UPDATE------------------------FEBRUARY 26, 2010 FRIDAY
BANGLADESH: NEWS
Govt forms task force for $1b terminal for LNG import
The government has formed a five-member taskforce, headed by power and energy secretaries, for installation of a terminal for liquefied natural gas, said officials.
The taskforce, led by power secretary Abul Kalam Azad and energy secretary Md Mesbahuddin, held its first meeting on Thursday at the power and energy ministry and discussed the installation of the terminal, the construction of which may cost around $1 billion.
The other members of the taskforce include the chairmen of the Petrobangla, Power Development Board and Bangladesh Petroleum Corporation.
‘We have held primary discussions to determine our course of action for installation of the LNG terminal. We will hold further discussions next month,’ said a taskforce member.
Azad told New Age after the meeting that the government might soon invite tenders for the feasibility study for installation of a LNG terminal in Chittagong.
‘A team of foreign experts will come to discuss the LNG terminal in March, after which we may invite tenders,’ he added.
The meeting also discussed the interest shown by various international companies in the proposed LNG terminal at the road-shows held in London, Singapore and New York in December-January to attract investment in power and energy projects.
Petrobangla officials said that more than 20 companies have expressed interest in constructing the terminal.
Petrobangla is currently planning to import LNG to tackle the ongoing gas shortage on an emergency basis by installing temporary facilities, and wants to install a terminal for long-term import.
Officials said that they would try to find out whether the platform at the Sangu gas-field in the Bay of Bengal could be used as a temporary terminal for LNG import. The platform is situated around 45 kilometres away from Chittagong and gas is being transmitted from it to Chittagong through an underground pipeline.
They will also ascertain whether it will be possible to get any specialized ship that will not only be able to carry LNG but also turn it back into a gas after arrival at the port.
Energy officials are, however, skeptical whether any temporary measure can be taken to bring LNG to the Sangu platform as the depth of water around it is not sufficient for any large ship.
‘Even if the government considers installation of a permanent LNG terminal near the Sangu platform, it might not be possible. We will have to go deep into the sea, which may not be economically viable,’ observed an official.
Petrobangla’s chairman Hossain Mansur told New Age that they were aware of the insufficient depth of water around the Sangu platform. ‘We will talk to experts on the issue,’ he said.
He said representatives of a consulting organization, Potent and Partners, would discuss the problems of LNG import in March. Another company, Accelerate Energy, would also hold talks with Petrobangla in this regard.
The country faces gas shortage of around 250 million cubic feet per day at present as Petrobangla supplies around 1,960-1,980mmcfd of gas against the demand for 2,200mmcfd.
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Tariff and non-tariff barriers to trade with India to go soon
The commerce minister Faruk Khan on Thursday said all tariff and non-tariff barriers to trade and investment between Bangladesh and India would be ‘eliminated’ within next few months.
‘After the prime minister’s recent India visit, lot of political developments have made us optimistic that all tariff and non-tariff barriers will be eliminated within next six months or so,’ he said at the inaugural ceremony of the first India-Bangladesh joint trade show at Dhaka Sheraton Hotel.
The finance minister AMA Muhith addressed the function as chief guest. The industries minister Dilip Barua and chief ministers of the Meghalaya and Tripura states of India also spoke.
The high commission of India, Federation of Indian Chambers of Commerce and Industry and Dhaka-based India-Bangladesh Chamber of Commerce and Industry jointly organized the three-day show.
Muhith said Bangladesh brings at least one fourth of its total imports from South Asian neighbors but it is sad that less than four per cent of Bangladesh’s exports are shipped to neighboring markets.
‘Regional prosperity is conditional to increased intra-region trade and investment,’ said the finance minister, reminding the Indian politicians Bangladesh’s right to Indian market and investments.
Citing the present Indian export worth several billion dollars to Bangladesh, Muhith said Bangladesh should allow at least a billion dollar worth of exports to India.
Dilip Barua said Bangladesh has lot of sector which should be lucrative for Indian investors.
The Meghalaya chief minister DD said that his state government had relentlessly been pursuing Delhi for reopening of the border markets to boost up trades between Bangladesh and India.
At present, Bangladesh imports goods, including vehicles, chemicals, food items, fabrics, cotton and machinery worth more than $3 billion from India. Exports to India account for less than $400 million.
The fair is opened from 10am to 8pm and entry fee is Tk 20 per person.
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SMEs to get Tk 24,000cr loans this year
Banks and non-banking financial institutions have set a target to disburse around Tk 24,000 crore loans to the SME sector during the current calendar year, a senior executive of the central bank said.
‘This is the first time the central bank has set a target to disburse loans to the SME sector in the country. We’ve earlier asked the banks to set their respective targets,’ Sukomal Sinha Chowdhury, general manager of Bangladesh Bank’s SME and Special Programme Department, told the news agency.
He said the country’s 48 foreign, state-owned and private banks and 24 non-bank financial organizations will disburse the loans.
According to Sukomal, outstanding loans to the SME sector stood at around Tk 52,000 crore and the number of loanees at about 4.4 lakh at the end of 2009.
He said if the 2010 target is achieved it would be the highest-ever loan disbursement to the sector in a single year.
Acting managing director of SME Foundation Momtaj Uddin, however, termed the figure less-than-requirement.
Referring to a research finding, he told the news agency that around
Tk 18, 28,000 crore is needed throughout the SME sector.
He said the targeted loans should be properly disbursed to the entrepreneurs on easy terms. Most of the previous loans were restricted to the urban areas, he added.
Rural people, particularly women must be given SME loans, he said, adding that increased loans should go for the production sector.
Asked which sub-sector would get priority, Sukomal said: ‘Undoubtedly it’s the export-oriented manufacturing sector.’
‘We’ll offer 100 per cent refinancing facility if loans are given to production and service sectors but maximum 50-60 per cent refinancing facility will be given in case of business loans,’ he said
A recent BIDS study revealed that banks and non-banking financial institutions disburse loans mostly to the business sector.
It also revealed that the financial institutions gave loans to around 3.91 lakh small and medium entrepreneurs until September, 2009.
Of them, around 3.35 lakh are trading houses, 54,000 manufacturing and remaining service-sector firms.
BIDS research recommended formulation of a guideline for giving collateral-free SME loans as the number of loan defaulters in the sector is negligible.
The study conducted on branches of 14 banks revealed that SME loan recovery rate ranges between 80 per cent and 100 per cent.
Bangladesh Bank has undertaken different plans to boost SME sector by increasing flow of money.
Sukomal said: ‘A booklet containing guidelines and programmes on SME will be released soon.’
On top of that a road-show will be arranged on SME next month, he added.
He said different areas of the country will be earmarked as SME zones where specialized banks will finance the sector.
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WORLD ECONOMY
China passes US as top Saudi oil importer
China has surpassed the United States, long the top importer of Saudi oil, in short-term average daily imports from the petroleum-rich Gulf kingdom, US Secretary of Energy Steven Chu said Wednesday in Abu Dhabi.
‘It’s correct, as far as I know,’ said Chu, when asked if China has recently moved ahead of the US in terms of average barrels-per-day oil imports from Saudi Arabia. He did not provide specific figures.
