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The industries ministry has again asked Unilever and Aventis to offload their 10 per cent shares, including five per cent stakes of the government in each of the two global consumer goods and pharmaceutical giants.
   The government made the fresh offer after the two multinational companies sought to acquire the government stakes, industries ministry officials said.
   The ministry had sought legal opinion from the stock market watchdog, Securities and Exchange Commission, about selling the government’s five per cent shares out to the public.
   ‘We’ve asked the SEC to initiate legal procedure to allow offloading of the shares in the two multinationals,’ said a high official of the ministry, who attended a meeting Tuesday on how to offload their shares.
   Rules allow the majority shareholder of a company to buy the stakes of the smaller shareholder if the latter agrees to sell its shares.
   However, in this case, the government wants to sell its five per cent shares to the public and asks both Unilever and Aventis to offload another five per cent shares through the country’s two stock markets.
   The issues were discussed Tuesday at an industries ministry meeting, presided over by Mahbub Jamil, special assistant to the chief adviser, and attended by senior officials of Unilever, Aventis and SEC.
   Officials of the two multinational companies offered to buy the government stakes while the industries ministry proposed that the government’s five per cent shares should be sold in the country’s capital market.
    The Unilever Bangladesh board earlier rejected a similar proposal of the industries ministry to offload five per cent of its 39.5 per cent stakes in the company. The government holds about 40 per cent stake in the Bangladesh operations of French drug maker Aventis, now known as Sanofi-Aventis.
   The government had decided to offload at least five per cent of its stakes in the multinational companies such as Unilever and Aventis by April 2006 as part of its wide-ranging plan to strengthen the country’s capital market.
   But no visible progress could be made in more than two years since then due to indifference of the multinational companies, industries ministry officials said.
   ‘Unilever shares are already being traded in Pakistan and other regional capital markets. But here the company is opposed to the government’s proposal to offload a small amount of its shares,’ said economist Professor Abu Ahmed.
   Multinational companies can enjoy tax exemption if they offload shares in the stock markets, he pointed out.
   The capital market expert expressed his strong reservation about the company’s proposal to buy the government’s stakes instead of offloading their shares in the stock markets.
   Formerly known as Lever Brothers Limited, the Anglo-Dutch fast-moving consumer goods company has been operating in the country since 1964, with the government holding minority shares.
   Renamed as Unilever globally, the company is the market leader in Bangladesh with its popular beauty soap brand Lux and about 40 other toiletries and consumer brands.
   Unilever Bangladesh has been witnessing double-digit growth since 1990s with annual gross turnover estimated at $200 million, maintaining its stronghold in the country’s fast-growing consumer market.
   Experts said Unilever stocks would be the most sought-after ones in the capital market if it decides to go public.
   An inter-ministerial meeting held last week at the finance ministry reviewed the progress of the government’s plan to bring quality shares, including those of multinationals and public sector companies, to the country’s stock markets.
   The meeting was told that multinational companies had ignored repeated appeals of the industries ministry for taking steps towards share offloading, while listing of state-owned enterprises also faced hurdles from bureaucracy and litigations.
   The government’s year-old plan to bring major state-owned companies, including the good performing ones, to the capital market also did not see much progress.
   The finance ministry meeting that reviewed the status of the government’s plan found that only three out of nearly 40 state-owned enterprises had so far offloaded their shares. They are Jamuna Oil Company Limited, Meghna Petroleum Limited and Titas Gas.
   The decision of offloading of the shares of other companies did not progress due to procedural delays.
   Legal restriction held back the offloading of the government’s 25 per cent out of 51 per cent stake in Usmania Glass Sheet manufacturing company.
   The government has also planned to offload more of its shares in Atlas, National Tubes and Eastern Cable, which are already listed with the stock market.
   Earlier, finance adviser Mirza Azizul Islam had instructed officials to complete asset valuation of some of the fully government-owned companies by June to pave the way for their listing with the stock market.
   A committee was formed comprising officials of SEC, Investment Corporation of Bangladesh and industries ministry to find out by June 2008 whether shares of any of the state-owned sugar mills can be offloaded.

