14/05/2014 Asia Business Report


14/05/2014

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Investigation into allegations of abuse will begin regarding reports

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of abuse by British soldiers. As Australia digests a brand`new

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budget with tough spending cuts and tax hikes, we get the reaction from

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the man on the street. And, Sony get set to announce its latest numbers,

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with warnings of a massive loss. Thank you for joining us on Asia

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Business Report. I'm Rico Hizon. Australians were warned it would be

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tough, and it was. The country's first Budget under the Abbott

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government includes plans to nearly cut the deficit by half, with

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reductions to welfare and higher taxes, and at the same time the

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government is increasing spending on infrastructure. The aim is to bring

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the deficit of nearly $50 billion, down to about 30 billion next year.

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To help with that goal, higher income earners will pay a special

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tax than three years. The new levy also applies to murmurs of

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Parliament. Benefits for families have been reduced as well. On the

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investment side, the government promised to spend $11 billion over

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five years on infrastructure spending. Phil Mercer in Sydney had

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a very early start this morning, he was out and about getting people's

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reaction to the budget. Pain with purpose, is how the

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government is describing its efforts to balance straight's books. There

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will be sweeping cuts to welfare, tax cuts for higher income earners,

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and the retirement age will rise to 70 further down the track.

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Government spending will be slashed, and thousands of public servants

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will lose their jobs. The aim is to save $34 billion in the next four

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years. The morning after, Australians are digesting their

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country's harshest Budget since the late 1990s. Tax hike are probably a

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reasonable thing, cuts to welfare are bit questionable. Is the part

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government stuff the country up, we have to try to everyone has to help

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out, pay to go to the doctor, that is what we have to do. Root think it

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is hard on health and education, but things have got to be sorted out, so

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as long as it is only short`term. The government says the budget will

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strengthen the Australian economy for decades to come. Billions will

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be spent on road, rail and port projects, to boost prosperity, as a

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decade`long resources boom comes to an end. Critics have labelled the

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Budget regressive and shortsighted. The opposition party has described

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it as a string of broken promises. Investors will be expecting a

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backlash from voters, but the next federal election is two years away,

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so the government will have time to sell the benefits of what it

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describes as a long`term budget repair job.

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Earlier, I spoke to the chief executive of the Australian innocent

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group, which represents the interests of more than 60,000

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businesses across a range of sectors, including manufacture, and

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labour hire. I asked him if this budget was what he had been

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expecting. This is a tough budget, it could have been tougher in some

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respects. But it is one for the longer term. The short`term pain

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will be quite significant for many within the community, as your street

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poll said, a lot of the focus is around health and welfare issues.

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For business, there are very significant cuts to government

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programmes, and that will be recalibrated, but it will be quite

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harsh on businesses. A lot of government programmes have been cut

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out, there has been cuts to research and development, we have had very

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welcome cuts to corporate taxes. Those will come down by one and a

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half points, to 28.5%. That is welcome. So, this Budget will indeed

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impact many businesses, but are their sectors that will benefit from

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it? Look, definitely. The biggest winner at this is infrastructure. We

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have a very dry infrastructure pipeline, and we need to get that

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going. Part of the problem that this Budget has identified is that the

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Australian economy is sluggish at the moment, we are growing below

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trend, unemployment is forecast to go up over the next year, do we need

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to get those infrastructure projects going. That was the CEO of the

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Australian industry group. Other news making headlines, a top caught

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in the EU has ruled that Google must altar search results if asked to buy

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an individual. An individual has rights to ask Google to remove

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information under particular circumstances. That is, individuals

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have a right to be forgotten. In the stock market, fresh highs on Tuesday

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after records were broken at the beginning of the week. The rupee

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rallied to its strongest point in ten months. It follows the end of

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five weeks of voting across India. It is a sign that investors are

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confident, particularly that Narendra Modi's BGP will win the

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election. `` BJP. Retail sales have grown, showing that consumers cut

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back on purchases of electronics and furniture. The slowdown surprised

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many analysts, who were looking for continued growth after a harsh

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winter impacted spending. A BBC Watchdog investigation into the

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German carmaker, Audi, has discovered widespread lying about

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the safety testing of their vehicles. Undercover research has

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witnessed nine out of ten dealers from around the UK falsely claiming

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the Audi A5 was safety tested. Audi UK said it had not been an

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deliberate intent to mislead. The electronics business is a tough one,

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and no country has been feeling the pain more than Japanese giant Sony.

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Just how big the challenges the company is facing will become

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clearer today, when it announces its latest report, with warnings of a

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massive loss. We explain why Sony, once the undisputed will market

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leader, has been struggling. Sony was once the king of consumer

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electronics, but it has fast been overtaken by competitors like Apple

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and Samsung. It is expected to book annual losses of $1.3 billion. That

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is despite undergoing restructuring of the firm, plans to cut 5000 jobs,

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and the $1 billion sell`off of its headquarters in Manhattan. The big

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drag on its bottom line has come from its TV and personal computer

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divisions. It prompted Moody's to cut its credit rating to junk status

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this year. Part of the losses have been put down to 1`off costs, linked

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to its decision to exit the PC business and sell off its brand of

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computers. There has been pressure to ditch its television division as

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well, a fiercely competitive sector with slim margins, but so far the

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firm is resisting the move, and is instead splitting the unit into a

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wholly owned subsidiary. It could prove to be a costly decision for

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the top executives, could be forced to forego their bonuses for yet

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another year. Some may now be asking why Sony is so different to other

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gadget makers like Panasonic and sharp. Both of them have turned

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their fortunes around, and are back in the black, after huge losses last

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year. Earlier, I spoke to an expert,

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asking him what Sony should do with its business. It is one of the

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toughest business sectors, they are struggling to turn it around, moving

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it into a separate subsidiary. The pace of innovation in that segment

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is not enough for Sony to be able to differentiate and command a premium.

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It is a tough business, I don't see them providing any ads is as yet ``

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answers, as to how they can bring back profitability. It is a tough

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business, as you say. Should they just shut it down? We all have

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associated televisions with the Sony brand. Diversification is what they

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need to do. As we see a variety of different consumer devices having

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the screen, that is an opportunity to bring growth. What Sony is doing,

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with its foray into healthcare, is an interesting proposition. They

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could integrate consumer devices into a new value proposition in

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hospitals, as well as consumers. That is an interesting idea. They

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will need more of these ideas to help drive growth and

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profitability. The PlayStation is doing very well, the movie business

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is profitable. When do you think this healthcare business will bring

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in revenues? To make the company again profitable? I think they are

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making tough decisions in terms of selling the PC business, and as a

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result they are left with only the television business. The remaining

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parts of the business are growing, there is profitability. The real

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value can come through Sony if it can integrate the various pieces of

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its business, from the television to the software to the music. And, have

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a greater impact on the consumer lifestyle.

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Asian stocks are inching upwards after another strong day. South

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Korea and Hong Kong in positive territory. Japan and Australia are

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moving sideways. Thank you for investing your time with us.

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Our top stories: An explosion at a coal mine in western Turkey has

:10:43.:10:51.

killed at least 160 people. Around 200 have been

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