Business

BERLIN/LONDON — Europe's airlines are racing to add Wi-Fi to their planes, eager to attract Internet-hungry customers in a cut-throat short-haul market and potentially add millions of dollars of revenue through entertainment, services and advertising.

US airline passengers already have a chance of accessing Wi-Fi on 66 per cent of miles flown, against a worldwide average of 24 per cent, according to data from Routehappy, which rates flights worldwide on amenities such as seats and entertainment.

In Europe, adoption of a ground-to-air service such as that in the United States, is harder due to the number of countries in the region, while satellite-based services have been too costly for short flights.

But with more satellites being sent up, bringing costs down, and airlines more aware of the money-making possibilities, price is no longer such a stumbling block, industry watchers say.

Lufthansa, Air France-KLM, Ryanair and Vueling are some of the major European carriers looking at on-board Wi-Fi on short-haul flights, following low-cost carrier Norwegian, which offers it for free on 74 of its 76 Boeing 737s.

As well as potentially charging passengers to stream TV shows and music on their mobile devices during flights of a couple of hours or less, airlines can use onboard connectivity to offer restaurant bookings, shopping or hotel offers in conjunction with advertisers and partners.

"Nowhere else in the world do you get that captive audience where you know everything about the people that got on the plane and what kind of advertisements you should offer them," said Robin Cole, vice president for global business development at Global Eagle Entertainment, which provides satellite-based Wi-Fi for airlines Norwegian and Southwest.

Global Eagle is due to trial a fee-paying system on two Air France A320s this summer in conjunction with mobile firm Orange, and believes the retail and sponsorship opportunities of onboard Wi-Fi could boost industry revenues by hundreds of millions of dollars a year. 

Becoming a basic need 

According to AT Kearney consultant Rene Steinhaus, the revenue opportunities are attracting attention across the European industry, with low-cost carriers particularly quick to move. 

"There's a huge logic to having Wi-Fi on board, even in Europe," he said.

Ryanair will use advertising or other revenue streams to ensure Wi-Fi access doesn't add to its costs, Chief Executive Officer Michael O'Leary said, adding it had begun talks with mobile phone companies over charges, and with technical companies over fitting the lightest possible aerials for the lowest cost.

In the United States, moves by low-cost carriers such as JetBlue to offer basic onboard Wi-Fi services for free were putting pressure on mainline carriers, Routehappy data research manager, Jason Rabinowitz, said.

Britain's Inmarsat, which partners with Honeywell to offer Internet onboard using its satellites and the US company's hardware, currently has over a 9 per cent share of the commercial cabin connectivity market.

"It's growing faster than anything else in the space that I can think of. Almost every airline in the world is asking about it right now," Jeff Sare, Inmarsat's vice president for airline market development, told Reuters.

Another company that stands to gain is Panasonic-owned AeroMobile, which provides mobile coverage within the aircraft via satellite for a fee that appears on a customer's usual mobile bill. 

Marketing and revenue development director, Jack Gordon, said it expected to announce a deal with a major European short-haul carrier this year.

Lufthansa Systems, whose BoardConnect platform provides in-flight entertainment and connectivity on shorter flights, expects airlines will have to offer Internet onboard within the next two to four years.

"Costs for data transfer are falling rapidly and customers are putting pressure on airlines," said Norbert Mueller, head of BoardConnect. "Wireless Internet has become something of a basic need."

AMMAN — Jordan Phosphate Mines Company (JPMC) generated a JD18.2 million net profit last year compared to JD2.6 million in 2013, the company announced on Monday.

Gross profit before tax and provisions in 2014 amounted to JD22.6 compared to JD6.7 in 2013, according to a JPMC disclosure to the Amman Stock Exchange.

Data showed that assets at the end of last year increased to JD1.2 billion, compared to JD1.1 billion at the end of 2013.

Shareholders equity rose to JD780.3 million from JD762 million while net operational income increased to JD739 million from JD574 million in 2013, due to higher production efficiency. 

RIYADH — Lateefa Al Waalan just wanted to make Arabic coffee simple: no more labourious mixing of ingredients and careful attention to boiling.

Supported by a Saudi programme to foster, or "incubate", technology-based businesses with high growth potential, she developed a machine to produce Arabic coffee at the push of a button — the first of its kind.

In the process, Waalan and her Yatooq company became emblematic of efforts to diversify the oil-dependent kingdom's economy and employ more Saudis, particularly women.

Yatooq is one success story from the business incubation programme, known as Badir [meaning "to initiate"], but it's not the only one.

After hitting the market in 2013, Yatooq has grown to employ 15 people with another 75 on contract.

"The factory is completely run by women," Waalan said at the Riyadh plant where she directs operations from her laptop and telephone in a spartan office.

