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Knitwear exporters have urged the European Commission to raise local value addition threshold to 45 per cent to help Bangladesh’s dressmakers benefit from the revised ‘generalised system of preferences.’
   The EC proposed new rules of origin criteria requiring products from least developed countries to have 30 per cent local value to get duty-free access to European Union market.
   Local textile and knitwear sectors fear that the proposed single-stage rules of origin criteria would put their industries in danger of losing market to advanced textile manufacturing countries.
   ‘We hope that the EC will raise the RoO criteria to 45 per cent for LDC products to enjoy the GSP facilities,’ Fazlul Hoque, president of the Bangladesh Knitwear Manufacturers and Exporters Association.
   He said this at a press conference Tuesday, a day after local textile makers urged the EC to review its decision or give them a five-year breathing space before implementing the new single-stage RoO criteria.
   Under the existing two-stage rules of origin criteria effective from 1997, exporters of Bangladesh and other LDCs now get duty-free access to EU for dresses made of local fabrics.
   The requirement criteria prompted Bangladesh’s knitwear exporters to strengthen backward linkage capacity to add more local value to products to avail of the duty-free access.
   ‘Proposed RoO will put local fabric manufacturers at risk, discourage investment in backward linkage industry and open local market of fabrics and yarns to China, India and Pakistan,’ said Fazlul Hoque.
   He argued that the new RoO would not benefit even Cambodia, which has a strong apparel industry after Bangladesh. ‘Chinese operate most of the Cambodian apparel units and new RoO will be a boon only to fabrics suppliers and garment investors of China.’
   The Dhaka-based EC officials Monday advised Bangladesh’s textile entrepreneurs to parley with EU member states individually to build opinion in favour of safeguarding the local textile industry.
   The BKMEA president said his association would communicate with Bangladesh embassies in EU countries in a week and start campaign against the changes in EC’s rules of origin criteria.

The Securities and Exchange Commission has agreed in principle to give consent to the IDLC Finance Ltd for issuance of 55 asset-backed zero-coupon bonds of Tk 50 lakh each totalling Tk 27.50 crore only through IDLC Securitization Trust 2007-A, Dhaka Stock Exchange’s website reported on Tuesday.
   It also reported that the SEC warned the directors, managing director and company secretary of the Himadri Ltd for alleged non-compliance with the securities related laws regarding the audited financial statements for the year ended on December 31, 2006.
   Meanwhile, stocks closed Tuesday bearish for the third day despite the opening hour’s rise due to increase in the prices of some financial securities.
   The general index of the Dhaka Stock Exchange lost 6.70 points or 0.23 per cent to close at 2899.55. The bourse’s blue chips index, DSE20, however, gained 1.63 points or 0.07 per cent to finish at 2307.70.
   A DSE stock broker said market remained dull as the investors, mostly retail, were offloading shares in couple of days for funds required to meet up expenses of the upcoming Eid-ul-Azha.
   Liquidity inflow to the market also went down recently, he said.
   He, however, said good corporate announcements pushed up the share prices of specific stocks.
   Dutch-Bangla Bank gained 6.98 per cent to close at Tk 6696.75 on Tuesday.
   The private commercial bank on Tuesday informed the DSE that its board of directors decided to increase the authorised capital of the bank from existing Tk 40 crore to Tk 400 crore subject to the approval of the Bangladesh Bank, reported the bourse’s website.
   Chittagong Stock Exchange’s selective categories index lost 27.99 points or 0.59 per cent to close at 4724.47, while its blue chips index, CSE30, shed 11.46 points or 0.18 per cent to close at 6496.35.
   The turnover at the DSE also decreased to Tk 96.10 crore from the Monday’s Tk 100.95 crore while at the CSE went down to Tk 12.50 crore from the Tk 13.76 crore.

The Bangladesh Knitwear Manufacturers and Exporters Association on Tuesday said a section of local spinners were irrationally raising the prices of different sorts of yarn, thus eroding the competitiveness of local knitwear exporters.
   ‘The prices of certain categories of yarn have been raised by 20 US cents per kilogram in just a couple of weeks, and by 50 cents or 20 per cent in the last two months,’ said BKMEA’s president, Fazlul Hoque, at a press conference in his office.
   The leader of the knitwear exporters said that due to the sharp increases in yarn prices the knitwear exporters are facing difficulties in supplying previously ordered apparels to the global buyers and are hesitating to take new orders.
   He said that certain categories of yarn that are in high demand sell at $2.40 per kilogram in India while local spinners are charging $2.90. Hoque argued that increases in the prices of yarns are much higher than the rates of increase in cotton prices in the international markets.
   ‘A section of greedy and opportunistic spinners are deliberately raising the prices of yarns and, in the process, are putting the knitwear industry in extreme difficulty,’ he alleged.
   He demanded that government monitor the local yarn market, make the spinners accountable and rationalise the prices of textile inputs. ‘The government must take measures to regulate the local prices of yarns.’
   The BKMEA president also demanded that government simplify the process of import of yarns from India through the land-ports so that the local spinners face competition and are thus compelled to decrease prices.
   Local knitwear manufacturers earned $4.55 billion or around half of the country’s total earning from apparel export in the 2006-2007 fiscal year.
   The country has nearly 300 spinning units, most of whom supply their products to local knitwear manufacturers who buy around 75 per cent of the entire yarn produced by them.

