02/05/2014 Asia Business Report


02/05/2014

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regarding his speeding points. Now on BBC News, all the latest business

:00:00.:00:10.

news live from Singapore. Political crisis and a shrinking economy, how

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much more damage than Thailand's political stalemate do to the

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country's finances? And Air Asia revs up for take`off in India, we

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find out how it plans to compete. Welcome to Asia Business Report.

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Thailand may be a step closer to ending its long`running political

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crisis. PM Yingluck Shinawatra's caretaker government has agreed to

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hold a new election in July, following months of street protest.

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However, the PM still faces the risk of being removed from office by the

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courts. She has been given until today to submit her defence against

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allegations of abuse of power, but she is not expected to testify in

:00:55.:00:59.

court. The crisis has taken its toll on Thailand's economy, and we speak

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to an Asian economist. I asked him how long the turmoil will last. The

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key factor will be to what extent we see a rebound in domestic

:01:16.:01:18.

confidence, and there has to be some clarity on the political front.

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Without clarity, investment can't take place, and commerce will

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stagnate. So that is really the main drag. Political certainty is still a

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long way away. Are you as confident as the finance ministry, which is

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sticking to its forecast of growth of 6.4% for this year? It has only

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forecasting one quarter of contraction, you think it could get

:01:41.:01:49.

to two quarters of contraction? I think it is optimistic. I think

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officials like to be optimistic, on the assumption that hopefully

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political clarity could become clearer in the next weeks and

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months. For that to happen, export has to recover, the global economy

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has to be firm, and investment and consumption has to take place. I'm

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not quite sure that will happen just yet. How big an impact has it had on

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investment and consumption? What are companies and businesses doing?

:02:14.:02:20.

Particularly given the government having live limited powers. ``

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having limited powers. We are not quite sure how the political

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uncertainty can drag on, let's hold onto investment decisions, holding

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onto expansion, because if consumers are not doing anything, the

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companies are not going to take the lead. What are the risks that a new

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election will not resolve anything? If companies are still set on the

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goal, but they do not want Yingluck Shinawatra in power, then it is

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something that could go on for months. Who knows? Uncertainty is

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the keyword for the next few months. After eight years at the

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helm, the boss of the Ford Motor Co, Alan Mullaly, is stepping down. His

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era came to an end with much fanfare, as he is credited with

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rescuing the country from the Global Financial Crisis. And setting it on

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the road to expansion. Mark Fields is set to replace him. He has vowed

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to continue the legacy. My plan is to build on their success, we would

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like to accelerate our pace of progress, because we are just

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starting to see the benefits and the power of the One Ford plan.

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Opponents to the government have demonstrated in Kuala Lumpur.

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Malaysian Budget carrier Air Asia is thought to be the first

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international brand to fly domestic routes in India. Low`cost airlines

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have struggled in India, so how does Air Asia plan to compete? We caught

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up with the chief executive of Air Asia India, Mittu Chandilya, to find

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out. We're dealing with a cost structure that is significantly

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higher than most other countries. We have fuel, which is extremely

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expensive, tax on fuel, which is very expensive. Bundle those

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together, and 50% of your P is locked in. Then, we have issues

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around payroll, salaries, and infrastructure costs. There are no

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low cost airlines. We are dealing with a cost structure significantly

:04:51.:05:01.

higher than most other countries. The areas in which you can optimise,

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that had to do with pushing revenues up, and that is not by raising

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fares, but by making sure the volumes are being catered to. It is

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by constantly looking at your costs in bringing back down. How has the

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competition welcomed you? They weren't happy when you announced

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your plans of entering India. That is a good question! I think we

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welcome the competition, and I truly believe in that. I think competition

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is a great thing, and no competitor is going to just let us walk in

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through the front door. It has not been easy, there has been a lot of

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fighting going on, and I think it is going to be a beautiful thing, and

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the only people who will benefit other people of India. `` are the

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people of India. You can see more on that and other business stories from

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across India this weekend on our India Business Report. To China,

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where possible new rules on the use of commodities to back loans are

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pushing down the price of iron ore, and could in turn cause problems for

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the steel mills. Steel mills have been one side of China's dynamic

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economy. They are the backbone of China's skyscrapers and factories.

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The key ingredient of steel is iron ore, which has seen its price pushed

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up by China's insatiable demand. Until now. China is the biggest

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importer of iron ore in the world, taking approximately 60% of the iron

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ore market. At the moment it is very much demand`driven, rather than the

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supply side of the balance sheet. Which would be exports out of

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Australia, that is fine, and we are really looking at what is happening

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in China. We are looking at macro growth, whether China can maintain

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its growth targets, which have been set above 7%. So the market is very

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set on what is happening, and whether it can be facilitated, which

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is the availability of credit. But as growth in the economy slowed,

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stocks of iron ore built up, and prices fell. The problem is, many of

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these steel mills not only possessed iron ore, but used it as a form of

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trade finance. `` process. In other words, they used it as collateral

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for loans. Authorities are now concerned about the risks behind

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such deals. To address these fears, regulators have asked banks to

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re`examine how iron ore imports are paid for. But that could make

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matters worse. On the back of this announcement, the price of iron ore

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futures fell dramatically in recent days. Investors are now concerned

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that a flood of iron ore stocks may be dumped in the market, which would

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push prices down even further. Microsoft says users of its Windows

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XP operating system will also get the security update it has issued to

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fix a flaw in the Internet Explorer browser. It issued the update on

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Thursday to fix the bug, that could let hackers gain access and user IDs

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to computers. Microsoft ended support for Windows XP earlier this

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month, which means no bug fixes and security updates for it. Apple and

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Samsung could get the verdict in their crucial patent infringement

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case as early as this weekend. The world's two largest smartphone

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makers have been battling it out in a Californian court over the past

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month. As Richard Taylor reports from San Francisco, billions of

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dollars are at stake. This is just the latest feud between these

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technology Titans, and unlike the trial of a few years back, this one

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is focused much more on the software inside the devices. At stake are

:09:00.:09:21.

five patents, which Apple value at over $2 billion. Because the

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arguments have centred around software, another Silicon Valley

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giant, Google, has been invoked. Google make the Android operating

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system that runs inside the Samsung handsets. As such, a primary strand

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of Samsung's argument is in effect that Apple are fingering the wrong

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target. Google executives have taken the stand to argue that they

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developed the software, not Apple. Apple have disagreed with that, and

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tried to convince the jury that Samsung are to blame, because they

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are wilfully using it inside their handsets. Regardless of the verdict,

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you can be sure that, if past experience is anything to go by,

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this trial will run on a lot longer, with appeals and counter appeals set

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to ensue. Even when the saga ends on the West Coast of America, you can

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ensure it will continue in courtrooms around the globe. `` you

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can be sure. Before we go, a quick check on the markets. And Asian

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shares have started the date relatively subdued. The Hang Seng up

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151. A lot of investors will have an eye on the key US payroll numbers,

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which are due out later today. That's it for Asia Business Report.

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Thank you for watching. The top stories this hour: Police in Nigeria

:10:37.:10:40.

say 19 people have been killed and 60 injured in

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