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The Securities and Exchange Commission is devising a scheme to simplify procedures and reduce the costs of floatation to give a boost to the country’s mutual fund sector.
   Insiders feel that the complex rules and regulations have blocked the growth of mutual funds that work as stabiliser for the capital market.
   The SEC officials said that commission is reviewing the existing rules and regulations to make them easier to encourage more funds in the market.
   ‘The commission has already started working on it. I think it will take at least one month to give it a final shape,’ the SEC executive director, Mansur Alam, told New Age recently.
   Mutual funds are already under strain for want of sufficient financial assets where they put in their money.
   Analysts reckon that there should be some arrangement to make sure that mutual funds get a certain chunk of the initial public offering so that they can stay viably in the business.
   ‘Of course we need more mutual funds. But where these funds would be invested if there is not enough investment opportunity?’ said Moin Al Kshem, assistant vice president of the Prime Finance and Investment Ltd.
   ‘I think there should be some quota in the IPO for mutual funds as an incentive,’ he said adding that mutual fund always protect small investors’ interests as it mitigates the risks as well as help the market remain stable and offset any unprecedented volatility.
   Identifying some of the impediments to the growth of the industry, the AIMS of Bangladesh Ltd recently proposed that the SEC should amend the mutual fund rules to give asset management companies a level playing filed.
   Analysts and experts said that high floatation cost and uneven playing field are some of the obstacles that held back the growth of mutual funds.
   There is no sufficient incentive for the sector, Dhaka Stock Exchange chief executive officer Salahuddin Ahmed Khan said, while explaining the reasons for the sector’s stagnated growth.
   ‘The objective of the mutual fund is to manage a portfolio by investing in various securities in a risk-efficient fashion.’
   As the market does not have enough securities, the asset management companies forced to buy shares from the secondary market, which makes the fund riskier, said the DSE chief executive.
   ‘New mutual funds should get a certain portion of IPO to minimise the risk,’ he said.
   He stressed on amendments to existing rules like the one that requires sponsors to have minimum 40 per cent stake in the total fund. ‘This can not be a condition.’
   Salahuddin also felt that paid-up capital for an asset management company should be scaled up from the existing Tk 3 crore.
   The AIMS Bangladesh Ltd proposed that trustee to be the sponsor of the mutual fund. The existing rules say that only the company can be the sponsor of the mutual fund.
   This provision prevents mutual funds from holding pension and provident fund, said Yawer Sayeed, chief executive officer of the asset management company.
   ‘We [the private operators] have been put in an uneven playing field. The existing system must change to help the industry flourish,’ he told New Age.
   He suggested that mutual funds should be given equal borrowing rights and quantitative restrictions on investment be relaxed to ensure a level playing field for all players in the trade.
   The SEC official Mansur Alam said, ‘Primarily the commission is planning to reduce the number of parties’
   At present it requires four parities – trustee, custodian, sponsor and asset management company – to float mutual funds, he said adding that the commission is planning to make it two.
   The official said that the commission is also planning to halve the floatation costs, which approximate at around 5 per cent of the total fund.
   The commission would also consider the viability of IPO allocation for mutual funds, he added.
   AIMS First is the lone mutual fund in the private sector out of total 12 such funds listed listed with the bourses. Ten of the eleven state-owned funds are operated by the ICB and the other by Bangladesh Shilpa Rin Sangstha.
   AIMS will also operate the newly subscribed Grameen Mutual Fund One.
   The Market statistics shows that all the funds have been performing well in terms of market price as well as performance of dividend distribution.

