DHAKA stocks continue gaining

Increased trading activities pushed the Dhaka market up for the
fourth day, with all the key indices finished positive. The total
turnover of Tk 711.22 crore marked a 45.7 percent rise yesterday,
compared to the previous day's turnover. "The jump in turnover meant
that investors were very active in trading and they were switching
from one stock to another," said Fazlur Rahman, head of Investment
Banking Division of AB Bank. He said investors' active participation
is a good sign for a healthy and vibrant market. The benchmark index
of Dhaka Stock Exchange, DSE General Index, rose by 11.84 points, or
0.38 percent to 3 ,086.9. The market reached a peak of 3 ,095 points
in the first 30 minutes of trading. Then it remained relatively
stable around that mark for the next 120 minutes, before dropping
about seven points towards the end of the session. The broader DSE
All Share Price Index gained 11. 06 points, or 0.42 points to 2 ,
594.41. Most non-banking financial institutions and mutual funds
gained, while most banks lost. Pharmaceuticals, insurance, cement and
tannery sectors finished positive. Fuel and power sector however
lost. Advancers beat losers 160 to 79. A total of 4 ,21 , 70 ,817
shares and mutual fund units were traded on the premier bourse.
Summit Alliance Port topped the turnover leaders with 1 ,24 ,250
units worth Tk 28.04 crore being traded on the DSE. Renwick
Jajneswar, which increased by 13.69 percent, was the largest gainer.
Monno Jute Stafflers, which declined by 3.77 percent, was the
biggest loser. Chittagong stocks also marked a rise. The CSE
Selective Categories Index gained 40.67 points, or 0.6 percent to 6
,780. The CSE All Share Price Index increased by 27.25 points, or
0.25 percent to 10 , 657.37. A total of 62 ,18 ,190 shares and
mutual fund units worth Tk 66.28 crore changed hands on the
Chittagong Stock Exchange. Of the traded securities, 106 advanced,
66 declined and three remained unchanged. The biggest gainer Samata
Leather Complex advanced by 16.50 percent. Aramit was the largest
loser that declined by 9.16 percent. Marico Bangladesh topped the
turnover leaders with 88 ,000 shares worth Tk 3.48 crore being
traded on the port city bourse.

Green revolution in rural Nepal

Nepalese villager Khinu Darai used to have to walk about five
kilometres (three miles) every day to collect firewood so she could
cook meals for her family. Then two years ago, she bought a biogas
plant under a government scheme to encourage villagers to convert to
greener energy -- an event the 30- year-old mother of three says
transformed her life. "Biogas is a blessing for my family. These days
I don't have to go into the jungle to collect wood, " she told AFP
outside her simple mud-brick home in the southern village of
Badrahani. "It is clean and safe, and we are healthier now as we are
not breathing in smoke all the time." In all, 82 households in
Badrahani have bought biogas plants at heavily subsidised rates under
the scheme, which is funded by the Dutch and German governments.
Biogas is a mixture of methane and carbon dioxide produced by feeding
cow dung, human waste and water into an airtight underground tank
known as digester and allowing it to decompose. Environmentalists say
biogas has huge potential in Nepal, where nearly 80 percent of the
population of 27 million live in rural areas with no electricity,
leaving them dependent on firewood for cooking and heating. This
means they live in smoke-filled houses, causing respiratory problems,
particularly for young children, while the destruction of forests is
also a major cause for concern. Badrahani is situated on the edge of
the Chitwan National Park, home to endangered species including the
Royal Bengal tiger and one- horned rhino, whose habitat is threatened
by villagers chopping down trees for firewood. "Biogas has brought a
green energy revolution to the country," said Prakash Lamichhane,
head of research at the Biogas Sector Partnership ( BSP), the
government agency in charge of installing the plants. "We have the
capacity to build 1.9 million biogas plants, but we have achieved
just 11 percent of our target so far. We still have a long way to
go. " Over the past two decades, BSP has installed around 210 ,000
biogas plants at a cost of around 350 dollars each, with the
government covering a third of the price. BSP says each plant reduces
the country's already low carbon emissions by around 4.7 tonnes a
year. "We are helping to reduce greenhouse gas emissions by 987 ,000
tonnes every year. It is helping us combat climate change," said
Lamichhane, chief of the research department. The biogas project has
won plaudits as a rare environmental success in a country with one of
the world's most polluted capital cities. But BSP research and
development officer Mahaboob Siddiki said it had not always proved
easy to convert villagers. "Because the gas is produced from cow dung
and human waste, villagers thought it was impure, and that it would
be shameful to cook food using it," said Siddiki, who has worked on
the project since it began 26 years ago. "Several times, we were
chased away from some of the villages, but we never gave up," he
said, calling the technology a "win-win situation" for villagers and
the environment. It is a view shared by Bibhimaya Tamang, a 45-
year-old farmer from Badrahani who uses slurry -- a by-product of
biogas -- to fertilize her crops, giving her higher yields and more
income from the vegetables the family grows. "Staying in a
smoke-filled kitchen for hours was painful. It hurt my eyes and I
used to cough a lot while cooking," she told AFP. "Using biogas has
been so much better." Sameer Thapa, coordinator of Nepal's
Alternative Energy Promotion Centre (AEPC), said the country made 600
,000 dollars in 2007 by trading a million tonnes of carbon emission
reductions from biogas plants. "We have huge potential to benefit from
carbon trading as we lessen the use of firewood, which releases
carbon dioxide into the atmosphere," said Thapa. "Around 80 ,000
biogas plants are in the process of getting approval for carbon
trading by next year." Thapa said the proceeds would be used to
install more plants, enabling the government to increase its carbon
trading capacity further. "Many developing countries in Asia and
Africa have used our expertise to promote biogas, and many others
are asking for our help," said the BSP's Lamichhane. "Nepal has
always been known as the land of mountains. Now, developing countries
are calling us the land of biogas."

Merkel faces reform test

The new coalition of German Chancellor Angela Merkel will likely
boost Europe's top economy but analysts questioned Monday how far she
will pursue crucial but contentious reforms. The German Association
of Chambers of Commerce and Industry (DIHK) called her victory in
Sunday's election "a clear vote for courageous reform." Its president
Hans Heinrich Driftmann said corporate tax cuts should now be "high
on the agenda." The Federation of German Wholesale and Foreign Trade
called for "simplified taxes, less bureaucracy and more
entrepreneurial freedom. " But analysts wondered how far the
conservative Merkel would go in making painful reforms after she
stressed the need to "maintain a balance between those who create
jobs and workers." During her first campaign, Merkel had called for
major changes to Germany's economic system. It provides generous
social benefits and its heavy reliance on exports left it exposed
during the global economic downturn. "Over the last four years her
position has become quite blurred" while she governed with the
centre-left Social Democrats in a cumbersome "grand coalition,"
Goldman Sachs economist Dirk Schumacher told AFP. "Where does she
actually stand" now on the issue of restructuring the German social
economic model, he asked. The new government faces a mountain of
serious challenges, including rising unemployment and a huge public
deficit that stems from efforts to buffer Germans from the worst of
the international crisis. At the same time, Merkel's new coalition
partners, the business-friendly Free Democrats ( FDP), have gained in
strength and will push for multi-billion-euro (dollar) tax cuts and a
simpler tax code. "The new government must therefore manage a tricky
balancing act between fiscal consolidation and implementing new
strategies for supporting growth," UniCredit economist Alexander Koch
wrote. Business daily Handelsblatt said FDP leader Guido Westerwelle
"should demonstrate the courage of new thinking and demand a super
ministry of economy and finance -- and then lead it himself." But
Commerzbank chief economist Joerg Kraemer noted that "scepticism of
the Germans against capitalism has risen significantly," despite the
FDP's strong showing. "This makes a general shift in economic policy
quite unlikely," he said. The country's crumbling demographic base
could eventually force Germans to retire later, and education reform
is needed to help disadvantaged youths gain full access to the jobs
market. "Otherwise you'll have a growing percentage of the population
who are just dependent on government transfers and who won't be able
to get a job," Schumacher warned. The jobless rate has been largely
held in check by state-subsidised shorter working hours but is still
expected to climb from its present level of 8.3 percent. "The silver
bullet would be a lower tax and social security burden in order to
avoid another round of stagnating real income," Koch wrote. But he
agreed that "the fiscal leeway in the next few years is slim," since
Germany expects to breach EU deficit rules until 2013 at the
earliest. Bank of America Merrill Lynch European economist Holger
Schmieding therefore anticipated "some tax cuts, spending restraint
and modest structural reforms to strengthen the incentives to work,
invest and create jobs." The Sueddeutsche Zeitung daily said Merkel's
inner drive for change was not lost however, and quoted her as saying
recently that " Germany is in a global competition and can take
nothing for granted." She warned Germans again Sunday: "We have a lot
of work ahead of us." Schumacher concluded that "if that's the
genuine Merkel, then we'll see some kind of more pronounced reforms"
in the next few years.

