petro-product demand is likely to outpace the incremental production planned and India’s self-sufficiency ratio would fall to 15 per cent, he added.
   “We import 70 per cent of our crude oil requirement currently. In 2025, this would rise to 85 per cent,” he said. Over $2.53 billion has already been invested in the blocks awarded in the first four rounds of bidding, he said adding bidding conditions have been made more attractive to draw investors’ attention.
   The government had changed the policy of taking its share of natural gas in cash or kind every year to once in five years, Aiyar said.

The world's rich industrialised nations stepped up their efforts yesterday to help Asian countries devastated by the tsunami by offering to freeze billions of dollars in debt repayments.
   The move could provide major relief to Indonesia, Thailand, Sri Lanka, the Maldives, India and Somalia which have a combined $272 billion in external debt.
   Britain, which has assumed the presidency of the G8 group-consisting of Canada, France, Germany, Italy, Japan, the United States, Russia and Britain-called for an immediate moratorium on debt repayments by nations hit by the tsunami which has so far claimed the lives of at least 145,000 people.
   "That would then lead to an analysis of the debt needs of these countries with the possibility of some write-off of debt," Gordon Brown, the Chancellor of the Exchequer (finance minister), told BBC Radio.
   Brown is hoping that a deal, which has the backing of the United States, will be announced at a meeting of the Paris Club of sovereign lenders when it meets on January 12.
   French Finance Minister Herve Gaymard said the Paris Club will meet next week to examine a debt moratorium for Indonesia and Sri Lanka, the two nations hardest hit by the tsunami.
   German Chancellor Gerhard Schroeder set the ball rolling last week saying Berlin would propose a debt moratorium for Indonesia and Somalia when the Paris Club meets.
   Indonesia has about $98.16 billion of external debt, while Sri Lanka owed $9.34 billion to external creditors at end- December 2002, according to the Organisation of Economic Cooperation and Development (OECD).
   Indonesia owes about $41.5 billion to the Paris Club.
   India's total external debt is estimated at $107.02 billion, while Thailand has foreign debt worth about $56.7 billion. Somalia has about $2.5 billion in external debt.
   But the per centage of external debt to gross domestic product, a key indicator of a nation's ability to service its foreign borrowings, stands at about 57 per cent for Sri Lanka and Indonesia, 21 per cent for India and about 45 per cent for Thailand.
   Indonesia responded cautiously to proposals of debt relief from creditors, saying it feared tough economic conditions might be attached to any offer.
   Analysts said the push by rich nations to reschedule or even forgive some of the debt owed by the tsunami-hit nations could herald the beginning of a concerted global move to reduce the debt burden of the world's poorest countries, mainly in Africa.
   Britain wants to use its G8 presidency to tackle Africa's economic woes.
   Brown has said Britain wants its G8 allies to agree to multilateral debt relief, set a timetable for raising development aid to 0.7 per cent of national income and sign up to his scheme to double Third World aid.
   In November, the Paris Club-a forum established in 1956 to provide a framework for rescheduling troubled sovereign debt - - agreed to cancel 80 per cent of the debt Iraq owed to its members.
   Economists said while providing debt relief is a good gesture on part of rich nations, what Asian nations need urgently is support in providing food to the millions displaced and help in reconstruction.

Indonesia's President Susilo Bambang Yudhoyono today welcomed proposed debt relief from creditors, saying even a rescheduling would benefit Indonesia's economy after a tsunami that hit the country hard.
   He said he wasn't sure what sort of form debt relief
   might take, "but even a rescheduling will still be a good opportunity," Yudhoyono told reporters when asked about proposals for a debt moratorium.
   The remarks came after his finance minister said on Tuesday the country would be cautious in accepting any debt relief offer as it might come with certain conditions which could be hard to meet.
   However, he also reiterated the country's positive attitude towards the offer from some donors on the possible debt relief.
   The Paris Club group of
   sovereign creditors plans to discuss proposals for
   debt relief for tsunami-hit countries at a meeting on January 12.
   Previous reschedulings of Indonesia's external public debt through the Paris Club of sovereign creditors involved a requirement that an IMF programme was in place, seen politically unpopular by locals as it required belt-tightening measures.
   Government officials said they were also concerned that a fresh rescheduling might lead rating agencies to downgrade Indonesia's sovereign credit ratings as they had previously done.
   Indonesia Planning Minister Sri Mulyani Indrawati said that of the country's 46.8 trillion rupiah ($5 billion) principle debt repayment this year, 12 trillion of it was bilateral, with half that figure from Japan, and 19 trillion of it was a multilateral loan.