Exported fashion goods — from women’s footwear to kids’ fancy garments, from artistically crafted dresses for young girls to stone-studded handbags and ornaments for ladies — all are in high demand in the thriving Eid market.
   They are either from Thailand or from Pakistan and Iran. Bangladesh’s Eid market has been growingly becoming lucrative for all of them.
   These products had to make their places in the shelves of city’s stores and lavish shopping malls amid stiff competitions from traditionally common sources of fashion wears — India and China.
    This happened mainly because of desperate efforts of trade diplomats, stationed in Dhaka, of those countries over the years, arranging trade fairs eyeing eid markets and engaging retail chains and superstores in their exclusive sales promotion programmes, market sources said.
    PQS Super Shop’s Gulshan outlet dedicated a significant space of its floor to showcase Made-in-Thailand shoes, men and women dresses, handbags and dozens of other products including showpieces or toys for kids.
   Colourful festoons and promotional posters hung in and outside, along with gimmicks like raffle draw promising Dhaka-Bangkok-Dhaka air trip and other surprises, are luring Eid shoppers into the superstore as convenient shopping is gaining ground in city life.
   The Thai embassy’s trade centre in Dhaka is behind all these campaigns.
   ‘Really Thai embassy people know how to promote products of their country and how to support their manufacturers,’ said Abid Hossain Sarker, general manager of PQS Super Stores that pioneered convenient shopping in Dhaka in early 2000.
   Since local consumers have fascination for quality foreign products, promotional activities have boosted the sales of Thai products, Hossain said.
   ‘Sometimes, products themselves create demand and sometimes demands invite products. And marketers and campaigners of foreign goods have got the pulses of Bangladesh’s consumers and are successfully exploiting their choices,’ said Professor Nurur Rahman, faculty of the Institute of Business Administration at Dhaka University.
   The marketing expert observed that it was difficult to prevent legal import of foreign products, instead there were lessons for Bangladeshi manufacturers and trade diplomats on how to promote country’s products abroad.
   ‘If only 10 per cent people of Bangladesh are segmented as middle and upper-middle classes, here is a market for 15 million well-off consumers, who could be reliable targets for both local and foreign branded products,’ said Dipankar Lahiri, an Indian businessman who supplies saris and readymade garments to selected shops in Dhaka.
   Lahiri visits Dhaka frequently on business trips like hundreds of others from his country to promote Indian fashion products, which already have good sales in Bangladesh.
    ‘Either saris crafted in Hyderabad, or punjabees stitched in Lucknow or ornaments designed in Mumbai, all have a good demand among eid shoppers here,’ he told New Age at a city hotel.
   Market people said small importers or ‘luggage parties’ — as travellers bringing small quantity of foreign goods home for sale are called — are also doing a very good business and supplying a wide range of fashionable items to the retail shops and shopping malls.
    Ainal Hossain, a shop owner at Bashundara City Shopping Complex in the city told New Age that he had filled most of his shelves with supplies of extraordinarily crafted Iranian handbags for women.
   ‘I have specially targeted eid sales. Although prices of these products are much higher than the Chinese ones, sales are not bad,’ said Ainal, whose shops sell purses each priced between Tk 2,000 and Tk 15,000.
   An official of a Bangladeshi event management company that helped organising weeklong 5th Women Entrepreneur Trade Expo told New Age that sellers there were satisfied beyond their expectations.
   Eyeing eid market, the Pakistan embassy in Dhaka last week organised the event WETEXPO-2008 that had accommodated products of women entrepreneurs from India, Sri Lanka, Thailand and China.
   Ashraf Uddin, sales manager of Lubnan, a Bangladeshi brand of men’s punjabees and fatuas said that hundreds of ‘luggage parties’ were bringing a significant quantity of consumer goods from China, Thailand, India and even from UAE..
   ‘Despite an array of foreign goods, Bangladeshi dresses or gift items are also having good sales. I think it is a reality that we have to compete with foreigners in our local market,’ Ashraf said.

Millions of greetings cards with glittering designs and diversity of colours are crammed into the Purana Paltan showroom of Ideal Products. Clients – both individual and corporate – come in flocks nowadays to buy cards to send seasonal greetings to their near and dear ones, business acquaintances and other targeted people. And Eid is one of the biggest occasions for this fancy business that pays very high dividends.
   Only a few players like Ideal are prominently active in this business—a business that thrives on people’s emotions, youthful fancies, feelings for one another, aesthetic sense, and social tradition. Added to these is the need of the corporate houses to convey their ‘best wishes’ to their clientele. Designers and script writers of greetings cards try to present what clients want to express in the cards, to create something that they visualise in their mind, and thus bring money for their employers.
   But, the businessmen say, the mass use of Internet and mobile phone has slightly jolted the greetings card business as many Internet users send season’s greetings cards online and cell phone users jam others’ phone sets with short text message to touch their emotions on festivals.
   ‘Mobile phone has hurt our business a bit. Those who once bought cards now prefer sending an SMS to greet their friends and relatives,’ said Ehteshamul Haque Chowdhury, manager of Ideal Products, one of the country’s two main producers of greetings cards. The other player is Azad Products. The two companies have employed experts to assess and understand public taste, design newer, more attractive cards, modify old ones, and write or use messages that suit the emotions and sophistication of people of various types.
   Surrounding the two main players based in Purana Paltan, a number of similar producers have developed there including Anis Products, Habib Products, Farhad Enterprise, Cartoon Products, Card King, and Royal Cards. Some of them also import large posters.
   Targeting the upcoming Eid-ul-Fitr, Ideal has developed and printed around 350 varieties of cards, although less than the 600-700 varieties it used to print in previous years. ‘This is the influence of mobile phone and to some extent Internet. Still we are strongly present in the market and many buyers still come to us,’ said the Ideal Products official. Its corporate orders range from 500 to 9,000 pieces of greetings cards.
   Azad Products has launched around 500 varieties of Eid greetings cards, including their latest edition of musical cards. ‘Our retailers have taken a lot of cards and they will hopefully come back to us demanding more,’ said M Abu Sayed, sales supervisor of the company.
   According to both Ehteshamul and Abu Sayed, the focus of their business has been significantly shifted to yearend greetings cards and more importantly to printing wedding cards. The two companies have showrooms in the major cities, besides hundreds of agents across the country.
   On Thursday, a former member of parliament was found at Azad Products’ Purana Paltan showroom scrutinising a good number of greetings cards. ‘I will send these to my area,’ said MA Matin from Shahrasty, Chandpur, who was the chairman of the parliamentary standing committee on the water resources ministry.
   Al-Amin, aged about 15, came from Shahidbagh with a friend. They intend to open a make-shift shop to sell greetings cards and other gift items that have relevance for Eid alone.
   Anwar Hossain and Saddam Hossain, both students of the Rokeya Ahsan College of Jatrabari, have come full of enthusiasm to visit the Ideal Products showroom to buy a number of cards to send to their friends and relatives of their same age. ‘We have come here to get better quality cards,’ said Anwar Hossain who has no access to Internet. They said they, too, used to send SMS on Eid days to greet friends.

