25/07/2014 Asia Business Report

Now on BBC News all the latest business news live from Singapore.

Propping it up. South Korea unveils a stimulus package to help its

struggling economy. The deadline passes for Malaysian Airlines

passengers to cancel their tickets and get a refund.

Welcome to Asia Business Report. $40 billion. Will that be enough to

bolster South Korea's economy? The government is hoping the answer is

yes. The announcement of a massive stimulus package to try and increase

activity. With fragile domestic demand and weaker exports, the

economy expanded 0.6% in the past three months. That is the slowest

pace in over a year. The government has cut its growth forecast for

2014. It is now down to three `` 3.7%. The stimulus money will be

used to offer financial support to small and medium`sized companies.

Earlier I spoke to an economist from IHS and started by asking him about

the ferry accident and the effect it has had on the economy. That was an

important factor. The weak consumption in the second quarter

indicated that. Private consumption contracted in the second quarter.

That is very unusual. That was mainly because of the impact of the

ferry disaster which triggered a period of national mourning. People

cancelled festivals. Any kind of ostentatious spending was cancelled.

That is why consumption was very badly hit. Also we are seeing signs

that Korea is also struggling from headwinds of a strong currency. That

is affecting exports and corporate profits. How right is the government

to be throwing money at the problem? We know this is not the first

stimulus package. They have had others before but they continue to

miss their growth targets. I think the stimulus package will help to

some extent with recovery in the second half of the year. But the

headwinds from strong currency are likely to continue to affect growth.

There is a somewhat better global environment with the US and Eurozone

picking up. We will also see some recovery in private consumption as

well. The impact of the disaster should wear off on consumers.

Fundamentally, this stimulus will provide something of an offset to

the contractions in spending that we have seen. In other news making

headlines, Amazon has reportedly lost over $126 million in the second

quarter. It has also warned that sales could slow in this quarter. It

has survived on thin profit margins, with investors being reassured by

strong sales growth. The news did not help the company's shares. They

slumped 6% in after`hours trade. Meanwhile, General Motors earnings

have slumped on the back of costs related to the vehicle recalls. Net

profits fell 85% from a year ago to $119 million. The carmaking giant

has had to recall nearly 29 million vehicles this year mostly due to

faulty ignition switches. The deadline has passed for Malaysia

Airlines customers to cancel tickets without penalty and get a full

refund if they have decided not to fly. The airline is not saying how

many tickets have been cancelled. But there are still questions about

its future. It was struggling financially before the tragic

disasters of the next 370 and MH17. I spoke to an airline safety expert.

I started by asking if Malaysia airlines could survive the damage

caused by these tragedies. Ultimately, that is going to be

determined by the Malaysian government. The Malaysian government

has about 7% holding in the airline. `` 70%. It is related to the

appetite for how much money they are prepared to lose. What are they

likely to do next? The government owns a majority of Malaysia

Airlines. Will they look at privatising it? Could there be a

potential restructuring? It could be all of those possibilities. A merger

is less likely. That is because of the cost structures in the airline.

They have a very high cost base. It is unlikely that any other airline

would be racing to join it. It basically means that if the airline,

if the government was to continue to back it, I suspect what they are

going to do is an absolute radical restructuring of the airline. That

includes a change in the profile and the culture of the airline. The

perception of safety is not going to be an issue. That is likely to be

enduring. Tell us, are the historical precedents to this? Have

airlines managed to survive these circumstances? There has been

instances both ways. One example was in America, there was an accident

back in 1995 with one company. But they rebranded it and became very

profitable within about a year. The year after it got the best low`cost

carrier award for domestic carriers. In other news... The IMF is lowering

its forecasts for global economic growth this year from 3.7% to 3.4%.

It reflects a weak start to the year, particularly in the US, as

will as a number of downgrades the outlook for some of the countries.

The global forecast remains unchanged. Growth is predicted to

come at 4%. Google has met with data regulators from across the European

Union to discuss the implications of the recent right to be forgotten

ruling. An EU court ruled that links to the relevant and updated data

should be erased from searches on request. The BBC understands that

Google has informed the watchdogs that it has received more than

91,000 requests. The EU ruling has led to censorship concerns.

In India, Mumbai's cafes have long been a symbol of the city's diverse

cuisine and culture. The cafes were open on the 19th century with

communities that have roots in Iran. But they are slowly dying out.

For more than 90 years, this has been the perfect place to take

shelter from the Mumbai monsoon. And from the looks of the walls and

furniture, the restaurant has not changed much since it first opened.

The 91`year`old proprietor, the second`generation owner, took over

the business in 1944 after his father died. Immediately, he changed

strategy. Until a few decades ago, cafes were

all the rage in Mumbai. Most of them were family businesses. Over the

past few years, most of them have shut down. Now less than 20 remain.

His son, who runs the restaurant now, says so many cafes are closing

because the next generation are not interested in taking over the

business. Most of them prefer to take up high`paying jobs or go

abroad after receiving good education. And in fact, he is facing

the same problem. With my children? Yes, definitely. They are not

impressed with this kind of business. My daughter and my son.

They do their own things. They say it is monotonous. There is a lot of

labour. He plans to sell this restaurant, but says he will not do

it while his father is still alive. The reality is, these cafes are

waning. With just a few of them left, lovers of the food can only

hope that the remaining places will keep serving their specialities for

as long as possible before becoming part of history. A quick look at the

markets. They are fairly mixed at the moment. The Nikkei strong in

exports. We are seeing a fall in gold prices in Australia although

metal prices are climbing elsewhere. A bad day in Hong Kong,

finishing up in negative territory. That is it for this edition of Asia

Business Report. I'm Adnan Nawaz. The top stories this hour.

13 people have been killed and hundreds wounded