30/06/2016 Asia Business Report

The Philippines is set to inaugurate a new president, but will Rodrigo

Duterte's tough talking ways help the economy?

And the economy as well looms large as Australians head to the polls for

a general election. Good morning, Asia and hello, world.

Glad you could join us for this Thursday edition of Asia Business

Report, I'm Rico Hizon. A big day in the Philippines, President-elect

Rodrigo Duterte will be inaugurated in just a few hours. He swept to

power promising to wipe out crime and corruption and drugs within his

first six months in office. Already the threats seem to have had an

effect on the crime front, hundreds of drug pushers and addicts have

surrendered to the police but what will he do about the economy?

Earlier I spoke with Roger from Manila via webcam, he's a leader

economist for the Philippines at the World Bank.

If you look at the ten point plan, the first point very good is they

want to keep the macro economic policies in place, maintain and

strengthen them. That's very welcome news. If you look at the ten point a

gender as a whole, it's really focused on the challenge that the

Philippines faces, jobs, and that focus is also welcome -- agenda.

During the Aquino administration despite the growth rate you had the

widening gap between the rich and poor and the poverty incidence rate

is still very high, Roger. How does the Duterte government plan to

address this? I think first of all in the most

recent years we do see the trend getting better. We see the income

growth of the bottom 20%... We see it being stronger actually than

income growth of the top 10%. There are some good trends, but these need

to be maintained and sustained over a longer period for people to really

feel it. That's what the Duterte administration wants to do.

He also wants to implement more inclusive growth in the economy. How

does he plan to do this? Is this building up on more small and medium

enterprises and agriculture and manufacturing sectors?

First they will focus on the sector where the poor are where they have

to make a living, that is in rural areas and agriculture. Then they

will look at making it easier to do business, which is really quite

complicated at the moment, especially for small businesses.

They will look at land tenure, the first thing you need is to be secure

around the property you have, a farmer or a small businessmen, so

those basics will be addressed. We think the ten point plan makes a

very coherent action plan. Roger from the World Bank joining us

earlier from Manila. Australians bowed in a federal election this

weekend, while climate change, immigration and education are key

issues it's the economy that is likely to decide who wins -- right.

Australia has avoided recession for 25 years but the future is unclear

as a resources boom fuelled by the Chinese appetite for iron ore and

coal continues to fade. Phil Mercer has the details from Sydney.

This is where surfboards are born. Even President Obama has a board

made by Barry Bennett, who has been in the industry for 60 years. His

family firm in Sydney sells to China, but it's at the mercy of

economic forces such as the exchange rate and Australia's high labour

costs that the government can do little to control. On the world

market if we want to export we still have to compete with countries that

have got a lot lower wage structure that what we have. What we've got is

what we've got. It won't change no matter who gets into Parliament.

Australia is a country in transition and voters hope the next Prime

Minister will chart a responsible path to prosperity as the Long

mining boom here comes to an end. The gap it is hoped will be filled

by manufacturing and tourism as well as agriculture and construction. For

decades immigrants have been part of Australia's economic success. This

man, a refugee from Iran, has a degree in mathematical science. But

now he runs a company fitting showers and kitchens.

Right now business is booming. Especially in the building industry

in Sydney. The government has started to realise that mining is

not there for ever and they needed to start to look at a new way to

create work and to create wealth for our country. The more migrants we

get to come to Australia, the stronger our economy's becoming.

But Britain's decision to leave the European Union has created anxiety

here. And Australia's political leaders have put economic security

at the heart of their campaigns. Businesses have, though, proved to

be resilient in the face of global shocks before and many believe they

can once again ride out any financial storm that comes their

way. Phil Mercer, BBC News, Sydney. In

other business news making headlines, South Korea's industrial

output has bounced back after two months of year-on-year declines. The

bank of Korea puts growth in output at 4.3% for May. The growth

outperformed expectations as car and semiconductor production boosted

activity. As for retail sales, it also expanded at 5.1% over the same

month. The Federal Reserve says nearly all

of the largest US banks are stable enough to increase pay-outs to

shareholders with just two affiliates of foreign banks failing

its annual stress test. Deutsche Bank filed for the second year and

Santander air USA has failed for a third.

France's President Francois Hollande has given a bullish assessment of

the economy in the country despite the impact of the UK decision to

leave the EU. He told a French website he expected the French

economy to add at least 200,000 new jobs over the next year. He

predicted a recession for the UK and conceded it would create additional

risks for France. Meanwhile, Brexit continues to

dominate discussions among the business community for the

Association of south-east Asian Nations, ASEAN, the outcome will be

important because Europe is ASEAN's second largest trading partner after

China according to the EU ASEAN business council. I spoke to the

executive director of the council Kris Humphries, who is calling for a

smooth transition. I think people are looking at the

situation in Europe and the UK at the moment with a bit of amazement.

The key thing to remember is UK is a long-term trading partner of ASEAN,

we are the largest source of FDI for ASEAN by a long-distance. The

fundamentals aren't going to change overnight because of Brexit. The

position my members are taking is, while you're waiting for the

politicians to sort themselves out in Europe and come up with a

coherent plan, life has to go on and we need to maintain stability and

business has to continue. There needs to be a smooth transition but

going forward ASEAN governments and businesses are thinking twice,

there's a lot of apprehension, what they are going to do next about the

investments in the UK and in Europe, because also there's a fear that

after the UK other countries could follow suit? We are speculating at

that point because we don't know what the plan will be with the UK,

when Will Article 50 get triggered and how long will it take after that

crazy Ulloa there are many unknowns. There are some emerging evidence

already that company is about to invest in the UK are stepping back,

they want to assess the situation and look elsewhere.

The businesses you have been speaking with, which industries are

looking at stepping back? Those industries that were looking to

invest with a view to selling from the UK into Europe are going to have

to reassess and they could look at moving investments elsewhere. One

thing sitting here at ASEAN you can see this as an opportunity, if

you're looking to attract investment then investors looking at Europe may

want to look elsewhere to make those investments. Development boards at

ASEAN and investment boards could look at that as an opportunity.

There could be more cooperation between the ASEAN governments and

the EU to be able to come up with a coherent policy after Brexit? I

think there needs to be, one thing for sure is the European Commission

has said this week life carries on as normal. The UK is still in the

EU, trading will continue as normal, and they will carry on with the

Philippines and Indonesia and Malaysia and they will finalise the

missing bits elsewhere in the region. Chris Humphrey from the

ASEAN business council. A quick look at the markets and Asian equities

are rising currently for a second trading day. The Nikkei two to five

up by 1.1% and the All Ords gaining 1.4%. This is because worries

continue to ease over Britain's vote to leave the EU but analysts are

saying this market volatility can come back any time and it is too

early to say if investor appetite for risks have made a full comeback.

As for Wall Street, gains for banks and energy stocks with the Dow and

NASDAQ in positive territory as well. Thank you so much for

investing your time with us. I'm Rico Hizon in Singapore, bye for

now.