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A huge hike in domestic prices of tea gives traders a windfall, but is crowding out the foreign players in the auction market in the port city, the hub of tea wholesale trade.
   If the trend continues, the industry would risk losing its lucrative export market, tea officials and brokers said.
   Sudden jump in tea auction prices was caused by a supply shortfall as the decade’s
   worst drought hit the country’s tea production this year, they added.
   ‘Prices of our tea in the auction market marked an unusual increase, forcing foreign buyers out of the market. Prolonged drought lessened the tea output in gardens and caused the price hike,’ said Feroz Ahmed, former chairman of the Tea Traders Association of Bangladesh.
   ‘Our foreign buyers remained absent from the weekly auctions here from the beginning  of the season as they failed to compete with local buyers who offer higher prices,’ he said, adding that local buyers are ready to pay more than Tk 100 for a kilogram on an average, while foreign players stick to Tk 80.
   ‘If such a price gap continues, tea export would become really difficult,’ the senior tea trader said.
   A total of 45 auctions are held in a season that continues from April to March.
   He, however, hoped that the foreign buyers would be back to the auction market after the ‘price correction’ expected in the days ahead when gardens would increase supplies.
   The deputy director (trade) of state-owned Bangladesh Tea Board,  Nabi Hossain, said,
   ‘Our tea export may be hampered this year as its prices in the auction market rose very high while the local buyers became so active.’
   Salman Ispahani, managing director of a leading tea company MM Ispahani Ltd, said, ‘Our tea gardens were badly affected by the severe drought which was worst of its kind in the decade. So the output might fall this year affecting our export also.’
   He, however, said the company looks to recover production loss if there is favourable climate and adequate rainfall in the days to come.
   According to official reports, during July to March of the fiscal year 2005-06, about 8.4 million kilograms of tea were exported as against 11.6 million kilograms exported during the corresponding period of the year before.
   Bangladesh in its 156 gardens, mostly located in Sylhet, produced 58.62 million kilograms of tea in 2005, up from 56 million kilograms produced in the year 2004, official figures said.

The private and public institutions alike should come forward to establish and implement corporate governance practices in Bangladesh, said Asaduzzaman, the chairman of University Grants Commission, on Saturday.
   He was speaking at a workshop on corporate governance organised by Bangladesh Enterprise Institute in association with the Association of Management Development Institutions of Bangladesh at Gulshan in Dhaka.
   AMDIB members include Institute of Business Administration, North South University, East West University, Academy of Planning and Development, Janata Bank Training Institute and Bangladesh Bank Training Academy among other leading business schools and management development institutions in Bangladesh.
   Managing director of the PKSF, Fakhruddin Ahmed, said that the teaching community can play a significant role in establishing corporate governance in Bangladesh.
   Corporate governance has to be linked with the other objectives of the business and the expectations of the shareholders, he also said.
   Sonali Bank chairman, Mirza Azizul Islam, said that there had been significant improvement in the corporate governance status in Bangladesh due to the stringent control and monitoring of the Securities and Exchange Commission.
   Compared to 2004, 50 per cent more listed companies held their annual general meetings and submitted their financial reports in 2005, said Aziz, also former chairman of the SEC.
   The SEC launched its own guidelines on corporate governance for the listed companies in January, 2006.
   IDLC managing director, Anis A Khan, advocate of the Supreme Court Nihad Kabir, also spoke on the workshop attended by the teachers of the AMDIB member universities and management development institutions.
   BEI president, Farooq Sobhan, and IBA director and AMDIB president, Iftekhar Ghani Chowdhury chaired different sessions of the workshop.

The Federation of Bangladesh Chambers of Commerce and Industry on Saturday gave a mixed reaction to the proposed budget of the next fiscal.
   At a press conference the leaders of the country’s apex trade body praised many budgetary measures including expanded allocations for education, agriculture and social sectors and also the reduction of duty on industrial raw materials and essential commodities.
   In the detailed formal observations, prepared from budget appraisal meeting of the board of FBCCI, it cautiously criticised some measures including low focus on power sector development, imposition of income tax on all enterprises, incentives for exporters and continuation of black money whitening provision.
   ‘The federation lauds highest allocations for education and social sectors, reduction of duty on essential commodities and industrial raw materials,’ said Mir Nasir Hossain, president of the federation.
   On expanded allocation for government’s Annul Development Programmes Nasir said, ‘We are concerned over implementation on the programmes as previous experiences have not been good.’
   Nasir expressed dissatisfaction over continuation of the provision for whitening black money. ‘The provision has been continued for buying non-productive properties – cars, homes and, more regrettingly, it has been deterred from productive sector investments.’
   He said that the provision in the budget for payment of Tk 5,000 or 0.5 per cent of the turnover as tax for companies irrespective of loss or profits was against the fundamental principles of income tax.
   The FBCCI president said the deduction of accelerated depreciation in capital machinery would discourage industrialisation.
   The FBCCI leader regretted that the government did not bring the NGOs, lawyers, doctors, and other professionals under the VAT net although it was expanded in various services.
   The boss of the apex chamber was frustrated over absence of mechanism on how the government would collect huge amount of taxes and improve the tax administration. ‘There is no clear description here.’
   Clearly supporting the government move on fuel price increase, Nasir said ‘It was inevitable and there was no option.’