The Bangladesh Milk Producers Co-operative Union Limited, country’s largest dairy firm, is planning to enhance its production capacity bringing more areas under its network.
   In one year the network will be expanded to eight new locations of the country – Satkhira, Shibpur, Swarupkathi, Ramganj, Moulvibazar, Chirir Bandar, Kurigram and Naogaon.
   The expansion will benefit some 50,000 to 75,000 dairy farmers, according to concerned sources.
   Established in 1972, the co-operative that markets Milk Vita brand liquid milk is contributing significantly in poverty alleviation by giving scattered milk growers an integrated marketing facility and better price.
   It buys a litre of milk for Tk 16.73 from farmers.
   The co-operative firm provides cattle farmers with various supports like free medication, vaccination, artificial insemination and fodder extension services. According to sources, the volume of milk collection by the firm is increasing.
   The total milk collection was 538.10 lakh litres in 2001-2002, 570.83 lakh litres in 2002-03 and 625 lakh litres in 2003-04, claimed an official adding that Milk Vita supplies hygienic and nutritious milk and milk products to the consumers.
   The firm invested Tk 52 crore in last couple of years.
   In its new expansion scheme, the government is providing soft loan, interest-free loan and equity.
   According to sources, Tk 12.25 crore will be provided to the farmers with 8 per cent interest for installing a high temperature milk treatment plant, Tk 12 crore interest-free loan for establishing several dairy plants, equity of Tk 23.39 crore for setting up condensed milk plant, bottled water plant and rural chilling plants and Tk 5 crore as revolving fund for cattle purchase.
   At present one lakh poor, landless and marginal milk producing farmers are working in 15 dairy plants and enjoy the facilities provided by the firm. Earlier they used to be exploited by the middlemen.
   The 15 dairy plants are located at Mirpur in Dhaka, Tangail, Manikganj, Madaripur, Sirajganj, Munshiganj, Rangpur, Pabna, Lahiri Mohanpur in Sirajganj, Raipur in Laxmipur, Natore, Jamalpur, Bogra and Nilphamari.
   The Milk Vita markets its products to the city areas of Chittagong, Comilla, Feni, Rangpur, Brahman-baria, Sreemangal, Moulvibazar and Sylhet.
   Its major products are products are pasteurised liquid milk, flavoured milk, butter, full cream milk powder, skimmed milk powder, ice-creams, ghee, sweet curd, cream, lolly and ras malai.
   At present the country spends Tk 341.15 crore in foreign currencies to import 16,250 tonnes of milk powder annually. The government last year took up some fiscal measures including a hike in duties on import of milk powder to encourage the growth of local dairy sector and reduce import dependence.

Major Asian currencies opted for sticking to their existing policies after China on Thursday decided to revalue yuan.
   The Monetary Authority of Singapore said on Thursday said it will maintain its policy of a gradual and modest strengthening of the Singapore dollar following the revaluation of the Chinese yuan.
   ‘Our current exchange rate policy stance remains appropriate. The fundamentals of the economy have not changed, nor have the factors influencing the growth prospects for the Singapore economy,’ the city-state’s central bank said in a statement.
   The Singapore dollar strengthened by about two per cent to 1.6498 per US dollar, a two-month high.
   Malaysia’s currency resisted a rapid appreciation on Friday, a day after the central bank unleashed the ringgit from its seven-year-old tether to the US dollar and followed China’s move to a managed float.
   The ringgit, still banned from offshore trade, firmed just 0.3 to 0.5 per cent against the dollar in trade on Friday, strengthening for the first time since Malaysia anchored it at 3.8 to the dollar at the height of Asia’s financial crisis in 1998.
   The currency fetched 3.78 per dollar in morning trade.
   Hong Kong said on Thursday it had no intention of changing its linked exchange rate system after China revalued the yuan currency, and welcomed Beijing’s move as positive for the city’s economy.
   Acting Financial Secretary Stephen Ip stressed that the Hong Kong dollar would remain pegged to US dollar.
   The Hong Kong dollar rose to as high as 7.7683 to the US dollar after the move from 7.7784/86 before the announcement, but it was well off its ceiling of 7.75. The Hong Kong dollar is pegged at 7.75-7.85 to the US dollar.
   ‘The government has no intention at all to change the linked exchange rate system which has served Hong Kong well for more than 21 years and has been the anchor of our economic stability, Ip said in a statement.
   Hong Kong imposed the peg during a currency crisis in the 1980s when it was still a British colony.

The fatal bomb blasts that rocked London July 7 are expected to cost the national tourism industry 300 million pounds ($517 million) in foreign tourist revenues this year, industry officials said Friday.
   The Tourism Industry Emergency Response Group also predicted that Thursday’s attempted bombings would have additional “serious implications” for tourism in London and elsewhere in Britain.
   It said spending by overseas visitors this year could be two per cent below expectations for 2005 in response to the blasts two weeks ago that killed 56 and injured 700.
   The response group comprises members of the national tourism office, the culture ministry, British Airways and the association of British travel agents. It was established following the September 11, 2001 attacks in the United States.

Citigroup Inc, the owning company of Citibank, N.A., on Monday reported net income for the second quarter of 2005 of $5.07 billion, or $0.97 per share, an increase from $1.14 billion or $0.22 per share in the second quarter of 2004.
   Income from continuing operations was $4.73 billion, or $0.91 per share, up from $916 million, or $0.17 per share.
   Excluding the second quarter 2004 after-tax charge of $4.95 billion for a WorldCom class action settlement and increased litigation reserves and an after-tax gain of $756 million on the sale of a stake in Samba Financial Group, revenues increased 2 per cent, and net income and earnings per share from continuing operations declined 7 per cent and 6 per cent, respectively.
   ‘Our businesses faced challenging conditions during the quarter,’ Citigroup chief executive officer Charles Prince said in a corporate statement. Worst environment of capital markets in years, combined with a flattening yield curve, led to a significant decline in its fixed income markets revenues, he said.
   New bankruptcy legislation caused a short-term spike in bankruptcy filings, adding approximately $175 million to the group’s credit costs in North America cards, he added.
   ‘Despite these challenges, our diversified business platform generated strong profitability,’ the company’s chief executive said.

