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The unusual high price of sugar has dug deep into consumers’ pockets and raised costs of production of food and beverage industries, but given a fresh lease of life to the moribund state-owned mills.
   The ever loss-making 14 mills, put on life support by the government’s protection at the cost of consumers, had the last smile as the government has one again increased price of sugar by Tk 3 to Tk 42 a kilogram to reverse the loss in state-own mills and curb the profit margin of middlemen.
   The increase, made effective in the current week, will bring a turnaround in the 14 sugar mills operated by the Bangladesh Sugar and Food Industries Cooperation, and help them see a Tk 12 crore profit, sugar officials said.
   The mills have already started selling sugar at the new rate, which is still much lower than the wholesale rate of imported sugar, they said.
   This was the fourth rise in official rate of the much-consumed sweetener, which saw a 50 per cent gain in just one fiscal year.
   The last season’s closing price was Tk 28 per kilogram.
   Corporation officials claimed the decision to raise mill rate of sugar aimed to slash unjustified margin of middlemen (corporation’s dealers), who are blamed for selling sugar at inflated rates ignoring the rate fixed by the government.
   As a result the consumers never get the benefit of low price set by the government in a bid to keep price of the sweetener stable, they said.
   ‘The new rate, we believe, will cut into the windfall of the middlemen and add some money to government exchequer,’ Kazi Aminul Islam, chairman of the corporation, said.
   Soaring price of sugar in international market forced local consumers pay up to Tk 64 for a kilogram of the much-used sweetener a month back before it eased at a range of Tk 52-54.
   Amid pressures from importers and consumer right bodies, the government last month slashed duties on sugar import to about 48 per cent from above 73 earlier.
   The corporation-run mills produced about 1,35,000 tonnes of sugar during the just-ended crushing season and about 40,000 tonnes of sugar, now stored in the corporation’s warehouses, will be marketed at Tk 42,000 per tonne.
   The latest hike would add Tk 12 crore to the mills’ profit. The sugar mills gained at least Tk 100 crore from the previous three hikes that helped the mills reverse the decline for years.
   The industries minister, Motiur Rahman Nizami, announced a couple of weeks back that the mills would be able to make a net profit of Tk 47 crore.
   The country’s sugar consumption is estimated at about 14 lakh tonnes, while the supply from the state-owned mills meets only 10 per cent.
   Sugar import was liberalised in 2003, ending state-monopoly in the sugar trade. But consumers benefited little from the step, as a traders’ syndicate controls the market and manipulate price, consumer rights groups often say.
   Sugar price surged to near $500 a tonne in recent weeks, squeezing supplies from import sources drastically and keeping the domestic sugar market in volatility.

Dhaka stocks rallied for the sixth straight day with index gaining 13.90 points on Wednesday as better performances of key securities have brought some momentum to the market.
   The market witnessed increased buying from both institutional and general investors on Wednesday, the last trading day of the week shortened by a public holiday on Thursday.
   Dhaka Stock Exchange general index advanced 0.99 per cent to close at 1416.83 while benchmark DSE20 went up by 20.41 points or 1.49 per cent to close at 1393.59.
   A total of 185 issues were traded on the day. Of them, 124 issues advanced, 36 declined and 25 remained unchanged.
   Good corporate disclosures by companies with strong fundamentals drew significant number of investors for the last couple of days, a stockbroker said.
    The news of offloading shares of the Power Grid Company Bangladesh and the Dhaka Electric Supply Company has also added new vigour to the market, he pointed out.
   PGCB and DESCO, two state-owned electricity entities, last week applied to the DSE for direct listing with the bourse intending to offload 25 per cent of their shares.
   PGCB looks to mobilise Tk 90.09 crore and DESCO Tk 32 crore from the market through selling shares each valued Tk 100

