China Removes Floor on Lending Rates as Economy Slows

China eliminated the lower limit on lending rates offered by the nation’s financial institutions as growth slows and authorities expand the role of markets in the world’s second-biggest economy.

The change, effective today, removes a floor set at 30 percent below the current 6 percent benchmark, according to a People’s Bank of China statement yesterday

While the move temporarily jolted world stocks higher, the PBOC acknowledged that it was a limited step and said that freeing up deposit rates would be more important. The shift came as central bankers and finance ministers from Group of 20 nations gathered in Moscow, and after a cash squeeze in money markets curbed a record expansion in China’s credit.

“While deposit-rate liberalization is still possible, the fact that a decision was made to just remove the lending-rate floor suggests that more aggressive liberalization proposals were defeated, or at least delayed,” said Ken Peng, senior economist at BNP Paribas SA in Beijing. “This decision shows that some reform is being done, but may actually reduce the chances for deposit-rate liberalization in the near term.”

Raising the deposit-rate ceiling would improve household incomes and reduce the attractiveness of non-traditional wealth management products while threatening banks’ profit margins, Peng said.

China is not yet ready for freeing up deposit rates, the “most risky” part of interest-rate liberalization, the PBOC said, adding that the nation lacks a deposit insurance system.
Right Timing

There’s no consensus on deposit-rate reform, Song Guoqing, an academic adviser to the central bank, said today.

“Some people said the timing is right, others said it’s not, there is no unified view,” Song said at a conference in Beijing. “Had there been a unified view, it would have been announced yesterday.”

The change will lower companies’ funding costs and boost financial institutions’ pricing capabilities, the PBOC said. In the first quarter, only about 11 percent of loans were priced below the lending benchmark, according to central bank data.

China will maintain the floor for mortgage rates because the government will continue to curb speculative home buying and investment, the PBOC said. It will remove the cap on lending rates offered by rural cooperatives and also scrap controls on bill discounting rates.

http://www.bloomberg.com/news/2013-07-19/china-removes-floor-on-lending-rates-offered-by-nation-s-banks.html

Honda’s Fujino Readies ‘Flying Acura’ to Challenge Cessna

Michimasa Fujino began working on Honda Motor Co. (7267)’s aviation project 27 years ago at a hangar in Mississippi. Next year, Fujino, now president of the aircraft unit, says the project may finally get off the ground.

If so, Tokyo-based Honda would become the first newcomer to get U.S. approval in the $21 billion business-jet market since 2006. That would pit the carmaker against market leadersTextron Inc. (TXT)’s Cessna and Brazil’s Embraer SA (EMBR3), who have fended off threats from companies such as Bill Gates-backed Eclipse Aviation, which sought bankruptcy protection five years ago.

Though delivery of the HondaJet hasn’t started, Fujino said he has clinched two to three years of orders for the $4.5 million plane and signaled the business will turn profitable before the end of the decade. The seven-seater plane, which Fujino calls a “flying sports car” or “flying Acura,” will be 15 percent more fuel efficient, have roomier cabin space and fly 10 percent faster than comparable aircraft, he said.

Skeptics abound.

“There are no newcomers to business aviation, only cautionary tales,” said George Tsopeis, vice president at Montreal-based Zenith Jet, an aviation advisory firm. “If Honda manages to bring the HondaJet to market, that alone will be an accomplishment.”
Aviator Glasses

Wearing aviator-style prescription glasses, Fujino said he expects the unconventionally designed jet -- the engines are on top of the wings -- to get clearance from the U.S. Federal Aviation Administration by next year.

He has said that before. Honda has delayed the debut of the plane every year since targeting deliveries in 2010 for reasons ranging from difficulties procuring components to parts damage caused by ice. The company says it’s getting closer, in May announcing that its fifth FAA-conforming HondaJet successfully completed its first flight.

To get permission from the FAA, a manufacturer must demonstrate that the plane meets U.S. regulations on everything from the strength of the wings to how it lands in a crosswind. Most of the process is conducted behind closed doors because the test data and designs supplied by aircraft manufacturers are considered proprietary and confidential.

Certification is a “long and arduous process” that typically involves testing four to five aircraft for 2,000 flight hours, Tsopeis said. Once a company gets the nod from the FAA, it becomes easier to win certification from other aviation jurisdictions, he said.
Founder’s Dream

The FAA doesn’t comment on pending aircraft certification, it said in an e-mailed statement. Representatives at Cessna and Embraer didn’t respond to e-mails seeking comment.

The start of deliveries would fulfill the wishes of the company’s late founder, Soichiro Honda, who died in 1991. Though the carmaker doesn’t expect the business to be a big profit contributor, it has pursued the project partly as a tribute to the founder, Chairman Fumihiko Ike said in an interview this month.