Inflationary pressure, electricity crisis and garment unrest are among the factors that will continue to pose challenge to the government in the next fiscal as well, as the proposed
   new budget lacks a sense of direction to get rid of those problems, a local research organisation says.
   Although the government is taking credit of higher GDP growth and hoping this year’s growth somewhere near 7 per cent, it has failed to make any effect in poverty reduction during the last five years, said Atiur Rahman, chairman of Unnayan Shamunnay.
   The number of poor people dropped at a rate of 0.5 per cent during the period, much lower than 3 per cent rate as envisaged in the PRSP to meet UN millennium development goals of halving poverty by 2015, he pointed out.
   The next government would land in a critical situation to fulfill the budgetary target of huge revenue earning of Tk 52,542 crore as the import duty on intermediate goods has been slashed.
   Depleting incomes from import revenue would force the government to borrow heavily from banks to finance the deficit, ultimately fuelling the inflation further.
   He observed that the real allocations proposed for health, electricity and education sectors would not be much supportive to achieve the MDGs and the PRSP targets.
   Per capita allocation for health service is only less then one taka (ninety-three paisa) daily, which needs to be at least two per cent of the GDP.
   Possibility to bring out any change in electricity sector remains bleak in terms of allocation proposed in the new budget, the economist felt.
   Terming the proposed budget as ambitious and conducive to corruption, Atiur said the
   budget has increased the target of indirect tax like VAT to Tk 14,319 crore, which is higher by 19 per cent than the amount expected in the revised budget of 2005-06. Such increase in indirect tax revenue would fuel the price hike of essentials in the next fiscal.
   The price increase of petroleum products specifically of kerosene and diesel, announced on the day of budget placement on June 8, would increase the transport charge and commodity prices as well, ultimately adding to the sufferings of the common people, the economist said.
   In short, the budget will be difficult for the three governments, including the present one, to implement, and whatever benefit it may yield, it would go to the ruling party people, not the poor, he felt.

Unnayan Onneshan, a local research organisation, has said that budget deficit has been kept ‘artificially lower’ in the proposed budget, while major sectors would see lower allocations in real terms if inflation is adjusted.
   ‘Given the inadequate foreign grants and limited sources of non-tax revenue collection, it seems that the government has kept the budget deficit at artificially lower rate by setting an ambitious target of tax revenue collection,’ read the organisation’s ‘rapid assessment of budget for fiscal year 2006-07.’
   As there is a sharp increase in the inflation rate, the proposed increase in allocation for different sectors may not go up in net terms compared to that of the previous year, it said.
   The report showed that the real increase in the development allocation for agriculture is only 3.78 per cent compared to non-adjusted figure of increase by 11 per cent.
   It also revealed that budget document showed development allocation for education and religion increased by 34.8 per cent in the proposed budget from the outgoing fiscal year’s revised budget.
   ‘But after the adjustment of inflation, the rate declined to 26 per cent,’ it added.
   Similarly, development allocation for transport has actually increased by 8.31 per cent, after adjusting inflation, while the official estimation of increase is 15.9 per cent.
   ‘The only sector shows a negative growth both in terms of ADP share and allocation in absolute amount is the power sector,’ said the assessment.
   It was 15.73 per cent of ADP in the revised budget of current fiscal year, and further decreased to 12.16 per cent in the proposed allocation for next fiscal year, meaning that the allocation in absolute amount slipped to 6.53 per cent.
   ‘The reduction is sharper than in any other sector of the economy. The allocation for power makes the situation more acute while the inflation-adjusted allocation is calculated. It shows more than 12 per cent decline in allocation undermining the urgent need of resolving the power crisis’.
   The Unnayan Onneshan also said that the government’s tax structure is regressive in nature as the dependence on direct tax that includes tax on income and corporate profit is lower than the indirect tax like value added tax and import duty.
   ‘The regressive nature of tax structure is one of the main reasons which contributed to widen income inequality between rich and poor over the years,’ it said.
   In the outlook analysis for the nest fiscal year, Unnayan Onneshan said that the upcoming fiscal would be a critical period for the investors for several reasons in terms of both political and economic perspectives.
   ‘Election could dampen the overall investment climate in the upcoming fiscal as the political unrest continues to prevail across the country,’ it said.
   ‘The election-oriented and ambitious public expenditure, which is less likely to be growth oriented, only could increase unproductive spending spree ahead of the elections, therefore, spur the inflationary pressure despite the central bank’s desperate effort to contain inflation by shrinking money supply into the economy,’ it added.
   But the contractionary monetary policy, which is further likely to limit the credit growth, would in turn contain the industrial activities, observed the research organisation.
   ‘Therefore, one can find an economy of higher than projected inflation rate and lower GDP growth in fiscal 2006-07,’ it concluded.
   The assessment was prepared by economists and researchers Rashed Al Mahmud Titumir, Jakir Hossain, M Iqbal Ahmed and Golam Sarwar.

