Indian firms' earnings seen weak

Indian firms are expected to report a fall in profits in the
quarterly results season that kicks off Friday, but better times lie
ahead as the country's economic recovery takes hold, analysts
forecast. "The economic fundamentals are improving," Hitesh Agrawal,
head of research at Mumbai's Angel Broking, said Wednesday. For the
three months to September, the 30 companies which make up Mumbai's
benchmark Sensex index could report up to a 12 percent drop in net
profit year-on-year, analysts say. But on a quarter-on-quarter basis,
profits are expected to rise, reflecting a recovery that is slowly
gathering steam in Asia's third- largest economy. "Sequentially over
previous quarters, we see better earnings," Bharat Iyer, India
strategist with JP Morgan, told AFP. India's economy grew by 6.1
percent in the three months to June, picking up pace from the
previous quarter when it expanded by 5.8 percent and signalling the
country's emergence from the global downturn.

Bank of England keeps interest rate at 0.5 pc

The Bank of England is holding its key lending rate at a record low
level of 0.5 percent and maintaining its credit-easing plans amid
signs of improvement in recession-hit Britain, it said on Thursday.
"The Bank of England's Monetary Policy Committee today voted to
maintain the official bank rate paid on commercial bank reserves at
0.5 percent," the BoE said in a statement after a two-day meeting.
"The committee also voted to continue with its programme of asset
purchases totalling 175 billion pounds (194 billion euros, 287
billion dollars) financed by the issuance of central bank reserves."
Earlier this year, in March, the central bank slashed borrowing costs
to the current record low level and launched a radical quantitative
easing (QE) policy in an attempt to lift Britain out of recession.

French economy, exports edge up in Q3

The French economy grew by 0.3 percent in the third quarter of 2009
, the country's central bank said in an estimate published on
Thursday, after the major EU economy emerged from recession. The
figure from the Bank of France followed a slightly higher
third-quarter growth forecast of 0.5 percent by the INSEE national
statistics agency, which estimated a 2.2- percent contraction overall
in 2009 in the worldwide downturn. According to INSEE, France
emerged from recession in the second quarter of 2009 , with 0.3
percent growth in gross domestic product, after four quarters of
contraction. The bank also published on Thursday its monthly
industrial confidence index, which it said strengthened slightly in
September from 89 to 92 points, well up from a low point of 68 at
the height of the crisis in December. Separate figures from the French
customs authorities showed the country's trade deficit -- the amount
by which imports exceed exports -- fell to 3.4 billion euros (five
billion dollars) in August. This was due notably to some major exports
of transport equipment such as Airbus planes.

S Korea aims for 10 pc of global electric car market by 2015

President Lee Myung-Bak Thursday offered full government support to
help South Korean firms secure about 10 percent of the global
electric car market by 2015. Lee said the country should make all-out
efforts to develop the technology. "The government will extend full
support to the auto industry," he said, adding electric cars could
become a new growth engine after computer microchips and ships. His
comment came at a meeting of economic policymakers in the research
institute of the country's leading auto group Hyundai at Hwaseong
south of Seoul. The Ministry of Knowledge Economy said it is now
targeting mass production of electric cars from 2011 instead of
2013. "If all goes according to our plans, local carmakers will be
able to grab 10 percent of the global electric car market by 2015 ,"
Cho Seok, a deputy minister, told reporters. The government says it
will allocate 400 billion won (341 million dollars) between now and
2014 to support development of high- performance batteries and other
related systems. Separately Hyundai Motor and its affiliate Kia
Motors have announced plans to invest 4. 1 trillion won by end-2013
to develop fuel- efficient cars and cut carbon emissions.

Oil rebounds

Oil prices rebounded on Thursday as stock markets rallied on economic
recovery hopes, traders said. New York's main contract, light sweet
crude for delivery in November climbed 93 cents to 70.50 dollars a
barrel. In London, Brent North Sea crude for November gained 98
cents to 68.18 dollars.

Obama meets top Democrats for jobs summit

US President Barack Obama held talks Wednesday with top Democrats in
Congress to underscore the urgency of job creation, a week after the
unemployment rate hit a 26- year high of 9.8 percent. The
administration and Democratic leaders are reportedly considering a
range of measures, including giving employers a tax credit for
creating new positions, as fears mount of a " jobless recovery" when
growth resumes. Senate Majority leader Harry Reid and Nancy Pelosi,
the speaker of the House of Representatives, said the meeting in the
Oval Office was dedicated to seeking ways to promote job growth amid
the deepest recession for generations. "Today's meeting with the
president reinforces our shared commitment to creating more jobs and
providing relief to the millions of Americans who are out of work,"
Reid said in a statement. "We also need to think about creative,
innovative ways to encourage businesses to create new jobs and we're
committed to working with the president to do that." Pelosi said the
meeting was a sign the US government was united in the goal of
getting Americans back to work. "Congress stands ready to partner
with the White House to keep our economy moving in the right
direction and lay the foundation for growth long into the future,"
Pelosi said. A senior Obama aide said the meeting focused on the
"success" of Obama's 787 billion dollar economic stimulus program,
which the administration says has staved off even worse carnage on
the jobs market. The official said the talks also considered the
possibility of extending unemployment benefit programs which will
soon expire and " the many ways that we can work together to continue
to save and create jobs in the future." White House spokesman Robert
Gibbs however declined to go into detail about the tax credits
proposal, or other measures that the administration was considering
to fire up job creation. In a blow to hopes of imminent recovery, new
Labor Department figures last Friday showed job losses accelerated to
263 ,000 in September, pushing the unemployment rate to a new 26-
year high of 9.8 percent. In a first reaction, Obama called the jobs
report "sobering" and a sign that the economic recovery expected to
begin in the last quarter of this year would need to be ground out
step by step.