Asian infrastructure development stressed

The Federation of Bangladesh Chambers of Commerce and Industry
(FBCCI) at an international conference sought regional cooperation,
technical assistance and financial support for developing
infrastructure facilities in Asian regions. Abul Kashem Ahmed, first
vice president of FBCCI, presented a keynote paper on "Role of
private sector to promote diversification of production and growth:
The case of Bangladesh" at the conference in New Delhi recently. The
conference on "Quality of Growth: Approaches to Inclusive Growth in
Asian Societies" organised by GTZ German Technical Cooperation, was
attended by about 300 delegates from the Asian region. Scholars and
economists from UK, USA, World Bank, Asian Development Bank and GTZ
also took part in the conference assisted by Planning Commission of
India and the Economic Cooperation and Development of Germany. Ahmed
presentation focused on private sector's contribution in
diversification of agricultural products, and private sector's role
in diversifying manufacturing products. He apprised the conference of
a congenial investment environment in Bangladesh. Market survey and
research and development will be the key components for
diversification of products to meet the local demand and compete in
the global market, he said. Free trade agreement can be a useful
instrument for export diversification, he told the conference.

Currency

Local Market FX Local inter-bank FX market was actively trading
today. There was ample liquidity in the market and the USD/BDT rate
traded in similar range to the previous working day. Money Market
Money market was active on Tuesday. The market was liquid; and the
majority of deals traded around 5-6 %. Call money rates eased off
today, as the liquidity pressure has reduced after te end of the
holiday shopping period. International Market The dollar edged up
against the yen on Tuesday in a corrective move after steep gains the
previous day as Japan's finance minister backtracked over its
tolerance of a stronger yen. But the rebound was seen limited as
markets still saw room for the yen to rise.

Taiwan may ease controls on high-tech investment in China

Taiwan is close to easing curbs on local firms investing in high-tech
companies in China, the island's economics minister said Tuesday, in
a sign of improving ties despite recent spats with the mainland. The
long-standing controls on investment in China are now under
government review and could be relaxed before the end of 2009 , Shih
Yen-hsiang told parliament. "The discussions will not take a long
time. We expect there will be a conclusion before year's end," he
said in response to a question from a lawmaker. The lifting of
restrictions referred to by Shih would apply to high-tech industries
in particular, said Huang Hsien-lin, an economics ministry official.
The Commercial Times earlier Tuesday also reported plans by the
ministry to allow Chinese investors to buy stakes in Taiwanese flat
panel and microchip makers. Calls for easing controls on high-tech
investment in the mainland have been mounting among local industry
players as they claim their competitors from South Korea and Japan
have been stepping up activity there.

Strike forces Air India to suspend ticket sales

Air India said on Tuesday that about half of its international
flights had been cancelled due to a strike by pilots and announced a
suspension of new bookings. Nine out of 21 international flights and
37 out of 177 domestic flights were scrapped, spokesman Jitender
Bhargava said, after pilots in three major cities called in sick for
the fourth day after talks to end the dispute broke down. "We have
stopped taking bookings temporarily till mid-October," Bhargava told
AFP. "This is to make sure inconvenience to passengers is avoided
and we have surety of flights operating." Overnight talks between the
company and the non-unionised senior pilots, who are protesting a
slash in performance-based incentive pay, failed to make headway with
about 180 pilots reporting sick on Tuesday, Bhargava said. An
earlier statement by Air India said the pilots' refusal to accept
bonus cuts was "unacceptable" and that "all options are being kept
open." But chairman and managing director Arvind Jadhav told
reporters there was no chance of a lockout and urged pilots who had
called in sick to "come back quickly and restore normalcy for the
benefit of the passengers."

Britain on course to exit deep recession

The deep recession in Britain is easing, official data showed on
Tuesday, boosting hopes that the nation will soon join other major
economies in returning to growth before the end of 2009. British
output contracted 0.6 percent in the second quarter compared with
activity in the first three months of 2009 , better than the
previous estimate of minus 0.7 percent, the Office for National
Statistics (ONS) said. Gross domestic product shrank 5.5 percent
between April and June compared with GDP in the second quarter of
2008. The 12- month figure, unchanged from the previous estimate made
in August, marked the biggest drop since records began in 1955.
"Today's data offers further indications that we are likely to see
growth in the third quarter" and an end to Britain's deep recession,
said Charles Davis, an economist at independent consultants, the
centre for economics and business research (cebr). IHS Global Insight
analyst Howard Archer commented: "Matters have moved on appreciably
since the second quarter with the key question being has the economy
returned to growth in the third quarter? "We suspect that it has, and
are looking for expansion of around 0.3 percent quarter-on-
quarter."

Oil dips

Oil prices fell slightly on Tuesday amid tensions between key crude
exporter Iran and the West over the Islamic republic's atomic
programme. New York's main contract, light sweet crude for delivery
in November, slipped 14 cents to 66.70 dollars a barrel. London's
Brent North Sea crude for November lost 13 cents to 65.41 dollars a
barrel.

Russia cuts key interest rate

Russia's central bank will cut its main refinancing rate by half a
point to 10.0 percent, it said in a statement Tuesday, in its latest
bid to stimulate the country's economy. The bank's directors "decided
to lower the Central Bank's refinancing rate by 0.5 points to 10.0
percent, starting on September 30 ," it said. The decision was
motivated by "the need for additional stimulation of economic
activity," it added.

Finnish recession to deepen to 7.2 pc in 2009

Finland's economy will contract by 7.2 percent in 2009 and will
experience zero growth in 2010 , the central bank said in a forecast
published on Tuesday. The Nordic country has experienced the worst
recession in the eurozone, shrinking by a record 9.4 percent in the
second quarter on a 12- month comparison, according to official
statistics. But the central bank said it expected Finland's economy
to recover in 2011 , returning to growth of 1.6 percent. In its
previous forecast in March, the central bank foresaw a recession of
5.0 percent this year and 1.1 percent in 2010 , before recovering
with growth of 1.5 percent in 2011. Finland's export-heavy economy
has been floored by a plunge in demand for its products. The
country's domestic market is limited. Exports represented nearly half
of gross domestic product last year but only 35 percent in the
second quarter of this year.

