HIGHLIGHTS


INDIA – BUSINESS – TECHNOLOGY

Microsoft building for first time in India
Microsoft continues to extend its presence in India: no longer content only to lease space, Microsoft has acquired its first plot of land in Hyderabad with plans to construct a three-building complex that will house at least 1,000 employees. While Microsoft portrayed the move as "thoughtful and deliberate," other industry insiders described it as a "wake-up call" for Microsoft’s 27,000 employees in the Seattle area:
"Every employee Microsoft hires overseas means they're placing an employee at Redmond in direct competition with someone that makes a fraction of their wage." Whether these fears are "overblown" or not, the fact remains that big-name U.S. technology companies continue to establish a permanent presence in India as part of a broader cost-cutting strategy.
Source; Seattle Post-Intelligencer, May 04

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SOLOMON ISLANDS – ECONOMY

Pacific fisheries agency seeks new role
The Pacific Islands Forum Fisheries Agency is to re-examine the way it operates.
Most Pacific states and nations with major tuna fishing fleets have ratified a new Pacific tuna convention, to take effect on 19 June.
The Honiara-based fisheries agency was set up a quarter of a century ago by Pacific Island Forum members to exercise greater control over their combined fishing resources.
But with a new commission to oversee the convention soon to be established in the Federated States of Micronesia, the agency is re-examining its role.
At the agency's annual board meeting in Kiribati last week, Forum government officials agreed to accelerate the development a new strategic plan.
That plan will include helping Pacific island nations meet their obligations under the convention. The agency also reported that staff working conditions in Honiara had improved dramatically since the arrival of the Regional Assistance Mission to Solomon Islands, RAMSI, and last July.
Source; FFA, May 04

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TONGA – POLITICAL AFFAIRS

Tongan anger saddens NZ inquiry official
The deputy chair of a New Zealand parliamentary inquiry into relations with Tonga says she is saddened by the attitude of the Tongan government towards her committee.
Tonga's former-acting prime minister, Clive Edwards, recently labelled the New Zealand committee an interference in the kingdom's internal affairs and said it would not be welcome if it tried to come to Tonga. The deputy head of the committee, Winnie Laban, says she hopes Tonga changes its mind about letting them in.
"We are a bi-partisan parliamentary select committee, and the intent and spirit of the inquiry is looking at our relationship with Tonga," she said.
"This was an opportunity for us to reflect on New Zealand's part in the relationship (and) Tonga's part in the relationship."
Source; ABC, May 04

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ECONOMY – ENERGY MARKETS

Oil prices rise in Asian trading in wake of Saudi attacks
World oil prices have surged in Asian trading in the first market reaction to the weekend attacks in Saudi Arabia.
Singapore dealers say, in early trade, the benchmark New York light sweet crude for July was at $US40.38 a barrel, up from $US39.88 at the close of trading in the United States on Friday.
The AFP news agency says with the US markets closed for a public holiday on Monday, the hike in Asian trading is the first indication of heightened fears about a disruption to world oil supplies following the weekend attacks in Saudi Arabia. Suspected al Qaeda militants killed 22 people, including 19 foreigners, in the attacks at oil company offices and a housing complex in the eastern Saudi city of al Khobar. The al Khobar attack is the second in a month on a hub of the oil industry in Saudi Arabia, the world's largest crude exporter. The surge in oil prices comes despite Saudi Arabia issuing assurances after the al Khobar attack that supplies would not be affected.
Source; AFP, May 04

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JAPAN – POLITICAL AFFAIRS

Japan's lower house approves bill to ban NKorean ships
Japan's House of Representatives has approved a bill to ban North Korean ships from calling at Japanese ports if they are deemed a threat to the country's security. The approval paves the way for the enactment of the legislation. Kyodo news agency says the new legislation will give the government a second tool to press North Korea to resolve the abduction and other issues.
It follows February's revisions to the foreign exchange law to enable the government to impose economic sanctions without United Nations authorization. North Korea has admitted its agents kidnapped at least 13 Japanese citizens in the 1970s and 1980s. While many have been allowed to return home, Tokyo wants a proper investigation into the Cold War abductions. The ruling Liberal Democratic Party, its coalition partner, the New Komeito party, and the main opposition Democratic Party of Japan reached an agreement last month to pass the bill, and make it a special law, so it can be abolished in line with changes in the international situation.
Date; May 04

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FOCUS


CHINA – ECONOMY

China booming property market sets records
Beijing is introducing measures to rein-in economic growth but it appears that even tough new banking regulations haven't been able to dampen China's newly found passion for the property market. In both Beijing and Shanghai real estate is the hottest investment around, and official warnings of bursting property bubbles are to no avail.

