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The Bangladesh Bank looks to replace L/C with open account trade by introducing international factoring to facilitate export and import trades.
   The central bank governor, Salaheuddin Ahmed, on Wednesday said this at a seminar while launching the guidelines for domestic factoring, a financial product aimed to ensure easy finance to cash-hungry small and medium enterprises.
   ‘We definitely would go for international factoring,’ he told a seminar, arranged to sell the concept of factoring as an effective tool for domestic SME financing.
   A set of guidelines, prepared by the central bank for domestic factoring, was presented at the seminar, jointly arranged by the Bangladesh Bank and the Southasia Enterprise Development Facility at the Sheraton Hotel.
   The governor told the banks and financials institutions to introduce the innovative financial product at their earliest and make it available to the SME sector, which suffers badly from want of capital finance despite its significant contribution to employment generation and poverty reduction.
   ‘Please expedite the service…and make sure that SMEs get the benefit,’ said the central bank top boss, hoping that the product would help to create new entrepreneurs.
   He hoped that it would enhance the performance level of financially weak suppliers by transferring the credit risk to their high-quality buyers.
   Global trade is fast moving towards open account trade discarding age-old letters of credit based transaction, and the country’s trade needs to cope with the changes, he said.
   ‘Open account is best served by international factoring,’ he said.
   Central bank’s deputy governor Nazrul Huda and executive director Murshid Kuli Khan, SEDF general manager Anil Sinha, and chief executives and high officials of different commercial banks attended the function.
   Central bank executives said international factoring is the ideal solution for financing export receivables for open account trade and being practiced in many courtiers around the world including neighbouring India and Sri Lanka.
   About 59 countries have so far introduced factoring. The value of the world’s factoring business amounts to $1,161 billion, with a 25 per cent growth in the Asia-Pacific region in last five years.
   In the transaction process of domestic factoring, the buyer would receive capital goods from the sellers while the financial institutions, which would offer factoring service, would pay for the goods to sellers. Later, the buyers would pay to the institutions on due date.
   According to the guidelines, factors (financial institutions) make advance payment to the seller up to certain percentage of the invoice value varying from 75 per cent to 85 per cent, while the factoring charge is generally 0.1 per cent to 0.5 per cent of the value of invoice factored.
   The central bank and the SEDF will arrange a two-day training workshop on factoring for around 100 participants on June 21-22.

Export of flowers and floral products has seen an impressive growth over the years on the back of strong demand in global market.
   Official figures show, in first nine months of the 2004-05 fiscal, the country exported flowers and foliage worth Tk 17 crore, up from only Tk 4.70 crore of a year ago period.
   Leaders of the Dhaka Flower Merchant Welfare Association said floral exports could fetch more than Tk 100 crore a year if the sector was provided with required supports.
   Until last year, Bangladesh exported flowers to Pakistan, Italy, Portugal, Saudi Arabia, UAE, USA, Congo and Korea. But export market has been widened with the inclusion of Philippines, Singapore, Greece, Belgium, Samoa, Turkey, Japan, Germany, United Kingdom, Denmark and France.
   Lack of policy supports from the government has held back further expansion of the export, association leaders felt.
   Flower exports still lag far behind of its potentials in Bangladesh while many countries earn significant part of export revenues from foliage and floral products.
   Flowers account for 80 per cent of export earning of the Netherlands, while it is 30 per cent for Kenya and Thailand, and 10 per cent for India, statistics show.
   Bangladesh’s total flower and foliage production amounts to Tk 150-200 crore a year, while local market stands at around Tk 25 crore.
   ‘The bulk of local floral output is rotten due to lack of proper storage and processing facilities,’ Babul Prasad Dasarath, president of the association, told New Age.
   He regretted that the sector that involves around 3 lakh people directly or indirectly in the production and export chain has failed to attract due attention of the government.
   The association leader listed the problems faced by the sector and hoped that the government would extend required supports to help the sector exploit huge export potentials.
   The International Flora Expo 2005, scheduled for July 1-3 in Indian city of Bangalore, is a meeting place of global market players of flower. Still at a fledgling state in flower trade, Bangladesh needs to take part in such global events to know the market better and share views with other players, Babul Prasad said, stressing that the government’s export promotion agency should take the event with due importance and ensure the country’s participation in it.
   The sector needs improved training for the people involved in flower production and marketing. They need further knowledge on flower cultivation, cutting, packaging and preservation.
   It also requires cold storage, air conditioned vehicles for transportation of flowers and subsidy in air cargo freight charges, he said, giving a long list of requirements to give the sector a boost.
   Moreover, the government should develop a wholesale outlet at Shahbagh in Dhaka to ease procurement of fresh flowers from across the country and ensure better prices for growers, the association leader said.
   Yakub Ali, a flower grower from Gafargaon of Mymensingh, echoed the same demand, saying that a well-organised wholesale market could give them a better marketing facility and better prices. He earned Tk 6000-7000 last year and he could even earn more if there was a good wholesale depot.
   Shabagh has become an unofficial hub for flower trade with trucks loaded with flower and foliage arriving in the early hours and disappearing before the daybreak. Flowers are unloaded and graded at the pavements before they start for export or local market destinations.
   Tube rose, rose, orchid and marry gold are among the major flowers that make up Bangladesh’s floral basket for exports. Most of the tuberose and rose supplies come from Zichargacha of Jessore and Savar of Dhaka, marry gold from Chuadanga and orchid from Mymensingh and Manikganj.

