Macau business daily, Feb 20, 2014

MOP 6.00 Closing Editor: Michael Grimes

Telcos off the hook for latest disruption

Publisher: Paulo A. Azevedo

Tam passes up chance to kill concession rumours

business daily 1

staff special bonus

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Families, businesses using more energy Page 6

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rancis Tam Pak Yuen – one of Macau’s most senior officials – passed up the chance yesterday to kill off a story in the Hong Kong media suggesting Macau’s next round of casino concessions could be for much shorter periods.

The Chinese-language Hong Kong Economic Journal – previously a well-informed source for news from mainland official sources – reported that when the current casino concessions come up for renewal in 2020 and 2022, there would be no repeat of the 20-year deals agreed last time. Indeed it went as far as saying the renewals could be for as little as five years.

Asked yesterday by Business Daily whether the licence renewal period could be as short as five years, Mr Tam replied: “…this review [in 2015 or 2016] is still open for suggestions.”

Year II

Number 480 Thursday February 20, 2014

MGM Macau gives Friday April 19, 2013

More on page

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Assembly pledges tighter control of big projects

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www.macaubusinessdaily.com

Legislative Assembly committee overseeing government spending will increase its supervision and focus on big-budget infrastructure projects.

The pledge was made by the chairman of the special finance committee, Mak Soi Kun, after a closed-door meeting yesterday.

Mr Mak said he would “ask for the government’s explanations… on projects that the public does not have a clear grasp [of] or that are alleged abuses of public money”.

The committee would compile a list of projects for the government’s clarification. The list would be ready by next week, he said.

“All projects that are of public concern”, including the budget for the Light Rapid Transit railway network, would be tabled for the government to provide more details, he said.

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Banks are ahead of Basel

Lisboa Palace – a preview

Half homes in 2013 cost MOP4 mln+

Capital adequacy ratios at Macau’s banks exceed Basel III standards, and the banks have maintained quality assets and sound liquidity, the Monetary Authority of Macau says.

Mr Wan Sin Long, a member of the monetary authority’s board of directors, said the banks’ nonperforming loan ratio stood at 0.09 percent at the end of last year.

Their capital adequacy ratio was 14.8 percent and the average “core” capital adequacy ratio stood at 11.2 percent.

Business Daily has gained exclusive access to renderings showing how the suites in SJM Holdings Ltd’s new selfbranded hotel on Cotai will look.

SJM announced last week that Lisboa Palace would be the overall brand identity for its entry into the Cotai resort market. It makes use of the strong recognition among Chinese consumers for its existing Macau peninsula properties – Hotel Lisboa and the Grand Lisboa.

More than half of all the homes sold in Macau last year cost at least 4 million patacas (US$500,000), official figures indicate. Estate agents say they now regard 4 million patacas as the minimum price of entry into the housing market.

They also predict that unfinished flats will make up only 10 percent of homes sold this year, having made up over 30 percent last year.

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22 business daily

February 20, 2014 Friday April 19, 2013

Macau business as usual

Driven to distraction Paulo A. Azevedo pazevedo@macaubusinessdaily.com

T

his column is personal.

It is in the name of the thousands of people who are outraged or have had their common sense insulted, as I have done, but have no way to express it besides social media.

The government has cut hundreds of parking spaces from the city, yet refuses to take measures to curb the problems stemming from heavy traffic.

I understand the need for some of the car parks to be cut, since they are in the way of construction for the – delayed – light rail network.

But the government’s lack of planning has already eaten through a big chunk of what was once considered by many to be a reasonable quality of life in Macau.

In my opinion, the traffic police continue to do the easiest thing possible: filling out parking tickets, rather than tackling the important traffic problems.

People continue to die on the city’s zebra crossings.

Drivers make the most illogical and illegal mistakes because there are no decent road safety campaigns to tell them otherwise.

There is generally poor supervision during driver’s exams.

And I have never seen the police concerned with problems on the road except for, sometimes, speeding.

But, every day, I do see officers giving out parking tickets.

It was as if the absence of parking was created by the people, and not because there is a lack of ideas to solve the parking problem.

Perhaps I could ask a favour of a close ally to a politician. Many of them have been investing in car parking spaces, so that people like myself can buy one at an inflated price - if they can afford to buy one at all.

Perhaps it is just one big commercial endeavour to make money.

Yesterday morning, while I was waiting to enter a car park that was temporarily full, on a culde-sac without much traffic, a police officer asked me to move along.

Of course I disagreed with him, saying that since there were no available parking places with a meter, it was safer for me and the public to stay where I was, rather than double park or drive out onto a busier street.

Typically I never need to wait much more than five minutes before I have found a space. It never takes too long because cars are always in and out.

The policeman gave me another warning to move away.

While the pair of us argued here, I told him, in many other parts of town, drivers were putting people in danger.

I would rather spend five minutes waiting here and he should do his job.

As I sat in the car, waiting, he gave me a ticket for parking illegally.

I waited for 11 minutes before entering the car park, and now I had a 600 pataca parking ticket on the passenger’s seat next to me.

I could take the ticket to friends who, believe it or not, I have in the force and ask them to find a way to help me fix this unfair case.

But that is a similar type of behaviour on display from most of the people who are speculating on car parks.

That would mean working in a grey area, and not following society’s most basic moral code.

Yes, I could ask for help from my friends, tonight, actually, at the Lunar New Year dinner the police are hosting for the media.

But I prefer to make this small story a public one because it reflects our daily lives in this city that is losing its honour and face.

Unfortunately, I will have to skip dinner and the kind invitation of the police.

The parking around the venue is poor and two tickets in the same day would be too much.

Monetary authority says banks ahead of Basel requirements Regulator says the banks’ capital adequacy ratios are outperforming Basel III rules Stephanie Lai

sw.lai@macaubusinessdaily.com

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apital adequacy ratios at Macau’s banks exceed Basel III standards, and the banks have maintained quality assets and sound liquidity, the Monetary Authority of Macau says.

Mr Wan Sin Long, a member of the monetary authority’s board of directors, said the banks’ nonperforming loan ratio stood at 0.09 percent at the end of last year.

Their capital adequacy ratio was 14.8 percent and the average “core” capital adequacy ratio stood at 11.2 percent.

In 2011 and 2012, the bank’s capital adequacy ratio stood at almost 15 percent, according to data from the monetary authority.

“On average our banks are wellcapitalised and their capital ratio has been kept at around 15 percent, which is higher than what Basel III requires,” Mr Wan said during a lunch held by the Macau Association of Banks yesterday.

Under the Basel III guidelines, the minimum capital adequacy ratio, including a conservation buffer, should reach at least 8 percent by next year.

Under the framework, the ratio

should grow to 10.5 percent by 2019.

The Basel III requirements are global, voluntary standards to ensure a bank’s capital adequacy, ability to meet stress tests and weather liquidity risk.

The conservation buffer should be held in reserve to offset losses and be substantial enough that banks could maintain enough capital to stay above the minimum requirements in a major downturn.

“We’ve always been preparing [local banks] for compliance with Basel III requirements, step-by-step,” Mr Wan said.

The city’s banks have seen their assets expand rapidly in the past year.

Total assets reached 990.1 billion patacas (US$123.95 billion), a 24.4-percent increase over 2012, the monetary authority says.

Meanwhile, savings held by the banks climbed to 680.1 billion patacas last year, an increase of 25.8 percent over 2012.

The value of loans issued has grown by 31.4 percent to 534.7 billion patacas in the past 12 months.

In his speech yesterday, Mr Wan said the banks had maintained a “sound asset quality” and good liquidity.

Banks’ international assets up by 27pct

M

acau banks’ total international assets expanded by 27.1 percent to 844.4 billion patacas (US$105.7 billion) in 2013 over that of the previous year.

The latest statistics released yesterday by the Monetary Authority of Macao show that of the total, external assets grew by 26.2 percent year-onyear to 652.8 billion patacas, while local assets in foreign currencies increased by 30.4 percent to 191.6 billion.

External loans and deposits also advanced by 25.8 percent to 603.5 billion patacas.

Foreign currencies were the dominant asset class in international banking transactions. The Hong Kong dollar accounted for 35.9 percent of international assets and 46.4 percent of international liabilities. Other foreign currency accounted for 63.3 percent of the total international assets and 52 percent of international liabilities.

Total international liabilities

increased by 25.7 percent year-onyear to 799.6 billion patacas. Of these, external liabilities in foreign currencies grew by 27.3 percent to 396.8 billion patacas year-on-year, while that of local liabilities grew 24.2 percent to 402.8 billion patacas.

In addition, foreign currency bank accounts held by residents continued to account for the majority of all international liabilities, recording a 23.4 percent growth to 375.8 billion patacas at the end of last year from 304.7 billion patacas in 2012.

At the end of last year, the share of international assets in total banking assets advanced to 85.3 percent from 84.9 percent at the end of September.

Share of international liabilities in total banking liabilities, however, dropped slightly to 80.8 percent from 81.1 percent.

The majority of external assets and liabilities were related to the regions of Asia and Europe.

Wan Sin Long of the Monetary Authority of Macau, speaking yesterday

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February 20,19, 2014

Friday April 2013

Macau

The Light Rapid Transit scheme – cost overruns

Committee pledges greater transparency on public works Extra oversight and greater focus on big-ticket items follows criticism that the public’s hopes have not been met Tony Lai tony.lai@macaubusinessdaily.com

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Legislative Assembly committee overseeing government spending will increase its supervision and focus on big-budget infrastructure projects.

The pledge was made by the chairman of the special finance committee, Mak Soi Kun, after a closed-door meeting yesterday.

Mr Mak said he would “ask for the government’s explanations… on projects that the public does not have a clear grasp [of] or that are alleged abuses of public money”.

The committee would compile a list of projects for the government’s clarification.

The list would be ready by next week, he said.

“All projects that are of public concern”, including the budget for the Light Rapid Transit railway network, would be tabled for the government to provide more details, he said.

Yesterday’s move comes after a stinging critique by assembly president Ho Iat Seng that the committee’s work had not satisfied the public.