Mobile phone business association has sought the government’s cooperation in setting up a mobile telephone handset industry in the country with a view to reducing dependence on the import of handsets.
   Leaders of the association sought the cooperation on Tuesday while they were addressing the inaugural ceremony of the 2nd five-day Dhaka International Mobile Phone Fair organised by the association and Federation of Bangladesh Chambers of Commerce and Industry at Bangladesh-China Friendship Conference Center.
   They also demanded a guideline for the mobile phone businessmen which would prevent them from purchasing illegal handsets. Businessmen said the government was not only deprived of earning revenue but the authorised importers were also deprived of their fair share in the business for smuggling of mobile sets into the country by a section of dishonest businessmen.
   Syed Monjur Elahi, administrator of the FBCCI, inaugurated the fair. Syed Marghub Morshed, the chairman of Telelink group, Annisul Huq, former president of Bangladesh Garment Manufacturers and Exporters Association, MA Rouf Chowdhury, former director of FBCCI, and Nizam Uddin Jitu, president of Bangladesh Mobile phone Business Association, also attended the ceremony.
   Different mobile phone operator companies, handset importers and distributors, telecommunication accessories providers, and telecommunication related institutions are participating in the fair.
   The fair began on December 10 and will continue till December 14. Fair will remain open from 8:00am to 9:00pm every day, and from 9:00am to 10:00pm on holidays.
   Products of the participants are on display in 62 stalls and 21 pavilions. Four seminars will be held on different issues relating mobile phone technology. The entry fee of the fair for each is Tk 20.

Bernd Voelcker desperately needs programmers and sales managers for his software firm in Berlin, but he can’t hire promising Indian or Chinese candidates because Germany’s labour market has shut them out.
   For his company Infopark, the situation is getting critical.
   ‘In November, we had to refuse a contract for the first time,’ Voelcker said. ‘We are trying to farm out tasks and to get our clients to wait. They are not happy, but they accept because it’s the same everywhere.’
   With 13 vacant posts of a total 80, Infopark is far from being an isolated case.
   There are roughly 43,000 jobs going begging in new technology sectors and ‘losses can be calculated in billions,’ according to August-Wilhelm Scheer, president of the sector federation Bitkom.
   Infopark and companies like it have made concerted efforts to attract qualified personnel.
   ‘We pay well, there are bonuses, the atmosphere is nice and informal, and we have even thought of setting up a day-care centre,’ Voelcker said.
   But owing to an unfavourable demographic trend and growing disinterest among German students for scientific studies, the labour pool for programmers, telecommunications engineers and computer security specialists is emptying out.
   A near-term solution would be ‘to allow, even stimulate immigration of highly qualified people,’ said Infopark’s boss, who would like to hire programmers from India and China.
   Scheer, meanwhile, calls for ‘minds of the world to come and help us.’
   Some European countries have taken initial steps to meet similar shortages.
   France has approved, though not yet issued, work permits for specific talents or abilities to assist professional immigration.
   At the European Level, a ‘blue card’ based on the US ‘green card’ model is being developed to attract skilled workers from all over the planet, but is still some way from fruition and is opposed by German authorities.
   In Germany, measures enacted early this decade specifically for high-tech sectors allow for limited immigration but are extremely restrictive.
   Candidates must present a work contract with an annual salary of 85,000 euros ($125,000), almost three times the 30,000-35,000 euros that Voelcker pays entry-level programmers.
   Sector leaders meeting in the northern city of Hannover this week hoped the government of Chancellor Angela Merkel would make a gesture in their favour, by lowering the minimum salary level for example.
   But Merkel and economy minister Michael Glos have made it clear that with more than three million unemployed German workers, their priority is at home.
   ‘The first step is to qualify the domestic workforce,’ the German chancellor has said.
   That would involve reforming how scientific subjects are taught to make them more attractive, in particular for women, and by making it easier for women to work by providing care for their children.

