Four private cos to take $36m in
foreign suppliers’ credit
Asif Showkat
Four local private companies have won the approval by the government for securing a total of $36.37 million of suppliers’ credit from three foreign companies to import machinery and equipments, official sources said.
The four local companies — Dutch-Bangla Pack Limited, Ever Smart Bangladesh Limited, Banglalion Communication Limited and RFL Plastic Limited — will also have to take services from the foreign companies in exchange of taking the suppliers’ credit, according to their contracts.
Supplier’s credit is an agreement between a supplier and a buyer whereby the supplier agrees to receive deferred payment and accepts payment in instalments for the supplied goods.
The central bank’s scrutiny committee for supplier’s credit, at a meeting chaired by the Bangladesh Bank governor, Atiur Rahman, in the first week of March, gave its consent to the proposals from the four local companies to get the suppliers’ credit, the first time during the present government.
The Board of Investment also approved the proposals.
‘We have given our consent to the proposals for taking suppliers’ credit in exchange for importing machinery and equipments,’ a member of the scrutiny committee told New Age on Friday.
The committee gave the permission to the RFL Plastic Company giving condition that the company would take loan from Prime Bank offshore account, said the member.
Another member said they were assured that repayment of suppliers’ credit to be drawn from foreign companies would not affect the country’s foreign exchange reserve which stood at around d $10. billion.
The Dutch-Bangla Pack limited will get loan of $1.50 million from the Netherlands’ LC Packaging International for new machinery at 4 per cent interest rate annually plus the London’s inter-bank offered rate.
The LC Packaging loan, which will come through offshore unit of Prime Bank Limited, will be repaid in seven years and six months.
Ever Smart Bangladesh Limited will get foreign loan of $13.37 million from its equity holder of Singapore’s CPAT Private Limited through Citibank N.A. Motijheel branch to expand their operations.
The RFL Plastic Limited will borrow $15 million from offshore unit of the Prime Bank at a 3.5 per cent interest rate plus LIBOR. The fund will be used to set up a new factory.
Asked to explain the purchase of machinery and equipment worth $3.15 million from the local market, the company’s representative informed the committee that it would be easier and faster to implement the expansion project, meeting sources said.
Banglalion Communication Limited will get a loan of $6.58 million from Chinese company ZTE Corporation. That loan excludes engineering service charge of $0.41 million. The borrowing company will have to repay the supplier’s credit through their nominated AB Bank Limited, Gulshan Branch.
The amount of loan at $36.37 million is not a big deal, given the country’s foreign currency reserve, former finance adviser AB Mirza Azizul Islam told New Age.
‘It is often alleged that suppliers’ credits are over priced, resulting in more fund remitted through repayment of the credit,’ he viewed.
NBR asked to settle 12,000
cases to realise tax
Staff Correspondent
A parliamentary panel has asked the National Board of Revenue to immediately settle some 12,000 pending cases for realising an outstanding tax amount of Tk 5,000 crore.
The parliamentary standing committee on the finance ministry at a meeting on Saturday gave the directive and suggested that the board should hire additional manpower, if needed, to settle the cases as ‘quickly as possible’.
The committee chairman, AFM Mustafa Kamal, who chaired the meeting, said that the revenue [Tk-5,000cr] remained unrealised as different parties filed lawsuits against government demands for tax of different types.
‘These cases have been pending for a long time,’ he said after the meeting held at the Sangsad Bhaban.
The government has fixed a target of earning Tk 61,000 crore revenue in the budget for the 2009-10 fiscal year, the meeting was told.
It expressed satisfaction at the revenue board’s performance in the first six months of the fiscal, saying that the board needed more steps to achieve the target at the end of the fiscal.
The meeting asked the government to reconstitute the income tax tribunal comprising manpower from judicial service and the government’s accounts department.
The standing committee also asked the authorities concerned to make easy the process of submitting income tax return by individuals so that the people are encouraged to pay tax.
The meeting suggested the finance ministry to take an initiative to bring the 1984 income tax ordinance in the parliament to make it compatible with the current situation.
Among others, committee members Ali Ashraf, AKM Maidul Islam, MA Mannan and Farida Rahman attended the meeting.
Thousands of BA flights cancelled
as crew on strike
Associated Press . London
British Airways cancelled more than 1,000 flights after its cabin crew launched a three-day strike Saturday, wreaking havoc on the plans of tens of thousands of passengers just before the busy spring holiday season.
Hoping to keep as many passengers happy as possible, BA scrambled to rebook some on other services, chartered planes from rival airlines and drafted in volunteer crew. But it still had to scrap more than half of its 1,950 scheduled flights over the period.
Chief executive Willie Walsh issued a direct apology via YouTube for the walkout, the airline’s first in almost 15 years, saying it was a ‘terrible day for BA.’
The strike — backed by some unions in the United States, Germany and Spain — also risked harm to Britain’s Labour government before a tough general election expected before June.
On Saturday morning at BA’s London Heathrow hub, the cavernous Terminal 5 was nearly deserted after some passengers had flown out early to avoid the strike or simply stayed away altogether. But delays were beginning to mount and passengers were warned that many long-haul flights would not have full meal services.
One man trying to get home to Sweden said he was already looking at a four-hour delay.
‘Our flight from Dallas arrived two hours late, and now we’re waiting to go to Stockholm — that flight is two hours late as well,’ said Bjorn Barka, a high school principal.
