13/07/2017 Asia Business Report


13/07/2017

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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Now on BBC News, all the latest business news live from Singapore.

:00:00.:00:17.

China or Japan takes the lead in reviving the ambitious Trans-Pacific

:00:18.:00:23.

Partnership trade deal after the US pulls out.

:00:24.:00:27.

And we look at why start-ups in India are hitting major roadblocks

:00:28.:00:29.

and struggling to raise money. They are hoping to reach a new trade

:00:30.:00:58.

arrangement. Japan is hosting them until Friday, but, without the US at

:00:59.:01:02.

the negotiating table, is there still a point? Economist Martin

:01:03.:01:09.

Schultz says yes. TPP was thought to be dead after the US was leaving,

:01:10.:01:14.

but with the EU, Japan FTA, which has been signed and brought on track

:01:15.:01:18.

to be going, there is some life still in free trade and getting

:01:19.:01:23.

things going in terms of having trading platforms, and that is the

:01:24.:01:27.

most important thing for Asia. Asia is a very attractive market. So

:01:28.:01:33.

creating a platform, even without the US, makes the entire area more

:01:34.:01:38.

attractive. Trade talks are keeping going. This is very helpful. But the

:01:39.:01:44.

linchpin of this Trans-Pacific Partnership is the United States,

:01:45.:01:48.

and it represents more than 60% of the initial members' GDP. Without

:01:49.:01:53.

the US, the 11 remaining countries will not represent a whole lot.

:01:54.:02:00.

Absolutely. It would be just 15% of world trade, and a lot of that is

:02:01.:02:06.

already covered by existing FTAs. Within Asia most countries already

:02:07.:02:08.

have that relationship, so that the question is, where is the value?

:02:09.:02:14.

It's easy to see from the American side, Canada, Mexico down to per

:02:15.:02:17.

room, they don't have these trade agreements and they are very

:02:18.:02:22.

interested. The drivers are Australia and New Zealand who needs

:02:23.:02:25.

of platform access to the Asian markets. Now Japan is getting

:02:26.:02:30.

interested because China is so active in building trade ties, so a

:02:31.:02:34.

platform without chiding that provides the potential for the US to

:02:35.:02:38.

come back is really a political incentive -- a platform without

:02:39.:02:42.

China. Do you think the Trans-Pacific Partnership will

:02:43.:02:46.

really survive? The big question is, if they get the framework going so

:02:47.:02:50.

it can exist for a while without the US, that is possible, and it will

:02:51.:02:55.

probably be possible until November, and then it's really just something

:02:56.:02:58.

that provides some good arguments for liberal US interests, or US in

:02:59.:03:07.

-- industry, to say, guys, we need to get back into trade talks. That

:03:08.:03:11.

would be really a big political positive point.

:03:12.:03:16.

The United States has officially notified South Korea that it wants

:03:17.:03:20.

to start talks next month on revising their Free Trade Agreement.

:03:21.:03:25.

The two countries have a significant trade deficit and US President

:03:26.:03:29.

Donald Trump has called the trade deal horrible. Earlier I asked an

:03:30.:03:34.

employee of McQuarrie securities for his reaction. Yes, it is about 15%

:03:35.:03:43.

of our exports, so the actual impact on negotiations would not be huge.

:03:44.:03:48.

It depends - even though it depends on the actual negotiation between

:03:49.:03:54.

Korea and the US. But obviously Trump and our government is trying

:03:55.:04:04.

to lower the trade deficit against Korea, so it could have an impact

:04:05.:04:08.

for a long time, but the actual impact on the economy would not be

:04:09.:04:14.

huge. It may not be huge, but what particular industries and areas do

:04:15.:04:18.

you think will be renegotiated by the United States with South Korea?

:04:19.:04:23.

We have many exporting products to the US, but the main product for us

:04:24.:04:31.

to sell to the US is cars, and steel products, so these two could be

:04:32.:04:38.

affected in the future. In around 30 minutes' time, South Korea's Central

:04:39.:04:42.

Bank is set to unveil their interest rate decision. The bank of Korea is

:04:43.:04:47.

expected to keep its benchmark lending rate unchanged at 1.25%.

:04:48.:04:53.

US stock and bond markets rallying overnight after the Fed chair Janet

:04:54.:04:56.

