18/03/2014 Asia Business Report

quickly. Time now for the latest business news live from Singapore.

Off the job. Workers in India are demanding higher wages from Japanese

car`maker Toyota. And a special report on Turkey. One of the

economies suffering from a cutback in US stimulus programmes.

Welcome. Toyota's Indian subsidiary will meet today with the state

government in an attempt to end an industrial dispute that has dragged

on for ten months. Yesterday, the Japanese car`maker announced a

lock`out of nearly six and a half thousand workers from its two

assembly plants, claiming some employees have threatened

supervisors and resorted to deliberate stoppages.

Toyota has shut down its manufacturing plants. The company

said in a statement, "Over the past 25 days, a section of employees have

disrupted business and stopped production lines". This after the

management today met with unions and local government and failed to reach

an agreement. They added that the shutdown will result in the loss of

700 units every day. We are not clear as to when the plants will

resume operations. India is not a huge contributor in terms of revenue

for Toyota, but it is a significant market. The firm has raised millions

of dollars over the years to expand its manufacturing presence in the

country. The auto industry here is used to it. In 2012, another

Japanese car`maker, Suzuki, had stoppages that were violent and left

one person dead. They had to shut production for several weeks, losing

many millions of US dollars. Activists and labour unions say a

lot of companies exploit contract workers by paying them less than

company employees. Auto companies have been hiring more contractors to

cut costs as the auto market has been hit by a slowdown over the last

couple of years. Toyota's rival, General Motors, has

issued new recalls of 1.5 million cars, mainly its utility vehicles

and luxury cars. It came after a report that engine fires happened in

two vehicles. General Motors has recalled around three million

vehicles worldwide due to faulty airbags and brake parts across

several models. The car`maker said it would come at a huge cost.

As the US Federal reserve meets for the first time under its new chief,

Janet Yellen, global investors are jittery with anticipation of

continued reduction of the stimulus programme. That programme has

provided liquidity into many emerging markets, such as Turkey.

Since winding back the stimulus last year, the Turkey Euro has lost 20%

of its value, and the stock market has fallen 25%. `` the Turkish lira.

Our correspondent went to Turkey. Turkey has one of the biggest

deficits amongst emerging economies. That means that it loses more than

it earns on its exports and investments. As a result, Turkey

owes a lot of money to foreigners. Foreign debt is up to 50% of GDP,

which is a risky level. It has cut back on cheap cash injections. That

cash had been going to other emerging economies. The lira has

weakened, making it harder to repay the debt. The Turkish central bank

has hiked rates, which are now at double figures. Needless to say,

seeing this happen at such magnitude would be a shock to anyone with a

mortgage business plan. That is why, when the money leaves, it can hurt

growth. Even worse, if a country can't repay its debts, it will

default and become a crisis. Our correspondent caught up with

Turkey's finance minister, and asked about the state of the economy.

Because this package has slowed down, we will be willing to live

with a more modest growth. Consumer comfort has collapsed. Industrial

output is up, which is unusual. I was surprised. Even though we may

experience some slowdown, I think it is unlikely to resuscitate, because

what is happening is on the back of these domestic political happenings.

I suppose the political instability, corruption, and unrest in the

country has led to this. If you look at opinion polls, they have a good

sense of what is happening. They understand much of this is

politically motivated. Even if there are problems, I think they still

have confidence in us addressing those problems. In your kind of

analysis, how much of the fall of the lira, how much of the concerns

over Turkey, will result in a change? I would say a substantial

portion of currency weakness is attributable to that decision. That

tapering, if there was clarity as to when and how, I think now is better.

Markets adjust. We will adjust. When there is uncertainty, that's where

the problems come in. I think the markets still offer value. The

political noise in a number of countries may get in the way,

whether you are talking about Ukraine or Venezuelan, Turkey,

Thailand, I can only speak of Turkey as far as politics are concerned,

and people want clarity, and that will mean going back to basics.

Japan will suspend talks on investment and relaxation of visa

requirements as part of sanctions against Russia. This comes after

Moscow recognise Crimea as a foreign state `` independent state following

a referendum on the weekend. They said it was in breach of Ukraine's

Constitution. Caesars entertainment has been given approval to operate a

casino resort in South Korea. It will take on the project in a joint

deal with Indonesian conglomerate. The entertainment complex will

include a theme park, two hotels, and a casino. It will only be open

to foreigners. They want to completed by 2018.

For more on the gaming industry in South Korea and other business

headlines from around the world, visit our website. China has pledged

to speed the pace of urbanisation and given property stocks a kick

along. More broadly across the region, what is the outlook for the

property market? With Asian investors keen to grow their wealth

at home and abroad, analysts say the market is changing and traditional

property sectors are becoming more crowded. I spoke with an analyst and

asking where investors were putting their money when it comes to bricks

and mortar. There are two ways to look at it. There are countries that

are popular with active capital. A lot of foreign capital is looking at

Australia, and a lot of funds are raised to target China. Those are

the three biggest in terms of capital focus. The other thing to

bear in mind is quality. The best quality real estate has been in high

domain since the financial crisis. Shiny office buildings and shopping

moles. That is about why they have come down. That quality property has

had a lot of capital targeting. Does that mean people have to look

elsewhere are looking to more niche markets and take more risks? Yes.

Our recommendations to investors is to move a little bit out of the risk

curb, not necessarily speculative development, but take on some

leasing risks outside of the CBD or work for older properties that need

fixing up. All get niche markets, such as medical offices in China or

industrial in China. Some variant of hotels as. At the same time, you

have Australia where there is a Parliamentary committee looking into

foreign investment, particularly by China, into residential property,

and whether that is pricing local residents as the market. That

concern about the foreign market, particularly residentially, is that

more widespread than Australia? It is, and there is a tendency to paint

foreign investment is innate equivocal negative, which is not

fair or true. Australia is certainly looking at this. Measures have been

introduced in Singapore and Hong Kong specifically targeting

residential. Bearing in mind that these economies are ones where

supply was tight because of government zoning. That is it for

this edition of Asia Business Report. Don't forget to follow us on

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