31/08/2017 Asia Business Report


31/08/2017

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

:00:00.:00:15.

The Indian economy is growing, but by how much? Recent changes, like a

:00:16.:00:23.

new goods and services tax, have kept people guessing. And Donald

:00:24.:00:29.

Trump snakes a pitch to clean up the tax code in America. -- makes a. It

:00:30.:00:36.

costs Americans millions and millions and millions of jobs and is

:00:37.:00:38.

self-destructive, trillions of dollars. Good morning, Asia. Hello,

:00:39.:00:45.

world. Welcome to another edition of Asia Business Report. I am Sharanjit

:00:46.:00:49.

Leyl. Thank you for joining us. Today, India releases growth figures

:00:50.:00:55.

for the three months until June. They they implemented a new goods

:00:56.:01:02.

and services tax which promises to boost production, but has trouble

:01:03.:01:05.

getting off the ground to be that is after the controversial move last

:01:06.:01:09.

year to remove high-value banknotes from circulation. How was that

:01:10.:01:13.

affecting growth in India? We have this report. After months of almost

:01:14.:01:20.

no work, things are starting to get a little bit busier. This factory

:01:21.:01:25.

makes machines for various industries ranging from hospitals to

:01:26.:01:31.

firms. But the company has been struggling to make profits for the

:01:32.:01:37.

last three years. It became worse when the government banned nearly

:01:38.:01:41.

90% of the cash in circulation last November in an effort to crack down

:01:42.:01:45.

on corruption. TRANSLATION: After the cash ban, most industries cut

:01:46.:01:52.

down production. They were all very worried. We were hardly getting any

:01:53.:01:58.

orders. Sales, which were already low, went down further by 50%. It

:01:59.:02:04.

had a huge impact on India's economy, especially the small to

:02:05.:02:07.

medium-sized businesses like this one. Just when factories started to

:02:08.:02:14.

recover, another setback. In July, a goods and services tax was

:02:15.:02:18.

introduced by the government are completely reformed the way

:02:19.:02:21.

businesses paid tax. The government says the tax overhaul will increase

:02:22.:02:28.

growth. But initial teething problems and the cash ban have

:02:29.:02:35.

stopped consumer demand. In June, production fell to levels not seen

:02:36.:02:38.

in nine years. The World Bank says India's economy will recover and

:02:39.:02:44.

grow by more than 7% in this financial year. But economists say

:02:45.:02:48.

more needs to be done for that to happen. It has the potential to grow

:02:49.:02:54.

at 7.5 - 8%. That that has the potential. However, the real growth

:02:55.:02:58.

engine has to come from private investment, consumption, and

:02:59.:03:01.

exports. We cannot depend on government funded infrastructure to

:03:02.:03:05.

actually be the stimulus for over. The revival of the sector will be

:03:06.:03:15.

important to that engine. It has a big role to play in the third

:03:16.:03:19.

largest economy to fully realise economic potential. BBC News. It is

:03:20.:03:26.

burning season for corporate China and the bank of China is reporting

:03:27.:03:34.

an 11.5% jump to more than $50 billion. -- earning. The fourth

:03:35.:03:42.

biggest lender reported a decline. Overall, the financial sector on the

:03:43.:03:46.

mainland appears to be healthy with lower bad loans. Regulators have

:03:47.:03:51.

been raising efforts to stop the shadow banking system which has over

:03:52.:03:54.

populated nontraditional bank lenders. I spoke to someone to ask

:03:55.:03:59.

if the crackdown is having an impact. Overall profitability for

:04:00.:04:04.

Chinese banks is actually quite healthy. What remains a concern is

:04:05.:04:09.

the net interest income has been deteriorating over the past two

:04:10.:04:13.

years. This is no fault of their own. What is happening is these are

:04:14.:04:18.

macro factors. The property market has been coming off and China is

:04:19.:04:22.

slowing down the pit is not all doom and gloom. The Chinese banks have

:04:23.:04:27.

been wise and are moving away from interest income -based to a

:04:28.:04:33.

fee-based approach. We can see they are currently investing in many new

:04:34.:04:36.

business opportunities like dobbing investment banking, syndicated loan

:04:37.:04:45.

desks, and trading. -- propping up. We have seen them invest in other

:04:46.:04:49.

parts of the region besides their own, which is Southeast Asia. I

:04:50.:04:55.

would say in the long-run, Chinese banks are OK. For many years we have

:04:56.:05:01.

reported on shadow banking. That is a real concern. That is right. The

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origins of shadow banking go back to the Chinese banks themselves. They

:05:08.:05:11.

have traditionally been very conservative with credit policy.

:05:12.:05:14.

