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Senior economist Muzaffer Ahmad on Thursday questioned the claim of the finance minister that he exercised his sole authority in proposing continuation of the money laundering scheme in the new national budget.
   ‘How can the finance minister make decisions alone in a parliamentary democracy where the cabinet is collectively responsible for the national budget? Is Saifur Rahman more powerful than the prime minister?’ asked Muzaffer, a professor of economics, at a discussion on the national budget.
   The Bangladesh Policy Forum, a local research organisation, arranged the meeting at the National Press Club.
   The finance minister, after presenting the budget, tried to defend himself amid speculations that he had changed his firm pre-budget stand against money whitening scheme, bowing to pressures from the ruling party people.
   Saifur claimed that even his cabinet colleagues did not know about the last-minute insertion of the provision.
   Disapproving the excuse, Muzaffer said the finance minister alone could not make such a decision and the tax amnesty would work little to bring the untaxed money in to the formal economy.
   ‘Without curbing the sources of black money generation and restricting the areas where untaxed money goes mostly, money whitening scheme will be dysfunctional,’ he added.
   Muzaffer said black money-holders are now opting for keeping the money in dollar, hiking the greenback exchange rates in the domestic market.
   People having black money are spending on lands, luxurious apartments and frequent foreign tours, he added.
   He said black-money holders are patronising the political parties by funding them.
   Muzaffer also blasted few other ministers for creating conflict of interests between their legislative roles and professional business.
   ‘Despite being the law minister, Maudud Ahmed still maintains his law firm — Maudud and Associates — which is not acceptable,’ he said.
   ‘Maudud has no right to continue as the law minister,’ the economist added.
   In a similar vein, Muzaffer also questioned communications minister Nazmul Huda’s position, as the minister has also involvement in transport business.
   The economist criticised NGOs including Brac for deceptive claims about their role in poverty reduction through micro-credit programmes.
   ‘The NGOs are working on micro-credit without any legal base and there is no statistics on how many poor people have graduated from poverty level through such programmes,’ he said.
   Taking part in the discussion, professor Abu Ahmed said the bigger the budget outlay is, the wider the scope of corruption is, as there would be a big purchase and commission.
   He also said one-third of the government officers-employees are in fact surplus, putting extra burden on the coffer.
   Economist Anu Muhammad said Saifur put the poverty reduction agenda on top since his first budget announced in 1978-79. ‘What happened during the years that finance minister still puts the same agenda on top?’
   Anu also said the finance minister’s different comments on black money implied that powerful black money holders are beside him.
   He said the so-called reform initiatives have gradually criminalised and urbanised the economy, further encouraging black economy generation.
   Economists Atiur Rahman and MM Akash also spoke at the programme presided over by Farid Uddin Khan, the convenor of the forum.

The country has been able to overcome initial shock of the expiry of multi-fibre arrangement, but poor infrastructure and outdated transaction system may overshadow its future potentials, says a review of the Citigroup.
   ‘While it is still too early to take a final call, as current trends indicate that, while exports of woven products have fallen, growth in knitwear and home textiles are buoyant resulting in overall positive growth,’ said the bi-annual review of the Bangladesh economy.
    It pointed out that the country’s poor infrastructure and antiquated letter-of-credit system remained as major hindrances. Although supportive measures taken by the government are encouraging and they should enhance the sectors’ competitiveness, it felt.
   The Citigroup observed that the Bangladesh economy has been going through six major challenges, despite largely positive macroeconomic environment.
   ‘Although Bangladesh has made considerable progress in the macroeconomic front over the past year, the country continues to face many challenges in sustaining steady growth acceleration,’ it said.
   These challenges are: inflationary pressure, fiscal correction, quota dismantling, current account deficits and two non-economic factors—weak governance and natural disaster.
   Excess liquidity, concerns over global oil prices, higher food prices on account of the setback to agricultural production and the recent pay revision are likely to be major inflationary threats, it felt.
   ‘The IMF has already expressed concern about the rapid expansion of broad money in the economy, and has suggested a hike in interest rates to keep inflation in check.’
   The group said despite improvements in tax collections, revenue mobilisation efforts need to be stepped up further.
   ‘Higher public spending and insufficient revenue collections left the fiscal deficit at 4.2 per cent and 4.5 per cent in FY04 and FY05, respectively’ it explained.
   ‘Bangladesh needs to overcome several supply-side bottlenecks, specifically in the areas of infrastructure and financial sector reforms, to ensure that its exports remain competitive’, the review suggested, identifying textile quota phase-out as a challenge.
   Despite a steady improvement since 2001-02 fiscal year, the current account has been driven largely by growth in invisibles.
   ‘Due to higher imports, the current account for the last two quarters is in the red,’ it said
   ‘Volatility in workers’ remittances or poor exports in the post-MFA era could put an additional strain on the balance of payments,’ warned the review, released by the Citigroup in Dhaka on Tuesday.
   ‘Confrontational politics between the BNP and the main opposition (Awami League) continued to intensify, with the killing of a prominent AL leader, AMS Kibria, in January this year,’ it said.
   ‘While the BNP is likely to complete its term, with elections due to be held by the end of 2006, the law and order situation remains a cause for concern,’ it added.
   On natural disaster, the review said Bangladesh has long been plagued by natural disasters, while flooding or failed monsoons remain a constant threat to economic growth.

