Macau Business Daily, March 12, 2014

MOP 6.00 Closing Editor: Michael Grimes

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he authorities in Macau and Zhuhai seem at odds over business daily 1 when the new border crossing in Ilha Verde might open.

Secretary for Transport and Public Works Lau Si Io said yesterday that he could not give an opening date.

But an official of the Zhuhai Port Bureau last week reportedly said the crossing will be ready by 2016.

Mr Lau told reporters on the sidelines of a sitting of the Legislative Assembly that the Ilha Verde project had many aspects to consider.

“The project is not only about the completion of structures like the immigration hall, but it also involves a joint inspection process,” he said.

He added another aspect was the arrangements for keeping the crossing open 24 hours day.

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www.macaubusinessdaily.com

Year II

Number 494 Wednesday March 12, 2014

Publisher: Paulo A. Azevedo

No green light for new Border says govt Friday April 19, 2013

Hostel stays considered for city

Hengqin no remedy for housing woes: Beijing

Page 4

Teaching, gaming, top career choices Page 5

Fujian maid quota undersubscribed Page 5

Brought to you by

HSI - Movers March 11

Name

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olving Macau’s housing problems is not the main purpose of the “limited” amount of land on Hengqin Island, Central People’s Government Liaison Office director Li Gang said yesterday.

He added: “Social issues like the problem of public

housing should be solved locally first.”

However, Mr Li said the authorities in Macau were talking to officials at Nansha in Guangzhou and Cuiheng in Zhongshan, about renting more land there.

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Galaxy mulls dividend

Cotai interruptus

Casino developer Galaxy Entertainment Group Ltd – which has previously said it wanted to husband cash for its Cotai expansion work – now says in a regulatory filing it will discuss the possible “declaration, recommendation or payment of dividend” at its board meeting on March 19. At that time the firm will also announce its annual results for year ended December 31.

It’s two years until the next of the new casino-resorts open on Cotai. That gives the government some time to build the infrastructure the properties need and gives the gaming companies some time to find the staff they will need. Economist Henry Lei Chun Kwok thinks the three-year hiatus in the opening of new casino-resorts may be good for the economy.

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%Day

Lenovo Group Ltd

5.01

Want Want China

4.60

Sands China Ltd

2.46

Galaxy Entert.

2.12

Belle International

2.09

Ping An Insurance

-0.73

COSCO Pacific Ltd

-0.94

Hengan Internat

-0.96

AIA Group Ltd

-1.22

China Resources Ent.

-1.23

Source: Bloomberg

I SSN 2226-8294

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22 business daily

March 12, 2014 Friday April 19, 2013

Macau Third electricity disruption in a month The city yesterday suffered its third – brief – electricity disruption in under one month. It again affected “most of the users” here, said a spokeswoman for the Office for the Development of the Energy Sector. Electricity supplier CEM – Companhia de Electricidade de Macau SA reported the incident lasting for 0.1 seconds, she added.

Initial signs show an electric circuit connecting llha Verde and the Lotus Bridge border was to blame, she added. “It takes time to investigate,” the public official added. The same circuit had caused brief disruptions on February 15 and 26.

Galaxy might declare dividend soon: analyst But casino operator might be more conservative than peers with the ratio, adds CLSA Ltd Stephanie Lai

sw.lai@macaubusinessdaily.com

Francis Lui, vice chairman, Galaxy Entertainment Group

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asino developer Galaxy Entertainment Group Ltd – which has previously said it wanted to husband cash for its Cotai expansion work – now says in a regulatory filing it will discuss the possible “declaration, recommendation or payment of dividend” at its board meeting on March 19. At that time the firm will also announce its annual results for year ended December 31.

A Hong Kong-based consumer and gaming research analyst at CLSA Ltd Richard Huang Li Shun told Business Daily that it “would not be a surprise” if Galaxy Entertainment decided to pay out dividends to shareholders, though a rare act when compared with its fellow casino developers in Macau.

“It would not be such a surprise if Galaxy Entertainment finally decided to pay out dividends, given that the company has a really strong cash flow even with its capital expenditures on the Cotai expansion projects,” Mr Huang remarked.

Galaxy Entertainment’s cash on hand as of September 30 was HK$14.4 billion while net cash stood at HK$7.7 billion, the group said in its unaudited third-quarter results published in November last year.

“With the strong cash flow, I think Galaxy Entertainment has no problem to share its profit with the shareholders while carrying on with its Cotai Phase 2, 3 and 4,” Mr Huang added.

The analyst expects that the dividend payout ratio from Galaxy Entertainment may range from 20 to 30 percent, a level much more conservative than industry peers such as Sands China Ltd or MGM China Holdings Ltd, whose payout ratio was near the level of 100 percent for 2012.

“For Galaxy Entertainment, they still need to go ahead with the expenditures for the Cotai constructions, their project in Hengqin and the renovation of the Grand Waldo Complex they previously purchased,” said Mr Huang, “So taking that into account, the group may in the end pay a token dividend to investors with a payout ratio at 20 to 30 percent.”

Galaxy Entertainment’s chairman Lui Che Woo said that the company might invest HK$10 billion (US$1.29 billion) in neighbouring Hengqin to build sports-related facilities and hotels on the island, Bloomberg reported in late January.

Mr Lui’s son and vice chairman of Galaxy Entertainment, Francis Lui Yiu Tung, told Hong Kong Chinese-language newspaper Hong Kong Economic Times last week that the Hengqin project would include “both land and water-based sport facilities”.

Business Daily could not reach Galaxy Entertainment before press time for a comment on a possible shareholder dividend.

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March 2014 Friday 12, April 19, 2013

Macau

‘Difficult’ to confirm Ilha Verde border opening date: Lau Public works secretary also cagey on 24-hour operation idea – in contrast to Xinhua report last week quoting Zhuhai officials Tony Lai

tony.lai@macaubusinessdaily.com

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he authorities in Macau and Zhuhai have given differing versions of when the new border crossing in Ilha Verde may open.

Secretary for Transport and Public Works Lau Si Io said yesterday that he could not give an opening date.

But an official of the Zhuhai Port Bureau last week reportedly said the crossing will be ready by 2016.

Mr Lau told reporters on the sidelines of a sitting of the Legislative Assembly that the Ilha Verde project had many aspects.

“The project is not only about the completion of structures like the immigration hall, but it also involves a joint inspection process,” he said.

He said another aspect was the arrangements for keeping the crossing open 24 hours day.

“These need the approval of the central government,” he said.

“It is difficult to confirm the opening date at the moment.”

The government would strive to complete construction of the various facilities “as soon as possible”, Mr Lau said.

Last week an official mainland news agency, Xinhua, quoted an unidentified official of the Zhuhai Port Bureau as saying construction of the main structures – the immigration hall and the walkways for travellers – could start in the second half of 2015.

“Once the new crossing is completed, in 2016, for the first time the two places will have one joint inspection process,” Xinhua quoted the official as saying.

The news agency said the

facilities at the new crossing would be designed to make it simpler for travellers to get in or out of Macau by making them go through only one set of customs and passport checks.

Gongbei overcrowding Mr Lau corroborated what the Xinhua report said about only one set of customs and passport checks, and about the crossing being open around the clock.

Vice-premier Wang Yang has said the central government has approved the project, but Beijing has given no details of it.

The Ilha Verde border crossing was proposed in 2012 with a view to easing the strain on the nearby Gongbei border crossing.

Xinhua reported last week that between 250,000 and

Hengqin no remedy for housing woes here, says Beijing’s man But central government representative says talks on more land for Macau are in progress Tony Lai

tony.lai@macaubusinessdaily.com

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olving Macau’s housing problems is not the main purpose of the “limited” amount of land on Hengqin Island, the Central People’s Government Liaison Office director Li Gang said yesterday.

However, Mr Li said the authorities in Macau and the mainland were having talks about making more land in the province of Guangdong available to the city.

Chief Executive Fernando Chui Sai On said at the weekend that his government was looking into getting more land from Guangdong so Macau could diversify its economy.

Speaking in Beijing about Hengqin Island, Mr Li said: “There are limited land resources suitable for development.”

He told reporters: “Cooperation between Macau and Guangdong now focuses mostly on high-end industries.”

He added: “Social issues like the problem of public housing should be solved locally first.”

Legislative Assembly member Mak Soi Kun has asked the government to discuss with the mainland the idea of Macau obtaining land on Hengqin for public housing.

The mainland authorities have already given Macau 1 square km of land on the island for the University of Macau’s new campus, and have reserved another 5 square km there for Macau investors.

Mr Chui said on Saturday: “We have an arrangement for cooperation with Guangdong province and Zhuhai in exploring several possibilities of obtaining more land for Macau’s economic diversification.”

Mr Li said he was aware that the authorities in Macau were in talks with their counterparts in Nansha in Guangzhou and Cuiheng in Zhongshan.

Macau might buy or rent land in those places for projects meant to make its economy more diverse, he said.

Mr Li said Macau should avoid “blind expansion” of tourism.

He said the city had sufficient capacity for the number of visitors it had at the moment.

The official didn’t comment when asked about Mr Chui’s intention to offer himself for re-election for a further five-year term as the city’s chief executive.

300,000 travellers of all kinds used the Gongbei crossing each day last year.

The news agency said the flow was expected to swell to 356,000 travellers a day next year.

Critics called for improvement of the border crossings to cope with the number of visitors to Macau, particularly during holiday periods, after chaotic scenes of overcrowding at the Gongbei crossing at Lunar

New Year last year.

Macau had 29.3 million visitors last year, over 63 percent of them mainlanders.

Chief Executive Fernando Chui Sai On and the Guangdong provincial chief of the Communist Party of China, Hu Chunhua, met in Beijing last week to discuss the border.

Mr Chui said after the meeting that no date had been set for opening the border around the clock.

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Macau

Fit for life Local office workers are turning to sport to keep stress at bay

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survey carried out by the Macau Federation of Trade Unions and the Macau Association of Economic Sciences found the main cause of anxiety among employees here was too much pressure at work. More than one quarter of the 10,000-plus employees surveyed said it was their major worry.

Now increasing numbers of Macau workers are turning to Western-style aerobic exercise rather than purely Chinese forms of physical and mental conditioning – in order to beat workplace stress, reports our sister publication Macau Business magazine.

