04/03/2014 Asia Business Report


04/03/2014

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Now it is time for the latest business news live from Singapore.

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Up in the air. Will changes to ownership structure help turn things

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around for Qantas? And, the world's most expensive city is in Asia, but

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it is no longer Tokyo. Welcome to Asia Business Report. We

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start with the Australian government, which has decided to

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relax foreign ownership restrictions on Qantas Airways, days after the

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national carrier posted a record half-year loss. The minister Tony

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Abbott said his cabinet investors have agreed to repeal legislation

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that prevents other airlines from owning more than 35% of Qantas. The

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government could struggle to pass the changes through Senate, where

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opposition parties have raised objections to any reforms that could

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send Qantas jobs overseas. Earlier, I spoke to our correspondent in

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Australia. I asked him whether suitors would be lining up for a

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stake in the airline. The Qantas management says it is being hampered

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by current restrictions, but to limit the amount of foreign

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ownership in the airline. They have always said that if the rules were

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relaxed, foreign investors could come in, and Qantas could be

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extremely profitable further down the track. If you look at the events

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of the past week or so, that record half-year loss, about 5000 jobs

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being lost, it certainly looks pretty grim. The Qantas management

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team is insisting it can turn things around, but there are many people

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here in Australia who fear for the future of the iconic national

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carrier. The airline's request for a guarantee on its debt from the

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government has also been turned down. Where else in whom else can

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Qantas turn to? -- in. That is why they have been relying on the

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changing of these laws. Qantas had hoped for a line of credit that

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would make it easier to get hold of cheaper loans, and that that would

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help the struggling airline. There has been an enormous debate here in

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Australia. Many Australians view the flying kangaroo with a great deal of

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fondness and a sense of sentimentality. They believe

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Australia should have its own airline, but many Australians view

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it as another business that should just stand or fall on its own

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merits. Which city is the most expensive and cheapest to live in?

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According to a report from an Economist intelligence unit, it is

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the one I live in, Singapore. It has taken the title of the world's most

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expensive city, forehead by Paris and Oslo. The cheapest city goes to

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Mumbai, followed by Karachi and Delhi.

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Singapore has been moving up the cost of living index quite quickly

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in the last five years. It has now taken at number one spot. A number

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of factors behind that, structural factors that push up prices in

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Singapore, so very high costs of cars, certificates of entitlement.

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Also, energy and water supplies are very expensive. These structural

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factors behind the rise. Other factors include the relative

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currency strength in Singapore, which makes the city more expensive

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in US dollar terms. Is it also about the cost of living in places that

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have great infrastructure and other factors? Certainly, this is one of

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the points. The cost pressures are reflective of success, but it does

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raise the question of livability. People will have to consider if they

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can afford to be based in Singapore or Sydney, or so on. They may start

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to look at other locations. Those at the bottom of the list, Mumbai,

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Karachi, Delhi, why? This reflect a different stage of economic

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development in the cities. Lower incomes, lower wage environments.

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There are more moderate levels of household spending. Levels of demand

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a much lower than you will see in the Asian cities we have been

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talking about. There is not the spending, and pressure on prices. As

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you may have heard from a previous bulletins, Russia has tightened its

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military control of Ukraine's crumby region, with thousands of troops. --

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Crimea. The US has put trade agreements on hold as a rebuke.

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Stock markets plunged, here is the reaction in the Asian markets.

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Stock markets plunged, here is the reaction in the They are fairly

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mixed, after the losses that we saw on Monday. That is basically as

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investors are considering signs of global economic recovery against the

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tensions in Ukraine. Michael McCarthy is the chief market

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strategist at CMC Markets. Investors are choosing to panic early at this

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stage of the crisis in Ukraine. The hardest hit is the share market. The

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Russian market itself was down 11%, but we saw huge falls in European

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markets as well. It is a natural response, given that we are seeing

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elevated levels of share prices around the globe at the moment.

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Let's take a look at this flight to safety, one of the assets being

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bought up is gold. You said that in Australia you have lots of resource

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stocks, so how will that impact them? Gold stocks yesterday were the

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best performing sector on the market, even with the market down

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more than 1%, they were in positive territory all day. The heavyweight

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in the sector was up by more than 5%. We are seeing good gains in

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further gains in trading this morning. The other sector that is

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performing well is the energy sector. With a number of large oil

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and gas companies listed here in Australia, it is those two areas

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that are lifting numbers. You mentioned energy, and we know that

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Russia is the world's second largest producer of oil. They were the top

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exporter of natural gas as well, so are we expecting any more spikes in

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oil prices? Quebec go as high as we saw in 2007 -08? -- could they. It

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is likely we will see higher prices over the course of this week. We

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sought a good list of over $2 per barrel overnight, and they were

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maintaining a firm number in trading this morning. The risk to that

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scenario is that there is a quick resolution of the Ukraine conflict.

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In Sri Lanka, a severe drought is affecting much of the country,

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meaning rice harvest is under threat, and equality of the tea

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crop, Sri Lanka's most important export, could be affected.

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These irrigation channels, vital for rice, have been dry for weeks. Any

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paddy fields have been left fallow. The crops depend on one short

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monsoon, and it just didn't happen. You should be a reservoir, three

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metres deep and capable of irrigating for 40 farmers. The

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failure of the range from October to December mean that only seven of the

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40 farmers felt able to plant anything, and only two of them are

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likely to get any paddy at all. Farmers have tried to channel the

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scarce water into pools, but it has been almost useless. This man

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planted four acres, and all was lost. These may look green, but

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there is no grain, just husks. TRANSLATION: We have borrowed from

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banks. We have lost our livelihoods. Because of the drought, we can't

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find labouring work. This man is tending his seedlings. These are

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watermelons. He gives them a little water from a makeshift dam, but this

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is an emergency crop. He has fallen back on it, because thanks to the

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drought he can no longer grow rice. Three quarters of the Mellon

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seedlings have died as well. TRANSLATION: We just can't plan for

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the future because rain is so unpredictable. It is the same story

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in the upland key country. This tea is dead. Workers have become water

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is, a highly unusual move. The owner says it is the worst drought since

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1993. Two thirds of our crop has come down very badly, and we used to

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bring 35 or 40 kilos per day, it has come down to 12 or 13 kilos. The

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plants are wilting. Sri Lanka is the fourth largest producer of tea. The

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blood praying for rain in the few weeks time. While in the drylands,

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even the wildlife is nothing to it. That brings us to an end to this

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edition of Asia Business Report. In Q4 watching. -- thank you for

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watching.

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