Macau Business Daily, April 1, 2014

MOP 6.00 Publisher: Paulo A. Azevedo Number 508 Tuesday April 1, 2014 Year II

Airport revenues take off

The amount might not seem much to most airports but the net profit of 190 million patacas that Macau International Airport Co. Ltd (CAM) pulled in last year represents a massive 184 percent increase compared to 2012. And 2013 was only the second time numbers were in the black since CAM was established, in 1989 Page

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Centaline expand business, target 30% market share Page 5

Jockey Club improves in 2013 but still not enough Page 12

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HSI - Movers March 31

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Coffers full

Casino operator SJM jumped 9.2 percent in net profit, issuing final dividends of 5.5 billion patacas. The company might increase leverage to fund its Cotai project but the chairman of the board reassures all that there’s no financial pressure Page 12

%Day

New World Develop

3.72

Henderson Land Dev

2.84

China Resources Po

2.75

Sino Land Co Ltd

2.33

Galaxy Entertainm

2.27

COSCO Pacific Ltd

-0.80

China Mengniu Dair

-1.15

Wharf Holdings Ltd

-1.20

Li & Fung Ltd

-1.88

CNOOC Ltd

-5.36

Source: Bloomberg

I SSN 2226-8294

Hot property market HK requests name Profits up in smoke and shame for IPO The number of homes sold in February fell sharply but prices are going through the roof.

NAPE and Nam Van Lake are the most expensive places for unfinished flats.

Companies willing to apply for IPOs in Hong Kong markets will have to comply with a new set of measures to prevent fraud and foster prestige.

Exclusive natural gas importer Sinosky continues to lose money.

The company’s results showed a loss of almost 28 million patacas last year. Since it was founded losses have hit nearly 150 million patacas

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April 1, 2014

Macau

Airport to live with aviation fuel monopoly Nam Kwong Petroleum remains the only company refuelling aircraft in Macau because no other enterprise is interested Tony Lai

tony.lai@macaubusinessdaily.com

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acau International Airport Co Ltd (CAM) has renewed state-run Nam Kwong Petroleum & Chemicals Co Ltd’s monopoly of the supply of aviation fuel at the airport because no other bidder for the work emerged.

Nam Kwong Petroleum’s 18-yearold aviation fuel supply concession expired last month.

MOP190 mln CAM net profit in 2013

CAM had intended to take competing bids for the work.

But a spokeswoman for CAM told reporters after the annual meeting of its shareholders yesterday that the company had simply renewed Nam Kwong Petroleum’s contract.

The spokeswoman said CAM would have liked to have had other bidders.

“Macau is lacking aviation fuel suppliers like Nam Kwong,” she said.

She declined to say how long Nam Kwong Petroleum’s contract had been renewed for, or to give other details.

It is not unknown for only one enterprise to bid for work at the airport.

MCS-Macau Catering Services Co Ltd’s in-flight catering concession expired in 2009, but it is still the only in-flight caterer at the airport.

CAM director of logistics and general aviation development Cui Guang said last year: “Macau is not a big market, whether for fuel for aircraft, cargo or services for passengers at the airport.”

Two in a row CAM announced yesterday that it made a net profit of 190 million patacas (US$23.75 million) last year, 184 percent more than the year before.

Revenue rose by 20 percent to 920 million patacas. Revenue from aviation operations made up 46.3 percent.

The combined revenue of CAM and its concessionaires rose by 14.2

editorial

Reporting without fear T

he quest for the truth is never an easy task. Neither is the struggle for an independent newspaper that doesn’t compromise its principles or stray from its editorial line.

Two years after its launch, the task ahead for Business Daily is tough, to say the least. Labour restrictions currently in force in Macau – that make absolutely no sense at all – are a difficulty that almost every business needs to overcome. We’re no exception.

Also, because of such unacceptable restrictions, the most powerful companies here have engaged in a labour war that is damaging small and medium companies, many of which are already struggling with high rents and landlords that have no hesitation in throwing them out once the two-year period on the lease expires.

Thankfully, the latter is not a problem this newspaper has to face but it is not because of this that we continue to be alert to the risks of the overdose of property speculation going on here and its consequences for small businesses. Which, by the way, represent the much-vaunted economic

diversification. To continue to kill SMEs will make Macau ever more dependent on the gaming industry and businesses connected to gaming. That would not be a tragedy, as economic diversification is increasingly a mirage, and a gaming and entertainment town is not shameful, besides being quite lucrative. But then, let’s stop pretending we want something that it seems nobody wants and accept it with no regrets.

Uncompromised reporting does not attract many friends, especially when some companies are used to buying media attention and the less scrupulous elements of our profession decide to play ball, forgetting the most basic concepts of democracy and freedom of expression.

That’s exactly why Business Daily goes to the newsstands. To do what we think. Nothing else would make any sense if we stopped doing it: reporting.

To try to make a difference. To see if we can contribute by making ordinary people and decision makers see the light, the road in front of all of us.

That was our commitment in the beginning; it is even stronger now.

percent to 4.1 billion patacas.

Last year was the company’s second profitable year since it was established in 1989.

CAM made its first profit in 2012 after its shareholders put another 1.95 billion patacas into the company to settle its debts.

The government contributed over two-thirds of the extra money and gaming and tourism conglomerate Sociedade de Turismo e Diversões de Macau SA (STDM) chipped in the rest.

CAM issued a written statement saying it was evaluating a number of bids to do the private aviation ground handling, passenger and crew services work at the airport.

The CAM spokeswoman said the company hoped to announce the winning bid this month.

Macau Business Aviation Center Ltd had the concession for this work, but it expired in November.

New air services in Q2 Airlines will probably begin two new services to Macau International Airport by the end of June.

Macau International Airport Co Ltd (CAM) held its annual meeting of shareholders yesterday and the chairman of the meeting, Charles Lo Keng Chio, said that one service would be to the southern Vietnamese city of Ho Chi Minh and the other to the East Malaysian state of Sabah. Mr Lo did not say which airlines would put on these services.

CAM issued a written statement saying more air services not only increased the number of places Macau people could travel to, but also made Macau accessible to visitors from more places around the world.

Last week airlines began services to Macau from Hanoi and another Vietnamese city, Da Nang, and from the mainland Chinese city of Dalian.

CAM said the airport handled about 1.28 million passengers in the first quarter of this year, about 10 percent more than a year earlier.

The airport handled 6,100 tonnes of cargo, 3.7 percent more.

It handled 12,500 landings and take-offs by commercial flights, 10 percent more, and 600 private aviation landings and take-offs, 35 percent more.

T.L.

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April 1, 2014

Macau Illegal labour A 48-year old woman hired by a civil engineering company allegedly hired 15 illegal workers (9 from the mainland, and 6 Vietnamese). The undocumented workers were earning 300-600 patacas daily, working as masons and carpenters from 9am to 6pm. Police are continuing investigations.

Make yourself at home Centaline Macau eyes expansion for a larger slice of the pie. The agency notes that its parent group’s strong financial standing is capable of backing up its investments Stephanie Lai

sw.lai@macaubusinessdaily.com

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mid slower home transactions anticipated for this year, Centaline (Macau) Property Agency Ltd says it will maintain its branch expansion policy in the city in order to fight for a bigger market share, the agency’s director told Business Daily.

Last Friday, the Hong Kong-based estate agency’s Macau unit hosted an opening ceremony for three more branches set up in the Cotai area, bringing the agency’s number of branches to a round dozen in total.

“This year, the business for agents is tougher, where we expect that home transactions for the whole year will decline by one-third when compared with 2013 if there’s no breakthrough in first quarter sales, a time, when business is usually more active,” said Jacky Shek Po Tak, director of Centaline Macau.

“But the expansion is based on our need and our plan for the long term,” Mr Shek added. “Our market share in the city is still quite low, and we think that there’s still space for us to grow via more branch expansion.”

According to Mr Shek, Centaline Macau has already gained a strong market share in the rentals and sales of shops and industrial space in Macau, where the company occupies 50 to 60 percent market share.

“We hope to at least maintain this market share for the sales and rentals business for shops and industrial units,” Mr Shek told Business Daily. “But for home sales, we’re targeting to expand our market share to 30 percent within these two years from the current 10 to 15 percent.”

Last year was a rough year for Hong Kong’s major

Centaline has 12 branches in Macau at present

estate agencies as they witnessed much slower transactions after the Hong Kong government doubled the sales tax on property costing more than HK$2 million (US$258,000), while tightening mortgage terms for commercial properties and parking spaces.

Ahead of the game “For the major Hong Kong estate agencies, such as Midland Holdings and Hong Kong Property Services (Agency) Ltd, all posted losses in the past year,” Mr Shek said. “Even for Ricacorp [a subsidiary of Centaline Group], the company also suffered the same situation.”

Midland Holdings, which has estate agencies in Macau, earlier posted a loss attributable to equity holders of HK$204 million, with turnover dropping 14 percent to HK$3.34 billion for 2013.

The company described in its result filing that the agency industry faced “the toughest business environment for decades, with property market activity falling to a 23-year record low and the agency business experiencing a high degree of competition” in Hong Kong.

“Centaline Group, however, still managed to register a profit in the past year that gave us a better disposition to support our expansion plans here,” Mr

30 %

Centaline goal for market share in 2 years

Shek added, although he did not detail the profit figures for the group.

Centaline Group is not listed but media in Hong Kong and mainland China report that the group earned total revenue of HK$13.4 billion in 2013, nearly 20 percent more

than the HK$11.3 billion of the previous year; the company’s revenue from the estate business in mainland last year also witnessed rapid growth, which exceeded HK$9.3 billion – nearly 60 percent more than in 2012.

“This year, we expect that second-hand home transactions will go down while not much new supply of flats will be available in Macau,” said Mr Shek.

“But the home rental market will be active, and we also expect home transactions in Taipa and Coloane to be more frequent,” he said. “Meanwhile, we’ll also maintain the focus on overseas property sales for local buyers.”

Congratulations on the 2nd Anniversary of Business Daily

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April 1, 2014

Macau

Painful record Presales boost February rebound in housing prices. The average price of unfinished flats climbs to 143,279 patacas a square metre, the highest on record Stephanie Lai

sw.lai@macaubusinessdaily.com

S

ales of expensive unfinished flats drove a rebound in housing prices in February, official data indicate.

