Beware ‘populist trap’ over $30m food-based VAT cut
reverted to the strategy agreed when VAT was first implemented a decade ago and redistribute a portion of the revenues generated by the levy to lower income Bahamian households so as to counter the increased cost of goods that resulted.
Nevertheless Mr Bowe, who headed the private sector’s Coalition for Responsible Taxation when VAT was first introduced in 2015, told this newspaper that the food-based VAT slash unveiled by the Prime Minister last week was unlikely “to cause a tremendous amount of disruption” to either the food/retail wholesale industry or the Government’s fiscal targets.
Michael Halkitis, minister of economic affairs, last week said the Government will forego around $30m in annual revenues as a result of the announced tax break.
Given that it only takes effect from April 1, 2025, around just $7.5m will likely be relinquished for the 20242025 fiscal full year as the relief covers just its final quarter.
And Mr Bowe said “the exceptional inflation of the last three years” will have given the Government sufficient fiscal headroom to make the food-based VAT cut because, as a consumption-based levy, the Public Treasury’s revenue intake or
yields increase as the cost of goods rises.
“My take on it is at least there’s an appreciation by the Government that it really doesn’t control prices,” the Fidelity Bank (Bahamas) chief told Tribune Business. “We import 90 percent of what we consume, so all it can control is the tax imposed on those goods.
“If prices are elevated, there’s room for tax reductions because of the consumption-based tax system. If the price of goods has generally gone up by 10 percent, you can reduce the rate because the amount of tax you are getting is based on a higher price per item. “They’ve [the Government] benefited from exceptional inflation for the best part of three years. Reducing what they charge on items that have gone up significantly, like food and gasoline, there is the fiscal headroom to make adjustments.”
Mr Bowe, though, argued that redistributing some VAT revenue to lower income Bahamians and those struggling to cover their daily living costs would have been a more efficient, targeted method for achieving the Davis administration’s relief goals rather than providing a tax break to all. And he added that the measure did not appear to
form part of any long-term fiscal and economic strategy.
“My question is: What is the objective?” Mr Bowe asked. “I think the general objective is to assist those finding it difficult to meet their obligations at the food store. Do higher income earners need these tax concessions? The answer is ‘no’.
“To me, I feel the most appropriate is to introduce the tax redistribution system and the RISE programme... [to] redistribute tax income to those whose earnings need to be supplemented to live in a dignified manner. I have no objection to the reduction of tax on those items, but I think they’re falling into what I call ‘the populist trap’.
“Persons are saying the way we provide relief is by reducing taxes. The true way we provide relief while maintaining our fiscal standing is to actually tax those who can afford the applicable rate and redistribute the excess; maintain the higher rate to those who need support.”
Mr Bowe, though, said he was not worried about the fiscal ramifications from the food-based VAT cutthe details of which were still awaited by food retailers and wholesalers as The Bahamas prepared for the Majority Rule Day celebrations and long weekend.
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perspective, it “won’t cost you”, he added: “I have no concern about the action taken. I believe it will not achieve the level of assistance to those who most need it, and give unneeded assistance to those who do need it.
“I don’t think it’s going to cause a tremendous amount of disruption to businesses. Clarity over which items are included will be needed. I don’t see this as a move that’s going to cause any fiscal disruption. I see this as a move that’s more populist driven than one that is a long-term solution.
“Ultimately, we have to get back to a wider fiscal
strategy and plan that takes us out ten years to allow us to see advances on a progressive basis.” Mr Bowe also urged both the Government and Opposition to follow the studies and empirical evidence as it relates to VAT and any proposed reforms rather than be driven by emotion or perceived populist political gain. The Prime Minister, in unveiling the food-based 50 percent VAT rate cut, said: “Beginning April 1, the rate will be cut in half from 10 percent to 5 percent. This new 5 percent rate will apply to all food in the food stores, including fresh fruits and
vegetables, baby food, lunch snacks and frozen foods.
However, it will not apply to prepared foods in the deli..
“This rate reduction will also apply to the importation of all items previously mentioned. The effective date is April 1 in order to give merchants and food stores time to make the necessary adjustments. VAT is not the cause of the high price of food, but for those with the tightest disposable income, reducing VAT by 50 percent will make a difference. This reduction will not impact our fiscal targets for this year.”
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Food stores, wholesalers seek 50% VAT cut clarity
absolutely sure on all the items. It needs a little more clarification. We understand it’s edible foods only. An item like baking soda is an edible ingredient, so we think they will include that.
“There are some grey areas that we need clarification on otherwise different food stores will have different items [at 5 percent]. Legally, they have to be exact. We hope more clarification will come through.”
Mr Roberts said the food distribution industry would also work with the Government to address transition issues such as aged inventory that was imported at 10 percent VAT at the border but attracts 5 percent come April 1.
In such a situation, the 5 percent ‘output’ VAT collected by retailers from consumers would be exceeded by the 10 percent
‘input’ they themselves paid to purchase food stock. Retailers would thus potentially end up paying more in VAT than they collected, resulting in them having to claim a refund or credit from the Government.
