Business

AMMAN – Jordan Insurance Federation (JIF) board member Ali Wazani on Saturday called for floating the prices of compulsory third-party liability (TPL) auto insurance to stop the financial losses of insurance firms in the Kingdom. 

Wazani said preliminary results show that 18 companies lost over JD7.1 million in the first half of this year, blaming regulations and instructions governing the auto insurance services, mainly the fixed price rate on TPL. 

The current price of compulsory TPL insurance is JD92.15 per year. 

The JIF board member expected the insurance sector to see more losses if the current policies continue, noting that several firms are considering leaving the market in order to end  losses. 

Wazani indicated that gross insurance premiums increased by 5.8 per cent at the end of June, reaching JD268.1 million compared with JD253 million during the same period of last year.

However, compensations went up at a faster pace of 8.7 per cent reaching JD171 million from JD157 million registered at the end of June 2013. 

He said  insurance services based on Islamic Sharia currently account for nearly 7 per cent of the market share, noting that it may go up to 10 per cent in the coming two years. 

Commenting on the government's endorsement of Islamic Sukuk law, Wazani said Islamic insurance firms in Jordan used to invest their funds in the Arab Gulf market due to its attractive investment tools, adding that the recent government decision would encourage many companies to be based in the Jordanian market. 

AMMAN — Jordan Chamber of Industry President Ayman Hatahet on Sunday said the Kingdom is going through a deep economic crisis that requires collective collaboration from the private and public sectors to avert the country further consequences. Hatahet also voiced confidence in Jordan's ability to overcome the economic dilemma and achieve considerable growth rates, citing an institutionalised partnership between the public and private sectors as the best mechanism for that end. He said that industrial exports, according to certificates of origin issued by Amman, Irbid and Zarqa chambers of industry, have grown by 5.5 per cent during the first six months of 2014 to reach JD2.6 billion compared with JD2.4 billion for the same period of last year.      

CARACAS — A government plan to combat Venezuela's food shortages by fingerprinting shoppers in grocery stores has sparked a backlash ranging from violent street protests to social media campaigns ridiculing the idea.

Shoppers have for more than a year struggled to find basic goods including cooking oil, powdered milk and corn flour as well as detergent, shampoo and diapers.

Apart from a short supply of dollars for imports, the shortages have been blamed on heavy subsidies that allow shoppers to stock up on staples and resell them in neighbouring Colombia or on the local black market.

President Nicolas Maduro says the biometric system, to be introduced this year, will allow authorities to weed out smugglers, often seen in lines buying conspicuous amounts of goods that are in short supply.

"It's absurd. How does a fingerprinting machine help you? It's only more regulation," said Jose Briceno, a pastry chef who was once a fervent supporter of late socialist president Hugo Chavez but says his handpicked successor, Maduro, should resign.

"I've reached my limit," added Briceno, 39, noting that he has to go shopping nearly every day to find what he needs for his kitchen.

Demonstrators opposed to the fingerprinting scheme clashed last week with police in San Cristobal, a city near the border with Colombia where product shortages are among the worst in Venezuela.

Some Caracas residents banged pots and pans on Thursday night in a traditional display of anger although the issue looks unlikely to spark the kind of massive demonstrations that rocked Venezuela for three months this year.

"I wanted to strangle Maduro," Esperanza Diaz, a 54-year-old retired government worker, said of the plan. "We can't keep being abused," she added, speaking in front of half-empty shelves as she stocked up on rare sugar at a sprawling government-run Bicentenario supermarket in central Caracas.

'Scan this' 

Government supporters argue that while stores in this oil-rich South American nation used to be better supplied, the poor could ill-afford to stock up on many consumer items anyway. They blast what they call a pampered, out-of-touch elite for seeking to stir up trouble.

"I agree with the fingerprinting system because I see how smugglers are bleeding the country dry," said Ninoska Mazza, 40, a real estate agent waiting behind other shoppers at a Bicentenario meat counter.

Venezuelans used to dodging socialist regulations are already joking that "rent-a-fingers" will soon emerge to help duck around the system.

A Twitter campaign shows a hand flashing the middle finger with the hashtag #ScanThisFingerprint.

