18/03/2016 Asia Business Report


18/03/2016

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standards, according to the Institute for Fiscal Studies.

:00:00.:00:17.

New look ministries for a new government, but what will it mean

:00:18.:00:23.

for Myanmar's economy? Can China keep the good times rolling or is

:00:24.:00:29.

it's economic slowdown worse than first thought? Welcome to Asia

:00:30.:00:43.

Business Report. When Myanmar's new administration takes office next

:00:44.:00:47.

month it will be the first democratically elected government in

:00:48.:00:50.

52 years. It will also be much smaller. The incoming government has

:00:51.:00:56.

announced a dramatic cut off the number of ministries from 36 to 21.

:00:57.:01:01.

Earlier, I asked the business consultant what the political

:01:02.:01:05.

transition will mean for the country's economy. What the

:01:06.:01:09.

government is trying to do is become much more effective, and instead of

:01:10.:01:15.

having a very large administration, it has cut down the ministries from

:01:16.:01:22.

31 to 21. It makes sense to combine ministries, like agriculture and

:01:23.:01:30.

livestock and fisheries. So, it hopes to achieve a high level of

:01:31.:01:34.

growth. Obviously they are saving money on the budget as well. Sure,

:01:35.:01:41.

but I don't think the savings will be huge. The main objective is to

:01:42.:01:47.

have an effective government, because the main challenge, or one

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of the main challenges for Aung San Suu Kyi and her NLD government will

:01:52.:01:59.

be managing a very high expectations. Yes, and they made a

:02:00.:02:05.

lot of promises, a lot of Democratic promises. What do we know about

:02:06.:02:09.

their economic reforms? So, we really have the sea who she will

:02:10.:02:18.

appoint in her cabinet together with the new president. The expectation

:02:19.:02:21.

is that they will continue the current course, really focusing on

:02:22.:02:27.

attracting investment, building infrastructure. Myanmar cannot

:02:28.:02:36.

industrialise without electricity, you can't industrialise on

:02:37.:02:39.

generators. You say it is about attracting investment, and you are a

:02:40.:02:44.

regular visitor. What have you seen internet changes that have

:02:45.:02:46.

transpired since the economy opened up to foreign investment? DEC at

:02:47.:02:51.

flowing in and other concerns with the Chinese slowdown? No, because

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Myanmar is not exporting much to China. Actually, we have seen

:02:57.:03:03.

investment is coming from mainly other parts of the world, like

:03:04.:03:09.

Japan, Europe, the rest of Asia. The expectation is that more investment

:03:10.:03:15.

will come in now there is a new government. What we have to see is

:03:16.:03:20.

if she herself will be part of the government, it is likely she will

:03:21.:03:23.

stay in Parliament. In other business news, tech giant Toshiba is

:03:24.:03:28.

to sell its medical equipment unit to fellow Japanese company Canon.

:03:29.:03:34.

Toshiba is struggling with getting over a massive accounting scandal

:03:35.:03:40.

uncovered last year, and hope to restructure its bloated business

:03:41.:03:45.

operations. But the book keeping nightmare might not be over yet.

:03:46.:03:49.

Toshiba says it has received requests from the US over accounting

:03:50.:03:53.

issues as well. The national people's Congress wrapped up in

:03:54.:04:00.

Beijing this year, as the rubberstamp parliament approved

:04:01.:04:03.

another five-year plan with slower growth targets. As China's economy

:04:04.:04:11.

has cooled, some are pointing to storm clouds on the horizon. I asked

:04:12.:04:17.

how next guest about the country's debt levels. The numbers are even

:04:18.:04:22.

dramatically bigger. They have added $20 trillion of bank and corporate

:04:23.:04:28.

and government debt, and the total now is pushing $30 trillion. If it

:04:29.:04:33.

was all good that it might not be a problem, because China is a fairly

:04:34.:04:38.

big country. It is not good that they have used it to expand

:04:39.:04:41.

infrastructure, which is unneeded, to finance state-owned enterprises

:04:42.:04:48.

that are overbuilt and have too much capacity, with banks just handing

:04:49.:04:53.

out to stimulate the economy. As much as $10 trillion of that could

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turn out to be bad debt. These are large numbers, and what we have

:04:57.:05:00.

heard from Chinese authorities in the last couple of weeks is that

:05:01.:05:04.

they have a handle on things. They are reassuring the rest of the world

:05:05.:05:09.

that China continues to grow, their target is 6.5%. Are you saying that

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isn't true? I don't believe the numbers. I have studied this a

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little bit, I have gone on the fact what their electrical consumption

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has done, what their power consumption has done, and what their

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coal consumption has done. In each of those categories, which ought to

:05:28.:05:33.

be good measures of economic activity, but each of those has

:05:34.:05:37.

declined in growth. You have made a living out of writing books

:05:38.:05:40.

predicting financial crises, and the word is that if you predict them

:05:41.:05:43.

long enough they will happen. What makes you think you are right now?

