UPDATE___________________JANUARY 22, 2010 SUNDAY
NEWS
Tardy SAARC, BIMSTEC prompt Dhaka
to sign deals with Delhi
Sluggish procedures for ratification of the SAARC and the BIMSTEC conventions prompted the government to sign three bilateral agreements on terrorism, trafficking and criminal matters with India.
‘There are understandings and conventions among the SAARC and the BIMSTEC member countries to jointly combat terrorism, illicit trafficking and organized crime. But Bangladesh and India signed some bilateral agreements on these issues because the ratification process (in the two regional organizations) is taking long time,’ foreign secretary Mohamed Mijarul Quayes said in Dhaka on Saturday.
Replying to a question as to what prompted the government to hastily sign the agreements with the neighboring country, he said the conventions among the SAARC and the BIMSTEC would not be enforced until and unless the member countries ratify the conventions signed in Colombo, Sri Lanka, in 2008 and Nay Pyi Taw in Myanmar in 2009.
The three agreements were signed during Prime Minister Sheikh Hasina’s much-talked-about visit to New Delhi from January 10-13.
According to the agreements, the two countries would form a coordination committee with the representatives of law-enforcing agencies and intelligence wings for coordinated action to combat international terrorism, organized crime and stop cross-border drug trade.
The coordination committee would be constituted under the aegis of the home ministries of the two countries as per terms of the signed agreement.
The coordination committee would extend cooperation in investigation, trial and prevention of cross-border terrorism, organized crime and illicit drug trafficking.
The Agreement on Combating International Terrorism, Organized Crime and Illicit Drug Trafficking is aimed at enhancing cooperation among the law-enforcing agencies and intelligence wings of the two countries to deal with those crimes and their trial.
‘Under the agreement, the two countries, subject to their domestic laws and rules, will assist each other in preventing international terrorism, resisting smuggling of drugs and chemical products, including psychotropic substances,’ the foreign secretary said at a press briefing at the foreign ministry.
Any activity that may hamper the country’s sovereignty and security or contradict one country’s existing laws and rules would not come under the purview of this agreement.
Under another treaty on Transfer of Sentenced Persons, an accused convicted of criminal offences will serve punishment in their respective country. The convicts who will have to serve a prison sentence for more than six months or the accused persons having the life sentence and is not facing any other criminal cases will come under this agreement.
But those who are sentenced under any army act or those who are given the death sentence or who are facing any other case will not come under the scope of this agreement.
This agreement will come into effect only when an accused concerned will write with his own hand or through a person appointed by him for his transfer to his own country.
The two countries also signed and Agreement on Mutual Legal Assistance in Criminal Matters between Bangladesh and India.
The foreign secretary said all the three agreements would be operational after ratification by the two countries. These agreements could be scrapped with six months’ advance notice by either side.
He claimed that there was nothing in the agreements that could hamper independence, sovereignty, security and interests of the country.
Mijarul Quayes said the government would continue to pursue bilateral negotiations as well as arbitration under the United Nations tribunal under the UN Convention on the Law of the Seas (UNCLOS) to resolve disputes on maritime boundary with India and Myanmar.
‘Myanmar for the first time recognized the ‘equity method’ to demarcate the sea boundary. This is a very big development in the maritime talks,’ he said.
‘If Bangladesh and Myanmar can amicably settle the remaining issues through bilateral talks, the UNCLOS tribunal would be redundant,’ he said.
The secretary said that the government was still in the process of appointing arbitrator for settling the maritime dispute with India.
Bangladesh and India are, however, expected to hold bilateral negotiations to demarcate the sea border, according to foreign ministry officials.
Bangladesh has been pursuing the ‘equity method’ as the ‘equidistance method’ would deprive the country most of the 28 offshore blocks as well as make the country sea-locked.
When asked why the government was pursuing an interim agreement on sharing the water of Teesta River with India, the foreign secretary said an interim agreement would give a common ground to sign a long-term treaty in future.
Meanwhile, foreign minister Dipu Moni recently said the government was looking to sign an ‘ad hoc deal’ with India on sharing Teesta waters.
‘A long-term agreement requires hydrological data, but we cannot remain stranded into hydrological survey,’ Mijarul Quayes said.
‘Not only the Teesta, but we want to sign agreements on all common rivers (with India),’ he said.
The two countries, which share 54 rivers, signed a treaty in 1996 to share the water of the Ganges River for 30 years.
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Garment exporters see rising
trend in orders
The country’s garments manufacturers and exporters have noticed, of late though, that there has been an increasing trend in enquiries and orders from foreign buyers following the easing of global recession.
Industry insiders said fresh increase in orders really started in October as reflected in the shipment of garments since December. But official export data for December is yet to be compiled.
A foreign merchandising official stationed in Dhaka representing a top European buying house told New Age that since October last year the Bangladeshi exporters started seeing fresh increase on order settlements.
‘Fresh increase on orders should be reflected in shipments of December and onwards,’ the executive said.
Bangladesh’s RMG shipments started seeing a negative year-on-year growth since May and in September the fall recorded at more than 27 per cent.
With some backlog due to Eid holyday in September, the October shipments saw 18 per cent year-on-year growth but in November the shipment saw more than 11 per cent negative growth again.
Quoting a preliminary report of the US Department of Commerce, the official informed your correspondent that Bangladeshi RMG shipments to USA in December 2009 had increased significantly month-on-month or year-on year basis.
He said November-December apparel export shipments boosted in India, Pakistan, Vietnam and Indonesia. In China, the executive said, December shipments improved to less than minus five per cent against average 11 per cent for the rest of 2009.
Industry leaders also admitted fresh rush of orders but they feared whether it could be sustained as, they pointed out, erratic gas flow interrupted production severely and weak cash flow, following recession, caused sufferings to many entrepreneurs.
The Bangladesh Knitwear Manufacturers ad Exporters Association president Fazlul Hoque said the industry was getting increased enquiries on next procurements as the sourcing executives of European retailers were back at office after Christmas vacation.
‘Enquiries and negotiations in January have increased significantly over that in the past few months,’ noted Hoque, who hoped negotiations and order settlements would take a momentum in the coming weeks.
Bangladesh Garment Manufacturers and Exporters Association president Abdus Salam Murshedy also admitted increased orders but feared that exporters might not be able reap that finally as they had been weakened by recession impacts and gas crisis.
‘Gas crisis is hampering production so severely that many exporters are failing to meet production and delivery schedules and were forced to ship their consignments by air-cargo, which is almost unviable,’ Murshedy said.
Both Murshedy and Hoque claimed that despite demands from the western retailers were increasing, their price offers remained very poor.
They demanded that the government should help the entrepreneurs by releasing stimulus and incentive funds to strengthen cash flow of the exporters so they can execute their fresh orders.
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Malaysia to relocate textile,
electronics units in Bangladesh
Malaysian government is keen to relocate textile, electronics and furniture industries in Bangladesh for mutual benefit of the two Muslim nations.
‘A Malaysian business delegation will arrive here soon to carry forward the matter,’ said president of Bangladesh Malaysia Chamber of Commerce and Industry Syed Moazzem Hossain at a press conference in the city.
The press conference was organised to disclose key successes of the three-day trade fair titled Showcase Bangladesh-2010 held in Kuala Lumpur on January 8-10.
Former chamber president Salauddin Quashem, chairman of fair organising committee MA Salam and other office bearers of the BMCCI were present on the occasion.
Hossain described the showcase a successful one and said the entrepreneurs were able to project Bangladesh’s potentials in Malaysia.
Highlighting achievements of the fair, he said two trade related memorandum of understanding on RMG products and electronic banking are among the significant achievements of the trade exposition.
During the fair, he said, Malaysian minister of international trade and industry assured the delegation of Bangladesh government of eradicating trade barriers mutually.
Moreover, Malaysian high commissioner in Dhaka has expressed his country’s interest to invest in Bangladesh’s tourism sector, said the BMCCI president.
A list of 19 items of Bangladeshi products including jute goods, frozen foods and ceramics already handed over to the Malaysian government for ensuring duty free market access to Kuala Lumpur.
Hossain said there are some trade barriers between Malaysia and Bangladesh and Bangladesh could raise its export to Malaysia one billion US dollar if the existing trade barriers with Kuala Lumpur are resolved
Malaysia exported goods worth $694 million to Bangladesh last year while Bangladesh’s export stood at only $31.28 million.
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Double-digit growth not
impossible: BB governor
Double-digit growth is not impossible for Bangladesh to attain, Bangladesh Bank governor Atiur Rahman said on Saturday.
The central bank boss, at a workshop on inclusive banking, elaborated the kind of measures that could lead to such an achievement.
He said the efforts that the central bank had initiated, especially loans for sharecroppers, bank accounts for farmers with a minimum deposit of Tk 10, spread of SME banking, e-commerce and mobile banking could all significantly contribute to the country’s growth.
Speaking at the workshop for bankers, Atiur said, ‘Bangladesh will become a model for inclusive banking within two or three years if these activities are properly implemented.’
‘Businesses will boom,’ he said.
Qazi Kholiquzzaman Ahmad, president of Bangladesh Economic Association, which organised the workshop on inclusive banking, commended the central bank’s recently published half-yearly policy statement, which the governor announced as an ‘inclusive’ monetary policy.
