TRADE
Mexico, Turkey seen as keys
Taiwan will use Mexico and Turkey as gateways to stepping up trade with the US and the EU, in a bid to reduce the impact of the free-trade agreements (FTAs) between South Korea and the two major economies, according to the country’s main trade promotion body. The Taiwan External Trade Development Council (TAITRA, 外貿協會) said in a recent document that it would set up business centers in Mexico City and Istanbul, and hold seminars and lead delegations to the two markets to further trade ties. TAITRA said Taiwan is choosing to have its exports shipped to Mexico and Turkey first before being rerouted to the US and EU because Mexico and Turkey enjoy zero tariffs to the US and EU respectively. Taiwanese products shipped from Mexico and Turkey would enjoy reduced tariffs or tariff-free access to their intended destinations, TAITRA said.
HONG KONG
Tsang expects improvement
Hong Kong’s economy should perform “slightly better” this year than last year, Financial Secretary John Tsang (曾俊華) wrote in a blog post dated Sunday. China’s economic growth is showing signs of accelerating, while markets in Europe and the US “seem to be more stabilized” than last year, Tsang wrote. The remarks contrast with Tsang’s warning in November that Hong Kong’s trade-reliant economy may enter recession if its major partners show a loss of growth momentum or signs of contraction. The city’s GDP will expand 3.7 percent this year, up from an expected 1.5 percent last year, according to economists surveyed by Bloomberg. Tsang pledged in the post to do more for the city’s middle class, especially the younger generation which is under “significant” pressure to pay housing mortgages and children’s education expenses.
HOME LOANS
Australian approvals drop
Australian home-loan approvals fell in December for a third month and the proportion to first-home buyers slumped to an eight-and-a-half-year low as central bank rate cuts failed to lure buyers into the market The number of loans granted to build or buy houses and apartments declined 1.5 percent from November, when they dropped a revised 0.7 percent, the statistics bureau said in Sydney yesterday. The number of loans approved for home construction climbed 1.2 percent in December from a month earlier, the report showed, the first increase since July. The report also showed first-home buyers made up 14.9 percent of the loans approved in December, the lowest proportion since June 2004. Still, first-time buyers’ average loan size climbed to a record A$293,900 (US$302,570) in December, it showed.
NETWORKING
Ericsson wins India contract
Ericsson AB, the world’s largest maker of wireless networks, won a US$1 billion contract to manage the systems of Indian phone company Reliance Communications Ltd. About 5,000 Reliance employees will transfer to Ericsson as part of the eight-year contract, according to a statement yesterday from the Stockholm-based company. Ericsson will operate and manage Reliance’s wireline and wireless networks in the northern and western states of India. Ericsson is trying to sell more services such as network management and maintenance as wireless operators in Europe curb investing in new infrastructure amid contracting economies and increasing competition. Ericsson stock closed little changed at 77.55 kronor in Stockholm on Friday. Reliance advanced 0.5 percent to 75.6 rupees yesterday at 12:55pm in Mumbai.
ECONOMY
ECB official urges Cyprus aid
A top European Central Bank (ECB) official is pressing for an agreement soon on a rescue package for Cyprus — a prospect viewed with little enthusiasm in Germany. ECB executive board member Joerg Asmussen was quoted yesterday as telling Germany’s Handelsblatt newspaper that he expects an aid program to be drawn up by the end of next month. He says it would be “negligent” to speculate about when Cyprus might run out of money, but added: “If anyone hopes to delay a decision until after the German parliamentary election [on Sept. 22], that won’t work.”
AVIATION
FBI probes EADS unit
The FBI is investigating allegations of corruption involving a British unit of aerospace group EADS over a contract in Saudi Arabia for the UK’s Ministy of Defence, the Financial Times said yesterday. US authorities have yet to decide whether to launch an investigation against the unit, GPT Special Management Systems, the paper said. An EADS spokesman said the company had not been contacted by the FBI. The newspaper said the FBI had interviewed a witness and acquired documents in connection with allegations that GPT, which sells communications equipment to the Saudi National Guard through the UK defense ministry, bribed Saudi officials.
AVIATION
Boards delay merger talks
The boards of American Airlines parent AMR Corp and US Airways have pushed back meetings to consider final plans for their merger, Associated Press sources said on Sunday. If American and US Airways combine, it would create the world’s biggest airline as measured by passenger traffic. It is not clear when the two boards would finally meet. People familiar with the matter said negotiations are continuing on issues that include AMR CEO Tom Horton’s exact title and role in the combined company. Discussions were centered on Horton being a non-executive chairman of the board while US Airways management, led by CEO Doug Parker, would run the day-to-day operations of the new carrier.
BANKING
Tougher auditing urged
Banks should have tougher internal auditors to stand up to senior decisionmakers within the firm and oversee risk taking, said Andrew Bailey, head of banking supervision at the UK’s Financial Services Authority. Regulators now expect banks to have internal auditors that can provide a challenge to management, “driving improved governance, risk management and internal controls,” Bailey said in an e-mailed statement. “The expectations of internal audit functions within financial services firms have hitherto been set too low,” Bailey said. Bailey’s comments came in support of draft guidelines published yesterday by the Chartered Institute of Internal Auditors that seek to improve governance within banks.
SRI LANKA
Taxes help shrink deficit
Sri Lanka’s new taxes on cars and luxury goods helped reduce imports last year and narrow the trade deficit, the central bank said yesterday. The doubling of vehicle taxes from April last year and credit restrictions helped rein in imports, while exports including tea and garments also recorded declines, the bank said. Export earnings dropped to US$9.77 billion, down 7.4 percent from US$10.55 billion in 2011. Imports also slowed to US$19.08 billion, down 5.8 percent from US$20.26 billion. The trade deficit was down 4.1 percent to US$9.31 billion.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure