14/08/2017 Asia Business Report


14/08/2017

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.:00:15.

On the upward trend. Japan charts another quarterly growth for the

:00:16.:00:28.

sixth time in a row. Is Abenomics finally working? And a tale of two

:00:29.:00:33.

economies. We focus on India and Pakistan as they mark 70 years of

:00:34.:00:36.

independence from the British Empire. Welcome to Asia Business

:00:37.:00:44.

Report. Live from Singapore. Let's kick off with what is on the

:00:45.:00:48.

business calendar this week. Japan just released its latest economic

:00:49.:00:53.

data. The world's third biggest economy expanded at an annualised

:00:54.:00:59.

rate of 4% between April and June. That is the sixth straight quarter

:01:00.:01:03.

of growth, driven partly by private consumption. Mid week, the bank of

:01:04.:01:08.

Thailand will be deciding on the cost of borrowing and later in the

:01:09.:01:12.

week, on Thursday, a lot of focus will be on Alibaba as it releases

:01:13.:01:20.

second-quarter earnings. Earlier I spoke to a representative from the

:01:21.:01:24.

bank of Singapore and asked about the Japanese economy and whether

:01:25.:01:27.

Abenomics is working through the system. It looks like growth will be

:01:28.:01:31.

between 2% and 3%, which is where Europe has been in the second

:01:32.:01:35.

quarter. So they seem to be doing quite well at the start of 2017,

:01:36.:01:39.

yes. There have been lots of talks about whether Abenomics has failed,

:01:40.:01:43.

but from all the data we are getting, is it actually succeeding,

:01:44.:01:48.

in your view? I think from the growth numbers it is succeeding.

:01:49.:01:52.

Labour markets are the best they have been in decades, so from that

:01:53.:01:55.

perspective Abenomics has worked. Where it has worked as on the

:01:56.:02:00.

structural side, raising the long-term growth rate, improving the

:02:01.:02:04.

operational behaviour of companies, improving governance significantly.

:02:05.:02:07.

So they have done well to stimulate growth and get things back to

:02:08.:02:11.

normal. They haven't done much to change what normal represents, and

:02:12.:02:14.

that has been the failure of Abenomics. What has been rattling

:02:15.:02:18.

the region over the last few weeks has been growing tensions between

:02:19.:02:21.

North Korea and the United states. We are starting to see a rush to

:02:22.:02:26.

safe haven, in your view? Certainly some safe haven flows. Gold is doing

:02:27.:02:32.

well, the Swiss franc, and rather strangely the Japanese currency went

:02:33.:02:39.

well as well, which is strange as it is on the flight path and has a long

:02:40.:02:44.

history of tension with North Korea. There is a bit of a bump, but

:02:45.:02:50.

nothing to severe. And of course, China plays a significant role in

:02:51.:02:53.

these growing tensions. There have been talks of President Trump

:02:54.:02:59.

possibly signing executive orders restricting intellectual property.

:03:00.:03:03.

What is your view on that? I think it is a real difficulty because when

:03:04.:03:08.

you have a transactional approach to policy, there is no predict ability

:03:09.:03:11.

or framework they are operating in. It is one of those things, if you

:03:12.:03:15.

help us here we will help you there, so you can't see what they will try

:03:16.:03:19.

to achieve. Obviously they have multiple goals but they are not

:03:20.:03:22.

necessarily compatible. At the moment it looks like he wants to

:03:23.:03:25.

bully china on trade with the hope they will help with North Korea.

:03:26.:03:29.

That doesn't seem like a very realistic ambition to anyone in the

:03:30.:03:32.

region. And briefly, before we let you go, we have significant figures

:03:33.:03:37.

from the Chinese economy as well. What are you predicting? Industrial

:03:38.:03:42.

production is tipped to grow about 7%. It has picked up in the last six

:03:43.:03:46.

months or so. People are worried about slowdown in China, it is a

:03:47.:03:50.

perpetual concern. So far the economy is doing fairly well heading

:03:51.:03:53.

into big vertical events later in the year. In other business news,

:03:54.:03:57.

the chief executive of the Commonwealth Bank of Australia says

:03:58.:04:01.

he will retire in the wake of a scandal over allegations of money

:04:02.:04:05.

laundering and terror financing allegations. He has been the head of

:04:06.:04:09.

Australia's biggest bank since 2011 but recently it has been embroiled

:04:10.:04:14.

in civil charges stemming from alleged breaches of financing rules

:04:15.:04:17.

which wiped out the lives of dollars from its market capitalisation. He

:04:18.:04:22.

is expected to step down in June 20 18. The price of Bitcoin has broken

:04:23.:04:28.

past the $4000 mark for the first time in its nine-year history. The

:04:29.:04:33.

value of the digital currency has more than quadrupled so far this

:04:34.:04:38.

year. Joining me here in my studio is the BBC's business reporter. Yet

:04:39.:04:44.

another record, but it has been rather volatile. That's right,

:04:45.:04:49.

crypto currencies like Bitcoin have been on a rollercoaster ride, and

:04:50.:04:52.

that is largely because it remains an unregulated market. So unlike

:04:53.:04:56.

other currencies there is no central bank that controls though

:04:57.:05:01.

currencies. They are also traded electronically, 24 hours a day and

:05:02.:05:06.

