BB guards money market, not capital market: official

Dhaka, Jul 28 ( bdnews24. com)-A central bank official assured
representatives of the country's twin bourses and the capital market
regulator on Tuesday that it is working for a transparent, vibrant
and buoyant economy. "As the money market's guardian, the central
bank monitors the activities of banks and financial institutions, it
will never hamper the capital market," Bangladesh Bank deputy
governor Murshid Kuli Khan told a delegation from the Dhaka and
Chittagong stock exchanges and the Securities and Exchange Commission.
"The Bangladesh Bank has no business knowing the content of an
individual's portfolio," Khan told the delegation at the BB's head
office. He said the central bank's job is to keep an eye on the
money market, while the SEC has oversight on the capital market.
Khan also said the banking regulator had not mounted an investigation
into the activities of any bank "The central bank is not
investigating investments in the market made by any bank," he said.
"Rumours are the cause of any fall in the market now." DSE president
Rakibur Rahman echoed the BB official, saying the drop in turnover
and indices had occurred without any apparent cause. "It is not true
that panic shook the market over the BB directive for submission of
monthly stock portfolio reports of all banks," said Rahman, contrary
to a previous statement on the matter. On July 15 , Rahman blamed
market intervention by the central bank for the stock market's
downturn-an allegation the bank refuted. Rahman had said the bank's
new directive would stymie the market's growth.

Sugarcane farming drops by half in the north

Sugarcane cultivation by four mills in the north is far from reaching the
target as farmers have opted for other cash crops. Sugarcane growers are
complaining of harassment and delayed payment from sugar mill owners and
unsupportive government policies. The four mills were able to reach the
target only halfway. The four sugar mills in Dinajpur, Thakurgaon,
Panchagarh and Joypurhat, which failed to achieve their sugar production
targets, are counting Tk 153 crore in losses. The sugar mills cultivated
19 ,842 acres of land, while the target was 35 ,950 acres, aiming to
produce 178 ,578 tonnes of sugarcane. The industry people said the target
would no longer be met because of adverse weather conditions. Setabganj
Sugar Mill of Dinajpur cultivated 4 , 300 out of 7 ,000 acres of land,
Thakurgaon Sugar Mill of Thakurgaon used 5 ,492 out of 14 , 000 acres,
Panchagarh Sugar Mill in Panchagarh farmed 5 ,850 out of 10 ,000 acres
and the Joypurhat mill cultivated 4 ,200 out of 4 ,950 acres for
sugarcane farming. The four sugar mills cultivated at least 30 ,000 acres
land last year. This year, the four mills have cultivated 55.1 percent of
land, recording the lowest production of canes in the history of sugar
mills. Generally, at least 55 ,000 farmers under the four sugar mills
cultivate sugarcane, but the number has dropped to 22 ,000 this year. "In
fact, the land under sugarcane cultivation is much lower than shown,"
claimed Ali Mortuza, president of Setabganj Cane Growers Association. Atul
Chandra Roy, 45 , from the village of Dollah under Chirirbandar upazila in
Dinajpur, said he had grown sugarcane every year in the past. " This year
is an exception." He said the farmers reduced sugarcane cultivation because
of the difficulties in obtaining payment from sugar mill owners. Last year,
mill authorities purchased sugarcane from farmers at Tk 153 per maund. But
farmers alleged that most farmers are yet to get their dues and refused to
cultivate this year. "Last year, we staged a series of protests to get our
dues. Even government agencies supported sugar mill owners for their own
interests," said Roy. "In such a situation, it becomes very difficult for
us to make ends meet." Roy said local farmers have now shifted their focus
towards other cash crops and cultivation of vegetables instead of
sugarcane. Officials form the Department of Agricultural Extension
suggested farmer-friendly policies and timely payment to save sugarcane
cultivation.