Emirates, the world’s fastest-growing intercontinental airline, signed an online partnership agreement with the Intercontinental Hotels Group, the world’s most global hotel company, to offer online customers best available internet hotel rates, said a press release.
   Emirates customers can go online and book their hotel stay at any of the Intercontinental Hotels Group properties, via a seamless link to the group’s online reservations system.
   Emirates’ executive vice-president, commercial operations worldwide, Ghaith Al Ghaith, said, the agreement with the Intercontinental Hotels Group will provide enormous value to our online customers, especially during the summer season in the northern hemisphere, when they can take advantage of the guaranteed best hotel rates, plus receive bonus Skywards Miles when booking online.
   Till September 30, members of Skywards, the frequent flyer programme of Emirates and SriLankan Airlines, who are also members of Priority Club Rewards, the loyalty programme of Intercontinental Hotels Group, will receive 500 bonus Skywards Miles, when they book a hotel stay online, in addition to receiving 500 Skywards Miles, when they produce their Skywards card at any Intercontinental property.

The 20th annual general meeting (AGM) of the National life Insurance Company Ltd was held on July 17 at Hotel Sheraton in Dhaka. The founder chairman M Haider Chowdhury presided over the meeting.
   The AGM was attended by directors and a large number of shareholders.
   The premium collection for the year 2004 was Tk 217.27 crore, which was the highest collection among the life insurance companies of the country.
   The life fund and investment for FY-2004 was increased to Tk 398.54 and Tk 315.76 crore respectively and total asset of the company reached to Tk 487 crore.
   The Shareholders highly praised the Board of Directors for this achievement. The shareholders unanimously approved the audited accounts for the year 2004 and also the dividend for the year per share of Tk 100, cash 20 per cent and 15 per cent bonus.

The Dhaka Bank Limited signed an agreement on Money Transfer System with the British company Travelex Money Transfer Ltd for disbursement of foreign remittances to the beneficiaries in Bangladesh.
   In this regard a training programme was organised at the Dhaka Bank board room on July 18. The training was conducted by Sam Wong, Sr business development manager of the Travelex, Shahed Noman.
   The managing director of Dhaka Bank, inaugurated the training programme.
   From Travelex, Onu Jaigirdar, director of the JW Worldwide and from Dhaka Bank, Khondker Fazle Rashid, deputy managing director, Mohammad Abu Musa, deputy managing director, and Md Mohashin Miah, senior vice president were present in the training programme.

Mirpur Ceramic cut down price of its environment friendly 'Hollow Klay Blocks'.
   One thousand pieces are now available at the rate of Tk 7,850 instead of earlier 8,800.
   To celebrate the success of its 45 years of using 'Hollow Klay Blocks', the managing authority of Mirpur Ceramic has taken the decision to slash the price.
   For any construction including highrise multi-storied building, 'Hollow Klay Blocks' are used.

An agreement was signed between Shahjalal Islami Bank Limited and Salmon Overseas Limited Sunday at the bank’s head office in Dhaka.
   Under the agreement, the bank extends Tk 80.5 million composite investment facility to Salmon Overseas Limited, for procuring tickets of KLM, British Airways, Singapore Airlines, Emirates, Thai Airways, Saudi Arabian Airlines, United Airlines, Malaysian Air, Gulf Air, Lufthansa Air, Jet Air, GMG Airlines and related services.
   According to agreement Salmon will also provide travel related services to American Express Bank.
   The managing director of the bank, M Kamaluddin Chowdhury, and managing director of Salmon Overseas, MA Mohaimin Saleh, signed the agreement.
   Other senior officials of the bank were also present during the occasion.

A brief orientation programme was arranged at the head office of the China-Bangla Ceramics Industries Ltd before the dealers departed for China.
   The managing director, high officials and the elected dealers of the company along with the journalists of some national dailies and electronic media were present.
   Sirajul Islam Molla, managing director of the company told the newsmen that the business personalities can increase their competence and exchange experiences with the Chinese counterparts through this
   visit.
   The team would visit several tiles and ceramics factory in China, he said.
   The team would return home after staying a week there.
   The team is being led by Gobinda Lal Ghosh, senior executive vice president of China-Bangla Ceramics.
   The managing directors of the Saikat Enterprise, Redoy Marble Co, National Marble Co, Sharif & Brothers, Graham & Co, Mitali Stone Pvt Ltd, Bangladesh Crown and the Karnaphuly Agency are in the team, among others.