‘It will expand banking services, investment will rise,’ the economist said.
The governor, however, expressed his concern on the slow spread of banking services in the rural areas citing that more than 40 per cent of the population was still under the poverty line.
He suggested that more private banks should come forward by opening their branches in remote and under developed areas to serve more customers still out of banking services.
More than 25 per cent adults in Bangladesh are still out of the reach of formal banking amid massive spread of micro-finance, he added.
Citing that the country’s total bank deposits stand at over Tk 2.5 lakh crore, the governor said they should extend their hands to the masses.
He also said the SME sector needed to be highlighted since it was contributing a great deal to the country’s economy and was an important tool for employment generation.
‘SMEs have generated 58 per cent of the country’s total employment,’ he said.
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Govt urged to extend farm
loans for jute sector
The government should extend farm loan for jute sector, which has started to regain its momentum, said Incidin Bangladesh, a research based development organisation.
The demands for jute and jute goods have increased at the global market bypassing the dominance of artificial fibre, it said at a news conference on Saturday.
This has created an opportunity for Bangladesh to fetch huge amount of foreign exchange through widening export baskets. For exploring this opportunity the country needs to nurture cultivation of jute for raising production side by side promote manufacturing of jute goods through expanding jute industries, it said.
Incidin Bangladesh organised the press conference to highlight its study on promotion of jute sector.
Incidin Bangladesh executive director AKM Masud Ali presented a written statement at the press conference while other executive directors Ratan Sarker and AKM Mustak Ali also spoke.
In the paper, AKM Masud Ali said for promoting jute production, the government should extend farm loans for jute sector, side by side it should provide subsidies on inputs required for jute cultivation and play due role in purchase of jute for ensuring appropriate price for the item.
Referring to data by the Bangladesh Jute Spinners Association, he said the production of jute in the country was not sufficient to meet the demand of the local jute mills, as the private jute mills at present required 30 lakh to 32 lakh bales of jute while the annual production of the item is 55 lakh to 60 lakh tonnes (one bale equals 180kg).
The cultivation of ‘deshi’ and ‘tossa’ varieties of raw jute in the northern districts including Lalmonorhat, Rangpur, and Dinajpur could not fulfil the target during the current season despite there was huge demand for the item at the global market at this moment, he added.
Against target of bringing 6,407 hectares of land under harvesting, deshi jute was cultivated only in an area of 4,865 hectares of land in these three districts, while ‘tossa’ jute was cultivated in an area of 11,762 hectares of land against a target of 12,300 hectares, he said.
The price of jute has increased by maximum 185 per cent during last two years, as in Rangpur jute is sold for Tk 923 per maund against Tk 323 per maund in 2007. The price for the item has increased to Taka 1400 per maund in 2009 from Taka 700 per maund in 2007 in Pirojpur, Masud Ali said.
The price of raw jute has increased as the demand for the item went higher both at local and global market, he said adding, despite this the target of jute production could not be achieved due to lack of adequate supports to the farmers at cultivation level.
‘The farmers earned large amounts from production of jute due to jump in jute prices and also because of higher productivity due to use of high breed jute seeds,’ he added.
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Few engaged in price manipulation: Faruk Khan
Commerce minister Faruk Khan on Saturday urged the business community to remain alert on manipulation of prices of essential commodities.
A few of the business people engaged themselves in manipulating prices of essential commodities and dodging taxes, but the whole community has to bear the stigma, he said.
‘The business community will have to remain alert in this regard,’ he said while addressing as chief guest at the installation ceremony of the board of directors of the Chittagong Metropolitan Chamber of Commerce and Industry.
With the CMCCI president Abdus Salam in the chair industries minister Dilip Barua, state minister for forest and environment Hasan Mahmud, Chittagong mayor ABM Mohiuddin Chowdhury and president of the Federation of Bangladesh Chambers of Commerce and Industry Annisul Huq were special guests at the ceremony.
Among others, CMCCI vice-presidents Mizanur Rahman and Khalilur Rahman addressed the function held on the Chittagong Club tennis ground.
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Int’l plastic fair begins tomorrow
The 6th ‘Dhaka International Plastic, Packaging and Printing Industrial Fair-2010’ will begin at Bangabandhu International Conference Centre in Dhaka tomorrow for showcasing local plastic goods, raw materials and machinery.
President of Bangladesh Plastic Goods Manufacturers and Exporters
Association Ferdous Wahed made the announcement at a press conference at the association’s Paltan office on Saturday.
Speaking on the occasion, ‘We are trying to expand the plastic industry sector gradually as the present government has given priority to the trade and commerce sector,’ said Ferdous Wahed.
The main objective of holding the fair is to bring a opportunity for the Bangladesh plastic industry through developing new alternative sources, he said.
Leading plastic technology and manufacturing countries including China, Taiwan, Thailand, India, Vietnam, Korea, Turkey, Austria and host Bangladesh will participate in the fair with their latest plastic items including plastic sack, shopping bag, toys and various household items.
Some 200 stalls will be set up in the fair.
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Citi’s Philip Brown
arrives in Dhaka
Philip Brown, director risk of Citi Microfinance arrived in Dhaka on Saturday for a four-day visit.
During his stay, Philip will meet major clients of the bank and with David Lascelles, the survey editor and author of the 2009 Microfinance Banana Skins Report, and conduct a microfinance risk roundtable discussion, said a news release.
Before moving to Citi Microfinance Philip was the risk director for project finance and structured trade finance within Europe, Middle East and Africa. Philip is a member of the governing council of the Centre for the Study of Financial Innovation of UK and the advisory council of the Centre for Financial Inclusion of USA.
David Lascelles, senior fellow of Centre for the Study of Financial Intermediation and a former Financial Times journalist and Mahesh Mani, vice-president of Microfinance of Citibank, NA, India will accompany Philip during the visit.
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Large-scale parija paddy
farming stressed
Large-scale farming of indigenous short duration indigenous parija variety paddy during off season between boro and aman cultivation can produce additional nine million tonnes of rice annually in the country, experts said.
As a part of the ongoing efforts to adapt with the adverse impacts of global climate changes and keep agri-productions intact, Rangpur-Dinajpur Rural Service, an NGO, revealed this after conducting three-year long field level research works.
Experts of the NGO on Saturday told the news agency that they conducted the research on 11 extinct indigenous variety paddies, selected parija as the most effective variety and successfully cultivated the short duration paddy last year with tremendous yields in greater Rangpur.
The paddy can be cultivated in 70-75 days during the completely off season in between late May and mid-August when the fields remain fallow after Boro harvest and before plantation of T-Aman seedlings, MG Neogi, Head of Agriculture of RDRS, said.
According to the technology evolved by RDRS, the parija paddy seeds can be sowed by directly using the direct seeded rice method and transplantation of the 20-day old seedlings would give the maximum yields, he added.
The RDRS conducted the research on extinct indigenous paddies like shaita, pariza, lakheejota, atha binni, kataktara, panbira, hashi kalmi, dular, marichbati, shurja mukhi and dhola shaita, and found parija’s 3.5 tonnes rice per hectare yield in shorter period.
Additional director of the DAE’s Rangpur zone Shakhawat Hossain and Professor Abdul Hamid of Bangabandhu Sheikh Mujibur Rahman Agriculture University saw brighter prospect for farming of the pariza paddy in the region, Neogi added.
Director (resources and livelihood) of the RDRS Dr Syed Samsuzzaman said that harvest of parija completes by August 15 without facing any flood paving the way for planting T-aman seedlings timely to get three paddy harvests annually in the same land.
The agri-scientists said the agriculture sector has already been severely affected by the adverse impacts of the ongoing climate change and the agri- production has already started reducing gradually throughout the globe creating growing concern for all nations.
During the past 10 years, five late floods, including three devastating, occurred in Bangladesh in between August 26 and September 14 due to the climate change causing colossal damages to the flowering T-Aman crops, they said.
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WORLD
Proposed bank rules unlikely
to hurt big US institutions
President Barack Obama’s latest broadside against big banks may have more bark than bite.
Obama’s plan to limit banks’ size and risky trading has spooked investors, but analysts say it would have only marginal effect on institutions like JPMorgan Chase, Bank of America and Citigroup — and would be hard to enforce. And it’s not clear the rules would reduce taxpayers’ risk of having to bail out another big bank.
The White House has yet to provide details of the plan outlined Thursday. But attention has centred on Obama’s effort to bar the biggest banks from doing what’s called proprietary trading. That’s when banks use their own money to make high-risk bets. If those bets go bad and a bank goes under, taxpayers could be on the hook.
Fearing the Obama plan might reduce bank earnings, investors reacted by dumping financial stocks Thursday, helping send the Dow Jones industrial average down 213 points. The pessimism continued Friday, with the Dow losing more than 216 points. Also weighing on the market were corporate earnings reports that failed to meet investors’ expectations.
The proposed overhaul marked Obama’s latest effort to more tightly police the nation’s largest banks. Last week, the president proposed a tax on banks to recoup billions in bailout money that was handed out at the height of the financial crisis in 2008.
