Business

AMMAN — Amman Chamber of Commerce (ACC) announced on Sunday that exports during the first ten months of 2014 reached JD3.24 billion, compared with JD3.26 billion during the same period of 2013.

Arab countries topped the list of ACC exports during this year’s January-October period with JD2.05 billion, compared with JD2.17 billion during last year’s ten months.

Despite the drop in ACC exports to Iraq by 20 per cent, it still topped countries importing Jordanian products with JD697 million, followed by Saudi Arabia with JD450 million, USA with JD306 million, India with JD285 million and United Arab Emirates with JD143 million.

According to the ACC report, exports increased to each of Syria by 119 per cent reaching JD95 million, Turkey by 61 per cent with JD84 million and Palestine by 45 per cent reaching JD68 million during the first ten months of 2014. In sector distribution of exports, chemical industries and cosmetics came first with JD702 million mineral industries came second with JD528 million followed by engineering and electric industries with JD476 million.

AMMAN — Amman Chamber of Industry Chairman Senator Ziyad Homsi on Saturday said that the industrial sector has incurred losses amounting to around JD21 million as a result of the recent strike by Aqaba  Container Terminal (ACT) employees.

Presiding over a meeting of the maritime transport agents, Homsi called for more pressure on ACT to prevent any similar strikes in the future, citing the deep impact on trading activity.

Homsi also said that ACT has been imposing non-stop increases on its cargo handling services since June in addition to the fines imposed by ships agents which varied between JD52 to JD74 per container, calling for more pressure on the ACT to cut down such "harmful attitude".

CHICAGO — A federal judge on Friday approved Detroit's plan to exit the largest municipal bankruptcy in US history, restructuring its $18 billion debt.

Judge Steven Rhodes ruled that the plan meets the legal requirement under Detroit's Chapter 9 bankruptcy to help the city of Detroit and the state of Michigan, giving the "Motor City" a fresh start on the road to recovery.

"This is an historic day not just for Detroit but for our region and our state," said Judge Gerald Rosen, the lead bankruptcy mediator, at a news conference in Detroit.

Entering bankruptcy protection in July 2013, the heart of the US automobile industry was saddled with more than $18 billion in debt and a tax base depleted by decades of population loss and urban blight.

After several weeks of hearings, the exit plan the federal court approved cancels about a third of Detroit's long-term debt, or $7 billion; creates a commission to oversee the city finances and requires a cost-cutting restructuring.

According to US media reports, part of the funds freed up by restructuring the debt will be reinvested in badly battered public services such as fire and police departments.

Some of the money would be used to attack widespread urban blight in the city, where some 80,000 homes and buildings have been abandoned.

"It's not the end, not even the beginning of the end, but maybe the end of the beginning," said Rosen, paraphrasing Winston Churchill's comment on a British victory during World War II.

"Detroit has a grand future," Michigan Governor Rick Snyder said at the news conference, but "there is more work to be done”.

Home to the "Big Three" automakers — General Motors, Ford Motor and Chrysler — the city has been on the decline for 60 years. It has lost half its population and crime is rampant.

The situation in Detroit is being closely monitored by government workers across the country who are fearful that they too may see their retirement benefits slashed by cash-strapped states and cities. 

Nearly half of the city's debt is to underfunded pension plans and retiree health benefits.

"To the current leadership of the city, you are about to get your city back from us in the bankruptcy world," said Judge Rhodes in his decision. "We give it back to you with the fresh start that this city needs and deserves under our federal bankruptcy laws. We hope we helped."

BEIJING — China secured backing from Asia-Pacific ministers Saturday to deepen anti-graft efforts, in a move that dovetails with a high-profile Communist Party "fox hunt" for corrupt officials who have fled abroad.

The anti-corruption proposal is said to have been pushed by China and backed by the United States at the Asia-Pacific Economic Cooperation (APEC) gathering in Beijing, which culminates in a two-day summit of leaders from 21 member-economies starting Monday.

But it remained unclear how effective the move would be, amid apprehension in some countries over returning suspects to China due to fears they could be subject to abuse and denied legal due process.

