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Sri Lanka's central bank kept its benchmark interest rate unchanged for a 17th straight meeting to spur economic growth without further stoking the fastest inflation in Asia.

The Central Bank of Sri Lanka held its repurchase rate at 10.5 percent, the highest level since 2002, according to a statement issued in Colombo today. All 14 analysts surveyed by Bloomberg News predicted the decision.

Policy makers across Asia are grappling with soaring consumer prices even as a slowdown in the U.S. economy stifles demand for the region's exports. Inflation in Sri Lanka jumped to 28.2 percent in June, as bus fares rose by as much as 27 percent in May and train fares nearly doubled last month.

“The central bank would probably use the recent slowdown in growth as an excuse not to raise rates, even though a much sharper slowing of the economy is required to ensure macroeconomic stability,'' said Ashok Parameswaran, senior emerging markets analyst at Invesco in New York.

The yield on the 16 percent bond due in April 2009 was little changed at 18.45 percent at 9:27 a.m. in Colombo, according to First Capital Treasuries Ltd. The rupee was at 107.62 to the dollar, after closing yesterday at 107.65, according to Hatton National Bank Ltd.

Indonesia's central bank increased its benchmark interest rate for a third straight month in July, aiming to keep inflation below 12.5 percent this year. The Reserve Bank of India last month lifted its key rate twice to a six-year high of 8.5 percent. Thailand and the Philippines will probably both raise borrowing costs this week, according to Bloomberg surveys.

`Further Tighten'

Sri Lanka would “further tighten'' monetary policy by lowering the 2008 target for growth in reserve money, or the currency in circulation and commercial banks' deposits at the central bank, to 11.75 percent from 12.5 percent, according to today's statement cash advance loan. Consumer price gains are expected to ease from about August, the bank said earlier this month.

“Unlike other banks in the region, the Central Bank of Sri Lanka prefers to control the quantity of money as its main policy instrument,'' said Prakriti Sofat, an economist at HSBC Holdings Plc in Singapore. Slowing growth should also “see demand-pull pressures on inflation abate.''

Economic growth weakened to 6.2 percent in the first quarter from a year earlier, from 7.6 percent in the previous three months. Escalating violence in the country's 25-year civil war, including bomb attacks in Colombo, curbed spending in the $27 billion economy.

Transport Costs

Sri Lanka's central bank has also kept monetary policy tight by reducing the amount of cash in the banking system and controlling credit demand.

Credit growth in Sri Lanka's private sector slowed to 15.1 percent in April from a year earlier, the lowest level since the end of 2003, according to the central bank. June's higher inflation rate was expected and due to an increase in fuel and transport costs in May, the central bank said.

Railway, education, health and postal employees stayed away from work July 10 to demand a 5,000 rupee ($46) monthly pay rise.

Sri Lanka's inflation may slow to 14 percent by the end of this year, central bank Deputy Governor W.A. Wijewardena said May 15. The increase in prices will ease to “around 8 percent'' by the end of 2009, he said.

The central bank said in January it was targeting annual inflation of about 10 percent for 2008.

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The state's largest business lobby has created a statewide alliance advocating for a property tax cap — something state legislators could not agree on before the end of their scheduled session.

The Business Council of New York State Inc., based in Albany, is backed by a group of businesses, taxpayer groups and other associations supporting Gov. David Paterson's proposed tax cap.

Paterson wants to cap annual property tax increases at 4 percent or 120 percent of the consumer price index, whichever is lower. A supermajority of a school district's voters can choose to override the limit.

Powerful unions, including the 600,000-member New York State United Teachers in Latham, have fiercely opposed that idea and campaigned against the cap in the waning days of the legislative session, which ended June 25. Paterson has repeatedly said he is willing to call special legislative sessions later this year to try to lower future budget deficits or pass key legislation like a property tax cap.

"I want to get to a point where we start to look at substance, more than anything else," Paterson said at a June 23 press conference 500 fast cash. He said he and state leaders would continue negotiations over the summer.

The cap was the key recommendation in a preliminary report from a state tax commission, issued in early June. A final report is due by the end of the year, one reason Assembly Speaker Sheldon Silver cited as a reason why he wasn't willing to take action on any tax cap proposal.

The new tax cap support group has nearly 50 members from Buffalo to Long Island. The group's Web site is: www.taxcapnow.org.