The average price of housing was 90,407 patacas (US$11,315) a square metre, 7.4 percent more than the month before and 28.4 percent more than a year earlier, the Financial Services Bureau data show.

But the number of homes sold in February fell to 457 from 301 the month before and 359 a year earlier. The average size of the homes sold was 70 square metres.

The average price of unfinished flats was 143,279 patacas a square metre, the most ever.

The previous record, of 120,077 patacas a square metre, had been set last May, when estate agents and developers rushed to complete transactions before

179,228 patacas Average price of space in an unbuilt high-rise in NAPE and Nam Van lake

a law governing presales came into effect.

Since June the law has allowed the sale of unfinished flats only once the foundations of the building that will contain them are complete

and each flat is registered with the government.

The most expensive unfinished housing sold in February will be in the NAPE and Nam Van Lake areas, where the average price of

space in an unbuilt highrise was 179,228 patacas a square metre.

Of the unfinished flats sold in February, 30 will be in the NAPE and Nam Van Lake areas.

Altogether, 75 flats were sold off-plan, 10 fewer than in January, which estate agents say is usually a slow month.

The average price of completed housing was 78,297 patacas a square metre in February, 0.8 percent less than the month before.

The average price of housing in Taipa and Coloane was between 106,000 patacas and 107,000 patacas a square metre, at least 23,000 patacas more than the average price on the peninsula.

The most expensive housing on the peninsula was in the NAPE and Nam Van Lake areas, where it cost 165,898 patacas a square metre.

The next most expensive housing on the peninsula was in the Areia Preta reclamation area, where it cost 96,019 patacas a square metre.

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April 1, 2014

Macau

Sinosky’s loss widens for 2013 The company accuses government of not conducting timely review of selling price of natural gas Stephanie Lai

sw.lai@macaubusinessdaily.com

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xclusive natural gas importer Sinosky Energy (Holdings) Co Ltd posted further losses for its operation last year, blaming them on the lack of adjustment of the natural gas supply cost, which is still pending the Macau government’s approval.

Sinosky Energy bore a loss of 27.71 million patacas (US$3.47 million) for 2013, according to results published in the Chinese-language Macao Daily News. Accumulated losses since the company’s establishment in 2006 have already reached 147.22 million patacas.

The company also noted that the revenue from selling natural gas last year was nearly 1.51 million patacas but the cost of purchasing natural gas was 3.54 million patacas.

“The main reason for the loss is that the MSAR government has not reviewed the selling price of the natural gas every three years as contractually required,” Sinosky Energy wrote in a note alongside its published results, “The government also did not amend the price in accordance with natural gas market dynamics.”

Currently, only the Hengqin campus of University of Macau, the

MOP147.22 million

Accumulated losses since the company’s establishment in 2006

Seac Pai Van public housing site and a few local buses have adopted natural gas.

In 2013, the purchase cost of natural gas as approved by the local government was 3.09 yuan (4.11 patacas) per cubic metre; for compressed natural gas, the approved

purchase cost was 15.8 patacas per cubic metre, the company noted in its results. contract signed with the MSAR government in 2006,” the company noted.

“That brought a direct loss of 1.374 patacas for every cubic metre of

natural gas sold [via pipeline], while for compressed natural gas the loss was registered at 13.065 patacas per cubic metre,” it added.

Sinosky Energy did not detail the total volume of natural gas sold in Macau for the past year in its published results but the company projected an estimate that it will see a loss exceeding 400 million patacas for 2014 with an expected natural gas volume supplied at 180 million cubic metres if the government do not approve the amendment in the purchase and selling price of natural gas.

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April 1, 2014

Macau

Delegation presented the island’s business opportunities to Macau

Kinmen: El Dorado without the glitter No gambling facilities in the future for the Taiwanese city that positions itself as a “smart island” Pierre-François Metayer

pf.metayer@macaubusinessdaily.com

C

ity officials from Kinmen, in Taiwan, are in Macau looking for business partners. A delegation led by the vice mayor of Kinmen County Government is confident the island can attract investors but for now casino operators are a card out of the deck. Talking to Business Daily, vice mayor Wu Yu-Chin said the city’s tourism market is “only in

its first steps, and for the citizens of Kinmen having casinos would completely change their peaceful lives”.

“Many are sceptical and afraid that it could bring security problems”, he explained. Kinmen was one of the first offshore locations Taiwan considered for casinos to enhance development.

Flight connections are still one of the difficulties to over-

come as there are no direct flights. “For now, only charter flights could be possible if we have enough demand”, said the vice mayor.

In an event held yesterday at Macau Tower, Mr Wu promoted Kinmen’s local culture, food, arts and crafts for its tourism attractions but primarily focused on investment incentives and preferential projects and policies. The existence of business income tax is considered a plus, to which authorities add free business tax upon operation to private institutions participating in major public construction.

But the town has a package of other incentives.

The government of Kinmen has already started construction of projects such as the Kinmen-Lieyu bridge, Shueitou International Harbour and the expansion of Shang Yi Airport.

Russia reportedly mulls Universal Ent. ditches Judge to oversee election gaming area in Crimea Manila casino deal of chief executive Russian officials are weighing a proposal to create a gaming area with casinos and hotels in Crimea, the Black Sea peninsula Russia recently annexed, Bloomberg reports. The news agency quotes four unidentified sources as saying the Russian ministries of the economy, finance and regional development have until April 15 to present a plan for the gaming project, with spending and revenue estimates. In September Macau casino developer Lawrence Ho Yau Lung said he would invest US$700 million (MOP5.59 billion) in a casino-resort in another Russian gaming zone, near the far eastern city of Vladivostok.

Japan’s Universal Entertainment Corp has scrapped its investment in a US$2 billion (MOP16 billion) casino-resort in Manila. Former Wynn Macau Ltd director Kazuo Okada controls Universal Entertainment. Century Properties said it would contest Universal’s decision because the Japanese group had sought to change the terms of their deal to remove exclusive rights to the commercial and residential portions of the complex. The deal was announced in October and was meant to ensure Universal complied with a law restricting foreign ownership of land in the Philippines to 40 percent of any one project.

Court of Final Appeal judge Song Man Lei will chair the Chief Executive Electoral Affairs Committee, according to the Official Gazette. Prosecutor Ma Iek and Court of First Instance presiding judge Ip Son Sang are the other two judicial appointees. Two government representatives are the director of the Public Administration and Civil Service Bureau, José Chu, and the Government Information Bureau director, Victor Chan Chi Ping. The 400 members of the body that that will choose the next chief executive will be appointed in June.

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April 1, 2014

Macau

SJM Macau profits surge 9.2 pct SJM may increase leverage to fund its maiden Cotai project but the company is under no financial pressure, says SJM’s Ambrose So Tony Lai

tony.lai@macaubusinessdaily.com

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asino operator Sociedade de Jogos de Macau SA saw its net profit jump 9.2 percent last year, issuing final dividends worth 5.5 billion patacas (US$687.5 million) in total.

Ambrose So Shu Fai, chairman of the board of directors of SJM SA, said that they will consider increasing the company’s leverage to fund its HK$30-billion maiden Cotai project, which will be completed by 2017. But he is more conservative in addressing solutions for the possible labour shortage that the city may face for the completion of Cotai’s mega resorts.

SJM SA revenue reached 87 billion patacas last year, rising by 10 percent from the previous year, Mr So said following a shareholders’ meeting yesterday.

The net profit of the company jumped by 9.2 percent to 8.6 billion patacas, he said. SJM SA, a local unit of listed SJM Holdings Ltd, directly holds one of the territory’s six gaming concessions and sub-concessions.

Mr So stressed again yesterday that they are under no financial pressure to develop its maiden project on the Cotai strip as the company now has cash deposits totalling 27 billion patacas with a cash flow of 8 billion patacas a year.

Angela Leong and Ambrose So

“But we have room to increase the [company’s] leverage by an appropriate amount,” he said. “We still have [time] to study this matter in depth as we do not have to use large amounts of our cash at the moment.”

The Cotai project - the Lisboa Palace - is designed to provide 700 gaming tables with 2,000 hotel rooms accommodating two of the hotel towers designed by Italian luxury fashion house Gianni Versace SpA and veteran fashion designer Karl Lagerfeld. The project, slated for

opening in 2017, is expected to employ 8,000 employees.

Mr So said yesterday that they may have to vie for labour with other gaming operators like Wynn Macau Ltd and MGM China Holdings Ltd, as the projects of the latter two in Cotai will open in similar time period to SJM’s.

MGM’s maiden Cotai project, expected to open in 2016, requires at least 8,000 employees, while Steve Wynn - chairman of Wynn Macau - told Chinese-language newspaper

Macao Daily News yesterday that their Cotai project needs “9,000 to 10,000 workers” when it opens by 2016.

“In these two or three years there will be numerous university graduates which can supplement the labour shortage,” Mr So said yesterday.

“But we still have to see the human resources situation by then to decide any policy.”

Mr So’s words were more restrained yesterday than those he uttered in February when he explicitly asked the government to ponder opening up casino croupier positions to non residents.

The idea has met strong opposition from local labour groups, which organised protests last month and in October supported by thousands of people.

Mr So is also confident that the territory’s gross gaming revenue this year can maintain double digit growth. “If revenue growth can still maintain double digits, I don’t see any sign of a slow-down [in the gaming market],” he said.

Latest official data reveal that gaming revenue expanded 23.7 percent year-on-year to 66.7 billion patacas in the first two months of this year.

Macau Jockey Club cuts the flow of red ink The club still lost money last year, but not as much as it has lost in years gone by Tony Lai

tony.lai@macaubusinessdaily.com

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acau Jockey Club Co Ltd’s financial performance improved last year but it still made a loss of over 40 million patacas (US$5 million), chief executive Thomas Li Chu Kwan has said.

Mr Li said after a meeting of the company’s shareholders yesterday that his immediate aim was to make the company profitable again by re-opening a casino at its racecourse that has been closed since 2004.

He said construction work on the Light Rapid Transit railway was still the main obstacle to a better performance.

“The work has affected spectator figures,” he said.

He did not elaborate.

The Macau Jockey Club is on Taipa, close to the site of what will become a transport interchange.

The club is part of gaming mogul Stanley Ho Hung Sun’s empire.

Mr Li said his company’s loss last year had also been due to increases in labour costs and to fewer horses racing.

Official figures show betting on horseracing fell to 178 million patacas last year from 205 million patacas the year before.

