09/07/2014 Asia Business Report

?1 billion, Britain's Finance Minister sets up a credit line to

invest in India's infrastructure. Investing for the long`term.

Singapore's sovereign wealth fund, we hear their strategy. Thank you

for joining us on Asia Business Report. I Rico Hizon. India's new

Prime Minister has two of the UK's most senior officials in Delhi.

George Osborne and William Hague are visiting to discuss how British

companies might benefit from the new government's plans to stimulate the

Indian economy. Our economics editor reports from Delhi. Everyone rides

on the Delhi Underground, including the Chancellor of the Exchequer ` in

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

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

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

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

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

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

enough to prevent the brutal massacre of Muslims, and Britain

boycotted him. Do you think that Narendra Modi harbours any kind of a

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

would happen, but they were extensively investigated. And this

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

ahead of other western nations, to re`establish contact with Narendra

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

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

winning other valuable contracts for Britain to help modernise India is

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

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

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

the bureaucracy, and the administrative system that is there.

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

wheels of British business is improving India's infrastructure, Mr

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

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

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

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

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

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

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

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

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

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

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

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

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

Indonesians go to the polls to elect a new president, it is down to two

candidates, Prabowo Subianto and Joko Widodo. Indonesia, the world's

third`largest democracy, has almost 200 million eligible voters. The

counting will start just after votes close, which works out to noon local

time in the capital of Jakarta. Workers in Greece have begun a 24

hour strike in protest at continuing cuts in government spending.

Hospitals, tax offices, and archaeological sites are expected to

be disrupted by the action. The workers are protesting against

austerity measures including a 40% reduction in salaries and pensions.

The striker and sides with a visit from Greece's international

creditors to check on the country's International progress. The bank and

fund are monitoring austerity measures which were a condition for

a bailout worth over 300 are in US dollars. A new canal which would

link the Atlantic and the Pacific is one step closer to becoming a

reality `` $300 billion United States. The project aims to

challenge the Panama Canal. The alternative route will pass through

Lake Nicaragua, from the Pacific to the Caribbean. Hong Kong company has

been granted a 50 year concession to build this channel. Earlier I spoke

with a representative from Shipping Australia and asked him what the

alternative route will mean for global trade. Shipping is a

competitive industry at the moment and the margins are slim. With an

extra competitor providing a canal between the Atlantic and Pacific, it

should put pressure on prices and make some savings. Savings, how much

more economical Willis the? It is hard to say at this stage. When you

hear of a $45 million investment to build the canal in the first place

come and you know they want a return on investment, you imagine they were

becoming too close to the bone. But the additional channel would provide

an alternative to shipping companies, hitting them more

flexibility in their booking times and would be welcome. The Panama

Canal currently has a lot of offal makes and delays ships by 20 to 30

hours. This new channel, as you mentioned, will make aspirations

more efficient. Yes, the timing is probably not the best for the

Nicaragua Canal, because the Panama Canal is being broadened and an

extra channel included at the locks. There should be fewer bottlenecks

when the expansion is completed. But the Nicaragua Canal has some

benefits. For the North Asian trade through to the east coast of USA,

there are 500 miles less of steaming to go through the Nicaraguan canal.

How important is Asian trade to this new waterway? And how will Asian

economies benefit from this new channel? Look, I think this is

really a significant than a fit to the Asian trade. For a start, the

new channel will be deeper and wider `` significant benefit. Even the

expanded Panama Canal would take the largest ships from Brazil back to

China and Asia. But the new canal will be able to do so. That will

save them many days of steaming. Singapore's sovereign wealth fund

says its investments grew at a slower pace last year. In 2013 it

what stakes in many sectors but delivered much lower returns to

shareholders. Our correspondent has more. One of the world's largest

sovereign wealth funds. They have stakes in many different set is and

businesses, ranging from Chinese banks to telecommunication firms,

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

varied set it as a key part of Singapore's economy `` varied

sectors. Last year, returns have been hit by exposure to the banking

sector in China, where shares have fallen. The heads of its investment

division blamed this on short`term market volatility. China, in spite

of all the talk, we still see growing at around 7% per year. We do

see China offering as attractive returns in the medium term. So

really our focus is on a number of check to make sectors in China which

we think will benefit from those returns. You can see our investments

in the consumer sector and juice companies and food companies, in

technology, Ali Barba, so on and so forth. All these companies we think

will benefit from the growth of the Chinese economy. You are one of the

world's largest sovereign wealth funds, but you returns in 2013

underperformed the broader market. Shouldn't you be doing a lot better?

Sometimes to get the superior long`term returns, you have to

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

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

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

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

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

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

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

our cost of capital. You remain committed to the investment in the

controversial company which was bought from the Thai Prime Minister

Shinawatra. Lots of political uncertainty in Thailand, any plans

to get rid of this stake? Shincorp as an investment, and the underlying

company, we are happy with the performance. In an emerging market

which builds on our theme of growing middle income population. We have

had political uncertainty in the past. What is more important thrust

is the operations of the company, Howard is doing, and ultimately,

that is what drives longer term returns `` what is important for us

is the operations of the company, how it is doing. He is keen to

stress that the lower returns are a blip in the bigger picture.

Temasek's strategy is to be an investor in it for the long haul. It

wants its shareholders to share in that journey. Thank you for

investing your time with us. The top stories this hour: Brazil

are out of the World Cup. The host nation was humiliated by Germany in

the first semi`final, losing