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