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Strong as steel. Iron ore prices have hit 15 month highs. So will | :00:14. | :00:21. | |
they last or will they rust? It's three years since the Raynor Plaza | :00:22. | :00:27. | |
tragedy in Bangladesh. We find out if anything's changed in the garment | :00:28. | :00:38. | |
industry. Hello and welcome to this Monday edition of Asia Business | :00:39. | :00:41. | |
Report. Investors will be keeping a close eye on iron ore prices which | :00:42. | :00:46. | |
have surged more than 50% since the beginning of the year after a | :00:47. | :00:49. | |
protracted slump cracked down on prices from the highs of $200 a ton | :00:50. | :00:55. | |
five years ago. It looks like command from China's steel industry | :00:56. | :01:00. | |
is on the rise. Prices have been boosted by supply disruptions in | :01:01. | :01:04. | |
Australia and Brazil. But will the rebound last? We found out from the | :01:05. | :01:10. | |
industry. Recently the iron ore price has hit, as you mention, the | :01:11. | :01:16. | |
15 month high against, about $70. I was in China last week and even the | :01:17. | :01:22. | |
Chinese market is finding it fascinating in a way, most are | :01:23. | :01:26. | |
saying it is hard to sustain because looking at China's steel demand as | :01:27. | :01:31. | |
well as iron ore demand, it's not as good as last year. People here are | :01:32. | :01:35. | |
very confused. At the same time, how come the prices have been rising? | :01:36. | :01:40. | |
They are fascinated by this, speaking to your sources, and indeed | :01:41. | :01:46. | |
a lot of iron ore producers, even the likes of BHP Billiton, think | :01:47. | :01:50. | |
this surge in prices will last. Why is that? Nowadays we can see a | :01:51. | :01:57. | |
closer coalition between iron or prices related to Chinese steel | :01:58. | :02:01. | |
prices. We will be looking at the prices in the physical market. Last | :02:02. | :02:07. | |
week, towards the end of last week, prices hit a new high as well. That | :02:08. | :02:17. | |
led to the $70. We know China is a major steel producer, they want to | :02:18. | :02:22. | |
curtail production, that doesn't bode well for the industry but at | :02:23. | :02:27. | |
the moment you are seeing production disruptions, leading to rising | :02:28. | :02:33. | |
prices. That's true. I would say the production disruptions stems from | :02:34. | :02:36. | |
the steel side as well as the iron northside. You might think it is | :02:37. | :02:41. | |
strange but at the same time, -- iron ore side. You are trying to | :02:42. | :02:45. | |
curtail the production and that would be a boost to the prices as | :02:46. | :02:50. | |
well from both sides. Where do you see prices heading? It's very hard | :02:51. | :02:55. | |
to say but I would say this year the volatility will be more than last | :02:56. | :03:00. | |
year. Anything could happen. Because we did see the $70 number. Because | :03:01. | :03:05. | |
of the volatility it is hard to predict nowadays. | :03:06. | :03:10. | |
Bangladesh has marked the third anniversary of the Rana Plaza | :03:11. | :03:17. | |
disaster when a garment factory collapsed in 2013, killing more than | :03:18. | :03:22. | |
1100. In the aftermath, the focus was trying to improve safety | :03:23. | :03:26. | |
standards so that a tragedy like this wouldn't happen again. We found | :03:27. | :03:35. | |
out how the industry has changed since then. | :03:36. | :03:41. | |
Almost all of the exporting garment factories have gone through a | :03:42. | :03:48. | |
standardised safety inspection, for building, structural integrity and | :03:49. | :03:56. | |
the like. All of them have now got an inspection report indicating what | :03:57. | :03:59. | |
changes need to be made to fix the safety issues. | :04:00. | :04:04. | |
The standard that is applied here in Bangladesh is essentially based on | :04:05. | :04:14. | |
Bangladesh National Building Core, but also following international | :04:15. | :04:17. | |
good practices, it's a combination of best practices. We are hearing | :04:18. | :04:22. | |
that the Bangladesh garment industry is heading towards a good standard. | :04:23. | :04:27. | |
When the renovation is complete I think this will place Bangladesh in | :04:28. | :04:30. | |
a very good place with competitive advantage. Safety has received a lot | :04:31. | :04:39. | |
of attention in Bangladesh and it has seen improvements. But we also | :04:40. | :04:47. | |
want to see more action with labour rights, making sure they are | :04:48. | :04:50. | |
protected. We have seen a lot of workers in the last few years | :04:51. | :04:59. | |
improving workers' rights as well as worker safety, that is a major | :05:00. | :05:00. | |
priority for us. We have spoken to the president of | :05:01. | :05:09. | |
the American Chambers of Commerce in Hong Kong. He travelled to the | :05:10. | :05:13. | |
tragedy after it happened and since then he has been looking at the | :05:14. | :05:17. | |
industry across the region and we found out if it had changed. The | :05:18. | :05:22. | |
engagement by Bangladesh by international businesses, which has | :05:23. | :05:25. | |
always been very strong, has intensified substantially imprecise | :05:26. | :05:31. | |
