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Portugal delays high speed rail link as part of austerity

Portugal's new centre-right government sacrificed on Tuesday the completion a high-speed rail link with Spain as part of efforts to beat austerity targets agreed in its EU-IMF bailout.

The suspension of the construction of the Lisbon-Madrid high speed rail link that was due to be completed by 2013 was included in the government's four-year programme which it submitted to parliament.

The programme of Portuguese Prime Minister Pedro Passos Coelho vowed to 'apply scrupulously the measures negotiated with the International Monetary Fund and the European Union.'

Under Portugal's 78-billion-euro ($112 billion) bailout Lisbon must implement tough measures to control public finances and introduce reforms and sell-off state assets to improve the weak structure of the economy.

However, the government signalled it wants to be 'more ambitious in the adjustment process for the Portuguese economy' in order to 'prevent against possible external and internal risks.'

There have been increasing concerns that a Greek default could spread a new wave of contagion throughout the eurozone, further damaging weaker economies such as Portugal.

Source : New Age

Compromise unblocks US trade deals

The White House and top lawmakers have finally reached a deal to allow long-stalled trade pacts with South Korea, Colombia and Panama to move ahead in Congress, officials said Tuesday.

The deal will allow a Senate panel to start work this week on the pacts, worth billions of dollars, which slash tariffs and are designed to boost exports and speed up slow US jobs growth, Capitol Hill officials said.

The White House said the breakthrough resulted from an agreement with lawmakers to fund Trade Adjustment Assistance, which offers health care and retraining for US workers who lose jobs to overseas markets through 2014.

The White House had insisted on renewing TAA as a condition for moving forward on the deals, drawing Republican fire that it was loading down the pacts with unrelated legislation and blocking vital trade deals.

'As a result of extensive negotiations, we now have an agreement on the underlying terms for a meaningful renewal of a strengthened TAA,' White House spokesman Jay Carney said in a statement.

'President Obama has fought for an ambitious trade agenda that doubles exports in five years, levels the playing field for American workers, and reflects American values,' he said.

Trade organizations and free trade advocates had been cranking up pressure on the White House to move on the deals before campaigning for the 2012 election further poisons the political atmosphere.

The deals may offer a boost to Obama's efforts to double US exports and create jobs in a sluggish economy with unemployment pegged at 9.1 per cent, a perilous political reality for the president.

Trade groups, which have mounted a vocal campaign for action on the pacts, welcomed the breakthrough.

'With our economic recovery stalling, the time is now for Congress to act on these deals,' said Thomas Donohue, president and CEO of the US Chamber of Commerce.

'For members of Congress who care about American jobs, this is a moment of truth,' he said.

Mitch McConnell, who leads the Republican minority in the Senate, however, suggested the ratification of the deals remained in doubt, saying the expansion of TAA in the South Korea pact was opposed by his party.

'I would strongly urge the Administration to re-think this action, and urge them to send up all three pending trade agreements without delay and without extraneous poison pills included,' he said.

But Democratic Senator Max Baucus said the TAA deal had been put together in talks which included top House of Representatives Republicans, adding his finance committee would begin to consider the deals on Thursday.

And a senior Obama administration official said on condition of anonymity that the White House was confident there was sufficient support in Congress to ratify the three deals and pass the extension of TAA.

Lori Wallach, Director of the global trade watch for Public Citizen, a consumer advocacy group, warned though that ratifying the deals could come at a political price.

'Given that polls show most Americans oppose more... trade pacts because they are job-killers, announcing that three more such agreements are ready to move... sure will make them mad.'

The Colombia trade pact, a fulcrum of US policy towards Latin America, was signed with Washington in 2006, but has languished in Congress ever since amid fierce debate among pro and -anti free traders.

In April, US president Barack Obama said the United States and Colombia had agreed a plan to boost labour rights in the Latin American nation and unblock a free trade agreement between their countries.

Source : New Age

Inflation fears give active managers new chance

Rising inflation is giving active fund managers a chance to claw back business lost to low-cost funds after the market crisis cast doubts over their ability to make money for clients.

With low interest rates and rising inflation making cash-like products unappealing and market volatility diminishing the allure of cheap index tracking funds, many investors are being forced back into active funds.

'There is a tremendous opportunity for investment managers to provide propositions — for a fee — to deal with that risk. In a high and rising inflation scenario, active management ought to be really key,' said Tom Brown, head of investment management for the EMEA region at KPMG.

Research house Cerulli Associates estimated while global assets recovered to pre-crisis levels last year, revenues were still $10 billion short of 2007, partly because of a reallocation to passive from active management.

