Thursday, October 23, 2014

Main Street in South Korea - Gangnam style during lunch break

Wandering down the main drag through Gangman during out lunch break with my colleagues Andrew Tillett of The West Australian, Lucy McNally of the ABC and Patrick Whitton from The Big Issue.

We're here thanks to The Australia Korea Foundation, The Walkley Foundation, The Korea Press Foundation and Australia's Department of Foreign Affairs & Trade.

Main Street in South Korea - Samsung C&T and Roy Hill Project

At Samsung C&T headquarters in Seoul - seeing a presentation of SS's construction of the Roy Hill project in WA - the largest Samsung project in the world. 

We hear that Roy Hill owner Gina Rinehart is "a reasonable businesswoman" who is "ready to listen" to complete the Roy Hill project by the 2015 deadline. 

Wednesday, October 22, 2014

Main Street in South Korea - right on the edge of North Korea at the Demilitarised Zone

Day 3 of the Korea-Australia Journalists Exchange takes us to the Demilitarized Zone (DMZ) at Panmunjeon. It's an hour's bus ride from our hotel in downtown Seoul - and fair to say this has been a highly anticipated trip. I'm at the DMZ with Andrew Tillett of The West Australian, Lucy McNally of ABC News and Patrick Witton on The Big Issue. We're in Korea thanks to the Korea Press Foundation and The Walkley Foundation in Australia.

Inside "Conference Row" on the extreme northern edge of the DMZ. This is inside the Joint Security Area (JSA) which is the only part of the DMZ where North and South forces stand face to face in an uneasy peace. That's a North Korean soldier behind me guarding the northern exit. He seems alert but not alarmed - chillingly accustomed to such photo opportunities that, while restricted, are encouraged. Just another day? Maybe not with shots fired between North and South in recent days.

It's a surreal experience as the North Korean guard stands watch without a sign of movement or emotion. Visitors are told not to wave or distract - a relief to these soliders who are more than just a tourist attraction in the world's most militarised flashpoint. 

Check out more about the DMZ on Wikipedia:

From the steps of the southern side. We are told not to cross the yellow line and all photos and filming must be straight ahead within the boundaries. No side shots showing facilities are permitted!

The Bridge of No Return. 

"End of Separation, Beginning of Unification". It's a highly complex issue beyond such slogans, with both North and South advocating a unified Korea - but of course on their own terms.

Main Street in South Korea: Australia's FTA with Korea in the balance

South Korea has set next month's meeting of G20 leaders in Brisbane as a critical opportunity to finalise its free trade agreement with Australia.

One of South Korea's top trade officials has nominated the G20 summit as a "psychological and physical" deadline for the nation's legislators to approve the FTA locally.

Suh Jeong-in, director-general of the Foreign Ministry's bureau of South Asian & Political Affairs, said pressure was building in both South Korea and Australia for the FTA to be ratified.

"We would like to ratify the FTA with Australia before the end of this year," Mr Suh told Australian reporters at a briefing in Seoul.

"With the G20, this will be an occasion to finalise everything."

Approval of the FTA has been delayed in South Korea's National Assembly which has been distracted by the complex and highly emotional investigation into the Sewol ferry disaster earlier this year.

More than 300 of the 476 people on board died - many of them children.

The complex investigation is dominating political debate, and the FTA between Australia and South Korea is among more than 90 bills waiting for National Assembly debate and approval.

The clock is ticking on the National Assembly's approval and it appears likely that politicians might not meet the deadline for the FTA to take effect this year.

Australia's ambassador in Seoul, Bill Patterson, is working to lift the priority of the FTA but he admits the battle is all uphill given the profile of the Sewol disaster investigation.

"That's really the $64 million question," Mr Patterson told reporters.

"We are hopeful it (the FTA) will go through some time in the next few weeks.

"We've done everything we can but it's a strongwilled legislature."

The financial and economic stakes are high for both Australia and South Korea.

