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February, 2008:

Congestion Charge ‘Boosts Health’

Feb 28th, 2008
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Congestion charge ‘boosts health’

BBC – 28th Feb 2008

London’s congestion charge may have delivered a small, unexpected health boost to the capital, say researchers.

The charge was introduced to cut traffic, but a study in Occupational and Environmental Medicine says reduced pollution has aided health as well.

Scientists from two London colleges calculated that since 2003, 1,888 extra years of life had been saved among the city’s seven million residents.

Transport for London described it as a “welcome side-effect” of the charge.

Policies affecting a larger geographical area and residential population, and which directly aim to reduce vehicle emissions, are likely to have larger public health impacts

Study researchers

The study is published in the journal Occupational and Environmental Medicine.

It currently costs a motorist £8 to enter the centre of London during working hours, and Transport for London data suggests that car journeys within the charging “zone” have fallen by a quarter.

The link between certain types of traffic pollution and health problems, including heart attack and breathing problems in children, are well-established, and Transport for London’s own figures estimate that the capital’s poor air quality is responsible for 1,000 premature deaths and 1,000 extra hospital admissions every year.

It recently launched a “Low Emissions Zone” targeting principally high-polluting heavy vehicles in a bid to meet London Mayor Ken Livingstone’s target of a 16% improvement in air quality by 2012.

Scientists at the London School of Hygiene and Tropical Medicine, and King’s College London wanted to examine further if traffic reductions since 2003 could have had a direct impact on health.

Extra years

They used a computer model to work out changes in air pollution based on the traffic figures, and looked for any relationship between this and death rates in areas in or near to the charging “zone”.

Within the central charging area itself – where relatively few people actually live – the benefits seemed more significant, with an extra 183 years of life saved for every 100,000 residents.

This does not necessarily mean that every resident received an equal but tiny slice of this, as the benefits to certain people, such as those with existing heart or lung problems, are likely to be greater.

Outside the congestion charge areas, the benefits were far less, totalling an extra 18 years of life per 100,000 residents.

However, because the number of residents there was much higher, this added up to a total of 1,888 years spread across the whole of London.

While acknowledging that the benefits were fairly “modest” in size, the researchers said that traffic-cutting schemes could still be considered as potentially health-improving policies.

They wrote: “Policies affecting a larger geographical area and residential population, and which directly aim to reduce vehicle emissions, are likely to have larger public health impacts.”

Across the whole UK, the impact of traffic pollution is far more significant. Defra has estimated that, in a century, we lose approximately 39 million years of life.

A spokesman for Transport for London said that the congestion charge, together with the “Low Emission Zone”, should dramatically reduce the number of people living in areas of the capital in which air pollution was a threat to health.

She said: “The congestion charge was introduced five years ago primarily to tackle congestion in central London, but has also had some success in reducing CO2 emissions and pollutants harmful to human health.

“This ground-breaking work in the capital is expected to have an impact throughout the world as other cities follow London’s example.”

China Tries To Find Ways To Overcome Pollution

Feb 28th, 2008
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Thursday, February 28, 2008 – Turkish Daily NewsDeborah Zabarenko
WASHINGTON – Reuters

Eat an orange. Wear a facemask. Train elsewhere and fly in at the last possible moment to compete.

These are some of the strategies suggested for Olympic athletes planning to compete in Beijing, where a thick cloud of smog often blankets one of the world’s most polluted cities.

“There really isn’t anything specific you can do to acclimate to substandard air quality,” said Darryl Seibel of the U.S. Olympic Committee. “From a training point of view, there’s nothing we’ve found that an athlete can do without risking their health and well-being.”

The U.S. teams expect Beijing’s air to reach a “safe and suitable standard for elite competition,” Seibel said in a telephone interview from Colorado Springs, Colorado, home of the U.S. Olympic Training Center.

He did not think athletes would need to wear activated carbon filtration masks, as U.S. coaches advised in a newsletter article in 2006, and as U.S. triathletes did on a visit to China last year.