Agro-based industries have bright prospects in the northwestern Bangladesh as the region produces sufficient food-grain, fruits and vegetables.
   Business leaders, agronomists and researchers told this news agency that the region has enormous potentials for producing varieties of fruits and vegetables side by side with contributing to the national economy with its huge agri-products.
   Director of Rajshahi Chamber of Commerce and Industry Kabirur Rahman Khan said the region, a food surplus area, produced adequate amount of fruits and vegetables over the last couple of years due to suitable soil condition, topography and climate.
   Vegetables like potato, cauliflower, tomato, white gourd, bean, spinach, puin, pea and baby corn are being produced in the region in larger amount side by side with broccoli, carrot, celery, capsicum, and strawberry.
   Khan said the Jamuna Multipurpose Bridge contributed a lot in improving communication in the northern region, creating wider scopes for increased production of cereals, fruits, vegetables and livestock over the years.
   ‘This has in fact opened up many opportunities for agro- business in the region,’ he said stressing the need for better communication, uninterrupted power supply and availability of natural gas to help set up agro-based small, medium and big industries in northern districts.
   The RCCI leader urged the government to upgrade the Rajshahi Airport, making it an outlet for directly exporting the processed agri- Products, fresh vegetables and fruits to different Middle Eastern and European countries.
   RCCI president Hasen Ali underscored the need for setting up agro-processing industries to ensure maximum utilisation of agricultural products. He said establishment of agro-processing industries would encourage the farmers to grow valuable products for their higher income.

Now is the best time to establish the Asian Monetary Fund – first proposed during the 1997 Asian financial crisis – to mitigate the impact of the US mortgage crisis on the region, Supachai Panitchpakdi, secretary-general of the United Nations Conference on Trade and Development, said Friday.
   ‘Global emerging markets should work together to avert a global crisis,’ Supachai told businessmen, economists and other participants at the second Vietnam Economic Conference held in Ha Noi. ‘In the short run, actions should be taken including injecting funds and keeping interest rates from going up.’
   Supachai – Thailand’s commerce minister at the height of the Asian financial crisis – eased concerns that the US crisis would have impacts on Asia despite the ‘worrying trend’ of Asian banks’ exposure in the US market.
   ‘It remains to be seen whether the bankruptcy of the Lehman Brothers and the troubles of Merrill Lynch are the end of the crisis, yet a number of analysts are also worried about other companies such as AIG,’ he said. ‘The precise impact on Asian markets will also depend on the exposure of Asian investors to these wider ripple effects.’
   He projected that Asia would grow at only 6 per cent by end-2008 and growth could remain stagnant in 2009, but the impact would not be as big compared to Europe. The 6 per cent growth is achievable only if China and India can sustain their growth, he added.
   ‘Everything will slow down but it does not mean the end of the world,’ Supachai said, adding that it would take a ‘longer time’ for the global economy to weather the crisis and nurse itself back to health.
   However, he expressed confidence that while Asia in general would feel the effects, it would sustain itself given that it had become a huge investor in the world market.
   As for smaller Asian economies, he said they might be hurt in the process but only in terms of lesser investments coming from Europe or the US. ‘The impact may not be critical... but this is the good time to set up a collective effort to address the crisis.’
   The former director-general of the World Trade Organisation also advised Asian governments to ‘bend a little bit and not stand stall against the storm’. He noted that it was all right to adapt policies to guard against stagflation but governments should not overdo its monetary policies and should also accompany them with fiscal, income and foreign exchange policies.
   He also said governments should not be too proud in revising their growth prospects for next year and instead target a level that is achievable. ‘There is a need to overhaul the financial system. Asian financial authorities should take the opportunity to enhance financial cooperation in the region.’
   ‘When this crisis is over, we will enter into the second generation of globalisation where we will see the emergence of the new south. It will be more inclusive and no longer a one-way street where only the first world pours in investments,’ he added.
   The second Vietnam Economic Forum was organised by Vietnam’s Ministry of Planning and Investment, in cooperation with Vietnam News Agency and the Asia News Network. Six hundred delegates participated in the forum that also discussed ways on sustaining Vietnam’s growth.