'Institutional investors are moving again to ... very high conviction portfolios. That is because of their need for returns and that includes inflation (rises),' said Bernhard Langer, chief investment officer of global quantitative equity at Invesco.

Langer, who oversees $25 billion, told Reuters he was seeing especially strong demand for high conviction equity products in the United States.

Products aiming to deliver returns above markets while managing downside risks were in demand, said Elizabeth Corley, Europe chief executive of Allianz Global Investors and a speaker at the Fund Forum industry conference in Monaco.

'That is what clients like, and that is growing faster than any other part of our business,' she said.

Rick Lacaille, global CIO at State Street Global Advisors said on the sidelines of the conference on Monday that while index-tracking investments remained popular, demand for more sophisticated funds offering potentially market beating returns was on the rise.

'There is still great appetite for indexed funds but that much more concentrated, high-return portfolio is also growing,' Lacaille said.

There is still plenty of criticism of active fund management which charges relatively high fees for a premium service that can fail to deliver.

A separate Cerulli study conducted earlier this year revealed that out of a sample of 69 European absolute return funds — meant to deliver returns in any market condition — with more than five years track record, only six posted positive annual returns since inception.

The respondents told Cerulli that absolute return was 'more an aspiration' than something they would necessarily deliver every year said Yoon Ng, the report's author.

In a rare acknowledgement of the industry's limits, Bill Gross, co-CIO at PIMCO, the Allianz fixed income subsidiary, recently said fund managers sold 'hope' in exchange for generous fees.

But despite the criticism, Fund Forum attendees said they have seen no significant fee pressure.

'I would almost go as far as saying that in the last three years the prices were constant,' Langer said.

Allan Polack, chief executive of Nordea Asset Management, said the largest Scandinavian asset manager had seen no big challenges in defending fee levels, while SSgA's Lacaille said fees for the active management range were stable.

Source : New Age

Same method, same result: France keeps IMF job

Despite pledges of new transparency, the IMF again gave its top job to a French candidate Tuesday, assuring continued ire from developing countries at Europe's hold on the job.

To the surprise of few, the global crisis lender's executive board named French finance minister Christine Lagarde as managing director, replacing her countryman Dominique Strauss-Kahn, who resigned on May 18 to fight charges of sexual assault in New York.

That made her the 11th European to hold the job since 1946, and the fifth from France—a record that comes thanks to a gentleman's agreement dating to their creation at the end of World War II that an American would be president of the World Bank and a European would lead the International Monetary Fund.

Despite a challenge by Mexico's central bank chief Agustin Carstens, few had doubted Lagarde's chances: Europe aggressively declared itself united behind her days after Strauss-Kahn departed and before any other candidates had a chance to surface.

A top European official at the time called it a 'done deal.'

Carstens persevered, while others—including the respected South African Trevor Manuel—stayed out, saying Lagarde already had the job sewn up.

'I think a lot more could be done, a lot more should have been done to persuade Europeans that this birthright is not a birthright that should find a resonance in an institution as important as the International Monetary Fund,' Carstens said at the time.

When Strauss-Kahn was chosen in 2007, Jean-Claude Juncker, who chaired the Eurogroup of countries, predicted that would be the last time a European got the job.

'The next director will certainly not be a European' he said.

That came after more than a decade of anger at the IMF's hectoring approach to developing country members, especially in the 1997 Asian crisis when it dictated reforms based on a developed country ideology that has since been partially jettisoned—especially its then-rejection of capital controls.

But the 'consensus' choice of Lagarde proved Juncker wrong, even though the same developed countries that dominate the fund plunged into their own financial crises beginning in 2007.

'The process is rigged,' said Arvind Subramanian, a former IMF economist.

'Fundamentally, the system must be made fairer by ensuring that no one group of countries gets an unfair advantage in the race to become the managing director of the IMF.'

Sarah Wynn-Williams, head of IMF relations at global poverty fighting group Oxfam, said ahead of the decision that the managing director nominee is 'not even decided by the board, it's not even decided in Washington.'

Source : New Age

Panel to decide on rice, wheat exports: Indian food minister

The food ministry is not against grains exports and a panel of ministers will decide on rice and wheat exports, food minister KV Thomas said on Wednesday,

without specifying any time frame. 'Food ministry is not negative to exports, but we will have to look at the demand in view of the Food Security Bill. We will place the issue before EGoM (Empowered Group of Ministers),' Thomas told reporters.

India could decide soon to allow exports of a million tonnes each of wheat and common rice as government stocks hit a record 65.6 million tonnes, well above targets, two government sources said on Tuesday.

