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The Bangladesh Bank stands firm on single borrower exposure limit set for banks, but said the lenders are allowed to set limit and margin for import letters of credit on case to case basis.
   The central bank gave its views in response to the finance ministry's query on the proposal of Bangladesh Fertiliser Association to make L/C terms easier for non-urea fertiliser imports, official sources said.
   The association earlier appealed for higher limits and zero margin requirement for opening import L/Cs for fertilisers.
   In its letter to the finance ministry, Bangladesh Bank referred to the general lending rules that prevent banks from lending more than 35 per cent of their total capital to individual borrowers.
   Banks are free to decide the limit [maximum loan for an import consignment] and margin [money paid in advance] for import L/Cs on the basis of their relationship with clients or on case-to-case basis, it also mentioned.
   Any commercial bank can also appeal to the central bank for offering maximum ceiling for an importer, it added.
   Following an intelligence agency report, the government earlier asked the central bank to resolve the alleged deadlock over opening L/Cs with commercial banks for importing fertilisers, especially triple super phosphate, murate of potash and di-ammonium phosphate.
   The intelligent agency had alerted the government to looming fertiliser crisis in the next year as complexities in opening import L/Cs almost stalled non-urea fertiliser import which could result in a shortage of fertilisers in the next cultivation season.
   It also suggested that the banks should be asked to raise their limits and lower margin for import letters of credit to facilitate non-urea fertiliser imports and make them available to farmers on time.
   The agency proposed that L/C limit could be slightly increased while margin be lowered to 5 per cent from the current of 10 per cent to facilitate hassle-free and timely import of fertilisers from a volatile global market.
   'If the farmers use less-than-required quantity of fertilisers because of their unavailability, it will lead to a fall in production and threaten the country's food security,' the intelligence agency report cautioned.
   Prices of di-ammonium phosphate surged to $1,065 a tonne from $450, triple super phosphate to $1,400 from $ 550 and murate of potash to $1,000 from $425 in the global market.

Jute yarn exporters demanded that the government should impose an interim restriction on exports of raw jute as massive decline in jute production this year would make their procurement difficult.
   More than 60 lakh bales (each 180 kilogram) of raw jute was produced last year but the Bangladesh Jute Spinners Association studied that jute production is set to decline by at least 20 per cent as jute farmers shifted to paddy cultivation in view of high returns.
   'Jute spinners are urging the government to impose an immediate and interim restriction on raw jute export as reports from major jute trade centres across the country indicate massive decline in production,' Shabbir Yussuf, chairman of the association, told New Age.
   Jute spinners, who ship nearly 0.3 million tonnes of yarns to global market, earned about $150 million in the first nine months of the just ended 2007-2008 fiscal year ensuing 62 per cent of jute goods earning.
   Spinners demanded that the restriction should continue up to December, because after the harvest (during July-December), it could be assessed how much jute Bangladesh should export after ensuring viable supply to its local industry.
   The spinners said early harvested jute lots started reaching local market, though not significantly, and market trend indicated that the average price level this year would cross Tk 13,00 per maund (37.3 kilogram), against Tk 900 in the previous year.
   Owners of jute spinning units said they were in double trouble as price of raw jute increased significantly while prices of their products declined on international market. According to industry sources, prices of jute yarns declined by more than 10 per cent during the past six months while its demand from the customers, especially the carpet makers in Turkey, Belgium, Australia and elsewhere, also declined.
   Because of economic slowdown in the USA and elsewhere, demand for carpets on the global market has declined, causing suffering to the Bangladeshi spinners who supply jute yarns used in carpet backing cloth.

The Bangladesh Electrical Merchandise Manufacturers Association has demanded that the government should take immediate measures to stop under-invoicing by some dishonest importers and address double VAT payment problem in the interest of smooth flourishing of the industry.
   'The country's electrical goods industry has huge potentialities but its growth is being hindered due to several problems, especially under-invoicing by some importers and double VAT payment system,' BEMMA president Enayet Hossain Chowdhury told the news agency on Friday.
   'We are facing uneven competition from dishonest traders, who import finished or semi-finished electrical products from different countries through under-invoicing and sell them at cheaper rate than locally-made goods. It deters competitiveness and destroys level-plying field,' he said.
   Due to under-invoicing, the government is being deprived of a huge amount of revenue annually, he said, adding electrical goods worth about Tk 8,000 crore are imported a year.
   He said different sub-sectors of the industry, including those producing light-fittings, fan, switch, socket, plug, ballast and bulb and tube, are victims of the under-invoicing.
   Despite reducing duty on raw materials and imposing supplementary duty on imported goods, local electrical industry is facing stiff price competition due to the under-invoicing, Chowdhury said.
   According to the BEMMA president, there are 2000 small and medium industries which produce 65 per cent electric goods of the country's total demand and about five lakh people are involved directly or indirectly in the fast-growing industry.
   The annual turnover from the industry is nearly Tk 16,000 crore, of which contribution of local producers is about Tk 8,000 crore and the rest comes from importers, he said, adding the demand for electrical goods in the country is increasing at 20 per cent yearly.
   Of the total demand, 90 to 95 per cent cables, fans, light- fittings and accessories are produced in the country, Chowdhury said and added, 'If we get proper patronisation and support from the government, we would be able to produce most of other electrical products within five years.'
   After meeting local demand, he said, some industries are exporting cables, energy-saving lamp, electrical substation components such as switchgear and transformers, accessories, electrical heater, iron, ballast, fluorescent and automobile bulbs on a small scale to different countries, including Nepal, Bhutan and the Middle East.
   Chowdhury said double VAT payment system is one of the main barriers to flourishing the industry. 'Double VAT payment during purchase of raw materials and again on finished products puts burden on the local industry which must be stopped by introducing proper VAT and tax policy,' he added.
   He also demanded setting up industrial park comprising plastic, electrical, electronics and light engineering industries.
   'To meet requirements of standards and compliance, some common facilities such as testing and training are needed. Without industrial park, it is difficult to develop such facilities,' he said.
   If industrial park is established, he said, quality of products would be improved on one hand, while cost would be reduced on the other hand.
   About the standard of local electrical goods, Chowdhury said, 'Twenty per cent of our products are of international standard. But 60 to 70 per cent are of Asian standard.'