The Bangladesh Petroleum Corporation increased price of Jet-A-1 fuel by two US cents per litre effective from Thursday.
   The corporation has hiked the price to 50 cent for the foreign aircraft at the Zia International Airport, BPC officials said. At the Shah Amanat International Airport, Chittagong, the charge is 49 cent per litre for the foreign aircraft.
   For domestic airlines, jet fuel price has been increased by Tk 2 per litre to Tk 40.
   The BPC took the decision to increase the fuel price at a meeting on Wednesday with its chairman in the chair
   The state-owned corporation had revised the fuel price upward by Tk five per litre on April 10.
   The latest increase was made to adjust with international market price of the fuel and the local market price of the other fuel products, officials said.
   On an average 4 to 4.5 lakh tonnes of jet-A-1 fuel are consumed in Bangladesh every year and the BPC is the sole importer.

FBCCI president Abdul Awal Mintoo Thursday criticised the government for imposing 10 per cent corporate tax on software business in the proposed budget for fiscal 2005-06 and demanded withdrawal of the tax to help flourish the potential sector.
   ‘ICT is an important factor for increasing productivity of different sectors, but our bureaucrats and politicians could not recognise it,’ said chief of the Federation of Bangladesh Chambers and Commerce and Industry said while addressing a roundtable on ‘Budgetary Policies for Software Industry in the Proposed National Budget 2005-2006’ at the CIRDAP auditorium.
   The Bangladesh Association of Software and Information Services (BASIS), Bangladesh Computer Samity (BCS) and Internet Service Providers Association of Bangladesh (ISPAB) jointly organised the roundtable.
   Responding to the plea of the software business leaders, the FBCCI president said that he would talk to the finance minister as well as other government high-ups within a day or two to pursue the government to reconsider the decision on the corporate tax.
   ‘If the society does not help, flourishing of any technology is quite impossible,’ he said.
   Eminent economist Dr Atiur Rahamn said expansion of ICT sector can bring about good governance, curb corruption and ensure accountability in the society, which will ultimately enhance the GDP growth and raise export volume.

Malaysia on Thursday called for a $10 billion Islamic bond issue to fund infrastructure projects to spur economic growth in less-developed Muslim countries.
   ‘A sum of $10 billion will be a decent amount to look forward to. I am sure the infrastructure bond will receive a good response,’ Malaysia’s second finance minister Nor Mohamed Yakcop told reporters.
   Nor Mohamed said Malaysia would support the Islamic bond — debt that complies with the Koran’s ban on paying or receiving interest.
   ‘We hope it will take off quickly,’ he said on the sidelines of the two-day meeting of the Islamic Development Bank, the lending arm of the world’s biggest Muslim grouping, the Organisation of Islamic Conference.
   In an opening speech to the meeting Thursday, Malaysian prime minister Abdullah Ahmad Badawi, who is chairman of the 57-member OIC, also urged the bloc to establish an infrastructure bond.
   ‘For infrastructure financing alone, it is estimated that the IDB members will require about $741 billion over the next 10 years,’ he said.
   Abdullah suggested that the central banks of OIC countries contribute to the bond fund and that the proceeds be used for major projects in member nations.
   
   IDB okays $437m projects
   The Islamic Development Bank, a lender set up by Muslim countries, said Thursday it has approved financing for development projects worth $437 million.
   The payments include $17.1 million to Gambia to finance a power plant, $106 million to Morocco for road construction and $37.6 million to Iran for the expansion of the Bandar Abbas shipyard in Iran.
   The infrastructure projects are part of the bank’s continuing efforts to boost economic growth and social development of member states and Islamic communities in non-member countries, the IDB said in a statement.

In a dramatic move, a state-run oil company of China made an unsolicited $18.5 billion bid on Thursday for the US energy giant Unocal Corp, which had already agreed to be acquired by another US company Chevron Texaco for $16.6 billion.
   Although China National Offshore Oil Ltd, the third largest oil company of the country, claimed that it would take over Unocal in two to three months, Chevron said its deal was still valid, report news agencies.
   About 70 percent of Unocal’s current proved oil and gas reserves are in countries in Asia and the Caspian region including Indonesia, Thailand, Bangladesh and Azerbaijan.
   Unocal Corp said it received a proposal from the state-run CNOOC to acquire all outstanding shares of Unocal for $67 per share in cash, Xinhua reports.
   The Chinese company topped the cash-and-shares offer Chevron hammered out with Unocal by $1.5 billion using Unocal’s June 21 closing share price of $64.85, AFP reports.
   The US Company said that it intended to evaluate an 18.5-billion-US-dollar merger proposal but the Chevron merger agreement, which the Unocal board of directors recommended the transaction to Unocal stockholders remains in effect,’ Unocal said.
   The company said there can be no assurance that the proposal would result in a definitive agreement with CNOOC.
   On April 4, 2005, Chevron Corp, the second largest US oil company, offered to acquire Unocal in a choice of $65 a share in cash, 1.03 shares of Chevron stock, or a combination of stock and cash.
   Chevron received US regulatory approval on June 10 for its bid.
   Chinese state-run oil firm said on Thursday it is confident its $18.5 billion cash offer for Unocal will prevail in the takeover battle with Chevron Corp, reports Reuters.
   Chevron, however, continued to stand behind its April offer and said its deal was likely to close since it is nearing completion of the regulatory process to allow a vote by Unocal shareholders in early August, reports Reuters.
   AFP reports that the CNOOC bid could face Congressional opposition in the United States on issues ranging from China’s trade surplus to US oil security.
   CNOOC Chairman Fu Chengyu dismissed the concerns, saying the deal was a strictly commercial transaction.
    ‘We are quite confident. We believe the US government will approve the deal.’
   If CNOOC succeeds, it would be the biggest-ever overseas acquisition by a Chinese firm, reflecting China’s broader energy strategy of buying overseas oil and gas reserves to feed its fast-growing economy for years into the future.

