NEW DAILY IN THE WORLD

“First, Americans have to embrace small cars,” he says. “They never have.” Neither have they bought Italian small cars in any volume; nor have small cars been profitable for any auto company in North America that wasn’t Japanese, says DesRosiers, a market research consultant for 24 years.

That kind of challenge is nothing new for a company born 84 years ago in Walter P. Chrysler’s reorganization of the Maxwell Motor Co. The bankruptcy filing Thursday by the Auburn Hills, Michigan-based automaker is the company’s fourth near-death experience since 1979. President Jimmy Carter’s US$1.5 billion government loan guarantee that year helped Lee Iacocca avert failure and turn himself into a Detroit icon.

The maker of Dodge Grand Caravan minivans and Charger sedans was given an $8.08 billion lifeline Thursday by President Barack Obama and forced into a shotgun marriage with the Italian automaker. The revival Iacocca led was based on sales of the K-car, a small, fuel-efficient, inexpensive line of sedans. This time, Chrysler will have to rely on low-priced, gas-thrifty cars from the Fiat lineup including the Punto and Fiat 500.

Chrysler didn’t escape bankruptcy in its latest death- defying move, and the success of its marriage with Fiat isn’t a given, analysts said.

Muscle cars, minivans

“To say that this Fiat deal is going to solve everything is just naïve,” said Rebecca Lindland, a senior auto analyst at IHS Global Insight in Lexington, Massachusetts. “It’s just not true.”

For much of its history, Chrysler has been the scrappy No. 3 to General Motors Corp. and Ford Motor Co.

The Plymouth Valiant, introduced in 1959, was an economical alternative to other midsized cars, while Chrysler burnished a reputation for engineering with the Hemi V-8 engine, in 1951, and 1960s muscle cars like the Charger. The Caravan in 1983 pioneered the minivan. Chrysler also blazed a trail with cash-back sales incentives in the 1970s.

General Motors, which celebrated its 100th year in 2008, is also reorganizing with the help of government financing. The Detroit-based automaker replaced Chief Executive Officer Rick Wagoner with Fritz Henderson on Obama’s orders in March.

Dealers whose livelihoods are staked on Chrysler’s success say they hope Fiat’s promise of fuel economy will keep the company alive this time around.

Punto, Panda

Fiat vehicles get the highest gas mileage in the world, which could give Chrysler a way to counter Japanese automakers, said Dale Early, who owns a dealership in the Houston suburb of Kingwood, Texas.

“Toyota, Honda, Nissan – they’ll no longer be able to lay claim to some of the things they can lay claim to Friday in the US market,” said Early, a Chrysler dealer since 1987.

Michael Jackson, CEO of AutoNation Inc., the largest publicly traded car dealer, said that if oil and gas prices rise, “I could sell Fiats all day long.”

Fiat said it will put no cash into its Chrysler investment. Instead it’s contributing small-car technology and designs so the American company can build and sell the subcompact 500, which won European Car of the Year in 2008, and the Panda, Punto and Grand Punto small cars.

None of Fiat’s models could be sold immediately in the US because they don’t conform to federal safety and other regulations. The design changes may take one to two years. Fiat said it could start selling its vehicles through Chrysler dealers in 2011.

Source: Bloomberg

Officials from 13 countries are gathering in Bali on May 3 to finalize each nation’s contribution to the US$120 billion pool of foreign-exchange reserves that can be used to defend their currencies in times of financial turmoil. They will meet at the sidelines of the Asian Development Bank’s annual meeting on the Indonesian resort island.

Economists are raising their estimates for the region’s growth this year amid expectations of a recovery in China and as indicators show production declines may have bottomed. Some manufacturers, including Toyota Motor Corp., have announced plans to boost output this quarter as inventories decline.

“As recent as a few months ago, there were expectations that at least one country will need to tap the reserve pool for funds before this crisis is over,” said Vishnu Varathan, a regional economist at Forecast Singapore Pte. “With signs that the slowdown is easing and of stability in the financial arena, that seems unlikely now.”

The global slowdown had slashed demand for the region’s computer chips, cars and commodities, and forced companies to fire hundreds of thousands of workers. The region’s governments pledged to pump more than $950 billion into their economies through increased expenditure, tax cuts and cash handouts to kick-start local consumer and business spending.

Industrial production

The extra spending may have helped the region’s economies escape a more prolonged slowdown. Malaysia’s central bank this week said it is seeing some signs of moderation in the pace of decline in economic activity, while the Monetary Authority of Singapore said the island has probably passed the worst phase of its recession.

In South Korea and Japan, industrial production increased in March, while China’s urban fixed-asset investment surged by almost a third the same month.

“Asian exports have shown signs of bottoming and orders from industrialized economies are starting to pick up,” said Sailesh Jha, an economist at Barclays Capital Plc in Singapore. “The worst in the decline of growth is over. We should see a modest path of recovery in the second half of the year.”

Nine of the region’s ten currencies tracked by Bloomberg fell against the US dollar in the first three months of the year. This quarter, eight have gained against their US counterpart.

Reserve pool

At a meeting last month in the Thai resort town of Pattaya, finance ministers from the 10-member Association of Southeast Asian Nations said they “stand ready” to pursue expansionary policies for as long as needed, and pledged to remain vigilant against downside risks to growth.

ASEAN, together with Japan, China and South Korea, have responded to the crisis by speeding up plans to create and boost the size of the reserve pool. The Southeast Asian nations will contribute 20 percent of the total amount, while the rest is divided between their three North Asian neighbors.