A series of significant budget overruns on public works elicited the criticism.

The government’s investment in the University of Macau campus on Hengqin Island blew out to 10.2

billion patacas (US$1.3 billion), a 76 percent increase over the original forecast from 2010.

The independent Commission of Audit has also been critical of the government for allowing the cost of the city’s light rail network to balloon past 11 billion patacas – almost three times the initial budget.

The government has yet to cap the project’s cost.

Mr Mak said the committee had asked the government to report on its expenditure between January and July last year.

The committee will ask the government to release a report on its

spending every six months from now on.

He said the Legislative Assembly had failed to properly monitor the government’s spending last year because members were occupied by September’s elections.

The most recent data available from the Financial Services Bureau show the government spent 54 billion patacas in 2012, representing 65.9 percent of its budget.

In his comments last week, Mr Ho said: “The Legislative Assembly should be clearly aware that there is still a huge gap between what it has done and residents’ expectations… particularly in supervising the government.”

Chinese lottery concession renewed Wing Hing Lda will keep its monopoly till year-end

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ociedade de Lotarias Wing Hing Lda will continue to run its monopoly on the Chinese lottery in Macau until December 31, 2014.

The decision to renew the concession agreement was published in yesterday’s Official Gazette. It said the contract signed was worth 500,000 patacas (US$62,500). Other than that, there are no changes made to the previous contract between Wing Hing and the government.

The company had been signing only one-year contracts with the government since 2010. Wing Hing’s lottery concession is part of Stanley

Ho Hung Sun’s business interests.

And the business model has remained almost unchanged since 1990.

Wing Hing pays the government 23 percent of its revenue, plus five per cent to the Macao Foundation. The yearly revenue of the Chinese lottery, known locally as Pa Ka Pio (sometimes Westernised in lottery outlet signs as ‘Pacapio’), has remained stable at around six million patacas since 2007.

Official data show that gross gaming revenue from lottery games was five million patacas last year, a 16.7 decrease from that of the previous year.

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February 20, 2014 Friday April 19, 2013

Macau MGM Macau gives staff special bonus MGM China Holdings Ltd announced yesterday a “special bonus” for “team members” at MGM Macau. “This special bonus follows the discretionary bonus of one month previously paid out at Chinese New Year, and means that our employees will have received total bonus equal to two months’ salary for 2013,” said the company. “This success is due to the commitment and hard work of the MGM team in Macau, it is appropriate to share our achievement with our colleagues,” said Grant Bowie, chief executive and executive director of MGM China.

Tam passes up chance to kill concession rumours Hong Kong media reporting next round of Macau casino concessions could be as short as five years Michael Grimes

michael.grimes@macaubusinessdaily.com

Stephanie Lai

sw.lai@macaubusinessdaily.com

O

ne of Macau’s most senior officials passed up the chance yesterday to kill off a story in the Hong Kong media suggesting Macau’s next round of casino concessions could be for much shorter periods.

The Chinese-language Hong Kong Economic Journal – previously a well-informed source for news from mainland official sources – reported that when the current casino concessions come up for renewal in 2020 and 2022, there would be no repeat of the 20-year deals agreed last time. Indeed it went as far as saying the renewals could be for as little as five years.

And the outlet – quoting “a source in authority” – suggested that Beijing might create a linkage between the condition of United States-China political relations and how long the current casino operators – three of whom are U.S.-based – might receive as an extension.

Using directly reported speech from the ‘source’, the Economic Journal reported: “…it’s impossible to issue [another] 20-year licence, and 10 years looks too long”.

The report continues in indirect speech, suggesting ‘it would be more appropriate to renew the licence every five years’.

Returning to direct speech, it quotes the source saying: “A few American senators always accuse Macau and

Francis Tam speaking to media yesterday

China of money laundering. So Beijing thinks there is a need to continue to use this licence interest to leverage with the U.S.”

Different approach If the Economic Journal is representing an official Beijing view on the process, it might amount to a fundamental misunderstanding by Chinese officials of the relationship between business and the nation state in the West. The idea that the Democrats’ President Barack Obama would lobby China on behalf of a major Republican donor such as Las Vegas Sands Corp chairman Sheldon Adelson cannot be assumed.

But in China, where the supposed private sector is generally a form of state capitalism with close ties to government, such linkage between the interests of business and of the state seems normal.

Business Daily understands from other Macau government sources that in fact Macau officials are under orders not to discuss publicly anything connected with the concession renewals prior to the election for the post of Macau chief executive, due this summer.

One well-informed source even suggested to this newspaper that the concession truncation story might have been fed to the Hong Kong media either by people with an interest in

shorting Macau gaming stocks, or wishing to depress the current strong prices for the operators’ equities.

Sands China Ltd fell 0.77 percent in Hong Kong trading yesterday.

Wynn Macau Ltd declined 0.59 percent; MGM China Holdings Ltd was down 0.99 percent and Melco Crown Entertainment slipped 0.09 percent on low volumes. Galaxy Entertainment Group Ltd was down 1.92 percent, and SJM Holdings Ltd led the downward slide with as 3.46 percent drop.

listen to it.”

Asked whether the opinion of Beijing would be a big factor in the licence renewal issue, Mr Tam replied: “…at this stage the local government, including our advisory commission or supervisory units; basically we didn’t have any mature opinions on this issue.

I have to reiterate that the review is not only about the gaming licence renewal, it is a strategic review for Macau’s economic development as well.”

Mixed messages But when Francis Tam Pak Yuen, Secretary for Economy and Finance, was yesterday asked by Business Daily about the report on the sidelines of an event for the banking industry, he didn’t take the opportunity to squash it.

Asked whether the government had a time period in mind for the next round of concessions, Mr Tam said: “No, we don’t. We truly want to take different opinions from the society for the upcoming review that can benefit the gaming and economic development here.”

Asked if Sino-U.S. relations would be a factor in the process, Mr Tam replied: “What we said is that we will collect different opinions for the review from every channel. I don’t know who will raise this factor [SinoU.S. relations] in future, but we’ll

…basically we didn’t have any mature opinions on this issue Francis Tam Pak Yuen, Secretary for Economy and Finance

Asked specifically whether the licence renewal period could be as short as five years, Mr Tam replied: “I think the government has already mentioned that 2015 and 2016 will be the appropriate time to review how the local gaming development should go when the current concessions expire in 2020 and 2022. We maintain this stance, and before this review the local government does not have any grounds [for discussion] on this issue. I think for the review starting in 2015 and 2016, which is important for Macau’s gaming and economic development, we hope to get some clearer directions. And this review is still open for suggestions.”

A regional gaming analyst who asked not to be named, told Business Daily yesterday: “I think if there were 10 years [concession period] on offer, you wouldn’t get much push back from the operators, but five years would be problematic given the size of investment and the declining rates of return on investment created by tougher rules on table numbers. If it were five years with no licence renewal fee and no increase in gaming tax, that might be a little more palatable.”

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February 20,19, 2014

Friday April 2013

Macau

Lisboa Palace – a preview An exclusive look at casino operator SJM Holdings’ plans for the hotel interiors at new Cotai resort Michael Grimes

michael.grimes@macaubusinessdaily.com

B

usiness Daily has gained exclusive access to renderings showing how the suites in SJM Holdings Ltd’s new self-branded hotel on Cotai will look.

SJM announced last week that Lisboa Palace would be the overall brand identity for its entry into the Cotai resort market. It makes use of the strong recognition among Chinese consumers for its existing Macau peninsula properties – Hotel Lisboa and the Grand Lisboa.

The new development is now budgeted at HK$30 billion (US$3.87 billion) – 50 percent more than originally forecast in 2011. It will have three hotels together containing up to 2,000 rooms.

The company and Italian fashion house Gianni Versace SpA signed last September a deal that will allow one of the Cotai project’s hotels to use the Versace brand name. The branding for a third hotel tower is still to be announced.

SJM’s self-branded hotel will

also be known as Lisboa Palace. It appears to draw strongly on some of the themes also seen in Versace hotels – Western style opulence with a neo-classical feel.

The whole Cotai development will have up to 700 gaming tables and 1,200 slot machines the company said last week. SJM hopes to complete the project in 2017.

SJM Holdings’ chief executive Ambrose So Shu Fai said over 90 percent of the space in the development

Artist’s view – bedroom at the Lisboa Palace-branded hotel

A bathing escape – bathroom at Lisboa Palace

High life – living room at Lisboa Palace

would be for non-gaming facilities.

It would include a wedding pavilion and a multi-purpose theatre, as well as an Italianate garden on the rooftop of the resort’s podium, along with several swimming pools.

SJM executive director Angela Leong On Kei added that a 180,000-square metre parcel of land next door controlled by her, would complement the Lisboa Palace with “family-oriented elements” such as cheaper hotels and a theme park.

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February 20, 2014 Friday April 19, 2013

Macau Macau named in UN report on N. Korea Macau gets a mention in the United Nations’ new report into human rights abuses by North Korea. It concerns the case of three women who were kidnapped from Macau and taken to North Korea in 1978, during the Portuguese administration of the territory. The report says the Thai woman is believed still to be in North Korea. There’s no suggestion from the UN of Macau colluding. But the city previously had extensive links with the hermit state, including a direct air service to Pyongyang, cross border banking ties via Delta Asia Bank Ltd, an informal trade office and frequent visits by Kim Jong-nam (pictured), brother of the country’s current leader Kim Jong-un.

Telcos off the hook for service disruption Last month’s blackout goes unpunished but regulator tells SmarTone and Hutchison to improve infrastructure Tony Lai

tony.lai@macaubusinessdaily.com

T

he telecommunications regulator says it will not impose fines on either company involved in last month’s service disruptions.

The Bureau of Telecommunications Regulation said SmarTone Mobile Communications (Macau) Ltd and Hutchison Telephone (Macau) Co Ltd could not be held responsible for a fire that damaged an exchange.

But the regulator urged both companies to improve their services.

SmarTone Macau subscribers were without services for more than six hours on January 30 after a fire

damaged its facilities at the Golden Dragon Centre in central Macau.