As Chinese demand will likely continue rising and the US is trying to cut back its consumption of oil, especially from foreign sources, China might continue to be the main importer of Saudi crude.
‘In the long run, one fully expects China’s demand for oil to be increasing,’ Chu told a press conference, adding that, ‘we’re moderating our demand for oil in general, and we would like to decrease our demand for imported oil.’
However, he said he thinks the close US-Saudi relationship, which dates back to the 1940s, will continue.
‘I think we will have a continuing relationship with Saudi Arabia,’ Chu said, noting that it is ‘the second-largest oil producer in the world’ and ‘is important as a supplier to the world.’
Chu said he sees the relationship between the US and the Middle East expanding from its current focus on oil and gas.
‘What I see is an enriching and diversification of mutual, common interests of the United States and the Middle East,’ he said.
The US and countries in the region can ‘work together on’ projects such as alternative fuels and increasing energy efficiency, he added.
Chu also discussed oil production capacity and fluctuations in oil prices.
‘Right now, because of the recession, there is excess capacity’ for oil production, Chu said. He declined to comment on whether the market was currently over-or under-supplied.
Chu emphasized the importance of stable oil prices, saying that, ‘a price that goes up and down very rapidly is not good for the producers or good for the users.’
‘We want the things that affect (oil prices) to be as open and transparent as possible and we want the price to be as stable as possible,’ he added.
Speaking in Riyadh on Monday, Chu said that ‘the volatility of the (oil) price seems to be far in excess of demand and supply.’
He pointed the finger at oil investments by speculators and hedge funds that are not end-users.
‘We are going to be (undertaking) studies to try and find out how much has the volatility been increased by large financial institutions taking positions,’ he said.
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BANGLADESH: IN FOCUS
Four lakh new income taxpayers by June
The chairman of the National Board of Revenue Nasiruddin Ahmed on Thursday said the board was working to bring four lakh new income taxpayers under the tax net by June this year.
He said this while inaugurating Tax Survey Activities of NBR in its conference hall.
Senior NBR officials including Syed Aminul Karim, Bosir Uddin
Ahmed and Shambhu Nath and cultural activist Ramendu Majumder were present on the occasion.
The NBR chairman said they were working on automation of the tax system to increase the government revenue collection along with ensuring transparency of the system.
He said it was essential to build a self-reliant economy to face the challenges of globalization and for that revenue collection from domestic sources must be increased.
The NBR is also planning to establish a national database to ensure accountability in its activities and services, he said.
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BANGLADESH: SHORT NEWS
Garment manufactures get $188m export order
Bangladesh garments and knitwear manufacturers and exporters got export orders of approximately $ 107.96 million with $ 26.81 million as instant confirmed order in a show in USA.
The three-day Men’s apparel Guild in California (MAGIC) show concluded in Las Vegas, the biggest city of the state of Nevada, USA on February 18. Sourcing at MAGIC is the largest trade show in the North America, which offers two shows annually—one in February and the other one in August.
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BGMEA workers’ fair begins today in Ctg
The Bangladesh Garments Manufacturers and Exporters Association organizes a day-long workers’ fair (Sramik Mela-2010) at MA Aziz Stadium in the city today.
Labour and employment minister Khandaker Mosharraf Hossain will be present at the fair as chief guest.
BGMEA first vice-president Nasir Uddin Chowdhury at a pre-fair press conference held at the association office said more than 50 thousand workers would take part in the fair.
He also said painting and math competition would be held in participation of the children of garments workers at the first session of the fair beginning at 10:00am.
‘Cultural function will be held at the second session of the fair beginning from 2:00pm,’ he said adding that the garment workers would take part in cultural events alongside professional artistes.
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SOUTH ASIA
Indian finance ministry opposes futures trade ban
The government should not impose an outright ban on futures trade and should provide a firm regulatory structure to promote transparency, a finance ministry report said on Thursday.
‘Government should, ideally, desist from imposing an outright ban on futures trade,’ the finance ministry said in its annual survey of economy for fiscal year to March 2010.
The seven year old commodity futures market has witnessed the ban and suspension of futures trade in many agricultural commodities since 2007, for its alleged role for stoking spot prices.
However, the Abhijit Sen committee constituted by the government did not find any link between futures trading and surging spot prices.
The report said, ‘an enabling government takes the view that if we cannot establish a connection between the existence of futures trading and inflation in spot prices, we should allow futures trade.’
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BANGLADESH: ANALYSIS
Rice mills can save husk worth Tk 4b annually
Country’s rice mills can contribute Tk 4 billion to national economy annually by saving two million tons of husk, a by-product of rice, through increasing their efficiency.
Studies indicate that at least 30 per cent rice husk can be saved if the traditional system of rice parboiling system is improved, former director general of Bangladesh Rice Research Institute MA Baqui said.
The saved husk can be turn into much more energy efficient source of fuel as briquette while rice bran is a high value animal feed and raw material for oil extraction plant, he said.
Khursheed-ul-Islam, senior adviser of GTZ (German Technical Cooperation) told the news agency that the surplus four million rice husks has the potentials to produce a little over about 400 MW of capacity of electricity as alternative energy across the country.
‘Four million tonnes of rice husk could produce a little over about 400 MW of capacity of electricity as one kilowatt electricity could be generated from 2 kgs of husk,’ he said.
The electricity, produced from rice husk, could be used conveniently in the rice mills. Presently, over one lakh rice mills in the country consumes 200 MW electricity per day from the grid to run their production process.
‘It means, if husk-based power plants are set up to mitigate the electricity demand of the rice mills, the national electricity grid could be relieved of an equivalent power load of 200 MW,’ said Khursheed.
According to the source of Rice Mill Owners’ Association of Bangladesh, over one lakh rice mills are in the country with large rice mills `cluster areas’ in Dinajpur, Bogra, Naogaon, Chapainawabganj and Ishwardi.
Taking an average capacity range of about 200 KW electricity consuming rice mills, there is a 1000 MW power market in these five cluster areas alone, the source said.
Central husk power plants with the capacity of 1-6 MW could be installed at the clusters areas from which electricity can distribute to several rice mills, said Khursheed.
In order to address the hazardous operating condition and save valuable rice husk the Sustainable Energy for Development, GTZ in collaboration with the Bangladesh Rice Research Institute and Ministry of Power and Mineral Resources had undertaken a pilot project to develop an improved rice parboiling system at Russel Auto Rice Mills at Kaliakoir, Gazipur.
At the mills, the new parboiling system with a capacity of 18 tonnes of paddy per day achieved a maximum efficiency of 54 per cent while the mill had been previously operating at only 18.2 per cent efficiency with the traditional parboiling system.
With increased efficiency, rice husk savings is observed in the range of 50 to 59 per cent and at this rate the total rice husk saving is 910 kg per day amounting to Tk 1820 per day from the rice mills.
Besides, GTZ has taken initiative to install a captive husk power plant with capacity of 600-KW at a rice mill soon.
Over eleven hundred of such rice husk based power plants are reported to be operating successfully in China while India reports nearly 500 such plants, especially in West Bengal.
