tv World Business PBS July 26, 2010 5:30pm-6:00pm PST
>>this week on world business... >>shaking off a shaky image, the progress made by the frontier market of syria. >>opportunity was limited, the law was very complicated for investors. >>stable, strong and resource rich, yet still under recognised on the world stage we speak to gita wirjawan, head of indonesia's investment coordinating board. >>we've got to hype indonesia up because there is still a lot of people in oklahoma who don't know about indonesia. >>and with an aging and increasingly affluent population, demand for replacement body parts in the us and europe is on the rise. >>there will be a fivefold increase in the number of knee joint replacements that are put into elderly patients by the year 2030.
>>hello and welcome. i'm raya abirached and this is world business, your weekly insight into the global business trends shaping our lives. over the last decade syria has undergone a series of fundamental internal changes. once a soviet style command economy it is now attempting to embrace features of a western style, social market. as part of our occasional series looking at frontier markets we went to damascus to find out how far it has come. >>reporter: damascus. the world's oldest, continuously, inhabited city. and, for most of the last fifty years, a city living
under the discipline of a state controlled economy. >>kahale: opportunity was limited, the law was very complicated for investors. and that's why people who wereca - it was like bringing a ferrari and let it run away in a desert. >>reporter: a move to a more free market was first considered in the nineteen eighties but the discovery of oil meant the government could continue business as usual. that oil though is now running out. >>sukkar: with the running out of the oil money the economy is now being threatened by the shortageof that money so the urgency of reform became again very important. >>reporter: the government has reduced marginal taxes on companies from around 90 to under 30 per cent; reduced tariffs on foreign goods by up to fifty per cent and encouraged competition. it has also relaxed exchange controls. >>mayaleh: there is another decision that allows foreign investors to transfer the full
value of their investments abroad. they are also allowed to transfer out the interest and the profits they havemade throughout their investment. >>reporter: perhaps the most visible manifestation of the changes is that middle and upper class syrians can now shop in western style malls - an unimaginable concept just ten years ago. >>al aktaa: to have a mall, you need to have products to sell in it. there were a lot of products that were not allowed into the country. but now that we have a lot of products and there is a lot more demand in the market, we have started building shopping malls. >>reporter: one feature of living under a command economy was that the country's family businesses tended to operate in the informal economy. now the government wants them to legalise their status, but after so long on the fringes they are now often unwilling to comply with tax regulations. >>shallah: these companies probably... their book value
is perhaps no more than one per cent of their actual value therefore when you come out with a huge sum the first thing that faces them is the fact that will have to be subject to paying capital gains tax or income tax and they won't like it. >>reporter: the government's answer has been to declare an amnesty on the under declaration of income and profit and to offer businesses, if they go public, a basic tax rate of 14 per cent. that saidthere is still some suspicion among the country's businessmen. >>kahale: i believe this is a good movement from the government but the application is not yet convincing people to open their books 100% >>reporter: the most significant change has been to the country's financial system. private banks were first introduced in 2004 and have grown rapidly since then. rateb shallah is chairman of the bank of syria and overseas. it began operations with just 19
employees. >>shallah: now we have twenty four branches in syria and our staff are now over 470 employees. >>reporter: foreign deposits have increased from $500 million in 2005 to more than four billion dollars. syrian deposits are up two and a half times and lending has increased by more than five times.syria also now has a stock exchange - albeit one with some cautious regulations on its activities. rateb shallah is also chairman of the new exchange. >>shallah: i would allow him to invest in whatever he likes provided he does not borrow to finance his purchase and he will not be allowed to sell short what he does not own. >>reporter: one factor, though, affecting the country's potential is that it remains under us sanctions - preventing a more complete integration into the global economy - although the governor of the central bank maintains their impact has been minimal.
>>mayaleh: regardless of the pressure we've been under in the recent years, american pressure or any other pressure - from any direction - i would like to repeat that the syrian economy has remained strong and the syrian currency and its exchange rate has remained stable. >>reporter: you can see the new syria in the mixed use residential developments springing up outside damascus. fdi has risen from $400 million dollars in 2004 to $2.1 billion in 2008. while annual gdp growth, until the global crisis, was around five per cent. this year the projection is again for 5%. what the reforms have not yet achieved is a reduction in the country's high rates of poverty, particularly in the agricultural sector which makes up 25% of gdp. they have also failed to create enough new jobs.