Thailand, Indonesia, Malaysia and Singapore, the four biggest Southeast Asian nations, will contribute $4.77 billion each, and the Philippines will provide $3.68 billion, Thai Finance Minister Korn Chatikavanij said April 9. South Korea will put $24 billion into the pool, ASEAN Secretary-General Surin Pitsuwan said a day later.

The fund is a broadening of a current arrangement called the Chiang Mai Initiative that allows only bilateral currency swaps. It was set up to help ensure central banks have enough to shield their currencies from speculative attacks such as those that depleted the reserves of Indonesia, Thailand and South Korea during a financial crisis a decade ago.

Source: Bloomberg

“The three shops, which are roughly 300 square meters each, are aimed at providing service to local communities,” Vivi Mou, a company spokeswoman told Reuters.

Wal-Mart will observe market acceptance and customer preferences for the stores, named “Smart Choice” or Hui Xuan in Chinese, before deciding on future development plans, Mou said.

She would not give any details about the business performance of the three stores so far.

An unnamed company source was quoted by Chinese media saying Wal-Mart plans to open 100 of the convenience stores across China this year and 1,000 in five years. Mou declined to comment on that report.

China’s US$824 billion retail sector is one of the world’s fastest growing. Smaller than Germany’s in 2003, the market could be almost twice as big by 2013, according to Euromonitor.

Wal-Mart now operates 227 outlets and employs over 70,000 workers in China, according to its website.

The US retail giant has set up similar stores in other markets, including Britain, Japan and Mexico, Mou said.

A good move?

Wal-Mart will benefit from its clout as the world’s biggest retailer in the new convenience store initiative, said a retail analyst at a major Western brokerage, speaking on condition his name not be used.

“We will see an immediate impact in terms of competition for prime locations for store operations,” he said. “It is a good move in the longer term for collecting market intelligence such as consumer behavior. It will be useful for its other retail operations.”

Convenience stores have become a lucrative business segment for retailers in China, enjoying relatively high margins and lower penetration in the country.

Taiwan’s President Chain Store Corp., which operates 7-Eleven convenience stores in Taiwan under a licensing agreement, recently opened its first 7-Eleven in Shanghai.

Other foreign convenience store operators in China include Japan’s Lawson and local operators Kedi and Lianhua.

Wal-Mart’s Mou said its larger stores will remain the company’s key business model in China.

Analysts say the company still has plenty of room to grow in China, as it shifts its focus from mature markets to countries like Mexico, China and Brazil.

Source: Bloomberg

Fears that bank stress tests will cast an even bigger shadow over the addled financial sector coupled with uncertainty about the April employment figures might just bring the rally to an end.

It will undoubtedly be a busy week with Federal Reserve Chairman Ben Bernanke heading to Capitol Hill to testify on the economy on Tuesday, the all-important April non-farm payrolls data set for release on Friday and authorities worldwide mobilizing against a deadly new flu strain.

Earnings reports should also command attention on Wall Street with Walt Disney, a market bellwether, among the companies due to post quarterly scorecards.

But analysts said the stock market's direction would mainly hinge on what emerges from the US bank stress test results.

"The focus is on the much ballyhooed and delayed release of the details of the stress tests," said David Dietze, president and chief investment strategist at PointView Financial Services in Summit, New Jersey.

"What investors are bracing for is to have a great big problem unloaded on them on those banks without a clear path to resolve it," he said, adding "that raises questions as to the sustainability of the rally."

Stress tests eyed

The stress tests are a government exercise to help regulators gauge what any additional capital would be needed in the event of a range of economic scenarios.

According to a government source, the results measuring the health of the largest 19 US banks are expected to be made public on Thursday.

"There are a lot of risks to the market over the next few weeks that might lead to some sell-off in financial stocks and in the market as a whole," said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC in Newark, New Jersey.

"A lot of information has been leaked out already, that everybody is going to pass the tests, but some of the big banks - especially Citi and Bank of America - are going to be asked to raise additional capital. Will there be further dilution of the existing shareholders?" he added.

Ever since major US banks, including Citigroup and Bank of America, signaled in early March that they had had a strong start to 2009, investors have found little reason to shun stocks.

The benchmark S&P 500 has risen 30 percent since touching a 12-year low on March 9, while the KBW Bank index has risen 64 percent since that psychologically-significant low.

For the latest week, the Dow Jones industrial average jumped 1.7 percent and the S&P 500 gained 1.3 percent. The Nasdaq climbed 1.5 percent - capping its eighth straight weekly advance, its longest weekly winning streak since December 1999.

Another recent boost for stocks has been a spate of surprisingly less-dire reports on the economy, suggesting that the recession that began in December 2007 may be abating.

Rally over?

But for a market now coming up against some significant resistance at levels last seen in January, a search for catalysts to sustain the recent rally may make this week a critical juncture.

Some analysts say a sideways movement would be healthy so the market can consolidate the recent gains. And those steeped in the history of Wall Street are mindful of the old saw: "Sell in May and go away."

"We've had a monster rally, there's been a lot of short covering," said John Schloegel, vice president of investment strategies at Capital Cities Asset Management in Austin, Texas.

"If you're a prudent investor who's been able to participate in such a gigantic rally it would make sense to pare back especially if you have a heavy weighting in equities," he said.

Overall, some skepticism about the likelihood of a further run-up has begun to emerge.

According to Citigroup's Chief US equity strategist Tobias Levkovich, stock mutual funds garnered six straight weeks of inflows starting the week of March 18, totaling $15.9 billion, with about 85 percent of that amount designated for US funds.

However, bond funds raked in $39.14 billion during the same period, underscoring a clear tone of skepticism among individual investors.

