11/01/2018 Asia Business Report


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11/01/2018

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.

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US stocks retreat on reports that

China could be losing its appetite

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for purchasing American debt as

tensions between the two countries

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continue to escalate.

Destination Cambodia, find out what

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storing international companies to

this manufacturing hub in Southeast

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Asia.

Good morning, Asia. Hello, world.

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Glad you could join us for this

Thursday edition of Asia Business

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Report, I'm Rico Hizon. We start

with Wall Street and the major stock

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indices ending lower overnight after

a choppy trading session and one of

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the reasons involve is Asia's

biggest economy, Bloomberg is

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reporting Chinese officials are

thinking of slowing or possibly even

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halting purchases of US Treasury

bonds. China is the biggest foreign

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holder of US government debt, with

$1.2 trillion in Treasuries as of

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October, 2017. But Chinese officials

were cited as saying they would slow

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down the purchase because of trade

tensions between the two big

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economies and there is further

evidence of a delicate business

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relationship between the Americans

and the Chinese, and these stories

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both concerns Mark phones. Apple

says a Chinese government owned

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company will take control of its

iCloud services in the country.

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Vincent from the BBC News service

says Apple's boss Tim Cook had no

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choice but to do this if he wanted

to keep this company in the

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mainland.

I think this is a dilemma for

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companies like Apple. The Chinese

market is really attractive to all

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sorts of businesses across the

world, but if you want to enter

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China there are local rules and

regulations that you have to comply

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with and I would say Tim Cook was

facing a really tough choice. From

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the Chinese government and business

perspective, it only makes Apple and

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equal player in China because all

businesses operating in China have

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to comply with Chinese government

role and they would argue why Apple

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is exceptional. The government were

saying I'm glad you're complying

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with our laws, welcome to our

market, but Apple, for them, they

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won the market in China, but they

lose the moral argument outside

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China.

Vincent Ni from the BBC China

news service.

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Leading Chinese and smart phone

manufacturer wow why has chosen,

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axing its US business presence Paul

Frew at the last minute because of

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security concerns. It wanted to sell

phones through AT&T in America but

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there was strong competition. The US

move has an air of protectionism.

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We've seen this in the

infrastructure market and now it

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seems to be coming to the smart

phone market. The key difference

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here is that Huawei's chipset is its

own chipset and I think that's why

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we've seen particular emphasis on

Huawei and this model in the US and

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this AT&T deal. Certainly 18

lawmakers have signed a document to

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the FCC highlighting their concerns

over this. Concerns over Chinese

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manufacturers' equipment has been

long-running in the US, and of

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course we get into this tit for tat,

it might be the US being

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protectionist over backdoors but who

started that? The US.

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The next guest says the trend is

still upwards for big deals in the

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region. In 2017 the various deals in

the Asia-Pacific added up to over

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673 billion US dollars, that's 4.8%

higher than 2016.

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The story is a bit different when

you look at muggy coming from China.

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Government restrictions reduced

mainland outbound M& by:

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If you count megadeals, Asia saw

four major deals in 2017, one more

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than 2016.

I spoke to Stephanie Hanna in Hong

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Kong and I asked her about the

future for deals already on the

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table.

I think it casts a shadow for other

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deals that are still waiting for

approval that involves Chinese

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buyers. Were talking about deals

like Jen Worth being sold to China

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Ocean wide, a life insurance

company, other deals being sold in

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the semiconductor space. It doesn't

bode well for those deals that are

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still hanging in the balance and I

think it goes to show that Cifius is

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considering access to consumer day

as part of that umbrella of national

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security risks.

Later today a UK

court will rule on evidence

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pertaining to the extradition case

of the Jane Malcolm Turnbull, the

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fugitive tycoon has co- ownership of

Formula 1 Force India race team and

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he also owns Kingfisher Airlines,

which has been grounded since 2012.

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Let's go to Mumbai. What is this

case all about?