The Hutchison Macau brand 3 Macau lost its customer hotline service.

The regulator told Business Daily it had received reports from both companies over the incident.

It did not say how many customers were affected by the service interruption.

“After initial analysis, the occurrence of this incident is out of the control of Hutchison Macau or SmarTone Macau,” the bureau said.

“And the location for the fire is also not managed by either of them,

so there is no proof to show that the incident can be attributable to the two operators.

“But the bureau will urge Hutchison Macau and SmarTone Macau to review their facilities and strive for an improvement proposal.”

The bureau said the fire damaged the telephone exchanges of both operators.

According to Macau’s telecommunication regulations, the government can fine any operator that cannot meet the terms of their concession contract, which includes service interruptions.

It may revoke their licences if fines accumulated by an operator exceed 1.5 million patacas (US$188,000).

Members of the Legislative Assembly have been critical of the system of fines, arguing the penalties are too lenient.

The government fined Companhia de Telecomunicações de Macau SARL 800,000 patacas for a major service blackout in February 2012.

That disruption affected between 63 percent and 96 percent of 2G and 3G mobile subscribers to the city’s biggest telecommunications operator for more than six hours.

Two providers involved have escaped fines

Families, businesses using more energy Electrical power accounts for nearly half of all energy consumption

M

acau consumed two percent more energy from all sources in 2013 than it had the previous year, with consumption volume reaching 4.29 billion kilowatt hours.

The latest figures released yesterday by the Statistics and Census Service show that while energy consumption for the whole

year was up, usage in the fourth quarter was down compared to the previous quarter. Energy consumption dropped 25 percent in the fourth quarter of 2013 over that of the third quarter.

In addition, residential energy consumption was down 44.1 percent sequentially in the fourth quarter, while commercial usage

fell by 19.6 percent quarter-onquarter.

Of the annual total, electricity accounted for the majority of consumption at 49.1 percent and gas 24.3 percent.

The price of bottled gas increased 6.2 percent in the fourth quarter of 2013 when judged quarter-on-quarter, as

did the price of electricity, up by 5.8 percent in the same period.

Importing energy has also become more expensive, with wholesale gas prices up by 2.4 percent year-on-year across the 12 months, while the wholesale rate for electricity was up 5.3 percent in 2013 judged yearon-year.

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Sky high – entry price for property ownership rising

Home dear home Half apartments sold in city during 2013 cost at least MOP4 mln Tony Lai

tony.lai@macaubusinessdaily.com

M

ore than half of all the homes sold in Macau last year cost at least 4 million patacas (US$500,000), official figures indicate.

Estate agents say they now regard 4 million patacas as the minimum price of entry into the housing market.

They also predict that unfinished flats will make up only 10 percent of homes sold this year, having made up over 30 percent last year.

Statistics and Census Service data published on Monday show the number of homes sold last year was 12,046, or 29 percent fewer than in 2012.

The data show over half the homes sold cost over 4 million patacas.

Nearly 36.9 percent cost 6 million patacas or more.

In 2010 only 16.6 percent of the almost 18,000 homes sold cost over 4 million patacas.

The latest figures fail to surprise Midland Realty (Macau) Ltd’s chief executive, Ronald Cheung Yat Fai. “In this current robust market, I’d say the entry price for buyers is at least 4 million

or even 5 million patacas,” Mr Cheung said.

“A flat costing 6 million patacas is no longer regarded as high-end flat,” he said.

“Right now 5 million patacas can get you only a two-bedroom flat built several decades ago.”

HKP Estate Agency (Macau) Ltd district sales director Marco Wong Kwok Ki said even 6 million patacas would buy only a smaller flat this year.

“For instance, you could buy an 800 square foot flat for 6 million patacas in 2013, but the same amount will buy you only a 600 square foot home in 2014,” Mr Wong said.

Old, dear Official data show the average price of housing was 81,811 patacas a square metre last year, 43 percent more than in 2012.

The average price on the peninsula was 79,770 patacas, 52 percent more than in 2012.

The average price on Taipa was 82,022 patacas, 27 percent more, and the average price on Coloane was 102,273

patacas, 26 percent more.

Mr Cheung said: “Apart from being driven up by pre-sales of unfinished flats,

In this current robust market, I’d say the entry price for buyers is at least 4 million or even 5 million patacas Ronald Cheung, CEO, Midland Realty (Macau) Ltd

housing prices were also buoyed last year by sales of flats in old buildings, which cost 4 million patacas now, compared with over 2 million patacas early last year.”

In the fourth quarter of last year a flat more than 20 years old cost, on average, 60,035 patacas, 60 percent more than a year earlier.

Various estate agents have forecast that housing prices will rise by between 10 percent and 20 percent this year, as the supply is limited.

Secretary for Transport and Public Works Lau Si Io said last week that the government was not ruling out taking more measures to cool the overheated property market.

Estate agents expect fewer pre-sales of unfinished flats this year, now that pre-sales are regulated by law.

Since June the law has allowed the sale of unfinished flats only once the foundations of the building that will contain them are complete, and each flat is registered with the government.

Official data show 3,868 of the 12,046 flats sold last year were unfinished.

Mr Wong said the government was unlikely to give permission this year for the sale of unfinished flats in Pearl Horizon or an unnamed housing project in Areia Preta owned by Hong Kong-listed developer Polytec Asset Holdings Ltd. “The ratio of pre-sales to sales of finished flats could reach one to nine this year,” he said.

Mr Cheung said developers might not pre-sell all their unfinished flats in one go, even if they got permission to.

Official data show the unfinished flats sold last year together fetched 33.7 billion patacas, nearly half the combined value of all housing transactions.

The average price of unfinished housing was 105,542 patacas a square metre, while the average price of finished housing was 66,175 patacas.

The average price of office space was 74,525 patacas a square metre last year, 61 percent more than in 2012.

The average price of industrial space was to 33,721 patacas a square metre, 62 percent more.

Mr Cheung said buyers of office and industrial space had had their eye on the investment value, as the limited supply of housing had curtailed the opportunities for investment in residential property.

He predicts that prices of office and industrial space will rise more slowly this year because they are nearing their peak.

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88 business daily

February 20, 2014 Friday April 19, 2013

Greater China Yuan slides to eight-week low The yuan fell to the lowest level almost eight weeks after the central bank cut the currency’s reference rate amid concern China’s economic growth is slowing. The PBOC lowered the yuan’s daily fixing by 0.05 percent to 6.1103 per dollar, the weakest since January 23. China has reduced its 2014 forecast for expansion in factory output to about 9.5 percent, from last year’s 10 percent, Mao Weiming, deputy minister at the Ministry of Industry & Information Technology, said on Tuesday. HSBC Holdings Plc and Markit Economics will release the preliminary reading for February manufacturing today.

Japan-China trade to improve ‘slightly’ Trade between China and Japan, Asia’s biggest economies, is set to pick up this year after a two-year slump, irrespective of political tensions, according to the Japan External Trade Organization, or Jetro. Japan’s trade deficit with China widened last year by 18 percent to a record US$52.2 billion, as the Chinese economy restructured and its growth slowed, Yoichi Maie, head of research at Jetro’s China and North Asia division, said at a briefing yesterday. Japan’s exports fell by 10 percent as China cut construction and mining machinery orders, he said.

Former Ziff Brothers boss plans hedge fund Gregard Heje, former Asia head of Ziff Brothers Investments LLC, plans to start his own Hong Kong-based hedge fund as early as the second quarter, said two people with knowledge of the matter. The family office that oversees the Ziff family’s publishing fortune will be an anchor investor in Heje’s Kontiki Capital Management (HK) Ltd., said one of people who asked not to be identified as the information is private. Most of Ziff Brothers’ former Hong Kong-based employees will join Kontiki, the person said. The firm will be staffed by a team of 12 people.

The big squeeze Russia, Iraq crowd other oil suppliers out of China Jacob Gronholt-Pedersen

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ussia and Iraq are boosting crude shipments to China despite demand there growing at its slowest in more than 20 years.

It’s forcing rival suppliers to divert cargoes elsewhere.

The redirected shipments from Latin America, Africa and some Middle Eastern producers that were originally expected to go to Chinese refineries will drag on benchmark prices this year, and state oil companies have already started cutting official selling prices in their search for buyers.

Russia’s Rosneft, backed by its government to push East Siberian oil to Asia, and Iraq, armed with big discounts and easy terms, have landed contracts that will raise their combined shipments nearly 50 percent more than China’s import demand is forecast to grow in 2014.

Buyers’ market With state refiner PetroChina and oil major BP Plc also delaying or dropping refinery projects in China due to worries about demand growth, sellers will be scrambling for shares in a market smaller than they had anticipated.

“Lots of people all around the world want to sell crude to Asia, and there may not be enough demand for everyone,” said Andrew Reed at

Energy Security Analysis, Inc. China’s oil demand rose just 1.6 percent last year, its slowest pace since 1992. Its crude imports grew 4 percent, their slowest since at least

2007, according to Reuters data, and down from a rise of more than 17 percent in 2010.

Although top China oil company China National Petroleum Corp

China accuses Qualcomm of overcharging Regulator says chipmaker may have abused market dominant position

C China to hoard pork to help farmers The Chinese government will stockpile pork from the domestic market as part of efforts to shore up prices, the National Development and Reform Commission (NDRC) said on Wednesday. Domestic pork prices in China, the world’s top producer and consumer, have been falling since the middle of December.

The stockpile is meant to stop a further slide in prices and stabilise domestic breeding, the NDRC said in a statement. It did not say how much pork the government would buy. Beijing stockpiles agricultural products, including grains and cotton, as part of its efforts to help farmers.

Shandong bans new oil refineries Eastern China’s Shandong province has banned approvals of new oil refining projects, a state oil major said, the latest move to tackle overcapacity in the second largest oil consumer. The ban comes on the heels of China’s fuel consumption rising at its slowest clip in more than 20 years in 2013, the end to a decade of rapid demand growth that helped drive global oil prices to over US$100 a barrel. While the fuel market cooled, construction of refineries continued apace, leaving a capacity glut.

hina’s anti-monopoly regulator yesterday said Qualcomm Inc. was suspected of overcharging and abusing its market position. The allegations could see the U.S. chip giant hit with record fines of more than US$1 billion.

