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The European Union has decided to give duty-free access with lower local value addition to readymade garments from the least developed countries of the SAARC region, including Bangladesh, under a new GSP arrangement to be effective from July this year, industry sources said.
   Under the new EU business rules, Bangladesh as a SAARC least developed country will enjoy zero tariff for all its apparel exports to the 25-nation European market, said Annisul Huq, president of Bangladesh Garments Manufacturers and Exporters Association.
   He said the local value addition content under the new GSP scheme will vary from zero to 25 per cent depending on the nature of the products and some other considerations.
   The present value addition requirement for the EU market is 51 per cent.
   The 12.5 per cent concessional duty that the EU collects now on import of apparels from the LDCs will also go bringing it down to zero for those countries to be entitled to enjoy the new GSP benefits, including Bangladesh.
   He said the EU will accept the SAARC cumulation in this case, meaning that Bangladesh can also buy fabrics and other raw materials from India and Pakistan for re- export. The zero tariff access will also be applicable for RMG products to be made with imported fabrics and raw materials from the ASEAN countries, the BGMEA president explained.
   He welcomed the EU move saying it would work as a new booster to least developed states in SAARC to face the post-MFA challenges.
   Meanwhile, a new bill will be placed simultaneously on Thursday in the US Congress and Senate seeking approval for duty-free access to apparel products from some of the Asian and Middle East countries, including Bangladesh, he added.
   The bill styled as ‘TRADE’ has the backing of four Congressmen and Senators. The legislation is expected to muster enough support from the US lawmakers and the administration to reward the countries that have close ties with the USA and yet did not enjoy special benefits in case of market access.
   ‘It may take up to one year and may see critical negotiations,’ he said.
   The USA now levies 16 per cent duty on RMG imports, including those from Bangladesh, under a quota regime that was in force up to December last year.
   Now in the post-MFA period from January 1, the quota restriction has gone and once the duty- free access comes into force as the new bill to the Congress is going to seek, the entry of Bangladesh’s RMG products to the US will become free from all tariff and non-tariff restrictions.
   Annisul Huq said the very placement of the new bill in the US Congress and Senate will create a new business environment for Bangladesh in terms of attracting new buyers and digging in the existing ones for meeting additional requirements from here.
   Annisul Huq said Bangladesh’s garments exports to the EU will phenomenally increase with the implementation of duty-free access from the middle of this year. It will see yet another fillip once USA market opens up, the BGMEA president said pinning very high hopes in the future of the Bangladesh apparel industry.
   He said the EU is tabling a new bill in this respect providing such facility to the LDCs, including Bangladesh. What the government here is to do is to make a strong plea to make sure the passage of the new bill by the EU parliament, Anis said.

Oregon apparel makers Nike and Columbia Sportswear have joined with several other companies to argue that the US government should expand trade with Sri Lanka and 14 other countries, to mitigate the economic effects of last month’s deadly tsunami.
   Sen Gordon Smith, R-Ore., plans to introduce a bill that would remove tariffs on textiles and other products from the countries, which also include Cambodia, Nepal and Afghanistan.
   The proposal comes after the January 1 expiration date of international quotas on textile imports.
   That will presumably allow large countries such as China to export clothing without limit, potentially dominating the industry that is one of Sri Lanka’s large employers.
   ‘This concept is actually letting these countries maintain their industries on their own, giving them a competitive advantage,’ said Brad Figel, Nike’s lobbyist in Washington. ‘It’s kind of a trade versus aid approach.’
   Nike receives some apparel from three of the countries covered in Smith’s proposal: Sri Lanka, Bangladesh and Cambodia. But Figel said the economic benefits to Nike would be small.
   ‘This is not going to be huge duty savings for Nike. It’s very minimal,’ Figel said. ‘But Nike has been actively engaged in broad coalitions of (nongovernmental organisations) to try
   to figure out how to approach this whole issue of job dislocation.’
   Among nonprofit supporters of the plan is Oxfam America, an anti-poverty group, which sees Smith’s proposal as a way to help some of the world’s poorest economies compete.
   ‘Giving some special attention to the poorest countries like Bangladesh and Cambodia seems appropriate and would make sure that as we open our markets, the benefits go to the most needy countries,’ said Gawain Kripke, policy adviser for Oxfam.
   But critics of the plan say it would increase the cheaper textile imports into the United States at the expense of the already shrinking US clothing industry.
   Alongside the textile industry, Smith’s bill is also likely to be opposed by shrimpers, who say any effort to lower trade barriers for tsunami-ravaged countries could be devastating to domestic producers.
   Given the textile industry’s political clout, any effort to open up its market further is likely to face a tough battle.
   ‘We’ve already been bled white,’ Lloyd Wood, a spokesman for the American Manufacturing Trade Action Coalition, a textile lobbying group, told the Los Angeles Times. He said the US had lost 363,200 apparel and textile jobs since January 2001.
   Smith has yet to introduce the bill, so concrete details on the tariff removal plan are unavailable. A Smith spokesman, Tucker Bounds, said the bill also would eliminate tariffs on exports such as watches, electronics, footwear, handbags, luggage and glass products.

