Business

WASHINGTON — Google has agreed to sell Motorola to Chinese technology giant Lenovo for $2.91 billion, after a lackluster two-year effort to turn around the smartphone maker it bought for $12.5 billion.

The deal ends Google’s run as a handset maker after its biggest-ever takeover, which was announced in 2011 and finalised in 2012.

It also provides Lenovo footholds in smartphone and tablet markets where it is eager to gain traction while acting as a peace offering to Samsung and other partners that make devices powered by Google-backed Android software.

“It is win-win,” said analyst Tim Bajarin of Creative Strategies in Silicon Valley. “Google keeps the patents and the research group, and they keep partners off their back, while Lenovo gets what they need to get into the US smartphone market.”

The deal comes just a week after Lenovo said it will buy IBM’s low-end server business for $2.3 billion, giving it a platform to compete in that sector with US giants Dell and Hewlett-Packard.

However, Lenovo’s Hong Kong-listed shares dived 8.21 per cent to HK$10.06 on Thursday as investors were spooked about Motorola’s profitability.

Even under Google, Motorola failed to gain traction in a rapidly evolving smartphone market now dominated by South Korea’s Samsung and US-based Apple.

Google and Lenovo claimed the deal was good for everyone involved.

“Lenovo has the expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem,” Google Chief Executive Larry Page said in a statement.

Lenovo Chairman and Chief Executive Yang Yuanqing said the acquisition “will immediately make Lenovo a strong global competitor in smartphones. We will immediately have the opportunity to become a strong global player in the fast-growing mobile space”.

The Chinese firm was the fifth-largest smartphone maker in the fourth quarter, with a 4.5 per cent market share, barely behind fellow Chinese maker Huawei and South Korea’s LG, according to a report by research firm IDC.

Ramon Llamas, at IDC, said with Motorola added in, Lenovo will be number three globally and gain other benefits.

“Lenovo gets an all-important foothold in North America and in Latin America, and to a lesser extent western Europe,” Llamas indicated. “Motorola has distribution, it has brand recognition, Lenovo does not have that.”

Lenovo became best known in the United States after buying IBM’s PC business in 2005, and used that to become the world’s biggest PC maker in 2013.

However, JP Morgan analysts said in a note to clients that Motorola is deeply unprofitable with losses approaching $1 billion and questioning whether Lenovo can get the business in the black.

They asked: “Are they buying a bit more than they can chew?”

While Google would be taking a loss on the sale, it did spin off the Motorola Home division for $2.3 billion in 2012 and sold off some of its manufacturing facilities.

Some analysts said one of Google’s main interests in Motorola would be the portfolio of 17,000 patents, the majority of which it will keep.

“Google got what they wanted and needed from Moto — they got patents, engineering talent and mobile market device insight,” said technology analyst Jack Gold. “They don’t need to be in the device business... This is a win for Google and a win for Lenovo in my opinion.”

But according to Llamas, the deal still leaves a hole of about $7 billion for Google and asked AFP: “Are the patents worth $7 billion? I don’t know but that is a big question.”

Llamas said Motorola failed to make headway some had expected with Google’s deep pockets. While the unit produced a highly regarded Moto X handset and a budget-priced Moto G, it has remained far behind the leaders.

“Nobody expected Motorola to go back to its heyday, but I think with Google’s backing, some of us expected it to make a run at the market leaders and that didn’t happen,” he added.

In a blog post, Page said Google bought Motorola “to help supercharge the Android ecosystem” and that goal has been accomplished.

“But the smartphone market is super competitive, and to thrive, it helps to be all-in when it comes to making mobile devices. It’s why we believe that Motorola will be better served by Lenovo — which has a rapidly growing smartphone business and is the largest [and fastest-growing] PC manufacturer in the world,” Page said.

“This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere,” he added.

UNITED NATIONS — The UN Development Programme (UNDP) warned in a report on Wednesday that income disparities in countries around the world have been worsening, posing new risks for global economic and political stability.

The UNDP warning echoes remarks from US President Barack Obama in his annual State of the Union address on Tuesday, in which he said there was a widening gap between rich and poor in the world’s biggest economy and that while the stock market has soared, average US wages have barely budged.

According to the UNDP report, income inequality increased by 11 per cent in developing countries over the two decades between 1990 and 2010.

