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Asia Business: Hong Kong Economy Receives Added Boost

In a fresh sign that Hong Kong's economy is well on the way to recovery, unemployment in the territory fell to its lowest level in three years. The unemployment rate stood at 6.5 in the last quarter of 2004.

Financial Secretary Henry Tang welcomed the news. "This is a very significant decrease, but we remain vigilant because we are going through a structural change in our economy and the unemployment situation will remain a challenge for us," he said.

Also in Hong Kong, China Netcom bought a 20 percent stake in the city's dominant telecommunications company, PCCW. China Netcom, one of China's largest telecom companies, paid $1 billion for the investment.

Over in Pakistan, the government has raised $600 million from the country's first sale of Islamic bonds. Investors snapped up the five-year bonds, which offer a fixed rate of return in the form of land rentals. Islamic law prohibits the payment of interest.

More than half of the demand came from investors in the Middle East, with the rest from Asia and Europe. It was Pakistan's second international debt issue since 1999.

In Southeast Asia, the Philippines says its budget deficit for 2004 fell seven percent from a year earlier to $3.3 billion. But the credit ratings agency Standard and Poor's downgraded its sovereign debt rating, citing the government's difficulty in raising tax revenues to cover the deficit. Manila is trying to introduce new taxes but faces resistance from politicians and the public.

Also in Southeast Asia, Indonesia raised $148 million from the sale of its 15 percent share in Bank Internasional Indonesia. The stake is a carry-over from the 1997 Asian financial crisis, when the government took control of several ailing banks. Jakarta has sold some of these assets in recent months to help cut its budget deficit.