Australian Prime Minister John Howard expressed Wednesday scepticism about the merits of freezing foreign debt repayments of countries ravaged in the tsunami disaster, saying it would not help victims on the ground.
   With a debt freeze expected to be one of the major goals for aid agencies meeting with world leaders in Jakarta on Thursday, Howard said he preferred specifically-targeted aid because debt relief was too unfocused.
   "There is no guarantee that if you do it what is forgiven or what is the subject of a moratorium will end up going in aid, because the debts are not normally owed by people who need the assistance," Howard told reporters before heading to Jakarta.
   "They are usually owed by other organisations and you have no guarantee that if you provide a debt moratorium or debt forgiveness that that money ends up where it should."

From millionaire Indian gurus and Canto-popstars to Australian prisoners and Hong Kong schoolchildren-the people of Asia have opened their hearts and their wallets for the tsunami victims.
   The December 26 disaster, which has left nearly 150,000 people dead in India, Indonesia, Sri Lanka and Thailand, has galvanised Asians from all walks of life and of all ages.
   Wealthy Hong Kongers have proven among the most generous, giving an estimated 51 million dollars to aid agencies, such as World Vision and Oxfam, trying to bring relief to millions affected by the tragedy.
   The Red Cross in particular has received 27 million dollars from individuals and companies in the former British colony.
   Making the biggest mark has been the generosity of ordinary Asians who have gone to often great lengths to do their bit.
   In Hong Kong some 500,000 dollars was collected last weekend during street collections by political parties and local schools, while citizens in Australia and New Zealand have also given generously.
   Fund-drives have helped the two nations raise 76 million and 3.2 million dollars respectively.
   Employees at Taiwan Cellular Group, meanwhile, donated a day's wages totaling some 345,900 dollars and in Australia's high-security Goulburn Jail inmates and staff pledged more than 6,000 dollars while 800 prisoners in a northern Malaysian jail donated 790 dollars.
   Celebrities have answered the aid call too, raising millions in personal donations and through special concerts and TV shows.
   In Hong Kong 70 local, Chinese and Taiwanese movie and pop stars recorded a Chinese-language version of the hit 1985 charity song "We Are the World" to promote a telethon organised for Friday.
   A series of concerts last weekend by the likes of Andy Lau and girl duo Twins, raised more than a million dollars.
   Lau and action hero Jackie Chan handed over 200,000 dollars between them, and South Korean TV star Bae Yong-Jun-known in Japan as Yonsama-chipped in almost 300,000, helping bump his nation's pledges to 12.7 million dollars.
   In Taiwan, where some seven million dollars has been raised, actress Sylvia Chang, a World Vision volunteer, gathered some 60 entertainers to help with an Internet charity auction Wednesday.
   And pop singers including A-Mei, Jay Chou, Jolin Tsai and boy band F4 will perform at a concert Saturday in Taipei that is hoped to raise 1.26 million dollars.
   Chinese film directors Chen Kaige and Feng Xiaogang have set up a donation hotline manned by film stars, which in its first six hours Tuesday collected 13,000 dollars. Chinese donations so far total 4.5 million dollars.
   The single largest donation came Wednesday from Mata Amritanandamayi Devi, one of India's most revered Hindu gurus, who pledged 23.4 million dollars to construct houses for the survivors.
   Thailand's revered King Bhumibol Adulyadej, whose 21-year-old grandson was killed in the waves while jet-skiing, donated a 770,000-dollar cheque.
   Sports stars, especially tennis players competing in Australian Open warm-up tournaments in Asia, have served up handsome contributions.
   American legends Venus and Serena Williams as well as Russian Wimbledon stunner Maria Sharapova lead a galaxy of stars in a Hong Kong tournament Wednesday that has already donated 64,000 dollars.
   It follows pledges last week by top men's player Jonas Bjorkman and other competitors in a championship in Madras to donate their prize money. Those pledges contributed to the 90 million dollars raised so far in India.
   Players at the New Zealand Classic WTA tennis tournament will also donate part of their fees.
   "We have been amazed at the response. It's been the biggest response we can ever remember," World Vision's New Zealand spokeswoman Liz McIntyre said.
   China's Olympic gold medalists hurdler Liu Xiang and swimmer Luo Xuejuan led a fund drive that drew 51,000 dollars its the first day Tuesday.
   Cricketers have also come to the stumps. The cricket board in India donated 222,000 dollars while the Indian cricket team promised a day's match fees, about 4,000 dollars for each player.
   In Australia the cricket Test team donated its 17,000 dollar bonus after beating Pakistan.
   The region's religious orders have shown compassion to victims of all faiths with contributions from Christian church groups in Singapore-a city that has so far collected 9.4 million dollars-and Buddhist associations in Hong Kong, China and Taiwan, which have given a collective 1.2 million dollars.
   Among corporate donors, banking giant Standard Chartered Wednesday gave five million dollars while Japanese carmaker Toyota has contributed a million and Hong Kong's Hutchison Whampoa joined a charitable foundation set up by its chairman Li Ka Shing to give 3.1 million dollars.