The world’s most influential finance chiefs convened in Saint Petersburg Saturday and were to call for greater international cooperation on energy policies and increased investment in the energy sector, according to a draft text of their statement.
   Ministers from the Group of Eight were also expected to highlight risks to the world economy from rising oil prices and to urge urgent action to ensure the success of the Doha Round of trade liberalization talks.
   The draft joint statement to be issued later in the day in Russia’s second city Saint Petersburg suggested a range of responses to the current energy squeeze that has seen oil prices break records beyond 70 dollars a barrel.
   ‘We call for comprehensive action by both energy producers and energy consuming countries to facilitate investment in the energy sector, improve energy efficiency,’ the draft seen by AFP said.
   The ministers, representing Britain, Canada, France, Germany, Italy, Japan, Russia and the United States, recommended a worldwide standard for reporting of oil reserves in order ‘to promote greater transparency and reliability in energy markets data.’
   The draft statement made reference to a long-delayed agreement, or charter, between Russia and the European Union under which the two sides would regulate their massive energy trade.
   ‘We recognize the importance of the principles of the energy charter, of diversification of energy markets and supply sources and of strengthened emergency response cooperation in ensuring energy security.’
   About a quarter of the European Union’s natural gas supplies are imported from Russia and many in EU capitals are nervous about over-dependence. Meanwhile, Russia complains that its energy companies are restricted from expanding business into Europe.
   The finance chiefs also declared their opposition to protectionism and called for ‘urgent progress’ to conclude the Doha Round of trade liberalization, according to their draft statement.

The Dhaka Stock Exchange said that the proposed budget offered nothing new for the growth of the country’s capital market and expressed concern that the stock market would suffer due to the possible instability at the money market in the next fiscal year for increased internal borrowing by the government for deficit financing.
   ‘The proposed budget for the fiscal year 2006-07 has not offered any new incentives for the growth of the capital market, though it has retained the previous incentives intact, said Salahuddin Ahmed Khan, the chief executive officer of the DSE, at a press briefing organised by the DSE on Saturday.
   He, however, said that from the overall analysis, the DSE thought that the proposed budget was growth-oriented and market-friendly and it would contribute significantly to reduce poverty.
   He said that the budget proposed Tk 17,000 crore deficit of which Tk 12,000 crore is expected to come from external sources.
   ‘There is a good risk that domestic credit will increase significant as our historic pattern shows that releases of these funds are hardly successfully made, Salahuddin, who read out the DSE paper, said.
   Increased internal borrowing will destabilise money market and the country’s stock market will be the indirect sufferer of the instability of the money market, he said.
   The DSE, however, requests the government that it should collect the money by using marketable bonds and offloading government shares in the capital market to avoid the possible instability in money market, he said.
   In answering to a question from the journalists, Salahuddin said the proposed budget did not reflect any of the pre-budget proposals made by the DSE.
   In the pre-budget proposals, the DSE proposed to decrease the corporate tax on listed companies to 20 per cent from 30 per cent.
   The DSE chief executive said the government could include investment of black money to be white in marketable securities including government bonds and government owned company shares. These could be good investment option along with house, land and car, he said.
   Terming the proposed budget as ‘static’, the DSE senior vice-president, Ahmad Rashid, said the country’s capital market got nothing from the proposed budget.
   The DSE president, Abdullah Bokhari, presided over the briefing attended by the DSE vice-president, NUM Oliullah and directors.

