03/11/2015 Asia Business Report


03/11/2015

Live from Singapore, the essential business news as it breaks and a look ahead to the news that will shape the business day.


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Now on BBC News all the latest business news live from Singapore.

:00:00.:00:16.

China unveils its first home-grown passenger jet, how will it compete

:00:17.:00:23.

globally? Desperate farmers in Indonesia try to end the drought the

:00:24.:00:34.

old-fashioned way. Good morning, Asia. That you could join us for

:00:35.:00:40.

Asia Business Report. I am Rico Hizon. China's first passenger

:00:41.:00:45.

airliner has rolled off the assembly line. It is a narrow body jet that

:00:46.:00:54.

can seat 168 passengers. It is similar in size to the Airbus A320

:00:55.:00:58.

and the Boeing 737. It could still be several years until it enters

:00:59.:01:04.

service but will it be able to compete with the European and

:01:05.:01:08.

American rivals? Earlier, I asked these questions to a member of happy

:01:09.:01:19.

knack flight Global. Right now, China purchases a large percentage

:01:20.:01:25.

of American and European aircraft. This won't take a dent out of Boeing

:01:26.:01:33.

and Airbus's books,... There will surely be room in the Chinese

:01:34.:01:37.

industry, because this initiative is led by the Chinese government, so

:01:38.:01:41.

they will be a signing these aircraft are the major carriers.

:01:42.:01:47.

Yes, all the Chinese airlines will be running this aircraft, but the

:01:48.:01:53.

question will be how efficient it will be, will it be as good as its

:01:54.:02:01.

rivals? This will only be rolled out in 2019, and by that time, in terms

:02:02.:02:06.

of tech ology and innovation, Airbus and Boeing will be way ahead of

:02:07.:02:10.

them. Airbus and Boeing move incrementally as well, but they will

:02:11.:02:13.

have very competitive product at that time. The 2019 date is also not

:02:14.:02:19.

a fixed date, there are a lot of issues the Chinese will have to deal

:02:20.:02:24.

with to get this off the ground. Systems integration, ensuring safety

:02:25.:02:28.

and getting it certified. This is just the beginning, we are nowhere

:02:29.:02:33.

near the end. In other business news, US regulators have found that

:02:34.:02:38.

more Volkswagen made cars, including Porsche and Audi were fitted with

:02:39.:02:44.

devices designed to cheat emissions tests. VW has already admitted that

:02:45.:02:49.

the 11 million cars had the so-called defeat device. A US

:02:50.:02:52.

investigation is under way and affecting at least 10,000 more cars

:02:53.:03:01.

from 2015-2016. Search giant Google will be launching its own delivery

:03:02.:03:07.

service in two years. Other online retailers like Amazon and Alibaba

:03:08.:03:13.

are experimenting with this. Google has announced its plan to return to

:03:14.:03:16.

China after leaving the market five years ago due to government

:03:17.:03:22.

censorship. Austria's central bank holds the key interest rate meeting

:03:23.:03:25.

today, and another carcass on the table. The reserve bank's last move

:03:26.:03:30.

was in May, when it reduced the cash rate to 2%. It has been cautious

:03:31.:03:34.

ever since, with inflation at key concern. How will that factor in

:03:35.:03:42.

today's decision? I was speaking to a representative from HSBC in Sydney

:03:43.:03:46.

saying there is a good chance the RBA would make a cut. The economic

:03:47.:03:51.

regulator has looked reasonable, with great looking like it is

:03:52.:03:53.

lifting into the third quarter this year. The RBA themselves have said

:03:54.:04:01.

that they expect GDP to lift in the third quarter. The question is

:04:02.:04:05.

whether there is enough rope in the economy to get the unemployment rate

:04:06.:04:08.

falling, and whether we have enough growth to keep inflation on target.

:04:09.:04:15.

On that front it is a little... It hasn't really started to fall,

:04:16.:04:19.

unemployment, but it has not been falling. Last week, we were told

:04:20.:04:25.

that inflation is running at a low level. We think on balance the RBA

:04:26.:04:29.

will be more worried about inflation, potentially undershooting

:04:30.:04:32.

their target even though growth is lifting. We think that means we will

:04:33.:04:42.

see a cut. While financial analysts place their bets on whether the RBA

:04:43.:04:45.

will cut interest rates today, the rest of the country will be getting

:04:46.:04:49.

on the nation's best-known and most prestigious horse race, the

:04:50.:04:58.