Bangladesh has been elected council member of the International Maritime Organisation, the mother body to monitor and govern the maritime sector across the world, for the next two-year term.
   The election of the IMO council was held during its council session on November 19-30 at its permanent secretariat in London where Bangladesh won from ‘B’ category, beating its strong opponent Belgium by 104 votes to 95, sources in the shipping ministry and department of shipping said.
   A total of 40 countries out of 167 were made council members from three categories A, B and C to run the IMO council, which is responsible for enacting and implementing policy and laws to monitor international maritime sector.
   The other council members elected from B category are India, Argentina, Brazil, France, Germany, Netherlands, Sweden, Canada and Spain, sources said.
   Earlier, a four-member delegation, including shipping secretary Sheikh Enayetullah and director general of the shipping department AKM Shafiqullah who joined the council session, conducted huge campaign in favour of Bangladesh, sources said.
   Terming the victory as a glorious event for the country’s history, AKM Shafiqullah said the achievement would uphold the image of Bangladesh to abroad in a large scale.
   ‘It is not only a big achievement for the nation, Bangladesh will play policy making role in the important international forum from now,’ the DG told New Age on Thursday.
   He said Bangladesh would play the leading role in the council to take necessary decision regarding development of maritime sector in the world and in Bangladesh as well.
   ‘We hope to play a vital role in world’s maritime development which will put a positive impact in maritime development in Bangladesh,’ Shafiqullah added.

President of Chittagong Chamber of Commerce and Industry, Saifuzzaman Chow-dhury, has proposed to offload 50 per cent shares of the state-owned Rupali Bank at the stock market.
   In a fax message sent to the chief adviser to the military-backed interim government on Tuesday, the CCCI president made the proposal. The government can collect money from the capital market by offloading 50 per cent shares of the bank within a short time, he said, urging the government to shun the plan of selling the state-owned bank to any foreign investor.
   Saifuzzaman said the public and private partnership would help turning the losing financial institution into a profitable concern ensuring transparency and accountability.

Murshid Kuli Khan, deputy governor of the Bangladesh Bank, has been appointed chairman of the BB standing committee that recommends punitive measures against the chairmen and directors of the banks, said an official of the central bank.
   The committee examine allegations against the board members of the banks and suggest the BB governor to take punitive actions against the wrong doers under the article 46, 47 and 48 of the Bank Company Act, he said.
   Murshid Kuli has replaced the former deputy governor Allah Malik Kazemi.
   Other members of the committee are Mohammad Yasin Ali, executive director, and Habib Ullah Bahar, economic adviser, of the central bank. General manager of the Banking Regulation and Policy Department of BB is the member-secretary.

The British government has taken a massive livelihood programme in Bangladesh and India to help people living in the low-laying sand islands (chars) to adapt with the cyclone and other types of natural calamities.
   The British minister of state for environment, food and rural affairs, Phil Woolas, Tuesday said the finance to be provided by its international development organisation DFID will be spent for the improving the livelihoods of the people in the Char areas of the Jamuna river.
   The British minister was talking to Bangladesh Sangbad Sangstha at EU Pavilion at Bali conference centre after briefing to the climate change media fellows who are coving the Bali conference.
   Phil Woolas said the British government would provide about 50 million pound to help char people of Bangladesh to adapt calamities like cyclone and flood.

Indonesia is failing to cash in on a global surge in mineral prices, with the country’s confusing business environment turning off major new investment, analysts say.
   Indonesia has massive reserves of minerals such as copper, tin and bauxite, all of which have seen dramatic price rises throughout the year, largely driven by demand from China and India.
   But business reluctance to muddle through an uncertain regulatory environment is leaving the country’s mineral sector behind, said Sacha Winzenreid, a mining partner at Pricewaterhouse Coopers.
   ‘While the industry in Indonesia continues to be very profitable, new investment is needed to sustain it into the long term,’ Winzenreid told AFP.
   ‘Global mining companies still rate Indonesia’s investment conditions relatively poorly, and as such Indonesia is lagging behind some less geologically prospective countries in attracting investment dollars.’
   Despite billions of dollars worth of minerals nestled underground, the 2006 annual report from the Indonesian Mining Association and PwC shows Indonesia received only two per cent of worldwide exploration spending in 2005 — and the situation has not improved, Winzenreid said.
   Key factors deterring major foreign investment, analysts said, include the murkiness created by devolution of power to previously weak regional governments, and a protracted debate over a new national mining law.
   Indonesian provinces have been gaining greater freedom to run their own affairs in the wake of the 1998 overthrow of former dictator Suharto, whose 32-year rule concentrated power in the capital Jakarta. z
   Regional autonomy means companies now deal with increasingly dense layers of government and contradictory regulations as well as overlapping claims, Winzenreid said.
   Decentralisation has also led to a proliferation of smaller, often illegal, mining operations in local regions, said Priyo Pribadi, the executive director of the Indonesian Mining Association.
   ‘A lot of the local companies that developed after the regional autonomy laws were passed do not really make income for the government,’ he told AFP.
   Royalties and taxes that previously flowed to Jakarta are now staying in the regions and often ending up in the pockets of local officials, he said.
   The glut of illegal tin miners and smelters prompted a government crackdown from late last year that helped push global prices to record highs.
   Amid the turmoil, investors are waiting to see the details of a new mining law, analysts say.
   The new law is expected to remove the so-called contract of work system, under which conditions such as royalties negotiated at the start of a project are locked away from new laws.
   It may also add a requirement for investors to cooperate with one of Indonesia’s state mining giants or to go directly to a regional government for licensing.
   Rahman Connelly, CEO of Kalimantan Gold Corporation Limited, noted in an opinion piece in the Jakarta Post that no new contracts of work have been issued for eight years in Indonesia due to a lack of definitive law.

