:00:13. > :00:22.Digging up trouble? Find out how the UK's referendum might impact the
:00:23. > :00:27.Australian economy. And the US Central Bank chief, Janet Yellen, on
:00:28. > :00:40.the immediate consequences if the UK votes to leave the EU. Hello, and
:00:41. > :00:45.welcome to Asia Business Report. Focusing on the EU Referendum this
:00:46. > :00:52.week, one country that could be effected by a UK withdrawal is
:00:53. > :00:57.Australia. The trade relationship is worth around $15.7 billion US and
:00:58. > :01:02.the UK is the second-largest source of total and foreign investment to
:01:03. > :01:06.Australia. Some of Australia's largest mining companies have UK
:01:07. > :01:12.stock listings, so what are Australian businesses expecting? I
:01:13. > :01:16.asked that to Jennifer from the Business Council of Australia. Many
:01:17. > :01:23.Australian businesses are anxious about how it will go. We don't need
:01:24. > :01:29.more volatility in global growth. We have fragile growth. We need Europe,
:01:30. > :01:35.the UK and North America are to be growing so that this interconnected
:01:36. > :01:39.global economy can benefit. You say it is not great for Australian
:01:40. > :01:44.businesses, but we've just heard from Australia's former Prime
:01:45. > :01:49.Minister John Howard, quoted as saying he is in favour of the UK
:01:50. > :01:54.leaving, and that the EU is a flawed concept that has failed to live up
:01:55. > :01:58.to expectations. Strong words from him. To most Australians agree with
:01:59. > :02:02.him? Most Australian businesses wouldn't agree with that, and I
:02:03. > :02:07.think most Australian people would be very concerned about anything
:02:08. > :02:12.that is going to add to global volatility and slowdown in growth,
:02:13. > :02:16.because they know that Australia is very connected and relies on other
:02:17. > :02:22.parts of the world for foreign capital. We rely on markets to
:02:23. > :02:28.export goods and services. There are two important things to say about
:02:29. > :02:32.this, there is a philosophical issue about whether the EU has lived up to
:02:33. > :02:36.expectations and if it is everything people hoped for versus the price
:02:37. > :02:41.and cost to Britain and the flow on effects to the rest of the world
:02:42. > :02:46.economy from leaving. That is the balancing act. Not everyone in the
:02:47. > :02:53.business region is in favour of the UK remaining in the EU. Peter Allen
:02:54. > :02:58.is CEO in Singapore of Grant Thornton and shared his views
:02:59. > :03:01.earlier this morning with me. This is a personal opinion, not
:03:02. > :03:08.corporate, and it derives from two things - the EU exhibits a lack of
:03:09. > :03:12.democratic accountability. It is hard for electors to be heard
:03:13. > :03:16.through the additional layer of the national governments and the
:03:17. > :03:21.commission. And secondly, the policy choices of the union makes are often
:03:22. > :03:24.dictated by or driven by the need for political integration, which
:03:25. > :03:29.causes quite often substantial policy errors with the euro and the
:03:30. > :03:33.Schengen zone being examples of it. In the medium to long-term this
:03:34. > :03:37.might not play out very positively. We would be better off looking the
:03:38. > :03:42.sidelines. You talk from the policy point of view. From the business
:03:43. > :03:48.point of view the fear in this region is that you will see Paris
:03:49. > :03:54.raised and trade barriers going up if the UK leads the EU and of course
:03:55. > :03:58.the opposite is the real target people want, integration versus
:03:59. > :04:03.disintegration -- tariffs. So, what do you have to say about that
:04:04. > :04:07.argument? Well, in the event of a Leave vote, which is quite likely,
:04:08. > :04:13.although of course it could go both ways, there will be challenges for
:04:14. > :04:17.some businesses. Some businesses, for example, that rely for their
:04:18. > :04:22.model on passport in into the union, they will have to reconsider that
:04:23. > :04:26.model, and businesses reliant on cost-effective labour from the EU
:04:27. > :04:35.will have to consider that. However, there will also be opportunities in
:04:36. > :04:44.pricing, because of the government's need to construct free deals outside
:04:45. > :04:48.the EU. In other news, Hasluck, US electric car maker, has made an
:04:49. > :04:56.offer to acquire solar city in a stock deal worth 2.8 billion dollars
:04:57. > :05:06.-- Telsa. It is the top-ranked company for homes in the US as well
:05:07. > :05:10.as -- and as well, Telsa makes the electric units and says this would
:05:11. > :05:17.complete the picture. And Boeing has agreed to sell 100 planes to Iran
:05:18. > :05:21.air in a deal worth $25 billion at list prices. The agreement marks a
:05:22. > :05:25.big step in economic relations between the US and Iran after
:05:26. > :05:28.sanctions on to Iran were lifted last year. Boeing is working with
:05:29. > :05:34.regulators to get the necessary US government approvals. The Royal Bank
:05:35. > :05:38.of Scotland is cutting 900 jobs in plans to reduce costs by $1 billion.
