IMF faces rough road towards bigger role

The IMF gained new stature as global lender at annual meetings with
the World Bank in Istanbul that ended on Wednesday, but is on a
rough road between a fragile economic recovery and dissension among
members. The finance chiefs from the 186 member nations of the
institutions agreed after two days of talks on a broad mandate to
build a lasting recovery from the worst crisis since the Great
Depression. But they said the nascent global recovery was
considerably weak and could stall as unemployment surges and serious
strains remain in the financial system. Divisions were evident
over the International Monetary Fund's ambition to become a 'new
IMF'—the global lender of last resort and watchdog of the Group of
20 largest economies' plan to build sustainable growth. 'This
annual meeting may be the starting point of a new IMF, and you may
say later when you will be talking with your grandchildren that you
were in Istanbul at this time,' IMF managing director Dominique
Strauss-Kahn said. The IMF's policy-steering committee asked the
fund to address four key reform areas—the IMF's mandate, its
financing role, multilateral surveillance, and governance. This
included a shift of at least 5.0 per cent in voting power to
under-represented countries as recommended by the Group of 20
largest rich and emerging countries. Strauss-Kahn said these
'Istanbul Decisions' would be a focal point for the coming year. 'We
have come a long way, but the journey is not over,' he told
delegates. 'The credibility of the fund still is precarious,' said
Carlos Quenan, an expert at the Institute of the Americas in France.
'It certainly has bolstered its fire- fighter role as the only
international institution that can deliver aid,' Quenan said in an
interview. 'But nevertheless it remains unclear what will be the
conditionality on the new loans and how voting power will be shifted
to give emerging countries more weight and thus gain better
credibility,' he added. Currency frictions stalked the meetings as
the weak dollar and the yuan, which the IMF says is undervalued,
highlighted the so-called global imbalances blamed for fuelling the
crisis. Americans' credit-fuelled consumption of Chinese-made
goods built up a huge trade deficit with China, and Beijing's
export-led growth model has allowed China to amass more than two
trillion dollars in reserves, mostly in dollars. The United
Nations called for a new global reserve currency to end dollar
supremacy, which it said had contributed to global imbalances. Top
UN official Sha Zukang said that ' greater use of a truly global
reserve currency, such as the IMF's special drawing rights,' the
fund's international reserve asset, would benefit global
development. Strauss-Kahn urged the delegates to build on the
spirit of economic cooperation at last month's G20 Pittsburgh summit
and 'seize this opportunity to shape the post-crisis world' and
reduce poverty. He said the fund could need more than a trillion
dollars in financing from its members to function as a bank of last
resort that would reduce the need for countries to build big reserves
as a cushion against shocks. Germany, Europe's biggest economy
and a G20 member, balked, saying a massive increase in the fund's
reserves could encourage governments to adopt risky economic policies
in confidence that they could get bailed out if they failed.
'Moral hazard issues... arise from the vast increase in fund
resources that is currently taking place. This increase should be
viewed as a temporary measure,' German central bank chief Axel Weber
said. The World Bank appealed for more funds as it sees a second
straight year of record lending to developing and poor countries.
'As we start to get towards the middle of next year, we are going to
start to face some serious constraints, and we would have to ration
and obviously focus on the lowest-income countries,' said World Bank
president Robert Zoellick. Policy-makers approved the first
general capital increase for the World Bank in 20 years as the crisis
was expected to force as many as 90 million more people into poverty
by 2010.

Caution cools Hong Kong IPO frenzy

Three more firms will list on the Hong Kong stock exchange Thursday,
but analysts warned that cooling economic optimism and overpricing
has been responsible for a series of disappointing debuts.
Companies forced to shelve their listing plans after the US financial
crisis set in had been tempted back by a rally of about 80 per cent
since early March on the benchmark Hang Seng index. But amid signs
the US economy is not picking up as quickly as previously thought,
that optimism is tailing off, just as dozens of Hong Kong firms are
preparing to launch their IPOs. The three firms listing Thursday—
Ausnutria Dairy, China Vanadium Titano- Magnetite Mining and Yingde
Gases— will be hoping they do not follow Shenzhen-based logistics
firm China South City Holdings which dived 23 per cent. According
to data company Dealogic, that debut last week was the worst ever on
the Hang Seng for a listing over 50 million US dollars. In recent
days there have also been disappointing showings from China's
Glorious Property, which sunk 14.5 per cent, and Peak Sport which
fell 17.1 per cent. Engineering and construction firm
Metallurgical Corp of China, Hong Kong's biggest public offering this
year, planned to raise up to 2.9 billion US dollars, but the stock
lost 14.1 per cent on its launch last month. And despite rising 28
per cent on its Shanghai debut days before, it soon fell back to just
a little above its listing price the day after. Eric Yuen, head of
research at Dao Heng Securities, blamed aggressive pricing conceived
at a time when the market was touching 2009 highs in September.
'(Companies) took advantage of bullish market sentiment and many
were priced at a premium to their competitors,' he said. Private
investors guided more by prevailing market sentiment than optimism
about an individual company's prospects also helped fuel inflated
prices, analysts said. 'The market had a huge run-up and a lot of
retail investors bought into the hype,' said Jackson Wong, vice
president of Tanrich Securities. Wong, like other market watchers,
expects companies listing later in the year to price their stocks
more reasonably as a result. 'Unless pricing has been at the
realistic end of the range or there is something distinctive about
the company, people are likely to be very cautious,' said Howard
Gorges, vice chairman at South China Securities. Recent results
compare unfavourably with the heady days before the collapse of US
investment bank Lehman Brothers last year. E-commerce firm
Alibaba.com's debut in November 2007 saw it surge 165 per cent. As
hopes for a recovery grew this year, there were some successful
debuts including Sinopharm Group and China All Access which as late
as September gained 15.8 per cent and 13. 1 per cent respectively.
And shares in China State Construction Engineering Group soared 60.3
per cent on their July debut in Shanghai, as investors jumped on what
was the world's largest stock offering in 16 months at the time.
Although optimism has faltered, companies with an established
reputation such as casino business Wynn Macau, which starts trading
Friday, are seen as stronger than some of the smaller, mainland
companies with IPO plans.