China and the United States, the world’s two biggest greenhouse gas polluters, will seek to work more closely on improving their energy use, a Chinese official said in comments published Tuesday.
   Improving energy efficiency will be a top agenda item when the two nations begin meeting near Beijing on Wednesday for twice-yearly economic talks, said Ma Kai, the head of China’s National Development and Reform Commission.
   ‘We have prepared a China-US energy cooperation guidebook,’ the China Daily quoted Ma, China’s top economic planner, as saying ahead of the Strategic Economic Dialogue.
   Ma said China was seeking ‘comprehensive cooperation’ with the United States in all aspects of energy use, including coal, petroleum and gas, energy efficiency and renewable energies, the paper said.
   Ma praised the United States ‘mature experience’ in improving the efficiency of burning coal.
   Coal is the source of around 70 per cent of China’s booming energy demands and a main reason behind the nation’s massive rise in emissions of carbon dioxide, one of the major greenhouse gases that are blamed for global warming.
   ‘The two sides should intensify their energy efficiency cooperation and increase their efforts in clean energy exploration,’ Ma said.

K Mahmood Sattar, managing director and chief executive officer of the City Bank Ltd, has been elected new chairman of the Association of Bankers, Bangladesh Limited for 2007-09.
   He was elected at the annual general meeting of the association held recently, said a press release.
   Sattar has over 26 years of experience in banking industry both at home and abroad.

Indian domestic car sales jumped more than 16 per cent in November from a year ago, spurred by buying during the festival season when consumers consider it lucky to make purchases, data showed Tuesday.
   But motorcycles sales, which have been heading lower all year, fell again, according to figures released by the Society of Indian Automobile Manufacturers.
   The rise in car sales comes despite consumer interest rates at five-year highs and cut-throat competition among automakers who have been pushing new products and aggressively marketing their models.
   Discounts by carmakers during the festival season — seen by many Indians as an auspicious time to buy costly goods — helped sales, analysts say.
   Passenger car sales jumped 16.42 per cent to 103,031 units from 88,501 units in the same month last year, SIAM said.
   But motorcycle sales, which has been declining throughout the year, fell 2.89 per cent to 540,553 units in November from a year earlier.

Credit Suisse has signed a memorandum of understanding to set up an investment banking joint venture with China’s Founder Securities, state press reported Tuesday.
   Under the agreement signed last week, Credit Suisse will hold no more than 33 per cent in the new company, the China Securities Journal reported, citing an unnamed source.
   If approved, Credit Suisse may become the first beneficiary of the anticipated lifting of restrictions on foreign investment in China’s financial service industry.
   China suspended the review of applications for foreign-invested securities houses two years ago to overhaul the ailing domestic industry.
   It agreed to resume licensing securities companies, including joint ventures, in the second half of 2007, in a high-level China-US economic meet in May.