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Wireless Internet is the most important technology amenity hotel guests ask for, according to a study by the American Hotel & Lodging Association.

The study shows that 82 percent of guests rank wireless Internet as their top amenity, followed by in-room entertainment systems (48 percent) and airline check-in kiosks (38 percent).

"During the past decade, advancements in information technology have significantly shaped the way the lodging industry plans, controls and manages operations in all segments of the hospitality community," AHLA President and Cheif Executive Officer Joseph A. McInerney said.

The AHLA's 2008 Lodging Survey indicates that 91 percent of hotels offer wireless Internet access, up 35 percent from just four years earlier fast payday loans.

Nashville Business Journal

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Ohio Gov. Ted Strickland signed House Bill 285 this week, a measure that gives one free pass to small businesses in the state that rack up first-time paperwork violations.

The measure, introduced about a year ago and cleared in both chambers of the Ohio General Assembly earlier this year, waives fines or civil penalties for small businesses’ first paperwork violation. The waiver applies to a wide range of state agencies, including the Department of Taxation, Environmental Protection Agency and Department of Natural Resources.

The bill also stipulates that fines and penalties remain intact if the violation could cause serious harm or involve a criminal offense.

H.B. 285 garnered support from small businesses and trade groups, including the state chapter of the National Federation of Independent Business.

State legislators roundly backed it as well creditreports. The measure in March passed unanimously in the House of Representatives and went on to receive unanimous Senate approval last month.

As the measure was moving through the General Assembly, Strickland also signed an executive order calling for state agencies to adopt a common-sense approach when reviewing and applying rules and regulations governing Ohio businesses.

With Strickland’s signature on the measure Tuesday, the law takes effect in mid-September.

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Albert Betts, Commissioner of Workers' Compensation for the Texas Department of Insurance, will retire at the end of August.

Betts was appointed to the newly created post in 2005.

"We have laid a solid foundation for the system going forward, including working to reform the agency itself," Betts said in a statement. "It remains critical that injured workers get the service they need from their workers' compensation insurance carrier as well as the agency, and that efforts be continued to keep workers' compensation costs at a reasonable level for Texas employers."

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European economic growth accelerated more than initially estimated in the first quarter as investment and construction spending in Germany helped the region weather record oil prices, the euro's gains and market turmoil.

Gross domestic product in the 15 countries that use the euro increased 0.8 percent from the fourth quarter, compared with an earlier estimate of 0.7 percent, the European Union's statistics office in Luxembourg said today. Investment jumped 1.6 percent in the first three months of this year, the most since the second quarter of 2006.

Both the German and European economies are set to slow in the current quarter as oil prices boost costs for consumers and companies and the euro's advance makes exports less competitive. The slowdown, signaled by declining measures for manufacturing and services activity and consumer confidence, may not be as sharp as in the U.S., reinforcing the European Central Bank's case for holding off lowering interest rates as it tries to tame inflation.

“The first quarter was an outlier and shouldn't be read as where the economy is going,'' said Michael Hume, chief European economist at Lehman Brothers International in London. “The services purchasing managers index has come off sharply and with the manufacturing PMI is pointing to a clear loss of momentum.''

The euro rose 0.5 percent to $1.5607 as of 11:30 a.m. in Brussels. The Dow Jones Stoxx 600 rose 0.1 percent to 318.72 and the Stoxx 50 index was little changed.

First Quarter

From a year earlier, the economy expanded 2.2 percent in the first quarter. Fourth-quarter growth was revised down to 0.3 percent from 0.4 percent compared to the prior three months.

Exports rose 1.9 percent and government spending increased 0.4 percent from the prior quarter, the statistics office said in today's report, the first detailed look at the first-quarter GDP data. Consumer spending gained 0.2 percent after contracting 0.1 percent in previous three months.

In the first quarter, Germany's economy expanded at the fastest pace in 12 years as construction spending jumped 4.5 percent. German builders benefited from an “exceptionally mild'' winter, according to the German weather service.

Hume at Lehman forecast that the German economy will shrink in the current quarter due to a “fading construction effect'' and factors including a “payback in inventories and statistical adjustments.'' The euro area as a whole may record zero growth this quarter, he said before today's report was published.