BANGLADESHI govt favours power tariff hike

Prime Minister's Adviser for Energy Towfique-e- Elahi Chowdhury has
suggested that power tariff be hiked in order to ensure its efficient
use. " Such a hike is necessary to make it sure that power and
energy are used efficiently," he told a roundtable in Dhaka
yesterday. Energy and Power Magazine organised the roundtable on
Policy, Pricing and Subsidy for Sustainable Energy at the Cirdap
auditorium. State Minister for Power, Energy and Mineral Resources
Enamul Haque, his predecessor AKM Mosharraf Hossain and former
president of the Federation of Chambers of Commerce and Industry
Abdul Awal Mintoo took part in the discussion among others. The
keynote paper was presented by Professor Ijaz Hossain of the
Department of Chemical Engineering at Bangladesh University of
Engineering and Technology. Towfique-e-Elahi Chowdhury said the
government is planning to explore gas both in offshore and onshore
areas to meet the growing demand of power and energy. He, however,
stressed efficient usage of power by consumers so that everybody can
be brought under the coverage of electricity. Chowdhury said the
government will prioritise the supply of power to rural areas. In
his speech Enamul Haque said although the government wants to raise
power and gas prices, it did not fix the methodologies yet in this
connection. Pointing to some bad impacts of power tariff hike, Haque
admitted that a large section of people in rural areas are still out
of power coverage. "But, the government wants ensure quality service
to consumers through raising power and energy tariff," he said. The
former state minister for power also advocated such tariff hike. He
said since the state-owned company is not well-equipped to explore
gas right this moment, foreign companies should continue the job of
exploration. He said coal exploration is very essential now to improve
the power situation. "The government should also increase the CNG
price as the price of such energy is too low in comparison with
petroleum products," Mosharrf Hossain said. Mukhlesur Rahman, acting
chairman of Bangladesh Energy Regulatory Commission ( BERC), said
subsidising is not a good solution to the power situation. Abdul Awal
Mintoo said if the government wants 1 percent more economic growth it
needs 2.50 percent growth in electricity production. He said the
government should not increase power and energy tariff unjustifiably.
Editor of the Energy and Power Magazine Mollah Amzad Hossain
moderated the roundtable.

Slack sales for mobile operators in August in BANGLADESH

Mobile phone operators added a mere 0.94 million customers to their
networks in August 2009 , as customers were awaiting new offers by
the operators in September. However, industry insiders said sales rose
significantly in September as a majority number of operators came
forward with new offers during mid Ramadan. According to Bangladesh
Telecommunication and Regulatory Commission (BTRC) statistics
released yesterday, the six mobile operators provided mobile phone
services to 48.91 million subscribers till August 2009. The total
number of mobile phone subscribers was 47.97 million in July. The
top mobile operator, Grameenphone, lost 0. 02 million customers in
August. The company's sales dropped, as it did not lower connection
charges, while some other operators cut connection rates from Tk 800
to below Tk 300. BTRC statistics show that the total number of
customers for Grameenphone dropped to 21.13 million in August from
21.15 million in July 2009. The number of subscribers for the
market's second largest operator, Banglalink, reached 11. 9 million
in August, up from 11.27 million in July. AKTEL crossed the 10
million subscriber mark in August, rising from 9.90 million in July.
Warid totalled 2.63 million customers, Citycell recorded 1.97
million and TeleTalk recorded 1.08 million in August 2009. Despite a
32 percent penetration rate for Bangladesh, there are debates over
how many people actually use the mobile phone. Zakiul Islam,
president of Association of Mobile Telecom Operators in Bangladesh,
said the telecom regulator should come forward with a unified
subscriber reporting format so that the actual number of users can be
seen.

Two BANGLADESHI bank raise authorised capital

State-owned Janata Bank and Investment Corporation of Bangladesh
(ICB) have increased their authorised capital. Authorised capital of
Janata Bank has been raised to Tk 2 ,000 crore from Tk 800 crore,
while ICB increased the amount to Tk 500 crore from Tk 100 crore.
Authorised capital is the maximum amount of share capital that a
company is authorised to issue to shareholders. Part of the
authorised capital can (and frequently does) remain unissued. The
rise in the bank's authorised capital was approved at an
extra-ordinary general meeting (EGM) in Dhaka yesterday, said a
statement. The EGM also approved rising the bank's paid-up capital to
Tk 125 crore through issuance of rights shares at Tk 100 each in
favour of the government. As per the annual report of the bank, it
made operating profit of Tk 700 crore and net profit of Tk 319
crore in 2008. Meanwhile, the finance ministry has approved the
enhancement of the ICB authorised capital, which came into effect
last Sunday. "With the increase in the authorised capital, the
corporation can expand its business activities, as it can raise
working capital up to Tk 500 crore through issuing rights shares,"
said a senior official of the ICB. The existing working or paid-up
capital of the ICB is Tk 50 crore. The official said the increase
was also needed for issuing rights shares, as a proposal for issuing
one rights share against one existing share is awaiting the finance
ministry's approval. The ICB has proposed offering each rights share
at Tk 100 , in addition of Tk 900 as premium. The increase also
creates opportunity for giving bonus shares as dividend, the official
added.

BANGLADESHI shipbuilders flourish on small vessel orders

Local shipbuilders are banking on the ongoing recession to carve
itself a position in the global market, as the demand for smaller
vessels has increased, shipbuilders and analysts said yesterday.
"Orders for small ships have gone up because of the global financial
crisis," said Sakhawat Hossain, managing director of Western Marine
Shipyard Ltd, an export-oriented shipbuilder. "Giant shipbuilders
cannot capitalise on this new market demand, as their projects will
prove to be unfeasible because of the high overhead costs they
bear," he said. He was speaking at the 'BFTI National Shipbuilding
Conference', organised by Bangladesh Foreign Trade Institute (BFTI)
at Sonargaon Hotel, where analysts and shipbuilders focused on
Bangladesh's potential to secure a position in the global
shipbuilding market. Shipping Minister Shajahan Khan, Head of
European Commission Delegation to Bangladesh Stefan Frowein and
Danish Ambassador Einar Hebogaard Jensen were present, while BFTI
Chief Executive Officer Prof MA Taslim chaired the event. Khan said
the government will facilitate the shipbuilding industry to allow it
to excel. Analysts observed that Bangladesh has the scope to emerge as
an export based shipbuilding nation within a decade because of
advantages like cheap labour, a presence of nearly 1 ,00 ,000
skilled and semiskilled workers and industry related educational and
training institutes. A long history of maritime activity and a
favourable geographical location also placed the country at a
favourable position, with about 200 shipyards and workshops to cater
to the domestic needs for water vessels. However, Bangladesh's
opportunity to emerge as a shipbuilding nation under global standards
was created in the last couple of years, as other traditional
shipbuilding nations showed little interests in making small ships.
Two leading local shipbuilders -- Ananda Shipyard and Slipways Ltd
and Western Marine Shipyard Ltd -- have bagged orders to make over
40 small vessels worth about $0.6 billion mainly from European
buyers. Including these two shipbuilders, according to analysts,
about 10 local shipyards are capable of making ships up to 10 ,000
DWT as per international standards. But capacity upgrades and
expansion are needed for a majority of them to compete in the global
arena with shipbuilders in other countries, such as Vietnam,
Indonesia and India. "By 2012, the world will need more than 10,000
vessels, mostly small to medium sized," said the Western Marine MD.
His remarks came at a time when some local shipyard operators took a
go-slow approach in expanding yard capacity to make ships of
international standards, as recession drastically cut demand for new
shipbuilding orders in 2009. "But this is of little relevance to the
Bangladeshi shipbuilding industry, as the market for certain sections
of small-ships and vessels of various types is unaffected by
recession," said Dr Abdullahel Bari, chairman of Ananda Shipyard,
which pioneered in winning orders to build ships for export. Prof
Khabirul Haque Chowdhury, head of the Depart-ment of Naval
Architecture and Marine Engineering of Bangla-desh University of
Engineering and Technology (BUET), said recession has caused a drop
in demand for large vessels. "Shipbuilding recession will have to
end. Orders will be activated, may be of different sizes," he said,
suggesting yards go for expansion and upgrades to win export orders.
Citing examples from South Korea, he said in the past recession, the
country expanded its capacity instead of reducing business scales. "
They succeeded," he said.