Once the FTA is ratified, 85 percent of Australian exports to South Korea will have no tariff. Under the deal 90 percent and 90 percent of South Korean exports to Australia will have no tariffs.

Suh Jeong-in also signalled that the threat of Ebola would be a major issue at the G20 summit.

And he diplomatically defended Tony Abbott's intention not to have climate change featured as an issue for G20 leaders to discuss in Brisbane.

"Agenda setting is the chairman's perogative" Mr Suh said in relation to Australia's current presidency of the G20.

"When you host a G20 meeting or any other meeting, the chairman's voice is the loudest."

* Peter Ryan is in Seoul for the Walkley Foundation as part of the 2014 Korea-Australian Journalists Exchange

Tuesday, October 21, 2014

Main Street in South Korea: Day 1 on 2014 Korea-Australia Journalists Exchange

It's been a full-on and fascinating first day for the 2014 Korea Australia Journalists Exchange.

The initiative by Australia's Walkley Foundation and the Korea Press Foundation involves yours truly as delegation leader, my ABC colleague Lucy McNally, Andrew Tillett of The West Australian and Patrick Witton of The Big Issue.

The weather as expected has been cool and rainy at times so umbrellas were at the ready courtesy of our program director Haejoo Kang. 

Here's the view from our meeting at the Korea Press Foundation boardroom this morning:

Today's briefings took us to the Korea Press Foundation, the Foreign Ministry and the Embassy of Australia where we met with Ambassador Bill Paterson and other top diplomats.

Discussions included the digital challenges facing the Korean media where heard a familiar global story about declining advertising revenues and falling traditional readership; the status of Australia's Free Trade Agreement with Korea; and the outlook (and a pessimistic one at that) for a peaceful reunification between North and South Korea.

And those tensions with North Korea are alive and kicking. Here's a story from page one of the Korea Times which greeted us this morning. The tensions of course are constant and therefore a running story.

However it will make our visit to the DMZ on Wednesday an interesting and much anticipated one.

Some pictures here from today's briefing at the Korea Press Foundation and discussion on "all of the above":

Wednesday, October 15, 2014

Future Fund boss David Neal says RBA comments about a "violent" market correction are overstated. Unless the Fed "makes a mistake".

The head of the Future Fund has played down comments from the Reserve Bank that financial markets are heading towards a "violent correction".

The Fund's managing director David Neal says there would only be a crisis if the US Federal Reserve makes a mistake when it eventually starts moving interest rates from the current level of close to zero percent.

Mr Neal says the Fund is also paying attention to the outlook for its investments in fossil fuels and the possibility that falling demand for oil could damage traditional energy assets.

Here's my report from The World Today.

Ireland calls time on "double Irish" tax dodge; G20 leaders under greater pressure to deliver real reforms in Brisbane next month

Ireland says it will phase out a well-worn loophole that allows multinationals to avoid paying billions of dollars in tax.

The avoidance scheme known as "the double Irish" is exploited by corporate giants including Google, Apple, Facebook, Linkedin and PayPal.

The move by Ireland comes as G20 leaders who'll meet in Brisbane next month face renewed pressure to rein in corporate tax dodgers with consistent global reform.

The announcement by Ireland's Finance Minister Michael Noonan comes as Ireland begins to recover from the global financial crisis which saw it bailed out by the European Union and the International Monetary Fund.

 "I want to make sure that the slur of the "Double Irish" is no longer attached to Ireland's reputation. it had become something that was thrown at us internationally" Mr Noonan said. 

"There's a big advantage I believe for Ireland to be the first mover. Our competitor countries, if you were investing there tomorrow you would still be uncertain about what the regime might be in two years time."

Ireland slashed its corporate tax rate in the late 1990s to 12.5 percent to attract investment by global companies.

But the "double Irish" allows corporations to use complex structure where untaxed revenues are funnelled to a subsidiary company in a tax haven like the Cayman Islands or Bermuda.

The loophole means multinationals end up paying very little tax or no tax at all.

Throughout the year, G20 finance ministers have been ramping up pressure to end corporate tax dodging so that more revenue can go into government treasury coffers.