But he did not rule anything out. “Until we arrive at the games in August, there’s no way to predict what the air quality will be.”

Beijing has poured 120 billion yuan ($16.8 billion) into clearing the smog, for a Games many of its leaders see as a coming-out party to mark China’s rise as a major world power.

“The air quality is much better now,” said Gao, a 77-year-old Beijing resident. “When I came to Beijing 50 years ago, I could not even open my eyes when walking on those dirt roads in the coal-burning neighborhood,” she said.

Officials reportedly plan to keep half of Beijing’s 3 million cars off the roads during the Games, which begin August 8. Authorities have also ordered Beijing and five surrounding provinces to cut industrial pollution for two months from late July.

International Olympic Committee president Jacques Rogge has warned that some endurance events — where athletes will be exposed to the air for long periods — could be rescheduled if air pollution presents a danger.

But he has also said environmental challenges are not new to the Games, citing the heat in Athens in 2004, and air pollution in Seoul in 1988 and Los Angeles in 1984. All three cities tackled the problems before the Games, building trams, shutting factories or asking drivers to stay off the roads.

Breathing in pollution:

Italy’s Stefano Baldini, the 2004 Olympic marathon gold medallist, said Beijing’s smog would be a problem.

“Having to breathe in pollution while running is bound to affect performances,” Baldini told Reuters in a telephone interview in January. “But I hope the situation will improve between now and August.”

German-born Josefa Idem, who won the gold medal for Italy in the 500 meter individual kayak event at the 2000 Sydney summer Games, will be competing in her seventh Olympics in Beijing. Her event will be held some 37 miles (60 km) from Beijing.

“I’m very sorry for the Chinese people who have to live in unhealthy environmental conditions,” Idem told Reuters. “If it has an effect on the sporting field, it will be the same for all of the athletes.” This pragmatic view is echoed by some Beijing residents.

“We cannot attribute all the reasons to air pollution if those foreign athletes don’t perform well. It doesn’t matter if they have the strength to win,” said Zhang, 39, who has worked as a street sweeper in Beijing for 23 years.

An advantage for some:

Andreu Alfonso, technical director of the Spanish triathlon team, told sports daily Marca that the team would acclimatize in South Korea and travel to China four days before the event.

“The last time we were in Beijing we were frankly amazed at the levels of pollution,” Alfonso was quoted as saying in the newspaper. “In low intensity training the problem wasn’t so great, but it was really noticeable in the quality sessions.”

“We are introducing extra rations of vitamin C and E through things like grapefruit and oranges into the diets for the riders because they are anti-oxidants and can help improve breathing,” Mikel Zabala, technical director of the Spanish Cycling Federation, told Marca.

“We have thought about wearing masks if necessary and I expect we will take them. I think the pollution will take its toll especially on sportsmen that have respiratory problems,” Zabala said.

For some athletes who already train in a polluted city, Beijing could present some advantages.

“It will benefit us, because if we are talking about toxic surroundings … we are training in the right place,” said Jorge Nunez, technical manager of the Chile Olympic Committee. Chile’s capital Santiago, where Olympic athletes are training, is one of Latin America’s most polluted cities.

“We won’t be in a situation that different (from where we live) so we don’t require special preparation,” Nunez said.

No Time For More Hot Air On Pollution

Feb 27th, 2008
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Chris Yeung – Updated on Feb 27, 2008 – SCMP

It sounds undiplomatic, but speaking at a media session on a report about better air quality, the head of a government-appointed panel on sustainable development declined a request from a radio journalist for a formal interview.

“I don’t want to talk any more,” said Edgar Cheng Wai-kin. “It’s been almost two years since we launched a public engagement exercise on better air quality. People want to see action.”

Dr Cheng, who chairs the Council for Sustainable Development, has good reason to feel concerned about whether the government and community can walk the walk after the prolonged debate on how to clean our foul air.

Kicking off a session with senior journalists on Friday, which followed a separate session with environment-beat reporters on Thursday, he made it clear that the Council’s Report on Better Air Quality Process deserved better media coverage.

