Probe into Taiwan ex-president leads to Singapore: report

TAIPEI (AFP) - - A Taiwanese prosecutor is due to head to Singapore to investigate alleged money-laundering by former president Chen Shui-bian and his family, a report here said Wednesday.

Prosecutor Ching Chi-jen would probe allegations that the Chen family had transferred funds to Switzerland via the Singapore bank accounts of Chen's brother-in-law Wu Ching-mao, said the United Daily News.
An official at the Taipei district prosecutor's office said Ching would attend a conference in Singapore this month but declined to comment on the investigation.
The report came after Singapore's de facto embassy in Taiwan issued a statement Monday offering to assist Taiwan in the probe.
The prosecutor recently returned from Switzerland to help officials there in their investigation into money-laundering apparently implicating Chen's son Chen Chih-chung and daughter-in-law Huang Jui-ching.
Thirty-one million US dollars were sent to Huang's Swiss bank accounts in 2007, according to copies of Swiss documents obtained by a Taiwan lawmaker.
The former president has admitted that his wife Wu Shu-chen had wired abroad 20 million US dollars from his past campaign funds, saying she had done so without his knowledge. But he has denied money-laundering.
Chen, his wife, son, daughter-in-law and brother-in-law were all named defendants in the case and barred from leaving the island.
But the ex-president's son and son's wife flew to the United States several days before the scandal broke last week.
Chen is already under investigation for allegedly embezzling 14.8 million Taiwan dollars (480,500 US) in special expenses while he was president, and his wife is on trial for corruption and document forgery in the same case.
Chen has admitted using false receipts to claim state money, but insisted those funds were for "secret diplomatic missions" and not his personal benefit.
Nevertheless, prosecutors found that at least 1.5 million Taiwan dollars had been spent on diamond rings and other luxury items for his wife.

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Oil drops to near $112 as storm threat eases

Oil prices fell to near $112 a barrel Tuesday in Asia, extending an overnight decline as Tropical Storm Fay avoided oil-producing infrastructure in the Gulf of Mexico.

Analysts also said oil pricing is likely to remain suppressed amid concerns that a global economic slowdown may further dampen world oil demand. But intermittent supply concerns due to the hurricane season and ongoing conflicts such as that between Russia and Georgia are likely to halt any sharp slide in pricing.

"Continuing worries about a U.S. economy slowdown, which may spread to the euro zone and perhaps also Asia are weighing down on oil pricing," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.

"In the near term, there will be a lot of downward pressure but I don't foresee a fast collapse of pricing to $100 dollars a barrel or below. There is still strong support at $110 a barrel level because of supply side issues," he said.

Midday in Singapore, light, sweet crude for September delivery was down 78 cents at $112.09 a barrel in electronic trading on the New York Mercantile Exchange.

The contract fell 90 cents Monday to settle at $112.87 a barrel after the threat of Tropical Storm Fay eased. That was the first time crude ended below $113 since May 1.

Fay, the sixth named storm of the 2008 Atlantic season, swept over the Florida Keys on Monday after being blamed for at least 14 deaths in Haiti and the Dominican Republic as it moved though the Caribbean. Fay was expected to become a hurricane before curling up Florida's western coast and hitting the state's mainland sometime Tuesday.

Royal Dutch Shell PLC has evacuated 425 oil workers from the Gulf of Mexico as a precaution but said it will redeploy them if the storm remains on its current track. So far during this year's hurricane season in the Atlantic Ocean, no storm has significantly damaged oil installations in the Gulf.

A bearish forecast on Friday from the Organization of the Petroleum Exporting Countries of lower global oil demand growth also helped to push down oil prices.

In its monthly report, OPEC forecast that the world's daily appetite for oil this year would grow by 1 million barrels, a reduction of 30,000 barrels a day from its previous estimate. It predicted growth for 2009 will be 900,000 barrels a day, the lowest growth in world demand since 2002.

Analysts said uncertainty over the conflict between Russia and Georgia will support oil pricing. Russia has begun withdrawing troops, but U.S. officials said Moscow has positioned missile launchers in the separatist South Ossetia province.

Oil market traders were also keeping an eye on possible tensions in Pakistan after President Pervez Musharraf announced his resignation Monday.