Stand together to get G20 fund share Muhith calls upon Asia Pacific countries at workshop on recession

Finance Minister AMA Muhith yesterday called upon the Asia Pacific
countries to raise their voice together to claim their share from a
G20 fund created to tackle the fallout of global recession. He also
demanded a proper distribution of the $1.1 trillion fund generated by
G20 leaders in April this year to help developing countries and
stimulate world trade. Of the fund, developing and poor countries will
receive only $50 billion. The World Bank and the International
Monetary Fund are likely to manage the fund. The minister also
expressed dissatisfaction at the poor allocation of $50 billion for
the underprivileged countries to deal with the financial crisis that
originated in the developed countries. "There is a group of vulnerable
countries and what kind of system should be followed to distribute
this fund is very important," Muhith told the inaugural session of a
four-day regional workshop on strengthening responses to the global
financial crisis in the Asia-Pacific region at Sonargaon hotel in
Dhaka. United Nations Economic and Social Commission for Asia and the
Pacific (UNESCAP) and the Bangladesh Bank jointly organised the
programme to work out realistic and viable policy suggestions required
for the region to weather the ongoing global recession. Finance
ministry and central bank officials of 17 Asia Pacific countries,
including China, India, Malaysia, Fiji and Russia, are taking part in
the workshop. Muhith also came down heavily on the global financial
regulators -- IMF and WB -- for their ' sheer failure' to warn member
countries about the recession. "Early warning system has totally
failed. We've to think about restructuring the system," said the
minister. He also urged the participating countries to work together
for restructuring the global financial system that he said had failed
to give the countries warning before the financial crisis. The finance
minister also felt the necessity to change the global attitude to use
resources for trade financing in the wake of the financial meltdown
that has affected trade financing badly. "Reserves could be used for
trade financing such as purchase of fuel, fertiliser and food," Muhith
suggested. Easy access to trade financing is crucial to absorb
financial shock, he said. The minister however said keeping up the
domestic demand is vital to absorb the shock following a decline in
demand. "Creating domestic demand is most obvious to mitigate the
impacts of the crisis," he said. More spending is needed for social
and infrastructure development to keep the domestic demand up amid the
crisis, he suggested. Bangladesh Bank Governor Dr Atiur Rahman
presented a keynote paper at the session chaired by BB Deputy Governor
Nazrul Huda. Nagesh Kumar, director of Macroeconomic Policy and
Development Division of ESCAP, delivered the address of welcome.
Rahman called upon the regional countries to strengthen cooperation in
response to the current crisis. "To grow intra-regional trade is
required to reduce dependence on North American and European markets,"
he said. A strong regional bond market can also help channel regional
savings into real sectors, he added. The governor also echoed the
finance minister for restructuring the global financial system.

Hitachi to take control of key businesses

Japan's Hitachi Ltd., hit hard by the global recession, plans to spend up
to 3.2 billion dollars to take full control of five domestic units with
strong growth prospects, a newspaper said Monday. The sprawling
conglomerate, which last year suffered the largest loss ever for a Japanese
manufacturer, is looking to pay to 300 billion yen (3.2 billion dollars)
for shares in the businesses, the Nikkei business daily said. The tender
offers will begin in late August and are expected to be announced this week,
the newspaper said without naming its sources. The group currently holds
stakes of about 50 to 70 per cent in the five subsidiaries - Hitachi
Maxell, Hitachi Plant Technologies, Hitachi Information Systems, Hitachi
Software Engineering, and Hitachi Systems & Services. The Nikkei said of
its 16 listed subsidiaries, Hitachi chose those firms for their strong
growth prospects. Hitachi Maxell makes lithium-ion batteries, used in
personal computers and many other electric devices, while Hitachi Plant
Technologies constructs nuclear power plants. Hitachi declined to comment on
the report. The Hitachi group, which makes everything from refrigerators
to nuclear power systems, logged a net loss of 787.3 billion yen for the
last business year to March.