The report, submitted to the government about 10 days ago, was publicised in a brief despatch by the Information Services Department. Officials gave no immediate response. Media coverage was scant.

The government’s cool treatment of the report reflects a sense of caution among officials. They are wary of raising expectations about an early implementation of the proposals contained in the document.

This is simply because ideas such as an electronic road-pricing system, a new alert system on high air pollution days and subsidising the upgrading of buses to the latest Euro vehicle standards are bound to trigger yet more heated debate.

It is not surprising that officials prefer more time to study the report before making a commitment on specific measures. But, if a feeling of unease has gripped council members and some sectors of the community, it is because of the depth of uncertainty about the practical meaning of the so-called public-engagement process in handling difficult issues such as air pollution.

Noting shortcomings in the government’s traditional public-consultation method, the council has adopted a new style of bottom-up engagement in policy discussions. This process, in the context of the report on better air quality, meant there was a full programme of discussion sessions, public exhibitions, stakeholder meetings and briefings for students. An unprecedented 80,000 written responses were received.

Of these, an overwhelming majority either expressed support for, or no opposition to, the electronic road-pricing proposal. Most respondents also indicated that they were willing to pay higher transport fares for cleaner air.

The formation of a strong body of public opinion on ways to beat air pollution could become a double-edged sword for the government. Public backing for certain proposals could become ammunition for the government to fight tough political battles when turning ideas into policies. Clear, strong public support could, nevertheless, limit the room for the government to play a balancing act in policy formulation.

Now that there is a clear public mandate on certain anti-pollution measures, the government will face growing pressure for an explanation on which ones are plausible, how and when they can be achieved, and why others are non-starters.

If the government fails to meet these expectations, it will deepen public scepticism that the high-level sustainable development body – an initiative of former chief executive Tung Chee-hwa – is just another talk shop with a fancy name.

Reflecting on the experience of the five-year-old council, Dr Cheng said Hong Kong needs a combination of bureaucrats and “out-of-the-box thinkers” to tackle problems like air pollution.

The thinkers have done their job in setting out what can be done. Now it is the bureaucrats’ turn to work out the policy options for people to choose.

Eco-Friendly Budget Will Be Good For Hong Kong

Feb 27th, 2008
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Eco-Friendly Budget Will Be Good For HK

Updated on Feb 27, 2008 – SCMP

Given the size of the government’s surplus – estimated by some experts to be as high as HK$120 billion – many people have been asking that the financial secretary hands out rebates of various kinds in today’s budget.

However, I would like to see some of the surplus being spent on programmes that will help to improve the quality of our living environment, where air pollution is still the top priority. Friends of the Earth has drafted a “green” wish list for the budget:

* Change street lights to high-energy-efficient LED light bulbs. These have a lifespan of at least 10 years, yet use less than one third of the electricity consumed by conventional bulbs, which have a much shorter lifespan. This will reduce energy wastage and reduce power plant emissions;

* Add “green” rooftops to all government buildings whenever practical. This will help to absorb the ambient heat of the city and lower the “heat island” effect;

* Plant more trees around government buildings and on our streets. Trees absorb roadside pollutants;

* Regulate the tunnel tolls for the three cross-harbour tunnels. Traffic congestion, especially at the Cross-Harbour Tunnel, creates more pollution and wastes precious time. With less congestion and a shorter waiting period, workers can be more productive;

* Offer subsidies to operators of pre-Euro and Euro-1 heavy-diesel vehicles. Existing government subsidies should be reviewed and possibly increased to quicken the pace of phasing out those highly polluting vehicles. The government must uphold the polluter pays principle and make owners of those vehicles bear a large part of the cost of getting the latest Euro-standard diesel vehicles for their businesses;

* Improve the city’s recycling bin facilities. More accessible and user-friendly recycling bins could be placed around the whole territory, both in public venues and in every appropriate building to induce more frequent use; and

* The government could provide job opportunities for unemployed locals by using organic fertiliser made from our food waste to enrich the topsoil of the many barren landscapes along highways and country parks in the New Territories so shrubs or trees could be grown and help absorb pollutants and greenhouse gases and improve air quality.

