Saturday, 8 November 2008

Govt slashes duty on garment imports from Nepal upto 75%

Nepal's ailing garment industry suffering due to a global slumpdown in demand has welcomed India's decision to slash duty on exports

to the country by upto 75 per cent.

The Nepali exporters will be now paying between half to two thirds less duty to India.

The amount of duty paid will come down to around Rs 4 million from Rs 12 million going by estimated annual apparel export of Rs 100 million and on the basis of 4 per cent customs duty, according to Nepali Garment Exporters' Association.

"The central government of India has issued a notification in this connection, rolling back the unfair decision," Vice president of Garment Association of Nepal, Uday Raj Pandey was qouted as saying by Kantipur.

The Indian policy decision has come as a great respite to Nepali exporters, said garment entrepreneurs. The sudden decision by Indian customs in the last week of August this year to charge customs duty on maximum retail price (MRP) instead of the invoice rate had created unnecessary hassles, they said.

"With the fresh decision of the southern neighbor, the duty volume on Nepali apparel will decrease two to threefold, and that means our competitiveness will strengthen in the coming days," Pandey said.

In a major policy reverse, India has rolled back its decision to impose customs duty on maximum retail prices (MRP) of garments exported to India and will now levy tax on the price indicated on the customs invoice.

The decision had brought exports of even top brands like John Players, Peter England, Ituchu and Pantaloons to a standstill.

Source: EconomicTimes

IIMs, others woo Asian, Gulf recruiters

The global economic slowdown is expected to hit the graduating class from B-schools very hard and the big alma maters in the country are doing their bit to help.

Leading business schools in India, including the premier IIMs, are going all out to roll out the red carpet for companies coming to hire on campus for the summer placement process. In fact, this time most B-schools have invited almost double the number of companies they had invited last year.

Besides, in the backdrop of the current recession, the placement departments are increasingly looking at companies in Asia and Middle East, a definite departure from the trend of focusing on the US and the UK corporations.

The rationale behind this year’s placement exercise for all prominent B-schools is to minimise the risk and provide wider options to the outgoing batch. From a human resources perspective, recruiters from Asia and the Middle East are expected to gain from the recession in developed countries, as Indian managerial talent, which until now looked towards the West, will be available at a reasonable cost.

“We have invited more companies this year as we want to make sure that the students remain relatively unaffected by the economic slowdown,” says Sourav Mukherji, chairperson of the placement cell at IIM-Bangalore.

As expected, the financial services sector, the biggest recruiter on B-school campuses, is shying away this season and experts feel there will be almost a 50-60% drop in offers from there. Institutes too are doubtful about the banking and finance sectors and, instead, inviting more companies from other industries.

Sectors that are being tapped in a big way now are FMCG, manufacturing, infrastructure, microfinance and IT. “In a major turnaround, we are seeing more and more companies approaching us that are from non-financial sectors. Last year, almost 21% of our placements were in financial companies and 19% in investment banking. But this year there will surely be a dip. If last year there were say 100 offers, this year there will be only 40 offers in these sectors,” says Mr Mukherji.

The decision of inviting more companies was also necessitated as premier B-schools were expecting a slight dip in the pay packages during placements. According to a professor at IIM-Kozikhode, the institute has invited almost 200 companies for this years summer placement, which has just kicked off. Meanwhile, the other IIMs, too, are working towards getting more companies to recruit on campus.

“To make sure that the students don’t get hit badly, we have invited almost double the number of companies this year as we are speculating that a few might falter. We have seen an increase of about 20% in the number of companies from manufacturing and infrastructure,” says a professor at one of the top IIMs.

Source: EconomicTimes

China ready to boost economy: World Bank chief

China told top finance officials on Saturday it was in a position to give a strong boost to its economy, like other countries, to help

fight the global credit crisis, the head of the World Bank said.

"There is a sense of a need for supportive fiscal expansion," World Bank President Robert Zoellick told reporters, referring to discussions among officials from the G20 group of advanced and developing economies.

"China is in a very good position to have a strong fiscal expansion. This is something the Chinese authorities talked about."

Source: EconomicTimes

Asia to avoid full-fledged financial crisis: ADB

Asia is expected to avoid a "full-fledged" financial crisis as governments and the corporate sector learned lessons from the previous crisis that hit the region a decade ago, the head of the Asian Development Bank said.

ADB President Haruhiko Kuroda told Reuters he also expects economies in the region to attain a more prominent role in the new global financial system that could emerge after leaders of the Group of 20 countries meet in Washington next week.

"Combined with the large buildup in foreign exchange reserves, capital outflows can now be handled more effectively than in the past. And reforms have improved financial systems," Kuroda said in a speech to the Asia Society in New York.

"A range of indicators also point to a healthier corporate sector in Asia. The result is that a full-fledged financial crisis in the region is unlikely," he added.

Nevertheless, the region is already feeling the economic impact of the global crisis, Kuroda said, forecasting aggregate economic growth for developing Asia will decline by 1.5 percentage points this year from a record 9.0 percent in 2007.

He said he sees "a further 0.5 or 1.0 percent deceleration next year."

"Initially we thought developing Asia could grow by 7.2 percent (in 2009), but now that is unlikely," Kuroda told Reuters in an interview following his speech.

"The giant economies of China and India, which account for a large portion of the growth estimate, have already seen growth slow significantly," he said.

