>>this week on world business... >>how unity is the key to prosperity as malaysia seeks to maintain its competitive edge >>let every single malaysian realize his or her fullest potential irrespective of race, that we maximize diversity as a strategic asset for our nation going forward >>a brave new world in banking, as well known brands return to retail, new banks open up and mobile banking takes off. >>at the end of the day it's all about improving customer choice, improving convenience, ease of use, and developing that personal relationship with customers >>with handheld media devices being the "must have" gadget this season, is the e-book market about to turn a new page?

>>we started with e-readers about two years and a half ago; we started with only five products...andnow we have 25 so we have a lot more choices for the customer. >> abirached: hello and welcome. i'm raya abirached and this is world business, your weekly insightinto the global business trends shaping our lives. multi-ethnic malaysia is often regarded as a model of racial harmony. but living in relative harmony is a lot different than enjoying national unity. that's something the country's prime minister is trying to bring about with his policy dubbed 1malaysia -- something he sees as vital not only to the country's social cohesion but also to its economic future.

>>reporter: malaysia day. it marks the date in 1963 when the states of sarawak and sabah on the island of borneo joined with malaya to form the federation of malaysia. >>reporter: it was made a nationwide holiday for the first time this year a symbolic gesture to two of malaysia's most underprivileged states. >>reporter: prime minister najib razak says his government is determined to raise living standards in sarawak and sabah up to the levels enjoyed in the rest of malaysia. >>reporter: it's a goal in keeping with najib's policy dubbed 1malaysia -- to create a more inclusive, equitable, meritocratic and efficient country -- one where ethnic malays and other indigenous groups, as well as the chinese and indian communities think of themselves as malaysian first. >>razak: let every single malaysian realize his or her fullest potential

irrespective of race, thatwe maximize diversity as a strategic asset for our nation going forward. >>reporter: it's not going to be easy. >>maelzer: since 1970, an affirmative action policy has aimed to narrow the economic gap between malays and nonmalays, especially the ethnic chinese. and while it has helped substantially reduce poverty and nurtured a large malay middle class, it has also been prone in inefficiencies and abuses. >>reporter: the affirmative action policy is credited with preventing ethnic tensions from boiling over. but over time it has bred resentment among non-malays, contributed to a brain drain and made malaysia less competitive. >>speaker (english): the prime minister says that he wants to see an end to all kinds of these prejudices, to bring down the walls of suspicion. >>reporter: at a recent

seminar on the 1malaysia policy, people debated how best to break down racial barriers. >>speaker (english): we need to nurture political parties who are neither race, nor religion based. >>speaker (english): the question we should ask is no longer who is to blame. i think we should ask what to do. >>reporter: the top concern was an education system in which most chinese and indians opt to send their children to vernacular schools teaching in their mother tongues, rather than national schools teaching in malay. >>fernandes: you are bringing up issues that have arisen over a long, long period of time. findinga solution isn't going to be over night. the first port of call is to debate and i think these forums along with a lot of what's happening is a natural maturing of society to be able to debate. >>reporter: the prime minister's 1malaysia push and economic reform agenda have helped drive his personal approval ratings to above 70 per cent, though his party and government lag well behind

that. >>suffian: if we look at the reform agenda, i think it's a motherhood issue. a lot of people support, i would say the vast majority of malaysians support, recognize the need for change and support what the prime minister says he wants to do. >>reporter: but he's running into resistance from some ethnic malays most notably a right-wing group called perkasa. its interaction malaysia's governing alliance is in some ways analogous to the tea party's uneasy relationship with the republican party in the u-s. >>reporter: perkasa opposes najib's efforts to move from an affirmative action programme based strictly on race to one based far more on needs. and it touts a continuation of what it calls malay supremacy. >>reporter: many believe najib needs to rein these people in. >>navaratnam: you can do it subtly, you can do it quietly, you can do it behind the scenes, you canadvise them, you can tell them look

you are going too far. if you go beyond this threshold you areundermining national unity. >>reporter: while the malay right attack the prime minister for pushing too far and too fast, the opposition accuse him of not moving fast enough, a criticism he rejects. >>razak: it is work in progress. it is a journey. it is a transformation. but what we can do, what we can put right, we will put right. but let this be a journey towards a full realization of 1malaysia. with a full commitment of all malaysians we will get to the ultimate objective. >>reporter: many see the goal of forging a more united malaysia not just as a social imperative, but also an economic one. >>fernandes: it's a seismic shift so you know it takes a lot of courage, so i applaud the prime minister for taking that step. it's up to the leadership