China said Tuesday constant US criticism over trade disputes was hurting economics ties, although the world powers agreed at top-level talks to cooperate on improving the safety of Chinese exports.
   Chinese vice premier Wu Yi used her opening remarks at an annual one-day trade meeting here to hit out at what she said was rising protectionist sentiment in the United States.
   ‘There have been some disharmonious notes in China-US relations this year. The inclination to politicise trade issues has increased,’ Wu said.
   ‘Trade restrictions, and protectionist measures, can only hurt both sides.’
   She was referring to a spate of bills introduced by US lawmakers that could lead to new legislation targeting alleged unfair Chinese trade practices, amid an ever-expanding trading imbalance between the two sides.
   The United States’ trade deficit with China ballooned to 23.8 billion dollars in September, up 5.5 per cent from August, according to the latest US figures.
   The United States has also initiated action at the World Trade Organisation this year over trade disputes, including alleged Chinese intellectual property rights abuses and unfair industrial subsidies.
   US commerce secretary Carlos Gutierrez said that, during talks among delegation chiefs before the official meeting, Wu had ‘mentioned very strongly and very directly that she felt uncomfortable’ with the US actions at the WTO. Gutierrez urged China not to take offence at the WTO complaints.
   ‘When we take a case forward in a legal fashion, we do so as a matter of business but never as a matter of disrespect,’ he said, while adding that the US administration remained opposed to protectionism.
   In her opening remarks to Gutierrez and trade representative Susan Schwab, co-leaders of the US delegation, Wu also criticised US media reports about the safety of Chinese-made products.
   ‘The US media has hyped the product safety issue, causing serious damage to the image of Chinese products and China’s national reputation,’ she said, adding the politicisation of trade issues had also had an impact.
   Nevertheless, the talks wrapped up with two agreements that saw the nations pledge to work more closely on improving the safety of food, farming feed, drugs and medical devices exported from China to the United States.
   Chinese producers of the affected items, which include some at the centre of recent US bans and recalls, will be subject to strict supervision, with the results of regular safety checks passed on to US authorities.
   ‘The most important aspect of this agreement is that it gives broader access by US officials to producers in this country,’ US health secretary Mike Leavitt said at the signing ceremony in Beijing.
   In total, 14 agreements were signed, including one that seeks to increase the number of Chinese tourists to the United States.
   The talks were the 18th annual session of the Joint Commission on Commerce and Trade, held to discuss specific trade-related issues.
   Gutierrez gave a cautiously positive assessment of the day’s proceedings, saying there was some ‘specific, tangible, incremental progress on individual issues.’
   ‘It’s some progress. Is it everything we would have liked? No,’ he told reporters.
   On Wednesday, a two-day Strategic Economic Dialogue will begin. Held twice a year, it is meant to look at longer-term trade issues between the two sides.
   US treasury secretary Henry Paulson, who will head the US team to the dialogue, has already flagged concerns over China’s trade practices to be discussed.
   One of the biggest issues for the United States is China’s currency, the yuan, which critics charge is being kept artificially weak to allow Chinese firms an unfair advantage when they sell their products overseas.
   Paulson last week called on China to immediately revalue the tightly-controlled yuan.

Forging a deal on tackling climate change will be even harder than hammering out long-stalled international trade talks, the head of the World Trade Organisation has warned.
   Pascal Lamy told a small group of reporters that trade policies could play a key role in fighting global warming, with shifts on agricultural subsidies and tariffs all possible solutions.
   ‘I’ve always said that a multilateral agreement on CO2 emissions is probably much more difficult than a multilateral agreement on exports of pigs or poultry or socks,’ he said in a weekend interview on the Indonesian island of Bali.
   The Doha Development Round of WTO negotiations has been deadlocked since its inception in 2001, with rich and poor countries at loggerheads over agricultural subsidies and industrial tariffs.
   ‘There is an element of similarity because it is about adjusting multilateral rules to a new reality,’ Lamy said.
   Government delegates from up to 190 countries are in Bali trying to agree on a timetable of negotiations for a new climate initiative when the current phase of the existing treaty — the Kyoto Protocol — expires in 2012.
   Rich and poor nations appear divided on who should make legally-binding commitments on cutting emissions of greenhouse gases blamed for global warming and who should pay for the damage wrought by climate change.
   ‘I think everybody agrees that climate change is a common responsibility with differentiated responsibility’ Lamy said. ‘How differentiated, that’s for the negotiations.’
   Trade ministers and then finance ministers have held talks in Bali on the role of commerce and economics in the fight against global warming.
   The United States, the European Union and Brazil emerged divided over a US-EU proposal for fewer tariffs among WTO members on 43 environmentally friendly products, with Brazil loudly protesting the exclusion of ethanol.
   Trying to define what products were ‘green’ when so many were dual use was very complex both in Bali and in the Doha round, Lamy said.
   Lamy acknowledged that trade — with products circling the globe by air and sea — did have a so-called carbon footprint, but urged more research on the extent of the damage it causes to the environment.