HSBC in advanced talks on buying RBS Asia assets

HSBC is in advanced talks to buy the Asian retail and commercial
banking assets of Royal Bank of Scotland as a Standard Chartered bid
for the lender has stalled over the price, a report said Wednesday.
The discussions involve HSBC taking over RBS's interests in China,
India and Malaysia, the Wall Street Journal quoted an unnamed source
close to the situation as saying. 'RBS is in on-going discussions
with bidders for the remaining assets it has decided to sell in Asia
and will make further announcements, as appropriate, in due course,'
RBS spokeswoman Yuk Min Hui was quoted by the paper as saying.
HSBC and Standard Chartered were unavailable for comment. The news
comes after the Financial Times last month said that plans by RBS to
sell its Chinese assets to Standard Chartered had run into problems
and looked set to fail. It also follows comments by HSBC head
Michael Geoghegan that he planned to delay any rush to expand the
bank because of concerns there will be a second economic downturn in
the coming months. RBS is majority-owned by the British
government after being ravaged by the credit crunch. Caption People
walk into the London headquarters of Britain's state- controlled
Royal Bank of Scotland (RBS). HSBC is in advanced talks to buy the
Asian retail and commercial banking assets of Royal Bank of Scotland
as a Standard Chartered bid for the lender has stalled over the
price.

Europe hits hole on rough road to economic recovery

Europe hit a recovery setback on Wednesday with the eurozone economy
shrinking more than expected, giving substance to widespread warnings
that talk of a rapid global turnaround might be overdone. But the
surprise revised results also showed some countries emerging from
recession. The increasingly upbeat mood accompanying results since
the summer was punctured by EU data showing that the economy of the
16- nation eurozone shrank in the second quarter by a greater margin
than initially thought. Gross domestic product down by 0.2 per
cent compared to the first three months of the year—and twice the
initial estimate—was reflected across the 27-nation EU as a whole,
where the fall was 0.3 per cent. Ireland's battered economy
produced returned to break-even point after steep contraction and
the Czech Republic achieved 0.1 per cent growth after shrinking by a
massive 4.8 per cent in the first quarter of 2009 — offering relief
to political leaders seeking to pressure Prague into signing the
long- delayed Lisbon Treaty, Greece, Poland and Portugal also
returned to growth, and the EU's Eurostat agency's second estimate
for Britain also showed a slight improvement predicting a
contraction of 0.6 per cent. But the annual rate of decline also
crept back upwards to 4.8 per cent with the fifth quarter running of
falling economic output for the area. Global financial leaders
have been at pains in recent weeks to warn that recovery from the
global crisis is likely to be uneven and unsteady, and that for most
people will be masked by a rise of unemployment figures in leading
industrialised countries. This tempering of signs that recovery is
under way was echoed at the annual meetings of the International
Monetary Fund and World Bank in Istanbul this week. The revised
eurozone figure 'does not materially change the picture,' said chief
IHS Global Insight analyst Howard Archer, referring to marked
improvement on the record 2.5-per cent plunge in the first three
months of the year. 'It still seems likely that the region
returned to growth in the third quarter, albeit modest,' he added.
'Government spending and significantly positive net trade were the
major factors in limiting the rate of contraction, while consumer
spending edged up. 'We expect eurozone GDP to have grown by
around 0.3 per cent quarter- on-quarter in the third quarter.
'Nevertheless, serious doubts remain about longer-term eurozone
growth prospects given high and rising unemployment, still
significant financial sector problems and a reluctance of banks to
lend.' He said more 'pressure on governments to withdraw fiscal
stimulus as soon as possible and then tighten fiscal policy
significantly in order to rein in ballooning public deficits' was
required. Nine more EU countries were hammered on Wednesday by the
European Commission for deficits Brussels says are spinning out of
control. Given record unemployment running to more than 15 million
people, the data tempers somewhat optimism that Europe's worst
post-war recession is coming to an early end. For the entire
27-nation EU, GDP fell 0.3 per cent in the second quarter, slightly
worse than the 0.2 per cent estimate first given. The annual rate of
decline was 4.8 per cent. Exports fell by 1.5 per cent in the
eurozone and 1.7 per cent across the EU, again worse than
anticipated. Domestic consumption rose 0.1 per cent in the
eurozone, a slight drop from the previously-released data but still a
sharp improvement after a slide of 0.5 per cent in the first quarter.
Analysts expect the European Central Bank to keep its benchmark
interest rate at its historic low of 1.0 per cent on Thursday as
deflation fears subside and the 16-nation economy shows signs of
recovery.

Microsoft unveils line of Windows phones

Microsoft chief Steve Ballmer on Tuesday unveiled his company's line
of Windows smartphones in an offensive against Apple's iPhone and
Google's Android system. Around 30 types of 'Windows phones' with
various designs will be available by the end of the year in more than
20 countries. Seven phone-makers, including Sony, Samsung and
Toshiba, and 16 operators including Orange, Vodafone and T- Mobile,
are involved in the launch. The phones, which combine the ability
to make calls, surf the Internet and view videos, carry Microsoft's
Windows Mobile 6.5 operating system. 'We have done a lot of work on
the user interface, we simplified the user interface,' Ballmer told
a news conference at Microsoft's new French headquarters near Paris
in Issy-les- Moulineaux. 'We have taken the Internet Explorer
browser technologies, and we rebuilt them for the first time for
these Windows phones. So you can get the same experience on these
phones that you will get on your windows PC,' he said. The new
mobile operating system was launched simultaneously in France and
New York on Tuesday. With Tuesday's launch Microsoft hopes to
reassert itself on the smartphone market, where it has lost ground.
The sector is considered especially promising, with 29 per cent jump
in sales expected this year. But in the second quarter only 9.0
per cent of all smartphones sold were equipped with Microsoft's
operating system, against 12 per cent a year earlier, according to
the Gartner research group. At the same time, Apple's iPhone has
seen its share jump from 2.8 to 13.3 per cent.