The benefits of aerobic exercise in reducing stress and maintaining mental health are well established in Western scientific literature. Even moderate exercise helps boost the production of hormones linked to improved cognitive function, learning and elevated mood. The Anxiety and

Depression Association of America says physical exercise is effective at reducing fatigue as well as improving alertness and concentration.

Last year’s edition of the AIA Healthy Living Index found that 71 percent of those surveyed in Macau use exercise or sport to reduce stress.

In Hong Kong, it was only 44 percent.

The survey of more than 10,000 adults across 15 Asia-Pacific jurisdictions also found that, when it comes to exercise, adults in Macau spend more time than their counterparts in Hong Kong exercising, averaging 3.9 hours a week compared to 2.8 hours in Hong Kong. The regional average was 3 hours.

For more on the Macau exercise trend, pick up the March edition of Macau Business magazine, on sale now.

71%

Macau respondents exercising regularly says AIA Healthy Living Index

Home stay and family hostel holidays popular in Taiwan

Model hospitality Family-run hostels would offer tourists a more modest, intimate alternative to the big hotel chains

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Only 44 pct of Hong Kongers polled claim to exercise regularly

Corporate HK$2 mln prize pool for Macau Millions The Macau Millions tournament at the PokerStars LIVE Macau poker room in City of Dreams has its finale this weekend.

The event has a HK$2,200 buy-in and a guaranteed prize pool of HK$2 million.

“While many will flock to it, only a few will reach it,” is how the organisers pithily put things.

The 2014 edition had 430 entries at the midway point. After a two-day break, the action resumes tonight at 7pm in the Melco Crown Entertainment Ltd Cotai casino resort.

Alex Chieng has become the first player to make it to Day 2 twice. For his performance, Chieng got a bonus HK$$11,000 payment.

He finished the day with 44,500 so he’ll be entering Day 2 later today with his Day 1A stack of 93,000.

Russia’s Svyatoslav Dvornikov ended the previous session as the chip leader, bagging up 219,500.

This put Dvornikov in third overall, just behind Mikael Blomlie’s 233,000 and way behind Tai Tan’s 364,500.

he government is considering making family-run hostels legal, reports our sister publication Macau Business magazine. Still to be decided is the style of accommodation they would provide, the outlet says.

The Macau Government Tourist Office told the magazine it was trying to come up with a suitable model for such operations. The tourist office expects them to “bestow a travel experience close to local lifestyle and culture”.

On Monday, Business Daily reported that Lynn Jamieson – a leading tourism academic visiting recently from the United States – thinks home stays similar to the pensioni found in Italy might be an option for Macau. But she also pointed out that with such a low employment rate here, people might not be willing to give up a secure job to take a risk in a still-untried segment of the hospitality market – even if it is eventually licensed and approved by the government.

Two important features of family hostels in other tourist markets – and that could help any local product to differentiate itself from the city’s existing hotel accommodation – are their likely location, typically in quieter neighbourhoods away from

the tourist bustle, and the family atmosphere they can offer.

“People aren’t necessarily always up for the giant 6,000-room hotel.

They may like a smaller one that is more like Macau, a residential type of dwelling,” said Ms Jamieson, professor of Recreation, Park and Tourism Studies at Indiana University Bloomington.

Family hostels are not to be confused with so-called “illegal inns” – which are normally found in apartments and that act like hotels but are not licensed for that purpose.

MGTO says last year it sealed 149 premises it suspected were illegally used as tourist accommodation.

The Office says in 2013 it received 550 reports of suspected illegal accommodation of tourists .

Macau has around 28,000 hotel rooms, but about two-thirds of them are in five-star hotels in the large casino resorts. An average fivestar room rate of more than 1,800 patacas (US$225) a night recorded from recent official data appears to price some visitors out of the luxury hotel market.

You can read more about the family hostel concept in the March edition of Macau Business, on sale now.

Journalists wanted We are looking for highly skilled candidates to fill the following positions:

Editor Reporter The roles would involve covering and/or editing – with our existing team – stories about business, economics and politics.

As well as covering the main stories of the day we would expect the successful candidates to have initiative and be able to generate their own story ideas and angles. They should also be able to pursue exclusive stories and investigations.

Requirements Bachelor’s degree holder, preferably in Journalism or English, with an excellent command of the English language; At least 2 years of experience gained at a newspaper and/or magazine for the reporter position, and 5 years of experience for the editor position.

(Those with prior involvement in trade and business publications will have an advantage); Ability to work under pressure and strong sense of responsibility; Excellent organisational skills and exceptional attention to detail; Proofreading skills.

Interested parties should send a CV with full career details, availability and expected salary to: editor@macaubusiness.com All personal data collected are used for recruitment purposes only.

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March 2014 Friday 12, April 19, 2013

Macau Teaching, gaming top choices for university graduates The teaching profession and the casino sector were the top two choices for hundreds of fresh graduates of the University of Macau last year, according to an online survey it conducted. The university added that the banking and hotel industries were tied in third place when it came to first career choices for graduates in the academic year of 2012-13. The employment rate for its own graduates was 82 percent – four percentage points higher than the previous academic year. Its graduates’ median monthly salary reached 13,000 patacas (US$1,625). The university did not specify the size of the sample it used for its survey.

Fujian maid quota undersubscribed Govt might invite a second round of applications: Tam Stephanie Lai

sw.lai@macaubusinessdaily.com

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Quota of Fujian maids allowed under scheme

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he government’s quota for importing domestic helpers from Guangdong has been oversubscribed, while quota for bringing maids from the mainland’s Fujian province hasn’t been used up.

As a result, the government plans to invite a second round of applications from families needing home help, said Francis Tam Pak Yuen, Macau’s Secretary for Economy and Finance on the sidelines of a meeting in Beijing. He didn’t specify whether the rules for the second round would be amended to make the scheme more attractive to would-be employers.

While Guangdong has the highest per capita income of any mainland province, the distribution of wealth is uneven both in terms of employment category and geography. Many inland rural areas remain poor, and the likely source of recruitment for the maids scheme, Fujian, to the northeast, is even poorer in many rural districts.

The other side of the border, the Macau government has given priority to helping families with elders or very young children to recruit ethnic Chinese rather than overseas helpers.

Under the first round of the scheme, the Human Resources

Office received applications from local households interested in hiring domestic workers from mainland China. Most applicants were interested in hiring Guangdong natives – probably reflecting the dominant linguistic and cultural ties to the immediately neighbouring jurisdiction – from where many Macau residents can trace their families or ancestors.

Last year, the central government granted Macau a quota of 300 domestic helpers – 200 from Guangdong province, and 100 from Fujian province.

The application period lasted from December 16 last

year to January 30 this year.

As at Monday of this week, 238 applications by local households for mainland domestic labour quota had been approved said the Human Resources Office.

A total of 202 submissions requested helpers from Guangdong, and the remainder asked for Fujian workers, the bureau added.

“We are now in the review process for the applications, some of which may not be well-qualified enough and drop out,” Secretary Tam said.

“The 300 domestic workers quota may not be used up eventually,” he told, noting that there were

fewer than 100 applications for hiring domestic workers from Fujian.

“In that case, we may start another round of applications for hiring mainland domestic workers,” Mr Tam added.

The secretary also said that the government has limited the application period for hiring mainland maids because it had expected an “enthusiastic” response from the local households.

Given the volume of applications recorded so far, the government may not even need to draw lots to pick the eligible households to hire mainland maids, Mr Tam explained.

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March 12, 2014 Friday April 19, 2013

Macau Brought to you by

HOSPITALITY Familiar figures The overall occupation rate for Macau hotels in January stood at 80.9 percent, about 2.6 percentage points below the corresponding figure on the previous year. This result is at odds with what was usually observed earlier. In previous years, the occupation rate grew or, at least, stood at a similar level, in every successive year.

Compared with the previous month, on the other hand, the drop reached 9 percentage points. This is a very sharp contraction but not an unusual one. When the Lunar New Year falls in February, the figures for January show usually a big decline, compared with December. That was not the case in 2013, when the drop recorded, was just over 3 percentage points. The numbers registered this January represent a sort of reversion to the previous norm. It was the results in 2013 that were outliers, so to speak.

Cotai catches its breath It’s two years until the next of the new casino-resorts open on Cotai. That gives the government some time to build the infrastructure the properties need and gives the gaming companies some time to find the staff they will need Luciana Leitão

Photos by Manuel Cardoso

S Occupation rates in January are typically very close to or above 80 percent for the top categories of hotels. But their trends in the last five years have been somewhat different. Five-star hotels display a slight but noticeable upward trend. In the last two years they had the highest occupation rates among all kinds of hotels, something that did not happen in earlier years. The case of four-star hotels is just the opposite.

They used to have the highest occupation rates, but in the 2012 lost the top spot. In 2013 three-star hotels also overtook them.

The two lower categories, two-star hotels and guesthouses show noticeably lower occupation rates. Their average for January, in the last five years, was about 70 percent and 58 percent, respectively. These figures may also reflect reporting issues, especially in the last case.

J.I.D.

83%

occupation rate for five-star hotels, January

ands Cotai Central was the last new casino-resort to open in Macau – in stages during 2012.

The next new casino-resorts – the second phase of Galaxy Entertainment Group Ltd’s Galaxy Macau and Melco Crown Entertainment Ltd’s Studio City – are not due to open until 2015.

Economist Henry Lei Chun Kwok thinks the three-year hiatus in the opening of new casino-resorts may be good for the economy, as it means growth in the number of gaming tables will slow.

“It provides some time for the government and the gaming industry to review how appropriate current capacity is,” Mr Lei says.

He says the pause is a good opportunity for the government and the casino operators to try to loosen the constraints that inadequate infrastructure and insufficient labour put on the economy, and so prepare for more visitors and a “new round of strong growth”.

By 2015 big infrastructure projects such as the Hong Kong-ZhuhaiMacau Bridge and the Light Rapid Transit elevated railway should be nearing completion.

Mr Lei considers this a good time to invest in Macau because he expects the city to have more visitors and to import more migrant

You will remember.