"I would think we're topping. The market looks very top-heavy," said Carl Birkelbach, chairman and chief executive of Birkelbach Investment Securities in Chicago. "I think a correction would even be healthy at this point."

Friday's payrolls report is expected to show the economy shed more than 600,000 jobs in April and the unemployment rate jumped to 8.9 percent from March's 8.5 percent.

Other key data will be Tuesday's reading on the vast service sector from the Institute for Supply Management, the government's productivity and costs report for the first quarter on Thursday, and the ADP National Employment report on Wednesday.

Bernanke will appear before the US Congress' Joint Economic Committee on Tuesday at 10 a.m. EDT (14:00 GMT), while on Thursday he is scheduled to speak on banking supervision.

On the earnings front through May 1, about 326 of S&P 500 companies have already reported first-quarter results, with 66 percent beating estimates, 9 percent matching and 25 percent missing.

Besides Disney, other likely earnings highlights this week include Sprint, Tyson Foods, Kraft Foods, Cisco Systems, Pulte Homes, D.R. Horton and Allstate Corp.

Major US retailers are also scheduled post monthly sales on Thursday.

Source: Reuters

“A rumor of a possible bankruptcy gets out, and we are called in to find out what’s going on,” said Minezawa, who works for Tokyo Shoko Research, based in nearby Nagoya. “These companies aren’t getting any work and are at the end of their tethers.”

Failure of the weak links in the chain may force Toyota to turn to suppliers outside its traditional network, ending the company’s stranglehold over a procurement system that has driven down profit margins at subcontractors to 1 percent or less, said Takeshi Miyao, a Tokyo-based supply chain analyst at CSM Worldwide, which advises the auto industry.

“This would change the balance of power and could become reflected in prices,” Miyao said.

Toyota’s supply network consists of two groups: the 217 primary partsmakers that deal directly with the carmaker and their subcontractors. Toyota spokeswoman Ririko Takeuchi declined to comment on the company’s pricing practices or negotiations between its suppliers and their subcontractors.

Minezawa expects bankruptcies to mount over the next six months, particularly in the lower ranks of Toyota’s supply chain.

Toyota’s grip

“Profit is next to nothing,” said Kazushi Kawabata, president of Comco Holdings Inc., a maker of machine tools, which supplies Toyota. “The suppliers are totally in Toyota’s grip.”

Nationwide, bankruptcies in the auto sector surged 52 percent to 41 cases in March compared with last year, according to Tokyo Shoko. The number of newly registered unemployed in Aichi prefecture, which includes Toyota City, jumped 88 percent in February.

About 80 percent of the labor force in Toyota City serves the auto industry, according to Norio Seki, the head of the city hall’s industrial affairs division. Domestic production of Toyota and Lexus cars fell last year to four million vehicles, the first decline in seven years.

The cuts have rippled through the local economy.

In the Meitetsu Toyota Hotel, opposite Toyota City rail station, occupancy rates have halved since October to as low as 30 percent, said front desk manager Chiharu Suzuki. Foreign suppliers, who used to make up more than half the hotel’s guests, are gone, leaving the once popular samurai swords untouched in the gift shop, she said.

Hello Work

At the Hello Work employment agency, Satoru Tsuda, a 31-year-old Japanese-Brazilian from Parana in southern Brazil, is trying to find work to meet his family’s 41,500 yen monthly rent. He, his two brothers and his parents worked for 12 years at an engine-parts factory until they were fired in March, he said.

Toyota may post a 227 billion yen (US$2.34 billion) loss for the year ending March 2010, according to the median of 20 analyst estimates compiled by Bloomberg.

The company forecast a loss of 350 billion yen for last fiscal year. It reports earnings on May 8th. The carmaker said it may cut global production by 12 percent this fiscal year to about 6.2 million vehicles.

As Japanese companies report earnings for the fiscal year ended March, more bankruptcies may come to light, said CSM’s Miyao.

Dry towel

Nihon Koshuha, a maker of car-door parts for Toyota affiliate Toyota Boshoku Corp., halted operations on

March 3 after orders dropped and the company couldn’t service debt on a new plant built in 2007. Taishin Kasei Inc., a maker of plastic car interior and body parts in Nagoya, ceased production in April and filed for bankruptcy.

Former President Eiji Toyoda, great-uncle to incoming President Akio Toyoda, once said “water can be wrung even from a dry towel if you put your mind to it,” to explain how the company overcame the economic crisis following the 1973 oil shock, according to the company. This philosophy permeates the supply chain, Miyao said.

Sub-suppliers’ profit margins are restricted because they are expected to open their books and show their costs to customers, he said. The price of their products is then typically decided after delivery, Kawabata and Miyao said.

“Part of Toyota’s success is based on its ability to squeeze parts makers,” said Bob Sliwa, advance design director at Nagoya -based Cobo Design Co., which works with Toyota suppliers such as Denso Corp., the world’s largest listed auto-parts maker.

Tied to Toyota

Toyota group companies like Denso and Aisin Seiki Co., Japan’s largest maker of car transmissions, in which Toyota has equity stakes, sell to automakers around the world. Sales to carmakers other than Toyota make up about half of Denso’s business. In contrast, most secondary suppliers in Toyota City make parts only for Toyota.

Denso set up a taskforce in January to help sub-suppliers cut costs, said spokesman Goro Kanemasu.

Comco’s Kawabata said the company’s relationship with Toyota “shocked” him when he joined his father’s business in 1981, leading him to diversify his company from being completely dependent on the Toyota group to getting 80 percent of sales from other companies.

