09/02/2017 Asia Business Report

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Live from Singapore, the essential business news as it breaks and a look ahead to the news that will shape the business day.

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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.