19/08/2014 Asia Business Report


19/08/2014

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was cancelled because it was behind schedule. Now on BBC News all the

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latest business news live from Singapore.

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$1 billion, that's the amount of money Indonesia is aiming to raise

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by reaching out to a new pool of investors. And, doing business in

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China, Mercedes`Benz is the most recent company to face penalties on

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the mainland. Thanks for joining us for this

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edition of Asia Business Report on BBC World News. Indonesia is on a

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drive to raise funds. Today is the first of a roadshow for a $1 billion

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global Islamic bond, and Islamic bond is different from a

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conventional government bond because it complies with Shari Law.

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Indonesia needs to raise cash to finance its budget deficit and by

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making the Islamic bonds available globally, they hope to reach a nuke

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all of investors that are not tapped yet `` Sharia. Although it has the

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biggest Muslim population in the world, its industry lags behind

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Malaysia which is the biggest issuer of these bonds in South East Asia. I

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speak with 80 that capital markets lawyer about these bonds. `` debt

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capital. These are Sharia compliant products, including the prohibition

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on payment of interest. Investors want to receive a return so we have

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to structure the arrangement in a way that gives that return and in a

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way that the market has done that is to invest the assets, the funds that

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investors put into the product in various assets which either create a

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profit or an income stream, which is then used to give a return to the

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investors are. Why would a government to 80 Dominique Gisin

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state of a conventional bond? Lots of reasons. They want to diversify

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those investments, they want to tap a broader range of investors and

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that would include issuing a variety of investors. Countries which have a

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large Muslim population would have an interest in providing a Sharia

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compliant investment product to support the ethical concerns of the

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population. That was Vicki Jones, debt capital market lawyer. Reports

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from China that the German car maker, Mercedes`Benz, was found

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guilty of price`fixing has given foreign businesses and other reason

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to question whether it is being unfairly targeted by the

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government. China is the world's largest car market and other brands

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like BMW, Chrysler and others have been accused of anti`competitive

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behaviour. I spoke earlier with our correspondent, John Sudworth, for an

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update on the fine Mercedes could face. We don't know yet what level

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of fine the authorities will level of Mercedes`Benz. Ahead of the

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announcement, under the shadow of the investigation, Mercedes and the

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other carmakers you mentioned have already been engaging in heavy

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cost`cutting. They have slashed the prices of spare parts after sales

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services. Too little avoid the attention of the

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authorities. There are some suggestions that a 20% reduction in

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the cost of spare parts in China might cost a carmaker around 1% of

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net profit. China has been saying that it doesn't discriminate between

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domestic and overseas companies. The European chamber in China feels

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otherwise. There is concern about this, not only in

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but across foreign business sector. We have seen a number of industries

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targeted, pharmaceuticals, technology companies, food

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companies, all under the spotlight. There is a worry that foreign

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business is singled out for political reasons. The cost`cutting

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in the car industry shows that margins are high, the Chinese

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authorities will suggest that proves there a point, that there is a case

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to be answered. People think that in many ways these companies are

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victims of their own success. The reason they can charge these prices

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is because the real monopoly they have in China is a perceived

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monopoly on quality. John Sutton worth in Shanghai. In other news,

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making headlines, US `based oil and gas giant says it has discovered a

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big oil well over the coast of Western Australia. Estimates say it

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could be the largest find in Australia in decades. It is said

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that the world is being evaluated could result in as many as 300

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million barrels of crude. A company says the potential of the world is

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extraordinary. The largest mining company in the world, BHP, is

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preparing to release its results on Tuesday, and is considering

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restructuring, announcing that a demerger is its preferred option,

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which is the company is keen to spin off assets which aren't big

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earners. An announcement is expected on the restructuring process as

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early as today. We will get a sense of global trade when we get half

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year results from China's big shipping company, Costco

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international. Revenues last year totalled $9 billion, down 7% from

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2012. Investor sentiment has recently taken a positive swing. I

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spoke earlier with our correspondent in Hong Kong and asked for an out

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lock on the industry and Costco international. That industry has

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been struggling since the financial crisis of 2009. They are struggling

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to pay that down. Also, there has been a slump in global trade. There

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are too many ships around so rates one can charge for shipping on those

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vessels are lower than they once were. This is something the industry

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is struggling with overcapacity. The Dyer Cosco say this is a problem

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that could continue `` Cosco say. They didn't have a great year, its

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profits were down by almost one third. We will see how they fared in

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the first six months of the year and for the whole year. Indeed, a very

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challenging environment for the industry. Surely, the focus is on

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cost`cutting. Absolutely. There is huge pressure in the industry to cut

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cost. The parent of Cosco International, the China Ocean Group

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has already cut some routes to Europe and America. Some developers

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are looking to developing ghost ships, ships without captains on

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board, where captains would sit on shore in an effort to cut costings.

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Family business is integral to developing nations and that is no

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different in South East Asia's largest economy, Indonesia.

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According to the latest Rich list, Indonesia's wealthiest million has

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come from family run companies. Keeping it all in the family can

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have its disadvantages. In the final instalment of the series, our

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correspondent reports from a plantation in western Indonesia.

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Survey in his empire from the clouds, this massive factory complex

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belongs entirely to the Kinoto family, with an estimated wealth of

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more than $2 billion, they are amongst Indonesia's top ten

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wealthiest families. This is the young man in charge on the ground.

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Only 25 years old, Anderson is a manager at a pulp and paper company

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whose product is sold in more than 75 countries. US educated, he is the

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younger son of the owner. This is a family business that has been handed

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down for two generations. The company realised on solid

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foundation. Working in a multigenerational team can bring its

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challenges. It isn't easy but it is our culture and our company that is

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not only about that but about fresh ideas. We have mutual respect. The

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more senior people in the company have respect for the younger people

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and the younger generation with fresh ideas. Likewise, the younger

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generation need to have mutual respect for the people they work

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with. My father said don't forget how lucky you are so you can

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appreciate where you come from. Anderson is the only son in the

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family business but he hasn't let his fast tracked career go to his

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head. You are no different to anyone else, yes? The day that you feel

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your sense of entitlement is the beginning of the decline, because

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everything that you have, you need to work for. You are not entitled to

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anything. This is the value that was imparted by my father and that is

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close to the whole family. This is the nervously dull at nursery

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growing the next generation of saplings. `` this is the nursery.

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This business is firmly rooted in family values and says that has been

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a key to its success. Thank you so much for investing your

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time with us. I am Rico Hizon in Singapore. Goodbye for now.

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I am Mike Embley in London with the main news stories

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