The National Development and Reform Commission (NDRC) also said it was in talks with another U.S. technology firm, InterDigital Inc, about a possible settlement to a separate anti-monopoly probe as the regulator focuses on the rapidly evolving information technology market.

Foreign firms from drug maker GlaxoSmithKline to Apple Inc are facing tougher scrutiny in the world’s second-biggest economy as China targets key industries to protect consumers from bloated prices and second-rate products.

In its first public statements about the Qualcomm investigation, the watchdog said it began making enquiries after receiving complaints that the San Diego-based company was charging higher prices in China than it does in other countries.

“We received reports from relevant associations and companies that Qualcomm abuses its dominant position in the market and charges discriminatory fees,” Xu Kunlin, who heads the NDRC’s anti-monopoly and price supervision bureau, told a press conference in Beijing.

The NDRC dual investigations are part of a focus on information technology providers, especially companies that license patent technology for mobile devices and networks.

Industry experts say the NDRC, which is also the government’s main economic planning body, is trying to lower domestic costs as China rolls out its faster 4G mobile networks this year.

Earlier this month, the China Mobile Communications Industry Association said it had filed a complaint against Qualcomm for overcharging for use of its patents.

Under the anti-monopoly law, the NDRC can impose fines of between 1 and 10 percent of a company’s

revenues for the previous year.

Qualcomm earned US$12.3 billion in China for its fiscal year ended September 29, or nearly half of its global sales.

The NDRC said it conducted raids at Qualcomm’s Beijing headquarters and at its Shanghai offices in November.

Officials subsequently met William Bold, Qualcomm’s senior vice president for government affairs, and Fabian Gonell, vice president and counsel for Qualcomm’s technology licensing, in December, the official Xinhua news agency reported.

Qualcomm spokeswoman Christine Trimble said the company was cooperating with the investigation.

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Greater China match that increase.

Russia’s biggest oil producer Rosneft, which supplied over 300,000 bpd to China in 2013, will ship an additional 180,000 bpd this year, with China-bound exports eventually to rise to more than 900,000 bpd.

“It’s a logical move. Russia is simply trying to secure a long-term off taker of its crude,” Reed said.

As Iraq pushes hard to raise its market share in China and Asia, it is set to become China’s secondlargest crude supplier this year by increasing shipments by 68 percent to 882,000 bpd.

Last year, Iraq passed Iran to become China’s fifth-largest supplier after cutting its official selling prices for its main crude Basra Light.

Share tussles

(CNPC) has said the nation’s crude imports will rise 7.1 percent this year, or about 370,000 barrels per day (bpd), the bumps in Russian and Iraqi supplies would more than

China’s increased imports from Russia and Iraq only intensifies the fight for Asian market share among other oil exporters.

Producers in Latin America and Africa are already offering steeper discounts to Asian buyers as import needs in their traditional U.S. and European markets drop.

“As the Atlantic basin needs less and less oil, crude from Latin America, Africa and Russia will have to find a new home,” said Jeff Brown of FG Energy.

“Naturally they’re looking to Asia.”

This prospect of oversupply and ongoing slow growth in China prompted investment banks such as Goldman Sachs and Barclays in December to lower their oil price forecasts for 2014.

Dutch bank ABN AMRO in January cut its average Brent price for this year to US$95 a barrel from US$100.

KEY POINTS China National Petroleum Corp says crude imports to rise 7.1 percent in 2014 Russia, Iraq oil sales rise more than projected China import growth Producers in Latin America, Africa offering discounts to Asian buyers Latin America, Africa volumes to China dropping this year

“Oil oversupply is here to stay, at least in the next few years, outpacing the rise in demand and thus keeping oil prices under pressure,” it said in a research note.

This month, however, the International Energy Agency (IEA) became the third major forecaster to say that global oil use would be higher than expected this year due to economic growth in the United

States and Europe.

Oil inventories are also at their lowest since 2008 because of stronger-than-expected demand and supply problems in a number of OPEC countries, the IEA said.

Still, the bump in supplies to China from Russia and Iraq look especially bad for Latin American exporters, who had been looking to Asia as surging U.S. shale oil output robs them of decades-old customers.

By the end of the first quarter, shipments of Latin American crude to China are likely to have fallen by 10 percent from a year earlier to around 504,300 bpd, according to data compiled by Thomson Reuters.

Compared with the first quarter of 2012, that volume would mark a fall of about 25 percent.

Latin American producers deliver a set volume of crude and products to China under annual deals, and Chinese companies sometimes launch tenders to resell a portion of them, after factoring in domestic requirements.

“If China’s oil demand slows down, resales of Venezuelan and Ecuadorian crude and products will increase,” said a trader working in a private firm and involved in PetroChina’s sales.

All Ecuadorian fuel oil being delivered by Petroecuador to PetroChina, some 100,000 bpd, is currently being resold by PetroChina, and it also frequently resells crude and different Venezuelan refined products, the trader said.

Shipments of West African grades to China are also likely to fall in January and February versus a record in November, although it is too early to say if the drop reflects a decline in China’s appetite for the crudes Reuters

StanChart mulls sale of HK consumer loans unit UK-based bank trying to maximise capital efficiency, suggest industry sources Denny Thomas and Saeed Azhar

S

tandard Chartered Plc is seeking buyers for a Hong Kong consumer finance business worth US$500 million to US$700 million, according to people familiar with the matter, as the Asia-focused lender sells off peripheral businesses.

A sale would come after the London-based bank in November said it aimed to use capital more effectively. It said it would close or sell small units that are not in its biggest markets, do not work well with other operations or do not produce sufficient profit.

Standard Chartered, which recently reshuffled management after saying 10 years of earnings growth likely ended in 2013, is also considering the sale of its Swiss private bank, Reuters reported last week.

Standard Chartered is working with an advisor to sell Hong Kong consumer finance business PrimeCredit Ltd, which the bank bought in 2004, said the people, who declined to be identified as discussions are confidential.

The bank is likely to kick off an auction to sell PrimeCredit in the next few weeks, they said.

A Standard Chartered Hong Kong-based spokeswoman, in an emailed response to a query on the matter from Reuters, said “We don’t comment on market speculation.”

Standard Chartered’s Hong Konglisted shares were up 0.8 percent by yesterday afternoon, whereas the benchmark Hang Seng index was up 0.3 percent.

Over the past year, the bank’s London-listed shares have fallen 23.6 percent compared with a 19.2 percent fall in the FTSE All Share Banks Index.

Standard Chartered operates consumer finance businesses in Asia

in Hong Kong and South Korea, and is in the process of selling the latter, Reuters previously reported.

PrimeCredit is a Hong Kong highstreet lender specialising in highinterest loans for customers with little credit history.

The lender booked after-tax profit of HK$251 million (US$32.4 million) for the six months to June, 5 percent more than in the same period a year earlier, regulatory filings

show. Impairment charges jumped 36 percent to HK$169.6 million.

The auction for PrimeCredit is likely to attract interest from banks in Australia, China and Singapore, the people said.

Banks from those countries had shown strong interest in the sale of two Hong Kong family-run banks last year.

StanChart changes Last month, Standard Chartered announced a shake-up in its top ranks which resulted in Mike Rees becoming deputy to chief executive Peter Sands.

The bank also said it would combine its wholesale and consumer units from April.

The announcement came after the bank in December said 10 years of growth had likely ended because of tougher international banking regulations, substantial loss in Korea, and slowdown in Asian markets.

The bank earns more than threequarters of profit in Asia, the Middle East and Africa. Its limited presence to Western markets helped it come through the 2008 financial crisis relatively unscathed, and made it a stock-market favourite because of its exposure to faster growth in those emerging markets.

Reuters

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Greater China Hong Kong stocks at four-week high Hong Kong stocks rose, with the city’s benchmark closing at its highest in four weeks, as financial companies outweighed losses by casino operators. Bank of East Asia Ltd., Hong Kong’s largest family-run lender, jumped 4.8 percent after UOB-Kay Hian Holdings Ltd. raised its rating on the stock.

HSBC Holdings Plc, which is scheduled to report earnings next week, rose 1.8 percent.

The Hang Seng Index gained 0.3 percent to 22,664.52, its highest close since January 2, reversing earlier losses of 0.2 percent. About three stocks rose for every two that fell on the measure, with trading volume 31 percent lower than the 30-day average. The Hang Seng China Enterprises Index, also known as the H-share index, was little changed at 10,057.52.

Peugeot gets Chinese partner in US$7.26 bln reboot Mainland carmaker Dongfeng to take stake in loss-making French giant

Tencent buys 20 pct of Dianping.com Tencent Holdings Ltd bought a 20 percent stake in the owner of China’s Dianping.com, a Yelp-like website, as Asia’s largest Internet company boosts location- based services.

Huai River Investment Ltd., a wholly owned unit of Tencent, will buy new shares in Dianping Holdings Ltd, according to a Hong Kong exchange filing yesterday. Tencent may invest as much as US$500 million in Dianping, Sina.com reported on February 17, without saying where it got the information.

The acquisition would let Tencent tap into Dianping’s nearly 100 million monthly active users who access the website’s reviews and discounts for food and entertainment.

Taiwan easing broker rules on FDI Taiwan’s financial regulator said on Wednesday it will ease rules to make it easier for local securities houses to tap Asian markets starting in the next quarter.

The Financial Supervisory Commission will allow brokerages to invest more of their money overseas, Chairman William Tseng told reporters. The current investment limit is 40 percent of their net worth. “Our purpose is to let them go beyond Taiwan and make a presence in Asia,” he said. No other details were immediately available. Taiwan’s securities industry has been struggling with stiff price competition in the crowded home market.

P

SA Peugeot Citroen, the unprofitable French carmaker, agreed to bring in Dongfeng Motor Corp. and France as investors as part of a 5.27 billion-euro (US$7.26 billion) rescue plan to fund new vehicles.

