Sri Lanka growth slows to 1.8 pc in first half

Sri Lanka's economy grew 1.8 percent year on year in the first half
of 2009 , dragged down by weak demand for clothing and tea, official
data showed Monday. The figure contrasted with 6.6 percent
expansion in the first half of 2008 , but analysts expect an economic
revival after government forces crushed the Tamil Tiger rebels in May
following nearly four decades of conflict. "The impact of the global
downturn reduced demand for our exports and resulted in this
reversal," deputy director of the Department of Census and
Statistics, Nalini Kumarasinghe, told reporters. The war-battered
economy slowed to 2.1 percent in the second quarter, from 7.0
percent in the same period a year earlier, as the services sector
including banks, shipping and telecom were slow to recover. The
sector slowed to 1.1 percent in the second quarter compared to 6.5
percent at the same point last year. Agriculture grew 4.4 percent,
from 7.4 percent the previous year, while industrial output
expanded 3.0 percent, against 6.9 percent a year earlier. Sri
Lanka's central bank has raised year-end economic targets to between
four and five percent, from 2.5 percent to 3.0 percent, after the
Tigers were defeated. "We expect full year 2009 forecast to be around
4.5 percent, driven by economic activity in construction, trade and
tourism," said Yohan Seimon, an analyst at John Keells Stockbrokers.

UAE delays $41 b nuclear plants contract

The UAE has delayed awarding a 41 billion dollar contract to build
nuclear power plants saying that the decision between the three rival
bidders was too close to call, an Abu Dhabi daily said Monday. "What
happened ultimately was some of the bids were so close in some areas,
we decided to proceed with all three," a senior government official
told The National. "It will mean a slightly longer period of
negotiations." The decision on the contract, which was due to be
awarded this Wednesday, will not come out until the end of the month,
the newspaper reported, citing an unidentified diplomat. A French
group led by Areva, Electricite de France, GDF Suez and Total is
competing against a Japanese-American alliance of Hitachi and General
Electric, and a Korean-American consortium comprising Korea Electric
Power, Samsung, Hyundai and US firm Westinghouse. The Arab world's
second-largest economy, the United Arab Emirates is seeking to reduce
its dependence on hydrocarbons for power generation and to boost its
image as an environmentally friendly country.

French firms keen on agro-food industry

French technology providers have shown interest in the rapidly
growing agro-based industries in Bangladesh. "We are ready to provide
French technologies and expertise to agro-food industry here," said
Timothee Mougeotte, area manager (Near & Middle East & South Asia) of
Adepta, at a roundtable at Lake Shore Hotel in Dhaka yesterday.
Adepta is a French association for the Development of Trade of
Agri-foods Products & Technologies. The Economic and Trade Department
of French embassy, Ubifranch (the French Agency for International
Business Development), France Bangladesh Chamber of Commerce &
Industry and Adepta organised the discussion. Representatives of
Bangladesh Agro-Processors Association and different local agro-food
manufacturers were present at the programme. Participants in the
discussion said agro-based industry is growing fast in Bangladesh
with an aim to tap both the domestic and global markets. Processed
food exports from Bangladesh increased almost fivefold to $46.68
million in fiscal 2008-09 from $10.46 million in fiscal 2005- 06 ,
luring new investment in the industry. Presently local agro-based
companies are mainly producing processed foods, spices and dairy
products. At the roundtable, two French companies -- Ets Charriau and
Sodime -- presented their technologies with focus on optimising milk
collection and agro-food manufacturing solutions.

Sarkozy threatens to walk out of G20

French President Nicolas Sarkozy is ready to walk out of next week's
G20 summit if no progress is achieved on curbing bankers' bonuses,
his chief of staff said Monday. "There must absolutely be an agreement
to make things change and the president is absolutely determined on
that score," said Claude Gueant, the secretary general of the
Elysee, on RTL radio. Sarkozy will be leading a charge for tough curbs
on bonus payments for bankers at the G20 meeting of the world's
major economies in the US city of Pittsburg on September 24 and 25.
France argues that the big payouts reward the risk-taking that led to
the 2008 financial meltdown. Already, at the G20 summit in London
in April, Sarkozy had threatened to storm out of the gathering and
later credited this threat for an agreement on steps to clamp down on
tax havens. Sarkozy's proposals for capping bankers' bonuses has won
support in the European Union but Britain and the United States have
voiced reservations.

Taiwan looks to China financial pact in October

Taiwan plans to sign an agreement with China in October that will
allow some of the mainland's huge pool of liquidity to start flowing
into the island's stockmarket, local media said Monday.
Representatives from the two sides could sign the memorandum of
understanding in Taiwan, China or Hong Kong, the Commercial Times
said, citing unnamed sources. Once it is signed, Chinese
institutional investors will be allowed to buy shares on the Taiwan
Stock Exchange, which has so far been closed to Chinese money,
according to the paper. banks will also be permitted to upgrade their
representative offices in China to branch status, meaning they can
start engaging in business for profit. Meanwhile, the Economic Daily
News reported that Taiwan expects to kick off negotiations on a
separate trade agreement with China in October. The island's new
premier Wu Den-yih, who took office last week, has asked his Cabinet
to prepares for negotiations on the pact, known as the Economic
Cooperation Framework Agreement, the paper said. Taiwan is waiting to
hear from China if it agrees to holding talks next month, the report
said. The pact is seen as key in maintaining Taiwan competitiveness
in the Chinese market at a time when other economies in the region are
all negotiating free-trade agreements with Beijing. Officials from
the economics ministry and government information office declined
comment when asked Monday to confirm the reports. President Ma
Ying-jeou of the China-friendly Kuomintang was voted to power last
year on a promise to bring about a better relationship with China,
which is increasingly seen as holding the key to the island's
economic future. Wu became premier in a cabinet reshuffle last week
after his predecessor resigned over criticism against the government
response to Typhoon Morakot in early August which left more than 600
people dead.

Income tax day today

National Income Tax Day will be observed across the country today.
This is the second time the country is observing the day. The
National Board of Revenue first observed the day in 2008 to
encourage and motivate people to pay tax. In separate messages on the
eve of the day, President Mohammad Zillur Rahman and Prime Minister
Sheikh Hasina praised the taxpayers who have been contributing to the
development of the country. Both the president and prime minister said
the National Income Tax Day would inspire people to pay their tax to
the national exchequer. The NBR this year will observe the day through
different programmes including rally, discussion meeting and
awarding leading taxpayers. The NBR brings out a colourful rally at 8
am from its headquarters at the city's Shegun Bagicha, which will end
at the National Press Club. Celebrities including eminent sportsmen,
film stars, singers, musicians and choreographers will participate in
the rally, to be inaugurated by NBR Chairman Nasiruddin Ahmed. The
NBR will also organise a function at Bangabandhu International
Conference Centre at 11 :30 am to award the country's leading
taxpayers.

Oil prices fall

Crude oil prices sank on Monday, extending heavy pre-weekend losses
as weak global stock markets dented investor sentiment. New York's
main contract, light sweet crude for October delivery slid 84 cents
to 68.45 dollars per barrel. Brent North Sea crude for October
delivery dipped 64 cents to 67.05 dollars in morning London trade.
Japanese share prices tumbled 2.32 percent on Monday as investors
fretted about pre-weekend losses on Wall Street and a stronger yen,
leading to a fall in Asian equities.

Changes in stimulus likely Economy will be back on track by year-end: Muhith

Finance Minister AMA Muhith has hinted at bringing about some changes
in the government' s stimulus package announced for some
recession-hit sectors, if necessary. While responding to queries in
parliament yesterday, the minister said the taskforce, formed with
an aim to weather out fallout from the financial crisis worldwide,
will review the package execution in its next meeting Thursday. On
investment sluggishness, Muhith pointed his finger at the global
economic meltdown. "We must admit that investment is not taking place
properly in many cases because of recession and we will not be able
to come out of the current situation easily," he told the House. The
present excess liquidity in banks shows that the country's economy is
not on track, he said. The minister figured out a Tk 347.62 billion
surplus liquidity in June 2009 , while it was Tk 129.89 billion in
the same month a year earlier. An uncertainty that loomed over the
investment scenario also led to a little slump in private credit
flow, he further informed lawmakers. "It's not because of our monetary
policy," Muhith told a questioner. The minister, however, shared his
hope with fellow Awami League lawmaker Abdul Mannan that a better
situation is at the year-end. "The investment situation may take a
positive turn once the government goes for PPP ( private-public
partnership) implementation," he said. In this context Muhith
identified power and energy constraint as the main impediment to
investment. The finance minister also placed a comparative study of
state-run and private banks with regard to deposits and disbursement
of loans, showing a poor performance by the state banks. Up to June
2009 , state bank deposits reached Tk 83 , 992.01 crore, while the
amount of loans was Tk 49 , 501.58 crore. The loan against deposit
in the state-run banks was 58.94 percent, Muhith told the
parliament. During the time, deposits in private banks stood at Tk
160 , 015.84 crore and loans Tk 138 , 776.39 crore, he said,
figuring out loans against deposits at 86.73 percent. He also
pointed to more transactions in private banks than in state banks
despite a higher interest the private banks charge. Quality and quick
modern services, diversified banking products and prompt disposal of
loan applications are some factors that contributed to the rise in
consumers in private banks, the minister said. On new pay scale,
Muhith said the recommendations the National Pay Commission put
forward in line with basic needs of life, inflation, social status
and ethical values of public servants will be implemented soon. He
also made it clear that salary of every public servant will be
raised. He further informed the House that currency notes inscribed
with the portrait of the Father of the Nation Bangabandhu Sheikh
Mujibur Rahman will hit the market soon. In reply to a query of AL
lawmaker Zobeda Khatun, the minister said a national tax tribunal is
on the card, which is likely to pick up district judges to run it.
"There is no plan to run mobile courts for raising the number of
income tax payers," he said, adding that the present number of such
tax payers is around 23 lakh and of them around seven lakh submit
their returns regularly. However, the minister pointed to the fact
that the government has already started survey work to net more
income tax payers. He turned down any speculations on appointment of
district judges for the tax appellate tribunal replacing the members
of National Board of Revenue. The minister also expressed his
firmness to draw a curtain on the culture of people's harassment,
building up a positive image of tax officials.