Purchasing Power

Data since the end of the first quarter have signaled growth across Europe is slowing. Retail sales in Germany unexpectedly dropped for a second month in April as faster inflation left consumers with less purchasing power, while unemployment rose for the first time in more than two years cash advance loan no fax. In France, business confidence declined to the weakest in more than two years last month as rising energy prices and the euro's advance hurt the outlook for corporate profits.

The euro has risen 16 percent against the dollar in the last 12 months and reached an all-time high above $1.60 in April. Crude oil rose to a record $135.09 a barrel on May 22.

Other data suggest a more benign outlook. Germany's Ifo index of business sentiment rose in May, while European retail sales rose for the first time in three months, according to a survey of more than 1,000 executives by NTC Economics Ltd.

Still, adding to pressure on Europe's companies and households is easing demand in the U.S. amid the fallout from the housing slump there, which pushed up credit costs worldwide. ECB council member Nout Wellink said yesterday the euro-area economy hasn't felt the full effect yet of the U.S. slowdown.

`Time Lag'

“The impact will become visible with a certain time lag,'' Wellink said in Frankfurt. “The economy is slowing down a little. The full impact hasn't been visible as yet.''

While economic growth is cooling, the ECB is focused on price stability, which it defines as keeping inflation just below 2 percent “over the medium term.'' That job has become more difficult in the last 12 months as food and oil prices soar. Consumer-price inflation accelerated to 3.6 percent last month, the fastest pace since the ECB's inception 10 years ago.

“The present price hikes are a timely reminder that, when it comes to inflation, complacency is out of place,'' ECB council member Axel Weber said on May 30 “We cannot rest on our laurels where credibility is concerned.''

Producer-price inflation accelerated to 6.1 percent in April, the most in more than seven years, from 5.8 percent in March, according to separate figures published today.

ECB policy makers hold their next rate-setting meeting in two days, when the central bank will publish new staff forecasts on inflation and growth. The ECB will probably hold its key rate at 4 percent this week and leave it there until at until at least February, according to economists surveyed by Bloomberg.

“The ECB's response will be to tolerate slower growth and leave rates unchanged for a while,'' said Silvia Pepino, an economist at JPMorgan Chase & Co. in London. “That said, the central bank's rhetoric is likely to be tough on inflation, leaning towards a tightening bias.''

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A Federal Reserve economist said the central bank's auctions of cash loans to commercial banks have had a “strong effect'' on reducing their borrowing costs, while new lending programs for securities firms may be less potent.

In addition, investors have placed a higher risk of default among financial institutions because of concerns about rising mortgage defaults, slowing economic growth and volatile financial markets, Tao Wu, a senior researcher at the Dallas Fed bank, said in a paper released today. Still, such concerns have had “little effect'' on the companies' borrowing costs.

The economist joins Fed officials in defending the Term Auction Facility's $75 billion biweekly sales, which Chairman Ben S. Bernanke said may be expanded. Stanford University economist John Taylor wrote in a paper last month that there is “no empirical evidence'' the Fed's auctions have cut banks' borrowing costs.

The TAF “has a strong effect in reducing financial strains in the inter-bank money market, primarily through relieving financial institutions' liquidity concerns,'' Wu said, citing his analysis.

The TAF has lowered the spread between the one-month London interbank offered rate for dollars and the overnight indexed swap rate by at least 0.31 percentage point, and the three-month Libor-OIS difference by at least 0.44 point, Wu said fast cash loans. The OIS is a measure of what traders expect for the benchmark federal funds rate, which covers overnight loans between banks.

Taylor said he saw Wu's results and hasn't changed his conclusions. “We very much stand by our original findings that there's no robust impact'' from the TAF, Taylor said in a telephone interview.

`Contradict' Results

Wu said he took a different approach to analyzing data and acknowledged his results “contradict'' those of Taylor, who co-authored his study with San Francisco Fed economist John Williams.

The Term Securities Lending Facility, which provides as much as $200 billion in Treasuries in exchange for asset-backed securities, and the Primary Dealer Credit Facility, providing direct loans to Wall Street bond dealers, “are found to have had less discernible effects so far in relieving financial strains in the Libor market,'' Wu said.

`This is consistent with market observations of a weaker interest from primary dealers'' in those programs than commercial banks have shown in the TAF, he said.

Wu worked at the San Francisco Fed from 2001 to 2006 before joining the Dallas district bank, according to the Dallas Fed's Web site.

