Sheikh Ahmad Fahd al-Sabah

KUWAIT CITY, May 2--OPEC’s president said Monday that the organization’s members excluding Iraq were producing 29.7 million barrels per day, 2.2 million bpd above the official quota, and there was no immediate need to pump any more oil, AFP reported.
“Our latest information is that the OPEC-10 production now is 29.7 million bpd. There is (more than) two million (bpd) over (official) production,“ Sheikh Ahmad Fahd al-Sabah, also Kuwait’s energy minister, told reporters.
“We think the market is well supplied... I think by numbers we already have more than the 500,000 bpd of real production,“ he said, referring to a proposed 500,000 bpd increase by mid-May.
“In Isfahan, production was 27.7 million barrels per day,“ he said, referring to a March OPEC meeting in Iran.
“The market needs real supply and this is what is on the market. Since Isfahan, two million barrels has been added to the market,“ Sheikh Ahmad said.
Asked what would OPEC do if prices continued to slide, he said, “I think prices will continue at this level between 45 to 55 dollars,“ for Brent crude.
“Yes, we accept less than this,“ he said when asked if this was acceptable to the group.
The drop in prices ruled out the need for further discussions on raising output, the Kuwaiti official added.
Oil prices fell further in Asian trade Monday as the market switched its focus to the possibility that the US economy may be slowing, thus easing pressure on supplies, dealers said.
At 0400 GMT, New York’s main contract, light sweet crude for delivery in June, was down 67 cents to $49.05 a barrel after closing at $49.72 in New York Friday where it had lost $2.05.
Data released last week showed the US economy grew a slower-than-expected 3.1 percent in the first quarter to March, raising concerns demand for oil will weaken. It was the slowest rate of expansion in two years.
With the world’s largest economy apparently slowing, a build-up in US crude oil stocks is also beginning to pressure prices, dealers said.
In London, the price of Brent North Sea crude oil for delivery in June retreated $1.88 to close at $50.60 per barrel on Friday.
Sheikh Ahmad said Kuwait was currently producing 2.7 million bpd and still had “a small spare (production) capacity.“

DOHA, Qatar, May 2--Gas-rich Qatar announced on Sunday the launch of a financial center, the third in the Persian Gulf region after similar bodies in Bahrain and the United Arab Emirates, AFP reported.
Prime Minister Sheikh Abdullah bin Khalifa al-Thani inaugurated the Qatar Financial Center (QFC), which will be temporarily located at the ministry of economy and trade in Doha.
The QFC Regulatory Authority is ready to receive license applications from international financial institutions and multinational corporations wishing to participate, a statement issued by the new center said.
Businesses operating in the QFC will be entitled to 100 percent ownership and full repatriation of profits. They will enjoy a three-year tax holiday, after which a corporate tax rate of 10 percent will apply, the statement said.
Project finance, private wealth management, insurance of all categories, Islamic finance and a wide range of investment, corporate and private banking opportunities are permitted under the QFC law, it said.
The tiny emirate, which is determined to become the world’s top exporter of liquefied natural gas (LNG), announced in January investment plans worth $108 billion over five years.
Some $7 billion of the investment allocations will go to infrastructure projects, the director of the Public Works Authority, Zayed Mansur al-Khiarain, told reporters Sunday.
Some of these projects, including the construction of roads, bridges and tunnels, will take priority because they are linked to Qatar’s staging of the 15th Asian Games in 2006, he said.
Economy and Trade Minister Mohammed bin Ahmed bin Jassem al-Thani said in January that a total of $50 billion will be spent on infrastructure projects over five years and the rest of the package on oil and gas ventures.
In April, Qatar partially opened its stock market to foreigners, allowing them to trade on the stock exchange and own up to 25 percent of the equity of listed firms.
The financial center inaugurated Sunday will rival similar entities in Bahrain and UAE member Dubai.

