14/05/2014 Asia Business Report


14/05/2014

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in Iraq. A group of lawyers presented what they call evidence of

:00:00.3:59:59

serious crimes. Now it is time for Asia Business

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Report. As Australia Day jest a brand`new budget, where tough

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spending cuts and tax hikes are the order of the day, we get the

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reactions from the man on the street. And, Sony get set to

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announce its latest numbers, with warnings of a massive loss. Thank

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you for joining us on Asia Business Report. I'm Rico Hizon. Australians

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were warned it would be tough, and it was. The country's first Budget

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under the Abbott government includes plans to nearly cut the deficit by

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

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the government is increasing spending on infrastructure. The aim

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is to bring the deficit of nearly $50 billion down to about $30

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billion next year. To help with that goal, higher income earners will pay

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a special tax for the next three years. The new levy also applies to

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members of Parliament. Benefits for families have been reduced as well.

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On the investment side, the government promised to spend $11

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billion over five years on infrastructure spending. Phil Mercer

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in Sydney had a very early start this morning, he was out and about

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getting people's reaction to the budget.

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Pain with purpose, is how the government is describing its efforts

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to balance Australia's books. There will be sweeping cuts to welfare,

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tax cuts for higher income earners, and the retirement age will rise to

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70 further down the track. Government spending will be slashed,

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and thousands of public servants will lose their jobs. The aim is to

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save $34 billion in the next four years. The morning after,

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Australians are digesting their country's harshest Budget since the

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late 1990s. Tax hikes are probably a reasonable thing, cuts to welfare

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are bit questionable. If the previous government stuffed the

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country up, we have to try to fix it. Everyone has to help out, pay to

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go to the doctor, that is what we have to do. I think it is hard on

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health and education, but things have got to be sorted out, so as

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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. Ministers 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. I spoke to a

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representative from a finance company in Sydney. I asked him if

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this was the budget we had to have? Absolutely. We have had years of

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mismanagement from previous governments, and I think this is a

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pill we have to swallow. Will these goals be achievable? I think this is

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an interesting question. I think if the Australian economy continues in

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this direction, it should do it. One of the fear is that we hold is what

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happens to its major trading partner, China. Our expectations of

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economic growth just happen to be linked to China, and if China

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continues to slow down, so will the Australian economy. I think given

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the budget, given where Australia stands at the moment, and the growth

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in the Asia region, I think the goals will be achieved. If China

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starts to slow down, more than what we expect, then it will be more of a

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concern. So, the economy is tied to progress in the Chinese economy as

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well. Taking a look on a local level, what will this budget level

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mean for you and your fellow Australians? I think it really means

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that we will be paying a little bit more. I know it is always hard to

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follow, but when you look at all the increases in the tax hikes, when you

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look at the increase in some of the subsidies, increase in some of the

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payments on the Medicare side, it is a bit tough, particularly for low

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income earners. At the end of the day, I think it is something that

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they will have to take. We are also getting tax hikes for the higher

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income as well, so it really is spread across the entire spectrum.

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When you look at it, it is a tough Budget, but everyone has to pay a

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little. In other business news, a top court in the European Union has

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ruled that Google must amend some search results if it is asked to do

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so by an individual. The landmark ruling found that a person has the

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right to ask the search engine giant to remove information under

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particular circumstances. That is, individuals have a right to be

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forgotten. Google said the ruling was disappointing. India's stock

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market, set to open in about an hour, headed to record highs on

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Tuesday after breaking new records at the start 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. Analysts say it is a sign investors

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are confident that Narendra Modi's pro`business party, the BJP, will

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win the election. Votes will be counted on the 16th of May. It is no

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secret that the electronics business is a tough one, and no business has

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been feeling the pain more than the Japanese giant, Sony. Just how big

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the challenges the company is facing will become clearer today, when it

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announces its latest report, with warnings of a massive loss. We

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explain why Sony, once the undisputed market leader, has been

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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, asking him what Sony should do with

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its business. It is one of the toughest business sectors, they are

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struggling to turn it around, moving it into a separate subsidiary. The

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pace of innovation in that segment is not enough for Sony to be able to

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differentiate and command a premium. It is a tough business, I don't see

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them providing any answers yet as to how they can bring back

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profitability. It is a tough business, as you say. Should they

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just shut it down? We all have associated televisions with the Sony

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brand. Diversification is what they need to do. As we see a variety of

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different consumer devices having the screen, that is an opportunity

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to bring growth. What Sony is doing, with its foray into healthcare, is

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an interesting proposition. They could integrate consumer devices

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into a new value proposition in hospitals, as well as consumers.

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That is an interesting idea. They will need more of these ideas to

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help drive growth and profitability. The PlayStation is doing very well,

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the movie business is profitable. When do you think this healthcare

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business will bring in revenues? To make the company again profitable? I

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think they are making tough decisions in terms of selling the PC

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business, and as a result they are left with only the television

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business. The remaining parts of the business are growing, there is

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profitability. The real value can come through Sony if it can

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integrate the various pieces of its business, from the television to the

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software to the music. And, have a greater impact on the consumer

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lifestyle. Asian stocks are inching upwards

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after another strong day. Asian stocks are inching upwards

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after another South Korea and Hong Kong in positive territory. Japan

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and Australia are territory. `` Australian and Japanese shares

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

:10:29.:10:42.

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

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killed at least 160 people. `` it has

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