mumbai for the challenges he faces. football fans come they are counting down to the world cup. there are mounting warnings. the teams get ready to fly in. the champagne a moment. up and close personal. that is cristal. all of that and more in "asia edge." start with a dramatic escalation of tensions and the south china sea. vietnam is accusing beijing on sinking one of his ships. what do we know so far? >> we do not know a lot of details. the details we know tells a fairly clear story of what happened. let me take you through this morning. the vietnam and newspaper in the country reported that a ship

carrying 10 people was attacked by a chinese vessel. been confirmed by the chinese foreign minister that indeed that fishing boat was around and 10 people were rescued -- was graham -- was mmed and 10as ra people were rescued. they were not fired upon. it was on monday. a bureaud out by chief, we do not have any details about what type of chinese vessel it was. if it was a fishing vessel or government vessel or military? we do not know. that area where the incident took place if i remember 10 or 12 miles from the coast. side ofg try to get the

the chinese government and they have yet to make a statement on this. >> the key thing is the location. near that oil rig. the waters claimed by the vietnamese. whynd the chinese which is it is indisputable waters. china has already maintained the rig is the basic location of where it is by the islands. on themplicated in is territory and can do whatever it wants. the vitamins prime minister was prime -- the vietnamese minister last week said china was violating international law. we know the oil rig has sparked a violent riots and protests over in vietnam. we have to emphasize this not the first time it has been a ramming of a vessel. it happened right now. the foreign ministry confirming

the sinking. it had 10 people on board. i will send it back to you. >> david ingels. is followingirline up with a full review of mh 370 missing mh 370. missing mh 370. bankruptcy, we have been told, is not an option. da has an important interview you did it will malaysia airline. what about the turnaround story here? a completeo be revamp. this is a national carrier that has all sorts of issues and not the least of all its workforce. a case and point, 20,000 employees for 100 aircraft. 9000 employees for 300 aircraft.

do not forget overly influential and strongly unions. several unions act that have resisted measures to help the company back in 2011. the ceo agreed to a swap to help rebrand malaysian airlines and that did not happen because of the union. speed of air asia, it is posing a petition along with others such as singapore air. malaysia airline in a tough spot. says, bankruptcy is not an option. take a listen. we havenot believe excluded any disruption. now is the time to take a close, hard look at all aspects of our business model. less enhance those that are more -- let us enhance those that are more efficient. can do it better,

we shall look at that. no decision has been been made at this stage. the review is expected to take three months. 6-9 months after implementation. >> it is no easy task especially now public opinion against you. that is for sure. that is the challenge. let's bring in zeb eckert on the conversation. how other carriers have turned things around. basis.s a case-by-case everybody has different challenges to overcome. some have aircraft that are too old and consume too much fuel as somehow ballooning employee forces. slight margins and razor thin. contracted negotiations and also , global economy. the price of jet fuel.

i want to give a few short examples. it was beset by safety thelems in the past decade, past two decades and that result in crashes that tarnished the company safety records and resulted in a ban on flights to the eu. they banned garuda from flying there. it took more than a decade for the company to lead the way, pave the way to a shared cell of $400 million that led garuda back and they were able to buy new aircraft with modern planes. you see a a330. the backbone of its international flying. that allows garuda to repair its image in -- is image with regulators and customers. garuda today is slow going. it has issues with the airport in indonesia and jakarta added these to modernize the airport

to deal with the flow of passengers. look at the travel market. it is booming. garuda according to analyst is well-positioned to take control of this. >> no doubt. look at malaysia airlines numbers itself. paste been looking the couple of years. actually just are he is not a good one. how bad is it? -- and that trajectory is not a good one. >> it shows declines in profits and big declines. 25 million loss. 300 millionbout $ loss. pair unprofitable. scrap unprofitable flights. i flew last year.

