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Bush warns of economic challenges

BBC, Washington

President George W Bush has warned the US economy continues to face "serious challenges" after signing a $700bn(£394bn) financial sector rescue plan.

The controversial package is aimed at buying up the Wall Street's bad debts in an effort to ease the credit crunch which is crippling the US economy.

The president said it would take "time and determined effort to get through this difficult period".

The US House of Representatives passed the bill by 263 votes to 171 on Friday.

It was the second vote in a week, following the shock rejection of an earlier version of the deal on Monday.

The House adopted the new version of the Emergency Economic Stabilisation Act after the Senate added about $100bn (£57bn) in new tax breaks to win Republican votes.

Job losses

The complex process of auctions to buy up the problem assets will be overseen by the US Treasury and is not expected to take place for at least a month.

Despite the adoption of the bill, share prices in New York ended Friday down, as government figures showed US job losses at a five-year high.

Mr Bush welcomed the approval of the bill, which he said was "essential to helping America's economy weather the financial crisis".

The president acknowledged that there were concerns about the government's role in the deal and its cost.

He said he believed in intervention only when it was necessary but that "in this situation, action is clearly necessary".

"Ultimately the cost to taxpayers will be far less than the initial outlay," he said.

Fearing a backlash from furious voters in November's looming congressional elections, politicians were hugely divided on the unpopular bill during the House debate.

Some who had voted "No" on Monday said they were switching because of the improvements to the bill, but many of them still expressed serious reservations.

Others maintained their opposition, saying the bill was still a bail-out benefiting mainly Wall Street.

'Outrage'

Both candidates for the US presidential election in November have welcomed the deal but neither were enthusiastic about the details.

Speaking in Arizona, Republican candidate John McCain said the deal "isn't perfect and it's an outrage that it is even necessary".

But he said the US had to stop damage to its economy caused by "corrupt and incompetent practices on Wall Street and in Washington".

Mr McCain said the deal was a temporary solution and it should not take a crisis for Congress to reach bi-partisan accord.

Democratic candidate Barack Obama said it was important that the Bush administration used the new powers granted by the deal wisely.

"We still have a health care system that's broken, we're still overly reliant on oil from the Middle East and so we've still got these structural problems," he said, on the campaign trail in Pennsylvania.

"The fundamentals of the economy aren't sound and we're going to have to do a lot of work moving forward."

BBC Washington correspondent Rachel Harvey says the focus now shifts back to the US Treasury, which is tasked with using the billions of dollars of taxpayers' money to try to unclog the financial system.

After all the political wrangling to get this plan passed, the question now is whether it will actually work, she says.

US Treasury Secretary Henry Paulson has vowed speedy action to get the rescue package up and operating.

BBC North America business correspondent Greg Wood says it will be several months before anyone can tell whether the plan is working.

EU leaders to discuss bank crisis

BBC, London

A number of European leaders are due to discuss the global economic crisis at an emergency summit in Paris later. UK Prime Minister Gordon Brown and the leaders of France, Germany and Italy are all due to attend.

They are expected to meet the president of the European Commission and European Central Bank chief.

The meeting was set up to try to forge a common approach but there have already been considerable disagreements about any sort of EU bail-out package.

French President Nicolas Sarkozy has said he hopes the discussions will lead to a world summit later this year.

Co-ordinated response

But there are growing divisions in Europe about where the limits are when it comes to regulating the money markets and bailing out failing banks and financial houses.

The scheduled four-hour meeting on Saturday will welcome Washington's approval of a $700bn (£397bn) rescue package planned to restore confidence in Wall Street.

European leaders are keen to agree a co-ordinated response ahead of next week's meeting of the G8 finance ministers and central bank governors in Washington.

But plans for a 300bn euros (£237bn, $417bn) EU-wide rescue similar to the US Congress plan have been denied by Mr Sarkozy's office.

Calls for European action follow the bail-out of both Bradford and Bingley, which cost the UK government around £14bn, and Fortis Bank, which cost the governments of Belgium, Luxembourg and the Netherlands around £9bn.

Only the Dutch appear to support getting the European Union's 27 countries to contribute to a £250bn emergency fund.

Such a fund would be used only when one of the member states' key banks or financial institutions faced serious trouble.

Scepticism

The four leaders, however, are expected to look at how they can encourage confidence by strengthening co-operation within Europe and ensuring the financial markets function properly in the future.

The BBC's Alistair Sandford said: "France wants countries to agree to intervene where necessary to protect European banks.

"But after the recent divisions, it is far from clear what will emerge." Germany has made its opposition to any co-ordinated European bail-out plan known ahead of the meeting.

Gordon Brown is also sceptical of the need for any Europe-wide plan.

