Most Sub-Saharan countries made doing business easier over the past year, but the African region is still the costliest and most complex in the world for entrepreneurs, the World Bank said in a report Thursday.
In its annual ranking of 183 countries, the bank found 36 of 46 Sub-Saharan African nations improved their business environment in the year through June 2011, the highest number since the study began nine years ago.
The world’s top five countries for doing business were unchanged from last year _ Singapore, Hong Kong, New Zealand, the U.S. and Denmark.
The bank judges nations on 11 criteria _ starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and employing workers.
The bank said 125 countries improved business regulations in the past year, up 13 percent from the previous year.
Morocco was this year’s biggest gainer in the rankings, jumping to 94 from 115 after the North African nation simplified construction permits, allowed minority shareholders to obtain some corporate documents during trials and enhanced electronic tax filing guaranteed payday loans.
South Korea leapt to 8th place from 15th by introducing an online process for starting a business, merging several taxes and filing commercial litigation electronically. Sweden fell out of the top ten to 14th.
Sub-Saharan Africa’s improvement was led by Sierra Leone, which advanced to 141 from 150. Mauritius at 23, and South Africa at 35, are Africa’s highest ranked countries.
Africa also has eight of the 10 lowest ranked nations, including Chad in last place.
Venezuela is South America’s lowest ranked country at 177, the only non-African nation in the bottom nine.
Some of the nation’s largest oil refineries are seeking huge tax refunds that could force school districts and local governments across Texas to give back tens of millions of dollars they were counting on to pay teachers and provide other services.
The refineries want the tax breaks in exchange for buying pollution-controlling equipment. But the cost to public schools would be dear, coming only months after lawmakers slashed education spending by more than $4 billion.
If a three-member commission appointed by Gov. Rick Perry grants the refunds, nearly half the money would be taken from schools. Classrooms in cities with refineries would be hurt most.
“We were already cut at the knees as it is, but more cuts? It’s appalling,” said Patricia Gonzales, a single mother of twins at Park View Intermediate School in Pasadena, a refinery town just south of Houston.
She is president of the parent-teacher organization, which was created this past summer after budget cuts left the school without basic supplies such as pencils and paper towels.
The Texas Commission on Environmental Quality is evaluating 16 refund requests that could add up to more than $135 million, according to county tax data and application documents analyzed by The Associated Press.
What’s more, if the commission grants the requests, at least 12 other refineries that have not sought a refund also could qualify.
On Monday, about a dozen community activists handed out fliers in Pasadena as they conducted a mock bake sale offering $10,000 cookies, brownies and cupcakes to draw attention to the problem.
Gonzales lives near a miles-long stretch of refineries, where massive pipes and stacks light the night like skyscrapers do in other cities. An intense odor of burnt chemicals hangs over the town.
“There are days when we can’t go out because our children’s asthma is that bad,” she said. “And then they want money back?”
The state commission expressed some support for the refund last year, raising speculation that it is preparing to side with the industry.
Beginning in 2006, the Environmental Protection Agency began requiring refineries to remove sulfur dioxide from diesel and gasoline, and many refineries had to either upgrade existing “hydrotreater” units or purchase new, more effective equipment.
San Antonio-based Valero Energy Corp. argues that the units should qualify for a tax exemption under an amendment to the Texas Constitution that says industrial plants don’t have to pay taxes on equipment purchased to reduce on-site pollution.
Valero first asked for the refund for six of its refineries in 2007. Since then, at least four other companies have asked for the same retroactive refund.
Valero’s initial request was denied. The company appealed, and the panel’s chairman, Bryan Shaw, said last April that the Legislature probably intended a broader interpretation of the law. He instructed his staff to research whether they could award partial exemptions to Valero.
Shaw declined to comment, saying it could present a conflict because the issue will be brought before him again.
Valero could potentially get a refund of more than $92 million, but company spokesman Bill Day said executives believe the final refund would be much smaller. He said appraisers will probably estimate the value of refinery properties below the amount submitted by the company.
There is no timeline for a ruling. The slow pace of the decision has put municipalities and school districts in the position of collecting and spending money they could be forced to return.