[indiscernible] april to cut the flight because it does not make money. put in the 777 to another flight. you do that incrementally and and you change management. >> the company has been a restructure from was two decades. every one or two years we hear the same a plan. haveld think they already a cost reduction plan that pirating implement it for a while so i'm not sure why would we need to wait another nine months. >> this morning i was look at annual reports of malaysia airlines for the past few years. each year, there's a match from the chairmen and ceos that says the year is the year we reform

and get to the right strategy in place. you have a president defense like mh 370 which factor into these turnaround plans it dilutes like the current one will be a new one devised. when malaysia returned to the oppressive airline it was. >> it was unprecedented here. at some point with all of the talk of the turnaround, how much of it is an airline that is crying well for investors? thank you. we would turn back to haslinda. is absolutelyrn evident here. what does malaysia airline need to do here? what measures should be adopted? andt needs to rein in costs that requires new aircraft. that is more fuel efficient and requires lower maintenance. it can carry more passengers and boost competitiveness while cutting.

thatve seen others do just , rely on wide-body new generation aircraft like the787. again. hugh dunleavy >> i am very confident we can do it. malaysia airline has been around for over 40 years. we have a world-class reputation. we are one of only seven airlines that have a five rating. our cabin group in the last 10 d's bestars has won worl cabin crew. the safety standards are on par with the very best. >> it has been a turbulent ride. they seemed to be trying to overcome the challenges. >> haslinda, thank you for that. with the malaysian airlines for a moment. more information on the latest for the missing plane could be

made public today. it is set to show flight mh 370 ended up in the indian ocean after dramatically changing course. it has expanded to take in a much larger area. most of the passengers were chinese. the european central bank said is ready to take action among. --tion next month. inflation for the 18 nation euro zone as reached a low. twice the 1%. is apple's main suppliers are looking to move beyond manufacturing to boost revenue. stake in abuying a telecom company ahead of negotiating a full merger.

they kicked off last year by buying a four g license. you can get more on that and the top stories eight you can watch us wherever you are on the bloomberg app and your mobile device. >> later in the program, discussing the risk of a mugging. the problems that threaten to overshadow the world cup in brazil. first day up, modi's in office. the challenges of the indian premier. you are watching "asia edge" and we are back in 2. ♪

>> of the new indian prime minister will start his first day on the job by holding talks with has pakistani counterpart. the hassle state who attended the inauguration in new delhi.

the heads of states who newnded the inauguration in delhi. are nuclearkistan states. >> thank you for joining us this morning. the primeask you, minister is also the defense minister, will it make things more complicated for him? >> a little bit. at the moment, but more importantly, try to see the new government. for are going ahead reorganization. similar ministries under one cluster. that is a very interesting idea. it could potentially lead to better coronation across moretries and boosting

decisive action. more about, as you know, modi campaigned on smaller government. certainly he will get to that. tell us what you know of him and what kind of man is he expected to be in that india's reform pack? uh, he has made a few points that are very interesting and what to do. theink it's made very clear ministry would try to focus on the near time. he may some of the administrative measures instead of talking about a big deal. a big room to improve.

administrative measures. for the moment, issues of the ministries. if the government can reduce over the next few weeks or big win.hat is a very number one. number two he is talking about trying to resolve the supply-side issues rather than on addressing inflation. that long-term is a very important. that goes hand-in-hand with boosting growth in managing inflation at the same time. these are some the things which he has spoken about. those are the ideas. inflation atout

10% and infrastructure crumbling and corruption, how do you address all of this? how hard will it be to translate that? expectations are high, are they too high? think it is one big difference between the bigger picture in india. industrial, d from int gives them revenue restructuring that is strong. the government to invest in some and infrastructure to the more stronger. that is one area where the indian government is at an advantage. having said that, already and thein place expectations of the new prime to come backling

over the next few months. inee real growth going ahead terms of better infrastructure. off. >> all right. great inside all india's newest era as they are calling it. >> warnings. >> reaction from around the region when "asia edge" returns. ♪

>> welcome back. for developed in thailand. leaders have promised to crack down. street intood to the defiance of -- demonstrators took to the street in defiance of the military warnings. the whereabouts of the foreign prime minister is unclear. >> political uncertainty that began last year hurt thai markets. they needed to better communicate.

