10/07/2014 Asia Business Report


10/07/2014

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passengers. Time for the latest business news.

:00:00.:00:15.

Budget day for India. Will the new government deliver on promises to

:00:16.:00:23.

reform the economy? Both candidates claim victory in

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Indonesia's presidential election, with results due out in two weeks.

:00:28.:00:38.

Welcome to Asia Business Report. India's new government will be in

:00:39.:00:43.

the spotlight later today when it reveals its first budget. There will

:00:44.:00:53.

be a lot to look out for. We are at joint from Delhi. Some are calling

:00:54.:01:00.

this a budget of hope, others say it is the most crucial since 1991. What

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could be some of the features? It is bright and early in Delhi.

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That building behind me, that is the Indian parliament. In three hours,

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we will hear the Finance Minister begin to deliver his budget speech.

:01:21.:01:25.

They have taken over power at a difficult time for the Indian

:01:26.:01:29.

economy. That is something that is being reflected in the newspaper

:01:30.:01:33.

today. This is the most widely read newspaper in India. It looks as if

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footballers factory making the headlines as well. If you look

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closely, that is the Finance Minister's head on the body of a

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footballer. Something he has to tackle is low growth, inflation and

:01:50.:01:56.

poor rain. People will be expecting to hear a concrete plan on how he

:01:57.:02:01.

plans to fix the economy. That is the promise on which the government

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was voted to power less than two months ago. People will be waiting

:02:06.:02:09.

to hear the details, to really see how they plan to do that.

:02:10.:02:16.

And they plan to focus on jobs particularly in the manufacturing

:02:17.:02:22.

and infrastructure sector. That is right. They are expected to

:02:23.:02:32.

boost manufacturing. One of the things that businesses and all the

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people we have been speaking to over the past few weeks want to see is a

:02:36.:02:42.

single tax. India has several layers of taxation. If you are running a

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factory, you might have to pay 20 ` 30 different taxes. That makes

:02:51.:02:52.

running any business really cumbersome. What has been proposed

:02:53.:03:00.

is a central tax across India. The previous government was not able to

:03:01.:03:05.

set out a roadmap for it. Businesses are hoping that they see a concrete

:03:06.:03:13.

plan for this to be put in place. Analysts are expecting that given

:03:14.:03:17.

the government has won with such a strong majority, perhaps some of the

:03:18.:03:20.

tough decisions to actually fix the economy, to fix the amount the

:03:21.:03:25.

country is spending, that is something we might see.

:03:26.:03:31.

The Indian economy and the Indian government also has to address its

:03:32.:03:37.

battered government finances. Everyone is also looking for reforms

:03:38.:03:47.

in terms of cutting subsidies. Exactly. India's finances have not

:03:48.:03:51.

been in order for a while. India spends a lot of money on subsidies.

:03:52.:03:58.

A lot of that on fuel. India imports about 70% of the oil it needs. That

:03:59.:04:04.

makes it cheaper for its people, but that the bill is being courted by

:04:05.:04:07.

the government. It is something gets into cannot afford. Even though it

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might be an unpopular decision to reduce the subsidy, analysts are

:04:16.:04:20.

hoping the government might be able to do that. Indonesia is in its

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tightest election that will for presidency since the end of

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authoritarian rule. `` for the role of. Quick counts by pollsters give

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the mayor of the car to a slim lead over his rival. `` Governor of

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Jakarta. I asked what the result means for the country's business

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environment. Uncertainty is what foreign investments `` investors are

:04:55.:05:11.

looking for `` certainty. They are looking for something much more

:05:12.:05:15.

certain, much more pro`business. The concern among investors will be this

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disputed result, which could push out that transition. It could upset

:05:24.:05:30.

the timetable. Upset the timetable for economic reforms moving forward.

:05:31.:05:36.