Well, Rico, Vijay

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Mallya is a wanted man in India and

ever since he left India for the UK

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in 2016, the Indian government has

really ramped up its efforts to get

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him extradited back to India to face

trial for financial crimes. Vijay

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Mallya's known for being a very

flamboyant businessman, this

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business interests ranged from

airlines to alcohol and he co- owned

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the Formula 1 team. He was once

dubbed the Richard Branson of India

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but this companies owe a lot of

muggy to Indian banks. The Indian

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government is trying to get back

around 1.4 $1.4 billion from his

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companies. He said he is subject to

a witch-hunt and the extradition

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trial is politically motivated and

he denies all the allegations.

It

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seems like the Indian government is

singling out Vijay Mallya, is this

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true?

Vijay Mallya owes a lot of

money to Indian banks, $1.4 billion

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is no laughing matter, but he's

become really the face of a wider

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problem in India. Public-sector

banks, which give out around 70% of

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loans, more than that, in India, are

struggling with non-performing

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assets and that's really causing

problems here, it's limiting the

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banks' ability to give credit to

small businesses and it's affecting

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the banks' balance sheets and it's

affecting foreign investment coming

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into the country and that's what the

Indian government really needs in

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order to boost growth. The Indian

economy slowed down a little bit

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last year and the Indian government

really wants to improve that. So

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Vijay Mallya has become the very

public face to a really serious

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problem here.

Thank you so much for that update.

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Many foreign companies are knocking

on the doors of Southeast Asia and

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companies to do business since they

are less expensive than its economic

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powerhouse to the North. A survey

from the US chain of commerce in

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China found nearly a quarter of its

members are considering moving or

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have already done so. Of those about

half are looking at other countries

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in Asia where labour costs are

lower. But do labour costs always

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mean more profits? Tim McDonnell has

more from Phnom Penh.

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It's exam day at this school and by

Cambodia's largest textile industry

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group. Many manufacturers come here

in search of cheap labour,

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especially as wages rise in China.

But there's plenty of competition

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from other low-cost countries, like

Vietnam and Bangladesh. So these

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classes are aimed at making sure

productivity keeps pace with wages,

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which have been rising here.

There's way to offset more than 100%

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increase over three years through

productivity gains. If wages rise to

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a level whereby we are competitive

then there is no development. There

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can only be growth and gain when

there's economic development. If you

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are uncompetitive it means there's

no investors or fewer investors

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coming to invest in Cambodia, so

where do you get development?

Wages

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will need to clear that speed bump

and start rising if ordinary

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Cambodians are to improve their

fortunes but economists say they

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will need better skills to do it.

Our productivity now has improved

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from day to day, but we need more

skill to improve. If our government

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improves we can gain manufacturing

from China.

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But a more diverse manufacturing

sector might be part of the answer

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to two.

The overwhelming majority of

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manufacturing in Cambodia is in the

garment industry, but a new

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generation of companies are moving

in hoping to take advantage of the

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country's low wages. This Japanese

company makes equipment for car

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factories. TRANSLATION:

Bearings,

gears shifts, we line up the parts

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and heat it up at a high temperature

to make it more durable.

The jobs

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are a little more skilled and the

pay is a bit better. This man says

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there are many challenges but

Cambodia is cheap enough for

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investing here to make sense.

TRANSLATION:

Wages are increasing in

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China, by manufacturing in China and

in porting to Japan it doesn't make

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much of a difference. Because of

that we've moved our factory to

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Cambodia and Southeast Asia --

importing.

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The World Bank says the number of

non- textile factories here is

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growing and they could be vital to

lifting the country's living

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standards. Some of those jobs might

come to Cambodia because China's

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getting more expensive and workers

there are making more money. That's

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a luxury many Cambodians would like

too. Timothy Wood Donnell, BBC News,

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Phnom Penh.

With that we end this addition of

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Asia Business Report. -- Timothy

McDonnell. Don't forget to follow us

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on Twitter.

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