In the fiscal year ended March, automobiles and motorcyclesaccounted for 92 percent of Honda’s revenue and 73 percent of operating profit.

http://www.bloomberg.com/news/2013-07-18/honda-s-fujino-readies-flying-acura-to-challenge-cessna.html

Social Media for Politics in Japan allowed ?

Noise-polluting trucks with loudspeakers and politicians hoarse from giving speeches at railway stations have been a staple of Japanese elections since before the Second World War.

That may be about to change, as politicians take advantage of new laws allowing them to use Twitter Inc., Facebook Inc. (FB) and video streaming websites to campaign online.


The Twitter Inc. page belonging to Shinzo Abe, Japan's prime minister, is displayed on a computer screen. Photographer: Tomohiro Ohsumi/Bloomberg


Shinzo Abe, Japan's prime minister, delivers a speech at an election campaign rally in Tokyo. Photographer: Kazuhiro/AFP/Getty Images


Sheryl Sandberg, chief operating officer of Facebook Inc., left, and Shinzo Abe, Japan's prime minister, pose for a photograph prior to their meeting at the prime minister's official residence in Tokyo on July 2, 2013. Photographer: Franck Robichon/Pool via Bloomberg

Japan’s July 21 upper house election is the first nationwide voting since the end of a ban on candidates using the Internet to spread political messages in a nation where door-to-door campaign visits are illegal. Politicians now have a campaign tool that’s quicker, cheaper and quieter than the loudspeaker trucks.

“Online campaigning may have an impact on public opinion, and voting results could be drastically different,” said Hiroshi Naya, an analyst at Ichiyoshi Research Institute Inc. in Tokyo. “Those who aren’t familiar with online communication methods have to learn how to use them.”

Companies such as Yahoo Japan Corp. (4689) and Dwango Co. (3715), which has seen candidates tap its Niconico video streaming channel, may benefit from the new style of campaigning, Naya said.

Loudspeaker vans are legal under Japan’s Public Offices Election Act. Rules also limit the size and number of pamphlets a political group can use and where posters can be placed.
New Blogs

Prime Minister Shinzo Abe’s Liberal Democratic Party, along with coalition ally New Komeito, will probably win a majority in the upper house election, according to a July 4-5 Yomiuri newspaper poll.

Under the old campaigning rules, candidates were barred from even updating blogs or making new entries on social networks during the campaign.

The April rule change has triggered a rush of politicians starting blogs to communicate with voters.

Of the 433 candidates in the election, 121 have opened an account at CyberAgent Inc. (4751)’s Ameba blogging service. About half of them are newly created accounts since the Tokyo-based company started in April offering free consulting services for politicians to help them get used to social media, said Ayako Toba, an Ameba spokeswoman.

Septeni Holdings Co. (4293), which manages Internet advertising businesses, last month sold an e-mail authentication service to a major Japanese political party, spokeswoman Hiromi Kofunato said, declining to specify the buyer. Septeni has also begun a consulting service to help politicians open Facebook accounts.
Market Impact

Shares of Dwango have almost tripled this year and Septeni has more than doubled, compared with a 41 percent advance for the broader Topix (TPX) index. Dwango’s Niconico Internet streaming service is used by 10 political parties, according to Akiko Matsumoto, spokeswoman for the Tokyo-based company.

“Those shares started to gain on expectation that the rule change would benefit the companies,” said Ichiyoshi’s Naya.

While many candidates are still beginners in the use of social media, a notable exception is Prime Minister Abe, said Jitsuko Miyazaki, who runs Haru Consulting Inc., an Internet business firm based in Yokohama, near Tokyo.

“There is no limit to using Internet to show what you are doing,” she said. “Prime Minister Abe may be the only politician standing out for regular use of online media.”

Abe has been uploading photos and comments several times a day to his Facebook accountsince he kicked off the LDP campaign July 4. Pictures and videos from the trip include a breakfast with his wife at home, holding a supporter’s baby during a lunch break and shaking hands with shoppers as he walked through a local market.
Obama’s Twitter

More than 5,000 people gathered in Osaka as Abe gave a speech for a LDP candidate Takuji Yanagimoto, Abe’s July 6 postings show. More than 10,700 people clicked a “like” button for that posting.

While Abe’s over 153,000 Twitter followers number more than LDP Secretary General Shigeru Ishiba’s 35,000, the roster is dwarfed by the more than 34 million people who track U.S. President Barack Obama’s posts.

Yosuke Ito, a candidate for the governing Liberal Democratic Party, is among those shunning traditional methods for the election. The 49-year-old musician has been seeking votes through Twitter, Facebook, Google Inc.’s YouTube and Niconico.
That’s Entertainment

As the new rules took effect, Ito kept his blog updated with new videos and photos while also getting help from other artists that are signed with Avex Group Holdings Inc. (7860), the agency that manages his music. The dance group Exile appeared on his blog, helping it become the most popular among the 121 Ameba sites for candidates.