A four-day first ever Bangladesh single country trade fair began Friday at Putra World Trade Centre in the Malaysian capital of Kuala Lumpur amidst enthusiasm and festivity.
   The Dhaka International Exhibition Company organised the fair in collaboration with the National Bank, according to a message received in Dhaka said.
   Bangladesh high commissioner to Malaysia M Khairuzzaman and Malaysian high commissioner to Bangladesh Abdul Malek Bin Abdul Aziz jointly inaugurated the fair.
   Senior officials and businessmen of the both countries were present.
   A total of 22 Bangladeshi manufacturing and service companies, including four banks, three life insurance companies, three readymade garments and four housing companies are taking part in the fair.
   The participating banks are National Bank, Pubali Bank, NCC Bank and AB Bank and the life insurance companies are Meghna Life Insurance Company, Prime Islami Life Insurance Limited and Golden Life Insurance Limited.
   Speaking on the occasion, the Malaysian high commissioner to Bangladesh said Kuala Lumpur would provide support to Bangladesh to export their products easily.
   He said this type of exhibition could boost exports and import and build image of both Bangladesh and Malaysia. He urged the Bangladeshi businessmen to invest in unexplored but potential sectors in Malaysia.
   Khairuzzaman said Malaysia is one of the potential product as well as labour market for Bangladesh, where trade is in favour of Malaysia.
   He invited the Bangladeshi businessmen to come forward with their products and services in Malaysian market.
   Enayet Karim, managing director of DIEC, spoke on the occasion.
   According to the message Golden Dream, a readymade garment, has fetch an order of 5000 dozens of polo shirt, while NCC Bank and Pubali Bank have confirmed remittance agreement with two Malaysian exchange companies and banks.
   National Bank is going to open an exchange house in Malaysia very soon and permission from the Malaysian authorities in this regard is almost at the final stage.

The government will soon build an Information Technology Tower in the port city of Chittagong with a view to expediting trade and industrialisation and also strengthening the share market by creating a network with the global market.
   A committee formed in this regard earlier will hold its first meeting on Sunday in Chittagong to discuss issues related to selection of site, budget for construction of the IT Tower and other technical aspects, said chairman of the Chittagong Develop-ment Authority Shah M Aktar Uddin on Friday.
   The CDA chairman, also convener of the six-member committee, said the IT Tower would work as a milestone in further developing the country's trade and business depending on this most modern technology.
   'It will help Chittagong seaport, various industrial units, and export-import businesses including readymade garments,' he said, adding that no country in the present world could progress without development of IT.
   Commerce and education adviser Hossain Zillur Rahman at a meeting with the businessmen, professionals and officials at the local circuit house recently disclosed the government's plan to build Chittagong as a world level commercial capital.
   As part of that plan, the process to resolve various problems in the port city has already begun. Chief adviser Fakhruddin Ahmed recently formed a committee with the commerce adviser as the convener to solve power crisis and other problems in the city.
   Shah M Aktar Uddin said the CDA has undertaken a number of projects to build garments' village at Fateyabad, marine drive at Patenga and riverside ring road on the bank of the River Karnaphuli.

Despite insecurity in various parts of the world, international tourism grew by five per cent during the first four months of this year compared to the same period last year.
   The United Nations World Tourism Organisation, however, expects slower annual growth due to economic crisis facing the world.
   Fluctuation in tourism demand will be contingent on 'how the economy evolves and consumers react, both of which are directly interrelated to oil and food prices,' said UNWTO secretary-general Francesco Frangialli.
   The northern hemisphere's summer season, traditionally the busiest period of the year, will need to be followed closely, he added.
   All of the world's subregions posted growth between January and April this year, with the Middle East, North-East and South Asia and Central and South America registering the strongest results.
   In the same period, countries such as China, Japan, Indonesia, Cuba, Jamaica, Sweden, Bulgaria, Israel, Turkey, Egypt and Morocco witnessed double-digit growth rates.

A State Administration of Grain official said on Friday grain prices might continue rising this year despite a rough supply-demand balance in China.
   ‘Price pressure for major grains in China this year persists as a result of increasing agricultural costs, soaring prices in the global market and bullish sentiment driven by higher minimum purchase prices,’ SAG deputy head Zeng Liying told a seminar.
   The country raised its minimum purchase prices for rice and wheat twice this year to spur grain production and curb inflation, which hit an 11-year high of 8.7 per cent in February.
   A bumper summer crop for the fifth year in a row has strengthened the government’s confidence in securing supply and easing inflation. Globally, grain shortages are easing as better weather helped increase output in the world’s producing areas.
   However, Zeng said grain demand would keep rising as the world had 76 million more people to feed during the past five years and a surge in grain-consuming bio-energy development impelled by soaring oil prices increased already voracious demand.
   She said the supply of wheat, corn and rice was sufficient in China while that of soybean was not. However, soybean imports would expose the country to global inflationary risks.
   In the long run, the country’s grain market would be increasingly influenced by the global market, she added.