Speakers at a roundtable on Wednesday observed that country lacked coherent national economic policies in the era of globalization that calls for minimising the role of state.
   They also questioned the validity and applicability of the lenders-driven poverty reduction strategy paper as a long-term plan of the country.
   ‘Non-interference by the state in the working of the international market mechanism does not imply a neutral state, rather it becomes the defender of the rich against the poor,’ said Salimullah Khan, the keynote speaker at the roundtable organised by the Centre for Asian Art and Culture in Dhaka Wednesday.
   The World Bank’s latest prescription of good governance is nothing but to protect the private property rights as well as to allow free movement of foreign capital in Bangladesh, he said in the paper themed on ‘national economy in the era of international capital: state and society.’
   ‘State has been proved dysfunctional in many cases as it washed its hand of many areas as it pursues a policy of not-intervention in line with free market economy,’ said professor Anu Muhammad.
   This sort of ineffectiveness in fact favors multinational corporations and local corporate houses, he pointed out.
   Referring to the high call charges of the mobile phone companies, the economist said government is totally silent when these companies are simply plundering Tk 2,500 crore every year from the people.
   Anu Mohammad said foreign aid is acting as a safeguard for the businesses of MNCs and gradually downgrading the role of the state for people’s welfare.
   Development activist Farhad Mazhar said, ‘We know little about nature of capital, which is grabbing every sphere of our life.’
   ‘In the WTO regime, key role of the state has been lessened and we are paying for this,’ he added.
   Mazhar said the PRSP would be able to do little for the poor people.
   Economist Rashed Al Mahmud said the PRSP does not call for any incentive for the local investment.
   ‘How can you expect private sector will accelerate investment without any incentive?’
   Women and social rights campaigner Khushi Kabir said while everybody is talking aloud for protecting the ready-made garments industries in the post-MFA era, very little attention is paid to non-resident wage earners who support the economy heavily with increased inflow of remittance.
   Economist Hossain Zillur Rahman said, ‘We have to face the challenge of the international capital and should not feel helpless in the face of aggressive movement of the capital.’
   ‘If we can double our remittance inflow which is already near $4 billion, we can easily offset the need of external aid,’ he added.
   Professor Ahmed Kamal presided over the session, which was also addressed, among others, by SI Khan, Mausumi Mahapatra and Arup Rahi.

Biman Bangladesh Airlines has planned to borrow about Tk 4,840 crore from external sources to finance an ambitious plan to buy 10 latest model aircraft, official sources said.
   The national flag carrier, under its plan, will procure six 221-seated Airbus 310 and four 330-seated Boeing 777 involving about Tk 6,660 crore.
   Of the total cost, Biman will give an amount of Tk 1,820 crore and borrow Tk 4840 crore from Exim Bank of the United States and Capital Authority of Europe.
   Sources said the loans from Exim Bank will be used to buy Boeing, while that of Capital Authority will be spent on buying Airbus.
   Biman sources said the planned purchases will increase the debt burden of the national flag career.
   The state minister for civil aviation and tourism, Mir Mohammad Nasir Uddin, however, told the news agency that fuel and maintenance cost of Biman would go down significantly once the new planes join its fleet. It would also help Biman to make profit, he added.
   According to surveys by French Airbus, US Boeing, British APT and Canadian Dash 8, Biman has a potential market of between Tk 3,000 and 3,500 crore, but it was able to capture a market of only Tk 1,000 crore, allowing foreign airlines to penetrate into its area.
   Biman sources said inclusion of 10 new aircraft would help Biman improve passenger services and double its revenue, besides bringing discipline in flight schedule.
   Currently, Biman, which a fleet of six Airbus, four DC 10 and four F 28 aircraft, is operating flights to 26 international destinations and seven domestic routes.
   Most of the Biman aircraft are 14 to 25 years old. It is now difficult for Biman to maintain flight schedules due to frequent technical faults.

Xerox, a leading global brand for office solution, has launched 31 products including printers, scanner and fax machine for local market.
   International Office Equipment, sole distributor of Xerox in Bangladesh, will market these new products.
   An official of the distribution company said seven mono laser printers, five colour printers, 16 multi functional devices, three DLP projectors, five vertical and flat bed scanners and two laser fax will be available in the market by this year.
   Abdul Moyeen Khan, minister for Science, Information and Communication Technology, formally launched the products on Wednesday.
   Andrew Horne, Xerox South Asia chief, said the products will allow customers in Bangladesh to get a taste of the latest Xerox technology.
   Aftab ul Islam, president and chief executive officer of International Office Equipment, said as an emerging market of document solutions products in Bangladesh, Xerox will take lead in digital colour, digital production and value added services of this market.
   Natesh Mani, director of South Asia operations of Xerox Corporation, also spoke.