Gold prices breached 700 dollars for the first time in 25 and a half years in both London and New York as investors ploughed cash into the precious metal amid rising concerns over the Iranian nuclear crisis.
   On the Comex, a division of the New York Mercantile Exchange, gold for June delivery touched 701.50 dollars per ounce—the highest level since October 1980.
   On the London Bullion Market, the price of gold reached 700.80 dollars per ounce for the first time since September 1980.
   ‘The scale of buying interest flowing into the market seems set to drive prices ever higher with the metal’s 850-dollar all-time high now a realistic target,’ said James Moore, an analyst with specialist website TheBullionDesk.com. Gold had struck the historic high point of 850 dollars in January 1980.
   Meanwhile on Tuesday, platinum climbed to a record high 1,236.50 dollars per ounce on the London Platinum and Palladium Market.
   Investors have sought refuge in gold and platinum because both precious metals are seen as a safe store of value in times of geo-political uncertainty, notably the current Iranian nuclear energy crisis.
   News emerged on Monday that firebrand Iranian President Mahmoud Ahmadinejad had sent a letter to US President George W. Bush in a bid to ease simmering tensions over Tehran’s nuclear ambitions.
   ‘Initial reaction to the news (on Monday) sent oil and gold heading lower,’ added Moore.
   ‘US officials have since said the letter fails to address international concerns while Secretary of State Condoleezza Rice said there was nothing new in it, allowing metal prices to rebound.’ The White House said on Tuesday that the United States will have no formal written response to the letter.
   Gold prices have also been supported by a weaker US currency, which makes precious metals priced in the US unit on world markets more attractive to buyers using other currencies.

The Australian economy faces structural changes if a commodity boom driven by economic growth in China and India, the world’s most populous nations, becomes prolonged, Treasury officials said.
   The officials, in budget papers released this week, said a continuation of strong catch-up growth in the large developing economies will generate further increases in energy and mineral needs over an extended period and are likely to keep commodity prices high.
   The Treasury indicated that capital and labor could shift out of some sectors—notably manufacturing, agriculture and services—Australia’s resources sector continues to ride the China boom.
   ‘If we are at the early stages of a long-lived change in Australia’s comparative advantage, this change is likely to generate significant reallocation of activity among major sectors of the economy,’ it said.
   ‘Higher average returns in the capital-intensive resource sector for an extended period would raise the profit share of national income, and provide continuing stimulus for high levels of business investment in that sector.’
   The Treasury argued that the rise of China, India and other large developing countries presented opportunities for Australia to exploit its comparative advantage in natural resources and ‘high-end’ goods and services.
   But at the same time some more labor-intensive sectors are likely to face increasing competition from cheaper Chinese and Indian imports.
   China’s future development is seen as likely to involve progressively more capital-intensive production, but its international trade will for a long time reflect its relative abundance of labor.
   ‘That means China will continue to export mostly labor-intensive manufactures, and to import mostly raw materials, foodstuffs and capital-intensive manufactures,’ it said.
   The global effects of India’s growth have so far been much less than those of China, because India remains a relatively closed economy with only a small share of global trade in goods and services, it said.
   Treasury said China was on track to overtake the United States as the world’s largest economy in 15 years and warns this transition could see ‘seismic disturbances with powerful economic implications’.
   The budget, unveiled late Tuesday by Treasurer Peter Costell, projected a government budget surplus of 14.8 billion dollars for the year to June 30, some 3.0 billion dollars higher than earlier forecast.
   Costello estimated the surplus for the year beginning July 1 would reach 10.8 billion dollars, even after the government implements a vast array of tax cuts and spending initiatives totally nearly 60 billion dollars.
   Such largesse was largely made possible by soaring company tax revenues, particularly from Australia’s large mining sector which is riding the crest of record high commodity prices created by high Chinese and Indian demand.

Japan Airlines Corp, Asia’s largest carrier, said Wednesday high fuel costs and a series of safety lapses pushed it deep into loss in the year to March but forecast a return to profit this year.
   JAL made a net loss of 47.2 billion yen (424.5 million dollars) for the financial year, roughly in line with its own forecasts, compared with a profit of 30.1 billion yen in the previous term.
   The airline also swung into the red at the operating level with a loss of 26.83 billion yen against a profit of 56.15 billion yen a year earlier.
   Revenues edged up 3.3 per cent to 2.20 trillion yen.
   ‘High fuel costs for international routes and the impact of safety problems are the main reasons for the losses,’ JAL’s chief executive designate, Haruka Nishimatsu, told a press conference.
   ‘It seems that these safety problems significantly worsened passengers’ confidence in our service,’ he added.
   JAL said its fuel bill rose 88.2 billion yen but it has now hedged about 75 per cent of its needs for the current year.
   The carrier predicts a return to the black in the year to March 2007 with a net profit of 3.0 billion yen but some analysts are sceptical it can achieve such a swift turnaround.
   ‘It will be hard for JAL to achieve a full recovery in profits unless it regains confidence among domestic customers who are a source of profits that can cover losses on international flights due to high fuel costs,’ said Yoshihisa Miyamoto, an aviation analyst at Okasan Securities.
   JAL’s profit forecasts for the current year of modest net and recurring profit appeared to be aimed at showing investors the company is seeking to return to the black, he said.
   ‘I can’t buy it with full confidence and regaining confidence over safety could take time,’ Miyamoto added.
   JAL has had a troubled record since its 1987 privatization and a complex merger with domestic carrier Japan Air Systems which was finally completed in 2004 after several years of negotiations and integration difficulties.
   In March, chief executive Toshiyuki Shinmachi was ousted following a management rebellion over mounting losses.
   He will be replaced in June by Nishimatsu, now senior vice president in charge of financial matters.
   Nishimatsu estimated that the carrier had lost business worth about 32 billion yen to rival All Nippon Airways because of the negative effect on its image at home from the string of high-profile safety lapses.
   In June last year the two front tyres came off a JAL plane as it was landing in Tokyo, injuring three passengers.