The US cotton industry is deeply worried over a potential onslaught of textile exports from China now that a decades-old quota system has expired, officials and industry analysts said yesterday.
   Dominance by low-cost Chinese textile and apparel producers is expected to be one of the leading topics when the industry's main meeting, the annual US Beltwide Cotton Conference, gets under way here.
   "I think there is a lot of concern ... how this elimination of quotas will impact the cotton market," Mark Lange, president of the US National Cotton Council, told Reuters in an interview at the start of the conference.
   "We have to talk a lot about China and what that means to the textile and cotton market," Carl Anderson, an economist who follows the market in Texas A&M University, said in a separate interview.
   Last month China said it would slap a tax on some textile and clothing exports to address fears it would dominate the global industry and spark massive textile job losses in the United States and around the world.
   A US inter-agency government panel known as the Committee for the Implementation of Textile Agreements published a plan last month for what it called a "staged entry" of certain textile and clothing imports next year.
   CITA proposed to gradually phase in Chinese textile imports.
   President Cass Johnson of the National Council of Textile Organizations said recently that China is "exporting trousers, shirts and underwear and other apparel at 76 per cent below US producer prices and 58 per cent below the prices of other exporting countries for the same garments."
   She added: "This data clearly demonstrates the enormously unfair trade advantages the Chinese government is employing on behalf of its textile and apparel industry, and validates our concern that China will flood the US in 2005, if textile safeguards are not imposed by our government."
   Participants at the conference will also be looking at the steady rise in US production, how the industry will sell the excess cotton and wondering about the prospects for an increase in production in countries like China and India, the world's biggest consumers of the fiber.
   Anderson said India could become more of a surplus producer of cotton in the years ahead and there were questions whether China would switch land out of cotton and into food crops, given it has a population that is well over 1 billion.
   The US Department of Agriculture, in its monthly supply/demand report in December, forecast China's cotton production in 2004/05 (August/July) at 29.5 million (480-lb) bales, while consumption was seen at 36 million bales.
   India's output was pegged at 15 million bales.
   US cotton output has also shot up, with production in the 2004/05 marketing year seen hitting a record 22.82 million bales, according to the USDA.
   "Acreage has stayed fairly stable, but we have had a banner year in terms of yields," Lange said, adding the American cotton trade is wrestling with the transformation of the market into "an export- dominated industry."
   Lange said the US cotton trade was also closely monitoring the case filed in the World Trade Organization over its program of cotton subsidies.
   Brazil won a ruling in the WTO that Washington exceeded subsidy limits for cotton, leading to over-supply, which in turn led to deflated fiber prices. In October, the United States appealed the ruling.
   "It's a complex situation and it can end up being volatile in the market place," Anderson said. "Everybody's going to have to be careful."