Australian jobless rate drops

Australia's jobless rate fell unexpectedly for the first time in five
months in September, prompting the government to claim Thursday its
economic stimulus measures were helping defy the global downturn.
Unemployment fell to 5.7 percent from 5.8 percent in August, with
figures showing the number of people with jobs jumped 40 ,600 ,
while full-time employment rose by 35 ,400. The news sent the
Australian dollar soaring to a new 14- month-high of 90.33 US cents
while the stock market gained 1.55 percent. "It's a phenomenal
result," Commonwealth Securities economist Savanth Sebastian told
Sky News after the data release. But Employment Participation Minister
Mark Arbib urged caution, saying that the figures reflected only one
month's performance and emphasised the economy remained very
fragile. "The stimulus is working but again there's still a long way
to go in the global recession," he told reporters in Melbourne.
"There's still a great deal of uncertainty about what is happening in
the United States, in Europe and in China and for those reasons the
stimulus must be kept in place," he said. Arbib also warned that 18
,000 jobs had to be created every month for the figures to stay
even. But the numbers far outstripped economists' expectations and
sparked speculation that unemployment had reached its peak. Analysts
had forecast an employment decline of 10 ,000 with the unemployment
rate rising to 6.0 percent. Economists now say that the employment
rate would probably not breach the six percent mark, despite a
government prediction earlier this year of 8.0 percent next year.
The surge in employment came two days after Australia became the
first advanced economy to raise interest rates since the global
financial crisis and promised more rises to come. The central bank
raised the official cash rate by 25 basis points to 3.25 percent,
up from a 49- year low after an aggressive round of cuts credited
with helping fight off the worst global downturn since the Great
Depression. In a long series of cuts, the bank had slashed the rate
from a high of 7.25 percent a year ago with Australia's economy
slowing as the world sank into recession. But Reserve Bank of
Australia governor Glenn Stevens made it clear Tuesday that with
growth returning to the economy and inflation close to target, it was
time to reduce monetary policy stimulus and raise rates. The move
came after Australia became the only major Western nation to avoid a
recession in the worldwide slump, posting growth of 0.6 percent in
the three months to June -- the best in the developed world.
Economists said the stronger-than-expected jobs figures for September
had proved the central bank was right to begin raising rates again
and said more hikes were likely in November. RBC Capital Markets
senior economist Su-Lin Ong said the numbers reflected the underlying
strength of the Australian economy, but also boosted the chance of a
rates rise in the short term. "It will have the policy makers
wondering if we've seen the peak (in unemployment) in this cycle,"
she said. "It completely supports and justifies the RBA's decision to
begin its policy tightening cycle this week, we continue to think
they will raise rates further in the coming months. "

Automobile Renault in quandary

When Renault bought a quarter of Avtovaz at the height of optimism
over the Russian car industry it cand hardly have imagined having to
shoulder responsibility for saving Russia's largest carmaker. But
Renault has found itself in a quandary after its one billion dollar
investment in 2008 to buy 25 percent in the troubled carmaker has
so far led to nothing but trouble. The outlook grew grimmer when Prime
Minister Vladimir Putin warned Renault last week its stake in
Avtovaz could be diluted unless it provided help for the company,
which has already announced plans to cut a quarter of its workforce.
The government is concerned that mass layoffs at Avtovaz, the key
employer in Tolyatti, a city of 700 ,000 people on the Volga River,
could spill into social unrest. "We need to deflate this huge bubble
that can burst" at any moment, a government official told AFP,
speaking on condition of anonymity. Putin bluntly said on Monday that
the state would not allow the carmaker to fail. On Monday, Putin met
with Christian Esteve, head of the Eurasia region for Renault, to
discuss ways the French carmaker could help. But the Renault
executive declined to commit to any concrete moves, except for saying
it felt "socially responsible." Analysts say Renault is stuck and
needs to decide fast whether it could afford to have a stake in the
troubled carmaker. "The government is trying to squeeze the maximum"
out of Renault, said Vladimir Bespalov, an auto analyst at VTB
Capital. " Difficult negotiations are going on" between Renault and
the government, he added. "Nobody expected that the (Russian auto)
market would collapse so much," he added. On Tuesday, Putin's powerful
first deputy, Igor Shuvalov, announced that Renault was ready to
invest in the ailing auto giant, a move that Renault refused to
confirm. "The most important thing is that Renault has confirmed
strategic interest in the development of Avtovaz, including
transferring the most advanced technologies, " Shuvalov told
reporters. Olga Sergeyeva, a Moscow-based spokeswoman for Renault,
said however that the transfer of technologies was just one of the
options. "As of today, the decision has not yet been taken," she
said. Shuvalov said the amount to be invested in Avtovaz by the state
and Renault would be determined in the coming weeks. The catch
however is that Avtovaz has not yet come up with a precise business
plan. German Gref, head of Russia's largest savings bank Sberbank and
the Russian carmaker's largest creditor, said Tuesday Avtovaz still
did not have a precise idea of how much money it needs. "So far we
don't have a figure we've agreed upon," he told reporters. The state
earlier this year provided 25 billion rubles (0.83 billion dollars,
0.57 billion euros) to Avtovaz. A report in Kommersant newspaper,
citing the Russian carmaker's presentation to the government, said
Tuesday that Avtovaz needed at least 70 billion rubles to cover its
debt among other things. Avtovaz spokesman Alexander Shmygov said he
could not confirm the report. Russia had promised to become Europe's
fastest growing market. Since the onset of the crisis a year ago the
car market there has been hit by a plunge in demand as Russian
consumers tighten their belts causing foreign and domestic companies
to slash their production plans. Renault has sold Avtovaz
technologies, including engines and a license to produce Logan MCV,
estimated at 220 million euros, but analysts say Avtovaz needs more
modern know-how.