Leasing companies have sought changes in the accounting system to make financial disclosures of lessees more transparent and compliant with global standards.
   They urged the National Board of Revenue to settle tax related matters in compliance with International Accounting Standard (IAS)-17 that requires the balance sheets to show the assets taken on lease.
   Under the current system, the lease assets are not shown in the balance sheet of the lessees.
   But once the NBR approves the proposal, the lessees will have to pay taxes on the lease assets, while leasing companies will keep an account on payment they receive from the lessees, said an official of the Institute of Chartered Accountants of Bangladesh.
   If the proposal is implemented, the leasing companies will gain more than that of lessees as the lessors will be relieved of tax burdens, he added.
   The issue is very important for the leasing companies, said a senior executive of a leasing company.
   However, he admitted that lessees would pay additional tax under the new accounting system but it will eventually bring more transparency in the books of non-banking financial institutions.
   A senior NBR official said they are examining the proposal and have already held several meetings with the local leasing companies.
   ‘The board has no problem in changing the accounting system if it does not affect the revenue earning,’ the official said.
   The NBR earned about Tk 50 crore income tax annually from 28 leasing companies.
   Officials of local leasing companies said that some companies including Phoenix and IDLC have already switched over to the new standard since 2004 though the IAS-17 has not yet implemented fully.
   The non-banking financial institutions have a capital base of Tk 5,000 crore with average annual growth of 25 per cent, they added.

Critics of globalisation on Wednesday rounded on the ‘irresponsible’ conduct of four top companies including the oil giant Shell and Dow Chemicals, on the sidelines of the World Economic Forum in Switzerland.
   As the meeting of global political and economic leaders got underway in the Alpine resort of Davos, pressure groups meeting nearby gave their ‘Public Eye Awards’ to the two multinationals, as well as to the US retail chain Wal-Mart and audit firm KPMG International.
   ‘They are model cases for all the corporate groups that have excelled in socially and environmentally irresponsible behaviour. They reveal the negative impacts of economic globalisation,’ the organisers of the Public Eye on Davos said in a statement.
   While business leaders were set to tackle issues of corporate responsibility, pledging greater efforts on climate change or poverty at the forum, environmental, human rights and left-wing groups were selecting their worst corporate performers from a list of 20 multinational companies.
   The groups in the Public Eye accused the Dow Chemical Company of failing to assume accountability in the aftermath of the chemical spill at one of its factories in Bhopal, India, in 1984
   Thousands of people were killed when 40 tonnes of lethal gas leaked from a pesticide plant in one of the world’s worst environmental disasters, and thousands more suffered chronic illness.
   The environmental impact of Shell’s oil and gas drilling operations in Nigeria were also sharply criticised.
   Oil spills since 1956 had allegedly not been properly cleaned up and the group had not met promises to stop the flaring of excess gas from fields in Nigeria, according to Public Eye.
   Wal-Mart’s working conditions in supplying factories in Africa and Asia were slated as ‘intolerable, ranging from excessive compulsory overtime to wages below the subsistence level.’
   The Public Eye said KPMG’s tax saving advice to clients had encouraged “aggressive tax avoidance”.
   The organisers urged private companies to take more responsibility for their business practices “instead of enforcing tough choices at the expense of local communities and the environment”.
   Its is the sixth time the alternative Public Eye meeting has been held only a few hundred metres away from the annual meeting of the World Economic Forum.

National Tubes Ltd posted a net profit of over Tk 3 crore during July-December, 2004 up by 71.3 per cent from a year-ago period.
   The company earned Tk1.9 crore as net profit in July-December period of 2003, according to the company’s half-yearly unaudited accounts submitted to the Dhaka Stock Exchange Wednesday.
   Earning per share of the company jumped to Tk.58.26 as of December 31, 2004 from Tk.47.62 in preceding year.
   The news of better-than-expected results boosted National Tubes’ share price, which was up by Tk52 or 2.5 per cent to close at Tk2,120 Wednesday.
   Meanwhile, stocks continued to limp along for the third consecutive session at DSE after Eid vacation with little trading activities and lower presence of investors.
   The DSE benchmark slid 0.4 point or 0.02 per cent to close at 1857.24 points. However, gainers topped the losers 87 to 69.
   Beximco Pharma and Square Pharma helped the blue-chip DSE 20 Index surge by 7 points or 0.3 per cent to 2039.4. But, most of blue-chip shares marked a downslide.
   The daily turnover also remained low at Tk16.3 crore with total number of trades (howla) slipping to 7,531.
   Most of the banking and cement stocks declined while IT, pharmaceuticals, investment and engineering stocks finished slightly higher. Insurance stocks witnessed a mixed trend.

The White House says its drive to halve federal deficits by 2009 remains on track, though it projects that the cost of wars in Iraq and Afghanistan will help drive this year’s shortfall to a record $427 billion.
   The figure, provided by a senior Bush administration official who briefed reporters on condition of anonymity, was among a flood of numbers released Tuesday that underscored a gloomy budget picture.