The majority of households in developing countries — more than 75 per cent of those nations’ populations — are living today in societies where income is more unequally distributed than it was in the 1990s, the report pointed out.

The UNDP says this is a global trend that, if left unchecked, could have dire consequences since it “can undermine the very foundations of development and social and domestic peace.”

The widening income gap comes as some major developing countries — such as China and India — have seen strong economic growth and an overall increase in national wealth. But that wealth has not been evenly distributed, which has contributed to greater inequality in those societies.

“The sharpest increases in income inequality have occurred in those developing countries that were especially successful in pursuing vigorous growth and managed, as a result, to graduate into higher income brackets,” the UNDP report said.

“Economic progress in these countries has not alleviated disparities, but rather exacerbated them,” it added.

In an interview with Reuters, UNDP chief Helen Clark made clear that this negative trend is reversible and that one of the key components is creating quality employment opportunities.

“The key thing is the focus on jobs — jobs, jobs, jobs,” Clark stressed, emphasising that it was important for governments to pay attention to ways of improving the skills of its labour force.

She also touched on the subject of the widening income disparities in countries like China and India, which have seen significant levels of economic growth in recent decades.

“It’s the nature of the growth,” she explained. “If it’s uneven growth... it does create tensions within society because people can see that others are doing much better than them.”

“The China example shows that you get fast growth and poverty reduction, but you also get the growing inequalities,” Clark said. “And this is of concern to China’s leadership.”

According to the report, there was evidence that increases in inequality over the last two decades were mainly due to trade and financial globalisation processes that weakened the bargaining position of labour.

Clark said one of the problems with globalisation is that it “has proceeded in a very deregulated world”.

She advocates more regulation of international trade and financial flows but without eliminating risk and the ability of companies to generate profits.

“It’s a balance,” she concluded. “You have to leave room for risk.”

ANKARA — A massive rate hike may have stalled the Turkish lira’s fall and salvaged the central bank’s credibility, but it stunts growth at a politically fraught time for Prime Minister Recep Tayyip Erdogan and may not shield Turkey from a fragile global backdrop for long.

The bank raised all its key interest rates in dramatic fashion at an emergency policy meeting late on Tuesday, ignoring opposition from Erdogan as it battled to defend the lira following its fall to a series of record lows.

The boldness of the actions stunned investors, propelling the lira to its biggest one-day gain in more than five years and stirring hopes it would short-circuit a vicious cycle of selling in emerging markets.

But gains of almost 4 per cent on the day quickly faded in later trade on Wednesday as market focus switched to a later monetary policy decision by the US Federal Reserve (Fed).

Erdogan, keen to maintain growth ahead of an election cycle starting in two months, has been a vociferous opponent of higher borrowing costs, railing against what he describes as an “interest rate lobby” of speculators seeking to stifle growth and undermine the economy.

He has yet to react to the midnight rate hike.

But a senior government official, speaking on condition of anonymity, said the bank had made a tough but necessary call.

“The move will certainly have some consequences for the economy, namely a reduction in consumption, higher credit costs and secondly a lower growth rate,” the official indicated, noting the government’s 4 per cent growth target for 2014 looked in jeopardy.

Turkey’s economy grew an estimated 3.6 per cent in 2013, but higher inflation and the withdrawal of cheap money by the Fed have dented hopes of much of an improvement this year.

“Although there will be no immediate effect on politics, approaching elections with low growth will of course have a cost,” the official said.

Fitch, which has a BBB- investment grade rating on Turkey, said the rate hike had reinforced the credibility of the central bank but would dent domestic demand and could lower growth.

The central bank had been struggling to contain the lira’s precipitous slide, with investor confidence damaged by a corruption scandal shaking the government and the global impact of the reduction in US monetary stimulus.

Reluctant until now to make an outright hike, the bank instead tried to defend the currency by burning through foreign exchange reserves and trying to squeeze up borrowing costs on the margins, before biting the bullet and tightening.

“Whatever happened yesterday, Turkey was facing a growth slowdown because it was living beyond its means,” said Neil Shearing, chief emerging markets economist at Capital Economics. “The tightening last night is not all negative. A loss of faith would have been more damaging.”

Self preservation

Finance Minister Mehmet Simsek played down the impact on growth, saying the economy would have suffered greater damage if the credibility of the central bank had been undermined.

“If we don’t preserve credibility, growth would lose ground on a much bigger scale. It would weaken much more rapidly,” Simsek told Turkish broadcaster NTV.