Japanese share prices slipped for a 12th straight trading day Friday, continuing their longest losing streak in more than five decades on worries about the earnings outlook, dealers said.
   Crude oil prices rocketed above 146 dollars a barrel overnight for the first time, heightening concerns for the global economy. Many Japanese companies are feeling the pinch from higher energy costs.
   The Tokyo Stock Exchange's benchmark Nikkei-225 index dropped 27.51 points or 0.21 per cent to end at 13,237.89. The broader Topix index of all first-section shares slipped 0.14 points or 0.01 per cent to 1,297.88.
   The last time the benchmark fell for 12 straight sessions
   was in April 1954, when it declined for 15 straight trading days.
   The index has fallen about 1,215 points, or 8.4 per cent, over the past 12 sessions.
   'Japanese shares have become an easy target for selling since they have outperformed other global markets since their lows in March,' Yutaka Miura, a senior technical analyst at Shinko Securities, told Dow Jones Newswires.
   The benchmark may trade below 13,000 next week, he said.
   Activity was muted with many players away ahead of Independence Day holiday in the United States.
   Real estate issues were hit by worries about the health of the sector.
   Sumitomo Realty & Development lost 3.3 per cent to 2,075 yen and Tokyo Tatemono slid 6.1 per cent to 551 yen.
   Chip shares ended in negative territory. Tokyo Electron declined 1.2 per cent to 5,880 yen and Advantest dipped 1.1 per cent to 2,195 yen.
   Auto shares fared better as the dollar held up above 106 yen despite a drop in US employment and an interest rate rise by the European Central Bank. A weaker dollar against the yen is bad for exporters' profits.
   Mazda Motor advanced 4.6 per cent to 550 yen and Nissan Motor edged up 0.8 per cent to 866 yen.
   On the foreign exchange market, the dollar was quoted at 106.72 yen in Tokyo afternoon trade, down slightly from 106.81 in New York late Thursday. The euro edged up to 167.67 yen from 167.50.

China and Taiwan launched regular direct flights Friday for the first time in nearly six decades, ushering in what Beijing called a 'new start' in their tense and testy relations.
   In the most visible sign yet of a new openness toward the mainland under new Taiwanese president Ma Ying-jeou, the two sides -- which split in 1949 after a civil war -- welcomed passenger flights directly from each other's territory.
   'This is a sacred moment,' said Liu Shaoyong, the chairman of China Southern Airlines, who piloted the first flight from the southern Chinese city of Guangzhou to Taiwan himself.
   'Flying over the strait to Taiwan is like coming home,' he told a crowd of well-wishers at the airport welcoming ceremony. 'It feels good.'
   The 100 Chinese tourists aboard got the red-carpet treatment on arrival, including jets of water shooting over the plane, to symbolise the cleaning of dusty travellers, as well as a traditional Chinese 'lion dance'.
   'We were lucky to be on the plane,' said Wang Yu, a businessman from Zhuhai in southern China. 'Many people were fighting for seats on the inaugural flight.'
   The head of China's National Tourism Administration, Shao Qiwei, led a delegation of officials who made the trip to the self-ruled island from Beijing.
   Ties between Taiwan and China have always been better than the public hostility from the two sides has acknowledged, and trade between them last year was more than 100 billion US dollars.
   But officially, China sees Taiwan as its territory waiting to be reclaimed by force if needed -- and the Strait, heavily armed on both sides, has long been one of the world's most dangerous potential military flashpoints.
   Taiwan banned direct trade and transport links following its split from the communist mainland, but Ma's election opened the door to warmer ties after an especially frosty period under his pro-independence predecessor Chen Shui-bian.
   The two sides held their first direct talks in a decade last month. Those talks led to the flights agreement -- a deal that, for four days a week at least, will eliminate the time-consuming stopovers in Hong Kong or elsewhere that have been the bane of travellers between the two sides.
   'Today is a new start in the history of exchanges between the two sides,' Wang Yi, director of China's Taiwan Affairs Office, said in Beijing.
   'At present, cross-Strait relations are facing a rare opportunity for development,' Wang said.
   Changes have been rapid since Ma took office in May.
   Taiwan banks can now exchange Chinese currency, limits on Taiwanese investment on the mainland have been eased, and some Chinese media outlets which had been banned on the island now have clearance to work.
   There will be 36 round-trip flights across the Taiwan Strait weekly, operating from Friday to Monday between six Taiwanese airports and five on the mainland.
   The service will meet growing demand after Taiwan allowed up to 3,000 visitors a day from China, a move expected to give a much-needed boost to the island's sluggish economy.

Rising food and energy prices in the Philippines pushed its June inflation rate to 11.4 per cent, the highest level in 14 years, the government said Friday.
   The upturn exceeded the forecasts of both the central bank and many private analysts who had expected inflation to range from 10.4 to 11.2 per cent.
   This was also the highest rate since May 1994 when inflation hit 11.5 per cent, the National Statistics Office said in a statement.
   Central bank governor Amando Tetangco signalled the monetary authority's plan to tighten monetary policy.
   'While inflation continues to be influenced by supply-side pressures, there are indications that such pressures have started to feed into demand, with core inflation steadily rising since December 2007,' Tetangco said in a statement.
   'Monetary authorities have acted last month to address risks to inflation and they stand ready to adjust monetary policy settings further as and when necessary to achieve the price stability objective,' he added.
   The central bank began tightening its key interest rates last month, for the first time since 2005, after the May inflation figure spiked at a readjusted rate of 9.5 per cent.
   The overnight borrowing rate rose to 5.25 per cent while the overnight lending rate was increased to 7.25 per cent, both by 25 basis points.
   The government said Friday that the upsurge in inflation was due to 'soaring prices of rice nationwide along with the upward adjustments of other food items such as flour and flour products, fruits and vegetables and meat in selected regions.
   'Tuition fee hikes and the series of upward adjustments in petroleum products also contributed to the uptrend,' the statement said.
   The school season began last month.
   Economic planning secretary Augusto Santos said cereals prices surged 42.2 from a year earlier, with fuel prices up 22.0 per cent while transportation and communication jumped 12.4 per cent.
   Excluding selected food and energy items, core inflation rose to 6.6 per cent in June from 6.2 per cent in May, the office said.
   The June figure brings inflation in the first half of the year to 7.6 per cent.
   The central bank originally forecast inflation for the whole year at 3.0 to 5.0 per cent.
   'The current inflation is consistent with the central bank outlook that inflation will reach double-digits beginning in June this year,' Tetangco said.
   'The inflation path is expected to peak in the third quarter of 2008 and decline thereafter toward single-digit levels in 2009, as price increases in food and oil may not be sustainable.'