Auction of three-year term ‘T&T treasury bond-2008’ will be held on June 28 to finance the ‘10 lakh T&T mobile (1st phase 2.5 lakh) project’ and setting up 2.66 lakh digital telephone lines, including digital conversion of 76,000 lines.
   Banks and financial institutions having appointment as primary dealers of government securities, and banks and financial institutions, mutual fund and life insurance companies having current account with Bangladesh Bank, and other institutional and private investors are eligible to submit bids for the auction.

India’s cabinet Thursday approved a 4.78 billion rupee ($111 million) grant to fund a power line from Uzbekistan to the Afghan capital Kabul, Defence Minister Pranab Mukherjee said.
   ‘The expenditure will be in the nature of assistance to Afghanistan and besides acting as a catalytic agent to speed up economic rehabilitation and development of the region, the projects will enhance India’s presence and profile in Afghanistan,’ Mukherjee said.
   There are frequent power cuts in war-battered Kabul as refugees have swarmed into the city to rebuild homes and businesses following the fall of the Taliban government in late 2001.
   India, along with Iran and Russia, backed Afghanistan’s Northern Alliance against the fundamentalist Islamic Taliban.

An emerging class of consumers, who have elegance and wider exposure to global fashions and tastes, has made Bangladesh an attractive destination for multinationals for marketing their branded and non-branded products.
    And business consultants are also gradually taking their interests in Bangladesh eyeing MNCs which are already in operations or planning to make their debut here.
   The MTI Consulting is one of them. The firm has launched its newest regional office in Dhaka, ‘with a promise to revolutionise and enrich the country’s corporate sector.’
   ‘You have a very sophisticated customers’ base. We strongly believe that Bangladesh has been a large, untapped market with tremendous growth potential and endless business opportunities,’ says Dhanushka Jayakody, country manager of the MTI in Dhaka.
   As such, ‘we feel that as a strategic business consultancy we would be able to add value to our client’s organisation by helping them take advantage of the limitless scope that exists in this country and as such bring about a sustainable change,’ says the Sri Lanka-born executive.
   MTI’s strong regional presence and outstanding success in India, Pakistan and Sri Lanka also propelled its decision to open operation in Bangladesh, he added.
   Founded in 1997 by famed Sri Lankan business strategist Hilmy Cader, the firm serves over 250 business projects under 38 product/service categories in 27 countries and its innovative strategies have propelled many companies make profit and sustain a competitive advantage, the company executive said in Dhaka on Tuesday. The MTI CEO would come to Dhaka in a month or two to celebrate the firm’s formal debut in Bangladesh.
   Aided by two local executives -- Malka Shamrose and Saima Mazhar—Dhanushka detailed how they would work and what their priorities and focuses would be in Bangladesh.
   ‘Our focus lies in developing and implementing innovative solutions to meet our client’s individual needs that range from strategic planning requirements to day-to-day operations,’ he said.
   MTI’s forte is strategically aligning businesses to enhance their bottom line through its unique techniques designed to detect factors that affect businesses. It also serves clients with distinct problems such as those contemplating restructuring or the need to develop new business strategies. ‘We’re equipped to serve all business clients ---from a newcomer to a veteran,’ the country manager said, pledging client-specific services.
   The strategic firm has in hand a lot of tested models, which could be re-applied in Bangladesh businesses fitting their sizes and needs, he said. ‘Unlike many other consultancy firms, we believe that our mission is not complete until we have implemented the recommended solution in total,’ he said.
   Readymade garment, financial services and pharmaceuticals will be their areas of initial priorities, said Malka Shamrose, who joined the firm and had a brief training in Colombo. Real estate and information technology could also be other areas of their interest, she said.
   ‘MTI’s core solutions areas include strategic planning, re-structuring, marketing and brand solutions, sales and channel management and supply chain solutions,’ Malka said.

The cell-phone operator, AKTEL, has introduced general packet radio service (GPRS) for its post-paid customers, says a press release.
   The company announced its new service at a function held in Dhaka recently.
   The subscribers will be provided with the GPRS facility free of charge for two months, effective from June 19 to August 18.
   Md Nasir Bin Baharom, managing director of AKTEL said, ‘This is a new technology in Bangladesh and it requires a certain degree of education and practice to be familiar with all GPRS.”
   ‘We want to give our customers adequate time to be acquainted with the technology. Therefore we are offering a two-month free trial period for the service to all our post-paid customers.’ The service is already available in Dhaka, Chittagong, Khulna, Rajshahi, and Barisal, and will be available in Sylhet within the next few weeks.’
   AKTEL has designed a customised WAP portal at http://wap.aktel.com/wap, which will enable customers to browse a variety of WAP-enabled sites almost instantly for entertainment, news, mail service, games, etc.
   Customers will need to have GPRS enabled handsets, which are individually configured for AKTEL GPRS to avail of the service.

AAA Consultants and Financial Advisers has become the issue manager of the Social Investment Bank Ltd, says a press release.
   An agreement, to this effect, was signed between the bank and AAA Consultants at bank’s board room recently.
   Under the agreement, the Social Investment Bank will raise capital by issuing right shares to the shareholders and AAA Consultants will act as the manager to the issue and render financial advisory services to the right issue.
   The managing director of the bank, KM Ashaduzzaman and managing partner and chief executive officer of AAA Consultants, Khwaja Arif Ahmed, signed the agreement on behalf of their respective organisations.
   The deputy managing director, Shahabuddin Chaudhury and other executives of the bank were present on the occasion.

