31/05/2016 Asia Business Report


31/05/2016

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Building the future, we find out if India's economic growth is

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delivering for its people. And India overtake America as the world's most

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competitive place to do business. Glad you could join us for this

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edition of Asia Business Report. We start off with India, and one of

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Asia's largest economies will reveal in several hours how rapidly it has

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grown over the past year. The country has become one of the

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fastest expanding economies in the world, and the IMF has estimated

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that growth of 7.5% will be recorded for this financial year. Despite the

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strong performance, job creation is still a major challenge.

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This has become a common sight outside most suburban train stations

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in Mumbai. These men are not travellers but out of work

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construction labourers who have lost jobs, due to a slowdown in the

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sector. They assemble here daily in the hope of getting jobs like

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repairing or painting to earn some money. This is the spot where

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residents from the area come to hire temporary manpower for the

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housework. Most of these men left farming and moved to Mumbai to

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become construction workers. This man is one of them. He came to the

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city in 2007, but lost his construction job two years ago, and

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since then has been struggling to survive. TRANSLATION: Are used to

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earn $200 every month, but now I barely get one third of that by

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doing temporary jobs. In fact, I am planning to move back to my village

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soon. At least then I will be able to earn more as working as a farm

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labourer. Despite strong economic growth, creating jobs is still a

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major challenge for India. The construction industry is the second

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largest employer in the country after agriculture. But there are

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concerns that the slowdown in the sector could push many people back

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into farming. This project has been under construction for more than two

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years. The developer has been struggling to find buyers, and now

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that there is a shortage of funds work at the site has been stalled.

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So you find all kinds of construction material and equipment

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here, but no workers. It is not just the housing sector that is affecting

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jobs. Stalled infrastructure projects are also contributing to

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the problem. Business is blamed slow government approvals and redtape.

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The approval part of the projects are been delayed very much. And

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construction work is being delayed by a lot. This leads to a loss of

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confidence by purchases. India has one of the youngest populations in

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the world and it needs to create 10 million jobs every year for the new

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people entering the workforce. Achieving that target will be the

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key for Asia's third-largest economy to realise its long-term growth

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potential. Earlier, I asked if India's strong

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growth numbers reflect positive conditions. That is the big question

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on everyone's minds. This is the fastest growth rate of any major

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economy in the world, and you would expect to see the other data points

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in India start to match up with those kinds of expectations. The

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thing is, they are not. What we are actually seeing is that experts have

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fallen, how much India sells to the world, for about 17 months in a row.

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Factories are not reducing as much as they could or should. By some

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estimates, we are seeing factories producing 30% less than what they

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could be producing, and the problem is that the way India has calculated

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its growth figures changed a couple of years ago. Critics of these

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revisions point to the fact that this is just PM Modi's way of making

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the Indian economy look like it is doing better than it actually is.

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His government says there are structural reforms that are put into

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place, they will take time, but the trajectory is moving upwards.

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Whether that is reflective of what is actually happening on the ground

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is beside the point. The figures are moving in an upward direction. Two

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years now in office, what should be the priorities of PM Modi today? I

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think the major priority for any Indian government has to be the

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reduction of the poverty rate. A fifth of the country still lives

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below the poverty line, and the PM has made it clear that that is very

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much part of his agenda. He has also pointed to the fact that in his two

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years in office he recently defended himself in an article in the Wall

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Street Journal, that he has opened the world to farmers. I think that

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is correct, but at the same time there are two key pieces of

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legislation that his government has not been able to pass. That is the

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goods and services tax as well as the land acquisition bill. He is

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hoping to pass that at some point this year.

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Hong Kong has toppled the US as the world's most competitive economy,

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according to a new survey. The US had led the business School's world

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competitive ranking for three years in a row, but now it has dropped to

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sixth place, with Switzerland ranked second. I asked why the city ranked

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so highly. It is a fact that Hong Kong is the conduit, the link

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between China and the rest of the world. The fact is that the

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infrastructure between Hong Kong and the rest of the world, ports,

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airlines and communication, is extremely good. It also has good

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communications into China as well. It is probably that linkage to the

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rest of the world that drives the efficiency of Hong Kong doing

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business. Basically two major rivals here in Asia in terms of

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competitiveness. You have Hong Kong and Singapore, which is ranked

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fourth. If you take a look at the overall survey, many other Asian

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economies have slipped in the rankings. Why do you think this is

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happening? Hiding a lot of that is to do with economic performance,

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which is one of the factors they take into account, and obviously a

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lot of these countries in Asia are exporters, and they have suffered

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with a global slowdown. I think a lot more of what Hong Kong does is

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infrastructure, finance, which has had less of a slowing process than

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other countries. Asia's biggest technology show opens

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today in Taipei. For more than three decades its annual exhibition has

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been focused on computers, but against a backdrop of declining

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sales, attention has turned to more ambitious technology, including

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robots and virtual reality. I am joined by our correspondent from

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inside the exhibition area. I know many of these technology companies

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are facing some major challenges. Yes, what is happening is that the

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staff from some 1600 companies are exhibiting here, and are setting up.

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The show will open to the public in about an hour. They are quickly

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trying to set up their laptops, smart phones, wearables, and all

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kinds of gadgets, trying to entice consumers to buy. That is what the

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companies here need, because computer sales have been declining

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for the past two years, I5-6% globally. That is really hurting the

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industry. If this continues this year and next year, this will be bad

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news for many companies like Acer, and global brands like Dell and

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Lenovo. They are trying to encourage people to buy things they have ever

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bought before, like household robots and virtual reality headset. That is

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the buzz right now in many computer shows all over the world, virtual

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reality and robots. The big question is, will the man on the street, will

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ordinary consumers, by these new consumer other than smart phones and

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personal computers? We are seeing even with smartphone sales, sales

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are flat so far this year. Analysts told me that consumers feel like

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they have all the hardware and they need, so unless the companies come

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up with really amazing product that people feel they need, they won't

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feel the need to spend the money. There might be some products that

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might convince people to buy, like household robots. They can unlock

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doors, read stories to kids, we have to see whether the consumers will be

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convinced. Thank you very much. Before we go, a quick look at the

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Asian stock markets. Currently, as you can see, they are mixed at this

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hour. The Nikkei down by 2.5, and the all ordinaries lowered by 34.

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This is after the US and UK financial markets were closed

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overnight due to the bank holiday.

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