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The government is set to incorporate five predicates in the Anti-Money Laundering Ordinance to extend its coverage to a wider range of financial and environmental offences of global nature, official sources said.
   The capital market will also fall within the ambit of the ordinance, as stock markets around the globe are also being used for large-scale financial crimes.
   ‘The predicates will help the ordinance bring persons involved in terrorist financing into justice,’ said a senior official of the finance ministry.
   The ordinance will now include crimes relating to the environment, he added, referring to the lack of law to deal with offences like intrusion of toxic ships.
   The five new types of offences are terrorist financing, insider trading and market manipulation, environmental crime, trafficking of human migrant smuggling and sexual exploitation of children.
   Ministry officials said an inter-ministerial meeting Thursday decided to add those crimes to those already mentioned in the ordinance and make the incorporation effective through a gazette notification soon.
   Earlier, Asia Pacific Group on money laundering, a Bangkok-based international watchdog on financial crimes, had examined the laws and logistics put in place in Bangladesh to check money laundering.
   The group submitted an evaluation report to Bangladesh Bank and recommended inclusion of the five predicates to make the ordinance more effective.
   A five-member expert team from the APG visited the country in August and held a series of talks with financial regulators and law enforcing agencies to take stock of the legal arrangements to contain money laundering and terror financing.
   The government’s efforts to bring back siphoned–off money from overseas locations and sign bilateral and multilateral agreements in this regard will depend on the formulation of proper laws and their effective enforcement, Bangladesh Bank sources said.
   Although figuring out the worldwide reach of money laundering is problematic, the International Monetary Fund estimates that proceeds from crimes account for between 2 per cent and 5 per cent of annual global GDP.

Experts at an Asian regional workshop have emphasised strengthening of national conformity assessment infrastructure, like standards, metrology, testing and calibration laboratories, and certification and inspection bodies, for accreditation of products in this era of globalisation and trading under the WTO regime.
   There is no alternative to strengthening the national conformity assessment infrastructure if a country wants to ensure product quality, protect public health and safety and consumers’ rights and enforce the law, they told the two-day workshop on accreditation cooperation held on November 10-11 in Dhaka.
   For building confidence among the stakeholders and the users, these institutions would in turn be accredited as per international norms and guides, the workshop participants said.
   The International Laboratory Accreditation Cooperation, International Accreditation Forum, United Nations Industrial Development Organisation and Bangladesh Accreditation Board jointly organised the international event with funding from the European Union and NORAD.
   More than 100 experts from Asian countries, including India, Pakistan, Nepal, Sri Lanka, the Maldives, Bhutan, Indonesia and Bangladesh, took part in the workshop.

Oil prices could soar dramatically after the world economy picks up due to delays in energy investment during the credit crisis, the head of the International Energy Agency warned Friday.
   The Paris-based agency on Thursday slashed its forecast for oil prices in 2009 to 80 dollars from 110 dollars a barrel as developed economies brace for recession.
   But it also warned that the price could jump to more than 200 dollars a barrel by 2030 as demand soars in China, India and other emerging economies.
   ‘What we are worried about is that oil development is being delayed,’ IEA executive director Nobuo Tanaka told a news conference in Tokyo.
   ‘As supply falls, prices are likely to surge when the global economy gets back on its feet,’ he said.
   ‘If we don’t invest in energy, this problem will only worsen. Unless we develop new oil fields, we will be unable to maintain supply and demand,’ he said. ‘The era of cheap oil has ended.’
   Oil prices surged to a record high of 147 dollars per barrel in July but have since dropped more than half as the global economy swings downwards. Oil fell to a 22-month low of 55 dollars a barrel on Thursday.

The Board of Investment needs to be urgently restructured with enough skilled and proactive functionaries to make it an efficient organisation capable to deal with fast changing global investment perspectives.
   BoI executive chairman Kamaluddin Ahmed emphasised the point for reforming the country’s major investment promotion agency while talking to the news agency on Thursday, and said a new initiative was underway to reorganise the body.
   He said the agency was having its age old organogram and running short of manpower, least to speak about recruitment of new generation graduates having state of the art knowledge in business management and investment promotion activities.
   The agency’s board of management needs strengthening, and departmental activities redefined in the changing context in domestic trade and investment and inflow foreign direct investment to new business.
   He said the restructuring of the agency was under process by a specially set up committee that had held several meetings in recent past, and several reform proposals would be presented to the chief adviser soon.
   Kamaluddin Ahmed said, ‘In the globalised world attracting FDI is a major issue and it requires presentation of the country’s investment facilities in highly professional way.’
   ‘Reforming BoI is very important in this context,’ he said, adding ‘the agency is looking forward to launching a new initiative called ‘Invest Bangladesh’ programme.’
   The BoI will line up specialised manpower to present the package to overseas investors, he said, adding only few developing countries offer such attractive investment package.
   He said the country had good investment laws, highly skilled manpower and cheap workers to produce goods at competitive price. These are matters for investors’ genuine interest in making investment decisions, he added.
   But it remained largely compromised now not only by poor projection of the country’s investment profile but also from insufficient infrastructure facilities such as shortage of gas and electricity.
   He blamed a neglect of the capacity building of the BoI keeping pace with the changing time although it stands at the centre of the nation’s investment promotion activities from home and abroad.
   In the first place, it remained handicapped, he said, under an old law and its functionaries, especially the top functionary remained highly constrained by many restricting rules and regulations to play a pro-active role in mobilising efforts to reach investors and bring them down.
   The agency should have an autonomous status, he said, like the NBR to take promotional activities. Its capacity building, moreover, needs urgent attention, he said giving a bleak picture of its manpower; where scores of post are falling vacant while most in-service personnel nearing retirement.
   He said most functionaries in the agency work on ‘current charge’ from lower posts. Eight assistant directors are working on current charge promoted from lower ranks. Out of three directors one is sick. Most deputy directors are also functioning on current charge.
   A working paper on restructuring of the agency said out of 68 posts of first class officers in the present organogram, only 28 were in place and 50 per cent of them were on deputation. Out of 319 posts in the third grade, 205 were vacant. Of the 108 posts in the fourth grade, only 42 were in place.
   Kamaluddin Ahmed said the organisation needs new set up, new recruits and new outlook to make it an effective body capable to deliver goods in the complex global investment climate. There was no recruitment in the BoI over the last 20 years, he added.
   He said the present reform initiative is working towards achieving that goal.