The lira strengthened to 2.18 per dollar in the immediate aftermath of the rate move, a sharp rise from the record low of 2.39 it hit on Monday. But it lost much of its gains by 1630 GMT, trading at 2.239.

Shares in Turkish banks fell 4.9 per cent, causing the wider stock market to underperform emerging market peers, as investors feared higher interest rates would squeeze demand from borrowers and squeeze their profits.

Turkey’s problems had been exacerbated by a sharp global emerging market selloff in recent days. Yet much of the pressure on Ankara is of its own making.

Erdogan has overseen strong economic growth since coming to power in 2002, transforming Turkey’s reputation after a series of unstable coalition governments in the 1990s ran into repeated balance of payments problems and economic crises.

But his increasingly authoritarian style — from a heavy-handed police crackdown on street protests last summer to his reaction to the corruption investigation in recent weeks — has started to unnerve investors.

The graft scandal, which triggered the resignation of three government ministers and the detention of businessmen close to Erdogan, has grown into one of the biggest challenges of his 11 years at the helm, just as he prepares for local elections in March and a presidential race five months later.

He reacted by purging the police force of thousands of officers and seeking tighter control over the courts. The response has been criticised by the European Union and raised investor concern over the rule of law and independence of state institutions.

The central bank’s rate hike after Erdogan’s opposition helps the case that institutions still function independently.

“Some might argue that all this was stage managed,” said Timothy Ash, head of emerging markets research at Standard Bank. “Arguably, when there is much talk of the independence of various state institutions being under threat... the government can perhaps now hail the central bank as being really independent.” 

BEIJING — China’s local governments have published separate audit reports detailing their combined public debt of $3 trillion for the first time ever, to increase transparency and quell investor concerns.

The audits showed China’s wealthiest eastern provinces are the most indebted, though repayment burdens are more onerous in poorer areas such as the southwestern province of Guizhou, where the ratio of debt to gross domestic product (GDP) is the highest, at 79 per cent.

Most governments were shown repaying the vast majority of their debt on time, though a handful, such as Inner Mongolia, have fallen behind, with the portion of loans due but unpaid running as high as 28 per cent.

The burst of transparency follows criticisms from some experts this month that China was not releasing enough information about its local debt troubles, widely regarded by investors as the biggest threat to its $9.4-trillion economy.

“The issues are the most pertinent in the poorer parts of the country,” said Louis Kuijs, an economist at RBS in Hong Kong. “Those parts of the country have difficulty repaying their debt.”

Spurred by the need to sustain brisk growth in the world’s second-biggest economy, Chinese local governments have borrowed heavily over the years to fund non-lucrative public works such as sewage systems and railway lines.

Though some analysts welcome the public works and say China is right to build its infrastructure now before costs escalate as its economy grows, others worry that rapid investment has generated waste and sowed the seeds for bad loans.

Audit statements from 30 of China’s 31 local regions, provinces and municipalities showed the governments of Jiangsu, Guangdong and Sichuan are the three most indebted, with Jiangsu borrowing the most, at 1.5 trillion yuan. Tibet was the only region that did not release an audit report.

In terms of total debt as a portion of local GDP, however, Guizhou, Chongqing and Yunnan led the league.

The Beijing local government was at the top of the table in terms of money borrowed as a percentage of annual fiscal income at 100 per cent, followed by Chongqing’s 93 per cent and Guizhou’s 92 per cent.

Worrisome but
not a crisis

China released its most comprehensive audit of local government finances last month in response to mounting investor scepticism that its local debt problems are worse than official numbers suggest.

The report showed debt surging 67 per cent in two years, far more than officials had publicly admitted.

But analysts said it did not suggest China was on the verge of a crisis as total government debt is worth around 58 per cent of the economy, far from the levels of Greece and Japan, where public finances are strained.

Fears that China may suffer higher bad debt levels imperilling its financial system were compounded in the past two years by its cooling economy, where growth narrowly missed a 14-year-low forecast in 2013.

The audit reports showed a handful of governments were struggling to repay some loans. Inner Mongolia seemed to be under the most strain, with overdue loans that have not been paid making up 28 per cent of total debt.

The governments in Gansu, Shandong, Shanxi and Jiangxi also reported that unpaid loans accounted for between 8 and 10 per cent of total debt.