“I think in three months that it will all be moved out,” Mr Roberts said.
“There’s very few items we go that long on. We were carrying three-four months inventory in COVID, but after that cut inventory to a month. That’s speaking of the warehouse. Anything we pay 10 percent on should be moved out in three months or we can catch it.
“It’s a point that we have to watch. It’s something the Government probably didn’t think of. I didn’t think of it until you brought it up. We could be paying one VAT rate and selling it off at the other. They [the Government] haven’t
said anything about adjustments, but if it becomes a problem they’ll work it out.
“They won’t expect us to donate our profits. That will create a 5 percent loss for us. We have to watch that doesn’t happen. We’ll have to consider that. If we see a problem we will have to ask the Government about it. It could become a problem if it drops to 5 percent and we bought those products at 10 percent.”
Mr Roberts said he suspected the Government delayed implementation until April 1, 2025, to avoid giving up too much revenue for the 2024-2025 fiscal year via the foodbased 50 percent VAT rate cut as well as give retailers and wholesalers sufficient implementation time.
As to the benefits for consumers, the Super Value chief said: “Every little bit helps. I think we know the public wants more and
Public company ‘exemption’ boost to Jack’s Bay developer
FROM PAGE B1
2024, notice also “ordered that Eleuthera Properties is not a public issuer” on condition that the developer “amends its constitutive documents” - such as its memorandum and articles of association“to expressly prohibit any invitation to the public to subscribe for any securities” in the company via an initial public offering (IPO) or similar mechanism.
And, as a further condition of the ‘exempt’ designation, Eleuthera Properties - which already has more than 50 equity owners - cannot take on more than150 shareholders. Sir Franklyn told this newspaper that the exemption, which was requested by the developer, gives it more flexibility - and opens the door furtherwhen choosing whether to accept potential investors as new shareholders/equity owners.
And, in exempting it from public company obligations such as increased reporting and disclosure
requirements, the Securities Commission has also established clear ‘rules of the game’ and limits on how many owners Eleuthera Properties can have so as not to breach any regulatory requirements. Sir Franklyn pointed to recent “seven-figure money” investments by the likes of Dionisio D’Aguilar, ex-minister of tourism and aviation, and Dr Ronald Knowles, former minister of health, as examples of the calibre of investor that Eleuthera Properties is attracting.
“The position is that Eleuthera Properties, through its Jack’s Bay investment, in particular, as more and more people are convinced and satisfied that the long-run future of this company is very promising, we are being approached by people who wish to invest with is,” he told this newspaper.
“We do not wish, however, to become a public company because, as a public company, the obligations are different and so on and so forth. We don’t
Opposition: Food VAT cut ‘too little, too late’
FROM PAGE B3
attached to a concrete plan. A concrete plan would state how this is to be paid for.
“I would expect the Prime Minister and Ministry of Finance would have run the numbers and be able to articulate what is the fiscal cost this tax relief would have, and they would then on the spending side be able to articulate how this is going to be paid for.”
The Prime Minister, in last week unveiling what
was branded as a “50 percent reduction in the VAT rate on all food sold in food stores”, said: “ Beginning April 1, the rate will be cut in half from 10% percent to 5 percent. This new 5 percent rate will apply to all food in the food stores, including fresh fruits and vegetables, baby food, lunch snacks and frozen foods.
“However, it will not apply to prepared foods in the deli.. This rate reduction will also apply to the
want to go through that. With this exemption, we are proposing to open up more and more opportunities for Bahamians, who approach us, to entertain them more than we do today.
“This is a very positive development for the company because it’s a way for us to be more positive with those investors who are approaching us.” Sir Franklyn, recalling how he first invested in the Eleutherabased developer some 40 years ago in 1985, said: “Since then we’ve gone through so much.
“Now people see the strength of the company is so critical the phone is ringing. Very substantial people are approaching us about investing. We decided to go this route because some of the people approaching us we prefer to say yes to them, rather than ‘no’, because some of those people have pretty deep pockets.
“We don’t go doing the solicitation. What they [the Securities Commission] say is that we must not do the solicitation. People must
importation of all items previously mentioned. The effective date is April 1 in order to give merchants and food stores time to make the necessary adjustments.
“VAT is not the cause of the high price of food, but for those with the tightest disposable income, reducing VAT by 50 percent will make a difference. This reduction will not impact our fiscal targets for this year.”
I’m sure they’ll appreciate it. We’re happy to pass it on to them because they really needed it. That’s why the Government took the action to give it to them. The consumer, they need more and they want more. They’d want the whole 10 percent, but we and the Government couldn’t do it.”
Steven Key, general manager of the d’Albenas Agency, said of the 50 percent VAT rate cut: “Of course, as a wholesaler, we won’t know the full effect of it until we see the details because does this mean that there’s going to be a reduction in the food store VAT, but not in other customers that we sell to?
“Will the restaurant still pay 10 percent VAT for the very same items? We don’t know. Certainly it would be good to have the information disseminated because we’ll need to know how
come to us,” Sir Franklyn added. “It’s a significant thing for us. Those are people approaching us. We would not have gone to ask for this if the interest was not strong and these were not the right people we would be interested in entertaining.
