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Britain". Now on BBC News, all the latest | :00:00. | :00:00. | |
business news live from Singapore. Euphoric financial markets are out | :00:00. | :00:19. | |
of step with economic reality, a major report warns. And, it should | :00:20. | :00:24. | |
be a time of fasting, but food prices in Indonesia are expected to | :00:25. | :00:27. | |
rise during the Muslim holy month of Ramadan. | :00:28. | :00:39. | |
Welcome to Asia Business Report. A major rally in global financial | :00:40. | :00:42. | |
markets are out of sync with a shaky economic outlook, that is the view | :00:43. | :00:46. | |
of the bank of International settlements, that is regarded as the | :00:47. | :00:51. | |
central bank of central banks, and focuses on regulation. In its annual | :00:52. | :00:59. | |
report, it warned emerging markets are at risk of a runner`up in stock | :01:00. | :01:06. | |
and property prices. `` a runner`up. I asked Michael McCarthy | :01:07. | :01:12. | |
in Sydney why that was the case. The current concerns are that they will | :01:13. | :01:16. | |
withdraw the stimulus to abruptly, that will knock risk assets around, | :01:17. | :01:20. | |
and bring share markets crashing down. The BIS is pointing out that | :01:21. | :01:24. | |
the deflation concerned markets are not as large as some would expect, | :01:25. | :01:32. | |
and there is a great risk in keeping rates too low for too long, and | :01:33. | :01:35. | |
borrowing goes up, and then when the rates go up, we will have an asset | :01:36. | :01:39. | |
price crash. We have heard this before, we heard it during the | :01:40. | :01:43. | |
financial crisis, the World Bank and others warned that low interest | :01:44. | :01:48. | |
rates in the West were sparking inflows that were unsustainable into | :01:49. | :01:57. | |
the emerging markets in Asia. It is not new, why aren't there more | :01:58. | :02:00. | |
prepared for it? It is not new, you're correct, it is a long way in | :02:01. | :02:09. | |
global markets that could break at any time. They are trained to | :02:10. | :02:16. | |
balance it, and keeping in mind that systemic risks to banks are a key | :02:17. | :02:21. | |
aspect of their function. China was highlighted in the report, is facing | :02:22. | :02:26. | |
a possible banking crisis, what is that you too? Is that also due to | :02:27. | :02:32. | |
the easing of monetary policy as well? China's economy is common to a | :02:33. | :02:36. | |
large extent, isolated from international investment, with | :02:37. | :02:39. | |
currency controls and inflow controls that authorities keep | :02:40. | :02:42. | |
there, but a buoyant trade feeds into the economy in China. Any | :02:43. | :02:48. | |
stomping on the brakes could have an impact. There is concern at BIS that | :02:49. | :02:53. | |
the Chinese banking system is opaque, they are concerned about | :02:54. | :02:58. | |
shadow banking taxes, and there are concerns that there will be a flow | :02:59. | :03:01. | |
on effect through the Chinese economy. In other business news, BNP | :03:02. | :03:08. | |
Paribas are expected to plead guilty to criminal charges of violating | :03:09. | :03:11. | |
American sanctions with rogue nations. They are alleged to have | :03:12. | :03:17. | |
hit $30 billion of transactions involving blacklisted countries | :03:18. | :03:21. | |
including Iran, Sudan and Cuba. According to reports, BNP Paribas | :03:22. | :03:25. | |
could pay a record $9 billion penalty. France plans to set up a | :03:26. | :03:29. | |
Paris`based pay system that will use their system, it signed on Sunday | :03:30. | :03:36. | |
with their counterpart, along to participate in the trade. Major | :03:37. | :03:42. | |
European financial centres like London and Luxembourg have competed | :03:43. | :03:45. | |
to trade using China's currency, which is gaining international use. | :03:46. | :03:50. | |
The World Bank has been making loans to poor countries since it was | :03:51. | :03:55. | |
founded in 1945, but the world 's most famous lender is now undergoing | :03:56. | :04:00. | |
its first restructuring in nearly two decades. Starting this week, it | :04:01. | :04:04. | |
will provide itself between 14 global practices that focus on areas | :04:05. | :04:10. | |
like energy and agriculture. Our correspondent spoke to the cheese | :04:11. | :04:16. | |
financial officer `` chief financial officer about the move. We set up | :04:17. | :04:22. | |
this ambition to eradicate poverty, it is amazing. It has helped people | :04:23. | :04:29. | |
on Earth since day one, we believe that, within our reach, we can | :04:30. | :04:35. | |
eradicate poverty. I am happy that we can consider this objective, and | :04:36. | :04:38. | |
I will be happier if we reach it. The World Bank president ends for a | :04:39. | :04:44. | |
further $400 million in cost savings, where will it come from and | :04:45. | :04:49. | |
bulletin tell job cuts? In the restructuring, within the | :04:50. | :04:52. | |
organisation, you have to address cost issues, that is in any private | :04:53. | :04:56. | |
sector organisation, true the government and true for an | :04:57. | :05:00. | |
organisation like ours, we want to make the institution more efficient, | :05:01. | :05:08. | |
then maybe job impacts, of course, but to minimise this, we have made | :05:09. | :05:13. | |
these decisions before which have had no impact. We had to address | :05:14. | :05:18. | |