Schools alone could be forced to fork over $62.8 million, according to data compiled by the AP.
In smaller, more rural counties _ where property taxes from heavy industry provide a big chunk of funding for schools and government services _ the effect could be even greater. For example, in Moore County, where a Valero refinery is seeking two exemptions, a $15.8 million refund would amount to more than $720 per person.
“If it was a good year and property values were up, it wouldn’t be so bad,” said Hugh Landrom Jr., president of Hugh Landrom and Associates, an engineering firm that does industrial appraisals for Galveston and other counties that are home to large refineries and chemical plants.
But the pain is “compounded by the state budget cuts that are being passed down to everybody,” Landrom said.
If the abatements are approved, all Texas schools would be affected. Refinery towns would be hurt the most.
“The dollars that are lost by these school districts directly affect the children of the employees that help make these companies what they are,” said David Hodgins, consultant and attorney for the Texas Association of School Administrators.
The Pasadena schools will have to refund $11.3 million to two refineries, according to the AP analysis.
The school where the Gonzales children attend class has laid off eight staff members and is asking parents to donate money to pay for basketballs, volleyballs and even gloves for the science teachers.
The Valero spokesman insisted the refund would not “be a disaster.”
“I guarantee you, it’s not a surprise to the school districts,” Day said. “Yes, they spent the money. Yes, we’re asking for an abatement on our pollution-control equipment. … But this is really no different than a homeowner appealing their property tax, just on a larger scale.”
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Associated Press Writer Troy Thibodeaux contributed to this report from New Orleans.
After more than a year, Peabody Energy’s dogged pursuit of a major Australian coal company now appears to have succeeded.
Spurning earlier offers from St. Louis-based Peabody, the board of directors at Macarthur Coal Ltd. announced this morning that it would recommend that shareholders accept a sweetened $5.2 billion bid from Peabody and its partner ArcelorMittal, the world’s largest steelmaker.
The deal gives Peabody Energy Corp. and its minority partner control of the world’s biggest maker of pulverized coal used by steelmakers. It also expands Peabody’s coal output in Australia, the world’s largest coal-exporting nation.
“This is a major step forward in our acquisition process,” Peabody Chairman and Chief Executive Officer Gregory H. Boyce said in a press release. “We are pleased to have Macarthur, Peabody and ArcelorMittal moving forward together to urge shareholders to accept this attractive premium.”
Peabody, the biggest U.S. coal miner, and ArcelorMittal raised their bid to 16 Australian dollars a share from 15.50 Australian dollars, which now values the company at 4.8 billion Australian dollars, or $5.2 billion. The offer is 44 percent more than the stock’s close before the initial bid July 11.
The market for coking coal is increasingly lucrative. Credit Suisse Group AG in July raised its price forecasts for coking coal by an average 15 percent for 2014 to 2018, citing “unrelenting” demand. Prices rose 47 percent to a record $330 a ton for three-month contracts starting April 1 and have traded close to records.
The chase began on March 30, 2010, when the St. Louis-based coal company offered to buy the Australian company for $3 billion. Eventually, Peabody offered as much as $3.8 billion before it was turned away after a two-month pursuit.
However, Peabody was not to be deterred. Last month, the St. Louis-based company teamed up with ArcelorMittal, which owns 16 percent of Macarthur. The two companies, through a jointly owned venture, offered 15.50 Australian dollars for each Macarthur share.
When the board rejected that offer three weeks ago, the two companies threatened to take the offer directly to shareholders.
WHITE KNIGHT?
After receiving the Peabody-ArcelorMittal bid, Macarthur began talks with other possible suitors in the hopes of finding a white knight.
Macarthur’s board said it accepted the 16 Australian dollar offer in the absence of any competing bids that were superior.
“In the period since the initial offer, a number of parties have conducted due diligence,” the company said in the statement. “Although it remains possible that a superior proposal might be made, none have emerged to date, and there can be no assurances that any will emerge.”
Anglo American Plc is exploring a bid for Macarthur, according to two people with knowledge of the matter. Teck Resources Ltd. and Yanzhou Coal Mining Co. may also be interested, the Australian Financial Review said in its Street Talk column last month, without citing anyone.