:05:44.:05:49.

When I looked at the US, for example, back in 2003 and 2006, I

:05:50.:05:55.

felt a duty to blow a whistle. People were buying homes in Las

:05:56.:06:00.

Vegas or 900,000 dollars that had sold for 240,000 seven years

:06:01.:06:04.

previously. Everywhere I looked there were these kind of trouble is

:06:05.:06:07.

in a world where wages have been for almost 20 years straight. China may

:06:08.:06:14.

be slowing but it is not always easy to make sense of the numbers. With a

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wealth of so-called tech unicorns, there is a big bunch of DNS, and how

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should you read the statistics? The Chinese state media says China

:06:27.:06:29.

is full of unicorns. There are 40 in Beijing alone. No, not these

:06:30.:06:38.

unicorns, but these ones. Start-up tech companies valued at over 1

:06:39.:06:41.

billion US dollars. Some say Beijing is a hub to unicorns, second only to

:06:42.:06:49.

Silicon Valley in California. Others think those figures might not stack

:06:50.:06:54.

up, but some of those tech companies might even that less magical

:06:55.:07:02.

unicorn, more Shetland pony. So what is the truth and why should you

:07:03.:07:05.

care? Has the answer tells us something about the real state of

:07:06.:07:08.

the Chinese economy, the economy that is powering world growth. As

:07:09.:07:13.

China's economy grinds to a halt, there could be a serious domino

:07:14.:07:19.

effect around the world. Company valuations are based in part on

:07:20.:07:25.

future earning potential. China's companies are suffering, and the

:07:26.:07:30.

outlook is less rosy. One private Chinese research firm says Beijing

:07:31.:07:34.

is home to more billionaires another of -- than any other place in the

:07:35.:07:39.

world. Including the capital of capitalism, New York. Forbes

:07:40.:07:43.

Magazine says that is wrong, New York has way more. Billion-dollar

:07:44.:07:49.

companies or billion-dollar people? Somewhat to claim their numbers are

:07:50.:07:53.

growing in China, but it is important to remember who has an

:07:54.:07:58.

interest in polishing those numbers. The questions from Celia Hatton, but

:07:59.:08:02.

despite China's claims, the other big question is whether Asia can

:08:03.:08:05.

catch up when it comes to creating the next so-called unicorn. If you

:08:06.:08:11.

look at tech start-ups worth more than $1 billion, there are only

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about 143 of them globally, and over half of them are based in the US. We

:08:17.:08:23.

met a successful tech entrepreneur whose latest venture is backed by

:08:24.:08:28.

the Facebook co-founder. My background was that I got fascinated

:08:29.:08:31.

with tech start-ups back in the days when I first discovered e-mail. It

:08:32.:08:38.

is completely changed how we communicate with each other, how we

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find information, all within the span of one or two years. All of

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this innovation came from a tiny place in California called Silicon

:08:49.:08:54.

valley. It is not much larger than Singapore, and it was fascinating to

:08:55.:08:57.

me how such a small place and such a small group of people with ideas and

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determination could completely change the world globally. What is

:09:03.:09:06.

the difference between public or government funding and going the

:09:07.:09:12.

private route, to a venture capital investor? I think most start-ups do

:09:13.:09:17.

both. What is the difference? Really the private route tends to be more

:09:18.:09:23.

risk tolerant and faster. The government route tends to take a lot

:09:24.:09:27.

more overhead, creating a certain burden in terms of compliance and

:09:28.:09:33.

paperwork and auditing they need to do. Start-ups' goal is not to be

:09:34.:09:43.

compliant, it is to change things. Is it really competitive among

:09:44.:09:48.

start-ups given that that has become a crowded space to get venture

:09:49.:09:51.

capital funding? No, it is the opposite. The money has grown much

:09:52.:09:56.

faster than the number of people competing for it. It has got a lot

:09:57.:10:01.

easier to get money today. Let's have a look at the markets, because

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we are continuing to see those losses on the Nikkei, due to the

:10:05.:10:09.

strong yen. Remember this week the Fed reserve said there would be a

:10:10.:10:17.

much looser monetary policy going forward. That means the dollar has

:10:18.:10:20.

fallen and a stronger yen is eating into exports. However, the Hang Seng

:10:21.:10:26.

and Australia, they are making gains. Positive lead from Wall

:10:27.:10:31.

Street, and much higher commodity in oil prices. -- and oil prices.

:10:32.:10:42.

The top stories this hour: EU leaders have agreed a plan to ease

:10:43.:10:46.

the migrant crisis, they hope to strike a deal with Turkey on Friday.

:10:47.:10:49.

North Korea has fired two ballistic missiles into the sea, stoking

:10:50.:10:53.

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