06/08/2014 Asia Business Report

News all the latest business news live from Singapore. Earnings

report, we find out why Standard Chartered is expected to close its

second straight drop in profits today. And making money from

property ` CapitaLand's chief executive talks about the trends and

the risks. Thank you for joining us for this edition of Asia Business

Report. Eye and Rico Hizon. `` I am Rico Hizon. Standard Chartered is

one of the UK's biggest lenders, but more than 75% of its earnings

actually come from Asia. With its first half`results due later today,

the bank's profits may fall compared to levels one year ago. There has

been speculation both the chief executive and chairman are under

pressure from some investors to stand down. We take a look at what

is behind the bank's change in fortunes, starting in India.

Standard Chartered is one of the country's oldest banks, having set

up its branch in 1858. Things have come a long way from dealing in

rubber, tea and oil. Today, it is the country's largest lender, with

its focus on corporate banking and customers in a market that has been

a huge source of profits for the bank. But a slump in the Indian

rupee last year took its toll along with slowing growth and corporate

investment remaining weak. India was once Standard Chartered's most

profitable market globally but it is no longer so. Only perhaps if the

new government can turn positive sentiment into real investments,

both from India and abroad, could things look likely to pick up any

time soon. Here in Hong Kong, the Standard Chartered Bank building

stands tall in the heart of the main business district. It is a testament

to its success in Asia, where it has seen ten straight years of profit

growth. But that winning streak came to an end last year because of

market volatility. Investors have begun taking their money out of

relatively risky emerging markets in Asia and are putting it back in

developed economies. That has forced Standard Chartered to rethink its

strategy. It has had to sell some businesses in key markets such as

Hong Kong and South Korea. What is more, analysts say that a slower

economy and tighter rules in China could affect its bottom line in the

coming months. Here in Singapore, Standard Chartered has already

flagged a weaker performance. One of the problems is competition. More

than 120 commercial banks operate on this island. There is another reason

for Standard Chartered to pay attention to Singapore, because it

is home to its biggest investor, the nation's sovereign wealth fund,

Temasek, which has a big stake. At least publicly, Temasek is refusing

to join the debate about the future of the bank's senior management but

it is being vocal about corporate governance and wants to see more

independent directors on the board. Periodically, there are rumours that

the Temasek would like to sell its holding, but as many point out, 18%

is a lot to swallow and there are no obvious buyers. Earlier, I asked

about what investors wanted in Standard Chartered. Investors want

to see credible leadership at the top of this organisation, whether

that means a change or reinforcement. This is the first

job. So job at number one `` job number one. In your view, should

there be a change in leadership? Or should there be a reinforcement?

Personally, I think it might be time for a more drastic change, however

that is really up to the board and the shareholders. That is only part

of the story. The real problem they have is competitiveness. Banking

competition in Asia has changed in a way that will never return to how

things were. The rise of strong national banks, banks like DVS in

particular, which is a great example. They have been taking

market share from both HSBC and Standard Chartered. I think this is

another issue that has to be addressed. How can they rethink,

then, their Asia strategy when 75% of their earnings come from region?

Yes, it is really, really tough. The problem is the playing field is

extremely level. All major banks have the same systems and quality

and staff. How do they differentiate themselves? The problem is perhaps

the life cycle for Colonial Banks is ebbing. In other business News,

Apple and Samsung have agreed to withdraw all lawsuits from one

another outside the US. Samsung said the agreement did not involve

licensing arrangements. It also said the two companies would continue to

pursue paid within America. `` pursue cases within America. A US

security company says a Russian group has hacked 1.2 billion

usernames and passwords from more than 500 million e`mail addresses.

They security company says it is the largest data breach known to date,

and that the information came from more than 420,000 websites,

including virtually all industries across the world. Many people

grumble about the chunk of their pay cheque going to the government. But

a new UN report says taxpayers in emerging economies in this region

might have to pay a lot more tax. The report says many Asian countries

aren't collecting nearly enough to pay for their development goals. For

more of this I spoke with the UN's economic and social commission

the Asia`Pacific. Largely if you look out, broadly, the evidence

the Asia`Pacific. Largely if you the Asia`Pacific, you will find as

substantial and potential tax collection. It is

on average about 5%. In some countries it is as high as 16%. This

is largely because the tax base is very low. The individual income tax

is not being paid, in some countries it is as low as 1% of the

population, to at best about 3% of the population. So we need to

broaden the tax base, we need tax administrative effort to enhance the

collection through stopping the tax evasion and avoidance practices.

There are some countries with low base tax regimes, others have high

base tax regimes. But meeting halfway, shouldn't governments just

improve the efficiencies of tax collection and enforce tax laws?

Absolutely, that is paramount. And I am not advocating at all tax rate

increases. I'm simply saying that we need to broaden the tax base by

reducing exemptions and concessions. But also making

have very strong tax records, which are publicly disclosed. And also

enforcement to effective tax administrators' vigilance.

South`east Asia's biggest property developer says that profits are up

14%. CapitaLand's chief executive told us how he is trying to deal

with the risk in those markets. That is despite weaker result in China.

Our correspondent heard how they are trying to deal with the risks in

those markets. If you look at both Singapore and China, in Singapore,

we remain very confident in the medium to long`term that it will

remain a hub in this part of the world. In the short`term, some of

the restrictions and measures will have an impact on residential

property prices as well as residential sales volume. Similarly,

in China, there is still this underlying trend. It remains intact.

I think urbanisation continues to take place. We are talking about

significant numbers of people moving from the countryside into the

cities. So that will generate a strong demand for housing. Chinese

residential sales have fallen over 40% in the first six months of this

year. So how are you trying to deal with these increased challenges for

your business? I think there has been a lot of talk about China

potentially slowing down from 7.5% growth to about 7% or possibly even

6.5%. But if you look at it, at 7% or 6.5%, China is still the engine

of growth in this part of the world. Is so if you put the two trends

together, migration and high growth in China, I foresee this to be a

very strong market for the next few years and CapitaLand is well

positioned. I think we have been doing well in China for the last few

years and we have a team of people on the ground that understands the

local market. We know the macro`picture may sometimes not be

as rosy but within that market, because the market is large, there

will be specific pockets of opportunities that, because we are

in the market, we will be able to take advantage of. That was the

chief executive of Singapore's CapitaLand. Before we go, here is a

quick look at the markets. CapitaLand. Before we go, here is a

quick look at Asian stocks are mostly in negative territory. Over

concerns regarding Russia and Ukraine. The Australian benchmark

lost 17 points. Those are the market this power.

lost 17 points. Those are the market this Thank you for investing your

time with us. I Rico Hizon in Singapore. Goodbye for now `` I am

Rico Hizon. I'm Mike Embley. The top stories this hour: The US Secretary

of State John Kerry has urged Israel and the Palestinians to take

advantage of the continuing truce in Gaza to move towards wider

negotiations. An America army general has been shot dead by an

Afghan soldier near Kabul. Harold Greene was the most senior US

officer to be killed since the Vietnam