Today's local and Asian business news summary:
Main Gulf and local news:
BAGHDAD: Between the brink and a breakthrough - We have a deal: UN - Skepticism in US, signatures in Baghdad: UN Secretary General Kofi Annan clinched a deal with Iraq over weapons inspections on Sunday, a UN spokesman announced, which will be signed Monday morning. Details of the deal would not be made public by the UN until Annan had presented it to the Security Council. One diplomat reported after the meeting with Saddam Hussein that "All the major issues have been resolved." The main sticking point - Iraq's insistence on a time limit to any UN searches of eight "presidential sites" for prohibited weapons - had been settled, he said.
KUWAIT: Kuwait not asked to be platform for Iraq strike - Cabinet hopes Annan mission a success: Kuwait said on Saturday its Western allies had not asked to use the Gulf state as a launch point for possible military strikes against Iraq. Foreign Ministry Undersecretary Suleiman Al-Shaheen told Reuters in an interview that no foreign power present (with forces in Kuwait) has asked to use Kuwait as a point for attack. He added that US and British troops and warplanes now in Kuwait were "defensive forces." However, diplomats say Kuwait will not hesitate to allow US and British forces to strike Iraq from its bases if Baghdad fails to meet UN demands for access to sites suspected of housing chemical or biological weapons. Most Arab states are strongly opposed to such attacks. Saudi Arabia, the launch pad for the Gulf War offensive against Iraq by a broad US-led coalition, is refusing to play any visible role in the current military buildup in the oil-rich region. The US forces base there do not have full clearance to directly participate in any potential Iraq strikes. The United States says Bahrain has assured that US planes based in the Gulf island state could be used in attacks against Iraq but regional sources say the issue has not been clearly resolved.
Meanwhile, Kuwait residents have been stocking up on basic supplies and buying gas masks in recent weeks, fearful of Iraqi retaliation with chemical weapons if there is an attack by Western forces. In wake of the near-agreement reached by Kofi Annan, public sentiment borders on uncertainty and confusion. People generally believe that until Saddam Hussein is not punished the region will never be free of insecurity.
DUBAI: US envoy jeered as anti-American streak in Gulf shows through - UAE rejects strike against Iraq: A special US envoy sent on a tour of the Arab world to explain Washington's stand against Iraq was jeered and heckled by an audience of more than 200 people in the Gulf. At one point, retired ambassador David Newton asked the audience in the Gulf Arab state of Bahrain - headquarters of the US Navy armada now arrayed against Iraq - whether they thought the United States wanted to kill Iraqi people. "The audience responded with `Yes, yes' and refused to accept the US justification to attack Iraq," the Gulf Daily News reported. The incident in Bahrain and other signs of disquiet among Gulf Arabs who are reluctant publicly to back a strike against Iraqi President Saddam Hussein show to what extent opinion in the region has changed since the 1991 Gulf War. Among other indications of unease are an unusually strongly worded appeal from the President of the United Arab Emirates, Sheikh Zaid bin Sultan Al-Nahayan, rejecting the use of force and saying that a US strike could damage current and future relations between the East and West and also affect the Gulf. In Saudi Arabia, a rare public opinion poll published on Saturday showed that 90.3% of Saudis opposed a US strike against Iraq. Some 5.5% supported an attack and the rest gave no response.
Asian Business news:
SEOUL: Crisis forces chip makers to sell off units overseas - Sale of other successful Seoul investments ruled out: A staggering liquidity crisis is forcing South Korean chip makers to sell off lucrative overseas units, underscoring their painful downsizing campaign which could affect the world's semiconductor market. The campaign gained momentum last week when Hyundai Electronics Industries (HEI), one of South Korea's three largest semiconductor firms, announced a $775 million deal to sell its US-based subsidiary, Symbios Logig. The deal marked the biggest foreign takeover of a South Korean firm overseas since the country received a massive bailout from the IMF in December. HEI president Kim Yong-Hwan said that they regretted losing Symbios to US computer firm Adaptec Inc, but said that it would facilitate Hyundai's reinvestment in improving manufacturing facilities for memory products and in developing non-memory devices. Hyundai's deal came a day after South Korea's largest chip producer, Samsung Electronics Co, said that it was seeking "new business alliances" with Intel Corp of the United States. South Korean chip makers need new investment funds to upgrade their production lines for 64-megabit Dram (dynamic random access memory) chips. The newspaper said South Korea's three top chip makers including LG Semicon would see their capital investment drop by 50% to two billion dollars this year, dealing a blow to American and Japanese equipment and materials vendors.
TAIPEI: Economy sizzles despite turbulence - Taiwan GDP growing: Taiwan's economy grew a dazzling 7.08% in the fourth quarter, crowning the best year since 1991 and cheering officials who said the rise proved Taiwan's success in deflecting Asia's financial crisis. But the island has yet to bear the full brunt of the crisis. The government forecast Taiwan's GDP growth would slow to 6.18% in 1998 as Asia's woes slow growth globally - especially in the United States.
Directorate chief Wei Duan said the performance showed Taiwan's economy was healthy at a time when others were not. He noted that the rise, the highest since a 7.55% surge in 1991, came as 1997 inflation fell to a 10-year low of 0.90% as measured by the consumer price index.