Michael Clements, a security director for a California-based company, was able to check in for his business trip to Amsterdam but was told it would be an hour before he could check in his heavy luggage. ‘Not enough people,’ he said with a shrug.
Charity worker Elizabeth Robb was told there would be no hot food on her flight to Dubai.
The Eurostar train service between London and continental Europe and Virgin’s rail services between London and Scotland were expected to be busy as passengers sought alternate routes.
BA also warned that the disruption would likely last several days beyond the three-day strike, because of a knock-on effect on flights that would carry through to the end of a second strike planned for March 27-30.
‘We’re in limbo land,’ said Susan Danby, a school worker from the northern English city of Hull. She is due to fly March 29 to Las Vegas with friends to celebrate their 50th birthdays. ‘This is our dream trip, we booked it last August and we’ve been planning it for years.’
‘We all want more money and better conditions, but people shouldn’t ruin other people’s holidays,’ Danby said.
As protesters were readying picket lines Saturday outside London’s Heathrow international airport, analysts estimated BA has already lost more than 25 million pounds (more than $37 million) because of cancelled tickets and contingency costs.
The two planned strikes combined could cost the airline more than the 63 million pounds ($95 million) that Walsh is trying to save through the disputed changes to workers’ pay and conditions.
BA’s pilots are not part of the strike, after their union resolved a separate dispute over pay with the airline.
US, German and Spanish unions have given some support for Unite’s action, but stopped short of pledges for coordinated activity that would disrupt BA’s ability to refuel and service the planes it is operating during the walkout.
The US International Brotherhood of Teamsters, which represents 40,000 aviation industry workers, urged travellers to find alternatives and said it was keeping its options ‘open.’ The US Association of Professional Flight Attendants also expressed support for BA.
‘Many of us have taken decisions not to pull extra flights or routes to help BA pick up the slack,’ said a pilot for a Chicago-based airline, who spoke on condition of anonymity for fear it could cause him repercussions with his job. ‘We don’t want to be seen as supporting scab labour.’
BA said it would handle as many as 49,000 passengers on both Saturday and Sunday. That compares with the average 75,000 for a normal weekend day in March.
At its Heathrow base, more than 60 per cent of long-haul flights will operate, but only 30 per cent of short-haul. At Gatwick, all long-haul flights and more than half short-haul flights will run as normal. London City flights, including flights to New York, are operating as normal.
Aside from hurting BA financially, the strike is also an unwelcome event for Britain’s governing Labour Party before the upcoming national elections.
Prime minister Gordon Brown irritated Unite, a major political donor, by calling the union ‘deplorable’ and saying as late as Friday night that it should call off the strike.
Britain faces even more possible travel chaos in the run-up to the April 2-5 Easter break, as railway signal workers voted last week to join rail maintenance workers in a strike. The rail, maritime and transport union has not called dates for the walkout, but refused to rule out the long Easter weekend.
And over this weekend, engineering works on the London Underground were forcing closures between central London and Heathrow, though the Heathrow Express train service was operating as normal.
Opposition Conservative Party leader David Cameron criticized the stranglehold that unions such as Unite have over the Labour Party.
Cameron is seeking to evoke memories of the difficulties the Labour government, which receives millions of pounds (dollars) in donations from unions, had in the 1970s, culminating in the mass strikes that became known as Britain’s ‘winter of discontent’ and led to the election of Conservative leader Margaret Thatcher in 1979. Unite alone has donated 11 million pounds to the Labour Party in recent years.
‘Once again, under Gordon Brown the vested interests triumph and the people lose out,’ Cameron said Saturday. ‘This threatens the future of one of Britain’s greatest companies along with thousands of jobs.’
At a rally of hundreds of striking workers in Bedfont, north of London, Unite spokesman Steve Turner said BA ‘is effectively at war with very proud, very dedicated employees.’ In a symbol of the acrimonious nature of the dispute, some protesters wore masks depicting Walsh as Hitler.
Walsh said the disputed changes are critical to the airline’s survival — BA has been particularly hard hit by the global economic recession because of its heavy running costs and reliance on increasingly unpopular premium fares.
The airline on Friday offered a compromise on a proposed pay freeze this year, offering a three per cent rise next year and the year after and then an inflation-linked increase in 2013/14 capped at four per cent.
Unite argues it was not properly consulted on the changes, which also include a switch to part-time work for 3,000 staff and a reduction in cabin crew sizes from 15 to 14 on long-haul flights from Heathrow.
Any passengers with cancelled flights from Saturday through the end of the second planned strike on March 30 will be allowed to rebook on another BA flight within 355 days at no extra charge, but no refunds were being offered, the airline said.
‘Country set to lose $2b RMG
market, 3 lakh jobs’
Khawaza Main Uddin
The country is set to lose an opportunity to create 3 lakh jobs due to decline in readymade garment exports this fiscal, believes an apparel sector leader.
Bangladesh is likely to lose $2 billion or Tk 13,000 crore in export value compared to its market share last year, Anwar-Ul-Alam Chowdhury Parvez, a former president of Bangladesh Garment Manufacturers and Exporters Association, said analysing the export trends.
Apparel exports dropped 13.82 per cent in knitwear and 16.13 per cent in woven garments in the six months of the fiscal, official statistics show.
