MOP 6.00 Closing Editor: Michael Grimes Publisher: Paulo A. Azevedo Number 481 Friday February 21, 2014 Year II
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Friday April 19, 2013
Watchdog slams failure to punish traffic cheats
Reclamation housing decision on hold Page 3
5-year concession idea ‘strange’: MGM CEO Page 5
Visitors’ spending up in 2013 Page 6
he Commission of Audit has severely criticised the government for defects in its arrangements for catching and punishing violators of the road traffic rules. The commission said the authorities had failed to collect fixed penalties and that cameras for detecting violators did not work properly. “How such matters are handled should be worthy of attention as it involves revenue of over 100 million patacas for the SAR government,” the commission’s report says. It says revenue from fines for violating traffic rules rose to over 109 million patacas (US$13.65 million) in 2012 from about 78 million patacas in 2008. Secretary for Security Cheong Kuok Va admitted yesterday “there is room for improvement,” adding that traffic equipment such as red lights and cameras will be upgraded, and better maintained. More on page
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All standalone slot parlours – and betting centres not currently located inside casinos – will be banned in the coming years to reduce the negative impact upon residents of gambling, Secretary for Economy and Finance Francis Tam Pak Yuen pledged yesterday. He didn’t give a timetable for the implementation of the policy. But he indicated it would be tied to concession renewal talks likely from 2015 onwards. He did pledge that more than half of such establishments would be closed before the end of this year. Page 16
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Blackmail and loansharking cases up
Illegal inns spreading, claim some legislators
Loansharking cases rose by 9.5 percent to 185 cases in 2013 the government said yesterday, but didn’t reveal if all of them were gaming-related. However in a crime figure review briefing in August last year, the Secretary for Security noted that the authorities had detained 133 people in the first half of 2013 – most of them mainland Chinese – for their involvement in gamingrelated loansharking cases.
The unlicensed accommodation business is confined mainly to the NAPE area, but stamping it out is difficult, the government says. Legislative Assembly member Angela Leong On Kei told a plenary session of the assembly: “The illegal accommodation business has yet to be curbed, and there is a trend towards more such accommodation, not confined to the NAPE area but extending into the northern district.”
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Macau Investment proposals for Hengqin by March By next month, a list of recommended Macau investment projects for Hengqin would be submitted to the island’s authority, said Secretary for Economy and Finance Francis Tam Pak Yuen. The 80 investment proposals received by Macau Trade and Investment Promotion Institute, have a roughly one in three chance of being advanced said Mr Tam. The qualifying sectors are for tourism, information technology, education and cultural and creative services. The secretary added that 30 qualifying Macau proposals would be housed in a 4.5 square kilometres area on the island, as agreed between the territory and Hengqin New Area.
Shenzhen to reach Lusophone world via Macau Macau and Shenzhen agree deal to encourage investment in each other’s hotels, travel agencies and tourist attractions Stephanie Lai
nly Macau can be the conduit for Shenzhen’s endeavours to increase its trade with the Portuguese-speaking world, Shenzhen Mayor Xu Qin says. Mr Xu, speaking after officials held their annual meeting about cooperation between Macau and Shenzhen, said his city was particularly eager to sell electric vehicles in Lusophone markets. “Shenzhen would like to see the products of our key industries penetrating markets in Portuguesespeaking countries, and Macau can play an agent’s role,” he told reporters. He said Macau was “irreplaceable” as the platform for fostering trade relations between mainland China and the Portuguese-speaking world. In November Vice-Premier Wang Yang told the ministerial conference of the Forum for Economic and Trade Cooperation between China and Portuguese-speaking countries that China was aiming for US$160 billion (MOP1.28 trillion) worth of trade with Lusophone markets by 2016. Mr Wang said the value of such trade had grown at an average annual rate of 37 percent in the preceding decade. In 2002 the value was US$5.6 billion. Mr Xu said yesterday: “We also mentioned in the meeting that we can reinforce cooperation with Macau on environmental issues, especially on electric vehicles.” He said electric vehicles were now more widely used in Shenzhen than before, the city having on its roads over 6,000 private electric vehicles and nearly 4,000 electric vehicles used for public transport. “Shenzhen has a strong manufacturing industry and wellestablished technology companies, and our electric vehicle industry is a pioneer in our country, with makers such as BYD Co Ltd and Shenzhen Wuzhoulong Motors Co Ltd,” Mr Xu said. “A dozen countries in Europe are already using the products of BYD Co Ltd,” he said. He said BYD vehicles were also used in the United States and in South America. “The use of green vehicles is one of the areas of cooperation with Macau we are most interested in,” he said. He did not say what form of cooperation. The governments of Macau and Shenzhen signed yesterday a memorandum on cooperation in tourism. The memorandum says the two
cities will encourage investment in each other’s hotels, travel agencies and tourist attractions by individuals and companies alike. It says Macau and Shenzhen will do more to promote jointly tourism at home and abroad.
Mr Xu said he would like to see more Macau companies doing business in Qianhai, the special economic zone in Shenzhen intended as a test bed for the internationalisation of the yuan and reform of the mainland’s economy.
Shenzhen’s Mayor Xu Qin (left) with Macau official Francis Tam yesterday
“We would support Macau companies, especially those in finance, healthcare, logistics and cultural and creative industries, as well as Macau lawyers, in the expansion of their business in mainland China through Qianhai,” he said.
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Watchdog slams failure to punish traffic violators The Commission of Audit says letting offending motorists off scot-free costs the government money Tony Lai
he Commission of Audit has severely criticised the government for defects in its arrangements for catching and punishing violators of the road traffic rules. The commission issued yesterday a report saying the authorities had failed to collect fixed penalties and that cameras for detecting violators did not work properly. “How such matters are handled should be worthy of attention as it involves revenue of over 100 million patacas for the SAR government,” the commission’s report says. It says revenue from fines for violating traffic rules rose to over 109 million patacas (US$13.65 million) in 2012 from about 78 million patacas in 2008. The Public Security Police and the Transport Bureau said they would try to do better. The Commission of Audit’s report says it found defects in the way the police process fixed penalty tickets. The commission says the police cannot ensure that all the fines are collected. A police officer that issues a ticket for a traffic violation should pass a copy of the ticket to police headquarters the same day. But the commission says the various police units that issue tickets follow no standard procedure. The commission reviewed the processing of 5,176 tickets issued in 2012, which imposed fines ranging from 75 patacas to 600 patacas. It found that the police had lost
track of 1,356 of the tickets, or nearly 26.2 percent. The police said they had lost or mislaid about 200.
No flash? The commission’s report says: “The unsound ticketing mechanism not only hampers the punishment of violators but also has real impact on the revenue of the SAR government.”
The commission also criticised what its report calls the “less than ideal” progress made in automating the detection of traffic violations and the punishment of violators. The police suggested automation in 2002. But the commission says only 30 percent of tickets issued between then and 2012 were issued automatically. In response to the commission’s
Reclamation housing decision on hold Legislators slam government for postponing a ruling crucial to easing territory’s chronic shortage of homes Tony Lai email@example.com
he number of homes to be built on five pieces of reclaimed land will be confirmed only after another round of public consultations later this year, the Legislative Assembly heard yesterday. But some members have expressed their concern that the government is dragging its heels in establishing a policy to determine the land’s use. And there are additional worries the delay will force would-be homebuyers into a decision to buy now, while the market is hot. “We still need to listen to different opinions from the society in depth before deciding what proportion of land in the five new reclaimed parcels
report, the Public Security Police issued a written statement saying: “The bureau will consider in depth the shortcomings pointed out in the ticket management mechanism, and immediately allocate resources for improvement.” The Commission of Audit criticises the Transport Bureau for failing to maintain cameras for detecting traffic violations. The commission says that in any given month in 2012 at least 39 percent of the cameras for detecting vehicles that jump red lights were incapable of taking pictures. At one stage the proportion was 80.6 percent. It says the cameras took nearly 178,200 pictures in 2012, but that only 0.5 percent were used as evidence in prosecutions for jumping the lights. The commission says that in any given month in 2012 between 28.2 percent and 52.2 percent of the cameras for detecting speeding vehicles were malfunctioning.
to reserve for housing,” the Secretary for Transport and Public Works Lau Si Io told the assembly yesterday. During a second round of consultations in 2011 looking into potential uses for the land around Taipa and the Macau peninsula, the government said the combined area would yield either 33,000 or 43,000 flats. Speaking yesterday, Mr Lau said a final figure could only be confirmed after a third round of consultations in the fourth quarter. “The central government approved the reclamation of these five new plots in 2009 but I don’t know why there are still endless consultations after
almost five years,” said legislator Au Kam San yesterday.