Indian airlines starred at the Paris Air Show Tuesday, accounting for over half of the $13 billion of jet deals carved up between US group Boeing Co. and European arch-rival Airbus.
   The orders highlighted growing demand for air travel in India, China and the Middle East, which aerospace executives hope will power a rebound in global aircraft manufacturing that began last year, following its deepest recession.
   Boeing is set to regain the lead in commercial jet orders this year for the first time since 2000, but sales at the world’s largest air show are helping Airbus gain ground, with India adding to the event’s $18 billion of deals Monday.
   ‘India is today one of the world’s most promising markets,’ John Leahy, chief commercial officer at Airbus, said.
   ‘More people in India travel by train in a day than travel by air in a year,’ he told a news conference.
   Indian airlines have been modernizing their fleets and expanding as their government has deregulated a sector once strait-jacketed by red tape. India’s government said in May it expected airline industry growth to surge 20 per cent a year.
   India’s largest domestic airline Jet Airways said Tuesday it had committed to buy at least 20 Boeing planes worth over $2.8 billion at list prices, including 10 wide-bodied 777s that it will use to boost international service.
   Jet said separately it would buy 10 Airbus aircraft with options to buy 10 more in a deal worth about $1.5 billion.
   In addition, Jet’s domestic rival Kingfisher Airlines said it planned to spend about $2.5 billion for ‘multiple wide-bodied aircraft’ from Airbus, including its mammoth 555-seat A380 model, the world’s biggest airliner.
   ‘China and India could be the drivers of growth in the future,’ said Airbus chief executive Noel Forgeard.
   ‘In Europe the trend is good, it is excellent in the Middle East, and it’s even better in Asia.’
   In a key battle ground between Airbus and Boeing, Kuwait-based aircraft leasing firm ALAFCO said it would buy 12 of Airbus’s planned A350 mid-sized planes and take options on six more.
   Airbus, owned 80-per cent by European aerospace group EADS and 20 per cent by Britain’s BAE Systems, is seeking enough buyers to convince its board to approve production of the A350, which would begin deliveries in 2010.
   But it faces tough competition from Boeing, which announced $4 billion of deals with aircraft leasing firms International Lease Finance Corp and GE Commercial Aviation Services.
   These deals did not include Boeing’s new mid-sized 787 plane, due in 2008, which has amassed over 260 commitments from customers so far and has left Airbus scurrying to catch up with its A350 program.
   But Tom Pickering, a former US ambassador who now spearheads Boeing’s diplomatic efforts, told Reuters that the 787 was still going strong.
   ‘We have momentum, the 787 is doing very well and we have another 450 deposits and high-level commitments,’ he said in an interview on the sidelines of the air show.
   Orders or commitments received for the A350 so far reached 102 by the second day of the Paris air show and Airbus said it expected to have 200 commitments this year.
   Forgeard forecast 360 total Airbus plane deliveries in 2005 and ‘at least’ 400 next year as the airline sector recovers from its worst recession that began in 2001 and ended around the middle of last year.
   Airbus parent companies EADS and BAE Systems last week delayed giving final approval to build the A350 until September. The move coincided with reports that Airbus faced congestion on all its major projects including the A380, the world’s biggest airliner, which has been delayed six months.
   Forgeard denied this and—for the first time—linked the decision to delay a final go-ahead for the A350 to negotiations between European Union and the United States over aircraft subsidies at the World Trade organization.
   He said the delay was a ‘contribution’ by Airbus to help clear the atmosphere at talks over mutual allegations of illegal subsidies, but that Airbus would build the plane anyway if no progress were made. He said the EU had not asked for this.
   Airbus specialists involved with the program said the A350 delay was purely industrial, however.
   ‘We do have a shortage of engineers. But we are moving them from one program to another in an organized way,’ said Colin Stuart, Airbus Vice-President of Marketing.
   Analysts say Airbus needs more time to finalize the 4.5 billion euro ($5.5 billion) project but may also have an interest in cooling the row with the United States partly in order to smooth its efforts to enter the US military market.

OPEC urged oil consuming countries to build more refineries amid warnings that the oil producer’s cartel could do little to contain high oil prices or correct a shortage of finished petroleum products.
   ‘The supply is here, inventories are building, there is certainly no shortage of supply—so build, build refineries,’ Saudi Arabia’s Oil Minister Ali al-Nuaimi told reporters on Tuesday.
   ‘Start building refineries and you will solve maybe half of the problem,’ he added during his traditional morning jog in Vienna, ahead of a meeting of the Organisation of Petroleum Exporting Countries due Wednesday.
   The cartel’s president, Kuwait’s Ahmad Fahd al-Sabah said that the ‘main problem’ with prices was caused by refinery capacity.
   ‘I think we have to work together producers and consumers to do something with the refining because this is our main problem now,’ he added.
   Industrialised countries have been pressing members of the cartel to raise their production ceiling for crude oil by half a million barrels per day (bpd) to 28 million bpd. But real crude output is already far higher and in some instance running at full capacity, according to ministers and analysts.
   OPEC ministers arriving in the Austrian capital have cautioned that while they are broadly ready to raise their collective production quota for crude, it would have little effect on prices.
   Oil prices had shot up by two dollars a barrel on Monday above the 55-dollar mark amid continuing supply fears, partly fuelled by China’s growing economy, and low-running concern that high oil prices are undermining global economic growth. The pressure eased in trading Tuesday.
   ‘The world will be more comfortable with prices below 50 dollars,’ Nuaimi said, echoing earlier comments by his Iranian counterpart Bijan Namdar Zangeneh. ‘We have been trying for some time,’ the Saudi Arabian official added.
   He indicated that Saudi Arabia was ready to boost its own production by 1.5 million bpd.
   But he placed great emphasis on bottlenecks caused by inadequate refinery capacity in consumer countries, pointing out that little or no investment in new refinery plants had been made for about 20 years.
   ‘We have to convince the governments to build refineries in the United States and elsewhere,’ Nuaimi told reporters. ‘Everybody is late in building refineries.’
   Analysts concurred with the long running complaint about refineries, which is essential to transform crude into petrol or heating oil.
   ‘There have been no new refineries built in Europe or the States since the seventies,’ Bruce Evers, an analyst with Investec in London said.
   Evers added that attempts had been made to boost efficiency of the plants but ‘demand that’s been stronger than expected and badly underestimated’.
   ‘It doesn’t matter how much crude there is: if you can’t turn it into product, then you’re gonna get severe price movements, which is the longer term problem that the markets are facing,’ he told AFP.
   Nuaimi underlined that any Saudi Arabian boost in output would bring only more medium and heavy crude onto the market.