Presenter/Interviewer: James Panichi
Speakers: Scott Barrack, SPACE director; Guy Hollis, China country head, Jones Lang

LaSalle; Bernie Shuttleworth, ANZ senior economist
PANICHI: Shanghai's heritage flats and houses were built between the 1800s and 1950, and feature hardwood floors and European-style high ceilings. Not surprisingly, they've become a prime target of the insatiable appetites of property investors. Scott Barrack is the director of SPACE, a Shanghai real estate agency.

BARRACK: The first people to go in and really starting buying these things were the local Chinese, but that was driven indirectly or directly by the fact that three or four years ago you had an influx of westerners into Shanghai, who were coming here on expat packages and wanted these old places. Recently now, people have started to feel a little more comfortable with foreigners and now you've got, I'd say, half western and half Chinese who are purchasing these, primarily for the purpose of investment, a little bit more now for individual living.

PANICHI: So, clearly the demand for these houses is on the rise, but to what extent are prices also rising?

BARRACK: Quite significantly. About two and a half years ago, when we first starting getting in the sales market, I purchased a property and a friend of mine purchased a property at the same time and we both paid about US$ 1,000 a square metre. Now, these same properties at the moment... well, I know one of them is for sale for US$ 3,000 plus a square metre. And that's in about two, two and a half years.

PANICHI: In other words, property investments in mainland China continue to boom. In fact, both Beijing and Shanghai are now selling over 20 million square metres of real estate each year. That's in spite of a raft of government measures to dampen enthusiasm, including raising the equity requirement for bank loans from 10 to 30 per cent. According to some observers, the problem is that the growth of city populations appears to be unstoppable. Guy Hollis is China country head for property consultancy Jones Lang LaSalle.

HOLLIS: Property is something that all Chinese seem to love and people are very keen. But the government have got a problem here, in as much as there's mass urbanisation going on China in the moment and the figures that are published -- and these aren't government figures, they're not our figures, they are actually from the European Commission on mortgages -- and they say something like 340 million Chinese are going to urbanise in the next 25 to 30 years, which is roughly the population of the United States. So, that bottom end of the market -- they've got to keep building into that market. And the government give tax-breaks to developers, they give incentives to developers and they also give tax incentives to buyers to buy into that market because that's the mass-market. So, while you slow down the economy, they've got to keep providing housing at that end. The bit they want to stop is developers building speculative schemes at the top-end of the market.

PANICHI: But the value of commercial properties, as well as that top end of the residential market, continues to grow. And the phenomenon may be spreading. In Hong Kong, the property market appears to have woken from its slumber. In the first land auction for 20 months, local developers snapped up two public sites for a total of US$ 380 million -- well above the reserve price. And because investors from Hong Kong and Taiwan are playing a large part in Shanghai's property boom, the previously disparate Chinese markets now appear closer than ever. But does that mean Hong Kong property prices will start to look increasingly like the prices of Shanghai? Guy Hollis.

HOLLIS: I don't know. I mean, Hong Kong is a different market. It's a small, enclosed market and it tends to work in smaller cycles. Shanghai works on more traditional cycles, more five-to-ten-year cycles, it seems to be, as it is maturing. But what is driving Shanghai is the foreign, direct investment and all the industrial growth that's bringing all of the jobs in and around Shanghai and Shanghai is becoming the financial centre for China, which is the Chinese government's policy.

PANICHI: So, on the one hand government policy has to reflect the need for residential developments in Shanghai, while on the other it has to drag an economic growth rate of around 9 per cent - to which the property market contributes - back down to more manageable levels. The good news is that if the market is substantially overvalued -- as many observers believe it is -- a sudden downturn may not have a lasting economic impact. Bernie Shuttleworth is a senior economist with Australia's ANZ Bank.

SHUTTLEWORTH: The bubble is in prices of new, luxury apartments that are largely targeted at investors, many of them from outside China, from places like Hong Kong and Taiwan. Now, if that bubble bursts, the investors will be hurt, the property developers will be hurt and it could very easy add to the bad debt situation of the banks. But bear in mind that the major banks are all government owned, and in a sense it's on the government's balance sheet and I don't think that would lead to a banking collapse.
Source; ABC, May 2004



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