HSBC dropped a $6.3 billion offer for 51 per cent of Korea Exchange Bank, blaming turmoil in financial markets and ending what would have been the biggest cross-border move in South Korea’s bank sector.
   Abandoning the long-running deal, which had been beset by regulatory delays, added to speculation HSBC would look to buy a distressed western peer amid a financial sector shakeout that has seen share prices plunge and forced a hasty round of deal-making.
   ‘In the light of developments around the world, not least changes in asset values in world markets, we do not believe it would be in the best interests of shareholders to continue to pursue this acquisition on the terms negotiated last year,’ HSBC Asia CEO Sandy Flockhart said in a statement.
   Shares in KEB, South Korea’s sixth-ranked bank, tumbled 8 per cent to 11,600 won by 0455 GMT on Friday in a broader market up 4.7 per cent. Global stocks rallied on news the United States government was looking at a comprehensive solution to the financial crisis.
   John Grayken, chairman of US private equity firm Lone Star, which was selling the KEB stake, said he was disappointed with HSBC’s decision to walk away from the deal.
   Shares in HSBC, Europe’s biggest bank by market value, rose nearly 6 per cent in Hong Kong.
   HSBC, less damaged than many from the subprime mortgage meltdown, has been rumoured as a potential suitor for ailing US Washington Mutual and UK rival Royal Bank of Scotland.
   ‘Maybe it’s better for HSBC to look at other markets. US bank valuations are very depressed. That is very attractive to HSBC,’ said YK Lee, analyst with Core Pacific-Yamaichi in Hong Kong.
   Analysts said big falls in global asset prices and tight funding might have pushed HSBC to look elsewhere. Also, KEB’s share price has held up better than its peers because of the merger premium. HSBC may also be looking to preserve capital, they added.
   KEB had shed 13 per cent in the past year to Thursday’s close, outperforming the MSCI index for Asia-Pacific excluding Japan, which tumbled by nearly a third.
   Separately, HSBC said on Thursday its HSBC Overseas Holdings UK Ltd unit agreed to sell its 18.6 per cent stake in Mexican micro credit lender Financiera Independencia for $145 million.
   With the British bank’s withdrawal, Lone Star, which has been struggling to exit its $1.2 billion investment in the South Korean bank since 2006, is likely to offload its KEB shares in a block trade at a discount, analysts said.

British bank Lloyds TSB agreed Thursday to buy rival HBOS for 12.2 billion pounds ($21.8b) in a rescue takeover that sparked concern about thousands of possible job cuts.
   HBOS is Britain’s biggest lender of home loans but faced possible collapse owing to massive write-downs caused by the US subprime housing crisis and resulting credit crunch.
   The share price of HBOS surged 17.34 per cent to 172.60 pence on Thursday. It had risen by more than 50 per cent during the session but late profit-taking slashed its gains and also contributed to London’s FTSE 100 index ending lower.
   Lloyds’ takeover bid was pitched at 232 pence per share and aimed at creating Britain’s third-largest bank behind Royal Bank of Scotland and HSBC in first place.
   ‘Lloyds TSB and HBOS announce that they have reached agreement on the terms of a recommended acquisition by Lloyds TSB of HBOS,’ the pair said in a joint statement.
   Analysts estimate that up to 40,000 jobs could be lost from the banks’ combined 145,000 staff following the deal and that hundreds of branches could close. HBOS has 1,100 on Britain’s high streets and Lloyds TSB 1,900.
   Business Secretary John Hutton is effectively extending Britain’s Enterprise Act to ensure that the deal goes through ‘on public interest grounds,’ his department said in a statement shortly after the deal.
   A European Commission spokesman said Thursday that it was up to Lloyds TSB to decide whether it needed to notify the European Union of the takeover bid.
   The landmark all-share merger, effectively a rescue plan, comes after the value of HBOS plummeted in recent trading following days of global stock market chaos and economic gloom.
   Lloyds TSB shareholders would own 56 per cent of the issued share capital under the acquisition and existing HBOS shareholders 44 per cent.
   HBOS, or Halifax Bank of Scotland, is the latest global bank to fall foul of the ongoing credit crunch following the collapse of US group Lehman Brothers, the sale of Merill Lynch and the rescue of insurer AIG earlier this week.
   ‘This is the right transaction for HBOS and its shareholders,’ said HBOS chairman Dennis Stevenson in the release.
   ‘Against the backdrop of the very high levels of volatility our industry is experiencing, the combined group will be one of the strongest players in the UK financial services sector.’
   Analysts and regulators expressed hope that the rescue takeover deal would draw a line under persistent questions about the funding of HBOS that have dogged the group’s share price in recent days and weeks.
   The value of shares in HBOS — created by the merger of Bank of Scotland and Halifax in 2001 — slumped by a total of 55 per cent during the first three days of the week.
   Many market watchers had feared that the retail bank could have faced the same fate as Northern Rock, which was nationalised earlier this year after experiencing severe funding problems and a run on its branches in late 2007.
   HBOS and Lloyds TSB together hold nearly a third of Britain’s savings and mortgage market, but competition watchdogs will not block the deal as it was backed by the government.
   ‘This will be a unique opportunity to accelerate and extend our strategy and create the UK’s leading financial services group,’ Lloyds TSB chairman Victor Blank said in the joint statement.
   The deal was expected to be completed towards the end of the year or in early 2009. HBOS shareholders will receive 0.83 Lloyds TSB shares for every HBOS share.