Women covered from head-to-toe in black, as is the custom in Saudi Arabia, handle administrative tasks in an adjoining office while the coffee is roasted and ground on large machines in another room.

Her business was driven by one idea: "I love coffee but it's very complicated. I want to make it simple."

John Mercer, an Australian consultant to Badir, calls Waalan's success story "quite stunning”.

Badir helped Walaan create a prototype in its industrial lab and provided legal, accounting and other advice as well as valuable connections.

Traditional Arabic coffee blends the ground beans with cardamom and saffron, giving the liquid a yellowish hue.

It takes about 30 minutes to brew in a home kitchen before it can be savoured, typically accompanied by dates.

Yatooq's innovation was a type of electric kettle that uses patented computerised technology to brew with consistent quality a ready-made blend of ingredients.

"We wanted to make a machine that you can press a button and then make the coffee without you needing kitchen equipment and so on," said Waalan, 30, who comes from a computer science and information technology background.

She declined to discuss revenues but indicated that the machine is now available in about 80 per cent of electronic retailers, is moving onto the shelves of more supermarkets and exported to neighbouring Gulf countries as well as the United States. 

'Massive impact'  

Badir is also proud of Ahmed Khalaf and his Stability Laboratory, which last August became the first private lab accredited by Saudi Arabia's Food and Drug Authority to test pharmaceuticals, along with other products.

His licence is posted proudly on the door of his lab at Badir's biotech incubator on the sixth floor at King Fahed Medical City in Riyadh.

British-educated Khalaf said Badir gave him "full support in many, many things" including idea-development and problem solving.

The Stability Laboratory already employs four staff with masters degrees and is turning a profit.

It is among 82 businesses at various stages of incubation with Badir, from start-up to revenue-producing.

Several others including Yatooq have "graduated" and are operating on their own, Mercer said.

Incubation also includes help for budding enterprises to develop their business models, install the right management teams and get funding.

Badir offers free laboratories, office space and even support for prototype development from its own workshop with three-dimensional printers and more traditional tools like a lathe.

With four incubators throughout the kingdom now, Badir plans to expand and broaden its focus from the current sectors of advanced manufacturing, biotechnology and information technology.

Its economic role in the world's biggest oil exporter is, for the moment, tiny but Badir is focused on longer-term impact, said Mercer.

"It's only a small part but it has a massive impact over time," he added. "Because what you've done in incubation is set a foundation for that company to grow".

The fall by roughly 50 per cent in global oil prices last year has left Saudi Arabia projecting its first budget deficit since 2011.

This has emphasised the need for economic alternatives, and the diversification effort is expected to continue under new King Salman who acceded to the throne in January.

'Things are changing' 

Badir "is probably the best example" of a local effort to tap the dynamism of dedicated and talented Saudis, belying stereotypes which labelled them as lazy or only want to work for government, a diplomatic source said.

The programme was set up five years ago by King Abdulaziz City for Science and Technology, the national science agency.

The government has since intensified efforts to bring into the workforce more Saudis, including women who have traditionally faced cultural barriers to employment in a conservative Islamic country where the sexes are strictly segregated and women are not allowed to drive.

Millions of foreigners in Saudi Arabia still do everything from management to construction.

Analysts say government efforts have boosted the employment of locals.

But Saudi Gazette columnist Khaled Almaena has blamed rampant "bureaucracy, red tape and complacency" for limiting the role that small and medium-sized businesses can play.

"In most countries these businesses constitute 80 to 85 per cent of the economy," though not in Saudi Arabia, he wrote.

But some things are changing, said Waalan, who sees in the kingdom a growing recognition of business people.

"Now more than ever, it's very cool to be an entrepreneur", she added.

ISTANBUL — From the outside, it looks like any other automatic bank machine on the streets of Istanbul. But rather than notes, this one distributes small pieces of gold.

Gold is hugely prized in Turkey not just for ornamentation or investment by banks but as a secure way for private individuals to hold their savings.

Many people in Turkey, which has one of the lowest private savings rates among major economies, keep gold as security for a "rainy day" rather than products offered by banks.

According to estimates, Turks hold some 3,500 tonnes of gold. Banks have sought to capitalise on the tradition by offering accounts denominated in gold.

"We were thinking about putting all that gold back into the financial system somehow, so we decided to create gold accounts for our clients," said Seda Yilmaz, marketing manager of the Kuveyt Turk Bank, the first to do so, in 2007.

"So we bought one kilogramme of gold, and the demand on the first day was three kilogrammes. It was a very good decision, so we decided to move ahead," he added.

