NEWS,30.07.2013

Egyptian exports start to boom

Egypt is in the early stages of an export boom, suggesting its economy could begin to recover in the next few months if a minimum level of political stability is restored.
Helped by a falling Egyptian pound, non-oil exports have grown at double-digit annual rates since early this year despite violence on the streets and deep uncertainty over the country's political future.
Egypt's export sector accounts for only slightly more than 10% of the overall economy, and this relatively modest contribution cannot by itself end high unemployment or generate enough tax revenue to fix the government's shattered finances.
But the surge in exports, which has received little publicity amid this year's flood of bad economic news from Egypt, shows many manufacturers are finding ways to ride out the political turbulence - and could enjoy strong growth if the country eventually gets a stable government.
"It's a good sign if they're managing to achieve that kind of export growth, especially in the current environment," said John Sfakianakis, chief investment strategist at MASIC, a Riyadh-based investment firm.
Overall Egypt still runs a huge merchandise trade deficit, which was $23.8bn in the financial year to March, although this was already 2.7% narrower than in 2011-12 as exports grew and imports remained steady.
In the separate energy sector, which accounts for about a fifth of overall exports, Egypt has sharply cut back natural gas shipments, diverting supplies to the domestic market to avoid power shortages.
Recovery
Egypt's non-oil exports grew strongly for much of the past decade, rising 18.5% to $18.6bn in 2011, the year when Hosni Mubarak was overthrown, according to the State Information Service.
Their growth plunged last year as the election of Islamist president Mohamed Mursi worsened political tensions and deterred investment; industrial unrest, poor security, fuel shortages and difficulties obtaining finance hit many companies.
Non-oil exports inched up just 2% in 2012, less than half the rate of consumer price inflation. But shipments began to recover around the start of this year, rising 7% from a year earlier in the first two months of 2013.
Trade minister Mounir Fakhry Abdel Nour told reporters that non-oil exports jumped 21% year-on-year in June, a month when big Egyptian cities were rocked by mass protests against Mursi that led to his overthrow by the army on July 3.
In many ways, the operating environment for Egyptian companies has remained as tough as it was last year. But exports of low-technology, cost-sensitive products such as textiles, food and leather have jumped, businessmen say.
Textile exports rose 16.5% from a year ago, according to the Textile Export Council. Processed food exports climbed 26% year-on-year in the month of May alone, and were nearly twice their level in May 2010.
A major reason for the export recovery is the depreciation of the Egyptian pound, which makes shipments more competitive. Depreciation accelerated in the first half of this year.
There are also signs that some Egyptian exporters are starting to tap fast-growing demand in markets beyond Europe and the Arab world, their traditional focuses.
Non-oil exports to non-Arab African countries surged 28% from a year earlier in the first five months of this year. Exports to the Arab world climbed 20%, helped by an economic recovery in neighbouring Libya after its civil war.

Bulgaria set to slash electricity prices

Bulgaria's energy watchdog says it will lower electricity prices by up to five percent starting on Thursday, in a new bid to appease protesters calling for the government to step down.
The DKEVR state energy regulatory commission late on Monday approved the price cut, which will come into effect on August 1, as the EU's poorest country continues to struggle against high bills, the commission said.
Last winter, high electricity bills sparked mass street protests against low living standards, growing poverty and unemployment, forcing out the previous conservative cabinet.
New protest rallies have called for the resignation of current technocrat Prime Minister Plamen Oresharski in office only since May.
To appease public anger, Oresharski's government has passed a package of social measures but the daily protests have continued for the 47th day on Tuesday and the electricity price cut was not expected to put an end to them.
Bulgarians pay about eight cents per kilowatt hour of electricity half of what consumers in wealthier EU countries pay their power utilities.
But incomes in the Balkan country are also just a fraction of the rest of the bloc, with monthly salaries averaging about €400  ($530) and pensions at €138.
Slumping household consumption and meagre exports contributed to an overheating energy production sector this year, prompting authorities to curtail output, while deals on expensive green energy prevented utilities from lowering costs for consumers.
Under the new move, all clients of the three power utilities Austrian EVN, Czech CEZ and Energo-Pro will see daytime electricity costs reduced by up five percent and nighttime costs by up to about seven percent.

Spain's economy close to leveling off

Spain's economy all but emerged from a two-year slump in the second quarter but its recovery looks fragile at best, given weak consumer demand and a simmering political scandal at home and faltering growth abroad.
Gross domestic product shrank 0.1% between April and June from the previous quarter, according to Tuesday's data from state statistics agency INE, which matched a Bank of Spain estimate given last week as well as market forecasts.
Between January and March the economy shrank 0.5%.
Given the signs of an upturn in economic activity, also including the first drop in unemployment in two years in the second quarter, Economy Minister Luis de Guindos has called an end to Spain's recession.
Many economists are not convinced.
"We're not counting on a further improvement in the third quarter and are very sceptical of any statement that the recession in close to being over," Ebrahim Rahbari, an analyst at Citi in London, said.
Spain's economy has been in and out of recession since 2008, when a burst property bubble undermined the foundations of one of the country's key pillars of growth, construction.
That sent unemployment to record highs, depressing business and saddling the banking system with billions of euros of soured real estate assets and loans.
Spain's biggest bank Santander SA, which insulated itself against the worst of the market meltdown by expanding its already dominant foreign operations, said on Tuesday half year group profits rose 29% on lower loan losses.
It said operating earnings were hit by the sluggish Spanish economy but also offered hope the impact of the property slump on the government and lenders - bailed out last year with €42bn of European aid - might be easing.
It said provisions against loan losses which many Spanish banks booked heavily in 2012 - dropped sharply, and that it might consider buying nationalised banks Catalunya Banc or NCG Banco if they came up for sale.
Temporary respite
Since 2008, already subdued domestic demand has been knocked back further by tax hikes and spending cuts aimed at balancing a budget which has one of the largest shortfalls in the eurozone.
Growth-friendlier policies have played a bigger role in Europe's economic debate in recent months as austerity has lost its lustre, but Spain's still high fiscal imbalances mean more budget cuts will have to be made, potentially hitting the tentative signs of recovery.
Meanwhile, allegations of millions of euros being filtered illegally to ruling party leaders, including Prime Minister Mariano Rajoy, has helped half the conservatives' approval rating putting them level with the opposition Socialists.
That has added an element of political instability that carries faint, but nonetheless unwelcome, echoes of events in fellow euro zone struggler Italy, where a shaky coalition government could fall if former prime minister Silvio Berlusconi loses a supreme court appeal hearing that began on Tuesday.
But the centre-right People's Party of Rajoy, who has denied wrongdoing, has a strong majority in parliament and unless new evidence ties him directly to the scandal, he is expected to remain in power.
Rajoy, along with his economy minister, has recently done his best to talk up the economy, and the second quarter also saw the first drop in unemployment in two years, to 26.3%.
But that lower figure still more than double the euro zone average was largely due to temporary factors especially strong trade data, which includes seasonal tourism.
Spanish retail sales due on Wednesday are expected to show high-street spending has shrunk every month for three years.
Spain's high reliance on activity beyond its borders exports rose to a third of economic activity in the first quarter adds uncertainty to the outlook amid a shaky global recovery and enduring weakness in Europe, where around 70 percent of Spain's exports are sold.
Martin van Vliet, analyst at ING, said he expected Spain's economy to flatline and then gradually return to growth in the first half of next year. "But the pace of growth will probably be too slow to create jobs, which is a prerequisite to embark on a self-sustaining recovery," he said. 