Baosteel, China's largest steel maker, said Friday it had agreed with BHP Billiton on a price increase of up to 96.5 per cent for iron ore in 2008, nearly double that of 2007.
   The prices were to increase by 79.88 per cent to 96.5 per cent, respectively, depending on the category of iron ore, the company said in a statement on its website.
   'As an outcome of these negotiations, the iron ore prices for Newman Fine Ore and Yandi Fine Ore, increased by 79.88 per cent, and the price for Newman Lump Ore increased by 96.5 per cent relatively to 2007,' said Baosteel in a web announcement.
   The price rise is in line with experts' predictions and followed the settlement between Baosteel and Australian miner Rio Tinto last week.
   Baosteel, which negotiated on behalf of China's steel industry, said on June 23 it agreed to a 79.88 per cent price hike for Pilbara blend fines and Yandicoogina fines and a 96.5 per cent price rise for Pilbara Blend Lump for the contract year starting on April 1.
   Baosteel agreed in February on a 65 per cent price rise for iron ore from Brazilian miner Vale. Rio Tinto and BHP Billiton then demanded a 'freight premium,' claiming it costs less to ship iron ore from Australia to China.

The Fareast Islami Life Insurance Company Limited and the SSL Wireless signed a deal in the Dhaka city on Thursday.
   M Mosharraf Hossain, deputy managing director of Fareast Islami Life Insurance Company, and Sayeeful Islam, managing director of SSL Wireless, inked the deal, said a press release.
   According to the deal, the SSL will provide mobile based services to the Fareast Islami Life Insurance Company.
   The policy holders of the company will receive information of insurance in their cell phones.
   Md Nazrul Islam, board chairman of Fareast Islami Life Insurance Company, Md Ali Hossain, managing director, M Tajul Islam, chairman, of the executive committee of the insurance company and senior executives of both the organisations were present on the signing occasion.

The group responsible for managing Japanese public pension reserves posted more than 5 trillion yen ($46.84b) in losses in fiscal 2007, due mainly to the US subprime mortgage loan crisis, sources said Thursday.
   This marks the first time in five years losses have been reported for the public pension reserves for a single fiscal year.
   Public pension reserves are managed by the Government Pension Investment Fund, an independent administrative corporation tasked with managing and investing reserve funds of public pension programmes.
   Declines in worldwide share prices resulting from the subprime loan crisis combined with the yen's appreciation against the dollar saw yields on investments fall 6 per cent, the sources said.
   The poor performance is expected to intensify calls for reviewing the management method of public pension reserves, observers said.
   The organisation is commissioned by the health, labour and welfare minister and manages about 90 trillion yen ($843.17 billion) in the markets, out of the about 150 trillion yen ($1.40 trillion) of reserves from employees' pension and national pension programmes.
   About 60 per cent of the funds have been invested in Japanese bonds and about 30 per cent in Japanese and foreign stocks.
   In fiscal 2007, the investment gained 2.38 trillion yen ($22.29b) in yields in the first quarter. After the subprime loan problem surfaced, however, the investment performance deteriorated, recording deficits of 1.63 trillion yen ($15.27b) in the second quarter and 1.53 trillion yen ($14.33b) in the third quarter. The margin of losses was even bigger in the fourth quarter, according to the sources.
   Under the programme, part of the yields are used for pension benefits.
   Sources close to the GPIF said, however, that management losses would not seriously affect the financial health of the public pension programmes because about 7 trillion yen ($65.59 billion) of yields have been accumulated even taking into account the fiscal 2007 losses.
   There are growing calls to raise the ratio of shares in the pension reserves' investment program with the aim of achieving higher yields.
   In May, private-sector members of the government's Council on Economic and Fiscal Policy proposed a plan to reform the GPIF and employ financial experts from the private sector, and to offer them significant incentives.

Hong Kong gold prices closed lower on Friday at 934.00-935.00 US dollars an ounce, down from Thursday's close of 943.50-944.50 dollars. It opened at 932.00-933.00 dollars.