“That’s the only reason we went and made the request. We would not have gone otherwise.” Sir Franklyn did not identify the potential investors that Eleuthera Properties is being approached by or is currently negotiating with.
Christina Rolle, the Securities Commission’s executive director, in the designation order signed on December 11, 2024, acknowledged that Eleuthera Properties presently has more than 50 shareholders, “has not issued and does not intend to issue its shares to the public”, and that its incorporation documents “restrict the right to transfer its shares”.
The Order granted the exemption on the condition
to proceed.” Mr Key said whether the implementation date of April 1 is too short a timeframe, depends on what the company needs to do to “accommodate” the changes.
“It really all depends on what we need to do internally to accommodate two different sets of VAT rates for different customers,” Mr Key said. “If you have the very same item that’s sold to a food store or a restaurant, then right now everything is the same VAT. But if you have to go now and take that same item and determine who gets 5 percent and who pays 10 percent, then there’s computer programming probably involved. And that all depends on the programmers as far as how long it will take.”
In terms of clearing out inventory brought in on 10 percent VAT, he added that the company is “able
that Eleuthera Properties “amend its constitutive documents to expressly prohibit any invitation to the public to subscribe for any securities” in the company and that the total number of equity shareholders number no more than 150.
“The public is advised that pursuant to section 197 of the Securities Industry Act, the Commission has exempted Eleuthera Properties from the ongoing obligations of a public issuer under the Act. Further, pursuant to Section 198(1)(a) of the Securities Industry Act, the Commission has ordered that Eleuthera Properties is not a public issuer,” the Securities Commission added. Jack’s Bay has a large number of Bahamian shareholders in its immediate holding company, Eleuthera Properties.
While Sir Franklyn’s Sunshine Holdings group is the largest shareholder, its other investors include the likes of Colina, BAF Financial, the John Bull
to claim back against the VAT”.
“Being a company our size, what we purchase to run our company we are able to claim back against the VAT that we paid the Government on the imports,” Mr Key said.
“So I have to get with the accounting team on that, but I don’t know how much of a factor that will be. That may be more of a factor at the grocery store level.
“But as far as a reduction in VAT, that’s great for us all. My wife goes to the food store to buy groceries, it’ll be 5 percent less. VAT is a consumer charge. That’s where the end of it is, at the consumer. When they buy something, businesses claim back on VAT, but consumers don’t have anything to claim back, so they’re the ones that bear the full price of the VAT.”
Group of Companies and Royal Bank of Canada (RBC). Besides the corporate investors, the Anglican Church has been “gifted” shares in Eleuthera Properties Ltd, while the estates of the late John Morley and Billy Lowe were also among the shareholders. Eleuthera links to the investors are through the estates of the late Albert Sands and Whitfield Kemp. Another Eleuthera shareholder is businessman Lawrence Griffin from Governor’s Harbour, while Sir Orville Turnquest, the former governor-general, and his family - long-time investment and business partners of Sir Franklynare also invested.
Among the amenities already in place are existing food and beverage outlets, a 10-hole golf course designed by Tiger Woods and TGR Design, 18 partially completed residential and mixed-use buildings and a 22,000-square foot partially completed activity centre with a pool and direct beach access.
WHICH US COMPANIES ARE PULLING BACK ON DIVERSITY INITIATIVES?
Associated Press
FACEBOOK and Instagram parent company Meta Platforms Inc. joins a growing list of companies that are pulling back on diversity, equity and inclusion initiatives.
Like others before it, the social media giant cited a U.S. Supreme Court decision in July 2023 that outlawed affirmative action in college admissions.
Conservative activists have gone after companies — both in the courts and on social media — seeking to set a similar precedent in the working world. They've been targeting workplace initiatives such as diversity programs and hiring practices that prioritize historically marginalized groups, and have widened their objections to include programs focused on gender identity and sexual orientation.
DEI policies typically are intended as a counterweight to discriminatory practices. Critics argue that education, government and business programs which single out participants based on factors such as race, gender and sexual orientation are unfair and the same opportunities should be afforded to everyone.
Joel Kaplan, Meta's freshly appointed global
policy chief, told Fox News Digital on Friday that the move will ensure that the company is "building teams with the most talented people" instead of making hiring decisions based on protected characteristics.
"This is ultimately about doing what's best for our company and ensuring that we are serving everyone and building teams with the most talented people," Kaplan told Fox News Digital. "This means evaluating people as individuals, and sourcing people from a range of candidate pools, but never making hiring decisions based on protected characteristics like race or gender."
Here's a look at some of the other companies that have retreated from DEI:
McDonald's
Four years after launching a push for more diversity in its ranks, McDonald's said earlier this month that it is ending some of its diversity practices, citing a U.S. Supreme Court decision that outlawed affirmative action in college admissions.
McDonald's said on Jan. 6 that it will retire specific goals for achieving diversity at senior leadership levels. It also intends to end a program that encourages its suppliers to develop
diversity training and to increase the number of minority group members represented within their own leadership ranks.