Standard & Poor’s expects 30 per cent of bank loans to local Chinese governments to sour if borrowers are not aided by other authorities, the rating agency said in a report last week.

“Nonetheless, we don’t see an imminent risk of a systemic crisis from local government debt,” it added, noting that China’s banks are buffered by strong profit growth.

Separately, China’s foreign exchange reserves, already the world’s largest, reached $3.82 trillion yuan at the end of 2013, the central bank pointed out, a new record.

The end-of-year figure was up from the $3.66 trillion as of the end of September, according to data published by the People’s Bank of China (PBoC).

It came after the country’s trade surplus reached $259.75 billion last year, up 12.8 per cent on 2012 and its highest since the global financial crisis.

Growth in China’s vast reserves has been fuelled by years of huge trade surpluses as the country has grown to become the world’s second-largest economy.

The surpluses have caused friction with China’s rivals in the West, headed by Washington, which says Beijing keeps its yuan currency artificially low in order to make its goods cheaper overseas and give exporters an unfair advantage.

But the rate of growth of China’s reserves has slowed in recent years as the once-booming economy is hit by troubles in the key export markets of Europe and the United States, while the yuan has been steadily strengthening against the dollar.

Analysts attributed some of the 2013 surge to speculative capital inflows, sometimes disguised as exports or foreign direct investment.

“We reckon hot money inflow pressures could be still strong at the moment,” Bank of America Merrill Lynch economists said in a research note, citing China’s rising interest rates, the rise of the yuan and confidence in the currency’s strength despite the tapering of the US stimulus.

Chinese leaders have repeatedly said they want to transform the economy to one in which domestic demand is the key growth driver, rather than public investment and exports.

But the daunting task looks set to be a long and arduous process.

The central bank said Chinese lenders extended a total of 8.89 trillion yuan ($1.47 trillion) in new loans last year, 687.9 billion yuan more than in 2012 and surpassing the reported official target of 8.5 trillion yuan set at the start of 2013.

In December alone, banks granted 482.5 billion yuan in new loans, down from 624.6 billion yuan a month ago, according to a PBoC statement.

AMMAN — Jordan’s public debt exceeded JD19 billion at the end of November 2013, official data showed on Tuesday.

According to the Ministry of Finance figures, the debt shot up by 15 per cent or JD2,484 million reaching JD19.065 billion.

The monthly bulletin carried on the ministry’s website showed the figure rising from JD16.580 billion at the end of 2012.

Subsequently, the public debt represented 79.5 per cent of the estimated gross domestic product (GDP) for 2013 compared with 75.5 per cent of the GDP of 2012.

The external debt totalled JD7,202.8 million or 30 per cent of the estimated GDP for 2013 with a debt service of around JD112.2 million, while at the end of 2012, the external debt was JD4,932.4 million or 22.5 per cent.

The domestic public debt reached around JD11,862 million at the end of November 2013, representing 49.4 per cent of the estimated GDP for 2013 compared with JD11,648 million at the end of 2012 or 53 per cent of the 2012 GDP.

The domestic debt covers both the central government and its independent entities.

The ministry’s bulletin also pointed to the $1.25 billion US-guaranteed Eurobonds issued by the Jordanian government, carrying an interest rate of 2.503 per cent and set to mature in 2020.

Other data showed that the state budget deficit, excluding external foreign grants, widened to JD1,680.2 million compared with JD1,523.8 million.

If external grants are taken into account, the deficit narrows down to JD1,100.8 million compared with JD1,427.2 million.

Total local revenues and external grants at the end of November 2013 increased by JD595.9 million to JD5,111.6 million compared with JD4,515.8 million at the end of 2012.

The bulletin attributed the rise in local revenues to an increase by 160.9 million or 5.1 per cent in taxes, coupled with a JD47.7 million drop in non-tax income.

External grants amounted to JD579.4 million during the first 11 months of last year compared with JD96.6 million in the previous year.

Total expenditures recorded at the end of November 2013 rose by JD269.5 million to JD6,212.4 million compared with JD5,942.9 million last year.

The increase resulted from rise by JD70.1 million in current spending, accompanied by an increase by JD199.4 million in capital expenditures.

