MEXICO CITY, June 10--Mexican cement giant Cemex SA became the world’s largest supplier of building materials after it won a majority stake in Australia’s Rinker Group Ltd., overcoming concerns of potential market dominance in the US.
Cemex announced Thursday it had won acceptance of its US$14.25 billion (Û10.5 billion) takeover bid from shareholders representing 50.34 percent of Rinker stock, AP reported.
The buyout--which comes as Mittal Steel completes its acquisition of Arcelor to create the world’s biggest steelmaker--adds to the rise of business conglomerates with roots in the developing world.
Cemex and other Third-World conglomerates such as Mittal, Brazil’s Companhia Vale do Rio Doce SA, or CVRD, and India’s Tata Group started as state monopolies or as dominant companies in their home countries. But today they’re snapping up companies in the developed world.
The acquisition of Rinker will boost Cemex’s annual sales (about US$18.2 billion; Û13.5 billion) by some US$5 billion (Û3.7 billion), putting it ahead of France’s LaFarge, generally considered the largest building materials company with US$21.4 billion (Û15.9 billion) a year in sales.
Analysts say the success of Cemex and its cohorts shows that management ability and access to capital are spread more equally across the globe than in the past, when U.S. and European firms were the only real transnationals.
“I think Cemex has already demonstrated it can compete with any company on a global level,“ said Gonzalo Fernandez of the Santander Mexico financial group. “It’s an important lesson, that Mexican companies can be efficient.“
“Before, it was hard to believe that a firm like Cemex could go to the United States, buy a company there and make it more efficient, or to England and make them more efficient ... but that has been exactly what they have done.“
But analysts also caution that management teams accustomed to being big fish in small ponds must still prove they can assimilate big acquisitions, and face tough global competition that has humbled many of their First World counterparts.

ST. PETERSBURG, Russia, June 10--Russian President Vladimir Putin called on Sunday for creating an alternative to the World Trade Organization which would favor developing economies and suggested it was necessary to give a greater role to regional currencies.
Speaking at an economic forum in the second largest city of St. Petersburg, Putin lamented that today’s international economic organizations Çlook archaic, undemocratic and awkwardÈ by protecting the interests mainly of developed economies, AP said.
ÇToday protectionism ... often comes from developed countries that have set up this structure,È Putin said. ÇIn order to stimulate trade and investment it is worth thinking about creating a regional Eurasian institute on free trade that could take advantage of the positive experience of WTO.
Putin also said that currently, global financial markets evolve around Çone or twoÈ currencies--an apparent reference to the euro and the dollar--and their fluctuations often have highly negative effects on many countries’ economies and financial reserves.
ÇThere can be only one answer to this challenge--the creation of several world currencies, several financial centers.
Russian officials are using the two-day forum to court international capital and talk up the resurgent country, combining ambitious economic projections with promises of an open investment climate.

ISLAMABAD, Pakistan, June 10--Pakistan’s government raised salaries and pensions and increased subsidies on basic foods including lentils, tea and cooking oil, aiming to allay voter concerns about inflation ahead of elections.
The South Asian nation’s 3.5 million civil servants will receive a 15 percent salary increase and their pensions will be lifted as much as 20 percent, junior Finance Minister Omar Ayub Khan said in his budget speech in parliament in Islamabad today. The minimum wage for other workers will also be increased, Bloomberg said.
Prime Minister Shaukat Aziz, a former Citibank executive who is enticing foreign investors and selling state assets, faces re-election in January with consumer prices rising at three times the pace they were before the previous poll in 2002. Political violence in Karachi last month, the worst since President Pervez Musharraf seized power in a military coup in 1999, may also cost the government votes.
``Political disturbances seem temporary and economic policy will maintain its direction even if there is a change of government,’’ said Tanvir Ahmed Shaikh, president of the Karachi-based Federation of Pakistan Chambers of Commerce and Industry. ``There’s a good show on and the government will try to keep it going.’’
Pakistan’s government expects the economy to expand 7.2 percent in the year starting July 1, accelerating from 7 percent in the previous 12 months. Growth has averaged 7.5 percent in the past four years.
``We have transformed Pakistan into one of Asia’s fastest growing economies and come a long way in the last eight years,’’ Khan told parliament.
Faster growth is fuelling inflation, which has averaged almost 8 percent in the past year, compared with 2.5 percent at the time of the last parliamentary elections in 2002. That’s increasing food prices in a nation where about 70 percent of the population of 160 million people lives on less than $2 a day.
The minimum wage will be raised to 4,500 rupees ($74) a month from 4,000 rupees to help lower-income workers cope with higher prices, Khan said.
Aziz’s government is also increasing development spending to ensure the faster growth needed to reduce poverty isn’t hampered by inadequate infrastructure. Outlays on development projects including power, health and education will rise 25 percent to 520 billion rupees, Khan told parliament.