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WORLD ECONOMY
Taiwan January export orders post record growth
Taiwan’s export orders in January rose by a record 55.8 per cent from a year earlier on strong demand from China and growing shipments of precision products, the economics ministry said Thursday.
Companies received orders worth $30.37 billion last month, a rise of $12.69 billion from a year earlier, the ministry said, marking the sharpest rise recorded if adjusted for seasonal factors.
‘Demand for precision products has returned to pre-financial crisis levels,’ the ministry said in a statement.
Exports of precision products, such as flat-screen panels, increased by 163.65 per cent, the ministry said.
Orders from China and Hong Kong, which together make up the island’s leading export market, soared 134.99 per cent from a year earlier to $8.59 billion. Orders from Southeast Asia rose by 99.46 per cent to $2.95 billion.
Orders from Japan and the United States rose 89.33 per cent and 41.82 per cent respectively.
Orders for information and communications items surged by 73.25 per cent year-on-year to $7.56 billion in January, it said, adding that electronics goods rose 74.2 per cent year-on-year to $7.42 billion.
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China to expand rural subsidies for home appliances, autos
China plans to expand subsidies to help the country’s vast rural poor buy home appliances and vehicles, as the government steps up efforts to boost domestic consumption.
The range of products eligible for government subsidies will be widened and support will be given to increase sales of ‘new energy’ vehicles, the State Council said late Wednesday after a meeting chaired by Premier Wen Jiabao.
‘We will continue to implement policies to encourage home appliance sales in the countryside, the replacement of autos and home appliances, expand the products (eligible for) subsidies and support the promotion of new energy cars,’ it said in a statement.
The statement by China’s cabinet did not provide details on the subsidy programme for appliances such as fridges and washing machines, or on what constitutes ‘new energy’ vehicles.
China is seeking to increase consumption among its 900 million rural residents as part of a broader effort to reduce the country’s heavy reliance on exports and investment to drive growth.
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China defends exchange rate policy
China Thursday defended the value of the yuan, rejecting accusations that it was responsible for global trade imbalances.
The commerce ministry said maintaining a stable currency was a ‘top priority’ and was necessary for the survival of Chinese companies and supporting jobs growth in the world’s third-largest economy. It also was important in helping stabilize global financial markets, ministry spokesman Yao Jian said at a news conference.
The value of the Chinese currency, which has effectively been pegged to the US dollar since mid-2008, has been a bone of contention between Beijing and its Western trading partners, which say it is kept low to boost exports. As China powers out of the global crisis, there is growing pressure on policymakers to let the yuan appreciate.
Goldman Sachs chief economist Jim O’Neill reportedly said earlier this month that China may allow the yuan to rise at ‘anytime’ by as much as five per cent in a one-off revaluation.
However, Yao dismissed calls by ‘so-called experts and politicians in the United States’ for the yuan to rise as ‘seeking the wrong prescription’ for the trade imbalance problem.
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Oil prices lose ground
World oil prices weakened on Thursday as prices struggled for support above $80 a barrel, with global crude supplies still outstripping demand, traders said.
New York’s main futures contract, light sweet crude for April delivery, was down 30 cents at $79.70 a barrel.
London’s Brent North Sea crude for April delivery fell 19 cents to $77.90 per barrel.
‘It’s not surprising that oil has pulled back below $80. Some downside risks in oil have remained, such as the sovereign debt problems in Europe,’ said Victor Shum of energy consultancy Purvin and Gertz in Singapore.
‘Since last year oil has traded between primarily $70 to $80 per barrel. It’s been difficult to push above and stay above $80 because of the downside risks and the continuing weakness in demand and high inventories.’
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Euro plunges amid Greece crisis
The euro plunged to a one-year low against the yen in Asia on Thursday as investors shunned riskier currencies for the safe-haven Japanese unit amid the public deficit crisis afflicting Greece.
The euro fell to 120.44 yen briefly, its lowest level since February 24, 2009, before changing hands at 120.63 yen in Tokyo afternoon trade. The rate was sharply down from 122.03 yen in New York late Wednesday.
The euro dropped to 1.3460 dollars from 1.3534 dollars.
Because euro-selling for the Japanese currency involves selling dollars for yen in the process, the US unit also slipped to the lowest levels in some two weeks. The greenback fell to 89.47 yen, its weakest since February 10, down from 90.12 yen in New York.
The euro took a beating on news overnight that Standard & Poor’s Rating Services warned of downgrading Greece by one or two notches within the next month, dealers said.
The Wall Street Journal also reported Thursday that any bailout for Spain — whose 1.6-trillion-dollar economy is nearly double those of troubled euro-zone partners Greece, Portugal and Ireland combined — would be far costlier.
‘Although the report wasn’t a particularly new topic, hedge funds, retail and institutional players took cues from it’ on mounting concern that other areas in Europe may also suffer similar fiscal problems, a dealer said.
‘Players will keep a close attention to whether the eurozone economy shows further weakness,’ the dealer at a major Tokyo bank told Dow Jones Newswires.
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Eurozone growth to lag behind Asian rivals
Economic growth across Europe will be uncertain, fragile and dwarfed by emerging Asian rivals throughout 2010, according to new Brussels forecasts released on Thursday.
As nervous euro countries anxiously study developments in debt-saddled Greece, the European Commission acknowledged that ‘uncertainty’ surrounding even these projections ‘remains rife, as recent developments in financial markets illustrate well.’
Brussels predicts just 0.7 per cent expansion for both the eurozone and the full 27-nation European Union, the world’s biggest open trading bloc, in disappointing forecasts unchanged from November.
After contractions of 4.0 per cent for the 16 countries that share the euro currency and 4.1 per cent across the EU in 2009, recovery is ‘materialising’ but ‘still fragile,’ said the bloc’s economic and monetary affairs overlord Olli Rehn.
Static inflation projections tip 1.1 per cent for the eurozone and 1.4 per cent across the EU, the commission also said.
Rehn told a press conference that the absence of any improvement in the overall European economic picture was causing fresh concern given ‘markedly more robust recovery in the emerging economies, especially in Asia.’
He said world trade is expected to grow by a stronger-than-expected seven per cent in 2010 (after a post-war record slump of 12 per cent last year), indicating rivals on the global economic stage powering ahead.
However, the main downside, Rehn said, remains alarming conditions on financial markets where the Greek debts and widened sovereign bond spreads are straining the eurozone’s political ties as experts formulate plans in case its biggest players have to cough up bailout support.
Detailed projections from seven core economies that make up 80 per cent of Europe’s worth — Britain, France, Germany, Italy, the Netherlands, Poland and Spain — showed a downwards-revised projection for straggler Britain.
From 0.9 per cent growth for the year as predicted in November, Brussels now sees just 0.6 per cent expansion for Britain, which Rehn largely blamed on an end to lower value-added tax rates.
Spain is forecast to remain in recession right through 2010, although the predicted 0.6 per cent contraction shows improvement from projections before the turn of the year.
Eastern industrial powerhouse Poland, the bloc’s top performer in 2009, is expected to streak even further ahead in 2010, with its growth forecast jumping from 1.8 per cent to 2.6 per cent.