However, a G20 committment to reform global tax rules is reliant on individual members such as Ireland to tighten up laws locally.

Ireland is a participant the G20 as a member of the European Union, so the decision by Ireland's Finance Minister Michael Noonan to end "the double Irish" is significant.

As part of the phased-in reforms, multinationals currently using the "double Irish" will be able to keep exploiting it until 2020 when the loophole will be closed.

New participants will be blocked from minimising or avoiding tax.

However, analysts expect tax lawyers for the corporate giants using the "double Irish"  will be working on a response and most likely new ways to minimise their tax.

The move to rein in multinationals poses a big risk for Ireland's soft economy as it recovers from the financial crisis.

Around 160,000 workers are paid by the hundreds of foreign firms incorporated in Ireland and any threat to relocate to another tax haven is an ever-present threat.

Monday, October 6, 2014

RBA cash rate on hold tomorrow - but tea leave readers will scrutinise statement for subtle changes

To most outsiders, it all sounds a bit ho mum.

But tomorrow's meeting of the Reserve Bank board is shaping up as anything but a dull affair.

While almost every market economist thinks the RBA will leave rates steady, all eyes will be on any changed language that could signal the start of a softening up period for a rate rise next year.

The anticipation for even subtle changes or the removal of key phrases is against the background of 2.5 percent cash rate for the past 13 months - one of the longest period of rates stability since 1990.

In statements throughout the year, RBA governor Glenn Stevens has been at pains to signal that the cash rate would remain low for an extended period and that any change in policy would be flagged well ahead.

In his September rates statement, Mr Stevens once again said "the most prudent course" was "likely to be a period of stability in interest rates".

Source: Reserve Bank of Australia September rates statement
Tea leave readers who scrutinise the RBA musings, including economist Annette Beacher of TD Securities, think the RBA is on the brink of preparing the market for an eventual cash rate increase.

"While we're not there yet, I think the time is coming where 'period of stability' of interest rates will be dropped from the statement," Ms Beacher said.

"I think from hereon in with all the discussion of the hot housing sector, we're wondering how long this period of stability will be in the statement."

The RBA has also noted that commodity prices " in historical terms remain high" but this is also likely to change with the iron ore price down dramatically from mining boom highs at US$79.60 a tonne  

"So tomorrow we expect to see 'historically high levels' and 'period of stability'. Technically that is a cut and paste from recent months but the risk is that one of those statements is not there," Ms Beacher said.

"So that makes tomorrow's RBA board meeting a must see event."

Source: Reserve Bank of Australia September rates statement

 Economists will also be watching for commentary on the slowdown in China's economy, the outlook for earlier than expected rate rises from the US Federal Reserve and a landscape of geopolitical flashpoints in Syria, Iraq, Ukraine and Hong Kong.

The steady decline of the Australian dollar - forced in part by rate cuts of 2.25 percentage points since November 2011 - could also feature tomorrow.

This morning it was buying 86.63 US cents after hitting a year high of 95.04 in July.

In September, Glenn Stevens said the dollar "remains above most estimates of its fundamental value".

While the RBA will take comfort from the recent falls in the currency, economists are expecting the RBA to maintain its jawboning to force the Australian dollar even lower.

The ramped up interest in the RBA's statement tomorrow comes amid positive private data out today on inflation and employment.

The monthly inflation gauge from TD Securities and the Melbourne Institute shows inflation rose just 0.1 percent in September after two months of flat results, making 2.2 percent over the year.

The survey  says underlying inflation probably rose 0.5 percent in the September quarter and 2.6 percent over the year - at the midpoint of the RBA's comfort zone of 2 to 3 percent.

The closely watched ANZ Job Advertisements series shows job ads in newspapers and on the Internet rose almost one percent in September - the fourth consecutive monthly rise.

ANZ believes this indicates that the labour market is gradually improving and that he official jobless rate will stabilise at just above 6 percent for the next few quarters before decreasing.