Kohinoor Chemical Company (Bangladesh) Ltd is working to improve and widen its product range to match the fast-changing taste and trend of consumers and meet the growing demand, especially for cosmetics and toiletries.
   ‘The cosmetics and soap market is growing by 12 to 18 per cent a year,’ says MA Khair, corporate affairs director of the company, ‘although, the growth rate differs from product to product.’
   He says the market size of cosmetics and toiletries is expanding as people are getting more and more health, hygiene and beauty conscious.
   ‘In this context, we are committed to carry on with our efforts to add new items to our product basket to get more market share as a local company,’ Khair reiterates.
   For instance, he refers to Ice Cool soap and Clean Master toilet cleaner – two new products that Kohinoor Chemical Company has introduced recently keeping the demand and preference of consumers in mind.
   But, one of the major impediments for the local cosmetics and toiletries manufacturers like Kohinoor to achieve their goal and prosper, Khair says, is the really stiff competition they face from the multinational companies who own the bulk of the market share.
   ‘The government has no policy for protecting and nursing the local cosmetics and toiletries manufacturers from the MNCs,’ Khair says, adding the government should formulate a policy to protect the local manufacturers from the uneven competition with the MNCs to help the local companies working in this sector grow and reach the international standard.
   Three MNCs have their factories in Bangladesh and seven or eight others sell their toiletries and cosmetic products here through local distributors, he informs New Age, while around 10 local companies are producing and marketing similar items.
   ‘I don’t think our products are inferior in quality to those of the MNCs,’ he says. ‘But people have a prejudice that local products are inferior in quality. So, we should also inform our consumers and change their irrational perceptions about what determines the qualities of a cosmetic item, a soap or a shaving lather for instance.’
   Founded in 1956, Kohinoor Chemical Company was nationalised after the country’s liberation and became a state-owned enterprise under the Bangladesh Chemical Industries Corporation. It was acquired by the present entrepreneurs when the government privatised it on August 3, 1993.
   According to Khair, ‘The private management has succeeded in reducing the loss incurred by the company as a state-owned entity. Within three years of privatisation, the former loss-making SOE turned into a profitable one.’
   In 2006-2007 Kohinoor Chemical declared an 18 per cent dividend for its shareholders.
   The company earned a Tk 1.77 crore net profit in 2006-2007 against the previous year’s Tk 1.70 crore. However, the accumulated loss of the company was Tk 14.41 crore as on December 31, 2007.
   Products of the company include soap, laundry soap, face cream, snow, body power, toothpaste, dental care items, baby lotion, shaving cream, aftershave, hair oil, attar, and fruit juice. It so far has produced as many as 32 product variants. Most of its products carry the brand name Tibet, launched in 1956. Some products, of course, carry other names deemed more suitable to them.
   The company under its corporate social responsibility programme also built and maintained or beautified median strips and isles with plantations, roadside gardens, and structures from Mohakhali to Saat Rasta in Dhaka, Khair tells or rather reminds New Age. The company also contributes to education, games, and sports and cultural activities, he adds without fail.

Troubled US investment bank Morgan Stanley is in talks to sell a stake of up to 49 per cent to China’s sovereign wealth fund, the Financial Times reported Friday, citing people close to the discussions.
   The talks with China Investment Corp, or CIC, which bought a 9.9 per cent stake in Morgan Stanley in December, were ‘advanced but no deal had been clinched yet’, the paper said, quoting unidentified sources.
   Morgan Stanley’s top management prefers a stake sale to CIC to a merger with US lender Wachovia, according to the paper.
   The paper said CIC president Gao Xiqing had been scheduled to meet Morgan Stanley executives in San Francisco.
   When asked by China’s state-run Xinhua news agency, an unnamed CIC official did not rule out the prospect of buying a stake in Morgan Stanley but pointed to political hurdles in the United States over such a deal.
   ‘Even if the CIC intended to buy a stake, it could be very hard now as the purchase of a stake, even one smaller than 10 per cent, could be subject to the US government foreign investment review,’ the official said.
   The Financial Times also said the sale of a significant stake of a blue-chip Wall Street firm to a state-owned Chinese institution could cause a political backlash in Washington.

Prime minister Gordon Brown said Friday that Britain was acting decisively to help calm the global financial crisis, as markets rallied on a US government promise to rescue Wall Street.
   ‘One thing is absolutely clear: we will do everything in our power to ensure the stability of the system... Everything that we are doing is designed to ensure that there is investor confidence in the future,’ he said.
   He noted that Britain’s Financial Services Authority had acted rapidly Thursday to halt short-selling in financial shares — when investors borrow company stock to sell it in anticipation of profiting from a fall in value.
   ‘We are now working with our international partners about broader intervention we are in a position to take,’ he said, speaking in Downing Street after talks with Georgian Prime Minister Lado Gurgenidze.
   ‘The central banks have joined together to find liquidity for the system. I am talking to French president Nicolas Sarkozy about some of the measures the European Union can take together,’ he added.
   The comments came after stocks rose around the world after US treasury chiefs vowed to quickly announce a plan to soak up the debt that has brought the fall of Lehman Brothers and badly hit other banks.

Banking giant HSBC announced Friday it has scrapped a six billion dollar deal to buy a major South Korean bank after the international credit crisis cut asset values worldwide.
   HSBC said in a statement it had terminated the deal to buy a 51 per cent stake in Korea Exchange Bank from US buyout fund Lone Star, ‘taking into account all relevant factors including current asset values in world financial markets.’
   It said discussions with Lone Star ‘have not led to agreement on how the transaction might proceed on a basis acceptable to HSBC,’ apparently indicating differences over pricing.
   The transaction had also been dogged by legal disputes over Lone Star’s 2003 purchase of KEB. South Korea’s watchdog Financial Services Commission had not yet given approval for the latest deal.
   ‘In the light of developments around the world, not least changes in asset values in world markets, we do not believe that it would be in the best interests of shareholders to continue to pursue this acquisition on the terms negotiated last year,’ said Sandy Flockhart, HSBC’s CEO for Asia.
   He said in the statement that HSBC would now focus on its own growing operations in Korea.

