Intercultural Business News

Today a team of local workmen in Panama will start to dig a hole partfunded by Japan, aided by Latin American cash and big enough to hold the world’s biggest Danish-owned, South Korean-built megaships. The ultimate winner, though, will be China.

The work, which coincides with the start of Panama’s dry season, is the latest phase in a $5.25 billion (£3.3 billion) project to widen the country’s famous canal — an expansion plan that could comprehensively reshape the flow of world trade and could even scupper Warren Buffett’s $34 billion “all-in” bet on American railways.

Work on deepening the Panama Canal begins amid more evidence of China’s roaring recovery from the global slump. Over the weekend, the closely watched Centre for Forecasting Science at the Chinese Academy of Sciences predicted that the country would return to double-digit rates of GDP growth this year. More critically for world trade, imports and exports are expected to grow by 19 per cent and 17 per cent, respectively.

Will Widening The Panama Canal Lower Import/Export Costs Worldwide?

These are precisely the sort of figures that have given new momentum to the Panama project — mooted a decade ago when Panama took possession of the canal from the United States. The aim is to increase vastly the canal’s capacity, in terms of both size and number of vessels. By doing so, shipping industry veterans say, it will re-establish the global importance of the isthmus.
The idea for an expansion began before China’s economic growth had truly begun to boom. The plans were drawn up in expectation of steady growth in Japanese exports to the United States and a rising tide of raw materials heading across the Pacific from Brazil.

Read More>Times Online

Volkswagen is poised to buy a large stake in Suzuki, the Japanese carmaker whose mini-cars dominate several emerging economies and comprise more than half the vehicles on the road in India.

People familiar with the talks, which may lead to the German carmaker sinking more than 300 billion yen (£2 billion) into Suzuki, expect an announcement on the capital tie-up before the end of the month.

Volkswagen may push the alliance further if it seeks to buy a controlling stake in the Japanese company next year.

Will The Partnership Lead To A TAkeover By VW?

The move would be Volkswagen’s first big investment in a Japanese rival and has echoes of a deal being negotiated between Peugeot Citroën, of France, and Mitsubishi Motors, the struggling Japanese carmaker.
 
The move is understood to be entirely non-hostile, contrary to recent comments by Osamu Suzuki, the 79-year-old patriarch of Suzuki, who denied any talk of new alliances with overseas groups.

Analysts have been speculating for some months that Suzuki represented one of the most attractive automotive assets in Asia for a potential buyer.

Read More>Times Online

At about two feet tall, it may turn out to be the world’s most compact revolution: The Tata Swach, launched Monday, is a water purifier priced for the masses, which India’s Tata Group hopes will help save the lives of millions of people who die each year of waterborne diseases.

“This is opening up a complete new market,” said R. Mukundan, managing director of Tata Chemicals Ltd. “It doesn’t compete with any existing product.”

Will This Product Save Millions Of Lives?

The Tata Swach — Hindi for “clean” — meets U.S. Environmental Protection Agency standards, doesn’t require running water, electricity, or boiling and is priced so that the mass of rural Indian consumers can afford it, executives said.

Group chairman Ratan Tata is scheduled to announce the sale price later Monday.

The water filter grew out of a decade of research and development, led by three different companies in the Tata Group. Tata is one of India’s largest conglomerates, making everything from table salt to Jaguar automobiles — as well as the ultra-cheap Nano compact car, which like the Swach filter targets a lower income rural market many companies have ignored.

Read More>Business Week

The Government of Dubai said today that it will not stand behind its wholly-owned subsidiary Dubai World, prompting fears that the company’s creditors could lose billions of dollars.

Today’s comment, from Abdulrahman al-Saleh, the director general of Dubai’s Department of Finance, effectively confirms that country does not have enough money to repay Dubai World’s $60 billion of liabilities. Deloitte, the accountancy firm, has been called in to restructure the giant business.

Last week, the state-owned conglomerate sought a six-month standstill on repaying its debts.

Shares Tumble As Dubai World Defoults On Debts

Dubai World’s borrowings include a $3.5 billion Islamic bond that was due to be repaid by Nakheel, the property developer behind the Palm Jumeriah islands, in two weeks.
 
Many creditors had assumed that the structure of Islamic bonds implied there was state backing for this type of financing and Dubai’s failure to support the Nakheel debt could have damaging implications for the wider Islamic market.

UK banks are among 70 institutions to have loaned Dubai World money in recent years as the company grew rapidly and bought foreign assets such as the Turnberry golf course in Scotland and P&O ports. Dubai’s Department of Finance said creditors will be affected in “the short term” by the Dubai World’s restructuring.

Royal Bank of Scotland (RBS) has arranged $2.3 billion of loans for Dubai World since 2007, although it is not known how much the bank could lose if the company defaults.

Read More>Times Online

The Dubai financial crisis continued to send shares and commodities falling around the world this morning, despite efforts by the emirate’s ruling family to calm the panic.

Shares were down again across Europe, although there was an air of calm in London following yesterday’s plunge. This came after a bout of heavy selling in Asia.

Today, the mood in the City is that traders are trying to catch their breath following the shock on Wednesday when Dubai World – the government-owned conglomerate that has led the dramatic growth in the emirate – asked to defer repaying some debts for six months.

Building Work Unfinished Due To Crisis In Dubai

Sheikh Ahmed bin Saeed al Maktoum, the uncle of Dubai’s ruler Sheikh Mohammed bin Rashid al Maktoum, attempted to calm the situation last night.

“Our intervention in Dubai World was carefully planned and reflects its specific financial position,” he said in a statement.

“The government is spearheading the restructuring of this commercial operation in the full knowledge of how the markets would react. We understand the concerns of the market and the creditors in particular. However, we have had to intervene because of the need to take decisive action to address its particular debt burden.”

It is still unclear whether Dubai will default on some of its estimated $80bn (£48.8bn) debts, which would be a major blow to the banking sector, or be bailed out by the United Arab Emirates.

Read More>The Guardian