Melbourne happy knack cup. It is the biggest betting day in Australia. I

:04:59.:05:07.

spoke to be CEO of one of the largest betting agencies in the

:05:08.:05:15.

country. The Melbourne Cup close to 163 countries, and in Asia we will

:05:16.:05:22.

see customers betting about 100 million Hong Kong dollars, we will

:05:23.:05:30.

see Singapore also betting on the customers -- customers in Singapore

:05:31.:05:38.

betting. A famous Japanese horse is running, so there will be a lot of

:05:39.:05:43.

money that in Japan as well. Who are the favourites? Fame Game will be

:05:44.:05:53.

hard to beat, but my money is on Are Trip to Paris. Heavy rain in some

:05:54.:06:02.

parts of Indonesia has significantly reduced the number of peatland fires

:06:03.:06:07.

that have enveloped much of South East Asia in a thick haze. But Rice

:06:08.:06:11.

producing areas are still suffering from a severe drought. Farmers are

:06:12.:06:14.

desperate for rain. Let us pray that rain comes and

:06:15.:06:27.

washes our sorrows away, chunk of the women of this village in central

:06:28.:06:33.

Java. After months of severe drought they are hoping the gods will be

:06:34.:06:38.

moved by this rainmaking ritual. TRANSLATION: This is about

:06:39.:06:41.

communicating with God in order for rain to be sent by God. After the

:06:42.:06:51.

mock battle the community eats rice together. At this time of year they

:06:52.:06:54.

should be planting their paddy fields. TRANSLATION: All the land in

:06:55.:07:01.

the village is dry and uncultivated. We are waiting for the rain to come

:07:02.:07:04.

then we will start to plant out paddy fields. Agriculture accounts

:07:05.:07:10.

for nearly 40% of Indonesia's gross domestic product. More than half of

:07:11.:07:15.

poor households in Indonesia live off the land. Due to the drought,

:07:16.:07:19.

this man says he is thinking about selling his soil to make Rex.

:07:20.:07:26.

TRANSLATION: This year, the dry season has been very long, we are

:07:27.:07:32.

already preparing our rice seeds. These are the conditions we have

:07:33.:07:39.

without water -- bricks. Where water is available, people wait in line to

:07:40.:07:43.

get it. Relief is meant to be on its way with rain is predicted to fall

:07:44.:07:50.

next month. But the World Bank says due to failed crops caused by this

:07:51.:07:52.

drought, the price of rice could rise by 10%, hitting the poor the

:07:53.:07:58.

hardest. This would put pressure on President Joko Widodo, who has made

:07:59.:08:01.

poverty reduction a key target. In China, the so-called peer-to-peer

:08:02.:08:10.

lending industry has grown substantially. It allows you to lend

:08:11.:08:16.

directly to an individual and bid against others to establish the

:08:17.:08:20.

interest rate. Companies that facilitate this are now in direct

:08:21.:08:25.

competition with banks. So, why is one company seeking to expand with

:08:26.:08:28.

backing from a major bank and how will regulators react? If you look

:08:29.:08:38.

at what has been happening lately, not just in finance but with

:08:39.:08:48.

companies like Uber, Airbnb, it is a concept of shared economy. Resources

:08:49.:08:54.

are limited and we have to learn how to share. Peer-to-peer lending is

:08:55.:09:02.

still in its infancy and is quite unregulated in China. If authorities

:09:03.:09:07.

decide to tighten the screws, your company should face significant

:09:08.:09:14.

challenges. We are often asked questions about what might happen,

:09:15.:09:19.

and we try to tailor that to our ability. We try to limit the

:09:20.:09:24.

business model... I think the best thing that could happen to our

:09:25.:09:28.

industry is to have regulations. Essentially your company falls under

:09:29.:09:33.

shadow finances? We fall under non- banking financial transactions. I

:09:34.:09:39.

was discussing earlier how the word shadow means that the transactions

:09:40.:09:46.

are not on the credit bill of China, but it does not mean they are

:09:47.:09:52.

illegal. They are 100% legal. A bank, when it gets a customer it has

:09:53.:09:58.

to register its actions, or guarantee companies won't be able to

:09:59.:10:02.

tell. That is an industrywide problem, so we want to be able to

:10:03.:10:10.

put our data on the register and access other people's data. That is

:10:11.:10:15.

how we will all end up doing a good job in debt management. If you would

:10:16.:10:24.

like to follow us on social media, we are on Twitter. Thank you for

:10:25.:10:30.

investing your time with us, I'm Rico Hizon.

:10:31.:10:40.

The Russian aviation authority says it's too early to speculate what

:10:41.:10:45.

caused a plane to crash in Egypt on Saturday,

:10:46.:10:48.

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