Of the traditionally big eurozone economies, major exporter the Netherlands is now expected to show the sharpest progress, with projected figures for France and Germany both static.
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SOUTH ASIA
India expects economy to bounce back to pre-crisis level
India’s economy will rebound to pre- financial crisis growth levels of nine per cent in two years, the government said on Thursday, and could become the world’s fastest expanding in four years.
A finance ministry report, unveiled a day ahead of the budget, said the upturn gives the government room to start a ‘gradual rollback’ of
$162 billion in stimulus put in place to shield the economy from the global slump.
India’s economy was one of the least hit by the global crisis and has been ‘one of the growth engines, along with China, in facilitating faster turnaround of the global economy,’ the annual Economic Survey added.
The finance ministry’s economic survey for the fiscal year to March 2010 projected economic growth would reach 8.75 per cent in 2010-11, quickening to over nine per cent in the following year.
That compares with forecast growth of up to 7.5 per cent this year to March and 6.7 growth last year when the economy was sideswiped by the global slump.
‘It is entirely possible for India to move into the rarefied domain of double- digit growth and even attempt to don the mantle’ of the fastest-growing economy in the world within the next four years, the report said.
China, expanded by 8.7 per cent in 2009, is now the fastest growing economy.
‘The fast-paced recovery of the economy underscores the effectiveness of the policy response of the government in the wake of the financial crisis,’ the report presented to parliament said.
‘The broad-based nature of the recovery creates scope for a gradual rollback, in due course, of some of the measures undertaken over the last 15 to 18 months,’ the report added.
But at the same time, the document said soaring food inflation, now running at close to 18 per cent, was a major problem and could spill over into other areas of the economy, driving up overall inflation, now at 7.3 per cent.
It added other risks remained as the recovery in global trade was still fragile, with demand fuelled by government spending.
The stimulus effects could evaporate if ‘natural recovery’ does not follow.
The survey, prepared by officials who advise on drafting the budget, also urged India to open up faster such sectors as health insurance, rural banking and higher education to foreign direct investment.
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Honda launches sporty hybrid
Honda launched its sporty new hybrid CR-Z on Thursday, vowing to uphold quality amid spectacular woes at its archrival Toyota.
Japan’s No. 2 automaker said it hopes the sleek two-door hatchback will appeal to a younger set or empty-nesters who want a ‘green’ car with a bit of pizazz. The car will go on sale in Japan on Friday and in the US and Europe by midyear.
‘Product quality is extremely important to us,’ chief executive Takanobu Ito said at a press conference.
Ito declined to comment on the troubles facing Toyota Motor Corp, whose president Akio Toyoda faced questioning Wednesday by lawmakers in Washington over massive recalls that total about 8.5 million vehicles globally. Toyoda partly blamed the problems on expanding too rapidly.
Far from gloating about Toyota’s struggles, Ito highlighted the challenges facing automakers as they expand abroad. When Honda grew rapidly around the world in the 1990s, it also experienced an increase in complaints from customers, he said.
Honda Motor Co said the Japan price for the CR-Z is a relatively affordable 2.268 million yen ($25,300) for the basic model and 2.498 million yen ($27,900) for the top-end model. Prices elsewhere haven’t been decided yet.
The car is Honda’s attempt to bring a bit of flair to the hybrid market. Designs have been dominated by the boxy lines and sloping roofs of four-door sedans like the Prius, which was Japan’s best-selling car last year. The CR-Z features a compact profile and roadster look.
Its debut comes two weeks after Toyota recalled nearly 440,000 Priuses and other hybrids for faulty brakes amid complaints about a slight delay in the brakes working in cold conditions or on bumpy roads. Toyota has since begun fixing the problem by reprogramming the brake software.
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Toyota’s problems loom large even after hearings
Even as Toyota CEO Akio Toyoda wrapped up a grueling appearance before Congress, the head of the world’s largest automaker wasn’t leaving his problems behind.
Toyota faces a criminal investigation by federal prosecutors in New York. The Securities and Exchange Commission is investigating the company. Its beleaguered US dealerships are facing repairs to potentially millions of customer vehicles that have been recalled. The company is offering customers new reimbursements for rental cars and other expenses.
Its lawyers are bracing for waves of death and injury lawsuits. The Senate will conduct a new hearing next week. And the cost to Toyota’s reputation is only now starting to emerge.
‘There is still a very large bull’s-eye pinned to Toyota right now,’ said Aaron Bragman, an auto industry analyst with IHS Global Insight.
Despite back-to-back congressional hearings this week, left to be said were a better explanation for slow actions to deal with the defects and believable assurances that the problems that led to sudden, unintended accelerations will be fixed.
Toyoda said those changes were being made nearly around the clock, but during three hours of often tense questions and answers he repeated the company’s insistence that there was no link to the cars’ electronic systems.
Many drivers filing complaints with Toyota and the government say their acceleration problems had nothing to do with floor mat interference or sticky gas pedals — the culprits the company is pointing to. Outside experts have suggested electronic problems.
House lawmaker’s unleashed blistering criticism on Toyoda, the grandson of the company’s founder.
‘I am embarrassed for you, sir,’ Rep. John Mica, R-Fla, said as he brandished an internal Toyota document showing the automaker estimated it saved $100 million by avoiding a broad recall over unintended acceleration in 2007.
The National Highway Traffic Safety Administration is seeking records on Toyota’s recalls and is conducting its own review on whether electronics were behind the vehicle defects. NHTSA also continues to look into steering complaints from drivers of the popular Corolla model.
‘The hearing is over, but the crisis is only getting more serious,’ he said. It may be a while before car buyers are convinced that Toyota really makes safe cars.
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Coke to buy North American bottling operations
Coca-Cola Co plans to buy the North American operations of its largest bottler, Coca-Cola Enterprises Inc, in a substantially cashless deal that would cut costs and increase flexibility in its distribution.
CCE shares rose 30 per cent to $24.93 in trading before the market opened, while Coke fell 3 per cent to $53.49.
Coke’s announcement on Thursday comes just as rival PepsiCo Inc is about to close its own $7.8 billion purchase of its largest bottlers, Pepsi Bottling Group Inc and PepsiAmericas Inc.
Coke said it would buy CCE’s North American business, which consists of about 75 per cent of its US bottler-delivered sales volume and almost all of its Canadian bottler-delivered volume.
Coke already owns about 34 per cent of CCE, a stake worth $3.21 billion at Wednesday’s close.
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China’s global profile increases with key IMF post
China has won its highest-ever staff position in the IMF in a reflection of its growing economic might and the clamor by emerging nations for a bigger say in global finance.
International Monetary Fund managing director Dominique Strauss-Kahn notified the fund’s executive board on Wednesday of his intention to appoint the deputy Chinese central bank governor, Zhu Min, as his special advisor.
It is the highest-level staff position attained by a Chinese citizen and follows appeals by China and other emerging nations for a bigger say in the running of the IMF and World Bank, the twin Bretton Woods institutions.
Zhu, who joined the Chinese central bank in 2009 after more than a decade as a senior executive of the Bank of China, is expected to assume his position on May 3, the Washington-based IMF said in a statement.