Islami Bank Bangladesh Ltd has awarded work order to three vendors – M/S Alap Communi-cation, M/S Tech Valley Computers and M/S MetroNet Bangladesh – for the bank’s wide area network connectivity, data centre and DRS, says a press release.
   Md Velayet Hussain, executive president (current charge) of the bank handed over the work order to the executives of the respective companies at a function in Dhaka on Wednesday.
   The work orders were given to ALAP Communications for the bank’s wireless branch connectivity, Tech Valley Computers for data centre, DRS and primary connectivity and MetroNet Bangladesh for optical fiber connectivity for data communication.
   Khan M Ahsan, managing director of ALAP Communications, Mamonoor Rashid Shamim, general manager of Tech Valley Computers and Ferdous Azam Khan, chief executive officer of MetroNet received the work order on behalf of heir respective companies.
   The function was attended, among others, by Principal Moulana Zainul Abedin, vice-chairman, board of directors, Mominul Islam Patwary, chairman, executive committee, Md Shahidul Islam, Engr. Muhanirnad Dawood Khan, Md Fayekuzzaman, Shamsul Huda, Kazi Harun-ar-Rashed, directors and Engr Eskander Ali Khan, Engr Md Mustafa Anwar, Nur Mohammad Akon, ex-directors, Principal Serajul Islam, member additional secretary, Shariah council, M Farid Uddin Ahmed and ATM Harun-ur-Rashid Chowdhury, deputy executive presidents of the bank.

China will not bow to foreign and speculative pressures to adjust the yuan, which can only delay the country’s currency reforms, a senior Finance Ministry official was quoted Thursday as saying.
   ‘No country is able to proceed with an adjustment in its foreign exchange rate amid external noise and speculative pressure,’ the Economic Information Daily quoted Zhu Guangyao, head of the ministry’s international department as saying.
   ‘The higher external pressure, the louder the outside noise, the more they will hinder China’s further reforms of the exchange rate regime,’ Zhu was quoted as saying.
   Zhu repeated Beijing’s stance that foreign countries should leave China to decide the pace of its currency reforms because the exchange rate was a matter of its sovereign rights.
   ‘China’s direction of reforms is clear and its determination is firm, but it will not bow to foreign pressure,’ he said.

US and Indonesian trade officials have discussed intellectual property rights and investment along with efforts to fight corruption and illegal logging in the Asian country, officials said on Wednesday.
   The talks Monday and Tuesday formed part of a regular dialogue under a bilateral Trade and Investment Agreement, which for some countries has resulted in a free trade pact with the United States.
   Barbara Weisel, assistant US Trade Representative for Southeast Asia and Pacific affairs, and Halida Milyani, special assistant to Indonesian Trade Minister Marie Elka Pangestu, held ‘extremely constructive’ talks, the USTR office said in a statement.
   ‘The bilateral agenda included discussion about work under a joint action plan to improve intellectual property protection in Indonesia,’ it said. ‘They also discussed addressing market access issues related to customs and agriculture and measures to improve Indonesia’s investment climate.

Big Japanese companies were more confident about business conditions now and in the future on expectations for robust sales and profits, easing some concerns about the economic outlook, a survey released today showed.
   Separate data showed activity in the services sector grew in April, underscoring steady personal consumption as jobs and wages improve.
   But the data were not enough to convince economists that Japan was quickly emerging from its current soft patch, despite strong growth figures for the first quarter.
   ‘Overall, the data show that the economy is still at a standstill,’ said Tatsushi Shikano, chief market economist at UFJ Tsubasa Securities.
   The government’s business sentiment index for big companies rose to 0.9 for the April-June quarter from 0.6 in the previous quarter.
   Looking ahead, the index for big companies showed further rises to 11.3 for the July-September quarter and 11.8 for October-December, according to the survey by the Ministry of Finance and the Economic and Social Research Institute, an arm of the Cabinet Office.
   The index subtracts the per centage of firms saying domestic economic conditions are unfavourable from those reporting they are favourable.
   Leading the improvement in sentiment among big companies were food manufacturers, telecommunications equipment makers and entertainment outlets and eateries.
   ‘An improvement in the sales outlook has buoyed sentiment,’ a Cabinet Office official told reporters. ‘I guess you can say that sentiment may be bottoming out centred on large firms.’

Egypt will choose advisers for the privatisation of key state assets within weeks, the country’s investment minister said on Wednesday, adding that foreign direct investment is set to jump next year.
   Investment Minister Mahmoud Mohieldin said investment banks would be chosen to handle the privatisation of the Bank of Alexandria, one of the country’s big four public banks, and state owned land-line monopoly Telecom Egypt.
   ‘We are finalising the short-listing of the bidders for the privatisation and we are going to announce the name of the winning investment bank very soon ... within weeks,’ he said, referring to the Bank of Alexandria bid.
   He said a bidder for Telecom Egypt would be chosen on a similar schedule, although he did not expect the companies to be privatised until the end of the year.
   The sales are part of an Egyptian economic reform plan announced in July, and analysts see progress on the long-stalled privatisation process as key to opening the floodgates to offshore investment.
   As part of the plan, Egypt has also boosted the stake for sale in state tobacco monopoly Eastern Company to 49 per cent from 35 per cent, and will float up to 20 per cent of Misr Aluminium, one of the most profitable companies in the country, Mohieldin said.
   Mohieldin was speaking at the Global Borrowers and Investors Forum in London, the same week Egyptian stocks soared to record highs on the back of an oversubscribed IPO in Sidi Kerir Petrochemicals.