Subcontractors “are pushed to cut costs in units of hundredths of a yen at times,” Tokyo Shoko’s Minezawa said. “It’s that kind of world.”

Source: Bloomberg

“Our foreign partners have presumed that copyright violations are common and being committed openly in Vietnam, and that the government and society have been indifferent,” she said.

On April 29, HCMC authorities found about 50,000 illegal Vietnamese copies of current best-selling books during an inspection of three houses in Thu Duc District.

This was a result of investigations done by the Tre Publishing House and HCMC Police. The city’s Department of Information and Communications, the agency responsible for controlling piracy, was informed later to send two officials for the raid.

The team found 1,000 books at the first house, before residents alerted them to two nearby houses where they found another 50,000 or so copies.

The department kept some of the books at its warehouse and some at the warehouse of the Tre Publishing House, while the rest were left in the houses and sealed.

There has been no announcement so far on what the authorities plan to do with books and how they would deal with the Minh Thang Bookstore in Hanoi, which was later found to have stored the books before they were transported to the three houses in HCMC’s Thu Duc District.

Nguyet said concerned agencies have been incompetent in carrying out inspections of pirated books, while the violators always had complicated tricks to avoid detection.

“An average of between 40 and 50 books printed by the Tre Publishing House have been copied illegally every year.”

She said the piracy has, besides the loss of business, also ruined publishers’ credibility among readers, who fail sometimes to distinguish the pirated copies, blaming publishers for low quality books.

Vu Hoang Giang, deputy director of Nha Nam Culture and Communications Joint Stock Company in HCMC, said current measures against piracy are not much of a deterrent.

“The act of faking medicine and alcohol can fetch jail terms or a death sentence, while faking books is subjected to maximum fine of VND30 million (US$1,688),” he said.

“Book piracy causes losses of taxes and damages the authors and publishers but it has been done nearly in the open,” Giang added.

Not enough resources, officials say

The government has not been able to increase the number of persons deputed to inspect piracy, said Le Manh Ha, director of the HCMC Department of Information and Communications.

“Moreover, the department can’t spend money to construct a warehouse reserved for pirated books,” he said.

Ha’s deputy, Nguyen Anh Tuan, admitted that the recent bust of illegal copies in Thu Duc District resulted from the residents’ report, reflecting the incompetence of the officials.

He said the department had sent only two officials to deal with the job for strategic reasons and that they “would learn from the experience.”

The department also failed to reveal their plans to deal with the violators, saying it was information that could not be disclosed to the media at present.

Reported by Do Tuan

“Our foreign partners have presumed that copyright violations are common and being committed openly in Vietnam, and that the government and society have been indifferent,” she said.

On April 29, HCMC authorities found about 50,000 illegal Vietnamese copies of current best-selling books during an inspection of three houses in Thu Duc District.

This was a result of investigations done by the Tre Publishing House and HCMC Police. The city’s Department of Information and Communications, the agency responsible for controlling piracy, was informed later to send two officials for the raid.

The team found 1,000 books at the first house, before residents alerted them to two nearby houses where they found another 50,000 or so copies.

The department kept some of the books at its warehouse and some at the warehouse of the Tre Publishing House, while the rest were left in the houses and sealed.

There has been no announcement so far on what the authorities plan to do with books and how they would deal with the Minh Thang Bookstore in Hanoi, which was later found to have stored the books before they were transported to the three houses in HCMC’s Thu Duc District.

Nguyet said concerned agencies have been incompetent in carrying out inspections of pirated books, while the violators always had complicated tricks to avoid detection.

“An average of between 40 and 50 books printed by the Tre Publishing House have been copied illegally every year.”

She said the piracy has, besides the loss of business, also ruined publishers’ credibility among readers, who fail sometimes to distinguish the pirated copies, blaming publishers for low quality books.

Vu Hoang Giang, deputy director of Nha Nam Culture and Communications Joint Stock Company in HCMC, said current measures against piracy are not much of a deterrent.

“The act of faking medicine and alcohol can fetch jail terms or a death sentence, while faking books is subjected to maximum fine of VND30 million (US$1,688),” he said.

“Book piracy causes losses of taxes and damages the authors and publishers but it has been done nearly in the open,” Giang added.

Not enough resources, officials say

The government has not been able to increase the number of persons deputed to inspect piracy, said Le Manh Ha, director of the HCMC Department of Information and Communications.

“Moreover, the department can’t spend money to construct a warehouse reserved for pirated books,” he said.

Ha’s deputy, Nguyen Anh Tuan, admitted that the recent bust of illegal copies in Thu Duc District resulted from the residents’ report, reflecting the incompetence of the officials.

He said the department had sent only two officials to deal with the job for strategic reasons and that they “would learn from the experience.”

The department also failed to reveal their plans to deal with the violators, saying it was information that could not be disclosed to the media at present.

Reported by Do Tuan

The coast, located in Quang Xuong District’s Sam Son Town, is 15 km from Thanh Hoa Town and 170 km from Hanoi. It boasts breathtaking sandy beaches which span a total length of 10 km.

There are four distinct beaches of equal beauty along the Sam Son coast and the water is safe for tourists to swim in. In many places there are even security guards and lifeguards on duty.

Other scenic areas abound along the coast and many are associated with well-known legends such as Doc Cuoc Temple, Trong-Mai Islet, and Co Tien Mountain. Most are within walking distance of the beaches.