DHAKA stocks continue gaining

Dhaka stocks continued to gain for third day yesterday, driven by
fuel and energy and banking sector shares. Benchmark index of Dhaka
Stock Exchange, DSE General Index, rose by 42.28 points, or 1.43
percent to 2 , 995.38. In the fuel and power sector, all companies
except one gained, backed by the news of ramping up of gas
production, Equity Partners Limited (EPL), an investment firm, said
in its daily market analysis. The market experienced a bearish trend
last week. Titas Gas shares, among the gainers, increased by 3.37
percent, Summit Power 3.06 percent, Power Grid 3.96 percent and
Desco 2.82 percent. The broader DSE All Share Price Index increased
by 35.24 points, or 1.41 percent to 2 , 518.26. All banks except one
gained. AB Bank advanced by 2.24 percent, BRAC Bank 1.98 percent
and Dutch Bangla Bank 1.78 percent. Advancers beat the losers 163
to 69. Two securities remained unchanged. A total of 3 ,01 ,42 ,720
shares and mutual fund units worth Tk 515.96 crore were traded on
the premier bourse. Titas Gas topped the turnover leaders, with 7 ,
23 ,950 shares worth Tk 48.46 crore being traded. Savar
Refractories was the biggest gainer on the trading board that
advanced by 9.67 percent. Jute Spinners was the top loser. The
company shares declined 9.18 percent. Chittagong stocks however
closed mixed. The CSE Selective Categories Index fell by 26.02
points, or 0.38 percent to 6 , 649.41. The CSE All Share Price Index
however rose by 145.66 points, or 1.4 percent to 10 , 492.33. A
total of 39 ,12 ,285 shares and mutual fund units worth Tk 40.01
crore changed hands on the Chittagong Stock Exchange. Of the traded
securities, 129 advanced and 37 declined. Bengal Biscuits, which
jumped by 16.07 percent, was the largest gainer on the port city
bourse. Ctg Vegetable Oil was the biggest loser. It went down by
10.05 percent. Bextex topped the turnover leaders with 5 ,95 , 400
shares worth Tk 3.58 crore being traded on the CSE.

Inflation on upward climb

Inflation jumped in July on a point-to-point basis mainly because of
soaring food prices. The rise breaks with low inflationary pressure
that continued through June this year. Experts blame volatility in the
international commodity markets for the rise in the inflation rate.
According to Bangladesh Bureau of Statistics ( BBS), inflation jumped
to 3.46 percent in July from 2.25 percent in June. Food inflation
increased to 3.34 percent in July from 0.25 percent in June.
However in case of non-food items, the rate was down to 3.74 percent
in July from 5.94 percent in June. People in urban areas faced extra
inflationary pressure for food compared to rural people. Inflation
rate in urban areas reached 4.14 percent in July, which was 0.71
percent in June. In rural areas, the inflation rate was 2.99 percent
in July, up from 0.05 percent in June. Zaid Bakht, research director
of Bangladesh Institute of Development Studies, said although the
domestic supply side was not in a bad shape, volatile commodity prices
in the international markets have added to the inflationary
pressure. "The government should monitor the global market on regular
basis so it (the government) can make a buffer stock by importing
essentials when the prices are low in the international market," he
said. Citing the recent price hike of sugar and edible oil, he said
such a situation could have been contained, had the government stored
the items earlier when their prices were low in the global market. He
said the global commodity prices went down significantly in July 2008
due to recession, but the prices then went up in July 2009 as
economic crisis began to ease. So the increased prices of essentials
in the global market in July 2009 had an impact on Bangladesh's
commodity market, Bakht said. "The government should increase
production capacity to rein in inflation," suggested Uttam Kumar
Deb, head of research at Centre for Policy Dialogue (CPD). He said
the government should take measures to minimise production cost.
"Fertiliser price cut could be a way to reduce production cost," said
Deb. Inflation crossed a record 12 percent in fiscal 2007-08
during the regime of the last caretaker government. Food inflation
also soared to 14 percent during the period. The caretaker government
faced a high inflation because of an abnormal price hike of oil (
petroleum) and food items in the international market. The
inflationary pressure also mounted then by lower domestic production
of crops caused by cyclones and floods. According to Trading
Corporation of Bangladesh, prices of most of the essentials increased
in the last one month.