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The country’s garment export has registered a sluggish and much lower than expected growth in the first two months of the current fiscal, according to the exporters’ associations.
   Bangladeshi garment manufacturers received comparatively poor volume of orders from US and EU buyers, a number of officials of the associations said and cautioned that, if the trend continued, the county might face a setback in apparel export earning at the end of this fiscal year.
   ‘What we are seeing is a disappointingly slothful business, as the growth on utilisation declarations in July and August was recorded at only five to seven per cent,’ the president of Bangladesh Knitwear Manufacturers and Exporters’ Association, Fazlul Hoque, told New Age on Saturday.
   UD is the mandatory documentation which every exporter after receiving confirmed order from foreign buyers has to obtain from the Bangladesh Garment Manufacturers and Exporters’ Association or the BKMEA. A UD also describes the quantity and monitory amount of the order and the fabric and accessories required to carry it out.
   ‘We are sensing that the volume of orders from European buyers has declined,’ said the BKMEA chief, adding, ‘The buyers may have not been going for alternative sources but the contracting European economy may have been behind the lower procurement.’
   As a consequence of violent and widespread labour unrest during the end of 2006, the country’s garment export suffered a negative growth in the first quarter of the past fiscal. But, later the industry did recover.
   In 2007-2008, Bangladesh’s knitwear export grew by 21 per cent in terms of volume while shipment of woven garments increased to the tune of 11 per cent. In terms of value, the country’s export proceeds from all categories of garments grew by 16 per cent to $10.7 billion over the last fiscal year.
   ‘Our annual knitwear export has been growing by 20 to 35 per cent on an average during the previous three to four years. So, the five to seven per cent growth posted in the last two months indicates a depression in the industry,’ Fazlul Hoque said.
   Knitted wears, including sweaters, made in Bangladesh are marketed mostly in European countries, which account for more than 50 per cent of Bangladesh’s total garment export earnings.
   Shahidul Islam, vice-president of the BGMEA, said, ‘Although the ongoing recession in the USA and EU is leaving a negative impact on Bangladesh’s garment export, the time has not yet come to be utterly frustrated about our export growth.’
   ‘Sometimes, the volume of orders for knitted items at the beginning of a fiscal year turns poor. So, we should wait and see for at least two more months before coming to any conclusion regarding the export growth,’ he argued.
   The country’s export earning and shipment trends are officially monitored and reported every month by the Export Promotion Bureau. But the bureau is yet to release the report for July, the first month of the current fiscal, let alone the last month, August.

The Bangladesh Petroleum Corporation has taken an initiative to set up a deep sea jetty to facilitate unloading of imported crude oil from the mother vessels and directly pump it to the Eastern Refinery through a pipeline, officials said.
   ‘It will save a huge amount of money we had to pay for transporting crude oil by lighter ships from mother vessels to the refinery,’ said a senior BPC official.
   ‘We have already sent a project proposal in this regard to the authorities concerned and are awaiting their green signal,’ he told New Age on Saturday. ‘If we get the approval, a feasibility study will be conducted soon.’
   The Islamic Development Bank has already agreed to finance the project, the official added.
   Every year, the BPC imports 12 lakh tonnes of crude oil on an average for refining at the country’s lone refinery in Chittagong.
   Meanwhile, a 4-member BPC team headed by its chairman, Anwarul Karim, went to India by the invitation of Bharat Petroleum Corporation Ltd to visit and learn the unloading and operational methods used by its Kochi Refinery Ltd.

Deutsche Bank struck a deal Friday to buy a stake in Germany’s largest retail bank Postbank for 2.79 billion euros (3.93 billion dollars) in the country’s latest major banking tie-up.
   Deutsche Post, Germany’s former postal monopoly, has agreed to sell to Deutsche Bank a 29.75 per cent stake in Postbank at 57.25 euros per share in cash, a joint statement said.
   It has also granted Deutsche Bank an option to buy a remaining 18.0 per cent in Postbank for 55 euros per share, the statement said following a meeting of Deutsche Post’s supervisory board at the firm’s Bonn headquarters.
   Once Deutsche Bank’s stake goes over 30 per cent, it will be obliged to make an offer for all remaining shares listed on Germany’s blue chip DAX 30 index.
   Deutsche Post also has the option to force Deutsche Bank to buy its remaining 20.25 per cent – but for only 42.80 euros per share. Both options can only take place within a certain time period after the first tranche is sold.
   In accepting the offer, Deutsche Post has rejected a rival but reportedly lower bid from Spanish bank Santander for all of Deutsche Post’s Postbank stake.
   Deutsche’s offer was also reportedly helped by political support for an all-German arrangement – although finance minister Peer Steinbrueck denied this on Friday after the deal was announced.
   ‘I think [the deal] is a good development in terms of consolidation of the German banking sector, which I also think was necessary,’ Steinbrueck said in Brussels, saying talk of political pressure had little to do with ‘realities’.
   It will fund the deal by raising up to 2.0 billion euros via a capital increase – issuing and selling more shares in itself – the timing of which will depend on market conditions.
   Postbank has Germany’s biggest retail banking network with more than 14 million customers, and through the acquisition Deutsche Bank will effectively more than double its own domestic client base of just under 10 million.
   ‘Deutsche Bank’s and Postbank’s service offering, which together include by far the biggest branch network in Germany, is highly complementary with attractive opportunities for cross-selling of financial products,’ the statement said.
   The two have agreed to cooperate in several areas including the distribution of home finance and investment products, producing ‘substantial revenue potential for both partners,’ they said.
   The announcement came less than two weeks after the announcement of another major deal that promises to shake up high street banking in Europe’s biggest economy: Commerzbank’s 9.8-billion-euro purchase of Dresdner Bank.
   This merger of Germany’s second and third largest banks meant that 138-year-old Deutsche Bank was being leapfrogged in terms of branches and customers, although it remains the country’s biggest lender in terms of assets.
   In July the retail banking sector, where cooperatives and state-owned Sparkassen savings banks have a strong presence, saw another major deal when France’s Credit Mutuel bought Citibank’s German business for 4.9 billion euros.
   Unlike Commerzbank’s deal with Dresdner, which is set to result in the loss of 9,000 jobs, Deutsche’s tie-up with Postbank ‘will have no impact on branches, jobs or the brand of Postbank,’ the statement said.