Development analysts on Saturday termed the proposed budget of 2006-07 as a ‘fly-by- night process’ and a by-product of centralised and non-participatory politics.
   They said the budget beneficiaries would be the multi-national companies, developed country’s subsidised farmers and a vested group of people in the country while the budget has no focus on implementing the Millennium Development Goals and working plan of Poverty Reduction Strategy Paper.
   Campaign for Good Governance, a non-government organisation, organised the discussion at the Dhaka Reporters Unity auditorium on the reaction of the budget 2006-07.
   They said the government prepared the budget overnight under the pressure of the World Bank and the IMF as there was no participation of local government members, and even with the parliament members.
   Rezaul Karim Chowdhury, secretary of Campaign for Good Governance, said the government would have to take loan from the international monetary agencies and the local banks to fulfil the deficit budget and at the end of the day country’s per capita foreign debt would be around Tk 11,000.
   He said the main problem of annual development budget is not the allocation but implementation. ‘Only 30 per cent development works in the last two year’s budget were carried out and 70 per cent remain only in paper’, he added.
   At the same time the PRSP working plan implementation was in the same dilly-dally position, the development analysts observed.
   A total of 67.63 working plans of Poverty Reduction Strategy Paper are still in paper, 26.01 per cent have been half-done and only 6.35 per cent implemented.
   In local government and village affairs sector allocations were raised 6.88 per cent in the budget, social security network being raised 1.52 per cent.
   ‘But this budget allocation is contradictory while the public service sectors have been squeezed in the budget,’ said Abdul Awal, president of Campaign for Good Governance.
   He said the highest allocation was given in the education sector which has lots of sub-sectors.
   The Campaign demanded about 6 per cent of farm subsidy that is Tk 6,000 crore instead of the existing 1 per cent to make a level playing field for the local farmers with their products to compete with Indian farmers.
   It added the subsidy of Tk 1200 crore is 1 per cent of the total output, while the India provides 7 per cent that is Tk 66,000 crore.
   Though the allocation in the health sector was raised 16.34 per cent over the previous budget, the allocation is not sufficient to achieve the MDGs.

Country’s 60 per cent bamboos are used in construction of house and other purposes, 20 per cent in rural uses, 5 per cent in packaging, 10 per cent in pulp manufacturing and 5 per cent in other uses.
   This was stated by Nurul Islam, a research Officer of Bangladesh Forest Research Institute(BFRI), Chittagong.
   Nurul Islam said Bangladesh is endowed with a great variety of bamboo resource and has varied and suitable land for its cultivation.
   There are some 35 species of bamboos under 9 genera found in Bangladesh. Of them, 7 are naturally growing in the hilly areas of Chittagong, Chittagong Hill Tracts and Sylhet. Bangladesh being a subtropical country has only culm forming bamboo.
   Bamboo occurs as an under storey in the hilly forests and forms an important floristic composition. The naturally occurring bamboos in the hilly areas are morphologically thin walled and smaller in size in comparison to village bamboo.
   Bamboo grows well all round Bangladesh and it has inherent adaptability to survive even in the prolonged water logging condition during the rainy season. Now, this resource seems to be seriously threatened by habitat expansion and over-exploitation.
   Bamboos are nicely well adapted to a variety of uses for thatching houses, construction works and making agricultural implements. Bamboo is used in abundance in paper mills and rayon mills for its raw materials. Bamboo is in great demand in cottage industries for making various kinds of products.

The Dutch-Bangla Bank Limited has extended financial assistance amounting to Tk 18.5 lach to 17 NGOs engaged in rehabilitation of the disabled children of Bangladesh.
   The Dutch-Bangla Bank Limited managing director, Md Yeasin Ali, handed over the payment orders to the representative of the organizations at a simple ceremony at the bank’s training institute on June 05.
   The donation programme aimed at establishment of Braille press for printing books for blind students, making soundproof room for helping the disabled children with hearing impairment providing vocational training and medical services for the disabled women and children, establishment of rehabilitation centre for mentally retarded persons and skill development of the poor street children of Bangladesh.
   The deputy managing director(Operation) of the bank, Abul Hashem Khan, deputy managing director(Administration), KS Tabrez, and the coordinator of Dutch-Bangla Bank Foundation, Mozammel Hossain Khan, and representative form different NGOs were present on the occasion.