NEWS,11.07.2013

China central bank mobbed for free loans

About 1 000 hopeful borrowers overran a branch of China's central bank as a rumour spread that it was handing out zero-interest loans, media said on Thursday, illustrating how Chinese financial know-how badly lags growth in banking products.
Police were called in on Tuesday to disperse the crowd, which had gathered for days outside the central bank in Beihai in the southern province of Guangxi, the Global Times said.
The rumour had spread that the People's Bank of China was distributing interest-free loans of between 50 000 yuan ($8 200) and 500 000 yuan.
"The People's Bank of China is a national financial regulator and does not extend deposit or lending services to individuals," Luo Daofang, the deputy head of the Beihai office, was quoted by Beihai television as saying.
The Beihai city government was not available for comment, and the central bank declined to comment when contacted.
As China frees up its financial markets, authorities must step up education of financial products, said Zhang Zhiwei, an economist at Nomura in Hong Kong.
"I worry more about investors buying wealth management products, thinking that these are risk-free, and finding out later down the road that they are not," Zhang said.
Growth in China's wealth management industry has exploded in the last three years as savers search for alternatives outside low-yielding bank deposits. Sales rose by 12.1trn yuan in the first six months of 2012.

China exports dip in June

China's exports fell 3.1% year-on-year (y/y) in June with imports also declining, the government said on Wednesday, in the latest signs of slowing growth in the world's second-largest economy.
The government recorded exports valued at $174.32bn in June and imports worth $147.19bn, down 0.7% y/y, the General Administration of Customs said.
The fall in monthly exports was the first negative figure since January 2012.
China's total foreign trade grew to almost $2trn in the first six months of this year, up 8.6% y/y, the administration said.
China's annual economic growth slipped from 9.3% in 2011 to 7.8% last year, the slowest expansion since 1999.
The government set targets of 8% for trade growth and 7.5% for growth in gross domestic product this year as it aims to rebalance the world's second-largest economy away from its long reliance on exports and investment in infrastructure.

Retailers unveil Bangladesh safety plan

NEARLY 20 North American retailers including Walmart and Gap  unveiled a five-year safety plan for Bangladesh garment factories on Wednesday that would include inspecting every factory within a year.
The announcement in Washington by the Alliance for Bangladesh Worker Safety on Wednesday comes after 1 129 workers were killed in the collapse of a Bangladesh garment plant in April and another 112 people perished in November fire at a Bangladesh factory.
A separate safety plan including coordinated inspections was announced by a group of mainly European brands on Monday.
A few student protesters were outside the building in Washington, where the plan was announced. The group United Students Against Sweatshops handed out fliers, saying "Gap and Walmart: Bangladeshi Workers Reject Your Fake Safety Plan".
Funding for the North American plan is based on how much production each retailer has in Bangladesh; those at higher levels will pay $1m a year for five years.
So far, $42m has been raised for the project. Ten percent of the funds will be set aside to assist workers temporarily displaced by factory improvements or if a factory closes for safety reasons.
The money will also support a non-governmental organisation chosen to implement it. A decision on the NGO should come within 30 days.
The 17 current members of the alliance include: Canadian Tire Corp; Carter's; The Children's Place Retail Stores; Gap; Hudson's Bay Co; IFG; J C  Penney Co; Jones Group; Kohl's; L L Bean; Macy's; Nordstrom; Public Clothing Co; Sears Holdings; Target; VF; and Walmart.
Hong Kong sourcing company Li & Fung, which does business with many of the companies involved, is serving as an adviser. Additional members are expected to join in the future.
"The safety record of Bangladeshi factories is unacceptable and requires our collective effort," member chief executives said in a joint statement.
"We can prevent future tragedies by consolidating and amplifying our individual efforts to bring about real and sustained progress."
Goals include developing common safety standards within three months, sharing inspection results, and getting factories to support the democratic election and operation of worker participation committees.
An independent board chairperson, set to be named in the next few weeks, will oversee the plan. Four retailers and four others will also be on the board.
The plan, Bangladesh Worker Safety Initiative, was developed with assistance from former U S senators George Mitchell and Olympia Snowe, who acted as independent facilitators at the Bipartisan Policy Center.
The group has asked Mitchell and Snowe to verify the effectiveness of the programme over at least the first two years.
Some companies are also set to offer a combined total of over $100m in loans and access to capital to help factory owners improve safety.
The North American group's plan is being backed by the American Apparel & Footwear Association, Canadian Apparel Federation, National Retail Federation, Retail Council of Canada, Retail Industry Leaders Association, and the United States Association of Importers of Textiles & Apparel.
A larger number of mostly European retailers and brands backed a safety accord put together with the help of labour unions.
The group behind that plan includes the world's two biggest fashion retailers, Inditex SA, owner of the Zara chain, and H&M. A small number of North American companies such as PVH signed onto that accord.