In other Nymex trading, heating oil futures fell 1.73 cents to $3.0675 a gallon, while gasoline prices lost 1.62 cents to $2.799 a gallon. Natural gas futures fell 5.8 cents to $7.83 per 1,000 cubic feet.

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2009 budget assumptions: Oil independence

Indonesia's independence-day this year was particularly colorful as the government reviewed their year-to-date performance and unveiled the 2009 proposed budget, which raised the eyebrows of many businessmen, analysts and the political elite alike.

The main issue of the controversy centered around the US$100 per barrel oil assumption. While this assumption might be too bullish for some, it is not surprising to us given the recent downtrend in global oil prices and the fact that campaigning for the 2009 elections will soon begin.

At the end of the day, no one knows where oil prices will be at the end of the year, much less in 2009.

We believe $100 is just as good as any forecast, allowing the government to capitalize on the current momentum of lower oil prices, which does wonders for the budget deficit on the back of a lower fuel subsidy allocation.

Besides, budgets and forecasts are meant to be altered as we get closer to 2009, in our view.

On the external front, the U.S. economic slow down is likely to continue into 2009, slowing down with it the rest of the world and particularly the EU and China.

Recent surveys in the U.S. conducted by Duke University concluded that 54 percent of chief financial officers (CFOs) believe there is a recession in 2008 and that the country will not recover until late 2009.

This is likely to bring down commodity prices, including oil. Whether it's $100 or $90 per barrel is as good as anybody's guess in our view, particularly since we have not seen any supply shortages thus far.

If anything, we see a decline in demand as oil prices recently reached nearly $150 per barrel.

Having said that, whether the proposed oil price assumption in the budget is too aggressive remains to be seen.

Nevertheless, we see the government's economic growth assumption as realistic, set at 6.2 percent, which is in line with our estimate. The 6.2 percent economic growth could be reached assuming strong stimulation from government spending.

First semester economic activity figures prove that the economic growth was mainly driven by export, supported by commodity exports.

Thus, the risk going forward will be whether other sectors, such as manufacturing and infrastructure sectors, will be able to take up the slack amid lower commodity prices.

Thus far, the government has been consistent in terms of the 2009 growth targets as capital expenditure has increased each year. Based on Finance Ministry data, capital expenditure rose 175 percent within five years to Rp 90.71 trillion in 2009 from Rp 31.89 trillion in 2005.

But, again the perennial disbursement problems remain a risk in the development of infrastructure.

Another eyebrow-raising macroeconomic assumption is the inflation rate. Similar to this year, the inflation figure in 2009 will be mostly driven by oil and commodity price fluctuations.

What makes the 2009 inflation figure relatively different is that the election campaigns will probably kick off as early as six months prior to April next year. This is likely to inject excess liquidity into the system and could apply upward pressure on inflation.

Based on our experience of the 2004 elections, household consumption contributed on average 60 percent to GDP. We estimate the inflation rate for 2009 will be 7.8 percent, higher than the government's assumption of 6.5 percent.

In summary, despite the need to create "economic performance" for political reasons, the government has in fact given more reliable assumptions compared to the previous budgets in our view.

One thing the government must learn from the recent commodity fluctuations is not to panic and to remain "independent" of short-term oil price fluctuations.

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Stocks advance as financials pare losses; Oil falls, H-P posts better-than-expected results

NEW YORK (AP) -- Stocks turned higher Wednesday as oil prices fell and financials pared their losses, allowing investors to focus on an upbeat profit report from Hewlett-Packard Co.

