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IN THE NEWS
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  INTERNATIONAL

 Oct 03 - 09, 2005

FOREIGN INVESTMENT RISES: UN

Global investment flows into developing countries have bounced back from a three-year slump, according to an influential United Nations report.

The UN Conference on Trade and Development (Unctad) said foreign funds to developing countries rose by 40% to $233bn (132bn).

Meanwhile, in the developed world investment fell 14% to 380bn.

Developing nations in Asia reaped the most benefits, the report said, particularly from research funds.

Research & development (R&D) funds flowing into developing nations rose from 2% to 18% between 1996 and 2002.

China, India, Thailand and Singapore have attracted the lion's share of R&D money.

More than 50% of the world's top R&D spenders have major operations in these countries including Pfizer, DaimlerChrysler, Siemens, Toyota and General Electric.

The rebound in foreign investment has been fuelled by global corporations' activities abroad, the UN said.

The high level of foreign direct investment flows to developing countries is likely to be sustained

Developing countries have a strong appeal for major firms, with low wages and large amounts of well-educated, skilled workers.

Multinationals have been "seeking to improve their competitiveness by expanding in the fast-growing markets of emerging economies and by seeking new ways to reduce costs," the UN said.

Overall foreign direct investment (FDI) flows last year reached $648bn, up 2% on 2003.

Six of the 10 economies with the largest increases in FDI were developing nations.

The top 10 were: the US, UK, Australia, Hong Kong, Brazil, China, Singapore, Mexico, South Korea and Russia.

CRUCIAL ITALIAN BUDGET APPROVED

Italian ministers have approved a controversial budget aimed at lowering the country's rising deficit.

After crunch talks, Italy's Cabinet approved measures to cut the deficit by 11bn euros (7.5bn) and put forward plans to boost its sluggish economy.

With elections due next year, Prime Minister Silvio Berlusconi faced opposition to his proposals from some members of his ruling coalition.

The budget proposals must now be approved by both houses of Parliament.

Silvio Berlusconi's government is under pressure to curb its budget deficit which has exceeded EU limits for several years.

The budget proposals, announced late on Thursday, include $16bn in spending cuts designed to reduce Italy's deficit.

There is clearly a big risk that the budget numbers aren't going to add up

Areas targeted include civil service and regional health spending, which will both be cut. There will also be a clampdown on tax evasion and a freeze on public sector hiring.

The budget also includes $4bn worth of investment to boost economic growth, which has languished at an average of 1% a year since 2001.

There would be tax breaks of more than 1bn euros for families while companies would have to pay 2bn euros less on social security costs.

Prime Minister Silvio Berlusconi said the proposals were fiscally responsible.

Italy's last budget before elections next year has proved highly contentious.

Finance minister Domenico Siniscalco quit last week amid claims that he was exasperated about divisions over the budget.

Italy has been put on notice to reduce its budget deficit, which is forecast to hit 4.3% this year.

US GROWTH ON STEADY PATH AT 3.3%

The US economy grew at a steady 3.3% annual rate in the second quarter, in line with initial estimates, official figures show.

This was down from a 3.8% rate of growth in the first quarter, but was still regarded as a solid performance by US economists.

Upward revisions to consumer spending were offset by weaker exports of services than previously forecast.

The US economy has exceeded 3% growth for nine straight quarters running.

Consumer spending - which accounts for about two-thirds of US growth - rose at a revised 3.4% in the second quarter, up from estimates of 3% and just down from the first quarter's 3.5% figure.

US-CHINA TEXTILE TALKS ARE FRAYED

The fifth round of US-China talks on Chinese textiles has ended without agreement, but the two sides will meet again in an attempt to iron out a deal.

Although some progress was reached at this week's talks in Washington, their differences were not settled, the Chinese trade ministry said.

The US enforced quotas on seven kinds of Chinese textile imports after a global quota system expired in January.

China says the quotas run contrary to World Trade Organization (WTO) rules.

The US textile lobby claims that the massive influx of textile exports from China may harm domestic producers, ending in mass redundancies.

Imports of shirts, pants, bras, underwear and other clothing to the US rose dramatically after a global quota system ended on 1 January this year.

BD RECEIVED 72PC MORE FDI IN 2004

DHAKA: Bangladesh attracted 72 per cent more foreign direct investment in 2004 than it did the year before, recording a significant improvement in the global investment index, reveals the UNCTAD's World Investment Report 2005, released in Dhaka on Thursday.

Gross inflow of foreign direct investment amounted to $460 million in 2004, up from $268 million in 2003, the report says.

Net foreign investment stood at $456 million after deducting an outflow of $4 million.

The United Nations Information Centre and the Board of Investment jointly launched the report.

The report also mentioned that Bangladesh advanced in the FDI performance index by 11 places from last year and ranked 112th but slipped in FDI potential index by two places to 115th among 196 countries.

MINIMUM WAGE

The minimum wage will rise on 1 October, benefiting more than one million UK workers.

Adults must be paid at least 5.05 an hour, up from 4.85, while 18 to 21 year olds will get 15p more at 4.25.

The increase follows a report from the Low Pay Commission which said the number of jobs had grown since the minimum wage was introduced in 1999.

DUBAI OPENS NEW STOCK EXCHANGE

Dubai's attempt to attract foreign investors by launching a new stock exchange is likely to get off to a slow start because it has no shares to sell.

The Dubai International Financial Exchange (DIFX) in the United Arab Emirates started trading at 1000 GMT.