UK MP's pay rise angers public

Britain's members of parliament will get a 9 percent pay rise under a proposal announced on Thursday that outraged a public struggling with wage freezes, high living costs and a government austerity drive.
The proposal  which, ironically, was made by a panel created to mend parliament's image after an expenses scandal  is uncomfortable for David Cameron, a prime minister seen by many as part of an out-of-touch elite, adrift from the worries of most voters.
Tabled by the Independent Parliamentary Standards Authority (IPSA), created to distance lawmakers from the pay and expenses system, the proposal cannot be blocked by members of parliament (MPs), even if they were to oppose it.
Cameron's spokesperson said the prime minister "doesn't think MPs' pay should be going up when public sector pay is being rightly constrained".
Deputy Prime Minister Nick Clegg said the plan, to increase MPs' annual pay to £74 000 from £66 396, was "incomprehensible".
The proposal is way above the 2.7% inflation rate and comes at a time of job losses, public sector cuts and low wage growth following a deep recession.
"Everyone has to be treated as fairly and equally as possible in the public sector," Clegg told LBC radio.
Public support for parliament was dented by the 2009 scandal when politicians were exposed boosting their income by claiming expenses for everything from pornographic films and dog food to tennis court repairs.
The public has until 20 October to respond to the proposal before the IPSA makes a final decision on what it said it was a package to end years of "fixes, fudges and failures" over MPs' pay.
Appalled
If no changes are made to the plan, MPs' pay will rise in 2015, the year of the next election. They will lose some perks, including money for evening meals and late night taxis home.
Public workers, unions and campaigners were appalled.
"The idea of hiking MPs' pay when everyone else has been suffering such a squeeze on their earnings is totally unpalatable," said Matthew Sinclair, of the TaxPayers' Alliance, which campaigns for lower taxes.
Unions said pay freezes or rises capped at 1% were widespread since the coalition government came to power in 2010.
"The very idea that MPs should enjoy an exemption and take a 9% increase will rightly cause outrage amongst workers up and down the country," said Dave Prentis, head of Unison, Britain's biggest trade union.
Debate over how much MPs should be paid has raged since they first received an annual salary, of £400, in 1911. That was meant to open politics to people without independent wealth.

Iran building new nuclear site - claim

An exiled opposition group said on Thursday it had obtained information about a secret underground nuclear site under construction in Iran, without specifying what kind of atomic activity it believed would be carried out there.

The dissident National Council of Resistance of Iran (NCRI) exposed Iran's uranium enrichment facility at Natanz and a heavy water facility at Arak in 2002. But analysts say it has a mixed track record and a clear political agenda.

In 2010, when the group said it had evidence of another new nuclear facility, west of the capital Tehran, US officials said they had known about the site for years and had no reason to believe it was nuclear.

The latest allegation comes less than a month after the election of a relative moderate, Hassan Rouhani, as Iran's new president raised hopes for a resolution of the nuclear dispute with the West, and might be timed to discredit such optimism.

The Islamic Republic says its nuclear energy programme is entirely peaceful and rejects US and Israeli accusations that it is really seeking the capability to make nuclear weapons.

But its refusal to curb sensitive nuclear activity, and its lack of full openness with the UN nuclear watchdog agency, have drawn tough Western sanctions and a threat of pre-emptive military strikes by Israel.

Satellite images

The NCRI said members of its affiliated People's Mujahideen Organisation of Iran (PMOI) inside the country had "obtained reliable information on a new and completely secret site designated for [Iran's] nuclear project".

The NCRI, which seeks an end to Islamist theocratic rule in Iran, is the political wing of the PMOI, which fought alongside Saddam Hussein's forces in the Iran-Iraq war in the 1980s.

The NCRI said the site was inside a complex of tunnels beneath mountains 10km east of the town of Damavand, itself about 50km northeast of Tehran. Construction of the first phase began in 2006 and was recently completed, it said.

The group released satellite photographs of what it said was the site. But the images did not appear to constitute hard evidence to support the assertion that it was a planned nuclear facility.

A spokesperson for the dissidents said he could not say what sort of nuclear work would be conducted there, but that the companies and people involved showed it was a nuclear site. The group named officials it said were in charge of the project.

"The site consists of four tunnels and has been constructed by a group of engineering and construction companies associated with the engineering arms of the Ministry of Defence and the IRGC Iran's elite Revolutionary Guards force," the NCRI said.

'No link to nuclear programme'

"Two of the tunnels are about 550m in length, and they have a total of six giant halls."

Asked about the report, International Atomic Energy Agency spokesperson Gill Tudor said in Vienna: "The agency will assess the information that has been provided, as we do with any new information we receive."

A Western diplomat accredited to the IAEA told : "I have heard nothing. My first suspicion is that it is like the 2010 revelation a tunnel facility the Iranians are keeping quiet, but no known link to the nuclear programme."

Iran said in late 2009 that it planned to build 10 more uranium enrichment sites on top of its underground Natanz and Fordow plants, but has provided little additional information.

Refined uranium can provide fuel for nuclear power plants, which is Iran's stated aim, but can also be used to make atomic bombs, which the West fears may be Tehran's ultimate goal.