China in July launched its so-called "Fox Hunt" — a campaign to bring back corrupt officials or their family members who have moved abroad, taking ill-gotten gains with them.

A report attributed to China's central bank and leaked three years ago said that as many as 18,000 corrupt officials had left the country over between the 1990s and 2008, taking as much as $123 billion with them.

In a statement, APEC ministers pledged to step up nascent anti-graft efforts with a regional commitment to "deny safe haven to those engaged in corruption, including through extradition".

But they stressed that such moves would be "subject to domestic laws and policies" and needed to be carried out "in accordance with fundamental legal principles of each economy".

"We, APEC member economies, recognise that corruption impedes economic sustainability and development, threatens social security and fairness, undermines the rule of law, and erodes government accountability, as well as public trust," the statement said.

It pledged to establish an office for the day-to-day running of the APEC Network of Anti-Corruption Authorities and Law Enforcement Agencies (ACT-NET), a body coordinating anti-corruption efforts that was launched by Chinese and US officials in August.

The office will "assist in detecting, investigating and prosecuting corruption, bribery, money laundering, and illicit trade" and seek cooperation on tracking cases across borders.

China has recently announced stepped-up efforts to extradite former officials suspected of corruption from countries including Australia, New Zealand and Canada.

Australian police said last month that they would work with their Chinese counterparts to track down and seize illegal assets, but foreign concerns over the country's legal system linger.

Anti-corruption efforts with the ruling Communist Party are carried out by an internal body which operates without any legal oversight, and there is concern that the crackdown may be used for political faction fighting.

APEC Secretariat Executive Director Alan Bollard said Thursday the proposal had been championed by China and the United States.

Bollard said any anti-corruption effort "needs to happen within the different laws and legal structures" of APEC members, but the statement did not spell out how this would work.

"Corruption impedes economic sustainability and development, threatens social security and fairness," the ministers concluded.

BEIJING — An impasse over a global pact to streamline customs procedures poses "the most serious crisis the World Trade Organisation has faced" and has paralysed all negotiations in the trade body, its chief Roberto Azevedo said Saturday.

A draft of the so-called Trade Facilitation Agreement was hammered out last December during tough negotiations at a World Trade Organisation (WTO) conference in Bali — the WTO's first global accord since its 1995 founding.

But the WTO's 160 members failed in July to reach a final agreement on the deal, which Azevedo himself has said is crucial to ensuring the WTO's relevance.

"The impasse has effectively paralysed the multilateral negotiations in the organisation," Azevedo told reporters in Beijing.

"Substantial discussions on all the measures in the Bali package programme have come to a halt," he said. "I have described this impasse to members as the most serious crisis the WTO has faced," 

Azevedo was speaking on the sidelines of the 21-member Asia-Pacific Economic Cooperation (APEC) forum's annual gathering, hosted this year by China.

Members of the Geneva-based WTO set trade rules among themselves in an attempt to ensure a level playing field, and spur growth by opening markets and removing trade barriers including subsidies, excessive taxes and regulations.

The Bali negotiations were seen as make-or-break for its mission of achieving a worldwide trade agreement fair to both rich and poor nations, which Azevedo has said is under threat from proliferating bilateral and regional trade deals often skewed in favour of richer countries.

Bali was the WTO's first ever global agreement and signalled the first concrete progress on the Doha Round of trade liberalisation talks.

Those discussions, launched in 2001, aim to underpin development in poorer nations, but agreement has been elusive amid protectionist reflexes.

Negotiators instead extracted parts of the Doha package for the far less ambitious Bali customs accord, in the hope of creating momentum towards the wider agreement.

But the trade facilitation deal has been put on ice by post-Bali sparring between WTO members, notably over demands from India that the group approves the developing power's stockpiling of food.

It took nearly a decade to conclude the customs talks, which began in 2004, and Azevedo warned that the patience of many WTO members is "fast running out".

India and its developing-world supporters say food stockpiling is essential to ensure poor farmers and consumers survive in the cut-throat world of business.

