Taipei Times (TT): The global economy is faltering and weighing on Taiwan’s GDP. What can the government do to ease the pain?
Jaspal Bindra: The world is going through a contraction in trade, largely driven by the impact of the slowdown in the Americas and Europe. That is unlikely to change in the near term.
It is important export-oriented countries understand the new trade routes. The new trade routes are Asia with Africa, Asia with the Middle East and Asia with Latin America.
It is important for Taiwan to diversify into new markets and the government is taking serious steps toward that by signing free-trade agreements or negotiating them at this stage with Singapore, India and many other markets.
Taiwanese firms have made some very good investments in Vietnam and Indonesia. That shows Taiwan is moving in the right direction. However, it has been historically dependent on two large markets (namely, the US and China). As the US is going to be slow in the medium term, Taiwanese firms should develop more sustained and resilient trade potential by diversifying.
TT: Which markets would you recommend?
Bindra: Standard Chartered can provide some help as we operate in 70 markets worldwide and 20 of them are growing by double digits in income. The medium to long-term potential for India is very bright. It could make a very good compliment to Taiwan. The single largest import item growing at the fastest pace in India is consumer electronics and Taiwan is home to that industry. For that industry alone, we see a fantastic opportunity for Taiwan to capture a very large market share in India. It is true that the country has supply side challenges in both infrastructure and education.
TT: What are your views on the Chinese yuan and how can Taiwan benefit from currency-related business?
Bindra: Taiwan has a fantastic opportunity in capitalizing on the new global currency, which is Chinese yuan. Today, the yuan is the third-largest traded currency after the US dollar and euro. It has the potential to grow multiple times from there as trading settlement process opportunities increase.
Today it has very limited functionality due to its convertibility restrictions, but over time we could see the currency growing in very big multiples. Taiwan is extremely well-placed to capture a fair share given its large trade partnership with China.
TT: How about Standard Chartered Bank’s first-half performance?
Bindra: We obtained our 10th record first-half profits with very clean results. We saw 9 percent growth in both revenue and profits which hit US$9.51 billion and US$3.95 billion respectively. Meanwhile, costs grew only 6 percent, suggesting they have been well controlled. The overall portfolio is looking robust in spite of the environment.
More importantly, our capital is sufficient and liquidity is high, with a low advance-to-deposit ratio of 77 percent. We have a liquid asset ratio of 27.9 percent.
TT: Loan impairment at Standard Chartered rose 42 percent during the January-to-June period from a year earlier. Will the trend be sustained into the second half and beyond?
Bindra: The increase came from very low bases and growth in the Middle East and India. Loan impairment stood at 49 basis points for consumer banking and 36 basis points for wholesale banking, relatively low compared with 2009 and 2007. We do not think it will go up, but will remain watchful given the challenging macro-economic environment. We have limited refinancing requirements over the next few years.
TT: What are Standard Chartered’s development plans in Asia?
Bindra: We are increasing investment in infrastructure, in new branches and in technology, and are building our deposit-gathering network. We aim to have 100 branches in both China and India next year, from the current 90 and 94 respectively.
While China has experienced a slowdown, we have good business momentum. We have delivered 22 percent income growth in the first half and have no exposure to local government investment vehicles, and our corporate real estate exposure is minimal. We will also strengthen services in Taiwan because it is an important market in the region.
ELECTRONICS BOOST: A predicted surge in exports would likely be driven by ICT products, exports of which have soared 84.7 percent from a year earlier, DBS said DBS Bank Ltd (星展銀行) yesterday raised its GDP growth forecast for Taiwan this year to 4 percent from 3 percent, citing robust demand for artificial intelligence (AI)-related exports and accelerated shipment activity, which are expected to offset potential headwinds from US tariffs. “Our GDP growth forecast for 2025 is revised up to 4 percent from 3 percent to reflect front-loaded exports and strong AI demand,” Singapore-based DBS senior economist Ma Tieying (馬鐵英) said in an online briefing. Taiwan’s second-quarter performance beat expectations, with GDP growth likely surpassing 5 percent, driven by a 34.1 percent year-on-year increase in exports, Ma said, citing government
UNIFYING OPPOSITION: Numerous companies have registered complaints over the potential levies, bringing together rival automakers in voicing their reservations US President Donald Trump is readying plans for industry-specific tariffs to kick in alongside his country-by-country duties in two weeks, ramping up his push to reshape the US’ standing in the global trading system by penalizing purchases from abroad. Administration officials could release details of Trump’s planned 50 percent duty on copper in the days before they are set to take effect on Friday next week, a person familiar with the matter said. That is the same date Trump’s “reciprocal” levies on products from more than 100 nations are slated to begin. Trump on Tuesday said that he is likely to impose tariffs
HELPING HAND: Approving the sale of H20s could give China the edge it needs to capture market share and become the global standard, a US representative said The US President Donald Trump administration’s decision allowing Nvidia Corp to resume shipments of its H20 artificial intelligence (AI) chips to China risks bolstering Beijing’s military capabilities and expanding its capacity to compete with the US, the head of the US House Select Committee on Strategic Competition Between the United States and the Chinese Communist Party said. “The H20, which is a cost-effective and powerful AI inference chip, far surpasses China’s indigenous capability and would therefore provide a substantial increase to China’s AI development,” committee chairman John Moolenaar, a Michigan Republican, said on Friday in a letter to US Secretary of
‘REMARKABLE SHOWING’: The economy likely grew 5 percent in the first half of the year, although it would likely taper off significantly, TIER economist Gordon Sun said The Taiwan Institute of Economic Research (TIER) yesterday raised Taiwan’s GDP growth forecast for this year to 3.02 percent, citing robust export-driven expansion in the first half that is likely to give way to a notable slowdown later in the year as the front-loading of global shipments fades. The revised projection marks an upward adjustment of 0.11 percentage points from April’s estimate, driven by a surge in exports and corporate inventory buildup ahead of possible US tariff hikes, TIER economist Gordon Sun (孫明德) told a news conference in Taipei. Taiwan’s economy likely grew more than 5 percent in the first six months
RSS