However, Macarthur’s shares rose to as much as 15.94 Australian dollars this morning, indicating investors don’t yet expect any counterbid.
Peabody and ArcelorMittal have the right to match any competing offer, and Macarthur faces a breakup fee of 48.3 million Australian dollars under the terms of the agreement.
The bid is being made through PEAMCoal Pty, a venture 60 percent owned by Peabody and 40 percent owned by Luxembourg-based ArcelorMittal.
The Peabody group’s bid for Macarthur will be the second-largest coal takeover this year, second only to Alpha Natural Resources Inc.’s $7.1 billion purchase of Massey Energy Co. in June. This year has yielded about 50 coal transactions globally, with a combined value of more than $20 billion.
UPDATED: at 3:49 p.m. with more details.
ST. CHARLES
U.S. workers were less productive in the spring for the second quarter in a row, a trend that doesn’t bode well for future hiring.
The Labor Department says productivity dropped 0.3 percent in the April-June quarter, following a decline of 0.6 percent in the first three months of the year. It was the first back-to-back decline in productivity since the second half of 2008.
The drop in productivity helped push unit labor costs up 2.2 percent. That follows a 4.8 percent rise in labor costs in the first three months of this year, the biggest increase since the last three months of 2008.
When workers are less productive and cost more, companies are less likely to add jobs.
Productivity measures the amount of output per hour worked. Higher productivity is generally a good thing because it can raise standards of living by enabling companies to pay workers more without raising their prices and increasing inflation.
Still, productivity gains can be painful in the short run if they are a result of job cuts. That’s what happened in the recession, when productivity rose sharply as companies laid off millions of workers and figured out how to do more with less. Employees worked harder and companies invested in labor-saving technology and machinery.
A slowdown in productivity growth is bad for the economy if it persists for a long period. It can be good in the short term when unemployment is high, if it means companies are reaching the limits on how much extra output they can get from their existing work forces.
But economists say a drop in productivity when economic growth has declined is a troubling sign. That likely means companies hired too many workers earlier this year, based on the assumption that growth was picking up payday loan lenders. The result: weaker output from a larger work force.
Recent government data show the economy expanded at a much weaker rate than most analysts expected. Growth slowed to a 0.8 percent annual rate in the first six months of the year, the government said late last month. That’s the weakest pace since the recession ended two years ago.
Consumers have cut back on spending in the face of stagnant wages, high unemployment and high gas prices. Supply disruptions stemming from Japan’s March 11 earthquake also reduced output, primarily in the auto sector.
Employers responded by cutting back on hiring. They added an average of only 72,000 jobs per month from May through July. That’s far fewer than the average of 215,000 per month added in February through April.
Growing fears that the country could be on the verge of another recession, concerns about the European debt crisis and the first-ever downgrade of U.S. debt have caused the stock market to plummet by about 15 percent in the past 2 1/2 weeks.
The Dow Jones industrial average plunged more than 600 points on Monday, the first trading day after Standard & Poor’s downgraded long-term U.S. debt from AAA to AA+.
The Federal Reserve, which is meeting on Tuesday, watches productivity and unit labor costs carefully. Since increases in productivity allow companies to pay workers more without raising the prices of their products, productivity gains can help keep inflation at bay.
U.S. investors will have their first chance Monday to react to Standard & Poor’s decision to strip the U.S. government of its top credit rating. But the bigger issues facing Wall Street and stock markets worldwide remain debt-ridden countries in Europe and concerns that the global economy is weakening.
The downgrade of U.S. long-term debt from AAA to AA+ wasn’t unexpected and may have little impact on interest rates. But it’s the kind of news that stock markets don’t need when investors are nervous. As a result, financial analysts interviewed Sunday said they expect markets to be volatile this week _ and beyond.
That view was echoed by former Federal Reserve Chairman Alan Greenspan, who appeared on NBC’s “Meet the Press” Sunday. “It is very unlikely that isn’t going to take a while to bottom out,” he said of selling in the markets.