The government should not waste time on lengthy consultations. It should put in place the right policies for the environment without delay.

Edwin Lau Che-feng, director, Friends of the Earth (HK)

Proposed Tuen Mun Incinerator

Feb 27th, 2008
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Tuen Mun incinerator would put us at risk, say Shenzhen residents

Fiona Tam in Shenzhen and Cheung Chi-fai

Updated on Feb 27, 2008 – SCMP

A proposed incinerator in Tuen Mun to turn waste into energy is facing opposition from Shenzhen over concerns that it will aggravate air pollution and put residents’ health at risk.

Dozens of Shenzhen residents and activists plan to send a proposal to the municipal people’s congress, urging its environmental protection bureau to meet Hong Kong authorities over the HK$4 billion project.

The opposition came after Hong Kong last month announced two potential sites for a 3,000-tonne capacity incinerator; at Tsang Tsui in Tuen Mun or Shek Kwu Chau off southern Lantau. Both sites have been criticised as unsuitable by local residents.

Nanshan district party chief Ye Minhui said yesterday the project would have a huge impact on the environment and residents’ concerns should be conveyed to the Hong Kong authorities.

Ao Jiannan , an environmental activist from the Nanshan district people’s congress, said yesterday the proposed incinerator was 5km from a densely populated area in Nantou, home to tens of thousands of people.

“Pollutants and carcinogens are likely to affect the peninsula north of Tuen Mun all year, especially with southerly winds in summer. It would be a huge health risk for local residents,” Mr Ao said.

“Hong Kong, as an international metropolis with a strong sense of social responsibility, should always have the health of neighbouring Shenzhen residents in mind.

“Hongkongers always complain about pollutants from the Pearl River Delta aggravating the heavy smog in Hong Kong and air pollution plaguing their sky. Now, it’s their turn to set the example for cleaning the sky.”

Mr Ao called on Shenzhen and Hong Kong environmental watchdogs to conduct further environmental impact assessments.

An Environmental Protection Department spokesman said the department would conduct a study to determine the most appropriate site and gauge the potential impact on the neighbouring environment and population.

Ng Cho-nam, of the environmental impact assessment subcommittee of Hong Kong’s Advisory Council on the Environment, said the project would have little impact on Shenzhen as it was likely to use the latest technology to limit toxic emissions.

“If the project passes the assessment in Hong Kong, it means it would be acceptable to the nearest population. So it should be fine for the Shenzhen residents too,” he said.

Dr Ng said Shenzhen residents could still submit their comments when the report was completed but by law the review could only consider the impact within Hong Kong.

But Shenzhen resident Xu Weiping , who lives in Moon Bay Garden, said: “We have complained about air pollution caused by nearby power plants for 15 years but polluters have never been relocated. Now I don’t know where to complain about an incinerator in Hong Kong.”

Aviation Takes Climate Cause Under Its Wing

Feb 27th, 2008
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Giovanni Bisignani – Updated on Feb 27, 2008 – SCMP

Aviation is the lifeblood of the Asian economy. Across the region, 10.5 million aviation-related jobs support US$807 billion in business. So, it should come as no surprise that the industry is growing. What may surprise many is the responsible approach of the industry – globally – to its environmental impacts.

Let’s start with the facts. The Nobel-Prize-winning Intergovernmental Panel on Climate Change is the only authoritative source of global facts. It estimates that aviation contributes 2 per cent of the world’s man-made carbon dioxide. This is expected to grow to 3 per cent by 2050. This is far less than the current emissions from road transport, shipping, deforestation or energy production. Aviation is, and will remain, a small part of the big problem of climate change.

Being small is not a licence for complacency. And a growing carbon footprint is unacceptable for any industry. The challenge is to keep the many benefits of aviation while eliminating any negative impacts.

