28/02/2017 Asia Business Report

India's Finance Minister tells the BBC his decision to pull large

banknotes from his nation was justified. And we find out more

about a $7 billion refinery being built in Malaysia. Good morning,

Asia. Hello, world. Thank you for investing your time in Asia Business

Report. It's a Tuesday. I am Sharanjit Leyl. India will release

its fourth quarter GDP figures in just a few hours. And those will

give us a very good indication of what impact the government's the

monetisation drive has had. They banned five types of notes last year

to crack down on illegal cash holding and counterfeit notes. But

it hit agriculture and industry hard. We report. Three months ago,

these tomatoes were ripe and ready to be harvested. This field would

have produced about 30,000 kilos of them. But this farmer simply had to

let them go after the government withdrew most of India's currency

notes in November last year. People were suddenly short of money and am

willing to spend. That drove down the prices of many consumer good,

including vegetables. He was left with no choice but to abandon his

crop. TRANSLATION: I would have to pay for workers and transport to

harvest it and sell it. At low market rates, I would lose money

rather than make it. For us, one season gone is a big deal. I lost

nearly $1000. Now, even though prices are going up again, I cannot

produce more vegetable. This is another big field where the farmer

could not harvest it. When agriculture is hit, it is bad news

for the country. More than two thirds of the country lives in rural

areas. When they have the ability to spend and purchase things, the

economy grows faster. Motorcycles, scooters, these are among the big

purchases that people living in rural India make. Sales of these two

wheelers fell sharply over November and December. TRANSLATION: On

average, every month I used to sell about 75- 80 motorcycles. After the

ban of the notes, I only sold about 42 in a month. People do not have

money to service their vehicles. There is just no cash flow. Now,

things are slowly beginning to improve. Cache is a lifeline in

rural India. As it comes back into circulation, people are beginning to

recover. -- cash. But getting back to normal might take a little

longer. BBC News. As you saw, reversing monetisation has been

controversial in India. The Finance Minister, Arun Jaitley, told the BBC

the move was necessary. He was speaking to us. There is no other

way it could be done. For the reason that one of the fundamental problems

within the economy is that from a taxation point of view, it was

hugely non-compliant, the economy. The ratio of nondenominational

currency was very high. And you saw tax evasion and corruption and crime

like issues. All of this came up. And therefore, rather than give an

opportunity to the evaders to manage, it had to be done abruptly,

so that money could lose its anonymity and go back into the

banking system. Do you worry that moving away from monetisation will

slow the economy? It was extremely fast. I believe that there would be

some transient impact only in the short run. However, in the medium

and long run, there would be the informal and formal economy.

Therefore, India's GDP could become even bigger. That was the Finance

Minister of India. Form all on those growth figures, we are joined by our

correspondent in Mumbai. -- for more. You heard about the

justification from the Finance Minister. But what impact will we

see on the economy, particularly in these fourth-quarter figures? Well,

the figures that will be released later today will actually give us a

clear indication as to what has been the impact of this exercise, because

these figures are for the months of October to December, 2016. And the

government took this decision in early November. So this is going to

give the first big picture of how it really hit businesses, consumers,

and earnings across the country. Most economists say that the rate

should fall somewhere between ex-6 .3%. -- 6-6.3%. Some say below 6%.

It could mean India would lose the tag of the fastest growing economy,

which it was for the last two quarters. It had surpassed diner,

which had been witnessing a slowdown. -- China. It had gone

ahead of that. We heard from the report that businesses are being hit

hard and consumer spending has been hit hard. We really saw the impact

during this. We will get a clear indication in a few hours. We will

watch those numbers. Thank you for joining us. Well, $7 billion to be

that is how much Saudi Arabia's state oil firm is investing into and

oil refinery set up by Petronas. It comes as the Saudi King arrived in

Kuala Lumpur law to kick off a and at kicking off deals. -- multination

tour. Let us not forget, one month ago this was off the table. This was

a massive reversal and a big save. For the Saudis, this puts another

crown jewel in their or for you. The Saudis will also get the right to

supply up to 50% of the 300,000 barrel a day refining capacity. This

is an outlet for some of their oil, for the Saudis. For Malaysia,

joining an investor of this magnitude, after, this was a month

ago that it was ended, it is a great save to buy it obviously, both sides

see some benefit. But is one side benefiting more than the other? It

will be hard to say. But when you see a deal go off and then a deal go

on, I expect renegotiation and more favourable terms. Who needed this

deal more. Look at the Saudis, China and Japan, they will be stopping in

Indonesia where they are investing. They have a downstream empire in

Asia. They have been a big investor adhere. This adds to the portfolio.

But I think the terms are ugly -- probably improved, which is why

it is back one. The airline has 40% of the domestic market and is keen

to expand. Earlier, I spoke to a consultant for the company looking

to do business there. I asked if the airline will face stiff competition.

Some of their growth will be stealing from the domestic market.

Obviously, their consumer base will be growing with the middle-class set

to be doubled by 2020. As Vietnamese become more wealthy, they will want

to go out. There will be competition. They will be wanting to

go out. We know there are many challenges within Vietnam, rather

unusually, infrastructure not keeping up with demand. Can you tell

us more about that? The Vietnamese are trying to add on as much

infrastructure as they can. Obviously, we face a lot of delays

in terms of some of the big projects, like the airport which

will be built in Ho Chi Minh City. Right now there is simply not enough

space for the aircrafts that are coming in. Many of the bigger cities

like Ho Chi Minh and Hanoi, there is a question of how the cities will

accommodate the increase in aircraft. Indeed. Last year we saw

you buying Airbus and Boeing planes, coming up to $12 billion. Can you

afford it? I think so. The model is resilient and is a low-cost carrier.

They will be in a good position to expand. And I think they will be

fine. And that is Matthew Garland. The markets before we go. Most

markets are up. Just slightly. They are taking cues from Wall Street. We

saw the Dow actually making its 12 record-breaking day. The Nikkei is

gaining some, reversing the 2.5 week low it hit yesterday.

All of this is in anticipation of Donald Trump's speech to Congress

later today when he