Month: August 2013
India’s Bilateral Investment Treaties
Posted on July 2, 2013
Op-Ed Commentary: Chris Devonshire-Ellis
Jul. 2 – Bilateral investment treaties (BITs) are an oft-ignored part of bilateral trade, commerce and investment between two countries, and have often been superseded by other, more detailed trade agreements such as double taxation agreements (DTAs). Nonetheless, for many countries, BIT agreements remain the only basis on which to mutually and legally recognize the protocols and parameters of bilateral investments, and particularly so in the case of many lesser developed countries. For such countries, BITs may be the only form of agreement in place with major trading powers such as India, China, and even the United States.
The purpose of a BIT between two countries is reciprocal encouragement, promotion and protection of investments in each other’s territories by companies based in either country. These treaties typically cover the following areas:
Scope and definition of investment;
Admission and establishment;
Fair and equitable treatment;
Compensation in the event of expropriation or damage to the investment;
Guarantees of free transfers of funds; and
Dispute settlement mechanisms, both state-state and investor-state.
India has been entering into BITs with other countries for the past three decades, many of these with either its historical trading partners in Europe, or with countries with a large Indian Diaspora. India has nearly 40 BITs in place, and continues to use them in its bilateral relationships. For example, while the BIT signed between India and Germany was ratified back in 1995, others still continue to be put into position. The recent BIT agreement between India and Nepal was negotiated as recently as 2011.
India has the following BIT agreements in place:
Belgium & Luxembourg Economic Union
South and Central America
Asia & Oceania
The longevity of a BIT goes some way to explaining their usefulness, and investors into India from other countries should be aware of the contents of these documents. These documents may be downloaded in full, on a complimentary basis, from the Dezan Shira & Associates Online Resource Library.
While BIT agreements as a general rule of thumb may now be purely a matter of academic or historical interest, for some countries (such as Cambodia, which currently has zero DTAs in place) these treaties provide a useful mechanism for understanding the legal, tax and dispute resolution mechanisms for investors into the country. As such, BITs are a useful starting point to clarify legal and tax treatments under bilaterally agreed conditions and should be understood as a bilateral document of first resort when understanding the investment environment, and protection mechanisms that India offers its many trading partners. These tend to be of particular importance for understanding the rights of companies investing from or into emerging markets throughout Asia, Africa, Latin America and the Middle East.
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U.S. Images of Banking, Real Estate Making Comeback
Healthcare industry ratings decline most this year
PRINCETON, NJ — Americans’ views of seven industries are substantially improved this year, based on increases of 10 points or more in the industries’ net positive ratings. The banking, travel, and real estate industries show the greatest improvements. Healthcare is the only industry to see a decline of at least 10 points, although the retail, computer, and pharmaceutical industries were close to that threshold.
The results are based on Gallup’s annual Work and Education poll, conducted Aug. 7-11. Each year since 2001, Gallup has asked Americans to rate 25 different business sectors and industries on a five-point scale ranging from “very positive” to “very negative.” The net ratings are the difference between the positive and negative ratings for each industry.
Broader improvement in the economy and increased consumer confidence may be behind the more positive ratings of the banking, real estate, travel, airline, and automobile industries.
Despite improving the most this year, the banking industry continues to be rated more negatively than positively by Americans. But its ratings are the best since 2008, a month before the financial crisis threatened the existence of AIG and other major financial institutions. And prior to the 2008-2009 recession, Americans had a significantly more positive than negative view of banking.
The improvements in ratings of the real estate industry likely are due to the recovery of the housing market from the depths of the housing crisis. Now, about as many Americans view that industry positively as negatively, for the first time since 2007.
This year’s decline in ratings of the healthcare industry may be partly explained by a normalizing of its ratings after a sharp increase last year. The increased negativity may also be related to increased news media coverage of the Affordable Care Act, as some of its major provisions are set to go into effect in the coming months. The healthcare industry has never been rated more positively than negatively, although even with this year’s decline, its ratings currently are better than they were for much of the last decade.
Computer Industry Remains on Top
Ratings of the computer industry declined this year, after a record year last year. In 2012, 73% of Americans rated the computer industry positively, the highest for any industry in any year. This year, positive ratings of computers are down eight percentage points to 65%, accounting for most of the nine-point decline in the industry’s net positive rating.
Despite the decline, the computer industry remains the most positively rated industry overall, with a +54 net positive rating. The restaurant industry and farming and agriculture are rated the next-most positively.
At the other end of the spectrum, Americans are most negative toward the oil and gas industry and the federal government. A majority of Americans rate each negatively, the only two with that dubious distinction.
The computer industry has had the highest net positive rating each of the last six years. Since 2001, either the computer or the restaurant industry has topped the list.