NEWS,22.05.2013

EU tackles tax evasion

Tax cheats big and small were under the microscope in Brussels on Wednesday, as European Union leaders gathered at a summit to discuss tax evasion amid a fresh scandal involving computing giant Apple.
"All of the questions of tax fraud and tax evasion will be taken up, meaning both those involving individuals and those involving companies," French President Francois Hollande pledged ahead of the talks with his 26 EU counterparts.
"I believe in low taxes for businesses because we've got to encourage investment, we've got to encourage jobs ... But we've got to make sure as we set those tax rates that companies pay taxes," British Prime Minister David Cameron added.
Their comments came a day after politicians in the United States publicly slammed Apple - one of the world's most successful technology companies - for using its international presence to dodge hefty US taxes. The arrangements are legal under loopholes in US law.
Among the allegations is that EU member state Ireland gave Apple a 2% income tax rate - far below its current, already-low corporate tax rate of 12.5%. But Irish Prime Minister Enda Kenny rejected those claims as he arrived for the Brussels summit.
"Ireland's corporate tax regime is very clear and transparent, and we do not do any special deals with individual companies in regard to that tax rate," he said.
The fight against tax evasion and avoidance has become a new global rallying cry, following a media expose on the widespread use of tax havens and scandals involving high-profile people in France and Germany.
The battle has gained traction in Europe amid concerns that painful austerity will be harder to sell if tax cheats are not forced to pay up. It is believed that EU governments lose €1 trillion ($1.3 trillion) annually in uncollected taxes.
The anti-poverty organization Oxfam estimates that more than €12 trillion are stashed away in tax havens within the EU and the territories it controls.
"Most governments claim to have no alternative but to cut public spending and development aid, but ... there's enough potential tax to be had on hidden 'private' money to end extreme world poverty twice over," said Natalia Alonso, head of Oxfam's EU office.
During their meeting in Brussels, the 27 leaders were set to call for progress on tackling "aggressive tax planning and profit shifting" by companies, according to a draft of their final statement seen by dpa.
European Parliament President Martin Schulz has proposed that all multinational companies should have to submit reports detailing what taxes they pay, profits they earn and how many people they employ in any given country.
"It is quite simply unfair that it should be the largest and most successful companies which pay virtually no taxes, even though they benefit enormously from state investment," Schulz told the leaders, according to a copy of his speech.
Various EU parliamentarians and non-governmental groups have called for the leaders to deliver hard-hitting measures, such as a blacklist of tax havens that would be subject to punishment.
But standing in the way of too much aggressiveness are Austria and Luxembourg, bank-secrecy stalwarts that are concerned about losing their attractiveness as banking destinations.
The draft summit statement does not propose any new measures, simply urging more action on VAT fraud, money-laundering and the taxation of the digital economy, along with more information-sharing between tax authorities including the adoption of EU reforms opposed by Austria and Luxembourg "before the end of the year."
Diplomats have argued that the Brussels summit, even without breakthroughs, will contribute to the "global momentum" against tax evasion and convey a united European position ahead of discussions at a Group of 8 summit in June.
German Chancellor Angela Merkel spoke of "a giant step forward."
"Just to be perfectly clear: we are not talking about harmonizing taxes or Europe taxing more or taxing less," EU President Herman Van Rompuy said. "We are talking about jointly fighting unacceptable practices that allow some people to avoid paying taxes altogether."
Also on Wednesday, the leaders were to discuss how energy policies can contribute to reinvigorating growth in the EU, with an unprecedented focus on energy prices. Bringing them in line with other parts of the world is seen as key to appeal to manufacturers.

Ireland feels heat from Apple tax row

Ireland called on Wednesday for an international clampdown on multinationals shifting profits around the world to avoid tax, after criticism that Irish loopholes helped technology giant Apple to shrink its tax bill.
A US Senate investigation into the tax affairs of the maker of iPhones, iPads and Mac computers has shone an uncomfortable spotlight on Ireland's tax regime and forced the government to defend itself against accusations of being Europe's onshore tax haven.
Other European governments, notably France, have previously criticised Ireland's low rate of corporation tax - 12.5% - but the revelations from Washington focus on loopholes in the Irish tax code that are more difficult to defend.
Richard Bruton, the minister in charge of attracting foreign companies to Ireland, admitted that companies need to be reined in.
"They play the tax codes one against the other; that is tax planning, and I think we do need international cooperation through the OECD to deal with the aggressive nature of that," he told state broadcaster RTE.
"Tax has always been an element of the Irish offering, and this will continue to be so, but what you have to avoid is what is known as harmful tax competition. We scrupulously avoid that."
Provoking Capitol Hill
The US investigation showed that Apple had paid just 2% tax on $74bn in overseas income, largely helped by Irish tax law, which allows companies to be incorporated in the country without being tax resident. Britain had a similar rule but changed it over 20 years ago to stop tax avoidance.
Unlike Britain, however, Ireland is heavily dependent on foreign companies such as Google, Pfizer and Intel for employment 150 000 of a labour force of around 2 million and for its much-vaunted economic model of export-led growth.
While Ireland has successfully repelled attacks on its corporate tax rate from European neighbours, US pressure is more difficult to ignore.
By closing its own loopholes, Washington could threaten Ireland's status as European hub for multinationals, and economists said it would be better for Ireland to act first.
"In the long run, the US Congress, if they wanted to, could wipe out those 150 000 real jobs, and we don't want to provoke people by over-egging it, by doing things that are clearly upsetting the US," said John FitzGerald, a professor at the Economic and Social Research Institute (ESRI), an Irish think-tank.
Ireland's Prime Minister Enda Kenny will face tough questions at a summit of European leaders in Brussels on Wednesday where the issue of tax avoidance will take centre-stage.
Bruton said scapegoating individual countries was not the answer and pointed to the fierce competition Ireland faces in trying to attract companies.
"When I go into the boardrooms either in Asia or the US, I am followed into those boardrooms by Swiss, by Singaporeans, by Dutch, by Belgians who are offering specially put-together deals on the tax front," he said.
"Ours is not a specially put-together deal; it is absolutely transparent, there are no side deals, no special arrangements."
"We make no apologies for having a regime that is designed to promote employment. It is a regime we have had for close to 50 years."