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A federal mediator will join the contract talks between The Honolulu Advertiser and its six employee unions.

Federal mediator Ken Kawamoto, who has been involved in previous talks between the newspaper and its unions, is being brought in to help move the negotiations forward, said Wayne Cahill, administrative officer of the Hawaii Newspaper Guild, one of the unions that is part of the Hawaii Newspaper Trades Council.

About 600 unionized Advertiser employees have been working under contracts that expired last June 9 and were extended by the agreement of both sides.

The Advertiser is asking workers to pay a larger share of their health insurance premiums and to switch to plans with fewer benefits and larger co-payments, the unions say. In addition, Cahill said the Advertiser is now proposing a three-year contract with 1 percent bonuses in each of the three years but no increases in the wage base.

Workers would also get a $200 bonus if the unions agree to a new payroll system that will pay them every two weeks instead of weekly.

Most unionized employees at the newspaper make between $50,000 and $70,000 a year but Cahill said a significant number make less, citing clerical workers and newspaper inserters.

In a statement Wednesday announcing the move toward mediation, Advertiser president and publisher Lee Webber said even with the new contract the newspaper will continue to pay "among the highest wages and benefits by job category of almost any Hawaii employer."

"But we also have a responsibility to protect the long-term health of the newspaper in light of the uncertainties of our state and national economies - particularly the challenges faced by the newspaper industry," Webber said online payday advance.

Cahill said the unions had proposed mediation in January and "the company consistently refused."

"We think it's a great idea, just a day late and a dollar short," he said.

Cahill said he didn't know when the mediated sessions would begin. The mediator can't impose anything on the parties but is often able to suggest ways to break deadlocks on contentious issues.

The unions took a strike authorization vote in February. Since then, both sides have met several times but Cahill said the company has moved "considerably backward" in its proposals.

In his statement, Webber described the company's offers as a "fair benefit and wage package."

"Our employees want the best contract they can get. It is our responsibility in management to meet their needs, while ensuring the newspaper remains strong and stable into the future. But in the end, we have a common purpose - to provide high quality journalism to the people of Hawaii. That shared mission is why I am confident we will soon reach an agreement," Webber said.

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Edward Kang spent 15 years building textile maker Ever-Glory International into a symbol of China's world dominance in cheap clothes, shoes and toys. With $70 million in annual sales, the company has won customers including Levi Strauss & Co. and Tesco Plc.

With rising labor costs and the yuan's appreciation against the dollar threatening profits, Kang, 45, considered moving from Nanjing, near China's Pacific coast, to the interior to take advantage of a government program to entice businesses into lower-wage provinces. He decided instead to shift 40 percent of his manufacturing capacity to a new plant in northern Vietnam's port city of Haiphong within five years.

The provincial Chinese workers didn't have the appropriate experience, and transportation to distant ports was too expensive, Kang says: “If we cannot meet customers' price expectations, they will say `Bye-bye, Ever-Glory.'''

Thousands of companies are arriving at similar conclusions. With Vietnam, India and other Asian nations mounting aggressive campaigns for foreign investment, a third of the manufacturers in Guangdong province — which produces 30 percent of China's exports — will be closed in three years, according to an April 29 report by Tao Dong, chief Asia economist at Credit Suisse in Hong Kong.

“The end of an era in terms of China's mighty export industry has just begun,'' he said.

Foreign Shores

The factory closures and departures to foreign shores aren't likely to dampen growth in the world's fastest expanding major economy, as China increases its production of higher- value goods — computer chips, electronic gadgets, automobiles.

What it does, in the world's largest Communist country, is increase the disparity between residents in the wealthy coastal areas and the more than 700 million people in inland provinces — more than half China's population — who may find themselves excluded from the country's success story.

“It is absolutely key that China push its development model westward,'' says Stephen Roach, chairman of Morgan Stanley's Asia division in Hong Kong. “The jury's out on whether they will pull it off.''

China's shipments of higher-technology products surged 412 percent since 2002 to 347.8 billion yuan ($47.6 billion) last year, or 28.5 percent of total exports, fueling 11.9 percent growth in gross domestic product. The economy is forecast to expand 10 percent this year and 9.5 percent in 2009, according to 21 economists surveyed by Bloomberg.

