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backlog. He blamed it on a surge in applications earlier this year. Time | :00:00. | :00:00. | |
for the latest is best used live from Singapore `` latest business | :00:00. | :00:14. | |
news live from Singapore. Indonesia's Central Bank meets for | :00:15. | :00:17. | |
the first time since campaigning began in the presidential elections. | :00:18. | :00:22. | |
And fierce competition. Our Asia India is taking off on its maiden | :00:23. | :00:27. | |
flight. What does this mean for other rivals? Thank you for joining | :00:28. | :00:35. | |
us on Asia Business Report on BBC World News. Indonesia's central | :00:36. | :00:41. | |
banks to make bank meets today `` Central Bank meets today. An | :00:42. | :00:46. | |
interest rate move is not expected. The spotlight is on the outlook for | :00:47. | :00:51. | |
Southeast Asia's a guest economy. This is the key to the government's | :00:52. | :00:55. | |
political fortunes. `` South East Asia's biggest economy. I spoke to | :00:56. | :01:01. | |
an investment officer. He explains why it is unlikely that the bank of | :01:02. | :01:04. | |
Indonesia will change its markets policy. US long`term interest rates | :01:05. | :01:10. | |
have been coming down in recent months. So there is really no | :01:11. | :01:13. | |
pressure for Indonesia to raise rates. Inflation ran at 7.3% in the | :01:14. | :01:18. | |
month of May. So there is really no pressure for the central bank to | :01:19. | :01:22. | |
raise rates. Having said that, a longer term issue is for Indonesia | :01:23. | :01:26. | |
to keep attracting capital. To fund investment and to fund the growth of | :01:27. | :01:31. | |
the economy. Why not cut rates now? We saw a slowdown in the Indonesian | :01:32. | :01:37. | |
economy in 2013. Yet again in the first quarter of 2014 it stands at | :01:38. | :01:42. | |
5.2%. Isn't there a case for them to reduce the cost of borrowing now | :01:43. | :01:46. | |
rather than later? Indonesia's economy is held down by subsidies. | :01:47. | :01:52. | |
Basically electricity and energy prices are subsidised by 2.5% of | :01:53. | :01:57. | |
GDP. As a consequence, the government has to reduce those | :01:58. | :02:00. | |
subsidies to spend that money on infrastructure and other more | :02:01. | :02:03. | |
important things. How can they attract foreign investment when they | :02:04. | :02:07. | |
have that minimum export and looser Labour laws? There is a shift in | :02:08. | :02:14. | |
terms of investment focus. Away from resource`based investments. Mining, | :02:15. | :02:17. | |
towards manufacturing. So you see big Japanese automakers, tyre | :02:18. | :02:23. | |
makers, cars Tomic setting up big plants in Indonesia in recent | :02:24. | :02:26. | |
months. They may have problems in terms of it attracting foreign | :02:27. | :02:29. | |
investment, but the biggest asset right now is the large population of | :02:30. | :02:34. | |
240 million people. They support the domestic economy. Indonesia last | :02:35. | :02:38. | |
year got $22 billion of investment. That's not too bad. When you | :02:39. | :02:42. | |
consider that China got about 115 billion. So Indonesia does get a | :02:43. | :02:47. | |
fairly large foreign investment. The issue is to change the quality, the | :02:48. | :02:50. | |
nature of that investment away from mining to as manufacturing. China is | :02:51. | :02:57. | |
investing to build railways on the roads, airports along the Yangtze | :02:58. | :03:03. | |
River. To help promote business along its waterways. It is the | :03:04. | :03:06. | |
government's latest attempt to sustain high growth rates. It is | :03:07. | :03:11. | |
that nation's third largest and joins the inland provinces to | :03:12. | :03:16. | |
Shanghai. Japanese engineering giant Mitsubishi has joined forces with | :03:17. | :03:22. | |
German firm Siemanns to come up with a French offer to rival that of | :03:23. | :03:26. | |
