:00:00. > :00:16.telephone directories. Now on BBC News all the latest business news
:00:17. > :00:18.live from Singapore. BNP Paribas pleads guilty to
:00:19. > :00:27.breaking US sanctions against blacklisted countries. Can it
:00:28. > :00:32.survive the record finds? Japan's business sentiment dips after a
:00:33. > :00:37.sales tax increase. Welcome to Asia Business Report. France's largest
:00:38. > :00:40.bank, BNP Paribas, is told it will be fined almost $9 billion for
:00:41. > :00:48.transferring funds to blacklisted countries. It is the largest penalty
:00:49. > :00:51.for a case like this in US history. It is accused of breaking sanctions
:00:52. > :00:58.against Iran, Cuba and Sudan between 2002`2009. The record fine
:00:59. > :01:12.quadruples a similar penalty imposed on HSBC a few years ago. For more, I
:01:13. > :01:15.am joined by a financial author in Sydney. What do you make of this
:01:16. > :01:19.huge fine, what will the implications be? There will be some
:01:20. > :01:22.impact but they will be relieved that the actual fine has been agreed
:01:23. > :01:25.to. There is no more uncertainty. It will impact the profits of the bank
:01:26. > :01:28.this year because, essentially, it equates to roughly what the bank
:01:29. > :01:31.makes in a year. They will have to make a substantial write`down. It
:01:32. > :01:34.will be extraordinary. The capital will be reduced. They are
:01:35. > :01:37.comfortably at 10%. We will have to wait and see what happens in the EU
:01:38. > :01:42.with their asset quality review, whether there are implications from
:01:43. > :01:45.that. The damage will come from the fact that they won't be allowed to
:01:46. > :01:52.clear US dollar transactions beginning in January next year for
:01:53. > :01:55.one year. It will have franchise issues for them. It is unclear
:01:56. > :01:59.whether it will affect all aspects of the operations of the bank. Those
:02:00. > :02:03.are some of the things affecting BNP Paribas itself. There will be wider
:02:04. > :02:11.implications for the banking industry generally. Let's look at
:02:12. > :02:15.some of those. What will they be? Banks today are looking nervously at
:02:16. > :02:20.the outcome. It won't be the last prosecution. There will be others.
:02:21. > :02:26.We have seen HSBC and ING and Standard Chartered. All foreign
:02:27. > :02:29.banks interestingly. There are wider investigations outside of these
:02:30. > :02:31.specific ones, to do with the manipulation of different rates,
:02:32. > :02:41.like the foreign exchange rates, the golden rates and so on. The bad news
:02:42. > :02:44.for the banks in terms of prosecutions and fines they will
:02:45. > :02:46.have to pay an over and this will affect the sector's profitability
:02:47. > :02:58.and ultimately their sharemarket performance. `` are not. This is the
:02:59. > :03:00.biggest fine ever by the US regulator. Are there concerns the
:03:01. > :03:06.regulator might have extraterritorial reach beyond the
:03:07. > :03:13.US? This is the biggest issue about the BNP Paribas and the previous
:03:14. > :03:16.fines. The US are taking their legislation and applying it to other
:03:17. > :03:20.banks. They are using the primacy of the US dollar and the fact that
:03:21. > :03:25.foreign banks have to clear their US dollars through New York, which has
:03:26. > :03:29.been the weapon they have used. It is a concerted area of US foreign
:03:30. > :03:36.and economic policy and we now risk seeing retaliation. Immediately, it
:03:37. > :03:43.will be in trade talks between Europe and America. Thank you. A
:03:44. > :03:46.financial expert in Sydney. The Bank of Japan's quarterly survey shows
:03:47. > :04:02.business confidence worsened among the largest manufacturers. It fell
:04:03. > :04:05.by five points in the three months to June to plus 12, below market
:04:06. > :04:08.forecast for a plus 15. Overall, there was optimism about the
:04:09. > :04:11.economy. It might be due to the PM 's economic policies, which saw
:04:12. > :04:16.inflation rise 3.4% in May, its fastest pace in 32 years. Household
:04:17. > :04:26.spending fell by 8%, and the sales tax began biting. I asked an analyst
:04:27. > :04:30.what he made of the latest figures. We are looking closely and this time
:04:31. > :04:35.it is because the sales tax and consumption tax went up. We had a
:04:36. > :04:40.boom before, but we have negative growth now. It is important what
:04:41. > :04:45.companies make out of that. We see the relief that the impact wasn't as
:04:46. > :04:48.strong as expected. The forecast, which has been negative, went down
:04:49. > :04:54.for this quarter, but they are already in terms of outlook going up
:04:55. > :04:57.again. A split between manufacturers, which has received a
:04:58. > :04:59.big hit, and the outlook on the nonmanufacturers, which are seeing
:05:00. > :05:09.households affected in the long`term. Certainly by the sales
:05:10. > :05:17.tax which took effect in April. What does this say about the PM's
:05:18. > :05:21.economics? His reform plan to restructure the economy. Is it
:05:22. > :05:25.working? It is working so far. What we see is that basically industry
:05:26. > :05:28.must take over. Last year, we had this expansion in terms of money
:05:29. > :05:33.printing and monetary expansion and fiscal expansion, optimism with talk
:05:34. > :05:37.of structural reforms. Now, implementation has to come in. This
:05:38. > :05:43.depends on investment in corporations. Companies are saying,
:05:44. > :05:49.we will invest more than 7% traditionally this year. This is
:05:50. > :05:54.close to the number. Companies are investing. They are optimistic that
:05:55. > :06:01.demand will increase again and that business conditions are improving.
