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Asia Business: The Week in Review - 2004-03-15


Hong Kong announced that it will sell government bonds to raise capital for the first time in ten years and India's Dodsal group plans a network of gasoline stations across Afghanistan.

In his maiden budget speech, Hong Kong's financial secretary Henry Tang announced the city plans to sell bonds worth $2.5 million for the first time in more than a decade. He says, however, that the territory will not raise or cut taxes for the time being.

Mr. Tang says the territory's budget deficit stood at about $6.2 billion - down from last year's $10 billion deficit. He predicted strong economic growth of six percent this year, outpacing last year's expansion of three-point-three percent.

The financial secretary did not introduce a sales tax, a measure many say would help solve recurring annual deficits.

Ratings agency Standard and Poor's criticized Mr. Tang's proposed budget, saying it failed to widen Hong Kong's tax base, which makes it vulnerable to economic shocks and downturns.

Hong Kong recorded large budget deficits in the years following the 1997 Asian financial crisis. That downturn eroded property prices and hurt the government's earnings from land auctions.

A Dubai based Indian company, the Dodsal group, says it will build a network of gasoline stations across Afghanistan in a deal worth $231 million.

Right now, most drivers in Afghanistan buy fuel from makeshift roadside shacks where the gasoline is cheap but poor quality.

A number of foreign companies have invested in Afghanistan since the ousting of the Taleban. The country now has two mobile phone networks and a handful of foreign banks.

Singapore's Deputy Prime Minister Lee Hsien Loong says his government has divested its holdings in ten of the city-state's companies.

Mr. Lee, who is widely expected to become the next prime minister, says the government will eventually sell stakes in about eighty additional companies in a fresh wave of privatization.