Worries about the well-being of mortgage financiers Fannie Mae and Freddie Mac again dragged on the financial sector. Wall Street is nervous that the government-chartered companies will need a bailout from the Treasury Department, a move that could wipe out shareholders' equity.
But stocks, which fluctuated in the early going amid light volume, turned higher after Fannie Mae Chief Executive Daniel Mudd said the concerns about the company's financial position are overblown. Light volume can exacerbate the market's moves, and therefore its reaction to news, good or bad.
"They haven't offered anything and we haven't asked for anything," Mudd said, referring to the federal government in a public radio interview Wednesday morning. "I don't anticipate that they will do that."
Fannie Mae and Freddie Mac shares moved well off their lows but were still each down more than 10 percent.
In late morning trading, the Dow Jones industrial average rose 71.00, or 0.63 percent, to 11,419.55. Concerns about inflation and the financial sector led the Dow to post its worst two-day performance since late June on Monday and Tuesday with an overall drop of about 310 points.
Broader stock indicators also advanced Wednesday. The Standard & Poor's 500 index rose 6.86, or 0.54 percent, to 1,273.55, while the Nasdaq composite index rose 19.15, or 0.80 percent, to 2,403.51.
Oil, which has rebounded this week after dropping $35 from its July 11 high of $147.27, declined after the Energy Department said crude oil inventories rose much more than forecast last week.
Energy costs remain a concern because of their effect on overall inflation. Government reports last week and on Tuesday showed larger-than-expected increases in prices faced by consumers and companies.
Light, sweet crude fell 58 cents to $115.50 per barrel on the New York Mercantile Exchange after the Energy Department said crude oil inventories rose much more than forecast last week, but gasoline inventories shrank by more than expected.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.81 percent from 3.84 percent late Tuesday.
The dollar was mixed against other major currencies, while gold prices rose.
In corporate news, Fannie Mae fell 66 cents, or 11 percent, to $5.36, while Freddie Mac declined 43 cents, or 10 percent, to $3.74. The stocks had shown steeper losses ahead of Mudd's comments.
H-P rose $2.17, or 5 percent, to $45.86 after posting better-than-expected quarterly results. Its results indicated that some sectors like technology are faring better than the financial stocks that have been pummeled by the credit crisis.
Monsanto Co. said it agreed to sell its Posilac brand of cow hormones to drug maker Eli Lilly & Co. for at least $300 million. Monsanto rose $3.59, or 3.2 percent, to $116.45, while Eli Lilly slipped 15 cents to $47.65.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 358.5 million shares.
The Russell 2000 index of smaller companies rose 4.88, or 0.67 percent, to 734.91.
Overseas, Japan's Nikkei stock average fell 0.10 percent. In afternoon trading, Britain's FTSE 100 rose 0.38 percent, Germany's DAX index advanced 0.33 percent, and France's CAC-40 rose 0.41 percent.

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Govt may not raise tobacco excise
The government may leave unchanged excise duty for cigarettes and tobacco next year to protect the cigarette industry's employment rate amid sluggish growth in other labor-intensive sectors.

"We expect to count on more excise revenue from an increase in cigarette sales. We forecast the sales will be higher next year," the Finance Ministry's Director General of Customs and Excise Anwar Surpijadi told The Jakarta Post on Tuesday.
In the draft of the 2009 state budget, revenue from excise duty is set at Rp 47.5 trillion (US$5.17 billion), up 4 percent from the Rp 45.7 trillion targeted in this year's budget.
Anwar said he was concerned a further rise in the excise would hurt the cigarette industry and risk the jobs of its millions of workers.
Indonesia, Southeast Asia's largest economy, has the lowest average price of cigarettes in the world, and analysts believe the livelihoods of 12 million people are directly or indirectly dependent on the country's tobacco and cigarette sector.
A pack of red Marlboro is sold for Rp 9,000 (98 US cents), while a pack of Gudang Garam Filter 16 clove cigarettes is priced at Rp 9,500. In China, a similar kind of cigarette brand is sold at the equivalent of at least Rp 12,000.
This year, the government adjusted excise on cigarettes by reducing the so-called "ad valorem tax" system, under which the excise is determined by a brand's base retail price. The government also increased the duty tax based on the price of a single cigarette.
Based on the 2009 budget plan, the government will continue its policy of gradually replacing the "ad valorem tax" with the per-cigarette tax in order to reduce the illegal application of duty on tobacco.
"With a specific tax, we're going to have a simpler tax scheme, boosting the industry's compliance," Anwar said.
He also disagreed with analysts who believe a 60 percent rise in excise duty would boost state revenue, cut the number of smokers and retain a robust cigarette industry.
"Cigarettes which are harmful to human health are perhaps those that are illegal or those that have high (levels of) nicotine. Branded cigarettes have less nicotine," he said.
Chairman of the Indonesian Non-Clove Cigarette Producers Association Muhaimin Moefti said the government and cigarette producers had a consensus to not raise the excise at least until 2010.
"This is already stated in the tobacco industry road map for 2007 until 2020," Muhaimin said.
He said cigarette producers would tolerate an increase in excise as the rate was below the inflation rate, allowing buyers to cope with rises in cigarette prices.
Cigarette producers include excise duty in the selling price of cigarettes.

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