>>sukkar: every year we have about three hundred thousand new entrants to the labour market and these new entrants are not being absorbed by the rate of growth that we are having at the present time,i think we need about seven or eight per cent a rate of growth a year. >>reporter: corruption too, among all levels of society, is certainly holding back the economy. butthe real challenge, according to economists such as abdulkader husrieh, is to tackle the country's government bureaucracy. >>husrieh: it needs of course first of all a paradigm shift in the thinking of the administrative apparatus in the system. >>reporter: there's no doubt that syria has changed but the government needs to step up its programme of reform - and bring the country's businessmen along with them. until that happens a more fundamental and longer lasting improvement in the country's economic fortunes will still be held up.
>>as former head of jp morgan indonesia and founder of private equity firm ancora capital, gita wirjawan is one of the country's most well known businessmen. he is now chairman of the indonesian investment coordinating board bkpm, charged with attracting fdi, boosting employment and improving social equality. eckart sager sat down with him to find out more. >>sager: indonesia has weathered the economic crisis very well and you are on track for 6-7% growththis year. what are the key drivers for growth? >>wirjawan: part of our resilience has to do with the fiscal discipline. we've got, you know, we'veshown the ability to trim down debts to about 28% of gdp
this year and it's only likely to furtherdecline and, you know, monetarily we've been able to show stability also, you know managing the risks to the extent that there is virtually no inflationary risk at all. in the last couple of years wehad spikes of domestic demand, you know, in the past, but we are not foreseeing any such event thisyear nor next year so you've got the fiscal sustainability, the monetary stability and the domestication of the economy and the willingness of the country to, you know, move the pendulum a little bitso that we can be more export centric and that would require a huge amount of investments, you know, to build factories so that we can produce goods and services, that could be exported to neighbouring countries or anywhere in the world. >>sager: let's talk about foreign direct investment. what are the sorts of key challenges in devising the right set of policies
to attract foreign direct investment? >>wirjawan: look, i think we've got to promote indonesia, we've got to pr indonesia, we've got to hype indonesia up because there is still a lot of people in oklahoma who don't know about indonesia. so we've got to elevate the level of awareness but doing that with full cognisance of the fact that we still have issues to fix. second, i think we've got to implement what i call smart capital. we'vegot to make sure that whatever fdi comes in, comes for purposes of adding value - optimizing the value chain. >>sager: you just received the upgrade. what does that mean for indonesia? >>wirjawan: look, we've just received an upgrade from both standard&poor's and fitch. standard&poor's pushed up to bb and fitch to bb+. what this is means is a lot for indonesia. it means that
peopleare actually starting to recognize the fiscal prudence that indonesia has been able to undertake inthe last few years, the monetary effectiveness, policy effectiveness in the last few years and alsothe improving investment climate. and it also means that cost of capital is going to decline - and that will only pave way for more and more capital to come into indonesia - in the next 18 months, give and take a few months, i think indonesia should be at about the investment grade status. >>sager: relations actually with china are very good. your bilateral trade has exceeded 30 billion dollars. why is it so strong? are you redirecting your focus? >>wirjawan: look, i think it's a reflection of our closeness, i mean this year it's going to mark the 60th year anniversary of our diplomatic relations between china and indonesia, and let's face
it,i mean we've been communicating and dealing with china for a long time, and, you know the trade volume of, you know, slightly in excess of 30 billion dollars, i think is a good number but i don't seeany reason why its not going to go up even further with everything that we are doing. >>sager: with this global economic gravity shift sort of moving to the east, do you see the whole intra-trained, regional-trained increase here in asia? >>wirjawan: chairman, indonesia's investment coordinating board >>i do. let's talk about asean first. asean, you know, has an intra-trade volume that's quite significant, you know. there are about 1.3 trillion us-dollars, and that is only likely to continue and with, you know our involvement with china, i think the upside potential is significant. so i do see this as a new beginning for a china indonesia relation.
>>still to come on world business... >>an aging population may put extra pressure on the state, but is also creating a boom in demand forreplacement hips and knees. >>and the world cup may have inspired many young players to lace up their boots, but a career as a professional footballer isn't always the dream it seems. >>it's tough at the top... and the rest in just a moment on world business... >>the global population is aging; already 10 percent of the elderly need some form of surgery to replace joints like knees and hips. and in the next 25 years that figure is set to increase fivefold.
