INTERNATIONAL

 

Aug 29 - Sep 04, 2005

 

1.INTERNATIONAL

2. PAKISTAN

 

MALAYSIA'S ECONOMIC GROWTH SLOWS TO 4.1PC

KUALA LUMPUR, Aug 24: Malaysia's growth eased to 4.1 per cent year-on-year in the three months to June, from 5.8 per cent in the first quarter, due to declines in the manufacturing and mining sectors, the central bank said.
But central bank governor Zeti Akhtar Aziz was upbeat when asked whether the economy remains on track to expand by a forecast 5.0-6.0 per cent this year despite spiralling oil prices.
"The underlying prospects of the economy remain good. The economy grew 4.9 per cent in the first half. The outlook for the second half should be more favourable," she told reporters.

"Private-sector activity continued to be the main driver of growth in the three months to June," she added.

Domestic demand rose 5.6 per cent, underpinned by strong private spending and a continued increase in private investment activity.

On the supply side, the services sector maintained its strong performance with 5.4 per cent expansion, she said.

Zeti said slower growth was experienced in the manufacturing sector, with 3.2 per cent expansion, while the output in the mining sector declined 1.6 per cent due to the shutdown of oil fields and plants for maintenance.

Growth in the construction sector continued to decline at a moderate rate of 2.0 per cent.

The central bank chief warned that full-year inflation could be higher than the projected 2.8 per cent if oil prices increased more than expected.

Zeti also said that despite higher petroleum-related expenditures, improved revenue collection contained the fiscal deficit at 2.7 billion ringgit or 2.3 per cent of GDP in the second quarter.

Malaysia's external position remained strong with the trade balance recording a large surplus of 22.9 billion ringgit, she said.

Gross exports grew at 10.8 per cent, supported by robust growth in minerals and reinforced by expansion in exports of manufactured goods and agricultural commodities.

Portfolio investment recorded a higher net inflow of 4.5 billion ringgit against 2.8 billion in the preceding quarter, mainly reflecting sustained foreign interest particularly in debt securities, she said.

VENEZUELA SIGNS JAMAICA OIL DEAL

Venezuela's President Hugo Chavez has signed a deal with Jamaica to supply it with oil at preferential rates.

Mr Chavez said his country, the world's fifth largest oil producer, was meeting the "call of conscience" by supplying cheap oil at a time of rising prices.

The agreement is part of a regional Petrocaribe initiative - proposed by Mr Chavez - to which most of the Caribbean countries have signed up.

Jamaica is the first to formalise its participation in the project.

Venezuela has been discussing similar deals with many countries in Latin America and the Caribbean in recent months.

Under the agreement, Venezuela will provide oil at a discounted rate of $40 (22) a barrel, compared to more than $60 (33) on the world market, Jamaica's Prime Minister PJ Patterson said.

The deal will initially involve about 22,000 barrels a day, for which Jamaica will be able to pay Venezuela in goods and services as well as through low interest loans, he added.

The prime minister said: "Much has been accomplished by strengthening the relationship between Venezuela and Jamaica."

Mr Chavez responded: "Don't thank us. It is the call of conscience."

His visit to Jamaica's resort city of Montego Bay followed a trip to Cuba, during which he and Cuban leader Fidel Castro reaffirmed their countries' joint commitment to socialism.

The Jamaica agreement represents only a tiny proportion of the 3.1 million barrels produced by Venezuela each day.

The Petrocaribe initiative to bring cheaper oil to the region was signed at a regional summit in the Venezuelan city Puerto La Cruz in June.

Leaders from Caribbean nations joined the venture, with only two countries, Barbados and Trinidad and Tobago, declining to sign the deal.

Critics have said Mr Chavez is using Venezuela's oil to secure diplomatic influence in the Caribbean.

INDONESIA TO BOOST NON-OIL EXPORTS

The Indonesian government has encouraged local exporters to build global brands and bring about added-value to their products to increase competitiveness to boost the national non-oil exports.