‘A 16 per cent negative growth would mean a loss of 300,000 employment directly and a million jobs indirectly,’ he said during an interaction with a group of journalists in the city on Saturday.
The decline in garment exports has been attributed to Bangladesh’s loss of competitiveness in the international market plagued by global recession and complacence at the national level that Bangladesh’s exports would not be affected.
‘Bangladesh’s rivals such as China, India, Vietnam and Cambodia have attained a positive export growth. All these countries excepting Bangladesh have cut per unit price of garments to retain their market shares,’ Parvez noted.
In their bid to tackle the impacts of recession, China cut per unit price by 12.44 per cent, India 4.68 per cent, Vietnam 12.42 per cent and Cambodia 6.59 per cent between January and December 2008.
Bangladeshi exporters, who offered the lowest price so far, rather increased per unit price by 2.32 per cent. After the price readjustments, their comparative per unit price stands at $2.36 for Bangladesh, $2.45 for Cambodia, $2.68 for China, $3.07 for India and $2.91 for Vietnam.
‘Bangladeshi manufacturers could not reduce the price because they did not get the support that exporters of other countries are offered by their governments. Moreover, energy crisis has increased the cost of production,’ said the business leader.
He gave an estimate that the garment exporters would have slashed price by 2-3 per cent, had the government agreed to spend $210 million overall to support them.
The Bangladesh government, in its stimulus package for export sectors, announced support such as interest rate cut, loan rescheduling facilities and waiver of licence fees on captive power plants.
Other countries either devalued their currencies or provided fiscal and financial support for exports to retain the market in the face of challenges of global recession, Parvez pointed out.
The finance minister, AMA Muhith, recently said the government would review the situation and consider if it would continue the stimulus package for export-oriented industries in the next fiscal.
Tk 600cr fresh water shrimps
exported to EU after ban
withdrawal
Business Desk
Bangladesh has exported freshwater shrimps worth Tk 600 crore to destinations mostly European countries since January 10 after withdrawal of the `self-imposed ban’ on export of such items to the EU countries, said chief of Bangladesh Frozen Foods Exporters Association on Saturday.
The BFFEA is also set to earn Tk 4,500 crore by exporting freshwater shrimp if any problem does not arise, Musa Meah, president of the BFFEA told the Sangladesh Sangbad Sangstha.
Bangladesh exported freshwater shrimp (galda, also known as green tiger prawn) worth Tk 114 crore to different destinations excepting the EU during June to November, 2009 while it was Tk 246 crore during corresponding period in 2008.
Besides, export of shrimp (bagda) stood Tk 1,348 crore during June- November in 2009, a Tk 173 crore more than that of the same period of the previous year.
The country exported around 50,368 tonnes of shrimp (all categories) and earned Tk 2,774 crore last year while this year the government is expected to export 55,000 tonnes of shrimp.
Musa sought Tk 425 crore initial financial support from the government to help shrimp farmers cope with the rise of raw materials’ price in the international market.
‘Shrimp production has been reduced due to price rise of raw materials in the international market, which led to lower shrimp production. Initially we need Tk 425 crore to increase the production,’ he told the news agency.
Trade through Bhomra land
port suspended
Our Correspondent . Satkhira
Trade with India through Bhomra land port remained suspended as Ghojadanga Truck Drivers’ Association enforced an indefinite strike on Saturday morning at the Ghojadanga land port in India.
The strike was announced following an alleged assault on an Indian truck driver Sirajul Islam by members of the BDR over parking of his truck on the main road at the port on March 19, said Bhomra clearing and forwarding association sources.
According to reports received from across the border, leaders of Ghojadanga Truck Drivers’ Association And Ghojadanga Truck Owners’ Association on Saturday held a meeting over the issue at Ghojadanga where the drivers’ association demanded punishment of the BDR men while the owners’ association considered the issue resolved through dialogue between the BDR and the truckers on the spot.
The truckcers enforced indefinite strike at about 11:00am at Ghojadanga to press home their demand, sources said.
Thakurgaon Sugar Mills incurs
Tk 16cr in losses
Bangladesh Sangbad Sangstha . Thakurgaon
The production in Thakurgaon Sugar Mills increased this year reducing its loss by Tk 3.5
crore as compared to the last year.
Sources at the mills said this year the amount of loss came down to Tk 16 crore from last year’s Tk 19.52 crore. During the current season, other expenses of about Tk 70 lakh has also come down due to strict administrative measures.
Managing director of the Mills Rafiqul Islam said that in the current season the mills started production of sugar from December 25, 2009 and continued up to February 9, 2010. During the time, the mills produced 3,814 tonnes of sugar by crushing 57,438 tonnes of sugarcane. The rate of sugar recovery was 6.70 per cent.
The MD further said that this year the mills purchased sugarcane from the farmers at Tk 66 per maund (40 kg) but in the next season the purchasing rate of sugarcane will be Tk 80 per maund (40 kg).
He also said that last year sugarcane was cultivated on 5,492 acres of land only in the mills zone. But this year sugarcane was cultivated on 10,000 acres of land. For sugarcane cultivation the mills has distributed a loan of Tk. 5 crore in terms of seed, fertilizer and irrigation among the sugarcane growers.
This year the farmers become interested in STP (spaced transplantation) method of cultivation because the production in STP method is one and a half times more than that in the conventional method of cultivation. The mills authority is also giving Tk. 4,400 per acre as subsidy to the growers for STP method of cultivation.