Eight years on, Kuveyt Turk manages 200,000 gold accounts with different products allowing sales by cheque, bank transfer or mobile phone.

Now with the introduction of the first automated teller machines (ATMs) that issue gold as well as the usual banknotes, consumers can withdraw pieces of gold weighing 1 or 1.5 grammes.

The success of the ATMs started a trend, with many other Turkish banks latching on. The volume of gold in their reserves has gone from two tonnes in 2007 to 250 tonnes.

The government has also tried to join the bandwagon with the central bank allowing commercial businesses to hold some of their reserves in gold and opening this up to private investors.

"Thanks to this measure, our sales jumped 85 per cent last year," said Aysen Esen, head of a leading gold refinery in the country.

"Over the last two years, banks have taken in some 40 tonnes of gold that people had stashed under their beds. And it's just a small proportion of the reserves,"  he added

'Huge opportunity' 

Turkey, where the mythical Phrygian King Midas turned everything to gold and Trojan King Priam was said to amass his gold hoard, has historically been a centre for gold mining.

The first gold was mined in Anatolia several millennia before the birth of Christ but until recent years there had been a long break in extraction.

This changed in the 1980s with new legislation facilitating foreign investments, resulting in the discovery of new gold deposits at home.

The extraction of gold has since risen exponentially, from two tonnes mined in 2002 to 33.5 tonnes in 2013. A bright future is assured, with underground reserves estimated at 6,500 tonnes.

"The main reason for this boom is that we still don't have any tax on gross gold transactions, we only pay VAT (value- added tax) on finished products," said Ali Bulut, the chief executive of Turkey's number one gold retailer Altinbas.

"I'm very optimistic in the long run about domestic demand, not only for fashion and jewellery but also for savings," he added.

Even if exchange rate variations have an effect on activity and profits, Turks are the number four global consumers of gold and number two exporters.

"In 2013, recycling, fabrication and consumption [of gold] boosted the Turkish economy by at least $3.8 billion," indicated Alistair Hewitt, author of a recent report published by the World Gold Council.

"The opportunity is huge. We are only at the early stages here, there is a huge potential," he said. "It's looking very, very exciting... all that infrastructure allows Turkey to become a gold trading hub within the region."

Made a little jealous by the successes of banks in a market that they once had to themselves, Turkish gold jewellers staked their interest in joining the gold investment industry.

"We are a little bit disappointed. We may need new legislation and have this gold end up with the jewellers instead of the banks," said Sarp Tarhanci of the Istanbul Chamber of Jewellery.

"Jewellers are customer-based, they build trust and good relationships with their clients," he added.

Turkey's performance in 2014 remained strong, according to the latest figures published by the World Gold Council, even if purchases were down on the extremely strong 2013.

2014 demand for gold jewellery of 68.2 tonnes in Turkey was down 7 per cent, "slightly more resilient" than the overall global trend of minus 10 per cent.

Meanwhile, investment demand of 54.8 tonnes was 46 per cent below the previous year's 102.1 tonnes record.

Separately,concerns are growing over the health of the Turkish economy, long seen as a star performer among emerging markets, partly due to unorthodox statements by President Recep Tayyip Erdogan on economic policy that have rattled investors.

Turkey's economic success of the past decade has been one of the pillars of the undefeated electoral success of Erdogan and his Justice and Development Party (AKP), with robust foreign investment and solid growth rates.

But economists now fear Turkey could be heading for an era of much lower sub-3 per cent growth as the AKP loses its reformist zeal ahead of June legislative elections, and Erdogan concentrates powers around the presidency after moving from the job of prime minister to head of state in August.

Moreover, Erdogan has become embroiled in a sometimes farcical row with the central bank, repeatedly telling the nominally independent institution in ever more heated terms to aggressively cut interest rates despite plus 7 per cent inflation.

His comments unnerved markets and Turkey's already embattled lira last week, for the first time, fell in value to the 2.5 lira against the dollar.

"At the moment, it's not clear whether this is posturing ahead of the election or more serious. But it does raise more general concerns about institutional independence in Turkey," William Jackson, senior economist at the Capital Economics Consultancy in London, told AFP.

'Undermining the future'  

Erdogan has in particular raised eyebrows by suggesting that high interest rates lead to high inflation, a suggestion that flies in the face of all economic orthodoxy which assumes that lowering interest rates increases inflation by raising consumer demand.

"Interest rate is a cause and inflation the result. But some of our friends think it is vice versa. What is the logic behind this?" Erdogan said before leaving on a trip to Latin America last week.

Central Bank Governor Erdem Basci, who has stood defiant in the row with Erdogan, pointedly noted that high inflation is detrimental to growth and "the best contribution to growth from a central bank would be to maintain price stability”.