The moves come as banks face increasingly hostile rhetoric from Obama. The president has called bankers ‘fat cats’ and vowed to defeat the banking industry’s lobbying efforts against financial reforms.
Still, several analysts called Wall Street’s reaction to the latest proposals overkill.
One reason is that most big banks derive only a tiny fraction of their revenue from proprietary trading. At JPMorgan Chase & Co and Bank of America Corp, for instance, proprietary trading brings in 1-2 per cent of revenue, according to a Citigroup report. Less than 5 per cent of Citi’s revenue comes from proprietary trading. The figure is 3-4 per cent for Morgan Stanley and less than 1 per cent at Wells Fargo & Co.
‘Proprietary investment restrictions probably won’t have a huge impact on most banks,’ said Douglas Elliott, fellow at Brookings Institution and a former investment banker. ‘That’s a pretty small part of what banks do.’
Elliott said much will depend on how lawmakers write the legislation, which has yet to be put even in draft form.
Citing banks’ limited proprietary trading activity, Citigroup analysts Keith Horowitz and Ryan O’Connell said in a note that the effect of Obama’s proposal ‘may be less severe than expected.’
The banking industry has reacted sourly to Obama’s proposal. Edward Yingling, president and CEO of the American Bankers Association, said his members are ‘very concerned’ about it.
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Commodities slide on China concerns
Most commodity markets fell this week as traders fretted over possible moves by Beijing to rein in the booming Chinese economy, which is a major consumer of raw materials.
However, sugar rocketed to a 29-year peak and cocoa forged a 33-year pinnacle as both were pushed higher by keen demand and tightening supplies.
‘China remains at centre stage,’ said Barclays Capital analysts in a research note to clients.
‘Despite proving unfounded on numerous occasions in the past, concerns that a China bubble is about to burst are never far away for many commodity market participants.
‘Those concerns have been piqued by China’s measures to slow lending growth,’ they added.
China’s red-hot economy expanded by 8.7 per cent in 2009, well exceeding the government’s target of 8.0 per cent, new data showed Thursday as authorities intervened to avert the risk of overheating.
Gross domestic product in the world’s third-largest economy, which analysts say is on track to overtake Japan, returned to double-digit growth in the fourth quarter. The growth of 10.7 per cent was the fastest in two years.
Top Beijing regulator Lim Mingkang on Wednesday said that China would rein in credit after explosive growth last year as the world’s most populous nation moves to cool its red-hot economy, also a major energy consumer.
The chairman of the China Banking Regulatory Commission said in Hong Kong Wednesday that new bank loans in the country this year would fall to about 7.5 trillion yuan ($1.1 trillion) from about 9.5 trillion yuan in 2009.
Analysts have said the policy was likely a response to concerns about asset bubbles, bad loans and an overheating economy.
World oil prices slumped against a background of weak global demand for energy, led by China and the United States — which are the world’s two biggest consumers of crude.
Oil had closed down almost $1.50 lower on Wednesday amid market concerns that a credit squeeze in China and swelling US stockpiles could dampen demand for the key commodity, traders said.
The market was also dampened as US president Barack Obama unveiled plans to crack down on the US financial sector on Thursday.
‘Obama stated... that he will intensify his efforts to curtail speculation by banks, which weighed on oil prices,’ said Commerzbank analyst Carsten Fritsch.
‘However, the implementation of these proposals is subject to approval by Congress, which is doubtful. Market uncertainty over an outcome should continue to weigh on the oil price for the time being.’
Meanwhile, the US Department of Energy said Thursday that gasoline reserves in the world’s biggest economy increased by a stronger-than-expected 3.9 million barrels in the week ending January 15, striking a two-year high.
It also said refineries operated at 78.4 per cent of capacity last week, their lowest rate in at least two decades apart from the immediate aftermath of a hurricane.
But US crude stocks fell 400,000 barrels, according to the DoE report, confounding expectations of a large gain of 1.9 million barrels.
Oil prices jumped by about 80 per cent in 2009 as traders were heartened by evidence that the battered global economy was on the mend, with the eurozone, Japan and the United States escaping a fierce recession.
However, crude futures have struggled to make much headway in early 2010 as economic data disappoints.
By late Friday, New York’s main futures contract, light sweet crude for delivery in March, slid to 75.15 dollars a barrel compared with 78.44 dollars for the since-expired February contract a week earlier.
London’s Brent North Sea crude for March delivery slumped to $73.52 from $77.55 a week earlier.
Prices of precious metals sank on the back of China concerns and the stronger dollar, and amid fears about soaring Greek public debt.
‘The whole precious complex suffered amid rallying greenback, while concerns over Greece’s debt and looming monetary tightening were still gripping investor sentiment,’ said VTB Capital commodities analyst Andrey Kryuchenkov.
‘At the same time, physical buyers were still absent from the market,’ he added.
A stronger greenback makes dollar-priced commodities like gold and oil more expensive for buyers holding weaker currencies, and tends to dampen demand.
On Thursday, the euro had stuck a six-month low against the dollar as worries that China will cool its booming economy curbed demand for risk-sensitive currencies.
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World steel output drops by 8pc
Global crude steel dropped 8 per cent in 2009, in one of the worst downturns in its history, but analysts expect production to rise around 10 per cent this year as the $500 billion industry slowly recovers.
The world produced 1.22 billion tonnes of crude steel in 2009, its lowest level since 1.144 billion tonnes in 2005, figures from the Brussels-based World Steel Association, whose members represent 85 per cent of steel output, showed on Friday.
China strengthened its position as the world’s top producer, with its production rising to a record high at 567.8 million tonnes.
After last year’s 13.5 per cent rise in its output, the country now accounts for 46.5 per cent of the world’s total production and is set to be the engine of growth once again in 2010.
‘Even at a modest growth rate of 8-10 per cent, the impact on the global industry will be huge,’ said John Lichtenstein, global leader of steel at Accenture.
‘Global steel production and demand should rise by around 10 per cent in 2010 over 2009, bringing production back to the 2008 level of approximately 1.2 billion tonnes,’ he said.
Signs of recovery were evident in monthly figures from last year. In December, output rose by 30.2 per cent year-on-year to 106.4 million tonnes although they showed a slight fall compared with November’s 117 million tonnes.
Macquarie Bank expects crude steel production at 1.365 billion tonnes this year, citing a phase of restocking after a sharp destocking last year, which would boost production.
The recovery of steel production and demand is set to vary greatly according to regions and the pace of growth could be faster in the developed world, which has seen falls of over 30 per cent in output last year.
‘Mature economies will show a higher recovery rate in 2010, in the range of 12-15 per cent,’ Accenture’s Lichtenstein said.
‘Because the acceleration of growth in the mature economies is from a very low consumption level, it will not be sufficient to close the gap in the overall demand structure,’ he added.
Demand in mature economies is not likely to return to 2007 levels until 2012 or later, he said.
In 2009, the hardest-hit region in terms of production was North America, where output dropped by almost 34 per cent, with the United States total falling 36.4 per cent, more than the regional average.
Output in Europe was down 22.8 per cent last year, while in South America it fell by 20.1 per cent. The Middle East was among the few regions which posted a rise in output, which was up 3.3 per cent.
Japan followed China as the world’s second largest producer, while Russia has taken over from the United States as the third biggest producer.
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Unemployment rises in 43
US states in Dec
Unemployment rates rose in 43 states last month, the government said Friday, painting a bleak picture of the job market and illustrating nationwide data released two weeks ago.
The rise in joblessness was a sharp change from November, when 36
states said their unemployment rates fell. Four states — South Carolina, Delaware, Florida and North Carolina — reported record-high jobless rates in December.
New Jersey’s rate, meanwhile, rose to a 33-year high of 10.1 per cent while New York’s reached a 26-year high of 9 per cent.
Analysts said the report showed the economy is recovering at too weak a pace to generate consistent job creation.
‘A lot of states that had started to add jobs (in November) gave up those gains in December,’ said Sophia Koropeckyj, managing director at Moody’s Economy.com.
Texas and Georgia lost more jobs in December than they had gained the previous month, she noted, while Arizona and South Carolina lost nearly as many as they had gained.
That is consistent with nationwide trends. Employers shed a net total of 85,000 jobs in December, the government said earlier this month, after notching a small gain of 4,000 jobs in November.
In another nationwide trend, long-suffering states like California and Michigan saw their jobless rates stabilize even as they continued to bleed jobs. That’s because thousands of frustrated workers gave up hunting for work and dropped out of the labour force, which means they aren’t included in the unemployment rate.
California lost 38,800 jobs, the most of any state. But its unemployment rate was unchanged at 12.4 per cent, the fifth-highest in the nation. That’s because 107,000 people, or 0.6 per cent of the state’s work force, gave up and stopped job-hunting.
Michigan shed 15,700 jobs, but 31,000 people left the labour force. That caused the state’s jobless rate to fall slightly, to 14.6 per cent from 14.7 per cent. Michigan has the nation’s highest unemployment rate.
Nationally, more than 600,000 people left the labour force in December, according to government data. The large exodus from the labour force indicates that ‘unemployment is a lot worse than the numbers suggest,’ Koropeckyj said.