India’s movie industry is sending a large contingent to the Cannes film festival this month in a new assault on the European market, senior players said Wednesday.
   Once mainly a haunt of Bollywood’s leading ladies, producers and distributors are beefing up the Indian presence as the industry attempts to turn its prodigious output into box office success.
   Indian films, including ‘Rang De Basanti’ (Colour Me Saffron), the biggest hit of the year so far in India, will be exhibited at the 12-day festival that runs from May 17, although none are in the running for awards.
   Bollywood producer and director Karan Johar, who plans to showcase his latest film ‘Kabhi Alvida Na Kehna’ (Never Say Goodbye), said he hoped to tap the huge European market.
   ‘I feel that the Cannes Film Festival will give me an opportunity to exhibit my film to European audiences. It is a huge market which I feel I have not tapped properly.’
   Suneel Darshan, a Bollywood producer and director said his films had done well in Britain, where there is a large Asian population and following of Hindi films.
   ‘The world is slowly waking up to Bollywood cinema and I don’t want to miss the bus. I want to give the Europeans a taste of traditional Indian cinema through this festival,’ he said.
   Bollywood actress Mallika Sherawat and former Miss World-turned-actress Aishwarya Rai have created a stir with their appearances at Cannes in the last two years.
   But this year, Bollywood actress Preity Zinta will make an appearance along with actor Ajay Devgan who will promote his latest film ‘Omkara’, loosely based on Shakespeare’s Othello.
   The Indian film industry is the largest by volume in the world, producing more than 1,000 movies in 2005 but accounting for only one per cent of global film industry revenues.
   A 2005 industry report said overseas markets were an ‘untapped opportunity’ with foreign box office receipts accounting for less than 10 per cent of Indian film industry revenue.
   The report blamed poor dubbing and subtitling, ineffective marketing and low investment for the industry’s failure to make more of a mark overseas.

The Executive Committee of the National Economic Council (ECNEC) today approved 14 development projects involving Taka 6174 crore, including Taka 3331 crore as project assistance, at a meeting with ECNEC chairperson and Prime Minister Begum Khaleda Zia in the chair.
   The projects belong to Education Ministry, Water Resources Ministry, Local Government Division, Post and Telecommunications Ministry, and Energy and Power Division.
   The four energy related projects are: installation of a combined cycle power plant in Sylhet, gas supply project to Shahjahal Fertiliser Factory, installation of Land and Infrastructures Development for Power Generation Hub in Sirajganj and 150 MW picking power plant at Shikalbaha of Chittagong.
   Finance Minister and ECNEC’s alternative chairman M Saifur Rahman, LGRD Minister Abdul Mannan Bhuiyan, Health Minister Dr Khandaker Mosharraf Hossain, Minister for Industries Matiur Rahman Nizami, Minister for Agriculture M K Anwar, Minister for Post and Telecommunications Aminul Haque, Minister for Commerce and Water Resources Hafizuddin Ahmed Bir Bikrom, Education Minister Dr Osman Farruk and State Minister for Power Iqbal Hassan Mahmud attended the meeting. The other approved projects include ‘special development’ of BUET, establishment of Mymensingh Engineering University, development and rehabilitation of roads and other infrastructures in Dhaka City Corporation area, installation of digital telephone exchanges in metropolitan cities, important district towns and upazila growth centres, establishment of two irrigation systems in Kurigram and construction of two roads in greater Sylhet.