Google widens lead over Bing, Yahoo!

Experian Hitwise on Tuesday reported that Bing and Yahoo! online
search engines lost ground in the United States in September while
Google inched ahead slightly.    Google handled 71.08 per cent of all
US Internet searches in the four weeks ending October 3, while
Yahoo! and Bing accounted for 16.38 per cent and 8.96 per cent
respectively, according to Hitwise.    Ask.com was the biggest
winner, with its share of US searches climbing 8 per cent to 2.56
per cent in September as compared with August.    Microsoft's Bing
saw its share of the US online search market dip 5 per cent in the
month-to-month comparison, while the number of searches at Yahoo!
was down 3 per cent, Hitwise reported.    Google last week rolled out
search engine refinements as Microsoft continues an aggressive
campaign to lure people to Bing.    The Internet giant's
modifications include tools that let people limit online searches to
only serve up results from the past hour, or by specific date
ranges.    Google users can choose to be shown search only results
from blogs, news, or Web pages that they have visited or those they
haven't visited.    The Bing search engine Microsoft launched in May
was designed to intuitively understand what people are seeking on
the Internet and challenge online king Google.    The US software
colossus described Bing as a 'Decision Engine' aimed at online
shoppers trying to make buying decisions, plan trips, research health
matters or find local businesses.    Bing posted a slight increase in
its share of the US search market in August, a third month in a row
of modest gains, according to online tracking firm comScore.
Yahoo! and Microsoft, after months of negotiations, unveiled a 10-year
Web search and advertising partnership in late July that set the
stage for a joint offensive against Google.    Under the agreement,
Yahoo! will use Microsoft's search engine on its own sites while
Yahoo! will provide the exclusive global sales force for premium
advertisers.    Microsoft is integrating messages from prominent
users of wildly popular micro-blogging service Twitter into results
generated by Bing.

Ramu rubber garden profits after 46 years

Ramu rubber garden, run by Bangladesh Forest Industry Development
Corporation (BFDC), made a profit of Tk 2.15 crore in last three
years after continuous losses for long 46 years. BFDC officials said
the rubber garden earned neat profits of Tk 1.16 crore in fiscal
year 2006-07 , Tk 83 lakh in 2007-08 , and Tk 15.53 lakh in
2008-09. The garden presently has 66 ,000 productive trees on its
over 2 ,682 acres of land. Some trees were cut down on expiry of
their lifecycles. Saplings were planted afresh on 432 acres of land
from where the old threes were cut down, officials said. The new
trees will come under production in the current fiscal 2009-10.
Saplings are also being planted in phases on 250 acres of land. The
total number of trees in the garden will cross 2 lakh within a few
years. In FY 1960-61 , the then Pakistan government set up the first
rubber garden of East Bengal at Ramu, some 18 kilometres off Cox's
Bazar. Assistant General Manager of the garden Mohammad Masuk Ahmad
said the garden had incurred loses for long 45 to 46 years for
various problems. Now development activities are going on at the
initiative of the BFDC. "If the present situation continues, the
amount of profit in Ramu rubber garden will cross Tk 5 crore in the
next two to three years," Ahmad added. Presently, some 150 persons
are working in the garden. Of them, 22 officers and employees and
18 night guards are the staff of BFDC and the rest work on daily
payment basis.

Sheraton looks to flag new deal

The government may renew the contract for management of Dhaka
Sheraton Hotel for another five-year term by the month-end,
according to Hedayetullah Al Mamun, the immediate past civil aviation
and tourism secretary. Meanwhile, Bangladesh Services Limited, a
government organ that owns the five-star hotel, expects a report on
its refurbishment plan today from a technical team of Starwood Hotel
and Resorts. Starwood is the parent company of international Sheraton
chain who sent this high-powered team here in mid- September to
conduct a feasibility study on such a plan. "We are waiting for the
report, which will help us to decide on the contract renewal. After
looking into the report, we can assess the exact condition of the
hotel and areas that need prompt renovation," said Mamun, who was
transferred to another ministry just three days back. "Starwood's
recommendation will also enable us to estimate the cost for
renovation," he added. "However, we have our own assessments on the
amount of investment in renovation. If both studies match, we are
going to finalise the contract by the end of October." On receipt of
the Starwood report, BSL may appoint a quality surveyor (QS) to carry
out a cost analysis and plan for the renovation. "It is the oldest
five-star hotel in the country and is strongly in need of renovation,
including modernising rooms, bathrooms, kitchen, conference rooms,
lounge, lobby and bar," a top official of the hotel said.
"Additionally, the hotel lacks fire-life safety aspects that need to
be included in the renovation project," he said. "A world class
five-star hotel brand like Sheraton cannot maintain its standard
without this feature." Sheraton is also expecting to maintain
operating profit growth at 10 percent by year-end. The hotel's 2008
profit growth was the same, earning revenues of around $13 million.
The official also linked a revenue growth to refurbishment.
Meanwhile, Starwood extended its management contract with the
government up to November 30 , for the fourth time this year,
following a request from BSL. Starwood's 25- year-deal with BSL
expired on December 31 , 2008 , but it was extended for nine months
in four terms till November 30 , 2009.