Aviation has delivered impressive results. Over the past four decades, fuel efficiency has improved 70 per cent. And the billions being invested in new aircraft are helping to put aviation on target for a further 25 per cent improvement in fuel efficiency by 2020.

The solution is not just about buying new aircraft. How we operate them is equally important. The International Air Transport Association (Iata) is working with airlines to identify environmental efficiencies. Last year, we identified operational measures that saved 7 million tonnes of carbon dioxide. Another 4 million tonnes was saved by shortening more than 300 routes.

In Asia, reorganising air traffic over the Bay of Bengal is saving 50,000 tonnes of carbon dioxide a year. Modernised approach procedures at Japanese airports will save 160,000 tonnes. And, if we could sort out the tangle of air-traffic procedures for the Pearl River Delta’s five airports, a further 250,000 tonnes could be saved. These achievements illustrate the positive impact of Iata’s four-pillar strategy on climate change: invest in new technology; operate aircraft effectively; build and use efficient infrastructure; and, provide positive economic incentives. Together, these initiatives have limited the growth of our carbon footprint to 3 per cent per year, even while air travel expands at between 5 per cent and 6 per cent.

Last June, I challenged the industry to achieve carbon-neutral growth on the way to a carbon-free future by developing a zero-emission aircraft in 50 years’ time. The vision is ambitious. But it is possible.

Asia has a role in building aviation’s future as a benchmark for environmental responsibility. By 2010, intra-Asia traffic will be the largest single market in the world. With an aircraft fleet that is two years younger than the global average of 11.8 years, it already has a head start on fuel efficiency. And the region’s growth is a unique opportunity to develop leading-edge infrastructure.

Asia also has the opportunity to avoid the political hypocrisy that has characterised the debate in Europe. Taxes applied in the name of the environment have only helped solve budget problems. Europe’s rushed unilateral approach to include aviation in its emissions trading scheme is contrary to international treaties.

There are two unique opportunities for Asia. First, transport ministers from the Asia-Pacific Economic Co-operation forum laid the groundwork for environmental leadership last year with an agreement that technology, operations and infrastructure must be at the core of aviation’s environmental agenda in the region. Second, the region’s sovereign wealth funds could be used strategically to fund basic research in green technologies. The Group of Eight meeting in Japan later this year can provide a global stage for Asia to show its support for the air transport industry’s strong vision for environmental responsibility.

Giovanni Bisignani is director general and chief executive officer of Iata

No Time For More Hot Air On Pollution

Feb 27th, 2008
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Chris Yeung – Updated on Feb 27, 2008 – SCMP

It sounds undiplomatic, but speaking at a media session on a report about better air quality, the head of a government-appointed panel on sustainable development declined a request from a radio journalist for a formal interview.

“I don’t want to talk any more,” said Edgar Cheng Wai-kin. “It’s been almost two years since we launched a public engagement exercise on better air quality. People want to see action.”

Dr Cheng, who chairs the Council for Sustainable Development, has good reason to feel concerned about whether the government and community can walk the walk after the prolonged debate on how to clean our foul air.

Kicking off a session with senior journalists on Friday, which followed a separate session with environment-beat reporters on Thursday, he made it clear that the Council’s Report on Better Air Quality Process deserved better media coverage.

The report, submitted to the government about 10 days ago, was publicised in a brief despatch by the Information Services Department. Officials gave no immediate response. Media coverage was scant.

The government’s cool treatment of the report reflects a sense of caution among officials. They are wary of raising expectations about an early implementation of the proposals contained in the document.

This is simply because ideas such as an electronic road-pricing system, a new alert system on high air pollution days and subsidising the upgrading of buses to the latest Euro vehicle standards are bound to trigger yet more heated debate.

It is not surprising that officials prefer more time to study the report before making a commitment on specific measures. But, if a feeling of unease has gripped council members and some sectors of the community, it is because of the depth of uncertainty about the practical meaning of the so-called public-engagement process in handling difficult issues such as air pollution.

