welcome to "asia biz

forecast." i'm shery ahn. both sides agreed to set up a preparatory panel to revise the constitution and lift the emergency law. the central bank says the country has so far lost about $8 billion. so how will the events in egypt affect the rest of the world, especially asia? first let's take a look back at recent developments. the large demonstrations have been taking place in egypt's capital city of cairo. rallies sprung up across the country from suez to alexandria. the protests grew increasingly violent after the first on january 25th. the so-called day of wrath. demonstrators set fire to mubarak's ruling national democratic party in cairo and there were reports of journalists being attacked by the egyptian police. on january 29th mubarak announced he will dissolve the government, rein in skyrocketing

food prices. he appointed omar suleiman vice president. the opposition movement and their allies called for 1 million strong across egypt to gather to demand mubarak's immediate resignation. the egyptian army vowed not to use force against any of the protesters. on february 1st, president mubarak confirmed he would not be seeking re-election. >> amid rising tension yet another massive rally was staged

on february 4th by the anti-government movement, so far hundreds have been reported injured in the demonstrations. the movement for democratization is spreading to other nations. they resigned in mass on the 1st after demanding the dismissal. in yemen the president announced he would not seek re-election in a spate of protests calling for his resignation. observers fear increased instability in the region could have a negative impact on the global economy. world symptoms reacted to the uprising in egypt as the dow jones industrial dropped 1 percentage point during the first week of the protest despite encouraging u.s. gdp figures. it wasn't just the u.s. markets, stocks plunged in tokyo, 1.5% in

hong kong and close to 6% in dubai in that same period. now those markets have mostly returned to levels preceding the unrest. oil futures were also affected at various times last week west texas intermediate oil futures jumped to $92 in new york, while in london crude futures shot past that $100 mark. for more insight we're joined by a member of the institute of energy, a proprietary think tank in japan. welcome to the program. >> thanks for having me. >> it seems oil markets are reacting to the crisis in egypt. how much further can we expect prices to rise? >> it's not the first time that the oil market has responded to a crisis in the middle east. it's not delivery and transportation of oil from the middle east to the markets.

we can see if the markets see there might be destruction of transfer of oil from the middle eeft through the canal and further beyond, then the market would just respond in the way that has been showing for the past few days. >> could it be as bad as 2008? >> i don't think so. even in 2008 there was never a sort of a disruption. it was all about speculation of how much oil demand would arise in asia and other parts of the world. >> here we know that china, japan are big importers of oil. how will this affect them? >> even though the market in asia would rise following the consequences of the market in london and new york, "i think these economies are big enough and strong enough to cope with the situation. of course there are smaller economies that might be affected by the price hike. that also happened in 2008 so it

might continue but things might settle. >> how about physically? is there any problem of oil getting to asia. >> most of the oil are coming through the persian gulf and strait of hormuz, geographically and physically far away from what is happening down in egypt. so i don't consider the current crisis in egypt would spread over to that region. >> it seems egypt is trying to get back to business as usual. we are seeing the banks, shops are open for the first time in days. will these uprisings that start in tunisia, egypt spread to other middle eastern countries and how will this affect the rest of the world? >> so far we've seen some demonstrations, people taking to the streets in countries like jordan, yemen as well. these states could face a serious challenge from the population over there. they share some kind of similar

problem, social problem, economic problem as well as a political problem domestically with egypt. if you look at the gulf oil-rich, gas-rich states, they have plenty of cash in their hands to appease the population. i don't think that kind of popular uprise would be seen in those stays. >> thank you for joining us. >> you're welcome. now we turn to japan where the country's top ranked steelmaker nippon and sum otto have made plans to merge. this would make them a top maker in production. >> translator: make us one of the top global steelmakers. we'll work to provide competitive prices and services that can meet changing needs in japan and around the world. >> translator: the steel market is expected to grow further.

we want to create a strong company and fight in the global market. >> competition is heating up in the steel market amid rising demand in the emerging economies. chinese and european producers are hoping to expand through mergers and acquisitions. the world's topmaker was born via series of acquisitions by a millionaire. as opportunistic and aggressive business strategies have changed the landscape of the local steel industry. in china, for example, the industry is undergoing government-backed restructuring, which includes consolidating large steelmakers to boost competitiveness. in 2000, nippon steel was the world's top steelmaker but has since fallen to number six. a merger with sumitomo metal would put the company in the top four. >> translator: dynamic

realigning is happening in the steel industry. manufacturers are expanding through mergers and acquisitions in order to survive. i think nippon and sumitomo gained the most by merging. >> the japanese government has expressed their support for the merger. >> automakers, one of the largest consumers are steel, are also welcoming the deal. >> translator: as the saying goes, steel is the nation. steel is a core industry. they should do everything they can to improve competitiveness. >> and in japan's southwestern prefecture of miyazaki, violent eruptions continue to shake mt.