@ : signature@macaubusiness.com tel : +853 2833 1258

workers to serve them.

Yet nobody knows for certain how the global economy in general and the mainland Chinese economy in particular will fare in the next two years, and the new casino-resorts may turn out to be risky projects.

“If the mainland economy fails to make a soft landing, settling at a steady rate of growth in the next year or two, and instead real GDP growth keeps slowing, it may hit the newly opened developments directly,” Mr Lei says.

First-mover advantage

If we could really diversify and improve what we have to offer, this period would give us a first-mover advantage in face of the challenges posed by neighbouring jurisdictions

The pause in the expansion of the gaming industry’s capacity has not entailed any pause in the growth of the economy. And gaming industry indicators keep breaking records.

“This shows the industry has room for more gamblers, or that the VIP gaming rooms, where business is relatively independent of the size of the casinos, are still the main source of revenue,” Mr Lei says.

But he says the pause may defer the expansion of mass-market gaming, and so unbalance the development of the gaming industry.

An associate professor in the Macao Polytechnic Institute’s Gaming Teaching and Research Centre, Carlos Siu Lam, believes the casino operators

are just taking a breather.

“After experiencing great success, they all have expansion projects and such projects normally take some years to materialise, so it’s not surprising that we have a pause,” Mr Siu says.

He thinks the pause will “do some

welcome

opportunity

Carlos Siu Lam, Macao Polytechnic Institute

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March 2014 Friday 12, April 19, 2013

Macau

good”, giving Macau time to prepare its infrastructure and solve the problem of the shortage of labour.

“If we could really diversify and improve what we have to offer, this period would give us a first-mover advantage in face of the challenges posed by neighbouring jurisdictions,” he says.

Mr Siu believes the attitude of investors will be swayed mainly by external influences.

He says the mainland’s fiscal policy has become a “bit restrictive” in recent years, with a view to discouraging extravagant spending, and that interest rates are tending to rise, perhaps deterring investment.

“The economy may be a bit turbulent,” he says.

This period of pause afforded casino-resort developers a unique opportunity to closely examine the wants and needs of the market Andrew Klebanow, Gaming Market Advisors

once the transport infrastructure has been improved.

“My company, Gaming Market Advisors, predicts that a target of US$90 billion [MOP720 billion] in gaming revenue is not unrealistic by 2020, given the increases in room and game capacity and improvements in transportation infrastructure,” he says.

Newpage Consulting advises the government about gaming. Newpage Consulting’s founder and chairman, David Green, says casino operators and investors needed time to appreciate that Macau has yet to tap the gaming market to the fullest possible extent.

“The government needed time to

Resilient and flexible Gaming Market Advisors principal Andrew Klebanow believes the expansion of the gaming industry’s capacity is pausing by accident rather than design.

But Mr Klebanow thinks the pause will have some benefits.

“This period of pause afforded casino-resort developers a unique opportunity to closely examine the wants and needs of the market and develop unique and dramatically different properties than those built during the first decade of the new millennium,” he says.

He says Wynn Resorts Ltd has obtained more land than it had before, allowing it to plan a bigger casinoresort than it originally envisaged.

Its Wynn Palace, in Cotai, is due to open in the first quarter of 2016 with 2,000 hotel rooms, up to 1,000 slot machines and 500 tables.

Mr Klebanow says Las Vegas Sands Corp went back to relying on its strengths in designing the Parisian Macao. The casino-resort is due to be completed by the end of 2015.

He says the pause gives Galaxy Entertainment “time and opportunity” to learn more about the market. The second phase of the Galaxy Macau will have up to 500 gaming tables.

Also in the pipeline are Melco Crown’s Studio City, with up to 500 tables, and MGM Resorts International’s Cotai casino-resort, due to open in the middle of 2016 with up to 500 tables, 2,500 slot machines and 1,600 hotel rooms.

Business Daily contacted all the casino operators in preparing this article, but only one had any comment to make.

A spokesperson for MGM

Macau said: “The Macau market has demonstrated its resilience and flexibility amid changes in circumstances. With no new property development coming online, it is an opportunity for the market to consolidate, and allows operators to diversify our offerings in line with the Macau government strategy.”

US$90 bln revenue Mr Klebanow does not believe the pause will dull Macau’s competitive edge much, although he thinks some gamblers may be enticed to visit new gaming centres in other places.

“They could go to Phnom Penh and be very pleasantly surprised by the great experience they will get at NagaWorld, particularly after they open their new 1,100-room casinoresort that will complement their existing casino-resort,” he says.

Mr Klebanow thinks the pause here will allow the necessary infrastructure to be built.

“It allows the government to complete work on the light rail system and new Border Gate crossing. It permits enough time for the bridge and road network to Hong Kong to be completed and it allows the highspeed rail to gain traction and increase capacity,” he says.

He says that once the infrastructure is complete, mass-market gamblers – which the new casino-resorts are largely meant for – will find it easy to get to the casinos.

Mr Klebanow sees no threats to the growth of gaming in Macau. He expects growth to accelerate in 2015,

The government needed time to consolidate its policies, and to move from a necessarily reactive position to a more proactive one David Green, Newpage Consulting

consolidate its policies, and to move from a necessarily reactive position to a more proactive one,” he says.

Great run Mr Green says the pause allows the government not only to catch its breath and have the necessary infrastructure built, but also to take measures to ban smoking in casinos, counter problem gambling and encourage investment in industries other than gaming.

“It has also allowed Hengqin Island development to get some attention,” he says.

He says investors have had a “great run” until now and should keep going during the pause.

Mr Green says the only threats to

the gaming companies are the risk of failure to have their casino concessions renewed, a labour policy that curbs the supply of suitable workers and restrictions on the sorts of gaming they can offer.

“I expect these will be addressed during the term of the next administration,” he says.

Mr Green does not believe the pause will give new gaming centres in other places the chance to catch up with or overtake Macau.

He says Taiwan and Japan will probably still have no casinos by the time the new casino-resorts in Cotai open.

“South Korea is taking a long time to get lift-off with new projects.

The Philippines has attracted some investment, but is unlikely to ever attract US operators and integrated resort developers, and Singapore is showing little upside,” he says.

Macau Economic Services remarked that Macau’s economy has grown steadily in recent years and that the annual rate of growth in gross domestic product was 10.5 percent in the first quarter of last year.

Macau Economic Services said in writing that as Macau became a global centre for tourism and leisure, it would enter a “new phase of steady development” after the completion of big projects in 2016 and 2017.

Jams tomorrow The success of the next phase of the development of Cotai seems to depend on the completion by 2015 or 2016 of the infrastructure needed to cope with all the visitors expected at the new casino-resorts there.

But what will happen if the infrastructure is not ready?

Economist Henry Lei Chun Kwok doubts that it will be finished in time.

Mr Lei thinks the roads will become even more congested than they are already.

He thinks that if the Light Rapid Transit (LRT) elevated railway, the Hong Kong-Zhuhai-Macau bridge and the Taipa ferry terminal are unfinished, it will mean a “bottleneck in the development process which would challenge the capacity of the local transportation system”.

Gaming Market Advisors principal Andrew Klebanow says some important infrastructure will be unfinished when the first new casinoresorts open in Cotai.

“While the light rail system will not be operational when the first resort opens up, it will be when the last one opens,” Mr Klebanow says.

He expects the first new casinoresort to open to attract more visitors, perhaps putting the transport infrastructure under strain.

“Taxi queues will be longer. The number of buses on area roadways will increase. Traffic to and from Cotai will be heavier and travel times will increase, but I doubt there will be gridlock,” he says.

The LRT had been due to open in 2015, but Transportation Infrastructure Office director Lei Chan Tong said this year that construction of the first stretch, on Taipa, would be completed only late in 2015 or early in 2016, after which trials would have to be conducted.

The Hong Kong-Zhuhai-Macau bridge across the Pearl River Estuary is due to open, on schedule, in 2016.

The Infrastructure Development Office expects the Pac On Ferry Terminal on Taipa to be completed before the end of June.

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Greater China Hong Kong shares rebound Hong Kong shares rebounded early yesterday, led by some mid-sized bank stocks. It was on expectations that the country’s annual parliamentary session will not unveil more aggressive reforms that could trim margins or restrict their lending. But gains came in lacklustre volumes, suggesting investors remain jittery after an index of large cap stocks listed in the mainland hit a five-year closing low on Monday. Data released after markets shut on Monday showed new yuan loans made by Chinese banks halved in February and liquidity in the economy tightened.

Snack maker Want Want profit rises 24 pct Want Want China Holdings Ltd , China’s top food and beverage maker and distributor, said 2013 net profit jumped nearly a quarter as it spent less on sales and marketing promotions.

Want Want, which makes dairy products, snack foods and rice crackers, said yesterday that net profit for the year ended December was US$687.3 million, up 24 percent from US$553.8 million a year earlier. That beat market expectations of US$651.8 million, according Thomson Reuters Starmine SmartEstimates.

The company, which has a market value of US$18.5 billion, said its revenue rose 14 percent to US$3.82 billion.

Lenovo says China strike is IBM matter Chinese PC maker Lenovo Group Ltd said it was up to IBM to resolve a strike at a China-based factory, as a deal to buy the U.S. company’s server business had yet to be finalised. More than 1,000 workers went on strike last week to protest over the terms of their potential transfer to Lenovo, which said in January it would buy one of the server businesses of IBM for US$2.3 billion. More than 7,500 IBM employees in more than 60 countries were expected to transfer to Lenovo once the deal is completed, Lenovo said.

ZTE in JV for Chinese game console ZTE Corp., China’s second-biggest maker of phone-network equipment, formed a venture with online game developer The9 Ltd. to make a gaming console after the nation lifted a 14-yearban on the devices. ZTE Network Technology (Wuxi) Co. plans to release the Fun Box console this month, Qin Yina, a spokeswoman for Shenzhen- based ZTE said in an e-mailed response to questions yesterday. The Fun Box, powered by Nvidia Corp.’s Tegra 4 chip, will only be sold in China, Qin said. The venture faces competition from makers including Microsoft and Sony.