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BANGLADESH: NEWS
Govt forms task force for $1b terminal for LNG import
The government has formed a five-member taskforce, headed by power and energy secretaries, for installation of a terminal for liquefied natural gas, said officials.
The taskforce, led by power secretary Abul Kalam Azad and energy secretary Md Mesbahuddin, held its first meeting on Thursday at the power and energy ministry and discussed the installation of the terminal, the construction of which may cost around $1 billion.
The other members of the taskforce include the chairmen of the Petrobangla, Power Development Board and Bangladesh Petroleum Corporation.
‘We have held primary discussions to determine our course of action for installation of the LNG terminal. We will hold further discussions next month,’ said a taskforce member.
Azad told New Age after the meeting that the government might soon invite tenders for the feasibility study for installation of a LNG terminal in Chittagong.
‘A team of foreign experts will come to discuss the LNG terminal in March, after which we may invite tenders,’ he added.
The meeting also discussed the interest shown by various international companies in the proposed LNG terminal at the road-shows held in London, Singapore and New York in December-January to attract investment in power and energy projects.
Petrobangla officials said that more than 20 companies have expressed interest in constructing the terminal.
Petrobangla is currently planning to import LNG to tackle the ongoing gas shortage on an emergency basis by installing temporary facilities, and wants to install a terminal for long-term import.
Officials said that they would try to find out whether the platform at the Sangu gas-field in the Bay of Bengal could be used as a temporary terminal for LNG import. The platform is situated around 45 kilometres away from Chittagong and gas is being transmitted from it to Chittagong through an underground pipeline.
They will also ascertain whether it will be possible to get any specialized ship that will not only be able to carry LNG but also turn it back into a gas after arrival at the port.
Energy officials are, however, skeptical whether any temporary measure can be taken to bring LNG to the Sangu platform as the depth of water around it is not sufficient for any large ship.
‘Even if the government considers installation of a permanent LNG terminal near the Sangu platform, it might not be possible. We will have to go deep into the sea, which may not be economically viable,’ observed an official.
Petrobangla’s chairman Hossain Mansur told New Age that they were aware of the insufficient depth of water around the Sangu platform. ‘We will talk to experts on the issue,’ he said.
He said representatives of a consulting organization, Potent and Partners, would discuss the problems of LNG import in March. Another company, Accelerate Energy, would also hold talks with Petrobangla in this regard.
The country faces gas shortage of around 250 million cubic feet per day at present as Petrobangla supplies around 1,960-1,980mmcfd of gas against the demand for 2,200mmcfd.
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Tariff and non-tariff barriers to trade with India to go soon
The commerce minister Faruk Khan on Thursday said all tariff and non-tariff barriers to trade and investment between Bangladesh and India would be ‘eliminated’ within next few months.
‘After the prime minister’s recent India visit, lot of political developments have made us optimistic that all tariff and non-tariff barriers will be eliminated within next six months or so,’ he said at the inaugural ceremony of the first India-Bangladesh joint trade show at Dhaka Sheraton Hotel.
The finance minister AMA Muhith addressed the function as chief guest. The industries minister Dilip Barua and chief ministers of the Meghalaya and Tripura states of India also spoke.
The high commission of India, Federation of Indian Chambers of Commerce and Industry and Dhaka-based India-Bangladesh Chamber of Commerce and Industry jointly organized the three-day show.
Muhith said Bangladesh brings at least one fourth of its total imports from South Asian neighbors but it is sad that less than four per cent of Bangladesh’s exports are shipped to neighboring markets.
‘Regional prosperity is conditional to increased intra-region trade and investment,’ said the finance minister, reminding the Indian politicians Bangladesh’s right to Indian market and investments.
Citing the present Indian export worth several billion dollars to Bangladesh, Muhith said Bangladesh should allow at least a billion dollar worth of exports to India.
Dilip Barua said Bangladesh has lot of sector which should be lucrative for Indian investors.
The Meghalaya chief minister DD said that his state government had relentlessly been pursuing Delhi for reopening of the border markets to boost up trades between Bangladesh and India.
At present, Bangladesh imports goods, including vehicles, chemicals, food items, fabrics, cotton and machinery worth more than $3 billion from India. Exports to India account for less than $400 million.
The fair is opened from 10am to 8pm and entry fee is Tk 20 per person.
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SMEs to get Tk 24,000cr loans this year
Banks and non-banking financial institutions have set a target to disburse around Tk 24,000 crore loans to the SME sector during the current calendar year, a senior executive of the central bank said.
‘This is the first time the central bank has set a target to disburse loans to the SME sector in the country. We’ve earlier asked the banks to set their respective targets,’ Sukomal Sinha Chowdhury, general manager of Bangladesh Bank’s SME and Special Programme Department, told the news agency.
He said the country’s 48 foreign, state-owned and private banks and 24 non-bank financial organizations will disburse the loans.
According to Sukomal, outstanding loans to the SME sector stood at around Tk 52,000 crore and the number of loanees at about 4.4 lakh at the end of 2009.
He said if the 2010 target is achieved it would be the highest-ever loan disbursement to the sector in a single year.
Acting managing director of SME Foundation Momtaj Uddin, however, termed the figure less-than-requirement.
Referring to a research finding, he told the news agency that around
Tk 18, 28,000 crore is needed throughout the SME sector.
He said the targeted loans should be properly disbursed to the entrepreneurs on easy terms. Most of the previous loans were restricted to the urban areas, he added.
Rural people, particularly women must be given SME loans, he said, adding that increased loans should go for the production sector.
Asked which sub-sector would get priority, Sukomal said: ‘Undoubtedly it’s the export-oriented manufacturing sector.’
‘We’ll offer 100 per cent refinancing facility if loans are given to production and service sectors but maximum 50-60 per cent refinancing facility will be given in case of business loans,’ he said
A recent BIDS study revealed that banks and non-banking financial institutions disburse loans mostly to the business sector.
It also revealed that the financial institutions gave loans to around 3.91 lakh small and medium entrepreneurs until September, 2009.
Of them, around 3.35 lakh are trading houses, 54,000 manufacturing and remaining service-sector firms.
BIDS research recommended formulation of a guideline for giving collateral-free SME loans as the number of loan defaulters in the sector is negligible.
The study conducted on branches of 14 banks revealed that SME loan recovery rate ranges between 80 per cent and 100 per cent.
Bangladesh Bank has undertaken different plans to boost SME sector by increasing flow of money.
Sukomal said: ‘A booklet containing guidelines and programmes on SME will be released soon.’
On top of that a road-show will be arranged on SME next month, he added.
He said different areas of the country will be earmarked as SME zones where specialized banks will finance the sector.
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WORLD ECONOMY
China passes US as top Saudi oil importer
China has surpassed the United States, long the top importer of Saudi oil, in short-term average daily imports from the petroleum-rich Gulf kingdom, US Secretary of Energy Steven Chu said Wednesday in Abu Dhabi.
‘It’s correct, as far as I know,’ said Chu, when asked if China has recently moved ahead of the US in terms of average barrels-per-day oil imports from Saudi Arabia. He did not provide specific figures.