Shining gold saddens traders-Sayeda Akter

Gold prices increased for the seventh time in September since January
this year, sending a chill pang to local jewellers amid declining
local demand in the past few years due mainly to its price spiral.
The latest price hike came as the precious metal crossed a $1 ,000
mark in London bullion market recently. However the price is now
hovering around $990 per ounce in the international market. Now the
price of 22- carat gold stands at Tk 29 , 335 a bhori (11.66 grams)
in the local market, a rise from Tk 25 ,194 in January. At the same
time, 21- carat gold is selling at Tk 27 ,994 a bhori, rising from
Tk 23 ,000 , and 18- carat at Tk 24 ,786 from Tk 21 ,286 in January.
Gold jewellery sales dropped by more than 50 percent in the past
three years. The local consumption has declined to 10-12 tonnes a
year now from 45-50 tonnes five years back, and so the annual
turnover of the jewellers has also marked a fall. Presently, the
annual market size of gold jewellery is around Tk 3 ,000 crore, said
the industry people. Small gold jewellery makers and traders now
increasingly opt for producing silver jewellery, as demand for
alternatives, including silver and gold-plated jewellery, is growing
fast, said industry people. They said price hike in the international
market has impacted the local market. Industry insiders said as the
dollar has lost its previous strong foothold, the demand for gold,
now considered as a safe haven, is gradually increasing, and so is
its price. Anwar Hossain, president of Bangladesh Jewellery
Manufacturers and Exporters Association, said local makers are forced
to increase the prices of gold jewellery due to the growing price in
the international markets. "When gold price marks a rise in the global
market, all the member countries of World Gold Council have to
adjust the price, as we all have to buy gold from international
markets," Hossain said. "Apart from used gold, the main source of the
metal for locally made jewellery is the migrant workers, who are
allowed to bring 200 grams of gold each time they come to
Bangladesh." Migrant workers, mainly from the Middle East, and
travellers buy gold at international prices and sell for more in the
local market, which is another reason for the price hike, Hossain
said. "Also, we have to raise the price to safeguard the local
industry. If we do not increase the price of local gold, it may be
smuggled to neighboring countries, where the price is higher, "
explained the association chief. "Foreign traders will purchase gold
at lower prices from us and sell at higher rates in their own
countries," he said. However, Hossain said the price of gold
jewellery in Bangladesh is lower so far than that in the neighboring
countries. He said around 20 percent small manufacturers and traders
of the association have quit business and taken to making silver
jewellery. Simultaneously, consumers' purchasing capacity and the
number of buyers have been constantly declining because of increasing
prices. "The price of gold jewellery has risen beyond the reach of
the common people. Except for weddings, people, especially the middle
class, do not buy gold jewellery," said Setara Gujnavi, who recently
came to purchase jewellery at Baitul Mukarram market for her
daughter's wedding. "We are cautious about choosing jewellery
because we have to strike a balance between the amount of gold and
design," she said. "Other than weddings, we cannot even think of
buying gold jewellery as a gift item."

IMF study gives high marks to its crisis support

International Monetary Fund support of 15 emerging market countries
in the global financial crisis helped them weather the worst of the
turmoil, according to an internal IMF study published Sunday. A mix
of increased resources, policy flexibility, and more focused
conditionality on financing had allowed the IMF to provide improved
support, the 186- nation institution said. In the report "Review of
Recent Crisis Programs, " the IMF said the fund-supported programs
were delivering the kind of policy response and financing needed to
help cushion the blow from the worst financial crisis since the 1930
s Great Depression. "What this study tells us is that, with IMF
support, many of the severe disruptions characteristic of past crises
have so far been either avoided or sharply reduced," IMF managing
director Dominique Strauss-Kahn said in a statement. Strauss-Kahn
underscored that serious challenges remained, particularly in
restoring sustained economic growth and higher employment, but he
also said there were " encouraging signs of stabilization." "The
governments and peoples of the countries concerned deserve the credit
for these efforts," he said. Still, the study cautioned that daunting
challenges remain as the global economy stabilizes from the worst
global recession since World War II, including the timely unwinding
of fiscal and monetary stimulus and fixing bank balance sheets. The
economists compared the typical economic and financial effects of
past crises and analyzed why those outcomes had been avoided so far
in most cases in Armenia, Belarus, Bosnia & Herzegovina, Costa Rica,
El Salvador, Georgia, Guatemala, Hungary, Iceland, Latvia, Mongolia,
Pakistan, Romania, Serbia, and Ukraine. Key factors for the improved
results included the fund's rapid mobilization of large financing
packages for countries hit by the global financial turbulence of late
2008 that followed the collapse of Wall Street investment bank in
mid- September. Almost all the financing packages provided access
beyond the normal limits to fund resources, with more front-loaded
disbursements. In a number of European programs, private sector
involvement was sought. "Importantly, official financing has been
used more to meet actual funding constraints of the private and
public sectors, less to replenish central banks reserves," the IMF
said.

Australia flags rate rise

Australia's central bank chief on Monday said economic stimulus was
set to be eased back as the country hits "recovery phase" after
shrugging off the worst global economic crisis in decades. Reserve
Bank of Australia (RBA) governor Glenn Stevens said interest rates
would be lifted off 49- year lows to keep a lid on inflation as the
domestic economy rises from its "mild downturn". "I think it is
reasonable to conclude, against the benchmarks of historical and
international experience, that Australia has done quite well on this
occasion," he told a Senate committee hearing. Australia moved a 70
billion dollar (61 billion US) stimulus package and slashed rates to
3.0 percent as the world economy dived, helping it avoid recession
and post world-beating growth of 0.6 percent in the June quarter.
"In due course, both fiscal and monetary support will need to be
unwound as private demand increases," Stevens said. "In the case of
the fiscal measures, this was built into their design. The peak effect
of these measures on the rate of growth of demand has probably
already passed." The central bank chief said strong demand from Asia,
particularly China, for Australia's vast resources had lifted the
economy and brightened prospects for the future.

British PM's party to tell bankers to curb bonuses

Britain's beleaguered ruling Labour Party promised tough new action
on bankers' bonuses Monday, as it fights for its life ahead of
general elections next year. Prime Minister Gordon Brown was forced
to spend the first day of his party's annual conference on Sunday
fending off questions about his health. Business minister Peter
Mandelson blasted the BBC for asking Brown if he was dependent on
anti-depressant drugs, saying the rumours circulating on the Internet
were "completely groundless". Mandelson, Brown's de facto deputy,
said it was "absolutely ridiculous" to suggest the prime minister
had a problem with pill use, and blamed politically motivated bloggers
for raising the possibility. With an election to take place by June,
Labour is so far behind the opposition Conservatives in opinion
polls after 12 years in power that it has little choice but to
portray itself as the underdog.