Amazon cuts Kindle price, adds global version

Amazon.com Inc is cutting the price of its Kindle electronic-book
reader yet again and launching an international version, in hopes of
spurring more sales and keeping it ahead of a growing field of
competitors. With Wednesday's $40 reduction on the Kindle, the
device now costs $259. It debuted in 2007 at $399 and started this
year at $359 , before another price cut in July. In an interview,
Amazon CEO Jeff Bezos said the company can now afford to reduce the
price because of the increased number of Kindles the company is
making -- and selling. Bezos called it Amazon's best-selling product,
but Amazon has not disclosed sales figures for the Kindle, which has
a 6- inch screen that displays shades of grey, room to store 1 ,500
books and the ability to download books wirelessly.

Oil above $71

Oil prices climbed above 71 dollars on Wednesday, extending gains
won a day earlier on a report that Gulf states were considering
dropping the greenback for oil transactions. New York's main contract,
light sweet crude for November delivery gained 35 cents to 71. 23
dollars a barrel. Brent North Sea crude for November delivery added
32 cents to 68.88 dollars a barrel in morning London trade.

Australia rate hike good sign

A move by Australia's central bank to raise its benchmark interest
rate, the first major economy to do so since the financial crisis
worsened last fall, may signal a vote of confidence in a global
recovery. Still, most economists don't expect the Federal Reserve or
other major central banks to follow Australia's lead and raise rates
anytime soon. Australia's economy is healthier than the US or
European economies, due to rising prices for metals and other
commodities it produces. But the decision by the Reserve Bank of
Australia to reverse some of the steep rate cuts it implemented last
year is a sign the economy is improving in parts of the world,
analysts said. A healthier world economy could help the United States
by boosting exports. "Recovery is starting to take hold" in Asia,
said Jay Bryson, global economist at Wells Fargo Securities. "Very
low interest rates there may not be necessary for much longer."
Australia's central bank governor, Glenn Stevens, said Tuesday the
risk of "serious economic contraction" in that country had passed.
Australia is benefiting from a strong rebound in China, a major
trading partner that imports huge amounts of Australia's iron ore
and other minerals. Its economy grew in the first two quarters of
this year, when the U.S. economy remained mired in recession. The move
helped boost the US stock market. The Dow Jones industrial average
jumped about 132 points, while broader indexes also increased.
Australia's move comes after the International Monetary Fund said
last week the global economy is recovering faster than expected. The
IMF raised its estimate for world economic growth to 3.1 percent in
2010 , from a previous forecast of 2.5 percent. Among major
economies, Norway is the most likely candidate to raise rates this
year, analysts said, as high oil prices bolstered its economy. The
country's central bank could boost rates as soon as its next meeting
on October 28. South Korea is another likely candidate, according to
Benjamin Reitzes, an economist at BMO Capital Markets in Toronto. The
country's central bank has already noted rising home prices and said
it might raise rates in response, he said. Asia is recovering so
quickly that some analysts worry it could face asset bubbles and a
spike in inflation if governments wait too long to withdraw stimulus
measures. Rising food prices already are becoming a problem in
India. HSBC economists said in a report Tuesday that South Korea,
Indonesia and the Philippines are particularly vulnerable to an
inflation blow-out. Still, when it comes to higher rates, " Australia
may prove to be an isolated case," said Geoffrey Yu, a London-based
currency strategist for UBS, given its much stronger recovery. Its
economy grew at a 2.5 percent annual rate in the April-June quarter,
Reitzes said, while the US economy shrank at a 0.7 percent rate. One
restraint on many countries will be exchange rates, several analysts
said: if they get too far ahead of the Federal Reserve, their
currencies will rise relative to the dollar, as investors seek out
higher interest rates. That, in turn, would make their exports to the
U.S. more expensive. That will cause some countries, such as
Switzerland, Canada and New Zealand, to delay raising rates for as
long as possible, Yu said. The Federal Reserve, which has pumped over
$2 trillion into the economy to spur lending and boost consumer
spending, isn't expected to raise the interest rate it controls until
sometime next year, at the earliest. The rate is currently at a
record low near zero. William Dudley, president of the New York Fed,
on Monday reiterated that the central bank will keep rates
"exceptionally low … for an extended period." Both the European
Central Bank and the Bank of England, meanwhile, are expected to keep
their benchmark interest rates at their respective historic lows of
1 percent and 0.5 percent when they announce their decisions
Thursday. Most analysts think that the ECB, which sets monetary
policy for the 16 countries that use the euro, is comfortable with
the notion of keeping interest rates at very low levels for a
protracted period. Last week, the ECB's president Jean-Claude Trichet
indicated that it is too early to consider raising interest rates.
The IMF is predicting that output in the 16 eurozone countries will
shrink 4.2 percent in 2009 , even though official figures show that
the recession in France and Germany is over. Italy, Ireland and Spain
are still struggling. Spain suffered a major housing boom and bust,
and its unemployment rate is almost 19 percent. When world leaders
from the Group of 20 major developed and emerging economies,
including Australia, met in Pittsburgh late last month, they pledged
to maintain low interest rates and other stimulative measures. They
also agreed to coordinate the reduction and removal of those
measures. But Yu said most central banks will set interest rates in
response to domestic needs, while coordinating on other measures, such
as unwinding emergency lending programs that support banks.

4 th Japan trade fair begins Oct 15

The 4 th Japan Trade Fair 2009 will begin from October 15 at
Bangabandhu International Conference Center in Dhaka, said a press
release. The Japan-Bangladesh Chamber of Commerce and Industry
announced the launching of the three-day long biennial fair at a
press conference in the capital recently. More than 35 business
firms and industries from various sectors will exhibit their
products and services in more than 100 booths at the fair along with
different Japanese government and semi-government organisations. The
event will be supported by the Embassy of Japan, Japan External Trade
Organization and Japanese Commerce and Industry Association in Dhaka
and managed by Windmill Advertising Limited. Entry ticket for the
fair is Tk 20 and the full proceeds from ticket sales will go to
charity.