Price pressure Another member, Melinda Chan Mei Yi, said the uncertainty behind the government’s proposed uses for the land meant people would be “compelled to buy existing homes, further pushing up the home prices”. Mr Lau told the assembly the reclaimed land was the city’s biggest “foreseeable land resource” and a decision had to be considered cautiously. He said the government would explore any possible means to increase
The cameras could take pictures, but often the images were of such poor quality that they could not be used as evidence in any prosecution. It says the cameras took over 28,800 pictures, but that only 17.9 percent were used as evidence in prosecutions for speeding. The commission says the police reported problems with the cameras to the Transport Bureau, but that the bureau failed to respond promptly. The commission says traffic violations also went unpunished because of the lack of guidelines on what pictures were suitable for use as evidence. The police “overly relied on the judgement of each officer”, the commission’s report says. The Transport Bureau also issued a written statement in response to the commission’s report. The bureau says it will endeavour to keep its camera equipment up to date, and that it intends to install by 2016 a new system for detecting vehicles that jump red lights. It says that in the second half of last year it began requiring its supplier to report monthly on the state of the camera equipment.
the number of public housing flats in the city. The average housing price reached 81,811 patacas (US$10,241) a square metre last year, rising by 43 percent over the year before, the Statistics and Census Service said this week. Legislative Assembly member Mak Soi Kun said the government could increase the plot ratio on the land used by private-sector developments to increase the number of flats. Members also voiced their dissatisfaction yesterday when the government could not say when it would re-introduce a bill controlling the urban renewal of the city’s older neighbourhoods. The government scrapped the bill last year, after the idea was first floated in 2004. Mr Lau told yesterday’s meeting that the government would “strive” for more opinions on the bill because the city had changed so much in the past decade. “I don’t know why your response today is so idle. It seems like you are waiting for a new secretary to take over your work by year-end,” lawmaker Ng Kuok Cheong said in response. The government’s five-year term ends in December.
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Blackmail and loansharking cases up Reports of all property-related crime have increased in the past year says Secretary for Security Stephanie Lai
ore than half of the 13,685 criminal cases recorded last year were property crimes. Property crime under the Macau legal system includes burglary and theft. Those two sub-categories showed a drop in absolute terms year-on-year in 2013. But ‘remote’ crimes such as Internet scams increased significantly, Secretary for Security Cheong Kuok Va said in a press briefing yesterday. The police recorded a rise in blackmail cases involving an online sex scam known as “nude chat”, the
secretary noted. He blamed the sex scam as the main cause for the 52.3 percent year-on-year rise in blackmail cases last year. Such crimes may reflect the growth of Internet use and mobile communications in the territory. Citywide however, only 67 blackmail cases were reported in the past year. Among property crimes of all kinds, 7,719 cases were reported in 2013, 436 cases more than a year earlier. The contribution of scams and loansharking offences to the property
crime statistics has risen. Loansharking cases rose by 9.5 percent to 185 cases in 2013, but Mr Cheong did not specify if all of them were gaming-related. However in a crime figure review briefing in August last year, Mr Cheong did note that the authorities had detained 133 people in the first half of 2013 – most of them mainland Chinese – for their involvement in gaming-related loansharking cases. The secretary also noted yesterday that the police had processed more cases of “falsifying documents” and
of using fake currency last year. That greatly contributed to the 38.5 percent rise in ‘crimes against society’, totalling 971 cases. Such crimes include offences against family members and bigamous marriage. He also noted that there was a significant rise in drug trafficking cases in the city, amounting to a 80.5 percent year-on-year increase to 231 cases. The secretary added that the local police would reinforce intelligence exchange with neighbouring regions to combat the drug trafficking problem.
noticed a woman walk into the property and start up conversations with random players, without placing any bets herself. When questioned, she confessed to being there to lure players to use their ATM cards to authorise withdrawal of money from their accounts back home in China.
They did so via card swipe machines allegedly located in a Cotai hotel room and were then given the cash up front by the suspects. The group charged an “ATM service fee” of between 15 and 25 yuan for each transaction regardless of the amount being withdrawn – an attractive option when withdrawing large amounts compared to the service charges of 1.4 percent per transaction at any regular ATM machine. During the raid, police seized 10 swipe devices and 750,000 patacas in cash. The suspects are all employees of a jewellery store in NAPE, including the owner’s wife. All those questioned said the mastermind behind the scheme was their boss, shop owner.
Secretary for Security Cheong Kuok Va
JETCO confirms losses in ‘ATM’ scam Macau police arrested six suspects in the case
oint Electronic Teller Services Limited (JETCO) has confirmed losses of 90,000 patacas (US$11,270) after six people were arrested in Macau for an alleged ATM service scam. According to a report in Portuguese-
language newspaper Jornal Tribuna de Macau, the scam targeted people with ATM cards from mainland China and Chinese bank accounts. The case was first reported to police by a casino in Cotai. The report does not mention which one. Casino staff
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MGM China CEO says 5-year concession idea ‘strange’ Casino operator reports 35pct rise in fourth quarter profit despite stern competition
rant Bowie, chief executive of Macau casino operator MGM China Holdings Ltd has described as “strange” a Hong Kong media report that concession periods might be reduced to five years post2020 when the first of the six current licences expire. During a conference call on Wednesday night Macau time – to discuss the fourth quarter results for the parent MGM Resorts International and for MGM China – Mr Bowie was asked about the report. He replied: “This, I think, strange comment about the five years, I think, it’s just a misunderstanding yet again. That’s been very clear for quite some time. When this issue came up last time, under the Macau law, the Chief Executive does have the prerogative to be able to extend any concession, not just gaming concessions, but any concessions for an additional five years. And I would say that he would reserve that prerogative as it applies to gaming
concessions. So I think it’s really important that there is no change, nothing is altered.”
Good result MGM China boosted fourth-quarter profit by 35 percent, beating analysts’ estimates as it drew more high-stakes gambling money in the world’s biggest singlejurisdiction gaming market. Adjusted earnings before interest, taxes, depreciation and amortisation, or EBITDA, rose to US$238 million (1.90 billion patacas) from US$176 million a year earlier, according to a statement from MGM Resorts. That surpassed the US$230.7 million average of 10 analysts’ estimates compiled by Bloomberg. The company proposed a special dividend of HK$1.02 a share, or US$500 million, and a final dividend of 26 Hong Kong cents a share of US$128 million. MGM China has defended its market share in the past two years, driven by
“aggressive forays” into the VIP business, according to Praveen Choudhary, a Hong Kong-based analyst at Morgan Stanley. High-stakes gamblers, or VIP bettors, typically wager more than US$1 million per visit to
Macau and often bet using credit arranged by junket operators. In the fourth quarter, “MGM China gained VIP market share but at the expense of mass,” Karen Tang, a Hong Kong-based
analyst at Deutsche Bank AG, wrote in a January 28 research note. Morgan Stanley’s Mr Choudhary also said competition from neighbouring casino Wynn Macau Ltd has intensified. M.G with Bloomberg News
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Macau Brought to you by
HOSPITALITY Concentration rising From 2009 to 2013, the number of guests checking in at Macau hotels rose by almost 3.96 million people. Asian countries were the source of more than 96 percent of the increase. The dominant supplier was China, from there came also more than threequarters of the additional number of guests in that period. The growth of the second source, Hong Kong, has been much slower. Its number of guests rose by just over 143,000 people in the period, a figure that represents just 3.6 percent of the total increase. Macau alone contributed almost three times more guests as Hong Kong, representing about 8.6 percent of the total increase registered in the period. Those three regions, together with Taiwan, accounted for 92 percent of the period’s rise. Most other countries had small increases, but four saw their total numbers decline - Japan, Singapore, Thailand and the Philippines. However, their combined decrease amounted to just about 66,000 guests, with little impact on the total figures.
Satisfaction not guaranteed – but tourists like the hotels
Visitors spending more Overnight visitors’ outlay averaged MOP3,475 Sara Farr
V Only in four cases did the share of the total number of guests rise: China, Macau, Korea and India. China saw its share rise quite dramatically by more than 10 percentage points. All the remaining countries of origin for guests had their shares of the total reduced, albeit in most cases by fewer than one percentage point. The evolution shown here has only translated in significant losses in the case of Japan and Hong Kong. The first posted a loss of 1.4 percentage points, while the latter, which was the second source of guests with more than 1.7 people, saw its share decline by 7.5 percentage points. This result contrasts vividly with the value registered for China.
Rise in the number of hotel guests from the mainland, 2009-2013
isitors spent more last year than in 2012, with overall spending up by 14 percent, totalling 52.3 billion patacas (US$6.5 billion). The latest information from the Statistics and Census Service quantifies both same-day and overnight visitor spending, excluding gaming expenses. According to the figures, for the whole of 2013 per-capita spending of visitors was of 2,030 patacas, up by 9 percent year-on-year. Overnight visitors spent a daily average of 3,475 patacas, while same-day visitors spent 662. In the fourth quarter of 2013, total spending of visitors amounted to 16.3 billion patacas, up by 12 percent year-on-year. Spending of overnight visitors totalled 13.4 billion patacas, up by 7 percent, and that of same-day visitors was 2.9 billion patacas, also up by 46 percent. On a quarterly basis, visitors spent around 2,201 patacas in the fourth quarter, up by 9 percent. Visitors from mainland China were the biggest spenders cashing out 2,801 patacas, while Chinese travelling under the individual visit scheme spent 2,909 patacas. In addition, per-capita spending of visitors from Japan and Singapore
was 1,800 patacas and 1,785 patacas, respectively. Australian visitors also spent over 1,300 patacas, making them one of the biggest spenders under the long-haul visitor category. In the fourth quarter of 2013, shopping accounted for 50 percent of visitor spending, followed by accommodation at 26 percent, and food and beverage at 18 percent. The majority of the shopping included jewellery and watches as well as food products, each accounting for 21 percent of overall shopping. Visitors from mainland China were the biggest daily shoppers, with those traveling under the individual visit scheme spending 1,895 patacas, up by 19 percent, while other mainland Chinese visitors spent 1,605 patacas, up by 11 percent. Still in the fourth quarter, percapita spending of overnight visitors amounted to 3,776 patacas, up by 6 percent, while same-day visitors’ spending was up by a staggering 40 percent to 746 patacas. Per-capita spending of overnight and same-day visitors from mainland China was 4,852 patacas and 949 patacas, respectively, while that of overnight and same-day IVS visitors reached 5,036 patacas and 1,462 patacas.