Western countries, led by the United States, have raised concerns that such stocks could leak onto global markets, skewing trade.

Azevedo said US Trade Representative Michael Froman had told him talks between Washington and New Delhi on the issue had resumed.

"It seems, however that we still don't have a breakthrough in these bilateral talks," said Azevedo.

He plans to stress the severity of the situation again this week when he attends a summit of the Group of 20 (G-20) biggest economies, hosted by Australia.

Russia on Friday warned of the imminent "death" of the WTO if developed and developing nations don't come to an agreement at the upcoming G-20 summit in Australia.

Russian President Vladimir Putin will participate at the G-20 summit in Brisbane on November 15-16. 

His representative at the summit, known as the G-20 sherpa, said the gathering will address a number of top issues like trade, stressing that the interests of developing nations would have to be taken into account.

"The process of negotiations within the framework of the WTO have practically ground to a halt," said G-20 sherpa Svetlana Lukash, noting that several key decisions of the global trade body have not been implemented.

She told reporters that it was necessary to find a solution that would take into account concerns of both developed and developing nations.

"If we don't find a way out of this dead-end at the G-20 summit this could jeopardise the entire system of multilateral trade," she said.

"In essence, it would mean... well... the death of the WTO," Lukash added. "It is a very important question. We are foreseeing rather heated discussions on this topic."      

She also expressed Moscow's concern about the stalled reform of the International Monetary Fund (IMF).

"The most important thing for us is the reform of the IMF, a problem which has not yet been solved within the framework of the G-20," Lukash said.

She accused the United States of hampering the reform.

"Not only does it thwart the renewal of the IMF in line with today's realities which have seen a significant rise in the role of emerging economies, it also prevents the decisions to double the IMF capital from coming into force," Lukash indicated. 

She warned that Russia and its BRICS partners would offer alternative proposals if a solution is not found by the end of the year.

Along with Russia, BRICS include emerging market nations Brazil, India, China and South Africa.

Russia is locked in a dramatic confrontation with the West over its support for separatists in eastern Ukraine.

The Russian strongman has repeatedly spoken out against what it calls Washington's desire to dominate world politics and economy, saying developing economies should have a greater say in global affairs.

Putin has accused Western nations of violating WTO rules by slapping sanctions against Russia.

GENEVA — The World Trade Organisation (WTO) called on the Group of 20 (G-20) leading economies on Thursday to begin removing trade barriers thrown up since the 2008 global economic crisis to allow international trade to resume the strong growth it saw at the start of the century. In its latest report on the problem, the 160-nation body indicated that of the 1,244 trade-restrictive measures G-20 members had introduced over the past six years, 962 remained in force despite a pickup in the world economy. In addition, the report said, G-20 countries were still introducing new measures limiting trade — at the rate of 18 a month over the past year — pushing the total in force up by 12 per cent since November 2013. Restrictive trade measures can include special tariffs and quotas on goods, but also administrative actions — dubbed behind-the-border measures in trade jargon — like domestic regulations or subsidies to national producers. Export restrictions can also be used, but the WTO said far fewer of those had been employed by the G-20 since 2008.

PARIS — The Organisation for Economic Cooperation and Development (OECD) called Thursday on the world's leading countries to step up measures to support flagging global growth, in particular urging the European Central Bank (ECB) to overcome its reluctance and undertake quantitative easing.

It made the appeal in an early update to its global economic forecasts before Group of 20 (G-20) leaders hold a summit next week in Australia.

Noting that risks to the global economy remain high and market volatility may rise, OECD chief Angel Gurria warned of an increasing risk of stagnation in the eurozone that would further darken already gloomy global economic skies.

"Countries must employ all monetary, fiscal and structural reform policies at their disposal to address these risks and support growth," he stressed.

The OECD, which provides economic analysis and advice to its industrialised country members, lowered its forecast for global growth this year by a tenth of a percentage point to 3.3 per cent. 

For 2015, it cut the forecast by two tenths of a point to 3.7 per cent growth.

It left in place its forecast for the 18-nation eurozone to grow by 0.8 per cent this year and by 1.1 per cent in 2015.