JAKARTA: All eyes on Suharto amid rupiah peg confusion as IMF due - US welcomes any sign Indonesia backing off from peg: World markets are watching as Indonesian President Suharto mulls a planned currency peg, amid mounting speculation it is just another move in the political chess-game he has been winning here for more than 30 years. The proposed currency board system sent the already battered rupiah seesawing, before stability returned on Friday on the realisation the veteran leader would make his position clear when he wanted and that attempts to apply reason to forecasts of his decision were futile. Mixed signals from officials in recent days have done nothing to clarify whether the government will go ahead with the peg in the face of mounting international opposition. The Straits Times newspaper in Singapore on Saturday quoted sources in Jakarta as saying President Suharto had decided to indefinitely postpone his plan to implement a currency peg on the rupiah.
A team from the IMF is due in Jakarta this week to review progress on economic reforms before the fund approves a further disbursement from a bail-out package, banking sources said Sunday. The IMF has so far disbursed some $3.0 billion from a package of $23 billion put together by the fund, the World Bank and the Asian Development bank. Commitments from other nations to a second line of defence brought the overall bail-out package to $43 billion. After signing a new reform agreement with IMF on January 15, President Suharto had estimated a 20% inflation rate for the year and zero economic growth. Banking sources said however these figures could turn out to be worse than predicted.
BEIJING: Turmoil hits China foreign investment - Rate cut won't stimulate growth: An expected interest rate cut in China later this year is likely to do little to stimulate slowing growth, as exports and foreign investment suffer from the Southeast Asian crisis, economists say. The goal of the proposed cut, trumpeted last weekend in the official press, would be to counter the effects of the crisis by helping exporters facing heightened competition from Southeast Asia. It would assure them cheaper credit, according to economists with the State Information Centre quoted in the China Daily Business Weekly. The rate cut is also designed to boost struggling state enterprises, by reducing their heavy debt burdens, and stimulate overall demand by encouraging investment.
BANGKOK: Thais to consider oil tax hike - Currency stability eyed: The Thai cabinet this week will consider slapping a two baht per litre tax hike on oil in a move designed to stabilise the local currency and replenish the country's depleted coffers, a report said Sunday. Government spokesman Abhisit Vejjejiva said Tuesday's crucial ministerial meeting would look at all options to raise revenue, including the oil tax and extra land charges. An economic think tank has also suggested the cabinet consider banning late-night television as part of a comprehensive energy-saving drive to slow down costly oil imports.
MANILA: Manila scraps tax subsidies for govt firms - Markets set to surge: Philippine President Fidel Ramos has scrapped tax subsidies for state-controlled firms related to the importation of capital equipment, trade department officials said Sunday. Ramos's administrative order is also expected to perk up the domestic market as firms owned or controlled by the government will now source their purchases locally. Trade department Undersecretary Melito Salazar said the removal of the tax break was contained in an administrative order recently approved by the president. A source from the department, who asked not to be named, said tax subsidies to these corporations were estimated to cost 10 billion pesos ($250 million) annually. The source said government firms' use of the capital equipment subsidy was further straining the country's depleted coffers.
Meanwhile, Ford Motor Co's request for incentives to build a 6.18 billion peso ($154 million) integrated facility in the country has been stalled by opposition from rival car manufacturers. The trade department's Philippine Economic Zone Authority was forced to defer approval of Ford's application for incentives such as tax breaks and duty-free importation of capital equipment, industry sources said, who asked not to be named. Vince Socco, senior vice president of current market leader Toyota Motors Philippines Corp, said the granting of perks to Ford would give the giant US automaker an "advantage" over existing players who are not getting such incentives.
HANOI: Vietnam on Sunday announced plans to speed up its privatisaion programme saying it would allow between 150 and 200 state firms to move into the private sector this year. The country's programme to liberalise state firms has gone ahead only tentatively - so far only 21 firms, capitalised at less than $20 million, have been privatised since 1992. The government was able to speed up the programme due to changes in existing legislation, Finance Minister Nguyen Sinh Hung was quoted as saying by the official Vietnamese news agency.
HONG KONG: G-7 not doing enough to help Asia: experts - No firm action: Analysts in Asia slammed the world's seven most powerful economies on Sunday for their lack of concrete action, singling out Japan for not doing enough to pull Asian nations out of dire financial straits. World economic leaders walked away from a two-day meeting on Sunday with a pledge to redesign the global financial system but left behind them a mountain of unfinished business and a deep rift between East and West. The G7, which groups the United States, Japan, Britain, Germany, France, Italy and Canada, convened in London on Saturday to discuss ways to help Asia out of economic crisis. The summit delivered a flailing to Japan for not doing enough to help the Asian neighbours. Instead of promising more action, Tokyo responded with indignation, complaining that it was misunderstood and underappreciated by the rest of the world. The obvious discord between Japan and the rest of the G7 did not help to boost the G7's credibility. The finance ministers will next meet in Washington in April. They promised to present a progress report on their work on bolstering the world financial system by the time their leaders meet in May in Birmingham, central England.
HAVANA: Cuba, Russia to boost ties - Trade deal signed: Russia and Cuba have agreed to strengthen their trade and economic cooperation after talks in Havana which reconfirmed a $350 million Russian credit to the communist-ruled island. The agreement was expressed in a document signed after a two-day meeting of a joint inter-governmental commission which ended on Friday. The Cuban news agency Prensa Latina said the two sides ratified a 1997 trade protocol and in addition reconfirmed the scheduled handover to Cuba this year of funds covered by a $350 million Russian credit line for the period 1997-2000.
Samira |