Many commodity prices continued to fall this week, mirroring a downward trend on global stock markets, with metals recording further heavy losses while crude futures also slipped.
   Plunging prices have left analysts pondering whether the metals markets have been gripped by a speculative fever over the past six months.
   Prices began to turn in the middle of May after a six-month rally that culminated in record highs for the price of cooper, aluminium, platinum, zinc, nickel, while gold and silver had struck their highest levels in 26 years.
   Soft or agricultural commodities, meanwhile, fared slightly better than hard commodities this week.
   On Friday, the Commodities Research Bureau’s index of 17 commodities fell to 340.30 points, from 345.64 points the previous week.
   GOLD: Gold prices sank close to a two-month low in reaction to the slaying of al-Qaeda’s chief in Iraq and a stronger US dollar.
   A stronger dollar makes commodities priced in the US unit on world markets more expensive for buyers using other currencies.
   Investors normally seek refuge in gold which is seen as a safe store of value in times of geopolitical uncertainty.
   SILVER: Silver prices slid to a two-and-a-half-month low.
   PALLADIUM AND PLATINUM: Platinum and palladium dropped in line with other metals. Platinum prices struck 1,191.50 dollars per ounce
   BASE METALS: Three-month aluminium prices declined to 2,528.50 dollars per tonne. Three-month nickel prices fell to 20,050 dollars per tonne Three-month tin prices plunged to 7,900 dollars per tonne
   OIL: Crude futures slipped after news of buoyant US energy reserves, as traders monitored geopolitical developments in oil- producing nations. US motor fuel supplies rose for the sixth successive time during the week to June 6, further dampening supply concerns in the peak-demand American driving season, while crude stockpiles also climbed. Owing to persistent violence and sabotage, Iraq struggles to produce 2.0 million barrels of oil per day, compared with 2.5 million before the US-led invasion of the country in March 2003. Added to the geopolitical picture on Thursday was news that five South Koreans taken hostage by Nigerian militants were freed, according to the Movement for the Emancipation of the Niger Delta, which had been holding them.
   SUGAR: Sugar prices enjoyed mixed fortunes. Sugar cane is used to produce ethanol, a cheaper alternative to motor fuel, or gasoline, which is refined from crude oil. On NYBot, the price of unrefined sugar for July delivery dropped to 15.09 US cents per pound, from 15.24 cents.
   GRAINS AND SOYA: Wheat, maize and soya prices beat a retreat, pressured by forecasts of favourable weather conditions which boost supplies.

The dollar traded mixed against the other major currencies Friday after the US trade deficit came in lower than analysts had expected.
   The euro eased to 1.2640 dollars at 2100 GMT from 1.2651 dollars late on Thursday in New York.
   The dollar edged down to 113.97 yen from 114.18 yen on Thursday.
   Data from the Commerce Department showed that the US trade deficit had risen by in April to 63.4 billion dollars.
   The figure was up from the March figure of 61.9 billion dollars, but lower than the Wall Street forecast of 65 billion.
   ‘The dollar derived some benefit from the trade numbers that didn’t come in as bad as expected,’ said Neil Mackinnon, chief economist at ECU Group.
   For much of this year, the US currency has been on the backfoot, partly because of the US current account deficit which is the equivalent to about 6.0 per cent of the country’s output.
   Global Insight economist Brian Bethune said a close look at the report offered some encouragement, because the price of oil moved higher but the volume of imports was lower.
   ‘This decline in the volume of petroleum product imports is a very welcome development, as it reflects stagnating domestic demand for petroleum products in response to the spike in prices,’ he said. ‘Underlying domestic supply and demand fundamentals in the petroleum markets appear to be improving.’
   Analysts noted Friday however that markets were monitoring the Group of Eight (G8) meeting of finance ministers in St. Petersburg, Russia, over the weekend.
   Energy issues were expected to top the agenda, with currency markets taking a backseat.
   In the longer term, market players expected the US deficit to become more of a concern however, especially if the US Federal Reserve called a halt to its cycle of interest rate increases.
   At the investment bank Calyon, senior currency strategist Mike Carey said he hoped the US trade deficit would improve as slower consumer spending trimmed import growth and a projected declines in the dollar helped exports.
   But until evidence of a sustained improvement emerged, the global interest rate outlook was tipped to dominate trading in currency markets.
   ECU Group’s Neil Mackinnon said that US inflation data due out next week would be crucial in determining whether the Federal Reserve raised its key Fed funds rate from the current 5.00 per cent at its next meeting on June 29.
   After 16 consecutive quarter-point rises, the Fed, under new chairman Ben Bernanke, has given mixed signals about its intentions ahead of the June meeting.

The London stock market will look to turn a corner next week after a bloodbath which has seen investors run for cover on inflation and interest rate concerns, analysts said.
   On Friday, London’s FTSE 100 index of leading shares ended at 5,655.20 points—down 1.89 per cent or a hefty 109.4 points from a week earlier.
   However, that marked an increase of 1.66 per cent from the previous day’s finish—but came hot on the heels of a 2.51-per cent plunge on Thursday.
   Global equities have mostly tumbled since US Federal Reserve chief Ben Bernanke suggested the current cycle of rate hikes, rather than being close to an end, might have still further to run.
   Also on the back of weaker commodity prices, the FTSE had plunged to an intra-day five-year low of 5,510.50 points on May 22 — erasing all of its gains won in 2006.
   Barclays Stockbrokers analyst Henk Potts said that markets were ‘spooked’ by the prospect of higher US interest rates.
   ‘When Ben Bernanke took over from Alan Greenspan as chairman of the Fed, he became the most powerful man in global markets and what we are seeing now is just how powerful his words can be,’ said Potts.
   ‘It has clearly made investors nervous. And it is not only happening in the US—interest rates in the eurozone and elsewhere also rising.’ ‘There is a lot of uncertainty about at the moment.’
   London’s FTSE is now almost 500 points lower than the five-year peak of 6,132.70 which it hit on April 21, when energy and mining groups were lifted by record commodity prices.