The fortunes of India’s wealthiest have been slashed by more than 60 per cent due to the global financial crisis which has sharply pulled down stock markets, according to a new rich list.
   Forbes magazine put Mukesh Ambani, chairman of India’s largest private sector firm Reliance Industries, as the country’s wealthiest man, with a net worth of 20.8 billion dollars after losing 28.2 billion dollars in the past year.
   He overtakes London-based steel tycoon Lakshmi Mittal who topped the list for the past four years. His net worth was 20.5 billion dollars after dropping 30.5 billion dollars on plunging steel prices.
   The combined net worth of all 40 individuals on the list fell 60.3 per cent to 139 billion dollars from 351 billion dollars, the magazine said.
   Mukesh’s younger brother Anil, who heads Reliance’s telecom, power utilities and financial services businesses, was third on the list with a total wealth of 12.5 billion dollars after losing 32.5 billion dollars.
   ‘These are painful times for India’s tycoons. The country’s once soaring stock markets fell 48 per cent in the 12 months and the rupee depreciated 24 per cent against the dollar,’ Forbes Asia said.
   All of this conspired to knock 60 per cent off the combined fortunes of the nation’s 40 wealthiest. Their total net worth fell 212 billion dollars, to 139 billion dollars, down from 351 billion dollars a year ago.
   The list includes two women. Savitri Jindal, who heads the industrial OP Jindal group was 12th with a net worth of 2.9 billion dollars, while Indu Jain, chairwoman of media group Bennett, Coleman & Co, was 17th with 1.8 billion dollars.
   Six of last year’s members had fallen out of the top 40 this year. They include United Breweries chief Vijay Mallya, who also owns premium airline Kingfisher. The magazine gave no figures on Mallya’s wealth.
   Others were nearly wiped out entirely, the magazine said. India’s windpower entrepreneur Tulsi Tanti and his brothers lost 91 per cent of their fortune, amid reports about problems with Suzlon’s wind blades.

Taramoni Dash has become a legend in her area. At 103, she works from dawn to dusk in the front yard of her hut making bamboo products to eke out a living.
   People flock to her modest home to see the agility, efficiency and working speed of this centenarian widow, who, her son said, ‘still walks in the village like a young girl. I have never seen her idle. She has always been struggling to earn a livelihood.’
   Taramoni was married to the late Tarak Chandra Das of Baissha Para village in Mohishkhocha union under Aditmari upazila of Lalmonirhat when she was 20. It was 1925. But, she had learned her craft and been making bamboo wares at her parental home at Kathal Bari village in Kurigram since the age of 12.
   She has five daughters and a son, all of whom also have become quite old. Her husband died five years ago. Since then, Taramoni has been the main bread winner of a five-member family. She lives with her son Moni Das, 68, daughter-in-law Biso Bala Das, 62, grand son Biswa Nath Das, 40, and granddaughter-in-law Bul Buli Das, 32.
   Day in day out, she has been making the finest quality bamboo wares like baskets, dali, kula, and chalon. Yet, what she earns from a full day’s work is just Tk 40 to 45. Even two years back, she used get Tk 80 to 100 a day for her products. But, now her income has halved due to ever-increasing bamboo price, Taramoni told New Age.
   She said, ‘I get Tk 200 a month in old-age allowance. But that does not help me much. I have not received any relief or allocation from the union parishad. I never go to the UP office and the UP chairman or any member never visits me. I prefer working hard to begging here and there. I want to work hard until the last day of my life.’
   But, the reality is, at her present income and the high commodity prices, the family often has to go starved or half starved.
   ‘Is there no agency, government or non-governmental, that can help such excellent craftsmen and women survive and live a more decent life,’ asked one of the villagers.

Leaders at the global economic summit in Washington are considering creating a ‘college of supervisors’ to oversee the world’s biggest financial institutions, the Washington Post reported Friday.
   The proposal at Group of 20 summit of wealthy and emerging nations would add a level of security to monitor excessive risk-taking by banks and other financial firms, the Post reported.
   The ‘college of supervisors’ would bring together international regulators to coordinate oversight of the world’s 30 largest financial institutions, the Post said, citing officials familiar with the plans.
   Additionally, the Post reported that the United States, European countries, Japan and major developing nations are close to a deal to create an ‘early warning system’ to detect weaknesses in the global financial system before they reach epic proportions. The report said details of the plans were still being worked out.
   The extraordinary summit aims at steadying a faltering global financial system, although US officials up to now have resisted calls for a global regulatory authority.
   President George W Bush was set to host leaders at a dinner Friday ahead of summit discussions Saturday.
   

The European Union is ready to take action at the World Trade Organistion if it judges that US aid for its struggling auto industry is ‘illegal,’ European Commission head Jose Manuel Barroso said Friday.
   ‘We are looking at the US plan. The plan has not yet been made official but certainly, if it amounts to illegal state aid we will act at the WTO,’ Barroso told Europe 1 radio when asked about the US bailout package.
   The US Congress approved an aid package worth 25 billion dollars in September to help the auto industry invest in new generation technology but no timetable was fixed for payments to be made.
   Since then, problems have mounted as the global financial crisis has savaged the economy, with all three US majors — General Motors, Ford and Chrysler — clamouring for help in the same way as Washington has bailed out the US banks.
   US president-elect Barack Obama raised the issue of help for the industry with the aim of protecting jobs in the US industrial heartland but President George W. Bush has been reluctant to take action.