Japan trade deficit hits $8.6bn in April

Japan's trade deficit expanded a worse-than-expected 70% on year to $8.6bn in April, government data showed Wednesday, as a weaker yen made imports costlier.
The monthly trade deficit came to ¥879.9bn ($8.6bn), 69.7% higher than the year-before deficit of ¥518.4bn, finance ministry data showed.
The deficit was the biggest for the month of April in comparable official data that goes back to 1979 and was also worse than a shortfall of ¥620bn economists predicted on average in a poll by the Nikkei business daily.
Exports in April rose 3.8% to ¥5.78 trillion while imports jumped 9.4% to ¥6.66 trillion.
The yen's average rate was 96.01 to the dollar in April against 82.31 in April 2012, meaning the value of the Japanese currency fell by nearly 17% on year, the data showed.
A lower yen helps Japanese exporters but pushes up import bills.
Higher import costs have been resulting in higher materials and parts prices, which are leading to higher retail prices of various items ranging from foodstuff to laptops.
With the yen hitting multi-year lows against the dollar, some politicians have started voicing concerns over its negative impact on people's lives.
Japan's fuel imports have also stayed high as most of its nuclear reactors remain off-line since the huge earthquake and tsunami in 2011 sparked the world's worst atomic accident in a generation. 

Office bullying video sparks outcry in Singapore

A Singapore company supervisor caught on video slapping a male intern is in trouble after the clip went viral on the web and sparked a public outcry.

Police confirmed to AFP that a complaint had been lodged against the supervisor, who works at a software company, and the manpower ministry said it had also been alerted about the alleged case of workplace abuse.

The 17-second Singapore office bully clip, first uploaded on the video-sharing website YouTube last Friday, showed the boss repeatedly slapping a younger man described by local media as a 29-year-old intern.

A fellow intern who filmed the video said in a posting at an online forum that he had noticed the supervisor "constantly bullying" his co-worker soon after starting his internship.

When he confronted the boss, the supervisor explained that "there is a story behind" the abuse.

"He said that my colleague apparently has an inferiority complex and apparently my supervisor is trying to 'nurture' him to get over it," he said.

"I felt this was stupid, as how can you nurture someone by hitting them? My co-worker is very timid and seems like the kind of guy that will not stand up for himself."

The Straits Times reported on Wednesday that after the video went viral, two former interns in the same company also came out to say they had worked in fear under the supervisor.

Local Chinese-language newspaper Shin Min said the intern, a university graduate, was being paid $400 a month and that his parents may seek compensation from the firm.

NEWS,10.12.2012

Slight gains on Wall Street

Wall Street moved higher amid promising data on China's economy, fuelling hopes that the world's second-largest economy is gathering steam again. China offered better-than-expected data on both industrial output and retail sales, welcomed by a market that is on tenterhooks about US budget talks aimed at avoiding the US$600 billion in tax increases and spending cuts scheduled to kick in on January 1. "China hit that trough and is starting to see an acceleration of growth," Tom Wirth, who helps manage US$1.6 billion as senior investment officer for Chemung Canal Trust, in Elmira, New York, told Bloomberg News.Meanwhile, no details were offered on yesterday's meeting between US President Barack Obama and Republican House Speaker John Boehner about an agreement to avoid the so-called fiscal cliff  and a potential recession for the world's largest economy.A study by the US National Intelligence Council, however, predicted that China's economy will take over the top spot from the US before 2030.In afternoon trading in New York, the Dow Jones Industrial Average was up 0.25%, the Standard & Poor's 500 Index gained 0.16%, while the Nasdaq Composite Index advanced 0.31%.Better-than-expected November sales data for McDonald's lifted its shares 1.3%, following a dismal October during which sales declined for the first time in nine years. Global sales at restaurants open at least 13 months increased 2.4% last month. "One month does not a trend make ... but it's a nice sign to see them rebound after a horrible October," ITG Investment Research analyst Steve West .Investors are eyeing a two-day meeting by Federal Reserve policy makers starting tomorrow. In Europe, the Stoxx 600 Index eked out a 0.1% gain from the previous close. It is at the highest level in 18 months, according to Bloomberg. National benchmark stock indexes also rose in London, Paris and Frankfurt. Italian Prime Minister Mario Monti's unexpected announcement over the weekend that he plans to resign soon after lawmakers approve his budget plan later this month sent the nation's stocks and bonds lower. Italy's FTSE MIB stock index dropped 2.2%, while the yield on the country's 10-year bond was last up 29 basis points at 4.82%. Elections may be held as early as February one to two months earlier than expected. European political and financial leaders today pressed for the next Italian government to hold fast on the reforms initiated by Monti. Still, the uncertainty may increase wariness among investors. "The underlying cracks within the euro zone are actually widening," Georg Grodzki, head of credit research at Legal & General Investment Management in London, told Bloomberg. "Investors will be reading Italian politicians' lips very, very closely."