Peugeot will shore up financing by selling new stock and warrants and setting up auto-loan joint ventures with Banco Santander SA, the Parisbased manufacturer said today. The carmaker also renewed a 2.7 billioneuro credit line with banks.

Chinese partner Dongfeng and the French government will each pay 800 million euros for a 14 percent stake apiece, accounting for about half of a 3 billion-euro capital increase. The sale would mark a turning point for the 118-year-old carmaker, Europe’s

China has placed a former close aide to the country’s ex-chief of internal security Zhou Yongkang (pictured) under investigation, authorities said. It heightens speculation that the net is tightening around Zhou. Ji Wenlin, a vice governor of the southern island of Hainan, is being investigated for “suspected severe violations of disciplines and laws”, the Central Commission for Discipline Inspection – the party’s internal graft watchdog – said in a one-sentence announcement on its website.

The phrase is usually an indication of alleged corruption. Ji, 47, was a secretary and close aide to Zhou.

Bloomberg News

IPO feast to IPO famine China’s crackdown on share insiders may have been too extreme – and ultimately ineffective

T

Aide to China’s ex-security chief ousted

second biggest, as the founding Peugeot family relinquishes control for the first time in a bid to finance model development and push into countries with stronger demand for autos.

“We need to redefine a winning strategy in Latin America and Russia, which will require global products and low-cost platforms that will be localized in these countries,” chief financial officer Jean-Baptiste de Chatillon said on a conference call. The investment and debt-reduction packages will let Peugeot “invest in research and development and deal with our product plans” through 2019.

Dongfeng, established in 1969 and based in the central Chinese city of Wuhan, operates three factories with Peugeot in the country. The

companies plan to raise their joint production by two-thirds to 750,000 vehicles by the end of 2015.

Peugeot, among the producers worst hit by a contraction in Europe’s auto market to a two-decade low, reported a 177 million-euro operating loss in 2013, its second unprofitable year in a row. That was narrower than the 247 million-euro average loss of nine analyst estimates compiled

by Bloomberg. Cash consumption plunged 86 percent to 426 million euros, beating Peugeot’s target of cutting the figure by half.

“The balance sheet at the end of second half is actually much better than I would have thought,” Erich Hauser, a London- based analyst at International Strategy & Investment Group who recommends buying the shares, said by phone. “They’re not doing this deal out of necessity, but out of choice. It makes an important distinction.”

The French company’s first model designed for China was the Peugeot 408 sedan, introduced in early 2010. The carmaker inaugurated a plant late last year with a separate joint venture partner, Chang’An Automobile Group, to make the Citroen nameplate’s premium DS vehicles. Peugeot group Chinese sales last year rose 26 percent, outpacing the passenger-car market gain in the country.

he worrying spectre of insider trading in China’s IPO market has prompted regulators to tighten control and Beijing may now be forced to scale back the pace of reform.

The China Securities Regulatory Commission (CSRC) let initial public offerings resume in January after a 14-month haitus, but traders say the authorities are concerned the market is being exploited by connected stakeholders ensuring generous cashouts for insiders.

The CSRC has tightened up rules on IPO pricing, and also stands accused of intimidating some firms into “voluntarily” suspending their listings, despite verbal commitments to stop meddling in the market – an accusation it denies.

“I think this is a total retreat in comparison to other areas of reform in China,” said Ding Yuan, professor at the China Europe International Business School in Shanghai who also runs a mutual fund investing in domestic equities.

Ding said that instead of giving markets a “decisive role” as promised, January saw the “most heavily intervened IPO in the history of China”. Drug maker Jiangsu Aosaikang apparently delayed its IPO over concerns the listing was overpriced.

“People may have felt like the IPO wasn’t politically correct, but it was totally legal. [Aosaikang] followed the regulations to the letter. For me that proves the soap opera we are seeing will continue.”

The problem of price manipulation during IPOs is one Beijing has struggled with for years. Ironically, some market-driven reforms may have exacerbated the problem.

“Look closely at companies that have gone public this year in China.

They include ones from industries, or with P&Ls (profit-loss ratios), that previously CSRC would not allow to IPO in China,” said Peter Furhman, chairman of China-focused

international investment bank China First Capital in Shenzhen, who is optimistic regarding the CSRC’s commitment to reform.

“To have a private sector company with downward-drifting net income successfully IPO in China was heretofore unthinkable.

Hence, it is already far more of a market‑driven system.”

By allowing financially weaker companies to list, and at the same time making it easier for their owners and cornerstone investors to cash out on the primary market for the first time, the CSRC may have inadvertently encouraged overpricing.

Reuters

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Asia

Reliance boss dials up exec for telecoms role

In June 2011, Reliance paid 48 billion rupees for control of Infotel Broadband Services Ltd., hours after the company bid 128.5 billion rupees for nationwide wireless-broadband licenses.

The purchase marked Ambani’s return to the telecommunications industry after he handed over a phone business to his younger brother Anil Ambani in 2005, when they split the group founded by their father.

Ambani’s elder son Akash has joined Reliance’s telecommunications unit as a full-time employee, the Economic Times newspaper reported Feb. 17.

Indian conglomerate planning move into country’s booming communications sector Rakteem Katakey and Debjit Chakraborty

I

ndian billionaire Mukesh Ambani is said to have handpicked an executive to lead his conglomerate into the telecommunications sector. He’s chosen P.M.S. Prasad, currently Reliance Industries Ltd’s petroleum division chief, according to people with direct knowledge of the matter.

Prasad, 61, is part of a group of top officials working on Reliance’s voice and data services foray, the people said, asking not to be identified because they aren’t allowed to speak to the media. Reliance held seven oil and gas blocks in India as of September 30 compared with 34 in 2006, giving Prasad the time to work on the telecommunications venture, one of the people said. He will continue to be in charge of the oil business.

Ambani, the world’s topranked energy billionaire with a US$18.8 billion fortune, is banking on new businesses to boost profit as earnings from producing oil and natural gas has slowed in the past three years. Ambani is turning to Prasad’s project management skills after he helped build Reliance’s two oil refineries in the western state of Gujarat and developed the company’s biggest gas field off India’s east coast.

Long history

Prasad didn’t answer two calls to his mobile phone or respond to a text message seeking comment on his additional role. Tushar Pania, a Reliance spokesman, didn’t reply to an e- mail.

The company is seeking to tap the world’s biggest wireless market by users after China as mobile-data usage surges. Reliance Jio Infocomm Ltd., the parent’s telecommunications unit that plans to offer a fourthgeneration wireless broadband

service, bid about 111 billion rupees (US$1.8 billion) for spectrum in 14 Indian regions in a government auction this month.

‘Valuable business’ “Reliance has the ambition for telecom and there’s a big demand for fourth-generation mobile networks, which could make it a valuable business,” Alex Mathews, head of research at Geojit BNP Paribas Financial

Services Ltd, said by phone from Kollam in south India.

“It’s a business that could give it a lot of profit and so the management has to be top class.”

Reliance is offering a hotspot device, called Jio we-fi, to employees at the company’s office at Vashi in Mumbai, according to documents obtained by Bloomberg. It plans to start its 4G service in October from south India, one of the people said.

Prasad joined Reliance in 1981 after speaking with Mukesh and his father, Dhirubhai Ambani, and agreeing to return to India and help start a polyester factory. He previously worked with Schlumberger Ltd. and a utility in Africa, Prasad said in a 2005 interview.

From polyester Reliance branched out into making petrochemicals, setting up the world’s biggest oil refining complex and exploring for gas with Prasad in various roles.

He was closely involved with Reliance’s first phone venture that started in December 2002 and the purchase of undersea fibreoptic cable operator Flag Telecom Group Ltd. in 2004, one of the people said.

Reliance operates India’s biggest gas field with BP Plc and Calgary-based Niko Resources Ltd. Output from the field dropped 51 percent to 135 billion cubic meters in the nine months ended Dec. 31 compared with a year earlier, the company said on January 17.

Bloomberg News

S. Korea bonds snap two-day decline Market benefits from disappointing U.S. manufacturing data Jiyeun Lee

S

outh Korea’s government bonds rose for the first time in three days as data showed manufacturing in New York slowed more than forecast, casting doubt on the strength of the U.S. economic recovery.

The Federal Reserve Bank of New York’s general economic index fell to 4.48 in February, compared with 12.51 in January, and the median estimate of 8.5 in a Bloomberg News survey, data showed on Tuesday. Positive readings mean that activity expanded. The Federal Reserve was due to release minutes from its January 28-29 meeting on Wednesday U.S. time, giving details on its decision to trim bond purchases by US$10 billion for the second occasion. South Korea’s short-term external debt rose to US$112.8 billion as of end- December, the central bank reported yesterday.

“Market participants have so far stayed positive on risk assets, attributing poor U.S. data to cold weather, but consistent weakness will make investors doubt the strength of the economic recovery,” said Park

Dongjin, a fixed-income analyst at Samsung Futures Inc. in Seoul.

The yield on the 3.25 percent notes due September 2018 fell two basis points, or 0.02 percentage point, to 3.14 percent at the close in Seoul,

according to Korea Exchange Inc. prices. Ten-year sovereign yields declined three basis points to 3.49 percent.

Goldman Sachs Group Inc. recommends staying long on the greenback against the Korean currency, targeting 1,100 won per dollar, analyst Fiona Lake in London wrote in a report on Tuesday. The won’s strength against the Japanese yen is likely to pose headwinds for exports, she wrote. The Korean currency appreciated 9.7 percent against the yen in the past six months, according to data compiled

by Bloomberg.

The won closed little changed at 1,065.65 per dollar, according to data compiled by Bloomberg. Onemonth implied volatility, a gauge of expected moves in the exchange rate used to price options, rose two basis points to 7.04 percent.