Dyeing and printing entrepreneurs of the textile sub-sector Wednesday demanded an appropriate land outside the capital for relocating their units like tanneries.
   As it is not feasible to set up industrial waste management system at the existing factory compound, the entrepreneurs raised the demand at a meeting with Industries Minister Matiur Rahman Nizami at his office.
   Earlier, the government through a circulation made it mandatory that every industrial unit must have its own waste management system.
   ‘We have developed our factory only on 15-33 decimal of land and setting up of ETP system (waste management system) at the tiny plant compound is not possible at all,’ said Badrul Huda Mashuk, president of Bangladesh Textile Dyeing and Printing Industries Association.
   ‘So, please arrange an appropriate land outside Dhaka for us so that we can shift our industries like tanneries,’ Mashuk requested the Industries Minister.
   At the meeting, the 13-member BTDPIA team, led by Mashuk, also put forward some other demands, including withdrawal of import tax on the chemicals that are necessary for destroying the reaction of industrial chemicals.
   The entrepreneurs informed that a government circulation recently directed all the small industries either to install waste management system (ETP system) to run their industrial plants or face action.
   They sought the Industries Minister’s help to exempt the dyeing and printing factories from the mandatory order.
   Responding to the BTDPIA pleas, the Industries Minister assured the leaders of his all-out cooperation. ‘I’ll take up the matter with the Prime Minister, Finance and Environment Ministers,’ Nizami assured.
   Earlier, the BTDPIA leaders pointed out that the government should help directly to install the ETP system at the dyeing and printing factories.
   BTDPIA vice-presidents Ataur Rahman and Abdul Haque, joint general secretary Saifuddin Ahmmed, members Alhaj Azizur Rahman, Abdul Khalek, Abul Bashar Mridha, Abul Kalam Azad, Abdul Qader, Harun-ur Rashid, Abdul Mannan Manik, Abdul Mannan and Alauddin were, among others, present at the meeting.

The Bangladesh Chamber of Industries demanded fixing of duty of raw materials at 2.50 per cent. Otherwise, he apprehended, smuggling would not be stopped.
   ‘We cannot compete with the neighbouring countries due to high price of basic raw materials,’ said the BCI president, AK Azad. As a result local industries are suffering.
   Power and gas crisis has been hampering the industrial production and trade seriously, Azad said in a meeting with the commerce minister, Hafiz Uddin Ahmed, on Wednesday.
   ‘We are to pay full payment if electricity remains cut-off for 3-4 hours per day. We are not benefited by power/gas generator due to minimum charge provision,’ said Azad.
   He also said that hundreds of industries have been set up at Ashulia but no infrastructure has been developed yet.
   He proposed holding coordination meeting of the concerned quarters including all chambers and associations every month for taking integrated decision.
   He observed that the bank rate for industrial investment is now 14-15 per cent, which is too high.

A delegation of the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) led by its president Tipu Munshi met Housing and Public Works minister Mirza Abbas at his office in Dhaka Wednesday.
   The leaders placed some demands, including allocation of 10 kathas of land at city’s Khilgaon area for a hospital and adequate land to set up a BGMEA complex in Chittagong, before the minister.
   They also requested the minister to allocate 200 acres of land at Gozaria in Munshiganj beside the Dhaka-Chittagong highway for relocating at least 200 garments factories there from the capital, as both the government and the industry leaders are planning to shift the garments factories gradually outside the city.
   ‘Only 200 acres do not suffice to meet the real need as there are almost 800 factories at present in the city,’ Tipu Munshi said adding, ‘But let the shifting process start as soon as possible.’
   Responding to a query about the fate of the hospital they were planning to build at Khilgaon after shifting of the factories, Tipu Munshi said, ‘We may handover it to a trust to provide health care services for general people.’
   He said that the minister assured of taking necessary steps regarding the demands.

The Australian High Commission has provided a fund of AUD 62,500 to Bangladesh Legal Aid and Services Trust (BLAST) under its Human Rights Small Grants Scheme (HRSGS) 2005-06 program.
   The funding will be used to raise awareness and sensitise rural community, promote alternative dispute settlement mechanism to ensure justice and to provide legal aid.
   Australian High Commissioner Douglas Foskett said, “the promotion and protection of human rights is a key focus of Australian funding programmes in Bangladesh.”
   He said through the Human Rights Small Grants Scheme, Australia is pleased to be able to assist in promoting justice for those in the rural community, especially women.
   The High Commissioner handed over a cheque to Taslimur Rahman, Executive Director, BLAST Tuesday.

