29/08/2014 Asia Business Report


29/08/2014

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live from Singapore. Malaysia Airlines is set to announce

:00:15.:00:19.

a big restructure after posting big losses and warning of more to come.

:00:20.:00:27.

And, Japan's economy stalls as the sales tax pain persists.

:00:28.:00:37.

Hello and welcome to Asia Business Report on BBC World News. I am Rico

:00:38.:00:42.

Hizon. Shares of troubled national carrier Malaysia Airlines are

:00:43.:00:44.

suspended today ahead of an announcement of the details of a

:00:45.:00:48.

major restructuring move. The company revealed a loss of $98

:00:49.:00:52.

million for the three months until June after the disappearance of NHS

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370 in March and with the MH17 tragedy months later `` MH370. The

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airline was warned of weak earnings in the second half after a sharp

:01:04.:01:06.

decline in bookings. Our correspondent has more.

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Prayers for the victims of the two extraordinary aviation disasters

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that happened to one airline. Like his company, Malaysia Airlines Chief

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Executive is under enormous pressure. The losses announced this

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week underlined that challenge the airline must meet. He says after

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MH370 disappeared, airline tried to rebuild but tragically, just as we

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were beginning to see signs of recovery in all regions, we were

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dealt a blow of MH17. The full financial impact of the tragedies

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will be seen in the next set of results. They will need fresh energy

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to come in and to make some very tough decisions that will probably

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be unpopular at a political level but they are things they will need

:01:57.:02:00.

to do in order for the airline to survive. That is serious work is now

:02:01.:02:04.

the task of the state investment fund design at which plans to take

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ownership of the company and implement a radical restructure .

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For staff, it is an anxious wait. TRANSLATION: I am anxious but I hope

:02:18.:02:20.

for success. There is no shortage of options for how to turn around the

:02:21.:02:24.

airline. As many as 6000 jobs could go. More than one quarter of its

:02:25.:02:30.

staff. Unprofitable international routes might be cancelled and the

:02:31.:02:32.

chief executive and other senior management replaced. No other

:02:33.:02:38.

carrier has lost two passenger planes in the space of less than six

:02:39.:02:43.

months. For the airline, fixing the finances is just the beginning. The

:02:44.:02:48.

restructure will only go some way towards gaining the confidence of

:02:49.:02:52.

passengers. The accuser at this check`in counter aren't exactly

:02:53.:02:57.

long. `` queues. Some planes are flying with rows of empty seats.

:02:58.:03:01.

Passengers aren't the only ones who were spooked. Nearly 200 cabin crew

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have resigned in the past six months, much more than normal

:03:06.:03:09.

turnover. The real challenge for Malaysia Airlines and its owners

:03:10.:03:11.

will be to get people playing a game.

:03:12.:03:19.

`` flying again. In other news, Virgin Australia 's losses have

:03:20.:03:23.

trebled to $330 million. They say is it was more than 200 roughly in line

:03:24.:03:28.

with market expectations. It plans to sell a 35% stake in developed ``

:03:29.:03:35.

velocity frequent`flier programme to Affinity Equity partners in a deal

:03:36.:03:39.

valued at about $900 million US. Figures from Japan highlighted

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challenges of boosting the third largest economy in the world with

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industrial production rising less than expected in July while

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household spending slumped and the inflation rate remains unchanged.

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Fujitsu research institute spokesperson tells us how to read

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the report. Japan has stabilised. We had a shock in April when the sales

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tax hike was increasing for consumers by 3% with real incomes

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diving down by 3% on that matter as well. 3.3%. We have 1.3% real

:04:14.:04:22.

consumer inflation if we take out the tax. This is good, but it does

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not mean we are on a positive trend. It is bottoming out. 1.3% is way

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below the 2% inflation target of the Japanese government. Will we see an

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upward trend going forward? Not for the summer. We very much hope the

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economy will recover. We heard `` hope for third quarter growth of

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2.5% and issued increased to the end of the year but it keeps the

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government on its toes to come up with more reforms for some

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reductions in taxes corporations for example. Some reforms that make

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people more positive in terms of the overall outlook and that will help

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create a positive trend. We shouldn't expect too much this

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summer. Revised numbers from the US reveal the economy grew at its

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fastest pace in `` than first thought at 4.2% in the second

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quarter, up to .2%, reflecting stronger business spending and

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exports. It was the fastest pace of growth since the first quarter of

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2013 `` the quarter. The Indian economy is growing at slowest pace

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in three decades. It has been high since Narendra Modi took charge of

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three months ago. The latest numbers are out today. Are there any signs

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of a pickup in business confidence? In Mumbai, our correspondent follows

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a local product on its journey from factory floor to shop window.