Hong Kong slipped into recession in the third quarter as the global economic slowdown took its toll on the financial hub, government figures showed Friday.
   Hong Kong’s gross domestic product fell 0.5 per cent from the previous quarter on a seasonally adjusted basis, following a fall of 1.4 per cent in the second quarter, the Census and Statistics Department said in a statement.
   ‘The growth of the Hong Kong economy slowed notably further in the third quarter, as the external sector slackened amid the faltering global demand,’ said government economist Helen Chan, in the statement.
   ‘And as domestic demand towards the end of the quarter was severely hit by the outbreak of the global financial tsunami that caused significant jitters in the local asset markets.’
   The standard definition for recession is two consecutive quarters of falling GDP.

The World Trade Organisation is facing growing calls from both sides of the Atlantic for a fresh ministerial meeting before the year is out to clinch a liberalisation deal that has proved elusive for seven years.
   The last attempt in July by WTO director general Pascal Lamy to bring the Doha Round of talks to a close ended in ignominious failure after the United States and India clashed over measures to protect poor farmers against import surges.
   But in recent weeks several key players have hinted a deal could be close to hand, raising the prospect of another ministerial meeting in December.
   ‘With leadership and determination, a Doha deal is within our grasp as the details of a final agreement could be agreed within weeks,’ new EU trade commissioner Catherine Ashton said in Brussels on Tuesday.
   In the meantime however all eyes will be on this weekend’s G20 summit meeting in Washington — and beyond that, on any signals from the camp of US president-elect Barack Obama, who occasionally struck a protectionist note during his election campaign.
   Carin Smaller of the Geneva-based Institute for Agriculture and Trade Policy, said that even if a deal were struck at any meeting in December, its ratification in the United States would not be one of Obama’s main priorities.
   ‘I do not expect that he will be a revolutionary in world trade terms,’ she told AFP.
   ‘The Doha Round will be neither his first nor his second priority.’
   The current chief US trade negotiator, Susan Schwab — who might step down when president George W Bush leaves office on January 20 — also urged the G20 to show a commitment to securing a WTO deal during their meeting.
   ‘At this critical time it is all the more important that we not only avoid retrenchment in market opening, but move ahead with an ambitious and balanced Doha Round that creates new trade flows and generates economic opportunities worldwide,’ she said in Brussels on Tuesday following a meeting with Ashton.
   Lamy himself, who recently announced he was seeking a second term at the helm of the WTO, repeated Wednesday his oft-expressed view that a deal is ‘doable’ if member states show the necessary commitment.
   ‘My sense is that we are not that far away from our objective of concluding the round, even if a number of tough nuts remain to be cracked,’ particularly on agriculture and industrial goods, he said.
   French president Nicolas Sarkozy gave a further indication of the obstacles negotiators must surmount when he suggested Wednesday that the parameters of the talks could be reviewed.
   ‘We are all agreed that protectionism would be a catastrophe,’ he said.
   That said, ‘one has to at some moment or other pose the question of a reform of the conditions of the negotiations.’
   Sarkozy clashed publicly with the then-EU trade chief Peter Mandelson over the July summit, fearing that the British commissioner was making too many concessions on agriculture.
   The Doha round of multilateral trade liberalisation talks was launched in the Qatari capital Doha in November 2001 but has foundered ever since in disputes between developing and industrialised nations.
   Developing countries have been pressing for greater access to agricultural markets in the industrialised world. Developed nations are in return seeking a better deal for their manufactured products on developing country markets.

South Korean ministry of strategy and finance said all public firms and government agencies will freeze wages next year, the Korea Times reported on Friday.
   The ministry also said the public sector will cut general spending by an average of more than 5 per cent next year in effort to share the burden of the troubled economy.
   ‘The measures are aimed at suppressing excessive expenditure on wages and other costs, encouraging more effective management of the public sector,’ the ministry said.
   While employees of public enterprises see wage freezes, the ministry said heads of these institutions will actually see
   pay cuts.
   The government already announced in June that heads of state-run enterprises will be paid 16.3 per cent less than the previous year on average, and auditors will receive 26.7 per cent wage cuts.
   To reduce general expenditure by 5 per cent, overtime payment to those at managerial level will be abolished and overseas business trips of all employees will also be refrained unless necessary, the ministry said.
   Furthermore, the government abandoned creating new allowances. Public enterprises often pay lots of allowances for workers, thus de facto paying good money while announcing low official basic salaries.

Foreign investors cashed out on Philippine stocks and securities again in October as the global financial crisis deepened, the central bank said Friday.
   Foreign portfolio investments posted a net outflow of 390 million dollars for the month, following a 312.2 million-dollar net outflow the previous month, it said.
   ‘Risk aversion further intensified given the global financial crisis and slowdown in the US and other major economies,’ central bank governor Amando Tetangco said.
   ‘This development has resulted in the withdrawal of investments out of emerging markets,’ he said.
   For the 10 months to October, there was a net outflow of 911.5 million dollars, reversing a 3.7 billion-dollar net inflow over the same period last year, the bank said.

The Prime Bank Limited on Thursday closed its 18th syndication deal as lead arranger by arranging Tk 150 million for Configure Engineers and Construction Co Ltd for setting up an international standard hotel in Cox’s Bazar.
   Prime Bank Limited, Pubali Bank Ltd, and Mutual Trust Bank Ltd participated in the deal.
   M Ehsanul Haque, managing director of Prime Bank Limited, Helal Ahmed Chowdhury, managing director of Pubali Bank Umited, Quamrul Islam Chowdhury, deputy managing director of MTB, and Habibur Rahman, chairman, and Khurshid Alam Opu, managing director of CECCL, signed the agreements on behalf of their respective organisations.
   Ehsanul presided over the signing ceremony at a city hotel in Dhaka. M Mehmood Hosain, deputy managing director, and M Touhidul Alam Khan, senior vice president of Prime Bank, along with senior officials of participating lenders and CECCL, were present on the occasion.