The state-owned mobile phone operator Teletalk Ltd has taken up an ambitious plan to release 30 lakh more SIMs in the market at a cost of $20 crore, which is likely to come from donors as soft-term loan, company officials said.
   The work for expansion of the network and setting up the equipment for connecting 18 lakh SIMs would be completed by December, chairman of Teletalk board and posts and telecommunications secretary Iqbal Mahmud told the news agency.
   Teletalk is likely to make a profit of Tk 32 crore this fiscal year after it improves its devices and expands the network, Mahmud said, adding that it would be the first profit earned by the company since its inception.
   He said the Teletalk management would also be recast. To bring transparency in the recruitment process, every job aspirant now has to sit written tests and face interviews simultaneously, Iqbal said.
   Besides, 25 officials deputed from the former BTTB to the Teletalk are also being sent back.

India and France could sign a major nuclear trade agreement at the end of this month, but only once a landmark India-US nuclear pact has been ratified by the US Congress, a minister said here Friday.
   The prime minister, Manmohan Singh, will attend an EU-India summit in the French city of Marseille and is expected to hold bilateral talks in Paris on September 29.
   According to Ashwani Kumar, the Indian minister of state for industry, the nuclear agreement has already been drawn up.
   ‘The documents are ready for signatures. When it comes to bilateral agreement, I see no difficulty,’ Kumar told AFP.
   ‘We hope it should be possible by the end of this month,’ he added.
   The details of the accord are believed to have been finalised back in January when the French president, Nicolas Sarkozy, visited India.
   Last week, the Nuclear Suppliers Group, which controls the export and sale of nuclear technology worldwide, amended its rules to allow India to buy equipment and expertise to fuel its fast-growing economy.
   The push for NSG approval, which opens the way for nuclear deals with other countries like Russia and Britain, was spearheaded by the United States.
   The administration of president George W Bush wants its own bilateral nuclear pact with India to be ratified by Congress before it adjourns at the end of this month.