The half-yearly branch managers' conference of Pragati Insurance Limited was held on July 15 at the Jamuna Resort, said a press release.
   Presided over by the chairman, Khalilur Rahman, the conference reviewed the business performance for the January-June period and noted the achievement of exceeding the target.
   The managing director, AKM Rafiqul Islam, said the idea of holding this bi-annual conference was to afford an opportunity to all concerned, both at the head office and branches to know each other's achievements and take fresh vow to end the year with glory.
   The chairman in his opening speech underscored the need for such an assembly in the context of the changing business scenario, growing competition and induction of new products.
   The branches, whose performance exceeded the given targets, were rewarded with incentive.
   A cultural programme was also arranged.

A visiting Japanese investors’ delegation of Japan-Bangladesh Group today expressed its keen interest to set up a modern composite textile mill and a power plant at Adamjee EPZ in Narayanganj.
   They expressed their desire after a visit to the site of Savar Export Processing Zone (EPZ) and the areas of the closed- down Adamjee Jute Mills of Narayanganj, a PID handout said.
   Textiles and Jute Minister Shajahan Siraj and Executive Chairman of BEPZA Brig Gen (retd) Zakir Hossain were present on the occasion.
   Chairman of Japan-Bangladesh Group Selim Pradhan, Vice Chairman Igarashi and Project Administrator Massaki Kai were also present.
   The BEPZA is now preparing the Adamjee site for distributing industrial plots among intending investors, both local and
   foreign.

China’s yuan revaluation has been welcomed as a good start towards rebalancing of global economy and trade with major trade partners expressing guarded optimism about the move’s immediate impact on the Asian giant’s huge trade surplus.
   In a surprise move, China on Thursday announced an end to a decade-old fixed exchange-rate between its yuan and the US dollar and targeted a basket of world currencies instead. China lifted its currency value by 2.1 per cent to 8.11 from 8.28 yuan per dollar.
   The measure followed long-drawn pressures from China’s major trading partners and competitors grouped in G7 and G8 and also from multilateral agencies including International Monetary Fund. Yaun flexibility was seen vital to correct trade imbalances created by China’s $162 billion trade surplus with the United States and rampant annual export growth of 30 per cent.
   China’s decision to revalue its currency conforms to long-standing pressure by some of its most influential non-Asian trading partners and the International Monetary Fund.
   While praising the move that came after two years of pressure, Washington took a wait-and-see approach. The US administration believed that the move alone can not help ease growing tensions between the countries.
   US Treasury Secretary John Snow, who with Federal Reserve Chairman Alan Greenspan last month persuaded US senators to delay a bill calling for a 27.5 per cent tariff on Chinese imports, said on Thursday the shift was extremely positive.
   ‘They’ve put in place a mechanism that provides room for significant movement over time in the currency,’ Snow said.
   Greenspan echoed this view: ‘I look at it as a first step in a number of further adjustments as they invariably increase their participation in the world trading market.’
   European Union trade commissioner Peter Mandelson welcomed Friday China’s revaluation of its currency against the dollar, but said he did not expect any immmediate impact on trade.
   ‘This is a welcome move,’ said Mandelson. ‘Everyone will be waiting to see what new currency regime finaly emerges, but I do not expect to see an early or significant impact on trade,’ he added, in comments cited by his spokeswoman.
   The move will give the country greater control over its economy and monetary policy and is a step in the right direction, the Organisation for Economic Cooperation and Development said.
   The move was likely to have little short-term impact on Chinese economic growth but would help China fit better into the global economic community.
   ‘The OECD applauds this measure as an important step towards giving China’s economy the flexibility needed to support rapid and sustainable growth and continued integration with the world economy,’ Secretary General Donald Johnston said in a statement.
   Sean Dougherty, economist on the OECD’s China desk, told Reuters the move was consistent with good economic policy.
   Policymakers and economists said ‘mini-revaluation’ of yuan by itself is unlikely to cut Beijing’s trade surpluses or correct global economic imbalances, but it is a start.
   The move, which will involve a small initial rise against the dollar of 2.1 per cent, is far smaller than calls in the United States for a revaluation of 20 per cent or more.
   ‘The move is not sufficient to make a meaningful dent to global imbalances, but it is significant because it signals change in the currency regimes in China and elsewhere in Asia,’ said Nouriel Roubini, chairman of research firm RGE Monitor and a former US Treasury official.
   China is the third-largest trading partner of the United States and its sixth-biggest export market. But while it accounts for 12 per cent of US imports.