AMMAN — Twenty-seven Jordanian companies will take part in the 31st Khartoum International Fair, slated to be held on January 30. The companies’ participation is organised by the Jordan Enterprises Development Corporation (JEDCO), according to a statement received by The Jordan Times. JEDCO Chief Executive Officer Yarub Qudah said the companies operate in the sectors of industry, medical appliances, health services, veterinary, engineering, food manufacturing and construction among others. He added that eight firms out of those taking part in the fair have benefited from JEDCO’s financial support for the first time. The trade volume between Jordan and Sudan reached JD78.2 per cent last year, of which JD48.4 per cent are in exports.

DUBAI — Iraq plans to establish a state-funded investment bank to help finance big infrastructure projects and steer money towards private sector companies which need it, a senior government official said on Monday.

An underdeveloped, inefficient banking system has hindered efforts to mobilise funds for investment in Iraq. Bankers at a financial conference in Dubai on Monday described how some Iraqi corporate executives carried around tens of thousands of dollars in cash to settle transactions that are too inconvenient to do through the banking system.

“We need this [state-funded investment bank] to push forward the economy,” Sami Al Araji, chairman of the National Investment Commission, told Reuters on the sidelines of the conference. “Our existing commercial banks do not have the skills or experience.”

The new institution, Investment and Development Bank of Iraq, would receive 1 per cent of annual state budget allocations over seven years under a proposal that will be sent to parliament for approval, he said.

That arrangement, if it goes ahead, could eventually provide the new bank with over $10 billion to invest; this year’s state budget is estimated at 174.6 trillion dinars ($150 billion).

Despite the militant violence plaguing Iraq, the economy has managed to keep expanding on the back of oil output; the International Monetary Fund forecasts annual gross domestic product growth of more than 6 per cent from 2014 to 2018.

Iraq already has 23 private conventional banks and nine private Islamic institutions, as well as seven state banks and 16 foreign banks operating in the country, according to the central bank website.

Araji said a dedicated investment bank could participate in financing some of the tens of billions of dollars of infrastructure projects which the government plans over the next several years.

It could also help arrange funding for small and medium-sized enterprises, which authorities want to develop to create jobs and diversify the economy beyond oil.

The proposal for the investment bank is part of a series of planned amendments to investment laws which will be submitted to parliament, Araji said. A parliamentary election is scheduled for April 30, so the proposal would probably be considered by Iraq’s next parliament.

Separately, officials in Baghdad want to promote tourism and believe visitor numbers can be increased threefold.

Though almost entirely dependent on oil exports for government income, the government wants to ease a reliance on Iranian pilgrims — most of the population of its enormous eastern neighbour is Shiite Muslim pilgrims annually who visit its multiple shrines and holy sites, from Samarra in the north to Basra in the south.

While tourists must struggle through Iraq’s decrepit infrastructure and often-frustrating bureaucracy, including a difficult-to-navigate visa system, a handful of tour operators is bringing groups to the country.

“Every area that we’ve been to has been totally, totally, different,” said Lynda Coney, one traveller on a trip organised by Britain-based Hinterland Travel.

“The Arab people, history, the archaeology... have absolutely grabbed me with interest,” the Briton told AFP while trudging through Baghdad’s main railway station.

Since 2009, Hinterland has been taking visitors on tours of Iraq lasting nine and 16 days, with prices starting at around $3,000 (2,265 euros) for the shorter trip, plus flights and visas.

The group travels in an unmarked air-conditioned van with Geoff Hann, Hinterland’s owner who has himself been making trips to Iraq since the 1970s, an Iraqi policeman for security, and a small team of drivers and guides.

They mostly try not to be noticed, do not announce where they are staying or headed, and generally have low-profile security.

By contrast, officials, diplomats and foreign company staff typically travel in heavily armed convoys of vehicles with tinted windows that zoom through Baghdad’s streets.

They travel from Iraq’s north, where they take in the ancient cities of Nimrud and Hatra, down through Baghdad to Babylon and on to the port city of Basra, before returning to the capital.

While in Iraq, Hinterland customers stay at hotels, though the quality of the establishments varies enormously. None of the tourists who spoke to AFP expressed any complaints about accommodation.

Hann’s tour operator is one of the few that has approval from the government to organise trips. Individual tourists often struggle to obtain visas to the Arab-dominated parts of the country.

Much of Iraq’s security-focused infrastructure is ill-prepared for Western tourists.

While moving through Baghdad, for example, Hann’s group was stopped at a checkpoint outside a cemetery, with federal policemen demanding authorisation papers, typically only required of journalists, from the capital’s security command centre for the tourists’ cameras.