Some localities cope by refurbishing archaic technologies, without either the up-front investment or the eventual savings that a complete redesign would provide. Such incremental solutions not only fail to address the need for infrastructure, but exacerbate it in the long run, by drawing more people into the region without satisfying the need for better service, says the study.

Interdependence and Imagination
What, then, would a comprehensive solution look like? It would start with recognition of the interdependence of the many players involved. Water, energy, and transportation, for example, are typically administered by different regulatory bodies and innovated by separate companies. That should change, it said.
The roles played by the public and private sectors also need rethinking. Since the early 1990s, politicians and economists have engaged in a heated debate over a false dichotomy: Which form of authority is better at developing infrastructure, government or business?
Experience suggests that the best projects are those that make best use of the publicÐprivate relationship. The three basic stages of infrastructure management: design and approval, oversight and financing, and construction and operations, are the best ways to take advantage of this relationship, it says.

Light-Handed Government
A genuinely effective planning process uses the government’s convening power to create a transparent, open discussion from the start, with sufficient opportunities to hear from stakeholders and anticipate possible problems before the design is finalized. This requires straightforward and complete statements of the plan’s objectives (unfortunately a real-world rarity), along with its costs and benefits, made clear to the public. It may also require a more coherent overlap between the geographic scale of a project and the coordination of authority, tradearabia said.
Government, in short, is best positioned to lead the initial planning stages, but deftly and selectively, with a firm but light-handed oversight role that emphasizes goals instead of means, the study adds.

Sustainable Financing
The private sector should take the lead, meanwhile, in financing, pricing, and ownership. The most appropriate government role in financing is explicit without direct oversight management: setting up a transparent, non-preferential financing process and then allowing capital markets to bear the risk and reap the financial reward. Allocating and syndicating risks is one of the things that the private sector does best. It is particularly attractive to institutional investors because it is largely uncorrelated with other classes of financial assets available to them. And it can be profitable: Booz Allen estimates suggest that in 2006, five-year returns included 11 to 13 percent for airports, 10 to 13 percent for toll roads, 8 to 10 percent for rail passenger lines, and 10 to 14 percent for wastewater plants.

Magnetic Cities
The final important area for change is in construction and operations. Governments are rarely equipped with the management skills needed to make projects work in an entrepreneurial, multifaceted global economy. Hampered by cumbersome procurement rules and local political constraints (the demand for local jobs, for example), they can’t leverage scale or speed in their supply chains to minimize costs. What’s more, the private sector can attract more innovators who could bring novel ideas to a major construction effort.
Therefore, the government’s role in construction and operations should be limited to oversight--not through enforcing rules and procedures, but through setting goals and incentives, establishing the criteria for success, and selecting the contractors in a structure that encourages both collaboration and competition within a project. This would allow the private sector to conceive and implement more novel, creative and profitable infrastructure systems at lower costs. Ideally, excess revenue generated from innovation and efficiency would be retained by the private contractors, since they would also have taken on the lion’s share of the risks, he said.
As people pour into cities, the abundance of power, water, and mobility will define their lives. Problems like this $40 trillion challenge are not solved overnight, and muddling through will probably work, as a substitute for strategy, for another five years. But the sooner we think about it comprehensively, the less expensive the solution will be, the report adds.
Concluded

KUWAIT CITY,
June 10--A parliamentary committee has asked Kuwait’s Audit Bureau to investigate why the cost of oil production has tripled over the past six fiscal years, the head of the committee said.
“We have asked the bureau to prepare a report on the causes of the steep rise of the production cost and elements included in calculating the cost,“ MP Adnan Abdulsamad told AFP.
Al-Shall Economic Consultants said in a report published Saturday that the production cost has increased from 1.4 dollars a barrel in 2001 to 4.42 dollars a barrel in 2007, growing by 18 percent annually on average.
The report is based on official statistics.
Al-Shall attributed the rise to one of three possible reasons: that Kuwaiti oilfields have become too old thus making it difficult to control production costs, that additional unnecessary expenses are included in cost, or that the cost is being deliberately altered.
OPEC member Kuwait is pumping around 2.4 million barrels per day, and a three dollar increase in the production cost of each barrel means additional expenses to the tune of 2.6 billion dollars annually.

Japanese Prime Minister Shinzo Abe speaks to reporters at his official residence in Tokyo, June 5.