China’s trade surplus hit 26.3 billion dollars in November, an increase of 14.7 per cent from the same month a year ago and the third-largest on record, official data showed Tuesday.
   China’s exports were up 22.8 per cent in November from a year earlier to 117.6 billion dollars, the customs bureau said in a statement.
   The figures were released as Chinese and US top envoys kicked off three days of economic talks, likely to centre around China’s huge trade surplus.
   Critics in the United States charge that China is keeping its currency, the yuan, artificially weak, giving Chinese firms an unfair advantage when they sell their products overseas.
   China has seen a year of record-high trade surpluses, peaking in October, when the figure topped 27 billion dollars.
   For the first 11 months of the year, the trade surplus totalled 238.1 billion dollars, a rise of 52.2 per cent from a year earlier, customs said. This puts the full-year trade surplus well on track to beat last year’s 177.5 billion dollars — then a record — by a wide margin.
   Imports increased at a faster rate than exports in November, rising 25.3 per cent from a year earlier to 91.3 billion dollars.
   It was the first time ever that imports exceeded 90 billion dollars for a single month, according to the customs authorities.
   ‘In our view, strong imports growth reflected robust domestic demand momentum,’ said investment bank Goldman Sachs in a research note.
   ‘However, the increasing intensity of the policy tightening is likely to put pressure on domestic demand growth going forward, and therefore the current strength of imports growth is unlikely to be sustained.’
   China’s economy is expected to expand 11.5 per cent in 2007, fuelled mainly by investment spending, making it the fifth consecutive year of double-digit growth, according to previous reports in the state media

Emerging countries, notably oil producers but also China, are using ever-greater inflows of foreign currency to buy businesses in industrialised economies arousing suspicions that their motives are political, the OECD says.
   And, suggesting last week a code of conduct for ‘opaque’ state sovereign wealth funds, it also foresaw that they would move some of their money out of top-rank bonds thereby pushing up long-term interest rates, and into stocks, pushing up share prices.
   ‘Some SWFs are becoming large players in financial markets and their importance is set to go on increasing rapidly as a significant part of global reserve accumulation (currently around one trillion dollars annually) is likely to be deployed into such funds.’
   ‘Altogether SWFs are thought to already manage combined assets of 1.5-2.5 trillion dollars,’ the Organisation for Economic Cooperation and Development says in its latest review of the world economy.
   The OECD argues for transparency in the strategies of SWFs which, it said, some suspect of being fronts for political purposes.
   And it sees a rise in defensive measures in the old industrialised economies against the purchase of businesses in their increasingly privatised economies by state investment vehicles.
   The largest of these funds by far is operated by the United Arab Emirates, followed by funds in Norway and probably Singapore.
   ‘The more recent Chinese SWF will manage assets of 200 billion dollars but two-thirds of this amount will be placed in investments designed to recapitalise Chinese banks, leaving around 67 billion dollars to be invested in world markets.’
   Until now, countries with large inflows of foreign currency had invested mainly in high-quality, fixed-income paper, thereby putting downward pressure on long-term interest rates.
   Any shift away from such assets would ‘tend to push up long-term interest rates.’
   The OECD also estimates that ‘SWFs are likely to invest a fair share of their portfolio in equities, which may have some impact on equity prices.’
   They could also have a ‘quite noticeable impact’ on the valuation of assets in emerging markets.
   The OECD warned that although it was right and good for the global economy that countries with big holdings of foreign assets manage them efficiently, the way they functioned across borders was out of step with general expectations that decision-makers acted on a rational commercial basis.
   ‘Indeed, with most OECD countries having undertaken massive efforts to reduce state ownership of commercial entities over the past two decades, a de-facto partial re-nationalisation of enterprises by foreign sovereigns (SWFs) is often eyed with suspicion.’
   Such concern was heightened by uncertainty about the amount of assets held by SWFs, their investment strategy and holdings.
   ‘Many SWFs are viewed as opaque and secretive, with the Norwegian and, to a lesser degree, the Kuwaiti ones being the major exceptions.
   ‘Lacking sufficient disclosure, funds are sometimes suspected of hiding strategic objectives, with the pursuit of financial returns and political objectives often becoming indistinguishable.’
   The OECD says that ‘this secrecy is at odds with standards applied in global financial markets’ and that given that many SWFs are now big enough to move markets ‘there is a case for making them liable to the same transparency requirements.’
   It would therefore appear to be in the general interest ‘that countries develop certain codes of conduct for their SWFs (as Norway, for example, has already done), which clarify their objectives, investment strategy and governance model, while guaranteeing sufficient transparency for their activity.’
   The OECD always warns that investment for non-financial purposes was a concern in any case since it could disrupt ‘the proper functioning of markets in the recipient country.’