Still, Michigan has actually gained about 10,000 jobs over the past three months, as automakers and other manufacturers have boosted production to restock inventories depleted over the summer and early fall.
‘That’s a positive thing for a state that has been doing so terribly for so long,’ said Dave Iaia, an economist at IHS Global Insight.
Texas lost the second-most jobs: 23,900. That sent its jobless rate to 8.3 per cent in December from 8 per cent. The next-largest job losses were in Ohio, Illinois and Michigan.
The economy grew at a 2.2-per cent annual rate in last year’s third quarter, after declining for four straight quarters during the recession. Many economists estimate that growth accelerated to more than 4 per cent in the October-December quarter. But that’s still sluggish by the standards of many previous recoveries.
And growth could slow in the first half of this year as temporary factors, such as government stimulus spending and inventory restocking, fade.
Many states saw sharp drops in restaurant, hotel and other leisure employment, a sign that consumers are still holding back on their spending. Nationwide, the United States lost 25,000 leisure and hospitality jobs in December.
Texas shed 6,500 restaurant and hotel positions. Florida lost 5,600, South Carolina 5,200 and North Carolina lost 2,600 — more than any other sector in that state.
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Toyota’s recall may spread
to Europe: report
Japan’s Toyota Motor may recall its vehicles in Europe due to an accelerator problem that triggered massive recalls in the United States, a newspaper reported on Saturday.
The world’s largest automaker is considering recalling Corolla, RAV4 and other models produced and sold in Europe, the Mainichi Shimbun reported, adding that it was not clear how many vehicles were involved.
The models are equipped with similar accelerator pedal parts to those of 2.3 million vehicles recalled in the United States, the latest in a series of recalls by Toyota, the daily said.
The Japanese company’s US division said Thursday that the recall was to correct accelerator pedals on the vehicles that become worn and then in some cases get lodged in a partially depressed position.
The action was separate to an ongoing recall of about 4.2 million Toyota and Lexus vehicles that began last year due to a risk of loose floor mats slipping forward and jamming the pedals.
An unnamed senior official of the company told the daily: ‘We cannot tell how much this recall will cost, but it can be handled within our reserve (for unexpected troubles).’
But Mainichi said a decline in Toyota’s reputation for quality following the malfunction may trim its earnings, adding it could take time for Toyota to recover customers’ confidence in its production.
Toyota, which overtook US rival GM in 2008 as the world’s largest automaker, returned to profit in the three months to September and upgraded its outlook for the rest of the year thanks to demand for fuel-efficient cars.
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Google co-founders to sell
5m shares each
Google founders Larry Page and Sergey Brin each plan to sell five million shares in the Internet giant, a move that would reduce their joint holdings to below 50 per cent, according to a filing Friday with the US Securities and Exchange Commission.
The SEC filing said the stock sales, which will occur over the next five years, are part of a pre-determined stock trading plan set up by Page and Brin on November 30, 2009.
It said the Google co-founders currently hold about 57.7 million shares of Google stock, which represents 18 per cent of Google’s outstanding shares and 59 per cent of the voting power.
Page and Brin each plan to sell five million shares, which would leave them with approximately 47.7 million shares or 15 per cent of Google’s outstanding shares and 48 per cent of the voting power, the SEC filing said.
Although Page and Brin would no longer hold a majority of the voting power, their remaining holdings would allow them to continue to exert control over the Internet search and advertising giant.
The filing said the trading plan was adopted ‘to allow Larry and Sergey to sell a portion of their Google stock over time as part of their respective long-term strategies for individual asset diversification and liquidity.
‘Using these plans, they can gradually diversify their investment portfolios and can spread stock trades out over an extended period of time to reduce market impact,’ it said.
Five million shares of Google is currently worth $2.75 billion.
Google lost 5.66 per cent to close at $550.01 on Wall Street on Friday.
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Obama scrambles to revive
economic optimism
US president Barack Obama is seeking to reassure voters he’s determined to create jobs while his administration is trying to protect an architect of the increasingly unpopular banking bailout that may have helped prevent a financial collapse.
Obama’s efforts on the economy come after a Massachusetts Senate election this past week that suggested voter unrest when Republican Scott Brown claimed a Senate seat in Democratic hands for more than a half-century. Brown gives the GOP a 41st vote in the Senate, taking away the Democrats’ supermajority and threatening Obama’s agenda.
And the administration has been working to shore up eroding support for Federal Reserve Chairman Ben Bernanke, who is seeking another four-year term.
In the face of daunting political conditions, Obama was sounding feisty as he told a town hall crowd he was more determined than ever to help the economy and pursue his agenda.
‘I’m not going to win every round,’ Obama said Friday in Ohio. But he pledged, ‘I can promise you there will be more fights in the days ahead.’
He tried out a revamped message focused mainly on the economy that is part of a stepped up effort to convince Americans that he’s doing all he can to create jobs.
‘This isn’t about me. This is about you,’ he said.
Obama told his audience at the Lorain County Community College ‘the worst of this economic storm has passed. But families like yours and communities like Elyria are still reeling from the devastation left in its wake. Folks have seen jobs you thought would last forever disappear.’
He said a new stimulus spending bill emerging in Congress — the White House is calling it a jobs bill — must include tax breaks for small business hiring and for people trying to make their homes more energy efficient — two proposals he wasn’t able to get into a bill the House passed last month.
Obama defended as necessary his administration’s widely unpopular moves to bail out financial and auto companies. He also stepped up his recent attack on bankers and bonuses, defending his proposal to tax big banks to recover bailout costs and to limit their size and activities.
Obama just completed his first year in office and will address the nation Wednesday in his State of the Union address. But that address comes after one of the worst weeks in recent times for the White House.
Brown’s seizing of the Massachusetts Senate seat held for decades by the late Senator Edward M Kennedy cost Democrats their filibuster-proof supermajority of 60 votes. That means Republicans will be able to stop or seriously slow down legislation at will. The GOP victory was also a poor omen for November’s midterm elections.
And Thursday’s Supreme Court ruling overturning limits on corporate political spending opened the way for businesses and special interests to spend money freely on commercials for or against individual candidates. Obama said the 5-4 decision would allow wealthy special interests to ‘drown out the voices of everyday Americans.’
The White House, meanwhile, has been working aggressively to keep congressional support for Bernanke from eroding further as he seeks another term. Several Democratic senators have said they won’t support Bernanke’s renomination, but the administration’s concerns about the nomination were lessened somewhat by the knowledge that some Republican lawmakers were committed for Bernanke.
Bernanke has no real Senate constituency with either party because he was appointed to his first term by president George W Bush but is now closely linked to Obama’s economic policies.
White House deputy press secretary Bill Burton said the president has ‘a great deal of confidence’ in the actions Bernanke already has taken and believes he’s ‘the best person for the job.’
Burton said the White House still believes that Bernanke, 56, will get enough votes in the Senate to run the nation’s central bank for another term.
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Greek bonds hit record
-worst level
The yield on Greek sovereign bonds on Friday hit its worst level since Greece joined the eurozone, underscoring the country’s low credibility on international financial markets.
The yields on Greek bonds, which move opposite to prices, peaked at 6.320 per cent before falling back to 6.261 per cent by 1700 GMT after the government said it would sell up to five billion euros of bonds through a group of banks.
It was the highest peak since 2000 before Greece adopted the euro in 2001.
The interest-rate spread between Greek and German 10-year bonds also widened to 3.12 per centage points, returning to levels unseen since early 1999. This spread means that Greece has to spend more than three times as much as Germany to attract lenders to finance its overspending.
‘The market remains of the view that the Greek government faces something of a credibility gap as regards their ability to close the enormous fiscal imbalance,’ analysts at Dutch lender Rabobank said in a note.
Greece has been hit by three credit downgrades in reaction to concerns over the country’s huge debt and public deficit, which reached 12.7 per cent of output last year, far above the 3.0 per cent ceiling for eurozone members.
The socialist government, which was elected in October, has since proposed a three-year crisis plan to slash the deficit to 2.8 per cent of output in 2012.
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Maruti Suzuki profit triples
India’s leading carmaker Maruti Suzuki reported Saturday its quarterly net profit more than tripled, fuelled by cheap loans and a reviving domestic economy.
Maruti, majority owned by Japan’s Suzuki Motor Corp, said net profit during the fiscal third quarter soared to 6.88 billion rupees ($149 million) from 2.14 billion rupees a year earlier.
The figure outstripped market expectations that profit for the three months to December would total about 5.8 billion rupees.
The company, which sells about one in two cars in the country, said sales jumped 62.5 per cent to 73.34 billion rupees.
The car manufacturer attributed the profit increase partly to government stimulus measures aimed at boosting the economy that have put more money into the hands of India’s increasingly affluent middle class.
‘Favourable conditions in the domestic market supported by the government’s stimulus package and ease of automobile finance helped achieve good sales,’ the company said in a statement.
Nearly four-fifths of cars in India are purchased using loans.
The company, which holds 55 per cent of the passenger car market, said it ‘remains cautiously optimistic’ about sales volumes in fourth quarter but added that rising commodity prices would put pressure on profit margins.
Total car sales in India are forecast to reach two million this year and triple in the next decade, according to industry estimates.