Just when sky-high gas prices should be raising demand for fuel-efficient gas-electric hybrids, Toyota and Honda are selling fewer of the hottest models than a year ago.
   They blame supply shortages for sales declines on Toyota Prius and Honda Civic hybrids in April from April 2005.
   ‘We sold down our inventory. We’re down to a two-day supply,’ says Toyota US President Jim Press. ‘The fact is, demand has never been higher.’
   The Power Information Network’s Tom Libby says dealers sell Priuses and Civics in an average of less than 10 days. The average for all models is 57 days.
   How hybrid sales played out:
   Toyota. Prius sales were down 27 per cent for April and 10% so far this year compared with last year. Press blames having to reallocate parts for the start-up of the Camry hybrid, which went on sale April 24.
   Waits for a new Prius can run up to a couple of weeks at Rice Toyota in Greensboro, NC, up to four months at Toyota Santa Monica, Calif. ‘We are selling every one we get,’ says Rice’s general sales manager, Elmon Dale.
   Honda. Civic hybrid sales fell 7.5 per cent for the month, although they are up overall this year. ‘Sales were purely constrained by supply,’ says spokesman Sage Marie. Sales of Honda’s generally overlooked Insight hybrid two-seater jumped 22.2 per cent last month, while sales of the Accord hybrid, unpopular because of its V-6 engine, fell 69 per cent in April from a year ago.
   Ford. In contrast to its Japanese competition, Ford says sales of hybrid versions of Ford Escape and Mercury Mariner SUVs soared 68% in April from a year ago. They doubled from March. Ford has promoted hybrids heavily and has offered incentives in some markets.
   Toyota and Honda found sympathy among some analysts, who say makers can’t be expected to react fast to quick upturns in gas prices. ‘They can’t turn that quickly,’ says Bradley Berman, editor of HybridCars.com. ‘You can’t speed up a pipeline of production in three weeks.’
   Others are beginning to wonder if hybrid interest has peaked. ‘There are many more compact and subcompact sedans in the market that are proving competition for hybrids,’ says Kelley Blue Book spokeswoman Robyn Eckard. With those new contenders, ‘you really have to be ‘green’ to buy a hybrid.’
   Just-introduced fuel-sipping subcompacts Toyota Yaris and Honda Fit are selling for full window-sticker prices or more, says car-shopper CarsDirect.com. Toyota’s Scion line of small, youth-oriented vehicles continues in short supply.

The Bank of England (BoE) said on Wednesday that British economic growth should remain close to its long-term trend rate of 2.5 percent over the next two years.
   The forecast in the central bank’s quarterly inflation report, published on Wednesday, was slightly lower than its previous February forecast of above-trend growth in 2006 and 2007.
   ‘Following a soft patch at the start of 2005, output growth has recovered to around its long-term average,’ the BoE said in its report.
   The central bank also predicted that 12-month inflation would move above the government-set 2.0-percent target in the near-term before dropping back to around the target.
   That compared with February’s forecast of inflation holding close to 2.0-percent over the next two years.
   ‘The risks to growth and inflation are broadly balanced,’ the BoE said.
   British 12-month inflation posted a surprise drop to 1.8 percent last March from 2.0 percent in February.
   The central bank froze the cost of borrowing in Britain at 4.50 percent last week for the ninth month in a row against a backdrop of steady economic growth.

Free trade talks between the United Arab Emirates and the United States continued Wednesday amid leaked reports of disagreements over labour rights and investment, a newspaper said.
   The negotiations, which resumed Tuesday, continued behind closed doors, with US embassy spokeswoman Hilary Olsin-Windecker saying the virtual media blackout over the talks was still in place.
   But the Al-Hayat daily newspaper quoted sources saying the US party has ‘made a (free trade) agreement contingent on amending the labour law in the UAE and establishing labour organisations.’
   The agreements, which require US congressional approval, are largely economic, but also include a major section on labour rights. That would require each party to recognise the right of association and collective bargaining, prohibit forced labour and respect minimum wages and caps on working hours.
   Unions are banned in the UAE and a minimum wage exists only for the country’s own citizens.
   The UAE has a population of four million, of whom only 20 per cent are nationals, and the vast majority of the workforce is made up of foreigners.
   Human Rights Watch, which recently issued a strongly worded report on labour abuses in the country, has asked the United States and the European Union and Australia, which are also negotiating FTAs with Abu Dhabi, not to sign until the country reforms its laws to conform to International Labour Organistation standards.
   Al-Hayat also said the UAE is resisting US pressure to open the country to US investment without the current requirement of having a local partner, ‘especially in the field of oil and gas’.
   Abu Dhabi is reportedly also balking at US demands for full rights to property ownership for US citizens.
   The UAE had allowed foreign investments in oil and gas but imposed a cap of 40 per cent on foreign business ownership, the paper said.
   The talks were launched in March 2005. The current round of discussions is to prepare for a fifth round of talks, whose date will be decided provided that the experts meeting in Abu Dhabi manage to overcome disagreements, it said.
   UAE Minister for Financial and Industrial Affairs Mohammad Khalfan bin Kharbash said last month the two sides were keen to ‘push the negotiations towards an agreement that serves the interests of the two countries’.
   The United States is eager to boost trade ties with the UAE, which currently has stronger business with Asia and Europe.
   The talks were postponed in early March, although UAE officials said the move had nothing to do with the ports controversy.
   Dubai-owned DP World, which had won the rights to operate six US ports through a multi-billion-dollar takeover of British company P and O, agreed to relinquish its rights due to fierce opposition to the deal from the US Congress.
   The move spared US President George W. Bush, who backed the DPW deal, a showdown with Congress which opposed it on security grounds.
   But another Dubai-owned firm—Dubai International Capital—announced last week sealing a deal to acquire a British supplier to the US military, following the approval of President Bush.