Berlusconi lashes out at foreign leaders

Former Italian Prime Minister Silvio Berlusconi has reacted angrily to negative comments from foreign politicians and media about his decision to run as a candidate to lead Italy for the fifth time, calling it an offensive interference in domestic affairs.He said in a statement that he had always been a "convinced supporter of Europe" and that the comments criticising him were "out of place" and "offensive not so much to me personally but to the free choice of the Italians".He suggested that the "interference" in Italian affairs may be an attempt to weaken the share price of Italian companies and make them easier takeover targets.The current Italian Prime Minister Mario Monti has been attempting to reassure rattled financial markets that Italy will not be left adrift following his surprise decision to resign from - and Berlusconi's return to frontline politics.Monti's weekend announcement that he will quit after Berlusconi's People of Freedom (PDL) party withdrew its support for his technocrat government pushed up Italy's borrowing costs and prompted a stock market sell-off on Monday."I understand market reactions. They need not be dramatised," Monti told reporters in Oslo where he attended the award of the Nobel Peace Prize to the European Union and where other EU leaders queued up to praise him.The former European Commissioner said he was confident the elections would produce a responsible government "which should be in line with the huge efforts already pursued by Italy... markets should not fear a decision-making vacuum".He added: "Let me remind markets that the current government has not left - it's fully in charge and will be so until a new government comes in after the elections."The campaign for a vote expected in mid-February is likely to be fought over Monti's reform agenda, which Berlusconi, his predecessor as prime minister, said had condemned Italy to recession and forced him to reluctantly run for a fifth term.European leaders were anxious to stress that any new government must stick to Monti's economic reform agenda."Monti was a great prime minister of Italy and I hope that the policies he put in place will continue after the elections," said European Council President Herman Van Rompuy in Oslo.There were similar comments from policymakers ranging from French President Francois Hollande to the head of the European bailout fund Klaus Regling and European Commission President Jose Manuel Barroso.Spanish Economy Minister Luis de Guindos warned that instability in Italy could spill over and put Spain's fragile public finances at risk of further turmoil.Attention is now focused on whether Monti will enter politics himself, either as a candidate or by endorsing one of the centrist forces that have backed his reforms and made more or less explicit pleas for him to run."I'm not considering this particular issue at this stage. All my efforts are being devoted to the completion of the remaining time of the current government," he said in Oslo.Monti has repeatedly warned of the danger posed by the rise of populist, anti-European forces in the region and said he hoped such forces would not dominate the Italian election campaign.Monti's decision to resign once the 2013 budget is approved, probably before Christmas, has brought forward to February an election that had already been expected in March or April at the latest. Opinion polls suggest Berlusconi has little chance of re-election, and he has struggled to reassert a previously undisputed domination of rival factions and courtiers in his deeply divided centre-right party. In contrast, his enemies in the centre-left Democratic Party (PD) under Pier Luigi Bersani hold a strong lead and are likely to form the next government on a broadly pro-European platform, largely in line with Monti's agenda.Bersani who hopes that the former European Commissioner will stay on in some capacity, possibly as Italy's president said on Monday that "precisely because Monti should still be able to be of service to this country, it would be better for him to stay out of the (election) contest" .Berlusconi's strategy appears designed to ensure he retains influence in the next parliament with a substantial voting bloc that, among other things, can protect his business and personal interests .After several weeks of calm, markets bridled at the prospect of Berlusconi's return to lead the centre right, just over a year after a financial crisis drove the scandal-plagued billionaire from office to be replaced by Monti's technocrats. Berlusconi's reappearance and the prospect of a messy anti-Monti election campaign has galvanised attention in Italy and abroad, reawakening memories of the financial and sexual scandals that peppered the media magnate's last government.Not that such memories have had much chance to slumber. This week the prosecutor in Berlusconi's trial for allegedly having sex with a juvenile prostitute accused the 76-year-old of delaying tactics after the young woman failed to appear as a witness.The Roman Catholic Church made outspoken and thinly veiled criticism of the former premier that could influence the PDL's conservative voting base."What leaves one astonished is the irresponsibility of those who think of arranging things for themselves while the house is still burning," the head of the Italian bishops' conference, Angelo Bagnasco, told the Corriere della Sera.French Finance Minister Pierre Moscovici also weighed in."The direction that Italy has been going in for the last year and a half is a solid direction, there is no reason to worry," he said."Berlusconi is returning to politics, but I'm convinced that he will not return to power," he said.With a new government likely to be formed in a few months, Italy's European partners have now started to look more closely at Bersani, the overwhelming victor in a centre-left primary election last month.A no-frills former communist who is close to Italy's unions, Bersani has promised to stick to Monti's promises on fiscal discipline.While Italy's election laws are likely to give Bersani a strong majority in the lower house, the complicated rules may make it more difficult for him to take control of the Senate, posing a possible risk to the formation of a stable government.Whoever wins will have to confront a severe recession, record unemployment and a ballooning public debt expected to surpass 126% of gross domestic product this year.

Concerns over Japan's economy

On Monday confirmed that the world's third-largest economy shrank in the three months to September, stoking fears the country is slipping into a recession.Financial turmoil in Europe, a strong yen that has dented exports and a painful diplomatic row with major trade partner China have dented Japan's economy, dousing hopes it had cemented a recovery after the 2011 quake-tsunami disaster.Some economists have warned the current quarter is likely to see another contraction, meaning two successive quarters of negative growth that would reflect a technical recession.On Monday, official data confirmed earlier figures that showed Japan's economy shrank 0.9% in the July-September quarter, or down 3.5% on an annualised basis.Revised figures from the Cabinet Office also showed the nation's growth in the previous quarter was essentially flat, further underscoring recession fears.Separate data released Monday showed Japan's current account surplus was down about 30% on-year to ¥376.9bn ($4.56 billion) in October, although the latest figure beat market expectations for a ¥218bn surplus, according to Dow Jones Newswires.The current account is the broadest measure of Japan's trade with the rest of the world, including exports, tourism and overseas income.Japan's current account surpluses have been hit by a slowing global economy and a spike in fuel imports due to the shutdown of most of the country's nuclear reactors following last year's disaster which triggered a major atomic crisis.Last month, Tokyo approved $10.7bn in fresh spending to help boost the limp economy, more than double a package announced in October.The new package was announced as the nation prepares for December 16 elections which are expected to see Prime Minister Yoshihiko Noda and his Democratic Party of Japan defeated by the main opposition Liberal Democratic Party led by Shinzo Abe.Abe has vowed to spend heavily on public works and pressure the Bank of Japan into launching aggressive monetary easing measures to boost growth if his party wins the election.The BoJ has unveiled two policy easing measures in recent months as its counterparts in the US and Europe launched major moves to counter slowing growth.The yen has been weakening as speculation grows that the BoJ will usher in further easing measures after its policy meeting this month, with the central bank's closely-watched Tankan corporate sentiment survey due this week. "The BoJ will have no choice but to consider additional monetary easing in case its own Tankan survey shows worsening in near-term corporate sentiment," said RBS Securities chief Japan economist Junko Nishioka. 