Cheap Labor

Growth is concentrated mainly in four provinces on China's southeastern coast: Guangdong, Jiangsu, Fujian and Zhejiang. Clothing, shoe and toymakers there sparked China's manufacturing boom, with much of the initial push coming from foreign companies attracted by cheap labor, easy access to ports and special economic zones that offered duty-free imports and other tax incentives.

China won more than 65 percent of the $792 billion in investment received by 21 Asian countries during the past five years, according to the Asian Development Bank. Such dominance prompted Singapore's founding father, Lee Kuan Yew, to say in 2002 that China is “a vacuum cleaner for foreign direct investment.''

About 90 percent of the money has gone into the coastal southeast, which accounts for 60 percent of the country's total exports. That's helped to double average monthly pay in the Guangdong province city of Dongguan, China's largest manufacturing center, to 2,594 yuan in December 2006 from 1,284 yuan in 2001, according to New York-based CEIC Data, an economic-research firm.

Poorest Regions

So far, the rest of China hasn't shared in the prosperity. Incomes in western China's poorest regions are one-tenth those of the richest areas on the east coast. The average monthly wage for the city of Gansu in the northwest is 1,437 yuan.

To help encourage investment and narrow the disparity, the government adopted a “Go West'' policy in 2000 free credit report and score. It spent 1 trillion yuan through 2005 on 70 major infrastructure programs including a 1,140 kilometer railway to Lhasa, Tibet's capital, according to China's National Development and Reform Commission. In mid-2006, the government added 168 billion yuan for regional airports, hydropower stations and other projects.

Even with the improvements, power failures, substandard roads and congested railways reduced production in 2004 by 9.5 percent in Kunming, the capital of Yunnan province in the southwest, according to a World Bank report. Such issues cut output during the same period only 2.3 percent in Shanghai, on the Pacific coast.

`Fragmented and Inefficient'

The transportation industry remains fragmented and “inefficient,'' Beijing-based World Bank economist Zhao Min wrote in a recent report. Better integration of rail lines, waterways and roads “could considerably reduce'' costs and increase “the competitiveness of the interior regions,'' she said.

Other disadvantages: The expense of setting up a business in the inland southwest is nearly three times higher than in the coastal southeast, and obtaining credit takes more than twice as long, according to the World Bank in “Doing Business in China 2008.''

The yuan's 4.45 percent rise against the dollar in the first four months of 2008, nearly twice the rate of last year's appreciation, is also eroding profits because China's exports are priced in dollars. The currency climbed 7 percent in 2007.

Investment Intentions

Foreign companies announced last year that they intend to invest $11.6 billion in central and western China, up 30 percent from $8.9 billion in 2003, according to Belfast-based FDI Intelligence, a provider of data on foreign direct investment. That's well below companies' investment intentions for Vietnam, which totaled $40.1 billion in 2007, up 354 percent from 2003, and for India, which rose 174 percent to $52.6 billion, FDII said.

Zhejiang Hefeng Shoes Co., with one factory in Zhejiang province employing 1,000 people, is examining relocation options that include Vietnam, according to export manager Ray King. “Customers say our prices are crazy,'' he says. “They always say other suppliers in Vietnam and Thailand are cheaper.''

Vietnam and India have become more aggressive in luring low-cost industries. Vietnam joined the World Trade Organization in 2007, giving it greater access to world markets. PricewaterhouseCoopers last July ranked it as the most competitive destination for manufacturing businesses among the world's top 20 emerging markets; China was second.

Low Wages

Vietnam's laborers earn an average of 1.669 million dong ($104) a month, 41 percent less than China's lowest-paid workers in the central province of Jiangxi, according to World Bank data.

India's wages are lower than Vietnam's, averaging 3,843 rupees ($87) a month, according to CEIC. India is copying China's special economic zones, building more than 400 that will provide low-cost land and rents, five- to 10-year tax breaks and duty-free imports.

It has been a member of the WTO since Jan. 1, 1995, and ranked 7th in the PricewaterhouseCoopers report, behind Vietnam, China, Poland, Chile, Malaysia and Thailand.

The labor-cost comparison became even more favorable for Vietnam and India in January, when a new Chinese labor law required companies to pay minimum wages and severance pay. The law contributed to a 22 percent increase in labor costs during the past year, according to the Federation of Hong Kong Industries.

The absence of such laws “anchored China's status as the world's factory,'' Tao said in the Credit Suisse report. That advantage “has gone overnight.''

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