The Hongkong and Shanghai Banking Corporation Ltd in Bangladesh recently signed a depositors insurance agreement with American Life Insurance Company, says a press release.
   The HSBC inked the agreement for the bank’s ‘Peace of Mind’ (POM) savings scheme under its ‘My Future’ range of personal financial services products.
   As per the deal, ALICO will provide accidental insurance of Tk 100,000 to depositors of Tk 10,000- POM unit and Tk 150,000 to depositors of Tk 50,000 -POM unit as a benefit to HSBC customers.
   Mamoon M Shah, manager (personal financial services) of HBSB and Rumi Ahmad, deputy director (business development) of ALICO, signed the agreement on behalf of their respective organisations.

International Leasing and Financial Services Ltd declared 40 per cent cash dividend for the year 2004 at its 9th annual general meeting in Dhaka on Sunday, says a press release.
   The chairman, board of directors of the company, Mahbub Jamil, presided over the meeting attended, among others, by the representative of the shareholders– Singer Bangladesh Ltd, IPDC of Bangladesh Ltd, Shaw Wallace Bangladesh Ltd, M Matiul Islam.
   The managing director of the company, Mafizuddin Sarkar was also present in the meeting.
   During the year 2004, the company contracted lease and term finance transactions for an aggregate amount of Tk 2,393 million while the cumulative disbursement during the year was Tk 3,167 million in the from of Tk 2,016 million for lease and term finance, Tk 1,151 million for other products namely government treasury bond, zero coupon bonds, capital market operations and treasury operations.
   The growth in contract and execution was 54 per cent and 89 per cent respectively compared with 2003.
   The portfolio of the company as on December 31, 2004 stood at Tk 4800.78 million. The company earned profit before tax and profit after tax of Tk 140.73 million and 122.50 million respectively during 2004.

Islami Bank Bangladesh Ltd signed a contract on entrepreneurship development training with Micro Industries Development and Services in Dhaka on Wednesday, says a press release.
   Under the contract, Islami Bank in collaboration with MIDAS will arrange a six-day training course titled ‘entrepreneurship development for SME entrepreneurs, which will begin on July 9.
   The executive president of IBBL, Abdur Raquib and the managing director of MIDAS, Abdul Karim, signed the deal on behalf of their respective sides.
   MD Velayat Hussain, ATM Harun-ur-Rashid, deputy executive presidents, Md Nurul Islam, Md Setaur Rahman, Md Shouquat Ali and Md Habibur Rahman Bhuiyan, executive vice-presidents of IBBL and M Alauddin, assistant general manager of MIDAS, among others, were present in the signing ceremony.

South Korea plans to use some of its vast foreign exchange reserves to help Korean companies make overseas investments, in an effort to spur dollar outflows.
   The measure comes as the won’s sharp appreciation against the dollar dents Korean exports, which has driven the growth of Asia’s third-largest economy over the past two years, while domestic spending still remains in the doldrums.
   ‘The falling won-dollar exchange rate is raising concerns about the possibility of a slowdown in export growth, and the excessive supply of foreign currencies plays as a burden on the monetary policy,’ the finance ministry said on Wednesday.

The EU commission called on Europe's textile industry to restructure to become more competitive following a recent deal with Beijing curbing a surge in Chinese textile imports into Europe.
   'The industry should now use this additional time to focus on-and invest in-the future and move up the value chain through innovation, restructuring, research and investment in skills,' said EU trade commissioner Peter Mandelson.
   'This is crucial if it is to remain competitive and be able to sell into China's growing market,' he added, speaking at a meeting of high-level representatives of EU member states, industry and the European Commission.
   The EU and China headed off a trade war Friday in Shanghai when Mandelson and his Chinese counterpart Bo Xilai agreed to limit the growth of 10 Chinese textile products to the EU to between 8.5-12.5 per cent until the end of 2007.
   Mandelson said that EU member states 'gave a broad welcome to this deal,' which was struck in last-minute talks before a deadline after which Brussels planned to seek limits on Chinese textiles at the World Trade Organisation.
   The EU textile industry had been urging Mandelson to take action to limit Chinese textile imports, which have boomed since the end of a global quota system at the beginning of the year.
   EU research commissioner Janez Potoncnik called for investment in research to be stepped up to boost the competitiveness of European textile firms.
   'It is only by raising the knowledge capacity of our firms, that we can secure our competitive advantage be based on the best new products and processes in the world,' he said in a speech.
   'I believe that the EU textile industry can thrive if it continues to invest in new production processes and materials, in innovative design and manufacturing systems and in training and skills,' he added.
   EU industry commissioner Guenter Verheugen acknowledged that job losses in the European textile industry would be inevitable and called for action to soften the blow.
   'Measures should further focus on attracting new investment to the regions hardest hit,' he said.
   'Besides we must provide re-skilling and re-qualification opportunities to those who will no longer be able to find employment in the textiles and clothing sector.'
   Earlier Tuesday Mandelson warned that the recent deal on textiles would not be followed by similar agreements in other industrial sectors.
   'The Shanghai agreement is not a green light to other sections of industry affected by the opening of trade to come to the (European) Commission and ask for protection,' Mandelson told the European Parliament.