Noting shortcomings in the government’s traditional public-consultation method, the council has adopted a new style of bottom-up engagement in policy discussions. This process, in the context of the report on better air quality, meant there was a full programme of discussion sessions, public exhibitions, stakeholder meetings and briefings for students. An unprecedented 80,000 written responses were received.

Of these, an overwhelming majority either expressed support for, or no opposition to, the electronic road-pricing proposal. Most respondents also indicated that they were willing to pay higher transport fares for cleaner air.

The formation of a strong body of public opinion on ways to beat air pollution could become a double-edged sword for the government. Public backing for certain proposals could become ammunition for the government to fight tough political battles when turning ideas into policies. Clear, strong public support could, nevertheless, limit the room for the government to play a balancing act in policy formulation.

Now that there is a clear public mandate on certain anti-pollution measures, the government will face growing pressure for an explanation on which ones are plausible, how and when they can be achieved, and why others are non-starters.

If the government fails to meet these expectations, it will deepen public scepticism that the high-level sustainable development body – an initiative of former chief executive Tung Chee-hwa – is just another talk shop with a fancy name.

Reflecting on the experience of the five-year-old council, Dr Cheng said Hong Kong needs a combination of bureaucrats and “out-of-the-box thinkers” to tackle problems like air pollution.

The thinkers have done their job in setting out what can be done. Now it is the bureaucrats’ turn to work out the policy options for people to choose.

Chris Yeung is the Post’s editor-at-large. chris.yeung@scmp.com

Pollution Curbs Target Processing

Feb 27th, 2008
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Denise Tsang – Updated on Feb 27, 2008 – SCMP

Beijing aims to further curb polluting manufacturing activities by cutting tax rebates and banning processing trade of 141 product types in six industries.

The State Environmental Protection Administration (Sepa) proposed yesterday to the Ministry of Commerce and China Customs to scrap tax rebates on agricultural chemicals, paint coatings, batteries and organoarsenic compounds – used to produce agricultural fertilizers – as part of the country’s environmental policy.

The policy will apply only to manufacturing using imported materials, which for years has enjoyed tax incentives.

The majority of manufacturers engaged in the affected industries are Hong Kong companies.

Described by Sepa vice-minister Pan Yue as this year’s first batch of products deemed hazardous to health and the environment, the list heralds more restrictions in the pipeline.

Market observers said the proposal would add to the financial burdens of tens of thousands of Hong Kong factory owners operating along the Pearl River Delta, who were already dealing with higher production costs, increasing wages, power shortages, a stronger yuan and other policies aimed at discouraging the production of low-value goods.

The rules would require greater environmental commitments from battery makers such as Hong Kong-listed Gold Peak Industries (Holdings) and Tianneng Power, which produce batteries in Guangdong and Zhejiang respectively, market observers said.

Neither company was available for comment yesterday.

At stake are eight types of batteries including those containing chrome, which is classified as a non-biodegradable material.

Also affected are 24 agrochemicals, 25 organoarsenic compounds and related products, 43 dyeing materials and 21 coatings that contain toxic lead oxide.

Without naming any companies, Mr Pan condemned many for making money at the expense of the environment.

He said about 500,000 tonnes of chrome waste was produced annually on the mainland, and four million tonnes had yet to be dealt with.

Green Manufacturing Alliance chairman Sunny Chai Ngai-chiu said the Sepa proposal would inevitably raise Hong Kong manufacturers’ costs and responsibilities for reducing pollution.

“It adds to the burdens of factory owners,” he said. “We are facing a lot of new environmental requirements and restrictions from the European Union and the United States.”

However, Mr Chai said the proposal to ban just the processing sector of such products meant that mainland companies were exempt.

“This is unfair,” he said. “Why does the proposal apply only to manufacturers in the processing trade? Why does the country allow domestic companies to engage in polluting and energy-consuming production activities?”

The mainland has been seeking to reduce its record trade surplus by limiting processing exports.