Deputy Prime Minister Ali Babacan, one of the few top AKP figures with the full respect of markets, meanwhile warned about making exchange rate policies the "subject of daily political polemics".

Erdal Saglam, economics commentator for the Hurriyet daily, said that Erdogan's approach was "undermining Turkey's economic and political future" by risking scaring away the foreign investment that is key to its economic success.

In a sign of the tensions, the Taraf daily said Babacan had threatened to resign over the growing influence of Erdogan's adviser Yigit Bulut but was talked out of it by colleagues.

The whole issue is coming to a head as Turkey presides over the Group of 20 (G-20) of top economies for the first time. Babacan last week chaired the first meetings of G-20 finance ministers and central bank chiefs. 

'Miracle over'  

Turkey under Erdogan was long seen as a poster child for economic emerging market success, but these days the country is lumped into the so-called "fragile five" emerging markets along with Brazil, India, South Africa and Indonesia, which have become overly dependent on foreign investment.

"It's fair to say that the 'economic miracle' seen during the 2000s has come to an end," said Jackson. "Unless there's a drastic improvement, I would be surprised to see the Turkish economy grow at rates of 3 per cent plus for a sustained period over the coming years."

The consolation for Turkey in a tricky economic period is lower oil prices, a boon for an economy which is a major energy importer with one of the largest current account deficits among emerging markets.

The current account deficit fell 29 per cent to $45.8 billion in 2014 thanks to lower oil prices, the central bank indicated Wednesday.

Fitch Ratings said the figures showed the economy's "capacity for rebalancing" but warned its resilience "may be tested in 2015" by tighter US monetary policy or geopolitical risks.

Turkey still has a long way to go to meet Erdogan's much-vaunted ambition of making it one of the world's top 10 economies — currently it is number 18 according to the World Bank — when the 100th anniversary of the modern republic is celebrated in 2023.

A report on global growth published by the Organisation for Economic Cooperation and Development (OECD) last week said that Turkey's income gap with the upper half of OECD countries "continues to narrow but remains large".

It called for reform to encourage formal employment in particular among the older generation and women, many Turks are employed illegally due to excessive regulation, as well as improvements to the inconsistent education system.

AMMAN – Arab Potash Company's (APC) net after-tax profit reached around JD100 million last year compared with JD131 million in 2013. In a disclosure to the Amman Bourse, the APC indicated that gross profit came at JD110 million in 2014 compared with JD148 million in 2013.

AMMAN — One hundred and nineteen industrial and service projects in Jordanian governorates will be receiving JD53.4 million in financing, following endorsement from the Governorate Development Fund (GDF).

According to a Ministry of Industry, Trade and Supply statement e-mailed on Sunday to The Jordan Times, the projects are expected to create 3,312 jobs when completed at an estimated JD115 million investment value.

The statement indicated that the GDF financing will benefit 100 new projects and  help expand and upgrade 19 ongoing schemes. 

Karak topped the list as JD14,146,257 will finance  21 projects that are expected to create 1,043 job opportunities, with an investment volume of JD23,974,799.

Tafileh came second as JD3,724,031 will finance 19 projects that are expected to create 295 jobs, with an investment volume of JD10,855,766.

Irbid ranked third with 13 projects slated to receive JD6,523,739 in financing. The projects, expected to provide 322 jobs, carry JD11,970,864 in overall investment.

In fourth place, JD5,037,816 will finance Maan's 13 projects that carry JD8,415,356 investment volume and expected to provide 277 new jobs.

Balqa's 11 projects, estimated to have a JD20,252,176  investment volume and to create 481 employment opportunities, will benefit from JD7,095,257 in financing.  

Madaba's 10 projects, valued at an investment volume of JD7,551,632 and projected to provide 196 new employment opportunities, are to receive JD3,460,483 in financing.

The GDF approved JD685,998 in financing for Ajloun's nine projects whose investment volume was projected at JD1,198,139 with 71 new jobs.

Mafraq came in eighth place with seven projects carrying an investment volume of JD6,983,465 with 171 new jobs. Financing was set at JD3,813,285.

Jerash ranked ninth with seven projects whose investment volume was estimated at JD2,380,218 with 74 new employment opportunities.

Four projects in Amman will get JD4,461,500 in financing. With  an investment volume of JD12,471,000, these enterprises were expected to create 184 jobs.

Zarqa came in eleventh place with three projects that were projected to provide 150 new employment openings. With an investment volume of JD7,209,992, the enterprises will receive JD1,926,043 in financing.

Aqaba trailed the list with JD1,458,665 in financing for two projects, whose investment volume was estimated at JD2,450,235 with 48 jobs.