Eurozone a 'major risk' 

The OECD's chief economist Catherine Mann warned that "overall, the euro area is grinding to a standstill and poses a major risk to world growth..." 

The organisation urged the ECB to expand its monetary stimulus programme given the very weak economy and the risk of deflation.

"This should include a commitment to sizeable asset purchases ['quantitative easing'] until inflation is back on track," it said, adding that the purchases could include government bonds, which the ECB has so far shunned due to political sensitivities in Europe about the central bank underwriting government spending.

The purchase of government bonds was the main element of the recently ended quantitative easing programme by the US Federal Reserve, and Japan last week stepped up its asset purchases in order to support growth. 

The ECB left its interest rates at record lows at its monetary policy meeting Thursday, and while ECB chief Mario Draghi did not announce new asset purchases, he said the bank was preparing to undertake additional measures if necessary.

The ECB has so far focused its new monetary stimulus, designed to spur lending and investment by buying financial assets, on packages of loans known as asset-backed securities (ABS) and corporate bonds.

The ECB has said it could inject some 1 trillion euros ($1.25 trillion) into the economy in this manner, as a means to stem a slide in inflation to .04 per cent that is flirting with a dangerous deflation leading to economic contraction and job losses.

With a debate ranging in Europe over whether to let up on austerity measures, the OECD said "all room to engage fiscal policy must be exploited".

G-20 leaders are expected to adopt an economic action plan at the summit in Brisbane on November 15 and 16 with each nation making reform pledges. 

"The potential pay-off from the structural reform agenda under consideration is tremendous," said Mann, saying the measures could add 2 per cent, or $1.6 trillion, to global economic output by 2018. 

China slows, Russia trips 

The OECD bumped up its forecast for US growth this year by a tenth of a point to 2.2 per cent, while leaving its 2015 forecast unchanged at 3.1 per cent.

Japan's growth forecasts were left unchanged at 0.9 per cent this year and 1.1 per cent in 2015.

Among emerging markets, which have been the source of most growth in the world economy in recent years, the OECD said China was set to slow as the government moved forward with efforts to achieve a more balanced and sustainable expansion.

It pared back its forecast for Chinese growth this year by a tenth of a point to 7.3 per cent, and by two tenths to 7.1 per cent in 2015.

The OECD dropped by three tenths of a point its forecast for the Indian economy this year to a 5.4 per cent expansion, but increased the 2015 outlook by five tenths to a 6.4 per cent growth.

It held Brazil's forecast for 2014 growth at 0.3 per cent, but raised the 2015 outlook by a tenth of a point to 1.5 per cent.

The OECD sees Russia managing 0.7 per cent growth this year, up from its previous forecast of 0.5 per cent, although this is still a major slowdown from the 1.7 per cent expansion the country recorded last year.

However, the OECD expects Western sanctions on Russia over its role in the Ukraine crisis to bite next year, dropping its forecast to zero growth from the previous 1.8 per cent.

"Russia is in go-slow mode, with the economy's course strewn with obstacles, including oil prices," said Mann.

LONDON/VANCOUVER — Struggling gold producers plan increasingly drastic measures such as scrapping dividends, cutting jobs, halting projects and shutting mines to survive the latest price plunge, but not all of them will make it.

Gold tumbled to a more than four-year low of $1,137.40 an ounce this week, rekindling memories of last year's 28 per cent drop to $1,196. That fall put an abrupt end to years of over-spending on expansion projects and forced producers to cut costs.

Gold prices recovered early in 2014, but the slide in the past three months to new lows will force companies to step up their efforts to cope.

According to Citi analysts, about three quarters of gold mining companies burn cash at spot prices just below $1,200 on an all-in cost basis, which includes head office, interest, permitting and exploration costs.

Buenaventura, Medusa and Iamgold  are among the highest-cost producers with all-in costs well above $1,300, a Citi note to investors indicated.

"Everyone has started now to appreciate that the music has stopped and there are only so many chairs," Mark Bristow, chief executive of gold miner Randgold, said in an interview. He expressed frustration that not much high-cost production had been shut down so far.

