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2006 Expected to Be Watershed Year for Expanding Asian Airlines

An Australian aviation research group says this year will be critical for airlines with big expansion plans. 2006 will also see Malaysia's central bank relaxing branch restrictions on foreign banks.

The Sydney-based Center for Asia Pacific Aviation says 2006 will be a make-or-break year for those airlines in the region preparing to substantially expand their fleets and route networks.

In 2005, operators like Australia's Qantas airlines, Hong Kong's Cathay Pacific and several Chinese airlines placed an unprecedented number of orders for new aircraft.

The research center warns their expansion plans could face a number of challenges, including a pilot shortage and the still unknown impact of higher fuel prices on consumer spending.

Richard Pinkham is a consultant for the Singapore office of the center. He predicts the most rapid growth in the regional aviation industry will take place in China and India. Mr. Pinkham also says major airlines will increasingly face competition by low-cost carriers in the region.

"In Indonesia, there are all sorts of new carriers coming on to challenge Garuda on the domestic market. In Malaysia, Malaysia Airlines is struggling in the face of Air Asia's growth - both domestically and within the region," he said. "That is something we think is going to continue to shape the regional market."

From the beginning of 2006, Malaysia's central bank will allow foreign banks to open up to four additional branches in the country. The move will end a freeze on new branches put in place five years ago in an attempt to protect local banks.

The relaxation of the rules is part of the Malaysian government's plan to liberalize the financial sector by 2007.

In other banking news, China's top financial watchdog has said last year it punished close to eight hundred staff members of the country's biggest four commercial banks for illegal or unauthorized activities.

The Chinese Banking Regulatory Commission says audits of the banks in 2005 uncovered irregularities of up to ^73 billion. The crackdown is part of an ongoing drive to overhaul local banks, as China prepares to open its banking sector to foreign competition by the end of 2006.

And Germany's Siemens company has signed a contract worth more than $212 million for supplying the main equipment for a gas power plant in southern Vietnam.

The power plant is part of a 200-hectare gas, power and fertilizer complex in the province of Ca Mau.

It is expected to begin generating power in 2007.