As Chinese demand will likely continue rising and the US is trying to cut back its consumption of oil, especially from foreign sources, China might continue to be the main importer of Saudi crude.
‘In the long run, one fully expects China’s demand for oil to be increasing,’ Chu told a press conference, adding that, ‘we’re moderating our demand for oil in general, and we would like to decrease our demand for imported oil.’
However, he said he thinks the close US-Saudi relationship, which dates back to the 1940s, will continue.
‘I think we will have a continuing relationship with Saudi Arabia,’ Chu said, noting that it is ‘the second-largest oil producer in the world’ and ‘is important as a supplier to the world.’
Chu said he sees the relationship between the US and the Middle East expanding from its current focus on oil and gas.
‘What I see is an enriching and diversification of mutual, common interests of the United States and the Middle East,’ he said.
The US and countries in the region can ‘work together on’ projects such as alternative fuels and increasing energy efficiency, he added.
Chu also discussed oil production capacity and fluctuations in oil prices.
‘Right now, because of the recession, there is excess capacity’ for oil production, Chu said. He declined to comment on whether the market was currently over-or under-supplied.
Chu emphasized the importance of stable oil prices, saying that, ‘a price that goes up and down very rapidly is not good for the producers or good for the users.’
‘We want the things that affect (oil prices) to be as open and transparent as possible and we want the price to be as stable as possible,’ he added.
Speaking in Riyadh on Monday, Chu said that ‘the volatility of the (oil) price seems to be far in excess of demand and supply.’
He pointed the finger at oil investments by speculators and hedge funds that are not end-users.
‘We are going to be (undertaking) studies to try and find out how much has the volatility been increased by large financial institutions taking positions,’ he said.
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BANGLADESH: IN FOCUS
Four lakh new income taxpayers by June
The chairman of the National Board of Revenue Nasiruddin Ahmed on Thursday said the board was working to bring four lakh new income taxpayers under the tax net by June this year.
He said this while inaugurating Tax Survey Activities of NBR in its conference hall.
Senior NBR officials including Syed Aminul Karim, Bosir Uddin
Ahmed and Shambhu Nath and cultural activist Ramendu Majumder were present on the occasion.
The NBR chairman said they were working on automation of the tax system to increase the government revenue collection along with ensuring transparency of the system.
He said it was essential to build a self-reliant economy to face the challenges of globalization and for that revenue collection from domestic sources must be increased.
The NBR is also planning to establish a national database to ensure accountability in its activities and services, he said.
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BANGLADESH: SHORT NEWS
Garment manufactures get $188m export order
Bangladesh garments and knitwear manufacturers and exporters got export orders of approximately $ 107.96 million with $ 26.81 million as instant confirmed order in a show in USA.
The three-day Men’s apparel Guild in California (MAGIC) show concluded in Las Vegas, the biggest city of the state of Nevada, USA on February 18. Sourcing at MAGIC is the largest trade show in the North America, which offers two shows annually—one in February and the other one in August.
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BGMEA workers’ fair begins today in Ctg
The Bangladesh Garments Manufacturers and Exporters Association organizes a day-long workers’ fair (Sramik Mela-2010) at MA Aziz Stadium in the city today.
Labour and employment minister Khandaker Mosharraf Hossain will be present at the fair as chief guest.
BGMEA first vice-president Nasir Uddin Chowdhury at a pre-fair press conference held at the association office said more than 50 thousand workers would take part in the fair.
He also said painting and math competition would be held in participation of the children of garments workers at the first session of the fair beginning at 10:00am.
‘Cultural function will be held at the second session of the fair beginning from 2:00pm,’ he said adding that the garment workers would take part in cultural events alongside professional artistes.
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SOUTH ASIA
Indian finance ministry opposes futures trade ban
The government should not impose an outright ban on futures trade and should provide a firm regulatory structure to promote transparency, a finance ministry report said on Thursday.
‘Government should, ideally, desist from imposing an outright ban on futures trade,’ the finance ministry said in its annual survey of economy for fiscal year to March 2010.
The seven year old commodity futures market has witnessed the ban and suspension of futures trade in many agricultural commodities since 2007, for its alleged role for stoking spot prices.
However, the Abhijit Sen committee constituted by the government did not find any link between futures trading and surging spot prices.
The report said, ‘an enabling government takes the view that if we cannot establish a connection between the existence of futures trading and inflation in spot prices, we should allow futures trade.’
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BANGLADESH: ANALYSIS
Rice mills can save husk worth Tk 4b annually
Country’s rice mills can contribute Tk 4 billion to national economy annually by saving two million tons of husk, a by-product of rice, through increasing their efficiency.
Studies indicate that at least 30 per cent rice husk can be saved if the traditional system of rice parboiling system is improved, former director general of Bangladesh Rice Research Institute MA Baqui said.
The saved husk can be turn into much more energy efficient source of fuel as briquette while rice bran is a high value animal feed and raw material for oil extraction plant, he said.
Khursheed-ul-Islam, senior adviser of GTZ (German Technical Cooperation) told the news agency that the surplus four million rice husks has the potentials to produce a little over about 400 MW of capacity of electricity as alternative energy across the country.
‘Four million tonnes of rice husk could produce a little over about 400 MW of capacity of electricity as one kilowatt electricity could be generated from 2 kgs of husk,’ he said.
The electricity, produced from rice husk, could be used conveniently in the rice mills. Presently, over one lakh rice mills in the country consumes 200 MW electricity per day from the grid to run their production process.
‘It means, if husk-based power plants are set up to mitigate the electricity demand of the rice mills, the national electricity grid could be relieved of an equivalent power load of 200 MW,’ said Khursheed.
According to the source of Rice Mill Owners’ Association of Bangladesh, over one lakh rice mills are in the country with large rice mills `cluster areas’ in Dinajpur, Bogra, Naogaon, Chapainawabganj and Ishwardi.
Taking an average capacity range of about 200 KW electricity consuming rice mills, there is a 1000 MW power market in these five cluster areas alone, the source said.
Central husk power plants with the capacity of 1-6 MW could be installed at the clusters areas from which electricity can distribute to several rice mills, said Khursheed.
In order to address the hazardous operating condition and save valuable rice husk the Sustainable Energy for Development, GTZ in collaboration with the Bangladesh Rice Research Institute and Ministry of Power and Mineral Resources had undertaken a pilot project to develop an improved rice parboiling system at Russel Auto Rice Mills at Kaliakoir, Gazipur.
At the mills, the new parboiling system with a capacity of 18 tonnes of paddy per day achieved a maximum efficiency of 54 per cent while the mill had been previously operating at only 18.2 per cent efficiency with the traditional parboiling system.
With increased efficiency, rice husk savings is observed in the range of 50 to 59 per cent and at this rate the total rice husk saving is 910 kg per day amounting to Tk 1820 per day from the rice mills.
Besides, GTZ has taken initiative to install a captive husk power plant with capacity of 600-KW at a rice mill soon.
Over eleven hundred of such rice husk based power plants are reported to be operating successfully in China while India reports nearly 500 such plants, especially in West Bengal.