Beyond the downgrade, though, investors have plenty of reason to be selling. Last week, the Dow Jones industrial average fell nearly 700 points, or 6 percent. Investors were worried because the economic signals in the U.S. and overseas were pointing toward trouble:
_On July 29, the government dramatically lowered its estimate of how much the economy grew during the first quarter. It had said the economy grew at an annual rate of 1.3 percent, but revised that number down to 0.4 percent. That meant the economy barely grew. Second-quarter growth was also weak, a 1.3 percent rate.
_The first reports on the economy during the third quarter have been mixed. Manufacturing, which helped pull the economy out of the recession, fell to its weakest level since July 2009. That was the month after the recession officially ended. The Labor Department said 117,000 jobs were created last month. But that came after 99,000 jobs were created in May and June combined _ and 250,000 new jobs are needed each month to reduce unemployment.
_European officials are trying to help Italy avoid the kind of bailouts that Greece, Portugal and Spain were forced to accept to prevent them from defaulting on their debt. And those bailouts haven’t solved all the problems in those countries.
To investors, the downgrade made it all worse.
“We are in unchartered territory and, therefore, should all brace for volatility over a number of days if not weeks,” said Mohamed El-Erian, CEO and co-chief investment officer of the bond mutual fund company PIMCO.
Greenspan noted that S&P had “hit a nerve” with its downgrade. The ratings agency said it was lowering the U.S. rating not just because of the country’s debt load, but because S&P doesn’t believe Congress has the ability to resolve the country’s debt problems low fee cash advance. And it warned that another downgrade could be forthcoming.
On Saturday, David Beers, S&P’s global head of sovereign ratings, said his agency was concerned about “the degree of uncertainty about the political policy process” in Washington.
S&P was looking for $4 trillion in budget cuts over 10 years. The deal that Congress passed on Tuesday would bring $2.1 trillion to $2.4 trillion in cuts over that time. S&P said it was also concerned about the ability of Congress to implement those cuts because of the division between Republicans and Democrats.
“Right now, the markets don’t believe anybody anywhere and the uncertainty premium is very high. Since the end of World War I, the United States has been an unquestioned AAA credit, until now,” said David Kotok, chairman and chief investment officer of Cumberland Advisors.
Prudential Financial market strategist Quincy Krosby, said, “The rating is in essence an indictment of Congress and puts the president on the defensive. While both sides came up with a package that was short on the cuts that we needed, ultimately it happened on this president’s watch. So, it takes on a very symbolic indictment of his ability to run the United States.”
Investors are worried about debt not only because countries and many people are overwhelmed by it. Debt is what financed economic growth for decades. Now countries and people are cutting back on debt _ deleveraging is what economists call that process _ and that means economic growth in the future will be slower. Economists had widely expected the U.S. economy to pick up in the second half of the year after its soft patch in the spring. But the stock market, which looks six to nine months ahead, doesn’t see an improvement until well into 2012.
They may get more insight on Tuesday. The Federal Reserve holds a regularly scheduled meeting on the economy and interest rates. It’s expected the central bank will state that interest rates will need to remain at their current low levels for at least another year.
Even with this bleak outlook, some analysts see a chance for stocks to rise, at least in the short run.
The stock market could recover next week if European leaders make progress in averting another debt crisis in that region, said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research.
Still, even if stocks do rise, there are so many economic and political problems to be resolved that any rally may well be very short-lived.
Aetna says its second-quarter net income rose 9 percent in part because it benefited from a continued slowdown in the use of health care services by its members.
The health insurer also raised its full-year operating earnings forecast on Wednesday.
Aetna earned $536.7 million, or $1.39 per share, for the three months ended June 30. That’s up from $491 million, or $1.14 per share, in the same period last year.
This beat the $1.07 per share that analysts expected.
Revenue slipped 3 percent to $8.34 billion from $8.55 billion, but still topped Wall Street’s $8.25 billion.
Total medical membership fell 2 percent to 18.2 million members.
Aetna, based in Hartford, Conn., is the third-largest commercial health insurer based on both enrollment and revenue, trailing WellPoint and UnitedHealth.
Asian stock markets fell Monday, dragged by global economic worries after an unexpectedly weak U.S. jobs report and surging inflation in China.