Early in the morning, fleets of village fishing boats come ashore, bringing with them the fish and shrimp they have caught out at sea. Fishermen and dealers trade a variety of fish, shrimp, crabs, cuttlefish and clams right on the beach. Here, tourists can buy fresh seafood directly from fishermen and ask their hotel or guesthouse to prepare dishes for them.

A variety of interesting festivals and cultural events are set to be hosted on the Sam Son coast this year in a bid to increase tourism in the area. The festivals include the Banh Chung, Banh Day (Square and Round Rice Cakes) Festival to be held at Doc Cuoc Temple on June 4, and the Cau Ngu (Wishing for Good Fishing) Festival to be held on June 7. In July, a cultural and gastronomic week will be held throughout the northern-central provinces.

From Hanoi, tourists can take a tour of Sam Son by contacting the Sam Son Tourism Office on Duong Quang Ham Street, Cau Giay District.

Reported by Hong Minh

“What I think Vietnam can teach the world is coming to terms with the former enemy by forgiveness,” he told Thanh Nien Daily shortly after his arrival in Ho Chi Minh City on Wednesday.

Vietnam was a model during the war years as a country engaged in a successful struggle against oppression, a victory for nationalism, and “it is now a post-war example how you can move on rapidly.”

Arnett, who won the Pulitzer Prize for his reporting on the Vietnam War, will deliver the keynote address at the 50th anniversary of the Hotel Caravelle today. The hotel was the hub of international media personnel during the war.

Asked how he would distinguish himself if sent as a correspondent to Vietnam during peacetime, Arnett said tourism, finance and economics would be the main thrust of his reporting.

“Fifty years ago you came to Vietnam to cover wars, conflicts, or people desperate for survival. Today, journalists come here to write about tourism, the economy,” he said.

“Vietnam is a great source of pleasure for visitors. Vietnam’s reputation, internationally, is superb,” Arnett added.

Professionally, he would want to help journalists do better work; get involved with media companies or the Internet to provide news and information valuable for businesspeople; and to make life easier for tourism.

“My reporting would be aimed at making the system work more efficiently,” Arnett said.

He cited the example of a professional guidebook for China’s Shantou City he had made with his students within a year. Arnett has been teaching journalism at Shantou University, founded and supported by Hong Kong billionaire and philanthropist Li Ka Shing, in southern China.

Shantou had a lot of journalists but they didn’t know how to do a professional guidebook on the city, Arnett said.

“So that’s Peter Arnett today: making a contribution to the society of Shantou,” he added.

Arnett said that in countries that are developing, the best role foreign reporters can play “is to bring out expertise.”

Regarding journalism in the era of globalization, Arnett said journalists were in a position where governments need them for accurate information, and that their role was clearer than it had been in the past.

“In today’s world we have to be honest with people through the media and journalism. This makes accurate reporting and professional journalism more significant today than ever.”

Then and now

Having returned to Vietnam in 2005 and 2007, Arnett said that he was struck again this time by the exploding economic development in the country, with new airports, hotels and restaurants.

He said that traffic was a big problem that “Vietnam has to worry about.” He was aghast that young people are dying in accidents.

“There is nowhere like it in the world. Nowhere in the world,” he said.

Arnett said failure to minimize the traffic problem could prevent people from visiting the country.

The former correspondent will stay in Vietnam until this Sunday to promote his book: “Live from the Battlefield: From Vietnam to Baghdad, 35 Years in the World’s War Zones.”

Reported by Dang Yen Dang

ECB officials have spent the past months bickering over whether to fight a recession by purchasing assets, with Bundesbank President Axel Weber leading resistance to such a move. The US Federal Reserve, the Bank of England and Bank of Japan have lowered rates close to zero and are already buying bonds, effectively printing money to reflate their economies in a policy known as quantitative easing.

“The ECB surprised in a good way,” said Natacha Valla, an economist at Goldman Sachs Group Inc. in Paris who used to work at the ECB. While “they took a little too long” in announcing it, “60 billion is not insignificant. It’s more than symbolic.”

Eurozone banks account for 70 percent of business financing, a much larger percentage than elsewhere, and the ECB has made it clear it wants them to remain at the center of measures to get credit flowing again.

UBS economist Stephane Deo said: "We indeed agree that securing banks' funding needs is a crucial task for the ECB."

The euro rose 0.7 percent against the dollar to $1.3424, climbed 1.7 percent against the yen and strengthened 1.3 percent against the pound. Weber is expected to comment on the rate decision later Thursday.

Covered bonds

Covered bonds, known as Pfandbriefe in Germany, are secured by property loans or lending to public-sector institutions, and differ from mortgage-backed securities because they’re also supported by a borrower’s pledge to pay. They have traditionally been considered among the safest corporate bonds available, allowing lenders to pay less interest.

There were about 1.5 trillion euros of the securities outstanding in the euro region as of the end of 2007, 900 billion euros of which were German, according to BNP Paribas SA.

“Covered bonds were considered as one of the segments of the, I would say, private securities in general that had been particularly touched and more touched than others in terms of impact of financial turbulences,” Trichet said.

Trichet, who refused to exclude further rate cuts, also said there’s evidence that Europe’s economy is improving.

“The latest economic data suggest tentative signs of stabilization at very low levels after a first quarter that was significantly weaker than expected,” Trichet said. “Inflationary pressure has been diminishing as money and credit growth have further decelerated.”

Also Thursday, the ECB said it will offer banks additional funds for 12 months from June to restore confidence in the financial system.

The Frankfurt-based central bank said in a statement on its website that it will launch refinancing operations on June 23, September 29 and December 15. The operations will be conducted at a fixed rate with full allotment.