Four European banks — UBS, SachsenLB, Lloyds TSB, and Societe Generale — revealing delayed strains from the US home-loan crisis which is still shaking global finance four months after it broke in August.
   On the wider front of short-term interest rates, vital to how banks refinance their immediate needs, there is renewed tension in the money markets as the year-end approaches.
   This led European Central Bank board member Lorenzo Bini Smaghi to say on Monday that the strains reflected ‘concern about cash requirements at the end of the year’ but this was misplaced because central bank policy of ‘stabilising overnight rates will continue.’
   UBS and SachsenLB have been hit so hard by their exposure to the so-called sub-prime mortgage market and the financial instruments it generated that their capital bases have been weakened.
   On Monday, UBS, one of the most prestigious names in Swiss and European banking, bit on the bullet of its losses, making a record write-off of about 10 billion dollars and announcing that the hole was being plugged mainly by the Singapore state investment fund, and also by an unnamed Middle East investor.
   UBS also warned of a loss in the fourth quarter and possibly for the whole year, and said that overall it needed 17.1 billion dollars of new capital. It plans to sell its own shares and to replace a cash dividend with a dividend in shares.
   The sudden arrival of the Singapore sovereign wealth fund occurred only days after the Organisation for Economic Cooperation and Development had focused on the rising importance of such emerging-country funds as corporate investors to recycle huge inflows of foreign, mainly dollar, reserves.
   Analysts said that by acting radically and quickly, UBS wanted to reassure that it was putting nasty surprises behind it.
   In Germany, the waves from the mortgage shock could have a far bigger impact than expected on the regional state bank SachsenLB, according to a group of experts who estimate its exposure at 43 billion euros, the Sueddeutsche Zeitung newspaper reported.
   It added that the fallout could overwhelm an emergency rescue organised for the bank after the US crisis emerged.
   At leading British bank Lloyds TSB, which puts the sub-prime damage to its accounts at 280 million euros, managing director Eric Daniels said that a ‘low-risk’ strategy had limited fallout, but the last few months had been one of the most difficult in global finance for a generation.

Russia’s 25 most multinational companies have more than doubled their foreign assets, sales and number of employees abroad since 2004, according to a survey published on Tuesday.
   The study compiled by the Skolkovo Moscow School of Management and Columbia University in New York found that the top 25 companies owned assets worth 59 billion dollars outside of Russia.
   The ranking of Russian multinationals was headed up by oil major Lukoil, followed by state-controlled gas monopoly Gazprom, steel giant Severstal, metals holding Rusal and transport company Sovcomflot.
   The main sectors on the list were energy, metals and mining.
   The study also found that Russia’s top 25 multinational companies had around 200 billion dollars in foreign sales every year, including exports, and employ 130,000 people abroad.
   The companies’ foreign sales and employment have more than doubled since 2004 and their aggregate foreign assets have grown 2.5 times in the same period, the study said. The growth was far ahead of the world’s 25 leading multinationals.
   ‘This means that Russian global players are catching up with international competitors quickly’ but ‘Russian multinationals have yet to outgrow their foreign counterparts,’ the report said.

The BRAC Bank Limited has recently opened eleven more ATM booths at Malibagh, Basabo, Rajarbagh, Shahabagh, Karwan-bazar, Kamalapur, Fakirapool, Hatirpool, Indira Road, Farmgate and Old Airport Road in the city.
   Apart from 24-hour cash withdrawal facility and other value added services, these new generation bi-lingual ATMs are expected to bring more convenience and comfort for the fast growing customer base of BRAC Bank, said a press release.
   There will also be cash deposit facility through cash deposit machine at the Fakirapool ATM booth.
   Imran Rahman, managing director and chief executive officer of BRAC Bank, inaugurated the ATM booths.
   Zabed Amin, head of retail banking, Abedur Rahrnan Sikder, head of alternative delivery channel, and other senior officials of BRAC Bank were also present at the inaugural ceremonies.

The Mutual Trust Bank Ltd has opened its 29th branch at Aganagar of Keraniganj in Dhaka recently.
   Samson H Chowdhury, industrialist and chairman of the Mutual Trust Bank Ltd, inaugurated the branch at Babul Tower, Shahid Delwar Hossain Road, East Aganagar, Keraniganj, said a press release.
   Kazi Md Shafiqur Rahman, managing director, Quamrul Islam Chowdhury, deputy managing director, senior executives of the bank and a large number of businessmen were present at the inaugural ceremony.