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NEWS
Tardy SAARC, BIMSTEC prompt Dhaka
to sign deals with Delhi
Sluggish procedures for ratification of the SAARC and the BIMSTEC conventions prompted the government to sign three bilateral agreements on terrorism, trafficking and criminal matters with India.
‘There are understandings and conventions among the SAARC and the BIMSTEC member countries to jointly combat terrorism, illicit trafficking and organized crime. But Bangladesh and India signed some bilateral agreements on these issues because the ratification process (in the two regional organizations) is taking long time,’ foreign secretary Mohamed Mijarul Quayes said in Dhaka on Saturday.
Replying to a question as to what prompted the government to hastily sign the agreements with the neighboring country, he said the conventions among the SAARC and the BIMSTEC would not be enforced until and unless the member countries ratify the conventions signed in Colombo, Sri Lanka, in 2008 and Nay Pyi Taw in Myanmar in 2009.
The three agreements were signed during Prime Minister Sheikh Hasina’s much-talked-about visit to New Delhi from January 10-13.
According to the agreements, the two countries would form a coordination committee with the representatives of law-enforcing agencies and intelligence wings for coordinated action to combat international terrorism, organized crime and stop cross-border drug trade.
The coordination committee would be constituted under the aegis of the home ministries of the two countries as per terms of the signed agreement.
The coordination committee would extend cooperation in investigation, trial and prevention of cross-border terrorism, organized crime and illicit drug trafficking.
The Agreement on Combating International Terrorism, Organized Crime and Illicit Drug Trafficking is aimed at enhancing cooperation among the law-enforcing agencies and intelligence wings of the two countries to deal with those crimes and their trial.
‘Under the agreement, the two countries, subject to their domestic laws and rules, will assist each other in preventing international terrorism, resisting smuggling of drugs and chemical products, including psychotropic substances,’ the foreign secretary said at a press briefing at the foreign ministry.
Any activity that may hamper the country’s sovereignty and security or contradict one country’s existing laws and rules would not come under the purview of this agreement.
Under another treaty on Transfer of Sentenced Persons, an accused convicted of criminal offences will serve punishment in their respective country. The convicts who will have to serve a prison sentence for more than six months or the accused persons having the life sentence and is not facing any other criminal cases will come under this agreement.
But those who are sentenced under any army act or those who are given the death sentence or who are facing any other case will not come under the scope of this agreement.
This agreement will come into effect only when an accused concerned will write with his own hand or through a person appointed by him for his transfer to his own country.
The two countries also signed and Agreement on Mutual Legal Assistance in Criminal Matters between Bangladesh and India.
The foreign secretary said all the three agreements would be operational after ratification by the two countries. These agreements could be scrapped with six months’ advance notice by either side.
He claimed that there was nothing in the agreements that could hamper independence, sovereignty, security and interests of the country.
Mijarul Quayes said the government would continue to pursue bilateral negotiations as well as arbitration under the United Nations tribunal under the UN Convention on the Law of the Seas (UNCLOS) to resolve disputes on maritime boundary with India and Myanmar.
‘Myanmar for the first time recognized the ‘equity method’ to demarcate the sea boundary. This is a very big development in the maritime talks,’ he said.
‘If Bangladesh and Myanmar can amicably settle the remaining issues through bilateral talks, the UNCLOS tribunal would be redundant,’ he said.
The secretary said that the government was still in the process of appointing arbitrator for settling the maritime dispute with India.
Bangladesh and India are, however, expected to hold bilateral negotiations to demarcate the sea border, according to foreign ministry officials.
Bangladesh has been pursuing the ‘equity method’ as the ‘equidistance method’ would deprive the country most of the 28 offshore blocks as well as make the country sea-locked.
When asked why the government was pursuing an interim agreement on sharing the water of Teesta River with India, the foreign secretary said an interim agreement would give a common ground to sign a long-term treaty in future.
Meanwhile, foreign minister Dipu Moni recently said the government was looking to sign an ‘ad hoc deal’ with India on sharing Teesta waters.
‘A long-term agreement requires hydrological data, but we cannot remain stranded into hydrological survey,’ Mijarul Quayes said.
‘Not only the Teesta, but we want to sign agreements on all common rivers (with India),’ he said.
The two countries, which share 54 rivers, signed a treaty in 1996 to share the water of the Ganges River for 30 years.
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Garment exporters see rising
trend in orders
The country’s garments manufacturers and exporters have noticed, of late though, that there has been an increasing trend in enquiries and orders from foreign buyers following the easing of global recession.
Industry insiders said fresh increase in orders really started in October as reflected in the shipment of garments since December. But official export data for December is yet to be compiled.
A foreign merchandising official stationed in Dhaka representing a top European buying house told New Age that since October last year the Bangladeshi exporters started seeing fresh increase on order settlements.
‘Fresh increase on orders should be reflected in shipments of December and onwards,’ the executive said.
Bangladesh’s RMG shipments started seeing a negative year-on-year growth since May and in September the fall recorded at more than 27 per cent.
With some backlog due to Eid holyday in September, the October shipments saw 18 per cent year-on-year growth but in November the shipment saw more than 11 per cent negative growth again.
Quoting a preliminary report of the US Department of Commerce, the official informed your correspondent that Bangladeshi RMG shipments to USA in December 2009 had increased significantly month-on-month or year-on year basis.
He said November-December apparel export shipments boosted in India, Pakistan, Vietnam and Indonesia. In China, the executive said, December shipments improved to less than minus five per cent against average 11 per cent for the rest of 2009.
Industry leaders also admitted fresh rush of orders but they feared whether it could be sustained as, they pointed out, erratic gas flow interrupted production severely and weak cash flow, following recession, caused sufferings to many entrepreneurs.
The Bangladesh Knitwear Manufacturers ad Exporters Association president Fazlul Hoque said the industry was getting increased enquiries on next procurements as the sourcing executives of European retailers were back at office after Christmas vacation.
‘Enquiries and negotiations in January have increased significantly over that in the past few months,’ noted Hoque, who hoped negotiations and order settlements would take a momentum in the coming weeks.
Bangladesh Garment Manufacturers and Exporters Association president Abdus Salam Murshedy also admitted increased orders but feared that exporters might not be able reap that finally as they had been weakened by recession impacts and gas crisis.
‘Gas crisis is hampering production so severely that many exporters are failing to meet production and delivery schedules and were forced to ship their consignments by air-cargo, which is almost unviable,’ Murshedy said.
Both Murshedy and Hoque claimed that despite demands from the western retailers were increasing, their price offers remained very poor.
They demanded that the government should help the entrepreneurs by releasing stimulus and incentive funds to strengthen cash flow of the exporters so they can execute their fresh orders.
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Malaysia to relocate textile,
electronics units in Bangladesh
Malaysian government is keen to relocate textile, electronics and furniture industries in Bangladesh for mutual benefit of the two Muslim nations.
‘A Malaysian business delegation will arrive here soon to carry forward the matter,’ said president of Bangladesh Malaysia Chamber of Commerce and Industry Syed Moazzem Hossain at a press conference in the city.
The press conference was organised to disclose key successes of the three-day trade fair titled Showcase Bangladesh-2010 held in Kuala Lumpur on January 8-10.
Former chamber president Salauddin Quashem, chairman of fair organising committee MA Salam and other office bearers of the BMCCI were present on the occasion.
Hossain described the showcase a successful one and said the entrepreneurs were able to project Bangladesh’s potentials in Malaysia.
Highlighting achievements of the fair, he said two trade related memorandum of understanding on RMG products and electronic banking are among the significant achievements of the trade exposition.
During the fair, he said, Malaysian minister of international trade and industry assured the delegation of Bangladesh government of eradicating trade barriers mutually.
Moreover, Malaysian high commissioner in Dhaka has expressed his country’s interest to invest in Bangladesh’s tourism sector, said the BMCCI president.
A list of 19 items of Bangladeshi products including jute goods, frozen foods and ceramics already handed over to the Malaysian government for ensuring duty free market access to Kuala Lumpur.
Hossain said there are some trade barriers between Malaysia and Bangladesh and Bangladesh could raise its export to Malaysia one billion US dollar if the existing trade barriers with Kuala Lumpur are resolved
Malaysia exported goods worth $694 million to Bangladesh last year while Bangladesh’s export stood at only $31.28 million.
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Double-digit growth not
impossible: BB governor
Double-digit growth is not impossible for Bangladesh to attain, Bangladesh Bank governor Atiur Rahman said on Saturday.
The central bank boss, at a workshop on inclusive banking, elaborated the kind of measures that could lead to such an achievement.
He said the efforts that the central bank had initiated, especially loans for sharecroppers, bank accounts for farmers with a minimum deposit of Tk 10, spread of SME banking, e-commerce and mobile banking could all significantly contribute to the country’s growth.
Speaking at the workshop for bankers, Atiur said, ‘Bangladesh will become a model for inclusive banking within two or three years if these activities are properly implemented.’
‘Businesses will boom,’ he said.
Qazi Kholiquzzaman Ahmad, president of Bangladesh Economic Association, which organised the workshop on inclusive banking, commended the central bank’s recently published half-yearly policy statement, which the governor announced as an ‘inclusive’ monetary policy.