shinmoe. after the long dormant volcano reawakened last month. this is having a big impact on the local economy as the volcanic ash is damaging local farmland. the volcano has erupted several times in the past few days, spewing columns of smoke over 2,000 meters high. officials are warning people not to come within 4 kilometers of the crater because of falling ash and cinders. miyazaki prefecture said volcanic ashe damaged thousands of farms in the prefecture as of friday. they have been buried invoke nick ash. farmers have not been able to harvest or ship produce. blocking sunlight and slowing growth of food and flowers. officials say eruptions have

disrupted farms. to make things worse miyazaki prefecture is suffering from an outbreak of bird flu at poultry farms. on sunday the 11th case of the disease was confirmed in a town in miyazaki city. about 140 chickens found dead at the farm over the weekend. the prefecture says the h5 strain was found in three of them. the farm's entire poultry population was culled monday. chicken and eggs from producers within a 10 kilometer radius has been banned. more than 940,000 chickens in the prefecture have been destroyed so far this winter. now let's take a look at other headlines around asia. the global food priss index hit a record high of 231 in january. according to a report released on thursday by the united nations food and agriculture organization. the number surpasses the

previous record of 224.1 set in 2008. the u.n. says demand in emerging economies are factors in the surge of global food prices. in india the price of onions, a popular ingredient in local cuisine has more than tripled in the past year. u.n. sites poor harvest and bad weather in places like australia. indonesia's central bank raised its benchmark interest rate by 25 basis points to 6.75% on friday. it's the first rate hike by bank indonesia since october 2008. it is the most recent of a number of asian countries that have raised interest rates to try and curb inflation. india, china, south korea and others have taken similar measures. indonesia's annual inflation in january hit a 21-month high of 7.02%. the rise is attributed in large part to soaring food prices. australia's sugarcane and

banana industries were battered by one of the strongest storms to ever hit the continent. cyclone yasi made landfall in the northeastern state of queensland early thursday with winds gusting close to 280 kilometers an hour. early estimates put the loss to the country's sugarcane industry at around $500 million. australia is the world's third largest sugar exporter and 95% of domestic sugar production takes place in queensland. concerns are mounting over price increases and shortages. the cyclone is just the latest setback for the region. heavy rains and flooding that began late last year have damaged agriculture and mining areas in much of the state's infrastructure. according to australia's treasurer queensland produces one-fifth of the country's economics output. india's former telecommunication minister was arrested on wednesday in new delhi in connection with one of the country's biggest corruption scandals.

he's accused of underselling mobile phone licenses to preferred cell phone operators in 2008. auditors estimate those dealings cost the country nearly $40 billion in revenue. with half a billion cell phone users already, india has the world's fastest growing mobile phone market. it's time for our weekly update. standing by, hong kong and sole. how are people celebrating? >> yes. china's biggest and most colorful holiday has been ongoing. jammed with visitors and in a festive mood. according to the chinese, it's the year of the rabbit. representations of the animal can be found everywhere.

these statues welcome visit toers a temple in central beijing. they are thought to bring good fortune. entertainers and vendors have set up around and inside the ground at temples across the country. visitors can shop simple traditional chinese delicacies and enjoy performances of chinese dancers and operas. the temples are expecting millions of visitors during the holiday which ends on tuesday. and many people also choose to go abroad during the holiday season. one popular destination is japan. hokkaido, famed for its fresh seafood and ski resorts has been a popular tourist destination for chinese visitors this year. >> i came to ski. >> the food, i'm especially looking forward to the crab. >> many japanese businesses are

trying to taylor businesses to visitors. they are trying to raise confidence in japan and attract more chinese tourists. that's our report from hong kong. let's go to nemo enseoul. >> south korea's unusually cold winter is having a severe affect on both the society and economy. how people are coping with the big chill. >> reporter: this traditional outdoor market is usually packed with shoppers each morning, but not today. people are staying away in droves because of the cold weather. on january 16th, the mercury plunged to minus 17.8 celsius in seoul. the lowest temperature for that day in 10 years. >> prices went up, and it's freezing, so no customers, no sales. it concerns me a lot because i brought these expensive things to sell but nobody buys them. these days, there are no people.

the sales are not increasing. food, vegetables and seafood are still on display but sales are down 30% compared to this time last year. prices are going through the roof as agricultural production falls due to the cold snap. a napa cabbage costs three times as much as it did last year while prices of white radish and green onions have gone up almost 80%. >> translator: it's difficult these days since prices have increased. living costs have multiplied. >> here at a farm near the southeastern city of pohang, greenhouses have collapsed because of snowfall. produce is frozen. other damage includes tomatoes, strawberries and pumpkins. >> translator: i don't know what to say. i make my living off of it but

it's all destroyed now. >> meanwhile have retailers have seen sales soar. prices have risen 30% as consumers stock up on winter clothing. >> this winter is so cold i'm afraid my kids will catch a cold so we came to buy jackets. >> our sales surged by three times compared to last year because this year winter start add bit earlier. >> sales of electric heaters and warm air blowers up 30% from last year as well. >> with temperatures dropping below zero, sales have risen dramatically. for the moment, we don't have any stock left, so we can no longer provide incoming customers with product. >> it's hard to put an exact figure on the cold snap's damage to the south korean economy but

