:00:00. > 3:59:59insisted the policy was a success. Now on BBC News all the latest
:00:00. > :00:22.business news live from Singapore. Mild expansion. Chinese companies
:00:23. > :00:26.show an increase in activities. Higher sales tax, is Japan's Prime
:00:27. > :00:39.Minister on the right track and how will it impact consumers?
:00:40. > :00:45.Welcome to Asia business report broadcasting around the world. A
:00:46. > :00:48.potential reprieve for investors as the latest data from China shows the
:00:49. > :00:51.manufacturing sector is registering a mild expansion in the month of
:00:52. > :00:54.March, with the government's official PM are coming in at 50.3,
:00:55. > :00:56.with a reading above 50 indicating an expansion. Let's look at the
:00:57. > :01:17.reaction right now. Hong Kong is in positive territorial
:01:18. > :01:23.by about 157 points but we have seen a volatile period for the likes of
:01:24. > :01:30.Japan, South Korea and Australia. Let's get the latest from our
:01:31. > :01:39.Shanghai bureau. We have seen a volatile time for the markets trying
:01:40. > :01:47.to digests how this PMI will affect the Chinese economy going forward?
:01:48. > :01:51.As you say, 50 is the number that separates growth from contraction.
:01:52. > :01:55.This is a measure of factory activity based on a survey of
:01:56. > :01:58.purchasing managers and as you see the official figures look pretty
:01:59. > :02:03.good today, a slight increase on where we where in February. There
:02:04. > :02:11.have been some people seeing this as something to celebrate, signs as
:02:12. > :02:14.well on the currency markets with the Australian dollar being up
:02:15. > :02:19.slightly after the figures were published, but the picture on some
:02:20. > :02:27.markets is mixed because in parallel to this, we have the HSBC Private
:02:28. > :02:30.survey of purchasing managers and that is very much in negative
:02:31. > :02:39.territorial, the figure coming and 48. That is a slightly different
:02:40. > :02:43.group of companies. The HSBC survey takes on smaller and medium`sized
:02:44. > :02:48.businesses whereas the official figures take in the large
:02:49. > :02:52.state`owned companies, but I think the reason we are seeing the mixed
:02:53. > :02:56.reaction is because nobody is convinced yet that Chinese growth is
:02:57. > :03:04.back on track for further expansion through this year. Analysts expect
:03:05. > :03:09.the government to take additional steps to jump`start the economy but
:03:10. > :03:16.they have basically ruled out a huge stimulus package? The Chinese
:03:17. > :03:19.premier is still speaking about infrastructure and there is no doubt
:03:20. > :03:25.that although we saw growth slowing in the last quarter of 2013,
:03:26. > :03:29.suggestions that left the HSBC figures are the more accurate ones,
:03:30. > :03:35.we may have seen slowing even further than quarter one of this
:03:36. > :03:39.year. Some people will suggest that there is a signal of an engineered
:03:40. > :03:44.slowdown, something everybody has been talking about in China and
:03:45. > :03:51.which many people see as necessary. The spike that, there is no doubt
:03:52. > :03:54.the Chinese economy is still heavily dependent on infrastructure
:03:55. > :04:00.spending, making up a huge proportion of GDP and despite all
:04:01. > :04:06.the talk of rebalancing, infrastructure still remains key
:04:07. > :04:13.going for Rod and I think these figures people will suggest will add
:04:14. > :04:18.a further boost to the viewpoint. Over to Japan where business
:04:19. > :04:21.confidence improved in the three months to March, marking five
:04:22. > :04:23.quarters or 15 months of positive sentiment among Japanese
:04:24. > :04:26.manufacturers, but according to the latest sentiment it is most likely
:04:27. > :04:29.to weaken over the next three months due to worries that the country's
:04:30. > :04:36.hike in sales tax will be heartening future growth. `` hurting. This was
:04:37. > :04:38.released as the country marks a brand`new financial year and
:04:39. > :04:43.effective today, the sales tax goes up to 8% from 5%. It was a campaign
:04:44. > :04:52.promise by Shinzo Abe when he was seeking the office more than one
:04:53. > :04:55.year ago. He's hoping revenues from the sales tax will help reduce the
:04:56. > :04:59.debt load, over twice the size of the economy. They also want to use
:05:00. > :05:04.the sales tax as a means to provide for rising welfare costs. The last
:05:05. > :05:08.time the country made an adjustment to the sales tax was almost 20 years
:05:09. > :05:10.ago won a lot of people held back on spending, fostering a prolonged
:05:11. > :05:17.period of falling prices and the relation. I asked earlier whether
:05:18. > :05:23.the latest sales hike could have the same effect. Everybody was extremely
:05:24. > :05:26.worried about the impact in particular because of the bad impact
:05:27. > :05:33.of the last hike, almost 20 years ago, but this time it seems to be
:05:34. > :05:36.widely accepted. People have been picking up big`ticket items before
:05:37. > :05:43.and that is smart but we did not see any panic buying. That means that
:05:44. > :05:49.while demand is strong now it will not drop that much. Does hoarding
:05:50. > :05:52.raise industrial production but industrial production numbers saw a
:05:53. > :06:03.dip at the fastest pace for eight months, showing people are very
:06:04. > :06:06.nervous about the sales tax? It rather shows that companies as much
:06:07. > :06:10.as consumers seem to be quite a bit more relaxed about the impact and
:06:11. > :06:18.the negative impact on them of the sales tax. Countries have been
:06:19. > :06:21.preparing for the big rush but they did not expand production in terms
:06:22. > :06:31.of new investment, so they are just smoothing out the impact and
:06:32. > :06:34.otherwise business as usual. A lot of economists feared after the last
:06:35. > :06:37.hike that Japan lacks an engine of growth so there will be pressure to
:06:38. > :06:48.come up with additional growth policies and basically more reforms?