Even so, the club reduced

its annual loss from 57.7 million patacas in 2012.

“We diversified the development of betting, focusing more on online betting and telephone betting,” Mr Li said.

The club has reduced the number of off-course betting centres it has to three, having closed four last year in response to the government’s policy of removing the temptation to gamble from residential areas.

Priority is profit “Our immediate aim is to turn the company around from loss to profit,”

Mr Li said.

The Jockey Club last made a profit in 2004, and by 2012 it had accumulated losses of about 3.78 billion patacas.

Mr Li declined to say whether the club would reopen its casino this year, or to give details of the plan for re-opening it. He said he might have more to say sometime this month.

The vice-chairman of the club, Angela Leong On Kei, said in February that the club would have more “familyoriented elements” along with the casino.

The Gaming Inspection and Coordination Bureau said in February that casino

operator Sociedade de Jogos de Macau SA – another part of Mr Ho’s empire – had asked permission to move some of its gaming tables into the Macau Jockey Club.

The bureau said the number of tables to be moved into the club and when they would be moved had yet to be decided, because the club’s premises were still being renovated.

Asked whether the club and the government had begun negotiations about renewing the club’s exclusive horseracing concession, which is due to expire in August next year, Mr Li replied: “It is too early to talk about that.”

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April 1, 2014

Macau

Smoke still clearing Air purifying solution provider Lifa Air says Casino Lisboa is already using its smoking lounge, and is expecting more users Stephanie Lai

sw.lai@macaubusinessdaily.co

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ore companies engaged in providing smoking control solutions for the city’s casinos - one being the setting up of smoking rooms on mass gaming floors - can be expected in the near future, air purifier producer Lifa Air International Ltd told Business Daily.

Mr Vesa Makipaa, chairman of Lifa Air, said that the lack of efficient control over the diffusion of tobacco smoke from smoking areas to non-smoking areas inside casinos has served as the background for their proposal to set up “smoking lounges” on mass gaming floors.

“We’re the frontrunner in here [for smoking lounge establishment on gaming floors],” said Mr Makipaa.

“We haven’t seen other competitors designing this type of smoking lounge yet but of course there will be later.”

Feedback from the operator at Casino Lisboa to the working of the smoking lounge has been very positive Vesa Makipaa, chairman of Lifa Air

The company was present at the 2014 Macao International Environmental Co-operation Forum & Exhibition.

“The background for this smoking lounge is that we have this smoking [control] law enacted in several European countries, and we developed this system already in 2006,”

Smoke exhaled in lounge is purified and converted into a stream of fresh air, Lifa Air says

Mr Makipaa added. “The airpurifying technology itself is not a brand-new innovation but here we just modified it to make it suitable for the casino environment.”

Lifa Air approached the Macau gaming operators with the “smoking lounge” proposal as early as August and September last year.

The Health Bureau first confirmed to media in early March that the government has accepted a proposal by the city’s six gaming concessionaires that their casinos should have smoking rooms without gaming tables or slot machines, instead of smoking areas that occupy half their gaming floors.

Casino Lisboa, operated

by Sociedade de Jogos de Macau, S.A. (SJM), has used smoking lounges produced

by Lifa Air for almost half a year, Mr Makipaa said.

“The design of the smoking room is that it can be fitted near the gaming tables [on

the mass gaming floor],” said Mr Makipaa, “so that these gamblers can just take a few steps away to smoke and then go back to playing.”

In Casino Lisboa, the smoking lounges are as close as two to three metres from the gaming tables, Lifa Air’s chief executive officer Benjamin Shum added.

“Feedback from the operator at Casino Lisboa on the working of the smoking lounge has been very positive,” Mr Makipaa said.

The Lifa Air smoking lounge, which is a cubicle installed with air filters on the door sides and in the centre of the lounge, is of a minimum 7 square metres and can be expanded per casino operators’ needs, Mr Makipaa confirmed. In the product description posted at the fair, the company declared that there is no limitation regarding the placement of the smoking lounge as connection to the

duct system is unnecessary.

“With this solution, we can protect casino workers’ health, which is a priority, and the next step is, of course, that we have to do it so that any businesses inside casinos won’t be affected,” Mr Makipaa remarked.

Floating particles In an interview with Chinese-language Macao Daily News, Health Bureau director Lei Chin Ion noted that the government would like to ban smoking on massmarket gaming floors but permit it in smoking rooms that did not contain gaming tables or slot machines.

At the time, Mr Lei did not confirm when this new arrangement could start, although he added that it would be tried out first in the 14 gaming establishments found last year to have had substandard air in their smoking areas.

“Actually, the other gaming establishments that did not fail the air quality test are also expressing interest in the smoking lounge concept,” said Mr Makipaa, “It’s just whether it would be us or another air quality solution provider that will eventually realise this concept.”

As Business Daily reported on March 20, a source in the gaming industry said if the new arrangement worked well it might ward off the imposition next year of a ban on smoking anywhere in casinos.

Legislator and SJM Holdings Ltd executive director Angela Leong On Kei has repeatedly pressed in the past year for a “full smoking ban” inside casinos.

She has also reiterated that ventilation systems in most casinos operated under SJM licence were old.

Mr Makipaa disagrees that the problem mentioned by Ms Leong is the key to Casino Lisboa’s demand for smoking lounges.

“Even with efficient air systems in every casino, they don’t protect people who are in non-smoking areas because those [tobacco smoke] particles are extremely hard to control,” said Mr Makipaa, “…These are suspended particles that cannot settle on the ground.”

“When you have a dealer and smokers in there, it doesn’t matter where the dealer is located or whether the ventilation system there is new or old because the dealer still has a very big risk of inhaling second-hand smoke,” he said.

However, in an interview with public broadcaster TDM and Macao Daily News on Friday, legislator and casino operator Angela Leong stressed that she will suggest to the Legislative Assembly an amendment in the smoking control law enforcing a full smoking ban inside casinos.

She commented that the setting up of smoking lounges on mass gaming floors was only a “measure of expediency”, although it poses a means of smoking control that can be more easily managed by the casino operator.

Congratulations on the 2nd Anniversary of Business Daily

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April 1, 2014

Macau Expectations push shares up Casinos shares rose yesterday ahead of official data to be released today. Hong Kong shares finished up 0.4 percent yesterday as casino operators gained ahead of the release of monthly Macau gambling revenue official data by the gaming inspectorate (DICJ). The Hang Seng Index closed at 22,151.06 points, rising 0.39 percent. Among casino operators, Galaxy Entertainment Group Ltd rose 2.27 percent, SJM Holdings Ltd gained 2.4 percent. Sands China Ltd had a more modest gain, with 0.96 percent growth.

(I can’t get no) satisfaction . . . or not as much, says gaming industry

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acau workers in general are more confident and satisfied about their jobs this year, except for casino dealers, the Macau University of Science and Technology finds.

Yesterday, the university’s Institute for Sustainable Development released the Macau Employee Confidence and Satisfaction Index 2014 by polling 1,015 full-time local workers.

The report finds that the confidence of Macau workers in general in their jobs this year was “above average”, scoring 3.14 points on a fivepoint scale with five the best.

The score was up 0.3 percent from 3.13 points last year.

Satisfaction on the job this year was 3.31 out of five points, up 0.6 percent from last year.

“This year’s survey reflects that the satisfaction and confidence of Macau employees remains at a stable level, without impact from any major incidents,” the report noted.

But the confidence and satisfaction level of gaming employees, particularly casino croupiers, declined against the rising trend.

“As gaming development grows, their working hours

EMPLOYEE CONFIDENCE INDEX 3.13

3.14

3.07

0.3%

3.04

3.05

2.89

1.0%

5.2%

2013 2014

2013 2014

2013 2014

OVERALL

GAMING

CASINO CROUPIERS

and workloads [of gaming employees] may increase, affecting their social and family life to a certain degree, imposing psychological pressure,” the report concluded.

The confidence of gaming workers dipped 1 percent year-on-year to 3.04 out of

five points this year, while casino croupiers scored even lower at 2.89 points, down 5.2 percent from last year.

Gaming workers satisfaction scored 3.12 out of five points this year, up 0.6 percent from last year but the satisfaction level of croupiers slipped 2.6 percent to 2.94 points.

The university polled over 1,000 respondents last month by telephone survey and 265 subjects worked in the gaming sector, of whom 99 were casino dealers.

The university created the confidence index by asking the respondents whether they feel it is easy to find a better

job and whether they are confident about promotion and salary increases. The satisfaction index was compiled by querying them about their salaries and workloads, as well as how their jobs impacted upon social and family life.

T.L.

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HK IPO getting harder New measures in Hong Kong improve quality of IPOs and deter fraud

Trading at HK Stock Exchange is getting more and more difficult

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ompanies seeking to list in Hong Kong will be subject to a stricter disclosure regime starting today as the city’s regulators crack down on sloppy underwriters and issuers.

The new rules are part of Hong Kong’s efforts to improve the quality of IPOs and avoid fraud. One of the key aspects of the new regime is that banks may be criminally liable if a listing prospectus is found to have misled investors.

Philippe Espinasse, a former equity capital markets banker at both UBS and Nomura, said the new rules make brokers and banks more accountable, particularly the smaller ones who have tended to send prospectuses to the exchange that were in poor shape.

“It just wasted everyone’s time. In this business, reputation is everything and if someone is not up to scratch, they will be named and shamed,” he added.

It just wasted everyone’s time. In this business, reputation is everything and if someone is not up to scratch, they will be named and shamed Philippe Espinasse, former UBS and Nomura banker

The new rules also follow a series of scandals at Mainland Chinese companies that have run into trouble after listing in Hong Kong.

Chinese textile maker Hontex International Holdings Co had its shares suspended in 2010, just three months after listing, when regulators alleged it overstated its financial position in the listing prospectus.

Authorities revoked the licence of the sponsor of the Hontex listing, Mega Capital (Asia), and slapped it with a record fine. Hontex had its listing cancelled in September 2013.

Ahead of the rule change, Hong Kong has seen an improvement in the quality of listing applications, resulting in lower rejection rates from

the stock exchange operator.

Hong Kong, which stood at No.2 in the first-quarter global rankings for IPO venues behind New York, has been tightening IPO rules to boost investor confidence in a market that has a higher than usual ratio of retail investor participation.