The world's biggest economy lost jobs for a sixth straight month in June as US employers shed 62,000 nonfarm jobs amid a lingering slowdown, a Labor Department report showed Thursday.
   The unemployment rate held steady last month at 5.5 per cent.
   The volume of job losses was slightly worse than the markets had expected, as most economists had predicted that 60,000 posts were cut in June.
   'Unemployment is still on a rising trend, payrolls are falling, and there's no light at the end of the tunnel here, so the tax rebates may have pushed up consumer spending, but it doesn't seem to have improved the labor market yet,' said Ian Morris, chief US economist at HSBC North America.
   Employers started laying off substantial numbers of workers in January following several years of solid employment gains that were boosted by a booming housing market and confident consumers.
   But the job picture has changed dramatically this year amid a housing market slump, a credit squeeze, a sharp downturn on Wall Street and rocketing oil prices which broke above a record 146 dollars a barrel Thursday.
   The US economy has shed jobs every month of this year so far, and June's job cuts followed a loss of a revised 62,000 positions in May. The government had originally said that 49,000 jobs were cut in May.
   HSBC's Morris said the 'continued rate of deterioration' in the job market could see the unemployment rate peak above six per cent in coming months.
   Economists say America's giant economy needs to create about 100,000 jobs every month to absorb new labor market entrants.
   Analysts said the weak job reading is likely to pressure the Federal Reserve to keep interest rates on hold at 2.0 per cent despite mounting inflation concerns.
   'We expect the Federal Reserve to remain on hold on the basis of weak employment among other factors. Markets are pricing in hikes after this summer,' said Stephen Gallagher, an economist at Societe Generale.
   The central bank had slashed its key base rate aggressively since September in a bid to fire up economic growth, but it put its rate-cutting campaign on hold last month in the face of inflation fears tied to surging oil prices.
   US treasury secretary Henry Paulson underlined such concerns Wednesday, saying: 'High oil prices will in all likelihood prolong our economic slowdown.'
   Some analysts say the economy is on the brink of a recession.
   Economic growth improved to 1.0 per cent during the first quarter compared with 0.6 per cent in the fourth quarter of 2007, but momentum has slowed significantly from the blistering 4.9-per cent clip during the third quarter of last year.
   Job losses were particularly heavy in the goods-producing, construction, manufacturing and service sectors last month.
   A total of 43,000 positions were lost in the construction industry which has been hit hard by the housing downturn.
   The manufacturing sector suffered a loss of 33,000 positions while professional and business services firms trimmed their payrolls by 51,000 positions.
   The administration of US president George W Bush approved a 168-billion-dollar economic stimulus, stuffed with tax rebates, to bolster the economy, but it has shown scant signs of helping the labor market yet.
   'Monthly job losses in the 75,000 range, which we have averaged this year, don't point to an economy that is crashing and burning. But it does indicate that conditions are slowly but steadily deteriorating,' said Joel Naroff of Naroff Economic Advisors.
   Retailers shed 8,000 jobs while the education and health care sectors added 29,000 new jobs during June, the report showed.
   A gain of 24,000 posts in the leisure and hospitality sectors also helped offset some of last month's job losses.
   Average hourly wages rose 0.3 per cent in June, or six cents, to 18.01 dollars while the average length of a workweek remained unchanged at 33.7 hours.

Inflation, and not the credit crunch, is the biggest economic concern worldwide, especially in developing countries, US treasury secretary Henry Paulson said in an interview Thursday.
   Speaking to the BBC on a visit to London, Paulson also said the comparison of the current economic climate in the United States to the Great Depression in the 1920s and 1930s was 'hyperbole'.
   Asked by the broadcaster whether the credit crunch or price rises were more of an issue, he said: 'When you look around the world broadly, I think inflation ... is getting the number one focus, when you look at emerging markets, whether its China, or Russia.'
   'When you look at not just oil prices, but food, in areas where there is poverty, this is a huge problem,' Paulson added, noting that despite concerns over inflation, he was 'very supportive' of interest rate cuts by the Federal Reserve.
   On the comparisons between America's present-day economic woes and the Great Depression, Paulson insisted the United States had 'strong long-term economic fundamentals' and described the comparison as 'hyperbole'.
   'In the Great Depression, we had foreclosures at 50 per cent, today they're two per cent in the US. Over 90 per cent of the people are making their mortgage payments on time,' Paulson said.
   'In the Great Depression, there was unemployment of 25 per cent. We're above five per cent,' he said, adding that the United States was 'working our way through the problems.'
   Earlier on Thursday, Paulson said the US economy would most likely be stronger at the end of 2008, after holding talks with his British counterpart Alistair Darling.

Asia's emerging economies are 'highly vulnerable' to skyrocketing oil prices, making inflation the number one concern for policymakers, the head of the Asian Development Bank said Friday.
   But emerging Asia looks set to avoid a sharp slowdown given strong economic growth in China and should easily avoid a repeat of the financial crisis that rocked the region a decade ago, said ADB president Haruhiko Kuroda.
   'Emerging Asian economies are highly vulnerable to surging oil prices, given their high dependence on oil imports and low energy efficiency,' he told a press conference at the Foreign Correspondents' Club of Japan.
   'With the global economy slowing and oil subsidies being phased out, high oil prices could have a more visible impact on domestic consumption and growth in the region this year and in 2009,' he warned.
   Oil prices have soared five-fold since 2003 amid rising demand in emerging economies such as China and India and fears of supply shortages. World oil prices shot above 146 dollars a barrel Thursday for the first time ever.
   Central banks in emerging Asia face a dilemma about how to contain inflation through higher borrowing costs while avoiding snuffing out economic growth, Kuroda noted.
   While rate rises may put the brakes on growth, 'the risk would be even greater if prices spiral out of control,' he said.
   Despite inflation worries, the ADB chief expressed optimism about prospects for the region's economies.
   'On the whole economic growth in Asia is quite robust. A sharp slowdown is still unlikely in emerging Asian countries,' said Kuroda, who is in his native Japan for next week's summit of leaders from the Group of Eight rich nations.
   'I'm reasonably confident that nothing like the Asian currency crisis 10 years ago would happen in the region,' he added, noting that countries had built up large foreign currency reserves.
   The East Asian financial crisis began in 1997 when Thailand floated the baht after a series of speculative attacks, leading to a plunge in its value.
   Other regional currencies also came under pressure and countries including Indonesia, Thailand and South Korea were forced to turn to the International Monetary Fund for emergency funds to try to stabilise their currencies.