Planemakers Airbus and Boeing Co on Tuesday took the edge off some of the rhetoric in the world’s biggest potential trade war, striking a conciliatory tone at the Paris Air Show.
   Airbus said the reason it had delayed its A350 model was to calm tensions and Boeing Co said negotiations were the best way forward.
   Washington’s clash with the European Union at the WTO involves accusations of improper state subsidies to the largest aerospace company on each side.
   In a conciliatory sign from the European side, Airbus Chief Executive Noel Forgeard for the first time on Tuesday said a delay in plans to launch the industrial phase of its new A350 model was intended to help clear the atmosphere.
   ‘To give a chance for an amicable settlement we decided to postpone the launch until September,’ Forgeard told a news conference.
   ‘The fact that we are trying to reach an amicable settlement doesn’t mean we will compromise on our conditions for a settlement. Boeing is receiving huge government money.’
   Airbus first announced the launch a new mid-sized cruiser, the A350, last year but has been forced to redesign it in the face of tough competition from Boeing’s similar 787 Dreamliner.
   While technical glitches and a shortage of engineering resources are also seen pushing back the start of work on the A350, Forgeard’s suggestion of compromise was a fresh nuance in a transatlantic war of words that has lasted more than a year.
   Thomas Pickering, a former influential US ambassador who now serves as Boeing’s senior vice president for international relations, also held out hopes for a negotiated settlement in an interview with Reuters.
   ‘The idea is not to punish Airbus, it is to get future trade where we can compete on equal terms,’ Pickering said.
   ‘Based on what’s been in the media, Airbus look willing to give up launch aid in return for putting a consideration of indirect subsidies on the table, and that’s been our position forever,’ he said.
   Planemaker Airbus risks having to turn billions of euros in state loans into conventional bank loans if the World Trade Organization backs a complaint filed by Washington.
   ‘It could conceivably cover all loans that are unpaid,’ Pickering said, referring to launch loans which Airbus has received for decades from European governments and used to help develop new models.
   Most have been repaid, but Airbus has not yet begun to deliver the A380 superjumbo which has cost $14.5 billion to develop and is planning another $5.4 billion program to build the mid-sized A350.
   Boeing could also benefit if the WTO backs the US case against the EU and finds merit in its claims that European state loans have helped Airbus gain market share from Boeing.
   A WTO ruling then could grant Washington the right to impose penalties against the EU tied to the value of the market share Boeing has lost to Airbus.
   ‘What we can prove is real injury from launch aid,’ Pickering said, in reference to lost market share.
   The European planemaker could also benefit if the WTO backs its case, which targets tax breaks and benefits which Boeing receives from US military contracts.
   The WTO is set to appoint boards to assess the two cases, which threaten to spark the biggest trade dispute in the WTO’s 10-year history.
   ‘It’s either litigation plus negotiations or just litigation,’ Pickering said.
   The United States pulled out of a bilateral agreement with the EU on aerospace subsidies late last year, taking action a year after Airbus had pipped Boeing in sales of airliners for the first time.
   A three-month truce ended in April, leading both sides to file cases with the WTO.

The European Union risks losing US investment if anti-business sentiment goes unchecked, US treasury secretary John Snow said in an interview published on Wednesday.
   'American business people are going to put capital where they feel they are welcome, where capital is honored and where they can get good returns,' Snow told Britain's Financial Times newspaper.
   'It is not so much the language that is used, it is the policies that get embraced. And if policies get embraced that make capital feel unwelcome, capital won't come.'
   Last month's rejection of the proposed EU constitution by French voters reignited a debate in Europe over whether it should embrace free-market policies or a more regulated, social model. French President Jacques Chirac repeated his pledge this month to preserve the French social model and rejected 'Anglo-Saxon' free-market economics.
   The head of Germany's ruling Social Democrats (SPD) Franz Muentefering recently described some investors as 'locusts' who destroyed firms for their own profit.
   Snow said anti-business policies could drive investors away.
   'Those who manage capital have lots and lots of alternatives,' he said. 'It seems to me short-sighted on the part of anybody to discourage investment in their own country with a set of attitudes that makes capital feel unwelcome.'
   Snow also warned against tough regulation of hedge funds.
   'Be careful with the heavy-touch approach because these are awfully important financial market players,' he told the FT.
   'They make financial markets more efficient and move capital around and put it in the hands of those who can use it best.'
   He played down referendum defeats for the EU's constitution in France and the Netherlands.
   'Wherever Europe goes with these constitutional votes, Europe can't and won't overlook the need to achieve its economic potential,' he said. 'But I see a will in Europe to do important things, like creating an integrated financial market.'
   In a wide-ranging interview, he repeated that China had made progress over possible moves toward a more flexible currency.
   'We are convinced that China has made such progress over the last couple of years, that they are ready to now move to greater flexibility,' he told the FT.