Former president of Central Sugarcane Growers Association Yunus Ali said that if the mills wanted to bring down the loss further, they had to increase the area of sugarcane plantation in the mills zone, give more subsidy to the growers, take effective measures to curb corruption and stop the process of leasing the lands of the `Mills Farms’ to the potato growers and give the lease to the genuine sugarcane growers.
Lebanon, Jordan sign economic
agreements
Xinhua . Beirut
Lebanon and Jordan signed16 agreements, protocols and memoranda of understanding in Beirut on Friday, Lebanese PM office announced.
Lebanese prime minister Saad Hariri met with visiting Jordanian prime minister Samir Rifai Friday at the Grand Serail in down town Beirut. Hariri and his Jordanian counterpart headed the meeting of the Lebanese-Jordanian committee and signed 16 agreements between the two countries.
The agreements include cooperation between the Jordanian Institute for the Development of Economic Projects and the Lebanese Trade Information Centre for the years 2010-2011, a technical program to activate the mutual recognition agreement on conformity certificates and quality marks, and administrative cooperation agreement on customs procedures.
They also include cooperation on animal health and production, cooperation in the agricultural sector, and the executive program for tourism cooperation for the years 2010-2012.
Earlier, Lebanese president Michel Suleiman met with Rifai at the presidential palace near Baabda where they discussed ‘the excellent relations between the two countries and the situation in the region’ said a statement released by Suleiman’s office.
Suleiman expressed his gratitude to Jordan’s King, and invited him to visit Lebanon. He also hailed the bilateral relations, and encouraged the signing of cooperation agreements between them.
Wal-Mart to slash
grocery prices
Reuters . San Francisco
Wal-Mart Stores Inc will cut food prices and mount a new ad campaign over the next six weeks, a threat to other US grocers that sent an industry shares index down more than 2 per cent on Friday.
A Morgan Stanley analyst first reported the world’s largest retailer’s plan, calling it a major setback for other US grocers, and the company confirmed the promotions in an email.
‘While this helps address Walmart’s traffic woes, we view this as a major setback for the grocery stocks, which have been rallying on hopes of a return to more rational pricing,’ Morgan Stanley analyst Mark Wiltamuth wrote in a note on Friday.
The Standard & Poor’s Food Retail Sub-Industry Index closed down 2.2 per cent.
Walmart has used aggressive pricing in grocery and other units to bring shoppers into its stores. The grocery business is particularly pressured by such pricing, as its profit margins are already low.
Investors in Walmart have been concerned about signs that shoppers who gravitated to its stores during the worst of the recession — boosting sales and profits — are returning to rivals. Traffic fell in Walmart’s US stores during its fourth quarter, despite the holiday season, when shopping is at its peak.
In the promotions, customers entering Walmart stores will be greeted by signs advertising price rollbacks on 10,000 items. The focus of the price cuts will be on food and other consumables.
The changes, to hit stores by April 1, will be supported by a television and media campaign.
That timing means the campaign would be in place just before Easter, which falls on April 4 and is a big time for home-cooked meals.
Wiltamuth cited the ‘continued strain’ on grocers’ margins and questioned whether the market should begin to ask whether grocers will be able to pass inflationary costs through to consumers.
Safeway Inc shares closed down 2.5 per cent at $24.04 and Supervalu Inc shares fell 2.4 per cent to $16.73 on the New York Stock Exchange. Kroger Co shares fell 2.7 per cent to $21.64 and Whole Foods Market Inc closed down 0.5 per cent at $35.83 on the Nasdaq.
Walmart shares closed down 1.1 per cent at $55.34 on the NYSE.
Indian govt clears ONGC, partners’
Venezuela investment
Press Trust of India . New Delhi
Saturday gave Oil and Natural Gas Corp (ONGC) and partners approval to invest $2.181 billion in a giant oilfield in Venezuela that will give energy deficient India 3.6 million tonnes a year of crude oil.
ONGC Videsh Ltd, the overseas arm of the state explorer, will invest $1.333 billion between 2010 and 2015 as its share of spending in the 400,000 barrels per day ‘Carabobo-1’ project. Indian Oil Corp (IOC) and Oil India will invest $ 454 million each in the project.
The cabinet committee on economic affairs approved the investment by Indian firms who together hold 18 per cent stake in the Carabobo-1 project, Indian home minister P Chidambaram told reporters after a meeting.
The Carabobo-1 project of the Orinoco extra-heavy oil belt of Venezuela would involve a total investment of close to $21 billion over 25 years. The three firms have for the time sought the government’s approval for investing $2.18 billion and may be able to fund most of the future investment from the revenues they will start earning when the project goes on-stream in three years.
Last month, the three won rights to develop Carabobo-1 project along with Spain’s Repsol-YPF and Petronas of Malaysia after committing themselves to pay a signing amount of $1.05 billion and an equivalent to Venezuela’s state-run PdV in loan.
Repsol-YPF, OVL and Petronas will each hold 11 per cent stake in the ‘Mixed Company’ that will develop Carabobo-1, with 7 per cent being split between IOC and OIL. Balance 60 per cent will be with PdV. The project will give India 3.6 million tonnes of crude oil annually out of the envisaged output of 400,000 barrels a day.