Kenya, Uganda and Tanzana took a belated first step towards their goal of creating a common market when they launched a customs union on January 1, which they hope will help attract more inward investment.
   The three members of the East African Community (EAC) plan to belong to one African regional economic bloc by 2008 to help ease the implementation of the new customs union, Zachary Mwaura, director of East African affairs at the Kenyan ministry of East Africa and Regional Cooperation said yesterday.
   They are now members of two different economic blocs.
   The EAC customs union was originally planned for Nov. 2003 but was delayed by disputes by the three countries on how to categorise products into various tariff bands.
   The three decided to move ahead with the customs union now to try and avoid delays to their timetable to set up a common market and eventually a political federation for the impoverished region of 90 million people.
   But analysts say the implementation of the customs union could still be impaired by the fact that the three countries belong to two different regional economic blocs.
   Tanzania is a member of the Southern African Development Community (SADC) while Kenya and Uganda belong to the Common Market for Eastern and Southern Africa (COMESA).
   Mwaura said, "Which country will handle two customs unions at the same time? A country can only manage one external tariff.
   By the end of the transitional period, we as the East African Community will sit together with SADC and COMESA and decide which bloc we want to belong to."
   Kenya, Uganda and Tanzania have agreed a common import tariff with bands of 25 per cent on finished goods, 10 per cent for semi- processed goods and zero for raw materials.
   Some farm imports such as milk, sugar and wheat, classified as "sensitive" will be liable to a surcharge of up to 100 per cent.
   Mwaura said the three countries would keep their trade agreements with their respective economic groups.
   He played down fears that a businessman in Kenya, Tanzania or Uganda could import goods in one regional economic bloc under preferential terms only to repackage the goods and then dump them in one of the partner countries.
   "The imports will be subjected to rules of origin and if they don't qualify for preferential treatment then they will not benefit," Mwaura said.
   The EAC's goal of economic integration has long been thwarted by rivalries between the three nations, home to entrenched and competing commercial and political interests.
   The four-day old customs union has already hit teething problems with Uganda calling for temporary revision of the rules saying its industries would be hurt by new tariffs imposed on goods categorised as finished goods.
   The customs union is seen as a first step towards a common market and single currency modelled on the European Union, and ultimately a political federation.
   Of the three farm-based economies, Kenya is the heavyweight. Its $15 billion gross domestic product is three times the size of Uganda's and one and a half times the size of Tanzania's.
   Despite its larger economy Kenya's reputation for graft and political infighting has deterred foreign direct investment (FDI), with the country attracting five times less FDI annually than either Uganda or Tanzania in recent years.

Emergency assistance to Asian communities affected by the tsunami disaster will be needed for at least six months, the United Nations said Wednesday, warning that a full recovery would take far longer.
   The UN children's fund (UNICEF) East Asia director, Anupama Rao Singh, said the immediate concern was to keep victims alive and to rebuild infrastructure such as schools and health centres.
   "In terms of immediate recovery it will take six to nine months minimum," Singh told reporters at a joint event with the UN's World Food Program, which warned it could take six months to reach all two million people in need of food aid.
   Malnutrition and disease leading to further deaths are the biggest concern for the United Nations in the coming months, Singh said.
   Full social and economic recovery in tsunami-affected communities could take much longer, she said.
   "We are looking at a minimum of two to three years, if not longer depending on the scale (of destruction)," she said, adding that at least one million children had been affected by the crisis.
   UN Secretary General Kofi Annan previously said the rebuilding effort could take up to 10 years, while World Vision Australia chief executive Tim Costello said reconstruction would take a generation.
   The number of people killed in the disaster edged up towards 146,000 Wednesday, with bodies still being found on the Indian Ocean's devastated shorelines 10 days after the catastrophe.
   The WFP said it was focussing its immediate energies on getting emergency food aid to the estimated two million tsunami survivors who urgently need it.
   "The challenges are immense and unprecedented in terms of the need for a response," the WFP's Asia director, Anthony Banbury, told reporters.
   "The total expected needs for our work are 250 million dollars for the next six months," he said adding only 65 million dollars would be spent on food with the remainder of the money needed to deliver it.
   Banbury said he expected the money would be pledged at a donors meeting to be held Thursday in Geneva.
   More than 900,000 tonnes of food aid has already been distributed to almost half a million people, he said, with Indonesia topping the priority list.
   "The biggest operational challenge right now is in northern Sumatra and Western Sumatra," he said.
   He said Banda Aceh in northern Sumatra had become the hub of an unprecedented global humanitarian mission to help survivors of the December 26 catastrophe that killed more than 94,000 Indonesians.
   UN operations are being coordinated out of Bangkok, but Banbury said talks were underway with an unnamed regional government to use a military base as a large-scale logistical hub, which would enable rapid aid delivery throughout the region.

