02/02/2017 Asia Business Report

More money for India's rule areas as farmers struggle with

demonetisation. -- rural areas. Mixed news for Facebook - strong

earnings results but loses a court case over the virtual reality

business. Hello, everyone, I am glad you can join us for this Thursday

edition of Asia Business Report. More government spending on rural

areas was a top priority announced by India's Finance Minister in his

budget on Wednesday. Farmers were one of the hardest hit by the

decision last year to withdraw almost 90% of bank notes in

circulation. Our correspondent sent this assessment of the budget from

Delhi. It seemed as if India's Finance

Minister was in a rush to deliver his fourth budget. And when he

finally revealed the contents of his briefcase, it wasn't what most had

expected. But he was optimistic about one thing at least... India

stands out as a bright spot in the world economic landscape. Three

months after banning most of the cash in circulation, the finance

minister chose the budget to admit its effects. For the first time, he

called it a disruptive reform. But he promised there would be long-term

benefits. That included extra income for the government and more cash in

the banking system, making it easier for people to get loans. Benefits

that would be supplemented by other measures. In an effort to boost

demand in domestic spending, especially in rural areas, he

announced more farmer loans and crop insurance. He did more to widen the

tax net to bring more people into the system but there were almost no

incentives for people who were already paying income tax. Small and

medium-sized companies which make up 90% of the firms in India were given

a boost. Their tax rate was reduced 5%. But for bigger firms there was

disappointment. Despite promises of a reduction in the last budget, the

high rate of corporate tax remains. Corporate tax rates are going down

throughout the world and even in some other western countries they

have committed to bringing down the tax rate, so I feel that the capital

is going to flow out of India unless we really do something to make it

more competitive. For Mr Arun Jaitley, this was a balancing act

between the need to put the momentum back into India's growth and at the

same time ensure that spending is under control. But all of this was

put together without knowing the true effect of the cash ban on the

economy. For that, he and the entire nation will have to wait for GDP

figures at the end of the month. In other news: making headlines, the UK

is a step closer to leaving the EU. MPs voted to allow Theresa May to

get the negotiations under way. She promised to trigger Article 50 by

the end of March. Amazon plans to schedule 200 flights

every day at a cargo hub it is building near Cincinnati. The

company announced the airport project earlier this week. The aim

is to handle shipping in-house to cut costs and get packages to

shoppers faster. The cargo hub is worth $1.5 billion US.

Social media giant Facebook reported the latest earnings numbers and

revenue was surging over 50% with the company continuing to benefit

from the aggressive push into mobile and video. There was bad news for

the company. A US jury ordered Facebook and the virtual reality

business oculus to pay half $1 billion to accompany accusing it of

stealing technology. Asked an analyst if the firm can continue the

strong performance. Facebook themselves acknowledged the

revenues that they are going to get from advertising through the

newsfeed will start the stabilisation over time, so they are

looking at other sources of growth, and they are doing a good job on

that, from Instagram, video, they have grown advertising revenue

substantially and they are investing in other areas, like what they can

do with WhatsApp and messenger. But of course everybody also wants to

find out about China. When are they likely to make a big splash in the

mainland market, if ever? I think that will be a big challenge for

Facebook. We know already, you know, Weibo and WeChat have become strong

in that. Facebook has a long way to grow to establish itself in China if

it gets into China. There are all manner of challenges. They have to

look at complying with regulations in China, which are much tighter

than anything. So, indeed they have challenges making their way into the

Chinese market, so how could they indirectly make money out of the

Chinese Internet users? Well, I think, you know, a key thing for

them, I mean, obviously if they want everyone in the globe to be

connected, and Facebook wants to, you know, get to all of the users,

China is a key market, the biggest issue is revenue they can get from

China, and there are a lot of Chinese firms that want to get

revenues outside of China, and Facebook could be an ideal vehicle

for that, so they might start by looking at ways in which they can

get revenue from Chinese customers to start with, before starting to

build a user base in China. Well, the world's biggest economy will

have a new Treasury Secretary, he is Steven Mnuchin and like much of the

presidency it has been divisive. Democrats say he is too close to

Wall Street whereas the President says it will help America towards

growth and prosperity, so what do we know about him? Let's have a look.

And staying with the US and the central bank also know as the

Federal Reserve decided not to raise the cost of borrowing this around as

economist -- and I asked an economist if he expected heights

this year. While most of the markets think that they will but they will

sit on their hands to find out how the Trump administration will play

out. The drum administration, Donald Trump as a candidate, was critical

of Janet Yellen and the Fed through the campaign so there is a bit of

ten June and I know the Janet Yellen has received anti-Semitic abuse from

the right wing supporters, so there is some tension. -- Trump

administration. You have Steven Mnuchin and Donald Trump wanting

growth and prosperity. When will there start to pump the economy? I

think it is interesting. Donald Trump's trade policies have been

about American jobs and I think he will make calls for General Motors

and American companies to stay in Michigan, to stay in the

manufacturing heartland. And he will be able to do this and then

basically ride the wave of employment growth that Janet Yellen

has been presiding over, so he may not have to even take trade tariffs

action against China. He may be able to get enough employment momentum in

any case by some of his actions via Twitter. But, Tim, trade is an

integral part of the global economy and growth. With him threatening

China as a currency manipulator, renegotiating Nafta and of course

other bilateral trade agreements, couldn't this also impact growth in

the US going forward? Oh, it definitely could, I think, with an

isolationist US being bad for the economy and for the American labour

market. And I think him ripping up the TPP straightaway is a sign that

he would take a very anti- trade view. His view is he is a great

negotiator and only he can negotiate trade agreements that have been bad

for America but it could have adverse impact on Asia, especially

China, and even Australia if there is a trade war. Can Asia still go

ahead without the United States in the Trans-Pacific Partnership? I

think something can take its place. I think the Trans-Pacific

Partnership was the United States and Japan trying to wrest control of

the Asia-Pacific economy back from China. Now, with Donald Trump anti-

TPP, as with all of the candidates in the election, including Hillary

Clinton and Bernie Sanders, China can actually step in and the

regional partnerships and other pacts to have a more assertive role,

so it could be that Donald Trump's isolationism will boost Chinese

negotiating power in the Asia-Pacific.

Let's have a quick look now at how Asia has performed in early trade

this Thursday, currently lacklustre, dull, moving sideways, this despite

US stocks advancing overnight. Thank you so much for investing your time

with us. I'm Rico Hizon. Sport Today is up next. Hello.

The United States Senate has voted to confirm the former chief

executive of the oil giant Exxon Mobil, Rex Tillerson,

as President Trump's Secretary of State.

The new American Defence Secretary, James Mattis, is heading