21/03/2016 Asia Business Report


21/03/2016

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Too early to call a recovery. Or is oil beginning to shake off its

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losing streak? On the take. We find out if India is having any success

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cleaning up corruption. Hello and welcome to Asia Business Report.

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Investors will be keeping a close eye on oil this week to see if it

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continues its winning streak. During Friday trade, it climbed above $42,

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reaching its highest mark of the year so far. It slipped slightly but

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this is a major reversal for oil prices which had plunged before this

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latest surge. I talked to a representative from the oil industry

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about whether a corner has been turned. We have seen a remarkable

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recovery in the last few weeks in oil prices. A few things have

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happened in the last few weeks. I think one of them is we had a few

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supply disruptions. Pipeline disruptions, 1-dimensional -- one in

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Manchuria, and a decline in oil production in the United States.

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Payrolls were better than expected in non-American producing countries.

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So it is not just supply and demand, there are many aspects behind it and

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the Fed has said that easing monetary policy has led to investor

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appetite for assets like oil. Of course. On the demand side it is

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very much related to world economics. On the supply-side, of

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course, there are a host of factors have been playing a role. We're

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finding some excess supply getting out of the market. If you look at

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the latest IAEA report, they clearly say that the excess supply, 1.5

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barrels per day in quarter one and expected to be the same importer

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to, it is going to shrink too much smaller later on in the year. April

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17 visit big day for oil as OPEC producers meet then. Will Saudi

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Arabia's agenda be to keep oil prices low and drive out American

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producers? Actually, what they are looking to do is freeze production

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at January levels. That is what they have been talking about, Russia and

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Saudi Arabia, the two largest suppliers. They've been talking

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about freezing production at those levels and taking out the excess

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supply to try to rebalance the market. This is a big thing because

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all along, Saudi Arabia has maintained, let prices crash, we

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don't care, we can produce at really low levels, so let the high-cost

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producer suffered. But eventually it will reach a point where they will

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do something about it. In other business news, China's central-bank

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governor says his latest data shows that the amount of money being taken

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out of the country is actually going down. Capital outflow has been a

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major concern as China struggles with slowing growth and Beijing has

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been trying to reassure investors that it still has a grip on the

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country's economy. It does seem Chinese consumers have taken on that

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optimism despite the slowdown. New research shows 55% of consumers are

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confident their income will increase significantly over the next five

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years and that is just two percentage points lower than in 2012

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when economic growth was stronger. Earlier I spoke to a representative

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from a consulting group responsible for this new study and I asked why

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Chinese consumers were feeling good about the economy while it was

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weakening. Chinese consumers are aware of the economic situation and

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they do see the currency negotiations and stock market

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turmoil. At the same time they do remain confident. As you spelled

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out, over the last three years consumer confidence has remained

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largely unchanged, which is a big surprise to us when we received the

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results back from the research. The main reason we are seeing God is

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that, so far unemployment has remained minimal. -- seeing that. At

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that point, the Chinese consumers are not yet feeling on their own the

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impact of that. But it is fragmented by geography because not everyone

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across the country feels the same way. You are absolutely right. Just

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a few years ago, everything in China was growing and consumers were

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spending across all categories. Now the differences are very big when it

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comes to different regions. In the northeastern part of China, for

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example, we do observe that consumer confidence has sharply declined. At

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the same time, in the eastern coast of the southern part of China, it

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has increased compared with three years ago. The same is also true for

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the spending patterns. Everything is no longer growing but this

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categories are. Product base spending has shifted to service

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-based spending. Movie Theatre spending has doubled over the last

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three years for example. The other thing is mass consumption has

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changed to more premium consumption and we have seen that across many

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categories, most noteworthy, cosmetics and skincare. In the past,

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this has been primarily domestic spending but today, 70 million

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Chinese have travelled overseas in the last year. Corruption. Whether

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paying a bribe or needing inside contacts to get things done, it is

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something that has long been a problem in India. But is the

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situation starting to improve? In 2013 India was ranked only 94th in

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the transparency international index where first is perceived as least

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corrupt. By 2015, it had moved up to 76 but that is still a long way to

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go. There are suggestions that technology is helping India slowly

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clean up its act and its image. Now we go to our correspondent. Caught

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in the act. A Delhi traffic policeman films taking money.

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Shocking as it may be, bribery like this, usually small amounts of money

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taken by officials for doing something that should be free, has

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long been a way of life in many Indian cities. Now the police forces

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trying to clean up the system, starting with their own. Using basic

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technology, people can use the messaging service WhatsApp to submit

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evidence of alleged wrongdoings and they have had thousands of

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responses. Compared to the amount invested to make the service more

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accessible to the public, I feel the economic impact on the average

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citizen would be much more. Cracking down on often petty corruption on

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the street corner is one thing. Another big frustration many Indians

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have come across is that getting even official things like passports

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can only be done if you know the right person or pay the right

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bribe. Somite technology be helping to clean up that as well -- so

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might? India issues over 12 million passports each year. It used to be

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an endless wait to get one but now the process can take as little as 48

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hours. That is partly down to the technology automating the system,

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making things more streamlined. But the government department

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responsible says computers have stripped away the opportunities for

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under the table bribes. It makes the service paperless. It makes the

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bureaucracy faceless and also the operations become cashless. Once you

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make the operation cashless, the corruption loses control. From

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fingerprints scanning to keeping digital records, it may seem basic

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budget is technology making a difference. With India increasingly

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looking for outside investment, often from countries with very

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strict anti- bribery and corruption laws, making doing business here

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more transparent can only help. And in the war on corruption, technology

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is looking like a potent weapon. A quick look at the markets before we

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go. Really quiet in Asia today. The Nikkei is close for a public holiday

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and fairly flat trade is taking place in Hong Kong with the Hang

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Seng opening slightly higher than usual. In Australia, we're seeing a

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lot of energy related stocks being sold off, possibly because of the

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flight slide in oil prices late on Friday. -- slight. There are also

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calls from the Prime Minister for an early election in Australia which

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will lead to investor caution. That is all for this edition of Asia

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Business Report. Thank you for watching.

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