Gulf sovereign funds lost $350 b in global crisis, says UN

Sovereign wealth funds (SWFs) of four oil- exporting Gulf states lost
around 350 billion dollars last year due to the global financial
crisis, according to a UN report. However, the funds -- those of Saudi
Arabia, Kuwait, Qatar and Abu Dhabi -- almost maintained their total
asset value at the end of 2008 after governments injected into them
huge returns from oil income, the United Nations Conference on Trade
and Development ( UNCTAD) said in a report. The World Investment
Report 2009 , released last week, said that assets held by the four
Gulf funds dropped to 1.115 trillion dollars last year from 1.165
trillion dollars at the end of 2007 and that government injections of
300 billion dollars helped narrow their losses. Abu Dhabi Investment
Authority (ADIA) was the most affected, as it shed around 183
billion dollars from the 453 billion dollars it held in 2007. But
the government pumped 57 billion dollars into the fund, helping it
end last year at 329 billion dollars. Kuwait Investment Authority
(KIA), which owns stakes in Daimler and Citigroup, lost 94 billion
dollars from 262 billion dollars it held at the end of 2007. The
Kuwaiti government, however, injected 59 billion dollars, helping
the fund to stand at 228 billion dollars at the end of last year.
Qatar Investment Authority (QIA) lost 27 billion dollars and ended
at 66 billion dollars in 2008 , while Saudi assets, run by the Saudi
Arabian Monetary Agency (SAMA), valued at 501 billion dollars at
end-2008 , shed around 46 billion dollars, the report said. Gulf
SWFs have never disclosed the size of their assets nor losses. The
UNCTAD report said that in recent years Gulf SWFs have become more
proactive investors, entering riskier investments and targeting
strategic holdings in international companies. "The recent collapse
of real estate and equity markets has generated large losses for
SWFs, but it also offers investment opportunities," UNCTAD said. As
a result, some Gulf SWFs have become more cautious in investing
abroad and turned to investments in domestic economies. The four Gulf
states pump more than 13 million barrels of oil per day, just under
half of total Opec production of around 29 million bpd.

China to launch Nasdaq-style board in late October

China will launch its long-awaited Nasdaq-style ChiNext board in
Shenzhen at the end of October, state media reported Monday. A new
round of firms seeking to list on the board will publish their
prospectuses for initial public offerings after the week-long
National Day holiday, which ends on October 8 , the official
Securities Times reported. These firms, along with 19 companies that
have already released their prospectuses, will make their debut on
the board in the last 10 days of October, the newspaper said, citing
an unnamed "authoritative" source. Regulators hope the new market
will help fuel start-ups and other companies with high-growth
potential in the world's third-largest economy, following the example
of Wall Street's Nasdaq. But there have also been worries that the new
board, which attracted strong interest from investors, may be
diverting funds from the main boards and drag down stock prices. The
first batch of 10 firms, which set their IPO prices and took
subscriptions last week, aim to raise up to 6.68 billion yuan (977.5
million dollars) -- more than double the 3.16 billion previously
planned.

Former Lankan privatisation chief reinstated

Sri Lanka on Monday re-instated the island's controversial former
privatisation chief despite police investigations against him for
causing huge losses for the state, the government said. President
Mahinda Rajapakse restored Punchi Banda Jayasundara as head of the
treasury, the government information department said. He was
stripped of the post a year ago over the sale of bunkering facilities
at Colombo port.

Yen hits eight-month dollar peak

The yen struck an eight-month high point against the dollar on Monday
as exporters repatriated overseas earnings and Japan insisted that it
would not intervene to weaken its currency. The dollar sank as low as
88.25 yen, the weakest since late January. In late morning London
trade it stood at 89.49 yen, down from 89.60 in New York on Friday.
The European single currency fell to 130.90 yen from 131.64 , and
to 1.4627 dollars from 1.4686 , as also traders digested the
re-election of Angela Merkel as German chancellor. The pound
continued to suffer after Bank of England governor Mervyn King had
said last week that the currency's weakness was " helpful" for
rebalancing the British economy. Sterling sank on Monday as low as
1.0752 against the euro, a level last seen in December. Markets were
looking ahead to US data including personal income and spending
figures on Thursday as well as a key monthly jobs report on Friday.
On Monday, Japanese Finance Minister Hirohisa Fujii reiterated that
the new government was not considering a foray into the market to
sell the yen and help exporters. "The recent dollar trend (against
the yen) is not abnormal," he said. It would be a "mistake" to
artificially weaken the yen to defend exporters, he added, restating
the new government's view that a stronger yen would boost consumption
at home thanks to cheaper imports. His remarks gave dealers "the
green light" to sell the dollar for yen, Mizuho Corporate Bank
senior dealer Yuichiro Harada told Dow Jones Newswires.

Singapore visitor arrivals fall in August

Singapore's visitor arrivals in August fell 0.7 percent from a year
ago, its smallest decline since the start of 2009 , the government
said Monday. The Singapore Tourism Board (STB) said 844 ,000 visitors
made trips to the city-state in August compared with 850 ,000 a year
ago. Airfare promotions and marketing activities by the board to
coincide with Malaysia's national day public holiday and Hong Kong's
summer holidays boosted arrivals from the two markets, the STB said
in a statement. Arrivals from Malaysia were up 40 percent annually
to 62 ,000 while 36 ,000 travellers arrived from Hong Kong, up 35
percent, the STB said. Singapore has said it expects to receive about
9. 0-9.5 million travellers this year, generating an expected
12.0-12.5 billion Singapore dollars (8. 5-8.9 billion US) in
revenue. It received 10.1 million visitors last year, missing its
target of 10.8 million as travel slowed in the second half due to
the global slump.

Oil below $65

Oil prices fell on Monday, falling under 65 dollars in London, amid
weak energy demand in the United States, the world's biggest oil-
consuming nation, analysts said. Brent North Sea crude for delivery in
November dropped 55 cents at 64.56 dollars a barrel. New York's
main contract, light sweet crude for November delivery, shed 58
cents to 65.44 dollars a barrel. Concerns over weak US energy demand
are resurfacing after data released Friday showed orders for
American durable goods fell 2.4 percent in August against market
expectations for a rise of 0.4 percent. Durable goods are those
likely to last three years or more, such as cars and appliances, and
represent a key segment of the manufacturing sector. "International
economic news was generally on the disappointing side of market
expectations, leaving metal and oil markets lacking impetus,"
analysts from the Commonwealth Bank of Australia said in a note to
clients. "The US economic data failed to allay concerns that US oil
demand remains tepid," they added. Oil prices had closed higher on
Friday on rekindled tensions over Iran's nuclear programme, traders
said. World leaders last week demanded that nuclear inspectors from
the International Atomic Energy Agency (IAEA) be granted access to a
previously secret plant in crude producer Iran and threatened to
impose tough new sanctions on Tehran. Looking ahead, the oil market
was expected to closely digest US non-farm payroll figures and the
American unemployment rate for September due for release on Friday.
The monthly payrolls report is seen as one of the best indicators of
economic momentum in the world's biggest economy.

Irish recession boosts EU vote's Yes camp: Analysts

The deep recession plaguing Ireland is a boon for the Yes camp in the
country's second referendum on the EU's Lisbon Treaty, analysts say.
Experts say voters are seeing the European Union as a potential
saviour which can pull the once-booming Ireland out of the financial
crisis. On June 12 last year, 53 percent voted against the reform
treaty, but "voting 'no' is a luxury we don't have any more," said
Michael Marsh, Professor of Comparative Political Behaviour at
Trinity College in Dublin. Back then, experts did not predict a
reverse of the "Celtic Tiger" economy's formidable growth. Ireland's
gross domestic product is set to slump by a record eight percent,
while unemployment could top 15 percent -- triple the rate when the
first referendum was held. "We need all the help we can get", Marsh
told AFP, ahead of the second referendum to be held on Friday. "This
is not the time to be cutting ourselves off the international
organisations." Peadar O'Broin, a researcher at the Institute of
International and European Affairs in Dublin, said: "People have seen
the economic security from which Ireland benefits as a member of the
EU -- particularly eurozone membership -- through the now infamous
comparison between Ireland and Iceland." The Nordic country, outside
the 27- country bloc, has seen its economy collapse and has applied
for membership, seeing the EU as a safe haven from the financial
storm. "The economic downturn has made people more aware of the
importance of Europe," said Alan Barrett, a research professor at the
Economic and Social Research Institute in Dublin, citing " awareness
of the support the European Central Bank has given during the banking
crisis". Without the ECB, "not only would our financial system have
collapsed but it would have been impossible to repair it", Finance
Minister Brian Lenihan said. The Yes camp is stressing that without
the 120 billion euros (176 billion dollars) recently injected by
the ECB, Irish banks would probably have had to close. "The harsh
fact was that a 'no' vote would shatter international confidence in
the country's ability to confront the financial crisis," Lenihan
added. Paul Duffy, president of the American Chamber of Commerce
Ireland, which numbers some 600 businesses, also warned against a
"no" vote. "We have no doubt that a second rejection of the Lisbon
Treaty would inflict a severe injury on the prospects for future
foreign direct investment in Ireland," he said.