India, one of the world's biggest producers and consumers of wheat and

rice, has kept a tight control over grain exports since 2007, allowing only overseas sales of aromatic basmati rice, to ensure it can provide cheap food grains to the poor.

Farm minister Sharad Pawar has called for grain exports with stocks overflowing after three years of bumper harvests and the onset of the monsoon has raised concerns stocks

outside could be

damaged, adding to pressure for sales.

Source : New Age

Migrant workers should not be charged for jobs: HR activists

Local and international human rights defenders on Wednesday fixed ten principles on the rights and dignity of migrant workers saying the recruiting agents should not charge workers any fees and all costs should be borne by the employers.

The other principles include — job contracts should be made available in migrants workers' language, recruiting agency or employer must not retain migrant workers passport, migrants workers are remunerated fairly in line with local wages and the employers facilitate safe return of migrant workers at the end of the contract with all benefits.

The principles were set on the concluding day of the two-day roundtable discussion tilted 'Bangladeshi migrant workers: responsible recruitment, responsible return', jointly organised by Refugee and Migratory Movement Research Unit and the London-based Institute for Human Right and Business at a city hotel.

Representatives from different human rights bodies, international brands, workers' organisations, migrant organisations, Bangladeshi recruiting agencies, government officials and trade unions took part in the discussion.

'A migrant worker is at the end of the chain, he or she should not have to bear the cost of recruitment,' member of the board of advisors of IHRB and former chief of Amnesty

International Irene Khan told a press briefing at the end of the roundtable.

She said manpower business is responsible not only for safe recruitment, but also for safe return. 'If people are not recruited properly, they will not return properly,' she added.

Expatriate welfare and overseas employment secretary Zafar Ahmed Khan, IHRB executive director John Morrison, representative of manpower ltd, a global manpower recruitment company David Arkless and director of RMMRU CR Abrar also spoke at the briefing.

Jafar said the government was working to make bilateral agreements with the manpower receiving countries to reduce the migration costs as well as protect the workers abroad.

He said presently the government was consulting with recruiting agencies and other stakeholders to fix the maximum migration cost. 'We will be able to declare a logical migration cost with the consent of all parties soon,' he said.

Source : New Age

Less durable umbrella import takes a toll on local manufacturers

Local umbrella manufacturers, who dominate the rural markets, claimed that their business is being hampered due to the indiscriminate import of less durable but fancier umbrellas.

Urban people prefer the foreign umbrellas, in spite of the fact that they are less durable and more costly, as they are easier to carry, said Mohammad Alauddin, manager of Sharif Umbrellas, on Wednesday.

The imported umbrellas, that usually last for one rainy season only, are sold in the local market for more than Tk 200 each, while the more durable local umbrellas cost about Tk 160 each, said Alauddin.

Last year the price of imported Chinese umbrellas was nearly half of this year's price, whereas the price of the locally manufactured umbrellas has grown by only Tk 30 to Tk 40 each due to increase in the cost of materials, he added.

The government should stop allowing import of foreign umbrellas to promote the local brands which are strong enough to withstand windy weather in the monsoon, he added.

Umbrellas of three other local reputed brands — Alam, Alauddin and Sanowar — are also available at almost similar prices, he said.

Mesbahuddin Bablu, manufacturer of Boishakhi Umbrellas, said the money with which they imported 26,000 umbrellas from China would suffice to make only half the number of local umbrellas.

The demand for local umbrellas is decreasing every year, said Bablu, adding that he manufactures nearly 13,000 umbrellas every year, apart from importing them.

He said China has the technology which Bangladesh lacks, which is the main reason that these types of umbrella cannot be fabricated locally. Local manufacturers need the latest technology to compete with foreign brands.

Government employee Moqbul, who had used local Alam brand of umbrella for 11 years and lost it recently, came to New Market to buy another of the same brand as he had found it to be quite durable.

Housewife Rabeya, who came to New Market to buy 3 umbrellas for her school-going children, said she was looking for the Chinese 'Dove' brand which she had bought for Tk 120 last year.

Shopkeeper Shahjahan, who demanded Tk 200 for each umbrella, said that the price of foreign umbrellas varies, depending on the quality of the materials used.

The Indian Shankar brand costs more than Tk 600, he added.

Brightly coloured umbrellas for kids cost about Tk 100 each, he said.

Some local companies copy popular Chinese umbrellas like Cherry and Atlas and sell them at lower prices, said Shahjahan.