Record stockpiles pile pressure on iron Chinese steel mills and traders holding iron ore as collateral for financing are rushing to sell to repay loans, traders said, piling more pressure on the steel-making raw material that has lost over a fifth of its value this year. Shanghai steel futures dropped for a fourth day to near record lows yesterday, a day after spot iron ore prices fell the most since 2009 amid mounting signs of an economic slowdown in top consumer China.

Chinese steel mills and traders were seeking to delay delivery of iron ore cargoes, traders said.

Interest rate liberalisation Pricing debt more efficiently would help to curb credit market

C

hina’s central bank governor said yesterday that the country’s deposit rates are likely to liberalised in one to two years. It’s the most explicit timeframe to date for what would be the final step in freeing up banks to set their own interest rates.

The move will let financial markets decide the price of loans, which economists say will go a long way to prevent the wasteful investment funded by artificially cheap credit that has led to a massive buildup in debt.

“Deposit rate liberalisation is on our agenda. Personally I think it’s very likely to be realised within one to two years,” said Zhou Xiaochuan, the head of the People’s Bank of China.

Briefing statement Zhou spoke in a media briefing lasting more than an hour at China’s annual parliament session. He offered few surprises, reiterating a promise to speed up financial reform and to move steadily towards freeing up the yuan on the country’s capital account.

Analysts expect the controls on deposit rates to be lifted gradually.

The current ceiling on deposit rates is 110 percent of the benchmark set by the central bank.

However, Zhou said he expected deposit rates to rise as a result of liberalisation. The central bank already allows banks to set their own lending rates, but there is limited room for them to float lending rates given the controls on deposit rates.

Beijing announced sweeping reforms late last year as it tries to shift the economy away from

a reliance on the investment and exports that have fuelled double-digit expansion for three decades in favor of consumption and services, which it hopes will generate more sustainable long-term growth.

Analysts said Zhou’s remarks showed China’s reform plans are on track. “It’s in line with expectations,” said Ting Lu of Bank of AmericaMerrill Lynch in Hong Kong.

The central bank is widely expected to introduce a deposit insurance scheme before liberalising deposit rates to protect savers in case a freed-

110%

of C-bank benchmark: current deposit rate ceiling

CSI 300 rebounds from 5-year Plunged yesterday to the lowest level since February 2009

C

hina’s CSI 300 Index rebounded from the lowest level in five years as the yuan halted a two-day slide and moneymarket rates declined. Consumerstaple producers and property developers led the advance.

China Vanke Co. was a pace setter in gains for real estate developers.

China Securities Journal reported China Vanke’s president bought one million shares in the secondary market. Inner Mongolia Yili Industry Group Co. rose to a one-month high after UBS AG said its profit could jump. Liquor maker Kweichow Moutai Co. surged 3.3 percent.

The CSI 300 climbed 0.5 percent to 2,108.66 at the close, after plunging yesterday to the lowest level since February 2009.

The Shanghai Composite Index rose 0.1 percent to 2,001.16 after changing directions at least 11 times. The gauge’s 50-day volatility hit the highest level since December yesterday, when stocks tumbled after a report showed exports tumbled 18 percent. Data yesterday also showed aggregate financing and new local- currency loans both trailed economists’ estimates.

“The market overreacted yesterday after the bad news over the weekend on the economic data so there’s some bargain hunting,” said

Zhang Yanbing, analyst at Zheshang Securities Co. in Shanghai. “However, it’s a fact that the economic data aren’t good and the data to come are unlikely to be decent too so this rebound is temporary.”

the lowest level since at least 2007, according to data compiled by Bloomberg. Yesterday’s tumble was the biggest since a cash crunch in China’s interbank market dragged down the index by 6.3 percent on June 24. The gauge slipped another 0.5 percent in the following three days, then rallied as much as 16 percent through mid-September.

Consumer staples

The market overreacted yesterday after the bad news over the weekend on the economic data…

Zhang Yanbing, Zheshang Securities Co.

The CSI 300 has dropped 9.5 percent this year, pushing down valuations to 7.9 times projected 12-month earnings, approaching

A gauge of consumer-staples producers in the CSI 300 rose 2.2 percent, the most among the 10 industry groups. Inner Mongolia Yili added 0.7 percent to 36.37 yuan after UBS analyst Linda Zhao said Yili may post “significantly” higher profit in 2014, particularly in the first half. Bright Dairy & Food Co. increased 2.5 percent to 19.13 yuan.

Kweichow Moutai, the biggest maker of baijiu liquor, rose 3.3 percent to 162.18 yuan. Wuliangye Yibin Co., the second largest, jumped 7.4 percent to 16.59 yuan.

A measure of property shares in the Shanghai index advanced 1.2 percent, the most among the five industry groups. China Vanke, the biggest developer, advanced 4.9 percent to 7.50 yuan. President Yu Liang bought 1 million shares on the secondary market yesterday,

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Greater China

in 2 years

Audi to pass half million vehicles milestone

excesses think some experts People’s Bank of China

up market leads to major turbulence for smaller banks.

HSBC analysts said they expected the insurance scheme to be introduced “in the coming months”.

Much of China’s economic expansion in recent years was fuelled by a rapid rise in debt levels, stirring concerns that China is inflating a credit bubble that may destabilise its economy as growth cools.

A Thomson Reuters analysis of 945 listed medium and large non-financial firms showed total debt soared by more than 260 percent, from 1.82

trillion yuan (US$298.4 billion) to 4.74 trillion yuan (US$777.3 billion), between December 2008 and September 2013.

Standard & Poor’s estimated outstanding bank loans and bond debt among non-financial companies in China reached about US$12 trillion at the end of 2013, the equivalent of more than 120 percent of GDP. On Friday, China recorded its first domestic bond default when lossmaking solar equipment producer Chaori Solar missed an interest payment, setting a landmark for market discipline in the world’s second-largest economy.

However, Shang Fulin, the head of China’s bank regulator, played down the debt risks.

“China’s banks have been growing with high speed in recent years, which indeed brings some risks. But the risks are generally under control,” Shang said.

“Our provisions and capital for bad assets are sufficient.”

State’s role China also flagged more competition for the country’s banks.

Shang said the government will allow five privately owned banks to be set up in the wealthier regions of Tianjin, Shanghai, Zhejiang and Guangdong to support cash-starved small firms.

E-commerce giants Alibaba Group Holding and Tencent Holdings Ltd are among the companies with approval to take part in the pilots, the Communist Party’s official newspaper, the People’s Daily, reported.

Reuters

The company will also introduce an electric version of the R8 sports car

A

udi’s chief executive Rupert Stadler expects the firm’s 2014 revenue to rise slightly. He forecast registrations in China, Audi’s biggest market, would exceed 500,000 vehicles for the first time. “We will increase deliveries in all regions of the world, including Europe,” he said in a previewed speech due to be delivered yesterday at the marque’s headquarters in Ingolstadt, Germany.

Audi AG plans to introduce 17 new or revamped models in 2014 and will move forward with the production an electric version of the R8 sports car to try and gain momentum on rival Bayerische Motoren Werke AG – more commonly known as BMW. Audi, the biggest earnings contributor of Volkswagen AG, Europe’s largest automaker, will invest 22 billion euros (US$30.4 billion) in the next five years, with 70 percent going toward new products and technology.

Most of the rest will be spent on expanding global manufacturing capacity, including new factories in Brazil and Mexico.

Operating profit in 2013 fell 6.2 percent to 5.03 billion euros (US$6.97 billion). Revenue gained 2.3 percent to 49.9 billion euros on higher vehicle sales. Operating profit as a percentage of sales was 10.1 percent, above its long-term target range of between 8 percent and 10 percent.

BMW retained the lead in global luxury-car sales for the ninth straight year in 2013 even as Audi and third-

ranked Mercedes-Benz stepped up efforts to overtake their Munich-based rival by the end of the decade. The world’s three biggest luxury-car makers posted fresh sales records last year and expect demand to rise further in 2014 fuelled by growth in China and North America.

6.2%

Fall in global operating profit in 2013

Audi introduced a fresh version of the A3 compact last year that helped lift sales 8.3 percent to 1.58 million cars, and is rolling out the model’s sedan variant in the U.S. and China this year. Wolfsburg-based VW reported last month that fourth quarter profit rose 18 percent to 3.11 billion euros as record sales at Audi and Porsche offset spending on developing new models and expanding production.

Bloomberg News

Trial run for five wholly private banks

low

Alibaba Group Holding Ltd and China Wanxiang Holding Co. will apply jointly for a licence the China Securities Journal said, citing the company’s board secretary.

Poly Real Estate Group Co., the second largest, rose 4.4 percent to 6.87 yuan.

Money rates The yuan gained 0.1 percent to 6.1356 per dollar, after declining 0.33 percent in the previous two days, according to China Foreign Exchange Trade System prices.

A stronger yuan helps Chinese developers borrowing in U.S. dollars.

The seven-day repurchase rate, a gauge of funding availability in the banking system, fell for a fourth day, even as the central bank drained 100 billion yuan (US$16.3 billion) via 28-day repurchase agreements, according to a trader at a primary dealer required to bid at the auctions.

That’s the biggest issuance of such contracts since June 2011, data compiled by Bloomberg show.

“Money-market rates are actually near their bottom,” said Becky Liu, a senior rates strategist at Standard Chartered in Hong Kong. Policy makers “still want to mop up excess liquidity at the moment but they don’t want to create too much volatility in the money market,” she said.

Bloomberg News

C

hinese regulators approved a trial programme to establish five privately owned banks as the government seeks to ease restrictions on the state-controlled banking industry.

The China Banking Regulatory Commission will allow the banks to be set up in the cities of Shanghai and Tianjin and in Guangdong and Zhejiang provinces, Chairman Shang Fulin said at a briefing in Beijing yesterday. Alibaba Group Holding Ltd. and China Wanxiang Holding Co. will apply jointly for a licence, Alibaba said in an e-mailed statement.

“While private banks are subject to the same regulation as other banks, they should have also their own characteristics, especially focusing on serving small and medium-sized companies,” Shang said. He didn’t

name any companies specifically at the briefing.

President Xi Jinping is pushing changes that may be the most sweeping since Deng Xiaoping’s liberalisation in 1978 to loosen government controls in everything from energy pricing to banking. The government pledged March 5 to introduce a deposit insurance system and allow banks more freedom to set interest rates this year.