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WORLD ECONOMY
Taiwan January export orders post record growth
Taiwan’s export orders in January rose by a record 55.8 per cent from a year earlier on strong demand from China and growing shipments of precision products, the economics ministry said Thursday.
Companies received orders worth $30.37 billion last month, a rise of $12.69 billion from a year earlier, the ministry said, marking the sharpest rise recorded if adjusted for seasonal factors.
‘Demand for precision products has returned to pre-financial crisis levels,’ the ministry said in a statement.
Exports of precision products, such as flat-screen panels, increased by 163.65 per cent, the ministry said.
Orders from China and Hong Kong, which together make up the island’s leading export market, soared 134.99 per cent from a year earlier to $8.59 billion. Orders from Southeast Asia rose by 99.46 per cent to $2.95 billion.
Orders from Japan and the United States rose 89.33 per cent and 41.82 per cent respectively.
Orders for information and communications items surged by 73.25 per cent year-on-year to $7.56 billion in January, it said, adding that electronics goods rose 74.2 per cent year-on-year to $7.42 billion.
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China to expand rural subsidies for home appliances, autos
China plans to expand subsidies to help the country’s vast rural poor buy home appliances and vehicles, as the government steps up efforts to boost domestic consumption.
The range of products eligible for government subsidies will be widened and support will be given to increase sales of ‘new energy’ vehicles, the State Council said late Wednesday after a meeting chaired by Premier Wen Jiabao.
‘We will continue to implement policies to encourage home appliance sales in the countryside, the replacement of autos and home appliances, expand the products (eligible for) subsidies and support the promotion of new energy cars,’ it said in a statement.
The statement by China’s cabinet did not provide details on the subsidy programme for appliances such as fridges and washing machines, or on what constitutes ‘new energy’ vehicles.
China is seeking to increase consumption among its 900 million rural residents as part of a broader effort to reduce the country’s heavy reliance on exports and investment to drive growth.
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China defends exchange rate policy
China Thursday defended the value of the yuan, rejecting accusations that it was responsible for global trade imbalances.
The commerce ministry said maintaining a stable currency was a ‘top priority’ and was necessary for the survival of Chinese companies and supporting jobs growth in the world’s third-largest economy. It also was important in helping stabilize global financial markets, ministry spokesman Yao Jian said at a news conference.
The value of the Chinese currency, which has effectively been pegged to the US dollar since mid-2008, has been a bone of contention between Beijing and its Western trading partners, which say it is kept low to boost exports. As China powers out of the global crisis, there is growing pressure on policymakers to let the yuan appreciate.
Goldman Sachs chief economist Jim O’Neill reportedly said earlier this month that China may allow the yuan to rise at ‘anytime’ by as much as five per cent in a one-off revaluation.
However, Yao dismissed calls by ‘so-called experts and politicians in the United States’ for the yuan to rise as ‘seeking the wrong prescription’ for the trade imbalance problem.
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Oil prices lose ground
World oil prices weakened on Thursday as prices struggled for support above $80 a barrel, with global crude supplies still outstripping demand, traders said.
New York’s main futures contract, light sweet crude for April delivery, was down 30 cents at $79.70 a barrel.
London’s Brent North Sea crude for April delivery fell 19 cents to $77.90 per barrel.
‘It’s not surprising that oil has pulled back below $80. Some downside risks in oil have remained, such as the sovereign debt problems in Europe,’ said Victor Shum of energy consultancy Purvin and Gertz in Singapore.
‘Since last year oil has traded between primarily $70 to $80 per barrel. It’s been difficult to push above and stay above $80 because of the downside risks and the continuing weakness in demand and high inventories.’
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Euro plunges amid Greece crisis
The euro plunged to a one-year low against the yen in Asia on Thursday as investors shunned riskier currencies for the safe-haven Japanese unit amid the public deficit crisis afflicting Greece.
The euro fell to 120.44 yen briefly, its lowest level since February 24, 2009, before changing hands at 120.63 yen in Tokyo afternoon trade. The rate was sharply down from 122.03 yen in New York late Wednesday.
The euro dropped to 1.3460 dollars from 1.3534 dollars.
Because euro-selling for the Japanese currency involves selling dollars for yen in the process, the US unit also slipped to the lowest levels in some two weeks. The greenback fell to 89.47 yen, its weakest since February 10, down from 90.12 yen in New York.
The euro took a beating on news overnight that Standard & Poor’s Rating Services warned of downgrading Greece by one or two notches within the next month, dealers said.
The Wall Street Journal also reported Thursday that any bailout for Spain — whose 1.6-trillion-dollar economy is nearly double those of troubled euro-zone partners Greece, Portugal and Ireland combined — would be far costlier.
‘Although the report wasn’t a particularly new topic, hedge funds, retail and institutional players took cues from it’ on mounting concern that other areas in Europe may also suffer similar fiscal problems, a dealer said.
‘Players will keep a close attention to whether the eurozone economy shows further weakness,’ the dealer at a major Tokyo bank told Dow Jones Newswires.
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Eurozone growth to lag behind Asian rivals
Economic growth across Europe will be uncertain, fragile and dwarfed by emerging Asian rivals throughout 2010, according to new Brussels forecasts released on Thursday.
As nervous euro countries anxiously study developments in debt-saddled Greece, the European Commission acknowledged that ‘uncertainty’ surrounding even these projections ‘remains rife, as recent developments in financial markets illustrate well.’
Brussels predicts just 0.7 per cent expansion for both the eurozone and the full 27-nation European Union, the world’s biggest open trading bloc, in disappointing forecasts unchanged from November.
After contractions of 4.0 per cent for the 16 countries that share the euro currency and 4.1 per cent across the EU in 2009, recovery is ‘materialising’ but ‘still fragile,’ said the bloc’s economic and monetary affairs overlord Olli Rehn.
Static inflation projections tip 1.1 per cent for the eurozone and 1.4 per cent across the EU, the commission also said.
Rehn told a press conference that the absence of any improvement in the overall European economic picture was causing fresh concern given ‘markedly more robust recovery in the emerging economies, especially in Asia.’
He said world trade is expected to grow by a stronger-than-expected seven per cent in 2010 (after a post-war record slump of 12 per cent last year), indicating rivals on the global economic stage powering ahead.
However, the main downside, Rehn said, remains alarming conditions on financial markets where the Greek debts and widened sovereign bond spreads are straining the eurozone’s political ties as experts formulate plans in case its biggest players have to cough up bailout support.
Detailed projections from seven core economies that make up 80 per cent of Europe’s worth — Britain, France, Germany, Italy, the Netherlands, Poland and Spain — showed a downwards-revised projection for straggler Britain.
From 0.9 per cent growth for the year as predicted in November, Brussels now sees just 0.6 per cent expansion for Britain, which Rehn largely blamed on an end to lower value-added tax rates.
Spain is forecast to remain in recession right through 2010, although the predicted 0.6 per cent contraction shows improvement from projections before the turn of the year.
Eastern industrial powerhouse Poland, the bloc’s top performer in 2009, is expected to streak even further ahead in 2010, with its growth forecast jumping from 1.8 per cent to 2.6 per cent.
