:00:00. > :00:00.Now, on BBC News it is time for Talking Business.
:00:07. > :00:12.Is the commodity boom over? Will food prices continue to rise? Plus,
:00:13. > :00:16.its Black Friday, the biggest shopping day in America. Will US
:00:17. > :00:20.consumers be spending this year? I am Linda Yueh and we are talking ``
:00:21. > :00:44.Talking Business. Welcome to the show. It has ban
:00:45. > :00:49.dramatic run that lasted for over a decade. Globally, commodity prices
:00:50. > :00:57.such as iron ore, copper, energy have doubled since the early 2000s.
:00:58. > :01:00.It has gone on so long it has been dubbed the commodity supercycle. Not
:01:01. > :01:05.even a financial crisis could dent it. Commodity prices refell but
:01:06. > :01:09.recovered rapidly. Prices doubled between 2009 and 2011, but since
:01:10. > :01:16.then, prices have fallen by more than 20%, becoming what is
:01:17. > :01:19.technically called a bear market. The biggest factor is likely the
:01:20. > :01:24.slowing of China. If the commodity boom is over, what
:01:25. > :01:31.will be the impact? One country that has seen the ups and the downs is
:01:32. > :01:38.Mongolia. Is it a precautionary tale for other resource dependent
:01:39. > :01:44.countries? Joining me to discuss this the Cabinet secretary and
:01:45. > :01:52.member of Parliament and has held various positions in the Mongolian
:01:53. > :02:02.Government, a respective from an investment company. And Tony Nash.
:02:03. > :02:06.Welcome to all of you. Let me start with you minister. Mongolia has been
:02:07. > :02:10.rescued four times in the last 22 year, the last time was during the
:02:11. > :02:14.2008 crisis. Are you sure that you have got the
:02:15. > :02:24.policies right so far in commodities? Yes, we are quite sure,
:02:25. > :02:30.because you know, as you say, we are experience it happened, because of
:02:31. > :02:35.the historical past we experienced these kinds of thing, we used to the
:02:36. > :02:42.biggest empire in the world, so we used to be a satellite country, to
:02:43. > :02:47.post the Communist regime. On the foreign investment, one of the
:02:48. > :02:49.issues is you were not treatmenting foreign investors equally but you
:02:50. > :02:55.have changed that policy, was it wrong in the first place? Yes, that
:02:56. > :03:11.is what I am trying to explain. We experienced a very good period of
:03:12. > :03:23.time, the worldwide company started... Why we need foreigner,
:03:24. > :03:30.and that is some kind of political game, also national people that we
:03:31. > :03:35.no longer need for money. We started to experience a problem, and our
:03:36. > :03:40.inflation rate, and without money there was the biggest issue in the
:03:41. > :03:45.social sphere, our life, and that is why people started to understand
:03:46. > :03:51.now. Without in technology, without this money, without this no how from
:03:52. > :03:55.developed countries, there is no way for the Government to succeeder, for
:03:56. > :04:01.the country to succeed. That is why we started to behave wisely and we
:04:02. > :04:07.started the treat foreign investors as equally as local investor, so we
:04:08. > :04:15.enacted new law, a new law investment, and we no longer going
:04:16. > :04:22.to divide between foreign and locals. We will ask what will they
:04:23. > :04:26.need from us. Two words, predictability and sustainability.