Satisfaction survey slates non-hotel service According to the results of a visitors’ survey, in the fourth quarter last year around 89 percent said they were satisfied with the services and facilities of hotels. However, complaints about customer service and travel agencies were high at 85 percent. In addition, 12 percent of the visitors surveyed said they were not happy with tourist attractions, labelling them “inadequate”, while 11 percent said public transport needs improving. As for the whole of 2013, around 90 percent of visitors were satisfied with hotel facilities as well as services from travel agencies.
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Macau Best Western deal clinched next month The HK$900-million (US$116.4-million) sale of Best Western Hotel Taipa to the operator of Macau’s Grand Emperor hotel-casino will be completed by March, developer Magnificent Estates Ltd told Hong Kong Stock Exchange. The developer said the deal would give it earnings of HK$620 million in the first half of this year. Profit reported in 2013 from the Best Western Hotel Taipa dropped year-on-year by 6.2 percent to HK$33.9 million last year with an EBITDA (earnings before interest, taxation, depreciation and amortisation) margin of 64 percent. Its occupancy rate stayed at 97 percent last year.
Govt take on illegal accommodation disputed An official says the problem is contained; a legislator says it is spreading Tony Lai
he illegal accommodation business is confined mainly to the NAPE area, but stamping it out is difficult as many people that stay in illegal accommodation work in the casino industry, the government says. Legislative Assembly member Angela Leong On Kei told a plenary session of the assembly: “The illegal accommodation business has yet to be curbed, and there is a trend towards more such accommodation, not confined to the NAPE area but extending into the northern district.” The director of the Macau Government Tourist Office, Maria Helena de Senna Fernandes, told the assembly: “There is no sign of large-scale expansion of such
accommodation into other areas.” Ms Senna Fernandes said over 77.2 percent of the 2,046 premises that the authorities had sealed between 2010 and this year on suspicion that they were being used illegally were in residential buildings in NAPE or near the Outer Ferry Harbour Terminal. She said only 5 percent were in the northern district of the peninsula or on Taipa. The situation was “complicated”, Ms Senna Fernandes said. “Many tenants of the units are active in the casino industry or related sectors,” she said. She said her office would cooperate more closely with the police in the effort to stamp out illegal accommodation. Assembly member Song Pek
Most of ‘illegal inns’ have been found around NAPE
Kei asked whether the government would amend the law to provide for heavier penalties for running illegal accommodation. Ms Senna Fernandes gave no undertaking to have the law amended. She said the law already provided for fines of between 200,000 patacas and 800,000 patacas which, she said, were “not lenient”. The assembly heard from the director of the Transportation Infrastructure Office, Lei Chan Tong, about progress towards opening the Light Rapid Transit (LRT) railway. Trains are due to begin running on the Taipa stretch of the railway first, and on the peninsular stretch later, and Mr Lei remarked: “The effectiveness of the Light Rapid
Transit project will be affected.” But he said there was no alternative, because the plan for the peninsular stretch was incomplete. He said the government would consult the public before July about “several” proposals it had for the route the railway should follow on the peninsula. He said the government would ensure trains began running on Taipa in 2016, but that it had set no date for trains to begin running on the peninsula. Secretary for Transport and Public Works Lau Si Io said the government was considering how to extend the LRT to Ilha Verde and to the Macau end of the Hong Kong-ZhuhaiMacau Bridge.
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Greater China PRC exchanges deny ex-trader’s claims The Shanghai Stock Exchange and the China Financial Futures Exchange disputed claims by an ex-trader at Everbright Securities in a lawsuit contesting the trader’s punishment for insider trading. The Beijing First Intermediate Court on Tuesday agreed to accept a lawsuit filed against the China Securities Regulatory Commission (CSRC) by Yang Jianbo, the former general manager of a high-frequency trading unit at Everbright. The CSRC banned Yang and some colleagues from the securities industry for life and fined them each 600,000 yuan (US$98,700) over trades related to a computer malfunction last August.
Questions over China’s looted art A tycoon’s US$1.6 million deal for the return of seven white marble columns – looted from a palace in Beijing by invading Anglo-French forces in 1860 – is raising fresh debate in China. Critics have openly challenged the motives of real estate developer Huang Nubo, whose donation to the KODE Art Museums of Bergen paved the way for the return of the Old Summer Palace relics, and some argued they should not be “bought back”. “They robbed us and then returned the marbles to us – I can’t work out if I’m happy or not,” Beijing student Guo Peida told AFP.
Ex-Sichuan Hanlong chairman on mafia charges The former chairman of Sichuan Hanlong Group, whose bid for Australian miner Sundance Resources Ltd. collapsed last April, has been charged with organising Mafia-like crime groups. Liu Han and 35 others were charged with committing a total of 21 crimes including creating, leading and joining Mafia-like organisations, and intentionally injuring others, the official Xinhua News Agency reported yesterday, citing the prosecutor’s office of Xianning city in the eastern province of Hubei. The charges are the first official news on Liu Han since state media reported last March he had been detained.
Mobile gamer Chukong mulls US$150 mln IPO Chukong Technologies Inc., a Chinese mobilegaming company, plans to seek about US$150 million through an initial public offering in the U.S., said two people with knowledge of the matter. Deutsche Bank AG and Morgan Stanley are helping prepare the IPO, said the people, who asked not to be identified because the information is private. Chukong, based in Beijing, aims to start the offering in the second half, they said. Founded in 2010, Chukong develops leisure games for smartphones, according to the company’s website. Fishing Joy, one of its most popular games, has attracted more than 200 million users in China.
China, UK mull yuan clearing British finance minister George Osborne on visit to ex-colony Hong Grace Li and Michelle Chen
he British and Chinese governments are in active discussions about setting up a clearing bank in London for China’s currency, a milestone that will put the city in a leading position to offer yuan trade business in Europe. Taking a leaf out of Hong Kong’s blueprint in being the leading offshore yuan hub after the establishment of Bank of China (Hong Kong) as a clearing bank, the authorities are pressing ahead with having one for the City of London – the ancient heart of the British capital and the nation’s centre for financial services. The move will help expand the Chinese currency’s footprint beyond Hong Kong, where more than 80 percent of yuan trade settlement transactions are handled and foster greater confidence among European companies to adopt the yuan, also known as the renminbi, as a currency for trade. “The UK and Chinese governments are in active discussions now about the appointment of a RMB clearing bank in London, recognising London’s role as the Western centre of offshore RMB trading,” Britain’s finance minister
George Osborne, Britain’s finance minister
Hong Kong shares down, on weak China Flash PMI But Sinopec surges by 10 pct in Shanghai on rumours of an equity sale
ong Kong shares fell from a four-week high early on Thursday, and losses accelerated after a preliminary private survey showed manufacturing activity in China slowed to a sevenmonth low, stoking fears of a more severe slowdown. The China flash Markit/HSBC Purchasing Managers’ Index (PMI) declined to 48.3 in February from January’s final reading of 49.5. The employment sub-index slid to its weakest in four years. At midday, the Hang Seng Index was down 1.1 percent at 22,412.8 points after closing on Wednesday at its highest since Jan. 23. The China Enterprises Index of the leading offshore Chinese listings slid 0.9 percent. The CSI300 of the largest Shanghai and Shenzhen A-share listings inched up 0.1 percent, while the Shanghai Composite Index was up 0.7 percent after rising by as much as 1.7 percent
before the survey’s release. “The survey today is a further sign of a slowdown in the Chinese economy after last month’s set of PMIs, but the market reaction is not that bad,” said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities speaking yesterday afternoon. “The upcoming annual parliamentary meetings in early March will take on bigger importance now,” Yip added. “You have to expect Beijing to act if the economy slows down more from here, because they cannot proceed with their reform agenda without maintaining a certain level of growth.” Chinese banking plays were among the leading drags on benchmark indexes. Industrial and Commercial Bank of China slid nearly 3 percent in Hong Kong and 0.6 percent in Shanghai. The sector was also hit by a directive from the banking regulator late on Wednesday reiterated that banks
must raise their liquidity coverage ratio, a barometer gauging their short-term resilience to high-stress situations, to 100 percent by 2018 under new rules effective March 1. Bank of Beijing was an exception to yesterday’s trend, rising another 2.8 percent after saying it would collaborate with Xiaomi.com in mobile payment and credit. It soared 10 percent on Wednesday on initial reports of this arrangement, and a formal announcement was made after market close. Tencent Holdings sank 2.3 percent on fears of greater competition after Facebook Inc announced its purchase of mobile-messaging startup WhatsApp for US$19 billion in cash and stock.