After Wall Street’s drubbing over the past month, the question for investors is whether the market is spooked by irrational fears about the economy, or presaging an ominous picture.
   The battering continued on the stock market over the past week, with the Dow Jones Industrial Average sliding 3.16 per cent to 10,891.92 and the tech-heavy Nasdaq tumbling 3.8 per cent to 2,135.06.
   The broad-market Standard and Poor’s 500 skidded 2.78 per cent to 1,252.30. The rout on Wall Street and other global stock markets comes amid heightened warnings from the Federal Reserve about inflation running too hot even as the economy is showing signs of cooling.
   This picture, outlined over the past week by chairman Ben Bernanke and other central bank policymakers on the Federal Open Market Committee, raised hackles about ‘stagflation,’ the dreaded scenario from the 1970s when inflation ran wild but the economy stagnated.
   Bernanke’s blunt warning Monday about the ‘unwelcome’ trend in inflation set the tone for the market over the past week.
   The new Fed chairman faces a dilemma of continuing the policy of rate hikes after 16 quarter-point increases, or allowing a cooling economy to take care of inflation. Most experts expect another rate hike June 29, but the picture after that is less clear.
   With the latest inflation figures above the ‘tolerance’ level of many economists, ‘This puts the FOMC in a tough spot because the signs are pointing to a slowing of the US economy which is what 17 rate increases tends to do,’ said Kevin Giddis, analyst at the brokerage firm Morgan Keegan.

Group of Eight finance ministers Saturday tackled the politically explosive issue of Russian-EU energy trade and urged greater cooperation in managing world oil and gas markets.
   A draft joint statement from G8 ministers meeting in Russia’s second city Saint Petersburg suggested a raft of responses to the current energy squeeze that has seen oil prices break records beyond 70 dollars a barrel.
   ‘We call for comprehensive action by both energy producers and energy consuming countries to facilitate investment in the energy sector, improve energy efficiency,’ the draft seen by AFP said.
   The G8 ministers—from Britain, Canada, France, Germany, Italy, Japan, Russia and the United States—recommended a worldwide standard for reporting of oil reserves in order ‘to promote greater transparency and reliability in energy markets data.’
   The draft statement made reference to a long-delayed agreement, or charter, between Russia and the European Union under which the two sides would regulate their massive energy trade.
   ‘We recognize the importance of the principles of the energy charter, of diversification of energy markets and supply sources and of strengthened emergency response cooperation in ensuring energy security.’
   About a quarter of the European Union’s natural gas supplies are imported from Russia and many EU capitals are nervous about over-dependence. Meanwhile, Russia complains that its energy companies are restricted from expanding business into Europe.
   The finance ministers of the G8 (Group of Eight) countries were joined for an initial session Saturday by counterparts and senior officials from Australia, Brazil, China, India, Nigeria and South Korea for talks on world trade.
   According to the draft statement, the G8 declared opposition to protectionism and called for ‘urgent progress’ to conclude the Doha Round of trade liberalization talks.
   ‘We are committed to fighting protectionism and to promoting liberalization of trade in agriculture, industrial goods and services as well as of investment,’ the ministers said.
   The Doha Round, launched in the Qatari capital in late 2001 and aimed at bringing the fruits of trade liberalization to developing countries, is currently foundering and in danger of missing an end-of-the-year target date for completion.
   In a separate statement, the draft of which was also seen by AFP, G8 ministers called for action on providing energy to parts of the world without electricity, especially in Africa, as a ‘lack of modern energy services is a barrier to economic growth.’
   Focus will be on energy for essential services, such as hospitals and schools, and also on providing cleaner energy that reduces air pollution, the draft statement said.

Canada’s unemployment rate in May fell 0.3 per centage points from April to 6.1 per cent, the lowest rate since December 1974, Statistics Canada said Friday, and far outstripping expectations.
   Some 97,000 new jobs were created in May, the government agency said in a statement. The ‘sizeable growth in employment’ also pushed the job rate to an all-time high of 63.2 per cent, it said.
   The increase in jobs was ‘roughly five times larger than the consensus outlook,’ said Warren Lovely, an analyst with CIBC World Markets.
   Employment was up in almost every sector in May from a year ago, Statistics Canada said.
   The largest gains in May came in finance, insurance, real estate and leasing; health care and social assistance; and public administration.
   High energy prices continued to fuel oil-rich Alberta’s boom, while increases in service industries offset declines in manufacturing sectors in Ontario and Quebec provinces. The three provinces led the way in job growth.
   The result is likely to put upward pressure on salaries and force the Bank of Canada to increase interest rates in the coming months, Lovely said.
   However, he added, disappointing new trade figures may also deter such a move.
   ‘For now, markets will assume the Bank of Canada will be prepared to hike rates a quarter-point at one of the two upcoming meetings, with still plenty of important economic releases to come before the July 11th rate date,’ he said.