State statistics show the Pearl River Delta has about 90,000 processing trade factories, of which 57,500 are owned by Hong Kong investors who collectively employ 9.6 million workers.

Since June last year, the Ministry of Commerce has eliminated tax rebates in two rounds on processing exports involving about 3,300 product types deemed to be heavy energy and resource consumers and heavy polluters.

Al Salam Bank-Bahrain executes a pioneering biodiesel investment in Hong Kong

Feb 27th, 2008
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27 Feb. 2008

Al Salam Bank-Bahrain (ASBB) announced the successful signing of a major, multi-faceted deal with six global strategic partners to invest in a pioneering alternative energy project in Hong Kong.

Mr. Yousif Taqi, CEO of Al Salam Bank Bahrain.

Related stor

Yousif Taqi, the Bank’s Chief Executive Officer, said that ASB Biodiesel (Hong Kong) Limited (the Joint Venture Company) will build and own a new plant which produces biodiesel using mainly waste products.
The plant will be located in the Tseung Kwan O industrial area of Hong Kong. The 100,000 metric ton per year facility will be the first of its kind in Asia and will aim to sell biodiesel – which effectively substitutes regular fossil diesel – both locally and to European markets, he clarified.

Traditionally, the production process of biodiesel reforms any variety of vegetable oils such as rapeseed, corn, and soybean oils into a single specified automotive fuel accepted by all diesel engines. However, in using virgin vegetable oils, this process has the disadvantage of competing with human consumption and cooking oil needs. There is also growing concern that demand for biodiesel from virgin oils such as palm oil may lead to destruction of tropical rainforests.

Taqi pointed out that what sets the JVC apart from traditional biodiesel producers, and further emphasizes ASBB’s environment-friendly approach, is that the new plant will utilize waste products including: used cooking oil, waste animal fat and grease trap waste (restaurant sewage) as some of the major feedstock components for biodiesel production.

He clarified that there is a three-pronged environmental benefit; reducing harmful vehicle emissions and global warming through the usage of biodiesel, productive use of materials which often go to a landfill (thus reducing landfill needs) and preservation of virgin vegetable oils for human consumption, thus addressing the issue of rainforest destruction and escalating food prices.

Mr. Taqi said:

“This is an innovative investment. It illustrates our bank’s strategy to meet clients’ expectations for attractive investment opportunities that are differentiated by sector and geography, and to ensure competitive returns to our shareholders. It also underlines our commitment to identify projects that have the potential to add value to the community and positively impact the environment.”
Mr. Taqi also thanked the strategic partners for their trust and confidence placed in Al Salam Bank-Bahrain, and for sharing their specialist industry knowledge and market experience, which has proved invaluable in finalizing this ground-breaking transaction

Rising Costs Close China Factories

Feb 26th, 2008
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Mei Fong, Beijing and Sky Canaves, Hong Kong | February 26, 2008 – The Australian Business

CHINA’S Pearl River Delta – the southern coastal area that in the past two decades has become the world’s factory floor for low-end goods — is losing thousands of factories.

Rising costs and tighter regulations are making the region less competitive than other Asian manufacturing hubs, including other parts of China.

New labour laws and higher taxes for foreign-invested companies, combined with tougher environmental rules and a strengthening Chinese currency, are squeezing Chinese companies that make labor-intensive products such as toys, clothing and furniture.

This year “will likely mark the year (China) manufacturers were finally forced to take a general hit on profitability”, UBS economist Jonathan Anderson said in a note.

The Federation of Hong Kong Industries estimates 10 per cent of the 60,000 to 70,000 Hong Kong-owned factories in the delta region will close this year – likely the highest rate of closures in 20 years, deputy chairman Stanley Lau says.

Some of these operations have been closed for good, some moved inland, and some relocated outside China.

In the past year, more than 1000 shoe factories and related suppliers have closed in Guangdong, which is home to the Pearl River Delta and which has provided about a third of China’s exports. That is roughly 10 per cent of the footwear manufacturers in the province, says Li Peng, secretary-general of the Asia Footwear Association.