The authorities in the worst-hit district of south India on Wednesday told aid agencies to provide what tsunami survivors need and to halt oversupply of cooked food, old clothes and water containers.
   "They are far in abundance," said Vivek Harinarayanan, secretary to the government of Tamil Nadu and coordinator for relief operations in Nagapattinam where nearly 6,000 died on December 26.
   "The state government has a tremendous task at hand and I need the help of non-governmental organisations. I told them (the) medical assessment of health has to be on top of the agenda," Narayanan told AFP.
   "There is an urgent need for uncooked food items and other raw materials such as lentils."
   And the senior government administrator added: "We need to know whether organisations can adopt villages."
   Narayanan said he had also requested non-governmental organisations not to distribute relief materials by themselves "as the poor are left high and dry."
   Supplies including clothes, sleeping mats, food, utensils and medicines continue to pour into Nagapattinam in Tamil Nadu state from Indian corporations such as the Tata Group, individual donors and aid agencies.
   Displaced villagers line the streets and flag down trucks carrying relief materials. Older women and men stand in snaking queues at places where the government is doling out small amounts of cash.
   A top official from the Tata Group in charge of the giant conglomerate's relief operations in Nagapattinam said excessive old clothes were clogging the streets and cooked food which was not consumed was deteriorating fast.
   "Cooked food is going to waste as most of the villagers do not have a taste for outside food. They want home cooked food," he said on condition of anonymity.
   "So they dispose of the cooked food outside the relief camps. This leads to health risks. Cooking stoves are the need of the hour."
   He said water which was available was of poor quality and there was a lack of an effective distribution system.
   "Most of the villages are far from the relief camps. All these people want to go home and if you keep them crowded in camps the chances of infections rise," he said.
   "There is debris all around. We came across children with measles, chicken pox and eye diseases," the official said.
   Most of the dead were from the poor fishing community strung out along the coast. Rescue workers are still looking for bodies in remote villages.
   The streets of Nagapattinam town resound with cranes and bulldozers clearing the debris.
   Sheelu Francis of the Tamil Nadu Women's Collective Training Centre, a non-governmental group looking after womens' issues, said a group of agencies had urged the government to reorganise the relief camps.
   "In some places relief camps house people from more than 10 villages. That number should come down to about three or four," Francis said.
   "There are camps where the mother is separated from the son and in other places where families want to be reunited," she said.