:04:27. > :04:30.You have corrected it. Have they done enough to reassure you this
:04:31. > :04:36.kind of policy mistake won't occur again in the future? Well I think
:04:37. > :04:39.the legislative advances are welcomed and it is a great first
:04:40. > :04:42.step and a key point of the legislation is the fact it will
:04:43. > :04:46.require more than a majority of two thirds of Government, in order to
:04:47. > :04:52.change this investment. Sorry all members of Parliament, now that,
:04:53. > :04:55.that is I think is a huge bonus and think that means we will have
:04:56. > :05:00.stability with regards to this investment law. From my perspective,
:05:01. > :05:05.the challenge is still remain with inest vester confidence. While this
:05:06. > :05:08.is a great first step and there has been other fantastic legislative
:05:09. > :05:13.progress with the secures law, that will help my business in the future,
:05:14. > :05:19.give me many more opportunities to invebs on the Mongolian Stock
:05:20. > :05:25.Exchange, we need a large catalyst to reignite in Mongolia and
:05:26. > :05:30.investment flows: It sound to me like there is a first step, but
:05:31. > :05:36.Mongolia has made a number of mistemperatures? Do you think they
:05:37. > :05:42.have `` mistakes. Do you think they have done enough? What we need to
:05:43. > :05:45.see is time. I think we, the continuity of enforcement, the
:05:46. > :05:50.continuity of implementation of this new investment law, is what many
:05:51. > :05:56.investors want to understand. So we look at say the rights issue, coming
:05:57. > :06:00.out in January, this big copper mine. We look at foreign investment.
:06:01. > :06:04.We see how some of the licenses that were pulled a couple of months ago,
:06:05. > :06:09.whether that is redistributed, this short of thing, under the new mining
:06:10. > :06:15.law, foreign investors are looking for a sense of continuity and
:06:16. > :06:22.consistency, so if we are looking at things like the a major mining area
:06:23. > :06:27.as you although, I think it is going to be a couple 06 years off before
:06:28. > :06:33.people can have confidence in that level of investment in Mongolia. Let
:06:34. > :06:38.me bring you in minister, one of the things that investors will worry
:06:39. > :06:42.about, is if copper prices, or commodity prices continue to
:06:43. > :06:48.decline, it resulted in a rescue just a few years ago, can you give
:06:49. > :06:54.an assurance your policies will not result in the fifth rescue in just
:06:55. > :07:06.over two decades? . There is no need, that is why we need from
:07:07. > :07:11.others mistakes and achievement. In Norway and Europe, and considering
:07:12. > :07:15.some mistakes because of this Dutch disease, we really understood that
:07:16. > :07:21.we really need good policy on this one, that is why we are talking
:07:22. > :07:25.about rainbow policy it consists of seven colours and mining is only one
:07:26. > :07:30.of the sense we need to find all the six colourings, and we need to talk
:07:31. > :07:35.not only about mining but other sectors of the economy. Mongolia is
:07:36. > :07:39.very good on cashmere because the quality of cashmere, it is number
:07:40. > :07:45.one in the world, and we have corrected with the Italian big name
:07:46. > :07:53.company, also our local factory, they will be very good investment on
:07:54. > :07:57.cashmere, and cashmere from 500 million businesses, could be five,
:07:58. > :08:02.six billion business, and next the step is tourism. Mongolia can be
:08:03. > :08:08.very good, and that is why we need to talk about the colours of the
:08:09. > :08:13.economy, and when we, when rainy days come as you say, we will be
:08:14. > :08:18.confident. Are you confident they are not going to need a rescue. The
:08:19. > :08:24.track record isn't very good? I am confident. Since 2008 there have
:08:25. > :08:27.been significant changes and that does give me confidence. I started
:08:28. > :08:32.investing in 2010 and I continue to invest. I think a at the moment
:08:33. > :08:39.Mongolian asset prices have been beaten up horrendously, this is a
:08:40. > :08:43.perfect time to enter the market and gain exposure. Tony, the issue to me
:08:44. > :08:49.this is the key issue, if you have been rescued so many times and it's
:08:50. > :08:54.a very resource dependent company, are you confident they have got it
:08:55. > :08:58.right and won't need another rescue? First I have to give them credit.