From April 1, listing applications will be made public as soon as companies pass an initial checklist after filing them with the exchange.

Incomplete applications will be rejected and banks and issuers submitting such applications will be named publicly and face an eightweek waiting period to re-file their documents.

Previously the so-called “A-1” document was filed and remained private until it was vetted and approved. Sponsors could also file incomplete documents and resubmit them without facing major penalties.

The tougher regulations take effect at a time when Hong Kong has struggled to attract new offerings due to choppy equity markets and poor performance by recent listings.

Just two weeks back, the city lost e-commerce giant Alibaba Group Holding Ltd’s IPO to New York.

Hong Kong Exchanges and Clearing Ltd (HKEx) said it has rejected about 15 percent of all companies that applied to list on the city’s stock market through March 24 after tougher measures were first introduced in October. The rejection rate was 33 percent at the end of January.

“The market is getting closer to the standard we’re expecting,” David Graham, chief regulatory officer and head of listing at HKEx, told Reuters.

“We’re getting down to the levels I think it’s appropriate to be,” he said, adding that a 5 percent rate would be a level at which to aim.

In the run-up to the starting date for the new rules, there was a sharp increase in IPO applications, people familiar with the matter told Reuters. While companies making the applications were hoping to avoid a post-April 1 rejection, regulators will regard the glut of applications with extra scrutiny, lawyers said.

“It (the new regime) hasn’t had any effect as of yet on the number of deals actually coming to market, which is much more linked to market performance than it is to the changes in sponsor regulations,” said David Neuville, a partner at law firm Cadwalader, Wickersham & Taft LLP in Hong Kong.

Reuters

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Greater China 2013 foreign debt made public China had outstanding foreign debt of US$863.2 billion at the end of December 2013, the top foreign exchange regulator said yesterday.

The State Administration of Foreign Exchange also said at a media conference that outstanding foreign debt stood at US$676.6 billion at the end of last year.

Huawei profits increase The world’s No.2 telecommunications equipment maker, matched company guidance by reporting its fastest profit growth in four years, powered by strength at home and in its enterprise and consumer businesses. Net profit for 2013 rose 34.4 percent to 21 billion yuan (US$3.38 billion), the company said in a statement yesterday. Operating profit was 29.1 billion yuan, compared with the company’s forecast range of 28.6 billion yuan to 29.4 billion yuan.

Revenue reached a record 239 billion yuan versus company guidance of 238 billion yuan to 240 billion yuan, as profit margins improved for the second year in a row.

Fighting pollution starts The province is home to seven of China’s 10 most polluted cities

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hina’s war on pollution is only a few weeks old, but the battle lines are already being drawn between Beijing and Hebei, the province most synonymous with dirty air.

A succession of Hebei officials used the annual session of parliament in Beijing this month to urge the central government to boost subsidies to help with job losses and other costs from mandated cuts in industrial production across the country. One local official said Hebei was taking on too much of the burden.

The pleas came after Premier Li Keqiang, in his opening address to parliament on March 5, declared war on pollution in an attempt to head off growing anger over the quality of China’s air, water and soil.

Hebei, which surrounds Beijing in the country’s north, was home to seven of China’s 10 most polluted cities last year. Researchers blame its steel, coal and cement plants for some of the hazardous smog that increasingly envelops the capital.

It is seen as a test of China’s determination to build a cleaner

economy after a decades-long obsession with growth.

Gao Hongzhi, the Communist Party secretary of Handan, a key steel producing city, said Hebei was contributing 75 percent of the national reduction in steel capacity when it accounted for only a quarter of total output.

Hebei was also contributing 50 percent of coal consumption cuts and had been set emission reduction targets that were “much higher” than national levels, Gao told a meeting of parliamentary delegates in the days

BoCom plans over 10% loan growth Bank of Communications Co Ltd plans to increase loans by 10.8 percent in 2014, maintaining the same growth rate as in 2013, the bank’s president, Peng Chun, said at a press conference on Monday. The country’s fifth largest bank posted a 2 percent drop in onyear net profit growth for the fourth quarter on Sunday, the only one of the country’s top five banks to miss market forecasts.

Alibaba to invest in Intime Retail Intime Retail (Group) Co Ltd said Alibaba Group Holding Ltd would invest HK$5.37 billion (US$692.25 million) in the Chinese department store operator and form a joint venture to develop online-to-offline (O2O) business. Intime will issue 220.54 million shares at HK$7.5335 each and HK$3.71 billion worth of convertible bonds to a unit of Alibaba, the Hong Kong-listed company said in a filing to the stock exchange yesterday. The pair will form a joint venture to develop shopping malls, department stores and supermarkets related to online-to-offline business in China, Intime said.

Stones and bottles versus chemical plant Protests against a planned chemical plant in the southern Chinese city of Maoming ended with demonstrators throwing stones and water bottles, the local government said. Demonstrators gathered on Sunday morning in front of the city’s Communist Party committee building and walked slowly through the streets, the city’s propaganda office said in a statement on its official Weibo account today. After 10:30 p.m. a few “troublemakers” threw stones and water bottle that damaged public facilities, it said. No one was hurt. The protests were the latest sign of growing public anger in China over pollution. Photos on social networking site Weibo purportedly of the demonstration showed an overturned car on the street and a crowd of people raising clenched fists.

Fund managers cut bonds allocation Weak economic indicators have prompted many international investment banks to lower their 2014 China growth forecasts

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hinese fund managers increased their suggested equity allocation for the next three months, after recommendations hit a 10-month low in February, although sentiment remains lukewarm as concerns about China’s economy grow, according to a Reuters poll.

March’s average recommended stock weightings rose to 81.3 percent

from 81.1 percent a month earlier, according to a poll of eight Chinabased fund managers conducted week of March 24.

Funds cut allocations to bonds to 3.9 percent from 6.2 percent, while increasing allocations to cash to 14.9 percent from 12.7 percent.

“My concern now is that the economy continues to slide, which may

cause changes to the fundamentals of many industries,” said a fund manager based in southern China who declined to be identified.

China’s manufacturing engine contracted in the first quarter of 2014, a preliminary private survey showed last week, raising market expectations of government stimulus to arrest a loss of momentum in the

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in Hebei last year after Li spoke.

Such cuts in capacity in Handan alone would put 43,000 people out of work and cost 15 billion yuan (US$2.41 billion) in “asset losses”, Gao said without elaborating.

“Once our tasks are completed, it won’t just be good for Hebei or the region - it will have a big impact and will make a huge contribution to the entire country,” Gao said at the meeting, which was attended

by Reuters.

“We are asking for the state to provide policy support and funding

to help with layoffs while we close out-dated capacity and ease overproduction.”

Hebei has pledged to cut steel capacity by 60 million tonnes, more than a fifth of its total, from 2013 to the end of 2017. Coal consumption would be slashed by 40 million tonnes, around 15 percent of the total. It has also promised to cut major pollutants by around 25 percent.

Wang Yifang, former chairman of China’s biggest steelmaker, Hebei Iron and Steel, called for a stronger “subsidy mechanism” to cover the cost of shutdowns, according to documents made available by parliament.

Wang Zengli, chairman of the Hebei branch of the state-backed All China Federation of Trade Unions, urged the government to provide funds for high-tech sectors.

Painful process Hebei’s Communist Party chief, Zhou Benshun, suggested the province would get help.

“The structural adjustments are certainly going to be painful, but we can work to ease that pain as quickly as possible,” he said at the meeting of parliamentary delegates.

We are asking for the state to provide policy support and funding to help with layoffs while we close outdated capacity and ease overproduction Gao Hongzhi, Communist Party secretary at Handan

Beijing has already been paying compensation for several years to firms across China that demolish out-dated steel facilities to meet new technical standards. The cuts to capacity are on top of that.

Local governments have already begun to shut old plants under the new targets, most recently the demolition of 6.71 million tonnes of iron smelting capacity in late February across Hebei.

Handan had closed eight steel smelters since last year, Gao said.

“This has brought about a series of problems that will affect social stability,” he said.

Reuters

world’s second-largest economy this year.

Weak economic indicators have prompted many international investment banks to lower their 2014 China growth forecasts. The Royal Bank of Scotland Group PLC trimmed its prediction for GDP growth to 7.7 percent from 8.2 percent in the middle of March.

The CSI300 index of the leading Shanghai and Shenzhen A-share listings has lost more than 7 percent so far this year as concerns about China have mounted.

Most respondents to Reuters’ fund poll said that China’s slowing economy was a near-term concern, while some considered imminent bond defaults and the liberalisation of interest rates to be priorities.

China saw its first ever domestic bond default earlier this month, when Shanghai Chaori Solar Energy Science and Technology Co Ltd failed to make an interest payment on a bond it issued in 2012.

A Shanghai-based fund manager was more positive, however, and suggested that bond defaults and the maturing of a large number of trusts would strengthen the market’s ability to withstand risk and improve the existing interest rate system.

For next month, two-thirds of the fund-managers surveyed said they would not change their recommendations for cash, equity and bond holdings positions, although one-third would cut their suggested equity allocation.

Reuters

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Anti graft policy achieves a new victory Hanlong Group owner faces trial in central Hubei province along with the other members of his “mafia-style” gang

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former Chinese mining magnate with links to the eldest son of retired security tsar Zhou Yongkang went on trial yesterday over charges including murder after being accused of leading a 36-member gang on a crime spree spanning two decades.

Liu Han, the former chairman of unlisted Hanlong Group and once ranked the 230th richest person in China, faced trial in central Hubei province along with the other members of his “mafia-style” gang, state news agency Xinhua said.

Xinhua said Liu, who was arrested last year, was facing charges ranging from murder to gunrunning and extortion for crimes carried out in southwestern Sichuan province. His gang was responsible for nine murders, Xinhua said, without giving details.

Two sources said Liu was also a business partner of Zhou Bin, the eldest son of Zhou Yongkang, who is at the centre of China’s biggest corruption scandal in more than six decades.

They said Liu was among those whose assets had been seized on Zhou’s case, adding he was also among more than 300 associates and family members of Zhou who had been arrested, detained or questioned in recent months as part of the investigation.

The sources, which requested anonymity to avoid repercussions for speaking

Li Keqiang’s proposed anti-corruption policy is getting rewards

to the foreign media about elite politics, gave no further details. But the respected Chinese magazine Caixin in February said Liu and Zhou Bin collaborated in power generation and tourism in Sichuan.