McDonald's said it will also pause "external surveys." The burger giant didn't elaborate, but several other companies have suspended their participation in an annual survey by the Human Rights Campaign that measures workplace inclusion for LGBTQ+ employees.
Walmart
The world's largest retailer confirmed in November that it would not be renewing a five-year commitment for an equity racial center set up in 2020 after the police killing of George Floyd, and that it would stop participating in the HRC's Corporate Equality Index.
Walmart also said it will better monitor its thirdparty marketplace to make sure items sold there do not include products aimed at LGBTQ+ minors, including chest binders intended for transgender youth.
Additionally, the company will no longer consider race and gender as a litmus test to improve diversity when it offers supplier contracts and it won't be gathering demographic data
Surging job market could prove costly for households, businesses as odds of quick rate cuts fade
By PAUL WISEMAN AP Economics Writer
U.S. job growth surged and unemployment fell last month, an unexpected show of strength that may prove costly to homebuyers and businesses who were counting on sharply lower interest rates to lower the cost of buying everything from refrigerators to homes.
Employers added 256,000 jobs last month, up from 212,000 in November, the Labor Department reported Friday.
Unemployment, which was expected to hover around 4.2%, fell to 4.1% last month. Health care companies added 46,000 jobs, retailers 43,000 and government agencies at the federal, state and local levels 33,000.
The final jobs report of 2024 underscores that the economy and hiring were able to grow at a solid pace even with interest rates much higher than they were
before the pandemic. As a result, the Federal Reserve could be much less likely to cut borrowing costs again in the coming months. The Fed cut its rate three times last year in part out of concern that hiring and growth were flagging.
Overall, the solid jobs figures suggest the economy is entering a post-COVID period of steady growth, higher interest rates, low unemployment, and slightly elevated inflation.
"There's just no need for additional cuts in the Fed's rate any time soon," said Joe Brusuelas, chief economist at RSM, an accounting and tax advisory firm.
Brusuelas says that the economy, fueled in part by greater productivity, can grow at a steadily faster rate than it has since the Great Recession 16 years ago. Low unemployment can fuel healthy consumer spending. Yet greater demand can also push up inflation.
NOTICE
NOTICE is hereby given that DAVIA JANINE CHAMBERS of P.O. Box EE-15292, #52 Bahama Close, New Providence, The Bahamas, applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 13th day of January, 2025 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.
"The economy is going to grow at a much higher equilibrium level, which implies higher inflation and higher interest rates relative to what we got used to from 2000 to 2020," he said.
The U.S. continued to create jobs steadily throughout 2024, 2.2 million in all. That is down from job growth of 3 million in 2023, 4.5 million in 2022 and a record 6.4 million in 2021 as the economy bounced back from massive COVID-19 layoffs. But last year's average of 186,000 new jobs a month still slightly exceeds the pre-pandemic average of 182,000 from 2016-2019, solid years for the economy.
U.S. markets tumbled on the release of December's jobs numbers as investors sensed the odds of further interest rate cuts have faded. But rates are still painfully high for Americans trying to buy a house, a car, or even a kitchen appliance. Mortgage rates have risen for
when determining financing eligibility for those grants.
Ford
CEO Jim Farley sent a memo to the automaker's employees in August outlining changes to the company's DEI policies, including a decision to stop taking part in HRC's Corporate Equality Index.
Ford, he wrote, had been looking at its policies for a year. The company doesn't use hiring quotas or tie compensation to specific diversity goals but remained committed to "fostering a safe and inclusive workplace," Farley said.
"We will continue to put our effort and resources into taking care of our customers, our team, and our communities versus publicly commenting on the many polarizing issues of the day," the memo said.
Lowe's
In August, Lowe's executive leadership said the company began "reviewing" its programs following the Supreme Court's affirmative action ruling and decided to combine its employee resource groups into one umbrella organization. Previously, the company had "individual groups representing diverse sections of our associate population."
The retailer also will no longer participate in the HRC index, and will stop sponsoring and participating in events, such as festivals and parades, that are outside of its business areas.
John Deere
The farm equipment maker said in July that it will no longer sponsor "social or cultural awareness" events, and that it would audit all training materials "to ensure the absence of socially-motivated
four consecutive weeks to reach the highest level since July.
Average hourly wages rose 0.3% from November and 3.9% from a year earlier. The year-over-year wage gain was slightly less than economists had forecast.
Over the past few years, the strength of the U.S. economy and the job market have surprised almost everyone. Responding to inflation that hit a four-decade high two and a half years ago, the Fed raised its benchmark interest rate – the fed funds rate -- 11 times in 2022 and
NOTICE
and Citizenship, for registration/naturalization as a citizen of The Bahamas and that any person who knows any reason why registration/ naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 3rd day of January, 2025 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, Bahamas.
2023, pushing it to the highest level in more than two decades.
A much-anticipated recession never happened. Companies kept hiring, consumers kept spending, and the economy continued to roll. In fact, U.S. gross domestic product – the nation's output of goods and services -- has expanded at a robust annual pace of 3% or more in four of the last five quarters. Inflation has come down, too, from a peak of 9.1% in June 2022 to 2.7% in November. The drop in year-over-year price increases gave the Fed
messages" in compliance with federal and local laws.