The banking regulator said in January it will allow a batch of threeto-five banks, completely funded by private investment, to operate this year under a trial as part of the country’s financial reform. That could help companies like Alibaba further erode what former Premier Wen Jiabao called the “monopoly” of big lenders.

Private investment accounted for

Alibaba’s corporate headquarters in Hangzhou

11-12% Private investment now in China’s banking sector

about 11 percent to 12 percent of the Chinese banking industry’s total capital, with the rest controlled by the state, Xinhua News Agency reported on March 5, citing Yang Kaisheng, former president of Industrial & Commercial Bank of China Ltd. Privately owned banks must have adequate net capital, a specific business strategy and a mechanism to prevent risks from spreading and to protect depositors’ interests, Shang said. They also need “living wills” designed to ensure an orderly winddown if they go bankrupt, the CBRC chairman said.

The banks will be established one by one after meeting qualifications and the CBRC will prevent them from becoming financing tools for their shareholders, according to Shang.

Bloomberg News

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Greater China It’s really just sloppiness, frankly, when this happens U.S. defence official

Chinese materials used in U.S. B-1 bomber, F-16 Jets Titanium mined in China might also be in a new missile U.S. is developing

A

fter discovering China-made components in the F-35 fighter jet, a Pentagon investigation has uncovered Chinese materials in other major U.S. weaponry, including Boeing Co’s B-1B bomber and certain Lockheed Martin Corp F-16 fighters, the U.S. Defense Department said.

Titanium mined in China may also have been used to build part of a new Standard Missile-3 IIA being developed jointly by Raytheon Co and Japan, said a senior U.S. defence official, who said the incidents raised fresh concerns about lax controls by U.S. contractors.

U.S. law bans weapons makers from using raw materials from China and a number of other countries, amid concerns that reliance on foreign suppliers could leave the U.S. military vulnerable in some future conflict.

The Pentagon investigated the incidents in 2012 and 2013, and granted the waivers after concluding the non-compliant materials posed no risk, Defense Department spokeswoman Maureen Schumann told Reuters.

Frank Kendall, the Pentagon’s

chief arms buyer, issued five such waivers after a change in U.S. law in 2009 expanded the restrictions on specialty metals to include highperformance magnets, Schumann said.

The change affected a radar system built by Northrop Grumman Corp for the F-35, which uses a number of such magnets.

Reuters reported in January that the Pentagon permitted Lockheed to use Chinese magnets to keep the US$392 billion F-35 programme on track, even as U.S. officials were voicing concern about China’s espionage and military build up.

The other, previously undisclosed waivers covered the B-1 bomber, F-16 fighter jets for Egypt equipped with a specific radar system, and the SM-3 IIA missile, Schumann said in response to a query from Reuters.

The U.S. Government Accountability Office is expected to brief Congress in April on its comprehensive audit of the issue of Chinese specialty metals on U.S. weapons systems.

China is the largest supplier of

specialty metals and materials needed to build magnets that work even at very high temperatures, although congressional aides say progress has been made on developing alternate sources in the United States.

Kendall initiated a broader Pentagon review after the initial F-35 issue was reported in late 2012, but ultimately granted the waivers because there was no risk involved with the parts, said the senior defence official.

In some cases, it would have been expensive to take apart complex equipment to swap out magnets potentially made with Chinese rare earths; in others, the parts will be swapped out during future routine maintenance.

“You don’t break a multimillion dollar radar to replace twenty dollars’ worth of magnets. There was no technical risk,” said the official, who added that the issue involved only raw materials. No weapons systems specifications were sent to China, the official said.

The F-35 waivers included a range of equipment, including US$2 magnets

used in radars on 115 F-35 jets. The F-16 and B-1B bomber waivers also involved magnets made from Chinese raw stock, the official said.

A separate issue involving thermal sensors built for the F-35 by a Chinese subsidiary of Honeywell International Inc. did not require a formal waiver because it involved a unit of a U.S. company, the official said. Honeywell now builds that part in Michigan.

Honeywell acknowledged in January that the U.S. Justice Department was investigating import and export procedures at the company after the incident.

Defence officials say the incidents underscore the need for greater vigilance by arms makers about their supply chain to ensure they comply with U.S. laws.

“It’s really just sloppiness, frankly, when this happens,” said the defence official. “It’s not enough to say, ‘I’m pretty sure it didn’t come from China.’

That doesn’t work for us. We’re looking for documents.”

Chaori Solar risks delisting Follows third straight annual loss for the energy equipment maker

S

olar equipment producer Chaori Solar, which last week recorded China’s first domestic bond default, said yesterday it could be delisted from the Shenzhen stock exchange after posting a preliminary loss for a third year in a row.

China’s securities law states that a company has to suspend trading of its shares after making a net loss for three consecutive years and will be

de-listed if it fails to make a profit in the following year.

This means Shanghai Chaori Solar Energy Science and Technology Co Ltd could be de-listed if it fails to make a profit in 2014.

China’s solar industry has suffered from severe overcapacity and falling prices for photovoltaic cells.

Chaori Solar recorded a default last Friday, when it missed an interest payment

Reuters

on a bond. It warned that it would only pay out less than five percent of the 89 million yuan (US$14.5 million) in interest due on 1 billion yuan worth of bonds issued in 2012.

The company suspended trading in its shares on Feb. 19.

The group, which had 6.5 billion yuan in liabilities outstanding at end-September, reported a 2013 preliminary net loss of 1.33 billion yuan ($216.67 million), it said in a filing released on the Shenzhen exchange yesterday.

The company’s Chaori-11 bond also faces delisting risks, it said in the statement.

Chaori could not be reached for further comment.

Reuters

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S. Korea trade deal with Canada Good news for latter’s beef cattle farmers says official

C

anada and South Korea concluded negotiations on a freetrade deal that will give more market access for Canadian beef producers and phase out tariffs on cars made by Korean companies such as Hyundai Motor Co. The agreement will boost Canadian exports to South Korea by one-third, adding an annual C$1.7 billion (US$1.5 billion) to Canada’s economic output once the deal is fully implemented, said a Canadian official familiar with the contents of the agreement who spoke to reporters in Seoul, asking not to be named as he’s not authorised to speak publicly. Korean carmakers will gain competitiveness in Canada over Japanese and European rivals, South Korea’s deputy trade minister Choi Kyong Lim said.

97.8% Of Canadian tariffs on Korean goods will be lifted

Canadian Prime Minister Stephen Harper, who met South Korean President Park Geun Hye in Seoul yesterday, has stressed the need to diversify his country’s exports from the U.S., which bought 76 percent of Canada’s foreign shipments last year.

Companies including Ford Motor Co. of Canada Ltd. oppose the deal on the grounds that it unfairly protects South Korea’s automakers.

“What we’re doing here is allowing other Canadian companies and other

Canadian sectors to have the same access that Ford already has,” Harper told reporters in Seoul. “Ford supported the Korea-US free trade agreement, thereby Ford has access through the U.S. to the Korean market.”

Negotiations between Canada and South Korea started in 2005 and reached an impasse in 2008. In 2011, the European Union implemented its deal with South Korea, while the U.S. brought its own version into force in 2012.

The agreement will eventually phase out 98.2 percent of South Korean tariffs and 97.8 percent of Canadian duties, the Canadian government said in documents released to reporters. South Korean duties now average about 13.3 percent, while Canadian

tariffs average 4.3 percent, according to the documents.

Disagreement over access for Canadian beef and pork, as well as South Korean cars, represented the biggest stumbling blocks to the deal, the Canadian official said.

Under the agreement, Canada will phase out over three years its 6.1 percent tariff on imports of vehicles produced by automakers such as Hyundai and Kia Motors Corp. Those provisions were criticised by Canadian labour leaders.

‘Undermining’ jobs “We cannot stand by a deal that secures a one-way flow of Korean auto imports into the Canadian market, undermining the jobs and industry on which so many Canadians depend, while

precious little is done to strengthen our imports to Korea,” said Unifor national President Jerry Dias, in an e-mailed statement.

Unifor represents workers at the largest automakers in Canada.

Dias and Ontario economic development minister Eric Hoskins both said the agreement should have included the same “snap- back” provision included in the U.S.-Korea pact, which allows the U.S. to re-establish tariffs if South Korea introduces non- tariff barriers on Canadian imports.

While Hoskins said in a statement he welcomes moves to open markets for Canadian farmers, Ontario “remains very concerned regarding the potential for serious negative impacts this agreement could have

on Ontario’s auto sector.”

South Korea will eliminate its duties on Canadian fresh, chilled or frozen beef over 15 years, and pork in the same categories over as many as 13 years. Canadian agriculture industries such as dairy, which are controlled through a policy known as supply management, are exempted from the deal, according to the official.

“I can understand how there might be voices of concern regarding potential injury caused to the agricultural and livestock industries,” South Korean President Park told reporters in Seoul. “We have done our best to fully reflect the sensitivities of our position in those regards and have put in certain measures to cushion the blow.”

Bloomberg News

India to slash Iran oil imports To align with international community’s deal over Tehran’s nuclear programme

I

ndia has to cut its Iranian oil imports by nearly two-thirds from the first quarter after the United States asked it to hold the shipments at end-2013 levels, in keeping with the nuclear deal easing sanctions on Tehran, Indian government sources said.

India, with the increases already made in the January-March loading plans from Iran, has to cut its purchases of the crude to about 110,000 barrels per day (bpd) to drop its intake average to 195,000 bpd for the six months to July 20.

Under the Nov. 24 agreement between Iran and six world powers, the OPEC member was to hold oil exports at “current volumes” of

about 1 million bpd, and a message delivered by a top U.S. energy policy official to Indian ministries in February was the first clear sign of low tolerance for any increases.

Since the interim deal was signed, purchases of Iranian oil by its top four buyers - China, India, Japan and South Korea - have been creeping up and together they have taken 1.25 million barrels per day (bpd) in January against a daily average of about 935,900 bpd for all of 2013.

“It is a fact that they (the United States) have asked us that Iran’s exports to India should not exceed 195,000 bpd between January to July and we have said that we’ll take care of that,” said one of the

195,000 bpd Imports from Jan 20 to July 20

government sources, all of whom requested anonymity because of the sensitivity of the issue.

