11/07/2016 Asia Business Report


11/07/2016

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.

The people of Japan have delivered their verdict. A victory for Shinzo

:00:17.:00:25.

Abe. What does that mean for his economic reform plans? And India's

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love affair with gold. We look at efforts to draw it away from temples

:00:32.:00:36.

and homes and put it back in the economy. Good morning, Asia. Hello,

:00:37.:00:46.

world. This is Asia Business Report. Japan's Prime Minister has won an

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election in the Upper House and appears likely to extend his

:00:55.:00:59.

majority. He pitched the election as a vote for his plans known as

:01:00.:01:05.

Abenomics. What does it mean for his reform agenda? Earlier, I spoke with

:01:06.:01:12.

a Japan economist. I think we have had some small areas of success in

:01:13.:01:19.

monetary policy. The Bank of Japan has done everything to boost the

:01:20.:01:24.

economy and inflation. The government itself has not really

:01:25.:01:31.

done much. We haven't seen the reforms. Not even those that Shinzo

:01:32.:01:38.

Abe originally alleged. Let alone those needed to keep Japan going in

:01:39.:01:44.

the long-term. -- pledged. Do you think he will go ahead with more

:01:45.:01:48.

economic reforms? There has been a lot of Reuters is about the rising

:01:49.:01:53.

income gap, et cetera. -- criticism. Will he continue reforms as

:01:54.:01:58.

promised? It is already the second election we have had during his time

:01:59.:02:04.

in power. The elections in 2014 when he did the same thing. He sold it as

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a vote on his economic policies and pledged economic reforms. Since then

:02:14.:02:18.

we have not seen any economic reform accepts the Trans-Pacific

:02:19.:02:22.

Partnership agreement which was already started before the election

:02:23.:02:26.

is. So, I don't think we will see much in the coming years after the

:02:27.:02:32.

election. And of course, global uncertainty like Brexit and in

:02:33.:02:39.

China. He can blame all this negative economic outcome on that.

:02:40.:02:44.

To some extent he came. I think private consumption in Japan has

:02:45.:02:52.

been weak. -- he can. It has been a four-year low. You can't blame that

:02:53.:02:56.

on global issues. Wages have not gone up in Japan. Inflation has been

:02:57.:03:01.

high, even for Japanese standard. That is something the government

:03:02.:03:10.

should have done more with. Taxes. Encouraging wage growth. This is the

:03:11.:03:13.

fault of the government, clearly. Now to another election which took

:03:14.:03:19.

place a week ago. Australia's Prime Minister, Malcolm Turnbull, has

:03:20.:03:24.

finally declared victory, and looks set to form government again. But

:03:25.:03:29.

uncertainty around the government made standard and pause what their

:03:30.:03:39.

triple-A rating on watch last week. -- Standard Poor's. Earlier I

:03:40.:03:44.

asked if the government will provide more uncertainty? We will see a

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degree of uncertainty We have a government, and opposition conceding

:03:53.:03:55.

defeat. We have a working majority, at least in the Lower House. One of

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the confusing factors here is there is a Lower House majority but an

:04:01.:04:09.

Upper House minority. It will be hard to pass controversial

:04:10.:04:12.

legislation. We have a Prime Minister and a government but no

:04:13.:04:17.

real working means of passing legislation. We see some certainty

:04:18.:04:23.

for a little while. But how the government chooses to see the

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legislation will be difficult. Last week, the credit rating was lowered

:04:32.:04:38.

to a negative outlook. Do you think other agencies will follow that?

:04:39.:04:44.

Some have said they and pulling to downgrade. But in this, S and P's

:04:45.:04:54.

thought no other party is willing to do what needs to be done to fix the

:04:55.:05:01.

budget deficit. Until those two parties, both parties, effectively,

:05:02.:05:04.

can come to a solution to fix the deficit, there will remain pressure

:05:05.:05:11.

on the credit rating. And I think it is likely we will see a downgrade.

:05:12.:05:15.

