:00:00. > :00:00.Only quotes or gists of the content are to be disclosed. Now on BBC News
:00:00. > :00:21.all the latest business news live from Singapore. The sales tax of
:00:22. > :00:24.fact `` affect. We look at how higher prices have affected spending
:00:25. > :00:29.habits in Japan. India and the economy, how soon can the new
:00:30. > :00:33.government help shore up growth? Welcome to Asia Business Report.
:00:34. > :00:38.Thank you for joining us, I'm Rico Hizon. The figures have indeed
:00:39. > :00:41.confirmed it. Japanese consumers held off on purchases after the
:00:42. > :00:44.country raised its sales tax in April from 5% to 8%. Household
:00:45. > :00:50.spending fell by more than 4%, when compared to the same period last
:00:51. > :00:55.year. Meanwhile, inflation prices in Japan edged up one more than 3% to a
:00:56. > :00:58.23 year high. That is something the government would be pleased about.
:00:59. > :01:07.Rupert Wingfield`Hayes explains from Tokyo.
:01:08. > :01:11.Sales tax went up for the first time in 17 years, and today for the first
:01:12. > :01:21.time we get to see the result. Has inflation here in Japan gone up? The
:01:22. > :01:25.answer is an emphatic yes. In fact, it has lept to well over 3%. For the
:01:26. > :01:28.Japanese government that is good news, because it is intent on ending
:01:29. > :01:31.20 years of falling prices and getting inflation back into the
:01:32. > :01:35.Japanese economy, and it appears to be succeeding. It also means that
:01:36. > :01:40.shops and businesses are willing for the first time in many years to put
:01:41. > :01:52.their prices up. In fact, some are doing it by quite a lot. I had my
:01:53. > :01:54.hair cut earlier this week and the price had gone up by 8%. So the
:01:55. > :01:57.Japanese government is happy, businesses are happy, but how do
:01:58. > :02:00.consumers feel? TRANSLATION: Before the tax rise I was worried, and I
:02:01. > :02:05.stocked up on lots of household stuff. But after the tax rise, I
:02:06. > :02:12.forgot pretty quickly, so now I am back to buying stuff just the same.
:02:13. > :02:18.Before the tax rise, if my family and I went out to eat sushi, it
:02:19. > :02:21.would cost about 10,000 yen. But now we end up spending a lot more, so
:02:22. > :02:28.why have decided to stop going out for sushi. How consumers here in
:02:29. > :02:34.Japan respond to these higher prices in the next few months is absolutely
:02:35. > :02:38.key. If they look at the higher prices and say, there is nothing I
:02:39. > :02:45.can do, and carry on spending, then it can create a positive cycle.
:02:46. > :02:48.Higher prices should mean higher profits, higher profits should in
:02:49. > :02:53.the end mean higher wages, and so it goes. But if on the other hand
:02:54. > :02:56.Japanese consumers look at these higher prices and say, hey, these
:02:57. > :02:59.prices are going up at my salary hasn't, I have to stop spending,
:03:00. > :03:02.then it could have the opposite effect, and could push Japan back
:03:03. > :03:12.into deflation. It is a high`risk plan. We spoke to Ed Rodgers in
:03:13. > :03:15.Tokyo, who offered his analysis. You have to consider that April numbers
:03:16. > :03:18.will be an aberration because of the effect of the buying before the
:03:19. > :03:28.implementation of the sales tax increase. If we have numbers of
:03:29. > :03:31.`4.4% going forward over the next couple of quarters, that would be
:03:32. > :03:39.cause for concern, but we don't think that will happen. Of course
:03:40. > :03:44.everyone right now is pinning their hopes on Shinzo Abe's next move, in
:03:45. > :03:49.terms of restructuring the economy. The so called third arrow? Right,
:03:50. > :03:57.the so`called third arrow that we have been calling a thousand darts
:03:58. > :04:00.for over a year now. We think there will be a number of positive data
:04:01. > :04:05.point for investors to look at, and say yes, change has come to Japan.
:04:06. > :04:13.We don't know exactly which of these reforms will be enacted, many or all
:04:14. > :04:16.of them. But between TPP, the labour reform, immigration reform, change
:04:17. > :04:19.of corporate taxes, there will be multiple positive outcomes we
:04:20. > :04:22.believe that the plans that will be put forward publicly, literally
:04:23. > :04:41.within a matter of weeks by the TPP and by the government for structural
:04:42. > :04:44.change. India's latest growth figures will be announced today.
:04:45. > :04:48.Growth has been below 5% for the past 12 months, which is slower than
:04:49. > :04:51.in previous years. But with the new government in power, could India's
:04:52. > :04:54.economy soon turn a corner? We have more from Calcutta.