Malaysian prime minister Abdullah Ahmad Badawi Thursday urged Muslim nations to tear down tariff barriers and move towards forming an Islamic common market.
   Speaking to economic and finance ministers from the world's biggest Muslim bloc, the Organisation of the Islamic Conference (OIC), Abdullah said there was an urgent need to foster the economic development of the Muslim world.
   'We should actively promote and integrate markets and reduce tariffs as well as non-tariff barriers,' he said.
   'This can be done by promoting FTAs (free-trade agreements) among member countries while working towards an Islamic common market.'
   Abdullah lamented the absence of strong economic links among the 57- member OIC.
   'In the past, trade was a strong bond for Muslim communities ... Today, this bond has become very weak,' he said in an opening address to a two-day meeting of the Islamic Development Bank (IDB), the lending arm of the OIC.
   'We do not trade with each other as much as we used to do during the peak of our civilisation.'
   The premier said intra-OIC trade was only 12 per cent of the total trade of OIC countries. Combined, they only represented 7.0 per cent of global trade despite the fact they possess 60 per cent of the world's natural resources.
   Highlighting their wealth, he said that 10 of the 11 members of the powerful Organisation of Petroleum Exporting Countries (OPEC) are OIC members, with the exception being Venezuela.
   As the current chair of the OIC, Malaysia has been pushing for closer economic integration in the grouping and for member nations to develop trade links and bolster their Islamic finance sectors.
   It announced earlier this week that in the first step of the process, 14 OIC members had agreed to join a preferential trading system and that the others were expected to sign up once it is in place, probably by year's end.
   Under the system, countries will reduce tariffs on 7.0 per cent of product lines in a gradual three-stage process, while there will also be fast-track mechanisms, officials said.
   Abdullah said that apart from raising money from financial markets to help economic development, the IDB could look at indigenous sources of funding in member countries.
   'This is important as the financing needs are large and cannot be satisfied through conventional means,' he said.
   'For instrastructure financing alone, it is estimated that the IDB members will require about $741 billion over the next 10 years.'
   The premier suggested that the IDB establish an OIC infrastructure bond fund to which the central banks of OIC countries could contribute, with the proceeds to be used for major projects in member nations.

The US administration is threatening a wine war with Europe as French producers target American consumers with new brands such as 'Fat Bastard' and 'Red Bicycle'.
   Washington is demanding a new wine accord by July 15 to replace one which expired in 2003 and which would enshrine American wine-making practices banned in Europe.
   These include adding oak wood chips to barrels of wine to hasten the ageing process, adding water to must (the grape juice before fermentation is complete), and the use of ion extractors to reduce acidity.
   Representatives of struggling French wine producers appealed at the international Vinexpo wine fair in southwestern Bordeaux this week to Agriculture Minister Dominique Bussereau and External Trade Minister Christine Lagarde to protect their interests in the negotiations.
   European Union officials, pushed by traditionalists, are so far refusing to extend a current dispensation allowing the American practices, but US officials say that if no agreement is reached they will tighten application of the Bioterrorism Act.
   This law, introduced after the September 11 2001 attacks in the United States, covers imports of all food and drink.
   Patrick Ricard, a major figure in the industry, with interests in Britain and Australia as well as France, called for pragmatism.
   'Better a bad agreement than no agreement at all,' he declared, though adding wryly: 'If there is no agreement, I'll sell more Australian Jacob's Creek in the United States.'
   France is the European country the most affected, with exports of wine and spirits to the United States worth 1.6 billion euros (1.9 billion dollars) last year. Its wine industry is in crisis, however, a result of overproduction and stiff competition from suxh countries as South Africa, Australia and Chile.
   At the trade fair, meanwhile, a huge biennial event attended by more than 40,000 professionals from around the world, French producers are showing off their ideas for conquering the United States.
   Consumption of wine in France is dropping, but Americans have increased theirs from eight to 13 litres a head over the past 10 years, French trade officials say, with 60 million Americans now drinking wine.
   'Fat Bastard', which has a label picturing a hippopotamus, is doing well there, along with 'Wild Pig', both produced by the Gabriel Meffre company in the south of France.
   'We sold five million bottles in 2004 and we're working toward 10 to 12 million bottles in two or three years,' said export manager Anthony Taylor.
   The company is also selling a wine targeted at Latin-Americans and labelled-in Spanish-'Tres Bandidos' (Three Bandits) -- with a label apparently shot through by pistol bullets.
   Another company in the south of France, Yvon Mau, is marketing a wine called 'You', selling for five to six dollars in the United States, and which has a screw-top.
   'We should be able to sell two million bottles a year from 2007,' said its chief executive officer, Francois Mau.
   'Red Bicycle' produced by the Sieur d'Arques cooperative in the south, has a label showing a Frenchman on a bicycle, wearing a beret, and followed by a dog with a baguette in its mouth.
   In 2004, world production of wine topped out at some 287 million hectolitres, a nearly 10 per cent increase over 2003, and close to the absolute record of 296 hectolitres set in 1992, according to statistics compiled by the International Organisation of Vine and Wine.
   One hectolitre is the equivalent of 133 bottles of wine.
   At the same time, overall consumption worldwide has remained largely stagnant, increasing less than two per cent from 227 million hectolitres in 1996 to 230 million in 2004.
   That adds up to production of more than 50 million hectolitres more wine than is drunk, roughly the equivalent of the entire annual production of the Bordeaux region.