as to the pace, how fast, how he balances up the right, the left etc. it's a complicated mix. >>suffian: the electorate is becoming more sophisticated now. they are looking just beyond the man.they want to look at institutions, they want to look at policies. and more importantly they want to see how things get implemented. >>reporter: najib's government should go a long way toward answering those questions in the next couple of weeks as it unveils the details of its economic transformation programme aimed at attractinghundreds of billions of dollars of new private investment, and tables its budget revealing the concrete steps it plans to take to kick start that transformation. >>reporter: and if 1malaysia goes as planned, it should create not only a more unified multi-cultural society, but also a more competitive malaysia in an ever more competitive world economy. >> abirached: after taking a punishing hit in the recession, the banking sector is once again on the rise. but things have

changed; the era of easy credit is over and it seems what's important now isthat banks reconnect with customers. >>reporter: two years after lehman's went under nearly sinking the global banking industry, it seems the sector is making a tentative recovery. stress tests in the eu and us show that banks are, on the whole, healthy. but as concerns over european sovereign debt and some heavily leveraged balance sheets still ripple through financial circles, there may yet be more stormy waters ahead. >>maughan: banks need to significantly boost the deposits that they take from the customer base andprobably will have to downsize their loan portfolios, and while that's at odds with the government's desire to see the banks lending more to mortgages and more to small business, the reality is the uk economy is heavily indebted through the banking sector and by rebalancing

their businesses the banks will necessarily have to reduce the amount of loans relative to the deposits they take in. >>reporter: banks have spent the last decade pulling out the high street to reduce costs and tryingto push customers onto the internet; but now as credit dries up, many retail banks are turning their attention back to the branches. this may not be a cheap option- but it does at least help reduce unemployment... >>russell: after the turbulence of the financial crisis, retail banks are realising it's not just about easy money any more. re-evaluating their relationship with their customers many banks are once more n stepping up hiring of front-line staff, spanish group, santander, are launching a recruitmentdrive that could see an additional 6,000 staff brought on board. royal bank of scotland and lloyds are also selectively recruiting in retail banking whilst newcomer to the market, metro bank, opened their second london location recently,

looking to take on an additional 60 staff over the next few months. >>reporter: metro bank is the first new high street bank to be granted a license in the uk for morethan 100 years and seems to take customer service seriously. with the kind of accessibility we've come to expect from shopping for groceries or clothing, punters have flooded through the doors at such a rate, this location in holborn hit its 12 month target for new accounts in four weeks. >>thomson: i think people have resorted more to bricks & mortar they like to know where their money is gong to be. i think they're becoming a little bit more savvy about the financial services compensation scheme, even some of them are beginning to understand what bank capitalization actually means. we're the first bank to have been authorized under the financial services authority's new, much more stringent rules around capital and liquidity. we meet all of the basel iii requirements many times over; other banks are given up to 8 years to do

that. so i think people are starting to understand that they want a bank that has good financial strength. >>reporter: whilst other banks seem to be heading in the same direction, in other words back to thehigh street, they have their work cut out for them. post crisis many banks are having to deleveragetheir balance sheet, which ultimately means cutting costs and inevitably cutting service. >>thomson: the other banks believe that it's a no-growth industry, that it's a maturerkey they can make money is to reduce costs. we think that there's a fantastic growth opportunity here. we think that we can grow a 200 store ú25 billion asset bank in a decade by overinvesting in the customer experience and that's what we're going to do. >>reporter: but such expense could be considered a valuable loss leader. going back to basics with branches, allows staff to sell more profitable products directly to the consumer. >>maughan: they've finally figured out that actually

there are certain very high value added products that can only really be sold through the branch network and that turning away customers from prime high street locations is not a very sensible retail strategy. >>reporter: but not all personal service needs to be carried out in person. what matters is that customers feel the service is tailored to them. banking by text on your own phone is both personal andextremely handy. juniper research believes we will see a huge shift towards mobile banking in the next three years, with one i one in six people in developed countries using some form of mobile banking. the number of sms messages sent reaching a staggering 90 billion world wide by 2015. >>wilcox: the end of the day its all about improving customer choice, improving convenience, ease of use, and developing that personal relationship with customers, and mobile banking has a critical role to play in that in the future. >>reporter: and of course one of the most attractive prospects going forward for banks, 80% of which already offer some form of mobile banking, is the untapped potential of the booming emerging markets. in remote parts

of africa, india and asia where a trip to the branch is a real challenge, the billions of potential mobile banking customers represents a real opportunity. on world business... >>super fast. super dangerous. superbikes. still growing despite the recession. >>and after years of being ignored ebooks have finally found their medium and a huge new market. >>the future is in your hands literary ... and the rest in just a moment on world business...