Official media have not directly linked Liu’s case to Zhou Yongkang, but have alluded to possible ties since the mining baron’s rise coincided with Zhou’s time as Sichuan’s Communist Party boss.

Liu’s lawyer, Zhang

Qingsong, could not be reached for comment. Zhang’s secretary, Liu Jiemin, told Reuters by telephone that he would not accept interviews before the trial ended, adding the hearing could last for two weeks.

A court official in the province of Hubei said updates on the trial in the city of Xianning would be published on the court’s microblog account. It was not clear why the charges were laid in Hubei, although some of the crimes were suspected of

having been committed there, Xinhua said.

Zhou rose through the ranks of China’s oil and gas sector before joining the elite Politburo Standing Committee in 2007, where as domestic security chief his budget exceeded defence spending.

He retired in 2012.

Apparent double life Reuters also was unable to reach Hanlong Group for comment on Liu, who headed a company that had global

ambitions in the mining sector.

The company, which is based in Sichuan, made headlines when it tried to take over Australia’s Sundance Resources Ltd . Its proposed A$1.4-billion (US$1.29 billion) deal for Sundance, a West Africa-focused iron ore explorer, was called off a year ago after Hanlong missed funding deadlines.

Hanlong still has a majority stake in Australianlisted iron ore miner Moly Mines and remains the biggest shareholder of Sundance Resources. Hanlong has never commented on Liu’s arrest.

Police last year launched an investigation into Liu and his younger brother Liu Yong -also known as Liu Wei - on suspicion of criminal activities, official media has said.

Prosecutors in Hubei said the two set up the gang in 1993, along with 34 others, and it “carried out a vast number of criminal activities”.

“The ring, allegedly led by former mining tycoon Liu Han and his brother Liu Wei in southwest China’s Sichuan province, is the largest mafiastyle criminal group under trial in recent years in the country,” Xinhua said.

The police investigation into the activities of Liu and his associates eventually covered more than 10 provinces and cities, including Beijing, Xinhua has previously said.

Reuters

Donfeng beats own record Carmaker posts record figures following business expansion in France

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hina’s Dongfeng Motor Group Co Ltd reported a better-thanexpected 16 percent rise in 2013 profit due to a rebound in sales at its Japanese partners.

The country’s second biggest carmaker, which on Wednesday agreed to buy a stake in struggling French peer PSA Peugeot Citroen, said net profit was 10.53 billion yuan (US$1.70 billion), according to a statement through the Hong Kong Stock Exchange.

That beat a forecast of 10.24 billion yuan from 28 analysts polled

by Thomson Reuters, and compared with 9 billion yuan a year earlier.

Dongfeng’s growth was largely driven by a sales rebound at its two

Japanese ventures -which combined accounted for nearly half of vehicle sales by volume in 2013- as anti-Japan sentiment inside China triggered by a 2012 territorial dispute eased.

Dongfeng’s ventures with Honda Motor Co Ltd and Nissan Motor Co last year reported sales increases of 113.9 percent and 19.9 percent by volume respectively, rebounding from a low base.

In 2012, a dispute between Beijing and Tokyo over a group of uninhabited islands in the South China Sea hurt sales of Japanese brands in China.

“Reputation of Japanese car brands is still falling in China due to political tensions,” said Liang Yonghuo, analyst at Haitong International

US$1.70 billion net profit

Research Ltd. “Relying too much on Japanese brands is a risk for Dongfeng.”

The agreement to buy 14 percent of PSA for 800 million euros (US$1.10 billion) is part of a 3 billion euro capital tie-up that will see Dongfeng become

one of PSA’s biggest shareholders, matching holdings by the French government and the Peugeot family.

Dongfeng formed a joint venture with another French carmaker, Renault SA, last year, when they started building a factory in the central city of Wuhan that will manufacture 150,000 cars a year upon completion.

State-owned Guangzhou Automobile Group, which owns ventures with Honda, Toyota Motor Corp, Isuzu Motors Ltd and Mitsubishi Motors Corp, is also heavily reliant on sales of Japanese brands. Guangzhou Auto reported a 135 percent surge in 2013 earnings.

Reuters

editorial council Paulo A. Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Michael Armstrong, Pierre-François Metayer, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee International editor Óscar Guijarro Brands & Trends Raquel Dias Creative Director José Manuel Cardoso WEB & IT Janne Louhikari interns Cynthia Wong, Yvonne Wong 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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Politics harms Thailand’s economy Activity will contract in the first quarter after consumption and investment fall

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hailand has endured months of political turbulence as protesters seek to topple Prime Minister Yingluck Shinawatra. The unrest is inflicting more damage to a country already grappling with slowing growth and outflows of capital from it fragile financial markets.

Yingluck yesterday showed up to defend herself against charges linked to a ruinous government rice pledging scheme that could lead to her removal from office.

The Bank of Thailand’s private consumption index dropped 1.2 percent in February from January and 2.5 percent from a year earlier.

Its private investment index was 1.9 percent lower on the month and was down 7.7 percent on the year.

Mathee Supapongse, senior director with the central bank, told a news conference that growth could contract in the first quarter from the fourth but might rebound in the second quarter.

He expects tourism to pick up if there is no violence from street protests and exports improve.

“Overall economic activities in February 2014 softened further from the previous month owing to prolonged political protests.

Households and businesses continued to hold back spending, while imports and manufacturing production contracted,” the Bank of Thailand said in a statement.

It said tourism was further affected by the protests although exports picked up helped by improving global demand.

Thailand posted a much bigger current account surplus in February of US$5.07 billion, compared with a surplus of US$0.22 billion in January.

The central bank said exports in February rose 2.2 percent from a year earlier, slightly lower than that of the Commerce Ministry.

The fresh set of indicators of yesterday adds to concerns that consumption will not be able to counter weak exports. Customs data last week showed plunging imports- a signal that Thai exporters will struggle to benefit from any improvement in global demand. Many imported materials are used as inputs in goods made for exports.

Reuters

Parliament chamber proposes candidates to become president on next July’s election

The bumpy road of nationalism Most Indonesian candidates support autocratic policies

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ressed in the style of Indonesia’s first leader, even using replica 1950s microphones, presidential hopeful Prabowo Subianto roared to thousands of supporters at a recent rally in the capital: “Indonesia cannot be bought”.

The question of whether Indonesia is souring on the foreign money that helped bankroll much of its growth was thrust into the spotlight this year with a new law that aims to boost the country’s profits by banning the export of minerals unless they have been processed first.

That threatens the fortunes of some of Indonesia’s biggest investors, notably two major U.S. mining companies with large operations in the country - Freeport-McMoRan Copper & Gold and Newmont Mining Corp.

To continue exporting, mining firms must now either pay 20-25 percent tax from this year, rising to up to 60 percent by the second half of 2016, or invest hundreds of millions of dollars on new smelters.

Approved foreign investment outside the oil, gas and banking sectors last year was around US$22 billion, roughly the same as 2012 in dollar terms.

Opinion polls suggest that PDI-P, currently in opposition, will win the most seats in parliament and easily grab the presidency with its hugely popular candidate, Jakarta governor Joko “Jokowi” Widodo. He has won national approval for his straightforward leadership style but has yet to detail any economic policy.

Behind PDI-P are Prabowo’s Gerindra party and also Golkar, the parliamentary vehicle for autocrat Suharto’s 32-year rule, which has managed to resurrect its fortunes in the 16 years since its patron was forced from office and Indonesia became a democracy.

All major parties favour keeping the law banning mineral ore exports despite criticism from the World Bank that it will damage the economy.

However much the election speeches are tinged with xenophobia, all the top parties promise to address more fundamental economic challenges.

That includes a large currentaccount deficit that threatens confidence in the currency and the budget-sapping cost of huge fuel subsidises at a time when the outlook for economic growth has softened to

KEY POINTS All major parties beating nationalistic drum Ban on export of raw minerals upset foreign miners Foreign investment appears to be peaking Election for new parliament on April 9; president on July 9

barely 5 percent this year.

Investors who commit to broader economic development would win favour. Others may find Indonesia less welcoming, he said.

The director of PDI-P’s Megawati Institute think tank, Arif Budimanta, said the country should develop infrastructure and lure investment into adding value to the country’s natural resources, much of which are exported unprocessed.

PDI-P wants to spend around 2030 percent of the budget, from about

11 percent now, on infrastructure, whose weakness is a major factor in keeping economic growth below its potential.

“We will prioritise the quality of growth, not just growth but also in terms of even distribution,” he said.

About 11 percent of Indonesia’s 240 million people live below the poverty line. Another 30 percent are barely above it, many of them in the rural sector.

Gerindra says the government needs to return to the 1970s emphasis on agriculture to lift the economy and has repeatedly warned that the ever yawning gap between the rich and the have-nots threatens social stability.

“The focus of our programme is agriculture and education ... If we want to develop our industry, it has to be agri-based industry,” said Abdullah.

His party wants to boost budget spending on agriculture to 5 percent in 5 years, from around 2 percent now. It will also press banks to lend more to the agriculture sector.

The front-running PDI-P has also stressed education for an exceptionally young population -about half is under 30- whose classrooms churn out workers barely able to compete with neighbouring economies.

Reuters

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April 1, 2014

Asia Singapore lending increases Total bank lending in Singapore rose 0.4 percent in February from January, led by loans to manufacturing companies, central bank data showed yesterday. Loans and advances by domestic banking units in the city-state amounted to S$584.5 billion (US$464.1 billion) last month, up from S$582.2 billion in January, according to the Monetary Authority of Singapore. From a year earlier, February bank lending rose 14.6 percent. Loans and advances in Asian currency units (ACU) increased to S$496.3 billion in February from S$488.4 billion in January.

Solaire casino expansion This is the first of four planned integrated resorts expected to rise

We are close to ideal because we have a nice variety of junkets that are currently calling Solaire home

SK central bank ready to act South Korea’s central bank will try to calm markets through open market operations should the local yield curve steepen in response to policy tightening in the United States, a senior official said yesterday. “If needed, we will use open market operations, like purchasing longterm bonds or other measures,” Kim Jun-il, a deputy governor and chief economist of the Bank of Korea, told reporters while explaining the bank’s policy report. The Bank of Korea said it would take measures aimed at preventing the local yield curve from steepening excessively in response to overseas factors.