Consumer prices in the Philippines shot up 8.6 per cent in December, bringing the 2004 average inflation rate to six 6.0 , topping official forecasts and raising the possibility of higher interest rates, the government said today.
   The 2004 figure, using 2000 as a base year, exceeded government forecasts, an official of the Central Bank of the Philippines said on condition of anonymity.
   The source would not disclose what those forecasts were.
   Under the old system, using 1994 as the base year, inflation in December rose to 7.9 per cent, bringing the annual average inflation rate 5.5 per cent, the National Statistics Office said.
   The government had targeted an inflation rate for 2004 at 4.0-5.0 five per cent with December at 7.6-8.1 per cent based on 1994 prices.
   The central bank official blamed the higher-than-expected inflation rate in 2004 to "supply factors, particularly the unprecedented increase in oil prices" as well as sharp increases in food costs following a series of storms late last year.
   Reacting to the inflation figures, Central Bank governor Rafael Buenaventura said "we've asked our economic research (department) to review whether the second-round effects of the supply-side inflation is now seeping into or already affecting demand-side factors."
   He said in a television interview that he believed the current situation did not require any policy action at this point.
   "If you look at the causes of the inflation, clearly it's supply-side (driven) ... mainly food and oil prices. If you look at the exchange rate, it's relatively stable," Buenaventura said.
   He added that a recent easing in prices of oil should also help mitigate inflationary pressure.
   However Buenaventura remarked that with the expected further increase in US interest rates and with the possibility of some demand- driven price pressures being felt by next month, "there may be some measured action on our part."
   The central bank has kept its key overnight rates unchanged since July 2003 at 6.75 per cent for borrowing and 9.00 per cent for lending, the lowest levels in 12 years.

The financial industry looks set to lead Asian merger and acquisition activity in 2005 after banks, insurers and other institutions accounted for a quarter of deals last year.
   "We believe the level of M&A activity in the (financial institutions) space will continue in 2005," said Matthew Ginsburg, head of Asia Pacific financial institutions for Morgan Stanley, the region's top M&A advisor last year.
   Most countries in the region will be active, he said, pointing to South Korea as a place where banks, asset management companies and insurers will be busy on the M&A front.
   HSBC Holdings Plc. and Standard Chartered Plc. are competing to buy Korea First Bank, the country's eight-largest lender, which is 48.6 per cent owned by US equity fund Newbridge Capital.
   On Dec 24, Korea First delayed a planned announce-ment about Newbridge's stake, although a source had earlier told Reuters that HSBC would be the preferred bidder in a deal reportedly worth up to $3 billion.
   Citigroup Inc's $2.7 billion takeover of South Korea's KorAm Bank, which HSBC and StanChart had also chased, was among landmark deals last year that pushed the value of Asian financial institution M&A deals to US$21 billion, according to data provider Thomson Financial.
   Other highlights included HSBC's $1.75 billion purchase of 19.9 per cent of China's Bank of Communications, which helped China account for 30 per cent of M&A deals in the region in 2004.
   Greater China is a clear hotspot for 2005, experts said.
   "There's expected consolidation in Taiwan and major Chinese banks looking for strategic partners," said Colin Banfield, head of Asia Pacific M&A for Credit Suisse First Boston. "I think (financial institutions) will definitely be one of the drivers of M&A in the region."
   Two of China's "Big Four" state lenders-Bank of China and China Construction Bank-are pursuing foreign investment as they clean up their balance sheets and prepare for initial public offerings as soon as the end of this year.
   On Dec. 28, Bank of China said it expects to choose strategic investors in the first quarter of 2005, although it keeps pushing back its timeline.
   Market watchers expect Citigroup to buy part of China Construction Bank, while Germany's Deutsche Bank AG and JP Morgan are often mentioned as possible investors in government lenders.
   Foreign banks are also looking at smaller lenders such as Shenzhen Bank, which sold an 18 per cent stake for $150 million and ceded control to US equity fund Newbridge Capital.
   "I'd be surprised if we didn't see more announcements in 2005," said Ginsburg, adding that most Chinese banks are keen to partner with foreign players for their expertise.
   Taiwan, which is one of the most heavily overbanked markets in the world, is expected to continue its slow consolidation process following the merger of Taipeibank and Fubon Bank.
   Bankers have been frustrated by the glacial pace of bank takeovers on the island but that may be changing.
   "The desire to get transactions done is much stronger than it has been in the past," Ginsburg said.
   Elsewhere last year, a number of significant bank deals were done in smaller markets.
   Singapore's United Overseas Bank bought 80.77 per cent of Thailand's Bank of Asia, while the Indonesian government sold a 20 per cent stake worth about $120 million in the country's largest bank, Bank Permata, to a consortium led by StanChart.
   "You've got to be strong in each of the markets across the region and to have the footprint," said Banfield.