In BANGLADESH budget monitoring meetings begin October 4

The Finance Ministry is set to begin a series of monitoring meetings
to review the progress in implementing the national budget for
2009-10 financial year. The first meeting will be with the energy
division on October 4 as the government has prioritised the power
and energy sector projects to meet the growing needs for electricity
and gas. The meetings will be continued till October 13 when the
finance ministry will discuss and review the progress of the budget
implementation with all ministries and divisions. This is the first
time that the ministry has taken such initiatives to oversee the
implementation process in such a way. The ministry will focus on
development programmes at the meetings, as the experience in
implementing such programmes was not satisfactory, an official said.
In the past a big portion of the allocated fund for development
projects remained unused mainly because of the slow implementation
process. The current budget has allocated a big amount of Tk 30 ,500
crore for the development programmes. Following the budget
announcement in June, economists suggested the government to take
special steps to ensure timely implementation of its development
projects under the Annual Development Programme (ADP). They also
cautioned that the success of the fiscal targets could not be achieved
without implementing the ADP. Finance Minister AMA Muhith also
admitted that the major challenge would be the implementation of the
budget. The minister in his budget speech, however, said that the
government will initiate special measures to ensure timely
implementation of the budget, especially the ADP. The monitoring
meetings are the major part of the initiatives. The finance ministry
has prepared a priority list of over 200 programmes and advised the
ministries concerned to submit quarterly reports on the progress of
the programmes. The ministry will also have a mid-term meeting in
December when it will review the progress and suggest further
measures to accelerate the process.

BANGLADESHI prime minister urges more foreign investment

Putting bounteous business bonanza on stake, Prime Minister Sheikh
Hasina invited foreign investors to make investment in Bangladesh in
potential sectors like banking, energy, infrastructure, agriculture,
agro-based industries and so. She made the call at a business meet
dubbed ' Investment Summit Bangladesh 2009 ' at Hotel Grand Hyatt in
this US city on Sunday afternoon as part of the PM's busy schedules on
the sidelines of the UN General Assembly session she addressed on
September 26. Businessmen from the Pan Asian-American Chamber of
Commerce were present at the meeting where they exchanged views with
the Prime Minister about the investment-friendly environment
prevailing now in Bangladesh. Prime Minister's son, Sajib Wajed Joy,
was also present at the summit meet on investment where rewarding
business offers from the head of government were aplenty. "In today's
globalised world, the farsighted and wise are taking immediate
advantage of opportunities for expanding their businesses. Surely,
such opportunities exist today for investors in Bangladesh," she told
the gathering. Indeed, she said, immense opportunities do exist for
new investments in capital market, banking, energy, infrastructure,
agriculture, agro-based industries, textiles, outsourcing, manpower,
pharmaceuticals, healthcare, biotechnology, light engineering,
shipbuilding, tourism, information technology, education, among
others. Sheikh Hasina mentioned that her government wants to turn
Bangladesh into a middle-income country by 2021 for which foreign
investment is a significant component. To attract the foreign
investors, fortunately, several conditions already exist in
Bangladesh's favour-a homogenous secular society, progressive
democracy, market-oriented economy, low-cost labour, entrepreneurial
ethos of the workforce, strategic geographic location accessible to
international land and air routes and a large domestic consumer
market of 160 million, the Prime Minister told her business
audience. "Complementing these favorable factors is our government's
incentives of zero duty for export-oriented industry, liberal tax
holidays, easy repatriation of profit, and even capital, in the
event of closures." The Prime Minister noted that such factors
prompted Goldman Sachs to include Bangladesh in its Next 11-- after
Brazil, Russian Federation, India and China--as one holding huge
potential. The government has initiated efforts for making the Board
of Investment effective and efficient.

Profits roll in for AKTEL-Md Hasan

AKTEL, the market's third largest mobile operator, has returned to
profitability in the second quarter of 2009 , after a gap of two
years, putting its financial position second to the largest operator,
Grameenphone. The company's profit after tax and minority interest
(PATAMI) was Tk 618 million at the end of June 2009 , which was a
deficiency of Tk 214 million in June 2008 , according to the
financial report of Axiata, the Malaysia-based controlling company
of AKTEL. In the six operator mobile market, Grameenphone (GP), which
is controlled by Norway-based Telenor, was the only profitable
operator till March 2009. GP's operating profit stood at Tk 569.63
crore at the end of June 2009. Cost management and lowering
subscriber acquisition costs mainly helped AKTEL return to breakeven.
Initially, the company made profits until June 2007 , after which it
faced massive financial losses for two years because it had to
compensate the telecom regulator with Tk 145 crore for involvement in
illegal call termination through VoIP (voice over internet protocol)
technology. AKTEL's EBITDA (earnings before interest, taxes and
depreciation) improved by 44 percent to Tk 3 ,539 million in June
2009 , up from Tk 2 ,459 million a year ago. "The EBITDA improved
significantly mainly from lower subscriber acquisition and related
costs, and reduced interconnect tariff for calls between operators
by the telecom regulator," says the Axiata report. Mobile phone
operators in Bangladesh used to pay Tk 800 as connection taxes on
behalf of new customers. However, from July last year, some
operators, including AKTEL, decided not to bear the tax anymore to
minimise losses. The telecom regulator at the end of 2008 also cut
interconnection tariff between mobile to landline or mobile-to-mobile
from Tk 0.40 to Tk 0.25. Axiata Group Berhad (formerly known as TM
International) is controlling interests in Malaysia, Indonesia, Sri
Lanka, Bangladesh and Cambodia with significant strategic stakes in
India and Singapore. Presently, Axiata controls 70 percent shares of
AKTEL, while the Japanese NTT DoCoMo is controlling the remaining 30
percent.

IN BANGLADESH GRAMEEN PHONE launches IPO-Sarwar A Chowdhury

Leading mobile phone operator Grameenphone is set to open its initial
public offering (IPO) subscription to the public next week to raise
Tk 486.08 crore. Subscription will begin next Sunday and close on
Thursday (October 8). However the opportunity will remain open to
non-resident Bangladeshis up to October 18. Raihan Shamsi, chief
corporate affairs officer of Grameenphone, said: "We are optimistic
about the launch of the GP IPO next week. Our IPO subscription
period for investors will begin nationwide on October 4 and run till
October 10 for resident Bangladeshis and October 18 for the
non-resident Bangladeshis." "We are honoured to be a part of the
largest IPO in the history of the Bangladesh capital market and would
like to thank SEC, DSE and CSE for their on-going commitment and
support to our transaction throughout the process," he said. Despite
concerns over liquidity outflows from the market during subscription
period, market insiders anticipate no such impacts. "Those who intend
to bid for Grameenphone shares have already withdrawn money from the
market by selling stocks from their portfolios," Sheikh Mortuza
Ahmed, head of merchant banking division of Prime Bank, told The
Daily Star yesterday. It means, he said, the market has already
absorbed the first shock and it did not observe any major fall.
Grameenphone, which received the final approval from the Securities
and Exchange Commission (SEC) on August 20 , will float 69 , 439 ,400
ordinary shares worth Tk 10 each, in addition to a Tk 60 premium
per share. As the market lot has been fixed at 200 shares, a
prospective investor will have to deposit Tk 14 ,000 to any of the
15 selected banks and the state-run Investment Corporation of
Bangladesh for Grameenphone shares. Cititgroup Global Markets
Bangladesh Private Ltd is the issue manager of the IPO, the largest
of its kind in the history of the Bangladeshi market. The market has
been waiting for the Grameenphone IPO for a long time now, but it
was delayed several times. Although Grameenphone finalised its plan to
raise $300 million from the capital market in July 2008 , it cut
the IPO and pre-IPO size to $125 million, as the company's valuation
dropped to $3.2 billion from a previous $3.75 billion and the
foreign institutional investors did not participate in pre-IPO
bidding due to the global economic slowdown. The pre-IPO or private
placement was later completed with local participation in December
last year. The final prospectus was submitted in January this year.
But the Dhaka Stock Exchange in March this year decided not to list
the securities with a face value of Tk 1 and urged Grameenphone to
increase its share price to Tk 10. Later, with direction from SEC,
Grameenphone increased share prices to Tk 10.