Also on Sunday, Industry, Trade and Supply Minister Hatem Halawani attended the ceremony held to celebrate signing agreements of the last phase of the European Union-funded Jordan Services Modernisation Programme (JSMPII) run by the Jordan Enterprise Development Corporation.

This phase, which includes 51 new and old service companies, carry a financing volume exceeding 3,44 million euros, with a total expected investment reaching around 5,79 million euros.

These projects are expected to provide 484 job opportunities in Mafraq, Jerash, Ajloun, Zarqa, Madaba, Tafileh, Karak, Maan and Aqaba, due to the importance of the service sector that contributes to 67 per cent of the national gross product.

NEW YORK — Oil closed up for a second straight week on Friday after another drop in the US rig count, and Brent crude hit a 2015 high above $60 a barrel, but market skeptics cautioned the rally could fade because supplies keep coming.

Many traders and analysts believe there is a global oversupply of nearly two million barrels per day (bpd) of crude oil. They say little has changed fundamentally to explain the price rebound of the past two weeks.

The number of oil drilling rigs in the United States fell last week to its lowest since August 2011, data showed on Friday. But the market's reaction was relatively tepid compared with the past two weeks when prices spiked on declining rig counts.

"I think people are starting to understand to a certain point that, even if rig counts go down, it's not going to affect production in the short term. It's going to take a few months for that to happen," said Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York.

US crude inventories have swelled to record highs of nearly 418 million barrels, government data showed earlier this month.

Brent settled the session up $2.24, or nearly 4 per cent, at $61.52 a barrel. It rose a 6 per cent on the week and 15 per cent month-to-date. Brent's gains increased last week after its front-month contract switched on Thursday at a premium.

Oil prices more than halved between June and January as a global glut pushed Brent from a summer peak above $115 to a near six-year low under $46.

"Naturally, when prices fall that much within that short a time, you're likely to have a severe rebound as well, though speculators are possibly adding more fuel on the way up now," said Phil Flynn, an analyst at the Price Futures Group in Chicago.

Some traders attributed Friday's strength to an unexpected acceleration in eurozone economic growth in the final quarter of 2014. The bloc's largest member, Germany, grew at more than twice the expected rate.

Market bulls were also betting that cuts in exploration budgets will help mop up some of the excess supply.

Separately, the world's three big energy agencies are forecasting higher demand for the Organisation of Petroleum Exporting Countries (OPEC) crude oil this year, a sign the producing nations' strategy to let prices fall is starting to win them back market share from rivals who are cutting output.

After an oversupply of world oil sent prices tumbling in 2014, top OPEC exporter Saudi Arabia urged fellow members not to prop up the market and to try to knock out competing sources like US shale, which, because it has higher production costs, had to cut output when prices fell.

In reports last week, the International Energy Agency (IEA) and OPEC have raised by at least 200,000 bpd their estimates of demand for OPEC crude in 2015, while the US government's Energy Information Administration (EIA) (EIA) forecasts OPEC will pump 140,000 bpd more.

At the same time, data suggesting a forthcoming economic recovery has raised hopes for improving oil demand: Eurozone economic growth accelerated unexpectedly in the final quarter of 2014 as the bloc's largest member, Germany, expanded at more than twice the expected rate.

"The main three monthly oil market reports...sent encouraging signals," said Daniela Corsini, analyst at Intesa Sanpaolo. "On average, their estimates of the call on OPEC crude have been increased significantly."

Those estimates also indicate that lower oil prices, which have prompted shale oil and other oil producers to cut spending, are also forcing them to cut supplies. 

OPEC officials have expressed cautious optimism about the price recovery and noted signs of higher demand.

Saudi Arabia's Oil Minister Ali Al Naimi discussed a "relative improvement in the market in terms of an increase in demand and the stability of prices in the current period" last week with Algeria's justice minister, the official Saudi news agency SPA reported.

OPEC pumps about 30 million bpd of crude, roughly a third of the world's daily requirement. Rising demand for OPEC oil is generally taken as a bullish sign in the oil market.

Still cautious

On Monday, OPEC forecast demand for its oil this year would average 29.21 million bpd, up 430,000 bpd from its previous prediction.

The IEA, which advises the United States and other industrialised countries, moved its forecast in the same direction on Tuesday, albeit by a more modest upward revision of 200,000 bpd to 29.4 million bpd.

Also on Tuesday, the EIA in its report forecast OPEC will produce 30.05 million bpd in 2015, up from its previous projection of 29.91 million bpd.

"I do believe demand is in a much better shape than we feared before and already expected right now," said Eugen Weinberg, oil analyst at Commerzbank.

"All kinds of signs of demand being above expectation are already in place. Especially in the US, where we had a real boom in registrations of pickups and SUVs and everything else," he added.