Most companies shutting factories had relatively small operations in Guangdong province, having invested less than $US3million ($3.25 million) each, according to a survey by the International Business Daily, a Chinese newspaper.

Douglas Sheridan, president of Hong Kong-based sportswear supplier Net69, says it is “the first time I’ve seen so many elements hitting us at once” in China. At a recent trade fair in Munich, “everyone was talking about who they are working with in south China, and whether they’ll still be in business”, says the 25-year industry veteran, who is now setting up a joint venture in Vietnam and scouting other locations outside China.

The changes buffeting low-end manufacturers are likely to be long-lasting. They are driven in part by the Chinese Government’s effort to redress some of the imbalances brought about by decades of breakneck growth, such as poor working conditions and pollution.

Beijing also changed its corporate-tax rates this year to phase out tax breaks given to foreign companies, which dominate the export sector. And rising prices for oil and other commodities have added to the pain, as has China’s strengthening yuan, which gained nearly 7 per cent last year against the dollar, making Chinese goods more expensive for buyers in the US.

“This year is a turning point for manufacturers,” said FC Lo, vice-president of the Chinese Manufacturers Association of Hong Kong, where many of the companies that manufacture in southern China are based. In years past, “many made money” he says, but “things have changed”.

The shift in China’s light-manufacturing sector is sending ripples around the world. Factory owners are looking beyond Guangdong and the Delta – where the cost of living, and hence, wages, has become relatively high – to new locations deeper inside China, where they can enjoy lower costs and investment incentives from local governments eager to attract businesses.

In some cases, they are also turning to poorer countries with lower wage levels. That means new investment and assembly-line jobs in countries such as Vietnam and Bangladesh – and possibly longer, more-complex supply chains for big buyers such as Wal-Mart.

Those changes are being driven by fierce pressure to keep prices low for overseas buyers. Prices for Chinese exports have already been rising at a quickened pace in recent years, and the new increases in labor and other costs could translate into even more expensive products for consumers and companies in the US and Europe – just as economists are worried about a possible recession in the US.

China retains a number of advantages in manufacturing that mean the broader impact is likely to be limited. The current pain is concentrated among producers of inexpensive, labor-intensive goods, whereas the majority of China’s exports now are machinery and electronics – goods such as auto parts or computers.

Beijing has encouraged manufacturers to switch to such higher-value goods, in which labour costs are less of a driving factor and China’s economies of scale make it a formidable competitor. China also boasts roads and other infrastructure that are superior to many other developing countries.

Those factors mean China will remain a force in global manufacturing for years, even if its traditional advantages in light manufacturing along the coast erode.

Perhaps the biggest catalyst behind the shifting climate for light manufacturers is a labour-contract law that took effect on January 1. Employers say the law has shifted bargaining power in favour of employees and raised awareness of rights among workers. A labour shortage in southern China – as workers find more jobs in other parts of China – has also given workers more clout.

“The biggest worry is not (the possible US) recession, which is cyclical,” says Willie Fung, chairman of brassiere manufacturer Top Form. Instead, he says, it is the “one way” changes in China’s operating environment. “Costs, once jacked up, cannot go down,” he says.

The changes are affecting low-end producers in other coastal parts of China, too. But the area hardest hit is the Pearl River Delta. During the two decades when investments poured in from Hong Kong and Taiwan, the area blossomed into a manufacturing juggernaut, responsible for about 8 per cent of the country’s gross domestic product as of 2006.

Today, parts of the area around Dongguan, a major manufacturing hub in the delta, are now full of “empty restaurants, factories closed down”, says Willy Lin, who heads a knitwear-manufacturing business.

Mr Lin’s company, Milos Manufacturing, is moving its factory to Jiangxi province, about six hours by car from Hong Kong. But he is worried about finding skilled workers. “We need nimble fingers, but we’re worried we find farmers who … can’t work my machines.”

Additional reporting: Ellen Zhu in Shanghai

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