Australian property jumps Sales of new homes in Australia jumped in February on strong demand for detached houses, an industry survey showed yesterday, the latest sign that low interest rates are fuelling a revival in the market. The Housing Industry Association (HIA) said its survey of large builders showed sales of new homes rose 4.6 percent in February from January, to their highest in almost three years. Sales of new detached houses surged 6.9 percent in February, while the volatile multiunit sector dropped 6.8 percent.

Current account surplus edges down in South Korea South Korea’s seasonally adjusted current account surplus edged down to US$7.57 billion in February from a revised US$8.56 billion in January as both exports and imports shrank slightly, central bank data showed yesterday. Exports last month fell by a seasonally adjusted 4 percent from the previous month to US$52.50 billion while imports slipped by 2 percent to US$44.53 billion. As a result, the trade surplus stood at US$7.97 billion, the Bank of Korea data showed. In the financial account, Asia’s fourth-largest economy saw a net outflow of US$6.92 billion in February.

Solar power supply for Australian mines First Solar Inc., the largest U.S. solarpanel maker, is close to announcing agreements to supply its technology to remote mining projects in Australia to help resources companies save on fuel costs. The company expects to develop as much as 200 megawatts of capacity for the mining industry over the next three years, Jack Curtis, First Solar’s Sydney-based vice president of business development for the Asia-Pacific, said in a phone interview. The Tempe, Arizonabased company plans to combine solar power with diesel, he said.

Thomas Arasi, Bloomberry president and COO

Solaire lost US$19 million during the first nine months

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loomberry Resorts Corp hopes to recreate the magic of Singapore’s Marina Bay Sands with the expansion of its US$1.2 billion Solaire casino-resort in Manila, a crucial project if the firm is to reverse its disappointing first-year results.

Solaire is the first of four planned integrated resorts expected to rise in Manila Bay’s new Entertainment City gaming precinct, a massive

development designed to give wealthy Asian gamblers an alternative to the Chinese casino city of Macau.

Solaire’s first phase opened in March last year, and as work on the US$500 million expansion gets into full swing Bloomberry is looking to Marina Bay Sands for inspiration.

With its triple towers, boat-shaped observation deck and infinity pool in the sky, Marina Bay Sands is more than just the world’s most profitable

casino - it is an emblem of Southeast Asian gaming glamour.

Solaire will struggle to match the US$5.9 billion Marina Bay Sands in terms of glitz, even though it already boasts spectacular views of Manila Bay and the expansion will see the opening of the country’s first Lyric theatre that can stage big musicals.

But Bloomberry’s billionaire owner Enrique Razon, the Philippines’ fourth-richest person, has managed

Factory data produces hesitation A separate survey shows manufacturing activity expanded at a slower

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apan’s factory output unexpectedly fell in February at the fastest pace in eight months in a possible sign that the benefits from last-minute demand before an impending sales tax hike may have run their course.

The data adds to growing concerns of a stumble in the economy, and comes on the heels of a separate survey showing manufacturing activity expanded at a slower pace in March.

The Ministry of Economy, Trade and Industry (METI) said industrial output fell 2.3 percent in February from the previous month, compared with a 0.3 percent rise expected by economists in a Reuters poll.

The weak result followed a solid 3.8 percent gain in January, which was driven by brisk production of cars and household appliances.

KEY POINTS Feb output -2.3 pct m/m vs f’cast +0.3 pct Output seen +0.9 pct in March; -0.6 pct in April Some concern about economy after sales tax hike

Manufacturers surveyed by the ministry expect output to rise 0.9 percent in March but decrease 0.6 percent in April, the METI data showed, suggesting a lack of confidence in domestic demand.

The data comes a day before the

national sales tax rises to 8 percent from 5 percent.

Analysts are also looking out for the Bank of Japan’s key tankan survey due on Tuesday, which may offer clues on any impacts of the sales tax hike on business sentiment in the three

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takes off

Samsung restructuring plans starts with acquisition

in Manila Bay’s Entertainment City to grab a bit of the Singapore casino’s executive nous in the form of exMarina Bay Sands CEO Thomas Arasi. Razon convinced Arasi to become Bloomberry president and COO in October, hoping to tap some of the secrets of Marina Bay’s success.

Five months later, Solaire has seven fixed-room junkets and over 40 casual junket operators who fly in players, against nearly zero junkets under the previous management of Las Vegas-based Global Gaming Philippines (GGAM).

That is apart from individual highrollers from China, Taiwan, South Korea, Japan and Southeast Asia, who fill Solaire’s VIP gaming sections.

High-class problems Arasi believes Solaire is already on the right path in terms of its clientele, having achieved in its first year the sought-after balance of high roller VIPs and mass-market gamblers.

“We are close to ideal because we have a nice variety of junkets that are currently calling Solaire home,” he told Reuters in an interview at Solaire’s Bay Tower hotel overlooking Manila Bay. “Based on our current space constraints in our VIP areas, we don’t have too much more room to bring in others. So that’s a high-class problem to have.”

He said the Philippines had certain advantages over Singapore for casino operators that should serve Solaire

in Japan pace in March

months to March and their outlook in the following quarter.

“Companies are curbing production to keep inventories low because they are worried about demand after the sales tax hike,” said Norio Miyagawa, senior economist at Mizuho Securities

well, citing lower taxes and highquality local staff.

Casino operators also enjoy higher margins in the Philippines because Manila allows junkets - middlemen who charge casinos commissions to bring in wealthy gamblers.

Solaire’s expansion is likely to open towards the end of the year, boosting Solaire’s VIP gaming area by 70 percent.

But for the market, Bloomberry’s inability to make its current assets profitable outweighs any anticipated jump in gaming revenue, after the company posted losses amounting to around US$19 million in its first nine months.

Investors who were disappointed

by Solaire’s weak earnings and a bitter shareholder battle involving GGAM have started to buy Bloomberry shares again after they fell 35 percent last year.

The stock is up about 13 percent this year, the only integrated casino resort-related stock to post gains in the Philippine stock market over the period.

Bloomberry is expected to post its first net profit this year of 3.2 billion pesos.

Arasi said the opening later this year of Melco Crown Entertainment Ltd’s more than US$1 billion City of Dreams integrated resort -Asia’s sole new casino development in 2014would lift the profile of Entertainment City.

Reuters

Research & Consulting Co. “This suggests the economy may not rebound quickly, and the burden may fall on the BOJ as the government has already committed to fiscal stimulus spending.”

Auto makers, manufacturers of mobile phones, personal computers and heavy machinery led declines in industrial production, the data showed.

Unusually cold weather and snowstorms also weighed on output, Miyagawa said.

The METI stuck to its assessment that industrial output is picking up, and in a press briefing noted that the weakness in February was largely a one-off event due to bad weather.

A survey of manufacturing released earlier in the day also showed weather-related impacts. The Markit/ JMMA Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 53.9 in March from 55.5 in February, keeping above the 50 threshold that separates expansion from contraction for a 13th consecutive month.

Analysts believe factory output is maintaining a rising trend, underpinned by firm domestic conditions and a pickup in external demand and reinforcing expectations that the economy can weather the sales tax rise.

Last-minute demand for big-ticket items such as cars and housing has peaked, with growth in housing starts seen decelerating sharply in February.

Still, rising sales of household appliances and non-durables such as foods and clothing before the tax hike are expected to fuel growth in the current quarter, analysts say.

The Japanese economy is expected to contract in the April-June quarter as consumer spending dips after the sales tax hike takes effect, before rebounding in July-September.

Battery maker Samsung SDI Co plans to acquire electronics materials affiliate Cheil Industries Inc. by swapping shares.

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he group, whose around 435 trillion won (US$407 billion) in assets spans handsets to ship building to medical services, is restructuring ahead of a widely expected transfer of ownership to the third generation of the founding family.

Lee Kun-Hee, 72, chairman of group crown jewel Samsung Electronics Co Ltd, has in recent years promoted his children to top positions and shuffled affiliates.

Son Jay Y. Lee is vice chairman of Samsung Electronics, elder daughter Boo-jin leads Hotel Shilla Co Ltd, and younger daughter Seo-hyun is president of Samsung’s fashion business.

Cheil Industries started in textile and fashion before selling that business to unlisted affiliate Samsung Everland for 1.05 trillion won late last year, to focus on electronics materials and chemicals.

SDI will acquire Cheil by offering Cheil shareholders 0.44 SDI share for each Cheil share they own.

“The acquisition will help Samsung SDI have better access to Cheil’s electronics materials assets and thus help improve our competitiveness, and enable Cheil to expand its customer base beyond electronics companies to the auto industry,” SDI said in a

10 trln won merged company annual sales forecast statement yesterday.

The merged company will have annual sales of around 10 trillion won, which SDI aims to boost to more than 29 trillion won by 2020, the company said in the statement.

Shares of Samsung SDI rose 4.6 percent and Cheil gained 3.5 percent after the announcement, compared with a flat benchmark index.

Samsung has made a flurry of restructuring moves in recent years.

In 2013, unlisted screen manufacturer Samsung Display sold its stake in a glass venture to Corning Inc., and unlisted IT services company Samsung SDS bought network equipment provider Samsung SNS. Reuters

Nippon funds increase assets The overall allocations to bonds rose to 48.1 percent in March, the highest level since November 2013, from 46.8 percent last month

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apanese fund managers increased the assets in their model portfolio allocated to bonds in March amid geopolitical risks stemming from the Ukrainian crisis and concerns about China’s slowing growth, a Reuters poll showed.

The survey of eight Japan-based fund managers, polled between March 17 and 24, also found they had slightly reduced their equity allocations in March after raising those weightings to a 2-1/2-year high the previous month.

The overall allocations to bonds rose to 48.1 percent in March, the highest level since November 2013, from 46.8 percent last month.

The allocations to stocks dropped to 44.9 percent from 46.1 percent, which was the highest since October 2011.

Within the bond portfolio, they raised U.S./Canada weightings to 29.1 percent, the highest since May 2013, from 24.9 percent last month.

Tensions between Ukraine and Russia over the Crimean peninsula and a string of indicators that pointed to slowing economic growth in China buffeted the global markets in March, prompting investors to seek safe havens in government bonds.

Investors also kept in mind the

likelihood that the U.S. Federal Reserve would continue tapering its economic stimulus as planned, spelling an eventual end to its quantitative easing policy.