After intense pressure from disgruntled trade partners, China plunged into uncharted waters and revalued the yuan in a move that appeared to be more political than economic, analysts said.
   The move on the yuan, which will now be pegged to a basket of trade weighted currencies in a managed float, was largely political in nature, aimed mainly at appeasing US and other trade partners’ long- standing gripes that the currency was undervalued, giving China an unfair trading advantage.
   ‘The government is making a gesture and hopes the American politicians can understand this,’ said Andy Xie, a China economist at Morgan Stanley.
   ‘Hopefully the US can accept this goodwill gesture; the Chinese currency cannot move too much too soon because it’s still a relatively undeveloped country,’ said Xie.
   
   Yuan move to cut China
   growth slightly-ADB
   Reuters reports from Manila: China’s yuan revaluation will cut economic growth slightly next year, but the impact will be more than compensated for over the longer term by efficiency gains, the Asian Development Bank’s chief economist said on Friday.
   ‘Our initial analysis shows that if the appreciation stays at 2 per cent, then by 2006 China’s GDP growth rate will come down from one quarter to a half of one per cent,’ Ifzal Ali told Reuters.
   ‘While there is short-term downside in terms of losing a little bit of their flexibility in exports, over the medium to long term that would be more than compensated by more efficient allocation of resources.’
   Ali said the 2.1 per cent revaluation should result in an easing of inflationary and investment pressures, but since the change is relatively small it also risked encouraging speculative inflows in anticipation of further yuan strength.
   There remain many questions about what weighting will be given to the dollar and how far the dollar could be allowed to fall against the yuan.
   ‘There is still uncertainty about how the mechanism will work,’ said Claudio Piron, a currency analyst at JP Morgan.

Vietnam and China have successfully concluded negotiations on bilateral market access, smoothing the way for Hanoi to enter the World Trade Organisation (WTO), a joint communique said on Friday.
   The agreement came at the conclusion of a four-day visit to China by Vietnamese President Tran Duc Luong, just weeks after his historic trip to the United States that also focused on Vietnam’s growing economic presence.
   Vietnam is hoping to enter the WTO by the end of 2005 and a number of negotiations are ongoing, though talks with China, Vietnam’s number two trading partner after the European Union, are key.
   Hanoi needs access to China’s huge markets, analysts say, as well as Beijing’s approval of its WTO bid.
   ‘The two sides are satisfied with the development of China- Vietnam trade and economic relations, and agreed to expand the two-way trade volume in a positive and pragmatic spirit to gradually reduce the imbalance in bilateral trade,’ the communique said.
   ‘The two sides have completed the negotiation on bilateral market access concerning Vietnam’s entrance into the World Trade Organization and believe the event will help open a new vista for bilateral cooperation especially in trade and economic fields.’
   Vietnamese reports say trade with China, which reached a record 7.2 billion dollars last year, is likely to reach 10 billion dollars by 2007, three years ahead of their target date.
   The two countries, historical enemies which fought a brief war in 1979 and only normalised ties in 1991, have gradually been putting behind territorial disputes in order to pursue more friendly relations.
   In the joint statement, they agreed to further accelerate demarcation work of their land border in order to finish it and sign a new agreement on borderline administration before 2008.

World Trade Organisation chief Supachai Panitchpakdi said Thursday the time had come to press the alarm button over the lack of progress in the WTO’s free trade talks.
   ‘I have said before that my finger was hovering over the alarm button. Now I have pressed it,’ he told the talks’ steering group, the Trade Negotiations Committee.
   ‘I urge you all to hear the alarm and to act upon it,’ he added.
   Leading trade ministers had called for accords by the end of July to clear the way for the full WTO virtually to wrap up its Doha Round of trade liberalisation negotiations at a ministerial meeting in Hong Kong in December.
   The round, launched in the Qatari capital in November 2001 and whose successful conclusion would boost the global economy, has already missed its initial end-2004 d eadline.
   The new target is early 2007, but for that to be realistic, ministers need to be able to gavel a blueprint in December with the most difficult issues resolved.
   However, with the talks way behind schedule again, hopes of a so-called ‘first approximation’ for Hong Kong being agreed this month have been dashed. All negotiators are aiming for in a final week of intensive discussions is to make some progress.
   But Supachai and others fear that it may leave too much to be done in the autumn.
   ‘In the beginning of the year, ministers set themselves objectives which clearly now are not going to be reached by the end of July,’ said WTO spokesman Keith Rockwell.
   Officials said that negotiators would focus on agriculture over the coming days and only if there were some advance there, would it be possible to talk seriously about industrial goods.
   Rich members, such as the United States and the European Union, under pressure to cut farm subsidies and tariffs to give developing countries more chance to compete, want opportunities for their manufacturing and service industries in return.
   But there will be no further discussions of services before the end of the month.
   In agriculture, the most that can be hoped for is a narrowing of differences on the formula for cutting tariffs, trade diplomats say.