OPEC on Wednesday lifted oil output limits but, bumping up against full capacity, may fail to topple crude from $55 a barrel.
   The Organization of the Petroleum Exporting Countries agreed to raise its formal production limits by 500,000 barrels a day to 28 million bpd, an OPEC delegate said.
   The increase merely legitimizes existing output, leaving a tough test for hard-pressed producers looming ahead of the fourth quarter, when annual world demand peaks.
   Ministers also authorized group president Sheikh Ahmad al-Fahd al-Sabah to trigger a further 500,000 bpd increase, perhaps in late July or early August, should prices stay high.
   ‘We have to prepare for the fourth quarter. Demands on OPEC will increase to 30.5-31 (million bpd) and we have to prepare ourselves to continue increasing our production just to reach the call on OPEC,’ Sheikh Ahmad said ahead of the meeting.
   ‘Even at the most optimistic estimate the spare capacity of OPEC is still too slim to reassure the market,’ said William Davie, chief economist at energy consultancy Simmons and Co.
   Driven by worries over a lack of OPEC spare capacity and refinery bottlenecks US crude rose 60 cents to $55.60 a barrel. Prices are up from May’s low of $46.20 back and heading toward early April’s all-time peak of $58.28 a barrel.
   Latest estimates are that OPEC, including Iraq which is exempt from quotas, already is touching 30 million bpd, near a 25-year high but well short of projected fourth quarter demand. Saudi Arabia is the only producer sitting on spare capacity. But Saudi Oil Minister Ali al-Naimi said Riyadh could not force-feed a market already sated with crude, blaming a shortage of refined product capacity for bolstering prices.
   ‘We will put more new oil on the market when the demand emerges. Price has nothing to do with it,’ said the minister. What Saudi Arabia wants to know is where are the customers?’
   The fourth quarter looks set to test OPEC, and refiners, to the limit. ‘What’s scary is that we’re just moving out of the lowest period of demand for the year, the second quarter, and OPEC at full stretch was unable to keep prices down,’ said Gary Ross of US consultancy PIRA Energy.
   ‘World demand in the second half will average 3 million barrels a day more than in the second quarter.’ OPEC supplies about 40 per cent of world demand of 84 million bpd. Iraq’s new oil minister, Ibrahim Bahr al-Uloum, highlighted concerns about the lack of spare capacity in global crude production.
   Plagued by security issues and a lack of investment, Iraq’s exports are stuck at 1.5 million bpd, he said, less than pre-war capacity. Hopes are pinned on foreign investment contracts that will not be signed until the end of 2006 at the earliest.
   OPEC member Venezuela’s output is at just 2.6 million bpd after failing to recover back above 3 million following an anti-government strike in 2002 and early 2003.
   Russia, the biggest exporter outside OPEC, has seen output growth slow sharply this year after the Kremlin cracked down on leading production company YUKOS as part of a campaign to regain political control over the Russian oil sector.

Arabian Oil Co, a state-supported oil supplier in major energy importer Japan, said it had signed a technical cooperation agreement with the Iraqi government to boost oil shipments.
   Arabian Oil and the Iraqi oil ministry will hold a first round of talks this week in Tokyo to discuss how they can increase Iraqi oil shipments using existing facilities.
   They will also consider drafting ‘a master plan’ to rehabilitate facilities or build new ones including production sites and tankers, the Japanese firm said Wednesday.
   The company said it will also accept Iraqi engineers for training in Japan, without further detailing the terms of the agreement.
   Japan is a major energy importer and has increasingly been in conflict with its neighbor China over maritime gas and oil reserves.
   Iraq has the world’s second-largest proven reserves at some 115 billion barrels but production has been sharply reduced by more than two decades of war and over a decade of UN sanctions.

POSCO Co Ltd, the world’s fifth-largest steel maker, said on Wednesday it will ink its $12 billion Indian steel project deal next week, marking the biggest foreign direct investment in India.
   The project, part of the South Korean firm’s drive to expand production globally, involves building a 12-million-tonne steel plant, a 30-million-tonne iron ore mine, a mill for making hot-rolled coil and a sea port.
   India’s steel minister said last week the deal with POSCO would be signed by the end of the month on the steel plant complex to be set up in Orissa.
   POSCO aims to start steel production in India by 2010, according to T.H. Jeong, head of POSCO’s India project team. Jeong added that the firm was talking with world-leading miner BHP Billiton about the project.

Growth in the world’s oil and gas reserves stalled last year, a report from oil giant BP showed on Tuesday, bucking a trend that has historically seen new discoveries more than match production.
   The BP Statistical Review of World Energy, compiled from official government figures, will reinforce concerns about the ability of global oil supplies to match surging consumption, which grew 3.4 per cent in 2004.
   The world had 1,188.6 billion barrels of oil reserves at the end of 2004, compared to 1,188.3 billion at the end of 2003, BP, the world’s second largest oil firm by market capitalisation, said.
   The 0.02 per cent growth rate was the lowest since 1990 and compares with a 10-year average above 1.5 per cent per annum.
   Last year’s almost imperceptible rise in oil reserves came despite high prices, which normally help by encouraging new exploration and by making previously uneconomic resources commercial.
   Gas fared only slightly better with reserves growing 0.18 per cent, but this was the lowest growth rate in over 20 years, and well below the 10-year average of more than 2 per cent each year.
   The figures contrast with BP’s view, regularly voiced by Chief Executive John Browne, that the world is not facing a supply crunch.
   However, the data echoes the oil majors’ own difficulties in finding oil. Last year, the biggest international firms replaced around 70 per cent of the oil and gas they pumped with new finds, analysts said. Even BP, one of the better explorers in the industry, failed to achieve the 100 per cent reserve replacement ratio that shows a firm’s resource base is not shrinking.
   The report also points to another worrying trend for the oil majors. The gap between their anaemic reserve replacement ratio and an effective 100 per cent ratio globally supports investors’ fears that the biggest oil companies will lose market share.
   Analysts have predicted firms like BP and US rival Exxon Mobil will become increasingly constrained in finding new exploration opportunities in the future because the biggest hydrocarbon reserves look set to be controlled by state-owned oil and gas companies in Russia, Venezuela and the Gulf states.
   BP cautioned that pundits have been predicting the imminent depletion of reserves for a century and added that since different governments use different methodologies to calculate proved reserves, it is hard to draw inferences from its review, which is published annually.