Wall Street heads into a key corporate earnings season with sentiment hammered amid a record surge in energy costs that has dampened prospects for an economic recovery.
   In the holiday-shortened week to Thursday, the Dow Jones Industrial Average shed 0.51 per cent to 11,288.54 ahead of the July 4 Independence Day holiday. The blue-chip index was pounded in June with a 10.2 per cent loss.
   The tech-dominated Nasdaq lost 3.04 per cent for the week to 2,245.38 while the broad-market Standard & Poor's 500 index shed 1.21 per cent to 1,262.90.
   The Dow and Nasdaq are now firmly in 'bear market' territory, down more than 20 per cent from their highs from last October, with the S&P not far off.
   While many analysts say the market is oversold due to poor sentiment, few see any catalysts that could spark a quick rebound.
   The first test comes in the upcoming week with quarterly results from General Electric, seen as a barometer of the overall economy, and key manufacturers including Alcoa and chipmaker Intel.
   Marc Pado, analyst at Cantor Fitzgerald, said the market will be on edge from results later in the month from the banking sector, which has been whipsawed by the national housing meltdown and the related credit squeeze.
   'Until we get those banks out of the way, the market isn't going to pay too much attention to other companies' earnings,' he said.
   'It really needs to see where we stand with the credit crisis first and then they'll focus on the industrials, the retailers, the technology firms.'
   But even with positive corporate news, Pado said the leap in oil prices could prevent any rally from taking hold.
   'When crude climbs and makes records every day, the market cannot focus on the economic news or anything else,' he noted.
   Myles Zyblock at RBC Capital Markets said the market is expecting a 10.3 per cent decline in overall earnings for the S&P 500 firms, but that this will be the low-water mark: 'Growth for the third and fourth quarter are expected to be up by 14 and 61 per cent, respectively,' he said.
   Zyblock noted that 'the runaway oil price and ongoing credit contraction' is expected to keep anxiety high.
   'The rocky ride experienced over the past few weeks could be with us for the remainder of the summer months,' he added.
   Nigel Gault at Global Insight said the economy held up better than expected in the first half, ekeing out modest growth, but he is unsure about the outlook.
   'The outlook for the rest of 2008 and early 2009 is darkening, not least because of the seemingly relentless rise in commodity prices,' he said. 'We now expect oil, food, and raw materials costs to keep rising through the middle of 2009.'
   Gault said the government's fiscal stimulus of 168 billion dollars will soon wear off and that could sink the economy if consumers retrench.

Russia is boosting its gas imports from Turkmenistan, the CEO of gas giant Gazprom said Friday, amid growing competition with the West and China for access to the ex-Soviet country's gas.
   Alexei Miller made the comments in the Turkmen capital Ashgabat during a visit by Russian president Dmitry Medvedev, who on Friday discussed the country's energy relations with president Gurbanguly Berdymukhamedov.
   'We are in the process of increasing the volume of deliveries of Turkmen gas,' said Miller. 'This year they will be greater than last year,' he said.
   Russia is also planning a pipeline from Turkmenistan through Kazakhstan that would consolidate its grip on gas supplies from Central Asia to Europe.
   Its success would undermine a Western-backed bid to reduce dependence on Moscow by pumping Turkmen gas through the planned Nabucco pipeline linking Turkey to European customers, who rely on Russia for a quarter of their gas.
   After Friday's meeting Medvedev said an agreement on the pipeline 'would come into force soon.'
   Amid increased competition for Turkmenistan's vast gas reserves, Moscow has already agreed to a hike in prices it pays to Turkmenistan to 150 dollars, up from 100 dollars last year.
   However, the price remains far lower than the price charged to European customers of almost 400 dollars per cubic meter. The Russian delegation was to discuss further price increases on Friday, Miller said.
   While Russia holds the world's largest gas reserves, lack of development of means it is forced to help meet rising internal demand for Russia's growing economy by supplementing its supplies with imports from Turkmenistan.
   But Russia is facing increased competition in the former Soviet Union, both from Europe and from China, which recently secured a promise for 30 billion cubic meters of gas, almost half of current Turkmen production.
   In April, the European Commission said it had secured a promise from Berdymukhamedov to deliver 10 billion cubic meters of gas annually from 2009, but Turkmenistan has never confirmed this.
   Some analysts have cast doubt on whether Turkmenistan has much to offer the West, with most of its current production already accounted for.
   Turkmenistan currently supplies 50 billion cubic meters of gas to Russia and uses 20 billion cubic meters domestically, together using the vast majority of production, which totalled 72.3 billion cubic meters in 2007.
   Speaking after talks with Medvedev, Berdymukhamedov said that Russia's supplies were safe.
   'We confirm our attachment to the agreement on natural gas deliveries to Russia until 2025,' he said.

Idling on the muddy sands of Thailand's coastal deep South, fishing boats hand-painted in lurid primary colours languish while their owners look on helplessly.
   Traditional fishing, once a thriving industry in southern Pattani and Yala provinces, has been reduced to a dwindling niche activity as fishermen lose out to large commercial firms and soaring fuel prices.
   The troubles in the industry compound the problems faced in this mainly Muslim region, where separatist unrest has claimed more than 3,300 lives in the last four years, with no resolution in sight.
   One Pattani fisherman, Ramly, 47, says he cannot afford to take his boat out to sea and is forced to resell bags of shrimp caught by commercial operators to feed his five children.
   'Normally I stay at home and buy some shrimp from the others to sell again because petrol is expensive,' he told AFP.
   He hopes his children will use the education offered by a free school near his village, which is sponsored by the king, to get other work.
   'I think if my children can learn at school they can find other work. I'm not sure if there will be any fishing left in 10 years because of the fuel price. People will have to become construction workers or go to Malaysia to find work there,' he said.
   Commercial fishing fuels the woes in these villages as experts say the large operations fish the waters illegally using nets small enough to steal the catch that locals would otherwise claim.
   They also employ cheap foreign labour which only adds to the tensions, they say.
   The commercial operations not only squeeze out Thai fishermen, forcing them to leave for work in Malaysia, but also lead to huge influxes of cheap foreign labour from neighbouring countries, experts say.
   This leads to tensions as coastal villagers increasingly find their way of life under threat, experts say.
   'About 70 to 80 per cent of labourers on the commercial fishing boats are from Myanmar and Cambodia,' said Sukree Hajisamae, a fisheries expert with the department of science at Prince Songkla University in Pattani.
   'In the near future this is going to be a big problem. Locals will try to push them out of the country because they want to keep something for their own people and most are here illegally.'
   A conservation fishing area that aims to safeguard the traditional industry extends only three miles out to sea, which Sukree said was too small an area to make fishing viable for the locals. 'It should be at least five.'
   Problems have been exacerbated by rising fuel prices.
   As oil hit a record high above 146 dollars a barrel on Thursday, Thailand, too, has been hit by soaring fuel prices, with premium petrol hitting a record high of 42.89 baht ($1.28) per litre on June 30, up from 32.89 baht (98 US cents) at the start of the year.
   Another fisherman, who did not want his name used, said: 'It's difficult to find fish and when we do the price of fish is too cheap. I'm really suffering. I want the government to try to reduce the price of petrol so we can go out.'
   Srisompob Jitpiromsri of Deep South Watch, a Pattani-based think tank monitoring the separatist conflict along the southern border with Malaysia, says the insurgency has forced the government to consider the fishermen's fate.
   'The fisheries' officers just ignored these things because they get money from the commercial sector but now they have become aware of the situation,' he said.
   The southern border association in Yala has a project to financially support the fishermen, but Sukree says this too is inadequate.
   'We need revolution,' he said. 'We have to refocus our fishing industry in the right direction with someone willing to start now, with new policies.'
   But, he says, the solutions are as tough as the problems.
   Sukree said half the fishing boats should be banned from the sea to prevent overfishing, and stricter controls put in place to ensure all boats are properly registered.
   'There are too many boats,' he said. 'But who dares to do that?
   'You have to set up the right management because fishing in Thailand right now means the longer your arms the more you get. If you are a commercial fisherman you probably have 10 boats but only register three.
   'The traditional fishermen don't know how to voice their problems. They have no choice, no alternative livelihood, they're just waiting for a new generation.'