The confidence of the country’s business community will hopefully get a boost after the national elections slated for the last week of December, said Syed Manzur Elahi, a former adviser to a caretaker government, during an interview with New Age.
   ‘The country’s economy will grow significantly when a newly elected government boosts the confidence of the businessmen,’ said the business magnate.
   Manzur said it would be easier for an elected government to carry out political and economic reforms smoothly, because without the parliament the government is not able to change or enact laws needed for such reforms.
   Manzur Elahi has played a proactive role in solving the country’s socio-economic crises on numerous occasions.
   He played an important role against those who grabbed the riverbeds. Due to his bold steps, a number of rivers like the Buriganga are now free of encroachment.
   As the administrator of the country’s apex trade body Federation of Bangladesh Chambers of Commerce and Industry he successfully organised its election this year.
   During the interview Manzur Elahi deliberated at length on a number of vital issues including the Regulatory Reform Commission, tannery industry, banking sector, and foreign direct investment.
   Talking about the Regulatory Reform Commission, he said, ‘One of the main problems has been implementation of its recommendations.’
   ‘The government has already implemented two recommendations of the RRC. One [of the recommendations] makes it mandatory to display all government gazettes on the official website and to pay all utility bills of government bodies through banks. Any utility bill left unpaid for two years will become obsolete and the official of the utility service provider concerned in charge of collecting the bill will be taken to task,’ Manzur said.
   ‘The Office of the Registrar of Joint Stock Companies has also been computerised following the other RRC recommendation,’ he added.
   He said, ‘We are closely monitoring the implementation process, because most of the ministry secretaries are also members of the RRC implementation committee. But legal complications often hinder implementation of the recommendations.’
   The commission has sent its recommendations to the chief adviser’s office for their smooth implementation, he said adding, ‘Recommendations of any regulatory reform commission cannot be implemented without the government’s will.’
   For instance, Manzur said, the Public Administration Reform Commission led by Shamsul Haq during the last Awami League regime came up with several recommendations, but those had not been implemented as a new government came into office.
   He also said, ‘I liked the recommendations of Nurun Nabi commission. One of its recommendations was for reducing the number of government ministries. The number of ministries should be 15 instead of 60. Because, a poor country like Bangladesh simply cannot bear the additional burden of redundant ministries.’
   ‘If even one-third of the recommendations of the last 13 commissions could have been implemented, we would not have needed to constitute this present commission,’ he quipped.
   He however sounded hopeful about the outcome of the activities and efforts of the RRC. ‘I am hopeful about implementation of the RRC recommendations by the next elected government.’
   Turning to the country’s tannery industry, Manzur Elahi said, ‘The industry will not develop if it is not shifted from Old Dhaka to Saver.’
   ‘We have already deposited money to the authorities concerned for relocating our tannery units to Saver,’ said the business leader. And the government also has arranged for supply of water, electricity and gas for tannery factories at Saver, but it has yet to install a central effluent treatment plant to check pollution of water and environment, he added.
   He also pointed out that ‘The relocation of the tannery industry from Hazaribagh to Savar hangs in the balance due to the absence of a central effluent treatment plant.’
   Regarding the cost of a central ETP, he said it would not be more than Tk 150 crore. ‘We have seen several central effluent treatment plants in Pakistan, India and Thailand, none of which cost more than Tk 150 crore.’
   Setting up a central ETP at Saver is so much important because the European Union will not import any tannery product the making of which has polluted the exporting country, Manzur explained. A bill will be moved in the European Parliament soon to ban import of polluting products, he added.
   He said, ‘If Bangladesh fails to install the central ETP, most of our raw hides will eventually go to India.’
   At present Bangladesh exports tannery products worth $200 million a year.
   Manjur Elahi, a veteran banker, appreciated the government initiative to raise the paid-up capital of banks from Tk 200 crore to Tk 400 crore.
   Explaining his view, he said, ‘According to the WTO provision, Bangladesh will have to open its service sector by 2009. So, foreign banks will come in our country to set up new banks or to buy commercial banks and insurance companies. That time, the Bangladeshi banks will face sever competition. In this context, the provision of raising the paid-up capital will help the country’s banking sector face such a sharp competition from foreigners.’
   ‘The provision of raising the capital of banks will also force the commercial banks to improve their efficiency. Some small banks will also merge in order to survive, which will develop our banking sector,’ he added.
   Manzur said to strengthen their balance sheets as well as to expand business the country’s commercial banks would have no other choice but to raise their capitals by issuing bonus and right shares.
   On foreign direct investment, Manzur said the local industries at the moment were suffering from scarcity of gas. In this condition, the government will not be able to ensure 20 years’ gas supply for foreign investors like TATA.
   ‘The government should have rejected TATA’s proposal earlier considering the acute shortage of gas the country has been experiencing for the last several years,’ he added.

Crude oil prices dipped below 100 dollars a barrel in New York Friday as traders anticipated Hurricane Ike would spare most oil installations in the Gulf of Mexico.
   New York’s main contract, light sweet crude for delivery in October, eased to 99.99 dollars a barrel, dropping below the psychological level of 100 dollars for the first time since April 1.
   The market action extended a downward trend in recent weeks in anticipation of weaker energy demand after crude hit peaks around 147 dollars a barrel.
   London’s benchmark Brent crude contract fell below 100 dollars earlier this week.

Beleaguered Scandinavian carrier SAS joined the ranks Friday of struggling airlines looking for a bigger partner to save them from collapse, as it announced it was in talks but did not say with whom.
   As drama mounted around the future of Italian airline Alitalia, loss-making Scandinavian Airlines System said it was ‘in the process of evaluating various structural possibilities for the group.’
   ‘Within this process SAS is conducting talks about a possible structural solution,’ it said, adding in a brief statement: ‘No decision has been taken.’
   The announcement came amid speculation in the Swedish media that German carrier Lufthansa was preparing a bid, rumours that sent SAS’s share price soaring on the Stockholm stock exchange.
   The SAS share closed up 15.34 per cent at 55.25 kronor, after the speculation prompted the exchange to halt trading in SAS for two hours earlier in the day.
   Lufthansa did not comment on the reports.
   The German airline has long been mentioned as a rescuer for the group, as SAS has struggled financially since the September 11, 2001 attacks in the United States wreaked havoc on the airline sector, the 2002-2003 SARS outbreak and last year’s slew of incidents with its Dash Q400 planes.
   The Scandinavian company has been in the red since the start of this year, hit hard by the global economic slowdown and the high price of fuel.
   In mid-August, it announced that it was stepping up its restructuring programme, leading to a 10 per cent reduction of its fleet and 2,500 job cuts.
   Just days after that announcement, a plane from SAS’ wholly-owned subsidiary Spanair crashed on August 20 at a Madrid airport, killing 154 people.
   The cause of the crash, Spain’s deadliest air accident in 25 years, is not yet known.
   SAS had plans earlier this year to sell Spanair but announced in June that it was abandoning them, citing difficult market conditions.
   The Scandinavian carrier, formed in 1946, is partly-owned by the Swedish state, 21.4 per cent, while the Norwegian and Danish governments each have an interest of 14.3 per cent.
   None of the three would comment Friday on SAS’ announcement.
   Analysts noted that any SAS takeover could be complicated by negotiations with the three governments.
   The SAS news came as uncertainty increased over the future of Alitalia as it attempts to avert bankruptcy.