China’s thirst for raw materials will continue to support its booming economy and underpin global commodity prices, according to analysts.
   China’s economy expanded 9.5 percent last year from 9.3 percent in 2003, official data showed yesterday, in an indication that Beijing’s tightening measures have proved to be insufficient.
   ‘There are signs that the commodity bull run has reached its peak, although strong growth in China will underpin demand going forward, giving an extended cycle,’ Standard Chartered analyst Helen Henton said.
   “While prices are expected to ease back, they are likely to remain high and above long-term averages, underpinned by a secular (long-term) increase in demand from China. This will be evident in prices for base metals and energy,” she added in a research note to clients.
   Analysts noted that commodity prices have risen sharply since three years ago, largely due to China’s burgeoning demand.
   The Commodities Research Bureau’s index of 17 commodities has surged by 50 percent since the start of 2002. It stood at 285.38 points on Tuesday.
   In a bid to restrain runaway growth, Beijing has imposed a series of lending curbs on overheated sectors of the economy such as construction, steel and autos.
   Analyst pointed out that the latest growth data proved China had not done enough, however, to tackle the runaway economy.
   ‘Measures to cool the economy in 2004 had an impact on commodity markets, but on the whole demand from China has remained strong following a period of de-stocking mid-year,’ Henton said.
   Standard Chartered analysts said they expected Chinese growth to slow to 8.0 percent in 2005.
   China currently accounts for 21 percent of the world’s demand for base metals, an almost three-fold rise since 1994, while its share of world demand for crude oil has almost doubled to 8.0 percent over the same period to 6.3 million barrels per day.

A Bangladeshi company will set up an agro-based industry in the Mongla Export Processing Zone.
   The fully Bangladeshi owned company, Sonu Processing Unit, will invest $ 1.140 million to produce 9,600 tonnes of Areca Nut annually, said a press release of Bangladesh Export Processing Zones Authority (BEPZA).
   An agreement to this effect was signed between BEPZA and the company here on Wednesday.
   Md Shahjahan, member (Investment Promotion) of the BEPZA and Md Zahirul Hasan, managing partner of Sonu Processing Unit, signed the lease agreement on behalf of their respective organisations.
   Executive chairman of BEPZA Md Zakir Hossain, member (finance) Masud Ahmed, member (engineering) Abu Reza Khan, secretary S Mahmood Yunus, general manager (Dhaka EPZ) Kamal Akthar and general manager (Investment Promotion) AZM Azizur Rahman were present at the signing ceremony.

Australia provided fund to Socio-Economic Development Society under its direct aid programme, says a press release.
   The Australian high commissioner, Ms Lorraine Barker, handed over a fund cheque to the SEDS director, Md Sirajul Islam.
   The fund will be used in purchasing equipment to improve quality of the hand-made paper production unit owned by the SEDS.
   The SEDS provides training to underprivileged women to produce hand-made paper and paper products such as greeting cards, lamb-sheds, photo-frames, note-books, jewellery boxes and photo albums.

Qatar Airways launched flights to Johannesburg and Cape Town, making its air service debut in South Africa, says a press release.
   With its new routes, Qatar Airways' global network now reaches to 59 destinations. The new routes come just eight days after the airline started flights between Doha and Yangon - capital of Myanmar.
   The airline is operating four flights a week between Qatar and the two cities of South Africa, using Airbus A330-200 having 24 seats in business class and 248 seats in economy calss.
   The chief executive officer of Qatar Airways, Akbar Al Baker, said the airline was spreading its award-winning Five Star service to a new market in South Africa to give passengers a taste of its excellent level of service.
   'We are extremely delighted to expand our network to South Africa's commercial hub of Johannesburg and one of the world's top tourist centres of Cape Town,' said Al Baker.

Pakistan rice export sales were thin in the past week due to high domestic prices, which will continue to limit sales in the coming weeks, traders said yesterday.
   ‘Our export price (of IRRI-6 variety of rice) is over $50 higher then the price quoted by the Chinese traders,’ said an exporter in Karachi. ‘High prices have made exports difficult.’
   Chinese traders are quoting $180 per tonne compared with Pakistan’s $240.
   The exporter said last week Pakistani traders had sold 35,000 tonnes of IRRI-6 rice to the World Food Programme for North Korea and Sri Lanka.
   ‘Other than the purchases by the WFP, no major contacts were signed during the past week and also nothing is in the pipeline because international buyers are asking us to cut prices,’ the exporter added.
   ‘At current prices obtaining an export order is next to impossible.’