JP Morgan Chase & Co said on Tuesday it had agreed to pay $2.2 billion to investors of collapsed energy firm Enron Corp in what lawyers said could end up being the largest-ever US securities settlement.
   JP Morgan Chase, the No 3. US bank, announced its settlement just four days after Citigroup Inc said it would pay $2 billion to Enron stock and bond investors who accused the banks of helping Enron in a huge accounting fraud.
   The Citigroup settlement with lead plaintiff, the board of regents of the University of California, had been expected to trigger settlements from some of the other 11 financial firms involved with Enron, which collapsed in December 2001.
   ‘The noose is tightening around the necks of the other defendants. Stay tuned,’ William Lerach, the lawyer representing the University of California, told Reuters.
   He expected the final figure to exceed the $6.1 billion that over a dozen Wall Street banks agreed to pay to settle allegations they didn’t adequately examine WorldCom Inc.’s financial health when they sold securities in 2000 and 2001.
   Neither Citigroup, the world’s largest financial services company, nor JP Morgan Chase admitted any wrongdoing in agreeing to settle the Enron suit but both said they wanted to put outstanding litigation behind them.
   JP Morgan Chase said it will take a pretax charge of $2 billion against its second-quarter earnings to pay the settlement and increase its litigation reserves.
   The bank has already warned its trading results in the quarter may be the weakest reported in some time, hurt by bets made with its own cash and dismal markets.
   It said it settled to eliminate the ‘uncertainties, burden and expense of further protracted litigation.’
   President and Chief Operating Officer Jamie Dimon is known to want to resolve outstanding litigation issues quickly so the New York firm can move forward without legal uncertainties.
   The class-action settlement must be approved by the Board of Regents of the University of California and JP Morgan board.
   So far financial institutions have agreed to pay Enron shareholders $4.7 billion. As well as the Citigroup and JP Morgan settlements, Bank of America has agreed to pay $69 million and Lehman Brothers $222.5 million.
   Other institutions involved include Barclays Plc (BARC.L), Credit Suisse First Boston, Merrill Lynch, Canadian Imperial Bank of Commerce, Toronto Dominion Bank, Royal Bank of Canada, Deutsche Bank AG and the Royal Bank of Scotland.
   Lerach declined to say if other settlement talks are ongoing.
   ‘But I don’t think there is any question the final amount will be in excess of the $6.1 billion (for WorldCom) and the largest securities settlement ever,’ said Lerach.
   JP Morgan Chase said it will add about $2 billion to its litigation reserves, of which about half was associated with Enron-related matters and the balance its estimate of expected additional costs associated with the remaining legal actions.
   JP Morgan’s reserves stood at about $3.5 billion after being boosted by the bank after it agreed to pay $2 billion to settle the WorldCom litigation, said Merrill Lynch.
   Enron filed for bankruptcy after its use of off-balance sheet deals to hide tens of billions of dollars in debt were revealed. Its meltdown sparked a flurry of shareholder lawsuits and some criminal charges against the company and management.
   Former Enron chairman Ken Lay and ex-chief executive Jeffrey Skilling are scheduled to go on trial in January 2006.
   The energy trader emerged from bankruptcy proceedings last year as a private entity which is in the process of liquidating remaining assets to pay off part of its debts.

Rangpur Foundry declares 15pc dividend
The Rangpur Foundry Limited declared 15 per cent for the year 2004. The decision was announced at the 25th annual general meeting of the company held at the National Shooting Club, Gulshan in Dhaka on Wednesday, says a press release. The meeting considered the company's earnings, financial result and future prospect. Mahtabuddin Ahmed, chairman of the company, presided over the annual meeting. Directors Amjad Hossain Khan and Sabiha Amjad, executive director ATM Nasiruddin Mahmud, company secretary SM Shahirul Wahid and group chief accountant Chowdhury Atiur Rasul and a large number of shareholders were present at the meeting. Nasiruddin appraised the shareholders about the last year performance, future business plans of the company and export efforts and prospect of PVC products in neighbouring countries and Africa. The investors made valuable suggestions to the management for the improvement of future performance of the company.
Beximco Pharma, Infusion merger approved
Beximco Pharmaceuticals Limited and Beximco Infusions Limited have informed that the High Court division of the Supreme Court vide order dated 15-06-05 approved the Scheme of Amalgamation of the two entities of same group. The record date for the exchange of the shares of Beximco Infusions Ltd for the shares of Beximco Pharmaceuticals Ltd has been fixed on July 10.
No price limit for National Bank
There will be no price limit on the trading of the shares of the National Bank Limited today following its corporate declaration. The bank’s board recommended 20 per cent stock dividend for 2004. The annual general meeting will be held in Dhaka on September 7.
Quasem Textile’s loss up
As per un-audited half yearly accounts as on March 31, the company has reported net loss of Tk 41.7 lakh with a negative earning of Tk 3.02 per share as against last year's half yearly loss of Tk 35.6 lakh and EPS of Tk 2.58.
Quasem Silk loss down
As per un-audited half yearly accounts as on March 31, the company has reported net loss of Tk 30 lakh with negative earning of Tk 1.50 per share as against last year's half yearly of Tk 50.5 lakh and Tk 2.35 respectively.
Excelsior Shoe loss down
As per un-audited half yearly accounts as on March 31, the company has reported net loss of Tk 65.9 lakh with a negative earning of Tk 2.20 per share against last year's half yearly of Tk 4.34 crore and Tk 14.46 respectively. Sources : DSE, CSE