The Chinese government is ready with new rules to tighten control over speculative capital inflow from abroad, or 'hot money'.
   The move follows economists' warning that hundreds of billions of dollars in illegal capital have entered the country in the garb of normal trade.
   The new system will make it mandatory for companies to provide evidence to the State Administration of Foreign Exchange for verification from July 14.
   Exporters will be required to park their export receipts in temporary verification accounts till they are cleared as genuine trade revenue, according to a statement issued by the SAFE, the Ministry of Commerce and the General Administration of Customs on Wednesday night.
   The new rules are aimed at stopping overseas traders from inflating their invoices to bring in more foreign money.
   Inflating invoices is believed to be a common way of pushing overseas speculative capital into China. Traders will have to report advance payments for exports and deferred payments for imports, too, because either of these channels can be used to bring in 'hot money'.
   The new rules make it clear that the annual deferred payments for exports should not exceed 10 per cent of a trader's total payments for exports in the previous year.
   The SAFE will work with the Ministry of Commerce and the GAC to implement the new rules through a nationwide computerized network. Banks' computers will be linked to those of the Customs to crosscheck data.
   The departments used to monitor trade-related foreign capital flows separately, an arrangement that has not proved effective.
   The collaboration will make the regulation more effective, said Zhang Ming, an economist with the Institute of World Economics and Trade of the Chinese Academy of Social Sciences.

The dollar inched higher against the euro and yen on Friday in muted trade as the United States celebrated its independence a day after the US currency surged.
   The European single currency dipped to 1.5690 dollars in morning London trade from 1.5694 dollars in New York late on Thursday.
   Against the yen, the dollar gained to 106.82 yen from 106.75.
   'A quiet end to the week is in store as the US celebrates
   the Independence Day holiday,' said Calyon analyst Henrik Gullberg.
   The dollar took a breather on Friday after strong gains won Thursday sparked by US jobs data that were not as bad as feared and signs that a eurozone interest rate hike may be a one-off, dealers said.
   The European Central Bank raised its key rate by a quarter point to 4.25 per cent Thursday as expected, but ECB chief Jean-Claude Trichet signalled the bank had not embarked on a series of hikes.
   Trichet told a news conference the bank's monetary policy 'will contribute to achieving our objective' of price stability, a code phrase that suggested more increases were not immediately at hand, dealers said.
   'A series of rate rises would be difficult' as the ECB is worried about slowing economic growth as well as inflation, said Kenichi Yumoto, vice president of forex sales at Societe Generale.
   The prospect of a series of rate hikes would have made the euro more attractive to investors and boosted its value against the dollar, dealers said.
   But at the same time there is 'no room for an interest rate hike in the United States either,' said Yumoto.
   'You can never be hawkish in monetary policy with stock prices falling and payrolls shrinking,' he said.
   The Fed has slashed its key federal funds rate to 2.0 per cent to try to shield the world's largest economy from a housing slump and credit crunch.
   The US economy lost 62,000 jobs in June, well below the figure of 100,000 that some had feared, official figures showed Thursday.
   'Despite a slight recovery in US stocks on Thursday overall global stock performance is still weak and players are nervous about volatile markets,' Tsutomu Soma, a senior trader at Okasan Securities, told Dow Jones Newswires.
   No significant US economic indicators are due next week but players may become more cautious ahead of the release of US financial institutions' earnings results, traders said.
   'In two weeks, US financial institutions' earnings will be released and increasing worries could cause the dollar to tumble,' said Tohru Sasaki, chief foreign exchange strategist at JPMorgan Chase Bank.
   In morning London trading on Friday, the euro changed hands at 1.5690 dollars against 1.5694 late on Thursday, at 167.62 yen, 0.7922 pounds and 1.6102 Swiss francs.
   The dollar stood at 106.82 yen and 1.0263 Swiss francs. The pound was at 1.9811 dollars.
   On the London Bullion Market, the price of gold
   fell to 931.63 dollars per ounce from 934 dollars late on Thursday.