seven days a week. With Bitcoin, the oldest and most valuable crypto

:05:07.:05:10.

currency, we saw prices past $4000 on Sunday morning, he began a market

:05:11.:05:14.

capitalisation of more than $60 billion. That is really large, more

:05:15.:05:18.

than triple the price of gold. So now some people are questioning

:05:19.:05:21.

whether crypto currencies like Bitcoin exist in a bubble, because

:05:22.:05:27.

some claim that these currencies basically have no fundamentals, and

:05:28.:05:31.

that they are being driven by people looking to make a quick buck. Thank

:05:32.:05:36.

you for the update. We will continue to monitor the price. Back to Japan

:05:37.:05:39.

and its rigid education system, where children are taught to follow

:05:40.:05:44.

rules and strive for perfection. It is often blamed for the lack of

:05:45.:05:48.

entrepreneurship in the country, but what if you drop out of the school

:05:49.:05:53.

system? As part of our Jumpstarting Japan series, I caught up with a man

:05:54.:05:59.

to find out how he found his own success. Meet the brainchild of Ken,

:06:00.:06:10.

and his avatar. Ken created this avatar to address the loneliness he

:06:11.:06:15.

felt as a child. TRANSLATION: For 3.5 years, from when I was ten, I

:06:16.:06:19.

couldn't go to school because of illness. I felt so unbearably

:06:20.:06:27.

lonely. I started to wonder if they had a healthy clone, could he make

:06:28.:06:30.

good memories at school instead of me. That was the beginning of

:06:31.:06:34.

wanting to create my own avatar. In a country which allows no room for

:06:35.:06:39.

failure, even as a child, Kentaro could have been easily left out of

:06:40.:06:43.

the system, but his teacher introduced. The idea is the robot

:06:44.:06:48.

can be at places where its users cannot be.

:06:49.:07:03.

So there are 120 units that have been rented out across Japan, and

:07:04.:07:11.

they are thinking of exporting it as well. And his robot is helping those

:07:12.:07:21.

with motor neurone diseases like ALS. This 30-year-old is learning

:07:22.:07:27.

how to use it so he can continue participating in society.

:07:28.:07:31.

TRANSLATION: I learn that even when I use all my muscles my eyeballs

:07:32.:07:38.

will be able to move -- when I lose. So I want to prepare myself by

:07:39.:07:41.

learning different tools to communicate. Kentaro 's innovation

:07:42.:07:45.

has given bedbound people the power to be part of the workforce, and it

:07:46.:07:49.

can be used by the elderly, or mothers with small children. From an

:07:50.:07:55.

awkward child, Kentaro has regained his confidence and found his own

:07:56.:08:00.

success. As we told you want Newsday, 70 years ago Britain pulled

:08:01.:08:06.

out of India, marking the end of empire on the subcontinent. So what

:08:07.:08:09.

has become of the economies of Pakistan and India? How do they

:08:10.:08:14.

differ and how much do they rely on each other? Our correspondent

:08:15.:08:18.

reports. Since partition, India and Pakistan have charted very different

:08:19.:08:23.

economic parts. India's economy was bigger than Pakistan's right from

:08:24.:08:27.

the start, because of the size of its population and the fact that it

:08:28.:08:31.

inherited financial and government institutions. Today, India's economy

:08:32.:08:35.

is almost eight times bigger than its neighbours. But what is

:08:36.:08:41.

interesting is during the first 50 years both nations saw similar

:08:42.:08:44.

economic growth. In fact, the average income per person in

:08:45.:08:48.

Pakistan was higher than India during this period. But, since the

:08:49.:08:54.

start of the 21st century, India's economy started to grow faster,

:08:55.:08:57.

widening the gap. This is largely down to the economic reforms in

:08:58.:09:04.

India in the 1990s when it opened up its markets for foreign and private

:09:05.:09:07.

investments. Today, India and Pakistan are the largest economies

:09:08.:09:12.

in East Asia, but they don't trade with each other much. Their trade is

:09:13.:09:18.

less than what they trade with smaller neighbours like Bangladesh,

:09:19.:09:22.

Sri Lanka and Nepal. Part of the reason is what Pakistan calls its

:09:23.:09:26.

negative list, which bans the import of more than 1200 goods from India.

:09:27.:09:30.

These goods range from toothbrushes and diapers to cars and even cricket

:09:31.:09:37.

bats. India also levies taxes on goods imported from Pakistan. That

:09:38.:09:44.

said, informal trade between the two countries is thriving, and it is

:09:45.:09:49.

estimated to be close to $5 billion. That involves shipping goods to a

:09:50.:09:53.

third country. Traders both in India and Pakistan used to buy two get

:09:54.:10:03.

goods to each other -- use to buy. -- Duabai. The total trade between

:10:04.:10:08.

the two countries could touch $10 billion every year. Checking the

:10:09.:10:12.

markets, despite the fairly solid GDP figures, the Japanese Nikkei is

:10:13.:10:17.

down because of the strong yen, which is seen as a safe haven

:10:18.:10:21.

currency as tensions grow between the United States and North Korea.

:10:22.:10:29.

Australia is also down by almost 1%. That is it for this edition of Asia

:10:30.:10:33.

Business Report. Thank you for

:10:34.:10:34.

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