Sinopec surge There were also gains for China Petroleum and Chemical Corp (Sinopec) , whose shares surged by the maximum 10 percent in Shanghai and 9.6 percent in Hong Kong. Investors cheered a plan to seek private investment for its marketing arm. “We believe management is exploring the possibility of spinning off the division in an IPO or sale of a stake, with an eye to unlock the value of the division which is not fairly reflected in the share price of Sinopec,” Citi analysts said in a client note dated February 19. Other petrochemical counters were also buoyed by Sinopec gains. Petrochina jumped more than 2 percent in Hong Kong and 4.9 percent in Shanghai. Reuters
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role for London
of 2010, data from the Hong Kong Monetary Authority showed.
George Osborne said yesterday. He was speaking at the British Chamber of Commerce Hong Kong.
Offshore centres All other offshore centres have Chinese banks as trade clearing institutions; Singapore has Industrial and Commercial Bank of China (ICBC) and Taiwan, Bank of China, as clearing institutions. A clearing bank is considered a politically sensitive subject and is usually a homegrown entity with Bank of China and ICBC being the leading contenders for this role, according to trade sources. At present, London mainly relies on Hong Kong’s offshore yuan infrastructure to obtain yuan liquidity and clearing services, with Standard Chartered Bank tying up with Agricultural Bank of China in December to provide yuan clearing services there. The yuan clearing bank set up in 2003 in the former British colony has created a channel for cross-border renminbi transactions through the banking system, and also laid a
Brent crude below US$110 on PRC worries
KEY POINTS Talks mark progress from early discussions last year ICBC, Bank of China are usual suspects Move to put London in leading position in Europe Currently London relies on HK’s offshore yuan system
solid foundation for the burgeoning development of yuan business. As a result, trade settled in yuan exploded with 18 percent of China’s total global trade now settled in yuan compared with 2 percent in 2010. Yuan deposits, including outstanding certificates of deposits, was over 1 trillion yuan (US$164.57 billion) in 2013, more than triple that
Competition among potential offshore yuan centres, including Taiwan, Singapore, London and Luxembourg, has intensified as Beijing steps up efforts to promote the wider use of its currency. The first international RMB conference in London will be hosted this summer, Osborne added. The UK signed a 200 billion yuan (US$32.9 billion) three-year bilateral currency swap deal with China last year, becoming the first G7 country with such a swap line. It was later granted an 80 billion yuan quota for a yuan investment scheme. Average daily turnover of foreign exchange products, including spots, forwards, swaps and options in London climbed to US$15.6 billion in the first half of 2013, more than doubling that of a year earlier, according to City of London. While London’s position as the world’s biggest foreign exchange and bond trading centre gives it advantages, regional rivals such as Luxembourg, Paris, Frankfurt and Switzerland, also want a part of the growing yuan business. China’s yuan has overtaken the Singapore dollar and Hong Kong dollar to become the 8th most used world payments currency, as well as the second in trade finance, global transaction services organisation SWIFT said. Reuters
Gold bulls hostage to uncertain China
China manufacturing survey hits oil Premiums on the Shanghai Gold markets on concerns about forward demand Exchange eased recently
rent crude slid below US$110 a barrel yesterday, dragged down by a survey that pointed to slower growth in China, the world’s second largest oil consumer. Manufacturing activity shrank again in February to the lowest in seven months, while employment fell at the fastest pace in five years, a preliminary private survey showed. “That is going to really knock the wind out of sales of risk assets this afternoon and probably for the next 24 hours because it is a substantial miss on estimates. I expect that it is going to have a negative impact across oil markets,” said Ben Le Brun, a market analyst at OptionsXpress in Sydney. April Brent crude had slipped 60 cents to US$109.87 a barrel by 0540 GMT, after settling at its highest level this year on Wednesday. U.S. crude futures for March delivery edged down 27 cents to US$103.04 a barrel. The contract closed on Wednesday, a day ahead of
its expiry, at its highest since October 8. Robust heating demand this winter has also supported U.S. crude prices. Geopolitical risks in Africa and Venezuela partially offset the negative impact on oil from the China survey. Domestic conflicts in Libya and South Sudan have cut their crude output, while investors eyed protests in Venezuela and the progress of Iran’s nuclear talks. Six world powers and Iran hammered out an agenda for reaching an ambitious final settlement to the decade-old standoff over Tehran’s nuclear programme. A settlement could lead to the lifting of sanctions on Iran, which has been curbing oil exports from the OPEC producer. Iraq may also add to global oil supply after Iraqi Kurdistan agreed to export crude via the country’s main oil marketing body, potentially removing a major sticking point in a resource row with the central government. Reuters
old bulls have been tempted out of hiding by bullion’s strong start to the year, but the basis for optimism looks unsteady and largely hostage to what happens in China and India. Spot gold has gained 8.8 percent so far this year to end February 19 at US$1,311.32 an ounce, recovering almost a quarter of its 28-percent loss in 2013. The World Gold Council (WGC), which represents producers, is unsurprisingly upbeat, with Marcus Grubb, the managing director for investment, saying 2014 is going to be “much better” for gold investment and returns will be positive. China became the world’s top gold consumer last year, overtaking India, with demand rising 32 percent to 1,065.8 tonnes, according to the council’s Gold Demand Trends report on February 18. The surge in demand in China was largely due to a consumer response to the sharp fall in prices. Given that a further slump in gold prices is something the council doesn’t expect, it may be logical to assume that Chinese buyers will be aware that the time to buy at bargain prices is past. Chinese consumers also tend to buy gold when they fear inflation is rising, or when other financial assets such as shares are likely to drop. Inflation in China remains well contained at 2.5 percent, well below the recent 6.5-percent peak from mid-2011, while the benchmark Shanghai stock index is up modestly
so far this year. Premiums on the Shanghai Gold Exchange have also eased recently after the demand boost ahead of the Lunar New Year holidays at the end of last month and the start of February. The current backdrop in China does little to suggest that gold demand will again surge by more than 30 percent in 2014, although equally it doesn’t suggest that demand will decline. Rather the outlook for China is for steady demand growth, which will be supportive for gold prices, but not enough to spur a rally by itself. Reuters
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Sinopec share surge ahead of unit sale Sparks concerns of info leak and possible insider dealing
hina Petroleum & Chemical Corp. shares rose prior to the company disclosing it had plans to seek private investors for its oil-retail unit. The fact spurred concern that details of the announcement had been leaked. Sinopec, as the Beijing-based company is known, jumped as much as 7.1 percent in Shanghai yesterday on trading almost four times more than the 20-day average, according to data compiled by Bloomberg. Trading of call options in Hong Hong climbed to a two-month high before the state-controlled company said after the close of local exchanges that it’s seeking private investors to buy as much as 30 percent of the unit. “Some investors were probably aware of the news in advance,” said Wang Zheng, the Shanghai-based chief investment officer at Jingxi Investment Management Co., which oversees about US$120 million. The move in Sinopec, which coincided with gains in other statecontrolled stocks such as PetroChina Co., follows unexplained rallies in U.S.-listed shares of AutoNavi
KEY POINTS Sinopec seeking private investors for its oil-retail unit Energy giant traded at 7 times 20-day average prior to news Fears of leak and insider dealing China has tried to clamp down on IPO-related insider activity
Holdings Ltd. and Shanda Games Ltd. before takeover announcements of the Chinese companies in the past month. The nation’s regulators said in January they have zero tolerance for insider trading as policy makers seek to boost confidence in a stock market valued at US$3.6 trillion that’s beset by investor withdrawals and four years of underperformance versus global equities.
Options surge Lv Dapeng, a Beijing-based spokesman at Sinopec, didn’t answer two calls to his office seeking comment. The China Securities Regulatory Commission didn’t immediately respond to faxed questions from Bloomberg News and a call to the press office wasn’t answered. Jonathan Li, a spokesman for Hong Kong’s Securities and Futures Commission, declined to comment. Sinopec’s intraday rally on Wednesday was the biggest since Aug. 16, when a trading error at Everbright Securities Co. sparked a surge in the Shanghai Composite Index. Sinopec shares pared gains on Wednesday to close 3.75 percent higher. The company’s Hong Kong-listed shares increased as much as 2 percent to HK$6.12, while trading of call options jumped to 5,683 contracts, more than three times higher than the 20-day average. The most-traded options were calls with a strike price of HK$6 that expire this month. Yesterday, shares in Hong Kong advanced 9.8 percent and the cost of the HK$6 calls surged 385 percent at 2:49 p.m. local time. The stock jumped by the 10 percent daily limit in Shanghai.