The United States and South Korea ‘hit the ground running’ on an ambitious free-trade pact this week but major hurdles remain, not least in agriculture and autos, a US official said Friday.
   The two countries concluded their first week of negotiations on what would be the largest free trade agreement (FTA) clinched by the United States since the NAFTA North American deal in 1994.
   ‘Overall I think we’ve accomplished much more than usual for the first round of an FTA negotiation,’ Assistant US Trade Representative Wendy Cutler told reporters.
   ‘Some very difficult issues remain to be resolved, but we’ve definitely hit the ground running,’ she said.
   Teams led by Cutler and South Korean chief trade negotiator Kim Jong-Hoon succeeded in harmonising their agendas, so that they can at least talk from the same page in their race against time to clinch a deal this year.
   South Korea is America’s seventh-biggest trading partner and Asia’s fourth-largest economy. Bilateral trade last year totalled $72 billion, with South Korea enjoying a surplus of 16 billion.
   Supporters on both sides argue that a deal would boost growth, create jobs and secure a new level of ties between strategic allies who together face a threat from Stalinist North Korea.
   But the FTA talks must be wrapped up by the end of this year if US President George W. Bush’s administration is to get a deal through Congress before it loses its ‘fast-track’ trade promotion authority in July 2007.
   ‘We know we’re on an accelerated track,’ US Trade Representative Susan Schwab said. ‘We seem to be progressing ... at a far faster pace than some of our other FTAs in the past,’ she said.
   The Washington talks were dogged by a number of protests by Koreans angry at the prospect of South Korea turning into the ‘51st US state’.
   Drum-beating and chanting demonstrators claimed that an accord would drive up profits for US drug firms and create ‘terror’ for South Korean rice farmers.
   Two of the most difficult chapters—agriculture and automobiles—were barely touched by the negotiators, with the two sides agreeing to get down to thornier issues at their next round of talks starting July 10 in Seoul.
   The United States wants concessions in the auto market, alleging that South Korean taxes discriminate against larger foreign cars. US carmakers are meanwhile losing sales to Asian rivals such as South Korea’s Hyundai and Kia.

The United States will settle for nothing less at the WTO than an ambitious deal that truly tears down obstacles to commerce, new US Trade Representative Susan Schwab said Friday.
   Speaking a day after being confirmed by the US Senate, the successor to Rob Portman as the top US trade official rejected any ‘sweeteners’ or half-hearted improvements to existing global trade pacts.
   ‘If you do one of these (negotiations) once every generation, and if your objective is to liberalise trade, why would you settle for something that doesn’t do a whole lot to liberalise trade?’ she told reporters.
   While noting that the World Trade Organisation and the US government face a race against time, Schwab said that Washington would not accept anything other than ‘substantial increases in market access, meaning real new trade flows’.
   ‘If you can’t get real new trade flows, why bother doing the rest of the deal?’
   The WTO is struggling to craft a successful outcome to its ‘Doha’ round of talks by the end of this year.
   Developing countries want dramatic cuts to farm subsidies paid by rich powers.
   The United States and Europe want far more market access for their industrial products and services.
   Schwab noted that her department is under additional pressure as the US administration will lose its ‘fast-track’ ability to negotiate trade deals on July 1 next year.
   Admitting that Congress is unlikely to renew the so-called Trade Promotion Authority, she said the WTO must therefore get the outlines of a deal in place by next month to fit the political calendar. It all amounts to a tall order, with the WTO already having missed a series of Doha deadlines, Schwab acknowledged.

Japan plans to provide Asian nations, particularly China, with the technology to liquefy coal as part of a broader effort to reduce global dependence on crude oil, a report said Saturday.
   In coal liquefaction, petroleum fuels such as gasoline and kerosene are produced from powdered coal by applying heat and pressure.
   The industry ministry intends to tap proprietary technologies of the New Energy and Industrial Technology Development Organization (NEDO), an independent administrative agency under its control, the Nihon Keizai Shimbun said.
   As a first step, NEDO will join with Chinese energy companies Datang International Power Generation Co. and Xinwen Mining Group to conduct feasibility tests to determine how efficiently they can liquefy coal, the newspaper said, without citing sources.
   The two Chinese firms plan to start operating a liquefaction plant by around 2010, the Nihon Keizai said.
   Japanese engineering firms are expected to participate in the large project, for which construction costs are estimated at 100 billion yen (877 million dollars), the newspaper said.
   Japan has also entered talks with the Indonesian government over coal liquefaction projects,
   it said.