It was only recently that the global credit crisis truly started to take a bite out of Asia's regional growth prospects, he said.

"The really serious impact on the Asian financial sector, markets has emerged only after mid-September. That is when Lehman Brothers went bankrupt, creating credit crunch situations all over the world, including Asia," he said.

On a positive note, Kuroda said inflation is also slowing in Asia as commodity prices fall and demand weakens.

"Inflation last year and the early part of this year was the number one challenge for many emerging economies in Asia," he said.

"But now inflation is a secondary issue. Particularly next year, the number one challenge would be how to sustain high growth because the economy is slowing down quite rapidly," he said.


The International Monetary Fund believes emerging economies will be the only source of global growth next year due to recessions in industrialized economies, where the current financial crisis has emanated from.

Kuroda said he believes Asia's emerging economies stand a real chance to increase their voice and stature in a new financial architecture and that the meetings in Washington are a good starting point for setting agendas and direction.

"You cannot easily identify which country gains from it, but all emerging economies would basically gain because of a greater voice and influence over the international financial system," Kuroda told Reuters.

Source: EconomicTimes

US favors financial reform: White House

Responding to Europe's call for aggressive financial changes, the White House said on Saturday the US and the European Union share "common ground" in addressing market turmoil.

The Europeans have expressed concern there is little desire in the Bush administration's waning days for a major overhaul of financial regulations. On Friday, EU leaders backed a 100-day deadline for leading economies to decide on financial reforms.

French President Nicolas Sarkozy, who led a special meeting of EU members in Belgium, said the economic crisis required quick agreement on reforms at the Nov 15 summit in Washington that Bush is hosting of the world's 20 largest industrialized nations and emerging economies.

"We are in an economic crisis," said Sarkozy, who currently is president of the EU. "We have to react and we have no time to lose."

Bush's press secretary, Dana Perino, said in a statement on Saturday that the administration shares "common ground" with European leaders about how to respond to the crisis and the need to move ahead on "certain reforms immediately."

Among other things, the EU leaders said they want an early warning system to watch for imbalances in financial markets, make the International Monetary Fund the world's financial watchdog, improve supervision of financial players and close loopholes that let some institutions avoid regulation.

"The United States has long been working to advance a financial markets reform agenda with many other countries," Perino said, adding that many of those actions are reflected in the EU statement.

The White House statement came as Brazil President Luiz Inacio Lula da Silva said emerging economies must have a prominent role in negotiations to fix the troubled financial system because the world's poor are blameless victims of the turmoil.

Finance ministers and central bank presidents from the world's 20 major economies met on Saturday in Sao Paulo, Brazil.

France is suggesting bringing emerging economies on board as members of the exclusive Group of Eight club of industrialized nations. Brazil's finance minister proposed the group be expanded to as many as 15 countries, but did not specify which emerging-market nations besides Brazil, Russia, India and China should be allowed to join.

Brazil and other emerging-market nations have complained they do not have sufficient representation at organizations such as the IMF and World Bank. Silva said the G-20 is well-poised to help forge new international finance regulations because it has broad representation from both rich and developing countries.

Source: EconomicTimes

Can Washington save the Big Three US automakers?

With the Big Three US automakers teetering on the edge of insolvency, it appears Washington may finally be ready to come to Detroit's rescue.

Only hours after both General Motors and Ford Motor Co announced large third-quarter losses, and stressed that they are both rapidly running out of cash, President-elect Barack Obama focused on the industry's plight during his first news conference since Tuesday's election.

"I have made it a high priority for the transition team to work on additional policy options to help the auto industry adjust," Obama told reporters gathered in Chicago.

Just how bad a situation the automakers are facing was hammered home on Friday, when GM reported a 2.5 billion dollar net loss for the third quarter, bringing to nearly 57 billion dollars its losses since the beginning of 2005.

Ford's 129 million dollar quarterly loss, meanwhile, brought to nearly 24.5 billion dollars the deficit it has run up since plunging into the red in 2006. Yet the losses only partially state the true depth of the problem for the automakers.

Going into the third quarter, GM had 21 billion dollars on its books. By the end of September, that had plunged to 16.2 billion dollars, coming perilously close to the 11 billion to 14 billion dollars it says it needs on hand to keep the company operating.

Ford burned through 7.7 billion dollars in the quarter, though its reserves are nearly twice as richer thanks to a massive line of credit it acquired last year.

Though it doesn't report its full financial data, the privately-held Chrysler LLC is also thought to be fast running out of cash: one reason, analysts believe, why its parent, Cerberus Capital Management, was so eager to sell Chrysler to GM. That deal, however, was scuttled by GM, and observers believe Cerberus may now rush to find another buyer as the economy continues to worsen.

"I doubt there's anyone who challenges the fact that we're operating in difficult times, perhaps as difficult as we've ever faced in the auto industry," GM Chairman and CEO Rick Wagoner said during a Friday conference call with reporters and industry analysts.

Detroit's situation has certainly worsened in the face of the current economic crisis that combines what many describe as a "perfect storm" of factors, such as high fuel costs, tight credit, job losses and rising commodity prices. But the seeds of the current crisis date back to the last big oil shock, of 1979, which helped the Japanese gain a foothold for small, fuel-efficient products.

As gas lines faded from memory, the Asian automakers continued to gain ground by focusing on quality, something GM, Ford and Chrysler have only recently come to grips with, and with varying degrees of success.

Source: EconomicTimes

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