The United States cannot rely on a falling dollar alone to tame its soaring trade deficit but must also cut government spending and save more or risk delivering a dangerous shock to the world economy, UN forecasters warned Tuesday.
   Without such additional steps, the world economy could suffer an ‘abrupt and globally damaging correction,’ according to the latest report on world economic prospects from the UN Department of Economic and Social Affairs.
   A falling dollar in theory makes US goods cheaper in other countries and makes imported goods more expensive in the United States, giving a boost to the US economy. The dollar fell for a third straight year against other major currencies in 2004, reaching a new low against the euro.
   Some economists say the Bush administration is counting on the sinking dollar to alone reverse the lag in trade by spurring the economy to simply grow out of it.
   But so far, the approach does not seem to be working, due to complications like higher oil prices that have increased the cost of US imports without slowing demand.
   The deficit keeps growing month after month, surpassing $650 billion last year or more than 5 per cent of the total value of US goods and services produced.
   The growing US trade gap was countered last year by surpluses in developing Asian nations, Japan and European Union states, the UN economists said. As a result, it had only a small impact on the global economy.
   But it could lead to ‘an abrupt and globally damaging correction (in 2005) since a depreciation of the dollar alone seems unlikely to be sufficient to reduce the global imbalances to sustainable levels in an orderly fashion,’ the report said.
   Federal spending cuts, to shrink budget deficits, and more savings by private Americans seem ‘indispensable,’ it said.
   US budget deficits are now financed largely by foreign investors who lend money to Washington by buying US government bonds. If the deficits shrank and Americans saved more, the United States could rely less on these investors.
   The world economy grew at a healthy 4 per cent rate in 2004, beating a 3.7 per cent U.N. forecast issued last April and 2.6 per cent global growth in 2003, the UN report said.
   But the cyclical recovery is peaking and the gross world product will expand at a more modest 3.25 per cent clip this year, the U.N. forecasters predicted.
   Among the factors weighing on growth this year will be higher oil prices and moves by central banks in the United States, China and elsewhere to raise interest rates as a defense against future inflation, they said.
   Growth was strong virtually around the world last year, the U.N. report said. The transitional economies of Eastern Europe expanded the most rapidly and developing nations grew at their fastest pace in more than two decades, it said.
   While expanding at a slower pace in 2004 than in 2003, the countries of South Asia and the Commonwealth of Independent States—the grouping of former Soviet Union republics dominated by Russia—both grew at over a 6 per cent rate.
   Among wealthy nations, expansion was less uniform.
   While growth was strong in North America, it was moderate in Japan and weak in Europe, making the European Union in many ways the world’s lagging economy these days instead of Japan, the report said.
   The economies of the United States and China continue to be the main engines for growth, with China especially providing new stimulus with increased demand for raw materials.
   Among developed countries, Japan performed moderately well, while Europe lagged.
   Expansion of world trade also grew, from 6.2 per cent to 10.6 per cent, although it was expected to slow again to 8 per cent growth in 2005.

The yen jumped on Wednesday, retracing some of this week’s losses, after China said it would discuss the yuan at an upcoming meeting of the Group of Seven economic powers, rekindling speculation of a yuan revaluation.
   A Chinese official said that the country’s finance minister would attend next week’s G7 meeting in London and that there would be a ‘deep dialogue’ on issues including the yuan.
   Asian currencies including the yen have been pushed around by comments on the yuan. The dollar rose 1.5 per cent against the yen on Tuesday after the head of China’s economic statistics bureau, Li Deshui, suggested it was in no hurry to loosen the tight peg of 8.28 yuan per dollar.
   ‘We’ve had some conflicting signals in the last 24 hours on China,’ said Daragh Maher, senior currency strategist at Calyon.
   ‘Yuan revaluation will be a topic of discussion at G7, but whether we will actually get some change of language on the yuan is questionable.’
   The dollar slid about half a yen before recovering to around 103.50 yen at 4:10 a.m. EST, 0.5 per cent down from late New York levels.
   The euro also slid as much as half a yen on the comments to around 134.24 yen. It was at 134.50 yen, down 0.4 per cent from the US close.
   The single currency edged up to $1.30 after Germany’s Ifo institute said its pan-German business climate index rose unexpectedly in January, to 96.4.
   Last month, the main sentiment index rose to 96.2, its highest since April and above all forecasts.
   Ifo economist Klaus Abberger said the soft patch was not fully behind the German economy.
   Current account data for the euro zone in November showed a surplus of 3.2 billion euros, from a revised 1.2 billion surplus in October.
   Speculation about a revaluation of the yuan has been rife in the past year, with European policymakers recently urging Asian countries, especially China, to let their currencies rise to share the burden of the dollar’s three-year decline.
   Any appreciation of the Chinese yuan would be expected to put upward pressure on all Asian currencies.
   The market remained skeptical about whether the G7 meeting would herald any immediate action by Beijing after US, Japanese and European officials all signaled little change was likely in the previous G7 communique calling for exchange rate flexibility.
   Marshall Gittler, senior currency strategist at Deutsche Bank in Tokyo, said the G7 and China might well discuss the yuan without doing anything about it.
   He said it was ‘increasingly unlikely’ the G7 outcome would give currencies a new sense of direction.
   Beijing has resisted pressure by US and European officials, saying it would move only when it was ready and not when speculators are most primed for a change.
   China’s growing clout in global trade was underscored on Wednesday after Japanese data showed that Japan’s trade with China and Hong Kong together surpassed that of the United States for the first time.
   So far in 2005 the dollar has defied widespread expectations to keep falling on worries about the United States’ ability to fund its massive current account and budget deficits.
   Expectations for the Federal Reserve to keep steadily lifting its fed funds rate above comparable rates in the euro zone and Japan has provided some support for the US currency.
   The Fed is widely expected to raise rates by a quarter- per centage point to 2.50 per cent next week, compared with 2 per cent in Europe and Japan’s virtually zero per cent.
   Thirty per cent of economists polled by Reuters expect New Zealand to raise rates by a quarter point from the current 6.50 per cent at its rate decision at 3 p.m. EST. Most economists see rates staying on hold.
   The New Zealand dollar was trading at US$0.7126, half a cent below recent three-week highs.