Unified code of conduct sought from RMG buyers

Leaders of garment industry owners yesterday demanded a 'unified code
of conduct' meant for international buyers to help ensure compliance
at their factories. "We need a unified code of conduct set for the
international buyers. Different buyers have different sets of
regulations, and they stress ensuring different standards, which
often cause trouble to us," said Abdus Salam Murshedy, president of
Bangladesh Garment Manufacturers and Exporters Association ( BGMEA).
"For maintaining these standards, we need to get certificates from
different international organisations spending a huge amount of
money. For example, if one has to get three or more certificates,
certainly it'll affect the process of ensuring compliance," he
explained. He was speaking at a roundtable on "social compliance to
address the necessity of improvements of the working conditions in
the garment industry of Bangladesh", jointly organised by
Brussels-based Business Social Compliance Initiative (BSCI), and
London- based LIFT Standard, in Dhaka. "We are keen to ensure
compliance at all the garment factories and already 90 percent
members of BGMEA have ensured compliance, " said Murshedy. But at the
same time the buyers also can help ensure compliance, he added. Abdul
Momen, director of Bangladesh Knitwear Manufacturers and Exporters
Association, also echoed the views of the BGMEA boss. Momen said the
foreign buyers should provide adequate opportunities to the
Bangladeshi manufacturers and exporters to improve working
conditions at the factories. "We should offer satisfactory salary,
health facility and hygiene to all workers to ensure better working
conditions at the factories. We need support from the buyers to do
so," he said. "The buyers often offer lower prices for our products
compared to those from other countries, which compel many owners to
pay lower wages to their workers. And finally many owners fail to
ensure better working conditions at the factories," Momen added.
Commerce Minister Faruk Khan said the government is constantly
working to bring harmony between the garment owners and the workers.
"We (the government) are trying to meet compliance requirements in
line with the labour law of the country. We have ensured minimum
wages and appointment letters for all workers, and are trying to
ensure health facilities at the factories," he said. The minister
called upon the industry owners to ensure fire safety at their
factories.

Kuwait Airways to fly from Chittagong

Kuwait Airways said yesterday it would begin international flights
from Chittagong to offer hassle-free travels to outbound passengers
in the port city from October 30. The national carrier of Kuwait said
it would operate on two days a week -- Friday and Sunday. The
carrier expects that flights from the port city would help it attract
those travellers who have to use Zia International Airport (ZIA) in
Dhaka for flying abroad due to an inadequate air movement at Shah
Amanat International Airport in Chittagong. "Chittagong has enormous
commercial potential. This move will enable us to offer regular
passenger and cargo services with wide-bodied aircraft to various
cities around the world," said Samiur Razzak, sales manager
(passenger) of Kuwait Airways, at a press conference at Sonargaon
Hotel in Dhaka. The carrier said it wants to bank on over 400 , 000
Bangladeshi migrant workers in the Gulf states as well as travellers
to Europe, the US and Africa. "Our main target is the US- and
Europe-bound travellers. We have set the flight schedule keeping in
mind of attracting these passengers," said the official of Kuwait
Airways, which now offers connections to 38 destinations around the
world. Razzak also hoped that the new flights would help reduce
pressure on ZIA as most of the foreign carriers now operate from the
capital instead of flying from other airports such as at Chittagong.
At present, only two foreign carriers -- Air Arabia and Oman Air --
operate flights from Chittagong along with three local airlines --
Biman, GMG and United. "Many passengers use Dhaka to fly abroad. We
want to take a lot of pressure away from the capital," the official
said. The carrier, which commenced operations in Bangladesh in 1981 ,
now operates daily flights from Dhaka. The airline will use A-300
and A-310 aircraft to operate flights from Chittagong.

Govt moves to handle pending customs cases

The government has moved to introduce an alternative dispute
resolution (ADR) system in the Supreme Court to reduce pressure of a
huge number of pending cases including customs-related ones, the law
minister told the House yesterday. "We have already held discussion
with the chief justice and high-ups of different departments to
introduce the system," Shafique Ahmed said during a question- answer
session. He said two separate proposals were sent to the law
commission for examining how the ADR system can be made mandatory.
"It needs a long time to dispose of cases following all the rules and
regulations. So, we consider introducing the system, which exists in
different countries," Ahmed added. The law minister said as many as
3.09 lakh cases have been pending with the High Court till August 1
, 2009. The government has appointed nine additional judges and
given permanent appointments to 11 other judges to the High Court
to dispose of the huge number of cases, he added. He said a total of
89 judges are working in the Appellate Division and the High Court
Division of the Supreme Court. Of them, 11 judges, including the
chief justice, are working in the Appellate Division, while 78 in the
High Court Division. In response to a query, the law minister said
the government is determined to complete the trial of war criminals
as soon as possible. He said the process is under way to set up
investigation agencies, appoint chief prosecutors and prosecutors,
and form tribunals.

Govt helping reopen 42 closed units in EPZs: PM

Prime Minister Sheikh Hasina has said the government now stretches
its hand of assistance to reopen 42 closed industrial units and
the ones that are on the verge of closure in the export processing
zones (EPZs). "We are giving assistance including loan rescheduling
in easy instalment so that the closed industrial units are reopened
and the weak ones survive,"she said during an question-answer hour
in parliament yesterday. Hasina pointed out that the industries were
closed because of weakness in their management, labour unrest and
decrease in exports on global economic recession. Describing the
EPZs' present rules and regulations as conducive to investment, the
prime minister informed the parliament that the number of industrial
units now in operation under the jurisdiction of the Bangladesh
Export Processing Zones Authority (Bepza) is 304. "There is no need
to relax the rules and regulations further," she affirmed. The
premier, however, made an assurance that any specific proposal to
raise investment and production will be considered. Replying to
queries, Hasina, also the leader of the House, said the government
will take measures to ensure fair price of different farm products.
"Monitoring will be strengthened in future so that farmers get fair
prices of rice and paddy," the premier said, adding that agri- inputs
for farmers at a cheaper rate will be ensured.