Ito, formerly a stockbroker, knows where he sees the value of his campaign.

“I am campaigning mainly on Internet,” Ito said in a July 8 post on Twitter. “I don’t repeat my name from an election van or scream out a speech in front of a station. I’d rather bring my passion in packets and footage that are enjoyable to all through Niconico and YouTube.”

To contact the reporters on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net; Takashi Amano in Tokyo at tamano6@bloomberg.net

To contact the editor responsible for this story: Robert Fenner at rfenner@bloomberg.net

India’s Bihar State Blames ‘Callous’ Principal for School Deaths

The source of poison that killed 23 school children last week in the Indian state of Bihar was the vessel storing cooking oil used to prepare their lunch, an official said, citing a forensic report released late yesterday.

Monocrotophos, a highly toxic organophosphate insecticide, was found in the oil container, the food and the utensil in which it was cooked, R. Lakshmanan, who runs the mid-day meals program in the state, said in a telephone interview last night. The chemical, which the U.S.stopped using in 1988 according to the website of the Extension Toxicology Network, is produced by at least 15 manufacturers in the world, according to the Pesticide Action Network’s website.

“This confirms our suspicion that the oil, or what was believed to be oil, was the source of poisoning,” Lakshmanan said in a telephone interview. He didn’t say if the food was cooked just using the insecticide or contaminated oil.

The deaths of the children further tarnished the reputation of an 18-year-old government meals program meant to feed the hungriest children in the poorest corners of India. The plan, part of a web of polices aimed at easing the malnourishment that afflicts almost half the country’s children, has been criticized by the Supreme Court and the comptroller and auditor general for corruption and inefficiencies.
Stolen Food

Graft has plagued all three of India’s major food aid programs. A Bloomberg News investigation last year showed how $14.5 billion in food meant for the poor was stolen from a rationing system and sold on the black market.

The forensic report doesn’t indicate whether the poisoning was intentional, Lakshmanan said.

About 50 to 60 children were present, seated on the building’s concrete floor, as lunch was served on July 16 around 1 p.m., relatives said July 18. Most ate off metal plates, many of which were strewn around the classroom. The meal had been cooked just outside on a makeshift stove made of bricks, which has since been destroyed during protests that followed the deaths.

A soyabean dish served to the children may have been prepared using the pesticide as a cooking medium instead of oil, the Times of India reported, citing sources in the federal human resources development ministry it didn’t name. The school principal scolded the students who refused to eat the dish because of its black color and smell, according to the report.

The condition of three children undergoing treatment in the Intensive Care Unit of the Patna Medical College hospital had improved, the hospital said in a bulletin yesterday. All the other children and the school cook were also stable and the patients were now being fed orally, it said.
‘Gross Negligence’

Lakshmanan, in a separate interview on July 19, said the tragedy wouldn’t have occurred if rules had been followed and condemned the “gross negligence” of the school principal in the village of Dharmasati Gandawan. He rejected charges the deaths represented a wider government failure.

“There has been a very callous attitude and gross negligence on the part of the headmistress,” he said in the provincial capital of Patna. “Our principals have been given detailed training as recently as April, including instructions to taste the food before feeding the students.”

Many of the grieving families in Bihar buried their dead children in the school grounds or in nearby paddy fields to protest what they said was official indifference to their loss.

http://www.bloomberg.com/news/2013-07-19/children-buried-at-indian-school-as-pesticide-is-blamed.html

Clean Energy: Green Power for Asia's Future Growth

700 million
people in Asia have no access to modern electricity

$4.8 billion
been invested in ADB projects with clean energy components from 2008-2010

71 million
tons of CO2 have been abated through ADB projects from 2008–2010

With energy demand projected to almost double in the Asia and Pacific region by 2030, there is an urgent need for innovative ways to generate power while at the same time reducing greenhouse gas emissions. Compounding the problem is widespread energy poverty across Asia with almost a billion people still without access to electricity.

As many of ADB’s developing member countries (DMCs) forge ambitious plans to meet these challenges ADB is committed to helping them achieve access to clean energy for all.

The Asia-Pacific region is the global leader in clean energy development, but there is much more that can be done to raise the level of clean energy deployment.

From 1990 to 2009, ADB provided over $25.8 billion in assistance for energy projects, extending electricity and modern fuels to hundreds of millions of people in Asia and the Pacific. ADB’s updated Energy Policy aims to promote energy efficiency and renewable energy. Clean energy investments in 2010 reached $1.76 billion with access-to-energy projects exceeding $950 million, up from $418 million in 2009. Between 2003 and 2009 such assistance connected 1.27 million households to electricity. Improving access to cleaner, renewable sources of energy strengthens energy security in DMCs and is a key to mitigating climate change

http://www.adb.org/sectors/energy/main

ASEAN lauds Indonesian`s efforts to fight forest fires

Kuala Lumpur (ANTARA News) - ASEAN environment ministers have praised Indonesia for its quick act to combat land and forest fires that caused air pollution in neighboring countries.