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It is a busy day in this shoe factory. The last few months, this

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has been a common sight with new orders coming in fast `` in the last

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few months. It wasn't always like this. The Indian economy slowed down

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considerably over the last two years, affecting businesses across

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the board. But, this firm, providing shoes to stores across the country,

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feels that business sentiment has started improving ever since the new

:06:18.:06:29.

government took charge. The initial sentiment shows everything went

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correct, everything in the right direction. We actually got to see

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the result. Everyone's gone through a lean period, right? So everyone

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sees an opportunity to grow big. They need to make up for lost time,

:06:41.:06:43.

make up for lost business. This seems to be that make up time taking

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place. O'Neill has come to the store to buy some new shoes for work. He

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worked in the information and technology sector and lost his work

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earlier this year due to the economic slowdown, as jobs in IT

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dried up `` Anil. After numerous interviews, he finally got the job

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earlier this month. TRANSLATION: I went for many interviews but there

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were very few jobs in the market. One or two companies were ready to

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hire me weren't offering a good salary. Since taking up his new job,

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three or four companies have shown interest in hiring me. Suddenly,

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there are so many jobs in the market, which wasn't the case when I

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was on the lookout. Most people and investors seem more positive about

:07:38.:07:39.

the economy than they were six months back. There is also a sense

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that this optimism may last only for a while. In the long`term, a lot

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will depend on how quickly the new government can introduce reforms

:07:50.:07:54.

bold enough to put Asia's third`largest economy on the fast

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track to grow. Fuel prices in Indonesia are some of the lowest in

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the world because the government spends $25 billion each year on

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subsidies but there is a limit on how much cheap fuel the government

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provides. The state`owned oil giant imposed restrictions on subsidised

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fuel but not now. Our correspondent looks at the impact on people

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travelling on one of the country's busiest highways.

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This is the north coast highway, a 1300 Kilometre Rd that links the

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cities in Java, Indonesia's most populated island. On average, 30,000

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motor vehicles use this road every day `` 1300 kilometre road. Trucks

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carry factory goods and residents of the town go about their daily lives.

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Fuel is a crucial commodity here. In the past few days, subsidised fuel

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has been in high demand. We have travelled about 200 kilometres and

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all along the road, we can see gas stations that didn't have the cheap

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fuel and those who did were limiting the amount that people can buy for

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each vehicle. At this petrol station, I have been told it has

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been out of a cheap fuel since yesterday and today's supply won't

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get here for another couple of hours. This man is on a long journey

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transporting goods for a company that operates mobile phone towers.

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Because of the limited supply, he has had to buy nonsubsidised fuel.

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TRANSLATION: I can go bankrupt. What the company paste is only an a for

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subsidised fuel. `` pays. Some are taking advantage of the restrictions

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on fuel. Nearby residents here are lining up to buy and resell it in

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remote villages. This woman has been waiting for six hours. TRANSLATION:

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I am trying to buy their fuel to make money but I have been waiting

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too long and there is no guarantee I will even get the fuel. Seems like

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this aren't good for public morale. So, the government stepped in. A

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spokesman from the state`owned oil firm told the BBC:

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How the government solve this issue at the pumps will affect

:10:16.:10:20.

Indonesia's growth. A new administration will take office in

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less than two months and already it is facing a critical challenge.

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Before we go, a quick look at the markets in Asia. It is lacklustre in

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mid`morning Friday trade after US equities slept overnight after the

:10:38.:10:40.

latest tension between Ukraine and Russia. Japan is done by 86 points

:10:41.:10:45.

due to disappointing economic data, while Hong Kong at a straight into

:10:46.:10:48.

higher on selective buying. Thank you for investing your time with us.

:10:49.:10:57.

I am Rico Hizon. Goodbye for now. I'm Mike Embley. The top stories

:10:58.:11:02.

this hour. President Obama is blaming Moscow

:11:03.:11:05.

for the violence in Ukraine as Nato states 1000 Russian troops are

:11:06.:11:08.

fighting alongside the separatist Plymouth.

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states 1000 Russian troops are fighting alongside the Humiliation

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followed by certain death as militants from Islamic State post

:11:14.:11:16.

this video online of

:11:17.:11:19.

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