President Vladimir Putin warned Wednesday that Russia’s drive to join the World Trade Organisation should not be used as a tool of bargaining on other issues.
   ‘Russia’s membership in the WTO should not be a subject of bargaining,’ Putin said, evoking WTO linkage to ‘issues that have nothing to do with the economy.’
   ‘We see negotiations on entering the World Trade Organization only on terms that support Russia’s economic interests,’ Putin said in his annual state of the nation address at the Kremlin.
   ‘It is obvious that the economy of the Russian Federation is today more open than the economies of many members of this organization,’ Putin said.
   The Russian leader last month accused the United States—the only major economy still withholding support for Russia’s WTO membership bid—of changing the rules in the middle of the game to impede Russia’s WTO accession.
   Soon after his election in 2000, Putin set WTO membership for Russia as one of his top priorities.
   Putin attacked corruption in Russia in his speech, calling it a major obstacle to the country’s development.
   ‘We have still not managed to overcome one of the most serious obstacles on the road to our development: corruption,’ he said.
   He stressed that Russia must introduce full convertability of the ruble by July 1.

The World Bank on Wednesday upgraded its 2006 growth forecast for China to 9.5 per cent as it cautioned that more measures needed to be taken to cool and rebalance the economy.
   In its quarterly report on China, the bank said it had revised up its 2006 forecast from 9.2 per cent to 9.5 per cent after faster-than-expected growth at the start of the year.
   China’s economy grew 10.2 per cent in the first quarter, taking many analysts by surprise, after expanding 9.9 per cent for all of 2005.
   ‘Much of the growth surprise stemmed from stronger exports whereas domestic demand grew in line with expectations,’ the World Bank report said.
   ‘Investment continued to power ahead, though, partly due to an uptick in credit growth, with more new lending going into real estate development.’
   The report said that inflation should remain ‘subdued’ while the current account surplus may rise again this year.
   With the economy continuing to expand at near double-digit pace, the World Bank warned China that a range of measures need to be taken to avoid overheating.
   ‘More policy action is needed to keep credit and investment growth in check, mitigate external imbalances and to entrench the rebalancing of growth patterns,’ it said.
   The bank also urged China to allow its currency to appreciate faster, saying a stronger yuan would help ‘reduce current account surpluses and rebalance growth towards consumption.
   ‘A stronger real exchange rate would encourage investment in non-tradable sectors such as services rather than in tradables (manufacturing).

Russia must fulfill the energy needs of its traditional foreign partners and help create a unified system for European energy supplies, President Vladimir Putin said Wednesday amid growing criticism of Russia’s energy power.
   In the energy sphere, ‘we must do everything not only for our domestic development, but also to fully meet our obligations before our traditional partners,’ Putin said in his annual state of the nation address.
   ‘Russia can play a positive role in the formation of a unified European energy strategy,’ he added in a speech that talked up the growing influence of Russia’s state-controlled natural gas giant Gazprom.
   Europe, Gazprom’s main export market, depends on Russia for more than a quarter of its natural gas supplies—a market share that has raised concern among European officials.
   ‘Gazprom has become the third largest company in the world... while keeping fares low for Russian consumers,’ he said, following last week’s announcement that the company had reached market capitalisation of more than 300 billion dollars (235 billion euros).
   European leaders and Gazprom executives have been involved in a bitter war of words in recent weeks over the company’s plans to expand business in Europe.