Oil prices fell Friday on profit-taking, a day after surging to record highs on the back of a weak dollar and concerns over tight supplies, traders said.
   Brent North Sea oil for August delivery slid 80 cents to 145.80 dollars a barrel in electronic deals.
   New York's main oil contract, light sweet crude for August delivery, shed one dollar to 144.29 dollars. On Thursday, Brent soared to a life-time peak of 146.69 dollars a barrel. New York crude leapt to an all-time pinnacle of 145.85 dollars on Thursday.
   'I think the uptrend is intact and supply-side concerns will really drive pricing in the coming weeks,' said Victor Shum, of Purvin and Gertz international energy consultancy.
   Oil has broken a series of price records this week, continuing the momentum begun at the start of the year when it broke through 100 dollars for the first time.
   The surge has triggered
   fears over inflation and
   slower economic growth, while sparking protests around the world.
   Divisions between consumer and producer countries on who to blame appeared to sharpen at the World Petroleum Congress this week, which brought together political and corporate oil bosses in Madrid.
   Saudi Arabia, OPEC's leading exporter, expressed concern on Thursday about new records for benchmark crude and again said it was committed to dialogue between consumers and producers.
   But those discussions show no sign of finding a solution to market tensions. Both sides cite different reasons: consumers underline supply shortage
   fears, while producers blame financial speculators and a falling dollar.
   Oil prices, which have doubled in value over the past year, were partly driven this week by news that American crude stockpiles fell by 2.0 million barrels to stand at 299.8 million barrels in the week to June 27.
   The US government's Energy Information Administration had also revealed on Wednesday that crude inventories were 15.3 per cent lower than at the same stage one year ago.
   The record-breaking price surge also came after Iranian Oil Minister Gholam Hossein Nozari said that Iran would react fiercely to any military attack against the oil exporter.
   The OPEC oil exporting group added on Thursday that it would be difficult to replace the crude output of Iran should the country face attack.
   There has been a surge in speculation recently that Israel might be planning a military strike against Iran's nuclear sites.
   Iran has been locked in a five-year standoff with the West over its nuclear programme. Iran claims it is for generating electricity while Western powers fear the development of nuclear weapons.
   The oil market also found key support from the struggling US currency, which makes dollar-priced commodities cheaper for foreign buyers and tends to encourage demand, analysts said.

India's annual rate of inflation rose to 11.63 per cent as the country continued to feel the knock-on effect of a hike in state-set fuel prices, government data released Friday showed.
   The rate, for the week ended June 21, was against 11.42 per cent for the previous week and remains at a more than 13-year high, according to the Wholesale Price Index, the most closely watched price monitor.
   The rise was marginally higher than expected by analysts, who had forecast the figure to be more or less flat.
   Up were prices of cooking oil, tea, fruits and vegetables as transporters absorbed the impact of last month's rise in pump prices of around 11 per cent. Prices of manufactured goods including iron, steel and cement were also up.
   'The inflation figure is above our forecast of 11.31 per cent,' said Shuchita Mehta, senior economist with Standard Chartered Bank.
   She said she expected the central Reserve Bank of India to raise the repo rate -- its key short term lending rate currently at 8.5 per cent -- by 50 basis points at its next meeting on July 29.
   The RBI can also be expected to hike the Cash Reserve Ratio, or the amount of cash banks must hold in reserve, by 25 basis points. The bank unleashed its latest round of monetary tightening on June 24, putting the repo rate and CRR up by 0.5 per cent each.
   'Inflation was above our forecast, though just marginally,' said Siddhartha Sanyal of brokerage Edelweiss Securities.
   The brokerage has forecast India's economic growth rate at 7.8 per cent for the year to March 2009.
   Economists expect growth in Asia's third-largest economy to slow this year on higher
   borrowing costs and tough global financial conditions. The prime minister has projected growth of more than eight per cent.
   The benchmark 30 share Sensex index was up 1.38 per cent or 180.69 points at 13,274.8 on Friday, largely ignoring the inflation data.

Mittal tops UK’s Richest Power list
Money and power being ‘natural bedfellows’ is not necessarily true in the British business world, except for steel tycoon Lakshmi Mittal who figures right on the top of a new ‘Richest Power List’, compiled after combining two separate rankings of the most powerful and the most richest in the UK. Giving Mittal company on the new list, compiled by the Times newspaper, is another Indian-origin executive Arun Sarin, the world’s top mobile firm Vodafone’s outgoing CEO, who has made it to 24th in the combined list, even though he does not figure among the top 1,000 richest persons in the UK. Mittal, with an estimated fortune of 27.7 billion pounds, had also topped this year the Sunday Times Richest List, which has been combined with the Times Power 100 list to make the ‘Richest Power List’. The Power 100 is an annually compiled survey of the top names in business in the UK. The Times newspaper cross- referenced those on the Power 100 list with another annual ranking, The Sunday Times Rich List, to produce the Richest Power List. The daily said, ‘Money and power have always been thought of as natural bedfellows: you only stand a chance of holding sway if you have the wealth to back it up.’ ‘To test the truth of this we combined The Times Power 100 with The Sunday Times Rich List - and we discovered the opposite. In the world of British business at least, it seems that you don’t have to be rich to be powerful,’ it noted. Out of the 26 of the Power 100 who also made it onto the Rich List, only 10 got a place in the top hundred, it added.
— PTI

ICBC forecasts over 50pc profit rise in H1
The Industrial and Commercial Bank of China, the country’s largest lender, said on Friday its unaudited first half net profit may jump more than 50 per cent from a year earlier. Net profit was likely to be more than 61.26 billion yuan ($8.9b) in the six months ending on June 30, according to Xinhua’s calculation. This was driven by rapid growth in the net interest and fee incomes and lower corporate income tax rate, ICBC said in a statement to the Shanghai Stock Exchange. China’s economy, which grew 10.6 per cent year-on-year in the first quarter, has boosted bank card sales and loans demand from businesses and individuals.
— xinhua