Source: Bloomberg

Bankers said Monday they had ample dollar funds following a rare trade surplus in the first quarter. But a central bank weekly report said banks had raised the interest rates on dong deposits by 0.1-0.3 percent in the past week, showing some of Vietnam’s more than 40 commercial banks may be in need of dong funds.

Banks have been speeding up their disbursement of dong loans under a government program that subsidizes interest in a bid to support exports and domestic production. Loans under the package totaled VND178.72 trillion (US$10 billion) as of last Thursday, central bank figures showed.

Source: Reuters

Dung also instructed concerned agencies to prevent plant and animal diseases, and better manage agriculture production to avoid situations where farmers suffer losses from bumper crops.

Farmers should make a 30 percent profit on their investment, he said.

The Prime Minister also wanted low-interest or no-interest loans given to farmers for purchasing farming equipment, televisions and motorbikes, and to build houses.

To boost industrial production, Dung said administrative procedures have to be simplified and the policy to apply peak-hour prices for electricity consumed by the sector reconsidered.

The disbursement of official development assistance (ODA) and foreign direct investment (FDI) should be expedited and the government would issue more bonds to raise funds to meet the capital needs of the production and commerce sectors, he said.

Dung hailed the management of the financial sector but recommended that the State Bank carefully consider its policy to maintain inflation at around 6 percent.

Small- and medium-sized enterprises will also be offered a 4 percent interest subsidy on two-year loans taken for new investment projects.

Social housing

At the session Tuesday, the government discussed projects to construct more houses for workers and low-income earners, and dormitories for university students.

Earlier, the government had approved a plan to build dormitories to accommodate 60 percent of total students nationwide by next year.

The Construction Ministry reported that only around 20 percent of between 2.2 million and 2.5 million workers in industrial parks nationwide had stable accommodation. Meanwhile, only one third of nearly two million civil servants own a house.

The ministry proposed an VND8 trillion (US$469.42 million) plan to build housing for university students, workers in industrial parks and low-

income earners in urban areas by 2015. Under the proposal houses would be built and leased to low-income earners at favorable rents, or sold with the help of low-interest bank loans.

The government has allowed the municipal administrations of Hanoi and Ho Chi Minh City to start building this year projects to provide accommodation for 200,000 students by 2010 and the second quarter of 2011, construction Deputy Minister Nguyen Tran Nam said.

More stimulus packages

The Ministry of Planning and Investment is considering another stimulus package of VND20 trillion ($1.14 billion) to spur investment and consumption, Deputy Minister Cao Viet Sinh said at the press briefing.

He said government bonds worth VND36 trillion ($2.1 billion) had been sold in 2008.

Recently, Le Duc Thuy, chairman of the National Finance Supervision Committee, had called for further stimulus packages to prevent the economy from slowing down and help it recover soon.

It is now using VND17 trillion ($970 million) from a stimulus package to provide a 4 percent interest subsidy on loans to companies that export, import or produce essential goods.

An official from the Ministry of Industry and Trade said his ministry will propose a plan for not reducing state budget spending so that social welfare projects and other government activities have adequate funds.

Reported by Bao Van – Xuan Toan

Far from being a version of TV reality show "Big Brother" without the cameras, the project is seen as a serious scientific experiment that will show the impact of prolonged isolation on stress, hormones, sleep and mood.

The six, all men, will be allowed to take personal effects like books, laptops and DVDs into the facility at Russia's Institute of Biomedical Problems (IBMP) in Moscow but will otherwise be sealed away from the world.

According to the strict rules for the experiment set out by the IBMP, the volunteers can only quit the capsule if they have decided to pull out of the experiment for good.

"The evacuation of individual members of the crew due to illness or personal wish is comparable to the 'death' of the cosmonaut," it said in a stern mission statement.

The institute said the main problem for a manned mission to Mars is ensuring the full autonomy of the crew for the year-and-a-half round trip.

As with a real mission, the supplies for the expedition have been painstakingly worked out in advance and no additional goods will be allowed to enter the capsule once the experiment starts.

"The crew will themselves resolve all problems and uncomfortable situations which do not require the evacuation of crew members," the IBMP said.

In a bid to exactly simulate possible scenarios of a manned mission, communications with a mission control center and loved ones outside will be subjected to a time delay of 20 minutes.

The 550-cubic-meter (19,500 cubic feet) facility is made out of three modules - one for storage of food, one "medical module" that can be used to isolate a sick participant if necessary and a unit where the participants will live.

There, each participant will have tiny individual bedrooms a maximum of 3.2 square meters (34 square feet) in area which have been minimally furnished with a desk, chair and small bed. The facility also has a small gym, complete with exercise bike.

Underlining the declared aim to simulate the exact conditions of a Mars mission, there is also a "landing module simulator" which the crew will occupy for the 30 day "orbit" around Mars.

The experiment is a joint project between the IBMP and the European Space Agency (ESA) and will lay the path for an even tougher Mars mission simulation later in 2009.

The partners are planning at the end of the year to send six more crew into the isolation facility for 520 days - the estimated duration of a return trip to Mars.

Source: AFP

Despite the market hitting the doldrums, however, the effects of the credit crunch will be gentler in the Middle East than in the US or Europe, where sales are expected to plunge by 75 percent, he predicts.

“Things are more likely to bounce back here... There is a lot more growth potential here and in Asia,” Derrett told AFP.

Luxury boats showcased at a recent international boat fair in Dubai drew amazement from spectators, but few were persuaded to dig into their pockets and splash out.

“Haven’t you heard? There’s a financial crisis going on,” Max Wilchefski 30, an Australian construction design manager, told AFP at the Dubai International Boat Show – the biggest annual boat show in the Middle East and one of the top five in the world.