General Electric. They are due to put up a proposal to the board next | :03:27. | :03:34. | |
week. Toyota has decided and added 650,000 cars all in Japan to the | :03:35. | :03:41. | |
recall list. It issued the list last year over a defect in passenger | :03:42. | :03:45. | |
airbags. That takes the number of cars recalled over the issue to 2.8 | :03:46. | :03:50. | |
million. Shares in a have plummeted after the airline cancelled an order | :03:51. | :03:58. | |
for 70 aircraft. It says it is, confident that new orders in the | :03:59. | :04:01. | |
coming months will compensate for the cancellation. Malaysia's airline | :04:02. | :04:11. | |
is said to be the first airline to fly in these skies. Air Asia India | :04:12. | :04:16. | |
is becoming the fourth Budget carrier after space jet. Our | :04:17. | :04:22. | |
correspondent reports. I am here at the Bangalore airport, one of the | :04:23. | :04:25. | |
largest in the country. It is from here that Air Asia India's landmark | :04:26. | :04:33. | |
flight will take off to Goa with 180 passengers. For its maiden flight | :04:34. | :04:37. | |
the airline was selling tickets at $17. That is cheaper than a second | :04:38. | :04:45. | |
class train ticket. That has triggered an airfare war with other | :04:46. | :04:48. | |
domestic carrier slashing fares and offering heavy discounts. All this | :04:49. | :04:53. | |
means great news for travellers, but that may not be the case for Indian | :04:54. | :04:58. | |
airlines. Because financially, most of them are struggling. The combined | :04:59. | :05:02. | |
losses of Indian airlines have been running into billions of dollars. | :05:03. | :05:07. | |
Due to high taxes on fuel and steep airport charges, which have pushed | :05:08. | :05:12. | |
up costs. A couple of airlines, including Kingfisher, had to shut. | :05:13. | :05:19. | |
Durie to the same reasons. So how is Air Asia India planning to make | :05:20. | :05:23. | |
money? If you look at demand and supply, there is a lot more capacity | :05:24. | :05:27. | |
that the Indian market can take on in terms of air traffic. With that | :05:28. | :05:31. | |
being said, our model has always been about low fares, keeping the | :05:32. | :05:36. | |
fares low, make sure that we make it affordable enough that people can | :05:37. | :05:41. | |
fly. Bringing that model into India, keeping our costs razor thin. The | :05:42. | :05:46. | |
new airline's main partner is a group which is joining hands with | :05:47. | :05:48. | |
Singapore airlines to start another domestic carrier later this year. | :05:49. | :05:54. | |
Last year, Abu Dhabi `based Etihad invested in jet Airways. This means | :05:55. | :05:59. | |
more flight options for passengers. And also renewed interest in Indian | :06:00. | :06:05. | |
aviation. But financially for the new entrant, it will not be a smooth | :06:06. | :06:11. | |
ride. In Asia's third largest economy. China's e`commerce giant | :06:12. | :06:22. | |
Aibaba is taking on American players like Amazon and eBay. `` Alibaba. | :06:23. | :06:26. | |
This comes ahead of their share sale in the US. I spoke to the | :06:27. | :06:33. | |
Asia`Pacific chief executive who explained why Alibaba is likely to | :06:34. | :06:37. | |
succeed. I think they will apply the same principles that they have. I | :06:38. | :06:40. | |
think we should not forget that in 2006, eBay had 80% market share of | :06:41. | :06:51. | |
the e`commerce in China. And Alibaba was a late starter. It wiped out | :06:52. | :06:54. | |
eBay very quickly on two principles. One was putting in touch sellers and | :06:55. | :07:01. | |
buyers, the second was not taking a cut on the transaction, but making | :07:02. | :07:06. | |
money out of marketing tools in an ecosystem they created. And I | :07:07. | :07:08. | |
believe they will do exactly the same thing in the, maybe not to the | :07:09. | :07:13. | |