PSI firms may linger, BANGLADESH Govt not ready yet to carry out inspection

The government may extend the service period of pre-shipment
inspection (PSI) firms until June next year despite their poor
performances and irregularities, hinted National Board of Revenue
(NBR) officials. The NBR is yet to equip it to take over PSI
activities, while the current term of contract of the PSI firms will
expire on December 31. The revenue board, especially its customs
department, was seen busy throughout the last week centring a seminar
on PSI scheduled for Sunday. Although the seminar will look into
whether the customs department can immediately take over PSI
activities, or possibility of time extension for the firms, the NBR
officials confidently forecast another extension as it happened
earlier. "The time extension decision may come at the Sunday
meeting," a senior NBR official told The Daily Star yesterday.
Stakeholders, including business and chamber leaders, are likely to
give their opinions on the issue at the meeting. Earlier, PSI of
imported goods was made mandatory in August 2000 in the wake of
growing complaints of corruption and inefficiency against customs
officials. The BNP-led government appointed four PSI companies --
Cotecna Inspection SA, SGS ( Bangladesh) Ltd, Bureau Veritas BIVAC (
Bangladesh) Ltd and Intertek Testing Service (ITS) -- in August 2005
for three years for certifying price, quality and quantity of
imported goods. Later, the caretaker government in 2008 extended
their service period till December this year, saying that the
country's customs department is not yet equipped enough to carry out
the job of the PSI firms. Bangladesh imported goods worth over $20
billion in fiscal 2007-08 and 2008-09. PSI firms charge one
percent of import value of any goods as their fees. These firms have
earned nearly Tk 1 ,500 crore since 2005 as fees in addition to
their ' income' from under-invoicing of goods, according to NBR
officials. The time extension, if allowed further, will come amid
widespread allegations that the PSI companies have been involved in
undervaluing goods, wrong declaration, or allowing entry of
substandard and adulterated products in the country. These firms were
fined several times for their wrongdoings, according to the NBR.
Even, the caretaker government in 2008 was forced to scrap the deal
of one of the four PSI companies, Cotecna Inspection, after an NBR
probe had found that it was involved in under-valuation of imported
goods. Penalties were also imposed on other PSI firms following
detection of irregularities in deciding valuation of imported goods.
Cotecna was penalised Tk 2.65 crore, SGS Tk 1. 86 crore, Bureau
Veritas Tk 78 lakh and ITS Tk 48 lakh in different times, according
to the figures of the tax appellate tribunal of the NBR. Mahfuz
Ahmed, managing director of Gulf Orient Sea Ways, blamed SGS for
delaying inspection reports. "The firm is supposed to send the
reports to banks and customs offices within four days of inspection,
but it takes 15 to 30 days," said Ahmed who imports goods from
India. However, the president of the country's apex trade body, the
Federation of Bangladesh Chambers of Commerce and Industry (FBCCI),
hinted his support to the extension of the PSI services by six months.
"We need to develop our own database before scrapping the deals with
PSI agencies," said Annisul Huq. "We may support six months'
extension proposal," the FBCCI boss added. The government was supposed
to develop the customs department to replace the PSI companies. But
the condition of the department remains more or less the same as it
was previously. "The NBR failed to develop a strong database and
capacity of the customs officials," a customs commissioner told The
Daily Star seeking not to be named. During the last time-extension,
the then finance adviser of the caretaker government AB Mirza Azizul
Islam had said the government would develop its own capacity to
replace the PSI firms within the next 16 months till December 2009.
Meanwhile, the NBR had also failed to appoint an auditor to review the
activities of the PSI companies in the last nine years despite having
a provision in the rules to do so. The NBR officials blamed the
failure on resistance from vested interests, both from the revenue
board and PSI firms.