Low birth rate and workforce migration in Romania could hinder the country’s long-term sustainable economic growth, a prominent Romanian economist said Thursday.
   ‘Because of its demographic problems, Romania cannot hope to maintain such growth in the long run,’ said Valentin Lazea, chief economist of Romanian National Bank during a seminar.
   ‘Only seven economic entities in the world could manage to sustain economic growth of over 5 per cent for more than 20 years, such as China, Ireland and Macao, but none has had demographic issues,’ Lazea said.
   Even though the migration of Romania’s workforce to other European states may be reversible, the country’s constant drop in birth rate since 1992 cannot be compensated and will start to affect the labor market in 2010, he said.
   Bianca Pauna of the Romanian National Economic Research Institute said employment rates are lower among youngsters compared to other age categories largely due to migration.
   Some 10 per cent of the country’s population has migrated, including 25 per cent of the country’s active workforce, according to a recent study.
   Workforce shortages are particularly serious in urban areas as migration from rural areas is lower than expected, said Pauna.
   Romania hit a record economic growth of 8.6 per cent in the second quarter this year thanks to dynamic investment. Analysts forecast that the country’s economic growth may exceed 6 per cent in 2008.

Seven banks in the Philippines have a total of $386 million in exposure to the bankrupt US investment banking giant Lehman Brothers, according to the central bank’s estimates, but the banking system is widely believed to be in a good position to withstand the world’s worst financial shake-out.
   Even assuming zero recovery of their exposure to Lehman, the fallout for the seven banks is not expected to exceed one per cent of their total assets.
   According to estimates by the central bank, Bangko Sentral ng Pilipinas, obtained by the Philippine Daily Inquirer, retail tycoon Henry Sy’s Banco de Oro Unibank has the biggest exposure to Lehman at $134 million, followed by state-owned Development Bank of the Philippines at $90 million.
   The BSP data show Metropolitan Bank and Trust Co has an exposure of $71 million, Rizal Commercial Banking Corp $40 million, Standard Chartered Bank’s Manila branch $26 million, Bank of Commerce $15 million, and United Coconut Planters Bank $10 million.
   As a percentage of total assets of the individual banks, the exposures are as low as 0.5 per cent and as high as 1.7 per cent, according to the estimates, which were discussed at a meeting of the BSP policymaking body, the Monetary Board, on Thursday.

The head of the Singapore subsidiary of troubled global insurance giant American International Group has resigned, the company said in a statement.
   It said late Thursday Mark O’Dell’s departure was ‘in no way related to the recent developments at AIG,’ whose Singapore subsidiary has been thronged by hundreds of anxious policyholders worried over the future of the parent company.
   A statement from American International Assurance Company Limited said O’Dell had resigned and taken immediate leave of absence from his position as executive vice-president and general manager of AIA Singapore.
   ‘It is a personal decision that he has been planning for some time,’ the statement said.
   Effective Friday, Kenneth Juneau will lead the company until a new general manager is found, the statement said. Juneau is executive vice president and senior regional life executive of AIA’s regional office. O’Dell resigned on the same day he took out a full-page newspaper advertisement to reassure AIA’s customers about the company.
   Despite short-term liquidity pressures at AIG, the Singapore unit is a ‘strong, well-positioned business,’ O’Dell wrote in the advertisement. Local newspapers reported that O’Dell will join a rival company.
   Attempts by AFP to reach him were unsuccessful. He has also resigned as president of the Life Insurance Association of Singapore, a member of staff there said.
   Hundreds of customers lined up outside the AIA Singapore offices this week, hoping to terminate their policies or to seek answers after the US Federal Reserve announced a bailout of AIG.
   On Friday the queues had gone, and only a few dozen people were inside the customer service area. A staff member said some were making inquiries, others hoped to cancel their policies, and some wanted to reinstate them.
   The US government will give an unprecedented loan of up to 85 billion dollars to AIG in a bid to avert its collapse and a global financial calamity.
   Singapore’s de facto central bank, the Monetary Authority of Singapore, said that apart from O’Dell there were no other changes in AIA Singapore’s management.
   ‘We are satisfied with the ability of the company to carry on business as usual and to meet new demands even when there are any changes in management,’ it said in a statement, adding that MAS’s regulatory oversight was ‘rigorous’.

A top UN agency, FAO, has warned that rising food prices have pushed 75 million more people into the ranks of the world’s famished, bringing the figure to a total of 925 million.
   The new figures released by the United Nations Food and Agriculture Organisation on Thursday ahead of next week’s General Assembly meeting on global anti-poverty targets known as the Millennium Development Goals, show that the number of people suffering from hunger is now roughly 925 million.
   Contributing to this growth is soaring food, fuel and fertiliser prices, the FAO said. Food prices rose 52 per cent between 2007 and 2008 and fertiliser prices have nearly doubled over the past year.
   ‘The devastating effects of high food prices on the number of hungry people compound already worrisome long-term trends,’ Hafez Ghanem, FAO assistant director-general for Economic and Social Development, said.
   Hunger increased as the world grew richer and produced more food than ever during the last decade, he said.
   ‘Not only does this development impact efforts to achieve the hunger-related MDG but it also affects progress towards many of the goals,’ Ghanem said.
   ‘Reducing the number of hungry people by 500 million in the remaining seven years to 2015 will require an enormous and resolute global effort and concrete actions,’ he added.
   The FAO stressed the need for action on two fronts – making food accessible to the most vulnerable and helping small producers raise their output and earn more.