"This year the National Agency for Export Development (BPEN) has started thinking of Indonesia not facing competition and relying merely on low prices," special staff member of the Trade Minister for export development Rheinald Kasali told copper handicraftsmen under the guidance of the Dharma Bhakti Astra Foundation (YDBA) at an exhibition here on Tuesday night.

At the opening of the copper handicraft exhibition being held from August 23 to 31, 2005, he said that starting this year BPEN is encouraging exporters to build brands in the international world and asked national businessmen to start developing added-value for their export commodities.

"Building a brand is very important. It is not only like giving a name, but creating a positive perspective in the international world," Rheinald, also known as an expert in management and marketing, said.

He said that building a brand does not need much money, and is proportional with the line of business being undertaken. If this is done seriously, he added, the image of the brand will be created in five years.

IMF WARNS OF OIL-LINKED INFLATION IN ASIA

Robust energy demand from Asia will help keep world oil prices high and this could result in slower economic growth in the region, the International Monetary Fund (IMF) chief said on Thursday.

IMF managing director Rodrigo Rato said Asia could expect to maintain its solid economic performance provided authorities kept a tight watch on monetary policy to prevent oil-linked inflation from choking growth prospects.

"The growth in Asia has been remarkable," the former Spanish finance minister said in a video conference with Asian journalists from Washington ahead of his trip to the region next month.

"There are risks of course and the most important risk is, at this time for Asia."

"We have seen that the impact of oil prices has been mild at this moment but we believe if the high oil prices persist and we believe that they will, Asian growth could be affected."

NIGERIA EYES $5BN FDI A YEAR

Nigeria hopes to more than double foreign direct investment to $5 billion a year thanks to investor friendly policies and a concerted government effort to court foreign business executives, an official said on Wednesday.

Mustafa Bello, head of the Nigerian Investment Promotion Commission, told Reuters a crop of tax incentives plus a new presidential committee that woos foreign CEOs would boost investment in Africa's most populous nation.

"As we improve policies we are attracting more investment," Bello said on the sidelines of a Nigeria-South African investment conference in Johannesburg.

"We should be able to do $5 billion a year, and after we open up the GSM (mobile phone) market further that will help us fast-track (investment)."

Nigeria attracted about $2 billion in foreign direct investment last year, with most going to its key oil sector, and delegates at the conference said this must improve to help boost economic growth and tackle poverty.

US DURABLE GOODS ORDERS SLIDE 4.9PC

Orders for US-made durable goods tumbled 4.9 per cent in July, marking the biggest drop in 18 months, the Commerce Department said on last Wednesday.

The drop in big-ticket items expected to last three years or more surprised analysts, who on average had been expecting a 1.5 per cent decline following a revised 1.9pc increase in June.

Transportation orders led the way in July, plunging 8.6 per cent after falling 1.6 per cent in June.

Excluding the often-volatile transportation goods category, July's new orders fell 3.2 per cent, almost reversing a 3.6 per cent rise in June. Excluding defence, total orders fell 4.5 per cent.

The report, a gauge of strength in manufacturing, tends to be volatile from month to month, so economists prefer to focus on longer trends spanning a quarter or a year.

Year-to-date shipments which feed directly into calculations of gross domestic product are up six per cent. Year-to-date durable goods orders are up 6.2 per cent from a year ago.

OIL AT RECORD $68 AS DEMAND SOARS

Oil prices hit a record $68 a barrel on Thursday after the US reported a fall in gasoline stocks, while China said its crude imports had risen sharply.

Fears that tropical storm Katrina might hit production in the Gulf of Mexico also pushed the cost of oil higher.

US light crude touched $68 a barrel in Asian trade before finishing the day at $67.49. London's Brent crude touched $66.56 before closing at $66.27.

Demand from the US, China and India is expected to keep oil prices high.

US stocks of gasoline fell by 3.2 million barrels last week to 194.9 million barrels, the US Department of Energy said on Wednesday - 7% below 2004 levels.

CORUS PROFITS SHINE AFTER REVAMP

A restructuring drive at Corus has helped the Anglo-Dutch steelmaker more than double its profits.