British economy showed its weakest year-on-year performance for 12 years during the second quarter, official data showed Friday, piling pressure on finance chief Gordon Brown’s 2005 growth targets.
   The manufacturing sector meanwhile fell into a recession, National Statistics added. Analysts said the negative data pointed towards an interest rate cut next month.
   Gross domestic product (GDP) growth on a 12-month comparison stood at 1.7 per cent during the second quarter—the weakest 12-month performance since the first quarter of 1993. Chancellor of the Exchequer Brown’s GDP growth target for 2005 was between 3.0-3.5 per cent.
   The economy grew at 0.4 per cent in the three months to June from the previous quarter, according to the initial estimates.
   Both figures were in line with analysts’ consensus forecasts.
   ‘The provisional figures confirmed that economic growth remained weak in the second quarter, leaving the current forecast of the Chancellor looking optimistic to say the least,’ said Capital Economics economist Vicky Redwood.
   And Global Insight economist Howard Archer lamented: ‘GDP growth failed to show any improvement in the second quarter.’
   The news was likely to cement expectations that the Bank of England (BoE) would cut the cost of borrowing at its August meeting, after it narrowly avoided a reduction in July, citing the sharp slowdown in economic growth.
   The figures also showed the manufacturing sector fell into recession after output contracted 0.7 per cent in the second quarter—on top of a 0.9-per cent decline in the previous three months. Manufacturing accounts for some 20 per cent of the Britain’s GDP.

Japan needs to get more women, young people and the elderly into the workforce as the country’s population declines, rather than rely on immigrants, the government’s annual white paper on labour said on Friday.
   While attracting skilled workers from around the world could energise the economy, importing unskilled labour would have long- term consequences for social security, crime prevention and economic competitiveness, the report said.
   Instead, working environments should be improved so that women with children, the young and retired people can actively participate in the labour market, it stressed.
   ‘It is not appropriate to import foreign workers as a remedy for a labour shortage. What is important is to improve the labour environment to let domestic workers fulfill their potential,’ the white paper said.
   ‘A brake can be put on the decline in the workforce by raising the participation rate of the young, the elderly and women. Technological innovation and other means to improve productivity can also make up for the shortfalls.’
   Japan’s population, which totalled 127.69 million as of last October, will peak in 2006 and start declining in 2007. The working-age population has already begun to decline, while the burden of bankrolling pensioners is rising rapidly.
   The workforce, which grew by an average of 1.4 per cent a year as recently as 1985-1990, is likely to have contracted 0.5 per cent annually in 2000-2005 and is expected to shrink by 0.5- 0.7 per cent a year in the next few decades, according to government projections.
   Thanks to the world’s highest life expectancy — 78 years for men and 85 years for women—the proportion of people aged 65 and above has risen to almost 20 per cent of the population from just 7 per cent in 1970.
   At the same time, the fertility rate has fallen to 1.29 births per woman by 2003 from above 2.00 in the early 1970s.
   The population issue poses a major headache for businessmen and economic policymakers, who have already been struggling with an economy which has dipped into recession four times since 1994.
   The unemployment rate hit a record 5.5 per cent in January 2003 but has since declined to 4.4 per cent in May.
   But Japan has long been reluctant to embrace immigration. Calls by the Philippines, for instance, for Japan to accept its nurses have not been met with a strong response despite a shortage of hospital staff in Japan.
   The white paper said one argument against importing foreign labour was that it could end up merely helping the survival of unproductive businesses and hamper Japan’s transition to a more productive industrial structure.
   Corporations must adopt more flexible workplace arrangements so that women can keep working when they have children, the report said. It noted that Japanese women’s job participation rate of 48.3 per cent was among the lowest in the developed economies, and compared with 59.5 per cent in the United States.
   The report also cited the over-65s as a potential labour pool, saying Japanese of that age were more keen to continue work than their global peers.
   The white paper said developing the younger generations was a big challenge, given the low motivation among many of them.
   The jobless rate rose to 12.8 per cent in 2002 for those aged 15-19 and climbed as high as 9.8 per cent for the 20-24 year olds.
   While those rates stemmed from a bleak economic environment at the time, many young people have given up pursuing careers, often quitting work within a year of starting, the report said.
   Many preferred being outside the corporate hierarchy, but the economy could suffer in the future if young people did not develop the skill sets to support growth, the report warned.

South African Airways operations were disrupted Friday when crew and cabin staff launched an open-ended strike for higher pay, leading to flight cancellations and causing mayhem at airports.
   At least 37 flights were cancelled and no SAA flights took off or landed at Cape Town, the country’s premier tourist destination, radio reports said.
   International flights to Ivory Coast, Mauritius, Namibia, Nigeria, Tanzania and Zambia were also cancelled, they said.
   Two leading unions launched the strike early Friday to press their demand for an eight-per cent wage increase instead of the five per cent offered by SAA management.

