11/08/2014 Asia Business Report

heavy rainfall and strong winds continue on Sunday.

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

Malaysia Airlines is set to receive a radical overhaul. Can its

financial fortunes be fixed? India's new government is changing its

outdated labour laws to help boost economic growth.

Hello and welcome to Asia Business Report. I am Sharanjit Leyl in

Singapore. Malaysian airlines joins the unenviable list of national

carrier is forced into painful restructuring. The government

investment fund looks to take total control. It will soon be delisted

from the stock exchange. Does it change how travellers feel about the

company? We took to the streets to find out.

If the government is taking over Malaysia Airlines, I will be more

confident. From a consumer point of view, it makes no difference to me.

As long as the service level is maintained. It doesn't make a

difference for the safety is flying with Malaysia Airlines. It doesn't

matter if it is privately owned or owned by the government. I told a

friend of mine to not fly. I wouldn't fly. Even if the government

decides to change the airline, bring change within the airline, I would

wait three or four years. I don't know. It depends if they have the

best price or not. What has been the fate of others who have been downed

Bell down this route? History is peppered with those who did not pull

through. Pan Am in the 1990s, Swiss air after 9/11 and Indonesia 's Adam

F. Malaysia might also look at the experience of Japan airlines which

filed for bankruptcy and delisted in 2010. $3.3 billion of public money

kept it operating while it restructured. And, 2.5 years later,

it relisted. Earlier, I spoke with a Government an aviation expert. ``

with an aviation expert. It requires the approval of minority

shareholders up to 50%. Restructuring is absolutely

necessary. To distinguish them from their list of other legacy carriers

they have gone to delist because of insolvency, Malaysia Airlines isn't

insolvent at the moment, they still have cash. But, they are burning it

at around 5 million per day, which isn't sustainable going into 2015.

Are they anticipating or correcting any of those issues coming up? You

describe it earlier as a pre` bankruptcy move. Malaysia Airlines

isn't unfamiliar with restructuring. They have tried it

three times in 15 years. They had one reasonably successful

restructure where the move of asset from the airline, selling it to a

leasing company set up by the government. There is the possibility

of success, obviously. But, their fortunes have been unprecedented in

the aviation annuals, having lost a number of lives, equivalent to the

last five years `` annuls. What does it need to do in terms of

restructuring? It has been highlighted earlier this year. What

needs to be done specifically? It needs to be more competitive. There

is a big gap between them and their competitors. Comparing with other

legacy carriers like Singapore Airlines. The shorthaul routes like

domestic carriers including air Asia and the limbo `` Melindo. How do you

do that? Controlling cost, managing labour, finding cheaper financing.

There are many things they will probably have to do. Australia's

treasury one states have received a second takeover offer worth more

than $3 billion from an unnamed private equity firm. The offer comes

after KKR, another equity company, raised the bid for the winemaker

that owns brands like Penfold 's and ligaments. Let's speak with a market

strategist at IAG markets who joins us on the line. Welcome to the

programme. Why are equity firms making bids for this one firm and

how lucrative is the Australian wine industry? Very interesting question.

Since one estates was established, it was part of Foster's Group. It

has been under a huge amount of scrutiny from private equity for a

while because of the diversification of assets. It has a huge amount of

assets in Australia and New Zealand and there are three major assets in

the US, all of them are very lucrative from the point of view

that US equity firms on the list look at using it as a way to

diversify in the US. You can provide wine and beer, spirits particular

into someone like TPG, the second takeover player, to move into their

casinos and other private equity firms. The second part of the

question is also interesting. The wine industry in Australia is very

strong despite global downward pressure. Domestically, it generates

most earnings in Australia and New Zealand, which is why you see good

upside and reasonable premiums might have been a number of challenges,

including China's austerity drive and competitors with other

winemakers. There are challenges ahead in this industry, surely?

There is and that is why China is key. The Australian wine industry is

pushing into the Asia region. They get most of their income from Asia

out of Japan, South Korea and South East Asia. That is where they see

their dry. The other thing is offering the Australian wine

industry as a premium. Most providers are independent and

privately owned, rather than Treasury one estates which is

obviously publicly listed. `` wine. That is why they tend to do OK,

because the margins are slightly higher. It is a downward treasure

market and spending in liquor is changing. That is why we see

downward pressure. Now, last week brought news which has people

wondering, could China take advantage of changes announced by

its neighbour, Moscow? They have slapped import dams on items from

the EU and the US and others in the sanctions battle over the crisis in

Ukraine. Could China plug the trillion dollar gap in trade? I

posed the question to an economist, Tony Nash. China is Russia's largest

import partner. Given that relationship, China will likely

benefit. If you look at the goods that Russia sanctioned in the EU and

US, it is only about $2 billion worth of goods on the food side.

Even if China absorbed that, it isn't a massive amount that will

impact China's exports. It is the first major reform of the Narendra

Modi government in India, revamping the labour laws. Something foreign

companies and domestic companies have demanded. It is a plan to

revive the economy, boost manufacturing and create jobs. Not

everyone thinks it is a great idea. Our correspondent reports from the

state of Haryana. Manufacturing makes up about 15% of

the economy. India wants this to reach 25% within a decade. And,

forcing companies to grow their skilled workforce by training

apprentices is just one change in labour laws aimed at kickstarting

the sector. India wants to encourage factories like this one to increase

their contribution of manufacturing to the economy. While businesses

like banks and IT companies can lay off employees pretty easily,

manufacturers face different laws. Labour laws make it tough for them

to hire or fire employees or even close down a factory when they want

to. This car parts maker says at the moment it cannot adjust the size of

its workforce to match the ebbs and flows in the business. And so it is

welcoming another change in the law to make it easier to hire you fewer

permanent staff and more subcontractors, making it more

competitive. As a businessman, I am looking for flexibility. If

businesses are fluctuating at five `10%, it is hard. There are some

segments where you can have a fluctuation of up to 15%. Might the

prospect of having more casual workers who don't have the same

legal protection, wages or job conditions cause problems? This is

the aftermath of violent clashes between workers and management at

this Suzuki factory in Haryana. Months of strikes cost it more than

$500 million. Workers' rights were at the heart of the dispute. The

types of stand`offs some expect to increase as the number of temporary

workers rises. Some question if factory floors really are the

long`term answer to more employment in India anyway. In a world ever

more driven by technology. But, an economic climate changing fast, most

expect these changes to be the beginning of an overhaul of India's

industrial landscape. Our correspondent was reporting

there. You can get more of the headlines on the website.

That is it for this edition of Asia Business Report. You can follow us

on Twitter. Sport Today is coming up next. I am Sharanjit Leyl in

Singapore. Thank you for watching.