Chairman of India’s Ailing Jet Airways Resigns

The chairman of India’s private Jet Airways has quit amid mounting financial woes which have forced it to suspend 14 international routes and ground more than 80 planes.

A statement by the airline says its board on Monday accepted the resignations of Chairman Naresh Goyal, his wife and a nominee of Gulf carrier Etihad Airways from the board. It said Goyal will also cease to be chairman.

Goyal has been trying to obtain new funding from Etihad Airways, which holds a 24 percent stake in the airline, which was founded 27 years ago.

The statement said the airline will receive 15 billion rupees ($217 million) in immediate funding under a recovery plan formulated by its creditors.

 

 

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Nike fined $14 Million for Blocking Cross-border Sales of Soccer Merchandise

U.S. sportswear maker Nike was hit with a 12.5 million euro ($14.14 million) fine on Monday for blocking cross-border sales of soccer merchandise of some of Europe’s best-known clubs, the latest EU sanction against such restrictions.

The European Commission said Nike’s illegal practices occurred between 2004 to 2017 and related to licensed merchandise for FC Barcelona, Manchester United, Juventus, Inter Milan, AS Roma and the French Football Federation.

The European Union case focused on Nike’s role as a licensor for making and distributing licensed merchandise featuring a soccer club’s brands and not its own trademarks.

The sanction came after a two-year investigation triggered by a sector inquiry into e-commerce in the 28-country bloc. The EU wants to boost online trade and economic growth.

European Competition Commissioner Margrethe Vestager said Nike’s actions deprived soccer fans in other countries of the opportunity to buy their clubs’ merchandise such as mugs, bags, bed sheets, stationery and toys.

“Nike prevented many of its licensees from selling these branded products in a different country leading to less choice and higher prices for consumers,” she said in a statement.

Nike’s practices included clauses in contracts prohibiting out-of-territory sales by licensees and threats to end agreements if licensees ignored the clauses. Its fine was cut by 40 percent after it cooperated with the EU enforcer.

($1 = 0.8839 euros)

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How Will Foreign Investment Change Vietnam’s Economy?

Vietnam’s cheap workers might not be the country’s stars for much longer: low wages helped to propel the communist nation to some of the fastest growth rates in the world, but analysts say it needs a new economic model now.

After a slow recovery from the Vietnam War, the Southeast Asian country saw gross domestic product rise year after year from the 1990s on. That was built on the back of low-cost labor and factory-driven exports, as well as companies’ increasing tie-ins to foreign investment.

Vietnam is currently at a turning point, looking back at simple exports like rice and Reeboks that helped it develop, and looking forward to a more advanced economy along the lines of Taiwan or South Korea. Locals do not want “Made in Vietnam” to signal low quality. They also want to integrate into global trade, without the backlash against globalization seen among populist voters from Europe to the United States.

“What has been working in the past 30 years may not necessarily work in the future,” said Ousmane Dione, the World Bank director in Vietnam. “The impacts of initial institutional and structural reforms seem to have reached their limit.”

He was referring to the Doi Moi reforms that began three decades ago, when Vietnam started to introduce more and more traits of a market economy into its system, like private ownership of firms and houses. Hanoi is conducting a review of how well Doi Moi turned out, and how to chart an economic path for the next three decades.

Advisers have put forward ideas of how the new economy could look in Vietnam, among which are three common themes: the internet and other high-tech sectors will dominate; businesses will move into services and other value-added industries rather than physical goods; and employees will constantly update their skills through life-long learning.

For example, Vietnamese factory hands are accustomed to assembling phones and cars, but could they one day move up the value chain, such as by providing tech support to people who buy these products?

On the technology side, Vietnam could do more to collaborate with the rest of Southeast Asia, according to Pham Hong Hai, CEO of HSBC Vietnam. That may range from ensuring electronic payments go off without a hitch across borders, to cooperating on a response to cyber threats, he said.

“Businesses are crying out for tangible developments that will smoothen intra-regional trade,” Hai said. Vietnam “should continue the momentum to further integrate into the region and gain most benefits from globalization.”

Left Behind?