A federal appeals court on Tuesday revived part of the widely-watched obesity suit against McDonald’s Corp. that accuses the world’s biggest fast-food company of using misleading advertising to lure children into eating fattening, unhealthy foods.
   The US Second Circuit Court of Appeals ruled that a trial judge wrongfully threw out certain portions of the complaint in September 2003 on grounds that it lacked information linking the plaintiffs injuries with eating McDonald’s foods. The panel did, however, uphold other parts of the dismissal.
   The appeals court said the proof about injuries could be provided during pre-trial proceedings and did not need to be included in the initial filing. It said it was sending the case back to the trial judge for further proceedings.
   The ruling comes on the same day that ‘Super Size Me,’ a documentary about a man’s month-long diet of McDonald’s fast food, was nominated for an Oscar.
   McDonald’s said they expected the obesity suit will be thrown out again.
   ‘As we have consistently said, common sense tells you this particular case makes no sense. Today’s ruling, which is strictly procedural, simply delays the inevitable conclusion that this case is without merit,’ McDonald’s said.
   ‘We are confident this frivolous suit will once again be dismissed,’ McDonald’s said.
   The 2003 ruling marked the second time US District Judge Robert Sweet dismissed the case brought on behalf of two youngsters who
   blamed their obesity, diabetes and other health problems on Big Macs and Chicken McNuggets.
   Sweet said the plaintiffs had not followed detailed instructions he gave when he first threw out the case and told the plaintiffs they could submit a new filing with information backing up their advertising allegations.
   He said the complaint did not answer such questions as ‘What else did the plaintiffs eat? How much did they exercise? Is there a family history of the diseases which are alleged to have been caused by McDonald’s products.’
   The judge said that without this information McDonald’s did not have sufficient information to determine if their foods caused the plaintiffs obesity or if instead the products were only a contributing factor.
   The suit had raised fears in the food industry of a new wave of tobacco-like litigation against restaurants and manufacturers. Indeed, when the judge threw out the first case, he left the door open to further litigation. In that ruling he referred to Chicken McNuggets as a ‘McFrankenstein creation’ made of elements not used in home cooking.

Chancellor Gordon Brown will have to raise taxes by £11bn to pay for his spending plans, a think-tank has said.
   The Institute for Fiscal Studies (IFS) says Gordon Brown will need to raise taxes to get public finances onto the track predicted in last year’s Budget.
   It warns tax revenues will not grow as fast as the government expects. The IFS also suggests the government may narrowly miss its ‘golden rule’- to borrow only for investment - if the current economic cycle ends in 2005/06.
   The findings are included in the IFS’s annual Green Budget, which has been produced in collaboration with US investment bank Morgan Stanley, and is a detailed analysis of the issues facing Brown ahead of March’s annual budget.
   The budget deficit is likely to be more than £3bn bigger this year than the Treasury predicted in December’s pre-budget report, the IFS said.
   Next year’s deficit is also set to be £6bn bigger than originally predicted, the IFS added.
   ‘This reflects stronger-than-forecast spending, and weaker-than-expected revenues,’ said the IFS report. The government may break its ‘golden rule’ but it depends on when the current economic cycle ends.
   ‘On these figures, the government would narrowly break its golden rule over the current economic cycle, if the cycle ends in 2005/06, as the Treasury expects.
   See the current and projected budget surplus
   ‘But if there is less spare capacity in the economy than the Treasury thinks, and the cycle is already in its final year, then the rule should be met.’
   However, it goes on to predict that whether or not the rule is met over the current cycle, ‘government borrowing will be higher over the next few years than the Treasury thinks, in large part because tax revenues are not expected to grow as quickly as it hopes’.
   If the government is to be reasonably confident of meeting the golden rule over the next cycle, it would need to announce fresh tax increases or cut its proposed spending, the IFS said.
   The government has pledged to pour billions of pounds into ailing public services, particularly schools and hospitals.
   ‘As the Labour government’s spending plans have now been laid down through to 2007/08, new tax increases look more likely,’ the IFS says.
   Earlier this week, the Ernst & Young Item Club group of economists also said taxes would have to rise after the general election to fill a hole in UK public finances.