Open sky for CHITTAGONG airport likely-SOHEL PAVEZ

The government considers opening up Chittagong Shah Amanat
International Airport to international flights, aiming to make it a
regional hub in future. "Adoption of an open sky policy for the
Chittagong airport is now under our active consideration. We want
that it turns a major aviation hub in South Asia," Hedayetullah Al
Mamoon, civil aviation and tourism secretary, told The Daily Star
yesterday. He said a feasibility study is underway to evaluate the
policy. He expects that such a policy will have a positive impact on
trade and commerce at the port city besides attracting foreign
tourists to visit the world's longest unbroken sea beach in Cox's
Bazar. The airport in Chittagong, which was modernised earlier this
decade at a cost of more than Tk 500 crore, has a capacity to handle
as many as 3 million passengers and nearly 6 ,000 tonnes of cargo a
year, as its runway allows wide bodied aircraft to land. But much of
its potential remains untapped due to scanty air movement at the port
city. Analysts linked the under-utilisation of the airport to a lack
of infrastructure and poor air traffic, which discourages airlines to
fly. They said problems with Departure Control System (DCS),
refuelling, cargo handling and flight catering remain. Domestic
carriers -- Biman, GMG, United -- and two foreign airlines --Air
Arabia and Oman Air -- are presently operating flights from the
airport. Thai Airways once began flights from the port city but
discontinued operations in 2008. Officials of the Civil Aviation
Authority, Bangladesh (CAAB) however said it will improve facilities
to lure more airlines to use the port. "We will remove all the
shortcomings at the airport to attract airlines. We are also
receiving positive responses from airlines to operate from there,"
said CAAB Chairman Air Commodore Sakeb Iqbal Khan Majlis, citing the
interests of carriers like Dubai based budget airline Fly Dubai to
operate flights from the Chittagong airport. He said opening up the
airport for all carriers will not only help reduce pressures on Zia
International Airport in Dhaka but also increase Chittagong airport's
viability. "It will attract more airlines to use the airport, as
there will be no restrictions on flight operations once the open sky
policy came into force," he said. Majlis said CAAB will draft an open
sky policy for Chittagong, if the results of the feasibility study are
positive. "Opening up the Chittagong skies will help increase
government revenue earnings because of an increased movement of
carriers," he said. This policy for the Chittagong airport will be
effective after a final approval from the cabinet, Majlis added. Kazi
Wahidul Alam, editor of aviation and tourism fortnightly 'The
Bangladesh Monitor', hailed the plan, but said the port suffers from
inadequate infrastructure to lure carriers. "It is a good move, but
the government needs to develop infrastructure facilities to attract
carriers," he said. Traffic from Chittagong remains at low levels and
efforts should be made to develop markets to lure airlines, said
Alam. "If there are facilities, people will come to avail services."

No more free lunch in Raul Castro's Cuba

President Raul Castro is taking a bold gamble to ease communist
Cuba's cash crunch by eliminating a costly government lunch program
that feeds almost a third of the nation's population every workday.
The Americas' only one-party communist government, held afloat
largely by support from its key ally Venezuela, is desperate to
improve its budget outlook; the global economy is slack, and Havana
is very hard pressed to secure international financing. Raul Castro,
76 , officially took over as Cuba's president in February 2008 after
his brother, revolutionary icon Fidel Castro, stepped aside with
health problems. Though some wondered if Raul Castro would try to
move Cuba's centralized economy toward more market elements, so far
he has sought to boost efficiency and cut corruption and waste
without reshaping the economic system. And so far it has been an
uphill battle, something akin to treading water. But now, Raul Castro
has moved to set in motion what will likely be the biggest rollback of
an entitlement since Cuba's 1959 revolution -- starting to put an
end to the daily lunch program for state workers, as announced Friday
in Granma, the Cuban Communist Party newspaper. In a country where
workers earn the average of 17 dollars a month, and state subsidized
monthly food baskets are not enough for families, more than 3.5
million Cuban government employees -- out of a total population of
11.2 million -- benefit from the nutritionally significant free
meal. The pricetag is a cool 350 million dollars a year, not
counting energy costs or facilities maintenance, Granma said. But
that will come to a halt in four ministries experimentally from
October 1 , Granma said. As workers stream to the 24 ,700 state
lunchrooms, the government "is faced with extremely high state
spending due to extremely high international market prices, infinite
subsidies and freebies," Granma explained. Parallel to the cutback,
workers will see their salaries boosted by 15 pesos a workday (.60
dollar US) to cover their lunch. It is a dramatic shift in Cuba, where
the government workers' lunchroom has been among the
longest-standing subsidies, though even authorities have called it
paternalistic. And more troubling, especially for authorities, is the
fact that the lunchrooms' kitchens have become a source of economic
hemorrhaging, from which workers unabashedly make off with tonnes of
rice, beans, chicken and cooking oil to make ends meet. The Castro
government is keen to reduce the 2.5 billion dollars a year it spends
on food imports, which it has to buy on the international market in
hard currency. "Nobody can go on indefinitely spending more than they
earn. Two and two are four, never five. In our imperfect socialism,
too often two plus two turn out to be three," Raul Castro said in an
August 1 address alluding to corruption problems. Some Cubans were
aghast at the idea of losing a free lunch. "What am I going to buy
with 15 pesos," asked a bank worker, who spoke on condition of
anonymity. "I cannot even make anything, even something horrible, at
home for that little." But Roberto Reyes, a construction employee,
said sometimes the state lunch is so bad, he would rather not eat it
-- and pocket the small monthly raise. The president has said health
care and education were not cuts he would willingly make. But Cubans
wonder how long it will be until the legendary monthly ration books
with which Cubans receive limited basic food goods, such as rice and
beans, for free, come under the budget axe.