>>reporter: 84 years old and still working out. by 2050 the number of people in the eu over 65 will hit 103 million - 70% higher than it was at the millennium. more pensioners mean more opportunities for healthcare providers, as demand for replacement hips, knees, spinal discs and heart valves increases. the medical technology business, already expanding at double digit rates is set to boom. >>fisher: this particular sector of products which are dealing with the ageing population has very strong projections of growth. for example it is projected that there will be a fivefold increase in the number of knee joint replacements that are put into elderly patients
by the year 2030 compare towhere we are now. >>reporter: nor are these replacements limited to the very elderly. due to a combination of greatersporting wear and tear and our more sedentary lifestyle, the client base is actually getting younger as well as older. one such patient is harvey thompson. >>thompson: when i spoke to the consultant surgeon when i had the x-ray he said i really had no support in the hip area at all so i had to have something done straight away. he said that had i been to him 12 months previously to that he would have recommended a hip resurfacing, but he said that some of the results he has had recently and some of the advances in total hip replacements he has said that i could expect to get 25 to 30 years on a new hip replacement. >>reporter: that's an improvement on older replacement hip joints that could be expected to last atmost 12 years, but in this broadening and expanding market even a 30 year lifespan
may not be enough. >>fisher: these interventions, be they knee joints, hip joints and biological re-jointed scaffolds,are increasingly being put into younger and younger patients so it's not unusual to put in the joint into somebody who is 50 years old. so that patient may live for another 50 years so we need new technologies to last that long so that in itself is a new market opportunity. >>reporter: and as the first generation of artificial joints starts to wear out, research in new technology is picking up to ensure their replacements go the distance. england's biomechanical engineering department at leeds university is a global leader in replacement body parts, specialising in living heart valves, knees and spinal disc replacement, but their biggest success story has been in developing a new super artificial hip. >>fisher: our laboratory simulation predicted that this
particular bearing combination of ceramic on metal will last up to 50 years and that's effectively in active patients up to 100,000,000 steps and that's 2 to 3 times longer than hip joints that have previously been available. >>reporter: as such, the goalposts are subtly shifting, away from just prolonging life to improvingquality of life. >>milns: historically medical research has focused more on improving the longevity of life, but this project has really stepped it up a gear. it's about staying active no matter what your age so thatyou can always keep up with the guy next door, come on frank my skeleton friend peddling the bike next door... >>reporter: good news for pensioners who are willing to keep themselves active. 84-year-old mary thornton had a knee replacement last year but is still as sprightly as ever. >>thornton: old age creeps up
and that is the time that people don't realise that they still have to be active if they wish to carry on a little bit longer... it's no pain no gain. >>reporter: more people like mary means less pressure on already overburdened national health systems. the stagnant economies of europe also tend to have large aging populations, so any overall saving is crucial in this time of cutbacks. >>but it is not just about being physically active and minimising demands on state funded healthcare, a healthy and mobile elderly population can also stay economically active, which could prove vitalto countries facing up to burgeoning pension deficits. >>bonet: the economic benefits over later retirement are obvious. people keep contributing to social security and somehow
their morbitity seems to be lower while you are actively working. >>seymour-newton: mary is an example of somebody who's kept going and she is now coming up to 85 and she is still working... >>reporter: one word of warning though. mary thornton: you all need new knees dears before you're finished >> around the world, millions of boys dream of becoming a professional footballer and recently we visited a tournament featuring some of europe's top young talent. despite their obvious ability, however, few will ever make it to the professional ranks. of those that do, most will find it a brilliantjob, but for others, the dream career may come with a heavy price tag... >>reporter: top young talent...from some of the biggest teams in europe, including barcelona, bayern munich, liverpool and milan....this is
the first edition of the aegon u17 future cup, hosted by ajax amsterdam... >>pronk: this weekend we have many scouts and many managers around the teams yeah. >>keane: everybody's very eager to see how big clubs develop their players and see what level they're at and so it's a good moment to come here and see also the different styles of play,ff. >>reporter: the styles may be different...but the dreams are most certainly the same... >>my dream is to be a professional football player >>player: of course to make ajax one...that's my dream. >>reporter: as the cost of buying players has soared, clubs investment in producing talent like this thru their academies has never been more important. today, turning out model professionals who canperform both on and off the pitch is a very serious business... >>jong: well at this tender young age it is unlikely these players will be mobbed outside