BBC Europe correspondent Mark Mardell said Downing Street prefered the case-by-case, nation-by-nation solutions that have been happening so far.

The president of the European Parliament, Hans-Gert Pöttering, has criticised the summit, warning that it has no power to make decisions for the entire EU.

Battle to buy Wachovia heats up

The battle for troubled US bank Wachovia has heated up with two rival suitors now competing for the firm.

Wells Fargo has announced it is set to buy Wachovia for $15.1bn (£8.5bn).

This scuppered an earlier US government-backed rescue deal in which Citigroup would buy Wachovia's banking arm for $2.2bn.

Citigroup has now objected, saying the new agreement breached its exclusive acquisition rights and has demanded that it be called off.

Exclusive agreement

But a few days later it was courted by another suitor Wells Fargo.

Wells offered to buy all of Wachovia for much more money, and so Wachovia walked away from its agreement with Citi.

This has clearly angered Citigroup, which said it had nearly completed its own deal with Wachovia.

This would have been overseen by the Federal Deposit Insurance Corporation (FDIC), and would have included government help.

"Wachovia's agreement to a transaction with Wells Fargo is in clear breach of an exclusivity agreement between Citi and Wachovia," Citigroup said in a statement.

The fight for Wachovia has come amid a crisis that has seen investment bank Lehman Brothers go bust, and the failure of giant mortgage lender Washington Mutual.

Financial difficulties

Cassandra Toroian, chief investment officer at Bell Rock Capital added: "For Citigroup, this is a real losstthis was a deal that was going to save them as much as it was saving Wachovia."

Wachovia's financial difficulties stemmed from its 2006 purchase of mortgage lender Golden West for $25bn at the height of the then US housing boom, according to analysts.

Wachovia's chief executive, Robert Steel, said: "Today's announcement creates one of the strongest financial firms in the world."

"This deal enables us to keep Wachovia intact and preserve the value of an integrated company," he said.

Shareholder questions

Wells Fargo said it expected its earnings to benefit from the new agreement within a year, but some question the attraction of the deal for Wells' shareholders.

Nancy Bush, analyst at Nab research said: "I think it's a more elegant solution for Wachovia shareholders."

But she added: "If I were a Wells Fargo shareholdertI wouldn't be so happy. Wells is going to have to go to the capital markets at a time when it's not so easy to raise capital." The deal still has to be approved by shareholders.

Pharmaceutical market valued at $700m in 2007 : Compound annual growth rate of 18.79pc through to 2012 can be expected

BUSINESS WIRE, Dublin, Ireland

Research and Markets has announced the addition of the "Bangladesh Pharmaceuticals and Healthcare Report Q3 2008" report to their offering.

Bangladesh Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Bangladesh's pharmaceuticals and healthcare industry.

The Bangladesh Pharmaceuticals & Healthcare Report Q308 is the most recent addition to BMI's Industry Survey and Forecasts Series. It integrates data and narrative from market research firms, industry associations and company presentations to provide objective assessment of one of Asia Pacific's most promising opportunities for drug makers.

We calculate that the country's pharmaceutical market had a valuation of US$700mn in 2007 and that a compound annual growth rate (CAGR) of 18.79% through to 2012 can be expected. This rapid market expansion is primarily due to greater uptake of medicine throughout this densely populated country, but also through appreciation of the data against the US dollar, population growth and increased government healthcare expenditure, among other factors.

2008 is proving a challenging year for drugmakers in Bangladesh. A round of price cuts is scheduled after a hiatus of two years. Sales forces of Bangladeshi drugmakers are growing exponentially, which results in significantly higher expenses.

Meanwhile, the appreciation of both the Indian rupee and the Chinese yuan is boosting the cost of raw materials.

Eskayef was best performing company in Bangladesh during Q108, with sales up 21.12% on Q107, according to IMS Health. This compares favourably to the next fastest growing drugmakers: Renata (+16.19%), ACI (+16.17%) and Drug International (+13.79%), Incepta Pharma (+6.77%) and Square Pharma (+2.32%). Not all Bangladeshi pharmaceutical companies performed so well. Beximco Pharma witnessed a huge 42.04% drop in sales, while Acme recorded a 4.89% decrease.

The greatest challenge facing the industry is the end of the patent-free regime in 2016, when local pharmaceutical companies will have to cease the production, distribution and sale of medicine that have intellectual property protection elsewhere in the world. Forward thinking local drugmakers will have to adapt their product portfolio as necessary or suffer a steep drop-off in sales. However, the global 'patent cliff' in 2011 will mitigate this watershed.

Avoid Cadbury, says adviser

bdnews24.com, Dhaka

The health adviser has recommended avoiding Cadbury's products in Bangladesh, following a recall of the company's China-made chocolate over the recent melamine scare.