Deepening recession and divisions over how to tackle the global financial turmoil increased pressure on world leaders Friday ahead of a summit of more than 20 of the richest nations and emerging countries.
   Although US president George W Bush has made an impassioned defence of the free market, critics from the rest of the world headed for Washington seeking strengthened regulation and other radical changes in the financial system.
   Before the White House dinner that launches the summit discussions, the European Union announced that the 15 nations in the eurozone were now gripped by recession — two quarters of economic contraction
   EU data revealed that the eurozone economy shrank by 0.2 per cent in the second and third quarters. The 27-nation European Union as a whole contracted in the third quarter, but avoided recession only because its economy had zero growth in the second.
   France narrowly avoided joining Germany and Britain in recession with 0.1-per cent growth in the third quarter. Finance minister Christine Lagarde acknowledged it had been an ‘astonishing’ escape.
   But with even Hong Kong trading tiger Hong Kong falling into recession and European automakers announcing a 14.5 per cent sales slump for October, the size of the crisis facing world leaders appears to grow by the day.
   Bush said Thursday that the world leaders have a clear aim ‘to lay the foundation for reforms that will help prevent a similar crisis in the future.’
   But the US leader’s term finishes on January 20 and he cannot make firm commitments for president-elect Barack Obama. Other participants have also sought to douse expectations.
   ‘We cannot expect a miracle from this summit,’ said European Commission president Jose Manuel Barroso in an interview with a German daily.
   He said the summit would be ‘the beginning of a process that will create a finished programme in 100 days.’
   Bush sternly warned against imposing widespread regulation as a solution.
   ‘The crisis was not a failure of the free market system. And the answer is not to try to reinvent that system,’ Bush said in a speech laying out his agenda for the expanded Group of 20 summit.
   ‘Our aim should not be more government. It should be smarter government,’ he said. It would be ‘a terrible mistake to allow a few months of crisis to undermine 60 years of success.’
   ‘Many European countries had much more extensive regulations and still experienced problems almost identical to our own,’ he said. ‘We must recognize that government intervention is not a cure-all.’
   But leaders from the European Union, Russia and other emerging nations want increased control of financial markets.
   And France and Russia have made hard-edged remarks about reviewing the role of the dollar, but Japan says it will argue for retaining the US currency as a main pillar of the global system.
   Russian Dmitry Medvedev said Thursday that the economic crisis would require ‘reform of the international financial system and its great institutions, the International Monetary Fund and the World Bank.’
   He discussed his proposals Friday with EU leaders and President Nicolas Sarkozy of France who has called for the creation of ‘regulated capitalism’.
   ‘The world changes. We are in the 21st century and the French view is that we cannot continue into the 21st century with a system established in the 20th century,’ Sarkozy said Thursday.
   The crisis broke out one year ago when the US real estate market went bust and swamped the financial sector with bad loans. Stock markets have crashed and companies around the world are laying off hundreds of thousands of workers.
   Bush outlined some issues he wants considered at the summit, such as improving bank risk management practices, improving accounting rules for securities and harmonizing accounting laws.
   Japan, the United States and other leading nations have also agreed that the IMF and World Bank need to be overhauled so that emerging economies such as China have a greater voice.
   Japan will offer to lend up to 100 billion dollars to the IMF to provide financial lifelines to emerging countries, prime minister Taro Aso announced.
   German chancellor Angela Merkel, in an interview a German newspaper published Thursday, acknowledged the talks would be difficult but said it was crucial that the first steps towards improved financial regulation are taken soon.
   ‘We have to implement the first steps in the coming months. The target is that in the future all areas, all products and all businesses are properly regulated and supervised,’ Merkel said.
   Several products and financial institutions, including hedge funds, credit default swaps and rating agencies, are largely if not completely unregulated at present.
   France, which advocates increased oversight of international financial transactions, wants tax havens added to the list.
   The Group of 20 countries account for 85 per cent of the world economy and about two-thirds of its population.
   Its members are the United States, Germany, Japan, France, Italy, Britain and Canada, the European Union, Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.
   Spain and the Netherlands have also been invited to the Washington summit.

Lafarge Surma Cement Ltd attaches ‘top priority to quality to gain confidence of the dealers and users,’ said Michael Andrew Cowell, managing director of the France-Bangladesh joint-venture company.
   ‘Our business plan is focused on continuous improvement,’ he added. ‘We have our own laboratory at the plant with most modern and reliable apparatus to monitor and control the quality of raw materials and finished product.’
   Cowell said the company is also working to improve and expand its services and management. ‘For example, cost management also gets due attention from us.’
   ‘Lafarge Surma Cement has been fully operational since the middle of last year and it has already succeeded in capturing 10 per cent market share,’ he said and claimed, ‘Our Supercrete brand cement has already been accepted as the best cement in the country.’
   ‘The current demand for cement in the country is about 8 million tonnes. Over the last few years it has been increasing by 6 to 7 per cent a year,’ Cowell told New Age in an exclusive interview.
   He said the pace in the construction sector in any developing country is bound to be fast and Bangladesh is no exception in that. ‘So, the consumption of cement will obviously go up as there will be more and more infrastructure development.’
   He said, ‘The main problem facing the cement industry here is the absence of limestone in the country. There is no limestone deposit in Bangladesh and so cement manufacturers have to depend on imported clinker.’
   ‘[But] we bring limestone from our own quarry in the Indian State of Meghalaya by a 17-kilometre cross-border conveyor belt.’
   A portion of the conveyor belt was damaged in a fire in December 2005, delaying the company’s coming into operation.
   Built by Lafarge of France, a world leader in building materials, and Spanish cement major Cementos Molins, Lafarge Surma boasts the first fully-integrated dry process cement manufacturing plant at Chhatak in Sunamganj.
   The company was listed with the Dhaka and Chittagong bourses in 2003 under ‘G’ category, which groups green field companies. However, from June 29 this year, shares of the company are being traded under ‘Z’ category, as it has failed to declare dividend as per the regulations after completion of two full years of commercial operation, DSE sources said.
   According to them, as per the un-audited half-yearly accounts till June 30, 2008, the company posted a post-tax profit of Tk 41.46 crore, with Tk 7.14 earning per share, compared to the half-yearly net loss of Tk 34.19 crore and a negative EPS of Tk 5.89 last year. The company’s net turnover in Jan-June 2008 was Tk 297.10 crore and as on June 30 its accumulated loss stood at Tk 185.74 crore.