The dollar steadied against the euro and yen on Tuesday as the market sat tight before the Federal Reserve’s meeting in which the US central bank was expected to cut American interest rates.
   In early European trading, the euro rose to 1.4717 dollars, from 1.4712 dollars in New York late on Monday.
   The dollar gained to 111.98 yen from 111.70 late on Monday.
   ‘The markets may be cautious ahead of the Fed’s rate announcement and statement, even if a 25 basis-point rate cut is now widely expected,’ CIBC economist Jodie Tiller said.
   ‘Focus will turn to the US central bank’s statement for any change in the risk assessment from the Fed,’ she added.
   The Federal Reserve was widely expected to cut its key interest rate by at least a quarter of a per centage point to 4.25 per cent, dealers said.
   But analysts warned that another dose of the Fed’s monetary medicine would not cure the US economy’s ills overnight.
   ‘The optimistic mood over the signs of an easing of the subprime crisis seen up until last week may be beginning to fade,’ said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.
   ‘US employment data have already been announced and after the Fed meeting ends the market will revert back to its original sentiment towards the subprime problems by the end of this week,’ he added.
   A 25-basis-point cut is seen as the most likely outcome of the Fed meeting after last week’s robust non-farm payrolls data and some stronger than expected housing data on Monday. However a 50-basis-point cut remains possible as the Fed tries to fend off signs of a severe economic slowdown, dealers said.
   ‘Another rate cut is virtually a done deal, but the size of the cut and the language of the statement are still uncertain,’ said currency strategists at the Commonwealth Bank of Australia in a note to clients.
   The Fed has already reduced borrowing costs twice since September in a bid to underpin economic momentum and is expected to act again amid a protracted housing slump and tighter global credit conditions, they said.
   The housing woes have triggered vast multi-billion dollar losses for major banks that snapped up mortgage-backed securities during a housing boom.
   This in turn has led to a credit crunch, as banks become wary of lending money to each other, and higher short-term interest rates.
   In European trade Tuesday, the euro changed hands at 1.4717 dollars, against 1.4712 late on Monday, at 164.79 yen 164.33, 0.7184 pounds 0.7189 and 1.6618 Swiss francs 1.6596.
   The dollar stood at 111.98 yen 111.70 and 1.1296 Swiss francs 1.1277.
   The pound was at 2.0498 dollars 2.0463.

World oil traded higher in Asia on Tuesday ahead of an expected US interest rate cut that analysts see as boosting economic growth and demand for crude.
   In afternoon trade New York’s main oil futures contract, light sweet crude for January delivery, was 44 cents higher at 88.30 dollars a barrel after closing at 87.86 dollars in New York on Monday. The contract had traded as high as 89.80 dollars.
   Brent North Sea crude for January delivery was 38 cents higher at 88.38 dollars a barrel. The contract reached 89.85 dollars a barrel in London Monday before easing.
   ‘I think we can expect quite a bit of volatility this week,’ said Victor Shum, of Purvin and Gertz international energy consultants in Singapore.
   Concerns about United States economic growth have weighed heavily on crude oil futures but they should receive some support from a key US interest rate decision expected on Tuesday, Shum said.
    Most analysts expect the US Federal Reserve to cut its key Fed funds short-term interest rate by a quarter-point to 4.25 percent.
   ‘That will help bolster the US economy,’ Shum said.
   After a run-up to record highs of close to 100 dollars in late November, crude prices have fallen back and analysts say bearish sentiments have taken over.
   ‘I think the bullish froth has been taken out of the crude oil futures market,’ Shum said.
   Underscoring the bearish tendencies was the fact that OPEC’s decision last week to leave its daily crude output quota unchanged at 27.25 million barrels failed to spark a rally, Shum said.
   Prices initially spiked in reaction to the Organisation of the Petroleum Exporting Countries’ decision but then fell back.

Suzuki to roll out new car from India
Japan’s Suzuki Motor will roll out its next global car from India, targeting European buyers, and plans to invest 1.78 billion dollars ramping up output in the country, the company said Tuesday. Suzuki Motor Corp, an early entrant into the Indian market when the nation began opening up its economy in the 1990s, is making India a global production hub with its majority-owned Indian unit Maruti. ‘Our next world car will be made in India,’ Suzuki chairman and chief executive Osamu Suzuki told reporters in the Indian capital. The new five-door hatchback will be called the ‘Concept A-Star’ and will be the fifth global car from the Suzuki line-up after the Swift, the Grand Vitara, the SX4 and the Splash. Tuesday’s announcement underscored the importance of the fast-growing Indian market to Suzuki after its Indian unit in October outstripped its parent in sales in their respective home markets for the first time ever. ‘Given the importance of India to the Suzuki world strategy it is planned to invest 200 billion yen ($1.78b) for plants in India to 2009,’ Suzuki Motor said in a statement.
— AFP

ADB lends $300m
to Indonesia
Indonesia will borrow 300 million dollars from the Asian Development Bank to develop the country’s capital markets, the Philippines-based lender said Tuesday. The programme would promote transparency and information disclosure in capital markets, enabling market valuation of fixed-income instruments, an ADB statement said. Jakarta has undertaken financial sector reforms to restore its banking sector to solvency and profitability after the mid-1997 Asian crisis, the bank said. However, the rate of economic growth has not returned to pre-crisis levels. Indonesia needs investments, especially in infrastructure.
— AFP