Broad rally Sinopec shares have climbed more than 3.75 percent in Shanghai on a closing basis four times during the past year through February 18, according to data compiled by Bloomberg. The Shanghai Composite advanced 1.1 percent on Wednesday to the highest
level in two months. It’s not unusual for Chinese stocks, including Sinopec, to post large oneday moves, said Zhou Lin, an analyst at Huatai Securities Co. in Nanjing. The shares may have been lifted by a broader rally in the stock market on Wednesday that was led by financial companies, Zhou said. “It wouldn’t necessarily be due to a news leak,” Zhou said. “I don’t rule out the possibility, but the market was pulled higher by the financials.” Sinopec’s board approved the plan on Wednesday to explore the restructuring of the business, which operates China’s largest network of more than 30,000 fuel stations, the company said in a statement. Selling 30 percent could raise more than $20 billion, Somshankar Sinha, an analyst at Barclays Plc, wrote in a research note. The move comes after the government pledged to encourage more private investment in stateowned industries.
Shanghai losses “There’s a very high possibility information leaked out,” said Steven Leung, director of institutional sales at UOB-Kay Hian Holdings Ltd. in Hong Kong. “It’s always possible in China.” Markets outside China have also come under scrutiny for leaks. The U.S. Securities and Exchange Commission sued traders over “suspicious” transactions in H.J. Heinz Co. a day before Warren Buffett and 3G Capital Inc. announced a $23 billion takeover of the ketchup maker in February 2013. Former SAC Capital Advisors LP money manager Mathew Martoma was found guilty this month in the most lucrative insider- trading scheme ever. Jurors in Manhattan federal court found Martoma used secret tips on clinical trials of an Alzheimer’s disease drug to trade shares of Wyeth and Elan Corp. Chinese regulators are trying to boost confidence in the nation’s equity market as investors empty trading
accounts and the Shanghai index lags behind global equities. The number of Chinese stock accounts containing funds shrank to a three-year low of 53.5 million on Feb. 7, a drop of 3.8 million from the June 2011 peak, data compiled by Bloomberg show. The Shanghai Composite touched its lowest valuation on record versus global equities last month. The gauge trades for 1.4 times net assets, a 29 percent discount versus the MSCI AllCountry World Index, data compiled by Bloomberg show. The Chinese measure has climbed 1 percent in 2014, paring its decline since the end of 2009 to 35 percent. The CSRC said in a January 24 statement it will severely punish any form of insider transactions, or trading on material information that isn’t available to the public, after handing out fines to two executives at Zhejiang Sunflower Light Energy Science & Technology, listed on Shenzhen’s ChiNext market for smaller companies. The executives sold shares before Zhejiang Sunflower forecast a first-half loss, the CSRC said. AutoNavi, an online map-content provider, jumped 13 percent over Feb. 6 and February 7, the most among the biggest Chinese stocks traded in New York, before Alibaba Group Holding Ltd. offered to buy the shares. Shanda Games soared 34 percent in the seven days prior to saying on January 27 that it plans to go private. The SEC said this month that two Hong Kong-based asset management firms agreed to pay almost US$11 million to settle claims related to improper trades made before Beijingbased Cnooc Ltd. announced it would acquire Canadian energy firm Nexen Inc. Concern over information leaks “definitely undermines investor confidence,” said UOBKay Hian’s Leung. “Valuation is attractive but overseas investors will take into consideration these unfair disclosures.” Bloomberg News
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MAS denies ordering 100 planes Expects to avoid operating loss in coming quarters
alaysia Airlines (MAS) group chief operating officer Ahmad Jauhari Yahya has dismissed reports that the loss-making national carrier is placing orders for 100 new planes. He added he does not expect an operating loss in the coming quarters. Ahmad Jauhari said that the negative earnings before interest, taxes, depreciation and amortisation (EBITDA) that the airline registered in the fourth quarter of last year was because of a one-time write off from the carrier’s engineering inventory. “If not for the write-down on spare parts for planes that we have retired, MAS would have registered a positive EBITDA in the last quarter,” said Ahmad Jauhari in response to concerns by analysts that MAS would continue to bleed operationally until 2016. Speaking at a briefing to editors, he said that based on January numbers, the revenue was the same as in last year and assuming the airline continued with it cost-cutting measures, the EBITDA should be positive. MAS announced its fourth consecutive quarterly loss for the financial year ended December 2013 on Tuesday. The national carrier registered a loss of RM343 million on the back of a turnover of RM3.9 billion (US$1.2 billion) while its EBITDA was negative by RM56 million. If MAS continues to incur a negative EBITDA, it would cause a deterioration of the cash balances of the national carrier that stood at RM3.9 billion as at the end of last year.
No spree Ahmad Jauhari also denied a foreign wire report that the national carrier planned to place orders for 100 new aircraft. He said MAS was only looking at replacements for its Boeing-777 planes that would be gradually retired by 2018. Towards this end, he said that
they would only start looking at the replacements in the second half of the year and it was a matter that even the board has not deliberated on. The existing fleet of narrow and wide body planes under the stable of the national carrier are largely new and fuel-efficient. Ahmad Jauhari attributed the poor results to the declining yields because of higher capacity, losses due to the depreciation of the ringgit and finance cost incurred by the airline because of it taking delivery of new planes. “The new planes are fuel efficient and able to accommodate more passengers. The average utilisation is also higher resulting in more seats being sold. “The efficiency gain from replacing the old planes is about 15%,” said Ahmad Jauhari. However the higher number of seats, described as load active strategy, resulted in lower yields for MAS. Analysts downgraded MAS after it announced its worst annual loss since
2011 while the stock shed 2 sen to close at 29 sen on Wednesday. This was MAS’ largest core loss in 10 quarters, according to CIMB Research, as the promised benefits of a new fleet were more than offset by depressed yields and fare dumping by local airlines.
Tough fight The brokerage expects the “theatre of war” in the local aviation scene, sparked by incumbents MAS, AirAsia and AirAsia X, as well as newcomer hybrid carrier Malindo Air, to spill over from the domestic front into the international arena this year. “If passenger yields are to improve at all in 2014, MAS, AirAsia, AirAsia X, and/or Malindo will have to blink and reduce capacity deployment, but we do not see any evidence of this happening based on the published capacity schedules up to July 2014. “However, airline behaviour is dynamic and can change. We are
prepared to revisit our bearish outlook if evidence emerges of greater rationality in the future,” CIMB Research said in a note to clients, maintaining its “reduce” rating. “The weak set of 2013 results showcases MAS’ inability to manoeuvre itself in a tough operating environment. “Yields have declined 14.3 percent year-on-year in 2013, much more severe than the industry decline of only 4 percent to 7 percent,” explained Maybank IB Research. “This is despite MAS having upgraded its fleet with brand new aircraft and enhanced its product offering and service quality.” According to the research house, MAS expects an equally difficult year in 2014, as it sticks to its strategy of filling seats at the expense of yields. “We are uncomfortable with management’s approach to continue with a strategy that hasn’t yielded positive results thus far,” Maybank IB Research said, downgrading the stock to “sell” from “hold”.
India’s natural rubber imports to fall Bounce in domestic production could depress world prices Rajendra Jadhav
ndia’s imports of natural rubber are expected to fall by third in 2014/15 to about 200,000 tonnes, as tapping of newly planted trees likely boosts domestic production to a record high, a senior government official told Reuters. A drop in imports by India, the world’s fourth biggest producer, would put pressure on global prices that are sitting not far off multiyear lows. “Trees planted in nontraditional growing areas are becoming ready for tapping. If weather remains normal, next year production can rise to 950,000 tonnes,” Sheela Thomas, chairman of the Rubber Board said yesterday on the sidelines of the India Rubber Meet. This would top
913,700 tonnes in 2012/13. India’s natural rubber imports are estimated to surge 38 percent in the current 2013/14 year to 300,000 tonnes after production was
disrupted by heavy rainfall during the June to September monsoon months. The country’s production in the first ten months of the 2013/14 April to March
financial year fell by 9.4 percent from a year ago period to 723,000 tonnes, despite a 2.8 percent rise in tapping area, data compiled by the Board showed. A sharp drop in rubber prices also contributed to squeezing production as some farmers curtailed tapping, Thomas said. The spot price of the most-traded RSS-4 rubber (ribbed, smoked sheet) at India’s Kottayam market fell to 14,200 rupees per 100 kg last month, the lowest level in nearly three years. Indonesia’s SIR20, usually the cheapest grade in Southeast Asia, was traded earlier this month at 85.00 to 85.50 U.S. cents a pound (US$1.87 to US$1.88 a kg) for March/April delivery.