Rangpur garments cross border

Entrepreneurs in Rangpur are now exporting readymade garments to
India, taking advantage of the South Asia Free Trade Area (Safta)
agreement. Tariqul Islam, proprietor of R&R Garments and Mouvasha
Garments Industry, along with two friends -- Mominur Rahman and
Barkatullah -- set up two small garment factories in Rangpur about a
year back. At first, they produced garments for the local market but
as profits started rolling in, they were encouraged to expand
equipment and machinery. They jumped at the opportunity of exporting
readymade garments to India when they visited Siliguri of West
Bengal. "Siliguri importers were interested in purchasing
three-quarter pants and trousers from us, under a preferential Safta
agreement," Islam said. Over the last three months, they have sent
two consignments with about 2 lakh pieces of pants and trousers to
Siliguri, said Islam. Barkatullah said most Siliguri buyers import
readymade garments to sell to the low- income groups in Siliguri,
Maldah, Assam and Kolkata. "In addition, some buyers import dresses
from us and then export to South Africa," he added. Rahman said they
export their goods through the Burimari Land Port, 60 kilometres
from Rangpur and Siliguri is only 100 kilometres from there.
Siliguri buyers prefer Rangpur to other Indian states as it is
cost-effective for them, he added. "Our factory is the first
export-oriented readymade garments factory in the north," Rahman
said. They began with 30 sewing machines. As work orders increased,
they contracted out the orders to seven other small factories in
Rangpur and Ulipur in Kurigram to complete work in time. About 400
workers, who previously worked in factories in Dhaka, found jobs in
these factories. Rasheda Begum, 30 , used to work at a garments
factory in Dhaka, but now that work is available in Rangpur, she did
not return. She joined R&R Garments as a supervisor. "Even though I
could have earned more in Dhaka, I prefer to work here as I can live
with my family. Despite prospects, garment factory owners said they
have to face difficulties and spend a hefty amount of money to get
BGMEA and EPB certification. Load shedding is another major problem
they face. "We have an order for 50,000 pairs of trousers and we have
to send the consignment by October 30. With continuous power
outages, it will be difficult to complete the work on time," Islam
said. Rahman said it is difficult for them to manage bank credit. "We
are now operating without the support of bank funds. It would have
been easier to expand operations with an easy access to funds."

GP IPO subscription raises high hope

The subscription of Grameenphone's initial public offering, the
largest in Bangladesh's capital market history, ends today amid signs
of overwhelming responses from prospective investors. For
non-resident Bangladeshis, the subscription will continue until
October 18. "We are receiving very positive responses from IPO
applicants," said Mesbah Ahamed, head of operations of Citigroup
Global Markets Bangladesh Private Ltd, the issue manager of the IPO.
The IPO has already been oversubscribed, said Ahamed, who visited 20
branches of different banks in the city and witnessed long queues of
applicants there. A similar picture was seen at 503 branches of the
15 selected banks and Investment Corporation of Bangladesh where the
prospective investors, comprising retired officials to students,
lined up to deposit money against Grameenphone shares. "The final
report on IPO subscription will be available next week," he said.
Grameenphone, the country's largest mobile phone operator, looks to
raise Tk 486.08 crore from the public by issuing 69 ,439 ,400
ordinary shares worth Tk 10 each, in addition to a Tk 60 premium per
share. Grameenphone, which received the final approval from the
Securities and Exchange Commission on August 20 , will use proceeds
from the issue to expand its network and develop information
technology and for corporate purposes. Grameenphone is 62 percent
owned by Telenor of Norway and the rest by Grameen Telecom, a
subsidiary of micro-finance giant Grameen Bank, which was set up by
Nobel peace prize winner Muhammad Yunus. It has around 21.16 million
of Bangladesh's fast growing 48 million cellular subscriber base.
It is also the country's largest private company by revenue.

TOYOTA introduce a new sports car

Toyota unveiled Tuesday a new lightweight, sporty concept car
inspired by an iconic coupe from the 1980 s, saying its vision of the
future was both mean and green. With a low centre of gravity and a
special two-litre boxer engine developed by partner Subaru, the
rear-wheel drive FT-86 is said to handle like a race car but with
less damage to the environment. The cherry-red concept car, which
will go on display at this month's Tokyo Motor Show, aims to
rekindle passion for its Corolla AE86 of the 1980 s. "Everyone thinks
sports cars won't sell but there is a huge demand, particularly among
middle-aged men who have fond memories of the Corolla 86 and who
would like to drive it once again," Toyota engineer Tetsuya Tada
said. "When green cars become prevalent, consumers will choose brands
that offer something extra," Tada said at a preview of the vehicle.
Toyota will also display a new version of its electric concept car --
based on its compact Toyota iQ -- at the Tokyo Motor Show, which
opens to the public from October 24 through November 4.

ADB lends $500 m to revive Indonesian economy

The Asian Development Bank said Wednesday it would lend 500 million
dollars to Indonesia to revive its sluggish economy. The loan will
support Jakarta's multi-billion- dollar stimulus efforts that include
tax relief, capital spending and government handouts, the
Manila-based lender said in a statement. Without the stimulus
programme, the bank said Indonesian economic growth could weaken to
2-3 percent from its current pace of 4.3 percent. That was already
below its 5-6.3 percent average over the past four years. "With
exports, private investment, and consumption still sluggish, a strong
countercyclical fiscal stimulus is needed to protect the social
sectors and support poverty reduction," ADB official Arjun Thapan
said in the statement. "Indonesia has the fiscal space for its
stimulus package, which is expected to be temporary, and is also
taking measures for structural reforms to sustain growth over the
longer term." The loan matures in five years, with no repayments for
the first three.