Russia’s conflict with Georgia has not impacted foreign investment, the prime minister, Vladimir Putin, said in an interview published Saturday, adding that high inflows could fuel inflation.
   ‘For me there is no effect of the Caucasus crisis on foreign investment in Russia,’ he told France’s Le Figaro newspaper.
   ‘The year 2007 was positive with an inflow of 81 billion dollars (57 billion euros), this year the figure will be around 45 billion dollars,’ he said, stressing that too much overseas investment could actually have a negative effect.
   ‘To tell the truth we don’t need more as this would increase our liquidity too much and could even fuel inflation,’ he said.
   The Russian president, Dmitry Medvedev, on Friday said the recent plunge in Russian stocks was in part caused by last month’s war with Georgia but was mostly due to the global credit crisis.
   Medvedev told Western foreign experts at a meeting in Moscow that ‘the consequences of the war in the Caucasus’ accounted for a quarter of the loss in value, while the rest was due to the global financial crisis.’

Eurozone industrial production fell 0.3 per cent in July, official Eurostat figures showed Friday, providing more evidence that the bloc is teetering on the edge of a recession.
   The July figures marked a third successive decline while on a 12-month basis industrial output fell 1.7 per cent in the 15-nation eurozone.
   Economists had expected the measure to slip 0.3 per cent on the month but just 0.6 per cent on the year, according to Dow Jones Newswires.
   The news came as eurozone finance ministers, meeting in southern France, ruled out a sweeping stimulus plan to ward off a recession but gave themselves some wiggle room on extra spending.
   The ministers agreed that Europe would not follow in the footsteps of the United States and Japan with an ambitious stimulus package.
   The European Commission warned on Wednesday that Europe was teetering on the brink of a technical recession, which economists define as two consecutive quarters of contraction.
   After the 15-nation eurozone economy contracted 0.2 per cent in the second quarter, the European Union’s executive arm estimated that it would be at a standstill in the third quarter.
   The commission cut its eurozone growth estimate for the whole of 2008 to 1.3 per cent from a forecast of 1.7 per cent given in April, marking an even sharper slowdown from the solid 2.6 per cent growth recorded last year.
   For the 27 EU nations as a whole, Eurostat also put industrial production for July down 0.3 per cent, with the 12-month decline at 1.3 per cent.
   Weakness was seen practically across the board in July, with only the energy sector, still buoyant from high oil prices, achieving a month-on-month increase.
   ‘While the recent retreat in the euro and oil prices will obviously benefit eurozone manufacturers, we believe that they will continue to find life difficult over the coming months as they are buffeted by slowing domestic demand, muted activity in key export markets and tight lending conditions,’ said Howard Archer, chief European economist at London-based Global Insight.
   ‘Furthermore, oil prices are still relatively elevated, as is the euro.’
   In separate figures, Eurostat showed eurozone and EU employment rose 0.2 per cent in the second quarter after a 0.3 per cent gain in the first.
   This reading added to ‘the mounting evidence that markedly weaker eurozone economic activity and depressed business confidence is taking an increasing toll on labour markets,’ said Archer.
   Jonathan Loynes, chief European economist for Capital Economics, was a little more upbeat, with the data holding up better than might be expected.
   ‘The latest eurozone figures on industrial production and employment are soft but not as weak as they might have been,’ he said.
   ‘With other sectors like construction likely to rebound, there is still a chance that the region avoids another fall in GDP, and hence recession, in the third quarter,’ he said.
   Overall, not great but not dreadful either.’