Still, this has yet to translate into more bullish global oil demand estimates from the three forecasters. Instead they raised their these forecasts only slightly or kept them unchanged.

David Fyfe, a former IEA official and now head of research at trading house Gunvor, also noted the common thread of the monthly supply and demand balances but was cautious on whether the oil rout was over.

"Certainly the balances have all moved in the same direction, acknowledging that several months of $50 oil is going to cause a supply side reaction and I wouldn't disagree with that," he said.

"But it is still a little too early be calling a floor for prices having been reached. I think we're going to have a pretty choppy, pretty volatile first half," Fyfe added.

SHANGHAI — As China pulls out the stops to get more lending into its economy to bolster flagging growth, farming, a sector that employs almost a third of its 1.4 billion people, remains in desperate need of funding.

Policy makers have cut interest rates, increased lending targets and freed up banks' reserves to lend more, helping to sustain a rally in Chinese shares and a property bubble, but it is not getting through to agriculture, which produces around 9 per cent of the China's gross domestic product (GDP), though with pitiful productivity.

World Bank data showed the value added per farmworker in China was $750 in 2012, compared with around $63,000 in the United States.

Inefficient and obsolete farming techniques have also been blamed for causing major soil and water pollution and food scandals, but it needs investment to turn the sector around.

Jin Yong, a lifelong farmer in Anhui, one of China's poorest provinces, formed a corporate entity with other individual investors in an effort to improve his access to funding.

The plan is to sell organic vegetables, but the company has yet to turn a profit, and credit is part of the problem.

"We don't have rights to the land. We have things in the ground, but banks don't care. They just want evidence of ownership for collateral," he indicated.

Beijing is aware of the problem; its recently published "number one" planning document listed modernising farms as a key priority for 2015, including plans to encourage private investment and cheaper financing.

But lenders are steering clear.

The share of loans going to agriculture has declined every year since 2010, official data show. In 2014, banks lent 306.5 billion yuan ($49.1 billion) to agriculture, compared with approximately 1 trillion yuan for margin finance for use in stock speculation, and 2.8 trillion yuan for real estate.

Reform dilemma

Chinese bankers who spoke to Reuters said official calls to lend to farmers were effectively countermanded by official orders to reduce the bad debt on their books.

"When banks lend, they're not going to think, 'I wonder what direction the country is expanding in?'" said a senior loan officer at one of the big five state-owned banks. "A bank's priority is still going to be a firm's liquidity; is it good? Cash flow, is it good? Do they have the ability to repay?"

Foreign bankers told Reuters they have been approached by regulators asking them to increase lending to the sector, but they, too, are reluctant.

There is also a failure by banks to adapt to changing needs, said Cheng Enjiang, senior research fellow at Victoria University in Australia specialising in rural finance and microfinance in China.

"There has been an increase in demand for agricultural loans to larger-scale farms, but rural credit cooperatives and agricultural banks don't have feasible products tested for that," he added.

There are also political dimensions to the problem.

Agricultural analysts say self-sufficiency goals intended to minimise China's dependence on food imports have resulted in mandated production of staple grains and starches that earn far lower profit margins for farmers than fruits and meats.

Some officials also fear that increasing efficiency and profits through mechanisation would ring Chinese cities with slums full of unemployed farmers.

But policies designed to keep farmers on small, low yielding plots impedes the consolidation that could create economies of scale.

The right to buy and sell rural land is retained entirely by the local government, so not only is a farmer unable to use his land as collateral, he can't buy other people's land.

Thus Jin Yong, the aspiring organic vegetable magnate, can only rent land, and rental contracts are no use in securing bank loans.

Without major policy reforms, farming will remain a bad bet both for the farmers and the bankers.

"We don't lend to certain sectors just because the government tells us to," said a fund manager at a listed Chinese commercial bank. "We'll only lend to a company in any sector if it means we'll come out profitable." 

Separately, China's top anti-corruption watchdog has targeted 26 of the biggest state-owned firms, including telecoms, energy, and manufacturing conglomerates, for inaugural inspections this year.

The visits will kick off immediately this week after lunar new year holidays, the Central Commission for Discipline Inspection (CCDI) said in a notice.

Designated conglomerates include China Telecom Group Co., China National Petroleum Corp., or PetroChina, China National Offshore Oil Corp., and China National Nuclear Corp.

"We need to sharpen the 'Sword of Damocles' hanging above those in power and use inspections to keep them in awe," the statement quoted watchdog head Wang Qishan as saying.

Other firms to be visited by antigraft investigation teams are Sinochem Group, China Ocean Shipping (Group) Co., or Cosco, China Mobile Communications Corp and Baoshan Iron & Steel Group Co.