>> what happened in the past several months, we were in a political deadlock and as a to movee were not able the economic engine of properly to normal to get back as soon as possible. the best way for us to do that is to communicate with investors. >> thailand's neighbors are watching. shanmugam is the foreign minister and he said members want the turmoil reserves peacefully is resolved peacefully and quickly. -- resolved peacefully and quickly. -- >> we hope to see resolved peacefully and quickly without bloodshed and violence. thailand and in getting back to growth in a way that is acceptable to all of its

people. it is something everybody wants. is a portfolio manager. he said the economic outlook is still positive despite. a slowdown in the economy, so the military power and implement in the next 12 months, leaving way which would be more free and willing to further reform, it is not such a bad outlook. when you look at the expectations and term of judy he and growth, it is probably too high in thailand. -- in terms of gdp and growth, it is probably too high in thailand. >> that is the latest on the unrest in thailand. >> other headlines. facto foot of the government will pay $500,000.

he is said to be the ultimate controller for the company that operated the ferry. she is a billionaire and rarely photographed. the nigerian army said they know where hundreds of kidnap schoolgirls are being held. they say using force to rescue them may risk their lives. nearly three hundred girls were kidnapped by militants six weeks ago. the government and military have faced international anger for not saving them. the markets across the region right now. australia. the u.s. is closed for memorial day. volumes are quite low. markets on the decline. there on the screen. .till down one of the decliners. hong kong, awaiting export numbers this afternoon.

the forecast is for 4.5% gain for each of those. this is from tokyo. after hong kong reopens after this quick break. ♪

>> stormy waters. via new -- been him accused china of sinking. accuses china of sinking a ship. cupting down to the world in brazil. now warnings. to our top story. the latest territorial dispute. vietnam is accused china of sinking one of its vessels.

what can you tell us? recap. is a what we know so far is tensions have escalated off the coast of vietnam. the government said yesterday, a chinese vessel rammed and sang a vimy's fishing boat. were safelyn rescued by other people in that area. rammed and sank a vietnamese fishing boat. it is an area that is very tense. what we do know is that at the time of the incident, 40 chinese ships and circled vietnamese fishing boats. once we do not know it's if they were fishing boats or military or coast guard boats from the

chinese side. bloomberg has put in question as to the chinese government for clarification of their side of the story and that is yet to come. iscan you tell us how it playing out on the land right now? we saw citizens rising up. we saw protest industries and violence against chinese companies, or companies seen as being chinese affiliated here. this sinking that really escalates tensions to a whole new level. what are you hearing on the land? >> definitely. analysts say this is the worst incident to hurt the relationship. there was an incident in 2007 when the one crew member was killed, one vietnamese. nothing to this extent has happened since then which really

escalated tensions. vietnam is looking at options. said it will stay in these waters on till august. until that point, when i was out on a boat on the coast guard boat, chinese ships were heavily guarding the exploration rig and vietnamese were trying to make daily excursions to break the perimeter. on the third day of our there, we were closely chased out of the area. that will probably continue on land. there's a lot of fear it might escalates. on land, which we are seeing is vietnam has said that basically, the prime minister was in manila as said vietnam will explore legal options. we do know what those legal actions would be. i think they are saying it is more likely in light of this they will take legal action. maybe filing arbitration in

court.international we'll see if it happened shortly. they will be putting a statement shortly most likely. >> a story we continue to monitor out of hanoi. thank you. said he is ready for talks with russia. they will accept the election results and are ready for talks. pro-russia force has taken lead. violence is great in eastern ukraine. forces launched air strikes. david nordin ultimatum to leave. many flights were canceled. in ultimatumrdin in-- and they ignored ultimatum to leave. let's find out what is happening in eastern ukraine.