Italy’s Alitalia was staring into the abyss Friday after investors, blaming union intransigence, abandoned talks to rescue the airline, leaving the government scrambling to salvage the situation.
   The Italian labour and transport ministers, Maurizio Sacconi and Altero Matteoli, met with Alitalia worker representatives, appealing for a united position in order to break the deadlock.
   Alitalia’s nine unions then convened in a stepped-up search for consensus, as around 200 pilots and flight attendants protested at Rome’s main airport, worried for the future of their jobs.
   All-night talks ran past a deadline early Friday set by the Italian flag carrier’s government-appointed administrator for a deal to avert bankruptcy.
   The deadlock ‘makes one fear the worst,’ Sacconi said, before investors – including top names in Italian industry – announced they were pulling out.
   Alitalia, a national symbol for Italians since its founding in 1946, flew Pope Benedict XVI into Paris on Friday – a day after traffic at Rome’s Fiumicino airport was seriously disrupted by Alitalia staff.
   Leaders of the main airline workers’ unions said Friday: ‘There are insurmountable difficulties, but we have decided to stop... and resume negotiations in the next few hours.’ But then the investors – who were prepared to put up one billion euros (1.4 billion dollars) – disclosed they were ending the talks.
   Their spokesman said they were ‘acting on the fact that after seven days of meetings, the conditions no longer exist for the negotiations to continue.’
   ‘Clearly (the unions) do not realise what a dramatic situation Alitalia is in and the need for profound changes from the past as required by the rescue plan.’
   Italian news agencies said the investor alliance, with the Italian acronym CAI, had not formally withdrawn its takeover offer.
   The special administrator, Augusto Fantozzi, warned unions on Wednesday that if a deal on restructuring was not reached before Friday, Alitalia would be made bankrupt quickly and that he would start dismissing staff.
   Fantozzi was appointed last month when the airline asked to be declared insolvent.
   By the end of September, Alitalia will have available funds of only 30 million to 50 million euros (42 million to 70 million dollars). The carrier has lurched for years from crisis to crisis, and from restructuring plans to the latest takeover rescue scheme.
   The last proposal, based on a takeover by Air France-KLM, fell apart in April when the French-based carrier – the world’s third biggest – walked away from talks after unions rejected terms.
   The latest negotiations on restructuring conditions hit deadlock over proposed cuts in pay and holidays and the application of a single employment contract across the group.
   A further complicating issue has been proposed job cuts in the range of 3,250-4,000 positions. The Alitalia group employs 11,100 in its air transportation division and 8,300 in maintenance and service operations.
   ‘All the rescue plans aim to dramatically cut labour costs,’ a flight attendant with 19 years’ experience said Friday. ‘But it is bad management, the purchase of equipment for political motives – that is at the origin of the deficit – not the employees.’
   Under the latest plan, the rescuing consortium would have taken over the passenger transport business, which would be merged with the second-biggest Italian airline, Air One.
   The new entity would then tie up an alliance with a foreign operator such as Air France-KLM, which has said it might take a minority interest. British Airways and Lufthansa are also believed to be interested. Alitalia’s debt of nearly 1.2 billion euros would be put into another company that would then be liquidated. Freight and maintenance activities would meanwhile be sold.
   The Italian government owns 49.9 per cent of Alitalia, which has been surviving on a state loan of 300 million euros made at the end of April.

Some two weeks ago, an international trading company was due to hold its annual meeting and getaway in Phuket, flying in close to 200 employees.
   When the company heard about the brief closure of Phuket airport, it hunted around for other options – and found the best offer in Macau. In a matter of minutes, Phuket lost the group’s business.
   The story is not uncommon. As many as 1,000 incentive travellers from Sunrise Insurance Company in China also cancelled their Thailand plans this month.
   According to the Thai Tourism Services Association, the number of international arrivals in recent weeks has fallen by 70 per cent – with Chinese tourists leading the cancellations.
   About 50,000 Chinese travellers have cancelled trips to Thailand, the association’s president Charoen Wang-ananont has estimated. Hotel room occupancy has also dropped by 30 to 40 per cent, he added.
   A separate study by the University of the Thai Chamber of Commerce found that from August 29 to September 5, foreign tourist arrivals dropped by between 150,000 and 170,000.
   Thailand had 14.5 million foreign tourists last year.
   Thai Hotels Association president Prakit Chinamourphong corroborated the trend, saying: ‘The hotel business alone...has already received a 40 per cent cancellation of total bookings for the rest of the year.’
   Thailand’s tourism industry has been hit hard as its economy takes a hit from the political crisis.
   While the country’s fundamentals remain sound and its export and manufacturing sectors are resilient, analysts are warning that the longer the crisis drags on, the greater the damage will be.
   When anti-government People’s Alliance for Democracy protesters forced the closure of three airports in southern Thailand – Hat Yai, Krabi and Phuket – on August 29, an estimated 15,000 tourists were stranded. This sent a shock through the industry.
   About a week later, after a violent clash between the PAD and a pro-government mob in Bangkok, a state of emergency was declared in the capital.
   Even though it has not been enforced, it was enough to spawn cancellations and prompt several countries to issue advisories to their citizens urging caution when travelling to Bangkok. Tourism accounts for 6.5 per cent of Thailand’s gross domestic product. The Tourism Authority of Thailand had earlier projected 15.53 million tourist arrivals this year, which could generate 638 billion baht ($18.37 billion) in revenue.
   There is some fear now that if the political turmoil continues, over two million tourists could be lost to other destinations.
   In monetary terms, the loss to tourism and related service industries has been estimated at more than 42 billion baht.
   The political unrest has also spawned economic losses in other sectors.Thailand’s consumer confidence index this month dropped to a 10-month low, according to the UTCC.
   UTCC vice-president Saovanee Thairungroj was quoted on Friday by the state-owned Thai News Agency as saying that the political stand-off had so far caused an estimated economic loss to the country of more than 100 billion baht ($2.88 billion).
   The three-day strike at Bangkok’s port over the last weekend of August – held by workers in sympathy with the PAD – is estimated to have cost the country around $338 million, and crimped its export growth figure for the year by 0.2 per cent.
   The strike forced 4,000 containers normally exported and imported through Bangkok’s Klong Toey port, to be diverted to Laem Chabang Port in Chon Buri, about 120km south-east of the capital.
   Thailand’s manufacturing and export sectors have remained resilient, but most analysts warned that if the political unrest was prolonged, investors would start holding off on Thailand.