Bloomberg News

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Asia Ex-Kyrgyzstan adviser admits fraud A former financial adviser to ousted leaders of Kyrgyzstan – who was accused of obstructing a U.S. insider-trading probe – has pleaded guilty to wire fraud, his lawyer said. Eugene Gourevitch entered his plea on Tuesday U.S. time in federal court in Brooklyn, New York, said his attorney, Marc Agnifilo. Gourevitch, scheduled for sentencing on June 10, faces a prison term of as long as 20 years, Agnifilo said. Gourevitch was charged in an indictment unsealed in October with one count of conspiracy and one count of obstructing justice in a U.S. Securities and Exchange Commission civil case.

S.Korea’s Hyundai wins Iraq refinery order A South Korean joint venture led by Hyundai Engineering & Construction won a US$6.04 billion order to build oil-refining facilities in Iraq’s Karbala Refinery Project, Hyundai said yesterday. Hyundai E&C, Hyundai Engineering Co Ltd, GS Engineering & Construction, and SK Engineering & Construction won the project from the country’s State Company for Oil Projects, Hyundai E&C added in a statement. Hyundai E&C and affiliate Hyundai Engineering have a combined 37.5 percent stake in the project, worth US$2.265 billion.

GS also has a 37.5 percent stake, while SK has a 25 percent stake worth US$1.51 billion, Hyundai said.

Rice price rout quickens Thailand’s turmoil and its fire sale of the commodity having global

G

lobal rice prices will extend declines as Thailand is forced to offload grain from record stockpiles accumulated under a statebuying programme, according to the Vietnam Food Association, the main shippers’ group.

Exports to China and Africa from the second-largest shipper will drop this year on increased competition from Thailand as well as from India and Pakistan amid a global glut, said Truong Thanh Phong, chairman of the Ho Chi Minh City-based group.

While Thailand’s reserves built up as the government paid farmers above-market prices since 2011, the programme is now short of funds and unpaid growers are demanding stockpile sales. The unrest by the growers adds to opposition targeting Yingluck Shinawatra’s caretaker administration, which has faced months of demonstrations. Phong’s comments reflect concern among exporters about the pace of sales from holdings that are large enough to cover 39 percent of annual world import demand.

“The rice market has seen fierce competition for the past two years due to the global surplus,” said Phong, who has been chairman of the group for 13 years. Global prices will decline this year because they’re guided by

Thai rates, he said.

The price of new-crop Thai 5-percent broken white rice, a benchmark grade, tumbled 23 percent last year and was at US$460 a metric ton on February 12. The Vietnamese 5 percent-broken variety is about US$395 a ton, higher than US$370 for old-harvest Thai grain, Phong said, without giving price forecasts. Rough rice fell 0.3 percent to US$15.81 per 100 pounds in Chicago yesterday.

Rural incomes Thailand spent 689 billion baht (US$21 billion) in the past two years buying from farmers to boost rural incomes. That spurred the build-up in the inventories to 14.7 million tons this year from 6.1 million tons in 2010, according to the U.S. Department of Agriculture.

The program is set to lapse at the end of this month, as Prime Minister Yingluck’s caretaker administration doesn’t have the authority to extend it.

“Given the caretaker government’s troubles in securing financing to pay farmers for their paddy pledged during the past wet-season crop, it seems likely that they will try to increase sales,” said David Dawe, Bangkok-based senior economist at the Food & Agriculture Organization.

“If they are sold too soon and all at once, the global price will fall, but if they are sold too late then the quality will continue to deteriorate.”

Thai farmers blocked roads in the provinces and protested in Bangkok this month, urging a faster pace of sales from the stockpiles so that the government can make missed payments to growers. It may take about five years for the state stockpiles

Malaysian Air weighing 100-plane order Australia’s Telstra to cut 800 jobs Telstra Corp Ltd will cut up to 800 jobs as it restructures its directories unit Sensis into a digital business, Australia’s largest telecommunications provider said yesterday.

“We need to remain responsive to the changing media landscape,” Sensis managing director John Allan said in a statement.

Telestra is trying to build its digital presence and Sensis is facing stiff competition from mobile and online search directories. In January, Telstra agreed to sell 70 percent of Sensis to U.S.-based private equity firm Platinum Equity for A$454 million (US$410 million), less than the market had expected.

New Islamic insurance rules for Brunei Brunei will introduce new guidelines for its Islamic insurance (takaful) sector by June, to standardise the way it’s managed. The guidelines will regulate commission rates payable to agents and the qualifications required for them to sell takaful products, said Osman Jair, chairman of industry body Brunei Insurance & Takaful Association.

“We will sign an inter-company agreement so companies will be better disciplined,” said Jair. Brunei, which has southeast Asia’s highest per capita income after Singapore, is the latest country to reform its takaful sector in the hope of stimulating growth.

National airline facing competition from regional budget carriers Elffie Chew

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alaysian Airline System Bhd plans to order as many as 100 planes, a person familiar with the matter said, as the carrier seeks new aircraft to fend off competition that contributed to three straight annual losses.

The state-run company is looking at a range of short-haul and long haul models from both Airbus Group NV and Boeing Co., said the person, who asked not to be identified because the information is private. A decision on the purchase may be taken by the end of first half of this year, the person said.

Malaysian Air seeks to start taking deliveries of the new planes from late 2016 or early 2017, the person said on Tuesday. It is working to upgrade its fleet over the next decade. The carrier needs new fuel-efficient jets to cut costs amid rising competition from discount airlines such as AirAsia Bhd., which have ordered hundreds of planes to tap Asia’s rising travel.

“Malaysian Air is playing catch-up with other airlines,” Mohshin Aziz,

an analyst at Kuala Lumpur-based Maybank Investment Bank Bhd., said in a telephone interview. “It’s the right thing to do given the competition in the industry.”

Najmuddin Abdullah, a spokesman for Malaysian Air, didn’t answer a call made to his mobile phone yesterday.

He didn’t respond to an e-mail sent on Tuesday.

Shares of Malaysian Air dropped 4.8 percent to 29.5 sen as of 11:59 a.m. in Kuala Lumpur trading, underperforming the benchmark FTSE Bursa Malaysia KLCI Index, which decreased 0.1 percent to 1,823.33.

AirAsia, Lion The national carrier, incorporated as Malayan Airways Ltd. in October 1937, operates a fleet of 88 planes, according to its website. The airline, which flies Boeing and Airbus jets, moves 37,000 passengers daily to 80 destinations worldwide.

About 15 low-fare carriers started

flying in Asia-Pacific over the past decade as the region’s increasing urbanisation and growing middle class fuel a surge in travel. Asia’s growth contrasts with the mature markets of the U.S. and Europe, where overcapacity has led to a consolidation.

AirAsia, the region’s biggest discount carrier, already has about 140 A320 planes in operation plus 335 on order. Indonesia’s PT Lion Mentari Airlines has a 105-strong fleet and a mammoth 650 Airbus and Boeing narrow-bodies yet to come.

VietJet Aviation Joint Stock Co., Vietnam’s only privately owned airline, last week signed an order for 100 Airbus planes.

Close to half the world’s air traffic growth will involve Asian routes over the next 20 years, Boeing marketing chief Randy Tinseth has said, with carriers from the region acquiring 12,820 more aircraft, or 36 percent of the global total. Competitor Airbus puts the figure at 11,000 planes.

Bloomberg News

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February 20,19, 2014

Friday April 2013

Asia impact

Minister and Commerce Minister Niwattumrong Boonsongpaisan said on February 17. The government will clear all remaining payments to farmers within six to eight weeks using short-term borrowings, Finance Minister Kittiratt Na-Ranong said the same day.

Vietnam’s exports are forecast at 6.5 million to 7 million tons this year, with shipments of 1.2 million tons seen this quarter and 3.5 million in the first half, Phong said. The country shipped 6.68 million tons in 2013, the lowest level in four years, according to VFA data.

Official exports to China may drop 9.1 percent to 2 million tons this year, Phong said on Feb. 14, referring to trade tracked by customs.

Unofficial shipments, not tracked by customs, may slide to 1 million tons to 1.1 million tons from a range of 1.4 million tons to 1.5 million last year, Phong said.

the commission determines whether she will be indicted. The prime minister defended the programme in a national address on Tuesday.

Vietnam’s sales to Africa will drop as India and Pakistan offer cheaper prices, Phong said. Shipments were 1.9 million tons last year, accounting for about 28 percent of the total.

That’ll decline to 23 percent to 25 percent this year, he said.

Shipments from India, the secondlargest producer, will probably expand to a record 11 million tons in the 12 months through March, according to M.P. Jindal, president of the All India Rice Exporters Association.

KEY POINTS

Biggest importer

to be sold off and a further slump in prices is possible as more of the grain is shipped out, Thai Rice Exporters Association President Chareon Laothamatas said on February 5.

Planned sales Thailand plans to sell about 1 million tons a month from stockpiles during the first quarter, Deputy Prime

China, the world’s largest buyer, will import 3.4 million tons in 2014, according to the USDA. Heilongjiang province halted a plan to buy 1.2 million tons, Deputy Prime Minister Niwattumrong said on Feb. 4, citing the province’s concerns about an anticorruption probe into the programme.

There’s enough evidence to charge Yingluck with negligence for her role overseeing the policy that generated losses, the National Anti-Corruption Commission said on Tuesday. Yingluck will have an opportunity to defend herself before

NZ court rules Megaupload search warrant legal

Unpaid Thai farmers demanding stockpile sales Thailand spent US$21 billion in the past two years buying from growers Country plans selling 1 million tons monthly during Q1 Vietnam to switch land to other crops in wake of global glut

Exports from Pakistan may total 3.4 million tons in 2014 compared with 3.5 million tons last year, a USDA projection shows.

Harvest forecast The global rice harvest expanded 0.8 percent to 469.5 million tons in 2013, outstripping demand of 467.1 million tons, according to the USDA. The surplus –together with record supplies of wheat, corn and soybeans – helped world food costs tracked by the Rome-based Food & Agriculture Organization to drop 15 percent from a record in February 2011.

Vietnam’s total output of unmilled rice this year will be similar to last year’s 44 million tons, Phong said.

In 2015, the harvest may decline 2 percent to 3 percent as the government implements a plan to switch more land to other crops, he said.