>> abirached: handheld electronic books have been around for a surprising amount of time. in fact the first handheld e-reader, the rocket was launched way back at the end of the last century. for years they have failed to catch on with the public, but recently the market has seen a flurry of activity and might finally take off. >>reporter: another day, another launch of a handheld media device with even more functions to entice the growing legion of electronic readers. >>smith: over the last ten years essentially it has gone from very basic devices with simple black and white screens and now we are seeing gadgets like the ipad with bright coloured screens, video, web access, music playback, pretty much anything you can do on a laptop pc. >>gurnah: the biggest challenge is differentiation. when everyone's making a digital reader what's the difference between all these devices. for us it is

pretty clear, its touch screen and it's this library loaning, being able to get books from your library. >>reporter: a far cry from the products of yesteryear by 2012 the global sales of e-readers could reach 20 million. >>west: we now have mass merchandisers sort of supermarkets, we are seeing consumer electronic stores taking on the product and now computer specialists as well. so we're at a point now where gfk aretracking over 11,000 outlets in the uk holding this type of product. >>jerome: we started with e-readers about two years and a half ago; we started with only five products....and now we have 25 so we have a lot more choices for the customer. >>easen: the market for tablets, web-books and e readers now has new momentum, spurred on by an explosion in the number of models, content and applications. but whether combining traditional readingexperiences with innovative digital channels will drive a new era of profitability remains to be seen. >>reporter: it helps that the model for monetising this market already exists

with consumers successfully paying for applications on their iphone and for digital copies of novels. >>gurnah: with these devices content is absolutely king, without books this is a piece of digital junk. so we've been working really hard with people like google, with some of the uk's biggest publishers like harper collins, random house just to make more books available. >>reporter: and not just books. the real driver could come from a sector that has struggled in recent years. >>hobbs: i think it is a real opportunity for the newspaper publishers in particular. i don't thinktheir traditional models are broken. but we all know that they need to invest into multi-revenue businesses, become multi-revenue businesses. i think they are doing that relatively successfully. >>reporter: many publishers now have ipad applications: take the ft - 400 thousand people have downloaded its ap and already ten percent of its subscriptions have come through this medium. >>christie: i think they like it because it is a bit like that harry potter newspaper,

its print but come to life. so it's got that video, it's got the interactive graphics. it is much more than justa newspaper. but it's got the advantage of the newspaper in that it's finite; there's a beginning; and a middle and an end, which people do like. >>alger: all of a sudden you can get t3 magazine or you can get your magazine out to multiple markets at a very, very low cost. so the money you put in, in creating the content could come back tenfold when you open it up to a market like the us, where at the moment, t3 magazine isn't sold. >>reporter: the main beneficiary from this explosion of hardware and software is the consumer, butearly adopters in the past sometimes pay like those who chose hddvd over blu ray, or betamax over vhs. >>frost: the consumer needs to remember the battles between the various video formats for example.and bear in mind there will be winners and there will be losers. and so when you are backing a piece of hardware be aware that it could end up being the loser.

>>mann: certain players just get the formula right, the combination of the form factor, the price point, the availability of content and applications. and the marketing and brand that associates that. there will be many players who try and there will be many players who don't have all the ingredients in their arsenal and therefore won't be able to compete against the likes of apple and amazon. >>reporter: and if you're wandering where the next battle ground is it's breaking into the boardroom. if the consumer market is big, the business market could be massive. >>mann: i think it is a great opportunity which is pretty much yet untapped in the business market for such a devices; we already see a lot of business users using devices such as the ipad for their day-to-day work. yet this is not yet endorsed as a corporate product. but it is getting there. >>reporter: and this looks set to redefine the market once

again. predicting the writing on the wall, with these devices...it reads like a good digital thriller. >> abirached: the sport of superbikes is spectacular, fast and dangerous. it may lack a little of the glamour of it's bigger brother moto gp, but has a large and dedicated following. where other sports have felt the pinch of recession, this season 2 more manufacturers swelled the ranks of superbikes. >>reporter: it's where the rubber hits the road...where the bike-makers put the product... >>flammini: ...our series promotes the product that