China, fresh from reaching a textiles accord with the European Union, said on Wednesday it hopes new talks with the United States can start as soon as possible.
   China canceled export quotas at the start of the year in line with the end of a global quota system. But surges in textile and clothing exports upset Europe and the United States which sought to impose safeguards.
   China agreed to limit annual growth in exports of various categories of textiles to the European Union to between 8 and 12.5 per cent, averting a possible trade war.
   But it is still negotiating with the United States.
   Zhao Hong, assistant representative of the Trade Negotiation Office under the Ministry of Commerce, told Xinhuanet.com, China's largest news Web site, that China and the United States had briefed each other on their 'preliminary stances' in the first round of technical talks which began on Friday.
   'The two sides both have the intention to resolve the issue through cooperation,' said Zhao. 'We are working vigorously and hope the second round of talks can begin as soon as possible.'
   She said China hoped the disputes can be resolved through bilateral negotiations, but refused to rule out the possibility of seeking World Trade Organization (WTO) intervention.
   China has stressed that the limit on China's textile goods and garments would harm the interests of not only Chinese businesses, but also consumers, dealers and importers in the United States.
   Lu Jianhua, director of the foreign trade department of the ministry, told the Web site that US cotton producers may also eventually suffer from the limit on imports of Chinese clothing.
   Many Chinese textiles exporters have enjoyed better business since the agreement with the European Union, state media reported, attributing the rise to the removal of uncertainty.
   'The deal reduced the harm toward China's textile industry to the lowest level,' Cao Xinyu, deputy director of the China Chamber of Commerce for Import & Export of Textiles, told state radio.
   Li Linmin, vice president of a textile import and export company, was equally exuberant.
   'These days, our orders have recovered very fast and our prices will rise too.'

Saudi Arabia's oil revenues will grow 15 per cent this year to 398 billion riyals ($106 billion) on the back of high global prices, setting the stage for a record budget surplus, a leading Saudi bank said.
   National Commercial Bank (NCB) said the combination of high prices and increased production will push oil income in the world's biggest crude exporter well beyond the conservative 231 billion riyals forecast in the Saudi state budget.
   NCB's first quarter report was prepared before world oil prices hit new records this week close to $60 a barrel.
   Non-oil revenue this year of 49 billion riyals will push total government income to 447 billion riyals, the bank said.
   Even with predicted government overspend of 30 billion riyals, which would raise expenditure to 310 billion, Saudi Arabia is headed for a record surplus of 137 billion riyals, according to the bank's forecast.
   That would be the third surplus in a row after 20 years of nearly continuous deficits.
   'Oil prices in 2005, due to tight oil supply, could turn out to be higher than what was implicitly estimated in the budget, thereby giving the government more confidence to even surpass its planned spending while aiming to reduce the public debt,' NCB said in its report.
   Saudi Arabia has reined in public debt to around 66 per cent of gross domestic product from 119 per cent five years ago. It has also used its surpluses over the last two years to build up foreign reserves and increase spending on infrastructure projects neglected during years of low oil prices.
   The bank said a two-year upswing in stock market and real estate prices should continue through 2005, as long as oil prices remain buoyant and the government is able to contain militant attacks which scared off some investors last year.
   'Moreover, lagged expenditure effect of the rising public spending in 2004 is expected to continue well into 2006 as new projects and public programmes get commissioned this year,' NCB said in its report.
   It predicted nominal GDP growth of 9 per cent this year, down from 16.9 per cent last year. Private sector GDP growth should reach 7.0 per cent after 6.8 per cent last year, it added.

Sony's new chief said Thursday he will push the electronics giant beyond cost cuts by extending its current three-year business revival plan and breaking down barriers among employees.
   Howard Stringer, the iconic Japanese company's first foreign chief executive officer who officially assumed the post Wednesday, said he would focus more on revitalising the huge global organization.
   'In a recent meeting with senior managers, I asked the
   group to first, 'please become Sony United',' he told reporters. 'We have to talk to each
   other.'
   He said while it had taken some years he had broken down the barriers and achieved stronger synergies between Sony's movie, music and electronics operations in the United States.
   'I will do it again in Japan,' he said.
   Stringer, who is also Sony chairman, said the company would release a new business strategy in late September.
   'Cost-cutting is one thing but growth is even more vital,' he said.
   He takes over Sony at a time when a cut-rate war in the electronics sector is eroding profits and competitors have to prove increasingly innovative, as seen with Apple and its iPod.
   Analysts and investors have questioned Sony's three-year business plan to the March 2007, which calls for a 10 per cent profit margin.
   Stringer said the company would extend the period of the current plan without elaborating.
   Denying the possibility of drastic job cuts, he said 'cost-cutting and axing are not solutions of all problems.'

Genetically modified foods currently on the market are unlikely to present new risks for humans, the UN's health agency said Thursday while urging a more cautious approach to future GM products.
   The World Health Organisation insisted in a study that procedures for checking new food products and genetically modified organisms needed to be adapted regularly to fast-paced change and innovation in the biotechnology industry.
   Public perceptions or social concerns about the costs and benefits of GM foods must also be taken more seriously, the study said.
   More international harmonisation was necessary to prevent a 'genetic divide' forming that could deprive more sceptical nations of acknowledged production or nutritional benefits of some GM foods, according to the WHO.
   'GM foods currently available on the international market have undergone risk assessments and are not likely to present risks for human health in any other form than their conventional counterparts,' the study said.
   No health problems had been found so far, it added.
   International guidelines for assessing the risk of GM foods, which are governed by the WHO and the UN's Food and Agriculture Organisation (FAO) were 'adequate' for measuring the safety of current GM produce, the study found.
   However potential risks should be assessed on a 'case-by-case' basis, taking into account the individual characteristics of each new genetically modified organism or foodstuff.
   The study acknowledged gaps in current knowledge, notably over the issue of food allergies.
   'A better understanding of the impact and interaction of food with the immune system is required to decipher how and whether conventional and GM foods cause specific health and safety problems,' it said.
   The three-year study was compiled by ten national regulators and experts with the WHO's food safety department, to try to establish an international 'knowledge base' for the evaluation of biotechnology in food production.
   It followed widespread concerns or doubts in recent years about the sale of food made from genetically engineered crops such as wheat, maize, tomatoes and potatoes, and their possible long-term impact on health.
   In 2002 several southern African countries rejected food aid from the United States because it included genetically-modified corn
   The issue has also generated a trade dispute between the United States, where authorities have widely embraced GM foods, and the European Union, where a more cautious approach prompted a ban until earlier this year.
   GM crops cover almost four per cent of global arable land, according to the study.