They also lauded Indonesia`s commitment to speeding up the process of ratifying an ASEAN agreement on transboundary haze pollution, according to the result of a haze pollution-related meeting in Kuala Lumpur on Wednesday.

Also attending the "15th Meeting of the Sub-regional Ministerial Steering Committee on Transboundary Haze Pollution were ASEAN Secretary General Le Luong Minh, Brunei, Indonesian, Malaysian, and Singapore environment ministers and Thai deputy environment minister.

The ministers said Indonesia`s efforts to fight land and forest fires indicated its capacity to prevent the fires from spreading.

Yet they underscored the need for the country to adopt an early warning system to prevent the land and forest fires from a recurrence in the future.

They also affirmed their offer to help fight forest fires if needed.

Indonesian Environment Minister Balthazar Kambuaya said Indonesia was very serious about handling land and forest fires in Riau province which caused thick haze a few weeks ago in view of their impact on many parties.

"Don`t think that Indonesia was silent. As a matter of fact, we made as maximum efforts as possible to put out the land and forest fires," he said.

The maximum efforts were made because Indonesia wanted to serve the interests of the local people whose health was at greater risk rather than to satisfy the interests of its neighboring countries such as Singapore and Malaysia, he said.

"We paid great attention to the health of the people living near the land and forest fires in Riau province," he said.

Kambuaya said the Indonesian government had proposed to the House of Representatives (DPR) to ratify the ASEAN agreement on transboundary haze pollution.

"We hope the DPR would approve the proposal at the end of this year," he said. ***1***

Reporting by N. Aulia Badar

http://www.antaranews.com/en/news/89915/asean-lauds-indonesians-efforts-to-fight-forest-fires

Japan election: Abe 'wins key upper house vote'

Japanese Prime Minister Shinzo Abe has won a majority in the upper house, exit polls suggest.

His Liberal Democratic Party and its junior partner New Komeito were set to get at least 71 of the 121 seats being contested, broadcaster NHK projected.

This would give him control of both houses of parliament for the first time in six years.

The deadlock in parliament has been seen as a key factor in Japan's recent "revolving door" of prime ministers.

Official results are not expected until Monday.

But the exit poll suggested Mr Abe's coalition would control 130 seats in the 242-seat upper house. Half the seats were being contested in Sunday's election.

The result is being seen as a vote of confidence in Mr Abe, says the BBC's Rupert Wingfield-Hayes in Tokyo.

He has the power - the question is whether he has the will, too, says our correspondent.

Media reports said voter turnout was lower than in the last upper house election, in 2010.

Search for stability

Reacting to the exit polls, LDP Vice-President Masahiko Komura told NHK: "People wanted politics that can make decisions and an administration with a stable grounding, which led to today's result."

"'Abenomics' is proceeding smoothly and people want us to ensure the benefits reach them too. That feeling was strong," he said referring to Mr Abe's economic proposals.

Japan's upper chamber, while not as powerful as the lower house, is able to block legislation introduced by the government.

Opposition parties have had enough combined seats to control the upper chamber in recent years, leading to what has become known as a "twisted parliament".

This has resulted in factionalism and multiple changes of prime minister.

"We need political stability to carry out policies," Mr Abe said ahead of the vote.

Mr Abe, 58, has relatively strong public support for his proposals for economic reform, which seek to revive the economy, stagnant for two decades.

Since his coalition government came to power, the economy has grown by 4% and the stock market by more than 40%.

His first two measures involved a big injection of cash by the Bank of Japan and a major boost in government spending.

But he now faces the task of driving through difficult structural changes to the economy.

Trade barriers need to come down, taxes will need to rise and large parts of the economy will have to be deregulated.

One of the decisions he will have to make later this year is whether to raise sales tax next April from 5% to 8% to help reduce Japan's national debt.

Mr Abe is also considering whether to cut Japan's 36% corporate tax to spur growth and open up the power industry, currently controlled by regional monopolies.
Japan's economy has grown by 4% since Mr Abe came to power but difficult decisions are expected

And his government is keen to join a free trade agreement known as the Trans-Pacific Partnership (TPP), being negotiated by 11 countries.

Mr Abe is also thought likely to endorse several controversial policies beyond the economy.

These include restarting Japan's nuclear reactors - something many in Japan are opposed to.

A possible revision of Japan's pacifist constitution, especially a section which prohibits the use of force in international disputes except for self-defence, may also be a priority. But correspondents say pursuing nationalistic policies may cause tension with neighbouring countries.

http://www.bbc.co.uk/news/world-asia-23396234