The oil and gas industry has most commonly been the poorest-rated industry; it has been last or statistically tied for last in all 13 years the question has been asked. The federal government has ranked at the bottom with the oil and gas industry each of the last three years.
Americans’ ratings of several industries are more positive this year than last, particularly banking, travel, and real estate. Both banking and real estate have more ground to make up to return to their formerly positive ratings from before the recession, housing, and financial crises. But they are at least back to where they were when the recession started.
At the same time, a number of industries’ images declined in the last year, in particular healthcare, but also the retail, pharmaceutical, and computer industries.
Most industries’ ratings suffered during the recession. In 2008, 13 industries had net negative ratings. That number is down to eight this year, including real estate and electric and gas utilities, with scores of -1.
Thus, as the economy has shown signs of improvement, Americans’ views of many U.S. industries have improved. So a healthier economy will likely boost industry ratings, in addition to the effects from more industry-specific improvements that have occurred recently in the real estate and automobile industries.
August 20, 2013
Obama approval rating on economy relatively weak at 35%
PRINCETON, NJ — The economy carries the greatest weight of nine key issues in determining how Americans rate President Barack Obama overall. Americans who approve of the job Obama is doing on the economy are six times more likely to approve of Obama’s overall performance than those who disapprove of Obama’s handling of the economy. That is nearly double the impact of any other issue. The next-most-influential issues are healthcare, terrorism, and the federal budget deficit.
The results are based on a statistical model that assesses the relative importance of the nine issue approvals measured in Gallup’s Aug. 7-11 poll in predicting Obama’s overall approval rating. The model gives an estimate of each issue’s independent effect on overall approval, controlling for the effects of the other issues.
All nine issues have a positive and statistically meaningful relationship to approval. The estimates, or odds ratios, estimate the increased likelihood that someone will approve of the job Obama is doing overall if he or she approves of Obama on a given issue rather than disapproving of him on the issue.
Of the nine issues, Obama’s approval ratings are highest on race relations (51% approval) and terrorism (50%), and lowest on the federal budget deficit (26%). His job approval rating for handling the economy is 35%.
The combination of his lower approval rating on the economy and its importance in predicting his overall approval rating makes it a problematic issue for the president at the moment. It also suggests that his overall approval rating is unlikely to show sustained improvement until Americans believe he is doing a better job of handling the economy.
Similarly, given their relatively strong predictive power and Obama’s lower ratings for handling them, healthcare policy and the deficit are also relative weaknesses for the president.
His major strength is on terrorism — 50% approve of his handling of that issue and it is one of the more influential predictors of his overall approval. Those who approve of the president on terrorism are three times more likely to approve of the overall job he is doing as president than those who do not approve of him on the issue. Terrorism could be one of the issues helping to keep Obama’s overall job approval ratings — which have averaged in the mid-40% range the last several weeks — above his ratings for handling the economy.
Two issues on which Obama’s approval ratings are better, education and race relations, are generally less influential in shaping Americans’ overall opinions of Obama. So while the president would clearly welcome high ratings on those two issues, they have less impact on how Americans currently rate his performance more broadly.
Obama’s approval rating on taxes lags, at 36%, but that is less of a weakness for Obama than his ratings on the economy, healthcare, or the federal budget deficit because the tax issue is less important in determining how Americans view Obama overall.
These odds-ratio estimates give a sense of how influential each issue is in determining whether Americans currently approve or disapprove of Obama. Over time, the relative importance of the issues can change. For example, if the budget deficit becomes a bigger issue this fall as Congress and the president work out legislation to raise the federal debt limit, it could become more influential in determining Americans’ views of Obama more generally. But given that the economy and unemployment have been at the top of the most important problem list for more than five years, the economy’s status as the key predictor of Obama’s job approval rating seems secure for the time being.
It’s no surprise that the economy is the key issue in determining how Americans rate the job Obama is doing as president. He was elected during the worst economy since the Great Depression and has recently attempted to refocus his attention on it. It is not clear how much presidents’ policies can influence the course of the U.S. economy, and Obama may be limited in what he can do in general, given stiff opposition to his economic agenda from Republicans in Congress. Regardless of whether it is through his own efforts or the efforts of American businesses and consumers, the surest way for Obama’s approval ratings to improve is for the economy to get stronger.
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Euro Stock Market Benchmark Indices German DAX and France CAC closing Friday 23rd August 2013
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US and UK Stock Market Benchmark Indices DowJones , Nasdaq and FTSE Closing value on friday 23rd August 2013
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US Stock Market update 22nd August 2013
Higher optimism due to increased positivity about getting credit
PRINCETON, NJ — U.S. small-business owners are more optimistic now than at any time since late 2008. The Wells Fargo/Gallup Small Business Index improved to +25 in July, from +16 in the second quarter. The latest result, while not as high as pre-recession levels, is the highest index score since the third quarter of 2008.