Foreign execs head east for jobs as China expands

BEIJING July 27 ( bdnews24. com/Reuters) - He calls himself a Silicon
Valley refugee who has worked for giants IBM and Siemens as well as
software startups. Now Ronald Raffensperger, a marketing director at
fast-growing Huawei Technologies, numbers among the increasing numbers of
foreign expatriates China is counting on to steer its push overseas. China
wants state and private companies to expand globally and skilled
expatriates like Raffensperger are increasingly finding key roles in that
campaign. "Chinese high-tech companies are just beginning to understand
the need for marketing, brand- building and globalisation," said
Raffensperger, who has worked at Huawei, the world's No. 3 wireless
telecoms gear maker, for two years after 30 years in Silicon Valley. "I
bring that global experience to Huawei," he said. That expertise is
becoming more valuable as foreign direct investment into China fell 17.9
percent in the first half and the country's acquisitions overseas face
stiff political headwinds as spotlighted by Chinalco's failed tie-up with
Rio Tinto. China's dynamism has long attracted overseas ethnic Chinese
executives but rising unemployment in developed countries is drawing
non-Chinese foreigners into the country's industries, from automobiles to
financial services. "Foreign expat executives have fewer options today,"
said Michael Norman, a vice-president for Sibson Consulting, a human
resources firm based in North America. "But for those with unique skills
or knowledge there are growing opportunities working for Chinese
companies," he said. China's economy grew a stronger-than-expected 7.9
percent in the second quarter, one reason Sibson -- which is looking for
local partners -- sees high demand from Chinese firms for executives with
specific technical or marketing skills. China International Intellectech
(Shanghai) Corp, an executive search and consultancy, said that last year,
it recommended over 1 ,000 foreign executives -- mostly ethnic Chinese --
for positions in multinationals doing business in the mainland. So far
this year, CIIC has recommended about the same number of expatriate
executives to clients. The list of Chinese companies taking advantage of
recruiting foreign executives is growing as they expand globally. The
Haier group, China's largest appliance maker -- including Qingdao Haier and
Haier Electronics bought a 20 percent stake in New Zealand's Fisher &
Paykel Appliances in May, just months after hiring American Philip
Carmichael as its Asia Pacific chief. Tencent Holdings Ltd hired U.S. game
producer Steve Gray as research and development consultant to develop and
distribute Take-Two Interactive Software Inc's popular NBA 2 K basketball
video game in China. STATE FIRMS JUMP IN Private firms, especially those
in the fast-paced electronics industry, have been the most aggressive in
recruiting foreign talent, but state-owned giants such as Aviation Industry
Corp of China (AVIC) are also beginning to appreciate the benefits. "The
global financial crisis comes just as we are opening to the world, offering
a great opportunity to attract international expertise," said Zhang, whose
company aims to one day challenge the global dominance of Boeing BA.N and
Airbus. AVIC earlier this year announced plans to recruit 13 executives
from around the world in key areas such as research, asset management,
business development and marketing. The aviation giant, like many Chinese
firms, has the ambition -- and the backing of Beijing -- to be a global
champion, but when it comes to execution, the lack of international
experience is a glaring hole in many domestic executives' resumes. Lenovo
Group, China's top personal computer maker, appointed a former Dell
executive, William Amelio, as its chief executive to help integrate IBM's
PC business after buying the unit in 2005 for $1.25 billion. "We decided
to bring in a foreigner to learn and study from," said Liu Chuanzhi, the
company's founder and chairman. Liu said putting current chief executive
Yang Yuanqing -- the heir apparent who eventually took over from Amelio
earlier this year -- in as CEO at the time would have been disastrous. "He
would almost certainly have failed," said Liu. PROBLEMS But going east is
not without its problems. China's highly efficient manufacturing base
seems to be a natural fit for executives with specialized skills honed in
global markets, but the cultural gulf can be formidable. Recruitment
companies and firms such as Sibson reckon the tenure for the majority of
foreign executives at Chinese firms is less than a year, including ethnic
Chinese expats. "As an American, I first came here and said, ' Where are my
people? What is my budget? Give me a general direction and I'll go for
it,'" said Huawei's Raffensperger, a U.S. citizen. "It doesn't work that
way. You have to spend a lot of time listening, asking questions and
understanding how decisions are made," he said.