For “most of our tours under the Saddam Hussein dictatorship, we were restricted with minders”, Hann said.

More recently, “it’s been difficult here because of the security situation. We’ve had to have a different sort of minder”, he added, referring to the policeman escorting the group.

“That’s still there, it hasn’t gone away, because the security position for everybody here is difficult,” Hann noted.

Officials admit that while they hope to promote tourism, they also lack the funds for advertising campaigns, since much is budgeted for physical reconstruction after decades of war, and resources are also lost to widespread corruption and incompetence.

Visas, meanwhile, are the domain of security officials, who are loathe to reform a complex system that prioritises entry permits for pilgrims over other tourists.

But that is all almost academic when compared to Iraq’s main problem — its reputation for poor security.

The country has been through decades of conflict, from the 1980-88 war with Iran to the bombings and shootings that continue to plague daily life.

“When Iraq is mentioned in Europe, the first things that people think of are terrorism and violence,” Baha Al Mayahi, a senior adviser to the tourism ministry, said.

“We need to put in place major efforts in order to change this, and to tell people that Iraq is not terrorism and killing, that Iraq is history and civilisation,” he added.

Mayahi said Iraq averages around two million tourists annually, but that with some basic improvements that figure could increase to six million.

By contrast, Hong Kong, with a population less than a quarter the size of Iraq’s, brought in more than 48 million tourists in 2012, according to its official data.

According to Zein Ali, a worker at a private house cleaning company, an influx of foreign tourists would help change Iraq’s image.

“I think tourists should come more often. There is violence here of course, but you can be killed anywhere in the world,” Ali remarked.

“Baghdad is not how we see it on TV. Tourists should come here, see this city, and I am sure they will come back again,” the 21-year-old said.

But the violence if anything appears to be worsening, with a surge in attacks and car bombings in recent months hitting much of the country. Although Hinterland is planning more trips, Mayahi admitted that security problems could scupper plans to promote tourism.

“If security worsens, tourism will decrease,” he said.

Despite the difficulties, few on the Hinterland tour expressed reservations about their trip.

“For a long time I’ve really wanted to come here,” said Greg Lessenger, a 32-year-old from Washington state in the United States. “There was no possible way for me to go travelling [to Iraq] on my own. But then I found out about this, and I thought, maybe I have got a chance, and I took advantage of it.

“If you’re a real traveller, you have got to see some of these places,” he added.

WASHINGTON — Big banks still pose a threat to the world financial system because there is a general assumption that governments will come to their rescue in case of trouble, according to an International Monetary Fund (IMF) executive.

“It is astonishing that officials in countries are still largely ill-equipped to deal with a Lehman Brothers-style bankruptcy, where assets and liabilities are scattered across multiple jurisdictions and entities,” Jose Vinals, tasked with financial oversight at the IMF, said in a blog post.

The 2008 bankruptcy of investment bank Lehman Brothers marked the height of the global credit crisis, and many of the reforms that have since been implemented were aimed at preventing a repeat of such a collapse.

During the financial crisis, a number of the world’s big banks were bailed out by governments with billions of dollars in taxpayer money.

“The not-so-good news is that, despite these efforts, implicit subsidies to these systemically important financial institutions remain too large,” Vinals said, noting that a related IMF study was due in April.

The problem of so-called too-big-to-fail banks is a priority for regulators in the Group of 20 (G-20), which is due to convene in November and expected to discuss a global financial reform agenda, Vinals said.

The G-20 includes Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, the Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the UK, the United States and the European Union.

The Basel III bank capital rules require banks to borrow less to fund their business, so they are better able to deal with problems. Governments have also told banks to draw up plans that would enable them to systematically unwind their businesses if the necessity arose.

The United States and Europe are putting into place so-called resolution authorities that would protect the wider financial system without the use of taxpayer funds in the event a bank needed to be bailed out.

Vinals said the G-20 had “yet to do much of the heavy lifting” to sort out what would happen if a bank with major operations abroad were to go under.

US and European regulators fined banks record amounts last year, imposing penalties and settlements of more than $43 billion as authorities work more closely across borders to clean up the financial sector.

Banks in the United States and Europe are paying for misconduct that includes mis-selling US mortgage bonds, rigging interest rates, and risky transactions such as JPMorgan’s “London Whale” trades.