Moline, Illinois-based John Deere added "the existence of diversity quotas and pronoun identification have never been and are not company policy." But it noted that it would still continue to "track and advance" the diversity of the company.
Tractor Supply
The retailer in June said it was ending an array of corporate diversity and climate efforts, a move that came after weeks of online conservative backlash against the rural retailer.
Tractor Supply said it would be eliminating all of its DEI roles while retiring current DEI goals. The company added that it would "stop sponsoring non-business activities" such as Pride festivals or voting campaigns — and no longer submit data for the HRC index.
enough confidence to cut rates three times in the last four months of 2024.
But Fed officials signaled in December that they planned to be more cautious about rate cuts this year. They now project just two rate reductions in 2025, down from the four they envisioned back in September. Progress against inflation has stalled in recent months, and it remains stuck above the Fed's 2% target.
"There is more to do to lower costs, but we've taken action to lower prescription drug prices, health insurance premiums, utility bills, and gas prices that will pay dividends for years to come," President Joe Biden said Friday. "This has been a hard-fought recovery, but we've made progress for working families, showing what can be accomplished when we build from the middle out and bottom up."
Biden is handing a largely solid economy to his successor, President-elect Donald Trump, though many Americans have been hit hard by the price spikes of the past three years and have generally been pessimistic about the economic outlook.
Many businesses are still scrambling to find workers.
NOTICE
NOTICE is hereby given that SHASHANA WILLIAMS of #329A Carmichael Road, New Providence, The Bahamas, applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 13th day of January, 2025 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.
NOTICE
NOTICE is hereby given that JERMAINE NICHOLAS BRADSHAW CHAMBERS of P.O. Box EE-15292, #52 Bahama Close, New Providence, The Bahamas, applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 13th day of January, 2025 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.
ATTENDEES visit the Meta booth at the Game Developers Conference in San Francisco on March 22, 2023.
Photo:Jeff Chiu/AP
A HIRING sign is displayed at a restaurant in Skokie, Ill., Wednesday, Jan. 8, 2025. Photo:Nam Y. Huh/AP
China and the UK restart economic and financial talks after a 6-year hiatus
By SIMINA MISTREANU Associated Press
CHINA and Britain restarted economic and financial talks on Saturday after a six-year hiatus during a visit by Britain's Treasury chief to Beijing, as the U.K.'s Labour government seeks to reset strained ties with the world's second-largest economy.
Accompanied by a delegation of British business executives and finance officials, Chancellor Rachel Reeves met with Chinese leaders, including Vice Premier He Lifeng and Vice President Han Zheng.
Reeves emphasized the need for a "stable, pragmatic" U.K.-China relationship as she wrapped up talks in Beijing.
"Our two countries can work together on areas of mutual interest in the interests of our citizens, whilst also being frank and open with each other when we disagree," she said.
The Sino-British ties have soured following a series of spying allegations from both sides, China's support for Russia in the Ukraine war and a crackdown on civil liberties in Hong Kong, a former British colony. British officials said Reeves will also urge
INDONESIAN
President Prabowo Subianto, right, shakes hands with Japan's Prime Minister Shigeru Ishiba during a joint press conference after their meeting at Bogor Presidential Palace in Bogor, West Java, Indonesia, Saturday, Jan. 11, 2025.
Beijing to stop its material and economic support for the Russian war effort in Ukraine and raise the issue of rights and freedoms in Hong Kong. The two sides inked agreements on Saturday in areas such as finance "worth 600 million pounds ($732 million) over the next five years for the U.K. economy," Reeves said without outlining the specifics of the deals.
"Overall, this government's re-engagement with China already sets us on course to deliver up to 1 billion pounds of value for the UK economy," she said.
Reeves's three-day trip has been clouded by upheaval in the bond markets, which has pushed borrowing costs to their highest level since the 2008 financial crisis. The opposition Conservative Party has accused her of having "fled to China,'' rather than addressing ease market concerns about inflation and economic stagnation.
In an op-ed piece in the Times of London, Reeves insisted that China offers Britain an opportunity to bolster growth. The nation cannot ignore the fact that China is its fourth-largest trading partner, with
exports supporting close to half a million jobs in the UK, she said.
"Choosing not to engage with China is therefore no choice at all,'' she wrote.
Reeves' visit marked the revival of the China-U.K. Economic and Financial Dialogue — annual bilateral talks that have been suspended since 2019 due to the COVID-19 pandemic and deteriorating relations.
London hopes renewed dialogues will help bring down barriers that U.K. businesses face when looking to export or expand to China. Britain seeks to improve exchanges in areas such as
BRITISH
sustainable finance, capital markets connectivity, pensions and regulatory alignment, as well as trade and investment, Reeves added.
"As part of this, it is important to prevent economic links weakening our national security and economic resilience," she said.