Chidambaram said OVL’s investment of $1.33 billion from 2010 to 2015 is made up of $302 million in equity, $289 million in loan of PdV, $ 454 million as contribution to Mixed Company as debt and $ 289 million as signature bonus.
IOC and OIL’s exposure of $0424 million each is made up of $96 million in equity contribution, $92 million in loan to PdV, $144 million as contribution to Mixed Company by way of debt and $92 million as signature bonus.
The Carabobo-1 project, comprising Carabobo-1 Central and Carabobo-1 North blocks, would develop extra-heavy crude production capacity of up to 400,000 barrels per day (20 million tonnes a year). Early output of at least 50,000 bpd is slated to start in 2012-13, rising to peak in 2016.
Rio staff trial seen as
test for China
Agence France-Presse . Beijing
The trial of four Rio Tinto employees next week will be widely watched as a test of whether China is willing to honour commitments to foreign investors and be a responsible member of the world community.
Australian national Stern Hu and three Chinese employees of the mining giant will be in the dock Monday on bribery and trade secrets charges in a case that has upset Australia and raised questions about the rule of law in China.
Canberra wants transparency in the three-day trial in Shanghai, but hearings on the industrial espionage charges will be closed, adding to questions over whether the men will get a fair hearing in the politically charged case.
The four defendants, all employees of the Anglo-Australian mining giant, were arrested last July during contentious iron ore contract negotiations which later collapsed, and after Rio snubbed a near $20-billion cash injection from state-run Chinese mining firm Chinalco.
Australian prime minister Kevin Rudd Thursday warned China the ‘world will be watching’ the trial.
Australian National University law professor Ann Kent told AFP the timing of the trial smacked of gamesmanship.
It opens the same day Rio Tinto chief executive Tom Albanese speaks at an economic forum in Beijing and as tough iron ore price talks between Chinese steel mills and foreign miners are under way once again.
‘This is blatant power politics (by China),’ Kent said, adding that the timing was an ‘extraordinary coincidence.’
‘There might be a suggestion of a quid pro quo — we might let your executives off (with a light sentence) if you give us what we want.’
The trial also comes against the background of an announcement Friday from Rio Tinto that it had signed a $1.35 billion deal with Chinalco to develop a huge mine in Guinea.
Sino-Australian trade has rocketed in recent years, driven by China’s growing demand for Australian resources and the two countries have worked to minimise the diplomatic fallout.
Both sides said this week the trial will not affect bilateral relations, but the episode has put Canberra in a difficult position, said David Martin Jones, an international relations expert at Queensland University.
Japan lends Turkmenistan $500
million for fertiliser plant
Agence France-Presse . Ashgabat
Japan’s state-run Bank for International Cooperation (JBIC) has loaned Turkmenistan $500 million to build a fertiliser plant, a state newspaper said Saturday.
The credit is for an ammonia and urea plant to be built by Japanese firms Kawasaki Plant Systems and Sojitz Corporation in the city of Mari in the south of the Central Asian state where its vast cotton industry is based, the Neutral Turkmenistan daily reported.
Ex-Soviet Turkmenistan harvests about one million tonnes of cotton yearly, according to official sources, and is among the world’s top 10 largest cotton producers.
Bharti to sell iPhone
3GS in India
Agence France-Presse . New Delhi
India’s top mobile phone company, Bharti Airtel, said Friday it had reached a deal with Apple Inc. to sell the iPhone 3GS in India.
In a statement, the company said the pact would allow Bharti to bring the latest iPhone to India ‘in the coming months.’
The announcement came a day after Bharti submitted its bid in a bandwidth auction for third generation, or 3G, mobile telephony services in India.
The successful bidders will be allowed to offer 3G services on a commercial basis from September.
The auction is expected to give an extra fillip to India’s mobile industry, already the fastest expanding globally, where scarcity of bandwidth has affected call quality.
Peru aims for Japan, South Korea
trade talks in April
Agence France-Presse . Lima
Peru is aiming to complete negotiations on free trade agreements with Japan and South Korea in April, trade minister Martin Perez said Friday.
The new round of talks with South Korea will take place in Washington in early April, while the Japan meeting will held the week of April 26 in Tokyo, Perez said, according to state news agency Andina.
‘Both Asian nations want this to be the last round’ of negotiations, he added.
At the last meeting between Peruvian and South Korean representatives, Seoul offered to lower a proposed tariff on 200 Peruvian products, Perez said.
He said Peru hoped Japan would exclude fewer than 1,000 Peruvian products from the tariff scheme in the economic partnership agreement under negotiation.
Trade negotiations between South Korea and Japan began in March and May of last year, respectively.
Peru said earlier this month that its free trade agreement with China went into effect at the same time as it sealed a similar trade pact with the European Union jointly with Colombia.
It also has free trade agreements with Canada, Singapore and the United States.
US stocks sink after India’s
surprise rate hike
Agence France-Presse . New York
US stocks fell Friday as investors took profits from recent gains and fretted about the global economic recovery following India’s surprise interest rate hike.
After opening with small gains, the Dow Jones Industrial Average fell 37.19 points (0.35 per cent) to finish at 10,741.98, snapping an eight-session rally that had brought the blue-chip index to an almost 18-month high.The tech-rich Nasdaq composite shed 16.87 points (0.71 per cent) at 2,374.41 while the broad-market Standard & Poor’s 500 index retreated 5.92 points (0.51 per cent) to 1,159.90.