same extent, but the principal will remain the same. So should Amazon | :07:14. | :07:18. | |
and eBay be worried with the entry of Alibaba? They should, but they | :07:19. | :07:24. | |
should be worried for the growth of Aly Alibaba for quite awhile now. | :07:25. | :07:32. | |
This is only the beginning. The 11 main platform of Alibaba will be | :07:33. | :07:39. | |
without ads. What kind of business model that they have you? How will | :07:40. | :07:43. | |
they be making money? The fact that they will be out of advertising, is | :07:44. | :07:48. | |
not dissimilar to what they do in China. I think they will make money | :07:49. | :07:52. | |
by monetising marketing tools and services to the stores is as opposed | :07:53. | :08:04. | |
paid advertising. Electronic cigarettes. Details have not been | :08:05. | :08:07. | |
exposed, but the firm expects to wrap up acquisition in the second | :08:08. | :08:12. | |
quarter of the 2014 fiscal year. Analysts believe that the cigarettes | :08:13. | :08:15. | |
will eventually outsell traditional cigarettes in some markets. The | :08:16. | :08:22. | |
Spanish owner of the fashion retailer Zara has reported its | :08:23. | :08:24. | |
biggest drop in profits in five years. Net profits fell in the three | :08:25. | :08:28. | |
months to April. More than one third of its sales come from a late | :08:29. | :08:32. | |
Europe, but the sharp rise in the euro against currencies like the | :08:33. | :08:35. | |
Japanese yen have reduced the level of profit that are patria did. | :08:36. | :08:44. | |
Moving back now `` repatriated. In Indonesia, the country's big | :08:45. | :08:50. | |
commercial banks are testing out a scheme called Rustlers banking. As a | :08:51. | :09:00. | |
way of `` branchless ranking. Life in this village has been like this | :09:01. | :09:04. | |
for a generation. But change is on its way here. For decades, farmers | :09:05. | :09:10. | |
like this man have struggled to access ASIC financial services. The | :09:11. | :09:16. | |
nearest bank is 16 kilometres away. `` ASIC financial services. But a | :09:17. | :09:24. | |
new scheme means he can transfer money and save right here in a small | :09:25. | :09:30. | |
shop in his village. `` basic. If I put my money in this branch, I have | :09:31. | :09:35. | |
to wait for a minibus to take me. Here I can withdraw my money faster | :09:36. | :09:39. | |
and get to the rice field earlier. Shopkeepers here were dumb at work | :09:40. | :09:46. | |
as agents for the bank, carrying out simple transactions. `` shopkeepers | :09:47. | :09:51. | |
here work as agents for the bank. This is crucial if Indonesia is to | :09:52. | :09:53. | |
boost economic growth in rural like this were living below the | :09:54. | :10:01. | |
poverty line last year. Critics say that Indonesian farmers need access | :10:02. | :10:05. | |
to credit. This scheme does not for this scheme to work, banks need | :10:06. | :10:15. | |
to provide borrowing services in rural areas. If it is simple | :10:16. | :10:22. | |
transactions, like saving money and withdrawing funds, it is going to | :10:23. | :10:26. | |
have limited success. But while this initiative may be a step in the | :10:27. | :10:31. | |
right direction, some observers say it doesn't go far enough. And before | :10:32. | :10:40. | |
we go, here is a quick look at the markets. Asian stocks are in | :10:41. | :10:43. | |
negative territory in early Thursday trading. US equities fell overnight | :10:44. | :10:47. | |
following the World Bank's production of its global growth | :10:48. | :10:51. | |
forecast. Thank you for investing your time in | :10:52. | :10:58. | |
The main news stories this our: after seizing two cities in two | :10:59. | :11:08. | |
days, the advance of the Islamist militants in Iraq appears to have | :11:09. | :11:12. | |
been halted north of Baghdad. Sepp Blatter has confirmed he wants to | :11:13. | :11:14. | |
stand as another | :11:15. | :11:15. |