The switch away from rice is designed to boost farmers’ incomes, with corn one of the alternatives, Pham Dong Quang, deputy head of the government’s crop-production department, said in an interview in September. Any reduction in planting will be mainly in the north of the country as the Mekong Delta in the south will stick to rice, said the VFA’s Phong.

“We will try to promote trade in China because it’s our biggest buyer,” said Phong, who’s been in the industry for almost four decades. “But China will definitely demand lower prices from us because of Thailand’s selling pressure.”

Bloomberg News

Philippine, Indonesian stocks up on JPMorgan upgrade

Blow to online entrepreneur Kim Dotcom’s Indonesia’s benchmark index advanced fight against extradition to U.S. to the highest level since October Ian Sayson

A

New Zealand court yesterday ruled that the search warrant used in the arrest of Megaupload founder Kim Dotcom on U.S. online piracy charges was legal, dealing a blow to the internet entrepreneur’s fight against extradition to the United States.

Acting on the request of U.S. authorities, the New Zealand government successfully appealed a 2012 ruling that police used illegal warrants when they arrested the tycoon in January 2012 at his mansion near Auckland and seized laptops and hard drives.

T he decis ion will b ene fit U.S. prosecutors who allege the Megaupload website cost film studios and record companies more than US$500 million and generated more than US$175 million in criminal proceeds by enabling users to store and share copyrighted material like movies and TV shows.

If Dotcom is extradited, the ensuing copyright case could set a precedent for internet liability laws and, should he win, may force entertainment companies to rethink their online distribution methods.

Yesterday’s ruling overturned an earlier High Court decision that the search warrants were vague and enabled police to seize materials which were irrelevant to the charges against Dotcom.

The appeals court ruled that the warrants were adequately worded and should not have caused

misunderstanding.

“A reasonable reader in the position of the recipients of the search warrants would have understood what they related to,” appeal court judges said in a statement.

“There was no disconnect between what there were reasonable grounds to believe might be at the properties and what the warrant authorised the police to take.”

Lawyers for the German-born entrepreneur with New Zealand citizenship said they were reviewing the decision and had no further comment.

The decision could shake Dotcom’s defence, as it enables U.S. authorities access to all relevant seized evidence to argue for his extradition. A hearing is scheduled for July.

However, the appeals court upheld an earlier ruling that prosecutors had not been authorised to send clones of seized electronic evidence to the United States.

Dotcom maintains that Megaupload, which housed everything from family photos to Hollywood blockbusters, was merely an online warehouse and should not be held accountable if content stored on the site was obtained illegally.

The U.S. Justice Department counters that Megaupload encouraged piracy by paying money to users who uploaded popular content and by deleting content that was not regularly downloaded.

Reuters

P

hilippine stocks climbed for a fourth day while Indonesia’s benchmark index advanced to the highest level since October after JPMorgan Chase & Co. lifted its recommendation on the Southeast Asian markets.

The Philippine Stock Exchange Index advanced 1.2 percent to 6,267.42 at noon yesterday in Hong Kong for the biggest gain among equity gauges in Asia. The Jakarta Composite Index increased 0.4 percent, set for its highest close since October 30.

JPMorgan upgraded both markets to overweight, citing lower valuations in the Philippines and an improving current-account deficit in Indonesia.

The Philippine stock gauge has climbed 6.4 percent this year and Indonesia’s increased 7 percent, even as reduced Federal Reserve stimulus and a selloff in developing- nation currencies spurred a 4.5 percent retreat in the MSCI Emerging Markets Index.

Indonesia “is proving adaptive and resilient faced with tapering,” Adrian Mowat, the chief Asia and emergingmarket strategist at JPMorgan, wrote in a report yesterday. In the Philippines, “valuations are no longer an issue.”

The Philippine index is trades at 16.9 times estimated earnings for the next 12 months, according to data

compiled by Bloomberg. While that’s the highest level among Asian peers, it’s down from a peak of 20.8 in May. Foreign investors have boosted holdings of Indonesian shares for 10 straight days, buying a net US$401 million. The shortfall in the broadest measure of trade was 1.98 percent of gross domestic product in the fourth quarter, down from 3.8 percent in the previous three months and a record 4.4 percent in the second quarter, the central bank reported this month as it left interest rates unchanged.

Mowat recommended Indonesian industries most tied to economic growth, including cement, consumer discretionary and industrials. He favours property and consumer companies in the Philippines.

Reuters

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International

Controversial Nordic farms flourish on fur Economic downturn may have made animal rights a fringe issue, boosting use of pelts in fashion Pierre-Henry Deshayes

F

ur has made a comeback on the world’s most important catwalks, fostering a thriving industry in the Nordic region to the dismay of animal rights activists.

In the 1990s, supermodels like Claudia Schiffer, Cindy Crawford and Naomi Campbell posed in the buff for People for the Ethical Treatment of Animals (PETA) under the slogan “I’d Rather Go Naked Than Wear Fur” -- part of initiatives that helped make fur politically incorrect.

Two decades later, mink and fox fur have become regulars in the most prestigious fashion shows.

According to www.fashionista. com, 70 percent of designers used fur in their fall-winter collections in 2013, a trend that seems set to continue in this year’s shows.

Some professionals think the comeback may be due to the financial crisis.

“If you’re in a situation where the economy is on a downward trend, politicians tend to focus on essentials – how to get economic growth going again, securing jobs,” Fur Europe lobby head Bo Manderup said.

“The luxury of political correctness may have gone down the drain with the financial crisis.”

In the last 10 years, global mink fur production has doubled, reaching 66 million skins last year, according to Finnish auction house Saga Furs.

Despite the rise of Chinese producers, Europe still tops the world ranking, with Denmark in first place.

Some 1,400 Danish farmers exported mink fur worth 13 billion kroner (US$2.4 billion) last year, making it Denmark’s first export to

China, where the skins are processed and some even commercialised.

Personal choice Subject to the recommendations of the Council of Europe, which requires a minimum cage size – 0.8 square metres (8.6 square feet) for foxes and 0.225 square metres for minks, the industry has created labels that aim to certify the origin and well-being of the animals.

The initiative was labelled by Austrian animal rights association Vier Pfoten (Four paws) a “greenwashing” attempt. The group recently released footage it claimed came from a farm in Finland, the leading European fox fur producer.

The Finnish farm’s skin boasts the “Saga Furs” label, which is supposed to stand for “responsible practices”.

The Austrian association, however, asserts that the conditions under which it operates are equivalent to “torture”.

The footage features tailless foxes, a possible sign of cannibalism, and others suffering from obesity due to insufficient physical activity or living on top of piles of excrement.

“This shows that there is no animal-friendly fur-farming,” Vier Pfoten’s wild animals expert Thomas Pietsch said.

Besides their well-being, animal rights activists claim that it is ethically unjustifiable in 2014 to breed and kill animals, usually with gas for minks and electrocution for foxes.

“Some people eat meat, some don’t. And I’m of course respectful of such a choice but it’s a personal, not a societal choice. Equally for fur:

some people like it, some don’t like it,” lobbyist Manderup said.

“The animal doesn’t really care whether it’s eaten or whether it’s worn.”

‘Nazi camps’ Improved techniques and marketing efforts have revamped the image of fur.

The long dark mink coat is dead.

Rejuvenated fur now comes in the shape of accessories: collars, belts or hoods.

…there is no animalfriendly fur-farming Thomas Pietsch, Austrian activist for animal rights

In the fast growing Russian and Chinese markets, fur has become a status symbol, just like German high-end cars or designer handbags.

As a result, mink prices have risen in recent years, attracting new entrepreneurs.

For the first time in 20 years, Sweden has seen a growing number of fur production farms, thanks to the interest of young farmers looking

to create their own business and pig and dairy farmers looking to increase their revenue.

But the mink price rise has boosted the offer to the point of surplus.

Together with a mild winter in China, the excess has caused a 26-percent price drop in the December auction, according to Danish house auction Kopenhagen Fur, the largest in the world, which said it failed to sell 80 percent of the merchandise.

Professionals say they expect the prices to stabilise slightly below former record-high figures.

But the industry’s critics have not given up.

Their actions can take a violent twist, as in Sweden where farms are attacked and some owners have been threatened and physically assaulted.

These radical activists, “draw a parallel with the Nazi concentration camps”, said Kerstin Jacobsson, sociology professor at the University Gothenburg in Sweden.

“They have difficulties understanding that mainstream society can be blind to this suffering.”

Some countries have taken a firmer line on the trade, siding with animal rights groups.

The Netherlands, the world’s fourth mink producer, said it would completely ban the activity in 2024.

“A blow to the fur industry,” according to fur trade professionals.

Norway, responsible for 1 and 4 percent of the world’s mink and fox production respectively, has set a December 2014 deadline for proposals on the future of the industry: either dismantling it or developing it in a sustainable way.

AFP

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February 20,19, 2014

Friday April 2013

Opinion Business

wires

Mastering our urban future

Leading reports from Asia’s best business newspapers

GLOBAL TIMES

Noeleen Heyzer

Under-Secretary-General of the United Nations

The Shanghai head office of the People’s Bank of China, the country’s central bank, kicked off yuan-denominated crossborder payment in the newly established Shanghai free trade zone on Tuesday. It will help people who purchase items from online shops overseas.

The bank said that Allinpay, 99Bill, China Pay, Dongfang Electronics and Shengpay are now allowed to process crossborder payments in the Chinese currency for cross-border trade in the China (Shanghai) Pilot Free Trade Zone. The zone – located on the outskirts of the city where the Yangtze River empties into the East China Sea, was launched in September 2013.

AFR Annual wage growth in Australia slowed to the weakest pace for at least 16 years, according to official data. That supports the Reserve Bank of Australia’s desire to keep the cash rate stable in coming months. Hourly rates of pay, excluding bonuses, rose 0.7 per cent in the December quarter from the previous three months, when they gained 0.5 per cent, the Australian Bureau of Statistics said yesterday. The wages index rose 2.6 per cent from a year earlier, the weakest annual growth in ABS data going back to 1997.