The major indices spent almost the entire session in negative territory and closed better than lows hit in the final hour of trade amid the quarterly expiration of futures and options contracts, known as the ‘quadruple-witching’ hour.
Stocks extended losses ‘after the central bank of India made an intra-meeting move to raise interest rates, and traders viewed the action as a reminder that strong economic growth can bring the potential for rate hikes, which tend to give stock markets indigestion,’ Charles Schwab & Co. analysts said in a client note.
Traders ‘used the action as an excuse to book profits after a nice run,’ they said.
The Reserve Bank of India said as part of its exit strategy from extraordinary support measures taken in the face of the global economic crisis, it was raising two repo rates by a quarter of a percentage points to curb rising inflationary pressures, ‘with immediate effect.’
‘Given the lags in monetary policy, it is better to respond in a timely manner, even if it is outside the scheduled policy reviews, than take stronger measures at a later stage when inflationary expectations have accentuated,’ the central bank said in a statement.
Among stocks in the spotlight Friday, struggling handheld device maker Palm plunged 29.16 per cent to $4.00. It reported another quarterly loss after the market close Thursday and gave disappointing guidance.
Google dropped 1.12 per cent to $560.03. According to China Business News, the Internet giant will end operations in China on April 10, citing an official with an unidentified Chinese advertising agency, making good on its threat in January to pull out because of censorship and cyber attacks. Google’s Chinese rival Baidu climbed 0.88 per cent to $569.65.
Boeing slipped 0.21 per cent to $70.72. The aerospace giant said it would ramp up production on 777 and 747-8 planes to support an anticipated increase in customer demand as the aviation market rebounds amid a global economic recovery.
Electronics retail chain Best Buy added 1.33 per cent at $40.99 after a Goldman Sachs analyst upgrade.
The bond market weakened. The yield on the 10-year US Treasury bond rose to 3.687 per cent from 3.672 per cent on Thursday and that on the 30-year bond rose to 4.579 per cent from 4.572 per cent. Bond prices and yields move in opposite directions.
Greek woes send dollar skyward
Agence France-Presse . New York
The dollar continued to hammer the euro and British pound on Friday, amid continued concerns about the Greek debt crisis and the robustness of Britain’s economic recovery.
The euro fetched $1.3530 by 2130 GMT, down from $1.3603 late Thursday, in the second straight day of heavy losses for the single European currency.
The dollar was up against the Japanese currency at 90.54 yen, versus 90.39 late Thursday.
‘Uncertainties stemming from the pending Greek bailout have sent the euro sharply lower for the second straight day,’ said Kathy Lien, director of currency research at Global Forex Trading.
Splits between France and Germany over the desirability of an International Monetary Fund bailout for Greece continued to weigh on the euro, ahead of a key European Union summit March 25-26.
CMC Markets analyst Michael Hewson said some ‘misplaced optimism’ about an EU bailout package for Greece was starting to ebb away, sending the euro lower.
The dollar also posted gains against the British pound, which bought just $1.5013, versus $1.5243 in late trades Thursday.
‘The British pound extended the previous day’s decline and slipped to a low of 1.5129 during the European trade as the Bank of England continued to see a risk for a double-dip recession,’ said David Song a currency analyst with DailyFX.com
The dollar rose to 1.0613 Swiss francs, versus 1.0579 on Thursday.
Pressure mounts over IMF role
in Greek crisis
Agence France-Presse . Brussels
Europe split over IMF intervention for debt-ridden Greece on Friday, upping pressure on national leaders to resolve crisis plans just days from a crunch EU summit.
Germany, changing tack, said it was open to the possibility of the International Monetary Fund helping Greece while the Netherlands, Finland and Italy — to varying degrees — also declared themselves open to IMF involvement.
‘The German government does not rule out aid from the IMF if Greece requests it,’ spokesman Ulrich Wilhelm said after reports that Berlin was concerned European aid for Greece could break German and EU law.
Investors reacted negatively, with Greek government bond yields- the interest rate that Athens must pay in order to raise money on debt markets- rising sharply. The euro weakened against the dollar, sliding to $1.3531 in London trade compared to 1.3603 in New York late on Thursday.
Non-euro peers Britain and Sweden firmly back an approach to the International Monetary Fund if Athens concludes that it cannot keep up with debt repayments.
The shift is not universal. There has been no change in the French position, which holds that the Greek troubles are an internal eurozone matter.
The IMF has never rescued a eurozone member, and a Greek bailout would be seen by some as a humiliation for the 16-nation bloc.
EU finance ministers agreed on the broad lines of such a European assistance plan when they met in the Belgian capital on Monday.
The EU’s budgetary overlord, Olli Rehn, said leaders had to come to a ‘specific political conclusion’ and clarify the way forward ‘next week,’ having compared notes with IMF chief Dominique Strauss-Kahn.
But in a pointed sign, a diplomatic source warned it was unlikely that EU president Herman Van Rompuy would find sufficient support to place the issue on the formal agenda for the March 25 and 26 EU summit.
Greek prime minister George Papandreou has urged the EU to help his country borrow more cheaply when they meet next week.
EU commission chief Jose Manuel Barroso on Friday urged European leaders to approve a coordinated loan facility for debt-laden Greece ‘as soon as possible,’ in order to restore confidence.
‘We cannot prolong any further the current situation,’ Barroso warned days ahead of a European summit.