She said she welcomed China's plans to issue its first overseas sovereign green bond in London this year. The meeting also focused on finding ways to lift market access barriers for goods and services, "including unlocking a package in agrifood which is set to boost U.K. trade with China," Reeves added.
Vice Premier He said China and Britain agreed to remove barriers to investment in areas such as clean technology, life sciences, digital technology and financial services.
The delegation included Bank of England Governor Andrew Bailey and the CEOs of the U.K. Financial Conduct Authority and the London Stock Exchange Group. Senior executives from some of Britain's
biggest financial services firms, including the group chairs of HSBC and Standard Chartered, were also included. Reeves' visit comes after Foreign Secretary David Lammy traveled to China in October and Prime Minister Keir Starmer met with Chinese President Xi Jinping on the sidelines of the G20 summit in Brazil in November. It's all part of a bid by Starmer, elected as leader in July, to strengthen political and economic ties with China, the U.K.'s fourthlargest single trading partner, according to the Treasury.
Officials said Starmer wanted a "pragmatic" approach to working with Beijing on global stability, climate change and the transition to clean energy. But some in the opposition Conservative Party have criticized his stance and said trade ties should not come at the expense of national security and human rights concerns. British political leaders and intelligence chiefs have repeatedly warned that China poses security threats.
INDONESIA AND JAPAN PROMISE DEEPER DEFENSE AND ECONOMIC TIES AS REGIONAL TENSIONS SPIKE
By NINIEK KARMINI and ACHMAD IBRAHIM Associated Press
JAPAN and Indonesia pledged on Saturday to deepen economic and defense ties during a visit by the Japanese prime minister, seen as promoting regional cooperation as China flexes its muscle and Donald Trump prepares to take over as the next U.S. president.
Prime Minister Shigeru Ishiba arrived in Jakarta on Friday from Kuala Lumpur after meeting Malaysian Prime Minister Anwar Ibrahim. He said he hopes to meet Trump at the earliest possible timing after his Jan. 20 inauguration, and plans to convey the importance of engaging with the region. "I don't know how much interest Mr. Trump has in this region until I actually talk with him," Ishiba told reporters. "I am convinced that having diplomatic engagement in this region is extremely important for Japan, and it is extremely important for America as well."
Japan wants to send a message that its respect for a rules-based international order, in contrast to China's more aggressive behavior in claiming islands in the disputed South China Sea, which Beijing claims virtually in its entirety, makes it the best partner for Southeast Asian countries.
Ishiba said in a statement on Friday that "any attempt to unilaterally change the status quo by force or coercion is unacceptable anywhere in the world."
In his meeting with Indonesian President Prabowo Subianto at the Bogor presidential palace, just outside Jakarta, Ishiba pledged to support Indonesia's goal of food and energy selfsufficiency, participate in its defense development and the industrialization of its natural resources, including the strategic mining of minerals, and to provide nutritious meals to Indonesian schoolchildren.
Ishiba also promised to help Indonesia become a member of the Organization for
Economic Cooperation and Development.
The two sides signed an agreement on a Japanese loan of up to 90.4 billion yen ($573 million) for projects including a new port construction at Patimban to improve Indonesian transportation and distribution systems.
"Indonesia has a desire to maintain good relations with all nations, so that it can contribute to an atmosphere that can reduce tensions between major countries," Subianto said.
Indonesia has remained on the periphery of the territorial disputes between China and its Southeast Asian neighbors in the South China Sea. It doesn't have a formal dispute with Beijing though Indonesia said its patrol ships repeatedly drove a Chinese coast guard vessel away from an Indonesian energy company vessel conducting a seismic survey in October.
"Regarding bilateral relations in the field of security, we have agreed to launch discussions between defense officials regarding maritime security from both countries, including engagement in defense equipment technology cooperation," Ishiba said.
Japan and Indonesia earlier agreed to continue negotiations on the joint development of naval ships and other military equipment and on technology transfer. Japan is unable to export finished frigates or submarines under its current defense guidelines.
Indonesia has pledged to remain nonaligned amid the rivalry between Washington and Beijing but has expressed anxiety over heightening security tensions in the region.
LEGAL NOTICE MDD INVESTMENT LTD
INTERNATIONAL BUSINESS COMPANIES ACT (No.45 of 2000) In Voluntary Liquidation
Notice is hereby given that in accordance with Section 138 (4) of the International Business Companies Act, (No.45 of 2000), that MDD INVESTMENT LTD Limited (Registration no. 199873 is in dissolution. The date of commencement of the dissolution is the 7th day of January, 2025. The Liquidator of the Company is Mauro Dutra Mediano Dias and can be contacted at Rua Baltazar da Veiga, 130-61, Vila Nova Conciecao, CEP 04510-000 Brazil. All persons having claims against the above-named company are required to mail their names, addresses and particulars of their debts or claims to the Liquidator before 7th day of February, 2025.
Mauro Dutra Mediano Dias Liquidator
Chancellor of the Exchequer Rachel Reeves, second from left, speaks during the 11th China - UK Economy and Finance Dialogue in Beijing, Saturday, Jan. 11, 2025.
