15/08/2016 Asia Business Report

Has Abenomics failed? Japan's yearly growth figures came in lower than

expected. And the end of wining and dining for businesses. South Korea

brings in a new law to crack down on corruption. Good morning, Asia.

Hello, world. I'm Sharanjit Leyl in Singapore. Thank you for joining us

for Asia Business Report. It's a Monday we will start with the third

largest economy in the world, Japan. Growth figures for the three months

between April and June came in weaker than expected at .2%. Some

economists are questioning whether the Prime Minister's aggressive

policies known as Abenomics have failed. Our guest has been lobbying

businesses in Japan to use more female workers to boost productivity

since the 1990s. I talked to her. It is the first time they have elevated

the issue of female participation in the workplace at the national

strategic growth level. In the past it has been viewed as something more

along the lines of human rights and equality, that clearly this topic,

in so far as trying to boost growth nationally, really the only way to

do it is to increase participation. One of the areas is female

participation. We have seen it chewed up in the last three years to

66%. That is higher than the rates in America. Not that we are near

where we need to be in Japan, there is still a long way to go, but there

has definitely been progress. 66%, you say, in terms of female

participation. That seems to be quite a change. Is at helping

Japan's economy but we are still seeing and credibly slow growth. The

problem is they are not all taking on full-time work, but rather

part-time work. Part-time workers get paid about half a full-time

worker. So they are not experiencing the gains they would if they were

working full-time jobs. The government is aware of this. It is

trying to change some of the tax and legal rules which is restricting

women from taking on full-time work. It is a work in progress. But the

direction is finally going in the right direction. What else can Abe

san do to boost the economy? He has introduced a huge stimulus package

in the last few weeks. Some people say that he has failed somewhat in

the policies we have seen over the last two years. Obviously, if you

have looked at the track record since he came into office in 2012

you see a mixed picture. On the one hand, you see overall corporate

rockets have essentially doubled, the stock market is up about 66%

since its level since then. As I said, you have seen more women in

the workplace than ever before. But on the other hand, the government

has failed to achieve its targets, for example, for inflation

expectations. They initially rose but have fallen back down despite

incredible easing by the Bank of Japan. Has been some success and

some failure. I think on the expectations front the government

certainly needs to do more to boost those back up among society. Thank

you. That us turn our attention now to Southeast Asia's largest economy,

Indonesia. -- let's. It is overhauling its coffers. It is

thinking of setting up two islands near Singapore as its own tax havens

while corporate tax may be cut to attract multinationals us. It will

allow repatriated funds to be invested in assets like gold and

property. Will this work? I asked an economist. Indonesia is struggling

at the moment with a lack of government revenue caused by low

commodity prices. There is an idea that tax amnesty would bring in

extra money but it hasn't brought in March to date. That is not a

surprise. That is typical of these measures. The reasons people don't

want to bring money into Indonesia, the day locals all foreigners, that

doesn't have much to do with the tax breaks but the regulatory

environment. -- be they. What is wrong with it? They have these

enticements to put some of the money into asset. Over the last year also,

the direction of economic and business policy in Indonesia has got

much better. The business environment is improving. But it is

the difficult. Any sectors are closed to foreign investment.

Regulation change quite often depending on which of Indonesia's

famous vested interests are more powerful at a moment in time. There

is no belief that they will persist for a time which is what you need

for sustained investment. A sustained regulatory environment is

what you are saying. Indonesia are also talking about dropping their

corporate tax rate to 70% to match Singapore. -- 17%. They are talking

about having tax havens on two islands near Singapore. What could

this do to an economy like Singapore which has benefited, to some extent,

from this in the last two years? A key part of Singapore's success is

that it is the easiest place to do business in all of Southeast Asia.

That essentially makes it the headquarters for many in the region.

I don't think these moves by Indonesia are going to be

game-changers. They will be sensible. It makes sense to take

advantage of islands that are nearby. Singapore could get some of

the overspill as the cost rises to do business. But I think it is not

so much the corporate tax rate that is the big turnoff for companies. I

think it is the certainty in the business environment and being able

to know that when you make an investment it is going to be

profitable for, you know, the 10- 20 years that they will be put to work.

In other business news, the International Monetary Fund has

urged China to reduce its reliance on credit fuelled investment in its

annual review, and they also said that Beijing needs to tackle rising

corporate debt. China's richest man will reportedly win backing for a

deal with the flagship firm of his empire. If approved, the deal worth

nearly $4.5 billion would be Hong Kong's biggest ever privatisation.

You might ask, what would business be without entertainment? Is GSS

part of dealmaking? -- golf subpoen not in Southeast Asia after next

month rules come in on how much can be spent entertaining people. It has

been called to Draconian. Steve Evans wanted to know what the

consequences might be over a business lunch in South Korea. This

is a very, very nice restaurant. It is in the middle of Seoul. Classic

business entertainment. But the rules will change at the end of next

month. There will be strict limits on this kind of dining in South

Korea. I have with me a government official and a is this man. These

rules will be much tougher for this kind of entertainment. --

businessman. Under the new rules, entertainment will be limited to

about $30 a head in restaurants. And you cannot give gifts of more than

$50 a head. Cash gifts, which are traditionally given at weddings,

cannot be more than $100 a head. Antwon of the intriguing things is

that teachers are covered in this. -- and one of the most. Parents give

gifts to teachers to get more attention to their children. This

country focuses on relationships. If you want to do something you have to

build a relationship. If they have been overentertaining people, the

government officer cannot be fair enough to do something. For the

people and the cities. The loophole is that the law EU's focusing on

this law for individual journalists. -- is. The problem is you still have

20 odd newspapers in Seoul. The only way they can survive is through some

advertising subsidies by the main conglomerates here. And of course,

in return for getting the advertising, the newspapers are very

careful about writing critical stories about these corporations. Oh

dear. The bill has arrived. It is more than $30 a head. But it is like

the new law does not come in place or a month, otherwise we would all

be in deep trouble. A clever escape for Steve Evans. Let's take a look

at the market before we go. Lacklustre markets. No real

surprise. We saw GDP numbers coming from Japan at weaker than expected,

0.2%. That is ironically the same the market is down. The All

Ordinaries Index is low as well. Japan is seeing sharp shares

falling. That is after the company said it completed its takeover. That

is it for me is edition of Asia Business Report. Thank you for

watching.