"Authorities have asked BSTI to check whether Cadbury chocolates contain melamine or not. Until the test results are available, the chocolate of that brand had better not be consumed," AMM Shawkat Ali told bdnews24.com by telephone.

Asked if the Cadbury products would be banned, he said, "It's the job of the commerce ministry to ban commercial products. It's up to them to decide."

"Already in some places in the United States and Australia Cadbury chocolates have been banned. However, disputes are there over the level of toxic melamine in the Cadbury products," the adviser said.

"Some say (melamine) is at tolerable level, while others say it's higher than the accepted level." "In the circumstances, we should make a decision after the tests."

British confectionery group Cadbury Plc said on Monday it was withdrawing all of its 11 chocolate products made in Beijing on concern over the possibility of contamination with melamine in its Chinese plant.

"The products that are affected by this withdrawal include a range of Cadbury chocolate products and Choclairs, all produced in our Beijing plant," the world's largest confectionery manufacturer said in a statement.

The London-based group said its products, including Dairy Milk chocolate, were being recalled from mainland China and the export markets of Taiwan, Hong Kong and Australia as a precautionary step pending further supply of fresh product.

The candy maker is the latest company to get caught up in the tainted-milk scandal, as a growing list of Chinese milk and milk-related products have been taken off shelves around the world in recent weeks.

Melamine was first found in powdered infant formula in China, where four babies died and nearly 53,000 were sickened. It has since been traced to dozens of other products.

Melamine is a relatively cheap industrial chemical, commonly used in coatings and laminates, wood adhesives, fabric coatings, ceiling tiles and flame retardants.

Some Chinese dairy plants added it to milk products to cheat protein quality checks.

Health experts say that ingesting melamine can lead to kidney stones, urinary tract ulcers, and eye and skin irritation. It also robs infants of much-needed nutrition.

Over here, the government banned three brands of Chinese milk powder in the wake of the milk scare, though at least two Bangladeshi firms have since been found marketing the products without BSTI approval and mobile courts have seized tins in open markets over recent days.

The government said Chinese authorities had earlier informed Bangladesh of the possible existence of melamine in the products of two companies Sun Care and Yashli, who manufacture 'Sweet Baby' and 'Yashli-1' and 'Yashli-2' milk powders.

Melamine content has been detected in Yashli -1, the director general of Bangladesh Standards and Testing Institution said Tuesday.

Md Ajmal Hossain, the BSTI chief, told bdnews24.com: "A melamine content of 72.77 mg per kg has been found in the Chinese Yashli-1 brand milk powder. There has been no melamine found so far in the other two banned Chinese brands."

The BSTI chief said samples of Yashli-1, Yashili-2 and Sweet Baby-2 formula were being tested at three laboratories. Of the three, one had reported back so far with a positive melamine result in Yashli-1.

"These three brands have already been banned from import and sale in Bangladesh," Hossain said.

Last week Cadbury said three factories from which it sources its dairy ingredient supplies in China had been tested by the government and no melamine had been found, but further tests had revealed some doubts so the recall was ordered.

The following 11 products are included in the recall, according to Hong Kong's Centre for Food Safety:

* Cadbury Dark Chocette, 45 grams.

* Cadbury Dark Chocette, 80 grams.

* Cadbury Eclairs, 180 grams.

* Cadbury Dairy Milk Chocolate Pumpkin, 150 grams.

* Cadbury Dark Chocolate, 40 grams.

* Cadbury Dairy Milk Chocolate Bulk Pack, 5 kilograms.

* Cadbury Dark Chocolate Bulk Pack, 5 kilograms.

* Cadbury Dairy Milk Hazelnut Chocolate Bulk Pack, 5 kilograms.

* Cadbury Dairy Milk Cookies Chocolate Bulk Pack, 5 kilograms.

* Cadbury Hazelnut Praline Chocolate (2008 Chinese New Year), 312 grams.

* Cadbury Dairy Milk Chocolate (2008 Chinese New Year), 300 grams.

Tata abandons cheapest car plant

BBC, New Delhi

India's Tata group has abandoned plans to build the world's cheapest car in the eastern state of West Bengal.

Tata group chief Ratan Tata said: "We have little choice but to move out of Bengal. We cannot run a factory with police around all the time."

He was speaking after protests in a row over land acquired from local farmers.

The car, the Nano, is expected to cost about 100,000 rupees ($2,130). It was due to be launched in October and will be ready "this year", Mr Tata said.

The BBC's Subir Bhuamik in Calcutta says the company is initially expected to produce several thousand Nanos this year at other sites in India.