:08:59. > :09:01.They took a faulty foreign investment policy and within, you
:09:02. > :09:05.know, within a short time they turned it round, kale up with a new
:09:06. > :09:10.law and came up with a credible way forward. That is very good. In terms
:09:11. > :09:13.of commodities, will the bottom fall out of commodities? We don't see the
:09:14. > :09:18.bottom falling out of commodities in the medium term, so we think that
:09:19. > :09:22.there is a sustainable market there, obviously the shine has come off
:09:23. > :09:28.some of them, but most of Mongolia's exports go to China. China will
:09:29. > :09:32.continue to grow between 7.5`8% for the next seven years so there is a
:09:33. > :09:37.market for what Mongolia is selling, and you know, our view is by 2020
:09:38. > :09:44.Mongolia's economy will be three times what it was, in 2011. So there
:09:45. > :09:49.is rapid growth. Sustain growth. What we are more concerned about is
:09:50. > :09:54.the implementation of that policy, right? There is I would say an
:09:55. > :09:58.uncomfortable overlap of the business class and the political
:09:59. > :10:02.elites. It is a small country. It is hard to avoid that on some level.
:10:03. > :10:07.The transparency has to come about, the transparency of how decisions
:10:08. > :10:13.are made, the transparency of how, say, company leadership is place,
:10:14. > :10:16.how political activities are doled out, that sort of thing there is
:10:17. > :10:19.some progress but that has to continue, it has to continue. I
:10:20. > :10:24.think this is something that Mongolian Government is aware of. It
:10:25. > :10:28.is sthot just an issue e for Mongolia it is an issue for
:10:29. > :10:33.countries like Australia, Canada and Africa. It account toser more than
:10:34. > :10:38.40% of the exports of these country, the impact is also on consumer, to
:10:39. > :10:43.necessities like petrol, utilities, food, there have been double digit
:10:44. > :10:48.price increases that have squeezed household incomes. Where they head
:10:49. > :10:52.from here matters. You started off down this line Tony, you think they
:10:53. > :10:57.have a level. Elaborate, what do you mean? Largely sideways. It is not as
:10:58. > :11:05.if economies are going to rock it off, unless we see major fixed asset
:11:06. > :11:08.investment globally, unless we see a return to rapid global growth. When
:11:09. > :11:12.you look at the US states that have a good way forward, it is slower
:11:13. > :11:16.than many people would want, when we look at Europe which is turning the
:11:17. > :11:20.corner, when we look at Japan which is back on a path to growth, so
:11:21. > :11:26.major, you know, major economies are moving ahead again. China is
:11:27. > :11:29.accelerating again and they are announcing major investment project.
:11:30. > :11:35.Minister you are the best tern person to tell us, what are you
:11:36. > :11:39.banking on in terms of where copper prices are heading? That is where
:11:40. > :11:46.Government has started to make a change. When we deal with commodity
:11:47. > :11:51.price, we may only deal for one year or two years, for example the
:11:52. > :11:56.Chinese part, an agreement for a very long period of time, 20 years
:11:57. > :12:01.and we are going to sell them our coal until one million tonne, this
:12:02. > :12:05.kind of agreement, this kind of arrangement gives us some kind
:12:06. > :12:12.pro`techion. What price are you putting on coal? The prices will be,
:12:13. > :12:22.you know, based on this every day, average things. Is this stable, like
:12:23. > :12:26.Tony suggests? For now, it went to the bottom. Now there is no room to
:12:27. > :12:31.go down, but it slowly will increase. I am going to put this to
:12:32. > :12:35.you Tony. We have been talking about falling commodity prices as if it a
:12:36. > :12:41.bad thing. I am looking at my petrol bill and I am thinking wouldn't it
:12:42. > :12:46.be good if commodity prices came down, wouldn't we benefit consumer,
:12:47. > :12:57.the world economy if we weren't paying huge price increases? This is
:12:58. > :13:04.what you have in some things like oil and gas in the US. You have
:13:05. > :13:09.supply induced price reductions and is helping manufacturing economies
:13:10. > :13:15.like the US. Some of these supply constraint is around rising prices
:13:16. > :13:20.over several decades has hurt concern `` consumers like you. It
:13:21. > :13:25.has been great to have these commodities, but in real terms they
:13:26. > :13:30.have been rising. With the advent of things like than conventional is, we
:13:31. > :13:35.have a change in the pricing of things like gas. So, does that help
:13:36. > :13:40.people? I think it does. When we look at things like global
:13:41. > :13:46.manufacturing over the last few years, that has been a step
:13:47. > :13:50.downwards. Are we looking at a step downwards in commodity prices?