The government has in recent days scaled back the fingerprinting plan, saying it will be voluntary and only required for 23 basic goods. Some Venezuelans are sceptical the  plan will even be implemented but others see a dark motive behind it.

"They want to control us," said Monica Betancour, 43, a dentist looking for turkey at a supermarket in posh eastern Caracas. "Whenever they announce a protest against this, I'll be there."

ZURICH — Natural disasters caused total economic losses of $41 billion in the first six months of this year, much less than usual, reinsurance group Swiss Re estimated last week.

The figure released by the Zurich-based group — which combines both insured and uninsured losses — was down from $59 billion (45 billion euros) in the first half of 2013.

It was also about half the average first-half loss of the previous 10 years, which was $94 billion.

The insurance industry took a hit of $21 billion from disasters in the January to June period.

That was down from the $25 billion in payouts over the same period in 2013, and also below the $27 billion 10-year average.

The costliest disaster for the insurance sector was the thunderstorms and hail which hit the United States in mid-May, causing $3.2 billion in damage, of which $2.6 billion was insured.

Next came June’s storms in France, Germany and Belgium, where losses reached $2.7 billion, with $2.5 billion of that covered by insurers.

February’s snowstorm in Japan inflicted $5 billion in economic losses, but only half of that figured was insured.

The January snowstorm in the United States lead to economic losses of $2.5 billion, of which $1.7 billion was insured.

And May’s thunderstorms and tornadoes in the United States generated losses of $1.7 billion, with $1.1 billion of that covered.

Rich countries traditionally see the most expensive single disasters in terms of insurance claims, given their wealthier economies and extensive insurance penetration.

Poorer nations generally face a gap between overall economic damage and insurance payouts.

For example, May’s heavy flooding in Serbia, Bosnia and Croatia resulted in economic losses of $4.5 billion, but Swiss Re said insured losses were moderate due to low coverage.

Poorer nations also traditionally bear the brunt in terms of lives lost in disasters, which Swiss Re said reached 4,700 in the first six months of the year.

Man-made disasters were to blame for economic losses of $3 billion over the first half, with $2 of the sum insured.

In the first six months of 2013, man-made disaster losses had reached $5 billion, above the 10-year average of $4 billion.

Separately, a report published this month by an environmental think tank that monitors mankind’s impact on the planet indicated that, in under eight months, humanity has used up its yearly quota of replenishable Earth resources,      “August 19 is Earth Overshoot Day 2014, marking the date when humanity has exhausted nature’s budget for the year,” the Global Footprint Network said in a statement. “For the rest of the year, we will maintain our ecological deficit... We will be operating in overshoot.”

The organisation tracks humanity’s demands on the planet against its ability to replenish resources like food and timber, and absorb waste like carbon dioxide from burning fuel for energy.

The cutoff point has been arriving earlier every year — in 1993 Earth Overshoot Day fell on October 21, in 2003 on September 22, and last year on August 20.

In 1961, the organisation remarked, humans used about three-quarters of the Earth’s annual resource budget. 

This changed by the early 1970s, when economic and population growth increased our footprint beyond what the planet could renew in a year.

“Today, 86 per cent of the world population lives in countries that demand more from nature than their own ecosystems can renew,” the network said.

It calculated that 1.5 Earths would be needed to produce the renewable resources needed to support current consumption.

“Moderate population, energy and food projections suggest that humanity would require the biocapacity of three planets well before mid-century,” the network warned. “This may be physically unfeasible.”

The costs of unsustainable consumption can be seen in deforestation, water scarcity, soil erosion, species loss and a buildup of planet-warming CO₂ in the atmosphere that threatens human well-being and countries’ economic stability, concluded the organisation.

WASHINGTON — US meat giant Tyson Foods has agreed to sell a hog business to win approval from antitrust regulators for its proposed buyout of Hillshire Brands, the Justice Department said Wednesday. Tyson, the leading US poultry seller, agreed in early July to buy sausage maker Hillshire for $8.55 billion, including Hillshire's debt. For the deal to proceed, Tyson will divest Heinold Hog Markets, its sow purchasing business, the Justice Department said. Without the business sale, Tyson and Hillshire would have accounted for more than a third of sow purchases from US farmers. Under the settlement, which must be approved by a federal court, Tyson must sell all of Heinold Hog Markets to a buyer approved by the antitrust division. The merger deal adds Hillshire's popular downstream processed meats — higher value-added brands like Jimmy Dean sausages and Ball Park hot dogs — to the more commodity-like fresh and frozen meats of the world's second-largest meat processor. Tyson says bringing the two businesses together would deliver $300 million in annual savings to the combined company.