India Friday invited mega investment by American companies in its petrochemical sector, which is growing at nine per cent and has immense potential for high returns.
   The Indian Petrochemical market offers immense potential for high returns on investment across a large spectrum of commercial activity, Minister of State for Industry Ashwani Kumar told a gathering of over 50 CEOs of major corporations, including some NRIs in Greenbrier, Virginia.
   The sector, with a turnover of nearly $40 billion, was growing at nine per cent and was poised for an exponential growth, he told the gathering attended among others by senior executives of Dow Chemicals, Dow Corning, Exon Mobil, Total SA, British Petroleum and Akzo.
   ‘India’s per capita polymer consumption was only four kilograms as against China’s 26 kg and the world average of 25 kg per capita and, therefore, the Indian petrochemical market offers huge possibilities,’ said Kumar, who is leading a high powered delegation.
   The CEO conference is a sequel to the initiative federal Prime Minister Manmohan Singh had taken in September 2004 to attract mega investments in India.
   Underlining India’s commitment to being an enabler and facilitator in setting up Petroleum Petrochemical Investment Regions (PCPIRs) spread over 100-250 km areas, he said based on preliminary study and evaluation, the states of Karnataka, West Bengal, Orissa, Gujrat and Andhra Pradesh had been identified as possible destinations for setting up PCPIRs.
   In a separate meeting presided over by Governor of Michigan John Engler, who is also President of the National Association of manufacturers with a membership of over 30,000 American manufacturing companies, Kumar called upon major American Corporations
   to look to India as a manufacturing hub.

Russia and the World Bank agreed Friday to cooperate in projects that help poor countries in debt relief, infectious diseases, energy and development.
   Russian Finance Minister Alexei Kudrin and World Bank President Paul Wolfowitz, who met ahead of a meeting of finance ministers of the Group of Eight (G8) leading industrialised nations, agreed on a debt-for-development swap plan to channel $250 million for priority needs in sub-Saharan Africa, a joint statement after the meeting said.
   The two sides also agreed to help Central Asian countries in meeting the challenge of infectious diseases, especially the problem of malaria.

The board of directors of the Prime Bank Ltd in a recent meeting unanimously elected Captain Imam Anwar Hossain as the chairman and Shahnaz Quashem and Saheda Pervin Trisha as the vice-chairpersons of the bank. They are all sponsor directors of the bank.
   Imam Anwar Hossain is the chairman of Imam Group that encompasses shipping, insurance, leasing, cement industry, lubricant oil distribution and tourism. He is the sponsor director and first vice-chairman of Pragati Insurance Ltd. He is also the sponsor director of Prime Cement Ltd, Peoples Leasing, Pragati Life and Jamuna Resort Ltd.
   Shahnaz Quashem is a director of Associated Oxygen Ltd. Saheda Pervin holds the position of directorship of Prime Insurance Co Ltd, VIP Shahadat Poultry & Hatchery and VIP Shahadat Cold Storage.

Delta to recall
60-70 pilots
Bankrupt Delta Air Lines on Friday said it was recalling between 60 and 70 furloughed pilots. The company said the recalled pilots will begin training in late June and will return to line flying late summer. Airline consultant Robert Mann said Delta may be recalling the pilots in anticipation of increased pilot retirements. Delta could see a relatively high number of retirements by pilots in the wake of a newly ratified labour contract that grants the carrier about $280 million a year in concessions, he said.
— Reuters

US vehicle price war seen heating up in summer
Soft US vehicle sales in May, declining consumer confidence in the face of rising gasoline prices, and a weak sales forecast for the summer may spark a new rebate war among US automakers, according to analysts. With the companies gearing up to launch vehicles for the 2007 model year, most of them need to clear space on dealer lots that are now filled with 2006 models. Mike Jackson, chief executive of dealership group AutoNation Inc expects a form of clearance sale this summer. Ford Motor Co, whose US. sales fell 6 per cent in May, upped the ante last week by offering interest-free loans on most of its vehicles and an extra $1,000 in cash for gas.
— Reuters

Cables found cut on Airbus A380 at factory
The aircraft manufacturer Airbus has said that three cables were found cut on an Airbus A380 that was being assembled at its Toulouse factory in southwestern France. An internal investigation is underway to determine what happened and why, said an Airbus spokeswoman, adding that any indication of sabotage has not been established. The aircraft maker did not indicate in what part of the plane or on which particular aircraft the cables were severed. The incident was reported in Saturday’s edition of the local newspaper Depeche de Midi as ‘sabotage’ which ‘took place at night, at a time when there are fewer staff around,’ the newspaper said.
— AFP