what is going on? what is next? >> well, after the election on sunday, fighting has intensified as you said. heavy fighting at the airport a the center of the city throughout the night. know, that certain denial on the streets of what is going on because you see people sitting in cafés and you see people, traffic moving as the usual but right in the outskirts attack onhere was an the train station as well. although trained this morning have resumed running. this morning have resumed running. the pro-russian insurgents who have blocked in donetsk seem to be under a lot of pressure.

saying he came out could resolve the issue with the east saying it would take him only a matter of hours to dealt with it. it clearly has taken more than an hour so far although he is only been elected and it's not responsibilities. >> what is russia's reaction to the election results? >> there was definitely some more moderate talk coming out of the kremlin. putin before the election said publicly he would respect the will of the ukrainian people and clearly, the people have spoken. on by a landslide. he won in the first round with over 50%. and voting was only disrupted in 2 regions out of 26. the russians and ukrainians are

at the start, resuming talking about a gas which is one of the major bones of contention. all billions of dollars. the number is disputed but $4sia said it is over billion for a gas tax consumed last year and this year. they said they want the ukraine is to switch to pre-payment terms for any gas they use a of thehat about half ukrainian energy consumption comes from russian gas, that would be a debilitating blow to an economy that is already hurting in the past several months. and yesterday in berlin -- excuse me? joining us from on the ground

. the latest on the ukraine settlement. the new indian prime minister will start his first day of the job today after the election landslide victory. mr. modi faces many challenges. >> it is very interesting you are asking me the question on the very moment he is making his chair as the prime minister. it is been a very electric campaign, hasn't it? will heard of lot of statements coming out. i think the clock starts ticking right now. it has been about 11 days. even now, we do not know the exact composition of his

cabinet. we do know the names but not in the portfolios. the message coming out from him and second guess me at your own peril. challenges at home and abroad. what we need to address as soon as he can? >> writes. -- right. he big blank he voted on was stressed on growth and development and government. the economy so to speak is what he needs to fix up front. it will not be an easy task. what is he going to do immediately? he is going to go out there and try to kickstart projects that have been stalled for many, many years. billions of dollars of projects. even though, the outgoing government did quite a bit to get some of them the approvals

they were awaiting for. the big question is getting those approvals is not going to be enough. the key question is will he be able to bring down -- that is linked largely on his ability to go out there to curb inflation. the r.b.i governor and the economists has made it very clear that the monetary policy is his domain. he does not see concrete steps being taken to fix the supply-side issues. their hands are tied. india is not going to bring to go out there with a kind of balance sheets they have kickstartw to go a the project and start investing again. fixing the inflation problem even though modi himself submitted a detailed report to the government three years ago

when he lost, actually being able to implement that that quickly is perhaps going to be his biggest challenge. he's telling the stock markets i'm going to fix the economy. how quickly can he do it is the question? he did not have much time because it's a big burden of expectation as you know. >> a small cabinet. about 45 people. seven are women. one of the key names. also defense minister. is that too much to handle? >> it does appear. let me put a caveat here. even as we speak right now, we still do not know the formal portfolio. that is quite amusing. well seen the drama playing out last night. and a lot of ministers were rushing and had to hold

themselves back because they were not allowed to and we're not supposed to talk about the portfolios yet. speculation is they are getting the portfolios. are veryf these diverse ministries. about and handle a very going to be difficult task as you talked about. >> thank you. chris and the world cup kicks off in brazil and under three weeks. more than 2 million tickets have been issued. , health andw what safety warnings are major concerns. paul allen reports. >> rio de janeiro has a well justified reputation for being a good place to be mugged. last month, a woman was mugged while giving an interview about being mugged. the most recent crimes

statistics show a 60% rise in muggings in the first three months of the year and a doubling of the overall crime rate in the past year. >> those statistics are a reality. we have taken action from the beginning of may and it is is anticipated the deployment of police officers that are going to work for the world cup. expect to control the crime numbers in an effective way. >> police simply walked off the job. police went on a 24-hour strike last week demanding higher pay leaving the streets on so much focus on crime, it is easy to lose sight of mankind's most lethal enemy. mosquitoes are abundant. and can transmit malaria and yellow fever. traveling fans are urged to pack repellents and take the

medication from home. >> drugs are not manufactured around the world with the same stringent standards and there is a huge issue with fake drugs. and to quality of medicine. in general, it is best to have medicine where ever you are from. it is best to have medicine that comes from your country. a in a moment we will discuss very angry vietnam accusing china of sinking. all of that is next. ♪