“The potential increase in geopolitical tension remains a factor regarding bond investments. But we have to bear in mind the risk of bond yields rising as there appears to be no change to the Fed normalising monetary policy,” said a fund manager at a Japanese asset management firm, who could not be identified because of his company’s policies.

New Federal Reserve chair Janet Yellen earlier last month suggested the possibility of raising interest rates early next year.

Fund managers shed exposure to euro zone bonds to 21.1 percent from 24.3 percent.

The surveyed fund managers slightly pushed up their U.S./Canada stock exposure to 34.8 percent, the highest since April 2012, from 34.3 percent.

The S&P 500 index continued its sustained bull run, hitting a record high last week, supported by optimism that soft economic indicators seen earlier this year was due to severe weather conditions.

Reuters

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April 1, 2014

International Natural gas beats several marks The cold snap in the Eastern U.S. convinced hedge funds and other speculators to keep betting on rising natural gas prices, accumulating the most bullish position for this time of year since at least 2010. The polar vortex that sent temperatures tumbling across the country in January boosted consumption by households and power plants to all-time highs. Waves of frigid weather through March pushed stockpiles to the lowest level in 11 years. Almost 3 trillion cubic feet of gas will need to go into storage during the warm-weather months to cover winter demand, something that’s never been done before.

Socialists fail in French local elections

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Ex-Israeli Premier accepted bribes Ehud Olmert was convicted of taking bribes over a Jerusalem real estate project, dealing a blow to any thoughts of a political comeback.

He faces prison time at an April 28 sentencing, and with today’s verdict joins a roster of other Israeli leaders convicted of serious crimes. “This effectively ends Olmert’s chances of any successful return to the political stage, even if he should end up winning on appeal,” said Abraham Diskin, a political science professor at The Hebrew University of Jerusalem. Olmert didn’t make any statement after leaving the Tel Aviv District Court.

Investment banking conflicts under observation The U.K. finance regulator will review how investment banks manage conflicts of interest between their obligations to clients and their own trading positions. The Financial Conduct Authority is also investigating how firms prevent confidential information they receive in one part of the business being used by another, the regulator said in its annual business plan today.

The FCA will also scrutinize firms’ controls designed to prevent traders from rigging benchmarks. The regulator was created a year ago when the Financial Services Authority was split into the FCA and the Prudential Regulation Authority.

Sudanese rebels target oil fields South Sudanese rebels plan to capture key oil installations to force President Salva Kiir to step down and end more than three months of conflict in the world’s newest nation, former Vice President Riek Machar said.

Fighters allied with Machar, known as the White Army, are “mobilizing” to attack the Paloch oil fields that are the main source of revenue for the country’s military, the 60-year-old rebel leader said in a March 27 interview at his bush hideout in Upper Nile state.

Machar fled the capital, Juba, in December after the government says he attempted a coup against Kiir.

rench President Francois Hollande’s Socialists lost control of cities across the country yesterday, as voters punished the party for record joblessness.

While Socialist candidate Anne Hidalgo, 54, won in Paris, making her the French capital’s first female mayor, throughout France the main beneficiary was former President Nicolas Sarkozy’s UMP party. It ousted Socialist mayors in cities such as Toulouse, Limoges, Belfort and Reims. The anti-euro National Front of Marine Le Pen gained ground, while failing to make the breakthrough it threatened after a first round a week ago.

“At both the local and national level, this is a defeat for the governing party,” Prime Minister Jean-Marc Ayrault said in a televised address.

“This evening is a moment of truth.”

The first nationwide voting since Hollande took power shows growing discontent with jobless claims at a record of more than 3 million and an economy that has barely grown in two years. The results could put pressure on Hollande, the least popular president since at least 1958, to overhaul his government team.

A Harris poll released last week said 78 percent of the French want him to replace Ayrault. Among the possible candidates, 19 percent favour Interior Minister Manuel Valls, 13 percent want Lille Mayor Martine

Aubry, and 10 percent opt for Foreign Minister Laurent Fabius, according to the poll.

A Harris poll released March 3 said that Hollande had a 25 percent approval rating, a record low.

Vote details Valls said yesterday that preliminary numbers show the Socialists and their allies got 40.6 percent of the nationwide vote, while the UMP and their allies got 45.9 percent and the National Front 6.8 percent. He said 10 towns with populations of more than 100,000 swung from the left to the right.

About 6,000 municipalities held run-off elections for city councils yesterday after a first round of voting a week ago in all of France’s 36,000 towns. A record 38.5 percent of registered voters abstained, according to estimates by TF1 television.

“The high abstention Sunday shows the failure of the left to mobilize its supporters,” Frederic Dabi, deputy director general of polling company Ifop, said on i-Tele television.

UMP’s victories Local elections generally go against the party in power, Dabi said, citing an election 10 years ago when the party of then President Jacques Chirac lost control of 24 of

France’s 26 regions.

The UMP held on to the mayor’s job in Marseille, France’s third-largest city. The victories gave the party a breather from months of scandals and a leadership battle that have left it in disarray since Sarkozy lost the presidency in May 2012.

The Socialists did have some victories, holding on to Metz, Rennes, Strasbourg, and Lille, while wresting control of Avignon.

The National Front won in Frejus and a candidate linked to the front won in Bezier. The party failed in Perpignan and Avignon, where it scored strongly in the first round.

European elections The anti-immigrant party may not match its success in 1995, when Front candidates won mayoral elections in Toulon, Orange, and Marignane.

None were re-elected.

The National Front will have another chance in May’s European parliamentary election, where it won’t face the challenge it faced in yesterday’s vote of compiling lists of candidates in 36,000 towns.

An Ipsos poll said the UMP will get 24 percent of the French vote in the European elections, with 22 percent for the National Front and 19 percent for the Socialists. The poll questioned 1,600 people on March 27-29.

Bloomberg News

Mercedes engines in Aston Martin British carmaker is in talks with the Germans in order to get technological help

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ston Martin Lagonda Ltd. and Daimler AG are holding talks to extend their cooperation to sport-utility vehicles as the British maker of cars featured in James Bond movies seeks to broaden its line-up, people familiar with the matter said.

Daimler, the producer of MercedesBenz luxury cars, may share the underpinnings of a new full-size SUV with Aston Martin, said the people, who asked not to be identified because the discussions are private.

Daimler agreed last year to acquire a stake of as much as 5 percent in Aston Martin as part of an agreement to share technology with the Gaydon, England-based sports-car maker.

Mercedes’s AMG high-performance division will develop V8 engines with the U.K. company for Aston Martin’s

next models.

“Aston really needs a technology partner” to update engine systems as well as build SUVs, “the fastestgrowing segment in the premium car game,” Erich Hauser, a London-based automotive analyst at International Strategy & Investment Group, said in an e-mail. “I’m just not sure what Daimler gets” from the partnership.

Mercedes is the third-largest maker of luxury cars, behind Bayerische Motoren Werke AG and Volkswagen’s Audi brand. Daimler Chief Executive Officer Dieter Zetsche has a target for Mercedes to retake the lead in the segment that it lost to BMW in 2005.

The strategy includes the rollout of 30 new models through 2020, a dozen of which will have no predecessor.

Aston Martin is the only global

luxury-auto producer that doesn’t belong to a larger manufacturing group. Following investment firm Investindustrial’s purchase of a 37.5 percent stake, the carmaker laid out plans in 2013 to spend 500 million pounds (US$832 million) in the next four years to challenge Volkswagen AG’s Bentley and Fiat SpA’s Ferrari and Maserati.

Talks are at an early stage as the SUV won’t come to market for another three years and the British carmaker is still weighing whether to use its own technology to develop a crossover, one of the people said. Representatives for Investindustrial, Aston Martin and Daimler declined to comment on whether they’re considering building an SUV together.

Bloomberg News

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April 1, 2014

Opinion

America’s Neglected wires Financial Children Business

Leading reports from Asia’s best business newspapers

The Times of India Nancy Birdsall Devesh Kapur In forcing automaker Maruti Suzuki India Ltd to backtrack on a controversial production deal with its Japanese parent, a group of Indian fund managers scored a rare win that heralds increased activism for an Indian fund industry long seen as timid. Across emerging markets, shareholder activism tends to be rare, with unhappy investors typically expressing discontent by dumping their shares. In the case of Maruti, that would have meant ditching a company that sells half the passenger cars in India and is a staple of institutional portfolios.

Founding president of the Center for Global Development. Associate professor of political science at the University of Pennsylvania.

The Myanmar Times President Thein Sein’s chief economist, U Myint, is calling on the government to pass stringent privatisation laws amid concerns of continued cronyism and rent-seeking in the sale of government-owned property, services and other businesses. U Myint, who was also senior economist to the United Nations, told reporters last week that until now the privatisation process of several entities has been carried out without a basis in law and could lead to serious repercussions for Myanmar as global entities increasingly look to do business here.

The Star Malaysian activists and leaders have paid tribute to Tenaganita director Irene Fernandez, who passed away at 10.58am Monday, calling her “amazing”, a “hero” and “an outstanding person”.

Fernandez was known in humanitarian circles and even outside as a strong voice in promoting and protecting the rights of the less fortunate, especially migrant workers.

Suhakam commissioner James Nayagam said that Fernandez was a human rights advocate to the word and was the voice for victims of human trafficking. Rumah Nur Salam founder Dr Hartini Zainuddin said that Fernandez, 67, was an amazing person.

Taipei Times Hon Hai Precision Industry Co Ltd (鴻 海 精 密 ), which makes iPhones and iPads for Apple Inc, reported about 39 percent growth in quarterly net profit for last quarter on strong seasonal demand for consumer products, bringing the company’s total net profits to an all-time high again last year. Net profit surged to NT$42.61 billion (US$1.39 billion) in the final quarter last year, compared with NT$30.75 billion in the third quarter. On an annual basis, net profit jumped 25.55 percent from the NT$33.94 billion in the same period last year.

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his week, the US Congress again failed to approve a modest appropriation that would have shored up financing for the International Monetary Fund and given China and other emerging economies greater responsibility there.

Support for the IMF may seem arcane, but it has important implications for America’s global role – and the signs are not good.

Indeed, if there was ever a moment for Congressional approval of the IMF reform package, this was it: the measure would have greatly increased the IMF’s ability to support Ukraine, a key American objective, at a much lower cost than the alternative of a US bilateral credit guarantee.

