09/02/2017 Asia Business Report

Press rewind. The US and Japan. And flying high, Indian carriers are

expanding their reach in aviation. Good morning, Asia. Hello, world.

I'm Rico Hizon. Thank you for investing your time in Asia Business

Report. It's a Thursday. We start off with Japan's Prime Minister,

Shinzo Abe. He has his work cut out for him when he meets with US

President Donald Trump tomorrow. This is important symbolically.

Shinzo Abe is the first Asian leader to meet the new US president. The

stakes are high. President Trump has had direct criticism of Japanese

companies and Japan. It has put them on again. Last month he criticised

Toyota Motors. They said they would invest more in America. The fall in

the yen is a reflection of the relationship between the US and

Japan in the 1980s. Are we in for deja vu? There is a huge difference

between what happened in the 1980s and is now. At the time, the

deficit, how much Japan was selling to the US in comparison to how much

the US was selling to Japan was a really wide gap. That situation is

not the same today. If anyone can be accused of dumping products into the

US it would be the other favourite sort of villain in the story that

President Trump likes to bring up, that is China. The deficit between

Japan and the US has really shrunk comparative to the US GDP over the

last three decades. And Japan is going to try to point out that there

are massive differences between what was going on then and what is

happening now. So, with this fear of a protectionist policy from the

Trump administration, it seems like the Japanese are trying to be more

aggressive in, basically, building a relationship with the Donald Trump

administration. Well, they don't have much of a joint. Back in the

1980s, one of the major considerations for Tokyo to give in

to concessions was the political factor. Basically, Japan needs

Washington as a major US ally in its backyard. The Seine is today. The

situation on that front has not changed. -- autor. Things like

autos, trade, that is what will be on the agenda. And for analysis of

the meeting with Donald Trump in Washington, DC with Shinzo Abe, you

can read more on her blog topic that is on the website, BBC .com. Japan

is not the only country nervous about a trade war under the

administration. I asked which Asian economies will be affected the most.

I think the US border adjustment task will hit Vietnam the hardest,

along with Korea, Taiwan, and Malaysia. These are the economies

which export a lot to the US. The nature of their products,

electronics, durable goods, they are highly responsive to price changes.

If there is a price hike in the US they will be impacted the most. If

that is true, by how much could this impact Gross Domestic Product and

economic growth? By adulation, even with the direct impact, it could be

in the tune of 0.6 - 0.9% of the GDP. That is significant already.

That could have knock-on impacts with domestic investment as well.

So, in countries like Vietnam, it could be bigger than 1% GDP. A

knock-on effect on the direct investment and a lot of lost jobs in

these countries. Yes. Potentially, it will not just be investment. It

will have an impact on employment which would also impact consumption.

So we are really thinking about the potential scaling down of some of

these trade related impacts which could really impact the economy. So,

how can many of these Asian economies which could be impacted by

the trade pacts basically skirt the reduction in growth? Is it through

bilateral agreements with the United States? I think that is probably one

channel. At a company level, there will be a great incentive to invest

and have domestic presence in the United States. Of course, that will

be viable for some industries, but not be labour intensive industry,

for example. It is not the easiest thing to do. It depends on the

industries, what you can do. The second thing is they will probably

look to each other more, increasing trade within the region. I think

China, ASEAN, there will be a great amount more of Chinese regional

investment to counter this. In other business news, we have what looks

like a case of mistaken identity. Snapchat announced its plans last

week. That seems to have gotten some investors slightly ahead of

themselves. Shares of the completely unrelated company called Snap

Interactives has since soared by more than 160%. Shares of the actual

Snapchat company, Snap Inc, will start trading only a week from now.

There was an announcement that all restrictions on cash withdrawals

will be removed from next month in Mumbai. The decision not to cut

rates may have come at a huge surprise for the markets and

investors. The decision to remove all curbs on cash withdrawals has,

the huge relief for people all across the country. In 2016, there

were restrictions regarding how much money people could withdraw from

banks and ATMs. It was a surprise move to withdraw two high-value

rupee notes from the system. The head of the Reserve Bank said that

it is reasonably confident that by next month, the situation will be

under control. There will be enough liquidity in the system. It is why

it is confident banks will be in a position to provide the new currency

notes without any problems. BBC News, Mumbai. Staying with India,

their airlines are flying high, with the middle-class flying at even

greater volumes. They are rushing to expand their fleet to take advantage

of the growth. This one is one of them. They are paying for a new

Boeing aircraft. They had to close operations a few years ago due to

financial difficulties We have the details. For airlines, India has

always been a land of opportunity. A growing population, rising

disposable incomes, and an increasing thirst for travel, these

are helping the aviation sector in the country finally take off. When

Indians have extra money on hand, they usually buy things like cars

and gadgets. But now more than before, they are choosing to travel,

with many opting to fly overseas. Last year, air passenger traffic

grew by 23% but overall, only 100 million people flew, a fraction of

the 1.2 billion people in India. I am thankful for the confidence in...

Low-cost airlines are rushing to expand their fleets and take

advantage. Spicejet, the fourth biggest in India, is buying more

Boeing aeroplanes. It helps reduce the cost of maintenance and flights

and the fuel burn, because this is a far more modern aircraft. It flies

off to many more destinations than we do today. That is quite a

turnaround for an airline that was forced to close operations in 2014

after running out of cash. Spicejet is not alone in expanding quickly.

GoAir has more planes on order, and so is Indigo, with 400 plant. While

that means more travellers can take to the skies, handling them on the

ground remains a key challenge. -- planes. It now becomes a question of

can the infrastructure keep up with that kind of growth? As Indian

airlines continue to expand, that gives a boost to aviation design and

many factoring and in that sector in India, since many plant products are

made in India already. With the recent large aeroplane orders,

India's skies are about to get more crowded. BBC News, Mumbai. Before we

go, a quick look at the markets. So far, as you can see on the market

boards, it is a mixed day for the stock markets. Japan is down by 76

and a quarter points. A stronger yen is impacting the exports sector.

There is concern about Mr Abe's meeting with Donald Trump in America

and what comes out of that bilateral meeting in the White House. That is

Wall Street. The NASDAQ edged up to another record. There is weakness in

banking stocks pressuring the Dow Jones industrial average. And with

that, we end this edition of Asia Business Report. Thank you very much

for investing your time in us. I am Rico Hizon. Have a productive

Thursday. That is it for now. The US Senate has confirmed

President Trump's controversial choice for Attorney General,

right-wing senator, Jeff Sessions. President Trump has criticised

the clothing retailer, Nordstrom, for dropping his daughter

Ivanka's clothing line.