06/03/2014 Asia Business Report

vote for independence. That is due to an EU directive that the banks

have only recently noticed. Now, time for Asia Business Report.

The April vote, India has called for national elections. Will a change in

leadership turn around the economy? Dry spell. What the recent drought

could mean for agricultural industries in Asia. Welcome to Asia

Business Report, broadcasting to viewers around the world. I am Rico

Hizon in Singapore. We start in Singapore, in the world's largest

democracy, which has set a date for the general election, which is a big

task. Many are hoping that these elections may be a turnaround for

the land wishing economy -- India. I am in the industrial hub of the

north-western state, a region that is in the spotlight because it is

home to one of the main contenders for the PM is post in the upcoming

election. Besides them, and the other major party, dozens of other

regional parties will have a major part to play. Organising the

elections is a mammoth task, because more than 800 million people have

come out to vote. The vote is likely to cost around half $1 billion,

which is not including what individual outfits will pump into

their campaigns. It is suggested the total expense could be nearly $2

billion. It is like to be a very busy Indian

summer. Businesses. There is a bigger picture here, with growth

slowing down India in the past two years. Any people we have been

speaking to say they feel like things are at a standstill waiting

for the outcome of this election. Consumers are holding back on

spending, something that hasn't been seen in the run-up to an election

before. There is hope that if a strong and politically stable

government comes to power, they will be prepared to take some hard

decisions on the economy that could trigger growth again. We are

certainly likely to see is the streets of villages and cities in

India, coming alive with campaign speeches and all the colour

associated with what is often called the world's biggest election.

The spending spree is on the rise in Australia. Fresh reports reveal

retail sales jumping by more than 1% in January, when compared to the

same period last year. The government also revised up retail

sales figures from December. The Australian dollar is picking up

following this data, and it will support the case for a steady

outlook on interest rates. The reserve bank of Australia has agreed

to keep the cost of borrowing at a record low. Changes are taking place

in the executive ranks at capita targets. The chief information

officer has resigned, and the company says it will search for an

incident, -- interim CIO. -- Target.

The US central bank has confirmed that severe weather conditions

across much of the country has taken a toll on shopping and consumer

spending in recent weeks. A report which gives a snapshot of business

conditions across the country, said that consuming slowed during

December and January because of severe weather conditions. It has

been hot and dry in the east. In Singapore, February was the

country's driest month in 144 years. It only ran for seven days last

month. In Malaysia, residents in the capital are rationing water after a

two-month dry spell. Forest fires have broken out in Indonesia. We

have also heard this week about the effects of the drought in the

outback of Australia, and in the north-west of Sri Lanka. So, what is

the effect of this unusually dry season in this part of the world?

Earlier, I spoke with John Baker, a food and agricultural expert, asking

him how the current weather conditions will impact food prices.

I think Indonesia is the focus. Indonesia is a significant producer

of palm oil, rubber, cocoa and coffee. They are the top four ranked

of all those commodities. We have already seen palm oil rise

significantly, and the expectations for prices to rise above 300 in the

next few months. Inevitably, the lag will be significant, so there won't

be an instant impact from the weather event, but it will take

place over the next few years. The market is factoring in that already.

We are seeing rising prices for some commodities, but the opposite trend

in Australia was much? The industry is affected mainly in the livestock

industry. When it is dry, farmers are forced to sell their stock at

the same time, so the price is dampened. Generally, talking about

Indonesia or Australia, the farmers on the ground are the most affected

by the drought, and businesses, such as the retail sector, are the ones

who benefit? I think that is a plausible argument. When we look at

drought, the first order in practice on the farmer. In my home country,

there are many farmers going through significant social distress at the

moment. We need to be mindful of that. As for the market, we are more

interconnected than ever, and production will find a way to a

market. Your company invests in food and agriculture. Not a good time to

put your money into it? Agribusiness is a long-term investment

proposition, and it works in cycles. Weather cycles and also commodity

cycles. You have to pick your time to enter the market, and I think now

is quite an interesting time to be investing in the sector, given where

evaluations lie generally. Moving to corporate news, and

Standard Chartered bank has posted a loss for the first time. It was

warned that they would take a hit because of losses in Asia. The

lender earns 90% of its profit in Asia, the Middle East and Africa. We

are into the second day of the leaders meeting in Beijing, known as

the National People's Congress. The finance minister said this morning

that job creation would be the most important policy going forward. The

message comes one day after Premier Li Kequiang committed to increasing

growth at 7.5%. This report from Beijing.

7.5%, China's annual growth target over the next year, that would be

the envy of most Western nations. What you have to remember is that

China is still a developing country, and its leaders fear that any

slowdown could lead to social instability. China's remarkable

economic development over the last 30 years has come at a huge cost. We

are seeing the impact of that on people's health, as well as damage

to the environment. That is the reason why it Premier Li Kequiang

said that his government would wage war on pollution. TRANSLATION: Smog

is affecting large parts of China, and pollution has become a major

problem. That is a red light warning sent by nature against fast

development. Premier Li Kequiang also talked about the need for a

painful structural reform, in order to ensure sustainable economic

growth. That will mean taking on state-owned enterprises that

continue to dominate the economy. It would be an easy task. TRANSLATION:

Currently, China must rely on its people. We need comprehensive reform

in all areas. The concern hanging over China's economy is the level of

debt being racked up to ensure more growth. Some economists warn that

until the government tackles the rate of growth in China, and till it

slows it down, what we are actually seeing here is inflation of an

enormous credit bubble. Asian markets are mixed, after Wall

Street posted little change overnight.

Thank you for investing your time with us.

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