04/12/2017 Asia Business Report

keep on winning? We look ahead. In

his first TV interview since taking

over as CEO, the boss of India's Jet

Airways talks about what its new

European alliance means. Good

morning, Asia. Hello, world. This is

the start of a brand-new week. We

kick up the final month of 2017 and

here is the calendar for the week

ahead. Lots of rates decisions with

Australia's Central Bank deciding on

the cost of borrowing on Tuesday,

currently at 1.5%. This will be

followed by another key meeting from

India's Reserve Bank on Wednesday.

Also, finding out more about

Australia's economic performance in

the middle of the week and rounding

off, we have trade data from the

world's second largest economy on

the eighth of December. Earlier, I

spoke with economist Peter McMahon

and asked if rates will remain the

same. -- Peter McGuire.

Record lows

to continue because we have seen

wage growth decline. We are not eat

-- not saying it is a robust. House

prices on the east coast. The 1.5%

will remain.

But the Australian

economy continues to grow.

Yes, it

does and we look at that inflation

number around the 3% annualised. He

saw the quarter on quarter about 0.7

for the third quarter but overall,

very high household debt because,

quite simply, at house pricing. If

you raise interest rates, that will

take more out of the wallet and the

purse which will constrain growth

and that is the great challenge the

Reserve Bank faces.

India's Central

Bank meeting on monetary policy, how

are they likely to go?

They will

keep interest rates where they are.

You have the GDP running at 7%. They

have got a couple of issues over

there, the de- monetisation and

naturally their introduction of a

GST so very, very large issues that

have come to the play over the last

9- 12 months and moving forward,

they will keep rates where they are.

You might even see a rate rise

sometime in 2018 but the jury is out

at the moment. They will probably

stay where they are.

The outlook is

for Australia and India to keep

monetary policy on old but South

Korea raised the benchmark interest

rate. Could this put pressure on

regional central banks if the

Federal Reserve tightens again this

December?

Yes, it could and I take

that on board. That will underpin

the US dollar's strength, probably

be better for the likes of Australia

and India though the Indian rupee, I

was there last week, it seems to be

range bound compared to the

Australian dollar. I take all those

components into play and at present,

I would have to say that both

central banks will hold. South Korea

is a little bit different, of

course.

China's trade report. The

trade imbalance between China and

the US.

They could well do. Overall,

a attraction. They are receptive to

talks. Growth numbers in turn, a

roundabout that 7.2 number. Overall,

the Trump administration is feeling

as though it is getting some

movement and that could be a good

sign for him.

The White House says

it would be willing to accept a

slightly higher corporate tax rate

if it means getting a final bill

through Congress. The Senate

versions of the bill sets the rate

at 20% but the right -- the White

House Budget chief said the final

figure could be 22% once a final

bill goes through. So what effect

might a 20% corporate tax rate have?

I'm joined by Timothy McDonald. How

does it stack up against the Asian

tax rates?

It's a bit higher and the

difference between 20 and 22%

doesn't sound like all that much. If

you went to a restaurant, 2% would

not cover your appetisers but when

you have billions on your balance

sheets, it starts to be a bit

different. It still would be at a

higher rate than quite a few Asian

economies including here in

Singapore. Taiwan is about 17%.

16.5%. Some of these countries have

used low taxes to promote economic

growth. That is what they are hoping

to do with the US. The question is

where that money goes in the

companies have a bit of extra money.

Do they invested into long-term

projects or return it to

shareholders? That's something we'll

have to watch and wait and see.

There is supposed to be this, Donald

Trump is host -- hoping there will

be a rush of money back into the US

economy. Oxfam estimates there is

something like $1.3 trillion of

money from major US corporations

stashed away overseas and how much

of that returns home is really

anybody's guess, considering the

whole region -- the whole reason

it's over in the first place, they

pay very tax -- very little tax.

On

the campaign trail, Donald Trump was

pushing for more like 15%. Thank you

so much for the update, Timothy

McDonald. In other business news,

British Prime Minister Theresa May

is due to travel to Brussels on

Monday for talks with European

Commission President Jean-Claude

Juncker. The focus has so far been

on citizens rights but also the

amount of money the UK will pay. The

EU will talk about trade when

sufficient progress has been made on

these subjects and it's due to

decide whether this happens at a

summit on the 14th and 15th of

December. A commercial deal

involving Jet Airways aimed at

improving collectivity with Europe

and this is happening while India is

set to become the third biggest

aviation market. We sat down with

the CEO of Jet Airways, Vinay Dube

and asked what the deal brings to

this carrier.

It allows us to offer

106 or more destinations in Europe,

access to 200 in North America and

as consumers start leading towards a

combination of debt and KLM, who

knows. More passengers are flying in

India than they were before.

We put

in order for 75 aircraft. We will

buy an extra 75 narrowbody aircraft.

Some of them will be growth.

Overall, we hope to grow the

category between eight and 10% over

the next five years.

Jet Airways

performance over the last two

quarters has actually gone down. Why

is it not able to capitalise on this

opportunity and make more money?

We

have put out nine profitable

quarters. If you look at the last

two quarters in particular,

certainly fuel has gone up, despite

an increase in inflation. We've been

able to reduce our unit costs. We

believe this trend will continue

over the course of the next 2.5

years, putting us in a position to

be able to capitalise on demand

because you talk to mount -- talked

about demand. And my view is that

air travel demand is really going to

grow over the next 20 years.

The

current aviation rules allow foreign

carriers to invest up to 49% in

domestic carriers. But there is it.

There are limitations on ownership

and foreign ownership in particular

is not unique to India. In most

other Western countries, certainly

the Far East, the restrictions are

even more. What you are describing

is not something I look at as an

immediate reaction.

The Indian

government is planning to privatise

Air India and Jet Airways has been

interested in buying a stake.

It's

too early for us to say but

something that is even more

important, no matter how this plays

out, when you take out a subsidised

player from any market, whether it

is aviation or steel or

manufacturing or retail, it's good,

in my view for consumers. That is

what we look for.

Vinay Dube, the

CEO of Jet Airways there are. Let us

look at the markets. Asia is in

negative territory. We also have the

All Ordinaries Index a fraction

lower. This is after US equities

finished the week on a tumultuous

note. Thank you so much for

investing your time at