01/04/2014 Asia Business Report


01/04/2014

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

:00:00.:00:18.

Higher sales tax, is Japan's Prime Minister on the right track and how

:00:19.:00:26.

will it impact consumers? We take a look at what impact this will have

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on businesses and residents? Great to have you with us for this

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edition of Asia business report. We will get to Japan in just a moment

:00:42.:00:47.

but first a potential reprieve for investors are the latest report from

:00:48.:00:50.

China shows the manufacturing sector is registering a mild expansion in

:00:51.:00:56.

the month of March, with the government's official PM are coming

:00:57.:01:04.

in at 50.3, with a reading above 50 indicating an expansion. Let's look

:01:05.:01:10.

at the reaction right now. So far, so good.

:01:11.:01:24.

This also adds to the positive mood, Federal reserve chair comments

:01:25.:01:32.

easing concerns of an early start to interest rate hikes. We move over to

:01:33.:01:37.

Japan where business confidence improved in the three months to

:01:38.:01:45.

March, marking five quarters or 15 months of positive sentiment among

:01:46.:01:49.

Japanese manufacturers, but according to the latest sentiment it

:01:50.:01:54.

is most likely to weaken over the next three months due to worries

:01:55.:01:59.

that the country's hike in sales tax will be heartening future growth.

:02:00.:02:04.

This was released as the country marks a brand`new financial year and

:02:05.:02:10.

effective today, the sales tax goes up to 8% from 5%. It was a campaign

:02:11.:02:16.

promise by Shinzo Abe when he was seeking the office more than one

:02:17.:02:21.

year ago. Here's hoping revenues from the sales tax will help reduce

:02:22.:02:26.

the debt load, over twice the size of the economy. They also want to

:02:27.:02:31.

use the sales tax as a means to provide for rising welfare costs.

:02:32.:02:37.

The last time the country made an adjustment to the sales tax was

:02:38.:02:41.

almost 20 years ago won a lot of people held back on spending,

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fostering a prolonged period of falling prices and the relation. I

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asked earlier whether the latest sales hike could have the same

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effect. Everybody was extremely worried about the impact in

:02:57.:02:59.

particular because of the bad impact of the last hike, almost 20 years

:03:00.:03:06.

ago, but this time it seems to be widely accepted. People have been

:03:07.:03:12.

picking up big`ticket items before and that is smart but we did not see

:03:13.:03:19.

any panic buying. That means that while demand is strong now it will

:03:20.:03:25.

not drop that much. Does hoarding raise industrial production but

:03:26.:03:33.

industrial production numbers saw a dip at the fastest pace for eight

:03:34.:03:37.

months, showing people are very nervous about the sales tax? It

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rather shows that companies as much as consumers seem to be quite a bit

:03:43.:03:46.

more relaxed about the impact and the negative impact on them of the

:03:47.:03:54.

sales tax. Countries have been preparing for the big rush but they

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did not expand production in terms of new investment, so they are just

:03:59.:04:03.

smoothing out the impact and otherwise business as usual. A lot

:04:04.:04:10.

of economists feared after the last hike that Japan lacks an engine of

:04:11.:04:13.

growth so there will be pressure to come up with additional growth

:04:14.:04:17.

policies and basically more reforms? We had a very strong year

:04:18.:04:28.

of Abenomics. The promised growth policies would be in place and they

:04:29.:04:31.

have been spending a lot and balancing. For this year, it becomes

:04:32.:04:40.

much trickier. Structural reforms are still very hard to implement so

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something has to be done when exports are slow as they already are

:04:45.:04:50.

and that is missing debt will be investments or companies are

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asking, what is there to invest in? What are the incentives? Thank you.

:04:54.:05:02.

Singapore's second`largest lender has made the formal offer to

:05:03.:05:11.

purchase Hong Kong's bank for $425 million. If they reach a deal with

:05:12.:05:20.

the biggest shareholder, the takeover, widely anticipated, will

:05:21.:05:25.

give OCBC a gateway to doing business in China.

:05:26.:05:37.

Chinese Rongshong heavy industries may be too big to fail. They

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received financing after reporting a loss for last year. `` Rongsheng.