British Airways to cut 1 ,700 jobs

British Airways (BA) said Tuesday it would cut 1 ,700 jobs and
freeze pay in its latest action to stem losses due to the global
downturn. The cuts will reduce the total number of cabin crew-related
jobs from 14 ,000 to 12 ,300 , it said, noting that the move
involves cabin crew managers rather than cabin crew themselves.
"These changes will take place from the end of November. They will
not .. reduce the number of working crew on board," said a BA
statement of the job cuts. British Airways "is currently not
profitable and we expect to record a significant loss for the second
consecutive year -- the first time that has happened in our history,"
it added. "Revenues are down, so we must reduce costs to restore
profitability. Thousands of staff across the airline have already
made contributions to the cost-reduction programme. "We have been
talking to the cabin crew unions since the start of the year, but
have made little progress on the contribution they might make," the
company added. BA last month launched its inaugural all- business
class service from London to New York as it seeks to claw back ground
lost to rival Virgin Atlantic and succeed where others failed.

German industrial orders rising

German industrial orders posted their sixth straight monthly rise in
August, official data showed on Wednesday, in a fresh sign that a
fragile recovery in Europe's top economy is taking root. A day after
Berlin gave a more bullish forecast for growth this year, the economy
ministry said that orders rose a better-than- expected 1.4 following
a 3.1- before. Germany, one of the world's biggest exporters, has
been hit hard by the global recession hurting demand for its
products, but Wednesday's data showed foreign orders rising 4.6
percent. On a less volatile two-month basis, orders rose 5.8
compared with May and June. Compared with a year earlier, orders
soared 20.3 with foreign demand up 24.3

Commodities push Asian stocks

Asian markets gained for a second consecutive day Wednesday, helped
by strong commodities stocks as a fresh rally on Wall Street
bolstered investor confidence. Bourses around the region were helped
by a surge in gold prices to record highs, as investors poured money
into commodities in the hope that demand is returning. Gold was at an
all-time high of 1 , 047.80 US dollars an ounce in early London
trading Wednesday, while light, sweet crude for November had risen
above 71 dollars a barrel in Asia. Tokyo gained 1.11 percent while
gold and mining stocks pushed Sydney 2.23 percent higher. Hong Kong
added 2.07 percent. However, Seoul ended flat after commodity-
related gains were offset by a mixed dollar and the impact of a
strong local currency on exporters. Wall Street shares lifted 1.37
percent to extend their rally for a second day Tuesday as risk
appetites were whetted by Australia' s earlier decision to raise
interest rates. Investors were eyeing the US third quarter earnings
season which was to kick off later in the day with the release of
mining giant Alcoa's results. Shanghai was closed for a public
holiday. TOKYO: Up 1.11 percent. The Nikkei-225 added 107.80
points to 9 , 799.60. HONG KONG: Up 2.07 percent. The Hang Seng
Index finished 430.06 points higher at 21 ,241. 59. Resources and
oil firms led the rise, with PetroChina gaining 3.6 percent to 9.23
Hong Kong dollars and CNOOC up 1.5 percent at 10. 96 dollars.
SYDNEY: Up 2.23 percent. The SP/ASX200 rose 104.1 points to 4
,695.7. SEOUL: Flat. The KOSPI ended down 0.44 points at 1 , 598.00.
Hyundai Motor slipped 5.3 percent to 96 ,600 won. Kia Motors fell
4.8 percent. TAIPEI: Up 0.96 percent. The weighted index rose 72.61
points to 7 , 608.66. SINGAPORE: Up 0.87 percent. The blue-chip
Straits Times Index rose 22.74 points to 2 ,634. 63. Singapore
Airlines was 12 cents higher at 13. 36 dollars while Keppel Corp
advanced 24 cents to 8.05. BANGKOK: Up 1.44 percent. The Stock
Exchange of Thailand gained 10.53 points to close at 741.92. KUALA
LUMPUR: Up 0.48 percent. The Kuala Lumpur Composite Index gained
5.88 points to 1 , 218.61. Tobacco giant BAT slid 0.4 percent to
44.80 ringgit while telecoms company Axiata slipped 1.0 percent to
3.04 ringgit. JAKARTA: Down 0.58 percent. The Jakarta Composite
Index lost 14.74 points to 2 , 513.40. MANILA: Up 2.86 percent. The
composite index gained 82.60 points to 2 , 967.06. MUMBAI: Down 0.9
percent. The 30- share Sensex fell 151.88 points to 16 , 806.66.

WB-IMF Meeting Bangladesh in double bind Muhith suggests special fund for quick budget support for LDCs

