19/12/2017 Asia Business Report

at all levels, as the prime

cause of the problems.

Now on BBC News, all the latest

business news live from Singapore.

India's ruling party sees its

majority squeezed, after elections

in Prime Minister Narendra Modi's

home seat, as voters react to his

economic policies. And Virgin's

founder takes over a futuristic

start-up and raises $50 million to

keep it running. Good morning, Asia,

hello, world. It is a Tuesday. Glad

you could join us for another

exciting edition of Asia Business

Report, I'm Rico Hizon. We kick off

the programme with India, where

elections in Prime Minister Narendra

Modi's home state of Gujarat have

seen a dip in his majority. The

optimism which brought him to power

is beginning to fade. The Indian

economy is beginning to slow due to

de monetisation and the imposition

of taxes. We spoke to our top guru

and author who thinks the country

will regain its glow in 2018.

I

think India will go back to 80%.

India needs to grow between eight or

9% if it wants to enjoy the

demographic dividend -- go back to

8%.

It doesn't help when you see

headlines that they are going to try

and recapitalise state banks that

have been failing for years.

Overlent, and now having to deal

with non-performing loans. Why are

they still propping up unproductive

industries?

This is where I have

fought with their Finance Minister.

Personally I think that no country

should have 70% of its assets

controlled by the public sector.

Nonetheless, we have seen a series

of what many economists globally are

calling errors, the move to de

monetise, the sales tax recently

enacted, how much impact has this

had? We have seen it have some

impact on India, but in terms of

future growth?

I think that Modi

promised three things when he got

elected. He said he would stop

corruption, he would control

inflation, and he would bring drop.

Well, -- bring jobs. Well, inflation

is under control. Of course, he has

been helped by low oil prices around

the world. The jobs agenda is

unfulfilled. That is the key agenda

for this government.

President Trump

is seeking to change the status quo

with a new national security

strategy. He named China and Russia

as competitors, seeking to challenge

the United States. It reflects

President Trump's America first

slogan which aims to protect the

American people and promote

asperity.

We will attempt to build a

great partnership with those and

other countries, but in a manner

that always protect our national

interest.

So how is it likely that

the world's number one and number

two economies may start a trade war?

By posed that question.

It is always

hard to predict where things go at

different points in time. It could

be areas or sectors which could be

impacted. People have been talking

about the automobile side. But what

we are looking at when we talk to

companies on the ground is really

looking at areas where there is real

growth coming in from China's

domestic economy. And that has been

unleashed by its biggest trend,

which is human capital. So 5 million

engineering graduates which are

working within China, and that is

quite apparent when we talk to

companies on the ground, and the

government really allowing companies

or pushing companies to innovate

further. That is really what this

whole shift towards Easter notation

is.

Easternisation is. In the East

has been significantly outgrown by

the West.

When you look at us there

is enough evidence to show that the

powershift is happening, that

western companies are also looking

at companies in the east and looking

at their business models. And when

you look at Asia today, it is not

just about being value added

reduces, but importantly, Asia is

also giving the world value added

consumers. It is not just China, it

is countries like India and

Indonesia and we are excited about

these opportunities on the ground.

So online companies, for example,

even some of the automakers for the

Chinese market.

Now to our year end

special, and today we focus on

Asia's second-biggest economy. It

has not been a great year for the

made in Japan brand, and some of its

biggest brands made news headlines

for all the wrong reasons. The

infamous apology by Japanese

executives became a familiar sight

this year, thanks to this long list

of corporate scandals, from Toshiba

to Kobe steel, to yesterday when

some of the biggest manufacturing

firms were accused of bid rigging to

win deals from Central Japan

Railway. Is there a breakdown in how

business is done in Japan? Our

correspondent said absolutely not.

It is a resurgence of the Japanese

way of doing business. Top quality.

You know, as the world gets more

competitive, as China is emerging as

a real competitor, Japan is upping

the game. The control for super,

super top quality, that is what this

is all about. Japan is actually

getting better as we move.

So will

these revelations and scandals

further strengthen corporate

governance in Japan?

Absolutely, you

are making a very important point.

You will remember around 1.5 years

ago Japan tightened its corporate

governance standard, so managers for

the first time really in the history

of Japan are being held accountable

to the very highest standards, both

in terms of quality control, but

also in terms of shareholder value

creation. So you know, the fact that

you do have management being held

accountable is actually a great sign

that corporate Japan is improving

and getting ready for a more

competitive world.

So if this is a

positive thing that is taking place,

these scandals, will this lead to

more revelations in 2018, more

misdeeds being revealed?

I think

that, you know, you never know what

is going to be coming down the pike

here but the one thing that is for

sure, you have in Japan, you know,

the pressure and the accountability

to being held to the very highest

standard, to actually perform to the

top 0.1% rather than the sort of...

We can also do this kind of

standard, that is what corporate

Japan is focusing on, and that is

really where Prime Minister Abe is

tightening the screws, because he

knows that in order to be a top tier

country, to be a top tier country,

you have got to have the highest

standards, and the government plays

its role in enforcing that those

standards are being held.

Transport

start-up Virgin Hyperloop has

appointed Richard Branson as its new

chairman and started a new round of

financing. I am joined by my

colleague. Should we be surprised by

Richard Branson's appointment?

Not

really, because Richard Ranson

actually invented in Hyperloop back

in October, so we had the Virgin

name at the top of the company. Him

being named chairman doesn't come as

a huge surprise. He has this

reputation for taking these big

business risks, and Hyperloop

completely fits that mould. It is a

futuristic train company which is

looking to cut the travel time

between major cities. So in the

future, once this is up and running,

they are hoping it will only take 30

minutes between Washington, DC and

New York City. So they just recently

did another test run and they hit a

new speed record of 240 mph at the

test site in Las Vegas. So it has

very exciting ambitions. It also

means it is bleeding cash, so it

managed to get a financial lifeline

from two new companies, from a

Russian firm as well as from a

company in Dubai. They are all

putting money into Virgin Hyperloop,

which will keep these operations

going.

This is amazing technology

and innovation at Richard Branson

will be competing against Elon Musk.

This is interesting, because it was

actually conceived by Elon Musk, it

was his idea, but also that of a man

who is on leave after being accused

of sexual misconduct, as well as

another engineer. But they are

dealing with not just programme but

leadership issues. Hopefully

Hyperloop can fix that.

leadership issues. Hopefully

Hyperloop can fix that.

And before

we go, here is a quick look at the

markets and it is an up heat session

right now for Asia. The Nikkei and

Australia currently in positive

territory, together with the South

Korean index, after Wall Street rose

to new milestones overnight as US

Republican lawmakers moved closer to

passing tax-cut legislation. And

potentially there could be more.

Thank