They have really preferred reaching out to a client segment that were

:05:15.:05:22.

persistent clients or had credit history. As a result of this, large

:05:23.:05:27.

segments in China have been sort of left out because banks would not

:05:28.:05:33.

look at them. Absolutely. What is interesting is recent innovations

:05:34.:05:43.

have brought P2P and on line lending companies to these. There have been

:05:44.:05:49.

many innovative solutions up Illias Fifa be subsidies of Alibaba for

:05:50.:06:03.

example. -- solutions. There are new ways to do this. Even if banks don't

:06:04.:06:14.

want to touch someone without credit history, these P2P lenders have

:06:15.:06:18.

their own models, with social media and data and on line platforms.

:06:19.:06:27.

Uber's new CEO says he wants to take the company public as soon as 2019.

:06:28.:06:35.

The former head of Expedia met his employees for the first time on

:06:36.:06:38.

Thursday. He said an initial IPO would take place in 36 months. He

:06:39.:06:49.

also said he would stem the financial losses of $3 billion. We

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will speak to a reporter now. Is that likely? This is still a

:06:55.:07:00.

tentative timeframe. Investors are excited for when it happens. Uber is

:07:01.:07:06.

the world's most valuable technology company, worth $70 billion. It is

:07:07.:07:12.

also the biggest loss making private company currently. It is expanding

:07:13.:07:19.

so rapidly and is bleeding cash. Ever since 2009 when it was launched

:07:20.:07:23.

it has failed to make money. That is top of the agenda for the CEO.

:07:24.:07:28.

Before taking a public he needs to narrow losses even more and make it

:07:29.:07:32.

profitable. He might be able to do this. He was at Expedia for 12 years

:07:33.:07:38.

and managed to expand it to 60 countries and made it highly

:07:39.:07:42.

profitable as well applied aside from the financial problems of Uber,

:07:43.:07:48.

it also has a toxic work environment. Exactly. That is why

:07:49.:07:54.

there is a large timeframe to be 18- 36 months. It gives him leeway to

:07:55.:08:00.

fix these problems. Finances, you mentioned the toxic workplace. It is

:08:01.:08:05.

a cultural problem he said he would fix. Discrimination, racism, sexual

:08:06.:08:12.

harassment. Uber is also involved in legal issues with Google and

:08:13.:08:18.

self-driving cars. They are also being investigated by US authorities

:08:19.:08:23.

regarding foreign bribery. There is a lot to sort out. It is his first

:08:24.:08:28.

week. He has a lot to do. A tough week ahead. 30 years since the

:08:29.:08:35.

world's biggest economy reformed its tax code. Overnight, Donald Trump

:08:36.:08:38.

launched his push for tax reform during a speech in the US State of

:08:39.:08:44.

Missouri. He said he wanted to create jobs with higher wages for

:08:45.:08:48.

Americans, but he lacks details. Congress had to do much of the

:08:49.:08:53.

heavylifting. We have this report. The stock market is up. The

:08:54.:08:57.

unemployment rate is at an all-time low. If you listen to Donald Trump,

:08:58.:09:04.

he says the system is rigged. In a speech to introduce tax reform, the

:09:05.:09:08.

US president told the crowd that the tax system of the country was

:09:09.:09:12.

broken. His sale pitch, light on details, focused on how it would

:09:13.:09:18.

benefit the middle-class. Our self-destructive tax code costs

:09:19.:09:22.

American millions and millions of jobs, trillions of dollars, and

:09:23.:09:27.

billions of hours spent on compliance and paperwork. One

:09:28.:09:31.

proposal he has been pushing is cutting the nation's 35% corporate

:09:32.:09:36.

tax rate to 15%. Those in favour say it would encourage countries to stay

:09:37.:09:43.

in the US and create jobs. But not so fast. Budget experts say it could

:09:44.:09:47.

cost the government $2 trillion. Critics say there is no new evidence

:09:48.:09:51.

companies saving more on tax will expand their workforce. Plus, it is

:09:52.:09:56.

so full of loopholes most firms already pay less. There is

:09:57.:10:00.

bipartisan support to simplify the tax code of America. But given the

:10:01.:10:05.

potential impact on workers and businesses in the deficit of the

:10:06.:10:08.

country, modernising the rules will be a tall order to be Michelle

:10:09.:10:13.

Fleury with that report. The markets that just opened in Asia. Gains for

:10:14.:10:25.

the Nikkei. The All Ordinaries in Australia as well. They are taking

:10:26.:10:29.

cues from Wall Street. Rosy numbers in the US. They have been advised up

:10:30.:10:39.

to 3% annual growth in the second quarter. And that is it for this

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