Source : New Age

Undisclosed money investment decision propels stocks

Turnover of the Dhaka Stock Exchange on Wednesday hit a two-and-a-half month high and the stocks extended gains for the third day on buying spree after the government allowed legalisation of undisclosed money by investing in the capital market, market operators said.

The Finance Bill 2011 passed on Tuesday included a provision of investment of undisclosed money in the stock market by paying a 10 per cent tax.

The benchmark general index of the DSE gained 68.18 points, or 1.14 per cent, to close at 6,038.66 points on Wednesday.

Turnover rose to Tk 937.66 crore from that of Tk 771.52 crore on Tuesday. Wednesday's figure of the turnover was the highest since April 11 when it was Tk 1,224.16 crore.

Market operators said both individual and institutional investors went for a buying binge following the government's move.

Out of the 257 issues traded on Wednesday, 205 advanced, 47 declined, and five remained unchanged.  

Prices of the bank and textile shares made significant gains on the day. All but two banks gained heavily and only one textile issue went red.

The DSE general index had gained 352 points over the previous nine trading days, riding on the hope that the government might finally include a provision in the budget for fiscal 2011-2012 allowing legalisation of undisclosed money invested in the capital market.

The DGEN had shed 213 points in a week after the finance minister in his proposed budget placed in the house on June 9 allowed legalisation of undisclosed money by investing it in government treasury bonds and infrastructure development fund by paying a 10 per cent tax ignoring calls from stock market stakeholders to allow such provision in the market.

Mahmood Osman Imam, who teaches finance at Dhaka University, said, 'The government's move may boost the general investors for a short period but would not bring any substantial positive change in the capital market in the long run.'

'So, it would not be justified to say that allowing undisclosed money for capital market investment will help the market.'

On Tuesday finance minister AMA Muhith said that the facility for legalising undisclosed money did not bring much benefit in the past. 'In 2009-2010 at total of Tk

922 crore was legalised and only Tk 121 crore was realised as income tax,' he said adding that the best way to reduce the size of undisclosed money was to invest it in real economy.

Source : New Age

More banks, insurance cos to get govt nod

The government will invite applications for setting up new private commercial banks and life insurance companies next month, finance minister Abul Maal Abdul Muhith said on Wednesday.

Muhith, while discussing on a cut motion by independent lawmaker Fazlul Azim, informed parliament that the new banks and insurance companies would help increase liquidity in the money market.

Azim criticised the finance minister for his handling of the share market issue and said that there was liquidity crisis in the country while the banks were charging exorbitant interest.

'When the general index [price index of bourses] went up, the finance minister took the credit. But when the index fell, he claimed the market was a 'fatkabzaar',' said Azim adding that the minister should take steps to increase liquidity supply in the share market.

In reply, Muhith claimed that there was no liquidity crisis in the country and there was no relation between liquidity crisis and the stock market debacle.

'The share market is now stable. We did not have any negligence towards the stock market. Our only lapse was that we could not check the over pricing of shares. There is nothing to be worried as the market has been stable for the last two months,' he said.

'We will invite applications for new commercial banks next month. Applications for new life insurance companies will also invited,' said the minister.

At present there are 49 commercial, specialised and multinational banks in the country. Of the total, 31 banks are listed with the Dhaka Stock Exchange.

The number of insurance companies in the country is 62, of which 18 are life insurance companies.

Source : New Age

Change in temperature unlikely

Light to moderate rain or thundershowers accompanied by temporary gusty or squally wind is likely at most places over the Rajshahi, Rangpur, Dhaka, Khulna, Barisal, Chittagong and Sylhet divisions till 6:00pm today.

Moderately heavy to heavy falls are also likely at places over the country, Met Office said.

Day temperature may remain nearly unchanged over the country.

The sun sets in the capital today at 6:50pm and rises tomorrow at 5:15am.

The country's highest temperature, 31.6 degrees Celsius, was recorded on Wednesday in Khulna and the lowest, 23.6 degrees, in Feni.

Source : New Age

RU students lock admin building TSCC opening

The students of Rajshahi University on Wednesday locked the main gate of its administrative building in continuance of their movement for opening the Teachers -Students Cultural Centre.

At about noon around 200 students and cultural activists brought out a procession that marched through the campus to end in front of the administrative building, where they staged street dramas and songs and later locked its gate.

Witnesses said that vice-chancellor Abdus Sobhan went to the spot with the proctorial body and pressurised the agitators to withdraw the movement.

The VC also threatened to take punitive action against the agitators and got them mass arrested, they said. 

They also blamed the RU syndicate for their failure to reach any concrete decision about opening the TSCC at its June 27th meeting.

Source : New Age