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Airbus to Invest $1 Billion in India

Airbus will double its investment in India, and Hong Kong's famous low tax environment remains unchanged after the government shelved plans to introduce an unpopular sales tax. Claudia Blume at VOA's Asia News Center has more on these and other business stories from the region.

Leading aircraft manufacturer, Airbus, announced it will invest $1 billion in India over the next 10 years. This is twice as much as the European company originally promised to invest after the Indian government ordered 43 Airbus planes for state-owned Indian Airlines last year. The planned investments include an engineering facility and a pilot training school in the southern city of Bangalore.

Airbus also released a study predicting India will need about 1,100 new planes worth $105 billion over the next 20 years.

The Hong Kong government has decided to drop the introduction of a sales tax, because of public opposition. The administration spent months trying to promote the tax, called a goods and services tax or G.S.T., as a new source of revenues to boost the city's public services budget. It also said the tax would broaden Hong Kong's narrow tax base.

But the public and many politicians opposed the proposal, saying the levy would scare away tourists and hurt the poor.

Finance Secretary Henry Tang admitted that the government failed to convince the public.

"So we accept at this time we do not have public support, nor the conditions for introducing a G.S.T," he said. "So for the remainder part of the consultations we will not be advocating G.S.T."

South Korean prosecutors said they have tentatively concluded that the U.S. private equity group Lone Star's 2003 acquisition of Korea Exchange Bank was illegal. They said a former finance ministry official colluded with a lawyer hired by Lone Star to inflate the bank's losses, allowing the company to buy it below its real value.

In May, the U.S. buyout fund signed an agreement to sell its controlling stake in KEB to Kookmin Bank, South Korea's biggest lender. But a high-profile investigation into the deals forced Lone Star to call the sale off last month. If the charges are proved, South Korean courts could declare Lone Star's acquisition of KEB void.

China's leaders say they want to slow growth next year, after years of double-digit expansion. Beijing set an eight percent growth target for 2007, well below the more than 10 percent rate recorded for the first nine months of this year. Chinese planners are trying to slow down a boom in real estate development and bank lending that they worry could spark a financial crisis.