Oil prices traded marginally lower on Wednesday ahead of key US data, which was expected to show a rise in heating fuel supplies as mild winter temperatures suppressed demand in the United States.
   US light crude fell 16 cents to $43.75 a barrel. Prices are broadly on par with levels at the end of 2004 following sharp swings in the first two trading days this year.
   But the market may come under downward pressure later on Wednesday when a US government report is expected to show a rise in supplies of heating fuels after a bout of unseasonably warm weather at the end of December.
   The US government Energy Information Administration (EIA) will release its weekly report at 10:30 am EST.
   Analysts polled by Reuters predicted distillate inventories, including heating oil and diesel, would rise by 160,000 barrels in the week to Dec 31.
   "The market is like a yo-yo moving up and down on data or headlines," said Tony Nunan at Mitsubishi Corp in Tokyo.
   "It really hasn't been a very cold winter and that will hurt short-term demand. If today's stats are bearish we'll go down, but $40 to $45 continues to be a good range," he said.
   Top exporter Saudi Arabia said on Tuesday it had sliced 500,000 barrels per day (bpd) from its production in line with OPEC's accord in December to withdraw 1 million bpd of excess supply from the world market.
   "We took off the 500, we're around nine," Saudi Oil Minister Ali al-Naimi told Reuters on arrival for a meeting with Asian oil consumers in New Delhi. The Organization of the Petroleum Exporting Countries wants to avoid a big build up in global stocks ahead of the second quarter when oil demand drops at the end of winter.
   Oil prices have fallen nearly $12 a barrel from record highs above $55 in late October. Some OPEC ministers have said the group might need to cut formal production limits of 27 million bpd when the cartel meets on Jan. 30 to stop prices falling further.
   Escalating violence in Iraq ahead of elections at the end of the month also is supporting oil prices. The country's northern exports through Turkey have been stopped since December following sabotage on the Kirkuk-Ceyhan pipeline, which can carry 500,000 bpd.
   The market has seen a succession of supply hitches in North America and Europe.
   About 145,000 bpd of crude output remains closed in the US Gulf of Mexico following September's Hurricane Ivan, and two oil fields with combined production of 205,000 bpd are still closed in the Norwegian North Sea after a gas leak in November.
   Canadian company Suncor Energy Inc. said on Tuesday a fire shut more than 100,000 bpd of production at its oil sands facility in Alberta.

Repo auction held
The repo auction of the Bangladesh Bank for commercial banks and financial institutions was held in Dhaka on Wednesday. One bid of 7-day tenor amounting to Tk 50 crore was received and accepted. The rate of interest against the accepted bid was 3.00 percent per annum, said a Bangladesh Bank press release.
— UNB

Beijing’s silk market closes with protest
Beijing's outdoor Silk Alley Market, a popular tourist shopping haunt renowned for its fake name-brand goods, was shut down Wednesday as angry stall owners scuffled with police. Shoving matches with police broke out along Changan Street, Beijing's major thoroughfare that fronts the market, when security tried to take down posters protesting the demolition of the popular market. Stall owners accused the Chaoyang district government of colluding with real estate developers to shutter the market and build a new indoor shopping centre nearby that will keep the market's name. "The government and the developers have got together to drive us out," Sun Xiuzhen, an elderly woman who has leased a stall since its opening more than two decades ago, told AFP. "They are even violating our intellectual property rights by taking the Silk Alley name, the name that we built up over years of hard work. It's like a lamb seller selling dog meat." Sun and several other stall owners, dressed in white shirts with slogans written on them, yelled and taunted police in protest at the market closure. Since 1997, city officials have been trying to demolish Xiushuijie, as it is called in Chinese, due to concerns over fire and safety hazards.
— AFP

Air Asia to launch three new routes
AWAIR, a local unit of Malaysian budget carrier AirAsia, said Wednesday it will launch three new routes on Sunday. "We are proud of our rapid business growth in responding to high demand from the Indonesian people," president Sendjaja Widjaja said in a statement. "After just one month, AWAIR will add...three new routes," he said. The carrier will employ its second aircraft, a 148-seat Boeing 737-300, to service the new routes. The new aircraft will serve two domestic routes from the capital Jakarta to Surabaya in East Java, and from Jakarta to Denpasar on the resort island of Bali. It will also offer an international service between Jakarta and Singapore. AWAIR was re-launched on December 8, when AirAsia entered the Indonesian domestic aviation market, after succumbing to intense competition in 2002. AirAsia has said its expansion into Indonesia has put it on track to becoming a region-wide player.
— AFP