Saudi burns more crude for power, halts fuel oil import

By Luke Pachymuthu and Jennifer Tan - Analysis SINGAPORE July 27 (
bdnews24. com/Reuters) - Saudi Arabia, the world's top oil exporter,
is burning more crude in domestic power plants to keep new wells
pumping and produce cleaner electricity, likely eliminating demand for
imported fuel this summer. The use of even more crude oil to generate
electricity allows the kingdom to put to use fresh output from a major
new oilfield while holding firm to its OPEC commitment to curb
exports. It also helps the kingdom meet stricter environmental rules.
Estimates on how much crude it is burning differ, but the kingdom's
own data show it has risen in recent years, and it could be as high as
470 ,000 bpd of crude this year, up 62 percent from 2008 , consultancy
FACTS Global Energy says. A Saudi source familiar with the kingdom's
energy sector said the maximum it could burn at power stations would
be 300 ,000 bpd, although another 120 ,000 bpd could be burned to
power refineries and other facilities related to upstream production.
While the rise would have little impact on global crude oil markets
more focused on Saudi exports -- which Riyadh has kept in check to
help drain swollen global stockpiles -- the substitution will likely
curtail its traditional summer fuel oil buying binge. "They won't be
importing fuel oil this summer because they are going to be burning
more crude," a Middle East trade source familiar with Saudi Arabia's
fuel oil import program said. Burning crude instead of fuel oil is
less of a loss to Saudi Arabia now than it has been historically, as
fuel oil prices have strengthened. Fuel oil now trades at a discount
of $5 to benchmark crude, about half the discount on average in 2008.
FACTS estimates that during peak summer power demand, crude burned
could rise as high as 500 ,000 to 600 ,000 bpd. Less is used in winter
when power demand is weaker. "In early 2009 , a significant fraction
of the fuel oil used in the power sector was replaced by crude, partly
due to tighter regulations on the quality and metals content of fuel
oil burned in power stations," said Vijay Mukherji, a FACTS senior
analyst. Saudi data from 2008 seem to support the thesis: Saudi Aramco
produced 8.96 million bpd of crude oil last year, exporting 6.88
million bpd and refining 1.58 million bpd, its annual report showed.
That left 500 ,000 bpd unaccounted for, crude likely to have been used
by power plants, energy facilities or put into inventories -- nearly
140 ,000 bpd more than the year before. Some 50 ,000 bpd of that went
into domestic inventories, according to Saudi data submitted to the
international JODI database. All told, it suggests the kingdom kept
nearly 100 ,000 bpd more crude domestically that it did not refine or
add to stocks in 2008 than in 2007 , according to Reuters
calculations. The kingdom burns a total of 800 ,000 bpd of crude and
oil products to generate power, a Saudi Electricity Co (SEC) official
said, but he was unable to say how much was crude or fuel oil. FACTS
estimates the kingdom used up to 240 , 000 bpd of fuel oil for power
generation last year. CLEANER POWER? Saudi Arabia typically imports
some 38 ,000 bpd of low-sulphur fuel oil from the Mediterranean and
Europe in summer to meet peak power demand as the desert heat stokes
air- conditioning use. The imports top up domestic refinery output.
The shift to burning more crude -- thought to be mostly Arab Light
that has about one-fifth as much metals content as fuel oil -- to
produce electricity is partly due to more stringent environmental
requirements of domestic utilities. "The power stations are getting
tougher on fuel standards... there is now a requirement for lower
metals in the fuel being used," a senior oil trader said. "So they are
now having to burn more light crude, which has lower metals content."
The SEC official said a committee on clean development headed by oil
minister Ali al-Naimi was set up some weeks ago to help implement
tighter rules to cut pollution and carbon emissions to internationally
acceptable levels. He said two years ago, banks signed international
pacts that prohibit them from funding projects which are not
environmentally friendly, adding that the SEC had spent 1 billion
riyals ($266.6 million) cleaning up their Rabigh and Shuaiba plants.
Arab Light has a vanadium content of about 19.7 parts per million,
less than a fifth of the level contained in fuel oil it imports for
power stations. Vanadium is a typical industry indicator for measuring
metals content in fuel. NEW KHURAIS OILFIELD Saudi Arabia has cut
crude output in 2009 to the lowest in six years as part of OPEC
pledges to remove 5 percent off global supply to match recessionary
demand. Estimated output in June of 8.02 million bpd was down from
9.54 mln bpd in August 2008. The cuts come even as the kingdom starts
output from huge new oilfields. Last month, it brought online the
giant Khurais field, which pumps Arab Light. Aramco is slowly cranking
up output at the 1.2 million-bpd facility, the largest-ever single
increase to global supply. The kingdom has the largest spare capacity
cushion it has held for years, so it can burn more crude at home with
no impact on its supplies to international markets.