SHANGHAI, China, May 2--China’s economic power is too big to ignore, Taiwan opposition leader Lien Chan said Monday, as he toured Shanghai, a home away from home for tens of thousands of the island’s business executives, AFP reported.
“China is the factory of the world and also a huge market. This is reality, and we have to face it,“ Lien said, speaking to journalists at a briefing. “We shouldn’t ignore it because of ideological differences.“
Lien, the chairman of the Kuomintang (KMT) or Nationalist Party, later spoke to members of the city’s sizeable Taiwan business community, urging them to grasp the opportunity offered by China’s explosive economic growth.
“Taiwan businesses are faced with a crucial moment for seizing market and business opportunities and striving for future development (in the mainland),“ he said at a luncheon. “If Taiwan keeps a closed mentality, we are quite likely to suffer serious negative impact,“ he said.
It is believed that up to a million Taiwan businesspeople and their relatives live on the mainland, testimony to close economic cooperation that has been going on even as the two sides have engaged in political rivalry.
Lien said the KMT had agreed with China’s Communist Party to establish a “platform“ for exchanges in the economic and trade field.
“The establishment of such a platform is of vital importance, as currently there’s still no sign of official contacts between the two sides,“ he said, referring to the chilly relationship between Taiwan’s government and Beijing.
Analysts have suggested Beijing may make steep cuts in tariffs imposed on agricultural imports from Taiwan to give Lien something tangible to take home from his China trip.
This could also help undermine support for Taiwan President Chen Shui-bian, an advocate of independence, in his stronghold in the southern part of the island.
Also on Monday, Lien urged the Taiwan government to grasp the opportunity to end 56 years of hostility.
“Peace is no longer a pie in the sky,“ Lien told reporters at the briefing. “It’s within reach, and it can be a win-win situation.“
Lien said Chinese leaders had for the first time responded positively to the idea of a peace agreement, unlike in the past, when the KMT had proposed a peace agreement unilaterally without getting a response from China.

Picture shows a shoe shop in downtown Tokyo. Core consumer prices will fall by 0.1 percent in the fiscal year ending March 31 and rise by 0.3 percent the following year.

BEIJING, May 2--Japan’s deflation will last for an eighth year, the central bank said, making it less likely it will soon end its policy of keeping rates at zero and pumping cash into the world’s second-largest economy, Xinhuanet.com reported.
Core consumer prices will fall by 0.1 percent in the fiscal year ending March 31 and rise by 0.3 percent the following year, according to the median forecasts of the bank’s nine policy-makers. In their last twice-yearly outlook in October, they forecast prices would rise by 0.1 per cent this year.
“The central bank will put a seal completely on discussions of policy changes“ this year, said Hiromichi Shirakawa, chief economist at UBS Securities Japan Ltd in Tokyo, and a former Bank of Japan official. “There may be some chance that the bank will seek a policy shift in mid-2006 at the earliest.“
Governor Toshihiko Fukui has pledged to keep the four-year-old policy until core prices stop falling and they are unlikely to resume sliding. Japan’s recovery from a fourth recession since 1991 will not be strong enough to put an end to deflation this year, Shirakawa said.
The predictions of central bank policy-makers compare to a median decline of 0.2 percent this fiscal year forecast by 12 economists in a Bloomberg Survey. Prices will rise by 0.1 percent next year, the survey showed.
Deflation in Japan is a legacy of the 1980s asset price bubble, which drove the Nikkei 225 Stock Average to a peak of 38,957.44 on December 29, 1989.
Japan fell into recession early last year as exports faltered and consumer spending stalled. The economy grew at a 0.5 percent annual pace in the fourth quarter.
The recovery may be faltering. Industrial production fell by 0.3 percent in March from February, the government said, compared to a median 0.2 percent increase forecast by economists.

FRANKFURT, Germany, May 2--The European Central Bank said Monday it had agreed with the central banks of Cyprus, Latvia and Malta on the compulsory intervention rates for the Cyprus pound, the Latvian lats and the Maltese lira as part of preparations by the three states for the adoption of the euro, AFP reported.
For Cyprus, the upper rate was fixed at 0.673065 pounds per euro and the lower rate at 0.497483 pounds, the ECB said in a statement.
The range for Latvia was 0.808225-0.597383 lats per euro. And the compulsory intervention rates for Malta were set in a range of 0.493695-0.364905 lira, the statement said.
The upper and lower rates represent a range within which the three currencies can fluctuate against the euro by plus or minus 15 percent, as required under the terms of the European Exchange Rate Mechanism (ERM II).
Before adopting the euro, the currencies of the three countries must remain stable within the range for a period of at last two years.