Russia’s president Dmitry Medvedev and France’s president Nicolas Sarkozy said Friday that they had agreed almost identical positions on the financial crisis ahead of a global summit.
   Medvedev and Sarkozy, whose country holds the rotating presidency of the European Union, met in Nice for four hours before setting off for a meeting in Washington with the heads of the world’s most important economies.
   ‘I think I can say that Russia’s propositions were of great quality and that they are very close to Europe’s propositions,’ Sarkozy said at a joint news conference held after the talks.
   ‘I’m pleased to see the Russian Federation’s determination that some strong decisions be made at the Washington summit,’ he added.
   Medvedev agreed, saying that Moscow and Brussels were heading to Washington with ‘practically common positions’. He also backed Sarkozy’s call for a second summit in February once US president-elect Obama takes office.
   The leaders also discussed the crisis in Georgia, and Sarkozy called on Medvedev to withdraw Russian forces from two enclaves they are occupying on the outskirts of South Ossetia in spite of a ceasefire deal.
   But both said that disputes in other domains should not deflect them from reforming international finance and the need, in Medvedev’s works ‘to neutralise the damaging effects of the global crisis’.
   Neither went into details of their proposals ahead of Saturday’s meeting in Washington, but in the build-up to the Nice talks both had spoken of the need to better regulate the free market.
   The French president has said the Washington meeting should seek to lay the groundwork for a complete overhaul of the financial system, an idea Russia was pushing even before the credit crisis erupted.
   Europe now hopes that Russia’s support will help push the United States into major changes — a move that is likely to meet stiff resistance in Washington.
   ‘The crisis was not a failure of the free market system. And the answer is not to try to reinvent that system,’ US President George W. Bush said in a speech laying out his agenda for the Washington summit.
   While it seemed unlikely that Europe and Russia would arrive in Washington with a joint blueprint, the two sides were moving closer together.
   Medvedev and Sarkozy have blamed US economic management for a credit crunch that has brought down banks around the world, put the squeeze on businesses and consumers and pushed national economies into recession.
   Sarkozy has called for the summit of more than 20 of the world’s leading economies and emerging powers, to ‘remake the world financial system’, creating a so-called Bretton Woods II.
   An international conference at Bretton Woods, New Hampshire, in 1944 to shape the post-World War II financial system resulted in the creation of the World Bank and the International Monetary Fund.

If markets are to regain a semblance of sanity, financial sector regulation must be tightened or overhauled to ensure that excesses that led to the global market crisis are not repeated soon, or ever.
   At the Reuters Global Finance Summit this week, experts said keys to restoring market confidence are to make investments and their accounting methods less secretive, to ensure capital levels are sufficient, and to reduce risk.
   ‘One of the greatest flaws in the system was really [not] understanding what was going on,’ said Gary Parr, deputy chairman of the investment bank Lazard Ltd. ‘There’s going to be more regulation and transparency. That will be one of the major events of the next year, if not two years.’
   Years of lax or eased oversight may be coming to an end.
   The reasoning? No longer should a Lehman Brothers carry a bloated balance sheet; or a Washington Mutual Inc stuff $176 billion of home equity, adjustable-rate and subprime loans on its books; or a Merrill Lynch & Co Inc take on massive exposure to collateralised debt obligations that no one understood.
   Many experts believe Democrats, fortified by the election of Barack Obama as president and gains in Congress, will make a serious effort in 2009 to overhaul the regulatory landscape, perhaps even merging the government’s oversight agencies.
   ‘I think it is on top of their agenda,’ said Robert Kapito, president of asset manager BlackRock Inc. ‘We need major process changes, major infrastructure changes, major regulatory changes. There’s no question about that.’
   Some fear any new regulatory fervour could go too far.
   ‘Re-regulation of the financial sector, particularly in the US but worldwide and Europe, is one of the big issues,’ said Rick Waugh, chief executive of Bank of Nova Scotia. ‘Is there an overreaction on capital levels? Is there an overreaction on where you should, or should not, do business?’
   Still, aggressiveness could be justified, said Denis Salamone, chief operating officer of Hudson City Bancorp Inc, a large New Jersey mortgage lender that has sidestepped the credit crisis.
   ‘It’s deserved if it goes overboard a little bit,’ he said. ‘The industry, right across the board from sophisticated Wall Street firms that created the trusts and the CDOs, down to the intermediaries that made the loans, and in many cases borrowers’ irresponsibility, will require more regulation.’
   Structural changes may be particularly hard to make in light of the politics and power struggles involved.
   A March proposal by US treasury secretary, Henry Paulson, to shuffle responsibilities among agencies and give more power to the Federal Reserve has had only limited impact, though pieces of his plan could yet come to fruition.
   Paulson and Fed chairman Ben Bernanke agreed that market disruptions showed the need to overhaul rules on financial behaviour. Rep. Barney Frank, a Democrat who chairs the House Financial Services Committee, has long advocated structural change among regulators.
   Pouring $700 billion into the financial industry won’t be enough, especially as it is unclear where all the money will end up.
   Several experts, speaking at the Reuters Summit, called for more transparency to ensure that a company’s critical decisions and assumptions do not end up in a black box.
   ‘Some kind of rules, minimum capital rules, it seems to me, are necessary so no bank is able to take undue risk in borrowing too much, or have assets that are too risky,’ said John Whitehead, a former chairman at Goldman.