Hundreds of thousands of small investors who fell victim to a stamp scam in Spain were rallying Wednesday to try to recover lost savings potentially amounting to billions of euros (dollars).
   The investors were tempted to place their money in what were essentially ‘pyramid’ schemes by the promise of high returns of between six and ten per cent and further guarantees that the stamps they bought would not depreciate.
   Consumer groups advised investors affected to contact them and draw up a battle plan a day after police arrested nine directors of two philately organisations—Afinsa and Forum Filatelico.
   As investors fumed the general director of Caja Espana bank, Jose Ignacio Lagartos, warned against such ‘high risk’ schemes whose promoters ‘are not financial entities and are not covered’ by state-guaranteed bailout funds.
   According to consumer groups, some 350,000 people typically placed between 10,000 and 100,000 euros (12,000 and 120,000 dollars) each investing in a sector worth up to 35 billion euros nationally.
   The ADICAE consumer protection group for financial small investors told victims to get in touch and told AFP it had received ‘thousands of calls’ from worried clients of the two companies.
   ADICAE added it did not know the extent of the two firms’ assets but El Pais newspaper quoted sources close to the affair as saying they had identified a 3.5 billion euro investment hole — 2.4 billion for Forum Filatelico and 1.1 billion for Afinsa, which would leave the firms bankrupt.
   In addition, El Pais reported there was an additional 1.75 billion euros outstanding in tax evasion relating to the affair.
   The High Court, behind the police operation which led to the nine arrests announced Tuesday, was not able to speculate on the extent of the alleged fraud, and the interior and finance ministries also would not comment.
   ‘We are trying to get data from the victims to put together a defence,’ said ADICAE, adding that ‘we are hoping for government intervention.’
   Matilde Valentin, responsible for social welfare issues in the ruling Socialist Party, insisted overnight that ‘the government’s priority ... is to help as far as possible the more than 350,000 people affected and punish the fraudsters.’

China plans to set up strategic reserves of uranium, coal, iron, copper, aluminum and other key mineral resources over the next five years, a report on a government website seen Wednesday said.
   The plan falls in line with efforts to build strategic oil and gas reserves that are already in progress, the Ministry of Land and Resources said in a report on its website.
   The energy and mineral resource reserves will be designed to adjust market supply and meet the nation’s fast-growing demand, the report said.
   China will also expand exploration of uranium resources in northern and southern mining regions in order to increase its uranium reserves, it added.
   China has ambitious plans to expand its nuclear energy program. It currently has 11 nuclear reactors in operation and has previously announced plans to build dozens more.
   The country will further accelerate the construction of petroleum reserves during the 2006-2010 period, it said.
   Increased exploration for oil and natural gas in East China Sea, the Yellow Sea and the northern part of the South China Sea will be stepped up as part of the effort, the ministry said.
   The report did not give any details on the extent of the stockpiling in strategic reserves.
   However it did give figures on how much extra would be targetted for discovery.
   The government is aiming for an increase in discoverable reserves of between 4.5 and 5.0 billion tons of oil and 2.0-2.25 trillion cubic meters (7.8-7.8 trillion cubic feet) of natural gas by 2010.
   It is also targeting an increase of five billion tons of iron ore, 20 million tons of copper, 100 billion tons of coal and 200 million tons of bauxite in discoverable reserves by 2010.

The Bank of England (BoE) said on Wednesday that British economic growth should remain close to its long-term trend rate of 2.5 per cent over the next two years.
   The forecast in the central bank’s quarterly inflation report, published on Wednesday, was slightly lower than its previous February forecast of above-trend growth in 2006 and 2007.
   ‘Following a soft patch at the start of 2005, output growth has recovered to around its long-term average,’ the BoE said in its report.
   The central bank also predicted that 12-month inflation would move above the government-set 2.0-per cent target in the near-term before dropping back to around the target.
   That compared with February’s forecast of inflation holding close to 2.0-per cent over the next two years.
   ‘The risks to growth and inflation are broadly balanced,’ the BoE said. British 12-month inflation posted a surprise drop to 1.8 per cent last March from 2.0 per cent in February.
   The central bank froze the cost of borrowing in Britain at 4.50 per cent last week for the ninth month in a row against a backdrop of steady economic growth.

