09/07/2014 Asia Business Report


09/07/2014

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return to Britain. Now it is time for all the latest

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business news, live from Singapore. ?1 billion, Britain's Finance

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Minister sets up a credit line to invest in India's infrastructure

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sector. Investing for the long`term.

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Singapore's sovereign wealth fund explains its strategy.

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Great to have you with us for this edition of Asia Business Report.

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India's new Prime Minister has two of the UK's most senior officials in

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Delhi. The Chancellor of the Exchequer, George Osborne, and

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William Hague, the Foreign Secretary. They will be discussing

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how British companies might benefit from plants to stimulator the Indian

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economy. Everyone rides on the Delhi

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Underground, including the Chancellor of the Exchequer ` in

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India, doing business with the new government here. And at the other

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end of the line, here is George Osborne again for talks with

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Narendra Modi, India's Prime Minister, whose BJP party won a

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landslide victory in May's general election. But the British government

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and Narendra Modi have not always been the best of friends, because of

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the Gujarat riots 12 years ago, when he was accused of not doing enough

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to prevent the brutal massacre of Muslims, and Britain boycotted him.

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Do you think that Narendra Modi harbours any kind of a grudge

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against the British? Back in 2002, there were concerns about what would

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happen, but they were extensively investigated. And this government,

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this British government, took a decision in 2012, actually ahead of

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other western nations, to re`establish contact with Narendra

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Modi, to begin a dialogue. A British company has played an important part

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developing Delhi's new air traffic control tower and airport, and

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winning other valuable contracts for Britain to help modernise India is

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what Mr Osborne and the Foreign Secretary dearly want. But it is not

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easy. As somebody who has worked here for a long time, what are the

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pitfalls you have to look out for? I think the pitfalls are dealing with

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the bureaucracy, and the administrative system that is there.

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Hopefully they are making the right moves to cut through. To grease the

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wheels of British businesses improving India's infrastructure, Mr

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Osborne is providing ?1 billion of credit. Have you ever done anything

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on this scale with any other country? This is the first time we

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have ever done anything on this scale. This is all about fixing what

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is not working, as well some other parts of the British economy, which

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is our exports. And I think as a country we depended too much on

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exports to the continent of Europe or to North America, you look at a

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country like India and you see Britain has to be more part of this.

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It is not all sunshine ` previous Indian governments have promised to

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modernise India, and have been defeated by the elements. A typical

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Mumbai monsoon, washing everything clean and new. It is what the Indian

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people I have spoken to expect of Mr Modi's government, and what he has

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promised. The world's second most populous country, determined to

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become richer, maybe with the help and to the benefit of Britain.

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In other business news making headlines, China's oil prices have

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increased compared to European levels. That is a slowdown last

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month. `` China's prices. They have been trying to increase domestic

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consumption. The US delegation includes Secretary

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of State John Kerry. The high`level meeting will focus on areas of

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cooperation ranging from security to energy to agriculture.

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Indonesians are at the polls today to elect a new president. It is down

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to a tight race between two candidates. The Jakarta government,

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who has a small lead over a former general in surveys. In the region,

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they have 119 million eligible voters. The counting will start

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after polls closed, which works out to noon local time.

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Public sector workers increase have begun a 24`hour strike to protest

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continuing cuts in government spending. Hospitals, tax offices and

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archaeological sites are expected to be disrupted by this disruption. The

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workers are protesting against austerity initiatives, including a

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40% deduction to the salaries and pensions. The European commission,

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the International Monetary Fund, the European Central bank, are

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monitoring austerity measures that were conditions for a bailout worth

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over 300 billion dollars. A new canal that would link the

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Atlantic and Pacific is one step closer to becoming a reality. A

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group in Nicaragua approved the waterways rich. The project aims to

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challenge the Panama Canal. The alternative route will pass through

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Lake Nicaragua from the Pacific to the Caribbean. The company has been

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granted a concession to build the channel. I'd asked someone from

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shipping Australia as to what the writ would mean the global trade.

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Shipping is a very competitive industry. The margins are very slim.

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An extra canal would certainly put pressure on prices and make some

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savings. How much for economical will this be? That is hard to say at

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this stage. When you hear of a $45 million investment and you know that

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they will want a return, I imagine they will not be cutting too close

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to the bone. The additional channel will provide an alternative to

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shipping companies, gives them more flexibility in their booking times

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and would be welcome. The Panama Canal currently has a lot of

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bottlenecks and delays ships by 20`30 hours. This new channel will

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make operations more efficient. The timing is probably not the best for

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the Nicaragua Canal. The Panama Canal is being broadened and an

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extra channel included. This will mean they should remove the

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bottlenecks when the new expansion is completed in around 2016. But the

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Nicaragua Canal has some real benefits. It is 500 or so miles less

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of steaming to go to the Nicaragua Canal. How important is Asian trade

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to this the waterway and how will Asian economies benefit from this

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new channel? This is really a significant benefit to the Asian

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trade. For a start, the new channel is meant to be deeper and wider.

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Even the expanded Panama will not take the biggest ships that carry

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the bulk cargoes from the east coast of South America. But this new canal

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will be able to do so. That will save them many days of steaming.

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Singapore's sovereign wealth fund says it is the fact that make its

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investments grew at a slower pace. It spent one money buying stakes in

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many different industries. One of the world's largest sovereign

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wealth funds. They have stakes in many different sectors and

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businesses, ranging from Chinese banks to telecommunication firms,

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coffee and nuts, and even infant formula. Temasek has its hands in

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varied sectors as a key part of Singapore's economy. It is headed by

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the weight of the prime minister. Last year, returns have been hit by

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exposure to the banking sector in China, where shares have fallen. ``

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wife. The heads of its investment division blamed this on short`term

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market volatility. China, in spite of all the talk, we still see

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growing at around 7% per year. We do see China offering us attractive

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returns in the medium term. So really our focus is on a number of

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sectors in China which we think will benefit from those returns. You can

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see our investments in the consumer sector, in juice companies and food

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companies, in technology, Alibaba, and so on and so forth. All these

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companies we think will benefit from the growth of the Chinese economy.

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You are one of the world's largest sovereign wealth funds, but your

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returns in 2013 underperformed the broader market. Shouldn't you be

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doing a lot better? Sometimes to get the superior long`term returns, you

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have to invest at times and accept short`term market volatility. You

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know, you mentioned that the Chinese market has been depressed for the

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last year, but that has actually given us opportunities to make

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high`quality investments. And we think we will generate superior

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returns for the long`term. So I really don't think one year is the

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right length to look at us from a performance perspective. If you take

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five or ten years, we have delivered returns in line with or in excess of

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our cost of capital. Celebrating its 40th year since its founding, they

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are stressing that the lower returns are just part of the bigger picture.

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They planned to be in it for a warm hall. And they want the shareholders

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to share in that journey. `` long haul.

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Thank you for joining us. Here are the headlines: Brazil are

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out of the World

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