The other vital theme has to do with the workforce, making sure its productivity and skill levels improve. Millions of Vietnamese now rely on entry-level jobs to make a living, whether it’s gluing together wallets at a factory, or picking coffee cherries on a farm.

That was the work that used to attract foreign investors to the country in droves, but not all of those jobs will last. So groups from government agencies to charities are enacting education and training programs to equip locals with skills for the future.

This is meant not just to increase job security, but also to prevent Vietnamese from feeling left behind or bitter if jobs get off-shored to cheaper countries. Vietnam hopes to avoid the populist resentment of other parts of the world, as well as the trade protectionism that has created.

To that end Vietnam is turning to partners like Australia, which has supported projects that allow the fruits of economic success to be spread more widely.

Vietnam set out on a new “chapter that embraces innovation, promotes bold reform, and helps Vietnam achieve its ambitious development goals,” said Craig Chittick, the Australian ambassador in the country of 100 million people.

His government has backed programs in Vietnam like the KOTO center, which teaches hospitality skills to street children, as well as a contest to invent technologies useful to rural women and a forum to promote impact investing. The idea is that not all groups have benefited from past economic growth, but there is still a chance to change that in the new Vietnam.

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How US States Are Richer Than Some Foreign Nations

The United States is an economic powerhouse.

As the largest economy in the world, the U.S. produced $20.5 trillion worth of goods and services — known as its Gross Domestic Product (GDP) — in 2018. That’s impressive when you consider that the total GDP for the entire world was about $80 trillion in 2017.

In fact, every U.S. state has a GDP that makes it as powerful, economically, as a foreign nation.

California is the state with the highest GDP in the country. Its $2.97 trillion economy is on par with Britain, which has a GDP of $2.81 trillion. The UK needed 14.5 million workers — 75 percent more than California used — to produce the same economic output. On its own, California is the fifth-largest economy in the world.

The GDP of Texas ($1.78 trillion) is equivalent to the economy of Canada ($1.73 trillion), while New York’s GDP ($1.70 trillion) matches up to South Korea ($1.66 trillion).

Even the smaller U.S. states can hold their own. Wyoming, the smallest U.S. state population-wise, with fewer than 600,000 residents, has a GDP of $41 billion, which is about the same as Jordan’s, a country of 9 million people.

Mark J. Perry, an economics and finance professor at the University of Michigan, and a scholar at the American Enterprise Institute, used data from the U.S. Department of Commerce and the International Monetary Fund for his analysis comparing the GDP’s of U.S. states to entire countries.

He says those numbers are a testament to the “world-class productivity of the American workforce,” and a reminder of “how much wealth, output and prosperity is being created every day in the largest economic engine there has ever been in human history.”

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US Government Posts $234 Billion Deficit in February

The U.S. federal government posted a $234 billion budget deficit in February, according to data released Friday by the Treasury Department.

Analysts polled by Reuters had expected a $227 billion deficit for the month.

The Treasury said federal spending in February was $401 billion, up 8 percent from the same month in 2018, while receipts were $167 billion, up 7 percent compared to February 2018.

The deficit for the fiscal year to date was $544 billion, compared with $391 billion in the comparable period the year earlier.

When adjusted for calendar effects, the deficit was $547 billion for the fiscal year to date versus $439 billion in the comparable prior period.

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GM Announces Jobs, Electric Vehicle After Trump Criticism

Less than a week after a series of critical tweets from the president over an Ohio plant closure, General Motors is announcing plans to add 400 jobs and build a new electric vehicle at a factory north of Detroit.

The company says it will spend $300 million at its plant in Orion Township, Michigan, to manufacture a Chevrolet vehicle based on the battery-powered Bolt.

GM wouldn’t say when the new workers will start or when the new vehicle will go on sale, nor would it say if the workers will be new hires or come from a pool of laid-off workers from the planned closings of four U.S. factories by January.

The company also announced plans Friday to spend about another $1.4 billion at U.S. factories with 300 more jobs but did not release a time frame or details.

The moves come after last weekend’s string of venomous tweets by President Donald Trump condemning GM for shutting its small-car factory in Lordstown, Ohio, east of Cleveland. During the weekend, Trump demanded that GM reopen the plant or sell it, criticized the local union leader and expressed frustration with CEO Mary Barra.