OECD warns G20 to put horse before cart on bank reform

Banks, bonuses, tax havens and under- regulation caused the financial
crisis and are the keys to reform. Not so, the OECD warns as the G20
takes steps in such areas. Compromises on action to deal with
symptoms, such as bonuses, rather than action on real causes could
even end up doing more harm than good, the OECD said in a report and
remarks to AFP. The Organisation for Economic Cooperation and
Development says that progress on new rules to strengthen the capital
base of finance companies and related regulations does go in the
right direction. But, in the words of the author of the report,
Adrian Blundell-Wignall, much of the focus in other areas, such as on
bonuses, tackles " symptoms instead of causes" and "puts the cart
before the horse." Instead the focus should be on matters which are
scarcely being discussed. Among these issues are: - Preventing the
spread of failure, or " contagion", by erecting "firewalls" within
financial companies; - Requiring the company risk manager to be on
the main board with freedom to speak out without fear of the chief
executive. This would ensure that boards were fully informed, and
would focus more on the interests of shareholders rather than on
their own incentive pay; - Ensuring that directors of financial
companies are competent and understand their business, instead of
meeting a requirement merely to have no criminal convictions as is
the practice now; - And reforming national tax regimes in leading
countries. This is because onshore tax incentives encourage the legal
use of offshore entities and complex instruments to take best
advantage of onshore tax allowances. The Organisation for Economic
Cooperation and Development is a policy forum for the 30 leading
industrialised economies, and participated in the G20 talks on
reform of the global system. The report said: "A widely held myth
about the current crisis is that it has occurred in a regulatory
vacuum." Although deregulation had been a factor, the crisis broke
"within an overall framework of complex rules" and supervision.
Regulatory arrangements should be updated and streamlined, the report
argued. On bank bonuses, Blundell-Wignall said: " Excessive bonuses
come out of excessive profits from excessive risk-taking. "If you
just cap bonuses without dealing with excessive risk, the problem is
not solved. If you get the corporate rules, structures and
governance right, you will deal with the bonuses. "Governments have
no place sitting in the boardrooms setting wages." The report argued
that if boardrooms came under increased pressure to work for
shareholders, the budgets for bonuses would be contained. A pivotal
step would be to free the chief risk officer from fear of sanction by
the chief executive. "If the chief executive loses direct control of
high risk activities because of firewalls, and if the risk officer
has to be a director reporting to the chairman and board, the balance
of power and risk-taking changes. This is the key," Blundell-Wignall
said. He said another central issue was the spread of damage when a
financial entity in a group failed. "The concept of contagion of risk
is about the structure of companies, but it isn't being addressed,"
he warned. Blundell-Wignall, who is deputy director of finance and
enterprise affairs at the OECD, told AFP that the causes of the
crisis lay with policymakers in many fields and in many countries.
"At the root of all this is public policy," he said. " On the macro
economic side, the global problem lies at the door of misaligned
exchange rates. "This is not a US or European policy matter. They
have no control of this. It is mainly driven from Asia, the Midddle
East and parts of Latin America where they have pegged their
currencies to the dollar." The report "Reform and exit strategies"
implies that the main causes of the global crisis were borrowing by
governments and unduly low interest rates by central banks. Official
distortion of exchange rates then prevented markets from absorbing
the global trade and savings imbalances which resulted. In the West,
a social bias towards "easy money policies" led to "excess liquidity,
asset bubbles and leverage."

BANGLADESHI FBCCI demands more time for income tax return

The Federation of Bangladesh Chambers of Commerce and Industry
(FBCCI) requested the government to extend the time for submitting
income-tax return, as many taxpayers might miss the deadline. In a
letter, signed by FBCCI President Annisul Huq, the apex trade body
asked the National Board of Revenue (NBR) chairman to consider the
request as members of the business community were busy for Ramadan,
Eid-ul-Fitr and Durga Puja. Currently September 30 is the last date
for annual submission of the income-tax return. The request "is under
active consideration", an NBR official said, while the response so
far from the taxpayers is very negligible. "I think majority
taxpayers are expecting extension of the time like previous years,"
the official added. The deadline is likely to be extended by one
month at initial stage. Last year, the board had extended time for
individuals' tax return twice. A large number of businessmen,
professionals and top individual taxpayers who are yet to submit
return have requested the revenue board to extend the time. NBR
received a total of 670 ,000 million tax returns worth Tk 7.92
billion within the deadline of November 12 last year. The
income-tax-collection target has been fixed at Tk 16 ,560 crore for
the current fiscal, 27 percent higher than previous year. Meanwhile,
the government is expecting to increase the annual income tax by more
than Tk 20 ,000 crore at the end of its 5- year tenure through
creating a spontaneous environment.

Spain looks to higher taxes to rein in deficit

Spain's government Saturday approved a draft budget providing for tax
hikes worth nearly 11 billion euros to rein in the deficit as it
struggles with recession and Europe's highest jobless rate. "The sum
of these measures will result in revenue of around 10.95 billion
euros (16.07 billion dollars), or around one percent of our gross
domestic product," Economy Minister Elena Salgado said after a cabinet
meeting. Under the new budget, the main rate of value- added tax will
rise from 16 percent to 18 percent and a lower rate from seven
percent to eight percent, starting July 1. The lowest rate of all
will remain at four percent. The government also intends to end a 400-
euro income tax allowance and hike the tax on capital investment
revenue, from 18 percent to 19 percent on the first 6 ,000 euros
and 21 percent thereafter. The government, which denies it risks
hindering an economic recovery that it expects to begin in 2010 ,
also cut public spending projects by 3.9 percent from 2009 to
185.24 billion euros. Socialist Prime Minister Jose Luis Rodriguez
Zapatero had made reducing taxes a key plank of his government since
taking office in 2004.

Huge apparel buyers expected this year in BANGLADESH-Refayet Ullah Mirdha

Bangladesh expects a massive brace of international buyers this year
as two major trade bodies are preparing to host two important
international apparel expositions in November. In the last fiscal
year the country outperformed in garment exports to many destinations
as the buyers flocked here to purchase cheap apparels despite
recession, industry insiders said. The BATEXPO-09 will be held on
November 5-7 under the auspices of Bangladesh Garment Manufacturers
and Exporters Association ( BGMEA). "We expect buyers in large number
this time because Bangladesh is now considered a lucrative place for
global apparel merchandisers, " BGMEA President Abdus Salam Murshedy
said. Cheap basic apparel products will attract new buyers from
Japan, South Africa, Mexico and Brazil to the annual exposition this
time, he added. Countries like USA, EU, Australia, Canada, China and
India are also expected to participate in the show This year the
foreign buyers have already confirmed for 11 stalls to participate
in the 20 th BATEXPO to be held at the Pan Pacific Sonargaon Hotel,
according to the apex trade body for the apparel sector. Similarly,
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA)
is going to organise its 5 th Knitexpo-09 on November 2-4 at Dhaka
Sheraton Hotel, a BKMEA official said. As part of the exposition,
Fazlul Hoque, the BKMEA president, visited Japan and Hong Kong
recently to invite the buyers of these potential markets to
participate in the exposition. "This year's Knitexpo will be the
biggest event as 80 international buyers have already confirmed
their participation. The number of such foreign participants would
cross 100 ," Hoque said. He said he is going to South Africa and
Botswana Saturday to invite the buyers and investors to visit
Bangladesh. Bangladesh exported knitwear worth $6.429 billion in
2008-09 fiscal-year showing a 16.21 percent growth over the same
period a year earlier. During the same time Bangladesh exported
woven items worth $5.918 billion registering a 14.54 percent
growth, Export Promotion Bureau (EPB) data said.

Gulf single currency should be phased: Kuwait

Gulf states should implement a monetary union and single currency in
phases, Kuwait's central bank governor said in comments published on
Sunday, casting further doubt on a 2010 target date. "Due to the
limited progress achieved so far... I believe that the best way is to
work out an administrative plan for the monetary union and single
currency and implement it in stages," Sheikh Salem Abdulaziz al-Sabah
told Awan newspaper. The six-nation Gulf Cooperation Council (GCC)
plans to launch monetary union and a single currency in 2010 ,
although many experts believe the target date is too ambitious and
unrealistic. Kuwait was one of four GCC members which in June signed
an accord to create a joint monetary union council, a prelude to
establishing a Gulf central bank and launching monetary union and a
single currency. OPEC kingpin Saudi Arabia, Qatar and Bahrain also
signed the pact, while the remaining two members, the United Arab
Emirates and Oman, did not. The UAE was upset at the Saudi capital
Riyadh being selected to host the future GCC central bank, while
Oman withdrew from the monetary union in 2007 saying it was not
ready to meet the preconditions.

Hungary sees falling car sales

Car sales are falling sharply in Hungary in contrast to many other
European countries where governments have launched car scrapping
bonus schemes to get the auto industry back on its feet. Auto
retailers' association Attila Fojt forecast sales of 70 ,000 units
for the whole of 2009 , compared with 160 ,000 in 2008. The record
was 208 ,000 in 2003.