French aerospace group Snecma, which supplies engines for Indian military helicopters, received the government's nod Thursday to b
   uild spare parts for civilian planes in collaboration with a domestic aircraft-maker, an official said.
   The Indian cabinet approved the 50:50 joint venture between Snecma and state-run Hindustan Aeronautics Ltd (HAL) and said India would invest 500 million rupees ($11.6 million) to kickstart the collaboration.
   'The formation will lead to outsourcing of aeronautical engine components by HAL and Snecma at competitive rates,' Defence Minister Pranab Mukherjee said.
   'Snecma will transfer technology to HAL and buy all products of the joint venture company initially,' Mukherjee said.

Pakistan has refused to import diesel from India saying the price was on the higher side. The decision was conveyed to Indian Oil Minister Mani Shankar Aiyar's recent visit to Islamabad.
   'Although the import of diesel from India continues to be in the Commerce Ministry's negative list, the price offered to Pakistan by India is much higher than the Middle Eastern rates,' The Dawn quoted an unidentified official as saying.
   According to the paper, the official said that Indian diesel was about 3-4 dollar per ton costlier than that of
   Kuwait and other Arab countries.
   He added that the question regarding removal of import of Indian diesel from the negative list might be taken up when the foreign secretaries of the two countries meet later this year as a part of composite dialogue.
   The official further states that even if India reduced its diesel prices, import from New Delhi through land route was not possible in the near future owing to Pakistan's internal commitments.
   New Delhi had informed that it had surplus refining capacity available in both public and private sectors near borders with Pakistan in the states of Gujarat and Haryana. Moreover, the Indian Oil Corporation (IOC) has a major depot at Jalandhar.
   India had offered to supply diesel to Karachi by sea
   from Jamnagar and by tankers from Jalandhar to Lahore. The IOC had separately asked Pakistan State Oil (PSO) to include its name in the list of pre-qualified suppliers.

The dollar climbed against the euro on Thursday as dealers focused on the possibility of European central banks cutting interest rates to spur economic growth, analysts said.
   The euro fell to 1.2084 dollars in early European trading, from 1.2124 late on Wednesday in New York. The dollar stood at 108.86 yen from 108.83 on Wednesday.
   ECB rate cut expectations were boosted this week when the Swedish central bank reduced the cost of borrowing by a larger than predicted half-point while analysts reckoned on a cut by the Bank of England (BoE) in August.
   While the ECB is being urged to cut rates from 2 per cent to help boost anaemic economic growth, the US Federal Reserve is poised to continue raising the cost of borrowing from the current 3 per cent in a measured manner, possibly to 4 per cent by the year's end.
   The euro was changing hands at 1.2084 dollars against 1.2124 late on Wednesay in New York.

Oil prices traded higher today after a two-day retreat, staying within sight of $60 a barrel after US data showed demand in the world's largest energy consumer running strong in spite of ballooning costs.
   Wednesday's US inventory figures provided little fresh direction. Crude oil stocks eased further from recent six-year highs, but product supplies rose as refiners worked at near full- throttle to meet demand.
   The data were in line with expectations. US light sweet crude CLc1 was up 30 cents at $58.39 a barrel in Asian trading, having slid 95 cents or 1.6 per cent a day ago.
   On Tuesday, the front-month contract hit a high of $59.70 a barrel, a record since the exchange started trade
   in 1983.
   US demand for distillates, which include heating oil and diesel, has risen 6.9 per cent from a year ago while stockpiles are still below average, driving worries that refiners may be ill-prepared to meet peak winter demand for the fuels.
   Oil prices have soared nearly 35 per cent since the start of the year, averaging about $10 more than in 2004, as hefty crude production from OPEC does little to assuage concerns about the ability of refiners to produce enough oil products.
   The extra OPEC oil helped boost US crude stocks to a six- year peak last month, although they have fallen for the past three weeks as refiners return from maintenance.
   Gasoline inventories nudged 200,000 barrels higher last week to stand 4.5 per cent higher than last year, adding to confidence that they will last the peak-demand summer driving season.
   Distillate inventories rose 1.3 million barrels and are only 0.7 per cent higher than this time in 2004.
   Total US oil product demand over the last four weeks is up 1.7 per cent from a year ago, with gasoline consumption rising 2.5 per cent but distillates leading the pack.
   Those gains have coincided with greater diesel consumption in Europe, where it is increasingly the motor fuel of choice, and in No. 2 energy consumer China, where many businesses use it to fire oil-powered generators during summer electricity shortages.
   Gains have also been spurred by renewed worries about supplies from producer countries after a threat against Western consulates in OPEC member Nigeria and a potential workers' strike in No. 3 oil exporter Norway, which was averted at the last moment.

Asian stocks closed mixed on Thursday in cautious trade with near record high oil prices again dominating sentiment and forcing many investors into the sidelines.
   World oil prices rebounded amid fresh fears of a supply crunch during the northern hemisphere winter. This was despite a reassuring US stocks report and an end to a threatened oil strike in Norway.
   And the general mood here reflected the overnight performance by Wall Street with Asian markets closing flat or tending slightly higher. Gains were also capped in some key markets which have recently struck resistance levels.
   South Korea stood out with solid gains on strong liquidity amid an easing of tensions with Pyongyang while Thailand
   was sharply higher amid speculation that Asian currencies will strengthen should the Chinese yuan be revalued.
   Australia made a modest move into positive territory with investors making portfolio adjustments ahead of the June 30 end to the financial year.
   But it was the Hong Kong market that stole most international interest after China National Offshore Oil Corp announced a bid to buy US oil major Unocal for 18.5 billion dollars cash, trumping a rival offer by Chevron Corp.