In your view, what does the government need to do to address

:05:16.:05:21.

that? Both parties have said within a decade they might come back to a

:05:22.:05:25.

budget balance. But there will be a debt that goes with that. There are

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structural problems. We spend too much money during the mining boom

:05:30.:05:34.

years. Welfare programmes, tax cuts, they went through during those

:05:35.:05:38.

times. Of course, the mining boom faded, revenue fell, but we still

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have the same amount of spending. Hard decisions need to be made,

:05:44.:05:46.

increased spending, decrease taxes, or maybe both. Unfortunately there

:05:47.:05:54.

is no sufficient wheel to do that. It is not inevitable, but likely,

:05:55.:06:02.

there will be a downgrade in the credit rating. We have to wait till

:06:03.:06:06.

we have someone who is ready to do it. We could come out of trouble by

:06:07.:06:12.

pure luck. We don't know. Both parties have to find a way to suit

:06:13.:06:17.

the political will to make changes needed to bring a balance to the

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budget. In other business news, the world's top 20 economies have

:06:23.:06:31.

growing protectionism and a downgrade in trade. The G20 had

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concerns over the slow overall recovery. They say protectionism has

:06:37.:06:42.

been rising since the crisis. New trade restrictions averaged the

:06:43.:06:45.

highest monthly average registered since it was monitored. Whether

:06:46.:06:54.

buying it at festivals, giving it as a wedding gift, or ceremonies,

:06:55.:07:01.

Indians love gold. 20,000 tons of aid are thought to be stashed away

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in people's homes, businesses, or in vaults. -- it. But this pushes up

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the import bill. The government is offering incentives to get it

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recycled and put back on the economy. We have the story.

:07:17.:07:21.

One of India's holiest Hindu shrines. 100,000 daily visitors.

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They don't only pray but give generously. The temple's collection

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boxes have amassed billions of dollars worth of cash and jewellery,

:07:40.:07:47.

and especially, bold. -- gold. Some covers the temple walls, others,

:07:48.:07:53.

kept in Treasuries, but it doesn't help the Indian economy. Now, the

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government is tried to get more gold into banks. -- trying. Temples are

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crucial to the government's plans of retrieving gold. They could have $1

:08:07.:08:10.

trillion worth of yellow metal stashed away in private lockers and

:08:11.:08:15.

safe-deposit boxes across the country. This is the richest temple

:08:16.:08:21.

in India and already has 700 tons of gold. People are bringing more

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everyday. This is one of the first temples to sign up to this. It gets

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interest payments on the gold at hands over. It says it makes sense.

:08:33.:08:40.

-- it we need to store it in a safe spot. Instead of keeping it in our

:08:41.:08:49.

Treasury. It helps with the interest we get. It is a safe way to do it.

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It also helps us produce costs. Temple gold will often end up here,

:08:58.:09:02.

melted down and made into bars that banks can trade. They need to reduce

:09:03.:09:08.

what they need to bring in from abroad, that is the idea. Most of

:09:09.:09:15.

India's gold is not in temples, but homes, in the form of jewellery. Is

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this where they need to focus? The housewife trusts the bank. Once she

:09:25.:09:28.

knows this is something she can do with her gold jewellery she is no

:09:29.:09:34.

longer wearing, she can give it to the bank, put it in a deposit, and

:09:35.:09:40.

earn interest on it. But it is exactly the cause gold is so popular

:09:41.:09:44.

that it is proving hard to tempt Indians to hand it over. Gold has

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always been seen as a way to store wealth and it shows no sign of

:09:49.:09:56.

losing its shine. BBC News, southern India. Let's take a quick look at

:09:57.:10:03.

the market before we go. Japan's Nikkei has gone 3% higher after the

:10:04.:10:09.

landslide victory by Prime Minister Shinzo Abe. Australia markets are

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also up by 1.5%. They are taking the due from Wall Street where Standards

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and Poors flirted with a record high on Friday at. That is it with this

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edition of Asia Business Report. Thank you for watching.

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