30/05/2014 Asia Business Report

not be made public. A long`awaited Chilcot Inquiry released only what

has been described as quotes and gists.

We look at how higher prices have affected spending habits in Japan.

India and the economy, how soon can the new government help shore up

growth? Thank you for joining us, I Rico Hizon. The figures have indeed

confirmed it. Japanese consumers held off on purchases after the

country raised its sales tax in April from five to 8%. Household

spending fell by more than 4%, when compared to the same period last

year. Meanwhile, inflation or prices in Japan edged up one more than 3%

to a 23 year high. That is something the government would be pleased

about. Rupert Wingfield`Hayes ex`players from Tokyo.

Sales tax went up for the first time in 17 years, and today for the first

time we get to see the result. Has inflation here in Japan gone up? The

answer is an emphatic yes. In fact, it has left to well over 3%. For the

Japanese government that is good news, because it is intent on ending

20 years of falling prices and getting inflation back into the

Japanese economy, and it appears to be succeeding. It also means that

shops and businesses are willing for the first time in many years to put

their prices up. In fact, some are doing it by quite a lot. I had my

hair cut earlier this week on the price had gone up by 8%. So the

Japanese government is happy, businesses are happy, but how do

consumers feel? TRANSLATION: Before the tax rise I was worried, and I

stocked up on lots of household stuff. But after the tax rise, I

forgot pretty quickly, so now I am back to buying stuff just the same.

Before the tax rise, if my family and I went out to eat sushi, it

would cost about 10,000 yen. But now we end up spending a lot more, so

why have decided to stop going out for sushi. How consumers here in

Japan respond to these higher prices in the next few months is absolutely

key. If they look at the higher prices and say, there is nothing I

can do, and carry on spending, then it can create a positive cycle.

Higher prices should mean higher profits, higher profits should in

the end mean higher wages, and so want it goes. But if on the other

hand Japanese consumers look at these higher prices and say, hey,

these prices are going up at my salary hasn't, I have to stop

spending, then it could have the opposite effect, and could push

Japan back into deflation. It is a high`risk plan. We spoke to their

drudges in Tokyo, who offered his analysis. `` Ed Rogers. You have to

consider that April numbers will be an aberration because of the effect

of the buying before the implementation of the sales tax

increase. If we have numbers of `4.4% going forward over the next

couple of quarters, that would be cause for concern, but we don't

think that will happen. Of course anyone right now is pinning their

hopes on Shinzo Abe's next move, in terms of restructuring the economy.

The so called third arrow? Right, the so`called third arrow that we

have been calling a thousand darts for over a year now. We think there

will be a number of positive data point for investors to look at, and

say yes, change has come to Japan. We don't know exactly which of these

reforms will be enacted, many or all of them. But between PPP, the labour

reform, immigration reform, change of corporate taxes, there will be

multiple positive outcomes we believe that the plans that will be

put forward publicly, literally within a matter of weeks by the LDP

and by the government for structural change `` TPP. Growth has been below

5% for the past 12 months, which is slower than in previous years. But

with the new government in power, could India's economy soon turn a

corner? We have more from Calcutta. He is working on the only order that

they have here at the moment. This factory makes ovens and mixes used

to produce biscuits. There is not much bright news. With no demand

from inside India, they are just about getting by on some small

orders from abroad. With 10% profit it is difficult to earn, because

prices have increased, my costs have doubled. The salary of my people

that I was giving, it has doubled. In that case, the cost also

increased power, has increased. Transport has increased. But if we

raise the prices we will not get the job. It has been the same story for

many big or small, they are all going through a slump that has been

particularly bad over the past year. In the months running up to the

election here, things have virtually come to a standstill around the

country. Businesses have stopped expanding, everyone was waiting and

watching to see what the results would be. Now, India has a new

government. Led by Narendra Modi, whose party swept elections with a

strong majority. Their promise of speeding up growth makes many

hopeful that things will be better. Things are positive on the sentiment

site, but the real challenge starts now. The first priority from the

government and the expectation is that the growth side starts to see

some revival. The investment products which are being stopped

because of lack of clearance will start to see a revival, so

essentially the ease of doing business will start to pick up. But

they can't afford to neglect inflation either. Especially over

food prices. One of the main reasons the last government was voted out.

Rains this year are expected to be below normal, said the new

government will need to strike the right balance between keeping the

cost of living down and getting growth to pick up.

Staying with India, the country's largest car maker is hopeful the new

government will help put economic reforms on track to boost growth.

That may then translate into higher sales in vehicles at home. They

earned close to what they earned in the previous quarter in the last

month. They say flat performances are due to a big drop in sales in

the home market. US car manufacturer, Ford, is recorded 1.4

million cars in North America due to potential power steering problems.

Manufacturing between 2008 and 2013... They will be recalling a

number of sedans with floor mats number of sedans with floor mats

that could interfere with accelerator pedals. There have been

crashes related to this format malfunction. Other business news

headlines from around the world. Please visit our website.

Outside Sweden, Saab is a brand that is perhaps best known for cars, but

there is one part of Saab. It also builds fighter jets and weapon

systems. It is now looking towards Asia. Earlier, I spoke to the head

of Saab in Singapore, asking if tensions in the region have lead to

higher defence spending. Globally it has been decreasing. In this part of

the world it has increased to 3.6%. We think that we will see a slight

increase globally. We will you see the spending taking place? Countries

buying more civil defence products, weapon systems or fighter jets? The

spending depends on what country you look at. Large programmes like

fighter jet programmes and big naval programmes are expanding, and that

is why it is important for us in the industry to come up with more cost

efficient solutions. Sport Today is coming up next on BBC World News,

tune in for the latest on the fate of the NBA basketball team, the Los

Angeles Clippers. According to the LA Times, Steve Ballmer has emerged

as the highest ever for the Clippers. He apparently beat two

other groups, including one led by David Geffen, the media mogul, who

made an offer of $1.6 billion. Details of the deal are yet to

materialise. Thank you for investing your time

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