China one of the most unequal nations

 

China's wealth gap has widened to a level where it is among the world's most unequal nations, a Chinese academic institute said in a survey, as huge numbers of poor are left behind by the economic boom.China's Gini coefficient a commonly used measure of inequality - was 0.61 in 2010, the Survey and Research Center for China Household Finance said, well above what some academics view as the warning line of 0.40.A figure of 0 would represent perfect equality, and 1 total inequality."Currently, China's household income gap is huge," said the institute, founded by the Southwestern University of Finance and Economics and the Institute of Financial Research, which operates under China's central bank."The Gini coefficient is as high as 0.61, rare in the world."China's growing wealth gap is a major concern for Communist authorities, who are keen to avoid public discontent that could lead to social unrest in the country of 1.3 billion people.In a sign of the sensitivity surrounding the issue the government has not released an official Gini coefficient for the country as a whole for more than a decade, since it put the statistic at 0.412 in 2000.A figure of 0.61 would put China at the top of a list of 16 countries by 2010 Gini coefficient on the World Bank website. The largest set of figures available on the site is for 2008, covering 47 countries and headed by Honduras on 0.613.The Global Times newspaper, which reported the latest survey results on Monday, said China's wealth gap had reached an "alarming" level.But the research centre played down its own findings, saying such a phenomenon was common in rapidly developing economies.It called on the government to use its vast financial resources to support low-income earners in the short term, while improving education to help address the imbalance in the long term."The Gini coefficient certainly points to the serious issue of income inequality," the director of the Chengdu city-based centre Gan Li said."But more importantly about the interpretation of the figure is that it does not necessarily indicate imbalance in China's economy," he said, adding it was normal for greater resources to flow to developed areas."There's no need to make a big fuss about it."The government-backed Chinese Academy of Social Sciences estimated China's Gini coefficient at nearly 0.47 in 2005.Another research institute, the Centre for Chinese Rural Studies, in August put the Gini coefficient at around 0.39 for rural residents last year, but gave no figure for the overall national level.

NEWS,13.07.2012

Spain Protests: Civil Servants Protest Wage Cuts

 

Spanish civil servants, many dressed in mourning black, took to the streets Friday in angry protest as the government approved new sweeping austerity measures that include wage cuts and tax increases for a country struggling under a recession and an unemployment rate of near 25 percent.Spain is under pressure to get its public finances on track amid concerns in the markets over the state of the country's banks and the wider economy."Spain is going through one of its most dramatic moments," Deputy Prime Minister Saenz de Santamaria said after a Cabinet meeting at which sales tax hikes and spending cuts were approved.Admitting that the austerity measures were "neither simple, nor easy, nor popular," she said the government would try to enact the measures "with the maximum justice and equity."The conservative government has come under mounting criticism that the austerity measures are hitting the middle and working classes the hardest."The government should go after the big companies that don't pay tax and bankers that have committed fraud and have run this country to the ground," said Pablo Gonzalez, 52, who works for the Madrid regional government. "Instead, we have to pay."The aim of the latest package of measures is to chop (EURO)65 billion ($79 billion) off the budget deficit through 2015, the biggest deficit-reduction plan in recent Spanish history.Though the increase in sales taxes, which risks slowing consumption and worsening Spain's recession, will take effect Sept. 1, other reforms will be left for later in the year, including a plan to speed up the gradual raising of the retirement age from to 65 to 67.Meanwhile, Economy Minister Luis de Guindos announced the creation of a new mechanism to help Spain's 17 regions finance themselves more easily. Some, such as Valencia in the east, are finding it increasingly difficult to tap capital markets for much-needed cash.The latest bout of austerity is prompting widespread opposition, not least from civil servants. In Madrid, several hundred government workers blocked traffic briefly in different parts of the city. In Valencia, several hundred Justice Ministry workers shouted "hands up, this is a stick-up" at a protest rally.The civil servants  whose wages were cut 5 percent on average in 2010 in the first round of austerity cuts –are usually paid 14 times a year. The government is now axing an extra payment made just before Christmas. The prime minister, his cabinet and lawmakers will also suffer the cut. At the local, regional and central level, there are around 3 million public servants in Spain.In the Puerta del Sol in downtown Madrid, about 500 civil servants gathered, about half dressed in black. Some women wore veils, as if at funerals. Protesters blew whistles and horns. Civil servants are often ridiculed in Spain and seen as lazy, clock-in and clock-out types with the luxury of lifetime jobs. But many earn as little as (EURO)1,000 a month.Isabel Perez, a 40-year-old librarian, said "our wages have already been cut and now they take away the Christmas payment. I don't make it to the end of the month as it is. The extra payment gave some relief. We're not exactly millionaires." She earns (EURO)1,300 a month and had already faced a yearly (EURO)330 euro wage cut by the Madrid regional government.The latest austerity package has come after Spain won approval from the other 16 countries that use the euro for the first (EURO)30 billion tranche of a bailout of up to (EURO)100 billion for its troubled banking sector. Spain also managed to secure an extra year to meet a European deficit reduction target of 3 percent of GDP. The size of Spain's economy in 2011 is estimated to have been $1.5 trillion.Investors' response has been lukewarm, and the yield on Spain's benchmark 10-year bonds, a measure of investor wariness of a country's debt, remains very high at 6.61 percent, up 4 basis points for the day.Investors are also becoming increasingly wary of placing money in Spanish banks, which are having to turn to the European Central Bank for financing.In June, Spanish bank borrowing from the ECB rose 17 percent from May. The accrued total as of the end of that month was (EURO)337 billion, 77 percent of all the money owed to the ECB and seven times the figure from June 2011.A draft memorandum of understanding agreed by eurozone finance ministers for Spain's bank bailout suggests billions in problematic assets should be segregated into an "external asset management agency" to clean up Spanish banks' balance sheets.It also says that by the end of the year certain areas of jurisdiction  sanctioning and licensing  should be transferred from the Spanish economy ministry to the Bank of Spain.This is seen as paving the way for Europe having a single bank supervisory body that will oversee central banks and be empowered to recapitalize Spanish and other troubled banks directly instead of via debt-laden government.

