24/05/2016 Asia Business Report

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

Taking off. Asia's airlines are turning a profit once again. We find

out why. US President Barack Obama visits Vietnam. What will this mean

for the country's fledgeling technology sector? Good morning,

Asia, hello world. It is Tuesday. Glad you could join us for this

edition of Asia Business Report. Let's start off with the Asia

Pacific airline industry and it is in the black again. After a few

difficult years, the Association of Asia-Pacific airlines say they have

recorded combined earnings of 6.9 billion US dollars last year. In

that compares with losses of $1.2 billion for 2014. So what has

changed for the airline industry in the region? I posed that question

earlier. The major thing behind this is that costs have come down. That

has been led by the lower oil price. Earlier this year although prices

have been down for some time a lot of airlines are rolling through

their previous hedges so they are taking advantage of those prices and

that is where we are seeing that profitability come about. It remains

a tough environment, very competitive. Especially for Asian

airlines are seeing that profitability come about. It remains

a tough environment, very competitive. Especially for Asian

airlines amongst the sign. Can this kind of proper profitability amongst

Asian carriers be sustained in 2016? At this stage it looks like it

will. Oil prices have come up slightly but around the $50 a barrel

mark which is where most airlines' business cases on the long-term have

been. In that sense it should sustain them through but again,

these airlines are still going to have to make smart moves to stay

ahead of the competition. They are going to have to invest in products

to make that a long-term, viable thing for them. What kind of smart

moves should these Asian carriers adopt? Are they keeping these

savings or are they passing them on to the passengers? At the moment

they are keeping a hold of I think longer term they will have to pass

those savings, particularly if this market remains quite competitive,

and so there is definitely an incentive for them to keep on

cutting fares. That will mean they have to keep investing in new

aircraft that will have to be more efficient, and look at ways of doing

things more efficiently, may be flying longer routes. For instance

Singapore airlines plan on flying non-stop began to the United States.

That will give them an advantage over a carrier which might have to

stop in the Middle East or somewhere along the way -- Singapore Airlines.

In other business is making headlines, American beverage giant

Coca-Cola has stopped producing soft drinks in Venezuela, because of a

sugar shortage in the country. Sugarcane production has been

falling off the back of rising cost. The company said it would

continue producing sugarfree drinks such as Coca-Cola light. It comes

after their biggest brewer close their facilities due to a bar Bali

shortage. Toyota is recalling 1.6 million vehicles in the United

States to replace potentially faulty airbag inflated as. The Japanese

automaker said the Japanese recall includes some but not all models of

the Corolla, Siena and Lexus. Toyota says it has recalled over 4 million

vehicles in America over airbags. Cash machines and convenience stores

across Japan may have been hit by fraudsters with $13 million taken

using credit cards created from information stolen from a South

African bank. Reports say the money was withdrawn in less than three

hours, from 1400 cash machines. Police suspect more than 100 people

were involved. India will invest $500 million to build and operate a

key uranium port following talks between Prime Minister Narendra Modi

and the President of Iran. The port is close to run's border with

Pakistan, and it would open a transit route to Afghanistan in

Central Asia, for Indian goods and products, avoiding the land passed

through Pakistan. When US President Barack Obama visits Ho Chi Minh city

later today he will be touring a shared office space called

DreamPlex, which has been described as Google needs Vietnam. It plays

host to a vibrant technology start-up scene with increasing

interest from foreign investors. As just one example, the Silicon Valley

companies are starting a $500 million fund dedicated to Vietnam.

This is the first of an Apple launched in 2012. The tech savvy

start-up entrepreneurs had an eye on the key market in so far so good.

Four years on it has 600,000 registered users with 4 million

unique visits every month and they have attracted international

investment. TRANSLATION: The company itself received funding from

Singaporean and Japanese investors. They saw an opportunity to invest in

a Vietnamese start-up and from that developed the product within the

Vietnam market to expand into the region. And Lozi is not the only

example of Vietnam's thriving start-up sector. There has been a

boom in new players since the gaming sensation Flappy Bird was released

three years ago. 30 million internet users and a lot of excitement around

what we can build for them so they are around 3 million start-ups in

Vietnam, but we estimate there will be 1000 start-ups per year in the

next few years. Brodev is another start-up, its owner estimates its

revenues will hit $2 million this year, mainly from the United States.

TRANSLATION: The advantage is cheap Labour. Besides, Vietnam has an army

of Labour. Besides, Vietnam has an army

engineers, who are notably more skilled. It bodes well for the

future growth of what is already a rapidly expanding start-up immunity.

For more on Vietnam's technology sector we are joined now by webcam

by the CEO of a software testing company. Thank you for joining us on

Asia Business Report. The start-up industry, the technology sector, has

really taken off over the past five to seven years. That's right, thank

you for having me. I believe that the ICT industry of Vietnam started

around 15 years or so ago. But for the last five or seven years has

been taking off quite rapidly. I have seen the research that has

indicated that the growth rate from now to 2019 could be at 11% compound

growth rate, so that is quite a remarkable figure. Indeed, and an

influx of funds from the United States are coming into Vietnam but

of course on the flipside there are some success stories and some

failures. For international investors in Vietnam. So what will

it take for the foreign companies to be successful in the country,

particularly in the technology industry? Should you really have

connections with the government, or is the competent governance and

transparency sufficient in Vietnam for them to be successful? Yes, I

think it is quite interesting. I think because you look at ICT in

Vietnam, the last five years, the start-ups really have been taking

off, and I think it is probably attribute it to some of the failures

due to not having the full understanding of the culture is and

also partly it is because the start-ups, the young workforce, they

used to work with lower order organisations, and coming in

building start-ups, maybe that is a new experience for them. So I think

it is the fact that the investors and the people and engineers need to

learn to work with each other more effectively. And I think things are

going to turn around very quickly. And briefly, before we let you go,

what are the success and the pitfalls of LogiGear doing business

is in Vietnam? I think that the success is really in the vibrant,

young, very talented, very eager to learn, fast learners, and that has

been a huge success for us. I think there is still some struggles with

getting the scale of the top, talented workforce. So that is still

a challenge for us there. But overall it is a wonderful experience

for us, and we really appreciate the engineers and the workforce in

Vietnam, it is really turning us around. After the dot-com boom in

the 2000. Thank you very much and congratulations on the success of

LogiGear in Vietnam, Hung Nguyen. Thank you very much for investing

your time with us. I am Rico Hizon. See you soon.