Microsoft Corp plans to severely curtail the ways in which people running pirated copies of its dominant Windows operating system can receive software updates, including security fixes.
   The new authentication system, announced Tuesday and due to arrive by midyear, will still allow people with pirated copies of Windows to obtain security fixes, but their options will be limited. The move allows Microsoft to use one of its sharpest weapons — access to security patches that can prevent viruses, worms and other crippling attacks — to thwart a costly and meddlesome piracy problem.
   But some security experts said the crackdown also could increase Internet security problems in general, if there is a spike in unsecured computers open to attack, which then could be used to attack others.
   David Lazar, a director of the effort, said Microsoft would monitor that potential problem closely. But the company actually considers its authentication requirement one possible way to boost Internet security — countering the idea it may increase threats. That’s because pirated copies of Windows could contain viruses or other security threats, he said.
   Over the next few months, the software behemoth will begin to more broadly adopt the program, called Windows Genuine Advantage, that urges users to provide proof their Windows copy is authentic before receiving some software updates.
   By mid-2005, the program will become mandatory for Windows users to get virtually all updates, including security fixes available through the company’s Windows Update Web site. But users who have pirated copies of Windows will be able to continue to get security fixes if they sign up to automatically receive security updates.
   Russ Cooper, a senior scientist with Cybertrust Inc., said completely cutting off access to security fixes for pirated machines could cause a spike in malicious, Internet-based attacks. He lauded Microsoft for mitigating that problem by continuing to allow all users to get the automatic updates, regardless of whether they’re running pirated versions.
   Still, Cooper said he expected Microsoft to eventually cut off that security update avenue for pirated copies. He said the company may feel it has few other options as it tries to stop the millions of users who are running pirated copes of Windows.
   The operating system is one of the company’s major cash cows, and the move comes as Microsoft is moving aggressively into emerging markets where piracy is thought to be more common.
   “The reality is that shareholders of Microsoft would like to see them get all the money they are owed,” Cooper said.
   Microsoft said the company has no current plans to require users running automatic updates to provide proof that their copies of Windows are genuine.
   Lazar said piracy has cost the Redmond-based company “billions of dollars over the past 10 years,” but he would not be more specific.
   “Our desire is to enhance the value of genuine Windows, to create a differentiation (and) to add more value in the form of greater security and reliability,” Lazar said.
   Customers who visit the manual Windows Update site will be asked to prove that their copies of Windows are legitimate by allowing Microsoft’s system to automatically run a check, or by providing a product identification number. Users who have lost that number will be asked three basic questions, and if they are deemed to be acting in good faith they will be given a free replacement key.
   The company also said it will begin providing discounted versions of Windows to users in China, Norway and the Czech Republic who discover they have a counterfeit version of Windows XP.
   Rob Enderle, principal analyst with the Enderle Group, is expecting the more stringent authentication system to be successful, as Internet attacks become ever more sophisticated and users with pirated copies of Windows become helpless to stop them.
   “It will create an environment where the pirated machines, if they’re connected to the Internet, won’t really work,” he said.

US consumers are likely to be major beneficiaries from the removal of quotas on Chinese textile and clothing products, as importers can now source more goods from low-cost China, a Hong Kong government trade body said on Wednesday.
   ‘It is estimated that the removal of quotas, as well as import tariffs, will save US$13 billion in prices paid by US consumers,’ the Hong Kong Trade Development Council’s chief economist Edward Leung said in a report released on Wednesday.
   A decades-old quotas system limiting textile exports from China and other countries lapsed on Jan. 1. China
   made 17 per cent of the world’s textiles and clothes in 2003 and the World Trade Organisation sees that share rocketing past 50 per cent within three years.
   An importer can now cut the number of sourcing locations from over 30 to 10, saving on costs, said Leung. They will also be able to stop paying above market prices for scarce quotas.
   However, the sector’s short-term outlook remains murky as WTO members, including the United States, can impose anti-surge measures against Chinese apparel that proves disruptive to their domestic industries.
   Even though China has imposed tariffs on exports of 148 textile products to ease the fears of its trade partners, industry players believe the US will still slap safeguard measures on select products to protect the domestic industry.
   ‘Manufacturers are still adopting a very prudent stance since the removal of quotas,’ said Leung. ‘We haven’t seen any major changes in the way they operate their business.’

The United States and China have signed an agreement that will make it easier for the Chinese government to help finance purchases of a wide range of American goods including energy products and medical equipment, the US Export- Import Bank said yesterday.
   Ex-Im Bank Chairman Philip Merrill and Chinese Vice Minister of Finance Liao Xiaojun signed the pact in Beijing, the bank said. It streamlines procedures for the Chinese Finance Ministry to guarantee repayment of loans made to a Chinese buyer under Ex- Im Bank programs.
   The agreement will enable Ex-Im Bank to finance exports of US goods including renewable energy, medical equipment, environmental products, transportation equipment and telecommunication products, the bank said.
   Ex-Im Bank recently financed sales of US railway track inspection equipment, air quality monitoring equipment, high-tech hospital supplies and components for an ethylene production plant to China.
   The official export credit agency of the United States says it has more than $4.1 billion worth of exposure in China.
   The Bush administration is under pressure to reverse the mounting US trade deficit with China, which is expected to exceed $160 billion when final figures for 2004 are in.