‘It will expand banking services, investment will rise,’ the economist said.
The governor, however, expressed his concern on the slow spread of banking services in the rural areas citing that more than 40 per cent of the population was still under the poverty line.
He suggested that more private banks should come forward by opening their branches in remote and under developed areas to serve more customers still out of banking services.
More than 25 per cent adults in Bangladesh are still out of the reach of formal banking amid massive spread of micro-finance, he added.
Citing that the country’s total bank deposits stand at over Tk 2.5 lakh crore, the governor said they should extend their hands to the masses.
He also said the SME sector needed to be highlighted since it was contributing a great deal to the country’s economy and was an important tool for employment generation.
‘SMEs have generated 58 per cent of the country’s total employment,’ he said.
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Govt urged to extend farm
loans for jute sector
The government should extend farm loan for jute sector, which has started to regain its momentum, said Incidin Bangladesh, a research based development organisation.
The demands for jute and jute goods have increased at the global market bypassing the dominance of artificial fibre, it said at a news conference on Saturday.
This has created an opportunity for Bangladesh to fetch huge amount of foreign exchange through widening export baskets. For exploring this opportunity the country needs to nurture cultivation of jute for raising production side by side promote manufacturing of jute goods through expanding jute industries, it said.
Incidin Bangladesh organised the press conference to highlight its study on promotion of jute sector.
Incidin Bangladesh executive director AKM Masud Ali presented a written statement at the press conference while other executive directors Ratan Sarker and AKM Mustak Ali also spoke.
In the paper, AKM Masud Ali said for promoting jute production, the government should extend farm loans for jute sector, side by side it should provide subsidies on inputs required for jute cultivation and play due role in purchase of jute for ensuring appropriate price for the item.
Referring to data by the Bangladesh Jute Spinners Association, he said the production of jute in the country was not sufficient to meet the demand of the local jute mills, as the private jute mills at present required 30 lakh to 32 lakh bales of jute while the annual production of the item is 55 lakh to 60 lakh tonnes (one bale equals 180kg).
The cultivation of ‘deshi’ and ‘tossa’ varieties of raw jute in the northern districts including Lalmonorhat, Rangpur, and Dinajpur could not fulfil the target during the current season despite there was huge demand for the item at the global market at this moment, he added.
Against target of bringing 6,407 hectares of land under harvesting, deshi jute was cultivated only in an area of 4,865 hectares of land in these three districts, while ‘tossa’ jute was cultivated in an area of 11,762 hectares of land against a target of 12,300 hectares, he said.
The price of jute has increased by maximum 185 per cent during last two years, as in Rangpur jute is sold for Tk 923 per maund against Tk 323 per maund in 2007. The price for the item has increased to Taka 1400 per maund in 2009 from Taka 700 per maund in 2007 in Pirojpur, Masud Ali said.
The price of raw jute has increased as the demand for the item went higher both at local and global market, he said adding, despite this the target of jute production could not be achieved due to lack of adequate supports to the farmers at cultivation level.
‘The farmers earned large amounts from production of jute due to jump in jute prices and also because of higher productivity due to use of high breed jute seeds,’ he added.
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Few engaged in price manipulation: Faruk Khan
Commerce minister Faruk Khan on Saturday urged the business community to remain alert on manipulation of prices of essential commodities.
A few of the business people engaged themselves in manipulating prices of essential commodities and dodging taxes, but the whole community has to bear the stigma, he said.
‘The business community will have to remain alert in this regard,’ he said while addressing as chief guest at the installation ceremony of the board of directors of the Chittagong Metropolitan Chamber of Commerce and Industry.
With the CMCCI president Abdus Salam in the chair industries minister Dilip Barua, state minister for forest and environment Hasan Mahmud, Chittagong mayor ABM Mohiuddin Chowdhury and president of the Federation of Bangladesh Chambers of Commerce and Industry Annisul Huq were special guests at the ceremony.
Among others, CMCCI vice-presidents Mizanur Rahman and Khalilur Rahman addressed the function held on the Chittagong Club tennis ground.
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Int’l plastic fair begins tomorrow
The 6th ‘Dhaka International Plastic, Packaging and Printing Industrial Fair-2010’ will begin at Bangabandhu International Conference Centre in Dhaka tomorrow for showcasing local plastic goods, raw materials and machinery.
President of Bangladesh Plastic Goods Manufacturers and Exporters
Association Ferdous Wahed made the announcement at a press conference at the association’s Paltan office on Saturday.
Speaking on the occasion, ‘We are trying to expand the plastic industry sector gradually as the present government has given priority to the trade and commerce sector,’ said Ferdous Wahed.
The main objective of holding the fair is to bring a opportunity for the Bangladesh plastic industry through developing new alternative sources, he said.
Leading plastic technology and manufacturing countries including China, Taiwan, Thailand, India, Vietnam, Korea, Turkey, Austria and host Bangladesh will participate in the fair with their latest plastic items including plastic sack, shopping bag, toys and various household items.
Some 200 stalls will be set up in the fair.
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Citi’s Philip Brown
arrives in Dhaka
Philip Brown, director risk of Citi Microfinance arrived in Dhaka on Saturday for a four-day visit.
During his stay, Philip will meet major clients of the bank and with David Lascelles, the survey editor and author of the 2009 Microfinance Banana Skins Report, and conduct a microfinance risk roundtable discussion, said a news release.
Before moving to Citi Microfinance Philip was the risk director for project finance and structured trade finance within Europe, Middle East and Africa. Philip is a member of the governing council of the Centre for the Study of Financial Innovation of UK and the advisory council of the Centre for Financial Inclusion of USA.
David Lascelles, senior fellow of Centre for the Study of Financial Intermediation and a former Financial Times journalist and Mahesh Mani, vice-president of Microfinance of Citibank, NA, India will accompany Philip during the visit.
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Large-scale parija paddy
farming stressed
Large-scale farming of indigenous short duration indigenous parija variety paddy during off season between boro and aman cultivation can produce additional nine million tonnes of rice annually in the country, experts said.
As a part of the ongoing efforts to adapt with the adverse impacts of global climate changes and keep agri-productions intact, Rangpur-Dinajpur Rural Service, an NGO, revealed this after conducting three-year long field level research works.
Experts of the NGO on Saturday told the news agency that they conducted the research on 11 extinct indigenous variety paddies, selected parija as the most effective variety and successfully cultivated the short duration paddy last year with tremendous yields in greater Rangpur.
The paddy can be cultivated in 70-75 days during the completely off season in between late May and mid-August when the fields remain fallow after Boro harvest and before plantation of T-Aman seedlings, MG Neogi, Head of Agriculture of RDRS, said.
According to the technology evolved by RDRS, the parija paddy seeds can be sowed by directly using the direct seeded rice method and transplantation of the 20-day old seedlings would give the maximum yields, he added.
The RDRS conducted the research on extinct indigenous paddies like shaita, pariza, lakheejota, atha binni, kataktara, panbira, hashi kalmi, dular, marichbati, shurja mukhi and dhola shaita, and found parija’s 3.5 tonnes rice per hectare yield in shorter period.
Additional director of the DAE’s Rangpur zone Shakhawat Hossain and Professor Abdul Hamid of Bangabandhu Sheikh Mujibur Rahman Agriculture University saw brighter prospect for farming of the pariza paddy in the region, Neogi added.
Director (resources and livelihood) of the RDRS Dr Syed Samsuzzaman said that harvest of parija completes by August 15 without facing any flood paving the way for planting T-aman seedlings timely to get three paddy harvests annually in the same land.
The agri-scientists said the agriculture sector has already been severely affected by the adverse impacts of the ongoing climate change and the agri- production has already started reducing gradually throughout the globe creating growing concern for all nations.
During the past 10 years, five late floods, including three devastating, occurred in Bangladesh in between August 26 and September 14 due to the climate change causing colossal damages to the flowering T-Aman crops, they said.
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WORLD
Proposed bank rules unlikely
to hurt big US institutions
President Barack Obama’s latest broadside against big banks may have more bark than bite.
Obama’s plan to limit banks’ size and risky trading has spooked investors, but analysts say it would have only marginal effect on institutions like JPMorgan Chase, Bank of America and Citigroup — and would be hard to enforce. And it’s not clear the rules would reduce taxpayers’ risk of having to bail out another big bank.
The White House has yet to provide details of the plan outlined Thursday. But attention has centred on Obama’s effort to bar the biggest banks from doing what’s called proprietary trading. That’s when banks use their own money to make high-risk bets. If those bets go bad and a bank goes under, taxpayers could be on the hook.
Fearing the Obama plan might reduce bank earnings, investors reacted by dumping financial stocks Thursday, helping send the Dow Jones industrial average down 213 points. The pessimism continued Friday, with the Dow losing more than 216 points. Also weighing on the market were corporate earnings reports that failed to meet investors’ expectations.
The proposed overhaul marked Obama’s latest effort to more tightly police the nation’s largest banks. Last week, the president proposed a tax on banks to recoup billions in bailout money that was handed out at the height of the financial crisis in 2008.