:13:51. > :13:58.Possibly. We have seen that since the recession. But we are now seeing
:13:59. > :14:03.that in gas prices. Do you agree? You are a consumer as well as an
:14:04. > :14:08.investor. Do you see prices for consumers being a good thing for
:14:09. > :14:10.lots of companies if they are looking at consumers doing better
:14:11. > :14:22.because they will not be paying all of that disposable incomes on
:14:23. > :14:25.necessities. All we look at his investments and we invest in many
:14:26. > :14:31.sectors of the economy. Fuel prices is a big issue in Mongolia. There is
:14:32. > :14:41.no control on production at the moment. What has been traditionally
:14:42. > :14:47.imported from Russia, the product is coming in from China as well.
:14:48. > :14:52.Minister, final word to you. Would it be better for the world if
:14:53. > :15:03.commodity prices went down instead of up? You know, Mongolia, we
:15:04. > :15:06.mentioned is a source rich country. We are committed to prices going
:15:07. > :15:18.down. It is not good for the country. But it is OK. Putting the
:15:19. > :15:28.price down on oil for example, but oil shares. Every problem has its
:15:29. > :15:36.solution, but we need to prepare, we need to have good policy, we need to
:15:37. > :15:44.have nice conditions for foreign investors. We are quite confident
:15:45. > :15:51.these three last years, will continue. And also filter through to
:15:52. > :16:01.other sectors. I would like to thank my panel. Turning from hard
:16:02. > :16:05.commodities to soft one. Even though energy and metal prices have fallen,
:16:06. > :16:10.food prices are bucking the trend. Global food rises rose for the first
:16:11. > :16:14.time in October after falling for nearly half a year. The UN projects
:16:15. > :16:20.food prices will be higher in the coming decade and even in 2008 when
:16:21. > :16:25.price rises triggered riots across the developing world. The reason?
:16:26. > :16:31.Because of the growth of the middle class in developing countries. How
:16:32. > :16:38.will that impact all others? I went to one of Singapore's famous centres
:16:39. > :16:42.to find out. We all enjoy a good meal out. Nowhere is that more
:16:43. > :16:48.apparent than in Singapore, where food is known as a national
:16:49. > :16:52.obsession. Half of all Singaporeans eat in one of these hawker centres
:16:53. > :16:58.six times a week. No wonder it is such big business. In the US,
:16:59. > :17:05.consumers spend the equivalent of 10% of GDP on food. In Britain, food
:17:06. > :17:13.production is the biggest part of the manufacturing sector. And
:17:14. > :17:19.globally, more than $4 trillion in revenue is generated by the food
:17:20. > :17:22.industry every year. It is not just agriculture and food production, it
:17:23. > :17:29.is all so restaurants and hawker centres like this. How are you? How
:17:30. > :17:49.much are prices for food risen in the past year?
:17:50. > :17:53.That is quite a big rise, he is from Shanghai in China he said prices
:17:54. > :18:03.have gone up why 15%. This begs the question, why have food prices risen
:18:04. > :18:07.so rapidly? Let's look at the most Singaporean of dishes, chicken rice.
:18:08. > :18:13.The price of chicken has risen by 84%. The price of rice by 90%. The
:18:14. > :18:17.price of vegetable oil has doubled in the past eight years. One of the
:18:18. > :18:22.reasons is because production has not caught up with the changing
:18:23. > :18:27.eating habits of a growing, global middle class. Also, trade barriers
:18:28. > :18:31.against agriculture don't help. What is clear is we are likely to
:18:32. > :18:36.continue to feel the squeeze as we consume our daily meals. Let me go
:18:37. > :18:48.and find a cultural commentator and ask, why food is such a business.
:18:49. > :18:55.Hello, how are you? Great to see you. How important is food in Asia?