Tk 450cr earned
by exporting
jute in 04-05
Bangladesh earned Tk 450.4 crore by exporting jute in 28 countries of the world during the 2004-05 fiscal. Replying to a question placed in Parliament Wednesday, jute and textiles minister Shahjahan Siraj said a total of 14.01 lakh bales of jute were exported from July 2004 to April 2005. Jute export was 19.05 lakh bales in 2003-04 fiscal. The minister said that a total of 36 lakh bales of jute would be needed for the state-run and private jute mills of the country in 2005-06 fiscal. Of them, 14.52 lakh bales will be needed for state-run jute mills while 21.48 lakh bales for private mills. Currently, there are 2,431 loom factories in the country, which can meet only 40 per cent of the country’s garments’ demand. ‘The government has taken a Tk 50 crore microcredit programme to reactive the damaged and inactive looms, he told the House. The minister further said the new units in Karim and Rajshahi jute mills have been installed using 650 machines of the abandoned Adamji Jute Mills. This two units, which will create employment for 2200 workers and 120 officials, are expected to produce additional 11,698 tonnes jute products worth about Tk 35 crore in foreign exchange.
—BDNews

New Hamdard plant opens in N’ganj
Hamdard Laboratories (Waqf) Bangladesh opened its new plant in Narayanganj on Wednesday. The health and family welfare minister, Dr Khandaker Mosharraf Hossain, inaugurated the plant at Sonargaon in Narayanganj. Speaking on the occasion, the minister outlined various steps undertaken by the governments for the development of herbal medicine. Chaired by the managing director of Hamdard Laboratories, Hakim Yousuf Harun Bhuiyan, the function was attended by the chairman of the board of trustees of Hamdard Bangladesh justice Mohammad Abdur Rauf.
— BDNEWS

DSE ends down
Trading at Dhaka Stock Exchange closed lower Wednesday with losers outnumbered gainers. The DSE all share price index decreased by 7.50 points or 0.56 per cent to close at 1323.05 points from 1330.56 points on Tuesday. The DSE-20 Index also down by 13.80 points or 0.73 per cent to close at 1864.77 points from 1878.58 points on the previous trading day. A total of 165 issues traded Wednesday. Of them, 50 gained, 92 declined and 23 remained unchanged. Some 5.48 million shares and debentures worth Tk 273.19 million changed hands on the day. The market capitalization stood at Tk 221.77 billion on the day.
— UNB

CSE closes lower
Trading at Chittagong Stock Exchange (CSE) closed lower Wednesday with the losers outnumbering the gainers. The CSE All Share Price Index decreased by 2.88 points or 0.08 per cent to close at 3360.47 points from Tuesday’s 3363.35 points. The CSE-30 Index also shed 19.56 points or 0.61 per cent to close at 3167.50 points from 3187.06 points on the previous trading day. A total of 66 issues traded Wednesday. Of them, 23 gained, 35 declined and eight remained unchanged. Some 515,438 shares and debentures worth Tk 3.13 crore changed hands against 671,827 shares valued at Tk 3.43 crore on the previous trading day.
— UNB

US industrial
product rebounds
with 0.4pc gain
US industrial production climbed 0.4 per cent in May, the Federal Reserve said Wednesday. The report was stronger than the 0.2 per cent increase expected by private economists. But the report revised downward its estimate for April to show a 0.3 percent decline, from an earlier estimate of a 0.2 percent drop. Capacity utilization rose to 79.4 per cent from a revised 79.1 per cent in the previous month.
— AFP

Microsoft warns of critical flaws
Windows users are being urged to download the latest security updates from Microsoft to fix critical flaws. The software giant has warned that three loopholes affecting Windows and Internet Explorer allow an attacker take control of a personal computer. Seven other updates have also been released to address less serious problems in its software. Microsoft has been trying to improve the security of its software, releasing regular monthly security bulletins. Microsoft first alerted the millions of Windows users that it was planning a bumper pack of patches last week.
— BBS

Chidambaram’s no to bank privatisation
Indian finance minister P Chidambaram on Wednesday ruled out privatisation of state-run banks, which dominate the banking business in the country. ‘There need not be any fear that the government will privatise public sector banks. The government is committed to strengthening our banks,’ Chidambaram said at the launch of a service by state-run Bank of Baroda.
— Reuters

Tata Investment
sets 1-for-2 bonus
share issue
Tata Investment Corporation Ltd. has decided to issue bonus shares in the ratio of one share for every two held, it told the stock exchange on Wednesday. The company posted a net profit of 1.12 billion rupees on net sales of 1.16 billion rupees for the year ended March 2005.
— Reuters

GE airline lease CEO sees bright future
The head of General Electric Co’s aircraft finance arm expects to lease more planes to non-US customers in the future, reflecting greater overseas growth, he said on Tuesday. ‘Sure, we’re going to focus (outside of the US) because we think those are the higher growth areas and we think there’s lots of opportunity there,’ GE Commercial Aviation Services (GECAS) chief executive Henry Hubschman said. GECAS has traditionally leased a greater number of planes in the US market than the other leading lessor, International Lease Finance Corp., but is increasingly looking overseas. Earlier this month GECAS said it had opened new offices in Mexico City, New Delhi, Sao Paulo, Shanghai and Toronto.
— Reuters