CSE closes
higher
Trading at Chittagong Stock Exchange closed higher Thursday with the gainers dominating the losers. The CSE All Share Price Index increased by 18.17 points or 0.54 per cent to close at 3337.49 points from Wednesday’s 3319.32 points. The CSE-30 Index also enhanced by 21.29 points or 0.68 per cent to close at 3129.29 points from 3108.00 points of the previous trading day. Of the total 54 issues traded Thursday, 42 gained, four declined and eight remained unchanged. Some 1,965,742 shares and debentures worth Tk 4.76 crore changed hands today as against 991,442 shares valued at Tk 5.80 crore of the previous trading day.
— UNB

Hong Kong gold prices close lower
Hong Kong gold prices closed lower Thursday at 435.90-436.40 US dollars an ounce, compared to Wednesday’s close of $437.40-$437.90. The market had opened at $438.20-$438.70.
— AFP

FedEx profit rises
FedEx Corp, the world’s largest air-express carrier, on Thursday posted a 9 per cent increase in quarterly profit on global economic growth, but said first-quarter earnings could fall below Wall Street estimates due to high fuel prices. Shares of FedEx, considered a gauge of economic health because it carries products ranging from raw materials to finished goods, fell $3.22, or 3.7 per cent, to $84.90 in premarket trading on Inet. Net income rose to $448 million, or $1.46 a share, for the fourth quarter ended May 31, from $412 million, or $1.36 a share, in the year-earlier quarter. Sales rose 10 per cent to $7.72 billion from $7.04 billion. Analysts, on average, expected FedEx to earn $1.48 a share on sales of $7.82 billion, according to Reuters Estimates.
— Reuters

IBM to introduce new consulting practice
IBM, the world’s largest computer maker and technical consultant, said it will introduce a new consulting practice on Thursday to help corporate customers more effectively manage global logistics. Bob Moffat, the IBM executive who has wrung billions of dollars in cost-savings out of IBM’s own operations in recent years, said the company is seeking to package up consulting services, software automation technology and its own expertise in global computer logistics as set of services for customers. Moffat, 48, a fast-rising IBM executive, has been tapped to lead the new supply-chain consulting practice—which economists estimate represents as much a $3 trillion global market in which companies procure goods and services.
— Reuters

US weekly jobless claims fall
New US jobless claims fell 20,000 to a seasonally adjusted 314,000 the week ended June 18, the Labor Department said Thursday. It was the lowest since April 16. The figure was better than the 330,000 expected by economists, suggesting some improvement in the labor market. The four-week average of jobless claims, seen as a more reliable indicator, fell 2,500 to 333,000.
— AFP

Yukos controversy slowing Russian growth
Russia’s economic growth is slowing, inflation risks rising, and controversy over the government break-up of the Yukos oil giant is partly to blame, the International Monetary Fund (IMF) said Thursday. Russian gross domestic product (GDP) will rise by about 5.5 per cent this year, below the 7.1 per cent growth in 2004, the IMF said at the conclusion of an annual fact-finding mission to Russia. The GDP fall-off coincides with a weakening in oil production caused by the break-up of Yukos — formerly Russia’s biggest oil producer — and a lack of capacity in extraction and transport facilities. ‘The Yukos affair appears also to have taken a toll on the investment climate as investment growth began to decelerate from mid-year as well,’ the international creditor said. The IMF criticised the government’s decision to reach increasingly into a stabilisation fund created from soaring oil revenues in order to cover social spending bills. ‘This risks exacerbating the slowdown by increasing the already high inflationary pressures.’
— AFP

Hong Kong inflation rises in May
Hong Kong inflation picked up in May to 0.8 per cent after a year-on-year increase of 0.5 per cent in April, official figures showed Thursday. A government spokesman said overall inflationary pressures remained modest despite the upturn, with prices of most commodity items recording only mild increases. ‘As consumer demand continues to strengthen, consumer prices are expected to edge up gradually in the months ahead,’ he added. For the first five months of 2005, prices rose 0.5 per cent from a year earlier.
— AFP

Vietnam consumer prices up 7.6pc
Vietnam’s consumer prices rose 7.6 per cent in June from a year earlier and were up 0.4 per cent compared with May, preliminary figures showed Thursday. Food prices, which form half of the basket of goods on which the consumer price index (CPI) is based, rose 10.0 per cent from a year earlier with rice prices up 7.8 per cent, according to Vietnam’s General Statistics Office. Prices for pharmaceutical products and health care services rose 5.0 per cent, construction materials were up 5.7 per cent while the cost of tobacco and beverages increased 4.5 per cent. Gold increased by 7.9 per cent. The US dollar was up 0.5 per cent against the dong compared with a year ago. Last year, inflation was officially controlled at 9.5 per cent.
— AFP

Australia calls for greater access for Qantas
The Australian government called for Qantas Airways to be given better access to European routes Thursday just a week after dismissing a request from the flag carrier’s arch rival Singapore Airlines to lift restrictions on its own network. Transport minister John Anderson said he was gravely concerned by Qantas’ failure to get better access to European air routes. ’I am really concerned, really concerned, that Qantas just does not have the access it needs into Europe and into London particular,’ Anderson told reporters. This global obsession by many governments to have their carrier at whatever cost to the taxpayer, is a real problem for us, he said.
— AFP