PARIS — France's Socialist Prime Minister declared his love for companies and ally Germany Wednesday in a speech that earned him rapturous applause from the country's business elite following a damaging political crisis.

Speaking to a gathering of the country's main MEDEF employers' union, Manuel Valls sought to put to bed weekend comments made by his former economy minister slamming France's economic direction and German-led austerity measures, as he consolidates his government's pro-business stance. 

 "France needs you," he told the gathering to much clapping. "I love companies!"

"I know it is the custom to oppose the [political] left and the business world, it's an old tune. But I deeply believe that our country needs to shake off this position, these role-plays that we are so used to," he said. "It has made us lose too much time and our country is dying because of these positions."

Valls' comments came just two days after he tendered his government's resignation in a shock move sparked when Arnaud Montebourg — the outspoken former economy minister who is on the left of the ruling Socialist Party — stepped out of line and made the controversial weekend comments.

These cost Montebourg his job, and he was replaced in an emergency reshuffle by former Rothschild banker Emmanuel Macron, who was economic adviser to President Francois Hollande and one of the architects of the country's move towards a more pro-business outlook.

Valls' speech drew immediate comparisons to former British prime minister Tony Blair, whose centre-left New Labour Party also cosied up to the business world.

"I am well versed in the ideological evolution of Socialist parties over the past two decades, and I can tell you that it's a cut-and-paste of the type of speeches that Tony Blair made in the 1990s in England," Laurent Baumel, a Socialist lawmaker, told BFMTV. "It's an ideological proposal to break with everything we on the left have believed in for decades." 

'Absurd face-to-face' 

But as France desperately struggles to emerge from the crisis, Hollande is pinning his hopes on a package of tax breaks for business funded by public spending cuts to kickstart growth again.

The so-called Responsibility Pact aims to cut social charges for companies in return for the promised creation of 500,000 jobs.

But with the current emphasis on austerity within Europe, France has vowed to counterbalance that with 50 billion euros ($66 billion) in cuts to public spending.

The country is battered by a jobless rate of more than 10 per cent, high taxes and a budget deficit that stubbornly refuses to come down to the European Union (EU) ceiling of 3 per cent of the gross domestic product (GDP).

Adding fuel to the fire, France's labour ministry announced Wednesday that unemployment hit a new high in July, with 3.424 million people now out of work — the ninth consecutive monthly rise.

Valls — who was appointed in March after the Socialists suffered a drubbing in local polls — has strongly defended the Responsibility Pact as the best way to drag France out of the crisis.

But those on the left of the party argue that public spending should increase instead of being reduced and slam austerity policies advocated by Germany.

Montebourg himself criticised France's European ally in his weekend comments, arguing Germany was "trapped in an austerity policy that it imposed across Europe" — remarks that Valls pointedly sought to smooth over in his speech.

"Now more than ever, Europe needs strong and lasting ties between France and Germany," he told the business leaders. "I reject any absurd face-to-face with Germany." 

On Wednesday, the European Commission said France's new government must urgently speed up its reform plan, aimed at helping the economy by cutting business taxes at the same time as trimming public spending to bring the deficit to within EU limits.

The call showed that the EU was keeping up the pressure on Hollande after a government crisis this week provoked by three ministers who challenged his increasingly pro-business line and rejected budgetary rigour.

Paris has admitted it will not meet its public deficit target this year and is unlikely to do so in 2015 but Hollande is hoping for leeway from EU officials in Brussels amid a debate in Europe about how to kickstart growth and reduce debts.

Hollande has ousted the three ministers and named a former investment banker, Emmanuel Macron, as his economy minister.

"It is urgent for France but not just France, for the other countries which are in a similar situation to speed up the work they are doing, the structural reforms," said a spokesman for EU Economic Commissioner Jyrki Katainen.