It had planned to make 250,000 cars a year at the Singur plant in West Bengal, rising to 350,000.

A number of other car firms also plan vehicles to compete with the Nano but have not yet begun production.

The dispute in West Bengal highlights a wider problem between India's growing industry - which needs land - and its farmers who are unwilling to give it up.

'Offers'

Work at Tata's Singur plant has been suspended since the end of August following protests led by the state's opposition Trinamul Congress party.

Mr Tata said the Nano will be built "within this year but I can't tell you where".

"We are going to do everything possible to come close to the deadline we had established," he told journalists in Calcutta.

"We have got offers from several Indian states but we have not yet finalised where to produce the Nanot All these issues we will announce in the next few days when we have a clearer picture."

Mr Tata said his group would still consider West Bengal as an investment destination in future.

"I value the considerable intellectual resources this state has, but something will have to change here," he said.

He was speaking after meeting the West Bengal chief minister Buddhadev Bhattacharya and his colleagues.

"This is a black day for Bengal. We will have so much more difficulty getting investments now," said the state's industry minister, Nirupam Sen.

Compensation

The West Bengal government acquired 1,000 acres of land for the Nano project two years ago.

More than 10,000 farmers accepted compensation for their land, but just over 2,000 of them refused and demanded land be returned.

During the protests Tata's engineers and workers were attacked, prompting the group to stop work.

Our correspondent says the Bengal governor then intervened and tried to mediate a deal between the government and the opposition but that did not work.

The plant was seen as a key part of industrialisation efforts in what is one of India's least developed states.

Citi named in 100 best cos list

BUSINESS REPORT

Citi, a global financial services company, has been named in the 100 best companies list by Working Mother magazine for the 18th year.

About 25 per cent of the top earners at Citi represent women. The company has established best practices at Citi with embarking on new initiatives like Global Women's Initiative launched in 2008. The initiative was aimed at helping women network and mentoring each other. Citi also provides child-care centre facilities in different locations, said a press release.

At Citibank Bangladesh around 20 per cent of the employees are women, including working mothers. Women also represent many senior positions at Citibank Bangladesh, including the management committee.

Stock markets slump despite US bailout deal

AFP, London

Global stock markets tumbled on Monday, despite a Wall Street bailout deal, as the ongoing financial crisis forced the state rescue of two key European banks.

Asian and European equities suffered fresh losses as the tentative US agreement to rid the financial sector of toxic mortgage-related assets gave only a short-lived boost to sentiment.

In Europe, Belgian-Dutch banking and insurance group Fortis sealed a government bailout, while Britain announced it would nationalise troubled mortgage lender Bradford & Bingley.

Investors were unsettled by signs of widening problems in the banking sector. London's stock market dived 2.51 per cent at 4,960.61 points in early deals, accelerating initial losses.

Paris shares plunged 2.87 per cent to 4,043.74 points and Frankfurt tumbled 3.16 per cent to 5,871.64 points.

Global central banks meanwhile pumped extra cash into the financial system as part of continued efforts to keep credit flowing.

'Despite the US bail out plan now being committed to paper, there's hardly a jubilant mood expected as the new trading week gets underway,' said CMC Markets dealer Matt Buckland in London. 'The fact the funds won't be released in one lot but instead a series of tranches is certainly detracting from its appeal.

'This, combined with the very visible scars of the credit squeeze t will again weigh in sentiment,' he added, in reference to the state rescues of B&B and Fortis.

The European Central Bank announced a special 38-day euro loan to provide eurozone banks with more cash in a bid to balance conditions on extremely tense interbank money markets.

German bank Hypo Real Estate was meanwhile granted a last-minute 'multi-billion euro' credit line from a consortium of German banks that allowed it to avoid declaring bankruptcy.

Hong Kong share prices closed down 4.3 per cent on Monday, as banking giant HSBC bumped up its mortgage rate, sending property stocks tumbling, dealers said.

Tokyo fell 1.26 per cent by the close, Sydney lost 2.0 per cent and Seoul dropped 1.35 per cent.

There were still doubts about the proposed US financial rescue package, which needs to be approved by Congress and offers no guarantee of an end to the credit crunch that has ravaged global markets, dealers said. 'In our view, while the 'bailout plan' reduces the risk of a systemic collapse, many downside risks remain - not least those related to a protracted slowdown in the global economy,' said Barclays Capital analyst David Woo.

'In addition t the financial market turbulence is seriously affecting the European financial system as well.'

He added: 'The weakness in equities t suggests the market is pessimistic about the likely effectiveness of the Treasury's plan.'

The US deal, announced just hours before Asian markets opened, is designed to mop up toxic debts from struggling banks and prevent further financial chaos that could tip the world's largest economy into recession.