The moves come as banks face increasingly hostile rhetoric from Obama. The president has called bankers ‘fat cats’ and vowed to defeat the banking industry’s lobbying efforts against financial reforms.
Still, several analysts called Wall Street’s reaction to the latest proposals overkill.
One reason is that most big banks derive only a tiny fraction of their revenue from proprietary trading. At JPMorgan Chase & Co and Bank of America Corp, for instance, proprietary trading brings in 1-2 per cent of revenue, according to a Citigroup report. Less than 5 per cent of Citi’s revenue comes from proprietary trading. The figure is 3-4 per cent for Morgan Stanley and less than 1 per cent at Wells Fargo & Co.
‘Proprietary investment restrictions probably won’t have a huge impact on most banks,’ said Douglas Elliott, fellow at Brookings Institution and a former investment banker. ‘That’s a pretty small part of what banks do.’
Elliott said much will depend on how lawmakers write the legislation, which has yet to be put even in draft form.
Citing banks’ limited proprietary trading activity, Citigroup analysts Keith Horowitz and Ryan O’Connell said in a note that the effect of Obama’s proposal ‘may be less severe than expected.’
The banking industry has reacted sourly to Obama’s proposal. Edward Yingling, president and CEO of the American Bankers Association, said his members are ‘very concerned’ about it.
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Commodities slide on China concerns
Most commodity markets fell this week as traders fretted over possible moves by Beijing to rein in the booming Chinese economy, which is a major consumer of raw materials.
However, sugar rocketed to a 29-year peak and cocoa forged a 33-year pinnacle as both were pushed higher by keen demand and tightening supplies.
‘China remains at centre stage,’ said Barclays Capital analysts in a research note to clients.
‘Despite proving unfounded on numerous occasions in the past, concerns that a China bubble is about to burst are never far away for many commodity market participants.
‘Those concerns have been piqued by China’s measures to slow lending growth,’ they added.
China’s red-hot economy expanded by 8.7 per cent in 2009, well exceeding the government’s target of 8.0 per cent, new data showed Thursday as authorities intervened to avert the risk of overheating.
Gross domestic product in the world’s third-largest economy, which analysts say is on track to overtake Japan, returned to double-digit growth in the fourth quarter. The growth of 10.7 per cent was the fastest in two years.
Top Beijing regulator Lim Mingkang on Wednesday said that China would rein in credit after explosive growth last year as the world’s most populous nation moves to cool its red-hot economy, also a major energy consumer.
The chairman of the China Banking Regulatory Commission said in Hong Kong Wednesday that new bank loans in the country this year would fall to about 7.5 trillion yuan ($1.1 trillion) from about 9.5 trillion yuan in 2009.
Analysts have said the policy was likely a response to concerns about asset bubbles, bad loans and an overheating economy.
World oil prices slumped against a background of weak global demand for energy, led by China and the United States — which are the world’s two biggest consumers of crude.
Oil had closed down almost $1.50 lower on Wednesday amid market concerns that a credit squeeze in China and swelling US stockpiles could dampen demand for the key commodity, traders said.
The market was also dampened as US president Barack Obama unveiled plans to crack down on the US financial sector on Thursday.
‘Obama stated... that he will intensify his efforts to curtail speculation by banks, which weighed on oil prices,’ said Commerzbank analyst Carsten Fritsch.
‘However, the implementation of these proposals is subject to approval by Congress, which is doubtful. Market uncertainty over an outcome should continue to weigh on the oil price for the time being.’
Meanwhile, the US Department of Energy said Thursday that gasoline reserves in the world’s biggest economy increased by a stronger-than-expected 3.9 million barrels in the week ending January 15, striking a two-year high.
It also said refineries operated at 78.4 per cent of capacity last week, their lowest rate in at least two decades apart from the immediate aftermath of a hurricane.
But US crude stocks fell 400,000 barrels, according to the DoE report, confounding expectations of a large gain of 1.9 million barrels.
Oil prices jumped by about 80 per cent in 2009 as traders were heartened by evidence that the battered global economy was on the mend, with the eurozone, Japan and the United States escaping a fierce recession.
However, crude futures have struggled to make much headway in early 2010 as economic data disappoints.
By late Friday, New York’s main futures contract, light sweet crude for delivery in March, slid to 75.15 dollars a barrel compared with 78.44 dollars for the since-expired February contract a week earlier.
London’s Brent North Sea crude for March delivery slumped to $73.52 from $77.55 a week earlier.
Prices of precious metals sank on the back of China concerns and the stronger dollar, and amid fears about soaring Greek public debt.
‘The whole precious complex suffered amid rallying greenback, while concerns over Greece’s debt and looming monetary tightening were still gripping investor sentiment,’ said VTB Capital commodities analyst Andrey Kryuchenkov.
‘At the same time, physical buyers were still absent from the market,’ he added.
A stronger greenback makes dollar-priced commodities like gold and oil more expensive for buyers holding weaker currencies, and tends to dampen demand.
On Thursday, the euro had stuck a six-month low against the dollar as worries that China will cool its booming economy curbed demand for risk-sensitive currencies.
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World steel output drops by 8pc
Global crude steel dropped 8 per cent in 2009, in one of the worst downturns in its history, but analysts expect production to rise around 10 per cent this year as the $500 billion industry slowly recovers.
The world produced 1.22 billion tonnes of crude steel in 2009, its lowest level since 1.144 billion tonnes in 2005, figures from the Brussels-based World Steel Association, whose members represent 85 per cent of steel output, showed on Friday.
China strengthened its position as the world’s top producer, with its production rising to a record high at 567.8 million tonnes.
After last year’s 13.5 per cent rise in its output, the country now accounts for 46.5 per cent of the world’s total production and is set to be the engine of growth once again in 2010.
‘Even at a modest growth rate of 8-10 per cent, the impact on the global industry will be huge,’ said John Lichtenstein, global leader of steel at Accenture.
‘Global steel production and demand should rise by around 10 per cent in 2010 over 2009, bringing production back to the 2008 level of approximately 1.2 billion tonnes,’ he said.
Signs of recovery were evident in monthly figures from last year. In December, output rose by 30.2 per cent year-on-year to 106.4 million tonnes although they showed a slight fall compared with November’s 117 million tonnes.
Macquarie Bank expects crude steel production at 1.365 billion tonnes this year, citing a phase of restocking after a sharp destocking last year, which would boost production.
The recovery of steel production and demand is set to vary greatly according to regions and the pace of growth could be faster in the developed world, which has seen falls of over 30 per cent in output last year.
‘Mature economies will show a higher recovery rate in 2010, in the range of 12-15 per cent,’ Accenture’s Lichtenstein said.
‘Because the acceleration of growth in the mature economies is from a very low consumption level, it will not be sufficient to close the gap in the overall demand structure,’ he added.
Demand in mature economies is not likely to return to 2007 levels until 2012 or later, he said.
In 2009, the hardest-hit region in terms of production was North America, where output dropped by almost 34 per cent, with the United States total falling 36.4 per cent, more than the regional average.
Output in Europe was down 22.8 per cent last year, while in South America it fell by 20.1 per cent. The Middle East was among the few regions which posted a rise in output, which was up 3.3 per cent.
Japan followed China as the world’s second largest producer, while Russia has taken over from the United States as the third biggest producer.
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Unemployment rises in 43
US states in Dec
Unemployment rates rose in 43 states last month, the government said Friday, painting a bleak picture of the job market and illustrating nationwide data released two weeks ago.
The rise in joblessness was a sharp change from November, when 36
states said their unemployment rates fell. Four states — South Carolina, Delaware, Florida and North Carolina — reported record-high jobless rates in December.
New Jersey’s rate, meanwhile, rose to a 33-year high of 10.1 per cent while New York’s reached a 26-year high of 9 per cent.
Analysts said the report showed the economy is recovering at too weak a pace to generate consistent job creation.
‘A lot of states that had started to add jobs (in November) gave up those gains in December,’ said Sophia Koropeckyj, managing director at Moody’s Economy.com.
Texas and Georgia lost more jobs in December than they had gained the previous month, she noted, while Arizona and South Carolina lost nearly as many as they had gained.
That is consistent with nationwide trends. Employers shed a net total of 85,000 jobs in December, the government said earlier this month, after notching a small gain of 4,000 jobs in November.
In another nationwide trend, long-suffering states like California and Michigan saw their jobless rates stabilize even as they continued to bleed jobs. That’s because thousands of frustrated workers gave up hunting for work and dropped out of the labour force, which means they aren’t included in the unemployment rate.
California lost 38,800 jobs, the most of any state. But its unemployment rate was unchanged at 12.4 per cent, the fifth-highest in the nation. That’s because 107,000 people, or 0.6 per cent of the state’s work force, gave up and stopped job-hunting.
Michigan shed 15,700 jobs, but 31,000 people left the labour force. That caused the state’s jobless rate to fall slightly, to 14.6 per cent from 14.7 per cent. Michigan has the nation’s highest unemployment rate.
Nationally, more than 600,000 people left the labour force in December, according to government data. The large exodus from the labour force indicates that ‘unemployment is a lot worse than the numbers suggest,’ Koropeckyj said.
