09/05/2014 Asia Business Report

rose after the announcement. Now on BBC News, all the latest

business news live from Singapore. Tough times for aviation. What do

regional airlines need to do to maintain profitability? Investor

confidence gets hit in Vietnam due to heightened tensions with China.

Thanks for watching Asia Business Report, I'm Rico Hizon. Two pages

list airlines are struggling to stay afloat and with earnings under way,

investors braced for bad news. `` two of Asia's. Thai Airways will

reveal a lower than in `` larger than expected loss when it reports

its earnings. It has been hit the crisis in Thailand, which has led to

a drop in tourism. The flesh `` flagship carrier in Malaysia is

expected to do the same. They may have to pay millions in compensation

to families on flight MH370, which disappeared two months ago. I spoke

with an aviation lawyer earlier and ask him if the troubles are due to

the political unrest or just more Management. Political protest is a

major factor. `` poor management. Traffic from China, Japan, Korea has

dropped by 25%. Wouldn't say it is bad management. Many carriers and in

Indonesia and the Philippines are also struggling in this competitive

environment. What about Malaysia Airlines? They have gone through so

much over the past year. Is it being run by bad management has yellow

Malaysia Airlines is a tale of two halves. They have the highest

traffic growth in 2013, 20 9%. They have benefited from that in they

have struggled with profit. They have been competing with low`cost

carriers in Malaysia and have struggled to make a profit. Could

they be taken over? Malaysia Airlines is the national carrier and

they employ thousands. There is a right issue. It won't get taken

over. `` pride issue. Singapore airlines made a what keeps it

competitive and profitable? It's a mere global brand. Singapore is a

major transit location for passengers `` major global brand.

They are also famous for being one of the best run carriers in the

world. They use a multi` pronged approach to their business model,

including long haul, cargo, premium service and low`cost, and not only

low`cost in the regional sense but also in the long haul. In other news

making headlines. $35 billion merger between two advertising giant has

been called off according to industry sources. Omnicom and

progress is not agree on terms including who would be the chief

financial officer `` Publicis. The merger would have seen the combined

unit overtake WPP as the world 's largest advertising company. It

included a joint structure in Donna called Publicis Omnicom group.

According to media, if the deal goes through for Apple, it will be the

largest acquisition ever. They also run a streaming music service and it

is a collaboration between Jimmy iPhone and Doctor dray. Raising

tensions in the South China Sea make investors nervous with the biggest

loss in the stock market for a decade in Vietnam. Naval ships and

Chinese vessels collided in the disputed area of the South China Sea

this week, marking the most serious event at sea in decades. Talks in

Vietnam fell `` stocks in Vietnam fell by 6% following the clash. It

extends a six`week sell`off that has turned the country 's benchmark

index into the world 's worst performer. We speak now with Tony

Foster, a managing partner in Hanoi. Thank you for joining us. As we

saw, the markets are indeed feeling the pressure. What about where you

are? Our businesses and investors feeling the tension from the

Chinese? I don't think so. There is a certain level of concern,

obviously. There is concern that is slightly more heightened than

normal. China is always a presence in the thinking in Vietnam. The

event the other day and recently have been more serious than usual. I

don't think it's likely to have much of a long`term impact on investment

activity either in the market or with direct investors, unless... Yar

a direct investors jittery about this ongoing dispute between Vietnam

and China? `` so why are. Domestic investors sold off yesterday, the

foreign investors were buying. It's potentially more serious if there is

something politically that people don't really know about and so at

the back of people 's minds, the question is, whether this domestic

sell`off is an indication of something going on politically that

other foreign investors aren't yet aware of. If that's the case, then

there is something to be worried about. What about bad debts in the

banking sector and corruption? Are these major issues that are also

impacting sentiment among businesses? Bad debts are definitely

a more important factor at the moment. There is a serious bad debt

problem which flows in from inefficient state`owned company. The

government is dealing with it `` state`owned companies. They are

dealing with it at a slow pace, taking bad debts off the books of

banks but not recapitalising the banks, so this situation is under

control and that wouldn't account for what's going on in that market.

What is your outlook on the Vietnamese economy? How will it

performed this year? I think it will be slow growth. The problem is, the

banking system isn't going to allow for substantial inflows of credit

into businesses. So, I think we are in for a period of slow growth for

the next year or two before the economy takes off again. Tony

Foster, from Hanoi, thank you for your insight. Did you ever wonder

how people live when they work in some of the most inhospitable oceans

on earth? Floating hotels provide accommodation for hundreds of oil

rig workers who need to work long`term out at sea. A Singaporean

firm is a market leader in building these vessels and our correspondent.

Access to the site of their latest project. This is the fourth floating

accommodation platform that the company is building. It cost $350

million. When ready, it will house at least 440 workers. I am here at

the fabrication yard where the oil rigs are being built as well as the

floating vessel platform. We are here to look at this special

floating platform. Or, they flotel. What is different about that one?

The uniqueness of the design is that it can operate in harsh environments

on the North Sea. Wave heights have recorded 16.5`17 metres. You can see

waves as close to about 30 metres approaching the vessel. What

specifically is it helpful for? We know a vessel like this was used

around the deep water horizon disaster cleanup workers `` where

cleanup workers were housed to clean up after the BP spill. Will we be

used after situations like that? Yes. In that accident, the vessels

that were used were one of ours. You are referring to a ship basically.

That is how it compares to a ship that is holding and providing

accommodation. This would be more safe. A lot safer and it is also

more comfortable. It avoids seasickness. During the time around

that disaster, workers complained about the uncomfortable nature of

the accommodation. How are you making it more comfortable for these

workers who work in a stressful industry? In terms of accommodation,

we have single men rooms. If you go on board this vessel, you will find

that the accommodation is close to a 5`star hotel. The central bank of

the Philippines wants banks to hold more cash amid concerns high

liquidity could lead to inflation. From the end of the month, the hike

in the ratio will drain $1.4 billion to the country's financial system.

Before we go, a look at the Asian stocks. Most are in negative

territory after Wall Street finished low. That was after better than

expected Chinese trade data. Thank you for investing your time with us.

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