30/06/2014 Asia Business Report


30/06/2014

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Britain". Now on BBC News, all the latest

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business news live from Singapore. Euphoric financial markets are out

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of step with economic reality, a major report warns. And, it should

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be a time of fasting, but food prices in Indonesia are expected to

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rise during the Muslim holy month of Ramadan.

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Welcome to Asia Business Report. A major rally in global financial

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markets are out of sync with a shaky economic outlook, that is the view

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of the bank of International settlements, that is regarded as the

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central bank of central banks, and focuses on regulation. In its annual

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report, it warned emerging markets are at risk of a runner`up in stock

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and property prices. `` a runner`up. I asked Michael McCarthy

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in Sydney why that was the case. The current concerns are that they will

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withdraw the stimulus to abruptly, that will knock risk assets around,

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and bring share markets crashing down. The BIS is pointing out that

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the deflation concerned markets are not as large as some would expect,

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and there is a great risk in keeping rates too low for too long, and

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borrowing goes up, and then when the rates go up, we will have an asset

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price crash. We have heard this before, we heard it during the

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financial crisis, the World Bank and others warned that low interest

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rates in the West were sparking inflows that were unsustainable into

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the emerging markets in Asia. It is not new, why aren't there more

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prepared for it? It is not new, you're correct, it is a long way in

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global markets that could break at any time. They are trained to

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balance it, and keeping in mind that systemic risks to banks are a key

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aspect of their function. China was highlighted in the report, is facing

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a possible banking crisis, what is that you too? Is that also due to

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the easing of monetary policy as well? China's economy is common to a

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large extent, isolated from international investment, with

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currency controls and inflow controls that authorities keep

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there, but a buoyant trade feeds into the economy in China. Any

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stomping on the brakes could have an impact. There is concern at BIS that

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the Chinese banking system is opaque, they are concerned about

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shadow banking taxes, and there are concerns that there will be a flow

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on effect through the Chinese economy. In other business news, BNP

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Paribas are expected to plead guilty to criminal charges of violating

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American sanctions with rogue nations. They are alleged to have

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hit $30 billion of transactions involving blacklisted countries

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including Iran, Sudan and Cuba. According to reports, BNP Paribas

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could pay a record $9 billion penalty. France plans to set up a

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Paris`based pay system that will use their system, it signed on Sunday

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with their counterpart, along to participate in the trade. Major

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European financial centres like London and Luxembourg have competed

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to trade using China's currency, which is gaining international use.

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The World Bank has been making loans to poor countries since it was

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founded in 1945, but the world 's most famous lender is now undergoing

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its first restructuring in nearly two decades. Starting this week, it

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will provide itself between 14 global practices that focus on areas

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like energy and agriculture. Our correspondent spoke to the cheese

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financial officer `` chief financial officer about the move. We set up

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this ambition to eradicate poverty, it is amazing. It has helped people

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on Earth since day one, we believe that, within our reach, we can

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eradicate poverty. I am happy that we can consider this objective, and

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I will be happier if we reach it. The World Bank president ends for a

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further $400 million in cost savings, where will it come from and

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bulletin tell job cuts? In the restructuring, within the

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organisation, you have to address cost issues, that is in any private

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sector organisation, true the government and true for an

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organisation like ours, we want to make the institution more efficient,

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then maybe job impacts, of course, but to minimise this, we have made

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these decisions before which have had no impact. We had to address

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these things regularly and properly, not every 20 years, a key issue is

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that we want an organisation that is, to a certain extent, a little

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bit too bureaucratic, driven by processes, and as rules `based, but

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it needs to be more productively managed. Muslims around the world

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began the holy month of fasting this weekend, in Southeast Asia, and in

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Indonesia, the world 's most populous Muslim nation, that means

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an increased demand for staple goods, fasting and feasting can

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often see prices jump dramatically in Southeast Asia 's largest

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economy. But, the price of food could be on the minds of voters this

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month. This weekend, millions of

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Indonesians began fasting, for the Muslim holy month of Ramadan. And,

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as you see pretty much every year, prices of fruits, vegetables, meats,

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they begin to rise, it is no different this time around. This

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woman has been running this stall in this market. For the last 15 years.

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She says that this time around, prices have gone up about 20%. Over

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here, you can see the major staples of the Indonesian market, soya

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beans, that can be fried or boiled, it goes in soups. Over here, these

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bright red chilies, an important part of Indonesian cuisine, but this

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year, the price rises are coming against the backdrop of a

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presidential election. Many of the street vendor is here have been

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telling me that this time around, they have not seen politicians come

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out to promise them lower prices in the way that they normally do in the

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Muslim holy month of fasting `` vendors. But what they have seen as

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party members coming out to try to get votes from their preferred

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candidates. The economy is a major issue in this election. Whoever

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becomes Indonesia 's next president will have to tackle the challenge of

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rising prices for this country. India's new government will deliver

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its first budget next month, one issue that will be under focus is

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the gap between what India sells abroad and what it buys in for its

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own needs. It imports more than it exports, which makes the economy

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vulnerable, as businesses try to find markets abroad, other

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businesses are worried. `` they are worried.

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For the past 30 years, the components made here have been sold

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around the world. Finding their way into products like microwave ovens

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and machines used in hospitals. Customers include global giants like

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Siemens and General Electric 's. Despite the use strong credentials,

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business is proving difficult. This computer charger will be exported to

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countries like Germany, Canada and France. Over the last few years, the

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cost of manufacturing these products in India is often more expensive

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compared to other Asian countries, because of that, the price tends to

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be higher. Due to these reasons, buyers in America and Europe find

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some Indian made products less attractive. The property is not

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really going down, it is time to find a customer, and because of the

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global competition, costs are reducing. The value of goods that

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they export is a sensitive topic. Every month, it imports more than it

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sells abroad. Figures change monthly, but recently, the gap has

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been about $10 million. This has been a cause for serious concern. ``

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$10 billion. To counter it, the government put curbs on imports of

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gold. The yellow metal is the second biggest item on India's import list

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after oil. It help to narrow the trade deficit. Rather than

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restricting what comes in, the new government wants to focus on

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increasing what goes out. By giving a big push to home`grown

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manufacturing. To achieve that, it is pursuing the idea of exporting

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high`value products for military and defence. Exporters are hoping that

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next month 's budget will give them some temporary reprieve, perhaps,

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with more tax rebates. But, more important, is India's new trade

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policy due later in the year. The long`term plan is what the countries

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manufacturers need to fill in the crucial trade gap.

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You can get more of our stories and updates on the website, that is it

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for this edition of Asia Business Report. We have Sport Today coming

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up next. Thank you for watching. Hello there, you are watching BBC

:10:41.:10:43.

News. I'm Adnan

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