13/01/2017 Asia Business Report

Indonesia changes its tune on mining exports, relaxing two year ban. And

how the art world has lost its lustre, as buyers from China shy

away. Good morning Asia, hello world. It is a Friday, almost a

weekend. Glad you could join us for this edition of Asia Business

Report. I am Rico Hizon. We start off with Indonesia where the

government has done an about-face on its ban on raw mineral exports.

Indonesia will now allow exports of more unprocessed minerals, a big

change from two years ago when the government banned most exports to

force mining companies to process minerals within the country. The

President, Joko Widodo, explained his decision. TRANSLATION: We need

to make sure that our natural resources benefit our own people.

That's the founding principle, and our mining needs to be sustainable

and done with respect for the environment. Here is more now on the

change in the ruling from our Indonesia correspondent. Joko Widodo

they're talking about the environment, sustainable mining. It

is very unclear how these changes will actually protect the

environment. What this is really about is improving the economy and

creating jobs, it was one that ban on export of raw minerals was

introduced, two years the idea was that companies would build smelters,

employ Indonesians to process these minerals and keep more of the value

from Indonesia's mining in the country. But that hasn't happened.

What did happen was mines were closed across the country. There

were mass layoffs, companies very reluctant to build smelters, saying

it wasn't financially viable and so now this has had to be reviewed. The

government saying that now it will allow under some conditions of the

exporting of raw minerals to companies, but they need to show

that they will build a smelter in the future. So a kind of relaxing

out of a reality of a situation that didn't work. So what has been the

reaction, Rebecca, in the mining industry? Well, the nickel prices

have plummeted as a result, Indonesians are now back in the

market. The smelter Association and those involved in smelters are very

upset, as you can understand. A lot of Chinese companies did invest

billions of dollars into building smelters and their reaction has been

that this change of policy shows that Indonesia can't be consistent,

and doesn't send a concise message to the investment community. So they

are very upset. It is a mixed bag for the US mining giant Freeport.

They did stop the exporting of their partly processed copper as a result

of this ban. It now looks as if they will be able to resume so they will

be quite pleased with these changes. India's Tata group has named this

man as the conglomerate's new chairman. He replaces the previous

leader who was sacked last year. We are joined by the BBC's

correspondent. Tell us more about the new man at the top job. Did it

come as a surprise? No, actually, it didn't. When the previous chairman

was ousted last year and names were doing the rounds about who would

replace him, Natarajan Chandrasekaran was always a front

runner. He is someone who has spent his entire life in the Tata group,

he joined their IT firm in 1987 and rose through the ranks to become the

chief executive of that company in 2009, and now on 21 February it will

take over as the chairman of the Tata Group. But in many ways he is

an outsider as well, it was in the 150 year long history of the Tata

Group, he is actually the first chairman who is not from this very

close-knit Farsi business community which for decades has dominated

Indian business and even today holds great sway over business here. He is

well respected and lots of corporate bosses welcomed him becoming the

chairman. But of course, we will know how shareholders react to this

in about 2.5 hours from now, when markets open here. A self-made man

indeed. So what challenges of this new chairman face with leading the

largest conglomerate in India? Well, firstly, Tata Group has taken a

beating over the last several months because of this very public spat

over the ouster of the previous chairman. Serious questions have

been asked about corporate governance in the company, and so

that image is something Natarajan Chandrasekaran will have to look at

closely and work towards rebuilding. But of course his biggest challenge

actually comes from the business of Tata Group companies, this is a

group that owns more than 100 companies, they make tea, they make

cars, they make steel. And except for Jaguar, Land Rover and the IT

firm which Natarajan Chandrasekaran was heading, except for those

companies, all of the other companies, the business is in

trouble. It is about getting that business in order. That will be the

big challenge for him. We will have find out how he will fare in 2017.

Well, shares in Japanese airbag maker Takata jumped in Tokyo trade

on reports the company has reached a $1 billion settlement with the US

Justice Department. It is over the company's handling of airbags

rupturing, linked to 16 deaths worldwide and is part of the

agreement Takata will plead guilty to criminal wrongdoing. The

settlement includes a criminal fine as well as compensation cost. Shares

of fear Chrysler tumbled 15% on news the company has violated vehicle

emission laws. The company failed to disclose software in some of its

vehicles, which made it possible for access diesel emissions to go

undetected. Fear has denied the allegations. After years of

record-breaking gains, the art world is losing its shine. The economic

slowdown in China which caused rapid growth in the art market now means

no one wants to pay top dollar for the works of contemporary art is.

Our correspondent went to South Asia's largest art show to have a

look at how the slump is affecting the mood. There is all kinds of art

on display here, appealing to all kinds of tastes, including this one

by a Japanese artist. This is South East Asia's largest art fair, but

this year there are fewer galleries taking part and even the organisers

acknowledge that records are not likely to be broken. Over 130

galleries are here, but that is down from the 173 that the part last

year. At that is not worrying the man who put the show together. And

art market is always the mirror of a social and economic reality. In

other words, that is one thing. The other thing is we had in the last

year a hike in the market. What you have now in the future is going back

to normality. That means it is no more what is the biggest price or

the highest price, and I will tell you frankly, I'm glad we speak a bit

more about art and not about numbers. And, as an investment, art

is tricky because unlike equities or currencies the market is

unregulated. We don't know how prices are fixed. How they are

defined. And there are people inside the art world who are very well

informed, because they are in the inner circles of the art world. And

they know there are quite a lot of practices that are not transparent

and not very rational. One Asian collector who has come here for

years is this Indonesian man who has a collection of nearly 1000, mainly

by Indonesian artist. At the very beginning I started collecting

because of investment purposes but as a spent time with artists and

communicators, I realise that art is really about changing the

perspectives about life. Much more than those dollar signs. Between

July 2015 and June 26 in the contemporary art market shrank by

more than one quarter. Global auction turnover was down on the

previous year. The sharpest fall is in the Chinese market, where sales

were down by 23%, to 11.8 billion. These figures don't paint a pretty

picture, but the conventional wisdom is that if one of these catch your

eye, right now may not be a bad time to buy. Nintendo is betting its new

hybrid game console will be a hit. The Japanese game maker is releasing

more details on its console later this Friday, including how much it

would cost. Switch allows users to play games on the TV but with a few

adjustments it also becomes a portable device. Let's have a look

at the markets. We have about 30 seconds to tell you about it and as

you can see, the Nikkei 225 is up by about 100 points, and this is due to

a stronger dollar against the Japanese yen in Asian trade, which

is benefiting exporters. The Hang Seng index is also up by 50 points,

and the all ordinaries down by 47. Thank you for investing your time

with us. Have a great