29/02/2016 Asia Business Report


29/02/2016

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What does the Indian government have upped its sleeves for the national

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budget? -- up. All will be named today. And where to from here? The

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world's financial leaders will meet in Shanghai. . Good morning. It is

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the start of a brand-new trading week. Officially, India may have the

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fastest growing economy in the world, but when the Finance Minister

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delivers the financial budget later it will be a tricky balanced. They

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will have increased spending to cover the maintenance of the

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country. Everyone will be waiting and watching when the Finance

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Minister talks. Will he prioritise fiscal stimulus or a form or capital

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expenditure? -- or reform. It is in this building behind me, the

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Parliament, that the budget will be delivered in four hours. It is the

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big headline in the newspapers. This paper is doing a take on the Oscars

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in Los Angeles. The Finance Minister is there in a tuxedo holding up an

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Academy Award. They are asking how me Oscars will he get today? --

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many. This says he will boost the economy a little bit. It has

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suffered over the past few years. Consumption and demand has not gone

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up in the country. Narendra Modi, in a radio address to students

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yesterday, talked about how this budget would be his big examination.

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We have asked business leaders what they are expecting. Until private

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spending or public-private partnerships returned to invest here

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we expect that from the budget greater fiscal space and spending to

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drive forward infrastructure projects as was done last year. --

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return. I hope they resolve the foreign investment. Not just that a

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policy level but at a more execution level. Money has gone away because

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the whole process is so tedious, unlike many other countries. We

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expect mining, which the government has taken on as a big challenge and

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executed, I think that should have realisation. They have the building

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blocks. They should start. The GST bill gets passed by the government

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and the Upper House. We do away with the plethora of different taxation.

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I hope the Indian budget would have provisions to spur the Indian

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economy We are seeing so much growth in technology, start-ups,

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entrepreneurs that are making a splash on the blood stage, that will

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require funding. -- world stage. Potentially putting together

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regional funds and computer education for the masses. They can

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help with that. The big question is, does Narendra Modi have the

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political capital to push forward with this wish list from the

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business community? That is right. Some of the promises they have made

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during that election in 2014, we haven't seen many of them being

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delivered until now. Especially a major tax reform that would simplify

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tax across the country. But in the budget today, what will be the big

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challenge facing the Finance Minister is how much will the

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government reach out into its own pocket? In 2015, when India became

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the fast growing major economy at over 7.5% growth, that was driven

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primarily by government spending. We haven't seen private spending

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takeoff that much. To push the economy forward that is what the

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government needs to do. At expenses will go up this year. There is a

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once in a decade hike for government employees coming in this year so

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they will need $16 billion for that. The industry will expect some

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benefits. Tax exemptions, for example. With regional elections

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coming up, people will be watching for tax benefit. People will be

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watching how they raise money. -- benefits. Thank you. She will cover

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the budget throughout the day from Delhi. To find out more about the

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budget... Sorry, moving on. A key measure of sentiment among South

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Korea's manufacturers has dropped to its lowest level since 2009. The

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index for March dropped to 65. A reading below 100 indicates the

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number of companies expecting deterioration outnumbers those

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seeing improvement. Industrial production in Japan has risen for

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the first time in three. That is according to government data just

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out. -- three months. It is expected to be a temporary rise. Retail sales

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in January fell by .1%. The faltering state of the world economy

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and tabular markets dominated discussion in Shanghai this

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weekend. The finance ministers and central bank workers merged to

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discuss. Almost all countries are suffering as a result of China's

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economic slowdown, not least Australia. We asked the Australia

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and Treasurer Scott Morrison how worried he was. What is happening is

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not an anticipated. -- unanticipated. Their growth, even if

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slower, is not a bad thing for Australia. At the same time, we are

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seeing growing areas of our economy now, the health sector, the services

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sector, they are growing and connecting to the growing consumer

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economy in China. None of this is a great shock to us. We deal with this

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all the time. Yeah, there is a transition, but that is the new norm

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in the economy. We and China are going through a transition and they

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are synced. We are optimistic. How do you rate the Chinese government

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and their ability to deal with volatility? How confident is your

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government they can deal with it? They will deal with their challenges

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how they see fit. How do you rate their capabilities? We cannot expect

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them to behave in the same way that we do. Whether it is the Australian

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reserve bank or the central bank. I think that they have other levers to

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pull. The banking sector is completely different to ours. We can

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have false expectations about how they respond. What I am convinced of

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his where they are heading, and that is that they are committed to

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growth. There will be bumps along the road in terms of how they manage

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these issues, they have exchange rate and capital flowed issues. They

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are dealing with it in a Chinese way. -- flow. But we are patient and

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respectful. Scott Morrison. Let's return to the lead story. The budget

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and India which will be revealed today. -- in. It is a bit tricky.

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Expectations are high. From our perspective, sitting here in Asia,

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what we expect the government should focus on is three things, one is,

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yeah, balancing out the fiscal stimulus, prioritising capital

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expenditure is absolutely needed, at the same time, their hands are tied

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when it comes to expenses going up because of these impending wage and

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pension hikes. From a sector perspective it is really important

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that they address how to revive the rural economy, agriculture, the

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state of the farmers in India, that is likely to be in focus again. And

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it is also about providing a clear roadmap for policy reform.

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Implementation of the much talked about GST bill and rebalancing

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public sector economies, that is likely to be a focus. Revising the

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rural economy so badly affected by recent monsoons. If they do this it

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will boost demand in general by having a multiplier effect.

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Absolutely. What we really need to see is demand improved in the rural

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economy. For example, in the auto industry, two wheeler sales is down

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when it should be up. Thank you so much for investing your time with

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us. I am Rico Hizon. Goodbye for

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