Financial regulators in China have asked domestic financial institutions to submit detailed records of their investments in US and European financial assets to ascertain the full extent of their exposure to the US financial crisis.
   The China Banking Regulatory Commission, China Insurance Regulatory Commission and the China Securities Regulatory Commission reportedly made the request to financial institutions under their supervision.
   At least six Chinese commercial banks have reportedly disclosed their holdings of bonds issued by US investment bank Lehman Brothers, which has filed for bankruptcy protection.
   Industrial and Commercial Bank of China has said it held $151 million in bonds issued by or linked to Lehman. China’s largest state-controlled commercial bank in terms of assets is known to have the highest exposure to securities associated with Lehman.
   On Tuesday, China Merchants Bank said in a statement to the Shanghai stock exchange that it held $70 million worth of Lehman bonds, out of which $60 million was senior debt and the rest subordinate bonds.

The dollar jumped on Friday against major rival currencies as world stock markets surged skywards on hopes of a US government plan to rescue troubled financial firms, traders said.
   The European single currency sank to 1.4197 dollars from 1.4348 in New York late on Thursday.
   Against the Japanese currency, the dollar leapt to 107.46 yen from 105.37 yen.
   Gold fell in value, having bounced higher earlier this week as investors had sought a financial safe-haven.
   Investors were waiting to hear new developments after reports that the US government was preparing a lifeline to wipe out the bad debt that has weighed on banks and set off the current financial crisis.
   US financial authorities have meanwhile banned short-selling — when investors borrow company shares to sell in anticipation of profiting from a fall in value — in a bid to help crisis-hit markets. Britain on Thursday declared a halt to short-selling in financial sector stock.
   ‘US treasury secretary Henry Paulson and Federal Reserve chairman Ben Bernanke met with lawmakers Thursday to push a plan that would move troubled assets from the balance sheets of American financial companies into a new institution,’ said Commerzbank analyst Antje Praefcke.
   ‘The initiative is aimed at removing the devalued mortgage-linked assets at the root of the worst credit crisis since the Great Depression.
   ‘Financial markets very much appreciated this plan. Stock markets rallied all over the world. The optimism towards the US economy and the dollar is now clearly visible again,’ added Praefcke.
   However, other analysts warned that it would not be so easy to quell market worries over the global financial system.
   ‘We can’t expect new measures to have immediate, drastic effects,’ said Kenichi Yumoto, vice president at Societe Generale’s foreign exchange sales and trading department.
   ‘It is hard to imagine the market turbulence will come to an end soon.’
   The dollar has been under pressure for several days in reaction to major upheavals in the US banking and insurance sectors that have prompted controversial and costly government intervention.
   The US Federal Reserve on Thursday joined central banks around the world to provide more than 300 billion dollars to keep credit flowing through jittery global money markets.
   On Friday, the European Central Bank and Bank of England each lent an additional 40 billion dollars to financial institutions struggling to obtain funds amid a worldwide squeeze on credit.
   In early London trading on Friday, the euro changed hands at 1.4197 dollars against 1.4348 late Thursday, at 152.43 yen (151.21), 0.7900 pounds (0.7889) and 1.5952 Swiss francs (1.5852).
   The dollar stood at 107.46 yen (105.37) and 1.1244 Swiss francs (1.1047).
   The pound was at 1.7961 dollars (1.8185).
   On the London Bullion Market, the price of gold fell to 834.56 dollars per ounce from 863 dollars late on Thursday.

A consortium of investors proposing to rescue airline Alitalia has withdrawn its takeover offer, raising fears the carrier may go into liquidation.
   The Italian group, called CAI, dropped its bid after unions failed to back the deal before a 1400 GMT deadline.
   Three of Alitalia’s nine unions backed the deal, while six had opposed the plans which involved 3,000 job cuts.
   Italy’s flag-carrier has already warned that it is running out of funds to buy all the aviation fuel it needs.
   Making its announcement, CAI said it expressed ‘profound disappointment’.
   ‘Further concessions would inevitably have put the realisation of the plan at risk,’ it said.
   ‘The situation is dramatic,’ said Italian prime minister, Silvio Berlusconi, after the latest development. ‘We could be facing an abyss.’
   Italian labour minister, Maurizio Sacconi, said before the deadline that the future of Alitalia was ‘hanging by a thread’.
   The unions opposed to the deal said it was ‘useless and provocative’.
   Fabio Berti, head of the ANPAC pilots union – one of the groups that opposed the deal – said unions were now looking to administrator Augusto Fantozzi to resolve the situation. Protests by those opposed to the deal forced Alitalia, which is losing 2.1 million euros ($3m) daily, to cancel 40 flights on Wednesday.
   The head of the UIL union, Luigi Angeletti, attacked those unions that rejected the CAI offer.
   ‘The company is dead and some of my colleagues want to be its undertakers,’ he said.
   Under the CAI rescue proposal, the Italian consortium had put forward a 1-billion-euro offer for the airline.
   It wanted Alitalia to merge with Air One, the country’s second-largest airline, while its 1.2-billion-euro debt would be absorbed by a second firm, which would then be liquidated.
   The prime minister, Silvio Berlusconi, has pledged to do all he can to save Alitalia, in which the Italian government holds a 49.9 per cent stake.
   In April, plans for the airline to be taken over by France-KLM collapsed when unions refused to accept the terms of the deal.
   Alitalia suspended trading in its shares in June and filed for bankruptcy protection last month.