As part of President Xi Jinping's vigorous crackdown on corruption, the anti graft body will inspect "all important backbone state-owned firms and financial institutions" this year, it said on its website.

The watchdog has brought down more than 70 senior officials at state firms in 2014, the official Xinhua News Agency pointed out on Thursday.

Last week, it accused officials at top coal producer China Shenhua Group of taking bribes and manipulating coal prices for personal benefit, according to its website.

The anti-graft watchdog also found serious violations by executives of power group China Huadian Corporation during takeovers of coal mines and in official appointments, activities that led to large losses.

Lu Haijun, a director of Bank of Beijing Co., has also been put under investigation this year as the commission widens inquiries in the finance sector.

The commission's anti-graft efforts at state firms coincide with the imminent roll-out of ambitious new guidelines to overhaul China's inefficient state sector.

One key measure, expected within weeks, will focus on controlling company insiders and avoiding losses during reforms.

Other firms targeted in the first round of inspections are China Power Investment Corp., State Nuclear Power Technology Corp., China Huaneng Group, State Grid Corp. of China, China Southern Power Grid Co.

Also named are China Nuclear Engineering Group Co., State Development & Investment Corp., Dongfang Electric Corp., China Electronics Technology Group Corp., China Electronics Corp., and China Minmetals Corp.

China State Construction Engineering Corp., China Shipbuilding Industry Corp., China National Machinery Industry Corp., China General Technology (Group) Holding Ltd., China Datang Corp., China Guodian Corp., and Wuhan Iron and Steel (Group) Co. are among the others identified.

According to state media, China's ruling Communist Party will launch a year-long probe into the incomes of military staff, following revelations of widespread graft in its armed forces.

Party leaders have described corruption as a key threat to China's military modernisation campaign, which has seen double digit increases in the army budget for more than a decade.

China's Central Military Commission, headed by President Xi Jinping, will conduct an "investigation of all military personnel", the state-run Global Times said.

The audit will be overseen by the head of the army's general logistics department Zhao Keshi, and will look into "all cash flows, receipts and expenses" to find evidence of embezzlement, said official army media according to the report.

The investigation will be "will be far reaching and may involve conflicts of interest", it cited Zhao as saying.

Xi heads the military and the Communist Party and has vowed a crackdown against endemic corruption, an issue that has long drawn widespread public anger in China.

China's People's Liberation Army (PLA) said last month it launched investigations into 16 senior officers at corps level and above in 2014.

Top Chinese military officer Gu Junshan was formally charged with corruption last year after he was exposed as owning dozens of homes, state media reported.

Officials seized "a gold boat, a gold wash basin and a gold statue of Mao Zedong" along with "crates of expensive liquor" from one of Gu's residences, reports said at the time.

Xi's campaign also led last year to the ousting of Xu Caihou, a former vice-chairman of the Central Military Commission.

But the Communist Party has not introduced reforms such as official asset declaration or independent courts and media, and critics have said that the anti-graft drive is politically motivated.

TUNIS — Just two days after confidently promising economic reforms to match Tunisia's transition to democracy, new Prime Minister Habib Essid was forced to say he would roll back a new tax after police shot dead a man protesting it.

Tunisia has been praised as an example of compromise politics and democratic transition since overthrowing its autocrat Zine El Abidine Ben Ali in a 2011 uprising, holding free elections and drafting a new constitution.

But the latest protests have made clear Essid's economic task list that includes reforms, development and boosting jobs will not be easy in a country reliant on tourism, with few natural resources, high unemployment and heavy state subsidies even with the goodwill of the coalition government.

"What do they mean by reforms, obeying the international Monetray Fund. That just means more misery for us, more sacrifices on our part," said Sami Majdoub, 30, an unemployed graduate. "Their priority should be creating jobs, not increasing prices."

Since its revolution, lenders such as the International Monetary Fund (IMF) have tied credits for Tunisia to efforts to curb heavy public spending and cut a budget deficit by reforming subsidies ranging from basic food goods to fuel.

Authorities tried to raise money by imposing a tax of $20 on foreign travellers, but this angered residents of Dhiba and Ben Guerdan, two remote towns on the Libyan border. They asked for it to be frozen because it hurt daily trade with Libya, which responded by imposing a tax on Tunisian travellers.

Tunisian traders protested, and youths demanding jobs joined them, torching a local police station. Police opened fire with bullets and tear gas, killing one man, witnesses say.

"We will not be silent, we will rebel if any one touches our interests and our work, whatever the political colour of the rulers, whether Islamist or secular, old system or a new system," said Mohammed Amari, a trader in Dhiba.

