11/07/2016 Asia Business Report


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


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


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


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


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


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


election in the Upper House and appears likely to extend his


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


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


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


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


economy and inflation. The government itself has not really


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


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


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


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


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


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


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


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


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


Partnership agreement which was already started before the election


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


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


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


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


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


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


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


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


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


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


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


uncertainty around the government made standard and pause what their


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


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


degree of uncertainty We have a government, and opposition conceding


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


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


Upper House minority. It will be hard to pass controversial


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


real working means of passing legislation. We see some certainty


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


growing protectionism and a downgrade in trade. The G20 had


concerns over the slow overall recovery. They say protectionism has


been rising since the crisis. New trade restrictions averaged the


highest monthly average registered since it was monitored. Whether


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


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


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


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


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


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


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


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


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


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


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


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


trillion worth of yellow metal stashed away in private lockers and


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


landslide victory by Prime Minister Shinzo Abe. Australia markets are


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


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


edition of Asia Business Report. Thank you for watching.


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