Embattled investment giant Lehman Brothers faced a weekend of scrambling for a buyer in the face of a massacre in its share price that threatened to sink the Wall Street bank, analysts said.
   Some reports and analysts said Lehman needed to find a buyer or risk a failure that ripples through financial markets.
   ‘Lehman needs a bid. So does the market,’ said Robert Brusca at FAO Economics.
   ‘The market needs for Lehman to be sold. Lehman’s counterparties have been hanging in there.... No one likes the notion that there is no bid for Lehman’s real estate portfolio at any price. And the price has gotten very low.’
   The Wall Street Journal reported that the Bank of America was a leading candidate for a takeover.
   The Financial Times said that in addition to the Bank of America, private equity firm JC Flowers & Co and China Investment Co, the Chinese sovereign wealth fund, are considering a possible joint bid for Lehman. British-based Barclays is also interested, the FT said.
   ‘The evidence is pretty clear that they are searching frantically for a buyer, and the most prevalent name being tossed around is the Bank of America,’ said Kevin Giddis, analyst at Morgan Keegan.
   ‘The speculation is that a sale could happen today or as we have gotten used to, over the weekend. They are looking for a white knight, but one may not emerge,’ Giddis said.
   ‘If they don’t find one, we might just test the “too big to fail” theory once again.’
   Brad Sorensen of Charles Schwab & Co said the main stumbling block appeared to be that a potential buyer would be seeking the same credit guarantees given to JP Morgan Chase in the 11th-hour deal to buy Wall Street rival Bear Stearns in March.
   ‘There are reports that the Treasury Department and the Federal Reserve are trying to help bring the appropriate parties together but are likely resistant to backing any deal with government money or guarantees,’ Sorensen said.
   ‘However, a precedent of sorts has been set with the backing of 29 billion dollars in debt by the government in the deal between JP Morgan and Bear Stearns. Therefore, any potential buyer of Lehman may balk at proceeding without at least some assistance from federal authorities.’
   White House spokesman Tony Fratto said the US Treasury ‘is closely monitoring the markets and they stay in contact with market participants,’ but offered no details.
   ‘The central bank’s rumoured involvement will again raise concerns about moral hazard,’ said Ryan Sweet at Economy.com.
   ‘Many view the Bear Stearns takeover and the recent seizure of mortgage giants Fannie Mae and Freddie Mac as bailouts. That said, a failure of any major financial institution will send borrowing costs higher and hurt business and investor sentiment,’ Sweet said.
   ‘The timing is particularly bad, as banks need cash at the end of a year to balance their books. Higher borrowing costs could put many in a difficult, if not fatal, squeeze,’ he added.
   ‘It’s a tough one because the [financial market] interactions are so complex you just don’t know the consequences,’ said Cary Leahey, senior economist at Decision Economics.
   ‘Is failure an option? Part of capitalism is failure... but are the repercussions so great? You can have everybody with their hat in their hand seeking a bailout. It’ll be the auto industry and then the citrus growers,’ Leahy said.
   Shares in Lehman fell 13.5 per cent to 3.65 dollars on the heels of a 41.7 per cent slide Thursday.
   The latest troubles for Lehman come days after the US government took over mortgage finance giants Fannie Mae and Freddie Mac in an effort to stem a global credit crisis.
   The financial firms have been roiled by the horrific slump in the US real estate market that has battered the banking firms that financed market speculation.

The Bank of Korea on Friday kept the key interest rate at an eight-year high of 5.25 per cent for September, emphasising that instability in financial markets may continue for some time.
   Consumer prices, which led the Korean central bank to raise the rate by 0.25 percentage points last month, are expected to stay at high levels for a considerable time, the BOK governor Lee Seong-tae said.
   ‘There can still be some volatility in the financial markets for some time because Korea’s stock and foreign exchange markets are heavily exposed to external factors,’ Lee told a news conference.
   ‘It would be too premature to say that all [of the volatile factors] have passed,’ he said. Local stock prices and the Korean won have fluctuated for the last couple of days, even after the so-called ‘September crisis’ – or foreign capital flight speculation – turned out to be groundless.
   Lee attributed the fears over foreign capital flight to simultaneous pressures coming from within and outside the country. The recent jitters in the international financial markets have coincided with the slowing local economy, rising domestic household debts and the spectre of the 1997 financial crisis, which all played their part in spreading capital flight rumours, Lee said.
   Although there was no massive capital flight, the won fell 14 won to 1,109.5 won to the US dollar, and the benchmark KOSPI lost 21.74 points to close at 1,443.24 Friday, reflecting the still-unstable market sentiment.
   ‘Lee’s comment seems to be in accord with the market view that not only Korea but other countries are being negatively affected by the subprime mortgage woes,’ Kwon Soon-woo, a senior research fellow at the Samsung Economic Research Institute, said.
   After announcing a rate freeze, Lee said that consumer prices are likely to stay at high levels for the rest of the year.
   ‘Consumer inflation in the second half is expected to be higher than the BOK’s previous forecast of 5.3 per cent,’ he said.
   Thanks to the decline of international oil prices to around $100 per barrel, the domestic consumer price index fell slightly to 5.6 per cent in August from a 10-year high of 5.9 per cent in July.
   However, core inflation, which excludes volatile food and energy prices, rose to 4.7 per cent year-on-year last month from 4.6 per cent in the previous month, continuing its upward trend, Lee noted.
   ‘The continuous rise of the core inflation rate is proof that the secondary effects of high oil prices persist, even though oil prices have recently fallen,’ he explained. Analysts said that Lee did not give a signal for another rate hike because he also mentioned the risks of slowing growth, sluggish domestic demand and weak job creation.
   The central bank will keep its neutral stance until the end of the year, when consumer prices begin to moderate and the economic slump gets worse, said SERI’s Kwon. Daewoo Securities analyst Seo Chul-soo predicted that the BOK might cut the rate by 0.25 percentage points twice in the first quarter of next year. He said that the BOK would put priority on sustaining growth, rather than curbing inflation.