Protests over economic opportunities are still sensitive in Tunisia, where a street vendor set himself on fire in 2011 in protest over poverty and local official abuses, and helped trigger the "Arab Spring" revolts across the region.

Last week was not the first Tunisian backtrack. A year ago, the government was forced to reverse a vehicle tax and energy price hikes after a string of protests.

Creating jobs is also urgent with unemployment creeping to 15.2 per cent in 2014 from 12 per cent a year after the uprising that promised more freedoms and economic opportunities. A third of those jobless are young graduates.

Tackling youth exclusion is especially sensitive as Tunisia fights a campaign against Islamist militants who emerged after the revolution. Around 3,000 young Tunisians have already left to fight with extremist groups in Syria and Iraq. 

Majority in congress

Tunisia has managed to avoid the upheaval afflicting other Arab Spring nations like Yemen and Libya, both caught up in internecine conflicts driven by unresolved political divisions after their uprisings.

Last week, Tunisia's parliament approved Essid's new government, including secular Nidaa Tounes Party and Islamist rivals Ennahda. Secular and Islamist leaders often reached compromise deals in Tunisia to keep the country on track.

That makeup at least offers Essid the backing needed in parliament to push politically sensitive decisions on reforms.

"Essid's new national unity government will enjoy a comfortable parliamentary majority that will enable it to implement the economic reform agenda with ease," said Riccardo Fabiani, a senior analyst at Eurasia Group.

The IMF agreed in 2012 to support Tunisia with a two-year credit programme worth $1.74 billion, in exchange for keeping its deficit under control and making the foreign exchange market more flexible.

The budget deficit reached 5.8 per cent in 2014 and is expected to narrow to 5 per cent this year. But Tunisia will still need multilateral lenders to make up external financing.

Incremental reforms, such as the temporary taxes and gasoline price rise that were imposed last year are expected to continue.

But while the government tries to cut spending, of which wages total about a third, Tunisia's powerful UGTT labour union demands the government negotiate to increase in 800,000 public sector salaries. UGTT has already threatened a general strike.

Last year, the government tried to raise the retirement age but this was scuttled by the UGTT.

A proposal to review the tax system and increase taxes paid by professionals, such as doctors and lawyers, could also lead to strikes and protests.

"The revolutionary atmosphere makes reforms an impossible dream," Zied Krichen, a Tunisian journalist wrote in a recent newspaper editorial.

But there are favourable indicators. A drop in global oil prices may make trimming energy subsidies easier.

Tunisia also wants to take advantage of its newfound political stability to attract investment and create new businesses and jobs to ease tensions over tougher reforms.

"The reforms are going to be painful, but we don't have a choice," said Moez Joudi, an economics professor at Tunis University. 

"We have to take advantage of the fall in oil prices, the new political stability and also the growth in Europe to push reforms and a clear economic plan right now," he added.

BAGHDAD — Iraq's prime minister called on Thursday for "patience" while the government implements economic reforms that include restructuring of many state-owned companies, saying the plan would deliver growth and development.

Haider Al Abadi, who took office in September after Islamic State (IS) militants seized control of large parts of north and west Iraq, is under pressure to improve economic and security conditions while navigating a polarised political landscape.

Iraq is struggling to attract foreign investment and diversify its revenue sources away from oil, the price of which plunged in the second half of last year.

"We call on citizens to be patient. Success and development are coming," Abadi told an investment conference in Baghdad. "If we stick to the reform plan, soon there will be economic breakthrough."

Abadi said the government aimed to restructure some state-owned companies although he did not say which, when changes would happen, or whether it would entail privatisation.

"We want these companies to be more efficient and contributive to the Iraqi economy," he added. "The government has no intention to get rid of the workers in these companies."

Many state firms have barely functioned since the US-led invasion to topple Saddam Hussein in 2003 and many related to the military have been shut down.

Iraq's economy, which gets about 90 per cent of its revenues from oil, was battered last year by plummeting global oil prices and the land grab by IS which prompted big spending on the military and displaced populations.

Defence alone is expected to take up 20 per cent of 2015 spending in a budget passed by parliament last month which includes a deficit of 25 trillion dinars ($22 billion) to be financed through borrowing.

The government also has to ensure more than 5 million state employees are paid.

Finance Minister Hoshiyar Zebari has said Iraq plans to use its Special Drawing Rights to raise financing from the International Monetary Fund (IMF).

A senior IMF official told Reuters the financial institution was open to providing additional funding to the war-torn nation.

"They certainly could [ask for more money]. So far they haven't... We had a programme before with Iraq. It's their call," the official said.

When extending emergency loan programmes to countries, the IMF has often pressed them to introduce economic reforms such as restructuring state finances.