The Securities and Exchange Commission took the dramatic step early Friday of temporarily banning the routine practice of betting against company stocks.
   The move, announced on the agency’s website, may well be unprecedented and a reflection of regulators’ concern about the widening scope of the financial crisis as entreaties come from all quarters to stem a swarm of short-selling.
   In the announcement, the commission said it was acting in concert with the UK Financial Services Authority in taking emergency action to ‘prohibit short selling in financial companies’ to protect the integrity of the securities market and boost investor confidence.
   ‘The commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets,’ SEC chairman Christopher Cox said in a statement. ‘The emergency order temporarily banning short-selling of financial stocks will restore equilibrium to markets.’
   The move, he said, would not be necessary in a well-functioning market and was only a temporary step that was part of the actions being taken by the Federal Reserve, the Treasury and Congress.

Oil prices rose for a third day running on Friday, again surpassing 100 dollars a barrel, at the end of an extremely volatile week for financial markets.
   New York’s main contract, light sweet crude for delivery in October, jumped 2.49 dollars to 100.37 dollars a barrel.
   London’s Brent North Sea crude for November gained 2.21 dollars to 97.40 dollars a barrel.
   ‘Prices continue to rise as market confidence returns, buoyed by a US government rescue plan alongside ongoing supply-side disruptions,’ Barclays Capital oil analyst Kevin Norrish said in London.
   The US government said it was putting together a rescue plan to clear away the mountains of bad debt that have weighed down banks in the past year.
   In other news affecting the oil market on Friday, the main militant group in southern Nigeria — the Movement for the Emancipation of the Niger Delta — said it had destroyed a major oil pipeline belonging to Royal Dutch Shell.
   The attack is the fifth on a Shell facility in Rivers State, the centre of Nigeria’s oil industry, in the space of a week.
   Since it first emerged in early 2006 MEND, which says it is fighting for a larger share of southern Nigeria’s oil revenue to go to local people, has cut Nigeria’s oil production by more than one quarter.
   Oil prices had on Thursday briefly surged above 102 dollars, as the US currency fell after major central banks offered short-term loans worth billions of dollars to financial institutions struggling to obtain funds amid a global squeeze on credit.
   A weak dollar makes oil cheaper for buyers holding stronger foreign currencies. Oil, like gold, is also seen as a haven investment in times of economic turmoil.
   Crude prices had jumped about six dollars on Wednesday after the US government’s 85-billion-dollar bailout of insurance giant AIG failed to reassure skittish traders and prompted a rush into commodities as a safe haven from the financial market storm.
   However on Tuesday, crude futures struck seven-month lows under 90 dollars as turmoil on the financial markets ignited worries about the prospect of a further drop in energy demand, traders said.
   OPEC this week cut its world oil demand growth forecast for 2008 to 1.02 per cent from 1.17 per cent previously, in the face of falling demand already occurring in the United States, the world’s biggest energy consumer.

Three executives dubbed ‘Germany’s stupidest bankers’ in the press have been suspended from state bank KfW over erroneous transfers of more than 500 million euros ($710m) to the bankrupt Lehman Brothers, the KfW said.
   Two board members and a top risk control manager were suspended ‘pending final clarification of the incident’ following a meeting of KfW’s supervisory board meeting attended by top ministers including finance minister Peer Steinbrueck, the bank said in a statement late Thursday.
   A law firm has also been hired to see if further ‘consequences’ are appropriate and the bank, already under fire over its rescue of IKB — Germany’s biggest casualty of the subprime crisis — will subject its business procedures, especially those of risk management, to an ‘in-depth audit.’
   The bank state-owned lender mistakenly transferred more than 350 million euros to Lehman Brothers on Monday after the US investment bank filed for bankruptcy protection, and according to the Bild daily the total exposure has since been established at 536 million euros.

China abolishes regulation on inspection exemptions for food
China’s State Council, or the cabinet, on Thursday announced the abolishment of regulations on inspection exemptions for food. In a circular distributed to ministries and governments at all levels, the cabinet said that it had decided to abolish the regulations relating to quality inspection exemptions for food in a document issued on December 5, 1999. It urged the ministries and governments to step up supervision, perform their duties strictly and carry out food quality inspections in line with relevant laws to ensure food safety. Saleswomen check the returned Sanlu brand milk powders in a supermarket in Yinchuan, capital of northwest China’s Ningxia Hui Autonomous Region September 17, 2008. In the wake of the contaminated baby milk powder scandal, Chinese quality watchdog on Wednesday cancelled all kinds of national inspection exemptions previously given to food producers. ‘Considering the particular characteristics of food products and the complexity in the cause of food safety problems, and with a view to further enhancing supervision over food producers, ensuring food safety and protecting consumers’ interests,’ said the State Administration of Quality Supervision, Inspection and Quarantine in an explanation of the move.
— Xinhua