Chinese President Hu Jintao pledged to improve relations with Spain across the board Friday, a day after the two nations signed a dozen agreements including a 3.1 billion dollar airplane deal.
   Hu made the remarks to visiting Spanish Prime Minister Jose Luis Rodriguez Zapatero who was on the second of a three day visit, state radio reported.
   ‘China hopes to make common efforts with Spain to deepen relations and exchanges at all levels and in all areas,’ Hu was quoted as telling Zapatero at a meeting in the Great Hall of the People in central Beijing.
   Zapatero cited politics, economics, science and technology, culture and tourism as areas of priority, the report said.

Now that German President Horst Koehler has fired the starting gun for early elections in September, the political parties can get down to fundamentals of their campaigns which will be dominated by two main themes: record unemployment and runaway deficits.
   With so much at stake—’our future and the future of our children’ was how Koehler put it—big promises are being made by both sides, the governing coalition of Social Democrat (SPD) and Green parties under Chancellor Gerhard Schroeder and the opposition Christian Union (CDU/CSU) parties under Angela Merkel.
   But experts are sceptical that whoever wins the election on September 18 will have the courage to push through the very painful reforms needed to bring down unemployment, kick-start growth and rein in the public deficit in the eurozone’s biggest economy.
   ‘Our country is facing immense tasks,’ Koehler diagnosed on national television on Thursday evening.
   ‘The federal and regional state budgets are in an unprecedentedly critical state. We have too few children and we’re getting older. And we have to hold our own amid fierce global competition.’
   During Schroeder’s past two terms in office, the German jobless queues have swelled to a post-war record of five million, economic growth has been stuck close to zero and public finances, burdened by the never-ending costs of unification, have deteriorated dramatically.
   But despite his disastrous showing in the polls, Schroeder has vowed to win the election by sticking to his current course of—so far unpopular—healthcare, pension and labour market reforms.

China’s cautious revaluation of its yuan is set to boost the value of Asian currencies as the region strengthens cooperation and looks to diversify its huge foreign reserves long attached to the dollar, economists said Fryday.
   China Thursday revalued its currency, as long sought by its trading partners, and scrapped the yuan’s decade-old peg to the dollar in favor of a managed float against a basket of currencies.
   Yuji Kameoka, senior economist at Daiwa Institute of Research, said China’s step could alter Asia’s usual view that it is better to trade in the dollar to reduce foreign exchange risks.
   “Trade in other currencies such as the yen or euro ... will likely increase in the long-term,” he said. “Along with diversified foreign reserves, this trend will weaken demand” for the dollar.
   The central People’s Bank of China announced that the currency was being reset at 8.11 yuan to the dollar compared to the old rate of 8.28 yuan, effectively a two per cent revaluation.
   State-run Chinese media Friday discounted the possibilities of a further revaluation soon but Kameoka said that if the yuan edges up to the ceiling of its daily allowed trading band of 0.3 per cent, “the yen and other Asian currencies will rise.”
   China did not give details of the currency basket and how the managed float would be actually implemented.
   “The currency basket leads people to think the dollar’s share of China’s foreign exchange reserves may fall while the yen would increase. This could weigh on the dollar,” said Kikuko Takeda, currency analyst at Bank of Tokyo-Mitsubishi.
   The yen immediately shot up after China’s widely anticipated but surprisingly timed announcement late Thursday although the US unit began to recover in Asian trading Friday.

Oil prices fell a dollar yesterday as dealers focused on robust commercial stockpiles in the United States, which have held up despite recent storm disruptions to platforms in the Gulf of Mexico.
   Explosions in London’s public transportation system Thursday were also seen encouraging some selling as dealers anticipated it could weaken European economic growth. China’s revaluation of the yuan was seen as a mixed factor.
   US crude CLc1 was down 89 cents to $57.13 a barrel, adding to heavy losses Wednesday, while Brent crude LCOc1 in London fell 93 cents to $55.72.
   The slide in crude prices since Wednesday was triggered by a US government report showing a smaller-than-expected decline in oil inventories last week and a large build in distillate stocks.
   The US Energy Information Administration said in its report Wednesday that crude stocks fell 900,000 barrels last week, compared with expectations of a 3.7 million drawdown after Hurricane Dennis thrashed through the Gulf.
   The EIA also showed a 2.3 million barrel build in distillate inventories, which include diesel, heating oil and jet fuel, easing worries of a supply crunch in the fourth quarter, when cold weather returns.
   Crude prices were pressured by the second series of bombings in London in two weeks, but the reaction was more muted than the initial market response to the July 7 attacks which killed more than 50 people.
   The market was mixed on how to react to China’s plan on Thursday to scrap the yuan’s peg to the US dollar to tie it to a basket of currencies.
   ‘For oil directionally it’s going to be bullish short term.