"What will of course be fundamental will be the respect for fiscal efforts measured in structural terms," the spokesman added of the commission's role monitoring national government moves to bring deficits into line with EU-endorsed limits.

The spokesman declined to comment on the new government line-up but said it was important that France had confirmed its intention to press ahead with reforms and added that the commission was willing to help France in its efforts.

Earlier, Macron vowed to rebuild trust in the eurozone's second largest economy, and put an end to mixed messages and infighting on its economic policy.

"We have to win back the confidence our partners and investors abroad must have in our country, and to win back the trust of the French themselves. Without that, we can do nothing," the 36-year-old former top economic advisor to Hollande said at a handover ceremony with Montebourg.

Economists have welcomed Macron's nomination, seen as a sign Hollande will press ahead with a pro-business policy to cut corporate taxes to lift the economy out of stagnation while trimming the deficit.

While some note the risk of increased resistance to future reform moves from the left wing of Hollande's Socialist Party, most say they expect fewer internal government divisions.

Deutsche Bank economic Gilles Moec said the issue was one of implementation — with scope for plenty of wrangling ahead.

"The message from Paris is likely to be clearer, but the implementation of any further reform is actually going to be more difficult," he said in a note. "The reshuffle was one act — the first of many, we think — in what is likely to be a crippling succession war within the French left."

Underlining the lack of confidence among investors in Hollande so far, data showed on Wednesday that morale in the manufacturing industry fell by one notch in August, falling further below its long-term average. Business climate overall also fell, particularly in retail trade.

In two years, Hollande has carried out reforms of France's generous pension system and complex labour market which critics argue go only part of the way needed to give a shot in the arm to the eurozone's flat-lining second largest economy.

Macron will take over preparation of a law promised for September to cut red tape for businesses, and open up closed professions such as pharmacists and notaries.

This is a longstanding demand from Brussels and one Hollande hopes will help convince EU peers it is carrying out structural reforms — a condition to win more reprieve on EU fiscal targets.

Hollande also promised last week a plan to boost the depressed housing sector. He gave no concrete details for the plan beyond saying it would tackle taxation, regulatory and funding issues.

Housing has become a major headache for the government, with housing starts in France down to a 16-year low — a serious drag on the economy. Property developers say this is partly due to regulations agreed by the first Hollande government that set limits on the rent landlords can charge in towns with more than 50,000 people.

Hollande has also confirmed the government plans to reform welfare benefits and income tax rules to give poorer households a tax break on a similar scale to one struck down by the constitutional court earlier this month.

The initial plan had been to bring lower-paid workers 2.5 billion euros in payroll tax cuts next year. The government has also promised to extend a rebate of just over 1 billion euros in income tax paid by poorer households into next year.

Going beyond the first labour reform, the government is also looking into reviewing rules that oblige companies with a certain number of staff to have works councils and other rules, which business leaders say deter many from hiring.

OSLO — New roads long enough to girdle the Earth 600 times are expected to be built by 2050 and better planning is needed to protect the environment while also raising food production, a study showed on Wednesday.

The study in the journal Nature showed that roads can aid farmers, especially in developing nations where food production is held back by a lack of access to markets or to fertilisers and other technologies.

But too often, new roads slice through remaining wildernesses in the Amazon, New Guinea, Siberia or the Congo Basin, which are home to valuable species of animals and plants and help to slow climate change by storing greenhouse gases.

"While new roads can promote social and economic development, they can also open a Pandora's box of environmental problems," a team of scientists from Australia, Malaysia, the United States, Britain and Costa Rica wrote in the study.

The report's maps showed that 12 per cent of the world land area could benefit from roads to help raise farm output with little environmental damage, such as areas of India, central Europe and Asia, North America and the Sahel in Africa.

New roads likely to be built by 2050 would total 250 million kilometres, a 60 per cent gain from 2010 and long enough to encircle the planet more than 600 times, it indicated.

Lead author William Laurance, of James Cook University in Australia, told Reuters the maps were "just a starting point" for a wider debate about the economic impact of roads.

Many other local factors, such as keeping costs down by taking the shortest route, usually determine routes. Shorter roads also mean less pollution by vehicles.