Pre-tax profits at the firm surged to 435m ($785m) for the first six months of the year, compared to 156m at the same time last year.

At least 35% of the improvement was a result of its "restoring success" shake-up, Corus said.

EU APPROVES $25BN HEALTHCARE DEAL

The European Commission has approved Johnson & Johnson's $25.4bn (14bn) takeover of rival Guidant, the largest ever deal in the medical device sector.

In doing so, Brussels ruled that the US firm must sell a number of businesses to ensure competition was not reduced in certain product areas.

Guidant makes cardio-vascular devices such as defibrillators and pacemakers.

Johnson, best known for its baby products, hopes Guidant will broaden its business beyond drugs sales.

Like other leading pharmaceutical firms, Johnson - based in New Jersey - is facing the expiry of patents on several of its drugs.

The launch of cheaper, generic versions of drugs has eaten into the revenues of leading drug companies, forcing them to diversify.

The $25.4bn acquisition of Guidant, whose headquarters is in Indiana, was first announced in December.

GERMAN BUSINESS CONFIDENCE FALLS

German business confidence fell unexpectedly in August ahead of an expected election in September, the Ifo research institute said.

Its main business climate index fell to 94.6 from 95.0 in July, its first decline since May.

The index is based on a monthly survey of 7,000 firms. A ZEW report earlier in the week gave the highest business confidence figure since March.

"Companies are a little disturbed ahead of the election," Ifo said.

Also on Thursday, German inflation slowed to 0.1% in August, making an annual rate of 1.9% despite the rise in energy prices.

The Ifo's survey's August figure was below the mid-range forecast of 95.2 in a Reuters poll of 41 economists.

Its measure of current business conditions dropped to 93.8 from 94.9 but its indicator of expectations for the next six months rose to 95.4 from an upwardly revised 95.1.

Germany is facing a September general election in which economic anxieties are expected to play a major role.

RENTOKIL HIT BY DROP IN PROFITS

Hygiene-to-security group Rentokil has announced plans to sell off its conference and training business as it unveiled a drop in first half profits.

The group revealed that pre-tax profits before one-offs for the six months to 30 June fell 20% to 135.4m compared to the same period last year.

LOSSES TRIPLE FOR SWISS AIRLINE

Losses at Swiss International Airlines have tripled as sky-high fuel prices hurt its finances.

Its loss for the six months to June 2005 was 89m Swiss francs (39.22m; $70.58m), up from 33m Swiss francs a year ago.

IMF WARNING OVER IRAQ'S RECOVERY

Iraq faces "daunting challenges" as it struggles to rebuild its battered economy, the International Monetary Fund has warned.

The violent insurgency and political uncertainties pose "major risks" to Iraq's economic recovery, the IMF said.

In its first review of the country in 25 years, the IMF called for reforms in Iraq's oil and finance industries.

The IMF report came as Iraqi lawmakers failed to meet a deadline to agree a new constitution for the country.

Iraq's parliament agreed on Tuesday to extend the deadline until 22 August to enable the country's disparate sides to reach agreement.

Directors at the Washington-based IMF commended Iraq's authorities for "maintaining a degree of macroeconomic stability under extremely difficult circumstances".

TURKEY APPROVES STATE PHONE SALE

Turkish ministers have approved the $6.55bn (3.6bn) sale of a stake in state telecoms firm Turk Telekom to a group led by Saudi-based Oger Telecom.

The disposal of the 55% stake, the largest ever sale of a Turkish public asset, marks the end of a high-profile but fraught privatisation process.

The sale was first mooted in 2001 but the process only got underway in June following lengthy legal challenges. Turk Telekom has 19 million subscribers and dominates Turkey's landline market.

US-CHINA ON VERGE OF TEXTILE DEAL

US negotiators say they are close to a textile trade deal with China, despite two days of talks ending without agreement between the countries.

Officials were optimistic that a deal could be reached after one more session of talks due in China later this month.

Chinese clothing exports to the US are limited under special World Trade Organization (WTO) rules amid claims they are damaging the US textile trade. However, retailers warn tough new limits may push up clothing costs.