“We’re dreaming. We’d love two of these ‘Out Of Limits’ racing boats,” said Wilchefski’s friend Rick Vinantuono, 38.

Both said however they would stick to just “looking around” – which exhibitors said had been the gloomy refrain of this year’s show.

After enjoying years of rapid growth as a business and tourism hub, Dubai, one of the seven emirates forming the United Arab Emirates (UAE), has been the hardest hit in the region by the global financial crisis.

At this month’s boat show, 721 exhibitors from 50 countries displayed more than 400 boats on a sprawling space of 85,000 square meters, the size of about 17 football pitches.

However, the number of exhibitors was 11 percent down on the 810 who pitched up in 2007, according to show organizers, who added that around 26,000 people visited the exhibition this year, down from nearly 27,500 last year.

Saeed Harib, the chief executive officer of the Dubai International Marine Club which hosted the event, acknowledged that the global credit crunch had affected sales.

Among those who did attend, however, were a number of boat-loving royals from the UAE and neighboring Gulf countries but whether they splurged out or not has not been revealed.

Glitzy leisure craft ranged from luxury yachts to speed boats, including the “Quantum of Solace” – the power boat featured in the latest James Bond movie of the same title.

Watersports and leisure crafts are popular in Dubai, which boasts year-round sunny weather and sandy beaches overlooking the azure waters of the Gulf.

This year’s highlight was a super yacht pavilion, where mega industry names as Abeking & Rasmussen, Amels B.V and Sunseeker among

others displayed their latest models, 19 pieces in all, compared to 10 displayed last year.

Ali al-Jafla, managing director of Sunseeker Middle East, proudly showed visitors around the lavish Sunseeker 38 Metre super yacht, which features neatly crafted bedrooms and bathrooms on each of its three decks, a lounge and a dining room with marble floors covered with fluffy rugs.

The price tag for such luxury yachts ranges from US$22 to 24 million.

“No doubt the economic downturn has affected business,” Jafla said. “It’s hard to judge what will happen next.”

Sunseeker’s sales at the show generated close to 20 million dirhams ($5.44 million), Jafla later announced.

Not everyone has been negatively affected by the economic downturn.

“On the contrary, we have benefited because the prices of building materials have dropped,” said Sultan al-Naeimi, chairman of Premier Composite, a UAE manufacturer of sailing yachts.

“We have been affected by the crisis to a small extent, but we already signed contracts and we’re doing fine,” he said.

And interest in leisure boats is still strong, despite the lack of sales.

For the first time, the UAE’s capital Abu Dhabi this month held its own boat show, with around 100 exhibitors from 26 countries showcasing 20 of the world’s most luxurious super and mega yachts. And according to local media reports, the show drew good crowds daily.

For marine consultant Derrett, the leisure boat industry in the Gulf region is being becalmed not only by the financial crisis but also by a drastic lack of berths.

He estimated that between them the six Gulf Cooperation Council members – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – now have around 9,000 berths, providing only limited space for the estimated 44,000 boats needing mooring.

Plans are underway, however, to build another 7,000 berths by 2012, he said.

Source: AFP

China’s consumer price index may stand at zero for 2009 and the nation may escape deflation because of “strong loan growth” and the government’s 4 trillion yuan (US$585 billion) stimulus package to spark an economic recovery, Zhang said.

Plunging prices have increased the risk that deflation will become entrenched, prompting consumers to delay purchases, squeezing company margins and triggering wage cuts. Premier Wen Jiabao, who this month set a 4 percent inflation target for 2009, is relying on a surge in lending and the support measures to spark an economic recovery.

Wen said March 13 the nation’s 8 percent growth target for this year is “difficult but possible” to achieve. People’s Bank of China Governor Zhou Xiaochuan said this week that leading indicators are pointing to an economic recovery.

Second quarter

“By mid-June, government leaders will have a better idea how well the stimulus package worked,” Jia Kang, head of the Institute of Fiscal Science under the Ministry of Finance, told reporters at Saturday’s forum. “Growth in the second quarter will be key for further policy moves, and if recovery is not seen the government is likely to roll out more stimulus.”

Wen said this month at the closing of the national congress that the government has “adequate ammunition” to add to its 4 trillion yuan stimulus package at any time.

“Economic indicators may look ugly this quarter because of the high comparative basis last year,” Jia said.

Inventories at local companies have started to fall and stockpiles may need replenishing in the second quarter, the central bank’s Zhang said.

“An increase in inventories will provide concrete proof industrial production and the economy is recovering,” he said.

China’s economy in the fourth quarter grew 6.8 percent from the same period a year earlier, lagging the 9 percent expansion for all of 2008 and 13 percent for 2007. Industrial output growth slowed, forcing thousands of factories to close and leaving about 20 million migrant workers jobless.

Domestic demand

“The rest of the year will be a struggle between coping with falling external demand and stimulating local consumption,” Zhang Yansheng, a researcher with the National Development and Reform Commission, said Saturday.

“Whether the government can achieve its 8 percent growth target hinges on domestic demand, and the government may need to do more.”

China’s new local-currency loans more than quadrupled from a year earlier in February to 1.07 trillion yuan ($156.6 billion), the central bank said on its website March 12, after it cut borrowing costs five times last year, scrapped quotas limiting lending and urged support for the stimulus plan.

Vehicle sales rose 25 percent in February and urban fixed-asset investment jumped 26.5 percent in the first two months from a year earlier.