Regulators across the globe are making banks dig far deeper than in the past for their misdeeds, led by US authorities who have long been more aggressive and imposed penalties more than 10 times those meted out in Europe.

Fines and settlements paid to US federal and state authorities have cost banks more than $40 billion last year, according to Reuters estimates, led by JPMorgan’s record $13 billion payout to a number of regulators for mis-selling mortgage bonds.

RIYADH — Saudi Arabia has doubled the number of its citizens working for private companies in the 30 months since it introduced wide-ranging reforms to tackle long-term unemployment, Labour Minister Adel Al Fakeih told a recent conference in Riyadh.

Policy makers fear a failure to create a productive local workforce will leave the kingdom vulnerable to any future fall in oil revenue.

Despite the lack of any significant protests during the 2011 Arab uprisings, they were uncomfortably aware that unemployment contributed to unrest in neighbouring countries and worry about the long-term risk of political instability.

“At this point in time, the employment in the private sector is about 1.5 million. This is 101 per cent more than it was 30 months ago,” the minister declared.

Although the official unemployment rate is around 12 per cent, economists estimate only 30-40 per cent of working-age Saudis hold jobs or actively seek work.

Most Saudis in jobs are employed by the government, but it cannot support such a large wage bill in the long term, and the International Monetary Fund has warned that the private sector must meet future job demand.

Most private-sector jobs are held by the 10 million expatriates in the kingdom.

In 2011, after decades of ineffective localisation policies, Riyadh imposed stricter penalties for failing to meet quotas for hiring Saudi citizens.

In 2012, it also introduced a levy of 2,400 riyals ($640) a year on every foreigner a company employed over the number of its Saudi workers.

Fakeih later told reporters that the increase of 750,000 jobs over the past 30 months only included those who had remained in the workforce, but that around 500,000 others had taken jobs and then left.

He noted that since the reforms were introduced, the average starting salary for Saudis had risen and that graduates of technical training colleges now found a job on average five months after qualifying, as opposed to 13 months in 2011.

Expatriate crackdown

Some companies, particularly in labour-intensive industries such as construction, have complained that the reforms have caused bottlenecks in important projects and cut profits by increasing the wage bill. Expatriates are typically paid less than Saudis.

Others have said they struggle to find qualified Saudis to replace expatriates despite high government spending on university scholarship programmes and technical training colleges. They have also complained that employment rules make it too hard to fire Saudis.

Young Saudi job-seekers often say they are reluctant to look for work in private companies, because government agencies offer better pay, benefits and job security.

Riyadh announced this month that it was introducing unemployment insurance for Saudis who lost their jobs for “reasons beyond their control” and who had been in work for more than a year. The policy was designed to encourage more young Saudis to look for jobs in the private sector.

Fakeih said the introduction of unemployment insurance was also designed to “make it easier” for the government to relax employment rules and give companies more flexibility to fire workers who did not perform well.

The minister defended a crackdown last year on foreigners breaking visa regulations by working for companies that did not sponsor their work permit as a necessary step to close loopholes that allowed employers to dodge hiring quotas.

Previous attempts to localise the Saudi labour market have foundered because companies could hire lower-cost foreigners who were registered to other sponsors.

But more than one million expatriates left the kingdom between March and November during an amnesty for foreign workers to leave without paying fines for visa violations or to switch their sponsorship to a new employer.

AMMAN — Airport International Group (AIG) — the Jordanian company responsible for the rehabilitation, expansion and operation of Queen Alia International Airport (QAIA) — announced Saturday in a press statement that QAIA’s 2013 annual traffic statistics showed robust growth across passenger and aircraft numbers.

“QAIA welcomed 478,245 passengers during December, an impressive 8.4 per cent increase compared with the same month in 2012. This boosted annual passenger traffic (PAX) by 4 per cent to settle at 6,502,323 PAX, marking over a quarter of a million passenger increase compared with last year’s results,” the press release said.

“Aircraft movements (ACM) in December 2013 also rose by 5.6 per cent over December 2012, recording 5,455 flights for the month and setting annual ACM up by 1.1 per cent to reach 67,959 ACM in total.”

QAIA kicked off its second expansion phase on January 20. Valued at over $100 million and scheduled to be completed in 2016, the expansion will help raise QAIA’s annual passenger capacity to up to 12 million, subsequently enabling Jordan to better serve as a regional transit hub for leisure and business travel, and supporting the Kingdom’s national tourism strategy goals.