26/04/2016 Asia Business Report

Now on BBC News, all the latest business news live from Singapore.

South Korea's economy continues to splutter. We will bring you the

latest growth numbers. And big and bold. We look at what is hot in the

world's biggest car market. Hello, and welcome to Asia Business

Report. I am Sharanjit Leyl. South Korea's economic expansion is

continuing to slow. From January to March the economy grew by only 0.4%,

in comparison with the previous quarter. That is slightly behind

expectations, and down from 0.7%. Our correspondent Stephen Evans is

in Seoul and he says the figures are confirmation that South Korea is

being affected by the slowdown in China, its largest trading partner.

The global economy is slowing because of China, the transition of

China from a factory economy to a factory economy and the spending

economy. If you look at the figures for South Korea, on annualised

rates, those are the rates that you will need to make sense of it, the

economy on the latest figures is growing at 2.7%. This economy here

in South Korea. At the end of last year it was growing at 3.1%. So the

slowdown continues. There are some negative figures which don't bode

well, within that slowdown. Manufacturing had a contraction, for

example. Exports, a contraction. Imports, a large contraction. And

that indicates partly that people here are starting to tighten their

belts a bit. That is important because if people and companies

continue to view the future ever more gloomily, that pessimism will

create exactly what they fear. It will create even more of a slowdown.

That is the worry with these figures. At what can the South

Korean authorities, the central bank that, potentially do to try to

alleviate this? The central bank is certainly not worried about

inflation. Inflation is below the 2% target. Some central banks in some

countries don't worry about inflation being too low. South Korea

is not one of those countries. If inflation is below target, it thinks

about lowering interest even more. But the big question for economists

is Ken central banks do enough anyway? Is it really about

government spending? Old-fashioned,", Keynesian spending.

The truth is the South Korean economy cannot transform its

situation on its own. It really needs China to stop contracting. We

don't know what is going to happen in China. There were figures out

recently for very high levels of debt. Not high levels of debt

compared to the US, for example, in terms of in relation to GDP, at high

for a developing country. If that debt leads to a crash then we are

all in trouble. If it is merely a slowdown that comes back up, it is

just what economies do. You heard him talk about China's slowing

economy, it is certainly having an impact far beyond its own borders.

It seems global carmakers are staying up beat despite its exit

from the fast lane. Beijing's annual auto show has opened its doors with

20 of optimism that this year will be a profitable one for the world's

largest car market. Our correspondent went along for a look.

China produces more cars than any other country, in order to serve the

fastest growing market in the world. So when the capital turns on a motor

vehicle exhibition it does so on quite a scale. Order companies who

want to thrive or even just survive are focusing on the massive Chinese

market. People here love their cars, and though they are clogging up the

roads, they are buying them in record numbers. To give you an

indication of how people are interested in vehicles here, you

just have to look around at the crowds they get to the Beijing auto

show. And in terms of the companies, their commitment to China can be

seen by the seniority of the executives that they wheel out to

comment. The secret of China, it is different to other world market but

it is fascinating. We are here in China since more than 30 years.

There is no growth pressure behind, we want to look for a qualitative

approach, it is very important, and we are aiming for this growth. These

days it is not hard to find somebody who is pessimistic about the slowing

Chinese economy but the world's carmakers are pinning their hopes on

domestic consumption really holding up here. There is a feeling that

millions more people will move into the so-called middle-class. They

will want newer, better cars and this is going to drive a hunger for

vehicles into the future. I am absolutely convinced that China will

stay the biggest single market in the developing world. There is still

a lot of growth potential. And of course, after a year of

consolidation in 2016, we will see further growth and we will also see

that the Chinese market could turn rapidly into, let's say, the new

energy vehicle strategy. There is a clear obligation that we would like

to comply regarding emissions and therefore we need a structure

involving hybrids or better electric vehicles, and this is where we are

investing. The streets around the exhibition Centre have been

gridlocked as people try and get in and out of the auto show. But the

car companies say that this does not mean that their industry should be

blamed for China's nightmare traffic jams. We will be following the

Beijing auto show throughout the week so if you are into cars, stay

tuned. In other news, Saudi Arabia has laid out plans to diversify its

economy, moving away from its heavy reliance on the oil. 80% of its

revenue currently comes from oil but it has been hit by falling prices in

the past year. Under Vision 2030, shares in the state owned oil

company will be sold to create a sovereign wealth fund. The cost of

living in Singapore fell for a 17th month straight in March, that is the

longest period of decline on record. Consumer prices dropped 1% from one

year earlier in the latest sign of a spluttering economy and that

compares with 0.4% -- zero .8% the previous period. Indonesia's

environment policy has long caused controversy. Now the world's second

largest palm oil company is promising greater transparency. It

says that in four years it will be able to tell its buyers where all

its palm oil comes from. They told our correspondent what is planned.

We need to know exactly when we buy the oil. We know every step. This

would include finding out if these plantations are compliant with

Indonesian law in terms of the protection of key Indonesian peat

land. It will come to that level of analysis. Only if we have that

detailed information will we be able to analyse whether or not they are

coming from a proper sources. This seems like a very basic thing to

know. Why has it taken so long to find out where your product is

coming from. -- from? We are one of the very few who started this effort

has traditionally these mills operate with whatever product comes

to their facility. When we ask them to do that, for them it is an extra

effort. Some can do it with not much of a problem, but most of them will

be a bit constrained, because it is not something that they are normally

doing. But surely it is the responsibility of the company to

make an effort to find out that information, to find out where your

product is coming from. We know exactly where it is coming from,

from those mills. But is your product coming from land that was

illegally don't, illegally cleared, surely that is something that you

should have been looking out from the very beginning. That is what we

are asking them to do. But why now? Because it is a big population we

are dealing with. So compared to the thousands of companies, our effort

is still part of the pioneering of the sect. Are you being pushed to do

this by consumers particularly in the European Union, who have been

calling for a boycott of Indonesian palm oil of environmental concerns?

Well, disk combination is also including requests from the buyers.

The market is changing, and the demand has to be matched with the

quality of products we are purchasing -- this combination.

Let's take a quick look at those markets now, and where they are

trading. In Asia they have opened weaker, as you can see, the Nikkei

coming to a second date of profit taking, but this week a lot of

caution setting in ahead of that Bank of Japan meeting where some

stimulus is expected. We are also seeing Australia opening up after a

public holiday for ANZAC Day yesterday and it is currently

public holiday for ANZAC Day yesterday and it is currently flat

at the moment. That is it for this edition of Asia Business Report.

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