China replaced the United States as Japan’s largest trade partner in 2004, the Finance Ministry said Wednesday.
   The trade volume between China, including Hong Kong, and Japan in the past year totaled 22,200 billion yen ($213.3 billion), the highest since the record began in 1947.
   The Japanese-US trade stood at about 20,480 billion yen ($198.8 billion) in 2004.
   The trade with China accounted for about 20 per cent in Japan’s total foreign trade volume, while the US share stood at about 18 per cent.
   The exports to the European Union marked a record 9,474 billion yen ($91.9 billion). Imports from the region were a record 6,208 billion yen ($60.2 billion).
   Japan enjoyed a worldwide trade surplus of 12,010 billion yen ($116.6 billion) in 2004, growing 17.9 per cent from the previous year.

Indonesia, Southeast Asia’s fallen economic giant, could at last be getting back on its feet.
   Far from giving up on Indonesia after last month’s devastating tsunami, a number of economists are turning more bullish in the hope that new President Susilo Bambang Yudhoyono can use a drive for more private-sector investment as a lever to implement long-awaited economic reforms.
   Yudhoyono’s rivalry with Vice-President Yusuf Kalla worries some analysts. Entrenched corruption and weak administrative capacity will test Jakarta’s ability to use the $1.5 billion that donors have pledged for this year to rebuild Aceh province after the Dec. 26 sea-surge, which killed at least 174,000.
   Above all, Yudhoyono must deliver the tax and legal changes needed to persuade investors to finance a set of 91 infrastructure projects worth $22.5 billion unveiled last week.
   Everything would depend on implementation, but Le Mesurier said he was impressed by the preparations for the slew of road, water and transport projects and was convinced that the government wanted to get things done.
   A reinvigorated Indonesia might also be able to reassert the leadership role it enjoyed within the 10-member Association of South East Asian Nations until the 1997/98 financial crisis forced it to turn inward.
   “If Indonesia prospers, the region is in for a period of stability,” said K Kesavapany, director of the Institute of Southeast Asian Studies (ISEAS) in Singapore.
   Anton Gunawan, Citigroup’s economist in Jakarta, said he expected Moody’s Investors Service to raise Indonesia’s credit rating soon as a reward for its prudent fiscal management.
   But he said in a report that the government would find it hard to hit its target of 5.5 per cent economic growth in 2005, as the benefits from the infrastructure drive and the reconstruction of Aceh might not be felt for a while. The next stage, analysts said, is for the government to introduce regulations and pass laws that will give investors greater legal certainty before they dig into their pockets.
   One of the bitterest of these disputes, still unresolved, involves Mexico’s Cemex SA CX.N . The cement giant has failed for four years to take majority control of Indonesian cement maker PT Semen Gresik Tbk SMGR.JK after Jakarta reneged on a deal to sell the state-owned firm in the face of pressure from local politicians.
   A memorandum of understanding to settle the spat was due to have been signed on Tuesday. But the government shelved the pact, saying agreement on some clauses had not been reached.
   Anne Booth, an economics professor at the University of London’s School of Oriental and African Studies, said that in addition to legal guarantees, investors wanted Yudhoyono to make good on his pledge to tackle corruption and cut fuel subsidies.
   Booth credits Yudhoyono with “making a lot of the right noises” but says he could find it tough to get controversial proposals through parliament.
   Yudhoyono has the direct support of only one small party in parliament, though he should be able to count on the votes of Golkar, the biggest party with 23 per cent of seats, since Kalla, his vice-president, won control of the party last month.
   Leo Suryadinata, a senior research fellow at ISEAS, said Yudhoyono and Kalla were rivals who had buried their well-known differences for now in a marriage of political convenience.
   “If the rivalry becomes very open and starts to harm the operations of the government, then it is going to affect overall stability and economic performance,” Suryadinata said.
   “I don’t want to exaggerate the rivalries between these two, but nevertheless to ignore the differences is not wise either.”