The global financial implosion took a heavy toll on US trade in September, hitting both imports and exports, according to a government report Thursday underlining the world’s economic woes.
   In a report that highlights the slowdown in the world’s biggest economy and a likely global recession, the Commerce Department said the US trade deficit narrowed 4.4 per cent in September to 56.5 billion dollars.
   What normally would be seen as an improvement in the trade balance set off alarms with a record drop in imports and a steep fall in exports.
   The data spotlighted weakening economic conditions both in the United States and its trading partners on the eve of a Group of 20 summit of industrialised and emerging nations in Washington aimed at confronting the worst financial crisis since the Great Depression.
   Imports showed the steepest drop on record of 5.6 per cent to 211.9 billion dollars, led by shrinking oil imports, as American consumers retrenched amid rising unemployment, shrinking investment portfolios and falling home prices.
   Exports fell by the biggest amount since September 2001, a month marked by terror attacks, plunging 6.1 per cent to 155.4 billion.
   ‘This month’s trade figures provided a foretaste of what is to come,’ said Nigel Gault, chief US economist at IHS Global Insight.
   ‘If we look out over the next 12 months, both export and import volumes will drop — meaning not just slower growth, but outright declines — as the global recession reduces trade activity,’ Gault said.
   Joel Naroff of Naroff Economic Advisors, noting the ‘ominous’ export figures, said ‘the higher dollar and weakening world economy has combined to cut the one sector that had been the bulwark of growth, exports.’
   The politically sensitive trade gap with China, the largest US trading partner, rose 9.6 per cent to 27.8 billion dollars as Chinese imports climbed to a record 33.1 billion dollars.
   ‘Despite the narrowing of the overall trade deficit, the shortfall with China actually expanded,’ Naroff said.
   ‘Can you say trade tensions with the new administration?’ he added, referring to Democratic president-elect Barack Obama, who takes office in January.
   Critics say president George W Bush’s Republican administration has not been tough enough against China, which they allege manipulates its yuan currency to maintain an unfair trade advantage.
   ‘Nowhere are America’s trade policy failures more glaring than on the China front. Our continually rising imports and now worsening exports show that the Clinton-Bush China policies have weakened the nation’s economy and productive base,’ said Alan Tonelson, a research fellow at the US Business and Industry Council.
   ‘President-elect Obama needs to change course quickly by urging swift Congressional passage of a strong currency manipulation bill.’
   The September trade data, reflecting the financial meltdown triggered by the collapse of investment bank Lehman Brothers, came in sharp contrast to record-high July import and export figures.
   Falling oil prices and consumption drove crude oil and oil product imports down 15.7 per cent from August to 37.0 billion dollars. It was the smallest amount of crude oil imported — 253.3 billion barrels — since February 2003.
   Among key US trade partners, the US deficit rose 22 per cent to 8.3 billion dollars with the European Union, 0.4 per cent to 7.8 billion with Canada and 16.7 per cent to 5.6 billion with Japan.
   The trade gap with
   the Organisation of the Petroleum Exporting Countries fell 30.2 per cent to 13.4 billion dollars.
   For the first nine months of the year, the US trade deficit reached 534.5 billion dollars, up 1.5 per cent from the same period in 2007.

Dark days lie ahead for the US auto industry even if executives from General Motors, Ford and Chrysler manage to convince skeptical lawmakers to fund a massive bailout package, analysts warned.
   And if Republicans manage to block the multi-billion dollar aid package, as they appeared set to do on Thursday, it is likely that at least one of the Detroit Three will simply be liquidated.
   GM warned last week that it could run out of cash in a matter of weeks if the federal government does not come through with an immediate aid package.
   Ford is expected to run out of money by the middle of next year and Chrysler’s private owners are looking to offload the struggling automaker.
   A credit crunch has made it impossible for the automakers to borrow money privately and US auto sales are expected to sink to between 10 and 13 million vehicles next year from recent averages of 15 to 17 million.
   ‘It would be difficult for them to put together a package that would allow them to emerge from Chapter 11’ bankruptcy protection said Kristin Sziczek, an analyst at the Center for Automotive Research.
   Restructuring the business would cost billions and in the current credit crunch ‘there is no money,’ she told AFP.
   The economic repercussions of a bankruptcy would be far-reaching.
   If even one automaker were to fail, it would be extremely difficult to keep already struggling automotive suppliers in business and vehicle production in the United States could be temporarily shut down, Sziczek warned.
   If operations at the Detroit Three were simply cut in half, Sziczek estimates that 2.5 million jobs and 125.1 billion dollars in personal income would be lost nationwide in a single year.
   While that would be painful in the short-term, ‘other companies will take up the slack should they vanish,’ said James Schrager, of the University of Chicago’s Booth School of Business.
   The US steel industry is in much better shape after it was allowed to fail and rebuild itself with lower structural costs, Schrager said.
   And despite recent attempts by the management of the Detroit Three to restructure and downsize their businesses, their current problems cannot all be attributed to the financial crisis and resulting sharp drop in demand.
   ‘Other companies have found a way to successfully make cars in this country,’ Schrager said in a telephone interview.
   ‘If you bail out GM are they going to make better cars or are they going to flush it down the toilet?’
   Despite the protestations from lawmakers who say they do not want taxpayers to have to pay for the automaker’s mistakes, the ‘massive risks associated with Big Three bankruptcies will eventually compel the US government to intervene,’ predicted Deutsche Bank analyst Rod Lache.
   ‘The risk now is that GM could run into liquidity trouble faster than the US government is prepared to act,’ Lache wrote in a recent report, adding that ‘GM’s collapse would be inevitable’ if assistance is not provided before January.
   But even if these dire warnings manage to convince lawmakers to bail out the automakers, deep cuts will still be needed as the automakers face a steep decline in demand.
   ‘Even if GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy-like,’ Lache wrote.
   GM is going to have to kill unpopular brands, cut back on its bloated dealer network, slash its costs, and spend billions shutting down factories and restructuring its massive debts and liabilities, he added.
   Ford, which is in a slightly better cash position, will likely be able to share in the bailout package required by GM and could even gain some of GM’s market share, but it also requires significant restructuring to cope with the current downturn, Lache wrote.
   Chrysler may have more difficulty accessing government aid because it is owned by a private equity firm and is the smallest of the Detroit Three, J.P. Morgan analyst Himanshu Patel said Thursday.
   While a sudden failure would be ‘more disruptive than it would be beneficial’ Patel said ‘the industry is likely best-served by allowing a large amount of capacity to be removed from the system.
   ‘In the event a convincing case cannot be made for the long-term viability of any one of the Detroit Three automakers, likely the goal would then turn to an orderly disposition of assets and phase-out of non-continuing product lines over time to give the supply chain time to adjust,’ Patel wrote in a research report.