The U.S. official could not be reached for comment.

Tehran and Western world powers are working through a landmark deal that runs from Jan. 20 to July 20 that requires Iran to curb its nuclear programme in return for a calibrated release of US$4.2 billion it is owed in back payments for its oil.

Tough international sanctions over the past two years have cut Iran’s oil exports in half, measures that starved it of hard currency and helped lead it to the nuclear deal last November.

Reuters

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Asia

Asian stocks pare gains as bank of Japan keeps policy unchanged

A

sian stocks pared gains as the Bank of Japan kept monetary policy unchanged and investors weighed data showing China’s credit growth trailed estimates.

Taiheiyo Cement Corp., Japan’s biggest maker of the building material, climbed 4.7 percent on a report the company’s U.S. unit will post its first profit in six years. Vanguard International Semiconductor Corp. rose 6.3 percent in Taipei after sales increased last month. Yamada Denki Co. added 2.1 percent after JPMorgan Chase & Co. raised its rating on the electronics retailer.

Sihuan Pharmaceutical Holdings Group Ltd. jumped 5.7 percent in Hong Kong after the drugmaker reported increased full-year earnings and proposed a bonus issue.

The MSCI Asia Pacific Index gained 0.3 percent to 138.01 as of 1.05pm in Tokyo after increasing as much 0.5 percent. The gauge fell from a six-year high yesterday. About two shares rose for each that fell today.

“The BOJ will have to do more to support the economy,” said Tim Schroeders, a money manager who helps oversee about US$1 billion in equities at Pengana Capital Ltd in Melbourne. “Any sustainable improvement in the Japanese economy needs to be tackled with a combination of monetary easing and structural reforms.”

Japan’s Topix index climbed 0.2 percent. The BOJ kept its pledge to expand the monetary base at a pace of 60 trillion yen (US$581 billion) to 70 trillion yen per year, the central bank said in a statement, in line with all but one of 34 economists surveyed

by Bloomberg News.

China’s Shanghai Composite Index advanced 0.3 percent, while Hong Kong’s Hang Seng Index increased 0.3

News. Chinese exports slid the most since 2009 last month, according to government data released over the weekend.

“There’s concern China’s 7.5 percent growth target is going to be challenging when you see credit growth and exports declining,” Toby Lawson, head of futures, options and cash equities trading for Asia Pacific at Newedge Group SA in Sydney, said by phone.

Liberalising Rates

percent. South Korea’s Kospi Index rose 0.1 percent. Taiwan’s Taiex index gained 0.3 percent. Australia’s S&P/ ASX 200 Index added 0.2 percent, while New Zealand’s NZX 50 Index fell 0.3 percent.

China credit A report yesterday showed aggregate financing in China dropped to 938.7 billion yuan (US$153 billion) last month amid a crackdown on shadow lending, down from January’s record 2.58 trillion yuan and less than the 1.31 trillion yuan median estimate of analysts surveyed by Bloomberg

60 trln yen Minimum growth of monetary base promised by Bank of Japan

Central Bank Governor Zhou Xiaochuan said today that China’s deposit rates will be liberalised in one to two years, suggesting the government could move faster than some analysts forecast, Zhou commented at a press briefing in Beijing as part of sessions of the annual meeting of the National People’s Congress. He also said that interest rates will initially rise as controls are removed.

The MSCI Asia Pacific Index increased 5.7 percent through yesterday from this year’s low on Feb. 4. The gauge traded at 13 times the estimated earnings of its constituent companies, compared with 16 for the Standard & Poor’s 500 Index and 14.4 for the Stoxx Europe 600 Index, according to data compiled

by Bloomberg.

Futures on the S&P 500 were little changed yesterday. The U.S. benchmark index fell 0.1 percent yesterday, retreating from a record high.

Ukraine began military drills as Russian forces tightened their hold on the Crimean peninsula and the Foreign Ministry in Moscow warned of “lawlessness” in the former Soviet Republic’s eastern provinces.

Bloomberg News

S. Korea ups stakes on data privacy Follows major breach of customer privacy by some financial firms last year

S

outh Korea’s financial regulator said future leaks of customer data by financial institutions will be punished with fines of up to three percent of total annual sales. Customers will also be given the right to order the firms to erase their personal information, according to the Korea Herald newspaper.

Despite these new regulations, however, experts and civic groups continued to express dissatisfaction, claiming that the financial authorities’ plan lacked effective penalties and compensation methods.

The Financial Services Commission on Monday announced

a comprehensive set of measures to protect personal information, as a follow-up of a draft announced in January. That came shortly after a massive leak of customer data involving some local credit card companies was discovered.

According to the updated regulations, financial companies found liable for the illicit circulation of customer data will be handed a punitive fine amounting to 3 percent of their total annual sales, with no ceiling on the actual amount.

Previously, the fines had been set at 1 percent.

They will also be banned from sharing clients’ data with their

affiliates and will be required to delete the data within three months once the transactions are terminated, officials said.

Customers, on the other hand, will be granted a wider range of authority regarding the management of their personal information.

Resident registration numbers will be required only for first-time registration and in an encrypted form.

Clients may also demand that the financial firms either step up the protection of their personal data or delete it altogether.

Financial operators that do not abide by these rules may face a fine of 50 million won (US$46,870)

or a business suspension of up to six months.

“The government will improve the personal information management system from the customers’ perspective,” said Finance Minister and Economic Vice Minister Hyun Oh-seok.

Hyun also pledged to come up with a more fundamental and comprehensive protection plan within the first half of the year, suggesting that the regulations will reach beyond the financial sector.

Despite these incoming measures, however, the dissatisfied public seems to consider the government’s measures lax and repetitive says the Herald.

editorial council Paulo A. Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com CLOSING editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai, Pierre-François Metayer, Cynthia Wong EDITOR AT LARGE Alex Lee Brands & Trends Raquel Dias Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, José Carlos Matias, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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Japan ‘can afford’ 5 point corporate tax cut Move would put Japan in line with rates in major European markets

Samsung pays up on price-fixing claim

J

apan can afford to cut corporate taxes by an initial 5 percentage points, said a government tax panel member. He called on business leaders to moderate demands for a bigger reduction.

“It’s impossible to bring it down by 10 points at once,” Takero Doi, an economics professor at Keio University, said in an interview in Tokyo last week. The government could decide to include plans to cut the corporate tax in its growth strategy due to be compiled in June, Doi said.

Investors are watching the speed and scale of efforts to reshape the Japanese economy - the so-called “third arrow” of Abenomics, after the unleashing of fiscal and monetary stimulus. Doi’s assessment of what is feasible contrasts with private sector members of a government economic council who have called for swift consideration of a 10-point cut.

“The 10-point figure has become very symbolic, and there is a risk that a smaller cut could disappoint markets,” said Sadakazu Osaki, head of research at Nomura Research Institute Ltd. in Tokyo. “However, the kind of measures accompanying the cut are more important than the number itself.”

Prime Minister Shinzo Abe said in January the government would alter corporate taxes to make Japan more internationally competitive and encourage firms to make investments and raise wages.

International levels “If industry isn’t too ambitious in its goal for a cut and can compromise on the broader tax base, an agreement is possible by June,” said Doi, a member of a government corporate tax advisory group that meets tomorrow for the first time. “Revenues can be found for a cut of 5 percentage points to a level similar to that in Europe.”

Japan’s levy on profits will be

Samsung SDI Co. agreed to pay US$33 million to settle allegations that it conspired with other makers of picture tubes used in televisions and computers to fix prices and overcharge buyers, lawyers for purchasers of the products said. The accord is the largest of five settlements worth a total of US$81 million reached in price-fixing lawsuits filed in 2007 claiming manufacturers conspired to raise prices for cathode-ray tubes and products containing the tubes starting in 1995, attorneys said yesterday in a filing in federal court in San Francisco.

Japanese Prime Minister Shinzo Abe

about 35 percent from April following the end of a surcharge for disaster relief. The rate - the second highest after the U.S. among Organization for Economic Cooperation and Development members - compares with Singapore’s 17 percent and about 30 percent in Germany.

The debate is complicated by a system that provides tax breaks to various parties and the difficulty of finding alternative revenues. Doi said there are two ways of broadening the tax base that companies may accept.

One is to tighten restrictions on carrying over losses to reduce future taxable income - a scheme that companies can currently use for up to nine years. The other is to calculate depreciation costs evenly each year, he said.

Aso’s concern Finance Minister Taro Aso has questioned the effectiveness of lowering the corporate tax rate, and has said a 10-point cut would cause

an annual loss of about 5 trillion yen (US$48 billion) in tax revenue.

Doi said the debate isn’t about alleviating the Ministry of Finance’s concern about finding alternative revenue sources.

The Topix index of stocks is down 6 percent this year after a gain of 51 percent in 2013 as investors assess the economy’s prospects ahead of a sales tax increase in April that will dampen consumption and is forecast to trigger a one-quarter contraction.

Nomura Securities Co. said last year a corporate tax cut of 10 points during the fiscal year starting April would offset most of the negative effects on the economy from raising the sales levy in two stages to 10 percent in 2015 from 5 percent. At the same time, it would damage government efforts to tackle a ballooning national debt, making a later reduction preferable, Nomura said.

The International Monetary Fund predicts Japan’s public debt will amount to 242 percent of gross domestic product at the end of 2014.

Bloomberg News

EU, Vietnam in free trade agreement Talks began in 2012 – deal likely ready by September

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his free trade deal predicates a main improvement in the Vietnamese economy, experts said at a seminar in Ho Chi Minh City.

Vietnam and its largest importer and investor, the European Union, began negotiations for a comprehensive free trade agreement in June 2012, and the deal is expected to be concluded in September.

Truong Dinh Tuyen, former trade minister and now the key EUMUTRAP (European Trade Policy and Investment Support Project]) expert, said that under the FTA, WTO commitments on trade in goods and services would be strengthened.

Areas not touched by WTO commitments, like investments, government procurement, stateowned enterprises and competition policy, sustainable development, and renewable energy would be

affected by the FTA. Claudio Dordi, technical assistance team leader of EU-MUTRAP, said when the agreement takes effect tariff reductions alone would increase Vietnam’s exports to the EU by 30 to 40 percent.