AKTEL, one of the country’s leading cell phone operators, has made its ‘balance transfer’ service faster and easier for its customers. From now on, a prepaid customer can also send request for balance transfer.
   To transfer a balance, a user has to type the amount in a text message body and send an SMS to 1212018XXXXXXXX (where 018XXXXXXXX is the balance receiver’s number), said a press release.
   To send a balance request, a customer needs to have a balance of at least Tk 0:58. For both prepaid and post-paid subscribers, a minimum transferable amount is Tk 10:00, the release added.
   To know more about the service, customers can call 123 (from AKTEL number) or 01819 400 400 (from any mobile phone) or sms HELP to 1210.

Crude oil futures slid to six-month lows below 100 dollars this week and many other commodities fell as the dollar rallied and surveys pointed to lower demand for raw materials amid an economic slowdown.
   Losses were reduced late on and some commodities even ended higher from a week earlier as the dollar gains were cut in the wake of weak US economic data released on Friday, traders said.
   OIL: Oil prices tumbled under 97 dollars a barrel on Thursday, reaching the lowest levels since early March, as the dollar struck a year-high against the euro and on concerns about falling demand for energy.
   Prices fought back early on Friday after Hurricane Ike had forced the closure of energy production facilities in the Gulf of Mexico.
   In a volatile week’s trade, oil futures also briefly rose after OPEC had on Wednesday decided to cut the cartel’s production by more than 500,000 barrels a day.
   The Organisation of Petroleum Exporting Countries, which produces 40 per cent of the world’s oil, cut its output to prevent a further drop in crude prices, which have tumbled since striking record highs above 147 dollars a barrel in July.
   ‘It looks like they are willing to defend 100 dollars [as a floor],’ Mike Wittner, an analyst at Society Generale, commented following the move by OPEC.
   The dollar had meanwhile pushed the euro below 1.39 dollars, a 12-month trough, on growing recession fears in the eurozone. A strong dollar makes dollar-priced goods, such as oil, more expensive for buyers using weaker currencies.
   A series of reports underlining weakening demand were meanwhile published this week. The US Department of Energy on Tuesday lowered its forecasts for 2009 global crude oil demand.
   Then on Wednesday the DoE, in its weekly report on US energy stockpiles, said that demand for petroleum products in the United States, the world’s largest consumer of crude oil, continued to fall and was now 3.8 per cent below its level a year ago.
   Gasoline (petrol) consumption declined 2.1 per cent on a 12-month basis, a sharper decline than in previous weeks, while prices at the pump were far below their July peaks, the DoE said.
   The International Energy Agency on Wednesday cut its estimate for demand growth this year by 100,000 barrels per day and for 2009 by 140,000 bpd.
   Crude futures rebounded on Friday also after Venezuela’s president, Hugo Chavez, threatened to halt the supply of oil to the United States, its main client, if Washington showed ‘aggression’ towards his country.
   The threat came after Chavez had announced Thursday that US ambassador to Venezuela, Patrick Duddy, had 72 hours to leave the country.
   Venezuela’s order to expel Duddy was an act of ‘solidarity’ with Bolivia, which expelled its US envoy Philip Goldberg on Wednesday after accusing him of encouraging a break-up of Bolivia through support of opposition groups.
   Deadly clashes in Bolivia have stoked fears of further widespread unrest and possibly even civil war.
   By Friday, New York’s main oil futures contract, light sweet crude for delivery in October, was trading at 102.67 dollars a barrel, down from 106.93 dollars a week earlier.
   Brent North Sea crude for October fell to 99.33 dollars a barrel from 105.33 dollars.
   PRECIOUS METALS: Gold prices dropped back under 800 dollars an ounce, striking the lowest point for almost one year, as the dollar strengthened.
   Gold had Wednesday tumbled to 736.70 dollars, a level last seen in October 2007.
   ‘The dollar’s ongoing recovery put further pressure on the precious metals Thursday with gold declining to an 11-month low while silver tumbled to its lowest since June 2006,’ said James Moore at the bulliondesk.com.
   Platinum unravelled to a 20-month low and palladium reached a trough not seen for almost three years.
   On the London Bullion Market, gold slumped to 750.25 dollars per ounce at Friday’s late fixing from 808.50 dollars a week earlier.
   Silver fell to 12.52 dollars per ounce from 12.72 dollars.
   On the London Platinum and Palladium Market, platinum slid to 1,187 dollars per ounce at the late fixing on Friday from 1,387 dollars.
   Palladium dropped to 241 dollars per ounce from 277 dollars.
   BASE METALS: Base metals prices fell for most of the week but some managed a late rally as the dollar lost some of its spark as US retail sales data disappointed.
   ‘We would view the price recovery as fragile and tenuous as sentiment remains weak,’ said analysts at Barclays Capital.
   Base Metals analyst William Adams added: ‘This weakness is not confined to the base
   metals, all markets seem to be waking up to the fact that the global economy faces a slowdown.’
   By Friday, copper for delivery in three months rebounded to 7,075 dollars per tonne on the London Metal Exchange from 6,889 dollars a week
   earlier.
   Three-month aluminium rose to 2,639 dollars per tonne from 2,595 dollars.
   Three-month lead fell to 1,895 dollars per tonne from 1,936 dollars.
   Three-month zinc climbed to 1,824 dollars per tonne from 1,780 dollars.
   Three-month tin dropped to 19,150 dollars per tonne from 19,425 dollars.
   Three-month nickel declined to 18,600 dollars per tonne from 20,226 dollars.
   COFFEE: Coffee prices extended losses amid abundant supplies in Brazil.
   By Friday on LIFFE, London’s futures exchange, Robusta for November delivery fell to 2,154 dollars per tonne from 2,212 dollars a week earlier.
   On the New York Board of Trade, Arabica for December delivery dropped to 139.20 US cents per pound from 147 cents.
   