Kenya tea production drops slightly
Kenya’s tea production in the first half of 2005 dropped marginally compared to the same period last year, hurt by dry weather in key growing areas, the Tea Board of Kenya said yesterday. Kenya is one of the world’s top three producers of black tea together with India and Sri Lanka. The board said Kenya produced 166.7 million kg of black tea from January-June down from 169.8 million kg recorded during the same period last year. “The decline in production was attributed mainly to dry weather conditions experienced between February and April,” the board said in a statement. The board said tea output in June edged higher to 24,045,399 million kg against 23,978,132 kg in June 2004. It added that production is expected to be depressed in the next three months. “The cold and dry weather characteristic of the July September crop season is expected to negatively affect tea production,” the board added.
— Reuters

Microsoft’s profit
up 50pc
Redmond (US), July 22 (DPA) Microsoft Corp., the world’s biggest software maker, has reported a record revenue of $39.8 billion in fiscal year 2005 along with profit of $12.3 billion. Revenue was eight percent higher than the year before, while profit was up 50 percent, the company said in a release Thursday after the US markets closed. The per share profit rose to $1.12 compared with 75 cents last year. The eight percent increase in revenue was the slowest ever at the company, which had an annual average of 38 percent in the 1990s. In Microsoft’s fiscal fourth quarter, which ended June 30, the company’s sales rose 9.4 percent to $10.2 billion. Net income for the quarter increased to $3.7 billion, or 34 cents a share, from $2.69 billion, or 25 cents, a year earlier. Quarterly profit included a special charge of $745 million for an antitrust law settlement. The company benefited last quarter from higher sales of network software and more than $2.5 billion in three-year contract renewals signings, Bloomberg financial news reported.
— IANS

McDonald’s profits down 10pc in Q2
McDonald’s Corp said on Thursday that its profits declined by 10 percent in the second quarter due to taxes from repatriating international profits but extended its momentum with a modest gain in operating income. McDonald’s Corp, the largest fast-food company in the United States, reported that its net income for the April-June period was US$530.4 million, compared with US$590.7 million in the second quarter of 2004.Results included an incremental tax expense of 9 cents per share related to the repatriation of overseas profits under a new federal law. Excluding that item, its operating income was US$1.02 billion, higher than the same period a year earlier. Revenues of the company were US$5.1 billion in the second quarter, up 8 percent from 4.7 billion in the same period of last
year.
— Xinhuanet

Google profits quadruple
Internet search phenomenon Google Inc. saw its quarterly profit quadruple, but its shares plunged by more than six percent in after hours trading as investors were spooked about an apparent slowdown in the company’s growth rate. The world’s most popular search engine said Thursday that net income rose to $342.8 million, or $1.19 a share, from $79.1 million, or 30 cents a share, a year earlier. Sales almost doubled to $1.38 billion, the Silicon Valley company said. Excluding fees passed on to other Web sites for displaying advertisements, sales were $890 million. The company’s share price has more than tripled since its initial public offering (IPO) last August but fell below $300 after chief financial officer George Reyes warned analysts in a conference call that as the company continued to expand its rate of growth was likely to slow down. Reyes also warned that third quarter growth may not show spectacular increases compared to last year, when its IPO kept Google constantly in the media spotlight.
— Internet

India’s Wipro Q1 net profit up 20pc
ADDS share price,s India’s third-largest software exporter, Wipro, reported Friday first-quarter net profit rose by a lower-than-expected 20 percent as earnings were hit by a higher rupee and other costs. The New York-listed company reported net profit for the three months to June totalled 4.3 billion rupees (95 million dollars), below market forecasts of around 4.5 billion rupees, and unchanged from the previous quarter. Wipro was the last of India’s “Big Four” software exporters to report first-quarter results. The other three, Tata Consultancy Services, Infosys and Satyam Computer, have also missed analysts’ profit targets, blaming such factors as rising salary costs and an appreciating rupee. Revenues of Wipro, headquartered in the southern hi-tech city of Bangalore, climbed 28 percent from a year earlier to 22.6 billion rupees.
— AFP

Fortis, India’s ICICI in private banking
tie-up
Dutch-Belgian financial services group Fortis said on Friday its private banking division has formed a strategic non-equity alliance with India’s second largest bank, ICICI Bank. Fortis said in a statement that its private banking unit, MeesPierson, and ICICI Bank Ltd would offer wealth management services, estate planning, trust and corporate services and discretionary asset management to non-resident Indian nationals around the globe. ICICI Bank is India’s second largest bank, with an asset base of over 31 billion euros ($37.65 billion) as at 31 March 2005, over 13 million accounts and current market capitalisation of over 5.65 billion euros. Fortis has a market value of around 29.8 billion euros and total assets of 694 billion euros.
— Reuters