 

Europe shows chocolate not recession-proof

 

An assumption that chocolate is a recession-proof treat that consumers continue to buy despite the grim economic outlook was proven wrong today by the sharpest fall on record in Europe's quarterly cocoa grind - an indicator of demand.Analysts said worsening economic conditions in the euro zone had prompted a sharp slowdown in European demand for chocolate, and the outlook could deteriorate further if the crisis deepens.The Brussels-based European Cocoa Association (ECA) reported that Europe's second-quarter cocoa grind tumbled 17.8% from the same period last year to 292,551 tonnes, far worse than even the most pessimistic predictions of a fall of up to 12%."We think the current slowdown in grindings reflects worsening economic conditions in the euro area. If contagion spreads to Spain and Italy, this would have undoubtedly an impact on demand for indulgence products like chocolate," said Francisco Redruello, senior food analyst at Euromonitor International.In Switzerland, the world's top chocolate consumer, domestic chocolate consumption dropped about 8% by volume in the first four months of the year, said Franz Schmid, managing director of the association of Swiss chocolate manufacturers Chocosuisse.Swiss chocolate exports - of which around two thirds are destined for Europe - also fell about 12% in the January to April period. Schmid said the strong Swiss franc also had hurt exports.In Germany, one of the world's largest chocolate consumers, retail sales of chocolate bars by tonnes fell 7.3% on the year in the first four months of 2012, according to the association of German confectionery producers BDSI.Following the grindings data, benchmark ICE September cocoa futures fell 5% to $2,177 per tonne 1516 GMT."It is by far the worst ever result in a quarter since the ECA began reporting these figures. It is reflecting the reality of the demand picture in Europe," said Javier Almela, head of cocoa purchasing at Spanish cocoa processor Natra Cacao.In Spain, where unemployment is high and consumers are feeling the pinch, chocolate consumption is expected to suffer.According to market research firm Mintel's June chocolate confectionary report, only 44% of Spaniards agree that chocolate is value for money, while 43% claim that they will cut back on purchasing chocolate if the value of their favourite bars rises."Given these responses it is not unreasonable to assume that consumers are likely to be cutting back on purchasing some forms of chocolate," said Marcia Mogelonsky, global food and drink analyst at Mintel.Cocoa demand growth typically tracks GDP growth, and with many European countries in recession plus cocoa processing margins being squeezed, analysts had expected a negative grind number - just not of this magnitude.Some are adjusting their global supply and demand balance sheet accordingly."This transforms a flat supply and demand picture into looking like a meaningful surplus for the year. We are now looking at a 2011/12 surplus of over 100,000 tonnes," said Jonathan Parkman, joint head of agriculture at broker Marex Spectron.In May, the International Cocoa Organization (ICCO) forecast a 2011/12 global cocoa deficit of 43,000 tonnes.Until now, growing global demand was attributed to strong cocoa powder demand from emerging markets including Brazil and China, but Parkman said the weak grind data throws this into question.When cocoa beans are ground, they produce roughly equal parts of butter, which makes chocolate melt in the mouth, and powder, used to flavour products including cakes and biscuits."Everyone is aware that powder demand has been holding grindings up and yes margins were negative, and that's what caused this slowdown in grindings, but the European grind also suggests the powder demand story has been exaggerated. Powder demand certainly doesn't seem to be growing," said Parkman.

 

China's economic growth slows

 

China's economy expanded at its slowest pace since the depths of the global financial crisis more than three years ago, official data showed on Friday, fuelling expectations of more stimulus moves.The world's second-largest economy grew 7.6% from April to June year-on-year, the National Bureau of Statistics said, the worst performance since 6.6% in the first quarter of 2009.The slowdown "was mainly due to the continued deterioration in the international environment, which further dampened foreign demand," statistics bureau spokesperson Sheng Laiyun told reporters."Domestic demand eased also as macro-economic tightening, particularly controls on the real estate sector, continued."The weak second-quarter expansion dragged down growth to 7.8% for the first half of the year.Sheng expressed confidence that the economy would stabilise and China would meet its full-year growth target of 7.5%."I believe China's economy will continue moderate and steady growth in the second half of the year," he said, citing the potential for investment, consumption and exports to propel expansion the rest of the year."We are very confident in achieving the full-year growth target."Nevertheless, the target growth rate of 7.5% is well down on the 9.2% achieved last year, and 10.4% in 2010.Market reaction in China to Friday's data was muted. Chinese stocks turned slightly into negative territory after initially rising following the release of the figures.The Shanghai Composite Index, which covers both A and B shares, was down 0.15%, or 3.30 points, to 2,182.19 in late morning.Tang Jianwei, economist at Bank of Communications in Shanghai, said the second-quarter result was in line with expectations and that China's planners would be able to speed up the economy."We expect economic conditions in the second half of the year will be slightly better than the first half," Tang said. "We've already seen stabilisation in investment from June's data thanks to government stimulus policies."The government last week took the rare step of slashing interest rates for the second time in a month. That came after three cuts since December in banks' reserve requirements, or the amount of money they must keep on hand.Such cuts are meant to free up funds for lending and thus boost the economy.Chinese leaders have vowed to take further measures. Premier Wen Jiabao this week called stabilising economic growth the government's "top priority".Slowing growth in China is also casting a further cloud over the broader global economy, which is still suffering the effects of the 2008-2009 financial crisis.Employment figures in the United States, the world's biggest economy, remain weak and Europe is struggling to overcome its sovereign debt crisis.Ren Xianfang of IHS Global Insight said in a report that China's second-quarter figure marked the sixth straight three-month period of slower growth, and highlighted that the country's economy risked losing momentum. Still, she said that the government retained ample tools - including another interest rate cut, more loosening in bank reserve requirements and exchange rate stability - to spur activity."We are expecting about 7.9% growth this year," she said.Besides the growth figures, the bureau released a slew of other economic statistics on Friday that backed up the broader slowdown.Growth in retail sales, the main gauge of consumer spending, continued to slow in June, rising 13.7% in June compared with the same period a year earlier, marginally down from growth of 13.8% in May.Output from China's millions of factories and workshops also continued to slow, growing by 9.5% year-on-year in June, the bureau said, down from 9.6% in May.However, indicating that some government measures to revive growth were starting to kick in, China's urban fixed asset investments rose 20.4% in the first half of 2012 compared with a year earlier, the bureau said.The investments for the half year compared with growth of 20.1% in the first five months of the year, signalling a slight increase in June.Fixed asset investments are a key measure of government spending on infrastructure.