Loan growth

Lending continued to rise in March and the growth “isn’t that much smaller” than in previous months, the central bank’s Zhang said, without giving a number. “We are likely to see sustained loan growth for the rest of the year.” The stimulus package is showing some results, he added.

Zhang at the reform commission, China’s top policy maker, said the country’s exports may fall 10 percent this year while imports may drop 5 percent. China’s trade surplus may shrink $200 billion this year, compared with a gap of $295.5 billion in 2008, he said.

The World Bank cut its forecast for China’s growth this year to 6.5 percent from 7.5 percent previously. The Organization for Economic Cooperation and Development said it will reduce its estimate this month to between 6 percent and 7 percent as the global slump deepens. The International Monetary Fund sees a 6.7 percent expansion, the least since 1990.

Source: Bloomberg

Hyundai Chairman Chung Mong Koo’s decade-long push to evolve from a maker of cheap cars has been aided by the won’s 13 percent plunge against the dollar over the last six months versus the yen’s 10 percent gain. Higher sales coupled with a favorable currency have kept Asia’s fourth-largest carmaker profitable as Toyota suffers its first loss in 59 years.

“This is a once-in-a-lifetime chance for Hyundai to catch up with Toyota,” said Chang In Whan, president of KTB Asset Management Co. in Seoul which manages about US$7.1 billion in assets including Hyundai shares. “Hyundai should make the most of this crisis to create its own opportunities over the next one to two years.”

The worst financial crisis since the Great Depression has hammered car demand, with sales falling 39 percent so far this year in the US. In contrast, Hyundai’s US sales have gained 4.9 percent. That has helped cushion the carmaker’s 20 percent plunge in South Korea, where the government plans to cut taxes to spur demand.

Hyundai slipped 3.8 percent to 53,000 won in Seoul trading Monday. Toyota dropped 3.7 percent to 3,140 yen in Tokyo.

China, India

Hyundai gets 55 percent of sales from emerging markets including China, India, where auto demand has withstood the global slowdown. Toyota gets 31 percent of sales from emerging markets. Hyundai’s sales in China jumped 38 percent in the first two months of the year.

Hyundai is also the second-largest carmaker in India, where its sales gained 13 percent this year. Santro minicars and Accent subcompacts made in India were exported to more than 100 countries. A reliance on such small cars gave the company an edge in emerging markets, said Lee Hyun Soon, Hyundai’s vice chairman.

“Our product mix was better than any of our competitors,” said Lee, development chief for Hyundai and affiliate Kia Motors Corp., in an interview on March 23. “More than half of our production is small vehicles, which has been a big help.”

Small cars

Small cars account for 64 percent of Hyundai and Kia’s global production, the second-highest proportion among automakers after Volkswagen AG, according to Chung Sung Yop, a Seoul-based analyst at Daiwa Securities Group Inc.

Hyundai generally undercuts Toyota on price and US sales of the $26,000 Sonata and $30,000 Santa Fe sport utility vehicle have risen while consumers avoid $28,000 Camrys and $39,000 4Runner SUVs.

Still, Hyundai has a long way to go to catch Toyota, which overtook General Motors Corp. as the world’s largest carmaker last year. In 2008, Japan’s biggest automaker sold 8.97 million vehicles, down 4 percent. Hyundai and Kia’s group sales rose 7.3 percent to 4.2 million, based on Bloomberg calculations.

Chasing Toyota

Even with Toyota’s 36 percent plunge in US sales this year, the 226,870 vehicles it sold in the market dwarfs Hyundai’s sales of 55,133 cars and trucks.

Hyundai also lags behind in quality. Toyota ranks fourth in quality in a 2009 survey by J.D. Power & Associates. Hyundai was in 14th place.

“Its brand perception is still lagging,” said Choi In Ho, who oversees 2.35 trillion won at UBS Hana Asset Management Co. in Seoul, including Hyundai shares.

Hyundai’s US unit has spurred sales with an offer to buy back vehicles from customers who lose their job and cannot make payments. Unemployment in the US in February rose to 8.1 percent, the highest in a quarter century.

“The number of people who would definitely consider buying a Hyundai model has more than doubled,” said

Alexander Edwards, head of auto research for San Diego-based Strategic Vision Inc., which estimates 9 percent of consumers surveyed would “definitely” consider a Hyundai, up from 4 percent in 2002. That compares with 40 percent for Toyota and 38 percent for Honda.

New engines

Hyundai is revamping the Sonata sedan to compete with Toyota’s Camry and Honda’s Accord. It will add new 4-cylinder and turbo-charged engines that it says will match Honda and Toyota engines in output and exceed them in fuel savings.

The company will begin selling a hybrid-electric version of the Sonata in the later part of next year that Hyundai’s Lee expects to cost less than Toyota’s Camry Hybrid and offer better fuel-economy. Hyundai will start selling a hybrid car that uses liquefied petroleum gas in South Korea in June.

At the New York Auto Show in April, Hyundai will display its new Equus luxury sedan with a domestic base price of 63.7 million won ($48,000). The car, comparable to Toyota’s Lexus LS and Daimler AG’s Mercedes-Benz S-class, may eventually be sold in the US, Lee said.

Hyundai is forecast to post a 1.4 trillion won profit this calendar year, according to analyst estimates compiled by Bloomberg. Toyota will have a loss of 224 billion yen in the year ending March 2010, according to analyst estimates.

Still, as both carmakers are dependent on exports and currency fluctuations, Hyundai’s advantage may not last, said UBS Hana’s Choi.

“The won can turn its direction at any time,” said Choi. “Japanese carmakers could return as even stronger rivals.”

Source: Bloomberg