The euro fell against the dollar on Friday when the eurozone switched officially into recession and the market awaited an emergency multi-nation summit in Washington on the global financial crisis.
   In morning trading here, the euro fell to 1.2677 dollars from 1.2779 dollars late in New York on Thursday.
   The dollar dropped to 97.12 yen from 97.67 yen on Thursday.
   ‘The latest eurozone GDP data confirm that the economy... entered its first technical recession since the formation of the euro’ in 1999, said Capital Economics analyst Ben May.
   ‘Coupled with the prospect of further sharp falls in inflation, this will prompt the ECB to cut interest rates aggressively over the coming months.’
   Traditionally, lower interest rates make a currency less attractive to investors even though they can help to boost economic growth. The European Central Bank last week cut its key lending rate by 0.50 percentage points to 3.25 per cent.
   ECB senior economist Juergen Stark on Friday underpinned expectations of further interest rate cuts to battle the effects of an economic recession.
   ‘If our analysis allows for it, we do not rule out using this instrument again,’ Stark told a local radio station.
   The economy of the 15 nations sharing the euro has slumped into recession for the first time ever, according to EU data released Friday, with gross domestic product growth falling 0.2 per cent in the second and third quarters.
   Two consecutive quarters of falling GDP is the technical definition of recession.
   Foreign exchange dealers said on Friday that the dollar could win a further boost against the euro should leaders of the world’s 20 largest economies hammer out a coordinated fiscal stimulus plan at Saturday’s emergency summit in Washington. But for now, a raft of gloomy corporate news and economic data clouded over the greenback. The US unemployment rate in October rose to 6.5 per cent, its highest level since 1994.
   Some 516,000 people in the United States newly reported last week that they lost their jobs, an unexpectedly high figure and the worst since the aftermath of the September 11, 2001 attacks.
   Meanwhile both US imports and exports were down sharply in September, signalling growing weakness in the US and global economy despite a narrowing of the US trade deficit.
   Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp, predicted more market turbulence should the Group of 20 summit achieve little.
   ‘At the summit, each country will likely look inwards and discuss from the standpoint of protecting its own national interests. That means that a prescription to curb the financial crisis is unlikely to be drawn up,’ Uno said.
   The euro changed hands at 1.2677 dollars against 1.2779 dollars late on Thursday, at 123.13 yen (124.84), 0.8557 pounds (0.8606) and 1.5099 Swiss francs (1.5166).
   The dollar stood at 97.12 yen (97.67) and 1.1910 Swiss francs (1.1866).
   The pound was at 1.4818 dollars (1.4842).

Oil prices fell on Friday, a day after slumping close to 50 dollars, despite growing expectations the OPEC crude exporters’ cartel could cut output again later this month, traders said.
   Brent North Sea crude for January fell 54 cents to 55.70 dollars on London’s InterContinental Exchange.
   The Brent December contract expired Thursday at 51.99 dollars after hitting 50.60 dollars — the lowest level since May 2005.
   On the New York Mercantile Exchange, light sweet crude for December delivery fell 36 cents to 57.88 dollars a barrel, after hitting 54.67 dollars on Thursday, a level last seen in January 2007.
   Crude oil prices have collapsed by about two-thirds since striking record peaks above 147 dollars in July on concern that a prolonged global recession could slam the brakes on energy demand.
   That, in turn, has sparked alarm among the OPEC cartel, whose member nations pump 40 per cent of the world’s crude supplies, because their oil revenues have been slashed.
   OPEC will hold a special meeting in Cairo on November 29 a spokesman for the organisation said on Friday amid some pressure in its ranks, notably from Iran, for a new output cut to hold up prices.
   ‘We confirm the Cairo meeting,’ the spokesman said, adding the gathering would last only a day.
   The Organization of Petroleum Exporting Countries agreed on October 24 to reduce production by 1.5 million barrels a day from November 1, but prices have continued to slide since then.
   The November 29 date had been reported by Algeria’s APS news agency which said that members of the OPEC cartel would gather on the sidelines of a meeting by the Organisation of Arab Petroleum Exporting Countries.
   Oil prices closed mixed Thursday, after flirting with a two-year low in New York, as OPEC had hinted at holding the emergency Cairo meeting to consider another cut in production amid a global economic slowdown.
   Iran, number two oil producer in OPEC after Saudi Arabia, said it would support a decision to cut production by the cartel at the meeting, the Mehr news agency reported Friday.
   ‘OPEC members have decided to hold a meeting on November 29 in Cairo to discuss recent prices. The current market situation is worrying,’ it quoted Iran’s cartel’s representative Mohammad Ali Khatibi as saying.
   ‘In light of dwindling oil prices and instability in the market, Iran will support an oil production cut.’
   He added: ‘OPEC decided to cut 1.5 million barrels from its production but it did not have much effect on the market.
   ‘If the current decrease in prices continues, the members will cut production in order to bring back stability to the market.’
   Amid rumours that OPEC may move to cut output soon, Libya’s oil minister Shukri Ghanem on Thursday told AFP that the cartel would meet in Cairo.
   The International Energy Agency reported on Thursday that global demand for oil is being severely crimped by the effects of approaching recession.
   Capital Economics analyst Julian Jessop said that OPEC remained an important player in the global oil market.
   ‘The fact that oil prices have continued to fall despite the 1.5-million-barrels-per-day cut in production quotas announced by OPEC last month underlines the impotence of the cartel in the face of rapidly deteriorating demand,’ Jessop said. However, he added: ‘It is important not to dismiss OPEC completely.
   ‘The cartel is likely to announce further output cuts shortly, perhaps as soon as the end of the month. In the meantime, supply from non-OPEC producers continues to disappoint.’