Yellen indicated the US central bank won't rush to raise interest rates

:04:57.:05:01.

further this year. In testimony to Congress, Janet Yellen said

:05:02.:05:04.

inflation levels would be a key factor in their decision. Because

:05:05.:05:09.

the neutral rate is currently quite low by historical standards, the

:05:10.:05:12.

federal funds rate would not have the rise all that much further to

:05:13.:05:18.

get to a neutral policy stance. Speaking of central banks, Canada's

:05:19.:05:22.

currency is trading at its highest level in a year after policymakers

:05:23.:05:27.

raised borrowing costs for the first time since 2010. Its central bank

:05:28.:05:32.

raised the benchmark rate to 0.75% from 0.5% following strong economic

:05:33.:05:35.

growth. The former head of my box says he

:05:36.:05:43.

denies embezzling and wrongdoing at his trial this week. The company

:05:44.:05:48.

went bust after losing nearly $500 million worth of bit coins. He

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allegedly spent $3 billion of customers' money for his personal

:05:55.:05:59.

use and altered the company's books. He was arrested in 2015 after the

:06:00.:06:03.

company collapsed. In Hong Kong, many of the world's biggest

:06:04.:06:11.

companies in start-ups have gathered for Rise. It's a turbulent time for

:06:12.:06:15.

many of them after Trump Administration moved to disassemble

:06:16.:06:24.

the start-up programme. It's certainly not a concern for the

:06:25.:06:28.

United States, I don't think. In technology for a number of years now

:06:29.:06:33.

I don't think the US is any longer seen as the capital or central

:06:34.:06:36.

technology, certainly not silicon valley. Thomas Friedman wrote a book

:06:37.:06:40.

quite some time ago saying the world is flat but the world is very much

:06:41.:06:45.

tilted, and it has tilted in the direction of China and Asia, and I

:06:46.:06:49.

think that's reflected in the fact that the number of American

:06:50.:06:52.

start-ups here this week has more than doubled year over year. So Asia

:06:53.:06:57.

will now be the linchpin for technology innovation going forward?

:06:58.:07:02.

I think it's certainly more diversifies in the world. Chen Zen,

:07:03.:07:09.

a long time ago, arguably became the hardware centre of the world, and

:07:10.:07:14.

the number of start-ups coming out of Beijing every month is greater

:07:15.:07:18.

than anywhere else in the world, and the amount of venture capital being

:07:19.:07:21.

deployed in China alone is unprecedented. So all the indicators

:07:22.:07:26.

are that the activity is switching. Paddy Cosgrave in Hong Kong.

:07:27.:07:36.

India has become known as a good place but competition is tough and

:07:37.:07:40.

many ventures have failed. Some companies are failing to raise money

:07:41.:07:44.

and are laying off employees. What are the ramifications for industry?

:07:45.:07:50.

When this woman set up her business, she fulfilled a lifelong dream. She

:07:51.:07:54.

always wanted to work in education, and so, in 2013, she started Purple

:07:55.:08:01.

Squirrel, a company that organise work experience trips for college

:08:02.:08:05.

students. But despite a promising start, she was forced to shut shop

:08:06.:08:10.

within three years. We were not generating enough profits to sustain

:08:11.:08:13.

operations, and given that we did require funds, we didn't have as

:08:14.:08:21.

many options as investors who truly understood the fabric of an

:08:22.:08:28.

education industry. In 2015, Indian start-ups received more than $8

:08:29.:08:31.

billion worth of investments. But last year that was down by more than

:08:32.:08:37.

50%, and that's forced many ventures to shut down. In 2015, the figure

:08:38.:08:43.

was 250, and it was more than 300 last year. The warning signs had

:08:44.:08:50.

been around for a while with some of India's most well-known companies

:08:51.:08:53.

taking drastic steps to cut costs. That has lead to uncertainty for

:08:54.:08:59.

those working in the industry. People like this man. After five

:09:00.:09:03.

years of working with start-ups, he chose to move back to the corporate

:09:04.:09:07.

world. There's a lot of fear, there's a lot of insecurity in the

:09:08.:09:13.

minds for people, because, when they join an organisation, they obviously

:09:14.:09:16.

want to make a career out of it, but eventually when you see that the

:09:17.:09:20.

organisation does not really treat them as a valuable resource, and

:09:21.:09:26.

they basically leave them in a hire and fire kind of strategy, it really

:09:27.:09:30.

puts them down. That hasn't put off these entrepreneurs. They've come to

:09:31.:09:34.

this workshop to hear from fellow business founders about their

:09:35.:09:38.

journey to success. But success in the start-up space will rely on

:09:39.:09:42.

funding and, until the investment climate improves, it will be

:09:43.:09:45.

difficult for the industry, which India is so well-known for, to fully

:09:46.:09:51.

bounce back. Let's have a look now at the

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markets. A positive start so far for the regional forces:

:09:57.:10:02.

This is after the rallies are being led by the US gains overnight, and,

:10:03.:10:10.

as Janet Yellen said, she foresees graduate rate hikes even as the US

:10:11.:10:15.

economy grows stronger. On Wall Street, another record breaking day

:10:16.:10:19.

for the Dow Jones industrial average, up by 123 points:

:10:20.:10:24.

Thank you for investing your time with us. Sport Today is coming up

:10:25.:10:28.

next. The nominated head of the FBI has

:10:29.:10:39.

told senators he doesn't regard the investigation into Russian

:10:40.:10:46.

intervention in last year's American

:10:47.:10:49.