Of the traditionally big eurozone economies, major exporter the Netherlands is now expected to show the sharpest progress, with projected figures for France and Germany both static.
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SOUTH ASIA
India expects economy to bounce back to pre-crisis level
India’s economy will rebound to pre- financial crisis growth levels of nine per cent in two years, the government said on Thursday, and could become the world’s fastest expanding in four years.
A finance ministry report, unveiled a day ahead of the budget, said the upturn gives the government room to start a ‘gradual rollback’ of
$162 billion in stimulus put in place to shield the economy from the global slump.
India’s economy was one of the least hit by the global crisis and has been ‘one of the growth engines, along with China, in facilitating faster turnaround of the global economy,’ the annual Economic Survey added.
The finance ministry’s economic survey for the fiscal year to March 2010 projected economic growth would reach 8.75 per cent in 2010-11, quickening to over nine per cent in the following year.
That compares with forecast growth of up to 7.5 per cent this year to March and 6.7 growth last year when the economy was sideswiped by the global slump.
‘It is entirely possible for India to move into the rarefied domain of double- digit growth and even attempt to don the mantle’ of the fastest-growing economy in the world within the next four years, the report said.
China, expanded by 8.7 per cent in 2009, is now the fastest growing economy.
‘The fast-paced recovery of the economy underscores the effectiveness of the policy response of the government in the wake of the financial crisis,’ the report presented to parliament said.
‘The broad-based nature of the recovery creates scope for a gradual rollback, in due course, of some of the measures undertaken over the last 15 to 18 months,’ the report added.
But at the same time, the document said soaring food inflation, now running at close to 18 per cent, was a major problem and could spill over into other areas of the economy, driving up overall inflation, now at 7.3 per cent.
It added other risks remained as the recovery in global trade was still fragile, with demand fuelled by government spending.
The stimulus effects could evaporate if ‘natural recovery’ does not follow.
The survey, prepared by officials who advise on drafting the budget, also urged India to open up faster such sectors as health insurance, rural banking and higher education to foreign direct investment.
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Honda launches sporty hybrid
Honda launched its sporty new hybrid CR-Z on Thursday, vowing to uphold quality amid spectacular woes at its archrival Toyota.
Japan’s No. 2 automaker said it hopes the sleek two-door hatchback will appeal to a younger set or empty-nesters who want a ‘green’ car with a bit of pizazz. The car will go on sale in Japan on Friday and in the US and Europe by midyear.
‘Product quality is extremely important to us,’ chief executive Takanobu Ito said at a press conference.
Ito declined to comment on the troubles facing Toyota Motor Corp, whose president Akio Toyoda faced questioning Wednesday by lawmakers in Washington over massive recalls that total about 8.5 million vehicles globally. Toyoda partly blamed the problems on expanding too rapidly.
Far from gloating about Toyota’s struggles, Ito highlighted the challenges facing automakers as they expand abroad. When Honda grew rapidly around the world in the 1990s, it also experienced an increase in complaints from customers, he said.
Honda Motor Co said the Japan price for the CR-Z is a relatively affordable 2.268 million yen ($25,300) for the basic model and 2.498 million yen ($27,900) for the top-end model. Prices elsewhere haven’t been decided yet.
The car is Honda’s attempt to bring a bit of flair to the hybrid market. Designs have been dominated by the boxy lines and sloping roofs of four-door sedans like the Prius, which was Japan’s best-selling car last year. The CR-Z features a compact profile and roadster look.
Its debut comes two weeks after Toyota recalled nearly 440,000 Priuses and other hybrids for faulty brakes amid complaints about a slight delay in the brakes working in cold conditions or on bumpy roads. Toyota has since begun fixing the problem by reprogramming the brake software.
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Toyota’s problems loom large even after hearings
Even as Toyota CEO Akio Toyoda wrapped up a grueling appearance before Congress, the head of the world’s largest automaker wasn’t leaving his problems behind.
Toyota faces a criminal investigation by federal prosecutors in New York. The Securities and Exchange Commission is investigating the company. Its beleaguered US dealerships are facing repairs to potentially millions of customer vehicles that have been recalled. The company is offering customers new reimbursements for rental cars and other expenses.
Its lawyers are bracing for waves of death and injury lawsuits. The Senate will conduct a new hearing next week. And the cost to Toyota’s reputation is only now starting to emerge.
‘There is still a very large bull’s-eye pinned to Toyota right now,’ said Aaron Bragman, an auto industry analyst with IHS Global Insight.
Despite back-to-back congressional hearings this week, left to be said were a better explanation for slow actions to deal with the defects and believable assurances that the problems that led to sudden, unintended accelerations will be fixed.
Toyoda said those changes were being made nearly around the clock, but during three hours of often tense questions and answers he repeated the company’s insistence that there was no link to the cars’ electronic systems.
Many drivers filing complaints with Toyota and the government say their acceleration problems had nothing to do with floor mat interference or sticky gas pedals — the culprits the company is pointing to. Outside experts have suggested electronic problems.
House lawmaker’s unleashed blistering criticism on Toyoda, the grandson of the company’s founder.
‘I am embarrassed for you, sir,’ Rep. John Mica, R-Fla, said as he brandished an internal Toyota document showing the automaker estimated it saved $100 million by avoiding a broad recall over unintended acceleration in 2007.
The National Highway Traffic Safety Administration is seeking records on Toyota’s recalls and is conducting its own review on whether electronics were behind the vehicle defects. NHTSA also continues to look into steering complaints from drivers of the popular Corolla model.
‘The hearing is over, but the crisis is only getting more serious,’ he said. It may be a while before car buyers are convinced that Toyota really makes safe cars.
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Coke to buy North American bottling operations
Coca-Cola Co plans to buy the North American operations of its largest bottler, Coca-Cola Enterprises Inc, in a substantially cashless deal that would cut costs and increase flexibility in its distribution.
CCE shares rose 30 per cent to $24.93 in trading before the market opened, while Coke fell 3 per cent to $53.49.
Coke’s announcement on Thursday comes just as rival PepsiCo Inc is about to close its own $7.8 billion purchase of its largest bottlers, Pepsi Bottling Group Inc and PepsiAmericas Inc.
Coke said it would buy CCE’s North American business, which consists of about 75 per cent of its US bottler-delivered sales volume and almost all of its Canadian bottler-delivered volume.
Coke already owns about 34 per cent of CCE, a stake worth $3.21 billion at Wednesday’s close.
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China’s global profile increases with key IMF post
China has won its highest-ever staff position in the IMF in a reflection of its growing economic might and the clamor by emerging nations for a bigger say in global finance.
International Monetary Fund managing director Dominique Strauss-Kahn notified the fund’s executive board on Wednesday of his intention to appoint the deputy Chinese central bank governor, Zhu Min, as his special advisor.
It is the highest-level staff position attained by a Chinese citizen and follows appeals by China and other emerging nations for a bigger say in the running of the IMF and World Bank, the twin Bretton Woods institutions.
Zhu, who joined the Chinese central bank in 2009 after more than a decade as a senior executive of the Bank of China, is expected to assume his position on May 3, the Washington-based IMF said in a statement.
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