OPEC will hold a special meeting in Cairo on November 29 a spokesman for the organisation said on Friday amid some pressure in its ranks, notably from Iran, for a new output cut to hold up prices.
   ‘We confirm the Cairo meeting,’ the spokesman said, adding the gathering would last only a day.
   The Organisation of Petroleum Exporting Countries agreed on October 24 to reduce production by 1.5 million barrels a day from November 1, but prices have continued to slide since.
   The November 29 date had been reported by Algeria’s APS news agency which said that members of the OPEC cartel would gather on the sidelines of a meeting by the Organisation of Arab Petroleum Exporting Countries.
   Iran indicated on Friday it would back any move for a further cut in OPEC production at the Cairo meeting, the Iranian press agency Mehr reported.
   The cartel will also meet in Oran, Algeria on December 17, as scheduled.
   Oil prices fell in London on Friday.
   The price of benchmark light sweet crude for December delivery fell by 82 cents to 57.42 dollars a barrel. The price of Brent North Sea crude for January delivery fell by 99 cents to 55.25 dollars.

Sri Lanka’s central bank cut its money supply target in a bid to wrestle down high inflation on Friday and kept its key interest rate on hold for the 21st straight month.
   Following a monthly policy review for November, the bank reduced its target for the amount of money in circulation for the third time this year to 9.7 per cent from 11.75 per cent.
   It also left the benchmark repurchase rate unchanged at 10.5 per cent while the cash reserve ratio — the percentage commercial banks must keep on deposit — was left at 12.0 per cent.
   ‘The tightening of the central bank’s demand management policies has been effective in containing the expansion in domestic credit,’ the bank said in a statement.
   The bank’s anti-inflation strategy has been focused on curbing cash in the economy rather than raising interest rates.
   Inflation, which hit a historic high of 28.2 per cent in June, has shown signs of abating.
   The Colombo Consumer Price Index reported inflation slowing to 20.2 per cent year-on-year in October due to lower food prices and weaker credit demand.
   After the latest moves the bank forecast year-end inflation would ease to between 17 and 18 per cent.
   ‘The central bank has decided to revise downwards the fourth-quarter target for the quarterly average of daily reserve money to 285.0 billion rupees ($2.63b) from 301.7 billion rupees,’ the statement said.
   The bank said it will continue to reduce the amount of money in circulation to curb credit demand and cool inflation.
   Sri Lanka’s 35-billion-dollar economy has been hit by a long-running ethnic conflict between the government and Tamil Tiger rebels that has left tens of thousands of people dead since 1972.
   The island has poured in 1.5 billion dollars into the war effort this year, hoping for a quick end to the conflict.
   Analysts say the government’s war spending has fuelled
   inflation.

China to hold on
to US assets
China will not panic and sell off its US assets in the face of the global financial crisis, the nation’s central bank vice governor told reporters on Friday. ‘China inevitably has to invest its forex reserves in the overseas market and we are very responsible about our forex investment,’ Yi Gang told reporters when asked about investing in US financial assets. ‘We will deal with the current financial tsunami in a responsible and steady manner... this responsible and steady attitude, instead of the attitude of selling off in a panic, will benefit the overall financial market.’
— AFP

Canada’s trade surplus shrinks 20pc
Canada’s trade surplus with the rest of the world decreased by 20 per cent in September to 4.5 billion Canadian dollars (US$3.7b) from the previous month, Statistics Canada said Thursday. The government agency said exports declined and imports rose to mark the nation’s lowest trade surplus since the start of 2008. After Canada posted a 5.6-billion dollar (US$4.5b) surplus in August, analysts had predicted only a slight drop to 5.0 billion dollars (US$4.1b). Export volumes were flat in September, but an overall one-per cent price drop in goods cut the total value of exports to 42.5 billion dollars (US$34.5b. ‘The retreat was led by industrial goods and materials, automotive products, and energy products,’ Statistics Canada said in a statement. Canada’s imports meanwhile increased 1.9 per cent in September to 38.0 billion dollars (US$31.0b), as both prices and volumes increased. September’s gain marked the fifth increase in six months. Exports to the United States, Canada’s biggest trading partner, also declined for the second consecutive month by 1.3 per cent to 32.1 billion dollars (US$26.2b), while US imports remained unchanged at 23.7 billion dollars (US$19.3b).
— AFP