KOREA HERALD Kolon Group was placed under public scrutiny on Monday night following the sudden collapse of a gymnasium in a resort it had built in Gyeongju of North Gyeongsang Province. The accident left 10 dead and many more injured. The incident was only the latest in a series of mishaps for the company, which has experienced a downturn in business performance that was punctuated by a large-scale damage claim filed by U.S.-based business giant DuPont. Kolon Group suffered a deficit of about 83 billion won (US$75 million) last year due to sagging performance at its core business units.

MYANMAR TIMES Microfinance institutions are worried a new directive by the sector’s regulator that caps loans at US$500 per loan could stifle small business growth and the development of the burgeoning MFI sector as it seeks to expand its role in the country. Myanmar’s MFI sector has experienced a boost in the past two years with the establishment of internationally backed institutions looking to capitalise on the estimated 84 percent of Myanmar’s population who have no access to financing. Those institutions were only recently regulated with the passage of the Microfinance Law in November 2011.

B

y the end of this century, ten billion people will inhabit our planet, with 8.5 billion living in cities. This could be the stuff of nightmares. But, with sufficient political will, vision, and creativity – along with some simple, practical policy changes – we may be able to create cities of dreams.

Cities are hubs of economic and social power. They drive national and global development by concentrating skills, ideas, and resources in a single location. But rapid urban development comes at a heavy cost. As cities expand, they swallow up land that would otherwise be used for food production. They drain water supplies, account for almost 70 percent of global energy use, and generate more than 70 percent of greenhouse‑gas emissions.

If global growth is to be sustainable and equitable, we will need to alter the balance between rapid urbanization and the unrelenting consumption of resources that it fuels. This is a main goal of the UN Conference on Sustainable Development, which has warned of the unprecedented pressures that economic growth will impose in coming decades on infrastructure (especially transportation), housing, waste disposal (especially of hazardous substances), and energy supplies.

Innovation critical The battle to keep the world’s cities – and thus the global economy – both dynamic and sustainable can be won

by developing innovative ways to consume our limited resources, without diminishing them or degrading the delicate ecological systems on which they depend. To achieve this, the world must meet six broad challenges.

First, we must change the way we design cities. Sustainability must be central to all urban planning, particularly in coastal cities that will soon face the ravaging effects of climate change. Denser cities use land more efficiently, reduce the need for private cars, and increase the quality of life by making space for parks and nature. Likewise, tightly integrated mass-transit systems reduce greenhousegas emissions dramatically.

…coastal cities… will soon face the ravaging effects of climate change

and auxiliary functions such as water supply, wastewater, and solid-waste disposal. Our building codes need to promote energy-efficient engineering and construction technologies, which can be supported by tax incentives and stricter regulations. With almost 30 percent of city dwellers in the Asia-Pacific region living in slums, one of our greatest tests will be to improve their living conditions without wreaking havoc on the environment.

The third challenge is to alter citizens’ transport habits. This means shifting from private cars to public transportation, and from road to rail. Indeed, wherever possible, we should try to reduce the need to travel at all. Transport systems that favour cars and trucks cause accidents, pollution, and chronic congestion. Moreover, the transport sector accounted for 23 percent of all energy-related CO2 emissions in 2004, and it is the fastest growing source of emissions in developing countries. Instead, we need to integrate transportation, housing, and land use, encourage reliance on public transportation, and make our streets pleasant and safe for walking (especially for women and the disabled).

Energy issues Second, we must rethink how we design and operate buildings so that they use less energy – or, better still, generate energy. Buildings are responsible for substantial CO2 emissions, owing to the materials used in their construction, their cooling and heating requirements,

The fourth challenge is to change how we produce, transport, and consume energy.

This includes creating more efficient energy systems and increasing our investment in renewable sources (which will, one hopes, create jobs in the process). We can also encourage households

to consume less energy, and companies to reduce the amount of energy that they waste.

Fifth, we must reform how we manage water resources and water infrastructure, so that this precious resource can be re-used several times, and on a city-wide scale. This requires us to integrate the various aspects of water management, such as household supply, rainwater harvesting, wastewater treatment and recycling, and flood-control measures.

Finally, we must change the way we manage solid waste so that it becomes a resource, not a cost. In many developing countries, 60-80 percent of solid waste is organic, with open dumping causing excessive amounts of methane to enter the atmosphere. Cash-strapped local governments spend 3040 percent of their budgets on waste management but derive little in return. Yet, with some simple technological and design improvements – aimed, for example, at achieving higher rates of composting and recycling – 90 percent of this waste could be converted into something useful, such as biogas and resource‑derived fuel.

These six steps require a comprehensive and coordinated change in behaviour, and will require government at all levels to cooperate, invest at scale, share ideas, replicate best practices, and plan for the long term. It is a monumental and daunting challenge, but not an impossible one. If it can be achieved, the world may yet get the urban future that it deserves. © Project Syndicate

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Closing France says 16,000 admit hidden accounts Greenpeace dumps coal at Elysee Palace France said on Wednesday that nearly 16,000 people had declared funds hidden abroad after Switzerland ended its vaunted banking secrecy. Budget Minister Bernard Cazeneuve (pictured) said the government was on track to collect 230 million euros (US$316 million) from only 2,621 of the cases. He told the finance committee of the lower house National Assembly that 80 percent of the newly declared accounts were from Switzerland, which has curtailed its banking secrecy traditions under international pressure. Another seven percent of the accounts were from Luxembourg, Cazeneuve said. France in June announced lower penalties for those who come forward.

Greenpeace activists yesterday dumped five tonnes of coal in front of the French presidential palace, ahead of a Franco-German ministerial meeting.

The group wants Europe to convert rapidly to renewable energy. Around 10 members of the environmental body parked a truck in front of the Elysee Palace a little before 7am local time and unloaded the coal, a highly polluting energy source that is notably used in Germany. They also dumped polluted water taken off the French coast.

The group wants Europe to obtain 45 percent of its energy through renewable sources, like wind and solar power, by 2030.

Retailers start Bangladesh factory inspections

S

afety experts – hired by Western retailers – yesterday launched mass inspections of Bangladesh clothing factories, 10 months after 1,135 garment workers died in a building collapse.

“The inspections have begun,” said Brad Loewen, who is overseeing the scrutiny of more than 1,500 plants on behalf of top retailers such as H&M and Benetton.

Dozens of fire officers and structural

Recluse in legal challenge over ‘Nazi art’ A

n elderly German recluse has taken legal action for the return of a vast art trove seized from his home, including works suspected to be Nazi loot, his spokesman said yesterday.

Lawyers for Cornelius Gurlitt, 81, filed a complaint last week against a 2011 order by a southern German court to search his Munich flat and seize around 1,400 long-lost works, his spokesman said.

Gurlitt’s legal petition aims for the seizure order to be lifted and the return of the artworks, which included long-lost masterpieces by Matisse and Chagall, Stephan Holzinger said in a statement.

Germany has been embroiled in a fresh debate over Nazi-looted art since news broke in November of the discovery of the works, some of which are believed to have been stolen or extorted from Jewish owners under Hitler.

Gurlitt, the son of a Nazi-era art dealer, is mindful of the “moral dimension” of the case and ready to talk to possible claimants.

engineers are expected to inspect the plants and then recommend safety improvements in an exercise set to last until September.

Roy Ramesh, an international labour activist involved in the

China exports water to Taiwan-run island chain C

hina has agreed to supply water to a Taiwancontrolled island group near the mainland in another sign of fast-warming ties between the two former bitter rivals, officials said yesterday.

The fortified Kinmen island group only two kilometres from the mainland was a flashpoint during the Cold War and was heavily shelled by Chinese forces in the late 1950s.

“Regarding the proposal for water imports from the mainland, the two sides have reached a consensus in the meeting,” said a brief statement after a meeting in Kinmen between officials from the Taiwan county government and China’s coastal Fujian province.

Details of the agreement, which needs final approval from higher authorities on both sides, were not released.

But Wang Teng-wui, head of the Kinmen water company, told AFP the Chinese water supplies – through an undersea pipeline – would not exceed 50 percent of the island’s demand.

inspections, said the first day went well, although he declined to give details of what inspectors found at the factories.

Local media reported that garment manufacturers were unhappy at some of the costly safety improvements recommended by the inspectors including sprinklers, fire doors and thicker wiring systems.

Bangladesh is the world’s second biggest clothing manufacturer and the sector is the mainstay of the impoverished South Asian nation’s economy.

But it has a woeful safety track record, highlighted in 2012 by a fire at a factory outside Dhaka in which 111 workers were killed. Many were unable to escape due to a lack of proper fire exits.

In April 2013, 1,135 people were killed when the nine-storey Rana Plaza complex collapsed on the outskirts of the capital in Bangladesh’s deadliest industrial disaster.

Experts say the complex had been constructed with sub-standard materials and without proper site surveys. Bosses had also set up huge generators on upper floors, which triggered the collapse when they all automatically clicked on following a power cut.

Spanish fashion chain Mango, Britain’s Primark, Italy’s Benetton, Sweden’s H&M and the sports brand Adidas were among Western brands to sign up to an accord in the aftermath of the disaster, in which they agreed to bankroll the safety inspections and lend the money for upgrades.

EU calls crisis talks over Ukraine E

AFP

uropean Union foreign ministers have been summoned for crisis talks on Ukraine today as shock and outrage over the bloodshed in Kiev triggered strident calls for sanctions.

In what would be a policy U-turn for the EU triggered by the escalating violence in Kiev, the bloc’s foreign policy chief Catherine Ashton said yesterday that the EU finally would consider tougher action, including sanctions against those deemed responsible.

“All possible options will be explored, including restrictive measures against those responsible for repression and human rights violations,” she said.

The latest explosion of violence in the three-month standoff in Ukraine, where at least 25 people were killed in fierce clashes on Tuesday, has set alarm bells ringing across the international community.

Ashton has asked Polish Foreign Minister Radoslaw Sikorski to travel to Ukraine to start a mission on behalf of the 28 EU member states.