GM spokesman Dan Flores would not answer questions about Trump but said the investment has been in the works for weeks. Indeed, GM has said it planned to build more vehicles off the underpinnings of the Bolt, which can go an estimated 238 miles on a single electric charge. The company has promised to introduce 20 new all-electric vehicles globally by 2023.

In November, GM announced plans to shut the four U.S. factories and one in Canada. About 3,300 workers in the U.S. would lose their jobs, as well as 2,600 in Canada. Another 8,000 white-collar workers were targeted for layoff. The company said the moves are necessary to stay financially healthy as GM faces large capital expenditures to shift to electric and autonomous vehicles.

Plants slated for closure include Lordstown; Detroit-Hamtramck, Michigan; Warren, Michigan; White Marsh, Maryland, near Baltimore and Oshawa, Ontario near Toronto. The factories largely make cars or components for them, and cars aren’t selling well these days with a dramatic consumer shift to trucks and SUVs. With the closures, GM is canceling multiple car models due to slumping sales, including the Chevrolet Volt plug-in gas-electric hybrid.

GM has said it can place about 2,700 of the laid-off U.S. workers at other factories, but it’s unclear how many will uproot and take those positions. More than 1,100 have already transferred, and others are retiring.

The United Auto Workers has sued GM over the closings, which still must be negotiated with the union.

Trump’s latest GM tweet on Monday said GM should: “Close a plant in China or Mexico, where you invested so heavily pre-Trump,” and “Bring jobs home!”

Ohio and the area around the Lordstown plant are important to Trump’s 2020 re-election bid. The state helped push him to victory in 2016, and Trump has focused on Lordstown, seldom mentioning the other U.S. factories that GM is slated to close.

Barra has said that she sees no further layoffs or plant closures through the end of 2020.

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Malaysian Leader in Pakistan to Sign $900M in Investment Deals 

Malaysian Prime Minister Mahathir Mohamad arrived Thursday in Pakistan on an official three-day visit, where his high-powered delegation is expected to finalize investment deals worth nearly $900 million, officials said. 

 

The Malaysian leader will also be the chief guest at the Pakistan Day military parade Saturday, the Foreign Ministry announced. 

 

Pakistani Prime Minister Imran Khan’s adviser on commerce told reporters that business leaders accompanying Mahathir would sign three memorandums of understanding on Friday covering up to $900 million worth of investments in information technology and telecom sectors.  

The adviser, Razak Dawood, said the deals with Malaysia would also provide Pakistan a new opening toward membership in the Association of South East Asian Nations. He said Malaysian businessmen had also indicated they would like to invest in other sectors, including energy and textiles, to help Pakistan improve its exports. 

 

Officials said that Malaysia’s Proton carmaker signed an agreement late last year with a Pakistani partner to set up an assembly plant in the southern city of Karachi that would be its first facility in South Asia. Khan and his Malaysian counterpart are expected to officiate at a symbolic groundbreaking of the Proton plant Friday.

Looking for investors

Since taking office last August, Khan has approached nations that have warm relations with Pakistan, including China, Saudi Arabia, the United Arab Emirates, Qatar and Malaysia, to bring investment and financial deposits to help reduce a widening current account deficit and shore up foreign reserves.  

Riyadh and Abu Dhabi have deposited or are in the process of depositing $6 billion in loans in recent months. The two countries have also agreed to allow Islamabad to import oil on deferred payments. China is expected to deposit more than $2 billion in the next few days. 

 

Beijing has invested more than $19 billion over the past six years in energy and infrastructure projects under what is known as the China-Pakistan Economic Corridor, as part of its global Belt and Road Initiative. 

 

Last month, Saudi Crown Prince Mohammad bin Salman visited Islamabad and signed investment agreements worth $20 billion, including a $10 billion refinery and petrochemicals complex in the southwestern port city of Gwadar. 

 

Pakistani officials say they are also close to securing a deal with the International Monetary Fund for a bailout package reportedly of up to $12 billion.

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