:04:55. > :05:03.He is working on the only order that they have here at the moment. This
:05:04. > :05:06.factory makes ovens and mixers used to produce biscuits. There is not
:05:07. > :05:09.much bright news. With no demand from inside India, they are just
:05:10. > :05:16.about getting by on some small orders from abroad. With 10% profit,
:05:17. > :05:26.it is difficult to earn, because prices have increased, my costs have
:05:27. > :05:35.doubled. The salary of my people that I was giving, it has doubled.
:05:36. > :05:42.In that case, the cost also increased, power has increased.
:05:43. > :05:54.Transport has increased. But if we raise the prices we will not get the
:05:55. > :05:57.job. It has been the same story for many, big or small, they are all
:05:58. > :06:01.going through a slump that has been particularly bad over the past year.
:06:02. > :06:04.In the months running up to the election here, things have virtually
:06:05. > :06:14.come to a standstill around the country. Businesses had stopped
:06:15. > :06:17.expanding, everyone was waiting and watching to see what the results
:06:18. > :06:24.would be. Now, India has a new government. Led by Narendra Modi,
:06:25. > :06:31.whose party swept elections with a strong majority. Their promise of
:06:32. > :06:44.speeding up growth makes many hopeful that things will be better.
:06:45. > :06:47.Things are positive on the sentiment side, but the real challenge starts
:06:48. > :06:50.now. The first priority from the government and the expectation is
:06:51. > :06:54.that the growth side starts to see some revival. The investment
:06:55. > :06:57.products which are being stopped because of lack of clearance will
:06:58. > :07:05.start to see a revival, so essentially the ease of doing
:07:06. > :07:07.business will start to pick up. But they can't afford to neglect
:07:08. > :07:12.inflation either. Especially over food prices. One of the main reasons
:07:13. > :07:16.the last government was voted out. Rains this year are expected to be
:07:17. > :07:19.below normal, so the new government will need to strike the right
:07:20. > :07:29.balance between keeping the cost of living down and getting growth to
:07:30. > :07:32.pick up. Staying with India, the country's
:07:33. > :07:36.largest car maker is hopeful the new government will help put economic
:07:37. > :07:47.reforms on track to boost growth. That may then translate into higher
:07:48. > :07:50.sales in vehicles at home. Tata earned close to what they earned in
:07:51. > :07:55.the previous quarter in the last month. They say flat performances
:07:56. > :07:59.are due to a big drop in sales in the home market.
:08:00. > :08:01.US car manufacturer, Ford, has recalled 1.4 million cars in North
:08:02. > :08:11.America due to potential power steering problems. The recall is for
:08:12. > :08:15.sedans and sport utility vehicles many manufactured between 2008 and
:08:16. > :08:18.2013. They will be recalling a number of sedans with floor mats
:08:19. > :08:20.that could interfere with accelerator pedals. There have been
:08:21. > :08:30.crashes related to this format malfunction.
:08:31. > :08:35.Outside Sweden, Saab is a brand that is perhaps best known for cars, but
:08:36. > :08:41.there is one part of Saab. It also builds fighter jets and weapon
:08:42. > :08:48.systems. It is now looking towards Asia. Earlier, I spoke to the head
:08:49. > :08:52.of Saab in Singapore, asking if tensions in the region have lead to
:08:53. > :09:02.higher defence spending. Globally it has been decreasing. In this part of
:09:03. > :09:12.the world it has increased to 3.6%. We think that we will see a slight
:09:13. > :09:22.increase globally. Where do you see the spending taking place here in
:09:23. > :09:25.Asia? Which countries? Countries buying more civil defence products,
:09:26. > :09:28.weapon systems or fighter jets? The spending depends on what country you
:09:29. > :09:31.look at. Large programmes like fighter jet programmes and big naval
:09:32. > :09:35.programmes are expanding, and that is why it is important for us in the
:09:36. > :09:44.industry to come up with more cost efficient solutions. Sport Today is
:09:45. > :09:48.coming up next on BBC World News, tune in for the latest on the fate
:09:49. > :09:51.of the NBA basketball team, the Los Angeles Clippers. According to the
:09:52. > :10:03.LA Times, Steve Ballmer has emerged as the highest ever for the
:10:04. > :10:06.Clippers. ``highest bidder. He apparently beat two other groups,
:10:07. > :10:10.including one led by David Geffen, the media mogul, who made an offer
:10:11. > :10:15.of $1.6 billion. Here is a quick look at the markets. Shares are
:10:16. > :10:22.currently mixed in midmorning trade. Earlier they were in positive
:10:23. > :10:30.territory inspired by a record close on Wall Street. Thank you for
:10:31. > :10:45.investing your time with us. Have a great weekend everyone. The main
:10:46. > :10:47.news stories. The African Union has begun a major
:10:48. > :10:52.campaign to eradicate child marriage. It cuts the childhoods of