areas where the tragedy gave rise to concern. Certainly on structural | :05:32. | :05:38. | |
safety and training, safety training of all sorts, fire safety in | :05:39. | :05:42. | |
particular, which has always been in place in the foreign investment | :05:43. | :05:47. | |
factories. The Rana Plaza disaster made it very clear that of the 5000 | :05:48. | :05:51. | |
factories that are in the manufacturing of garments in | :05:52. | :05:57. | |
Bangladesh, they all had to take a much closer look at the way they | :05:58. | :06:01. | |
operate. You say things have changed but many critics said progress has | :06:02. | :06:06. | |
been incredibly slow. The international coalition is set up | :06:07. | :06:12. | |
after the disaster said a lot of the changes they have been trying to | :06:13. | :06:15. | |
implement are well behind schedule. Why? That is an accurate observation | :06:16. | :06:26. | |
first of all. A great number of factories have been investigated for | :06:27. | :06:33. | |
structural safety but that takes extra time. That is not widespread | :06:34. | :06:38. | |
to the international standards and hasn't been available in | :06:39. | :06:40. | |
Bangladesh. There's a lot of training involved, which isn't a two | :06:41. | :06:46. | |
weekend exercise obviously. Getting enough people to do the proper | :06:47. | :06:48. | |
inspections and procedures is one thing. The other thing, foreign | :06:49. | :06:54. | |
investor factories are less than half of that 5000, maybe 2000 | :06:55. | :07:01. | |
factories. Much more progress being made there even more than before. | :07:02. | :07:05. | |
Then you need to train out and build out that explored these to the | :07:06. | :07:10. | |
Bangladesh government manufacturing and exporters Association. That | :07:11. | :07:16. | |
export. They have a wide range of expertise and they need a strong | :07:17. | :07:21. | |
will to make changes -- export. It's a government issue, it is an | :07:22. | :07:25. | |
institutional one as well as a company one. | :07:26. | :07:27. | |
The Indian government has revoked the passport of the flamboyant | :07:28. | :07:31. | |
businessman and lawmaker Vijay Mali. He fled abroad last month | :07:32. | :07:37. | |
following pressure from Indian banks to repay $1.3 billion in debts owed | :07:38. | :07:42. | |
by his failed company Kingfisher airlines. Some reports have traced | :07:43. | :07:47. | |
him to the UK. India is now seeking legal advice on whether he can be | :07:48. | :07:52. | |
extradited to face charges of money-laundering and financial | :07:53. | :07:59. | |
irregularities. Some of the companies considered forbidden in | :08:00. | :08:06. | |
Islamic finance where investors need to be Shariah compliant or meet a | :08:07. | :08:10. | |
code of law found in the Koran. It's a growing industry but can it | :08:11. | :08:15. | |
navigate investments that might fall into a grey area, like hotels. We | :08:16. | :08:17. | |
found out. Welcome to the Holiday Inn Express | :08:18. | :08:25. | |
in Singapore. To most it looks like just another hotel but its owner has | :08:26. | :08:29. | |
used it in a landmark Islamic finance deal worth $260 million. I | :08:30. | :08:34. | |
sat down with the bank are behind the transaction and asked how it is | :08:35. | :08:38. | |
unique. When you talk about hotels and you think about the facilities | :08:39. | :08:45. | |
that go with the hotel, they would serve pork and alcohol. That's a | :08:46. | :08:52. | |
no-no in Islamic finance. In this case we were able to analyse whether | :08:53. | :08:57. | |
the income stream which is the threshold in terms of share to the | :08:58. | :09:05. | |
total income of the hotel. We were able to find out it is not. The | :09:06. | :09:11. | |
Islamic finance industry is expected to be worth more than $3 trillion by | :09:12. | :09:16. | |
2020. Saudi Arabia is the market leader, followed by Malaysia with | :09:17. | :09:21. | |
Indonesia in seventh. But Islamic finance still only accounts for less | :09:22. | :09:25. | |
than 1% of all global financial assets. So why the lack of | :09:26. | :09:29. | |
appetite? I suppose because conventional banking is so sure. Why | :09:30. | :09:40. | |
would you want to do something different? This transaction could be | :09:41. | :09:48. | |
a good idea. The industry has yet to take off particularly in secular | :09:49. | :09:51. | |
countries. But given this latest deal, hopefully there will be more | :09:52. | :09:54. | |
opportunities for the industry to become mainstream. | :09:55. | :09:58. | |
Let's look at the markets now because Japan's Nikkei is just a tad | :09:59. | :10:06. | |
lower, this is due to profit-taking after we saw that four-day rally | :10:07. | :10:11. | |
last week. Caution setting in ahead of the Bank of Japan's Central Bank | :10:12. | :10:15. | |
meeting this week to decide policy. There was a suggestion they could | :10:16. | :10:20. | |
inject more stimulus. Australia is shut for Anzac Day. Trade doesn't | :10:21. | :10:25. | |
start again until tomorrow and the Hang Seng is open in a bit. That's | :10:26. | :10:31. | |
it for this edition of Asia Business Report. Thanks for watching. | :10:32. | :10:33. |