The grade was last traded at similar prices in 2009. India’s consumption of natural rubber is expected to be flat in 2013/14 due to a slowdown in the domestic auto industry, denting demand for natural rubber from tyre makers, Thomas said, although demand is slowly improving. In 2014/15 demand for natural rubber could rise to 1.01 million tonnes, up 4.1 percent from the 970,000 tonnes estimated for the current year, she said. Car sales in India fell 7.6 percent in January, the fourth straight month of decline, according to figures released by the Society of Indian Automobile Manufacturers (SIAM), in a market set to fall for the second straight year. Finance Minister P. Chidambaram, in his interim budget, proposed reducing the excise duty on small cars, two-wheelers and commercial vehicles to 8 percent from 12 percent. “The changes in excise duty can improve auto sales. Revival in truck and bus sales is crucial for natural rubber demand,” Thomas said. Reuters
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Asia Korean builders sell equity South Korean builders, facing at least 4 trillion won (US$3.75 billion) in debt repayments by the end of June, are turning to equity instruments to bolster depleted balance sheets that have deterred bond investors. GS Engineering & Construction Corp. plans to raise 523.6 billion won selling shares, the company said Feb. 18. SK Engineering & Construction Co. and Lotte Engineering & Construction Co. sold ordinary and preferred stock in December. Yields paid on three-year notes from builders with local ratings above A- jumped an average of 54 basis points in the last year, according to calculations by Bloomberg.
Vincent Tan sells online payments stake Cardiff City Football Club owner Vincent Tan has sold a stake in a Malaysian online payments company to the Sultan of Johor. The latter is paying RM396 million for 15 percent of privately-owned MOL AccessPortal Sdn Bhd. The deal values MOL at RM2.64 billion, making it one of the most valuable online payment service providers in the local scene. The price tag values MOL at 18 times more than its locally-listed peer GHL Systems Bhd. Both are involved in online payment gateways. Sources said MOL was seeking a listing on the US Nasdaq market.
Radioactive water leak at Fukushima A new leak of 100 tonnes of highly radioactive water has been discovered at Fukushima, the plant’s operator said yesterday after it revealed only one of nine thermometers in a crippled reactor was still working. The toxic water is no longer escaping from a storage tank on the site, said a spokesman for Tokyo Electric Power. The news is a further blow to the company’s already-battered reputation for safety. As there is no drainage way near the leak, which is in any case far from the ocean, it is unlikely that the water has made its way into the sea,” he said.
Malaysia’s Jan inflation at 27-month high Malaysia’s consumer price index in January rose 3.4 percent from a year earlier, reflecting a rise in prices of food, transport and electricity, data from the Statistics Department showed on Wednesday. The rate is the highest since October 2011 and exceeded a forecast of 3.3 percent in a Reuters poll of 15 economists. Alliance Research said the implementation of minimum wages and the steep decline of the ringgit against the US dollar in January were contributing factors to the rise in the manufacturing cost of food and non-alcoholic beverages.
Australia wants G20 to set clear Country is next president of the club for rich and emerging nations Ian Chua
ustralia will champion the causes of emerging markets during its presidency of the G20, calling for concrete global growth goals, a re-starting of reforms to international bodies, and for the U.S. Fed to consider the wider impact of its stimulus taper. Ahead of the weekend meeting of finance ministers and central bankers from the Group of 20 developed and emerging economies, Treasurer Joe Hockey on Thursday outlined a wish list that included tackling international tax‑minimisation practices. “We must at all times fully explain our actions to each other and to the public, because clear communication, along with information sharing, is the very essence of macroeconomic coordination,” Hockey told the Institute of International Finance in Sydney. “At the moment, macroeconomic coordination is being talked about in the context of the U.S. Federal Reserve’s gradual tapering of its assetpurchase programme.” The Fed needed to be aware of the international impact of its tapering, and factor that into its actions, he said. His comments came after the International Monetary Fund advised advanced economies, including the
KEY POINTS Hockey seeks measurable growth objectives Australia also wants ‘clear communication’ at G20 Says U.S. Fed needs to be aware of the global impact of tapering Regulation, tax minimisation also on agenda United States, to avoid pulling back stimulus too quickly given the weak global economic recovery. Mike Callaghan, director of G20 Studies Centre at the Lowy Institute for International Policy, hoped the global impact of the Fed’s tapering would be discussed, but added that he was not expecting any major outcomes at this weekend’s meetings. “At the moment, the approach taken by the U.S. and U.S. Fed is that they set monetary policy on the basis of the U.S. economy, full stop,” he said.
“It would be good to see some recognition that its handling of this will have an impact on the rest of the world.”
Growth aims Hockey reiterated calls for the G20 to set global growth objectives and deliver on them. “I think there would be value in setting out in concrete and measurable terms the objectives we are aiming for. We shouldn’t talk in generalities about growth but should communicate our
Thai unrest could cost US$2.8 bln in lost tourism Tourism authority predicts nearly a million fewer visitors
hailand will lose 90 billion baht (US$2.8 billion) in tourism revenue if the political conflict becomes more violent and drags on for another six months, says the Tourism Authority of Thailand (TAT). It forecasts the number of foreign visitors to Thailand will drop by 900,000. TAT governor Thawatchai Arunyik said tour groups would see the biggest drop, and they represent 30-35 percent of total visitors. The agency talked with eight tourism associations about starting a number of promotions to boost tourist confidence in the second half of this year. Key players such as the Tourism Council of Thailand (TCT), the Association of Thai Travel Agents and the Thai Hotel Association (THA) will organise campaigns to woo tourists back to Thailand, focusing on discounts and giveaways. The TAT is gathering proposals from relevant operators on what they need to support their marketing plans. Such attempts may focus on markets that can improve quickly, particularly in Asia. TCT president
Piyaman Techapaiboon said promotions will focus on the most affected destinations, comprising Bangkok, Pattaya, Rayong, Hua Hin, Cha-am and Kanchanaburi. The TAT plans to join with THA members to introduce the promotions next month. Kasian Watanachaopisut, president of the Thai-Chinese Tourism Alliance Association, said 209 tour operators specialising in the Chinese market suffered losses over Chinese New Year. Mr Kasian said
Chinese tourist arrivals to Thailand reached 150,000 last April, but they could drop by 40 percent this year if protests persist. Promotions for the Chinese market should make an impression, like giving them souvenirs when they arrive at Thai airports, he said. Mr Kasian said the government and airports should work out incentives for flights into secondary markets such as Krabi and Trang to reduce congestion at Phuket.
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Australian Treasurer Joe Hockey
intentions to lift growth,” he said. Such proposals have drawn scepticism, with a German government source criticising the idea as a “slightly antiquated form for economic planning”. Hockey also said it was vital to complete the IMF governance and quota reform, which would give emerging powers such as China, India and Brazil a greater voice in the IMF. The plan has stalled because of the United States’ failure to ratify it, annoying much of the developing world.
“Most importantly, the International Monetary Fund has a role to play as a credible, effective and legitimate lender of last resort,” Hockey said. “This is one of many reasons why completing the IMF governance and quota reform is so important - and why I, as chair of the G20 Finance process, will be devoting considerable effort to trying to move this forward.” On financial regulation, Hockey said significant progress has been made, but warned about over reaching. “The focus shouldn’t be about constantly adding to the regulation agenda. More regulation should be cast aside in favour of better regulation.” Hockey noted that the global taxation system has not kept pace with changes in the business world, a major issue for cash-strapped governments around the world. “As a consequence, we have seen the erosion of domestic tax bases resulting from international tax planning that takes advantage of the gaps in our current taxation systems,” he said. “The G20 will work this year towards these changes to make sure our tax systems keep pace with the changing ways people do business.” Reuters
Gov’t urged to set up unit to protect investments L
ocal and foreign business groups are pushing for the creation in the Philippines of an Office of Investor Protection. It would help to safeguard long-term investors from “technicalities” that often delay or block the issuance of refunds and other critical incentives to the private sector. At the same time, the proposed unit would help investors cut through the layers of bureaucracy across government agencies. The Joint Foreign Chambers, the Makati Business Club, the Philippine Chamber of Commerce and Industry and the Information and Communication Technology-Business Processing Association of the Philippines said in a statement on Wednesday not only are incentive packages for investors important, but also actual delivery these perks to the private sector. The groups said there are examples of investors winning cases at the Court of Tax Appeals (CTA) against the Bureau of Internal Revenue, but then being shortchanged when the Supreme Court overturned the decisions. This, the groups stressed, left the business community confused, depriving some investors of the promised value added tax refund, such as in the case of San Roque Power. San Roque Power was invited by the government to invest in a hydropower plant in the late 1990s, and was provided with the incentive that all capital goods could be imported
duty-and tax-free. The power firm then filed for a refund in 2003 and was allowed by the CTA to claim it. But in 2013, the Supreme Court overturned the decision of the CTA, explaining that San Roque Power was ineligible to claim the refunds “based on technicalities”. The groups noted that there was no need to amend the Electric Power Industry Reform Act (Epira) to make electricity rates in the country – said to be the most expensive in the region next to Japan – more attractive and competitive for local industries. “The IT-BPM industry and the energy sector outlined the need for incentives to attract more call centres and knowledge management companies to the Philippines, and encourage energy generators to provide much needed power,” the groups said. “As business needs sufficient power at competitive prices, the present power issues were discussed. The private sector outlined that there are immediate remedies available within the existing market rules to address the current crises and consequently, there is no need to amend Epira. However, incentives are needed and … have to be delivered,” they added. The business community likewise outlined what is needed in legislation to encourage long-term productive investments, especially in those areas where unemployment, underemployment, and poverty, are most prevalent.