Wall Street’s sharp drop before the weekend extended to Asia, where investors digested news that U.S. employers created the fewest number of jobs in nine months. The 18,000 net jobs in created in June were a fraction of what many economists expected and dampened hopes that the economy is improving.
Japan’s Nikkei 225 stock average lost 0.5 percent to 10,089.56, with a stronger yen adding more pressure to exporters.
Hong Kong’s Hang Seng retreated 0.7 percent to 22,562.24, South Korea’s Kospi was down 0.8 percent at 2,162.48, and the Shanghai Composite index fell 0.1 percent to 2,796.05.
Also dragging sentiment was data released Saturday showing China’s inflation accelerated to a three-year high in June even as the overheated economy began to cool.
Consumer prices rose 6.4 percent over a year ago, a sharp jump from May’s 5.5 percent rate, China’s government said Saturday. Communist leaders declared taming prices their priority this year, but they have been frustrated amid inflation’s steady rise.
In Australia, the government’s new carbon tax proposal battered stocks. The S&P/ASX 200 shed 1.3 percent to 4,594.60.
Prime Minister Julia Gillard unveiled a plan Sunday to force the country’s 500 worst polluters to pay 23 Australian dollars ($25) for every ton of carbon dioxide they emit.
Australia’s flagship carrier Qantas said Monday the tax will cost it 110 million to 115 million Australian dollars ($118 million to $123 million) for the 2013 financial year and lead to an increase in passenger fares.
Qantas shares tumbled 2.8 percent.
In New York Friday, the Dow Jones industrial average lost 62.29, or 0.5 percent, to 12,657.20.
The Standard and Poor’s 500 index fell 9.42 points, or 0.7 percent, to 1,343.80. The tech-heavy Nasdaq composite dropped 12.85, or 0.4 percent, to 2,859.81.
Oil prices fell to below $96 a barrel Monday in Asia amid signs of a struggling U.S. economy.
Benchmark oil for August delivery was down 33 cents to $95.87 a barrel in electronic trading on the New York Mercantile Exchange. Crude gave up $2.47 to settle at $96.20 on Friday.
In London, Brent crude was steady at $118.33 per barrel on the ICE Futures exchange.
Investment guru Peter Lynch once advised ordinary folks to “invest in what you know.”
For many small investors, some of the companies they are most familiar with are the e-commerce and social media sites they use every day. Now some of these private Internet companies, such as Facebook, are expected to go public soon and will likely attract a rush of fans to their stocks.
But even if you feel like you know these companies well, there is a risk in investing in them. Competitors are constantly sprouting up, and it’s difficult to predict which ones have staying power. Some Internet companies have raked in millions in revenue but have yet to turn a profit.
And there’s so much hype about these companies now that you can count on paying a high price once they do start selling shares to the public. That would be fine if the stock keeps going up. But if the price falls back to Earth, it can take a while to recover your initial investment.
Early investors in Pandora Media Inc., an online music service that went public this month, are already underwater short term personal loans. The stock shot up to $26 per share during the first day of trading. Buyers’ remorse set in the next day, and the stock has been trading below its IPO of $16 ever since. It closed last week at $15.37 per share; on Monday, it rose just above $16 on an up day for the markets.
California-based Pandora has been around for about a decade but has never posted a profit. The fact that Pandora attracted investors anyway has added to the debate on whether we’re experiencing something similar to the dot-com bubble.
“It feels like we are partying like it’s 1999 again,” said James Angel, an associate finance professor at Georgetown University.
But Chuck Carlson, chief executive of Horizon Investment Services in Indiana, said the climate now isn’t as frenzied as it was before, when investors would throw money at any company whose name ended in “com.”
“It’s unfair to paint the whole group as a giant Internet bubble,” Carlson said. “Like any sector, there will be winners and losers.”
Small investors’ best bet at gaining a piece of these companies
Thirty-one years ago, Linda Little was working as a bank teller when her best friend’s father, a union pipefitter, recommended she look into a career in the electrical trades. She joined International Brotherhood of Electrical Workers Local 1 that year
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