TOKYO, June 10--Some of Japan’s highest-flying bureaucrats may soon lose their golden parachutes.
The government, hit by a series of scandals, is seeking to tighten controls on the system of “amakudari“, or descent from heaven, whereby retiring civil servants land cushy jobs in the industries they used to supervise.
The lower house of parliament Thursday approved a bill introduced by Prime Minister Shinzo Abe’s cabinet that would create an independent “job centre“ to end the practice of ministries helping bureaucrats find new jobs, AFP reported.
Experts say that if the shake-up--which still has to be approved by the upper house -- is enforced it could curb a practice which encourages collusion and bid-rigging in public work projects.
“If they do what they say they’re going to do--and that’s a big ’if’--it will go very far to destroying the (amakudari) system,“ said Professor Gerald Curtis, an expert on Japanese politics at New York’s Columbia University.
“A lot of companies don’t want to hire any of these bureaucrats and in the past they had no choice. Even if they didn’t need them you don’t want to make an enemy of the ministry which has supervisory functions over your industry.“
Under Japanese convention, bureaucrats are expected to retire when one of their peers from the same entry year reaches the rank of vice minister, leaving many 50-something civil servants looking for new jobs.
So the amakudari system was a way to entice the top university graduates to take up jobs in the civil service with a relatively low salary in the knowledge that they would land well-paid jobs in the twilight years of their career.
In return the companies would gain expert knowledge from inside the civil service.
But the big question, experts say, is whether amakudari will continue to operate informally after the reforms, with companies continuing to take on retiring civil servants to avoid irking the government ministries.
“The government realises that they have to be seen to be doing something about this issue,“ said Noriko Hama, an economist and professor at Doshisha Business School in Kyoto.
“Whether or not this will have any genuinely meaningful effect in changing anything is very much another matter,“ she added.

MANAMA, Bahrain, June 10--Rising levels of inflation in Bahrain and other Persian Gulf Arab countries are killing plans for economic and currency union by 2010, according to analysis by the Middle East Economic Digest (Meed).
In its latest issue, Meed says that governments in the Perisan Gulf face a stark choice between taking measures to tackle rising inflation in order to maintain current growth levels, and meeting the convergence criteria agreed between the Persia Gulf Arab states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE grouped in the Persian Gulf Cooperation Council or the PGCC). in order to deliver economic and currency union by 2010, tradearabia reported.
The bloc committed in December, 2001 to work towards monetary and economic union. Meed’s analysis, however, provides new fears that the process is now under threat.
’ Persia Gulf Arab governments must decide whether to pursue their own agendas to maintain growth or adapt their policies, and possibly curtail growth, to work towards the long-term aim of establishing a homogeneous economic bloc in the Persian Gulf,’ said Meed editor Richard Thompson from Dubai yesterday (June 8).
’The result is already obvious. ’Despite often-repeated statements of commitment towards the single currency and economic union, most, if not all, will choose to maintain current growth levels.
’But this is not the wrong course to follow. ’The aim of economic union is to create jobs and boost prosperity for the Persian Gulf’s growing population,’ Thompson said.
’If putting currency union on hold is the cost of delivering that more quickly, then that is a reasonable price to pay.’
Inflation in the Persian Gulf has increased dramatically in the past six years, with the UAE seeing 13.8 per cent last year, compared to 1.4 per cent in 2000, and similar trends occurring in the other Persia Gulf Arab states economies, none of whom have seen a drop in inflation since 2001.

ST. PETERSBURG, Russia, June 10--Russian state-controlled airline Aeroflot signed a landmark deal with US jetmaker Boeing on Saturday to buy 22 Boeing 787 Dreamliner jets.
Aeroflot CEO Valery Okulov said the price of the contract was a “commercial secret,“ though the list price of the planes puts the value of the contract at over three billion dollars (2.2 billion euros), AFP said.
The long-awaited agreement was a breakthrough for Boeing, which neared a deal on the sale in 2006 before tensions between Washington and Moscow appeared to scupper it.
It was not a snub to Boeing’s European rival Airbus, however, as Aeroflot intends to formalise an earlier provisional agreement to buy 22 Airbus A350 airliners in the coming months, Okulov said. It was previously thought that Aeroflot would choose planes from only one of the two companies to update its fleet.
Delivery of the Boeing 787s will begin in January 2014, while the Airbus planes will be delivered later, Okulov said.
Boeing president Scott Carson signed the deal with Okulov at the Saint Petersburg Economic Forum in the presence of Deputy Prime Minister Sergei Ivanov, widely tipped as a possible successor to President Vladimir Putin.