If the results are not accepted by either candidate, this could lead to

:05:37.:05:39.

a further cloud of uncertainty on the economy, which has been slowing

:05:40.:05:45.

down since last year. The river close Indonesia watchers will be

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looking forward to analysing who is going to populate the economic

:05:52.:05:54.

ministries inside the next government. That should be starting

:05:55.:06:00.

now, rather than the husband over who is going to be president. Those

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decisions, and the groups who surround them, are going to set the

:06:08.:06:14.

chart for the next Administration. And of course, your claims want to

:06:15.:06:20.

really find out, is this a time to stay on or is it time to go to the

:06:21.:06:24.

sidelines for a move out of the country? There has been a lot of

:06:25.:06:32.

speculation about the position on economic nationalism or a

:06:33.:06:39.

technocratic approach. I actually do not think there is much between

:06:40.:06:46.

them, in all honesty. If we get the new president, he has surrounded

:06:47.:06:50.

himself with most of the country's vested interests. They will have a

:06:51.:06:58.

drag on the form. Equally, with the incumbent, the party supporting him

:06:59.:07:04.

is heavily populated with their own vested interests. Key sectors like

:07:05.:07:13.

mining or resources. That is going to have an impact on policy.

:07:14.:07:23.

China chalked up a 60% rise in trade surplus in the month of June to $31

:07:24.:07:27.

billion. The latest numbers also show the rise in imports and

:07:28.:07:30.

exports, signalling continued strength in the world's

:07:31.:07:34.

second`largest economy. The vast amount of foreign trade is done in

:07:35.:07:39.

US dollars. But it is forecast at 30% will be in its currency. Earlier

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I spoke to someone from HSBC and asked what this means for the ease

:07:48.:07:53.

with which the country's currency can be converted into other

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currency. Our prediction is it will be fully convertible around three

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years. The nature of it becoming convertible is one of the factors of

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the trade settlement. What difference will use in its mean for

:08:12.:08:18.

China's trade figures? The issue for suppliers and buyers that trade with

:08:19.:08:23.

China is by adopting the currency, it means it is easier for people to

:08:24.:08:29.

build long`term, sustainable relationships with their

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counterpart. What a server has said is of the companies surveyed, 47% of

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companies believe there is a financial benefit to trading. Such

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as price discounts. 49% also believe there is a relationship that in

:08:45.:08:50.

using it as a trade currency as opposed to an alternative. What do

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they mean by relationship benefit? Making it easier for them to win

:08:56.:08:59.

business in China. They see themselves as being differentiated

:09:00.:09:04.

from other buyers or suppliers in the industry who are trying to trade

:09:05.:09:07.

with China. There may be only trade in the euro or US dollar. Cities

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across Asia are facing the largest sustained population migration in

:09:17.:09:26.

human history. We went to speak to Microsoft, which has developed

:09:27.:09:28.

software being used to help create safer and more efficient cities.

:09:29.:09:35.

The transformations and technology are providing more opportunity. As

:09:36.:09:38.

with a pet cloud cover mobile, big data, the new things as this can do

:09:39.:09:44.

will have a dramatic impact on citizens. This is about putting

:09:45.:09:49.

people first. It is about providing solutions that create jobs and more

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sustainable cities. And you have some examples about providing

:09:54.:09:56.

technology to realise situations. We have so many examples, but I want to

:09:57.:10:01.

share a view. One of them is around public safety. We have a partner

:10:02.:10:07.

based in New Zealand, looking at social media in terms of the safety

:10:08.:10:13.

of a city. Having a constant pulse and what has been happening in the

:10:14.:10:20.

cities. We are seeing this technology getting deployed in

:10:21.:10:25.

public safety and for other applications. Social media is having

:10:26.:10:29.

a dramatic impact on how governments create a more sustainable and

:10:30.:10:32.

exciting city. They give are watching.

:10:33.:10:35.

`` thank you for. Here are the headlines: Gaza's

:10:36.:10:46.

deadly conflict is still escalating. A second day of missile

:10:47.:10:52.

and rocket attacks on Israel and Palestinians lead to at least 60

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