‘I urge the EU’s leaders to agree on this instrument as soon as possible,’ he stressed, amid fears that the pressure on Greece could end up damaging the eurozone.
The help Barroso had in mind would be ‘a system of coordinated bilateral loans,’ and as such would be compatible with EU law which bans bailout loans to any of the eurozone countries.
Barroso did not go into any great detail about the sums involved but an EU official said Greece would require ‘around 22 billion euros ($30 billion),’ to help it service its massive debt burden.
According to another EU official, several partially or fully state-owned banks and financial institutions across Europe are considered as potential candidates to offer loans, including France’s Caisse des Depots, the Franco-Belgian bank Dexia and, if Berlin gives the green light, regional German banks.
The aid plan would allow Greece to borrow at ‘lower interest rates than it is currently paying’ on the markets, the source said.
The yield on Greek 10-year bonds rose Friday to 6.333 per cent from 6.265 per cent on Thursday, more than double the rate for German bonds.
‘Time is running out’ for definitive action, said Ulrich Leuchtmann, an analyst at Germany’s Commerzbank, as Greece needs to raise some 20 billion euros ($27 billion) from international debt markets over the next two months.
Under pressure from the EU, Athens has announced draconian action to fix its public finances- triggering strikes and violent protests on the streets of Athens.
On Friday, Papandreou said his country had come ‘one step from being unable to borrow’ on the world markets.
YouTube creators cashed in big
on sale to Google: documents
Agence France-Presse . New York
YouTube’s creators walked away with hundreds of millions of dollars after the startup was bought by Google in 2006, according to documents released in a copyright brawl between Viacom and Google.
While former PayPal pals Chad Hurley, Steve Chen and Jawed Karim each scored fortunes in Google stock by selling YouTube to the Internet giant, a venture capital firm that backed the online video-sharing service landed the lion’s share of the wealth.
Sequoia Capital got $516 million worth of Google stock as a return on approximately $9 million it invested in YouTube in late 2005 and early 2006, according to court documents made public this week.
Hurley’s haul was worth $334 million and Chen’s chunk tallied $301 million based on the stock price the November day the deal with Google was sealed, according to the documents.
YouTube’s third co-founder, Jawed Karim, had left the startup by then but got about $66 million worth of Google stock for his share in the fledgling company, the documents indicated.
Viacom presented the evidence while trying to make its case that YouTube’s founders and Google benefited from letting copyrighted videos be posted at the website.
Viacom is suing Google and YouTube for a billion dollars, arguing that they condoned pirated video clips at the website to boost its popularity.
Viacom was also a target in legal filings with Google countering that the US entertainment giant foisted some of its own content onto YouTube’s online stage and even wanted to buy the firm.
Viacom attorneys contended that after YouTube was launched in 2005, the startup’s strategy was to achieve meteoric growth by whatever means necessary so it would become a prize acquisition target.
YouTube was a year-old internet sensation when Google bought it in a $1.65-billion stock deal in 2006.
Viacom filed its copyright lawsuit against YouTube and Google two years ago.
The lawsuit has been merged with similar civil litigation being pursued by the English Premier League, which says soccer game clips are routinely posted on YouTube without authorisation.
China inflation goal tough
but reachable: official
Reuters . Beijing
China’s 2010 inflation goal of 3 per cent is tough but achievable, with good grain supplies and excess capacity helping keep prices down, while growth should hit 8 or 9 per cent, senior government advisers told a conference on Saturday.
The chief economist of the National Bureau of Statistics, Yao Jingyuan, told the China High Level Development Forum that the government was battling a range of forces pushing up consumer prices this year — a key concern in Beijing.
Consumer prices rose 2.7 per cent in the year to February, up from 1.5 per cent in January and flirting with the government’s 3 per cent target for 2010.
More than one in two Chinese savers regard the current inflation rate as unacceptable, according to a central bank survey on Tuesday.
In his comments to the closed-door gathering, carried by the official Xinhua news agency, Yao said the challenges for China include the rising costs of imported inputs in a globalised economy, the impact of high inflation forecasts on consumer behaviour, polluting growth and building a greener economy.
‘Achieving this year’s target of keeping the increase in the consumer price index at around 3 per cent will be quite difficult, but... it can be achieved,’ Xinhua quoted Yao saying.
Ample grain supplies after a good harvest last year would help keep prices in rural areas stable and other prices down, while excess production capacity could also help damp inflation, he added.
Premier Wen Jiabao told a news conference last week that inflation, along with income inequality and corruption, could upset social stability and even undermine the power of the state if it got out of hand.
An advisor to the central bank’s monetary policy committee, Fan Gang, told the Forum on Saturday that Chinese economic growth would be 8 to 9 per cent this year, returning to ‘normal’ next year.
Fan did not specify what he considered normal, but his forecast for 2010 is moderate compared to the expectations of Western economists.
Greece was ‘one step’ away
from loan paralysis: PM
Agence France-Presse . Athens
Greece is enacting tough reforms after coming ‘one step from being unable to borrow’, prime minister George Papandreou said Friday as his debt-hit government pressed for EU political support.
‘We have been forced into the toughest decisions ever taken by a government in this country,’ Papandreou told a union congress in the northern city of Thessaloniki.
‘We did it because things had reached a critical state... we found ourselves one step from being unable to borrow,’ he said, hours after his government unveiled a new bill designed to combat deep-rooted tax evasion.