"What we're attempting is to put road-building into a wider context," Laurance said. "There are a lot of local factors that will come into actual road planning — but one of the things that's been ignored so far is the 'big picture'."

Roads help GDP

Many other studies have shown that roads boost growth. A World Bank report this year about an expansion of the road network in Brazil since the 1960s found that "roads are shown to account for half of per capita gross domestic product growth".

The maps tried to value the animals and plants in each region and gauge the amount of carbon stored in vegetation, a natural buffer against climate change. They also created an index to value agricultural production.

Stephen Perz, an expert at the University of Florida, said the quality of data available for creating such maps varied a lot from country to country but that the study could help "a broader effort to improve such maps".

"Governments routinely plan roads without adequate consultation with local people and construction often goes ahead with insufficient attention to minimising the environmental effects," he wrote in a comment in Nature.

AMMAN — Jordan Investment Commission President Khaled Abu Rabei on Wednesday met with the chairman of the Jordanian-Saudi Business Council and discussed means to boost cooperation ties. Abu Rabei highlighted prospects for fostering trade and investment ties between the two countries, according to a statement received by The Jordan Times. 

AQABA — The Aqaba Special Economic Zone Authority (ASEZA) announced this week in a press statement that  its revenues during the first half of this year  increased by JD39 million or 18 per cent from the figure registered during the same period of last year. The statement attributed the improved revenues  to better and effective collection measures by concerned authorities in Aqaba, in addition to payment flexibilty of due amounts by investors and taxpayers. “The total amount of income tax collected by the Directorate of Revenue, Tax and Audit during the first half of this year reached about JD15 million,  31 per cent higher than  the JD11 million received during the January-June period of 2013,” the statement indicated. Sales tax revenues amounted to JD21 million, an increase of 11 per cent over the JD19 million. The buildings and lands tax increased by 1 per cent, registering JD1.6 million during the first six months of 2014.

SINGAPORE — Singapore sovereign wealth fund GIC, which manages more than $100 billion of the city-state's foreign reserves, warned in its annual report of a tough investment outlook over the next decade as global central banks withdraw ultra-easy monetary policies.

According to GIC, prices of all major asset classes have been inflated by the massive stimulus measures, and now face weak future returns.  

"Global financial markets have been recovering strongly from the 2008/09 global financial crisis, supported by low interest rates and unconventional monetary policies," GIC indicated in the report.

As central banks unwind monetary stimulus measures and interest rates increase, "financial assets will see diminished returns", it said. 

The US Federal Reserve is expected to end multibillion-dollar bond purchases in October, winding up a five-year stimulus effort to support the world's biggest economy. The European Central Bank has said it will reassess its stimulus measures at the end of this year.  

"The investment environment for the next 10 years will, therefore, be more challenging for global investors, including GIC," the fund added. 

GIC indicated that its assets earned a 4.1 per cent annualised real rate of return over the past 20 years in the year to March 2014, almost the same as last year's 4 per cent. It does not report the value of its assets.  

Lim Siong Guan, GIC's president, said the fund is committed "to ride out significant short-term volatility and focus on long-term fundamentals".

GIC last year unveiled a new investment strategy that split its global portfolio into three segments, a move it said was in anticipation of a "more challenging and complex investment environment". 

In its annual report this year, the fund said the Americas region including the United States accounted for 42 per cent of its portfolio in the year to March 2014, 2 per cent lower than the previous year.   

Its exposure to Europe was at 29 per cent, 4 per cent higher than in 2013.

Its holdings in Asia stood at 27 per cent, 1 per cent lower than 2013, while the remaining 2 per cent was concentrated in the Australasia region. 

Twenty-nine per cent of its portfolio was in developed markets equities, 19 per cent in emerging markets equities, 31 per cent in nominal bonds and cash, 7 per cent in real estate, 9 per cent in private equity and the remaining 5 per cent in inflation-linked bonds.    

Among its latest investments, in June GIC acquired a stake in US-based anti-plagiarism software maker iParadigms, and in May bought into a Philippine hospital group as well as Brazilian online sports retailer Netshoes.  

GIC is one of two Singapore sovereign wealth funds, the other one being Temasek Holdings. 

The net investment returns from GIC, the central bank, and Temasek account for about 15 per cent of the total government budget in Singapore.