11/07/2016 Asia Business Report

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

The people of Japan have delivered their verdict. A victory for Shinzo

Abe. What does that mean for his economic reform plans? And India's

love affair with gold. We look at efforts to draw it away from temples

and homes and put it back in the economy. Good morning, Asia. Hello,

world. This is Asia Business Report. Japan's Prime Minister has won an

election in the Upper House and appears likely to extend his

majority. He pitched the election as a vote for his plans known as

Abenomics. What does it mean for his reform agenda? Earlier, I spoke with

a Japan economist. I think we have had some small areas of success in

monetary policy. The Bank of Japan has done everything to boost the

economy and inflation. The government itself has not really

done much. We haven't seen the reforms. Not even those that Shinzo

Abe originally alleged. Let alone those needed to keep Japan going in

the long-term. -- pledged. Do you think he will go ahead with more

economic reforms? There has been a lot of Reuters is about the rising

income gap, et cetera. -- criticism. Will he continue reforms as

promised? It is already the second election we have had during his time

in power. The elections in 2014 when he did the same thing. He sold it as

a vote on his economic policies and pledged economic reforms. Since then

we have not seen any economic reform accepts the Trans-Pacific

Partnership agreement which was already started before the election

is. So, I don't think we will see much in the coming years after the

election. And of course, global uncertainty like Brexit and in

China. He can blame all this negative economic outcome on that.

To some extent he came. I think private consumption in Japan has

been weak. -- he can. It has been a four-year low. You can't blame that

on global issues. Wages have not gone up in Japan. Inflation has been

high, even for Japanese standard. That is something the government

should have done more with. Taxes. Encouraging wage growth. This is the

fault of the government, clearly. Now to another election which took

place a week ago. Australia's Prime Minister, Malcolm Turnbull, has

finally declared victory, and looks set to form government again. But

uncertainty around the government made standard and pause what their

triple-A rating on watch last week. -- Standard Poor's. Earlier I

asked if the government will provide more uncertainty? We will see a

degree of uncertainty We have a government, and opposition conceding

defeat. We have a working majority, at least in the Lower House. One of

the confusing factors here is there is a Lower House majority but an

Upper House minority. It will be hard to pass controversial

legislation. We have a Prime Minister and a government but no

real working means of passing legislation. We see some certainty

for a little while. But how the government chooses to see the

legislation will be difficult. Last week, the credit rating was lowered

to a negative outlook. Do you think other agencies will follow that?

Some have said they and pulling to downgrade. But in this, S and P's

thought no other party is willing to do what needs to be done to fix the

budget deficit. Until those two parties, both parties, effectively,

can come to a solution to fix the deficit, there will remain pressure

on the credit rating. And I think it is likely we will see a downgrade.

In your view, what does the government need to do to address

that? Both parties have said within a decade they might come back to a

budget balance. But there will be a debt that goes with that. There are

structural problems. We spend too much money during the mining boom

years. Welfare programmes, tax cuts, they went through during those

times. Of course, the mining boom faded, revenue fell, but we still

have the same amount of spending. Hard decisions need to be made,

increased spending, decrease taxes, or maybe both. Unfortunately there

is no sufficient wheel to do that. It is not inevitable, but likely,

there will be a downgrade in the credit rating. We have to wait till

we have someone who is ready to do it. We could come out of trouble by

pure luck. We don't know. Both parties have to find a way to suit

the political will to make changes needed to bring a balance to the

budget. In other business news, the world's top 20 economies have

growing protectionism and a downgrade in trade. The G20 had

concerns over the slow overall recovery. They say protectionism has

been rising since the crisis. New trade restrictions averaged the

highest monthly average registered since it was monitored. Whether

buying it at festivals, giving it as a wedding gift, or ceremonies,

Indians love gold. 20,000 tons of aid are thought to be stashed away

in people's homes, businesses, or in vaults. -- it. But this pushes up

the import bill. The government is offering incentives to get it

recycled and put back on the economy. We have the story.

One of India's holiest Hindu shrines. 100,000 daily visitors.

They don't only pray but give generously. The temple's collection

boxes have amassed billions of dollars worth of cash and jewellery,

and especially, bold. -- gold. Some covers the temple walls, others,

kept in Treasuries, but it doesn't help the Indian economy. Now, the

government is tried to get more gold into banks. -- trying. Temples are

crucial to the government's plans of retrieving gold. They could have $1

trillion worth of yellow metal stashed away in private lockers and

safe-deposit boxes across the country. This is the richest temple

in India and already has 700 tons of gold. People are bringing more

everyday. This is one of the first temples to sign up to this. It gets

interest payments on the gold at hands over. It says it makes sense.

-- it we need to store it in a safe spot. Instead of keeping it in our

Treasury. It helps with the interest we get. It is a safe way to do it.

It also helps us produce costs. Temple gold will often end up here,

melted down and made into bars that banks can trade. They need to reduce

what they need to bring in from abroad, that is the idea. Most of

India's gold is not in temples, but homes, in the form of jewellery. Is

this where they need to focus? The housewife trusts the bank. Once she

knows this is something she can do with her gold jewellery she is no

longer wearing, she can give it to the bank, put it in a deposit, and

earn interest on it. But it is exactly the cause gold is so popular

that it is proving hard to tempt Indians to hand it over. Gold has

always been seen as a way to store wealth and it shows no sign of

losing its shine. BBC News, southern India. Let's take a quick look at

the market before we go. Japan's Nikkei has gone 3% higher after the

landslide victory by Prime Minister Shinzo Abe. Australia markets are

also up by 1.5%. They are taking the due from Wall Street where Standards

and Poors flirted with a record high on Friday at. That is it with this

edition of Asia Business Report. Thank you for watching.