Oil eases but
still near $50
Oil prices held within sight of $50 a barrel on Wednesday on supply worries in the United States, where weekly data is expected to show a draw in winter fuel inventories. A refinery fire in Louisiana helped send prices to a new eight-week high of $49.75 a barrel on Tuesday, highlighting the market’s sensitivity to supply disruptions ahead of this weekend’s Iraqi elections and OPEC policy meeting. US light crude was down 21 cents to $49.43 a barrel, but up nearly 14 per cent since the start of the year after the eastern United States was hit with the first severe cold snap of the winter, boosting demand for heating oil. London Brent was down 26 cents at $46.75 a barrel after hitting a nearly three-month peak on Tuesday. Prices leapt on Tuesday after ConocoPhillips said it had slowed production at its Belle Chasse, Louisiana, refinery after a fire at the weekend. US supplies of heating oil were running about 4 per cent below last year, the most recent government figures showed, and analysts forecast a 2.6 million barrel fall in total distillates stocks for the week to Jan 21.
— Reuters

Britain misses
official growth
target for 2004
Britain’s economy expanded at a faster than expected rate towards the end of 2004, official figures showed, but growth for the year as a whole just missed government targets at 3.1 percent. Gross domestic product (GDP) growth of 0.7 percent in the final quarter of 2004 beat economists’ expectations of a 0.6-percent rise, with a buoyant service sector cancelling out another sharp fall in industrial activity. This meant that for 2004 as a whole, Britain’s economy grew by 3.1 percent, the National Statistics office said in preliminary figures, missing finance minister Gordon Brown’s target of 3.25 percent. However, it was the best annual GDP growth since 2000, comfortably ahead of 2003’s 2.2 percent and a solid figure for the government to take into a general election widely expected for May. Chancellor of the Exchequer Brown’s stewardship of the British economy, which is outperforming many of its eurozone neighbours, is seen as one of the strongest electoral cards for Prime Minister Tony Blair as he seeks a third consecutive term in office.
— AFP

Google, Yahoo
launch television
search effort
Internet giants Yahoo and Google moved into a new battleground in the search business—video and television content. Google unveiled a service that allows users to search for the content of TV programs, allowing searches of programs on the US Public Broadcasting System, the National Basketball Association, Fox News and C-Span, the service broadcasting congressional hearings. ‘What Google did for the Web, Google Video aims to do for television,’ said Larry Page, Google co-founder and president of products. ‘This preview release demonstrates how searching television can work today.’ Google said the service can increase viewership by providing Google users with information on future airings of relevant programs. But it does not provide a direct link to video. Instead, based on the search request, it offers a list of relevant television programs with still images and text excerpts. Google did not indicate any plans to expand the service outside US media. Yahoo meanwhile launched a test service that lets users search content on Bloomberg TV, BSkyB and BBC.
— AFP

Thomson to sell Italian tubes
plant to Videocon
France’s Thomson said on Wednesday it would dispose of its Italian tubes manufacturing plant in Anagni to Indian consumer electronics maker Videocon, as it exits the low-margin production of television sets. The deal, part of Thomson’s transformation into a group focused on serving the media and entertainment industries, boosted Thomson’s shares by over 2 per cent. By 0859 GMT, Thomson shares had gained 2.04 per cent at 18.53 euros and were among the top gainers on the CAC-40 index of French blue chips. The impact of the transaction would be in line with the one-time charge that was announced on Oct. 21 to be taken largely against 2004 results, Thomson said in a statement. Thomson, which is seeking partnerships for its display assets, had said it would take a one-time charge of 780 million euros ($1.02 billion) in second half 2004 tied to depreciation of displays and components. Videocon meanwhile was expanding internationally and would develop a European manufacturing base from the Anagni plant, Thomson said.
— Reuters

Kodak posts net loss, finds tax errors
Photography company Eastman Kodak Co on Wednesday said fourth quarter sales of its digital products rose 40 per cent—evidence of the early success of its transition away from film—and shares rose. However, it still reported a fourth-quarter net loss due to restructuring costs associated with its costly digital strategy, and said it has found errors related to its income taxes, which may require a restatement. Kodak reported a net loss of $12 million, or 4 cents a share, compared with a year-earlier profit of $19 million, or 7 cents a share. Revenue rose 3 per cent to $3.77 billion from $3.64 billion on strong sales of digital products, the company said. Excluding special items, earnings for the quarter were 78 cents per share, in line with the average forecast from analysts polled by Reuters Estimates. Shares of Kodak rose to $32.49 in pre-open trade on Wednesday, from its Tuesday close of $31.55 on the New York Stock Exchange.
— Reuters

Malaysia auto
sales reach all time
high in 2004
Auto sales reached an all time high in 2004 and are expected to grow a further 2.5 per cent in 2005 to reach half-a-million vehicles, the Malaysian Automotive Association (MAA) said Wednesday. Total auto sales in 2004 amounted to 487,605, up 20 per cent from a revised figure of 405,745 for 2003. The increase was attributed to the introduction of new models, low interest rates, longer repayment periods and new brands such as Oriental-Hyundai, Hyundai-Berjaya, Cheverolet, Fiat and Ssangyong reporting sales figures for the first time, the MAA said. MAA president Aishah Ahmad said 2004 marked an all-time high despite the announcement at the beginning of the year of an auto levy policy that created uncertainties over the direction of prices. Malaysia, one of the region’s top passenger car markets, cut import duties to 20 per cent on Association of Southeast Asian Nation (ASEAN) cars on under a free trade agreement but it also raised excise duties on all new cars sold in the country to offset an expected fall in
revenue.
— AFP