06/09/2016 Asia Business Report


06/09/2016

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Now on BBC News, all the latest business news

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Next up, Laos, the flats are ready but tough talk awaits President

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Obama at the meeting of south-east Asian leaders. And striking gold

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with cocoa, we meet a postman who quit to pursue life as a farmer.

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Good morning Asia, hello world, I am glad you can join us for this

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addition -- edition of Asia Business Report. President Obama heads to

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Laos to meet south-east Asian leaders for the last time before he

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leaves office. At home he is trying to sell the TPP to Congress, the 12

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nation free trade pact which has been agreed but has not been given

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the final sign off, and Americans are indeed divided. The Pew research

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centre reports 47 of all registered voters say free trade agreements

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like the TPP are bad for the US, while 45% say they are for the pact.

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Candidates for the presidential election don't agree on much, but

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both are against the TDP. In Asia the TPP is not the only trade deal

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in town. Our correspondent reports on the options. TPP, ASEAN, GDP, so

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many acronyms, so many options. Let's start with the TPP, the

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Trans-Pacific Partnership. It is a US backed trade club which 12

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Pacific Rim nations have signed up to, including Japan, Chile and Peru.

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If it goes through it could be worth 40% of the global economy that is

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massive. But, it is a big heart, the US Congress has to ratify it and the

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US appears to be against it. And notice who is not in the TPP party,

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China, the second largest economy, with its own trade deal on the trade

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deal, the RECP, the regional brands of economic partnership. Here is how

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it gets complicated, it includes ASEAN, the countries that have

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signed FTAs, free trade agreements with ASEAN, and the PRC, the peoples

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respond with China. If the RECP comes together it could make up 48%

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of the global population and be worth 24% of global GDP -- People's

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Republic of China. Who will end up with the biggest party? The US or

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China? We get close to that as leaders sit down for the ASEAN

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summit. The ASEAN summit comes on the heels of another leaders

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meeting, the G20, with Chinese President Xi jinking opening the

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meeting urging leaders to avoid empty talk. Did they succeed? We

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speak to a member of the lowly institute on international policy,

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he joined me earlier via webcam. I don't think we will be saying a lot

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of claims come in that this G20 was more than a talk shop, because I

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don't think economic lows will be addressed by leaders -- Lowy

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Institute. Indeed, economic worries and issues, the slowdown in the

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economy is what market watchers were looking out for in this meeting, if

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there would be any fiscal monetary policy decisions, even to jumpstart

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the global economy. Yes, yes, definitely. And one thing I think

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which is quite symbolic of this is it appears that the communique was

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actually drafted, the leader's statement was actually drafted and

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finalised before they had even sat around the table. So, at this point,

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how relevant is the G20? Is the organisation, in your view,

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effective in trying to solve global issues? It is certainly making

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progress in defined areas but it is clear, increasingly clear, in fact,

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that these are a very small subset of areas. It is all about

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cross-border economic governance. The real questions about whether or

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not the G20 and government are able to get out of the low growth, high

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unemployment, mounting risk, consistent and a result in a quality

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scenario that we find ourselves in, that is an open question. Tristram

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Sainsbury joining us earlier. Australian banks are among the best

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performing in the world since the financial crisis with the big four

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now facing allegations of rate reading and anti-competitive

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behaviour and slowness in adapting to new technologies. So, are their

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golden years over? Earlier, I spoke with Ben Pedley, director of

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investments that you see a funds management. I think the Australian

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banks have had it too good for too long and one of the problems is the

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four pillars policy which helped the banks become strong and whether the

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financial crisis is now a millstone around their necks. It is stifling

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innovation. It is also encouraging complacency and anti-competitive

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behaviour. And I think the latest example of that is of course this

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rate reading scandal, which is referred to as the BBSW scandal,

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similar to the LIBOR scandal. Is it time now for the government to get

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rid of the four pillars policy? I think the answer is probably yes,

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because I think the job it has done has been a very good one but it is

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very much outdated, and I think the latest evidence of that is the fact

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that, when Apple Pay came to Australia, the Australian banks said

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to them as a whole, you deal with us or else we won't allow you in, the

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and this is the value to respond to technological change and also

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competition that I think will ultimately hurt the banks and

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potentially hurt Australian consumers. So what will this mean if

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they break down this four pillars policy, what will it mean for the

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financial industry? It will give Australians more choice, which is

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good, and therefore better pricing for consumers, and it might also

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provide foreign banks more opportunities in Australia. One of

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the problems for the Australian banks is that all of this change

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occurs at a time when they have sought expansion overseas and failed

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in places like the UK, for example. They have also failed spectacularly

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in Asia. They have become inward looking. The Australian economy is

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adjusting to the end of the mining boom, so it is hard to see where

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they will get their profits. Is it possible we could see one of these

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four pillars failing? I don't think failing is the issue but I think

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that the earnings growth and the halcyon days they have seen for the

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last couple of decades are well and truly behind us. Yes, they still

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offer attractive dividends but if you are looking for growth, and that

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expansion and earnings growth to continue in the medium term, we

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think that is unlikely. And, as an ethical fund, we are will so saying

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this behaviour should not be rewarded. Well, Asia is one of the

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fastest growing consumers of chocolate with a market worth more

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than $18 billion in 2019 -- we are saying. The Philippines produces

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less than 1% of global supply of cocoa butter with the equatorial

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climate it has perfect growing conditions and entrepreneurs want to

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increase it tenfold in three years. We caught up with one farmer who is

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cashing in. I am a retired government employee of the

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Philippines. I decided to plant cocoa because I have six children

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and, if we just rely on our salaries, my wife is a classroom

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school teacher, I could not imagine how could I send these six children

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to college. At the very beginning, it is really my passion to love

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farming. During my off days and holidays I would go to my farm and

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started planting cocoa little by little, 100 trees, 200 trees, the

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only kind of tree that reduces fruit 24 months from planting. At the very

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beginning when I started cocoa farming it was only about 20 pesos

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per kilo and now it is quite high, 140- 150 pesos per kilo. I have a

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better income from cocoa farming. It is more or less 50 times my salary.

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And I am proud to say that I have even got one daughter who got into

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medicine. Even I myself did not expect that this would happen to

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myself. I have no experience before in cocoa farming. My father is not a

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farmer and my mother is not a farmer. Many times I have failed but

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if you fail you have to do something to overcome the failure. And that

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was a former postman and now a very successful cocoa farmer in the

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Philippines. Before we go, a quick look at the markets. This is where

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they are at the moment, lacklustre, moving sideways, because US markets

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were closed overnight due to a public holiday, so not a lot of

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liquidity in the Asia-Pacific markets today. The Nikkei is up

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slightly but the all ordinaries down by 16 points. Thank you so much for

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spending your time with us, I'm Rico Hizon. Sport Today is coming up

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next. You are watching BBC News.

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