>> welcome back. joining me now is john and zeb and david. lots of things to talk about. is region is, well, it getting a little tense. i am not just talk about thailand. let's kick it off with vietnam. it will cite china sunk one of their ships. >> political tension between the countries in the region have been there for forever. economics have been comparative and are trumping the political animus, it is fine. when economic advances are left secured because of situations, before, of course

you have the tensions reappear. you have something part a picture for a breach of the global economy in the next five-10 years. the advantages of staying comparative across countries are going to be compared to a much bigger, much stronger political activity. >> how many calls did you get from clients? focus on vietnam or thailand? exchanging fire. >> what are they asking about? >> they go about even. yeah, yeah. >> political? >> yeah. i always tell them to look at the bigger picture. more difficult he and the

economy. to i think this is the way trade this story. looking at a broader picture and seeing where i put my money in order to use this in order to be protected. >> a window it includes -- it relatively busy trade route. is it is something that necessarily worries you? made the fortunes of asia in recent years is this fantastic global value change. territorial organization of production. and so this is a very, very strong reason. in the china and vietnam last part -- >> the same supply chain? >> in the same supply chain.

in the past 18 months, i've learned many chinese companies and, you have this is proof. share. a year and a 28% half ago. it is clear that china and vietnam have increased economic cooperation. lastny to company and the few months or quarters. this is why it is so important. context, itin the becomes in a way more dangerous and easier to read. >> isn't it fascinating how it all seems to be connected, right ? factory and labor moving to vietnam because it's cheaper than china.

that must create tension. china is moving off the value chain but does not leave. it all comes together. the dispute is a reflection of there's a lot of money underneath. >> that is a great point. pointve to wonder at some and you alluded to this. as the global economy tries to shake things out, we are seeing much more growth in the u.s. in slowly and china. could this be an opportunity to throw in a political red herring to distract people with nationalism and with the south china sea event rather than have to address slowdown at home? >> and are being very cynical. [laughter] >> middle name. >> you are right. i feel really is vietnam and start ofng did not

the government level. diplomatic. -- of course, it had overdone tensions. economic, is not an governments of the countries being in a difficult situation and trying to distract from something else. for now, it is on the micro level. tos what is interesting economists and analysts, which will suffer more if the situation worsens? right. let's leave it there. thank you so much. >> like italian. [laughter] >> perfect. thank you. a lot more coming up. the toast of the town. >> cristal.

seventh generation. joining us after the break. ♪

>> for our regular viewers, you know that the first for the finer things in life -- the thirst for the finer things in life. >> the flame as cursed -- and the famous cristal. thank you for coming. champagne is not as in demand as a line. -- itn't >> five fold? has increased to five fold? >> especially in asia.

[indiscernible] in 1876, the russian market was one of the biggest. there.our operation was the champagne for him. he asked us to great a special blend for him. not to the same found on the markets. a special bottle which was the was toy to be unique have a cristal clear bottle. >> tell us about what you brought. >> 2006 vintage. the advantage we just released on the market three months ago. we have 240. first to have the idea of buying. to make great champagne estimate -- youine, you did great

need great -- [indiscernible] winemaking, the detail you is in, the way you function, how you get it. >> let's have a little taste. >> whoo! [laughter] >> 2006. to that.ink >> the chinese market is playing into the global industry. >> it is starting to increase slowly but surely. like all parts of asia. big market for champagne. and so, things are going very well. >> congrats. >> cheers. >> on that note, ready for a drink. many thanks for joining us.

cheers on a tuesday afternoon. >> this is it. we'll be back tomorrow with glass in hand. >> a magnificent. it really is. ♪

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