Kingfisher has suffered two years of growing losses and a week ago started widespread flight cancellations which many people believe were because the airline was unable to pay for fuel. The company recently had its bank account frozen for non-payment of taxes. Kingfisher is owned by Vijay Mallya, a tycoon who made his money selling Kingfisher beer.

Reports of unpaid wages and invoices to other suppliers have been emerging over the last week, during which time at least 130 flights have been cancelled. At present the company is only operating 28 of its 64 aircraft.

A failure of the airline would cause serious damage to a number of state owned banks that own about a fifth of Kingfisher’s equity and about 75% of its USD 1.3 billion debt. India’s central government is therefore under pressure to bail out the airline, or ‘provide it with working capital’ to the tune of USD 400 million.

On the other hand, the government of Manmohan Singh is in a weak position and has been rocked by several scandals of crony capitalism. The airlines owner Vijay Mallya has used his fortune to deliver himself a position in the upper house of parliament and has become an influential figure behind the scenes in Indian politics.

The last thing the government needs is to bail out a failing company and open up new criticism that it lacks market discipline and is helping out its own kind. Most Indians would not care if Kingfisher went under since so few use airlines to travel, and view it as yet another privilege of the elite.

Ideally, a foreign buyer would be able to come in and take the airline over, but the Singh government has been unsuccessful in reforming restrictions on the foreign ownership of Indian companies. Until that happens, foreign investors are unlikely to show much interest.

Kingfisher is legally owned by United Breweries Group (BSX:507458) whose founder and major shareholder is Vijay Mallya.

Speaking at a conference,the ministry’s mineral reserve department deputy head Xu Dachun said the recent discorvery made it the country’s ninth time to discorver oil reserves exceeding 1 billion tonnes since 1949.

Over 85% of the new oil discorveries were made in five major deposit location including Tarim Basin,Mongolia’s Ordo Basin,Xinjiang Uygur autonomous region, Junggar Basin and the Bohai Bay Basin in eastern China.

According to Xu, over 100 million tonnes of reserves were found in each basin.

China has increased efforts in oil and gas exploration over the past years in its bid to ease reliance on imports and meet the economy’s rapidly increasing energy demand.

China’s energy demand has gone up sharply in recent past making the south Asian nation a leading consumer of energy in the world.

The country’s primary energy consumption increased 70% year-on-year to 3.48 billion tonnes equivalent of coal last year (2011).

Currently, Indonesia has a high economic potential and according to Omar,this had made it possible for financial institutions to expand in the country.

He added added BII would become one of the main revenue sources to Maybank in the near future. According to Omar,Maybank’s growth this year is expected to be 15% but BII’s growth is expected to be higher.

The government of Indonesia expects the country’s economic growth to be 6.7% in 2012 compared to that of Singapore (4%) and that of Malaysia (3.5%)-two countries where Maybank has a strong presence.

For the last six months ending Dec 31,2011,the Malaysian bank made a net profit of RM 2.58 billion (USD 854 million) this being an increase of 20% from RM 2.15 billion recorded 2010 in the same period . Maybank’s date of its financial year was changed from June 30 to Dec 31.

Regarded as Malaysia’s largest financial services group, Maybank recorded a net interest income increase of 12.2% to RM 4.89 billion in the second half of 2011, from 3.59 billion in the same period the previous year.

The ‘China 2030′ report has been prepared by government insiders with the help of leading economists so is expected to hold significant sway. The findings of the report were leaked to the Wall Street Journal yesterday and will prove controversial with many in the Chinese communist party.

The economists have concluded that China’s large state-owned corporations which contribute an estimated 45% of the country’s GDP are stifling innovation and growth and their role should be cut back. The report identifies a number of ways in which they are harmful to long term economic health:
- they crowd out competition in key industries (energy, natural resources, telecoms, infrastructure) with privileged access to low interest loans from state-owned banks
- they used monopoly profits to expand into other businesses rather than pay dividends
- they often have real estate arms that invest in property which pushes up land and property prices

The financing of local government also comes in for criticism. Currently most of local government is financed by the selling of land for development rather than taxes. In other words local government depends on a never ending property boom to maintain healthy finances. This is unsustainable and the economists are urging that state owned corporation dividends in part finance local government with the remainder coming from taxes on property and corporations.

According to a statement released by the airline, the Transportation Ministry has reinstated Mandala’s Air Operators Certificate (AOC) that was frozen in January last year (2011) after its oprations were suspended.

A research analyst with CIMB ,David Lan, said Tiger’s performance which had been affected by diminishing passenger numbers in back in Singapore, would improve with the relaunch of Mandala Airlines.

Mandala was hit by financial problems and had to undergo financial restructuring according to the law in Indonesia.

The Saratoga Group owns 51.3% of the airline while 15.7% is owned by previous creditors and shareholders of Mandala. Tiger itself is part owned by Singapore Airlines.

On Tuseday, dealers were selling high volumes of shares in the world’s largest contract electronics maker, Hon Hai Precision Industry Co.,Foxconn’s parent company.

Foxconn produces devices for Dell, Apple and other major brands and employs more than 1 million people in China. It has been the focus of a series of negative media stories in the US about working conditions and pay. Some stories accused Foxconn of operating ‘blood and sweat shops’

Analysts are saying that instititutional investors are fearing that the wage hikes would seriously affect Hon Hai’s profitability. The pay increases are the third since 2010.

Hon Hai’s shares had gone down 3.21% as of 11.22 am Tuesday to NT$ 96.50 (USD 3.27) with 40.38 million shares of the company trading at the TAIEX that day.