Finance Minister AMA Muhith says the economies such as Bangladesh are
caught in a double bind as they cannot qualify for debt reduction nor
can they get any IMF support for trade financing. The reason is, they
have no balance of payment crisis. Bangladesh and other countries
that are doing better by being cautious in trade transactions and
prudent in debt management are, indeed, being punished, the minister
says. Muhith spoke at the annual general meeting of the World Bank
and the International Monetary Fund that ended in the Turkish city of
Istanbul yesterday. Muhith returned to such a meeting after a lapse
of 26 years and made a trip down the memory lane. "What impresses me
most is that I find after more than a quarter century that we are
still grappling with many issues which have remained with us for
almost all of the post- War period," he recalls. The minister charges
that the World Bank has yet to start operations directed at anti-
cyclical measures in its member countries. "There is very little of
trade financing from any quarter although global liquidity is at
very comfortable levels," Muhith says. "The regional development
banks, however, are doing much better in holding the hands of the
low income countries. The IMF has at least allocated the new issue of
SDRs (special drawing rights) and the flexible credit facility is
proving to be helpful to some countries. "The debt reduction
initiative is proceeding in its traditional slow motion as if the
crisis is nothing new. But the systemic problem of what I would term
punishment for good performance and prudent debt policy is an issue
that cannot be neglected any further," Muhith says. The least
developed countries are forced to borrow costly short-term money to
finance essential imports such as fuel, fertiliser or food and
undertake their development effort at a lower level of their
potential. Muhith says this is a problem that defies any explanation
or justification. He believes that alternative ways of budget support
or sector lending for infrastructure investment or social protection
can possibly find some solution. "Such economies need firstly grants
and concessional loans that are available now at much reduced levels
and secondly rapid commitment of external assistance without
elaborate conditionalities." Bangladesh has been experiencing a
gradual decline in export earnings and in the volume of manpower
export. Remittance receipts are not affected yet mainly because of
improvement in the system of money transfer, the minister says.
Muhith points to reduced capital and investment flows in the
financial crisis, which have in turn adversely affected investment
decisions by the private sector in Bangladesh and other countries. "It
(financial crisis) has substantially reduced global trade including a
decline in manpower export that has turned into the main export
earner for many countries." "The unemployment rate in the weaker
economies is a matter of serious concern and the consequent need for
safety net expansion is a Herculean task," Muhith says. "The fall in
revenues, due to both external and domestic contractions, is further
limiting the fiscal space available to the weak economies to tackle
the crisis. This slowdown will impede the fight against poverty and
jeopardise the achievement of MDG targets by 2015. " The situation is
further complicated by the threat of climate change and environmental
hazards being faced especially by the low- income countries. "Climate
change symptoms have already created impossible challenges in my
country where devastating effects of successive cyclones and tidal
surges have obliterated habitations and warranted investment of
billions of dollars for rehabilitation of embankments, agriculture
and shelters," he says. "While we appreciate the G20 initiative to
almost triple the IMF resources for supporting developing countries
to fight the economic slowdown, we also note that a large part of
this support will be earmarked for middle-income countries leaving
little leeway to underwrite balance of payment and fiscal deficits
in the LDCs," the minister says. The LDCs have neither received any
substantial support so far from the WB group to ride out the crisis.
The minister has urged a special fund to be created with core
resources of the WB to provide quick budget support for the LDCs. The
development enterprise anywhere is a long-term undertaking. "Keeping
this in mind it is wrong for a DFI to withdraw from any critical
sector such as agriculture and water sector, transport and road
sector or energy and power sector in any developing member country,"
he says. "Mercifully the World Bank has realised the folly but needs
firmly to confirm a policy of continuous engagement in various
sectors of its member countries." "World Bank Group's withholding of
support in growth-inducing areas such as roads, railways and power on
a plea of institutional deficiencies in a particular country context
does not augur well for unimpeded growth and development," Muhith
says. "We must stem this tendency towards stop- go kind of
interventions in the credit recipient countries." "When additional
development financing is needed to face the economic crisis, it is
not clear how this 'front-loading' without any additional allocation
can sustain the development momentum." Muhith urges the global
community to revive the stalled Doha negotiations and consider duty
and quota free entry of all exports from LDCs under a simplified rule
of origin. RECOMMENDATION The minister emphasises the restructuring of
the global public sector for the financial and monetary system of
the future. "The architecture of the international financial
institutions and the global economic system as drawn up in Bretton
Woods still survives with some significant modifications." This
system when it was shaped took into account the experience of the
Great Depression of 1930 s and the urge for a Post- World War II
economic order enshrining equity, peace and prosperity. In recent
times, WB-IMF collaboration has flourished and the much-expected
third institution of WTO has come into existence. IMF has taken up a
larger role as development financier and as supporter of economies in
sudden and enormous balance of payment crisis. Muhith says new ideas
are in the air about a restructuring of the international financial
institutions with the sudden arrival of a severe depression and
near-collapse of the financial sector. "These ideas need to be
carefully and systematically pursued and not put under the carpet
once the crisis is temporarily contained," he suggests. "On the one
hand we need a regulatory body on greater and asymmetric monitoring
of the global economy, more comprehensive regulation of the
financial sector and the capital market and development of an
effective early warning system."

Big 20 scope out capital market

Twenty big companies with paid-up capital of over Tk 100 crore are
on track to raise funds from capital market, the Dhaka Stock
Exchange president said yesterday. "The companies are in the pipeline
to go for initial public offering," said Rakibur Rahman. Hosaf Group,
The Westin Dhaka and United Hospital are among the companies that
have set sights on capital market. The disclosure came after
reporters queried why the DSE would not allow listing of any company
with paid-up capital below Tk 50 crore. The DSE decided against the
low-cap companies at a meeting on Tuesday to curb price
manipulation. Rahman said the bourse in recent times has received
proposals from many low-cap companies to raise capital. "But it seems
to us that most are now facing hurdles in business following the
recent global financial crisis. They choose our market as an exit
point through offloading their shares," he said. If a company's IPO
size is small -- meaning a small number of shares to trade -- it is
easy to manipulate the prices. It was seen in many times that some
investors pack the shares into their portfolios, creating an
artificial crisis in the market, Rahman said. "We can't allow them to
do so," he said. Asked whether the DSE is discouraging companies with
low paid-up capital to list on the bourses, he said: "No. It is being
practiced in our neighbouring countries as well." But, he said, in
those countries there are alternative or over-the-counter (OTC)
markets for low-cap companies. "Our OTC market will remain open to
low-cap companies," Rahman said. "The latest IPO of Grameenphone
indicates that our market is ready to absorb big IPOs," Rahman said.
"The Dhaka market can alone absorb an IPO worth Tk 500 crore every
month," Rahman said. On Tuesday's meeting, the DSE also decided that
a company would have to go for IPO with a minimum of shares
equivalent to 25 percent of its paid-up capital to get approval for
listing on the bourse. Also, the DSE decided that if the IPO size is
25 percent of a company's paid up, there would not be any allocation
for private placement. A private placement, practised by new issuer
companies currently, is a funding round of securities that are sold
without an IPO, usually to chosen private investors. DSE's decisions
however will have to be approved by the market regulator, Securities
and Exchange Commission.