Toyota Motor Corp said Wednesday annual net profit jumped 17.2 per cent to a fourth straight record high as it won customers from struggling US rivals with its fuel-efficient vehicles.
   Toyota, Japan’s top automaker and the world’s most profitable, announced net earnings of 1.37 trillion yen ($12.35b) for the year to March on revenue which rose 13.4 per cent to a record 21.04 trillion yen.
   Toyota, which is on track to overtake ailing US General Motors Corp as the world number one in terms of output, also posted better than expected operating profit of 1.88 trillion yen.

Vietnam’s state-run ship builder has signed a one billion dollar contract with Israel to build eight car carriers, an official said Wednesday.
   Under an agreement signed Tuesday with Israel’s Ray Car Carriers Ltd, the Vietnam Shipbuilding Industry Corporation (Vinashin) will build eight 4,500-car carriers designed by Italy’s Naval Progetti Company, the company official told AFP.
   The first delivery is scheduled for September 2008, she said asking not to be named.
   According to the English-language daily Vietnam News, last year, Vinashin earned a revenue of 491 million dollars and will double that to one billion dollars this year. Vinashin and its 20 subsidiaries have ranked Vietnam 11th among the world’s largest ship builders, the paper said.

Bus, rail and air travel was hit by a public sector strike Wednesday that also affected schools, hospitals and some banks, unions said.
   Unions including the powerful General Confederation of Workers (GSEE) called for a 24-hour strike to protest against the conservative government’s proposals for labor market reform.
   The Greek national carrier Olympic Airlines cancelled 51 flights, leaving only one for each domestic destination during the day, and one to each foreign country served.
   In Athens no buses, metros, trams or trolleys were expected to run, and the national railways only had one train on each main line.
   The strike, the fifth in a year, also hit both primary and secondary schools, state-owned banks were closed and hospitals were operating with reduced staff.
   The unions are protesting against plans to reform public sector companies, including the privatisation of some, and calling for greater social benefits, measures to combat unemployment and hardship pay for some jobs.

The prices of copper smashed through 8,000 dollars per tonne for the first time on Wednesday following the closure of a mine in key producer Mexico.
   In morning trade on the London Metal Exchange (LME), three-month copper prices reached 8,010 dollars per tonne—the highest point since the metal was first listed in 1877.
   The price of copper, used for electrical wiring and plumbing, has been boosted in recent months by supply problems, limited output and soaring demand from the booming economies of China and India.

Euronext, the pan-European stock exchange, has held informal merger talks with the US futures and derivatives market, the Chicago Mercantile Exchange, the daily Frankfurter Allgemeine Zeitung reported on Wednesday, quoting financial sources.
   CME is particularly interested in Euronext’s derivatives business incorporated under the London-based market Liffe, the newspaper reported. It said that Euronext had refused to comment on the information. Euronext, which operates the Paris, Brussels, Amsterdam and Lisbon stock exchanges, ann-ounced last week that it was burying any ambitions to tie the knot with the London Stock Exchange and would focus instead on ‘active’ tie-up talks with Deutsche Boerse, operator of the Frankfurt stock market, as well other non-identified partners.

Shinsei to buy
stake in Jih Sun
Japan’s Shinsei Bank Ltd said Wednesday it will acquire a 31.8 per cent stake in Taiwan-based Jih Sun Financial Holdings Co. as part of its strategy to link up with overseas partners. Shinsei will buy the stake at a cost of 40.2 billion yen ($360 million, 11.3 billion Taiwan dollars), the Japanese bank said. ‘Through the investment, Shinsei will provide Jih Sun with business expertise while bolstering the bank’s capital and contributing to strengthening its competitiveness in the international market,’ Shinsei said in a statement.
— AFP

Infineon to float memory chips business
Infineon, the German semi-conductors giant, said Wednesday it planned to list its memory chips business Qimonda on the New York Stock Exchange (NYSE) in the second half of this year. The exact timing and the size of the initial public offering (IPO), which was approved by the supervisory board at a meeting on Wednesday, woul depend on market conditions, Infineon said. Infineon would retain a majority stake in Qimonda, it added.
— AFP

Hong Kong gold closes higher
Hong Kong gold prices closed higher Wednesday at 702.00-702.50 US dollars an ounce, up from Tuesday’s close of 678.40-678.90 dollars. The market opened at 698.40-698.90 dollars an ounce. Gold prices breached 700 dollars for the first time in nearly 26 years overnight. Investors have sought refuge in gold and other precious metals and commodities which are seen as a safe store of value in times of geo-political uncertainty, as seen now with the standoff over Iran’s nuclear programme.
— AFP