Textiles and clothing, footwear, and processed foods will be the sectors most likely to benefit from the agreement, a report released by the EU-MUTRAP said, adding that the extent of expansion of production capacity would determine whether the increase in exports would be significant.

Pham Thi Lan Huong, another EU-MUTRAP expert, said Vietnam should increase imports of machinery and equipment from the EU since they would become cheaper thanks to the imminent tariff cuts and offer high technology.

The agreement would help services expand significantly while other trade related areas currently under negotiation, such as procurement, customs, and trade facilitation are expected to yield substantial welfare gains and lead to an improved business climate, according to EUMUTRAP experts.

They claimed that around 95,700 people are expected to climb out of poverty by 2020 due to the FTA, with the rural population benefiting the most, as exports of agricultural products to the EU rise and EU investments generate more jobs.

Tuyen said the report fails to fully analyse the impacts of the Trans Pacific Partnership (TPP) of which Vietnam is a member and the tremendous and multidimensional impacts of the EU-VN FTA on the TPP.

Vietnam coffee farmers selling as prices rise Coffee farmers in Vietnam, the world’s largest producer of the robusta variety used to make instant drinks, sold 55 percent of their 2013-14 crop as local and futures prices rose, according to Volcafe Ltd. Vietnamese coffee prices gained 18 percent in the local market this year as futures advanced and growers initially held back supplies, slowing exports, data from the Daklak Trade & Tourism Center on Bloomberg showed.

Farmers in the Southeast Asian nation had sold 35 percent to 40 percent of the crop by Feb. 21, down from 53 percent a year earlier.

Japan nuclear industry wants to restart plants The cost of restarting Japan’s nuclear power plants is US$12.3 billion and counting. That’s the amount power companies have committed so far on thousands of tons of reinforced concrete and steel, armies of workers, tsunami walls and seismic tests. It’s to meet tougher safety standards for the remaining 48 reactors on coastlines throughout earthquake-prone Japan. And to convince regulators the defences will withstand a quake and tsunami on a scale of that shich struck the Fukushima area three years ago yesterday, causing one of history’s worst civil nuclear disasters and shutting down the nation’s atomic capacity.

Hyundai to have battery car by 2016 Hyundai Motor Co plans to start selling its first battery-powered electric vehicle (EV) in 2016 as South Korea’s champion of fuel-cell cars hedges its bets in next-generation green technology.

Hyundai has leant toward engines, which turn hydrogen into electricity in response to stricter emissions regulations in markets such as the United States. Research and development partner Kia Motors Corp has focused on rechargeable batteries. But the division of labour is blurring at a time when the number of battery-powered EVs is on the rise.

Thai central bank cuts key rate Thai policymakers will cut the country’s benchmark interest rate today to help the economy cope with the damage from months of political unrest, according to a majority of economists polled by Reuters. But the majority is a slim one, reflecting uncertainty over how the Bank of Thailand’s monetary policy committee will act at a time busy Bangkok intersections are no longer blocked by protesters. Eleven of 19 economists polled expect the committee to trim the one-day repurchase rate by a quarter of a point to 2.0 percent to shore up growth.

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International

Ukraine neighbours glad Stem cell to be in NATO scientist disowns study Ex-Warsaw Pact allies have no regrets about turning westward Emmanuel Angleys

It hinted at revolution in growing transplant tissue in the lab

A

co-author of a Japanese study that promised a revolutionary way to create stem cells has called for the headline-grabbing research to be retracted over claims its data was faulty.

The findings, published by Japanese researcher Haruko Obokata and US-based scientists in the January edition of British journal Nature, outlined a simple and lowtech approach in the quest to grow transplant tissue in the lab.

But it has faced hard questions as the Japanese research institute that sponsored the study launched a probe last month over the credibility of data used to reach the explosive findings.

At issue are allegations that researchers used erroneous image data for the high-profile Nature article.

The Japan-based Riken Institute, which could not be immediately reached yesterday, had earlier said it was standing by the results for the time being.

Teruhiko Wakayama, a Yamanashi University professor who co-authored the article, said the team’s research should be retracted.

“It’s hard to believe the findings anymore after so many mistakes in the data,” he told broadcaster Nippon Television late on Monday.

Nature said it was launching its own investigation.

“Issues relating to this paper have been brought to Nature’s attention and we are conducting an on-going investigation,” the journal said in an e-mailed statement.

“We have no further comment at this stage.”

However, Hitoshi Niwa, who also contributed to the article, stood by the results despite “minor mistakes” in the data, Japanese media reported.

Another co-author of the study, Charles Vacanti, a tissue engineer at Harvard Medical School and Brigham and Women’s Hospital in Boston, told the Wall Street Journal: “Based on the information I have, I see no reason why these papers should be retracted.

“It would be very sad to have such an important paper retracted as a result of peer pressure, when indeed the data and conclusions are honest and valid,” he said.

F

ifteen years have passed since the Czech Republic, Hungary and Poland joined the NATO military alliance, a decision the exSoviet satellites now see as fortuitous given today’s Ukraine standoff between Russia and the West.

“NATO is the safest alliance Poland ever joined,” Polish Prime Minister Donald Tusk said on Monday, hours before NATO announced it was deploying reconnaissance aircraft in his country and Romania as part of efforts to monitor the crisis in neighbouring Ukraine.

NATO’s 1990s overture to the East marked the beginning of the alliance’s enlargement to former members of the now-defunct Sovietled Warsaw Pact.

After a decade of tough negotiations, the Czech Republic and Ukraine’s neighbours Hungary and Poland joined the alliance on March 12, 1999.

Tide turned This paved the way for a host of other ex-communist Central European states – Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia and Slovenia – to follow suit in 2004, thus erasing the divisions of the Cold War. “If Poland weren’t in NATO, then the Baltic states (Estonia, Latvia and Lithuania) certainly wouldn’t be in it either,” former Polish president Aleksander Kwasniewski said on Sunday.

“There was a kind of security vacuum in this part of the world, which could have been filled by others,” he said, adding that

without NATO membership the Ukrainian conflict would pose “an extremely serious threat” for Poland and the Baltics.

“But today we’re under the NATO umbrella and can sleep more soundly.”

Sixty-two percent of Poles say they are happy with NATO membership, while only four percent disapprove, according to a February poll from the CBOS institute.

The Ukraine crisis has raised the spectre of the Cold War, with the leaders of Poland, the Czech Republic, Hungary and Slovakia comparing Russia’s actions in Ukraine to Soviet crackdowns at home during that era.

NATO also held rare emergency talks after Poland requested consultations under Article 4 of the alliance treaty, which any member can do when they believe their territorial integrity, political independence or security is threatened.

To reassure its eastern European NATO allies, the United States stepped up a joint training exercise with Poland and strengthened the alliance’s air patrols over the Baltic states.

A dozen F-16 fighter jets and 300 US service personnel will descend on Poland by Thursday to take part in the exercise, originally planned to be smaller but increased and pushed forward because of the “tense political situation” in Ukraine, Polish defence ministry spokesman Jacek Sonta told AFP. While Russian President Vladimir Putin says the breakaway Crimea peninsula has the right to join his

country, Ukraine has sought US help to end Moscow’s “aggression” in the strategic region, where it has effectively seized control.

Washington, along with London and Moscow, pledged to respect Ukraine’s territorial integrity in a 1994 agreement under which the ex-Soviet republic agreed to give up its nuclear weapons.

“NATO today is no longer the same organisation that fought the USSR,” said security expert and former Czech military intelligence chief Andor Sandor.

“It’s no longer the alliance that we joined 15 years ago, but I continue to think it’s in our best interest security-wise.

“Membership allowed our army to learn many things. We’ve met the Western standard in a lot of ways, and today many soldiers have completed missions, trained, held positions,” he told AFP.

Happy Hungary Hungary is likewise satisfied with its decision to join, according to defence expert Istvan Balogh from the Hungarian Institute of International Affairs, the foreign ministry’s think-tank.

“NATO membership has definitely been a net benefit to Hungary. It has anchored us in the transatlantic community,” he told AFP. “The combat experience we got out of Afghanistan, seeing how a 21stcentury military environment works, has also contributed to developing the Hungarian military.”

AFP

25 mins Acid solution incubation for white blood cells from newborn mice

President of Poland, Bronislaw Komorowski and NATO Secretary General Anders Fogh Rasmussen in 2010

AFP

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March 2014 Friday 12, April 19, 2013

Opinion Business

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Leading reports from Asia’s best business newspapers

THANH NIEN NEWS Sacombank is working on a plan to acquire Southernbank , the former’s general director Phan Huy Khang has told news website VnExpress. Following the takeover, Sacombank is expected to become Vietnam’s fifth-largest lender by assets behind the four state-owned giants Agribank, BIDV, Vietcombank, and Vietinbank. Its chartered capital would rise to 16.5 trillion dong (US$783.75 million), and total assets to almost VND240 trillion ($11.4 billion).

Sacombank now has assets of more than VND160 trillion.

The two would have to obtain permission from the State Bank of Vietnam, Khang said.

BANGKOK POST Digital TV will not have a broadcast trial period and all 24 channel operators must air their programmes within 30 days after they are awarded licenses, says the legal subcommittee of the National Broadcasting and Telecommunications Commission. A NBTC source said the subcommittee reasoned the 90-day licence issuing period will not include any broadcast trials, meaning the NBTC must i ssu e lic enc es wi th i n 6 0 days after the deadline for digital TV operators to submit their documents — Feb 26.

However, the licence term will have significance if the broadcast trials are not included in the period.

TAIPEI TIMES The Fourth Nuclear Power Plant in Gongliao District, New Taipei City, will possibly not be fuelled for operational testing by the end of the year because of the time required for evaluation and other paperwork, Minister of Economic Affairs Chang Chia-juch said on Monday.

Chang made the remark at the legislature’s Economics Committee, adding that the ministry’s task force is still conducting security testing on the power plant, with the testing scheduled to be finished by June.