:06:49. > :06:56.We had a very strong year of Abenomics. They promised growth
:06:57. > :07:03.policies would be in place and they have been spending a lot and
:07:04. > :07:07.balancing. For this year, it becomes much trickier. Structural reforms
:07:08. > :07:11.are still very hard to implement so something has to be done when
:07:12. > :07:14.exports are slow as they already are and that is missing debt will be
:07:15. > :07:28.investments or companies are asking, what is there to invest in? What are
:07:29. > :07:31.the incentives? Thank you. Corporate news and Singapore's
:07:32. > :07:36.second`largest lender has made the formal offer to purchase Hong Kong's
:07:37. > :07:38.bank for $425 million. If they reach a deal with the biggest shareholder,
:07:39. > :07:50.the takeover, widely anticipated, will give OCBC a gateway to doing
:07:51. > :07:56.business in China. Chinese Rongsheng heavy industries
:07:57. > :08:03.may be too big to fail. They received financing after reporting a
:08:04. > :08:09.loss for last year. It amounted to more than $1 billion. The
:08:10. > :08:13.shipbuilder are grappling with debts of around Rongsheng are leveraging
:08:14. > :08:19.loans that have not been paid worse in total 20 billion US dollars.
:08:20. > :08:23.Electricity bills are set to go up for households and businesses in my
:08:24. > :08:26.own mark with the effect set to kick in today. `` Myanmar. Electricity
:08:27. > :08:32.bills could rise by as much as 50% which some feel will raise the price
:08:33. > :08:35.of goods and services. Only a quarter of the population has
:08:36. > :08:39.access to electricity aren't they are frequent power shortages. I
:08:40. > :08:46.asked earlier whether these power price rate hikes are indeed
:08:47. > :08:52.necessary? Deeply unpopular but very necessary and prices will rise 25 to
:08:53. > :08:55.50%. This will affect heavy residential users on some businesses
:08:56. > :08:58.but the government also claims 55% of all households and businesses
:08:59. > :09:08.will not be affected, so they will continue to pay subsidised rates.
:09:09. > :09:15.Power demand is rising by 15% a year in a Myanmar. This is necessary to
:09:16. > :09:23.bring an adequate investment. In the medium term, could this stifle
:09:24. > :09:27.fledgling growth? It does not look as if it will because as I mentioned
:09:28. > :09:29.55% will not be affected than consumers will not be affected. You
:09:30. > :09:32.mentioned only a quarter of households are connected to the
:09:33. > :09:35.grid. Those households are probably not the lowest income households in
:09:36. > :09:43.the first place, so bringing more people onto the grid is probably
:09:44. > :09:47.more important. On the flip side, could it attract more foreign direct
:09:48. > :09:52.investments in to the country? Exactly. This sort of raising prices
:09:53. > :09:54.makes financing for an adequate supply possible and keeps the
:09:55. > :10:03.country of the diesel power generation bread, and that is
:10:04. > :10:06.better. `` power grid. Making that more viable means you get more
:10:07. > :10:17.foreign investors coming in and more factories and people connected to
:10:18. > :10:26.the grid. Before we go look at Asian stock
:10:27. > :10:34.markets, currently mixed. The reserve bank will today decide on
:10:35. > :10:44.the cost of borrowing at about 1130 Singapore time. Thanks for watching.