‘Japan can weather tax hike’: BOJ director Country might also exceed expected growth rate says Yoshihisa Morimoto
apan’s economy can continue to exceed its potential growth rate after a planned sales tax hike in April, Bank of Japan board member Yoshihisa Morimoto said yesterday. It’s being taken as a signalling the government’s confidence that planned taxes on consumption will not derail the economy. Morimoto also said he expects exports to grow gradually as a recovery in advanced countries spreads to Asia, but some economists are starting to
worry about external demand after Japan posted a record trade deficit in January. Morimoto’s comments were in line with the BOJ’s official stance that the economy does not need additional monetary easing. But there are lingering doubts about the central bank’s willingness to stand aside if risks to the outlook continue to grow. “We expect demand to rise before the tax hike and then fall afterwards,” the BOJ board
member said in a speech to business leaders in Wakayama, western Japan. “It is important to average out these swings when deciding monetary policy and whether we are progressing toward our inflation target.” Morimoto, a former utility executive, stuck to the BOJ’s assessment that Japan’s economy was headed for a moderate recovery and making steady progress toward achieving the central bank’s
2 percent inflation target. There is a high chance that consumer prices will reach 2 percent from the second half of fiscal 2014 to fiscal 2015, Morimoto said. As widely expected, the BOJ on Tuesday maintained its pledge of increasing base money, its key monetary policy gauge, at an annual pace of 60-70 trillion yen (US$589 billion to US$687 billion). The BOJ has stood pat on policy since launching
an intense burst of stimulus last April, when it pledged to accelerate inflation to 2 percent in roughly two years via aggressive asset purchases in a country mired in deflation for 15 years. Morimoto reiterated the central bank’s view that exports will start to pick up as growth in the United States and Europe stimulates activity in China and other Asian countries. Reuters
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Romanian Roma face prejudice – from the president down Country’s chief executive Traian Basescu has called them ‘nomadic’ and dishonest Isabelle Wesselingh
131euros Romanian president’s fine for anti-Roma remarks
ike many teenagers, Cristi gets extra help outside school in favourite subjects. But unlike most, the Bucharest boy panics at the thought of his tutor leaving the room, even for a moment. “When I go to my neighbour to take extra English lessons, I am afraid to be left alone because you know that people say Roma steal,” said the 13-year-old, an ordinary boy who likes English, mathematics and, of course, football. “Me, I don’t, but I am afraid that something will disappear and I would be falsely accused.” Like Cristi, many Romanian Roma struggle daily against “prejudiced and heavily stereotypical rhetoric” used by politicians, the media and society in general, the head of the country’s anti-discrimination council, Csaba Asztalos, told AFP. A rise in anti-Roma attitudes elsewhere in Europe has underscored
the problem. And in Romania – where Roma were treated as slaves until 1856 – looking down at the minority starts right at the top. In an unprecedented move last week, the state anti-discrimination council slapped President Traian Basescu with a US$180 (131-euro) fine for anti-Roma remarks, after giving him two earlier warnings. Basescu had publicly alleged, during a 2010 visit to Slovenia, that Roma do not want to work and that “many nomadic Roma traditionally live from what they steal.” Roma rights group Romani Criss praised the sanction but warned that Basescu was not an isolated case. “Many other politicians, including Prime Minister Victor Ponta and former Prime Minister Calin Tariceanu, promote racism by describing Roma as offenders and anti-social,” it said.
“I do not recognise myself at all in the way politicians describe us,” complained Loredana Dumitru, a 24-year-old Roma journalist working for a national TV channel. “I do not feel protected in a country where many people in the street despise me because of my ethnic background and where politicians, who are supposed to guarantee my security in society, are doing the same,” she told AFP. Romania has the largest Roma minority in Europe, estimated at about two million people by rights groups. On Thursday, many will mark the abolition of Roma slavery 158 years ago. But the vast majority do not declare themselves as ethnic Roma for fear of discrimination. Only 620,000 Roma openly stated their ethnicity in the 2011 official census. Romania is the European Union’s second poorest member state and its
Roma are among the poorest of the poor, with 35 percent of Roma children living below the poverty line. High-profile members of the community have spoken out about the trauma of discrimination, including Alina Serban, a London-based actress and playwright. “From a grandmother telling her grandchild, ‘If you do not behave I will give you to the gypsies’, to politicians using stereotypes about Roma, all of them affected me and gave me complexes,” she said. Asztalos of the anti-discrimination watchdog likewise stressed the “devastating effects the negative rhetoric has on Roma children”. Like Cristi, many “live in constant fear of the widespread prejudice against their minority,” he said. Some Roma have gone into politics themselves to fight for change, such as 30-year-old Petre Florin Manole, a history graduate who joined the Social Democratic party, the largest in Romania’s parliament. With a group of colleagues, he started a league to foster better understanding but readily concedes they have a long way to go. Romanian “politicians in theory should be an example,” he told AFP, “but we should not forget they come from this very society where the majority is prejudiced against the Roma.” The challenge is how to affect change. For Manole, EU integration and action by the anti-discrimination council is helping raise awareness among politicians. Asztalos, meanwhile, also looks to the grass roots. “Society should address economic and social problems rather than link everything to ethnicity,” he said. AFP
Curitiba World Cup stadium struggling for fans 41,500-seater venue may not be full during Brazil’s global football party Tariq Panja
uritiba has a new problem after surviving the threat of removal as a venue for soccer’s World Cup: a lack of interest in the games that will be played there. The southern Brazilian city found out three days ago that it would remain a World Cup site following a threat from soccer governing body FIFA that it would be cut from the list of 12 hosts if it didn’t come up with a plan to complete construction of the 41,500seat Arena da Baixada in time for the competition. The city will stage four first-round group games, starting with Iran against Nigeria. That will be followed by Honduras- Ecuador,
Australia-Spain and AlgeriaRussia. Of the group, only defending champion Spain is considered among the top teams in soccer. The fixture list has hurt demand for games, according to Horst Schmidt, chief executive officer of the 2006 World Cup and a consultant to the 2014 ticketing operation. “We have to do a lot of work to promote the matches there,” Schmidt said in an interview on Tuesday in Florianopolis, where coaches from the 32 competing teams have gathered for a two-day workshop. “Perhaps because of the profile of matches the demand isn’t the same as other venues.” Schmidt said organisers
will “focus on this” and may come up with new promotions to generate interest among the local population in Curitiba. He couldn’t guarantee that the stadium would be sold out for games, and dismissed offering discounts.
“In my opinion they are receiving good matches, they have Spain there, and Spain will use Curitiba as its main base,” Ricardo Trade, chief executive officer of the World Cup organising committee, said in an interview. “I never
discussed this with the mayor or the governor in Curitiba. We talk every day.” FIFA says it has sold about one-third of its 3 million World Cup tickets. It doesn’t break down sales by site. Tickets for sale in Curitiba, a city with a population of 1.7 million, range from US$90-US$175 per game. Organisers say the Curitiba stadium will be finished on May 15, less than a month before the start of the World Cup. It was supposed to have been ready in November. Work has hit delays and cost overruns, with the latest estimate of 330 million reais being 78 percent more than the original budget. Bloomberg News
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A clear case for golden rice
Leading reports from Asia’s best business newspapers
Professor of Bioethics at Princeton University
Kawasaki Heavy Industries Ltd. has developed a liquefied natural gas-fuelled ship engine that emits less carbon dioxide than heavy oil. KHI showed the ME-GI engine to reporters at the company’s factory in Kobe. It applies high pressure on LNG and burns the gaseous form to obtain momentum for a ship’s pistons. It’s more fuel-efficient than steam turbine-powered or electrical propulsion-powered engines using LNG, KHI said. The engine can also be powered by heavy oil. Mitsui Engineering and Shipbuilding Co. and South Korean manufacturers are working on similar LNG-fuelled ship engines, but they have yet to market the products.
BANGKOK POST Three large banks – Bangkok Bank (BBL), Siam Commercial Bank (SCB) and Kasikornbank (KBank) – are reaping a windfall from the current run on deposits at the state-owned Government Savings Bank (GSB). A large portion of the 30 billion baht withdrawn from the GSB is landing in their deposit accounts. A number of depositors opened accounts and deposited billions of baht into branches of these banks on Monday alone, said SCB executive vice-president Smith Banomyong, adding that the bank has not finalised he figure yet. He said both retail and corporate customers are flocking to SCB.
THE STAR Residential property in the second phase of the Battersea power station project in London will be offered for sale in the British capital before being marketed to overseas buyers, the scheme’s Malaysian-backed developer said. The decision comes in response to increasing pressure on builders to give Londoners priority for new homes in an effort to combat a housing shortage exacerbated by the droves of overseas buyers who have snapped up residential property in the city over recent years. The power station, famous for its imposing quartet of art deco chimneys, stood derelict on the south bank of the River Thames for about three decades.
reenpeace, the global environmental NGO, typically leads protests. Last month, it became the target. Patrick Moore, a spokesperson for the protesters – and himself an early Greenpeace member – accused the organisation of complicity in the deaths of two million children per year. He was referring to deaths resulting from vitamin A deficiency, which is common among children for whom rice is the staple food. These deaths could be prevented, Moore claims, by the use of “golden rice,” a form of the grain that has been genetically modified to have a higher beta carotene content than ordinary rice. Greenpeace, along with other organisations opposed to the use of genetically modified organisms (GMOs), has campaigned against the introduction of beta-carotene, which is converted in the human body into vitamin A.