‘We want to prevent this very possibility,’ Papandreou said.
‘We are in a state of war, fighting against interests both within and outside our borders who want to take advantage of the difficult situation and the weakness in which Greece finds itself today.’
The Socialist government is trying to plug leaks in its budget-which last year ended up short of over 30 billion euros- and bring an end to decades of fiscal waste that accumulated nearly 300 billion euros in state debt.
Papandreou has repeatedly called on the European Union to help Athens bring down its borrowing costs which soared after his Socialists doubled the country’s budget deficit estimate after coming to power in October.
‘We want to prevent having to pay usurious interest rates for many decades, condemning the country to a deep and protracted recession,’ he said on Friday.
Papandreou blamed the previous conservative government of draining public coffers but also admitted that the Greek political system had harboured corruption for decades.
The prime minister has warned that Greece could appeal to the International Monetary Fund ‘as a last resort’ if Brussels fails to provide the necessary backing.
The interest rates demanded by investors to hold Greek bonds have failed to recede despite a spate of austerity cuts announced by the Greek government, worth around 16 billion euros this year.
The European Central Bank has already said that an approach by Greece to the IMF would be inappropriate.
But days from a European Union summit on March 25, Germany officially declared its openness to an IMF appeal, an unprecedented move by a eurozone country.
The Greek government’s austerity cuts have already sparked two general strikes and the tax hikes announced Friday are expected to raise fresh objection from work groups affected by the measures.
A wide range of professionals including taxi drivers, gas station owners, doctors and teachers have been holding separate strikes of their own in recent days.
But polls show most Greeks concede the cuts are necessary.
US tanker bid war heats up with
Airbus, Russia in wings
Agence France-Presse . Washington
The US Air Force tanker bidding contest against Boeing heated up Friday, with Airbus parent EADS mulling a proposal and Russia’s state firm UAC gearing up for one next week.
EADS opened the door to a bid against US arch-rival Boeing for the 35-billion-dollar aerial refuelling tanker contract on signs of pentagon willingness to extend the May deadline.
The European Aeronautic Defence and Space Company’s expressed interest in the competition, and the surprise emergence of a Russian competitor late Friday, marked new twists in the long-running saga to replace the aging Boeing fleet.
Just last week EADS, the parent of Airbus, was forced to withdraw from the bidding after its lead partner, US defence contractor Northrop Grumman, refused to compete, alleging the requirements were skewed in favour of Boeing.
Northrop’s exit from the competition left the field open to the Chicago-based Boeing, the aerospace giant that built the tanker fleet in the 1950s and has promised a formal bid by May 10.
Military commanders view the planned KC-X aircraft as crucial to sustaining US air power and are anxious to replace the older Boeing KC-135 Stratotankers.
The turning point for EADS appeared late Thursday, when the defence department acknowledged it would consider ‘a reasonable extension’ to the bidding deadline after learning from EADS it may re-enter the fray.
‘Yesterday the US department of defense indicated it would welcome a proposal from EADS North America as prime contractor for the KC-X tanker competition,’ EADS said in a statement Friday.
Obama calls on congress to
pass finance reforms
Associated Press . Washington
US president Barack Obama said Saturday that congress needs to enact comprehensive financial reforms to protect consumers, keep banks strong and ensure the US economy doesn’t sink into another great depression.
In his weekly radio and internet address, Obama said ‘we need commonsense rules that will our allow markets to function fairly and freely while reining in the worst practices of the financial industry.’
That, he said, is the central lesson of the current financial crisis that has cost millions of Americans their jobs and nearly caused the collapse of the entire financial system. ‘And we fail to heed that lesson at our peril,’ Obama said.
The senate banking committee is set to begin debate on a more than 1,300-page bill authored by its chairman, Christopher Dodd, D-Conn, that would give the government unprecedented powers to split up firms that threaten the economy, force the industry to pay for its most spectacular failures and create an independent consumer watchdog.
Already, Obama said, industry lobbyists are gearing up to spend millions of dollars in an attempt to defeat the legislation.
German tax authorities target
Credit Suisse clients
Agence France-Presse . Berlin
Over 1,000 rich Germans with accounts at Swiss bank Credit Suisse found themselves under investigation Friday following the purchase by authorities of a CD containing the names of tax dodgers.
‘State prosecutors have launched 1,100 investigations against customers and staff of Credit Suisse,’ Dirk Negenborn, spokesman for prosecutors in Duesseldorf, western Germany, told AFP.
‘The Credit Suisse clients have investments in total of around 1.2 billion euros ($1.6 billion).’
He said the total amount of tax owed to the authorities was unclear, but according to several sources the tax authorities stand to recover up to 400 million euros.
CORPORATE NEWS
HSBC, Shanta Properties
sign memo
Business Desk
The Hongkong and Shanghai Banking Corporation Ltd in Bangladesh signed a memorandum of understanding with Shanta Properties Ltd at the bank’s corporate lounge premises in Dhaka recently.
Shanta Properties chief executive officer Kamal Uddin Ahmad and HSBC Bangladesh personal financial services head Md Shafqat Hossain signed the agreement, said a news release.
Under the agreement, HSBC customers would receive upcoming project information, salable products and privilege services from Shanta Properties when purchasing an apartment.
Other senior officials from both the organisations were also present on the occasion.
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