KUALA LUMPUR, Malaysia, May 2--Diesel smugglers in Malaysia can be held under a controversial security law which allows for indefinite detention without trial, a report said Monday, as the government struggles with a nationwide diesel shortage, AFP reported.
“The provisions are there,“ to detain such smugglers under the Internal Security Act (ISA), Minister in the Prime Minister’s Department Radzi Sheikh Ahmad was quoted as saying by the New Straits Times.
The act, originally designed to combat a communist rebellion half a century ago, allows for two year detention periods without trial, which can be renewed indefinitely.
However, Radzi added it was up to Domestic Trade and Consumer Affairs Minister Shafie Apdal to “make the suggestion.“
Shafie had said on Saturday that the maximum punishment ought to be meted out to diesel smugglers as their activities had affected the country’s economy, according to the daily.
He said it was obvious that existing punishments, including a maximum fine of 25,000 ringgit ($6,579), did not deter smugglers.
Corrupt officials and fuel smugglers have been targeted by the government as it struggles with the shortage which has crippled transport.
The government was also working on long-term plans to regulate the supply of the vital fuel after a crisis meeting last week.
Diesel in Malaysia is heavily subsidized at 88 sen (23 US cents) a liter, tempting smugglers to sell it in neighboring Thailand where it is more expensive, or pass it onto industrial users not entitled to the subsidy.
In an attempt to curb the smuggling, the government imposed a quota system for petrol stations which led to a crunch last week with school and commercial buses, trucks, taxis and even fishing vessel operators finding it difficult to get enough for their daily needs.
Pan Malaysian Lorry Owners’ Association president Er Sui See said the crisis had forced about 30 percent of the group’s 10,000 members, owning some 100,000 lorries and trailers, to temporarily halt operations.
Faced with a growing outcry, the government last week ordered the oil companies to begin distributing June’s quotas and Shafie acknowledged Thursday there were weaknesses in the quota system.

COLOMBO, Sri Lanka, May 2--Sri Lanka is set to shortly increase domestic fuel prices and end subsidies in line with promises to international lenders ahead of a crucial aid meeting, official sources said, AFP reported.
The price increase is aimed at convincing multilateral lending institutions such as the IMF and the World Bank that the government is serious about reform and to reduce consumption and ease pressure on the balance of payments, finance ministry sources said.
They said the government also agreed to politically risky moves to sell a part of the state-run Ceylon Petroleum Corporation to raise $88 million and to restructure the loss-making electricity utility.
During talks with the IMF in Washington two weeks ago, Colombo promised to lift the fuel subsidy, pursue privatization and reach an agreement with Tamil rebels to handle tsunami aid before the aid review meeting, officials said.
Diplomats said European donors were keen that the Sri Lankan government and the rebel Liberation Tigers of Tamil Eelam (LTTE) establish a “joint mechanism“ to distribute millions of dollars in tsunami aid before the review.
Sri Lanka has already announced that former US president Bill Clinton will attend the May 15-17 aid review known as the “Sri Lanka Development Forum (SLDF)“ at which Colombo was to firm up pledges from foreign donors.
However, the government of President Chandrika Kumaratunga has been forced to carry out a delicate balancing act because of opposition from within the Marxist-backed coalition to privatization as well as any deal with the Tigers.
Kumaratunga last week went on record saying that she was
committed to the “joint mechanism“ that Sri Lanka’s peace broker Norway has suggested and described it as the foundation for a final peace deal.
Despite announcements of receiving nearly $2 billion in aid pledges following the December 26 tsunami, the Central Bank Friday signaled that money was not coming in as fast as expected. The Bank said the government will raise 150 to 250 million dollars by way of a bond issue to start tsunami reconstruction shortly.
For their part, the Tamil Tigers have said that they agreed to a draft of a “joint mechanism“ given to them by peace broker Norway, but the delay was on the part of the Colombo government.