everyone can buy for road use. therefore you have a direct return on your investment. >>sunnotel: the racing class that is most closest to products people can buy in the street. people really can identify them. >>de jong: ok we are in a sunny summers afternoon here in britain and there are few things i like doing more than hanging out on the grid at the world superbikes...because lets face it...these are mykind of people. >>corser: what do you need to do win? just get a good start and get up the front. get away with thefront guys. >>you like the motorbikes? yeah of course. and what sort of qualifications do you need to do this kind of thing? you've got to have a good smile. you've got to have a good body. you've got to look good. >>brookes: the big thing with bikes is you know, you've gotta go to the edge but be careful becauseif you get it wrong or make a mistake then you pay quite a big price. >>reporter: this is the bike series for true bike

lovers...and for the 7 manufacturers on the grid..reaching out to those potential customers has never been more important...in 2009 motorcycle sales in europe fell by 40%... >>sunnotel: we are selling products that basically nobody really needs but everybody wants and in terms of a recession these markets are hit first. so we had a steep decline in sales especially during 2009. >>reporter: despite the recession...last year manufacturers aprilia and bmw joined the series. in bmw's case, it's proved an ideal platform for launching a new sports bike onto the market... >>de jong: if you want to enter the competition, last year you had to produce 1000 bikes, this yearyou have to produce 2000 bikes. essentially the idea is that you can walk into a shop and buy a bike that is not too far removed from this beast. obviously it won't go as fast...

>>reporter: because while the chassis does remain the same...the one litre engines are highly tunedand any modifications can make a significant difference. >>sunnotel: the whole layout, the geometry, everything is the same but in terms of electronics for example, in terms of engine power you're allowed to change quite a lot of things but clearly there is a strong link. >>reporter: in a tough economy, world superbikes has been a welcome addition to the silverstone circuit's 2010 portfolio... >>phillips: since december we've been spending quite a lot on rebuilding the track to get the safety in for bikes. motogp...for world superbikes. and we've spent about 10m total on that and now we'rebuilding a new pit and paddock building as well. >>reporter: the more prestigious motogp series, which visited silverstone earlier in the year racesslightly faster cutting edge 800cc prototypes...but they are far more expensive

machines...here youcan get a team onto the grid for less than 2m euros - about a quarter what you'd pay in motogp...and keeping costs down is a constant mantra... >>flammini : we have forbidden exotic technologies...exotic materials to the point that today a racing bike ready for the track can be bought for 100 thousand euros which is really a limited amount of money. >>reporter: superbike's revolutionary decision in 2004 to appoint a single tyre supplier also helped cut costs, along with levelling out the competition...and every race weekend pirelli provides teams with around 5000 tyres... >>barbier: in this race for instance we got 4 different slick choices for the riders and so they have to make during the test session on friday and saturday to make their own choice for the race. whowill make the best will win.

>>reporter: and pirelli's performance in superbikes has helped the italian company win a far more high profile contract...because despite being out of formula one for 20 years, from next year it'll be that championship's sole tyre provider... >>barbier: for pirelli it's really important to go in a part of the world where maybe our brand is not so well known like the far east. where the f1 is now concentrating on new countries that are farfrom europe, far from the us and we need to show our image down there as well. >>reporter: f1's attractiveness is undisputed. this year's grand prix at silverstone pulled in 305000 fans to silverstone. that's about twice what motogp attracted...more than 4 times the world superbike crowd. it makes superbikes appeal sound rather thin....but while motogp is struggling to put more than 17 riders on the grid...at this race 24 superbike riders attacked the track... >>crutchlow: are

you in a dangerous business? no. i don't think so. it's what we do and we all loveit or else we wouldn't be here. >>corser : a dangerous sport? no more dangerous than walking across the road mate. doesn't worry you. nah! >>brookes: part of the job though isn't it. yeah part of the job and obviously everyone realise that but we all are stupid enough to do it anyway. >>toseland: if you worried about the danger you wouldn't go fast. it's a dangerous sport but i think we love it. good on you, good luck today. and i think you're doing a very good job too....your umbrella holding is exemplary. thank you very much. bravo >>reporter: right now rumours are flying round that motogp may try to allow semi production bikes to compete in the future and next year it's reverting to 1000cc bikes...but rest assured, despite such growing similarities...the two series will always be competitors... >>sunnotel: the fan base is quite different so i think there really is space for two. >>flammini: you would never see motogp and superbikes on the same day at the same track? no. this would be a big mistake because you would lose

value. >>reporter: value this particular series prides itself on offering...as it fights to stay...ahead of the curve... >>abirached: that's it for this week's world business. thanks for watching. we'll see you again at the same time next week.