Indian ad firms
show restraint
Indian firms and advertising agencies have decided to restrain themselves from depicting heroism at sea in television commercials. Admakers said if someone is working on ads with tsunamis or sea waves as motifs, it should be done with care. They cited the recent pullout of global TV commercials by American Express and Dell. In the given scenario, any kind of advertising that's delicate "must be treated with restraint," said Piyush Pandey, chairman, O&M India. "People are very disturbed and advertisers need to be careful when dealing with this new situation." The Amex commercial was made by O&M Worldwide, part of the WPP group. Amex said it was made for US viewers and is not shown in India. Ad agencies maintained that firms won't like to be perceived as making gains out of a tragedy. "Symbols in advertising which can create a link to negativity should be avoided. After the 9/11 disaster, for example, any image linked to skyscrapers were generally avoided by advertisers," said Sandip Vij, president, OMS (Mudra's media-buying outfit).
— Internet

Petrol price goes
up in Pakistan
Petrol has become costlier by Rs7 per litre and high speed diesel (HSD) by Rs5 in just one year. In January 2004, petrol was selling at Rs33.78 as compared to Rs40.39 in January 2004. In January 2003, it was being sold at Rs32.50 per litre. Similarly, on January 1, 2004 and January 1, 2003 diesel was available at Rs22.78 and Rs21.14 respectively as against Rs26.21 per litre on January 1, 2005. High Octane Blending Component (HOBC) was on January 1, 2004 and January 1, 2003 being sold at Rs 37.67 and Rs 36.41 as compared to Rs44.59 per litre on January 1, 2005. Kerosene prices on January 1, 2004 and January 1, 2003 were Rs22.38 and Rs20.70 per litre. Currently it is priced at Rs26.04 per litre. Light diesel oil (LDO) was selling at Rs18.63 on January 1, 2004 as against current price of Rs22.92 per litre. In January 1, 2003 it was available at Rs17.60 per litre. International crude oil price, which was $29.90 a barrel on January 1, 2004, is now at $31.29 a barrel.
— Dawn

HK’s Hutchison mobile phone to cut 750 jobs
Hong Kong conglomerate Hutchison Whampoa said Wednesday it will cut 750 jobs at its mobile telephone business in a bid to trim the company’s operating costs and generate savings. The ports-to-telecoms conglomerate controlled by tycoon Li Ka-shing said it will cut 270 jobs at Hutchison Telecommunications International (HTIL) and ask 480 other employees to join outsourcing firms or the Hutchison Group. HTIL chairman Canning Fok said the move will help the company save 250-300 million Hong Kong dollars (32.00-38.50 million US dollars) a year and help it weather a difficult operating environment. HTIL has arranged an outsourcing scheme with NEC of Japan and Hewlett-Packard that will begin on January 10 and last for five years. Hutchison Whampoa has kept analysts guessing about its telecom business as growth at its costly third-generation 3 mobile operations has only recently begun to pick up.
— Internet

China’s steel exports via Tianjin port
rise sharply
Tianjin, a major trade port in north China, nearly doubled its year-earlier foreign sales of steels in the first 11 months of last year, according to local customs officials. The sources said that from January to November, the port sold 2.61 million tons of rolled steel abroad for 1.57 billion US dollars, up 93 percent and 130 percent respectively year-on-year. The exports were 823,000 tons more than the imports via the port for the same 11-month period, the officials said. The United States, the Republic of Korea and the European Union remained the top three target markets of steel exports from Tianjian, the officials added. Local customs officials attributed the dramatic growth in steel exports to rapid expansion of domestic production and rising demand abroad. Meanwhile, at the beginning of 2004, the United States terminated its Section 201 measures for steel trade protection.
— Xinhuanet