Still, Michigan has actually gained about 10,000 jobs over the past three months, as automakers and other manufacturers have boosted production to restock inventories depleted over the summer and early fall.
‘That’s a positive thing for a state that has been doing so terribly for so long,’ said Dave Iaia, an economist at IHS Global Insight.
Texas lost the second-most jobs: 23,900. That sent its jobless rate to 8.3 per cent in December from 8 per cent. The next-largest job losses were in Ohio, Illinois and Michigan.
The economy grew at a 2.2-per cent annual rate in last year’s third quarter, after declining for four straight quarters during the recession. Many economists estimate that growth accelerated to more than 4 per cent in the October-December quarter. But that’s still sluggish by the standards of many previous recoveries.
And growth could slow in the first half of this year as temporary factors, such as government stimulus spending and inventory restocking, fade.
Many states saw sharp drops in restaurant, hotel and other leisure employment, a sign that consumers are still holding back on their spending. Nationwide, the United States lost 25,000 leisure and hospitality jobs in December.
Texas shed 6,500 restaurant and hotel positions. Florida lost 5,600, South Carolina 5,200 and North Carolina lost 2,600 — more than any other sector in that state.
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Toyota’s recall may spread
to Europe: report
Japan’s Toyota Motor may recall its vehicles in Europe due to an accelerator problem that triggered massive recalls in the United States, a newspaper reported on Saturday.
The world’s largest automaker is considering recalling Corolla, RAV4 and other models produced and sold in Europe, the Mainichi Shimbun reported, adding that it was not clear how many vehicles were involved.
The models are equipped with similar accelerator pedal parts to those of 2.3 million vehicles recalled in the United States, the latest in a series of recalls by Toyota, the daily said.
The Japanese company’s US division said Thursday that the recall was to correct accelerator pedals on the vehicles that become worn and then in some cases get lodged in a partially depressed position.
The action was separate to an ongoing recall of about 4.2 million Toyota and Lexus vehicles that began last year due to a risk of loose floor mats slipping forward and jamming the pedals.
An unnamed senior official of the company told the daily: ‘We cannot tell how much this recall will cost, but it can be handled within our reserve (for unexpected troubles).’
But Mainichi said a decline in Toyota’s reputation for quality following the malfunction may trim its earnings, adding it could take time for Toyota to recover customers’ confidence in its production.
Toyota, which overtook US rival GM in 2008 as the world’s largest automaker, returned to profit in the three months to September and upgraded its outlook for the rest of the year thanks to demand for fuel-efficient cars.
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Google co-founders to sell
5m shares each
Google founders Larry Page and Sergey Brin each plan to sell five million shares in the Internet giant, a move that would reduce their joint holdings to below 50 per cent, according to a filing Friday with the US Securities and Exchange Commission.
The SEC filing said the stock sales, which will occur over the next five years, are part of a pre-determined stock trading plan set up by Page and Brin on November 30, 2009.
It said the Google co-founders currently hold about 57.7 million shares of Google stock, which represents 18 per cent of Google’s outstanding shares and 59 per cent of the voting power.
Page and Brin each plan to sell five million shares, which would leave them with approximately 47.7 million shares or 15 per cent of Google’s outstanding shares and 48 per cent of the voting power, the SEC filing said.
Although Page and Brin would no longer hold a majority of the voting power, their remaining holdings would allow them to continue to exert control over the Internet search and advertising giant.
The filing said the trading plan was adopted ‘to allow Larry and Sergey to sell a portion of their Google stock over time as part of their respective long-term strategies for individual asset diversification and liquidity.
‘Using these plans, they can gradually diversify their investment portfolios and can spread stock trades out over an extended period of time to reduce market impact,’ it said.
Five million shares of Google is currently worth $2.75 billion.
Google lost 5.66 per cent to close at $550.01 on Wall Street on Friday.
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Obama scrambles to revive
economic optimism
US president Barack Obama is seeking to reassure voters he’s determined to create jobs while his administration is trying to protect an architect of the increasingly unpopular banking bailout that may have helped prevent a financial collapse.
Obama’s efforts on the economy come after a Massachusetts Senate election this past week that suggested voter unrest when Republican Scott Brown claimed a Senate seat in Democratic hands for more than a half-century. Brown gives the GOP a 41st vote in the Senate, taking away the Democrats’ supermajority and threatening Obama’s agenda.
And the administration has been working to shore up eroding support for Federal Reserve Chairman Ben Bernanke, who is seeking another four-year term.
In the face of daunting political conditions, Obama was sounding feisty as he told a town hall crowd he was more determined than ever to help the economy and pursue his agenda.
‘I’m not going to win every round,’ Obama said Friday in Ohio. But he pledged, ‘I can promise you there will be more fights in the days ahead.’
He tried out a revamped message focused mainly on the economy that is part of a stepped up effort to convince Americans that he’s doing all he can to create jobs.
‘This isn’t about me. This is about you,’ he said.
Obama told his audience at the Lorain County Community College ‘the worst of this economic storm has passed. But families like yours and communities like Elyria are still reeling from the devastation left in its wake. Folks have seen jobs you thought would last forever disappear.’
He said a new stimulus spending bill emerging in Congress — the White House is calling it a jobs bill — must include tax breaks for small business hiring and for people trying to make their homes more energy efficient — two proposals he wasn’t able to get into a bill the House passed last month.
Obama defended as necessary his administration’s widely unpopular moves to bail out financial and auto companies. He also stepped up his recent attack on bankers and bonuses, defending his proposal to tax big banks to recover bailout costs and to limit their size and activities.
Obama just completed his first year in office and will address the nation Wednesday in his State of the Union address. But that address comes after one of the worst weeks in recent times for the White House.
Brown’s seizing of the Massachusetts Senate seat held for decades by the late Senator Edward M Kennedy cost Democrats their filibuster-proof supermajority of 60 votes. That means Republicans will be able to stop or seriously slow down legislation at will. The GOP victory was also a poor omen for November’s midterm elections.
And Thursday’s Supreme Court ruling overturning limits on corporate political spending opened the way for businesses and special interests to spend money freely on commercials for or against individual candidates. Obama said the 5-4 decision would allow wealthy special interests to ‘drown out the voices of everyday Americans.’
The White House, meanwhile, has been working aggressively to keep congressional support for Bernanke from eroding further as he seeks another term. Several Democratic senators have said they won’t support Bernanke’s renomination, but the administration’s concerns about the nomination were lessened somewhat by the knowledge that some Republican lawmakers were committed for Bernanke.
Bernanke has no real Senate constituency with either party because he was appointed to his first term by president George W Bush but is now closely linked to Obama’s economic policies.
White House deputy press secretary Bill Burton said the president has ‘a great deal of confidence’ in the actions Bernanke already has taken and believes he’s ‘the best person for the job.’
Burton said the White House still believes that Bernanke, 56, will get enough votes in the Senate to run the nation’s central bank for another term.
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Greek bonds hit record
-worst level
The yield on Greek sovereign bonds on Friday hit its worst level since Greece joined the eurozone, underscoring the country’s low credibility on international financial markets.
The yields on Greek bonds, which move opposite to prices, peaked at 6.320 per cent before falling back to 6.261 per cent by 1700 GMT after the government said it would sell up to five billion euros of bonds through a group of banks.
It was the highest peak since 2000 before Greece adopted the euro in 2001.
The interest-rate spread between Greek and German 10-year bonds also widened to 3.12 per centage points, returning to levels unseen since early 1999. This spread means that Greece has to spend more than three times as much as Germany to attract lenders to finance its overspending.
‘The market remains of the view that the Greek government faces something of a credibility gap as regards their ability to close the enormous fiscal imbalance,’ analysts at Dutch lender Rabobank said in a note.
Greece has been hit by three credit downgrades in reaction to concerns over the country’s huge debt and public deficit, which reached 12.7 per cent of output last year, far above the 3.0 per cent ceiling for eurozone members.
The socialist government, which was elected in October, has since proposed a three-year crisis plan to slash the deficit to 2.8 per cent of output in 2012.
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Maruti Suzuki profit triples
India’s leading carmaker Maruti Suzuki reported Saturday its quarterly net profit more than tripled, fuelled by cheap loans and a reviving domestic economy.
Maruti, majority owned by Japan’s Suzuki Motor Corp, said net profit during the fiscal third quarter soared to 6.88 billion rupees ($149 million) from 2.14 billion rupees a year earlier.
The figure outstripped market expectations that profit for the three months to December would total about 5.8 billion rupees.
The company, which sells about one in two cars in the country, said sales jumped 62.5 per cent to 73.34 billion rupees.
The car manufacturer attributed the profit increase partly to government stimulus measures aimed at boosting the economy that have put more money into the hands of India’s increasingly affluent middle class.
‘Favourable conditions in the domestic market supported by the government’s stimulus package and ease of automobile finance helped achieve good sales,’ the company said in a statement.
Nearly four-fifths of cars in India are purchased using loans.
The company, which holds 55 per cent of the passenger car market, said it ‘remains cautiously optimistic’ about sales volumes in fourth quarter but added that rising commodity prices would put pressure on profit margins.
Total car sales in India are forecast to reach two million this year and triple in the next decade, according to industry estimates.
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