the government plans to compensate the agriculture and fishery industries for their losses. chloe jung, nhk world, sole. due to losses that occurred in the cultivated farm, fishery sectors due to severe weather conditions comes to nearly $40 million. moving on now to the manufacturing sector. the bank of korea announced according to south korean business survey index or bsi, based on a nationwide survey of over 2,500 firms, the sentiment index conditions for january dropped to 90, down two points from december. this is the lowest level its been since december 2009. the index has now failed to clear the benchmark 100 in this category for six consecutive months. the bsi forecast for conditions in february also declined, falling one point to 91 and indicating a pessimistic outlook for the month. an analyst for bok said local

manufacturers are concerned that the rising costs of raw materials could shrink their profits while economies are concerned that economic economy and surging raw material prices could drive up consumer prices and increase inflationary risks. that's our report from seoul. >> thank you, nemo. now weekly japan. last week many companies announce their earnings for the quarter ending last december. earnings for major japanese electronics company soared thanks to strong demand in the emerging economies and at home. flat panel televisions drove the surge. on thursday announced net profits between april and december grew eight-fold to $1.6 billion compared to the same nine-month stretch last year. rival panasonic also posted positive net profits of about $1.4 billion from april through december, recovering from a near

$180 million net loss through the same period last year. electronicsmakers hitachi, toshiba, mitsubishi and sharp posted net losses last year but all of them are back in the black. this is mainly because shipments of flat panel tvs in japan hit a record high in 2010 thanks to a government incentive program for buyers of ecofriendly electronic goods. in contrast two electronic companies who don't produce tv sets saw sales and profits drop from last year. last week panasonic announced it would sell its auto battery business to a chinese country. panasonic supplies hybrid batteries to automakers for use in hybrid models. the electronicsmaker said it would sell to a leading chinese batterimaker for about $6 million. panasonic and sanyo electric have a large share in the global

market for batteries. sanyo is expected to become a wholly-owned subsidiary. the chinese government requested that panasonic sell its battery business to offset concerns of a monopoly in the market. social networking games where people can find each other or share information is spreading rapidly particularly among cell phone users. subscribers of two japanese network game port always reached 48 million combined at the end of last year. the smartphone boom is creating a new global business opportunity. on wednesday social network service provide announced september it had tallied over 20 million subscribers. meanwhile dna the leading social network game portal expanded to 25 million users as of december. both firms posted record profits in the october to december

quarter. with the japanese market expected to slow down, both companies are looking to expand their business overseas. last year dna acquired a company for up to $400 million. gree launched its u.s. affiliate last month. game portals were developing game software exclusively for japanese cell phones using japanese operating systems. with the number of smartphone users increasing over the last year, companies are hoping to take advantage. smart phones run on the same os across all regions, so developing domestic and international versions of applications has been reduced to a simple matter of language translation. last month gree invited 30 companies to discuss potential partnerships aimed at expanding smartphone-based business overseas. >> translator: bringing products

developed in japan to overseas markets is a huge endeavor. i believe this means the smartphone business is going to be a great opportunity. >> the most common variety of cherry in japan, sweet and juicy, very popular among japanese. used to be japanese cherry lovers could oenl joy this kind during the summer but no more. >> reporter: he visits a tokyo supermarket. on this day he promotes the cher cherries. these cherries were grown in australia. >> really? this isn't from japan?

it's good. very sweet. >> they were just as good as japanese ones. >> these cherries come from tasmania in the southern part of australia. there the summer is just starting and the cherry season is at its peak. this man grows the cherries. >> they are probably a little bit bigger than we had last year. good. good. >> he keeps about 20,000 trees on a 20 hector orchard. he greenwood to grow apples.

twenty years ago he took a trip to japan and saw shoppers were willing to pay high prices for these cherries. he thought by growing the cherries in australia where the seasons were reversed, he had a good business opportunity. >> people really looking for something like this for gift giving, to put on the christmas and new year table. >> he began with a single cherry sapling he gained from a cherry producer. here he also studied how to grow the cherries. the japanese impressed upon him the importance of covering his trees with netting to protect the fruit from birds and wind. the final product was even better than he had hoped for. as it happens tasmania's weather

is perfect for growing large, sweet cherries. five years ago he began shipping his cherries to japan. he ships by air to get them there quickly. >> and they say that we are very close to the quality that comes from japanese producers. so that's very encouraging for me to hear people from japan telling that. we are already trialing these cherries into other markets such as singapore, taiwan, hong kong. >> reid has been increasing sales and this year he plans to export 80 tons of cherries. eventually he wants to sell in other asian countries that have affluent shoppers. >> unfortunately due to record breaking rainfall in australia this season, reid fruits was

only able to export 13 tons of their cherries to japan this year. but over the next few years he expects exports to grow to about 200 tons. that's all for this week's "asia biz forecast".