24/02/2016 Asia Business Report

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

Thinking positive. We ask a business leader about the economic prospects

in Singapore and around Asia. Made in North Korea no more, we look at

what the closure of the manufacturing Park means for one

South Korean company. Thank you for joinging me

for this Wednesday edition of The first story is about the

citystate which has announced growth numbers which were stagnant. GDP

came in at 1.8% for the three months until December year on year, weighed

down by poor global demand, lower oil prices and Chinese slowdown. The

citystate is the latest country in the region facing weak economic

expansion. What is the outlook for the big local companies? One

correspondent spoke to the boss of a bank which is one of the largest

lenders in Southeast Asia about his company. I think growth was slow. We

grew 12% topline in 2015. We would be hard pressed to get seven or

eight next year but seven or 8% topline growth can lead to 6% bottom

line growth which is not bad at this point. How badly good you be

affected by the slowdown in China? The exposure at this point in time

is unlikely to be materially impacted, even if it slows down

more. The large part of China exposure is trade finance backed by

a Chinese policy banks and we don't expect that to be impacted at all.

Investors seem stressed. Your share price is down 35% since July. They

don't appear to be convinced. That is true. It is hard to understand

why. I went on record that investors are pricing in another Lehmann

crisis. If you factor in that crisis, looking at how Singapore

performed, it wasn't that bad. At the current price I would have to

burn through 15 or $20 billion in losses to justify this company. We

have not seen those losses cumulative in -- cumulatively in the

last 20 years. Barclays management business in Asia, can you confirm

you are interested or looking to buy? We don't comment on speculation

about activity but I can say that we are always open to the possibility

of bulking up on wealth management and private banking. Moving to other

news making headlines. Resilient authorities have charged the

president of the mining company San Marco and six others for the

homicide of 19 people, which also caused widespread environmental

damage in November. A police report included the accident was caused by

a lack of proper monitoring and 40 equipment. San Marco is owned by

Brazil's Vale and BHP Billiton. Australian mining company for disk

is said first half profits fell following the mounting global supply

glut -- Fortescue. Fortescue, along with BHP and others, posted a profit

of $319 million US down from $330 million US a year ago. Much faith do

you have in your central bank? Let's look at recent developments. The US

Federal Reserve is backpedalling on plans for more rate hikes in 2016.

As for the Bank of Japan, they introduced negative interest rates

despite promising not to, and of course there is uncertainty about

Chinese ability to push the right buttons. Ali Moore asked the

governor of the Sri Lankan central bank whether the loss of faith was

justified. I think the central bankers are being asked to do all of

the heavy lifting and to a large extent they are hamstrung by the

fact that governments, ranging from the government of the US all the way

down to emerging market governments, have been reluctant or

unable to increase fiscal stimulate that would accompany the monetary

stimulatory unleashed by central banks which is part of the problem.

What is happening as a consequence is access liquidity which has been

created by these central bank is not filtering into the real economy.

That problem cannot be solved by central banks alone. You say their

hands are effectively tied? Effectively, yes. They are

desperately seeking alternative props to make sure that original

intention is achieved, but that's very difficult because there is no

real push out there in terms of actual spending of this money. So

what is effectively happening is banks are very conveniently parking

the access cash in their central banks themselves, and that's why for

instance the Japanese are now applying negative rates, other

central banks are applying negative rates, because they want to make it

not economical for banks to park their cash conveniently in the

central bank. Those rates didn't seem to be working, all we see is a

fall in bank shares and an increase in the yen, not what the Japanese

were hoping for. Well, that is another issue. A lot of this money

which has been around has been creating excessive exuberance in

some of the capital markets. So this money that was pumped in by the

central banks, which was initially supposed to stimulate the real

economy, in the meantime the asset prices are coming down and we have a

problem of whether liquidity goes. You talk about the need to look for

props for other mechanisms. Is part of the problem that there is a

perception that banks are out of ammunition, more accurately, it out

of ammunition they are prepared to use, which leads to Alice of faith,

if the armoury is there? -- leads to a loss of faith. That is partially

true but you can't expect them to do all of the heavy lifting. They don't

have much left. Not many bullets left. They have to be fired by the

commercial banks and the governments as well. What happens when your

business loses a key manufacturing hub Bass that is a challenge facing

South Korean companies after the shutdown of the Gaesong zone in the

north where 124 southern firms employing 54,000 North Korean

workers their -- hub? -- That is. Seoul pulled the pin on the venture

two weeks ago after John Yan's recent rocket launch. Steve Evans

spoke to one company about the impact on his business. --

Pyongyang's. This is a promo video for Jin, a paraglider, a product

without a factory now. 220 northern workers lost their jobs, North Korea

stopped the finished product being removed. It's just mean one day,

let's say in 24 hours, we lost everything, so we couldn't do

anything, we couldn't bring the materials and products, no one was

able to bring them, so a lot of companies now have big Dublin. In

the ten years the factory was running the owner saw a change in

the workers. I was quite shocked the first day when I visited the

factory. First meeting them. I see them, the smell was so bad, their

skin was quite bad, and skinny, and then I realised that they couldn't

wash. So then we give them two times a week showers and there we provide

food for them, lunchtime we provide them big suits on Monday, and then

Saturday at different menu, beef, chicken, you know, protein. There is

debate about whether you should engage with North Korea or whether

you should cut them off on the house sanctions. What is your view? For me

the most important is all of the people who work with me is, yeah,

the same humans. You know, the lady who work, they already asked me what

is South Korean women doing? You know, the women are really women,

and they want to have cosmetics and they want to have plastic

surgery... It is normal. This is really... Before they never thought

about it but today you see them change, at least, you know,

communication is a bit more free. The company still has its testing

and design centre in South Korea. As the peak of demand pressures with

the norm in summer it will try to produce in China but ten years of

hard-working North Korea has ended. And before we go, a look at the

markets, and most Asian stocks are in negative territory after US

equities lumped overnight on signs of a proposed deal to freeze oil

output by major producers will not happen, and as you can see

everything is red at the moment, the Nikkei two -- Nikkei 225, the All

Ordinaries, down about 2%.