BUSINESS INQUIRER Roxas Holdings Inc. wants to use the presence of First Pacific group in Southeast Asia to make inroads in neighbouring markets. It’s in anticipation of the regional economic integration in 2015. “We are looking at possible new sources of revenue and at diversifying our product lines, as well as opening new markets,” RHI chair Pedro E. Roxas said. Roxas also said that through First Pacific’s strong presence in Indonesia’s food sector, RHI was optimistic about entering the region’s largest and fastest-growing market. RHI is looking at possible partnerships in the Vietnam and Cambodia food industries.
There is no reliable scientific evidence that GM foods cause illness
Moore’s mortality figures seem to be on the high side, but there is no doubting the seriousness of vitamin A deficiency among children, especially in parts of Africa and Southeast Asia. According to
the World Health Organization, it causes blindness in about 250,000-500,000 pre-school children every year, about half of whom die within 12 months. The deficiency also increases susceptibility to diseases like measles, still a significant cause of death in young children, although one that is declining as a result of vaccination. In some countries, lack of vitamin A is also a major factor in high rates of maternal mortality during pregnancy and childbirth.
Swiss formula First developed 15 years ago by Swiss scientists, golden rice specifically addresses vitamin A deficiency, and the first field trials were conducted a decade ago. But it is still not available to farmers. Initially, there was a need to develop improved varieties that would thrive where they are most needed. Further field trials had to be carried out to meet the strict regulations governing the release of GMOs. That hurdle was raised higher when activists destroyed fields in the Philippines where trials were being conducted. Critics have suggested that golden rice is part of the biotech industry’s plans to dominate agriculture worldwide. But, although the agribusiness giant Syngenta did assist in developing the genetically modified rice, the company has stated that it is not planning to commercialise it. Low-income farmers will own their seeds and be able to retain seed from their harvests. Indeed, Syngenta has given the right to sublicense the rice to a non-profit organisation called the Golden Rice Humanitarian Board. The board, which includes the two co-inventors, has the right to provide the rice
to public research institutions and low-income farmers in developing countries for humanitarian use, as long as it does not charge more for it than the price for ordinary rice seeds. When genetically modified crops were first developed in the 1980’s, there were grounds for caution. Would these crops be safe to eat? Might they not cross-pollinate with wild plants, passing on the special qualities they were given, such as resistance to pests, and so create new “super weeds”? In the 1990s, as a Senate candidate for the Australian Greens, I was among those who argued for strong regulations to prevent biotech companies putting our health, or that of the environment, at risk in order to increase their profits. Genetically modified crops are now grown on about onetenth of the world’s cropland, and none of the disastrous consequences that we Greens feared have come to pass. There is no reliable scientific evidence that GM foods cause illness, despite the fact that they receive much more intense scrutiny than more “natural” foods. (Natural foods can also pose health risks, as was shown recently by studies establishing that a popular type of cinnamon can cause liver damage.) Although cross-pollination between GM crops and wild plants can occur, so far no new super weeds have emerged. We should be pleased about that – and perhaps the regulations that were introduced in response to the concerns expressed by environmental organisations played a role in that outcome. Regulations to protect the environment and the health of consumers should
be maintained. Caution is reasonable. What needs to be rethought, however, is blanket opposition to the very idea of GMOs.
Risk-benefit With any innovation, risks need to be weighed against possible benefits. Where the benefits are minor, even a small risk may not be justified; where those benefits are great, a more significant risk may well be worth taking. Regulations should, for instance, be sensitive to the difference between releasing a GM crop that is resistant to the herbicide glyphosate (making it easier for farmers to control weeds) and releasing GM crops that can resist drought and are suitable for droughtprone regions of low-income countries. Similarly, a GM crop that has the potential to prevent blindness in a halfmillion children would be worth growing even if it does involve some risks. The irony is that glyphosate-resistant crops are grown commercially on millions of hectares of land, whereas golden rice (which has not been shown to pose any risk at all to human health or the environment) still cannot be released. In some environmental circles, blanket opposition to GMOs is like taking a loyalty oath – dissidents are regarded as traitors in league with the evil biotech industry. It is time to move beyond such a narrowly ideological stance. Some GMOs may have a useful role to play in public health, and others in fighting the challenge of growing food in an era of climate change. We should consider the merits of each genetically modified plant on a case-by-case basis. © Project Syndicate
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Closing Captain held over Japan divers’ accident
Russia says Ukraine ‘hardliners’ seek war
Indonesian police have arrested the captain of a boat that took a group of Japanese divers on an ill-fated expedition off Bali, an official said yesterday. At least one woman died. The man has been named a suspect and is accused of “negligence which caused the loss of life” by leaving the female divers alone in the open seas, said Handoyo Supeno of Bali marine police. Officials have called off the search for the final missing diver, Shoko Takahashi – one of seven women who took part in the expedition.
Russian Foreign Minister Sergei Lavrov (pictured) yesterday accused Ukrainian “extremists and hardliners” of seeking to spark a civil war, as protesters stormed police barricades in Kiev after a truce broke down. Moscow supports negotiations between Ukranian authorities and the opposition, so they can try to overcome “this crisis and together fight extremists and hardliners who are trying to provoke a civil war,” Lavrov said at news conference in Baghdad. The violence led to the deaths of more than two dozen people in fewer than 48 hours.
Non-casino slots to be banned In future betting centres will also be confined to casino premises Tony Lai
ll standalone slot parlours – and betting centres not currently located inside casinos – will be banned in the coming years to reduce the negative impact upon residents of gambling, Secretary for Economy and Finance Francis Tam Pak Yuen pledged yesterday. He didn’t give a timetable for the implementation of the policy. But he indicated it would be tied to concession renewal talks likely from 2015 onwards. He did pledge that more than half of such establishments would be closed before the end of this year. “In setting up an administrative regulation for slot parlours [in 2012],” Mr Tam told a plenary session of the Legislative Assembly yesterday, “our goal is to eliminate all slot parlours not situated in casinos.” “Despite…a lack of such regulation on betting centres, we have [a] similar intention [for them],” he added. The rationale behind the move was to “reduce [the] negative impact of gaming in the neighbourhood areas”, Mr Tam added. A November 2012 regulation declared slot parlours had to be barred from residential buildings and had to be within 500 metres of an existing casino casino. Five parlours closed down last November after a year-long grace period for implementation of the policy. But Mr Tam said yesterday that regulation is only for a “transitional period”. The government will ask gaming operators to ban all slot parlours not situated in casinos. It
Singapore jails two senior civil servants S
ingapore yesterday passed prison sentences on two senior civil servants embroiled in corruption scandals that have dented the government’s reputation as one of the least corrupt worldwide.
will be part of expected discussions in 2015-16 on gaming concession renewals. The city’s six gaming concessions and sub-concessions will expire between 2020 and 2022. For sports betting centres and Chinese lottery outlets, Mr Tam said five out of 11 centres not located in casinos were already closed last year. The administration aims to shut two of the remaining six betting centres, namely located in the areas of Horta e Costa and Rua da Praia
do Manduco, by the end of this year, the official added yesterday. But he gave no details on exactly how and when the administration will do so. Several legislators yesterday voiced dissatisfaction about the government allowing Mocha Clubs, a unit of Melco Crown Entertainment Ltd, to re-open a slot parlour in a neighbourhood area, near to the Ponte 16 casino resort in the Inner Harbour district. Mocha Clubs closed down three parlours after the new slot
Lim Cheng Hoe, 61, the former head of protocol at the Ministry of Foreign Affairs, was sentenced to 15 months in jail for inflating expenses for thousands of dollars’ worth of pineapple tarts and wine bought as gifts for dignitaries. In a separate case, Edwin Yeo Seow Hiong, 40, an assistant director at the Corrupt Practices Investigation Bureau, was sentenced to ten years in jail for misappropriating Sg$1.76 million (US$1.4 million) worth of government funds. The two men had earlier pleaded guilty. Several corruption scandals prompted the government last year
to introduce new rules in the civil service to further deter graft. “This case has caused public disquiet as it involved a highranking public officer who deceitfully obtained public funds by virtue of his position and the trust reposed in him,” district court Judge Eddy Tham said in a written judgement in the case involving senior diplomat Lim. State prosecutors had initially slapped Lim with 60 charges of overbilling the government for gifts bought for foreign officials during overseas visits, totalling Sg$88,997 (US$70,280). AFP
regulation but had already applied to open two outlets including the Inner Harbour venue. Mr Tam admitted there might be “loopholes” in the current regulation but he pledges to “take necessary measures” if the situation of slot parlour location worsened. He also reiterated the government will consider regulations on electronic gaming machines, online gambling and gaming advertisements but he gave no details.