KOREA HERALD Stock transactions via mobile devices have continued to rise sharply as more retail investors have opted to use their smartphones and tablet PCs for stock trading, the bourse operator said this week. Stock trading via mobile gadgets made up for some 25 percent of the total transactions on the country’s main bourse last month, compared with 21 percent tallied a year earlier, according to the Korea Exchange. Comparable figures for 2012 and 2011 were 14.45 percent and 7.55 percent, the data showed.

Revisiting the Fed’s crisis J. Bradford DeLong

Former deputy assistant secretary of the U.S. Treasury

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eading through the justreleased transcripts of the US Federal Reserve’s Federal Open Market Committee meetings in 2008, I found myself asking the same overarching question: What accounted for the FOMC’s blinkered mindset as crisis erupted all around it?

To be sure, some understood the true nature of the situation.

As Jon Hilsenrath of the Wall Street Journal points out, William Dudley, then the executive vice president of the New York Fed’s Markets Group, presented staff research that sought, politely and compellingly, to turn the principals’ attention to where it needed to be focused. And FOMC members Janet Yellen, Donald Kohn, Eric Rosengren, and Frederic Mishkin, along with the Board of Governors in Washington clearly got the message. But the FOMC’s other eight members, and the rest of the senior staff?

Not so much (albeit to greatly varying degrees).

As I read the transcripts, I recalled the long history dating back to 1825, and before, in which the uncontrolled failure of major banks triggered panic, a flight to quality, the collapse of asset prices, and depression. But there in the FOMC’s mid-September 2008 report, many members express self-congratulation for having found the strength to take the incomprehensible decision not to bail out Lehman Brothers.

Borrowed thoughts I find myself thinking back to the winter of 2008, when I stole – and used as much

as possible – an observation by the economist Larry Summers. In the aftermath of the housing bubble’s collapse and extraordinary losses in the derivatives market, Summers noted, banks would have to diminish leverage.

While it would not m a t t e r much to any individual bank whether it did so by reducing its loan portfolio or by raising its capital, it mattered very much to the economy that the banks chose the second.

Even today, I cannot comprehend then-New York Fed President Timothy Geithner’s declaration in March 2008 that, “it is very hard to make the judgment now that the financial system as a whole or the banking system as a whole is undercapitalised.”

Geithner’s view at the time was that “there is nothing more dangerous…than for people…to feed…concerns about…the basic core strength of the financial system.”

Of course, we now know that indifference to such concerns turned out to be far more dangerous.

Likewise, I look at history and see that it is core inflation

(which strips out volatile food and energy prices), not headline inflation, that matters for predicting future inflation (even future headline inflation).

Then I read declarations like that by Dallas Federal Reserve President Richard Fisher, that dangerous inflationary pressure was building during the summer of 2008, and I find myself at a loss.

Some of the 2008era mindset (most of it?) most likely stemmed from the fact that there are things that are very real and solid to monetary economists.

We can see, touch, and feel how a financial-deleveraging cycle depresses aggregate demand.

We know that this year’s change in an inertial price, such as wages, tells us a lot about next year’s wage changes, while this year’s change in a non-inertial price, such as oil, tells us next to nothing. And we know how herd behaviour by investors means that a single salient bank failure can turn a financial mania into a panic, and then a crash.

But others do not see, touch, and feel these things.

For non-economists, they are simply shadows on the

…herd behaviour by investors means that a single salient bank failure can turn a financial mania into a panic…

walls of a cave.

That distinction was less relevant in the past. The Fed of old usually had a charismatic, autocratic, professional central banker at its head: Benjamin Strong, Marriner Eccles, William McChesney Martin, Paul Volcker, and Alan Greenspan. When it worked – which was not always true – the chair ruled the FOMC with an iron hand and with the near-lockstep voting support of the governors. The views of the other members – with their varying backgrounds in banking, regulation, and elsewhere – were of little or no concern.

Collegiate approach But former Chairman Ben Bernanke’s FOMC was different. It was collegial, respectful, and consensusoriented. As a result, there was a deep disconnect between Bernanke’s policy views, which followed from his analyses in the 1980’s and 1990’s of the Great Depression and Japan’s “lost decades,” and the FOMC’s failure in 2008 to sense what was coming and to guard against the major downside risks.

So I find myself wondering: What if those who understood the nature of the crisis and those who did not had been compelled to make their cases to Bernanke in private? If Bernanke had then said, “This is what we are going to do,” rather than seeking consensus – that is, if Bernanke’s Fed had been like the old Fed – would better monetary-policy decisions have been made in 2008? © Project Syndicate

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Closing Philippines protests over ‘blocked’ ships

Zimbabwe rhino poaching drops

The Philippines said yesterday it had lodged a formal protest after two Filipino vessels were prevented from bringing supplies to marines by the Chinese coastguard on a disputed shoal in the South China Sea. The foreign ministry said the Chinese charge d’affaires was summoned over the March 9 incident on Second Thomas Shoal, which sits around 200 kilometres (125 miles) from the western Philippine island of Palawan and is part of the contested Spratly island group. “China’s actions constitute a clear and urgent threat…” said the Department of Foreign Affairs.

The number of rhinos poached in Zimbabwe dropped sharply last year but decades of illegal killing have decimated the population and only 750 remain, a senior wildlife official said yesterday.

Poachers killed 20 rhinos in the country in 2013, a drop of 66 percent compared with the previous year, the director of the Zimbabwe Parks and Wildlife Authority told AFP on the sidelines of a rhino conservation meeting. This compared with 60 killed in 2013 and 84 slaughtered in the peak poaching year of 2008, said Geoffreys Matipano.

No idea where to look The hunt for missing Flight MH370 continues

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elicopters and planes crisscross the sky as scores of boats search below – but officials say the international hunt for missing flight MH370 is like looking for a needle in a haystack.

Malaysia on Monday doubled the search radius to 100 nautical miles (equivalent to 185 kilometres) around the point where Malaysia Airlines MH370 disappeared from

radar over the South China Sea early Saturday.

“The biggest problem is just knowing where to look – especially at night,” Vo Van Tuan, a top Vietnamese military officer who is leading Vietnam’s search effort, told AFP. The vastness of the search zone reflects authorities’ bafflement over the plane’s disappearance. On the

fourth day of searching, the operation had grown to involve 42 ships and 35 aircraft from Southeast Asian countries, Australia, China, New Zealand and the United States. Japan said Tuesday it was sending a plane to join the search efforts.

Vietnam has mobilised its first major search and rescue operation, deploying aircraft, boats and its commercial fishing fleet to help

Malaysia search for the jet – even as relatives of the 239 people aboard said their hopes for a miracle were ebbing away.

The hunt to discover the plane’s fate will likely be “a long mission that requires patience,” Vietnamese Major General Do Minh Tuan told AFP as he flew on a military helicopter near the country’s southern Tho Chu island.

“If the plane crashed and sank, some debris will surface, and if we find that we will be able to pinpoint the location of the plane,” he said.

But multiple reports of “suspicious floating objects” have revealed nothing but flotsam, tired Vietnamese rescue officials, putting in 20-hour days, concede.

“In terms of our assessments and predictions – we have little hope of a positive outcome,” Pham Quy Tieu, deputy minister of transport, said Tuesday.

In southern Phu Quoc, normally a sleepy tourist town, hundreds of foreign journalists – who usually face strict visa restrictions – have arrived after the government set up a search and rescue base at the airport.

Officials have taken over rooms in the air traffic control tower at the new Phu Quoc international airport, where the atmosphere is calm and organised, but sparsely furnished rooms hint at Vietnam’s limited resources.

The communist country “has minimal capabilities for search and rescue at sea,” said Vietnam expert Carl Thayer, adding it was geared more towards dealing with natural disasters such as typhoons.

AFP

Malaysia jet imposters ‘likely migrants not terrorists’

Chinese passengers’ relatives decline airline cash

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he two mystery passengers who triggered an international terrorism probe into a missing Malaysian jet now appear to be young Iranian migrants seeking a new life overseas, officials said Tuesday.

The case of the pair, who travelled with stolen passports, has focused attention on the murky world of people smuggling, particularly through Southeast Asia, which has long been renowned as a hub of illegal migration and human trafficking.

Interpol said yesterday the two men were believed to have travelled to Kuala Lumpur via Doha using Iranian passports – not reported stolen – under the names of Delavar Seyed Mohammad Reza, aged 29, and Pouri Nour Mohammadi, 18.

They then switched to stolen Austrian and Italian passports to board Beijing-bound flight MH370, which vanished Saturday with 239 people on board.

Interpol Secretary General Ronald Noble said it appeared increasingly certain “these two individuals were probably not terrorists”. “…they might just be people who were being smuggled or trafficked,” he told a news conference in France.

elatives of Chinese passengers on board missing Malaysia Airlines flight MH370 declined to accept money from the airline yesterday as distrust and frustration at the carrier mounted.

The airline said it had offered “financial assistance” of 31,000 yuan (US$5,000) to the family of each missing traveller.

But a relative of one of the passengers, from east China’s Shandong province, told AFP: “We’re not really interested in the money.”

“It is all about the people – the people on the plane. We just want them back,” she said at the Beijing hotel where relatives and friends of many of the 153 Chinese passengers – more than two-thirds of those on board MH370 -were waiting anxiously for news.

Ignatius Ong, leader of the Malaysia Airlines (MAS) response team in China, confirmed that the offer had not been taken up.

But he denied the relatives had rejected it, saying they had asked the airline to “review” the terms of the acceptance form.

16 dead in Maoist attack on India police

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aoist rebels killed at least 16 people in a massive attack on security forces in central India yesterday, less than a month before the country holds a general election.

Security officials and police sources said the victims were all killed when up to 200 rebels ambushed a patrol in forests in Chhattisgarh state, sparking a major gun battle that lasted for three hours.

Eleven members of the national paramilitary Central Reserve Police Force (CRPF) were killed along with four members of the state police force, said Mukesh Gupta, one of Chhattisgarh’s most senior police officers.

“As of now, a total of 11 CRPF, four policemen and one civilian have died,” Gupta told AFP. Others suggested the death toll was even higher.

Rajinder Kumar Vij, the head of anti-Maoist operations in Chhattisgarh, put the number of CRPF personnel dead at 15 and said that five state policemen had also been killed.

There were no figures for Maoist casualties.