   COCOA: Cocoa prices also fell further.
   By Friday on LIFFE, the price of cocoa for December slid to 1,498 pounds per tonne from 1,544 pounds a week earlier.
   On the NYBOT, the December cocoa contract declined to 2,569 dollars per tonne from 2,645 dollars.
   SUGAR: Sugar prices hit seven-week lows as oil prices continued to fall and as Brazil announced a large rise is sugar cane production.
   Sugar is used in the production of ethanol, a cheaper alternative to motor fuel which is refined from crude oil. When crude futures fall, demand for ethanol also wanes.
   By Friday on LIFFE, the price per tonne of white sugar for December delivery slipped to 384.70 pounds from 388.60 pounds the previous week.
   On NYBOT, the price of unrefined sugar for October delivery decreased to 12.43 US cents per pound from 12.77 cents.

The dollar wilted against the euro Friday on an unexpected fall in US retail sales in anxious trading reflecting market uncertainty surrounding the fate of ailing US investment giant Lehman Brothers.
   The single European currency in late trade was at 1.4177 dollars, up sharply from 1.3969 late Thursday in New York.
   But the dollar managed to edge higher against the yen, at 107.37 yen against 107.05 on Thursday after the Japanese economy faltered badly in the three months to June.
   Against the euro, the dollar was weighed down by news that US retail sales fell 0.3 per cent in August from July as a government fiscal stimulus faded.
   The figure, released by the Commerce Department, surprised analysts who had expected a gain in sales of 0.3 per cent.
   ‘Retail sales figures for this month are quite disappointing and show that there is no support to consumer spending in the third quarter as the fiscal stimulus fades,’ said Amine Tazi, analyst at Natixis.
   ‘We don’t expect any recovery in the coming months – consumption is likely to be negative,’ Tazi said.
   Citigroup analysts said ‘weakness in the retail sales report reveals further underlying deterioration in the US economy.
   ‘Since the housing sector will continue to drag, the building blocks for a long-term dollar recovery are absent. Risks for additional dollar appreciation remain concentrated in the near term.’
   Analysts said investors remained unsettled by prospects for embattled Lehman Brothers, whose share meltdown continued Friday and as the US government scrambled to find a buyer.
   Shares in Lehman fell 9.3 per cent to 3.84 dollars on the heels of a near 42 per cent slide Thursday.
   In London trading late Friday, the dollar changed hands at 107.37 yen (107.05) and 1.1323 Swiss francs (1.1391). The pound was at 1.7846 dollars (1.7552).

PetroVietnam wins rights to Peru oil
holiday offers
The Peru National Petroleum Company has announced that the PetroVietnam Exploration Production Corporation, under the Vietnam Oil and Gas Group (PetroVietnam), has won a contract to explore and exploit oil and gas at Block 162 in Peru. According to the PetroVietnam, this is a result of an auction this year of 22 blocks in Peru, in which 44 international companies took part. Block 162, in the Ucayali oil field, has an area of 4,700sqm of land in the eastern zone of Peru. The PetroVietnam said this was the second project signed by the PVEP in Peru. Its first project explored and exploited oil and gas at Block Z47 in the Trujillo oil field, offshore from Peru. The PVEP holds 100 per cent of shares in the two projects. Nguyen Quoc Thap, PVEP general director, said winning the second project in Peru was a part of its strategy to enhance exploration and exploitation of oil and gas in key points around the world, including Latin America. The PVEP is actively preparing to begin the project right after an official signing of the contract, said Thap. The PetroVietnam stated that Peru was considered to be in a region with potential oil and gas. Pedro Gamio, Peru’s deputy energy minister, said the winners of this year’s auction planned to invest $800 million to explore oil and gas in the next two years. Peru has to import 12 million barrels of oil a year, mainly from Ecuador and Iran, so the country is investing in the petrol industry with the goal of becoming an oil exporter in 2010. In April, the PVEP announced that it had discovered oil in the Touggourt area of the Sahara Desert, Algeria. In February, it signed a deal with the Tunisian National Oil Company to exploit crude oil and gas in Tunisia.
— ANN