The weighted index at 7,921.25 was down 0.42%.An analyst with  MasterLink Securities Tom ang said pay hike concerns are what made Hon Hai  shares to plummet below the psychologocal NT$ 100 mark with many investors suddenly turning pessimistic about the company’s share price prospects.

Foxconn announced over the weekend that basic wages for its Chinese workers in four locations had been raised. Employees will now be getting a base monthly salary of RMB 2200 (NT$ 10,320) or more from RMB 1800.

Pamela Cox, the organisation’s vice president for East Asia and Africa said, “We are encouraged by developments in Myanmar (Burma) and we have begun the process of re-engaging with the government to support reforms that will benefit all of the people of Myanmar, including the poor and vulnerable”. In particular Cox was keen for the World Bank to eventually help upgrade public services, the antiquated financial and banking sectors and generate private sector opportunities.

The World Bank is charged with eliminating poverty through economic development and will provide loans for infrastructure in developing countries. On the face of it, this is exactly the sort of help that Burma needs, but the country has had arrears since 1998 which require addressing first.

The organisation’s constitution prohibits it from funding any country that is in arrears. In 2008, when Burma was hit by Cyclone Nargis the Bank again was unable to provide financial help.

The World Bank was unable to confirm the current level of Burma’s debt. The country has an opaque currency where the informal rate is as much as 100 times that of the official rate. Add to that the difficulty of trusting the country’s statistics on matters such as GDP and even experts find it hard to work out its credit worthiness.

Burma took many by surprise last year when it unilaterally implemented a series of political and economic reforms and freed political prisoners. It parliament is now partially comprised of civilians and Rangoon has played host to a series of visitors from abroad including Hillary Clinton, the US secretary of state.

In January, it announced plans for eight-year tax exemptions to foreign investors. In November last year its banking reforms resulted in basic infrastructure like ATMs arriving for the first time. The country remains subject to international sanctions but most observers believe they will be lifted soon.

Yahoo! owns 40% of the e-commerce company while the Aliababa gropu owns 74%. Alibaba Group is offering minority share holders HK$ 13.50 each in cash.On Wednesday, Alibaba.com’s shares which had been suspended since Feb 19th surged 40% as they resumed trading.

To complete the deal, the group secured a USD 3 billion loan earlier this week. Yahoo’s bid to buy back its stake in Alibaba Group has not yet borne fruit after long-running negotiations between the two companies concerning the matter.

Analysts believe that Yahoo! is not part of the Alibaba Group’s deal but they say it signals the company’s change of strategy. Alibaba.com is the world’s largest business-to-business e-commerce platform.

What the change in strategy is has not been made clear. Within the Alibaba empire is Alibaba.com, a B2B product supply agent; Taobao, a C2C auction site; Tmall, a B2C retail site; Alipay, a payment platform; and Yahoo China. Speculation is forming that the wider group may be relisted, but with the founder Jack Ma, retaining a larger stake

Initially the company focused on attracting members to its site for growth. However,the company had to change tack after fraud scandal that threatened to take it down two years ago. Nowadays,it focuses on offering high qaulity services to a smaller group of customers.

This has resulted to the decrease of the number of new customers joining the site,a situation that will likely slow revenue growth.

If the plan goes through, Wal-Mart’s online sales in the Chinese market will be boosted while the retail giant’s competitiveness in the south Asian country’s e-commerce sector will be maintained.

 According to a statement relased by Wal-Mart, plans are underway to incerase the retailer’s holding in Yihaodian to 51%.

Chinese regulation authorities are yet to appprove the retailer’s move. Founder and Chairman of Yihaodian Yu Gang speaking with China Daily in a telephone interview said that no significant changes of personnel would be occassioned by increasing Wal-Mart’s stake.

Financial details f the move were not revealed by neither company. Yu also disputed claims that one of Yiahaodian’s major shareholders Ping An Insurance Group, was planning to sell its entire stake to Wal-Mart.

There have been rumours in recent past that the insurer was planning to selll 60% of its stake in Yihaodian to the American retailer.According to Yu,the Yihaodian brand will remain independent ans separate in China.

Yihaodian recorded a sales revenue of RMB 2.7 billion in 2011 up from RMB 4.17 million in 2008. Ping An acquired 80% of Yihaodian’s share at RMB 80 million in 2010.

A new report by the Economist Intelligence Unit (EIU) think-tank has analysed FDI in detail and concluded that serving China’s growing domestic demand will be the main driver but that this move into a more service oriented economy will be harder for investors to navigate than with export-led manufacturing.

The trend away from manufacturing is evident in the last ten years. In 2001, 66% of investment was into manufacturing; by 2010 this had fallen to 47%.

In terms of investment moving inland the EIU highlighted the province of Chongqing in central China. In 2010 the Central Government awarded one its cities, Liangjiang, the same status as Bianhai in Tianjin and Pudong in Shanghai. In FDI terms the province went from being ranked 22nd out the 31 provinces in 2007 to bringing in USD 10.8 billion of investment in 2011, more than Beijing. In 2014 it is expected to overtake Tianjin and Shanghai in the amount invested.

While China’s government is clearly trying to direct business investment towards the central provinces, it is not clear what its attitude is towards investment in services rather than manufacturing. The EIU argues that China should actually welcome service sector investment because that has proved so successful in Hong Kong and Singapore. Specifically, sectors such as consumer banking and insurance, which are so poorly delivered in China currently, would benefit from liberalisation and allowing foreign players in.