The failed measure involved only a transfer of previous US commitments from a supplementary account to the IMF’s core funding source, at virtually no cost to taxpayers.

Congressional approval would have implemented a deal, concluded at the G-20’s Seoul Summit in 2010, to double the Fund’s lending capacity.

Under the agreement, which US President Barack Obama’s administration shepherded through tough negotiations, America would remain the IMF’s largest single shareholder, retaining its veto over major decisions.

But, fearing a backlash, the Obama administration tried to gain Congressional backing only at the last minute – and as quietly as possible.

A few years ago, the US displayed a similar lack of commitment to another US-dominated international institution: the World Bank.

After the global financial crisis, the Bank lacked enough capital to boost lending beyond precrisis levels.

But the US was not particularly interested in a larger World

Bank; instead of using its considerable influence – reflected in its power to appoint the Bank’s president – to create a stronger institution capable of responding to new demands, it went along with what became a modest Bank recapitalization. In fact, the US and its European allies are rumoured to have rejected several major emerging economies’ quiet offers to provide additional funding, possibly to avoid diluting their own capital.

The US is like an aging parent; it is no longer willing to invest much in the family business, but remains averse to ceding control to its increasingly mature children

This contrasts sharply with the experience of two large regional multilateral lenders: the Inter-American Development Bank and the African Development Bank.

Whereas wealthy countries hold the most World Bank shares, borrowing countries hold a slight majority of the shares (and the presidency) at the regional banks. Their leaders pressed hard – and successfully – for substantial capital increases.

America’s recent failure to champion the international financial institutions represents a reversal of its approach during the latter half of the twentieth century, when it invested heavily in securing and maintaining their effectiveness. US leaders understood that these institutions enabled America to pursue its own foreign-policy preferences and commercial interests in a more open and stable global economy.

The end of the Cold War undercut the foreign-policy logic behind America’s backing, as increasing globalization of trade and investment made economic support for developing countries seem less necessary as a way to expand markets.

Moreover, the terrorist attacks of September 11, 2001, made non-state actors and so-called “failing” states with troubling sectarian and ethnic conflicts a new security concern.

In those settings, the US, reasonably enough, did not view traditional investment support from the IMF and World Bank as a high priority.

Finally, the global financial crisis put considerable strain on the US economy, intensifying pressure on lawmakers to undertake policies aimed at boosting domestic GDP growth and creating jobs. To this end, the White House is investing enormous effort and political capital in two major trade deals – the Trans-Atlantic Trade and Investment Partnership and the Trans-Pacific Partnership – despite domestic opposition.

But, while America’s economic woes and hyperpolarized political climate have undoubtedly contributed to the decision to favour controversial trade deals over international financial institutions that the US created and nurtured, what is really driving the policy shift are fundamental

geopolitical changes. In short, an internationally diminished US is loath to relinquish its dominance of global institutions, yet unwilling to shoulder the associated financial and political costs.

By contrast, the US market’s enduring weight amplifies America’s bargaining power in plurilateral trade agreements, which also serve the country’s immediate commercial interests. Indeed, such deals offer the promise of new export markets, “good” jobs, and rules that lock in US competitive advantages. At the same time, they can help to contain China’s economic power and strategic influence in Asia.

As the issuer of the world’s dominant reserve currency, the US can manage without the IMF in the short run, using the Federal Reserve to provide liquidity to countries where it has core political interests, as it did after the 2008 crisis.

And World Bank lending is helping the middle-income countries that are increasingly competing with the US in global trade, while boosting demand for private – that is, American – capital.

The US is like an aging parent; it is no longer willing to invest much in the family business, but remains averse to ceding control to its increasingly mature children. Resentful and restless, the children are seeking opportunities elsewhere – to the detriment of the family firm. China has nearly two dozen currencyswap arrangements, which serve as an alternative to IMF liquidity support. India just signed a $50 billion swap deal with Japan. Over time, these arrangements will erode the US dollar’s role as the world’s leading reserve currency.

Furthermore, the major emerging economies – Brazil, Russia, India, China, and South Africa – plan to establish their own development bank, and many African countries now count on China to fund infrastructure investments.

In Latin America, the Andean Development Bank lends more to its members for infrastructure projects than the World Bank – at higher cost, but with less hassle.

The World Bank’s diminished role will ultimately undermine America’s ability to advance its view that development is a function of open markets and democratic accountability.

Strong and effective global financial institutions are still very much in America’s interest. But, without US leadership, the global role of the IMF and the World Bank will erode gradually – as will their usefulness to the US. © Project Syndicate, 2014

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Closing Hong Kong posts HK$31.8 bln fiscal surplus Restaurant subsidy scheme rules relaxed Hong Kong posted a HK$31.8 billion (US$4.10 billion) fiscal surplus for AprilFebruary, the first 11 months of its 2013/14 financial year, against a HK$75.7 billion surplus for the same period last year, official data showed yesterday. The government also logged a deficit of HK$38 billion in February mainly as the expenditure in March is expected to exceed revenue, the government said in a statement.

A new round of applications for a subsidy scheme targeting the city’s old restaurant renovation and financed by the Macau Foundation has started. Eligible restaurants can gain a subsidy of up to 200,000 patacas.

Restaurants that have operated for at least eight years with 50 or less employees can apply for the subsidy. The old rules required that the restaurant be in operation for at least 10 years, and employ 20 staff or less.

Inflation in the “danger zone” Euro zone worried about deflation. Inflation drops to lowest level since 2009 Robin Emmott and Philip Blenkinsop

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uro zone inflation hit its lowest level since November 2009 in March, a shock drop that raises expectations the European Central Bank will take radical action to stop the threat of deflation in currency bloc.

Annual consumer inflation in the 18 countries sharing the euro was 0.5 percent in March, with the pace of price rises cooling from February’s 0.7 percent reading, the EU’s statistics office Eurostat said yesterday.

Economists polled by Reuters had predicted a 0.6 percent reading worrying in itself for an economy that is barely pulling out of a record-long recession after a crisis that nearly broke up the currency area.

Inflation has now been in the ECB’s “danger zone” of below 1 percent for six consecutive months, and the flash reading increases the chances the ECB will cut interest rates when its Governing Council meets on Thursday. Speculation is also growing that it may employ other easing measures such as a negative deposit rate or even U.S.-style bond-buying.

But this year’s late Easter, which has delayed the impact of rising travel and hotel prices at a time when many people go away in Europe, could encourage the euro zone’s central bank to wait until its June meeting to act.

“This will keep the possibility of further monetary policy easing very much alive,” said Nick Kounis, head of economic research at ABN AMRO in Amsterdam. “Nevertheless, the central bank has shown quite some tolerance for low inflation recently.”

The ECB, which targets inflation of just below 2 percent, left borrowing costs unchanged at 0.25 percent in March and has argued that deflation risks in the bloc are limited.

ECB President Mario Draghi suggested after the ECB’s March meeting that the bank will either do nothing or take bold action should the outlook deteriorate.

He has also said the bank has been preparing additional policy steps to guard against possible deflation, and that the longer inflation remained low, the higher was the probability of deflationary risks emerging.

The relentless trend may focus minds, especially as the head of Germany’s central bank has appeared to soften his long-held resistance to bold steps such as pumping more money into the economy via a bondbuying programme.

“There’s still a case for easing, but we don’t think there’s going to be enough agreement within the Governing Council members to

ease on Thursday,” said Guillaume Menuet, an economist at Citigroup in London.

Yesterday, the International Monetary Fund’s top European official said the ECB had more room to cut interest rates to counter risks from low inflation.

“We are not so much worried about deflation by itself, but we are very worried about what we call ‘lowflation’,” Reza Moghadam, Director of the IMF’s European Department, said.

“There is more room for further (ECB) easing, not least because inflation is under control.”

Reuters

Yuan suffers 2nd biggest Huawei aims to double French minister monthly loss ever revenue by 2018 in trouble China’s yuan closed weaker against the dollar yesterday and posted its second-biggest monthly loss on record as the central bank kept up strong pressure on speculators and sought to curb hot money inflows.

The People’s Bank of China (PBOC) fixed the official mid-point at a six-month low for the second straight trading session, setting a weaker tone for the day, and traders expect the currency to slide further in coming weeks.

There were signs that major state-owned banks continued to buy dollars, a move traders say reflects the central intention to guide the yuan towards further depreciation. The yuan fell some 2.7 percent against the dollar in the first quarter, nearly erasing all of the gains it made last year.

Spot yuan closed at 6.2180 per dollar yesterday, 0.09 percent weaker than Friday’s close, after the PBOC fixed its mid-point at 6.1521, down 0.05 percent from the previous trading day.

It also marked the official base rate’s weakest level since Sept. 18.

China’s Huawei Technologies Co Ltd has targeted 2018 revenue almost double the record reaped last year when the company booked 34 percent profit growth and became the world’s third-biggest smartphone manufacturer.

Huawei has been flooding emerging markets with low-priced smartphones and tapping advanced economies with high-end offerings to make up for slowing growth in its primary business of building mobile telephone networks.

Smartphones last year contributed the most to revenue growth in yuan terms and are likely to feature prominently in reaching a revenue target which translates as roughly 10 percent annual growth.

To reach that target, the company will have to improve on 2013 when revenue hit a record yet grew at a pace slower than Huawei’s 10 percent goal primarily because overseas companies spent less on networks.

Huawei also missed its smartphone sales target as local peers Lenovo Group and ZTE Corp pursued similar strategies to close the gap with leaders Apple Inc and Samsung Electronics Co.

France’s minister in charge of relations with French-speaking countries, Yamina Benguigui, is suspected of lying about her assets, a stateappointed transparency watchdog said yesterday.

Francophonie Minister Benguigui has repeatedly and formally denied media allegations that she failed to declare assets of up to 430,000 euros (US$592,000) in April last year.

She subsequently sold the shares she held in a Belgian company, which earned her 430,000 euros, according to French weekly Marianne.

The revelation is a fresh embarrassment for the embattled ruling Socialists, who received a drubbing in municipal polls over the weekend.

President Francois Hollande’s party however won the race for the Paris mayor’s office, with Anne Hidalgo becoming the first female mayor of the French capital. Benguigui was also elected as a councillor from Paris’s 10th district.

The High Authority for Transparency in Public Life said there was a “serious doubt on the comprehensiveness, accuracy and sincerity” of the minister’s declaration of her assets.

Reuters

Reuters

AFP