:05:39. > :05:43.The lender majority owned by the UK government has shed 2000 jobs since
:05:44. > :05:49.January with the latest cuts to be in back office and technology
:05:50. > :05:53.operations. Hong Kong has claimed the crown as the world's most
:05:54. > :06:01.expensive city for expatriates. It has knocked off Angola from the top
:06:02. > :06:04.spot. Singapore, Tokyo, Beijing were all in the top ten according to the
:06:05. > :06:10.survey from human resources consultancy Mercer. It is a
:06:11. > :06:14.different result from a survey from the Economist intelligent unit which
:06:15. > :06:20.placed Singapore at the top several times. So, why do different surveys
:06:21. > :06:25.say different things? That is what I asked Marriot Herero from Mercer.
:06:26. > :06:30.They are used by international organisations that operate globally
:06:31. > :06:35.and that send foreign employees to various locations -- Mario. And
:06:36. > :06:40.therefore we survey the price of goods and services representative of
:06:41. > :06:46.how expats are likely to spend their money. So, the survey doesn't
:06:47. > :06:49.necessarily respect the spending habits of local populations, rather
:06:50. > :06:57.focusing on expats. It is expats as you say, but the -- what is the
:06:58. > :07:00.reality of these plush expats being available? Multinationals are
:07:01. > :07:05.cutting back on this. Your survey doesn't include the cost of
:07:06. > :07:11.education or the cost of buying a car. You say it is included in expat
:07:12. > :07:15.packages. Are they really? When they are included, accommodation is
:07:16. > :07:21.usually provided by employers. And in some locations a car is still
:07:22. > :07:25.necessary. Not necessary in some locations. Education is obviously a
:07:26. > :07:28.necessity for expats. However, often allowances are covered by the
:07:29. > :07:33.employer under separate allowances and therefore in order to reflect
:07:34. > :07:39.the cost of living experienced by expatriates we include in the basket
:07:40. > :07:42.items that are typically covered by the expats themselves. Very often
:07:43. > :07:47.these baskets also include a lot of imported goods. They can be very
:07:48. > :07:52.expensive or in short supply in certain locations, especially in
:07:53. > :07:56.emerging markets, which explains why we see so many locations from
:07:57. > :07:59.emerging markets in the list in the top ten. Once upon a time they were
:08:00. > :08:04.called hardship postings, for instance Angola on top last year,
:08:05. > :08:07.knocked off by Hong Kong. What are some of the other determining
:08:08. > :08:15.factors leading to the cost of a place? Let me say that the currency
:08:16. > :08:21.fluctuations can have a significant impact on where a location sit in
:08:22. > :08:25.the ranking. One of the key factors why Angola went to second place was
:08:26. > :08:28.because of the devaluation of the currency against the US dollar by
:08:29. > :08:35.more than 40% as a result of the oil prices. That allowed Hong Kong to
:08:36. > :08:39.bubble up to the top position. Now, the chair of the US Federal Reserve,
:08:40. > :08:42.Janet Yellen, told a Senate hearing that the central bank is likely to
:08:43. > :08:48.be cautious about raising interest rates in the coming month and noted
:08:49. > :08:55.caution about the upcoming UK referendum. Just a a few days after
:08:56. > :09:01.America's central bank said it would not raise interest rates the chair
:09:02. > :09:04.of the Federal Reserve was facing questions from US lawmakers --a few
:09:05. > :09:09.days. I want to go back to Brexit for a minute. Unsurprisingly Janet
:09:10. > :09:16.Yellen was asked about financial repercussions if Britain chooses to
:09:17. > :09:22.leave on Thursday. I think the financial reaction to what is
:09:23. > :09:28.unleashed by that decision could result in a kind of risk off
:09:29. > :09:36.sentiment that we would see impact on financial markets that we might
:09:37. > :09:39.-- on financial markets, that we might see safety flows that could
:09:40. > :09:43.push up the dollar or other so-called safe haven currencies.
:09:44. > :09:47.While fears of a Brexit dominate the vulnerabilities to the global
:09:48. > :09:51.economy, Janet Yellen also spoke of the continuing fears in China.
:09:52. > :09:56.Although concerns about slowing growth in China and falling
:09:57. > :10:03.commodity prices appear to have eased from earlier this year, China
:10:04. > :10:08.continues to face considerable challenges as it rebalances its
:10:09. > :10:12.economy towards domestic demand and consumption and away from export-
:10:13. > :10:17.led growth. With uncertainty in the global economy and uneven growth
:10:18. > :10:22.here in the US, well, what does all of this mean for interest rates?
:10:23. > :10:31.Well, for now, America's monetary policy remains accommodative. And
:10:32. > :10:41.that it for this edition of Asia Business Report. Thanks for
:10:42. > :10:42.watching. You're watching BBC