07/10/2016 Asia Business Report


07/10/2016

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European Parliament in Strasbourg following a confrontation with one

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of his colleagues. Now on BBC News, all the latest business news live

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from Rico in Singapore. Samsung Electronics is facing an

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explosive situation with its smart phones. Will its bottom line get

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burned? And Filipino President Rodrigo Duterte eight marks 100 days

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in office but his shock tactics may be scaring away investors.

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Welcome to this Friday edition of Asia Business Report.

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It is almost the weekend. We start off with Samsung Electronics and the

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conglomerate in South Korea has signalled a 5.5% increase in

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operating profit for the third quarter compared to year ago levels.

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The company will disclose full earnings results at the end of the

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month when it will also provide details on how various businesses

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performed in the three months until September. This, take a look at it,

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the Galaxy Note 7 was supposed to be Samsung's big hit to boost its

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bottom line but instead it's faulty batteries have resulted in a global

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recall. Earlier I spoke with tech analyst takes orders and asked if

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Samsung can recover from this massive recall. There will be some

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impact on the third quarter but I think more of the consequences will

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be felt in the fourth quarter even potentially after that. It is about

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2.5 million phones have been recall but I think the challenge is not

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everyone will hand them back. There is going to be someone with the

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contacts, with pictures of their grandchildren, they are not aware of

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the news and haven't handed it back. It won't have a sufficient impact on

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the earnings guidance but now there are calls for the company to be

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split two ways. Is this the way forward for Samsung? It is a huge

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company. It sits on a cash pile of $69 billion. Comparatively, Apple

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sits on $231 billion. In relation to that it is small fry but it is a

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big, hegemonic company. At its root is -- it is an entrepreneurial

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company, from fridges to smartphone, tablets, you cannot be the slow,

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clunking bureaucratic companies to do that. Taking a look at the share

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price on Thursday, it has reached a new record high. Well, of course you

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have one point there being the news about the proposal to split the

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company, but you also have the global recall and you also have a

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succession issue that may impact the structure of Samsung going forward.

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I'm not sure it will break up because of this. I think there are

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too many vested interests. You are right it is a sure company. If you

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look at the profitability, it is much lower than Apple. Samsung

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outsells phones to 21 in terms of but profitability Apple outstrips

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it. -- two to one. Samsung was trying to boost the profit margin

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with the Note 7. That has been a roadblock. Will Samsung recover from

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this global recall? It seems like they are making investment into

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artificial intelligence. The story that Note 7 will keep bubbling and

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popping for sometime to come. They are trying to diversify into

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innovative areas. They have invested in Viv, it is an AI company. I don't

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know if you saw Pixel from Google. It was Google assisted, artificial

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intelligence. You have Siri with Apple and they are trying to do

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something similar with their own AI construct. In other news:,

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Twitter shares losing 20% of their value overnight in the US markets on

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fears that the much anticipated sale of the company will draw minimal

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interest from potential buyers. Shares headed south on reports that

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neither Walt Disney nor Google will be making a bid for the social media

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company. Deutsche Bank will cut 1000 jobs in Germany in addition to the

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3000 job losses previously announced in June. The lender has been under

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intense pressure over the last few weeks in US authorities asked the

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bank to pay a final $14 billion US to settle an investigation into

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mortgage-backed securities. That was to help boost its finances. Deutsche

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Bank has been selling assets and promising cost cuts.

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Now to the Philippines, where President Duterte marks 100 days in

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office this weekend. He has made headlines for what is perceived to

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erratic behaviour including telling Barack Obama to go to hell. He has

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challenged the US and EU to end its eight. The stock market has taken a

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tumble -- aid. Earlier I spoke with the head of the European Chamber of

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Commerce in the Philippines and I asked him if Mr Duterte comments are

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interacting the European business community. Locally the situation

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seems to be contained but if you are at some of the local investors here,

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foreign investors here in the local market, they are hesitant to expand

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at this point in time. But no one has so far indicated they are going

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to pull out. I think the danger is more bringing in new investment. If

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you don't focus on Mr Duterte's statements and on his drug campaign,

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what is your assessment of his economic reform programmes in his

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first 100 days? So far we have to give him and his government, it is

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very good, because the ten point agenda that they worked out, even

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before he was nominated as President already, it covers a lot of issues

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that they have tackled there. All of the ministers have been working on

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the different resources and so far the feedback is positive that we

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will achieve what we have set out to get done. Mr Duterte has rated

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himself in the first 100 days six tenths, what about you, what is your

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rating of his first 100 days? -- six out of ten. On the economy I would

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say six out of ten makes a fair assessment. In other portions, like

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for instance traffic situation, foreign policy, I would certainly

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not give it a six out of ten. Because there is lots to be desired

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in those aspects. Is Mr Duterte at this point in communication with the

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ECCP? Is the open to dialogue to discuss what needs to be done to

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move the Philippine economy forward? He talked to all his secretaries of

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the different departments, especially trade, finance and

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whatnot, and as I said earlier we are very much on track with what we

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have set out to achieve within the 60 years of his presidency. The head

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of the World Bank, Doctor Jim Kim, says the UN target of poverty is at

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risk because of political backlash against global trade seen by many

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economistss as the fastest driver of growth and the quickest way to lift

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billions of people out of poverty. He spoke with our economics editor

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in Washington. We can build all the infrastructure we want and then we

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can increase trade among the emerging market countries. But at

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the end of the day of if global trade does not grow at a robust rate

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it will be difficult to reach those targets. We are going to work at it.

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We know that it is not just investing in infrastructure and the

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other sort of foundational elements of economic growth, you have to

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invest in people, you have to have better social protection programmes

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and better health programmes, so we will do all that. But if the

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developed countries all close their borders it will be difficult, and it

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will be difficult for those countries as well. Is that it will

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be difficult, if there is a closing of boarders do you fear we may miss

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those targets? We very well could, absolutely -- borders. Any of us who

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have watched this up close, how important trade is for everybody, we

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have not done a good enough job of telling that story to people in high

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income countries. That was the president of the World Bank. With

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the Paris global agreement on climate change to take effect next

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month, the focus is on the airline industry. For the last 25 years of

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the UN has tried and failed to get airlines to limit carbon emissions

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but now the UN's aviation body, the ICAO, which sets global industry

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rules, has endorsed a scheme to cut emissions. Here is how it works.

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And finally, as you can see right now on the market boards, Asian

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stock markets trading cautiously ahead of a key US employment report

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to be released later today. Thank you so much for investing your time

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with us. I am Rico Hizon. Sport Today is up next.

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Before Sport Today, let's catch up with some of the headlines. Two days

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after it was struck by Hurricane Matthew a picture is emerging of the

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devastation on the south-western Tennessee off Haiti with 250 people

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now dead -- south-western

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