Photo:Aaron Favila/AP
Photo:Achmad Ibrahim/AP
Wall Street recoils after good news on the economy raises inflation worries
By STAN CHOE AP Business Writer
U.S. stocks fell Friday on worries that good news on the job market may be too good and prove to be bad for Wall Street by keeping inflation and interest rates high.
The S&P 500 tumbled 1.5% to close its fourth losing week in the last five.
The Dow Jones Industrial Average dropped 696 points, or 1.6%, and the Nasdaq composite sank 1.6%.
Stocks took their cue from the bond market, where yields leaped to crank up the pressure after a report said U.S. employers added many more jobs to their payrolls last month than economists expected. Such strength in hiring is of course good news for workers looking for jobs. But it could also keep upward pressure on inflation by keeping the overall economy humming. That in turn could dissuade
the Federal Reserve from delivering the cuts to interest rates that Wall Street loves. Lower rates can not only goose the economy but also boost prices for investments.
The Fed has already indicated it's likely to ease rates fewer times this year than it earlier expected because of worries about higher inflation. That's in part because some officials are taking seriously the possibility of tariffs and other policies coming from Presidentelect Donald Trump that could worsen inflation.
To be sure, Friday's jobs report may not be as strong as it seems on the surface. While the overall number of hires in December blew past expectations, "manufacturing is still getting crushed," said Brian Jacobsen, chief economist at Annex Wealth Management.
"The macroeconomy may be fine," he said, "but
each individual's microeconomy could look very different."
The raises in pay that workers are getting are also an important data point for the Fed, and gains in average hourly earnings were below 4% last month. That's what "the Fed wants to see," according to Wells Fargo Investment Institute Senior Global Market Strategist Scott Wren.
The nuanced takes helped Treasury yields give back some of their initial bursts following the release of the jobs report. But preliminary results from a separate report later in the morning underscored the issue. It suggested U.S. consumers are getting more pessimistic about where inflation is heading.
Consumers are expecting inflation in the coming year to be 3.3%, up from their expectation of 2.8% last month. It's the highest reading in the University of Michigan's survey since May. Expectations are
worsening across different types of Americans, particularly for households that make less in income, according Joanne Hsu, director of the Surveys of Consumers.
The problem for Wall Street is that when traders were sending U.S. stock indexes to dozens of records last year, they were banking on a stream of rate cuts coming from the Fed. If fewer cuts materialize than expected, stock prices would likely either need to fall, or profits at companies would have to rise more strongly to make up for it.
Smaller companies can take worse hits from higher interest rates than their bigger rivals because of the need for many to borrow to grow. The Russell 2000 index of smaller stocks slumped 2.2%.
Constellation Brands tumbled 17.1% for the biggest loss in the S&P 500 after the seller of Modelo beer and Robert Mondavi wine reported weaker
profit and revenue for the latest quarter than analysts expected. CEO Bill Newlands said the company is seeing subdued spending from its customers, who are looking for better values.
Insurance companies were also under pressure as wildfires continue to burn in the Los Angeles area. Many of the homes that have been destroyed were in expensive areas where the typical price can top $3 million, and such highpriced damage could eat into insurers' profit. Allstate fell 5.6%, Travelers dropped 4.3% and Chubb lost 3.4%.
Delta Air Lines was able to fly 9% higher because it delivered a stronger profit report for the last three months of 2024 than analysts expected. The airline said it's seeing strong demand for travel, which accelerated through the end of last year, and it expects that to continue into 2025.
Big banks will begin reporting their own results
for the end of 2024 next week, as earnings season gets underway in earnest. All told, the S&P 500 fell 91.21 points to 5,827.04. The Dow Jones Industrial Average dropped 696.75 to 41,938.45, and the Nasdaq composite sank 317.25 to 19,161.63.
In the bond market, the yield on the 10-year Treasury jumped to 4.76% from 4.68% late Thursday. In September, it was below 3.65%, marking a major move for the bond market. The yield on the twoyear Treasury, which moves more closely with expectations for what the Fed will do in the near term, climbed to 4.38% from 4.27% late Thursday. Friday's jobs report means traders see it as a near certainty that the Fed will not cut interest rates at its next meeting later this month. That would be the first time it's stood pat following three straight cuts to interest rates.
MARINE FORECAST
A startup city in Kenya tries to tackle Africa’s problem of urbanizing while poor
By ADRIAN BLOMFIELD
Associated Press
TURN into Tatu City on the outskirts of Kenya’s capital, Nairobi, and it feels like entering a different world.
Even the country’s most reckless drivers are transformed, slowing to a crawl and not tossing trash out the window — thanks to surveillance cameras and rigorously enforced penalties for speeding and littering.
For the 5,000 people who have moved into Tatu, a “startup city” that welcomed its first residents four years ago, the ruthless upholding of such rules makes the place appealing.
“Tatu has more law and order than other places,” said Valerie Akoko, a digital content creator who moved in two years ago.
“I’ve never seen Tatu City dirty.”