:06:02. > :06:05.It is interesting to see where companies are headed next. Will this
:06:06. > :06:12.drive the central bank to change their policy? No. The short`term
:06:13. > :06:16.engines of growth, the government pushing the economy, talking up the
:06:17. > :06:22.economy, the Bank of Japan printing more money, lowering the exchange
:06:23. > :06:28.rate, this is done. Stable companies are expected to be stable. The
:06:29. > :06:34.question is, can they sell overseas and in Japan? It depends on if they
:06:35. > :06:41.are investing and coming up with new products. They need to put money
:06:42. > :06:47.behind their word and behind their plans. China's factory activity
:06:48. > :06:51.accelerated to a six`month high in June, showing the economy is gaining
:06:52. > :06:54.strength. The purchasing managers index rose to 51 last month,
:06:55. > :07:06.compared with 50.8 in May, which was in line with market estimates. GM is
:07:07. > :07:11.recalling more than 8 million more cars. It has already issued several
:07:12. > :07:17.major recalls which has cost the firm billions of dollars. The latest
:07:18. > :07:23.recalls are over potentially dangerous ignition switches for all
:07:24. > :07:26.car models made from 1997. In Japan, no`frills air travel is still a
:07:27. > :07:29.phenomenon which hasn't taken off. Today, the Japanese online retailer
:07:30. > :07:34.Rakuten and Air Asia are expected to announce they are teaming up to
:07:35. > :07:37.launch a new airline in the market. Our correspondent reports on what
:07:38. > :07:41.the deal would mean for the companies.
:07:42. > :07:43.Air Asia is expected to announce a less conventional approach to
:07:44. > :07:50.entering the Japanese market by throwing in its fortunes with the
:07:51. > :07:56.online retailer, Rakutan. It is the answer to Amazon and sells watches,
:07:57. > :08:02.clothing and medical supplies. It has bought dozens of companies and
:08:03. > :08:05.made a billionaire of the founder. Its most recent purchase is the
:08:06. > :08:18.Israeli messaging service, Vibr, for 900 million dollars. What might they
:08:19. > :08:23.gain by linking? It could mean a boost to the online travel site of
:08:24. > :08:27.Rakutan's, one of Japan's largest. It could mean a second chance in the
:08:28. > :08:32.lucrative Japanese market for Air Asia. It is among the world's
:08:33. > :08:40.largest. Last year, Air Asia pulled out of a venture with ANA. It is
:08:41. > :08:43.clear the company has had a different approach with Air Asia
:08:44. > :08:50.focusing on cost and 80 and ANA focusing on servers. They bought out
:08:51. > :08:56.the 33% stake and rebranded the low`cost carrier as Vanilla Air.
:08:57. > :09:05.Now, Air Asia will be in competition with their former partner. It will
:09:06. > :09:13.compete with a number of other carriers, including Jet Star Japan
:09:14. > :09:17.and Peach. The social media site Facebook caused an uproar when it
:09:18. > :09:25.was revealed that they allowed researchers to socially experiment
:09:26. > :09:33.on users. It raises concern over laws regarding what companies are
:09:34. > :09:36.able to do with the data of users. Earlier I asked a technology lawyer
:09:37. > :09:44.how significant these new rules will be. It is about protecting our data
:09:45. > :09:48.and it puts key obligations in place for companies that hold this data.
:09:49. > :09:53.They should be getting your consent before they advertise to you or use
:09:54. > :09:57.it. He should not be giving it to other people and they should be
:09:58. > :10:04.giving you rights to access your data. Common sense legislation and
:10:05. > :10:09.companies, most of them, will already be doing this. We know that
:10:10. > :10:14.the regulation came into force in 2012 and it has taken years to come
:10:15. > :10:21.into effect. I have been receiving loads of letters all about data
:10:22. > :10:25.protection. It does appear that businesses have been getting ready
:10:26. > :10:30.for this. The law was passed by Parliament in 2012 but it does not
:10:31. > :10:34.come into effect until tomorrow. It was to give companies in Singapore
:10:35. > :10:38.time to comply with the obligations and I have been receiving e`mails as
:10:39. > :10:44.well from companies getting up to speed and telling customers how they
:10:45. > :10:48.are complying with these new laws. That is it for this addition of Asia
:10:49. > :10:57.Business Report. You can follow us on Twitter. Thank you for watching.
:10:58. > :11:00.I'm Adnan Nawaz. The top stories this hour. Israel has vowed to make
:11:01. > :11:01.Hamas "pay" after three Israeli teenagers