on the field and it will be easier for us to talk to them out there. but ajax is adamant they want all their young players to be interviewed in the press room here because if they do make it to the top level of football that is exactly what will happen. >>reporter: but training and playing at least 6 days a week...just what sort of life are these players actually chasing? firstly...a very regimented one... >>cusack: your whole life is set out for you. what you are supposed to eat. how you can behave. whether you can go out with your friends. >>when you sign up to be a football player you know what sacrifices you have to make >>i don't' need a party in a while...i do not think it's important. >>i've got to sacrifice some things, like that...not going out and having a drink of a friday night.i'll stay in and watch a bit of telly. >>reporter: of course, the rewards in professional football can be magnificent...but is it the perfect job? >>kay: people's perception is that the money they earn, the cars and perhaps women, that they have no problems in their life. but nothing
could be further from the truth. >>reporter: sporting chance deals with the darker side of professional sport...helping players who've succumbed to problems such as alcoholism and gambling addictions...the result of a career that isoften insecure, and always high-pressured.... >>kay: massive pressure to perform. a lot of these players...if you can imagine, their desire isn'tthe money. it's actually to play football at the highest level. it's almost like showing off. it's what they do best in their life. some of them, it's the only thing they do well. and therefore there's a lot of pride at stake, and a lot of self worth and self esteem that is gained through that. >>reporter: a recent uefa survey found that half of all europe's professional football clubs are now running at a loss, which indirectly puts even more pressure on cheap, homegrown talent to perform...and that pressure starts early...sometimes from close to home... >>reporter: do you sometimes
have parents who are pushing too hard perhaps? >>pronk: not sometimes...many times. >>my son...he's been there since he's been 5. he's done it because he wants to do it. obviously we've just encouraged him as parents and left it in the hands of the academy. >>a lot of parents are very pushy but i'm not one of them. and i wouldn't be that. i've never been that way. >>cooper: parents are always involved course they are and everyone wants the best for their child. i wouldn't say we've got a bad problem at liverpool. >>reporter: in the uk alone...its estimated clubs now spend around $100m a year on academies, whichtake in thousands of boys. but in what is a cruelly inefficient system, the vast majority will failto realize their dreams...even the 16 and 17 year olds who've made it this far are unlikely to go much further... >>cusack: the statistics show that 85% of those will not be playing pro football beyond the age of about 21. >>beckenbauer: if one or two of this team go up to the professionals then it's
a high score... >>fiorin: 2 or 3 players >>reporter: but what qualities will help you succeed? >>fiorin: the mentality...and the speed. velocita. speed and mentality. >>pronk: the mentality that they want to reach the top. that's very important for players in the future. >>reporter: although ironically, the very qualities that will help a player rises above the rest...can also make them susceptible to a heavy fall later on... >>kay: the characteristics that we find that are basically prevalent in addiction are also the characteristics that would propel a player to be the 1% that is needed to be different. so a tunnel like vision. obsessive nature. desire absolutely to win,
competitiveness. all of that stuff is very much the trait of an addict. >>reporter: few will make it, and those that do will find being a pro is not always the bed of roses people believe...but these youngsters at least sound remarkably down to earth about the path they've chosen... >>a lot of things come with the package...the money...the girls the cars and stuff but that isn't mypriority. i just want to be successful as a player... >>i give 100% and we'll see in a few years.... >>i've seen lots of players fall off by the wayside since i was 6 so i do know what it takes so hopefully i can give it my best shot and see what happens. >>reporter: and if you can combine that sort of attitude, with this sort of talent...which incidentally helped ajax to win the tournament...well...perhaps you do have a real chance of a great career in the world's greatest game.
>>the disastrous performance at this year's world cup will also no doubt have the english, french and italians thinking about investing in young footballers in the future to prevent such humiliating early exits. it's worth remembering of course that holland - made the final. >>that's it for this week's world business. thanks for watching. we'll see you again at the same time next week. of the best of europe.
on sunday mornings when i'm in paris, you're likely to find me here... [ pipe organ playing ] ...in the saint sulpice church with its magnificent pipe organ. for organ lovers, a visit here is a pilgrimage. after mass, organ enthusiasts from around the world scamper like sixteenth notes up the spiral stairs into a world of 7,000 pipes. before electricity, it took three men working out on these 18th-century stairmasters to fill the bellows which powered the organ.
the current organist, daniel roth, carries on the tradition of welcoming guests into the loft to enjoy his performance. a commotion of music-lovers crowd around a tower of five keyboards below a forest of pipes. saint sulpice has a rich history with a line of 12 world-class organists going back over 200 years. like kings or presidents, the lineage is charted on the wall. and overseeing all this: johann sebastian bach. [ pipe organ playing ] this music continues to fill the spiritual sails of saint sulpice as it has for centuries, and it's just another reason i consider paris the cultural capitol of europe.