Situated on 5,000 acres, Tatu City aspires to be what its name suggests: a city, privately owned, that its designers hope will eventually have a population of 250,000. It is already home to 88 businesses employing 15,000 people. They include CCI Global, which operates a 5,000-seat call center, and Zhende Medical, a Chinese medical supply manufacturer.
There are similar projects around the world. But in sub-Saharan Africa, champions of the idea hope that new-city developments can address the continent’s urbanization conundrum: While the growth of cities
has rolled back poverty elsewhere, the region has largely been an exception. History suggests that as people move into cities, productivity increases, wages rise, exports grow and a country gets richer. But in Africa, urbanization has rarely unleashed such economic transformation.
In theory, Africa should be prospering. The continent’s urban population is set to grow by 900 million by 2050, according to the United Nations, more than the present urban population of Europe and North America combined.
But sub-Saharan Africa is urbanizing while still poor.
“Towns and cities in Africa today simply lack the tax base needed to invest in the urban infrastructure needed to accommodate the tsunami of people being added to their ranks in a short period of time,” said Kurtis Lockhart, director of the Africa Urban Lab, a research center at the African School of Economics in Zanzibar.
Weak property rights and political tensions can make the problem worse.
Even Tatu City has battled Kenyan politicians and politically connected businessmen. In 2018, the London Court of International Arbitration ruled in favor of the development’s multinational owner, Rendeavour, in a dispute with its Kenyan former partners, including a former governor of the central bank. The dispute delayed project development by several years.
Last year, Tatu City’s Kenya head, Preston Mendenhall, took the unusual step of accusing the governor of the county where the development is based of extortion, saying he had demanded land worth $33 million in exchange for approving its updated master plan. The governor denied it and is suing Tatu City and Mendenhall for defamation. No ruling has been made.
Still, the case for building new cities, complete with new infrastructure, is compelling to some. The Charter Cities Institute, a Washington-based nonprofit, argues that, done properly, such projects could drive growth, create jobs and “lift tens of millions of people out of poverty.” The institute sees Tatu City as a model.
Yet building new cities is hard. Africa is littered with failed projects. A handful have shown promise. Angola’s Quilamba city, whose construction began in 2002, is arguably the most successful, with a population of more than 130,000. It was built by CITIC, a stateowned Chinese company, but is owned by the Angolan government.
Perhaps a dozen new city projects — from Zanzibar to Zambia — are underway in Africa that stand a chance of emulating Quilamba, experts reckon. Of these, Tatu is the farthest along, with 26,400 people already living, working or studying there.
Canada's Trudeau urges US consumers to consider the harm of Trump's tariff threats
By JIM MORRIS Associated Press
CANADA'S outgo-
ing Prime Minister Justin Trudeau on Sunday suggested that President-elect Donald Trump's remarks about Canada becoming America's "51st state" has distracted attention from the harm that steep tariffs would inflict on U.S. consumers.
Trump has threatened to impose 25% tariffs on all Canadian imports.
"The 51st state, that's not going to happen," Trudeau said in an interview with MSNBC. "But people are talking about that, as opposed to talking about what impact 25% tariffs (has) on steel and aluminum coming into the United States."
Trudeau told MSNBC: "No American wants to pay 25% more for electricity or oil and gas coming in from Canada. That's something I think people need to pay a little more attention to."
Trump has also said that if Canada merged with the U.S., taxes would decrease and there would be no tariffs.
"I know that as a successful negotiator he likes to keep people off balance," Trudeau said of Trump's threats to use economic force to turn Canada into the 51st state. Trump has also erroneously cast the U.S. trade deficit with Canada — a natural resource-rich nation that provides the U.S. with commodities like oil — as a subsidy.
Canadian officials say that if Trump follows through with his threat of punishing tariffs, Canada would consider slapping retaliatory tariffs on American orange juice, toilets and some steel products.
Already during Trump's first term in the White House, Canada responded to Trump's tariffs on Canadian steel and aluminum with its own on American products like bourbon, Harley Davidson motorcycles and playing cards. "He got elected to try and make life easier for all Americans, to support American workers," Trudeau said of Trump. "These (tariffs) are things that are going to hurt them."
Trump said last week that the U.S doesn't need oil, or anything else, from Canada. But almost a quarter of the oil that the U.S. consumes each day comes from Canada. The energyrich western province of Alberta exports 4.3 million barrels of oil a day to the U.S.
Data from the United States Energy Information Administration shows that the U.S. consumes 20 million barrels a day, and produces about 13.2 million barrels a day.
Canada, a founding partner of NATO and home to more than 40 million people, is also the top export destination for 36 U.S. states. Nearly $2.7 billion worth of goods and services cross the border each day.
Trump has said that he would reconsider his tariff threat if Canada made improvements in managing security at the Canada-U.S. border, which he and his advisers see as a potential entry point for undocumented migrants.
Trudeau has said that less than 1% of illegal immigrants and fentanyl cross into the U.S. from Canada.
FRED KAMBO, Managing Director ARCH, gestures during an interview with The Associated Press at Tatu city, a startup city that tries to tackle Africa’s problem of urbanizing, in Nairobi, Kenya, Friday, Oct. 25, 2024.