:18:56. > :19:01.Food is what we live for. It has always been vital in Asia. The West
:19:02. > :19:08.rings so many great things to the world. Music, films, art. But food,
:19:09. > :19:13.you have got to admit Asian food is better than Western food. Tell me a
:19:14. > :19:19.little bit about the value of food in Asia. I understand it has
:19:20. > :19:25.attracted criminal attention? Asia was seen as the spice Island to the
:19:26. > :19:30.Westerners. Today there are gangs, there is a salad trafficking gang in
:19:31. > :19:38.Hong Kong. They would steal salad items, green vegetables to order.
:19:39. > :19:44.They took `` it took the serious crime squad to track them down. Even
:19:45. > :19:53.food items are being auctioned. You might have participated? I did once
:19:54. > :19:58.did for a jar of source. Very spicy, tangy, fishy source. Usually made in
:19:59. > :20:03.small quantities. Well worth reading for, you will have to come round and
:20:04. > :20:08.tasted. I will not ask you how much you paid. What about something else
:20:09. > :20:19.that has rocketed up in price, Coffey? There is a type of coffee
:20:20. > :20:25.here in Asia, beans that have been semi`digestive by a type of cat. It
:20:26. > :20:31.tasted much better. Now it has gone global and you can spend 50 US
:20:32. > :20:37.dollars on one cup of coffee. I tried to think about the guy who
:20:38. > :20:40.discovered it. He said, there is some weasel poop, I think I will
:20:41. > :20:47.brew it up and see what it tastes like. On a more serious note, food
:20:48. > :20:53.prices is a political issue, especially in India? A politician
:20:54. > :20:59.can add to his boat simply by saying he is talking to farmers. If he is
:21:00. > :21:04.talking to the general public, onions will go down. The magic
:21:05. > :21:09.work, onions, can get a politician straight into power.
:21:10. > :21:14.Food prices and slowing income growth have squeezed consumer
:21:15. > :21:18.spending. It may be we see the impact this weekend in America,
:21:19. > :21:22.because it is Black Friday. Traditionally the biggest day of
:21:23. > :21:27.shopping. The world's biggest retailer, Walmart has warned of
:21:28. > :21:32.gloomy times. Will the US consumer be pipped by the record spend of
:21:33. > :21:40.Chinese buyers on singles Day earlier this month? We report from
:21:41. > :21:47.New York. A steady stream of customers keep this man and his wife
:21:48. > :21:53.pretty busy. They own this store and almost everything sells for just $1.
:21:54. > :21:58.These days, they seem more customers and not just their regulars. People
:21:59. > :22:05.have lost their jobs, they are losing their houses. They are in
:22:06. > :22:26.debt. So it is hard for everyone. It is very hard for
:22:27. > :22:31.to spend money. So, more of them come here because they don't have to
:22:32. > :22:33.do hunt to find a bargain. It is less money because everything is so
:22:34. > :22:36.expensive out there. But we manage. It is quick, things are a dollar and
:22:37. > :22:41.you know what they cost. Since the recession, incomes in the US have
:22:42. > :22:45.been declining and are barely out pacing inflation, which means people
:22:46. > :22:54.have less money in their pocket. So, why does that matter if people have
:22:55. > :22:57.less to spend? What this economy depends on consumers making
:22:58. > :23:02.purchases and lots of them. If people aren't in the shops, the
:23:03. > :23:08.economy as a whole, suffers. A typical family are a family on the
:23:09. > :23:13.middle income level and hats to spend every dime they make to meet
:23:14. > :23:16.their basic needs. That gets circulated in the economy, causing
:23:17. > :23:22.growth. Amylase are spending everything they have at it is not
:23:23. > :23:26.enough to sustain the consumer spending we need for a robust
:23:27. > :23:31.economic recovery. In an economy that needs consumers to shop, the
:23:32. > :23:43.people snaking the small Isles are doing their part for the recovery.
:23:44. > :23:49.Even if it is only $1 at a time. It is all we have time for this week.
:23:50. > :24:02.Do check out the website and follow me on Twitter. Join me next week.
:24:03. > :24:03.It is the first day of winter tomorrow.