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Rongsheng are leveraging loans that have not been paid worse in total 20

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million US dollars. Manufacturing activity is slowing in

:05:58.:06:01.

Australia with the latest survey for the private sector revealing the

:06:02.:06:07.

manufacturing index slipped to 47.9, well below the 50 level that marks

:06:08.:06:11.

the distinction between a contraction and an expansion.

:06:12.:06:16.

The survey of around 200 companies should businesses are complaining

:06:17.:06:20.

about the rising currency intensifying competition for

:06:21.:06:23.

exports. The Australian dollar hit a four

:06:24.:06:27.

month high against the US dollar last week.

:06:28.:06:31.

Electricity bills are set to go up for households and businesses in my

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own mark with the effect set to kick in today. `` Myanmar. Electricity

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bills could rise by as much as 50% which some feel will raise the price

:06:45.:06:51.

of goods and services. Only a quarter of the population has access

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to electricity aren't they are frequent power shortages. I asked

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earlier whether these power price rate hikes are indeed necessary?

:07:02.:07:08.

Deeply unpopular but very necessary and prices will rise 25 to 50%. This

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will affect heavy residential users on some businesses but the

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government also claims 55% of all households and businesses will not

:07:19.:07:23.

be affected, so they will continue to pay subsidised rates. Power

:07:24.:07:29.

demand is rising by 15% a year in a Myanmar. This is necessary to bring

:07:30.:07:36.

an adequate investment. In the medium term, could this stifle

:07:37.:07:41.

fledgling growth? It does not look as if it well because as I mentioned

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55% will not be affected than consumers will not be affected. You

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mentioned only a quarter of households are connected to the

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grid. Those households are probably not the lowest income households in

:07:55.:07:58.

the first place, so bringing more people onto the grid is probably

:07:59.:08:04.

more important. On the flip side, attract more foreign direct

:08:05.:08:06.

investments in to the country? Exactly. This sort of raising prices

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makes financing for an adequate supply possible and keeps the

:08:16.:08:19.

country of the diesel power generation bread, and that is

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better. Making that more viable means you get more foreign investors

:08:27.:08:32.

coming in and more factories and people connected to the grid.

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Next time you stream a movie or book a plane ticket you may well have our

:08:36.:08:42.

next guest to thank. He is the co`founder of possibly the biggest

:08:43.:08:45.

Internet company you have never heard of, and they delivered up to

:08:46.:08:49.

30% of global web traffic and keep it secure it. He told us how that

:08:50.:08:58.

works. We place our computer servers in thousands of locations around the

:08:59.:09:01.

world with the goal of being near every consumer. When they go to get

:09:02.:09:09.

the content, the browser is connecting to one of our servers and

:09:10.:09:14.

that makes it happened very fast. Proximity means fast but also means

:09:15.:09:18.

you are spreading content around some 150,000 servers. How do you

:09:19.:09:26.

keep that safe? That is a big challenge today so in addition to

:09:27.:09:29.

distributing it and making it very fast, they arouse all sorts of

:09:30.:09:35.

security layered on top so we want to intercept any bad or malicious

:09:36.:09:40.

traffic right where the bad guy is. How do you do that and stay one step

:09:41.:09:46.

ahead of the attackers, those who are becoming increasingly

:09:47.:09:52.

sophisticated? It involves a lot of research and innovation and security

:09:53.:09:55.

expertise to try to figure out what vulnerabilities might be exploited,

:09:56.:10:01.

and also keeping track of who the bad actors are watching what they

:10:02.:10:08.

are doing. Particularly in this region, legislate away, companies

:10:09.:10:14.

are not required to notify of data breach. The last thing a company

:10:15.:10:20.

wants to do is speak publicly about security effort is particularly if

:10:21.:10:24.

they have been hacked. Some countries require disclosure but

:10:25.:10:28.

generally companies do not want to talk about that sort of thing.

:10:29.:10:30.

Thanks for watching. The main news stories this hour. New

:10:31.:10:46.

details have emerged about the final message sent from the cockpit

:10:47.:10:47.

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