In an area that can prove tricky for foreign investors, the DIFX aims to offer a liquid, well-regulated market.

While no firms are listed, investors can buy five securities that track markets in the US, Europe and Japan.

Dubai-based mobile phone company Investcom is expected to become the first firm to list on the exchange, and DIFX officials said they expect about 15 companies to be trading by the end of 2006.

Steffen Schubert, chief executive of the exchange, said he expected the share sales to be worth about $2bn (1.1bn).

KUWAIT MAY RAISE FOREIGNERS' PAY

Kuwait is considering proposals to improve the lives of nearly a million expatriate workers, most of them from India, Sri Lanka and Bangladesh.

Labour Minister Faisal al-Hajji has recommended days off for domestic workers and a minimum wage for private sector workers, Kuwaiti media report.

Non-Kuwaitis hired by private companies contracted by the government should get at least $170 a month, he proposed.

Mr Hajji's proposals, which have been submitted to the Kuwaiti cabinet, also include a suggested $240-a-month minimum wage for security guards employed by private companies.

SIX FIRMS 'TARGETING BOOTS UNIT'

Six bidders have submitted offers for the over-the-counter medicines division of UK retailer Boots, according to media reports.

Sale of the unit, which markets such well-known brands as Strepsils and Nurofen, is expected to net struggling Boots about 1.4bn ($2.47bn).

MORE JOIN MILLIONAIRE'S ROW IN US

Shrewd investment has swelled the ranks of US millionaires to nearly nine million, a survey of America's wealthiest households has found.

Households with investable assets worth more than $1m rose 8% to a record 8.9 million this year, even though stock markets showed only a modest rise.

The end of the dot.com bubble saw the number of millionaires shrink in 2001 and 2002, but figures have risen since.

The number of households with $100,000 worth of assets now exceeds 24 million.

MORTGAGE APPROVALS RISE SHARPLY

The number of loans approved for house purchase surged to 107,000 in August, their highest level in over a year, the Bank of England (BoE) has said.

The BoE figures could support recent evidence that buyers are returning to the housing market, following an interest rate cut in August.

Overall, mortgage lending rose by 7.6bn compared with 6.5bn in July.

Consumer credit grew by 1.3bn in August, up on the figures for both June and July, the BoE said.

SAMSUNG PLANS BIGGEST CHIP PLANT

Samsung Electronics, the South Korean chipmaker, is planning to spend $33bn (19bn) expanding output and building a research and development plant by 2012.

The company said it would create 14,000 new jobs and add 5,000 research posts over the next seven years, creating the world's biggest semiconductor factory.

Samsung said the extra output would boost chip sales to $61bn (35b) in 2012, compared with $16.3bn last year.

FRANCE'S JOBLESS RECOVERY STALLS

France's jobless rate remained little changed in August, as the economy continued to perform sluggishly.

Unemployment dipped to 2,712,000 from 2,718,000 in July on a seasonally adjusted basis, official figures show.

That left France's jobless rate unchanged at 9.9% in August, the government said.

France's national statistics office confirmed that the economy grew by just 0.1% during the second quarter, from 0.4% in the first three months of 2005. =

JAPAN PRESSES CHINA ON GAS FIELDS

Japan has called on China to stop developing gas fields near a disputed maritime border in the East China Sea, as fresh talks began on the issue.

Japan formally complained to China last week after it said a Chinese company's operations could take gas from the Japanese side of the border.

Both countries have suggested joint exploration of the area, but they are at odds about how to proceed.

The issue is one of the main irritants in testy relations between the two.

Japan's Foreign Minister Nobutaka Machimura said before the talks began in Tokyo that Japan would ask China for more information.

RITA'S AFTERMATH BUOYS OIL PRICES

Crude oil prices stayed above $66 on Thursday last amid further concerns over Hurricane Rita's impact on US supplies.

Adding to the pressure on oil markets, strike action in France closed a refinery and disrupted supplies.

New York light crude rose 31 cents to $66.66 a barrel in the US. In London, Brent crude added 13 cents to $64.06.

Analysts said the prices of crude oil and products such as petrol and heating oil were set to be volatile and high in the run-up to winter.

SLOWEST UK GDP GROWTH IN 12 YEARS

The UK economy was growing at an annual rate of just 1.5% in the second quarter of 2005, according to new figures.

The unexpected revision meant that UK growth was at its weakest since 1993.

In the three months to June, UK GDP grew by 0.5% compared to the previous quarter, the Office for National Statistics (ONS) said.

Changes to public administration, defence, and transport and storage of motor cars led to the downward revision of the annual figure.

Chancellor Gordon Brown admitted at the weekend that economic growth in the UK was unlikely to reach his forecast of 3-3.5% this year.

He accepted that higher oil prices would lead to slower growth after criticism from the International Monetary Fund and other independent forecasters.

WATCHDOG MAKES ENERGY PRICE PLEA

Soaring energy prices are posing a serious threat to UK businesses of all sizes, a consumer watchdog has warned.

Utility consumer group Energywatch voiced its concerns at a meeting at the Labour party conference in Brighton.

Together with business leaders, Energywatch called for government intervention to help lower prices.

At the same meeting, the CBI also warned that firms may be forced to lay off staff and close down this winter, amid fears of a power shortage.

CBI chief Sir Digby Jones told Energy Minister Malcolm Wickes that low energy reserves were posing a serious risk to businesses, no matter what their size.

 
 

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