"It is questionable whether, without injection of liquidity, the leading companies in our industry can manage their businesses going forward. Everyone is trying to survive in hope that the gold price will go up," he added.

Unlike prices for most other commodities, the gold price does not hinge mostly on demand and supply fundamentals.

Instead, it is tied more to global economic factors such as interest rates and inflation and is more subject to investor sentiment, which make its moves more difficult to predict.

And gold equities are historically even more volatile than the metal. After outperforming the bullion price for most of this year, gold mining shares have given up all gains to sink much deeper than gold itself.

"It is difficult days for the sector... if lower prices persist for a lot longer, then a lot of the operations will have to be suspended," said Angelos Damaskos, a portfolio manager at Junior Gold fund. 

Cut to the bone

To make ends meet at a lower price, producers have already cut exploration and corporate costs in the past year, and many have relied on high-grading, which means focussing on areas with higher quality metal to reduce unit costs.

A fall in oil prices and a weakening of currencies such as the South African rand against the dollar also have offered some breathing space, with companies' costs priced in rand and sales in dollars.

But reforms now must become more radical.

"I don't really see on the operating side, the unit cost side, much more room for meaningful impact," said Phil Russo, mining equity analyst at Raymond James. "The ability to meaningfully change all-in costs will have to come from the capital side. Whether they might under-capitalise operations or defer capital is really the theme of the day. Dividends will surely be under review," he added.

Kinross Gold has scrapped its dividend in the past year, and this week it said weak prices may derail the planned expansion of its Tasiast mine in Mauritania.

AngloGold Ashanti is looking to sell assets to shore up its finances after shareholders forced it to abort a plan to spin off part of its mines and raise capital in September.

Barrick Gold is also looking to divest assets to help repay its high level of debt.

South Africa's Harmony Gold suggested on Wednesday it might have to cut jobs as it contends with depressed prices.

"We are seeing this clear separation between the gold companies. Those that use a conservative price assumption like Randgold, that are low-cost and have little debt or very profitable operations, can service that debt even at these prices," said Neil Gregson, portfolio manager at JP Morgan Asset Management.

"Others that are either high cost or that took on a lot of debt in the bull market like Barrick will now have to sell assets," he  added.

The cure or the poison?

Things could get even uglier.

If gold prices persist around $1,100, companies could see their credit lines withdrawn or reduced. Those with heavy debt may be forced to hedge revenue or raise distressed equity, and companies such as AuRico, Detour, Iamgold, Lake Shore and Pan American may be forced to scrap dividends, according to RBC.

At $1,000, many could be forced to accept discounted takeover offers or other dilutive measures for equity holders, according to the bank.

"There may be some consolidation in the space — some guys getting together and trying to pool assets to turn around and run a more efficient business model," said Joseph Fazzini, an analyst at Dundee Securities in Toronto. "I think that is the best way that these guys can make sense of the industry at this point in time."

But the medicine for a quick recovery could kill the patient in the long run. Emergency cuts in both exploration and operating capital could result in a steep output decline later on and threaten the existence of a mining firm.

"The bigger problem is that if they cannot afford to reinvest and explore, there will be a sharp drop in production a year or two from now," said Meryl Pick, an equity analyst at South African fund Old Mutual.

"If current prices persist we may see more shafts going onto care and maintenance," he added.

BRUSSELS — The European Union’s (EU) auditor called on the bloc’s new executive on Wednesday to seek better value for taxpayers’ money as its report on the 2013 accounts estimated that up to 9 billion euros may have been misspent.

However, at a time when national governments under pressure from Eurosceptic parties denouncing waste in Brussels, the European Court of Auditors criticised member states’ failure to curb fraudulent and other unjustified claims for EU cash and praised the commission’s efforts to claw back misdirected funds.

Signing off on its audit of the 148.5 billion euros ($186 billion) of EU spending last year, the court put its estimated “error rate” — a statistical measure of what was spent in breach of EU rules — at between 3.5 per cent and 5.9 per cent, giving a headline rate in the middle of the range of 4.7 per cent, similar to 2012.