Prior to the recession and financial crisis of 2008-2009, Small Business Index scores were generally in the triple digits. The Wells Fargo/Gallup Small Business Index was initiated in August 2003, reached its peak at 114 in December 2006, and hit its low point of -28 in July 2010.
The latest results are based on a national random sample of 603 small-business owners having $20 million or less of sales or revenues, conducted July 22-26.
Owners’ Higher Optimism Due More to Future Outlook
The increase in the overall index score comes more from owners’ improving future outlook than from their views of present conditions.
Small-business owners’ ratings of their current operating environment are mostly flat compared with April. The Present Situation Dimension of the index was +4 in July, essentially the same as the +2 in the previous quarter. But, this is only the second time the Present Situation Dimension has been in positive — if still broadly neutral — territory since December 2008.
The Future Expectations Dimension of the index, which measures owners’ expectations for their business’ operating environment over the next 12 months, increased to +21 in July, up from +14 in April. Small-business owners are modestly more optimistic about their future operating environment compared with one year ago, when this dimension stood at +18.
Perceptions About Credit Availability Pushing Index Score Up
Small-business owners’ increased overall optimism correlates with their more positive views toward the ease of obtaining credit. Fewer business owners say they have experienced difficulty in the last 12 months obtaining credit, at 25%, than did so last quarter, at 30%.
Thirty percent of small-business owners say they expect credit to be difficult to obtain in the next 12 months — down significantly from the 36% recorded last quarter, and the lowest percentage reported since 2008.
Small-business owners are more optimistic than they have been since late 2008. This higher optimism is due more to what they expect in the future than what they are experiencing in the present, and also is related to increased views about the ease of obtaining credit. Still, the overall level of the index remains well below where it was in the years prior to the 2008 recession.
During recent weeks, Gallup data have shown that Americans’ economic confidence is down slightly from the peaks reached in May and June, and in the early months of the year. Gallup’s measure of job creation was quite stable in July.
Gallup’s measurement of consumer spending has been up in recent weeks, which in turn could have a positive impact on many small businesses across the country.
About the Wells Fargo/Gallup Small Business Index
Since August 2003, the Wells Fargo/Gallup Small Business Index has surveyed small-business owners on current and future perceptions of their business financial situations. Visit the Wells Fargo Business Insight Resource Center to access the full survey report and to listen to Wells Fargo’s quarterly Small Business Index podcast.
Results for the total dataset are based on telephone interviews with 603 small-business owners, conducted July 22-26, 2013. For results based on the total sample of small-business owners, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.
Sampling is done on a random-digit-dial basis using sampling of small businesses having $20 million or less of sales or revenues. The data are weighted to be representative of U.S. small businesses within this size range nationwide.
In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
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Sri Lanka’s central bank held its benchmark repurchase rate steady at 7.0 percent, as expected, and said there was room for market rates to fall further and the reduction in lending rates so far had been inadequate to reflect the central bank’s policy stance and low inflation.
The Central Bank of Sri Lanka, which has cut rates by 75 basis points since December last year, said inflation is expected to remain in single digits during the rest of this year and in mid-single digits in 2014 and this would be “conducive for sustained economic growth and improved domestic and international investor confidence.”
Global developments have been reasonably encouraging, the central bank said, and the “positive developments in advanced economies, if continued, would augur well for domestic economic growth as a result of a stronger performance of the external sector.”
However, the bank added that the “wide fluctuations of currencies of trading partners and competitors in the international market would need to be closely monitored in order to address any adverse effects on Sri Lanka’s external balance in the period ahead.”
Exports from Sri Lanka showed some turnaround in June, recording a positive year-on-year growth after a decline seen in the past 15 months, while imports also rose in June so the trade deficit rose.
But inflows to commercial banks and to the stock market along with foreign direct investment inflows showed that foreign investor confidence had remained “unchanged despite the volatility caused by global markets reacting to the prospects of the tapering of quantitative easing by advanced economies,” the central bank said.
Inflation in Sri Lanka eased further in July to 6.1 percent from 6.8 percent in June and core inflation fell to 3.1 percent from 4.3 percent, continuing the declining trend seen since March after headline inflation approached 10 percent in the second half of 2012 and first few months of this year.
Sri Lanka’s Gross Domestic Product rose by an annual 6 percent in the first quarter, down from 6.3 percent in the fourth quarter.
for more details log on to Central Bank of Sri Lanka website : http://www.cbsl.gov.lk/
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