these things regularly and properly, not every 20 years, a key issue is | :05:19. | :05:23. | |
that we want an organisation that is, to a certain extent, a little | :05:24. | :05:28. | |
bit too bureaucratic, driven by processes, and as rules `based, but | :05:29. | :05:32. | |
it needs to be more productively managed. Muslims around the world | :05:33. | :05:38. | |
began the holy month of fasting this weekend, in Southeast Asia, and in | :05:39. | :05:43. | |
Indonesia, the world 's most populous Muslim nation, that means | :05:44. | :05:50. | |
an increased demand for staple goods, fasting and feasting can | :05:51. | :05:54. | |
often see prices jump dramatically in Southeast Asia 's largest | :05:55. | :05:58. | |
economy. But, the price of food could be on the minds of voters this | :05:59. | :06:04. | |
month. This weekend, millions of | :06:05. | :06:07. | |
Indonesians began fasting, for the Muslim holy month of Ramadan. And, | :06:08. | :06:14. | |
as you see pretty much every year, prices of fruits, vegetables, meats, | :06:15. | :06:18. | |
they begin to rise, it is no different this time around. This | :06:19. | :06:24. | |
woman has been running this stall in this market. For the last 15 years. | :06:25. | :06:34. | |
She says that this time around, prices have gone up about 20%. Over | :06:35. | :06:41. | |
here, you can see the major staples of the Indonesian market, soya | :06:42. | :06:46. | |
beans, that can be fried or boiled, it goes in soups. Over here, these | :06:47. | :06:51. | |
bright red chilies, an important part of Indonesian cuisine, but this | :06:52. | :06:56. | |
year, the price rises are coming against the backdrop of a | :06:57. | :07:00. | |
presidential election. Many of the street vendor is here have been | :07:01. | :07:04. | |
telling me that this time around, they have not seen politicians come | :07:05. | :07:08. | |
out to promise them lower prices in the way that they normally do in the | :07:09. | :07:12. | |
Muslim holy month of fasting `` vendors. But what they have seen as | :07:13. | :07:16. | |
party members coming out to try to get votes from their preferred | :07:17. | :07:20. | |
candidates. The economy is a major issue in this election. Whoever | :07:21. | :07:24. | |
becomes Indonesia 's next president will have to tackle the challenge of | :07:25. | :07:34. | |
rising prices for this country. India's new government will deliver | :07:35. | :07:37. | |
its first budget next month, one issue that will be under focus is | :07:38. | :07:41. | |
the gap between what India sells abroad and what it buys in for its | :07:42. | :07:47. | |
own needs. It imports more than it exports, which makes the economy | :07:48. | :07:52. | |
vulnerable, as businesses try to find markets abroad, other | :07:53. | :07:58. | |
businesses are worried. `` they are worried. | :07:59. | :08:01. | |
For the past 30 years, the components made here have been sold | :08:02. | :08:04. | |
around the world. Finding their way into products like microwave ovens | :08:05. | :08:12. | |
and machines used in hospitals. Customers include global giants like | :08:13. | :08:16. | |
Siemens and General Electric 's. Despite the use strong credentials, | :08:17. | :08:25. | |
business is proving difficult. This computer charger will be exported to | :08:26. | :08:28. | |
countries like Germany, Canada and France. Over the last few years, the | :08:29. | :08:33. | |
cost of manufacturing these products in India is often more expensive | :08:34. | :08:37. | |
compared to other Asian countries, because of that, the price tends to | :08:38. | :08:44. | |
be higher. Due to these reasons, buyers in America and Europe find | :08:45. | :08:47. | |
some Indian made products less attractive. The property is not | :08:48. | :08:54. | |
really going down, it is time to find a customer, and because of the | :08:55. | :09:06. | |
global competition, costs are reducing. The value of goods that | :09:07. | :09:11. | |
they export is a sensitive topic. Every month, it imports more than it | :09:12. | :09:15. | |
sells abroad. Figures change monthly, but recently, the gap has | :09:16. | :09:20. | |
been about $10 million. This has been a cause for serious concern. `` | :09:21. | :09:26. | |
$10 billion. To counter it, the government put curbs on imports of | :09:27. | :09:31. | |
gold. The yellow metal is the second biggest item on India's import list | :09:32. | :09:35. | |
after oil. It help to narrow the trade deficit. Rather than | :09:36. | :09:40. | |
restricting what comes in, the new government wants to focus on | :09:41. | :09:44. | |
increasing what goes out. By giving a big push to home`grown | :09:45. | :09:50. | |
manufacturing. To achieve that, it is pursuing the idea of exporting | :09:51. | :09:53. | |
high`value products for military and defence. Exporters are hoping that | :09:54. | :10:00. | |
next month 's budget will give them some temporary reprieve, perhaps, | :10:01. | :10:03. | |
with more tax rebates. But, more important, is India's new trade | :10:04. | :10:09. | |
policy due later in the year. The long`term plan is what the countries | :10:10. | :10:14. | |
manufacturers need to fill in the crucial trade gap. | :10:15. | :10:21. | |
You can get more of our stories and updates on the website, that is it | :10:22. | :10:27. | |
for this edition of Asia Business Report. We have Sport Today coming | :10:28. | :10:40. | |
up next. Thank you for watching. Hello there, you are watching BBC | :10:41. | :10:43. | |
News. I'm Adnan | :10:44. | :10:44. |