That reflects an improvement on the 6.9 per cent recorded in 2007, but exceeds levels seen in 2009-11 below 4 per cent.

In big net contributor states, like Germany and especially Britain, accounts of fraud, waste and inefficiency may fuel new grumbling about the EU.

British Prime Minister David Cameron, who plans a referendum on membership, is this week fighting a revision in states’ contributions to the EU budget that has seen London presented with a bill for an extra 2 billion euros.

In the 1,200 or so sample cases tracked by auditors, they found irregularities of some kind in over 40 per cent — including over half of those in the biggest parts of the budget, devoted to the likes of regional infrastructure and farm subsidies.

“There has to be more careful management and control of EU funds,” Court of Auditors President Vitor Caldeira said. “If EU citizens do not have a clear perception of the added value of EU spending, we will not have their trust.”

Regarding the EU executive led by Jean-Claude Juncker which took office this week for the next five years, Caldeira added: “This new commission is a golden opportunity to move from a spending culture to a performance culture.”

Incentives

The court noted that in such areas of spending, which account for much of a budget that makes up about 2 per cent of public expenditures across the 28-member bloc, national officials manage much of the payment systems. It found misspending higher in such areas than in budgets managed solely by the commission.

Among other examples, it cited the case of a Sardinian artichoke grower being found using harmful pesticides while claiming EU compensation for eschewing their use, a German airport contract awarded with EU support without tender rules having been followed, and Scottish farmers claiming EU subsidies while not meeting rules for the notification of movement of livestock.

Officials say national governments have little incentive to halt payments that would reduce the EU funds flowing to their country. Caldeira called for an effort to introduce incentives for curbing misspending and for directing money to those ends that do most to fulfil EU goals, such as creating jobs.

The auditors did not single out member states for criticism, saying they found misspending across the eurozone, adding that in a large proportion of cases national officials should have seen mistakes by simply looking at information they already held.

The court also welcomed efforts by the commission to correct errors and recover funds, estimating that without this action, misspending would have been 6.2 per cent of total spending rather than 4.7 per cent.  

DUBAI — The United Arab Emirates (UAE) economy, the Arab world’s second largest, is recovering at a fast pace from the global financial crisis but remains threatened by low oil prices, the International Monetary Fund (IMF) said Wednesday.

“Economic recovery has continued at a solid pace, supported by construction, logistics and hospitality,” a team from the IMF said after visiting the Gulf country.

Growth was underpinned by ongoing public projects in oil-rich Abu Dhabi and continued strength in Dubai’s services sectors, it indicated in a statement. 

UAE, the fourth largest supplier in the Organisation of Petroleum Exporting Countries (OPEC), was hit hard by the global financial crisis, strongly dampening economic growth which averaged just 1.5 per cent between 2007 and 2011.

The IMF projected the UAE economy would grow 4.25 per cent this year, down from 5.2 per cent in 2013 with non-oil growth forecast at 5.5 per cent.

The decline in oil prices, if sustained, could have a significant impact on revenues, the IMF warned, noting, however, that the UAE had sufficient fiscal buffers to minimise the fallout. 

The IMF welcomed stable real estate prices in Dubai as sales in summer moderated.

“The slower momentum in the market is welcome news following a period in which prices had increased at a fast pace,” it said.

Dubai and its government-related entities (GREs) have continued to improve their debt profiles after the major debt restructurings from the 2008-2009 crisis, the IMF said, adding that several GREs had begun to make early repayments.

While debt levels for some GREs remained significant, stronger financial positions and lengthened maturity profiles had further reduced debt-related risks. 

Dubai said this week it has repaid $1.93 billion raised from Islamic bonds known as “sukuk” and renewed its commitment to pay back billions of dollars worth of debt on time.

In August, the emirate’s real estate giant Nakheel repaid all of its $2.15 billion bank debt almost four years ahead of schedule.

Dubai in March managed to delay for another five years the repayment of $20 billion worth of debt it received from Abu Dhabi that had been due to mature this year.